Over the past three year, Lukoil has recorded fluctuating rates of operational leverage. The organization’s fixed assets have been on the increase as compared to its current assets. It thus implies that the liquidity ratios have been on the rise. The ratios assess a business's capacity to come up with funds as compared to the expenses with cumulative costs incurred over a specific period of time.
Under profitability ratios, there is a sharp and consistent transition from one ratio to the other. Therefore, it means that during one particular period the company made many profits because of proper planning and usage of appropriate management decisions. Hence, the same formula used should be passed on to the next financial period.
The above table indicates that the operational leverage of Lukoil has been experiencing a deteriorating trend from 2013 to 2014. Similar to 2012 to 2013, Lukoil profitability has affected the shareholders equity in relation to the net income of the company. On the other hand, the operational leverage implies that the company has maintained it position in the market due to proper management skill. The increase and decreases of the operational leverages offer room for implementations of the necessary measure to achieve set goals and objectives.
References
Ginzburg, M. (2012). Financial Management In Oil And Gas Companies. Ministry Of Education And Science Of The Russian Federation, 1(1), 1-79.
Sloutsky, E. (n.d.). Lukoil. Annual report 2013. Retrieved October 12, 2014, from http://www.lukoil.ru/materials/doc/AGSM_2014/Luk_GO_Book_eng.pdf
