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  • Submitted by: loving888
  • on December 12, 2011
  • Category: English
  • Length: 252 words

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Below is a free excerpt of "Essay" from Anti Essays, your source for free research papers, essays, and term paper examples.

Profit analysis may be carried out using total profits and their yearly growth, or with profit rates. Total profit analysis is useful in evaluating the effect of the industry’s profitability on expenditure flows within the economy as well as the potential command over resources held by companies in the industry. Yearly growth of profits can show whether the industry is becoming more or less of a factor in over all expenditure flows in the economy.
Profit analysis based on profit rates is useful in examining the effectiveness of the firm’s management in using available resources. Profit rate analysis is also useful in making comparisons based on the relative performance of firms in the industry and is widely used by investment analysis.
In this report, the focus is on total profits and the growth of profits within the oil industry and the likely uses of profits by the industry, specifically the potential ability of the industry to invest in oil supply related projects.
Profit in the oil industry have been volatile over the past three decades, reflecting oil price changes as well as other market effects. For example, net income for the major energy companies, as defined by the Energy Information Administration (EIA), increased almost threefold by 1981, compared to 1977, on the oil price increases associated with the Iran-Iraq war. By 1986, net incomes of the major energy companies had sunk below 1977 levels. Profits peaked and declined at least three other times during the period 1987-2002.

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