Circle Advertising Internship Report

CHAPTER 1: COMPANY OVERVIEW

Introduction to The Circle Advertising Agency:The Circle Advertising is a full-service advertising and marketing communications agency that

offers our clients a combination of on-target strategic thinking and excellent creative

development. Their staff has worked with a wide variety of clients, ranging from start-up

companies to some of the most recognized organizations in Pakistan.

They offer over 25+ years of hands-on experience working with some of the most prominent

organizations that market technology-related products and services to business and government

audiences, including Ministry of Information, Ministry of Interior, Ministry of Health, Ministry

of Planning & Development, UN Systems, Foreign High Commissions, National and

Multinational Brands, NGOs and many others.

Their offices in Karachi, Lahore, Islamabad and UK provide a range of services for organizations

marketing to business-to-business, business-to-government and business-to-consumer audiences.

They purchase and place media nationally and locally, and specialize in creative integrated

marketing campaigns for the clients with whom they work.

Vision: The Circle Advertising is dedicated to providing our clients with results-oriented

advertising, public relations, and total marketing support. We are committed to providing

products and services that benefit our clients.

They want to maintain a financially strong, growth-oriented company for the protection of our

employees and clients.

Mission: The mission of The Circle Advertsing is to provide results-oriented advertising, public

relations, and marketing designed to meet our client's objectives by providing strong marketing

concepts and excelling at customer service.

They seek to become a marketing partner with our clients.

INTERNSHIP REPORT – 2013 1

They desire to measure success for our clients through awareness, increased sales, or other

criteria mutually agreed upon between the agency and the clients. They are committed to

maintaining a rewarding environment in which we can accomplish our mission.

Values:

To their employees, their most important resource, they offer:

A healthy, enjoyable, exciting, and motivational work atmosphere in which individuals are

empowered to take on responsibility, develop and present ideas, educate themselves and others,

and use their talents and abilities to their fullest capacity.

They want to continually promote teamwork, quality improvement, and excellence in all phases

of business.

This environment is upheld and promoted by open and direct communication, availability of

information resources, and an organizational-wide commitment to motivating employees to

reach their maximum potential in everything they do.

To their clients we offer:

A professional marketing system that provides the highest standards of quality and efficiency

where service, creativity, reliability, and integrity are the hallmarks of every aspect of our work.

They effort is to ensure that we are satisfying the client's needs and providing materials that are

strategically on target as well as having the ability to produce superior results.

Through creative thinking and strategic planning we will reach the marketing objectives of our

clients.

They want to be accountable for helping our clients obtain measurable goals, which may include

(but are not limited to) sales or awareness.

Organizational Design:

The Circle is a Pakistan based company. It is a part of The Circle Agency UK.


Division of the Organization:The organization has been divided into three distinct regions countrywide; (The Circle Adv,

2011)

North – Islamabad

Center – Lahore

South – Karachi

International – UK

Hierarchy


Head Office (Islamabad)

Regional Office (Lahore)

Regional Office (Karachi)

Regional Manager (Lhr & Khi)

CEO

General Manager

Media Manager

Productions Manager

Finance Manager

Creative Dep’t.

Art Dep’t.

National Corporate Office Regional Offices

Islamabad Karachi - Lahore

Competitors:Here are the direct competitors of The Circle Advertising in Pakistan, These organizations offer

more or less the same products as The Circle Advertising does. Indirect have been ignored.

1. Orient/McCann

2. Interflow Communications

3. IAL Saatchi & Saatchi

4. MPL Advertising

5. Ad Group Advertising

6. Channel 7 Communication

7. Maxim Advertising

8. M-Com

9. Ad Reach

10. JWT Asiatic Advertising

11. RLintas Communications

12. MNJ Advertising

13. Adcom Advertising

14. EMC Square

Services:The Circle Advertising offers a wide range of services:

1. Advertising Campaigns

2. Branding & IDs

3. Multimedia Graphics Design

4. Creative Services

5. Media Productions & services

6. Corporate Image Building

7. PR Building

8. Email Marketing


Department Information:There are six major departments in any advertising agency. These can be split into other sub-

departments. These departments are:

1. Account Service

2. Account Planning

3. Creative

4. Finance & Accounts

5. Media Buying

6. Production

Larger agencies may also separate out the following departments:

1. Human Resources & Facilities

2. Research

3. Web development

4. Traffic

Account Services:The account service department comprises account executives, account managers and account

directors, and is responsible for liaising with the agency's many clients. This department is the

link between the many departments within the agency, and the clients who pay the bills.

Account Planning:The account planning department provides consumer insights, strategic direction, research, focus

groups and assists helps keep advertising campaigns on target and on brand. To be truly

effective, advertising must be both distinctive and relevant, and planning helps on both counts."


Creative:This is the engine of any advertising agency. It's the lifeblood of the business, because the

creative department is responsible for the product. And an ad agency is only as good as the ads

the creative department puts out. The roles within the creative department are many and varied,

and usually include:

Copywriters

Art Directors

Designers

Production Artists

Web Designers

Associate Creative Directors

Creative Director(s)

In many agencies, copywriters and art directors are paired up, working as teams. They will also

bring in the talents of other designers and production artists as and when the job requires it.

Sometimes, traffic is handled by a position within the creative department, although that is

usually part of the production department. Everyone within creative services reports to the

Creative Director. It is his or her role to steer the creative product, making sure it is on brand, on

brief and on time.

Finance & Accounts:At the end of the day, both ad agencies and clients want money, at the center of all the money

coming into, and going out of, the agency is the finance and accounts department. This

department is responsible for handling payment of salaries, benefits, vendor costs, travel, day-to-

day business costs and everything else you'd expect from doing business. It's been said that

approximately 70% of an ad agency's income pays salary and benefits to employees. However,

this figure varies depending on the size and success of the agency in question.


Media Buying:It is the function of the media buying department to procure the advertising time and/or space

required for a successful advertising campaign. This includes TV and radio time, outdoor

(billboards, posters, guerrilla), magazine and newspaper insertions, internet banners and

takeovers, and, well, anywhere else an ad can be placed for a fee. This usually involves close

collaboration with the creative department who came up with the initial ideas, as well as the

client and the kind of exposure they want. This department is usually steered by a media director.

Production:Ideas are just ideas until they're made real. This is the job of the production department. During

the creative process, the production department will be consulted to talk about the feasibility of

executing certain ideas. Once the ad is sold to the client, the creative and account teams will

collaborate with production to get the campaign produced on budget. This can be anything from

getting original photography or illustration produced, working with printers, hiring typographers

and TV directors, and a myriad of other disciplines needed to get an ad campaign published.

Production also works closely with the media department, who will supply the specs and

deadlines for the jobs.

In small to mid-sized agencies, traffic is also a part of the production department. It is the job of

traffic to get each and every job through the various stages of account management, creative

development, media buying and production in a set timeframe. Traffic will also ensure that work

flows through the agency smoothly, preventing jams that may overwhelm creative teams and

lead to very long hours, missed deadlines and problematic client relationships. Traffic keeps the

agency's heart beating

.


CHAPTER 2: ORGANIZATIONAL ANALYSISThe organizational analysis is completed on my own personal impressions and observations. I

used the internet as a source for visions, goals etc to better understand the organization and its

functioning/ I talked to various employees working there in different departments to gather my

information for this part of the analysis.

Despite having limited branches in Pakistan, the organization has a large chain of customers

attached to it. The agency has been operational in Pakistan since 1999 but it was a rebirth of the

organization. It had operations in Pakistan before as well but due to political and other reasons

the agency had to wrap up operations in the country subsequently then but as the conditions got

better they decided to re-launch their operations here.

They came back with a renewed vigor, a better structure and better employees. They decided to

keep their focus on customers more limited this time in line with the corporate strategy that has

been implemented worldwide. They opened limited branches and kept employees who had more

experience regarding advertising and had much more desire in them than the previous ones.

The organizational culture encapsulates all the elements of an informal environment with fusion

to a sense of integrity and professionalism. All the employees with full motivation are absorbed

and incredibly elated by the prevailing dominant culture. Freedom of expression is another

element of the culture that counts a lot.

An environment with no defined offices is demonstrated; even a director is as easy accessible as

an executive is. There are open spaces instead of closed cabins. Brand colors and their blend

demonstrate a sense of joy and rapture especially in every department.

SWOT Analysis:

SWOT analysis is a part of strategic planning process. With rapidly changing environment, the

organization needs to know where it stands. What resources it has within, and what resources it


needs to acquire. In order to survive, the organization must respond to the changes, grab

available opportunities and overcome its weaknesses. For that SWOT analysis needs to be done.

Internal Potency or Strengths:

The Circle Advertising is dedicated to providing our clients with results-oriented

advertising, public relations, and total marketing support. We are committed to providing

products and services that benefit our clients.

They want to maintain a financially strong, growth-oriented company for the protection

of our employees and clients.

The mission of The Circle Advertsing is to provide results-oriented advertising, public

relations, and marketing designed to meet our client's objectives by providing strong

marketing concepts and excelling at customer service.

They seek to become a marketing partner with our clients.

They desire to measure success for our clients through awareness, increased sales, or

other criteria mutually agreed upon between the agency and the clients. They are

committed to maintaining a rewarding environment in which we can accomplish our

mission.

For success in any field, leadership is the most vital part. Leaders are present everywhere

in this organization. During my time there, I witnessed how greatly even the clerks had

been performing when needed. Sometimes early morning, when no one was present to

handle customers, the guards even had enough training to guide the customers. Taking

the initiative.


Since the agency functions through an MIS (Management Information System) everyone

working there has to be well familiar with the system.

The HR department functions primarily through their head office in Islamabad and has

small sub departments in every branch to handle administrative issues that may arise.

Recruitment and selection is done through the head office which maintains a proper

portfolio of all the active employees working at the branches across Pakistan.

Weaknesses:Lacks of certain strengths are viewed as weaknesses;

Weaknesses are:

Understaffed at times; No backup in case of absences.

During the internship the main weakness I found was lack of staff, many times when there was

burden or urgent work, there was not sufficient strength of senior resources to handle the

situation timely.

Compensation packages aren’t in line with the amount of work that is put in by

some of the employees.

Employees late hour sitting were in most practice, but I found no compensations in term of bonus, some

extra allowance or overtime wages.

Structure too linear; too highly dependent upon the head office in Islamabad.

I found system was not decentralized and was so dependent on head office management for making

decisions, which causes wastage of time usually.

Sometimes a bit too much complacency on part of the employees


Like all other organizations, The Circle has its issues, but these are not any issues which cannot

be eradicated over time.

Opportunities:Opportunities present themselves in different ways for different organizations.

From what I observed the following are the opportunities for The Circle:

Affiliations with international advertising agencies

The firm is affiliated with several International bodies which give it a competitive edge, as most of the

other similar organizations are not linked with outside agencies. Such affiliations provide the firm with

the opportunity to even serve for international clients and grow globally as well as internationally.

They should take more advantage of international advertising networks and tools

As the western countries are far more ahead us Pakistanis in every field, the firm has an opportunity to

learn new skills and technologies that can be used as advertising tools. The international networks can

also be used by the firm to expand its business in the international market.

Introducing new technologies such as 3-D video mapping

Threats:As well all know, the advertising sector of Pakistan is one of the largest operational sectors in the

market.

Therefore, the pertaining threats are:

Local and International ad agencies currently operating in Pakistan

Political and Economic Conditions

PID regulations

Security concerns in the country

Recent issues with the organization regarding downsizing worldwide

Information Access


The organization should provide information to all the present and potential customers relating to the new

advertising tools and technologies, services, some service’s fee structure and other matters, which are

likely to affect the customers. It should be made sure that all the customers have access to this

information. Conveying information is of no use, unless, there is some feedback from the customers.

Identification of Main Problems Areas:From the above written analysis I have derived the following main areas of problems that The

Circle faces:

Hierarchy too flat: Hierarchy of the company is flat there are no as such set rules and

pattern of employees that who reports to whom .this aspect needs to be improved as it can

become a problem

Chain of command is too dense: As there are many departments in this organization

which makes the chain of command very dense.

Competition in the market is very high: As we have plenty of ad agencies working in

the market which makes competition very tough. So we have to expertise and mold our

self to the upcoming modern trends in order to survive and have a market edge over our

competitors.

Some of the employees need to be paid way more than they actually are: as

mentioned above the market competition is very tough so we have very few talented staff

and it is difficult to get hold of employees with required skills that’s why you have to pay

more to the talented staff in order to retain them

The management from Islamabad can be too strict at times for no particular

reasons: chain of command in the head office Islamabad is very strict in terms of work.

Which sometimes becomes a hurdle in co-ordination& accomplishment of tasks?


Political and Economical conditions are losing customers: Political and economic

situation has also become a problem for the agency as there is no new company ready to

invest in Pakistan.

PEST Analysis:

Political Analysis:

Business decisions are influenced by political factors. Although Pakistan is currently under

democratic rule, still the political condition is quite volatile. At the one side we can say there is

weak and unpopular government, on the other side war against terrorist going on. With such

political conditions no business can withstand. In such circumstances, agency face the challenges

of lower profits, insecurity among the investors, That’s why the agency had to wrap up

operations in the country before but as the conditions got better they decided to re-launch their

operations here.

Economic Analysis:

Economic factors change rapidly and are sometimes difficult to predict especially in case of

Pakistan. During a recession customers spend less on optional items such as cars and appliances

so companies does not make a new logos and banners. As a result, the business environment

suffers.

Social Analysis:

Social factors reflect the constant change in society’s interests, beliefs and actions. In Pakistan

we find a lot of variety in the social structure. Pakistan is a densely populated country with high

birth rates and bigger families. High unemployment prevails in the population. There is a high

trend of moving from rural to urban areas for making the income. Population is strongly bonded

to the religious and cultural norms. The Circle agency aware of their social responsibilities, that’s

why they work for the betterment of country,.


Technological Analysis:

Now a day’s technology has played a vital role. Pakistan is keeping up with the technological

advancements in almost all fields. To remain competitive The Circle must ensure that its

processes and systems support innovation and creativity for itself and its customers and provider

sustainable services.

CHAPTER 3: INTERSHIP EXPERIENCE


Position Title

Internee, The Circle Advertising

• Starting Date: 2nd July, 2012

• Ending Date: 12th August, 2012

Duration: 40 Days

Concerned department information: I joined The Circle Advertising at the position of intern. During my six weeks I worked mainly

in the Accounts and Finance Department. It’s a large scale department that handles everything

related to client accounts. This department is the link between the many departments within the

agency, and the clients who pay the bills. In the past they were referred to as "the suits," and

there have been many battles between the account services department and the creative

department. But as most creative’s known, a good account services team is essential to a good

advertising campaign. A solid creative brief is one of the main duties of account services.

Working Experience (duties and Responsibilities):The Circle Advertising arranged various learning sessions for all of its interns. Every department

further arranged separate learning and training sessions for the interns posted in the department.

This strengthened the apprenticeship relationship that interns had with the organizations and the

departments.

1. Account Service

2. Account Planning

3. Finance & Accounts

All these sessions were beyond the text book experiences. The work in practical life is very

much different from what we study in books yet the knowledge we gained from books has

certain applications in real world. During these sessions, the mentor’s focus was to depart as

much information to the interns as they could. No base line concepts were involved and we

became familiar the organizational practices.


Job Description:It includes the daily tasks that were assigned to me. I shall proceed to list them on weekly basis

as I learnt them.

Week 1 and 2:

In the first and second week I was given an overall and in depth preview into the business

development and the various products that the agency has to offer, they took this process slow to

help me absorb the information gradually and in detail so that before I started customer

interaction I was familiar with all the services that could be offered.

Week 3 and 4:

In these two weeks I was allowed to interact with client services to answer and solve any queries

that they had. These were hard weeks as I was faced with many different challenges and

situations that I had to handle. I was assisted well by the staff. I spend whatever spare time I had

to sit down with the various personnel’s in the accounts dep’t to learn how these processes are

carried out.

Week 5 and 6:

In these two weeks I was given tougher tasks as compared to the week before, I was asked to join

different departments of agency where I had to attend few meetings and meet few clients for

account service. In last week, I had become more familiar with the processes so the difficulty

level had decreased and I was comfortable working by myself

Learning/Achievements:


As a student of Finance Primarily, it was a difficult decision for me to initially shun all other

opportunities and accept this offer from The Circle. It helped me learning lot of new thing that I

would never be able to learn if I did not choose The Circle for my internship. As an internee I spent good

time in the organization, I learnt to deal with different situations. I learnt many problem solving

techniques in difficult times. The key learning’s of my internship include:

Confidence: after my 6 weeks internship experience I can handle issues and work responsibilities more

confidently as I could do before my work experience.

Hardworking: As we all know hard work leads to success. I now work dedicatedly for the projects that

are assigned to me.

Team work: Working with teams is always an issue in most of the organizations as it is difficult to cope

up with the mind sets of different people. In my internship duration, I worked with teams of different

people and learnt how to adapt to different work settings.

Seeking success out of dark: The organization teaches us all the required skills and competencies that

would help us grow in our career and lead to success.

Skills used and acquired:

Analytical Skills

As a Finance intern I had used analytical skills to investigate the root cause of a problem and

work toward a solution in an organization. I used creativity and financial knowledge to resolve

problems for the company.

Interpersonal Skills

I used to interact with workers and management in all aspects of department; this would be

possible just because of good interpersonal skills. Interpersonal skills are also an important skill

when working on a team to resolve financial problems and issues in the organization.


Job Knowledge

I have an education in finance, accounting or economics to work in the finance department. As

an The Cricle advertising with an international reach, we must have knowledge and expertise in

international finance and global economics. International finance and global economics requires

a strong knowledge of compliance laws and regulation.

CHAPTER 4: FINANCIAL ANALYSIS

Balance sheet:

2007 2006 2005 2004 2003


CURRENT Assets

Cash and cash equivalents 1,477,342 3354597 446,142 208,860 19,664

Accounts receivable 325714 1259850 500122 441362 139,644Prepaid expenses 221419 128967 57172 48499 103,309

Other current assets 10913 6743 344 2400 1,700

Total current assets 2,035,388 4,750,157 1003780 701121 264,317

PROPERTY AND EQUIPMENTFurniture and fixtures 40,674 36,870 24931 16572 16,572Computer equipment and software 93,045 74,875 51,975 48,031 47,126Less: accumulated depreciation -95,076 -75,678 -61,135 -50,179 -32,994Total property and equipment, net 38,643 36,067 15,771 14,424 30,704

GOODWILL 250,000 250000 250,000 250,000 250000

OTHER ASSETS 6,922 6,922 6,922 11,500 11500

TOTAL ASSETS 2,330,953 5,043,146 1,276,473 977,045 556,521

CURRENT LIABILITIESAccounts payable 116,837 257,717 271,751 489,961 372,223 Customer advance payments 3,650 89,804 11,050 80,784 114,707Accrued salaries and wages 95,348 110,643 907,785 618,688 367,415 Accrued liabilities 47,822 267,887 80,855 29,888 127,267

Other current liabilities 373 8,430 1,739 33 1,263 Obligations under capital leases 887 3,165 4,841 2,342 2,201


Total current liabilities 264,917 737,646 1,525,629 1,553,174 1,197,830 Obligations under capital leases, long-term 0 887 4,052 2,211 4,553

Total liabilities 264,917 738,533 1,529,681 1,555,385 1,202,383

Commitments and contingenciesShareholders’ equity (DEFICIT)

Preferred stock series A, 3 3 14 14 14

Preferred stock series B, 0 0 0 0 0

Common stock, 10,881 10,881 19,095 18,892 18,859 Additional paid-in capital 6,735,101 6,735,101 2,126,685 2,099,928 2,033,534 Accumulated deficit -4,679,949 -2,441,372 -2,399,002 -2,697,174 -2,698,269Total shareholders’ equity (deficit) 2,066,036 4,304,613 -253,208 -578,340 -645,862

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) 2,330,953 5,043,146 1,276,473 977,045 556,521

Error! Not a valid link.Income Statement:

2007 2006 2005 2004 2003

REVENUES 3,434,654 4,824,614 5477086 3668871 1,955,404COST OF GOODS SOLD 2,307,500 3,000,207 3554352 2594344 1,447,225


Gross profit 1,127,154 1,824,407 1,922,734 1,074,527 508,179OTHER OPERATING EXPENSE

3,484,863 2,339,950

Selling, administrative and other operating expenses 1587877 999,338 1,743,113Income (from operations -2,357,709 -515,543 -36,685 75,189 -1,684,934

OTHER INCOME (EXPENSE)

Interest expense -1,341 -12,573 -36,685 -77,128 -51,316Interest and other income 112,454 31,006 0 3,034 754

Total other income (expense) 111,113 18,433 -36685 -74,094 -50,562

Income before income taxes -2,246,596 (497,110) 298,172 1,095 -1,735,496

Income Taxes 0 0 0 0 0

NET INCOME (LOSS) - 2,238,577 -42,370 298,172 1,095 -1,735,496

NET INCOME (LOSS) PER SHARE, basic (0.21) (0.01) 0.02 0 (0.09)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, basic 10,880,867 6,439,802 19008175 18,878,549 18,807,762NET INCOME (LOSS) PER SHARE, diluted (0.21) (0.01) 0.02 0 (0.09)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, diluted 10,880,867 6,439,802 1907785 18,947,459 18,807,762


Ratio Analysis:

Ratio analysis is basically used to understanding the financial health of a business entity. With

the help of ratios we can easily calculate from current year performance of the companies and are

then compared to previous years. Ratio analysis conducts a quantitative analysis of information

in a company’s financial statements

Liquidity Analysis:

Liquidity is a company’s ability to meet its maturing short – term obligations. Liquidity is

essential to conducting business activity, particularly in times of adversity, such as when

business is shut down by strike or when operating losses ensue due to an economic recession etc.

Liquidity ratios are static in nature as of year-end. Therefore, it is important for management to

look at expected future cash flows. If future cash outflows are expected to be high relative to

inflows, the liquidity position of the company is deteriorate.

Current Ratio:

Current ratio is equal to current assets divided by current liabilities. This ratio is used to measure

the ability of an enterprise to meet its current liabilities out of current assets. The formula can be

written as:

Quick Ratio:

The quick ratio, also known as the acid-test ratio is strongest test of liquidity. In it more liquid

current assets are divided by current liabilities. It can be written as:


2003 2004 2005 2006 2007

0.220 0.451 0.657 6.439 7.683

2003 2004 2005 2006 2007

0.220 0.451 0.657 6.439 7.683

Debtor Turnover Ratio:

The relationship of net sales to total debt is known as the Debtors Turnover Ratio.

2003 2004 2005 2006 2007

0 12.629 11.635 5.482 4.332

Fixed Asset Turnover:

The relationship of net sales to total assets is known as the Fixed Asset Turnover.

2003 2004 2005 2006 2007

63.685 254.358 347.288 133.76 88.88

Leverage Ratio

Leverage equivalent to solvency or long-term debt. Solvency is a company’s ability to meet its

long-term obligations as they become due. An analysis of solvency concentrates on the long-term

financial and operating structure of the business. The degree of long-term debt in the capital

structure is also considered. Further, solvency is dependent upon profitability since in the long

run firm will not be able to meet its debts unless it is profitable.

Debt/ Equity Ratio:


The debt/equity ratio is a significant measure of solvency since the high degree of debt in capital

structure makes difficult for organizations. Excessive debt will result in less financial

flexibility .Debt/equity ratio equals to total liabilities divided by equity.

2003 2004 2005 2006 2007

-1.861 -2.689 -5.901 0.171 0.128

Total Asset Turnover:

The total asset turnover ratio is useful in evaluating a company’s ability to use its asset base

efficiently to generate revenue. A low ratio may be due to many factors, and it is important to

identify the underlying reasons.

2003 2004 2005 2006 2007

3.513 3.755 4.290 0.956 1.473

Net Working Capital:

Net working capital is equal to current assets less current liabilities. Current assets are those

assets that are expected to convert into cash or used up within 1 year. Current liabilities are those

liabilities that must be paid within 1 year; they are paid out of current assets. Net working capital

is a safety cushion to creditors.


2003 2004 2005 2006 2007

-933513 -852053 -521849 401254 1770471

Profitability Ratio:It is used to assess a business's ability to generate earnings as compared to its expenses and other

relevant costs incurred during a specific period of time.

Gross Profit Margin:

The gross profit margin reveals the percentage of each rupee left over after the business has paid

for its goods. The highest the gross profit earned the better. Gross profit equals net sales less cost

of goods sold.

2003 2004 2005 2006 2007

25.98% 29.28% 35.10% 37.81% 32.82%

Net Margin:

The ratio of net Profit after tax to net sales is called the Net profit margin. It indicates the

profitability generated from revenue and hence is an important measure of operating

performance.


2003 2004 2005 2006 2007

-88.75% 0.029% 5.44% -0.87% -65.17%

Return on Equity:

ROE measures the overall firm performance. ROE compares net profit after taxes (minus

preferred stock dividends, if any) to the equity that shareholders have invested in the firm:

2003 2004 2005 2006 2007

-2.6 -0.0018 -1.177 -0.0098 -1.08

Return on Asset:

The return on total assets (ROA) indicates the efficiency with which management has used its

available resources to generate income.

2003 2004 2005 2006 2007

-3.11 0.0011 0.23 -0.008 -0.96

Vertical Analysis:

A method of financial statement analysis in which each entry for each of the three major

categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a

proportion of the total account. The main advantages of vertical analysis are that the balance

sheets of businesses of all sizes can easily be compared. It also makes it easy to see relative

annual changes within one business.

Balance sheet:


2007 2006 2005 2004 2003Cash and cash equivalents 63.37% 66.51% 34.95% 20.94% 3.53%

Accounts receivable 13.97% 24.9% 39.17% 45.1% 25.09%

Prepaid expenses 9.49% 2.55% 4.47% 4.96% 18.56%

Other current assets 0.46% 0.13% 0.026% 0.24% 0.30%

Total current assets 87.31% 94.19% 78.63% 71.75% 47.49%

PROPERTY AND

EQUIPMENT

Furniture and fixtures 1.74% 0.73% 1.95% 1.69% 2.97%

Computer equipment and

software 3.99% 1.48% 4.07% 4.91% 8.51%

Less: accumulated

depreciation -4.07% -1.50% -4.78% -5.13% -5.92%

Total property and

equipment, net 1.65% 0.71% 1.23% 1.47% 5.51%

GOODWILL 10.72% 4.95% 19.58% 25.58% 44.92%

OTHER ASSETS 0.29% 0.13% 0.54% 1.17% 2.06%

TOTAL ASSETS 100 100 100 100 100

CURRENT LIABILITIES

Accounts payable 5.012% 5.11% 21.28% 50.14% 66.88%

Customer advance payments 0.15% 1.78% 0.86% 8.26% 20.61%

Accrued salaries and wages 4.09% 2.19% 11.16% 63.32% 66.01%

Accrued liabilities 2.05% 5.31% 6.33% 3.05% 22.86%

Other current liabilities 0.016% 0.167% 0.136% 0.0033% 0.22%

Obligations under capital

leases 0.038% 0.062% 0.379% 0.239% 0.395%

Total current liabilities 11.36% 14.62% 119.51% 158.96% 215.23%


Obligations under capital

leases, long-term 0 0.017% 0.317% 0.22% 0.81%

Total liabilities 11.36% 14.64% 119.83% 159.19% 216.05%

Commitments and

contingencies

Shareholders’ equity

(DEFICIT)

Preferred stock series A, 0.000129% 0.000059% 0.001% 0.0014% 0.0025%


Common stock 0.466% 0.215% 1.49% 1.93% 3.38%

Additional paid-in capital 288.94% 133.54% 166.6% 214.92% 365.4%

Accumulated deficit -200.77% -48.45% -187.9% -276.0% -484.8%

Total shareholders’ equity

(deficit) 88.63% 85.35% -19.83% -59.19% -116.0%

TOTAL LIABILITIES

AND SHAREHOLDERS’

EQUITY (DEFICIT) 100 100 100 100 100

Income Statement:


2007 2006 2005 2004 2003

REVENUES 100 100 100 100 100

COST OF GOODS SOLD 67.18% 62.18% 64.89% 70.71% 74.01%

Gross profit 32.81% 31.81% 35.104% 29.28% 25.98%

OTHER OPERATING

EXPENSE

Selling, administrative and

other operating expenses 101.46% 48.5% 28.99% 27.23% 73.8%

Income (Loss) from operations -68.64% -10.68% -0.66% 2.04% -86.16%

OTHER INCOME (EXPENSE)

Interest expense -0.036% -0.26% -0.66% -2.10% -2.62%

Interest and other income 3.27% 0.64% 0 0.082% 0.038%

Total other income (expense) 3.23% 0.382% -0.66% -2.01% -2.58%

Income before income taxes -65.4% -10.3% 0 0 -88.75%


NET INCOME (LOSS) -65.17% -0.87% -5.44% -0.02% -88.75%

NET INCOME (LOSS) PER

SHARE, basic 0 0 0 0 0

WEIGHTED AVERAGE

NUMBER OF SHARES

OUTSTANDING, basic -316.7% -133.47% 5.44% 0.02% 961.83%

NET INCOME (LOSS) PER

SHARE, diluted 0 0 0 0 0

WEIGHTED AVERAGE

NUMBER OF SHARES

OUTSTANDING, diluted -316.2% -133.47% 3.65% 0 961.83%

Horizontal Analysis:


In this ratio companies compares ratios or line items in a company's financial statements over a

certain period of time.

Income Statement:

2003 2004 2005 2006 2007

REVENUE 100% 187.62% 280.09% 246.73% 175.64%

COST OF GOODS SOLD 100% 179.26% 245.59% 207.3% 159.44%

Gross profit 100% 211.44% 378.35% 359.0% 221.80%

OTHER OPERATING

EXPENSE

Selling, administrative and

other operating expenses 100% 57.33% 91.09% 0 0

Income from operations 100% -4.46% 2.17% 30.59% 139.92%

OTHER INCOME

(EXPENSE)

Interest expense 100% 150.30% 71.48% 24.50% 2.613%

Interest and other income

Total other income

(expense) 100% 146.54% 72.554% -36.45% -219.75%

Income before income

taxes 100% -0.063% -17.18% 28.64% 129.44%


NET INCOME (LOSS)

NET INCOME (LOSS)

PER SHARE, basic 0 0 0 0 0

WEIGHTED AVERAGE

NUMBER OF SHARES 100% 100.37% 101.06% 34.24% 57.85%


OUTSTANDING, basic

NET INCOME (LOSS)

PER SHARE, diluted 0 0 0 0 0

WEIGHTED AVERAGE

NUMBER OF SHARES

OUTSTANDING, diluted 100% 100.74% 10.14% 34.24% 57.85%

Balance sheet:

2003 2004 2005 2006 2007CURRENT AssetsCash and cash equivalents 100 1062% 2268% 17059% 7512%

Accounts receivable 100 316.06% 358.14% 902.18% 233.24%Prepaid expenses 100 46.9% 55.3% 124.8% 214.3%Other current assets 100 141.17% 20.23% 396.64% 641.94%Total current assets 100 265.25% 379.76% 179.7% 0.0007%PROPERTY AND EQUIPMENTFurniture and fixtures 100 100% 0.042% 222.4% 245.43%Computer equipment and software 100 101.92% 150.4% 222.4% 197.43%Less: accumulated depreciation 100 -152% -121.8% -229.3% -288.1%Total property and equipment, net 100 46.9% 51.35% 117.46% 125.8%GOODWILL 100 100% 100% 100% 100%OTHER ASSETS 100 100% 60.19% 60.19% 60.19%TOTAL ASSETS 100 175.5% 229.3% 906.1% 418.8%

CURRENT LIABILITIESAccounts payable 100 131.63% 73% 69.24% 31.38%Customer advance payments 100 70.42% 9.63% 78.28% 3.18%


Accrued salaries and wages 100 168.3% 247% 30.11% 25.95%Accrued liabilities 100 23.48% 63.53% 210.45% 37.57%Other current liabilities 100 2.61% 137.68% 667.45% 29.53%Obligations under capital leases 100 106.4% 219.9% 143.7% 40.29%Total current liabilities 100 129.66% 127.36% 61.58% 22.1%

Obligations under capital leases, long-term 100 48.56% 219.94% 143.7% 40.29%Total liabilities 100 129.3% 127.2% 61.4% 22.03%

Commitments and contingencies

Shareholders’ equity (DEFICIT)

Preferred stock series A, 100 100% 100% 21.42% 21.42%


Common stock, $0.001 100 99.82% 101.25% 57.69% 57.69%

Additional paid-in capital 100 103.26% 104.58% 331.2% 331.2%Accumulated deficit 100 -99.95% -88.9% -90.47% 173.44%

Total shareholders’ equity (deficit) 100 -89.54% -89.9% 666.49% 319.88%

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) 100 175.56% 229.36% 906.1% 418.84%


CHAPTER 5: RECOMMENDATIONS

Based on the departmental and organizational analysis, the following are the recommendations

that I have put forward for The Circle Pakistan:

Open new branches; if I haven’t said this enough before, the agency needs new branches,

there is sometimes too much pressure on the existing branches with the customers being

too many. New branches in some of the other cities like Quetta and Peshawar could not

only bring in new customer but would also help ease the pressure on the existing

branches

Some of the employees follow the policies and rules to the very core, which annoys the

customers who want their service no matter what. A little entrepreneurial behavior on

their part could prove to be a success

Staff Training would enhance the skills of employees

Management should be improvise

Internal control system also needs improvements

Staff monitoring would also be helpful


On time promotions would lead employees to perform their tasks more efficiently and

effectively

Employee incentives and bonuses would encourage employees and they would perform

their tasks efficiently

Recruitment and selection on the basis of merit should also be there


Documents

Circle Advertising Internship Report