PROJECT ON FINANCIAL STATEMENT ANALYSIS

Submitted To:

Miss Zahra Akram

Submitted By:

Saira Shoukat (1410408)

Class:

B. Com (Hons)

Semester:

VII

Session:

2014-2018

Subject:

Managerial Finance

Date of Submission:

January 15, 2018

Govt. Post Graduate Islamia College (W) Cooper Road LHR

 FINANCIAL STATEMENT ANALYSIS

OF

PAK SUZUKI MOTOR COMPANY LIMITED

(PSMCL)
 ACKNOWLEDGEMENT

First of all, we would like to express our deep gratitude to Almighty Allah, who enabled
us to undertake such an important task and to study about Pak Suzuki and the Strategies to operate
in Pakistan Automobile Market

We also wish to acknowledge the valuable guidance provided by our respected teacher Ms. Zahra
Akram. She always motivated and encouraged us in the completion of this analysis.

Finally, thanks to our family for their continuous encouragement and support, without which we
would not have been able to concentrate and complete this research.

Thanks, you
CHAIRMANS REVIEW
In Year 2009 the demand for automobile was sluggish. The industry for cars and light
commercial vehicles experienced 29% decline in the sales volume. The industry sold 107,768 units
during the year against 151,517 units last year. It’s my pleasure to present review on the
performance of the company for the year December 31, 2009T h e d e m a n d h a s
d e p r e s s e d d u r i n g t h e ye a r d u e t o c o s t p u s h i n f l a t i o n r e s u l t i n g f r o m
d e p r e c i a t i o n o f P a k r u p e e , l i m i t e d f i n a n c i n g b y b a n k s / l e a s i n g companies and
general economic recession. First half of the year was the worst. Sales volume during
this period has dropped by 53% compared to last period of last year. Second half was
somewhat better than first half year. As it was growing by 33% over the first half year. The market
size of motorcycle has marginal improved by 2% over the last y e a r i n t h e o r g a n i z e d
s e c t o r . D u r i n g t h e y e a r 5 9 3 , 4 7 9 u n i t s w e r e s o l d a g a i n s t 580,604 units last year.
During the first half year Demand was 25% lower than same period of last year. However,
this loss of demand was offset by the increased demand latter half year.
 Table of Content

Chapter No. 1

Executive Summary…………………………………………….

Chapter No. 2

2.1. Industry Study………………………………………………

2.2. Company History……………………………………………

2.3. Vision and Mission Statement………………………………
2.4. Goals and Objectives………………………………………...

2.5. Departments………………………………………………….

2.6. Products / Services…………………………………………...

2.7. Competitors…………….…………………………………….
2.8. SWOT Analysis……………………………………………….

Chapter No. 3

Analysis and Interpretations

3.1 Vertical Analysis……………………………………………….

3.2. Horizontal Analysis……………………………………………

Chapter No. 4

4.1. Cross Sectional Analysis………………………………………

Chapter No. 5

5.1. Credit Analysis………………………………………………….

5.2 Equity Analysis………………………………………………………….

Chapter No. 6

Findings and Suggestions……………………………………………………

Chapter No. 7

Appendix I…………………………………………………………………….

Appendix II……………………………………………………………………
 Chapter 1

EXECUTIVE SUMMARY

MARKETING & EXPORTS

Suzuki product remain popular Despite sluggish market demand

f o r automobile, Pak Suzuki remain market leader with 48% market share. The company launched
new 1300cc car (SWIFT) in January 2010.This has been well accepted by the customers.
Imported used cars do not really pose any threats to Suzuki products. Availability of spare
parts at economics prices and reliable after sales service are the strength of Suzuki
products. The export of Suzuki Ravi pickup to Bangladesh and exports of sheet metal
parts of Suzuki Cultus to Europe going well. During the year Three hundred and sixty
units of Suzuki Ravi pick up and parts worth Rs. 120 million and Rs. 22 million
respectively were exported.

LOCALIZATION
The company continues to pursue localization in order to reduce the cost of product and keep the
prices competitive besides saving foreign exchange.

HUMAN RESOURCE
Management and employee relations continued to cordial and industrial p e a c e
p r e v a i l d u r i n g t h e ye a r . A n e w c h a r t e r o f d e m a n d w a s n e g o t i a t e d i n a
congenial atmosphere and agreement was entered into for the period of ten years. Human Resource
development remains one of the key objectives of the company. Company spent Rs. 12.5 million
on the foreign and local training of its employees.

ECONOMIC CONTRIBUTION
The company has distinctive position in an automobile industry as leading c o n t r i b u t o r t o t h e
p u b l i c e x c h e q u e r . T h e d u t i e s a n d t a x p a i d a n d t h e f o r e i g n exchange saved by
company.
Duties and taxes paid by the company during the year represent 0.6%of the total tax estimate
forecast in the Federal budget for the fiscal year 2009 -2010.Company contribution has
reduced 1.06% in the last year because of lower sales volume.

SUMMARY CONCLUSION
The management is optimistic that economic indicator is improving. However, it feels that difficult
business environment is likely to continue for some time and profitability will remain under
pressure.
 Chapter 2

PROFILE OF COMPANY

2.1. Industry Study:

Pakistan’s automotive industry is the one of the fastest growing industries of the country,
accounting for 4% of Pakistan's GDP and employing a workforce of over 1,800,000 people.
Currently there are 3200 automotive manufacturing plants in the country, with an investment of
₨ 92 billion (US$880 million) producing 1.8 million motorcycles and 200,000 vehicles annually.
Its contribution to the national exchequer is nearly ₨50 billion (US$480 million). The sector, as
a whole, provides employment to 3.5 million people and plays a pivotal role in promoting the
growth of the vendor industry. Pakistan’s auto market is considered among the smallest, but fastest
growing in South Asia. Over 180,000 cars were sold in the fiscal year 2014-15, rising to 206,777
unit’s fiscal year 2015-16. At present, the auto market is dominated by Honda, Toyota and Suzuki.
However, on 19 March 2016, Pakistan passed the "Auto Policy 2016-21", which offers tax
incentives to new automakers to establish manufacturing plants in the country. In response,
Renault-Nissan, Kia Motors, Audi, Volkswagen and Hyundai have expressed interest in entering
the Pakistani market. Pakistan has not enforced any automotive safety standards or model upgrade
policies. Obsolete vehicles including the Mehran, Bolan, and Ravi continue to be sold by Pak
Suzuki.

The industry was highly regulated until the early 1990s. Following deregulation, the decade
witnesses a huge boom in auto production, as nationalization was abandoned in favor of
privatization. Japan acquired the 40% shares of Pak Suzuki in 1991. In 1993, the Indus Motor
Company began production of Toyota Corollas. In 1994, the Pakistan Automotive Manufacturer
Association formed, and Honda Atlas introduced manufacturing of the Honda Civic. In 1995, the
Engineering Development Board inaugurated the PAP show.

2.2. Company History:

Pak Suzuki Motor Company Limited (PSMCL) is a public limited company with its shares quoted
on Pakistan Stock Exchange. The Company was formed in August 1983 in accordance with the
terms of a joint venture agreement between Pakistan Automobile Corporation Limited
(representing Government of Pakistan) and Suzuki Motor Corporation (SMC) Japan. The
Company started commercial production in January 1984 with the primary objective of
progressive manufacturing, assembling and marketing of Cars, Pickups, Vans and 4x4 vehicles in
Pakistan. The Company’s long term plans inter-alia includes tapping of export markets. The
foundation stone laying ceremony of the Company’s existing plant located at Bin Qassim was
performed in early 1989 by the Prime Minister then in office. By early 1990, on completion of first
phase of this plant, in-house assembly of all the Suzuki engines started. In 1992, the plant was
completed and production of the Margalla Car commenced. Under the Government’s privatization
policy, the Company was privatized and placed under the Japanese management in September
1992. At the time of privatization, SMC increased its equity from 25% to 40%. Subsequently,
SMC progressively increased its equity to 73.09% by purchasing remaining shares from PACO.
The Suzuki Management immediately after privatization started expansion of the existing plant to
increase its installed capacity to 50,000 per annum. The expansion was completed in July 1994.
However, the capacity remained substantially under-utilized until 2002 because of economic
recession. Thereafter realizing growth in demand, the Company increased capacity in phases. The
first phase was completed in January 2005 when capacity was enhanced to 80,000 vehicles. The
second phase was completed in January 2006 and capacity was raised to 120,000. The third phase
was completed when on 6th February 2007; Prime Minister of Pakistan, Mr. Shaukat Aziz
inaugurated 150,000 vehicles capacity expansion facilities. On 25th April 2007, the Board of
Directors of Pak Suzuki Motor Company Limited (PSMCL) and Suzuki Motorcycles Pakistan
Limited (SMPL) approved Scheme of Arrangement (The Scheme) to amalgamate SMPL into
PSMCL with effect from 1st January 2007. The scheme was approved by the shareholders of the
respective Companies at the Extra - Ordinary General Meeting held on 30th June 2007. The
scheme was sanctioned by the Honorable High Court of Sindh (the court) on 17th September 2007.
The certified copy of the Order of the Court sanctioning the scheme was filed with the Registrar
Companies Karachi on 1st October 2007, from which date the scheme became operative. PSMCL
and Suzuki Motor Corporation (SMC) Japan held 41% and 43% shares in SMPL respectively. Pak
Suzuki issued and allotted 1,233,300 ordinary shares of Rs.10/- each to the qualifying shareholders
of SMPL @ one ordinary share in Pak Suzuki for every twenty-one shares held by SMPL
shareholders as on the date of final book closure i.e. 29th October 2007. The trading in shares of
SMPL on Karachi and Lahore Stock Exchanges ceased from the same date. The Company setup a
new plant for motorcycles at Bin Qassim. All the operations of motorcycles have been shifted to
the new plant effective from July 2011. The Company continues to be in the fore-front of
automobile industry of Pakistan. Over a period of time, the Company has developed an effective
and comprehensive network of sales, service and spares parts dealers who cater to the needs of
customers and render effective after-sale service country wide.

2.3. Vision and Mission Statement:

➢ Vision:

To be recognized as a leading organization that values customers’ needs and provides motoring
solutions with strong customer care.

➢ Mission:
• Develop products of superior value by focusing on the customer
• Establish a refreshing and innovative company through teamwork
• Strive for individual excellence through continuous improvement

2.4. Goals and Objectives:

➢ Goals:

Pak Suzuki’s primary goals are originality, innovation and efficiency, resulting in high quality
products at affordable price, and environment friendly.

➢ Objectives:

The main objective is to provide high level of customer service through:

• Continuous improvement in plant to ensure better quality of products.

• Continuous training of staff to develop more customers oriented marketing attitude.
• Well-Developed dealership network and very efficient logistic system to ensure prompt
delivery of products to the intermediaries and end user.
2.5. Departments:

➢ Marketing Department
The marketing department of the firm comprises of highly qualified, dedicated and hardworking
team, equipped with the latest marketing techniques.

➢ Customer Relation (CR) Department

Suzuki Pakistan, Customer relations department nationwide falls under top 5 positions of national
Suzuki Pakistan Dealerships Network. We believe in perpetual improvement in all fields of
services and facilities as per Suzuki Pakistan Standards applicable globally, through regularly
conducting Training & workshops to enhance knowledge and share experience of our
fellow National CR- member and globally available experience of Suzuki. The Customer relation
department is one of the most important departments which can control all the activities perform
for the retention and benefit the customers.

➢ Accounts Department
The accounts department is related to the accounts handling, the customer drafts for the booking
of cars to the Suzuki Pakistan and the employees’ salaries, records of the transactions. The salaries
are giving on their ranks like the top management salaries are sent to their accounts while the lower
level employees are gives cash salaries on the spot from the account department.

➢ Sales Department
The Sales department is related to the sales of the Vehicles, The Sales department includes
Customer Services (CS), Vehicle Delivery Inspection Quality (VDIQ), Record Maintenance, and
Inquiries & Complaints Handling.

➢ Customer Services (CS)

Customer service department is related to the external customer who is come to Suzuki Pakistan
for the purchasing and booking of the Suzuki Vehicle of any variant. The Customer service staff is
well trained and sophisticated person because these are the people who can play an important role
in the sales of a firm.
 ➢ Vehicle Delivery Inspection Quality (VDIQ)
This department deals with the overall checking of the Vehicle at the time of arrival and the selling
to customer. At arrival stage, the vehicle that come from the Suzuki Pakistan the Inspector check
the vehicle and if any default occurs then it claims to the Suzuki Pakistan At the Selling perspective
the inspectors check the vehicle so that the customer are more facilitate rather they have any
problem faced after the purchasing.

➢ Human Resource Management Department

Human resource management refers to the activities an organization carries out to use its human
resource effectively. These activities include determining the firm's human resource strategy,
staffing, performance evaluation, management development, compensation, and labor relations.
Suzuki Pakistan Motor also running department of HRM for hiring and compensating the
employees of the firm. HRM function to pay significant attention to selecting individuals whom
not only has the skills required to perform particular jobs but who also "fit" the prevailing culture
of the firm.

2.6. Products / Services:

Cars
➢ Suzuki FX
➢ Suzuki Mehran
➢ Suzuki Alto
➢ Suzuki Margalla
➢ Suzuki Baleno
➢ Suzuki Cultus
➢ Suzuki Liana
➢ Suzuki Potohar
➢ Suzuki Swift
➢ Suzuki Wagon R
➢ Suzuki Bolan
➢ Suzuki Ravi
➢ Suzuki Khyber
➢ Suzuki Kizashi
Motor Cycles
➢ Suzuki Sprinter ECO
➢ Suzuki Sprinter Standard
➢ Suzuki Raider
➢ Suzuki GD-110
➢ Suzuki GS-150

2.7. Competitors:

Businesses exist in a competitive environment. So, automotive industries are in fierce competition
with each other to provide the best possible value for money goods, and to offer the most suitable
range of products for their customers. Here is the list of Pak Suzuki’s competitors:

• Bajaj Auto Limited

• Hero Motor Corp (Hero Honda)
• Yamaha
• Toyota
• Honda

1. Bajaj Auto Limited:

Bajaj Auto Limited is an India-based manufacturer of motorcycles, three-wheelers and parts. The
Company's business segments include Automotive, Investments and Others. The Company's
vehicles include two-wheelers and commercial vehicles.
Bajaj Auto Ltd is one of the leading two & three-wheeler manufacturers in India. The company
is well known for their R&D, product development, process engineering and low-cost
manufacturing skills. The company is the largest exported of two and three-wheelers in the
country with exports forming 18% of its total sales. The company has two subsidiaries, namely
Bajaj Auto International Holdings BV and PT Bajaj Indonesia.
2. Hero Motor Corp (Hero Honda):
Hero Motor Corp is the World's single largest two–wheeler motorcycle company. Honda Motor
Company of Japan and the Hero Group entered a joint venture to setup Hero Honda Motors
Limited in 1984. The joint venture between India's Hero Group and Honda Motor Company, Japan
has not only created the world's single largest two-wheeler company but also one of the most
successful joint ventures worldwide.

3. Yamaha:
Yamaha Corporation is a Japanese multinational corporation and conglomerate based
in Japan with a very wide range of products and services, predominantly musical
instruments, electronics, and power sports equipment. It is one of the constituents of Nikkei
225 and is the world's largest piano manufacturing company. The former motorcycle division
became independent from the main company in 1955, forming Yamaha Motor Co., Ltd, although
Yamaha Corporation is still the largest shareholder.

4. Toyota:
Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered
in Toyota, Aichi, Japan. Toyota was the world's first automobile manufacturer to produce more
than 10 million vehicles per year which it has done since 2012, when it also reported the production
of its 200-millionth vehicle. Toyota is the world's market leader in sales of hybrid electric vehicles,
and one of the largest companies to encourage the mass-market adoption of hybrid vehicles across
the globe.

5. Honda:
Honda Motor Co., Ltd. is a Japanese public multinational conglomerate corporation primarily known
as a manufacturer of automobiles, aircraft, motorcycles, and power equipment.

Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's
largest manufacturer of internal combustion engines measured by volume, producing more than
14 million internal combustion engines each year. Honda became the second-largest Japanese
automobile manufacturer in 2001. Honda was the eighth largest automobile manufacturer in the
world behind Toyota, Volkswagen Group, Hyundai Motor Group, General Motors, Ford, Nissan,
and FIAT in 2015.

2.8. SWOT Analysis:

SWOT analysis (strengths, weaknesses, opportunities, and threats analysis) is a framework for
identifying and analyzing the internal and external factors that can have an impact on the viability
of a project, product, place or person.

The SWOT analysis has been adopted by organizations of all types as an aid to making decisions.

As its name states, a SWOT analysis examines four elements:

• Strengths - internal attributes and resources that support a successful outcome.

• Weaknesses - internal attributes resources that work against a successful outcome.

• Opportunities - external factors the project can capitalize on or use to its advantage.

• Threats - external factors that could jeopardize the project.

Once the SWOT factors are identified, decision makers should be able to better ascertain if the
project or goal is worth pursuing and what is required to make it successful. Often expressed in a
two-by-two matrix, the analysis aims to help an organization match its resources to the competitive
environment in which it operates.

Strengths:

❖ Pioneer in Pakistan automobile industry

❖ Largest dealership networks
❖ Low price vehicles
❖ Highest market share
❖ A household names
❖ Good resale value
❖ Innovative & deep product line
 ❖ Well managed & competitive staff
❖ Most number of company fitted CNG Cars

Weaknesses:

❖ Less focus on the looks and design for cars

❖ Tough competition from cheaper imported cars
❖ None of the local Suzuki cars offer airbags
❖ Mehran, Cultus & Bolan are globally obsolete cars which are no longer produced or sold
in any other country
❖ Not many automatic transmission vehicles in the market

Opportunities:

❖ Increased demand for cars

❖ Large market size to operate in
❖ As the demand for CNG vehicles is on the rise in Pakistan, their small size CNG
cylinders save space
❖ The deteriorating transport system has awakened the need for owning personal transport
means

Threats:

❖ Tough competitors like Toyota & Honda

❖ Smuggling of auto parts
❖ High inflation rate
❖ Imposition of heavy taxes
❖ Increase in fuel prices
❖ Lack of skilled labor and technology
 Chapter 3

3.1. Vertical Analysis:

“Vertical analysis is the proportional analysis of a financial statement, where each line item
on a financial statement is listed as a percentage of another item. Typically, this means that
every line item on an income statement is stated as a percentage of gross sales, while every
line item on a balance sheet is stated as a percentage of total assets.”

In a vertical analysis the percentage is computed by using the following formula:

When the analysis is restricted to the financial statement of one particular period only, it is
known as analysis vertical analysis of financial statements.

BALANCE SHEET
2016 2015 2014

ASSETS Rs. In ‘000’ % Rs. In ‘000’ % Rs. In ‘000’ %

Stores, spares and loose 111,006 0.3 98,801 0.3 82,030 0.3
tools

Stock-in-trade 16,288,608 43.0 13,084,447 34.9 14,976,001 52.8

Trade debts 1,205,269 3.2 1,561,823 4.2 14,976,001 4.8

Current portion of long- 291,254 0.8 347,976 0.9 387,608 1.4

term installment sales
receivables

Loans and advances 163,019 0.5 197,712 0.5 514,845 1.8

Trade deposits and short- 77,129 0.2 70,862 0.2 53,110 0.2
term prepayments

Accrued profit on bank 120,761 0.3 193,429 0.5 16,340 0.1

accounts
Other receivables 167,306 0.3 86,666 0.2 134,260 0.5

Sales tax adjustable 1,651,301 4.4 277,801 0.7 1,002,345 3.5

Income tax refundable – 1,894,297 5.0 1,589,882 4.2 2,747,340 9.7

net

Cash and bank balances 8,548,293 22.6 15,006,007 40.1 1,841,384 6.5

Fixed assets 6,672,057 17.8 4,510,789 12.3 4,790,506 17.6

Intangible assets 72,619 _ 83,288 _ 205,287 _

Long-term investments _ 0.0 - 0 351 0.0

Long-term loans 1,160 0.6 9,609 10 9,597 0.0

Long-term deposits, 258,103 0.1 24,768 23 22,788 0.1

prepayments and other
receivables

Long-term installment 96,033 0.3 113,627 162 162,260 0.6

sales receivables

Deferred taxation 233,750 0.6 194,500 56 55,797 0.2

TOTAL ASSETS 37,851,965 100.0 37,451,987 100.0 28,354,159 100.0

EQUITY AND 2016 2015 2014

LIABILITIES 37,451,9
Rs. In % Rs. In ‘000’ % Rs. In %
‘000’ ‘000’

Share capital 2.2 822,999 2.2 2.9

822,999 822,999

Reserves 25,393,908 67.1 23,856,239 63.7 18,413,683 64.9

Total equity 26,216,907 69.3 24,679,238 65.9 19,236,682 67.8

Trade and other payables 26,216,907 16.6 6,441,748 17.2 4,945,271 17.4

Advances _ 4.3 _ 11.3 8,982 7.6

Accrued mark-up 1,625,472 0.0 4,226,341 0.0 2,159,487 0.0

Short-term borrowing _ 0.0 _ 0.0 _ 0.0

Security deposits 3,673,164 9.7 2,068,361 5.5 1,917,414 6.8

Provision for custom 36,299 0.1 36,299 0.1 86,323 0.3

duties and sales tax

TOTAL EQUITY AND 37,851,965 100.0 37,451,987 100.0 28,354,159 100.0

LIABILITIES

2013 2012

ASSETS Rs. In ‘000’ % Rs. In ‘000’ %

Stores, spares and loose 66,279 0.3 83,095 0.4

tools

Stock-in-trade 10,726,457 45.0 10,562,194 49.4

Trade debts 983,273 4.1 588,042 2.9

Current portion of long- 330,504 1.4 353,077 1.5

term installment sales
receivables

Loans and advances 411,629 1.7 195,491 0.9

Trade deposits and 62,935 0.3 38,918 0.2

short-term prepayments

Accrued profit on bank 13,016 0.1 5,664 0.0

accounts

Other receivables 114,138 0.5 169,622 0.9

Sales tax adjustable 802,777 3.4 970,176 4.5

Income tax refundable 2,896,998 12.2 2,676,742 12.5
– net

Cash and bank balances 1,964,359 8.2 1,417,430 6.6

Fixed assets 4,892,675 21.3 3,738,867 19.0

Intangible assets 182,638 _ 312,028 _

Long-term investments 2,194 0.0 4,545 0.0

Long-term loans 6,264 0.0 1,409 0.0

Long-term deposits, 36,977 0.2 63,451 0.3

prepayments and other
receivables

Long-term installment 170,252 0.7 162,650 0.8

sales receivables

Deferred taxation 147,912 0.6 _ 0.0

TOTAL ASSETS 23,811,277 100.0 21,348,864 100.0

EQUITY AND
LIABILITIES

Share capital 822,999 3.5 822,999 3.9

Reserves 16,822,159 70.6 14,977,885 70.2

Total equity 17,645,158 74.1 15,800,884 74.0

Trade and other 3,695,675 15.5 2,694,625 12.6

payables

Advances _ 2.6 _ 5.4

Accrued mark-up 629,275 0.0 1,143,746 0.0

Short-term borrowing 1,615,747 0.0 1,486,406 0.0

Security deposits 86,947 7.2 84,728 7.4

Provision for custom 138,475 0.6 138,475 0.6
duties and sales tax

TOTAL EQUITY 23,811,277 100.0 21,348,864 100.0

AND LIABILITIES

Explanation:

➢ Assets:
During the last five years, an asset has increased from the amount 37851965 in the financial
year 2016 to 28354159 due to increase in the assets of the company.

➢ Equity and Liabilities:

• Equity:
During the last five years, share of equity has increased from 69.3% in the financial year
2016 to 74.0% in the financial year 2012 due to increase in profitability and fair value
reserves on investments.

• Liabilities:
Both the non-current and current liabilities have decreased during the last five years in
relation to equity due to continuous improvement in profitability.
 PROFIT AND LOSS ACCOUNT

Particulars 2016 2015 2014

Rs. In ‘000’ % Rs. In ‘000’ % Rs. In ‘000’ %

Sales 76,516,040 100% 84,548,757 100% 53,664,947 100%

Cost of sales (69,167,463) (90.40) (73,061,309) (86.41) (49,481,248) (92.20)

Gross profit 7,348,577 9.60 11,487,448 13.59 4,183,699 7.80

Distribution costs (2,004,285) (2.62) (1,945,832) (2.30) (746,304) (1.39)

Administrative (2,004,285) (2.01) (1,230,819) (1.46) (1,101,650) (2.05)

expenses

Other expenses (333,542) (90.44) (653,212) (0.77) (195,850) (0.37)

Other income 1,039,851 1.36 1,058,426 1.25 510,208 0.95

Operating profit (95,775) 5.90 (30,840) 10.31 (26,709) 4.94

Finance costs (2,933,341) (0.13) (2,802,277) (0.04) 1,560,305) (0.05)

Profit before 4,415,236 5.77 8,685,171 10.27 2,623,394 4.89

taxation

Taxation (1,642,601) (2.15) (2,842,500) (3.36) (701,500) (1.31)

Profit after taxation 2,772,635 3.62 5,842,671 6.91 1,921,894 3.58

Particulars 2013 2012

Rs in ‘000’ % Rs. In ‘000’ %

Sales 51,061,333 100% 58,531,137 100%

Cost of sales (47,818,820) (93.65) (56,185,397) (95.99)

Gross profit 3,242,513 6.35 2,345,740 4.01

Distribution costs (560,239) (1.10) (356,960) (0.61)

Administrative expenses (959,363) (1.88) (860,753) (1.47)

Other expenses (175,137) (0.34) 111,152) (0.19)

Other income 863,241 1.69 493,985 0.84

Operating profit (57,576) 4.72 (11,100) 2.58

Finance costs (889,074) (0.11) (845,980) (0.02)

Profit before taxation 2,353,439 4.61 1,499,760 2.56

Taxation (504,082) (0.99) (521,738) (0.89)

Profit after taxation 1,849,357 3.62 978,022 1.67

 Explanation:

➢ Cost of Sales:
Cost of sales as a percentage of sales has decreased by 86.41% as compared to financial year
2015. Reason for decrease in this percentage is attributable to the use of optimal fuel and power
mix and better cost control.
➢ Distribution Expenses:
Distribution expenses as a percentage of sales has been at a lowest level in current financial
year as compared to preceding five financial years. Distribution expenses of the company have
remained consistent during the last six financial years i.e. between 2.62% to 1.47%.

➢ Administrative expenses:
Increase in administrative expenses is consistent during the last five years. The increase is due
to the inflation impact and expansion in operations of the company during last five financial
years.

➢ Other Income:
Other income as a percentage of sales has increased considerably during the last five financial
years. This is due to optimum utilization of surplus funds of the Company by investing in
lucrative and diversified investment portfolio which is the source of regular dividend income
and capital gain.

➢ Profit after Tax:

Profit after tax as a percentage of sales for the current financial year (3.62%) was at second
highest level as compared to last five years. The highest profit percentage of 6.91% was
achieved in financial year 2015. Increase in profit after tax is mainly due to the decrease in fuel
and power expenses and financial cost along with increase in other income.
3.2. Horizontal Analysis:

The percentage analysis of increases and decreases in corresponding items in comparative

financial statements is called horizontal analysis. Horizontal analysis involves the computation of
amount changes and percentage changes from the previous to the current year. It is also called
“Year to Year” analysis in which we compare each amount with the base amount for a selected
base year. This analysis is also called “index analysis”.

“Horizontal analysis is the comparison of historical financial information over a series of

reporting periods, or of the ratios derived from this financial information.”

Dollar and percentage changes are computed by using the following formulas:

Horizontal Analysis:
BALANCE SHEET
ASSETS 2016 2015 2014 2013 2012

% % % % Rs. In ‘000’ %

Stores, spares and loose 133 118 99 80 83,095 100

tools

Stock-in-trade 154 123 141 102 10,562,194 100

Trade debts 204 265 2546 167 588,042 100

Current portion of long- 83 99 91 94 353,077 100

term installment sales
receivables

Loans and advances 84 101 263 210 195,491 100

Trade deposits and short- 198 182 136 161 38,918 100
term prepayments
Accrued profit on bank 2132 3415 288 229 5,664 100
accounts

Other receivables 99 52 80 68 169,622 100

Sales tax adjustable and 170 29 103 83 970,176 100

income tax refundable – net

Income tax – net 71 60 102 108 2,676,742 100

Cash and bank balances 603 1058 129 138 1,417,430 100

Fixed assets 178 120 128 130 3,738,867 100

Intangible assets 24 27 66 59 312,028 100

Long-term investments - - 8 49 4,545 100

Long-term loans 83 68 681 444 1,409 100

Long-term deposits, 406 40 36 59 63,451 100

prepayments and other
receivables

Long-term installment sales 60 70 99 104 162,650 100

receivables

Deferred taxation _ _ _ _ _ _

171 115 122 126 4,282,950 100

TOTAL ASSETS 177 175 132 111 21,348,864 100

Share capital _ _ _ _ _ _

Reserves 169 159 122 112 14,977,885 100

Trade and other payables 972 239 183 137 2,694,625 100
Accrued mark-up _ _ _ _ _ _

Advances 142 369 188 56 1,143,746 100

Deposits against display of _ _ _ 108 1,486,406 100

vehicles

Security deposits 4335 2441 2263 102 84,728 100

Provision for custom duties 27 99 63 0 138,475 100

and sales tax

Total equity and 177 175 132 111 21,348,864 100

liabilities

Explanation:

➢ Assets:
During the last five years, a total asset has increased from the amount 177 in the financial
year 2016 to the amount in the financial year 21.348,864 in 2012 due to the increase in the
assets of the company.
➢ Equity and Liabilities:
• Equity:
During the last five years, total equity and liabilities has increased from the amount 8.5%
in the financial year 2012 to the amount 1.1% in the financial year 2016 due to increase in
profitability and fair value reserves on investments.
 • Liabilities:
Both the non-current and current liabilities have decreased during the last five years in
relation to equity due to continuous improvement in profitability.

ROFIT AND LOSS ACCOUNT

Particulars 2016 2015 2014 2013 2012

% % % % Rs. In ‘000’ %

Sales 130 144 92 88 58,531,137 100

Cost of sales 123 130 89 86 (56,185,397) 100

Gross profit 313 489 178 138 2,345,740 100

Distribution costs 561 545 209 156 (356,960) 100

Administrative expenses 232 142 127 111 (860,753) 100

Other expenses 300 587 176 157 111,152) 100

Other income 210 214 103 174 493,985 100

Finance costs 862 277 240 518 (11,100) 100

346 331 184 105 (845,980) 100

Profit before taxation 294 579 174 156 1,499,760 100

Taxation 314 544 134 97 (521,738) 100

Profit after taxation 283 597 196 189 978,022 100

Explanation:

➢ Profit and Loss Account:

• Sales:
Sales have increased in the financial year 2015 with 144 %. Sales have come down in the
financial year 2013 with 88%.

• Cost of Sales:
Cost of sales is showing an increasing trend in the financial years while in the year 2016
the cost of sales is 123 which is lower than 2015.
• Distribution Cost:
Distribution cost normally moves up and down in harmony with sales volume. Distribution
cost has decreased in 2013 with `156 as compared to that of financial year 2011. This
decrease is more than reduction in sales as a result of austerity measures introduced by the
management of the Company.

• Administrative Expenses:
Compound annual increase in administrative expenses is at 11.7 % per annum which is in
line with the yearly increase in non-current assets of the Company.

• Other Income:
Other income increased in the financial year 2015 with 214 Rs. while in the other years
other income is increasing or decreasing.

• Finance Cost:
Finance cost of the Company recorded a decrease of 30% in the current year as compared
to financial year 2012 due to availability of loans at subsidized rates and stringent financial
management policies of the Company.
• Profit after Tax:
Profit after tax increased from Rs. 23 million in financial year 2012 to Rs. 52.5 million in
financial year 2016.
 Chapter 4
4.1. Cross Sectional Analysis:

Cross-sectional analysis is a type of analysis that an investor, analyst or portfolio manager may
conduct on a company in relation to that company's industry or industry peers. The analysis
compares one company against the industry in which it operates, or directly against certain
competitors within the same industry, in an attempt to assess performance and investment
opportunities.
In this analysis, the two companies undertaken are Pak Suzuki and Honda. The analyses of these
companies are as follows:

Profitability Ratio

Sr. no. Ratios Pak Honda

Suzuki 2016
2016

1. Gross Profit Margin 9.6% 15.1%

2. Operating Profit Margin 5.8% 12.9%

3. Net Profit Margin 3.6% 8.9%

4. Earnings Per Share (Rs.) 33.7 24.90

 Profitability Ratio Chart

15.1
16

14 12.9

12
9.6
10 8.9

8
5.8
6
3.6
4

0
Pak Suzuki 2016 Honda 2016

Gross Profit Margin Operating Profit Margin Net Profit Margin

Profitability Ratio Chart

33.7
35

30
24.9
25
20
15
10
5
0

Pak Suzuki 2016

Honda 2016

Earnings per share

Explanation:

➢ The competitor ratio is 9.6% of Pak Suzuki and 15.1% Honda in 2016. It is a measurement
of how much from each Rupee of a company's revenue is available to cover overhead, other
expenses and profits. The higher the ratio the better of Honda the company. It also shows
that the company has control on its production cost.
➢ The ratio is 5.8% of Suzuki and 12.9% of Honda in 2016. It measures each sales rupee
remaining after all costs and expenses other than interest, taxes and preferred stock dividends
are deducted, the profits’ earned on each sales rupee. This ratio is higher in Honda Company.
➢ The Pak Suzuki profit ratio is 3.6% and 8.9% of Honda in 2016. Net profit margin measures
how much of each Rupee earned by the company is translated into profits. Low net profit
margin indicates low margin of safety. Net Profit Margin is high as 8.9% of Honda. Net
profit margin is affected by more factors as production, administration, selling, financing,
pricing or tax factors
➢ The earnings per share represent the number of dollars earned during the period on behalf
of each outstanding share of common stock. Earnings per share are higher in 2016 with 33.7
rupees of Pak Company.

Liquidity Ratio

Sr. no. Ratios Pak Honda

Suzuki 2016
2016

1. Current Ratio 2.62times 1.5times

2. Quick Ratio 1.21times 1.0times

3. Liabilities as a % of Total Assets 31% 50.9%

4. Equity Asset as a % of Total Assets 69% 49.0%

 Liquidity ratio chart

3
2.6
2.5

2
1.5
1.5 1.21
1
1

0.5

0
Pak Suzuki 2016 Honda 2016

Current ratio Quick ratio

Liquidity Ratio Chart

69
70

60
50.9 49
50

40
31
30

20

10

0
Pak Suzuki 2016 Honda 2016

Liabilities as a % of Total Assets Equity Assets as a % of Total Assets

Explanation:

➢ The current ratio of Pak Suzuki is 2.62 and 1.5 of Honda in 2016. This ratio measures that the
company has enough resources to pay its current debts, usually for 12-month period. And
Suzuki is fairly meet in this year.
➢ The quick ratio is 1.21 of Suzuki and Honda is 1.0 in 2016. This excludes inventory and
measures the ability to use its quick assets to pay its current liabilities. This is normal as
compared to the current ratio which shows that company is not depending heavily on inventory.
➢ The liabilities as a % of total asset is 31% of Pak Suzuki and 50.9% of Honda that is highly
than the Suzuki Company in 2016. That mean debts are highly pays in this year.
➢ The equity assets as a % of total assets is more by 64% in 2016 rather than Honda is49.0% in
2016 that’s mean equity are increase of Suzuki firm.

Activity Ratio

Sr. no. Ratios Pak Honda

Suzuki 2016
2016

1. Inventory Turnover 4.2times 7.1times

2. Number of days stock 86days 51days

3. No. of sales in trade debt 5.7days 0.78days

4. Total Asset Turnover 2.0times 2.5times

5. Net Worth Turnover 2.9times 5.0times

 Activity Ratio Chart

8 7.1
7

6
5
5 4.2
4
2.9
3
2.5
2
2

0
Pak Suzuki 2016 Honda 2016

Inventory Turnover Total Asset Turnoer Net Worth Turnover

Activity Ratio Chart

86
90
80
70
60 51
50
40
30
20
5.7
10 0.78
0
Pak Suzuki 2016 Honda 2016

Number od days stock No. of sales in trade debt

Explanation:

➢ In the year of 2016 the inventory turnover ratio is 4.2 of Pak Suzuki and 7.1. It measures the
activity or liquidity of a firm’s inventory. The ratio is higher of Honda Company.
➢ The number of day stock is 86 days of Suzuki and 51 days of Honda.
➢ The no of sales in turnover 2.0 of Suzuki and Honda 2.5 in 2016
➢ The highest asset turnover is in 2016 with 2.9 of Suzuki and 5.0 of Honda, which means that
more efficiently the firm’s assets have been used by Honda.

Market Ratio

Sr. no. Ratios Pak Honda

Suzuki 2016
2016

1. Break Up Value Per Share (Rs.) 318.55 5.6

2. Cash Dividend as a % of Capital 55% 70%

3. Dividend Payout Ratio 16% 28%

4. Plough-back Ratio (%) 84% 72%

Explanation:

➢ The breakup value of per share is 318.55 of Suzuki and 5.6 of Honda in 2016. It measures the
amount that shareholders are willing to pay for each share of the Suzuki firm’s is high. When
the price of share is higher, the shareholders also decrease.
➢ The cash dividend is higher of Honda that is 70% and 55% in 2016 because in this year higher.
➢ Dividend payout ratio is higher of Honda with 28% and 16% of Pak Suzuki.
➢ Plough-back ratio is high of Pak Suzuki with 88% and 72% of Honda.

Market Ratio Chart

350 318.55

300

250

200

150

100

50
5.6
0
Pak Suzuki 2016 Honda 2016

Break UP value per share (Rs.)

Market Ratio Chart

90 84

80 70 72
70
55
60
50
40
28
30
16
20
10
0
Pak Suzki 2016 Honda 2016

Cash Dividend as a % of Capital Dividend Payout Ratio Plough-back Ratio

 Chapter 5
5.1. Credit Analysis:
Credit analysis is the method by which one calculates the creditworthiness of a business or
organization. In other words, It is the evaluation of the ability of a company to honor its financial
obligations. The audited financial statements of a large company might be analyzed when it issues
or has issued bonds. Or, a bank may analyze the financial statements of a small business before
making or renewing a commercial loan. The term refers to either case, whether the business is
large or small.

Credit analysis ratios are:

❖ Profitability Ratio
❖ Liquidity Ratio
❖ Market Ratio
➢ Profitability Ratio:
Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings compared to its expenses and other relevant costs incurred during a specific
period of time. For most of these ratios, having a higher value relative to a competitor's ratio or
relative to the same ratio from a previous period indicates that the company is doing well.

Profitability Ratios Include

1.Gross Profit Margin

2.Operation Profit Margin

3.Net Profit Margin

4.Earning Per Share

1. Gross Profit Margin

Interpretation:

The average for this ratio is 8.26%. It is a measurement of how much from each Rupee of a
company's revenue is available to cover overhead, other expenses and profits. The higher the ratio
the better is for the company. It also shows that the company has control on its production cost. It
was high in 2015 with 13.5 %.
2. Operating Profit Margin:
The average for this ratio is 5.64%. It measures each sales rupee remaining after all costs and
expenses other than interest, taxes and preferred stock dividends are deducted, the profits’
earned on each sales rupee. This ratio is higher in 2015 with 10.3%.

3. Net Profit Margin:

The average for this ratio is 3.88%. Net profit margin measures how much of each Rupee
earned by the company is translated into profits. Low net profit margin indicates low margin
of safety. Net Profit Margin is high as 6.9% in 2015. Net profit margin is affected by more
factors as production, administration, selling, financing, pricing or tax factors.

4. Earning Per Share:

The earnings per share represent the number of dollars earned during the period on behalf of
each outstanding share of common stock. Earnings per share are higher in 2015 with 71.0
rupees.
➢ Liquidity Ratio:
A measurement of a company’s capacity to pay for its liabilities with its assets. The overall
liquidity ratio is calculated by dividing total assets by the difference between total liabilities
and conditional reserves. This ratio is used in insurance company analysis, as well as in the
analysis of financial institutions.
Liquidity Ratios Include
1.Current Ratio
2.Quick Ratio
3.Liabilities as a % of Total Assets
4.Equity Asset as a % of Total Assets
Interpretation:

1.Current Ratio
The average current ratio of five years is 8.29 which is fairly satisfied for the company. This
ratio measures that the company has enough resources to pay its current debts, usually for 12-
month period.

2.Quick Ratio
The average quick ratio is 1.20. This excludes inventory and measures the ability to use its
quick assets to pay its current liabilities. This is normal as compared to the current ratio which
shows that company is not depending heavily on inventory.

3.Liabilities as a % of Total Assets

The liabilities as a % of total asset is high are 34% in 2015 that mean debts are highly pays in
this year.

4.Equity assets as a % of Total Assets

The equity assets as a % of total assets is more by 74% in 2012 & 2013 that’s mean equity are
increase.

➢ Market Ratio:
When a stock analyst wants to understand how other investors value a company, they look
at market ratios. These measures all have one factor in common; they're evaluating the
current market price of a share of common stock versus an indicator of the company's
ability to generate profits or assets held by the company.

Market ratio include

1.Breakup Value Per Share
2.Cash Dividend as a % of Capital
3.Dividend Payout Ratio
4.Plough Back Ratio
Explanation:

Breakup Value Per Share

The average of breakup value of per share is191.7. It measures the amount that shareholder are
willing to pay for each share of the firm’s. When the price of share is higher, the shareholders
also decrease. This ratio is higher in 2016, which is 318.55; it means that the shareholder
confidence is higher in 2016.

2.Cash Dividend as a % of Capital

The cash dividend is higher with 150% in 2016 because in this year higher investors are
investing the firm.

3.Dividend Payout Ratio

Dividend payout ratio is higher with 22% in 2015 because in this year the company pays more
dividend to its shareholders.

4.Plough-back Ratio
Plough-back ratio is higher with 97% in 2014 which shows that the company pays more annual
dividend in this year.

5.2. Equity Analysis

Equity analysis can have somewhat different meanings, depending on the context and
the type of asset. In finance in general, you can think of equity as one’s degree
ownership in any asset after all debts associated with that asset are paid off.

Equity analysis contains followings ratios as;

1.Earning Per Share

2.Cash Dividend as a % of Capital

3.Dividend Payout Ratio

1.Earning Per Share:

The earnings per share represent the number of dollars earned during the period on behalf of
each outstanding share of common stock. Earnings per share are higher in 2016 with 33.7
rupees of Honda Company.

2.Cash dividend as a % of capital:

The cash dividend is higher of Honda that is 70% and 55% in 2016 because in this year higher.

3.Dividend Payout Ratio:

Dividend payout ratio is higher of Honda that is 28 in 2016 because in this year company pays
more dividend to its shareholders.
 Chapter No. 6
FINDINGS AND SUGGESTIONS

Pak Suzuki also deals in motorcycle and also in Marine equipment, and they have a
variety of Product line expansion in Motor bikes is also one of the largest customers
size to operate and has a high market size to fulfill the needs of the customers.

❖ Pak Suzuki should be more versatile to capture more customer range which will help to
increase its net sales in comparisons to Honda.
❖ Pak Suzuki should try to decrease its direct expenses and increase sales in order to
increase its gross profit.
❖ Net profit of Pak Suzuki is rising by decreasing its debts as payment of interest are given
more.
❖ Gross profit ratio is showing declining percentage so Pak Suzuki should try to increasing
sales.
❖ Earnings per share of Pak Suzuki are high as compared to Honda. High earnings give
more profits which will increase the value of shares.
❖ Dividend pay-out ratio of Pak Suzuki is low whereas Honda dividend pay-out ratio is
more so Pak Suzuki can increase its earnings and this can make Pak Suzuki is a growing
company.
❖ Due to decrease in consecutive current ratio I suggest the company to reduce the current
obligations and increase the current assets which can help in meeting current liabilities.
❖ As quick ratio is decreasing so the company should try to make good short term solvency
which can lead to easily conversion of quick assets into cash for meeting current
obligations.
❖ Due to increase in operating ratio I suggest the company to reduce the unnecessary
expenses incurred while producing products and also reduce the wastage which can lead
to decrease in operating cost, increase in net sale and favorable operating ratio.
 CONCLUSION

This project of ratio analysis in the production concern is not merely a work of the project. But a
brief knowledge and experience of the production that how to analyze the financial performance
of the firm. The study undertaken has brought in to the light of the conclusions. According to this
project I came to know that from the analysis of financial statements it is clear that Pak Suzuki had
get fewer amounts during 2016 as compared to 2015. So the firm should focus on getting of profits
in the coming years by taking care internal as well as external factors.

The analysis of financial statements is a process of evaluating the relationship between component
parts of financial statements to obtain a better understanding of the firm’s position and
performance.

The automobile industry is one of the major contributors to GDP of our nation. The Government
of Pakistan needs to provide necessary the much n needed support for the expansion of Auto
industry.

Due to the lower price level, there is a huge incentive for the consumer. But competition in auto
industry also gets stiff.

Pak Suzuki should also compete with the other brands in the market so it can increase its
performance but should not lose its target audience which is upper middle and lower class.
Chapter No. 7

APPENDIX 1

1. Gross Profit Margin Ratio

Gross Profit
Gross Profit Margin = x100
Sales

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Gross Profit 4183699 3242513 4183699 11487448 7348577 6046780

Sales 53664947 51061333 53664947 84548757 76516040 40085521

Ratio 4% 6.4% 7.8% 13.5% 9.6% 15.1%

2. Operating Profit Margin Ratio

Operating Profit
Operating Profit Margin = x100
Sales

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Operating 1499760 2353439 2623394 8685171 4415236 5.178882

Profit

Sales 58531137 51061333 53664947 84548757 76516040 40085521

Ratio 2.5% 4.6% 4.9% 10.3% 5.8% 12.9%

 3. Net Profit Margin Ratio
Earning available for Common Stock
Net Profit Margin =
Sales

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Earnings 15800884 1849357 1921894 5842671 2772635 3555782

Available for
Common
Stock

Sales 58531137 51061333 53664947 84548757 76516040 40085521

Ratio 26% 3.6% 3.6% 6.9% 3.6% 8.9%

4. EPS Ratio
Earning available for Common Stock
EPS =
No. of shares of Common Stock Outstanding

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Earnings 15800884 1849357 1921894 5842671 2772635 3555782

Available for
Common
Stock

No. Of 82300 82300 82300 82300 82300 142800

Shares

Ratio 11.9 22.5 23.4 71.0 33.7 24.90

 5. Current Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖ㄷ𝑖𝑒𝑠

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Current 23107573 18372365 23107573 32515406 30518243 12338148

Assets

Current 9117477 6166119 9117477 12772749 37851965

Liabilities 8038182

Ratio 3.08 2.98 2.53 2.55 2.62 1.5

6. Quick ratio
Current Assets−Inventory
Quick Ratio =
Current Liabilities

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Current 17060451 183723365 23107533 32515406 30518243 12338148

Assets
_ _ _ _ _
- _
Inventory 4009825
10562194 10726457 14976001 1308447 16288608

Current
Liabilities 5547980 6166119 9117477 12772749 11635058 8038182

Ratio 1.16 1.23 0.89 1.52 1.21 1.0

 7. Liabilities as % of Total assets Ratio
Liabilities
Liabilities as % of Total Assets = x100
Total Assets

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Liabilities 5547980 6166119 9117477 12772749 11635058 8263949

Total Assets 21348864 23811277 28354159 37451987 37851965 16204898

Ratio 26% 26% 32% 34% 31% 50.9%

8.Equity as % of Total Assets Ratio

𝑆ℎ𝑎𝑟慲ℎ𝑜𝑙𝑑𝑒𝑟 ′ 𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
Equity as a % of Total Assets Ratio = x 100
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Equity 15800884 17645158 192.36682 24679238 26216907 7940949

Total Assets 21348864 23811277 28354159 37451987 37851965 16204898

Ratio 74% 74% 68% 66% 69% 49.0%

 9. Inventory Turnover ratio
CGS
Inventory Turnover Ratio =
Inventory

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

CGS 56185397 47818820 49481248 73061309 69167463 28725171

Inventory 10562194 10726457 14976001 13084447 16288608 4009825

Ratio 5.3 4.5 3.3 5.6 4.2 7.1

10. No. of days Stock ratio

365
No. of days Stock Ratio =
Inventory Turnover

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

365 365 365 365 365 365 365

Inventory 5.3 4.5 3.3 5.6 4.2 7.1

Turnover

Ratio 69 81 110 65 86 51
 11. No. of days Sales in Trade ratio
Trade Debts
No. of days Sales in Trade Ratio =
Annual Sales/365

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Trade Debts 588042 983273 1352310 1561823 1205269 86343

Annual 58531137 51061333 53664947 231640 209632 109823

Sales/365 / 365 / 365 / 3 65 / 365 / 365 / 365

Ratio 3.7 7.0 9.2 6.7 5.7 0.78

12.Total Asset Turnover Ratio

Net Sales
Total Asset Turnover Ratio =
Total Assets

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Net Sales 58531137 51061333 53664947 84548757 76516040 400855212

Total Assets 31348864 23811277 28354159 37451987 37851965 16204898

Ratio 2..7 2.1 1.9 2.3 2.0 2.5

 13.Net Worth Turnover Ratio

Sales
Net Worth Turnover Ratio =
Equity

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Sales 58531137 51061333 53664947 84548757 76516040 40085521

Equity 15800884 17645158 28354159 24679238 26216907 7940949

Ratio 3.7 2.9 2.8 3.4 2.9 5.0

14.Break up Values per Share Ratio

Net Assets
Net Worth Turnover Ratio =
No.of Shares

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Net Assets 15800884 17645158 19236682 24679238 26216907 40085521

No. of 82300 82300 82300 82300 82300 16204898

Shares

Ratio 191 214.4 233.7 299.8 318.55 5.0

 15.Cash Dividend as % of Capital Ratio

Dividend
Cash Dividend as % of Total Assets = x100
Capital

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Dividend 205750 329199 411499 1234498 452649 999600

Capital 822999 822999 822999 822999 822999 1428000

Ratio 25% 40% 50% 150% 55% 70%

16. Dividend Payout Ratio

𝐴𝑛𝑢𝑢𝑎𝑙 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒

Dividend Payout Ratio = x100
𝐸𝑃𝑆

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Annual 2.5 3.99 4.99 15.0 5.49 7

Dividend
Per Share

EPS 11.9 22.5 23.4 71.0 33.7 24.90

Ratio 21% 18% 2.1% 22% 16% 28%

 17.Plough-back Ratio

𝐴𝑛𝑛𝑢𝑎𝑙 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

Plough-back Ratio = 1- x100
𝐸𝑃𝑆

Company Pak Suzuki Honda

Years 2012 2013 2014 2015 2016 2016

Annual 2.5 3.99 0.50 15.0 5.49 7

Dividend
per share

EPS 11.9 22.5 23.4 71.0 33.7 24.90

Ratio 79% 82% 97% 79% 84% 72%

APPENDIX I

Pak Suzuki Company

Balance sheet

December 31, ___

ASSETS 2016 2015 2014 2013 2012

CURRENT ASSETS: Rs. in Rs. in Rs. in Rs. in Rs. in

‘000’ ‘000’ ‘000’ ‘000’ ‘000’

Stores, spares and loose 111,006 98,801 82,030 66,279 83,095

tools

Stock-in-trade 16,288,608 13,084,447 14,976,001 10,726,457 10,562,194

Trade debts 1,205,269 1,561,823 14,976,001 983,273 588,042

Current portion of long- 291,254 347,976 387,608 330,504 353,077

term installment sales
receivables

Loans and advances 163,019 197,712 514,845 411,629 195,491

Trade deposits and short- 77,129 70,862 53,110 62,935 38,918

term prepayments

Accrued profit on bank 120,761 193,429 16,340 13,016 5,664

accounts

Other receivables 167,306 86,666 134,260 114,138 169,622

Sales tax and excise duty 1,651,301 277,801 1,002,345 802,777 970,176
adjustable

Income tax – net 1,894,297 1,589,882 2,747,340 2,896,998 2,676,742

Cash and bank balances 8,548,293 15,006,007 1,841,384 1,964,359 1,417,430

30,518,243 32,515,406 23,107,573 18,372,365 17,060,451

NON-CURRENT
ASSETS:
Property, plant and 6,672,057 4,510,789 4,790,506 4,892,675 3,738,867
equipment

Intangible assets 72,619 83,288 205,287 182,638 312,028

Long-term investments _ - 351 2,194 4,545

Long-term loans 1,160 9,609 9,597 6,264 1,409

Long-term deposits, 258,103 24,768 22,788 36,977 63,451

prepayments and other
receivables

Long-term installment 96,033 113,627 162,260 170,252 162,650

sales receivables

Deferred taxation 233,750 194,500 55,797 147,912 _

7,333,722 4,936,581 5,246,586 5,438,912 4,282,950

TOTAL ASSETS 37,851,965 37,451,987 28,354,159 23,811,277 21,348,864

EQUITY AND 2016 2015 2014 2013 2012

LIABILITIES

SHARE CAPITAL AND Rs. in Rs. in Rs. in Rs. in Rs. in

RESERVES: ‘000’ ‘000’ ‘000’ ‘000’ ‘000’

Authorized share capital 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000

150,000,000 ordinary
shares of Rs.10/- each

Issued, subscribed and 822,999 822,999 822,999 822,999 822,999

paid-up share capital

Reserves 25,393,908 23,856,239 18,413,683 16,822,159 14,977,885

26,216,907 24,679,238 19,236,682 17,645,158 15,800,884

CURRENT
LIABILITIES:
Trade and other payables 26,216,907 6,441,748 4,945,271 3,695,675 2,694,625

Accrued markup on short _ _ 8,982 _ _

term borrowings

Advances from customers 1,625,472 4,226,341 2,159,487 629,275 1,143,746

Deposits against display of _ _ _ 1,615,747 1,486,406

vehicles

Security deposits 3,673,164 2,068,361 1,917,414 86,947 84,728

Provision for custom duties 36,299 36,299 86,323 138,475 138,475

and sales tax

11,635,058 12,772,749 9,117,477 6,166,119 5,547,980

TOTAL EQUITY AND 37,851,965 37,451,987 28,354,159 23,811,277 21,348,864

LIABILITIES
 Pak Suzuki Company

Profit and loss account

December 31, _____

Particulars 2016 2015 2014 2013 2012

Rs. in ‘000’ Rs. in ‘000’ Rs. in ‘000’ Rs. in ‘000’ Rs. in ‘000’

Sales 76,516,040 84,548,757 53,664,947 51,061,333 58,531,137

Cost of sales (69,167,463) (73,061,309) (49,481,248) (47,818,820) (56,185,397)

Gross profit 7,348,577 11,487,448 4,183,699 3,242,513 2,345,740

Distribution costs (2,004,285) (1,945,832) (746,304) (560,239) (356,960)

Administrative (2,004,285) (1,230,819) (1,101,650) (959,363) (860,753)

expenses

Other expenses (333,542) (653,212) (195,850) (175,137) 111,152)

Other income 1,039,851 1,058,426 510,208 863,241 493,985

Finance costs (95,775) (30,840) (26,709) (57,576) (11,100)

(2,933,341) (2,802,277) 1,560,305) (889,074) (845,980)

Profit before 4,415,236 8,685,171 2,623,394 2,353,439 1,499,760

taxation

Taxation (1,642,601) (2,842,500) (701,500) (504,082) (521,738)

Profit after 2,772,635 5,842,671 1,921,894 1,849,357 978,022

taxation
 Pak Suzuki Company

Statement of comprehensive income

December 31, ____

Particulars 2016 2015 2014 2013 2012

Rs. in Rs. in ‘000’ Rs. in Rs. in Rs. in

‘000’ ‘000’ ‘000’ ‘000’

Profit after taxation 2,772,635 5,842,671 1,921,894 1,849,357 978,022

Other comprehensive (loss)

/ income

Gain on derivative financial _ 38,163 9,225 214,013 (329,353)

instrument – net

Items that may not be

reclassified subsequently to
profit and loss account

Re-measurement loss on (468) (26,779) (10,396) (29,828) _

defined benefit plan - net

(468) 11,384 (1,171) 184,185 (329,353)

Total comprehensive 2,772,167 5,854,055 1,920,723 2,033,542 648,669

income for the year
 Pak Suzuki Company

Cash flow statement

December 31, ____

Particulars 2016 2015 2014 2013 2012

Rs. in Rs. in Rs. in Rs. in Rs. in

‘000’ ‘000’ ‘000’ ‘000’ ‘000’

CASH FLOWS FROM

OPERATING
ACTIVITIES

Cash (used in) / generated (751,912) 15,371,222 1,448,069 2,955,261 1,568,442

from operations

Finance costs paid (95,782) (39,830) (17,730) (57,583) (11,116)

Taxes paid (1,986,266) (1,842,542) (465,342) (847,838) (835,806)

Long-term loans (106) (12) (3,333) (4,855) 114

Long-term deposits, (224,780) (1,980) 14,189 26,474 (42,964)

prepayments and other
receivables

Long-term installment 17,594 48,633 7,992 (7,602) 23,179

sales receivables

Net cash (used in) / (3,041,252) 13,535,491 983,845 2,063,857 701,849

generated from operating
activities
CASH FLOWS FROM
INVESTING
ACTIVITIES

Purchase of property, plant (3,122,862) (731,704) (880,880) (1,943,239) (480,283)

and equipment

Purchase of intangible (62,236) (852) (197,744) (14,471) (202,677)

assets

Proceed from sale of non _ _ _ 280,000 _

current asset

Proceeds from sale of fixed 71,716 42,271 64,170 78,699 166,006

asset

Profit received on bank 926,642 729,434 234,931 286,766 257,203

accounts

Net cash (used in) / (2,186,740) 39,149 (779,523) (1,312,245) (259,751)

generated from investing
activities

CASH FLOWS FROM

FINANCING
ACTIVITIES

Dividends paid (1,229,722) (410,017) (327,297) (204,683) (164,148)

Net (decrease) / increase (6,457,714) 13,164,623 (122,975) 546,929 (164,148)

in cash and cash
equivalents

Cash and cash equivalents 15,006,007 1,841,384 1,964,359 1,417,430 1,139,480

at beginning of the year
Cash and cash 8,548,293 15,006,007 1,841,384 1,964,359 1,417,430
equivalents at end of the
year