Final Imran

Answers for Pakistan www.siemens.com.pk

SIE MENS

Subject FINANCIAL MANAGEMENT Overview To Analyze the Financial Situation of Siemens Submit To: Sir. Usman Saeed Submit By: Muhammad Imran B.com (Hons)

Contents Introduction Introduction of scope of work Profitability Ratio Liquidity Ratio Capital Structure Investors Ratio Review of Report

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Introduction Siemens is a global powerhouse in electrical engineering and electronics. The company has around 400,000 employees working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of services for individual requirements. Siemens provides innovative technologies and comprehensive know-how to benefit customers in 190 countries. Founded more than 160 years ago, the company focuses on the areas of Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In fiscal 2007 (ended September 30), Siemens had sales from continuing operations of €72,4 billion and net income of €3.9 billion.

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Scope of work I have preparing report of Siemens Company in that report I will highlight the following things: (i) All the financial ratios of the company, which includes: (a) Profitability Ratio (b) Liquidity Ratio (c) Capital Structure (d) Investors Ratio (ii) I have also analyzed those ratios and given the brief comments on those ratios.

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Profitability Ratio Gross Margin Ratio (GP/Sales × 100)

Comments:

2007 3,125,129 × 100 21,901,752 14.26

2006 2,451,757 × 100 20,795,847 11.78

The company grow margin ratio in 2007 is 14.27% and in 2006 is 11.78% which is increase by 2.49% which shows that company profit is increase and company is in good financial position as compared to the previous year.

Operating Margin Ratio (PBIT/Sales × 100)

2007 1,964,574 x 100 21,901,752 8.96

2006 1,508,320 x 100 20,795,847 7.25

Comments: In 2006 the company operating margin ratio is 7.25% and in 2007 is 8.96%, which is increase by almost 1.71% as compared with the previous year. Which shows company is generating more profit. Net Profit Margin Ratio (Net Profit/Sales x 100)

Comments:

2007 2,481,322 x 100 21,901,752 11.32

2006 724,536 x 100 20,795,847 3.48

In 2006 company profit is 3.48% and in 2007 11.32% the profit is increase by 7.84% as compared with the previous year which shows the company is generating much and heavy profit as compared with the previous year.

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Profitability Ratio Comments The company grow margin ratio in 2007 is 14.27% and in 2006 is 11.78% which is increase by 2.49% which shows that company profit is increase and company is in good financial position as compared to the previous year. And in 2006 the

company operating margin ratio is 7.25% and in 2007 is 8.96% which is increase by 1.71% as compared with the previous year. In 2006 company profit is 3.48% and in 2007 11.32% the profit is increase by 7.84% as compared with the previous year which shows the company is generating much and heavy profit as compared with the previous year.

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Liquidity Ratio Current Ratio (Current assets/Current Liabilities)

Comments:

2007 14,484,573 12,115,914 1.20

2006 10,258,300 9,693,190 1.06

The current ratio of Siemens Company in 2006 is 1.06:1 and 2007 is 1.20:1. If we analyze both the ratios of two years we reach to the result is that the company has improve its assets position as compare to the previous year. And increase by 0.14% which really shows the good position of the assets.

Quick Ratio

2007 2006 (Current Assets– Stock/Current Liabilities) 14,484,573– 3,166,741 10,258,300– 2,452,339 12,115,914 9,693,190 0.93 0.81

Comments:

The quick ratio of Siemens Company in 2006 is 0.8:1 and in 2007 is 0.93:1. The company is also improving its quick ratio by 0.12% to the previous year which really shows the fast turn over of the company as compared to the previous year.

Debtor Days (Trade Debtors/Sales x 365)

Comments:

2007 6,634,051 x 365 21,901,752 110 days

2006 5,336,901 x 365 20,795,847 93 days

The payment received in 2006 is 93 days and in 2007 is 110days.which is 17days less if we compare it with the previous year the company has received the money quickly from the debtors compared to 2007.

Creditor Days (Trade Creditors/COS x 365)

Comments:

2007 7,058,499 x 365 18,776,623 137 days

2006 7,665,891 x 365 18,344,090 152 days

In 2006 the company has paid to its creditors in 152 days and in 2007 the company paid to the creditors in 137 days, which shows the difference of 15 days. The company has taken extra 15days to pay to its creditors. 6

Inventory Days (COS/Stock x 365)

2007 3,166,741 x 365

18,776,623 61 days

2006 2,452,339 x 365

18,344,090 48 days

Comments: In 2007 the stock turn over was 61 days and in 2006 the stock turn over was 48 days. Which is less then 13 days it indicates that company has fastest its trading and investment in stock is becoming less.

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Liquidity Ratio Comments The current ratio of Siemens Company in 2006 is 1.06:1 and 2007 is 1.20:1. If we analyze both the ratios of two years we reach to the result is that the company has improve its assets position as compare to the previous year. And increase by 0.14%. The quick ratio of Siemens Company in 2006 is 0.8:1 and in 2007 is 0.93:1. The company is also improving its quick ratio by 0.12% to the previous year. The payment received in 2006 is 93 days and in 2007 is 110days.which is 17days less if we compare it with the previous year the company has received the money quickly from the debtors. In 2006 the company has paid to its creditors in 152 days and in 2007 the company paid to the creditors in 137 days which shows the difference of 15 days. The company has taken extra 15days to pay to its creditors. In 2007 the stock turn over was 61 days and in 2006 the stock turn over was 48 days. This is less then 13 days. And company improved liquidity ratio compare to previous year.

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Capital Structure Debt Equity Ratio (Total Debt / Total Debt + Equity)

Comments:

2007 113,680 113,680 + 5,351,422 0.02%

2006 124,290 124,290 + 2,721,812 0.04%

The debt equity ratio of Siemens Company in 2006 the equity ratio was 0.04% and in 2007 the debt equity ratio was 0.02% which is less then 0.002% as compare to the previous year. The company has received fewer amounts of debtors as compared to the previous year. Which that the performance of the company has devalued becoming the company is receiving less amount of debtors.

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Investors Ratio Basic & Diluted Earning Per Share (Profit Attributable to Share Holders) No of ordinary Shares

Comments:

2007 2,481,322 8,247,037 300.87

2006 727,006 7,769,597 93.57

The investor ratio in 2006 was 93.57 and in 2007 were 300.87, which show as increase of 207 as compared to previous year. It also shows that investors are investing more and more in the company as compared with previous year.

Price Earning Ratio (Market Value of Share / EPS)

Comments:

2007 1,689 300.87 5.61

2006 980 93.57 10.47

The earning per share in 2006 was 10.47 and in 2007 was 5.61 the company earning per share is decreased by almost 4.86 as compared with previous year and company is losing its cash flows.

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Investors Ratio Comments: The investor ratio of Siemens Company in 2006 was 93.57 and in 2007 were 300.87 which show as increase of 207 as compared to previous year. It also shows that investors are investing more and more in the company as compared with previous year. The earning per share in 2006 was 10.47 and in 2007 was 5.61 the company earning per share is decreased by almost 4.86 as compared with previous year and company is losing its cash flows. And it is a way of value decreasing in market. It is danger for the company.

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Overview of Report The situation of Siemens company grow margin ratio in 2007 is 14.27% and in 2006 is 11.78% which is increase by 2.49%. And in 2006 the company operating margin

ratio is 7.25% and in 2007 is 8.96%, which is increase by 1.71% as compared with the previous year. In 2006 company profit is 3.48% and in 2007 11.32% the profit is increase by 7.84% as compared with the previous year. The current ratio of Siemens Company in 2006 is 1.06:1 and 2007 is 1.20:1. If we analyze both the ratios of two years we reach to the result is that the company has improve its assets position as compare to the previous year. And increase by 0.14%. The quick ratio of Siemens Company in 2006 is 0.8:1 and in 2007 is 0.93:1. The company is also improving its quick ratio by 0.12% to the previous year. The payment received in 2006 is 93 days and in 2007 is 110days.which is 17days less if we compare it with the previous year the company has received the money quickly from the debtors. In 2006 the company has paid to its creditors in 152 days and in 2007 the company paid to the creditors in 137 days, which shows the difference of 15 days. In 2007 the stock turn over was 61 days and in 2006 the stock turn over was 48 days. This is less then 13 days. And company improved liquidity ratio compare to previous year. The debt equity ratio of Siemens Company in 2006 the equity ratio was 0.04% and in 2007 the debt equity ratio was 0.02% which is less then 0.002% as compare to the previous year. Which that the performance of the company has devalued becoming the company is receiving less amount of debtors. The investor ratio of Siemens Company in 2006 was 93.57 and in 2007 were 300.87, which show as increase of 207 as compared to previous year. The earning per share in 2006 was 10.47 and in 2007 was 5.61 the company earning per share is decreased by almost 4.86 as compared with previous year and company is losing its cash flows. The Siemens company have good financial position but some points lack for the company.