salamat afs

8/6/2019 SALAMAT AFS

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Analysis of Financial statement

Project report on

Horizontal/Trend Analysis

Team Member

Salamat Ali (8933)

Shakeel Ahmed (10758)

Submitted To: MR. Sajjad Ahmed


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H O R I Z E N T A L A N A L Y S I S P a g e | 2

ACKNOWLEGEMENT

We are grateful to the number of people for their encouragement,

inspiration and information. Specially,

We are deeply thankful to Honourable Sir Sajjad Ahmed who has given

us opportunity and also encourage for working on this project

report Horizontal Analysis of DG Khan Cement limited and lucky

cement limited

Secondly, thanks &appreciation for whole group members specially,

Shakeel Ahmed, and Salamat Ali for contributions, cooperation,

support and feedback.


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DEDICATIONS

TO THE FACULTY OF FINANCE & SPECIALLY MR. SAJJAD AHMED WHOSE

CONTRIBUTIONENHANCESTHEFUTUREOFFINANCESTUDENTS.

SECONDLY,

TO THE HUNDREDS OF STUDENTS WHO HAVE LEARNED ABOUT ANALYSIS OF FINANCIAL

MANAGEMENTCOURSEFROM IQRA UNIVERSITY.


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s.no Description Page #

1 Acknowledgement 2

2 Dedications 3

3 Executive summary 5

4 Overview of Cement industry 6

Overview of D.G Khan cement 6

Overview of Lucky cement 6

Horizontal analysis 7

Lucky

Horizontal analysis-Balance sheet base year 2005

Horizontal analysis- income statement base year 2005

7

10

7

D.G Khan 12

Horizontal analysis-Balance sheet base year 2005

Horizontal analysis- income statement base year 2005

15

12

Conclusion & recommendation 21


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The cement Industry of Pakistan has around 25 active Players. Around 10% have less than

2% market share each. At the same time the top 4 players control more than 40% production

capacity in the industry. The cement sector is divided into the north and south zones.

Presently, north zone accounts for around 80% of the rated capacity with 19 plants, while

south zone accounts for 20% with 10 plants. The cement industry of Pakistan entered theexport markets a few years back, and has established its reputation as a good quality product.

The latest information is that India will import more cement from Pakistan. So far 130,000

tonnes cement has been exported to the neighbouring country. The last few years have been a

golden period for cement manufacturers, when the government increased spending on

infrastructure development. High commercial activity and rising demand for housing on

account of higher per capita income has kept cement offtake growth in double digits. The

main factors behind increase in demand of cement were: 60 percent higher Public Sector

Development Projects (PSDP) allocation, seven percent GDP growth, increasing number of

real estate development projects for commercial and residential use, developing export

market and expected construction of mega dams. it is estimated that the price would increase

in domestic as well in regional markets that may surely boost the profitability and give relief

to the industry on its new investment.

Overview: D.G KHAN: DGKC was established in 1978 under the management control of

State Cement Corporation of Pakistan Limited (SCCP). The company is a unit of Nishat

group, which is a leading and diversified business group with a strong presence in three most

important sectors of Pakistan: textiles, cement and financial services. it is presently the

second largest cement producer of the sector. The company had a total installed capacity of

37,156,750 metric tons as at June 2008. DGKC had a market share of 13% in the localcement industry. DGKC has two plants at Dera Ghazi Khan and a new Greenfield cement

plant at Khairpur village.

Overview of lucky Cement: Lucky Cement Limited is currently one of the largest

manufacturers of cement in Pakistan. During FY10, in order to decrease cost of production,

Lucky Cement signed an MoU with Oracle Coal Fields for coal supply and also implemented

the Waste Heat Recovery Project in Karachi . LUCK is the market leader & has 21% of

the total market share. LUCK sales comprise of 44% exports & 56% local sales and

similar mix is expected to continue.

Horizontal/trend analysis:

Horizontal analysis is one of the most important parts of financial analysis. But what

is horizontal analysis in accounting and financial management. the horizontal analysis is the

financial statements of a company of successive years presented side-by-side. The goal of

horizontal analysis is to compare the figures of the current period with that of the past period.

This helps the company and its shareholders analyze their performance and find out areas of

improvement. Horizontal analysis is done for both income statements and balance sheets.

Importance of horizontal/Trend Analysis


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Horizontal analysis is an important part of the financial statements and annual reports.

It places the facts very simply in front of the shareholder and makes the job of analyzing the

improvements or the lack of it very simple for the shareholder. Horizontal analysis helps the

shareholder understand the change and the percentage change. And if there is no

improvement or in fact a reduction, then the board is compelled to explain the situation to theshareholder and what they intend to do in the future to fix it.

Calculation ofHorizontal analysis and interpretation

(Current year base year)/ base year

Horizontal Analysis income statement (lucky cement)

2005 2006 2007 2008 2009 2010 20

05

2006 2007 200

8

2009 2010

Net sales 3,980,109 7,984,529 12,521,

861

16,957

,879

26,330

,404

24,508

,793

10

0

100.

6

214.

611

326.

07

561.5

498

206.9

535Cost of sales 2,600,589 5,073,797 8,846,7

08

12,595

,158

16,519

,138

16,529

,932

10

0

95.1 240.

181

384.

32

535.2

076

225.7

902

Gross profit 1,379,520 2,910,732 3,675,1

53

4,362,

721

9,811,

266

7,978,

861

10

0

111 166.

408

216.

25

611.2

087

174.1

187

Distribution cost 23,817 33,917 497,729 1,155,

054

2,427,

837

3,433,

047

10

0

42.4

1

1989

.81

474

9.7

1009

3.71

1002

1.91

Administrative

expenses

61,355 106,740 111,311 131,30

0

165,93

6

303,24

4

10

0

73.9

7

81.4

212

114 170.4

523

184.0

959

85,172 140,657 609,040 1,286,

354

2,593,

773

3,736,

291

10

0

65.1

4

615.

071

141

0.3

2945.

335

2556.

314

Operating profit 1,294,348 2,770,075 3,066,1

13

3,076,

367

7,217,

493

4,242,

570

10

0

114 136.

885

137.

68

457.6

161

53.15

722

Finance cost 21,691 82,809 862,847 126,743

1,236,971

569,184

100

281.8

3877.9

484.31

5602.692

587.3456

Other operating

income

(1141) -203.00 -629289.

00

-1293.0

0

(23,255)

(1,902)

100

-82.2

1

55052.4

13.322

1938.124

836.9458

Other charges 63,847 134,493 142,204 644,38

8

826,77

6

257,77

4

10

0

110.

6

122.

726

909.

27

1194.

933

91.66

351

84,397 217,099 375,762 769,83

8

2,040,

492

825,05

6

10

0

157.

2

345.

231

812.

16

2317.

73

280.0

368

Profit before taxation 1,209,951 2,552,976 2,690,3

51

2,306,

529

5,177,

001

3,417,

514

10

0

111 122.

352

90.6

3

327.8

686

33.86

393

Taxation 383,364 617,026 63,146 85,394 580,45

2

280,05

7

10

0

60.9

5

-

83.5284

-

77.725

51.41

015

-

54.6118

Profit after taxation 826,587 1,935,950 2,547,292

2,677,670

4,596,549

3,137,457

100

134.2

208.17

223.94

456.0877

62.06291

Other comprehensive

income for the year

Total comprehensive

income for the year

826,587 1,935,950 2,547,2

92

2,677,

670

4,596,

549

3,137,

457

10

0

134.

2

208.

17

223.

94

456.0

877

62.06

291

Earnings per share -

basic and diluted

3.14 7.35 9.67 9.84 14.21 9.7 100

134.

1

207.

962

213.

38

352.5

478

31.97

279

ANALYSIS:


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Net sales: Below graph show the net sales trend based on 2005, increase by 100.6% in 2006, in 2007

it increase double by 214.611% which is huge increase, in 2008 there is 326.07% increase and there is

huge increase in 2009 which is positive sign for any company. And in 2010 the increase in sales by

206.95%. The increase in sales revenue was thus mainly due to lesser prices as although sales

volume had increased, sales price remained constant. Lucky Cement decreased exports which

had increasing distribution cost.

Cost of sales of the company increased by 0. 07% during FY10. The cost per ton of cement

decreased by 11% due to the implementation of Waste Heat Recovery Project and using

lesser expensive coal from a local supplier.

Net sales

Financial cost:

FC is the sum all cost including Mark-up on long term finances, Mark-up on short term

borrowings Interest on workers' profit participation fund, and Bank charges and commission

etc. SBP had increased its mark-up rate- hence a higher financing cost in 2009 and 2010.Lucky adopt the strategy to wound up in cross currency swap transactions which were

providing interest rates hedging this help to prevent the company further from interest rates.

Gross profit: The fuel and coal costs are 62% of the total costs which went down by 16. 2%.

In the previous years, the Gross profit of the lucky cement was greatly affected as cost of

sales had increased by 31% in FY09

Profit after tax: in above graph there is increasing trends from base year 2005 to subsequentyears. The highest change in 2009 by 327.8686% in profit. if we look at the figure of sales

in 2009 there is huge increase in demand of cement and sales increase by 561.5498%

Profit after tax %Gross profit %


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Earning per Share:

Earnings per share: The portion of a company's profit allocated to each outstanding share of

common stock is refereed as Earnings per share serves as an indicator of a company's profitability. In

above graph base year is 2005 compare with 2006, there is increase by 17% which is better indication

of profitability and shareholder wealth while in 2007 to 2010, there is declining trends and its is not

good indication for company as well as for shareholders.

total assets: in above graph, there is increasing trends from baseyear to following year which is positive sign for company if it is usingthem efficiently

Fixed assets: fixed assets are the plant, machinery, buildings, land etc. in

above graphs trends in increasing in 2006 to 2008 while in 2009 and 2010

there is decline in fixed assets


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Share holders equity: A firm's total assets minus its total liabilities.

Equivalently, it is share capital plus retained earnings minus treasury

shares. Shareholders' equity represents the amount by which a company

is financed through common and preferred shares. From base year 2005 ,

following years are increasing trends shown in graph.

LUCKY CEMENT Aanysis of balance sheet

2005 2006 2007 2008 2009 2010

ASSETS

rupees in

000

NON-CURRENT ASSETS

Property, plant and equipment

1346215

0 19165108 20,318,908 25,829,520 31,378,255 30,476,872

Long term deposits 2175 2175 2,175 2,175 2,175 2,175

Intangible assets 0 0 0 0 2,977 0

Long term advance 0 0 0 0 55,373 55,373

1346432

5 19167283 20321083 25831695 31438780 30534420

CURRENT ASSETS

Stores and spares 863978 1267000 1,993,573 4,160,146 3,411,549 4,008,288

Stock-in-trade 115771 431418 676,256 709,372 1,196,608 608,813

Trade debts - considered good 22808 98389 476,667 720,314 1,267,248 779,305

Loans and advances 134795 202238 241,821 163,844 108,876 105,915

Trade deposits and short term

prepayments 10100 285121 9,661 189,641 9,761 48,807

Other receivables 19936 83912 183,138 890,204 59,251 184,805

Tax refunds due from the

government 538,812 538,812 538,812 538,812

Taxation-net 33694 23661 50,057 130,899 176,584 145,151

Sales tax refundable 0 634,136 40,162 117,939

Cash and bank balances 141429 2063755 1,239,158 270,011 1,049,091 333,629

1342511 4455494 5409143 8407379 7857942 6871464

Total assets

1480683

6 23622777 25,730,226 34,239,074 38,392,362 38,310,244

EQUITY AND LIABILITIESShare capital 2633750 2633750 2,633,750 3,233,750 3,233,750 3,233,750

Reserves

2,499,93

3 4435883 6,719,800 15,421,673 20,018,222 21,862,179


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5133683 7069633 9353550 18655423 23251972 25095929

NON - CURRENT

LIABILITIES

Long term finance

6,530,16

3 10156595 8,335,604 6,633,333 4,300,000 1,658,600

Long term deposits 858,519 1435622 25,863 30,252 28,589 31,957Deferred liabilities 116,346 181623 147,245 174,171 234,633 319,217

Deferred taxation 25,362 27269 1,515,535 1,058,998 1,478,490 1,562,850

7530390 11801109 10024247 7896754 6041712 3572624

CURRENT LIABILITIES

Trade and other payables 597,853 1451086 1,546,699 3,549,543 2,677,356 3,043,320

Accrued mark-up 125,021 190130 326,181 288,977 233,381 155,500

Short term borrowings 786,543 645872 2,864,397 3,606,710 6,187,941 6,267,112

Current portion of long term

finance 616,667 2382576 1,615,152 241,667 0 175,759

2142763 82371 6352429 7686897 9098678 9641691TOTAL EQUITY AND

LIABILITIES

1480683

6 23622777 25730226 3423907 38392362 38310244

LUCKY CEMENT Horizontal Analysis of balance sheet (Base Year 2005)

ASSETS In% 2005 2006 2007 2008 2009 2010

NON-CURRENT ASSETS

Property, plant and equipment 100 42% 51% 92% 133% 126%

Long term deposits 100 0% 0% 0% 0% 0%

Intangible assets 100 100% 0%

Long term advance 100 100% 0%

100

0.4235

6 0.509 0.919 1.335 1.268

CURRENT ASSETS

Stores and spares 100 47% 131% 382% 295% 364%

Stock-in-trade 100 273% 484% 513% 934% 426%

Trade debts - considered good 100 331% 1990% 3058% 5456% 3317%

Loans and advances 100 50% 79% 22% -19% -21%

Trade deposits and short term

prepayments 100 2723% -4% 1778% -3% 383%

Other receivables 100 321% 819% 4365% 197% 827%

Tax refunds due from the government 100 100% 0% 0% 0%

Taxation-net 100 -30% 49% 288% 424% 331%

Sales tax refundable 100 100% -94% -81%


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Cash and bank balances 100 1359% 776% 91% 642% 136%

100

2.3187

8 3.029 5.262 4.853 4.118

Total assets 100 60% 74% 131% 159% 159%

EQUITY AND LIABILITIES

Share capital 100 0% 0% 23% 23% 23%

Reserves 100 77% 169% 517% 701% 775%

100

0.3771

1 0.822 2.634 3.529 3.888

NON - CURRENT LIABILITIES

Long term finance 100 56% 28% 2% -34% -75%

Long term deposits 100 67% -97% -96% -97% -96%

Deferred liabilities 100 56% 27% 50% 102% 174%

Deferred taxation 100 8% 5876% 4076% 5730% 6062%

100

0.5671

3 0.331 0.049 -0.2 -0.53

CURRENT LIABILITIES

Trade and other payables 100 143% 159% 494% 348% 409%

Accrued mark-up 100 52% 161% 131% 87% 24%

Short term borrowings 100 -18% 264% 359% 687% 697%

Current portion of long term finance 100 286% 162% -61% -100% -71%

100 -0.9616 1.965 2.587 3.246 3.5

TOTAL EQUITY AND LIABILITIES 100 0.5954 0.738 -0.77 1.593 1.587

D.G. Khan Cement Company Limited

Income Statement (2005-2010) Rs; 0000

2010 2009 2008 2007 2006 2005

Sales - net 16,275,354

18,038,20

9 12,464,347 6,419,625 7,955,665 5,279,560

Cost of sales (13,569,994)

(12,358,47

9) (10,528,046) (4,387,640) (3,992,822) (3,330,769)

Gross profit 2,705,360 5,679,730 1,936,301 2,031,985 3,962,843 1,948,791

Administrative expenses (172,436) (141,852) (110,745) (104,169) (121,953) (76,480)

Selling and distribution

expenses (994,418)

(1,871,517

) (562,970) (65,122) (34,352) (60,905)


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Other operating expenses (189,015) (795,854) (595,687) (139,307) (191,850) (93,786)

Other operating income 911,672 770,137 846,606 479,420 294,114 707,692

Impairment on investment 0 (257,386)

Profit from operations 2,261,163 3,383,258 1,513,505 2,202,807 3,908,802 2,425,312

Finance cost (1,902,760)

(2,606,358

) (1,766,298) (468,173) (450,696) (304,041)

Profit before tax 358,403 776,900 (175,273) 1,720,471 3,448,533 2,121,271

Taxation (125,381) (251,319) 200,958 (98,000) (1,030,078) (439,193)

Profit for the year 233,022 525,581 25,685 1,622,471 2,418,455 1,682,078

Earnings per share 0.72 1.63 0.12 6.43 9.14 7.82

Income Statement Horizontal Analysis (Bais Year 2005)

Rs;

%

2010 2009 2008 2007 2006 2005

Sales - net 208.3

241.

7 136.1 21.6 50.7 100.0

Cost of sales 307.4271.

0 216.1 31.7 19.9 100

Gross profit 38.8

191.

4 (0.6) 4.3 103.3 100

Administrative expenses 125.5 85.5 44.8 36.2 59.5 100Selling and distribution

expenses 1,532.72,97

2.8 824.3 6.9

(43.6

) 100

Other operating expenses 101.5748.6 535.2 48.5 104.6 100

Other operating income 28.8 8.8 19.6 (32.3)(58.4

) 100

Impairment on investment (100.0)100.

0

Profit from operations (6.8) 39.5 (37.6) (9.2) 61.2 100

Finance cost 525.8757.

2 480.9 54.0 48.2 100

Profit before tax (83.1)(63.4

)

(108.3

) (18.9) 62.6 100

Taxation (71.5)(42.8)

(145.8) (77.7) 134.5 100

Profit for the year (86.1)

(68.8

) (98.5) (3.5) 43.8 100

Earnings per share (90.8)(79.2

) (98.5) (17.8) 16.9 100


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The net sales of DG Khan Cemet Pvt Ltd has low rate of sales growth in trande of first two

steadied years, while it attained the highe sales growth in year 2009 with respect to its base

year sales 2005. The reasion behind the low trande of first two years might be low demandof

market or inflationary factor of the country. The financing costs of the firm have highly

increased in last three years, it shows that firm has higly borrowed short term loans in the last

threeyears. Its better sign to have tax shield but at a certain limit. It is possative sign for

compony to export product and increase its sales volume, while the financig cost might be

delimma for firm.

The net sales of DG Khan Cemet Pvt Ltd has low rate of sales growth in trande of first two

steadied years, while it attained the highe sales growth in year 2009 with respect to its base

year sales 2005. The reasion behind the low trande of first two years might be low demandof

market or inflationary factor of the country. The financing costs of the firm have highly

increased in last three years, it shows that firm has higly borrowed short term loans in the last

threeyears. Its better sign to have tax shield but at a certain limit. It is possative sign for

compony to export product and increase its sales volume, while the financig cost might be

delimma for firm.


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The absolute amount of the EPS shows diminishing trand after 2006, absolute EPS of 2008 is

.12 with respect to EPS of base year 2005 which is 7.82. the Base year graph shows

percentage change in EPS of the year with rspect to EPS of Base year. Net earnigs has

diminished in the last three years, there fore EPS is also diclining.

DG Khan Cement Company Limited

Balance Sheet (2005-2010)

ASSETS 2010 2009 2008 2007 2006 2005

CURRENT ASSETS:Stores, spares and loose tools 3,017,742 2,935,880 2,299,250 1,496,291 836,049 1,035,081

Stock-in-trade 1,036,876 899,836 445,856 295,140 226,286 100,994

Trade debts 303,949 513,966 366,173 144,245 74,165 76,238

Investments 10,740,972 7,785,968 15,082,582 16,933,790 8,543,763 2,769,134

Advances, deposits, prepayments and

other receivables 1,087,161 908,100 782,358 229,315 152,465 121,486

Cash and bank balances 230,792 243,842 226,372 116,173 77,167 93,836

Total Current Assets 16,417,492 13,287,592 19,202,591 19,214,954 9,909,895 4,196,769

Fixed Assets:

Property, plant and equipment 25,307,302 24,345,793 22,977,894 22,117,551 7,521,723 6,637,237

Assets subject to finance lease 5,135 133,376 295,058 317,262

Capital work in progress 465,650 1,750,208 2,488,307 1,907,063 11,759,677 3,983,175

Investments 4,696,922 3,172,508 6,795,961 8,174,474 4,482,213 2,610,634

Long term loans, advances and deposits 158,677 166,940 523,046 196,913 335,810 271,428

Total Fixed Assets 30,628,551 29,435,449 32,790,343 32,529,377 24,394,481 13,819,736

Total Assets 47,046,043 42,723,041 51,992,934 51,744,331 34,304,376 18,016,505

Liabilities & Shareholder'sEquityCurrent Liabilities

Trade and other payables 1,679,749 1,435,420 1,370,336 1,027,274 1,406,869 1,154,426

Accrued markup 346,425 531,772 364,664 342,612 340,757 960,620

Short term borrowing - secured 9,585,642 9,068,575 7,597,020 3,942,972 2,613,695 306,048

Current portion of non-current

liabilities 2,139,283 4,763,942 2,687,608 2,042,281 1,619,025 599,674

Provision for taxation 35,090 35,090 35,090 35,090 35,090 35,090

Total Current Liabilities 13,786,189 15,834,799 12,054,718 7,390,229 6,015,436 3,055,858

Fixed Liabilities

Long term finances 5,089,507 4,375,837 8,411,051 8,686,447 7,372,468 4,899,225


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Liabilities against assets subject to

finance lease 1,141 28,886 131,985

Long term deposits 81,138 73,765 73,890 79,467 33,814 28,674

Retirement and other benefits 104,029 78,622 54,018 39,862 26,572 45,765

Deferred taxation 1,465,960 1,441,576 1,319,000 1,624,000 1,559,000 537,000

Total Fixed Liabilities. 6,740,634 5,969,800 9,857,959 10,430,917 9,020,740 5,642,649

CAPITAL AND RESERVES

ordinary shares of Rs 10 each 9,500,000 9,500,000 9,500,000 9,500,000 2,500,000 2,500,000

preference shares of Rs 10 each 500,000 500,000 500,000 500,000 500,000 500,000

10,000,000 10,000,000 10,000,000 10,000,000 3,000,000 3,000,000

Issued, subscribed and paid up

capital 3,650,993 3,042,494 2,535,412 2,535,412 1,843,937 1,843,937

Share deposit money 8,351

Reserves 22,160,477 17,401,220 27,595,698 29,630,084 15,085,354 7,196,568

Accumulated profit 707,750 474,728 (50,853)

1,757,68

9 2,330,558 277,493

26,519,220 20,918,442 30,080,257 33,923,185 19,268,200 9,317,998

CONTINGENCIES AND

COMMITMENTS

47,046,04

3

42,723,04

1

51,992,93

4

51,744,33

1

34,304,37

6

18,016,50

5

DG Khan Cement Company Limited

Horizontal Analysis of Balance Sheet Base Year 2005ASSETS 2005 2006 2007 2008 2009 2010CURRENT ASSETS:

Stores, spares and loose tools 100% -19% 45% 122% 184% 192%

Stock-in-trade 100% 124% 192% 341% 791% 927%

Trade debts 100% -3% 89% 380% 574% 299%

Investments 100% 209% 512% 445% 181% 288%

Advances, deposits, prepayments and

other receivables 100% 26% 89% 544% 647% 795%

Cash and bank balances 100% -18% 24% 141% 160% 146%

Total Current Assets 100% 136% 358% 358% 217% 291%

Fixed Assets:

Property, plant and equipment 100% 13% 233% 246% 267% 281%

Assets subject to finance lease 100% -100% -100%

Capital work in progress 100% 195% -52% -38% -56% -88%

Investments 100% 72% 213% 160% 22% 80%

Long term loans, advances and deposits 100% 24% -27% 93% -38% -42%

Total Fixed Assets 100% 77% 135% 137% 113% 122%

Total Assets 100% 90% 187% 189% 137% 161%

Liabilities & Shareholder's Equity


17/21


Current Liabilities

Trade and other payables 100% 22% -11% 19% 24% 46%

Accrued markup 100% -65% -64% -62% -45% -64%

Short term borrowing - secured 100% 754% 1188% 2382% 2863% 3032%

Current portion of non-current liabilities 100% 170% 241% 348% 694% 257%Provision for taxation 100% 0% 0% 0% 0% 0%

Total Current Liabilities 100% 97% 142% 294% 418% 351%

Fixed Liabilities

Long term finances 100% 50% 77% 72% -11% 4%

Liabilities against assets subject to

finance lease 100% -78% -99% -100% -100% -100%

Long term deposits 100% 18% 177% 158% 157% 183%

Retirement and other benefits 100% -42% -13% 18% 72% 127%

Deferred taxation 100% 190% 202% 146% 168% 173%

Total Fixed Liabilities. 100% 60% 85% 75% 6% 19%

CAPITAL AND RESERVES

ordinary shares of Rs 10 each 100% 0% 280% 280% 280% 280%

preference shares of Rs 10 each 100% 0% 0% 0% 0% 0%

100% 0% 233% 233% 233% 233%

Issued, subscribed and paid up capital 100% 0% 37% 37% 65% 98%

Share deposit money 100%Reserves 100% 110% 312% 283% 142% 208%

Accumulated profit 100% 740% 533% -118% 71% 155%

100% 107% 264% 223% 124% 185%

CONTINGENCIES AND

COMMITMENTS 100% 90% 187% 189% 137% 161%

The total assets increased from that of the base year due to the phenomenal increase in sales

and the reduction of the in efficient assets by the company but still, the DGKC has invested in

the expansion projects, which has increased rate of trend, it shows the companys operating


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cycle has been relatively stable. Current Assets of the firm has also increased, it indicated that

firm could face its short term claims

Fixed assets of the firm has increased with respect to its base year, which is good sign for

company, and it is possative sign for its investors, but the highely increased short term

liabilities of the firm is not in favour of shareholders objectives which could diminise their

EPS. While firm have ability to face for short term borrowing decisions.

Comparative Balance Sheet Analysis:


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Current liabilities of DG are greater than current liabilities of Lucky, while both firms current

liabilities are increasing gradually. Lucky has higher current assets as compare to its current

liabilities than DG khan, which shows that Lucky has greater ability to face its short term

claims, so, its good sign for firm as well as creditors and investors.

Conclusion and recommendation:

Fixed Liabilities of both firm are significantly increasing while Lucky Cement has

diminishing trend in 2009-2010. It shows that Lucky is performing well. Fixed Assets of both

firms are gradually increasing with respect to its base year, which shows both firms are

investing in new projects and equipments.

Share holder equity of Lucky Cement has highly increased from 2008 to 2010, whichindicates that Lucky Cement is more emphasis over equity financing rather to finance long

term liabilities. Worth of assets of both firm is in good position, but the DG assets have

significant posative shift in 2006-07, while Lucky Cements assets are gradually increasing.

Comparative Income Statement Analysis:


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DG Khan Cements net sales is increasing gradually, while Lucky Cements sales is highly

increasing. Which shows firm is performing well to grow its sales by exporting or placing

efficiently its product in the country. Gross profit of Lucky Cement is too much higher then

DG Khan Cement, which shows that Lucky Cement has controled its distributin and othe

costs, while DG Khan Cement has 1% decling gross profit with respect to its base year. Over

all trend for GP is good of Lucky Cement Ltd.

AS Lucky cement has higher sales, gross profit and current liabilities, so the firm is facing

higher financing costs with respect to its base year, it may resulted in decline of its net

income, but profit before tax also shows that lucky is in good position.

Profit after tax and EPS of Lucky Cement shows that Lucky cement is managing its financing

cost efficiently and availing sales growth opportunities efficiently, so its EPS and Net income

is in good position as compared to DG Khan Cemen Pvt Ltd. DG Cement Should controle its

cost of goods sold because it has good share of sales but it gross profit is not in good position

which became the delima for DG Khan Cement.

Lucky :


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Conclusion:

The future outlook on the international front seems dull, while the local demand is expected

to pick up in the aftermath of floods. the cement sector as not only the year which saw growth

in cement prices, both locally and internationally, helping the companies to secure more

profits; but also the year in which they faced massive growth in operation costs, primarily

fuel and electricity costs. This led the most of cement companies of the country to face

massive problems in continuing productions and even to obtain profits from sales after the

deduction of operation costs. Many cement companies were faced losses due to these costs.

SBP had increased its mark-up rate- hence a higher financing cost in 2009 and 2010.

Lucky adopt the strategy to wound up in cross currency swap transactions which were

providing interest rates hedging this help to prevent the company further from interest

rates.

Energy and fuel crisis has also been spotted by the company in due time and

preventive measures are employed with the hope that as possible to reduce operations

and fuel costs in the future.

It is highly recommended that lucky should to reduce financial cost which can be

create difficulties regarding debt policy as well as reduce as profit.

salamat afs

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