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Gul Ahmed Textile Mills Ltd
Financial Statement
Analysis
Group Members
• Hafiz Zohaib Ali
• Sameera Khan
• Rian Haider
HAFIZ ZOHAIB
• Gul Ahmed is globally identical as a name with quality,
innovation & reliability.
• The group began trading in textiles in the early 1900s.
• The group entered in the field of manufacturing with the
establishment of Gul Ahmed Textile Mills Ltd in 1953.
• Starting from Karachi, Gul Ahmed now has an extensive
chain of more than 40 retail stores across the country.
HISTORY
Product line
Liquidity measurement ratios
• Liquidity ratios attempt to measure a company’s ability
to pay-off its short-term debt obligations.
• This is done by comparing a company’s most liquid
assets (or, those that can be easily converting to cash),
to its short terms liabilities.
• We shall now see a few ratios grouped under the stated
heading.
Current Ratio
Current ratio is a measure of company’s short term debt
paying ability by deriving the proportion of current
assets available to cover current liabilities.
Formula: Current assets
Current liabilities
Calculation
2013 2012 2011 2010
Current Assets 13,921,865 10,754,152 13,616,576 8,350,600
Current
Liabilities
13,255,764 10,851,954 13,194,546 8,574,679
Ratio 1.05 0.99 1.03 0.97
Graphical representation
0.9
0.95
1
1.05
1.1
2013 2012 2011 2010
Current Ratios
Current Ratios
Analysis
• Current ratio of Gul-Ahmed is at the border line
• Although it is an a position to pay it’s short terms debts, but it is
expected to DEFAULT because current assets are almost equal to
the current liabilities
• The current liabilities, hence, after paying the liabilities, no assets
would remain.
Quick Ratio/ Acid- test ratio
• Also known as “quick asset ratio” and “Acid- test ratio”
• Measures “IMMEDIATE short-term debts paying abilities” by
measuring the amount of the most liquid current assets to there
are to cover the current liabilities.
• Is a liquidity measuring ratio, that further refines the current ratio
Formula:
cash+Equivalent+short-term investment+Account Receivable
Current Liabilities
2013 2012 2011 2010
Cash/Equivalent 101,921 120,013 83,335 84,966
Short-term
investment
Accounts
receivables
2,746,982 2,256,858 2,243,269 2,597,201
Current
Liabilities
13,255,764 10,851,954 13,194,546 8,574,679
Quick Ratio (%) 28.4 21.90 17.06 31.28
(Gul-Ahmed has no short term investments for the past 4 fiscal years, thus, there value is
not included. Only cash/ Equivalent and accounts receivables (TRADE DEBTS + OTHER
RECEIVABLES) are included)
Calculation
0
5
10
15
20
25
30
35
2013 2012 2011 2010
Quick Ratio
Quick Ratio
Graphical representation
Analysis
• The liquidity ( specifically cash) is highly low, thus, the
company can not pay its immediate short terms debts without
either defaulting, or further (over) borrowing
• This clearly shows that the ability of the company to pay its
immediate short-term obligations is LOW, and
• that it does not have the capacity to bear the Burdon.
SAMEERA KHAN
Leverage Ratio
Leverage ratio use to measure the company borrowed capital to
increase the potential return of an investment.
• Debt-to-Total Assets Ratio
• Debt-to-Equity Ratio
Debt Ratio/ Debt to Total Assets
Ratio
• Debt ratio compares a company's total assets to its total
liabilities
• It is used to gain a general idea as to what amount of leverage
is used by the company
• A lower percentage indicates that a company is less dependent
on borrowing, and the capital is mix depends more upon the
owner’s or shareholder’s.
Formula:
Debt ratio= Total liabilities
Total Assets
2013 2012 2011 2010
Total Liabilities 15,760,428 13,246,249 15,691,806 11,003,926
Total Assets 21,188,930 17,718,758 20,404,679 14,599,691
Debt Ratio (%) 74.38 74.76 76.90 75.93
Calculation
73
74
75
76
77
78
2013 2012 2011 2010
Debt Ratio
Debt Ratio
Analysis
• Gul-Ahmed has a debt ratio (percentage) in 70s.
• Which mean that their creditors have a claim on more than
70 % of there assets which is significantly high.
• If Gul-Ahmed pays its debts now, only 30% of the assets
would be left.
• They may loss all liquid assets and declare bankruptcy.
• Moreover the company’s capital mix HEAVELY depends
upon borrowed capital.
Debt To Equity Ratio
• Similar to debt ratio, except that now, total liabilities are compared
with total share holder’s equity.
• It shows how much the suppliers, lenders, creditors, and obligators
have committed to the company, to what share holders have
committed to the company.
• Therefore, it is the comparison of the company’s leverage versus
equity.
• How much of the capital mix consist of borrowed capital and how
much of it is from the share holders.
Formula: Debt to Equity ratio= Total liabilities
Shareholder’s Equity
2013 2012 2011 2010
Total Liabilities 15,760,428 13,246,249 15,691,806 11,003,926
Shareholder’s
Equity
5,428,502 4,472,509 4,712,873 3,595,765
Debt to Equity
Ratio (%)
40% 47% 47% 62%
Calculation
0
20
40
60
80
2013 2012 2011 2010
Debt to Equity Ratio
Debt to Equity
Ratio
Analysis
• It has a stronger equity position and is using less borrowed capital
share holders have almost thrice the money creditors have in the
company.
• Positively, this shows excellent management, calculated investments,
and so on and so forth.
• According to the STATE BANK OF PAKISTAN a company should not
borrow more than 70 % of its own capital/assets so that it does not
default and paying debts doesn’t becomes next to impossible.
Activity Ratios
Activity Ratio measures the speed with which accounts
are converted into sales/cash that is assessment of the
company’s operating cycle.
 Inventory Turnover
Average Collection Period
 Average Payment Period
 Total Asset Turnover
Inventory Turnover Ratio
Inventory turnover ratio, defined as how many times the entire
inventory of a company has been sold during an accounting
period, which is a major factor to success in any business that
holds inventory.
Formula:
Cost of goods Sold
Inventories
2013 2012 2011 2010
Cost of sales 25,502,336 21,432,746 20,808,843 16,515,934
Inventories 8472536.877 8893255.602 7650309.926 4416025.134
Inventory
turnover ratio
3.01 2.41 2.72 3.74
Calculation
0
1
2
3
4
2013 2012 2011 2010
Inventory Turnover Ratio
Inventory
Turnover Ratio
• It shows the good position of the company in 2010.
• Because stock is quickly converted into sales as compare to
2013, 2012 and 2011.
Analysis
Average collection period
The approximate amount of time that a company takes to receive
payments owed, in terms of receivables, from its customers and
clients. Average collection period must be less or equal to the
company credit policy.
Formula: Accounts Receivables* Days in a Year
Net Credit Sales
OR
Days in a Year
Receivable Turnover Ratio
0
10
20
30
40
50
2013 2012 2011 2010
Average collection period
Average
collection
period
2013 2012 2011 2010
Days in a year 365 365 365 365
Debtor turnover
ratio
13.00 12.14 11.59 8.05
Average
Collection Period
28.078 30.659 31.493 45.342
Calculation
Analysis
• It’s collection period is very good in 2010. as compared to
2011, 2012 and 2013.
• Its collection position is low in 2013 as compared to previous
year.
• Because company increase it’s credit sales.
• And it also increase its long term financing.
Total Assets Turnover Ratio
This ratio is useful to determine the amount of sales that are
generated from each rupee of assets. The higher the ratio, the
more sales that a company is producing based on its assets.
Formula:
Net Sales
Total Assets
1.1
1.2
1.3
1.4
1.5
2013 2012 2011 2010
Total Assets Turnover Ratio
Total assets
turnover ratio
2013 2012 2011 2010
Net Sales 30,201,588 24,918,480 25,435,465 19,688,794
Total Assets 21,188,930 17,718,758 20,404,679 14,599,691
Total Assets
Turnover
1.43 1.41 1.25 1.35
Calculation
• In 2011 its assets are more than its sales which cause low
turnover
• If we compare between past 4 years from2010 to 2013 its
turnover it high in 2013 then remaining years.
• In 2013 its sales are more than its assets,
• Which is good sign for the company because company did no
need to stock its inventories into warehouses.
Analysis
These types of ratios evaluate earning the company’s profit with
respect to various levels.
 Net Profit Ratio
 Return on Assets
 Return on Equity
Profitability Ratio
Net Profit Ratio
• Often referred to simply as a company’s Profit Margin,
• It is the most discussed number while considering a
company’s profitability.
• This simply ratio behaves investors to take a systematic look
on company’s income statement.
• Formula :
Net Profit After Tax
Net Sales
2013 2012 2011 2010
Net Income 702,078 (240,364) 1,196,457 477,533
Net Sales 30,201,588 24,918,480 25,435,465 19,688,794
Net Profit
Margin %
2.32 (0.96) 4.70 2.43
Calculation
-2
0
2
4
6
2013 2012 2011 2010
Net Profit Margin
Net Profit Margin
• Company rise its profit as compare from 2010 to 2011 (2.43 to
4.70)
• Unfortunately the company could not maintain the swiftness and in
2012 a loss of 0.96/100 rupee was incurred.
• Various factors may have accounted for the loss, for instance,
• Over spending
• Severe economic recession
• Plunge reserves, so on and so forth.
• Appreciatively, FY 2013, the company recovered from loss and
declared a profit of 2.32. though too little.
Analysis
• This ratio indicates how profitable a company is relative to
its Total Assets.
• The return on assets (ROA) ratio illustrates how well
management is employing the company’s total assets to
make profits.
• Formula :
Return on Assets
Net Profit After Tax
Total Assets
2013 2012 2011 2010
Net Profit 702,078 (240,364) 1,196,457 477,533
Total Assets 21,188,930 17,718,758 20,404,679 14,599,691
Return on Assets 3.313 (1.357) 5.864 3.271
-2
0
2
4
6
8
2013 2012 2011 2010
Return on Assets
Return on Assets
Calculation
• In the last FY i.e. 2013, the company is obviously in the
recovering phase, and has employed 3.313% of its assets,
successfully in raising profits.
• This means, for a profit of rupees 100 the company is utilizing
assets worth 3.313 rupees.
• It is worth mentioning that the low profits, (as indicated earlier),
may also be an outcome of under capitalization of assets.
Analysis
• The ration indicates how profitable a company is by comparing
its profit and Average shareholder’s equity.
• It measures how much the shareholder earn for their investment
in the company.
• Higher ratio percentage signifies efficient and effective
management,
• Showing how much a company is generating from shareholder’s
capital
• Formula :
Return on Equity
Net Profit After Taxes
Shareholders equity
2013 2012 2011 2010
Net Profit 702,078 (240,364) 1,196,457 477,533
Shareholders
Equity
5,428,502 4,472,509 4,712,873 3,595,765
Return on Equity 12.933 (5.374) 25.387 13.280
-10
0
10
20
30
2013 2012 2011 2010
Return on Equity
Return on Equity
Calculation
Analysis
• Drastic changes led to a glorious increase in subsequent
years until 2012, when the company declared losses.
• As of, 2013 the company is back on track with 12.933%
return, which is a large recovery and improvement.
• It is therefore, expected that the managerial decisions and
policies shall yield an even better figures this FY.
2013 2012 2011 2010
Current Ratio 1.05 0.99 1.03 0.97
Quick Ratio (%) 28.4 21.90 17.06 31.28
Debt Ratio (%) 74.38 74.76 76.90 75.93
Debt to Equity
Ratio (%)
40% 47% 47% 62%
Interest Coverage
Ratio
1.69 1.00 2.40 1.75
Inventory
turnover ratio
3.01 2.41 2.72 3.74
Average
Collection Period
28.078 30.659 31.493 45.342
Total Assets
Turnover 1.43 1.41 1.25 1.35
Net Profit
Margin % 2.32 (0.96) 4.70 2.43
Return on Assets 3.313 (1.357) 5.864 3.271
Return on Equity 12.933 (5.374) 25.387 13.280
RIAN HAIDER
Common Size & Trend Analysis
Common Size Analysis
An analysis of % financial statements where all balance
sheet items are divided by total assets and all income
statement items are divided by net sales or revenues.
Balance
Sheet
2013
(000)
2012
(000)
2011
(000)
2010
(000)
2013
%
2012
%
2011
%
2010
%
Total
Equity
5,428,50
2
4,472,50
9
4,712,873 3,595,765 25.62 25.24 23.10 24.63
Total Non
Current
Liabilities
2,504,66
4
2,394,29
5
2,497,260 2,429,247 11.82 13.51 12.24 16.64
Total
current
liabilities
13,255,76410,851,954 13,194,546 8,574,679 62.56 61.25 64.66 58.73
Total equity
and
liabilities
21,188,93017,718,758 20,404,679 14,599,691 100.00 100.00 100.00 100.00
Total non-
current
assets
7,267,065 6,964,606 6,788,103 6,249,091 34.30 39.31 33.27 42.80
Total
current
assets
13,921,86510,754,152 13,616,576 8,350,600 65.70 60.69 66.73 57.20
Total assets 21,188,93017,718,758 20,404,679 14,599,691 100.00 100.00 100.00 100.00
Balance Sheet
Profit & loss
account
2013
(000)
2012
(000)
2011
(000)
2010
(000)
2013
%
2012
%
2011
%
2010
%
Net sales 30,201,588 24,918,480 25,435,465 19,688,794 100.0 100.0 100.00 100.0
Cost of sales (25,502,33
6)
(21,432,746) (20,808,843) (16,515,934) (84.44) (86.01) (81.81) (83.88)
Gross profit 4,699,252 3,485,734 4,626,622 3,172,860 15.56 13.99 18.19 16.12
Distribution
expenses (1,509,886) (1,322,582) (1,090,588) (776,234) (5.00) (5.31) (4.29) (3.94)
Administrati
ve expenses (1,086,920) (955,070) (808,926) (715,293) (3.60) (3.83) (3.18) (3.63)
Other
income
38,558 166,617 24,931 25,116 0.13 0.67 0.10 0.13
Other
expenses
(72,356) (653) (116,604) (53,619) (0.24) (0.00) (0.46) (0.27)
Operating
profit
2,068,648 1,374,046 2,635,435 1,652,830 6.85 5.51 10.36 8.39
Financial
expenses
(1,227,520) (1,375,463) (1,097,981) (944,603) (4.06) (5.52) (4.32) (4.80)
Profit before
taxation 841,128 (1,417) 1,537,454 708,227 2.79 (0.01) 6.04 3.60
Income tax
expense (139,050) (238,947) (340,997) (230,694) (0.46) (0.96) (1.34) (1.17)
Profit for the
year
702,078 (240,364) 1,196,457 477,533 2.32 (0.96) 4.70 2.43
Analysis
• Performance is improving as their sales have grown by 21% and
gross profit margin has increased by 35%.
• During the year, we were able to reduce our finance cost by
11%, which was achieved by efficient utilization of credit
facilities.
• Both local and export sales have increased by 29% and 16%
respectively.
• They strived to make their production processes more efficient
to curtail the cost of production and to that effect we managed to
reduce the cost by 2% of sales.
• Net assets of the company have increased by 21%. Trade
debts have increased by 24% mainly due to the increase in
sales.
• Fixed assets have increased by 4.4% mostly due to the
addition of new machinery in their production facilities.
• Long-term financing has increased by Rs. 58.57 million,
which is 3% as compared to fiscal year 2012. Short-term
borrowings have increased by 14%.
• Overall there is significant improvement in the leverage,
debt to equity and interest cover ratios.
Index Analysis
Balance
Sheet
2013
(000)
2012
(000)
2011
(000)
2010
(000)
% % % %
Total Equity 5,428,502 4,472,509 4,712,873 3,595,765 21.37 (5.10) 31 100
Total Non
Current
Liabilities
2,504,664 2,394,295 2,497,260 2,429,247 4.61 (4.12) 2.7 100
Total current
liabilities
13,255,764 10,851,954 13,194,546 8,574,679 22.15 (17.75) 53.88 100
Total equity
and liabilities
21,188,930 17,718,758 20,404,679 14,599,691 19.58 (13.16) 39.76 100
Total non-
current assets
7,267,065 6,964,152 6,788,103 6,249,091 4.34 2.60 8.63 100
Total current
assets
13,921,865 10,754,152 13,616,576 8,350,600 29.46 (21.02) 63.06 100
Total assets 21,188,930 17,718,758 20,404,679 14,599,691 19.58 (13.16) 39.76 100
Profit &
loss account
2013
(000)
2012
(000)
2011
(000)
2010
(000)
% % % %
Net sales 30,201,588 24,918,480 25,435,465 19,688,794 21.20 (2.03) 29.19 100
Cost of sales (25,502,33
6)
(21,432,74
6)
(20,808,843
)
(16,515,934
)
18.99 3.00 25.99 100
Gross profit 4,699,252 3,485,734 4,626,622 3,172,860 34.81 (24.66) 45.82 100
Distribution
expenses
(1,509,886) (1,322,582) (1,090,588) (776,234) 14.16 21.27 40.50 100
Administrati
ve expenses (1,086,920) (955,070) (808,926) (715,293) 13.81 18.07 13.09 100
Other
expenses
(72,356) (653) (116,604) (53,619) 10,980.55 (99.44) 117.47 100
Other
income
38,558 166,617 24,931 25,116 (76.86) 568.31 (0.74) 100
Operating
profit
2,068,648 1,374,046 2,635,435 1,208,851 50.55 (47.86) 59.45 100
Financial
expenses
(1,227,520) 1,375,463) (1,097,981) (944,603) (10.76) 25.27 16.24 100
Profit before
taxation 841,128 (1,417) 1,537,454 708,227
(59,470.00
)
(10.09) 117.08 100
Income tax
expense
(139,050) (238,947) (340,997) (230,694) (41.81) (29.93) 47.81 100
Profit for the
year
702,078 (240,364) 1,196,457 477,533 (392.09) (120.09) 150.55 100
• Shareholders equity has almost doubled to Rs. 5,428 million as
compared Rs. 3,595 million in FY 2010.
• Property, plant and equipment have increased by Rs. 6,140 million to
Rs. 7,132 million over the four years period. Capacity has increased
and latest state of the art machinery has been inducted.
• Over the last four years, net sales grew by 153% from Rs. 19,688
million in FY 2010 to Rs. 30,202 million in FY 2013. The growth
has more than doubled in the last four years. Local Sales and Export
Sales have increased both in volume and price.
Comments on Financial Analysis
• Finance cost as percentage of sales has gone down to 4.1%
in FY2013 from 4.8% in FY 2010.
• Profit after tax in FY 2013 has increased to Rs. 702 million
as compared to Rs. 477 million in FY 2010. Earnings per
share now stand at Rs. 4.84 versus Rs. 3.76 in FY 2010.
• During the four year period Company has paid 22.5% cash
dividend and issued 100% bonus shares. In addition for the
FY 2013 20% bonus shares have been proposed, taking the
total bonus issue 120%.
HAFIZ ZOHAIB
Conclusion
• The textile sector has a key role in the economic activities of the country
when it comes to contribution to the percentage of exports and GDP and
serves as a major engine of employment.
• Textile is an important industry having an inherent value addition
capability and exponential employment generating potential.
• To weather the energy crisis, the made-ups and apparel sector is
extremely vital as it requires the lowest energy and investment while
yielding the greatest employment potential and value added exports
PERFORMANCE OVERVIEW their financial performance is assessed
mainly by improvement in the shareholders stake, which is the result of
profits earned by the Company, market penetration in terms of sales and
liquidity.
• Gul Ahmed as a responsible corporate citizen voluntarily works for the
welfare of the society.
• With a history of spending for infrastructure development of society,
providing tap water for local community and facilitating law
enforcement forces in the area with the cooperation of other
stakeholders.
• Severe energy crisis in our country is not only adversely impacting the
national economy but also a matter of depression for general public as
long hours of load shedding of electricity and gas has disturbed
peaceful lives of the citizens.
• Gul Ahmed has shared national burden by investing millions of Rupees
in the most efficient power generation facilities.
Gull ahmad.pptx
Gull ahmad.pptx

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Gull ahmad.pptx

  • 1.
  • 2. Gul Ahmed Textile Mills Ltd Financial Statement Analysis
  • 3. Group Members • Hafiz Zohaib Ali • Sameera Khan • Rian Haider
  • 5. • Gul Ahmed is globally identical as a name with quality, innovation & reliability. • The group began trading in textiles in the early 1900s. • The group entered in the field of manufacturing with the establishment of Gul Ahmed Textile Mills Ltd in 1953. • Starting from Karachi, Gul Ahmed now has an extensive chain of more than 40 retail stores across the country. HISTORY
  • 7.
  • 8.
  • 9. Liquidity measurement ratios • Liquidity ratios attempt to measure a company’s ability to pay-off its short-term debt obligations. • This is done by comparing a company’s most liquid assets (or, those that can be easily converting to cash), to its short terms liabilities. • We shall now see a few ratios grouped under the stated heading.
  • 10. Current Ratio Current ratio is a measure of company’s short term debt paying ability by deriving the proportion of current assets available to cover current liabilities. Formula: Current assets Current liabilities
  • 11. Calculation 2013 2012 2011 2010 Current Assets 13,921,865 10,754,152 13,616,576 8,350,600 Current Liabilities 13,255,764 10,851,954 13,194,546 8,574,679 Ratio 1.05 0.99 1.03 0.97 Graphical representation 0.9 0.95 1 1.05 1.1 2013 2012 2011 2010 Current Ratios Current Ratios
  • 12. Analysis • Current ratio of Gul-Ahmed is at the border line • Although it is an a position to pay it’s short terms debts, but it is expected to DEFAULT because current assets are almost equal to the current liabilities • The current liabilities, hence, after paying the liabilities, no assets would remain.
  • 13. Quick Ratio/ Acid- test ratio • Also known as “quick asset ratio” and “Acid- test ratio” • Measures “IMMEDIATE short-term debts paying abilities” by measuring the amount of the most liquid current assets to there are to cover the current liabilities. • Is a liquidity measuring ratio, that further refines the current ratio Formula: cash+Equivalent+short-term investment+Account Receivable Current Liabilities
  • 14. 2013 2012 2011 2010 Cash/Equivalent 101,921 120,013 83,335 84,966 Short-term investment Accounts receivables 2,746,982 2,256,858 2,243,269 2,597,201 Current Liabilities 13,255,764 10,851,954 13,194,546 8,574,679 Quick Ratio (%) 28.4 21.90 17.06 31.28 (Gul-Ahmed has no short term investments for the past 4 fiscal years, thus, there value is not included. Only cash/ Equivalent and accounts receivables (TRADE DEBTS + OTHER RECEIVABLES) are included) Calculation
  • 15. 0 5 10 15 20 25 30 35 2013 2012 2011 2010 Quick Ratio Quick Ratio Graphical representation
  • 16. Analysis • The liquidity ( specifically cash) is highly low, thus, the company can not pay its immediate short terms debts without either defaulting, or further (over) borrowing • This clearly shows that the ability of the company to pay its immediate short-term obligations is LOW, and • that it does not have the capacity to bear the Burdon.
  • 18. Leverage Ratio Leverage ratio use to measure the company borrowed capital to increase the potential return of an investment. • Debt-to-Total Assets Ratio • Debt-to-Equity Ratio
  • 19. Debt Ratio/ Debt to Total Assets Ratio • Debt ratio compares a company's total assets to its total liabilities • It is used to gain a general idea as to what amount of leverage is used by the company • A lower percentage indicates that a company is less dependent on borrowing, and the capital is mix depends more upon the owner’s or shareholder’s. Formula: Debt ratio= Total liabilities Total Assets
  • 20. 2013 2012 2011 2010 Total Liabilities 15,760,428 13,246,249 15,691,806 11,003,926 Total Assets 21,188,930 17,718,758 20,404,679 14,599,691 Debt Ratio (%) 74.38 74.76 76.90 75.93 Calculation 73 74 75 76 77 78 2013 2012 2011 2010 Debt Ratio Debt Ratio
  • 21. Analysis • Gul-Ahmed has a debt ratio (percentage) in 70s. • Which mean that their creditors have a claim on more than 70 % of there assets which is significantly high. • If Gul-Ahmed pays its debts now, only 30% of the assets would be left. • They may loss all liquid assets and declare bankruptcy. • Moreover the company’s capital mix HEAVELY depends upon borrowed capital.
  • 22. Debt To Equity Ratio • Similar to debt ratio, except that now, total liabilities are compared with total share holder’s equity. • It shows how much the suppliers, lenders, creditors, and obligators have committed to the company, to what share holders have committed to the company. • Therefore, it is the comparison of the company’s leverage versus equity. • How much of the capital mix consist of borrowed capital and how much of it is from the share holders. Formula: Debt to Equity ratio= Total liabilities Shareholder’s Equity
  • 23. 2013 2012 2011 2010 Total Liabilities 15,760,428 13,246,249 15,691,806 11,003,926 Shareholder’s Equity 5,428,502 4,472,509 4,712,873 3,595,765 Debt to Equity Ratio (%) 40% 47% 47% 62% Calculation 0 20 40 60 80 2013 2012 2011 2010 Debt to Equity Ratio Debt to Equity Ratio
  • 24. Analysis • It has a stronger equity position and is using less borrowed capital share holders have almost thrice the money creditors have in the company. • Positively, this shows excellent management, calculated investments, and so on and so forth. • According to the STATE BANK OF PAKISTAN a company should not borrow more than 70 % of its own capital/assets so that it does not default and paying debts doesn’t becomes next to impossible.
  • 25. Activity Ratios Activity Ratio measures the speed with which accounts are converted into sales/cash that is assessment of the company’s operating cycle.  Inventory Turnover Average Collection Period  Average Payment Period  Total Asset Turnover
  • 26. Inventory Turnover Ratio Inventory turnover ratio, defined as how many times the entire inventory of a company has been sold during an accounting period, which is a major factor to success in any business that holds inventory. Formula: Cost of goods Sold Inventories
  • 27. 2013 2012 2011 2010 Cost of sales 25,502,336 21,432,746 20,808,843 16,515,934 Inventories 8472536.877 8893255.602 7650309.926 4416025.134 Inventory turnover ratio 3.01 2.41 2.72 3.74 Calculation 0 1 2 3 4 2013 2012 2011 2010 Inventory Turnover Ratio Inventory Turnover Ratio
  • 28. • It shows the good position of the company in 2010. • Because stock is quickly converted into sales as compare to 2013, 2012 and 2011. Analysis
  • 29. Average collection period The approximate amount of time that a company takes to receive payments owed, in terms of receivables, from its customers and clients. Average collection period must be less or equal to the company credit policy. Formula: Accounts Receivables* Days in a Year Net Credit Sales OR Days in a Year Receivable Turnover Ratio
  • 30. 0 10 20 30 40 50 2013 2012 2011 2010 Average collection period Average collection period 2013 2012 2011 2010 Days in a year 365 365 365 365 Debtor turnover ratio 13.00 12.14 11.59 8.05 Average Collection Period 28.078 30.659 31.493 45.342 Calculation
  • 31. Analysis • It’s collection period is very good in 2010. as compared to 2011, 2012 and 2013. • Its collection position is low in 2013 as compared to previous year. • Because company increase it’s credit sales. • And it also increase its long term financing.
  • 32. Total Assets Turnover Ratio This ratio is useful to determine the amount of sales that are generated from each rupee of assets. The higher the ratio, the more sales that a company is producing based on its assets. Formula: Net Sales Total Assets
  • 33. 1.1 1.2 1.3 1.4 1.5 2013 2012 2011 2010 Total Assets Turnover Ratio Total assets turnover ratio 2013 2012 2011 2010 Net Sales 30,201,588 24,918,480 25,435,465 19,688,794 Total Assets 21,188,930 17,718,758 20,404,679 14,599,691 Total Assets Turnover 1.43 1.41 1.25 1.35 Calculation
  • 34. • In 2011 its assets are more than its sales which cause low turnover • If we compare between past 4 years from2010 to 2013 its turnover it high in 2013 then remaining years. • In 2013 its sales are more than its assets, • Which is good sign for the company because company did no need to stock its inventories into warehouses. Analysis
  • 35. These types of ratios evaluate earning the company’s profit with respect to various levels.  Net Profit Ratio  Return on Assets  Return on Equity Profitability Ratio
  • 36. Net Profit Ratio • Often referred to simply as a company’s Profit Margin, • It is the most discussed number while considering a company’s profitability. • This simply ratio behaves investors to take a systematic look on company’s income statement. • Formula : Net Profit After Tax Net Sales
  • 37. 2013 2012 2011 2010 Net Income 702,078 (240,364) 1,196,457 477,533 Net Sales 30,201,588 24,918,480 25,435,465 19,688,794 Net Profit Margin % 2.32 (0.96) 4.70 2.43 Calculation -2 0 2 4 6 2013 2012 2011 2010 Net Profit Margin Net Profit Margin
  • 38. • Company rise its profit as compare from 2010 to 2011 (2.43 to 4.70) • Unfortunately the company could not maintain the swiftness and in 2012 a loss of 0.96/100 rupee was incurred. • Various factors may have accounted for the loss, for instance, • Over spending • Severe economic recession • Plunge reserves, so on and so forth. • Appreciatively, FY 2013, the company recovered from loss and declared a profit of 2.32. though too little. Analysis
  • 39. • This ratio indicates how profitable a company is relative to its Total Assets. • The return on assets (ROA) ratio illustrates how well management is employing the company’s total assets to make profits. • Formula : Return on Assets Net Profit After Tax Total Assets
  • 40. 2013 2012 2011 2010 Net Profit 702,078 (240,364) 1,196,457 477,533 Total Assets 21,188,930 17,718,758 20,404,679 14,599,691 Return on Assets 3.313 (1.357) 5.864 3.271 -2 0 2 4 6 8 2013 2012 2011 2010 Return on Assets Return on Assets Calculation
  • 41. • In the last FY i.e. 2013, the company is obviously in the recovering phase, and has employed 3.313% of its assets, successfully in raising profits. • This means, for a profit of rupees 100 the company is utilizing assets worth 3.313 rupees. • It is worth mentioning that the low profits, (as indicated earlier), may also be an outcome of under capitalization of assets. Analysis
  • 42. • The ration indicates how profitable a company is by comparing its profit and Average shareholder’s equity. • It measures how much the shareholder earn for their investment in the company. • Higher ratio percentage signifies efficient and effective management, • Showing how much a company is generating from shareholder’s capital • Formula : Return on Equity Net Profit After Taxes Shareholders equity
  • 43. 2013 2012 2011 2010 Net Profit 702,078 (240,364) 1,196,457 477,533 Shareholders Equity 5,428,502 4,472,509 4,712,873 3,595,765 Return on Equity 12.933 (5.374) 25.387 13.280 -10 0 10 20 30 2013 2012 2011 2010 Return on Equity Return on Equity Calculation
  • 44. Analysis • Drastic changes led to a glorious increase in subsequent years until 2012, when the company declared losses. • As of, 2013 the company is back on track with 12.933% return, which is a large recovery and improvement. • It is therefore, expected that the managerial decisions and policies shall yield an even better figures this FY.
  • 45. 2013 2012 2011 2010 Current Ratio 1.05 0.99 1.03 0.97 Quick Ratio (%) 28.4 21.90 17.06 31.28 Debt Ratio (%) 74.38 74.76 76.90 75.93 Debt to Equity Ratio (%) 40% 47% 47% 62% Interest Coverage Ratio 1.69 1.00 2.40 1.75 Inventory turnover ratio 3.01 2.41 2.72 3.74 Average Collection Period 28.078 30.659 31.493 45.342 Total Assets Turnover 1.43 1.41 1.25 1.35 Net Profit Margin % 2.32 (0.96) 4.70 2.43 Return on Assets 3.313 (1.357) 5.864 3.271 Return on Equity 12.933 (5.374) 25.387 13.280
  • 47. Common Size & Trend Analysis Common Size Analysis An analysis of % financial statements where all balance sheet items are divided by total assets and all income statement items are divided by net sales or revenues.
  • 48. Balance Sheet 2013 (000) 2012 (000) 2011 (000) 2010 (000) 2013 % 2012 % 2011 % 2010 % Total Equity 5,428,50 2 4,472,50 9 4,712,873 3,595,765 25.62 25.24 23.10 24.63 Total Non Current Liabilities 2,504,66 4 2,394,29 5 2,497,260 2,429,247 11.82 13.51 12.24 16.64 Total current liabilities 13,255,76410,851,954 13,194,546 8,574,679 62.56 61.25 64.66 58.73 Total equity and liabilities 21,188,93017,718,758 20,404,679 14,599,691 100.00 100.00 100.00 100.00 Total non- current assets 7,267,065 6,964,606 6,788,103 6,249,091 34.30 39.31 33.27 42.80 Total current assets 13,921,86510,754,152 13,616,576 8,350,600 65.70 60.69 66.73 57.20 Total assets 21,188,93017,718,758 20,404,679 14,599,691 100.00 100.00 100.00 100.00
  • 49. Balance Sheet Profit & loss account 2013 (000) 2012 (000) 2011 (000) 2010 (000) 2013 % 2012 % 2011 % 2010 % Net sales 30,201,588 24,918,480 25,435,465 19,688,794 100.0 100.0 100.00 100.0 Cost of sales (25,502,33 6) (21,432,746) (20,808,843) (16,515,934) (84.44) (86.01) (81.81) (83.88) Gross profit 4,699,252 3,485,734 4,626,622 3,172,860 15.56 13.99 18.19 16.12 Distribution expenses (1,509,886) (1,322,582) (1,090,588) (776,234) (5.00) (5.31) (4.29) (3.94) Administrati ve expenses (1,086,920) (955,070) (808,926) (715,293) (3.60) (3.83) (3.18) (3.63) Other income 38,558 166,617 24,931 25,116 0.13 0.67 0.10 0.13 Other expenses (72,356) (653) (116,604) (53,619) (0.24) (0.00) (0.46) (0.27) Operating profit 2,068,648 1,374,046 2,635,435 1,652,830 6.85 5.51 10.36 8.39 Financial expenses (1,227,520) (1,375,463) (1,097,981) (944,603) (4.06) (5.52) (4.32) (4.80) Profit before taxation 841,128 (1,417) 1,537,454 708,227 2.79 (0.01) 6.04 3.60 Income tax expense (139,050) (238,947) (340,997) (230,694) (0.46) (0.96) (1.34) (1.17) Profit for the year 702,078 (240,364) 1,196,457 477,533 2.32 (0.96) 4.70 2.43
  • 50. Analysis • Performance is improving as their sales have grown by 21% and gross profit margin has increased by 35%. • During the year, we were able to reduce our finance cost by 11%, which was achieved by efficient utilization of credit facilities. • Both local and export sales have increased by 29% and 16% respectively. • They strived to make their production processes more efficient to curtail the cost of production and to that effect we managed to reduce the cost by 2% of sales.
  • 51. • Net assets of the company have increased by 21%. Trade debts have increased by 24% mainly due to the increase in sales. • Fixed assets have increased by 4.4% mostly due to the addition of new machinery in their production facilities. • Long-term financing has increased by Rs. 58.57 million, which is 3% as compared to fiscal year 2012. Short-term borrowings have increased by 14%. • Overall there is significant improvement in the leverage, debt to equity and interest cover ratios.
  • 52. Index Analysis Balance Sheet 2013 (000) 2012 (000) 2011 (000) 2010 (000) % % % % Total Equity 5,428,502 4,472,509 4,712,873 3,595,765 21.37 (5.10) 31 100 Total Non Current Liabilities 2,504,664 2,394,295 2,497,260 2,429,247 4.61 (4.12) 2.7 100 Total current liabilities 13,255,764 10,851,954 13,194,546 8,574,679 22.15 (17.75) 53.88 100 Total equity and liabilities 21,188,930 17,718,758 20,404,679 14,599,691 19.58 (13.16) 39.76 100 Total non- current assets 7,267,065 6,964,152 6,788,103 6,249,091 4.34 2.60 8.63 100 Total current assets 13,921,865 10,754,152 13,616,576 8,350,600 29.46 (21.02) 63.06 100 Total assets 21,188,930 17,718,758 20,404,679 14,599,691 19.58 (13.16) 39.76 100
  • 53. Profit & loss account 2013 (000) 2012 (000) 2011 (000) 2010 (000) % % % % Net sales 30,201,588 24,918,480 25,435,465 19,688,794 21.20 (2.03) 29.19 100 Cost of sales (25,502,33 6) (21,432,74 6) (20,808,843 ) (16,515,934 ) 18.99 3.00 25.99 100 Gross profit 4,699,252 3,485,734 4,626,622 3,172,860 34.81 (24.66) 45.82 100 Distribution expenses (1,509,886) (1,322,582) (1,090,588) (776,234) 14.16 21.27 40.50 100 Administrati ve expenses (1,086,920) (955,070) (808,926) (715,293) 13.81 18.07 13.09 100 Other expenses (72,356) (653) (116,604) (53,619) 10,980.55 (99.44) 117.47 100 Other income 38,558 166,617 24,931 25,116 (76.86) 568.31 (0.74) 100 Operating profit 2,068,648 1,374,046 2,635,435 1,208,851 50.55 (47.86) 59.45 100 Financial expenses (1,227,520) 1,375,463) (1,097,981) (944,603) (10.76) 25.27 16.24 100 Profit before taxation 841,128 (1,417) 1,537,454 708,227 (59,470.00 ) (10.09) 117.08 100 Income tax expense (139,050) (238,947) (340,997) (230,694) (41.81) (29.93) 47.81 100 Profit for the year 702,078 (240,364) 1,196,457 477,533 (392.09) (120.09) 150.55 100
  • 54. • Shareholders equity has almost doubled to Rs. 5,428 million as compared Rs. 3,595 million in FY 2010. • Property, plant and equipment have increased by Rs. 6,140 million to Rs. 7,132 million over the four years period. Capacity has increased and latest state of the art machinery has been inducted. • Over the last four years, net sales grew by 153% from Rs. 19,688 million in FY 2010 to Rs. 30,202 million in FY 2013. The growth has more than doubled in the last four years. Local Sales and Export Sales have increased both in volume and price. Comments on Financial Analysis
  • 55. • Finance cost as percentage of sales has gone down to 4.1% in FY2013 from 4.8% in FY 2010. • Profit after tax in FY 2013 has increased to Rs. 702 million as compared to Rs. 477 million in FY 2010. Earnings per share now stand at Rs. 4.84 versus Rs. 3.76 in FY 2010. • During the four year period Company has paid 22.5% cash dividend and issued 100% bonus shares. In addition for the FY 2013 20% bonus shares have been proposed, taking the total bonus issue 120%.
  • 57. Conclusion • The textile sector has a key role in the economic activities of the country when it comes to contribution to the percentage of exports and GDP and serves as a major engine of employment. • Textile is an important industry having an inherent value addition capability and exponential employment generating potential. • To weather the energy crisis, the made-ups and apparel sector is extremely vital as it requires the lowest energy and investment while yielding the greatest employment potential and value added exports PERFORMANCE OVERVIEW their financial performance is assessed mainly by improvement in the shareholders stake, which is the result of profits earned by the Company, market penetration in terms of sales and liquidity.
  • 58. • Gul Ahmed as a responsible corporate citizen voluntarily works for the welfare of the society. • With a history of spending for infrastructure development of society, providing tap water for local community and facilitating law enforcement forces in the area with the cooperation of other stakeholders. • Severe energy crisis in our country is not only adversely impacting the national economy but also a matter of depression for general public as long hours of load shedding of electricity and gas has disturbed peaceful lives of the citizens. • Gul Ahmed has shared national burden by investing millions of Rupees in the most efficient power generation facilities.