- Both PSO and Shell are relying more on debt financing rather than equity financing, with PSO being more prone to financial risk and riskier for creditors. - Liquidity is decreasing for both companies as current liabilities are increasing faster than current assets, though Shell's liquidity is increasing. - Inventory management needs improvement as turnover is decreasing and days to convert inventory to sales are increasing for both companies. - Profitability is improving for both companies as gross and net profit margins and returns on assets and equity are increasing.

1. Pakistan State Oil Shell Pakistan VS

6. LIQUIDITY RATIOS

9. Leverage Ratios

11. Leverage Ratios- Equity Multiplier The Equity multiplier for both the companies confirms previous conclusions that both companies are relying more on debt finance to finance their assets. PSO’s equity multiplier is more than Shell’s

12. Coverage Ratio

14. Activity Ratios

18. Profitability Ratios

22. Profitability Ratios- Return on Equity ROE improving for both firms but PSO has a better ROE.

23. Market Value Measures

25. COMMON SIZE & INDEXED ANALYSIS

26. Pakistan State Oil Common Size Balance Sheet As at June 30, 2005 2004 2005 Total Shareholder’s Equity 36.43% 33.24% Total Long Term Liabilities 3.86% 3.84% Total Current Liabilities 59.72% 62.92% Total Liabilities & Equity 100% 100% 2004 2005 Total Fixed Assets 25.40% 21.78% Total Current Assets 74.60% 78.22% Total Assets 100% 100%

27. Pakistan State Oil Common Size Income Statement For the year ended June 30, 2005 2005 2004 Sales 100% 100% Cost of Products Sold 93.53% 94.31% Gross Profit 6.47% 5.69% Profit Before Taxation 4.34% 3.88% Taxation 1.66% 1.27% Net Profit After Taxation 2.68% 2.61%

28. Pakistan State Oil Indexed Balance Sheet As at June 30, 2005 2005 2004 Total Shareholder’s Equity 112.09% 100% Total Long Term Liabilities 122.16% 100% Total Current Liabilities 129.38% 100% Total Liabilities & Equity 122.80% 100% 2005 2004 Total Fixed Assets 105.27% 100% Total Current Assets 128.77% 100% Total Assets 122.80% 100%

29. Pakistan State Oil Indexed Income Statement For the year ended June 30, 2005 2005 2004 Sales 131.55% 100% Cost of Products Sold 130.46% 100% Gross Profit 149.56% 100% Profit Before Taxation 147.32% 100% Taxation 172.46% 100% Net Profit After Taxation 135.07% 100%

30. Summary

33. THANK YOU Presented By: Shafiq Abdullah Ammad Uddin Siddiqui Umair Shafi Choksy