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14167659-Financial-Statement-Analysis-of-Pakistan-Hotels-Developers-Limited-and-Pakistan-Services-Limited

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					  Financial Statement Analysis of
Pakistan Hotels Developers Limited
   and Pakistan Services Limited
           Introduction of the Project

The presentation is based on the financial data
analysis of two Pakistani listed companies engaged
in the business of hotel industry, Pakistan Hotels
Developers Limited (hereinafter referred to as
PHDL) and Pakistan Services Limited (hereinafter
referred to as PSL).

Three years data has been analyzed in order to
reach at a comprehensive conclusion to avoid any
unusual fluctuation confront the company.
            Objectives and Significance
 Objectives
We will discuss balance sheet, P & L accounts,
Cash flow statement and each and every
important aspect of both the companies. So
that we can be in a better position to
comments on hotel industry of our country

Significance
Hotel industry is the back bone of tourism, and
it is an industry of huge dimensions in its own
place. It consumes large amounts of inputs and
services, thus, creating strong economic stimuli
for the economy of the country.
                        Data Collection
a)     Data Collection Sources:-

Primary Sources:
Following are the two main primary sources used:
     1) Annual Reports
     2) Interviews

Secondary Sources:
Secondary sources used are:
     1) Study text
     2) Articles
     3) Internet

b)      Data Collection Tools:-
     Interviews, books, and websites are main tools which have been
     described above under the heading of data collection sources.
                        Data Processing
Data Processing:-
   The evaluation process will primarily involve the use of ratio
   analysis which will further be broken down in to:

1) Graphical Analysis:- Use of graphs to show comparison of past
   with current data, with competitors, using financial statement
   absolute figures.

2) Vertical Analysis:- Each expense is analyzed on the basis of
   turnover in respect of income statement whereas balance sheet
   items are analyzed over total of assets and equities in respect of
   any individual asset or equity.

3) Horizontal Analysis:- To analyze trend of components of financial
    statements using 2006 as base year.

4) Future Planning:- It will broadly include the company’s future
   plans in terms of increasing financial performance and achieving
   financial goals.
                      Data Analysis
   Financial analysis views the financial or commercial worth of the
    entity from the perspective of all stakeholders. It helps to measure
    the progress made by an enterprise through analyzing the needs of
    each individual who has a financial interest in the company.

   Trends and performance can be represented pictorially in the form
    of absolute figures which provides us with the opportunity to
    evaluate the growth and decline in businesses activities:
Equities side of Balance Sheet of PHDL
Assets side of Balance Sheet of PHDL
P & L of PHDL
Cash Flow Statement of PHDL
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Ratio Analysis of PHDL
Note: (Rupees '000)
                      Common Size Analysis PHDL
Horizontal Analysis     -   Equities side of Balance Sheet
                      Common Size Analysis PHDL
Horizontal Analysis     -   Assets side of Balance Sheet
                      Common Size Analysis PHDL
Horizontal Analysis     -    P & L Account
                 Vertical Analysis Analysis PHDL
Equities side of Balance Sheet
                 Vertical Analysis Analysis PHDL
Assets side of Balance Sheet
                          Graphical Analysis
                                                                      PHDL               Sales and services




                                                     600,000




                                  Rs. in Thousands
                                                     500,000
                                                     400,000

Sales & Services - PHDL                              300,000
                                                     200,000
                                                     100,000
                                                         -
                                                               2008          2007               2006
                                                                             Year




                                                                      PHDL          Cost of sales and services




                                                     185,000
                                  Rs. in Thousands




                                                     180,000
Cost of Sales & Services - PHDL                      175,000
                                                     170,000
                                                     165,000
                                                     160,000
                                                               2008          2007               2006
                                                                             Year
                          Graphical Analysis




Gross Profit - PHDL




Net Profit Margin- PHDL
Equities side of Balance Sheet of PSL
Assets side of Balance Sheet of PSL
P & L of PSL
Cash Flow Statement of PSL
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Ratio Analysis of PSL
Note: (Rupees '000)
                      Common Size Analysis PSL
Horizontal Analysis     -   Equities side of Balance Sheet
                      Common Size Analysis PSL
Horizontal Analysis     -   Assets side of Balance Sheet
                      Common Size Analysis PSL
Horizontal Analysis     -   P&L
                  Vertical Analysis Analysis PSL
Equities side of Balance Sheet
                  Vertical Analysis Analysis PSL
Assets side of Balance Sheet
                Vertical Analysis Analysis PSL
P & L Account
                           Graphical Analysis




Sales & Services - PSL




Cost of Sales & Services - PSL
                         Graphical Analysis




Gross Profit - PSL




Net Profit Margin- PSL
                        Conclusion/Findings
 The objective of this report was to analyze the current financial position of
     PHDL & PSL in the light of financial data of preceding three years of its
     performance.
The analysis concluded:
Graphical analysis of sales revenue, cost of sales and gross profit reflected
     sound financial position of PSL as compare to PHDL. But if we see these
     analysis with due consideration then PHDL is in much better position
     because its current gross profit is about 54% of sales while this ratio of
     PSL is only about 34%.

The liquidity situation of the PHDL has been tremendously improved over its
     prior years, although it is a good sign but it might also indicate that
     PHDL is not using its current resources adequately to generate profits as
     compared to PSL.
PHDL has sound financial position indicating that it has a good credit rating,
     would have no problems if it plans to obtain further loan for expansion
     but even for this lender would first need to assess the norms of industry
     & risks associated with project before providing them further loan.
                         Conclusion/Findings
The competitor was a market leader so its performance was obviously better
     than PHDL in almost all ways, but PHDL is making efforts to improve its
     existing performance; it have not yet been able to come to the standard
     of PSL but with the continuous efforts from management it will soon be
     able to raise its standards.

By interviewing few personnel in management, I came to know PHDL is
      making future plans for expansion by setting up a new hotel project in
      Lahore city which will contribute greatly to the financial growth of the
      company; however this plan has been deferred for some period.

Pakistan is a beautiful country with holiday resorts and hotels like regent
     plaza. Through better and improved facilities for marketing, the world
     has come to know of this fact. As a result, foreign tourism has been on a
     rise causing the increase in the demand and consequently, the
     appreciation of Pakistani currency. It is possible that the appreciation of
     currency would make hotelling expensive and might lead to a reduction
     in the overall foreign demand of the hotel industry in the future.
                      Recommendations


PHDL is working very efficiently in terms of inventory control, but it needs
to give attention to improving its credit control system or revise the
payment terms of the debtors; whereas the working capital period also
need to be improved.

Although being listed in two stock exchanges PHDL’s investment ratio does
not promotes the investors to invest, if it wants to expand it should provide
opportunities for general public to invest. Hence, PHDL will be able to
obtain further finances for expansion from the shareholders instead of the
lending institutes.
Thank You

				
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