Ecopetrol Analysis

Ecopetrol analysis.

Top competitors for “Eco petrol” are :”HKN”,”Nexen” and “Pacific Rubiales Energy Corporation”.

Comparison of net cash provided in operating, investing and financing activities

Data for comparison taken from our calculations which are added in appendixes

Current ratio shows, that through this 4 years period company has an ability to meet their short-term obligations, but only in 2012 their ability decreased for a little more than it is acceptable

(We can guess that it is much lower because of fact, that it was counted with half of the year information about current assets and liabilities).

Quick ratio shows that company has a good liquidity even if their inventory cannot be easily and immediately converted into cash. It is acceptable to have about 1, and company almost reach the best result (again 2012 result is lower for the same reason – counting are only of half of the year information).

Gross profit margin shows us percentage of each sales Columbian peso remaining after firm has already paid for its goods. In the table we can see that till 2012 this ratio was growing and it is a good sign, because company earns more. This growing started in 2010, when company reduced their old equipment and acquired new. We can see, that for example in 2012 that every 1 Columbian peso earns about 46% that means that it earns 0.46 Columbian pesos. Of course, even if this ratio for company is growing, it is better to have higher results.

Just like gross profit through 4 years period operating profit also was increasing. Operating profit ratio measures the percentage of each sales Columbian peso remaining after ignoring all cost and expenses (it is focused on operating activities and cash provided from these activities) - interests, taxes and etc. It is acceptable to have higher ratio as it possible, so Ecopetrol should have a better results.

Now looking at the return on assets (ROA) that company situation is poor. For example, company purchased most of new equipment till 2011 from 2009, but from that time their effectiveness on available assets only decreased, so it shows that Ecopetrol should exploit their assets more to generate more profit.

To sum up all profitability ratios, we could say that company is working quit good, but of course, there is always possible to do better, and Ecopetrol should seek to reach more profit for example trying to reduce cost of good, or exploit their assets as much as possible.

Fixed assets turnover measures company effectiveness of fixed assets to generate sales.

Ecopetrol had the highest result in 2010 when revenue was highest, and till 2012 it is fluctuating and it is caused because of changes in revenue (in 2011 it decreased and in 2012 increased) and in fixed assets ( fixed assets was increasing all the period).