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					           THE ORGANIZATION CONCERNED
Shahzad Textile Mills Limited is a textile company which is of their concern
that has been introduced right below. They are going to make a full-fledge
financial analysis of this textile company in order to check its financial
situation in the market. The analysis of each and every major ratio has been
involved in this financial analysis. Then furthermore the interpretation of each
and every ratio has been given to elaborate it.




                               An Overview
Shahzad Textile Mills Limited is a renowned textile mill locally as well as in
the foreign export markets for the impressive quality of yarn productions,
highly competitive prices and matchless professional services. With a total
installed capacity of 30,720 spindles, the company is engaged in the
productions of ring spun cotton and synthetic blended yarns since it’s inception
in 1980. With the passage of time, the company continuously adopted latest and
advanced technologies to ensure the best possible quality standards and
efficient workings.

Shahzad Textile Mills Limited is comprised of two production units, built in
the heart of cotton growing belt in Pakistan at convenient locations and are
fully equipped with highly sophisticated and most modern spinning machinery
with a capacity to produce around 50 x40’FCLs per month.

                           Vision and mission


Vision Statement:
They aim at seeing their mills to be a model manufacturing unit producing
high quality yam by complying with the requirements of Quality
Management




System and continuously improving its effectiveness for total customer’s
satisfaction. They wish to play a leading role in the spinning sector by
keeping a substantial presence in the export and local markets.



Mission Statement – Action Plan:

            To install state of the art machinery and to
            acquire sophisticated process technology to achieve highest
            quality levels in the competitive business environment.

            To make strenuous efforts to enhance profitability of the company and ensuring a fair
            return to the investors, shareholders and employees.

            To
            exercise maximum care for improvement of quality of their produ
            cts by employing a team of highly skilled technicians and
            professional managers/supervisors.

            Tostrive hard to develop new markets for the sale of their
            products both in export and local markets.
             To improve customer satisfaction level by adhering strictly to
             quality requirements of their
             customers in local and export markets and by improving
             communications with customers for receiving prompt feed backs
             about quality of their products.

             To attend to the prompt resolution of customer complaints by
             taking timely corrective & preventive measures to address the
             quality complaints.

             To
             improve logistic facilities for their customers dispatch plan and iss
             ue all shipments / delivery documents well in time.

             Tomake comprehensive arrangements for the training of their
             workers / technicians.

             To promote team work, sense of transparency, creativity
             in their professionals and technical people.




                        Products and services



The two independent productions units of the company are involved in the
productions of ring spun yarn counts for various applications with details as
follows:

Unit – 1: This unit presently produces their “Super Unicorn” brand of
polyester/viscose blended ring spun yarn counts for weaving and knitting
applications. Here, they also have the possibilities to produce 100% polyester
and 100% viscose spun yarn counts on special requirements.

Unit – 2: This unit produces their “Dynacon” brand of prime quality
polyester/cotton blended ring spun yarn counts in various blends like PC 52:48,
PC 65:35, CVC 60:40, CVC 70:30, etc. with Carded/Combed cotton portion to
suit weaving and knitting applications. In this unit, they have also have
facilities to provide their customers with TFO yarns from 2-ply up to 7-ply for
special applications. All the productions are guaranteed for even dyeing.

Markets:
Beside serving local market requirements of yarn, they are a major exporter
from Pakistan and successfully serving a large number of high quality
conscious customers in USA, Germany, Portugal, Spain, Hong Kong, S. Korea,
Taiwan, China, Japan, Singapore, Sri Lanka, Malaysia, Phillipines, Mauritius,
Middle East, etc.

Machinery:
Machinery in use consists of Blow Room from Trutzschler (Germany), cards
from Crosrol UK (MK4), Draw/Simplex Frames from Toyota (Japan),
Combers from Rieter (Switzerland), Automatic winders with Splicers & Uster
from Murat (Japan), and TFO Twisters from Volkmann (Germany).

Quality Control & Laboratory Equipment:
The satisfaction of their customers is all important to us and the use of
technologically advanced laboratory equipment assures the highest possible
quality of yarn. They have a comprehensive periodic testing procedure in place
which monitors product quality at every stage of spinning process by frequent
sample collections and tests. The laboratory is equipped with HVI-900 with
ultra violet light for color shade check of raw cotton and grading. The yarn is
checked through the Uster Tester – 3 / Tensorapid and finally, each cone of
finished yarn is passed through UV lights capable of detecting even the
slightest color variation.

Packing & Loading:
The finished product is packed with the utmost care by trained personnel, and
loaded directly in to containers for export purposes. All packing and loading is
done under strict supervision, while maintaining maximum quality and safety
standards. To facilitate their customers, they provide yarn packed in 100Lbs
and 50Lbs sea-worthy export cartons. They also have facility to provide
customers with polythene film shrink wrapped Pallet packing to specially
accommodate customers in Europe/USA and help them reduce the labor
handling costs.

                            Business practice
Shahzad Textile Mills Limited has laid down the following business
ethics and principles, the observance of which is compulsory for all
the directors / employees of the company in the conduct of company’s business
in order to protect and safeguard the reputation and integrity of the
company at all levels of its operations.
Any contravention of these ethics is regarded as misconduct.
The company will ensure that all the executives and subordinate staff members
are fully aware of these standards and principles.

Conflict of interest:
All staff members are expected not to engage in any activity which can cause
conflict between their personal interests and company’s interest, such as:

             In effecting the purchases for company and selling its products
             the directors and the staff members are forbidden from holding
             any personal interest in any organization supplying goods or
             services to the company or buying its products.

             The  staff members should not engage in any outside business w
             hile serving the company.

             Staff
                   members are not permitted to conduct personal business in
             company’s premises or use company’s facilities for the same.

             If a staff member has direct or indirect relationship with an
             outside organization dealing with the company he must disclose
             the same to the management.



Confidentiality:
All staff members are required not to divulge any secrets / information of the
company to any outsider even after leaving the service of the company unless it
is so required by a court of law. During the course of service in company they
should not disseminate any information relating to business secrets of the
company without the consent of management.

Kickbacks:
All staff members are strictly forbidden not to accept any favors, gifts or
kick backs from any organization dealing with the company. In case if such a
favor is considered, in the interest of the company, the same should be
disclosed clearly to the management.
Proper Books of Accounts:
All funds, receipts and disbursements should be properly recorded in the books
of accounts of the company. No false or fictitious entries should be made or
misleading statement pertaining to the company or its operations should be
issued. All agreements with agents, dealers and consultants should be made in
writing supported with required evidence.

Relationship with Government officials, suppliers, agents etc. :
The dealings of the company with Government officials, suppliers, buyers,
agents and consultants of the company should always be such that the integrity
of the company and reputation is not damaged. Members having queries in
connection with how to deal with these requirements should consult the
management.

Health and Safety:
Every staff members is required to take care of his health and safely and those
working with him. The management is responsible for keeping its staff
members insured as per government rules and regulations.

Environment:
To preserve and protect the environment all staff members are required to
operate the company’s facilities and processes so as to ensure maximum safety
of the adjoining communities, and strive continuously to improve
environmental awareness and protections.

Alcohol, Drugs:
All types of gambling and betting at the company’s working places are strictly
forbidden. Also taking of any alcohols or drugs inside the work places is not
allowed and any member of the staff, not abiding by these prohibitions will
attract disciplinary as well as penal action under the law.

Coordination among staff members to maintain Discipline:
All staff members will work in close coordination with their co-workers,
superiors and colleagues. Every member will cooperate with other members so
that the company’s work is carried out effectively and efficiently. All cases of
non-cooperate among staff members should be reported to the management for
necessary and suitable action. Strict disciplinary action will be taken against
those staff members who violate the rules regulations of the company.

Workplace harassment:
All members of the staff will provide an environment that is free from
harassment and in which all employees are equally respected. Work place
harassment means any action that creates an intimidating, hostile or offensive
environment which may include sexual harassment, disparaging remarks based
on gender, religious, or race ethnicity.




                   Certification & Achievement:
Shahzad Textile Mills Limited has always placed special emphasis on
maintaining high quality world standards and in this regard ISO 9001:2000
certifications for both units are regularly maintained for last many years which
itself is a proof their achievements in quality and service.

They feel proud to state that their hectic efforts in improvement of quality and
service has brought us rewards in terms of a very satisfied customer base
spanning across North America, Europe, Far East, Asia, Australia and other
regions of the world.

Besides the improvements in quality of their products & services, the company
is very much concerned on the growing environment and health issues. They
are firmly committed to play a positive role in this regard and would do their
best to make this world a better place to live in for their future generations.

They are presently in the advance stages to achieve “Oeko-Tex Standard 100”
certification from International Association for Research and Testing in the
Field of Textile Ecology. After “Oeko-Tex Standard 100” certification, their
customers will have more confidence in their textile productions and will
manufacture / sell their products with a globally acceptable guarantee / mark
that their products are free from any harmful substances




                            Health & Safety:



Shahzad Textile Mills Limited (STML) undertakes that HSE is a
management responsibility and is committed to give priority to the health and
safety of all its employees and of other personnel effected and involved in its
activities.
STML also confers its overriding commitment towards minimizing impact of
its activities on the natural environment.

The Chief Executive Officer carries the responsibility for the company’s
commitment to Health, Safety & Environment. Each and every employee is an
integral part of this commitment and it is the responsibility of line managers to
ensure that employees and contractors are aware of company HSE policies and
procedures. They must also ensure that these policies and procedures are duly
enforced.

Employees are required to become familiar with, adhere to and promote the
company policies throughout all aspects of their duties.
TO CARRY OUT THIS POLICY, SHAHZAD TEXTILE MILLS LTD. WILL:

             Promote   its conviction that accidents can be avoided.

             Minimize risks by investigating incidents to determine their
             causes and as well as impact, both physical and financial, and to
             develop actions & policies that shall suitably prevent recurrence.

             Train   its personnel in Health, Safety & Environment protection.

             A high level of safety awareness shall be maintained by means
             of safety programs, safety review meetings, internal auditing and
             general communications.

                     and promote protective equipment culture at all STML
             Persist
             working areas.

             Develop and implement emergency evacuation procedures to
             minimize the consequences of accidents at its working areas.

             Have its operating areas, storage facilities and other locations
             regularly inspected and audited by management & independent
             auditors.

             Incorporate HSE principles, policies and procedures into the key
             responsibilities of all personnel and ensure that their HSE
             performance is accurately reflected in their appraisals.
             Actively  participates with government and other responsible
             institutions in meeting applicable national and international
             Health, Safety & Environment rules and regulations.

             Definepractical means for taking into account and minimize
             environment impact.

             Develop  and implement procedures for proper storage,
             transportation and disposal of waste materials and minimize
             pollutant emissions.

             Actively encourage its employees to participate in the conduct
             and management of HSE by means of achieving defined
             objectives and standards.

             Encourage  its employees to suggest positive changes and
             improvements in HSE policies and procedures by means of
             internal protocols and communications.

             Provideresources to ensure that the best possible HSE standards
             are maintained.

                     on HSE policy from its suppliers, customers and other
             Insists
             business associates.

The company Health, Safety & Environment policy is built on a “NO BLAME”
culture. They are more concerned with recognizing, identifying and eliminating
risk than they are with looking for someone to blame.
                The Organization of Comparison
The organization with whom the comparison of Shahzad textile mills is to be
done is Shaheen Cotton Mills Ltd. The comparison can only be done by
making the financial analysis of this particular cotton mills in a similar way in
which the analysis of Shahzad textile mills Ltd is to be done by first of all
calculating all the major five ratios and interpreting them one by one thereby
gaining a position to make a comparison become their financial situation.




                               An Overview


Shaheen Cotton Mills Limited, is a renowned cotton mill locally as well as in
the foreign export markets for the impressive quality of yarn productions,
highly competitive prices and matchless professional services. With a total
installed capacity of 33,600 spindles, the company is engaged in the
productions of ring spun cotton and synthetic blended yarns since it’s inception
in 1976. With the passage of time, the company continuously adopted latest and
advanced technologies to ensure the best possible quality standards and
efficient workings.

Shaheen Cotton Mills Limited is comprised of two production units, built in the
cotton growing belt in Pakistan at convenient locations and are fully equipped
with highly sophisticated and most modern spinning machinery with a capacity
to produce around 55 x40’FCLs per month.
                          Vision and mission


Vision Statement:

They aim at seeing their mills to be a model manufacturing unit producing high
quality yam by complying with the requirements of Quality Management
System and continuously improving its effectiveness for total customer’s
satisfaction. They wish to play a leading role in the spinning sector by keeping
a substantial presence in the export and local markets.

Mission Statement – Action Plan:

             To install state of the art machinery and to acquire sophisticated
             process technology to achieve highest quality levels in the
             competitive business environment.

             To make strenuous efforts to enhance profitability of the
             company and ensuring a fair return to the investors, shareholders
             and employees.

             To exercise maximum care for improvement of quality of their
             products by employing a team of highly skilled technicians and
             professional managers/supervisors.

             To strive hard to develop new markets for the sale of their
             products both in export and local markets.

             To  improve customer satisfaction level by adhering strictly to
             quality requirements of their customers in local and export
             markets and by improving communications with customers for
             receiving prompt feed backs about quality of their products.

             To  attend to the prompt resolution of customer complaints by
             taking timely corrective & preventive measures to address the
             quality complaints.

             To improve logistic facilities for their customers dispatch plan
             and issue all shipments / delivery documents well in time.
             Tomake comprehensive arrangements for the training of their
             workers / technicians.

To promote team work, sense of transparency, creativity in their professionals
and technical people.




                         RATIO ANALYSIS
                    (Shahzad Textile Mills Ltd.)
Ratios simply mean a number expressed in terms of another. A ratio is a
statistical yardstick by mean of which relationship between two or various
figures can be compared or measured. Thus Ratio Analysis shows the
relationship between accounting data. Ratio can be found out by dividing on
number by another number.Ratio analysis is an important and age old technique
of financial analysis. Following are some of the advantages of ratio analysis.

Advantages:
It simplifies the comprehension of financial statements.

             Ratios tell the whole story of changes in the financial condition
             of the business.

             It provides data for inter-firm comparison. Makes inter-firm
             comparison possible

             Ratio analysis also makes possible comparison of the
             performance of different divisions of the firm. The ratios are
             helpful in deciding about their efficiency or otherwise in the past
             and likely performance in the future.

             Ratios highlight the factors associated with successful and
             unsuccessful firm. They also reveal strong firms and weak firms,
             over-valued under-valued firms.

             It helps in planning and forecasting. Ratios can assist
             management, in its function of forecasting, planning, co-
             ordination, control and communications.

             It helps in investment decisions in the case of investors and
             lending decisions in the case of investors and lending decisions in
             the case of bankers’ etc.

Types of Ratios Analysis:



Let us now have a detailed analysis of all the following four ratios for Shahzad
Textile Mills Ltd:

                    Liquidity Ratios

                    Leverage Ratios

                    Activity Ratios

                    Profitability Ratios
Liquidity Ratios:

Current Ratio:

Current Ratio is equal to current assets divided by current liabilities

Current Ratio = Current Assets

Current liabilities



2006 – 2007:

Current Ratio = 155,423,687

235,258,292

Current Ratio = 0.6666

2005 - 2006:

Current Ratio = 211,443,611

245,562,802

Current Ratio = 0.861

2004 - 2005:

Current Ratio = 231,538,514

206,990,030

Current Ratio = 1.118

Comparison over the years / Interpretation:

Current ratio is a general and quick measured of liquidity of firm. It represents
the margin of safety or cushion available to the auditor. It is the index of the
firm’s financial stability. It is also an index of the financial solvency and index
of strength of working capital.
The current ratio of the firm is decreasing over the years right from 2004-07
constantly, that is, it was 1.118 in 2004-05 and it was 0.6666 in 2006-07.



Acid Test (Quick) Ratio:

Acid Test (Quick) ratio is equal to Current assets less inventories divided by
current liabilities. It gives more liquid amount of assets to cover your liabilities.



Quick Ratio = Current assets – Inventories - Preapids

Current liabilities

2006 – 2007:

               Quick Ratio = 155,423,687 – 78,466,960 – 1,032,634

235,258,292

               Quick Ratio = 0.322



2005 - 2006:

               Quick Ratio = 211,443,611 – 103,171,510 -10,775

245,562,802

Quick Ratio = 0.4408

2004 - 2005:

               Quick Ratio = 231,538,514 – 85,121,508 – 1,197,161

206,990,030

Quick Ratio = 0.7015

Comparison over the years / Interpretation:
The quick test ratio is a very useful measuring of the liquidity position of the
firm. It means that firm’s ability to pay its short-term obligations or current
liabilities immediately and is a more rigorous test of liquidity than the current
ratio.

The quick ratio of the firm as is shown by the above calculations is decreasing
over the years, that is, the company is getting lesser and lesser liquid current
assets to cover its current liabilities.



Leverage ratios:

Debt Equity Ratio:

Debt equity ratio is equal to long term debts divided by stockholder’s equity.

Debt Equity ratio = Long Term Debts

Stockholder’s equity

2006 – 2007:

Debt equity ratio = 331,932,701

216,260,913

Debt equity ratio = 1.5348

2005 - 2006:

Debt equity ratio = 370,501,304

233,187,729

Debt equity ratio = 1.588

2004 - 2005:

Debt equity ratio = 316,314,578

190,255,511
Debt equity ratio = 1.6625

Comparison over the years / Interpretation:

This ratio indicates the proprietor’s claims of owners and outsiders against the
firm’s assets. The purpose is to get an idea of the cushion available to outsiders
and the liquidity of the firm. The interpretation of the ratio depends upon the
financial and business policy of the firm.

The debt ratio of the company has decreased constantly over the years right
from 2004-07 which is actually a positive sign for the company.

Debt Equity ratio increment is a negative point to management that the more of
their business is financed by debts this will increase their financial charges or
interest expense and firm’s liquidity and hence decreasing the company’s
profit. The lower the ratio the higher the firm’s financing that is provided by
the shareholders and larger the creditors cushion (margin of protection) in the
extent of shrinkage of assets values or outright loss.

Debt Ratio:

Debt ratio is equal to total liabilities divided by total assets.

Debt Ratio = Total liabilities

Total assets

2006 – 2007:

Debt Ratio = 567,195,993

977,927,145

Debt Ratio = 0.57999

2005 - 2006

Debt Ratio = 616,064,106

1,052,511,963

Debt Ratio = 0.585
2004 - 2005

Debt Ratio = 523,304,608

940,390,441

Debt Ratio = 0.5564

Comparison over the years / Interpretation:

It can be defined as how much sufficient our assets are in retrieving the total
debts. The debt ratio of the company has remained stagnant almost over the last
three years as shown clearly by the above calculations.

Times Interest Earned (Coverage Ratio):

It briefs that how many times the firm has earned the interest. Or how many
times the firm has user its earning before interest and taxes to cover the interest
expense.

Times Interest Earned = Profit before Interest and Taxes

Interest expense

2006 – 2007:

Interest coverage Ratio = 19,617,194

11,881,311

Interest Coverage Ratio = 1.65 times

2005 - 2006:

Interest coverage Ratio = 69,154,874

6,331,039

Interest Coverage Ratio = 10.923 times

2004 - 2005:

Interest coverage Ratio = 26,685,569
5,331,875

Interest Coverage Ratio = 5.0049 times



Comparison over the years / Interpretation:

The interest coverage ratio is a very important from the lender point of view. It
indicates the number of times interest is covered by the profit available to pay
interest charges. It is an index of the financial strength of the enterprise. A high
ratio assures the lender a regular and periodic interest income. But weakness of
the ratio may create some problems for the firm’s financial manager in raising
funds from the debts sources.

The no. of times the firm earns interest has fluctuated dramatically, that is, it
was 5.0049 in 2004, increased up to 10 and fell down to 1.65

Activity Ratios:

Inventory Turnover Ratio:

Inventory Turnover Ratio is equal to Cost of Goods Sold divided by Average
Inventory.

Inventory Turnover ratio = Cost of Goods Sold

Avg Inventory

2006 – 2007:

Inventory Turnover Ratio = 1,037,707,262

22,571,693

Inventory Turnover Ratio = 45.97 times

2005 - 2006:

Inventory Turnover Ratio = 804,424,768

17,679,208.5
Inventory Turnover Ratio = 45.5011 times

2004 - 2005:

Inventory Turnover Ratio = 630,000,839

12,750,484.5

Inventory Turnover Ratio = 49.4099 times

Comparison over the years / Interpretation:

Inventory turn over ratio measures the velocity of conversion of stock into
sales. In other words how rapidly inventory is turning into receivables through
sales.

In 2006 it was 6.74 times and in 2007 it was 8.01 times. In 2006 the ratio was
low because of over investment in inventories. In year 2007 it is better that is
8.01 times in the year, which is quite good because of good management and
polices.

Inventory Holding Period in months:

Inventory holding period in months is equal to number of months in a year
divided by inventory turnover ratio.

Inventory Holding Period in months = No of months in a year

Inventory turnover ratio

2006 – 2007:

Inventory turnover in months = 12

45.97

Inventory turnover in months = 0.26102 months

2005 - 2006:

Inventory turnover in months = 12

45.5011
Inventory turnover in months = 0.2637 months

2004 - 2005:

Inventory turnover in months = 9

(because 9 months ended) 49.4

Inventory turnover in months = 0.182 months

Comparison over the years / Interpretation:

Inventory turn over ratio measures the velocity of conversion of stock into
sales. In other words how rapidly inventory is turning into receivables through
sales.

In 2006 it was 54 days times and in 2007 it was 46 days. In year 2007 it is quite
good and in 2006 it was better that is 56 days in a year to move inventory
through sales, which is quite good because of good management and polices.

Net Fixed Assets Turnover Ratio:

Net Fixed assts turnover ratio is obtained by dividing sales with net fixed
assets, where,

(Net fixed assets = Total fixed Assets – Accumulated Depreciation)



Net Fixed Asset Turnover Ratio = Sales

Net Fixed assets

2006 – 2007:

Fixed asset turnover ratio= 1,100,181,111

567,187,294

Fixed asset turnover ratio = 1.939 times

2005 - 2006:
Fixed asset turnover ratio = 909,784,346

600,565,280

Fixed asset turnover ratio = 1.5148 times

2004 - 2005:

Fixed asset turnover ratio = 693,800,355

480,566,483

Fixed asset turnover ratio = 1.4437 times

Comparison over the years / Interpretation:

Fixed asset turnover ratio measures sales productivity and plant and equipment
utilization. It is clear that this ratio is declining from 2006 which is 4.36 to 2.76
in 2007

Total Asset Turnover:

Total asset turnover ratio measures that how much sales are generated through
the total assets of the organization.

Total Asset Turnover Ratio = Sales

Total assets

2006 – 2007:

Total asset turnover ratio= 1,100,181,111

977,927,145

Total asset turnover ratio = 1.125 times

2005 - 2006:

Total asset turnover ratio = 909,784,346

1,052,511,963
Total asset turnover ratio = 0.8643 times

2004 - 2005:

Total asset turnover ratio = 693,800,355

940,390,441

Total asset turnover ratio = 0.7377 times

Comparison over the years / Interpretation:

It shows that firms must manage its total assets efficiently and should generate
maximum sales through their proper utilization. As the ratio, increases there are
more revenue generated per rupee of total investment in asset. The firm ability
to produce a large volume of sales on a small total asset based is an important
part of the firms overall performance in terms of profits. In 2007, 2006. The
ratio was 1.51, 1.99 times respectively. In 2007, the ratio indicates that it is
producing RS 1.51 sales per

rupees of investment in total assets. So as time is going by this ratio is
decreasing which means company performance is not up to mark in terms of
profits.

Receivables Turnover Ratio:

Receivables turnover ratio is equal to net credit sales divided by average
receivables.

Receivables Turnover Ratio = Net credit Sales

Avg Receivables

2006 – 2007:

Receivables Turnover Ratio = 1,100,181,111

16,481,740.5

Receivables Turnover Ratio = 66.751 times

2005 - 2006:
Receivables Turnover Ratio = 909,784,346

15,193,435

Receivables Turnover Ratio = 59.88 times

2004 - 2005:

Receivables Turnover Ratio = 693,800,355

21,300,565.5

Receivables Turnover Ratio = 32.571 times

Comparison over the years / Interpretation:

Receivables turnover ratio measures the average length of time it takes a firm
to collect credit sales in percentage terms. So Receivables is better in 2006 as
compare to 2007 which is 18.19 times



Average Collection Period in months:

Average collection period in months is equal to months in year divided by
Receivables turnover ratio.

Average Collection Period in months = No of months in a year

Receivables turnover ratio

2006 – 2007:

Receivables turnover ratio in months = 12

66.751

Receivables turnover ratio in months = 0.179 months



2005 - 2006:
Receivables turnover ratio = 12

59.88

Receivables turnover ratio = 0.2 months

2004 - 2005:

Receivables turnover ratio = 9

(9 months ended) 32.57

Receivables turnover ratio = 0.2763 months

Comparison over the years / Interpretation:

Average collection period shows the average length of time it takes affirm to
collect credit sales in months. From above analysis it is clear that average
collection period was 17 days respectively in year an2006. But it is best in 2007
which is 20 days.

Payables Turnover Ratio:

Payable turnover ratio is equal to net credit purchases divided by average
payables.

Payables Turnover Ratio = Net credit Purchases

Avg payables

2006 - 2007:

Payable Turnover Ratio = 751,225,511

591,630,049

Payable Turnover Ratio = 1.2969 times

2005 - 2006:

Payable Turnover Ratio = 598,780,067

569,684,357
Payable Turnover Ratio = 1.051 times

2004 - 2005:

Payable Turnover Ratio = 457,326,068

481,757,914

Payable Turnover Ratio = 0.949 times

Comparison over the years / Interpretation:

The firm pays off its payables out of its cash 15.22 times in a year.

Avg Payment Period Ratio in months:

Payable turnover ratio in months is equal to months in year divided by payable
turnover ratio.

Avg Payment Period in months = No of months in a year

Payables turnover ratio

2006 – 2007:

Payable Turnover Ratio in months = 9

1.2969

Payable Turnover Ratio in months = 9.4 months

2005 - 2006:

Payable Turnover Ratio in months = 12

1.051

Payable Turnover Ratio in months = 11.4 months

2004 - 2005:

Payable Turnover Ratio in months = 9
(9 months ended) 0.949

Payable Turnover Ratio in months = 9.48 months

Comparison over the years / Interpretation:

It shows or represents the no of days taken by the firm to pay to its debtors. If it
is higher than it is beneficial for the management.

.In 2006 it is 24 days and in year 2007 it was 33 days. In year 2006 the
company was having low

ratio. In 2007 it is best which means that the company is taking the advantage
of credit facilities allowed by the creditors.

Profitability Ratios:

Gross Profit Margin:

Gross profit margin is equal to the ratio of gross profit to sales.

Gross Profit Margin = Gross Profit

Sales

2006 – 2007:

Gross profit margin = 62,473,849 X 100

1,100,181,111

Gross profit margin = 5.67 %

2005 - 2006:

Gross profit margin = 105,309,578 X 100

909,784,346

Gross profit margin = 11.57 %

2004 - 2005:
Gross profit margin = 63,799,516 X 100

693,800,355

Gross profit margin = 9.196%

Comparison over the years / Interpretation:

Gross profit margin or gross profit ratio is the ratio of gross profit to net sales
expressed as percentage. In 2006 it increased slightly to 7.73 % and in 2007 it
increased to 10.22 %. The gross profit is sufficient to recover all operating
expenses and to build up reserve after paying all fixed interest charges and all
dividends.

Operating Profit Margin:

Operating Profit Margin is equal to earning before interest and tax divided by
sales.

Operating Profit Margin = EBIT/Operating Profit

Sales

2006 – 2007:

Operating Profit Margin = 19,617,194 X 100

1,100,181,111

Operating Profit Margin = 1.78%



2005 - 2006:

Operating Profit Margin = 69,154,847 X 100

9,097,843,616

Operating Profit Margin = 7.6 %

2004 - 2005:
Operating Profit Margin = 26,685,569 X 100

693,800,355

Operating Profit Margin = 3.84 %

Comparison over the years / Interpretation:

This used to show the profitability without concern for taxes and interest. In
2006the operating profit ratio was 5.05% and in 2007 the net profit ratio is 7.59
%. In 2006 operating profit ratio increased by 1.66 % and increased by 2.54%
in 2007relative to 2006 Higher ratio shows firm’s capacity to with stand
adverse economic condition without caring taxes and interest.

Net Profit Margin:

Net Profit Margin is equal to net profit divided by sales.

               Net Profit Margin = Net Profit

Sales

2006 – 2007:

Net Profit Margin = 74,939,223 X 100

1,100,181,111

Net Profit Margin = 6.81 %

2005 - 2006:

Net Profit Margin = 91,866,039 X 100

909,784,346

Net Profit Margin = 10.09 %

2004 - 2005:

Net Profit Margin = 48,782,436 X 100

693,800,355
Net Profit Margin = 7.03 %

Comparison over the years / Interpretation:

This used to show the overall profitability and hence it useful to the proprietors.
Higher the ratio betters for the organization .It shows the firm’s ability to turn
each rupee of sale into profit. In 2006 the net profit ratio is 1.995 % and in
2007 the net profit ratio is 2.66%. In 2006 net profit ratio increased by 0.795 %
relative to 2007 . Higher ratio shows firm’s capacity to with stand adverse
economic condition.



Earning per share:

This ratio shows that how much amount per share does a common stock holder
attains.

Earning per share = Earning Available for Common Stock Holders

No. Of Common Stock Shares

2006 – 2007:

Earning per share = (26,419,136)

13,552,569

Earning per share = Rs. (1.95) / share

2005 - 2006:

Earning per share = 23,556,157

13,552,569

Earning per share = Rs.1.74/share

2004 - 2005:

Earning per share = (3,079,733)

13,552,569
Earning per share = Rs. (0.23) /share

Comparison over the years / Interpretation:

This ratio shows the worth of the share. As we can see that the worth of the
shares of SHTM has increased. EPS is almost twice to the 2003 in 2007

Price earning ratio:

It equals to the ratio of market price per share divided by earning per share.

Price Earning Ratio = Market price per share

Earning per share

2006 – 2007:

Price Earning Ratio = 13

(1.95)

Price Earning Ratio = (Rs.6.66)

2005 - 2006:

Price Earning Ratio = 19.95

1.74

Price Earning Ratio = Rs.11.465

2004 - 2005:

Price Earning Ratio = 22.25

(0.23)

Price Earning Ratio = (Rs.96.739)

Comparison over the years / Interpretation:
These ratios results show that in 2007Rs.7.91 were to be spent in order to earn
Rs.1 profit. But in year 2006the position had improved a little bit showing that
Rs. 6.91 have to be spent in order to earn Rs.1 of profit.




                           RATIO ANALYSIS
                      (Shaheen Cotton Mills Ltd.)
Types of Ratios Analysis:



Let us now have a detailed analysis of all the following four ratios for Shaheen
Cotton Mills Ltd:

                      Liquidity Ratios

                      Leverage Ratios

                      Activity Ratios

                      Profitability Ratios



Liquidity Ratios:

Current Ratio:

Current Ratio = Current Assets

Current liabilities
2006 – 2007:

Current Ratio = 124,814,962

190,729,441

Current Ratio = 0.6544

2005 - 2006:

Current Ratio = 251,003,176

249,133,615

Current Ratio = 1.0075

2004 - 2005:

Current Ratio = 240,489,264

239,040,784

Current Ratio = 1.00605

Comparison over the years / Interpretation:

Current ratio is a general and quick measured of liquidity of firm. It represents
the margin of safety or cushion available to the auditor. It is the index of the
firm’s financial stability. It is also an index of the financial solvency and index
of strength of working capital.

Firm's Current ratio has been increasing over the years right from the 2004 –
2007. Which shows that the current ratio of the firm has been increasing over
the years.

Acid Test (Quick) Ratio:

Quick Ratio = Current assets – Inventories - Preapids

Current liabilities

2006 – 2007:
Quick Ratio = 124,814,962-75,496,998-13,622,386

190,724,441

Quick Ratio = 0.2511



2005 - 2006:

               Quick Ratio = 251,003,176 -141,230,544-139,589

249,133,615

Quick Ratio = 0 .44005

2004 - 2005:

               Quick Ratio = 240,489,264 - 100,915,021 – 839,298

239,040,784

Quick Ratio = 0.5803

Comparison over the years / Interpretation:

The quick test ratio is a very useful measuring of the liquidity position of the
firm. It means that firm’s ability to pay its short-term obligations or current
liabilities immediately and is a more rigorous test of liquidity than the current
ratio.

The calculations above clearly shows that the quick ratio of the firm has been
decreasing over the years due to the increase in prepaids and inventories which
is a negative point for the company



Leverage / Debt ratios:

Debt Equity Ratio:

Debt Equity ratio = Long Term Debts
Stockholder’s equity

2006 – 2007:

Debt Equity ratio = 216,171,622

51,741,235

Debt Equity ratio = 4.177

2005 - 2006:

Debt Equity ratio = 254,355,262

62,565,620

Debt Equity ratio = 4.0654

2004 - 2005:

Debt Equity ratio = 272,265,545

53,055,841

Debt Equity ratio = 5.1316

Comparison over the years / Interpretation:

This ratio indicates the proprietor’s claims of owners and outsiders against the
firm’s assets. The purpose is to get an idea of the cushion available to outsiders
and the liquidity of the firm. The interpretation of the ratio depends upon the
financial and business policy of the firm.

Debt Equity shows the relationship between the external equities or outside
funds and internal equities and shareholder’s funds. The debt equity ratio of the
firm has been fluctuating over the years right from 2004 – 2007 with maximum
in the year 2004-05 thereby decreasing in the next year and increasing finally.

Debt Equity ratio increment is a negative point to management that the more of
their business is financed by debts this will increase their financial charges or
interest expense and firm’s liquidity and hence decreasing the company’s
profit. The lower the ratio the higher the firm’s financing that is provided by
the shareholders and larger the creditors cushion (margin of protection) in the
extent of shrinkage of assets values or outright loss.

Debt Ratio:

Debt Ratio = Total liabilities

                                         Total assets

2006 – 2007:

Debt Ratio= 406,896,063

664,277,855

Debt Ratio= 0.6125

2005 - 2006

Debt Ratio= 503,488,877

772,251,884

Debt Ratio= 0.6519

2004 - 2005

Debt Ratio= 511306,329

773,837,219

Debt Ratio= 0.6607

Comparison over the years / Interpretation:

It can be defined as how much sufficient our assets are in retrieving the total
debts. We can observe in our analysis that the debt ratio of the firm is
decreasing over the years which is a good sign for the company, that is, the
company uses less of its total liabilities for its current assets.

Times Interest Earned (Coverage Ratio):

Times Interest Earned = Profit before Interest and Taxes
Interest expense

2006 – 2007:

Interest coverage Ratio = 21,871,47

6,072,316

Interest Coverage Ratio = 3.6 times

2005 - 2006:

Interest coverage Ratio = 35,366,081

8,150,380

Interest Coverage Ratio = 4.3391 times

2004 - 2005:

Interest coverage Ratio = 38,580,210

11,495,605

Interest Coverage Ratio = 3.356 times



Comparison over the years / Interpretation:

The interest coverage ratio is a very important from the lender point of view. It
indicates the number of times interest is covered by the profit available to pay
interest charges. It is an index of the financial strength of the enterprise. A high
ratio assures the lender a regular and periodic interest income. But weakness of
the ratio may create some problems for the firm’s financial manager in raising
funds from the debts sources.

The no. of times the company earns its interest fluctuates from over the years
right from 2004 – 2007. The times interest earned by the company in 2007
returns to the level where it was in 2004.
Activity Ratios:

Inventory Turnover Ratio:

Inventory Turnover ratio = Cost of Goods Sold

Avg Inventory

2006 – 2007:

Inventory Turnover Ratio = 873,405,530

8,884,430

Inventory Turnover Ratio = 98.30times

2005 - 2006:

Inventory Turnover Ratio = 810,116,680

9,789,488.5

Inventory Turnover Ratio = 82.75times

2004 - 2005:

Inventory Turnover Ratio = 577,778,273

12,363,273

Inventory Turnover Ratio = 46.732 times

Comparison over the years / Interpretation:

Inventory turn over ratio measures the velocity of conversion of stock into
sales. In other words how rapidly inventory is turning into receivables through
sales.

In 2006 it was 6.74 times and in 2007 it was 8.01 times. In 2006 the ratio was
low because of over investment in inventories. In year 2007 it is better that is
8.01 times in the year, which is quite good because of good management and
polices.
Inventory Holding Period in months:

Inventory Holding Period in months = No of days in a year

Inventory turnover ratio

2006 – 2007:

Inventory turnover in months = 12

98.30

Inventory turnover in months = 0.1220months

2005 - 2006:

Inventory turnover in months = 12

82.75

Inventory turnover in months = 0.1450months

2004 - 2005:

Inventory turnover in months = 9

(9 months ended) 46.73

Inventory turnover in months = 0.192 months

Comparison over the years / Interpretation:

Inventory turn over ratio measures the velocity of conversion of stock into
sales. In other words how rapidly inventory is turning into receivables through
sales.

In 2006 it was 54 days times and in 2007 it was 46 days. In year 2007 it is quite
good and in 2006 it was better that is 56 days in a year to move inventory
through sales, which is quite good because of good management and polices.

Net Fixed Assets Turnover Ratio:

Net Fixed Asset Turnover Ratio = Sales
Net Fixed assets

2006 – 2007:

Fixed asset turnover ratio= 931,308,945

283,063,160

Fixed asset turnover ratio = 3.29 times

2005 - 2006:

Fixed asset turnover ratio = 886,433,781

272,801,908

Fixed asset turnover ratio = 3.24 times

2004 - 2005:

Fixed asset turnover ratio = 644,748,123

299,753,028

Fixed asset turnover ratio = 2.15 times

Comparison over the years / Interpretation:

Fixed asset turnover ratio measures sales productivity and plant and equipment
utilization. It is clear that this ratio is declining from 2006 which is 4.36 to 2.76
in 2007

Total Asset Turnover:

Total Asset Turnover Ratio = Sales

Total assets

2006 – 2007:

Total asset turnover ratio= 931,308,945

664,277,855
Total asset turnover ratio = 1.40 times

2005 - 2006:

Total asset turnover ratio = 886,433,781

772,251,884

Total asset turnover ratio = 1.14 times

2004 - 2005:

Total asset turnover ratio = 644,748,123

773,837,219

Total asset turnover ratio = 0.833 times

Comparison over the years / Interpretation:

It shows that firms must manage its total assets efficiently and should generate
maximum sales through their proper utilization. As the ratio, increases there are
more revenue generated per rupee of total investment in asset. The firm ability
to produce a large volume of sales on a small total asset based is an important
part of the firms overall performance in terms of profits. In 2007, 2006. The
ratio was 1.51, 1.99 times respectively. In 2007, the ratio indicates that it is
producing RS 1.51 sales per

rupees of investment in total assets. So as time is going by this ratio is
decreasing which means company performance is not up to mark in terms of
profits.

Receivables Turnover Ratio:

Receivables Turnover Ratio = Net credit Sales

Avg Receivables

2006 – 2007:

Receivables Turnover Ratio = 931,308,945

10,148,122
Receivables Turnover Ratio = 91.77 times

2005 - 2006:

Receivables Turnover Ratio = 886,433,781

4,035,115

Receivables Turnover Ratio = 219.677 times

2004 - 2005:

Receivables Turnover Ratio = 644,748,123

2,249,557.5

Receivables Turnover Ratio = 286.611 times

Comparison over the years / Interpretation:

Receivables turnover ratio measures the average length of time it takes a firm
to collect credit sales in percentage terms. So Receivables is better in 2006 as
compare to 2007 which is 18.19 times



Average Collection Period in months:

Average Collection Period in months = Days in a year

Receivables turnover ratio

2006 – 2007:

Receivables turnover ratio in months = 12

91.77

Receivables turnover ratio in months = 0.130 months



2005 - 2006:
Receivables turnover ratio = 12

219.678

Receivables turnover ratio = 0.0546months

2004 - 2005:

Receivables turnover ratio = 9

(9 months ended) 286.611

Receivables turnover ratio = 0.0314 months

Comparison over the years / Interpretation:

Average collection period shows the average length of time it takes affirm to
collect credit sales in months. From above analysis it is clear that average
collection period was 17 days respectively in year an2006. But it is best in 2007
which is 20 days.

Payables Turnover Ratio:

               Payables Turnover Ratio = Net credit Purchases

Avg payables

2006 - 2007:

Payable Turnover Ratio = 588,328,732

458,517,776

Payable Turnover Ratio = 1.283 times

2005 - 2006:

Payable Turnover Ratio = 651,080,849

507,397,603

Payable Turnover Ratio = 1.283 times
2004 - 2005:

Payable Turnover Ratio = 442,441,206

484,471,094.5

Payable Turnover Ratio = 0.9132 times

Comparison over the years / Interpretation:

The firm pays off its payables out of its cash 15.22 times in a year.

Avg Payment Period Ratio in months:

Avg Payment Period in months = No of Days in a year

Payables turnover ratio

2006 – 2007:

Payable Turnover Ratio in months = 12

1.283

Payable Turnover Ratio in months = 9.353months

2005 - 2006:

Payable Turnover Ratio in months = 12

1.283

Payable Turnover Ratio in months = 9.353months

2004 - 2005:

Payable Turnover Ratio in months = 9

(9 months ended) 0.9132

Payable Turnover Ratio in months = 9.8554 months

Comparison over the years / Interpretation:
It shows or represents the no of days taken by the firm to pay to its debtors. If it
is higher than it is beneficial for the management.

.In 2006 it is 24 days and in year 2007 it was 33 days. In year 2006 the
company was having low

ratio. In 2007 it is best which means that the company is taking the advantage
of credit facilities allowed by the creditors.

Profitability Ratios:

Gross Profit Margin:

Gross Profit Margin = Gross Profit

Sales

2006 – 2007:

Gross profit margin = 57,903,415 * 100

931,308,945

Gross profit margin = 6.21 %

2005 - 2006:

Gross profit margin = 76,317,101 * 100

886,433,781

Gross profit margin = 8.60 %

2004 - 2005:

Gross profit margin = 66,969,850 X 100

644,748,123

Gross profit margin = 10.3 %

Comparison over the years / Interpretation:
Gross profit margin or gross profit ratio is the ratio of gross profit to net sales
expressed as percentage. In 2006 it increased slightly to 7.73 % and in 2007 it
increased to 10.22 %. The gross profit is sufficient to recover all operating
expenses and to build up reserve after paying all fixed interest charges and all
dividends.

Operating Profit Margin:

Operating Profit Margin = EBIT/Operating Profit

Sales

2006 – 2007:

Operating Profit Margin = 21,871,647 *100

931,308,945

Operating Profit Margin = 2.30%



2005 - 2006:

Operating Profit Margin = 35,366,081 * 100

886,433,781

Operating Profit Margin = 3.98 %

2004 - 2005:

Operating Profit Margin = 38,580,210 X 100

644,748,123

Operating Profit Margin = 5.98 %

Comparison over the years / Interpretation:

This used to show the profitability without concern for taxes and interest. In
2006the operating profit ratio was 5.05% and in 2007 the net profit ratio is 7.59
%. In 2006 operating profit ratio increased by 1.66 % and increased by 2.54%
in 2007relative to 2006 Higher ratio shows firm’s capacity to with stand
adverse economic condition without caring taxes and interest.

Net Profit Margin:

Net Profit Margin = Net Profit

Sales

2006 – 2007:

Net Profit Margin = (986,679,35) * 100

931,308,945

Net Profit Margin = (10.55%)

2005 - 2006:

Net Profit Margin = (113,961,110) * 100

886,433,781

Net Profit Margin = (12.85%)

2004 - 2005:

Net Profit Margin = (129,469,749) X 100

644,748,123

Net Profit Margin = (20.8) %

Comparison over the years / Interpretation:

This used to show the overall profitability and hence it useful to the proprietors.
Higher the ratio betters for the organization .It shows the firm’s ability to turn
each rupee of sale into profit. In 2006 the net profit ratio is 1.995 % and in
2007 the net profit ratio is 2.66%. In 2006 net profit ratio increased by 0.795 %
relative to 2007 . Higher ratio shows firm’s capacity to with stand adverse
economic condition.
Earning per share:

Earning per share = Earning Available for Common Stock Holders

No. Of Common Stock Shares

2006 – 2007:

Earning per share = (8,578,439)

14,729,344

Earning per share = Rs. (0.58)

2005 - 2006:

Earning per share = 5,018,031

14,729,344

Earning per share = Rs.0.34/share

2004 - 2005:

Earning per share = 12,380,355

13,706,473

Earning per share = Rs. 0.9 /share

Comparison over the years / Interpretation:

This ratio shows the worth of the share. As we can see that the worth of the
shares of SHTM has increased. EPS is almost twice to the 2003 in 2007

Price earning ratio:

Price Earning Ratio = Market price per share

Earning per share

2006 – 2007:
Price Earning Ratio = 6

(0.58)

Price Earning Ratio = Rs.(10.344)

2005 - 2006:

Price Earning Ratio = 7

0.34

Price Earning Ratio = Rs.20.58

2004 - 2005:

Price Earning Ratio = 8.25

0.9

Price Earning Ratio = Rs.9.166

Comparison over the years / Interpretation:

These ratios results show that in 2007Rs.7.91 were to be spent in order to earn
Rs.1 profit. But in year 2006the position had improved a little bit showing that
Rs. 6.91 have to be spent in order to earn Rs.1 of profit.

      INDUSTRY ANALYSIS (comparison through graphical interpretation)

Activity Ratios:

Current Ratio:

                      Current Ratio

          2004-05      2005-06        2006-07

Shahzad       1.118        0.867        0.6606

Shaheen     1.00605       1.0075        0.6544
Comparison:

Quick Ratio:

                     Quick Ratio

          2004-05     2005-06      2006-07

Shahzad     0.7015      0.4408      0.3227

Shaheen     0.5803     0.44005      0.2511


Inventory Turnover Ratio:

               Inventory Turnover Ratio
                       (Times)

           2004-05      2005-06     2006-07

Shahzad     49.4099      45.5011      45.973

Shaheen      46.732      82.7537        98.3


Comparison:

Inventory Holding Period:

             Inventory Holding Period
                     (months)

          2004-05     2005-06      2006-07

Shahzad      0.182      0.2637       0.261

Shaheen      0.192       0.145       0.122
Comparison:

Receivables Turnover Ratio:

            Receivables Turnover Ratio
                     (Times)

          2004-05    2005-06     2006-07

Shahzad     32.571      59.88     66.751

Shaheen     286.61    219.677      91.77




Comparison:



Average Collection Period:



            Average Collection Period
                    (months)

          2004-05    2005-06     2006-07

Shahzad     0.2763         0.2     0.179

Shaheen     0.0314     0.0546        0.13




Comparison:

Payables Turnover Ratio:

          Payables Turnover Ratio (times)
          2004-05    2005-06    2006-07

Shahzad      0.949      1.051     1.2969

Shaheen     0.9132      1.283      1.283




Comparison:

Net Fixed Assets:

              Net Fixed Assets Ratio

          2004-05    2005-06    2006-07

Shahzad    1.4437      1.5148     1.9397

Shaheen       2.15       3.24          3.29
Comparison:




Average Payment Period:

             Average Payment Period
                    (months)

          2004-05    2005-06    2006-07

Shahzad       9.48       11.4           9.4

Shaheen     9.8554      9.351         9.353




Comparison:

Total Assets Turnover:

              Total Assets Turnover
          2004-05     2005-06      2006-07

Shahzad    0.7377        0.8643      1.125

Shaheen       0.833       1.147         1.4




Comparison:

Debt Ratio:

                      Debt Ratio

          2004-05     2005-06      2006-07

Shahzad     0.5564        0.585      0.5799

Shaheen     0.6607       0.6519      0.6129




Comparison:




Debt Equity Ratio:

                 Debt Equity Ratio

          2004-05     2005-06      2006-07

Shahzad     1.6625       1.5888      1.5348

Shaheen     5.1316       4.0654       4.177
Comparison:

Times Interest Earned:

           Times Interest Earned (times)

          2004-05    2005-06     2006-07

Shahzad     5.0049     10.923    1.65109

Shaheen      3.356     4.3391         3.6
Comparison:

G.P.Margin:



              G.P. Margin
          2004-05   2005-06   2006-07

Shahzad     9.20%    11.57%    5.67%

Shaheen    10.30%     8.60%    6.21%
Comparison:

Operating Profit Margin:

             Operating Profit Margin

          2004-05   2005-06    2006-07

Shahzad     3.84%      7.60%      1.78%

Shaheen     5.98%      3.98%      2.30%
Comparison:



N.P. Margin:



                     N.P. Margin

          2004-05     2005-06      2006-07

Shahzad    7.03%       10.09%        6.81%

Shaheen   20.08%      -12.85%      -10.50%




Comparison:

Price Earning Ratio:

               Price Earning Ratio

          2004-05     2005-06      2006-07

Shahzad    -96.739      11.465        -6.66

Shaheen      9.166       20.58      -10.344




Comparison:
EPS:

                     EPS (Rs)

          2004-05    2005-06    2006-07

Shahzad      -0.23       1.74      -1.95

Shaheen        0.9       0.34      -0.58




Comparison:




                Recommendations and suggestions
After going through the an entire analysis of the two textile industries Shazad
& Shaheen companies, quite evident results can be deduced about the financial
situations of the industries. Each and every ration has been analyzed quite
profoundly and the results have been provided along with the clear illustration
of the graphs.

As far as current financial situation of Shahzad textile is concerned, it is going
quite in a better condition as compared to the current financial situation of
Shaheen & co, which is growing in its debt ratio and decreasing in its
profitability and activity ratios, while Shahzad is depending lesser and lesser on
its debtors.

But one thing that should be taken into notice by the management of Shahzad
& co that their EPS and in fact the overall profitability isn't attaining a
satisfactory position. So, they need to take into account their profitability.

As far as, Shaheen cotton mills & co is concerned, it needs to take some serious
steps in its overall financial structure and needs a renewal of its strategy to
compete in the market.

                                 Conclusion
So, in the light of all the details given above about the financial analysis of both
the industries, i.e. debt, activity, liquidity, & profitability, Shahzad & co
surpasses the Shaheen co is respect to the overall financial structure. Thereby
giving Shaheen & co a tough time in the textile market.

				
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