Evaluation of the Business and Financial Performance (Research Paper Sample)

Running Head: AN EVALUATION OF THE BUSINESS AND FINANCIAL PERFORMANCE OF ROYAL DUTCH PLC BETWEEN 31ST DECEMBER 2008 AND 31 DECEMBER 2012
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Contents
TOC \o "1-3" \h \z \u INTRODUCTION PAGEREF _Toc355668973 \h 4
RESEARCH OBJECTIVES AND OVERALL RESEARCH APPROACH PAGEREF _Toc355668974 \h 5
Choice and selection of the organization PAGEREF _Toc355668975 \h 5
Reasons for selection PAGEREF _Toc355668976 \h 5
Research objectives PAGEREF _Toc355668977 \h 7
Research questions PAGEREF _Toc355668978 \h 7
Research approach PAGEREF _Toc355668979 \h 8
INFORMATION GATHERING AND ACCOUNTING / BUSINESS TECHNIQUES PAGEREF _Toc355668980 \h 8
Collection and Gathering of Data PAGEREF _Toc355668981 \h 8
Data collection methods and sources of information PAGEREF _Toc355668982 \h 9
Limitations in collecting and gathering of information PAGEREF _Toc355668983 \h 10
Ethics concern in collection of data and Information PAGEREF _Toc355668984 \h 11
Business and accounting techniques used PAGEREF _Toc355668985 \h 12
Financial Ratio Analysis PAGEREF _Toc355668986 \h 12
SWOT analysis PAGEREF _Toc355668987 \h 14
Porter’s five forces PAGEREF _Toc355668988 \h 14
RESULTS, ANALYSIS, CONCLUSIONS AND RECOMMENDATIONS PAGEREF _Toc355668989 \h 15
Company corporate profile PAGEREF _Toc355668990 \h 15
Products PAGEREF _Toc355668991 \h 15
Corporate and shareholders PAGEREF _Toc355668992 \h 15
Company operations PAGEREF _Toc355668993 \h 15
Oil and Gas industry overview PAGEREF _Toc355668994 \h 16
RATIO ANALYSIS FOR ROYAL DUTCH SHELL PLC PAGEREF _Toc355668995 \h 17
Royal Dutch Shell PLC, profitability ratios PAGEREF _Toc355668996 \h 17
Liquidity ratios analysis Royal Dutch Shell PLC, PAGEREF _Toc355668997 \h 19
FINANCIAL LEVERAGE ANALYSIS ROYAL DUTCH SHELL PLC, PAGEREF _Toc355668998 \h 21
Short-term (operating) activity ratios Royal Dutch Shell PLC, PAGEREF _Toc355668999 \h 23
SWOT analysis PAGEREF _Toc355669000 \h 25
PORTER’S FIVE FORCES ANALYSIS PAGEREF _Toc355669001 \h 27
CONCLUSIONS PAGEREF _Toc355669002 \h 28
RECOMMENDATION PAGEREF _Toc355669003 \h 30
Introduction
Royal Dutch Shell plc is a multinational company commonly known as Shell, with a registered office in London, United Kingdom. This is one the largest company in the world in terms of profitability and revenue (Global shell 2013). Shell is one of the six leading oil and gas and it is one of the leading super majors with its subsidiaries and branches across the globe. In addition Shell is also asserted to be the world's most valuable companies (The Shell global 2013).Therefore it can be argued to being among the largest Companies in the world. The mother Company, Royal Dutch Shell revenue consisted of 84% of the Netherlands's $555.8 billion GDP, this shows the huge and strong financial capability of this company(The Shell global 2013).Shell Company is notably integrated in various areas majorly oil and gas industry which involves production, refining, exploration, petrochemicals, power generation, trading and marketing(The Shell global 2013).
The company is also involved with renewable energy activities including bio-fuels. The company has its operations in more than 100 countries with 44,000 service stations across the world (Shell Global 2013). This translates in to a production of about 3.1 million barrels of oil per day globally. One of its major largest businesses is its subsidiary in the United States. Financial trading activities are its primary listing on the London Stock Exchange constituting of the FTSE 100 Index. According to EBIT Financial Analyses Center 2012 as of July 2012, the company was the largest company on the FTSE having a market capitalization of £140.9 billion (The Shell global 2013).
Research objectives and overall research approach
Choice and selection of the organization
I have selected the "The business and financial analysis" and the Research and Analysis Project is in the context of Royal Dutch Shell plc financial statements. The financial analysis is based on the performance of Royal Dutch Shell plc over three financial periods. The key major focus of this research report is Royal Dutch Shell plc which is the current largest multinational oil and gas company. Various financial analytical tools are used to evaluate its business operations and financial performance over the three years period from 2010 to 2012. This business and financial analysis entails both financial and non-financial aspects of the organization and the impacts of the internal and external factors that significantly affect the financial performance of the company (Thomas 2012). The major analytical tools and techniques are the SWOT analysis, Porter’s Five Forces analysis and, financial ratios analysis.
Reasons for selection
1 There are a number of reasons for choosing "The business and financial analysis" basing on the financial dimensions of Royal Dutch Shell plc. These reasons entail the following.
2 Financial ratio analysis is an interesting area in the current corporate world, this attributes to the fact that it can be used to predict the financial position and performance of a company in the future. In the context of Applied Accounting and Research and Analysis this topic is most relevant and appropriate. This topic to me is appropriate because the various statistical financial techniques, porters five forces analysis and SWOT analysis can be applied in a real company and its desired outcomes and specifications achieved. It is also notable to me that in applying these techniques, theories and models on such a big organization am very much motivated.
3 Royal Dutch Shell plc is a multinational company which has its operations in almost of the multinational countries across the entire continent. I have a lot of curiosity to know how it has managed its financial capability and sustainability since its establishment considering that the key major commodity which is oil and gas is perceived to being a basic commodity globally.
4 Thirdly is that Oil and gas industry is one of the lucrative industry globally attracting many competing companies. This industry is one of the leading contributors to the Netherlands economy and other economies across the globe. Thus its financial analysis will give me a greater insight on how it is able to achieve this.
5 Fourthly is the fact that by choosing Royal Dutch Shell plc gives me an opportunity to make a critical analysis on the reasons why it has emerged the most competitive key player in oil and gas industry globally in comparison with other competing firms in the industry.
6 Finally is that Royal Dutch Shell plc has been leading company for a long time in Oil and gas industry gaining recognition with other companies in other sectors. By analyzing its financials will enable me identify its key milestones, sustainability and continuous gaining of market shares in both new and existing global markets.
Research objectives
1 To have understanding on how companies in Oil and gas industry operate in a country.
2 To conduct company corporate appraisal to identify profitable company strengths and opportunities to counter weaknesses and threats.
3 To analyze the company business and financials over the three year period and giving interpretations for profitability, asset management, liquidity, equity and financial leverage values and their significance to its performance.
4 To use Porter’s five forces model for the industry competitive intensity defining the company financial and strategic position in the market.
Research questions
With a suitability and appropriateness of the topic and organization, the following are the research questions that this research analysis project seeks further clarification and answers. In addition these research questions sets a basis and clarification foundation for the project core objectives. The questions include:
1 Where can I obtain reliable and relevant sources of information for the research? And what is their accessibility?
2 What is the suitable approach can I adopt in order to realize the project objective outcomes?
3 What is the reliability and appropriateness of both the primary and secondary sources of information?
4 What are the necessary IT skills and technical skills for reviewing journals and books required in the preparation of this research project?
5 What are the key major areas of business financial analysis necessary for this research project and the appropriate conclusions that can be asserted from the underlying analysis?
Research approach
The following is the research approach I adopted considering the project research questions and objectives. Project scheduling is a priority in setting time outline, itinvolved consideration of amount of data to be collected and time to finish analyzing. Time framework for consultation, submission date and the anticipated challenges are considered (Crane 2008). Secondly is conducting the research accomplishing the requirements within the time framework achieving the set objectives. I adopted Sequence approach gathering the relevant company information, economy and oil and gas industry thereafter proceeding to the analysis stage. From the data analysis I drew conclusions and started reviewing the project as a whole making appropriate adjustments and corrections. Finally I made adjustments putting more weight on important areas and removing what was irrelevant and putting more emphasis on data analysis and interpretation.
Information gathering and accounting / business techniques
Collection and Gathering of Data
This is being a crucial step involved verification and determining validity, reliability, relevance and accuracy of the data to be used. The so...