final assign (3)

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Umar Apparel private Ltd.

Session

Submitted to:

Sir.Omer Sharif

Submitted By: Faiza Andleeb 2009-ag-857

Numera Ali 2009-ag-952

Maryam Nisar 2009-ag-1273

Hira Amjad 2009-ag-1274

Khalid Farooq 2009-ag-725

DEGREEM.com 3rd

Table of Content




SERIAL

NO.

SUBJECTS PAGE

No.

EXECUTIVE SUMMARY

1 COMPANY INTRODUCTION1.1 INCORPORATION /COMMENCEMENT

1.2 BUSINESS OPERATIONS

1.3 SOWT ANALYSIS

1.4 RESOURSES

2 FIRM ANALYSIS

2.1 COMMON SIZE ANALYSIS

2.2 RATIO ANALYSIS

3 PERFORMA STATMENT.

3.1 BASIS OF ANALYSIS.

4 PRACTICES OF FIRM

4.1 ACQUASATION OF CAPITAL

4.2 FINANCIAL FORCASTING

4.3 INVESTMENT AVENUES

4.4 WORKING CAPITAL MANAGEMENT

4.5 DIVIDEND POLICY

5 EVELUATION

6 VISIT REPORT

7 CONCLUSIONS




EXECUTIVE SUMMARY

We accept the project of finance and select Umar Apparel private Ltd.

The motive of accepting the MTM was to have an exposure of textile

sector and potential to avail a sound and promising career. We devoted

our time to learn about Umar Apparel , which will be beneficial to us if

we join textile sector. In this visits,

The object of this report that we have placed is to express what we

observed and what are the necessary measures that can help to capitalize

the strengths to overcome weakness and remove the threats.Umar Apperal is one of the largest knitted garment manufacturers

of Pakistan. The company is 100% export oriented. U.S.A. and Europe

are major markets of Umar Apperal . It is a quality conscious company.

The company is ISO 9002 certified. Company’s mission statement is,

“To be the world’s Best Apparel Company.”

1 Introduction of CompanyThe company was initially established in 1990 by Mr. Sajjad Nazir in Pakistan. Later

on, as an expansion project, Umer Apparels was established in Pakistan nearly two




decades ago to accommodate the growth of orders to the Worldwide and European

countries. The company has been running successfully since its inception, currently

we have the strength of more than 2000 people consisting of, a team of highly

professional and efficient management, workers in our manufacturing unit.

Umer Apparels has a state of the apparels manufacturing setup; it is equipped with

most modern and advanced technologies. This combination with our highly

experienced management has enabled the company to become one of the best

apparel manufacturers and suppliers in the region. Strict quality controls are followed

through out the entire process, from the selection of raw materials, to the production

and delivery of the garments. Complete customer satisfaction is our prime objective.

At Umer Apparels, every garment we sell is of the highest quality, simply because we

care, and simply because it has your name on it. Our products are designed to reflect

the pride we have in our company. Thus we place meticulous attention to every

single detail of the garment and assert a great deal of care in every aspect of the

manufacturing process. We want you to "feel good" and be proud when wearing one

of our "Umer Apparels" with your company logo embroidered or printed on it. We

value the opportunity to work with you and guarantee to provide; cutting-edge

technology, on time delivery, superb customer service and outstanding quality.

Umer Apparels has customers all over the world, a global variety of garments in a

variety of fabrics and colors. You can also customizing your own garments utilizing

our unmatched service, and much, much more…

Umer Apparels has never hesitated in adapting the latest manufacturing

technologies. The engineering and sampling department is equipped with latest,

Gerber Garment Technology (GGT) Accumark, designing, grading and markingsystem.Garments designed at Umer Apparels are engineered to perfection. Being

the backbone of the entire manufacturing facility the pattern making and sampling

department at Umer Apparels take great pride in creating unmatchable quality

garments.

Vision Statement

A leading producer of textile products by producing the highest quality of

products ad services to its customers.

To strive for excellence through commitment, integrity, honesty and team work.




Highly ethical company and be repeated corporate citizen to continue playing due

role in the social and environmental sectors of the company.

To develop and extremely motivated and professional trained work force, witch

would drive growth through innovation and renovation. Sustained growth in earning in real terms.

Mission Statement:

Our mission is to be a dynamic, profitable and growth oriented

Company by providing good return on investment to its shareholders

And investors, quality products to its customers, a secured and

Friendly environment at workplace

to its employees and to project Pakistan’s image in the international market.

COMPANY INTRODUCTION

CHAIRMAN/CEO: MR. SHAHID NAZIR

DIRECTORS: CH. MUHAMMAD AMIN

: CH. MUNIR AHMAD

: MR. FAZAL ELAHI

: MR. NASEER AHMASHAH

: MR. MUHAMMADARSHAD

: MR. MUAMMAD NAWAZ

DIRECTOR FINANCE: MR. MUHAMMADFAROOQ

CHIEF FINANCIAL OFFICER : MR. BINYAMIN




COMPANY SECRETARY: MR. ABDUL BARIHAQQANI

AUDITORS: M/S RIAZ AHMADCHARTERED ACCOUNTANTS

COMNPANY 10-B, Saint Mary Park, Main Boulevard,

Gulberg –III, Lahore-54660.

Tel: 042-5718137-39-26 Fax: 5714340

E-mail: [email protected]

[email protected]

RATING OF SBP

Riaz Ahmed & Co.is at A11 no.by SBP

BANKERS: HABIB BANK LIMITED

UNITED BANK LIMITED

MCB LIMITED

THE BANK OF PUNJAB

HABIB BANK A.G. ZURICH

REGISTERED OFFICE: UNIVERSAL HOUSE, WEST

CANAL ROAD, FAROOQABAD,

FAISALABAD.

MILLS: 32-K.M SHEIKUPURA ROAD,

FAISALABAD.

22 Business operationsBusiness operations

Business operations of Business operations of Umar Apperal Limited include following areasinclude following areas

mailto:[email protected]

mailto:[email protected]




Products Products

⇒ Yarn

⇒ Knitted Fabric

⇒ Garments

(1)(1) Yarn:Yarn:

Umar Apperal Limited produces high quality yarn according to the

demand of the market. 80 to 90% yarn is exported rest of the yarn is used

is in Umar Apperal Limited .

Single knit Strippers Double knit

Flat knit Textures Jacquards

(2) Knitted Fabric:(2) Knitted Fabric:

One of the largest Fabric facility in Pakistan having the capability to

produce all kinds of knitted fabrics in 100% cotton & blends. Following

are types of fabric

Jersey

Pique

Inter Lock

Rib

Waffle

Min Thermal

o Fleece

GarmentsGarments: Umar Apperal Limited is a leading apparel company in

Pakistan having expertise & machinery capable of transforming customer

ideas into superior quality garments, which are taken as the most famous

brands in the world.

These includes the




Loungewear

Sportswear

Activewear

Sleepwear

Athletic

Countries of Export:

Umar Apperal Limited is making a good effort to increase

the market share. Today company is exporting its products to many

countries like,

o USA.

o Hong Kong

o Japan

o Germany

o Thailand

o Malaysia

Customer profileCustomer pr ofile

Umar Apperal Limited has also proud of work with world best Labels

like

• JC Penney (Stafford, Arizona, St. John’s Bay)

• War Naco (Chaps Ralph Lauren, Calvin Klein)

• Indus (Vantage, Champs, Tom Taller)

• Vanity fair Lee, Wrangler

• Perry Ellis

• Levi’s

Departments;




1. Merchandising

2. Production Planning & Control (PPC)

3. Industrial engineering

4. production

i. Cutting

ii. Stitching

iii. Finishing

iv. Clipping

v. Packing

vi. Shipment

2. Quality assurance

3. Quality control

4. Human Resource

5. Information Technology

6. Procurement

7. Finance

8. Forwarding

9. Stores

10. Marketing

11. Transportation

12. Compliance

13. Washing

Management Hierarchy in MTM

Top Management Chief Executive

Officer




Middle Management

Lower Level Management

General Manager

Manager

Deputy

Manager

Assistant

Manager

Senior

Officer Officer

Supervisor

ForemanOperators

Helpers




1.3 Swot analysis

SWOT analysis is a tool for auditing an organization and its environment. It is the

first stage of planning and helps marketers to focus on key issues.

Once key issues have been identified, they feed into marketing objectives




SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and

weaknesses are internal factors.

STRENGTHS WEAKNESSES

1. ISO 9002 Certification.

2. WRAP Certified

3. Vertically integrated.

4. High quality products.

5. Excellent market image in the local

and international market.

6. Highly qualified management.

7. Adequate financial resources.

8. Competitive advantage.

9. Adopting information technology.

10. Recruitment on merit.

11. Loyal customers.

12. Skilled Labor.

13. Broad and motivational vision.

1. Increased employee turnover

2. Centralized management system

3. High cost of production.

4. Low production capacity.

5. De-motivated Staff.

6. Non-Corporative culture.

7. Insufficient benefits for the

employees.

8. Stereotype machinery for

processing.

9. Communicational gap among

different departments.

10. High percentage of debts




14. Back Track System

OPPORTUNITIES

THREATS

1. Can expand its division

such as entering in weaving sector

also.2. Can introduce its own label

in domestic as well in

international market

3. Can capture new market

segment.

4. Full potential of

entertaining the local market.

5. Can reduce the cost by

proper utilization of resources.6. End of quota restrictions

by the end of year 2004.

7. Can hire well-educated and

experienced staff.

1. Entry of new competitors just like

China & India or local companiesKamal Spinning Mills Fsd.

2. Buyer need and demand changes.

3. Political instability.

4. Changing geopolitical situation.

5. Change of government policies.

6. Low price offered by competitor

7. Globalization.

8. Increase in inflation




1.4 RESOURCES

PHYSICAL RESOURCE

Umar Apperal Limited is leaders in creating, developing and manufacturing of knitted apparel products right from basic to highly fashioned garments thus

responding to emerging trends in the industry.

They have spinning, knitting, and processing and apparel divisions. In this apparel

division they have these sections.

Umar Apperal Limited. is the largest vertical integrated setup in Pakistan in knitwear

industry. We have our own Spinning, Knitting, Dyeing, Processing, cutting and

sewing facilities. Our capacities are as follows:

- 300 yarn bags per day

- Plus 50 Ton fabric production per day

- 5 Million Pieces Cutting Capacity per month

- 4.50 to 5 Million Pieces export per month

Cutting:

Cutting units working under the supervision of skilled unit managers, these cuttingunits are well equipped with latest machinery including Gerber Plotter, Spreader etc.

Machine Quantity

Gerber cutter

Max. Cutable height 7.2cm, Max Cutable width 68″3






Band knife

Model-EC-700N 220V 50/60 Hz Knife size 3500mm2

Model-EC-900N 220V 50/60 Hz Knife size 3860mm

2

Gerber spreader

Max.Load 100 kg, Max width 70″Max. roller 65cm.2

Gerber Tublar Spreader

Max.Load 100 kg, Max width 38″3

Synchron Spreader 101

Max.Load 100 kg, Max width 96″Max.roller 65cm.3

Synchron Spreader 55B

Max.Load 100 kg, Max width 70″Max. roller 50cm.2

Tesan Spreader

Max.Load 50 kg, Max width 38″3

Bierrebi

Total Machines22

Stitching:

With over 1,749 stitching machines, manned with the most skilled and expert

operators, Masood is capable of producing about 120,000 dozens per month versatile

garments ranging from basic to high fashion, men’s, women’s and kids with

maximum flexibility in size and color assortments.

Stitching Units Quantity

Apparel 1168

Apparel III 188

Apparel IV 289

Apparel II Warehouse 227




Falcon 341

Falcon-2 161

Leopard 155

Lion 220

Panther 286

Zain Godown 1

Total Machines 3036

Finishing:

Our Finishing Capacity in

kg

: 66,000 / Day

: 2,046,000 / Month

: 22,552,000 / Year

lbs

: 145,502 / 24Hrs

: 4,510,562 / Month

: 54,126,744 / Year

HUMAN RESOURCES




No. of Employees

2005

2006

2007

2008

2009

2010

2 COMPREHENSIVE ANALYSIS OF FINANCIAL STATEMENT

The financial analysis of the company presents us the true picture of the

company and its performance regarding the utilization of resources, worth and its

profitability.

Usually there are three types of financial analysis in which one analysis the financial

statements of the company mostly Balance Sheet Analysis and Income Statement

Analysis.

Following are the three types of analysis:




2.1 Common size analysis

(a)Horizontal analysis

(b)Vertical analysis

2.2 Ratio Analyses

Umar Apperal LimitedPROFIT AND LOSS ACCOUNT

Horizontal analysis

Notes 2010% 2009% 2008%

SALES 22

86.7

0

38.8

3

100.0

0

COST OF SALES 23

87.9

9

37.6

8

100.0

0

GROSS PROFIT

81.0

0

43.8

7

100.0

0

DISTRIBUTION COST 24

140.1

7

73.7

3

100.0

0

ADMINISTRATIVE EXPENSES 2556.9

414.6

7100.0

0

OTHER OPERATING EXPENSES 26216.0

3138.0

7100.0

0

122.1

0

61.5

2

100.0

058.3

2

34.1

4

100.0

0

OTHER OPERATING INCOME 27

63.7

0

31.0

0

100.0

0

PROFIT FROM OPERATIONS

58.3

7

34.1

1

100.0

0

FINANCE COST 2810.4

533.5

6100.0

0

PROFIT BEFORE TAXATION

121.6

7

34.8

3

100.0

0

PROVISION FOR TAXATION 29

93.2

9

32.5

2

100.0

0

PROFIT AFTER TAXATION

127.9

8

35.3

4

100.0

0

EARNINGS PER SHARE - BASIC 30

75.6

5

17.6

1

100.0

0

- DILUTED 30

55.2

3

(10.4

6)

100.0

0




Umar Apperal LimitedPROFIT AND LOSS ACCOUNT

VERTICAL ANAYSIS

DSECRIPTION2010

%2009

% 2008%

SALES 100 100 100

COST OF SALES 82.10 80.86 81.53

GROSS PROFIT 17.90 19.14 18.47

DISTRIBUTION COST 5.68 5.53 4.42

ADMINISTRATIVE EXPENSES 1.49 1.46 1.77

OTHER OPERATING EXPENSES 0.64 0.65 0.38

7.81 7.64 6.57

10.09 11.50 11.90

OTHER OPERATING INCOME 0.10 0.10 0.11

PROFIT FROM OPERATIONS 10.19 11.60 12.01

FINANCE COST 4.04 6.58 6.84

PROFIT BEFORE TAXATION 6.14 5.03 5.17

PROVISION FOR TAXATION 0.98 0.90 0.94

PROFIT AFTER TAXATION 5.17 4.13 4.23

Sales

Sale of the company increases 86% as compared to last two years the increase in sale

is due to increase in export sales that are result of better management of operationsCost of goods sold




in 2010 cost of goods sold is 82.10 % of total sale and as compared to previous years

is is increased from 37.68% to 87.99% this increase in cogs is due to increase in

production and increasing cost of raw material

Gross profit

In 2010 gross profit margin is 17% of sale that is less than previous year % as

compared to previous year gross profit increased from 43.87 % to81% that showsalthough prices of raw material increases but company’s gross profit increase over

year due to increase in sales

Distribution Expenses

Distribution expenses of the company in 2010 is 5.68% of sale that is more than last

two years as compared to last year’s distribution expenses increase from 73.73%

to140.17% this increase in expenses is due to more expenses on advertisement and

distribution of more stock

Administrative expenses

In 2010 administrative expenses are 1.49% of sale and as compared to last years it

increase froms14.67% to56.94% this huge increase is due to increase in workers and

administrative services to meet current requirements of productionOther operating expenses

Other operating expenses are 0.64% of sale in 2010 that is less than previous year %

but as compared to last year’s operating expenses increase from 138.07 % to

216.03% this increase is due to increase in capacity of company

Other operating income

Other operating income as a percentage of sale remains same as compared to last year

sale percentage in comparison of last year’s income it increases from 31% to 63.70%

Profit from operations

Profit from operations of the company as a percentage of sale as compared to last year

% due to high cost of operations to meet more production as compared to previous

year’s profits it increases from34.1% to 58.3 %

Finance cost

Finance cost of company as a % of sale decrease as compared to last year from 6.58%

to 4.04% and also decrease over the year from 33.56% t0 10.45 % this decrease is

due to acquisition of mark up free loans

Profit before taxation

Profit before taxation of company increases over the year from 34.83% to 121.67 %

the major increase is due to decrease in finance cost as a percentage of sale it increase

from 5.03% to 6.14 %

Profit after taxation

Companies net profit is 5.17 % of total sale that is more than last year’s % company’snet profit as compared to last year’s increases from 35.34% to 127.98%

The overall analysis of company’s profitability shows company is growing over year

the major cost are of increasing raw material cost




Umar Apperal Limited

Balance SheetHorizontal analysis

EQUITY AND LIABILITIES

Note

s 2010% 2009% 2008%

SHARE CAPITAL AND RESERVES

Authorized share capital

65 000 000 (2009: 65 000 000 ) ordinary shares

of Rupees 10 each62.5 62.5 100

60 000 000 (2009: 60 000 000 ) preference shares

of Rupees 10 each- -

Issued, subscribed and paid up share capital 3 26.9 - 100

Reserves 4 136.2 35.9 100

Total equity 81.9 18.1 100

Surplus on revaluation of operating fixed assets - 100

Deferred income on sale and lease back of

operating fixed assets (92.8) (48.6) 100

NON-CURRENT LIABILITIES

Long term financing 5 (17.3) (5.4) 100

Liabilities against assets subject to finance lease 6 (46.3) (41.7) 100

Deferred liability for gratuity 7 72.5 38.0 100

(15.7) (7.0) 100

CURRENT LIABILITIES

Trade and other payables 8 101.1 32.6 100

Accrued mark-up 9 61.4 132.0 100

Short term borrowings 10 64.8 25.3 100

Current portion of non-current liabilities 11 69.5 45.0 100

Provision for taxation 93.3 32.5 100

73.9 30.7 100

TOTAL LIABILITIES 42.8 17.6 100

CONTINGENCIES AND COMMITMENTS 12

TOTAL EQUITY AND LIABILITIES 49.3 16.8 100




A S S E T S

Nots 2010% 2009% 2008%

NON-CURRENT ASSETS

Property, plant and equipment 13 30.31 4.10 100

Long term advances 14 (46.90) (19.79) 100

Long term security deposits (45.88) (25.07) 100

29.74 3.89 100

CURRENT ASSETS

Stores, spare parts and loose tools 15 32.15 17.88 100

Stock in trade 16 51.70 (6.03) 100

Trade debts 17 82.99 65.36 100

Loans and advances 18 23.98 (11.65) 100

Short term deposits and prepayments 19 49.08 8.58 100

Other receivables 20 2.84 (22.28) 100

Cash and bank balances 21 251.23 133.89 100

60.85 24.46 100

TOTAL ASSETS 49.34 16.85 100


Balance Sheet Account

Vertical analysis

DESCRIPTION 2010% 2009% 2008%

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES




Authorized share capital

65 000 000 (30 June 2008: 40 000 000 ) ordinary shares

of Rupees 10 each 5.29 6.76 4.86

60 000 000 (30 June 2008: 60 000 000 ) preference shares

of Rupees 10 each 4.88 6.24 7.29

10.16 12.99 12.14

Issued, subscribed and paid up share capital 9.28 9.35 10.93

Reserves 17.51 12.87 11.07

Total equity 26.79 22.23 22.00

Surplus on revaluation of operating fixed assets 3.09 3.94 4.61

Deferred income on sale and lease back of operating fixed assets 0.00 0.03 0.06

NON-CURRENT LIABILITIES

Long term financing 11.90 17.39 21.49

Liabilities against assets subject to finance lease 0.96 1.33 2.67

Deferred liability for gratuity 1.51 1.55 1.31

14.37 20.26 25.46

CURRENT LIABILITIES

Trade and other payables 14.82 12.49 11.00

Accrued mark-up 1.11 2.05 1.03

Short term borrowings 35.13 34.14 31.84

Current portion of non-current liabilities 3.51 3.84 3.10

Provision for taxation 1.17 1.02 0.90

55.75 53.54 47.87

TOTAL LIABILITIES 70.12 73.81 73.34

CONTINGENCIES AND COMMITMENTS

TOTAL EQUITY AND LIABILITIES 100 100 100


Balance Sheet Account

Vertical analysis




DESCRIPTION 2010% 2009% 2008%




A S S E T S

NON-CURRENT ASSETS

Property, plant and equipment32.0

632.7

336.7

4

Long term advances0.0

30.0

50.0

7

Long term security deposits0.0

70.1

30.2

0

32.16

32.91

37.01

CURRENT ASSETS

Stores, spare parts and loose tools3.9

44.4

94.4

6

Stock in trade22.6

817.9

622.3

3

Trade debts28.7

833.2

423.4

9

Loans and advances

1.6

7

1.5

2

2.0

1

Short term deposits and prepayments2.0

21.8

82.0

2

Other receivables4.8

34.6

77.0

2

Cash and bank balances3.9

23.3

41.6

7

67.84

67.09

62.99

TOTAL ASSETS 100 100 100

Equity

Total equity of company increases over year from 18.1% to 81.9% the increase in

equity is through increase in the reserves of the company from its profit

Equity as a percentage of total equity and liability increases over the year from

22.23% to 26.79% this increase is due to increase in reserves that is 17.51% over

the year but issued capital decrease from 9.35% to 9.28% reserves are 136.2%

increase over year Noncurrent liabilities

Liabilities of the company decrease over the year from 7% to 15.7% major decrease

is due to decrease in the long term financing 17.3% and liabilities against asset




subject to finance lease 46.3% percentage of noncurrent liabilities as a percentage of

total liabilities and equity decrease over year from 20.26% to 14.37 %

Current liabilities

Current liabilities of the company increase over the year from 30.7% to73.9% this

major increase is due to increase in payables and short term borrowing .current

liabilities as a percentage of total equity and libilites increases over from 53.54% to55.75% these are more than half of total amount.

Noncurrent assets

Noncurrent assets of the company increases over year from 3.89% to 29.74% this

increase is due to increase in plant ,property and equipment that is 4.10% to 30.31%

other noncurrent assets decreases over year as a percentage of total assets noncurrent

assets decreases over year from 32.91% to 32.16 % this shows company’s major

investment in expanding ist plant

Current assets

Current assets of the company in 2010 increases from 24.46% to 60.85% the major

increase in current assets is due to increase in trade debts stock cash current asserts

contribution in total assets increases from 67.09% to 67.84% this shows company isnon risk taking firm and do not go for long term investments


CASH FLOW STATEMENT

HORIZONTAL ANALYSIS

2010 2009 2008

(Rupees in Thousand)

CASH FLOWS FROM OPERATING ACTIVITIES 837,370 632,821(981,748)

CASH FLOWS FROM INVESTING ACTIVITIES (966,607) (370,513)(415,397)

CASH FLOWS FROM FINANCING ACTIVITIES 290,285 (78,537)

1,458,8

32

NET INCREASE IN CASH AND CASHEQUIVALENTS 161048 183771 61687

Interpretation

Analysis of cash flow shows that over the year company’s cash generated from

operations increases and this cash is utlize in fixed assets cash flow from financing

activity increases as compared to last year it is mainly from short term borrowing and

equity company generating its finance from debts




Ratio analysis.

Ratio analysis is very useful approach to keep the management,

shareholder and creditors in making various decisions about company.

Types of ratios

Some of the different types of ratios that can be calculated from

data in the financial statements and used to evaluate a business

include:

Liquidity ratios

Activity ratios

Coverage ratios

Profitability ratios

Solvency ratios

No. Descriptions 2010 2009 2008Liquidity ratio

1. Current Ratio% 122 125 132

2. Acid Test Ratio 0.81 0.92 0.85

3. Cash Ratio% 7.303 6.23 3.48

4.

5. Working Capital(In Thousands) 1487135 1303484 1244555

Activity Ratio

6. Days Sales In

Receiveables(days)

87 107 90

7. A/R Turnover(Times) 4.37 4.27 4.08

8. A/R Turnover In Days(Times) 84 85 89

9. Days Sales In Inventroy(Days) 85 71 104

10 Inventory Turnover(Times) 5.35 4.96 3.5

11. Inventory Turnover In Days.

(Days)

68 74 104

12. Operating Cycle(Days) 152 159 193

13 Net sale/fixed asset 0.96 1.14 0.96

14. Cash Cycle(Days) 118 127 14215

16. Labor Cost % 13.33 12.92 12.19

Coverage Ratios




17. Time Interest Earned(Times) 2.52 1.76 1.76

Profitability Ratios

19. Net Profit Margin% 5.17 4.13 4.23

20. T.A Turnover(Times) 1.32 1.23 0.96

21. Fixed Asset Turnover

Ratio(Times)

4.15 3.55 2.61

22. Earning Per Share 30.09 19.17 17.92

23. Return On Asset% 6.94 5.06 4.05

24. Dupont Return On Assets% 6.82 5.08 4.06

25. Operating Income Margin% 10.19 11.60 12.01

26. Operating Asset Turnover 1.34 1.33 1.15

27. Return On Operating Assets 15.4 13.7 13.8

28. Dupont Return On Operating

Asset

13.65 15.43 13.81

30. Return On Total Equity% 24.27 19.22 14.41

31. Return On Common Equity% 13.98 13.22 36.40

Relationship Between

Profitability Ratios

32. Return on Total Assets

Variation%

12.37 13.12 10.60

33. G.P Margin% 17.90 19.14 18.47

Solvency ratios

34. Solvency Ratio% 4.11 9.86 9.27

35. Debt Ratio% 70.12 73.81 73.34

36. Debt/Equity Ratio% 261.75 332 333

37. Debt To Tangible Net Worth% 188 133 148

Interpretation

Liquidity ratio:

The liquidity ratio measured by the current assets over current

liabilities. The company performance to meet their current obligation forms their

current assets. The company has decreasing trend in current ratio in 2010 as compared

to 2008 due to increase in trade payable and short term liabilities.




The quick ratios /acid test ratio of the company continuously decrease due to increase

in stock trade with is unfavorable trend. The liquidity of a business firm is measured

by its ability to satisfy its short-term obligations as they come due. Liquidity refers to

the solvency of the firms overall financial position.

The company is good liquidity position as compared to previous year 2008,

because in 2010, the company has sufficient net working capital. Cash ratio also

shows that company is in a position to meet its short-term obligation.

Activity ratio.

Inventory turnover ratio is increasing, which shows

the high speed of inventory converting into cost of goods

sold. The days to sell the average inventory are

decreasing. The receivable turnover rate is also

increasing. Days to collect average accounts receivable

are decreasing as compared to previous years.

All activity Fixed assets utilization ratio shows the net sale

in relation to fixed assets. Ratio shows the decreasing

trend in 2010 as compared to 2009 which shows that

company not utilizing its fixed assets properly

ratios show favorable trends.

Coverage ratio

The interest coverage ratio shows the increasing trend to meet the

financial charges. Because company repay loans so its annual interest

expenses is decreasing as compared to their profitability.

Profitability ratio.




Profitability analysis shows that company gross

profit increase and then decrease from 2008 to 2010.

There is decrease in operating income in 2010 as

compared to 2009 and 2008 while there is continuously

increase in distribution and admin expenses. So

company’s overall performance is satisfactory because net

profit continuously increase due to increase in operating

income and decrease in financial cost.

Profitability ratios shows an increasing trend this shows

increase in profitability

Solvency ratio.

The solvency analysis has to do with testing the

organization ability to meet the liabilities and remain

solvent.

The solvency of Masood textile shows that the

organization total liabilities are greater than the equity of

the company however the assets of the company are

greater than the liabilities which describe that in the long

run the firm is quite solvent. Debt to equity ratio shows

the favorable trend in 2010 as compared to 2009 which

shows the liabilities are decreasing in relation to current

and fixed assets of the company.

PROJECTED STATEMENT FOR 2011





BALANCE SHEET FOR THE YEAR 2011




Basis of projected statement

Increase in Sal 25% =18401037 Net profit margin 5% = 920051

Dividend 19% = 174810

Retained earnings

Net income= 920051

Assets 2011 LIABILITIES 2011

RS RS

Cash 552031 Trade payables220812

4

Receivables 736041 Accrued markup 165609

Prepayments 368020 Short term borrowings533630

0

Loan sources 239213Current portion in noncurrentassets 552031

Trade debts441624

9 Provision for taxation 165609

Stock in trade349619

7

stock andspares 552031Total currentassets

10359782 Total current liabilities

8427673

0perating fixedassets

Long termliabilities

Property plant&equipment

4968280

Long termfinance

2165807

Long term

advances 3680

Liabilities against asset subject to

finance leas 88614Long termdeposits 11040

Defferd liability forgratuity 241652

Total long term assets498300

0Total long termliabilities

2496073

equity114166

7Surplus on revaluation of fixedassets 379420

Reserves 600000Retainedearnings

2297949

TOTALASSETS

15342782

TOTAL LIABILITIES &EQUITY

15342782




Less dividend = 174810

745241

Add retained earnings 1552708

2297949

AFN 834030

All afn is ful filled by long term finance

4 corporate PracticesFollowing is an analysis of corporate practices

4.1 Acquisition of capital

In routine practices company acquire capital from 5 sources share

capital that include ordinary and preferred shares .

reserves of the company that include genral reserves for working capital need and

capital reserves for meeting specific functions

long term loans for meeting long term need and short term loans for working capital

need but sometimes company use long term loans to meat working capital needscompany also go for financial lease

4.2 capital budgeting

in routine practices company use all four techniques for analysis but give

preference to pay back period .all these techniques mostly used for paper work

in real scenario company do not go for proper analysis for capital budgeting

plans they just invest in those projects where they see potential of growth

4.3 Financial forecasting

While preparing forecasting Company use previous year averages, trends and

also consider orders in hand for the next year their capacity of production .they

also consider economic conditions in market availability of resources

4.4 Investment avenues

Umar Apperal Limited don’t go for any long term and short term investment

4.5 Working capital/Inventory management system

The requirement of working capital and inventory increase over the time due

to increase in sales and increase in prices company meat its working capital

requirement from short term loans and soma time from long term loans

company manage its inventory according to orders company has wellestablished internally linked inventory management system

4.6 Dividend policy

In last two years Umar Apperal Limited declare dividend @15% the company

consider following matters while deciding dividend amount

Attraction of new share holders

To maintain existing share holders

To maintain market value of share

Future investment

As the company is debt based and mostly fulfill financial requirement through debts

so company’s main focus is on maintenance of existing share holders and marketvalue of share




5 Evaluation

According to our evaluation we give following suggestions and recommendations for Umar Apperal Limited

SUGGESTIONS & RECOMMENDATIONS

There is no doubt Umar Apperal Limited is very organized textile mills.

Still there is always room for improvements and following are some

measures we suggest for improving the performance of the company.

i) Decisions making should be decentralized. Middle and lower

level management should have participation in decision

making.

ii) Company should have separate organized marketing

department.

iii) Company should introduce products with its own brandname.

iv) Company should capture Middle East markets.

v) Company should start its own “Apparel Stores Chain”.

vi) Promotions, increments and other benefits should be

performance based in the company.

vii) The company should build a dispensary for workers in the

premises.

viii) Company shouldn’t depend upon large customers it should

also try to capture small ones.

ix) Company should try to develop over all thinking in

employees, not only departmental thinking.

x) Company should try to create interdepartmental coordination

and harmony.




xi) Company should try to control wastage of fabric. It reduces

cost of production.

xii) Company should try to enhance its customer portfolio by

increasing marketing efforts.

6 Visit report6 Visit report

We conducted two visits of Umar apparel division at Sargodha road FaisalabadWe conducted two visits of Umar apparel division at Sargodha road Faisalabad

during our visit we conduct interview of Mr. shahid naveed and discuss issues relatedduring our visit we conduct interview of Mr. shahid naveed and discuss issues related

to our project and get useful informationto our project and get useful information

7 CONCLUSION:

Umar Apperal is a big name in knitted garments. Its working environment is

simply the best in Faisalabad.

The company has fully equipped cutting, stitching and packing units. Its quality

assurance system is one of the best in Pakistan. It wins “Best supplier awards 2001-

02” from JC Penny the World Wide stores chain. The company’s infrastructure is

good. Offices are fully furnished. The company is centrally air-conditioned. The

company is working in “Papers less” environment. Computerized bar coding and back

tracking system are there.

Company has good warehousing capacity for fabrics and garments. Customer

portfolio of the company is very broad. World leaders in Apparel are working with .

Umar Apperal

Company has no separate marketing department. CEO and Marketing Manager of thecompany perform marketing functions individually.

Company is engaged in merchandising and its merchandising department is very

efficient for taking orders and fulfilling them accordingly. Company’s decision

making is centralized. All major decisions are made by higher management and

implemented by lower management.

Now Company is giving preference to its personals separate personnel

department is established and a ladies wing is also incorporated.

Financially the company is performing well. Its sales are increasing and its profits are

rapidly growing.




Simply we can say that Umar Apparel Division is performing well.

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