Download - Engro foods 3
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Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in 2004. Using dairy as a stepping stone to enter into the food business, the Company has established its processing units in Sukkur and Sahiwal, along with an ice cream production facility in Sahiwal.
HISTORY…..
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The main plant that is located at Sukhur on 23 acre of land, has the raw milk reception capability 300000 liters per day.The plant has been established at a cost of Rs. 1 billion which provides direct employment to 750 peoples.
MAIN PLANT…..
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PRODUCTS
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Hussain Dawood
M.Aliuddin Ansari
Sarfraz Ahmed
Khawaja Iqbal
Ruhail Muhammad
Shabbir Hashmi
HIRARICHY
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Best Communication Award (for Tarang Sohni Mahiwal Campaign) In 2011 (Karachi)
Best Launch of 2007/2008 Award (for Tarang) In 2008
Brand that Created the Biggest Buzz Award for Olpers In 2008
Best Commercial Consumer Award for Olpers: Pakistan Media Awards, 2010
Tarang got award in 2011 for breakfast category.
AWARDS
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Leadership
Innovation
International focus
Open communication
Individual growth and development
Safety ,Health and Environment
Core values……
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RATIO ANALYSIS OF ENGRO FOOD…….
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Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm's financial performance. In addition, ratios can be used in a form of trend analysis to identify areas where performance has improved or has to improve.
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Liquidity RatioActivity RatioProfitability RatioSolvency RatioReturn on investment
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Liquidity ratios are the ratios meant for testing short_term financial position of a business.
CURRENT RATIO
LIQUID/ACID TEST/QUICK RATIO
ABSOLUTE LIQUID RATIO
LIQUIDITY RATIO……
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Current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares the firm’s current assets to its current liabilities.
Current Assets/Current
Liabilities
CUREENT RATIO
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FORMULACurrent Assets/Current Liabilities
YEAR 2011 2012
Calculation
Result
=9512702/4441432
=2.14
=6369139/3479693
=1.83
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Liquid ratio is also term as Acid test or Quick ratio. It is the ratio of Liquid assets to Current Liabilities. It expresses a company’s ability to repay short term creditors out of its liquid assets.
Liquid assets/Current liabilities
Liquid Ratio
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FORMULA(Current Assets – Stock – Prepaid) / Current Liabilities
YEAR 2011 2012
Calculation
Result
=3465230/3479693 =5756307/4441432
=0.9 =1.2
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Absolute liquid ratio
In addition to computing current and liquid ratio, some analysts also compute absolute liquid ratio to test the liquidity of the business.
Formula:
(Cash+Bank+Marketable secqurities)/Current liabilities
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2011 2012
=350728/3479693 =422008/4441432
=0.10 =0.09
FORMULA (Cash + Bank + Marketable securities) / Current Liabilities
YEAR
Calculation
Result
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ACTIVITY RATIOS….
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ACTIVITY RATIOS……
Inventory Turnover Ratio.
Inventory Conversion Period.
Receivables Turnover Ratio.
Receivables Conversion Period.
Payables Turnover Ratio.
Payables Conversion Period.
Working Capital Turnover Ratio.
Fixed Assets Turnover Ratio….
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Inventory Turnover Ratio…
“This ratio measures the velocity with which average stock is sold in market…….”
Formula...CGS / Cost Of Average Stock
Cost Of Average Stock=(opening
Stock+closing Stock)/2
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Inventory Turnover Ratio…..
Calculation
Result:-
2011 2012“CGS / Cost Of Average Stock”
“CGS / Cost Of Average Stock”
Cost of Average Stock= (2089221+2637816)/2
Cost of Average Stock= (2637816+3494605)/2
=23230445/2363519 =29848301/3066211
=9.8 Times….. =9.7 Times……
Formula:-
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Inventory Conversion Period…..
“It means that on an average how many days were taken to dispose off average inventory…..”
Formula“365 /
Inventory Turnover
Ratio”
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2011 2012Formula:- 365 / Inventory
Turnover Ratio 365 / Inventory Turnover Ratio
Calculation: = 365 / 9.8 = 365 / 9.7
Result:- = 37 Days = 37 Days
Inventory Conversion Period…..
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Receivables Turnover Ratio…..
“This ratio measures that how
many times average
receivables have been received
during a period of one year…”
• Formula…
• Net Credit Sales / Average Receivables
• Average Receivables = (Opening Debtors & B/R + Closing Debtors & B/R)/2
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Receivables Turnover Ratio…..
2011 2012Formula... “Net Credit Sales /
Average Receivables”“Net Credit Sales /
Average Receivables”
Calculation: Average Receivables = {(51879+720735) + (87121+1160126)}/2
Average Receivables = {(87121 + 1160126)
+ (149074+1440167)}/2
// = 29859226/1009931 = 40168919 / 1418244
Result = 29.5 Times… = 28.3 Times…
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Receivables Conversion Period“It means that on an average how many days were taken to
receive average receivables…..”
FormulaDays In Year /
Receivables Turnover
Ratio
365 / Receivables Turnover
Ratio
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Receivables Conversion Period
2011 2012Formula 365 /
Receivables Turnover Ratio
365 / Receivables
Turnover Ratio
Calculation = 365 / 29.5 = 365 / 28.3
Result = 12 Days……
= 13 Days…..
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“This ratio measures that how many times average payables are being paid during a
period of one year…”
Payables Turnover Ratio
Formula…….Net Credit Purchases /
Average Payables
CGS Opening
Stock+Purchases-Closing Stock
Avg Payables (Opening
Creditors & B/P + Closing Creditors
& B/P) / 2
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Payables Turnover Ratio :Year 2011 2012
Formula… Net Credit Purchases / Average Payables
Net Credit Purchases / Average
Payables
Calculation: Avg Payables = (2040575 + 2343506) / 2
Avg Payables =(2343506 + 2358793) /
2
// = 23779040 / 2192041 = 30705090 / 23511495
Result….. 10.8 Times 13.05 Times
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“Payables Conversion Period”
“It means that on an average how many days were taken to pay average payables…..”
Formula: 365 / Payables Turnover Ratio
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“Payables Conversion Period”
Year 2011 2012Formula “365 / Payables
Turnover Ratio”“365 / Payables
Turnover Ratio”
Calculation = 365 / 10.8 = 365 / 13.05
Result = 34 Days = 28 Days
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Working Capital Turnover Ratio……
“This ratio measures that how efficiency working capital is being utilized for generation of revenues………”
• CGS / Average working Capital
Formula!!
• Current Assets – Current Liabilities
Working Capital
• (Opening Working Capital + Ending Working Capital) / 2
Avg Working Capital
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Working Capital Turnover Ratio……
Year 2011 2012Formula “CGS / Average
working Capital”“CGS / Average
working Capital”
Calculation = 23230445 / 2888152
= 29848301 / 5071270
Result…. = 8.04 Times…..
= 5.9 Times……
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Fixed Assets Turnover Ratio“This ratio measures that how efficiency fixed
assets are being utilized for generation of revenues………”
Formula = CGS / Fixed Assets
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Fixed Assets Turnover Ratio
Year 2011 2012
Formula = CGS / Fixed Assets
= CGS / Fixed Assets
Calculation = 23230445 / 10270045
= 29848301 / 12675983
Result……. = 2.3 Times….
= 2.4 Times…
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PROFITABILITY RATIO
THE MAIN OBJECT OF BUSINESS CONCERN IS TO EARN PROFIT. IN GENERAL TERMS, EFFICIENCY IN THE BUSINESS IS MEASURED BY PROFITABILITY. BANKERS, FINANCIAL INSTITUTIONS AND OTHER CREDITORS LOOK AT THE PROFITABILITY RATIOS AS AN INDICATOR WHETHER OR NOT THE FIRM EARNS MORE THAN IT PAYS INTEREST FOR THE USE OF BORROWED FUNDS AND WHETHER THE ULTIMATE REPAYMENT OF THEIR DEBT APPEARS REASONABLY CERTAIN.
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TYPES….GROSS PROFI RATIO
OPERATING PROFIT RATIO
NET PROFIT RATIO
OPERATING RATIO
EXPENSE RATIO
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GROSS PROFIT RATIO….
GROSS PROFIT RATIO IS THE RATIO OF GROSS PROFIT TO NET SALES. IT IS MOST COMMONLY CALCULATED RATIO. THE RATIO TUS REFLECT THE MARGINE OF PROFIT THAT A CONCERN IS ABLE TO EARN ON ITS TRADING AND MANUFACTURING ACTIVITY.
FORMULA
=GROSS PROFIT/NET
SALES*100
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YEAR 2011 2012CALCULATIONS 6628781/29859226
*10010320618/40168919
*100
RESULT 22.20% 25.69%
GROSS PROFIT RATIO….
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OPERATING PROFIT RATIO
OPERATING PROFIT RATIO HELPS IN DETERMINING THE ABILITY OF MANAGEMENT IN RUNNING THE BUSINESS…
FORMULA…
OPERATING PROFIT/NET SALES*100
=G.P - OPERATING EXPENSES
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YEAR 2011 2012
CALCULATIONS 2411801/29859226*100
4823292/40168919*100
RESULT 8.07% 12.00%
OPERATING PROFIT RATIO
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NET PROFIT RATIO
NET PROFIT/NET
SALES*100
THIS RATIO MEASURES THE OVERALL PROFITABILITY.NET PROFIT IS ARRIVED AT AFTER TAKING INTO ACCOUNT BOTH THE OPERATING AND NON OPERATING ITEMS OF iNCOME AND EXPENSES.THE RATIO INDICATE WHAT PORTION OF NET SALES IS LEFT FOR THE OWNERS AFTER ALL EXPENSES HAVE BEEN MET..
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YEAR 2011 2012CALCULATIONS 890973/29859226
*1002595193/40168919
*100
RESULT 3.00% 6.5%
NET PROFIT RATIO
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OPERATING RATIO
The ratio is the test of efficiency of the management in their business operation. In normal conditions, the operating ratio should b low enough so as to leave portion of sales sufficient to give a fair return to the investors.
FORMULA
((C.G.S+OPERATING EXPENSES)/NET SALES*100)
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year 2011 2012CALCULATIONS ((23230445+4430113)/29859226
*100)((29848301+5879728)/40168919*100)
RESULT 92.63% 88%
OPERATING RATIO
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EXPENSE RATIO
EXPENSE RATIOS ARE CALCULATED BY DIVIDING EACH ITEM OF EXPENSE OR GROUP OF EXPENSES WITH THE NET SALES SO ANALYSE THE CAUSE OF VARIATION OF THE OPERATING RATIO.IT INDICATE THE PORTION OF SALES WHICH IS CONSUMED BY VARIOUS OPEATING EXPENSES…
FORM
ULA
EXPENSES/
NET SALE
S
*100
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YEAR 2011 2012CALCULATIONS 5950941/29858226
*1OO8107847/40168919
*100
RESULT 19.92% 20.18%
EXPENSE RATIO
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Ratio:- The term accounting ratios is used to describe significant relationship which exist between figures shown in a balance sheet, in a profit and loss account or in any other part of the accounting organization.
EXAMPLE:- The relationship between 100 and 500 may be expressed as1:5. Ratio analysis facilitates the presentation of information of financial statements in simplified, concise and summarized form.
J. Batty
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SOLVENCY
RATIO
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The ratio determine the long term debt paying capacity of any organization & measure the efficiency of firm regarding interest payment.
Solvency Ratio
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Solvency Ratio
Solvency Ratios
Debt to equity ratio
Fixed asset ratio Reserves to Capital
Proprietary ratio
Interest coverage ratio
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Debt to equity ratio
The relationship between borrowed funds and internal owner’s funds is measured by debt equity ratio.
Also known as:- Debt to net worth ratio. FORMULAS:
Debt to equity ratio= long term debt/ equityDebt to equity ratio= total debt /equityDebt to equity ratio= long term debt/long term funds
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Debt to equity ratio
Debt to equity ratio= long term debt/ equity
Year 2011 2012
Calculation =5610,000/7236942 = 6023070/10054273
Result =0.77 =0.59
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2011 20120
0.10.20.30.40.50.60.70.80.9
ANALYSIS
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Debt to equity ratioDebt to equity ratio= total debt /equity
Year 2011 2012
Calculation =(5610,000+252250)/7236942
=(6023,070+85389)/10054273
Result =0.81 =0.60
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2011 20120
0.20.40.60.8
1
ANALYSIS
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Debt to equity ratio
Debt to equity ratio= long term debt/long term fundslong term funds=long term debt+equity
Year 2011 2012
Calculation =5610,000/12846942 =6023070/16077343
Result =0.43 =0.37
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20112012
0.320.340.360.380.4
0.420.44
ANALYSIS
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Fixed assets ratio
Fixed assets ratio=Fixed Assets/Long Term Funds
Year 2011 2012
Calculation =10270045/12846942 =12675983/16077343
Result =0.80 =0.79
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2011 20120.785
0.79
0.795
0.8
ANALYSIS
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Reserves to CapitalReserves to Capital=Reserves/Capital
Year 2011 2012
Calculation =(-280947/7517889) =2437263/7615776
Result =(-0.03) =0.32
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2011 2012-0.050
0.050.1
0.150.2
0.250.3
0.35
ANALYSIS
-0.03
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Proprietary ratioProprietary ratio=Equity/Total assets
Year 2011 2012
Calculation =7236942/16639184 =10054273/22188685
Result =0.43 =0.45
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20112012
0.420.4250.43
0.4350.44
0.4450.45
ANALYSIS
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Interest coverage ratio Interest coverage ratio =EBIT/Interest
Year 2011 2012
Calculation =2411801/1049141 =4823292/902503
Result =2.298 times =5.344 times
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2011 20120123456
ANALYSIS
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Return on investment ratios
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'Return On Investment RATIO
Return on investment is the primary ratio to measure the overall profitability and efficiency of business. It is also used to evaluate the efficiency of an investment. If an investment does not have a positive ROI then the investment should not be undertaken.
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Types Of Return On Investment
Ratio
Return On Capital
Employed Ratio
Return On Equity Ratio
Earning Per Share Ratio
Price/ Earning
Ratio
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Return On Capital
Employed (ROCE)
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Return On Capital Employed (ROCE)
It is a measure of the returns that a business is achieving from the capital employed, usually expressed in percentage terms.
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FORMULA
ROCE = Earning before interest and tax (EBIT) *100 Capital employed
=Current Asset+ Fixed Asset-current Liabilities-non Operating.Capital
employed
2012
=(4823292/15038503)*100
=32.07%
2011
=(2411801/11865491)*100
=20.32%
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2011% 2012%0
5
10
15
20
25
30
35 20.32% 32.07%
ANALYSIS
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'Return on Equity /shareholder’s fund
Ratio
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'Return on Equity /shareholder’s fund Ratio
This ratio measures that how much profit a company generates with the money shareholders have invested.ROE is expressed as a percentage.
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Formula=Profit After Tax*100
Equity
=(2595173/10054273)*100=25.81%
= (890793/7236942)*100=12.3%
2012
2011
Equity=Share Capital+Reserve+Profit&Loss (Cr.)-Deferred Cost
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2011 20120
5
10
15
20
25
30 25.81%12.3%
ANALYSIS
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EARNING PER SHARE RATIO
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EARNING PER SHARE
“This ratio tells us about earning on “1” share”. EPS is the most important term for the investors of stock exchange.
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2012 =2595173/763248 =Rs.3.40
2011 =890973/730721 =Rs.1.22
Earning per share= Net profit after tax No. of share outstanding.
FORMULA
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2011 20120
0.5
1
1.5
2
2.5
3
3.5
Rs.3.40Rs.1.22
ANALYSIS
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PRICE/EARNING RATIO
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PRICE/EARNING RATIO
It is a valuation ratio of a company's current share price compared to its per-share earnings.
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FORMULA:= Market Value per ShareEarnings per Share (EPS)
2012 =98/3.4 =Rs.28.8
2011 =22.6/1.22 =Rs.18.5
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2011 201205
1015202530
Rs. 18.5 Rs.28.8
ANALYSIS
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Positive Points
Won the G20 award on Inclusive Business Innovation .
Growth in profit
Growth in sales
Unique advertisement concept
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Provide nutritious and affordable dairy product.
Pakistan’s first company to cross 1 billion Tetra packs in 1 year.
Having 3rd UHT generation plant.
Positive response from customers.
Positive Points
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EFL should have its own packaging system to reduce the cost.EFL should build their own dairy farms to meet the increasing demand and for quality milk and to reduce cost.EFL should own any colour like Nestle and Habib.
Recommendations:
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CONCLUSION
After making the ratio analysis of Engro Foods we determine that all the profitability ratios are increases as compare to previous year it means that this company is growing company.
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Any Question