GLOBAL ECONOMIC DOWNTURN

Firm Performance and the Global Economic Downturn

Table of Content

TABLE OF FIGURESIII

INTRODUCTION1

DISCUSSION2

Overview of the Company2

Business Segment of the Company2

Primary Activities of the Company2

Financial Highlights3

Economic Crises3

Financial Performance of Oula Fuel Marketing Company (Oula)6

Liquidity Ratios6

Profitablity Ratios7

Efficiency Ratios8

Gearing Ratios9

Investment Ratios9

Overall Analysis10

CONCLUSION11

REFERENCES12

APPENDIX15

Table of Figures

FIGURE 1: LIQUIDITY RATIOS6

FIGURE 2: PROFITABILITY RATIOS7

FIGURE 3: EFFICIENCY RATIOS8

FIGURE 3: GEARING RATIOS9

FIGURE 3: INVESTMENT RATIOS9

Firm Performance and the Global Economic Downturn

Introduction

Firm Performance is directly related to the performance of the country's economy as well as world's economy. This has been proved from the recent financial crisis 2007, which has significantly impacted on the entire performance of the world economy. The origin of this financial crisis can easily be traced in early 2007 when U.S.A Sub-Prime Mortgage lending collapse badly. This sub-prime mortgage crisis spread to other economies and markets by means of market failure along with the regulatory weakness. Hence, countries which have superfluous integrated economies i.e. they are more incorporated into global network of economies are probably to be much adversely impacted by the global downturn. For oil producing countries, the result of economic downturn was reduction in export and lower oil prices and due to this, performance of the companies in Gulf regions were adversely impacted including UAE and Kuwait.

In this paper, we will analyze non-financial local Kuwait based company through evaluating its performance by using financial ratio analysis. Furthermore, the paper will discuss, examine and evaluate the major changes in the ratios and possible reasons behind these changes in relation to the global economic downturn, the particular industry in which the company is operating and the company's business. The company that has been chosen is Oula Fuel Marketing Company (Oula).

Discussion

Overview of the Company

Oula Fuel Marketing Company (Oula) is Kuwait-based Shareholding Company which has been involved in sector of Fuel marketing. This company came into existence in 2004. The main focus of this company is to formulate their stations as a part of people daily life (Oula Fuel Marketing annual report, 2011).

Business Segment of the Company

Oula Fuel Marketing Company (Oula) has two business segments. These have been divided into fuel marketing and other related service segment. This service segment comprises of fuel sales and other various related service sales that arises from fuel stations. The other segment is investment segment which comprises of investment portfolio and unquoted shares.

Primary Activities of the Company

The primary activities of Oula Fuel Marketing Company (Oula) consist of establishing, owing, leasing, acquisitions, operation and maintenance of petrol station and related customer services centres. They also provide services for cars & machineries i.e. oil change, car wash and repair, technical inspection. Beside this, they are also involved in trading of retail and wholesale petroleum products and real estate land renting, owning and selling in order to achieve objective of the company.

Financial Highlights

In 2011, the revenue of the Oula Fuel Marketing Company increased by 11% compared to 2010. The gross profit also improved with 34% with net profit of ...