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HAMZA MALIK
HAMMAD KHAN
SHEHRYAR FAZAL
Introduction
Board of Directors:
Expenses
Misc expenses 7,000,000 1.1% 7,700,000 8,470,000 9,317,000 10,248,700
Wages & Salaries 56,280,000 9.0% 61,908,000 68,098,800 74,908,680 82,399,548
Administrative expenses 9,000,000 1.4% 9,900,000 10,890,000 11,979,000 13,176,900
Office supplies 2,500,000 0.4% 2,750,000 3,025,000 3,327,500 3,660,250
Rent 6,000,000 1.0% 6,600,000 7,260,000 7,986,000 8,784,600
Repair & Maintenance 10,000,000 1.6% 11,000,000 12,100,000 13,310,000 14,641,000
Depreciation expense 140,000,000 22.4% 140,000,000 140,000,000 140,000,000 140,000,000
Total expenses 230,780,000 37.0% 253,858,000 249,843,800 307,168,180 337,884,998
-
Other revenue -
-
EBIT 392,920,000 63.0% 432,212,000 504,833,200 522,976,520 575,274,172
Interest 84,171,948 13.5% 70,167,730 53,912,270 35,043,673 13,141,862
EBT 308,748,052 49.5% 339,622,857 450,920,930 410,943,657 562,132,310
Taxes 89,536,935 14.4% 98,490,629 130,767,070 119,173,661 163,018,370
NI 219,211,117 35.1% 241,132,229 320,153,860 291,769,997 399,113,940
Balance Sheet (Asset side)
2020 2021 % 2022 2023 2024 2025
Assets
PP&E 975,000,000 975,000,000 820,000,000 665,000,000 510,000,000 355,000,000
Land 200,000,000 200,000,000 200,000,000 200,000,000 200,000,000 200,000,000
Equipment 685,000,000 685,000,000 548,000,000 411,000,000 274,000,000 137,000,000
Vehicle 30,000,000 30,000,000 24,000,000 18,000,000 12,000,000 6,000,000
Plant 53,000,000 53,000,000 42,400,000 31,800,000 21,200,000 10,600,000
Furniture and Fixtures 7,000,000 7,000,000 5,600,000 4,200,000 2,800,000 1,400,000
Acc. Depriciation 155,000,000 310,000,000 465,000,000 620,000,000 775,000,000
Net PP&E 975,000,000 820,000,000 665,000,000 510,000,000 355,000,000 200,000,000
Profitability
Gross Profit Margin on Sales 100% 100% 100% 100% 100%
Operating Profit Margin on Sales 63% 65.0% 66.9% 68.6% 70.1%
Before Tax Margin on Sales 49.5% 54.8% 59.8% 64.4% 68.7%
Net profit margin on sales 35.15% 38.92% 42.42% 45.69% 48.76%
EPS 0 Cash Dividend = 0 0 0 0 0
Asset Productivity Ratio
Asset Productivity
Total Asset Turnover 0.55 0.53 0.50 0.48 0.45
Fixed Asset Turnover 0.76 1.03 1.48 2.34 4.57
Turnover of Inventory N/A N/A N/A N/A N/A
Turnover of A/R 2.17 2.18 2.10 2.10 2.10
Liquidity Ratio
Liquidity
Current Ratio N/A CL = 0 N/A N/A N/A N/A
Quick Ratio N/A CL = 0 N/A N/A N/A N/A
WC & NWC 312,095,568 632,967,233 990,745,867 1,388,835,765 1,830,935,610
NWC to Sales 0.50 0.92 1.31 1.67 2.01
Days Sale in Receivables (365*AR/Sales) 168 168 174 174 174
Days Sale in Inventory (365*Inv/Sales) N/A N/A N/A N/A N/A
Operating Cycle N/A CGS = 0 N/A N/A N/A N/A
Day sales receivable+Day
sales inventory-day sales
Cash Conversion Cycle 168.01 payable 167.62 174.20 174.20 174.20
Turnover of Inventory N/A CGS = 0 N/A N/A N/A N/A
Turnover of Receivable 2.17 2.18 2.10 2.10 2.10
Financial Leverage
Financial Leverage
Debt to equity 0.83 0.46 0.24 0.10 0.00
TL/TA 0.45 0.32 0.20 0.09 0.00
TA/OE (Financial Leverage) 1.83 1.46 1.24 1.10 1.00
TA Financing 60/40
Debt Coverage Ratio (EBIT/Interest Expense) 4.67 6.36 9.36 16.25 48.72
CF Coverage Ratio (OCF/Interest Expense) 5.27 6.80 9.54 15.82 45.53
Debt Service Coverage Ratio (OCF/Debt Service) 2.59 Debt Service (12 month Ammortization) 2.79 3.00 3.24 3.49
KD (Interest expense/Interest Bearing Debt) 0.164 0.170 0.183 0.222 N/A
Return on Capital
Return on Capital
Return on invested capital (EBIT(1-t)/Total Capital
Invested) 27.90% 31.68% 35.84% 40.42% 45.46%
ROA 19.36% 20.57% 21.33% 21.75% 21.92%
ROE 35.40% 30.13% 26.54% 23.92% 21.92%
WACC
WACC= 0.6*0.15(1-0.29) + 0.4*0.16 = 12.79%
Wd=60%=0.6
Wc=40%=0.4
Kd=15%(interest rate charged by the bank)
Kc=16%(Return that we expect to get on our investment)
Tax rate=29%=0.29
Capital Budgeting
NPV
Year 0 1 2 3 4 5
Cash outflow 1,000,000,000.00
Cash inflow 219,211,117.03 241,132,228.73 320,153,859.96 291,769,996.76 399,113,939.82
NPV 5,955,061.31
IRR 13.01%
Payback period 3.75 years
Discounted payback 4.97
AAR 2.94
Profitability index 1.01
Discounted payback
Year 1 2 3 4 5
Current value 194,353,326.56 189,545,756.91 223,124,341.80 180,284,439.47 218,647,196.58
Discounted payback (805,646,673.44) (616,100,916.53) (392,976,574.73) (212,692,135.26) 5,955,061.31
Payback
Year 1 2 3 4 5
Payback period (780,788,882.97) (539,656,654.24) (219,502,794.28) 72,267,202.48
Conclusion
Our conclusion is that the project is feasible.
The solar energy business is a highly lucrative business but the challenges that the private business
faces with the government institute is the payback period.
All the ratio analysis, NPV and Discounted payback support the project feasibility.
Research on Nishat and Engro power business shows that the profits are high but the trade debts is
almost close to 50%.
Conclusion
Private and Government sector needs to work together to come up with a workable solution to
resolve the debt issue that the private power sector is facing in order to boost the support and
economy.
The country needs to boost the energy sector to facilitate business sector to produce goods at
market competitive rates which will increase our exports and will decrease our trade deficit.
Thankyou