fm ratio analysis ppt
TRANSCRIPT
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ACKNOWLEDEMENT IN THE NAME OF ALLAH THE PRAISEWORTHY,
THE PASSIONATE WHOSE BLESSINGS MADE IT POSSIBLE TO COMPLETE THIS TASK.
WE ARE VERY MUCH THANKFULL TO THE SECRETARY OF NML WHO HAS PROVIDED US ALL THE INFORMATION REGARDING THE PROJECT.
WE ARE HIGHLY THANKFULL TO OUR RESPECTED MA’AM WHOSE GUIDEANCE AND CONSTANT ENCOURAGEMENT HELPED US TO COMPLTE THIS RESEARCH REPORT.
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RATIO ANALYSIS
OFNISHAT MILLS LIMITED (2009-2010)
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EXECUTIVE SUMMARY We have tried to completely describe all the elements of the “NISHAT MILLS LIMITED” in this this report.
We have tried to describe the ratio analysis of “NISHAT MILLS LIMITED” in all types of last two years.
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PRESENTED BYMUHAMMAD SALMAN
PRESENTED TO MS: AMMARA YASMIN
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INTRODUCTION OF “NISHAT MILLS LIMITED”
VISION MISSION
MAIN FOCUS OF PRESENTATION
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MAIN FOCUS OF PRESENTATION Liquidity Ratios1. Current Ratio2. Acid test (quick) Ratio3. Cash Ratio Debt Ratios1. Debt-to-Equity2. Debt-to-Total-Assets3. Total Capitalization Coverage Ratios1. Interest Coverage Ratio Activity Ratios1. Receivable turnover Ratio2. Average Collection Period
(Receivable turnover in Days)3. Payable turnover Ratio4. Average Payable Period
(Payable Turnover in Days)
5. Inventory Turnover Ratio6. Average Age of Inventory7. Total Assets turnover
ratio Profitability Ratios1. Gross Profit Margin2. Operating Profit Margin3. Net Profit Margin4. Return On Investment5. Return on Equity Market/Valuation
Ratios1. Earning per share2. Price earning ratio3. Market price per
share/Book value per share
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INTRODUCTION FLAGSHIP COMPANY ESTABLISHED IN 1951. MOST MODERN , BIGGEST COMPOSIT UNIT IN
PAKISTAN. PROFESSIONAL AND CLIENT ORIENTED MARKETING
STRATEGIES. ISO-9001 AND IKO-TEX 100 CERTIFIED SA 800 CERTIFICATION IS CURRENTLY IN PROGRESS TOTAL EXPERTS FOR THE COMPANY IN THE YEAR 2000
WERE 9.1 BILLION. DUE TO THE APPLICATION OF MANAGEMENT POLICIES CONSOLIDATION OF OPERATION A STRONG BALANCE SHEET AND EFFECTIVE MARKETING STRATEGY THE TREND IS EXPECTED TO CERTAIN IN THE YEARS OF COME.
THE COMPANY’S PRODUCTION FACILITIES COMPRISES, SPINNING, WEAVING, PROCESSING, STITCHING AND POWER GENERATING.
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VISION To transform the Company into a modern and dynamic
yarn, cloth and processed cloth and finished product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan.
To transform the Company into a modern and dynamic
power generating Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan.
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MISSION To provide quality products to
customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company.
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Nishat Mills LimitedBalance Sheet
ASSETS JUNE 30, 2010 JUNE 30, 2009
NON-CURRENT ASSETSPROPERTY, PLANT AND EQUIPMENTINVESTMENT PROPERTIESLONG TERM INVESTMENTSLONTERM LOANSLONGTERM DEPOSITES AND PAYMENTS
11,841,667 132,550 21,959,543 489,803 16,823
34,449,386
11,199,635 41,049 11,952,949 12,367 11,848
23,217,848CURRENT ASSETSSTORES, SPARE PARTS AND LOOSE TOOLSSTACK IN TRADE (INVENTORIES)TRADE DEBTSLOANS AND ADVANCESSHORT TERM DEPOSITES AND PAYMENTSOTHER RECEIVABLES (A/R)ACCRUDE INTERESTSHORT TERM INVESTMENTSCASH AND BACK BALANCES
TOTAL ASSETS
688,8326,060,4412,041,256 504,046 31,912 724,407 16,906 1,554,543 110,585
11,732,928
46,182,314
561,2514,092,5121,300,366 462,025 29,880 323,000
- 1,414,310 111,494
8,294,838
31,512,686
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Nishat Mills LimitedBalance Sheet
EQUITY & LIABILITIES JUNE 30, 2010
JUNE 30, 2009
SHARE CAPITAL AND RESERVESAUTHORISED SHARE CAPITAL
ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITALRESERVES
TOTAL EQUITY
11,000,000
3,515,99927,860,314
31,376,313
11,000,000
2,424,82716,905,940
19,330,767
NON-CURRENT LIABILITIESLONG TERM DEBTSDEFERRED TEX
2,980,6941,256,892
4,237,586
2,334,411245,243
2,579,654
CURRENT LIABILITIESTRADE AND OTHER PAYABLES (A/P)ACCRUDE MARKEUPSHORT TERM BORROWINGSCURRENT PORTION OF LONG TERM FINANCINGPROVISION OF TAXATION
TOTAL LIABILITIESTOTAL EQUITY AND LIABILITIES
2,139,321232,247
6,649,4471,128,632418,7678
10,568,415
14,806,00146,182,31
4
1,309,958202,777
7,342,600433,313313,917
9,062,265
12,181,91931,512,6
86
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Nishat Mills LimitedIncome statement
Particulars JUNE 30, 2010
JUNE 30, 2009
SALESCOST OF GOODS SOLDGROSS PROFIT
DISTRIBUTION COSTADMINISTRATIVE EXPENSESOTHER OPERATING EXPENSES
OTHER OPRATING INCOME
PROFIT FROM OPERATIONSFINANCE COST
PROFIT BEFORE TAXATIONPROVISION FOR TAXATION
PROFIT AFTER TAXATIONEARING PER SHARE- BASIC AND DILUTED
31,535,647(25,555,462)
5,980,185(1,714,598)(545,166)(289,080)
(2,548,844)
3,431,341
981,650
4,412,991(1,126,922)
3,286,069(370,608)
2,915,46110.50
23,870,379(19,518,838)
4,351,541(1,315,630)(435,012)(191,608)
(1,942,250)
2,409,291
599,006
4,412,991(1,446,796)
1,561,501(293,500)
1,268,0016.23
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Liquidity Ratios
Liquidity ratios are used to measure a firm ability to meet short term obligations.
They compare short term obligations with short term (or current) resources available to meet these obligations.
From these ratios, much insight can be obtained into the present cash solvency of the firm.
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L1)Current Ratio: Shows a firm’s ability to cover its current liabilities with its current assets
Current RatioCurrent Assets
Current LiabilitiesNISHAT MILLS LIMITED
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Current Assets 11,732,928 8,294,838Current Liabilities 10,568,415 12,181,919
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
11,732,928
10,568,415
1.11: 1
8,294,838
12,181,919
.86:1
COMPARISON
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L2) Acid-Test Ratio: Shows a firm’s ability to meet current liabilities with its most liquid assets
Acid-Test (Quick)Current Assets - InvCurrent Liabilities
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Current Assets 11,732,928 8,294,838Current Liabilities 10,568,415 12,181,919Inventory 6,060,441 4,092,512
COMPARISON JUNE 30, 2010 RS. JUNE 30, 2009 RS.
11,732,928 -6,060,441
10,568,415
.53:1
8,294,838-4,092,512
12,181,919
.43:1
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L3) Cash Ratio: Shows a firm’s ability to meet current liabilities with its cash. Cash Ratio
CashCurrent Liabilities
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Cash 110,585 111,494Current Liabilities 10,568,415 12,181,919
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
110,585
10,568,415
.010:1
111,494
12,181,919
.011:1
COMPARISON
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Summary of the Liquidity Ratio Comparisons
Strong current ratio and weak acid-test ratio indicates a potential problem in the inventories account.
Note that this industry has a relatively high level of inventories.
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Debt RatiosBalance Sheet Ratios
Financial Leverage Ratios
Shows the extent to which the firm is financed by debt.
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D1) Debt-to-Equity : It is the relationship between borrower’s fund (Debt) and Owner’s Capital (Equity).
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Total Debts 13,549,109 11,936,676Stock Holder's Equity 31,376,313 19,330,767
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
13,549,109
31,376,313
.43:1
11,936,676
19,330,767
.61:1
COMPARISON
Debt-to-EquityTotal Debt
Shareholders’ Equity
Nish at MILLS LIMITED
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D2) Debt-to-Total-Assets: Shows the percentage of the firm’s assets that are supported by debt financing
Debt-to-Total-AssetsTotal Debt
Total AssetsNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Total Debts 13,549,109 11,936,676Stock Holder's Equity 46,182,314 31,512,686
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
13,549,109
46,182,314
.29:1
11,936,676
31,512,686
.37:1
COMPARISON
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D3) Long term Debt to Total Capitalization: Shows the relative proportion of long-term debt to the long-term financing of the firm.
Total CapitalizationLong Term Debt
Total CapitalizationNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Long Term Debts 2,980,694 2,334,411Stock Holder's Equity 31,376,313 19,330,767
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
2,980,694
31,376,313
.086:1
2,334,411
19,330,767
.107:1
COMPARISON
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Coverage RatiosIncome Statement Ratios
Coverage Ratios
Ratios that relates the financial charges
(interest) of a firm to its ability to service or cover
them.
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C1) Interest Coverage Ratios: It Indicates a firm’s ability to cover interest charges. It is also called times interest earned. Interest Coverage
EBITInterest Charges
Nishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. EBIT 4,061,736 2,938,466Interest Expense 1,308,396 1,446,796
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
4,061,736
1,308,396
3.10 :1
2,938,466
1,446,796
2.03:1
COMPARISON
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Activity Ratios Ratios that measure how effectively
the firm is using its assets are called Activity Ratios.
Activity ratios, also known as Efficiency or Turnover Ratio, measure how effectively the firm is using its assets.
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A1)Receivable Turnover: Indicates quality of receivables and how successful the firm is in its collections.
Receivable TurnoverAnnual Net Sales
ReceivablesNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Sales 32,554,012 23,870,379Accounts Receivables 2,041,256 1,300,366
COMPARISON JUNE 30, 2010 RS. JUNE 30, 2009 RS.
32,554,012
2,041,256
15.94 times
23,870,379
1,300,366
18.35 times
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A2)Average Collection Period: Average number of days that receivables are outstanding
Average Collection Period
Days in the YearReceivable Turnover
orReceivables * Days in the year
Annual Credit salesNishat mills limited
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
365
15.94
22.58 days
365
18.35
19.16 days
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A3)Payable Turnover :Indicates the promptness of payment to suppliers by the firm.
Payable Turnover (PT)Annual Credit Purchases
Accounts Payable
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Purchases 7,405,307 5,517,538Accounts Payable 2,139,321 1,309,958
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
7,405,307
2,139,321
3.46 times
5,517,538
1,309,958
4.21 times
COMPARISON
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A3)Average Payment Period :Average number of days that payables are outstanding.
PT in DaysDays in the YearPayable Turnover
OrAccounts payable * Days in the year
Annual Credit PurchasesNishat mills limited
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
365
3.46
105.49 days
365
4.12
88.59 days
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A4)Inventory Turnover:The rate at which a company’s Inventory is turned over is called Inventory turnover ratio.
Inventory TurnoverCost of Goods Sold
Avg. InventoryNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Cost of Goods Sold 25,555,462 19,518,838Inventory 6,060,441 4,092,512
COMPARISON JUNE 30, 2010 RS. JUNE 30, 2009 RS.
25,555,462
6,060,441
4.12 times
19,518,838
4,092,512
4.762 times
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A5)Average Age of Inventory :Average number of days that inventories are converted into CGS.
PT in DaysDays in the Year
Inventory TurnoverOr
Avg Inventory * Days in the yearCGS
Nishat mills limited
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
365
4.126
85 days
365
4.769
75 days
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A6)Total Assets Turnover Ratio: Indicates the overall effectiveness of the firm in utilizing its assets to generate sales. Total Asset Turnover
Net SalesTotal Assets
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Sales 31,535,647 23,870,379Total Assets 46,182,314 31,512,686
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
31,535,647
46,182,314
.68
23,870,379
31,512,686
.75
COMPARISON
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Profitability Ratios
Ratios that relate profits to sales and investment are called profitability ratios.OrProfitability ratios measures that how much profit the firm generates.
Income Statement/Balance Sheet Ratios
Profitability Ratios
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P1)Gross Profit Margin: It shows the relationship between Gross profit and sales.
Gross Profit MarginGross Profit Net Sales
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Gross Profit 5,980,185 4,351,541Net Sales 31,535,647 23,870,379
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
5,980,185
31,535,647
18.96%
4,351,541
23,870,379
18.22%
COMPARISON
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P2)Operating Profit Margin: Indicates the firm’s profitability after taking account of all expenses except interest and taxes.Operating Profit Margin
EBITNet Sales
Nishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Operating Profit 4,412,991 3,008,297Net Sales 31,535,647 23,870,379
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
4,412,991
31,535,647
13.99%
3,008,297
23,870,379
12.60%
COMPARISON
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P3)Net Profit Margin: Indicates the firm’s profitability after taking into account all expenses and interest and taxes. Net Profit Margin
Net Profit after TaxesNet Sales
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Net Profit 2,915,461 1,268,001Net Sales 31,535,647 23,870,379
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
2,915,461
31,535,647
9.24%
1,268,001
23,870,379
5.31%
COMPARISON
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P4)Return on Investment: Indicates the profitability on the assets of the firm (after all expenses and taxes).
Return on InvestmentNet Profit after Taxes
Total AssetsNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Net Profit After tax 2,915,461 1,268,001Total Assets 46,182,314 31,512,686
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
2,915,461
46,182,314
6.39%
1,268,001
31,512,686
4.023%
COMPARISON
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P5)Return on Equity: Indicates the profitability to the shareholders of the firm (after all expenses and taxes).Return on Equity
Net Profit after TaxesShareholders’ EquityNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Net Profit after Tax 2,915,461 1,268,001S.H.E 31,376,313 19,330,767
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
2,915,461
31,376,313
9.29%
1,268,001
19,330,767
6.55%
COMPARISON
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Valuation/Marketability Ratios
The ratios which shows the risk and potential earning of a business investment.
These ratios are not calculated from the financial reports only, since they may involve market data such as share prices.
It is also known as a Valuation Ratios or Shareholders ratios.
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M1) Earning per share:It shows that how much net profit investors are earning on each share.
Earning per shareNet Profit after Taxes
Total number of sharesNishat mills limited
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Net Profit After tax 2,915,461 1,268,001Total No. of Shares 351,599,848 242,482,654
COMPARISON JUNE 30, 2010 RS. JUNE 30, 2009 RS.
2,915,461
351,599,848
.oo8
1,268,001
242,482,654
.005
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M2) Price earning ratio: How much investors are willing to pay for $1 of earnings.Price earning ratio
Market price per shareEarning per share
Nishat mills limitedPARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Market Price 57.47 30.5Earning / Share 10.50 6.23
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
57.47
10.50
5.47
30.5
6.23
4.89
COMPARISON
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M3) Market to Book Ratio: It shows the relationship between the market price per share and book value per share. M/B
Market price per shareBook value per shareNishat mills limited
JUNE 30, 2010 RS. JUNE 30, 2009 RS.
57.47
10.50
5.47
PARTICULARS JUNE 30, 2010 RS. JUNE 30, 2009 RS. Mkt. /share 57.47Book Value/ Share 10.50 6.23
COMPARISON
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Ratios2010 2009
Current ratio 1.11 0.86 Gearing ratio 25.53 34.34
Gross profit % 18.96 18.23 Net profit % (before tax)
10.42 06.54
Earnings per share 10.50 06.23 Proposed dividend % 25.00 20.00
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CONCLUSION
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QUESTION ANSWER SESSION
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