CRESCENT TEXTILE LIMITED Address:

Sargodha Road, Faisalabad, Pakistan T: + 92-041-111-105-105 F: + 92-041-111-103-104 E: crestex@ctm.com.pk.

Annual Report 2010

Mission, Vision and Values

To be the 1st Choice of Customers and achieve a leading role in the economy through enhancement of quality of life style for Stakeholders

Ratio Analysis
Ratio Analysis involves methods of calculating and interpreting financial Ratios to analysis and monitors the firms performance. The basic inputs to ratio analysis are the firms income statement and balance sheet. Type of ratio comparisons 1. Cross sectional analysis 2. Time-series analysis

Time-series analysis Time series analysis evaluation of the firms financial performance over time using financial ratio analysis. Categories of Financial Ratios 1. Liquidity Ratio (Measure the risk of the business ) 2. Activity Ratio (Measure the risk of the business ) 3. Debt Ratio (Measure the risk of the business ) 4. Profitability Ratio (Measure the return of business) 5. Market Ratio (Capture both risk and return)
1. Liquidity Ratio A firm ability to satisfy its short term obligation as they come due. 1. Current Ratio 2. Quick Ratio

y Liquidity Ratios
Current assets Current Ratio = Current liabilities

4085672 Current Ratio 2009 = 5805685 4202903 Current Ratio 2010 = 6010688 Explanation: The current ratio is same 0.70 in 2009 and 2010 Generally, the higher the = 0.70 = 0.70

current ratio , the more liquidity the firm is considered to be. A current ratio is 2.0 is occasionally cities as acceptable , but a value acceptability depends on the industry in which the firm operates
Current assets - inventory Quick (acid test) Ratio = Current liabilities 4085672-94021 Quick (acid test) Ratio 2009 = 5805685 4202903-1047150 Quick (acid test) Ratio 2010 Explanation Quick ratios unfavorable as compare to previous year. Because inventory is based on credit bases inventory is patricianly completed and use for specific purpose. This ratio shows to go poor condition of the mill. = 6010688 = 0.52 = 0.54

y Activity Ratios
Cost of goods sold Inventory turnover Ratio = Average Inventory 9175267 Inventory turnover Ratio 2009 = 954537 =9.61

9406644
Inventory turnover Ratio 2010 = 1216919 =7.72

Comment The resulting turnover is meaningful only when it is compared with that of order firms in the same industry or to the firm s past inventory turnover.

Average Collection Period The average amount of time needed to collect account receivable. Average Collection Period = Accounts Receivable Net Sales/365
2562348 Average Collection Period 2009 = 29453 2579901 Average Collection Period 2009 = 29763 = 87day = 87day

Comment On the average, it takes the firm 87 days to collect an account receivable. The average collection period is meaningful only in relation to the firm s credit terms.
Sales Total asset turnover = Total assets 10750512 Total asset turnover 2009 = 10815934 = 0.99

10863386 Total asset turnover 2010 = 10988698 = 0.99

Comment
This ratio shows the no change result of the mill total assets turn over show 99 time sales.

y Debt Ratios
Total liabilities Debt Ratio = Total assets 6913704 Debt Ratio 2009 = 10815934 6675852 Debt Ratio 2010 = 10988698 = 0.60 = 0.64

Comment
This ratio show good result in 2010 as compare in 2009 the liabilities of the company decrease as compare with previous year Earnings before interest and taxes Time interest earned Ratio = Interest

Time interest earned Ratio2009

889159 815948

=1.09

Time interest earned Ratio2010 = 879739 536270 =1.64

Comment
The mill has the ability of interest payment 1.64 in the current year which is better than the previous year.

y Profitability Ratios
Gross profits Gross profit margin = Sales 1575245 Gross profit margin 2009 = 10750512 = 14.65% 1456742 = 10863386 X100 X100

Gross profit margin 2010

X100

= 13.41%

Comment
The Mill show poor net profit in current year as compare in previous year in previous year gross profit margin is 14.65 but in 2010 the gross profit is low and that is 13.41 Operating profit Operating profit margin = Sales 889159 Operating profit margin 2009 = 10750512 879739 Operating profit margin 2010 = 10863386 X100 = 8.10% X100 = 8.27% X100

Comment
The operating profits of the firm are also decrease in current year. As compare to previous year. The decreased of the operating profit show the poor position of the Mill. Earnings available for ordinary Share holders Net Profit margin = Sales 179020 Net Profit margin 2009 = 10750512 X100 = 1.67%

344670 Net Profit margin 2010 = 10863386 X100 = 3.17%

Comment
The Mill net profit is more than the previous year net profit margin. The mill earned he more profit on the sale. Return on Assets = Earning available for common shareholder X100 Total assets 179020 Return on total Assets 2009 = 10815934 344670 Return on total Assets 2010 = 10988698 X100 =3.13% X100 = 1.66%

Comment
The mill present assets have the efficiency and effectiveness to generate the profit for this. Current assets have the more ability of return as compared to the previous year assets so it is show the good performance of mill assets and good for the mill. Return On equity = Common stock Equity 179020 Return On equity 2009 = 492099 344670 Return On equity 2010 = 492099 = 70.04% = 36.38% Earnings available for common shareholder

Comment
The ROE is more from the previous year which show the common stock equity of the mill which is more is show good for the mill and the mills owners Earnings available for ordinary Share holders

Earnings per share

(EPS) =
Number of shares of ordinary share outstanding

179020 Earnings per share 2009 = 49209 344670 Earnings per share 2010 = 49209 = 7.0 = 3.64

Comment
The figures represent the rupees amount earned on behalf of each outstanding shares of common stock. The rupees amount of each actually distributed to each shareholder is the dividend per share (DPS).The company show good earning in current year. Market Ratios Market ratio relate a firms market value as measured by its current share price , to certain accounting values. Price Earnings (P/E) Ratio = Market Price Per Share of Common Stock Earnings per Share 13 Price Earnings (P/E) Ratio 2009 = 3.64 15.75 Price Earnings (P/E) Ratio 2010 = 7.0 = 2.25 = 3.57

Comment:
The earning per share of the mill is less than the previous year so the market value of the share decrease This ratio is not good for the mill. Market/Book (M/B) ratio = Market price per share of common stock Book value per share of common stock 13
Market/Book (M/B) ratio 2009

= 10 15.75

= 1.3

Market/Book (M/B) ratio 2010

= 10

= 1.57

Comment:
The market book value of the mill is increase from the previous year which is create the good reputation for the mill and invite the outsider to invest the capital in the mill. Time Series Analysis Crescent textile mills Limited Names Ratio Year 2009 Year 2010 Comment

Current ratio Quick ratio Inventory turnover ratio Average collection period Total assets turn over Debt ratio Time interest ratio G.P ratio O.P ratio N.P ratio Return on assets Return on equity Earnings per share Price Earnings (P/E) Ratio

0.70 0.54 9.61 87 Days 0.99 0.64 1.09 14.65 8.27 1.67 1.66% 36.38% 3.64 3.57

0.70 0.52 7.72 87 Days 0.99 0.60 1.64 13.41 8.10 3.17 3.13% 70.04% 7.0 2.25

No change Poor Good No change No change Good Good Poor Poor Good Good Good Good Poor

Market/Book (M/B) ratio

1.3

1.57

Good

Liquidity Ratio: From the above table we can see that the company liquidity is no better as compared to and it is not according to the standard of the ratios Activity Ratio: From the above table of the ratio we can analyze that the company activity ratio is not improving and it is same as compared to the past which should be improve for the betterment of the industry. And in the activity ratio the inventory turnover ratio is bad as compared to the past. And others are same Debt Ratio: From the above given table of the ratios of the company we can analyze that the company Debt ratio is Excellent as compared to the past and it is much better than past and the company is improving the Debt ratio Profitability Ratio: From the above given table of the ratios of the crescent now can comment that in the Profitability Ratio the Gross Profit, Operating Profit is bad and the Net Profit ratios are good as compared to the past and company has improved its Net Profit ratios. And the ROA and ROE ratio also of the company is better as compared to the past. Suggestion : Over all analysis I think the mill is working perform well .The debt profitability activity and market ratios good so we should invest this company for earning profit. But some weakness is also in this company SO for achieving good result the company must take some action for better result as the liquidity ratio is not good G P and price earnings ratio also poor so take some action for better result.