AFS - Indus Motors

8/13/2019 AFS - Indus Motors

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Indus Motor CompanyAnalysis of Financial Statement

Submitted To:

Sir Shuja Ali

Submitted By:

Sameer Tariq (090032)

Air University, Islamabad


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Company Information:

Company Registration Number:

0020742

National Tax Number:

0676546 7

Status of the Company:

Listed On:Karachi Stock Exchange (Guarantee) Ltd

Lahore Stock Exchange (Guarantee) Ltd

Islamabad Stock Exchange (Guarantee) Ltd

Symbol:

INDU

Details of Permissible Business Activities:

Manufacturers, assemblers, distributors and importers of Toyota and Daihatsu vehicles,

spare parts and accessories in Pakistan.

Bankers:

Askari Bank Limited

Bank Alfalah Limited

Barclays Bank PLC Pakistan

Bank Al-Habib Limited

Citibank N.A.

Habib Bank Limited

Habib Metropolitan Bank Limited

HSBC Bank Middle East Limited

MCB Bank Limited

National Bank of Pakistan

NIB Bank Limited


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Soneri Bank Limited

Standard Chartered Bank (Pakistan) Limited

The Bank of Tokyo-Mitsubishi UFJ, Limited

United Bank Limited

Auditors:

A.F. Ferguson & Co.

Chartered Accountants

State Life Building No. 1-C,

I.I. Chundrigar Road,

Karachi.

Legal Advisors:

A.K. Brohi & Company

Mansoor Ahmed Khan & Co.

Mahmud & Co.

Sayeed & Sayeed Co.

Share Registrar:

Noble Computer Services (Pvt.) Ltd.,

First Floor, House of Habib Building,(Siddiqsons Tower), 3 Jinnah Cooperative Housing Society,

Main Shahrah-e-Faisal

Karachi-75350.

PABX: (92-21) 34325482-87, Fax (92-21) 34325442

Email:[email protected]

Address of Head Office / Registered Office / Factory

Plot No. N.W.Z/1/P-1, Port Qasim Authority,

Bin Qasim, Karachi.

Phone: (PABX) (92-21) 34720041-48

(UAN) (92-21) 111-TOYOTA (869-682)

Fax: (92-21) 34720056

Email:[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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Memberships:

Pakistan Automotive Manufacturers Association (PAMA)

The Overseas Investors Chamber of Commerce & Industry (OICCI)

Karachi Chamber of Commerce & Industry (KCCI)Pakistan Business Council (PBC)

Associated Companies:

Toyota Motor Corporation, Japan

Toyota Tsusho Corporation, Japan

Thal Limited

Habib Insurance Co. Limited

Shabbir Tiles & Ceramics Ltd.Makro-Habib Pakistan Ltd.

Habib Metropolitan Bank Limited


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Vision and Mission Statements:

Vision Statement:

To be the most respectable and successful enterprise, delighting customers with a wide

range of products and solutions in automobile industry with the best people and the best

technology.

Mission Statement:

IMCs Mission is reflected in our Companys Slogan

ACT # 1

Action, Commitment and Teamwork to become #1 in Pakistan.

The Indus Team is committed to ACT so that it achieves the #1 position in the auto industry

in:

Respect and Corporate Image

Customer Satisfaction

Profitability

Quality and Safety

Production and Sale

Best Employer


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History:

Indus Motor Company (IMC) is a joint venture between theHouse of Habib ,Toyota Motor

Corporation Japan (TMC) , andToyota Tsusho Corporation Japan (TTC) for assembling,progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01,

1990. IMC is engaged in sole distributorship of Toyota andDaihatsu Motor Company Ltd.

vehicles in Pakistan through its dealership network.

The company was incorporated in Pakistan as a public limited company in December 1989

and started commercial production in May 1993. The shares of company are quoted on the

stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation

have 25 % stake in the company equity. The majority shareholder is the House of Habib.

IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an

area measuring over 105 acres.

Indus Motor Companys plant is the only manufacturing site in the world where both

Toyota and Daihatsu brands are being manufactured.

Heavy investment was made to build its production facilities based on state of art

technologies. To ensure highest level of productivity world-renowned Toyota Production

Systems are implemented.

IMC's Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux

Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of imported

vehicles.
http://www.hoh.net/http://www.toyota.co.jp/enhttp://www.toyota.co.jp/enhttp://www.toyotsu.co.jp/http://www.daihatsu.com/http://www.daihatsu.com/http://www.toyotsu.co.jp/http://www.toyota.co.jp/enhttp://www.toyota.co.jp/enhttp://www.hoh.net/


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Collaboration:

EQUITY

Toyota Motor Corporation

Toyota Tsusho Corporation

House of Habib

BUSINESS

TOYOTA GROUP

Technology & KD Parts

Materials, Parts & Logistics Support

Technology KD Parts

Hilux Frame & Deck


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Core Values:

These are the core values of Indus Motor Company Limited:

World class production quality

Achieving the ultimate goal of complete customer satisfaction

Being seen as the best employer

Fostering the spirit of teamwork

Inculcating ethical and honest practices


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Strategic Objectives:

Achieving market leadership by delivering value to customers:

Following our Customer First philosophy in manufacturing and providing high

quality vehicles and services that meet the needs of Pakistani customers.

Enhancing the quality and reach of our 3S Dealership Network.

Employing customers insight and feedback for continuous corporate renewal,

including product development, improving service and customer care.

Bringing Toyota Quality to Pakistan

Maximizing QRD (Quality, Reliability and Durability) by built-in engineering.

Transferring technology and promoting indigenization at IMC and its Vendors.

Raising the bar in all support functions to meet Toyota Global Standards.

Optimizing cost by Kaizen

Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors.

Implementing Toyota Production System.

Removing waste in all areas and operating in the lowest cost quartile of the

industry.

Respecting our people

Treating employees as the most important sustainable competitive resource.

Providing a continuous learning environment that promotes individual creativity

and teamwork.


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Supporting equal employment opportunities, diversity and inclusions without

discrimination.

Building competitive value through mutual trust and mutual responsibility

between the Indus Team and the Company.

Becoming a Good Corporate Citizen

Following ethical business practices and the laws of the land.

Engaging in the philanthropic and social activities that contribute to the

enrichment of Pakistani society, especially in the areas that are strategic to both

societal and business needs e.g. Road Safety, Technical Education, Environment

Protection, etc.

Enhancing corporate values and respect while achieving stable and long-term

growth for the benefit of our shareholders.


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Stockholder Information:

Factory / Registered Office

Plot No. N.W.Z/1/P-1, Port Qasim Authority,

Bin Qasim, Karachi.

PABX: 92-21-34720041-48

Fax: 92-21-34720056

Share Registrar:

Noble Computer Services (Private) Limited

First Floor, House of Habib Building(Siddiqsons Tower), 3-Jinnah C. H. Society,

Main Shahrah-e-Faisal, Karachi 75350.

PABX: 92-21-34325482-87

Fax: 92-21-34325442

Ownership:

On June 30, 2011, there were 3,497 shareholders on record of the Companys ordinary

shares.

Listing on stock exchanges:

Indus Motor Company Limited equity shares are listed on Karachi, Lahore and Islamabad

Stock Exchanges.

Stock Code:

The stock code for dealers in equity shares of Indus Motor Company Limited at KSE, LSEand ISE is INDU.


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Financial Statement Analysis:

This section will include the following to analyze the Financial Statements of Indus Motor

Company Limited:

Vertical Analysis

Horizontal Analysis

Ratio Analysis


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Profit and Loss Account


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Profit and Loss Account:

2007 2008 2009 2010 2011

Rs in 000 Rs in 000 Rs in 000 Rs in 000 Rs in 000

Net sales 39,061,226 41,423,843 37,864,604 60,093,139 61,702,677

Cost of sales (34,620,632) (37,575,356) (35,540,418) (55,382,306) (57,613,542)

Gross profit 4,440,594 3,848,487 2,324,186 4,710,833 4,089,135

Distribution

costs (509,986) (487,373) (469,985) (468,496) (690,130)

Administrative

expenses (265,302) (297,284) (352,249) (381,575) (462,517)

(775,288) (784,657) (822,234) (850,071) (1,152,647)

3,665,306 3,063,830 1,501,952 3,860,762 2,936,488

Other operating

expenses (348,430) (306,193) (156,479) (416,106) (355,796)

3,316,876 2,757,637 1,345,473 3,444,656 2,580,692

Other operating

income 956,494 786,834 727,080 1,801,459 1,507,878

4,273,370 3,544,471 2,072,553 5,246,115 4,088,570

Finance cost (43,889) (2,760) (26,540) (3,576) (77,115)

Profit before

taxation 4,229,481 3,541,711 2,046,013 5,242,539 4,011,455

Taxation (1,483,780) (1,250,866) (660,911) (1,799,136) (1,268,071)Profit after

taxation 2,745,701 2,290,845 1,385,102 3,443,403 2,743,384


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Vertical Analysis (Profit and Loss Account):

2007 2008 2009 2010 2011


Net sales 100.00% 100.00% 100.00% 100.00% 100.00%

Cost of sales 88.63% 90.71% 93.86% 92.16% 93.37%

Gross profit 11.37% 9.29% 6.14% 7.84% 6.63%

Distribution

costs 1.31% 1.18% 1.24% 0.78% 1.12%

Administrative

expenses 0.68% 0.72% 0.93% 0.63% 0.75%

1.98% 1.89% 2.17% 1.41% 1.87%

9.38% 7.40% 3.97% 6.42% 4.76%

Other operating

expenses 0.89% 0.74% 0.41% 0.69% 0.58%

8.49% 6.66% 3.55% 5.73% 4.18%

Other operating

income 2.45% 1.90% 1.92% 3.00% 2.44%

10.94% 8.56% 5.47% 8.73% 6.63%

Finance cost 0.11% 0.01% 0.07% 0.01% 0.12%

Profit before

taxation 10.83% 8.55% 5.40% 8.72% 6.50%

Taxation 3.80% 3.02% 1.75% 2.99% 2.06%Profit after

taxation 7.03% 5.53% 3.66% 5.73% 4.45%

Interpretation:

The vertical analysis is used to measure the accounts in comparison with the other

businesses. In this profit and loss account the cost of sales contains the major portion of net

sales which is 88.63% in FY 2007, 90.71% in FY 2008, 93.86% in FY 2009, 92.16% in FY

2010 and 93.37% in FY 2011.


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Horizontal Analysis (Profit and Loss Account):

2007 2008 2009 2010 2011


Net sales 100.00% 106.05% 96.94% 153.84% 157.96%

Cost of sales 100.00% 108.53% 102.66% 159.97% 166.41%

Gross profit 100.00% 86.67% 52.34% 106.09% 92.09%

Distribution

costs 100.00% 95.57% 92.16% 91.86% 135.32%

Administrative

expenses 100.00% 112.05% 132.77% 143.83% 174.34%

100.00% 101.21% 106.06% 109.65% 148.67%

100.00% 83.59% 40.98% 105.33% 80.12%

Other operating

expenses 100.00% 87.88% 44.91% 119.42% 102.11%

100.00% 83.14% 40.56% 103.85% 77.80%

Other operating

income 100.00% 82.26% 76.02% 188.34% 157.65%

100.00% 82.94% 48.50% 122.76% 95.68%

Finance cost 100.00% 6.29% 60.47% 8.15% 175.70%

Profit before

taxation 100.00% 83.74% 48.38% 123.95% 94.85%

Taxation 100.00% 84.30% 44.54% 121.25% 85.46%Profit after

taxation 100.00% 83.43% 50.45% 125.41% 99.92%

Interpretation:

In the horizontal analysis, the items in a financial statement are measured over a certain

period of time. As compared to the FY 2007 the net sales in FY 2008 has increased by

6.05%, in FY 2009 it has decreased by 3.06%, in FY 2010 it has increased exponentially by

53.84% and same is the case in FY 2011 the net sales have increased by 57.96%. Going onto the cost of sales, it has increased by 66.41% in FY 2011 which is the most increase in this

time series. Same is the case in distribution costs the percentage has increased by 35.32%

as compared to FY 2007 in FY 2011. The operating expenses shows an increasing trend till

FY 2010 but falls in FY 2011 from 88.34% to 57.65%. The change is a decrease by 30.69%.


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Balance Sheet


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Vertical Analysis (Balance Sheet):

2007 2008 2009 2010 2011


Assets

Non-current assets

Fixed assets 13.37% 29.34% 19.02% 12.25% 15.75%

Long-term loans and

advances 0.18% 0.31% 0.14% 0.06% 0.04%

Long-term deposits 0.04% 0.05% 0.03% 0.03% 0.03%

13.59% 29.70% 19.19% 12.33% 15.83%

Current assets

Stores and spares 1.45% 1.69% 0.62% 0.41% 0.71%

Stock-in-trade 18.26% 19.19% 19.77% 19.16% 21.20%

Trade debts 4.25% 9.69% 8.40% 5.94% 5.05%

Current maturity of

finance under musharika

arrangements 0.02% 0.00% 0.00% 0.00% 0.00%

Loans and advances 2.57% 5.36% 4.32% 3.09% 3.45%

Short-term prepayments

and trade deposits 0.30% 0.17% 0.08% 0.07% 0.07%

Accrued mark-up 0.85% 0.25% 0.25% 0.21% 0.20%

Other receivables 3.87% 0.54% 0.33% 0.72% 0.56%

Investments - at fair valuethrough profit and loss 0.00% 0.39% 0.00% 0.00% 18.61%

Taxation-net 0.31% 1.52% 0.00% 0.00% 1.49%

Cash and bank balances 54.54% 31.48% 47.04% 58.06% 32.84%

86.41% 70.30% 80.81% 87.67% 84.17%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%


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2007 2008 2009 2010 2011


Liabilities and Equity

Equity

Share capital

Authorized capital

100,000,000

(2006:100,000,000)

Ordinary shares of Rs 10

each 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Issued, subscribed and

paid-up capital 5.02% 5.72% 3.80% 2.90% 2.93%

Reserves 46.33% 62.92% 45.98% 43.49% 49.69%51.35% 68.64% 49.78% 46.38% 52.62%

Liabilities

Non-current liabilities

Deferred taxation 1.34% 3.87% 2.44% 1.20% 1.69%

1.34% 3.87% 2.44% 1.20% 1.69%

Current liabilities

Trade and other payables 18.46% 20.32% 19.06% 21.76% 21.39%

Advances from customers

and dealers 28.82% 7.17% 28.65% 29.76% 24.30%Accrued mark-up 0.00% 0.00% 0.00% 0.00% 0.00%

Short-term running

finances 0.00% 0.00% 0.00% 0.00% 0.00%

Current portion of

liabilities against assets

subject to finance lease 0.02% 0.00% 0.00% 0.00% 0.00%

Taxation - net 0.00% 0.00% 0.07% 0.89% 0.00%

47.31% 27.49% 47.79% 52.42% 45.69%

Contingencies and

commitments

Total equity and

liabilities 100.00% 100.00% 100.00% 100.00% 100.00%


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Horizontal Analysis (Balance Sheet):

2007 2008 2009 2010 2011


Assets

Non-current assets

Fixed assets 100.00% 192.65% 187.91% 158.77% 201.82%

Long-term loans and

advances 100.00% 148.63% 100.08% 54.66% 41.95%

Long-term deposits 100.00% 108.95% 108.95% 107.44% 139.12%

100.00% 191.80% 186.48% 157.21% 199.48%

Current assets

Stores and spares 100.00% 102.18% 56.55% 49.11% 83.52%

Stock-in-trade 100.00% 92.23% 142.97% 181.76% 198.96%

Trade debts 100.00% 200.23% 260.89% 242.36% 203.72%

Current maturity of

finance under musharika

arrangements 100.00% 0.00% 0.00% 0.00% 0.00%

Loans and advances 100.00% 183.46% 222.55% 208.95% 230.44%

Short-term prepayments

and trade deposits 100.00% 48.71% 35.51% 39.51% 39.77%

Accrued mark-up 100.00% 26.40% 38.41% 43.17% 39.65%

Other receivables 100.00% 12.28% 11.21% 32.40% 24.69%

Investments - at fair valuethrough profit and loss

Taxation-net 100.00% 431.85% 0.00% 0.00% 822.35%

Cash and bank balances 100.00% 50.67% 113.90% 184.43% 103.15%

100.00% 71.40% 123.49% 175.76% 166.87%

Total Assets 100.00% 87.76% 132.05% 173.24% 171.30%


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2007 2008 2009 2010 2011


Liabilities and Equity

Equity

Share capital

Authorized capital

100,000,000

(2006:100,000,000)

Ordinary shares of Rs 10

each 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Issued, subscribed and

paid-up capital 100.00% 100.00% 100.00% 100.00% 100.00%

Reserves 100.00% 119.18% 131.04% 162.60% 183.71%100.00% 117.31% 128.01% 156.49% 175.53%

Liabilities

Non-current liabilities

Deferred taxation 100.00% 253.22% 239.69% 155.03% 216.04%

100.00% 253.22% 239.69% 155.03% 216.04%

Current liabilities

Trade and other payables 100.00% 96.60% 136.34% 204.18% 198.51%

Advances from customers

and dealers 100.00% 21.84% 131.28% 178.90% 144.42%Accrued mark-up 100.00% 14.69% 94.13% 132.03% 58.74%

Short-term running

finances

Current portion of

liabilities against assets

subject to finance lease 100.00% 0.00% 0.00% 0.00% 0.00%

Taxation - net

100.00% 51.00% 133.38% 191.94% 165.44%

Contingencies and

commitments

Total equity and

liabilities 100.00% 87.76% 132.05% 173.24% 171.30%


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Interpretation:

Vertical Analysis of Balance Sheet:

The current assets are greater in respective financial years which are 86.41% in FY 2007,70.30% in FY 2008, 80.81% in FY 2009, 87.67% in FY 2010 and 84.17% in FY 2011. The

major portion of current assets is contained by cash and bank balances which drops in FY

2008 to 31.48% and in FY 2011 to 32.84%. The second major portion of current assets is

contained by stock-in-trade which shows a positive trend in a time series. The non-current

assets have increased in FY 2008.

In the liabilities and equity portion the vertical analysis shows that the major portion is the

equity and the current liabilities. In equity the reserves shows the higher percentage in a

group. Whereas in current liabilities; trade and other payables and advances from

customers and dealers shows the highest percentage.

Horizontal Analysis of Balance Sheet:

The horizontal analysis of the balance sheet shows that the fixed assets shows an

increasing trend but falls in FY 2010. Long-term loans and advances show a decreasing

trend but increases by 48.63% in FY 2008. The short term loans and advances show an

increasing trend. In FY 2009 and FY 2010 the stores and spares have decreased.

In the liabilities and equity portion the reserves shows increasing trend. It has increased by19.18% in FY 2008, 31.04% in FY 2009, 62.60% in FY 2010 and 83.71% in FY 2011. The

deferred taxation has increased exponentially in FY 2008 by 153.22% and decreased in FY

2009 from 239.69% to 155.03% in FY 2010. The total liabilities and equity has decreased

by 12.24% in FY 2008 but shows increasing trend afterwards.


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Cash Flow Statement


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Cash Flow Statement:

2007 2008 2009 2010 2011


Cash flow from operating activities

Cash generatated from operations 4,045,040 (125,517) 6,538,777 7,952,792 1,806,008

Interest paid (43,411) (3,427) (8,267) (77,415) (25,443)

Workers profit participation fund

paid (227,390) (201,390) (105,538) (282,674) (205,836)

Workers welfare fund paid (67,655) (78,562) (50,069) (37,587) (110,469)

Interest received 780,163 702,156 612,950 1,605,244 1,017,491

Income tax paid (1,634,104) (1,089,890) (465,156) (1,749,120) (1,781,441)

Long-term loans - net (27,468) (13,854) 13,832 12,939 3,621

Long-term deposits (1,448) (593) 0 100 (2,100)

Net cash flow from operating

activities 2,823,727 (811,077) 6,536,529 7,424,279 701,831

Cash flow from investing activities

Fixed capital expenditure (805,259) (2,422,406) (721,823) (270,252) (1,877,040)

Proceeds from disposal of fixed assets 46,989 8,952 42,806 19,864 15,548

Investment made in listed mutual

fund (25,000) (50,000) 0 (1,490,000) (7,059,000)

Proceeds from redemption of

investment in listed mutual fund 26,313 0 55,922 1,515,186 4,372,743

Receipts from finance under

musharika arrangements 6,570 3,849 0 0 0

Purchase of market treasury bills 0 0 0 0 (7,048,403)

Proceeds from redemption of market

treasury bills 0 0 0 0 5,124,596Net cash flow from investing

activities (750,387) (2,459,605) (623,095) (225,202) (6,471,556)

Cash flow fom financing activities

Repayments of obligation against

assets subject to finance lease (6,413) (3,878) 0 0 0

Dividend paid (939,844) (940,118) (510,853) (1,174,263) (1,174,056)

Net cash flow from financing

activities (946,257) (943,996) (510,853) (1,174,263) (1,174,056)

Net cash and cash equivalents 1,127,083 (4,214,678) 5,402,581 6,024,814 (6,943,781)

Cash and cash equivalents at the

beginning of the year 7,416,180 8,543,263 4,328,585 9,731,166 15,755,980Cash and cash equivalents at the

end of the year 8,543,263 4,328,585 9,731,166 15,755,980 8,812,199


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Vertical Analysis (Cash Flow Statement):

2007 2008 2009 2010 2011


Cash flow from operating activities

Cash generatated from operations 47.35% -2.90% 67.19% 50.47% 20.49%

Interest paid -0.51% -0.08% -0.08% -0.49% -0.29%

Workers profit participation fund

paid -2.66% -4.65% -1.08% -1.79% -2.34%

Workers welfare fund paid -0.79% -1.81% -0.51% -0.24% -1.25%

Interest received 9.13% 16.22% 6.30% 10.19% 11.55%

Income tax paid -19.13% -25.18% -4.78% -11.10% -20.22%

Long-term loans - net -0.32% -0.32% 0.14% 0.08% 0.04%

Long-term deposits -0.02% -0.01% 0.00% 0.00% -0.02%

Net cash flow from operating

activities 33.05% -18.74% 67.17% 47.12% 7.96%

Cash flow from investing activities

Fixed capital expenditure -9.43% -55.96% -7.42% -1.72% -21.30%

Proceeds from disposal of fixed assets 0.55% 0.21% 0.44% 0.13% 0.18%

Investment made in listed mutual

fund -0.29% -1.16% 0.00% -9.46% -80.10%

Proceeds from redemption of

investment in listed mutual fund 0.31% 0.00% 0.57% 9.62% 49.62%

Receipts from finance under

musharika arrangements 0.08% 0.09% 0.00% 0.00% 0.00%

Purchase of market treasury bills 0.00% 0.00% 0.00% 0.00% -79.98%

Proceeds from redemption of market

treasury bills 0.00% 0.00% 0.00% 0.00% 58.15%Net cash flow from investing

activities -8.78% -56.82% -6.40% -1.43% -73.44%

Cash flow fom financing activities

Repayments of obligation against

assets subject to finance lease -0.08% -0.09% 0.00% 0.00% 0.00%

Dividend paid -11.00% -21.72% -5.25% -7.45% -13.32%

Net cash flow from financing

activities -11.08% -21.81% -5.25% -7.45% -13.32%

Net cash and cash equivalents 13.19% -97.37% 55.52% 38.24% -78.80%

Cash and cash equivalents at the

beginning of the year 86.81% 197.37% 44.48% 61.76% 178.80%Cash and cash equivalents at the

end of the year 100.00% 100.00% 100.00% 100.00% 100.00%


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Ratio Analysis


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Ratio Analysis:

The ratio analysis of Indus Motor Company Limited will include the following:

Turnover ratios

Liquidity ratios

Solvency ratios

Profitability ratios (with reference to investment)

Profitability ratios (with reference to sales)


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Turnover ratios:

1. Inventory turnover ratio:

Formula =

2006 2007 2008 2009 2010 2011

Inventory

turnover ratio10.15 13.67 10.57 11.93 10.58

Cost of goods sold 31088906 34620632 37575356 35540418 55382306 57613542

Inventory 3959316 2,859,951 2,637,629 4,088,858 5,198,367 5,690,052

Interpretation:

It measures the number of times the inventory has been used or sold in a financial year. So,

in FY 2007 the inventory has been used 10.15 times which increases by 3.52 times in FY

2008 w.r.t FY 2007. Then it decreases by 3.1 times in FY 2009.

0

2

4

6

8

10

12

14

16

2006 2007 2008 2009 2010 2011

Inventory turnover ratio

Inventory turnover

ratio


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2.Average of inventory on hand:

Formula =

2007 2008 2009 2010 2011

Avg of inventory on hand 35.96 26.70 34.53 30.60 34.50

Interpretation:

This ratio tells us that how long it will take to convert the inventory into sales. The

calculated results show that in FY 2007 it takes 36 days to convert its inventory into

sales. Whereas, in FY 2008 it takes 27 days, in FY 2009 it takes 25 days, in FY 2010 it

takes 31 days and in FY 2011 it takes 35 days approximately.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2006 2007 2008 2009 2010 2011

Avg of inventory on hand

Avg of inventory on

hand


34/73

34

3. Debtor turnover ratio:

Formula =

2006 2007 2008 2009 2010 2011

Debtor turnover

ratio55.65 41.46 24.67 35.88 41.56

Net Sales35,236,53

539,061,226 41,423,843 37,864,604 60,093,139 61,702,677

Debtors 738,281 665,647 1,332,832 1,736,631 1,613,247 1,356,068

Interpretation:

This ratio shows that how many times the debts have been collected in a year. In FY

2007 it is 55.65 times, in FY 2008 it is 41.46 times, in FY 2009 it is 24.67 times, in FY

2010 it takes 35.88 times and in FY 2011 it takes 41.56 times to collect back the debts

from the account receivables.

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2006 2007 2008 2009 2010 2011

Debtor turnover ratio

Debtor turnover ratio


35/73

35

4.Average collection period:

Formula =

2007 2008 2009 2010 2011

Avg collection period 6.56 8.80 14.80 10.17 8.78

Debtor turnover ratio 55.65 41.46 24.67 35.88 41.56

Interpretation:

The average collection period tells us that in a year after how many days the debt the

collected from the account receivables. The lesser the number the days the better it is. In FY

2007 it takes 7 days, in FY 2008 it takes 9 days, in FY 2009 it takes 15 days, in FY 2010 ittakes 10 days and in FY 2011 it takes 9 days to collect the money from the debtors.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2006 2007 2008 2009 2010 2011

Avg collection period

Avg collection period


36/73

36

5. Creditor Turnover Ratio:

Formula =

2006 2007 2008 2009 2010 2011

Creditor

turnover ratio9.95 2.30 1.07 9.65 8.71

Purchases 26,923,813 27,327,660 6,541,304 3,597,898 47,500,217 50,744,050

Creditors 2599911 2,892,017 2,793,554 3,942,988 5,905,062 5,740,869

Interpretation:

This ratio tells us that how many times the money is paid to the creditors in a financial

year. The lower the times of payment the better it is. In FY 2007 it pays 10 times, in FY

2008 it pays 2.3 times, in FY 2009 it pays 1.07 times, in FY 2010 it pays 10 times and in

FY 2011 it pays money 8.71 times to its creditors in a financial year.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2006 2007 2008 2009 2010 2011

Creditor turnover ratio

Creditor turnover ratio


37/73

37

6.Average Payment Period:

Formula =

2006 2007 2008 2009 2010 2011

Average

payment period 36.68 158.70 341.12 37.82 41.91

Creditor

turnover ratio 9.95 2.30 1.07 9.65 8.71

Interpretation:

This ratio tells us that after how many days do the company pays the money to its

creditors. The greater the number of days the better it is. In FY 2007 the company paid

within 37 days, in FY 2008 it paid after 158 days, in FY 2009 it paid after 341 days, in FY

2010 it paid after 38 days and in the FY 2011 it paid within 42 days.

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

2006 2007 2008 2009 2010 2011

Average payment period

Average payment

period


38/73

38

7. Fixed Assets Turnover Ratio:

Formula =

2006 2007 2008 2009 2010 2011

Fixed Asset

Turnover Ratio 20.26 13.34 9.40 16.43 16.25

Net Sales 35,236,535 39,061,226 41,423,843 37,864,604 60,093,139 61,702,677

Fixed Assets 1726811 2,128,968 4,083,325 3,970,204 3,347,025 4,246,881

Interpretation:

This ratio tells us the effectiveness of company use of fixed assets to generate sales. It ratio

shows a decrease in FY 2008 - FY 2009 which is 13.34 and 9.40 respectively. But in otherfinancial years the total assets are being used effectively.

0.00

5.00

10.00

15.00

20.00

25.00

2006 2007 2008 2009 2010 2011

Fixed Asset Turnover Ratio

Fixed Asset Turnover

Ratio


39/73

39

8. Total Asset Turnover Ratio:

Formula =

2006 2007 2008 2009 2010 2011

Total Asset

Turnover Ratio 2.48 2.82 2.20 2.51 2.29

Net Sales 35,236,535 39,061,226 41,423,843 37,864,604 60,093,139 61,702,677

Total Assets 15822468 15,665,050 13,748,109 20,685,523 27,138,278 26,834,618

Interpretation:

This ratio tells us the effectiveness of company use of total assets to generate sales. It ratio

shows a decrease in FY 2009 and FY 2011 which are 2.20 and 2.29 respectively. But in

other financial years the total assets are being used effectively.

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2006 2007 2008 2009 2010 2011

Total Asset Turnover Ratio

Total Asset Turnover

Ratio


40/73

40

Liquidity Ratios:

1. Current Ratio:

Formula =

2006 2007 2008 2009 2010 2011

Current Ratio 1.83 2.56 1.69 1.67 1.84

Current Assets 14,095,657 13,536,082 9,664,784 16,715,319 23,791,253 22,587,737

Current Liabilities 9444554 7,410,926 3,779,631 9,884,850 14,224,866 12,260,958

Interpretation:

The current ratio determines that whether the firm has enough short term resources or in

other words does the company has enough resources to pay up its debts within a period ofone year. The ratio greater than 1 shows that the company has the resources to pay off its

debts in one financial year. In FY 2008 it was 2.56 that means the company had 2.56 times

the assets as compared to its liabilities.

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2006 2007 2008 2009 2010 2011

Current Ratio

Current Ratio


41/73


42/73


43/73

43

4. Cash Conversion Cycle:

Formula =

2007 2008 2009 2010 2011

Cash conversion cycle 5.84 -123.2 -291.79 2.95 1.37

Avg of inventory on

hand35.96 26.7 34.53 30.6 34.5

Avg collection period 6.56 8.8 14.8 10.17 8.78

Average payment period 36.68 158.7 341.12 37.82 41.91

Interpretation:

The cash conversion cycle tells us that how quickly a company can convert its products into

cash through sales. The shorter cycle means the less capital is tied up in the business. Thenegative values in FY 2008 and 2009 shows that the company has been holding cash from

the creditors and have not paid for a long time in a period of 1 year. These results have

already been shown in average payment period.

-350

-300

-250

-200

-150

-100

-50

0

50

2006 2007 2008 2009 2010 2011

Cash conversion cycle

Cash conversion cycle


44/73

44

Solvency Ratios:

1. Debt to Asset Ratio:

Formula =

2007 2008 2009 2010 2011

Debt to Asset Ratio 0.49 0.31 0.50 0.54 0.47

Total Debt 7,621,075 4,311,769 10,388,550 14,550,663 12,714,970

Total non-current

liabilities210,149 532,138 503,700 325,797 454,012

Total current liabilities 7,410,926 3,779,631 9,884,850 14,224,866 12,260,958Total Asset 15,665,050 13,748,109 20,685,523 27,138,278 26,834,618

Interpretation:

This ratio shows that how much the assets are financed through debt. The lower value of

this ratio means that the greater portion of assets is financed through equity rather than

debt. From the results shown above we can say that in a time series the major portion of

assets is financed through equity.

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2007 2008 2009 2010 2011

Debt to Asset Ratio

Debt to Asset Ratio


45/73


46/73

46

3. Debt to Equity Ratio:

Formula =

2007 2008 2009 2010 2011

Debt to Equity Ratio 0.03 0.06 0.05 0.03 0.03

Total Long term Debt 210,149 532,138 503,700 325,797 454,012

Total Equity 8,043,975 9,436,340 10,296,973 12,587,615 14,119,648

Interpretation:

Taking the long term debt in the debt position gives us an overview of how much long termliabilities are financed by equity. From the results it shows a smaller portion is financed by

the equity.

0.00

0.01

0.02

0.03

0.04

0.05

0.06

2007 2008 2009 2010 2011

Debt to Equity Ratio

Debt to Equity Ratio


47/73


48/73

48

Profitability Ratios (with reference to Investment):

1. Return on assets:

Formula =

x 100

2007 2008 2009 2010 2011

Return on assets 17.53% 16.66% 6.70% 12.69% 10.22%

Net Income 2,745,701 2,290,845 1,385,102 3,443,403 2,743,384

Total Assets 15,665,050 13,748,109 20,685,523 27,138,278 26,834,618

Interpretation:

The ratio return on assets shows us that how efficient management is at using its assets to

generate earnings. The FY 2009 result shows the misuse or inefficient use of assets to

generate income.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

2007 2008 2009 2010 2011

Return on assets

Return on assets


49/73

49

2. Return on equity:

Formula =

x 100

2007 2008 2009 2010 2011

Return on equity 34.13 24.28 13.45 27.36 19.43

Net Income 2,745,701 2,290,845 1,385,102 3,443,403 2,743,384

Total Equity 8,043,975 9,436,340 10,296,973 12,587,615 14,119,648

Interpretation:

This ratio tells us that how much the profit Is generated by the company from the

shareholders contribution. It has decreased in FY 2009 and FY 2011. The ratio has fallen

because of the decline in the net income.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2007 2008 2009 2010 2011

Return on equity

Return on equity


50/73

50

3. Operating return on asset:

Formula =

x 100

2007 2008 2009 2010 2011

Operating return on

assets0.27 0.24 0.12 0.22 0.15

Operating Income 4,072,777 4,229,481 3,541,711 2,046,013 5,242,539 4,011,455

Total Assets 15822468 15,665,050 13,748,109 20,685,523 27,138,278 26,834,618

Interpretation:

This ratio tells us in a more descriptive way that how much assets have been used to

generate the profit from its operations rather than other income. It is lower in FY 2009 and

FY 2011 due to less operating income leading to misuse or inefficient use of assets.

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2007 2008 2009 2010 2011

Operating return on assets

Operating return on

assets


51/73

51

Profitability Ratios (with reference to Sales):

1. Gross profit margin:

Formula =

x 100

2007 2008 2009 2010 2011

Gross Profit

Margin11.37% 9.29% 6.14% 7.84% 6.63%

Gross Profit 4,440,594 3,848,487 2,324,186 4,710,833 4,089,135

Net Sales 39,061,226 41,423,843 37,864,604 60,093,139 61,702,677

Interpretation:

The gross profit margin tells us the percentage of income left after accounting for the cost

of goods sold. The trend is falling in a time series; it tried to recover in FY 2010. It can be

the cause of economic conditions and inflation in Pakistan.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2007 2008 2009 2010 2011

Gross Profit Margin

Gross Profit Margin


52/73

52

2. Net profit margin:

Formula =

x 100

2007 2008 2009 2010 2011

Net Profit Margin 7.03 5.53 3.66 5.73 4.45

Net Profit 2,745,701 2,290,845 1,385,102 3,443,403 2,743,384

Net Sales 39,061,226 41,423,843 37,864,604 60,093,139 61,702,677

Interpretation:

The net profit margin tells us that how much income has been earned in a percentage after

deducting the direct and indirect expenses or how much net revenue has been generated

from Rs. 1 of sales. The trend is falling in a time series; it tried to recover in FY 2010. It can

be the cause of economic conditions and inflation in Pakistan.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2007 2008 2009 2010 2011

Net Profit Margin

Net Profit Margin


53/73


54/73

54

Appendix


55/73

55

1. Financial Year 2005 2006

a) Balance Sheet:


56/73

56

b) Profit and Loss:


57/73


58/73

58


a) Balance Sheet:


59/73

59

b) Profit and Loss:


60/73

60

c) Cash Flow Statement:


61/73

61


a) Balance Sheet:


62/73

62

b) Profit and Loss:


63/73

63



64/73

64

4. Financial Year 2008 2009:

a) Balance Sheet:


65/73

65

b) Profit and Loss:


66/73

66



67/73

67


a) Balance Sheet:


68/73

68

b) Profit and Loss:


69/73

69



70/73

70


a) Balance Sheet:


71/73

71

b) Profit and Loss:


72/73

72



73/73

References:

Indus Motor Company Limited Annual Report 2006






www.toyota-indus.com

AFS - Indus Motors

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