Final Project Financial Management: Submitted To: Madam Ayesha

Final Project Financial
Management
Submitted to : Madam Ayesha

Submitted By:
Muhammad Usman Khan
Zain Mehmood
IqraAltaf Mayo
Muhammad ZeeshanSaeed
Muhammad SaadSamee
bbafal11069
bbafal11116
bbafal11122
bbafal11055
bbafal11048
Table of Content
Chapter 1
Chapter 2.
Chapter 3.
Chapter 4.
Chapter 5
Introduction
History of Company
Mission and Vision
Balance sheet
Income Statement
Profitability Ratios
10
Gross Profit Margin
11
Operating Profit Margin

Net Profit Margin
Earning per Share
Return on Total Assets
Return on Common Equity
12
13
14
15
16
Market Ratio
17
Price/Earning Ratio
Market/book Ratio
18
19
Liquidity Ratio
21
Current Ratio
21
Quick Ratio
22
Activity Ratio
23
Inventory Turn Over Ratio

Average Collection Period
Chapter 6.
23
24-25
Average Payment Period
26
Total Asset Turn over
27
Debt Ratios
28
Debt Ratio
Time Interest Earning Ratio
29
30
Annexures and Reference
31
Time Series Financial Analysis of PSO
Introduction:
Pakistan State Oil is a multi-million and global competitive state-owned megacorporation and the leading
oil market presiding entity in Pakistan. Headquartered in Karachi, Sindh Province of Pakistan, it has
several state divisions in the different cities in Pakistan, with administrative management business
network infrastructure well expanded, and built at par with international standards, represents 82% of
countrys national energy sources.
The PSO is horizontally integrated and is the largest state-owned energy megacorporation active in every
area of the oil and gas industry, including exploration and production, refining, distribution and
marketing, petrochemicals, power generation and trading. The PSO conducts major renewable energy
activities, including in biofuels, hydrogen, solar, nuclear and wind power as well as defence management.
The megacorporation is the largest entity in the country, with well expanded business presence in abroad.
The PSO has a primary listing at the Karachi Stock Exchange (KSE), and is a constituent of the KSE-30
Index. The PSO is the third largest entity to be placed in the KSE, ranking behind the Shell Pakistan a
subsidiary of Royal Dutch Shell.
History:
The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the
government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL)
as Premiere Oil Company Limited (POCL).
Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into
existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976.
Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested
in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company
Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO).
After PSOs inception, the corporate culture underwent a comprehensive renewal program which was
fully implemented in 2004. This program over the years included the revamping of the organizational
architecture, rationalization of staff, employee empowerment and transparency in decision making
through cross functional teams. This new corporate renewal program has divided the companys major
operations into independent activities supported by legal, financial, informative and other services. In
3
order to reinforce and monitor this structural change, related check and balances have been established by
incorporating monitoring and control systems.
Human Resource Development became one of the main priorities on the companys agenda under this
corporate reform.
It is due to this effective implementation of corporate reform and consistent application of the best
industrial practices and business development strategies, that PSO has been able to maintain its market
leadership in a highly competitive business environment.
For the past 35 years, Pakistan State Oil has been fuelling the needs of the nation. Acknowledged as the
leading Public Sector Company of Pakistan, PSO has been driving the wheels of the national economy
and is the first public company to pass the 1 Trillion rupee revenue mark.
Currently the Company is engaged in the marketing and distribution of various POL products including
Motor Gasoline , High Speed Diesel (HSD), Furnace Oil (FO), Jet Fuel (JP-1), Kerosene, CNG, LPG,
Petrochemicals and Lubricants. PSO has the most wide-spread retail network in the country with over
3,500 retail outlets and is also the major fuel supplier to aviation, railways, power projects, armed forces,
marine and agriculture sectors. The Company also possesses the countrys largest storage capacity
representing nearly 74% of the nation's total storage capacity.
PSO is now on the road to becoming a fully integrated firm encompassing facets of exploration, refining,
transportation and shipping. Through this plan, PSO will not only reduce operational costs, it will also be
able to reduce dependence on external supply sources and develop self-sufficiency in the energy sector.
The Companys future plans also include exploring new product markets, expanding the lubricants
product range, further expansion of the company retail network, and reducing product movement costs.
Vision:
To excel in delivering value to customers as an innovative and dynamic energy company that gets to the
future
We are committed to leadership in energy market through competitive advantage in providing the highest
quality petroleum products and services to our customers, based on.
Professionally trained, high quality, motivated workforce, working as a team in an environment, which
recognizes and rewards performance, innovation and creativity, and provides for personal growth and
development.
Lowest cost operations and assured access to long-term and cost effective supply sources.
Sustained growth in earnings in real terms.
Highly ethical, safe environment friendly and socially responsible business practices.
Values
Excellence:
We believe that excellence in our core activities emerges from a passion for satisfying our customers'
needs in terms of total quality management. Our foremost goal is to retain our corporate leadership.
Cohesiveness:
We endeavor to achieve higher collective and individual goals through team. This is inculcated in the
organization through effective communication.
Respect:
We are an Equal Opportunity Employer attracting and recruiting the finest people from around the
country. We value contribution of individuals and teams. Individual contributions are recognized through
our reward and recognition program.
Integrity:
We uphold our values and Business Ethics principles in every action and decision. Professional and
personal honesty, dedication and commitment are the landmarks of our success. Open and transparent
business practices are based on ethical values and respect for employees, communities and the
environment.
Innovation:
We are committed to continuous improvement, both in New Product and Processes as well as those
existing already. We encourage Creative Ideas from all stakeholders.
Corporate Responsibility:
We promote Health, Safety and Environment culture both internally and externally. We emphasize on
Community Development and aspire to make society a better place to live in.
Upcoming Initiatives:
Establishment of Refinery in Khyber Pakhtunkhwa:
An important step in PSO's efforts to secure the national energy supply chain, the Company plans to
establish a state-of-the-art (EURO IV) refinery with a capacity of 40,000 barrels per day in Khyber
Pakhtunwa.
By establishing this refinery, PSO will be able to diversify its business offerings, improve availability of
POL products in the country, reduce supply lines and transport costs for the northern region as well as
help save substantial foreign exchange savings for the national exchequer. This project will also help
drive economic growth in the region by offering job opportunities for both skilled and unskilled labor as
well as increase foreign investment in the area.
BALANCE SHEET
As per Audited for last 5 years
2012
2011
2010
2009
2008
2007
7460549
8012317
Rupees in '000
ASSETS
Non- Current Assets
Property, plant and equipment
Intangibles
5831993
6084731
637523
6987025
299991
28822
36250
68872
105502
126212
1968073
2314168
2019270
2153514
2701097
2990591
Long term loans, advances and receivables
385497
324554
317889
405780
477745
627972
Long term deposits and prepayments
123740
148748
125951
83655
79098
65913
1202316
957487
5033273
407337
9631610
9858510
8874593
14732119
11231328
401037
1222404
2
134431
115339
113863
112143
115814
88523794
21802229
2
95378393
12472183
2
58598668
11750107
4
40698209
62360067
80509830
33904728
Long term investments
Deferred tax
Current Assets
Stores, spare parts and loose tools
Stock-in-trade
Trade debts
Loans and advances
127891
2956205
5
1359996
6
526118
430716
409987
418015
396220
365974
Deposits and short term prepayments
2528406
1027381
367378
551803
401433
Other receivables
2122166
2252028
14557542
12806779
15681790
1583913
1575119
8
Taxation net
5314752
6311951
46580
709627
Cash and bank balances
1624025
33779598
4
2309006
25281489
6
1778056
19337314
8
2883118
13868952
4
3018640
11587869
2
1522276
6251327
3
Net Assets in Bangladesh
34742759
4
26267340
6
20224774
1
15342164
3
12711002
0
7473731
5
1715190
1715190
1715190
1715190
1715190
48244718
40187795
27620868
19155595
29249864
49959908
41902985
29336058
20876785
30965054
1715190
1922402
7
2093921
7
Long term deposits
1176078
1023531
948476
854718
834598
768308
Retirement and other service benefits
2518502
2233717
1887751
1673020
1574148
1644063
3694580
3257248
2836227
2527738
2408746
2412371
24676746
0
19185101
7
15603571
6
11012370
2
81067565
4143107
5
688512
688512
688312
688512
726116
688512
total Assets
EQUITY AND LIABILITIES
Share Capital
Reserves
Non-Current Liabilities
Current liabilities
Trade and other payables
Provosions
Accrued interest / mark-up
Short term borrowings
544485
432133
3330213
5556380
217928
131961
45772649
24541511
13021015
18654526
10997908
9064781
8
Taxes payable
Total equity And Liabilities
29377310
6
21751351
1
17007545
6
13002312
0
726703
93736220
79398
5138572
7
34742759
4
26297340
6
20247741
15342164
3
12711002
0
7473731
5
PROFIT AND LOSS ACCOUNT

As per audited for last 5 years
Sales - net of trade discounts and allowances
2012
2011
119992790
2
163861410
2010
2009
2008
2007
97491706
4
Rupees in '000
87717325
4
71982176
58321395
9
411057592
13796915
8
11856357
7
-15851726
Less:
- Sales tax
- Inland freight equalization margin
1344153
03
74275795
1
71359170
7
-9199864
1065865
87
61269558
9
60968547
8
74249472
1
13685954
1
8793542
61
49527853
3
46525490
7
-337446896
-97386723
-52418310
Net sales
-11642892
17550430
2
102442360
5
Cost of products sold
990101083
-16417542
1543867
00
82053036
4
78625005
9
Gross profit
24322522
3428030
5
2916624
4
3010111
3002362
6
12259430
2133994
1815951
1479054
1451666
1396527
1278932
Transportation costs
-1205394
-810423
-631849
-513673
-337886
-369328
Distribution and marketing expenses
-5863170
-5178233
-4055238
-3960953
-3264599
-2745289
Administrative expenses
-1659530
-1514532
-1125891
-1151793
-116074
-1002712
Depreciation
-1127587
-1120999
-1137637
-1141698
-1119137
-1098157
Other operating income
-8932956
-61351266
349706326
Operating costs
Amortisation
-15491
-18210
-44752
-52615
-47689
-41908
-9272048
-2416518
-3994389
-3352969
-755420
19143220
-2239725
1087912
2
-9411885
1081512
1
-9283021
-6012814
17313296
25217134
21233413
-6353344
313860
424238
Other Income
7550581
4143710
6095348
776686
22450992
7949786
Finance costs
-11658928
13204949
-11903162
1745768
2
-9882010
1744675
1
-6232056
1180871
-1367898
2108369
4
-1158112
6791674
Other operating expenses
Profit From Operations
9
4
Share of profit of associates
469468
516752
516401
451850
294318
330306
Profit before taxation
13674417
17974434
17963152
-11356864
21377412
7121980
Taxation
-4618362
3195120
-8913556
4658329
-7323617
-2432182
Profit for the year
9056055
1477931
4
9049596
-6698535
1405379
5
4689798
81.94
27.34
In Rupees
Earnings per share - basic and diluted
52.8
86.17
52.76
-39.05
Profitability Ratios:
Ratios
Gross Profit
Margin
Operating
Profit Margin
Net Profit
Margin
Earnings per
Share(in Rs.)
Return on
Total assets
2012
2.9%
2011
3.5%
2010
3.3%
2009
0.4%
2008
5.1%
2007
3.0%
1.4%
2.6%
2.4%
(0.9%)
3.8%
1.9%
0.7%
1.5%
1.0%
(0.9%)
2.4%
1.1%
52.80
86.17
52.76
39.05
81.99
27.34
2.6.%
5.6%
4.4%
(4.3%)
11%
6.2%
Return on
Common
Equity
18%
35%
30%
(32%)
45%
22%
Calculationsand Interpretations
Gross Profit Margin : Gross Profit
Sales
Gross Profit Margin for 2012 =
34322522
= 2.9%
1199927907
34280305
= 3.5%
974917064
29166244 = 3.3%
877173254
10
3010111
= 0.4%
719282176
30023626
= 5.1%
583213959
12259430
= 3.0%
411057592
Graph:
6
5
4
3
Gross profit margin
2
1
0
2012
2011
2010
2009
2008
2007
Interpretations:
The gross profit Margin shows the margin of profit after excluding the cost of goods sold from
sales. A higher gross profit margin is estimated.
Now we consider the PSOs financial position, in 2007 the ratio was 3.0% which means that for
each rupee of sales generated 0.03 rupee is retained for further operating expenses, interest
payment, taxation and distribution of shares which is very low. Companies usually have much
greater gross profit margin(depending upon the type of company). This may be explained in
terms of high value of cost of goods sold which is almost 81% of sales. The reason behind
higher COGS can be explained in terms of increasing prices of petroleum. We can see
improvement in 2008 as the ratio increased to 5.1% , while in 2009 the margin is very low i.e.
0.4%. After that ratios improved from 3.3% to 3.5% in 2010 and 2011 respectively. Yet again
11
the margin declined in 2012 which is 2.9%. However if we consider public utility then it is quite
acceptable. This lower margin of gross profit is the cause of other profitability ratios to be low.
The overall effect of gross profit margin can be seen in above graph.
Operating Profit Margin :Operating Profit

Sales
Operating Profit Margin for 2012 =
17313296
= 1.4%
1199927907
25217134
= 2.6%
974917064
21233413
= 2.4%
877173254
(6353344)
= -0.9%
719282176
22450992
= 3.8%
583213959
7949786
= 1.9%
411057592
Graph:
12

5
4
3
2
1
0
2012
2011
2010
2009
2008
2007
-1
-2
Interpretations:
Operating profit margin gives an estimate of how much PSO generates on each rupee of sales
before interest, taxation and distribution of shares. It determine the pricing strategy and
operating efficiency of PSO. Usually a high or increasing operating margin is expected.
In the present scenario, the margin is low because of low gross profit. However being public
utility it is quite acceptable.
The Margin is 1.4% for 2012, 2.6% for 2011, 2.4% for 2010, -0.9% for 2009, 3.8% for 2008 and
1.9% for 2007. The difference is because of difference in operations. Higher operations tend to
have higher sales.
Overall margin for past 6 years can be seen in graph.
Net Profit Margin :Net Profit

Sales
Net Profit Margin for 2012 =
9056055
= 0.7%
1199927907
14779314
= 1.5%
974917064
9049596
= 1.0%
877173254
(6698535)
= -0.9%
719282176
14053795 = 2.4%
583213959
13
4689798
= 1.1%
411057592
Graph:
Net Profit Margin

3
2
Net Profit Margin
1
0
-1
2012
2011
2010
2009
2008
2007
-2
Interpretations:
Net Profit Ratio indicates how much of Sales PSO has secured as profit or in other words it is the
actual earning of PSO. The margin is 0.7% in 2012 which is less than that of 2011 i.e. 1.5%.
Similarly 2011 can be compared with 2010s value that is 1.0% and so on up to 2007s value.
The lower values are due to higher COGS which is due to increasing prices of petroleum. The
lower value indicates the less efficient operations and thus leads to lesser reserves and low
earning available for stockholders.
Earnings per Share :Earnings available for common stockholders

:
Number of shares of common stock outstansing(1)
Earnings per share for 2012 =
90560550 = 52.80
1715190
Earnings per share for 2011 = 147793140 = 86.17

1715190
90495960 = 52.76
1715190
66985350 =(39.05)
1715190
140537950 = 81.94
1715190
46897980 = 27.34
1715190
14
Graph:
Earning per Share

100
80
Earning per Share
60
40
20
0
2012
2011
2010
2009
2008
2007
Interpretations:
This ratio indicates the amount PSO earn from each outstanding share of common stock. Ratio
for 2012 is 52.80 which means that PSO earn Rupees : 52.80/- from each share of common
stock. 2011 has the highest EPS among the last 6 years Rupees: 86.17/- per share of common
stock. Company can improve its EPS by either decreasing the number of shares of common
stock outstanding or by increasing the earnings available for common stock holders.
Return on Total Assets :Earnings available for common stockholders
Total Assets
Return on Total Assets for 2012 =
9056055 = 2.6%
347427594
14779314 = 5.6%
262673406
9049596 = 4.9%
202247741
(6698535) = 4.3%
153421643
14053795
= 11%
15
127110020
4689798
= 6.2%
74737315
Graph:
Return on total Assets

12
10
8
6
Return on total Assets
4
2
0
-2
2012
2011
2010
2009
2008
2007
-4
-6
Interpretations:
This indicates how effectively a company is using its assets. The values for 2012 is 2.6% which
is low as compared to 5.6% of 2011. This indicates that in 2012 the total assets are not used
effectively as compared to 2011, although total assets were more in 2012. Higher COGS is one
of the major reason for this result. Similarly the later years can be compared relatively. However
the most efficient one was 2008 where maximum output was taken from the total assets.
The collective trend is shown in table.
Return on Common Equity :Earnings available for common stockholders x 100
Common Stock Equity
Return on Common Equity for 2012 =
49959908
905605500 = 18%
14779314
= 35%
41902985
9049596
= 30%
29336058
16
(6698535) = -32%
20870785
14053795
= 45%
30965054
4689798
= 22%
20939217
Graph:
Return On ToTal Equity

0.5
0.4
0.3
0.2
Return On ToTal Equity
0.1
0
-0.1
2012
2011
2010
2009
2008
2007
-0.2
-0.3
-0.4
Interpretations:
This ratio indicates how much profit PSO has generated with the investments of common
stockholders. The ratio for 2012 is 18% which is almost have of 2011 that is 35% although the
investment of 2011 is less than 2012. This leads to the lack of proper asset allocation or might
be the oil prices are the cause of low outcome. Similarly 2011 has higher value than 2010
which is 30%. 2009 was lowest with -32% value. 2008 was the highest in last 6 years which
was 45%.
The general detail can be studied from graph.
17
Market Ratios
Ratios
Price /Earnings
Ratio
Market/boo
k Ratio
2012
4.46
2011
03.07
2010
4.93
2009
(5.47)
2008
5.09
2007
14.31
0.81
1.08
1.52
1.76
3.2
2.31
Calculations and Interpretations

Price/Earning Ratio :Market Price per share of Common Stock
Earnings per share
Price/Earning Ratio for 2012 =
235.8 = 4.46
52.80
264.58 = 3.07
86.17
260.20 = 4.93
52.76
213.65 = (5.47)
39.05
417.24 = 5.09
81.94
Price/Earning ratio for 2007 =
391.5 = 14.31
27.34
Graph:
18
Price Earning Ratio

20
15
10
Price Earning Ratio
5
0
2012
2011
2010
2009
2008
2007
-5
-10
Interpretations:
Price/Earning ratio measures the amount that investors are willing to pay for each rupee of
PSOs earnings. It also indicates the degree of confidence that investors have in firms future
performance. Higher value indicates higher confidence.
If we consider the value of 2012 which is 4.46 and compare it with that of 2011 that is 3.07
then we can say that investors has more confidence in 2012 performance than of 2011
performance. Similar comparison can be done for the rest of years. 2009 was worst where the
value was -5.47 indicating a very poor confidence of investors. 2008 has the highest value in 5
year analysis with 5.09 confidence level. The two major factors affecting this ratio are market
price per share of common stock and earnings available for common stockholders.
Market/Book Ratio :Market Price per share of Common Stock
Book Value per share of Common Stock
Where
Book Value per Share =
Common Stock Equity

:
Number of Shares of Common Stock outstanding
Market/Book Ratio for 2012 = 235.8 = 0.81

49959908000 = 291.5
291.28
171518901
41902985000 = 244.30
144.30
171518901
where
where
Book value per share =
Book Value per share =
19
29336058000 = 171.03
171.03
171518901
where

20870785000 = 121.68
121.68
171518901
where

30965054000 = 180.53
180.53
171518901
where

20939217000 = 122.08
122.08
171518901
where
Graph:
Market/Book Ratio
3.5
3
2.5
Market/Book Ratio
2
1.5
1
0.5
0
2012
2011
2010
2009
2008
2007
Interpretations:
This ratio relates the companys book value per share of common stock with market value per
share of common stock. It provides an assessment of how investors view the companys
performance.
20
In 2012, the ratio was 0.81 which indicates that investors payed 0.81 rupee for each 1 rupee of
book value of PSOs stock which is low in terms of earnings and in terms of investors
confidence. The condition was quite satisfactory in the rest of the past 6 years, however we
saw a declining effect in the ratio from 2007 to 2011 from value 3.20 to 1.08 which showed the
decreasing confidence of investor about companies performance.
Liquidity Ratios
Ratios
Current
Ratio
Quick
Ratio
2012
1.14
2011
1.16
2010
1.13
2009
1.06
2008
1.23
0.84
0.72
0.79
0.75
0.57
Current Ratio:
Current Assets
:
Current Liabilities
Current Ratio for 2012 =
337795984
= 1.14
29773106
252816896
= 1.16
217513173
193373148
= 1.13
170075456
138689524
= 1.06
130023120
115878692
93736220
Graph:
= 1.23
21
Current Ratio
1.25
1.2
1.15
Current Ratio
1.1
1.05
1
0.95
2012
2011
2010
2009
2008
Interpretations:
2007
The Ratio tells the ability to full fill its short term obligation
Company data shows that for every one rupees of liability there is 1.14 rupees of asset in
2012. The ratio was 1.16, 1.13, 1.06, 1.23 in the year 2011, 2010, 2009 & 2008 respectively.
Company can improve its current ratios by increasing its accounts receivables and by
decreasing the account payables.
Quick Ratio :Current Assets Inventory

Current Liabilities
Quick Ratio for 2012 =
293773106
337795984-88523794
= 0.84

217513173
252814896-95378393 = 0.72

170075456
193373148-58598668 = 0.79

130023120
138689524-40698209
= 0.75

93,736,220
115878692-62360067
= 0.57
Graph:
22
Quick Ratio
0.9
0.8
0.7
0.6
Quick Ratio
0.5
0.4
0.3
0.2
0.1
0
2012
2011
2010
2009
2008
2007
Interpretations:
The Ratio tells more precisely and accurately companies the ability to full fill its short term
obligations.
This ratio is more precisely because in this ratio we subtract the inventory; it is difficult to
convert the inventory into the cash.
To pay the 1 rupee current liability there is only 0.84 rupees of assets in 2012, while in 2011
to pay the 1 rupee liability there is only 0.72 rupees of assets, to pay the liability of 1 rupee
in 2010 there is only 0.79 rupees of assets , while in 2009 to pay the liability of 1 rupee there
is only assets of 0.75 rupees, in 2008 to pay the liability of one rupee there is 0.57 rupees of
asset
company can increase its quick ratio by maximum utilization of inventory .they should fully
utilizes their all assstes ,they should also works on the average collection period time
Activity Ratio:
Ratio
Inventory
Turnover
Ratio
Average
Collection
Period
Average
Payment
Period
2012
13%
2011
12.6%
2010
17%
2009
13.9%
2008
12.1%
52.12
45.34
41.19
28.93
14.86
62.85
77.14
41.42
59.33
44.86
23
Total Asset
Turnover
3.45
3.71
4.3
Inventory Turnover Ratio:
4.6
4.58
Cost of Goods Sold

Avg Inventory
Inventory Turnover Ratio for 2012 =
1199927907 = 13%
91951093.5
974917064
= 12.7%
76966530.5
877173254
= 17%
49648438.5
719282176
= 13.9%
51529138
583213959
= 12.1%
45961061
Graph:
Inventory Turn Over

18
16
14
12
Inventory Turn Over
10
8
6
4
2
0
2012
2011
2010
2009
2008
2007
24
Interpretations:
Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales. Its
purpose is to measure the liquidity of the inventory. The company shows the greatest efficiency
in 2010 where the company inventory turnover was 17% which SHOWS GOOD LIQUIDITY OF
INVENTRY.but later in following year it shows descending
values .IN 2011 A SLITE
IMPROVEMENT IN 2012
Company can improves its inventory turnover by AVOIDING OVER STOCKING AND steps should
be taken to increases in sales to consume more inventory
Average Collection Period:
Average debtors x 365

Sales
Average Collection Period for 2012 =
171372062 x 365
= 52.12
1199927907
121111453 x 365
= 45.34
974917064
99005452 x 365
= 41.19
877173254
57207279 x 365
= 28.93
719282176
23752347 x 365
= 14.86
583213959
Graph:
25

60
50
40
30
20
10
0
2012
2011
2010
2009
2008
2007
Interpretations:
Average collection period is the number of days that i a company to collect its accounts
receivables.
52.12 45.34 41.19 28.93 14.86
The company shows that average collection period is continuously increasing in following years.
The company can increase it collection period by defining it polices to its debtors so that all
accounts receivable should be received in prescribed time
Average Payment Period:
Average Creditors x 365

Purchases
Average Payment Period for 2012 =
1693092385 x 365
983246484
= 62.85
173943366.5 x 365
823029784
= 77.14
83079709 x 365
= 41.42
731492166
95595633.5 x 365
588023620
61249320 x 365
498052919
= 59.33
= 44.86
26
Graph:
Average payment Period

90
80
70
60
Average payment Period
50
40
30
20
10
0
2012
2011
2010
2009
2008
2007
Interpretations:
It measures how many days it takes to pay off accounts payable.

Company data shows a major variation in payment period. With, owes in 2011 which was 41
days and highest in2011 showing 77 days. In 2012 it has approximately 62 days to pay it
accounts pay able
Total Assets Turnover:
Sales
Total Assets
Total Assets Turnover for 2012 =
1199927907
= 3.45
347427594
974914064
= 3.71
262673406
877173254
= 4.3
202247741
719282176
= 4.6
153421643
583213959
= 4.58
127110020
411057592
= 5.50
74737315
27
Graph:

6
5
4
3
2
1
0
2012
2011
2010
2009
2008
2007
Interpretations:
The total asset turnover ratio measures the ability of a company to use its assets to efficiently
generate sales
The company total asset turnover ratio is not declining in every year which is not satisfactory.
Low asset turnover ratio suggests problems with excess production capacity, poor inventory
management, or lax collection methods
The company should have to utilizes it all resources .and plants to increase it sales.it should
increase the sale by maximum utilization of its resources e.g. inventory
Debt Ratio
Ratios
Debt
Ratio
Times
Interest
Earned
Ratio
Debt Ratio:
2012
0.856
2011
1.189
2010
1.169
2009
1.157
2008
1.322
2007
1.389
2.17
2.5
2.81
-0.8
16.6
7.14
Current Liabilities + Non-current Liabilities

Total Assets
28
Debt Ratio for 2012 =
293773106 + 3694580 = 0.856

347427594
217513173 + 3257248 = 1.189

262673406
170075456 + 2836227 = 1.169

202247741
130023120 + 2527738= 1.157

153421643
93736220 + 2408746 = 1.322

127110020
51385727 + 2412371 = 1.389

74737315
Graph:
Debt Ratio
1.6
1.4
1.2
1
Debt Ratio
0.8
0.6
0.4
0.2
0
2012
Interpretations:
2011
2010
2009
2008
2007
Debt Ratio Measures what proportion of debts a company has as compared to its assets. Thus
it shows the measure of debtness of a company. It helps investors determine the level of risk of
an organization.
Now we consider the present scenario, in 2012 the ratio was 0.856 which indicates that assets
were greater than liabilities ensuring a safe side for investors. While in the previous years the
29
ratio was greater than 1 which indicates that companies loans were more than assets. 2007
was worst where ratio was at extreme for last 6 years which was 1.389, however if we consider
5 years analysis then 2008 was worst with value 1.322. The values for 2011, 10 and 09 are
1.189, 1.169 and 1.157 respectively.
Times Interest Earned Ratio:
Earnings before interest and tax

Interest
(Note: As in the balance sheet, interest has already been deducted before taxation so we will
add the value of tax as well in the below ratios)
Times Interest Earned Ratio for 2012 =
13674417 + 11658928 = 2.17

11658928
17974434 + 11903162 = 2.5

11903162
17963152 + 9882010 =2.81

9882010
(110356864)+6232056 = (0.8)
6232056
21377412 + 1367898 = 16.6

1367898
7121980 + 1158112
1158112
Graph:
= 7.14
30
Time Interst Earned Ratio

18
16
14
12
Time Interst Earned Ratio
10
8
6
4
2
0
-2
2012
2011
2010
2009
2008
2007
Interpretations:
It indicates the companys ability to meet its debt obligations or interest obligations. Or simply
we can that it indicates that for how much times the net operating profit covers the interest
payment. Usually a value of 2 and greater is considered to be acceptable.
So the Condition was quite acceptable for 2012, 11 and 10 with values 2.17, 2.5 and 2.81.
However for 2009 the value was in negative -0.8 which was very hopeless for PSO to pay off
interest. Condition was much satisfactory for 2008 where the value was 16.6. It meant that if
the PSO earnings were shrink by 93% (16.6-1.0/16.6), it would still be able to pay off interest
payments.
Annexures
Annexure (1)
31
References:
http://www.psopk.com

Final Project Financial Management: Submitted To: Madam Ayesha

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Final Project Financial

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Mission and Vision

Gross Profit Margin

Operating Profit Margin

Inventory Turn Over Ratio

Average Payment Period

Total Asset Turn over

Annexures and Reference

Time Series Financial Analysis of PSO

Long term loans, advances and receivables

Long term deposits and prepayments

Long term investments

Deposits and short term prepayments

Cash and bank balances

Net Assets in Bangladesh

Long term deposits

Retirement and other service benefits

Total equity And Liabilities

PROFIT AND LOSS ACCOUNT

Sales - net of trade discounts and allowances

Cost of products sold

Distribution and marketing expenses

Other operating income

Other operating expenses

Profit From Operations

Profit before taxation

Profit for the year

Gross Profit Margin for 2011 =

Gross Profit Margin for 2010 =

Gross Profit Margin for 2008 =

Gross Profit Margin for 2007 =

Gross profit margin

Operating Profit Margin :Operating Profit

Operating Profit Margin for 2011 =

Operating Profit Margin for 2010 =

Operating Profit Margin for 2009 =

Operating Profit Margin for 2008 =

Operating Profit Margin for 2007 =

Operating Profit Margin

Net Profit Margin :Net Profit

Net Profit Margin for 2010 =

Net Profit Margin for 2009 =

Net Profit Margin for 2008 =

Net Profit Margin

Net Profit Margin

Earnings per Share :Earnings available for common stockholders

Earnings per share for 2011 = 147793140 = 86.17

Earnings per share for 2009 =

Earnings per share for 2008 =

Earnings per share for 2007 =

Earning per Share

Return on Total Assets for 2011 =

Return on Total Assets for 2010 =

Return on Total Assets for 2009 =

Return on Total Assets for 2008 =

Return on total Assets

Return on total Assets

Return on Common Equity for 2011 =

Return on Common Equity for 2010 =

Return on Common Equity for 2008 =

Return on Common Equity for 2007 =