Ibf Project Report Kohinoor Sugar Mills Ltd
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- Words: 4,488
- Pages: 56
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Serial no. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Particulars Acknowledgement Preface Cross Sectional Analysis Time Series Analysis Graphical Representation Common Size Statement Internal and Sustainable Growth Rate Performa Income Statement and Balance Sheet Plug Variable Conclusion Recommendations
Pages no. 5 8-9 11-29 31-41 43-44 46-48 49 51-52 53 54 55-56
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First of all I would like to thanks to the mighty ALLAH that he courage me to complete this project. Secondly I would like to thanks to my dear teacher Mr. Asif Nagi that he has assigned me to write this report. I have putted my best to complete this report. It is honor for me to write a final report of Kohinoor Sugar Mills Ltd.
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About Student; Name : ID :
Syed Owais Ali SP07-BB-0135
Project Report on a Financial Statement Analysis of a Company
Financial statement analysis: 8
It is a set of four related accounting reports which shows the position and results of operations of an entity during a particular period of time. It includes; • • • •
Income statement Balance sheet Statement of cash flows Statement of retained earning
Types of Analysis; 1. Cross sectional analysis 2. Time series analysis
Cross sectional analysis: Financial results of the firm are compared with the result of industry.
Time series analysis: Evaluation of the firm financial performance over time (using financial ratio analysis) is known as Time series analysis. We do this analysis to; • Know the strengths and weakness • Know the historical performance • Know the current financial position of firm
9
About a company; The company which is being selected for this report is
Kohinoor Sugar Mills Ltd. FAROOQ AHMED is a company secretary. Its registered office is in 29 – G, GULBERG – II, LAHORE and mills are in JAUHARABAD, DISTRICT KHUSHAB. STATEMENT OF ETHICS AND BUSINESS PRACTICE Code of ethics is a pre-requisite for all directors and employees of Kohinoor Sugar Mills Limited. We endeavor to have fully groomed employees committed to carry out honestly activities assigned to them. Our aim is to have high standard of excellence for the products and for all those involved with our Company. VISION STATEMENT To become a market leader in the Industry setting out high quality standards for the Company and others to follow. MISSION STATEMENT To produce/manufacture quality sugar and molasses by maintaining a high standard of efficiency and staying competitive to ensure customer satisfaction and to provide a comfortable level of return to all stakeholders.
10
Current Ratio: 11
Current Ratio =
Current Assets Current liabilities = 390,666,841 457,793,528 Current Ratio = 0.85
Interpretation: Current ratio measures a firm’s ability to meet its short term obligations.
Company’s Result: In this company current ratio is 0.85. It means current assets are 0.85 times more than that of its current liabilities.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because current ratio of a company is ‘less than’ that of industry’s ratio.
Quick Ratio: Quick Ratio = Current Assets – Inventory – Prepaid Expenses 12
Current Liabilities = 390,666,841 – 218,956,788 – 369,790 457,793,528 Quick Ratio = 0.374
Interpretation: Quick Ratio measures the firm ability to meet its short term obligations.
Company’s Result: In this company quick ratio is 0.374. It means quick assets are 0.374 times more than that of its current liabilities.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because quick ratio of a company is ‘less than’ that of industry’s ratio.
Cash Ratio: Cash Ratio =
Cash Current Liabilities = 9,553,415 13
457,793,528 Cash Ratio = 0.021
Interpretation: Cash Ratio measures the firm ability to meet its short term obligations.
Company’s Result: In this company cash ratio is 0.021. It means quick assets are 0.021 times more than that of its current liabilities.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because cash ratio of a company is ‘less than’ that of industry’s ratio.
Working Capital: Working Capital = Current Assets – Current Liabilities = 390,666,841 – 457,793,528 Working Capital = (67,126,687)
14
Interpretation: Working Capital measures the firm ability to meet its short term obligations.
Company’s Result: In this company working capital is (67,126,687).
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because working capital of a company is ‘less than’ that of industry’s ratio.
Debt Ratio: Debt Ratio = Total Liabilities or Total Debts Total Assets = 884,122,802 1,238,530,181 Debt Ratio = 0.714
15
Interpretation: Debt Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total assets.
Company’s Result: In this company debt ratio is 0.714. It means that total liabilities of a company are 0.714 times of its total assets.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because debt ratio of a company is ‘more than’ that of industry’s debt ratio.
Debt to Equity Ratio: Debt to Equity Ratio = Total Liabilities or Total Debts Total Shareholder’s Equity = 884,122,802 354,407,379 Debt to Equity Ratio = 2.49
Interpretation: 16
Debt to Equity Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total shareholder’s equity.
Company’s Result: In this company debt to equity ratio is 2.49. It means that total liabilities are 2.49 times of total shareholder’s equity.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because company debt to equity ratio is ‘more than’ that of industry’s debt to equity ratio.
Time Interest Earned: Time Interest Earned = Operating profit/EBIT Interest Expense = 86,517,309 39,414,193 Time Interest Earned = 2.195 times
Interpretation: 17
Time interest indicates that how many times a company can pay its interest expense from its operating profit.
Company’s Result: In this company time interest earned is 2.195 times. It means that company can pay its interest expenses 2.195 times from its operating profit.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result”, because time interest earned of a company is ‘less than’ that of industry’s time interest earned.
Account Receivable Turnover: Account Receivable Turnover =
Net Credit Sales Average Account Receivable = 913,370,379 18,490,064 Account Receivable Turnover = 48.71 times
Interpretation:
18
Account Receivable Turnover indicates that how many times a company converts its receivable into cash during a year.
Company’s Result: In this company account receivable turnover is 48.71 times. It means that company converts its receivable into cash 48.71 times in a year.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “positive result” because company result is ‘greater than’ that of industry.
Average Collection Period: Average Collection Period
Average Collection Period
=
365 Account Receivable Turnover = 365 48.71 = 7.5 days
Interpretation:
19
Average Collection Period indicates that in how many days a company converts its receivable into cash.
Company’s Result: In this company average collection period is 7.5 days. It means that the company converts its receivable into cash after every 7.5 days.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “positive result” because company result is ‘less than’ that of industry.
Inventory Turnover: Inventory turnover
= Cost of Goods Sold Average Inventory = 775,729,109 218,956,788 Inventory Turnover = 3.54 days
Interpretation:
20
Inventory turnover indicates that how many times a company converts its inventory into sales or cash.
Company’s Result: In this company inventory turnover is 3.54 days. It means that a company converts its inventory into cash or sales in 3.54 days in a year.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “positive result” because company result is ‘less than’ that of industry.
Fixed Assets Turnover: Fixed Assets Turnover
=
Net Sales Fixed Assets = 913,370,379 1,303,161,767 Fixed Assets Turnover = 0.701 times
Interpretation: It indicates that how many times revenue is generated from fixed assets of its own worth. 21
Company’s Result: In this company fixed asset turnover is 0.701 times. It means that fixed assets of a company generate revenue 0.701 times of its own worth.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company fixed asset turnover is ‘less than’ that of industry.
Total Assets Turnover: Total Assets Turnover
=
Net Sales Total Assets = 913,370,379 1,238,530,181 Total Assets Turnover = 0.737 times
Interpretation: It indicates that how many times revenue is generated from total assets of its own worth.
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Company’s Result: In this company total asset turnover is 0.737 times. It means that total assets of a company generate revenue 0.737 times of its own worth.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company total asset turnover is ‘less than’ that of industry.
Gross Profit Margin: Gross Profit Margin
=
Gross Profit Net Sales = 137,641,270 913,370,379 Gross Profit Margin = 15.1%
Interpretation: Gross Profit Margin shows the relationship between gross profit and net sales. It is a percentage of gross profit based on net sales.
Company’s Result:
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In this company gross profit margin is 15.1%. It means a company generates 15.1% gross profit based on its net sales.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company gross profit margin is ‘less than’ that of industry.
Operating Profit Margin: Operating Profit Margin
=
Operating Profit Net Sales = 86,517,309 913,370,379 Operating Profit Margin = 9.4%
Interpretation: Operating Profit Margin shows the relationship between operating profit and net sales. It is a percentage of operating profit based on net sales.
Company’s Result: In this company operating profit margin is 9.4%. It means a company generates 9.4% operating profit based on its net sales. 24
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company operating profit margin is ‘less than’ that of industry.
Net Profit Margin: Net Profit Margin
=
Net Profit Net Sales = 8,141,611 913,370,379 Net Profit Margin = 0.89%
Interpretation: Net Profit Margin shows the relationship between net profit and net sales. It is a percentage of net profit based on net sales.
Company’s Result: In this company net profit margin is 0.89%. It means a company generates 0.89% net profit based on its net sales.
Company vs. Industry: 25
If we compare the result of this company with the result of industry, company is showing “negative result” because company net profit margin is ‘less than’ that of industry.
Return on Assets: Return on Assets =
Net Profit Total Assets = 8,141,611 1,238,530,181 Return on Assets = 0.6%
Interpretation: Return on Assets shows the relationship between net profit and total assets. It is a percentage of net profit based on total assets.
Company’s Result: In this company return on assets is 0.6%. It means a company generates 0.6% of net profit based on total assets.
Company vs. Industry:
26
If we compare the result of this company with the result of industry, company is showing “negative result” because company return on asset is much ‘less than’ that of industry.
Return on Equity: Return on Equity
=
Net Profit Total Shareholder’s Equity = 8,141,611 354,407,379 Return on Equity = 1.45%
Interpretation: Return on Equity shows the relationship between net profit and total shareholder’s equity. It is a percentage of net profit based on total shareholder’s equity.
Company’s Result: In this company return on equity is 1.45%. It means a company generates 1.45% of net profit based on total shareholder’s equity.
Company vs. Industry:
27
If we compare the result of this company with the result of industry, company is showing “negative result” because company return on equity is much ‘less than’ that of industry.
Earning per Share: Earning per Share
= =
Earning per Share =
Net Profit after Tax – Preferred Dividend No. of Equity Shares or Common Stocks 8,141,611 - 0 9,486,780 0.86
Explanation: Earning per Share shows the earning generated by a single share of a company.
Company’s Result: The Earning per Share of this company is 0.86, which means it is earning 0.86 by a single share.
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Dividend per Share: Dividend per Share
=
Dividend paid to Common Stock Holders No. of Equity Shares = 14,080,315 9,486,780 Dividend per Share = 1.48
Explanation: Dividend per Share shows the dividend paid against every share.
Company’s Result: Dividend per Share of this company is 1.48, which means a company paid 1.48 against every share.
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Ratios
2006
2005
2004
Short Term Solvency Ratios Current Ratio Quick Ratio Cash Ratio Working Capital
0.853
1.082
0.777
0.236
0.550
0.341
0.021
0.014
0.004
(67,126,687)
17,219,191
(65,722,452)
Long Term Solvency Ratios/Stability Ratios Debt Ratio Debt to Equity Ratio Time Interest Earned
0.714
0.502
0.637
2.494
1.011
1.759
2.195
1.043
1.743
Assets Utilization Ratios Account Receivable Turnover Average Collection Period Inventory Turnover Fixed Assets Turnover Total Assets Turnover
48.71 times
58.13 times
174.8 times
7.5 days
6.27 days
2.1 days
3.54 days
10.8 days
7.49 days
0.701 times
1.233 times
1.219 times
0.737 times
1.202 times
1.341 times
Profitability Ratios Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Equity
15.1%
15.8%
12.1%
9.4%
10.8%
7.3%
0.89%
6.3%
3.5%
0.6%
7.6%
4.7%
1.4%
15.3%
13.0%
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Explanation and Comparison of Ratios of 2004, 2005 and 2006
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Current Ratio: Explanation: Current ratio measures a firm’s ability to meet its short term obligations.
Comparison: In 2004 company current ratio is 0.777, in 2005 it become 1.082 and in 2006 it is 0.853, as the current ratio is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Quick Ratio: Explanation: Quick Ratio measures the firm ability to meet its short term obligations.
Comparison: In 2004 company quick ratio is 0.341, in 2005 it become 0.550 and in 2006 it is 0.236, as the quick ratio is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
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Cash Ratio: Explanation: Cash Ratio measures the firm ability to meet its short term obligations.
Comparison: In 2004 company cash ratio is 0.004, in 2005 it become 0.014 and in 2006 it is 0.021, as the cash ratio is increasing in 2005 and also in 2006 therefore it is good for a company.
Working Capital: Explanation: Working Capital measures the firm ability to meet its short term obligations.
Comparison: In 2004 company working capital is (65,722,452), in 2005 it become 17,219,191 and in 2006 it is (67,126,687), as the working capital is increasing in 2005 but again it is decreasing in 2006 therefore it is not good for a company.
Debt Ratio: 34
Explanation: Debt Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total assets.
Comparison: In 2004 company debt ratio is 0.637, in 2005 it become 0.502 and in 2006 it is 0.714, as the debt ratio is decreasing in 2005 but it is increasing in 2006 therefore it is not good for a company.
Debt to Equity Ratio: Explanation: Debt to Equity Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total shareholder’s equity.
Comparison: In 2004 company debt to equity ratio is 1.759, in 2005 it become 1.011 and in 2006 it is 2.494, as the debt to equity ratio is decreasing in 2005 but it is increasing in 2006 therefore it is not good for a company.
Time Interest Earned: Explanation:
35
Time interest indicates that how many times a company can pay its interest expense from its operating profit.
Comparison: In 2004 company time interest earned is 1.743, in 2005 it become 1.043 and in 2006 it is 2.195, as the time interest earned is decreasing in 2005 but it is increasing in 2006 and it is good for a company.
Account Receivable Turnover: Explanation: Account Receivable Turnover indicates that how many times a company converts its receivable into cash during a year.
Comparison: In 2004 company account receivable turnover is 174.8 times, in 2005 it become 58.13 times and in 2006 it is 48.71 times, as the account receivable turnover is decreasing in 2005 and also in 2006 therefore it is not good for a company.
Average Collection Period: Explanation: Average Collection Period indicates that in how many days a company converts its receivable into cash. 36
Comparison: In 2004 company average collection period is 2.1 days, in 2005 it become 6.27 days and in 2006 it is 7.5 days, as the average collection period is increasing in 2005 and also in 2006 therefore it is not good for a company.
Inventory Turnover: Explanation: Inventory turnover indicates that how many times a company converts its inventory into sales or cash.
Comparison: In 2004 company inventory turnover is 7.49 days, in 2005 it become 10.8 days and in 2006 it is 3.54 days, as the inventory turnover is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Fixed Assets Turnover: Explanation: It indicates that how many times revenue is generated from fixed assets of its own worth.
Comparison:
37
In 2004 company fixed assets turnover is 1.219 times, in 2005 it become 1.233 times and in 2006 it is 0.701 times, as the fixed assets turnover is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Total Assets Turnover: Explanation: It indicates that how many times revenue is generated from total assets of its own worth.
Comparison: In 2004 company total assets turnover is 1.341 times, in 2005 it become 1.202 times and in 2006 it is 0.737 times, as the total assets turnover is decreasing in 2005 and in 2006 therefore it is not good for a company.
Gross Profit Margin: Explanation: Gross Profit Margin shows the relationship between gross profit and net sales. It is a percentage of gross profit based on net sales.
Comparison:
38
In 2004 company gross profit margin is 12.1%, in 2005 it become 15.8% and in 2006 it is 15.1%, as the gross profit margin is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Operating Profit Margin: Explanation: Operating Profit Margin shows the relationship between operating profit and net sales. It is a percentage of operating profit based on net sales.
Comparison: In 2004 company operating profit margin is 7.3%, in 2005 it become 10.8% and in 2006 it is 9.4%, as the operating profit margin is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Net Profit Margin: Explanation: Net Profit Margin shows the relationship between net profit and net sales. It is a percentage of net profit based on net sales.
Comparison:
39
In 2004 company net profit margin is 3.5%, in 2005 it become 6.3% and in 2006 it is 0.89%, as the net profit margin is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Return on Assets: Explanation: Return on Assets shows the relationship between net profit and total assets. It is a percentage of net profit based on total assets.
Comparison: In 2004 company return on assets is 4.7%, in 2005 it become 7.6% and in 2006 it is 0.6%, as the return on assets is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Return on equity: Explanation: 40
Return on Equity shows the relationship between net profit and total shareholder’s equity. It is a percentage of net profit based on total shareholder’s equity.
Comparison: In 2004 company return on equity is 13.0%, in 2005 it become 15.3% and in 2006 it is 1.4%, as the return on equity is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
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Cross Sectional Graphical Representation2004 2005 2006
42
By seeing overall results of 2004, 2005 and 2006, in cross sectional analysis, company performance is better in 2005 then 2004 and 2006.
Time Series Graphical 40 Representation 30 50
20 10 0
2004
2005
2006 43
By seeing overall results of 2004, 2005 and 2006, in time series analysis, company performance is better in 2005 then 2004 and 2006.
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Kohinoor Sugar Mills Ltd. Common Size Income Statement For the year ended September 30, 2006
2006
Percentage
2005
Percentage
SALES
913,370,379
100%
852,372,071
100%
COST OF SALES
775,729,109
84.9%
717,170,556
84.1%
GROSS PROFIT 137,641,270
15.1%
135,201, 515
15.9%
OPERATING EXPENSES Selling and Distribution cost
1,901,689
0.21%
1,656,656
0.2%
Administrative Expense
49,222,272
5.4%
40,712,566
4.7% 45
51,123,961
5.6%
42,369,222
4.9%
86,517,309
9.5%
92,832,293
10.9%
51,801,936
5.7%
20,816,861
2.4%
4,698,820
0.51%
17,001,821
1.2%
39,414,193
4.3%
89,017,253
10.4%
1,735,769
0.2%
4,238,917
0.5%
738,793
0.1%
-
36,936,631
4.0%
84,778,336
9.9%
Current
4,580,109
0.5%
13,612,568
1.6%
Deferred
24,217,911
2.6%
17,084,060
2.0%
28,798,020
3.2%
30,696,628
3.6%
8,141,611
0.9%
54,081,708
6.3%
OPERATING PROFIT FINANCE COST OTHER INCOME/(EXPENSES) WORKER’S PROFIT PARTICIPATION FUND WORKER’S WELFARE FUND PROFIT BEFORE TAXATION PROVISION FOR TAXATION
PROFIT AFTER TAXATION
Kohinoor Sugar Mills Ltd. Common Size Balance Sheet For the year ended September 30, 2006 FIXED ASSETS Property, plant and equipment Capital work in progress LONG TERM DEPOSITS CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade Debts Loans and Advance Short Term Deposits and
2006
Percentage
2005
Percentage
894,236,931 408,924,836 1,303,161,767 2,495,101
72.2% 33.0% 105.2% 0.2%
644,351.583 46,634,018 690,985,601 1,140,301
90.8% 6.5% 97.4% 0.2%
84,466,516
6.8%
90,623,529
12.8%
218,956,788 4,168,000 33,899,374 369,790
17.7% 0.3% 2.7% 0.03%
66,437,296 26,669,845 3,839,179
9.4% 3.8% 0.5% 46
Prepayments Other Receivables Taxation Cash and Bank Balance CURRENT LIABILITIES Trade and Other Payables Accrued Mark-Up Short term borrowings-Secured Current portion of long term liabilities Provision for Taxation CURRENT ASSETS LESS CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES
CONTINGENCIES AND COMMITMENTS NON CURRENT LIABILITIES Long Term Finances-Secured Liabilities against Assets subject to finance lease Other loan-Unsecured DEFERRED TAXATION OTHER LIABILITIES NET ASSETS REPRESENTED BY: Share Capital Capital Reserve-premium on right shares Revenue Reserve General Reserve Inappropriate profit
14,581,064 24,671,894 9,553,415 390,666,841
1.2% 1.2% 0.8% 31.5%
14,662,764 22,031,178 2,909,458 227,173,249
2.1% 3.1% 0.4% 32.0%
71,639,821 23,025,566 294,697,100 63,850,932
5.7% 1.9% 23.8% 5.2%
46,598,878 5,412,193 112,112,231 41,555,667
6.6% 0.8% 15.8% 5.8%
4,580,109 457,793,528 (67,126,687)
0.4% 36.9% (5.4%)
4,275,089 209,954,058 17,219,191
0.6% 29.6% 2.4%
1,238,530,181
100%
709,345,093
100%
-
-
-
-
326,317,346 12,049,439
42.4% 1.2%
101,206,852 3,681,601
18.6% 0.7%
87,962,489 426,329,274 41,301,971 1,309,000 769,589,936
11.4% 55.4% 5.4% 0.2% 100%
41,816,509 146,704,962 17,084,060 1,309,000 544,247,071
7.7% 26.9% 3.1% 0.2% 100%
94,867,800 41,109,380
12.3% 5.3%
94,867,800 41,109,380
17.4% 7.6%
62,000,000 5,924,900
8.1% 0.7%
62,000,000 12,013,459
11.4% 2.2% 47
TOTAL CAPITAL AND RESERVES SUSPLUS ON REVALUATION OF LAND
67,924,900 203,902,080
8.8% 26.5%
74,013,459 209,990,639
13.6% 38.6%
565,687,856
73.5%
334,256,432
61.4%
769,589,936
100%
544,247,071
100%
Internal and Sustainable Growth Rate First we have to find Payout Rate and Retention Ratio; Payout Rate: Payout ratio
=
Dividend paid
x 100
Payout ratio
Net profit after tax = 14,080,315 x100 36,939,631 = 38.1%
Retention Ratio: Retention ratio (b)
= 1 - Payout ratio
48
= 1 – 0.38 Retention ratio (b) = 0.62 Retention ratio indicates percentage change of net profit after tax retained by company. The retention ratio of company is 96%.
Internal Growth Rate: Internal growth rate
= Return on assets (ROA) x b 1 – (ROA) x b =
0.006 (0.62) x 100 1 – (0.006 x 0.62) = 0.0037 x 100
Internal growth rate = 0.37% Sustainable Growth Rate: Sustainable growth rate = Return on equity x (b) x 100 1 – (ROE x b) = 0.014 (0.62) x 100 1 – (0.014x0.62) = 0.0087x100
Sustainable growth rate = 0.87%
49
Performa Income Statement and Balance Sheet
Kohinoor Sugar Mills Ltd. Performa Income Statement For the year ended September 30, 2006 PARTICULARS Sales Cost of Sales GROSS PROFIT OPERATING EXPENSES Selling and Distribution cost Administrative Expenses
(913,370,379x0.89) ((75,729,109)x0.89) (137,641,270x0.89) (1,901,689x0.89) (49,222,272x0.89)
AMOUNT 812,899,637 (690,398,907) 122,500,730 1,692,503 43,807,822
50
(51,123,961x0.89) OPERATING PROFIT (86,517,309x0.89) Finance Cost (51,801,936x0.89) Other Income/(Expenses) (4,698,820x0.89) (39,414,193x0.89) Workers’ Profit Participation Fund (1,735,769x0.89) Workers’ Welfare Fund (738,793x0.89) PROFIT BEFORE TAXATATION (36,939,631x0.89) Provision for Taxation Current (4,580,109x0.89) Deferred (24,217,911x0.89) (28,798,020x089) PROFIT AFTER TAXATATION (8,141,611x0.89)
45,500,325 77,000,405 46,103,723 4,181,950 35,078,632 1,544,834 657,526 32,876,272 4,076,297 21,553,941 25,630,237 7,246,034
Kohinoor Sugar Mills Ltd. Performa Balance Sheet For the year ended September 30, 2006 In Balance Sheet we multiply each with 0.89
Assets FIXED ASSETS Property, plant and equipment Capital work in Progress
Equities and Liabilities SHARE CAPITAL and RESERVE 795,870,86 Share Capital 9 363,943,104 Capital reserves-premium on right shares
84,432,342 36,587,348
51
1,159,813,97 REVENUE RESERVE 3 General Reserve In appropriated Profit TOTAL CAPITAL and RESERVE CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade debts Loans and Advance Short term deposits and Prepayments Other receivables Taxation Cash and Bank balances TOTAL
75,175,199 194,871,541 3,709,520 30,170,443 329,113
CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings-Secured Current portion of long term liabilities Provision for Taxation
12,977,147 TOTAL 21,957,986 8,502,539 347,693,489 NON CURRENT LIABILITIES Long term finances-Secured Liabilities against assets subject to finance lease Other loan-Secured TOTAL
55,180,000 5,273,161 60,453,161
63,759,441 20,492,754 262,280,419 56,827,330 4,076,297 407,436,240
290,422,438 107,240,001 78,286,615 379,433,054
52
The company performance is good in 2005 but it is not as better in 2004 and in 2006. Comparing the data of industry with a company, company ratios are mostly in negative which is showing that company is not in good reputation. But company account receivable turnover is greater than that of company and also the average collection period of company is good than of industry. 53
54
By seeing overall performance of a company is in good position in 2005, company should maintain its Current Ratio so that it can become able to meet its short term obligations, company should pay its liabilities in proper way so it can maintain its Debt Ratio. Company should decrease the average inventory so that it can maintain its Inventory Turnover; company should increase its net sales
55
by taking good steps so that it can make more Revenue from its total assets. Considering these things the company can be able to maintain a good level.
56
3
4
Serial no. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Particulars Acknowledgement Preface Cross Sectional Analysis Time Series Analysis Graphical Representation Common Size Statement Internal and Sustainable Growth Rate Performa Income Statement and Balance Sheet Plug Variable Conclusion Recommendations
Pages no. 5 8-9 11-29 31-41 43-44 46-48 49 51-52 53 54 55-56
5
First of all I would like to thanks to the mighty ALLAH that he courage me to complete this project. Secondly I would like to thanks to my dear teacher Mr. Asif Nagi that he has assigned me to write this report. I have putted my best to complete this report. It is honor for me to write a final report of Kohinoor Sugar Mills Ltd.
6
7
About Student; Name : ID :
Syed Owais Ali SP07-BB-0135
Project Report on a Financial Statement Analysis of a Company
Financial statement analysis: 8
It is a set of four related accounting reports which shows the position and results of operations of an entity during a particular period of time. It includes; • • • •
Income statement Balance sheet Statement of cash flows Statement of retained earning
Types of Analysis; 1. Cross sectional analysis 2. Time series analysis
Cross sectional analysis: Financial results of the firm are compared with the result of industry.
Time series analysis: Evaluation of the firm financial performance over time (using financial ratio analysis) is known as Time series analysis. We do this analysis to; • Know the strengths and weakness • Know the historical performance • Know the current financial position of firm
9
About a company; The company which is being selected for this report is
Kohinoor Sugar Mills Ltd. FAROOQ AHMED is a company secretary. Its registered office is in 29 – G, GULBERG – II, LAHORE and mills are in JAUHARABAD, DISTRICT KHUSHAB. STATEMENT OF ETHICS AND BUSINESS PRACTICE Code of ethics is a pre-requisite for all directors and employees of Kohinoor Sugar Mills Limited. We endeavor to have fully groomed employees committed to carry out honestly activities assigned to them. Our aim is to have high standard of excellence for the products and for all those involved with our Company. VISION STATEMENT To become a market leader in the Industry setting out high quality standards for the Company and others to follow. MISSION STATEMENT To produce/manufacture quality sugar and molasses by maintaining a high standard of efficiency and staying competitive to ensure customer satisfaction and to provide a comfortable level of return to all stakeholders.
10
Current Ratio: 11
Current Ratio =
Current Assets Current liabilities = 390,666,841 457,793,528 Current Ratio = 0.85
Interpretation: Current ratio measures a firm’s ability to meet its short term obligations.
Company’s Result: In this company current ratio is 0.85. It means current assets are 0.85 times more than that of its current liabilities.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because current ratio of a company is ‘less than’ that of industry’s ratio.
Quick Ratio: Quick Ratio = Current Assets – Inventory – Prepaid Expenses 12
Current Liabilities = 390,666,841 – 218,956,788 – 369,790 457,793,528 Quick Ratio = 0.374
Interpretation: Quick Ratio measures the firm ability to meet its short term obligations.
Company’s Result: In this company quick ratio is 0.374. It means quick assets are 0.374 times more than that of its current liabilities.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because quick ratio of a company is ‘less than’ that of industry’s ratio.
Cash Ratio: Cash Ratio =
Cash Current Liabilities = 9,553,415 13
457,793,528 Cash Ratio = 0.021
Interpretation: Cash Ratio measures the firm ability to meet its short term obligations.
Company’s Result: In this company cash ratio is 0.021. It means quick assets are 0.021 times more than that of its current liabilities.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because cash ratio of a company is ‘less than’ that of industry’s ratio.
Working Capital: Working Capital = Current Assets – Current Liabilities = 390,666,841 – 457,793,528 Working Capital = (67,126,687)
14
Interpretation: Working Capital measures the firm ability to meet its short term obligations.
Company’s Result: In this company working capital is (67,126,687).
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because working capital of a company is ‘less than’ that of industry’s ratio.
Debt Ratio: Debt Ratio = Total Liabilities or Total Debts Total Assets = 884,122,802 1,238,530,181 Debt Ratio = 0.714
15
Interpretation: Debt Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total assets.
Company’s Result: In this company debt ratio is 0.714. It means that total liabilities of a company are 0.714 times of its total assets.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because debt ratio of a company is ‘more than’ that of industry’s debt ratio.
Debt to Equity Ratio: Debt to Equity Ratio = Total Liabilities or Total Debts Total Shareholder’s Equity = 884,122,802 354,407,379 Debt to Equity Ratio = 2.49
Interpretation: 16
Debt to Equity Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total shareholder’s equity.
Company’s Result: In this company debt to equity ratio is 2.49. It means that total liabilities are 2.49 times of total shareholder’s equity.
Company vs. Industry: If we compare the result of this company with the result of industry, it is showing “negative result”, because company debt to equity ratio is ‘more than’ that of industry’s debt to equity ratio.
Time Interest Earned: Time Interest Earned = Operating profit/EBIT Interest Expense = 86,517,309 39,414,193 Time Interest Earned = 2.195 times
Interpretation: 17
Time interest indicates that how many times a company can pay its interest expense from its operating profit.
Company’s Result: In this company time interest earned is 2.195 times. It means that company can pay its interest expenses 2.195 times from its operating profit.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result”, because time interest earned of a company is ‘less than’ that of industry’s time interest earned.
Account Receivable Turnover: Account Receivable Turnover =
Net Credit Sales Average Account Receivable = 913,370,379 18,490,064 Account Receivable Turnover = 48.71 times
Interpretation:
18
Account Receivable Turnover indicates that how many times a company converts its receivable into cash during a year.
Company’s Result: In this company account receivable turnover is 48.71 times. It means that company converts its receivable into cash 48.71 times in a year.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “positive result” because company result is ‘greater than’ that of industry.
Average Collection Period: Average Collection Period
Average Collection Period
=
365 Account Receivable Turnover = 365 48.71 = 7.5 days
Interpretation:
19
Average Collection Period indicates that in how many days a company converts its receivable into cash.
Company’s Result: In this company average collection period is 7.5 days. It means that the company converts its receivable into cash after every 7.5 days.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “positive result” because company result is ‘less than’ that of industry.
Inventory Turnover: Inventory turnover
= Cost of Goods Sold Average Inventory = 775,729,109 218,956,788 Inventory Turnover = 3.54 days
Interpretation:
20
Inventory turnover indicates that how many times a company converts its inventory into sales or cash.
Company’s Result: In this company inventory turnover is 3.54 days. It means that a company converts its inventory into cash or sales in 3.54 days in a year.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “positive result” because company result is ‘less than’ that of industry.
Fixed Assets Turnover: Fixed Assets Turnover
=
Net Sales Fixed Assets = 913,370,379 1,303,161,767 Fixed Assets Turnover = 0.701 times
Interpretation: It indicates that how many times revenue is generated from fixed assets of its own worth. 21
Company’s Result: In this company fixed asset turnover is 0.701 times. It means that fixed assets of a company generate revenue 0.701 times of its own worth.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company fixed asset turnover is ‘less than’ that of industry.
Total Assets Turnover: Total Assets Turnover
=
Net Sales Total Assets = 913,370,379 1,238,530,181 Total Assets Turnover = 0.737 times
Interpretation: It indicates that how many times revenue is generated from total assets of its own worth.
22
Company’s Result: In this company total asset turnover is 0.737 times. It means that total assets of a company generate revenue 0.737 times of its own worth.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company total asset turnover is ‘less than’ that of industry.
Gross Profit Margin: Gross Profit Margin
=
Gross Profit Net Sales = 137,641,270 913,370,379 Gross Profit Margin = 15.1%
Interpretation: Gross Profit Margin shows the relationship between gross profit and net sales. It is a percentage of gross profit based on net sales.
Company’s Result:
23
In this company gross profit margin is 15.1%. It means a company generates 15.1% gross profit based on its net sales.
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company gross profit margin is ‘less than’ that of industry.
Operating Profit Margin: Operating Profit Margin
=
Operating Profit Net Sales = 86,517,309 913,370,379 Operating Profit Margin = 9.4%
Interpretation: Operating Profit Margin shows the relationship between operating profit and net sales. It is a percentage of operating profit based on net sales.
Company’s Result: In this company operating profit margin is 9.4%. It means a company generates 9.4% operating profit based on its net sales. 24
Company vs. Industry: If we compare the result of this company with the result of industry, company is showing “negative result” because company operating profit margin is ‘less than’ that of industry.
Net Profit Margin: Net Profit Margin
=
Net Profit Net Sales = 8,141,611 913,370,379 Net Profit Margin = 0.89%
Interpretation: Net Profit Margin shows the relationship between net profit and net sales. It is a percentage of net profit based on net sales.
Company’s Result: In this company net profit margin is 0.89%. It means a company generates 0.89% net profit based on its net sales.
Company vs. Industry: 25
If we compare the result of this company with the result of industry, company is showing “negative result” because company net profit margin is ‘less than’ that of industry.
Return on Assets: Return on Assets =
Net Profit Total Assets = 8,141,611 1,238,530,181 Return on Assets = 0.6%
Interpretation: Return on Assets shows the relationship between net profit and total assets. It is a percentage of net profit based on total assets.
Company’s Result: In this company return on assets is 0.6%. It means a company generates 0.6% of net profit based on total assets.
Company vs. Industry:
26
If we compare the result of this company with the result of industry, company is showing “negative result” because company return on asset is much ‘less than’ that of industry.
Return on Equity: Return on Equity
=
Net Profit Total Shareholder’s Equity = 8,141,611 354,407,379 Return on Equity = 1.45%
Interpretation: Return on Equity shows the relationship between net profit and total shareholder’s equity. It is a percentage of net profit based on total shareholder’s equity.
Company’s Result: In this company return on equity is 1.45%. It means a company generates 1.45% of net profit based on total shareholder’s equity.
Company vs. Industry:
27
If we compare the result of this company with the result of industry, company is showing “negative result” because company return on equity is much ‘less than’ that of industry.
Earning per Share: Earning per Share
= =
Earning per Share =
Net Profit after Tax – Preferred Dividend No. of Equity Shares or Common Stocks 8,141,611 - 0 9,486,780 0.86
Explanation: Earning per Share shows the earning generated by a single share of a company.
Company’s Result: The Earning per Share of this company is 0.86, which means it is earning 0.86 by a single share.
28
Dividend per Share: Dividend per Share
=
Dividend paid to Common Stock Holders No. of Equity Shares = 14,080,315 9,486,780 Dividend per Share = 1.48
Explanation: Dividend per Share shows the dividend paid against every share.
Company’s Result: Dividend per Share of this company is 1.48, which means a company paid 1.48 against every share.
29
30
Ratios
2006
2005
2004
Short Term Solvency Ratios Current Ratio Quick Ratio Cash Ratio Working Capital
0.853
1.082
0.777
0.236
0.550
0.341
0.021
0.014
0.004
(67,126,687)
17,219,191
(65,722,452)
Long Term Solvency Ratios/Stability Ratios Debt Ratio Debt to Equity Ratio Time Interest Earned
0.714
0.502
0.637
2.494
1.011
1.759
2.195
1.043
1.743
Assets Utilization Ratios Account Receivable Turnover Average Collection Period Inventory Turnover Fixed Assets Turnover Total Assets Turnover
48.71 times
58.13 times
174.8 times
7.5 days
6.27 days
2.1 days
3.54 days
10.8 days
7.49 days
0.701 times
1.233 times
1.219 times
0.737 times
1.202 times
1.341 times
Profitability Ratios Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Equity
15.1%
15.8%
12.1%
9.4%
10.8%
7.3%
0.89%
6.3%
3.5%
0.6%
7.6%
4.7%
1.4%
15.3%
13.0%
31
Explanation and Comparison of Ratios of 2004, 2005 and 2006
32
Current Ratio: Explanation: Current ratio measures a firm’s ability to meet its short term obligations.
Comparison: In 2004 company current ratio is 0.777, in 2005 it become 1.082 and in 2006 it is 0.853, as the current ratio is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Quick Ratio: Explanation: Quick Ratio measures the firm ability to meet its short term obligations.
Comparison: In 2004 company quick ratio is 0.341, in 2005 it become 0.550 and in 2006 it is 0.236, as the quick ratio is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
33
Cash Ratio: Explanation: Cash Ratio measures the firm ability to meet its short term obligations.
Comparison: In 2004 company cash ratio is 0.004, in 2005 it become 0.014 and in 2006 it is 0.021, as the cash ratio is increasing in 2005 and also in 2006 therefore it is good for a company.
Working Capital: Explanation: Working Capital measures the firm ability to meet its short term obligations.
Comparison: In 2004 company working capital is (65,722,452), in 2005 it become 17,219,191 and in 2006 it is (67,126,687), as the working capital is increasing in 2005 but again it is decreasing in 2006 therefore it is not good for a company.
Debt Ratio: 34
Explanation: Debt Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total assets.
Comparison: In 2004 company debt ratio is 0.637, in 2005 it become 0.502 and in 2006 it is 0.714, as the debt ratio is decreasing in 2005 but it is increasing in 2006 therefore it is not good for a company.
Debt to Equity Ratio: Explanation: Debt to Equity Ratio measures the firm ability to meet its long term obligations. The ratio shows the relationship between total liabilities and total shareholder’s equity.
Comparison: In 2004 company debt to equity ratio is 1.759, in 2005 it become 1.011 and in 2006 it is 2.494, as the debt to equity ratio is decreasing in 2005 but it is increasing in 2006 therefore it is not good for a company.
Time Interest Earned: Explanation:
35
Time interest indicates that how many times a company can pay its interest expense from its operating profit.
Comparison: In 2004 company time interest earned is 1.743, in 2005 it become 1.043 and in 2006 it is 2.195, as the time interest earned is decreasing in 2005 but it is increasing in 2006 and it is good for a company.
Account Receivable Turnover: Explanation: Account Receivable Turnover indicates that how many times a company converts its receivable into cash during a year.
Comparison: In 2004 company account receivable turnover is 174.8 times, in 2005 it become 58.13 times and in 2006 it is 48.71 times, as the account receivable turnover is decreasing in 2005 and also in 2006 therefore it is not good for a company.
Average Collection Period: Explanation: Average Collection Period indicates that in how many days a company converts its receivable into cash. 36
Comparison: In 2004 company average collection period is 2.1 days, in 2005 it become 6.27 days and in 2006 it is 7.5 days, as the average collection period is increasing in 2005 and also in 2006 therefore it is not good for a company.
Inventory Turnover: Explanation: Inventory turnover indicates that how many times a company converts its inventory into sales or cash.
Comparison: In 2004 company inventory turnover is 7.49 days, in 2005 it become 10.8 days and in 2006 it is 3.54 days, as the inventory turnover is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Fixed Assets Turnover: Explanation: It indicates that how many times revenue is generated from fixed assets of its own worth.
Comparison:
37
In 2004 company fixed assets turnover is 1.219 times, in 2005 it become 1.233 times and in 2006 it is 0.701 times, as the fixed assets turnover is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Total Assets Turnover: Explanation: It indicates that how many times revenue is generated from total assets of its own worth.
Comparison: In 2004 company total assets turnover is 1.341 times, in 2005 it become 1.202 times and in 2006 it is 0.737 times, as the total assets turnover is decreasing in 2005 and in 2006 therefore it is not good for a company.
Gross Profit Margin: Explanation: Gross Profit Margin shows the relationship between gross profit and net sales. It is a percentage of gross profit based on net sales.
Comparison:
38
In 2004 company gross profit margin is 12.1%, in 2005 it become 15.8% and in 2006 it is 15.1%, as the gross profit margin is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Operating Profit Margin: Explanation: Operating Profit Margin shows the relationship between operating profit and net sales. It is a percentage of operating profit based on net sales.
Comparison: In 2004 company operating profit margin is 7.3%, in 2005 it become 10.8% and in 2006 it is 9.4%, as the operating profit margin is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Net Profit Margin: Explanation: Net Profit Margin shows the relationship between net profit and net sales. It is a percentage of net profit based on net sales.
Comparison:
39
In 2004 company net profit margin is 3.5%, in 2005 it become 6.3% and in 2006 it is 0.89%, as the net profit margin is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Return on Assets: Explanation: Return on Assets shows the relationship between net profit and total assets. It is a percentage of net profit based on total assets.
Comparison: In 2004 company return on assets is 4.7%, in 2005 it become 7.6% and in 2006 it is 0.6%, as the return on assets is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
Return on equity: Explanation: 40
Return on Equity shows the relationship between net profit and total shareholder’s equity. It is a percentage of net profit based on total shareholder’s equity.
Comparison: In 2004 company return on equity is 13.0%, in 2005 it become 15.3% and in 2006 it is 1.4%, as the return on equity is increasing in 2005 but it is decreasing in 2006 therefore it is not good for a company.
41
Cross Sectional Graphical Representation2004 2005 2006
42
By seeing overall results of 2004, 2005 and 2006, in cross sectional analysis, company performance is better in 2005 then 2004 and 2006.
Time Series Graphical 40 Representation 30 50
20 10 0
2004
2005
2006 43
By seeing overall results of 2004, 2005 and 2006, in time series analysis, company performance is better in 2005 then 2004 and 2006.
44
Kohinoor Sugar Mills Ltd. Common Size Income Statement For the year ended September 30, 2006
2006
Percentage
2005
Percentage
SALES
913,370,379
100%
852,372,071
100%
COST OF SALES
775,729,109
84.9%
717,170,556
84.1%
GROSS PROFIT 137,641,270
15.1%
135,201, 515
15.9%
OPERATING EXPENSES Selling and Distribution cost
1,901,689
0.21%
1,656,656
0.2%
Administrative Expense
49,222,272
5.4%
40,712,566
4.7% 45
51,123,961
5.6%
42,369,222
4.9%
86,517,309
9.5%
92,832,293
10.9%
51,801,936
5.7%
20,816,861
2.4%
4,698,820
0.51%
17,001,821
1.2%
39,414,193
4.3%
89,017,253
10.4%
1,735,769
0.2%
4,238,917
0.5%
738,793
0.1%
-
36,936,631
4.0%
84,778,336
9.9%
Current
4,580,109
0.5%
13,612,568
1.6%
Deferred
24,217,911
2.6%
17,084,060
2.0%
28,798,020
3.2%
30,696,628
3.6%
8,141,611
0.9%
54,081,708
6.3%
OPERATING PROFIT FINANCE COST OTHER INCOME/(EXPENSES) WORKER’S PROFIT PARTICIPATION FUND WORKER’S WELFARE FUND PROFIT BEFORE TAXATION PROVISION FOR TAXATION
PROFIT AFTER TAXATION
Kohinoor Sugar Mills Ltd. Common Size Balance Sheet For the year ended September 30, 2006 FIXED ASSETS Property, plant and equipment Capital work in progress LONG TERM DEPOSITS CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade Debts Loans and Advance Short Term Deposits and
2006
Percentage
2005
Percentage
894,236,931 408,924,836 1,303,161,767 2,495,101
72.2% 33.0% 105.2% 0.2%
644,351.583 46,634,018 690,985,601 1,140,301
90.8% 6.5% 97.4% 0.2%
84,466,516
6.8%
90,623,529
12.8%
218,956,788 4,168,000 33,899,374 369,790
17.7% 0.3% 2.7% 0.03%
66,437,296 26,669,845 3,839,179
9.4% 3.8% 0.5% 46
Prepayments Other Receivables Taxation Cash and Bank Balance CURRENT LIABILITIES Trade and Other Payables Accrued Mark-Up Short term borrowings-Secured Current portion of long term liabilities Provision for Taxation CURRENT ASSETS LESS CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES
CONTINGENCIES AND COMMITMENTS NON CURRENT LIABILITIES Long Term Finances-Secured Liabilities against Assets subject to finance lease Other loan-Unsecured DEFERRED TAXATION OTHER LIABILITIES NET ASSETS REPRESENTED BY: Share Capital Capital Reserve-premium on right shares Revenue Reserve General Reserve Inappropriate profit
14,581,064 24,671,894 9,553,415 390,666,841
1.2% 1.2% 0.8% 31.5%
14,662,764 22,031,178 2,909,458 227,173,249
2.1% 3.1% 0.4% 32.0%
71,639,821 23,025,566 294,697,100 63,850,932
5.7% 1.9% 23.8% 5.2%
46,598,878 5,412,193 112,112,231 41,555,667
6.6% 0.8% 15.8% 5.8%
4,580,109 457,793,528 (67,126,687)
0.4% 36.9% (5.4%)
4,275,089 209,954,058 17,219,191
0.6% 29.6% 2.4%
1,238,530,181
100%
709,345,093
100%
-
-
-
-
326,317,346 12,049,439
42.4% 1.2%
101,206,852 3,681,601
18.6% 0.7%
87,962,489 426,329,274 41,301,971 1,309,000 769,589,936
11.4% 55.4% 5.4% 0.2% 100%
41,816,509 146,704,962 17,084,060 1,309,000 544,247,071
7.7% 26.9% 3.1% 0.2% 100%
94,867,800 41,109,380
12.3% 5.3%
94,867,800 41,109,380
17.4% 7.6%
62,000,000 5,924,900
8.1% 0.7%
62,000,000 12,013,459
11.4% 2.2% 47
TOTAL CAPITAL AND RESERVES SUSPLUS ON REVALUATION OF LAND
67,924,900 203,902,080
8.8% 26.5%
74,013,459 209,990,639
13.6% 38.6%
565,687,856
73.5%
334,256,432
61.4%
769,589,936
100%
544,247,071
100%
Internal and Sustainable Growth Rate First we have to find Payout Rate and Retention Ratio; Payout Rate: Payout ratio
=
Dividend paid
x 100
Payout ratio
Net profit after tax = 14,080,315 x100 36,939,631 = 38.1%
Retention Ratio: Retention ratio (b)
= 1 - Payout ratio
48
= 1 – 0.38 Retention ratio (b) = 0.62 Retention ratio indicates percentage change of net profit after tax retained by company. The retention ratio of company is 96%.
Internal Growth Rate: Internal growth rate
= Return on assets (ROA) x b 1 – (ROA) x b =
0.006 (0.62) x 100 1 – (0.006 x 0.62) = 0.0037 x 100
Internal growth rate = 0.37% Sustainable Growth Rate: Sustainable growth rate = Return on equity x (b) x 100 1 – (ROE x b) = 0.014 (0.62) x 100 1 – (0.014x0.62) = 0.0087x100
Sustainable growth rate = 0.87%
49
Performa Income Statement and Balance Sheet
Kohinoor Sugar Mills Ltd. Performa Income Statement For the year ended September 30, 2006 PARTICULARS Sales Cost of Sales GROSS PROFIT OPERATING EXPENSES Selling and Distribution cost Administrative Expenses
(913,370,379x0.89) ((75,729,109)x0.89) (137,641,270x0.89) (1,901,689x0.89) (49,222,272x0.89)
AMOUNT 812,899,637 (690,398,907) 122,500,730 1,692,503 43,807,822
50
(51,123,961x0.89) OPERATING PROFIT (86,517,309x0.89) Finance Cost (51,801,936x0.89) Other Income/(Expenses) (4,698,820x0.89) (39,414,193x0.89) Workers’ Profit Participation Fund (1,735,769x0.89) Workers’ Welfare Fund (738,793x0.89) PROFIT BEFORE TAXATATION (36,939,631x0.89) Provision for Taxation Current (4,580,109x0.89) Deferred (24,217,911x0.89) (28,798,020x089) PROFIT AFTER TAXATATION (8,141,611x0.89)
45,500,325 77,000,405 46,103,723 4,181,950 35,078,632 1,544,834 657,526 32,876,272 4,076,297 21,553,941 25,630,237 7,246,034
Kohinoor Sugar Mills Ltd. Performa Balance Sheet For the year ended September 30, 2006 In Balance Sheet we multiply each with 0.89
Assets FIXED ASSETS Property, plant and equipment Capital work in Progress
Equities and Liabilities SHARE CAPITAL and RESERVE 795,870,86 Share Capital 9 363,943,104 Capital reserves-premium on right shares
84,432,342 36,587,348
51
1,159,813,97 REVENUE RESERVE 3 General Reserve In appropriated Profit TOTAL CAPITAL and RESERVE CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade debts Loans and Advance Short term deposits and Prepayments Other receivables Taxation Cash and Bank balances TOTAL
75,175,199 194,871,541 3,709,520 30,170,443 329,113
CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings-Secured Current portion of long term liabilities Provision for Taxation
12,977,147 TOTAL 21,957,986 8,502,539 347,693,489 NON CURRENT LIABILITIES Long term finances-Secured Liabilities against assets subject to finance lease Other loan-Secured TOTAL
55,180,000 5,273,161 60,453,161
63,759,441 20,492,754 262,280,419 56,827,330 4,076,297 407,436,240
290,422,438 107,240,001 78,286,615 379,433,054
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The company performance is good in 2005 but it is not as better in 2004 and in 2006. Comparing the data of industry with a company, company ratios are mostly in negative which is showing that company is not in good reputation. But company account receivable turnover is greater than that of company and also the average collection period of company is good than of industry. 53
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By seeing overall performance of a company is in good position in 2005, company should maintain its Current Ratio so that it can become able to meet its short term obligations, company should pay its liabilities in proper way so it can maintain its Debt Ratio. Company should decrease the average inventory so that it can maintain its Inventory Turnover; company should increase its net sales
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by taking good steps so that it can make more Revenue from its total assets. Considering these things the company can be able to maintain a good level.
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