Business Essentials

BP and Shell Comparison Activity

March 24, 2015

BP AND SHELL (FINANCIAL YEAR 2013) COMPARISON ACTIVITY

1. Current Ratio
=

For BP,

Current Asset = 96,840,000,000

Current Liabilities =72,812,000,000
Therefore,
() =

96,840,000,000
72,812,000,000

() = 1.330
For Shell,

Current Asset = 103,343,000,000

Current Liabilities =93,258,000,000
Therefore,
() =

103,343,000,000
93,258,000,000

() = 1.108

2. Quick Ratio
=

For BP,

Current Asset = 96,840,000,000

Current Liabilities =72,812,000,000
Stock (inventories) 29,231,000,000
Therefore,
() =

96,840,000,000 29,231,000,000
72,812,000,000

() = 0.929

Page 1 of 4

Business Essentials
BP and Shell Comparison Activity

March 24, 2015

For Shell,

Current Asset = 103,343,000,000

Current Liabilities =93,258,000,000
Stock (inventories) = 30,009,000,000
Therefore,
() =

103,343,000,000 30,009,000,000
93,258,000,000

() = 0.786

3. Debt Ratio
=

For BP,

Total Finance Debt = 7,381,000,000 + 40,811,000,000 = 48,192,000,000

Total Assets = 305,690,000,000
Therefore,
() =

3,685,000,000
305,690,000,000

() = 15.77%
For Shell,

Total Finance Debt = 36,218,000,000 + 8,344,000,000 = 44,562,000,000

Total Assets = 357,512,000,000
Therefore,
() =

4,209,000,000
357,512,000,000

() = 12.47%

4. Debt to Equity Ratio

=

For BP,

Total Finance Debt = 7,381,000,000 + 40,811,000,000 = 48,192,000,000

Shareholders Equity (Total Equity) = 130,407,000,000
Page 2 of 4

Business Essentials
BP and Shell Comparison Activity

March 24, 2015

Therefore,
() =

48,192,000,000
130,407,000,000

() = 36.96%
For Shell,

Total Finance Debt = 36,218,000,000 + 8,344,000,000 = 44,562,000,000

Shareholders Equity (Total Equity) = 181,148,000,000
Therefore,
() =

44,562,000,000
181,148,000,000

() = 24.40%

5. Profit Margin
=

For BP,

PBIT = 31,769,000,000
Turnover = 379,136,000,000
Therefore,
() =

31,769,000,000
379,136,000,000

() = 8.38%
For Shell,

PBIT = 33,592,000,000
Turnover = 451,235,000,000
Therefore,
() =

33,592,000,000
451,235,000,000

() = 7.45%

6. Return on Total Assets (ROA)

() =

Page 3 of 4

Business Essentials
BP and Shell Comparison Activity

March 24, 2015

For BP,

PBIT = 31,769,000,000
Total Assets = 305,690,000,000
Therefore,
() =

31,769,000,000
305,690,000,000

() = 10.39%
For Shell,

PBIT = 33,592,000,000
Total Assets = 357,512,000,000
Therefore,
() =

33,592,000,000
375,512,000,000

() = 9.40%

COMPARISON:
From the above calculations, both companies can meet their current liabilities fairly
well if need be, however BP can achieve this more efficiently than Shell. On the other
hand, though BP has a slightly better Profit Margin and Return on Total Assets than
Shell, its debt ratio is relatively too high as compared with Shell. Therefore it is less
risky to invest in Shell than BP.
I would prefer to invest with Shell.

Page 4 of 4