Analysis of financial statement

1. AHMED ABDULLAH QUDDUS
04151313026
AFS…
Analysis Of
Gul Ahmed Textile Mills Ltd ..

2. Reasons
 Famous Pakistani brand in the field of textile and clothing
both in Pakistan and international level.
 Gul Ahmed is very famous name so I want to analysis its
financial statement to know its financial work
 Its financial statement is up-to-date and easily available

3. Objectives
To understand, analyze and interpret the concepts of
financial statement analysis into practical work.
To enhance our analytical skills with respect to financial
statements
To know the financial position of Gul Ahmed Textile
Mills Ltd for past two years

4. Statutory Requirement’s
 The financial statements have been prepared in
accordance with approved accounting standards as
applicable in Pakistan.
 Approved accounting standards comprises of such
International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards
Board, (IASB) as are notified under the Companies
Ordinance, 1984,
 The financial statements have been prepared in Pak
Rupees, which is the Company's functional currency.

5. Standards which Company Follows
 IFRS 2 ‘Share-based Payment’
 IFRS 13 – Fair Value Measurement
 IFRS 10 – Consolidated Financial Statements
 IFRS 11 – Joint Arrangements
 IFRS 12 – Disclosure of Interests in Other Entities
 IFRS 8 ‘Operating Segments’
 IAS 19 – Employee Benefits – (Amendment) - Defined
Benefit Plans: Employee Contributions Improvements
to Accounting Standards Issued by the IASB

6. Standards which Company Follows
 IAS 16 ‘Property, Plant and Equipment’ and IAS 38
‘Intangible Assets
 IAS 24 ‘Related Party Disclosures’
 IAS 40 ‘Investment Property’
 IAS 36 ‘Impairment of Assets’ - Recoverable amount
disclosures for non-financial assets
 IAS 32 ‘Financial Instruments: Presentation’ -
Offsetting financial assets and financial liabilities

7. IFRS 10 ‘Consolidated Financial Statements’
This is a new standard that replaces the consolidation
requirements in SIC - 12 Consolidation: Special Purpose
Entities and IAS 27 - Consolidated and Separate Financial
Statements. The proposed standard builds on existing
principles by identifying the concept of control as the
determining factor in whether an entity should be included
within the consolidated financial statements of the parent
company and provides additional guidance to assist in the
determination of control where this is difficult to assess.
The standard only affects the disclosure in the Company's
financial statements.

8. IFRS 2 ‘Share-based Payment’
 IFRS 2 has been amended to clarify the definition of ‘vesting
condition’ by separately defining ‘performance condition’ and
‘service condition’. The amendment also separately clarifies how
to distinguish between a market condition and a non-market
performance condition and the basis on which a performance
condition can be differentiated from a vesting condition. The
amendment has no impact on the Company's financial statements.

9. IFRS 10 ‘Consolidated Financial Statements’
This is a new standard that replaces the consolidation
requirements in SIC - 12 Consolidation: Special Purpose
Entities and IAS 27 - Consolidated and Separate Financial
Statements. The proposed standard builds on existing
principles by identifying the concept of control as the
determining factor in whether an entity should be included
within the consolidated financial statements of the parent
company and provides additional guidance to assist in the
determination of control where this is difficult to assess.
The standard only affects the disclosure in the Company's
financial statements.

10. Introduction of Gul Ahmed textile Mills lim..
 Gul Ahmed Textile Mills Limited is a subsidiary of Gul
Ahmed Holdings (Private) Limited (GAHPL), which
owns 66.78% shares.
 Gul Ahmed is one of the leading textile set-ups in Asia
offering fine woven fabric products which represent a
delightful blend of old traditions of every corner of the
world.
 The story of textile in the subcontinent is the story of Gul
Ahmed.
 The Group began trading in textile products in the early
1900s. The Group entered the field of manufacturing
with the establishment of today's iconic name of Gul
Ahmed Textile Mills Ltd (the Company) in the year 1953

11. History
 The Company was incorporated on April 1, 1953 in
Pakistan as a private company with its liability
limited by shares.
 The Company was converted into a public limited
company on January 07, 1955 and got listed on the
Karachi Stock Exchange (KSE) in 1970.
 Currently, the Company is listed at all the three
Stock Exchanges of Pakistan.

12. Continue…
 Gul Ahmed is a composite unit – making everything from
cotton yarn to finished products
 Gul Ahmed is playing a vital role not only as a textile
giant, but also as a strong player in the retail business as
well.
 The opening of its flagship store- Ideas by Gul Ahmed -
marked the Group's entry into the retail business.
 Starting from Karachi, Gul Ahmed now has an extensive
chain of more than 65 retail stores across the country,
offering a diverse range of products from home
accessories to fashion clothing.

13. Continue…
 The Company has following three wholly owned
subsidiaries which are engaged in trading of textile related
products:
1. Gul Ahmed International Limited (FZC) incorporated in UAE on
November 27, 2002.
2. GTM (Europe) Limited incorporated in United Kingdom (UK) on
April 17, 2003 is a wholly owned subsidiary of Gul Ahmed
International Limited (FZC).
3. GTM USA Corp. incorporated in United States of America (USA) is a
wholly owned subsidiary of GTM (Europe) Limited.

14. Auditors’ Opinion
Year Opinion Auditing firm Date
2014 Qualified Kreston Hyder
Bhimji & Co.
Sept 27, 2014
2015 Unqualified Kreston Hyder
Bhimji & Co.
Sept 22, 2015

17. RATIO ANALYSIS
 Liquidity Ratios
 Profitability ratios
 Activity Ratios
 Leverage Ratios
 Market value ratios

18. Liquidity Ratios
2014 2015
Current Ratio 1.06 1.05
Quick Ratio 0.20 0.24
Net working capital Rs/-890,272,000 Rs/-756,447,000

19. Interpretation of liquidity ratio
 Current ratio
 Current ratio in 2015(1.05:2) is slightly decrease from 2014(1.06:2) this
change is occur due to decrease in current asset included (Stores, spare parts
and loose tools, Stock-in- trade ,Loans and advances) in 2015 similarly
small decrease in current liabilities .
 Current ratio in both year is still away from the ideal current ratio (2:1).
that means companies liquidity position is not good .

22. Quick Ratio
 Quick ratio of the company is slightly increase in
2015(o.24:1) as compared to 2014(0.20:1) this is
because inventory in 2014 current asset cover a large
portion so amount of current asset decrease largely
there fore quick ratio decrease in 2014.
 Quick ratio in 2015 is increase because both current
asset and current liabilities are decrease but current
asset are decrease very small as compare to liabilities
so quick ratio are increase.

24. Working Capital
 Working Capital shows the ability of the firm to meet its
current liabilities from its current assets. Working capital in
2014 (890,272,000) slightly high as compared to
2015(756,447,000) working capital because current asset
in 2015 but current liabilities are not decrease in the same
portion as current asset due to this working capital are
decrease in 2015

25. Liquidity performance
 Liquidity means firm ability to pay current or short
term obligation when due is also related to the cash-
generating ability of the firm.
 The liquidity performance of Gul Ahmeh textile
limited is not good .its current ratio is below 2,its
quick ratio is less then 1 .
 Gul Ahmad needs to devise new policies in order to
overcome the liquidity crisis.

26. Activity Ratios
2014 2015
Inventory Turnover 2.26 2.41
Inventory turnover
days
162 151
A/R Turnover 19 15
A/R Turnover in days 19.21 24.33
A/P Turnover 2.91 3.10
A/P Turnover in days 126 118

27. Interpretation of Activity Ratios
 Inventory Turnover
 Inventory turnover ratio indicates how many times inventory is sold
and replaced in a financial year. In other words, the ratio gives the
frequency of conversion of inventory into cash in a given financial year.
Inventory turnover ratio is high in 2015(2.41) as compared to 2014
(2.26) inventory turnover this is because inventory in 2014 is high due
to the inventory turnover ratio is low in 2014.That means inventory
management in 2015 is better.
 Inventory turnover days
 Inventory turnover days in 2015 is less as compare to 2014 that means
inventory in 2015 is early changed into cash as compared to 2014

29. Cont…
 A/R Turnover
 Receivable turnover ratio indicates the frequency of conversion from
debtors to cash normally in a year. A/R turnover ratio in 2014(19) is
high as compared to A/R turnover ratio in 2015(15) this is because
Account receivable in 2015 is increased as compared to 2014 similarly
A/R Turnover in days is high in 2015 as compared to 2014 that means
cash is collected early in 2014 as compared to 2015 company has to
restrict its collection policy

30. Leverage Ratios
2014 2015
Debt to Assets Ratio 0.63 0.71
Debt to Equity Ratio 0.34 0.34

31. Market Value Ratios
2014 2015
Earning per share 5.40 2.65
Reason for Decrease in EPS is that profit after Tax in 2015 is decrease from
1,234,798,000 in 2014 to 604,943,000 in 2015 .The decrease in profit is occur
due increase in Distribution cost, Administrative expenses and Other operating
expenses .there cost are 3,552,777 in 2014 and 4,319,868 in 2015