SHELL COMPANY

OPERATING ACTIVITIES
- So shell had an income loss or an outflow in income before income tax which is 14.67%
of their net sales. This is already not a good start for the company as this will affect
negatively the operations of the company. But then it will be adjusted.
- Depreciation and amortization expense is 2.7% and it is still around 4.2 billion so this
implies that the companies PPE is not yet totally depreciated.
- Interest and finance charges is 22.2 billion or equal to 14.16% of their net sales. This
implies that the cost of the companies borrowed money is very big. Since the interest
expense is a deduction in the income statement, it is added back here in the cash flow.
But the amount of interest paid must also be disclosed and we can see it later in the
financing activities.
- Impairment of assets. So this is the cost of the imapirment of asset that is already
recognized as impairment loss in income statement. So since in cash flow, we use the
indirect method so we start back with the profit and we include the non cash
transactions that is why it is added back. We can imply here that the impairment loss is
abig amount but it really has no impact in the cash flow as there is no transaction that
has taken place.
- And so their operating income before changes in the working capital is an outflow of
3.37% mostly because of the income loss
- And then there is Net increase in inventories, trade and other receivables, prepayments,
and other assets which is an inflow of 11.27%. This is good since this means that the
company has collected more from their receivable they have sold in credit and that they
may have a big inventory of their product. The only problem is that we dont know which
of this comprises the most of the 17.69 billion becuase they combined it in one account
title.
- There is outflow in the trade and payables and other liabilities. This iplies that Shell is
paying their short term liabilities.
- And so their net cash from operating is only around 3.8% of their net sales which is a
low level of cash flow which is because of their income loss. So this could be a problem if
they have large investments as their cash from operations may not be enough to fund it
thus they may have to need to borrow or rely on financing
INVESTING ACTIVITIES
- Here they added or acquired more PPE which amounted to 4 billion and is 2.57% of their
sales. Considering their expenses in the amortization and depreciation of their PPE, it is
almost the same on how much the company spend on addition of PPE.
- The dividends and interest received is negligible plus the proceeds from the sale of PPE.
It does not even amounted to 1%.
- And so their net cash flow used in investing is 3.96 billion or equal to 2.52% of thier total
sales. So we see that their cash from operating is enough to fund its investment. Their
investment is not big but maybe becuase since they have an income loss so need to
acquire more ppes.
FINANCING ACTIVITIES
- In here, it is mostly from the proceeds form their short term borrowings which is a big
amount actually.
- The company also paid their interest and finance charges plus their payment for the
principal of their lease liabilities.
- aANd in total, their total cash flow vused in their financing, so the changes in their
financing is an outflow of 0.3% so still low enough to bew covered by their cash flow
from operating
And so the changes in cash for the year is only 1.5 billion and is not even 1% of their total sales.
It is low but it is still a positive change so as long as it is an inflow it is acceptable og it si good. I
mean there are a lot of factors that affected to this like the pandemic. So because of the
lockdown, the vehicles in the road had decreased significantly plus the price of the oil increased
then people cant afford it. That is why it resulted to this.

FWD
OPERATING
- So their is an increase in thier unit linked liabilities of around 7.8 billion or around
54.17% of their revenue. So this is an inflow as they had received cash but this is
recorded as liability because they dueduct it on the custumers premium. This usually
goes with assets that u will use to cover this laibilities in case something happens. And
you can see it here.
- And the amortization of their prepaid assets is equal to 3.655 of their revenue. So this is
another non cash expense that is added back in the cash flow
- And an outflow for Assets held to cover unit-linked liabilities around 55%. This is what i
mention before that is the cash spent by the company to cover the unit-linked liabilites.
And since it increased, so noramlly this increased to as you can see, their amount is also
alost the same
- An their net cash from operating activities is around 8% of thier revenue. So they
generated a satisfactory level of operating cash flow as this is even higher than their
income before income tax.
INVESTING
- Here they acquired available for sale financial assets amounting to 1.1 billion or 7.76 %.
But this is not a problem as this will also be disposed.
- As you can see here in the proceeds for the disposal of available for sale assets as it
ampounted to almost half of what they have acquired.
- And their net cash used in investing is equal to 4.66% of thier revenue. This implies that
their cash gnerated from operating is sufficient enough to fund trheir investments
FINANCING
- and for financing it is just the payment for their lease liabilities which is only less than 1%.
AND THEIR TOTAL CHANGES IN CASH IS 343M OR 2.38 OF THEIR REVENUE PLUS THIER CASH
FRO THE BEGINNING OF THE YEARD THAT IS EUQIVALENT TO 5.98% WHICH RESULTED TO AN
INCREASE IN CASH AT THE END OF THE YEAR AMOUNTING TO 1.2 BILLION OR 8.6% OF THIER
NET REVENUE.
SO WITH THIS ANALYSIS, WE SAW THEIR DIFFERENCE BASED ON THE INDUSTRY THAT THEY ARE
IN. ON HOW THIER COMPANY PERFORMED IN TERMS OF LIQUIDITY OR THE CHANGES IN CASH
AND THE DIFFERENCE IN THE PRIMARY DETERMINANTS OF THIER CASH FLOWS FROM DIFF
SECTION. BOTH OF THEM HAD A POSITIVE CHANGE IN CASH FLOW. EVEN WITH THE ONE
COMPANY STARTED WITH AND INCOME LOSS. SO THATS IT. THANK YOU FOR LISTENING.