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Financial Performance Evaluation of Shell Plc

Module Code: 7144EXQ

Module Lecturer: Nathaniel Babajide

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Table of Contents
Introduction...............................................................................................................................................3
Financial Analysis......................................................................................................................................4
Ratio Analysis........................................................................................................................................4
Liquidity Ratios.................................................................................................................................5
Activity Ratio.....................................................................................................................................6
Debit Ratio.........................................................................................................................................7
Profitability Ratio..............................................................................................................................8
Trend Analysis...........................................................................................................................................9
Upstream Investment Analysis...............................................................................................................11
ESG Program...........................................................................................................................................13
Energy Transition....................................................................................................................................13
Sustainability Programs..........................................................................................................................15
Recommendations...................................................................................................................................16
For Investors........................................................................................................................................16
For Company.......................................................................................................................................16
Conclusion................................................................................................................................................16
References:...............................................................................................................................................18
Appendices:..............................................................................................................................................21
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Introduction
The Royal Dutch Petroleum Company of the Netherlands and the "Shell" Transport and Trading
Company of the United Kingdom's merged to establish the Royal Dutch Shell Plc in 1907. The
united business quickly overtook American Standard Oil as its main rival, and by 1920 Shell was
the world's largest oil producer. In 1929, Shell made its initial foray into the chemical sector.
One of the "Seven Sisters" that controlled the world's petroleum sector from the middle of the
1940s to the middle of the 1970s was Shell. The first commercial marine delivery of liquefied
natural gas took place in 1964 with Shell as a partner (LNG). Shell bought the mining business
Billiton in 1970; it later sold it in 1994 and it is now a part of BHP. Gas has elevated in
importance in recent years. In current decade Shell is more focusing on the GAS business. In
order to accommodate his focus and enhance business in GAS sector Shell had acquired BG
Group since 2016. BG group was also operating in the field of Oil and GAS and was based in
United Kingdom. Prior to acquired by Shell Plc, BG group was working in 25 countries and was
largest supplier of LNG to the United States.

Shell has currently operations in around 99 countries with the help of 82 thousand employees by
the end of December 2021. Company have expanded its operations through 45 thousand service
stations around the globe. Company produces more than 3.7 million barrels of oil everyday to
feed the energy need around the globe. Oil drilling operations are performed around the globe
and oil is refined through 15 company owned refineries. Shell is a player in the CRT industry.
The market for commercial road transport (CRT), which includes all commercial road transport
axles, is broad and complicated. Shell's primary offerings in the CRT sector are gasoline,
lubricants, greases, etc. However, Shell doesn't have a strong brand for the CRT market and pays
less attention to it than it does to the market for private automobiles. In the CRT market, Shell
has stiff competition from BP, Q8, Esso, and Texaco.

Company have name Royal Dutch Shell Plc which was officially changed to Shell plc since
January 2022. Shell plc has its headquarter basede in London. It is a publicly traded business
having secondary listings on the New York Stock Exchange and Euronext Amsterdam in
addition to its principal listing on the London Stock Exchange (LSE). It is one of the
"supermajors" in the oil and gas industry and, in terms of revenue and earnings, one of the
biggest businesses in the world.
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Over more than a century of Shell Plc history have been an incredible adventure. Through a
century of fast change and sporadic turmoil, mankind and Shell have consistently been able to
adapt. But the coming century will also provide significant difficulties.

Financial Analysis
Financial analysis is the process of assessing the performance and appropriateness of enterprises,
projects, budgets, and other financial-related operations(Areas, 2018). Financial analysis is used
to determine if a company have stable growth, solvent for a foreseeable future, have enough
liquidity to meet its obligations and run smoothly its operations, or lucrative enough to justify a
financial investment (Malgwi & Dahiru, 2014).

In order to ascertain the financial health of Shell the five-year 2017 to 2021 financial analysis is
steered. Company has strong financial strength with having a Market Capitalization of $169,421
million by the end of 2021. However, company is facing a unstable revenues growth since 2017.
The company's financial status shows a fluctuation since 2017 as depicted from the annual
report. However, a substantial decline in the Financial Year 2020 have been evidenced which is
mainly due to the COVID–19 epidemic, which has affected countries all over the world, hasn't
spared this firm too.

Ratio Analysis
Ratio analysis is a more viable mathematical technique for assessing and analyzing a company's
financial performance by obtaining information from its financial statements, such as the balance
sheet and income statement (Horrigan, 1968). Ratios mainly analysis the company operating
efficiency, its liquidity for smoothing its operations, operational effectiveness and profitability of
its operations and return to the shareholders. Fundamental equity research is built on ratio
analysis (Salmi & Martikainen, 1994).

Managers can utilize ratio analysis to assist them in making critical decisions after assessing the
company's financial status. It also makes it easier to spot important links between various
financial indicators that show the financial success of a firm (Drake & Fabozzi, 2012). The
financial analyst could find areas that need development, necessitating assessing these linkages
to develop a workable follow-up strategy (Nissim & Penman, 2001).
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Liquidity Ratios
Structured ratios, often referred to as liquidity ratios, show a company's ability to meet its short-
term obligations. These ratios show where current or liquid assets are produced (Maxwell et al,
2000).

Following table shows liquidity ratios of the company i.e. current ratio, quick ratio and cash
ratio.

Particulars 2021 2020 2019 2018 2017

Current Ratio 1.3477 1.227 1.1641 1.2528 1.196

Quick Ratio 1.0833 0.9638 0.8618 0.9814 0.8798

Cash Ratio 0.3869 0.4306 0.2268 0.3437 0.2546

Source: Annual Reports of the Company for the year 2021, 2020, 2019, 2018 & 2017
Detailed Calculation in Appendix 1

Current Ratio

The capacity of the corporation to pay its current liabilities in the regular course of business is
shown by the current ratio (Yadav, et al., 2016).. In order to provide a leverage to accommodate
current obligations and guarantee the company's smooth operations, firms often keep current
assets that are twice as large as current liabilities. The current ratio shows each year's
progression: 1.196 in 2017, 1.252 in 2018, 1.164 in 2019, 1.227 in 2020 and 1.3477 in 2021.
Normally, companies try to maintain current ratio of 2:1 in order to fulfill the working capital
needs but industry standards may vary. In case of petrochemicals and refining related industries,
current ratio standard is 1.34 in the year 2021. Company maintains the current ratio in 2021 is
the universal benchmark for analyzing a company's current ratio. Company current ratio in the
year 2019 was too low but company gained the position after period.

Quick Ratio

Trend in quick ratio shows a significant improvement. It seems company is managing its
inventories effectively as delivery channels have been improved so that Shell needs to retain low
level of inventories on hand.

Cash Ratio
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Cash ratio shows a volatile impact. Company have lowest cash ratio 2019 post pandemic but in
year 2020 company improved its cash ratio and have more in form cash but in year 2021 the ratio
starts declining. However, the company have good cash ratio but declining trend question the
company management to maintaining more current assets in form of cash that operations can be
smoothened.

Activity Ratio
Activity of Shell Plc has been examined through Receivable turnover ratio and total assets
turnover ratio.

Particulars 2021 2020 2019 2018 2017

Receivable Turnover 4.52 4.43 6.83 7.89 5.87

Total Assets Turnover 0.674 0.483 0.871 0.993 0.766

Source: Annual Reports of the Company for the year 2021, 2020, 2019, 2018 & 2017
Detailed Calculation in Appendix 2

Receivable Turnover Ratio

The goal of the receivable turnover ratio is to assess the company's ability to quickly recover its
receivables. The high ratio suggests that the organization has excellent clients. The cautious
business has a high turnover rate for its receivables (Alawi et al).

Due to a large fall in the company's sales, the receivable turnover ratio has been on the slide for
the past two years. In the instance of Royal Dutch Shell, the downward trend is brought on by a
decline in revenue rather than the caliber of the company's consumers. In 2020, & 2021 the firm
didn't generate enough revenue. The declining trend shows that the business is having trouble
getting its clients to pay it back. The business must thus determine what is causing this
downward trend in cash collection.

Total Assets Turnover Ratio

The total asset turnover ratio is used to assess a company's capacity to produce revenue from its
available resources, such as assets. The peak of the total asset turnover ratio occurred in 2018.
The total assets turnover ratio had begun to fall in 2019. Sales had been seen to be much down in
2020, which resulted in a significantly lower total asset turnover and company recovers its assets
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turnover ratio in 2021 This demonstrates the management of the company's inability to
effectively utilize its resources. Efficiency significantly drops from 76 percent to 48 percent and
then rise again to 67%. The ideal total asset turnover is one or higher. The total assets turnover
for Shell Plc. was not deemed to be ideal since it is substantially below 1. Due to lower demand,
sales are declining, which is the cause of the negative trend.

Debit Ratio
In order to ascertain leverage of Shell Plc two of debit ratio have been examined summarized in
below table.

Particulars 2021 2020 2019 2018 2017

Debit Ratio 0.566 0.582 0.529 0.4926 0.514

Times Interest Earned 9.269 -5.595 6.434 10.512 5.485

Ratio

Source: Annual Reports of the Company for the year 2021, 2020, 2019, 2018 & 2017
Detailed Calculation in Appendix 3

Debit Ratio

The debt ratio contrasts the firm's assets and debt. It assessed the extent to which the company
relied on money obtained through debt to pay for its assets. The debt ratio indicates how much of
the assets are financed by debt. The debt part first exhibited a declining trend in 2017, and by
2018, it was smaller than the equity portion investing in assets. The trend shifted in 2019. It grew
as time went on. With each passing year, Shell Plc’s creditworthiness gets worse. Smaller
amounts of debt are seen favorably than larger amounts of debt. This indicates that by 2021, debt
would have covered 56.6 percent of total assets.

Interest Earned Ratio

A company's capability to payout its debt holders by making interest payments may be
determined by looking at its interest earned ratio. This refers to how much interest a business can
pay on its debt using operating income left over after all operational costs are paid. Investors and
creditors of organizations mostly use this ratio to assess the risk they may incur when providing
money to the company.
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Compared to previous years, the corporation was able to pay interest more often in 2018. The
trend began to change in 2019 and even became negative by 2020. This is due to the fact that the
business did not generate a profit in 2020 to pay off its debt. There is very little evidence of a
negative interest coverage ratio trend. If this pattern persists, the business's reputation might be
damaged and it could default on its loan, which would be bad for its creditworthiness. The
business is not paying its debts as they are due. But in 2021 company perform a good revival and
generate profits which can cover interest cost to the business more than 9 times.
Creditworthiness of the Shell Plc was restored in 2021.

Profitability Ratio
Three ratios have been calculated to measure the profitability of the Shell Plc which have been
summarized in the following table.

Particulars 2021 2020 2019 2018 2017

Return on Equity 11.68% -13.95% 8.49% 11.755% 6.676%

Return on Assets 4.9% 5.71% 3.918% 5.849% 3.187%

Profit Margin 7.37% -11.83% 4.49% 5.89% 4.16%

Source: Annual Reports of the Company for the year 2021, 2020, 2019, 2018 & 2017
Detailed Calculation in Appendix 4

Return on Equity

The sole distinction between return on equity and return on assets is that return on equity
measures how well management generates profits using the available equity. This ratio compares
the net income to the equity of the firm (Adjirackor, et al., 2021). It describes the potential return
on investment for those who buy firm equity. The pattern of ROE and ROA is comparable.
Company performs better in 2018 from 2017 evidenced from its increasing ROE. But later on, it
began to fall in 2019 and eventually turned negative in 2020. In the year 2020, the company's
return on equity was negative. It stands for the management of the company's inability to profit
from its equity. But company made an astonishing come back and reach the ROE level of 2018
in 2021.
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Return on Assets

The company's management's ability to make a profit from the assets at its disposal is measured
by return on assets. It assesses how well the company's assets are managed. The rising trend in
ROA is an indication of the company's asset management's increasing ability to manage its assets
profitably (Adjirackor, et al., 2021). 2021 had the greatest ROA of the previous four years. In
contrast, the company faces fluctuating since the last five years and a negative turn down in
2020. . This downward trend suggests that management of the organization did not utilize its
resources effectively in that particular year however its was managed effectively afterwards.

Profit Margin

Profit margin is used to assess the company's profits in compare to company revenues. Investors
lose satisfaction and are less likely to continue investing in the firm if it doesn't produce a
sufficient amount of money. As a result, this ratio identifies and attempts to address problems
with the company's profitability (Mishra & Panpaliya, 2021). In 2021, the profit margin was at
its greatest. In 2019 it began to fall, and in 2020 it turned negative. 2020 was a pandemic year
and trade restriction halted the sales and movement which resulted into losses for the company
and company could not make any profits in such particular year. However, company made a
significant revival post pandemic years and earn a highest of profit margin from its past five
years.

Trend Analysis
An organization's financial data is analyzed over time using trend analysis. Depending on the
situation, periods might be counted in months, quarters, or years (Harvey, 2014). Calculating and
examining the amount change and percent change from one period to the next is the aim (Hess,
Iyer & Malm, 2001).

Trend over the five period in revenues, expenditures and incomes/losses are as follows:

For the Years

2017 2018 2019 2020 2021
Revenues 311,870 396,556 352,106 183,195 272,657
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Operating Expenditure 293,740 360,935 326,621 210,162 242,828

94% 91% 93% 115% 89%
Income/Loss 12,977 23,352 15,842 (21,680) 20,101
4% 6% 4% -12% 7%
Source: Annual Reports of the Company for the year 2021, 2020, 2019, 2018 & 2017
Detailed Calculation in Appendix 5

Trend in Revenues, Exenditures and Incomes

500,000

400,000

300,000

200,000

100,000

-
2017 2018 2019 2020 2021

(100,000)

Revenue Operating Expenditure Income/Loss

To analyses company performance over time it has been revealed that company total revenues
were at peak in 2018 which starts declining after that. Company made a worsen performance in
2020 in which operating expenditure and cost of goods sold has been increased from revenues.
Company made a good revival and earns 7% profits in year 2021 which is greater in past four
years but total revenues have not reached at 2018 level which seems Shell Plc market share is
reducing or market is shrinking in which it operates.

From company assets and liabilities horizontal trend analysis it is revealed that company non-
current assets are declining over course of past five years. There were no major variations in
company’s current liabilities and current assets but both showed a upward trend in 2021, which
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reveals that company accounts receivable, inventories and accounts payables have been
increased. Which is increasing collection period from accounts receivables and also increasing
accounts payable payment period because company total revenues are not increasing from the
past periods.

Trend in Assets and Liablilities

350,000

300,000

250,000

200,000
Axis Title

150,000

100,000

50,000

-
2017 2018 2019 2020 2021
Years

Current assets Non-current liabilities Current liabilities

Total equity Non-current assets

Upstream Investment Analysis

Exploration and extraction of crude oil, natural gas, and natural gas liquids are done in the
upstream section. Additionally, it transports and markets gas and oil as well as runs the
infrastructure required to get them to market. Currently upstream locations operated by the Shell
Plc are South Africa, Tunisia, Morocco, Egypt, Cameroon, Gabon, Algeria, Libya, Ghana &
Nigeria.

Recently, Shell Plc has notified Tunisian authorities that it will hand over upstream concessions
and depart the nation next year as it shifts its focus to renewable energy. Shell Plc is planning to
early hand-back of Asdrubal Permit which was going to be expired in 2035, but Shell Plc plans
to concessions will lead to early handover to such permit. In order to early withdrawal from
Tunisia company is dealing with Rothschild & Co Bank to smoothen the sales of Tunisian assets.
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Major western energy corporations have gradually left Tunisia in recent years as a result of rising
dissatisfaction with the nation's unpredictable regulatory and political climate after the 2011
revolution, which has caused investments to dry up.

In order to help the Sultanate of Oman meet its expanding energy needs, Shell Plc inked an
interim upstream agreement in February 2019 that included a finance and work schedule for
projects that would produce gas resources in 2019 and 2020. Petroleum Development Oman
(PDO), Oman Oil Company (OOC), and Total were the other signatories. Investments in gas
exploration and production are covered under the project.

Shell Plc have earned profits of $9,694 million in Upstream segment in 2021 but in the year 2020
there were losses of $10,785 million in upstream segment. Upstream is facing volatile
profitability since last five years. However, company transition to renewable energy and
concession of upstream operations may cause this segment may not be more profitable in future.

Upstream Segment Earnings

$15,000.00

$9,694.00
$10,000.00
$6,798.00

$5,000.00 $4,195.00
$1,551.00
(millions)
Earnings

$-
2017 2018 2019 2020 2021

$(5,000.00)

$(10,000.00) $(10,785.00)

$(15,000.00)
Year

Recently company have provided insight into the organization's plan to change as it advances in
the energy transition as it opened one of the world's premier oil and gas conferences in August
2021. Company claims that it has the edge over its rival for lower-carbon production in segment
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of oil and gas. Company plans regarding drilling of around 25 to 28 exploration wells in Gulf of
Mexico was shared in Offshore Technology Conference of 2021. The business has announced
that it will continue to invest around $1.5 billion in exploration each year, with a focus on
prolonging the life of its eight key upstream properties and de-risking its present frontier position
by 2025, with no further new frontier entrants envisaged. As long as they remain a component of
the energy mix, Shell will continue to explore for hydrocarbons. Company will do it through
research and development so these two energies could be combined and work altogether.

ESG Program
Company is exploring the low carbon footprints wells in Gulf of Mexico. Recently, at Offshore
Technology Conference, 2021, company claims that because of a few inherent characteristics,
deep-water Gulf of Mexico oil is thought by Shell to have one of the lowest net carbon footprints
of any oil that can be produced. That oil reservoir has very high pressure which causes changes
in properties of oil which leads to reduces footprints. One is that the reservoir has a high
pressure. Another benefits for extraction of oil from these high-pressure reservoirs is that they
require less energy due to this greater reservoir pressure. Extraction from these reservoirs
requires low infrastructure cost due to high pressure inside. As well company is assuming it a
very good potential investment due to high quality of fuel of such basin and regulatory procedure
of the US are very clear and in favor of oil extraction industries.

Energy Transition
The Paris Agreement makes reference to the need of a fair transition for low carbon economies,
acknowledging the need for governments to generate "decent employment opportunities and
quality jobs and workplace" and account for the workers impacted by the transition to a low-
carbon economy. According to the Paris Agreement's parent treaty, the UN Framework
Convention on Climate Change, decent employment is defined as "jobs that provide appropriate
salaries and social protection, safe working conditions, respect for rights at work, and effective
social conversations."

Shell Plc has issued its energy transition strategy in 2021. According to which Shell Plc have
planned to invest around $19 to $22 billion each year for decarbonizing efforts. Company is
planning to seek its energy transition by following main strategies.
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i. Reducing investment in Upstream segment with a gradual rate of 1%-2% every year
ii. Increase in energy transition portfolio and have a 50% share in hydrocarbon
production by 2030.
iii. Increase in investment in other segments which assists in low carbonized
environments.

Company is diversifying its portfolio and investing in PV and wind energy as alternate to the
carbonized power means. Because PV and wind energy could not completely replace the fossil
fuels company is investing in hydrocarbon energy for eliminating the use of fossil fuels.
Company has set a target to eliminate carbon emission and become zero emission by 2050. The
targets have been set on the year-to-year basis and company has published its first energy
transition progress repot in 2021. In 2021 AGM 89% of the shareholders shows confidence on
implementation of the energy transition strategy of the company. However, the recent AGM
conducted on May, 24 2022 the support has been reduced by the shareholders to 80%. Support
for Paris climate program has also been reduced in ballot from 30% last year to 20% in current
year. The group's intentions to achieve net-zero emissions by 2050 were stated in Shell's Energy
Transition Strategy, which was published earlier this year. When compared to 2016 levels, it
seeks to cut net carbon emissions by 6 to 8 percent by 2023. The goal increases to 20% by 2030,
then to 45% by 2035, and finally to 100% by 2050.

Liquid natural gas (LNG) and bioLNG, which burn cleaner than diesel, can assist the road
transportation sector in reducing emissions and expenses.Shell Plc has anticipated expanding our
network of European LNG refueling stations to 50 locations by the end of 2021 for the
distribution of bioLNG. We had 44 Shell-branded LNG refueling stations in seven countries
before the end of the year. Compared to 2020, when we had 26 stations, this is an increase. We
hope to provide bioLNG as a blend to clients as it will expand network of LNG refueling
stations in order to further reduce emissions.

Company has expanded its operations for availability of clean energy by charging points ion its
gas stations. Almost 8,000 of 87,000 public and private electric vehicle (EV) charging stations
are located at Shell gas stations,

For instance, Shell now runs more than 850 public charging stations at Shell gas stations and EV
Mobility Hubs in China. By the end of 2025, company had planned to expanded its operation and
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will install 50,000 on-street EV charging points in the UK through its “ubitricity”, a division of
the Shell Plc.

Liquid natural gas (LNG) and bioLNG, which burn cleaner than diesel, can assist the road
transportation sector in reducing emissions and expenses. Company had anticipated that
expanding their network of European LNG refuelling stations to 50 locations by the end of 2021
for the distribution of bioLNG. Company had 44 Shell-branded LNG refueling stations in seven
countries before the end of the year. Compared to 2020, when company had 26 stations, this is an
increase. Company had planned to provide bioLNG as a blend to further reduce emissions for her
clients as it expand their network of LNG refueling stations.

Sustainability Programs
Company is spent $815 million in 2021 research and development of net-zero emission.
Company invested in improving energy efficiency and electrification, invested in R&D of
biofuels and synthetics fuels and other products which are alternate to fossil fuels and assists in
reduction in carbon emissions. Shell Plc is investing in innovation for renewable sources which
combined the natural gas in the process of energy production and carbon capture instruments.
These captured carbons can be used and stored for later usage purposes. The economical
production of such instruments and their economic usage viability is the main concern under
R&D of the Shell Plc.

According to its sustainability program company have installed REFHYNE in 202 in Rheinland
which produces 10 MW electricity. This is electrolyser which uses renewable energy and will
produce 1300 tons of hydrogen. Company has extension plans for installing of such king of
renewable electrolyser around the Europe. Company is planning to build largest hydrogen
projects in Netherlands. These carbon free and renewable energy mechanisms are in line with
company sustainable energy growth policy.

Company is building a biofuel plant in Netherlands which will produce the renewable diesel
which consumes industrial and Agri residuals. Full utilization of this plant could produce enough
bio fuel which could reduce the carbon emission by 2.8 million tons per year. This bio fuels
emits very low carbons.
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After finishing the productive ViennaGreenCO2 project in 2021, Shell Plc had relocated our
solid sorbent carbon capture pilot from Austria to the Netherlands. At BMC Moerdijk, the pilot
plant currently absorbs CO2 created during the process of producing power from chicken dung.
It is a crucial step toward the first implementation of Solid Sorbent Technology on a commercial
basis. Shell Plc is in hurry for the development and deployment of the Solid Sorbent Technology
toward a commercial size unit, subject to R&D advancement and future investment decisions. If
successful, Solid Sorbent Technology will enable more CO2 emitters to capture and store their
emissions due to its lower CO2 capture costs and superior carbon capturing performance when
compared to current CO2 capture methods.

Recommendations
For Investors
Some problems with Shell Plc were found by the financial ratio analysis and upstream
investment analysis of the company. Using their choice of investment, investors may determine
the company's financial health thanks to the ratio analysis. The firm has a high potential to
swiftly pay off its present debt because to its solid liquidity position. On the basis of this, it is
recommended to investors that they offer short-term loans to Shell Plc. The corporation has an
extremely little risk of going bankrupt. It is not advised to invest in the firm based on their
success in the prior year, depending on the activity and profitability ratio. Each ratio reveals a
negative impact. Therefore, it is advised that investors invest based on the cash flow to sale ratio
since it demonstrates an upward tendency. Shell Plc is a profitable firm when evaluating its
current performance in relation to its past performance. The assets did not result in any sales for
the firm. The proliferation of Covid-19 is to blame for the loss it is currently experiencing. The
business lost money during that time since it was unable to turn a profit and pay its bills. Travel
limitations had decreased demand for oil and gas, which resulted in the loss. Investors are
advised to make investments once the world has recovered from the virus. In the upcoming years
as the economy improves, it is anticipated that the firm would quickly recoup from this loss.

For Company
Shell Plc should diversify its portfolio, which is solely depends on the sole petrochemicals
causes the company huge losses if any situation like covid-19 pandemic rises again.
Furthermore, global transition to clean energy and legal requirements of different nations around
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the globe may cause disruption of operation in near future in some countries of the world. Shell
Plc may have to diversify its portfolio to enhance the shareholder’s wealth.

Conclusion
The examination of Shell Plc financial ratios served as the report's main focus. Oil and gas global
business Shell Plc. From 2017 to 2021 examination was conducted for these five years.
According to the ratios calculated and looking into company’s further policies of energy
transition, sustainability and upstream investment programs, it has been observed that company's
performance had been increasing from 2017 to 2018, but in 2019 and 2020, a significant reversal
in performance was observed, which was mainly due to spread of pandemic around the Globe
which halts the business operations around the world. Therefore, oil prices were declined to less
than $1 per barrel in US due to reduction in demand and lack of facilities to store the fuel in
transit. Therefore, in the year 2020, the Shell plc suffered a huge loss due to such mega decline
in prices and substantial charges of storing the in transit fuel and gas when demand was halted.
There is a noticeable difference between the company's performance before and after the Covid-
19 epidemic. Company had revived from pandemic as well as company energy transition
programs and sustainability program make company more stable. Company investments in Gulf
of Mexico for low carbon footprint oil will support the company policy for reduction in carbon
emission also it enhances its market capitalization due to gradual increase in clean energy
demand around the globe.
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Shell Plc. Annual Report 2020. Accessed from https://www.shell.com/about-us/annual-

publications/annual-reports-download-centre.html [Accessed on 02/08/2022]

Shell Plc. Annual Report 2019. Accessed from https://www.shell.com/about-us/annual-

publications/annual-reports-download-centre.html [Accessed on 02/08/2022]

Shell Plc. Annual Report 2018. Accessed from https://www.shell.com/about-us/annual-

publications/annual-reports-download-centre.html [Accessed on 02/08/2022]

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publications/annual-reports-download-centre.html [Accessed on 02/08/2022]

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publications/annual-reports-download-centre.html [Accessed on 04/08/2022]

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publications/annual-reports-download-centre.html [Accessed on 04/08/2022]

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publications/annual-reports-download-centre.html [Accessed on 03/08/2022]

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publications/annual-reports-download-centre.html [Accessed on 03/08/2022]

Shell Plc. Sustainability Report 2018 Accessed from https://www.shell.com/about-us/annual-

publications/annual-reports-download-centre.html [Accessed on 03/08/2022]
 20

Shell Plc. Sustainability Report 2017 Accessed from https://www.shell.com/about-us/annual-

publications/annual-reports-download-centre.html [Accessed on 03/08/2022]

Yadav, S. K., Kapoor, R. & Dhaigude, A. S. (2016). Financial performance Ranking of oil and
gas companies in india using topsis method. Jaber, 14(6), 4463-4473.
 21

Appendices:
Appendix 1

Current Assets
Current Ratio=
Current Liabilities

128,765
Current Ratio for 2021= =1.3477
95,547

90,695
Current Ratio for 2020= =1.227
73,915

92,689
Current Ratio for 2019= =1.1641
79,624

97,482
Current Ratio for 2018= =1.2528
77,813

95,404
Current Ratio for 2017= =1.196
79,767

Current Assets−Inventories
Qucik Ratio=
Current Liabilities

128,765−25,258
Qucik Ratio for 2021= =1.0833
95,547
 22

90,695−19,457
Quick Ratio for 2020= =0.9638
73,915

92,689−24,071
Qucik Ratio for 2019= =0.8618
79,624

97,482−21,117
Quick Ratio for 2018= =0.9814
77,813

95,404−25,223
Quick Ratio for 2017= =0.8798
79,767

Cash+ Marketable Securities

Cash Ratio=
Current Liabilities

36,970
Cash Ratio for 2021= =0.3869
95,547

31,830
Cash Ratio for 2020= =0.4306
73,915

18,055
Cash Ratio for 2019= =0.2268
79,624

26,741
Cash Ratio for 2018= =0.3437
77,813
 23

20,312
Cash Ratio for 2017= =0.2546
79,767

Appendix 2

Total Revenue
Asset Turnover Ratio=
Total Assets

272,657
Asset Turnover Ratio for 2021= =0.6743
404,379

183,195
Asset Turnover Ratio for 2020= =0.483
379,268

352,106
Asset Turnover Ratio for 2019= =0.8708
404,336

396,556
Asset Turnover Ratio for 2018= =0.9934
399,194

311,870
Asset Turnover Ratio for 2017= =0.7661
407,097

Sale
Receivable Turnover Ratio=
Accounts Receivables
 24

272,657
Receivable Turnover Ratio for 2021= =4.52
60,273

183,195
Receivable Turnover Ratio for 2020= =4.43
41,266

352,106
Receivable Turnover Ratio for 2019= =6.83
51,499

396,556
Receivable Turnover Ratio 2018= =7.89
50,257

311,870
Receivable Turnover Ratio 2017= =5.87
53,040

Appendix 3

Total Liabilites
Debit Ratio=
Total Assets

229,053
Debit Ratio for 2021= =0.566
404,379

220,731
Debit Ratio for 2020= =0.5819
379,268

213,873
Debit Ratio for 2019= =0.5289
404,336
 25

196,660
Debit Ratio 2018= =0.4926
399,194

209,285
Debit Ratio 2017= =0.514
407,097

EBIT
Time Interest Earned Ratio=
Interest

33,436
Time Interest Earned Ratio for 2021= =9.269
3,607

−22,878
Time Interest Earned Ratio for 2020= =−5.595
4,089

30,175
Time Interest Earned Ratio for 2019= =6.434
4,690

39,366
Time Interest Earned Ratio 2018= =10.512
3,745

22,172
Time Interest Earned Ratio 2017= =5.485
4,042

Appendix 4

Net Income
Returnon Equity=
Total Equity
 26

20,101
Returnon Equity for 2021= =0.116889
171,966

−21,680
Returnon Equity for 2020= =−.1395
155,310

15,842
Returnon Equity for 2019= =.0849
186,476

23,352
Returnon Equity for 2018= =0.11755
198,646

12,977
Return on Equity for 2017= =0.06676
194,356

Net Income
Returnon Assets=
Total Assets

20,101
Returnon Assets for 2021= =0.049
404,379

−21,680
Returnon Assets for 2020= =0.0571
379,268

15,842
Returnon Assets for 2019= =0.03918
404,336
 27

23,352
Returnon Assets 2018= =0.05849
399,194

12,977
Returnon Assets 2017= =0.03187
407,097

Net Income
Profit Margin=
Sales

20,101
Profit Margin for 2021= =7.3723
272,657

−21,680
Profit Margin for 2020= =−11.8344
183,195

15,842
Profit Margin for 2019= =4.4992
352,106

23,352
Profit Margin 2018= =5.8887
396,556

12,977
Profit Margin 2017= =4.161
311,870

Appendix 5
 28

Consolidated Income Statement for Shell Plc

For the Year

2021 2020 2019 2018 2017
Revenue 261,504 180,543 344,877 388,379 305,179
Share of profit of joint ventures and associates 4,097 1,783 3,604 4,106 4,225
Interest and other income 7,056 869 3,625 4,071 2,466
Total revenue and other income 272,657 183,195 352,106 396,556 311,870
Purchases 174,912 117,093 252,983 294,399 223,447
Production and manufacturing expenses 23,822 24,001 26,438 26,970 26,652
Selling, distribution and administrative 11,328 9,881 10,493 11,360 10,509
expenses
Research and development 815 907 962 986 922
Exploration 1,423 1,747 2,354 1,340 1,945
Depreciation, depletion and amortisation 26,921 52,444 28,701 22,135 26,223
Interest expense 3,607 4,089 4,690 3,745 4,042
Total expenditure 242,828 210,162 326,621 360,935 293,740
Income/(loss) before taxation 29,829 (26,967) 25,485 35,621 18,130
Taxation charge/(credit) 9,199 (5,433) 9,053 11,715 4,695
Income/(loss) for the period 20,630 (21,534) 16,432 23,906 13,435
Income attributable to non-controlling interest 529 146 590 554 458
Income/(loss) attributable to Shell plc 20,101 (21,680) 15,842 23,352 12,977
shareholders
Basic earnings per share ($) 3 (3) 2 3 2
Diluted earnings per share ($) 3 (3) 2 3 2

Consolidated Balance Sheet of Shell Plc

For the Year
2021 2020 2019 2018 2017
Assets
Non-current assets
Intangible assets 24,693 22,710 23,486 23,586 24,180
Property, plant and equipment 194,93 209,70 238,34 223,17 226,38
2 0 9 5 0
Joint ventures and associates 23,415 22,451 22,808 25,329 27,927
Investments in securities 3,797 3,222 2,989 3,074 7,222
Deferred tax 12,426 16,311 10,524 12,097 13,791
Retirement benefits 8,471 2,474 4,717 6,051 2,799
Trade and other receivables 7,065 7,641 8,085 7,826 9,394
Derivative financial instruments 815 2,805 689 574
 29

275,61 287,31 311,64 301,71 311,69

4 4 7 2 3
Current assets
Inventories 25,258 19,457 24,071 21,117 25,223
Trade and other receivables 53,208 33,625 43,414 42,431 49,869
Derivative financial instruments 11,369 5,783 7,149 7,193
Cash and cash equivalents 36,970 31,830 18,055 26,741 20,312
126,80 90,695 92,689 97,482 95,404
5
Assets classified as held for sale 1,960 1,259
128,76 91,954
5
Total assets 404,37 379,26 404,33 399,19 407,09
9 8 6 4 7
Liabilities
Non-current liabilities
Debt 80,868 91,115 81,360 66,690 73,870
Trade and other payables 2,075 2,304 2,342 2,735 4,428
Derivative financial instruments 887 420 1,209 1,399
Deferred tax 12,547 10,463 14,522 14,837 13,007
Retirement benefits [A] 11,325 15,605 13,017 11,653 13,247
Decommissioning and other provisions 25,804 27,116 21,799 21,533 24,966
133,50 147,02 134,24 118,84 129,51
6 3 9 7 8
Current liabilities
Debt 8,218 16,899 15,064 10,134 11,795
Trade and other payables [A] 63,173 44,572 49,208 48,888 56,663
Derivative financial instruments 16,311 5,308 5,429 7,184
Income taxes payable [A] 3,254 3,111 6,693 7,497 7,250
Retirement Benefits 419 451 594
Decommissioning and other provisions 3,338 3,622 2,811 3,659 3,465
94,294 73,512
Liabilities directly associated with 1,253 196
assets classified as held for sale
95,547 73,708 79,624 77,813 79,767
Total liabilities 229,05 220,73 213,87 196,66 209,28
3 1 3 0 5
Equity
Share capital 641 651 657 685 696
Shares held in trust (610) (709) (1,063) (1,260) (917)
Other reserves 18,909 12,752 14,451 16,615 16,932
Retained earnings 153,02 142,61 172,43 182,60 177,64
 30

6 6 1 6 5
Equity attributable to Shell plc 171,96 155,31 186,47 198,64 194,35
shareholders 6 0 6 6 6
Non-controlling interest 3,360 3,227 3,987 3,888 3,456
Total equity 175,32 158,53 190,46 202,53 197,81
6 7 3 4 2
Total liabilities and equity 404,37 379,26 404,33 399,19 407,09
9 8 6 4 7