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Jordan Hashematic Kingdom
Faculty of Economics & Adminstrative Sciences
Course Title : Financial Statement Analysis
( Thus Day )
Analysis Of Financial Statements Of
Al-Ekbal Printing And Packaging
(2005 - 2008)
Instructors : Dr. Mishiel Suwaidan .
Prepaired By : Ahmad Draghmah , ( 2008 7300 23 ) .
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Theoretical Frame Work:First :
Objectives of the Analysis)A - 1(
Al-Ekbal Printing And Packaging:)A - 2(
Introduction)A 2 -1(
Management and Board of Directors)A 2 -2(
Share holder owns 5 % or more)A 2 -3(
Risk the company is faced)A 2 -4(
Significant Policies of accounting and preparation
of financial statement)A 2 -5(
sector of Printing and Packaging)A - 3(
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: Theoretical Frame Work:First
Objectives of the Analysis:(A-1)
The main object from this analysis is to evaluate Al-Ekbal
Printing And Packaging company from many aspects like
liquidity and how efficient to manage it is assets and generate
higher net income and cash flow from its operations , through
compare the performance and financial center over many years
to the same company to see percentage of growth over this years
, and through compare the performance and financial center
with only competitor in Jordanian market ( Union Advanced
Industries ) to see how efficiency of the company .
Al-Ekbal Printing And Packaging:(A-2)
Introduction :)A 2 -1(
The company is established in 27 / 12 / 1994 by JD
8,000,000 capital , but in 2006 the company decide to decrease
its capital from JD 8,000,000 to JD 5,000,000 by JD 3,000,000
, because it is increase of its need . and it is Established to do
Commercial Presses and printing and forming of packaging
materials for cigarettes, detergents, pharmaceuticals , and books
...etc. . the main place to the company management building
and the factory building in AL-Naor City south of Amman ,
and it didnt have any affiliate company and any branches . at
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the end of 2008 the investment capital to the company was (J D
8,022.545) , but the company capital is ( J D 5,000,000 ) .
The company get the ISO 9001 2000 certificate . After
finish all the requirement to get this certified .
The auditor company is Ibrahim Al-Abbasi & Co. and legal
consular is Osama Sukkary .
Management and Board of Directors :)A 2 -2(
The general manager of the company is Adel Abo Durgham .
The board of director :
1- Mayr Mclnhof Packaging International Co.
2- Neupack Gesellschaft M.B.H Co.
3- Mayr Mclnhof Packaging Austria Co.
4- Company pearl trade and investment for reconstruction.
5- Arabic Gulf for Investment and General Transportation .
Termination Date of the Board: 11-7-2011
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(A 2 3) Name of Share holder owns 5 % or more and
numbers of they owns shares compared With previous year1:
Percent
%
Number of
shares
31-12-2007
Percent
%
Number of
shares 31-
12-2006
Name
29.491,474,46429.491,474,464Mayr Mclnhof
Packaging Austria Co.
201,000.000201,000.000Neupack Gesellschaft
M.B.H Co .
6.1305,203.15,000Al-Ekbal Company For
Investing
006300.2.3Jean Joseph Issa
Chamo'un
5.84292,1875.84292,187Bank Of Jordan
5250,0005250,000Al-Said For Trade
Risk the company is faced2:)A 2 - 4(
The main risk the company is faced is little number of
customer , through that its activity is effected directly by any
change happened to that customers , and the company strive to
increase its numbers of customers .
But the risk this firm is in general is international economicand financing problem which is started in the last quarter in 2008
and still to now .
, 1* annual report for Al-Ekbal Printing And Packaging ( 2008 ) , page 42* the same previous references
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loss. Moreover, the impairment loss of debt instruments can be
recovered through the statement of income, while the
impairment loss in companies shares can be recovered through
the cumulative change in fair value.
Provisions
are recognized when the Company has liabilities at the date of
the balance sheet arising from previous events, settlement of
these liabilities is probable, and their value can be reliablymeasured.
Fixed assets
are stated at cost net of accumulated depreciation and
impairment, and depreciated (except for land), when ready for
use, according to the straight-line method over their expectedoperating lives at annual rates .
- When the recoverable amount of any fixed asset becomes less
than its net book value, its value is reduced to the recoverable
amount and the impairment in value is taken to the income
statement.
- The productive lives of fixed assets are revalued at the end of
every year. If revaluation differ from previous estimates, the
change is recorded in subsequent years being a change in
estimate.
- Fixed assets are eliminated when disposed of or when no
future benefits are expected from their use or disposal.
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Finished products
are stated at the lower of cost or ex-refinery selling price.
Spare parts and supplies
are stated at cost according to the weighted average method
Revenue
from fuel sales is recognized upon delivery of goods to the
customer and issuance of the invoice.
sector of Printing and Packaging:(A-3)
The company work in industry the competition in the high level
in the Jordanian market and foreign market .
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Evaluate Financial StatementsSecond :
Common Size Financial Statement:)B - 1(
Common-Size Balance Sheet( B-1-1 )
Common-Size Income Statement( B-1-2 )
Trend ratios:( B - 2 )
Trend Analysis for Balance Sheet( B-2-1 )
Trend Analysis for Income Statement( B-2-2 )
Cash flow analysis( B - 3 )
Structure analysis( B - 4 )
Ratios Analysis :( B - 5 )
Short -Term Liquidity Ratios( B-5-1 )
Capital Structure & Solvency Ratios( B-5-2 )
Operating Efficiency & Profitability Ratios( B-5-3 )
Market Ratios( B-5-4 )
Comparison with industry competitors( B - 6 )
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ents:Evaluate Financial Statem:Second
(B-1)Common Size Financial Statement:
B-1-1) Common-Size Balance Sheet :(
Table (1)
Common-Size Balance Sheet (%)
2008200720062005Liability& Equity2008200720062005Assets
0.060.020.050.04Accounts and Notes
Payable
0.040.040.040.09Cash on Hand & at
Banks
0.000.020.000.00Credit Banks0.110.060.090.08AccountReceivables, Net
0.040.060.040.00Short Term Loans0.000.000.000.00Short TermInvestments
0.140.130.150.06Total Current
Liabilities
0.330.370.370.36Inventory
0.220.290.31
0.07
Total Liabilities0.500.490.530.53Total Current
Assets0.090.080.080.07
Compulsory Reserve0.480.490.460.45Fixed Assets, Net
0.000.000.040.00Proposed Cash
Dividends
0.050.020.0010.02Retained Earnings
0.780.710.690.93Total Shareholders
Equity1.001.001.001.00Total Liabilities &
Shareholders Equity
1.001.001.001.00Total Assets
From the table above we can to the following:
A : Assets aspect :
( A: 1 ) current Assets : In 2005 & 2006 The table current assets
was formed (53%) of to tall assets but in 2007 & 2008 this
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1) The total curate liability was formed about 6% total liability in 2005
but in 2006 this % was increase to be (15% ) of total liability and then
in 2007 this % decrease to be (13%) but also in 2008 this % was
returned to be (14% ) .
2) The Short Term loans was formed zero percentage of total liability
in 2005 but in 2006 , 2007 , 2008 it was ( 4% ) , (6%) , (4%)
respectively .
3)The Credit Banks: it was formed zero percentage of total liability in
2005 , 2006&2008 but in 2007 it was formed 2% of total liability .
4)The account & notes payable: it was formed about (4%) of total
liability in 2005 but in 2006 this % increase to be (5%) in 2006 and
decrease to be (2%) in 2007 and then in 2008 it was increase to be
(6%) .
5)The Total Shareholders Equity : this Itemed was formed (93%) oftotal liability & shareholder equity in 2005 but in 2006 this percentage
decrease to be in 2007 it was increase to be (71%) (78%)
respectively.
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The figure below show the Common-Size Balance Sheet:
Figure1
0.04
0.11
0.00 0.000.00
0.330.00
0.50
0.01
0.48
0.000.00
0.48
0.00
1.00
C.S Asset 2008Cash on Hand & at Banks
Account Receivables, Net
Short Term Investments
Inventory
Total Current Assets
Long Term Investments
Fixed Assets, Net
Total Fixed AssetsOther Assets
Total Assets
Figure2
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(B-2) Trend ratios:
(B-2-1) Trend Analysis for Balance Sheet:
Table (3)
Trend Analysis for Balance Sheet (%)
200
8
2007200
6
2005Liability &Equity2008200720062005Assets
0.30-0.600.110.00Accounts and NotesPayable
-0.63-0.58-0.530.00Cash on Hand &at Banks
0.20-0.290.140.00Account
Receivables, Net
0.810.801.170.00Total Current
Liabilities
-0.22-0.07-0.020.00Inventory
1.652.893.290.00Total Liabilities-0.22-0.17-0.080.00Total Current
Assets0.120.090.050.00Compulsory Reserve-0.11-0.02-0.040.00Fixed Assets, Net
1.510.43-0.950.00Retained Earnings
-0.30
-0.32-0.310.00Total Shareholders
Equity-
0.17-0.10-0.070.00Total Liabilities &
Shareholders Equity
-0.17-0.10-0.070.00Total Assets
- Firsts: Assents aspects :
- The percentage change of cash on hand & at banks was ( 0.53) in 2006
and this % was decrease to be (0.58 ) (0.663 ) in 2007 , 2008 respectively
.
- The % of Account Receivables was (0.14) in 2006 and this value was
decrease to be
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(0.29 ) in 2007 and then it was increase to be ( 0.20 ) in 2008.
- The % of lavatory was ( -0.02 ) in 2006 but in 2007 ,2008 this 5%
was decrease to be (0.07) , ( 0.22 ) in 2007 ,2008 respectively .
- The % of total current assets was (-0.08 ) in 2006 and this 5% was
decrease to be
( 0.7), ( 0.22- ) in 2007 , 2008 respectively .
- The % fixed assets was ( 0.04 ) in 2006 but this value was increase
to be ( 0.02- ) in 2007 and in crease to be ( -0.11 ) in 2008 .
- There in no % in short term investment and other assets .
Second: Liability & Equity Aspect :
- The % of accounts and notes payable was ( 0.11 ) in 2006 and in 2007
this value was decrease to be ( 0.60- ) but in 2008 this% was in crease to
be( 0.30) .
- The total current liability was deuces from ( 1.17 ) in 2006 to be . (80 )
in 2007 but in 2008 it was increase to be ( 0.81 ) .
- The % of total liability was ( 3.29 ) in 2006 but in 2007 , 2008 it was
decrease to be ( 2.89 ) , ( 1.65 ) respectively .
- The % of compulsory Reserve was ( 0.05 )in 2006 and then in
2007,2008 it was increase from ( 0.95- ) in 2006 to be ( 0.43 ) ( 1.51 ) in
2007 , 2008 respectively .
- The % of total shareholders was deceased form ( 0.31 ) in 2007 to (
0.32- ) in 2008 but in 2008 was increase to be ( 0.30- )
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- The % of total liability & shareholders Equity was decrease from (
0.07- ) in 2006 to be ( 0.10- ) ( -0.17 ) in 2007 , 2008 respectively .
(B-2-2) Trend Analysis for Income Statement:
Table (4)
Trend Analysis for Income Statement(%)
2008200720062005Income statement
-0.11-0.11-0.080.00Operating Revenues
-0.17-0.20-0.140.00Operating Expenses
0.290.490.350.00Gross Profit
0.430.130.110.00General and AdministrativeExpenses
-0.44-0.37-0.340.00Selling and DistributionExpenses
0.411.321.010.00Net Operating Income
0.501.290.840.00Income Before Interest & Tax
-0.300.010.000.00Net Income before Tax
0.040.430.420.00Net Income
- The % of operating Revenues was decrease from ( 0.08- ) in 2006 to
be ( 0.11- ) in 2007 , 2008 .
- The % of grass profit was in crease from ( 0.35 ) in 2006 to be ( 0.49 )
in 2007 but in 2008 this % was decrease to be ( 0.29 ) .
- The % of general & administrative Expenses was increase from 0% in
2006 to ( 0.13 ) ( 0.43 ) in 2007 , 2008 respectively .
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-The % of selling and distribution Expenses was decrease from (
0.34-) in 2006 to be
( 0.37-) ( 0.44- ) in 2007 , 2008 respectively .
-The % of net operating in come was increase from ( 1.01 ) in 2006 to
( 1.32 ) in 2007 but in 2008 it was ( 0.41 ) .
-The % of in come before interest & tax was increase from ( .84 ) in
2006 to ( 1.29 ) in 2007 but in 2008 it was decrease to be ( 0.50 ) .
-The % of net income before tax was increase from ( 0% ) in 2006 to
( 0.01 ) in 2007 and it was decrease to be ( 0.30-) in 2008 .
-The % of net income was increase frame ( 0.42) in 2006 to be ( 0.43
) in 2007 . but in 2008 it was decease to be ( 0.04 ) in 2008 .
(B-3) cash flow analysis :
Table (5)
cash flow from main activities
2008 2007 2006 2005
cash flow from operating
activity 1,097,234 1,117,643 1,224,167 597,796cash flow from investment
activity -86,852 -670,531 -521,607 24,502
cash flow from finance activity -1,052,671 -489,842 -1,148,415 -408,844
net change in cash flow -42,289 -42,730 -445,855 276,060
add : cash and banks beginning
year 347,718 390,447 836,302 560,242
add : cash and banks ending
year 305,429 347,718 390,447 836,302
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From the above table , the company can generate cash flow
from operating activity by stable and good way , and cash flow
from financing activity it shows by mince (cash out flow)
which mean is good because the company it is expansion and
investing , and cash flow from financing either shows by mince
(cash out flow) which mean the company pay interest and
dividends to creditor and stock holder .
(B-4) Structure analysis:
The table below shows the capital structure o Al-Ekbal Printing
and PackagingCompany.
Table (6)
2008200720062005Liability& Equity
0.220.290.310.07Total Liabilities
0.780.710.690.93Total Shareholders Equity
1.001.001.001.00Total Liabilities & Shareholders Equity
This table the capital structure for the company and show to us
the increase in percent of debt , which mean the company startfinance its project by debt , which is good , because the higher
debt in capital structure make the company take advantages from
pretax expense ,so increase net income maximize profit- and its
generate higher rate of return equity .
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(B-5) Ratios Analysis:
(B-5-1) Short -Term Liquidity Ratios:
Table (7)
Liquidity RatiosShort-Term
Avg.2008200720062005Ratios
4.8063.5813.8153.5308.296Current ratio1.4791.2000.9461.0232.747Acid - test ratio47.15259.99635.80648.28644.521Collection Period251.481
222.214275.608270.433237.668Days to sell inventory
From table above we note the following:
1- Current Ratio: the current ratio for Al-Ekbal Printing and
Packaging company was (8.296) time in 2005 and if we
compare this ratio with the historical standard of that ratio
(Aug) we found that this ratio is more than the historical
standard so it's almost bad situation which the company must
try to decrease it.
So in 2006, 2007 this ratio was decreased to be (3.530) (3.815)
respectively and this decrease is below the historical standard
(4.806) time that means the current asset could cover the currentliability by (4.81) time approximately. So this company have
surplus about (3.81) JD.
In 2008 this ratio was deceased to be (3.581) time, although it
still less than the historical standard but its good result.
2- Acid test ratio: in 2005 the acid - test ratio was (2.747)
time and if we compare this result with historical ratio we find
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that this result is more than the historical standard (1.479) time
but in 2006, 2007, this ratio was decrease to be (1,023),
(0.946), respectively and increase to be (1.200) in 2008 but in
every case it still below the historical standard (1.479).
3- Collection Period: the collection period for this company
was about 45 day in 2005 and this good situation (the lower the
collection period the better the situation), because this ratio is
below it's historical standard (47) day. In 2006 this ratio was
increase to be about (48) day and this value is bad according
the average, but in 2007this ratio decrease to be about (36),
days this result is good situation, but in 2008 the result of this
ratio returned to be bad (about 60 days).
4-Days to sell inventory: the result of this ratio was about
(238) day in 2005, and this result is below it's historicalstandard (about 251) day, so this is a good indices. In 2006,
2007 this ratio was increase to be about (270) (276) day
respectively, so the company have to decrease this value. in
2008 this ratio returned to decrease to be about (222) day , and
this result reflect good indices in general.
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Figure4
0.000
50.000
100.000
150.000
200.000
250.000
300.000
acid ratio
day to sell inventory
C.R
coll.period
(B-5-2) Capital Structure & Solvency Ratios:
Table (8)
Capital Structure & Solvency Ratios
From the table above we note:
1-Total Debt to Equity: the debt burden on this corporation
was about (7.3%) in 2005 and this value is below it's
average (30.5%) so the corporation have to increase this
ratio. In 2006 the debt burden was increase to be (45.5%)
and this increase is above the average. In 2007, 2008 the
Avg.2008200720062005Ratios
0.3050.2770.4170.4550.073Total debt to equity0.1360.0880.2270.2310.000Long-term debt to equity6.5623.2082.8444.94015.255Times interest earned
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debt burden decrease to be (41.7%) and (27.7%)
respectively but the value of 2008 was below the average.
2-Long-Term Debt to Equity: the total long term debt to
equity was zero in 2005 and it increase in 2006 to be (0.231)
and then decrease to be (0.227), (0.088) in 2007, 2008
respectively. and all values are less than the historical
standard (0.136) this indicate that this firm has a few
depend on long term debt to finance it's investment in term
of other companies in the same industry.
3-Time Interest Earned: this company could cover it's dept
by about (15) times in the year 2005 and this value is higher
than the average that about (7) but in 2006, 2007 this value
was decrease to be about (5), (3) respectively so these value
is below the historical standard. In 2008 the ratio wasincrease to be (3.208) although this increasing it still below
the average.
Figure5
0.000
2.000
4.000
6.000
8.000
10.00012.000
14.000
16.000
total debt to equity
long term debt to eaquity
time interest earned
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(B-5-3) Operating Efficiency & Profitability Ratios:
Table (9)
Profitability Ratios
Avg.2008200720062005Ratios
0.0230.0220.0270.0260.017Return on Assets0.0310.0280.0390.0380.019Return on common equity0.1770.1830.2120.1850.126Gross Profit Margin0.0470.0410.0670.0560.026Operating Profit Margin (pretax)0.0370.0330.0450.0430.028Net Profit Margin
From the table above we note:
1-Return on assets: this company increase it's generated
income from it's assets from (0.017) in 2005 to (0.026),
(0.027) in 2006, 2007 respectively and this increase is
above the average (0,23%) but in 2008 the ability of
generating income for this company from it's total assetsdecrease to be (0.022) this decrease is around the average
(0.23) in other word it's good result.
2-Return on common equity: this company could generating
income from it's owner equity by (0.019), (0.038), (0.039)
in 2005, 2006, 2007 respectively and this result was above
the historical standard (0.031) but in 2008 this value was
decrease to be less than the historical standard (0.028).
3-Gross profit margin: the gross profit margin for this
company was (12.6%), (18.5%), (21.2%) in the year 2005,
2006, 2007 respectively and this value is above the average
(17.7%) except the value of 2005, in 2008 this ratio
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decrease to be (18.3%) but also it still above the average, so
this is perfect situation.
4-Operating profit margin (pre tax): this ratio was increase
from (2.6%) in 2005 to (5.6 %) (6.7%) in 2006, 2007
respectively but in 2008 it was decrease to be (4.1%), but
although this decrease it still around the average (4.7%).
5-Net profit margin: this ratio was increase from (2.8%) in
2005 to (4.3%) (4.5%) in 2006, 2007, respectively but in
2008 it was decrease to be (3.3) and this ratio is around the
average (3.7%) so(good situation).
Figure 6
0.000
0.050
0.100
0.150
0.200
0.250
ROA
ROE
GPM
NPM
OPM
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Table (10)
Activity Ratios
From the table above we note:1-Cash Turn Over: the efficiency of the firm in utilizing it's
cash was about (7.16) time in 2005 and this vale is less than
the average (about 13.5), in 2006, 2007, 2008 the efficiency
of the firm in utilizing it's cash increase in high percentage
to be about (14.14), (15.29), (17.42) in 2006, 2007, 2008
respectively so this firm increase it's efficiency.
2-A/R Turn Over: this ratio was (8.086) in 2005 and it's
above the average (7.899) but in 2006, this ratio was
decreased to be (7.456) which is less than the average. in
2007 it was increase to be (10.054) so it's become above the
average (7.899) and then it's good result, but in 2008 it
decrease to be less than the average (6), so this company has
to increase this value.
3-Inventory Turn Over: the ability of the firm in generating
sales from it's inventories was (1.734) in 2005 (around the
average (1.752) but the ability of the firm in generating
sales from it's inventories was decrease to be (1.634), in
Avg.200820072006200513.49917.42015.28514.1357.157Cash Turn Over7.8996.00010.0547.4568.086A/R Turn Over1.7521.9841.6571.6341.734Inv. Turn Over0.6260.6630.6110.6110.618T.A Turn Over1.6141.8301.6891.6191.319W.C Turn Over1.3251.3691.2381.3221.371PPE Turn Over
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2006, but in 2007, 2008 this value was increase to be
(1.657), (1.984) in 2007, 2008 respectively. So the company
improve its policy.
4-Total Asset Turn Over: the ability of the firm in
generating it's sales from it's total asset was (0.618) in 2005
and this ability decrease to be (0.611), in 2006, 2007, but in
2008 this value increase to be (0.663) so it's higher than the
average (0.626) and this result is good.
5-Working Capital Turn Over: this ratio was increase from
(1.319) in 2005 to be above the average that is (1.614), and
these value are (1.619), (1.689), (1.830) in 2006, 2007, 2008
respectively. So good result was being.
6-PPE Turn Over: this ratio was decrease from (1.371) in
2005, to be (1.322), (1.238), in 2006, 2007, respectively.But in 2008 this value was increase to be above the average
(1.325) So this company increase its sales from using fixed
assets.
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Figure 7
0.000
2.000
4.000
6.000
8.000
10.000
12.00014.000
16.000
18.000
Cash T.OA/R T.O
PPT T.O
Inventory T.O
W.C T.O
T.A T.O
(B-5-4) Market Ratios:
Table (11)
Market Ratios
Avg.2008200720062005Ratios
0.0580.0760.0350.0350.086EPS36.25626.62836.87226.56354.962P/E0.0300.0380.0270.0380.018Ear. yield0.0140.0000.0000.0560.000Div. yield0.3690.0000.0001.4760.000Div. payout1.0520.7401.4341.0151.019P/B
From the table above we note:
1-Earning Per Share (EPS): this ratio was decrease from
(0.086) in 2005 to (0.035) in 2006, 2007 and the value of
this decrease was below than the average (0.058) but after
that it was increase to be (0.076) in 2008, so it became
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above the average (0.058) and this result is a benefit to the
stockholders.
2-Price to Earning: this ratio was about (54.96) in 2005 so it
higher than the average (about 36.26) after that it was
decrease to be (26.56) in 2006, and then increase to be
above the average (36.87) in 2007 but in 2008 it was
decrease to be below the average (36.25).
3-Earning Yield: the earning yield for this company was
(0.018) in 2005 and increase in 2006 to be (0.038),but it
decrease to be (0.027) in 2007, and increase to be (0.038) in
2008. So this value is above the average (0.030) and it's
reflect good situation.
4-Dividend Yield: this ratio still zero in 2005, 2007, and 2008
and in 2006 it was (0.056). The average was (0.014). so thiscompany have to increase this ratio.
5-Dividend Pay Out: this ratio still zero in 2005, 2007, and
2008 and in 2006 it was (1.476). The average was (0.369)
so this company has to increase this ratio.
6-Price to Book Value: in 2005 this ratio was (1.019) and it's
below the average (1.052) but it was decrease in 2006 to be
(1.015). in 2007 it was increase to be (1.434), and in 2008 it
return to decrease to be (0.740) and this below the average.
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Figure8
0.000
10.000
20.000
30.000
40.000
50.000
60.000
EPS
P/E
Earning Yeild
div. yeild
div pay out
price to B.V
( B-6 ) Comparison with industry competitors:
Table (12)
The industrial standard for Printing and Packaging
Industries
(Short Term Liquidity)
From the table above we note:
- Current Ratio: the industrial standard for the current assets is
(2.44) and the historical standard for AL-Ekbal Printing Company
Ind. Stan.AL-Ekbal
Printing
Union Advanced
Industries
2.443.581.31C.R0.821.200.44Acid - ratio49.3860.0038.77Coll. period231.03222.21239.84Days-sell inv.
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is (4.806) so we find that the current ratio of AL-Ekbal Printing
Company is higher than the current ratio of the industrial standard
so this company has a good and positive liquidity, but it has to
decrease it to benefit from cash investment.
- Acid Ratio: according to the industrial standard to this ratio
which was (0.82) we find that the historical standard which was
(1.479) is higher than the industrial standard and this indicate a
perfect performance to this company in term of it's competitive
firm the market.
- Collection Period: the industrial standard for this ratio is
(49.38) day while AL-Ekbal Printing Company ratio was (47.15)
day so this result is good according to competitive firms.
- Days Sell Inventory: the industrial standard for this ratio was
about (231) day, but the historical ratio of AL-Ekbal PrintingCompany was about (251) day and that indicate a bad
performance for his company according to it's competitive firms
in the market, so this company has to decrease this ratio.
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Table (13)
The industrial standard for Printing and Packaging
Industries
(Capital Structure. & L.T Solvency.)
From the table above we note:
- Debt to Equity Ratio: the industrial standard for this ratio is
equal to (72%) and the historical ratio is (30.5%) so this company
is less depended on debt than it's competitive.
- Long term debt to equity: the industrial standard for this ratio
was (24%) and the historical standard for AL-Ekbal Printing
Company was (13.6%), and this is a good value according to themarket.
- Time Interest Earned: the industrial standard for this ratio
was about (4) times and for the AL-Ekbal Printing Company it
was about (7) times so this company has perfect indices according
to the market.
Ind. Stan.AL-Ekbal
Printing
Union Advanced
Industries
0.720.281.15D / E0.240.090.40L. D / E3.993.214.78Time I . earned
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Table (14)
The industrial standard for Printing and Packaging
Industries
(Operating Efficiency & Profitability)
From the table above we note:
- Return on assets: the industrial standard for this ratio was
about (7.15) and for the AL-Ekbal Printing Company the
historical ratio was about (2%) and so this ratio is very low
according to competitive companies and AL-Ekbal Printing
Company has to increase it.
- Return equity : the industrial standard for this ratio was
(10.26) but for AL-Ekbal Printing Company the historical
ratio was about (3%) and we can not make a judgments
about this result because this related to the policy of the
company.-Gross Profit Margin: the industrial standard for this ratio
was about (26%) but for the AL-Ekbal Printing Company
the historical standard was (17.7%) so this ratio is less
efficient in the AL-Ekbal Printing Company than the
competitive companies.
Ind. Stan.AL-Ekbal
Printing
Union Advanced
Industries
7.153.3810.93ROA10.262.7817.75ROE25.6418.3332.94GPM16.935.8328.02OPM10.643.2817.99NPM
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- Operating Profit Margin: the industrial standard for this
ratio was about (17%) and for the AL-Ekbal Printing
Company it was about (5%) so this company has bad
performance in generating profit.
- Net Profit Margin: the industrial standard for this ratio
was about (11%) but for the AL-Ekbal Printing Company it
was equal to (4.7%) so this ratio is bad for the AL-Ekbal
Printing Company.
Table (15)
The industrial standard for Printing and Packaging
Industries
(Market Ratios)
From the table above we note:
- Earning per share: the industrial standard for this ratio was
(0.22) and for the AL-Ekbal Printing Company it's has historical
ratio about (6%) so the stock holders in this company receive
earning more than the stock holders in other competitive firms on
the market.
Ind. Stan.AL-Ekbal
Printing
Union Advanced
Industries
0.220.030.41EPS16.3926.636.15P/E0.030.040.03Ear. yield3.000.006.00Div. yield0.950.001.90Div. payout0.920.741.09P/B
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- Price to earning: the industrial standard for this ratio was about
(12.30) and for AL-Ekbal Printing Company the historical ratio
was (929.71) so there is very difference between tow ratio behalf
to the AL-Ekbal Printing Company.
- Earning yield: the industrial standard for his ratio was
(16.39%) and for the AL-Ekbal Printing Company it was about
(36.25%) so this ratio behalf the AL-Ekbal Printing Company.
- Dividend yield: the industrial standard for this ratio is (0.95)
and for the AL-Ekbal Printing Company it was (0.014) so this
company did not have high dividend according to the market.
- Price to book value: the industrial standard for this ratio was
(0.92) and the historical ratio for AL-Ekbal Printing Company
was (1.052) so this ratio is good according to the competitive
companies ratio in the market.
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Table (16)
The industrial standard for Printing and Packaging
Industries
(Activity Ratios)
From the table above we note:
- Cash Turn Over: the industrial standard for this ratio was
( 377.35) time, but for the AL-Ekbal Printing Company it's
historical standard was about (13.5) time so it's better for
this company to increase this ratio.
- A/ R turn over: the industrial standard for this firm was
about (8) time and for the AL-Ekbal Printing Company it
was also about (8) so this company's activity is near to the
market.
- Inventory turn over: the industrial standard for this ratio
was about (1.7) time and for AL-Ekbal Printing Company itwas about (1.8) time and so this company's activity is near
to the market.
- Total Asset Turn Over: the industrial standard for his
ratio was about (0.6) and for the AL-Ekbal Printing
Company it was also about (0.6) so this company's activity
is near to the market.
Ind. Stan.AL-Ekbal
Printing
Union Advanced
Industries
377.3517.42737.28Cash Turn Over7.646.009.29A/R Turn Over1.741.981.50Inv. Turn Over0.560.660.46T.A Turn Over3.041.834.26W.C Turn Over1.131.370.90PPE Turn Over
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- Working capital turn over: the industrial standard for
this ratio was about (3) but for the AL-Ekbal Printing
Company it was positive and about (1.61) so this indicate a
bad performance for this company according to it's
competitive companies in the market.
- PPE Turn Over: the industrial standard for his ratio was
(1.13), and this value is above the historical standard of AL-
Ekbal Printing Company, which was (1.05), so this
company has to try to increase this ratio.
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Results and Recommendations :
1 - The company have problem with liquidity because Current
ratio is too high when we compared with historical standard ,industrial standard and competitor standard ( Union Advanced
Industries ) . the company should decrease it through more
investment in fixed assets because its more profitable assets .
2 - The company have a problem with collect its receivable
because it is takes too much time to collect its debt . it should
mad more restriction about the credit on sales and improve
collection department ).
3 - The company have littlie debt in its capital structure
component . which is make it lose the advantages from debt like
(pretax deduction , higher rate of return on equity , creditor have
no control on the company and increase time interest earned ) .
so I advice him to finance future project by debt .
4 - The company have problem with managing its assets because
the return on its assets it is very littlie when we compared with
historical standard , industrial standard and competitor standard
( Union Advanced Industries ) . so the company should increase
its profit by finding new market and customers, not just depend
little numbers from customers .
5 - The cost of goods sold is too high when we compared with
sales , which mean little percentage of profit margin . so I advice
him to seek a new market for material and dont depend on 2
main suppliers .
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From all previous result and recommendations , I observe bad
performance of management with little development and
improvement in manage its assts compared with its competitor (
Union Advanced Industries ) which reflected in the big
difference of stock prices to both companies .
Figure 9
0
0.5
1
1.5
2
2.5
3
3.5
4
2008 2007 2006 2005
Al-Ekbal
Printing And
Packaging
Union
Advanced
Industries
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References :
1 Annual Report Of Al-Ekbal Printing And Packaging for
years ( 2005 2008 ) .
2 Companies' Guide for Jordanian market for years ( 2005
2008 ) .
3 Some Statistic about Al-Ekbal Printing And Packaging on
.www.moubasher.infothe web sit :
4 - Some Statistic about Al-Ekbal Printing And Packaging on
www.ase.orgthe web sit :
5 Excel Files by stock prices at the end of each month from
year ( 2005 2008 ) .
6 K.R Suberamanyam And John.Wild , Financial Statement
Analysis ,10th
, Mc Graw Hill -usa- 2009 .
7 Gibson ,c.h , financial reporting and analysis : uses financial
accounting information , 11th
, western college publishing -usa-
2009 .
http://www.moubasher.info/http://www.ase.org/http://www.ase.org/http://www.moubasher.info/