FACULTY OF BUSINESS & MANAGEMENT

FINANCIAL MANAGEMENT
(FIN420)
Company Comparative Analysis

ALISSA SABRINA
BINTI MOHD FAHMI
2023141289 (BA233)

MARIAM HANIM
BINTI CHE HAMID
2023114083 (BA233)

NUR HAZIQAH
SHOFIA BINTI
MOHAMMAD YUSOFF
2023136003 (BA233)

SITI FATIMAH BINTI

KHAIRUL RAZAK
2023141463 (BA233)

NUR ALYA SOFINA

BINTI HUZAINI
IKRAM
2023149149 (BA236)
 JUSTIFICATION ON THE

SELECTION COMPANY
JUSTIFICATION 1

Petronas and Petron are two of the

largest and most financially sound
companies in Malaysia. They are both
involved in the oil and gas industry,
which is a major contributor to the
Malaysian economy.

JUSTIFICATION 2

STRONG
FINANCIAL
PERFORMANCE
Both Petronas and Petron have
consistently reported strong financial
performance over the past several years.
This demonstrates their ability to
generate profits and manage their
businesses effectively.

JUSTIFICATION 3

REVENUE
DIVERSIFICATION
Petronas and Petron derive revenue
from a variety of sources, including
oil and gas production, refining, retail
sales, and petrochemicals. This
diversification helps to reduce their
risk exposure.

JUSTIFICATION 4

ATTRACTIVE
VALUATIONS
Petronas and Petron are
currently trading at attractive
valuations relative to their peers.
This means that investors can
potentially buy shares of these
companies at a discount.
PETRONAS COMPANY
BACKGROUND

BACKGROUND HISTORY
A national oil company of Malaysia established on
August 1974. Wholly owned by the Malaysian
government through the Minister of Finance
Incorporated.

CORE ACTIVITIES
Trading, gas processing and liquefaction, gas
transmission pipeline network operations, liquefied
natural gas marketing, petrochemical manufacturing
and marketing, shipping, automotive engineering,
and real estate investment.

COMPANY’S STRENGTHS
They have a strong commitment to numerous
humanitarian objectives, including development,
community well-being, and youth empowerment.
They has grown to be an intergrated international oil
and gas company with business interests in 35
countries.
Sponsored education to Malaysian students.

COMPANY’S WEAKNESSES
Has been part of a number of controversies such as
taking undue advantage of the state support, poor
working conditions for the employees and some
problems such as oil spillage etc.
Concentration too high in the oil and gas industry.
PETRONAS COMPANY
BACKGROUND

COMPANY’S OPPORTUNITIES
Collaborating with other companies in the energy
sector or forging strategic partnerships can open up
new business opportunities.
Leveraging its technical expertise, Petronas can lead
in developing and adopting innovative technologies to
enhance efficiency and sustainability.
Diversify into renewable and clean energy sources to
address environmental concerns and reduce its
reliance on fossil fuels.

COMPANY’S THREATS
Collaborating with other companies in the energy
sector or forging strategic partnerships can open up
new business opportunities.
Leveraging its technical expertise, Petronas can lead
in developing and adopting innovative technologies to
enhance efficiency and sustainability.
Diversify into renewable and clean energy sources to
address environmental concerns and reduce its
reliance on fossil fuels.
PETRON BACKGROUND
COMPANY

COMPANY HISTORY
Started as Petron Malaysia Refining &
Marketing Bhd. in 1893. In January 2013,
Petron officially opened their Malaysian
operations, rebranding all Esso and
Mobil stations across Peninsular
Malaysia.

STRENGTHS WEAKNESSES
Has an innovative culture Has a high cash cycle compare
where research and to other players in the Oil &
development contributes to Gas
an important share of Has a very deliberative
revenue. decision making approach.
Diverse product range which
they produces wide range of
petroleum products such as
jet fuel, diesel, petrol, and
petrochemicals.

OPPORTUNITIES THREATS
Collaborate with other value Tighter environmental laws
chain participants. Increasing international
Reforming the budgeting competition and downward
process to reduce the cost of pressure on margins.
project. Shortening product life cycle
Investing in renewable energy
or cleaner refining
technologies.
 ACTIVITY RATIO
30%

25%

20%

15%

10%

5%

0%
2018 2019 2020 2021 2022

( Accounts Receivable Turnover )

SUMMARIZE

PETRON PETRONAS
The Petron account Petronas' account
receivable turnover receivable turnover
ratio has been ratio has improved
increasing steadily steadily over the
over the past five past five years. This
years. This indicates
indicates that the
that Petron is
company is
improving its
efficiency in becoming more
collecting its efficient at
receivables. This is a collecting its
positive accounts
development for the receivable. This is a
company, as it means positive
that it is getting its development for
cash faster and can Petronas' financial
use it to invest in
health.
growth opportunities
or pay down debt.

INDICATOR
the higher the Account
Receivable Turnover Ratio, the
better or more liquid is the company
 ACTIVITY RATIO
Average Collection Period (ACP) Graph

2018

2019

2020

2021

2022

0 10 20 30 40 50 60 70

INDICATOR :The better the ACP, the faster the company can
collect the debts; the shorter the ACP compared to the credit
terms, the better.
 LIQUIDITY RATIO
a type of financial ratio used to determine a company's
ability to pay its short-term debt obligations

PETRONAS PETRON
2019 is the highest CR 2019 is the highest CR
(the company able to pay (the company able to pay
its short term liabilities) its short term liabilities)

2018 is the lowest CR 2020 is the lowest CR

(the company less (the company less
effective to pay its short- effective to pay its short-
term liabilities) term liabilities)

INDICATOR
the higher the CR, the better or more liquid is the
company
<1 (bad)
=(satisfactory)
>1 (good)

Petronas Petron
6 RM
4,000,000,000

5
3,000,000,000

2,000,000,000

1,000,000,000
2

0
1

-1,000,000,000 year
0 2018 2019 2020 2021 2022
2018 2019 2020 2021 2022

CURRENT RATIO (CR) NET WORKING

CAPITAL (NWC)
Graph
Graph

PETRONAS PETRON
2019 is the highest in NWC 2018 is the highest in NWC
more effectively its function. more effectively its function.
(company have enough (company have enough
current assets to cover its current assets to cover its
short-term obligation) short-term obligation)

2020 is the lowest NWC 2020 is the lowest NWC

(inefficient its function) (inefficient its function)

INDICATOR
the higher the NWC, the better or
more liquid is the company
 LEVERAGE OR DEBT RATIOS
measure a company’s level of debts and its ability
to fulfill and pay for financial obligations

INDICATOR
The higher the DR, the higher the company risk.
Thus, if the DR is lower than it is the better

Petron
2022 > higher DR, high risk
( The company has low ability to
pay for financial obligations )

2020 < lower DR, low risk

( The company has high ability to

Petronas pay for financial obligations )

2019 > higher DR, high risk

( The company has low ability to
pay for financial obligations )

2020 < lower DR, low risk

( The company has high ability to
pay for financial obligations )

(%)
Petronas Petron
1.2

0.8

DEBT RATIO ( DR )
0.6
GRAPH
0.4

0.2

0
2018 2019 2020 2021 2022 ( YEAR )

(%)
Petronas Petron
0.6

0.5

0.4

DEBT TO EQUITY
0.3
RATIO ( DER ) GRAPH
0.2

0.1

0
2018 2019 2020 2021 2022 ( YEAR )
PROFITABILITY RATIO

RETURN ON ASSET (ROA) GRAPH

PETRONAS PETRON

0.005 0.005
0.004 0.004
0.003 0.003
0.002 0.002
0.001 0.001
0 0
20

21

22

23

24

20

21

22

23

24
20

20
20

20

20

20
20

20
20

20

PETRONAS and PETRON Gas Berhad’s projected ROA will increase steadily
over time, reaching about 4% by 2027.

INDICATOR :
THE HIGHER THE ROA, THE BETTER OR MORE EFFECTIVE IS THE COMPANY
IN GENERATING NET PROFIT USING TOTAL ASSETS

2023> higher ROA, more better

(The company is effective in generating net
profit using total assets)
2022< lower NPM, less effective
(The company is less effective in generating
net profit using total assets)

SUMMARIZE ON DEBT RATIOS

Within the 5 years trend analysis,
Petron’s debt ratios:
Keep increase
Has a greater numbers of debt thus,
this company has higher risk on their
financial obligations
Within the 5 years trend analysis,
Petronas's debt ratios:
Not constant
Has a smaller numbers of debt thus,
this company has less risk on their
financial obligations

Petronas is better than Petron on Debt Ratios

SUMMARIZE ON PROFITABILITY RATIOS

Based on these ratios, we can see that both companies are relatively
similar in terms of profitability, but Petronas has a slight edge over
Petron in most cases. However, these ratios are not the only
indicators of a company’s performance, and they may vary
depending on the industry, market conditions, accounting methods,
and other factors.
WAYS TO IMPROVE FINANCIAL RATIOS
PETRON
Improve revenue: Petron could focus on increasing its
sales by expanding into new markets, developing new
products or services, or entering into strategic
partnerships with other companies.
Reduce expenses: Petron could reduce its expenses by
negotiating better deals with suppliers, streamlining its
operations, or implementing cost-saving measures such
as layoffs or furloughs.
Manage debt: Petron could reduce its debt by paying
down existing loans, refinancing its debt at a lower
interest rate, or issuing new equity.
Invest in renewable energy: Petron could reduce its
reliance on oil by investing in renewable energy sources
such as solar or wind power. This could help to improve
the company's environmental performance and reduce its
exposure to fluctuations in oil prices.
Improve efficiency: Petron could improve its efficiency
by streamlining its operations, adopting new
technologies, or implementing lean manufacturing
techniques. This could help to reduce costs and improve
profitability.

PETRONAS
Continue to focus on exploration and production:
Petronas could continue to invest in exploration and
production activities to identify and develop new oil and
gas reserves. This could help to increase the company's
revenue and profitability.
Invest in new technologies: Petronas could invest in new
technologies to improve its efficiency and reduce its
environmental impact. For example, the company could
invest in carbon capture and storage technologies to
reduce its greenhouse gas emissions.
Build strong relationships with governments and oil
companies: Petronas could continue to build strong
relationships with governments and oil companies to
secure access to oil and gas reserves and to obtain
favorable terms on contracts.
Expand into new markets: Petronas could expand into
new markets by entering into joint ventures with local
companies or by acquiring existing oil and gas
companies in other countries. This could help to
diversify the company's revenue streams and reduce its
reliance on any one market.