Download to read offline
More Related Content
Accouting 2 project copy2 1
- 1. ADP Semester project Submitted By: Aroonaarif(11) University of Central Punjab sheikhupura
- 2. 2 Project Title RATIO ANALYSISOF NISHAT AND CRESCENT MILL
- 3. 3 DECLARATION We hereby declarethat this project report entitled “Ration analysis of Nishat and Crescent mills” is written by us and is our own effort and that no part has been copied and taken from any other source. Submit by Signature with Date Aroona arif ------------------------------------------------- ------------------------------------------------ ------------------------------------------------- ------------------------------------------------
- 4. 4 DEDICATION We hereby dedicatethat this project report entitled “RATIO ANALYSIS OF NISHAT AND CRESCENT MILLS” to our parents.. ACKNOWLEDGEMENT This project document is submitted at University of Central Punjab, Faisalabad Campus. We have read the report and confirm that this report meets the minimum requirements for the degree of Associate degree program in IT (ADP-IT). The project is completed through a lot of efforts and hard-work. However, it would not have been possible without the kind support and help of our teacher and the institute. It would like to extend our sincere thanks to them. It is highly indebted to the University Of Central Punjab for their guidance and constant supervision as well as for providing necessary information regarding the project and also for their support in completing the project. We would like to express my gratitude towards my parents and our project in-charge “SIR Toheed Alam” for his co-operation and encouragement which help us in completion of this project. It would like to express our special gratitude and thanks for giving us such attention and time. Our thanks and appreciations also go to our team members in developing the project and people who have willingly helped me out with their abilities.
- 5. 5 Table of Content Contents I.Nishat Mills LTD ..........................................................................................................................7 II. Organizational structure..............................................................................................................8 i. Our Vision...............................................................................................................................9 ii. Our Mission.............................................................................................................................9 iii. Strategic Objectives.................................................................................................................9 III. Crescent Mills LTD.................................................................................................................10 i. VISION..................................................................................................................................12 ii. CORE VALUES........................................................................................................................12 V. Financial Statements of Nishat Mills Limited...............................................................................13 i. Balance Sheet:.......................................................................................................................13 ii. Income Statement.................................................................................................................14 VI. Financial statements of Crescent Mills Limited........................................................................15 i. Balance Sheet & Income Statement........................................................................................15 VII. Ratios...................................................................................................................................15 i. Current Ratio.........................................................................................................................16 ii. Quick Ratio............................................................................................................................17 iii. Inventory Turnover................................................................................................................18 iv. Inventory Period....................................................................................................................19 v. Receivable Turnover..............................................................................................................20 vi. Receivable Period..................................................................................................................20 vii. Payable Turnover.....................................................................Error! Bookmark not defined. viii. Payable Period.........................................................................Error! Bookmark not defined. ix. Gross Profit Margin................................................................................................................21 x. Net Profit....................................................................................Error! Bookmark not defined. xi. Return on Assets ...................................................................................................................23 xii. Assets Turnover.................................................................................................................24 xiii. Earning Power.........................................................................Error! Bookmark not defined. xiv. Debt to Equity ...................................................................................................................26 xv. Long Term to Capitalization................................................................................................27
- 6. 6 VIII. Suggestions forCrescent........................................................................................................28 IX. Suggestion forNishat.............................................................................................................28 X. Comparison of Both...................................................................................................................29
- 7.
- 8.
- 9. 9 i. Our Vision Totransform the Company into a modern and dynamic yarn, cloth and processed cloth and finished product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan. ii. Our Mission To provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company. iii. Strategic Objectives • To enhance the profitability of the Company; • To increase the overall efficiency and productivity of the Company; • To become the market leader by outshining the competitors and be an innovative Company by introducing new ideas; • To expand sales to the global marketplace by anticipating customer needs and develop and maintain strong customer base; • To monitor and improve internal processes to achieve efficiencies, improve organizational structure and ensure the best use of available resources; • To follow the latest technology trends and their implementation in the Company to enhance the overall productivity of the Company. • To develop and promote the reputation and image of the Company for its stakeholders in specific and non-stakeholders in general; • To promote awareness and best practices about environmental sustainability and social responsibility
- 10.
- 11.
- 12. 12 i. VISION To bethe preferred choice of customers through innovative products and solutions and be a leading contributor to the economy by enhancing value for stakeholders. ii. CORE VALUES Our core values are at the heart of our business because they define who we are, how we work, what we believe in what we stand for. Our core values set out how we act and how we expect to be treated as part of The Crescent Textile Mills Limited.
- 13. 13 V. Financial Statementsof Nishat Mills Limited i. Balance Sheet:
- 14.
- 15. 15 VI. Financial statementsof Crescent Mills Limited i. Balance Sheet& Income Statement VII. Ratios
- 16. 16 i. Current Ratio Nishat2016 2015 2014 Current Assets Current Liability 25850830 19553041 24190444 19167495 28774992 21553219 Result 1.32 1.26 1.33 Crescent 2016 2015 2014 Current assets Current liability 5923 6606 5343 6571 4944 6491 Result 0.89 0.81 0.76 Interpretation Its shows how much current assets to cover 1 current liability. Nishat mills limited have 1.3 assets to cover 1 liability in 2014 and 2015 have 1.2 and 2016 have 1.3 assets to cover 1 liability. On the other hand Crescent mills doesn’t cover their liabilities, in 2014 have 0.78, 2015 have 0.81, 2016 have 0.89 Current ratio of Nishat mills limited is better as compares to Crescent in all year of 2014, 2015 2016
- 17. 17 ii. Quick Ratio Nishat2016 2015 2014 Current assets – inventory Current liability 1651294 19553041 13840248 19167495 16022497 21553219 Results 0.084 0.72 0.74 Crescent 2016 2015 2014 Current assets – inventory Current liability 4287 6606 4005 6571 3454 6491 Result 0.64 0.60 0.53 Interpretation Overall quick ratio of all years are not good for both companies. Because the quick ratio is always greater than 1 but with comparison of both, Nishat mills limited is better as compared to crescent in 2014 2015 and 2016 Because the quick ratio of Nishat in 2016 0.84, 2015 is 0.722 and 2014 ratio is 0.743 And Crescent in 2016 0.64, 2015 0.60 & 2014 0.53
- 18. 18 iii. Inventory Turnover Nishat2016 2015 2014 CGS Inventory 41734871 9933736 45153439 10350193 46580317 12752495 Result (times) 4.20 4.36 3.65 Crescent 2016 2015 2014 CGS Inventory 9239 1636 10322 1338 11054 1490 Result (times) 5.64 7.71 7.41 Interpretation In one year, how many time inventories sold? Nishat in 2016 sold 4 times inventory, in 2015 sold 4 times inventory and Nishat 2014 sold 3 times inventory in one year. Crescent in 2016 5 sold times inventory, in 2015 sold 7 times inventory and Nishat 2014 sold 7 times inventory in one year. Its mean Nishat manage its inventory. Damage cost is less, balance between the demand and supply. Nishat makes goods according to customer demand. So, this show that Crescent has better inventory turnover than Nishat
- 19. 19 iv. Inventory Period Nishat2016 2015 2014 365/inventory turnover 9933736 41734871 10350193 45153439 12752495 46580317 Result (days) 83.95 80.3 98.55 Crescent 2016 2015 2014 365/inventory turnover 1636 9239 1338 10322 1490 11054 Result (days) 64.63 47.31 49.19 Interpretation Measures the average number of days inventory in held by the company. Nishat shows good result. Nishat in 2016 held 83.95, 2015 held 80 days inventory and 2014 held 98 days inventory in one year. Crescent in 2016 held 64, in 2015 held 47 & in 2014 49 Its mean Nishat manage its inventory than Crescent. Damage cost is less, balance between the demand and supply. Nishat makes goods according to customer demand.
- 20. 20 v. Receivable Turnover Nishat2016 2015 2014 Sales Receivables 47999179 12582368 51200223 10314628 54444091 11478458 Result (times) 3.81 4.96 4.74 vi. Days sales in Receivable Nishat 2016 2015 2014 Receivables Sales * 365 12582368 47999179 *356 10314628 51200223 *365 11478458 54444091 *365 Result (days) 95.6 73.5 76.9 Interpretation There is no comparison of receivables between both companies because Nishat doesn’t show their payable and Crescent doesn’t show their receivables in their balance sheet.
- 21. 21 vii. Gross ProfitMargin Nishat 2016 2015 2014 GP Sales * 100 6264308 47999179 6046784 51200223 7863774 54444091 Result (%) 13.0 11.8 14.4 Crescent 2016 2015 2014 GP Sales * 100 1340 10579 1457 11779 1357 12411 Result (%) 12.6 12.3 10.9 Interpretation Shows that what portion of each sales dollar is available to meet the companies’ expenses and generate profit. After calculating GP of both companies ,we analysis that in 2016 & 2014 Nishat is showing good position as it’s higher than Nishat 2015 as compare to Crescent. In GP ratio Company has control over its CGS & good inventory management.
- 22. 22 viii. Return onnet sales Nishat 2016 2015 2014 Net Profit Sales * 100 4923038 47999179 3911925 51200223 5512552 54444091 Result 10.2 7.6 10.1 Crescent 2016 2015 2014 Net Profit Sales * 100 251 10579 220 11779 239 12411 Result 2.37 1.86 1.92 Interpretation Percent of each sales dollar earned as net income There is a great difference in a result of both companies Nishat in 2016 10.2, 2015 7.6, 2014 10.1 On the other hand Crescent in 2016 2.37, 2015 1.86, 2014 1.92 Nishat has in better position than Crescent according to the result of Net Profit
- 23. 23 ix. Return onAssets Nishat 2016 2015 2014 Net Profit total assets *100 4932038 10659929 3911925 101140000 5512552 97048577 Result 46.2 3.86 5.6 Crescent 2016 2015 2014 Net Profit total assets * 100 251 13875 220 12453 239 11983 Result 1.80 1.76 1.99 Interpretation It shows the percentage of profit a company earns in relation to its overall resources. It is commonly defined as net income divided by total assets. Nishat is better than Crescent in all years
- 24. 24 x. Assets Turnover Nishat2016 2015 2014 Sales total assets 47999179 106599219 51200223 101140000 54444091 97048577 Result (times) 0.45 0.50 0.56 Crescent 2016 2015 2014 Sales total assets 10579 13875 11779 12453 12411 11983 Result (times) 0.76 0.94 1.03 Interpretation • Measures the amount of net sales generated for each average dollar of total assets invested. • There is a great difference between the both companies. • Crescent is performing well as compared with Nishat. Like Nishat 2014 sold 0.56 times total assets in one year and Crescent in 2014 sold 1.03 times total assets in one year. 2014 • Crescent properly utilize its assets, company received payments in time and also not hold inventory. • This show that Crescent properly manages its land, building and machinery
- 25. 25 xi. Debt ratio Nishat2016 2015 2014 Total liabilities/total assets 24,444,073 106,599,219 24997177 101,140,000 28459401 97,048577 Result 0.22 0.24 0.29 Crescent 2016 2015 2014 Total liabilities/total assets 13461 13875 11952 12453 11622 11983 Result 0.97 0.95 0.96 Interpretation Shows portion of assets financed with debt. The higher the ratio, the higher the risk Nishat is better than Crescent in all years
- 26. 26 xii. Debt toEquity Nishat 2016 2015 2014 Total liability Equity 1065999219 82155155 101140000 76142823 97048577 68589176 Result 12.9 1.32 1.41 Crescent 2016 2015 2014 Total liability Equity 13875 4552 12453 3448 11983 3078 Result 3.04 3.61 3.89 Interpretation Nishat Company is showing good result in 2014, 2015 & 2016 as compare to Crescent Nishat: in 2016 has 1.2, 2015 has 1.3 & 2014 has 1.4 Crescent:in 2016 has 3, 2015 has 3.6 & 2014 has 3.8 Which means that Nishat company is not having relying on its
- 27. 27 xiii. Long Termto Capitalization Nishat 2016 2015 2014 L.T.L equity + L.T.L 4891023 82155155 + 4891023 5829682 76142823 + 58296682 6906182 68589176 + 6906182 Result 0.056 0.043 0.092 Crescent 2016 2015 2014 L.T.L equity + L.T.L 2811 4552 + 2811 2678 3448 + 2678 2371 3078 + 2371 Result 0.38 0.48 0.43 Interpretation It showing the financial leverage of a firm, calculated by dividing long-term debt by the amount of capital available Nishat: in 2016 has 0.5, 2015 has 0.4 & 2014 has 0.9 Crescent:in 2016 has 0.3, 2015 has 0.4, & 2014 has 0.4 It means that Nishat shows good result in all years
- 28. 28 VIII. Suggestions forCrescent Crescent have to strong its working capital. Company should not hold inventory. Company should improve its inventory management. Company should improve the credit policy/ collection policy. Crescent should improve its sale management. Company should properly utilize cash in profitable projects. Crescent company should have balance between the demand and supply. Company should made goods according to customer demand. Company should improves its sale management and also known good customer knowledge. IX. Suggestion for Nishat Nishat mills limited should properly utilize its assets. Company should not hold inventory for long time and also properly manage its land, building and machinery because these investments used in profitable projects, in return they generate profit for the company. Nishat mills limited should manage its inventory becausedamage costoccurs. Company should have balance between the demand and supply.
- 29. 29 X. Comparison ofBoth This Industry If Political Stability in Our Country So Our Export Increases and Business Opportunities Increases Day By Day and Govt. Revenues Increase and Unemployment Low and Develop Country Give Different Business Opportunities Terrorism & Corruption Its Increases Day By Day in Our Country. In Karachi And Rawalpindi Cities Faces Very Hard And Sewer Condition Due To Terrorism So The Business Condition Is Very Bad Day By Day And Business Shutdown And Crises Level High And Poorly Level Increase Due To These Factors . In This People Purchasing Power Low and Textile faces A Lot of Problems Political Situation it’s Not Satisfactory Due To Rapid Changes in the Govt. And Every Govt. Set Its Own Trade Policies, Rules And Laws And Different Tax Policies So In This Govt. Hough Textile Sector Is Still Zero Rated For The Purposes Of Sales Tax On Exports Yet The Tax On Domestic Supply And Income Tax Contribute Greatly To Government Revenues. Diversification Of Economy Development In Textile Sector Has Helped In Diversifying Economy By Reducing Dependence On Mere Production And Export Of Raw Material. It Also Instilled Diversification By Stimulating Collateral Industrial Development. It Is Also A Source Of Foreign Exchange Earnings. SOCIAL, CULTURE, DEMOGRAPHIS & ENVIRONMENTAL FORCES Nishat Mills Ltd. Is A Large Organization And According To Its Claims of Social Responsibility It Provides Its Employees With Good Attitude To Work And Leisure And A Safe Work Environment.
- 30.