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

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Analysis of financial statements (2012 2013)

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