ACKNOWLEDGEMENT

Ratio analysis of Indus motors

Done by:Ali Husnaen O9-HITEC-BBA-03

Wajih-ul-Hassan09-HITEC-BBA-12

Instructed by:

Ms.Faiza Saleem

HITEC UNIVERSITY TAXILA

WE would start this report by saying that ALLAH Almighty has graced me with enough energy to work in this period and complete this report.

First of all we would like to acknowledge out parents who encouraged us to do BBA. Their prayers enable us to complete this report.

We would really like to acknowledge our teacher Ms. Faiza Sleem, who provided us opportunity to work on this report. She really encourages us to complete this report. She provided us helpful knowledge regarding this project.

At the end, we would like to acknowledge the people who provided us help to get this financial report and work on this report.

VISION

"IMC’s Vision is to be the most respected and successful enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology".

MISSION

IMC’s Mission is reflected in our Company’s Slogan

ACT #1

Action, Commitment and Teamwork to become # 1 in Pakistan.

The Indus Team is committed to ACT

So that it achieves the #1 position in the Auto Industry in:

Respect & Corporate Image Quality & Safety Customer Satisfaction Production & Sales Profitability Best Employer

Background

The company was incorporated in Pakistan as a public limited company in December 1989 and

started commercial production in May 1993. The shares of company are quoted on the stock

exchanges of Pakistan i.e. Karachi, Lahore and Islamabad stock exchanges. The stock code for

dealer in equity shares of Indus Motor Company Limited at KSE, LSE and ISE is INDU. Toyota

Motor Corporation and Toyota Tsusho Corporation have 25 % stake in the company equity. The

majority shareholder is the House of Habib.

Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor

Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC) for assembling,

progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990.

IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd vehicles in

Pakistan through its dealership network.

IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area

measuring over 105 acres.

Indus Motor Company’s plant is the only manufacturing site in the world where both Toyota and

Daihatsu brands are being manufactured.

Heavy investment was made to build its production facilities based on state of art technologies.

To ensure highest level of productivity world-renowned Toyota Production Systems are

implemented.

IMC's Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux

Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of imported

vehicles.

Shareholder Information:

Factory / Registered Office

Plot No. N.W.Z/1/P-1,

Port Qasim Authority, Karachi.

PABX 92-21-34720041-48

Fax 92-21-34720056

Shares Registrar

Noble Computer Services (Private) Limited

Mezzanine Floor, House of Habib Building

(Siddiqsons Tower), 3-Jinnah C. H. Society,

Main Shahrah-e- Faisal, Karachi - 75350.

PABX 92-21-34325482-87

Fax 92-21-34325442

Annual General Meeting

The Annual General Meeting will be held at 09:00 a.m. on October 28, 2009 at the Pearl Continental Hotel, Karachi. Shareholders as of October 21, 2009 are

Encouraged to participate and vote. Any shareholder may appoint a proxy to vote on his or her behalf. Proxies should be filed with the Company at least 48 hours before the meeting time.

Ownership

On June 30, 2009, there were 4,010 shareholders on record of the Company’s ordinary shares.

Dividend Payment

The proposal of the Board of Directors for dividend payment will be considered at the Annual General Meeting. Following approval, the dividend warrants will be sent within one week thereafter to persons listed in the register of members on October 21, 2009. Income Tax and Zakat will be deducted in accordance with the current regulations. Shareholders who wish to have the dividends deposited directly in their bank accounts should contact the Shares Department by October 21, 2009.

Listing on Stock Exchanges

Indus Motor Company Limited equity shares are listed on Karachi, Lahore and Islamabad Stock Exchanges.

Stock Code

The stock code for dealer in equity shares of Indus Motor Company Limited at KSE, LSE and ISE is INDU.

PRODUCTS & SERVICES

Service:

The focus on after sales services continues to increase with the rising number of Toyota and Daihatsu vehicles in Pakistan.

Following the signing of the After Sales Service Mid Range Plan a number of activities have been undertaken to upgrade service operations, prepare for business growth and to provide high quality and consistent after sales service to our valued customers. Our aim is to get our Service department recognized throughout the Toyota affiliates. With our continued commitment to enhance the level of technical education in Pakistan and to cater to the needs of the northern region of the country we selected the Construction Technology Training Institute (CTTI), Islamabad to launch the 3rd Toyota Technical Education Program (T-TEP) on February 20, 2009. We are confident that T-TEP graduates from this institute would prove highly productive for IMC, Toyota dealers and Auto industry vendors. To enhance the technical and management skill level and create a competitive environment for dealer’s service staff, a National Skill Contest for

General Technicians, Service Advisors and Paint

Technicians was organized on June 12, 2009.

Products:

Corolla

Variants Ex-Plant Price

1.3 XLI 1289000

1.3 GLI 1414000

1.8 ALTIS M/T 1699000

1.8 ALTIS M/T SR 1784000

1.8 ALTIS A/T 1784000

1.8 ALTIS A/T SR 1869000

2.0 D 1347000

2.0 D SALOON 1699000

2.0 D SALOON SR 1784000

COURE

CX 665000

CX-ECO 709000

CX-AUTO 694000

CX-ECOMATIC 749000

HILUX

3.0 HILUX 4X2 S/C (STANDARD) 1419000

3.0 HILUX 4X2 S/C (UP SPECS) 1459000

LAND CRUISER PRADO

LANDCRUISER PRADO 4.0 L VX A/T (GASOLINE)

13500000

LANDCRUISER PRADO 3.0 L VX A/T TURBO (DIESEL)

13500000

LANDCRUISER PRADO 2.7 L TX M/T (GASOLINE)

9700000

LANDCRUISER PRADO 3.0 L TX M/T TURBO (DIESEL)

9700000

TOYOTA FORTUNER 2.7L A/T (GASOLINE) 7500000

TOYOTA AVANZA 21.5L M/T STD (GASOLINE) 1900000

TOYOTA AVANZA 21.5L M/T UP SPECS (GASOLINE) 2100000

DAIHATSU TERIOS 1.5L A/T (GASOLINE) 2500000

DAIHATSU TERIOS 1.5L M/T 4X4 (GASOLINE) 2600000

Ratio analysis

2006 2007 2008 2009

14,095,657/9,444,554 13,560,329/7,410,926 9,664,784/3,779,631 16,715,319/9,884,850

1.49 1.82 2.56 1.69

Current Ratio = C.A/C.L

2006 2007 2008 20090

0.51

1.52

2.53

Analysis:

This shows an increasing trend in the first three years and then shows an decreasing trend in the last year this is because that the increase in liability decreases the current ratio value of the company.

Quick Ratio= Quick Assets / Current Liabilities

2006 2007 2008 2009

14,095,657-3,959,316/9,444,554

13,560,329-2,859,951/7,410,926

16,715,319 -4088858/9,884,850

9664784-2637629/3,779,631

1.07 1.44 3.34 1.85

2007 2008 2009 20100

0.51

1.52

2.53

3.54

Analysis :

This shows an increasing trend in the first three years and then there is an sudden decreasing trend in the last year this is because of the sudden decrease in the value of the liability and it is good for the company.

2006 2007 2008 2009

9,444,554/6,257,879 7,410,926/8,043,975 1,736,631/ 10,296,973 1,332,832 /9,436,340

1.51 0.92 0.17 0.14

2006 2007 2008 20090

0.20.40.60.8

11.21.41.6

Analysis:

Debt to Equity Ratio=Total Liabilities / Total Stockholder's Equity

This shows a decreasing trend in these four years, and this is beneficial for its shareholders.

Debt to asset=total debt/ total assets

2006 2007 2008 2009

9,444,554/15,822,468 7,410,926/15,665,050 4,311,769/13,748,109 10,388,550/20,685,523

0.59 0.47 0 1

2006 2007 2008 20090

0.20.40.60.8

11.2

Analysis:

It shows an decreasing trend in the beginning and then shows an increasing trend in the ending years.

Receivable Turnover Ratio= Sales / Average Account Receivables

2006 2007 2008 2009

35,236,535/1988498 39,061,226/1271372 41,423,843/1,442,204 37,864,604/1,855,477

17.72 30.72 28.722 20.406

2006 2007 2008 200905

101520253035

Analysis:

This shows a slight increase in the beginning and then at the end decreasing trend but the value that is 17.72 is the best year because they collect there money from there customers in that mean time.

Receivable Turnover in Days= 365/ Receivable Turnover

2006 2007 2008 20090

5

10

15

20

25

Analysis:

It shows an random trend but the year 2007 is the best year in this because in this the company collect money in the minimum years as we see in the table and the graph as well.

2006 2007 2008 2009

2006 2007 2008 2009

365/17.72 365/30.72 365/28.72 365/20.40

20.5 11.88 12.71 17.85

31,088,906/3,959,316

34,620,632/2,859,951

37,575,356/2,637,629 35,540,418/4,088,85

8

7.85 12.10 14.24 8.69Inventory Turnover Ratio= COGS/INVENTORY

2006 2007 2008 200902468

10121416

Analysis:

This also shows an random behavior but the year 2008 is the best year because in this we have a large amount of inventory after selling our goods so we can use this inventory for some surprising situations or bulk of orders.

Inventory Turnover in days=365/inventory turnover

2006 2007 2008 2009

365/7.85 365/12.10 365/14.24 365/8.69

46.49 30.1625.63 42

2006 2007 2008 20090

10

20

30

40

50

Analysis:

This also shows an random trend and in this the year 2008 is the best one because the company can get its inventory within 26 days for its use.

2006 2007 2008 2009

35,236,535/ 15,822,468

39,061,226/ 15,665,050

41,423,843/13,748,10937,864,604/20,685,523

2.22 2.493.01 1.83

Total Asset Turnover Ratio= Sales / Total Assets

2006 2007 2008 20090

0.51

1.52

2.53

3.5

Analysis:

This also shows an random trend and this ratio expresses us that how many no of assets company have after its sales for this the year 2009 is the best one because company recover its assets within minimum time as compared to the rest of the years.

Total Asset (or Capital) Turnover in Days= 365/ Total Asset Turnover

2006 2007 2008 2009

365/2.22 365/2.49 365/3.01 365/1.83

164.41 146.58 121.26 199.45

2006 2007 2008 20090

50

100

150

200

250

Analysis:

This also shows an random trend within the years, but the year 2998 is the best one because the company capital turnover came to them in minimum no of years as compared to the others years.

2006 2007 2008 2009

4,147,629/ 35,236,535 4,440,594/ 39,061,226 3,848,487/41,423,843 2,324,186/37,864,604

0.11 0.11 0.092 0.061Gross Profit Margin Ratio= GP/Sales

2006 2007 2008 20090

0.02

0.04

0.06

0.08

0.1

0.12

Analysis:

This also shows an random behavior within the years but the year 2006-07 are the best one because in these years company gain a maximum profit as compared to the rest of the years.

Net Profit Margin Ratio= Net Income / Sales

2006 2007 2008 2009

2,648,464/35,236,535 2,745,701/39,061,226 2,290,845/41,423,843 1,385,102/37,864,604

0.07 0.07 0.055 0.036

2006 2007 2008 20090

0.010.020.030.040.050.060.070.08

Analysis:

This also shows an random behavior this is also best in year 2006-07 because in these years company has a grater net profit margin as compared to the rest of the years.

Return on Assets Ratio= Net Income / Average Total Assets

2006 2007 2008 2009

2,648,464/15,822,4682,745,701/15,665,050 2290845/13748109 1385102/20685523

0.16 0.170.16 0.06

2006 2007 2008 20090

0.05

0.1

0.15

0.2

Analysis:

This shows an equal trend in the beginning and then shows an decreasing trend in the ending, it is good in the year 2006-07 and in the year 2009 it is worse one. It is good if it is grater.

Return on Equity= Net Income/Stockholder's Equity

2006 2007 2008 2009

2,648,464/6,257,879 2,745,701/8,043,975 2,290,845/9,436,340 1,385,102/10,296,973

0.42 0.34 0.24 0.13

2006 2007 2008 20090

0.10.20.30.40.5

Analysis:

It shows an decreasing trend from year 2006-09, thus it is good if it is grater for keeping this concept in the mind it is grater in the year 2006 as compared to the rest of the years.

Horizontal & vertical analysis

HORIZONTAL ANALYSISOf

BALANCE SHEET of 2006&07EQUITIES AND LIABILITIES 2007 2006 2007 2006

Share capital and reserves

Authorized capital100000000ordinary shares of Rs.10 each 1,000,000 1,000,000 1,000,000 1,000,000Issued, subscribed & paid up capital 786,000 786,000 5.01 4.96Capital reserve 7,257,975 5,471,879 46.3 34.5Total equity 8,043,975 6,257,879 51.3 39.5Non-current liabilitiesLiabilities against assets subject to finance lease

0 3,871 0 0.02

deferred taxation 210,149 116,164 1.34 0.73Total non current liabilities 210,149 120,035 1.34 0.75Current liabilities

Trade and other payables 2,892,017 2,599,911 18.46 16.43advance from customers &dealers 4,514,480 6,620,869 28.81 41.84

Short term running finances- secured 0 0 0 0taxation net 0 195,789 0 1.23accurate mark up 715 22,250 0.004 0.14Total current liabilities 7,410,926 9,444,554 47.3 59.6

Total equity and liabilities 15,665,050 15,822,468 100.00% 100.00%

Trade debt increased with the passage of time which shows the lacking ability to collect receivable on time. On the other hand of balance sheet the major equity there is 51% and 39% share of debt and equity respectively. The major contributor to debt is current liabilities is which is 59% of total right hand side of balance sheet on average, and these liabilities have increased at steady pace during the last year. Long-term debt of the firm contribute 30% on average to total right hand side of balance sheet and it has increased from 2006 to 2007 and thereafter it drop down significantly due to respective decrease in fix assets during same period of time.

Assets 2007 2006 2007 2006

Non-current assets

fixed assets 2,093,852 1,716,590 13.36 10.84

long term loans and advances 4,240 1,019 0.02 0.006

Long term deposits 6,629 5,181 0.04 0.03

Total non current assets 2,104,721 1,726,811 13.43 10.91

Current assets

Store and spare 227,191 226,169 1.45 1.42

Stock-in-trade 2,859,951 3,959,316 18.25 25.02

Trade debts 665,647 738,281 4.24 4.66

short term prepayments 47,523 9,134 0.30 0.05

accrued return on bank deposit 132,634 76,211 0.84 0.48

Other receivables 605,725 1,250,217 3.86 7.90

Loans and advances 426,165 414,338 2.72 2.61

Taxation-net 48,520 0 0.30 0

Cash and bank balance 8,543,263 7,416,180 54.5 46.87

Total current assets 13,560,329 14,095,657 86.5 89.0

Total Assets 15,665,050 15,822,468 100.00% 100.00%

Analysis of Non Current Assets: -

In common size analysis we express the various components of a balance sheet as percentage of the total assets of the company. In addition this can be done for the income statement, but here items are related to net sales. In Indus motors balance sheets over the three year span the percentage of current assets increased. The vertical common size analysis of balance sheet shows that long-term assets remain with 10-15 % range during last two years and the major contributor to long-term assets is plant and equipment which is about 50% of total asset on average it increased for some time and after that it showed a decline due to some financial constraints of the firm. The percentage of common size for the year 2007 is 86% but for the year 2006 it is 89%. It shows a increasing trend there is improvement. It shows that there is increase of Property and Equipment in total assets. It shows that our Capital work in progress is more in 2007 then 2006. It’s better for our company. Long term investments show no improvement because it’s equal for 2007 and 2006. Long term loans and advances show an increasing trend. In 2006 it is 0.2 but in 2007 it is 0.006. It shows that long term loans and advances are already too much we need to control it Long term deposits show the increasing trend which is good for this company. Total noncurrent assets show the increasing trend which is good for the Indus motors. It means that company’s profitability position is good in the year 2007.

Analysis of Current Assets: -

The vertical common size analysis of balance sheet shows that current assets remain 86.5-89% during that period. Stock in trade means inventory. It shows the increasing trend which means that in 2007 the value of inventory is high and it contributed more in total assets in the year 2007. Our loans and advances have been decreased and it’s also very good for the balance sheet of our company.

HORIZONTAL ANALYSISOf

Income statement of 2006&7Profit and loss account 2007 2006 2007 2006

Net sales 39,061,226 35,236,535 100 100

Cost of goods sold 34,620,632 31,088,906 88.6 88.2Gross profit 4,440,594 4,147,629 11.3 11.7

Distribution cost 509,986 404,917 1.3 0.19Administrative expenses 265,302 242,456 0.6 0.6

775,288 647,373 1.98 1.833,665,306 3,500,256 9.38 9.93

Other operating expenses 348,430 321,746 0.89 0.913,316,876 3,178,510 8.49 9.02

Other operating income 935,290 1,021,212 2.39 2.894,252,166 4,199,722 10.88 11.91

Finance cost 22,685 126,945 0.05 0.36

Profit before taxation 4,229,481 4,072,777 10.82 11.55Taxation 1,483,780 1,424,313 3.79 4.04Profit after taxation 2,745,701 2,648,464 7.02 7.51Earnings per share 34.93 33.70 0.00009 0.00010

The vertical common size analysis of income statement shows that cost of goods sold is about 88% of total Sales on average which leave 11% gross profit on average for firm during 2007 and in 2008.

Expense is about 0.6% of total sales and major contributor to operating expense is finance cost which has increased because of increased finance lease of assets. The net operating profit of company remained on average about 7.0% during 2007 and after that it increased to average of 7.5% .this is mainly because firm is able to generate much gross profit because of low cost of production which right very high margin for operating expense hence lead to high net profit.

Vertical Analysis of

Balance Sheet of 2007

EQUITIES AND LIABILITIES2007 2006 2007 2006

(Rupees in '000)

(Rupees in '000)

Share capital and reserves

Authorized capital100000000(2008.100000000ordinary shares of Rs.10 each 1,000,000 1,000,000 1,000,000 1,000,000Issued, subscribed & paid up capital 786,000 786,000 100% 100.00%Capital reserve 7,257,975 5,471,879 132% 100.00%Total equity 8,043,975 6,257,879 128% 100.00%Non-current liabilitiesDeferred taxation 210,149 116,164 180% 100.00%

Total non current liabilities 210,149 120,035 175% 100.00%Current liabilities

Trade and other payables 2,892,017 2,599,911 111% 100.00%advance from customers &dealers 4,514,480 6,620,869 68%Short term running finances- secured 0 0 0% 100.00%taxation net 0 195,789 0% 100.00%accurate mark up 715 22,250 3.2% 100%

Total current liabilities 7,410,926 9,444,554 78% 100.00%

Total equity and liabilities 15,665,050 15,822,468 0.99% 100.00%

Liabilities:

The right hand side of balance sheet shows the changes in liabilities and equity capital, the major change in equity portion is in general reserve which grew at a steady pace. Deferred liabilities also shows a steady increase which show that firm in not able to pay the liabilities in time. our trade and financing has been increased in 2007 that is not good for our company .our total current liabilities has been decreased due to decrease in short term borrowing and it’s good for our company. If we see the overall index analysis of our company we have seen that our company is going in profit for 2009 we should decrease our liabilities and increase current assets.

Vertical ANALYSISOf

Income statement 2006&7

Profit and loss account 2007 2006 2007 2006

Net sales 39,061,226 35,236,535 110 100

Cost of goods sold 34,620,632 31,088,906 111 100Gross profit 4,440,594 4,147,629 107 100

Distribution cost 509,986 404,917 125 100Administrative expenses 265,302 242,456 109.4 100

Other operating expenses 348,430 321,746 108.2 100

Other operating income 935,290 1,021,212 91.2 100

Finance cost 22,685 126,945 17.8 100

Profit before taxation 4,229,481 4,072,777 103 100Taxation 1,483,780 1,424,313 104 100

Profit after taxation 2,745,701 2,648,464 103.6 100Earning per share 34.93 33.70 103.65 100

The Income statement horizontal analysis reveals the findings that sales have increased at a continuous rate it show a variable trend of increase trend which shows that firm is still able to grow at a steady rate. As net profit is directly related to sales so this item also shows a variable trend of increase. Profit of the firm before taxation has increased. There is increase in Provision for Taxation .its 104% less than 2007. There is decreasing trend in Finance cost for 2007 and it’s so better for the reputation of our company. Our overall company is in profit because profit after taxation is so good. Our profit is 103.65% in 2007 and it shows our company is progressing in 2007 and its repo is so good then 2006.

Horizontal analysis of Balance sheet of 2008&9

Trade debt decreased with the passage of time which shows the enhancing ability to collect receivable on time. On the other hand of balance sheet the major equity there is 49% and 69% share of debt and equity respectively. The major contributor to debt is current liabilities is which is 47% of total right hand side of balance sheet on average, and these liabilities have decreased at steady pace during the last year.

EQUITIES AND LIABILITIES 2009 2008 2009 2008(Rupees in

'000)Share capital and reservesAuthorized capital100000000(2008.100000000ordinary shares of Rs.10 each 1,000,000 1,000,000 1,000,000 1,000,000Issued, subscribed & paid up capital 786,000 786,000 3.80% 5.72%Capital reserve 9,510,973 8,650,340 45.98% 62.92%Total equity 10,296,973 9,436,340 49.78% 68.64%Non-current liabilitiesdeferred taxation 503,700 532,138 2.44% 3.87%Total non current liabilities 503,700 532,138 2.44% 3.87%Current liabilitiesTrade and other payables 3,942,988 2,837,084 19.06% 20.64%advance from customers &dealers 5,926,529 942,442 28.65% 6.86%Short term running finances- secured 0 0 0.00% 0.00%taxation net 14,660 0 0.07% 0.00%accurate mark up 673 105 0.00% 0.00%Total current liabilities 9,884,850 3,779,631 47.79% 27.49%

Total equity and liabilities 20,685,523 13,748,109 100.00% 100.00%

Analysis of Non Current Assets: -

In common size analysis we express the various components of a balance sheet as percentage of the total assets of the company. In addition this can be done for the income statement, but here items are related to net sales. In Indus motors balance sheets over the three year span the percentage of current assets increased. The vertical common size analysis of balance sheet shows that long-term assets remain with 18-30 % range during last two years and the major contributor to long-term assets is plant and equipment which is about 25% of total asset on average it increased for some time and after that it showed a decline due to some financial constraints of the firm. The percentage of common size for the year 2009 is 80% but for the year 2006 it is 70%. It shows an increasing trend there is improvement. It shows that there is increase of Property and Equipment in total assets. Total noncurrent assets show the increasing trend which is good for the Indus motors. It means that company’s profitability position is good in the year 2009.

Analysis of Current Assets: -

The vertical common size analysis of balance sheet shows that current assets remain 80-70% during that period. Stock in trade means inventory. It shows the increasing trend which means that in 2009 the value of inventory is high and it contributed more in total assets in the year 2009. Our loans and advances have been decreased and it’s also very good for the balance sheet of our company.

Assets 2009 2008 2009 2008

Non-current assetsfixed assets 3,934,473 4033762 19.02% 29.34%long term loans and advances 28,509 42,341 0.14% 0.31%Long term deposits 7,222 7,222 0.03% 0.05%

Total non current assets 3,970,204 4,083,325 19.19% 29.70%

Current assets

Store and spare 128,483 232,142 0.62% 1.69%Stock-in-trade 4,088,858 2,637,629 19.77% 19.19%Trade debts 1,736,631 1,332,832 8.40% 9.69%short term prepayments 16,876 23,148 0.08% 0.17%accrued return on bank deposit 50,944 35,012 0.25% 0.25%Other receivables 67,902 74,360 0.33% 0.54%investments at fair value through profit &loss

0 54,171 0.00% 0.39%

Taxation-net 0 209,533 0.00% 1.52%Cash and bank balance 9,731,166 9,664,784 47.04% 70.30%

Total current assets 16,715,319 9,664,784 80.81% 70.30%

Total Assets 20,685,523 13,748,109 100.00% 100.00%

Income statement of 2008&09

2009 2008 2009 2008(Rupees in

'000)(Rupees in

'000)Sales 37,864,604 41,423,84

3100.00% 100.00%

Net sales 37,864,604 41,423,843

100.00% 100.00%

Cost of sale(c.g.s) -35540418 -37,575,35

6

-93.86% -90.71%

Gross profit 2,324,186 3,848,487 6.14% 9.29%Operating expense Marketing, selling and distribution cost

-469,985 -487,373 -1.24% -1.18%

Administrative expense -352,249 -297,284 -0.93% -0.72%other operating expense -156,479 -306,193 -0.41% -0.74%Total operating exp -978,713 -

1,123,718-2.58% -2.71%

Profit from operation before finance costs

1,345,473 2,757,637 3.55% 6.66%

Finance costs -26,540 -2,760 -0.07% -0.01%

Profit from operation after finance costs

1,318,933 2,754,877 3.48% 6.65%

Other income 727,080 786,834 1.92% 1.90%Profit before taxation 2,046,013 3,541,711 5.40% 8.55%Taxation -660,911 -1,250,866 -1.75% -3.02%

Profit after taxation 1,385,102 2,290,845 3.66% 5.53%

The vertical common size analysis of income statement shows that cost of goods sold is about -90% of total Sales on average which leave 7% gross profit on average for firm during 2008 and in 2009.

Expense is about -2.5% of total sales and major contributor to operating expense is finance cost which has increased because of increased finance lease of assets. The net operating profit of company remained on average about 3.55% during 2007 and after that it increased to average of 6.65% .this is mainly because firm is able to generate much gross profit because of low cost of production which right very high margin for operating expense hence lead to high net profit.

Vertical AnalysisBalance Sheet

For the year ended 2008&9

EQUITIES AND LIABILITIES

2009 2008 2009 2008

(Rupees in '000)

(Rupees in '000)

Liabilities:

The right hand side of balance sheet shows the changes in liabilities and equity capital, the major change in equity portion is in general reserve which grew at a steady pace. Deferred taxation also shows a steady decrease which show that firm in able to pay the liabilities not on time. our trade and payable has been increased in 2009 that is not good for our company .our total current liabilities has been increased due to increase in short term lender and it’s good for our company. If we see the overall index analysis of our company we have seen that our company is going in profit for 2009 we should decrease our liabilities and increase current assets.

The Income statement horizontal analysis reveals the findings that sales have decreased at a continuous rate it show a variable trend of decrease trend which shows that firm is still able to decrease at a steady rate. As net profit is directly related to sales so this item also shows a variable trend of decrease. Profit of the firm before taxation has decreased. There is increasing trend in Finance cost for 2009 and it’s so better for the reputation of our company. Our overall company is in loss because profit after taxation is so bad. Our profit is 60.46% in 2009 and it shows our company is progressing in 2009 and its repo is so bad then 2008.

Vertical analysis of Income statement

for 2008&92009 2008 2009 2008

(Rupees in '000) (Rupees in '000)Sales 37,864,604 41,423,843 91.41% 100.00%Net sales 37,864,604 41,423,843 91.41% 100.00%

Cost of sale(c.g.s) -35,540,418 -37,575,356 94.58% 100.00%

Gross profit 2,324,186 3,848,487 60.39% 100.00%

Operating expense Marketing, selling and distribution cost -469,985 -487,373 96.43% 100.00%Administrative expense -352,249 -297,284 118.49% 100.00%

other operating expense -156,479 -306,193 51.10% 100.00%Total operating exp -978,713 -1,123,718 87.10% 100.00%

Profit from operation before finance costs 1,345,473 2,757,637 48.79% 100.00%

Finance costs -26,540 -2,760 961.59% 100.00%

profit from operation after finance costs 1,318,933 2,754,877 47.88% 100.00%

Other income 727,080 786,834 92.41% 100.00%

Profit before taxation 2,046,013 3,541,711 57.77% 100.00%

Taxation -660,911 -1,250,866 52.84% 100.00%

Profit after taxation 1,385,102 2,290,845 60.46% 100.00%

Conclusion:

We have done the following things in this project;

Company introduction. Abstract Historical Background of the Company. Mission, Vision. The Company Products/Services. Financial Statement (ratio) Analysis for the last 4 Years. Trend analysis and Plot Line graph of each Ratio Common Size and Index Analysis.

REFERENCES

1. www.toyota-indus.com 2. www.motormania.com 3. www.pakmotors.com 4. www.pakwheels.com 5. www.indus_cars.com