analysis of income statement of kohat cement company and d
TRANSCRIPT
COMMON SIZE STATEMENT OF KOHAT CEMENT
Year 2004 -2005
Accounts 2004 2005
ASSETS: Value in Rupees %Value in Rupees %
FIXED ASSETS: Property plant and equipment 603,032,810 47.33 581,007,037 35.17capital work in progress 178,169,534 13.98 488,802,983 29.59store & spares held for capital 124,267,150 9.75 50,070,412 3.03expenditure long term loans & advances 2,943,180 0.23 4,639,073 0.28long term deposits 14,952,130 1.17 16,756,490 1.01staff retirement benefits 1,097,189 0.09 - Total fixed assets 924,461,993 72.55 1,141,275,995 69.08
CURRENT ASSETS: Store, spares &loose tools 87,617,242 6.88 86,217,074 5.22stock in trade 15,100,336 1.19 22,336,658 1.35trade debtors 25,986,269 2.04 23,799,056 1.45advances, deposits, prepayments 52,744,640 4.14 89,192,508 5.4and other receivables cash and bank balances 168,099,514 13.2 289,066,136 17.5Total current assets 349,548,001 27.45 510,611,432 30.92TOTAL ASSETS 100 100
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Year 2006-2007
Accounts 2006 2007
ASSETS:Value in Rupees %
Value in Rupees %
FIXED ASSETS: Property, plant and equipment: operating fixed assets 1,095,105,981 35.6 1,023,528,041 17.45capital work in progress 984,287,376 32 4,234,731,837 72.21long term loans &advances 49,565,634 1.61 45,731,201 0.78long term deposits 4,969,240 0.16 3,879,440 0.07Total fixed assets 2,133,928,231 69.37 5,307,870,519 90.51
CURRENT ASSETS: Store, spares &loose tools 117,594,905 3.82 157,436,002 2.69stock in trade 87,869,995 2.86 125,147,740 2.13trade debtors 21,642,079 0.7 21,381,453 0.36advances, deposits, prepayments 51,589,010 1.68 120,072,947 2.05and other receivables Short term investment 6,600,000 0.22 - cash and bank balances 656,886,230 21.35 132,401,943 2.26Total current assets 942,182,219 30.63 556,440,085 9.49TOTAL ASSETS 100 100
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COMMON SIZE STATEMENT OF D.G KHAN CEMENT
Year 2004-2005
20042005
Value in Rs Value in Rs.FIXED ASSETS
Property, plant & equip 6128083 52.31 6637237 36.84Assets subject to finance lease
166583 1.42 317262 1.76
Capital w.i.p. 1126108 9.61 3983175 22.11Investment 1387681 11.84 2610634 14.49Long term loan, advances and deposits
25021 0.21 271428 1.51
Total 8833476 75.2 13819736 76.71CURRENT ASSETSStores, spares & loose tools
938847 8.01 1035081 5.75
Stock-in-trade 298538 2.55 100994 0.56Trade debts 52622 0.45 76238 0.42Investment 1386816 11.84 2769134 15.37Advance, deposits, prepay & other receivable. 120329 1.03 121486 0.67Cash and bank balance 83991 0.72 93836 0.52Total 2881143 24.6 4196769 23.29TOTAL 11714619 100 18016505 100
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Year 2006-2007
2006 2007
VALUE IN RS.
VALUE IN Rs.
FIXED ASSETSProperty, plant & equip 7521723 21.93 22117551 42.74Assets subject to finance lease
295058 0.86 133376 0.26
Capital w.i.p. 11759677 34.28 1907063 3.69Investment 4482213 13.07 8174474 15.80Long term loan, advances and deposits
335810 0.98 196913 0.38
Total 24394481 71.11 32529377 62.61CURRENT ASSETS
Stores, spares & loose tools 836049 2.44 1496291 2.89Stock-in-trade 226286 0.66 295140 0.57Trade debts 74165 0.22 144245 0.58Investment 8543763 24.91 16933790 32.73Advance, deposits,prepayment & other receivable
152465 0.44 229315 0.44
Cash and bank balance 77167 0.22 116173 0.22Total 9909895 28.89 19214954 37.39TOTAL 34304376 100 51744331 100
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COMMON SIZE STATEMENT OF LIABILITIES AND EQUITY OF
KOHAT CEMENT
Accounts 2004 2005
LIABILITIES Value in Rupees %Value in Rupees %
SHARE CAPITAL AND RESERVES Issue, subscribed &paid-up capital 329,000,010 25.82397 439,500,020 26.60651reserves 162,120,028 12.72518 162,120,028 9.814444unappropriated profits 204,110,962 16.02114 426,112,279 25.79604
695,231,000 54.57029 1,081,732,345 65.48606NON CURRENT LIABILITIES
Long term finances- secured 133,048,330 10.44327 81,648,330 4.942837liabilities against assets subject to 56,282,172 4.417718 35,461,448 2.14677finance lease long term security deposits 1,846,056 0.144901 2,132,500 0.129098deferred liabilities 105,589,559 8.287969 104,240,120 6.310502Total non current liabilities 296,766,117 23.29386 223,482,398 13.52921
CURRENT LIABILITIES Trade and other payables 139,925,047 10.98304 147,709,665 8.942067markup payable on secured loans 1,414,512 0.111028 1,655,264 0.100207Short term finances 58,477,626 4.590045 52,582,288 3.183234current portion of long term liabilities: long term finances 41,300,000 3.241733 53,800,000 3.256952 liabilities against assets subject to 26,949,946 2.115364 30,297,282 1.834141 finance lease provision for taxation 12,144,144 0.953222 58,943,432 3.568325unclaimed dividends 1,801,602 0.141412 1,648,753 0.099812Total current liabilities 282,012,877 22.13584 346,636,684 20.98474TOTAL LIABILITIES & EQUITY 1,274,009,994 100 1,651,851,427 100
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YEAR 2006-2007
Accounts 2006 2007LIABILITIES Value in Rupees % Value in Rupees %
SHARE CAPITAL AND RESERVES Issue, subscribed &paidup capital 925,312,540 30.0806 1,017,843,800 17.35658reserves 389,397,905 12.65878 396,306,773 6.757943unappropriated profits 969,229,248 31.50827 925,505,570 15.782 2,283,939,693 74.24765 2,339,656,143 39.89652
NON CURRENT LIABILITIES Long term finances- secured 237,500,000 7.720789 2,703,308,354 46.09763liabilities against assets subject to 2,358,098 0.076658 - finance lease long term security deposits and 5,451,100 0.177208 106,808,320 1.821328retention money deferred liabilities 161,267,836 5.242589 158,739,583 2.706875Total non current liabilities 406,577,034 13.21724 2,968,856,257 50.62584
CURRENT LIABILITIES Trade and other payables 215,249,060 6.997443 178,982,959 3.052072markup payable on secured loans 1,973,686 0.064162 12,260,606 0.209072Short term finances - secured 57,397,506 1.865912 146,434,421 2.497044current portion of long term liabilities: long term finances 44,148,330 1.4352 218,120,218 3.719452 liabilities against assets subject to 34,064,784 1.107398 - finance lease provision for taxation 32,760,357 1.064993 - Total current liabilities 385,593,723 12.53511 555,798,204 9.477639TOTAL LIABILITIES & EQUITY 3,076,110,450 100 5,864,310,604 100
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COMMON SIZE STATEMENT OF LIABILITIES AND EQUIY OF D.G KHAN CEMENT
Year 2004-2005
2004 2005VALUE IN Rs. VALUE IN
Rs.CAPITAL AND RESERVEIssued, subscribed & paid-up capital
1676306 14.31 184393710.23471
Reserves 4389088 37.45 7196568 39.94431
Unappropraited profit 251661 2.15 277493 1.540215
Total 6317055 53.91 9317998 51.72NON-CURRENT LIABILITIESLong term finances 2730573 23.31 4899225 27.19298
Liab. Against assets 83487 0.71 131985 0.732578
Long term deposits 30365 0.26 28674 0.159154
Retirement and other benefits 38150 0.33 45765 0.254017
Deferred taxation 138000 1.18 537000 2.9806
Total 3020575 25.79 5642649 31.32CURRENT LIABILITIESCurrent portion for long term liab.
487254 4.16 5996743.32847
Finance under markup- secured 1360677 11.62 960620 5.331889
Derivation foreign currency - 306048 1.698709
Creditors, acc.& other liabilities 493968 4.22 1154426 6.407602
Provision for taxation 35090 0.30 35090 0.194766
Total 2376989 20.3 3055858 16.96TOTAL LIABILITIES & EQUITY
11714619 100 18116505100
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YEAR 2006-20072006 2007
VALUE IN Rs. VALUE IN Rs.CAPITAL AND RESERVEIssued,subscribed & paidup capital 1843937 5.375224 2535412 4.899884Shared deposit money 8351 0.024344Reserves 15085354 43.97501 29630084 57.26247Unappropraited profit 2330558 6.793763 1757689 3.396873Total 19268200 56.17 33923185 65.56NON-CURRENT LIABILITIESLong term finances 7372468 21.49133 8686447 16.78724Liab. Against assets 28886 0.084205 1141 0.002205Long term deposite 33814 0.098571 79467 0.153576Retirement and other benefits 26572 0.07746 39862 0.077036Deferred taxation 1559000 4.54461 1624000 3.138508Total non current liabilities 9020740 26.30 10430917 20.16CURRENT LIABILITIESTrade & other payable 1406869 4.101136 1027274 1.985288Accrued mark up 340757 0.993334 342612 0.662125Short term borrowing 2613695 7.61913 3942972 7.620104Current portion 1619025 4.719587 2042281 3.946869Provision for taxation 35090 0.10229 35090 0.067814Total current liabilities 6015436 17.53 7390229 14.28TOTAL 34304376 100 51744331 100
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TREND ANALYSIS OF INCOME STATEMENT OF KOHAT
CEMENT COMPANY
ACCOUNTS 2007 2006 2005 Base in 2004 Rs.Sales 111.15 166.484 122.717 1,397,871,078Cost of good sold 134.148 124.962 166.498 902,333,594Gross profit 690.271 242.093 134.041 495,537,484Distribution cost 157.957 131.195 105.655 11,839,810Adm. & general expenses 141.401 116.809 111.413 32,771,011Operating profit 61.701 254.11 136.431 450,926,663Other operating expenses 21.389 199.971 112.452 35,722,154Other operating income 1701.544 429.894 205.406 4,444,478Profit from operation 82.5 260.58 139.202 419,648,987Finance cost 1151.275 221.939 95.23 24,374,892Profit before taxation 16.593 262.963 141.914 395,274,095Taxation 16.353 243.193 169.999 102,616,840Profit after taxation 16.677 269.895 132.062 292,657,255
ACCOUNTS 2007 2006 2005 Base 2004 in Rs.
Sales 1.65 2.05 1.36 3882756Cost of sales 1.76 1.60 1.33 2497262Gross profit 1.47 2.86 1.41 1385494Adm. Expenses 1.52 1.78 1.11 68645Selling and dist. expenses 1.69 0.91 1.58 38560Operating profit 1.46 2.98 1.42 1278289Other operating expenses 2.26 3.11 1.52 61735Other operating income 3.73 2.29 5.51 128462Profit from operation 1.64 2.91 1.80 1345016Finance cost 2.15 2.05 1.35 224601Profit before tax 1.54 3.08 1.89 1120415Taxation 0.30 3.16 1.35 325922Profit for the year 2.04 3.04 2.12 794493
D.G KHAN CEMENT COMPANY
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TREND ANALYSIS OF BALANCE SHEET OF KOHAT CEMENT
Accounts 2007 2006 2005 Base in 2004 Rs.
FIXED ASSETSProperty, plant and
equipment1.6973 1.8160 0.9635 603,032,810
Capital work in progress 23.7680 5.5244 2.7435 178,169,534stores and spares held for
expenditure - - 0.4029 124,267,150Long term loans and
advances15.5380 16.8408 1.5762 2,943,180
Long term deposits 0.2595 0.3323 1.1207 14,952,130CURRENT ASSETS
Stores, spares and loose tools
1.7969 1.3421 0.9840 87,617,242
Stock in trade 8.2877 5.8191 1.4792 15,100,336
Trade debt 0.8228 0.8328 0.9158 25,986,269
Advances, deposits, prepayments and other
receivables
2.2765 0.9781 1.691052,744,640
Cash and bank balances 0.7876 3.9077 4.2448 168,099,514SHARES CAPITAL &
RESERVESIssued, subscribed and paid
up capital3.0938 2.8125 1.5000
329,000,010Reserves 2.4445 2.4019 1.0000 162,120,028
Unappropriated profits 4.5343 4.7485 2.0877 204,110,962FIXED LIABILITIES
Long term finances - secured
20.3182 1.7851 .06137 133,048,330
Liabilities against assets subject to finance lease - 0.0419 0.6301 56,282,172
Long term security deposits 1.2330 2.9528 1.1552 1,846,056CURRENT LIABILITIES
Trade and other payables 1.2791 1.5383 1.0556 139,925,047Mark up payables on
secured loans8.6677 1.3953 1.1702 1,414,512
Short term finances 2.5041 0.9815 0.8992 58,477,626
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Long term finances 5.2814 1.0690 1.3027 41,300,000Provision for taxation - 2.6976 4.8537 12,144,144
TREND ANALYSIS OF D.G.KHAN CEMENT OF BALANCE SHEET
ACCOUNTS 2007 2006 2005 BASE 2004 IN Rs
FIXED ASSETSProperty, plant & equip. 3.61 1.23 1.08 6128083Assets subject to finance lease
0.80 1.77 1.90 166583
Capital work in progress 1.69 10.44 3.54 1126108Investments 5.89 3.23 1.88 1387681Long term loan & deposits
7.87 13.42 10.85 25021
CURRENT ASSETSStores, spares & loose tool
1.59 0.89 1.10 938847
Stock-in-trade 0.99 0.76 0.34 298538Trade debts 2.74 1.41 1.45 52622Investment 12.21 6.16 1.996 1386816Advance, deposits, prepayment & other receivable
1.91 1.27 1.01120329
Cash and bank balance 1.38 0.92 1.12 83991CAPITAL AND RESERVEIssued, subscribed & paid up capital
1.51 1.10 1.10 1676306
Reserves 6.75 3.44 1.64 4389088Un appropriated profit 6.98 9.26.1.10 251661NON-CURRENT LIABILITIESLong term finances 3.18 2.70 1.06 2730573Liab. Against assets 0.01 0.35 1.58 83487Long term deposite 2.62 1.11 0.94 30365Retirement and other benefits
1.04 0.70 1.20 38150
Deferred taxation 11.77 11.30 3.89 138000CURRENT LIABILITIESCurrent portion for long term liab.
4.19 3.32 1.23 487254
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Provision for taxation 1 1 1 35090
KOHAT CEMENT COMPANY LIMITEDREFORMULATED BALANCE SHEET
AS ON 30 JUNE 2007
FINANCIAL ASSETS: Amount in Rs.
Advances and deposits 15,740,787Short term investment 6,600,000
Long term loans and advances 49,565,634 Long term deposits 4,969,240 Total financial assets 76,875,661FINANCIAL LIABILITIES:
Long term finances 237,500,000Liab. Against assets subject 2,358,098
to financial leaseShort term finances secured 57,397,506
Long term finances 44,148,330Liab. against assets subject 34,064,784
To finance leaseMark up payable on secured loans 1,973,686
Total financial liabilities 377,442,404
OPERATING ASSETS:
Property, plant and equipment 2,079,393,357Stores, spares and loose tools 117,594,905
Stock in trade 87,869,995Advances, deposits and 35,848,223
Other receivablesTrade debt 21,642,079
Cash and bank balances 656,886,230Total operating assets 2,999,234,789
OPERATING LIABILITIES:
Long term security deposits 5,451,100And retention moneyDeferred liabilities 161,267,836
Trade and other payables 215,249,060
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Provision for taxation 32,760,357Total operating liabilities 414,728,353
NFO = 300,566,743 CSE = 2,283,939,693 NOA = 2,584,506,436D.G. KHAN CEMENT COMPANY LIMITED
REFORMULATED BALANCE SHEETAS AT JUNE 30, 2007
FINANCIAL ASSETS: Amount in Rs.
Advance, deposits, prepayment & others receivable
18693
Investment 8174474Long term loan, advances and deposits 196913Investment 16933790Total Financial Assets 25323870
FINANCIAL LIABILITIESLong term finance 8686447Liabilities against assets finance lease 1141Short term borrowing-secured 3942972Total Financial Liabilities 12630560
OPERATING ASSETSProperty, plant and equipmentAssets subject to finance lease 22117551Capital work in progress 133376Trade debts 144245Stores, spares and loose tools 1496291Stock in trade 295140Advance, deposits, prepayment & others receivable
210622
Cash 116173Total operating assets 26420461
OPERATING LIABILITIESLong term deposits 79467Retirement and other benefits 39862Deferred taxation 1624000Trade and other payables 1027274Accrued markup 342612Current portion of fixed liabilities 2042281Provision for taxation 35090
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Total operating liabilities 5190586
(NFA) = 12693310 Net operating assets (NOA) = 21229875 (CSE) = 3392318KOHAT CEMENT COMPANY LIMITED
REFORMULATED INCOME STATEMENTFOR THE YEAR ENDED 30 JUNE 2007
PARTICULARS DEBIT CREDIT
Net sales 1553733256
Cost of sales 1210466340
Gross profit 343266916
Distribution cost 18701815
Administrative and general expenses 46338529
Other operating expenses 7640715
Other operating income 75624748
Operating income before interest and tax 346210605
Tax as reported 213216408
Tax on financial expenses 98217719 114998689
Operating income after tax 231211916
Interest expense 280622053
Interest income ----
Net interest expense 280622053
Tax on net interest 98217719 182404334
Comprehensive income 48807582
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D.G. KHAN CEMENT COMPANY LIMITEDREFORMULATED INCOME STATEMENT
For the year ended June 30, 2007
PARTICULARS DEBIT CREDIT
Net sales 6419625
Cost of sales 4387640
Gross profit 2031985
Administrative expenses 104169
Selling and dist. Expenses 65122
Other operating expenses 139307
Other operating income 479420
Operating income before interest and tax 2202807
Tax as reported 167167
Tax on financial expenses 18580
148587
Operating income after tax 2054220
Interest expense 468173
Interest income 3681
Net interest expense 464492
Tax on net interestShare of loss of associated companies
1858014163 431749
Comprehensive income 1622 471
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ACTIVITY ANALYSIS OF KOHAT CEMENT COMPANY
Inventory turnover = CGS / Average Inventory
= 1,210,466,340 / 106,508,867.5
= 11.3649
Average no. of days inventory in stock = 365/ inventory turnover
= 365/ 11.3649
= 32 days
Kohat Cement Company kept its inventory 32 days in this year.
Receivable turnover = sales/ average receivables
= 1,553,733,256/ 85830978.5
= 18.1022
Company made a sale of 18.10 rupees by investing 1 rupee in receivables.
Average no. of days receivables outstanding = 365/ receivables turnover
= 365/ 18.1022
= 20 days
Kohat Cement Company recovered its receivables in 20 days in this year.
Payable turnover = purchases/ average account payable
= 1,247,744,085/ 197,116,010
= 6.3300
For 1 rupee, payable company has made purchases of 6.33 rupees in this year.
Average no. of days payable outstanding = 365/ payable turnover
= 365/ 6.3300
= 58 days
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Company had 58 days to use others assets in this year.
Working capital turnover = sales / average working capital
= 1,553,733,256/ 278,615,188.5
= 5.58
Company made a sale of 5.58 rupees by investing 1 rupee in working capital in this year.
Fixed asset turnover = sales / average fixed assets
= 1,553,733,256 / 3,720,899,375
= 0.410
Company invested 1 rupee in capital investment and its sales has increased by 0.410
rupee in this year.
Total asset turnover = sales / average total assets
= 1,553,733,256 / 4,470,210,527
= 0.348
Company made a sale of 0.348 rupee by investing 1 rupee in total assets in this year.
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ACTIVITY ANALYSIS OF D.G KHAN CEMENT COMPANY
Inventory turn over = Cost of good sold/ average inventory
= 4387640/ 260713
= 16.83
Average inventory = (inventory of current year + inventory of previous year)/2
= (295140+226286)/2
= 260713
Average numbers of days inventory in stock = 365/inventory turnover
= 365/16.83
= 21.69= 22
Receivable turn over = Sales/Average receivable
= 6419625/190890
= 33.63
Average receivable = (account receivable of current year +account receivable of
previous year)/2
= (229315+152465)/2
Average numbers of days receivable outstanding= 365/receivable turnover
= 365/33.63
= 10.85 =11
Payable turnover ratio (PTO) = purchases / average account payable
= 4457720 / 1217072
= 3.66
Purchases = cost of sales + change in inventory
= 4387640 + (144245 – 74165)
= 4457720
average account payable = (payable of current year + payable of previous year) / 2
= (1027274 + 1406869) / 2
= 1217072
Average numbers of days payable outstanding = 365 / PTO
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= 365 / 3.66
= 99.73 = 100
Working capital turnover ratio = Sales/ average working capital
= 6419625/ 7859592
= 0.82
Average working capital= (working capital of current year +working capital of
previous year)/2
= (3894459 + 11824725)/2
=7859592
2006 working capital = current assets – current liabilities
= 9909895-6015436
= 3894459
2007 working capital= 12214954 – 7390229
=11824725
Fixed assets turnover ratio= Sales /average fixed assets
= 6419625/ 28461929
= 0.23
Average fixed assets= (current fixed assets + previous year fixed assets)/2
= (32529377 + 24394481)/2
= 28461929
Total assets turnover ratio= Sales / average total assets
= 6419625/43024353.5
=0.15
Average total assets = (total assets of current year + total assets of previous year)/2
= (51744331+34304376)/2
= 43024353.5
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LIQUIDITY ANALYSIS OF KOHAT CEMENT COMPANY
Current ratio = current assets / current liabilities
= 556,440,085 / 555,798,204
= 1.001
Company have 1.001 rupee of current assets against 1 rupee of liability in this year.
Quick ratio = cash + marketable securities + account receivables / current
liabilities
= 132,401,943 + 0 + 120,072,947 / 555,798,204
= 0.4543
Company have 0.4543 rupee of assets that can be quickly liquidated against 1 rupee of
current liability in this year.
Cash ratio = cash + marketable securities / current liabilities
= 132,401,943 + 0 / 555,798,204
= 0.2382
Company have 0.2382 rupee of quick assets against 1 rupee of current liability in this
year.
LIQUIDITY ANALYSIS OF D.G KHAN CEMENT COMPANY
Current ratio = Current assets / Current liabilities
= 19214954 / 7390229
= 2.60
Quick ratio = [cash + marketable security + account receivable] / Current
liabilities
= [116173 + 0 + 229315] / 7390229
= 0.047
Cash ratio = [cash + marketable security] / Current liabilities
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= [116173 + 0] / 7390229
= 0.016
LONG TERM DEBT AND SOLVENCY ANALYSIS OF
KOHAT CEMENT COMPANY
Debt to total capital = total debt / total capital
= 3,524,654,461 / 5,864,310,604
= 0.601
Company has 0.601 rupee debt against 1 rupee capital for operation in this year.
Debt to equity = total debt / total equity
= 3,524,654,461 / 2,339,656,143
= 1.506
Company has 1 rupee of equity against 1.506 rupee debt. Risk of return is high as equity
is less than the debt.
LONG TERM DEBT AND SOLVENCY ANALYSIS OF
D.G KHAN CEMENT COMPANY
Debt total capital = total debt / total capital
= 17821146 / 51744331
= 0.34
Total debt = current + long term liabilities
Total capital = liabilities + equity
Debt to equity = total debt / total equity
= 17821146 / 33923185
= 0.53
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INTEREST COVERAGE RATIO OF KOHAT CEMENT COMPANY
Time interest earned = EBIT / interest expense
= 346,210,605 / 280,622,053
= 1.234
EBIT of Kohat Cement Company is higher than the interest expense. Company can get
loan easily if it has greater ratio of time interest earned.
Capital expenditure ratio = cash from operation / capital expenditure
= 249,492,301 / 3,173,942,288
= 0.0786
As CER <1 that is why, company will arrange cash from other sources.
CFO to debt = CFO / total debt
= 249,492,301 / 3,524,654,461
= 0.0708
Company generated 0.0708 rupee cash from operation against 1 rupee debt in this year.
INTEREST COVERAGE RATIO OF D.G KHAN CEMENT
COMPANY
Time interest earned = earning before interest and tax (EBIT) / interest expense
= 2202807 / 468173
= 4.71
Capital expenditure ratio = cash from operation / capital expenditure
=997019 / 8134896
= 1.23
Capital expenditure = fixed assets of current year – fixed assets of previous year
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Cash from operation to debt = cash from operation / total debt
= 997019 / 8434146 = 0.056
PROFITABILITY ANALYSIS OF KOHAT CEMENT COMPANY
RETURN ON SALES
Gross margin = gross profit / sales
= 343,266,916 / 1,553,733,256
= 0.221 = 22.1 %
Company earned 22.1% gross margin in this year.
Operating margin = operating income / sales
= 278,226,572 / 1,553,733,256
= 0.1791 = 17.91 %
Company earned 17.91% operating margin in this year
Margin before interest and tax = EBIT / Sales
= 346,210,605 / 1,553,733,256
= 0.223 = 22.3 %
Company’s earning was 22.3 % before paying interest and taxes in this year.
Pretax margin = EBT / sales
= 65,588,552 / 1,553,733,256
= 0.042 = 4.2 %
Company’s earning has reduced to 4.2 % after paying taxes in this year.
Overall margin = net income / sales
= 48,807,582 / 1,553,733,256
= 0.0314 = 3.14 %
Company’s overall margin was 3.14 % in this year.
RETURN ON INVESTMENT
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Return on assets (before tax) = EBIT / average total assets
= 346,210,605 / 4,470,210,527
= 0.0774 = 7.74 %
Company earned 7.74 % profit on assets in this year.
Return on assets (after tax) = net income + after tax interest cost / average total
assets
= 48,807,582 + (1-0.35) 280,622,053 / 4,470,210,527
= 231,211,916.5 / 4,470,210,527
= 0.0517 = 5.17 %
Company earned 5.17 % profit on assets after paying tax in this year.
Return on total capital (before tax) = EBIT / average (total debt + stockholder’s
equity)
= 346,210,605 / 4,470,210,527
= 0.0774 = 7.74 %
Company earned 7.74 % profit on total capital in this year.
Return on total capital (after tax) = net income + after tax interest cost / average
(total
Debt + stockholder’s equity)
= 48,807,582 + (1- 0.35) 280,622,053 / 4,470,210,527
= 231,211,916.5 / 4,470,210,527
= 0.0517 = 5.17 %
Company earned 5.17 % profit on total capital after paying tax in this year.
Return on equity = net income / average stockholder’s equity
= 48,807,582 / 2,311,797,918
= 0.0209 = 2.09 %
Company earned 2.09 % profit on total equity in this year.
Neelam Faiza Page 24
Return on assets = total asset turnover x return on sales
= 0.348 x 0.0314
= 0.011
PROFITABILITY ANALYSIS OF D.G KHAN CEMENT COMPANY
RETURN ON SALES
Gross margin = gross profit / sales
= 2031985 / 6419625
= 0.32 or 32%
Operating margin = operating income / sales
= 1862694 / 6419625
= 0.29 or 29%
Margin before interest and tax = EBIT / Sales
= 2202807 / 6419625
= 0.34 or 34%
Pre Tax Margin = earning before tax (EBT) / sales
= 1720471 / 6419625
= 0.27 or 27%
The overall profit margin = net income (N.I) / Sales
= 1622471 / 6419625
= 0.25 or 25%
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RETURN ON ASSETS
Return on assets = [net income + after tax interest cost] / average total assets
= 1622471 + 449446] / 43024354
= 0.048 or 4.8%
After tax interest cost = 1 – tax rate
= 1 – 0.04
= 0.96
= 0.96 x 468173
= 449446
Return on assets before tax = EBIT / average total assets
= 2202807 / 43024354
= 0.051 or 5.1%
Return on total capital before interest an tax = EBIT / average (total debt + equity)
= 2202807 / 43024354
= 0.051 or 5.1%
Return on total capital = [net income + after tax interest expense] / average ( total
debt
= [1622471 + 449446] / 43024354
= 0.048
Return on equity = net income / average stock equity
= 1622471 / 26595693
= 0.061 or 6.1%
Neelam Faiza Page 26
ANALYSIS OF PROFITABILITY AND GROWTH OF
KOHAT CEMENT COMPANY
ROCE = RNOA + [FLEV (RNOA – NBC)]
RNOA = OI / Average NOA
= 278,226,572 / 3,968,531,203
= 0.0701
NBC = Interest expense / average NFO
= 280,622,053 / 1,656,733,285
= 0.1694
FLEV = Average NFO / Average CSE
= 1,656,733,285 / 2,311,797,918
= 0.7166
ROCE = 0.0701 + [0.7166 (0.0701-0.1694)]
= 0.0701 + [0.7166 x -0.0993]
= - 0.0011 = - 0.11%
ROCE = PM x ATO + [FLEV (RNOA- NBC)]
Profit margin = OI / Sales
= 278,226,572/ 1,553,733,256
= 0.1791 = 17.91 %
Asset turn over = sales / average NOA
= 1,553,733,256 / 3,968,531,203
= 0.3915 = 39.15 %
ROCE = 0.1791 x 0.3915 + [0.7166 (0.0701- 0.1694)]
= 0.0701 + [0.7166(-0.0993)]
= 0.0701-0.0712
= -0.0011
OLLEV = OL / NOA
Neelam Faiza Page 27
= 456,791,468 / 5,352,555,969
= 0.0831 = 8.31 %
Financial leverage effect = operating income / net income
= 278,226,572 / 48,807,582
= 5.7005
ANALYSIS OF PROFITABILITY AND GROWTH OF D.G KHAN
CEMENT COMPANY
Return on common equity(ROCE) = ROA + debt / equity (ROA – return on net
financial assets)
= 0.10 + (-0.30)[(0.10 – (-0.058)]
=0.10 – 0.0474
= 0.0526
ROA= O.I. / average net operating assets
= 1862694 / (21229875 + 15919344) / 2
= 0.10
Return on net financial assets (RNFA) = NFI / [1/2(net financial assets of current
year +net financial assets of previous year)]
RNFA = -464492 / 0.5(12693310 + 3348856)
= -0.058
Financial leverage = debt / equity = NFO / CSE
= - 8021083 / 26595692
= -0.30
Financial leverage effect = O.I. / N.I
= 1862694 / 1622471
= 1.15
Neelam Faiza Page 28
BUSINESS ACTIVITIES OF KOHAT CEMENT COMPANY
Dividends = earning – change in CSE
= 48,807,582 – 55,716,450
= Rs. -6,908,868
C- I = d + NFE – change in NFO
= -6,908,868 + 280622053 – 2,712,333,083
= Rs. -2,438,619,898
BUSINESS ACTIVITIES OF D.G KHAN CEMENT COMPANY
Dividend (d)= earning – change in common stock equity
= 1622471 – (33923185 – 19268200)
= 1622471 – 14654985
= -13032514
C-I = d – NFI + change in NFA
= - 13032514 – (-464492) + 3348856
= - 9219166
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