Case Study Phoenix vs Petron
TABLE OF CONTENTS
1 INTRODUCTION 1
1.1 Purpose of the Case Study 1
1.2 Framework of Analysis 1
1.3 Background 1
2 PROBLEM DEFINITION 2
3 ANALYSIS 2
3.1 Risks 2
3.2 Product Development Strategy Evaluation 2
3.3 Financial Statement Analysis 3
3.3.1 Profitability 3
3.3.2 Operating Efficiency 4
3.3.3 Liquidity and Solvency 4
3.3.4 Cash Flow Activities 4
4 RECOMMENDATIONS 5
APPENDICES i
REFERENCES xiv
1 INTRODUCTION
1.1 Purpose of the Case Study
The primary objective of this case study is to provide investors with the necessary information to help them determine whether their investment in the two major Philippine oil industries: Phoenix Petroleum Philippines Inc and Petron Corporation is sound. In addition, it also aims to provide a baseline support for potential investors with regard to the feasibility and the risks involved in engaging into this kind of business.
1.2 Framework of Analysis
The case study focuses on three areas of analysis: corporate strategies and direction, risks and financial performance. To carefully examine these areas the following information about Petron and Phoenix were gathered, examined and evaluated: financial statements, Annual report (2011), statistics and business model and strategies documentation. The period under evaluation is year 2011 but supporting data from 2010 and 2009 were obtained for trending analysis.
The techniques used in the analysis include: common-sized financial statements, key financial ratios, trend analysis, structural analysis and industry comparison. The key financial ratios utilize are liquidity and solvency, profitability, leverage, and activity. Statement of cash flow is evaluated and integrated with the ratio analysis results.
1.3 Background
Petron’s principal business involves the refining of crude oil and the marketing and distribution of refined petroleum products. It sells a full range of refined petroleum products including gasoline, LPG, diesel, jet fuel, kerosene, industrial fuel oil,
1 INTRODUCTION 1
1.1 Purpose of the Case Study 1
1.2 Framework of Analysis 1
1.3 Background 1
2 PROBLEM DEFINITION 2
3 ANALYSIS 2
3.1 Risks 2
3.2 Product Development Strategy Evaluation 2
3.3 Financial Statement Analysis 3
3.3.1 Profitability 3
3.3.2 Operating Efficiency 4
3.3.3 Liquidity and Solvency 4
3.3.4 Cash Flow Activities 4
4 RECOMMENDATIONS 5
APPENDICES i
REFERENCES xiv
1 INTRODUCTION
1.1 Purpose of the Case Study
The primary objective of this case study is to provide investors with the necessary information to help them determine whether their investment in the two major Philippine oil industries: Phoenix Petroleum Philippines Inc and Petron Corporation is sound. In addition, it also aims to provide a baseline support for potential investors with regard to the feasibility and the risks involved in engaging into this kind of business.
1.2 Framework of Analysis
The case study focuses on three areas of analysis: corporate strategies and direction, risks and financial performance. To carefully examine these areas the following information about Petron and Phoenix were gathered, examined and evaluated: financial statements, Annual report (2011), statistics and business model and strategies documentation. The period under evaluation is year 2011 but supporting data from 2010 and 2009 were obtained for trending analysis.
The techniques used in the analysis include: common-sized financial statements, key financial ratios, trend analysis, structural analysis and industry comparison. The key financial ratios utilize are liquidity and solvency, profitability, leverage, and activity. Statement of cash flow is evaluated and integrated with the ratio analysis results.
1.3 Background
Petron’s principal business involves the refining of crude oil and the marketing and distribution of refined petroleum products. It sells a full range of refined petroleum products including gasoline, LPG, diesel, jet fuel, kerosene, industrial fuel oil,
References: Petron Annual Report 2011 Phoenix Annual Report 2011 Maybank ATR Kim Eng, Phoenix Petroleum Philippines: Aiming for the Big Leagues, June 15, 2012 Retrieved From: http://phoenixphilippines.com/pdf/MATRKE_research_report.pdf) Sunstar, P5-B smuggling case filed vs. Phoenix Petroleum, May 5, 2011. Retrieved from: (http://www.sunstar.com.ph/breaking-news/2011/05/05/p5-b-smuggling-case-filed-vs-phoenix-petroleum-153724). Department of Energy, Oil Supply/Demand Report 1H 2011, Retrieved from: http://www.doe.gov.ph/do/Report1H2011.htm The Manila Times, DOE fetes Phoenix Petroleum Strategy, August 14, 2010. Retrieved from: http://phoenixphilippines.com/2010/11/doe-fetes-phoenix-petroleum-strategy/