IBF final presentation

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IBF final presentation

  1. 1. A Comparison of Ratios Of Ferozsons Lab. Ltd and Searle Pakistan Ltd . Group members Farheen Khalid Nissa Razzak Sobia Yousuf Lubna Mahar
  2. 2. INTRODUCTION TO FEROZSONS
  3. 3. COMPANY PROFILE Exchanges: Karachi, Lahore & Islamabad Symbol: Feroz Country: Pakistan City: Rawalpindi Industry: The company is primarily engaged in the manufacturing and sale of pharmaceuticals and soap products Number of Employees: 461 Year Ended: 30th June
  4. 4. INTRODUCTION TO SEARLE
  5. 5. COMPANY PROFILE Exchanges: Karachi & Islamabad Symbol: Searl Country: Pakistan City: Karachi Industry: The company is principally engaged in the manufacture of pharmaceutical products and a low calories sweetener Number of Employees: 528 Year Ended: 30th June
  6. 6. FINANCIAL RATIOS 2004 & 2005
  7. 7. LIQUIDITY RATIOS
  8. 8. CURRENT RATIO Current Ratio= Current Assets Current Liabilities 1.22 2.82 2005 1.11 2.01 2004 Searle Ferozsons Year
  9. 9. QUICK RATIO (ACID-TEST RATIO) Quick Ratio= Current Asset-Inventory Current Liabilities 0.96 1.01 2005 0.97 1.89 2004 Searle Ferozsons Year
  10. 10. LEVERAGE RATIOS
  11. 11. DEBT TO EQUITY RATIO Debt-to-Equity= Total Debt Shareholder Equity 2 0.36 2005 3 0.46 2004 Searle Ferozsons Year
  12. 12. DEBT TO TOTAL ASSETS Total Debt Ratio= Total Debt Total Assets 0.56 0.24 2005 0.52 0.27 2004 Searle Ferozsons Year
  13. 13. EQUITY MULTIPLIER Equity Multiplier= Total Assets Shareholders’ equity 3.55 1.5 2005 4.55 1.71 2004 Searle Ferozsons Year
  14. 14. COVERAGE RATIO
  15. 15. TIMES INTEREST EARNED Times Interest Earned= EBIT Interest Charges 4.5 118 2005 3.9 104.5 2004 Searle Ferozsons Year
  16. 16. EFFICIENCY RATIOS
  17. 17. RECEIVABLE TURNOVER Receivable Turnover= Annual Net Credit Sales Receivables 3.07 87 2005 2.8 64.5 2004 Searle Ferozsons Year
  18. 18. RECEIVABLE TUROVER IN DAYS Average collection period= Days in a year Receivable Turnover 117 4 2005 129 6 2004 Searle Ferozsons Year
  19. 19. INVENTORY TURNOVER Inventory Turnover = Cost Of Goods Sold Inventory 6.4 3.6 2005 5.45 3.5 2004 Searle Ferozsons Year
  20. 20. INVENTORY TURNOVER IN DAYS Inventory Turnover in Days= Days in a year Inventory turnover 56 101 2005 66 103 2004 Searle Ferozsons Year
  21. 21. TOTAL ASSET TURNOVER Total Asset Turnover= Net sales Total assets 1.04 1.27 2005 0.93 1.53 2004 Searle Ferozsons Year
  22. 22. PROFITABILITY RATIOS
  23. 23. GROSS PROFIT MARGIN Gross Profit Margin= Gross Profit Net Sales 32.5% 53% 2005 37% 50% 2004 Searle Ferozsons Year
  24. 24. NET PROFIT MARGIN Net Profit Margin= Net profit after taxes Net sales 3.50% 21% 2005 6% 16% 2004 Searle Ferozsons Year
  25. 25. RETURN ON ASSETS Return on Assets= Net profit after taxes Total assets 3.70% 27% 2005 5% 24% 2004 Searle Ferozsons Year
  26. 26. RETURN ON ASSETS DUPONT APPROACH Return on Assets= Net profit margin*Total Asset Turnover 0.036 0.26 2005 0.055 0.24 2004 Searle Ferozsons Year
  27. 27. RETURN ON EQUITY Return on Equity= Net profit after taxes Shareholder’s equity 13.10% 41% 2005 24% 42% 2004 Searle Ferozsons Year
  28. 28. RETURN ON EQUITY DUPONT APPROACH Return on Equity = Net profit margin*Total Asset Turnover*Equity Multiplier 0.13 0.40 2005 0.25 0.41 2004 Searle Ferozsons Year
  29. 29. MARKET VALUE MEASURES
  30. 30. EARNINGS PER SHARE EARNING PER SHARE= EAT No. Of Shares 3.6 19.87 2005 5.06 13.06 2004 Searle Ferozsons Year
  31. 31. PRICE TO EARNINGS SHARE Price to Earnings Ratio= Price Earnings 11.56 9.30 2005 6.92 9.47 2004 Searle Ferozsons Year
  32. 32. Common Size & Indexed Size Balance Sheet & Income Statement
  33. 33. FEROZSONS’ COMMON & INDEXED SIZE BALANCE SHEET (ASSET SIDE) 72.16 100.00 100.00 100.00 575305163 415130035 TOTAL 60.19 100.00 53.19 44.37 306002950 184183116 TOTAL CURRENT ASSETS 56.74 100.00 14.44 11.35 83045347 47119395 Cash and bank balances 43.39 100.00 9.92 5.97 57071000 24763787 short term investments 54.83 100.00 1.08 0.82 6206514 3403035 Trade deposits 117.42 100.00 1.46 2.38 8415508 9881645 Trade debts (RECEIVABLES) 90.49 100.00 17.48 21.92 100545997 90984280 Stocks-in-trade 116.6  100.00 46.81 55.63 269302213 230946919 TOTAL FIXED ASSETS 100.58 100.00 0.09 0.13 538147 541247 LONG TERM DEPOSITS 100.00 100.00 0.01 0.01 33085 33085 LONG TERM INVESTMENTS 85.73 100.00 46.71 55.49 268730981 230372587 Property, plant & equipment             Fixed Assets Tangible Indexed size % Common size % Regular Years   2005 2004 2005 2004 2005 2004  
  34. 34. FEROZSONS’ COMMON & INDEXED SIZE BALANCE SHEET (LIABILITY SIDE) 138.58 100.00 100.00 100.00 575305163 415130035 TOTAL LIABILITY AND EQUITY 123.26 100.00 23.80 26.76 136906815 111075514 Total liabilities 118.58 100.00 18.86 22.05 108520915 91519724   Total Current Liabilities 139.96 100.00 12.50 12.38 71912416 51381311 Trade and other payables             Current Liabilities 145.15 100.00 4.93 4.71 28385900 19555790   Total Non Current Liabilities 158.15 100.00 66.66 58.41 383470795 242479041   Total Equity Indexed Size% Common Size% Regular Years 2005 2004 2005 2004 2005 2004  
  35. 35. FEROZSONS’COMMON & INDEXED SIZE INCOME SHEET 152.11 100.00 21.03 15.84 153565799 100955403 Net profit 152.31 100.00 21.05 15.83 153664442 100891537 Profit after taxes 131.50 100.00 8.71 7.59 63607622 48371149 Profit for taxation 145.56 100.00 29.76 23.41 217272064 149262686 Earning after interest 128.62 100.00 0.25 0.23 1854323 1441689 Finance Cost 145.40 100.00 30.01 23.64 219126387 150704375 EBIT 461.44 100.00 3.55 0.88 25929235 5619173 Other income 136.65 100.00 28.96 24.27 211392190 154698493 Operating profit 107.61 100.00 24.22 25.78 176837384 164335764 total expenses 104.28 100.00 19.54 21.46 142663053 136807554 selling & distribution costs 124.14 100.00 4.68 4.32 34174331 27528210 Administrative Expenses 121.69 100.00 53.18 50.05 388229574 319034257 Gross profit 107.35 100.00 46.82 49.95 341837087 318441195 Cost of goods sold 114.52 100.00 100.00 100.00 730066661 637475452 Net sales 2005 2004 2005 2004 2005 2004   Indexed Size% Common Size% Regular Year  
  36. 36. <ul><li>Based on our analysis, below are a few recommendations for the company which may help in increasing the financial position of the company FEROZSONS: </li></ul><ul><li>FEROZSONS is having high number of inventories and which needs to be clear out in order to have more cash and receivables. </li></ul><ul><li>The Average Collection Period for the company has decreased, which is a good sign. However, keeping such a tight repayment policy may lead to loss of customers. </li></ul><ul><li>The company should focus on its management, to improve the efficiency of the management to convert the inventories into cash fast. </li></ul>RECOMMENDATIONS
  37. 37. <ul><li>From the ratio analysis, we conclude that the company’s positioning in the investor’s mind may be strong. </li></ul><ul><li>The company is relatively good for the long-term investment as the financial risk associated with the company is relatively low. </li></ul><ul><li>From the balance sheet and income statement analysis, we have come to the conclusion that the overall financial health of the company is good. </li></ul><ul><li>The company has strived to increase shareholder’s wealth. </li></ul>CONCLUSION
  38. 38. QUESTIONS TIME

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