Hinopak

Hinopak Motors
Hinopak Motors
Page 1
Hinopak Motors
Contents
ACKNOWLEDGEMENT................................................................................................. 4
COMPANY PROFILE...................................................................................................... 5
Calculations of Year 2006........................................................................................... 7
Short-term Solvency Ratio....................................................................................... 8
Long-term Solvency Ratio....................................................................................... 9
Assets Utilization Ratio.......................................................................................... 10
Profitability Ratios................................................................................................. 11
Calculations of Year 2007......................................................................................... 12
Short-term Solvency Ratio..................................................................................... 13
Long-term Solvency Ratio..................................................................................... 14
Calculations of Year 2009......................................................................................... 17
Short-term Solvency Ratio..................................................................................... 18
Long-term Solvency Ratio..................................................................................... 19
Market Ratios........................................................................................................ 22
Cross Sectional Analysis Year 2009..........................................................................23
Short-term Solvency Ratios................................................................................... 24
Long-term Solvency Ratios.................................................................................... 26
Assets Utilization Ratios........................................................................................ 28
Time Series Analysis Year 2006, 2007, 2009............................................................34
Graphical Representation of Time Series Analysis....................................................41
Short Term Solvency Ratios...................................................................................42
Long term Solvency Ratios.................................................................................... 43
Asset Utilization Ratios.......................................................................................... 44
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Hinopak Motors
Financial Statements................................................................................................ 46
Calculations of IGR & SGR Year 2009........................................................................47
Performa Financial Statements on the Basis of SGR.................................................49
Overall Analysis and Recommendations...................................................................50
Overall Analysis..................................................................................................... 51
Recommendations................................................................................................. 52
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Hinopak Motors
IN THE NAME OF ALLAH, THE MOST BENEFICIAL, THE MOST

MERCIFUL
ACKNOWLEDGEMENT
I am enormously grateful to Almighty Allah; by the Grace of Whom I have been able to present this
informative report.
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Hinopak Motors
COMPANY PROFILE
Hinopak Motors Limited assembles, manufactures and markets world renowned Hino
diesel trucks and buses in Pakistan. The Company has held the top position in the
domestic market for medium and heavy-duty vehicles for 17 consecutive years and is
highly acclaimed for quality and technological excellence Backed by Hino's expertise
Hinopak has achieved standard of quality and excellence that rival the best in the region.
With over 39,000 vehicles on road, Hinopak has gained 65% market share making it the
largest manufacturer in medium and heavy-duty truck and bus industry in Pakistan.
Hinopak product range has been designed and built in Hino's traditions of automotive
excellence to be the leader in its category and the main emphasis has been given to
passengers' safety & comfort.
THE COMPANY
Hino Motors Japan and Toyota Tsusho Corporation in collaboration with Al-Futtaim Group
of UAE and PACO Pakistan formed Hinopak Motors Limited in 1986.
In 1998, Hino Motors Ltd., and Toyota Tsusho Corporation obtained majority shareholding
in the company after disinvestments by the other two founding sponsors. This decision to
invest in Hinopak at a time when the country's economy was passing through a
depression and the sale of commercial vehicles was at an all time low reflects the
confidence our Principals have in our company and their commitment to the Pakistani
market. Hinopak is the trusted market leader with over 65% share in the Pakistani Truck
and Bus industry. Hinopak a vital contributor in saving of foreign exchange is also
providing jobs and plays a pivotal role for the development of the local industry through
its progressive manufacturing. By continuing to move forward and staying alert to the
ever-changing market & social needs, Hinopak will continue to be a successful and
respected corporate citizen of Pakistan, reflecting their commitment and belief in the
Hinopak corporate philosophy to "contribute to the development of a more prosperous
and comfortable society by providing the world with a new set of values".
VISION
Total Customer Satisfaction, a set vision for the company. In pursuit new concepts have
been introduced such as a mobile workshops, 3S/2S dealership facilities, training and free
service camps for the vehicle owners and drivers.
MISSION
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Hinopak Motors
"The mission of Hinopak Motors Limited is to provide
the society with safe, economical, comfortable and
environment friendly means of transportation by
manufacturing and supplying commercial vehicles and
services".
Environment management System

Hinopak conducted its Initial Environmental Review (IER) in the year 2001 to ascertain its
capability for adopting ISO14001 standard. In a very short span of time Hinopak
management adopted ISO14001 management system and became the first automobile
company in Pakistan to get this qualification. Hinopak in its mission to promote activities
that reduce environmental impacts and as directive from the principal Hino Motors Japan
acquired ISO 14001:1996 in 2001. In 2005, we successfully upgraded our ISO 14001:1996
Standard to new ISO 14001:2004 Standard and again became the first automobile
company in Pakistan as well as in Hino Group to achieve this qualification worldwide.
Environmental Audits
Regular audits are conducted to ensure that our EMS is in line
with ISO 14001:2004 international standard and is properly
implemented and maintained. Top management reviews
results of audits on regular basis to verify that the Hinopak
EMS spiral up continually. Two days EMS Internal Audit
Training was held on 6-7 June 2007 to develop team of
auditors, whose expertise would be utilized for the effective
execution of audits. During Sept. 2007, recertification audit
was conducted in which no major or minor nonconformity was
registered.
Training and Awareness
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Hinopak Motors
At Hinopak, various educational activities are organized to give environmental awareness
to employees, suppliers and customers. We make it a point that our people develop
greater consciousness and sense of responsibility towards the environment. Trainings
related to Operational Control, Energy Conservations and Emergency Response are on
our regular agenda. Every new employee whether appointed in management or worker
cadre is given orientation on EMS.
Country wide free services and tune-up camps are regularly organized to educate the
general transport customers on the need to maintain healthy environment. Such activity
demonstrates our commitment to a better environment and road safety. We organize
technical training program free of cost free of drivers and mechanics. Topics range from
Road Safety to Vehicle Maintenance, etc. to inculcate consciousness for safe, optimum,
pollution free performance of our products.
Calculations of Year
2006
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Hinopak Motors
Short-term Solvency Ratio

Current ratio
= Current assets / Current Liabilities

= 3259538/2343081
= 1.39 : 1
Quick ratio
= (Current assets Inventory) / Current

= Liabilities
= (3259538 2381286) / 2343081
0.4 : 1
Cash ratio
= Cash / Current Liabilities

= 118297/ 2342081
= 0.05 : 1
Working Capital
= (Current assets Current Liabilities)

= (3259538 2342081)
= 917457
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Hinopak Motors
Long-term Solvency Ratio

Debt ratio
Debt to equity ratio
Time interest earned
= Total Liabilities / Total assets

= 2426442/4139836
= 0.6 : 1
= Total Liabilities / Total share holders

= equity
2426442/1422853 = 1.2 : 1
= Operating profit / Finance Cost

= 560179 / 48416
= 11.57 : 1
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Hinopak Motors
Assets Utilization Ratio

Account receivable turnover
= Net Cr Sales / Avg. A/R

= 6392282 / 503226
= 12.7 : 1
Avg. Collection period
= (360 / (A/R Turnover))

= 360 / 12.7
= 28.34 Days
Inventory turnover
= Cost of Sales / Avg. Inventory

= 5557702/ 2381286
= 2.33 : 1
Fixed asset turnover
= Net Sales / Fixed asset

= 6392282 / 865244
= 7.38 : 1
Total asset turnover
= Net Sales / Total asset

= 6392282 / 4139836
= 1.5 : 1
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Hinopak Motors
Profitability Ratios
Gross Profit margin
Operating Profit margin
= (Gross Profit / Net Sales) x 100

= (834580 / 6392282) x 100
= 13.05 %
= (Operating Profit / Net Sales ) x 100

= (560179 / 6392282) x 100
= 8.76 %
Net Profit margin
= (Net Profit / (Net Sales ) x 100

= (323881 / 6392282) x 100
= 5%
Return on assets
= (Net Profit / (Total Asset )) x 100

= (323881 / 4139836) x 100
= 7.82 %
Return on equity
= (Net Profit / T.S.H.E) x 100

= (323881 / 1422853) x 100
= 22.76 %
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Hinopak Motors
2007
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Hinopak Motors

Current ratio

= 4008095/2672702
= 1.5
Quick ratio

= Liabilities
= (4008095 2533159) / 2672702
0.6:1
Cash ratio
= Cash / Current Liabilities

= (260915) / 2672702
= 0.097:1
Working Capital

= (4034443 3018002)
= 1335393 Lacks
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Hinopak Motors

Debt ratio

= 2738296/4911531
= 0.6:1
= Total Liabilities / Trade Capital

= 2738296/5007046
= 1.45:1

= 967778 / 63168
= 15.32:1
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Hinopak Motors

Inventory turnover
= (Net Cr Sales / (Avg. A/R)

= 7826780 / 816386
= 9.6:1
= 360 / (A/R Turnover)

= 360 / 9.6
= 37 Days

= 6439143 / 2533159
= 2.6:1 Times.
= Net Sales / Fixed asset

= 7826780 / 890313
= 8.8:1 Times.
= Net Sales / Total asset

= 7826780 / 4911531
= 1.6 Times.
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Hinopak Motors
Gross Profit margin
= (Gross Profit / Net Sales ) x 100

= (1387637 / 7826780) x 100
= 18 %
= (Operating Profit / Net Sales) x 100

= (967778 / 7826780) x 100
= 13.36 %
Net Profit margin
= (Net Profit / Net Sales ) x 100

= (590047 / 7826780) x 100
= 7.53 %
Return on assets
= (Net Profit / Total Asset ) x 100

= (590047 / 4911531) x 100
= 12 %
Return on equity
= (Net Profit / Trade Capital ) x 100

= (590047 / 1888558) x 100
= 31.24 %
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Hinopak Motors
2009
Page 17
Hinopak Motors

Current ratio

= 4034443/3018002
= 1.331
Quick ratio

= Liabilities
= (4034443 2398605) / 3018002
0.54:1
Cash ratio
= (Cash) / Current Liabilities

= (70206) / 3018002
= 0.02:1
Working Capital

= (4034443 3018002)
= 7052445 Lacks
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Hinopak Motors

Debt ratio

= 3061501/5007046
= 0.61:1
= Total Liabilities / Trade Capital

= 3061501/5007046
= 1.835:1

= 115828 / 678526
= 1.17:1
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Hinopak Motors

Inventory turnover
= Net Cr Sales / Avg. A/R

= 12,151,021 / 1135332
= 11:1
= (360 / (A/R Turnover)

= 360 / 11
= 33 Days

= 10899778 / 2398605
= 4.54:1 Times.
= (Net Sales / (Fixed asset)

= 15,151,021 / 948535
= 13:1 Times.
= (Net Sales / (Total asset)

= 15,151,021 / 5007046
= 2.42 Times.
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Hinopak Motors
Gross Profit margin
= (Gross Profit / Net Sales )x 100

= (1251,243 / 12151021) x 100
= 10.29 %
= (Operating Profit / Net Sales ) x 100

= (794354 / 12151021) x 100
= 7.29 %
Net Profit margin
= (Net Profit / Net Sales ) x 100

= (69,923 / 12151021) x 100
= 0.57 %
Return on assets
= (Net Profit / Total Asset ) x 100

= (69,923 / 5007046) x 100
= 1.39 %
Return on equity
= (Net Profit / Trade Capital ) x 100

= (3018002 / 124006) x 100
= 4.19 %
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Hinopak Motors
Market Ratios
Earnings Per Share
Dividend Payout Rate
Retention Rate
Dividend per Share
= NPAT / No. of Share Issued

= (69923 / 12398)
= 5.64 Rupees
= Total Dividend / NPAT

= (21704.992 / 69923)
= 0.3104
= 1 - Dividend Payout Rate

= 1 - 0.3104
= 0.6896
= Dividend CS / No. of Share Issued

= (21704.0992 / 12397.7)
= 1.75
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Hinopak Motors
Cross Sectional Analysis

Year 2009
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Hinopak Motors
Short-term Solvency Ratios
Current ratio
Current ratio measures a firms ability to meet its short term obligation. It shows the
relationship between current assets and current liabilities.
Hinopak has current ratio of 1.33times. It means the companys current assets are
1.33times more than current liabilities. If we compare the results of company with the
industry results, the company is showing its worst position.
Current Ratio
2009
Industry
1.33
1.6
Quick ratio
Quick ratio measures a firms ability to meet its short term obligations. The quick ratio is
more conservative than the current ratio because it excludes inventory and other current
assets, which are more difficult to turn into cash. Therefore, a higher ratio means a more
liquid current position.
It shows the relationship between current assets, inventory and current liabilities. In this,
company quick ratio is 0.54 Times, if we compare the result with the industrys result,
Hinopak is showing worse position.
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Hinopak Motors
Quick Ratio
2009
Industry
0.54
1.6
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Hinopak Motors
Cash ratio
Cash ratio measures a firms ability to meet its short term obligations. It shows the
relationship between Cash and Current liabilities. In this, company cash ratio is 0.02 times
means that company cash balance is 0.02 times more than that of its current liabilities. It
is the relationship between cash and current liabilities. Hinopak has 0.02 times of cash
ratio and showing worse position against industrys result.
Cash Ratio
Cash Ratio
2009 0.02
Industry
0.8
Working Capital
Working Capital measures firms ability to meet its short-term obligations. If a company's
current assets do not exceed its current liabilities, then it may run into trouble paying
back creditors in the short term. It shows the relationship between current assets and
current liabilities. It is the difference between current assets and current liabilities.
Hinopak has 70 Lacks and 52 thousand of working capital and shows better result against
the industry result.
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Hinopak Motors
Working capital
2009
Industry
70.2
50
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Hinopak Motors
Long-term Solvency Ratios
Debt ratio
Debt ratio measures firms ability to meet its long-term obligations. It is the relationship
between total liabilities and total assets. In this company, debt ratio is 0.61times means
company can pay its total liabilities 0.61 times from its total assets. If we compare the
result against industrys result, Hinopak is showing worse position.
Debt Ratio
2009
0.61
Industry
0.45

Debt to equity measures firms ability to meet its long-term obligations and
commitments. It is the relationship between total liabilities and Trade Capital. Hinopak
has debt to equity ratio of 1.9 times from its total shareholders equity. If we compare the
results of company and industry, company is showing worse position.
Debt to equity Ratio

2009
Industry
1.9
0.55
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Hinopak Motors
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Hinopak Motors
Time interest earned measures the firms ability to meet its long-term obligations. It is the
relationship between Operating profit and Finance Cost. Hinopak has a Time interest
earned of 1.17 times means that it can pay its interest-expanses 1.17times from its
operating profit. If we compare Hinopak performance with industry Hinopak is showing
worse position.
2009
Industry
18
1.17
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Hinopak Motors
Assets Utilization Ratios
Account receivable turnover indicates that how many times a company converts its
receivable into cash during a year. In this company A/C turnover is 11 times of its
receivable into cash. It is the relation between net Credit sales and A/C receivable.
Comparing with industry, Hinopak is showing worse Position.
Account recievable Turnover
2009
11
Industry
18

Avg. Collection period indicates that after how many days a company converts its
receivable into cash. It is the relation between number of days in a year and account
receivable turnover. In this company Avg. Collection period is 33 days means company
converts its receivable into cash in 33 days. Against industry, Hinopak is showing worse
Position.
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Hinopak Motors
Avg. collection Period
2009
Industry
33
20
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Hinopak Motors
Inventory Turnover
Inventory turnover indicates that how many times a company converts its inventory into
cash or sales. It is the relationship between cost of sales and Avg. inventory. Hinopak
converts 4.54 times of its inventory into cash or sales during a year. This shows worse
position against industry.
Inventory Turnover
2009
4.54
Industry
25
Fixed Asset Turnover

This ratio is a rough measure of the productivity of a company's fixed assets (property,
plant and equipment or PP&E) with respect to generating sales. Hinopak has 13 times of
fixed asset turnover, means Hinopak generates 13 times revenues from its fixed asset. If
we compare the result with industry Hinopak is showing better position this time.
Fixed Asset Turnover
2009
Industry
13
10
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Hinopak Motors
Total Assets Turnover
It is the relation between companys total assets and net sales. This Indicates that
Hinopak generates 2.4 times revenues by total assets of its own worth. If we compare
with the industry Hinopak is showing worse position.
Total assets turnover
2009
Industry
2.42
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Hinopak Motors
Gross Profit Margin
Gross profit margin shows the overall record of management in producing profit. Hinopak
has 10.29% of Gross profit margin means it generates gross profit 10.29% of its Net Sales
during a year. If we compare with the industry, company is showing worse position.
Gross profit Margin
2009
10.29
Industry
25
Operating Profit Margin

Operating profit margin shows the overall record of management in producing profit. It is
the relationship between operating profit and net Sales. Hinopak has 7% of operating
profit margin if we compare with the industry company is showing worse position.
Operating profit Margin
2009
Industry
20
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Hinopak Motors
Net Profit Margin
Net Profit margin indicates firms ability or measures the overall record of management in
producing profit. Hinopak has 0.57% net profit margin means it generates 0.57% of Sales
into profit. Against industry Hinopak is showing worse Position.
Net profit Margin
2009
0.57
Industry
15
Return on Assets
This ratio indicates how profitable a company is relative to its total assets. The return on
assets (ROA) ratio illustrates how well management is employing the company's total
assets to make a profit. The higher the return, the more efficient management is in
utilizing its asset base. Return on assets measures firms over record of management in
producing profit. Hinopak has 1.39% ROA. If we compare the result with result of industry,
Hinopak is showing worse position.
Net profit Margin
2009
Industry
1.39
10
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Hinopak Motors
Return on Equity
Return on equity measures firms overall record of producing profit. Hinopak has 4.19%
returns on equity mean generates 4.19% profit from equity during a year. It is the
relationship between net profit and trade capital. If we compare the results, Hinopak is
showing worse position.
Net profit Margin
2009
Industry
4.19
12
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Hinopak Motors
Time Series Analysis

Year 2006, 2007, 2009
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Hinopak Motors
Current ratio
Current ratio measures firms ability to meet its short term obligations, it shows the
relationship between current assets and current liabilities. In year 2006 current ratio was
1.39. it means current assets were 1.39 times more than current liabilities. In year 2007,
current ratio rise to 1.5 and in 2009 it is 1.33 times. If we evaluate the performance
company is in stable position showing mixed trends in current ratio.
Years
Current
ratio
2006
1.39
2007
1.5
2009
1.33
Quick ratio
Quick ratio measures a firms ability to meet its short term obligations. The quick ratio is
more conservative than the current ratio because it excludes inventory and other current
assets, which are more difficult to turn into cash. Therefore, a higher ratio means a more
liquid current position. Hinopak has quick ratio of 0.4 times in 2006, in 2007 it reached to
0.6 and in 2009 it was 0.54 times. If we evaluate the performance over the period of time
Hinopak is showing better position.
Years
Quick ratio
2006
0.4
2007
0.6
2009
0.54
Cash Ratio
Cash ratio measures a firms ability to meet its short term obligations. The cash ratio is
an indicator of a company's liquidity that further refines both the current ratio and the
quick ratio by measuring the amount of cash; cash equivalents or invested funds there
are in current assets to cover current liabilities. Hinopak has cash ratio of 0.05 times in
2006, in 2007 it reached to 0.097 and finally in 2009 it falls to 0.02. This time Hinopak is
showing worse position over the period of time, showing decreasing trend in Cash Ratio.
Years
Cash ratio
2006
0.05
2007
0.097
2009
0.02
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Hinopak Motors
Working Capital
Working Capital measures firms ability to meet its short-term obligations. If a company's
current assets do not exceed its current liabilities, then it may run into trouble paying
back creditors in the short term. In 2006 Hinopak has working capital of 917457 lacks,
2007 it raised to 1335393 lacks and finally in 2009 it was 7052445 lacks.
Years
Working
Capital (Rs)
2006
917457
2007
1335393
2009
7052445
Debt Ratio
Debt ratio measures firms ability to meet its long-term obligations. It is the relationship
between total liabilities and total assets. In 2006 Hinopak has debt ratio of 0.6 times, in
2007 it remained 0.6 and in 2009 it reached to 0.61. If we evaluate the performance
Hinopak is in stable position as far as collection of debts are concerned.
Years
Debt Ratio
2006
0.6
2007
0.6
2009
0.61
Debt to Equity ratio

Debt to equity measures firms ability to meet its long-term obligations and
commitments. It is the relationship between total liabilities and Total shareholders equity.
In 2006 Hinopak has Debt to equity ratio of 1.2 times of its equity, in 2007 it reached up
to 1.45 times and finally 1.84 times in 2009. If we evaluate the performance this
increasing trend is showing worse position over the period of time.
Years
Debt to equity
ratio
2006
1.2
2007
1.45
2009
1.84

Time interest earned measures the firms ability to meet its long-term obligations. It is the
relationship between Operating profit and Finance Cost. Hinopak has 11.57 times in 2006,
in 2007 it raised to 15.32 and finally in 2009 Time interest earned ratio falls to 1.17 times.
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Hinopak Motors
If we evaluate the results over the period of time, company was stable in 2006 and 2007
but, in 2009 company shows worse position.
Years
Time
interest
earned
2006
11.57
2007
15.32
2009
1.17
Account receivable Turnover

Account receivable turnover indicates that how many times a company converts its
receivable into cash during a year. In 2006 Hinopak has A/R turnover of 12.7 times, in
2007 it falls to 9.6 times and in 2009 it raised to 11 times. Therefore if we evaluate the
performance over the period of time, company is showing stable position.
Years
A/c
Rec.Turnove
r
2006
12.7
2007
9.6
2009
11
Average collection period

Avg. Collection period indicates that after how many days a company converts its
receivable into cash. It is the relation between number of days in a year and account
receivable turnover. In 2006 collection period was 28.34 days, in 2007 it increased to 37
days and finally in 2009 it decreased to 33 days. If we evaluate the performance over the
period of time, company is showing stability.
Years
Avg
Collection
Period (Days)
2006
28.34
2007
37
2009
33
Inventory Turnover
Inventory turnover indicates that how many times a company converts its inventory into
cash or sales. It is the relationship between cost of sales and Avg. inventory. In 2006,
inventory turnover was 2.33 times, in 2007 it increased to 2.6 times and in 2009 it again
increased, to 4.54 times. Over the period of time, company is showing better position
with their inventory returns.
Years
Inventory
Turnover
2006
2.33
2007
2.6
2009
4.54
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Hinopak Motors
Page 42
Hinopak Motors
Fixed asset Turnover
This ratio is a rough measure of the productivity of a company's fixed assets (property,
plant and equipment or PP&E) with respect to generating sales. In 2006, fixed asset
Turnover was 7.38 times, in 2007 it increased to 8.8 times and in 2009 it reached to 13
times. Over the period of time, Hinopak shows increasing trend thus showing very good
performance with fixed assets.
Years
Fixed Asset
Turnover
2006
7.38
2007
8.8
2009
13
Total asset Turnover

It is the relation between companys total assets and net sales. In 2006, it indicates that
Hinopak generates 1.5 times revenue by total assets of its own worth. In 2007, it
increased to 1.6 times and in 2009 it reached to 2.42 times. Over the period of time,
company is showing good performance.
Years
Total Asset
Turnover
2006
1.5
2007
1.6
2009
2.42
Gross Profit margin

Gross profit margin shows the overall record of management in producing profit. It is the
relation between gross profit and net sales. In 2006 G/P margin was 13.05%, in 2007 it
increased to 18%, and finally in 2009 it falls to 10.29%. Over the period of time Hinopak
shows average performance due to mixed trends in G/P margin.
Years
Gross Profit
Margin (%)
2006
13.05
2007
18
2009
10.29
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Hinopak Motors
Operating Profit Margin
Operating profit margin shows the overall record of management in producing profit. It is
the relationship between operating profit and net sales. In 2006 Hinopak had 8.76% of
O/P margin, in 2007 it raised to 12.36 % and finally in 2009 O/P margin is 7%. Over the
period of time Hinopak is showing stable results on average.
Years
Operating
Profit
Margin (%)
2006
8.76
2007
12.36
2009
7
Net Profit Margin

Net Profit margin indicates firms ability or measures the overall record of management in
producing profit. It is the relation between net profit and net sales. In 2006, N/P margin
was 5%, in 2007 it increased to 7.53% and in 2009 it falls to 0.57%. Over the period of
time Hinopak is showing worse position over Net profit margin.
Years
Net Profit
Margin (%)
2006
5
2007
7.53
2009
0.57
Return on Assets
This ratio indicates how profitable a company is relative to its total assets. The return on
assets (ROA) ratio illustrates how well management is employing the company's total
assets to make a profit. The Return on assets measures firms over record of
management in producing profit. Hinopak had 7.82% ROA in 2006, in 2007 it was 12%
and in 2009 it falls to 1.39%, shows worse position over the period.
Years
Return on
Assets (%)
2006
7.82
2007
12
2009
1.39
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Hinopak Motors
Return on Equity
Return on equity measures firms overall record of producing profit. Hinopak had 22.76%
of ROE in 2006, 2007 it increased to 31.24 % and unfortunately in 2009 it falls to 4.19%.
If we analyze the performance over the period of time Hinopak is not showing stable
position, due to fluctuating trend.
Years
Return on
Equity (%)
2006
22.76
2007
31.24
2009
4.19
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Hinopak Motors
Graphical
Representation of Time
Series Analysis
Page 46
Hinopak Motors
1.5
1.6
1.33
1.39
1.4
1.2
0.54
1
0.8
2006
0.6
0.6
2007
2009
0.02
0.4
0.4
0.1
0.2
0.05
0
Current Ratio
Quick Ratio
Cash ratio
ort Term Solvency Ratios
Page 47
Sh
Hinopak Motors
8000000
7000000
6000000
5000000
Rupees
4000000
2006
3000000
2007
2000000
2009
1000000
0
Working Capital (Rs)
Working Capital Chart
Long term Solvency Ratios
Page 48
Hinopak Motors
2
1.84
1.8
1.6
1.45
1.4
1.2
1.2
1
0.8
0.6
0.6
0.61
0.6
0.4
0.2
0
Debt Ratio
Debt To Equity Ratio

2006
2007
2009
15.32
16
14
11.57
12
10
8
6
4
1.17
2
0
Time Interest Earned

2006
2007
Page 49
2009
Hinopak Motors
Asset Utilization Ratios

13
12.7
14
11
12
9.6
8.8
10
7.38
4.54
2.33 2.6
1.5 1.6
2006
40
35
30
Tu
rn
ov
er
To
ta
lA
ss
et
s
Tu
rn
ov
er
Fix
ed
As
s
et
s
Tu
rn
ov
er
In
ve
nt
or
y
Ac
co
un
tR
ec
Tu
rn
ov
er
2007
2009
37
33
28.34
25
20
15
10
5
0
Average Collection Period
2006
2007
Page 50
2009
2.42
Hinopak Motors
Page 51
Hinopak Motors
31.24
35
30
25
20
22.76
18
13.05
15
10.29
12.36
8.76
10
12
7
7.82
7.53
4.19
1.39
0.57
2006
2007
Page 52
2009
Eq
ui
ty
on
Re
tu
rn
Re
tu
rn
on
As
s
et
s
M
ar
gi
n
et
Pr
ofi
t
N
Pr
ofi
tM
ar
gi
n
O
pe
ra
tin
g
G
ro
ss
Pr
ofi
tM
ar
gi
n
Hinopak Motors
Financial Statements
Income Statement
2009
Rs. in
million
Sales - net
2007
Rs. in
million
2006
Rs. in
million
12,151.0 100.00
2
10,899.7 89.70
8
1,251.24 10.30
399.78
3.29
206.77
1.70
19.95
0.16
169.61
1.40
794.35
6.54
678.53
5.58
115.82
0.95
45.91
0.38
69.91
0.58
7,826.78 100.0
0
6,439.14 82.27
6,392.28 100.0
0
5,557.70 86.94
1,387.64 17.73
268.98 3.44
140.39 1.79
68.10 0.87
57.61 0.74
967.78 12.36
63.17 0.81
904.61 11.56
314.56 4.02
590.05 7.54
834.58 13.06
188.53 2.95
119.72 1.87
38.77 0.61
72.62 1.14
560.18 8.76
48.42 0.76
511.76 8.01
187.88 2.94
323.88 5.07
Property, plant and equipment

Other noncurrent assets
Long-term deposits
Long-term loans and advances
Current assets (excluding
investments)
Total assets
948.54
5.50
5.48
13.09
4,034.44
18.94
0.11
0.11
0.26
80.58
887.12 18.06
3.20 0.07
6.00 0.12
7.12 0.14
4,008.10 81.61
864.53 20.88
0.71 0.02
8.30 0.20
6.76 0.16
3,259.54 78.74
5,007.05 100.00
Shareholders' equity
Long-term security deposits
Liability against assets
subject to finance lease
1,668.06
32.00
4,911.54 100.0
0
1,888.56 38.45
32.00 0.65
4,139.84 100.0
0
1,422.85 34.37
30.00 0.72
Cost of sales
Gross profit
Distribution expenses
Administration expenses
Other operating expenses
Other operating income
Profit from operations
Finance cost
Profit before taxation
Taxation
Profit after taxation
Balance Sheet
Deferred taxation
Surplus on revaluation of fixed
assets
Short term debt (including
current maturity of long term
debt)
11.50
277.49
1,400.49
33.32
0.64
0.
00 0.23
5.54
27.97
Page 53
0.00
0.68
5.80
5.
69
48.67
290.54
1.18
7.02
110.08 2.24%
266.62
6.44
33.59
284.68
0.14
Hinopak Motors
Other Current Liabilities
1,617.51
32.30
Total equity and liabilities
5,007.05 100.00
Page 54
2,562.63 52.18
%
4,911.54 100.0
0
2,075.47 50.13
4,139.84 100.0
0
Hinopak Motors
Calculations of IGR &

SGR Year 2009
Page 55
Hinopak Motors
Internal Growth Rate

IGR=
ROAb
100
1(ROAb)
IGR=
0.01390.6896
100
1(0.01390.6896)
IGR=0.98
Sustainable Growth Rate

SGR =
ROEb
100
1( ROEb)
SGR =
0.04190.6896
100
1(0.04190.6896)
SGR =2.97
Page 56
Hinopak Motors
Performa Financial Statements

on the Basis of SGR
Income Statement
Sales - net
Cost of sales
Gross profit
Distribution expenses
Administration expenses
Other operating expenses
Other operating income
Profit from operations
Finance cost
Profit before taxation
Taxation
Profit after taxation
2009
Rs. in
million
2010
Rs. in million
12,151.02
10,899.78
1,251.24
399.78
206.77
19.95
169.61
794.35
678.53
115.82
45.91
69.91
12511.91
11223.51
1288.40
411.66
212.92
20.54
174.64
967.78
817.94
119.25
47.27
71.98
948.54
5.50
5.48
13.09
4,034.44
976.71
5.66
5.64
13.47
4034.44
5,007.05
1,668.06
32.00
5155.75
1717.60
32.95
Balance Sheet
Property, plant and equipment
Other noncurrent assets
Long-term deposits
Long-term loans and advances
Current assets (excluding
investments)
Total assets
Shareholders' equity
Long-term security deposits
Liability against assets
subject to finance lease
Deferred taxation
Surplus on revaluation of fixed
assets
Short term debt (including
current maturity of long term
debt)
11.50
277.49
11.84
285.73
1,400.49
1442.08
Page 57
Hinopak Motors
Other Current Liabilities
Total equity and liabilities
1,617.51
5,007.05
Page 58
1665.55
5155.75
Hinopak Motors
Overall Analysis and

Recommendations
Page 59
Hinopak Motors
Overall Analysis
Sale 2008
Rs. in million
12151.02
Sales 2007
Rs. in million
7826.78
Sales 2006
Rs. in million
6392.28
It has been enigmatic extended financial year, the sales revenue was highest ever and
the companys share of 56% in the national sales was also close to the highest 57%
achieved in 2003. The exchange loss stood at Rs. 563 million compared to only Rs. 31
million in the corresponding period last year due to depreciation of rupee against US
dollar by 34% and the appreciation of Japanese Yen against US dollar by 22%, highest in
13 years. The financial cost also increased by Rs. 79 million due to larger borrowings and
higher interest rates in the latter half. Production cost also risen because of depreciating
rupee and rising cost of materials. The distribution and administrative expenses
increased to Rs. 607 million from 409 million chiefly due to inflation.
Page 60
Hinopak Motors
Recommendations
Hinopak needs to improve its sale volume by manufacturing low cost vehicles which
should be greater fuel efficient, advance featured and efficient sales back up with high
quality. Hinopak needs to use its available resources with full efficiency. As we have seen
in analysis of Hinopak and industry, Hinopak is showing unstable performance due to
which all financial ratios are decreasing. Hinopak should curtail its borrowings and
increase its investments which will give a handsome return. Due to capacity expansion
project the cost of depreciation is very high. Management need to review the rate of
depreciation which charges on fixed assets. Hinopak requires finding new ways to fulfill
its financing needs because the interest rates on which bank are providing loan is very
high or Hinopak should issue new share in market to full fill its financing need. Hinopak
should use its excess available cash in different mutual fund and bond scheme in order to
earn other income.
The struggle ahead looks long and hard. The management can only promise to work hard
and as long as it takes, and asks for the understanding of the shareholders with whom it
has always generously shared its profits.
Page 61

Hinopak

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Hinopak Motors

IN THE NAME OF ALLAH, THE MOST BENEFICIAL, THE MOST

Environment management System

Training and Awareness

Short-term Solvency Ratio

= Current assets / Current Liabilities

= (Current assets Inventory) / Current

= Cash / Current Liabilities

= (Current assets Current Liabilities)

Long-term Solvency Ratio

Debt to equity ratio

Time interest earned

= Total Liabilities / Total assets

= Total Liabilities / Total share holders

= Operating profit / Finance Cost

Assets Utilization Ratio

= Net Cr Sales / Avg. A/R

Avg. Collection period

= (360 / (A/R Turnover))

= Cost of Sales / Avg. Inventory

Fixed asset turnover

= Net Sales / Fixed asset

Total asset turnover

= Net Sales / Total asset

Operating Profit margin

= (Gross Profit / Net Sales) x 100

= (Operating Profit / Net Sales ) x 100

Net Profit margin

= (Net Profit / (Net Sales ) x 100

= (Net Profit / (Total Asset )) x 100

= (Net Profit / T.S.H.E) x 100

Short-term Solvency Ratio

= Current assets / Current Liabilities

= (Current assets Inventory) / Current

= Cash / Current Liabilities

= (Current assets Current Liabilities)

Long-term Solvency Ratio

= Total Liabilities / Total assets

Debt to equity ratio

= Total Liabilities / Trade Capital

Time interest earned

= Operating profit / Finance Cost

Assets Utilization Ratio

Avg. Collection period

= (Net Cr Sales / (Avg. A/R)

= 360 / (A/R Turnover)

= Cost of Sales / Avg. Inventory

Fixed asset turnover

= Net Sales / Fixed asset

Total asset turnover

= Net Sales / Total asset

Operating Profit margin

= (Gross Profit / Net Sales ) x 100

= (Operating Profit / Net Sales) x 100

Net Profit margin

= (Net Profit / Net Sales ) x 100

= (Net Profit / Total Asset ) x 100

= (Net Profit / Trade Capital ) x 100

Short-term Solvency Ratio

= Current assets / Current Liabilities

= (Current assets Inventory) / Current

= (Cash) / Current Liabilities

= (Current assets Current Liabilities)