Financial Analysis of Fuaji Cement Company Limited

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The Eagles Department of Management of Sciences
Report on Financial Analysis of “Fuaji Cement Company
Limited”.
Submitted to
Mr. Waseem Khan
Submitted in requirement of the course of
“Financial Statement Reporting and Analysis”
By
The Eagles
BBA 7th M2
Muhammad Javed Roll no 75
Ayesha Mureed Roll no 57
Department of Management Sciences

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Acknowledgement
God Almighty is worthy of all acknowledgement………………
No one can say that I am perfect, everyone should admit that without the help of Allah
and His people a man can’t get anything so we bow our head before Almighty Allah with
gratitude. We are also very thankful and present salute to individuals who have helped us in
shaping this project.
We are gratitude to Almighty ALLAH, who has given us strength and mentor to
accomplish this mammoth task.
First and foremost we would like to appreciate our course Instructor Mr. Waseem Khan
for asking us this report so we could better learn the course of Financial Statement Reporting and
Analysis offered to us. His guidance and encouragement supported us throughout this project. He
has been very compensating and helping to us. Especially he had time for us to talk about the
project anytime during the whole semester.
We are thank full to our teacher for giving this opportunity and build up confidence
thorough theatrical knowledge implementation. I hope this effort on our part will come up to
your expectations.
The last but not least, we would feel incomplete without thanking to our parents who
pray for our brilliant success and bright future.
By:
Muhammad Javed
Ayesha Mureed

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Dedication
We dedicate this assignment to our parents, elder brother and teacher, who taught us to think,
understand and express. We earnestly feel that without their inspiration, able guidance and
dedication, we would not be able to pass through the tiring proses of this assignment.
Special thanks to my group member, “Ayesha Mureed” due to her hard work and complicated
attention toward completing this assignment before time but unfortunately we’ve completed
assignment in last week but not last night.

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Table of Contents
History & Profile...........................................................................................................................................6
Director Report .............................................................................................................................................7
Audit Report..................................................................................................................................................9
Chapter #2: Vertical Analysis.....................................................................................................................10
1. Profit and loss account:...................................................................................................................10
2. Balance Sheet:.................................................................................................................................14
Chapter# 3: Horizontal Analysis.................................................................................................................18
1. Profit and loss Account...................................................................................................................18
2. Balance Sheet..................................................................................................................................23
Chapter# 4: Ratio Analysis .........................................................................................................................27
4.1 Liquidity Ratio:.....................................................................................................................................27
1. Current Ratio:..................................................................................................................................27
2. Quick ratio/ Acid Test Ratio:..........................................................................................................28
3. Net Working Capital........................................................................................................................28
4.2 Management Efficiency Ratio ..............................................................................................................29
1. Account Receivable Turnover: .......................................................................................................29
2. Accounts Receivable Turnover in Days:.........................................................................................29
3. Inventory Turnover:........................................................................................................................30
4. Inventory Turnover in days:............................................................................................................30
5. Accounts Payable Turnover:...........................................................................................................30
6. Accounts Payable Turnover in Days:..............................................................................................31
4.3 Long Term Ratios .................................................................................................................................32
1. Interest Coverage Ratio:..................................................................................................................32
2. Fixed Charge Coverage Ratio:........................................................................................................32
3. Debt Ratio:......................................................................................................................................32
4. Debt/Equity Ratio: ..........................................................................................................................33
5. Debt-to-tangible Net worth Ratio: ..................................................................................................33
6. Total Capitalization:........................................................................................................................34
7. Fixed Assets Ratio: .........................................................................................................................34
4.4 Profitability Ratios:...............................................................................................................................36

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1. Gross Profit Margin: ...................................................................................................................36
2. Operating Profit Margin:.............................................................................................................36
3. Net Profit Margin:.......................................................................................................................37
4. Total Assets Turnover:................................................................................................................37
5. Return on total assets: .................................................................................................................37
6. Operating Assets Turnover: ........................................................................................................38
7. Return on Equity:........................................................................................................................38
8. Return on Assets: ........................................................................................................................39
4.5 Analysis for Investors ...........................................................................................................................40
1. Earnings per Share:.........................................................................................................................40
2. Price Earnings Ratio: ......................................................................................................................40
3. Percentage of Earning Retained:.....................................................................................................41
4.6 Cash Flow ratio.....................................................................................................................................42
1. Operating Cash flow to total debt: ..................................................................................................42
2. Operating Cash Flow Per Share:.....................................................................................................42
3. Operating Cash Flow To Dividend:................................................................................................42
Reference: ...................................................................................................................................................43

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History & Profile
A longtime leader in the cement manufacturing industry, Fauji Cement Company,
headquartered in Rawalpindi, operates a cement plant at Jhang Bahtar, Tehsil Fateh
Jang, and District Attock in the province of Punjab. The Company has a strong and
longstanding tradition of service, reliability, and quality that reaches back more than 15
years. Sponsored by Fauji Foundation, the Company was incorporated in Rawalpindi in
1992.
The cement plant operating in the Fauji Cement is one of the most efficient and
best maintained in the Country and has an annual production capacity of 1.165 million
tons of cement. The quality portland cement produced at this plant is the best in the
Country and is preferred in the construction of highways, bridges, commercial and
industrial complexes, residential homes, and a myriad of other structures, fundamental to
Pakistan's economic vitality and quality of life.
Erection & Commissioning of New Line with a Production capacity of 7200 TPD
has been completed and Plant has started its production. The Plant is equipped with latest
and state of the art equipment and is a great value addition in Pakistan Cement Industry.
In pursuance of its commitment to produce cement under stringent environment
friendly conditions, the Company has taken the lead by installing first ever Refuse
Derived Fuel (RDF) Processing Plant at a cost of Rs. 320 Million. This project acts as a
beacon to the entire industrial sector of the Country towards an environment friendly
production, RDF is not only providing economical fuel to the Company but also
contributing towards solving the problem of Municipal Garbage Disposal. Minimum 300-
400 tons of garbage is being lifted from each garbage dump located at Rawalpindi and
Islamabad. In addition, the other important advantages include reduced use of fossil fuel,
lowering of greenhouse gases in the atmosphere and availability of compost fertilizer as a
byproduct.
Fauji Cement is ISO certified for its Quality & Environment Management Systems and
has won number of awards in its category.

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Director Report
The Director of Fauji Cement Company Limited(FCCL) are please to present the 20th
Annual report together with audit financial statement of the firm for the year ended 30th
Jun 2014
and Audit Report thereon.
FCCL has increase in 3.5% of total dispatches (Sales both domestic and export) in 2014.
FCCL increase domestic dispatches by 4.33% and decrees in export is 2.83%.
FCCL gross profit has 35% as compared to 32%, earned EBIT 2626 million as compared
to 2097 million as compared to last year. FCCL successful manage debt servicing Rs. 3.5 billion
during financial year from operational cash.
Fauji Cement Company Limited has the ability and strength to operate it business
operation as long. So we can say that FCCL has on going concern.
FCCL Rs .75/- recommended final cash dividend per ordinary share and .75 interim
dividend has already paid during FY 2013-14. FCCL has no any statutory dues.
FCCL fulfil every aspect for corporate governance such as presentation of financial
statement, preparing book of account, accounting policies that applicable in Pakistan, IAS &
IFRS, disclose best knowledge of management and their children have not undertaking any
share.
FCCL fulfil also corporate their social responsibilities because during the year FCCL
donate to Thar Affectees and IDPs, wining CSR award in 2014, annual environmental
excellence award 2013. FCCL also educational facilities for fccl’s employee. For education
FCCL run a school in which 553 students enrolled.
FCCL also conduct employee welfare activities such as sports gala, health and safety etc.
FCCL has medical facilities for his employee.

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Graphical Representation of Profit and Loss Account by Director,
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sum of 2014
Sum of 2013

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Audit Report
Audit of financial statement is independent for the business issuing these. Auditor
express his opinion on financial statement that prepared by firm management. Auditor provide
assurance to outsider user about the completeness and reliability of firms financial. During audit
auditor obtained every necessary information about the firm financial for giving opinion.
Opinion of an auditor is termed as unqualified when the auditor concludes that that the financial
statements give a true and fair view in accordance with the identified financial reporting
framework.
There is no statuary definition of the words “true and fair”. However, true and fair has
been taken to mean the following: (I) free from prejudice or bias, (II) presentation of an objective
picture, (III) in accordance with generally accepted accounting principles, (IV) consistent and
having clarity,(V) not misleading and understandable by the reader of financial statements,. (V)
Presented fairly, in all material respects.
According to the company’s ordinance 1984, in an unqualified audit report the auditor is
required to make some statutory affirmations without reservations, as prescribed in section
255(3).
According to FCCL auditor KPMG Taseer Hadi & Co. describes follow the audit:
FCCL financial accounts, profit and loss account, balance sheet, cash flow statement,
statement of changing in owner equity and statement of comprehensive income are in format that
approved accounting standard that applicable in Pakistan and also giving required information by
Companies Ordinance 1984.
According to auditor FCCL financial give true and fair views at the end of 30-June-
2014. We personally feel that FCCL give true and fair views because in annual report 2014 every
information that effect stock and stockholder given in report. Even though FCCL describe that
loan from different bank also in report and contingencies liabilities of FCCL has over the year
also in annual report that are off balance sheet activates. So, we can say that its true and fair vies.

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Chapter #2: Vertical Analysis
1. Profit and loss account:
Fauji Cement Firm Limited
Profit and Loss Account
For the year Ended on December 31, 2015 Vertical
AnalysisThousands
Description 2014 2013 2014 2013
PKR % %
Net sales 17532277 15967900 100 100
Cost of production
Raw Material 1756737 1549574 10 10
Labour 788964 715956 5 4
Deprication/ Amortization 1257196 1261532 7 8
Factory Overhead 8063038 7316552 46 46
Cost of Production 11865935 10843614 68 68
Inventory Adjustment 417793 43813 2 0
Cost of Goods Sold 11448142 10887427 65 68
Gross Profit 6084135 5080473 35 32
Operating Expenses
General Administrative
Expenses
225957 205074 1 1
Selling Expenses 125106 143866 1 1
Total Operating Expenses 351063 348940 2 2
Operating Profit 5733072 4731533 33 30
Less: other Operating Expense/finance charges or interest expenses
Other operating expenses 333504 228579 2 1
Financial Charges 1042144 1512148 6 9
Net Operating Profit 4357424 2990806 25 19
Add: Other Income
Other Income 152081 94719 1 1
Profit Before Taxes 4509505 3085525 26 19
Tax 1883511 988458 11 6
Net Profit 2625994 2097067 15 13
Preferred stock dividend 486,992 486,992 3 3
Net Profit Available for
Common Stockholder 2,139,002 1,610,075
12 10

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Income statement vertical analysis interpretation:
Vertical analysis also known as common size analysis is a popular measure of financial
statement analysis that show each item on statement as percentage of base item with in the
statement. Conducting a vertical analysis for Profit and loss account, sales used a base item and
all other item of profit and loss account show as a percentage of sales.
Net Sales:
Sales consider 100% every year because base this is a base item.
Cost of Goods Sold:
Raw material consumed:
FCCL consumed 10% raw material of sales. This percentage is equal to increase in sales
current year as compared to last year. In last year also raw material equal to 10% of sales. It’s a
good sign for FCCL because raw material consumption increase same as increase sales.
Labor Cost:
FCCL labor cost 5% in 2014 but in 2013 was 4% of sales. Increase in 1% in labor cost is
alarming situation for FCCL. This increase is not favor in FCCL. This increase may be due to
increase in wages.
Factory Overhead:
FOH 46% of sales in 2014. FOH same as in 2013. The only difference in amount but not
difference in % over the year in 2013 and 2014. We cannot say either good or bad.
Total Cost of Goods Sold:
Cost of goods sold 65% of sales in 2014. In last year cost of goods sold was 68%. The
decrease 3% due to decrease in depreciation/amortization. This is good for FCCL because due to
decrease in CGS increase the gross profit.
Gross Profit:
FCCL gross profit in 2014 is 35% of sales but in last year it was a 32% of sales. The 3%
decrease in CGS lead toward increase in gross profit by 3%. Another reason for increasing gross
profit increase price of cement (Director Report as reference). This increase is good sign for
FCCL.
Operating Expenses:

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Administrative expenses of FCCL is 1.29% of sales in 2014 and 1.28% was in 2013.
Difference is not significantly as compared to last year. We can’t say either good or bad because
we have only two year data. But we can say increasing trend consider not good.
Selling expenses of FCCL is .71% of sales in 2014 and .90% was in 2013. The decrease
in selling expense after increasing sales showing good sign for FCCL. This decrease due to
decrease in export freight charges.
Operating Profit:
FCCL operating profit 32.70% of sales in 2014 and 29.63% in 2013. Increase in
operating profit is a good sign for FCCL. This increase is due to increase in gross profit and
decreasing operating expense.
Other operating expense:
Other operating expense of FCCL is 1.90% of sales and 1.43% in last year. This increase
due increase in production, sales and other related expense. We can’t say either good or bad for
FCCL.
Financial charges has reduced from last year but we can clearly see that financial charge
is not major expenses therefore do not much beneficial for FCCL performance. This indicate that
firm has low borrowing as compare to last year. Financial charges has significantly decrease by
almost 5%.
Other Income:
FCCL other income remain same over the year of sales. So, it difficult for me to say
either good or bad.
Profit before Taxes:
Profit before taxes is 25.72% of sales in 2014 and 19.32% in 2013. In 2014 FCCL profit
before taxes has increased 6% as compared to last year. It’s a good sign for FCCL. This increase
due to increase in operating profit.
Taxes:
Tax amount is 10.74% of sales in 2014 and in 2013 was 6.19%. Increase in taxes amount
in 2014 is due to increase income before taxes. We can’t say it’s a bad for FCCL because its due
to increase in EBIT.
Net Profit:

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Net profit is 15 % of sales in 2014 and 13.13% in 2013. FCCL has increase 2% net profit as
compared to last year of sales. This increase is good for FCCL. FCCL manage efficiency over
process and reduced expenses.
Net profit available for common stockholders:
Net profit available for common stockholders 13.68% of sales in 2014 and 11.81% was in
2013. FCCL has increase 2% income for common stockholders in 2014. Its best for FCCL
common stockholders. That is best for investors.

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2. Balance Sheet:
Balance Sheet
As on December, 31
(Rupees in Thousands)
Vertical Analysis
2015 2014
Assets
Current Asset
Cash and Bank balance
842,983 1,702,171 3 6
Derivative financial instruments
55,394 0
Trade in debts
580,214 205,802 2 1
stock in trade
1,409,107 981,092 5 3
Advance
50,414 12,920 0 0
Store, spares and loose tools
2,016,336 1,869,919 7 6
Interest accrued
173 10,472 0 0
Trade deposit, short term prepayment and balance
with statutory authority 268,545 179,119 1 1
Other receivable
20,585 22,201 0 0
Total current assets
5,188,357 5,039,090 18 17
Non-Current Assets
Property, Plant and Equipment
23,881,426 24,734,325 81 82
Long term advance
1,800 2,700 0 0
Long term deposits and prepayments
309,749 528,934 1 2
Total Non-Current Assets
24,192,975 25,265,959 82 83
Total assets
29,381,332 30,305,049 100 100

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Liabilities and Equity
Liabilities
Current Liabilities
Trade and other payables
1,725,648 1,483,438 6 5
Interest Payable/ Markup
163,457 206,362 1 1
Short term borrowing
42,232 159,685 0 1
Current portion of long term financing
2,551,169 2,559,945 9 8
Total Current Liability
4,482,506 4,409,430 15 15
Non-current liabilities
long term financing secured
5,362,998 7,924,264 18 26
Deferred liabilities
3,747,641 2,034,994 13 7
Total Non-Current Liabilities
9,110,639 9,959,258 31 33
Total Liabilities
13,593,145 14,368,688 46 47
Equity
Reserve
1,990,037 2,138,211 7 7
Common Stock
13,311,158 13,311,158 45 44
Preferred Stock
486,992 486,992
Total Equity
15,788,187 15,936,361 54 53
Total Liabilities and Equity
29,381,332 30,305,049 100 100

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Balance Sheet vertical analysis interpretation:
Current Assets:
Cash and bank balance decrees by 3% in 2015 of total assets. It’s not good for FCCL
because this reduced liquidity. FCCL has reduced cash in deposit account and cash in hand half
as compare to last more than 50%. Fccl management take an immediate action on this issue.
FCCL has increase .02% of total assets as compared to last year. An increase may due to
decrease in cash and bank balance. FCCL paid supplies advances as compare last year advances
to supplier and giving advances to employee as compared to last years.
Trade in debts means account receivable increase 1.3% as compared to last year. In 2014
account receivable 2% of total assets and last year was only .7%. As AR increase also a chance
increase bad debts that not good for FCCL. FCCL management take an immediate action. A
significantly increase in AR in “consider goods” reason for increasing. At the same time we can
say that this increase is good for FCCL because its lead to increase liquidity.
Stock in trade also known as inventory. Inventory include raw material, work in process
and finished goods inventory. FCCL has increased 1.6% as compared to last year of total assets.
This increase due to increase in purchase that ultimate result ending raw material, work in
process and finished goods. Increasing in inventory main cause due to significantly increase in
work in process (Reference as Annual Report 2014, financial notes). This is not good for FCCL
because its show that fccl process management has not efficient. We can say that its increase
FCCL liquidity.
Interest accrued has decline .o3% in 2014 as compared to last year of total assets. This
decline we mention that FCCL has withdrawal more than half amount from deposit account so
that result effect the interest accrued. We can say that it’s a good, may be fccl used this amount
for expanding their operation.
Overall current assets increase by 1% of total assets, its means FCCL mange efficiently
liquidity as compare to last year. Over all FCCL increase liquidity. It’s a good thing for fccl
creditors.
Non-Current Assets:
Property, plant and equipment has reduced 1% of total assets as compared to last year.
This decrease due annual depreciation of fixed assets. We cannot say either good or bad.
Long term advances has decreased almost same % of total assets as compare to last year.
We can’t say either good or bad because % remain same as total assets as last year.
Long term deposit and prepayment has decreased 1% of total assets as compared to last
year. This decreased due to expire prepaid guarantee fee. So, we can’t say either good or bad.

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Overall non-current assets has decreed also 1% of total assets as compared to last year.
As we can see that FCCL has not manage his fixed assets?
Liabilities and Equity:
Liabilities:
Current Liabilities:
FCCL has increase trade and other payable 6% of total liabilities in 2014 but in last year
it was a 5% of total liabilities. It difficult for me to say either good or bad. But we can say that
increasing liabilities never favor anyone.
FCCL has decrees Interest payable remain same % of total liabilities in both year. It’s
difficult for me to say either good or bad for this firm.
Short term secured borrowing had decreased by .4%of total liabilities as compared to last
year. It’s a good sign for fccl because firm has enough fund to pay off its short term obligation.
FCCL increase 2% current liabilities and current assets increased by 3%. So it’s a good sign for
fccl because fccl has more current assets as compared to current liabilities.
Non-Current Liabilities:
Long term financing secured has decreased by 8% of total liabilities and equity. It’s a
good sign for FCCL. FCCL payoff Royal bank of Scotland loan. So this is main reason for
decreasing long term liabilities.
`FCCL has increased deferred liabilities 6% of total liabilities and equity as compared to
last year. This increase due to increase in “provision for compensated absences and deferred
taxation”. It’s a good sign for FCCL because use its amount further in business and then payoff
late through generating this deferred liabilities.
Equity:
Reserve remain same % over the year of total liabilities and equity.
Common stock remain same in amount but increase 1% of total liabilities and equity. Preferred
stock remain same over the year. FCCL has no change in equity. So we can’t say either good or
bad.

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Chapter# 3: Horizontal Analysis
1. Profit and loss Account
Profit and Loss Account
For the year Ended on December 31, 2015 Horizontal
AnalysisThousands
Description 2014 2013 2014
PKR
%
Change
Net sales 17532277 15967900 10
Cost of production
Raw Material 1756737 1549574 13
Labor 788964 715956 10
Depreciation/Amortization 1257196 1261532 0
Factory Overhead 8063038 7316552 10
Cost of Production 11865935 10843614 9
Inventory Adjustment 417793 43813 854
Cost of Goods Sold 11448142 10887427 5
Gross Profit 6084135 5080473 20
Operating Expenses
General Administrative
Expenses
225957 205074 10
Selling Expenses 125106 143866 -13
Total Operating Expenses 351063 348940 1
Operating Profit 5733072 4731533 21
Less: other Operating Expense/finance charges or interest expenses
Other operating expenses 333504 228579 46
Financial Charges 1042144 1512148 -31
Net Operating Profit 4357424 2990806 46
Add: Other Income
Other Income 152081 94719 61
Profit Before Taxes 4509505 3085525 46
Tax 1883511 988458 91
Net Profit 2625994 2097067 25
Prefferd stock dividend 486,992 486,992 0
Net Profit Available for Common
Stockholder 2,139,002 1,610,075
33

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Income statement horizontal analysis interpretation:
Analyst when compare financial statement of a single company for two are or more
years, they want to measure the change from year to year. Measure year to year change of single
item called horizontal analysis. In other wards analyst compare amount of single item change for
evaluation either this change good or bad. Comparing financial statement for no. of years, this
measure analyst refer to use variation over the time period that also called trend analysis.
Net Sales:
FCCL has net sales increase 10% over the year. It’s a good sign for FCCL because its
show utilization of business operation capacity. Cause of increasing sales according to annual
director report 2014, director mention that this increase due to increase domestic consumption.
Cost of Goods Sold:
Raw material consumed:
FCCL sale increase 10% but raw material consumed 13%. Raw material consumed 3%
this show FCCL has increase wastage of material. FCCL procurement department not enough
efficient to control over the material quality. This increase due to increase either increase
wastage due to low quality material or increase quality with increasing using material.
Labor Cost:
Increase in labor cost and sales over the years same. Labor cost mostly associated with
sales so increase in sales neither good nor bad. But at the same time we can say that, it is a good
sign for FCCL because exist economy inflation over the year labor cost still remain same
percentage as sales compared to last year.
Factory Overhead:
FOH change in amount but remain same as sales compare to last year. We can’t say
either good or bad. Its fastidious for any argument.
Total Cost of Goods Sold:
Cost of goods sold increase 5% of sales as compare to last year. Sales increase 10% and
CGS increase 5% this show efficiency FCCL management. After increase raw material
consumed fccl manage and control other CGS controllable expenses.
Gross Profit:
FCCL increase 20% gross profit as compared to last year. FCCL gross profit increase
20%, sales increase by only 10% but this increase show management efficiency. This increase

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may due to increase profit margin of per unit and cost of goods sold remain same per unit as
compared to last year this reason mention in director report.
Operating Expenses:
Administrative expenses increased 10% from last year. This increase due to increase in
salaries, wages benefits by 10%, communication and establishment expenses almost 50% and
donation expenses by almost more than 100% but overall increase is 10% because some other
expense include are reduced this years. We can say, this increase is a good sign for FCCL
because this increase equal to increase in sale revenue.
Selling expenses reduced by 13% that a good things for FCCL. This reduced by due to
export freight charges, travelling and entertainment expenses more than by 50%. Decrease export
freight charges due to decrease export with vide reference director report 2014. But average
selling expenses decrease by 13% and other expense increase.
Operating Profit:
FCCL operating profit increase by 21% from last year. This increase by decrease in
controllable operating expenses and increase in gross profit that result ultimate effect on
operating profit. Increase operating profit show FCCL efficiency in term of fccl focus on
operational income form business operation. This increase show good sign for FCCL.
Other operating expense:
Other operating expense increase by 46% from last year. It not good sign for FCCL
because these expense are controllable expenses but FCCL can’t control. Reason behind increase
other operating expense is workers participation fund and workers’ welfare fund increase by
more than 40% and other expense increase but not significantly. We can say that its good sign
for workers.
Financial charges decrease by 31%. It good sign for FCCL and efficient assets and
liabilities management. The main reason decreasing by decrease >200% exchange loss on
revaluation of loan. Other financial charges increase but overall 31% decrease by financial
charges.
Other Income:
FCCL other income increase by 61%. This increase due to increase in profit on deposit
account and gain on disposal of property, plant and equipment respectively almost 50% and
1000%. Other income generating source decrease but overall increase as compared to last year
by 61%.
Profit before Taxes:

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Profit before taxes increase by 46% as compared to last 2013. Reason for increase profit
before taxes in 2014 due to increase in net operating profit and increase in other income.
Taxes:
Tax amount increase by 91% over the year from 2013 to 2014. This increase due to
increase amount profit before taxes. Taxes always a percentage on profit before taxes so this tax
amount vary increase/decrease in PBT.
Net Profit:
Net profit increase by 25% as compared to last year. It’s a good sign for FCCL because operating
profit increase by 21% but net profit increase more than operating profit. Net profit increase due
to increase in sales, gross profit and operating profit.
Net profit available for common stockholders:
Net profit available for common stockholders increase by 27% as compared to last years.
This increase due increase in net profit.

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Graphical representation of horizontal analysis:
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sum of 2014
Sum of 2013
0
5
10
15
20
25
30
35
40
45
50
Total
Total

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2. Balance Sheet
Balance Sheet
As on December, 31
(Rupees in Thousands) Horizontal
Analysis2015 2014
Assets
Current Asset
Cash and Bank balance
842,983 1,702,171 (50)
Derivative financial instruments
55,394
Trade in debts
580,214 205,802 182
Stock in trade 1,409,107
981,092 44
Advance
50,414 12,920 290
Store, spares and loose tools 2,016,336
1,869,919 8
Interest accrued
173 10,472 (98)
Trade deposit, short term prepayment and
balance with statutory authority 268,545 179,119 50
Other receivable
20,585 22,201 (7)
Total current assets 5,188,357
5,039,090 3
Non-Current Assets
Property, Plant and Equipment
23,881,426 24,734,325 (3)
Long term advance
1,800 2,700 (33)
Long term deposits and prepayments
309,749 528,934 (41)
Total Non-Current Assets
24,192,975 25,265,959 (4)
Total assets
29,381,332 30,305,049 (3)

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Liabilities and Equity
Liabilities
Current Liabilities
Trade and other payables 1,725,648
1,483,438 16
Interest Payable/ Markup
163,457 206,362 (21)
Short term borrowing
42,232 159,685 (74)
Current portion of long term financing 2,551,169
2,559,945 (0)
Total Current Liability 4,482,506 4,409,430
2
Non-current liabilities
long term financing secured 5,362,998
7,924,264 (32)
Deferred liabilities 3,747,641
2,034,994 84
Total Non Current Liabilities 9,110,639 9,959,258
(9)
Total Liabilities
13,593,145
14,368,688
(5)
Equity
Reserve 1,990,037 2,138,211
(7)
Common Stock
13,311,158 13,311,158 -
Preferred Stock 486,992 486,992
Total Equity
15,788,187 15,936,361 (1)
Total Liabilities and Equity
29,381,332 30,305,049 (3)

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Balance Sheet horizontal analysis interpretation:
Current Assets:
Cash and bank balance decrees by 50% in 2015. It’s not good for FCCL because this
reduced liquidity. FCCL has reduced deposit account and cash in hand more than 50%. Fccl
management take an immediate action on this issue.
FCCL has increase advances amount by 290%. A significantly increase may due to
decrease in cash and bank balance. FCCL paid supplies advances as compare to last year
advances to supplier and giving advances to employee as compared to last years.
Trade in debts means account receivable increase 182% as compared to last year. As AR
increase also a chance increase bad debts that not good for FCCL. FCCL management take an
immediate action because this increase more than increase in sale % and as well current assets
and total assets. A significantly increase in AR in “consider goods” reason for increasing. At
the same time we can say that this increase is good for FCCL because its lead to increase
liquidity.
Stock in trade also known as inventory. Inventory include raw material, work in process
and finished goods inventory. FCCL has increased 44% as compared to last year. This increase
due to increase in purchase that ultimate result ending raw material, work in process and
finished goods. Increasing in inventory main cause due to significantly increase in work in
process. This is not good for FCCL because its show that fccl process management has not
efficient. We can say that its increase FCCL liquidity.
Interest accrued has decline 98% in 2014 as compared to last year. This decline we
mention that FCCL has withdrawal more than half amount from deposit account so that result
effect the interest accrued. We can say that it’s a good, may be fccl used this amount in
expanding their operation. But it’s bad if we talk in term of current year liquidity.
Overall current assets increase by 3% its means FCCL mange efficiently liquidity. Over
all FCCL increase liquidity. It’s a good thing for fccl creditors.
Non-Current Assets:
Property, plant and equipment has reduced 3% as compared to last year. This decrease
due annual depreciation of fixed assets. we cannot say either good or bad.
Long term advances has decreased 33% as compared to last year. FCCL not good for that
because its effect overall firm liquidity.
Long term deposit and prepayment has decreased 41%. This decreased due to expire
prepaid guarantee fee. So, we can’t say either good or bad.

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Overall non-current assets has decrees as compared to last year. As we can see that FCCL
has not manage his fixed assets it’s not good sign for fccl.
FCCL decrease total assets by 3%. It is a good sign because liabilities decrease d by mere
than assets %. But over the year fccl not increase as compared to last year. If we conservative
analysis then good thing because assets still more than liabilities.
Liabilities and Equity:
Liabilities:
Current Liabilities:
FCCL has increase trade and other payable by 16% in 2014 as compared to last year.
Accrued liabilities has increased 100% as compared to last year accrued liabilities but other
liabilities decrease. It difficult for me to say either good or bad. But we can say that increasing
liabilities never favor anyone.
FCCL has decrees Interest payable by 21%. Decrease interest payable is good sign for
FCCL. Decreasing interest payable trend because interest payment on remaining principle
payment, every year principle payment decrease this also lead decrease in interest payment.
Short term secured borrowing had decreased by 74% as compared to last year. It’s a good
sign for fccl because firm has enough fund to pay off its short term obligation.
FCCL increase 2% current liabilities and current assets increased by 3%. So it’s a good sign for
fccl because fccl has more current assets as compared to current liabilities.
Non-Current Liabilities:
Long term financing secured has decreased by 32%. It’s a good sign for FCCL. FCCL
payoff Royal bank of Scotland loan. So this is main reason for decreasing long term liabilities.
`FCCL has increased deferred liabilities 84% as compared to last year. This increase due
to increase in “provision for compensated absences and deferred taxation”. It’s a good sign for
FCCL because use its amount further in business and then payoff late through generating this
deferred liabilities.
Equity:
Reserve has decrees 7% from last year. This decrees due decrees in un-appropriated
profit.
Common stock and preferred stock remain same over the year. FCCL has no change in equity.
So we can’t say either good or bad.

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Chapter# 4: Ratio Analysis
Ratios are typically used to analyze how well a firm uses its assets and liabilities
internally. Efficiency Ratios can calculate the turnover of receivables, the repayment of
liabilities, the quantity and usage of equity and the general use of inventory and machinery.
4.1 Liquidity Ratio:
Liquidity ratio measure short-term debt paying ability of the firm, firm unearth a relationship
between the current assets and the current liabilities. From these ratios, much insight can be
obtained into the present cash solvency of the firm and the firm’s ability to remain solvent in the
event of adversity. Profitability of the firm does not determine the short term debt-paying ability.
Almost every firm use accrual accounting policy, the entity may report very high profits but may
not have the ability to pay its current bills because it lacks available funds. May be if any entity
reports a loss, it may still be able to pay short-term obligations.
1. Current Ratio:
= Current Assets
Current Liabilities
2014 2013
Current Assets 5,188,357 5,039,090
Current Liabilities 4,482,506 4,409,430
Ratio 1.157 1.142
Normal current ratio is 2:1 but it differs from industry to industry. Within industry
comparison, individual firm can comparison with industry average current ratio. Current assets
should be twice the current liabilities. It should however be noted that too high ratio may indicate
that capital is not being used productively and efficiently. Such a situation calls for financial
reorganization.
FCCL has downward current ratio trend. It’s a good for a FCCL because his management
managing efficient capital. FCCL has below industry average current ratio likewise in industry
had extreme value on both end high and low. If the average >1 and <2; consider is good for the
firm. Current ratio is increase in 2014, due to increase in current assets is more as compare to
increase in current liabilities.

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2. Quick ratio/ Acid Test Ratio:
= Current Assets - Inventory
Current Liabilities
2014 2013
Current Assets 5,188,357 5,039,090
Inventory 1,409,107 981,092
Ratio 0.78 1.06
Quick ratio also knows as Acid Test ratio. These tools used to access a more immediate
liquidity position than that indicated by the current ratio. These tools provide best result where
inventory can’t convert easily into cash because this ratio include those items that are either
equal to cash or item next stage is cash. Prepayment and Inventory less from the current assets:
reasons for removing inventory are that inventory may be slow-moving or possibly obsolete, and
parts of the inventory may have been pledged to specific supplier/payable.
Normally quick ratio is 1:1 consider good sign for the firm but it can differ from industry
to industry likewise within industry. FCCL has also faced downward Quick ratio trend from last
five years. It’s a difficult for me to say either good or bad. FCCL has below the industry average,
we can say it’s a bad for FCCL. At the same time it’s good for managing efficient capital
because firm has paid all liabilities on time. Downward trend show that firm management has
realized capital viva efficient way firm.
3. Net Working Capital
= Current Assets – Current Liabilities
2014 2013
Current Assets 5,188,357 5,039,090
Amount 705,851 629,660
Working capital depends upon the size and nature of business. Net working Capital
can’t describe that anything about the firm. Net working capital gives some hint about firm, if we
compute the net working capital turnover. That result show how much working capital is
contributed toward generating sales.
Net working capital is upward slow growing trend of FCCL. But it’s a fastidious for me
to say either good or bad.

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4.2 Management Efficiency Ratio
Businesses exist for the purpose of generating profit and satisfying the customer’s needs.
It is the role of the management to ensure such objectives are attained, and hence must gather
sufficient data to inform them how the business is doing.
As a financial manager, you must ask yourself questions such as whether the firm’s market
share has improved, or whether the assets are generating enough revenue relative to the amount
of money invested, these question answer show the management is either managing efficient and
effectively or not.
1. Account Receivable Turnover:
= Net Sales
Avg. Account Receivable
2014 2013
Net Sales 17532277 15967900
Avg. Account
Receivable 393008 393008
Times 45 40
The accounts receivable turnover is a tool that used to evaluate efficiency, firm credit policy.
Too low accounts receivable turnover may perhaps show that firm is either finding it hard to
collect debts from customers or that it is granting credit too easily. Other thing remains constant,
a high accounts receivable turnover is recommended.
FCCL account receivable turnover has been increased as compare to last year account
receivable turnover. It’s a good sign for a FCCL because as many as high account receivable
turnover reduce the collection period. Net sales has increased also increase account receivable
but firm has efficient management and increase account receivable turnover that show a good
thing for firm. FCCL has efficient management of credit policy.
2. Accounts Receivable Turnover in Days:
= 365
Account Receivable turnover ratio.
2014 2013
Account Receivable turnover
ratio 45 40
Days 8 9
Also known as the days’ sales in accounts receivable, this ratio refers to the average
number of days between when a credit transaction is processed to the date the customer pays for
the product obtained. It helps the firm manage its cash flows, so that it can meet its current
obligations as they fall due.

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FCCL showing upward trend in account receivable in days. It’s a good for firm because
firm managing efficient debt recovery. As soon as FCCL reduce debt recovery period, it’s better
for the firm.
3. Inventory Turnover:
= Cost of Goods Sold
Avg. Inventory
2014 2013
CGS 11448142 10887427
Avg. Inventory 1195099.5 981,092
Times 9.57 11.10
This ratio, like other ratios, must be judged in relation to ratios of similar firms, the industry
average or both. Higher the inventory turn-over, the more efficient the inventory management of
the firm and the “fresher” more liquid, the inventory and vice versa.
FCCL Inventory T/O is decrease from 11.10 to 9.5 which is negative trend now firm
efficiency is reduce and that is alarming for firm. Firm should take immediate step for overcome
this situation.
4. Inventory Turnover in days:
= 365
Inventory Turnover
2014 2013
Inventory Turnover 9.57 11.10
Inventory Turnover in
Days
38 32
As inventory turnover ratio show the firm efficiency in times to convert the inventory into
CGS .This Ratio show in how many days a firm take to convert its inventory into CGS. FCCL
inventory turnover in days has significantly increase. It’s a not good for the firm and that is
alarming for the firm. FCCL should take immediate effective action to overcome the situation.
5. Accounts Payable Turnover:
= Cost of goods sold
Avg. Accounts Payable
2014 2013
CGS 11448142 10887427

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Avg. Account
payable
1604543 1,483,438
Times 7.13 7.34
The account payable turnover ratio is how many times firm pay off its average account
payable during the accounting period. This ratio tells the vendors that firm is unable to pay off
their short term liabilities. Most of the times vendor used this ratio when they give credit to new
firm.
This means that FFCL pay it vendor on average 7.13 of year. This ratio is reduced from
previous years it’s not good for the FCCL because as many times extend better for the firm. We
can’t say anything overall about this ratio unknowing the industry average.
6. Accounts Payable Turnover in Days:
= 365
Account Payable Turnover.
2014 2013
Account Payable Turnover. 7.13 7.34
Days 51. 49.
Also known as the days’ purchase in accounts payable, this ratio refers to the average
number of days between when a credit transaction is processed to the date the firm pays for the
purchase raw material. It helps the firm manage its cash flows, so that it can managing the firm
cash from its current assets.
FCCL showing upward trend account payable in days. It’s a good sign for firm. FCCL
extend two days for repaying of account payable.

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4.3 Long Term Ratios
1. Interest Coverage Ratio:
= EBIT
Interest Expenses including capitalization interest
2014 2013
Operating Income 5733072 4731533
Interest Expenses 1042144 1512148
Times 4.33 2.04
Interest coverage ratio measure firm’s ability to paying interest payment on debts.
Creditor and investor used this ratio measure the firm profitability and risk of firm. Investor want
to see that .their firm can pay its obligation on time without sacrifice its operation and profit.
Creditor want to seek firm either able to support additional debt or not. Creditor seek risk
involved in lending to firm.
FCCL has 4.33 times increase 50% from previous. Its means 4.33 times earnings available
for current interest payment. It is a good sign for FCCL lender and as well as investor who want
to invest in FCCL. Its increase means firm has low risk in business operation to generate enough
cash to pay obligation. Increase in ICR due to increase in Net operating profit and decrease in
Interest expenses.
2. Fixed Charge Coverage Ratio:
= Operating Income
Interest Expenses + lease Rental + Principal payment + Pension Payment
2014 2013
Operating Income 5733072 4731533
Interest Exp 1042144 1512148
Times 4.33 2.04
Fixed coverage ratio measure the firm ability to pay all of its fixed payment/expenses
through operating income/income before interest and taxes. All fixed payment like interest
expenses, lease rental, principal payment consider as fixed payment.
FCCL has 4.33 times increase 50% from previous. Its means 4.33 times earnings available
for fixed payment. It is a good sign for FCCL lender giving debt to firm and as well as investor
who want to invest in FCCL. Its increase means firm has low risk in business operation to
generate enough cash to pay obligation. Increase in fixed coverage ratio due to increase in Net
operating profit and decrease in Interest expenses.
3. Debt Ratio:

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= Total Liabilities
Total Assets
2014 2013
Total Liabilities 13,593,145 14,368,688
Total Assets 29,381,332 30,305,049
% 46 47
Debt ratio measure the firm’s total liabilities as percentages of its total assets. This ratio
evaluate the firm’s ability to pay off its liabilities as compared to assets. In other word this ratio
show how may assets sell in order to pay off all of its liabilities.
FCCL has debt ratio is 46% decrease only 1% from previous year. Its ratio means that FCCL
has more than 2 times assets as compared to liabilities. This decrease due to decrease to decrease
in total liabilities but this decrease is > decrease in total assets. It’s a good sign for FCCL.
4. Debt/Equity Ratio:
= Total Liabilities
Equity
2014 2013
Total Liabilities 13,593,145 14,368,688
Equity 13,311,158 13,311,158
% 1.02 1.08
This ratio compare to total debt to equity. The debt to equity ratio shows the percentage
of company financing that comes from creditors and investors. A higher debt to equity ratio
indicates that more creditor financing (loans) is used than investor financing (shareholders).
FCCL has 6% decrease debt to equity ratio from previous year. It good sign for FCCL
because its show more investment by investor. Overall according to my opinion not good
because FCCL still more than equity.
5. Debt-to-tangible Net worth Ratio:
= Total Liabilities
Shareholders Equity – Intangible Assets
2014 2013
Total
Liabilities
13,593,145 14,368,688
Equity 13,311,158 13,311,158

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Intangible
Assets
0 0
% age 102 108
Debt to tangible net worth ratio measure how much tangible net worth of firm are
available against total liabilities. This ratio compare to total debt to tangible net worth of firm.
The debt to tangible net worth ratio shows the percentage of company financing that comes from
creditors and investors. A higher ratio indicates that more creditor financing (loans) is used than
investor financing (shareholders).
FCCL has 6% decrease debt to tangible net worth ratio from previous year. It good sign
for FCCL because its show more investment by investor. Overall according to my opinion not
good because FCCL still more than equity.
6. Total Capitalization:
= Long term Debt
Total Capitalization + Equity
2014 2013
Long term
Debt
5,362,998 7,924,264
Total
Capitalization
13,311,158 13,311,158
Equity 13,311,158 13,311,158
% age 0.29 0.37
7. Fixed Assets Ratio:
= Fixed Assets
Equity
2014 2013
Fixed Assets 13,593,145 14,368,688
Equity 13,311,158 13,311,158
% age 1.81 1.89
Fixed assets ratio show how much fixed assets are available against to equity. But one
thing keep in mind total equity not invested in fixed assets means that part of equity also invested
in working capital.

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FCCL has decrease this ratio. Reason behind this is fixed assets are depreciation every
years and decrease nominator and denominator remain same. We can’t say either good or bad.

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4.4 Profitability Ratios:
The income statement contains several figures that might be used in profitability analysis.
In general, the primary financial analysis of profit ratios should include only the types of income
arising from the normal operations of the business.
1. Gross Profit Margin:
= Gross Profit X 100
Net Sales
2014 2013
Gross Profit 17532277 15967900
Net Sales 6084135 5080473
% age 35 32
Gross profit margin ratio is a profitability ratio that describes the percentage of sales that
exceed the CGS. You can say that this ratio measure the firm efficient use of materials, labor to
produced product and profitability.
FCCL gross profit increase 3% as compared to last year. This increase is due to high
prices of FCCL product with reference to: Director Report of Annual Report 2014. The increase
in price may be due to high demand of cement in construction industry. It is a good for FCCL.
2. Operating Profit Margin:
= Operating Profit X 100
Net Sales
2014 2013
Operating Profit 5733072 4731533
Net Sales 17532277 15967900
% age 33 30
Operating profit ratio is important for investor, creditors and firm management use this
tool to evaluate the profitability of the firm. This ratio is consider important because this profit
from the core business activities. High operating income will be favor for the firm to pay off
firm debt.
FCCL operating profit increase by 3% from last year. Reason is that gross profit increase
that result also effect the operating profit. It is a good for FCCL because firm manage efficiently
controllable expense as last year.

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3. Net Profit Margin:
= Net Profit X 100
Net Sales
2014 2013
Net Profit 2625994 2097067
Net Sales 17532277 15967900
s% age 15 13
Net profit is amount that left after deducting all expenses. High net profit is always
preferable. In case of high profit, firm reinvest their profit to expanding firm operation.
FCCL has increase 2% profit over the year. It is good sign of increasing overall net profit
but at the same time, we can say that it not good efficient management because operating profit
has been increase but firm can’t managed other expense that why net profit decreased by 1% as
compared to increase in operating profit.
4. Total Assets Turnover:
= Sales X 100
Avg. Total Assets
2014 2013
Sales 17532277 15967900
Avg. Total Assets 29,843,191 30,305,049
% age 59 53
Total asset turnover ratio describe how firm efficiently using both long term and short
term assets. We can say that each rupee of your firm’s assets generating sale. High assets
turnover always preferable. High turnover asset means firm uses its assets efficiently. This ratio
give creditor and investor idea for managing assets.
FCCL ratio is 59%, this means that for every rupee in assets. We can say that FCCL only
59 paisy of Rs.1/-.FCCL show upward trend of assets turnover as compared to last years. This
increase may be due to increase in sales percentage as compared to increase in total assets.
According to annual report data FCCL sales increase but total net assets is decreased from
previous year that main reason for increase in total assets turnover. It is a good sign for the
FCCL and showing efficient management of FCCL.
5. Return on total assets:
= Net profit+ Interest X 100
Avg. Total Assets

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2014 2013
Net Profit 2625994 2097067
Avg. Total
Assets 29,843,191 30,305,049
Interest 1042144 1512148
% age 12 12
Return on assets also called return on total assets. This ratio measure the profitability
ratio that measure net profit generate during the firm period by total assets. Assets of a firm is
sole purpose to generate revenue. This ratio describes assets management efficiency of firm.
Management and investor want to see how well company can managing its assets towards the net
profit.
FCCL return on assets are same in both years. The reason behind remaining same total
assets return is: net profit increase in 2014, total assets decrease and also reduced financial
charges but in previous year net profit is less as compared to 2014, total assets is more than 2014
and financial charges more than 2014. It’s a neutral opinion about this ratio.
6. Operating Assets Turnover:
= Net Sales X 100
Total Operating Assets
2014 2013
Net Sales 17532277 15967900
Total
Operating
Assets
23,881,426 24,734,325
% age 73 65
Operating assets turnover ratio evaluate the firm’s ability to utilize its assets to generating
revenue. This ratio describe net sale generated per dollar by operating assets. High ratio
describes that firms firm generating more sale with few assets.
Operating assets turnover 5% more than last year. It’s showing firm efficiency of
managing operating assets. Its good sign for FCCL because that increase either directly or
indirectly increase net profit.
7. Return on Equity:
= Net Profit – Preferred Stock dividend X 100
Average No.Common Stock

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2014 2013
Net Profit 2625994 2097067
Preferred
Dividend 486,992 486,992
Ave. Common
Stock 1,331,116 1,331,116
% age 180 121
Return on equity ratio shows how much profit each dollar of common stockholders'
equity generates. This is an important measurement for potential investors because they want to
see how efficiently a company will use their money to generate net income. ROE is also an
indicator of how effective management is at using equity financing to fund operations and grow
the company.
FCCL return on equity is 1.8 in 2014. This means that every dollar of common
stockholder’s equity earned this year is 1.8. In other words, we can say that stockholder’s saw a
180% return on their investment. This could indicate that FCCL's is a growing company. FCCL
has significant change of return on equity from last year. It’s a good sign for the FCCL for
seeking investor.
8. Return on Assets:
= Net Profit + Interest Expenses X 100
Equity + Long Term Assets
2014 2013
Net Profit 2625994 2097067
Interest Expenses 1042144 1512148
Equity 13,311,158 13,311,158
Long Term Assets 5,362,998 7,924,264
% age 7 2
Return on assets ratio also called ROA. This ratio measure how efficiently company
manage its assets to generate net profit during a period. Assets of a firm is sole purpose to
generate revenue. This ratio describes assets management efficiency of firm. Management and
investor want to see how well company can managing its assets towards the net profit.
FCCL assets turnover ratio is 7% of 2014. Its means every rupee that FCCL invested in
assets during the accounting year is Rs.7/- of net income. For FCCL is good change, return on
assets as compare to last year. This change occur due to efficient management of current assets
because current ratio reduce this year that means we manage assets. FCCL investor can compare
this ratio with other firm of cement industry.

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4.5 Analysis for Investors
1. Earnings per Share:
= Net Income – Dividend on Preferred Stock
Avg. No. of Shares Outstanding
2014 2013
Net Income 2625994 2097067
No. of shares
outstanding 1,331,116 1,331,116
Rs. 1.61 1.21
Earnings per share same as any profitability or market prospect measurement ratio. High
earning per always prefer then lower earnings per share because high ratio means firm high
profitability or amount available to distribute to its shareholders. High earning per share often
make the price rise.
FCCL earning per share show increasing trend. FCCL EPS increase from 1.21 to 1.61.
It’s a good sign for FCCL because increase in net profit year to year, preferred stock dividend
and average no of common stock remain same. FCCL EPS for the year is RS.1.61/- means that
distributed to every rupee of income to its shareholder.
2. Price Earnings Ratio:
= Market Price per Share
Earnings per Share
2014 2013
Market Price
Per Share
15.41 7.9
EPS 1.61 1.21
Rs. 9.59 6.53
Price earnings ratio describe that the investor is willing to pay firm share based on its current
earnings. Investor used this ratio for evaluation stock market value should be predicating future
earnings per share. Higher future earning usually expecting to issue on higher dividend giving
by firm. This ratio help investor to how much pay for the stock at the current price earning. Low
price ratio means company has low future growth.
FCCL price earnings ratio is an upward trend means FCCL has a potential growth. FCCL’s
price earnings ratio is 10 times. This means that investor are willing to pay 10 rupees for every
rupee of earning. In other words we can say that stock will be traded at a multiple of ten. It is
good for the FCCL because as compared to previous year significantly increase. This increase

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may be due to increase in market price from last year. And also may be other reason due to high
demand of cement that may be expand his operation, expansion lead toward high growth that
will also increase market price. May be also decreasing % of retain earning means highly
distributed profit to common stockholders.
3. Percentage of Earning Retained:
= Net Profit – All Dividend
Net Profit
2014 2013
Net Profit 2625994 2097067
All Dividend 2,865,398 210687
% age (0.11) 100
Percentage of earning retained describe that how much firm profit distributed to shareholders
of the firm. High ratio not favorable to stockholder because it means firm retain high amount in
retained earning amount and less distributed to shareholders.
FCCL retained all profit 2013 in retained earning account but in 2014 FCCL distributed all
profit to shareholders. Reason may be retain all earning in 2013 to reinvest for business operation
that ultimately beneficial of shareholders because reinvest increase profit in future. In 2014
FCCL distributed all profit as well amount from reserve account to shareholders. It’s good for
investor because they received highly benefit in term of dividend.

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4.6 Cash Flow ratio
Ratio Formula 2014 2013
operating cash flow to
total debt
operating cash flow/ total debts 1.08 .74
operating cash flow per
share
operating cash flow-preferred dividend /
common share outstanding
4.15 3.42
operating cash flow to
dividend
operating cash flow/total cash dividend 1.99 22.24
1. Operating Cash flow to total debt:
Operating cash flow to total debt describe that how much cash generating operating cash
flow as compared to debt. FCCL has increase this ratio in 2014. It is a good for FCCL because
operating cash generating increase from business operation. This increase may be due to increase
in operating cash from sales. This show management efficiency. Its increase trend both for
investor and stockholders.
2. Operating Cash Flow Per Share:
Operating cash flow per share measure per share rupee available from operating cash
flow. This increase may be due to increase in operating cash from business operation and
preferred stock dividend amount remain same. It’s a good sign for FCCL. This is best for
Common stockholders.
3. Operating Cash Flow To Dividend:
Operating cash flow measure the firm ability to pay cash flow of total cash dividend from
operating cash from operation. A huge change in this ratio is due to paying out cash dividend in
2013 FCCL has paid only preferred stock cash dividend but in 2014 FCCL paid both equity
holder common stock and preferred stockholder dividend. It’s good for common stock because
current ratio preferable that show FCCL distributed cash dividend to common stockholders.

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Reference:
 Annual Report
 Virtual University of Pakistan (Course related material and lecture: Financial Statement
reporting and Analysis)
 Financial Reporting & Analysis by Charles H. Gibson, 11th
edition.
 FCCL website
 Wikipedia
This report is completely produced by "Muhammad Javed and Ayesha Mureed". Any material or
concept similarity with some other project report or source is entirely coincidental.
The Eagles © Copyrights

Financial Analysis of Fuaji Cement Company Limited

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