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Analysis of financial statements (2012 2013)


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analysis of financial statements

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Analysis of financial statements (2012 2013)

  1. 1. Analysis of Financial Statements (2012-2013) Presented by: MBA 90 D- 1B
  2. 2. Introduction The journey of K-Electric Limited began a hundred years ago. The Karachi Electric Supply Company Limited (KESC) was established on September 13, 1913, to serve the power needs of Karachi. Right from its inception, KESC served its consumers with the utmost zeal. The new management at K-Electric which took over in 2008 has introduced several successful initiatives that have enabled significant value creation across the company’s operations.
  3. 3. Mission & Vision Vision is to restore and maintain pride of K-Electric, in Karachi and in Pakistan. Mission of the organization is to brightening the lives of the people of Karachi by building the capacity to deliver uninterrupted, safe and affordable power.
  4. 4. Core Values We always seek relevance to our values which include integrity, accountability and the need for continuous improvement. •We Believe: We speak as professionals, committed to helping the customer. •We are Trustworthy: We never make complicated explanations. •We are Open: We speak clearly and concisely. •We are Dependable: The customer relies upon us to do the right thing because we are responsible to the people and for protecting the environment. •We think about You: We take time to listen to you and to understand your needs.
  5. 5. Products & Services K- Electric is publicly listed; fully integrated power utility involved in generation, transmission and distribution; Lighting up Karachi for last 100 years. • 28 Integrated Business Centers located across Karachi. • 10,603 workers in different capacities. • Covering the area of 6,500 sq km. with 2,431 MW of installed capacity of generating electricity. • 52% of the city is exempted from load shed.
  6. 6. 73% 1% 2% 24% Residential Public Sector Industrial Commercial Total 2.5 Million (approx.) consumers 1.8 Million are Residential consumers 13,000 are of the public sector 60,000 are Industrial consumers and 0.6 Million are Commercial. Consumption of Electricity
  7. 7. K-Electric is the only vertically- integrated power utility. It has power purchase agreements for 1021 MW from various IPPs • WAPDA • KANUPP These purchases are based on an optimized generation cost that is governed by the fuel cost at the respective power facilities and their operating efficiencies Generation of Electricity
  8. 8. K-Electric’s transmission system comprises a total of 1249 km of KV lines with 62 grid stations and 128 power transformers. The Company’s current transmission losses are less than 1.03%. Distribution of Electricity
  9. 9. Distribution network ranks amongst the largest electricity networks in the world. The Power distribution and customer service is efficiently managed though distribution of the area into four regions, which are divided into a total of 28 distribution centers. Transmission of Electricity
  10. 10. Analysis of Financial Statements Following are the methods of analyzing Financial Statements: 1. PKR Change & % Change 2. Trend Analysis 3. Vertical Analysis 4. Ratio Analysis
  11. 11. Analysis of Financial Statements PKR Change & % Change In PKR change and percentage change the amount would be change in rupee and we can easily calculate the percentage of the two years to show the change; increase or decrease in assets or liabilities. The amount is calculated by the following formula PKR change= Current Amount-Base Amount Percentage change= PKR change Base Amount
  12. 12. Analysis of Financial Statements Trend Analysis: It is also called horizontal analysis. It is used to disclosed the patterns of data and information which covers the one or another period of time. It is calculated by the following formula: Trend Percentage= Current Amount X 100 Base Amount
  13. 13. Analysis of Financial Statements Vertical Analysis: By computing this type of analysis, organization examines the size of each and every item of financial statements. For common size Analysis • In Balance Sheet total assets is 100% which determine the position of company • In Income statement total revenue is 100% which determine the performance of company. It is calculated by the formula: = Analysis Amount X 100 Amount of Total Assets
  14. 14. Analysis of Financial Statements Ratio Analysis: Ratios are simply relationships between the two financial calculations, and these ratios are made to measuring the financial performance of the organizations. Types of Ratios: • Short term Liquidity Ratio • Long term credit Risk Ratio • Profitability Ratio • Market price of common stock Ratio
  15. 15. Graphical Analysis 207.63 236.35 272.58 279.23 2010 2011 2012 2013 Assets (In Billions PKR)
  16. 16. Graphical Analysis 2010-11 2011-12 2012-13 Earning per share -0.44 0.11 0.26 Market value per share 2.15 3.24 6.22 0 1 2 3 4 5 6 7 InPKR Investment Ratios
  17. 17. Graphical Analysis 0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 2013 2012 Profit & loss Account Revenue Operating Expenses Operating Profit
  18. 18. Graphical Analysis 103.9 130.7 162.8 194.7 2010 2011 2012 2013 Revenues ( in billions PKR)
  19. 19. 0.7 0.57 0.69 0.71 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2010 2011 2012 2013 Current Ratios Graphical Analysis
  20. 20. -14.6 -9.4 2.6 6.8 2010 2011 2012 2013 Net Profits/ Loss (In Billions PKR) Graphical Analysis
  21. 21. Graphical Analysis 33.1% 33.5% 34.3% 36.6% 31.0% 32.0% 33.0% 34.0% 35.0% 36.0% 37.0% 2010 2011 2012 2013 Generation Fleet Efficiency
  22. 22. Short term Liquidity Ratio Current ratio 0.71 The company has an ability to pay off the short term debts Quick Ratio 0.40 The company has an ability to pay off the short term debts Working Capital (45,089,707) The company has more current liabilities then current assets Net cash provided by operating activities 1,411,769 Cash generated by operations after allowing for cash payment of expenses and operating liabilities Cash flows from operations to current liabilities 0.01 It indicates the ability to cover currently maturing obligations from recurring operations. It means company has 0.01% ability to meet the current obligations. Receivables turnover rate 1.28 It indicates that the company is not receiving their amounts quickly. The company is least concern about the recovery of their receivables Days to collect average accounts receivable 284.85 Free cash flow 4,544,887 Excess of operating cash flow over basic needs
  23. 23. Debt ratio 81% It indicates the relative size of the equity position. Company is 81% at financial risk. Trend in net cash provided by operating activities 10,838,503 Previously the generation of cash was less but now there is an upward trend to meet the obligations Interest covering ratio -1.92 The company is not having efficient ability to meet its interests payment obligations Long Term Credit Risks
  24. 24. Profitability Ratios Gross profit rate 15.3% It shows the profitability of the company Operating expense ratio -1% Management’s ability to control expenses Operating income 29,467,794 The profitability of the company's basic business activities. Company has an ability to make profits. Net income as a percentage of net sales 4% An indicator of managements’ ability to control costs Return on assets 0.03 Productivity of the assets; they are eligible to pay their debts in respect of their assets. Return on equity 13% The rate of return earned on the shareholders equity is high as compared to 2012.
  25. 25. Investment or Market Ratios Earnings per share 0.26 It shows the earning per share Market value per share 6.22 It shows the market value of share
  26. 26. Conclusion In general, the ratios indicate a continuous improvement trend in financial health over the years. The resolution of circular debt will further improve the position.
  27. 27. Thank you…