Table Of Content

Task 01.......................................................................................................................................2

01.Company Overview..............................................................................................................2

02.Strategic financial overview..................................................................................................2

2.1.market ratios Calculation.................................................................................................2

Task 02.......................................................................................................................................9

02.Impact Of Corporate Governance Codes On Financial Reporting.......................................9

2.1.Introduction To Corporate Governance...........................................................................9

2.2.Review Of How The Codes Impact Financial Reporting And Promote ........Sustainable
Business Practices. 10

2.3.Recommendations..........................................................................................................13

03.Refferences..........................................................................................................................13

04.Appendices..........................................................................................................................17

List Of Figures
Figure 1 The bp Brand...............................................................................................................2
Figure 2 PB PLC Share Prices...................................................................................................7

List Of Tables
Table 1 Operations and profitability Ratios...............................................................................2
Table 2 Asset efficiency and liquidity Ratio..............................................................................3
Table 3 Capital financing Ratio.................................................................................................3
Table 4 Investors Ratio..............................................................................................................3
Task 01

01.Company Overview

The mission of BP plc is to reimagine energy for humanity and the earth. By working toward
a future with zero net emissions, we hope to better the lives of all people. BP plc plans to
substantially cut carbon emissions across the board, from operations to production, and to
expand into new low-carbon industries, product lines, and service offerings. BP plc will be an
outspoken supporter of immediate and substantial progress toward the Paris Agreement and
an industry pioneer in terms of disclosure. BP plc aspires to be a purposeful energy firm, one
that is trusted by society, respected by shareholders, and inspiring to BP's workforce (BP
PLC, 2020).

Figure 1 The bp Brand

02.Strategic financial overview

2.1.market ratios Calculation

Table 1 Operations and profitability Ratios

2021 2020
Gross Margin 0.410907 0.455543
Gross Profit/Sales
Operating Margin 0.238781 0.237135
Operating Income/Sales
Net Profit Margin 0.053804 0.19566
Net Income/Sales
Return on Equity (ROE) 0.093842 0.242252
Net Income/Tot.Equity
 Return on Assets (ROA) 0.029543 0.077447
Net Income/Tot.Assets

Table 2 Asset efficiency and liquidity Ratio

2021 2020

Inventory Days 91.86057 12.60705

(Inventories/Purchases) x 360

Account Receivable Days 62.79826 61.83474

(Account Receivable/Sales) x 360

Account Payable Days 206.6551 227.8893

(Account Payable Days/Purchases) x 360

Duration Working Capital Cycle -51.9963 -153.447

Stock Period + Credit Period - Payable Period

Table 3 Capital financing Ratio

2021 2020
Debt/Equity Ratio 2.176417 2.127968
Total Debt/Total Equity
Debt/Capital Ratio 0.68518 0.680304
Total Debt/(Tot.Equity+Tot.Debt)
Interest Coverage Ratio 6.329016 -6.97913
EBIT/Interest Expense

Table 4 Investors Ratio

2021 2020
Earnings per share 0.000845 0.000845
Earnings/Tot.SharesOutstanding
Price/Earnings Ratio 2.82 2.83
Market price/Earnings per share
Dividend Yield 0.040575 0.040575
 Tot.Dividends/Market Price

2.2.Analysis Of Ratio Results

In 2021 and 2022, gross operation margin is 0.410907 and 0.455543. Reduce net profit
margin by 4% in 2022. Higher gross profit margin indicates more revenue per unit sold. If the
company's unit profits drop (Bloomenthal, 2022). 2021's operating margin is 0.238781 and
2020's is 0.237135. Income from operations is the difference between revenue and operating
expenses for a certain period. Divide operating income by total expenses to calculate
operational margin (Hayes, 2021). 2021's NPM is 0.053804 while 2022's is 0.19566. 2022:
14% reduction "Net profit margin" is the profit-to-sales ratio after taxes. Investors can use net
profit margin to assess a company's management and operational and overhead costs (Segal,
2021). 2021 ROE is 0.093842, 2020 is 0.242252. In 2021, lower ROE to show that the
corporation isn't returning shareholders' money. 2021 ROA: 0.29543, 2020: 0.077447. Return
on assets measures a company's profitability based on its assets. Management, analysts, and
investors can utilize ROA to assess a company's asset use (Boyte-White, 2019).

Profitability Ratios
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Gross Operating Net Profit Return on
Margin Margin Margin Equity
(ROE)

2021 2020

Figure 2Profitability Ratios

Working capital is a measure of a company's financial health. This indicator measures a

company's health and productivity. A corporation with a working capital ratio below 1 may
be unable to pay its debts. A high working capital ratio shows the company isn't using its
extra cash well. (2019) 2021 inventory days are 91.86057 days, up from 12.60705 in 2020.
BP PLC has a lot of unsold stock (measured by days inventory was out), thus it's probably
not moving it fast. Insufficient sales or overstocking are common culprits. Unsold stock
might become outmoded, hurting a business (Abby Jenkins, 2020). 2021 Account Receivable
Days were 62.79826 and 61.83474. A high receivables day shows a company's collection
practices or payment conditions could be improved. It affects cash flow and growth (ACCA
Global, 2019). 2021 A/P Days is 206.6551 while 2020 is 227.8893. When a company pays
off supplier debts quicker than it can use credit to buy new products and services, account
payables fall (Murphy, 2020). 2021 Working Capital Cycle Duration is -51.9963, and 2020 is
-153.447. If it can be maintained without significant liquidity risk, a low level of working
capital is beneficial for both daily operations and long-term capital investments. Working
capital savings can boost productivity and free up funds for long-term projects (Wei, 2021).

Asset efficiency and liquidity Ratio

250
200
150
100
50
0
Inventory Account Account Duration
-50 Days Receivable Payable Working
Days Days Capital
-100 Cycle
-150
-200

2021 2020

Figure 3 Asset efficiency and liquidity Ratio

Leverage ratio can be used to evaluate Bp plc's liquidity. By calculating a company's leverage
ratio, output changes can be compared to operating income (Hayes, 2020). 2021 debt/equity
ratio is 2.176417, 2020 is 2.127968. The D/E ratio varies by industry, but shouldn't exceed
2.0. (Maverick, 2020). A debt-to-equity ratio of 2 means debt accounts for 2/3 of the
company's capital investment. In 2021, the debt-to-capital ratio is 0.685182. Higher debt-to-
equity ratios make borrowing more difficult; lower levels make borrowing easier. Safety is
the key factor. Even if a smaller debt ratio indicates more trustworthiness, the company may
be excessively debt-free (Ross, 2019). 2021's ICR is 6.329016 and 2020's is -6.97913.
Negative interest coverage is below 1. 2020 revenues won't pay the company's debt. Below
1.5, the company may have problems servicing its interest commitments (Fernando, 2022).
 Leverage Ratios
8

0
Debt/Equity Ratio Debt/Capital Ratio Interest Coverage Ratio
-2

-4

-6

-8

2021 2020

Figure 4 Leverage Ratios

Investor ratios create per-share data on profits, dividends, assets, and cash flows for equity
shareholders and discover a relationship between these performance indicators and equity
share prices (Elmerraji, 2022). 2021 and 2020 EPS are 0.000845. EPS is determined by
dividing a company's net income by its outstanding common stock. It's used to estimate a
company's profitability when valuing stocks (Fernando, 2020). 2020 and 2021 identical. 2.82
in 2021 and 2.83 in 2020. This ratio is calculated by dividing the last closing price by EPS.
Because it's easy to understand, the price-to-earnings (PE) ratio is the most popular way to
appraise a company. As of 11 November 2022, BP's value-to-earnings is 3.87. 2020 and 2021
both had 2.83. In 2020 and 2021, dividend yield is 0.040575. Dividend yield gauges dividend
payout as a percentage of stock price. Dividend yield measures a company's financial health
and investment gain per dollar. Depending on the market, the appropriate dividend yield is
2% to 6%. (Fernando, 2019).
 Investor Ratios
3

2.5

1.5

0.5

0
Earnings per Price/Earnings Dividend Yield
share Ratio

2021 2020

Figure 5 Investor Ratios

As of November 2022, BP is worth 104.66 billion. Our research shows that BP is the 123rd
most valuable firm. Market capitalization, or "market cap," is used to value publicly listed
enterprises. It's computed by multiplying the current stock price by the total number of

shares.
Figure 6 PB PLC Share Prices

BP Plc has a plan to shift from a global oil corporation focused on resource production to an
integrated energy company focused on customer solutions (BP PLC, 2020b).
Due to our size and experience, BP PLC is confident in its capacity to manage increasingly
integrated energy systems and compete in complex markets.
Integrating energy systems so that more people can get the energy they need and want and so
that BP PLC's stockholders gain. BP PLC hopes to provide cities and corporations integrated
energy and mobility solutions to decrease carbon emissions and take advantage of new
commercial opportunities by creating relationships with other nations, municipalities, and
sectors. Digital innovation helps BP PLC increase operational efficiencies, staff morale, and
customer engagement. Launchpad and bp ventures are two ways we help start firms (BP
global, 2018).

BP has achieved significant progress in all three strategic focus areas since August 2020,
putting the company on schedule to reach its 2025 goals. Eleven new hydrocarbon projects
were started since 2020. This finishes a six-year campaign that generated 35 on-time and
under-budget projects (WBCSD Communications, 2020). BP expects to sustain its
hydrocarbons EBITDA at $33 billion per year despite a 40% decline in production by 2030.
From 2019 until 2030. BP will focus on expenses, performance, and high-margin prospects.
While keeping its quality and concentration. BP sees opportunity in its assets and client base
as the world moves to lower-carbon fuels. BP's growth engine is bioenergy. Include biogas
and biofuels. BP intends five biofuels projects, one of which may convert two refineries, to
enhance its refinery presence. Biogas sales are expected to rise in the U.S., Europe, and the
U.K. (BP PLC, 2022).

Since 2019, BP's margin share from convenience and electrification has climbed from 25% to
29%. In that time, BP has added approximately 13,000 EV charging points. BP is on track to
double 2019 convenience & mobility earnings to $9-10 billion by 2030, with convenience
and EV charging as growth engines. BP has 2,150 convenience stores worldwide and plans
3,500 by 2030. BP wants 100,000 charging stations by 2030. BP plans to 100x EV charging
network energy sales by 2030 due to fast charging and mobile fleets. Half of BP's network is
superfast (The Financial Times Ltd, 2022).
Since the end of 2018, BP's renewables development pipeline has expanded from 6GW to
24.5GW. This includes the company's achievements in the ScotWind leasing round and its
entrance into offshore wind, where it has a pipeline of 5.2GW net. bp has pledged to boost its
annual capital spending on low carbon energy from $1.5 billion to $3-5 billion by 2025 and
from $1.5 billion to $4-6 billion by 2030. Both renewable energy and hydrogen are growth
drivers for BP during this shift. It plans to have 20 GW of renewable electricity capacity by
2025 and 50 GW by 2030 thanks to its renewables pipeline and 4.4 GW developed to FID by
2021. bp still expects 8% to 10% from these investments (BP PLC, 2022).

BP has a broad portfolio of hydrogen alternatives in favorable markets worldwide with 0.7 to
1.3 million tonnes per year of potential capacity. Renewables and CCS boost value. BP's
strategy is to show that an integrated energy company can generate profits while reducing
carbon emissions. The company's UK goals show it will invest in all of its transition growth
engines. BP plans to double its UK spending by 2020. BP's ambitions suggest UK growth.
BP has helped boost the UK's North Sea, retail, and supply and trading sectors. It intends to
lead the country's electron and hydrogen energy sectors (BP PLC, 2022). Produce green and
blue hydrogen in Teesside, Scotland, and elsewhere; build new hydrogen markets,
particularly in Teesside and Aberdeen; create new uses for hydrogen and biofuels in
transportation; expand its market-leading electric vehicle charging network; etc. BP plans to
implement its integrated energy company concept worldwide (Critchlow, Critchlow and
Burgess, 2021).

Task 02

02.Impact Of Corporate Governance Codes On Financial Reporting

2.1.Introduction To Corporate Governance.

The term "corporate governance" refers to the guidelines that regulate businesses. The board
of directors is responsible for running the company. Directors and auditors are nominated by
the shareholders to provide a strong governance framework. The board's responsibilities
include setting the company's strategic direction, providing authority to the CEO to carry it
out, monitoring day-to-day operations, and delivering an annual report to shareholders
(ICAEW, 2019). Therefore, corporate governance is concerned with what the board of a
corporation does and how it decides the values of the organization, as opposed to the day-to-
day operational administration of a firm by full-time executives. Any company with a
premium listing of equity shares, regardless of where it was founded, must adhere to the
current UK Corporate Governance Code for financial reporting periods commencing on or
after 1 January 2019.

Effective governance, on the other hand, is all about bolstering openness and accountability
within current procedures; this can have far-reaching effects on the non-listed sector. In
recent years, there has been an intriguing shift toward using the term "corporate" governance
to describe issues of leadership and accountability outside of the business world.. Since UK
Corporate Governance was intended to handle the governance of listed business entities, and
not all organizations share the same accountability structure, this can lead to
misunderstandings and misinformation. Companies with strong governance tend to be more
successful in the long run (Chiang et al., 2021).

2.2.Review Of How The Codes Impact Financial Reporting And Promote

Sustainable Business Practices.

The accounting profession and the business world as a whole now rely heavily on corporate
governance and codes of ethics. Professionals (accountants) are expected to conduct
themselves in an ethical manner and a code of ethics provides guidance on how to do so. To
ensure their continued success, businesses must adhere to basic principles of good
governance. In light of rising public concern about the environment and society generally,
businesses and other organizations are increasingly being pushed to evaluate their broader,
non-financial impacts on the planet. Under the umbrella concept of "Business Sustainability,"
new frameworks and methods are being developed and implemented to meet this expectation.
To be environmentally and socially responsible while yet making a profit is to practice
sustainable business practices. Generally speaking, sustainable development is the main topic
of discussion when discussing business sustainability. Development must be sustainable if we
want to make sure that future generations can also meet their own needs. (University of West
Florida, 2022).

Investor risk is reduced, financial performance is improved, and new investors are drawn in
when. The primary purpose of good corporate governance is to ensure that businesses are
being watched and managed efficiently. Its foundation is greater disclosures and operational
fairness aimed at safeguarding the interests of various constituencies (Mats Isaksson, 1999).
Quality decision-making is another way in which corporate governance systems are supposed
to improve a company's bottom line (Shivani et al., 2017).

Corporations with strong corporate governance practices are more likely to regularly meet
their strategic goals (Bradley, 2004). Adams and Mehran (2003b) state that companies with
well-established practices have a greater chance of success. It has been found that better
organizational policies and processes can have a significant impact on a company's bottom
line. Many writers contend that if a company makes having and using systems a top priority,
it will be better equipped to benefit its shareholders. The goal of excellent corporate
governance is to protect all stakeholders, including the general public, by ensuring that
businesses operate ethically and in accordance with the rules set forth by relevant regulatory
bodies. The agency costs that arise when ownership and decision-making power are kept
separate in businesses are largely mitigated by the board of directors. Best governance
practices reduce investor risk, boost financial performance, and attract investors, so they are
often cited as reasons why good corporate governance matters for an economy's growth
potential. companies listed on stock exchanges in France, Italy, Japan, the UK, and the US
have higher market valuations and financial performance as measured by return on assets
(ROA) when they have better corporate governance. (OECD, 2015)

The Stewardship concept presupposes that directors will prioritize the company's interests
over their own when making decisions. Directors will carry out their responsibilities with the
common good or the creation of value for the company in mind rather than their own
personal gain. The board of directors receives all it needs so that its members can focus on
advancing the company's objective. When making decisions, directors prioritize the wishes of
the company's shareholders and other stakeholders over their own. However, the
effectiveness of the stewards is dependent on whether or not the organizational structure
facilitates timely and appropriate response. According to stewardship theory, the principal-
agency conflict disappears when stewards put the principal's interests ahead of their own.
When the steward's and the principal's interests align, everyone wins in the long run. The
theory also stresses the idea that firm executives and managers should serve as stewards on
the board of directors. The existing literature supports this position by arguing that a certain
proportion of the board should be comprised of executive directors (Clarke, 2012).
Smith's (1776) Agency theory postulates that managers may not act in the best interests of
their owners if they are not also shareholders. An agency relationship is established when a
shareholder (the principal) contracts another party (the agent) to perform certain duties on the
principal's behalf. The agent may not always behave in the best interests of the shareholders
(the principal) if both the principal and the agent are seeking to maximize utility (Jensen &
Meckling, 1976). There are different levels of risk aversion and willingness to take risks
inside a company, as stated by Berle and Means (1932). The investor puts up their own
money and takes a chance on a firm in the hopes of making a profit. However, managers
(agents) are profit-oriented and avoid taking unnecessary risks. Due to this misalignment,
there is friction between the agent and the principal in terms of their willingness to take risks.
Managers and executives will automatically match their ambitions with the organization's
aims if they choose to act in a way that promotes their own intrinsic motivation, goal
attainment, and self-actualization (Schillemans & Bjurstrm, 2020).

According to agency theory, a board of directors should have both executive and non-
executive members in order to effectively monitor management. The board should be
organized in a way that protects against conflicts of interest and guarantees impartial
decision-making by incorporating independent directors. Independent board of directors has a
substantial effect on firm performance, according to research by Malik and Makhdoom
(2016).

The Dependence Theory of Resources argument posits that a company's board of directors is
crucial because it supplies funds to management, who then use those funds to carry out the
company's strategic goals (Hillman & Dalziel, 2003; Hillman & Dalziel, 2003). According to
the view, the board's role is to back up the company's in-house leaders, finances, people, and
intangible assets. Executives can increase their abilities and productivity with the support of
training and mentoring from the board's experienced and professional members. In addition
to bringing in crucial resources, board members can also connect the organization with their
own networks. The notion posits that chief executive officers (CEOs) should have wide
latitude to make decisions for their companies, with just a small subset of those decisions
requiring board approval. Stakeholder theory in the banking industry refers to the practice of
maximizing the interests of shareholders, depositors, and other stakeholders through
responsible, open, and honest management (Vicnente-Ramos et al., 2020).

Professionals are encouraged to join a company's board of directors under the resource-based
concept, which places a premium on having members from the business world at large. More
directors with different backgrounds and skill sets can be accommodated on a larger board,
which is another key recommendation of the theory. Ghazali (2010), Ujunwa (2012), Francis
et al. (2015), and Mori (2016) all agree that a company's board of directors should consist of
both non-executive directors and experts with a wide range of expertise and skills (2014).

2.3.Recommendations

Effective corporate governance is characterized by frequent board meetings, sustained

executive authority, and clearly delineated responsibilities. Further, it ensures a reliable
approach to handling potential dangers. There is a consensus among successful organizations
regarding the importance of good corporate governance. The term "governance" is used to
describe the framework of policies, regulations, and practices that are put in place to steer a
business in the right direction. Performing a financial health check, setting long-term goals,
and creating a risk management strategy are all important steps. and keeping an eye on the
industry as a whole are all examples of governance duties. Corporate governance ensures that
all decisions are made with the company's success in mind. In particular, it can boost
operations, increase stability and productivity, and introduce previously unavailable
possibilities to your company. This can help mitigate potential threats and pave the way for
more rapid and secure expansion. Likewise, it has the potential to increase credibility and
build trust. Company's future looks brighter as a result of these factors. Good governance can
also aid in securing investment by establishing regular reporting procedures that detail all the
information investors need to know. Companies with trustworthy leadership and management
are more likely to receive financial backing. Investors who are wary of the company's
management might demand more returns or a larger ownership stake if they are willing to
take on more of a risk by putting their money in the business.

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04.Appendices
Input data for Profitability Ratios: 2021 Mn 2020 Mn
Gross Profit 64816 48262
Operating Income 37665 25123
Pre Tax Income 18082 21740
Net Income 8487 20729
Sales 157739 105944
Total Equity 90439 85568
Total Assets 287272 267654

PROFITABILITY RATIOS:
Gross Margin 0.410907 0.455543
Gross Profit/Sales
Operating Margin 0.238781 0.237135
Operating Income/Sales
Net Profit Margin 0.053804 0.19566
Net Income/Sales
Return on Equity (ROE) 0.093842 0.242252
Net Income/Tot.Equity
Return on Assets (ROA) 0.029543 0.077447
Net Income/Tot.Assets

LEVERAGE RATIOS Input: 2021 2020

Total Debt 196833 182086
Total Equity 90439 85568
Total Assets 287272 267654
EBIT 18082 -21740
Interest Expense 2857 3115
LEVERAGE RATIOS: 2021 2020
Debt/Equity Ratio 2.176417 2.127968
Total Debt/Total Equity
Debt/Capital Ratio 0.68518 0.680304
Total Debt/(Tot.Equity+Tot.Debt)
Interest Coverage Ratio 6.329016 -6.97913
EBIT/Interest Expense

Input data for Working Capital Ratios: 2021 2020

Inventories 23711 16873
Account Receivables 27139 17948
Account Payables 52611 36014
Purchases 92923 57682
Sales 157739 105944
WORKING CAPITAL RATIOS: 2021 2020
Inventory Days 91.86057 12.60705
(Inventories/Purchases) x 360
Account Receivable Days 62.79826 61.83474
(Account Receivable/Sales) x 360
Account Payable Days 206.6551 227.8893
(Account Payable Days/Purchases) x 360
Duration Working Capital Cycle -51.9963 -153.447
Stock Period + Credit Period - Payable Period

VALUATION RATIOS Input: 2021 2020

Earnings (Net Income) 8487 -20729
Total Shares Outstanding 20128.68 20221.51
Current market price 23812231 23922051
Dividends 966176.7 970632.7
Total Equity 90439 85568

VALUATION RATIOS: 2021 2020

Earnings per share 0.000845 0.000845
Earnings/Tot.SharesOutstanding
Price/Earnings Ratio 2.82 2.83
Market price/Earnings per share
Dividend Yield 0.040575 0.040575
Tot.Dividends/Market Price