Pakistan Telecommunication

Company Ltd.
(PTCL)
Connecting
the Nation since 1947
Pakistan Telecommunication Company Limited (PTCL) is the
largest integrated Information Communication Technology (ICT)
company of Pakistan. With a humble start from a telephone and
telegraph department in 1947, it has evolved to offer latest digital
and telecommunication technologies today. With the largest fixed
line network of the country, PTCL offers products and services like
high speed Broadband internet, CharJi wireless internet, Smart TV
(IPTV) service, over-the-top (OTT) applications like Smart Link App,
Smart TV App and Touch App, and world class digital content like
Netflix, iflix and icflix. PTCL’s enterprise grade platforms like Smart
Cloud, Tier-3 Certified Data Centers, Managed Services and
Satellite Services are meeting the connectivity needs of
organizations and enabling businesses to operate more efficiently.
It acts as the communication backbone for the country with largest
fiber cable network that spans from Khyber to Karachi and
submarine cables connecting Pakistan to the world.
PTCL is proud of its 70 years heritage; connecting people of
Pakistan. PTCL has always played its part in development of the
country and is committed to building a prosperous and digitally
connected Pakistan.
 Financial Statements
PTCL COMPANY OF PAKISTAN
BALANCE SHEET
AS ON DEC 31.

LIBILTIES AND OWNER`S EQUITY

2014 2015 2016

Rs 000 Rs 000 Rs 000
LIBILITIES AND EQUITY
Equity
Share capital and reserves
Share capital 51,000,000 51,000,000 51,000,000
Revenue reserves
Insurance reserve 2,196,770 2416078 2621288
General reserve 30,500,000 30500000 27497072
Unappropriated profit 8,117,782 12,668,976 7,047,199
40,814,552 45,585,054 37,165,559
Statutory and other reserves 2,007 20,096
Unrealized gain on available for sale investments 329,039 -995 1,063
92,143,591 96,586,066 88,186,718
Liabilities
Non-current liabilities
Long term loans from banks 549,256 20,975,000 26,136,667
Customers deposits 2,676,026 106,308 2,400,425
Liability against assets subject to
finance lease 25,293 1,888
License fee payable 19,818,874 11,228,196
Long term security deposits 1,576,434 1,493,177
Deferred income tax 2,676,026 12,379,290 9,562,487
Employees retirement benefits 33,011,258 32,173,440 24,121,967
Deferred government grants 6,848,180 9,497,840 11,570,655
Long term vendor liability 24,639,049 24,639,049
43,084,720 121,191,528 115,502,732
Current liabilities
Trade and other payables 44,345,349 59,189,010 71,463,996
Customers deposits 959,008 5,179,565
Interest accrued 554,585 580,142
Short term running finance 427,428
Current portion of:
Long term loans from banks 25,000 838,333
Liability against assets subject to finance lease 31,977 34,401
License fee payable 7,584,902 4,504,874
Long term vendor liability 2,163,554 9,679,951
Unearned income 3,231,768 4,113,549
74,167,232 96,394,811

Total equity and liabilities 179,573,660 291,944,826 300,084,261

ASSETS

2014 2015 2016

Rs 000 Rs 000 Rs 000
Assets
Non-current assets
Fixed assets
Property, plant and equipment 19 94,452,061 170,289,008 170,800,044
Intangible assets 20 4,826,422 40,326,443 37,111,800
99,278,483 210,615,451 207,911,844
Long term investments 21 7,791,296 92,443 101,224
Long term loans and advances 22 2,794,106 2,359,788 2,200,034
Investment in finance lease 23 84,398 96,113 38,513
109,948,283 213,163,795 210,251,615
Current assets
Stores, spares and loose tools 24 2,872,542 2,940,425 2,742,794
Stock in trade 25 15,758,805 248,586 174,351
Trade debts 26 15,549,034 15,008,567
Loans and advances 27 4,136,133 2,643,569 6,282,398
Investment in finance lease 23 28,305 52,255 53,030
Accrued interest 28 344,801 221,179 727,644
Recoverable from tax authorities 29 16,366,457 22,487,465 19,257,011
Receivable from the Government of Pakistan 30 2,164,072 2,164,072 2,164,072
Deposits, prepayments and other receivables 31 4,994,327 2,770,718 6,267,181
Short term investments 32 18,441,389 26,569,286 28,380,131
Cash and bank balances 33 4,518,546 3,134,442 8,775,467
69,625,377 78,781,031 89,832,646
Total assets 179,573,660 291,944,826 300,084,261

PTCL COMPANY OF PAKISTAN

PROFIT & LOSS ACCOUNT
FOR THE PERIOD ENDED DEC 31
2014 2015 2016
Rs 000 Rs 000 Rs 000
Revenue 81,512,598 118,561,034 117,202,376
Cost of services -55,682,723 -88,054,308 -86,693,235
Gross profit 25,829,875 30,506,726 30,509,141

Administrative and general expenses -9,857,639 -18,291,409 -17,286,850

Selling and marketing expenses -3,290,137 -8,209,247 -7,111,055
-26,500,656 -24,397,905
Operating profit 4,507,563 4,006,070 6,111,236
Voluntary separation scheme cost -8,174,536 -4,601,379
Other income 4,706,389 5,230,068 6,379,225
Finance costs -295,193 -5,218,817 -3,628,626
Loss of property, plant and equipment due to fire -907,230
4,017,321 4,260,456
Share of profit / (loss) from associate -2,343 8,781
Profit before tax 8,011,529 4,014,978 4,269,237
Provision for income tax -2,804,035 -2,146,512 -2,646,390

Profit for the year 5,207,494 1,868,466 1,622,847

 FINANCIAL RATIOS
The following are financial ratios:

1 Liquidity ratio

2 Activity ratio

3 Profitability ratio

4 Debt ratio

5 Market ratio

There details are as follows:

Liquidity Ratio
1: Current Ratio
Current Ratio = Current Assets / Current Liabilities

Years 2014 (000) 2015 (000) 2016 (000)

Current assets 69,625,377 78,781,031 89,832,646
Current liabilities 44,345,349 74,167,232 96,394,811
Current ratio 1.57 1.06 0.93

Interpretation
In the year of 2014 company have current ratio is 1.57 which shows that company have
more current assets than current liabilities and its favorable for the company 1.57 shows
that current assets are enough for paying their current liabilities and in the year of 2015
company have current ratio is 1.06 which shows that current assets which are more than
current liabilities so that`s why company easily pay their liabilities at any time but in 2016
company have current ratio is 0.93 which shows that not enough current assets to pay his
current liabilities because current liabilities are more than current assets . Current ratio
gradually decreased yearly basis which is not favorable for the company.

2: Quick Ratio
Quick ratio = Current Assets - Inventory / Current Liabilities

Years 2014 (000) 2015 (000) 2016 (000)

Current assets 69,625,377 78,781,031 89,832,646
Inventory 15,758,805 15,549,034 15,008,567
Sub total 53,866,572 63,231,997 74,824,079
Current liabilities 44,345,349 74,167,232 96,394,811
Quick ratio 1.21 0.85 0.77
Interpretation
A quick ratio of 1 or greater is occasionally recommended. The quick ratio provides a
better measure of overall liquidity only when a firm`s inventory cannot be easily
converted into cash. In 2014 quick ratio is 1.214 which shows liquidity of current assets to
pay their liabilities is favorable as in 2015 quick ratio is 0.85 is least favorable for firm and
in 2016 quick ratio is 0.77 which is most least favorable for the company liquidity of
current assets to pay their current liabilities. Quick ratio is gradually decreased yearly
basis which is unfavorable for the company.

Activity Ratio
1: Inventory Turnover Ratio
Inventory Turnover Ratio = Cost of goods sold / Inventory

Years 2014 (000) 2015 (000) 2016 (000)

C.G.S 55,682,723 88,054,308 86,693,235
Inventory 15,758,805 15,549,034 15,008,567
Inventory Turnover
3.53 5.66 5.77
Ratio

Interpretation
Inventory turnover commonly measure the activity or liquidity of a firms inventory. In the
year of 2014 inventory turnover ratio is 3.53 which shows that inventory liquidate 3.53
times complete his cycle in the company as in 2015 inventory turnover ratio increased
5.66 times and also in the year of 2016 inventory turnover ratio is 5.77 which shows
inventory liquidate of the company Gradually increased which is favorable.

2: Average age of Inventory

Average age of inventory = 365 / Inventory Turnover

Years 2014 (000) 2015 (000) 2016 (000)

Days 365 365 365
Inventory Turnover 3.53 5.66 5.77
Average age of
103 64 63
inventory

Interpretation
Average age of inventory shows that one inventory cycle complete in how much days? In
the year of 2014 103 days required to complete their one inventory cycle as in the year of
 2015 64 days required and in the year of 2016 same 63 days required to complete the one
inventory cycle. In 2015 and 2016 required less days to complete the one inventory cycle
which are favorable for the company. When company used less days to complete their
one inventory cycle than least days are more favorable for the company.

3: Average Collection Period

Average collection period = Account receivable / Annual sale per day

Annual sale per day = Annual sale / 365

Years 2014 (000) 2015 (000) 2016 (000)

Account Receivable 4,994,327 2,770,718 6,267,181
Annual sale 81,512,598 118,561,034 117,202,376
Days 365 365 365
Sub total 223,322 324,825 321,102
Average Collection
22 8 19
Period

Interpretation
Average collection period shows that average collection of money of the company in
specific period from their account receivables. In the year of 2014 average collection
period is 22 days and in 2015 average collection period is 8 days which are less than 2014
days and in 2016 again 19 days which are increased from previous year 2015. In these
years 2015 is more favorable for the company because in this period average collection
period is lesser than others years periods. When company have least average collection
period than it’s most favorable for the company.

4: Average Payment Period

A.P.P = Account Payable / Annual Purchases per day
Annual Purchases per day = Annual Purchase / 365

Years 2014 (000) 2015 (000) 2016 (000)

Account payable 44,345,349 59,189,010 71,463,996
Annual purchases 15,758,805 15,549,034 15,008,567
Days 365 365 365
Sub total 43174 42600 41119
Average Payment
1027 1389 1737
Period
Interpretation
Average payment period shows that the average amount of time needed to pay accounts
payable. If more days provided by the account payables towards company than it`s
beneficial for the company but at the same time if company return or pay their accounts
payable in less days than it`s favorable for the company. In the year of 2014 1024 days of
accounting period to pay their accounts payable in 2015 1389 days of accounting period
to pay their accounts payable in in 2016 1737 days of accounting period to pay their
accounts payable gradually increased time duration of accounts payable it`s favorable for
the company but in reality it`s unfavorable for the company because if company pay their
accounts payable timely than customers more satisfy with the financial position of the
company.
5: Total Assets Turnover
Total Assets Turnover = Sales / Total Assets

Years 2014 (000) 2015 (000) 2016 (000)

Sales 81,512,598 118,561,034 117,202,376
Total Assets 179,573,660 291,944,826 300,084,261
Total Assets Turnover 0.454 0.406 0.391

Interpretation
Total assets turnover shows that how much assets are used for increased in efficiency of
sales of the company. Efficiency of management is also measured through the total assets
turnover ratio. In 2014 ratio is 0.454 this means the company turnover its assets 0.454
times per year. In 2015 ratio is 0.406 this means the company turnover its assets 0.406
times per year. In 2016 ratio is 0.391 this means the company turnover its assets 0.391
times per year. The higher a firm`s total assets turnover the more efficiently its assets has
been used. Comparatively 2014 is more better than other years because in 2014 assets
are more efficiently used

Debt Ratios
1: Debt ratio
Debt ratio = Total Liabilities / Total Assets

Years 2014 (000) 2015 (000) 2016 (000)

Total Liabilities 87,430,069 195,358,760 211,897,543
Total Assets 179,573,660 291,944,826 300,084,261
Debt ratio 0.487 0.669 0.706
Interpretation
It`s measures the proportion of total assets financed by the firms creditors. In 2014 debt
ratio is 0.487 which is 48.7% used debts for purchasing their assets. In 2015 ratio is 0.669
which is 66.9% used debts for purchasing their assets. In 2016 ratio is 0.76 which is 76%
used debts for purchasing their assets. Lower the ratio is best favorable for the company
in this company gradually ratio increased which is unfavorable for the company.

2: Time Interest Earned Ratio

Time Interest Earned Ratio = EBIT / Interest

Years 2014 (000) 2015 (000) 2016 (000)

EBIT/O.P 4,507,563 4,006,070 6,111,236
Interest 0 0 0
TIE ratio 4,507,563 4,006,070 6,111,236

Interpretation
EBIT shows that how much times interest earned by the company. In the year of 2014,
2015 and 2016 interest is 0. So that`s why interest earned by the company is 0.

Profitability Ratio
1: Gross Profit Margin
Gross Profit Margin = Gross Profit / Sales * 100
Gross Profit Margin = Sales – CGS / Sales * 100

Years 2014 (000) 2015 (000) 2016 (000)

Gross Profit 25,829,875 30,506,726 30,509,141
Sales 81,512,598 118,561,034 117,202,376
G.P Margin 31.69% 25.73% 26.03%
Interpretation
Gross profit margin means that it measures percentage of each sales rupees remaining
after the firm has paid for its goods. In the 2014 g.p margin is 31.69% it means that firm
earn 31.69 paisa per rupees same as 2015 firm earn 25.73 paisa per rupees in the 2016
firm earns 26.03 paisa per rupees. Higher the g.p margin shows more profitability of the
company per rupees 2014 is more profitable for as compared to the other`s years g.p
margin remaining the part of rupees after earning per rupees includes CGS.
2: Operating Profit Margin
Operating Profit Margin = Operating Profit / Sales * 100
Operating Profit Margin = EBIT / Sales * 100

Years 2014 (000) 2015 (000) 2016 (000)

Operation Profit 4,507,563 4,006,070 6,111,236
Sales 81,512,598 118,561,034 117,202,376
O.P Margin 5.53% 3.38% 5.21%
Interpretation
Operating profit margin means that it measure the percentage of each sales rupees remaining
after all cost and expenses other than interest, taxes & preferred stock dividend are deducted the
pure profits earned on each sale rupees. If company sale is 1 rupees than in 2014 company earns
5.53 paisa on per rupees and in 2015 company earns 3.38 paisa on per rupees and in 2017
company earns 5.21 paisa per rupees remaining the part of rupees includes interest, taxes &
preferred stock dividend. 2014 is more favorable for the company because in 2014 company earns
more O.P margin on its sales as compared to the other years.

3: Net Profit Margin

Net Profit Margin = Net Profit / Sales * 100
Net Profit Margin = Earnings available for common stock holders / sales * 100

Years 2014 (000) 2015 (000) 2016 (000)

Net Profit 5,207,494 1,868,466 1,622,847
Sales 81,512,598 118,561,034 117,202,376
N.P Margin 6.39% 1.58% 1.38%
Interpretation
Net Profit Margin means that its measure the percentage of each sale rupees remaining
after all cost and expenses including interest, taxes & preferred stock dividend have been
deducted. If company`s sale is 1 rupees than in 2014 company earns 6.39 paisa on per rupees in
2015 company earns 1.58 paisa on per rupees in 2016 company earns 1.38 paisa on per rupees. In
2014 company earns more net profit rather than others year’s net profit excluding all cost and
expenses including interest, taxes & preferred stock dividend. When company earns more net
profit margin than company is more favorable.

4: Earnings per Share

Earnings per Share = Earnings available for common stock holders / No. of outstanding
Shares of common stock

Years 2014 (000) 2015 (000) 2016 (000)

Earnings Per Share 0.78 1.72 1.34
Interpretation
Earnings per share represents the number of rupees earned during the period on behalf
of each outstanding share of common stock. In 2014 company earnings per share is 0.78
rupees on each share of common stock as in 2015 company earnings per share is 1.72
rupees on each share of common stock in 2016 company earnings per share is 1.34
rupees on each share of common stock. 2015 is best year in which company earns more
earnings per share rather than others year`s earnings per share.

5: Dividend per Share

Dividend per Share = Total Dividend / No. of outstanding Shares of common stock

Years 2014 (000) 2015 (000) 2016 (000)

Dividend Per Share 1.5 1 1

Interpretation
Dividend per share means that how much company paid to their common stock holders.
If company paid more dividend to their stock holders than investors attract towards the
company. In 2014 1.5 rupees paid by the company on per share of common stock in 2015
1 rupees paid by the company on per share of common stock and in 2016 again 1 rupees
paid by the company on per share of common stock. 2014 is more preferable for the
common stock holders because they get more dividend in this year rather than other`s
years.

6: Return on Assets
Return on Assets = Earnings available for common stock holders / Total Assets * 100

Years 2014 (000) 2015 (000) 2016 (000)

Earnings available
for common stock 5,207,494 1,868,466 1,622,847
holders
Total Assets 179,573,660 291,944,826 300,084,261
Return on Assets 2.90% 0.64% 0.54%
Interpretation
Return on Assets measures the overall effectiveness of management in generating profit
with its available assets also called the return on investment. Means that if company
management used 1 rupees assets in 2014 than they generate 2.90 paisa on per rupees.
In 2015 if company management used 1 rupees assets than they generate 0.64 paisa on
per rupees. In 2016 if company management used 1 rupees assets than they generate
0.54 paisa on per rupees. 2014 is best year because management used their assets to
generating more profit rather than other years.
7: Return on Equity
Return on Equity = Earnings available for common stock holders / Total Equity * 100

Years 2014 (000) 2015 (000) 2016 (000)

Earnings available
for common stock 5,207,494 1,868,466 1,622,847
holders
Total Equity 92,143,591 96,586,066 88,186,718
Return on Equity 5.65% 1.93% 1.84%
Interpretation
Return on Equity measures the return earned on the total equity investment in the firm.
Company earns 5.65 paisa on per rupees in 2014. Company earns 1.93 paisa on per
rupees in 2015. Company earns 1.84 paisa on per rupees in 2016. Company return on
equity gradually decreased which is unfavorable for the company. More the return
earned on equity means more profitable for the company.

8: Return on Common Stock Equity

Return on Common Stock Equity = Earnings available for common stock holders / Total
common equity

Years 2014 (000) 2015 (000) 2016 (000)

Earnings available
for common stock 5,207,494 1,868,466 1,622,847
holders
Total common
51,000,000 51,000,000 51,000,000
equity
Return on
Common Stock 10.21% 3.66% 3.18%
Equity
Interpretation
Return on Common Stock Equity measures the return earned on the common stock
holder investment in the firm. If total common equity is one rupees than in 2014 company
earns 10.21 paisa on per rupees total common stock equity also in 2015 company earns
3.66 paisa on per rupees of total common stock equity in 2016 company earns 3.18 paisa
on per rupees of total common stock equity. The best year is 2014 because in 2014 more
earnings by using company total common stock equity.