1

ALLAMA IQBAL OPEN UNIVERSITY

Department of Business Administration
Course Title Analysis of Financial Statements
Level MBA (3 Years)/ MBA (2 Years)
Course Coe (!""#)$
To%ic Assi&ne
're%are ()uity *nvestment Analysis re%ort of
a %u+lic limite com%any
,ame of Tutor
,ame of Stuent
-oll ,o
Semester S%rin& 2.#/
2
A!NO"LED#EMENTS
*n t0e name of Almi&0ty ALLA$1 t0e most &racious1 t0e most +eneficent +y
0el% of 20om * am a+le to com%lete my assi&nment an accom%lis0e all t0e
ifficult tas3s relatin& to t0is assi&nment$
4it0 a ee% sense of &ratitue1 * e5ten my t0an3s to teac0ers at 6e%artment
of Business Aministration1 Allama *)+al 7%en 8niversity 20o %rovie me t0e
o%%ortunity t0rou&0 t0is assi&nment to learn %ractically$
* am also &rateful to t0e mana&ement of 'TCL t0eir staff 20ose 0el%1 &uiance
an co9o%eration ena+le me to com%lete t0is assi&nment$ Finally * %ay s%ecial
t0an3s to my family for t0eir never enin& su%%ort t0ey e5tene me at every
ste%$
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A%stra&t
T0is re%ort is t0e %ractical %art of t0e most vital %ractice of my M$C7M/MBA
%ro&ram$ T0e sole o+:ective of my activity is to stuy t0e &iven as%ects of t0e
to%ic &iven to me$ T0is re%ort 0as +een 2ritten to 're%are ()uity *nvestment
Analysis re%ort of a %u+lic limite com%any$
*n t0e first %0ase of t0e re%ort t0ere is t0e &eneral introuction a+out t0e
&iven to%ic an ifferent relate terms 0ave +een e5%laine$ A very +rief
introuction of t0e selecte to%ic is &iven an t0en t0e etail stuy of t0e to%ic
is %rovie$ At t0e en references are %rovie from 20ere t0e ata is
collecte$$
Ta%'e of ontents
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ontents Pa(e No
#$ *ntrouction to to%ic
2$ *m%ortant su+9to%ics
'ractical stuy of t0e or&ani;ation 2it0 res%ect to t0e to%ic
3$ -evie2 of t0eoretical an %ractical situations merits1 e9
merits eficiencies or stren&t0s of t0e or&ani;ation 2it0 res%ect to
t0e to%ic uner stuy$
/$ Conclusions an recommenations
"$ Anne51 if any
Topi&) Prepare E*uit+ In,estment Ana'+sis
report of a pu%'i& 'imited &ompan+
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Almost anyone 20o ma3es an investment e5%ects a return at some %oint$ For
e5am%le1 one 20o invests in an eucation may +e oin& so to 0ave a &oo :o+ in t0e
future$ *n +usiness1 an investor 20o %uts in money normally e5%ects a monetary
return$ Suc0 investment +usiness ecisions are often +ase on analytical tools t0at
com%are )uantifia+le monetary returns 2it0 returns of ot0er investments$
Rate of Return on In,estment
T0e sim%lest tool for analy;in& a +usiness investment is a com%utation of t0e rate of
return on t0e investment$ T0e amount of t0e return is ivie into t0e amount of t0e
investment to arrive at a %ercenta&e rate$ To one 20o lens out money1 t0is is t0e
interest ivie +y t0e %rinci%al$ To an accountant1 t0is is net income after ta5es
(from t0e income statement) ivie +y e)uity of t0e stoc30olers (from t0e +alance
s0eet)$ T0e %erio from t0e time t0e amount is investe to t0e time t0e return is
reali;e also 0as to +e consiere 20en com%arin& rates of return$
Important su% topi&s
*m%ortant su+ to%ics are<
Annua'i-ed and A,era(e Returns
To strictly com%are an investment rate of return 2it0 anot0er1 t0e common %ractice is
to use one year$ T0is %er annum or annual rate of return is arrive at +y iviin& #2
mont0s +y t0e num+er of mont0s over 20ic0 t0e returns are earne$ T0is is t0en
multi%lie 2it0 t0e unannuali;e rate$ *n cases 20ere t0e amounts of t0e returns
iffer from year to year1 an avera&e annual rate of return is use$
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Time Va'ue of Mone+) Interna' ROI and NPV
Some of t0e more so%0isticate tools of analysis of returns are< t0e internal rate of
return an net %resent value$ T0ese tools use a series of cas0 inflo2s an outflo2s to
arrive at a rate (internal rate of return)1 or at a value (net %resent value)1 ta3in& into
consieration t0e time value of money$ T0ese financial valuation measures are use
mostly to assess investments or %ro:ects t0at are ca%ital intensive$
Ot.er Quantitati,e Too's of Ana'+sis
Anot0er measure of returns is t0e moifie rate of return1 20ere a com%any=s cost of
ca%ital is consiere$ T0ou&0 t0e various com%utations of rates of return are t0e most
2iely use tools1 t0ey are +y no means t0e only measures use for +usiness
investment analysis$ 7t0ers inclue< +rea39even analysis1 %rofit mar&in calculations1
li)uiity tests1 receiva+le an inventory turnover ratios1 mar3et s0ares an levera&e
or e+t9to9e)uity measures$
Non/Quantities In,estment Ana'+sis
*n lieu of1 or often in con:unction 2it01 )uantitative analysis1 )ualitative factors are
also analy;e to arrive at &oo investment ecisions$ T0ese inclue assessments of
t0e inustry1 economic conitions1 t0e com%any=s mana&ement1 com%etitive stren&t0s
an 2ea3nesses of t0e com%any an its %roucts an its c0annels of istri+ution$ T0e
more com%re0ensive t0e investment analysis1 t0e +etter t0e +usiness ecision$
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-eturn on investment ratio analysis etermines a com%any=s efficiency in investments$
Sim%ly %ut1 it s0o2s 0o2 %rofita+le an investment 2ill +e$ Several ratios 2it0in t0is
cate&ory are fre)uently )uote< -eturn on *nvestment (-7*)1 -eturn on ()uity (-7()
an -eturn on Assets (-7A)$ T0e calculations are also useful in measurin&
mana&ement=s effectiveness in &ro2in& a +usiness$ By com%arin& similar +usinesses1
a smaller ratio may +e inicative of %oor investment c0oices +y e5ecutives$
Return on In,estment
T0e return on investment is calculate +y su+tractin& t0e &ain from an investment +y
t0e cost of t0e investment an t0en iviin& t0at fi&ure +y t0e cost of t0e investment$
*nstea of loo3in& at ra2 num+ers1 t0is ratio 2ill tell an investor t0e %ercenta&e &ain
earne %er ollar investe1 t0us revealin& 0o2 efficient an investment truly is$ T0is
ratio is most useful 20en com%arin& %ast %erformance to etermine trens of
increasin& or ecreasin& efficiency$
Return on E*uit+
T0e return on e)uity is a valua+le tool for fi&urin& relative %rofit %er s0are of stoc3 for
investors o2nin& s0ares of t0e com%any$ *t is calculate +y iviin& net +y total
avera&e e)uity$ T0is 2ill tell an investor t0e return &aine %er s0are of stoc3 o2ne$
Li3e -7*1 it is useful to s0o2 trenin& %atterns$ A %attern s0o2in& an increasin& ratio
coul mean t0e com%any is &ettin& +etter at 20ere an 0o2 t0ey invest$
Return on Assets
T0e return on assets ratio is use to measure efficiency 2it0out re&ar to financial
structure$ T0e ratio is calculate +y iviin& earnin&s +efore ta5es an interest +y
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avera&e total assets$ T0is measures a com%any=s a+ility to &enerate returns from
actual ca%ital assets$ T0is ratio is 0i&0ly e%enent u%on t0e inustry1 as some are
more ca%ital9intensive t0an ot0ers$
Ot.er onsiderations
Levera&e can istort -7* ratios +y ratc0etin& u% returns 20ile also e5%osin& t0e
com%any to more ris3$ Be 2ary of ratios 2ell a+ove inustry norms1 as t0is can
inicate a levera&e strate&y t0at 20ile %otentially returnin& 0i&0er %rofits1 it can
result in 0eavy losses$ Anot0er consieration to 3ee% in min is t0e time frame in
20ic0 an investment actually %ays off$ T0e -7* for t2o com%anies can +e t0e same1
+ut one may mature in a year1 20ile t0e ot0er 2oul not reali;e t0e &ain for a ecae$
Pra&ti&a' stud+
Pa0istan Te'e&ommuni&ation ompan+ Limited
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Introdu&tion
T0e Telecommunication sector aroun t0e 2orl is &oin& t0rou&0 a
%rocess of ra%i c0an&e in information tec0nolo&y an conver&ence 2it0
focus on mo+ile *nternet an value ae services$ *n t0e line of &lo+al
trens an for meetin& t0e emer&in& eman1 ma:or initiatives 0ave +een
ta3in& %lace +y t0e com%any to u%&rae its net2or3$ T0e 2or 'TCL is
itself is an inustry an 20ole 2orl$
*n t0e year of #>>!1 'TCL esta+lis0e Mo+ile an *nternet services in
20ic0 it is very successful$ *n t0e year 2...1 finally 'TCL is forme an
finali;e t0e telecom %olicy$
'TCL unerstans t0e 0i&0ly si&nificant role of information tec0nolo&y in
toay=s &lo+al +usiness environment1 an t0us %ays s%ecial attention to
t0e im%lementation of *T in all of its e%artments$ (very e%artment 0as
its o2n net2or3 system an ata+ase t0at %rovies increase
communication an relia+le information$
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'TCL %rovies )uality services to t0eir customers$ *t ta3es many im%ortant
ecisions an ma3es many ne2 %lans accorin& to t0e nees of
customers$ 'TCL introuces ne2 services an also im%roves t0e )uality$
Suc0 as<
(nter in t0e mo+ile +usiness$
(5%ansion of *nternet +ac3+one infrastructures$
*m%rovement in mana&ement information ? financial control
system$
T0e &ro2t0 of t0e cellular sector in 'a3istan can also +e attri+uta+le to
&oo &overnance %olicies of t0e &overnment of 'a3istan an t0e
'rivati;ation Commission$ *n A%ril 2..@1 (mirates Telecommunication
Cor%oration1 20ic0 is commonly 3no2n as (tisalat1 0as assume
mana&ement control of 'a3istan Telecommunication Cor%oration Lt A %art
of t0e B2$@+n eal to +uy a 2@C sta3e in 'TCL$ T0e successful
%rivati;ation of 'TCL1 an conse)uently 8fone1 is 0aile as us0erin& in a
ne2 era for telecommunications in 'a3istan$ ,o21 uner t0e mana&ement
of (tisalat1 8fone 2ill concentrate on customer nees an +enefits an is
more etermine t0an ever to +e t0e leain& cellular %layer in t0e mar3et$
Vision
To +e t0e leain& *nformation an Communication Tec0nolo&y Service
'rovier in t0e re&ion +y ac0ievin& customer satisfaction an ma5imi;in&
s0are0olers= value=$ T0e future is unfolin& aroun us$ *n times to come1
2e 2ill +e t0e lin3 t0at allo2s &lo+al communication$ 4e are strivin&
to2ars mo+ili;in& t0e 2orl for t0e future$ By +ecomin& %artners in
innovation1 2e are reay to s0a%e a future t0at offers telecom services
t0at +rin& us closer$
Mission
To ac0ieve our vision +y 0avin&$
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An or&ani;ational environment t0at fosters %rofessionalism1
motivation an )uality$
An environment t0at is cost effective an )uality conscious$
Services t0at are +ase on t0e most o%timum tec0nolo&y$
DEualityD an DTimeD conscious customer service$
Sustaine &ro2t0 in earnin&s an %rofita+ility$
PTL "e% $ostin( Ser,i&es
*n toay=s 2orl1 a 2e+site is an im%ortant tool for any +usiness$ 'TCL
no2 offers 2orl class 0ostin& on 2ino2s %latform$ 'TCL %rovies you
t0e control1 fle5i+ility an relia+ility re)uire to create an mana&e a
successful 2e+ %resence an our self 0ealin& +ac3+one ma3e sure t0e
0i&0 availa+ility of your 2e+site$
7ur 2e+9+ase Control 'anel 0el%s you mana&e an avertise your
site$ T0e Control %anel %rovies you 2it0 %o2erful an easy to use
tools to 0el% you mana&e an control your site
Pra&ti&a' stud+ of t.e or(ani-ation 1it. respe&t to
topi&
T0e mana&ement of 'TCL is ma3in& tall claims t0at t0ey 0ave %ulle t0e com%any out
of t0e re an %resent almost e)uity investment re%ort every year$ +ut 0ave omitte
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an s3i%%e %ayin& t0e ivien es%ite a 0efty +alance s0eet as enumerate in %oint
no$ 3 of iscussion$
T0ere is nee to %ay em%0asis on F8MA, -esources an c0an&e t0e min set of t0e
em%loyee for 20ic0 a rastic cultural c0an&e is re)uire 20ic0 t0e 0ierarc0y of 'TCL is
not co&ni;ant of an is miss &uiin& t0e B76 (forei&n investors)$ Certain S(G'Hs 0ave
outlive t0eir utility an nee to +e s0o2n t0e oor for more %ro&ressive an
com%etent successors$

S0are0olers are avise in t0eir o2n interest to loo3 for safer 0eavens an &reener
%astures$
4e 0ave trie to %erform 0olistic an inte&rate financial analysis of 'TCL 2it0
t0e 0el% environmental analysis1 inustry analysis1 com%any o%erational revie2
an annual re%ort$
232 4'o1 &.art of ana'+sis approa&.
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Environmental analysis
Industry analysis
7%erational revie2 of
'TCL
2$2 -e)uisite essential ocuments for financial analysis
T0e uner mentione ocuments are essential to %erform com%re0ensive
analysis of financial %osition1 %erformance an cas0 %osition of 'TCL
#$ Financial %lan9Year 2.## to 2.#"
2$ Auite financial statements9Year 2.#2
3$ *nternal auit re%orts
/$ Mana&ement letter /$ Letter of internal control from e5ternal auitors
Minutes of %oard meetin(s
A total of #1I// cases (2.##< #1@!/ cases) 0ave +een file a&ainst t0e Com%any
%rimarily involvin& su+scri+ers an em%loyees$ Because of t0e num+er of cases
involve an t0eir uncertain nature1 it is not %ossi+le to )uantify t0eir financial
im%act at %resent$ Fo2ever1 t0e mana&ement an t0e Com%anyHs le&al avisors1
are of t0e vie2 t0at t0e outcome of t0ese cases is e5%ecte to +e favora+le an a
lia+ility1 if any1 arisin& on t0e settlement of t0ese cases is not li3ely to +e
material$ Accorin&ly no %rovision 0as +een mae in t0ese financial statements
in t0is re&arJ
As %er t0e re)uirements of *AS 3I an funamental %rinci%le of %ruence1 t0e
financial im%act of #1I// la2suits a&ainst 'TCL s0oul +e measure an
reco&ni;e in t0e financial statements to ensure true an fair vie2 of financial
%osition an %erformance$
T0e non9incor%oration of %rovision for la2suits &ives rise to follo2in& material
misstatements in t0e financial statements of 'TCL for t0e year ene 3.
t0
Kune
2.#2
A$ 8nerstatement of lia+ilities
B$ 7verstatement of net assets
C$ 7verstatement of %rofits
Data &o''e&tion met.ods
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Financial analysis
6ata are collecte +y ifferent +oo3s of (conomic (nvironment for Business1
Mana&ement1 %ersonal o+servations1 iscussion +y Mana&er Aministration
'TCL1 teac0er iscussion1 ifferent literatures of Fuman resource Mana&ement
S"OT ANALYSIS
Stren(t.
Association %lay very im%ortant role in &ainin& +enefits
T0e 2elfare of its mem+ers +y co9o%erative met0os$
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'revious year all contractual la+or a%%ointment as %ermanent +asis
in 'TCL$
*n 'TCL any la+our ismissal association as3 t0e reason of ismissal$
Association %lay very im%ortant role in &ainin& +enefits$
'ic3 an 6ro% service for t0e em%loyees for uty$
"ea0nesses
(motions in la+ stuies are usually mani%ulate an are t0erefore
relatively LcolH (not intense)$ Alt0ou&0 t0ose LcolH emotions mi&0t
+e enou&0 to s0o2 effects1 t0ey are )ualitatively ifferent from t0e
L0otH emotions often e5%erience urin& ne&otiations$
*n real life t0ere is self9selection to 20ic0 ne&otiation one &ets into1
20ic0 effects t0e emotional commitment1 motivation an interests$
Fo2ever t0is is not t0e case in la+ stuies
La+ stuies ten to focus on relatively fe2 2ell efine emotions$
-eal life scenarios %rovo3e a muc0 2ier scale of emotions$
Opportunities
Lo2 teleensity of 'a3istan$
Fave vast infrastructure an real estate assets 20ic0 can +e levera&e
furt0er$
Mlo+al connectivity relia+ility 0as +een im%rove$ 'TCL is e5%anin& t0e
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lon& istance an infrastructure sie t0rou&0 s%reain& out t2o sea9me9
2e su+marine ca+les$
'artners0i% 2it0 ne2 entrants in a ere&ulate environment$
Sco%e for efficient/cost effective o%erations3
T.reats
Coin& t0e emotions 0as a ou+le catc0< if one +y a t0ir sie1
some emotions mi&0t not +e etecte as t0e ne&otiator su+limates
t0em for strate&ic reasons$ Self re%ort measures mi&0t overcome
t0is1 +ut t0ey are usually fille only +efore or after t0e %rocess1 an
if fille urin& t0e %rocess mi&0t interfere 2it0 it
ONLUSION 5 REOMMENDATIONS
To association &ives t0e ri&0t an confience to convey la+ors
%ro+lems to to% mana&ement in +etter 2ay$ T0e 0i&0er aut0orities
no2 a ay totally i&nore t0e association an its %ro+lem t0e 0i&0er
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aut0orities s0oul &ive s%ecial attention to association an la+or
mana&ement %ro+lems$ T0e association s0oul solve t0e %ro+lem of
community.
T0is com%any 0as s0o2n e5cellent %erformance in t0e Fuman
-esource Mana&ement$
4or3ers are 2ell %ai in com%arison 2it0 ot0ers com%anies$ T0e
com%any %roviin& ecent %ensions for mana&ement1 ecent
retirement +enefits1 +asic 0ealt09care facilities1 as 2ell as
a%%rentices0i% sc0emes an trainin& %ro&ramme for ne2
mana&ers$
4or3menHs association 0as to %lay a vital role in 'TCL t0erefore
re)uire to +e 2ell converse 2it0 t0e la+or / mana&ement role$
T0e e5ecutive mem+ers in tri%artite conferences for t0eir eucation$
T0ey s0oul also atten various courses 0el in connection 2it0
la+or mana&ement
7n t0e ot0er 0an mana&ement s0oul %ay more attention to t0e
&enuine %oint raise +y t0e association an 0ave re&ular meetin&s
2it0 t0em to accommoate t0eir %oint of vie2 as for as %ossi+le$
T0e com%any is overstaffe as com%are to staff %osition in ot0er
refineries$ So t0e mana&ement ecie not to recruit 2or3ers for
some time an for ri&0t si;in& t0ey launc0e a sc0eme of
NGoluntarily Se%aration from ServiceJ$
-eferences
Boo0s
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Mana&ement of %llanin& an evelo%ment %rouct
Mana&in& Fuman -esources +y 4ayne F$ Cascio
La+or Mana&ement -elations +y 6aniel Euinn Mills
Fuman -esource Mana&ement +y 4ert0er 6avis
Ot.er sour&es of data
6iscussion +y 'TCL Mana&er Aministration
222$%tcl$com
'ersonal o+servations 1
Teac0er iscussion
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