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Ibf final report j atextile

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Ibf final report j atextile Ibf final report j atextile Document Transcript

  • J. A TEXTILE MILLS LIMITED By SYED MUHAMMAD HASSAN FA06-BB-0105 To SIR.JAMIL AHMED SABRI NOV 3rd, 2007 IBF SECTION-D MUHAMMAD ALI JINNAH UNIVERSITY
  • ACKNOWLEDGEMENT First of all I would like to thanks to all mighty ALLAH that HE courage me to complete this project. Secondly I would like to thanks to my respected teacher Mr.Jamil Ahmed Sabri, 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 J. A. TEXTILE MILLS LIMITED. At last but not the least I really great full to Mr. Khalid Haseeb, he helped me a lot to complete this report. 2
  • TABLE OF CONTENTS PARTICULARS 1. COMPANY PROFILE 4 2. RATIO ANALYSIS 5 11 3. GRAPHICAL REPRESENTATION 16 4. TABLE OF RATIO ANALYSIS 18 5. INTERPRETATION 20 6. COMMON SIZE INCOME STATEMENT 21 7. COMMON SIZE BALANCE SHEET 22 8. GROWTH RATE 23 9. PROFORMA INCOME STATEMENT 24 10. PROFORMA BALANCE SHEET 25 11. CONCLUSION 26 12. RECOMENDATION 3
  • BORD OF DIRECTORS CHIEF EXECUTIVE MR. IMRAN ZAHID DIRECTORS MS. QURATUL-AIN-ZAHID MR. JAMIL AHMED TAHIR MR.RIAZ AHMED MR.NAVEED EJAZ MR. MUHAMMAD ZAHID BASHIR MR. MUHAMMAD SHEHZAD AUDIT COMMITTEE: CHAIRMAN MR. IMRAN ZAHID MEMBER MR. RIAZ AHMED MEMBER MR. JAMIL AHMED TAHIR SECRETARY: MR. KHALID JABBAR FINANCIAL OFFICER: MR. MUMTAZ AHMED BANKERS UNITED BANK LTD HABIB BANK LTD NATIONAL BANK LTD AL-BARAKA ISLAMIC BANK B.S.C. (E.C) KASAB BANK LTD REGISTERED OFFICE AND SHARE DEPARTMENT: 16-C,PEOPLES COLONY, FAISLABAD. MILLS: 29-KM, SHEIKHUPURA ROAD, FAISLABAD. 4
  • WEBSITE www.jatm.com FINANCIAL RATIO ANALYSIS 5
  • (A) LIQUIDITY 1- CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES C.R 2006 = 62,587,249 40,007,447 = 1.564 C.R 2005 = 62,932,153 68,213,975 = 0.922 2. QUICK RATIO = QUICK ASSETS CURRENT LIABILITIES Q.R 2006 = 35,521,598 40,007,447 = 0.887 Q.R 2005 = 14,296,682 68,213,975 = 0.021 3. CASH RATIO = CASH CURRENT LIABILITIES C.R 2006 = 1,395,766 40,007,447 = 0.034 C.R 2005 = 9,439,030 68,213,975 = 0.138 6
  • (B) ACTIVITY 1. INVENTORY TURN OVER = COST OF GOOD SOLD AVERAGE INVENTORY I .T 2006 = 434,783,999 21,545,471 = 20.179 I .T 2005 = 190,707,845 29,907,970 = 6.376 2. AVERAGE COLLECTION PERIOD = A/c RECEIVABLE Avg. Sales/ day Avg.coll.period 2006 = 2,248,932 1,299,570 = 1.730 Avg.coll.period 2005 = 1,732,781 5, 65,551 = 3.064 3. AVERAGE PAYMENT PERIOD = A/c PAYABLE Avg. Purchase/day Avg. Payment Period 2006 = 18,375,343 8, 17,076 = 22.489 Avg. Payment Period 2005 = 50,547,715 3, 83,244 = 131.894 7
  • 4. TOTAL ASSETS TURNOVER = Total net sale x 100 = Ans % Total Assets Total assets turnover 2006 = 467,845,051 256,787,835 = 1.8 x 100 = 182 % Total assets turnover 2005 = 203,598,318 269,783,587 = 0.75 x 100 = 75.467 % (C) PROFITIBILITY 1. Gross Profit margin = Gross profit x 100 Total net sale G.P 2006 = 33,061,052 467,845,051 = 0.0706 x 100 = 7.06% G.P 2005 = 12,890,473 203,598,318 = 0.063 x 100 = 6.33% 2. Net Profit Margin = Net Profit after Taxes x 100 Sales N.P 2006 = 7,669,156 x 100 467845051 8
  • = 1.639% N.P 2005 = (15,528,654) x 100 203,598,318 = (7.6%) 3. Operating Profit Margin = Operating Profits Sales O.P 2006 = 7,669,156 467,845,051 = 0.016 O.P 2005 = (15,528,654) 203,598,318 = (0.076) 4. Return on Total Asset = Net Profit after Taxes x 100 Total Assets R.A 2006 = 7,669,156 x 100 256,787,835 = 2.98% R.A 2005 = (15,528,654) x 100 269,783,587 = 5.75% 5. Return on Equity = Net Profit after Taxes x 100 Stockholder’s Equity R.E 206 = 7,669,156 x 100 (113,656,902) = (6.75%) 9
  • R.E 2005 = (15,528,654) x 100 (126,703,532) = 12.25% 6. Earning per Share = Earning Available for Common Stock No. Of Shares of Common Stock E.S 2006 = 7,669,156 12,601,160 = 0.608 E.S 2005 = (15,528,654) 12,601,160 = 1.232 10
  • GRAPHICAL REPRESENTATION 11
  • (A) LIQUIDITY Current Ratio 2 1.5 amount 1 Series1 0.5 0 1 2 years Quick Ratio 1 amount 0.5 Series1 0 1 2 yeras Cash Ratio 0.04 0.03 amount 0.02 Series1 0.01 0 1 2 years 12
  • (B) ACTIVITY Inventory turnover amount 30 20 Series1 10 0 1 2 years Average collection period 4 3 amount 2 Series1 1 0 1 2 years Average Payment period 150 amount 100 Series1 50 0 1 2 years 13
  • Total assets turnover 200% 150% amount 100% Series1 50% 0% 1 2 years (C) PROFITIBILITY Gross profit margin 7.50% 7.00% amount 6.50% Series1 6.00% 5.50% 1 2 yeras net profit margin 5.00% amount 0.00% 1 2 Series1 -5.00% -10.00% years 14
  • Operating Profit Margin 0.05 amount 0 1 2 Series1 -0.05 -0.1 years Return on total assets 8.00% 6.00% amount 4.00% Series1 2.00% 0.00% 1 2 years Return on Equity 20.00% amount 10.00% Series1 0.00% 1 2 -10.00% years Earning per share 1.5 amount 1 Series1 0.5 0 1 2 years 15
  • TABLE OF RATIO ANALYSIS 16
  • TABLE COMPUTATION FOR YEAR 2006 RATIOS RATIOS ANALYSIS RESULTS RUPEES 62,587,249.0 40,007,447.0 Working Capital Rs22,579,802.00 0 0 62,587,249.0 40,007,447.0 Current Ratio Rs1.56 0 0 1,395,766.0 40,007,447.0 Cash Ratio Rs0.03 0 0 35,521,598.0 40,007,447.0 Acid Test Ratio Rs0.89 0 0 434,783,999.0 21,545,471.0 Inventory Turnover times) Rs20.18 0 0 365.0 Inventory Turnover days) 6.37 Rs57.30 0 467,845,051.0 1,990,856.5 Account Receivable (times) Rs235.00 0 0 365.0 Account Receivable (days) Rs235.00 Rs1.55 0 Total Days Of Operating Cycle 57.30 1.55 Rs36.97 298,711,025.0 256,787,835.0 Debt Ratio Rs116.33 0 0 (113,656,902.0 256,787,835.0 Equity Ratio Rs44.26- 0) 0 467,845,051.0 256,787,835.0 Asset Turnover Rs182.19 0 0 7,669,159.0 12,601,160.0 Earning Per Share Rs0.61 0 0 20,000,000.0 Price Earning Ratio 5.75 Rs0.00 0 (113,656,902.0 20,000,000.0 Book Value Per share Rs5.68- 0) 0 Rate Of Return On Share Holder's 7,669,156.0 (113,656,902.0 Rs6.75- Equity 0 0) 7,669,159.0 256,787,587.0 Rate Of Return On Total Assets Rs2.99 0 0 434,783,999.0 467,845,051.0 Rate Of Cost Of Goods Sold Rs92.93 0 0 33,061,052.0 467,845,051.0 Rate Of Gross Profit OR (Loss) Rs0.07 0 0 23,315,924.0 467,845,051.0 Rate Of Operating Expenses Rs4.98 0 0 7,669,159.0 467,845,051.0 Rate Of Net Profit OR (Loss) Rs0.02 0 0 Market Ratio 5.75 10.00 Rs4.25- 17
  • INTERPRETATION TIME SERIES RATIO ANALYSIS: 18
  • Liquidity: The overall liquidity of the industry is good in 2006. But it is at the very low stage in 2005, because industry has current ratio is 1.56 in 2006 but in 2005 is 0.922, which means industry is not doing well. Quick ratio indicates that industry has high inventory level and increases as compared to previous years. The industry had low cash ratio in two years comparing with the company. Asset Management: Asset management of the industry was good because the inventory turnover is increasing in 2006. Average collection period of the industry is increasing gradually in two years. But the company has very low average collection period, which means that company is not able to collect its receivables. Average payment period of the industry is very low in 2006 as compare 2005, which means that company is not paying it payables quicker than the industry. Total asset turnover is increasing in year 2006 as compare 2005, the company has very low total assets turnover than industry. Profitability: Gross Profit margin is increasing gradually in 2006 as compare to 2005. The change in margin is 0.73%. Over all its better. Industry Operating Profit margin is also good in 2006 than 2005. Net profit margin for the industry is increasing gradually but it is negative for the company in 2005 and good in 2006.. COMMON SIZE INCOME STATEMENT 19
  • 2006 (Rs) COMMON SIZE Sale net 467,845,051 100% Cost of sales 434,783,999 92.93% Gross profit 33,061,052 7.60% Operating Expenses Distribution and selling cost 11,996,901 2.56% Administrative and general expenses 7,671,567 63.95% other operating expenses 681,190 8.88% Finance cost 2,966,266 35.45% 23,315,924 86.04% 9,745,128 41.80% Other operating income 279,090 2.86% operating profit 10,024,218 2.14% Taxation 2,355,062 23.49% Net profit/(loss) for the year/ period after taxation 7,669,156 325.65% Sale net 501,389,541 Cost of sales 465,958,012 Gross profit 35,431,529 Operating Expenses 12,857,079 Distribution and selling cost 8,221,618 Administrative and general expenses 730,031 Other operating expenses 3,178,947 Finance cost 24,987,676 Other operating income 10,443,854 Operating profit 299,101 Taxation 10,742,954 Net profit/ (loss) for the year/ period after taxation 2,523,920 8,219,034 COMMON SIZE BALANCE SHEET COMMON 2006 Rs. SIZE EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES 20
  • Authorized capital 20,000,000 ordinary shares of Rs. 10/- each 200,000,000 100% Issued, subscribed and paid up capital 12,601,160 ordaiary shares of Rs. 10/- each fully paid in cash 126,011,600 -239,668,50 Accumulated loss 2 -113,656,90 2 SURPLUS ON REVALUATION OF FIXED ASSETS 71,733,712 NON CURRENT LIABILITIES Long term financing 215,470,750 83.28% Deferred liabilities 43,232,828 16.71% 258,703,578 100% CURRENT LIABILITIES Trade and other payables 19,346,653 48.35% Mark up/interest on long term financing 17,188,830 42.96% Provision for taxation 3,471,964 8.67% 40,007,447 100% 256,787,835 ASSETS NON CURRENT ASSETS Property, plant and equipment-Tangible 191,019,549 98.36% Long term investment 17,875 0.01% Long term deposits 3,163,162 1.62% 194,200,586 100% CURRENT ASSETS Stores and spares 3,741,147 5.97% Stock in trade 13,182,972 21.06% Trade debts 2,248,932 3.59% Short term investment 141,532 0.22% Loans and advances 30,287,443 48.39% Prepayments 116,659 0.19% Other receivable 11,472,798 18.33% Cash and bank bakance 1,395,766 2.23% 62,587,249 99.98% 256,787,835 GROWTH RATE IGR = ROA x b 1-(ROA x b) 21
  • ROA = Net Income Total Assets = 7,669,156 256,787,835 = 0.029 b = 0.999 IGR = 0.029 x 0.999 1-(0.029 x 0.999) IGR = 0.0297 SGR = ROE x b 1-(ROE x b) ROE = Net Income Total Share Holder’s Equity = 7,669,156 (113,656,902) = (0.067) SGR = (0.067) x 0.999 1-((0.067) x 0.999) SGR = 0.0716 PERFORMA INCOME STATEMENT Sale net 501,342,757 Cost of sales 465,914,533 Gross profit 35,428,223 22
  • Operating Expenses Distribution and selling cost 12,855,879 Administrative and general expenses 8,220,851 other operating expenses 729,963 Finance cost 3,178,651 24,985,344 10,442,879 Other operating income 299,073 operating profit 10,741,952 Taxation 2,523,684 Net profit/(loss) for the year/ period after taxation 8,218,268 PERFORMA BALANE SHEET EQUITY AND LIABILITIES Rs. SHARE CAPITAL AND RESERVES Authorized capital 20,000,000 ordinary shares of Rs. 10/- each 200,000,000 Issued, subscribed and paid up capital 12,601,160 ordaiary shares of Rs. 10/- each 23
  • fully paid in cash 126,011,600 Accumulated loss/Retained earning -232007015.2 -105,995,415 SURPLUS ON REVALUATION OF FIXED ASSETS 71,733,712 NON CURRENT LIABILITIES Long term financing Deferred liabilities 353,168,972 2,113,349,529 CURRENT LIABILITIES Trade and other payables 158,042,808 Mark up/interest on long term financing 140,415,552 Provision for taxation 28,362,474 326,820,835 2,097,699,824 -1,136,151,249 ASSETS NON CURRENT ASSETS Property, plant and equipment-Tangible 1,560,438,696 Long term investment 146,021 Long term deposits 25,839,870 1,586,424,587 CURRENT ASSETS Stores and spares 30,561,430 Stock in trade 107,691,698 Trade debts 18,371,526 Short term investment 1,156,175 Loans and advances 247,418,122 Prepayments 952,987 Other receivable 11,402,012 Cash and bank bakance 511,275,237 2,097,699,824 CONCLUSION The overall summary of this project analysis is that the common size income statement is good in the year 2006; because sales are increasing 10% and cost of sales are constant for both the year. A huge increase and cost of sales are 93% in that year and other expenses 24
  • are also increasing while gross profit is constant in both years. Operating profit is increasing in 2006, but it’s very low in 2005. Profit before taxation is increasing by 23.49%. Net income is increasing in 2006.While analyzing balance sheet asset are utilized in good manner and sales are increasing every year therefore asset are increasing every year and liabilities are also good. The overall liquidity of the company is good because company has current ratio is 1.564 which means company had 1 liability for every 1.564 in assets in 2006. Quick ratio indicates that in 2006 company had low inventory but it increases gradually in two years. Company had low cash ratio in both years. The company is highly leveraged because debt ratio was less than one which means that for every one asset the company had 0.56 liabilities in 2006. Debt equity ratio is increasing and very high. It is quite high because of the reason of smaller equity. Long term debt ratio is lower but increases gradually. Cash coverage ratio is increasing gradually. Asset management of the company was good because the inventory turnover is increasing gradually. Receivable turnover is increasing. Profit margin is increasing in 2006. Market to book ratio is increasing gradually. The industry average is better than the company because almost every ratio of the industry is high with comparison to the company in case of liquidity, leverage, asset management, profitability and market value measure is better of textile industry, industry performance is better and improving every year, in conclusion company and industry is doing well and in future growth is take place which increase the revenues and dividends and it better for the country. RECOMMENDATION For J. A TEXTILE MILLS LTD, Which is a profitable company, i recommend that they should increase their cash & bank, according to me it’s compartively less for those companies like reliance weaving mills. 25
  • On the other hand they should pay their liabilities as soon as they can, and increase its owner’s equity than its liabilties. Cost and expenses should be reduced so the company can generate more profit.company should sale their shares on the high market rates and pay more dividend to their investors. 26