Question

In what ways does finance fit into the oil and gas industry? What areas of the business does finance impact? Where might a deeper understanding of finance help you professionally in your career?

Answer 1

There are various ways finance fit into the oil and gas industry like oil and gas industry regularly buying assets and spending some parts of its revenue to find more assets, as they deal with volatile commodity prices, they have huge financing needs. Therefore they issue more debts as well as equity.

The areas of the business where finance impact –

• Business planning and control
• Buying and selling of commodities
• Source of funding like issuing debt and equity for companies financial needs
• Hedging for financial risk

A deeper understanding of finance may help you to analyze financial statements like profit & loss account, balance sheet and other financial parameters. It is important to understand how to report and analyze financial statements because understanding of profit & loss and other financials are crucial for smooth functioning of business. It will also be helpful in decision making and could become an effective tool to compare and contrast alternative business plans and take best decision. By analyzing the operating and financial statements, you can analyze the results and take the decision in the best interests of the business which will give you added advantage professionally in your career.