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Shell’s interest cover has decreased to 42 times in 2008 compared to 45 times in 2007. The interest covers for 2006 was 38 times. This shows Shell’s ability to finance its debts and the ability to pay interest out of the profits for sure. As investors are interested in the risk level the company is in, it is a healthy sign.

Interest Cover in Times (2006-2008)

For BP, there is an increase of interest cover to 30 times as compare to 29 times in 2007 but in 2007 there is a huge reduction in interest cover to 29 times from 49 times in 2006 which clearly indicates the inability of BP to finance its debt and to pay interest out of profits generated. That makes BP riskier than Shell for investment purposes.

e. Investors Ratios

Earnings per Share (EPS): “Earnings per Share for Shell decreased in 2008 from $5 in 2007 to $4.27 in 2008. This was due to decline in profits followed by the repurchase of the shares, which causes a net decrease of 105 million in the number of ordinary shares outstanding as a result of share buybacks. As widespread the use of the EPS as a yardstick for investment decisions. Share price of company might fall if it looks as if EPS is going to be low. EPS increased to $5 in 2007 compared to $3.97 in 2006, this was due to decrease in the number of ordinary shares in 2007 as company repurchased its 112 million shares of common stock for cancellation at a gross cost of $4.4billion.this purchase reduced the number of shares outstanding to 1.7% in 2007 and by 7.3% in total since the commencement of share repurchases following the unification into Royal Dutch Shell and successful completion of Royal Dutch Minority tender (August 2005)”.

(Annual Report Shell 2008)

“In the first six months of 2009 the EPS for Shell is $1.19 compared to the six month figure of $3.34 of the same period of 2009

(2nd quarter results 2009, www.shell.com )

Earnings Per Share in $ (2006-2008)

“BP’s Basic Earnings per Share increased in 2008 to $1.13 from $1.09 in 2007. This was due to the appreciation in the profits followed by the repurchase of shares, which causes a net decrease of 373 million in the number o shares. Basic EPS decline by 0.01 to stands at $1.09 in 2007 compared to $1.10 in 2006. This was due to the declining of profits of BP”.

(BP Annual Report 2008)

Diluted Earnings per Share(DEPS) : “Diluted Earnings Per Share attempts to alert the shareholders to the potential impact on the Earnings per Share due to change in equity share capital in future owing to circumstances which exist now-known as dilution. The most common type of dilution is an option or warrant which gives the holder right to buy shares at time in future at predetermined price”.

(Kaplan Financial, Paper F7 Study Text)

Diluted Earnings Per Share in $ (2006-2008)

Shell’s DEPS reduced due to the reduction in the profits and number of shares to $4.26 in 2008 compared to $4.99 in 2007, while it was $3.95 in 2006.

BP’s DEPS increased to $1.12 in 2008 from $1.08 in 2007. The fig本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。