financial statement

shezan company limitedbalance sheet

for the year ended 2008

Aseet

Non current aseetplant property and equipmentlong term investementlong term deposits

current Aseetstores and sparesstoke in tradetrade debtadvances,deposits,prepaymentsincome tax recoverablecash and bank balance

total aseetEquity and Liabilitiesshare capital and reserveshare capital reservesunappropriated profitTotal Equity

long term liabilitiescurrent liabilitiesTotal liabilities

Income statementShezan company limitedfor the year ended 31,dec 2008

2007Rs

Sales 2174894Cost of sales 1489845

Gross profit 685049

Distribution Cost 289336Administrative cost 68213Other operating expences 70145Other operating income -13240

414454

Operating profit 270595

Finance cost 12940share of loss from associatesprofit before taxation 257655taxation 116981

net profit for the year 140674

Ratio Analysisprofitability ratios analysis

Gross profit margin2007

Err:509 Gross profit/net Sales 685049/2174894=31.50

Interpretation. Groos profit margin is an indicator of the total margin which is available to cover operating expences and yield a profit .the gros profit of shezan in 2007 was 31.50% which has decreased over the year and in 2008 it 31.48% and reason in decrease in gross profit margin is increase in the cost of good sold

Operating profit margin2007

operating profit/net sales 270595/2174894=12.44

Interpretation operating profit margin indivates that operating profit margin of shezan 12.44 &shows a decreasing trend in 2008 it was 11.23 it means that operating expences of shezan has increased over the year

Net profit marginNet income/net sales 140674/2174894=6.4

Interpretation the net profit margin is profit after taxation ,shezan net profit in decrease.

Return on Aseet2007

Net income/avg.total aseet 140674/1120347=12.55

Interpretation return on asset measure the return on total investement in org.the return on aset of a shezan company decreased over the period from 12.56%in 2007 to 12.32% in 2008

Return on Equity2007

Net income/avg.total.equity 140674/625412=22.49

Interpretation return on equity measure the rate of return on investement in busines.return on equity of shezan has decreased over time period of 2007 is 22.49 to 2008 is 21.88reason is that decrease in the net income of the shezan company

Return on common equitynet income-prefered dividend/avg.common equity

Interpretation return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.

Liquidity ratio analysisCurent ratio

20007current aseet/current liabilities 836031/437654=1.91

Interpretation current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2

Quick ratio2007

current aseet -inventory/curent liabilities 836031-612251/437654=0.51

Interpretation quick ratio is a measure of a firms ability to pay off short term obligation .quick ratio of shezan increase from 2007 is 0.51 &in 2008 the ratio is 0.60 .reason is that less inventories are stocked

c

Financial leaverageDebt to equity ratio

2007total liabilities/total equity 494935/625412=0.79

Interpretation Financial leaverages refers to the use of the data capital in a company to finance its assets.even though debt is cheaperit is considered riskier compare to equity &a huge threat to company.shezan is financing 100%of its asewhich is riskier

Debt to Aseet ratio2007

total liabilities/total asset 494935/1120347=0.44

Interpretation The debt to assets ratio show how much of your asset base its finance with debt debt to asset ratio for shezan has 2007&2008 are same its means shezan has finance its 44% of the aseet with debt

Long term debt to equity2007

long term liability/total equity 57281/625412=0.09

Interpretation Long term debt to equity measures the balance between debt and equity in the firm long term .long term debt to equity ratio decline in 2007 0.09&2008 it is 0.07,ths mean major chunk of long term debt was repaid

ACTIvity ratio

inventory turnover2007

cost of good sold/avg.inventory 1489845/836031=3.56

Interpretation inventory turnover provides an indicator of company exces amount of inventory of finish goods.shezan has low inventiry turnover ratio of 3.56 in 2007&in 2008 3.58

Fixed asset turnover2007

annual sale/fixed asset 2174894/284316=7.64

Interpretation fixed aset turnover is a measure of sale productivity and utilization of fixed aset.ratio of fixed asset turnover increase over the year 2007 is 7.64 &in 2008 it increase to 8.08due to sale of shezan

total aseet turnover2007

annual sale/total aset 2174894/1120347=1.94

Interpretation Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan

for the year ended 2008

2007 2008Rs Rs

plant property and equipment 256787 292922

25591 9915

1938 2603284316 305440

1348 1091

610903 689438

59749 74892

advances,deposits,prepayments 13729 38897

42116 114255

108186 84042836031 1002615

1120347 1308055

50000 60000

425000 500000

150696 176900

625412 736700

57281 51858

437654 519497

494935 571355

Income statementShezan company limitedfor the year ended 31,dec 2008

2008Rs

24685721691443

777129

3682407895172555

-19880

499866

277263

8104760

268399107195

161204

Ratio Analysis

Gross profit margin2008

685049/2174894=31.50 777129/2468572=31.48

Groos profit margin is an indicator of the total margin which is available to cover operating expences and yield a profit .the gros profit of shezan in 2007 was 31.50% which has decreased over the year and in 2008 it and reason in decrease in gross profit margin is increase in the cost of good sold

Operating profit margin2008

270595/2174894=12.44 277263/2468572=11.23

operating profit margin indivates that operating profit margin of shezan 12.44 &shows a decreasing trend in 2008 it was 11.23 it means that operating expences of shezan has increased over the year

Net profit margin74894=6.4 161204/2468572=6.5

is profit after taxation ,shezan net profit in 2007 is 6.4 and in 2008 net profit margin increased by 6.5 reason is that interest charges and other expences

Return on Aseet2008

140674/1120347=12.55 161204/1308055=12.32

return on asset measure the return on total investement in org.the return on aset of a shezan company decreased over the period from 12.56%in 2007 to 12.32% in 2008

Return on Equity2008

140674/625412=22.49 161204/736700=21.88

return on equity measure the rate of return on investement in busines.return on equity of shezan has decreased over time period of 2007 is 22.49 to 2008 is 21.88reason is that decrease in the net income of the shezan company

Return on common equity2007 2008

140674-0/625412=22.49 161204-0/736700=21.88

return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.

Liquidity ratio analysisCurent ratio

2008836031/437654=1.91 1002615/519497=1.92

current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2

Quick ratio2008

836031-612251/437654=0.51 1002615-690529/519497=0.60

quick ratio is a measure of a firms ability to pay off short term obligation .quick ratio of shezan increase from 2007 is 0.51 &in 2008 the ratio is 0.60 .reason is that less inventories are stocked

Financial leaverageDebt to equity ratio

2008494935/625412=0.79 571355/736700=0.78

Financial leaverages refers to the use of the data capital in a company to finance its assets.even though debt is cheaperit is considered riskier compare to equity &a huge threat to company.shezan is financing 100%of its ase

Debt to Aseet ratio2008

494935/1120347=0.44 571355/1308055=0.44

The debt to assets ratio show how much of your asset base its finance with debt debt to asset ratio for shezan has 2007&2008 are same its means shezan has finance its 44% of the aseet with debt

Long term debt to equity2008

57281/625412=0.09 51858/736700=0.07

Long term debt to equity measures the balance between debt and equity in the firm long term .long term debt to equity ratio decline in 2007 0.09&2008 it is 0.07,ths mean major chunk of long term debt was repaid

ACTIvity ratio

inventory turnover2008

1489845/836031=3.56 1691443/1002614=3.58

inventory turnover provides an indicator of company exces amount of inventory of finish goods.shezan has low inventiry turnover ratio of 3.56 in 2007&in 2008 3.58

Fixed asset turnover2008

2174894/284316=7.64 2468572/305440=8.08

fixed aset turnover is a measure of sale productivity and utilization of fixed aset.ratio of fixed asset turnover increase over the year 2007 is 7.64 &in 2008 it increase to 8.08due to sale of shezan

total aseet turnover2008

2174894/1120347=1.94 2468572/1308055=1.88

Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan

Groos profit margin is an indicator of the total margin which is available to cover operating expences and yield a profit .the gros profit of shezan in 2007 was 31.50% which has decreased over the year and in 2008 it

operating profit margin indivates that operating profit margin of shezan 12.44 &shows a decreasing trend in 2008 it was 11.23 it means that operating expences of shezan has increased over the year

2007 is 6.4 and in 2008 net profit margin increased by 6.5 reason is that interest charges and other expences

return on asset measure the return on total investement in org.the return on aset of a shezan company decreased over the period from 12.56%in 2007 to 12.32% in 2008

return on equity measure the rate of return on investement in busines.return on equity of shezan has decreased over time period of 2007 is 22.49 to 2008 is 21.88

return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.

current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2

quick ratio is a measure of a firms ability to pay off short term obligation .quick ratio of shezan increase from 2007 is 0.51 &in 2008 the ratio is 0.60 .reason is that less inventories are stocked

Financial leaverages refers to the use of the data capital in a company to finance its assets.even though debt is cheaperit is considered riskier compare to equity &a huge threat to company.shezan is financing 100%of its ase

The debt to assets ratio show how much of your asset base its finance with debt debt to asset ratio for shezan has 2007&2008 are same its means shezan has finance its 44% of the aseet with debt

Long term debt to equity measures the balance between debt and equity in the firm long term .long term debt to equity ratio decline in 2007 0.09&2008 it is 0.07,ths mean major chunk of long term debt was repaid

inventory turnover provides an indicator of company exces amount of inventory of finish goods.shezan has low inventiry turnover ratio of 3.56 in 2007&in 2008 3.58

fixed aset turnover is a measure of sale productivity and utilization of fixed aset.ratio of fixed asset turnover increase over the year 2007 is 7.64 &in 2008 it increase to 8.08due to sale of shezan

Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan

return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.

current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2

through debt

Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan