awami supermarkets ltd

8/8/2019 Awami Supermarkets Ltd

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Awami Supermarkets Ltd.Summarized Income Statements

2001 2002 2003Rs Million Rs Million Rs Million

Sales 1200 1280 1,540Cost of Sales 720 780 942Gross Profit 480 500 598

Administrative Overheads 108 128 164Marketing Overheads 180 170 165Financial Overheads 72 72 84

Total Overheads 360 370 413Profit before Tax 120 130 185

Less Corporation Tax 48 52 74

Profit after Tax 72 78 122Retained earning brought forward 0 30 33

Profit available for appropriation 72 108 155Dividends 50 75 122

Retained Earnings carried forward 22 33 33

No of Supermarkets at the end of year

80 100 130



Awami Supermarkets Ltd.Summarized Balance Sheets

2001 2002 2003Rs. Million Rs. Million Rs. Million

Paid Up Share Capital(Rs. 10 ordinary Share s ) 200 300 400

Retained Earnings 30 33 33Equity 230 333 433

11% Callable Preference Shares 00 200 20012% Debentures 600 600 700

Trade Payables 80 120 265Bank overdraft (Average cost 15%) - 40 260

Proposed Dividends 50 75 122Corporation Tax 40 42 64

1,000 1,410 2,044

Land & Building 336 618 982Vehicles Furniture & Fitting & Equipment 314 412 496

Stocks 240 300 440Trade Receivables 50 80 126

Cash at Bank 60 - -1,000 1,410 2,044



Ratios 2006

1. Trading RatiosRatio Formula 2001 %age/Rate

Gross Profit as % of SalesGross Profit *100 480

40.00%Sales 1200

Gross Profit as % of Cost of Sales

Gross Profit *100 48066.67%

Cost of Sales 720

Rate of Stock Turnover Cost of Sales 720

3 TimesAverage Stock 240

Total Assets Turnover Sales 12001.2 TimesAverage Total Assets 1000

Operating Assets Turnover/Current Assets Turnover

Sales 12003.4 Times

Current Assets 350

2. Profitability Ratios

Return on Equity (ROE) Net Profit After Interest, Tax &Preference Dividends *100 72 * 100 31%

Average Ordinary Equity 230

Return on Capital Employed( ROCE)

Net Profit before Interest but after Tax * 100 144 17.32%

Capital Employed 830

Return on Assets (ROA)Net Profit after Tax 72

7.2Total Assets 1000

Net Profit as % of SalesNet Profit * 100 120

10%Sales 1200

Net Profit as % of Cost of SalesNet Profit * 100 120

16.67%Cost of Sales 720

Net Profit as % of Gross ProfitNet Profit * 100 120

25.00%Gross Profit 480

Overhead as a %age of Gross Profit

Total Overhead 360 * 100 75%Gross Profit 480



Earnings Per Share (EPS)Net Profit attributed to Ordinary

shareholders 720.36

Number of Ord’ shareholders 200

Price Earning Ratio ( P/E)Market Value of Ordinary Share 12

33.33Earnings per share 0.36

Earning Yield RateEPS* 100 0.36

3%Market Value of Ordinary share 12

3. Dividend Ratios

Dividend Declared as a %age of Profit after Tax

Dividend declared * 100 50 * 10069%

Profit after Tax 72

Dividend Cover ( for ordinaryshares) Profit after Tax 72 1.44Dividend Declared 50

Dividend Yield RateOrdinary dividend declared per

share * 100 0.25 2.083%

Market Value of Ordinary Share 12

4. Capital Ratios

Equity as a %age of CapitalEmployed

Average Equity * 100 230 * 10027.7%

Total Capital Employed 830

Borrowed Capital as a %age of Capital Employed

Total Borrowed Capital * 100 600 * 10072.3%

Total Capital Employed 830

Capital Gearing Ratio CWFR: CWVR/Debt : Equity

6002.6 : 1

230

Gearing LevelCWFR * 100 600 * 100

72.3%Total Capital Employed 830

Interest Cover RateInterest Expense 72 * 100

50%Net Profit before Interest 144

Fixed Assets as a %age of Capital Employed

Average Fixed Assets * 100 650 * 10078%


Working Capital as a %age of Capital Employed

Working Capital 180 * 10022%


5. Liquidity Ratios



Working Capital Ratio/Current Ratio

Current Assets 3502.05

Current Liabilities 170

Quick Ratio / Acid Test ratioQuick Assets: Current Liabilities 110

0.64 Times170

Debtor’s Turnover RatioCredit Sales 360

7.2 TimesAverage Trade Debtors 50

Rate of Stock Turnover Annual Cost of Sales 720

3 TimesAverage Stock 240

Average Credit Allowed PeriodAverage Trade Debtors * No. of

months/weeks/days in a year 50 * 121.66 Months

Total Annual Credit Sales 360

Average Credit Received PeriodAverage Trade Creditors * No. of

months/weeks/days in a year 80 * 121.33 Months

Total Annual Credit Purchases 720

Average Stock Retention PeriodAverage Stock * No. of

months/weeks/days in a year 240 * 124 Months

Total Annual Cost of Sales 720

Working Capital Cycle

Average Stock Retention Period+

Average Credit Allowed Period –

Average Credit Received Period

4+

1.66-

1.33

4.33 Months

Du Point Analysis (2001)ROE = Return on Sales * Total Assets Turnover * Gearing

= Net profit/Sales * Sales/Total assets * Total assets/Equity

= 72/1200 * 1200/1000 * 1000/230

ROA = 6% * 1.2times7.2%ROE =% * 7.2% * 4.3 times

31%

Common Sized Statements



Income statementComparative Common Sized

Income Statement Income Statement2003 2002 2001 2003 2002 2001Rs. Million Rs. Million Rs. Million as a %age of Sales Figures

SalesCost of sales

1540 1280 1200 128 107 100%942 780 720 131 108 100%

Gross Profit

AdministrativeMarketingFinancial

Total overheads

598 500 480

164 128 108165 170 18084 72 72

413 370 360

125 104 100%

152 119 100%92 94 100%

117 100 100%

115 103 100%Income before tax

Provision for tax

185 130 120

(74) (52) (48)

154 108 100%

154 108 100%Net income 122 78 72 169 108 100%

Balance Sheet Comparative Common Sized

Balance Sheet Balance Sheet



CashTrade ReceivablesStocks

Current Assets

Land & BuildingsOther Fixed Assets

Total Assets

Bank OverdraftTrade PayablesCorporation TaxProposed DividendCurrent Liabilities

12% DebenturesTotal Liabilities

Paid Up Share CapitalRetained Earnings11% CallablePreference SharesTotal Equity

Total Liabilities &

Equity

2003 2002 2001 2003 2002 2001Rs. Million Rs. Million Rs. Million as a %age of Total assets

0 0 60 0 0 6

126 80 50 6 6 5440 300 240 22 21 24

566 380 350

982 618 336496 412 314

28 27 35

48 44 3431 24 29

2,044 1,410 1,000 100% 100% 100%

260 40 0265 120 80

64 42 40122 75 50

13 3 013 9 8

3 3 46 5 5

711 277 170

700 600 600

35 20 17

34 43 601,411 877 770 69 62 77

400 300 20033 33 30

200 200 0

19 21 202 3 3

10 14 0733 533 230 31 38 23

2,044 1,410 1,000 100% 100% 100%

Ratios for year 2002

1. Trading Ratios



Ratio Formula 2002 %age/Rate

Gross Profit as % of SalesGross Profit *100 500 * 100

39%Sales 1280


Gross Profit *100 500 * 10064%

Cost of Sales 780

Rate of Stock TurnoverCost of Sales 780

2.9Average Stock 270

Total Assets Turnover Sales 12801.06

Average Total Assets 1205


Sales 12803.40

Current Assets 380


Return on Equity (ROE) Net Profit After Interest, Tax & Preference Dividends *100 78 * 100 23%

Ordinary Equity 333


Net Profit before Interest butafter Tax * 100 150 * 100 13%Capital Employed 1,133

Return on Assets (ROA)Net Profit before Tax 130 * 100

9%Total Assets 1,410

Net Profit as % of SalesNet Profit * 100 130 * 100

10%Sales 1280

Net Profit as % of Cost of Sales

Net Profit * 100 130 * 10017%

Cost of Sales 780

Net Profit as % of GrossProfit

Net Profit * 100 130 * 10026%

Gross Profit 500


Total Overhead * 100 370 * 10074%Gross Profit 500

Earnings Per Share (EPS)Net Profit attributed toOrdinary shareholders 78

0.26Number of Ord’ shareholders 300

Price Earning Ratio ( P/E) Market Value of Ordinary Share 14 53.84



Earnings per share 0.26

Earning Yield RateEPS* 100 0.26

Market Value of Ordinary share 14 1.85

3. Dividend Ratios

Dividend Declared as a%age of Profit after Tax

Dividend declared * 100 75 * 100 96%Profit after Tax 78

Dividend Cover ( forordinary shares)

Profit after Tax 781.04 Times

Dividend Declared 75

Dividend Yield Rate ( forordinary shares)

Ordinary dividend declared pershare * 100 0.25

1.78%Market Value of Ordinary Share 14

4. Capital Ratios


Equity * 100 333 * 10029.39%

Total Capital Employed 1,133

Borrowed Capital as a %ageof Capital Employed

Total Borrowed Capital * 100 800 * 10070.60%


Capital Gearing Ratio CWFR: CWVR/Debt : Equity

8002.4 : 1

333


70.60%Total Capital Employed 1,133


35.6%Net Profit before Interest 202


Average Fixed Assets * 100 1,030*100 90.9%

Capital Employed 1,133

Working Capital as a %age

of Capital Employed

Working Capital 103 * 100 9.09%Capital Employed 1,133

5. Liquidity Ratios


Current Assets 380 1.37 TimesCurrent Liabilities 277

Quick Ratio / Acid Test ratio Quick Assets:Current Liabilities 80 0.3:1



277



Rate of Stock TurnoverAnnual Cost of Sales 780

2.88 TimesAverage Stock 270

Average Credit AllowedPeriod

Average Trade Debtors * No. of months/weeks/days in a year 65 * 12

2.03 MonthsTotal Annual Credit Sales 384

Average Credit ReceivedPeriod

Average Trade Creditors * No.of months/weeks/days in a

year100 * 12

1.53 Months


Average Stock RetentionPeriod

Average Stock * No. of

months/weeks/days in a year270 * 12

4.15 MonthsTotal Annual Cost of Sales 780



Average Credit Allowed Period–


4.15+

2.03-

1.53

4.65 Months

Du Point Analysis (2002)

ROE = Return on Sales * Total Assets Turnover * Gearing


= 78/1,280 * 1,280/1,410 * 1,410/533

ROA = 6.1% * 0.9times5.5%

ROE = 6.1% * 0.9times * 2.65 times15%



Ratios for year 2003

1. Trading RatiosRatio Formula 2002 %age/Rate

Gross Profit as % of Sales Gross Profit *100 598 * 100 38.8%Sales 1,540


Gross Profit *100 598 * 10063.5%

Cost of Sales 942

Rate of Stock TurnoverCost of Sales 942

2.5Average Stock 370

Total Assets Turnover Sales 1,5400.89Average Total Assets 1,727


Sales 1,5402.3

Current Assets 660


Return on Equity (ROE) Net Profit After Interest, Tax & Preference Dividends *100 122 * 100 19%

Average Ordinary Equity 633


Net Profit before Interest butafter Tax * 100 206 * 100 15%Capital Employed 1,333

Return on Asses (ROA) Net Profit before Tax 185 * 100 9%Total Assets 2,044

Net Profit as % of SalesNet Profit * 100 185 * 100

12%Sales 1,540

Net Profit as % of Cost of Sales

Net Profit * 100 185 * 100 20%Cost of Sales 942

Net Profit as % of GrossProfit

Net Profit * 100 185 * 10031%

Gross Profit 598


Total Overhead * 100 413 * 10069%Gross Profit 598



Earnings Per Share (EPS)Net Profit attributed toOrdinary shareholders 122

3.05Number of Ord’ shareholders 40

Price Earning Ratio ( P/E)Market Value of Ordinary Share

Earnings per share

Earning Yield Rate EPSMarket Value of Ordinary share

3. Dividend Ratios

Dividend Declared as a%age of Profit after Tax

Dividend declared * 100 122 * 100100%

Profit after Tax 122

Dividend Cover ( for

ordinary shares)

Profit after Tax 100 0.82Dividend Declared 122

Dividend Cover ( forPreference Shares

????????? 1225.55

Preference Dividend Declared 22

Dividend Yield Rate ( forordinary shares)

Ordinary dividend declared pershare * 100 ?????

Market Value of Ordinary Share

Dividend Yield Rate ( forpreference shares)

Preference dividend declaredper share * 100 ???????

Market Value of Preference

Share

4. Capital Ratios


Average Equity * 100 633 * 10047.5%


Borrowed Capital as a %ageof Capital Employed

Total Borrowed Capital * 100 700 * 100 52.5%Total Capital Employed 1,333

Capital Gearing Ratio CWFR: CWVR/Debt : Equity 700 1.1 : 1633


52.5%Total Capital Employed 1,333


31.2%Net Profit before Interest 269




Average Fixed Assets * 100 1,478*100 110.9%


Working Capital as a %ageof Capital Employed

Working Capital -145*100-10.9%


5. Liquidity Ratios


Current Assets 5660.796

Current Liabilities 711

Quick Ratio / Acid Test ratio Quick Assets:Current Liabilities 126 0.17:1711



Rate of Stock Turnover Annual Cost of Sales 942 2.55 TimesAverage Stock 370

Average Credit AllowedPeriod

Average Trade Debtors * No. of months/weeks/days in a year 103 * 12

9.8 MonthsTotal Annual Credit Sales 126

Average Credit ReceivedPeriod

Average Trade Creditors * No.of months/weeks/days in a

year192.5*12

8.72 Months


Average Stock RetentionPeriod

Average Stock * No. of months/weeks/days in a year 370 * 12

4.7 MonthsTotal Annual Cost of Sales 942



Average Credit Allowed Period–


4.7+9.8

-8.7

5.8 Months

Du Point Analysis (2003)

ROE = Return on Sales * Total Assets Turnover * Gearing




= 122/1,540 * 1,540/2,044 * 2,044/633

ROA = 7.9% * 0.75times5.9%

ROE = 7.9% * 0.75times * 3.23 times19%

A Summary of the Ratios

2001 - 2003Ratios 2001 2002 2003

Gross Profit as % of Sales 40.00% 39.% 39

Gross Profit as % of Cost of Sales 66.67% 64.% 63.5

Rate of Stock Turnover 3.00 2.9 2.5



Total Assets Turnover 1.20 1.06 0.89

Current Assets Turnover 3.40 3.4 2.3

ROE 31% 23% 19%

ROCE 17.35% 13% 15.45%

ROA 7.2% 9% 9.05%

Net Profit as % of Sales 10.00% 10% 12.%

Net Profit as % of Cost of Sales 16.67% 17% 19.6%

Net Profit as % of Gross Profit 25.00% 26.% 31%

Overhead as a %age of Gross Profit 75% 74% 69%

Earnings per share 3.6 2.6 2.5

Price Earning Ratio ???

Earning Yield Rate ???

Dividend Declared as a %age of Profit after tax 69% 96% 100%

Dividend Cover 1.44 3.5 5.55

Dividend Yield Rate

Equity as a %age of Capital Employed 27.7% 47% 47.5%

Borrowed Capital as a %age of CapitalEmployed 72.3% 53% 52.5%

Capital Gearing Ratio 2.6:1 1.5:1 1.1 : 1

Gearing Level 72.3% 71% 52.5%



Interest Cover Rate 38% 35.6% 31%

Fixed assets as a %age of Capital Employed 78% 91% 110.8%

Working Capital as a %age of Capital Employed 22% 9% -10.9%

Working Capital Ratio 2.05 1.37 0.8

Quick Ratio/Acid Test Ratio 1:1.5 0.288 : 1 0.17 : 1

Debtor’s Turnover Ratio 1 time 1.23 times 1.22 times

Rate of Stock Turnover 3 times 2.88 times 2.55 times

Average Credit Allowed Period 12 months 9.75 months 9.8 months

Average Credit Received Period 12 months 10 months 8.72 months

Average Stock Retention Period 4 months 4.15 months 4.7 months

Working Capital Cycle 4 months 3.9 months 5.78 months

Assumptions

1. Market Price of O.Share for 2001 = 122. Market Price of O.Share for 2002 = 143. Market Price of P.Share for 2002 = 10

awami supermarkets ltd

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