Ibf Report 2

TABLE OF CONTENT

ACKNOWLEDGEMENT 2 Vision and Mission

3

COMPANY PROFILE 4

TIME SERIES ANALYSIS CALCULATION TABLE

7

12

INTERPRETATION 15

COMMON SIZE INCOME STATEMENT BALANCE SHEET INTERNAL GROWTH RATE

16 17

18

SUSTAINABLE GROWTH RATE 19

PRO FORMA INCOME STATEMENT 20

PRO FORMA BALANCE SHEET 21

CONCLUSION 23

RECOMMENDATION 24 1

ACKNOWLEDGMENT

In the name of Allah, the most gracious and merciful. First, I am very thankful from bottom of our hearts to our Allah who helped us to make this project complete. Second, we would like to thank all the people who helped us through out this project. Specially, the staff of Hajra textile who gave us their precious time & ideas.

I specially would like to thank Mr. Jamil Ahmed Sabri & Mr. Muhammad Mumtaz Khan and my friend Imran saeed who helped us through out this project with their ideas, concept, time & most of all their knowledge.

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VISION To attain a leadership position in the textile sector through commitment,integrity,honesty and team work.

MISSION STATEMENT The company will conduct its prudently assuring customer satisfaction and to provide profits as well as growth to its shareholder through:  Striving hard to develop new market for sale of our product.  Providing quality product to our customer mainly engaged in the manufacturing of textile product.  Protecting environment and contributing towards the economic growth of the country as a good corporate citizen.

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Corporate Information: BOARD OF DIRECTORS Mr. Noor Ellahi

chairman

Mr. Ahmed Ellahi Mr. M.Hussain Ellahi Mr. Rukhsani Ellahi Mr. Salman Yaqub Sheikh Mr. Muhammad Shafique Bhati Mr. Shahid Aziz

COMPANY Chief Executive Mr. Noor Ellahi

CHIEF FINANCIAL OFFICER Mr.Ahmed Ellahi

AUDIT COMMITEE Mr. Noor Ellahi

Mr. Salman Yaqub Sheikh Mr. Muhammad Saeed Rana

AUDITORS

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M.Hussain Chudhri

BANKERS ALLIED Bank Of Pakistan Bank Of Punjab Saudi Pak Bank

REGISTERED OFFICE 45-50 Industrial Area ,Gulburg -111,Lahore Tel(042)5756181-5756183 Fax :(042)5756194-5759466 Email:[email protected]

MILLS AT Jhamke macheke 8-9KM Sheikhpura ,Sarguda Road,Sheilhpura

RATIO ANALYSIS 5

1. WORKING CAPITAL Working Capital = Current Assets – Current Liabilities 2006 = 903168109 – 1056843432 = (153675323) 2005 =1040477758 – 893642102 =146835656 2. CURRENT RATIO Current Ratio =

Current Assets Current Liabilities

2006

2005 = 903168109 1056843432 = 0.85: 1

3. CASH RATIO Cash Ratio =

= 1040477758 893642102 = 1.16:1

Cash Current Liabilities

2006 = 23858850 1056843432 = 0.022:1 4. QUICK RATIO Quick Ratio =

2005 = 12223409 893642102 = 0.013:1

Quick Assets Current Liabilities

2006 = 404992337 1056843432 = 0.32:1

2005 = 173715775 893642102 = 0.19:1

5. (a) INVENTORY TURNOVER Inventory Turn Over = Cost of Goods Sold Average Inventory 2006 2005 = 2249574997 = 967362954 594.35718 785418763 = 3.78times = 1.23times

(b) INVENTORY TURNOVER DAYS 6

Inventory Turn Over Days = 360 Times 2006 = 360 3.78 = 95 days

2005 = 360 12.3 = 29 days

6. (a) ACCOUNTS RECEIVABLE TURNOVER Receivable Turn Over = Net Credit Sales Average Accounts Receivables 2006 2005 = 2671677837 = 1174792736 180966914 154973530 = 14.76 times = 7.8 times (b) ACCOUNTS RECEIVABLE TURNOVER DAYS Receivable Turn Over Days = 360 Times 2006 2005 = 360 = 360 14.76 7.8 = 25 days = 47days 7. (a) ACCOUNTS PAYABLE PAYMENT PERIOD Payable payments = Net Credit Purchases Average Accounts Payable 2006 2005 = 1277075128 = 1120799093 247214643 130398939 = 5.17 times = 8.5 times (b) PAYABLE PAYMENT DAYS Payable Payments Days = 360 Times 2006 = 360 5.17 = 71 days

2005 = 360 8.5 = 42 days

8. TOTAL DAYS OF OPERATING CYCLE Total Days of Operating Cycle = Accounts Receivable Turnover days + Inventory Turnover Days 2006 2005 = 25 + 95 = 120 days = 47 + 29 = 76 days

9. DEBT RATIO 7

Debt Ratio = Total Liabilities x 100 Total Assets 2006 = 1155582990 x 100 3070491272 = 37.63%

2005 = 973895594 x 100 2369940076 = 41.10%

10. EQUITY RATIO Equity Ratio = Total Shareholder’s Equity x 100 Total Assets 2006 2005 = 737169995 x 100 = 614592756 x 100 3070491272 236940076 = 62.36% = 58.90% 11. ASSETS TURNOVER Assets Turnover = Total Net Sales x 100 Total Assets 2006 = 1277075128 x 100 3070491272 = 87.01%

2005 =1174792736 x 100 236940076 = 40.57%

12. EARNING PER SHARE Earning per Share = Net Income No. of Shares 2006 = 137577239 3000000 = 45.86

2005

13. PRICE EARNING RATIO Price Earning Ratio = Market Price Earning per Share 2006 = 62 45.86 = 1.35

2005

14. DIVIDEND PER SHARE Dividend per Share = 2006 = 150000000

= 88350864 3000000 = 29.45

= 62 29.45 =2.11

Dividend No. of Shares 2005 = 150000000 8

3000000 =5 15. DIVIDEND YIELD Dividend Yield = Dividend per Share Market Price 2006 =5 62 = 0.08

3000000 =5

2005 =5 62 = 0.08

16. BOOK VALUE PER SHARE Book Value per Share = Total Shareholder’s Equity No. of Shares 2006 2005 = 737169995 = 614592756 3000000 3000000 = 245.72 = 204.86 17. RATE OF RETURN ON TOTAL ASSETS Return on Total Assets = Net Income x 100 Total Assets 2006 2005 = 137577239 x 100 = 88350864 x 100 3070491272 2369940076 = 4.48% = 3.72% 18. RATE OF RETURN ON SHAREHOLDER’S EQUITY Return on Shareholder’s Equity = Net Income x 100 Total Shareholder’s Equity 2006 2005 = 137577239 x 100 = 88350864 x 100 737169995 614592756 = 18.66% = 14.37% 19. RATE OF COST OF GOODS SOLD Rate of Cost of Goods Sold = Cost of Goods Sold x 100 Total Net Sales 2006 2005 = 2249574997 x 100 = 967362954 x 100 2671677837 1174792736 = 84.2% = 82.30%

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20. RATE OF GROSS PROFIT Rate of Gross Profit = Gross Profit x 100 Total Net Sales 2006 2005 = 422102840 X 100 = 207429782 X 100 2671677837 1074792736 = 15.8% = 17.66%

21. RATE OF OPERATING EXPENSES Rate of Operating Expenses = Operating Expenses x 100 Total Net Sales 2006 2005 = 80816975 x 100 = 56596253 x 100 2671677837 1174792736 = 3.02% = 4.81%

22. RATE OF NET PROFIT Rate of Net Profit = Net Profit x 100 Total Net Sales 2006 = 137577239 x 100 2671677837 = 5.15%

2005 = 88350864 x 100 1174792736 = 7.5%

23. CASH FLOW MARGIN Cash flow Margin = Cash from Operation x 100 Total Net Sales = 622607854 x 100 = (232326719) x 100 2671677837 1174792736 = 2.32% = (19.7) %

INTERPRETATION 10

WORKING CAPITAL: In 2005 company have (78694)perform business operations. In 2006 company have (17549)as compare to past year company have improve their working capital but still its liabilities are more then their asset.In this situation company should not take more liabilities and try to pay their liabilities in order to decrease its liabilities.. CURRENT RATIO : It is the ability to pay its current liability with current asset in 2005 company has 0.59Rsurrent assets to pay of 1Rs current liability. In 2006 company has 0.89current asset to pay 1Rs current liability, as compare to 2005 it is increase. Cash Ratio: In 2005 company have cash of 0.036Rs to pay 1Rs current liability and in 2006 company have cash 0.19 to pay current liability. As compare to previous year company take loans and other finance to pay its current liability. Quick Asset Ratio: It is the ability to pay 1 Rs current liability to pay it from most liquid asset. In 2005 company have 0.22 to pay 1Rs of current liability . In 2006 it is increase by 0.56Rsshows company has improve its position to meet current obligation. Inventory Turnover : Indicate the sale ability of inventory in 2005 is 7times. In 2006 it is increase by 12 t times which may be the good sign that company selling its goods by increasing its time. Account Receivable Turnover : Measure collection ability of receivables. In 2005 is 23times that is 2 days. In 2006 it is increase to 85 times that is 4 days which may be company should improve the collection ability . Operating Cycle; The days which required completing the operational activity of the company. In 2005 the operating cycle is 158day which were increase in 2006 to 103 day this shows that the operating activities is increase in 2006.

Debt Ratio : It indicates percentage of assets through borrowing In 2005 107.89% of debt ratio tells us the proportion of the company assets that it has financed with debt . In 2006 it is 91.53% it indicate a fairly high debt position in comparison . Equity Ratio : 11

Indicate percentage of assets which stockholder own .In 2005 it is 38.51% and in 2006 it are 8.47% which show increment. Asset Turnover: Show the percentage of net income on assets. In 2005 it is 86.84%. In 2006 it is increased to 105.75% Earning Per Share : Gives the amount of earning per one share of common stock . In 2005 the amount of earning per share is -33.55Rs and in 2006 it is -14.56Rs which may be improve.

Dividend per Share : The dividend per share in both the year is nil because company is facing loss.

Rate of Cost of goods sold : It indicate the percentage of cost on sale or the part of cost in sales In 2005 it is 99.72% which is increase in 2006 to 99.72% this rate of cost of godd sold is in the retain position.. Rate of return on Asset: It indicates the percentages of net income on total assets. In 2005 it is -40.46% which were increase in 2006 to -33.95%this show the increase in net income. Rate of return on Stock Holder Equity: It indicates the percentage of net income on total stock holder equity . In 2005 it is -5.12%. This show the improvement in net income of the company by the company

Rate of Gross profit : Indicate the percentage of Gross profit on sale or the part of profit in sale In 2005 it is 0.28% which is reducing in 2006 to 0.28 is in the retaining position.

Book Value per Share : Book value per share is the value of share on total stock holder’s equity. In 2006 the book value par share is 6.54 which increase in 2006 to 3.68per share Rate of Operating Expenses : It indicates the percentage of operating expense on sale or the part of expense in sales. In 2005 it is 1.91% which is decrease in 2006 to 2.40% due to increase the operating expense the net profit is increased. RATE OF NET PROFIT :

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It indicates the percentage of net loss on sale or the part of net loss in sales. In 2005 it is -46.73% which is reducing in 2006 to -32.10% due to increase in cost the net profit is reducing .but company should improve its credit policy to improve it bet profit. Company facing because of there liabilities other item of income statement are higher then their profit.

RATIO ANALYSIS 2006 WORKING CAPITAL CURRENT RATIO CASH RATIO QUICK RATIO INVENTORY TURNOVER INVENTORY TURNOVER DAYS

(153675323) 0.85:1 0.022:1 0.32:1 3.78 Times 95 Days

2005 146835656 1.16:1 0.013:1 0.19:1 12.3 Times 29 Days 13

ACCOUNTS RECEIVABLE TURNOVER ACCOUNTS RECEIVABLE TURNOVER DAYS ACCOUNTS PAYABLE PAYMENT PERIOD PAYABLE PAYMENT DAYS TOTAL DAYS OF OPERATING CYCLE DEBT RATIO EQUITY RATIO ASSETS TURNOVER

14.76 Times 25 Days

7.8 Times 47 Days 8.5 Times

5.16 Times 71 Days 120 Days 37.63% 62.36% 87.01%

42 Days 76 Days 41.1% 58.90% 40.57%

EARNING PER SHARE PRICE EARNING RATIO DIVIDEND PER SHARE DIVIDEND YIELD BOOK VALUE PER SHARE RATE OF RETURN ON TOTAL ASSETS RATE OF RETURN ON SHAREHOLDER’S EQUITY

45.86 1.35 5 0.08 245.72 4.48% 18.66%

29.45 2.11 5 0.08 204.86 3.72% 14.37%

RATE OF COST OF GOODS SOLD RATE OF GROSS PROFIT RATE OF OPERATING EXPENSES RATE OF NET PROFIT CASH FLOW MARGIN

84.2% 15.8% 3.02% 5.15% 2.32%

82.30% 17.66% 4.81% 7.5% (19.7)%

BHANERO TEXTILE LIMITED COMMON SIZE INCOME STATEMENT Sales

100%

100%

Cost of goods sold

84.20%

86.57%

Gross Profit

15.80%

82.34%

Other operating income

0.626%

17.66

Distribution cost

1.02%

1.11%

Administrative expense

1.64%

2.72%

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Other operating expenses

0.36%

0.99%

Finance cost

6.90%

4.15%

Profit before tax

6.49%

8.75%

Provision for taxation Profit after tax

1.34% 5.15%

1.23% 7.52%

BHANERO TEXTILE LIMITED COMMON SIZE BALANCE SHEET

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2006

2005

70.07% 0.01% 0.20% 0.30%

55.20% 0.01% 0.27% 0.62%

0.80% 19.35% 5.89% 1.27% 0.63% 0.01% 0.70% 0.78% 100%

1.02% 33.14% 6.54% 1.81% 0.35% 0.28% 0.26% 0.52% 100%

60000000 0.98%

60000000 1.27%

21.1% 1.86%

32.1% 1.46%

36.29% 0.52% 1.21% 0.34%

27.85% 2.37% 2.48% 0.27%

1.11% 2.11%

1.31% 2.07%

9.91% 0.92% 16.82% 4.75% 1.31% 100%

6.82% 0.79% 26.73% 0.84% 1.60% 100%

Assets Fixed Asset Property , plant & Equipment Long term investment Long term loans Long term deposits

Current Assets Stores, spare parts & loose tools Stock in trade Trade debts Loans & advances Trade deposit & short-term prepayments Other receivables Taxations Bank balances

Total Assets Equity and liabilities Share capital And Reserves Authorized Capital 6,500,000 (2005: 6,500,000) ordinary shares of Rs. 10 each Issued, subscribed and paid-up-capital General reserves Unappropriated profit

Non Current liabilities Long-term financing Liabilities against assets subject to finance lease Long –term murabaha Infrastructure fee payable Deferred liabilities: -employee benefits - deferred taxation

Current liabilities Trade and other payables Make-up accrued on loans Short-term barrowing Current portion of L long term financing Liabilities against assets subject to finance lease

Total Equity & Liabilities

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INTERNAL GROWTH RATE:

Internal Growth Rate = =

ROA x b x 100 1 – (ROA x b) 0.045 x 0.89 x 100 1 – (0.045 x 0.89)

= 0.04005 x 100 0.95995 = 4.17%

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SUSTAINABLE GROWTH RATE:

Sustainable Growth Rate = ROE x b x 100 1 – (ROE x b) =

0.186 x 0.89 x100 1 – (0.186 x 0.89)

= 0.1650 x 100 0.8350 = 19.76%

BHANERO TEXTILE LIMITED 18

PRO FORMA INCOME STATEMENT Sales

2778544950

Cost of goods sold

2339557997

Gross Profit

438986953 2006 17231361.68 2254016089 28227974.32 9392948833.4 45693388 3193310923 10128291.68

Other operating income Assets Distribution cost Fixed Asset Current Assets expense Administrative Total Assets Other operating expenses Equity and liabilities Finance cost Share Capital and Reserve Profit before tax Non Current liabilities Provision for taxation Current liabilities Profit after tax Total Equity & Liabilities

191766559.90 741934248.5 180402101.40 1352259506 37321772.80 1099117169 143080328.6 3193310923

BHANERO TEXTILE LIMITED COMMON SIZE BALANCE SHEET 19

PLUG VARIABLE

20

Debt Before Projection Debt After Projection Financing of debt

= 98739558 = 1352259506 = 1253519948

CONCLUSION: In preparing this report I focus on all financial concepts that I learn in the course of business finance. The financial position of Hajra textile is in worst condition so the finance manager of this company must think about to maintain the position and take some important steps for betterment of Hajra textile. 21

Company need some financial changing according to its ratio analysis because sustainable growth can be improve more its means there is a chance of betterment in future so management need full concentration to handle this situation. “The only room of the earth is the room of improvement”

RECOMMENDATION • The short term solvency ratio of the company is in worse condition. The company should increase its assets or decrease liabilities. •

The long term solvency ratio of the company is in worse condition ratio which is in better condition to increase its term solvency. The company should increase its total assets or decrease total liabilities. 22

•

If Assets utilization ratio of the company can improve. The company should increase its net sales.

•

Profitability ratio of the company is in worst better condition, company is facing loss if its like this company will be close or demolished financial manger of company its not able take right decision as far as company’ betterment is concern., so it should be fire.

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