IBF Report 2

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    TABLE OF CONTENT

    ACKNOWLEDGEMENT2Vision and Mission 3

    COMPANY PROFILE4

    TIME SERIES ANALYSIS

    CALCULATION 7

    TABLE 12

    INTERPRETATION15

    COMMON SIZE

    INCOME STATEMENT 16

    BALANCE SHEET 17

    INTERNAL GROWTH RATE18SUSTAINABLE GROWTH RATE19

    PRO FORMA INCOME STATEMENT

    20PRO FORMA BALANCE SHEET21

    CONCLUSION 23

    RECOMMENDATION24

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    ACKNOWLEDGMENT

    In the name of Allah, the most gracious and merciful. First, I am very

    thankful from bottom of our hearts to our Allah who helped us to make this

    project complete. Second, we would like to thank all the people who helped

    us through out this project. Specially, the staff of Hajra textile who gave us

    their precious time & ideas.

    I specially would like to thank Mr. Jamil Ahmed Sabri & Mr. Muhammad

    Mumtaz Khan and my friend Imran saeed who helped us through out this

    project with their ideas, concept, time & most of all their knowledge.

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    VISION

    To attain a leadership position in the textile sector through

    commitment,integrity,honesty and team work.

    MISSION STATEMENT

    The company will conduct its prudently assuring customersatisfaction and to provide profits as well as growth to its

    shareholder through:

    Striving hard to develop new market for sale of our

    product.

    Providing quality product to our customer mainly

    engaged in the manufacturing of textile product.

    Protecting environment and contributing towards the

    economic growth of the country as a good corporate

    citizen.

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    Corporate Information:

    BOARD OF DIRECTORS

    Mr. Noor Ellahi chairman

    Mr. Ahmed Ellahi

    Mr. M.Hussain Ellahi

    Mr. Rukhsani Ellahi

    Mr. Salman Yaqub Sheikh

    Mr. Muhammad Shafique Bhati

    Mr. Shahid Aziz

    COMPANY Chief Executive

    Mr. Noor Ellahi

    CHIEF FINANCIAL OFFICER

    Mr.Ahmed Ellahi

    AUDIT COMMITEE

    Mr. Noor Ellahi

    Mr. Salman Yaqub Sheikh

    Mr. Muhammad Saeed Rana

    AUDITORS

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    M.Hussain Chudhri

    BANKERS

    ALLIED Bank Of Pakistan

    Bank Of Punjab

    Saudi Pak Bank

    REGISTERED OFFICE

    45-50 Industrial Area ,Gulburg -111,Lahore

    Tel(042)5756181-5756183

    Fax :(042)5756194-5759466

    Email:[email protected]

    MILLS AT

    Jhamke macheke

    8-9KM Sheikhpura ,Sarguda Road,Sheilhpura

    RATIO ANALYSIS

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    1. WORKING CAPITAL

    Working Capital = Current Assets Current Liabilities

    2006

    = 903168109 1056843432

    = (153675323)

    2005

    =1040477758 893642102

    =146835656

    2. CURRENT RATIO

    Current Ratio = Current Assets

    Current Liabilities

    2006 2005

    = 903168109 = 1040477758

    1056843432 893642102

    = 0.85: 1 = 1.16:1

    3. CASH RATIO

    Cash Ratio = Cash

    Current Liabilities

    2006 2005

    = 23858850 = 12223409

    1056843432 893642102

    = 0.022:1 = 0.013:1

    4. QUICK RATIO

    Quick Ratio = Quick Assets

    Current Liabilities

    2006 2005

    = 404992337 = 1737157751056843432 893642102

    = 0.32:1 = 0.19:1

    5. (a) INVENTORY TURNOVER

    Inventory Turn Over = Cost of Goods Sold

    Average Inventory

    2006 2005

    = 2249574997 = 967362954

    594.35718 785418763

    = 3.78times = 1.23times

    (b) INVENTORY TURNOVER DAYS

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    Inventory Turn Over Days = 360

    Times

    2006 2005

    = 360 = 360

    3.78 12.3

    = 95 days = 29 days

    6. (a) ACCOUNTS RECEIVABLE TURNOVERReceivable Turn Over = Net Credit Sales

    Average Accounts Receivables

    2006 2005

    = 2671677837 = 1174792736

    180966914 154973530

    = 14.76 times = 7.8 times

    (b) ACCOUNTS RECEIVABLE TURNOVER DAYS

    Receivable Turn Over Days = 360

    Times

    2006 2005= 360 = 360

    14.76 7.8

    = 25 days = 47days

    7. (a) ACCOUNTS PAYABLE PAYMENT PERIOD

    Payable payments = Net Credit Purchases

    Average Accounts Payable

    2006 2005

    = 1277075128 = 1120799093

    247214643 130398939

    = 5.17 times = 8.5 times

    (b) PAYABLE PAYMENT DAYS

    Payable Payments Days = 360

    Times

    2006 2005

    = 360 = 360

    5.17 8.5

    = 71 days = 42 days

    8. TOTAL DAYS OF OPERATING CYCLE

    Total Days of Operating Cycle = Accounts Receivable Turnover days+ Inventory Turnover Days

    2006 2005

    = 25 + 95 = 120 days = 47 + 29 = 76 days

    9. DEBT RATIO

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    Debt Ratio = Total Liabilities x 100

    Total Assets

    2006 2005

    = 1155582990 x 100 = 973895594 x 100

    3070491272 2369940076

    = 37.63% = 41.10%

    10. EQUITY RATIO

    Equity Ratio = Total Shareholders Equity x 100

    Total Assets

    2006 2005

    = 737169995 x 100 = 614592756 x 100

    3070491272 236940076

    = 62.36% = 58.90%

    11. ASSETS TURNOVER

    Assets Turnover = Total Net Sales x 100

    Total Assets

    2006 2005

    = 1277075128 x 100 =1174792736 x 100

    3070491272 236940076

    = 87.01% = 40.57%

    12. EARNING PER SHARE

    Earning per Share = Net Income

    No. of Shares

    2006 2005

    = 137577239 = 88350864

    3000000 3000000

    = 45.86 = 29.45

    13. PRICE EARNING RATIO

    Price Earning Ratio = Market Price

    Earning per Share

    2006 2005

    = 62 = 62

    45.86 29.45

    = 1.35 =2.11

    14. DIVIDEND PER SHARE

    Dividend per Share = Dividend

    No. of Shares

    2006 2005

    = 150000000 = 150000000

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    3000000 3000000

    = 5 = 5

    15. DIVIDEND YIELD

    Dividend Yield = Dividend per Share

    Market Price

    2006 2005

    = 5 = 5

    62 62

    = 0.08 = 0.08

    16. BOOK VALUE PER SHARE

    Book Value per Share = Total Shareholders Equity

    No. of Shares

    2006 2005

    = 737169995 = 614592756

    3000000 3000000

    = 245.72 = 204.86

    17. RATE OF RETURN ON TOTAL ASSETS

    Return on Total Assets = Net Income x 100

    Total Assets

    2006 2005

    = 137577239 x 100 = 88350864 x 100

    3070491272 2369940076

    = 4.48% = 3.72%

    18. RATE OF RETURN ON SHAREHOLDERS EQUITY

    Return on Shareholders Equity = Net Income x 100

    Total Shareholders Equity2006 2005

    = 137577239 x 100 = 88350864 x 100

    737169995 614592756

    = 18.66% = 14.37%

    19. RATE OF COST OF GOODS SOLD

    Rate of Cost of Goods Sold = Cost of Goods Sold x 100

    Total Net Sales

    2006 2005

    = 2249574997 x 100 = 967362954 x 100

    2671677837 1174792736= 84.2% = 82.30%

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    20. RATE OF GROSS PROFIT

    Rate of Gross Profit = Gross Profit x 100

    Total Net Sales

    2006 2005

    = 422102840 X 100 = 207429782 X 100

    2671677837 1074792736

    = 15.8% = 17.66%

    21. RATE OF OPERATING EXPENSES

    Rate of Operating Expenses = Operating Expenses x 100

    Total Net Sales

    2006 2005

    = 80816975 x 100 = 56596253 x 100

    2671677837 1174792736

    = 3.02% = 4.81%

    22. RATE OF NET PROFIT

    Rate of Net Profit = Net Profit x 100

    Total Net Sales

    2006 2005

    = 137577239 x 100 = 88350864 x 100

    2671677837 1174792736

    = 5.15% = 7.5%

    23. CASH FLOW MARGIN

    Cash flow Margin = Cash from Operation x 100

    Total Net Sales

    = 622607854 x 100 = (232326719) x 100

    2671677837 1174792736

    = 2.32% = (19.7) %

    INTERPRETATION

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    WORKING CAPITAL:In 2005 company have (78694)perform business operations. In 2006 company have

    (17549)as compare to past year company have improve their working capital but

    still its liabilities are more then their asset.In this situation company should not take

    more liabilities and try to pay their liabilities in order to decrease its liabilities..

    CURRENT

    RATIO

    :It is the ability to pay its current liability with current asset in 2005 company has

    0.59Rsurrent assets to pay of 1Rs current liability. In 2006 company has 0.89current

    asset to pay 1Rs current liability, as compare to 2005 it is increase.

    Cash Ratio:

    In 2005 company have cash of 0.036Rs to pay 1Rs current liability and in 2006

    company have cash 0.19 to pay current liability. As compare to previous year

    company take loans and other finance to pay its current liability.

    Quick Asset Ratio:

    It is the ability to pay 1 Rs current liability to pay it from most liquid asset.

    In 2005 company have 0.22 to pay 1Rs of current liability . In 2006 it is increase by

    0.56Rsshows company has improve its position to meet current obligation.

    Inventory Turnover :

    Indicate the sale ability of inventory in 2005 is 7times. In 2006 it is increase by 12 t

    times which may be the good sign that company selling its goods by increasing its

    time.

    Account Receivable Turnover :

    Measure collection ability of receivables. In 2005 is 23times that is 2 days. In 2006 it

    is increase to 85 times that is 4 days which may be company should improve the

    collection ability .

    Operating Cycle;

    The days which required completing the operational activity of the company.

    In 2005 the operating cycle is 158day which were increase in 2006 to 103 day this

    shows that the operating activities is increase in 2006.

    Debt Ratio :

    It indicates percentage of assets through borrowing

    In 2005 107.89% of debt ratio tells us the proportion of the company assets that it

    has financed with debt . In 2006 it is 91.53% it indicate a fairly high debt position in

    comparison .

    Equity Ratio :

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    Indicate percentage of assets which stockholder own .In 2005 it is 38.51% and in

    2006 it are 8.47% which show increment.

    Asset Turnover:

    Show the percentage of net income on assets. In 2005 it is 86.84%. In 2006 it is

    increased to 105.75%

    Earning Per Share :

    Gives the amount of earning per one share of common stock . In 2005 the amount of

    earning per share is -33.55Rs and in 2006 it is -14.56Rs which may be improve.

    Dividend per Share :The dividend per share in both the year is nil because company is facing loss.

    Rate of Cost of goods sold :It indicate the percentage of cost on sale or the part of cost in sales

    In 2005 it is 99.72% which is increase in 2006 to 99.72% this rate of cost of godd

    sold is in the retain position..

    Rate of return on Asset:

    It indicates the percentages of net income on total assets. In 2005 it is -40.46% which

    were increase in 2006 to -33.95%this show the increase in net income.

    Rate of return on Stock Holder Equity:

    It indicates the percentage of net income on total stock holder equity . In 2005 it is

    -5.12%. This show the improvement in net income of the company by the company

    Rate of Gross profit :Indicate the percentage of Gross profit on sale or the part of profit in sale

    In 2005 it is 0.28% which is reducing in 2006 to 0.28 is in the retaining position.

    Book Value per Share :Book value per share is the value of share on total stock holders equity.

    In 2006 the book value par share is 6.54 which increase in 2006 to 3.68per shareRate of Operating Expenses :

    It indicates the percentage of operating expense on sale or the part of expense in

    sales. In 2005 it is 1.91% which is decrease in 2006 to 2.40% due to increase the

    operating expense the net profit is increased.

    RATE OF NET PROFIT :

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    It indicates the percentage of net loss on sale or the part of net loss in sales. In 2005

    it is -46.73% which is reducing in 2006 to -32.10% due to increase in cost the net

    profit is reducing .but company should improve its credit policy to improve it bet

    profit. Company facing because of there liabilities other item of income statement

    are higher then their profit.

    RATIO ANALYSIS

    2006 2005WORKING CAPITAL (153675323) 146835656

    CURRENT RATIO 0.85:1 1.16:1

    CASH RATIO 0.022:1 0.013:1

    QUICK RATIO 0.32:1 0.19:1

    INVENTORY TURNOVER 3.78 Times 12.3 Times

    INVENTORY TURNOVER DAYS 95 Days 29 Days

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    ACCOUNTS RECEIVABLE TURNOVER 14.76 Times 7.8 Times

    ACCOUNTS RECEIVABLE TURNOVER DAYS 25 Days 47 Days

    ACCOUNTS PAYABLE PAYMENT PERIOD 5.16 Times 8.5 Times

    PAYABLE PAYMENT DAYS 71 Days 42 Days

    TOTAL DAYS OF OPERATING CYCLE 120 Days 76 Days

    DEBT RATIO 37.63% 41.1%EQUITY RATIO 62.36% 58.90%

    ASSETS TURNOVER 87.01% 40.57%

    EARNING PER SHARE 45.86 29.45

    PRICE EARNING RATIO 1.35 2.11

    DIVIDEND PER SHARE 5 5

    DIVIDEND YIELD 0.08 0.08

    BOOK VALUE PER SHARE 245.72 204.86

    RATE OF RETURN ON TOTAL ASSETS 4.48% 3.72%

    RATE OF RETURN ON SHAREHOLDERS EQUITY 18.66% 14.37%RATE OF COST OF GOODS SOLD 84.2% 82.30%

    RATE OF GROSS PROFIT 15.8% 17.66%

    RATE OF OPERATING EXPENSES 3.02% 4.81%

    RATE OF NET PROFIT 5.15% 7.5%

    CASH FLOW MARGIN 2.32% (19.7)%

    BHANERO TEXTILE LIMITEDCOMMON SIZE INCOME STATEMENT

    Sales 100% 100%

    Cost of goods sold 84.20% 86.57%

    Gross Profit 15.80% 82.34%

    Other operating income 0.626% 17.66

    Distribution cost 1.02% 1.11%

    Administrative expense 1.64% 2.72%

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    Other operating expenses 0.36% 0.99%

    Finance cost 6.90% 4.15%

    Profit before tax 6.49% 8.75%

    Provision for taxation 1.34% 1.23%

    Profit after tax 5.15% 7.52%

    BHANERO TEXTILE LIMITEDCOMMON SIZE BALANCE SHEET

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    2006 2005

    Assets

    Fixed AssetProperty , plant & Equipment 70.07% 55.20%

    Long term investment 0.01% 0.01%

    Long term loans 0.20% 0.27%

    Long term deposits 0.30% 0.62%

    Current AssetsStores, spare parts & loose tools 0.80% 1.02%

    Stock in trade 19.35% 33.14%

    Trade debts 5.89% 6.54%

    Loans & advances 1.27% 1.81%

    Trade deposit & short-term prepayments 0.63% 0.35%

    Other receivables 0.01% 0.28%

    Taxations 0.70% 0.26%

    Bank balances 0.78% 0.52%

    Total Assets 100% 100%

    Equity and liabilitiesShare capital And Reserves

    Authorized Capital

    6,500,000 (2005: 6,500,000) ordinary shares of Rs. 10 each 60000000 60000000

    Issued, subscribed and paid-up-capital 0.98% 1.27%

    General reserves 21.1% 32.1%

    Unappropriated profit 1.86% 1.46%

    Non Current liabilitiesLong-term financing 36.29% 27.85%

    Liabilities against assets subject to finance lease 0.52% 2.37%

    Long term murabaha 1.21% 2.48%

    Infrastructure fee payable 0.34% 0.27%

    Deferred liabilities:

    -employee benefits 1.11% 1.31%

    - deferred taxation 2.11% 2.07%Current liabilities

    Trade and other payables 9.91% 6.82%

    Make-up accrued on loans 0.92% 0.79%

    Short-term barrowing 16.82% 26.73%

    Current portion of L long term financing 4.75% 0.84%

    Liabilities against assets subject to finance lease 1.31% 1.60%

    Total Equity & Liabilities 100% 100%

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    INTERNAL GROWTH RATE:

    Internal Growth Rate = ROA x b x 100

    1 (ROA x b)

    = 0.045 x 0.89 x 100

    1 (0.045 x 0.89)

    = 0.04005 x 100

    0.95995

    = 4.17%

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    SUSTAINABLE GROWTH RATE:

    Sustainable Growth Rate = ROE x b x 100

    1 (ROE x b)

    = 0.186 x 0.89 x100

    1 (0.186 x 0.89)

    = 0.1650 x 100

    0.8350

    = 19.76%

    BHANERO TEXTILE LIMITED

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    PRO FORMA INCOME STATEMENT

    Sales 2778544950

    Cost of goods sold 2339557997

    Gross Profit 438986953

    Other operating income 17231361.68Distribution cost 28227974.32

    Administrative expense 45693388

    Other operating expenses 10128291.68

    Finance cost 191766559.90

    Profit before tax 180402101.40

    Provision for taxation 37321772.80

    Profit after tax 143080328.6

    BHANERO TEXTILE LIMITEDCOMMON SIZE BALANCE SHEET

    2006

    AssetsFixed Asset 2254016089

    Current Assets 9392948833.4

    Total Assets 3193310923

    Equity and liabilities

    Share Capital and Reserve 741934248.5

    Non Current liabilities 1352259506

    Current liabilities 1099117169

    Total Equity & Liabilities 3193310923

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    PLUG VARIABLE

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    Debt Before Projection = 98739558

    Debt After Projection = 1352259506

    Financing of debt = 1253519948

    CONCLUSION:

    In preparing this report I focus on all financial concepts that I

    learn in the course of business finance. The financial position

    of Hajra textile is in worst condition so the finance manager

    of this company must think about to maintain the position and

    take some important steps for betterment of Hajra textile.

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    Company need some financial changing according to its ratio

    analysis because sustainable growth can be improve more its

    means there is a chance of betterment in future so

    management need full concentration to handle this situation.

    The only room of the earth is the room of improvement

    RECOMMENDATION The short term solvency ratio of the company is in worse

    condition. The company should increase its assets or decrease

    liabilities.

    The long term solvency ratio of the company is in worse condition

    ratio which is in better condition to increase its term solvency.

    The company should increase its total assets or decrease total

    liabilities.

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    If Assets utilization ratio of the company can improve. The

    company should increase its net sales.

    Profitability ratio of the company is in worst better condition,

    company is facing loss if its like this company will be close or

    demolished financial manger of company its not able take right

    decision as far as company betterment is concern., so it should be

    fire.