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1 Mid Term Project of Fin
FINANC
MID
Program MB
Submitted To: Si
Submitted By: Z
ancial Management | Sir
IAL MANAGEME
TERM PROJECT
FINANCIAL RATIOS
- Professional (Sec-) 2nd Seme
r. Tariq Saleem
eshan Tufail
T
ter
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Statement of Submission
I completed their task ofMidterm PROJECT of Financial Management
TASK GIVEN: Ratios of Financial Management at Superior University
Lahore; to fulfill the partial requirement of the Semester ofMBA 2nd
Semester.
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Acknowledgement
We bow our head to Almighty Allah, the Omnipotent, the Merciful, who endeavor
our services towards his manuscript. All praises to Almighty Allah who gave us
the courage and patience for completion of this work. All the respects are for Holy
Prophet Muhammad (Peace Be upon Him) who se moral and spiritual teachings
enlightened our hearts.
We feel how weak and deficit in vocabulary to find suitable words that would fully
convey the sense of immense indebtedness and deep gratitude that we owe to our
teacher, Sir Saroop for his endless propitious guidance, illustration advice,keen interest, value able comments and encouragement throughout the course of
studies and completion of this work.
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DYNEA PAKISTAN LIMITED
26TH ANNUAL REPORT
FOR THE YEAR ENDED
30TH JUNE 2008
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INTRODUCTION
We have reviewed the annexed interim condensed Balance Sheet of DYNEAPAKISTAN LIMITED as at December 31, 2007, and the related interim condensedProfit and Loss Account, interim condensed Cash Flow Statement and interimcondensed Statement ofChanges in Equity together with the notes forming part thereof(here-in-after referred to asthe interim condensed financial information) for the half-year then ended. Management is responsible for the preparation and presentation ofthis interim condensed financial information in accordance with approved accountingstandards as applicable in Pakistan. Our responsibility is to express a conclusion on thisinterim condensed financial informationbased on our review.
SCOPE OF REVIEW
We conducted our review in accordance with the International Standard on ReviewEngagements 2410, Review of Interim Financial Information Performed by theIndependent Auditor of the Entity. A review of interim condensed financialinformation consists of making inquiries, primarily of persons responsible for financialand accounting matters, and applying analytical and other review procedures. A reviewis substantially less in scope than an audit conducted in accordance with InternationalStandards on Auditing and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit.Accordingly, we do not express an audit opinion.
VISION
Dynea Pakistan is a Market Leader in its core and diversified business, delighting its
customers by providing quality products at competitive price through development of
Market , product range , technology and human capital whilst ensuring sound return
to stakeholders.
MISSION
Maximize productivity and sales of Formaldehyde , Amino Resins and Aminoplast
Moulding Compounds and provide satisfaction to customers.
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1. ASSETS TURNOVER RATIOFORMULA = SALES / TOTAL ASSETS
Name Year 2007 Year 2008 Differences ResultSales 1,174,891,399 1,261,973,380 87,081,981 Increase
Total Assets 303,685,825 344,587,457 40,901,632 Increase
Calculation 3.86 Times 3.66 Times 0.21 Decrease
WORKING (Total Assets)
Name Year 2007 Year 2008
Current Assets 395,702,747 518,597,390- Current Liabilities 240,205,345 307,703,547
+ Non- Current Assets 148,188,423 133,693,614
Total Assets 303,685,825 344,587,457
INTERPRETATION
This ratio reflects the productivity of the assets of the company .As the above result
shows that if we invest Rs.1 then generating sales Rs.3.87and Rs.3.66 in the year 2007
and 2008.Productivity of the assets of the company is less as compared to the last year
2007.
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2. RETURN ON ASSETS RATIOFORMULA = NET PROFIT / TOTAL ASSETS
Name Year 2007 Year 2008 Differences ResultNet Profit 17,710,004 39,844,811 22,134,807 Increase
Total Assets 303,685,825 344,587,457 40,901,632 Increase
Calculation 0.05 Times 0.11 Times (0.06) Decrease
INTERPRETATION
This ratio indicates the profitability of the assets of the company. The above result
shows that if we invest Rs.1 in the Dynea Pakistan Ltd. Generating profit Rs. 0.05 in
year 2007 and Rs.0.11 in 2008.
3. DEBT EQUITY RATIOFORMULA =DEBT / TOTAL CAPITALIZATION
Name Year 2007 Year 2008 Differences Result
Debt 7,163,025 8,219,846 1,056,821 IncreaseTotal Capitalization 303,685,825 344,587,457 40,901,632 Increase
Calculation 0.02*100 0.02*100 0.02*100
2/98 2/98 2/98
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4. DEBT SERVICE COVERAGE RATIOFORMULA = NET PROFIT + DEPRECIATION + INTEREST
INTEREST + PRINCIPLE AMOUNT
Name Year 2007 Year 2008 Differences Result
Net Profit 17,710,004 39,844,811 22,134,807 Increase
Depreciation 31,366,853 25,675,129 (5,691,724) Decrease
Interest 15,647,972 11,075,034 4,572,938 DecreasePrinciple Amount 35,165,708 124,681,080 89,515,372 Increase
Calculation 1.27 Times 0.564 Times (0.706) Decrease
WORKING (Depreciation)
Name Year 2007 Year 2008
Cost of Sale 29,765,780 24,357,710
Distribution Cost 350,254 293,282
Admin Expense 1,250,819 1,024,137
Depreciation 31,366,853 25,675,129
WORKING (Principle Amount)
Name Year 2007 Year 2008
34,715,853 123,406,801
449,855 1,274,279
Principle Amount 35,165,708 124,681,080
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INTERPRETATION
This ratio reflects the debt service ability of the company. If the ratio is
greater than 1 it shows the satisfactory condition. The above result shows
that if we borrow Rs.1 we have the ability to repay Rs. 1.27 and Rs. 0.564 in
year 2007 and 2008.Condition of the year 2007 is satisfactory as compared
to 2008.
5. CURRENT RATIO
FORMULA = CURRENT ASSETS / CURRENT LIABILITIES
Name Year 2007 Year 2008 Differences Result
Current Assets 395,702,747 518,597,390 122,894,643 Increase
Current Liabilities 240,205,345 307,703,547 283,683,002 Increase
Calculation 1.647:1 1.685:1 0.038:1 Increase
INTERPRETATION
This ratio shows the Short Term Liquidity of the company. If the ratio is
greater than unity it is satisfactory, if less than unity it shows that the
company face Working Capital Or Short Term Liquidity Problem. The
above result shows that we have current assets Rs.1.647 and Rs.1.685 to pay
Rs.1 liability that is satisfactory condition in 2008 as compared to year 2007.
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6. ACID TEST / QUICK RATIOFORMULA = CURRENT ASSETS - INVENTORY
CURRENT LIABILITIES
Name Year 2007 Year 2008 Differences Result
Current Assets 395,702,747 518,597,390 122,894,643 Increase
Current Liabilities 240,205,345 307,703,547 283,683,002 Increase
Inventory 163,818,967 233,112,330 69,293,363 Increase
Calculation 0.965:1 0.927:1 .038 Increase
FORMULA = (INVENTORY/CURRENT ASSETS) 100
Name Year 2007 Year 2008 Differences Result
41% 44% 3 % Increase
INTERPRETATION
This ratio reflects the Immediate Liquidity Position of the company. If the percentage
of inventory in current assets is higher than acid-test ratio will be lower. The above
result shows that the acid test ratio in year 2007 & year 2008 are 41% and 44%, therefore
in year 2008 the Immediate Liquidity Position is high so it is unsatisfactory while 2007
is satisfactory.
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7. GROSS PROFIT RATIO
FORMULA = (GROSS PROFIT/SALE) 100
Name Year 2007 Year 2008 Differences Result
Gross Profit 132,162,723 187,990,553 55,822,830 Increase
Net Sales 1,174,891,399 1,261,973,380 87,081,981 Increase
Calculation 11.248% 14.896% 3.648% Increase
INTERPRETATION
This ratio reflects the gross profit of the company. The above result shows
that in year 2007 & year 2008 the gross profit is 11.248% and 14.896% respectively
while total increment is 3.648
8. OPERATING PROFIT RATIO
FORMULA = (OPERATING PROFIT/SALE) 100
Name Year 2007 Year 2008 Differences Result
Operating Profit 45,466,175 87,482,885 42,016,710 Increase
Net Sales 1,174,891,399 1,261,973,380 87,081,981 Increase
Calculation 3.869% 6.932% 3.063% Increase
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INTERPRETATION
This ratio shows that in year2007 and 2008 the operating profit ratio is
3.869% and 6.932% while increment is 3.063% that is good for the company. The above
result shows that operating profit and net sale both are increased.
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Assets Turn Over Ratio
2007 2008 Difference
Sales 1174891399 1261973380 87081981
Total Assets 303685825 344587457 40901632
Return On Assets Ratio
2007 2008 Difference
Net Profit 17710004 39844811 22134807
Total Assets 303685825 344587457 40901632
2007 2008 Difference
Assets Turn Over
Sales
Total Assets
2007 2008 Difference
Return On Assets Ratio
Net Profit
Total Assets
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Debt Equity Ratio
2007 2008 Difference
Debt 7163025 8219846 1056821
Total Capitalization 303685825 344587457 40901632
Debt Service Coverage Ratio
2007 2008 Difference
Net Profit 17710004 39844811 22134807
Depreciation 31366853 25675129 -5691724
Interest 15647972 11075034 -4572938
Principle Amount 35165708 124681080 89515372
2007 2008 Difference
Debt Equity Ratio
Debt
Total Capitalization
Net Profit Depreciation Interest Principle Amount
Debt Service Coverage Ratio
2007
2008
Difference
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Current Ratio
2007 2008 Difference
Current Assets 395702747 518597390 122894643
Current Liabilities 240205345 307703547 67498202
Acid Test / Quick Ratio
2007 2008 Difference
Current Assets 395702747 518597390 122894643
Current Liabilities 240205345 307703547 67498202
Inventory 163818967 233112330 69293363
2007 2008 Difference
Current Ratio
Current Assets
Current Liabilities
2007 2008 Difference
Acid Test/Quick Ratio
Current Assets
Current Liabilities
Inventory
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Gross Profit Ratio
2007 2008 Difference
Sales 1174891399 1261973380 87081981
Gross profit 132162723 187990553 55827830
Operating profit Ratio
2007 2008 Difference
Sales 1174891399 1261973380 87081981
Operating Profit 45466175 87482885 42016710
2007 2008 Difference
Gross Profit Ratio
Sales
Gross profit
2007 2008 Difference
Operating Profit Ratio
Sales
Operating Profit
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Return On Sale
2007 2008 Difference
Sales 1174891399 1261973380 87081981
Net Profit 17710004 39844811 22134807
Return On Equity Ratio
2007 2008 Difference
Net Profit 17710004 39844811 22134807
Equity 296522800 336367611 39844811
2007 2008 Difference
Return On Sale Ratio
Sales
Net Profit
2007 2008 Difference
Return On Equity Ratio
Net Profit
Equity