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Final report
Submitted to:
Mr. Taqi zidhi
Submitted By:

Sufian Rasul (BBA-sp09-129)

Taimoor Raees (BBA-sp09-138)

M Imran (BBA-spo9-086)

Naveed Akbar (BBA-sp09-107)

Rao Farooq (BBa-sp09-114)

Jamal Abudurehman (BBA-sp09-062)

Department:
Management Sciences

Topic:
Financial Ratio’s

Comsats Institute of Information Technology Lahore


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Analysis of Financial Ratio’s Of

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

Dec 29, 2010

Mr. Taqi Zaidhi

Course Instructor, Business Finance

Comsats institute of information technology Lahore.

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,

Sufian rasul (BBA-sp09-129)


Taimoor Raees (BBA-sp09-138)
M Imran (BBA-sp09-086)
Naveed Akabar (BBa-sp09-107)
Rao Farooq (BBA-sp09-)
Jamal Abdulrehman (BBA-sp09-)
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Acknowledgement

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

To provide quality products to customers and explore new


Markets to promote/expand sales of the Company through
Good governance and foster a sound and dynamic team,
So as to achieve optimum prices of products of the Company
For sustainable and equitable growth and prosperity of the
Company.

Vision Statement

To transform the Company into a modern and dynamic


Cement manufacturing company with qualified
professionals
And fully equipped to play a meaningful role on sustainable
Basis in the economy of Pakistan.
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DIRECTORS’ REPORT

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

- Net Sales 16,275,35 18,038,209


- Cost of Sales 13,569,994 12,358,479
- Gross Profit 2,705,360 5,679,730
- After tax profit 233,022 525,581
- EPS (BASIC) Rs. /Share 0.72 1.63

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

A fully liquidity analysis require the use of cash budget.

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.

Day sale out\


2009
Average receive able

Average sales per year

513966
18038209/365
Day sale out = 10.4
Day sale out\
2010
Average receive able

Average sales per year

303949
16275354/365
Day sale out = 6.81

Analysis:

The average receive able and the saleof 2010 less then 2oo9

Inventory turn over:


2009

sales
Inventory

18,038,209
899836
Inventory turn over=20.04

Inventory turn over:


2010

sales
Inventory

16,275,354
1,036,876

Inventory turn over=15.696


Analysis:
Because the inventory of 2010is high so the inventory turn over is less then 2009 inventory turnover
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Fixed Assets Turnover:


2009
Sales

Fixed Assets

18,038,209
29,435,449
Fixed assets turnover=0.6128

Fixed Assets Turnover:


2010
Sales

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 Turnover:


2009
Sales

Total Assets

18,038,209
42,723,041
total assets turnover=0.4221

T0tal Assets Turnover:


2010
Sales

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

Time interest earned


2009
Ebit
Interest charges
3,383,258
2,606,358
Time interest earned=1.2980

Time interest earned


2010
Ebit
Interest charges
2,261,163
1,902,760
Time interest earned=1.1883

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

Basic Earning Power:


2009

Ebit
TA

3,383,258
42,723,041
Basic Earning Power=0.0791

Basic Earning Power:


2010

Ebit
TA

2,261,163
47,046,043
Basic Earning Power=0.0480
Analysis:

Because EBIT of the 2010 is low so basic earning power low


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Return on equity:
2009

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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Return on Fixed Assets:


2010

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:

Price to earning ratio


2009
Share Pries
EPS
100
1.63
Price to earning ratio=61.34

2010
Share Pries
EPS
100
072
Price to earning ratio=138.8

Price To Cash flow


2009
Pries per share
Cash flow per share
100
(0.026)
Price To Cash flow=-3903
2010 - 18
Pries per share
Cash flow per share
100
(0.029)
Price To Cash flow=-3448

Market to book value -


2009
Market pries per share
Bv of share
30
100
Market to book value=0.3
2010
Market pries per share
Bv of share
39.2
100
Market to book value=0.392
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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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Commonly used symbol’s

Bv: Book value


EPS: Earning Per Share
ROfa: Return on fixed assets
NI: Net Income
ROA: Return on Assets
ROE: return on equity
TA: Total Assets
Ebit: Earning before Interest on tax
TE: Total Equity