Guarantee Oil Company Ltd Guarantee Oil Company (GOC) Ltd operates through three segments: Oilfield Services (OFS), Oilfield Equipment (OFE) and Turbomachinery & Process Solutions (TPS). The OFS segment offers drilling, wireline, evaluation, completion, production, and intervention services. The OFE segment designs and manufactures products and services. The TPS segment provides equipment and related services for mechanical-drive, compression, and power-generation applications across the oil and gas industry. The Company is based in XYZ. The company employs over 1,300 personnel in it's factory and country head office. The market share of the GOC in the XYZ is estimated to be in the region of 55%, and thus recognised as the market leader in the heavy equipment sector. Following financial statements of GOC belong to the past 2 financial years (in Million CU) Balance Sheet as at 31st December Assets Notes 20x8 20x9 Non Current Assets Property Plant & equipment Motor vehicles 1 2 2,500 4,500 2,200 9,200 4,200 4,000 1,900 10,100 Current Assets Cash & bank balances Accounts and other receivable Inventories Marketable securities 3 3,342 3,085 1,900 200 8,527 3,372 2,428 2,800 8,600 17,727 18,700 Total Assets Liabilities & Shareholders' Equity Current Liability Accounts payable Tax payable Current portion of long term loan 4,870 190 410 5,470 4,805 150 375 5,330 Non Current Liabilities Term loans Employees terminal benefits 4,500 500 5,000 4,000 500 4,500 Shareholders' Equity Share Capital Retained Earnings Reserves 5,000 1,557 700 7,257 17,727 6,000 2,170 700 8,870 18,700 Total Liabilities & Shareholders' Equity Income Statement for the years ended 31st December 20x8 20x9 Turnover (Sales) 3,858 5,131 Cost of sales (1,830) (2,346) Gross profit 2,028 2,785 Selling & distribution General Administration (936) (423) (1,359) (1,310) (572) (1,882) 669 80 749 Operating Profit Other Income Profit/Loss before interest and tax Interest Charges Profit/Loss Before Tax Tax Net Profit/Loss After Tax (90) 659 (102) 557 903 100 1,003 (85) 918 (125) 793 Statement of Changes in Equity (retained earnings extract only) 20x8 20x9 Opening Retained Earnings Net Profit/Loss After Tax 1,000 557 1,557 793 0 Dividend Retained Earnings Carried Forward (180) 2,170 1,557 Statement of Cash Flow (extract) Net cash flow from operating activities Net cash flow from Investing activities Net cash flow from Financing activities Net increase/decrease in cash & cash equivalents Cash & cash equivalents at 1st January Cash & cash equivalents at 31st December 1,392 1,200 (500) 2,092 1,250 3,342 830 (1,300) 500 30 3,342 3,372 Notes 1. Plant & Equipment 20x8 20x9 Opening Balance Additions/Disposals Total Depreciation Closing Balance 5,000 0 5,000 (500) 4,500 4,500 0 4,500 (500) 4,000 2. Motor Vehicles Opening Balance Additions/Disposals Total Depreciation Closing Balance 1500 1500 3000 (800) 2200 2200 0 2200 (300) 1900 3. Accounts and other receivables Trade Debtors Other Receivables 2,800 285 3,085 2,200 228 2,428 Following additional information are given 1. GOC had in issue 50,000,000 ordinary shares at CU 100 each, fully paid. A further issue of 10,000,000 ordinary shares at CU 100 each was completed in 20x9 and fully paid. 2. The company was listed on the share market and following market information are provided as on 31st of December 20x8 20x9 GOC Share price CU 122 135 3. The weighted average cost of funds employed is estimated at 12%. 4. The management declared a 3% dividends in 20x9 and promised the shareholders that the dividend will be growing at a minimum rate of 10% over the years. 5. Company manufactures three main products. The following breakdown shows the contribution to revenue from the each product from the local and foreign markets. 5. Company manufactures three main products. The following breakdown shows the contribution to revenue from the each product from the local and foreign markets. Local sales 40% Products Category A Category B Category C Contribution 81% 16% 3% Exports 60% 100% 100% The export revenue is denominated in respective country's foreign currency. The management has so far not taken any measure to hedge foreign currency risk. 6. Credit sale is common in this industry and GOC disposes 80% of its sales on credit. Required: Analyse the above financial Statements by using ratio analysis. Use template provided Guarantee Oil Company Ltd Guarantee Oil Company (GOC) Ltd operates through three segments: Oilfield Services (OFS), Oilfield Equipment (OFE) and Turbomachinery & Process Solutions (TPS). The OFS segment offers drilling, wireline, evaluation, completion, production, and intervention services. The OFE segment designs and manufactures products and services. The TPS segment provides equipment and related services for mechanical-drive, compression, and power-generation applications across the oil and gas industry. The Company is based in XYZ. The company employs over 1,300 personnel in it's factory and country head office. The market share of the GOC in the XYZ is estimated to be in the region of 55%, and thus recognised as the market leader in the heavy equipment sector. Following financial statements of GOC belong to the past 2 financial years (in Million CU) Balance Sheet as at 31st December Assets Notes 20x8 20x9 Non Current Assets Property Plant & equipment Motor vehicles 1 2 2,500 4,500 2,200 9,200 4,200 4,000 1,900 10,100 Current Assets Cash & bank balances Accounts and other receivable Inventories Marketable securities 3 3,342 3,085 1,900 200 8,527 3,372 2,428 2,800 8,600 17,727 18,700 Total Assets Liabilities & Shareholders' Equity Current Liability Accounts payable Tax payable Current portion of long term loan 4,870 190 410 5,470 4,805 150 375 5,330 Non Current Liabilities Term loans Employees terminal benefits 4,500 500 5,000 4,000 500 4,500 Shareholders' Equity Share Capital Retained Earnings Reserves 5,000 1,557 700 7,257 17,727 6,000 2,170 700 8,870 18,700 Total Liabilities & Shareholders' Equity Income Statement for the years ended 31st December 20x8 20x9 Turnover (Sales) 3,858 5,131 Cost of sales (1,830) (2,346) Gross profit 2,028 2,785 Selling & distribution General Administration (936) (423) (1,359) (1,310) (572) (1,882) 669 80 749 Operating Profit Other Income Profit/Loss before interest and tax Interest Charges Profit/Loss Before Tax Tax Net Profit/Loss After Tax (90) 659 (102) 557 903 100 1,003 (85) 918 (125) 793 Statement of Changes in Equity (retained earnings extract only) 20x8 20x9 Opening Retained Earnings Net Profit/Loss After Tax 1,000 557 1,557 793 0 Dividend Retained Earnings Carried Forward (180) 2,170 1,557 Statement of Cash Flow (extract) Net cash flow from operating activities Net cash flow from Investing activities Net cash flow from Financing activities Net increase/decrease in cash & cash equivalents Cash & cash equivalents at 1st January Cash & cash equivalents at 31st December 1,392 1,200 (500) 2,092 1,250 3,342 830 (1,300) 500 30 3,342 3,372 Notes 1. Plant & Equipment 20x8 20x9 Opening Balance Additions/Disposals Total Depreciation Closing Balance 5,000 0 5,000 (500) 4,500 4,500 0 4,500 (500) 4,000 2. Motor Vehicles Opening Balance Additions/Disposals Total Depreciation Closing Balance 1500 1500 3000 (800) 2200 2200 0 2200 (300) 1900 3. Accounts and other receivables Trade Debtors Other Receivables 2,800 285 3,085 2,200 228 2,428 Following additional information are given 1. GOC had in issue 50,000,000 ordinary shares at CU 100 each, fully paid. A further issue of 10,000,000 ordinary shares at CU 100 each was completed in 20x9 and fully paid. 2. The company was listed on the share market and following market information are provided as on 31st of December 20x8 20x9 GOC Share price CU 122 135 3. The weighted average cost of funds employed is estimated at 12%. 4. The management declared a 3% dividends in 20x9 and promised the shareholders that the dividend will be growing at a minimum rate of 10% over the years. 5. Company manufactures three main products. The following breakdown shows the contribution to revenue from the each product from the local and foreign markets. 5. Company manufactures three main products. The following breakdown shows the contribution to revenue from the each product from the local and foreign markets. Local sales 40% Products Category A Category B Category C Contribution 81% 16% 3% Exports 60% 100% 100% The export revenue is denominated in respective country's foreign currency. The management has so far not taken any measure to hedge foreign currency risk. 6. Credit sale is common in this industry and GOC disposes 80% of its sales on credit. Required: Analyse the above financial Statements by using ratio analysis. Use template provided