financial statment
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Packages limited LahoreStatement of profit and loss
For the year ended December 31, 2006(Rupees in thousands)
Local sales 8,869,068Export sales 158,820Total sales 9,027,907Less: sales tax and excise duty 1,172,430Commission 8,878
1,181,308Net sales 7,846,599Cost of sales (6,551,995)Gross profit 1,294,604Adminstrative expenses (349,934)Distabution and marketing cost (255,587)Other operating expenses (213,475)Other operating income 252,005
Profit from operations 757,613Finance costs (78,909)Investment income 5,669,136Profit before tax 6,347,840Taxation (247,060)Profit for the year 6,100,780
Earnings per share Rupees 87.30
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Packages limited LahoreStatement of profit and loss
For the year ended December 31, 2007(Rupees in thousands )
Local sales 10,365,224
Export sales 174,771Total sales 10,539,995Less: sales tax and excise duty 1,501,230Commission 10,130
1,511,360Net sales 9,028,635Cost of sales (7,829,362)Gross profit 1,199,273Administrative expenses (348,064)Distribution and marketing cost (240,357)Other operating expenses (145,439)
Other operating income 122,185Profit from operations 587,598Finance costs (367,378)Investment income 4,412,728(Loss)/Profit before tax 4,632,948
Taxation (307,000)(Loss)/Profit for the year 4,325,948
(Loss)/Earnings per share Rupees 51.27
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Packages limited LahoreStatement of profit and loss
For the year ended December 31, 2008(Rupees in thousands)
Local sales 13,697,837Export sales 603,086Total sales 14,300,923Less: sales tax and excise duty 2,056,475Commission 19,669
2,076,144Net sales 12,224,779Cost of sales (11,281,480)Gross profit 943,299Administrative expenses (512,189)Distribution and marketing cost (362,425)Other operating expenses (324)
Other operating income 336,965Profit from operations 405,326Finance costs (1,662,094)
Investment income 948,879(Loss)/Profit before tax (307,889)Taxation (112,064)
(Loss)/Profit for the year (195,825)
(Loss)/Earnings per share Rupees (2.32)
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Packages limited lahoreStatament of profit and loss
For the year ended december 31,2010(Rupees in thousands)
Local sales 20,598,198Export sales 1,239,235
Total sales 21,837,433Less:sales tax and excise duty 3,266,556Commisison 34,969
3,301,525Net sales 18,535,908Cost of sales (17,740,467)Gross profit 795,441Adminstrative expenses (521,269)Distribution and marketing cost (565,638)Other operating expenses (15,185)Other operating income 202,368
Impairment charged on available for sale investment -Loss from operations (104,283)Finance costs (1,210,323)Investment income 997,260(Loss) before tax (317,346)Taxation (15,079)(Loss) for the year (332,425) (Loss)/Earnings per share
Basic Rupees (3.94)Diluted Rupees (3.94)
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Packages limited lahoreStatament of profit and loss
For the year ended december 31,2009(Rupees in thousands)
Local sales 15,775,713Export sales 757,575
Total sales 16,533,288Less:sales tax and excise duty 3,266,556Commisison 34,969
2,489,455Net sales 14,043,833Cost of sales (13,736,498)Gross profit 307,335Adminstrative expenses (467,582)Distribution and marketing cost (444,210)Other operating expenses (118,682)Other operating income 385,299
Impairment charged on available for sale investment (1,793,991)Loss from operations (2,131,831)Finance costs (1,278,433)Investment income 9,179,837Profit before tax 5,769,573Taxation (1,705,649)Profit for the year 4,063,924 Earnings per share
Basic Rupees 48.16Diluted Rupees 44.72
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Packages limited LahoreBALANCE SHEET
For the year ended December 31, 2006(Rupees in thousands)
ASSETS:NON-CURRENT ASSETS
Property, plant and equipment 3,071,115Intangible assets 2,532Investment property 14,423Assets Subject to finance lease 1,901Capital work-in-progress 10,143,195Investments 5,775,665Long-term loans and deposits 180,618Retirement benefits 69,805
Total Non current assets 19,259,254 CURRENT ASSETS: Stores and spares 485,665
Stock-in-trade 1,647,173Trade debts 821,160Loans, advances, deposits, prepayments
And other receivables 353,521Cash and blank balance 106,703Total current assets 3,414,222Total current and non current assets 22,673,476
EQUITY AND LIABILITIES:CAPITAL AND RESERVES
Authorized capital 1,000,000
Issued, subscribed, and paid up capital 698,795Reserves 6,872,336Unappropriated profit 6,101,666Total Equity 13,672,797
NON-CURRENT LIABILITES Long term finances 6,000,000
Liabilites against assets subject to finance lease _ Deferred liabilities 688,455Total Non current liabilites 6,688,455
CURRENT LIABILITES: Current portion of liabilites against
Assets subject to finance lease 851Finances under mark up arrangements-secured 1,280,857Derivation foreign currency forward options _ Creditors , accured and other liabilities 1,030,516Provisions for taxation _
Total current liabilites 2,312,224 Contingences and commitments _
Total liabilities and equity 22,673,476
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Packages limited Lahore
BALANCE SHEETFor the year ended December 31, 2007
(Rupees in thousands)ASSETS:
NON-CURRENT ASSETS
Property, plant and equipment 10,361,253Intangible assets 363Investment property 26,055
Capital work-in-progress 7,800,683Investments 10,080,259Long-term loans and deposits 244,166Retirement benefits 88,262
Total Non current assets 28,601,041CURRENT ASSETS:
Stores and spares 715,840Stock-in-trade 2,206,191
Trade debts 1,288,928Loans, advances, deposits, prepaymentsAnd other receivables 525,421
Cash and blank balance 101,022 Total current assets 4,837,402 Total current and non current assets 33,438,443
EQUITY AND LIABILITIES:CAPITAL AND RESERVES
Authorized capital 1,500,000Issued, subscribed, and paid up capital 733,735Reserves 13,110,240
Unappropriated profit 4,326,797 Total Equity 18,170,772 NON-CURRENT LIABILITES Long term finances -secured 12,346,500
Deferred liabilities 955,790Total Non current liabilities 13,302,290CURRENT LIABILITES:
Current portion of long term finances-secured _ Finances under mark up arrangements-secured 401,019Trade and other payables 1,564,362
Total current liabilities 1,965,381Total liabilities and equity 33,438,443
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Packages limited LahoreBALANCE SHEET
For the year ended December 31, 2008(Rupees in thousands)
ASSETS:NON-CURRENT ASSETS
Property, plant and equipment 11,285,293Intangible assets 241Investment property 25,294
Capital work-in-progress 8,155,293Investments 8,362,485Long-term loans and deposits 155,102Retirement benefits 127,518Total non current assets 28,111,172
CURRENT ASSETS: Stores and spares 841,487
Stock-in-trade 3,652,261
Trade debts 1,523,049Loans, advances, deposits, prepaymentsAnd other receivables 692,076
Cash and blank balance 199,188 Total current assets 6,908,061
Non current assets classified as heldFor sale-investment in related party 15,400
6,923,461Total current and non current assets 35,034,633
EQUITY AND LIABILITIES:
CAPITAL AND RESERVES Authorized capital 1,500,000Issued, subscribed, and paid up capital 843,795Reserves 15,624,602Unappropriated profit /(Loss) (195,825)Total Equity 16,272,572
NON-CURRENT LIABILITES Long term finances secured 12,304,400
Deferred liabilities 840,788Total Non current liabilities 13,145,188
CURRENT LIABILITES:
Current portion oflong term finances secured 550,000Finances under mark up arrangements-secured 2,587,819Trade and other payables 1,461,904
Total current liabilities 4,599,723Liabilities associated with non current asssets -
Classified as held for sale advance against sale of shares 1,017,150Total current liabilities 5,616,873Total liabilities and equity 35,034,633
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Packages limited LahoreBALANCE SHEET
For the year ended December 31, 2009(Rupees in thousands)
ASSETS:NON-CURRENT ASSETS
Property, plant and equipment 19,161,332Intangible assets 137Investment property 55,335Capital work-in-progress 65,578Investments 8,099,401Long-term loans and deposits 139,577Retirement benefits 107,900
Total Non current assets 27,629,260 CURRENT ASSETS:
Stores and spares 870,951
Stock-in-trade 4,102,396Trade debts 1,752,216Loans, advances, deposits, prepayments
And other receivables 203,817Income tax receivable 593,669
Cash and blank balance 455,720Total current assets 7,978,769
Total current and non current assets 35,608,029
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EQUITY AND LIABILITIES:CAPITAL AND RESERVES
Authorized capital150,000,000 (2009:150,000,000) ordinary share of Rs. 10 each 1,500,00022,000,000(2009:22,000,000) 10% non-voting cumulative
Preference shares/convertible stock of Rs. 190 each 4,180,000Issued, subscribed, and paid up capital
84,379,504(2009:84,379,504) ordinary share of Rs. 10 each 843,795Reserves 17,099,138
Preference shares/convertible stock reserve 1,605,875Unappropriated profit 3,868,099Total Equity 23,416,907
NON-CURRENT LIABILITES Long term finances 7,970,577
Deferred income tax liabilites 2,353,000Retirement benefits -Deferred liabilities 124,852
Total Non current liabilites 10,488,429 CURRENT LIABILITES: Current portion of long-term finances-secured -
Finances under mark up arrangements-secured 86,496Trade and payables 1,406,516
Accured finance cost 249,681Total current liabilites 1,742,693
Contingences and commitments _ Total liabilities and equity 35,608,029
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Packages limited LahoreBALANCE SHEET
For the year ended December 31, 2010(Rupees in thousands)
ASSETS:NON-CURRENT ASSETS
Property, plant and equipment 17,861,486Intangible assets 2,392Investment property 31,588Capital work-in-progress 753,328Investments 12,219,037Long-term loans and deposits 128,429Retirement benefits 94,557
Total Non current assets 31,090,817 CURRENT ASSETS:
Stores and spares 1,049,950
Stock-in-trade 3,669,151Trade debts 1,643,275Loans, advances, deposits, prepayments
And other receivables 265,361Income tax receivable 766,107
Cash and blank balance 1,140,143Total current assets 8,533,987
Total current and non current assets 39,624,804
EQUITY AND LIABILITIES:CAPITAL AND RESERVES Authorized capital
150,000,000 (2009:150,000,000) ordinary share of Rs. 10 each 1,500,00022,000,000(2009:22,000,000) 10% non-voting cumulative
Preference shares/convertible stock of Rs. 190 each 4,180,000Issued, subscribed, and paid up capital
84,379,504(2009:84,379,504) ordinary share of Rs. 10 each 843,795Reserves 24,218,774
Preference shares/convertible stock reserve 1,605,875
Unappropriated profit 261,441Total Equity 26,929,885
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NON-CURRENT LIABILITES Long term finances 7,956,291
Deferred income tax liabilites 2,168,000Retirement benefits 167Deferred liabilities 149,173Total Non current liabilites 10,273,631
CURRENT LIABILITES: Current portion of long-term finances-secured 14,286
Finances under mark up arrangements-secured 141,231Trade and payables 1,794,059
Accured finance cost 471,712Total current liabilites 2,421,288
Contingences and commitments _ Total liabilities and equity 39,624,804
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Packages limited LahoreCASH FLOW STATEMENTS
For the last five years
Operatingactivities:
2010 2009 2008 2007 2006
Cash generatedfrom operations 2,048,790 618,112 -708,816 326,117 774,099Finance costpaid -988,292 -1,479,667 -1,800,985 -1,051,738 -38,270
Taxes paid -490,263 -285,615 -220,937 -139,191 -194,335Payments foraccumulatingcompensatedabsences -16,805 -6,971 -12,268 -6,783 -7,299Retirementbenefits paid -50,488 -44,236 -35,564 -30,339 -27,384Net cash fromoperatingactivities 502,942 -1,198,377 -2,778,570 -901,936 506,811Cash flow from investing activities:fixed capitalexpenditure -633,758 -972,975 -2,447,617 -4,841,392 -7,325,683Investments 50,968 -10,000 -12,903 -20,504advanceagainstdisposal of investments - --- 1,017,150 - -Net dec./inc. inlong term loansand deposit 11,148 15,525 89,064 -63,548 -164,418
proceeds fromdisposal of property,plantand equipment 25,034 23,543 21,252 48,401 12,493proceed fromdisposal&investment 7,865,000 71,428Dividendsreceived 946,292 313,087 948,879 646,650 822,990Net cash 399,684 7,234,180 -371,272 -4,151,364 -6,675,122
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genreatedfrom/used ininvesting act.Cash flow from financing activities:payment of long termfinances - -7,354,400 -Proceeds fromlong-termfinances 6,346,500 5,000,000proceeds fromissuence of preferenceshares/convertible stock/net 4,076,452proceeds fromissue finance - - 1,061,208 - -Payment of finance leaseliabilities - - - -851 -5,159proceeds fromissuance of ordenary shares
- - - - -
DIVIDENT PAID -272,938 - - -418,194 -417,914Net (decrease)/ increase incash and cashequivalents
629,688
2,7
57,855
(2,088,634
) 874,157
(1,591,384
)Net cash(usedin)/genratedfrom financingactivites
-272,938 -3,277,948 1,061,208 5,927,455 4,576,927Netincrease/decrease in cash andcash equivalent
369,224 -2,388,631 -299,997 -1,174,154 417,230Cash and cashquivalent at thebeginning of theyear
629,688 2,757,855 -2,088,634 874,157 -1,591,384cash and cash 998,912 369,224 - -299,997 -
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quivalent at theend of the year
2,388,631
1,174,154
Statement of Owners Equity
Rupees in Thousands ) Share Share Fair Value General HedgingCapital Premium Reserve Reserve reserve
Balance as on 698,795 2,986,953 19,500 3,090,936 (76,902)December 31, 2005
Final Dividend for the year endedDecember 31,2005 _ _ _ _ _ Rs. 6.00 Per share
Transferred fromProfit And loss _ _ _ 596,000 _ Account
Fair value gain during _ _ 178,250 _ _ The year
Transferred from _ _ 697 _ _ Profile And lossAccount on disposal of Shares of the resourceGroup (TRG) PakistanLimited
Gain arising on foreign _ _ _ _ 1,905Currency forward optionsEntered into as part of Cash flow hedge for the
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Purchase of plant
Transferred to CWIPOn expiry of foreign _ _ _ _ 74,187Currency forwardOptions (note 110)
Profit for the year _ _ _ _ _
Balance as on 698,795 2,968,953 198,477 3,686,936 _ December 31, 2006
(continued)
Statement of Owners Equity
(Rupees in thousands) Unappropriated TotalProfit & loss
Account
Balance as on 1,016,163 7,736,255December 31, 2005
Final Dividend for (419,277) (491,277)The year endedDecember 31,2005Rs. 6.00 Per share
Transferred fromProfit and loss (596,000) _ Account
Fair value gain duringThe year _ 178,250
Transferred fromProfit And lossAccount on disposal of
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Shares of the resourcegroup (TRG) Pakistan _ 697Limited
Gain arising on foreignCurrency forward optionsEntered into as part of Cash flow hedge for thePurchase of plant _ 1,905 Transferred to CWIPOn expiry of foreignCurrency forwardOptions (note 110) _ 74,185 Profit for the year 6,100,780 6,100,780
Balance as onDecember 31, 2006 6,101,666 13,672,797
Statement of owners Equity
(Rupees in Thousands) Share Share Fair Value GeneralCapital Premium Reserve Reserve
Balance as on 698,795 2,968,953 198,477 3,686,936December 31, 2006
Final Dividend for the year endedDecember 31,2005Rs. 6.00 Per share _ _ _ _
Transferred fromProfit And lossAccount _ _ _ 5,646,600 3,493,975 ordinaryShares of Rs, 10Each issued as fully 34,940 _ _ _ Paid bonus sharesFair value gain
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during The year _ _ 2,476,829 _
Transferred fromProfit And lossAccount on disposalof Shares of theresource group(TRG) PakistanLimited & NestlePakistan limited _ _ (1,885,525) _
Profit for the year _ _ _ _ Balance as onDecember, 31 2007 733,735 2,986,953 789,751 9,333,536
Statement of owners Equity
(Rupees in Thousands ) Unappropriated Profit Total& Loss account
Balance as onDecember 31, 2006 6,101,666 13,672,797
Final Dividend for the year endedDecember 31,2005Rs. 6.00 Per share (419,277) (419,277)
Transferred fromProfit And lossAccount (5,646,600) _
3,493,975 ordinaryShares of Rs, 10Each issued as fullyPaid bonus shares (34,940) _
Fair value gain
during The year _ 2,476,829
Transferred fromProfit And lossAccount on disposalof Shares of theresource group(TRG) PakistanLimited & NestlePakistan limited _ (1,885,525)
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Profit for the year 4,325,948 4,325,948
Balance as onDecember, 31 2007 4,326,797 18,170,772
Statement of owners Equity
(Rupees in Thousands) Share Share Fair Value GeneralCapital Premium Reserve Reserve
Balance as onDecember, 31 2007 733,735 2,986,953 789,751 9,333,536
11,006,022 ordinary
Shares of Rs, 10Each issued as fullyPaid bonus shares 110,060 (110,060) _ _
Transferred fromProfit And lossAccount _ _ _ 4,326,797
Fair value lossduring The year _ _ (1,072,375) _
Loss for the year _ _ _ _
Balance as onDecember, 31 2008 843,795 2,876,893 (912,624) 13,660,333
( continued)
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Statements of Owners Equity
(Rupees in Thousands ) Unappropriated Profit Total& Loss account
Balance as onDecember, 31 2007 4,326,797 18,170,772
11,006,022 ordinary
Shares of Rs, 10Each issued as fullyPaid bonus shares _ _
Transferred fromProfit And lossAccount (4,326,797) _
Fair value lossduring The year _ (1,702,375)
Loss for the year (195,825) (195,825)
Balance as onDecember, 31 2008 (195,825) 16.272,572
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Profit & Loss account
(Rupees in thousands) 2009
Local Sales 15,775,713Exports sales 757,575
16,533,288
Less; Sales & Excise Duty 2,466,027Commission 23,4282,489,455
(14,043,833)Cost of sales 13,736,498
Gross Profit 307,335
Administrative expenses (467,582)Distribution & marketing cost (444,210)Other operating expenses (118,682)Other operating income 385,299Impairment charged on available for sale investment (1,793,991)
Loss from operations ( 2,131,831)
Finance costs (1,278,433)Investment Income 9,179,837
(Loss)/Profit before tax 5,769,573
Taxation (1,705,649)
(Loss) / Profit for the year 4,063,924
(Loss) / earning per share
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Basic 48.16Diluted 44.72
Statement of Comprehensive Income
(Rupees in thousands) 2009
(Loss) / Profit after taxation 4,063,924
Other Comprehensive income;
Surplus / (Deficit) on re-measurement of availableFor sale financial assets 319,455
Implement loss transferred to profit & loss account 1,793,991
Other comprehensive income for the year 1,474,536
Total comprehensive income for the year 5,538,460
Statement of Owners Equity
(Rupees in Thousands ) Share Share Fair Value General PreferenceCapital Premium Reserve Reserve Shares/
ConvertibleStock
Reserve
Balances on December 31, 2008 843,795 2,876,993 (912,624) 13,660,333 _
Equity components of Preference shares/ con-Vertable stock as referredTo in note 72 (net of Transaction cost) _ _ _ _ 1,605,875
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Total comprehensiveIncome for the year _ _ 1,474,536 _ _
Balance on December 31, 2009 843,795 2,876,993 561912 13,660,333 1,605,875
(continued)
Statement of Owners Equity
(Rupees in Thousands ) Unappropriated (loss) / TotalProfit
Balances on December (195,825) 16,272,57231, 2008
Equity components of Preference shares/ con- 1,605,875Vertable stock as referredTo in note 72 (net of Transaction cost)
Total comprehensive 4,063,924 5,538,460Income for the year
Balance on December 3,868,099 23,416,90731, 2009
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Profit & Loss account
(Rupees in thousands 2010
Local Sales 20,598,198Exports sales 1, 239,235
21,837,433
Less; Sales & Excise Duty 3,266,556Commission 34,969
3,301,52518,535,908
Cost of sales (17,740,467)
Gross Profit 795,441
Administrative expenses (521,269)Distribution & marketing cost (565,638)Other operating expenses (15,185)Other operating income 202,368Impairment charged on available for sale investment .
Loss from operations (104,283)
Finance costs (1,210,323)Investment Income 997,260
(Loss)/Profit before tax (317,346)
Taxation (15,079)
(Loss) / Profit for the year (332,425)
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(Loss) / earning per shareBasic (3.94)
Diluted (3.94)
Statement of Comprehensive Income
(Rupees in thousands) 2010
(Loss) / Profit after taxation (332,425)
Other Comprehensive income;
Surplus / (Deficit) on re-measurement of availableFor sale financial assets 4,119,636
Implement loss transferred to profit & loss account .
Other comprehensive income for the year 4,119,636
Total comprehensive income for the year 3,787,211
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Statement of Owners Equity
For the year ended 2010
(Rupees in Thousands ) Share Share Fair Value General PreferenceCapital Premium Reserve Reserve Shares/
ConvertibleStock
Reserve
Balance on December 843,795 2,876,993 561912 13,660,333 1,605,87531, 2009
Transfers from profit& loss account _ _ _ 3,000,000 _
Final dividend for theYear ended December 31, 2009 Rs. 3.25 per Share _ _ _ _ _
Total comprehensiveIncome or ( loss) for theYear _ _ 4,119,636 _ _
Balance on December 843,795 2,876,993 4,681,548 16,660,333 1,605,87531, 2010
(continued)
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Statement of Owners Equity
(Rupees in Thousands ) Unappropriated (loss) / TotalProfit
Balances on December 3,868,099 23,416,907
Transfers from profit& loss account (3,000,000) _
Final dividend for theYear ended December 31, 2009 Rs. 3.25 per (274,233) (274,233)Share
Total comprehensiveIncome or ( loss) for the (332,425) 3,787,211Year
Balance on December 261,441 26,929,88531, 2010
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Chapter 6
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Horizontal &vertical analysi s
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Financial Analysis
Financial analysis means that the analysis of the financial statements i.e Analysis of income
statement, balance sheet etc. in financial analysis various ratios and graphs are shown. Which depict the past
performance of last 4 or 5 years? The question may arise that what is the benefit of financial analysis? The
answer is quite simple that many parties are interested in financial analysis like the investors before makinginvestment in the company see the financial trends of business, because they will invest in those firms which
will give them low risk and high return.
Moreover the financial institutions before sanctioning loans also evaluate the solvency of the
applicant through financial analysis. There are two main tools of financial analysis.
Vertical Analysis
Vertical as name shows it is y axis analysis of financial statements. It is a useful way of
analyzing statements and to convert them into common size statement by expressing absolute rupee amounts
into percentages of a base figure. The income statement thus exhibits expense as a percentage of sales, and each
asset/liability as a percentage of total assets and total liabilities. Statements so prepared are called common size
statements the analysis facilitates the comparison with prior period and also highlights the relative importance
of each item the analysis can be equally useful for inter firm comparison.
Horizontal Analysis
Horizontal as the name shows it is the x axis analysis. The computation of percentage and
changes in the same item over time is referred to as a trend analysis this spotlights trends and establishes
relationships between items that appear on the same row of a comparative statement there by disclosing changes
on items in financial statements.
Vertical Analysis
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(Profit and Loss Account)2010
%2009
%2008
%2007
%2006
%local sales 94.33 95.42 95.78 98.34 98.24export sales 5.67 4.58 4.22 1.66 1.76gross sales 100 100 100 100 100
Less :sales tax and excise duty-14.96
-14.92
-14.38
-14.24
-12.99
comission -0.16 -0.14 -0.14 -0.1 -0.1Net sales 84.88 84.94 85.48 85.66 86.91
Cost of sales-81.24
-83.08
-78.89
-74.28
-72.57
Gross profit 3.64 1.86 6.6 11.38 14.34Administrative expenses -2.39 -2.83 -3.58 -3.3 -3.88Distribution and marketing costs -2.59 -2.69 (2.53) -2.28 -2.5Other operating expenses -0.07 -0.72 0 -1.38 -2.36Other operating income 0.93 2.33 2.36 1.16 2.79Impairment charged on available for
sale investment --10.85 0 0 0
(Loss) / profit from operations -0.48-12.89 2.83 5.57 8.39
Finance costs (5.54) -7.73-11.62 -3.49 -0.87
Investment income 4.57 55.52 6.64 41.87 62.8(Loss) / profit before tax -1.45 34.9 -2.15 43.96 70.31
taxation -0.07-10.32 0.78 -2.91 -2.74
(Loss) / profit for the year -1.52 24.58 -1.37 41.04 67.58EPS - basic 0 0 0 0 0EPS - diluted 0 0 0 0 0
Comments:Local sales are continuously decreasing in every year but export sales are increasing.Operating income increase in 2009 but again decrease in 2010.Company faced loss from operations in 2009 and 2010 and also face
Loss before tax in 2010.Company is facing net loss in 2008 and 2010.
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Profit and loss account of horizontal/trend analysis
Local sales2006%
2007 % 2008 % 2009 % 2010%
Local sales 100 116.8 154.4 177.8 232.2Exportsales 100 110 379.7 477 780.2
Total sales 100 116.7 158.4 183.1 241.8Less: salestax andexciseduty 100 128 175.4 210.3 278.6commission 100 114 221.5 263.8 393.8
100 127.9 175.7 210.7 279.4Net sales 100 115 155.7 178.9 236.2Cost of sales 100 119.4 172.1 209.6 270.7Grossprofit 100 92.6 72.8 23.7 61.4Adminstrativeexpenses 100 99.4 146.3 133.6 148.9Distabution and
marketingcost 100 94 141.8 173.7 221.3Otheroperatingexpenses 100 68.1 0.15 55.5 7.1Otheroperatingincome 100 48.4 133.7 152.8 80.3Loss/Profitfrom
operations 100 77.5 53.5 -281.3 13.7Financecosts 100 465.5 2106.3 1620.1 1533.8Investmentincome 100 77.8 16.7 161.9 17.5Loss/Profitbefore
100 72.9 -4.8 90.8 4.9
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tax Taxation 100 124.2 45.3 690.3 6.1Loss/Profit forthe year
100
70.9 -3.20 66.6 5.4Earningper share
10058.7 -2.65 55.1 4.5
Comments: Net sales of packages limited are continuously increasing as compared to base year.Gross profit is continuously decreasing due to increase in cost of sales.Profit from operations is decreasing due increase in distribution and marketing cost and administrative expenses.
Net profit of company is less as compared base year and in 2008 company has to face loss.
Horizontal/Trend analysis of balance sheet:
2006 2007 2007 2008 2008 2009 2009 20102010
ASSETS:NON-CURRENT ASSETS
Property, plantandequipment
3,071,115
10,361.25
0.337377565
11,285,293
367.4656599
19,161,332
623.9210189
17,861,486
581.5961
Intangibleassets 2,532 363
14.33649289 241
9.518167457 137
5.410742496 2,392
94.47077
Investmentproperty
14,423
26,055
180.6489635
25,294
175.3726687
55,335
383.6580462
31,588
219.0113
AssetsSubjectto
financelease 1,901 0 0 0 0 0 0 0 0 Capitalwork-in-progress
10,143,195
7,800,683
76.90558054
8,155,293
80.40161902
65,578
0.646522126
753,328
7.42693
Investments
5,775,665
10,080,259
174.529842
8,362,485
144.7882625
8,099,401
140.2332199
12,219,037
211.5607
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Long-termloansanddeposits
180,618
244,166
135.1836473
155,102
85.87294733
139,577
77.2774585
128,429
71.10532
Retirementbenefits
69,805
88,262
126.4407994
127,518
182.6774586
107,900
154.5734546
94,557
135.4588
TotalNoncurrentassets
19,259,254
28,601,041
148.5054457
28,111,172
145.9618945
27,629,260
143.4596584
31,090,817
161.4331
CURRENT ASSETS:Storesandspares
485,665
715,840
147.3937797
841,487
173.2649048
870,951
179.3316381
1,049,950
216.1881
Stock-in-trade
1,647,173
2,206,191
133.9380259
3,652,261
221.7290473
4,102,396
249.0567779
3,669,151
222.7544
Tradedebts
821,160
1,288,928
156.9642944
1,523,049
185.4753032
1,752,216
213.3830191
1,643,275
200.1163
Loans, advances, deposits, prepayments
Andotherrceivabl
es
353,5
21
525,4
21
148.6
25117
692,0
76
195.766588
1
203,8
17
57.6534350
2
265,3
61
75.0
623 Cashandblankbalance
106,703
101,022
94.67587603
199,188
186.6751638
455,720
427.0920218
1,140,143
1068.52
Totalcurrentassets
3,414,222
4,837,402
141.6838741
6,923,461
202.7829766
7,978,769
233.6921559
8,533,987
249.9541
Total
current andNONcurrentassets
22,673,476
33,438,443
147.4782384
35,034,633
154.5181383
35,608,029
157.0470668
39,624,804
174.7628
EQUITY AND LIABILITIES:CAPITAL AND RESERVES
Authori 1,000 1,500 150 1,500 150 1,500 150 1,500 150
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zedcapital ,000 ,000 ,000 ,000 ,000Issued,subscribed,andpaid upcapital
698,795
733,735
105.0000358
843,795
120.7500054
843,795
120.7500054
843,795
120.75
Reserves
6,872,336
13,110,240
190.768321
15,624,602
227.3550362
17,099,138
248.8111466
24,218,774
352.4096
Unappropriated profit
6,101,666
4,326,797
70.91173132
-195,825
-3.209369376
3,868,099
63.39414514
261,441
4.284748
TotalEquity
13,672,797
18,170,772
132.8972558
16,272,572
119.0142149
23,416,907
171.2663985
26,929,885
196.9596
NON-CURRENT LIABILITES Longtermfinances
6,000,000
12,346,500
205.775
12,304,400
205.0733333
7,970,577
132.84295
7,956,291
132.6049
Liabilitesagainstassetssubject
tofinancelease 0 0 0 0 0Deferredliabilities
688,455
955,790
138.8311509
840,788
122.1267911
124,852
18.13509961
149,173
21.66779
TotalNoncurrent
liabilites 6,688,455 13,302,290
198.8
843462 13,145,188
196.5
354929 10,448,429
156.2
158824 10,273,631
153.
6025 CURRENT LIABILITES:Current portion of liabilites against
Assetssubjecttofinance
851 0 0 550,000
64629.84724
0 0 14,286
1678.731
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lease
Finances undermarkuparrangements-secured
1,280,857
401,019
31.30864726
2,587,819
202.0380886
86,496
6.75297867
141,231
11.02629
Derivationforeigncurrencyforwardoptions 0 0 0 0 0Creditors ,accuredandotherliabilities
1,030,516 0 0 0 0 0 0 0 0
Provisions fortaxation 0 0 0 0 0Totalcurren
tliabilites
2,312,224
1,965,381
84.99959346
5,616,873
242.9207983
1,742,693
75.36869265
2,421,288
104.7168
Contingencesandcommitments 0 0 0 0 0Totalliabilities and
equity
22,67
3,476
33,438,44
3
147.478238
4
35,03
4,633
154.518138
3
35,60
8,029
157.047066
8
39,62
4,804
174.762
8
Comments for trend analysis of balance sheet:Property plants and equipment are decreas in 2008and again increase in2009 and again decrease in2010.
Capital work in progress increase in 2010 as compared to previous years.Cash and bank balances also increase in 2010 as compared to previous years.
Long term finances decrease but current portion of finances increases, trade and other payables also increase.Reserves decrease in 2007 to 2009 but again increase in 2010.In 2007, 2008 and 2010 company has faced inappropriate loss and in 2009 has faced inappropriate profit.
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Chapter 7Chapter 7
37
RATIO
ANALY SIS
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Ratios Analysis:
Ratio analysis involves methods of calculating and interpreting financial ratios to analyze and monitor the
firms performance.
1. Liquidity ratios :
The liquidity of a firm is measured by its ability to satisfy its short term obligations as they come due.
Liquidity refers to the solvency of the firms over all financial position the ease with which it can pay its bills.
a) Net Working Capital:
The formula for Net Working Capital is:
Net Working Capital = Current Assets Current Liabilities
It is a safety cushion to creditors. A large balance is required when the entity has difficulty on short
notice.
s
years 2006 2007 2008 2009 2010
Networkingcapital(Rsinthousands)
1102998 2872,021 1306,588 6236,000 6113,000
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Interpretation:
It is a safety cushion to creditors. A large balance is required when the entity has difficulty on shortnotice.Net working capital has increased from 2006 to 2007, but again decrease in 2008,because in 2008
its current liabilites increased as compared to previous years to greater extent.again in 2009 this ratio
increased due to incresase in current assets and decrease in current liabilites.company paid its current
liabilites and purchase some new current assets which is a good sign for packages.in 2010 current assets
are greater than 2009 but current liabilites are also increased due to which this ratio is less than 2009.
b) Current ratio:
This ratio, which is subject to seasonal fluctuations, is used to measure the ability of a firm to meet its
current liabilities out of current assets. Generally, the higher the current ratio, the more liquid the firm is
considered to be.
The formula for Current Ratio is:
Current Ratio = Current Assets /Current liabilites
years 2006 2007 2008 2009 2010
CurrentRatio(times)
1.48 2.46 1.23 4.58 3.52
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Interpretation:
This ratio, is used to measure the ability of a firm to meet its current liabilities out of current assets.
Generally, the higher the current ratio, the more liquid the firm is considered to be.Current ratio hasincreased from 2006 to 2007, but again decrease in 2008,because in 2008 its current liabilites
increased as compared to previous years to greater extent.again in 2009 this ratio increased which
means packages is more liquid in 2009.in 2010 current assets are greater than 2009 but current
liabilites are also increased due to which this ratio is less than 2009.
c)Quick or acid test ratio:
Acid-test or quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its currentliabilities immediately. Quick assets include those current assets that presumably can bequickly converted to cash at close to their book values . A company with a Quick Ratio of less than 1 can not currently pay back its current liabilities.
40
http://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_assethttp://en.wikipedia.org/wiki/Book_valuehttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_assethttp://en.wikipedia.org/wiki/Book_value -
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years 2006 2007 2008 2009 2010
Quick Ratio
(times) 0.55 0.97 0.43 1.72 1.57
Interpretation:
Quick ratio of packages limited is increasing from 2006 to 2007 but decrease in 2008 which means company
can not pay back its liabilites in this year.in 2009 this ratio again increases which means company has enoughassets to pay back its current liabilities.in 2010 this ratio is again more than 1.
2) Activity ratio:
Activity Ratios are used to determine how quickly various accounts are converted into sales or cash.
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a) Inventory turnover ratio:
If a company is holding a access inventory it means that funds which could be invested else where are
being tied up in inventory. In addition, there will be high carrying cost for storing the goods, as well as
the risk of obsolescence on the other hand, if inventory is too low the company may loose customers
because it has run out of merchandise.
The formula for inventory turnover is:
Inventory turnover= cost of goods sold/average inventory
years 2006 2007 2008 2009 2010
InventoryTurnover
6.14 5.36 5.02 5.52 7.52
b)Fixed Assets Turnover Ratio:
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratiomeasures the efficiency and profit earning capacity of the firm.Higher the ratio,greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets.
Formula of Fixed Assets Turnover
Fixed Assets Turnover Ratio = Cost of Sales / Net Fixed Assets42
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years 2006 2007 2008 2009 2010
Fixed AssetsTurnover Ratio(times)
2.92 1.01 0.86 0.86 1.22
Interpretation:
Fixed asset turnover ratio is higher in 2006,after that it tends to decrease in 2007,2008 and 2009 againincrease in 2010 but this increase is less than 2006.which means packages has to incraese its efficiencyto utilize its fixed assets to earn profit.
b) Total Asset turnover:
It is helpful in evaluating a companys ability to use its asset efficiently to
generate revenue. The formula for total asset turnover is:
Total Asset turnover = Sales / Total Assets
years 2006 2007 2008 2009 2010
Total AssetsTurnover Ratio(times)
0.4 0.32 0.46 0.46 0.55
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Interpretation:
Total assets turnover ratio is continuously increasing from 2008 to 2010.
3. Profitability Ratios:
An indication of good financial health and how effectively the firm is being managed is
the companys ability to earn a satisfactory profit and return on investment.
a) Gross profit margin:
The gross profit margin measures the percentage of each sales rupee remaining after the firm has paid
for its goods. The higher the gross profit margin, the better position of company would be.
The formula for gross Profit Margin is:
Gross Profit Margin = Gross Profit / Sales
years 2006 2007 2008 2009 2010
Gross Profit Ratio(%)
14.34 11.38 1.86 1.86 3.64
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Interpretation:Gross profit margin is decreasing from 2006 to 2010.which is not a good sign for packages limited.
b)Return on Assets:
The return on total assets (ROA) indicates the efficiency with which management has used its available
resources to generate income. It is also called Return on Investment. If ROA ratio decreases over the
year, it indicates inefficient use of assets.
The formula for ROA is:
ROA = Net Income / Average Total Assets
years 2006 2007 2008 2009 2010
Return onAssets(%)
27 13 11 11 (1)
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Interpretation:Return on assets ratio is continuously decreasing from 2006 to 2010 .which shows inefficiency of its employees.
b) Return on Equity:
ROE measures the return on common stockholders investment in the firm. Generally, the higher this
return, the better off is the owners.
The formula for ROE is:
ROE = Earnings available for common stockholders / common stock equity
years 2006 2007 2008 2009 2010
Return onEquity (%)
14.8 4.39
(1.20)
(13.05) (1.23)
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Interpretation:
Debt ratio of packages is increasing from 2006 to 2009 which is good for stockholders of packages.but not for
its creditors. In 2009 and 2010 debt ratio again decreased.which is not good sign for packages stock holders.
5. Market Value Ratios:
Market ratios relate to the firms market value as measured by its current share price, to certain accounting
values.
a) Earning Per Share:
It indicates how much amount firm is earning on its one share. Earning per share is useful indicator of
the operating performance of the company as well as of the dividends that may be expected.
The formula for EPS is:
EPS = (Net income Preferred Dividends) / Common stock outstanding
years 2006 2007 2008 2009 2010
Basic EPS(Rs.)
30.05 40.6
(2.32)
48.16 (3.94)
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Interpretation:
Earning per share increase in 2007 but decrease in 2008,again increase in 2009. In 2010 earning per share again
decrease.ss
b) Price/Earning Ratio:
It measures the amount that investors are willing to pay for each dollar of a firms earning; the higher
the price earning ratio, the greater the investors confidence.
The formula for Price Earning Ratio is:
Price Earning Ratio = Market Price per share / Earning per share
years 2006 2007 2008 2009 2010
Price -EarningRatio 58.96 58.96
(34.98)
2.99 (32.65)
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Interpretation :
Price to earning ratio is continuously decreasing from 2007 to 2010.which is not a good sign for packageslimited.s
Dividend Yield Ratio:
Dividend yield ratio is the relationship between dividends per share and the marketvalue of the shares.Share holders are real owners of a company and they are interestedin real sense in the earnings distributed and paid to them as dividend. Therefore,dividend yield ratio is calculated to evaluate the relationship between dividends pershare paid and the market value of the shares.
Formula of Dividend Yield Ratio:
Following formula is used for the calculation of dividend yield ratio:
Dividend Yield Ratio = Dividend Per Share / Market Value Per Share
years 2006 2007 2008 2009 2010
DividendYield (%)
2.41 6.17
-
2.26 2.53