Philip Morris (Pakistan) Limited, incorporated in 1969, operates in the manufacturing and sale of tobacco products, and is a subsidiary of Philip Morris International. The company's financial statements reveal a decline in assets from 2015 to 2016, with significant changes in inventory and current liabilities. The firm reported a turnover of 14.2 billion PKR for 2016, experiencing a decrease in net income compared to the previous year.

2. Submitted to
Ma’am Naima Saleem

4. HISTORY
• THE COMPANY STATES ITS HISTORY IS TRACED TO A LONDON
TOBACCONIST'S, PHILIP MORRIS’S, 1847 OPENING OF A SINGLE SHOP ON
LONDON’S BOND STREET WHICH SOLD TOBACCO AND CIGARETTES.
• THE CURRENT OPERATIONS CENTER OF THE COMPANY IS LOCATED
IN LAUSANNE, SWITZERLAND; IT OWNS 7 OF THE TOP 15 TOBACCO BRANDS
IN THE WORLD.
• IN APRIL 2014, PHILIP MORRIS ANNOUNCED THAT IT WOULD CLOSE
ITS MOORABBIN PLANT IN AUSTRALIA BY THE END OF 2014 AFTER
OPERATING FOR 60 YEARS, DUE TO THE GRADUAL DECLINE OF SALES IN THE
LAST TEN YEARS AND DIFFICULTIES CONFORMING TO 2010 AUSTRALIAN
GOVERNMENT REGULATION ABOUT REDUCING FIRE RISKS.
• IN 2015 IT SOLD 850 BILLION CIGARETTES

5. INTRODUCTION
• PHILIP MORRIS (PAKISTAN) LIMITED (THE COMPANY) WAS INCORPORATED IN PAKISTAN
ON FEBRUARY 10, 1969 AS A PUBLIC LIMITED COMPANY UNDER THE COMPANIES ACT,
1913 (NOW COMPANIES ORDINANCE, 1984). THE COMPANY IS LISTED ON THE PAKISTAN
STOCK EXCHANGE. THE PRINCIPAL ACTIVITY OF THE COMPANY IS THE MANUFACTURING
AND SALE OF CIGARETTES AND TOBACCO PRODUCTS. ITS REGISTERED OFFICE IS
SITUATED AT 19TH FLOOR, THE HARBOUR FRONT, DOLMEN CITY, HC - 3, BLOCK 4,
CLIFTON, KARACHI, PAKISTAN
• THE COMPANY IS A SUBSIDIARY OF PHILIP MORRIS INTERNATIONAL INC., (THE ULTIMATE
PARENT) THROUGH PHILIP MORRIS INVESTMENTS B.V., (THE PARENT COMPANY) AND
PHILIP MORRIS BRANDS

6. SIGNIFICANT ACCOUNTING INFORMATION
•THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE APPROVED
ACCOUNTING STANDARDS AS APPLICABLE IN PAKISTAN. APPROVED
ACCOUNTING STANDARDS COMPRISE OF SUCH INTERNATIONAL
FINANCIAL REPORTING STANDARDS (IFRSS) ISSUED BY THE
INTERNATIONAL ACCOUNTING STANDARDS BOARD AS ARE
NOTIFIED UNDER THE ORDINANCE

7. COMPARATIVE FINANCIAL STATEMENTS
• COMPARATIVE FINANCIAL STATEMENTS ARE THE COMPLETE SET OF FINANCIAL
STATEMENTS THAT AN ENTITY ISSUES, REVEALING INFORMATION FOR MORE
THAN ONE ACCOUNTING PERIOD.
THE FINANCIAL STATEMENTS THAT ARE INCLUDED IN THIS PACKAGE ARE:
• THE INCOME STATEMENT (SHOWING RESULTS FOR MULTIPLE PERIODS)
• THE BALANCE SHEET (SHOWING THE FINANCIAL POSITION OF THE ENTITY AS
OF MORE THAN ONE BALANCE SHEET DATE)
• THE STATEMENT OF CASH FLOWS (SHOWING THE CASH FLOWS FOR MORE
THAN ONE PERIOD)

8. PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
2016 2015
Assets (Rupees in thousand )
Current assets:
Stores and spares – net 379,229 491,672
Stock in trade - net 7,273,187 8,468,495
Trade debts - net 1,523 95,928
Advances 33,279 52,960
Prepayments 92,828 215,757
Other receivables 210,304 26,253
Income tax - net 578,775 798,593
Staff retirement benefits 31,538 60,155
Cash and bank balances 108,093 74,610
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683
Intangibles 29,909 22,708
Investment in a subsidiary company 1 1
Long term deposits and prepayments 39,762 37,452
Deferred taxation 761,323 937,354
Total Assets 18,027,011 19,307,621
* Percent rounded to one decimal point.

9. PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
EQUITY AND LIABILITIES (Rupees in thousand )
CURRENT LIABILITIES: 2016 2015
Short term borrowings 1,338,557 13,538,365
Trade and other payables 2,643,360 3,053,270
Accrued mark-up on short term
borrowings 7,249 66,659
Sales tax and excise duty payable 447,809 0
EQUITY:
Authorised capital 12,000,000 1,000,000
Ordinary shares 615,803 615,803
Preference shares 10,464,000 0
Transaction cost on issuance of
preference shares - net of tax (33,911) 0
Reserves 6,137,315 6,201,852
Unappropriated loss (3,593,171) (4,168,328)
TOTAL EQUITY AND LIABILITIES 18,027,011 19,307,621
* Percent rounded to one decimal point.

10. DOLLAR CHANGE
DOLLAR CHANGE = ANALYSIS PERIOD AMOUNT - BASE PERIOD AMOUNT

11. $CHANGE&
%CHANGE
PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
2016 2015
Dollar
Change
Percent
Change*
Assets (Rupees in thousand )
Current assets:
Stores and spares - net 379,229 491,672
Stock in trade - net 7,273,187 8,468,495
Trade debts - net 1,523 95,928
Advances 33,279 52,960
Prepayments 92,828 215,757
Other receivables 210,304 26,253
Income tax - net 578,775 798,593
Staff retirement benefits 31,538 60,155
Cash and bank balances 108,093 74,610
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683
Intangibles 29,909 22,708
Investment in a subsidiary company 1 1
Long term deposits and prepayments 39,762 37,452
Deferred taxation 761,323 937,354
Total Assets 18,027,011 19,307,621
* Percent rounded to one decimal point.

12. DOLLARCHANGE
PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
2016 2015
Dollar
Change
Percent
Change*
Assets (Rupees in thousand )
Current assets:
Stores and spares - net 379,229 491,672 (112,443)
Stock in trade - net 7,273,187 8,468,495
Trade debts - net 1,523 95,928
Advances 33,279 52,960
Prepayments 92,828 215,757
Other receivables 210,304 26,253
Income tax - net 578,775 798,593
Staff retirement benefits 31,538 60,155
Cash and bank balances 108,093 74,610
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683
Intangibles 29,909 22,708
Investment in a subsidiary company 1 1
Long term deposits and prepayments 39,762 37,452
Deferred taxation 761,323 937,354
Total Assets 18,027,011 19,307,621
* Percent rounded to one decimal point.
379,229 – 491,672 = (112,443)

13. PERCENT CHANGE
• PERCENT CHANGE =
𝐷𝑂𝐿𝐿𝐴𝑅 𝐶𝐻𝐴𝑁𝐺𝐸
𝐵𝐴𝑆𝐸 𝑃𝐸𝑅𝐼𝑂𝐷 𝐴𝑀𝑂𝑈𝑁𝑇

14. PERCENTCHANGE
PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
2016 2015
Dollar
Change
Percent
Change*
Assets (Rupees in thousand )
Current assets:
Stores and spares - net 379,229 491,672 112,443 22.86%
Stock in trade - net 7,273,187 8,468,495
Trade debts - net 1,523 95,928
Advances 33,279 52,960
Prepayments 92,828 215,757
Other receivables 210,304 26,253
Income tax - net 578,775 798,593
Staff retirement benefits 31,538 60,155
Cash and bank balances 108,093 74,610
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683
Intangibles 29,909 22,708
Investment in a subsidiary company 1 1
Long term deposits and prepayments 39,762 37,452
Deferred taxation 761,323 937,354
Total Assets 18,027,011 19,307,621
* Percent rounded to one decimal point.
(112,443 ÷ 491,672) × 100% = 22.86%

15. DOLLARCHANGE&PERCENT
CHANGE
PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
2016 2015
Dollar
Change
Percent
Change*
Assets (Rupees in thousand )
Current assets:
Stores and spares - net 379,229 491,672 (112,443) 22.87
Stock in trade - net 7,273,187 8,468,495 (1,195,308) 14.11
Trade debts - net 1,523 95,928 (94,405) 98.41
Advances 33,279 52,960 (19,681) 37.16
Prepayments 92,828 215,757 (122,929) 56.98
Other receivables 210,304 26,253 184,051 701.07
Income tax - net 578,775 798,593 (219,818) 27.53
Staff retirement benefits 31,538 60,155 (28,617) 47.57
Cash and bank balances 108,093 74,610 33,483 44.88
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683 461,578 5.75
Intangibles 29,909 22,708 7,201 31.71
Investment in a subsidiary company 1 1 0 0.00
Long term deposits and prepayments 39,762 37,452 2,310 6.17
Deferred taxation 761,323 937,354 (176,031) 18.78
Total Assets 18,027,011 19,307,621
* Percent rounded to one decimal point.

16. TREND ANALYSIS
• 𝑇𝑅𝐸𝑁𝐷 𝐴𝑁𝐴𝐿𝑌𝑆𝐼𝑆 = 𝐴𝑁𝐴𝐿𝑌𝑆𝐼𝑆 𝑃𝐸𝑅𝐼𝑂𝐷 𝐴𝑀𝑂𝑈𝑁𝑇
𝐵𝐴𝑆𝐸 𝑃𝐸𝑅𝐼𝑂𝐷 𝐴𝑀𝑂𝑈𝑁 𝑇
× 100

17. TRENDANALYSIS PHILIP MORRIS (PAKISTAN) LIMITED
INCOME INFORMATION
FOR THE YEARS ENDED DECEMBER 31,
2016 2015 2016 2015
Assets (Rupees in thousand )
Turnover - net 14,213,338 14,416,905 99% 100%
Cost of Sales 8,192,406 9,561,847 86% 100%
Gross profit 6,020,932 4,855,056 124% 100%
(14,213,338 / 14,416,905) *100 = 99%
(8,192,406 / 9,561,847) * 100 = 86%
(6,020,932 / 4,855,056) * 100 = 124%

18. COMPONENT PERCENT
• 𝐶𝑂𝑀𝑃𝑂𝑁𝐸𝑁𝑇 𝑃𝐸𝑅𝐶𝐸𝑁𝑇 =
𝐴𝑁𝐴𝐿𝑌𝑆𝐼𝑆 𝐴𝑀𝑂𝑈𝑁𝑇
𝐵𝐴𝑆𝐸 𝐴𝑀𝑂𝑈𝑁𝑇
× 100

19. COMPONENTPERCENTAGES
PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
Common size analysis for the other
assets 2016 2015 Common size %
Assets (Rupees in thousand )
Current assets: 2016 2015
Stores and spares - net 379,229 491,672 2.10% 2.55%
Stock in trade - net 7,273,187 8,468,495
Trade debts - net 1,523 95,928
Advances 33,279 52,960
Prepayments 92,828 215,757
Other receivables 210,304 26,253
Income tax - net 578,775 798,593
Staff retirement benefits 31,538 60,155
Cash and bank balances 108,093 74,610
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683
Intangibles 29,909 22,708
Investment in a subsidiary company 1 1
Long term deposits and prepayments 39,762 37,452
Deferred taxation 761,323 937,354
Total Assets 18,027,011 19,307,621
* Percent rounded to one decimal point.
(379,229 ÷ 18,027,011) × 100% = 2.01%
(491,672÷ 19,307,621) × 100% = 2.55%

20. COMPONENTPERCENTAGES
PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
Common size analysis for the other
assets 2016 2015 Common size %
Assets (Rupees in thousand )
Current assets: 2016 2015
Stores and spares - net 379,229 491,672 2.01% 2.55%
Stock in trade - net 7,273,187 8,468,495 40.35% 43.86%
Trade debts - net 1,523 95,928 0.01% 0.50%
Advances 33,279 52,960 0.18% 0.27%
Prepayments 92,828 215,757 0.51% 1.12%
Other receivables 210,304 26,253 1.17% 0.14%
Income tax - net 578,775 798,593 3.21% 4.14%
Staff retirement benefits 31,538 60,155 0.17% 0.31%
Cash and bank balances 108,093 74,610 0.60% 0.39%
Fixed assets:
Property, plant and equipment 8,487,261 8,025,683 47.08% 41.57%
Intangibles 29,909 22,708 0.17% 0.12%
Investment in a subsidiary company 1 1 0.00% 0.00%
Long term deposits and prepayments 39,762 37,452 0.22% 0.19%
Deferred taxation 761,323 937,354 4.22% 4.85%
Total Assets 18,027,011 19,307,621 100% 100%
* Percent rounded to one decimal point.

21. PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE BALANCE SHEET
DECEMBER 31,
Common size analysis for the other assets Common size %
EQUITY AND LIABILITIES (Rupees in thousand )
CURRENT LIABILITIES: 2016 2015 2016 2015
Short term borrowings 1,338,557 13,538,365 7.43% 70.12%
Trade and other payables 2,643,360 3,053,270 14.66% 15.81%
Accrued mark-up on short term
borrowings 7,249 66,659 0.04% 0.35%
Sales tax and excise duty payable 447,809 0 2.48% 0.00%
EQUITY:
Authorised capital 12,000,000 1,000,000 66.57% 5.18%
Ordinary shares 615,803 615,803 3.42% 3.19%
Preference shares 10,464,000 0 58.05% 0.00%
Transaction cost on issuance of
preference shares - net of tax (33,911) 0 -0.19% 0.00%
Reserves 6,137,315 6,201,852 34.05% 32.12%
Unappropriated loss (3,593,171) (4,168,328) -19.93% -21.59%
TOTAL EQUITY AND LIABILITIES 18,027,011 19,307,621 100% 100%
* Percent rounded to one decimal point.
COMPONENTPERCENTAGES

22. PHILIP MORRIS (PAKISTAN) LIMITED
COMPARATIVE INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31,
2016 2015 2016 2015
Assets (Rupees in thousand )
Turnover - net 14,213,338 14,416,905 99% 100%
Cost of Sales 8,192,406 9,561,847 86% 100%
Gross profit 6,020,932 4,855,056 124% 100%
* Percent rounded to one decimal point.
COMPONENTPERCENTAGES

23. RATIOS WORKING CAPITAL
W.C = CURRENT ASSETS - CURRENT LIABILITIES
Dec 31,2016 & 2015
Assets (Rupees in thousand )
2016 2015
Current assets 8,708,755 10,284,423
Current liabilities (4,436,975) (16,658,294)
Working capital 4,271,780 (6,373,871)
* Percent rounded to one decimal point
(8,708,755 – 4,436,975) = 4,271,780
(10,284,423 – 16,658,294)=(6,373,871)

24. RATIOS
Current Ratio
C.R =
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺
Dec 31,2016 & 2015
Assets (Rupees in thousand )
2016 2015
Current assets 8,708,755 10,284,423
Current liabilities 4,436,975 16,658,294
Current Ratio 1.96 : 1 0.62 : 1
* Percent rounded to one decimal point
(8,708,755 / 4,436,975) = 1.96 : 1
(10,284,423 / 16,658,294)=0.62 : 1

25. RATIOS Quick Ratio
Q.R =
𝑸𝑼𝑰𝑪𝑲 𝑨𝑺𝑺𝑬𝑻𝑺
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺
Dec 31,2016 & 2015
Assets (Rupees in thousand )
2016 2015
Quick assets 8,708,755 10,284,423
Current liabilities 4,436,975 16,658,294
Quick Ratio 1.96 : 1 0.62 : 1
* Percent rounded to one decimal point
(8,708,755 / 4,436,975) = 4,271,780
(10,284,423 / 16,658,294)=(6,373,871)

26. RATIOS Debt Ratio
D.R =
𝑻𝑶𝑻𝑨𝑳 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺
𝑻𝑶𝑻𝑨𝑳 𝑨𝑺𝑺𝑬𝑻𝑺
× 𝟏𝟎𝟎
Dec 31,2016 & 2015
Assets (Rupees in thousand )
2016 2015
Total liabilities 4,436,975 16,658,294
Total assets 18,027,011 19,307,621
Debt Ratio 24.61% 86.29%
* Percent rounded to one decimal point(4,436,975 / 18,027,011) *100= 24.61%
(16,658,294 / 19,307,621)* 100=86.29%