Final Report on Attock- Ibf

8/3/2019 Final Report on Attock- Ibf

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Muhammad Ali JinnahMuhammad Ali Jinnah

UniversityUniversity

Report On Attock PetroleumReportOn Attock Petroleum

LimitedLimited

Prepared by Faraz SaleemPrepared by Faraz Saleem

(Fa09-Mb-0033)(Fa09-Mb-0033)

Submitted toSubmitted to

Sir Umair BaigSir Umair Baig


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TABLE OF CONTENT

1. COMPANY PROFILE

2. BALANCE SHEET

3. INCOME STATEMENT

4. FINANCIAL RATIOS & GRAPH

5. INTERPRETATION

6. COMMON SIZE INCOME STATEMENT

7. COMMON SIZE BALANCE SHEET

8. IGR

9. SGR

10. PROFORMA INCOME STATEMENT

11. CONCLUSION

12. RECOMMNDATIONS


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COMPANY PROFILE

Attock Petroleum Limited (APL) is the 4th Oil Marketing Company in Pakistan to be

granted a marketing license in February 1998. Though a new entrant in the field of oil

marketing, APL has managed to establish its presence and reputation as a progressive

and dynamic organization focusing on providing quality and environment friendly

petroleum products and services in Pakistan and abroad. Its steady and substantially

growing market share and customer confidence, which it enjoys, are manifestations of

APL's successful policies.

APL is part of the first fully integrated Oil Company of the sub-continent, APLs

sponsors include Pharaon Commercial Investment Group Limited (PCIGL) and Attock

Group of Companies.

Pharaon Group is engaged internationally in diversified entrepreneurial activities,

including Hotels, Oil Exploration, Production and Refining, Manufacturing of

Petroleum Products, Chemicals, Manufacturing and Trading of Cement, Real Estate

etc.

The Attock Group of companies consist of The Attock Oil Company Limited (AOC),

Pakistan Oilfields Limited (POL), Attock Refinery Limited (ARL), Attock Petroleum

Limited (APL), Attock Information Technology Services (Pvt) Limited (AITSL), Attock

Cement Pakistan Limited (ACPL) etc. AOC was incorporated with limited liability in

England on December 01, 1913. The company is principally engaged in exploration,

drilling and production of petroleum and related activities in Pakistan. AOC is the

pioneer in the oil sector in Pakistan. Its first oil discovery in Pakistan was made in

Khaur district Attock in 1915. The refining operations were started in 1922 at Morgah

near Rawalpindi. (For other group companies information please visit Group Profile)


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Liquidity Ratios

Liquidity ratios measure the availability of cash to pay debt.It have two subtypes current

ratio and quick ratio. The current ratio is an indication of a firm's market liquidity and

ability to meet creditor's demands. Acceptable current ratios vary from industry to

industry.Attock Petrolium showing potive trent in Current ration because it is rises from1.41 Fy08 to 1.50 FY 09 due to rise in current asset from 13881634000 to 16406083000

which is very benificial for any organisation.However if current ratio rises to high it

mean company is not utilizing their assest in best way.

While Generally, the acid test ratio should be 1:1 or better, however this varies widely by

industry. In general, the higher the ratio, the greater the company's liquidity (i.e., the

better able to meet current obligations using liquid assets). Therefore atoock petroliumQuick Ratio also increasing which is making the company repotation stronger and

stronger.

Positive working capital means that the company is able to pay off its short-termliabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory). Similarly APLIncreasing from previous year it means company can work after paying their liabilities.

WORKING CAPITAL

Total Asset Total liabilities

2008 2009

15513336-9977487 18270355-11188087

5535849 7082268

0

1000000

2000000

3000000

4000000

5000000

6000000

70000008000000

2008 2009

Workin capital
http://en.wikipedia.org/wiki/Market_liquidityhttp://en.wikipedia.org/wiki/Market_liquidity


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CURRENT RATIO

Current Assets

Current Liabilities

ACID-TEST/ QUICK/ LIQUID RATIOACID-TEST/ QUICK/ LIQUID RATIO

.

.

Quick Assets

Current Liabilities

2008 2009

13881634

9842350

16406083

10936549

1.41 1.50

2008 2009

13484019

9842350

162326287

10936549

1.37 1.48

1.4

1.42

1.44

1.46

1.48

1.5

2009 2008

C.R

1.3

1.35

1.4

1.45

1.5

2009 2008

Q.R


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PROFITABILITY RATIO

Profitability ratios measure the firm's use of its assets and control of its expenses to

generate an acceptable rate of return.Similarly ATP little bit increses in GP but due to its

same COGS rate which is almost 94% of its sale, although sales increses by 16% fromprevious year but it cannot imposed its much effect on GP due to high rate of COGS.

Operating profit ratio decrease from 0.061 to 0.058 due to high rate of operating expensein 2009, which is 0.81% higher than that of 0.69% in 2008.however due to high other

income which include commission and interest net profit ratio rises from 0.0496 to 0.498

GROSS PROFIT MARGIN

Gross Profit

Total Net Sales

2008 2009

2748401

53242330

3292350

61863152

0.051 0.053

0.05

0.0505

0.051

0.0515

0.052

0.0525

0.053

2009 2008

Gross Profit

Margin


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Operating Profit Margin

Operating income

Net sales

Net Profit MarginNet income

Net Sales

Return on Asset

2008 2009

3272090

53242330

3630256

61863152

0.061 0.058

2008 2009

2641552

53242330

3082419

61863152

0.496 0.0498

0.056

0.057

0.058

0.059

0.06

0.061

2009 2008

Operating Profit

Margin

0

0.1

0.2

0.3

0.4

0.5

2009 2008

NET PROFIT

MARGIN


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Net Income

Total Asset

2008 2009

264155215513336

308241918270355

0.170 0.168

Return on Equity

Net income

Total SHE

2008 2009

2641552

5535849

3082419

7082268

0.0477 0.435

0.1

0.11

0.12

0.13

0.14

0.15

0.16

0.17

2008 20009

Return on asset

0.41

0.42

0.43

0.44

0.45

0.46

0.47

0.48

2008 2009

Return on Equity


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EARNING PER SHARE

Net income

No of share

ACTIVITY RATIO

An indicator of how rapidly a firmconverts various accounts into cash orsales. In general, the sooner management can convert assets intosales or cash, the more effectively the firmis being run. Analysis of each rationis following:

A/P turnover times means how many times a firm paid their liabilities in a year this ratiomay differ from industry to industry but generally stockholders attracts towards the organizationwho paid their liabilities quickly in the same way ATC A\P turn over slightly moved downwardfrom 54 to 63.

Asset turnover measures a firm's efficiency at using its assets in generating sales orrevenue - the higher the number the better the performance of company.. But here you can seethat asset turnover is decreasing from 3.43 to 3.38 which is somewhat bit lower than previousyear.

By maintaining accounts receivable, firms are indirectly extending interest-free loans totheir clients. A high ratio implies either that a company operates on a cash basis or that itsextension of credit and collection of accounts receivable is efficient. A low ratio implies the

company should re-assess its credit policies in order to ensure the timely collection of impartedcredit that is not earning interest for the firm .APL improving in account receivable because in2008 its collected asset days are 49 which become 45 in 2010.

Inventory ratio showing how many times a company's inventory is sold and replaced

over a period. This ratio should be compared against industry averages. A low turnover

implies poor sales and, therefore, excess inventory. A high ratio implies either strong

sales or ineffective buying likewise APL showing very high ration of inventory almost

20082009

2641552

57600

3082419

57604

45.8653.51

42

44

46

48

50

52

54

2008 2009

EPS


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double of previous year if we kept eye on inventory turnover days then we know that in

almost every 1 and half day the inventory is updating because of high ratio of sales.

A/P TURNOVER TIMES

Net Purchases

Average A-P

20082009

50451319_____

(5296183+9813929/2)

58413217____

(10728556+9813929/2)

6.675.68

ACCOUNT PAYABLE TURNOVER DAYS

360A-P turnover times

20082009

360

6.67

360

5.68

54 63

TOTAL ASSET TURNOVER

Net Sale

Total. Asset

5

5.5

6

6.5

7

2009 2008

A/P turnover

times

48

50

52

54

56

58

60

6264

2008 2009

Accout Py

days


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2008 2009

53242330

15513336

61863152

18270355

3.43 3.38

ACCOUNT RECEIVABLE TURNOVER TIMES

Net Cr Sale

Average A/R

2008 2009

53242330____

(6721529+878498/2)

61863152_____

(8592508+6721529/2)

7.43 8.07

3.34

3.36

3.38

3.4

3.42

3.44

2009 2008

Total asse t turnover

7

7.2

7.4

7.6

7.8

8

8.2

2009 2008

A/R Turnover


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ACCOUNT RECEIVABLE DAYS

360

A/R Times

2008 2009

360

7.43

360

8.07

49 45

43

44

45

46

47

48

49

2008 2009

A/R Days

INVENTORY TURNOVER TIMES

COGS ____

Average Inventory

2008 2009

50493929___

(341702+299092/2)

58570802____

(141507+299092/2)

157 265

0

50

100

150

200

250

300

2009 2008

Inventory

turnover times


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INV TURNOVER DAYS

360

INV Times

2008 2009

360

157

360

265

2.32 1.35

AVERAGE DAYS OF OPERATING CYCLE.

A/R Days +Inv Days

2008 2009

2.32+49 1.35+45

51.32 46.35

0

0.5

1

1.5

2

2.5

2008 2009

INV Turover

Days

0

50

100

150

200

250

300

350

2008 2009

Average Daysof

operatin Cycle


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LONG TERM DEBT PAYING ABILITY

Ratio that indicates what proportion of debt a company has relative to its assets. The measuregives an idea to the leverage of the company along with the potential risks the company faces interms of its debt-load. A debt ratio of greater than 1 indicates that a company has more debt thanassets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets than

debt. Used in conjunction with other measures of financial health, the debt ratio can helpinvestors determine a company's level of risk. Debt ratio of APL showing that it has more assetsthan its liabilities, which is good sign for company. A measure of a company's financial leveragecalculated by dividing its total liabilities by stockholders' equity. It indicates what proportion ofequity and debt the company is using to finance its assets. A high debt/equity ratio generallymeans that a company has been aggressive in financing its growth with debt. This can result involatile earnings as a result of the additional interest expense. However APL debt to companyration showing that debt is almost 57% more than its liabilities but lower than previous year, whichindicating that equity is gradually increased in contrast with their liabilities in current year

DEBT RATIO

Total Liabilities

Total Asset

20082009

9977487

15513336

11188087

7082268

0.64 0.61

0.59

0.6

0.61

0.62

0.63

0.64

2009 2008

Debt ratio


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DEBT TO EQUITY

Total Debt

Total Equity

2008 2009

9977487

5535849

11188087

7082268

1.801.57

DIVIDEND PER SHARE.DIVIDEND PER SHARE.

Dividends

No. Of Shares

20082009

960000

48000

1440000

57600

20 25

1.4

1.5

1.6

1.7

1.8

2009 2008

Debt to equity

0

5

10

15

20

25

2008 2009

Divident per

share


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SUMMARY OF RATIOS

Liquidity2009 2008

Working capital7082268 5535849

CURRENT RATIO1.50 1.41

QUICK RATIO1.48 1.37

Profitability2009 2008

Gross Profit Margin0.053 0.051

Operating Profit

Margin 0.058 0.061

Net Profit Margin0.0498 0.0496

Return on Asset0.168 0.170

Return on Equity0.435 0.477

Earning Per Share53.51 45.86

A/P turnover times 5.68 6.67

A/P turnover days63 dys 54

Total asset turnover3.38 3.43


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A/R Turnover times8.07 7.43

A/R Days45 49

Inventory Turnover

times265 157

Inv turnover Days 1.35 2.27

Avg Day of operating

cycle.46.35 51.27

Debt ratio0.61 0.64

Debt to equity1.57 1.80

Dividend per share25 20


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COMMON SIZE

INCOME STATEMENT

2009 % 2008 %

Sales 61863152 100 53242330 100

Cost of sales (58570802) 94.7 (50493929) 94.8

Gross profit 3292353 5.3 2748104 5.2

Other operating Income 843967 1.4 896359 1.7

Operating Expense (506061) 8.0 (372670) 0.7

Operating Profit 3630256 5.9 3272090 6.1

Income on bank Deposits and

Investment848852 1.4 381910 0.7

Share of Profit of Associated

Companies26510 0.042 58918 0.1

Workers Profit ParticipationFund

(225199) 0.4 (183366) 0.3

PROFIT BEFORE TAXATION 4280419 6.9 3529552 6.6

Provision for taxation (1198000) 1.9 (888000) 1.7

PROFIT FOR THE YEAR 3082419 5.0 2641552 5.0


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COMMON SIZE

BALANCE SHEET

SHARE CAPITAL AND RESERVES 2009 2008

Issue subscribed and paid up capital 3.1% 3.09%

Reserves

Special reserve

Revenue reserve

Inappropriate profit

38.76%35.68%

NON-CURRENT LIABILITIES

Long-term deposit

Deferred income tax

Liability

1.37%

0.87%

CURRENT-LIABILITIES

Trade and Other Payables

Provision for income tax

58.85%

63.44%

TOTAL LIABILITIES 100% 100%

0.18%

35%

0.34%

32.24%

0.87%

0.50%

0.78%

0.09%

57.72%

1.13%

63.26%

0.18%


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& EQUITIES

2009 2008

PROPERTY, PLANT

AND EQUIPMENT

LONG TERM INVESTMENTIN ASSOCIATED COMPANIES

10.11% 10.51%

CURRENT ASSETS

Stores and spares

Stock in trade

Trade debts

Advances, deposits prepayment

And other receivable.

Short term Investments

6.1% 5.94%

4.01% 4.57%

0.015% 0.033%

0.77% 1.92%

42.88% 37.55%

5.42% 8.40%

- 2.12%


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Cash and bank balances

89.68%

89.44%

INTERPRETATION:

Common size Income statement defines the percentage of each item with respect to

Net Sales so that we can easily analysis that which item % is increasing or

decreasing.

If we kept eye on APL common size Income statement then we know that cost of

good sold declined from 94.8 to 94.7 which helped to higher the rate of gross profit

but due to high ratio of expense compare to previous year operating profit declined

from 6.1 % to 5.9.However due to other income net profit margin moves little bit

high.

On other hand common size balance sheet shows the percentage of each item with

respect to total assets, like APL Share equity has been rose from 35% to 38%, it

means that firm has the total share holder equity of 38 % of its total asset. While

APL had 63% current liabilities of total asset in 2008, which decreases to 58 % in,2009, which is somewhat, better for any company to lower down its liabilities.

Moreover APL Non current asset percentage slightly moved downward from

10.51% to 10.11% while little bit increases in current ratio from previous year.

40.6% 39.42%

0% 20% 40% 60% 80% 100%

2009

2008

current Asset Non Current Asset

0% 20% 40% 60% 80% 100%

2009

2008

share hoder equity current liabiilities

no current liabilities


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CALCULATION OF GROWTH RATE

Sustainable Growth Rate: (SGR)Sustainable Growth Rate: (SGR)

SGR => Return on Equity. b

1- (ROE. b)

b => retention ratio => 1 payout ratio

Payout ratio => Dividend

Net Income

PAYOUT RATIO = 14400003082419

b = 1-0.467 = 0.533

SGR= 0.435 *0.533

1-(0.435*0.533)

SGR = 0.231 = 0.231 = 30%

1-0.231 0.769

Internal Growth Rate: (IGR)Internal Growth Rate: (IGR)

IGR => Return on Assets. b

1-(ROA. b)

0.168 *0.533 =9.83%

1-(0.168*0.533)


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PROFORMA INCOME STATEMENT 2010

SGR 30%

Sales

80422098

Cost of sales (76142043)

Gross profit 4280055

Other operating Income 1097157

Operating Expense (657879)

Operating Profit 4719333

Income on bank Deposits and Investment 1103507

Share of Profit of Associated Companies 34463

Workers Profit Participation Fund (292759)

PROFIT BEFORE TAXATION 5564544

Provision for taxation (1557400)

PROFIT FOR THE YEAR 4007144


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PROFORMA INCOME STATEMENT 2010

IGR 10%

Sales 68049467

Cost of sales (64427882)

Gross profit 3621585

Other operating Income 928364

Operating Expense (556667)

Operating Profit 3993282

Income on bank Deposits and Investment 933737

Share of Profit of Associated Companies 29161

Workers Profit Participation Fund (247719)

PROFIT BEFORE TAXATION 4708461

Provision for taxation (1317800)

PROFIT FOR THE YEAR 3390661


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CONCLUSION

After careful consideration of the financial position of Attock petroleum

limited, I found that Sale has been increased by almost 16% of previousyear but somewhat it could not change the net profit margin massively

due to high percentage of expense.

If we kept eye on the financial ratio of company then, we know that

return on asset and equity is decreasing from previous year for the

reason that assets and equities increase by almost 18%, while income

increased by 16.5%, so it is obvious to understand that change in

income is less than change in asset and equity, which cause decline in

both the ratios.

Moreover, there is a clear increased in earning per share from 45 to 53

this increase raise question that when the net profit margin is same as

previous year then how EPS has been grown. As we know that net profit

increases almost 17% from previous year while there is no change

occurred in the number of shares, which boost up the EPS from 45 to

53.

RECOMMENDATION

Attock Petroleum must decrease their expense ratio because it is

increasing since last year.

More important thing for APL is to improve their recurring income

because since many year APL is selling their asset in order to increase

EPS which is not useful for any organization because regular selling of

their asset could caused the insolvency of firm. Therefore, APL should

increase their recurring nature income.

Final Report on Attock- Ibf

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