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Islamic Family Law (LAW605)
University of Selangor
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FACULTY OF BUSINESS AND MANAGEMENT
BACHELOR’S IN OFFICE SYSTEMS MANAGEMENT (HONS)
FINANCIAL MANAGEMENT
FIN
GROUP PROJECT CASE STUDY:
ANALYSIS OF CORPORATE FINANCIAL PERFORMANCE: A TREND AND COMPARATIVE
STUDY OF PETRONAS AND PETRON
PREPARED BY
NAME STUDENT ID CLASS
FARRAH JASMIN BINTI JAMIL 2022900755 BA2322E
MUHAMMAD AIEMAN HAIQAL BIN RUSLI 2022764829 BA2322E
MUHAMMAD DANIEL BIN MUHAMMAD SHAMSUL 2022787295 BA2322E
NOR MAISARAH BINTI MOHD HARUN 2022908343 BA2322E
NUR ANIS WAHIDAH BINTI MOHD NASIR 2022987851 BA2322E
PREPARED FOR
MISS WAN ASMA HANIM BINTI WAN MUSTAPHA
DATE OF SUBMISSION
27 th MAY 2022
TABLE OF CONTENT
NO. TITLE PAGE
- Introduction 1
- Background Company A 2
- Financial Report Company A (202 1 ) 3 - 4
- Background Company B 5
- Financial Report Company B (202 1 ) 6 - 7
- Ratio a. Liquidity b. Activity c. Profitability d. Leverage
8 - 21
- Interpretation 22 - 29
- Comparison Company A & B 30 - 31
- Recommendation 32
- Conclusion 33
- References 34
- Appendices 35
BACKGROUND COMPANY A
Core Activities The core business of this company is petroleum, and it is included the process of exploration and production (E&P), downstream, gas and power, logistic and maritime, and technology and engineering. There are a few other primary business activities such as sustainability, investor relations, careers, and partnering. PETRONAS also provides an extensive source of income for the Malaysian government, accounting for more than 15% of the government’s revenue from 2015 to 2020. Other than that, PETRONAS also had used to sponsor the Formula One Malaysian Grand Prix since the year of 1999 until 2017. PETRONAS or also known as Petroliam Nasional Berhad (PETRONAS) was founded on 17 August 1974. It has been a domestic-based national oil company who is owned fully by the Malaysian Government. The headquarter is located in PETRONAS Twin Towers, Kuala Lumpur. Recently, PETRONAS was ranked as one of the largest corporations in the world in Fortune Global 500 as of 2020. Strengths and Weaknesses of PETRONAS Strengths Weaknesses Expanded interests – Its business interests could be expanded highly by covering it through oil and gas and also related domains. Their core interests include upstream exploration, and production of oil and natural oil refineries, marketing, and many mores. Excessive concentration in oil and gas – In industry of oil and gas, many companies are switching to non-oil industries due to the situation. It may be risky to proceed with this kind of business. However, PETRONAS still continues with the business. Top grade facilities – Currently, the company has three refineries, and they also own an infrastructure for gas and utilities. High costs – The company has made wrong timing major investments in two major projects. It was made at the beginning of the business crisis. State ownership – This business is owned by the government of Malaysia. Plus, it has given the responsibility to control and manage the oil needs of the country. Ethical issues – It has taken unnecessary advantage of the state support, poor working conditions for employees and some problems such as oil leakage. Strong customer relationship – Its service has got the trust from costumers, and it is their mission to keep fulfil and give the best service. Racing partnership – PETRONAS has been into business partnership with the MERCEDES AMG PETRONAS Formula One team.
PETRONAS
Statement of Profit or Loss as at 31 December 202 1
BACKGROUND OF COMPANY B
Core Activities Petron Malaysia Refining & Marketing Bhd. engages in the manufacture and marketing of petroleum products. Its products include retail fuels, liquefied petroleum gas, commercial fuels, and automotive and industrial lubricants. It operates through the Domestic and Foreign geographical segments. The company was founded in 1893 and is headquartered in Kuala Lumpur, Malaysia. Strength and Weakness of Petron Strength Weakness Market Leadership Position - Petron Refining has a strong market leadership position in the Oil & Gas - Integrated industry. It has helped the company to rapidly scale new products successes. Loyalty among suppliers is low - Given the history of Petron Refining coming up with new innovations to drive down prices in the supply chain. Brands catering to different customers segments within Oil & Gas - Integrated segment - Petron Refining extensive product offerings have helped the company to penetrate different customer segments in Oil & Gas - Integrated segment. It has also helped the organization to diversify revenue streams. High cost of replacing existing experts within the Petron Refining. Few employees are responsible for the Petron Refining's knowledge base and replacing them will be extremely difficult in the present conditions. First mover advantage in the increasingly crowded marketplace. The new products are rapidly increasing Petron Refining market share in the Oil & Gas - Integrated industry. Gross Margins and Operating Margins which could be improved and going forward may put pressure on the Petron Refining financial statement. High margins compare to Oil & Gas - Integrated industry's competitors - Even though Petron Refining is facing downward pressure on profitability, compare to competitors it is still racking in higher profit margins. Business Model of Petron Refining can be easily imitated by the competitors in the Oil & Gas - Integrated industry. To overcome these challenges company name needs to build a platform model that can integrate suppliers, vendors, and end users.
PETRON
Statement of Profit or Loss as at 31 December 202 1
TREND ANALYSIS OF COMPANY A & B (PETRONAS AND PETRON)
a. Liquidity i. Current ratio Formula Current asset Current liabilities Company 2017 2018 2019 2020 2021 Petronas 198, 67,
241,
111,
206,
73,
193,
56,
252,
83,
Total 2 times 2 times 2 times 3 times 3 times Petron 145, 124,
162,
156,
179,
158,
132,
149,
188,
190,
Total 1 times 1 times 1 times 0 times 0 times Trend analysis Company Trend analysis Petronas As for 2017 to 2018, the ratio decreased but it increased by the following year which is 2019. Then, the company’s current ratio started to increase by 2020 to 2021. Petron The current ratio seems decline from 2017 to 2018 and accumulate in 2019. In the meantime, the current ratio emerges to drop in 2020 but increased in 2021. Comparative analysis Company Comparative analysis Petronas 2017 to 2018 show a worse result 20 19 to 2020 show a better result. 2021 back to show a worse result. Petron 2017 to 2018 show a worse result. 2019 show better result but worse in 2020. 2021 back to show a better result.
ii. Acid-test ratio Formula Current asset - inventory Current liabilities Company 2017 2018 2019 2020 2021 Petronas 198,516-15, 67,
241,434-14,50 3
111,
206,462-14,44 7
73,
193,394-12,
56,
252,627-14,
83,
Total 2 times 2 times 2 times 3 times 2 times Petron 145,490-56, 124,
162,022-63,
156,
179,488-72,
158,
132,294-44,
149,
188,035-67,
190,
Total 0 times 0 times 0 times 0 times 0 times Company Trend analysis Petronas In 2017 until 2018, it reveals that the liquidity ratio drops but increased again in 2019 to 2020. But, as for 2021, the liquidity decreased again. Petron The liquid assets in 2017 to 2018 shows a decreasing while in 2019 the ratio increased. Besides, in 20 20, the liquidity seems to drop again but intensify in 2021. Comparative analysis Company Comparative analysis Petronas 2017 to 2018 show a worse result 20 19 t0 2020 show a better result. 2021 back to show a worse result. Petron 2017 to 2018 show a worse result. 2019 show better result. 2020 to 2021 back to show a better result.
ii. Average collection period Formula Account Receivables Net sales x Company 2017 2018 2019 2020 2021 Petronas 44, 223,622 x 360
46,
250,976 x 360
41,
240,263 x
40,
178,741 x 360
48,
247,962 x 360 Total 71 days 66 days 62 days 82 days 70 days Petron 38, 434,624 x
42,
557,386 x 360
44,
514,362 x 360
27,
286,033 x 360
51,
438,057 x 360 Total 32 days 27 days 31 days 34 days 42 days Trend analysis Company Trend analysis Petronas In average collection period for Petronas, we can see the increases of their performance in year of 2017 to 2019. Then it started to decrease again in year of 2020 but come increases in 2021. Petron For Petron, its show that in 2017 to 2018, the increases of average collection period but it started to decrease in 2019 to 2021. Comparative analysis Company Comparative analysis Petronas 2017 to 201 9 show a better result. 2020 show a worse result. 2021 show a better result Petron 2017 to 2018 show a better result. 2019 to 2021 show a worse result.
iii. Fixed asset turnover Formula Net sales Net fixed asset Company 2017 2018 2019 2020 2021 Petronas 223, 327,
250,
310,
240,
319,
178,
291,
247,
282,
Total 0 times 0 times 0 times 0 times 0 times Petron 434, 177,
557,
163,
514,
168,
286,
168,
438,
171,
Total 2 times 3 times 3 times 1 times 2 times Trend analysis Company Trend analysis Petronas Fixed asset turnover for Petronas shows some increases from their result in year of 2017 to 2018. Then it started to decrease again in 2019 followed by 2020. In 2021, Petronas come increase again. Petron In year of 2017 to 2019, Petron shows the increases of their fixed asset turnover but turn to decrease again in 2019 to 2020 and in 2021, the result a increasing again. Comparative analysis Company Comparative analysis Petronas 2017 to 2018 show a better result. 20 19 to 2020 show a worse result. 2021 show a better result. Petron 2017 to 2018 show a better result. 2019 to 2020 show a worse result. 2021 back to show a better result.
c. Profitability i. Gross profit margin Formula Gross profit Net sales x Company 2017 2018 2019 2020 2021 Petronas 83, 223,622 x 100
92,
250,976 x 100
84,
240,263 x 100
43,
178,741 x 100
89,
247,962 x 100 Total 37% 37% 35% 24% 36% Petron 42, 434,624 x 100
34,
557,386 x 100
30,
514,362 x 100
8,
286,033 x 100
30,
438,057 x 100 Total 9% 6% 5% 3% 6% Trend analysis Company Trend analysis Petronas The gross profit margin shows that in 2017 to 2019, there is a decreasing moment happen and it started to increase again from 2020 move to 2021. Petron In 2017 to 2020, Petron experience a decreasing in gross profit margin but increase again in year of 2021. Comparative analysis Company Comparative analysis Petronas 2017 to 20 18 show a better result. 20 19 to 2020 show a worse result. 2020 back to show a better result. Petron 2017 to 20 20 show a worse result. 2021 back to show a better result.
ii. Operating profit margin Formula Earnings before interest & taxes (EBIT) Net sales x Company 2017 2018 2019 2020 2021 Petronas 35, 223,622 x 100
76,
250,976 x 100
56,
240,263 x 100
12,
178,741 x 100
69,
247,962 x 100 Total 15% 30% 23% 6% 27% Petron 18, 434,624 x
10,
557,386 x
3,
514,362 x 100
16,
286,033 x
7,
438,057 x 100 Total 4% 1% 0% 5% 1% Trend analysis Company Trend analysis Petronas In 2017 and 2018 the profit margin increases and decrease in 2019 until 2020. In 2021 it started to increase. Petron In 2017 until 2019 the profit margin decreases and increase in 2020 but, the profit margin increases just for a while and started to decrease in 2021. Comparative analysis Company Comparative analysis Petronas 2017 to 2018 show a better result. 20 19 to 2020 show a worse result. 2021 back to show a better result. Petron 2017 to 201 9 showed a worse result. 2020 show better result. 2021 back to show a better result.
iv. Return on total asset/return on investment (ROI) Formula Earning after tax (EAT) Total asset x Company 2017 2018 2019 2020 2021 Petronas 45, 599,850 x
55,
636,314 8x
40,
622,421 x
21,
574,071 x
48,
635,004 x 100 Total 7% 8% 6% 3% 7 % Petron 14, 338,030 x
7,
358,154 x
2,
394,835 x
11,
349,725 x
6,
407,420 x 100 Total 4% 2% 0% 3% 1% Trend analysis Company Trend analysis Petronas The return on investment were increasing from 2017 to 2018. After that, the values had decreased in 2019 and 2020 and increase once again in 2021. Petron The return on investment were decreasing from 2017 to 2019. Then, it had increased in 2020 and decreased in 2021. Comparative analysis Company Comparative analysis Petronas 2017 to 20 18 show a better result. 2 019 to 2020 show a worse result. 2021 back to show a better result. Petron 2017 to 201 9 showed a worse result. 2020 show better result. 2021 back to show a worse result.
v. Return on Equity (ROE) Formula Earning after tax (EAT) Total equity x Company 2017 2018 2019 2020 2021 Petronas 45, 432,835 x
55,
452,252 x
40,
438,915 x
21,
381,034 x
48,
404,340 x 100 Total 10% 12% 9% 5% 12% Petron 14, 99,619 x
7,
86,186 x
2,
92,430 x
11,
86,195 x
6,
110 x 100 Total 14% 8% 2% 13% 5% Trend analysis Company Trend analysis Petronas The return on equity in 2017 to 2018 had increased. In 2019 to 2020, the values were decreasing, and the value was raising back in 2021 Petron The return on equity had decreased in 2017, 2018 and 2019. In 2020, the number of calculations had highly increased and dropped back in 2021 Comparative analysis Company Comparative analysis Petronas 2017 to 201 9 show a worse result. 2020 show a worse result. 2020 back to show a better result. Petron 2017 to 201 9 showed a worse result. 2020 show better result. 2021 back to show a worse result.
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Course: Islamic Family Law (LAW605)
University: University of Selangor
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