Analysis Of Salvatore 's Chapter 10

Ratio analysis are useful tools when judging the performance of a company by weighing and evaluating the operating performance (Block-Hirt). There are 13 significant ratios that can separate by four main categories,

Ratio analysis shows the correlation within certain figures of financial statements, like current assets and current liability, and is used for three types of company needs- within, intra- and inter-company. Association can be shown in proportion, rate, or percentage and can evaluate company’s liquidity, profitability, and solvency. Liquidity ratios show company’s ability to pay obligations and fulfill needs for cash; profitability ratios show wellbeing and success for the certain time period; and solvency ratios show company’s endurance over the years.

The 1970s is a significant period in the U.S. oil and gas history. American oil production was declining steadily and imports from mainly Arab producers were relied on to shore up the shortfall. The Arab states, which constituted the majority of the Organization of the Petroleum Exporting Countries (OPEC), imposed an oil embargo in October 1973 against the U.S. and a number of other industrialized nations that backed Israel during the 1973 Arab-Israeli War. Not only did the sanction ban petroleum exports to the target nations, it also introduced cuts in oil production. As a result, between 1972 and 1982, oil prices increased more than tenfold.

Leading up to the 1970’s the world was fueled by an abundance of cheap oil. Countries were able to industrialize, consumers were able to utilize all sorts of petroleum goods and low costs, and best of all there were no worries of shortages. The good times were not to last. There was emerging conflict in the Middle East that warranted United States aid to Israel in the early 1970s. The Arab countries of the Organization of the Petroleum Exporting Countries (OPEC) were not in favor of United States intervention with Israel. This caused an outrage and sparked a non-negotiable rise in posted prices of oil. Eventually, it led to an oil embargo on the United States and Netherlands. The impacts of the 1973 oil embargo led to long term impacts on Lesser Developed Countries economically, United States energy security outlook, and United States energy action.

Until the above said period, the OPEC countries were the main producers of the natural oil and they worked as the cartel and they determined the quantity to be produced based on the market demand and they kept the price at a higher rate and prevented the fall of the price by reducing the production of oil. The introduction of the shale oil made the problem. The higher demand and lower supply of

Ratio analysis are useful tools when judging the performance of a company by weighing and evaluating the operating performance (Block-Hirt). There are 13 significant ratios that can separate by four main categories,

In 2014 the Organization of Petroleum Exporting Countries, or OPEC decided to lower the oil price. The reason the OPEC nations decided to overproduce and flood the market was to strangle the oil industry of the United States. This low price would force the oil businesses to lower their prices to compete and therefore income would be reduced. The OPEC nations would have a majority of control over the oil market if the US oil industry fades or is driven out of business. The OPEC nations, whose primary income is from petroleum, are fighting for more income from the US based

the Arab members of OPEC had the drop in production that resulted world production to drop by 7.8% between September and November of 1973. Also, an exogenous oil price shock can be explained by studying the component of oil price increase that happened as a result of the Arab production cutbacks in 1973 and 1974. The third event the Iranian revolution occurred in November 1978. Iran had oil production of 6.1 million barrels a day in September 1978, but in January 1979, it was 6.1 million barrels a day; consequently, the drop caused total world oil production to decline by 8.9%. The fourth event was Iran-Iraq War.

In the 1960’s, OPEC came into existence with the five original founding members. By the end of this decade, it had grown to ten members, which now included Qutar, Indonesia, Libya, United Arab Emirates and Algeria. By the 1970’s OPEC’s power and influence over the price of oil had grown immensely. It was at this time since OPEC had been in effect that we had really observed an increase in the price of oil per barrel. In 1973, the Yom Kippur War occurred against Israel, led by Egypt and Syria, which were part of the Arabian countries. The Arab’s struck back and enacted an embargo against any country who

The oil embargo was imposed by Arab oil producers through the then-powerful cartel, the Organization of Petroleum Exporting Countries (OPEC)(Miller, 1998). OPEC was founded in 1960 with five members: Iraq, Kuwait, Saudi Arabia, and Venezuela. Six other nations had joined OPEC by the end of 1971. These included Qatar, Indonesia, United Arab Emirates, Algeria, and Nigeria. This cartel had experienced a decline in the real value of their product since the foundation of the Organization of Petroleum Exporting Countries (Williams, 1999). But in March of 1971, the power to control crude oil prices shifted from Texas and the United States

OPEC has too much control over the US oil markets. Lately, the United States has been producing more and more oil because of shale oil deposits

“When OPEC was formed in 1960, its main goal was to prevent its compromise the world’s largest oil producers, refiners, and marketers—from lowering the price of oil, which they had always specified, or reported. OPEC members sought to gain greater control over oil prices by

When deciding to invest there should be an extensive analysis of the company’s financial statement should be done. The analysis should involve a comparison of the company’s performance with other companies in the same industry. It should also involve and evaluation of trends in the company’s financial position over a period of time. The use of financial ratios is a way to gain important information that is neither simple nor obvious. Financial ratios are calculated by using data that can be found on the company’s balance sheets and income statements.

The two most common measures of degree of centration is concentration ratios and Herfindahl index. Concentration ratio measures how much an industry is dominated by large firms as represented by 4,8, or 12 of the largest firms for that industry. Herfindahl index looks at the degree of concentration for an industry as the sum of squared values of shares for all of the firms in that given market.

ExxonMobil and other companies in the retail oil industry are working in monopolistic competitive market. The market demand in oil industry is inelastic in short run and all the companies have their own share in oil demand. In the monopolistic competition like in the case of ExxonMobil and other retail oil companies, prices are usually set by the forces of demand and supply prevail in the market. However, companies in this situation usually try to gain maximum profits and they also want that