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HORIZANTAL ANALYSIS

Pakistan State oil Company Ltd.


(PSO)
Comparative Balance Sheet
As On July 02,2009,
2006&2009
2002 2003 2004 2002-2003 2003-2004
Item Amount Amount Amount Amount % Amount %
Assets:
Operating
Fixed 481,316,2 558,110,17
418,512,285 62,803,915 15.01 76,793,973 15.95
Assets 00 3

Capital
Work In
53,919,226 19,513,070 161,838,918 (34,406,156) -63.81 142,325,848 729.39
Progress

Long term
Assets 14,501,127 11,988,692 29,278,969 -2,512,435 -17.33 17,290,277 59.053

Current Assets:

Stores,
spares and
loose tools 11,799,639 15,732,563 15,725,753 3,932,924 33.34 -6,810 -0.0433

Stock in
trade 183,469,356 162,762,136 363,042,352 -20,707,220 -11.3 200,280,216 123.05

Trade
debts 135,634,627 161,482,588 132,885,996 25,847,961 19.1 -28,596,592 -17.71

Loans and
advances 65,338,672 40,945,023 71,064,538 -24,393,649 -37.4 30,119,515 73.560

Receivable
s And 3,154,623 12,210,124 15,829,580 9,055,501 287.1 3,619,456 29.643
Deposit

Cash At
Bank 9,215,837 11,335,902 6,235,419 2,120,065 23.01 -5,100,483 -44.99

Total
Current
408,612,754 404,468,336 604,783,638 -4,144,418 -1.01 200,315,302 49.525
Assets

Total
Assets 895,545,392 915,850,222 1,345,011,698 20,304,830 2.27 438,161,476 47.84
Liabilities:
Current
335,234,512 241,516,594 536,811,744 -93,717,918 -27.96 295,295,150 122.267
Liabilities
Long Term
and
81,097,904 82,753,270 45,085,585 1,655,366 2.041 -37,667,685 -45.518
deferred
Liabilities
Shareholder's Equity:
Share
Capital 60,000,000 60,000,000 60,000,000 0 0 0 0

Inappropria
te Profits 62,600 75,043,645 59,677,731 74,981,045 119778 -15,365,914 -20.48

Reserves
373,100,000 373,100,000 474,000,000 0 0 100900000 27.044
Total
Liabilities
and 895,545,392 915,850,222 1,354.011,698 20,304,830 2.27 438,161,476 47.842
Stockholder
's Equity
Bhanero Textile Mill Limited
Comparative Income Statement
For the Year Ended September 30
2004, 2003&2002
2002 2003 2004 2002-2003 2003-2004
Item
Amount Amount Amount Amount % Amount %

Sales 1,285,216,712 1,426,008,047 1,530,174,712 140,791,335 10.96 104,166,665 7.30

Cost of
1,083,486,802 1,204,305,837 1,391,568,582 120,819,035 11.16 187,262,745 15.55
Sales

Gross
201,729,910 221,702,210 138,606,130 19,972,300 9.900 -83,096,080 -37.49
Profit

Operating 72,973,557
62,150,092 50,253,090 -10,823,465 -14.832 -11,897,002 -19.14
Expenses

Operating
128,756,353 159,552,118 88,353,040 30,795,765 23.918 -71,199,078 -44.62
Profit

Other
101,421 16,263,266 2,373,410 16,161,845 15935.4 -13,889,856 -85.41
Income

Other
56,180,541 39,200,989 34,450,892 -16,979,552 -30.2 -4,750,097 -12.12
Expenses

Profit
before 72,677,233 136,614,395 56,275,558 63,937,162 87.97 -80,338,837 -58.807
Taxation

Taxation 25,681,410 31, 633,350 -29,258,528 5951940 23.18 -60891878 -192.49

Profit after
46,995,823 104,981,045 85,534,086 57,985,222 123.38 -19,446,959 -18.52
Taxation
VERTICAL ANALYSIS

Bhanero Textile Mills Limited


Comparative Balance Sheet
As On September 30
2003,2004,2005
2002 2003 2004
Item
Amount % Amount % Amount %
Assets:

Operating
Fixed
418,512,285 46.73 481,316,200 52.55 558,110,173 41.495
Assets

Capital Work
In Progress
53,919,226 6.021 19,513,070 2.13 161,838,918 12.03

Long term
Assets 14,501,127 1.62 11,988,692 1.31 29,278,969 2.18

Current
Assets:

Stores,
spares and 11,799,639 1.32 15,732,563 1.72 15,725,753 0.878
loose tool

Stock in
trade 183,469,356 20.49 162,762,136 17.78 363,042,352 13.64

Trade debts 135,634,627 15.14 161,482,588 17.63 132,885,996 10.084

Loans and 65,338,672 7.296 40,945,023 4.47 71,064,538 4.86


advances
Receivables
3,154,623 0.35 12,210,124 1.33 15,829,580 0.23
And Deposit

Cash At 9,215,837 1.029 11,335,902 1.24 6,235,419 0.68


Bank
Total Current
Assets 408,612,754 45.62 404,468,336 44.16 604,783,638 44.96

Total Assets 1,345,011,69


895,545,392 100 915,850,222 100 100
8
Liabilities:

Current
Liabilities 335,234,512 37.43 241,516,594 26.38 536,811,744 39.65

Long Term
and deferred 81,097,904 9.05 82,753,270 9.04 45,085,585 3.33
Liabilities
Shareholder's
Equity:

Share Capital
60,000,000 6.69 60,000,000 6.55 60,000,000 4.43
Inappropriate
Profits 62,600 0.007 75,043,645 8.19 59,677,731 4.41

Reserves
373,100,000 41.66 373,100,000 40.73 474,000,000 35.01
Total
Liabilities
and 1,354.011,69
895,545,392 100 915,850,222 100 100
Stockholder's 8
Equity
Bhanero Textile Mills Limited
Comparative Income Statement
For the Year Ended September 30
2004,2003&2002

2002 2003 2004


Item
Amount % Amount % Amount %
1,285,216,71 1,426,008,04 1,530,174,71
Sales 2
100
7
100
2
100

1,083,486,80 1,204,305,83 1,391,568,58


Cost of Sales 84.30 84.45 90.94
2 7 2

Gross Profit 201,729,910 15.69 221,702,210 15.55 138,606,130 9.06

Operating 72,973,557
.677 62,150,092 4.36 50,253,090 3.29
Expenses

Operating
128,756,353 10.02 159,552,118 11.19 88,353,040 5.78
Profit

Other Income 101,421 0.008 16,263,266 1.14 2,373,410 0.16

Other Expenses 56,180,541 4.371 39,200,989 2.75 34,450,892 2.26

Profit before
72,677,233 5.65 136,614,395 9.59 56,275,558 3.68
Taxation

Taxation 25,681,410 1.99 31, 633,350 2.22 -29,258,528 -1.91

Profit after
46,995,823 3.66 104,981,045 7.362 85,534,086 5.59
Taxation
INTERPRETATION
OF DATA

HORIZANTAL ANALYSIS
Bhanero Textile Mills Limited

 COMPARATIVE BALANCE SHEET

The total assets at the end of year 2002was Rs.


895,545,392,on year 2003 was Rs. 915,850,222 on year
2004 was Rs.. 1,354.011,698 The assets are increasing
as the years gone which is favorable for company. But the
liabilities were decreasing which is also favorable.
Inappropriate profits increased in years 2002 and bou
decreased in year 2003 but again much increased in year
2004.Total stockholder’s equity was increasing during
three years. Overall, the horizontal analysis of
comparative balance sheet indicates the prosperous
feature of the company.
 COMPARATIVE INCOME STATEMENT:
An increase in net sales, considered alone, is not
necessarily favorable. The increase in net sales was
accompanied by a somewhat greater percentage increase
in the COST OF GOODS (merchandise) sold, but gross
profit is also increased in all three years. Operating
expenses increased in year 2001 and in year 2002 but
decreased in year 2003 which is favorable for the
company. There was increase in operating income in year
2001and in year 2002 and year 2003 also. Individually,
each year was in profit .Overall company was in profit.
It would be incorrect for management to
conclude that its operations were at maximum efficiency.
A study of the expenses and additional analysis and
comparisons of individual expense accounts should be
made.
Bhanero Textile Mills Limited

FINANCIAL STATEMENT ANALYSIS

Solvency Analysis

(1) Working Capital


Working Capital = Current assets – Current liabilities

Current Assets Current Liabilities Working capital


Years Rs. Rs. Rs.
2002 408,612,754 335,234,512 73,378,242
2003 404,468,336 241,516,594 162,951,742
2004 604,783,638 536,811,744 67,971,894

COMMENT

Treet Corporation limited has enough working capital in all its three
years to meet currently maturing obligations.

(2) Current Ratio


Current Ratio = Current assets / Current liabilities

Years
Current Assets Current Liabilities Current Ratio
Rs. Rs.
2002 408,612,754 335,234,512 1.218886
2003 404,468,336 241,516,594 1.674702
2004 604,783,638 536,811,744 1.126621

COMMENT

In year Treet Corporation limited with its current ratio of 2.18:1 has
more favorable position to obtain short-term credit as compared to in year 2001
& 2002.
(3) Acid-test ratio
Acid-test ratio = Quick assets / Current liabilities
Quick Assets 2002 2003 2004
Cash Rs. 9,215,837 11,335,902 6,235,419
Marketable Securities --- ---- ----
Accounts Receivable 3,154,623 12,210,124 15,829,580
Total Rs. 12,370,460 23,546,026 22,064,999

Quick assets Current Liabilities Acid Test Ratio


Years Rs. Rs.
2002 . 12,370,460 335,234,512 .0369
2003 23,546,026 241,516,594 .0975
2004 22,064,999 536,811,744 .0411

COMMENT

Treet has favorable ratio of its acid test. It has more cash and
account receivables (net) in year 2003 as compared to in years 2001&2002 which
can be sold in market to meet its obligations.

(4) Accounts Receivable Turnover


Account Receivable Turnover = Net Sales / Average
account receivable

Year Net Sales Average Account Account Receivable


Receivable Turnover

2002 1,285,216,712

2003 1,426,008,047 7682373.5 185.620765


2004 1,530,174,712 14019852 109.143428

(5) Inventory turnover ratio


Inventory turnover ratio = Cost of goods sold / Average
inventory

Years Cost of goods Average Inventory turnover


sold Rs. inventory Rs. ratio
2002 1,083,486,802
2003 1,204,305,837 173115746 6.956651055
2004 1,391,568,582 262902244 5.293102717

COMMENT

Treet Corporation limited has higher turnover which is favorable for


company. It means Co. do not incurring extra expenses such as those for
administration and storage, is decreasing its risk of loss because of obsolescence
and adverse price changes, incurring less interest charges ,and has free fund for
other uses.

(6) Number of days’ sales in inventory


Number of days’ sales in inventory =Ending Inventory/
Average daily cost of goods sold

Ending inventory Average daily Number of days’


Years
Rs. cost of goods sales in inventory
sold Rs. day’s
2002 183,469,356 2968456.992 62
2003 162,762,136 3299468.047 49
2004 363,042,352 3812516.663 95

COMMENT

The no of day’s sales in inventory gives a rough measure of length of


time it takes to acquire, sell, and then replace the average inventory. And there
was a substantial improvement in as the years passed on, but, in 2001 it goes
down. No. of days sales in inventory is an essential element in judging the
effectiveness of Treet Corporation limited

(7) Total Asset Turnover


Total Asset Turnover = Net sales / Average total assets

Year
Net Sales
Rs Average total assets Total Asset Turnover

2002
1,285,216,712

2003 905697807 1.57


1,426,008,047

2004
1,530,174,712 1130430960
1.35

Ratio of stockholder’s equity to


(8)
liabilities
Ratio of stockholder’s equity = Total stockholder’s
equity / Total liabilities

Ratio of
Total Total liabilities
Years stockholder’s
stockholder’s Rs.
equity
equity Rs.
2002
2003
2004
COMMENT

There is an increase in the ratio in year2003 which indicates the large


margin of safety for the creditors .So it is good for company as she increases its
ratio as it increases safety for the creditors.

Number of Times Interest Charges


(9)
Earned
No. Of times Interest Charges earned = Income before
income tax +Interest Expenses / Interest Expenses

No. of times
Amount available to
Interest charges Interest
Years meet interest charges
Rs. Charges
Rs.
Earned
72,677,233 +
2002 52,355,423 2.388151
52,355,423
136,614,395 +
2003 31,807,810 5.294995
31,807,810
56,275,558 +
2004 31,250,227 2.800805
31,250,227

COMMENT

This measure provides an indication of general financial strength. It is higher


in year 2003 as compared to years 2002&2001.So, company is in best favorable condition
to provide interest payments continuously.

(10) Debt Ratio

Debt Ratio = Total Liabilities / Total Assets

Year Total Liabilities Total Assets Debt Ratio

2002 895,545,392
2003 915,850,222

2004 1,345,011,698

(11) Equity Ratio

Equity Ratio = Total Equity / Total Assets

Year Total Equity Total Assets Equity Ratio


2002 895,545,392
2003 915,850,222
2004 1,345,011,698

Profitability Ratios
(2) Rate earned on total assets

Rate earned on total assets = Net income + Interest


expense / Average total Assets

Years Net income + Interest Average total Rate earned on


expense assets total assets
Rs. Rs.
2002 46,995,823+52,355,423
104,981,045+31,807,81 15.10%
2003 905697807
0
2004 85,534,086+31,250,227 1130430960 10.33%

COMMENTS

The rate earned on total assets is a measure of the profitability of


the assets, without regard to the equity of the creditors & stockholders in the
assets. They have improvement in year 2003, which indicates the effectiveness of
the management performance.

(3) Rate earned on stockholder’s equity


Rate earned on stockholder’s equity = Net income /
Average stockholder’s equity*100

Years Net income Average Rate earned on


Rs. stockholder’s stockholder’s
equity Rs. equity
2002 46,995,823
2003 104,981,045
2004 85,534,086

COMMENTS

The rate earned by a thriving enterprise on the equity of its


stockholders is usually higher than the rate earned on total assets due to
difference in the amount earned on assets acquired through the use of funds
provided by creditors is more than the interest charges paid to creditors called
Leverage Factor. Treet Co. ‘s rate on stockholders equity for 2002, 43.68%
compares favorably with the rate of 20% earned on total assets. The Leverage
Factor 23.68 %( 43.68%-20%) in 2002 also compare favorably with the 15.70 %(
58.70%-43%) in 2003.

(4) Gross Profit Ratio


Gross Profit Ratio= Gross Profit / Net Sales*100

Years Gross Profit Net Sales Gross Profit


Rs. Rs. Ratio %

2002 1,083,486,802 1,285,216,712 8.43


2003 1,204,305,837 1,426,008,047 8.45
2004 1,391,568,582 1,530,174,712 91

(5) Net Profit Ratio


Net Profit Ratio= Net Profit / Net Sales*100

Years Net Profit Net Sales Net Profit Ratio


Rs. Rs.

2002 46,995,823 1,285,216,712 3.66


2003 104,981,045 1,426,008,047 7.61
2004 85,534,086 1,530,174,712 5.59

(8) Dividend per Share


Dividend per share = Dividend / Total no. of share
Years Dividend Total no. Of share Dividend per
Rs. share Rs.
2002 15,000,000 6,000,000 2.5
2003 30,000,000 6,000,000 5
2004 - - -
(9) Dividend Yield
Dividend Yield = Dividend per Share / Market per
Share

Years Dividend per Market price per Dividend Yield


share Rs. share Rs. Rs.
2002 2.5 10 .25
2003 5 10 .5
2004 - - -

(10) Earning per Share


Earning per Share = Net incomer after tax / Average Ordinary
shares In issue during the year

Years Net income after Avg. Ordinary Earning per share


tax Rs. shares in issue Rs.
during the year
2002 46,995,823 6,000,000 7.8
2003 104,981,045 6,000,000 17.5
2004 85,534,086 6,000,000 14.26

COMMENT
Earning per share & Dividend per share on common stock is
commonly used by investors in weighing the merits of alternative investment
opportunities. Earning per share data can be presented in conjunction with
Dividend per share data to indicate the relationship between earnings & dividends
& the extent to which the corporation is retaining its earning for use in the
business.

(11) Price Earning Ratio


Price Earning Ratio = Market price per share / Earning per
share

Earning per
Market price Price Earning
Years share
per share Rs. Ratio
Rs.
2002 10 7.8 .78
2003 10 17.5 1.75
2004 10 14.26 1.45

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