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Final report
Submitted to:
Mr. Taqi zidhi
Submitted By:
M Imran (BBA-spo9-086)
Department:
Management Sciences
Topic:
Financial Ratio’s
D G KHAN Cement
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CONTENTS
1) Title page 1
2) Cover Letter 2
3) Letter of Transmittal 5
4) Acknowledgement 6
5) Mission and vision statements 7
I. Mission 7
II. Vision 7
6) DIRECTORS’ REPORT 8
III. INDUSTRY REVIEW 8
IV. PLANT PERFORMANCE 8
V. SALES 8
VI. OPERATING RESULTS 9
7) Financial Ratios Analysis 10
8) Liquidity Ratios 10
VII. Current Ratio 10
VIII. Quick Ratio 11
9) Assets management ratio 12
IX. Day sale out 12
X. Inventory turn over 12
XI. Fixed Assets Turnover 13
XII. Total Assets Turnover 13
10) Debt Management 14
XIII. Time interest earned 14
XIV. Debt ratio 14
11) Profitability 15
XV. Profit margin 15
XVI. Basic Earning Power 15
XVII. Return on equity 16
XVIII. Return on assets 16
XIX. Return on Fixed assets 17
12) Market Ratio 17
XX. Price to earning ratio 17
XXI. Price To Cash flow 18
XXII. Market to book value 18
13) Bibliography 19
14) Glossary 20
15) Commonly used symbols 21
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Letter of Transmittal
Sir,
We herewith present our “final report” authorized by you as a requirement by course .in this
report we have tried to provide analysis of financial statement of D G Khan Cement (nashat
group) Ltd.
We hope we have covered all that was required for the report.
You’re sincerely,
In the name of”ALLAH” the most beneficent and merciful who gave us strength and
knowledge to complete the report. This report is a part of our course “Business
Finance”. This has proved to be a great experience. This report is the combine effort
of all group members
We would like to gratitude to our finance teacher Mr.Taqi Zaidhi who gave us this
opportunity to fulfill this report .we would like to thank our class fallow who
participated in a focus group session. They gave us many helpful comments which
help us a lot in preparing our report.
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Vision Statement And Mission Statement Of D G Khan Cement
Ltd
Mission Statement
Vision Statement
I am delighted to present annual report of D.G. Khan Cement Company Ltd. for the year ended June 30, 2010
along with financial statements and auditor's report thereon.
INDUSTRY REVIEW
Poor economic indexes continue to flow on back of bleak security issues across the country, coupled with meager
business activities. Waves of terrorist activities in all parts of the country seriously affected the investment
climate in the country. Going forward growing concern of power outage and gas management badly hit the
wheels of the country. Almost no major developmental and infrastructural activity witnessed during FY 2010.
GDP growth during the FY 2010 expected to be around 4.1% as announced in Federal Budget FY 2011 and target
set is 4.5%
for the next year which looks very ambitious specially in the aftermath of devastating flood across Pakistan. Last
year both federal and provincial Govt. slashed developmental expenditure on the wake of financial crunch and
diverted the funds to other important areas, which affected the infrastructure and development projects.
PLANT PERFORMANCE
Plant performance during the period under review was good. The three Kilns operated well above their rated
capacity. This was made possible due to excellent preventive maintenance of the plants and highly professional
and skilled team of engineers and technicians. The machines run factor was also
Good. The Kiln-3 at Khirper site operated 347 days which is a record.
SALES
During the period under report cement prices in the country were highly volatile and witnessed a steep decline to
ever lowest. In addition, cement prices in international market were also not very much attractive compared with
prices in local market. Your company focused more on domestic market due to better net retention sales prices.
Total sales in the local market witnessed a growth of about 45% compared to corresponding period. Whereas
export of cement plunged by nearly 20% from the last year. Overall increase in sales of cement is about 28% from
the last year.
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OPERATING RESULTS
Sales revenue during period under review declined by nearly 10% despite volumetric growth of about 28%
compared with corresponding year. The decline in sale revenue attributed to sluggish cement prices in the
country. Stiff competition emanated in the first quarter of FY 2010 and later turned into a price war. Cement
manufacturers in an attempt to capture market share from others lowered cement prices which bodes negatively
on revenues.
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Financial Ratios Analysis:
A statistic has little value in isolation. Hence a profit figure of 100 million is meaningless unless it is relate to
either the firms turnover or values of it assets.
Accounting ratio attempt to highlight the relationship between significant item in account of a firm.
Financial ratios are the analyst the microscope they allow them to get a better view of the firm financial health
than just looking at the raw financial statement.
Ratio are used both internal and external analysts.
Internal uses:
1) Planning
2) Evaluating of management
External use
1) credit granting
2) Performance monitoring
3) Investment decision
4) Making Policies
Categories of financial Ratio
The accounting ratio can be grouped in 5 categories
1) Liquidity ratio shows the extant to which the firm can meet it financial obligations.
2) Assets management ratio how effective the firm manage its assets.
3) Debt management ratio exam the degree to which firm uses debt financing.
4) Profitability ratio relates profit to sales and assets.
5) Market values measures of return on assets.
Liquidity Ratios
2010
Current Assets
Current Ratio=
Current Liabilities
16,417,492
13,786,189
Current Ratio=1.190
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2009
Current Assets
Current Ratio=
Current Liabilities
13,287,592
15,834,799
Current Ratio=0.8391
Analysis:
In 2010 the company current asset are high then the current assets of 2009 so the 2010 current ratio is high
Quick Ratio:
2010
Current asset –inventory
Current liabilities
16,417,492-1,036,876
13,786,189
Quick Ratio=1.11565
2009
Current asset –inventory
Current liabilities
13,287,592-899,836
15,834,799
Quick Ratio=0.7823
Analysis:
Because of the current assets of 2010 is high then 2009 so it increase the quick ratio of 2010.
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Assets management ratio:
Assets management ratio tell how efficient company utilized it total assets for generating sales.
513966
18038209/365
Day sale out = 10.4
Day sale out\
2010
Average receive able
303949
16275354/365
Day sale out = 6.81
Analysis:
The average receive able and the saleof 2010 less then 2oo9
sales
Inventory
18,038,209
899836
Inventory turn over=20.04
sales
Inventory
16,275,354
1,036,876
Fixed Assets
18,038,209
29,435,449
Fixed assets turnover=0.6128
Fixed Assets
16,275,354
30,628,551
Fixed assets turnover=0.531
Analysis
Because the fix assets of the 2010 is high so the fixed assets turnover of 2010 is less then 2009 fixed assets
turnover
Total Assets
18,038,209
42,723,041
total assets turnover=0.4221
total Assets
16,275,354
47,046,043
Total assets turnover=0.3459
Analysis:
Because the total asset of 2010 is high so the total assets turnover is less then2009
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Debt Management:
Shows the extent the firm is financed by debt
2009
Debt ratio
Total DEBT
Total Assets
21804559
42,723,041
total debt ratio=0.5103
2010
Debt ratio
Total DEBT
Total Assets
20526813
47,046,043
Total debt ratio=0.4363
Analysis
Because the debt of 2010 is less so the total debt ra - 14 -tio is also less
Analysis:
Because interest charge less then2009 interest charge so the timed interest earned is low
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Profitability:
Profit margin:
2009
Net income
Sales
(10,175,979)
18,038,209
profit margin=(0.564)
Profit margin:
2010
Net income
Sales
4,383,780)
16,275,354
profit margin=0.269
Analysis:
Because the 2009 net income is in loss so the gross margin of 2010 is high
Ebit
TA
3,383,258
42,723,041
Basic Earning Power=0.0791
Ebit
TA
2,261,163
47,046,043
Basic Earning Power=0.0480
Analysis:
NI
Total equity
525,581
20,918,442
ROE=0.0251
Return on equity:
2010
NI
Total equity
233,022
26,519,220
ROE=0.0081
Analysis:
Because the net income of 2010is less then 2009 so the return on equity is low in 2010
Return on assets
2009
NI
Total assets
525,581
42,723,041
ROA=0.012
Return on assets:
2010
NI
Total Assets
233,022
47,046,043
ROA=0.0049
Analysis:
The net income of 2010 is less and the total assets are high so the return on assets are low
Return on Fixed assets: 17
2009
NI
Total fixed assets
525,581
29,435,449
ROfa=0.0187
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NI
Total equity
233,022
30,628,551
ROfa=0.0076
Analysis:
The net income is les and the fixed assets are high so the Return on fixed assets are low then 2009
Market Ratio:
2010
Share Pries
EPS
100
072
Price to earning ratio=138.8
Bibliography
http://02e4f8d.netsolhost.com/financial-reports/Annual2010.pdf
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Glossary
1. Acknowledgement
2. Assets management ratio
3. Basic Earning Power
4. Bibliography
5. Current Ratio
6. Day sale out
7. Debt Management
8. Debt ratio
9. DIRECTORS’ REPORT
10.Financial Ratios Analysis
11.Fixed Assets Turnover
12.INDUSTRY REVIEW
13.Inventory turn over
14.Letter of Transmittal
15.Liquidity Ratios
16.Market Ratio
17.Market to book value
18.Mission and vision statements
19.Mission
20.OPERATING RESULTS
21.PLANT PERFORMANCE
22.Profitability
23.Profit margin
24.Price to earning ratio
25.Price To Cash flow
26.Quick Ratio
27.Return on assets
28.Return on Fixed assets
29.Return on equity
30.SALES
31.Time interest earned
32.Total Assets Turnover
33.vision
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