Shell Case Study

Using Actual Financial Accounting Information To
Conduct Financial Ratio Analysis: The Case of

Royal Dutch Shell
Shell is an international energy company with expertise in the exploration, production,

refining and marketing of oil and natural gas, and the manufacturing and marketing of chemicals.
They use advanced technologies and take an innovative approach to help build a sustainable
energy future. They invest in power, including from renewable sources such as wind and solar.
They also invest in electric vehicle charging and low-carbon fuels for transport, such as
advanced biofuels and hydrogen. Shell’s purpose is to power progress together by providing
more and cleaner energy solutions. We believe that rising standards of living for a growing
global population are likely to continue to drive demand for energy, including oil and gas, for
years to come. At the same time, the need to tackle climate change means there is a global
transition under way to a low-carbon energy system.
The Shell Companies in the Philippines (SciP) collectively and separately referred to as
Shell has established itself in the country as a corporation providing quality products and
excellent services to Filipino people. Since the local introduction of kerosene products in 1897,
Shell has progressed into diverse businesses of manufacturing, marketing and distribution of
fuels, lubricants, liquefied petroleum gas (LPG), and petrochemical products.
Shell covers seven business units in the Philippines. These are: the Pilipinas Shell
Petroleum Corporation (PSPC)3 , Shell Gas Eastern, Inc. (SGEI), Shell Gas Trading Asia.
Looking back over 185 years of Shell history, it has been an amazing journey. Mankind has
managed to adapt, time and time again, through a century of rapid change and periodic upheaval;
and so has Shell. But there are also big challenges in the century ahead. Society today faces a
challenge on an unprecedented scale: how to meet increasing energy needs while reducing
carbon emissions.
Shell is an active player in and has embraced the transformation of the energy system.
The company sees commercial opportunity in participating in the global drive to provide more
and cleaner energy solutions. Thriving as the world transitions to a lower-carbon energy system
is a key focus and Shell’s strategy, portfolio and strong financial framework will give the
company a source of resilience in the years to come. Understanding what climate change means
for Shell is one of the biggest strategic questions facing company leaders. In answering that
question, Shell is determined to continue to work closely with society and its customers as it has
done for nearly 200 years.
CLASSES OF BUSINESS
RETAIL
Pilipinas Shell is one of the leading fuel retail players in the country, with a strong network of
1,084 Shell-branded retail stations nationwide. We offer high-quality fuels to our consumers.
Our Shell V-Power Racing, Shell V-Power Gasoline and Shell V-Power Diesel are designed to
provide the best performance and efficiency for your vehicle. Our FuelSave Gasoline and
FuelSave Diesel are designed to last longer compared to standard fuels. Recognizing that our
customers’ needs go beyond fuel, we continue to expand our non-fuel retailing business. We
offer affordable food choices and other products in our Shell Select stores, deli2go, and our
quick service restaurant partners. Our offering also includes services such as oil change, repair,
and other maintenance tasks. Our retailers are our partners, and we work with them to grow our
business and provide a premium experience with well- appointed facilities
COMMERCIAL BUSINESS
Through our commercial business, Pilipinas Shell provides end-to- end technical consulting.
Beyond our fuel and lubricant products, we offer fuel differentiation and price risk management.
Our strong professional sales team delivers the excellent service that our customers have come to
expect from the Shell brand. Wholesale Commercial Fuels. We supply wholesale commercial
fuels to customers nationwide. We serve major businesses in the construction, manufacturing,
maritime, mining, and power sectors. Our product portfolio includes main-grade and premium
transport fuels (unleaded gasoline and diesel) for both on-road and off-road heavy-duty vehicles,
as well as heavy fuel oils for industrial heating and manufacturing boilers. We aim to give
customers energy solutions that add value to their business and reduce their fuel price exposure,
optimize energy use, and improve operational efficiency.
https://edge.pse.com.ph/openDiscViewer.do?edge_no=af9bdf1b69e593b95d542af6f1e997b9
Table 1. Condensed Statement of Financial Performance 2018 to 2020
2020 2019 2018

Sales 162,022.6 224,288.6 223,817.7
Net Earnings -16,182.6 5,621.2 5,076.3
Table 2. Ratio Analysis
2020 2019 2018

Current ratio 0.90 1.20 1.43
Quick ratio 0.54 0.52 0.61
Average collection
period
Inventory Turnover 6.80 times 9.44 times 10.33 times
Fixed Asset Turnover 5.08 times 8.15 times 8.87 times
Total asset Turnover
Debt Ratio 0.18 0.1 0.1
Debt to Equity Ratio 0.68 0.4 0.2
Time Interest Earned
Gross Profit Margin
Net Profit margin
Return on Investment -22.37 11.29 10.17
Return on Equity -70.26% 14.3% 13.2%
Asset/Equity

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Shell Case Study

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Using Actual Financial Accounting Information To

Conduct Financial Ratio Analysis: The Case of

Shell is an international energy company with expertise in the exploration, production,

2020 2019 2018

Table 2. Ratio Analysis

2020 2019 2018

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