Financial Statement Analysis of Pakistan Tobacco Company 110525094441 Phpapp02

Acknowledgement
Pakistan Tobacco Company | Final Project
Pakistan Tobacco Company

Pakistan Tobacco Company Limited (PTC) is a part of British American Tobacco - the world's
most international tobacco group - with brands sold in 180 markets around the world.
Pakistan Tobacco's operations in Pakistan began in 1947, making it one of Pakistan's first
foreign investments.
The company produces high quality tobacco products to meet the diverse preferences of
millions of consumers, and it works in all areas of the business - from seed to smoke.
The company provides a number of reputed brands of cigarettes to consumers in Pakistan,
including Benson and Hedges, Embassy, Gold Flake, Capstan and Gold Leaf.
Vision
Like a lighthouse in a dark, stormy sea... Our vision serves as a beacon of light and
hope, helping us navigates the waters
Mission Statement
Transform PTC to perform responsibly with the speed, flexibility and enterprising
spirit of an innovative, consumer focused Company
Strategic Objectives
Our strategy reflects our vision of being the champions of Growth, Productivity,
Responsibility and a Winning Organisation
Companys Brands
We have always considered ourselves a consumer focused company. We aim to
offer a product that excels in all aspects and exceeds the expectations of our
consumers
Pakistan Tobacco Company invests in trying to understand the consumers preferences and
ensures that adult smokers make informed choices about different brands available in the
market. We have put in particular effort in promoting two of our Global Drive Brands,
Dunhill and Pall Mall; and two of our great value for money brands, John Player Gold Leaf
and Gold Flake.
Dunhill
Dunhill, a premium global brand, celebrated its centenary in 2007.
2008 was an exceptional year for Dunhill in Pakistan as the brand witnessed exponential
growth; fuelled by its re-launch in July. Going forward, Dunhill is poised to strengthen its
foothold in the premium segment.
Benson & Hedges

In 1873, Richard Benson & William Hedges started a partnership in London.
Benson & Hedges was launched in Pakistan in March 2003 and has since been able to build
strong brand loyalty among its consumers showing excellent year on year growth.
Gold Leaf
The story of John Player Gold Leaf has to start from the story of its founder, John Player. An
enterprising businessman, John Player started a small tobacco selling business in 1877 and
turned it into a thriving cigarette company, John Player and Sons.
John Player Gold Leaf has become an institution in itself, becoming one of the most
recognisable cigarette brands in the country. John Player Gold Leaf has recently been
declared the largest Urban Brand in Pakistan, beating out products across the F.M.C.G.
spectrum.
Capstan
Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created
under the auspices of W.D. & H.O. WILLS at Bristol and London.
Gold Flake
Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS where it
was a premium brand around the end of the 19th century. Launched in 1982, in 'soft cup'
packaging, the brand took off when it was repositioned in the Value For Money (VFM)
segment and later a 'hinge lid' variant was introduced in 2000.
Gold Flake has grown tremendously as a brand since 2004, making it the largest volume
brand in Pakistan, and the second largest brand in British American Tobacco's Asia Pacific
region. The key to Gold Flakes success has been its novel engagement schemes which have
fuelled growth over the years. Through consumer relevant initiatives, Gold Flake has
established itself as a fresh and modern offering in the VFM segment and is all set to
consolidate its position as the major volume driver for Pakistan Tobacco Company.
Embassy
Embassy, is a leading volume brand in Pakistan, and is most popular in Punjab where it
enjoys a leading position. Having built its heritage over a number of years, Embassy thrives
on its brand loyalty and locally tailored taste characteristics.
Financial Highlights
Gross Turn Over
Year
2004
2005
2006
2007
2008
2009
Gross Turnover
25,453 Million Rupees
Gross Turn over

60000
Million Rupees
50000
40000
30000
20000
10000
0
2004
2005
2006
2007
2008
2009
Years
Financial Highlights
Property Plant and Equipment (Fixed Assets)
Years
Property Plant and Equipment
2004
2005
2006
2007
2008
2009

Fixed Assets
Million Rupees
6000
5000
4000
3000
2000
1000
0
2004
2005
2006
2007
2008
2009
Years
Earnings per Share and Dividend Yield
Year
2004
2005
2006
2007
2008
2009
Earnings
2.60/Share
5.17/Share
7.46/Share
9.47/Share
9.91/Share
11.83/Share
Dividend Yield
3.25%
5.37%
7.64%
6.37%
9.08%
9.10%
Earning per Share and Dividend Yield

12
Rs per share
10
8
6
Earning per Share

Dividend Yield
4
2
0
Years
Gross Volume
Year
2004
2005
2006
2007
2008
2009
Volume
27 Billion
31 Billion
35 Billion
37 Billion
41 Billion
41 Billion
Gross Profit
3,483 Million
4530 Million
5534 Million
6516 Million
7277 Million
8224 Million
Operating Profit
After Tax Profit
1,077 Million
665 Million
2,081 Million
1,322 Million
2,841 Million
1,905 Million
3,720 Million
2,420 Million
3,860 Million
2,532 Million
4,589 Million
3,022 Million
Volume
50
40
30
20
10
0
2004
2005
2006
2007
2008
2009
Profit
9000
8000
7000
Million Rupees
6000
5000
Gross Profit
Operating Profit
Profit after Tax
4000
3000
2000
1000
0
2004
2005
2006
2007
2008
2009
Years
Financial Analysis 2004-2005

Balance Sheet (Horizontal Analysis)
ITEMS
2004
2005
Horizontal Analysis
Property plant and

Equipment
Investment in
Subsidiary
Company
Long term Loans
3,564,407
4,529,366
4529366 - 3564407 3564407
27.07%
5,000
5,000
5000 5000 5000
---
16,324
17,782
17782 16324 16324
8.93%
Long Term Deposits
4,433
11,365
11365 4433 4433
156.3%
3,074,052
3,780,931
3780931 3074052 3074052
22.99%
Stores and Spares
131,464
125,232
125232 131464 131464
(4.70%)
Trade Debts
12,486
2,894
2894 12486 12486
(76.82%)
Loans and Advances
32,273
32,676
32676 32273 32273
1.24%
Short term
Payments
Other Receivables
36,003
31,987
31987 36003 36003
(11.15%)
119,126
104,791
104791 119126 119126
(12.03%)
Cash and Bank
39,197
57,605
57605 39197 39197
46.96
Total Current Assets
3,434,601
4,136,116
4136116 3434601 3434601
20.42%
Total Assets
7,024,765
7,968,453
7968453 7024765 7024765
13.43%
NON CURRENT
ASSETS
CURRENT
ASSETS
Stock in Trade
10
Balance Sheet
ITEMS
2004
2005
Horizontal Analysis
2,554,938
2,554,938
2554938 2554938 2554938
---
707,885
1,084,456
1084456 707885 707885
53.19%
---
---
---
---
624,475
724,673
724673 624475 624475
16.04%
Trade and other

payables
2,056,298
2,515,824
2515824 2056298 2056298
22.34%
Accrued Interest
5,041
10,911
10911 5041 5041
116.44%
Short term running

finance
996,579
400,662
400662 996579 996579
(59.79%)
Income tax liability
79,549
676,969
676969 79549 79549
75.10%
Total Current
Liabilities
3,137,467
3,604,366
3604366 3137467 3137467
14.88%
Total Liabilities
7,024,765
7,968,453
7968453 7024765 7024765
13.43%
SHARE CAPITAL
AND RESERVES
Share Capital
Revenue Reserves
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
CURRENT
LIABILITIES
11
Profit and Loss Account
ITEMS
2004
2005
Horizontal Analysis
Gross turnover
25,452,634
30,615,062
30615062 25452634 25452634
20.28%
Excise Duties
12,466,912
14,758,558
14758558 12446912 12446912
18.57%
Sales Tax
3,413,146
4,103,324
4103324 3413146 3416146
20.20%
Net Sales
9,572,576
11,753,180
11753180 9572576 9572576
22.77%
Cost of Sales
6,089,955
7,223,576
7223576 6089955 6089955
18.61%
Gross Profit
3,482,621
4,529,604
4529604 3482621 3482621
30.06%
Selling and
distribution
1,442,356
1,578,656
1578656 1442356 1442356
9.44%
Administrative
Expenses
595,637
573,285
573285 595637 595637
(3.75%)
Other Operating
Income
14,590
8,100
8100 14590 14590
(44.48
%)
Other Operating
Expense
381,914
304,462
304462 381914 381914
(20.27
%)
Operating Profit
1,077,304
2,081,301
2081301 1077304 1077304
93.19%
Finance Income
---
26,317
---
100
Finance Cost
21,265
25,554
25554 21265 21265
20.16%
Profit Before
Tax
Income Tax
Expense
Profit of the
Year
1,056,039
2,082,064
2082064 1056039 1056039
97.15%
390,812
760,145
760145 390812 390812
94.50%
665,227
1,321,919
1321919 665227 665227
98.77%
12
Financial Analysis 20042005

Balance Sheet (Vertical Analysis)
ITEMS
2004
2005
Vertical Analysis
Property plant and

Equipment
Investment in
Subsidiary
Company
Long term Loans
3,564,407
4,529,366
4529366 7968453
56.84%
5,000
5,000
5000 7968453
0.006%
16,324
17,782
17782 7968453
0.22%
Long Term Deposits
4,433
11,365
11365 7968453
0.14%
3,074,052
3,780,931
3780931 7968453
47.57%
Stores and Spares
131,464
125,232
125232 7968453
1.57%
Trade Debts
12,486
2,894
2894 7968453
0.03%
Loans and Advances
32,273
32,676
32676 7968453
0.41%
Short term
Payments
Other Receivables
36,003
31,987
31987 7968453
0.40%
119,126
104,791
104791 7968453
1.31%
Cash and Bank
39,197
57,605
57605 7968453
0.72%
3,434,601
4,136,116
4136116 7968453
51.90%
Total Assets
7,024,765
7,968,453
7968453 7968453
100%
NON CURRENT
ASSETS
CURRENT
ASSETS
Stock in Trade
13
Balance Sheet
ITEMS
2004
2005
Vertical Analysis
2,554,938
2,554,938
2554938 7968453
32.06%
707,885
1,084,456
1084456 7968453
13.62%
---
---
---
---
624,475
724,673
724673 7968453
9.09%
Trade and other

payables
2,056,298
2,515,824
2515824 7968453
31.57%
Accrued Interest
5,041
10,911
10911 7968453
0.13%
Short term running

finance
996,579
400,662
400662 7968453
5.03%
79,549
676,969
676969 7968453
8.49%
Total Current
Liabilities
3,137,467
3,604,366
3604366 7968453
45.26%
Total Liabilities
7,024,765
7,968,453
7968453 7968453
100%
SHARE CAPITAL
AND RESERVES
Share Capital
Revenue Reserves
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
CURRENT
LIABILITIES
14
ITEMS
2004
2005
Vertical Analysis
Gross turnover
25,452,634
30,615,062
30615062 11753180
260.48%
Excise Duties
12,466,912
14,758,558
14758558 11753180
125.57%
Sales Tax
3,413,146
4,103,324
4103324 11753180
34.91%
Net Sales
9,572,576
11,753,180
11753180 11753180
100%
Cost of Sales
6,089,955
7,223,576
7223576 11753180
61.46%
Gross Profit
3,482,621
4,529,604
4529604 11753180
62.70%
Selling and
distribution
1,442,356
1,578,656
1578656 11753180
13.43%
Administrative
Expenses
595,637
573,285
573285 11753180
4.8%
Other Operating
Income
14,590
8,100
8100 11753180
0.06%
Other Operating
Expense
381,914
304,462
304462 11753180
2.59%
Operating Profit
1,077,304
2,081,301
2081301 11753180
17.70%
Finance Income
---
26,317
---
0.22%
Finance Cost
21,265
25,554
25554 11753180
0.21%
Profit Before
Tax
Income Tax
Expense
Profit of the
Year
1,056,039
2,082,064
2082064 11753180
17.71%
390,812
760,145
760145 11753180
6.46%
665,227
1,321,919
1321919 11753180
11.24%
15

Balance Sheet
ITEMS
2005
2006
Horizontal
Analysis
Vertical
Analysis
19.25
51.86
NON CURRENT
ASSETS
Property plant and
Equipment
Investment in Subsidiary
Company
Long term Loans
Long Term Deposits and
Payments
4,529,366 4,529,366
5,000
5,000
---
0.006
17,782
18,660
4.94
0.21
11,365
8,424
(25.88)
0.10
0.26
43.40
CURRENT ASSETS
Stock in Trade
3,780,931 3,690,893
125,232
140,008
11.80
1.60
Trade Debts
2,894
2,406
(16.86)
0.03
Loans and Advances
32,676
12,205
(62.65)
0.14
Short term Payments
31,987
72,235
125.83
0.83
Other Receivables
104,791
92,360
(11.86)
1.06
Cash and Bank Balances
57,605
62,883
9.16
0.72
Stores and Spares
4,136,116 4,172,950
0.89
47.78
Total Assets
7,968,453 8,734,400
9.61
100
16
Balance Sheet
ITEMS
2005
2006
Horizontal
Analysis
Vertical
Analysis
SHARE CAPITAL
AND RESERVES
Share Capital
2,554,938 2,554,938
---
29.25
Revenue Reserves
1,084,456 1,584,249
46.08
18.14
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
---
---
---
---
724,673
845,004
16.60
9.67
(12.07)
25.23
CURRENT
LIABILITIES
Trade and other
payables
2,515,824 2,212,241
Accrued Interest
10,911
11,115
1.87
0.13
Short term running

finance
400,662
1,293,114
222.75
14.81
676,969
233,712
(65.48)
2.68
Total Current liability
3,604,366 3,750,209
4.05
42.94
Total Liabilities
7,024,765 8,734,400
9.61
100
17
ITEMS
2005
2006
Horizontal
Analysis
Vertical
Analysis
Gross turnover
30,615,062
35,715,451
16.66
---
Excise Duties
14,758,558
16,991,172
15.13
---
Sales Tax
4,103,324
4,833,285
17.79
---
Net Sales
11,753,180
13,890,994
18.19
100
Cost of Sales
7,223,576
8,357,747
15.70
60.16
Gross Profit
4,529,604
5,533,520
22.16
39.84
Selling and
distribution
Administrative
Expenses
1,578,656
1,816,198
15.05
13.07
573,285
644,981
12.75
4.64
Other Operating
Income
8,100
20,686
155.38
0.15
Other Operating
Expense
304,462
251,932
(17.25)
1.81
Operating Profit
2,081,301
2,841,095
36.51
20.45
Finance Income
26,317
47,402
80.12
0.34
Finance Cost
25,554
27,824
8.88
0.20
Profit Before Tax
2,082,064
2,860,673
37.40
20.59
Income Tax
Expense
Profit of the Year
760,145
955,685
25.72
6.88
1,321,919
1,904,988
44.11
13.74
18

Balance Sheet
ITEMS
2006
2007
Horizontal
Analysis
Vertical
Analysis
13.80
52.45
NON CURRENT ASSETS
Property plant and

Equipment
Investment in
Subsidiary Company
Long term Loans
Long Term Deposits
and Payments
4,529,366 5,154,326
5,000
5,000
---
0.05
18,660
12,513
(32.94)
0.13
8,424
13,025
54.62
0.13
5.47
40.69
CURRENT ASSETS
Stock in Trade
3,690,893 3,998,181
140,008
140,777
0.55
1.43
Trade Debts
2,406
2,386
(0.83)
0.02
Loans and Advances
12,205
38,580
216.10
0.39
Short term Payments
72,235
64,887
(10.17)
0.66
Other Receivables
92,360
229,891
148.91
2.34
Cash and Bank

Balances
62,883
166,666
165.04
1.70
4,172,950 4,641,368
11.23
47.23
Total Assets
8,734,400 9,826,232
12.50
100
Stores and Spares
19
Balance Sheet
ITEMS
2006
2007
Horizontal
Analysis
Vertical
Analysis
SHARE CAPITAL AND

RESERVES
Share Capital
2,554,938 2,554,938
---
26.00
Revenue Reserves
1,584,249 1,149,742
(27.43)
11.70
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
---
1,149,742
100
4.98
845,004
809,109
(4.25)
8.23
60.39
36.11
(24.42)
0.09
(19.69)
10.57
(2.55)
2.32
CURRENT
LIABILITIES
Trade and other
payables
Accrued Interest
Short term running
finance
2,212,241 3,548,237
11,115
8,401
1,293,114 1,038,550
233,712
227,752
Total Current
liabilities
3,750,209 4,822,940
28.60
49.08
Total Liabilities
8,734,400 9,826,232
12.50
100
20
ITEMS
2006
2007
Horizontal
Analysis
Vertical
Analysis
Gross turnover
35,715,451
40,889,275
14.49
--
Excise Duties
16,991,172
19,311,946
13.66
--
Sales Tax
4,833,285
5,534,452
14.51
--
Net Sales
13,890,994
16,042,877
15.49
100
Cost of Sales
8,357,747
9,527,306
14.00
59.39
Gross Profit
5,533,520
6,515,571
17.75
40.61
Selling and
distribution
Administrative
Expenses
1,816,198
1,795,793
(1.12)
11.19
644,981
736,147
14.13
4.59
Other Operating
Income
20,686
71,756
246.88
0.45
Other Operating
Expense
251,932
335,763
33.28
2.09
Operating Profit
2,841,095
3,719,624
30.92
23.19
Finance Income
47,402
30,878
(34.86)
0.19
Finance Cost
27,824
25,928
(6.81)
0.16
Profit Before Tax
2,860,673
3,724,574
30.20
23.22
Income Tax
Expense
Profit of the Year
955,685
1,304,367
36.49
8.13
1,904,988
2,420,207
27.05
15.09
21

Balance Sheet
ITEMS
2007
2008
Horizontal
Analysis
Vertical
Analysis
Property plant and

Equipment
Investment in
Subsidiary Company
Long term Loans
5,154,326
5,599,758
8.64
53.87
5,000
5,000
---
0.05
12,513
9,244
(26.12)
0.09
Long Term Deposits

and Payments
13,025
41,172
216.10
0.40
3,998,181
4,059,063
1.52
39.05
140,777
190,646
35.42
1.83
Trade Debts
2,386
2,666
11.74
0.03
Loans and Advances
38,580
65,917
70.86
0.63
Short term Payments
64,887
105,728
62.94
1.02
Other Receivables
229,891
246,675
7.30
2.37
Cash and Bank

Balances
166,666
69,172
(58.50)
0.67
4,641,368
4,739,867
2.12
45.60
Total Assets
9,826,232 10,395,041
5.79
100
NON CURRENT ASSETS
CURRENT ASSETS
Stock in Trade
Stores and Spares
22
Balance Sheet
ITEMS
2007
2008
Horizontal
Analysis
Vertical
Analysis
Share Capital
2,554,938
2,554,938
---
24.58
Revenue Reserves
1,149,742
1,053,393
(8.38)
10.13
1,149,742
739,133
51.00
7.11
809,109
836,939
3.44
8.05
Trade and other

payables
3,548,237
4,324,704
21.88
41.60
Accrued Interest
8,401
10,354
23.25
0.10
Short term running

finance
1,038,550
572,397
(44.88)
5.51
227,752
303,183
33.12
2.92
Total Current Liability
4,822,940
5,210,638
8.04
50.13
Total Liabilities
9,826,232 10,395,041
5.79
100
SHARE CAPITAL AND

RESERVES
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
CURRENT
LIABILITIES
23
ITEMS
2007
2008
Horizontal
Analysis
Vertical
Analysis
Gross turnover
40,889,275
49,053,928
19.97
--
Excise Duties
19,311,946
23,351,734
20.92
--
Sales Tax
5,534,452
6,829,699
23.40
--
Net Sales
16,042,877
18,872,495
17.64
100
Cost of Sales
9,527,306
11,595,736
21.71
61.44
Gross Profit
6,515,571
7,276,759
11.68
38.56
Selling and
distribution
Administrative
Expenses
1,795,793
1,933,364
7.66
10.24
736,147
928,358
26.11
4.92
Other Operating
Income
71,756
60,551
(15.62)
0.32
Other Operating
Expense
335,763
615,458
83.30
3.26
Operating Profit
3,719,624
3,860,130
3.78
20.45
Finance Income
30,878
59,600
93.02
0.32
Finance Cost
25,928
26,013
0.33
0.14
Profit Before Tax
3,724,574
3,893,717
4.54
20.63
Income Tax
Expense
Profit of the Year
1,304,367
1,361,422
4.37
7.21
2,420,207
2,532,295
4.63
13.42
24

Balance Sheet
ITEMS
2008
2009
Horizontal
Analysis
Vertical
Analysis
Property plant and

Equipment
Investment in Subsidiary
Company
Long term Loans
5,599,758
5,952,108
6.29
48.68
5,000
5,000
9,244
7,310
(20.92)
0.06
Long Term Deposits and

Payments
41,172
19,915
(51.63)
0.16
4,059,063
5,765,367
42.04
47.15
190,646
218,375
14.54
1.79
Trade Debts
2,666
1,684
(36.83)
0.01
Loans and Advances
65,917
48,598
(26.27)
0.40
Short term Payments
105,728
72,483
(31.44)
0.59
Other Receivables
246,675
88,147
(64.27)
0.72
Cash and Bank Balances
69,172
47,874
(30.79)
0.39
4,739,867
6,242,528
31.70
51.06
Total Assets
10,395,041 12,226,861
17.62
100
NON CURRENT ASSETS
0.04
CURRENT ASSETS
Stock in Trade
Stores and Spares
25
Balance Sheet
ITEMS
2008
2009
Horizontal
Analysis
Vertical
Analysis
Share Capital
2,554,938
2,554,938
---
20.90
Revenue Reserves
1,053,393
1,705,296
61.89
13.95
Retirement
Benefits
739,133
---
(100)
0.00
Deferred Taxation
836,939
1,109,847
32.61
9.08
Trade and other

payables
4,324,704
5,037,469
16.48
41.20
Accrued Interest
10,354
27,659
167.13
0.23
Short term
running finance
572,397
1,300,837
127.26
10.64
Income tax
liability
303,183
490,815
61.89
4.01
Total Current
Liability
5,210,638
6,856,780
31.59
56.08
Total Liability
10,395,041 12,226,861
17.62
100
SHARE CAPITAL
AND RESERVES
NON CURRENT
LIABILITIES
CURRENT
LIABILITIES
26
ITEMS
2008
2009
Horizontal
Analysis
Vertical
Analysis
Gross turnover
49,053,928
57,544,309
17.31
--
Excise Duties
23,351,734
27,654,345
18.43
--
Sales Tax
6,829,699
8,223,439
20.41
--
Net Sales
18,872,495
21,666,525
14.80
100
Cost of Sales
11,595,736
13,442,066
15.92
62.04
Gross Profit
7,276,759
8,224,459
13.02
37.96
Selling and
distribution
Administrative
Expenses
1,933,364
2,246,014
16.17
10.37
928,358
1,100,814
18.58
5.08
Other Operating
Income
60,551
226,499
274.06
1.05
Other Operating
Expense
615,458
514,665
(16.38)
2.38
Operating Profit
3,860,130
4,589,465
18.89
21.18
Finance Income
59,600
102,826
72.53
0.47
Finance Cost
26,013
43,802
68.39
0.20
Profit Before Tax
3,893,717
4,648,489
19.38
21.45
Income Tax
Expense
Profit of the Year
1,361,422
1,626,083
19.44
7.51
2,532,295
3,022,406
19.35
13.95
27

Balance Sheet
ITEMS
2009
2010
Horizontal
Analysis
Vertical
Analysis
Property plant and

Equipment
Investment in
Subsidiary Company
Long term Loans
5,952,108
5,680,296
(4.5)
39.58
5,000
5000
---
0.03
7,310
4170
(42.9)
0.02
Long Term Deposits

and Payments
19,915
29,721
49.2
0.20
5,765,367
7,255,007
25.83
50.55
218,375
249,632
14.31
1.73
Trade Debts
1,684
1,554
(7.71)
0.01
Loans and Advances
48,598
68,559
41.07
0.47
Short term Payments
72,483
135,267
86.61
0.94
Other Receivables
88,147
124,896
41.69
0.87
Cash and Bank

Balances
47,874
56,910
18.87
0.39
6,242,528
7,893,825
26.45
55.01
Total Assets
12,226,861 14,349,473
17.72
100
NON CURRENT ASSETS
CURRENT ASSETS
Stock in Trade
Stores and Spares
28
Balance Sheet
ITEMS
2009
2010
Horizontal
Analysis
Vertical
Analysis
Share Capital
2,554,938
2,554,938
---
17.80
Revenue Reserves
1,705,296
1,313,955
(22.94)
9.15
---
---
---
---
1,109,847
1,113,833
0.35
7.76
Trade and other

payables
5,037,469
5,815,867
15.45
40.53
Accrued Interest
27,659
53,648
93.96
0.37
Short term
running finance
1,300,837
2,561,362
96.90
17.84
490,815
199,409
(59.37)
0.13
Total Current
Liability
6,856,780
8,630,286
25.86
60.14
Total Liability
12,226,861 14,349,473
17.36
100
SHARE CAPITAL
AND RESERVES
NON CURRENT
LIABILITIES
Retirement
Benefits
Deferred
Taxation
CURRENT
LIABILITIES
Income tax
liability
29
ITEMS
2009
2010
Horizontal
Analysis
Vertical
Analysis
Gross turnover
57,544,309
44,458,074
(22.74)
283.24
Excise Duties
27,654,345
22,347,073
(19.9)
142.37
Sales Tax
8,223,439
6,414,894
(21.99)
40.86
Net Sales
21,666,525
15,696,107
(27.25)
100
Cost of Sales
13,442,066
10,789,048
(19.73)
68.73
Gross Profit
8,224,459
4,907,059
(40.33)
31.26
Selling and
distribution
Administrative
Expenses
2,246,014
2,007,158
(10.63)
12.78
1,100,814
943,256
(14.31)
6.00
Other Operating
Income
226,499
158,253
(30.13)
1.00
Other Operating
Expense
514,665
24,193
(95.29)
0.15
Operating Profit
4,589,465
1,822,585
(60.28)
11.61
Finance Income
102,826
34,669
(66.28)
0.22
Finance Cost
43,802
101,415
131.5
0.64
Profit Before Tax
4,648,489
1,755,839
(62.22)
11.18
Income Tax
Expense
Profit of the Year
1,626,083
614,218
(62.22)
3.91
3,022,406
1,141,621
(62.22)
7.2
30
Ratio Analysis 2005-2010

Liquidity Ratios
1. Current Ratio
Years
Current Assets
Current Liabilities
Current Ratio
2004
3,434,601
3,137,467
1.094
2005
4,136,116
3,604,366
1.147
2006
4,172,950
3,750,209
1.112
2007
4,641,368
4,822,940
0.962
2008
4,739,867
5,210,638
0.909
2009
6,242,528
6,856,780
0.910
2010
7,893,825
8,630,286
0.914
2. Quick Ratio
Years
Quick Assets
Current Liabilities
Quick Ratio
2004
3,60,549
3,137,467
0.1149
2005
3,55,185
3,604,366
0.098
2006
3,82,097
3,750,209
0.101
2007
6,43,187
4,822,940
0.133
2008
6,80,804
5,210,638
0.130
2009
4,77,161
6,856,780
0.069
2010
6,38,818
8,630,286
0.074
31
Liquidity Ratios
3. Inventory Turnover
Years
Cost of Sales
Average Inventory
Inventory Turnover
2004
6,089,955
3,069,090
1.98
2005
7,223,576
3,427,491
2.10
2006
8,357,474
3,785,892
2.20
2007
9,527,306
3,894,517
2.44
2008
11,595,736
4,028,622
2.87
2009
13,442,066
4,972,215
2.70
2010
10,789,048
6,510,187
1.67
4. Average Account Receivables Turnover
Years
Credit Sales
Average A/R
A/R Turnover
2004
9,572,576
1,05,266
90.93
2005
11,753,180
1,11,958
104.97
2006
13,890,994
98,575
140.91
2007
16,042,877
1,61,125
99.56
2008
18,872,495
2,38,282
117.15
2009
21,666,525
1,67,411
129.41
2010
15,696,107
1,06,521
147.34
32
Profitability Ratios
1. Assets Turnover
Years
Sales
Average Total Assets Assets Turnover
2004
9,572,576
6,641,792
1.45
2005
11,753,180
7,496,609
1.56
2006
13,890,994
8,351,426
1.66
2007
16,042,877
9,280,316
1.78
2008
18,872,495
10,110,636
1.86
2009
21,666,525
11,310,951
1.91
2010
15,696,107
12,964,936
1.21
2. Profit Margin
Years
Sales
Cost of Goods Sold
Profit Margin
2004
9,572,576
6,089,955
36.38 %
2005
11,753,180
7,223,576
38.53 %
2006
13,890,994
8,357,474
39.83 %
2007
16,042,877
9,527,306
40.61 %
2008
18,872,495
11,595,736
38.55 %
2009
21,666,525
13,442,066
37.95 %
2010
15,696,107
10,789,048
31.27%
33
3. Return on Assets
Years
Net Income
Average Total Assets Return on Assets
2004
665,227
6,641,792
0.10
2005
1,321,919
7,496,609
0.17
2006
1,904,988
8,351,426
0.22
2007
2,420,207
9,280,316
0.26
2008
2,532,295
10,110,636
0.25
2009
3,022,406
11,310,951
0.27
2010
1,141,621
12,964,936
0.80
4. Return on Common Stockholders Equity
Years
Net Income
Average Stock
Holders Equity
Return on Stock
holders Equity
2004
665,227
3,262,823
0.20
2005
1,321,919
3,451,118
0.38
2006
1,904,988
3,889,300
0.48
2007
2,420,207
4,081,022
0.59
2008
2,532,295
3,656,505
0.69
2009
3,022,406
3,934,282
0.76
2010
1,141,621
4,065,563
0.28
34
5. Earnings per Share
Years
Net Income
Average Shares
Outstanding
Earnings per Share
2004
665,227
2,55,494
2.60
2005
1,321,919
2,55,494
5.17
2006
1,904,988
2,55,494
7.46
2007
2,420,207
2,55494
9.47
2008
2,532,295
2,55,494
9.91
2009
3,022,406
2,55,494
11.83
2010
1,141,621
2,55,494
4.47
6. Payout Ratios
Years
Dividends per
Share
Earnings per Share
Payout Ratio
2004
1.61
2.60
0.61
2005
3.69
5.17
0.71
2006
5.48
7.46
0.73
2007
7.88
9.47
0.83
2008
11.62
9.91
1.17
2009
9.53
11.83
0.80
2010
5.99
4.47
1.34
35
7. Price Earnings Ratio
Years
Market Price of
Share
Earnings per Share
2004
2.60
2005
5.17
2006
7.46
2007
9.47
2008
9.91
2009
11.83
2010
4.47
Price Earnings
Ratio
36
Solvency Ratios
1. Debt to Assets Ratio
Years
Total Debts
Total Assets
Debt to Assets Ratio
2004
1,896,686
7,024,765
0.27
2005
2,916,486
7,968,453
0.33
2006
3,505,382
8,734,400
0.40
2007
4,586,767
9,826,232
0.46
2008
4,897,101
10,395,041
0.47
2009
6,338,306
12,226,861
0.51
2010
8,377,229
13,613,012
0.61
2. Times Interest Earned
Years
Operating Income
Interest Expense
Times Interest Earned
2004
1,056,039
390,812
2.70
2005
2,082,064
760,145
2.73
2006
2,860,673
955,685
2.99
2007
3,724,574
1,304,367
2.85
2008
3,893,717
1,361,422
2.86
2009
4,648,489
1,626,083
2.85
2010
1,755,839
614,218
2.85
37
Interpretation of Analysis
Liquidity Ratios
The analysis of Pakistan Tobacco Companys financial statement shows that it has a high
tendency to pay its debts and to convert assets into liquid form within short intervals of time.
The current ratio of PTC remained between 0.90 1.14 in the last six years and it
shows its ability to pay short term liabilities.
The quick ratio of PTC ranged between 0.069 0.133 from 2005 to 2010. It shows the
companys ability to convert its current assets into liquid form (cash form) in order to
meet current liabilities.
On yearly basis from the year 2005 2010, we observed that the number of times the
total inventory or stock of the company was sold on the average of 2.25 times/year.
It shows the sales of the company are on a very large scale and also gives rise to the
company opportunity to generate huge profits in the long run.
Average Account Receivables Turnover shows that how many times a company is
able to recover the amount of credit sales to people. PTC has shown a high Accounts
Receivables turnover rate which shows its high liquidity transformation rate.
38
Pakistan Tobacco Companies Profitability ratios clearly reflect its great ability to generate
huge profits and of generating dividends for its shareholders.
Average Assets turnover of the company ranges between 1.21 - 1.91 times per year.
It shows the generation of huge sales from the worth of assets of the company and in
the case of Pakistan Tobacco Company, it shows the firm's efficiency at using its
assets in generating sales or revenue - the higher the number the better.
The profit margin of PTC lies between 31.27% - 40.61% in previous six years. It
measures the percentage of each dollars of sales that results in net income. A higher
profit margin indicates a more profitable company that has better control over its
costs compared to its competitors.
The return on assets of PTC ranges among 0.80 to 0.27 according to preceding six
years record. An overall measure of profitability is return on assets. ROA gives an
idea as to how efficient management is at using its assets to generate earnings. This
number tells you what the company can do with what it has, i.e. how many rupees of
earnings they derive from each rupee of assets they control.
Return on common stockholders equity of PTC varies between 0.28 0.76 between
the years 2005 to 2006. Another widely used profitability ratio is return on common
stockholders equity. It measures profitability from common stockholders point of
view. Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested.
Averaging ROE over the past 5-10 years can give you a better idea of the historical
growth.
39
Earnings per share are a measure of net income earned on each share of common
stock. PTCs earning per share of last six years lies among 4.47 - 11.83. The EPS
formula does not include preferred dividends for categories outside of continued
operations and net income. Earnings per share serve as an indicator of a company's
profitability.
Payout ratio of this company ranges from 0.8 - 1.34. It measures the percentage of
earnings distributed in the form of cash dividends. The amount of earnings paid out
in dividends to shareholders. Investors can use the payout ratio to determine what
companies are doing with their earnings. Dividend payout ratio is the fraction of net
income a firm pays to its stockholders in dividend.
Price earnings ratio is an oft-quoted measure of the ratio of the market price of each
share of common stock to the earnings per share. It is also called its "P/E", or simply
"multiple". The P/E ratio is a vital ratio for investors. Basically, it gives us an
indication of the confidence that investors have in the future prosperity of the
business. A P/E ratio of 1 shows very little confidence in that business whereas a P/E
ratio of 20 expresses a great deal of optimism about the future of a business. It is the
valuation ratio of a company's current share price compared to its per-share
earnings.
40
SOLVENCY RATIOS
Solvency ratios measure the ability of a company to survive over a long period of time. It
provides a measurement of how likely a company will be to continue meeting its debt
obligations. Different countries use different methodologies to calculate the solvency ratio,
and have different requirements.
Debt to total assets ratio measures the percentage of total assets that creditors
provide. A metric used to measure a company's financial risk by determining how
much of the company's assets have been financed by debt. If the ratio is less than
one, most of the company's assets are financed through equity. If the ratio is greater
than one, most of the company's assets are financed through debt. Calculated by
adding short-term and long-term debt and then dividing by the company's total
assets.
The average value of Times interest earned of PTC is approximately 2.8 for previous
six years. IT PROVIDES COMPANYS ABILITY TO MEET interest payments as they come
due. Times interest earned (TIE) or interest coverage ratio is a measure of a
company's ability to honour its debt payments. The times interest earned lets the
creditor understand whether or not a company has sufficient income to cover its
interest payments requirements. It is calculated by taking a company's earnings
before interest and taxes (EBIT) and dividing it by the total interest payable on bonds
and other contractual debt.
41

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Acknowledgement

Pakistan Tobacco Company | Final Project

Pakistan Tobacco Company

Pakistan Tobacco Company | Final Project

Benson & Hedges

Pakistan Tobacco Company | Final Project

Pakistan Tobacco Company | Final Project

Gross Turn over

Pakistan Tobacco Company | Final Project

Property Plant and Equipment

3,564 Million Rupees

Pakistan Tobacco Company | Final Project

Earnings per Share and Dividend Yield

Earning per Share and Dividend Yield

Earning per Share

Pakistan Tobacco Company | Final Project

Pakistan Tobacco Company | Final Project

Financial Analysis 2004-2005

Property plant and

4529366 - 3564407 3564407

5000 5000 5000

17782 16324 16324

Long Term Deposits

11365 4433 4433

3780931 3074052 3074052

Stores and Spares

125232 131464 131464

2894 12486 12486

Loans and Advances

32676 32273 32273

31987 36003 36003

104791 119126 119126

Cash and Bank

57605 39197 39197

Total Current Assets

4136116 3434601 3434601

7968453 7024765 7024765

Pakistan Tobacco Company | Final Project

2554938 2554938 2554938

1084456 707885 707885

724673 624475 624475

Trade and other

2515824 2056298 2056298

10911 5041 5041

Short term running

400662 996579 996579

Income tax liability

676969 79549 79549

3604366 3137467 3137467

7968453 7024765 7024765

Pakistan Tobacco Company | Final Project

Profit and Loss Account

30615062 25452634 25452634

14758558 12446912 12446912

4103324 3413146 3416146

11753180 9572576 9572576

7223576 6089955 6089955

4529604 3482621 3482621

1578656 1442356 1442356

573285 595637 595637

8100 14590 14590

304462 381914 381914

2081301 1077304 1077304