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A company?s financial statements and ratios are good indicators of its performance over
the years. This report specifically compares the ratios for 2004 and 2005, with some
additional insight into 2003, 2002, and 2001.
The current ratio has increased by 0.0534 from 0.9900 to 1.434. As the current ratio is a
measure of liquidity and ability to meet short-term debt requirements, BP was more able to
meet their short term debt obligations in 2005 than 2004. From 2001 to 2003 the current
ratios were 1.0767, 0.9733, and 0.9600 respectively. In 2001, 2002, and 2004, BP?s
current liabilities were greater than current assets, indicating that BP may have faced some
difficulty in meeting short-term debt obligations during these years. In 2003 and 2005 the
current ratios were greater than 1, representing that BP?s current assets were greater then
its current liabilities for the year. BP?s current ratios are less than the industry average,
which simply means that there are other companies that are more successful at meeting
short term debt obligations than BP for the industry. The industry median for the current
ratio is 1.26.
The quick ratio has increased by 0.0246 from 0.7467 to 0.7713. Quick ratios are a measure
of the financial strength or weakness of a company and gives insight into how liquid a
company is. BP had a higher quick ratio in 2005 than 2004 which translates into being
