financial statement analysis of Pakistan State Oil

1. ACCOUNTING
Financial Statements Analysis
PSO-Pakistan State Oil
SUBMITTED TO
Ma’am Arooj Anwar
SUBMITTED BY
Sehrish Afzal
Hafsa Shahbaz
Hanza Maqbool
Asma Farrukh
Samiya-tu-Zahra

2. Introduction:
Pakistan State Oil is a multi-million and global competitive state-
owned megacorporation and the leading oil market presiding entity
in Pakistan. Headquartered in Karachi, Sindh Province of Pakistan,
it has several state divisions in the different cities in Pakistan, with
administrative management business network infrastructure well
expanded, and built at par with international standards, represents
82% of country’s national energy sources.
The PSO is horizontally integrated and is the largest state-owned
energy megacorporation active in every area of the oil and gas
industry, including exploration and production, refining, distribution
and marketing, petrochemicals, power generation and trading. The
PSO conducts major renewable energy activities, including in
biofuels, hydrogen, solar, nuclear and wind power as well as
defence management. The megacorporation is the largest entity in
the country, with well expanded business presence in abroad.
The PSO has a primary listing at the Karachi Stock Exchange
(KSE), and is a constituent of the KSE-30 Index. The PSO is the
third largest entity to be placed in the KSE, ranking behind the Shell
Pakistan— a subsidiary of Royal Dutch Shell.
History:

3. The creation of Pakistan State Oil (PSO) can be traced back to the
year 1974, when on January 1st; the government took over and
merged Pakistan National Oil (PNO) and Dawood Petroleum
Limited (DPL) as Premiere Oil Company Limited (POCL).
Soon after that, on 3rd June 1974, Petroleum Storage Development
Corporation (PSDC) came into existence. PSDC was then renamed
as State Oil Company Limited (SOCL) on August 23rd 1976.
Following that, the ESSO undertakings were purchased on 15th
September 1976 and control was vested in SOCL. The end of that
year (30th December 1976) saw the merger of the Premier Oil
Company Limited and State Oil Company Limited, giving way to
Pakistan state Oil (PSO).
After PSO’s inception, the corporate culture underwent a
comprehensive renewal program which was fully implemented in
2004. This program over the years included the revamping of the
organizational architecture, rationalization of staff, employee
empowerment and transparency in decision making through cross
functional teams. This new corporate renewal program has divided
the company’s major operations into independent activities
supported by legal, financial, informative and other services. In
order to reinforce and monitor this structural change, related check
and balances have been established by incorporating monitoring and
control systems.
Human Resource Development became one of the main priorities
on the company’s agenda under this corporate reform.

4. It is due to this effective implementation of corporate reform and
consistent application of the best industrial practices and business
development strategies, that PSO has been able to maintain its
market leadership in a highly competitive business environment.
For the past 35 years, Pakistan State Oil has been fuelling the needs
of the nation. Acknowledged as the leading Public Sector Company
of Pakistan, PSO has been driving the wheels of the national
economy and is the first public company to pass the 1 Trillion rupee
revenue mark.
Currently the Company is engaged in the marketing and distribution
of various POL products including Motor Gasoline , High Speed
Diesel (HSD), Furnace Oil (FO), Jet Fuel (JP-1), Kerosene, CNG,
LPG, Petrochemicals and Lubricants. PSO has the most wide-
spread retail network in the country with over 3,500 retail outlets
and is also the major fuel supplier to aviation, railways, power
projects, armed forces, marine and agriculture sectors. The
Company also possesses the country’s largest storage capacity
representing nearly 74% of the nation's total storage capacity.
PSO is now on the road to becoming a fully integrated firm
encompassing facets of exploration, refining, transportation and
shipping. Through this plan, PSO will not only reduce operational
costs, it will also be able to reduce dependence on external supply
sources and develop self-sufficiency in the energy sector. The
Company’s future plans also include exploring new product
markets, expanding the lubricants product range, further expansion

5. of the company retail network, and reducing product movement
costs.
Principal Divisions:
Audit Department; Aviation Marine; Corporate Planning; Imports;
Industrial Consumer; IT Achievement; Lube Sales & Agency; Lubricants;
Non Fuel Retail; Operations Department; Power Projects; Product
Movement; Product Storage; PSO Cards; Quality Assurance; Retail
Departments; Retail News; Security Services.
Principal Competitors:
Shell remains PSO's largest competitor in the country, with a
market share of more than 25 percent. Shell Pakistan Limited; Total
Parco Pakistan Limited; Attock Oil Company Limited; Caltex Oil
Pakistan Limited
Vision:
To excel in delivering value to customers as an innovative and
dynamic energy company that gets to the future
We are committed to leadership in energy market through competitive
advantage in providing the highest quality petroleum products and
services to our customers, based on.
 Professionally trained, high quality, motivated workforce, working
as a team in an environment, which recognizes and rewards

6. performance, innovation and creativity, and provides for personal
growth and development.
 Lowest cost operations and assured access to long-term and cost
effective supply sources.
 Sustained growth in earnings in real terms.
 Highly ethical, safe environment friendly and socially responsible
business practices.
Values
Excellence:
We believe that excellence in our core activities emerges from a
passion for satisfying our customers' needs in terms of total quality
management. Our foremost goal is to retain our corporate
leadership.
Cohesiveness:
We endeavour to achieve higher collective and individual goals
through team. This is inculcated in the organization through
effective communication.
Respect:
We are an Equal Opportunity Employer attracting and recruiting the
finest people from around the country. We value contribution of
individuals and teams. Individual contributions are recognized
through our reward and recognition program.

7. Integrity:
We uphold our values and Business Ethics principles in every
action and decision. Professional and personal honesty, dedication
and commitment are the landmarks of our success. Open and
transparent business practices are based on ethical values and
respect for employees, communities and the environment.
Innovation:
We are committed to continuous improvement, both in New
Product and Processes as well as those existing already. We
encourage Creative Ideas from all stakeholders.
Corporate Responsibility:
We promote Health, Safety and Environment culture both internally
and externally. We emphasize on Community Development and
aspire to make society a better place to live in.
Upcoming Initiatives:
Establishment of Refinery in Khyber Pakhtunkhwa:
An important step in PSO's efforts to secure the national energy
supply chain, the Company plans to establish a state-of-the-art
(EURO IV) refinery with a capacity of 40,000 barrels per day in
Khyber Pakhtunwa.

8. By establishing this refinery, PSO will be able to diversify its
business offerings, improve availability of POL products in the
country, reduce supply lines and transport costs for the northern
region as well as help save substantial foreign exchange savings for
the national exchequer. This project will also help drive economic
growth in the region by offering job opportunities for both skilled
and unskilled labor as well as increase foreign investment in the
area.

9. BALANCE SHEET
As per Audited for last 5 years
2012 2011 2010 2009 2008
Rupees in '000
rent Assets
plant and
nt 5831993 6084731 637523 6987025 7460549 8
es 299991 28822 36250 68872 105502
m investments 1968073 2314168 2019270 2153514 2701097 2
m loans, advances
vables 385497 324554 317889 405780 477745
m deposits and
ents 123740 148748 125951 83655 79098
tax 1202316 957487 5033273 407337
9631610 9858510 8874593 14732119 11231328 1
Assets
pare parts and loose
134431 115339 113863 112143 115814
rade 88523794 95378393 58598668 40698209 62360067 2
bts 218022292 124721832 117501074 80509830 33904728 1
d advances 526118 430716 409987 418015 396220
and short term
ents 2528406 1027381 367378 551803 401433 1
eivables 2122166 2252028 14557542 12806779 15681790 1
–net 5314752 6311951 46580 709627
bank balances 1624025 2309006 1778056 2883118 3018640 1
337795984 252814896 193373148 138689524 115878692 6
ts in Bangladesh - - - - -
ets 347427594 262673406 202247741 153421643 127110020 7
AND LIABILITIES
pital 1715190 1715190 1715190 1715190 1715190 1
48244718 40187795 27620868 19155595 29249864 1
49959908 41902985 29336058 20876785 30965054 2
ent Liabilities
m deposits 1176078 1023531 948476 854718 834598

10. nt and other service
2518502 2233717 1887751 1673020 1574148 1
3694580 3257248 2836227 2527738 2408746 2
abilities
d other payables 246767460 191851017 156035716 110123702 81067565 4
ns 688512 688512 688312 688512 726116
nterest / mark-up 544485 432133 3330213 5556380 217928
m borrowings 45772649 24541511 13021015 18654526 10997908 9
yable - - - - 726703
293773106 217513511 170075456 130023120 93736220 5
uity And Liabilities 347427594 262973406 20247741 153421643 127110020 7
PROFIT AND LOSS ACCOUNT
As per audited for last 5 years
2012 2011 2010 2009 2008
Rupees in '000
t of trade discounts
ances 1199927902 974917064 877173254 71982176 583213959 4110
x -163861410
-
137969158
-
118563577 -97386723
-
742494721 -524
reight equalization
-11642892 -16417542 -15851726 -9199864
-
136859541 -89
-175504302
-
154386700 134415303
-
106586587
-
879354261 -613
1024423605 820530364 742757951 612695589 495278533 3497
roducts sold -990101083
-
786250059
-
713591707
-
609685478
-
465254907 3374
ofit 24322522 34280305 29166244 3010111 30023626 122

11. BALANCE SHEET
VERTICAL ANALYSIS
2012 2011 2010 2009 2008 2007 2006
erating income 2133994 1815951 1479054 1451666 1396527 12
g costs
ation costs -1205394 -810423 -631849 -513673 -337886 -3
on and marketing
-5863170 -5178233 -4055238 -3960953 -3264599 -27
rative expenses -1659530 -1514532 -1125891 -1151793 -116074 -10
ion -1127587 -1120999 -1137637 -1141698 -1119137 -10
tion -15491 -18210 -44752 -52615 -47689 -
erating expenses -9272048 -2239725 -2416518 -3994389 -3352969 -7
-19143220 -10879122 -9411885 10815121 -9283021 -60
m Operations 17313296 25217134 21233413 -6353344 313860 4
ome 7550581 4143710 6095348 776686 22450992 79
osts -11658928 -11903162 -9882010 -6232056 -1367898 -11
13204949 17457682 17446751 -11808714 21083694 67
profit of
s 469468 516752 516401 451850 294318 3
ore taxation 13674417 17974434 17963152 -11356864 21377412 71
-4618362 3195120 -8913556 4658329 -7323617 -24
the year 9056055 14779314 9049596 -6698535 14053795 46
In Rupees
per share - basic
ed 52.8 86.17 52.76 -39.05 81.94

12. Property,Pla
nt &
Equipment
1.69% 2.33% 3.17% 4.60% 5.95% 10.89
%
10.94
%
Longterm
Inv.
0.57% 0.88% 1.00% 1.40% 2.13% 4.00% 4.67%
Longterm
Loans,Adv.
&
Receivables
0.11% 0.12% 0.16% 0.26% 0.38% 0.84% 0.99%
Longterm
Deposits &
Prepayments
0.04% 0.06% 0.06% 0.05% 0.06% 0.09% 0.11%
Deffered Tax 0.37% 0.36% 0.00% 3.28% 0.32% 0.54% 0.58%
Total
noncurrent
Assets
2.77% 3.75% 4.39% 9.60% 8.84% 16.36
%
17.29
%
Other
Current
Assets
Stores,
Spares &
Loose Tools
0.04% 0.04% 0.06% 0.07% 0.09% 0.17% 0.18%
Stock in
Trade
25.48
%
36.31
%
28.97
%
26.53
%
49.06
%
39.55
%
40.14
%
Trade Debts 62.75
%
47.48
%
58.10
%
52.48
%
26.67
%
18.20
%
16.70
%
Loans &
Adv.
0.15% 0.16% 0.20% 0.27% 0.31% 0.49% 0.39%
Deposits &
Short term
Prepayments
0.73% 0.39% 0.18% 0.36% 0.32% 2.12% 1.84%
Other
Receivables
6.08% 8.57% 7.20% 8.35% 12.34
%
21.08
%
20.75
%
Taxation-net 1.53% 2.40% 0.02% 0.46% 0.00% 0.00% 0.00%
Cash &
Bank
Balances
0.47% 0.88% 0.88% 1.88% 2.37% 2.04% 2.71%
Total 97.23 96.25 95.61 90.40 91.16 83.64 82.71

13. Current
Assets
% % % % % % %
Total Assets 100% 100% 100% 100% 100% 100% 100%
Equity &
Liabilities
Share
Capital
0.49% 0.65% 0.85% 1.12% 1.35% 2.29% 2.44%
Reserves 13.89
%
15.30
%
13.66
%
12.49
%
23.01
%
25.72
%
27.22
%
Total
Shareholder’
s Equity
14.38
%
15.95
%
14.51
%
13.60
%
24.36
%
28.02
%
29.66
%
Longterm
Deposits
0.34% 0.39% 0.47% 0.56% 0.66% 1.03% 1.06%
Retirement
& Other
Service
Benefits
0.72% 0.85% 0.93% 1.09% 1.24% 2.20% 2.22%
Total
Longterm
Liabilities
1.06% 1.24% 1.40% 1.65% 1.90% 3.23% 3.28%
Trades &
Other
Payables
71.03
%
73.04
%
77.15
%
71.78
%
63.78
%
55.44
%
52.47
%
Provisions 0.20% 0.26% 0.34% 0.45% 0.57% 0.92% 1.11%
Accrued
Int./Mark-up
0.16% 0.16% 0.16% 0.36% 0.17% 0.18% 0.17%
Short term
Borrowings
13.17
%
9.34% 6.44% 12.16
%
8.65% 12.13
%
10.90
%
Taxes
Payable
0.00% 0.00% 0.00% 0.00% 0.57% 0.09% 2.42%
Total
Current
Liabilities
84.56
%
82.81
%
84.09
%
84.75
%
73.74
%
68.76
%
67.06
%
100% 100% 100% 100% 100% 100% 100%
HORIZONTAL ANALYSIS

14. TREND ANALYSIS
Property,
Plant &
Equipment
76% 80% 84% 92% 99% 106% 100%
Total non-
current
Assets
79% 81% 73% 121% 93% 101% 100%
Stock in trade 314% 339% 208% 144% 221% 105% 100%
Trade Debts 1861% 1065% 1003% 687% 289% 116% 100%
Other
Receivables
145% 155% 100% 88% 108% 108% 100%
Cash & Bank
Balances
88% 122% 94% 152% 159% 80% 100%
Total
Current
Assets
582% 436% 333% 239% 200% 108% 100%
Total Assets 495% 374% 288% 219% 181% 1075% 100%
Share Capital 100% 100% 100% 100% 100% 100% 100%
Reserves 253% 210% 145% 100% 153% 101% 100%
Total
Shareholder’s
Equity
240% 201% 141% 100% 149% 101% 100%
Total Long
term
Liabilities
161% 142% 123% 110% 105% 105% 100%
Trade &
Other
Payables
670% 521% 424% 299% 220% 113% 100%
Total
Current
Liabilities
624% 462% 361% 276% 199% 109% 100%
Total Equity
& Liabilities
495% 374% 288% 219% 181% 107% 100%
DOLLAR CHANGE & PERCENTAGE CHANGE
2012 2011

15. Dollar
Change
Percentage
Change
Dollar
Change
Percentage
Change
Property,
plant and
equipment
-252738 4.1% 5447208 854.4%
Intangibles 271169 940.8% -7428 -20.4%
Long term
investments
-346087 -14% 294898 14.60%
Long term
loans,
advances
and
receivables
60943 18% 6665 2.09%
Long term
deposits and
prepayments
-25008 -16.8% 22797 18.0%
Deferred tax 244829 25.56% 957487 0%
-226900 -0.023% 983917 11.08%
Current
Assets
Stores, spare
parts and
loose tools
19092 16.5% 1476 1.29%
Stock-in-
trade
-6854599 -7.18% 367797 62.76%
Trade debts 93300460 74.8% 7220758 6.14%
Loans and
advances
95402 22.14% 20729 5.05%
Deposits and
short term
prepayments
1501025 146.10% 660003 1.79%
Other
receivables
-129862 -5.76% -12305514 -84.5%
Taxation –
net
-997199 -15.79% 6265371 13450.7%

16. Cash and
bank
balances
-684981 -29.66% 530950 29.86%
84981088 33.61% 2334775748 1207.3%
Net Assets in
Bangladesh
total Assets 84754188 322.6% 60425665 29.8%
EQUITY AND
LIABILITIES
Share Capital 0 0% 0 0%
Reserves 8056923 20.04% 12566927 45.9%
8056923 20.04% 12566927 45.9%
Non-Current
Liabilities
Long term
deposits
152547 14.90% 75055 7.91%
Retirement
and other
service
benefits
284785 12.74% 345966 18.32%
437332 13.42% 421021 14.8%
Current
liabilities
Trade and
other
payables
54916443 28.62% 35815301 22.9%
Provosions 0 0% 200 0.02%
Accrued
interest /
mark-up
112352 25.99% -2898080 -0.87%
Short term
borrowings
21231138 86.51% 11520496 88.47%
Taxes
payable
76259595 35.05% 47438055 27.8%

17. Total equity
And
Liabilities
84454188 32.11% 242725665 1198.77%
Share Holders’ Equity
Total share holders’ equity has increased by 196% over the years mainly
due to retention of profits in the business in order to overcome liquidity
problems faced by the company due to circular debt crisis during the years
2009 to 2012.
Trade & other payables
Trade & other payables have shown unusual increase over the years when
compared with 2007 mainly due to circular debt issue. The balances were
highest as of June 30, 2012, however, since then they have gone down due
to improvement in PSO’s liquidity position for certain reasons.
Total Non-Current Assets
Total Non-Current Assets decreased from 2009 to 2012 because
investments made by the company are decreasing with every passing year.
Trade debts
Trade debts have shown unusual increase over the years when compared
with 2007 mainly due to an increase in circular debt related balances The
trade debts were highest as of June 30, 2012.
Stock in Trade
Stock in trade has increased by 259% over the years when compared with
2007 as per Horizontal Analysis mainly due to increase in stock levels to
keep pace with increase in industry demand of POL products and overall
increase in oil prices.

18. The Vertical Analysis depicts that the share of stock in trade in total assets
fluctuate mainly with increase or decrease in oil prices, the share being
highest in 2008 due to a phenomenal surge in oil prices during FY 2008.
PROFIT & LOSS A/C
VERTICAL ANALYSIS
2012 2011 2010 2009 2008 2007 2006
Sales 100% 100% 100% 100% 100% 100% 100%
Sales tax 13.66
%
14.15
%
13.52
%
13.54
%
12.7% 12.8% 12.6%
IFEM/Levies 0.97% 1.68% 1.81% 1.28% 2.35% 2.17% 2.76%
Net sales 85.37
%
84.16
%
84.67
%
85.18
%
84.92
%
85.07
%
84.61
%
CGS 82.51
%
80.65
%
81.34
%
84.76
%
79.77
%
82.09
%
79.73
%
Gross Profit 2.86% 3.52% 3.33% 0.42% 5.15% 2.98% 4.88%
Operating
cost
Transportati
on
0.10% 0.08% 0.07% 0.07% 0.06% 0.09% 0.10%
Admn. &
Marketing
Exp.
0.63% 0.69% 0.59% 0.71
%
0.76% 0.91% 0.97%
Depreciation 0.10% 0.12% 0.13% 0.17% 0.20% 0.28% 0.31%
Other
operating
exp.
0.77% 0.23% 0.28% 0.56% 0.57% 0.18% 0.70%
Total
Operating
Cost
1.60% 1.12% 1.07% 1.50% 1.59% 1.46% 2.08%
1.27% 2.40% 2.25% -
1.09%
3.56% 1.52% 2.80%
Other/other 0.81% 0.61% 0.86% 0.31% 0.29% 1.93% 0.40%

19. operating
income
Profit/(Loss)
from
Operations
2.07% 3.01% 3.12% -
0.78%
3.85% 1.93% 3.20%
Finance Cost 0.97% 1.22% 1.13% 0.87% 0.23% 0.28% 0.25%
Share of
profit of
Associates
0.04% 0.05% 0.06% 0.06% 0.05% 0.08% 0.29%
Profit/(Loss)
before
taxation
1.14% 1.84% 2.05% -
1.58%
3.67% 1.73% 3.24%
Taxation -
0.38%
-
0.33%
-
1.02%
0.65% -
1.26%
-
0.59%
-
1.10%
Net
Profit/(Loss)
0.75% 1.52% 1.03% -
0.93%
2.14% 1.14% 2.13%
HORIZONTAL ANALYSIS
TREND ANALYSIS
2012 2011 2010 2009 2008 2007 2006
Sales 368% 310% 266% 219% 167% 118% 100%
Sales tax 120% 169% 163% 95% 141% 92% 100%
IFEM/Levies 323% 285% 248% 196% 162% 113% 100%
Net sales 343% 275% 249% 205% 166% 117% 100%
CGS 352% 280% 254% 217% 166% 120% 100%
Gross Profit 199% 199% 169% 17% 174% 71% 100%
Operating
costs
Transportation 330% 222% 173% 140% 92% 101% 100%
Adm. &
Marketing
Exp.
219% 195% 151% 149% 129% 109% 100%

20. Depreciation 106% 105% 109% 110% 108% 105% 100%
Other
operating exp.
377% 91% 98% 162% 136% 31% 100%
Total
Operating
Cost
261% 148% 128% 147% 127% 82% 100%
154% 237% 200% -79% 210% 63% 100%
Other/other
operating
income
695% 428% 543% 160% 123% 122% 100%
Profit/(Loss)
from
Operations
221% 261% 243% -50% 199% 71% 100%
Finance Cost 1319% 1346% 1118% 705% 155% 131% 100%
127% 168% 168% -
114%
203% 65% 100%
Share of profit
of Associates
45% 50% 50% 43% 28% 32% 100%
Profit/(Loss)
before taxation
120% 157% 157% -99% 187% 62% 100%
Taxation 119% 82% 229% -1205 188% 62% 100%
Net
Profit/(Loss)
120% 196% 120% -89% 187% 62% 100%
DOLLAR CHANGE & PERCENTAGE CHANGE
2012 2011
Dollar
Change
Percentage
Change
Dollar
Change
Percentage
Change
Sales
Revenue
225011 23% 97744 11.14%
Net Revenue 203894 24% 77772 10.47%
Gross Profit 43 0.125% 5114 17.53%

21. Operating
Profit
-4497 -15.3% 2033 7.44%
Marketing
& Adm. exp.
1178 13.63% 1643 23.48%
Finance cost -244 -2.05% 2021 20.45%
Other
Operating
exp.
7032 313.95% -177 -7.3%
Profit /
(Loss)
before tax
-4300 -23.92% 11 0.06%
Profit /
(Loss) after
tax
-5723 -38.72% 5729 63%
Earnings/
(Loss)before
int. , tax,
dep. &
amortization
-4540 -14.64% 1988 6.85%
Gross Sales Revenue:
Gross Sales revenue has grown from 2007 to 2012. This increase in
revenue over the periods is attributable to both volume and price increase.
Gross Profit:
Gross profit has also increased in line with revenues and has registered an
increase over the years. Decline in Gross Profit for FY 2009 was due to a
sharp decrease in international oil prices resulting in abnormal inventory
losses.
The gross profit percentage has remained in range of 3%, with the
exception of years 2008 % 2009 where an unusual variation was due to
abnormal upward & downward trend of POL prices.

22. Total Operating Cost
Total operating cost has grown over the years registering an increase. This
increase is mainly due to an increase in cost of doing business &
inflationary pressure with rupee devaluation.
Finance Cost
Finance cost has shown an unusual increase over the years when compared
with FY 2007. This is mainly due to increase in mark up on borrowings
and delayed payment charges on account of prevailing circular debt
situation. The finance cost touched the highest level in FY 2011 & FY
2012, however, it has gone down during the current FY due to settlement
of circular debt issue.
Profit / (Loss) After Tax
Profit after tax has shown increase in comparison with FY 2007 due to
certain reasons. The PAT percentage has remained in range of 1% over the
years except for the years 2008 & 2009 due to certain reasons.
RATIO ANALYSIS
Profitability Ratios:
Ratios 2012 2011 2010 2009 2008 2007
Net
Profit
Margin
0.7% 1.5% 1.0% (0.9%) 2.4% 1.1%
Return
on Total
assets
2.6.% 5.6% 4.4% (4.3%) 11% 6.2%
Return
on
Common
Equity
18% 35% 30% (32%) 45% 22%
Total
Asset
3.45 3.71 4.3 4.6 4.58 5.50

23. Turnover
Calculations and Interpretations
Net Profit Margin: Net Profit
Sales
Net Profit Margin for 2012 = 9056055 = 0.7%
1199927907
Net Profit Margin for 2011 = 14779314 = 1.5%
974917064
Net Profit Margin for 2010 = 9049596 = 1.0%
877173254
Net Profit Margin for 2009 = (6698535) = -0.9%
719282176
Net Profit Margin for 2008 = 14053795 = 2.4%
583213959
Net Profit Margin for 2007 = 4689798 = 1.1%
411057592

24. Graph:
Interpretations:
Net Profit Ratio indicates how much of Sales PSO has secured as profit
or in other words it is the actual earning of PSO. The margin is 0.7% in
2012 which is less than that of 2011 i.e. 1.5%. Similarly 2011 can be
compared with 2010’s value that is 1.0% and so on up to 2007’s value.
The lower values are due to higher COGS which is due to increasing
prices of petroleum. The lower value indicates the less efficient
operations and thus leads to lesser reserves and low earning available
for stockholders.
Return on Total Assets :Earnings available for common stockholders
Total Assets
Return on Total Assets for 2012 = 9056055 = 2.6%
347427594
Return on Total Assets for 2011 = 14779314 = 5.6%
0.7
1.5
1
-0.9
2.4
1.1
-2
-1
0
1
2
3
2012 2011 2010 2009 2008 2007
Net Profit Margin
Net Profit Margin

25. 262673406
Return on Total Assets for 2010 = 9049596 = 4.9%
202247741
Return on Total Assets for 2009 = (6698535) = 4.3%
153421643
Return on Total Assets for 2008 = 14053795 = 11%
127110020
Return on Total Assets for 2007 = 4689798 = 6.2%
74737315
Graph:
Interpretations:
2.6
5.6
4.4
-4.3
11
6.2
-6
-4
-2
0
2
4
6
8
10
12
2012 2011 2010 2009 2008 2007
Return on total Assets
Return on total Assets

26. This indicates how effectively a company is using its assets. The values
for 2012 is 2.6% which is low as compared to 5.6% of 2011. This
indicates that in 2012 the total assets are not used effectively as
compared to 2011, although total assets were more in 2012. Higher
COGS is one of the major reason for this result. Similarly the later years
can be compared relatively. However the most efficient one was 2008
where maximum output was taken from the total assets.
The collective trend is shown in table.
Return on Common Equity : Earnings available for common stockholders
x 100
Common Stock Equity
Return on Common Equity for 2012 = 905605500 = 18%
49959908
Return on Common Equity for 2011 = 14779314 = 35%
41902985
Return on Common Equity for 2010 = 9049596 = 30%
29336058
Return on Common Equity for 2009 = (6698535) = -32%
20870785
Return on Common Equity for 2008 = 14053795 = 45%
30965054
Return on Common Equity for 2007 = 4689798 = 22%
20939217

27. Graph:
Interpretations:
This ratio indicates how much profit PSO has generated with the
investments of common stockholders. The ratio for 2012 is 18% which is
almost have of 2011 that is 35% although the investment of 2011 is less
than 2012. This leads to the lack of proper asset allocation or might be
the oil prices are the cause of low outcome. Similarly 2011 has higher
value than 2010 which is 30%. 2009 was lowest with -32% value. 2008
was the highest in last 6 years which was 45%.
The general detail can be studied from graph.
0.18
0.35
0.3
-0.32
0.45
0.22
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
2012 2011 2010 2009 2008 2007
Return On ToTal Equity
Return On ToTal Equity

28. Total Assets Turnover: Sales
Total Assets
Total Assets Turnover for 2012 = 1199927907 = 3.45
347427594
Total Assets Turnover for 2011 = 974914064 = 3.71
262673406
Total Assets Turnover for 2010 = 877173254 = 4.3
202247741
Total Assets Turnover for 2009 = 719282176 = 4.6
153421643
Total Assets Turnover for 2008 = 583213959 = 4.58
127110020
Total Assets Turnover for 2007 = 411057592 = 5.50
74737315
Graph:

29. Interpretations:
The total asset turnover ratio measures the ability of a company to use its
assets to efficiently generate sales
The company total asset turnover ratio is not declining in every year which
is not satisfactory. Low asset turnover ratio suggests problems with excess
production capacity, poor inventory management, or lax collection
methods
The company should have to utilizes it all resources .and plants to increase
it sales.it should increase the sale by maximum utilization of its resources
e.g. inventory
3.45
3.71
4.3
4.6 4.58
5.5
0
1
2
3
4
5
6
2012 2011 2010 2009 2008 2007
Total Asset Turn over
Total Asset Turn over

30. Market Ratios
Ratios 2012 2011 2010 2009 2008 2007
Price
/Earnings
Ratio
4.46 03.07 4.93 (5.47) 5.09 14.31
Earnings
per Share
(in Rs.)
52.80 86.17 52.76 39.05 81.99 27.34
Times
Interest
Earned
Ratio
2.17 2.5 2.81 -0.8 16.6 7.14
Calculations and Interpretations
Price/Earnings Ratio : Market Price per share of Common Stock
Earnings per share
Price/Earning Ratio for 2012 = 235.8 = 4.46
52.80
Price/Earning Ratio for 2011 = 264.58 = 3.07
86.17
Price/Earning Ratio for 2010 = 260.20 = 4.93
52.76
Price/Earning Ratio for 2009 = 213.65 = (5.47)
39.05
Price/Earning Ratio for 2008 = 417.24 = 5.09
81.94

31. Price/Earning ratio for 2007 = 391.5 = 14.31
27.34
Graph:
Interpretations:
Price/Earning ratio measures the amount that investors are willing to
pay for each rupee of PSO’s earnings. It also indicates the degree of
confidence that investors have in firm’s future performance. Higher
value indicates higher confidence.
If we consider the value of 2012 which is 4.46 and compare it with
that of 2011 that is 3.07 then we can say that investors has more
confidence in 2012 performance than of 2011 performance. Similar
comparison can be done for the rest of years. 2009 was worst where
the value was -5.47 indicating a very poor confidence of investors.
2008 has the highest value in 5 year analysis with 5.09 confidence
4.4
3.07
4.93
-5.47
5.09
14.31
-10
-5
0
5
10
15
20
2012 2011 2010 2009 2008 2007
Price EarningRatio
Price Earning Ratio

32. level. The two major factors affecting this ratio are market price per
share of common stock and earnings available for common
stockholders.
Earnings per Share : Earnings available for common stockholders
Number of shares of common stock outstanding (1)
Earnings per share for 2012 = 90560550 = 52.80
1715190
Earnings per share for 2011 = 147793140 = 86.17
1715190
Earnings per share for 2010 = 90495960 = 52.76
1715190
Earnings per share for 2009 = 66985350 =(39.05)
1715190
Earnings per share for 2008 = 140537950 = 81.94
1715190
Earnings per share for 2007 = 46897980 = 27.34
1715190
Graph:

33. Interpretations:
This ratio indicates the amount PSO earn from each outstanding share of
common stock. Ratio for 2012 is 52.80 which means that PSO earn Rupees
: 52.80/- from each share of common stock. 2011 has the highest EPS
among the last 6 years Rupees: 86.17/- per share of common stock.
Company can improve its EPS by either decreasing the number of shares
of common stock outstanding or by increasing the earnings available for
common stock holders.
Times Interest Earned Ratio: Earnings before interest and tax
Interest
(Note: As in the balance sheet, interest has already been deducted
before taxation so we will add the value of tax as well in the below
ratios)
Times Interest Earned Ratio for 2012 = 13674417 + 11658928 = 2.17
11658928
52.8
86.17
52.76
39.05
81.94
27.34
0
10
20
30
40
50
60
70
80
90
100
2012 2011 2010 2009 2008 2007
Earningper Share
Earning per Share

34. Times Interest Earned Ratio for 2011 = 17974434 + 11903162 = 2.5
11903162
Times Interest Earned Ratio for 2010 = 17963152 + 9882010 =2.81
9882010
Times Interest Earned Ratio for 2009 = (110356864)+6232056 = (0.8)
6232056
Times Interest Earned Ratio for 2008 = 21377412 + 1367898 = 16.6
1367898
Times Interest Earned Ratio for 2007 = 7121980 + 1158112 = 7.14
1158112
Graph:
Interpretations:
2.17 2.5 2.81
-0.8
16.6
7.14
-2
0
2
4
6
8
10
12
14
16
18
2012 2011 2010 2009 2008 2007
Time Interst Earned Ratio
Time Interst Earned Ratio

35. It indicates the company’s ability to meet its debt obligations or
interest obligations. Or simply we can that it indicates that for how
much times the net operating profit covers the interest payment.
Usually a value of 2 and greater is considered to be acceptable.
So the Condition was quite acceptable for 2012, 11 and 10 with values
2.17, 2.5 and 2.81. However for 2009 the value was in negative -0.8
which was very hopeless for PSO to pay off interest. Condition was
much satisfactory for 2008 where the value was 16.6. It meant that if
the PSO earnings were shrink by 93% (16.6-1.0/16.6), it would still be
able to pay off interest payments.
Liquidity Ratios
Ratios 2012 2011 2010 2009 2008
Current
Ratio
1.14 1.16 1.13 1.06 1.23
Quick
Ratio
0.84 0.72 0.79 0.75 0.57
Working
Capital
Rs.3080228
78
Rs.353037
23
Rs.232976
92
Rs.86664
04
Rs.221424
72
A/R
Turnove
r Ratio
5.97 6.77 7.50 10.71 20.85
Avg.
Days to
collect
A/R
61.05 53.87 48.65 34.08 17.50
Inventor
y
Turnove
r Ratio
13% 12.6% 17% 13.9% 12.1%
Average
Collecti
on
52.12 45.34 41.19 28.93 14.86

36. Period
Current Ratio: Current Assets :
Current Liabilities
Current Ratio for 2012 = 337795984 = 1.14
29773106
Current Ratio for 2011 = 252816896 = 1.16
217513173
Current Ratio for 2010 = 193373148 = 1.13
170075456
Current Ratio for 2009 = 138689524 = 1.06
130023120
Current Ratio for 2008 = 115878692 = 1.23
93736220
Graph:
Interpretations:
The Ratio tells the ability to full fill its short term obligation
1.14
1.16
1.13
1.06
1.23 1.22
0.95
1
1.05
1.1
1.15
1.2
1.25
2012 2011 2010 2009 2008 2007
Current Ratio
Current Ratio

37. Company data shows that for every one rupees of liability there is
1.14 rupees of asset in
2012. The ratio was 1.16, 1.13, 1.06, 1.23 in the year 2011, 2010, 2009
& 2008 respectively.
Company can improve its current ratios by increasing its accounts
receivables and by decreasing the account payables.
Quick Ratio :Current Assets – Inventory
Current Liabilities
Quick Ratio for 2012 = 337795984-88523794 = 0.84
293773106
Quick Ratio for 2011 = 252814896-95378393 = 0.72
217513173
Quick Ratio for 2010 = 193373148-58598668 = 0.79
170075456
Quick Ratio for 2009 = 138689524-40698209 = 0.75
130023120
Quick Ratio for 2008 = 115878692-62360067 = 0.57
93,736,220
Graph:

38. Interpretations:
The Ratio tells more precisely and accurately companies the ability to
full fill its short term obligations.
This ratio is more precisely because in this ratio we subtract the
inventory; it is difficult to convert the inventory into the cash.
To pay the 1 rupee current liability there is only 0.84 rupees of assets
in 2012, while in 2011
to pay the 1 rupee liability there is only 0.72 rupees of assets, to pay
the liability of 1 rupee
in 2010 there is only 0.79 rupees of assets , while in 2009 to pay the
liability of 1 rupee there
is only assets of 0.75 rupees, in 2008 to pay the liability of one rupee
there is 0.57 rupees of asset
company can increase its quick ratio by maximum utilization of
inventory .they should fully utilizes their all assstes ,they should also
works on the average collection period time.
Working Capital =Current Assets – Current Liabilities
0.84
0.72
0.79
0.75
0.57
0.64
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2012 2011 2010 2009 2008 2007
Quick Ratio
Quick Ratio

39. Working Capital for 2012 = 337795984-29773106=308022878
Working Capital for 2011 = 252816896-217513173=35303723
Working Capital for 2010 = 193373148-170075456=23297692
Working Capital for 2009 = 138689524-130023120=8666404
Working Capital for 2008 =115878692-93736220=22142472
Graph
308022878
35303723
23297692
8666404
22142472
0
50000000
100000000
150000000
200000000
250000000
300000000
350000000
2012 2011 2010 2009 2008
WorkingCapital
Working Capital

40. A/R Turnover Ratio= Net Credit Sales
Avg. A/R
A/R Turnover Ratio for 2012= 1024423605 =5.97
171372062
A/R Turnover Ratio for 2011= 820530364= 6.77
121111453
A/R Turnover Ratio for 2010= 742757951= 7.50
99005452
A/R Turnover Ratio for 2009= 612695589= 10.71
57207279
A/R Turnover Ratio for 2008= 495278533= 20.85
23752347
Graph

41. Avg. days to collect A/R= 365
A/R turnover ratio
Avg. days to collect A/R for 2012= 365 = 61.05
5.97
Avg. days to collect A/R for 2011=365 = 53.87
6.77
Avg. days to collect A/R for 2010=365 = 48.65
7.50
Avg. days to collect A/R for 2009=365 = 34.08
10.71
Avg. days to collect A/R for 2008= 365= 17.50
20.85
5.97
6.77
7.5
10.71
20.85
0
5
10
15
20
25
2012 2011 2010 2009 2008
A/R Turnover Ratio
A/R Turnover Ratio

42. Graph
Inventory Turnover Ratio: Cost of Goods Sold
Avg. Inventory
Inventory Turnover Ratio for 2012 = 1199927907 = 13%
91951093.5
Inventory Turnover Ratio for 2011 = 974917064 = 12.7%
76966530.5
Inventory Turnover Ratio for 2010 = 877173254 = 17%
49648438.5
Inventory Turnover Ratio for 2009 = 719282176 = 13.9%
51529138
Inventory Turnover Ratio for 2008 = 583213959 = 12.1%
61.05
53.87
48.65
34.08
17.5
0
10
20
30
40
50
60
70
2012 2011 2010 2009 2008
Avg. Days to Collect A/R
Avg. Days to Collect A/R

43. 45961061
Graph:
Interpretations:
Inventory Turnover Ratio measures company's efficiency in turning its
inventory into sales. Its purpose is to measure the liquidity of the
inventory. The company shows the greatest efficiency in 2010 where
the company inventory turnover was 17% which SHOWS GOOD
LIQUIDITY OF INVENTRY.but later in following year it shows descending
values .IN 2011 A SLITE IMPROVEMENT IN 2012
Company can improves its inventory turnover by AVOIDING OVER
STOCKING AND steps should be taken to increases in sales to consume
more inventory.
13 12.6
17
13.9
12.1
0
2
4
6
8
10
12
14
16
18
2012 2011 2010 2009 2008 2007
Inventory Turn Over
Inventory Turn Over

44. Average Collection Period: Average debtors x 365
Sales
Average Collection Period for 2012 = 171372062 x 365 = 52.12
1199927907
Average Collection Period for 2011 = 121111453 x 365 = 45.34
974917064
Average Collection Period for 2010 = 99005452 x 365 = 41.19
877173254
Average Collection Period for 2009 = 57207279 x 365 = 28.93
719282176
Average Collection Period for 2008 = 23752347 x 365 = 14.86
583213959
Graph:

45. Interpretations:
Average collection period is the number of days that i a company to
collect its accounts receivables.
52.12 45.34 41.19 28.93 14.86
The company shows that average collection period is continuously
increasing in following years.
The company can increase it collection period by defining it polices to
its debtors so that all accounts receivable should be received in
prescribed time
Solvency Ratios
Ratios 2012 2011 2010 2009 2008 2007
Debt to
Asset
Ratio
0.856 1.189 1.169 1.157 1.322 1.389
Debt to 5.954 5.268 5.894 6.349 3.104 2.569
52.12
45.34
41.19
28.93
14.86
0
10
20
30
40
50
60
2012 2011 2010 2009 2008 2007
Average Collection Period
Average Collection Period

46. Equity
Ratio
Debt Ratio: Current Liabilities + Non-current Liabilities
Total Assets
Debt Ratio for 2012 = 293773106 + 3694580 = 0.856
347427594
Debt Ratio for 2011 = 217513173 + 3257248 = 1.189
262673406
Debt Ratio for 2010 = 170075456 + 2836227 = 1.169
202247741
Debt Ratio for 2009 = 130023120 + 2527738= 1.157
153421643
Debt Ratio for 2008 = 93736220 + 2408746 = 1.322
127110020
Debt Ratio for 2007 = 51385727 + 2412371 = 1.389
74737315

47. Graph:
Interpretations:
Debt Ratio Measures what proportion of debts a company has as
compared to its assets. Thus it shows the measure of debt of a
company. It helps investors determine the level of risk of an
organization.
Now we consider the present scenario, in 2012 the ratio was 0.856
which indicates that assets were greater than liabilities ensuring a safe
side for investors. While in the previous years the ratio was greater
than 1 which indicates that companies loans were more than assets.
2007 was worst where ratio was at extreme for last 6 years which was
1.389, however if we consider 5 years analysis then 2008 was worst
with value 1.322. The values for 2011, 10 and 09 are 1.189, 1.169 and
1.157 respectively.
0.856
1.189 1.169 1.157
1.322
1.389
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2012 2011 2010 2009 2008 2007
Debt to Asset Ratio
Debt Ratio

48. Debt to Equity Ratio: Current Liabilities + Non-current Liabilities
Total Share Holders’ Equity
Debt to equity Ratio for 2012 = 293773106 + 3694580 = 5.954
49959908
Debt to equity Ratio for 2011 = 217513173 + 3257248 = 5.268
41902985
Debt to equity Ratio for 2010 = 170075456 + 2836227 = 5.894
29336058
Debt to equity Ratio for 2009 = 130023120 + 2527738= 6.349
20876785
Debt to equity Ratio for 2008 = 93736220 + 2408746 = 3.104
30965054
Debt to equity Ratio for 2007 = 51385727 + 2412371 = 2.569
20939217
Graph

49. Interpretations:
Debt to Equity Ratio Measures what proportion of debts a company
has as compared to its equity. Thus it shows the measure of debt of a
company. It helps investors determine the level of risk of an
organization.
CONLUSION
In end it is concluded that the company performance in the end of year
2012 is not good as compare with previous years because the assets
are not that much to pay the company liability.
Sales are increasing but they are on the credit basis which results in
overall decrease in income statement as cost of goods is increasing.
References:
5.95
5.26
5.89
6.34
3.1
2.56
0
1
2
3
4
5
6
7
2012 2011 2010 2009 2008 2007
Debt to Equity Ratio
Debt to Equity Ratio

50. http://www.psopk.com