Schlumberger Financial Analysis

1582 WordsNov 17, 20127 Pages
Schlumberger Analysis Amy Jones Analyzing Financial Statements Schlumberger Limited (SLB) Overview My analysis of Schlumberger Limited indicates presumes that the company will continue as a going concern in accordance with the Beaver Univariate Model. I have examined the cash flow/total debt, return on assets and the debt ratio and have concluded that Schlumberger (SLB) is financially stable. The following are major characteristics of a company that is financially stable: 1. Cash flow/total debt ratio of 0.26 which has remained stable over the last two years, although there was a decrease from 2009 to 2010. Receivables increased year over year, it is to be expected a year after the acquisition of Smith International…show more content…
This indicates a slight concern as SLB has leveraged a substantial amount of their assets. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2011 Schlumberger 10-K indicate that after a strong recovery of 2010, when worldwide oil demand grew 2.7 million barrels per day corresponding to the largest year-on-year increase in 30 years, in 2011 oil demand grew only by a modest 0.7 million barrels per day (Schlumberger, 2012). This is consistent with the modest increase in revenue year over year 2010 and 2011. In line with lower GDP growth, oil demand outlook has also been revised downwards during the fourth quarter of 2011 (Schlumberger, 2012). Feedback from Schlumberger customers and the findings from recently published spending surveys suggest that exploration and production investment in 2012 will be higher than that of 2011 which is an indication that business may continue its modest growth into 2012. A good indication that Schlumberger will continue conducting business as a going concern is the 2011 revenue of $37.0 billion,39% higher than 2010, primarily reflecting the acquisition of Smith International on August 27, 2010 as well as the significantly improved overall activity. Please note 2009 was cut from SLB 2010 Annual Report as only two years are listed. Schlumberger Ltd. | | | | | Dec 31, 2011 | Dec 31, 2010
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