f.analysis final.docx

7/30/2019 f.analysis final.docx

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FINANCIAL ANALYSIS

ASSIGNMENT NO.2

SUBMITTED BY:

AHSAN NAZAR

USAMA JALIL

ALI ARSHAD

SUBMITTED TO: PROF. T.EESHA

Section: A


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INTRODUCTION

Maple leaf Cement factory limited

Maple Leaf Cement Factory Limited is a Pakistan-based company. Theprincipal activity of the Company is production and sale of cement. The

Company is a subsidiary of Kohinoor Textile Mills Limited. The company owns

and operates two production lines for grey cement and one production line for

white cement. Its plants are located at Daudkhel District Mianwali. The

Company supplies its products to domestic market and overseas markets

Vision Statement

The Maple Leaf Cement stated vision is to achieve and then remain as the most progressive and

profitable Company in Pakistan in terms of industry standards and stakeholders interest.

Mission Statement

The Company shall achieve its mission through a continuous process of having sourced,

developed, implemented and managed the best leading edge technology, industry best practice,

human resource and by conducting its business professionaly and efficiently with responsibility

to all its stakeholders and community.

Competitors

Major competitors of Maple leaf cement are:

Askari cement limited

D.G. Khan cement limited

Lucky cement limited

Pioneer cement limited

Fauji cement limited

Cherat cement limited

Attock Cement limited

Dandot cement limited

Bestway cement limited


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.

CONSOLIDATED BALANCE SHEET

2012 2011

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised share capital 7,000,000 7,000,000

Issued, subscribed and paid up capital 5,803,458 4,264,108

Reserves 3,575,531 4,180,433Accumulated loss (6,355,664) (4,310,393)

Total Share capital & Reserve 3,023,325 4,134,148

Share deposit of money - 1,000,000

SURPLUS ON REVALUATION OF

PROPERTY, 5,548,120 -

PLANT AND EQUIPMENT

NON - CURRENT LIABILITIES

Long term loans from banking

company 2,557,185 1,100,808

Redeemable capital 7,983,000 8,289,800

Syndicated term finance 1,497,000 1,498,200

Liabilities against assets subject to

finance lease 464,366 700,743

Long term deposits 5,569 2,739

Deferred liabilities

deferred taxation 2,223,962 -

employees compensated

absences 19,149 19,629Total non- Current Liabilities 14,750,231 11,611,919

CURRENT LIABILITIES

Trade and other payables 4,115,909 3,498,766

Current profit/ markup 791,161 921,812

Short term borrowings 4,084,666 4,060,838


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Current portion of:

long term loans from banking

company 448,473 480,231

redeemable capital 306,800 6,800

syndicated term finance 1,200 1,200

liabilities against assets subject tofinance lease 620,161 379,198

Total Current liabilities 10,368,370 9,348,845

Total liabilities 33,690,046 26,094,912

ASSETS

NON - CURRENT ASSETS

Property, plant and equipment 28,203,393 21,035,368

Intangible assets 17,591 1,774Long term loans to employees -

secured 2,531 3,293

Deposits and prepayments 52,036 51,573

Total non- current Assets 28,275,551 21,092,008

CURRENT ASSETS

Stores, spare parts and loose tools 3,032,946 2,407,410

Stock-in-trade 539,084 504,718

Trade debts 560,103 751,400

Loans and advances 145,061 266,642

Investments 404,863 472,338

Deposits and short term prepayments 121,896 121,824

Accrued profit 890 656

Refunds receivable from government 16,797 16,797

Other receivables 98,152 91,178

Income tax (net of provisions) 206,382 296,506

Cash and bank balances 288,321 73,435

Total current Assets 5,414,495 5,002,904

Total Assets 33,690,046 26,094,912


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Income statement

2012 2011

Sales - net 13,073,218 13,630,511

Cost of sales 10,898,059 10,691,883

Gross profit 2,175,159 2,938,628

Distribution cost 1,646,632 3,152,889

Administrative expenses 230,828 194,221

Other operating expenses 162,394 158,641

Operating Income 135,305 (567,123)

Other operating income 71,240 57,031

Profit / (loss) from operations 206,545 (510,092)

Finance cost (2,166,409) (2,059,476)

Loss before taxation (1,959,864) (2,569,568)

Taxation (188,125) (14,447)

Loss after taxation (1,771,739) (2,555,121)


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Ratios Analysis

Lenders and creditors point of view

LIQUIDITY RATIOS:

Current Ratio:

Formula: Current Assets / Current Liabilties

In 2011 Mapple leafs current ratio was 0.535. but in 2012 it again dropped to 0.522. this shows it recent

year maple leafs Rs.1 of Current liabilities supported only 0.522 Current assets.

Quick Ratio:

Formula: (Current assets Inventory) / Current liabilities

In 2007 Maple Leafs Quick ratio was 0.224 but decreased to 0.177 in 2012. These values show that for

last 2 years company wasnt striving hard enough to maintain its quick ratio or we can say the ability of

meeting short term liabilities with most liquid assets.

FINANCIAL LEVARAGE RATIOS:

Debt to Equity:

Formula: Total debt /Share holders equity

In 2011 maple leafs debt to equity ratio was 2.173 but it decreased in 2012 1.562.These values shows

that company have taken debt more than equity.

Debt to Asset :

Formula : Total Debt /Total Assets

In 2011 maple leafs debt to asset ratio was 0.427and in 2011it was decreased by 0.397. this shows that

currently company has Rs.1 of assets to support 0.397 of debt.

Debt to Captalization:

Formula : Long term debt/ Total capitalization

In 2011 maple leafs debt to capitalization wasto 0.260 in 2011 0.260 was maintained. Cuurentlycompany

has the same ability of capitalization to support long term debt.


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Debt services ratios

Interest coverage Ratio:

Formula: EBIT/Interest Expense

In 2011 maple leafs interest coverage ratio was 0.247 and in 2011 it was decreased to 0.095. this shows

the worst scenario that company has less earning to cover even the finance cost of the company.


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FINANCIAL LEVARAGE RATIOS:

Debt to Equity:

Formula: Total debt /Share holders equity

In 2011 maple leafs debt to equity ratio was 2.173 but it decreased in 2012 1.562.These values shows

that company have taken debt more than equity.

Debt to Asset :

Formula : Total Debt /Total Assets

In 2011 maple leafs debt to asset ratio was 0.427and in 2011it was decreased by 0.397. this shows that

currently company has Rs.1 of assets to support 0.397 of debt.

Debt to Captalization:

Formula : Long term debt/ Total capitalization

In 2011 maple leafs debt to capitalization wasto 0.260 in 2011 0.260 was maintained. Cuurentlycompany

has the same ability of capitalization to support long term debt.

Debt services ratios

Interest coverage Ratio:

Formula: EBIT/Interest Expense

In 2011 maple leafs interest coverage ratio was 0.247 and in 2011 it was decreased to 0.095. this shows

the worst scenario that company has less earning to cover even the finance cost of the company.


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Management point of view

Operational analysis

Gross Margin:

Formula: Gross profit/Sales

From 2011 2012 the values are 0.215, 0.166 these values shows the decrease of gross profit margin in

the last year.

Net profit margin:

Formula: net profit /net sales

From 2011-2012 the values are -0.187, -0.135 these values reflect the worst situation as net profit

margin is negative due to loss and is increasing.

Profitability

RETURN ON ASSETS:

Formula : Net income/ total assets

From 2010-2012 the values are -0.097 , -0.052. this scenario shows that rs.1 of assets are bearing loss of

0.052 in 2011.

Resource management

ASSET TURNOVER:

Formula: Net sales/ Total Assets

In 2011 0.522 and in 2011 it was decreased to 0.388. current asset turnover shows that Rs.1 of the

assets are supporting Rs.0.388 of sales.


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Receivable Turnover:

Formula: Annual net credit sales/receivables

In 2011 maple leafs receivable turnover ratio was 2.89 and in 2011 it was increased to 3.20. above

values represent that this company is improving its recovering in last 2 years.

Receivables turnover in days:

It is calculated as (days in a year)/( receivable turnover). This ratio tells number of days between

credit sales and collection day. This ratio is moving in accordance with receivables turnover. In 2011

recieveables turnover in days was 126.23 and in 2012 it became 113.7.

Inventory Turnover:

Formula : Cost of goods sold /inventory

In 2011 inventory turnover was 3.671 and in 2012 it was decreased to 3.050. This means maple leafsstock piling its inventory as most of inventory is not sold out according to given CGS.

Inventory turnover in days:

It is calculated as days in a year/ inventory turnover. It measures the days between inventories

being turned into accounts receivable through sales. In 2011 inventory turnover in days were 99.4 days

n it increased in 2012 to 119.6 days.

Payables Turnover:

Formula: Annual credit purchases/accounts payable

In 2011 maple leafs payables turnover ratio was 2.904 and in in 2011 it was decreased to 2.799. the

calculations reflect that company is not paying out its payables for credits purchases on time.

Payable turnover in days:

It is calculated as days in year/ payables turnover. It is moving in accordance with the payables

payable turnover.In 2011 maple leafs payables turnover was 125 days and in 2012 it became 130.3 days.


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OPERATING CYCLE VERSUS CASH CYCLE:

Operating Cycle:

Formula: inventory turnover in days + receivable turnover in days

Operating cycle:

Operating cycle is calculated as sum of receivables turnover in days and inventory turnover in

days. It shows the time period between commitment of cash when purchases are made for inventory

and finally it turns into collection of receivables through sales i.e. time period between manufacturing a

product and collection of cash. Operating cycle of Maple leaf is fluctuating and moving as inventory andreceivables turnover increase and decrease year to year. Operating cycle show great lag in 2008 when it

increased to 176.75 days due to combined effect of increment in both receivables turnover in days and

inventory turnover in days. But now it reduces to 122.84 in 2012 and 102.3 in 2011.

Cash cycle:

It is calculated as operating cycle less payable turnover in days and reflects actual outlay of cash

from purchases until collection of cash resulting from sales. For Maple Leaf Corporation, cash cycle has

become negative due to increasing accounts payable year after year. The reason can be firm is prompt

in cash collection but they are delaying payments to their suppliers and creditors due to strong market

position and committing cash in expansion projects. But this decision of postponing payables is not good

as firm has to manage its receivables and payables effectively to gain trust of stake holders. Thats why

in 2011 its cash cycle is -23.34 days and now they manage their payables much beeter and reduced their

cash cycle to -7.52.

ROE

Net income/total equity

For 2012 value is 0.206 and in 2011 the value is -0.206 it means currently company rs.1

of equity is bearing loss of 0.206.

SALES PER DAY

Sales/days of year

In 2012 sales per day of maple leaf is $35817 and in 2011 this value is $37344.

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