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Acknowledgement
In the name of Allah, the most Gracious and the most Merciful. We thank to Allah
Almighty who enables us to accomplish our project “Analysis of Financial Statement of
PSO”. We are also very thankful to our parents whose prayers and efforts support us to
complete our project successfully. We pay regards and gratitude to our most respectable
and hardworking instructor Mr. M. Taimoor Hassan Abbasi who gave us his precious
time and knowledge along with proficient skills to help us in learning how to handle
difficulties in real situations and how to meet with challenges in the actual business
environments. By giving us difficult tasks in this project he actually indulge us in the
practice of our Quaid’s sayings “work, work and work”. Working on this project with such
a sincere instructor is great honor and pleasure for us. We are also very thankful to our
Department of Management Sciences and The Islamia University of Bahawalpur which
provides us great opportunity to work on such an informative project in a small period of
time and the faculty of management sciences who provides us with all possible
intellectual human and economic resources to fulfill the requirements of this project. By
the combination of all these blessings prayers and mental and physical aids we
ultimately completed our project in a period of four months.
Introduction
PSO is the market leader in Pakistan’s energy sector. The company has the largest
network of retail outlets to serve the automotive sector and is the major fuel supplier to
aviation, railways, power projects, armed forces and agriculture sector. PSO also
provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports.
The company takes pride in continuing the tradition of excellence and is fully committed
to meet the energy needs of today and rising challenges of tomorrow.
Pakistan State Oil, the largest oil marketing company in the country, is currently
engaged in storage, distribution and marketing of various POL products. The company’s
current market share of 82.3% in the black oil market and 59.4% share in the white oil
market.
The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on
January 1st; the government took over and merged Pakistan National Oil (PNO) and
Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL).
Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC)
came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on
August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th
September 1976 and control was vested in SOCL. The end of that year (30th December
1976) saw the merger of the Premier Oil Company Limited and State Oil Company
Limited, giving way to Pakistan state Oil (PSO).
January 1, 1974
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June 6, 1974
The Government merges PNO and POCL into SOCL (State Oil Company
Limited) and renames it Pakistan State Oil Company Limited (PSO).
1999
The new vision program is launched with the new logo of PSO.
Vision
Mission
Table of Content
Introduction..........................................................................................................................2
Table of Content..................................................................................................................5
Income Statement.................................................................................................................6
Balance Sheet.......................................................................................................................8
Cash Flow Statement...........................................................................................................9
Vertical Analysis of Income Statement.............................................................................10
Horizontal Analysis of Income Statement.........................................................................16
Vertical Analysis of Balance Sheet....................................................................................24
Horizontal Analysis of Balance Sheet...............................................................................33
Vertical Analysis of Cash Flow Statement........................................................................42
Horizontal Analysis of Cash Flow Statement....................................................................49
Ratio Analysis....................................................................................................................56
Short-term Solvency Ratios...............................................................................................57
Activity Ratios...................................................................................................................59
Long-term Solvency Ratios...............................................................................................63
Profitability Ratios.............................................................................................................65
Bankruptcy Analysis..........................................................................................................70
Income Statement 1
Balance Sheet 3
Cash Flow Statement 4
Vertical Analysis of Income Statement 5
Interpretation 5
Horizontal Analysis of Income Statement 11
Interpretation 12
Vertical Analysis of Balance Sheet 18
Interpretation 19
Horizontal Analysis of Balance Sheet 27
Interpretation 28
Vertical Analysis of Cash Flow Statement 36
Interpretation 36
Horizontal Analysis of Cash Flow Statement 43
Interpretation 43
Ratio Analysis 50
Interpretation 51
1. Short-term Solvency Ratios 51
2. Activity Ratios 53
3. Long-term Solvency Ratios 57
4. Profitability Ratios 59
Bankruptcy Analysis 65
Interpretation 65
Conclusion & Recommendations 66
Income Statement
For The Period of 5 Years ended on June 31st, 2009
Particulars 2005 (Rs. In '000) 2006 (Rs. In '000) 2007 (Rs. In '000) 2008 (Rs. In '000) 2009 (Rs. In '000)
Sales Revenue 254,362,981 353,833,345 411,989,979 583,298,190 719,412,244
Less:
Trade Discount & Allowances (586,061) (1,318,472) (932,387) (84,231) (130,068)
Sales Tax (32,673,120) (44,539,632) (52,418,310) (74,249,472) (97,386,723)
Inland Freight Equalization Margin (8,600,150) (9,725,202) (8,932,956) (13,685,954) (9,199,864)
Net Sales 212,503,650 298,250,039 349,706,326 495,278,533 612,695,589
Less Cost of Goods Sold:
Opening Stock 14,992,097 20,604,757 28,190,089 29,583,511 62,381,523
Purchases 204,369,979 288,628,145 338,840,318 498,052,919 588,023,620
Cost of Product Available for Sale 219,362,076 309,232,902 367,030,407 527,636,430 650,405,143
Closing Stock (20,604,757) (28,190,089) (29,583,510) (62,381,522) (40,719,664)
Cost of Sales 198,757,319 281,042,813 337,446,897 465,254,908 609,685,479
Gross Profit / Loss 13,746,331 17,207,226 12,259,429 30,023,625 3,010,110
Less Operating Expenses:
Transportation Cost:
Cost Incured During The Year 6,766,429 6,409,299 6,860,622 8,219,929 9,482,779
Realized Against IFEM (8,600,150) (9,725,202) (8,932,956) (13,685,954) (9,199,864)
Refinery Share 2,774,028 3,382,251 3,042,484 5,998,784 835,398
Adjustments from Other Oil
(627,038) 299,447 (600,822) (194,873) (604,640)
Companies
313,269 365,795 369,328 337,886 513,673
Distribution & Marketing Expenses:
Salaries, Wages & Benefits 1,251,558 1,225,467 1,332,317 1,672,477 2,070,788
Rent, Rates & Taxes 221,354 185,600 232,589 274,614 381,626
Balance Sheet
For The Period of 5 Years ended on June 31st, 2009
Particulars 2005 (Rs. In '000) 2006 (Rs. In '000) 2007 (Rs. In '000) 2008 (Rs. In '000) 2009 (Rs. In '000)
Assets
Current Assets:
Cash & Bank Balances 1,921,936 1,898,894 1,522,276 3,018,640 2,883,118
Short-term Investments 10,081 - - - -
Taxation - Net - - - - 709,627
Other Receivables 10,358,006 14,562,628 15,751,198 15,681,790 12,806,779
Deposits & Short-term Prepayments 726,157 1,287,893 1,583,913 401,433 551,803
Loans & Advances 213,248 275,729 365,974 396,220 418,015
Trade Debts 6,791,078 11,715,868 13,599,966 33,904,728 80,509,830
Stock in Trade 20,583,301 28,168,633 29,562,055 62,360,067 40,698,209
Stores, Spare Parts & Loose Tools 130,559 125,030 127,891 115,814 112,143
Total Current Assets 40,734,366 58,034,675 62,513,273 115,878,692 138,689,524
Non-Current Assets:
Deferred Tax 124,740 408,296 401,037 407,337 5,033,273
Long-term Deposits & Prepayments 105,163 74,662 65,913 79,098 83,655
Long-term Loans, Advances &
769,674 698,146 627,972 477,745 405,780
Receivables
Long-term Investments 2,317,810 3,278,970 2,990,591 2,701,097 2,153,514
Intangibles 144,647 154,819 126,212 105,502 68,872
Property, Plant & Equipment 8,111,482 7,518,956 8,012,317 7,460,549 6,987,025
Total Non-Current Assets 11,573,516 12,133,849 12,224,042 11,231,328 14,732,119
Total Assets 52,307,882 70,168,524 74,737,315 127,110,020 153,421,643
Liabilities & Equity
Liabilities:
Current Liabilities:
Taxation - Net 1,344,268 1,695,250 69,398 726,703 -
Short-term Borrowings 4,811,605 7,648,919 9,064,781 10,997,908 18,654,526
Interpretation
1. Sales
Interpretation
In vertical analysis we took sales as base so sales of all the years will 100%.
2. Trade Discount
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.23%, 0.37%, 0.23%, 0.01%, and 0.02% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
3. Sales Tax
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 12.85%,12.59 %, 12.72%, 12.73%, and 13.54% of respective sales in
the last five consecutive years. The overall tendency of the cost of sales is increasing.
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 3.38%, 2.75%, 2.17%, 2.35%, and 1.28% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
5. Net Sales
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 83.54%, 84.29%, 84.88%, 84.91%, and 85.17% of respective sales in
the last five consecutive years. The overall tendency of the cost of sales is increasing.
6. Opening Stock
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 5.89, 5.82%, 6.84%, 5.07%, and 8.67% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
7. Purchases
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 80.35%, 81.57%, 82.24%, 85.39%, and 81.74% of respective sales in
the last five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 86.24%, 87.40%, 89.09%, 90.46%, and 90.41% of respective sales in
the last five consecutive years. The overall tendency of the cost of sales is increasing.
9. Closing Stock
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 8.10%, 7.97%, 7.18%, 10.69%, and 5.66% of respective sales in the
last five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 5.40%, 4.86%, 2.98%, 5.15%, and 0.42% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.12%, 0.10%, 0.09%,0.06%, and 0.07% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.93%, 0.70%, 0.67%,0.56%, and 0.55% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.34%, 0.26%, 0.24%, 0.20%, and 0.16% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.39%, 0.31%, 0.28%, 0.20%, and 0.17% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.42%, 0.70%, 0.18%, 0.57%, and 0.56% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.47%, 0.27%, 0.31%, 0.24%, and 0.20% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.15%, 0.25%, 0.28%, 0.23%, and 0.87% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.15%, 0.25%, 0.28%, 0.23%, and 0.87% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.09%, 0.42%, 0.18%, 0.10%, and 0.17% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 3.61%, 3.23%, 1.73%, 3.66%, and (1.58%) of respective sales in the
last five consecutive years. The overall tendency of the cost of sales is increasing.
21. Taxation
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 1.39%, 1.10%, 0.59%, 1.26%, and (0.65%) of respective sales in the
last five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 2.22%, 2.13%, 1.14%, 2.41%, and (0.93%) of respective sales in the
last five consecutive years. The overall tendency of the cost of sales is increasing.
Interpretation
1. Sales
Interpretation
Since the sales of Pakistan State Oil Limited have increased as compared to base Year
(2005) significantly we conclude that PSO has improved its sale to more than 182% in 5
years.
2. Trade Discount
Interpretation
The trade discount of PSO shows an increase in year 2006. Also in 2007 its value is
showing increase as compared to base year. After 2007 decreased significantly and
same is for the year 2009. Hence this trend showed that PSO has decreased its trade
discounts.
3. Sales Tax
Interpretation
From the above values it is obvious that sales tax is continuously increasing from 2006
to 2009 as compared to base year. It also shows that the sales volume is increasing
each year as compared to base ear.
Interpretation
From the above values we can see an increasing and decreasing trend of freight margin
when compared to the base year. It shows a significant increase in year 2008 as
compared to base year.
5. Net Sales
Interpretation
Since the computed value of net sales are showing a continuous increase from 2006 to
2009 as compared to base year we can conclude that the net sales of PSO has been
increasing continuously.
6. Opening Stock
Interpretation
The above values show an increasing trend in the opening stock of the PSO as
compared to the base year, even in the year 2009 it shows a significant increase i.e.
416%.
7. Purchases
Interpretation
Since the above values show an increasing trend as compared to the base year so we
can say that the Purchases of the company have increased more than double from the
base year till 2009.
Interpretation
The above calculated values are showing an increase in comparison to the base year
but this increase is not negative as the volume of production is also increasing that
caused increase in cost of production hence we conclude that it is a positive sign as
sales are also increasing.
9. Closing Stock
Interpretation
The values of closing stock are increasing as compared to the base year from 2006 to
2009.
Interpretation
The calculated values of the gross profit show a see-saw model. It increased in next
year i.e. 2006 when compared to base year then decreased in 2007. Again it increased
sufficiently in 2008 and then decreased again in 2009.
Interpretation
From the above calculated values the transportation cost is showing a mixed stream of
increasing and decreasing behavior. In first two subsequent years it increased up to 17%
and then it decreased in 2008. Again it shows a significant increase in 2009.
Interpretation
The above values shows a continuously increase in distribution and marketing expenses
in years 2006 to 2009 as compared to base year 2005.
Interpretation
The calculated values of administrative expenses are continuously increasing from years
2006 to 2009 as compared to base year 2005.
Interpretation
Interpretation
Since the calculated value shows a continuous increase in the operating expenses of
PSO limited as compared to the base year yet there is a significant decrease in the year
2007 but again in subsequent years this value increased significantly.
Interpretation
The above values of operating income when compared with the base year decreased in
first year but it increased continuously in the subsequent years.
Interpretation
Since the computed values of operating profit are does not show a continuous trend so
we can say that the profit increased in two non-subsequent year i.e. 2006 and 2008 but
it decreased in 2007 as compared to base year. In 2009 it shows a significant loss.
Interpretation
The finance cost of the PSO limited shows a significant increase over the years when
compared to the base year. It means that the finance cost of the company in increasing
continuously.
Interpretation
From the above computed values we can see that the other income of the company
increased in 2006 very significantly but in next subsequent years it increased with a
decreased rate.
Interpretation
The calculated values of profit before tax show an increase as compared to base year in
the first year and then a decrease in the next year. However it shows significant positive
change in the next year as compared to the base year. Yet in the year 2009 it showed a
very significant decrease that is signifies a tax bracket.
21. Taxation
Interpretation
The above computed values of taxation are showing increase in 2006 as compared to
base year and decrease in the next year 2007. Again the value of tax increases in 2008.
However the firm got tax bracket due to operating loss in the year 2009.
Interpretation
The computed values of net profits here also show the above zigzag pattern as
compared to the base year. However in the last year i.e. 2009 the company shows a
significant loss.
Interpretation
Interpretation
Since the computed value of cash & bank balances under vertical analysis taking total
assets as base is covering almost 3.67%, 2.71%, 2.04%, 2.37%, and 1.88% of total
volume of balance sheet in the consecutive last five years. The overall tendency of the
cash & bank balances is decreasing.
2. Short-term Investments
Interpretation
Since the computed value of Short-term Investments under vertical analysis taking total
assets as base is covering almost 0.02% of total volume of balance sheet in the year
2005. In the coming years till 2009 company did not invest in short-term assets.
3. Taxation - Net
Interpretation
Since the computed value of Taxation - Net under vertical analysis taking total assets as
base is covering almost 0.46% of total volume of balance sheet in the last five
consecutive years.
4. Other Receivables
Interpretation
Since the computed value of Other Receivables under vertical analysis taking total
assets as base is covering almost 19.80%, 20.75%, 21.08%, 12.34%, and 8.35% of total
volume of balance sheet in the last five consecutive years. The overall tendency of the
Other Receivables is increasing in first three years than decreasing in last two years.
Interpretation
Since the computed value of Deposits & Short-term Prepayments under vertical analysis
taking total assets as base is covering almost 1.39%, 1.84%, 2.12%, 0.32%, and 0.36%
of total volume of balance sheet in the last five consecutive years. The overall tendency
of the Deposits & Short-term Prepayments is increasing in first three years than
decreasing in last two years.
Interpretation
Since the computed value of Loans & Advances under vertical analysis taking total
assets as base is covering almost 0.41%, 0.39%, 0.49%, 0.31%, and 0.27% of total
volume of balance sheet in the last five consecutive years. The overall tendency of the
Loans & Advances is decreasing.
7. Trade Debts
Interpretation
Since the computed value of Trade Debts under vertical analysis taking total assets as
base is covering almost 12.98%, 16.70%, 18.20%, 26.67%, and 52.48% of total volume
of balance sheet in the last five consecutive years. The overall tendency of the Trade
Debts is increasing.
8. Stock in Trade
Interpretation
Since the computed value of Stock in Trade under vertical analysis taking total assets as
base is covering almost 39.35%, 40.14%, 39.55%, 49.06%, and 26.53% of total volume
of balance sheet in the last five consecutive years. The overall tendency of the Stock in
Trade is increasing.
Interpretation
Since the computed value of Stores, Spare Parts & Loose Tools under vertical analysis
taking total assets as base is covering almost 0.25%, 0.18%, 0.17%, 0.09%, and 0.07%
of total volume of balance sheet in the last five consecutive years. The overall tendency
of the Stores, Spare Parts & Loose Tools is decreasing.
Interpretation
Since the computed value of Total Current Assets under vertical analysis taking total
assets as base is covering almost 77.87%, 82.71%, 83.64%, 91.16%, and 90.40% of
total volume of balance sheet in the last five consecutive years. The overall tendency of
the Total Current Assets is increasing.
Interpretation
Since the computed value of Deferred Tax under vertical analysis taking total assets as
base is covering almost 0.24%, 0.58%, 0.54%, 0.32%, and 3.28% of total volume of
balance sheet in the last five consecutive years. The overall tendency of the Deferred
Tax is increasing.
Interpretation
Since the computed value of Long-term Deposits & Prepayments under vertical analysis
taking total assets as base is covering almost 0.20%, 0.11%, 0.09%, 0.06%, and 0.05%
of total volume of balance sheet in the last five consecutive years. The overall tendency
of the Long-term Deposits & Prepayments is decreasing.
Interpretation
Since the computed value of Long-term Loans, Advances & Receivables under vertical
analysis taking total assets as base is covering almost 0.23%, 0.37%, 0.23%, 0.01%,
and 0.02% of total volume of balance sheet in the last five consecutive years. The
overall tendency of the Long-term Loans, Advances & Receivables is increasing.
Interpretation
Since the computed value of Long-term Investments under vertical analysis taking total
assets as base is covering almost 4.43%, 4.67%, 4.00%, 2.13%, and 1.40% of total
volume of balance sheet in the last five consecutive years. The overall tendency of the
Long-term Investments is decreasing.
15. Intangibles
Interpretation
Since the computed value of Intangibles under vertical analysis taking total assets as
base is covering almost 0.28%, 0.22%, 0.17%, 0.08%, and 0.04% of total volume of
balance sheet in the last five consecutive years. The overall tendency of the Intangibles
is decreasing.
Interpretation
Since the computed value of Property, Plant & Equipment under vertical analysis taking
total assets as base is covering almost 15.51%, 10.72%, 10.72%, 5.87%, and 4.55% of
total volume of balance sheet in the last five consecutive years. The overall tendency of
the Property, Plant & Equipment is decreasing.
Interpretation
Since the computed value of Total Non-Current Assets under vertical analysis taking
total assets as base is covering almost 22.13%, 17.29%, 16.36%, 8.84%, and 9.60% of
total volume of balance sheet in the last five consecutive years. The overall tendency of
the Total Non-Current Assets is decreasing.
Interpretation
We take total assets as base in this vertical analysis so total assets are 100% in every
year.
Interpretation
Since the computed value of Taxation - Net under vertical analysis taking total assets as
base is covering almost 2.57%, 2.42%, 0.09% and 0.57% of total volume of balance
sheet in the last five consecutive years. The overall tendency of the Taxation - Net is
decreasing.
Interpretation
Since the computed value of Short-term Borrowings under vertical analysis taking total
assets as base is covering almost 9.20%, 10.90%, 12.13%, 8.65%, and 12.16% of total
volume of balance sheet in the last five consecutive years. The overall tendency of the
Short-term Borrowings is increasing.
Interpretation
Since the computed value of accrued Interest / Mark-up under vertical analysis taking
total assets as base is covering almost 0.12%, 0.17%, 0.18%, 0.17%, and 0.36% of total
volume of balance sheet in the last five consecutive years. The overall tendency of the
accrued Interest / Mark-up is increasing.
22. Provisions
Interpretation
Since the computed value of Provisions under vertical analysis taking total assets as
base is covering almost 1.44%, 1.11%, 0.92%, 0.57%, and 0.45% of total volume of
balance sheet in the last five consecutive years. The overall tendency of the Provisions
is decreasing.
Interpretation
Since the computed value of Trade & Other Payables under vertical analysis taking total
assets as base is covering almost 49.30%, 52.47%, 55.44%, 63.78% and 71.78% of
total volume of balance sheet in the last five consecutive years. The overall tendency of
the Trade & Other Payables is increasing.
Interpretation
Since the computed value of Total Current Liabilities under vertical analysis taking total
assets as base is covering almost 62.64%, 67.06%, 68.76%, 73.74%, and 84.75% of
total volume of balance sheet in the last five consecutive years. The overall tendency of
the Total Current Liabilities is increasing.
Interpretation
Since the computed value of Retirement & Other Service Benefits under vertical analysis
taking total assets as base is covering almost 2.53%, 2.22%, 2.20%, 1.24%, and 1.09%
of total volume of balance sheet in the last five consecutive years. The overall tendency
of the Retirement & Other Service Benefits is decreasing.
Interpretation
Since the computed value of Long-term Deposits & Prepayments under vertical analysis
taking total assets as base is covering almost 1.29%, 1.06%, 1.03%, 0.66%, and 0.56%
of total volume of balance sheet in the last five consecutive years. The overall tendency
of the Long-term Deposits & Prepayments is decreasing.
Interpretation
Since the computed value of Total Non-Current Liabilities under vertical analysis taking
total assets as base is covering almost 3.82%, 3.28%, 3.23%, 1.90%, and 1.65% of total
volume of balance sheet in the last five consecutive years. The overall tendency of the
Total Non-Current Liabilities is decreasing.
Interpretation
Since the computed value of Share Capital under vertical analysis taking total assets as
base is covering almost 3.28%, 2.44%, 2.29%, 1.35%, and 1.12% of total volume of
balance sheet in the last five consecutive years. The overall tendency of the Share
Capital is decreasing.
29. Reserves
Years 2005 2006 2007 2008 2009
Percentage 30.26% 27.22% 25.72% 23.01% 12.49%
Interpretation
Since the computed value of Reserves under vertical analysis taking total assets as
base is covering almost 30.26%, 27.22%, 25.72%, 23.01%, and 12.49% of total volume
of balance sheet in the last five consecutive years. The overall tendency of the Reserves
is decreasing.
Interpretation
Since the computed value of Total Equity under vertical analysis taking total assets as
base is covering almost 33.54%, 29.66%, 28.02%, 24.36%, and 13.60% of total volume
of balance sheet in the last five consecutive years. The overall tendency of the Total
Equity is decreasing.
Interpretation
As we take total assets as base for this analysis so total liabilities & equity is also 100%
in every year.
Interpretation
Interpretation
Since the computed values of Cash & Bank Balances are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Cash & Bank
Balances of PSO has been increasing continuously.
2. Short-term Investments
Interpretation
Since the computed value of Short-term Investments is showing that company made
short term investment only in 2005 from last five years.
3. Taxation - Net
Interpretation
Since the computed values of Taxation – Net is showing that the company has only
earned the benefit of taxation in 2009.
4. Other Receivables
Interpretation
Since the computed values of Other Receivables are showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Other Receivables of
PSO has been increasing continuously.
Interpretation
Since the computed values of Deposits & Short-term Prepayments are showing a
significant increase from 2006 to 2009 as compared to base year we can conclude that
the Deposits & Short-term Prepayments of PSO has been increasing continuously.
Interpretation
Since the computed values of Loans & Advances are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Loans &
Advances of PSO has been increasing continuously.
7. Trade Debts
Interpretation
Since the computed values of Trade Debts are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Trade Debts of PSO has
been increasing continuously.
8. Stock in Trade
Interpretation
Since the computed values of Stock in Trade are showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Stock in Trade of PSO
has been increasing continuously.
Interpretation
Since the computed values of Stores, Spare Parts & Loose Tools are showing a
decrease from 2006 to 2009 as compared to base year we can conclude that the Stores;
Spare Parts & Loose Tools of PSO has been decreasing continuously.
Interpretation
Since the computed values of Total Current Assets are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Total Current
Assets of PSO has been increasing continuously.
Interpretation
Since the computed values of Deferred Tax are showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Deferred Tax of PSO
has been increasing continuously.
Interpretation
Since the computed values of Long-term Deposits & Prepayments are showing a
significant decrease from 2006 to 2009 as compared to base year we can conclude that
the Long-term Deposits & Prepayments of PSO has been decreasing continuously.
Interpretation
Since the computed values of Long-term Loans, Advances & Receivables are showing a
significant decrease from 2006 to 2009 as compared to base year we can conclude that
the Long-term Loans, Advances & Receivables of PSO has been decreasing
continuously.
Interpretation
Since the computed values of Long-term Investments are showing a significant increase
from 2006 to 2008 and decrease in 2009 as compared to base year we can conclude
that the Long-term Investments of PSO has been increasing continuously. However
Long-term Investments decreased in 2009.
15. Intangibles
Interpretation
Since the computed values of Intangibles are showing a significant decrease from 2007
to 2009 as compared to base year we can conclude that the Intangibles of PSO has
been decreasing continuously.
Interpretation
Since the computed values of Property, Plant & Equipment are showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the
Property, Plant & Equipment of PSO has been decreasing continuously.
Interpretation
Since the computed values of Total Non-Current Assets are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Total
Non-Current Assets of PSO has been increasing continuously except in 2008.
Interpretation
Since the computed values of Total Assets are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Total Assets of PSO has
been increasing continuously.
Interpretation
Since the computed values of Taxation - Net are showing a significant decrease from
2007 to 2009 as compared to base year we can conclude that the Taxation - Net of PSO
has been decreasing continuously.
Interpretation
Since the computed values of Short-term Borrowings are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Short-term
Borrowings of PSO has been increasing continuously.
Interpretation
Since the computed values of Accrued Interest / Mark-up are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the
Accrued Interest / Mark-up of PSO has been increasing continuously.
22. Provisions
Interpretation
Since the computed values of Provisions are showing a significant decrease from 2007
to 2009 as compared to base year we can conclude that the Provisions of PSO has
been decreasing continuously.
Interpretation
Since the computed values of Trade & Other Payables are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Trade &
Other Payables of PSO has been increasing continuously.
Interpretation
Since the computed values of Total Current Liabilities are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Total Current
Liabilities of PSO has been increasing continuously.
Interpretation
Since the computed values of Retirement & Other Service Benefits are showing a
significant increase from 2006 to 2009 as compared to base year we can conclude that
the Retirement & Other Service Benefits of PSO has been increasing continuously.
Interpretation
Since the computed values of Long-term Deposits & Prepayments are showing a
significant increase from 2006 to 2009 as compared to base year we can conclude that
the Long-term Deposits & Prepayments of PSO has been increasing continuously.
Interpretation
Since the computed values of Total Non-Current Liabilities are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Total
Non-Current Liabilities of PSO has been increasing continuously.
Interpretation
The computed values of Share Capital are showing that the capital of the company is
remained same over the years.
29. Reserves
Years 2005 2006 2007 2008 2009
Percentage 100.00% 120.65% 121.44% 184.78% 121.01%
Interpretation
Since the computed values of Reserves are showing a significant increase from 2006 to
2009 as compared to base year we can conclude that the Reserves of PSO has been
increasing continuously.
Interpretation
Since the computed values of Total Equity are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Total Equity of PSO has
been increasing continuously.
Interpretation
Since the computed values of Total Liabilities & Equity are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Total
Liabilities & Equity of PSO has been increasing continuously.
Interpretation
Interpretation
Since the computed value of Cash Generated from Operations under vertical analysis
taking Cash at End of The Year as base is covering almost 3,835.25%, 231.09%,
642.00%, 173.55%, and 25.24% of respective Cash at End of The Year in the last five
consecutive years. It is showing that Company using more cash than it generated from
operations.
Interpretation
Since the computed value of Long-term Loans, Advances & Receivables under vertical
analysis taking Cash at End of The Year as base is covering almost 74.57%, 2.52%,
5.25%, 2.08%, and 0.63% of respective Cash at End of The Year in the last five
consecutive years. The overall tendency of the Long-term Loans, Advances &
Receivables is decreasing.
Interpretation
Since the computed value of Long-term Deposits & Prepayments under vertical analysis
taking Cash at End of The Year as base is covering almost 17.72%, 1.08%, and 0.62%
of respective Cash at End of The Year in the last five consecutive years. The overall
tendency of the Long-term Deposits & Prepayments is decreasing.
4. Long-term Deposits
Interpretation
Since the computed value of Long-term Deposits under vertical analysis taking Cash at
End of The Year as base company made long term deposits at 0.92% and 0.17% of
respective Cash at End of The Year only in 2008 and 2009.
5. Taxes Paid
Interpretation
Since the computed value of Taxes Paid under vertical analysis taking Cash at End of
The Year as base is covering almost 853.61%, 134.91%, 285.66%, 92.80%, and 12.20%
of respective Cash at End of The Year in the last five consecutive years. The overall
tendency of the Taxes Paid is decreasing.
Interpretation
Since the computed value of Finance Costs Paid under vertical analysis taking Cash at
End of The Year as base almost 175.94%, 29.17%, 80.88%, 17.83%, and 51.20% of
respective Cash at End of The Year in the last five consecutive years. The overall
tendency of the Finance Costs Paid is decreasing.
Interpretation
Since the computed value of Payment against Provisions under vertical analysis taking
Cash at End of The Year as base is covering almost 41.87%, 6.49%, 0.71%, 0.00%, and
0.33% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Payment against Provisions is decreasing.
Interpretation
Since the computed value of Retirement Benefits Paid under vertical analysis taking
Cash at End of The Year as base is covering almost 83.84%, 6.50%, 20.29%, 8.50%,
and 4.23% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Retirement Benefits Paid is decreasing.
Interpretation
Since the computed value of Net Cash Generated / Used In under vertical analysis
taking Cash at End of The Year as base is covering almost 2,736.83%, 57.61%,
260.32%, 57.25%, and 41.95% of respective Cash at End of The Year in the last five
consecutive years. The overall tendency of the Net Cash Generated / Used In is
decreasing.
10. Purchases of Fixed Assets
Interpretation
Since the computed value of Purchases of Fixed Assets under vertical analysis taking
Cash at End of The Year as base is covering almost 785.94%, 26.49%, 113.50%,
8.63%, and 6.03% of respective Cash at End of The Year in the last five consecutive
years. The overall tendency of the Purchases of Fixed Assets is decreasing.
Interpretation
Since the computed value of Proceeds from Disposal of Operating Assets under vertical
analysis taking Cash at End of The Year as base is covering almost 6.31%, 9.23%,
2.17%, 0.80%, and 0.18% of respective Cash at End of The Year in the last five
consecutive years. The overall tendency of the Proceeds from Disposal of Operating
Assets is decreasing.
Interpretation
Since the computed value of Dividends Received under vertical analysis taking Cash at
the End of The Year as base is covering almost 143.35%, 10.27%, 61.41%, 5.43%, and
5.83% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Dividends Received is decreasing.
Interpretation
Since the computed value of Proceeds from Liquidation of Subsidiaries under vertical
analysis taking Cash at End of The Year as base is covering 0.87% of respective Cash
at End of The Year only in 2006.
Interpretation
Since the computed value of Net Cash Generated / Used In under vertical analysis
taking Cash at End of The Year as base is covering almost 636.29%, 6.12%, 49.93%,
2.40%, and 0.03% of respective Cash at End of The Year in the last five consecutive
years. The overall tendency of the Net Cash Generated / Used In is decreasing.
Interpretation
Since the computed value of Repayment of Long-term Loan under vertical analysis
taking Cash at End of The Year as base is repay 0.02% of respective Cash at End of
The Year only in 2005.
Interpretation
Since the computed value of Proceeds from / Repayment of Long-term Deposits under
vertical analysis taking Cash at End of The Year as base is covering almost 32.43%,
2.43% and 1.71% of respective Cash at End of The Year in the years from 2005 to 2007.
The overall tendency of the Proceeds from / Repayment of Long-term Deposits is
decreasing.
Interpretation
Since the computed value of Proceeds from / Repayment of Short-term Finances under
vertical analysis taking Cash at End of The Year as base is covering almost 278.61%,
7.62%, 226.40%, 74.21%, and 30.17% of respective Cash at End of The Year in the last
five consecutive years. The overall tendency of the Proceeds from / Repayment of
Short-term Finances is decreasing.
18. Dividends Paid
Interpretation
Since the computed value of Dividends Paid under vertical analysis taking Cash at End
of The Year as base is covering almost 1886.93%, 154.77%, 338.52%, 60.92%, and
25.72% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Dividends Paid is decreasing.
Interpretation
Since the computed value of Net Cash Generated / Used In under vertical analysis
taking Cash at End of The Year as base is covering almost 1578.38%, 144.73%,
110.40%, 135.12%, and 4.45% of respective Cash at End of The Year in the last five
consecutive years. The overall tendency of the Net Cash Generated / Used In is
decreasing.
Interpretation
Since the computed value of Total Net Cash Generated / Used In for the Year under
vertical analysis taking Cash at End of The Year as base is covering almost 522.17%,
93.24%, 100%, 80.28%, and 37.53% of respective Cash at End of The Year in the last
five consecutive years. The overall tendency of the Total Net Cash Generated / Used In
for the Year is decreasing.
Interpretation
Since the computed value of Cash at Beginning of the Year under vertical analysis
taking Cash at End of The Year as base is covering almost 622.17%, 6.76%, 200%,
19.72%, and 62.47% of respective Cash at End of The Year in the last five consecutive
years. The overall tendency of the Cash at Beginning of the Year is decreasing.
Interpretation
Since the computed value of Cash at End of the Year under vertical analysis is taking as
base year.
Interpretation
Interpretation
Since the computed values of are Cash Generated from Operations showing a
significant increase in 2007 and 2008 as compared to base year we can conclude that
the Cash Generated from Operations of PSO has been increasing continuously.
However there is a significant decrease in 2009.
Interpretation
Since the computed values of Long-term Loans, Advances & Receivables showing a
significant decrease from 2006 to 2009 as compared to base year we can conclude that
the Long-term Loans, Advances & Receivables of PSO has been decreasing
continuously.
Interpretation
Since the computed values of Long-term Deposits & Prepayments showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the Long-
term Deposits & Prepayments of PSO has been decreasing continuously.
4. Long-term Deposits
Interpretation
Since the computed values of Long-term Deposits are showing that company has made
investment in long term deposits only in last two years from last consecutive five years.
5. Taxes Paid
Interpretation
Since the computed values of Taxes Paid showing a significant increase from 2006 to
2008 as compared to base year we can conclude that the Taxes Paid of PSO has been
increasing continuously. However there is a significant decrease in 2009.
Interpretation
Since the computed values of Finance Costs Paid showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Finance Costs Paid of
PSO has been increasing continuously.
Interpretation
Interpretation
Since the computed values of Retirement Benefits Paid showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Retirement
Benefits Paid of PSO has been increasing continuously.
Interpretation
Since the computed values of Net Cash Generated / Used In showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the Net
Cash Generated / Used In of PSO has been decreasing continuously.
Interpretation
Since the computed values of Purchases of Fixed Assets showing a significant decrease
from 2006 to 2009 as compared to base year we can conclude that the Purchases of
Fixed Assets of PSO has been decreasing continuously.
Interpretation
Since the computed values of Proceeds from Disposal of Operating Assets showing a
significant increase from 2006 to 2009 as compared to base year we can conclude that
the Proceeds from Disposal of Operating Assets of PSO has been increasing
continuously.
Interpretation
Since the computed values of Dividends Received showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Dividends Received of
PSO has been increasing continuously.
Interpretation
Since the computed values of Proceeds from Liquidation is showing that company made
investment in Proceeds from Liquidation only in 2006, from 2005-09.
Interpretation
Since the computed values of Net Cash Generated / Used In showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the Net
Cash Generated / Used in of PSO has been decreasing continuously.
Interpretation
Since the computed values of Repayment of Long-term Loan showing that company
made repayment of long term loan only in base year.
Interpretation
Interpretation
Interpretation
Since the computed values of Dividends Paid showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Dividends Paid from
Operations of PSO has been increasing continuously. However there is a decrease in
2009.
Interpretation
Since the computed values of Net Cash Generated / Used In showing a significant
increase from 2006 to 2008 as compared to base year we can conclude that the Net
Cash Generated / Used in of PSO has been increasing.
Interpretation
Since the computed values of Total Net Cash Generated / Used In for the Year showing
a significant increase from 2006 to 2009 as compared to base year we can conclude that
the Total Net Cash Generated / Used In for the Year of PSO has been increasing
continuously.
Interpretation
Since the computed values of Cash at Beginning of the Year showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Cash at
Beginning of the Year of PSO has been increasing continuously.
Interpretation
Since the computed values of Cash at End of the Year showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Cash at End of
the Year of PSO has been increasing continuously.
Ratio Analysis
For The Period of 5 Years ended on June 31st, 2009
Particulars 2005 2006 2007 2008 2009
Short-term Solvency Ratios
Current Ratio 1.24 1.23 1.22 1.24 1.07
Acid Test Ratio 0.59 0.60 0.61 0.57 0.75
7,970,16 10,978,09 11,127,54 22,142,47
8,666,404
Net Working Capital 1 7 6 2
Activity Ratios
Accounts Receivable Turnover Ratio 31.29 25.46 25.71 14.61 7.61
Average Collection Period 11.50 14.14 14.00 24.64 47.30
Accounts Payable Turnover Ratio 7.71 7.63 8.14 5.74 5.54
Average Payment Period 46.71 47.16 44.20 62.73 65.02
Inventory Turnover Ratio 9.66 9.98 11.41 7.46 14.98
Average Conversion Period 37.28 36.08 31.54 48.25 24.03
Total Asset Turnover Ratio 406.26% 425.05% 467.91% 389.65% 399.35%
Gross Fixed Assets 63.68% 91.57% 54.28% 177.04% (90.61%)
Long-term Solvency Ratios
Long-term Debt Equity Ratio 0.11 0.11 0.12 0.08 0.12
Debt Equity Ratio 1.98 2.37 2.57 3.10 6.35
Time Interest Earned Ratio 25.20 12.24 6.50 16.18 (1.02)
Total Capitalization Ratio 0.10 0.10 0.10 0.07 0.11
Debt Ratio 0.66 0.70 0.72 0.76 0.86
Profitability Ratios
Gross Profit Ratio 6.47% 5.77% 3.51% 6.06% 0.49%
Net Profit Ratio 2.66% 2.52% 1.34% 2.84% (1.09%)
Earning Per Share 32.98 43.87 27.34 81.94 (39.05)
Price Earning Ratio 310.21% 276.60% 446.48% 220.33% (311.57%)
Earning Yield Ratio 32.24% 36.15% 22.40% 45.39% (32.10%)
Dividend Per Share 26.00 34.00 21.00 23.50 5.00
Dividend Payout Ratio 78.85% 77.50% 76.80% 28.68% 12.80%
Dividend Yield Ratio 25.42% 28.02% 17.20% 13.02% 4.11%
ROE (Return On Equity) 32.24% 36.15% 22.40% 45.39% (32.10%)
ROI (Return On Investment) 105.17% 131.69% 87.10% 278.87% (85.94%)
Interpretation
Interpretation
The computed values of Current Ratio shows decreasing trend from year 2005-
09. It is decreasing because the current liabilities of firm increasing but the
current assets are not increasing. It is therefore suggested that the company
should lower its current liabilities; increase the value of current assets thus by
maintaining an optimum Capital Structure.
Current Ratio
1.3
1.25
1.2
1.15
Current Ratio
1.1
1.05
1
0.95
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Acid Test Ratio is showing an increasing trend from year
2005-09. It is increasing because increase in the inventory of the. It is therefore
suggested that the company should increase its level of inventory thus by
maintaining an optimum Capital Structure.
Acid Test Ratio
0.5 QuickRatio
0
2005 2006 2007 2008 2009
Years
Interpretation
The Net Working Capital of the company has remained positive throughout the
last five years. It happens due to increase in the current assets of the firm. So it
is therefore suggested that the company should maintain this level of current
assets & liabilities, or it can be improved.
NetworkingCapital
25000000
20000000
15000000
Rs.
Networking Capital
10000000
5000000
0
2005 2006 2007 2008 2009
Years
Activity Ratios
Accounts Receivable Turnover Ratio
Interpretation
40
Times
20 AccountsReceiablesRatio
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed values of Average collection period shows increasing trend from
year 2005-09. The value of the average collection period increases because the
firm mostly has relaxed its credit terms due to which it takes more time to collect
its debt from its creditors. It is therefore suggested that the company should
lower its credit sales and tight its credit terms thus by maintaining an optimum
Capital Structure.
Average Collection Period
50
Days
AverageCollectionPeriod
0
2005 2006 2007 2008 2009
Years
Interpretation
10
8
Times
6 AccountsPayable Trunover
4 Ratio
2
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Average Payment Period shows increasing trend from
year 2005-09. This increase in the value is due to the lower value of the Account
Payable Turnover Ratio. It is a positive sign for the company.
Average Payment Period
80
60
Days
Interpretation
The computed value of Inventory Turnover Ratio shows increasing trend from
year 2005-09. The increase in the value is due the cost of goods sold of the firm
is increasing consistently as compare to the cost of inventory. It is therefore
suggested that the company should maintain this level or it can be improved to
gain optimum Capital Structure.
InventoryTurnover Ratio
20
15
Times
10 InventoryTurnover Ratio
5
0
2005 2006 2007 2008 2009
Years
Interpretation
60
40
Days
Interpretation
The computed value of Total Assets Turnover Ratio shows a mix trend from year
2005-09, but mainly decreasing. This happens due to decrease in the sales
volume as compare to the total assets of the company, which have not increased
with the same proportion. It is therefore suggested that the company should
maintain its sales and total assets level. Thus it can maintain an optimum Capital
Structure.
Total Assets Turnover Ratio
600
Percentage
400
Total AssetsTurnover Ratio
200
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Gross Fixed Assets Turnover Ratio shows increasing
trend for the years 2005-08, but a loss in 2009. This increase is due to the low
increase in the values of both tangible and intangible assets of the firm. So it is
suggested that the company should increase its non-current assets.
GrossFixed AssetsTurnover Ratio
150
100
Percentage
50
GrossFixedAssetsTurnover
0
Ratio
-50 2005 2006 2007 2008 2009
-100
-150
years
Interpretation
The computed value of Long-term Debt Equity Ratio shows a consistent trend
from year 2005-09. This is because the company has not obtained any long-term
loan & equity. It is therefore suggested that the company should increase its
long-term debt; thus by maintaining an optimum Capital Structure.
Long-termDebt EquityRatio
0.15
Times
0.1
Long-termDebt EquityRatio
0.05
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Debt Equity Ratio shows increasing trend from year
2005-09. It means the ratio of debt in the business structure is not an
appropriate, which is not a healthy sign for the business. It is therefore suggested
that the company should lower the value of debt or increase the value of equity to
maintain the ratio of 60:40 as per the rules of State Bank of Pakistan, thus by
maintaining an optimum Capital Structure.
Debt Equity Ratio
8
6
Times
4 Debt EquityRatio
2
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Time Interest Earned Ratio shows decreasing trend from
year 2005-09. The decrease in the value is due to the slight increase in the
interest charges on short term borrowings of the company in comparison to the
earning for the same year. It is therefore suggested that the company should
improve its interest payment on borrowings, thus by maintaining an optimum
Capital Structure.
Time Interest Earned Ratio
30
20
Times
Years
Interpretation
The computed value of Total Capitalization Ratio shows a consistent trend from
year 2005-09. This shows that company is maintain this ratio of debt and equity
for the last five years. It is therefore suggested that the company should improve
this ratio so that it can be able to capture a bigger portion of market.
Total Capitalization Ratio
0.15
0.1
Times
Total CapitalizationRatio
0.05
0
2005 2006 2007 2008 2009
Years
Debt Ratio
Interpretation
The computed value of Debt Ratio shows increasing trend from year 2005-09.
The increase in the Debt Ratio shows that the debt paying ability of the company
has increased because the company is increasing its total assets and company
is moving towards growth.
Debt Ratio
1
Times
0
2005 2006 2007 2008 2009
Years
Profitability Ratios
Gross Profit Ratio
Interpretation
The computed value of Gross Profit Ratio shows decreasing trend from year
2005-09.The decrease in the value shows that the company’s sales are
decreasing and the cost of goods sold of the firm is also increasing which
ultimately decreases the gross profit of the company. It is therefore suggested
that the company should increase its sales and decrease its cost of goods sold,
thus by maintaining an optimum Capital Structure.
GrossProfit Ratio
10
Precentage
5 GrossProfit Ratio
0
2005 2006 2007 2008 2009
Years
Net Profit
X 100 2.66% 2.52% 1.34% 2.84% (1.09%)
Net Sales
Interpretation
The computed value of Net Profit Ratio shows decreasing trend from year 2005-
09. The decrease in the value is due to the decrease in the profit of the firm due
to increase in the operating expenses largely and finance cost of the firm also
increased. It is therefore suggested that the company should reduce its operating
expenses and also finance cost, thus by maintaining an optimum Capital
Structure.
Net Profit Ratio
4
Percentage
2
Net Profit Ratio
0
2005 2006 2007 2008 2009
-2
Years
Interpretation
The computed value of Earning per Share Ratio shows increasing trend from
year 2005-08, but in 2009 the company did not earn any profit so it became
negative. The increase in the value shows that the earning per share of the
company increased up to Rs 81.94. In year 2008 it is maximum after that
company experience the loss. It is therefore suggested that the company should
increase its profits, thus by maintaining an optimum Capital Structure.
EaringPer Share
100
50
Rs.
EarningPer Share
0
-50 2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Price Earning Ratio shows fluctuating trend from year
2005-08, but in 2009 company incurred loss. The fluctuation is due to increase or
decrease in the market price of the shares of the company. It is therefore
suggested that the company should maintain the level of its shares in the market,
thus by maintaining an optimum Capital Structure.
Price EarningRatio
600
400
Percentage
200
Price EarningRatio
0
-200 2005 2006 2007 2008 2009
-400
Years
Interpretation
The computed value of Earning Yield Ratio shows increasing trend from year
2005-08, but in 2009 company incurred loss. The increase in the value is due to
the consistent value of market price. It is therefore suggested that the company
should increase its market price so it can attain the optimum Capital Structure.
EarningYield Ratio
60
40
Percentage
20
EarningYieldRatio
0
-20 2005 2006 2007 2008 2009
-40
Years
Interpretation
Since the computed value of Dividend Per Share Ratio shows decreasing trend
from year 2005-09. The decrease in the value is due to the less amounts of
dividend paid. It is therefore suggested that the company should lower its number
of shares outstanding or increase the value of dividend paid thus by maintaining
an optimum Capital Structure.
DividendPer Share
40
Rs.
20 DivdendPer Share
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Dividend Payout Ratio shows decreasing trend from year
2005-09. There is a continuous decrease in the ratio which is due to distributing
lower portion of earning as dividend by the company. It also clarifies that
company is retaining the maximum portion of profit to capture high market share.
It is therefore suggested that the company should maintains proper policy for the
distribution of its dividend, thus by maintaining an optimum Capital Structure.
Dividend Payout Ratio
100
Percentage
80
60
Dividend Payout Ratio
40
20
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of Dividend Yield Ratio shows decreasing trend from year
2005-09. The decrease in the value is due to the larger amounts of market price
& Lower levels of dividend per share. It is therefore suggested that the company
should increase the value of dividend per share and decrease the market price
per share so that it can achieve an optimum Capital Structure.
Dividend Yield Ratio
30
Percentage
20
DividendYieldRatio
10
0
2005 2006 2007 2008 2009
Years
Interpretation
The computed value of ROE shows a mix trend from year 2005-09. This ratio
increase in first two years but in 2007 it decreases than again in 2008 it
increases, but in 2009 company incurred a loss. So it is therefore suggested that
the company should increase the value of net profit, thus by maintaining an
optimum Capital Structure.
Return On Equity
50
40
Percentage
30
ROE
20
10
0
2005 2006 2007 2008 2009
Years
Operating Profit
X 100 105.17% 131.69% 87.10% 278.87% (85.94%)
Average Operating Assets
Interpretation
The computed value of the ratio shows mix trend. The ROI has increased in year
2005 and 2008 which is a positive sign for both investors and company. The
reason for increase in the return on investment is an increase in the operating
profit of the company. In year 2009 the ratio is showing weak position of the
company because it is negative in this year which is alarming sign for the
company. It is therefore suggested that the company should increase the value
of return on investment thus by maintaining an optimum Capital Structure.
Return OnInvestment
300
200
Percentage
100
ROI
0
-100 2005 2006 2007 2008 2009
-200
Years
Bankruptcy Analysis
For The Period of 5 Years ended on June 31st, 2009
Univariate Model
Years
Particulars 2005 2006 2007 2008 2009
(0.551 (5.746 (2.636 (7.479
(Cash Flow / Total Debt)*100 (8.684)
) ) ) )
(Net Income / Total Assets)*100 10.813 10.724 6.2750 11.056 (4.366)
(Total Debt / Total Assets)*100 66.459 70.339 71.983 75.639 86.397
Interpretation
Univariate
Since the computed values of first two ratios are showing decreasing trend and the last
one is showing increasing trend so we can conclude that the company is moving
towards bankruptcy.
Multivariate
Since the computed values of Z-score in each year is above then our bench mark i.e.
more than 2.675 so we can conclude that the company is far away from bankruptcy but
actually the trend of Z-score is showing a decreasing rate which may be alarming in the
future if it continues.
In bankruptcy analysis, the company shows weak financial position in univariate model. On the
basis of this we can conclude that the company is not working efficiently and not provides any
opportunity of dividend or capital gain to its investors. Due to this weak position the chances of
bankruptcy increase rapidly. But in multivariate the company is showing good results. But the
trend analysis of the last five years is showing decreasing trend. So we can say that the company
may become bankrupt in the future. So company should mange its assets efficiently so that this
situation can be solved.
However the sale of the company increases over the period of last five years it shows that the
company is moving towards progress and try to improve its operations by this the profit of the
company increases. So it is recommended that the company needs a lot of efforts so it is
necessary that the company should have to improve its operations to compete with others and
capture the market share.