RATIOS

Financial Ratio Analysis of BP

Financial Ratio Analysis of BP

Profitability Ratios

Return on Capital (RoC)

“This ratio determines how well the company is using its Capital Employed”

RoC = {Operating Profit / (Total Equity + Total Non-Current Liability)} * 100%

Value in 2011 = {39.8b / (96.27b + 112.48b)} = 19.06%

Value in 2010 = {-3.70b / (95.89b + 92.49b)} = -1.96%

Return on Equity (RoE)

“This ratio determines how well the company is using its equity financing”

RoE = (Net Profit after Tax / Total Equity) * 100%

Value in 2011 = (25.7b / 112.48b) * 100 = 22.8%

Value in 2010 = (-3.71b / 95.89b) * 100 = -3.87%

Gross Profit Margin (GPM)

“This ratio determines how well the company is controlling its cost of sales”

GPM = (Gross Profit / Sales) * 100%

Value in 2011 = (68.42b / 386.46b) * 100% = 17.7%

Value in 2010 = (22.86b / 308.93b) * 100% = 7.4%

Operating Profit Margin (OPM)

“This ratio determines how well the company is controlling its operating expenses”

OPM = (Operating Profit / Sales) * 100%

Value in 2011 = (39.82b / 386.46b) * 100% = 10.3%

Value in 2010 = (-3.70b / 308.93b) * 100% = -1.2%

Net Profit Margin (NPM)

“This ratio determines how well the company is performing in terms of profitability”

NPM = (Net Profit / Sales) * 100%

Value in 2011 = (25.7b / 386.46b) * 100% = 6.7%

Value in 2010 = (-3.72b / 308.93b) * 100% = -1.2%

Efficiency Ratios

Fixed Asset Turnover

“This ratio determines how the company is using its fixed assets to generate sales”

Fixed Asset Turnover = Sales / Property, Plant and Equipment

Value in 2011 = 386.46b / 119.21b = 3.24 times

Value in 2010 = 308.93b / 110.16b = 2.8 times

Current Asset Turnover

“This ratio determines how the company is using its current assets to generate sales”

Current Asset Turnover = Sales / Total Current Assets

Value in 2011 = 386.46b / 97.58b = 3.96 times

Value in 2010 = 308.93b / 94.21b = 3.28 times

Total Asset Turnover

“This ratio determines how well the company is using its assets to generate sales”

Total Asset Turnover = Sales / Total Assets

Value in 2011 = 386.46b / 293.07b = 1.32 times

Value in 2010 = 308.93b / 272.26b = 1.13 times

Liquidity Ratios

Current Ratio

“This ratio determines the capability of the company to pay its short term debts”

Current Ratio = Current Assets / Current Liabilities

Value in 2011 = 97.58b / 84.32b = 1.16 times

Value in 2010 = 94.21b / 83.88b = 1.12 times

Acid Test Ratio

“This ratio determines the ability of the company to pay its short term debts”

Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities

Value in 2011 = (97.58b - 25.66b) / 84.32b = 0.85 times

Value in 2010 = (94.21b - 26.22b) / 83.88b = 0.81 times

Inventory Value

“This ratio determines how well the company is able to sell of its inventory”

Inventory Value = Inventory / Cost of Sales

Value in 2011 = 25.66b / 318.04b = 0.081 times

Value in 2010 = 26.22b / 286.07b = 0.092 times

Working Capital

“This ratio determines how well the company can finance its short term debts”

Working Capital = Current Assets - Current Liabilities

Value in 2011 = ...