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    Analysis of Financial statement

    Project report on

    Horizontal/Trend Analysis

    Team Member

    Salamat Ali (8933)

    Shakeel Ahmed (10758)

    Submitted To: MR. Sajjad Ahmed

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    H O R I Z E N T A L A N A L Y S I S P a g e | 2

    ACKNOWLEGEMENT

    We are grateful to the number of people for their encouragement,

    inspiration and information. Specially,

    We are deeply thankful to Honourable Sir Sajjad Ahmed who has given

    us opportunity and also encourage for working on this project

    report Horizontal Analysis of DG Khan Cement limited and lucky

    cement limited

    Secondly, thanks &appreciation for whole group members specially,

    Shakeel Ahmed, and Salamat Ali for contributions, cooperation,

    support and feedback.

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    H O R I Z E N T A L A N A L Y S I S P a g e | 3

    DEDICATIONS

    TO THE FACULTY OF FINANCE & SPECIALLY MR. SAJJAD AHMED WHOSE

    CONTRIBUTIONENHANCESTHEFUTUREOFFINANCESTUDENTS.

    SECONDLY,

    TO THE HUNDREDS OF STUDENTS WHO HAVE LEARNED ABOUT ANALYSIS OF FINANCIAL

    MANAGEMENTCOURSEFROM IQRA UNIVERSITY.

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    H O R I Z E N T A L A N A L Y S I S P a g e | 4

    s.no Description Page #

    1 Acknowledgement 2

    2 Dedications 3

    3 Executive summary 5

    4 Overview of Cement industry 6

    Overview of D.G Khan cement 6

    Overview of Lucky cement 6

    Horizontal analysis 7

    Lucky

    Horizontal analysis-Balance sheet base year 2005

    Horizontal analysis- income statement base year 2005

    7

    10

    7

    D.G Khan 12

    Horizontal analysis-Balance sheet base year 2005

    Horizontal analysis- income statement base year 2005

    15

    12

    Conclusion & recommendation 21

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    H O R I Z E N T A L A N A L Y S I S P a g e | 6

    The cement Industry of Pakistan has around 25 active Players. Around 10% have less than

    2% market share each. At the same time the top 4 players control more than 40% production

    capacity in the industry. The cement sector is divided into the north and south zones.

    Presently, north zone accounts for around 80% of the rated capacity with 19 plants, while

    south zone accounts for 20% with 10 plants. The cement industry of Pakistan entered theexport markets a few years back, and has established its reputation as a good quality product.

    The latest information is that India will import more cement from Pakistan. So far 130,000

    tonnes cement has been exported to the neighbouring country. The last few years have been a

    golden period for cement manufacturers, when the government increased spending on

    infrastructure development. High commercial activity and rising demand for housing on

    account of higher per capita income has kept cement offtake growth in double digits. The

    main factors behind increase in demand of cement were: 60 percent higher Public Sector

    Development Projects (PSDP) allocation, seven percent GDP growth, increasing number of

    real estate development projects for commercial and residential use, developing export

    market and expected construction of mega dams. it is estimated that the price would increase

    in domestic as well in regional markets that may surely boost the profitability and give relief

    to the industry on its new investment.

    Overview: D.G KHAN: DGKC was established in 1978 under the management control of

    State Cement Corporation of Pakistan Limited (SCCP). The company is a unit of Nishat

    group, which is a leading and diversified business group with a strong presence in three most

    important sectors of Pakistan: textiles, cement and financial services. it is presently the

    second largest cement producer of the sector. The company had a total installed capacity of

    37,156,750 metric tons as at June 2008. DGKC had a market share of 13% in the localcement industry. DGKC has two plants at Dera Ghazi Khan and a new Greenfield cement

    plant at Khairpur village.

    Overview of lucky Cement: Lucky Cement Limited is currently one of the largest

    manufacturers of cement in Pakistan. During FY10, in order to decrease cost of production,

    Lucky Cement signed an MoU with Oracle Coal Fields for coal supply and also implemented

    the Waste Heat Recovery Project in Karachi . LUCK is the market leader & has 21% of

    the total market share. LUCK sales comprise of 44% exports & 56% local sales and

    similar mix is expected to continue.

    Horizontal/trend analysis:

    Horizontal analysis is one of the most important parts of financial analysis. But what

    is horizontal analysis in accounting and financial management. the horizontal analysis is the

    financial statements of a company of successive years presented side-by-side. The goal of

    horizontal analysis is to compare the figures of the current period with that of the past period.

    This helps the company and its shareholders analyze their performance and find out areas of

    improvement. Horizontal analysis is done for both income statements and balance sheets.

    Importance of horizontal/Trend Analysis

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    H O R I Z E N T A L A N A L Y S I S P a g e | 7

    Horizontal analysis is an important part of the financial statements and annual reports.

    It places the facts very simply in front of the shareholder and makes the job of analyzing the

    improvements or the lack of it very simple for the shareholder. Horizontal analysis helps the

    shareholder understand the change and the percentage change. And if there is no

    improvement or in fact a reduction, then the board is compelled to explain the situation to theshareholder and what they intend to do in the future to fix it.

    Calculation ofHorizontal analysis and interpretation

    (Current year base year)/ base year

    Horizontal Analysis income statement (lucky cement)

    2005 2006 2007 2008 2009 2010 20

    05

    2006 2007 200

    8

    2009 2010

    Net sales 3,980,109 7,984,529 12,521,

    861

    16,957

    ,879

    26,330

    ,404

    24,508

    ,793

    10

    0

    100.

    6

    214.

    611

    326.

    07

    561.5

    498

    206.9

    535Cost of sales 2,600,589 5,073,797 8,846,7

    08

    12,595

    ,158

    16,519

    ,138

    16,529

    ,932

    10

    0

    95.1 240.

    181

    384.

    32

    535.2

    076

    225.7

    902

    Gross profit 1,379,520 2,910,732 3,675,1

    53

    4,362,

    721

    9,811,

    266

    7,978,

    861

    10

    0

    111 166.

    408

    216.

    25

    611.2

    087

    174.1

    187

    Distribution cost 23,817 33,917 497,729 1,155,

    054

    2,427,

    837

    3,433,

    047

    10

    0

    42.4

    1

    1989

    .81

    474

    9.7

    1009

    3.71

    1002

    1.91

    Administrative

    expenses

    61,355 106,740 111,311 131,30

    0

    165,93

    6

    303,24

    4

    10

    0

    73.9

    7

    81.4

    212

    114 170.4

    523

    184.0

    959

    85,172 140,657 609,040 1,286,

    354

    2,593,

    773

    3,736,

    291

    10

    0

    65.1

    4

    615.

    071

    141

    0.3

    2945.

    335

    2556.

    314

    Operating profit 1,294,348 2,770,075 3,066,1

    13

    3,076,

    367

    7,217,

    493

    4,242,

    570

    10

    0

    114 136.

    885

    137.

    68

    457.6

    161

    53.15

    722

    Finance cost 21,691 82,809 862,847 126,743

    1,236,971

    569,184

    100

    281.8

    3877.9

    484.31

    5602.692

    587.3456

    Other operating

    income

    (1141) -203.00 -629289.

    00

    -1293.0

    0

    (23,255)

    (1,902)

    100

    -82.2

    1

    55052.4

    13.322

    1938.124

    836.9458

    Other charges 63,847 134,493 142,204 644,38

    8

    826,77

    6

    257,77

    4

    10

    0

    110.

    6

    122.

    726

    909.

    27

    1194.

    933

    91.66

    351

    84,397 217,099 375,762 769,83

    8

    2,040,

    492

    825,05

    6

    10

    0

    157.

    2

    345.

    231

    812.

    16

    2317.

    73

    280.0

    368

    Profit before taxation 1,209,951 2,552,976 2,690,3

    51

    2,306,

    529

    5,177,

    001

    3,417,

    514

    10

    0

    111 122.

    352

    90.6

    3

    327.8

    686

    33.86

    393

    Taxation 383,364 617,026 63,146 85,394 580,45

    2

    280,05

    7

    10

    0

    60.9

    5

    -

    83.5284

    -

    77.725

    51.41

    015

    -

    54.6118

    Profit after taxation 826,587 1,935,950 2,547,292

    2,677,670

    4,596,549

    3,137,457

    100

    134.2

    208.17

    223.94

    456.0877

    62.06291

    Other comprehensive

    income for the year

    Total comprehensive

    income for the year

    826,587 1,935,950 2,547,2

    92

    2,677,

    670

    4,596,

    549

    3,137,

    457

    10

    0

    134.

    2

    208.

    17

    223.

    94

    456.0

    877

    62.06

    291

    Earnings per share -

    basic and diluted

    3.14 7.35 9.67 9.84 14.21 9.7 100

    134.

    1

    207.

    962

    213.

    38

    352.5

    478

    31.97

    279