Final afs projct azgard9


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Final afs projct azgard9

  1. 1. Of AZGARD NINEThe Origins and the inception in the ancient legend “AZGARD” was one of none worlds in NorseMythology- it was protected by “Heimdall” the son of nine different Mothers each attributing himwith a particular skill and power – and thus He would protect Azgard from the powers that be.The significance of nine for our company is not just based on this Mythology but also connectedwith the auspicious nature of this number throughout many different elements in and out of theworld today that is an auspicious and important number in Indian, Chinese, Japanese and Greekcultures for various different reasons.In Chinese culture the number Nine represents „Change‟ and „Transformation‟, as in the case withAzgard Nine which is changing and Transforming itself into an entity with new goals, aspirationsand targets.Nine in much of ancient Greek methodology also has represented gestation and fulfillment ofcreation as it does for us at Azgard Nine. The „fulfillment of creation‟ for us being the forming ofthis global entity by nine members on the ninth day of February sowing the seeds for anauspicious and rewarding future.HISTORY:The Azgard Nine Limited Group was started as a family business over four generations ago. TheSheikh family, Now in its Fourth generation, in one of the oldest business families in the subcontinent with experience in many different sectors and having a proven track record ofsuccessful leadership in four continents. The gamily began its first operations in 1886 inshamkot, in the Asian sub continent.Although, now, A Public company the family still remains behind the company in every way,supporting and nurturing its growth into the future and beyond.The current specialized yarn operation was set up in 1972 with the open end spinning and denimweaving operations following in 1995. The final frontier was the garments operation, whichcame in to being in 1997.
  2. 2. The concept behind the group‟s textile ambitions was to be a fully vertical apparel solutionprovider based in a country that would be able to maintain its competitive advantage in this fieldfor the yards to come (Pakistan is the fourth largest denim producer in the world with an annualproduction of 200,000,000 meters). This has now been achieved and Azgard in able to offerthese services as a single source supplier for all denim and specialized yarn customers.The future is squeezing the brand customers toward a sourcing solution that stems from as smalla global map as will allow. We believe it is feasible, in order to not be spread too thin‟, toconsolidate a position in as few regions as possible in the quest of r practical and economicalglobal sourcing – Azgard Nine limited is that perfect vehicle which can accommodate andachieve this position, therefore realizing the vision that was incepted so many years ago by theguardians of the Azgard group bring the resultant advantages to you the customer. MISSIONTEXTILE & APPARELTo retain a leadership position as the largest value added denim Products Company in Pakistan. VISIONTEXTILE & APPARELTO BECOME A MAJOR GLOBAL FASHION APPARECOMPANY
  3. 3. FINANCIAL ANALYSIS OF THE COMPANYPURPOSE OF FINANCIAL ANALYSIS 1) In our course of financial management we are required to make a financial analysis of anymanufacturing company. The main purpose of these analyses is that we are the business graduateand it is very necessary for us to apply our knowledge in the practical way. For example if infuture we are the manager of any bank and a company wants to obtain a loan from our bank thenwe make analysis of the company‟s financial statement to access the capacity of paying usinterest on time as well as the principle which we lend that company through analyzing thedifferent ratio analyses, and to know that what is capital structure of the company. 2) Then through the cash flow statement we are able to know that how much cash is availablewith the company because profitability does not mean that the company has the equal amount ofcash. We also able to know that how much cash is generated by the company from its operatingactivities, and how much amount of cash is investing in the asset through which we can access thefuture performance of the company. 3) Being as an investor if we are able to make an analysis of financial statement then we caninvest in that venture which is the best in terms of our purpose. 4) Being as an investor before investing in any company we can analyze the performance ofthe company through the vertical analyses and horizontal analyses with the current and previousyear or we can also comparison of the company with the other company of the same age(Competitors) and applying the same accounting techniques.1. Short Term Debt-Paying AbilityReceivables 2005 2006 2007 2008 20091 Days Sales in Receivables 83.68 84.72 91.26 64.14 97.232 Account Receivable turnover 4.52 4.55 4.75 5.89 4.793 Account Receivable turnover in 80.84 80.20 76.88 61.97 76.25days
  4. 4. Receivables 120.00 100.00 80.00 Days Sales in Receivables 60.00 Account Receivable 40.00 Turnover Account Receivable 20.00 Turnover in Days - 2005 2006 2007 2008 2009In the table and chart we see that day‟s sales in receivables are 83.68 days and it further increasein the year of 2006 and 2007. An internal analyst compares day‟s sales in receivables with thecompany credit terms as an indication of how efficiency the company manages its receivables.We see that company have high sales in the years 2006 and 2007 but due to low credit policyday‟s sales in receivables are increased in the years 2006 and 2007. In the year 2008 the dayssales in inventory were 64.14 which mean company control its credit policy. In the year 2009receivables reached its highest position of 97.23 days which shows against company low creditpolicy and poor management. In the year 2008 company have 64.14 days of minimum days andshows a good credit policy within five years. If day‟s sales in receivables are materially morethan the credit terms, the company has a collection problem. An effort should be made to keepthe days sales in receivables close to the credit terms.We see that company have increased account receivables turnover from 2005 to 2008, whichshows a good credit policy and efficient management. In the year of 2009 receivables decreasewhich shows company inefficiency low credit policy. In the year 2005 receivables turnovers are4.52 times which shows a low credit policy and poor management.We see that account receivables turnover in days decrease from 2005 to 2008, which shows agood credit policy of the company. In the year 2008 turnover in days are 61.97 days which areminimum days in receivable turnover. In the year 2009 receivables turnover in days were 76.25days which shows company low credit policy.Inventory 2005 2006 2007 2008 20094 Days sales in inventory 225.76 199.34 177.42 221.08 188.555 Inventory turnover 1.92 1.83 2.17 2.12 2.02
  5. 5. 6 Inventory turnover in 190.28 199.91 168.58 172.09 180.42days Inventory 250.00 200.00 Days Sale in Inventory 150.00 Inventory Turnover 100.00 50.00 Inventory Turnover in Days - 2005 2006 2007 2008 2009We see that day‟s sale in inventory decrease from 2005 to 2007, which shows companyefficiency and good management .in the year 2007 inventory was 177.42 days which showsefficient management and good company policy in this year. And it shows a positive trend. In theyear 2008 days sales in inventory reach to 221.08 days which shows a company bad policy andmanagement. In the year2005 company have day‟s sales in inventory of 225.76 days which meanthat company in this year take more days to sell the current inventory. In the year 2009 days salein inventory again decrease to 188.55 days which again shows company good management andefficiency.Inventory turnover increase in the year 2006 to 199.91 day‟s shows a positive trend. In the year2007 it decrease which shows inefficiency and in last year it again increase, which meancompany sale more inventory in days. 2005 2006 2007 2008 20097 Net Working 323,461,546 1,187,508,778 3,163,296,118 789,374,554 (2,684,061,320)Capital
  6. 6. Net Working Capital 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 Net Working Capital - 2005 2006 2007 2008 2009 (1,000,000,000) (2,000,000,000) (3,000,000,000)As we know that working capital is equal to current assets minus current liabilities so From theabove table and charts we see that current asset are increased from 2005 to 2007 as it showscurrent assets were 45.26% in 2005 and liabilities were 42.19% in this year, and it shows ahighest current assets in this year and lowest of 38.91&% in the year of 2006. Current assets areincreased because company made more investments in these years. In the year 2009 currentliabilities are greater than current assets shows 32% current assets and 38.96% current liabilities.There is increase in payables in this year. It shows a negative trend in the company. 2005 2006 2007 2008 20098 Current Ratio 1.07 1.15 1.51 1.08 0.829 Acid-test Ratio 0.41 0.80 0.99 0.61 0.4510 Cash Ratio 0.01 0.07 0.01 0.01 0.01 Current, Acid test & CASH Ratio 2.00 1.50 Current Ratio 1.00 Acid _ Test Ratio 0.50 Cash Ratio - 2005 2006 2007 2008 2009
  7. 7. From the above table and chart we see that current ratio shows a positive trend from 2005 to2007. current asset are increased from 2005 to 2007 as it shows current assets were 45.26% in2005 and liabilities were 42.19% in this year, and it shows a highest current assets in this yearand lowest of 38.91&% in the year of 2006. Current assets are increased because company mademore investments. Company has a good current ratio of 1.51 in the year of 2007 which shows ofcompany efficiency. In the year 2009 current liabilities are greater than current assets shows 32%current assets and 38.96% current liabilities. There is increase in payables in this year. It shows anegative trend in the company. In 2009 current ratio remains 0.82.The acid test ratio relates the most liquid assets to current liabilities. And inventory is removedfrom current assets when computing the acid test ratio. So we can see that from above table andchart that acid test ratio increase from 2005 to 2007. And it has a maximum position of 0.99 inthe year of 2007. And in last year it decrease to 0.45 in 2009.When we need to view liquidity of a firm from an extremely conservative point of view, then weuse cash ratio. We see that it minor increase of .07 in the year of 2006 and then decreaseonwards, and remain at .01 in the last year. 1. Long-term Debt Paying Ability 2005 2006 2007 2008 200911 Times Interest Earned 2.80 1.23 1.48 1.15 1.0812 Fixed Charge Coverage 2.80 1.23 1.48 1.15 1.08 Time Interest Earned & Fixed Charge Coverage Ratio 3.00 2.50 2.00 1.50 Time interest Earned ratio 1.00 Fixed Charge 0.50 Coverage Ratio - 2005 2006 2007 2008 2009
  8. 8. From the table and chart we see that time interest earned ratio and fixed charge coverage ratioboth are decreased in the year of 2006. These ratios indicate the firm‟s long term debt payingability and in this situation we see a change from 2.80 times to 1.23 times show that the firm willnot be able to meet its interest obligation. In the year 2007 firm little betters its ratio to 1.48times than before. And again it‟s decreased to 1.08 times per year in the year 2009. A relativelyhigh, stable coverage of interest over the year indicate has a good record and a low fluctuatingcoverage from year to year indicate a poor record. In this situation we see that company has aratio of 2.80 times shows a good record and debt paying ability and 1.08 times show a badperformance and record of the company.In 2005 a good record shows that the company has a high proportion of debt in relation tostockholders equity and at the same time, obtains funds at the favorable rates. Fixed chargecoverage ratio indicate that a firm‟s ability to cover fixed charges. 2005 2006 2007 2008 200913 Debt Ratio 0.68 0.59 0.58 0.62 0.5214 Debt/Equity Ratio 2.32 1.48 1.41 1.68 1.38 2.5 2 1.5 Debt Ratio 1 Debt/Equity Ratio 0.5 0 2005 2006 2007 2008 2009Debt ratio indicates the firm‟s long term debt paying ability. This ratio indicates the percentageof assets financed by the creditors, and it helps to determine how well creditors are protected incase of insolvency. If creditors are not well protected, the company is not in a position to issue
  9. 9. additional long term debt. So from table and chart we see that debt ratio is decreased in 2006indicates a better company position. In 2008 it again increases to .62%. In last year it againdecrease to 0.52%.From chart and table we see that debt/equity ratio of the company was 2.32% in the year 2005.And it decrease to 1.48% in 2006 indicate the company good performance. 2005 shows a verydanger position and it shows that creditors are not protected and they are going to insolvency. Inthe last year 2009 ratio reach to 1.38% indicates a good position of the company and debt payingability. In 2005 company have more debt ratio then equity ratio indicate a danger sign forcreditors and in 2009 lower this ratio give protection to the creditors.3. Profitability Ratios 2005 2006 2007 2008 200916 Net Profit Margin 0.17 0.23 0.16 0.09 0.0117 Return on Assets 0.06 0.87 0.64 0.59 0.0718 Operating Income Margin 0.18 0.16 0.24 0.28 0.2119 Return on Operating Assets 0.18 0.51 - - -20 Gross Profit Margin 0.26 0.24 0.30 0.34 0.27 1.00 0.90 Net Profit Margin 0.80 0.70 Return on Asset 0.60 0.50 Operating income Margin 0.40 Return on operating 0.30 Assets 0.20 Gross Profit Margin 0.10 - 2005 2006 2007 2008 2009
  10. 10. From above table and chart we see that net profit margin increase in the year 2006. And then itcontinuously decreases. Different factors like competitive force within the industry, economiccondition, debt financing, and high fixed cost affect the net profit margin. Due to some increasein debt ratio and other factors profit margin reach to .01% in last year.Return on assets increase from .06% to .87% which shows that the firm‟s best utilize its assets tocreate profits by comparing with the assets that generate the profits. In the year 2007 it startdecreases and in th year 2009 it reach to .07% which mean that firm inefficiency in utilization ofits resources to generate profit. In the year 2005 company have a very low return on assets thensome growth and then again decrease till the last year which shows that company was not in theposition to maintain its policies, better management and best use of resources.Operating income margin shows a minor fluctuation within years. At 2008 it was at high positionof 0.28%. Gross profit margin equal the difference between sale revenue and cost of goods sold.From the following data it shows that gross profit margin decreases in 2006 and then someincrease in two years then it again decrease. It shows a high profit margin in 2008 of .34%. Somefactors like cost of buying inventory, selling price decline and other situation in the companycause effect on the gross profit margin. 2005 2006 2007 2008 200921 Total Assets Turnover 0.38 0.22 0.19 0.27 0.2522 Operating Assets Turnover 1.00 3.14 - - -23 Sales to Fixed Assets 0.75 0.38 0.31 0.45 0.40 Total Assets , Operating Asset Turnover& Sales to Fixed Assets 3.50 3.00 2.50 Total Asset Turnover 2.00 1.50 Operating Asset Turnover 1.00 Sale to Fixed Assets 0.50 - 2005 2006 2007 2008 2009
  11. 11. From above table and chart we see that operating assets turnover are increased in the year 2006reach to 3.14 times. It shows that company use of utilizing operating assets to generate sale. Andcompany in good position in this year. And then it starts to decrease and reach to zero in theyears of 2007 to 2009. Because company were not able to use its assets properly to generatesales.Sale to fixed assets decreases from 2005 and reach to .31. In the year 2005 sale to fixed assetswas .75 times which mean that company has a better ability to make productive use of itsproperty, plant and equipment by generating sale dollars. And in the year 2007 company haveratio of .31 times which shows company were not use fixed assets to generate sales. 2005 2006 2007 2008 200924 Return on Investment 0.20 0.15 0.11 0.15 0.0925 Return on Total Equity 0.24 0.12 0.11 0.09 0.0026 Return on Common Equity 0.28 0.32 0.19 0.16 0.0127 Return on Total Assets 0.09 2.92 1.82 1.47 0.67Variation 3.50 3.00 2.50 Return on Investment 2.00 Return on Total Equity 1.50 Return on Comman 1.00 Equity Return on Total 0.50 Asset Variation - 2005 2006 2007 2008 2009From the above table and chart the return on investment decreasing within two years and thenincrease in 2008 and then again decrease in last year. It shows high ratio at year 2005 which
  12. 12. mean the ability of the firm to reward those who provide long term funds and to attract providersof future funds.Return on total equity was .24% in the year 2005 and then it starts decrease and become negativein 2009. It measure the both return to common stock and preferred stockholder.Return on common equity show the common stockholder, the residual owner. It has the samecase as with the return on total equity.Vertical AnalysisITEMS V 05 V 06 V 07 V 08 V 09 Vertical Analysis (Values in %)Sales- 100.00% 100.00% 100.00% 100.00% 100.00%NetCost of sales -74.37% -75.74% -69.72% -65.85% -72.81%GROSS PROFIT 25.63% 24.26% 30.28% 34.15% 27.19%Selling and distribution -2.75%expensesAdministrative and general expenses -4.26%ADMINISTRATIVE AND SELLING 7.25% 8.00% 6.57% -5.97%EXPENSESNet other income 1.68%OPERATING 18.38% 16.26% 23.72% 28.18% 22.29%PROFITOther income 6.92% 22.96% 9.67% 6.13% 25.30% 39.22% 33.39% 34.31%OTHERCHARGESFinance Cost 6.57% 13.27% -16.02% -24.43% -20.65%Workers Profit 0.55% 0.16%
  13. 13. Participation FundOthers 0.27% 0.02% -0.11% 7.39% 13.45%Profit before 17.91% 25.77% 17.37% 9.88% 1.52%taxationProvision for -1.15% -2.36% -1.09%taxationTaxation -1.01% -1.01%PROFIT AFTER 16.76% 23.41% 16.29% 8.87% 0.52%TAXATION