This presentation was uploaded only for education purposes and for helping those students who are working of BSc thesis. Also, Conclusion and recommendations are judgmental.

1. Oxford Brookes University
BSC (Honors) In Applied Accounting
Prepared By: Muhammad Ehtisham Jadoon
ACCA Registration No: 2354347
Submission Session: 30
Topic 8: An analysis and evaluation of the business and financial
performance of organisation over three years period

2. REASON TO CHOOSE TOPIC#8
Easy data availability
Relevant to my studies
Analysis include ratio analysis and business
Improve my analytical skills by comparing two
competing companies
Enterprise analysis
REASON TO CHOOSE INDUSTRY AND
ORGANISATION:
Top contributing in GDP and jobs to the economy
Share of Pakistan in cotton and yarn production
Micro-economic and macro-economic factors and
budget policies against textile sector.
Flagship of group, broad range of customers,
reputation, brand and vast distribution channel
Diversified portfolio
Large network and share in export sales of Pakistan
Strong Value chain

3. Nishat Mills Limited Kohinoor Mills Limited
It was formed in 1949
Brand and Fame
Also, one of largest vertically integrated manufacturer
Customers are based in Americas, Australia, Europe, Asia
and Africa
Contributor of Economy
Dynamic team that change operating losses into profits
NML was formed in 1951
Company Strong Group and Broad customers
Textile Exporter
Company earning fat profits
Most modern & largest vertically integrated textile company
Company is a vital contributor towards GDP
Up-to involve in Home Textiles

4. SOURCES OF INFORMATION:
Primary source of information
I didn’t use this source due to confidentiality threat and non lack of professional
competence.
Secondary Source Of Information
Annual reports Analyst Reports
Websites and internet Government Reports
Newspaper and magazine Blogs
ACCA text books
LIMITATIONS OF DATA GATHERING
High Cost, inaccurate feedback, Time consuming, non reliable information

6. Profitability affected by PKR
appreciation
Decreased demand of cotton
GPM decreased to 14% due to
increased cotton purchase and
decreased cotton yarn prices.
Fuel and power expenditure rise
NPM decreased to 10% due to
decreased margins
Increased expenses, increased
administration cost and distribution
cost by 18% and 0.99%
0.00%
5.00%
10.00%
15.00%
20.00%
2011 2012
2013
2014
Percentage
2011 2012 2013 2014
GPM 16.16% 15.11% 17.25% 14.44%
NPM 14.40% 13.00% 15.20% 13.90%
ROE 20% 20% 20% 20%
Profitability

7. Current Ratio decreased by 10% due to
increased stock in trade by 16.5%
and increased trade payables by 16.9%
0
0.5
1
1.5
2011 2012 2013 2014
Times 1.2 1.31 1.49 1.34
Times
Liquidity Ratio
2011 2012 2013 2014
Leverage Ratio
(%)
7% 8% 5% 9%
Interest
Coverage
Ratio(Times)
4.38 3.32 4.93 4.71
0%
100%
200%
300%
400%
500%
600%
Solvency Ratio
Leverage Ratio decreased by 38.92% due to increased market index and
general reserves and decreased long term debt
Interest cover decreased by 4.4% due to KIBOR reduction and profits
reduction.

8. 0 20 40 60 80 100 120 140
2011
2012
2013
2014
2011 2012 2013 2014
Working Capital 100 113 119 87
Payable 7 8 16 33
Inventory 88 93 92 100
Recievable 19 28 43 20
Efficiency Ratio

9. 4.40
3.21 5.32
5.01
5.54 3.06 4.77 3.94
2010 2011 2012 2013
Investor Ratio
Earnings per share (times) Dividend Cover (times)

10. 2012
2013
2014
15.00%
16.00%
13.00%
10%
12%
3%
1.24%
1.98%
0.40%
Profitability
ROE NPM GPM
0.00
0.50
1.00
1.50
2012 2013 2014
1.06
1.33
1.19
Current Ratio 2012 2013 2014
5.72
9.17
1.84
5.72
9.17
1.84
Investor
Earnings per share (times)
Dividend Cover (times)

11. 0.00 20.00 40.00 60.00
2011
2012
2013
2011 2012 2013
Working Capital 46.00 42.00 44.00
Payable 37.00 19.00 19.00
Inventory 39.00 32.00 38.00
Recievable 44.00 29.00 25.00
Efficiency
2011
2012
2013
120.34%
81.29%
70.89%
2.98 3.15
1.38
Solvency
Leverage Ratio (%)
Interest Coverage Ratio (Times)

12. Strengths
• Strong good will and reputation.
• Providing wide range of products over local and international market
• Have strong customer base in exports market
Weakness
• CHAIRMAN and CEO belongs to same family
• Large number of receivables, WIP and FG
• Unstable leverage ratio
Opportunities
• Should increase the investment in new technologies.
• Increase production to cope with increase in demand due to population
• Renewed textile policy and GSP plus status
Threats
• Political and economic instability in Pakistan
• Terrorism and inflation
• Shortage of electricity, fuel and power

13. • Urbanization
• Increase in population
• Brand consciousness
• New innovated design
• Customers ease by e-
marketing
• Standardization of
products
• KIBOR decreasing
trend
• Currency rates
fluctuations
• Inflation increased
interest rates
• Government renewed
textile policy
• Textile Associations
• Decreased sales tax
Political Economical
SocialTechnological

14. PORTER FIVE FORCES
Threat to entrant
Low risk of this
industry leads to
increase this
threat which are
shaping
competition in
market
Threat to rivalry
Competitors of
NML are Gul
ahmed,
Kohinoor Mills
etc. NML is
facing strong
competition from
its rivals and
have resources
to push them in
performance.
Threat of substitute
The possibility of
substitute
products and
services is vey
low in textiles.
Bargaining power of
Customers
NML has strong
base customers
in local and
export markets,
However due to
large
competitors
presence makes
customers more
powerful
Bargaining power of
Suppliers
NML strong brand
leads to less
bargaining power
of suppliers.
There products
are
undifferentiated
and NML
purchase cotton
at start of FY.

15. NML have good financial ratios but with its
past than there is little decrease in the ratios.
Decreased profitability, Rising sales volume
and sales price, Trustworthy group.
When we compare the NML performance with
KML, NML is performing well. It s enhancing
profitability decreasing finance cost dividend
cover makes.
When conducting business analysis identified
strengths and opportunities are significant to
cover the weaknesses and threats.
Opportunity to sell in export markets through
GSP status, Rich cash reserves, Increasing
cotton expenditure and fuel prices
Rupee devaluation and inflation posing as a
threat to NML
NML should invest in new technologies
like customer relations, ecommerce etc.
Increase investment in power generation
Appropriate hedging methods
Comply corporate governance
Utilize rich cash reserves
Increase working capital days
Focus on local markets
Less reliance on imported material
Exploit new markets