Advanced Financial Management

Attock Cement
Submitted By:
Ahsan Shahid
Saad Bin Zahid
Sehrish Shuja
Overview of the presentation
Short term liquidity
operating cycle
long term solvency
Cost of Capital
ROA, ROE, Return on investment,
Break even, current operational level,
effective use of leverage
market price of the share.
Industry Analysis
We have taken DGCK results and ratios as a
representation of industry analysis
Attock Cement
Company incorporated in 1981
Listed on the KSE on june 2002
ACPL, is part of the Pharaon Group, which in addition
to investment in Cement industry has diversified
stakes in Pakistan mainly in the Oil and Gas Sector.
Attock Cement claims pioneer status in bringing the
Pre-calcination / Pre-heating dry process technology
to Pakistan.
Brand Name Falcon
Attock Cement
PRODUCTS
OPC
SRC
Portland Blast Furnace Slag Cement (PBFSC)
 Financial Ratios

Financial Ratios Ratios Attock Cement

 INDUSTRY(DGCK
2007 2008 2009 )
Liquidity Ratios
Current ratio 1.269 1.5099 2.43 1.59
Quick Ratio 0.996 0.457 1.36 1.56
Leverage Ratios
Total Debt Ratio 41.30% 39.85% 31.49% 42.15% 
Debt to Equity 70.36% 66.24% 45.75% 72.85% 
Times Interest Earned 12.6915 5.39 17.6 0.86 
DOL 0.027 -0.034 2.20 - 
DFL 0.011 1.260 1.58 - 
DCL 0.000 -0.043 3.47
Activity Ratios
Receivable Turnover (times) 229.2 100.232 183.07 33.93 
Average Collection Period (days) 1.5707 3.5917 1.97 10.59 
Inventory Turnover (times) 10.8734 9.4925 6.77 25.72 
Average age of inventory 33.1082 37.9248 53.14 14.00 
Operating cycle 34.6789 41.5165 55.11 24.59 
Total Asset Turnover (times) 0.788 0.8502 1.22 0.24 
Profitability Ratios
Gross Profit Margin 34.09% 22.12% 31.83% 15.39% 
Net Profit Margin 17.46% 8.72% 17.50% -0.43% 
Return on Assets 13.77% 7.41% 21.41% -0.91% 
Return on Investment 23.45% 12.32% 31.24% -0.91% 
Return on Equity 23.45% 12.32% 31.24% -.018% 
Market Ratios
Earnings Per Share PKR 11.04 PKR 6.03 PKR 20.89 -0.21 
divident payout 45.30% 74.50% 15.70% - 
P/B ratio 12.245 7.713 4.875 - 
divident per share PKR 4.50 PKR 1.5 PKR 5.00 - 
P/E Ratio 11.09 12.791 2.3336525 319.71 
Market Price of Share PKR 122.45 PKR 77.13 PKR 48.75 35.10 
Shares outstanding 72163 72163 72163 - 
Company :- Attock Cement Pakistan Limited Days in a Year 360 Days

Deprication, Finance cost, rent and insurace Is taken as to be fixed costs in BE

Short Term Liquidity
Current Ratio
Fy 07 1.29, FY 08 1.5,Fy 09 2.43
DGCK FY 09 1.59
investments in cash and bank balances, short term
investments and stock in trade, as compared to last year.
No increase in significant levels in liabilities
Quick Ratio
has also shown an improvement from almost 1.0 in FY 07
to 1.36 in year 2009
 60
Average age of inventory

Operating Cycle
50

40

30

20

10

0
1 2 3
Activity Ratios
Receivable Turnover (times) 229.2 100.232 183.07 33.93 
Average Collection Period (days) 1.5707 3.5917 1.97 10.59 
Inventory Turnover (times) 10.8734 9.4925 6.77 25.72 
Average age of inventory 33.1082 37.9248 53.14 14.00  Operating Cycle in
Operating cycle 34.6789 41.5165 55.11 24.59  60 days
Total Asset Turnover (times) 0.788 0.8502 1.22 0.24 
50
40
30
20
10
0
1 2 3
 Equit
y
30% Debt
70%

LONG TERM SOLVENCY

42.15%
Total Debt Ratio 41.30% 39.85% 31.49%  
72.85%
Debt to Equity 70.36% 66.24% 45.75%  
Times Interest Earned 12.6915 5.39 17.6 0.86 
DOL 0.027 -0.034 2.20 - 
DFL 0.011 1.260 1.58 - 
Debt
DCL 0.000 -0.043 3.47
Equity 45%
55%

•Debt Ratio
•In the last three years Attock Cement has made a significant effort in order to
improve its debt to equity ratio.
•In 2007 70% of the Assets were financed by the long term and short term
debt.
•Reduced Debt because of increased financial costs
LONG TERM SOLVENCY
TIE ratio
Times interest Earned
Increase in EBIT by 154% 20
Ratio
18
16
Decrease in Finance cost in FY09 14
12
10
8
6
4
2
0
1 2 3
DOL DFL DCL
•means that a 1% increase in 4 egree of Combined Leverage
D
sales would increase net 2008 2009
income
by 3.47% in FY 09. 3
•Low risks from operating
2
expenses and Finance
Charges 2
•If a future sales forecast is
slightly higher than what
actually occurs, this could
lead to a small difference 0
between actual and budgeted
cash flow, which will not 0
1 2
greatly affect a firm's future - DOL DFL DCL
operating ability.
Analysis of Solvency Risk
A decline in debt ratio indicates that Attock Cement is
able to control its leverage impressively despite high
financing costs.
Its DCL ratios also show that the company financial
and operational risks are at very low levels as
compared with the industry which has an average DOL
of 13%. In the long run Attock would not have any
major risks associated with solvency and it is expected
to outperform the industry in the next year as well.
Breakeven Analysis

Components
Fixed Cost
 Administrative Expense
 Finance Cost
 Depreciation (vehicles)

Variable Cost
 COGS
 Other Operating Expenses

Sales
Performance
2008 2009
 Rs 1.86 Billion Rs 1.006 Billion
46.08% Decrease in
Breakeven level
70.15% Increase in Sales
5.1% Increase in Fixed Cost
Operational Level (Sales – B.E.)
2008 2009
 Rs 3.134 Billion Rs 7.503 Billion
139% Increase in Operational
Level
Market Ratios

The EPS is seen to EPS in PKR

decrease in 2008
majorly because of
decrease in income 20.89
in 2008. With net
sales almost 11.04 6.03
doubling in the year
2009 the EPS has
shown an 1 2 3

improvement
 A higher P/E ratio in FY08
P/E Ratio
suggests that investors are
14
expecting higher earnings
12 growth in the future
compared to the overall
10
market as they are paying
more for today’s earnings in
8
anticipation of future
6 earnings growth

0
1 2 3
Conclusion
To study the financial performance of Attock Cement,
based on measures such as liquidity, efficiency,
profitability, leverage and coverage
Huge impact of the economic condition of a nation on
its industrial environment in general and on every
player of each industry
2008 proved as a very crucial economic year
Attock Cement impressively controlled its venture in
this risky area of financing through reduced long term
financing, lesser trade payables and accrued markup
Attock Cement displayed greater prudence in
financing its assets within a challenging economic
situation in order to keep its head floating above water.
Attock Cement has displayed better receivable and
credit management as against D. G. Cement,
indicating an upgraded quality of receivables and the
firm’s success in its collection policies in year 2008 as
well
During FY08 as a result of the SBP’s tight monetary
stance, leading to higher lending rates
Inflationary trend prevailing in the economy cast its
effect on the prices of raw materials such as coal and
furnace oil, leading to greater cost of production and
subsequent greater distribution expenses
Attock Cement in year 2008 as well was enjoying
better profits in comparison to whole industry and as
far as 2009 is concerned it has over smarted every one
by 70% increase in sales
Recommendations
The cement industry is one of the strengths of Pakistan’s
economy, and has potential to produce more to meet
international demands. It should explore as many regions it
can cover, so not only it can expand its own market but also
raise its standards to global level.
The new budget announces a relaxed monetary policy,
interests rates will be cut down and concessional benefits
from the government for local development in FY10. The
industry must take advantage of the upcoming expected
lower interest rates but always be on alert to keep debt on
lower side and finance more through equity.
Adding more production capacity to boost sales,
as there is expected potential for new projects and
requirement to complete existing projects and
upkeep..
Passing on the cut from Fed to consumers to
promote demand and encourage investment
ACPL requires to improve its liquidity ratios to
meet its short term payables and maintain good
cash flow for investments and reinvestments.
Collection policy needs to be improved, the
collection criteria should be made stricter.