Comparison between the power supplying companies in Pakistan along with the objectives, profit ratios

1. ANALYSIS OF FINANCIAL STATEMENT
FINAL PROJECT: ELECTRICITY SECTOR

2. ELECTRICITY INDUSTRY PREVIEW
The electricity industry provides the production and delivery of electric energy, often known as
power, or electricity, in sufficient quantities to areas that need electricity through a grid
connection. The grid distributes electrical energy to customers. Electric power is generated by
central power stations or by distributed generation. Many households and businesses need access
to electricity, especially in developed nations, the demand being scarcer in developing nations.
Demand for electricity is derived from the requirement for electricity in order to operate
domestic appliances, office equipment, industrial machinery and provide sufficient energy for
both domestic and commercial lighting, heating, cooking and industrial processes. Because of
this aspect of the industry, it is viewed as a public utility as infrastructure.
Electricity in Pakistan is generated, transmitted, distributed and retail supplied by two vertically
integrated public sector utilities: Water and Power Development Authority (WAPDA) for all of
Pakistan (except Karachi), and the Karachi Electric Supply Corporation (KESC) for the City of
Karachi and its surrounding areas. There are around 20 independent power producers that
contribute significantly in electricity generation in Pakistan.
For years, the matter of balancing Pakistan's supply against the demand for electricity has
remained a largely unresolved matter. Pakistan faces a significant challenge in revamping its
network responsible for the supply of electricity.
While the government claims credit for overseeing a turnaround in the economy through a
comprehensive recovery, it has just failed to oversee a similar improvement in the quality of the
network for electricity supply.

3. PAKISTAN’S PERFORMANCE IN ELECTRICITY INDUSTRY
Electricity - production
89.23 billion kWh (2009 est.)
Electricity - production by source
Fossil fuel: 68.8%
hydro: 28.2%
nuclear: 3%
other: 0% (2001)
Electricity - consumption
68.55 billion KWh (2008 EST.)
Electricity - exports
0 kWh (2009 EST.)
Electricity - imports
0 kWh (2009 EST.)

4. INTRODUCTION:
Karachi Electric Supply Company(KESC)generates and supplies electric power to Karachi a
metropolis with a population of over 17million and one of the most populous cities in the world.
Karachi is also the financial capital and the industrial hub of Pakistan and by efficiently
providing electricity, KESC ensures the engines of the country's economy continue running.
KESC is one of the city's largest employers: around 11,600 people currently work for the
company. It is also one of the oldest companies in Karachi and was established in the city even
before the creation of Pakistan in 1947. Incorporated on September 13, 1913 , under the Indian
Companies Act of 1882, the company was nationalized in 1952 but was re-privatized on
November 29, 2005. KESC came under new management in September, 2008; a significant
number of professional managers with experience in running utility and other large companies
have joined under this management and will be running it until the company is turned into a best
practice utility. KESC is listed on all three of Pakistan's stock exchanges: the Karachi Stock
Exchange, the Lahore Stock Exchange and the Islamabad Stock Exchange.
At present, KESC is the only vertically-integrated power utility in Pakistan and manages the
generation, transmission and distribution of electricity. KESC covers a vast area of 6,000 square
kilometers and supplies electricity to all the industrial, commercial, agricultural and residential
areas that fall under its network.

5. MISSION,VISION & OBJECTIVES
Vision:
To restore and maintain pride in KESC, Karachi
Mission:
Brightening lives by building the capability to deliver uninterrupted, safe and affordable power
to Karachi.
Our Values
We are open.
We are trustworthy
We are dependable
We think about you.
Consumer Objectives:
Growing the measure of our customer service and customer satisfaction
Providing value for money and striving to provide electricity at a reasonable price, especially for
ordinary citizens.
Implementing high standards in quality assurance, process, reliability and public safety, through
the implementation of global best practices
Striking a balance between economic and environmental needs
Playing a sustainable social role in the communities of Karachi

6. Shareholders Objectives:
Building shareholder value, through performance excellence and improved financial results.
Protecting our biggest asset (our brand name) by acknowledging our social responsibility and
accountability as a corporate citizen of Karachi
Management and Employees Objectives:
Nurturing and developing our substantial talent pool.
To focus on performance, continuous learning, reward and empowerment
To create an environment for personal improvement, innovation, open communication and
teamwork.

7. SWOT ANALYSIS
Strength Weakness
 Major electricity company
 Customer service
 Declining Market share in Sector
 Limited operating margin
Opportunities Threats
 Infrastructure expansion
 Focus on renewable energy
 Global economic slow down
 Electricity theft

8. KESC PROFIT AND LOSS ACCOUNT
2011 2010
Rs in '000s Rs in '000s
Sales of energy- net 85,926,679 74,274,710
Tariff adjustment 44,581,068 29,453,496
Rental of meters and equipment 213,433 208,309
130,721,180 103,936,515
Expenditure
Purchase of electricity (65296292) (59881477)
Consumption of fuel and oil (50694196) (37180851)
Expenses incurred in generation, transmission and distribution (14481300) (10925814)
(130471788) (107988142)
Gross Profit/Loss 249,392 -4,051,627
Consumer services and Administrative expenses (9814339) (8378749)
Other operating income 4880547 4751526
Other operating expenses (242523) (235002)
-5,176,315 -3,862,225
Profit From Operations -4,926,923 -7,913,852
Less: Finance Cost (5127376) (6823638)
Loss before taxation -10,054,299 -14,737,490
Taxation
Current -874,964 -
Prior -11,331 -
Deferred 1,547,060 96,274
Net loss for the year -9,393,534 -14,641,216
Loss per share- basic -0.44 -0.74
- diluted -0.39 -0.66
Earning/ (loss) before interest, tax, depreciation and amortization 3,470,568 -3839502

9. KESC BALANCE SHEET
ASSETS 2011 2010
Non- Current Assets
Fixed Assets
Property, plant and equipment 167,491,103 141,432,310
Intangibles 22,927 37,602
Long term loans 61,360 75,383
Long term deposits and prepayments 18,436 22,399
Due from the Government 0 158,687
167,593,826 141,726,381
CURRENT ASSETS
Current portion of amount due from the Government 634,750 476063
Stores and spares 6,140,246 4,945,239
Trade debts 39,356,297 29,029,574
Loans and advances 463,238 806,022
Trade deposits and prepayments 2,999,092 12,150,099
Other receivables 17,860,046 16,069,414
Derivative financial assets 36,534 766,453
Taxation- net 0 470,829
Cash and bank balances 1,268,670 1,189,424
68,758,873 65,903,117
TOTAL ASSETS 236,352,699 207,629,498
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital 80,335,490 74,966,045
Capital Reserve 509,172 509,172
Revenue Reserve 5,372,356 5,372,356
Accumulated losses (87332960) (80812538)
Other reserve (1333346) (560147)
Total Equity (2449288) (525112)

10. Surplus on Revaluation of property, plant and equipment 28952905 31826017
Total Equity 26503617 31300905
NON CURRENT LIABILITIES
Long term finance 47,157,037 39,289,102
Long term deposits’ 4,332,650 4,040,288
Deferred liability 5,605,790 5,767,124
Deferred revenue 16,144,963 16,249,362
Specific grant from the government 348,606 348,606
Deferred tax liability 15,590,025 17,137,086
89,179,071 82,831,568
CURRENT LIABILITIES
Trade and other payables 75,299,452 54,799,202
Markup accrued 5,009,065 4,770,125
Short term borrowings 21,374,141 13,441,796
Short term deposits 8,215,674 4,276,499
Taxation- net 266,023 0
Provisions 9,978 12,127
Current maturity of non-current liabilities 10,495,678 16,197,276
Contingencies and commitments 120,670,011 93,497,024
TOTAL EQUITY AND LIABILITIES 236,352,699 207,629,498

11. KESC CASH FLOW STATEMENT
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 16,599,586 6,861,934
Payment in respect of fatal accident -2,149 -3,800
Deferred liabilities paid -890,346 -552,638
Income tax paid -149,444 -250,281
Receipts in deferred revenue 1,000,477 644,768
Finance cost paid -6,698,823 -4,497,601
Interest received on bank deposits 218132 338386
Net cash (used in)/generated from operating activities 10,077,433 2,540,768
CASH FLOWS FROM INVESTING ACTIVITIES
capital expenditure incurred (30865389) (14156765)
Proceeds from disposal of fixed assets 116,530 151,009
Receipt from GoP- PSO and PIRKOH - 238,031
Long term loans 14023 17,584
Long term deposits 3963 227,184
Net Cash from / (used in) investing activities (30730873) (13522957)
CASH FLOWS FROM FINANCING ACTIVITES
Advance against subscription of right shares 5,391,713 14,869,122
Liabilities against assets subject to finance lease repaid - -330,826
Payment of long term financing- net (9,427,749) (4,946,042)

12. transaction cost incurred on right issue -22265 -141,884
Short term borrowing repaid/ acquired net 7,932,342 1,488,274
long term financing paid- PSO and PIRKOH -163,716 -97,969
Receipt from long term financing – net 16,729,999 -
Security deposits from consumer 292,362 203,294
Net Cash from financing activates 20,732,686 11,043,969 6,437,798
Net decrease/ increase in cash and cash equivalents 79246 61780
Cash and cash equivalents at the beginning of the year 1189424 1127644
Cash and cash equivalents at the end of the year 1268870 1189424

13. CASH FLOW COMMENTARY
Cash flow from operating activities:-
CFO has increased significantly over the period of one year which is a positive sign. It means
that even finance cost has increased due to increased LTF but it don’t have a solid impact on
operations, the CFO is generating more inflow rather than the outflow for this industry. As we
can see that as the company is in loss because of that tax payable has reduced along with increase
in LT deposits and prepayments has resulted in reducing the total by 30% and if we compare it
with last year we can measure a huge change because on 2010 the finance cost had reduced
around 65% of the previous year CFO. The company is in great lost But yet the net is in positive
which shows that the company is able to handle its NWC effectively.
Cash flow from investing activities:-
decreased in fixed assets and the collection from other long term loans and deposits are not
enough to entertain CFI as they have buy lots of thing which result in increased of capital
expenditure as it will directs towards increased future growth potential in the company which
will in return generate more profitable future cash flows. LT loan to subsidiary companies can
help the group embark on newer heights of success as the company utilizes the cash more
efficiently and effectively. Although it is negative, it is expected to be positive in near future
when the company is going to get return on the investments it has made and fixed assets it has
purchased.
Cash flow from financing:-
As we can see repayments of long term loans and leased assets along with paying of transaction
cost for right issue, as we can conclude that company is not able to pay its dividends there for
they are putting more concentration on taking loan rather than issuing shares to public, As the
company has down the image of the company to its stockholders which would not contribute to
help their financing in future as well.
Cash flow generated from financing activities shows that the company is using both the short
and long term financing available in the sector and utilizes it efficiently by investing in fixed
assets and making investments that is expected to bring in compounded returns.

14. FINANCIAL RATIOS
A statistic has little value in isolation. Hence, a profit figure of Rs.100 million is meaningless
unless it is related to either the firm’s turnover (sales revenue) or the value of its assets. Liquidity
ratios measure the availability of cash to pay debt. Activity ratios measure how quickly a firm
converts non-cash assets to cash assets. Debt ratios measure the firm's ability to repay long-term
debt. Profitability ratios measure the firm's use of its assets and control of its expenses to
generate an acceptable rate of return. Market ratios measure investor response to owning a
company's stock and also the cost of issuing stock. These are concerned with the return on
investment for shareholders, and with the relationship between return and the value of an
investment in company’s shares.
Note # KESC Ratios 2011 2010
1 Current Ratio 0.57 0.70
2 Quick Ratio 0.49 0.52
3 Cash Ratio 0.0105 0.0127
4 Working Capital -51,911,138 -27,593,908
5 CF from operations 0.084 0.027
6 Receivable turnover 3.00 3.29
7 Receivable in days 122 111
8 Payable Turnover 1.77 1.48
9 Payable in days 206 246
10 GP Margin 0.002 -0.039
11
Operating Income
Margin
-0.057 -0.107
12 Pre-tax Margin -0.117 -0.198
13 Net profit Margin -0.109 -0.197
14 Return on assets -0.019 -0.075

15. 15
Return on common
equity
0.92 2.00
16
Return on Total
Equity
-0.33 -0.94
17 Fixed Asset turnover 0.78 0.73
18 Total assets turnover 0.59 1.00
19 Equity Turnover 2.97 4.75
20 Debt to Equity 8.92 6.63
21
Interest Coverage
ratio
0.96 1.16
22 Earnings per share -0.44 -0.74
Note # 1: The current ratio has decreased from 0.7 to 0.57 which means that company can’t pay
its Short Term obligations. The reason for this decrease is the significant increase in current
assets with a lower rate compare to the current liability which has increased with higher rate.
Note # 2: It has decreased by .04 in 2011. It points that current ratio does not have any feasible
impact because of inventory or prepaid that significant amount is stuck in cash and cash
equivalent.
Note # 3: It has decreased from 0.0127 to 0.0105 in 2011. This is because of get 15% of cash
over liabilities, the more cash in hand compare with other current assets which is not good.
Note # 4: decrease in working capital is continuously going negative as the debt is increasing on
year on basis.
Note # 5: CF from operations has a positive results as the operations are working effectively
which has increased the by 60%.
Note # 6: it has decreased by 1.61because of the prominent change although increase in sales by
24% is a good sign but the company has not recovering its trade debt properly and has increased
from 111 to 122 days.

16. Note # 8: The ratio has increased by .29 which is unfavorable for KESC in applying for loan or
credit.
Note # 10: It has increased from -.039 to .002 in 2011 because of higher input prices and increase
in oil and gas which can’t entirely be passed on to customers.
Note # 11: It has improved as can see it’s shift from -.107 to -.057, which shows that operating
expenses has been increased and that should be cut down in order to generate profit, distribution
and other cost being contributing significantly to the increment because of rising fuel costs.
Note # 12: It has decreased by 19% because of cumulated loss added in KESC financial
statement.
Note # 13: KESC reduced his accumulated loss slightly by .197 to .109 from last year, however
in absolute terms it has moving towards positive side.
Note # 14: if the company controls is Operating Expense then OE of the company has increased
by 8% owing to the tremendous increase in sales 2011 has brought for KESC which directly
impacted EBIT not to go in loss.
Note # 15: It has decreased from 45% to 55% because of the increase in net loss and decrease in
total equity.
Note # 17: It has increased from .73 to .78 in the year 2011 as compared to 2010. The reason for
this increase is the efficient utilization of the fixed assets in order to generate sales.
Note # 18: as we know that current assets were not utilized properly because of which total
assets turnover has reduce by 49%
Note # 19: It has decreased from 4.75 to 2.97 as the company is not paying its dividend for last
many years which shows that the company is only generating increased sales with debts.
Note # 20: It has increased from 6.63 to 8.92. The reason is that the company is operating though
debt only which has also increased very heavily on year on year basis, equity has decreased by
greater proportion. It isn’t good for the company since it has increased debt reliance.
Note # 21: It is reducing by .2 times which is lesser than last year by10. It is due to the increase
in EBIT by 14% compare to last year. It is relatively good for KESC in this era of recession
when borrowing is of importance; since banks check ICR to decide on giving loan.
Note # 22: It has increased by Rs. 0.3 comparing with last year as it was -.74 but now because of
the increased sales and tax saving because of loss.

17. INTRODUCTION
1985, the Government of Pakistan (GOP) with the assistance of the World Bank formulated its
long term strategy for development of the power sector in Pakistan. At that time it was correctly
assessed that the provision of assured and reliable power would spur economic growth. With
energy demand growing at 12 percent and supply at 7 percent per annum, load shedding was
rampant with consequential output losses for industry and agriculture. Under the new energy
policy Pakistan's first private sector power plant, the Hub Power Company (Hubco) came into
operation. Many others followed the suit. However, since May 1998, an important issue facing
Pakistan policy-makers has been whether independent power producers (IPPs) produce
expensive electricity. It is contended that IPPs expensive power has rendered the state utility,
Water and Power Development Authority (WAPDA), bankrupt.
Since May 1998, an important issue facing Pakistan policy-makers has been whether
independent power producers (IPPs) produce expensive electricity. It is contended that IPPs'
expensive power has rendered the state utility, Water and Power Development Authority
(WAPDA), bankrupt. It is also alleged that IPPs indulged in corruption and colluded with
WAPDA officials to get their signatures on contracts which allowed procurement of expensive
power by WAPDA.

18. MISSION AND VISION
Vision:
To be energy leader – committed to deliver growth through energy.
Mission:
To be a dynamic and growth oriented Energy Company that achieves the highest
international standards its operations and delivers a fair return to its shareholders,
while serving the community as a corporation citizen.
Protecting our biggest asset (our brand name) by acknowledging our social
responsibility and accountability
SWOT ANALYSIS
Strength Weakness
 Initiation Activities
 Increasing operational performance
 Strong Liquidity Position
 Operational delays
 Overreliance on fuel oil based generation
Opportunities Threats
 Increasing demand for electricity
 New project developments
 Rising fuel prices
 Government regulations
 Competitive and/or technological threats


19. HUBCO PROFIT & LOSS ACCOUNT
2011 2010
Rs in '000s Rs in '000s
Sales 123,309,604 99,694,264
Less: Cost of sales 114,092,576 92,006,319
Gross Profit 9,217,028 7,687,945
General & Administrative
expenses
436,708 391,491
Worker's Profit Participation
Fund -
-
8,780,320 7,296,454
Add: Other Operating Income 26,684 53,259
Profit From Operations 8,807,004 7,349,713
Less: Finance Cost 3,382,172 1,793,591
Profit For The Year 5,424,832 5,556,122
Basic and Diluted Earnings Per
share
4.69 4.8

20. HUBCO BALANCE SHEET
ASSETS 2011 2010
Non- Current Assets
Fixed Assets
Property, plant and equipment 48,890,480 49,614,595
Intangibles 6,698 8,369
Stores and Spares 637,023 637,023
Investments in Subsidiary 4,034,361 2,610,118
Long term advance, deposits and repayment 50,652 4,133
53,619,214 52,874,238
CURRENT ASSETS
Stores and spares 358,797 0
Stocks in trade 3,773,699 1,559,876
Trade debts 85,806,069 66,712,461
Advances, repayments and other recievables 1,066,697 739,628
Cash and bank balances 1,615,203 809,311
92,620,465 69,821,276
TOTAL ASSETS 146,239,679 122,695,514
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital
Authorized 12,000,000 12,000,000
Issued, subscribed and paid up 11,571,544 11,571,544
Revenue Reserve
Inappropriate profit 17,948,793 18,309,733
29,520,337 29,881,277
NON CURRENT LIABILITIES
Long term finance 27,231,358 23,444,521
Share premium payable - 41,208

21. Deferred liability- gratuity 19,320 15,689
CURRENT LIABILITIES
Trade and other payables 74,177,088 59,595,332
Interest or markup accrued 1,596,824 1,317,961
Short term borrowings 11,682,276 6,743,596
Current maturity of long term loans 2,012,476 1,655,930
Total Current Liability 89,468,664 69,312,819
TOTAL EQUITY AND LIABILITIES 146,239,679 122,695,514

22. HUBCO CASH FLOW STATEMENTS
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 5,424,832 5,556,122
Adjustments For:
Depreciation 1,953,856 1,719,556
Amortization 3,877 1,753
Loss on disposal of fixed asset 744 879
Staff gratuity 16,033 9,222
Interest income (11722) (15637)
Interest markup 3,199,728 1,587,340
Amortization on transaction cost 12,432 -
Operating profit before working capital changes 10,603,657 8,859,235
Working capital changes (7753020) (3400552)
Cash generated from operations 2,850,637 5,458,683
Interest received 11,930 15,985
Interest markup paid (2131050) (1553124)
Staff gratuity paid (12402) (8657)
Net cash (used in)/generated from operating activates 719,115 12,674,683
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed capital expenditure-net (1236885) (13452528)
Investment in subsidiary (1843896) (1438489)
Proceeds from disposal of fixed assets 4,194 5,469
Long term advance, deposits and prepayments (46519) 142
Net Cash from / (used in) investing activities (3123106) (14885406)
CASH FLOWS FROM FINANCING ACTIVITES

23. Proceeds from long term loans- Narowal plant 2,172,360 13,759,537
Proceeds from long term loans- Laraib's Investment 3,367,794 -
Repayment of long term loans- Hub plant (979,061) (979,061)
Repayment of long term loans- Narowal plant (430,142) -
Repayment of finances under markup arrangements- Narowal
plant
- (1,148,890)
Dividends paid (5,775,871) (5,193,788)
Net Cash from financing activates (1,644,920) 6,437,798
Net decrease in cash and cash equivalents (4,132,788) (4,534,721)
Cash and cash equivalents at the beginning of the year (5,934,285) (1,399,564)
Cash and cash equivalents at the end of the year (10,067,073) (5,934,285)

24. CASH FLOW COMMENTARY
Cash flow from operating activities:-
Net cash generated in 2011 is very much less from the previous year because cash
generated from operations has decreased by almost 95.5% because of increase in liability
over the current, as we can look at CFO which is showing that interest markup has
increased working capital (note #1) has increased so all these things are showing that
companies CFO is not affectingly utilizing the cash because if they have invested in other
current assets so they should received come thing in return or we can say that they are
planning for future expansion which is causing their CFO to decrease. That interest and
dividend income while looking at the cash flow, we can easily narrow down the idea that
increases in finance cost in negative cash flow. Although the sales have increased, yet it
was offset by decreased cash flow generated from operations.
(Note#1) Changes in working capital is included in cash flow from operations because
companies typically increase and decrease their current assets and current liabilities to
fund their ongoing operations. When a company increases its current assets, it’s a cash
outflow: The company had to shell out money to buy the extra assets. Likewise, when a
company increases its current liabilities, it’s a cash inflow: The added liabilities, such as
short-term debt, provide money. Changes in working capital simply show the net effect
on cash flows of this adding and subtracting from current assets and current liabilities.
When changes in working capital are negative, the company is investing heavily in its
current assets, or else drastically reducing its current liabilities. When changes in working
capital are positive, the company is either selling off current assets or else raising its
current liabilities.
Cash flow from investing activities:-
Increased in buying fixed capital and Investment in subsidiary directs towards increased
future growth potential in the company which will in return generate more profitable
future cash flows. LT loan to subsidiary companies can help the group embark on newer
heights of success as the subsidiary utilizes the cash more efficiently and effectively.
Although it is negative, it is expected to be positive in near future when the company is
going to get return on the investments it has made and fixed assets it has sold.
The company has been investing the excessive cash received from its debtor into its cash
flow from investing activities by disposing-off fixed assets and buying more fixed capital

25. to have more profitable operations in future. 2010 was seen to be generating more
negative cash flows because in that year investment was made in subsidiary company and
LT loan was allotted to subsidiary, and now these investments are paying off in the form
of dividend and repayment of LT loan. Interest has also increased.
Cash flow from financing:-
It has decreased and went to negative when compared with the year 2010 because of the
increase in finance costs thus repayment of the LT financing (Repayment of long term
loans- Narowal plant) has increased by almost 27% and unlike 2010 shares have not been
issued in the year 2011. Furthermore, dividends paid has increased by 46% when
compared with the year 2010 which contributed to the decreased CF from financing
activities yet it is positive which indicates that company is using their CFF efficiently to
invest in future projects for the provision of better operating facilities.

26. RATIO ANALYSIS OF HUBCO
Note # HUBCO Ratios 2011 2010
1 Current Ratio 1.63 1.77
2 Quick Ratio 0.99 0.98
3 Cash Ratio
0.018 0.012
4 Working Capital 3,151,801.00 508,457.00
5 CF from operations 0.01 0.18
6 Receivable turnover 1.60 2.96
7 Receivable in days 228 123
8 Inventory Turnover 3.46 4.93
9 Inventory days 106 74
10 Payable Turnover 1.71 3.09
11 Payable in days 214 118
12
Cash Conversion
Cycle
120 79
13 GP Margin 0.0747 0.0771
14
Operating Income
Margin
0.0712 0.0732
15 Net profit Margin 0.04 0.06
16 Return on assets 0.04 0.09
17
Return on common
equity
0.47 0.96
18 Return on Total Equity 0.47 0.47
19 Fixed Asset turnover 2.32 3.77
20 Total assets turnover 0.92 1.63
21 Equity Turnover 10.66 17.23
22 Debt to Capital ratio 0.95 0.95
23 Debt to equity 7.73 5.99
24 Interest Coverage ratio 2.60 4.07
25 Payout Ratio 0.66 0.71
26 Earnings per share 4.69 4.80
27 Growth Rate 0.73 0.62
Note #1: The current ratio has decreased from 1.77 to 1.63 which means that company can meet
its pay off obligations but this is not a good indication to have a decrease in asset by .14 or we
can say that it is because of the increase in debts . The reason for this decrease is the significant

27. decrease in current assets which were sold, increase in debt and pay of its dividend to its share
holder.
Note #2: It has increased by .01 in 2011. It points that current ratio is inventory-driven revealing
that significant amount is stuck in cash, store and spares trade debts and stock in trade.
Note #3: It has increased from 0.012 to 0.018 in 2011. This is because the cash comes from
borrowing was not invested completely and resulted in increase in cash on hand.
Note #4: decrease in working capital requirements was mainly because of increase in debt over
assets.
Note #5: CF from operations has been adversely affected and decreased by .175 because of the
increased borrowing rates.
Note #6: It has decreased by .962 because of the prominent change and increase in receivable . It
signifies that the credit policy of HUBCO has increased from 124 to 228 days.
Note #8: It has decreased to 3.456 because of the prominent change in COGS of almost aligned
with sales thus it’s not an issue. But yet this decrease is reducing the direct expense so it should
be balanced as it will have direct impact on gross profit.
Note #10: The ratio has decreased by 1.382 which is favorable for HUBCO in applying for loan
or credit. Decrease is because of paying is liability from excusive cash on hand.
Note #12: It takes HUBCO 120 days to convert collection into cash, thus CCC has worse by 40
days.
Note #13: It has decreased by 2% in 2011 because of higher input prices which can’t entirely be
passed on to customers.
Note #14: It has decreased from 2% to 3%, which shows that operating expenses has been
increased, distribution cost being contributing significantly to the increment because of rising
fuel costs.
Note #16: Company’s NPM reduced slightly to 10.18% from 12.51% last year, however in
absolute terms it has due to inflation occurs.

28. Note #17: The return on assets has decreased to 0.04 in 2011 which indicates that the company
isn’t efficiently using its assets in generating income. The company’s profitability is decreased in
2011 as compared to 2010.
Note #18: It has decreased from 45% to 50% because of the decrease in net income over
common equity.
Note #19: It has decreased from 3.771 to 2.316 in the year 2011 as compared to 2010. The
reason for this decrease is the inefficient utilization of the fixed assets in order to generate sales.
Note #20: It has decreased from 1.625 to 0.917 which means that the company is not utilizing its
assets. It is because of 10% reduction in sales data.
Note #21: This ratio has decreased by 28% which shows that critical financial elements of the
company are not generating good revenues.
Note #24: the company has not better off in this ratio. They aren’t repaying their debts and
increasing it on year on year basis.
Note #25: Payout has increased to 15% which is because of increase in dividends paid by almost
41%.
Note #26: It has decreased by Rs. 0.11 because of the decreased in sales.
Note #27: The Company has increased its growth on the equity year on year basis it has injected
which is greater than last year’s.