Analysis of Financial Statements (2011-2012)

Presented by:

MBA 90 D- 1B

November 13, 2014

Presented to:

Course Facilitator

Introduction:

Pakistan International Airline (PIA) is the national

flag carrier of Pakistan.PIA is the national airline

and the main cargo service around the world. Their

central points of activity are as:

• Jinnah International Airport Karachi.

• The Allama Iqbal airport in Lahore.

• and Islamabad International airport.

PIA traces its beginning when Pakistan was not a nation. In 1946, Quaid-e-Azam the founder of nation realized the need of air line network for the developing country and after the efforts PIA was established in 1955. The most important element of any airline service airline is its craft itself. Now a day’s PIA has 43 aircrafts in its fleet.

Vision and Mission

VISION:

PIA’s vision is to be world class airline exceeding customer expectations through dedicated employees, committed to excellence, innovation products and absolute safety.

MISSION:

• PIAC’s mission statement as follows:

• Employee teams will contribute towards making PIA a global airline of choice through

• Offering quality customer service and innovation products.

• Using state of the art technologies.

• Ensuring cost effective measures in procurement and operations.

• Development safety culture.

CORE VALUES:

• Customer Expectations

• Convenience, Caring, and Competitive Tariff

• Service

• Personalized and Courteous

• Innovation

• Cherishing New Ideas, Translated Into Action

• Cohesiveness

• Respect for Individuals, Teamwork, and Effective Communication

• Integrity

• Business Ethics, Accountability, and Transparency

• Reliability

• Loyalty and Consistency

• Safety

• Passengers, Employees, Environment, and Health

• Humility and mutual respect

6

ORGANIZATION HIERARCHY

Human Resources Corporate Planning

Flight Operations Marketing

Airport Services Finance

Flight Services Financial monitoring and Appraisal

Work Store Purchases

Information Technology Engineering

Quality Assurance Coordination

Presicion Engineering General Services

Chairman/CEO

Board of Directors

7

MANAGEMENT HIERARCHY

Staff

Supervisor

Staff

Supervisor

Officer Officer

Assistant Manager Assistant Manager

Manager Manager Manager

General Manager General Manager General Manager

Senior Vice President

Staff

Supervisor

Officer

Assistant Manager

Manager

General Manager

Senior Vice President

Deputy Managing Director

Chairman/ CEO

Products & Services

• Same day speed

• Second day speed

• Overnight SpeedPIA Speedex

• DHL cargo

• Royal air cargoPIA Cargo

Share holders of PIA

85%

3% 8%4%

Government

Individual

PIA Employees

public sector

Market Share

Domestic Market International Market

24%

76%

61%

39%

Others

PIA

Analysis of Financial Statements:

• PKR Change Analysis and Percentage change:

In rupee and percentage change the amount would be

change in rupee and we can easily calculate the percentage of the two years to show how much increase and decrease in assets and liabilities.

PKR change=Current Amount-Base Amount

Percentage change=

PKR change/Base Amount

Analysis of Financial Statements:

• Trend Analysis:

Trend analysis is also called horizontal analysis. It is used to disclosed the patterns of data and information which covers the one or another period of time.

Trend Percentage=

(Current Amount/Base Amount)*100

Analysis of Financial Statements:

• Common Size Analysis:

• It is also known as vertical analysis. By computing this type of analysis organization examined the size of each and every item of financial statements. For common size Analysis.

Common Size Analysis= (Analysis Amount/Amount of Total Assets)*100

Analysis of Financial Statements:

• Ratios: Ratios are simply relationships between the two financial calculations, and these ratios are made to measuring the financial performance of the organizations. Ratios are of four types:

1.Short Term Liquidity Ratios

2.Long Term Credit Risk Ratio

3.Profitability Ratio

4.Market Ratio

Graphical Analysis Of Current Ratios

0.25

0.22

0.16

0.13

0

0.05

0.1

0.15

0.2

0.25

0.3

2009 2010 2011 2012

Graphical Analysis

-20,786,501

-26772325

-33,177,503-35000000

-30000000

-25000000

-20000000

-15000000

-10000000

-5000000

0

2010 2011 2012

NET PROFIT/LOSS

-40,000,000

-20,000,000

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

2012 2011

Revenue Operating Expenses Operating loss

Position of Profit / Loss

Ratios 2012 2011 Interpretations

Current ratio 0.13 0.16

The company has an ability to pay

off the short term debts in 2011 in

compare with 2012

Quick Ratio 0.11 0.12The company has an ability to pay

off the short term debts

Working Capital (144445613) (88221403)

The company has more current

liabilities then current assets in both

the years

Cash flows from operations to

current liabilities(0.065) (0.015)

In comparative with 2011 the

company is cash deficit for paying

their short term liabilities

Receivables turnover rate 34.6 51.2 The receivable turnover rate with

respect to days is slow in 2012 than

in 2011. In 2012 in 10 days

receivable are collected while in

2011 the collectable rate of

receivables is 7 days. So, the

company is least concern about the

recovery of their receivables in 2012

Days to collect average accounts

receivable10 7

Short term Liquidity Ratio:

Short term Liquidity Ratio:

Inventory turnover rate 28.39 29.75It means how quickly the inventory

sell from the ware houses. In 2012

and 2011 the days to sell the

inventory is same, it means the PIA

sells their inventory in 13 days

which shows the company has good

inventory turnover rate with respect

to days.

Days to sell average inventory 13 13

Operating Cycle 23 20

The Co. shows the good position in

2012 that they can easily invested in

inventory and converts back into

the cash

Long Term Credit Risk:

Debt ratio 185% 162%It indicates the relative size

of the equity position

Profitability Ratios:

Gross profit rate -19% -15%

It shows the profitability of the

company but PIA has very low gross

profit rate in both the years

Operating expense ratio 18.74% 14%

Management’s ability to control

expenses but PIA has more expenses

than revenue

Net income as a percentage of net

sales-29.5% -22%

Due to the losses the management is unable to control the cost of company. The other reason is due to decrease of net sales affects the income of the company.

Return on assets -0.16 -0.14.

The Co. has faces loss in both the year so in compare with 2011,the PIA has negative productivity of assets and not liable to pay their debts in respect of their assets.

Return on equity 32% 31%

The rate of return earned on the

shareholders equity is also low in

comparison of 2011. This shows what

the shareholders earned this year is

low than in 2011.

Investment or Market Ratios

Earnings per share -11 -9.73

Earning per share is -11 in

2012 which shows that

earning is very low.

Market value per share 4.07 1.97It shows the market value

of share

CONCLUSION

In general, the ratios show the continuous improvement trend in financial statements

over the years. The resolution of circular debt will raise the position of the

company. In short, financial ratios help us to profile a company easily.