Introduction Aims and objective of the report ...

Introduction
Aims and objective of the report
The following report consists of the ratio analysis carried out on two different but competitor companies in the same sector. Financial statement analysis refers to the act of accumulating, calculating and analyzing the financial data of a company. The goal of this report is to shed light on the true financial condition of a company and provide a realistic valuation so that a company can be determined for investment. Through this report we are able to look into British Petroleum’s financial position and compare it with Royal Dutch Shell Plc. We are taking into account the financial and non-financial factors that affect an investor’s decision to become a stake holder in a company. The report will consist of finding for companies, comparison and our recommendations to a prospective investor. We have also included other information such as graphs, charts and our group’s minutes of meetings, which helps an investor to know how we have come to a certain conclusion.
Company chosen
The company that we have chosen for this report is British Petroleum Plc, which is a UK based company and has its registered office in London at 1 St James Square, London, SW1Y 4PD. British Petroleum (hereinafter simply BP) is one of the leading companies in UK and has been ranked 2nd in the Fortune Global 500 list of top companies in the world concerning turnover. BP recorded a turnover of $262 billion in the year 2005 and apart from that it the largest company in the world with respect to revenues in its industry of petroleum refining.
Reason
The main rationale for choosing BP as our main company is quite obvious and logical. Firstly as stated above it is a top UK company according to its revenues and apart from that the industry in which it trades has partially affected our rationale for choosing BP. Petroleum refining as an industry has been having a major affect over the world economies due to its existence. The oil industry is often considered the peg on which industrial civilization is held and has a prominent role in most industries and thus is greatly affected by world politics and economics and to a great extent shapes it also. The unalterable reality of the ultimate exhaustion of the world’s oil supplies, also has an affect on oil prices and thus on the financial performance of companies in this sector. Energy resources has been, and will be, always a critical factor globally for any nation’s success, therefore our group collectively decided to chose a company from the petroleum refining industry for this report.
We taught that analyzing the top oil producing company will be a great challenge and really useful. Hence BP was chosen as our main company because of its huge size and ever growing nature.
Background
In May 1901 and Englishman, William Knox D’Arcy, obtained a concession from the Shah of Persia to explore for and exploit the oil ...