Analysis of Balance Sheet

8/3/2019 Analysis of Balance Sheet

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Analysis Of Financial Statement

Group Member:

Khurram Mansoor

Muhammad Noman Shafi Mubasher Rehman

MBA (Morning) 4th A Submitted To :

Sir Mehmood ul Hassan


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BALANCE SHEET (Honda Atlas Cars)

ASSETS Rs. In Thousands

Year -08 Year-09 Year-10

prop erty, p lant and equi pment 4,082,955 3,864,527 5,190,535

intangible asses 65,903 64,636 195,830

capital w ork- in-pro gress 191,842 80,746 19,226

long te rm loans, advance and de po sits 32,196 33,141 35,545

defe rr ed taxati on 251,008 338,165 571,214

NON-CURRENT ASSETS 4,623,904 4,381,215 6,012,350

st or es and s pares 50,316 83,101 101,942

st o ck-in-trade 2,704,946 1,612,696 2,954,091

trade and o the r receivables 706,092 507,852 853,218

cash and ban k balances 219,859 231,880 20,487

CURRENT ASSETS 3,681,213 2,435,529 3,929,738

TOTAL ASSETS 8,305,117 6,816,744 9,942,088

Equity and Liabilitiesauthorized capital 750,000 2,000,000 2,000,000

issued, subscribed and paid up capital 714,000 1,428,000 1,428,000

reserves 1,991,000 1,727,000 1,801,500

inappropriate profit -264,332 74,678 -401,655

SHARE CAPITAL AND RESERVES 2,440,668 3,229,678 2,827,845

NON-CURRENT LIABILITIES 1,958,334 500,000 1,500,000

current portion of long term finances 583,333 - -

short term borrowings - - 2,151,601

mark up accrued on loans and other payables 39,627 32,029 75,048

trade and other payables 3,283,155 3,055,037 3,387,594

CURRENT LIABILITIES 3,906,115 3,087,066 5,614,243

TOTAL EQUITY AND LIABILITIES 8,305,117 6,816,744 9,942,088

FINANCIAL STATEMENTS ANALYSIS

Honda Atlas Cars Pakistan


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INCOME STATEMENT (Honda Atlas Cars)

Income StatementRupees in Thousands

Year 2008 Year 2009 Year 2010

Sales 17,055,115 14,715,495 14,149,646Cost o f Sales 16,955,181 14,088,001 13,973,144Gro ss P ro fit 99,934 627,494 176,502Less: Dist ributi on and Ma rketing Costs 214,889 209,677 190,088Less: Administ rative Expenses 147,274 139,163 139,749Add: Othe r Operating Inc ome 150,585 23,589 64,844Less: Othe r Op erating Expenses 64,514 4,975 311,025Pro fit/Loss f ro m Ope rati ons 176,158 297,268 399,516Less: Finance Cost 305,491 233,651 222,769Pro fit/Loss bef or e taxati on 481,649 63,617 622,285Taxati on 217,109 11,393 220,452

Pro fit/Loss afte r taxati on 264,540 75,010 401,833Earnings per Sha re ( rupees) 2.08 0.55 2.81

Financial Analysis

Ratio Analysis

Liquidity Ratios

Ratios 2007 2008 2009Current Ratio 0.94 0.80 0.70Quick Ratio 0.23 0.24 0.15

Its cu rr ent rati o has been less than one f or th ree yea rs which sh ows that its cu rr ent liabilities a re g reate r than its

curr ent assets. Alth ough its cu rr ent assets inc reased by 61% in Financial Yea r 2009 but its cu rr ent liabilities als o

increased by 82% s o curr ent rati o furthe r dec reased.

App arently it l ook s that its liquidity po siti on is ve ry wea k but actually it is n o t t rue because o f the natu re of its

curr ent liabilities. In its cu rr ent liabilities one main por tion is its t rade payables, as it purchases its raw mate r ial f ro m

parent c ompany H onda Ja pan s o it can get a l o t o f relaxati on in ma king payment t o its parent c ompany.

In its cu rr ent liabilities one por tion c onsist of advances f ro m deale rs which a re n o t likely t o demand all of thei r

money in nea r futu re. S o if we c onside r these fact or s then its liquidity po sition look s bette r even with l ow quic k and

curr ent rati os.


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It has t o pay its payables in Ja panese Yens s o change in cu rr ency rate can affect the figu re o f payables s o a risk is als o

invo lved.

Its quic k rati o is ve ry low as m ost o f the cu rr ent assets c onsist o f invent or y, o the r assets li ke receivables and cash a revery low. Its receivables a re ve ry low or are nil as it ma kes sales on cash even gets m oney in advance which fu rthe r

increases its cu rr ent liabilities.

Its cash po siti on is ve ry low as it did its ex pansi on in plant ca pacity in 2007 and a l o t cash was used the re.

Asset Management Ratios

2007 2008 2009 Invent or y Turno ver (Days) 58.50 43.33 78.73To tal Asset tu rnover 2.05 2.16 1.42

I have n o t calculated its receivable tu rn ove r as I have ex p lained that it eithe r does n o t has its receivables or they a r e

very low.

Its invent or y tu rno ver increased sh owing that it t ook longe r f or the c ompany t o sell its st ock in t rade. It has

increased f ro m 43 t o 79. Its basic reas on is dec rease in ove r all demand of ca rs due t o bad financing c onditi on. The

company has t o ma ke big batches o f each m odel t o reduce set u p cost but this over pro ducti on ta kes time in selling

as demand has dec reased due t o due t o high inte rest rates.

The t o tal asset tu rnover rati o has dec reased sh owing that the assets a re n o t being used efficiently as it has beendiscussed that ca pacity is much highe r than pro ducti o n and sales.

Debt Management Ratios

2007 2008 2009 Debt/ Equity (Times) 2.40 1.11 2.52Times Inte rest Earned (Times) -0.58 1.27 -1.79

The t o tal liabilities o f the c o mpany have alm ost d oubled du ring 2009. Its maj or reas on is that it l ong te rm debt has

doubled.

Negative rati o is due t o loss in 2007 and 2009. L ong te rm debt is paid th ro ugh pro fit which H onda is n o t gene rating

but still this l oss d oes n o t sh ow ve ry wea k po sition as maj or expense is de pr eciati on ex pense which is c o nve rting

pro fit int o loss and we know that the c ompany d oes n o t has t o pay this ex pense. It is a n on cash ex pense. If we

exclude this ex pense then c ompany can sh ow some bette r debt po siti on. But overall po sition is n o t s o goo d as

demand o f ca rs has dec reased in last th ree yea rs.


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Profitability Ratios

2007 2008 2009 Net P ro fit Ma rgin -1.55 0.51 -2.84Retu rn on Asset -3.19 1.10 -4.04Retu rn on Equity -10.84 2.32 -14.21Earning Pe r Sha re -3.71 0.55 -2.81

As the c ompany is in l oss the ref or e all pro fitability rati os a re negative. Actually in this ty pe o f business big fixed c ost

is invo lved which can only be reco vered if pro ducti on is d one at la rge scale but due t o low demand it is ve ry difficult

to recover and which c onve r ts the c ont ributi on gene rated f ro m sale int o loss. Alth ough it l ook s that its sha reh o lde rs

are in l oss but that is n o t the reality its parent c ompany sells parts t o it and ea rns pro fit on this sale s o even if H onda

Atlas is in l oss still parent c ompany is ea rning pro fit.

ROA went d own because of the dual reas on of dec reasing retu rns and inc rease in asset size. The asset base o f the

company widened du ring 2007 due t o capacity ex pansi on and int ro ducti on o f new m odels because the re was

increasing t rend o f demand when this ex pansi on was sta rted.

The c ompany was able t o kee p its cost o f sales in a bit l ow du ring 2009. The c ost of sales in 2009 due t o rest ricted

pro ducti on o f ca rs and c ost minimizati on. H oweve r, lowe r costs c ould n o t rest rict the im pact o f lowe r sales revenue

on the pro fitability o f the c ompany.

Common Size Analysis of Balance Sheet (Assets Side)

ASSETS Rs. In Thousands Common Size (%)

Year -08 Year-09 Year-10 Year 2008 Year 2009 Year 2010prop erty, p lant and equi pment 4,082,955 3,864,527 5,190,535 49% 57% 52%intangible asses 65,903 64,636 195,830 1% 1% 2%capital w ork- in-pro gress 191,842 80,746 19,226 2% 1% 0%long te rm loans, advance and de po sits 32,196 33,141 35,545 0% 0% 0%defe rr ed taxati on 251,008 338,165 571,214 3% 5% 6%NON-CURRENT ASSETS 4,623,904 4,381,215 6,012,350 56% 64% 60%

st or es and s pares 50,316 83,101 101,942 1% 1% 1%st o ck-in-trade 2,704,946 1,612,696 2,954,091 33% 24% 30%trade and o the r receivables 706,092 507,852 853,218 9% 7% 9%cash and ban k balances 219,859 231,880 20,487 3% 3% 0%CURRENT ASSETS 3,681,213 2,435,529 3,929,738 44% 36% 40%

TOTAL ASSETS 8,305,117 6,816,744 9,942,088 100% 100% 100%


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Common Size Analysis of Balance Sheet (Equity and Liabilities Side)

Equity and Liabilities Rs. In Thousands Indexed (%)Year 2008 Year 2009 Year 2010 Year

2008Year2009

Year2010

authorized capital 750,000 2,000,000 2,000,000 9% 29% 20%issued, subscribed and paid up capital 714,000 1,428,000 1,428,000 9% 21% 14%reserves 1,991,000 1,727,000 1,801,500 24% 25% 18%inappropriate profit -264,332 74,678 -401,655 -3% 1% -4%SHARE CAPITAL AND RESERVES 2,440,668 3,229,678 2,827,845 29% 47% 28%NON-CURRENT LIABILITIES 1,958,334 500,000 1,500,000 24% 7% 15%current portion of long term finances 583,333 7% 0% 0%short term borrowings 2,151,601 0% 0% 22%mark up accrued on loans and otherpayables

39,627 32,029 75,048 0% 0% 1%

trade and other payables 3,283,155 3,055,037 3,387,594 40% 45% 34%CURRENT LIABILITIES 3,906,115 3,087,066 5,614,243 47% 45% 56%TOTALEQUITY AND LIABILITIES 8,305,117 6,816,744 9,942,088 100% 100% 100%

Index Analysis of Balance Sheet (Assets Side)

ASSETS Rs. In Thousands Indexed (%)Year 2008 Year 2009 Year 2010 Year 2008 Year 2009 Year 2010property, plant and equipment 4,082,955 3,864,527 5,190,535 100% 95% 127%intangible asses 65,903 64,636 195,830 100% 98% 297%capital work-in-progress 191,842 80,746 19,226 100% 42% 10%

long term loans, advance and deposits 32,196 33,141 35,545 100% 103% 110%deferred taxation 251,008 338,165 571,214 100% 135% 228%NON-CURRENT ASSETS 4,623,904 4,381,215 6,012,350 100% 95% 130%stores and spares 50,316 83,101 101,942 100% 165% 203%stock-in-trade 2,704,946 1,612,696 2,954,091 100% 60% 109%trade and other receivables 706,092 507,852 853,218 100% 72% 121%

cash and bank balances 219,859 231,880 20,487 100% 105% 9%CURRENT ASSETS 3,681,213 2,435,529 3,929,738 100% 66% 107%TOTAL ASSETS 8,305,117 6,816,744 9,942,088 100% 82% 120%


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Index Analysis of Balance Sheet (Equity & Liabilities Side)

Equity and Liabilities Rs. In Thousands Indexed (%)Year 2008 Year 2009 Year 2010 Year 2008 Year 2009 Year 2010

auth or ized ca pital 750,000 2,000,000 2,000,000 100% 267% 267%

issued, subsc ribed and paid u p ca pital 714,000 1,428,000 1,428,000 100% 200% 200%

rese rves 1,991,000 1,727,000 1,801,500 100% 87% 90%

una ppropr iated pro fit (264,332) 74,678 (401,655) 100% -28% 152%

SHARE CAPITAL ANDRESERVES 2,440,668 3,229,678 2,827,845 100% 132% 116%

NON-CURRENT LIABILITIES 1,958,334 500,000 1,500,000 100% 26% 77%

cu rr ent por tion o f long te rm finances 583,333 100% 0% 0%

shor t te rm b orro wings 2,151,601 100%

ma rk up acc rued on loans ando the r payables

39,627 32,029 75,048 100% 81% 189%

trade and o the r payables 3,283,155 3,055,037 3,387,594 100% 93% 103%CURRENT LIABILITIES 3,906,115 3,087,066 5,614,243 100% 79% 144%TOTAL EQUITY AND LIABILITIES 8,305,117 6,816,744 9,942,088 100% 82% 120%

Common Size Analysis of Income Statement

Income Statement Rupees in Thousands Common Size (%)

Year 2008 Year 2009 Year 2010Year2008

Year2009

Year2010

Sales 17,055,115 14,715,495 14,149,646 100% 100% 100%Cost o f Sales

16,955,181 14,088,001 13,973,144 99% 96% 99%Gro ss P ro fit 99,934 627,494 176,502 1% 4% 1%Less: Dist ributi on and Ma rketingCosts

214,889 209,677 190,088 1% 1% 1%

Less: Administ rative Expenses 147,274 139,163 139,749 1% 1% 1%Add: Othe r Operating Inc ome 150,585 23,589 64,844 1% 0% 0%Less: Othe r Op erating Expenses 64,514 4,975 311,025 0% 0% 2%Pro fit/Loss f ro m Ope rati ons 176,158 297,268 399,516 1% 2% 3%Less: Finance Cost 305,491 233,651 222,769 2% 2% 2%Pro fit/Loss bef or e taxtati on 481,649 63,617 622,285 3% 0% 4%Taxati on 217,109 11,393 220,452 1% 0% 2%Pro fit/Loss afte r taxati on 264,540 75,010 401,833 2% 1% 3%Earnings per Sha re ( rupees) 2.08 0.55 2.81


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Index Analysis of Income Statement

Income StatementRupees in Thousands Common Size (%)

Year 2008 Year 2009 Year 2010Year2008

Year2009

Year2010

Sales 17,055,115 14,715,495 14,149,646 100% 86% 83%Cost o f Sales 16,955,181 14,088,001 13,973,144 100% 83% 82%Gro ss P ro fit 99,934 627,494 176,502 100% 628% 177%Less: Dist ributi on andMa rketing Costs

214,889 209,677 190,088 100% 98% 88%

Less: Administ rative Expenses 147,274 139,163 139,749 100% 94% 95%Add: Othe r Operating Inc ome 150,585 23,589 64,844 100% 16% 43%Less: Othe r Op erating Expenses 64,514 4,975 311,025 100% 8% 482%Pro fit/Loss f ro m Ope rati ons 176,158 297,268 399,516 100% 169% 227%Less: Finance Cost 305,491 233,651 222,769 100% 76% 73%Pro fit/Loss bef or e taxtati on 481,649 63,617 622,285 100% 13% 129%Taxati on 217,109 11,393 220,452 100% 5% 102%Pro fit/Loss afte r taxati on 264,540 75,010 401,833 100% 28% 152%Earnings per Sha re ( rupees) 2.08 0.55 2.81


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INTRODUCTION

The General Tyre and Rubber Company of Pakistan Limited (Gentipak) is Pakistans premier industry. It

was established in 1963 by General Tire USA and has been in production since 1964.

Gentipak has a Technical Services Agreement (TSA) with CONTINENTAL AG (Germanys largest tyre

manufacturer) which enables it to produce tyres of GENERAL brand and provides the latest technology

for production of tyres based on Continentals, R&D.

The Plant and the Offices are located in suburb of Karachi. Initial production capacity was only 120,000

tyres per annum but is now around 2,000,000 tyres per annum. The plant is constantly upgraded and is

equipped with the most modern technology in tyre manufacturing.


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Income Statement (Profit and Loss Account)


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Analysis of Income Statement (Profit and Loss Account)

CC.2 shows the income statement of The General Tyre and Rubber Company from year 2006 to 2010. It

shows that the sales of the company have increased over the years in FY 2006 to FY 2010.The Sales have

been increased by the 58 percent if we compare it to FY 2006. The distribution cost the company has been

increasing over the years. However, the Administrative expense has shown fluctuations and it is showing a

decreasing trend from FY 06 to FY 10. The Finance Cost of the company has increased drastically from a

very small value in FY 06 to a relatively very high value in FY 09and this drastic increase tells us that the

company has started to rely heavily on debts and it is giving out huge amount of interests on these loans.

The taxes of the company are showing a declining trend and taxation value for FY 09 is negative because of

the fact that the EBT of the company for this year is negative but in the FY 10 the company EBT is positive

and company gave tax, the positive trend in the FY 2010 is due the new contracts with the Toyota and

AltasHonda. The Net income of the company is showing a declining trend and it has incurred huge amount

of losses in FY 08 and FY 09. The increasing amount of interest expenses has played a huge role in the

decline and eventual loss of the company. Overall, the net income of the General Tyre and Rubber

Company shows that the performance of the company over the years is getting poorer and poorer but in FY

2010 the company made a record increase in the net income because in the FY 2010 the after myth of

recession are decreased and on the same time the company got the two major contracts and they have

increased the prices of their tyre as compare to the other brands and in the year FY 09 two long liabilities

have come to end so the FY 10 starts with the lesser obligation so at that year company have given lesser

interest so thats why the net income of the company at that time period is positive.


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Balance Sheet


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Analysis of Balance Sheet

CC.3 includes the balance sheet of The General Tyre and Rubber Company from FY 2006 to FY 2010.

The total no. of share outstanding from FY 06 to FY 10 is same. This shows that the company hasnt been

increasing its no. of shareholders. However, the total amount of equity has shown a slight decrease and it is

because of the decrease in the value of reserves that the company has been holding from the FY 06 to FY 09

but in the FY 2010 the equity portion is increased as compare to the previous years this is because the

inappropriate profit is increased because in the FY 10 company reinvested its profit to expand the business

rather than giving dividends to its shareholders. Total long-term liabilities of the company have increased

from FY 06 to FY 07 but then it decreased from the FY 08 to FY 10. It seems like a good strategy on the

part of the company because the company has decreased its liabilities due to adverse political and economicconditions in Pakistan. The Current liabilities of the company show an upward trend from FY 06 to FY 10.

The total sum of Liabilities and Equity shows an uptrend because of the drastic increase in current liabilities

from FY 05 to FY 09. Fixed Assets of the company do not show a drastic change they are rather same over

the years. However, the current assets have increased from FY 06 to FY 10. This could be the counter effect

of the increase in the current liabilities. Total Assets of the company also show an uptrend due to the

increase in current assets.


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Common Size Income Statement:

2010 2009 2008 2007 2006

Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%Cost of Sales 84.81% 88.75% 88.94% 88.16% 86.03%

Gross Profit 15.19% 11.25% 11.06% 11.84% 13.97%

Administrative Expenses 1.38% 1.49% 1.60% 2.32% 2.03%

Distribution Cost 3.25% 4.38% 4.45% 4.13% 4.19%

Operating Profit 10.55% 5.38% 5.01% 5.40% 7.75%

Other operating expenses 0.81% 3.24% 2.22% 0.33% 0.57%

other operating income 0.78% 0.83% 1.34% 0.79% 0.78%

Finance Cost 4.09% 5.62% 3.97% 3.17% 2.33%

(loss)/profit before taxation 6.44% -2.66% 0.16% 2.68% 5.63%

Taxation 3.00% -0.61% 0.52% 1.09% 2.23%

(loss)/profit after taxation 3.44% -2.05% -0.36% 1.59% 3.40%

Analysis of Common Size Income Statement:

CC.6 shows us the Common size Income Statement for the FY 2005 to FY 2009. It is calculated by dividing

each component of income statement with sales of that year.

This common size income statement shows us that COGS has the highest percentage of sales and it has

increased over the years. The cost of goods sold ratio decreased in FY 2010 it is good for the company

because gross profit ratio have increased. In the FY 2010 General tyre import all the nylon, filler and bead

from the Bangladesh which was cheap from the previous imports so in that why they reduced the CoGS by

3.94%. The gross profit in the income statement has the second highest percentage in the income statement

and shows a downward trend from the FY 2006 to FY 2009 but there is an increase of 3.94 % in the FY

2010. Other operating income has the lowest percentage in the table although it shows an increasing trendover the 5 fiscal years. The net income of the company is continuously decreasing from the FY 2006 to FY

2009 but there is an increase in FY 2010 due to decrease in the CoGS.The company needs to generate more

sales to survive in the market because there Net income is not enough as compare to their capital.


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Common Size Balance Sheet:

2010 2009 2008 2007 2006

PROPERTY, PLANT AND EQUIPMENT 39.00% 47.76% 42.60% 46.13% 42.92%INTANGIBLE ASSETS 0.00% 0.00% 0.00% 0.01% 0.01%

INVESTMENTS 0 0 0 0 0

LONG-TERM LOANS AND ADVANCES 0.12% 0.06% 0.09% 0.11% 0.12%

DEFERRED TAXATION 0 0 0 0 0

LONG-TERM DEPOSITS AND

PREPAYMENTS

0.15% 0.18% 0.18% 0.20% 0.22%

CURRENT ASSETS

Stores and spares 7.40% 9.34% 9.47% 10.18% 8.88%

Stocks 28.51% 18.30% 26.24% 25.80% 29.84%

Trade debts 17.80% 17.15% 15.96% 13.29% 12.07%

Loans and advances 0.43% 0.54% 0.39% 0.43% 0.45%

Deposits and prepayments 0.70% 0.77% 1.91% 0.74% 1.02%

Other receivables 0.53% 0.74% 0.65% 0.88% 0.94%

Taxation 3.30% 1.48% 0.00% 0.00% 1.18%

Cash and back balances 2.07% 3.69% 2.51% 2.23% 2.33%

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

SHARE CAPITAL AND RESERVE

Issued, subscribed and paid-up 12.42% 15.07% 14.91% 17.00% 17.61%

Reserve 15.23% 12.98% 15.58% 18.23% 20.56%

LONG TERM MURABAHA

FINANCING

0.00% 0.00% 0.00% 0.00% 0.00%

LONG TERM LOANS 3.60% 8.10% 8.42% 10.13% 5.89%

LIABILITIES AGAINST ASSETS

SUBJECT TO FINANCE LEASES

0 0 0.38% 1.22% 1.97%

STAFF BENEFITS 2.95% 3.45% 3.26% 3.54% 3.52%

DEFERRED CREDIT 0.00% 0.00% 0.00% 0.01% 0.01%

DEFERRED TAXATION 3.38% 0.23% 1.11% 1.25% 0.98%


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LONG-TERM DEPOSITS FROM

DEALERS

0.18% 0.25% 0.24% 0.27% 0.28%

CURRENT LIABILITIES AND

PROVISIONS

Current maturity of

long-term murabaha financing 0.00% 0.00% 2.49% 2.84% 2.95%

long-term loans 4.27% 6.07% 2.96% 3.38% 0.00%

liabilities against assets subject to finance

leases

0.00% 0.38% 0.69% 0.70% 0.68%

Short-term finances 9.41% 8.28% 24.97% 11.76% 12.10%

Running finances under mark-up

arrangements

24.53% 22.82% 5.62% 6.60% 2.88%

Trade and other payables 21.21% 18.86% 17.49% 16.14% 20.75%

Accrued mark-up 1.72% 1.85% 0.51% 0.40% 0.23%

Taxation 0.00% 0.00% 0.02% 0.02% 0.00%

Provisions 1.12% 1.67% 1.35% 3.68% 3.69%

Total Equity and Liability 100.00% 100.00% 100.00% 100.00% 100.00%


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Analysis of Common Size Balance Sheet.

CC.7 shows the Common Size Balance of General Tyre and Rubber Company for Fiscal Years 2006 to

2010. This is calculated by dividing each component of asset side with total assets and also by dividing eachcomponent of liability and equity side with total liabilities and equity.

The Plant, Property and Equipment account makes the largest part of the total assets and it has an increasing

trend over the years.In the FY 09 General Tyre purchased rubber and tyre recycling plant so thats why in

the FY 09 the plant asset and machinery acquires more percentage. In current assets stocks make has the

highest proportion of total assets. However, it shows a decline as a percentage of total assets over the 4 years

but it increased by 10 percent in the FY 10 this was because General Tyre got 2 contracts for that reason

they needed for stock to fulfill their targets. The whole table also shows us that that the total current assets

make up a larger part of the total assets as opposed to the non-current assets.

In the liabilities and equity side, Accounts payable has the highest percentage to the total liabilities and

assets. Running finances under markup arrangements of FY 10 has the highest percentage in the whole table.

This was due to the purchase of plant, equipments and stocks. The second highest percentage of liability

component to total liability and equity is of issued, subscribed and paid-up capital. However, it has a

downtrend over the five fiscal years.


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Return on Invested Capital Ratio:


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Analysis of Return on Invested Capital Ratio:

CC.21 includes the return on invested capital ratio of The General Tyre and Rubber Company for the fiscal

years 2006 to 2010.

There is an increase in the ROA from the FY 06 to FY 10 this shows that the return on asset is increasing

which is a positive sign. ROA gives an idea as to how efficient management is at using its assets to generate

earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a

percentage. In the FY 2010 there is an abnormal increase in the ROA this shows that in the FY 2010 the

company uses its total asset more efficiently and at the same time in the fiscal year 2010 the net income is

also increased because due to decrease in the CoGS.This also shows that over company is perform good inthe FY 2010 as compare to the industrial average.

ROE (return of equity) measures how much the company is making profits using the investments made by

investors. The ROE for our company has been decreasing massively over the years and it has become

negative in the FY 08 and FY09. It tells us that our company hasnt been utilizing the investments efficiently

and it really needs to work on that area. But on contrary the ROCE is increased in the FY 2010 this was also

due to the increase Net income.

The equity growth model shows us the growth of the company using the dividend payout ratio and ROE.

Unfortunately, the growth of the company has been decreasing drastically over the years and it has become

negative in the FY 07,08and09. The industry average of the companies is very high than our company

growth and it tells that company needs to work really hard to improve its performance.

As the ROE exceeds the ROA this means that the company is using the debt profitability, same is applied

here because in the year 2006 and 2010 the ROE is greater than the return on ROA this means that the

company is on the debt profitability.

The asset turnover ratio shows us the total no. of sales in each year with respect to total no. of assets in that

particular year. Asset turnover ratio shows fluctuated trend over the years and its highest value is in the FY

09. And our companys value is almost the same as the industry average.


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Profit Margin Ratio:

Analysis of Profit Margin Ratio:

These ratios simply show us the strength or potential of the company to generate profits over the years.

Gross profit margin ratio which is a ratio of gross profit to sales gives us the idea how much income remains

relative to sales once we subtract cost of goods sold from the sales. This ratio has a downtrend from FY 06

to FY 09. But there is an increase in the gross profit as compare to the previous this was due to the decrease

in the CoGS.

The operating profit margin increase which means that companyhas enough money to give up its interests on

loan and other obligations due.


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Market Measures:

CC26 General Tyre and Rubber Company

Market Measures

For the year 2006 through

2010

price of 30th july, 2006 28.2

Price of 30th june,2010 23.4

Average Share Price 25.8

2010 2009 2008 2007 2006

Price to Earning(range) 70.633 -140.416 -934.323 245.093 121.427

Price to Book(range) 11.589 13.864 12.618 12.450 11.905

Earnings Yield 0.014 -0.007 -0.001 0.004 0.008

Dividend Yield 0.000 0.000 0.000 -0.008 -0.007

Dividend Payout Ratio 0.000 0.000 0.006 -1.886 -0.819

Industry Average

Price to Earning(range) 30.75

Price to Book(range) 21.65

Earnings Yield -0.22

Dividend Yield 317.7

Dividend Payout Ratio -317.83


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Analysis of Market Measures:

CC.26 includes the market measures of The General Tyre and Rubber Company for the fiscal years 2006 to

2010. To calculate the market measures we have first calculated the average price by adding up the 1 st July,

2006 and 30 th July, 2010 and dividing the both prices with 2.

The price to earnings ratio has been increasing from FY 05 to 07 and then it becomes negative in the FY 08

and FY 09 but it shows a dramatic increase in the year 2010 which is 70.33. The high P/E ratio is good for

the investor because he is willing to earn more on it.

A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current

closing price of the stock by the latest quarter's book value per share. There is a decrease in the ratio in the

FY 201o as compare to FY 2009. Similarly, the price to book ratio is showing an uptrend over the years

which implies that the companys share price has been increasing relative to its worth, but this value is also

well below the industry average.


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PAK SUZUKI MOTOR COMPAY LIMITED

RATIO ANALYSIS

Working Capital = Current Assent Current liabilities

Years Current Assets Current Liabilities W. Capital

2000 3152839 2710563 442276

2001 2768706 2087090 681616

2002 7183211 5511463 1671748

2003 8541540 5603769 2937771

Comment:

Pak Suzuki Mo tor Company Limited has en ough w ork ing ca p ital which is a g oo d sign. You can see that Assets a regro wing u p and Curr ent liabilities a re als o go ing t o increase and when y ou see the propor tion o f work ing ca p ital thatis als o gro wing.


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Current Ratio: Cu rrent Assets / Current Liabilities

Years Current Assets Current Liabilities Current ration

2000 3152839 2710563 1.16

2001 2768706 2087090 1.33

2002 7183211 5511463 1.3

2003 8541540 5603769 1.5

Comments:

In yea r 2003Pa k Suzuki Mo tor company Limited is in ve ry st ro ng po siti on if you compare this t o the o the r yea rs youcan easily t o reach the decisi on that 2003 is the best yea r and 2000 yea r is no t satisfact or y.

Acid Test Ratio = Q uick Assets / Curr ent Liabilities

Years Quick Assets Current Liabilities Ratio

2000 4502145 2710563 1.66

2001 4725149 2087090 2.26

2002 5190168 5511463 0.94

2003 5797749 5603769 1.03

Comments:

The ideal Acid test rati on is 1:1 and y ou can see in 2002 the c ompany has over quic k assets which g oes id o l but in2003 it is g oo d because it is ve ry close t o an ideal rati o.


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Inventory Turnover Ratio = Cost o f goo ds s o ld / Ave rage Invent or y

Years Cost of goods sold Average Inventory Ratio

2000 6578898 1999521 3.29

2001 7599439 2054251 3.70

2002 9614256 2088767 4.6

2003 15840739 NA

Comments:

In all the yea rs the c ompany has high tu rnover which is a g oo d sign f or company it means c ompany ea rning a l o t o f pro fit and that has overcome its ex penses.

Debt Ratio = Total Debts / T o tal Assets

Years Total Debts Total Asset Ratio

2000 2807563 4567695 0.61

2001 2132090 3993930 0.53

2002 551463 8159447 0.07

2003 5603769 9674550 0.58


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Comments:

In all yea rs the c ompany has ve ry satisfact or y debt rati o but in 2002 it is n o t goo d it means that c ompany has m or eself propor tion in the investment that sh ould ta ke m or e m oney as a l oan and in o the r yea rs co mpany has g oo drati on that can ta ke rati o with out any hesitati on.

Total Asset Turn Over Ratio = Net sales / T o tal Assets

Years Net Sales Total Assets Ratio

2000 6889145 4567695 1.51

2001 7976122 3993930 1.20

2002 10994067 8159447 1.35

2003 18484220 9674550 1.91

Comments:

The c o mpany s to tal asset tu rnover rati o is ve ry goo d it has minimum rati o in 2001 and maximum rati o in 2003 itmeans the c ompany rati o is gro wing u p steady which is a g oo d sign. It means the c o mpany utilizing its fewe r res ources and getting high pro fit.

(8) Gross Profit Ratio = Gro ss pro fit / Net Sales

Years Gross profit Net sales Ratio

2000 310247 6889145 0.045

2001 376683 7976122 0.05

2002 1379811 10994067 0.13


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2003 2643481 18484220 0.14

Comments:

The c o mpany s gro ss pro fit rati o is no t en ough in 2000 it has ve ry less but in 2003 it is c omparatively g ro wing, in anut shell we can say the g ro ss pro fit rati o is gro wing.

(9) Profit Margin Ratio = Net Inc ome / Net Sales

Years Net Income Net sales Ratio

2000 (26600) 19816 (1.34)

2001 141013 20434 6.9

2002 850097 29484 28.83

2003 1570191 49503 31.72

Comments:

The c o mpany s pro fit me rging rati o result is ve ry pro ficient because in 2000 the c ompany s rati o was in negative butwith passing o f yea r it gain ve ry goo d result and in 2003 it g o t ve ry goo d result.


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Working Capital Turnover Ratio

= Cost o f goo ds s o ld / net w ork ing ca p ital

Years Cost of goods sold Working capital Ratio

2000 6578898 442276 14.88

2001 7599439 681616 11.15

2002 9614256 1671748 5.75

2003 15840739 2937771 5.39

Comments

If the w ork ing ca p ital rati o is less it is benefited f or the c ompany its means the c ompany is s pending less and gettingmor e pro ducts.

Analysis of Balance Sheet

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