fm project financial analysis of 3 pak companies

7/31/2019 FM Project financial analysis of 3 pak companies

1/16

TOYOTA INDUS MOTOR

Current Ratio

Current Ratio = Current Assets

Current Liabilities

= 16,715,319

9,884,850

= 1.69:1

Toyota Indus motor Company has Rs. 1.49 of current assets for every Re. 1 of current liabilities,

which is good for the company.

Quick ratio / acid test

Quick Ratio = Current AssetsInventory

Current Liabilities

= 22,587,737 - 5,690,052

12,260,958

= 1.3:1

In this ratio the quick assets amounts to pay off the short term loan of the company which is good its

more than one so its favorable for the company.


2/16

Debt- equity ratio

Debt-Equity Ratio =Total Debt

Total Equity

= 947,345

13,333,648

= 0.07:1

The Toyota has Rs. 0.07 in debt for every Re. 1 in equity, this means equity is more than its debtits good, favorable for the company.

Debt to total assets

Debt to Total Assets = Total Debt

Total Assets

= 947,345

26,834,618

= 0.02:1

The Toyota has Rs. 0.02 in debt for every Re. 1 in assets; the amount of assets is higher than the

total liabilities which is good for the company in case of liquidation of the company total debts

amount cover by the total asset.


3/16

Debt to total capitalization ratio

Long-Term Debt Ratio = _____Long-Term Debt_______

Long-Term Debt + Total Equity

= 947,34514,280,993

= 0.066

Toyotas accounts payable may be more of a reflection of trade practice than debt management

policy. It is sometimes also called as the Toyotas total capitalization and the financial manager

will frequently focus on this quantity rather than on total assets.

Interest coverage ratio

Times Interest Earned Ratio = ____EBIT____

Interest Charges

= 4,011,455

24,443

= 164 Times

Interest should be cover 164 times from the earning which is favorable for the company.


4/16

Receivables turnover

Receivables Turnover = ______Sales_______

Accounts Receivables

= 61,702,677

149,533

= 412.7 Times

This ratio is favorable for the company because receivable is good on the behalf of the company

and in this ratio company received the a/c receivable 412.7 times as this ratio increased it is good

for the company.

Debtor collection period

Debtor Collection Period= _____365 Days_____

Receivables Turnover

= 412.7

365

= 0.8 Days

Toyota has collected on its credit sales in 0.88 days, which is good for the company and its favorable for

the company.


5/16

PAYABLE TURNOVER RATIO

Inventory Turnover = Net Credit Purchases

Accounts Payable

= 50,744,050

5,740,869

= 8.83 Times

In this ratio company account payable has high amount but it is favorable for the company to slow

down such type of payable.

Average payment period

Debtor Collection Period = _____365 Days_____

Receivables Turnover

= 365

8.83

= 41 Days

In this ratio its shows the average period in which company receive its receivables its 41 days means

that after 41 days of credit sales company receive its account receivables.

Inventory turnover

Inventory Turnover = _Cost of Goods Sold_

Inventory

= 57,613,542

5,690,052


6/16

= 10.125 Times

The Toyota has sold off or turned over the entire inventory10.125 times, its favorable for the

company that company sold its inventory very quickly.

Total asset turnover

Total Asset Turnover = ___Sales___

Total Assets

= 61,702,677

26,834,618

= 2.29 Times

This ratio shows that for every rupee in assets, the Toyota generated Rs. 2.29 in sales.

Gross profit margin

Profit Margin = ____Gross Profit___

Sales

= 4,089135

61,702,677

= 6.63%

The amount of sales is higher than the gross profit which means that amount of cost of sale is

more which is not good for the company.


7/16

Net profit margin

Profit Margin = __Net Income__

Sales

= 2,743,384

61,702,677

= 4.45%

The amount of sales is higher than the net profit which means more expenses and taxes

decreased that profit amount which is not favorable.

Return on investment

Return on Investment (ROI) = _Net Income after Tax_

Total Assets

= 2,743,384

26,834,618

= 0.10%

The Toyota has 0.10% profit per rupee of assets


8/16

Return on equity:

Return on Equity (ROE) = Net Income_

Total Equity

= 2,743,384

14,119,648

= 42.98%

The Toyota generated 42.98% rupees in profit, for every rupee in equity

Earnings per share

Earnings per Share = _____Earnings After Tax _____

Number of Shares Outstanding

= 2,743,384

786,000

= 34.90

This ratio shows the earning per share is 34.90 against every 1 share.

Dividend per share

Divided per share= __Dividend __

No of outstanding Share

= 1,179,000

786,000

= 15.00

The Toyotas shares sell forRs15.00 per earnings.


9/16

Dividend Payout Ratio

Book Value per Share = Dividend per Share x 100

Earnings per Share

= 15.00 x 100

34.90

= 42.98 %


10/16

SHELL PAKISTAN

Current ratio = Current Assets

Current liabilities

= 25,489,760

30,407,710

= 0.83 times

In this ratio current liabilities of company are more than its current assets which is not favorable

for the company.

Quick ratio = Current asset(Inventories + prepaid expenses)Current Liabilities

= 25,489,760-12,668,324

30,407,710

= 0.42 times

In this ratio the quick assets amounts to pay off the short term loan of the company which is not

good on the behalf of the company.

Cash ratio = Cash + Cash equivalentCurrent Liabilities

= 8,941,41330,407,710

= 0.30 times

In this ratio company cash and cash equivalent amounts also less than the company liabilities in

case of liquidation of company the amounts of cash and cash equivalent is not so much to cover

the debts and shareholders investment. Which is also not favorable for the company?


11/16

Debt to equity ratio = total liabilitiesShareholders equity

= 9,986,438

7,900,035

= 1.26 times

In these ratio total debts is more than the shareholders equity which means that shareholderscontribution is less than the creditors and lenders.

Debt to asset ratio = total liabilities/total debtsTotal assets

= 9,986,43838,497,511

= 0.26 times

Total asset amount is higher than the total liabilities which is good for the company in case of

liquidation of the company total debts amount cover by the total asset.

Interest coverage ratio = Earning before interest & taxInterest expenses

= 3,712,75486,350

= 42.99 times

Interest should be cover 42.99 times from the earning which is favorable for the company.


12/16

Debt-service coverage ratio= Earnings before interest & tax

Interest + principal

1-(tax rate)

= 3,712,754

86,350+9,986,4381-35%

= 0.24 times

Receivable turnover ratio = Credit salesAverage Account Receivable

= 223,813,592

9,395,541

= 23.82 times

This ratio is favorable for the company because receivable is good on the behalf of the company

and in this ratio company received the a/c receivable 23.82 times as this ratio increased it is good

for the company.

Receivable turnover (in days) = 360

Receivable turnover ratio

= 360

23.82

= 15.11

Company received the amounts from the debtors after 15.11 days if the company

Inventory turnover ratio = Cost of goods sold

Average inventory

= 185,403,153


13/16

12,727,689

= 14.56 times

This ratio favorable for the company because as early as possible goods sold inventory should be

placed. If goods replaced as goods sold than there is no chance of shortage of inventory.

Inventory turnover (in days) = 360

14.56

= 24.72

This is favorable for the company to sell the inventory in no time. Holding period should beminimum. Because as early as possible goods sold company generates the revenues.

Payable turnover ratio = Credit purchasesAverage account payable

= 6,117,414

17,953,773

= 0.34 times

In this ratio company account payable has high amount but it is favorable for the company toslow down such type of payable.

Payable turnover ratio (in days) = 360Payable turnover ratio

= 360

0.3407

= 1057

It is beneficial for the company to pay his payable not as early as required because this is optionto company to invest that amount in other business and earns the profit.

Net profit margin = Net profitSales


14/16

= 1,615,582223,813,592

= 7.2%

The amount of sales is higher than the net profit which means more expenses and taxes

decreased that profit amount which is not favorable.

Gross profit margin = Gross profitSales

= 12,127,758

223,813,592

= 5.41%

The amount of sales is higher than the gross profit which means that amount of cost of sale is

more which is not good for the company.

Return of equity = Profit after taxShareholders equity

= 1,615,582

7,900,045

= 20.45%

Return on investment = Profit after taxTotal investment

= 1,615,582

38,497,511

= 4.20%

Earning per shares = Profit after taxNo. of outstanding shares


15/16

= 1,615,58268,487,913

= 2.40%

Dividend per shares = Dividend declaredNo. of outstanding shares

= 821,859,956

68,487,913

= 12.00

Dividend payout = Dividend per shareEarning per share

= 12.0023.59

= 50.86%

Retention ratio = 1- Dividend payout

= 1-50.86%

= 49.14%

Price-earnings ratio = Market price per shareEarning per share

= 142

23.59

= 6.02


16/16

Earning yield = Earning per shareMarket price per share

= 23.59142

= 16.61%

Dividend yield = Dividend per shareMarket price

= 12

142

= 8.5%

Market price to book value = Market priceBook value

= 142

11.53%

= 1231.56

Book value = Shareholders equityNo. of outstanding shares

= 7,900,035

68,487,913

= 11.53%

fm project financial analysis of 3 pak companies

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