Purchase Solution

Investment Analysis and Recommendation - BP

Not what you're looking for?

Ask Custom Question

Please examine the mix of debt and equity that British Petroleum (BP) uses. After finding this information:

• Compare this to an industry average or Dutch Shell. What are the differences?
• Based on what you know about BP, do these differences seem appropriate?
• Relate BP's capital structure choices to the appropriate capital structure theory (ies).

BP Annual Report and Form 20-F 2012:
http://www.bp.com/content/dam/bp/pdf/investors/BP_Annual_Report_and_Form_20F_2012.pdf

Royal Dutch Shell plc annual report of 2012:
http://reports.shell.com/annual-report/2012/servicepages/downloads/files/entire_shell_ar12.pdf

Purchase this Solution

Solution Summary

The solution discusses the investment analysis and recommendation.

Solution Preview

BP - Capital Structure

Gross debt at 31 December 2012 was $48.8 billion compared with $44.2 billion at 31 December 2011. Net debt was $27.5 billion at 31 December 2012, leaving BP's gearing (net debt ratio) at 18.7%.
BP's shareholders' equity at 31 December 2012 was $118,414 million.
Net Debt + Net Equity = $167.214 billion
% of Debt = 48.8/167.214 = 29.18%
% of Equity = 118.414/167.214 = 70.82%
Debt-Equity ratio = Total Debt/Total BP ...

Purchase this Solution


Free BrainMass Quizzes
Lean your Process

This quiz will help you understand the basic concepts of Lean.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Introduction to Finance

This quiz test introductory finance topics.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.