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BPCL - Financial Statement Analysis | PDF | Market Liquidity | Equity (Finance)
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BPCL - Financial Statement Analysis

BPCL's total equity and assets have increased from 2013-2017 due to rising reserves and current/non-current assets. Cash flow from operations has declined as liabilities and payables increased. Profitability ratios like ROCE, ROE, and EPS are up though sales to total assets is down. Liquidity ratios have declined with higher current liabilities. The debt to equity ratio is lower as the company relies less on debt. The interest coverage ratio and z-score indicate the company is financially stable and not at risk of bankruptcy.

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186 views3 pages

BPCL - Financial Statement Analysis

BPCL's total equity and assets have increased from 2013-2017 due to rising reserves and current/non-current assets. Cash flow from operations has declined as liabilities and payables increased. Profitability ratios like ROCE, ROE, and EPS are up though sales to total assets is down. Liquidity ratios have declined with higher current liabilities. The debt to equity ratio is lower as the company relies less on debt. The interest coverage ratio and z-score indicate the company is financially stable and not at risk of bankruptcy.

Uploaded by

hardrocks69
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Financial Statement

Analysis

BPCL
Bharat Petroleum Corporation (BPCL)

Financing and investing decisions:

The total equity of BPCL has been increased from 16,634.02 crores in 2013 to 29,668.38
crores in 2017. This is due to the fact that the equity share capital has increased in the last
year and because of the fact that the reserves and surplus have been increasing steadily
since 2013.

Total assets of the company also increased from 66,987.39 to 91,989.63 accounting to the
increase in current assets and non-current assets.

Cash flow from Operating Activities (CFO) is showing a downward trend since 2015. These
are revenue generating activities of the company, which normally includes cash receipts
from sale of goods and services, cash payments to suppliers for goods and services and
disposal gains and losses of fixed assets. The reduction noticed here is because of the
increase in liabilities and payables. The CFI has been negative throughout, which shows
BPCL is a fundamentally strong company.

Ratio analysis:

Profitability ratios:

1. ROCE:

The return of capital employed has remained more or less constant since 2013. The increase
is PBIT is neutralized by the capital employed in this case, especially the long-term loans.

DuPont Analysis

a) PBIT/Sales (OD): This ratio has increased in the last 5 years but only to a negligible
amount.

b) Sales/TA: This value has reduced over the years especially due to the reduced sales
and increase in total assets.

c) TA/CE: This value has reduced since 2013 mainly because of the increase in long
term loans.

2. ROE:

The ROE has been increasing since 2013 but to a lesser extent mainly because of the long-
term loans.
3. EPS:

The earnings per share has increased from 18.28 in 2013 to 61.31 in 2017 because of the
increase in PAT over the years. This is a positive sign for the investors looking for a long
terms investment in BPCL. The high z score also shows the company is in a “safe zone”.

Liquidity ratios:

1) Current ratio:

The ratio has slightly reduced to a mainly due to an increase in liabilities. Current ratio can
be used to take a rough measurement of a company's financial health and a reduced current
ratio in this case indicates the company’s ability to pay out liabilities using its assets.

2) Liquid Ratio and Absolute Cash Ratio:

Both ratios have been decreased recently due to the increase in current liabilities. The low
liquid ratio and absolute cash ratio of BPCL shows the company’s reduced ability to pay out
short term liabilities / debts.

Solvency ratios:

1) Debt-Equity Ratio:

The Debt-Equity ratio was 3.03 in 2013 which explains that the company was mostly debt
driven. The ratio has come down to 2.10 in 2017 which indicates that the company is still
debt driven but to a lesser extent compared to 2013.

2) Interest Coverage Ratio:

The ratio has increased from 5.58 in 2013 to 24.83. This is mainly due to the increase in PBIT
and interest remaining more of less same over the years. The steady increase in PBIT of the
company is a positive sign for investors.

Z Score

A Z score of 3.41 in 2016 and 2.93 in 2017 shows the company is stable and is nowhere near
an impending bankruptcy. The existing and prospective investors can be sure of the
company’s stable financial position as BPCL is in “safe zone”.

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