Financial Performance and Positional Repsol †MyAssignmenthelp.com

Question: Discuss about the Financial Performance and Positional Repsol. Answer: Introduction: The report has been prepared to evaluate the financial performance and positional Repsol plc. It evaluates the annual reports, financial statements and the market position of the company to evaluate the performance and the investment position of the company. In the report, management discussion and analysis, ratio analysis, security market, news about the company etc has been discussed and it has been concluded that whether the investment into the company is a good idea or not. Repsol plc is an integrated international energy company which is operating its business in Madrid, Spain. The company carries downstream and upstream business in the entire world. The company operates in all the areas of the oil and gas industry such as exploring, refining, marketing, power generation, distribution, trading etc. the main competitor of the company is British petroleum. The economic position of the company is quite better (Bloomberg, 2018). The financial position of the industry briefs about better position of the company and the economic environment. Annual report (2017) of the company briefs that the company is looking forward to diversify the market more. Though, the report also tells that the natural resources are used by the company and thus the company is looking for the other perspectives to enhance the revenue and reduce the uses of natural resources. It has also been found that the company is quite concern about the future due to natural resources and the company has disclosed all the information according to the accounting policies and the standards. Ratio analysis: Ratio analysis is a study which is done to evaluate the financial changes and the performance of the company. The financial performance of Repsol plc has been evaluated in context with the financial performance of British petroleum to evaluate the performance and the investment position of the company. Following is the calculations and analysis of different ratios of the company and the competitive company: Profitability ratios of company briefs about the performance and the competition position of the company. Return on equity and return on asset ratio explains that the performance of Repsol is quite better in terms of generating the profit in context of total equity and the assets of the company. In addition, the financial leverage percentage briefs that the company has managed the profits in an effective way. Further, the earnings per share, quality of margin, fixed asset turnover ratio and the profit margin of the company also expresses that the profitability position of Repsol is quite higher than the performance of British petroleum. It explains that the company has generated a great margin of profit in recent year. Profitability Ratios: Repsol BP Return on equity Net income / 2,121 3,388 Average shareholder's equity 29,793 98,491 Answer: 7.12% 3.44% Return on assets Net income / 2,121 3,388 Net assets 59,857 2,76,515 Answer: 3.543% 1.23% Financial leverage percentage Return on equity - 7.12% 3.44% Return on assets 3.54% 1.23% Answer: 3.58% 2.21% Earnings per share Net income / 2,121 3,388 Average number of shares 1551 3282 Answer: 1.368 1.032 Quality of margin Cash flow from operating activities / 5113 18931 Net income 2,121 3,388 Answer: 2.411 5.588 Profit margin Net income / 2,121 3,388 Sales Revenue 59,857 2,76,515 Answer: 3.54% 1.23% Fixed assets turnover ratio Net sales revenue/ 2121 3388 Average net fixed assets 45086 201547 Answer: 4.70% 1.68% Liquidity ratio: Liquidity ratios of company briefs about the performance and the competition position of the company. Cash ratio, Current liquidity ratio explains that the performance of Repsol is quite better in terms of managing the funds to pay for short term debt obligations. Further, the acid test ratio, receivable turnover ratio and inventory turnover ratio of the company also expresses that the liquidity position of Repsol is quite better than the position of British petroleum. It explains about the better position of the company in the industry. Liquidity Ratios Repsol BP Cash Ratio Cash + cash equivalents 4601 25586 Current liabilities 12035 64726 Answer: 0.38230162 0.395297099 Current Ratio Current Assets / 14,771 74,968 Current liabilities 12,035 64,726 Answer: 1.23 1.16 Acid test ratio Current Assets - Inventory / 10,974 55,957 Current Liabilities 12,035 64,726 Answer: 0.91 0.86 Receivable turnover ratio Net credit sales / 2121 3388 Average net receivable 6116 28832 Answer: 0.35 0.12 Inventory turnover ratio Cost of goods sold / 30045 203945 Average inventory 3797 19011 Answer: 7.91 10.73 Solvency ratios: Solvency ratios of company briefs about the gearing position, debt position and the equity position of the company. Times interest coverage ratio and cash coverage ratio of the company expresses that the interest cost in terms of profits of Repsol is quite better than the position of British petroleum. It explains about the better position and the less cost of the company in the industry. Further, debt equity ratio explains that the performance of Repsol is not better in terms of managing the better capital structure in context with the managing strategy of British petroleum. Solvency ratio Repsol BP Times interest earned ratio Net income + interest expenses + Income tax expenses 3708 8521 Interest expenses 327 1421 Answer: 11.34 6.00 Cash coverage ratio Cash flow from operating activities / 5,113 18,931 Interest paid 222 2,504 Answer: 23.032 7.560 Debt to equity ratio Total liabilities / 29,794.00 1,76,111.00 Stockholder's equity 29,793 98,491 Answer: 1.000 1.788 Market related ratios: Market related ratios of company have been studied lastly to evaluate the performance of the company and make a decision about the investment position of the company. The report briefs about the performance and the competition position of the company. Price earnings ratio explains that the Repsol plc is offering equal earnings to its stakeholders than the BP which explains that the market position and the investment position of Repsol plc is better in the industry. Further, the dividend yield ratio of the company expresses that the company is paying better dividend amount in context with the British petroleum. The dividend coverage ratio of the company is better in the industry. Market based ratios Repsol BP Price earnings ratio Market price per share 15.65 515.00 Earnings per share 1.37 39.87 Answer: 11.423 12.917 Dividend yield ratio Dividend per share / 0.21 1.87 Market price per share 15.65 515.00 Answer: 0.014 0.004 (Morningstar, 2018) Security analysis: The security position of the company has been evaluated further and it has been found that the stock price of the company has been enhanced by a huge % after release of the annual report. Annual report has attracted the investors towards the company (Yahoo Finance, 2018). The annual report contains all the related information about the changes into the organization, financial and non financial informnation of the organization, future outlook of the organization and the comparison of the organization with the last year performance of the company. Annual report makes it easy for the investors and the financial analyst to evaluate the financial performance and the position of the company. In case of Repsol plc, the annual report is quite helpful for the investors (Morningstar, 2018). Investors could get the information about the financial performance, segment performance, dividends, net profit etc information of the company on the basis of annual reports. Financial times (2018) has disclosed that the company has generated huge profits and the current position of the company is quite competitive in the market. The analyst report tells that the financial performance of the company is quite better in the industry and it suggests the investors to invest into the company. The Yahoo finance (2018) tells that the corporate social responsibility policy of the company is quite better. The company is using the natural resources for its business and for it; the company is paying the society back in terms of providing job opportunities and launching various new projects for the environment. Reuters (2018) has also briefed that the comapny has diversified its market into vertical way. It has launched various subsidiaries to manage the various operations of the company such as exploring, refining, marketing, power generation, distribution, trading etc. The economic position of the company is quite better. The financial position of the industry briefs about better position of the company and the economic environment. On the basis of above study on Repsol limited and the British petroleum, it has been found that the performance of the company is quite better and at the same time, the market position of the company is also well. The report explains that the investors should invest into the organization for short term as well as long term (Bloomberg, 2018). In both the situations, the investors would be able to get huge return as the stock price of the company briefs about positive changes as well as the dividends of the company are also attractive. The report explains that the investors should hold the stock of Repsol plc for now and at the time of announcing the dividend amount or releasing the annual report, investors should sold it in the market. It would offer them huge return. Investors could buy the stock now and hold it for some time to enhance the return, Conclusion: To conclude, the financial performance of and the market position of the company is quite better and briefs about a competitive position in the industry. It expresses that the investment position of the company are quite better. An investor should invest into the organization for short term as well as long term to generate the extra profit. References: Annual Report. Repsol plc. Web. 18th April 2018. 2018. https://www.repsol.com/imagenes/global/en/2017_Integrated_management_report_tcm14-123306.pdf Bloomberg. Repsol plc. Web. 18th April 2018. 2018. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=323502 Financial Times. Repsol plc. Web. 18th April 2018. 2018. https://markets.ft.com/data/equities/tearsheet/summary?s=REP:MCE Morningstar. British petroleum. Web. 18th April 2018. 2018. https://www.morningstar.com/stocks/XNYS/BP/quote.html Morningstar. Repsol plc. Web. 18th April 2018. 2018. https://financials.morningstar.com/cash-flow/cf.html?t=XBER:REPregion=deuculture=en-US Reuters. Repsol plc. Web. 18th April 2018. 2018. https://www.reuters.com/finance/stocks/overview/REP.MC Yahoo Finance. Repsol plc. Web. 18th April 2018. 2018. https://finance.yahoo.com/quote/REP.MC/