British petroleum Essay Example | Topics and Well Written Essays - 750 words

British petroleum - Essay Example Some of the brands of the company are ARCO, Castrol, and Wild Bean Cafà ©. When companies show balance sheets for the group and for the company they are reporting the income of a subsidiary that is part of a parent company. The group balance sheet is the result of the entire company. The company is a subsidiary that reflects the result of a business segment of the firm. The financial statements of British Petroleum illustrated in its latest annual report only reflect the results of the group or the parent company. The assets minus liability equation can be interpreted as a liquidity ratio. A more specific evaluation of short term liquidity would occur by subtracting the current assets against the current liabilities. The accounting equation states that assets equal liabilities plus stockholders equity (Cliffnotes, 2012). The straight line method is calculated dividing cost minus salvage value by depreciation time. â€Å"The declining balance depreciation method uses the depreciable basis of an asset multiplied by a factor based on the life of the asset† (Assetaide, 2009). The use of an alternative method of depreciation such as double declining would increase the expenses of the company in the early years, thus the profitability of the company would be lower in the short term. Stewardship accounting refers to, â€Å"A traditional approach of accounting that places an obligation on stewards or agents, such as directors, to provide relevant and reliable financial information relating to resources over which they have control but which are owned by others, such as shareholders† (Williamson, 2002). There are several factors that affect the price of common stocks. The prices of stocks are influenced by the general state of the economy, the financial performance of a company as illustrated in its financial statements, and by political factors among other reasons. If I was a potential investor of British Petroleum I would be very satisfied with