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National University of Modern Languages Sector H-9 ISLAMABAD Department of Management Science Afs ProjectKohinoor Sugar mill ltd 5/12/11SUBMITTED TO: Madam iram qaziSUBMITTED BY: Adeel AzherKohinoor Sugar Mills LimitedIntroductionKohinoor Sugar Mills Limited is one of the first Sugar Factories established in Pakistan since the country’s independence. A Saigol Family project, KSML is a public limited company, listed on the Karachi and Lahore Stock Exchanges. Kohinoor Sugar Mills is located in Jauharabad, District Khushab in the Punjab province. The plant has the capacity of crushing over 5,000 Metric Tons of Cane per Day (TCD). The Factory produces over 40,000 tons of sugar every year.Statement of Ethics and Business PracticeCode of ethics is a pre-requisite for all directors and employees of Kohinoor Sugar Mills Limited. We endeavor to have fully groomed employees committed to carry out honestly activities assigned to them. Our aim is to have high standard of excellence for the products and for all those involved with our CompanyVISION STATEMENT“To become a market leader in the Industry setting out high quality standards for the Company and others to follow”MISSION STATEMENTTo produce/manufacture quality sugar and molasses by maintaining a high standard of efficiency and staying competitive to ensure customer satisfactionRatio AnalysisNow we shall find out the ratios of the Kohinoor Sugar Mills Limited to check the condition of the firm. We will find out the the performance of company is bad.Cash RatioThe cash ratio gives the information about the coverage of the current liabilities through cash which is the liquid. It should be 1: 1 as this is considered as satisfactory. The liquidity is calculated by adding cash and marketable securities.The Cash Ratio of Kohinoor Sugar Mills Limited is:FormulaThe formula of working capital is:Cash Ratio = (Cash + Marketable Securities) / Current liabilitiesComputationYears Cash + MKT Securities Current Liabilities Cash Rati
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National University of Modern Languages
Sector H-9 ISLAMABAD
Department of Management Science
Afs Project
Kohinoor Sugar mill ltd
5/12/11
SUBMITTED TO: Madam iram qazi
SUBMITTED BY: Adeel Azher
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If u want to download this project then call me at 03458014643 or send me a text
Kohinoor Sugar Mills Limited
Introduction
Kohinoor Sugar Mills Limited is one of the first Sugar Factories
established in Pakistan since the country’s independence. A Saigol
Family project, KSML is a public limited company, listed on the
Karachi and Lahore Stock Exchanges. Kohinoor Sugar Mills is
located in Jauharabad, District Khushab in the Punjab province. The
plant has the capacity of crushing over 5,000 Metric Tons of Cane per
Day (TCD). The Factory produces over 40,000 tons of sugar every
year.
Statement of Ethics and Business Practice
Code of ethics is a pre-requisite for all directors and employees
of Kohinoor Sugar Mills Limited. We endeavor to have fully groomed
employees committed to carry out honestly activities assigned to
them. Our aim is to have high standard of excellence for the products
and for all those involved with our Company
VISION STATEMENT
“To become a market leader in the Industry setting out high
quality standards for the Company and others to follow”
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MISSION STATEMENT
To produce/manufacture quality sugar and molasses by maintaining a
high standard of efficiency and staying competitive to ensure
customer satisfaction
Ratio Analysis
Now we shall find out the ratios of the Kohinoor Sugar Mills Limited to
check the condition of the firm. We will find out the Following Ratio
Balance Sheet Income Statements
Liquidity Ratio Profitability Ratio
Leverage ratio Coverage Ratio
Efficiency Ratio
Market Value Ratio
Liquidity Ratio
Those ratios which shows how quickly a firm meets its short term
obligations. Current liability
Following are the liquidity Ratio
Current Ratio
Quick Ratio
Cash Ratio
Current Ratio
The current ratio is obtained by dividing the current assets by current
liabilities. Current assets normally includes: cash, marketable
securities, account receivable and inventories.
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Formula
The formula of current ratio is:
Current ratio = Current assets / Current liabilities
Computation
Years Current Assets Current Liabilities Current Ratio2005 227,173,249 209,954,058 1.082006 390,666,841 457,793,528 0.85
Analysis
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The firm current ratio is in poor condition so it means that they need
financing to cover up their current obligations.
Quick Ratio.
The quick ratio can be calculated by deducting the inventories and
prepayments from the current assets and then dividing the remainder
by current liabilities. Inventories are typically the least liquid of the
firm current assets hence they are the current assets on which losses
are most likely to occur in a bankruptcy.
Formula
The formula of Quick ratio is:Quick ratio= Current assets-inventories-prepayments / Current
liabilities
2005Quick Asset= 227,173,249- 90,623,529- 66,437,296=70,112,4242006Quick Asset= 390,666,841-84,466,516-218,956,788=87,243,537
Computation
Years Quick Assets Current Liabilities Quick Ratio
2005 70,112,424 209,954,058 0.33
2006 87,243,537 457,793,528 0.19
Analysis
We can see that in 2005 we have current rati of 0.33 that means we
have 0.33 quick assets to pay a 1 current liability. But in 2006 it
decrease from 0.33 to 0.19 which show the performance of company
is bad.
Cash Ratio
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The cash ratio gives the information about the coverage of the current liabilities
through cash which is the liquid. It should be 1: 1 as this is considered as
satisfactory. The liquidity is calculated by adding cash and marketable securities.
The Cash Ratio of Kohinoor Sugar Mills Limited is:
Formula
The formula of working capital is:
Cash Ratio = (Cash + Marketable Securities) / Current liabilities
Computation
Years Cash + MKT Securities Current Liabilities Cash Ratio
2005 2,909,458+3,839,179=6,748,637 209,954,058 0.032
2006 9,553,415+369,790=9,923,205 457,793,528 0.022
ANALYSIS
The cash ratio tells us about the covering of short term obligation with
cash and cash equivalent it should the firm quick availability of the
cash and cash equivalent. This shows firm quick liquidity.
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LEVERAGE RATIO
Those ratios which show extend to which it is financed by Debt.
Following are the leverage ratio
debt to equity
Total debt to total asset
Total debt ratio
Debt to equity
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This ratio asses the extent to which the firm is using borrowed money. This
measures how much effective the firm is in usage of the debt. This ratio tells the
amount of debt taken against each rupee of equity.
The debt to equity ratio of Kohinoor Sugar Mills Limited is:
Formula
The formula of is:Debt to equity = total debt / equity
Computation
Years Long Term Debt Shareholders' Equity Debt to Equity
2005 165,098,022 94,867,800 1.74
2006 468,940,245 94,867,800 4.94
Total debt to total asset
The total debt to total asset generally called debt ratio, measures the percentage
of the funds provided by creditors. The creditors prefer low percentage because it
provides greater cushion to the creditors losses in the event of the liquidation.
The total debt to total assets of Kohinoor Sugar Mills Limited is:
Formula
The formula of is:
Total debt to total asset = total debt / total assetTotal debt= Current liabilities + LT Debt
Computation
Years Total Debt Total Assets Debt to Total Assets
2005 375,052,080 911,218,836 41.16%
2006 626,733,773 1,307,811,430 47.92%
Analysis
The debt ratio is increase in 2006 by 6 percent that means we have
more assets to pay off the debt.
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Total debt ratio
This ratio tells about how much firm’s capital is financed by the debt. It should be
low because of the risk factor that effect on the firm’s reputation. It should be
maximum of 50% or less.
The total debt to total capitalization ratio of Kohinoor Sugar Mills Limited is:
Formula
The formula of is:
Total debt ratio = total debt / total debt + EquityComputation
Years Current liabilities + LT Debt Total Debt + Total Equity Debt Ratio
2005 375,052,080 478,256,327 78.42%
2006 626,733,773 729,938,020 85.86%
Analysis
That means for paying the debt we have 78% owner equity and we
have a 22% liabilities. And in 2006 we have 85 % are owner equity
and 15 percent debt.
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Profitability ratios
Profitability is the net result of the number of policies and decisions. The ratios
examined thus far provide useful clues as tot the effectiveness of the firms
operations.
The profitability ratios are:
Net profit margin
Gross profit margin
Operating profit Margin
Basic earning power
Return on total assets
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Net Profit Margin
Net profit margin is calculated by divided EAT by sales. it is the percentage of
sales which is the profit. It should be high as it means that the cost of incurring
production is low.
The Kohinoor Sugar Mills Limited net profit margin is:
Formula
The formula of ratio is:
Net profit margin = net profit after taxes / net sales
Computation
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Years Net Profit After Taxes Net Sales Net Profit Margin
2005 54,081,708 852,372,071 6.34%
2006 8,141,611 913,370,379 0.89%
ANALYSIS
This ratio tells us the percentage of sales that is the profits this ration
also provide information about the profitability of the firm. The more
the net profit margin the more is the profitability of the firm. In case of
Kohinoor sugar the firm has maximum profit which means that the
firm profitability is good.
Gross Profit Margin
The gross profit margin is calculated by dividing gross profit by sales.
This the percentage of sales which is the gross profit as percentage
of sales. The difference of this percentage from 100% gives the
percentage of cost of goods sold.
Formula
The formula of ratio is:
Gross profit margin = Gross profit / net sales
Computation
Years Gross Profit Net Sales Gross Profit Margin
2005 135,201,515 852,372,071 15.86%
2006 137,641,270 913,370,379 15.07%
Analysis
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This ratio tells us about the percentage of gross profit from the sales
this also shows the profitability of the firm after the cost of sales the
difference between the gross profit margin and the sale is the
percentage of the cost of sales. in case of the Kohinoor sugar the
gross profit margin is good.
Operating Profit Margin
The operating profit margin is calculated by dividing operating profit
by sales. This the percentage of sales which is the operating profit as
percentage of sales. The difference of this percentage from 100%
gives the percentage of cost of goods sold and operating expenses
incurred.
Formula
The formula of ratio is:
Operating profit margin = Operating profit / net sales
Computation
Years Operating Profit Net Sales Operating Profit Margin
2005 92,832,293 852,372,071 10.89%
2006 86,517,309 913,370,379 9.47%
Analysis
This ratio tells us about the operating profitability of the company.
This ratio gives the percentage of sales that is the operating profit.
The difference between the operating margin and the gross profit
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margin is the percentage of the operating expenses. In Kohinoor
sugar the operating profit is negative in second year.
Return on total assets
The ratio of net income to total assets measures the return on total assets. This
shows that how much of the profit is due to assets or how much is the profit on
assets. It should be high in manufacturing oriented firm.
The Kohinoor Sugar Mills Limited return on assets
Formula
The formula of ratio is:
Return on asset = net profit after taxes / Total assetsComputation
Years Net Profit After Taxes Total Assets Return on Total Assets
2005 54,081,708 911,218,836 5.94%
2006 8,141,611 1,307,811,430 0.62%
Analysis
This ratio tells us about the return that would the total capital employed
generate in the firm. The total capital includes the all form of debt and equity.
This ratio gives us the return on the total capital employed. In case of the
Kohinoor sugar in early year it generate the negative return but by time the
return become positive.
Basic earning power
The basic earning power ratio is calculated by dividing earning before interest
and taxes this ratio shows the raw earning power of the firm assets before the
influence of taxes and leverages.
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The Kohinoor Sugar Mills Limited basic earning power is:
Formula
The formula of ratio is:Basic earning Power = EBIT / Total assets
Computation
Years EBIT/Operating Profit Total Assets Basic Earning Power
2005 92,832,293 911,218,836 10.19%
2006 86,517,309 1,307,811,430 6.62%The basic earning power ratio is calculated by dividing earning before interest
and taxes this ratio shows the raw earning power of the firm assets before the
influence of taxes and leverages.
The Kohinoor Sugar Mills Limited basic earning power is:
Formula
The formula of ratio is:Basic earning Power = EBIT / Total assets
Computation
Years EBIT/Operating Profit Total Assets Basic Earning Power
2005 92,832,293 911,218,836 10.19%
2006 86,517,309 1,307,811,430 6.62%
Efficiency Ratio or turnover Ratio
That ratio which show how efficiently a company is using its assets
following are some efficiency Ratio.
Receivable turnover
Payable turnover
Inventory Turnover
Receivable turnover
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The receivable turnover is defined as the sales divided by receivables. This ratio
shows how many times in a year the receivable received by the customer it
shows how much the firm is efficient tin collecting the account receivables.
The Kohinoor receivable turnover is:
Formula
The formula of receivable turnover is:
Receivable Turnover = Sales / Receivables Computation
Years Sales Receivables Receivable Turnover (Times)
2005 852,372,071 39,003,866 22
2006 913,370,379 44,906,524 20
Average collection period
It is also called average collection period it is calculated by dividing the number of
days in year by receivable turnover. This ratio shows after sales how many days
after which the account receivable are received.
The Kohinoor Sugar Mills Limited days sales outstanding are:
Formula
The formula of receivable turnover is:
Receivable Turnover in days = 365 / Receivables turnover
Computation
Years Days in Year Receivable Turnover Receivable Turnover (Days)
2005 360 22 16
2006 360 20 18
Inventory turnover ratio
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The inventory turnover ratio is defined as CGS divided by the inventories. This
ratio shows that in a year how many times the inventory turn in to the sales. This
shows that how much firm is efficient in managing and recycling inventory in a
year either it is a lot of inventory without circulating or not.
The Kohinoor Sugar Mills Limited the inventory turnover ratio is:
Formula
The formula of inventory turnover is:
Inventory Turnover = cost of good sold / inventory
Computation
Years Cost of Sales Inventories Inventory Turnover (times)
2005 717,170,556 157,966,407 4.54
2006 775,729,109 230,242,065 3.37
Inventory turnover days
The inventory turnover days is defined as the number of days in year divided by
inventory turnover. This shows that after how many days the inventory is
converted in to cash or sales.
The Kohinoor Sugar Mills Limited inventory turnover in days is:
Formula
The formula of inventory turnover in days is:
Inventory Turnover in days = 365 / inventory turnover
Computation
Years Days in Year Inventory Turnover Inventory Turnover (Days)
2005 360 4.54 79
2006 360 3.37 107
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The payable turnover means in a year how many time they pay the credits of
their purchases which means after credit purchases how many times a year they
pay the credits.
The Kohinoor Sugar Mills Limited payable turnover is:
Formula
The formula of ratio is:
Payable Turnover = Purchases / Account payable
Computation
Years Cost of Sales Account Payable Payable Turnover
2005 717,170,556 39,612,353 18.10
2006 775,729,109 39,916,147 19.43
Average collection period
The payable turnover in days means after credit purchases how many days after
which the credit are paid this shows the firm ability to manage and release debts.
It should be greater then the receivable turnover in days.
The Kohinoor Sugar Mills Limited payable turnover in days is:
Formula
The formula of ratio is:
Payable Turnover in days = 365 / payable turnover
Computation
Years Days in Year Payable Turnover Payable Turnover (Days)
2005 360 17.97 20
2006 360 10.58 34
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