Ratio Analysis:Ratio analysis of DG Khan Company limited is done through these financial statements given on their websites.http://www.dgcement.com/financial-reports/2011-12%20Annual%20Report.pdfhttp://www.dgcement.com/financial-reports/2012-13%20Annual%20Report.pdfhttp://www.dgcement.com/financial-reports/2013-14%20Annual%20Report.pdf

Ratio Analysi

s

DG Khan Cement FactoryCurrent assets/current liabilities

Current Ratio

FY12 FY13 FY1418,265,583,000/11205943,000=1.63 times

25,789,989,000/9,307,593,000=2.77 times

32,068,626,000/ 5,940,563,000=5.40 times

FY12FY13

FY14

Current Ratio

Ratio Analysi

s

DG Khan Cement FactoryCurrent asset-Inventories-prepayments/ Current

liabilities

Acid Test Ratio

FY12 FY13 FY1417,310,935,188/11,205,943,000=1.54:1

24,128,262,435/9,307,593,000=2.59:1

30,719,879,540/ 5,940,563,000=5.17:1

FY12 FY13 FY140246

1.542.59

5.17

Acid test Ratio

Ratio Analysi

s

DG Khan Cement Factorycurrent assets- current liabilities

Working Capital

FY12 FY13 FY1418,265,583,000-11,205,943,000= Rs. 7,059,640,000

25,789,989,000-9,307,593,000= Rs. 16,482,396,000

32,068,626,000- 5,940,563,000= Rs. 26,128,063,000

FY12 FY13 FY14

010,000,00020,000,00030,000,000

Working Capital

Ratio Analysi

s

DG Khan Cement FactoryEBIT/annual interest earned

Times interest Earned

FY12 FY13 FY145,723,250,000/1,670,784,000=3.42 times

8,090,737,000/994,879,000=8.1 times

8,460,256,000/608,859,000=13.8 times

FY12 FY13 FY140

5

10

15

3.42

8.1

13.8

Times interest earned

Ratio Analysi

s

DG Khan Cement Factorytotal liabilities/total assets*100

Debt Ratio

FY12 FY13 FY1417,785,673,000/50,685,198,000=35%

15,569,921,000/63,526,719,000=24%

11,765,534,000/73,282,069,000=16%

FY12 FY13 FY140%5%

10%15%20%25%30%35%40%

Debt ratio

Ratio Analysi

s

DG Khan Cement Factorytotal debt/total equity

Debt/ Equity Ratio

FY12 FY13 FY1417,785,673,000/32,899,525,000=0.54 times.

15,569,921,000/47,956,798,000=0.32 times.

11,765,534,000/61,516,535,000=0.19 times.

FY12 FY13 FY14

0.54 0.320000000000002

0.19

Debt to equity ratio

Ratio Analysi

s

DG Khan Cement FactoryNet profit*100/sales

Net Profit Margin

FY12 FY13 FY144,108,118,000/22,949,853,000=17.9%

5,502,169,000/24,915,924,000=22.08%

5,965,498,000/26,542,509,000=22.47%

2012 2013 201405

10152025 17.9

22.08 22.47Net Profit Margin

Ratio Analysi

s

DG Khan Cement FactoryGross profit*100/net sales

Gross Profit Margin

FY12 FY13 FY147,506,755,000/22,949,853,000=32.71%

9,326,007,000/24,915,924,000=37.43%

9,257,568,000/26,542,509,000=34.87%

2012 2013 20143032343638

32.71

37.43

34.87

Gross Profit Margin

Ratio Analysi

s

DG Khan Cement Factorynet income/average total assets*100

Return on Assets

FY12 FY13 FY144,108,118,000/50,194,214,000=8.18%

5,502,169,000/57,105,959,000=9.63%

5,965,498,000/68,404,394,000=8.72%

FY12 FY13 FY147.00%

8.00%

9.00%

10.00%Return on Asset

Ratio Analysi

s

DG Khan Cement Factoryoperating income/net sales*100

Operating Income Margin

FY12 FY13 FY145,723,250,000/22,949,853,000= 24.93%

8,090,737,000/24,915,924,000=32.47%

8,460,256,000/26,542,509,000=31.87%

FY12 FY13 FY1405

1015202530

24.93

32.4731.87

Operating income Margin

Ratio Analysi

s

DG Khan Cement Factorynet income/ total equity*100

Return on Equity

FY12 FY13 FY144,108,118,000/32,899,525,000=12.4%

5,502,169,000/47,956,798,000=11.4%

5,965,498,000/61,516,535,000=9.6%

FY12 FY13 FY140.00%

4.00%

8.00%

12.00%

Return on equity

Ratio Analysi

s

DG Khan Cement Factorynet sales / average total assets

Asset Turnover Ratio

FY12 FY13 FY1422,949,853,000/50,194,214,000=0.45 times.

24,915,924,000/57,105,959,000=0.43 times.

26,542,509,000/68,404,394,000=0.38 times.

FY12 FY13 FY140.340.360.38

0.40.420.440.46

Asset turnover ratio

Ratio Analysi

s

DG Khan Cement Factoryoperating cash flow/current liabilities

Operating Cash Flow Ratio

FY12 FY13 FY144,011,634,000/11,205,943,000=0.35 times.

6,685,968,000/9,307,593,000=0.71 times.

ratio=8,724,257,000/5,940,563,000=1.46 times.

FY12 FY13 FY140

0.20.40.60.8

11.21.41.6

Ratio Analysi

s

DG Khan Cement Factorytotal dividend paid/ total no. of shares

Dividend per Share

FY12 FY13 FY14657,179,000/438,119,118= Rs. 1.5

1,314,357,000/438,119,118= Rs. 3.00

1,533,417,000/438,119,118= Rs. 3.5

FY12 FY13 FY140

0.51

1.52

2.53

3.54

Dividend per share

Ratio Analysi

s

DG Khan Cement Factorynet income/no. of shares

Earning per Share

FY12 FY13 FY144,108,118,000/438,119,118=Rs. 9.38

5,502,169,000/438,119,118= Rs. 12.56

5,965,498,000/438,119,118= Rs. 13.62

FY12 FY13 FY1402468

10121416

9.38

12.5613.62

EPS

Conclusions: From the whole comprehensive analysis of company I have concluded

that the factory has growing potential. They can also pay back its debt obligations easily, though their current assets are not highly dependent on its stock in trade.

Although high current ratio may be due to high receivables which indicates poor working capital management and therefore company is open to risk of bad debts.

As Pakistani market is going to be very exhaustive and rigorous, to hang on as market leader they should restructure its policies regarding price, place, workforce management and development.

Profit margin ratios are the indicators that the company is making high return from its sales after reimbursement of expenses. Decreasing debt equity ratio is also a good indicator for success of company.

DG Khan Cement factory has a high share in government tax payment. The company is executing well from financial perspective. Company’s distribution channels are very effective. But the most important factor that must be highlighted is the utilization of assets, DG Khan Cement Factory is not making the most of its assets that it actually can.

Recommendations: By best utilizing its assets DG Khan Cement factory can easily generate

revenues. Due to fine quality their prices are higher than the competitors, by modifying their prices accordingly, they will surely gain local and international market share. Through paying attention to pull strategy no one can stop them from becoming sound firm.

Top management can play a role of milestone by applying up to date marketing strategies and put emphasis on promotional tools. With extra-ordinary care of decision making power they can actually control overhead cost effectively and with consistency.

The shareholders and employees if given proper attention this will result in increasing their loyalty with the organization. Employee’s performance appraisal and their rotation in different jobs will increase productivity and satisfaction with the job.

The most important factor is high current ratio that doesn’t always promise high liquidity although they have tied up too much of its finance in current asset, after in depth analysis I will suggest them to reinvest.

Through special emphasis on utilizing assets and funds from shareholder effectively, they can generate higher returns.

By:SAMIA KHANMSBA.