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Fauji Fertilizer and Fatima Fertilizer Annual Reports Analysis
 

Fauji Fertilizer and Fatima Fertilizer Annual Reports Analysis

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We worked on Annual Reports of 2008 to 2011

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    Fauji Fertilizer and Fatima Fertilizer Annual Reports Analysis Fauji Fertilizer and Fatima Fertilizer Annual Reports Analysis Presentation Transcript

    • PRESENTED TO: SIR NAZIMPRESENTED BY: AYESHA AHMED KAZIM ALI MOIZ KHAN WASEEM SADIQ ASIF
    • WHICH ONE IS BETTER TOINVEST, FATIMA FERTILIZEROR FAUJI FERTILIZER?
    • Working Capital 2008 2009 2010 2011Current Assets 9,709,511 14,917,456 17,223,642 27,636,405Current Liabilities 11,823,641 17,854,574 19,987,109 25,924,328Working Capital -2,114,130 -2,937,118 -2,763,467 1,712,077 2008 2009 2010 2011Current Assets 892,413 2,216,453 4,498,680 8,126,119Current Liabilities 3,505,688 4,660,938 7,074,260 10,757,984Working Capital -2,613,275 -2,444,485 -2,575,580 -2,631,865
    • Working Capital2,000,000 1,000,000 0 2008 2009 2010 2011 Fauiji-1,000,000 Fatima-2,000,000-3,000,000-4,000,000
    •  Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets .If a companys current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. Working capitals for both companies i.e. Fauji and Fatima Fertilizer have declining working capital ratio and fauji’s working capital increased in 2011 than previous year 2010.Fatima fertilizer has been facing problems in paying their dues.
    • Current Ratio 2008 2009 2010 2011Current Assets 9,709,511 14,917,456 17,223,642 27,636,405Current Liabilities 11,823,641 17,854,574 19,987,109 25,924,328Current Ratio 0.82 0.84 0.86 1.07 Current Ratio 2008 2009 2010 2011Current Assets 892,413 2,216,453 4,498,680 8,126,119Current Liabilities 3,505,688 4,660,938 7,074,260 10,757,984Current Ratio 0.25 0.48 0.64 0.76
    • Current Ratio1.20 1.071.00 0.86 0.82 0.840.80 0.76 0.640.60 Fuiji Fatima 0.480.40 0.250.200.00 2008 2009 2010 2011
    •  The Current ratio is the measure of general liquidity in the firm . For both companies i.e. Fauji Fertilizer and Fatima Fertilizer, The current ratio of 2011 is slightly higher than that of 2010 which means that in 2011 the company will be much more in good position to pay the debt in the next coming year. In above comparative graph, you can easily judge that Fauji Fertilizer is in better position than Fatima Fertilizer.
    • Quick Ratio 2008 2009 2010 2011Current Assets 9,709,511 14,917,456 17,223,642 27,636,405Stock in Trade 258,094 144,087 211,720 636,923Deposits & Prepayments 107,369 37,653 50,188 53,852 365,463 181,740 261,908 690,775Current Liabilities 11,823,641 17,854,574 19,987,109 25,924,328Quick Ratio 0.79 0.83 0.85 1.04 Quick Ratio 2008 2009 2010 2011Current Assets 892,413 2,216,453 4,498,680 8,126,119Stock in Trade 0 0 539,730 1,215,014Deposits & Prepayments 410,752 849,238 939,864 945,225 410,752 849,238 1,479,594 2,160,239Current Liabilities 3,505,688 4,660,938 7,074,260 10,757,984Quick Ratio 0.14 0.29 0.43 0.55
    • Quick Ratio1.20 1.041.00 0.85 0.83 0.790.800.60 0.55 Fuiji Fatima 0.430.40 0.290.20 0.14 - 2008 2009 2010 2011
    •  Quick Ratio is an indicator of a companys short-term liquidity. The quick ratio measures a companys ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company. In above calculation you can observe that Quick Ratio of Fauji Fertilizer is better than Fatima Fertilizer, it is increased from 0.85 to 1.04 which is shows good sign or improvement and shows ability to meet its short-term obligations with most its liquid assets.
    • Inventory Turnover 2008 2009 2010 2011Cost of Goods Sold 18,234,692 20,515,044 25,310,406 20,871,759Average Stock in Trade 258,094 201,091 177,904 424,322Inventory Turnover 70.65 102.02 142.27 49.19 Total Asset Turnover 2008 2009 2010 2011Cost of Goods Sold 18,234,692 20,515,044 25,310,406 20,871,759Average Total Assets 31,918,963 35,235,273 40,806,219 49,295,886Total Asset Turnover 0.57 0.58 0.62 0.42
    • Non Current Asset Turnover 2008 2009 2010 2011Cost of Goods Sold 18,234,692 20,515,044 25,310,406 20,871,759Average Non Current Assets 22,209,452 22,921,789 24,735,670 26,865,863Non Current Asset Turnover 0.82 0.90 1.02 0.78 Current Asset Turnover 2008 2009 2010 2011Cost of Goods Sold 18,234,692 20,515,044 25,310,406 20,871,759Average Current Assets 9,709,511 12313484 14917456 22430024Current Asset Turnover 1.88 1.67 1.70 0.93 Working Capital Turnover 2008 2009 2010 2011Cost of Goods Sold 18,234,692 20,515,044 25,310,406 20,871,759Average Working Capital -2,114,130 -2525624 -2850293 -525695Working Capital Capital -8.63 -8.12 -8.88 -39.70
    •  The activity analysis ratios are also called the Turnover ratios or Performance ratios. These ratios are computed to assess the efficiency with which the firm manages and utilizes its assets. These ratios usually indicate the frequency of sales with respect to its assets. These ratios are usually calculated with reference to sales/cost of goods sold and are expressed in terms of rates or times. Fauji fertilizer shows improvement in their activity ratio. Activity ratio for Fatima Fertilizer is not possible due to the fact that values are not given in Financial Statement
    • Gross Profit Margin 2008 2009 2010 2011Gross Profit 12,358,114 15,648,130 19,563,953 34,349,409Net Sales 30,592,806 36,163,174 44,874,359 55,221,168Gross Profit Margin 40% 43% 44% 62% Net Margin 2008 2009 2010 2011EAT 6,525,083 8,823,106 11,028,849 22,492,053Net Sales 30,592,806 36,163,174 44,874,359 55,221,168Net Margin 21% 24% 25% 41%
    • Operating Margin 2008 2009 2010 2011EBIT 8,098,525 10,256,230 13,156,739 26,536,552Net Sales 30,592,806 36,163,174 44,874,359 55,221,168Operating Margin 26% 28% 29% 48% Operating Expense Ratio 2008 2009 2010 2011Operating Expense 895,647 1,272,448 1,376,000 2,654,881Net Sales 30,592,806 36,163,174 44,874,359 55,221,168Operating Expense Ratio 3% 4% 3% 5% Cost of Goods Sold Ratio 2008 2009 2010 2011COGS 18,234,692 20,515,044 25,310,406 20,871,759Net Sales 30,592,806 36,163,174 44,874,359 55,221,168COGS Ratio 60% 57% 56% 38%
    • Operating Ratio 2008 2009 2010 2011COGS 18,234,692 20,515,044 25,310,406 20,871,759Operating Expense 895,647 1,272,448 1,376,000 2,654,881Net Sales 30,592,806 36,163,174 44,874,359 55,221,168Operating Ratio 63% 60% 59% 43%
    •  DEBT RATIO Years 2008 2009 2010 2011 Total Debts 19,633,750 25,469,140 27,613,309 32,460,692 Total Assets 31,918,963 38,551,582 43,060,856 55,530,916 Ratios 0.62 0.66 0.64 0.58 Years 2008 2009 2010 2011 Total Debts 22,752,404 39,459,744 45,198,258 48,292,383 Total Assets 38,097,748 57,202,532 69,457,038 76,347,248 Ratios 0.60 0.69 0.65 0.63
    • Debt Ratio70% 69%68% 66%66% 65% 64%64% 63%62% 62% Fuiji60% 60% Fatima 58%58%56%54%52% 2008 2009 2010 2011
    •  Debt ratio should be less than 1.0, both Fauji & fatima fertilizer having less than 1 . The higher values are respectively the signal of excessive debt. Although it is decreased a little but still it is alarming situation. For the case of Fatima fertilizer. Fauji fertilizer is at better position than Fatima fertilizer.
    • Years 2008 2009 2010 2011 LTD 7,810,109 7,614,566 7,626,200 6,536,364 SHE 12,285,213 13,082,442 15,447,547 23,070,224Ratio 0.64 0.58 0.49 0.28Years 2008 2009 2010 2011 LTD 19,246,716 34,798,806 38,123,998 37,534,399 SHE 15,345,344 17,742,788 24,258,780 28,054,865Ratio 1.25 1.96 1.57 1.34
    • Debt to Equity Ratio250%200% 196% 157%150% 134% 125% Fuiji Fatima100% 64% 58% 49%50% 28% 0% 2008 2009 2010 2011
    • Years 2008 2009 2010 2011Total Debts 19,633,750 25,469,140 27,613,309 32,460,692 SHE 12,285,213 13,082,442 15,447,547 23,070,224 Ratio 1.60 1.95 1.79 1.41 Years 2008 2009 2010 2011Total Debts 22,752,404 39,459,744 45,198,258 48,292,383 SHE 15,345,344 17,742,788 24,258,780 28,054,865 Ratio 1.48 2.22 1.86 1.72
    • Total Debt to Equity Ratio250% 222%200% 195% 186% 179% 172% 160% 148%150% 141% Fuiji Fatima100%50% 0% 2008 2009 2010 2011
    •  Total Debt to equity ratio indicates a capacity to borrow additional fund by having low value of Debt to Equity ratio. This is ideal situation for Fauji fertilizer because 1.79 and 1.49 for the year 2010 and 2011 respectively. Fauji fertilizer is also in better condition than Fatima fertilizer because value of Debt to Equity ratio is still very low as compared to Fatima fertilizer
    • Years 2008 2009 2010 2011 EBIT 9,689,543 12,473,625 15,619,480 29,977,258Interest 695,371 944,947 1,086,741 785,825 Ratio 13.93 13.20 14.37 38.15 Years 2008 2009 2010 2011 EBIT 9,150,623Interest 3,063,055 Ratio #DIV/0! #DIV/0! #DIV/0! 2.99
    •  The times interest earned ratio indicates how well the firms earnings can cover the interest payments on its debt. This ratio also is known as the interest coverage. By having lower values it shows that company has very low capability to pay interest charges. Fauji fertilizer is in stable condition as compared to Fatima fertilizer, because it have much higher value of Times interest earned ration, whereas Fatima does not have any capability to pay interest charges by having lesser value.
    •  RETURN ON ASSET Years 2008 2009 2010 2011 EAT 6,525,083 8,823,106 11,028,849 22,492,053 Average Total Asset 31,918,963 38,551,582 43,060,856 55,530,916 Ratios 20% 23% 26% 41% Years 2008 2009 2010 2011 EAT (144,195) (97,121) (163,639) 4,116,975 Average Total Asset 38,097,748 57,202,532 69,457,038 76,347,248 Ratios -0.38% -0.17% -0.24% 5.39%
    • Return on Assets25% 20%20%15% 11% Fuiji10% Fatima 7% 6%5% 2%0% 2008 0% 2009 0% 2010 0% 2011-5%
    •  Return on assets is a measure of how effectively the firms assets are being used to generate profits. By having positive value means that companys assets are greater than its profit. For Fauji fertilizer the value of Return on Total Assets increased. It shows a little improvement but higher value is better for company and trend should be upward. For Fatima fertilizer Negative ratio shows that company is in loss. Company has to pay interest cost from its asset
    • Years 2008 2009 2010 2011 EAT 6,525,083 8,823,106 11,028,849 22,492,053Average SHE 12,285,213 13,082,442 15,447,547 23,070,224 Ratio 53% 67% 71% 97% Years 2008 2009 2010 2011 EAT (144,195) (97,121) (163,639) 4,116,975Average SHE 15,345,344 17,742,788 24,258,780 28,054,865 Ratio -0.94% -0.55% -0.67% 14.67%
    • Return on Shareholder Equity60% 53%50%40% 29%30% Fuiji Fatima 19%20% 17% 15%10% 0% 2008 -1% 2009 -1% 2010 -1% 2011-10%
    •  Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each dollar invested in the firms stock. Fauji fertilizer by having positive Return on Equity (ROE) shows that stockholders are getting profit from company, although it is very minimal but trend is going upward. Fauji fertilizer must increase its net profit margin to have better ROE and to gain investor trust. Fatima fertilizer is in very bad situation, having negative ratio shows that company is in loss. Company has to pay interest cost from its assets