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Introduction to Business Finance Project Report on Dawood Lawrencepur Limited

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					                                                      TABLE OF CONTENT




CONTENTS
HISTORY ....................................................................................................................................... 2
INTRODUCTION .......................................................................................................................... 2
PRODUCTS.................................................................................................................................... 2
VISION STATEMENT .................................................................................................................. 3
MISSION ........................................................................................................................................ 3
COMPANY INFORMATION........................................................................................................ 3
BALANCE SHEET ........................................................................................................................ 5
INCOME STATEMENT ................................................................................................................ 7
RATIOS .......................................................................................................................................... 8
LIQUIDTY RATIOS ...................................................................................................................... 8
DEBT RATIOS ............................................................................................................................... 8
ACTIVITY RATIOS ...................................................................................................................... 9
GRAPHICAL REPRESENTATION OF RATIOS ...................................................................... 12
COMMON SIZE ANALYSIS ...................................................................................................... 20
INDEX ANALYSIS ..................................................................................................................... 23
CONCLUSION ………………………………………………………………………………………………………………………………..27




                                                                Page 1 of 26
HISTORY
Formed in April 2004 by the merger of four publicly listed companies of the Dawood Group,
namely Dawood Cotton Limited, Lawrencepur Woolen & Textile Mills Limited, Burewala
Textiles Limited and Dilon Limited. The Company is principally engaged in the manufacture and
sale of yarns fabrics made from natural and artificial fibers in various blends. The Company
offers numerous brands including a well known “Lawrencepur” Brand.



INTRODUCTION
Dawood Lawrencepur Limited has been at the forefront in manufacturing high quality textile
products for the past 55 years. Although the future of textile products in Pakistan is faced with
tough competition. Dawood Lawrencepur are the largest textile groups in Pakistan working since
1954 in the Karachi city. Dawood Lawrencepur opened its first company outlet in Karachi .


PRODUCTS
The main products are:

      Various quality of Yarn in Cotton (combed & carded),
      Polyester and Polycot ton from 7/s to 100/s.




                                          Page 2 of 26
VISION STATEMENT
To remain the pioneers in textile industry by producing quality products at competitive prices to
the entire satisfaction of our customers without compromising on our principles of ethics,
integrity and professional standards.


MISSION
    Maintain the reputation of a reliable manufacturer and supplier of high quality textile
      products through technology and effective resource management while maintaining high
      ethical and professional standards.
    Have sustainable growth in this era of competition in quality of products and its prices.
    Achieve high returns on investment through a continuous process of improvement for
      the benefit of the stakeholders.
    Strive for excellence through commitment, integrity, honesty and teamwork.
    Provide excellent working atmosphere and growth potential to talented professionals
      and develop long term relationships with its employees.


COMPANY INFORMATION
BOARD OD DIRECTOS:                                          DAWOODPUR

      Hussain Dawood (Chairman)                           District Attock
      M. S. Farooqui (Chief Executive)                    Ph: 0597-641074-6
      A. Samad Dawood                                     Fax: 0597-641073
      Aleem A. Dani                                       DAWOODABAD
      Haroon Mahenti                                      District Vehari
      Shahzada Dawood                                     Ph: 0447-53347, 53145,
      S. M. Asghar                                         Fax: 0447-54679


BOARD AUDIT COMMITTEE

      Shahzad Dawood
      Aleem A. Dani
      Haroon Mahenti
      S. M. Asghar


COMPANY SECRETRY

      Yousuf A. Deshi




                                          Page 3 of 26
AUDITORS

      Gangat & Company
       (Chartered Accountants)

BANKERS

      Bank Al-Habib Limited
      Habib Bank Limited
      Metropolitan Bank Limited
      Meezan Bank Limited
      Muslim Commercial Bank Limited

REGISTERED OFFICE
35-A, Shahrah-e-Abdul
Hameed Bin Baadees
(Empress Road), Lahore

Karachi Office /Shares Department
Dawood Centre,
M.T. Khan Road, Karachi


Dawood Lawrencepur Limited was established on very sound principles of its development
and growth on the basis of making no compromises in any aspect of business practices. The
Company takes pride in adherence to its principles and continues to serve its customers,
stakeholders and society on the following guidelines:

      The Company strongly believes in free and fair business practices and open competitive
       markets. Developing any association within the segment, industry or with competitors to
       distort the pricing and availability is contradictory to our business code of conduct.
       The Company's financial policies for conducting business are transparency, integrity and
       following the principles of accounting and finance as approved by regulations and
       contemporary accounting codes.
      The Company believes in uprightness of performance and expects it to be a fundamental
       responsibility of our employees to act in Company's best interest while holding
       confidential information. We expect our employees neither to solicit internal information
       from others nor to disclose Company's figures, data or any material information to any
       unauthorized person/body.
       The Company anticipates integrity and honesty of employees in doing business for the
       Company. Any unfair or corrupt practices either to solicit business for the Company or


                                          Page 4 of 26
           for personal gains of the employee is fundamentally inconsistent with business codes of
           the Company.
          The Company believes in community development without political affiliations with any
           person or group of persons working for gains. We contribute our resources for a better
           environment with an unprejudiced approach. Within our mills our policies gear towards
           unbiased and impartial employee’s betterment.


   BALANCE SHEET



                            2005            2006                2007            2008            2009
       ASSETS:
Non current assets:
   Operating assets      470,698,601    793,422,516         543,766,550      76,286,430      65,042,892
    Capital work in      275,221,360     8,185,876               -                -               -
        process
   Intangible assets           -              -                6,900         1987,421        1,331,572
      Long term          2305,496,520   4,732,985,86        664,264,484     492,725,446     400,139,314
      investment
   Long term loans         472,115            -                   -               -              -
 Long term deposit        30,013,771     27,391,294          20,822,339      20,937,427       9855,245
    Current assets
  Stores and spares       92,170,582    103,880,512          94,339,565      44,953,229      50,389,186
    Stock in trade       921,172,584    723,624,248         365,792,225     196,083,900     209,055,405
     Trade debtors       285,444,427    327,523,203         184,145,547      46,916,659      36,013,497
 Advances, Security      179,131,767    172,230,612         115,466,004      864,761,49      899,210,68
   deposits & short
         term
  prepaymen,Other
      receivable,
       Shot term          5573,205       5,292,540           5,252,445       4,330,2360           -
      investment
     Cash & bank          57,686,495     34,441,439          42,567,777      62,035,776      79,236,002
        balance
Total current assets     1541,179,060   1,366,992,554       807,563,563     440,795,973     464,615,158
 Noncurrent assets             -              -             376,699,002     758,363,668     729,759,579
classified as held for
         sales
     Total assets        4823,081,427   6,928,978,106       2,413,122,838   1,791,096,365   1,670,743,757
  Equity & liability
  Issued subscribed      350,759,240    385,835,160         424,418,680     466,860,550     513,546,600
 and paid up shares
        capital
                                             Page 5 of 26
       Reserves        602,011,976     602,011,976        1,579,017,144   1,115,930,070    972,919,404
Inappropriate profit   941,430,650     888,859,129              -               -               -
    Total equity      1894,201,866    1,876,706,265       2,003,435,824   1,582,790,620   1,486,466,004
Fair value reserve on 1.846,174,814   4,172,724,111             -               -               -
     investment
    Non current
      liabilities
 Liabilities against    87,419,968     45,747,722          23,520,113           -               -
  assets subject to
    finance lease
    Deferred tax       120,588,827    122,464,970          82,735,535      37,740,094      41,620,870
      liabilities
 Current liabilities
 Creditors and other   141,882,356    170,700,937         124,618,976     136,692,220     133,334,505
       liabilites
 Dividend payable       21,074,510    20,823,266               -                -               -
  Short term bank      652,174,581    466,819,984         135,253,162           -               -
  finances secured
  Markup on short            -              -              5,945,176            -               -
 term bank finance
    Provision for       13,034,915     14,262,786          15,000,000      10,205,482      9,322,378
       taxation
 Current portion of     46,529,590     38,728,065          22,614,052      23,667,949           -
   lease liabilities
   Total current       874,695,952    711,335,038         303,431,366     170,565,651     142,656,883
       liability
  Total liability &   4,823,081,427   6,928,978,106       2,413,122,838   1,791,096,365   1,670,743,757
        equity




                                           Page 6 of 26
 INCOME STATEMENT



                       2005            2006          2007             2008            2009
    Sales         1,220,919,297   1,861,352,483 1,221,321,736      368,294,009    350,372,025
 Cost of sales   (1,093,553,205) (1,761,142,755) (1160,437,30     (294,373,417)   (273,859,63
                                                      8)                                )
 Gross profit      127,366,092     100,209,728    60,884,428       73,920,592      76,512,362
   Selling &        52,530,293      62,155,076    45,340,442       20,923,124     (15,102,77)
 distribution
    expenses
Administrative     50,595,892     74,073,903       54,599,981      23,807,009     (26,020,14)
    expenses
   Loss from           -               -           (72,349,185)   (300,825,659)        -
 discontinued
  operations
   Profit/loss     24,239,907     (36,019,251)    (111,405,180)   (271,635,200)   35,389,448
       from
   operation
      Other       506,081,960     121,112,385      166,628,090    84,925,9492,9   79,221,734
   operating                                                           26)
     income
 Finance cost     (30,520,726)    (75,843,080)     (35,115,712)     (332,926)     (1,622,152)
Other charges           -         (12,432,869)           -              -              -
  donation to
  earthquake
       fund
 Impairment            -               -                -               -         (115,616,36
     loss on                                                                           3)
 available for
        sale
  investment
    Loss for           -               -                -              --         (2,627,333)
 period from
   continued
   operation
    Loss for           -               -                -               -         (92,328,35)
 period from
 discontinued
   operation
   Profit/loss    499,801,141     (3232,815)       20,107,198     (187,042,177)   (94,955,68)
      before
    taxation

                                        Page 7 of 26
Provision for
  taxation:
   current         (13,034,915)       (14,262,786)     (15,000,000)     (10,083,104)     (9,200,000)
  deferred               -                 -           14,704,884             -               -
 profit/ Loss                         (17,495,601)     19,812,042      (197,125,281)     (104,155,68
after taxation   486,766,226                                                                  4)



 RATIOS


      LIQUIDTY RATIOS
 Ratio that measures the firm ability to meet its short term obligations. More the ratio this means
 the more the current assets which means the more the liquid the firm. The greater holdings of
 current assets the smaller the damage of running out and lower the firms operating risk.



                 2005          2006            2007           2008            2009
 Current         1.76          1.92            2.66           2.5             3.25
 ratio
 Quick ratio     0.60          0.75            1.14           1.17            1.43


 EXPLANATION:
 The liquidity ratio has increased with the passage of time from 2005 to 2009. Which means the
 current assets increased which states that the firm is becoming more liquid. Companies that have
 a lot of liquidity ratio will be more successful since they can expand and improve their
 operations. And the company is in good position to pay off its liabilities. The firm is liquid and
 has less risk.


       DEBT RATIOS

 Debt ratio shows the extent to which the firm is financed by debt. This ratio expresses the
 relationship between capital contributed by creditors and that contributed by owners. It expresses
 the degree of protection provided by the owners for the creditors. The lower the ratio the lower
 the risk.




                                            Page 8 of 26
                    2005            2006            2007            2008          2009

   Debt-to-          0.57           0.46             0.20           0.13          0.123
    equity
 Debt to total       0.22           0.12             0.17           0.116         0.110
     asset
  Long term         0.098           0.082           0.050           0.023         0.024
  debt/ total
capitalization


EXPLANATION:

The company debt ratio is decreasing with the passage of time. It means that very few percent of
its asset are financed by borrowed money which is good sign for the company. In 2005 57 % was
debt financing which has decreased to 12 % in year 2009.and total asset financed by debt
financing in 2009 is only 11% which is a good sign.


      ACTIVITY RATIOS

       Ratios that measure how effectively the firm is using its assets.

                   2005            2006            2007           2008           2009
Receivable         4.27            5.68            6.63           7.84           9.27
  turnover
Receivable          84              63              54              46            37
turnover in
    days
 Inventory         1.07            2.12            2.52            1.22          1.05
  turnover
 Inventory          298            160              135            235           266
turnover in
    days
Total asset        0.25            0.26            0.50            0.20          0.209
  turnover


EXPLANATION:
 In 2005 receivable turnover is not good but there is increasing train which is good sign. In 2009
the receivable turnover is higher which mean that there is a shorter time between sale and
collection period. Average collection is not good in past but it is decreasing in 2009. Inventory
turnover ratio is very low which indicates that the company is not managing its inventory
effectively. Inventory turnover in days is very high in year 2009 which indicates that company is

                                            Page 9 of 26
not managing its inventory efficiently and it takes longer period of time to convert inventory into
receivables through sales. Total asset turnover is also fluctuating which is not a good sign for the
company.



      COVERAGE RATIOS
   Ratios that relate the financial charges of a firm and its ability to cover them.

                   2005            2006               2007          2008          2009

  Interest          0.79             -                  -             -           21.81
 coverage


      NOTE: In year 2006, 2007 and 2008 company is facing operating loss due to which it can’t
pay its expenses and thus coverage ratio value is invalid.

EXPLANATION:
In 2009 the company has the high tendency to pay back its loans or the money that they
borrowed. From 2006 to 2008 the company was in loss thus they are not in the position to pay
back there interest charges. And in 2005 the company has some but very low tendency to pay
back the borrowed money.



      PROPFITABILITY RATIOS
  Ratios that relate profit to sales and investment

               2005            2006            2007            2008             2009
 Net profit       0.398          (0.0093)         0.0162          (0.53)           (0.29)
  margin
 Return on          0.10          0.0025           0.0082           0.11               0.062
investment
 Return on         0.256         (0.0093)          0.0098          (0.12)          (0.070)
  equity
Gross profit       0.104           0.053              0.049         0.20               0.21
  margin


EXPLANATION:
From the above table we can see that gross profit margin has increased over the past few years.
This means that company is relatively more effective at producing and selling products. And net

                                            Page 10 of 26
profit margin is fluctuating over the year which means that in year 2006 company expenses were
increasing due to which they were having negative net profit margin. In 2007 net profit margin is
in positive because they have improved and have managed to decreases there expenses. But in
2008 and 2009 net profit margin has decreased and is in negative and company need to reduced
its expenses. Return on investment is also fluctuating trends but in 2009 it’s very low which
mean that the assets are not being used effectively to generate revenue. A decreasing return on
equity shows that the company is not in a strong position. Its shareholders are getting less return
on their investment.




                                           Page 11 of 26
GRAPHICAL REPRESENTATION OF RATIOS

     CURRENT RATIO:


                               Current Ratio
3.5

 3

2.5

 2

                                                                             Series 1
1.5

 1

0.5

 0
        2005          2006          2007         2008          2009




     ACID-TEST RATIO:




                                           Acid Test Ratio
      1.6

      1.4

      1.2

        1

      0.8
                                                                                    Acid Test Ratio
      0.6

      0.4

      0.2

        0
               2005          2006         2007
                                       Page 12 of 26    2008          2009
         DEBT-TO-EQUITY RATIO:




                               Debt To Equity Ratio
0.6


0.5


0.4


0.3
                                                                        Debt To Equity Ratio

0.2


0.1


 0
             2005     2006        2007          2008        2009




        DEBT-TO-TOTAL ASSET:


                              Debt To Total Asset Ratio
      0.25


       0.2


      0.15

                                                                   Debt To Total Asset Ratio
       0.1


      0.05


        0
               2005    2006       2007       2008        2009


                                         Page 13 of 26
      LONG TERM DEBT TO TOAL CAPITALIZATION:




            Long Term Debt To Total Capitalization
0.12


 0.1


0.08


0.06                                                      Long Term Debt To Total
                                                          Capitalization
0.04


0.02


  0
        2005    2006     2007     2008      2009




      GROSS PROFIT MARGIN:


                        Gross Profit Margin
0.25


 0.2


0.15

                                                                Gross Profit Margin
 0.1


0.05


  0
         2005    2006      2007      2008          2009


                                  Page 14 of 26
          NET PROFIT MARGIN:


                              Net Profit Margin
0.6


0.4


0.2


  0                                                                 Net Profit Margin
            2005     2006          2007          2008       2009

-0.2


-0.4


-0.6




          RETURN ON ASSET:


                                          ROA
0.15


  0.1


0.05


       0                                                                          ROA
              2005          2006          2007          2008       2009

-0.05


 -0.1


-0.15


                                            Page 15 of 26
        RRETURN ON EQUTIY:


                                    ROE
 0.3

0.25

 0.2

0.15

 0.1
                                                                                 ROE
0.05

     0
            2005          2006      2007           2008          2009
-0.05

 -0.1

-0.15


        AVERAGE COLLECTION PERIOD:


                      Average Collection Period
90

80

70

60

50

40                                                        Average Collection Period

30

20

10

 0
         2005      2006     2007   2008     2009


                                      Page 16 of 26
        RECCIEVABLE TURNOVER:


                         Recievable Turnover
12


10


 8


 6
                                                                        Recievable Turnover

 4


 2


 0
          2005    2006      2007          2008          2009


        INVENTORY TURNOVER IN DAYS:


                   Inventory Turnover In Days
350

300

250

200

                                                               Inventory Turnover In Days
150

100

 50

     0
          2005   2006    2007      2008          2009




                                      Page 17 of 26
     INVENTORY TURNOVER:


                      Inventory Turnover
 3


2.5


 2


1.5
                                                         Inventory Turnover

 1


0.5


 0
       2005    2006     2007       2008         2009


     ASSET TURNOVER:




                        Assets Turnover
0.6


0.5


0.4


0.3
                                                            Assets Turnover

0.2


0.1


 0
       2005    2006      2007        2008         2009




                                Page 18 of 26
     INTEREST COVERAGE RATIO:




                     Interest coverage Ratio
0.9

0.8

0.7

0.6

0.5

0.4                                                   Interest coverage Ratio

0.3

0.2

0.1

 0
       2005   2006      2007    2008           2009




                               Page 19 of 26
COMMON SIZE ANALYSIS
In common size analysis, we expressed 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. The gross and net profit margin take-up earlier.

BALANCE SHEET:

                                2009        2008           2007       2006         2005
          ASSETS:
   Non current assets:
      Operating assets          3.89         4.25          22.53      11.45         9.75
 Capital work in process                       -              -        0.11         5.70
      Intangible assets         0.07         0.11         0.00028        -            -
  Long term investment          23.9         27.5          27.52        68         51.94
      Long term loans             -            -              -          -        0.0097
     Long term deposit          0.58         1.16           0.86       0.39         0.62
       Current assets
     Stores and spares          3.01         2.50           3.90       1.49        1.91
       Stock in trade          12.51        10.94          15.15      10.44         19
       Trade debtors            2.51         2.61           7.63       4.72        5.91
    Advances, Security          5.38         4.82           4.79       2.48        3.71
  deposits & short term
     prepaymen,Other
         receivable,
   Shot term investment           -          0.24          0.217      0.076         0.11
   Cash & bank balance          4.74         3.46           1.76       0.49         1.19
   Total current assets        27.80        24.61          33.46      19.72        31.95
     Noncurrent assets          43.6          42            15.6         -            -
classified as held for sales
        Total assets            100          100           100         100          100
     Equity & liability
  Issued subscribed and         30.7        26.06          17,58      5.56         7.27
  paid up shares capital
          Reserves              58.2         62.3          65.4        8.68        12.48
    Inappropriate profit         -            -              -         12.8         19.5
        Total equity           88.97        88.36           83        27.08        39.27
   Fair value reserve on         -            -              -        60.02        38.27
         investment
 Non current liabilities
 Liabilities against assets       -           -            0.97       0.66         1.81
 subject to finance lease
  Deferred tax liabilities      2.49         2.10          3.42       1.76         2.50

                                          Page 20 of 26
  Current liabilities
  Creditors and other          7.98             7.63           5.16         2.46    2.94
         liabilites
   Dividend payable              -               -               -          0.30    0.43
Short term bank finances         -               -             5.60         6.73    13.5
          secured
 Markup on short term            -               -             0.24          -       -
      bank finance
 Provision for taxation        0.55             0.56           0.62         0.20    0.27
Current portion of lease         -              1.32           0.93         0.55    0.96
        liabilities
 Total current liability       8.53             9.52          12.57      10.26     18.13
Total liability & equity       100              100            100        100       100




BALANCE SHEET EXPLANATION:

While looking at the asset side of the balance sheet it is clear that the cash are not stable and
there is decreasing trends in current assets from 31.95 in year 2005 to 27.80% in 2009. While
looking at liability side the non-current liabilities has decreased from year 2008 which was
9.52% to 8.53% in 2009 which is the good sign for the company.

INCOEM STATEMENT:

                     2009             2008             2007           2006         2005
     Sales            100              100              100            100          100
 Cost of sales         78             79.9               95           94.6         89.56
 Gross profit        21.83              20             4.98           5.38         10.43
   Selling &         4.31S            5.68             3.71           3.33          4.30
 distribution
   expenses
Administrative        7.42            6.46             4.47           3.97         4.14
   expenses
  Loss from             -             81.6             5.92             -            -
 discontinued
  operations
  Profit from        10.10           (73.75)1          (9.12)         (1.93)       1.98
   operation
     Other           22.61            23.05            13.64          6.50         41.4
   operating
    income
 Finance cost         0.46            0.09             2.87           4.07         2.49

                                             Page 21 of 26
Other charges          -              -                -         0.0026            -
 donation to
 earthquake
      fund
 Impairment          32.99            -                -            -              -
     loss on
available for
       sale
  investment
    Loss for          0.74            -                -            -              -
 period from
   continued
   operation
    Loss for          26.3            -                -            -              -
 period from
discontinued
   operation
   Profit/loss      (27.10)        (50.78)           1.64        (0.173)        40.93
     before
    taxation
Provision for
   taxation:
    current           2.62          2.73             1.22         0.76           1.06
   deferred            -              -              1.20           -              -
  Loss after                       (53.52)           1.62         0.93          39.86
   taxation          (29.72




INCOME STATEMENT EXPLANATION:

Profit before tax Was average in year 2005 but with the passage of time has decreased and in
year 2009 its in negative means company is suffering from loss before The financial cost in 2009
is very low, taxation has increased with the passage of year from year 2005 to 2009 due to which
company is facing loss after taxation in year 2009 and 2008.




                                           Page 22 of 26
INDEX ANALYSIS


INDEX ANALYSIS FOR BALANCE SHEET:

                               2009      2008          2007    2006        2005
          ASSETS:
   Non current assets:
      Operating assets         0.13      0.16          1.15    1,68        100
 Capital work in process         -         -             -     0.02        100
      Intangible assets        192       288           100       -     -
  Long term investment         0.17      0.21          0.28    2.95        100
     Long term deposit         0.32      0.69          0.69    0.91        100
       Current assets
     Stores and spares          0.54     0.48           1.02    1.12       100
       Stock in trade           0.22     0.21           0.39    0.78       100
       Trade debtors           0.126     0.16          0.640    1.14       100
    Advances, Security          0.50     0.48           0.64   0.960       100
  deposits & short term
     prepaymen,Other
         receivable,
   Shot term investment          -       0.77          0.942   0.940       100
   Cash & bank balance         1.37      1.07           0.73    0.59       100
   Total current assets        0.30      0.28           0.52    0.88       100
     Noncurrent assets         1.93      2.01           100
classified as held for sales
        Total assets           0.346     0.37          0.50    1.43        100
     Equity & liability
  Issued subscribed and        0.14      1.33          1.20    1.09        100
  paid up shares capital
          Reserves             1.64      1.85          2.62    1.00        100
    Inappropriate profit         -         -             -     0.94        100
        Total equity           0.78      0.83          1.05    0.99        100
   Fair value reserve on         -         -             -     2.26        100
         investment
 Non current liabilities
 Liabilities against assets      -         -           0.26    0.52        100
 subject to finance lease
  Deferred tax liabilities     0.34      0.13          0.68    1.01        100
    Current liabilities
    Creditors and other        0.93      0.96          0.87    1.20        100
          liabilities
     Dividend payable            -         -             -     0.98        100

                                       Page 23 of 26
Short term bank finances          -               -            0.20          0.71    100
         secured
 Provision for taxation         0.71            0.78           0.83          1.09    100
Current portion of lease          -             0.50           0.48          0.83    100
        liabilities
 Total current liability        0.16            0.19           0.34          0.81    100
Total liability & equity        0.34            0.37           0.50          1.43    100


NOTE: keeping 2007 as base year for asset held for sale and for intangible asste.

BALANCE SHEET EXPLANATION:

After doing index analysis and keeping 2005 base year for all the items of balance sheet except
for intangible asset and asset held for sale we can analyzed that its current assets are fluctuating
with respect to base year but in 2009 its o.30 or 30% as compared to 28% in year 2008.and its
total assets are also fluctuating while taking 2005 base year in 2006 total assets were 1.43 but in
2009 they were 0.346 which means company is not in a good position and has less assets to pay
back its liabilities. On total equity and liabilities side its current liabilities are decreasing as
keeping 2005 base year. This is a good sign for the company. While decrease in total equity
means that rate of investment is decreasing in your business and investors are getting lower
return.

INCOEM STATEMENT:

                      2009             2008             2007           2006         2005
     Sales            0.28             0.30             1.00           1.52          100
 Cost of sales        0.25             0.26             1.06           1.61          100
 Gross profit         0.60             0.58             O.47           0.78          100
   Selling &          0.51             0.39             0.86           1.18          100
 distribution
   expenses
Administrative         0.28            0.47             1.07           1.46         100
   expenses
  Loss from             -              4.15             100                           -
 discontinued                                                            -
  operations
  Profit from          1.45           (11.20)          (4.59)          (1.48)       100
   operation
     Other             0.15            0.16             0.32           0.23         100
   operating
    income
 Finance cost          0.05            0.010            1.15            2.48        100
  Profit/loss         (0.18)           (0.37)           0.04          (0.0064)      100
                                              Page 24 of 26
     before
   taxation
 Provision for
   taxation:
    current           0.70           0.77             1.15         1.09            100
  Loss after                         0.40             0.04        (o.o35)          100
   taxation          (0.213)


INCOME STATEMENT EXPLANATION:

Keeping 2005 as base year company profit after tax is fluctuating in 2006 there is a negative
value means company faces the loss , in 2007 profit after tax has increased and continue to
increased till year 2008 but in 2009 it has again declined. The gross profit after tax in 2006 and
2009 is going in to loss due to a horrible increase in financial charges or in current taxes.




                                            Page 25 of 26
CONCLUSION


The company liquidity ratio has increased with the passage of time from 2005 to 2009. This
states that the firm is becoming more liquid. And the company is in good position to pay off its
liabilities. The firm is liquid and has less risk. The company debt ratio is decreasing with the
passage of time. It means that very few percent of its asset are financed by borrowed money
which is good sign for the company.And total asset financed by debt financing in 2009 is only
11% which is good sign. In 2005 receivable turnover is not good but there is increasing train
which is good sign. In 2009 the receivable turnover is higher which mean that there is a shorter
time between sale and collection period.
Average collection is not good in past but it is decreasing in 2009. Inventory turnover ratio is
very low which indicates that the company is not managing its inventory effectively. Inventory
turnover in days is very high in year 2009 which indicates that company is not managing its
inventory efficiently and it takes longer period of time to convert inventory into receivables
through sales. Total asset turnover is also fluctuating which is not a good sign for the company.
Gross profit margin has increased over the past few years. This means that company is relatively
more effective at producing and selling products. And net profit margin is fluctuating over the
year which means that in year 2006 company expenses were increasing due to which they were
having negative net profit margin. In 2009 the company has the high tendency to pay back its
loans or the money that they borrowed. From 2006 to 2008 the company was in loss thus they
are not in the position to pay back there interest charges. And in 2005 the company has some but
very low tendency to pay back the borrowed money.
 Return on investment is also fluctuating trends but in 2009 it’s very low which mean that the
assets are not being used effectively to generate revenue. Return on investment of the company
shows that the assets are not being used effectively to generate revenue .a decreasing return on
equity shows that the company is not in a strong position. Its shareholders are getting less return
on their investment.
At the end after going through all the ratio analysis we can conclude that:

    Company liquidity has increased with the passage of time,
    The management should take care of inventory management and speed up the movement of stock,
    Overall profitability position of the company is quite satisfactory.
    Return on equity shows that the company is not in a strong position. Its shareholders are
       getting less return on their investment.




                                           Page 26 of 26

				
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