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8/9/2019 Ibf-Full n Final
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Acknowledgement
In the name of Allah the praiseworthy, the passionatewhose blessings made it possible for us to complete this
complex task.I would like to show my gratitude towards our honorable
instructor Sir Asif Naji, with his encouragement,guidance and support from the initial to the final levelenabled me to develop an understanding of the subject.Lastly, I am indebted to many of my colleagues who
supported me in any respect during the completion of myproject.
Muhammad Umair Azhar
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Cross-Sectional Analysis:-
For the year 2009:-
1. CURRENT RATIO:Current ratio = Current Assets
Current Liabilities
= 3,929,738
5,614,243
= 0.699 times or 0.7 times
INTERPRETATION:-
Current ratios measures a firms ability to meet
its short-term obligations. It shows the
relationship between current assets and current
liabilities.
In this company current ratio is 0.7 times. Itmeans that companys current assets are 0.7 times more than that of its current liabilities.
If we compare the results of the company with the results of industry, companys results are
showing worst position because current ratio of the company is less than that of i ndustrys
current ratios.
2. QUICK RATIO:Quick Assets = Cash+ Marketable securities + Account receivable
Current liabilities
= 20,487+0+0
5,614,243
= 0.00364: 1
INTERPRETATION:-
Quick ratios measures a firms ability to meet its short-term obligations. It shows the
relationship between quick assets and current liabilities.
In this company quick ratio is 0.00364 times. It means that companys quick assets are 0.00364
times more than that of its current liabilities.If we compare the results of the company with the results of industry, companys results are
showing worst position because current ratio of the company is less than that of industrys quick
ratios.
3. CASH RATIO:Cash ratio = Cash
Current liabilities
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= 20,487
5,614,243
= 0.00364
INTERPRETATION:-
Cash ratios measures a firms ability to meet its short-term obligations. It shows the relationship
between cash and current liabilities.
In this company quick ratio is 0.00364 times. It means that companys cash are 0.00364 times
more than that of its current liabilities.
If we compare the results of the company with the results of industry, companys results are
showing worst position because current ratio of the company is less than that of industrys cash
ratios.
4. WORKING CAPITAL:Working capital = Current assetsCurrent liabilities
= 3,929,738 - 5,614,243
= (1,684,505)
INTERPRETATION:
Working capital measures a firms ability to meet its short-term obligations. It shows the
relationship by subtracting current assets with current liabilities.
In this company working capital is (1684505). It means that companys cash are (1684505) times
less than that of its current liabilities.
If we compare the results of the company with the results of industry, companys results are
showing worst position because working capital of the company is less than that of industrys
working capital.
5. DEBT RATIO:Debt ratio = Total debts
Total Assets
= 7,114,243
9,942,088
= 0.71
INTERPRETATION:-Debt ratio measures a firms ability to meet its long-term obligations. It shows the relationship
between total debts and total assets
In this company debt ratio is 0.71 times. It means that the companys total debts are 0.71 times of
its total assets.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys debt ratio is more than that of industrys debt ratio.
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6. DEBT TO EQUITY RATIO:Debt to equity ratio = Total Debts
Total shareholders equity
= 7,114,243
2,827,845
= 2.5
INTERPRETATION:-
Debt to equity ratio measures a firms ability to meet its long-term obligations. It shows the
relationship between total debts and total shareholders equity.
In this company debt ratio is 0.71 times. It means that the companys total debts are 0.71 times of
its total shareholders.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys debt ratio is more than that of industrys debt to
equity ratio.
7. TIME INTEREST EARNED:Time interest earned = Operating Profit
Interest expense
= (399,516)
222,769
= (1.79) times
INTERPRETATION:-
Time interest earned indicates that how many times a company can pay its expenses from its
operating profit.
In this company time interest earned is 1.79 times. It means that a company can pay its interest
expenses 1.79 times from its operating profit.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys time interest earned ratio is less than that of
industrys time interest earned ratio.
8. INVENTORY TURNOVER:Inventory turnover = Cost of goods sold
Average inventory
= 13,973,144
2,954,091
= 4.730 times
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11.GROSS PROFIT MARGIN:Gross profit margin = Gross profit
Net sales
= 176,502
14,149,646
= 0.0124 or 1.24%
INTERPRETATION:-
It shows the relationship between gross profit and net sales. It is a percentage of gross profit
based on the value of net sales.
In this company gross profit margin is 0.0124 or 1.24%. It means that company generates 0.0124
or 1.24% of gross profit based on the value of net sales.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys gross profit margin is less than that of industrys
gross profit margin.
12.OPERATING PROFIT MARGIN:Operating profit margin = Operating profit
Net sales
= (399,516)
14,149,646
= 0.028 or 2.8%
INTERPRETATION:-
It shows the relationship between operating profit and net sales. It is a percentage of operating
profit based on the value of net sales.
In this company operating profit margin is 0.028 or 2.8%. It means that company generates 0.028
or 2.8% of operating profit based on the value of net sales.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys operating profit margin is less than that of industrys
operating profit margin.
13.NET PROFIT MARGIN:Net profit margin = Net profit
Net sales
= (401,833)
14,149,646
= 0.0283 or 2.83%
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INTERPRETATION:-
It shows the relationship between net profit and net sales. It is a percentage of net profit based on
the value of net sales.
In this company net profit margin is 0.0283 or 2.83%. It means that company generates 0.0283 or
2.83% of net profit based on the value of net sales.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys net profit margin is less than that of industrys net
profit margin.
14.RETURN ON ASSETS:-Return on assets = Net profit
Total assets
= (401,833)
9,942,088
= 0.040 or 4%
INTERPRETATION:-It shows the relationship between net profit and total assets. It is a percentage of net profit based
on the value of total assets.
In this company return on assets is 0.040 or 4%. It means that company generates 0.040 or 4% of
net profit based on the value of total assets.
If we compare the results of the company with the results of industry, companys results are
showing worst position because companys return on assets is less than that of industrys return
on assets.
15.RETURN ON EQUITY:Return on equity = Net profit
Total shareholder equity
= (401,833)
2,827,845
= 0.142 or 14.2%
INTERPRETATION:-
It shows the relationship between net profit and total shareholder equity. It is a percentage of netprofit based on the value of total shareholder equity.
In this company return on equity is 0.142 or 14.2%. It means that company generates 0.142 or
14.2% of net profit based on the value of total shareholder equity.
If we compare the results of the company with the results of industry, companys results are
showing worstposition because companys return on equity is less than that of industrys return
on equity.
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16.EARNINGS PER SHARE:Earnings per share = Net profit after taxDividend to preferred stockholders
No. of common stocks issued
= 401,833 - 0
142,800,000
= 0.00281 or 2.81 per share
For the year 2008:-
1. CURRENT RATIO:Current ratio = Current Assets
Current Liabilities
= 2,435,5293,087,066
= 0.788 or 0.8 times
2. QUICK RATIO:Quick Assets = Cash+ Marketable securities + Account receivable
Current liabilities
= 231,880+0+0
3,087,066
= 0.0751: 1
3. CASH RATIO:Cash ratio = Cash
Current liabilities
= 231,880
3,087,066
= 0.0751
4. WORKING CAPITAL:Working capital = Current assetsCurrent liabilities
= 2,435,529 - 3,087,066
= (651,537)
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5. DEBT RATIO:Debt ratio = Total debts
Total Assets
= 3,587,066
6,816,744
= 0.52
6. DEBT TO EQUITY RATIO:Debt to equity ratio = Total Debts
Total shareholders equity
= 3,587,066
3,229,678
= 1.11
7. TIME INTEREST EARNED:Time interest earned = Operating Profit
Interest expense
= 297,268
233,651
= 1.27 times
8. INVENTORY TURNOVER:Inventory turnover = Cost of goods sold
Average inventory
= 14,088,001
1,612,696
= 8.735 times
9. FIXED ASSETS TURNOVER:Fixed assets turnover = Net sales
Fixed assets
= 14,715,495
4,381,215
= 3.639 times
10.TOTAL ASSETS TURNOVER:Total assets turnover = Net sales
Total assets
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= 14,715,495
6,816,744
= 2.158 times
11.GROSS PROFIT MARGIN:Gross profit margin = Gross profit
Net sales= 627,494
14,715,495
= 0.04264 or 4.264%
12.OPERATING PROFIT MARGIN:Operating profit margin = Operating profit
Net sales
= 297,268
14,715,495
= 0.020 or 2.0%
13.NET PROFIT MARGIN:Net profit margin = Net profit
Net sales
= 75,010
14,715,495
= 0.0050 or 0.50%
14.RETURN ON ASSETS:Return on assets = Net profit
Total assets
= 75,010
6,816,744
= 0.011 or 1.1%
15.RETURN ON EQUITY:Return on equity = Net profit
Total shareholder equity
= 75,010
3,229,678
= 0.023 or 2.3%
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16.EARNINGS PER SHARE:Earnings per share = Net profit after taxDividend to preferred stockholders
No. of common stocks issued
= 75,010 - 0
142,800,000
= 0.00525 or 0.525 per share
For the year 2007:-
1. CURRENT RATIO:Current ratio = Current Assets
Current Liabilities
= 3,681,2133,906,115
= 0.942 or 0.9 times
2. QUICK RATIO:Quick Assets = Cash+ Marketable securities + Account receivable
Current liabilities
= 219,859+0+0
3,906,115
= 0.0562: 1
3. CASH RATIO:Cash ratio = Cash
Current liabilities
= 219,859
3,906,115
= 0.0562
4. WORKING CAPITAL:Working capital = Current assetsCurrent liabilities
= 3,681,213 - 3,906,115
= (224,902)
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5. DEBT RATIO:Debt ratio = Total debts
Total Assets
= 5,864,449
8,305,117
= 0.70
6. DEBT TO EQUITY RATIO:Debt to equity ratio = Total Debts
Total shareholders equity
= 5,864,449
2,440,668
= 2.40
7. TIME INTEREST EARNED:Time interest earned = Operating Profit
Interest expense
= (176,158)
305,491
= (0.57) times
8. INVENTORY TURNOVER:Inventory turnover = Cost of goods sold
Average inventory
= 16,955,181
2,704,946
= 6.268 times
9. FIXED ASSETS TURNOVER:Fixed assets turnover = Net sales
Fixed assets
= 17,055,115
4,623,904
= 3.688 times
10.TOTAL ASSETS TURNOVER:Total assets turnover = Net sales
Total assets
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= 17,055,115
8,305,117
= 2.053 times
11.GROSS PROFIT MARGIN:Gross profit margin = Gross profit
Net sales= 99,934
17,055,115
= 0.0058 or 0.58%
12.OPERATING PROFIT MARGIN:Operating profit margin = Operating profit
Net sales
= (176,158)
17,055,115
= 0.010 or 1.0%
13.NET PROFIT MARGIN:Net profit margin = Net profit
Net sales
= (264,540)
17,055,115
= 0.015 or 1.5%
14.RETURN ON ASSETS:Return on assets = Net profit
Total assets
= (264,540)
8,305,117
= 0.031 or 3.1%
15.RETURN ON EQUITY:Return on equity = Net profit
Total shareholder equity
= (264,540)
2,440,668
= 0.108 or 10.8%
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16.EARNINGS PER SHARE:Earnings per share = Net profit after taxDividend to preferred stockholders
No. of common stocks issued
= 264,540 - 0
71,400,000
= 0.0037 or 3.70 per share
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TIME SERIES ANALYSIS
2007 2008 2009
CURRENT RATIO 0.9 0.8 0.7
Current ratio measures the firms ability the short term obligation. It shows the relationship b/w
current assets and current liabilities.
In year 2007 the current ratio is 0.9.It means the current assets is 0.9 more than that of current
liabilities.
In 2008 current ratio reached to 0.8 and in 2009 current ratio reached to 0.7.
If we evaluate the results of the firm over the period of time, companys result show worst
position b/c there is a decreasing trend in the current ratio.
2007 2008 2009
QUICK RATIO 0.562 0.0751 0.0036
Quick ratio measures the firms ability the short term obligation. It shows the relationship b/w
quick assets and current liabilities.
In year 2007 the quick ratio is 0.562.It means the quick assets is 0.562 more than that of current
liabilities.
In 2008 quick ratio reached to 0.0751 and in 2009 quick ratio reached to 0.0036.
If we evaluate the results of the firm over the period of time, companys result show worst
position b/c there is a decreasing trend in the quick ratio.
2007 2008 2009
CASH RATIO 0.562 0.0751 0.0036
Cash ratio measures the firms ability the short term obligation. It shows the relationship b/w
cash and current liabilities. In year 2007 the cash ratio is 0.562.It means the cash is 0.562 more
than that of current liabilities.
In 2008 cash ratio reached to 0.0751 and in 2009 cash ratio reached to 0.0036.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in the cash ratio.
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2007 2008 2009
WORKING CAPITAL (224902) (651537) (1684505)
In year 2007 the W.C is (224902)
In 2008 W.C reached to (651537) and in 2009 W.C reached to (1684505).
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in the working capital.
2007 2008 2009
DEBT RATIO 0.7 0.52 0.71
Debt ratio measures the firms ability the long term obligation. It shows the relationship b/w total
assets and total liabilities.
In year 2007 the debt ratio is 0.7.It means that the companys total liabilities are 0.7 of its total
assets.
In 2008 debt ratio reached to 0.52 and in 2009 debt ratio is also 0.71.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in the debt ratio.
2007 2008 2009
DEBT TO EQUITY RATIO 2.4 1.11 2.5
Debt to equity ratio measures the firms ability the long term obligation. It shows the relationship
b/w total liabilities and total shareholder equity.
In year 2007 the debt to equity ratio is 2.4.It means that the companys total liabilities are 2.4 of
its total shareholder equity.
In 2008 debt to equity ratio reached to 1.11 and in 2009 debt to equity ratio is also 2.5.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in the debt to equity ratio.
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2007 2008 2009
TIME INTREST EARNED (0.57) 1.27 (1.79)
Indicates that how many times a company can pay its interest expense from its operating profit.
In year 2007 the time interest earned ratio is (0.57).it means that the company can pay its interest
expense (0.57) times from its operating profit.
In 2008 T.I.E ratio is 1.27 and in 2009 T.I.E ratio reached to (1.79) times.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in the T.I.E ratio.
2007 2008 2009
INVENTIORY TURNOVER 6.268 8.735 4.730
Inventory turnover ratio indicates that how many times company converts its inventory into cash
and sales.
In 2007 inventory turnover is 6.268 times.
In 2008 inventory turnover is 8.735 and in 2009 inventory turnover is 4.730 times.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in inventory turnover ratio.
2007 2008 2009
FIXED ASSETS TURNOVER 3.688 3.639 2.6
Fixed assets turnover indicates that how many times revenue is generated by fixed assets of its
own worth.
In 2007 fixed assets turnover is 3.688 times.
In 2008 fixed assets turnover is 3.639 and in 2009 fixed assets turnover is 2.6 times.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in fixed assets turnover ratio.
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2007 2008 2009
TOTAL ASSETS TURNOVER 2.053 2.158 1.423
Total Assets turnover indicates that how many times revenue is generated by total assets of its
own worth.
In 2007 total assets turnover is 2.053 times.
In 2008 total assets turnover is 2.158 and in 2009 fixed assets turnover is 1.423 times.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in total assets turnover ratio.
2007 2008 2009
GROSS PROFIT MARGIN 0.58% 4.26% 1.24%
It shows the relationship of gross profit and net sales. It is a % of G.P based on the value of net
sales.
In 2007 gross profit margin is 0.58%.
In 2008 gross profit margin is 4.26% and in 2009 gross profit margin is 1.24%.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in gross profit margin ratio.
2007 2008 2009
OPERATING PROFIT MARGIN (1) % (2) % (2.8) %
It shows the relationship of gross profit and net sales. It is a % of O.P based on the value of net
sales.
In 2007 operating profit margin is (1) %.
In 2008 operating profit margin is (2) % and in 2009 operating profit margin is (2.8) %.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in operating profit margin ratio.
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2007 2008 2009
NET PROFIT MARGIN (1.5) % 0.5 % (2.83) %
It shows the relationship of gross profit and net sales. It is a % of N.P based on the value of net
sales.
In 2007 net profit margin is (1.5) %.
In 2008 net profit margin is 0.5% and in 2009 net profit margin is (2.83) %.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in net profit margin ratio.
2007 2008 2009
RETURN ON ASSETS (3.1) % 1.1% (4) %
It shows the relationship b/w net profit and total assets. It is a % of net profit based on the value
of total assets.
In 2007 the return on assets is (3.1) %.
In 2008 the return on assets is 1.1% and in 2009 (4) %.
If we evaluate the results of the firm over the period of time, companys result show worst
position b/c there is a decreasing trend in return on assets ratio.
2007 2008 2009
RETURN ON EQUITY (10.8) % 2.3% (14.2) %
It shows the relationship b/w net profit and Total shareholder equity. It is a % of net profit based
on the of total shareholder equity.
In 2007 the return on equity is (10.8) %.
In 2008 the return on equity is 2.3% and in 2009 (14.2) %.
If we evaluate the results of the firm over the period, companys result show worst position b/c
there is a decreasing trend in return on equity ratio.
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0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2009
Current Ratio
Company's Ratio Industry's Ratio
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0
0.2
0.4
0.6
0.8
1
1.2
1.4
2009
Quick Ratio
Company's Ratio Industry's Ratio
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-2000000
-1500000
-1000000
-500000
0
500000
2009
Working Capital
Company's Ratio Industry's Ratio
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0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2009
Debt Ratio
Company's Ratio Industry's Ratio
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0
0.5
1
1.5
2
2.5
2009
Debt to Equity
Company's ratio Industry's Ratio
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-2
0
2
4
6
8
10
12
14
16
18
2009
Time Interest Earned
company`s ratio industry`s ratio
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0
5
10
15
20
25
30
2009
Inventory turnover
Company`s ratio industry`s ratio
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2.3
2.35
2.4
2.45
2.5
2.55
2.6
2009
Fixed Asset Turnover
Company s ratio Industry`s ratio
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0
2
4
6
8
10
12
2009
Total Asset Turnover
Company`s ratio industry`s ratio
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0
5
10
15
20
25
30
35
2009
Gross Profit Margin
company`s ratio Industtry`s ratio
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-5
0
5
10
15
20
25
2009
Operating Profit Margin
Company s ratio industry`s ratio
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-4
-2
0
2
4
6
8
10
12
14
16
2009
Net Profit Margin
Company`s ratio industry`s ratio
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-4
-2
0
2
4
6
8
10
12
2009
Return On Asset
Company s ratio Industry`s ratio
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.
-15
-10
-5
0
5
10
2009
Return On Equity
Company`s ratio Industry`s ratio
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Current Ratio
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
20072008
2009
Current Ratio
Current Ratio
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Quick Ratio
0
0.1
0.2
0.3
0.4
0.5
0.6
20072008
2009
Quick Ratio
Quick Ratio
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Cash ratio
0
0.1
0.2
0.3
0.4
0.5
0.6
20072008
2009
Cash ratio
Cash ratio
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Working Capital
-1800000
-1600000
-1400000
-1200000
-1000000
-800000
-600000
-400000
-200000
0
20072008
2009
Working Capital
Working Capital
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Debt Ratio
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
20072008
2009
Debt Ratio
Debt Ratio
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Debt to equity Ratio
0
0.5
1
1.5
2
2.5
20072008
2009
Debt to equity Ratio
Debt to equity Ratio
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Time interest earned
-2
-1.5
-1
-0.5
0
0.5
1
1.5
20072008
2009
Time interest earned
Time interest earned
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Inventory Turnover
0
1
2
3
4
5
6
7
8
9
20072008
2009
Inventory Turnover
Inventory Turnover
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Fixed Assets Turnover
0
0.5
1
1.5
2
2.5
3
3.5
4
20072008
2009
Fixed Assets Turnover
Fixed Assets Turnover
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Gross Profit Margin %
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
20072008
2009
Gross Profit Margin %
Gross Profit Margin %
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Operating Profit Margin %
-3
-2.5
-2
-1.5
-1
-0.5
0
2007 2008 2009
Operating Profit Margin %
Operating Profit Margin %
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Net Profit Margin %
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
20072008
2009
Net Profit Margin %
Net Profit Margin %
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54/71
54
Return on Assets %
-4
-3
-2
-1
0
1
2
20072008
2009
Return on Assets %
Return on Assets %
8/9/2019 Ibf-Full n Final
55/71
5
Return on Equity %
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
20072008
2009
Return on Equity %
Return on Equity %
8/9/2019 Ibf-Full n Final
56/71
56
Honda atlas cars
Common size balance sheet
2009 2009% of the company
Equity and liabilities:-
Share Capital And Reserves:
Authorized Capital 2,000,000 2,000,000 100 = 20.11
9,942,088
Issued Capital 1,428,000 1,428,000 100 = 14.36
9,942,088
Reserves 1,801,500 1,801,500 100 = 18.11
9,942,088
(Accumulated loss)/ Unappropiated profit (401,655) 401,655 100 = 4.04
9,942,088
Total Shareholders equity
2,827,845
2,827,845 100 = 28.449,942,088
Non-current Liabilities:
Long-term finances secured 1,500,000 1,500,000 100 = 15.089,942,088
Current Liabilities:
Short-term borrowings- secured 2,151,601 2,151,601 100 = 21.64
9,942,088
Mark-up accrued on loans and other
payables
75,048 75,048 100 = 0.75
9,942,088Trade and other payables 3,387,594 3,387,594 100 = 34.07
9,942,088
Total current liabilities
5,614,243
5,614,243 100 = 56.469,942,088
Total Equities9,942,088
9,942,088 100 = 100
9,942,088
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57/71
5
2009 2009% of the company
Assets:-
Non-current Assets:
Property, Plant and Equipment 5,190,535 5,190,535 100 = 52.20
9,942,088
Intangible Assets 195,830 195,830 100 = 1.96
9,942,088
Capital work-in-progress 19,226 19,226 100 = 0.19
9,942,088
Long-term loans and advances 31,503 31,503 100 = 0.31
9,942,088Long-term deposits 4,042 4,042 100 = 0.04
9,942,088
Deferred taxation 571,214 571,214 100 = 5.74
9,942,088
Total non-current assets
6,012,350
6,012,350 100 = 60.47
9,942,088
Current Assets:
Stores and spares 101,942 101.942 100 = 1.029,942,088
Stock in trade 2,954,091 2,954,091 100 = 29.71
9,942,088
Advances, prepayments and other receivables 853,218 853,218 100 = 8.58
9,942,088
Cash and bank balances 20,487 20,487 100 = 0.2
9,942,088
Total current assets 3,929,738 3,929,738 100 = 39.529,942,088
Total Assets
9,942,088
9,942,088 100 = 100
9,942,088
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58/71
58
Honda atlas cars
Common size income statement
2009 2009% of the companySales 14,149,646 14,149,646 100 = 100
14,149,646
Less: Cost of sales (13,973,144) 13,973,144 100 = 98.75
14,149,646
Gross profit
176,502
176,502 100 = 1.24
14,149,646
Less: Distribution and marketing cost (190,088) 190,088 100 = 1.3414,149,646
Less: Administrative expenses (139,749) 139,749 100 = 0.9814,149,646
Other operating income 64,844 64,844 100 = 0.45
14,149,646
Other operating expenses (311,025) 311,025 100 = 0.021
14,149,646
(Loss) / Profit from operations
(399,025)
399,025 100 = 0.028
14,149,646
Less: Finance cost (222,769) 222,769 100 = 0.01514,149,646
(Loss) / Profit before taxation
(622,285)
622,285 100 = 0.04314,149,646
Less: Taxation (220,452) 220,452 100 = 0.01514,149,646
(Loss) / Profit after taxation
( 401,833 )
401,833 100 = 0.028
14,149,646
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59/71
59
Honda atlas cars
Common size balance sheet
2008 2008 % of the company
Equity and liabilities:-
Share Capital And Reserves:
Authorized Capital 2,000,000 2,000,000 100 = 29.336,816,744
Issued Capital 1,428,000 1,428,000 100 = 20.94
6,816,744
Reserves 1,727,000 1,727,000 100 = 25.336,816,744
(Accumulated loss)/ Unappropiated profit 74,678 74,678 100 = 1.096,816,744
Total Shareholders equity
3,229,678
3,229,678 100 = 47.376,816,744
Non-current Liabilities:
Long-term finances secured 500,000 500,000 100 = 07.33
6,816,744
Current Liabilities:
Short-term borrowings- secured - -
Mark-up accrued on loans and other payables 32,029 32,029 100 = 0.466,816,744
Trade and other payables 3,055,037 3,055,037 100 = 44.81
6,816,744Total current liabilities
3,087,066
3,087,066 100 = 45.28
6,816,744
Total Equities6,816,744
6,816,744 100 = 100
6,816,744
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60/71
60
2008 2008 % of the company
Assets:-
Non-current Assets:
Property, Plant and Equipment 3,864,527 3,864,527 100 = 56.69
6,816,744
Intangible Assets 64,636 64,636 100 = 0.94
6,816,744
Capital work-in-progress 80,746 80,746 100 = 1.1
6,816,744
Long-term loans and advances 29,050 29,050 100 = 0.42
6,816,744Long-term deposits 4,091 4,091 100 = 0.06
6,816,744
Deferred taxation 338,165 338,165 100 = 4.96
6,816,744
Total non-current assets
4,381,215
4,381,215 100 = 64.276,816,744
Current Assets:
Stores and spares 83,101 83,101 100 = 1.216,816,744
Stock in trade 1,612,696 1,612,696 100 = 23.65
6,816,744
Advances, prepayments and other receivables 507,852 507,852 100 = 7.45
6,816,744
Cash and bank balances 231,880 231,880 100 = 3.40
6,816,744
Total current assets
2,435,529
2,435,529 100 = 35.72
6,816,744
Total Assets
6,816,744
6,816,744 100 = 1006,816,744
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61/71
6
Honda atlas cars
Common size income statement
2008 2008% of the companySales 14,715,495 14,715,495 100 = 100
14,715,495
Less: Cost of sales (14,088,001) 14,088,001 100 = 95.7314,715,495
Gross profit
627,494
627,494 100 = 4.2614,715,495
Less: Distribution and marketing cost (209,677) 209,677 100 = 1.42
14,715,495
Less: Administrative expenses (139,163) 139,163 100 = 0.94
14,715,495
Other operating income 23,589 23,589 100 = 0.16
14,715,495
Other operating expenses (4,975) 4,975 100 = 0.033
14,715,495
(Loss) / Profit from operations
297,268
297,268 100 = 2.02
14,715,495
Less: Finance cost (233,651) 233,651 100 = 1.58
14,715,495
(Loss) / Profit before taxation
63,617
63,617 100 = 0.432
14,715,495
Less: Taxation (11,393) 11,393 100 = 0.07714,715,495
(Loss) / Profit after taxation
75,010
75,010 100 = 0.50914,715,495
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62/71
62
Honda atlas cars
Common size balance sheet
2007 2007 % of the company
Equity and liabilities:-
Share Capital And Reserves:
Authorized Capital 750,000 750,000 100 = 9.038,305,117
Issued Capital 714,000 714,000 100 = 8.59
8,305,117
Reserves 1,991,000 1,991,000 100 = 23.97
8,305,117
(Accumulated loss)/ Unappropiated profit (264,332) 264,332 100 = 3.188,305,117
Total Shareholders equity
2,440,668
2,440,668 100 = 29.388,305,117
Non-current Liabilities:
Long-term finances secured 1,958,334 1,958,334 100 = 23.57
8,305,117
Current Liabilities:
Current portion of long-term finances 583,333 583,333 100 = 7.028,305,117
Mark-up accrued on loans and other payables 39,627 39,627 100 = 0.47
8,305,117
Trade and other payables 3,283,155 3,283,155 100 = 39.53
8,305,117Total current liabilities
3,906,115
3,906,115 100 = 47.03
8,305,117
Total Equities8,305,117
8,305,117 100 = 100
8,305,117
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63/71
63
2007 2007 % of the company
Assets:-
Non-current Assets:
Property, Plant and Equipment 4,082,955 4,082,955 100 = 49.16
8,305,117
Intangible Assets 65,903 65,903 100 = 0.79
8,305,117
Capital work-in-progress 191,842 191,842 100 = 2.30
8,305,117Long-term loans and advances 28,105 28,105 100 = 0.33
8,305,117
Long-term deposits 4,091 4,091 100 = 0.05
8,305,117
Deferred taxation 251,008 251,008 100 = 3.02
8,305,117
Total non-current assets
4,623,904
4,623,904 100 = 55.67
8,305,117
Current Assets:
Stores and spares 50,316 50,316 100 = 0.60
8,305,117
Stock in trade 2,704,946 2,704,746 100 = 32.56
8,305,117
Advances, prepayments and other receivables 706,092 706,092 100 = 8.508,305,117
Cash and bank balances 219,859 219,859 100 = 2.64
8,305,117Total current assets
3,681,213
3,681,213 100 = 44.32
8,305,117
Total Assets
8,305,117
8,305,117 100 = 1008,305,117
8/9/2019 Ibf-Full n Final
64/71
64
Honda atlas cars
Common size income statement
2007 2007 % of the companySales 17,055,115 17,055,115 100 = 100
17,055,115
Less: Cost of sales (16,955,181) 16,955,981 100 = 99.4117,055,115
Gross profit
99,934
99,934 100 = 0.5817,055,115
Less: Distribution and marketing cost (214,889) 214,889 100 = 1.25
17,055,115
Less: Administrative expenses (147,274) 147,274 100 = 0.86
17,055,115
Other operating income 150,585 150,585 100 = 0.88
17,055,115
Other operating expenses (111,644) 111,644 100 = 0.65
17,055,115
(Loss) / Profit from operations
(176,158)
176,158 100 = 1.03
17,055,115
Less: Finance cost (305,491) 305,491 100 = 1.79
17,055,115
(Loss) / Profit before taxation
(481,649)
481,649 100 = 2.82
17,055,115
Less: Taxation (217,109) 217,109 100 = 1.2717,055,115
(Loss) / Profit after taxation
(264,540)
264,540 100 = 1.5517,055,115
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65/71
6
Calculations for the year 2009:-
1.Internal Growth Rate (I.G.R):
(Loss) / Profit before taxation (622,285)
Less: Taxation (220,452)
(Loss) / Profit after taxation (401,833)
Less: Dividend to preferred stockholders -____
Dividend available for common stockholders (401,833)
Less: Dividend to common stockholders ____-____
Addition to Retained earnings 401,833
Retention ratio = Addition to retained earnings
Net profit after tax
= 401,833
401,833
= 1 or 100%
Internal Growth Rate = R.O.A b1-(R.O.Ab)
= 0.040 1
1-(0.040 1)
= 0.041667 or 4.1667%
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66/71
66
2.Sustainable Growth Rate (s.g.r):
(Loss) / Profit before taxation (622,285)
Less: Taxation (220,452)
(Loss) / Profit after taxation (401,833)
Less: Dividend to preferred stockholders -____
Dividend available for common stockholders (401,833)
Less: Dividend to common stockholders ____-____
Addition to Retained earnings 401,833
Retention ratio = Addition to retained earnings
Net profit after tax
= 401,833
401,833= 1 or 100%
Sustainable Growth Rate = R.O.E b
1-(R.O.E b)
= 0.142 1
1-(0.142 1)
= 0.1655 or 16.55%
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67/71
6
Honda atlas cars
Proforma balance sheet
As on December 31st, 2010
2010
Equity and liabilities:-
Share Capital And Reserves:
Authorized Capital (2,000,000 x 116.55%) 2,331,000
Issued Capital (1,428,000 x 116.55%) 236,334
Reserves (1,801,500 x 116.55%) 2,099,648
(Accumulated loss)/ Unappropiated profit (401,655 x 116.55%) (468,129)
Total Shareholders equity (2,827,845 x 116.55%)
3,295,853
Non-current Liabilities:
Long-term finances secured (1,500,000 x 116.55%) 1,748,250
Current Liabilities:
Short-term borrowings- secured (2,151,601 x 116.55%) 2,507,671
Mark-up accrued on loans and other payables (75,048 x116.55%) 87,468
Trade and other payables (3,387,594 x 116.55%) 3,948,241
Total current liabilities (5,614,243 x 116.55%)
6,543,400
Total Equities (9,942,088 x 116.55%)11,587,504
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68
2010
Assets:-
Non-current Assets:
Property, Plant and Equipment (5,190,535 x 116.55%) 6,049,569
Intangible Assets (195,830 x 116.55%) 2,282,340
Capital work-in-progress (19,226 x 116.55%) 22,408
Long-term loans and advances (31,503 x 116.55%) 36,717
Long-term deposits (4,042 x 116.55%) 4,711
Deferred taxation (571,214 x 116.55%) 665,750
Total non-current assets (6,012,350 x 116.55%)
7,007,394
Current Assets:
Stores and spares (10,942 x 116.55%) 118,813
Stock in trade (2,954,091 x 116.55%) 3,023,413
Advances, prepayments and other receivables (853,218 x
116.55%)
994,426
Cash and bank balances (20,487 x 116.55%) 23,878
Total current assets (3,929,738 x 116.55%)
4,580,110
Total Assets (9,942,088 x 116.55%)
11,587,504
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69/71
69
Honda atlas cars
Proforma Income statement
For the period ended December 31st, 2010
2009
Sales (14,149,646 x 116.55%) 16,491,412
Less: Cost of sales (13,973,144 x 116.55%) (16,285,699)
Gross profit(176,502 x 116.55%)
205,713
Less: Distribution and marketing cost (190,088 x 116.55%) (221,548)
Less: Administrative expenses (139,749 x 116.55%) (162,877)
Other operating income (64,844 x 116.55%) 75,576
Other operating expenses (311,025 x 116.55%) (362,500)
(Loss) / Profit from operations (399,025 x 116.55%)
(465,064)
Less: Finance cost (222,769 x 116.55%) (259,637)
(Loss) / Profit before taxation (622,285 x 116.55%)
(725,273)
Less: Taxation (220,452 x 116.55%) (256,937)
(Loss) / Profit after taxation (401,833 x 116.55%)
( 468,336 )
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70/71
70
Recommendations:-
In order to increase the current and quick ratio of the company should sell more of itsproducts with respect to its liabilities generated.
Cash ratio can be maintained appropriately by doing more and more sales on cash basis. Working capital can be well managed if the company is able generate more assets as
compared to its liabilities.
In order to have best utilization of its debt ratio and debt to equity ratio, company musthave sales more on cash bases in order to reduce their liabilities with respect to totalassets and total shareholder equities.
In inventory Turnover Company has excessively invest in inventory as shown by itscurrent ratio. This extra inventory reduces inventory turnover ratio and also increase
carrying cost of inventory. The inventory should be stock as per production requirement.
In fixed assets companys measure fixed assets do not contribute generating salesrevenue. In future company should invest in fixed assets. That uses in production and
ultimately help to generate sales revenue.
In total assets companys measure total assets do not contribute generating sales revenue.In future company should invest in total assets. That uses in production and ultimately
help to generate sales revenue.
In gross profit margin company should critically analyze the reason of its low gross profitmargin. If cost of goods sold is increased due to high cost associated with carrying of
inventory it should use just in time system. If the reason of high cost of goods sold are
high production costs it should plan how the cost can be controlled.
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In operating profit margin the worst operating profit margin of a company is due to itshigh cost of goods sold rather than its operating profit.
Net profit margin is worst due to high cost of goods sold company should decrease costof goods sold.
The worst Return on assets is due to non-productive assets and low profit as compared toindustry. It can be improved by increasing net profit and total assets turnover.