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National Research University Higher School of EconomicsStudent ThesesInvestment Appeal of Oil and Gas Companies Based on DuPont Model

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Georgii Izmailov
Investment Appeal of Oil and Gas Companies Based on DuPont Model
Economics
(Bachelor’s programme)
2017
Oil and gas industry, which is one of the most significant and strategically important sector of every country, faces the problem of investment capital attraction due to the high capital intensity, strong dependence on market conjuncture and geopolitical environment. Effectiveness of the investment capital usage as well as the company’s management effectiveness is the main criteria of investment appeal for potential investors. ROE (return on equity) is the optimal and representative indicator in terms of shareholder’s capital usage effectiveness. ROE indicator has an advantage of the possibility to be decomposed into detailed components in the framework of five-factor DuPont model what is a good tool for the determination of the most significant efficiency factors. For the research, the biggest oil and gas companies of the world that included at the Forbes Global 2000 list were selected. For the reason of the indicators’ high sensitivity to one-time events elimination, companies’ financial and non-financial data was collected for the period of 2012-2016. By means of ROE decomposition and regression analysis, the most significant efficiency factors were revealed. As a result, EBIT margin and asset turnover influence ROE to a greater extent. The formed system of indicators has been applied on the example of three Russian oil and gas companies. The results of the study allow to identify companies’ problem areas, on the base of what companies’ management can undertake measures to eliminate problems and potential investors can conduct comparative analysis of investment objects to make right investment decisions.

The graduate qualification work consists of introduction, three chapters, conclusion, references and applications. The paper includes 65 pages, 16 pictures, 4 tables and 5 applications. During the writing of the paper, 33 literature sources were used.

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