Miss Case

Financial reporting , as a widely accepted way for companies to show their financial performance to investors, creditors, and other interested parties by presenting financial statements, has been playing a significant role in modern business (CFA program curriculum, Volume 3). According to the IASB 2010, the objective of financial statement is to provide information about the reporting entity that is useful to existing and potential investors, lender, and other creditors in making decisions about providing resources to the entity (conceptual framework for financial reporting, 2010).

This report is going to interpret and analysis the annual financial reportings of two leading companies in oil and gas industry of the word:BP and Royal Dutch Shell. Both of them are highly vertically-integrated multination and their businesses reach every areas of the industry, from the oil exploration and production to the petrochemicals and power generation (CIA, 2012). BP and Shell both adopt the International Accounting Standard and the financial year ended in 31 December.

Ratio analysis which is a commonly used analytical tool for verifying the performance of a firm is going to be adopted in this report to evaluate the performance of BP and Shell. Since the ratios are useful tools for expressing relationships among data that can be used for internal comparisons and comparisons across firms (Johnston, 2006), the profitability, liquidity, gearing, and shareholder interests will be covered separately in analysis to compare and analysis the performance of BP and Shell. Then a brief summary will be given to show the overall performance of these two companies. At last, the conclusion of this report is going to be provided.

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