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FINANCIAL MANAGEMENT
ASSIGNMENT Analysis Of Financial Statement

Organization EXIDE

Submitted by: M. Romaan Qamar (1046101) MBA-Day(A)

Submitted to: Mr. Imran Qamar

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1. HORIZONTAL ANALYSIS
Horizontal Analysis of Balance Sheet:
Balance Sheet
Cash Short Term Investments Accounts Receivable Inventory Current Assets Long Term Investments Net Fixed Assets Total Assets Current Liabilities Total Liabilities Total Stockholders' Equity

2011 2010 In thousand In thousand Horizontal Analysis


567,426 317,367 36,358 1,856,140 2,959,417 1,051,084 1,027,910 4,010,501 2,366,350 2,412,097 1,148,488 286,206 203,098 19,563 1,457,671 2,107,704 796,908 776,542 2,904,612 1,710,480 1,754,611 900,499 98% 56% 86% 27% 40% 32% 32% 38% 38% 37% 28%

Note: values in the table are taken directly from annual report of Exide of 2011.

Comments:
Increase in cash holding increases by 98% between 2011 and 2010. The reason behind this increase is increase in the cheques in hand, cash in hand and current account amount. Cheque in hand amount increase by 102% and current account increase by 97% and cash in hand increased by 45%. The short term investment increases by 56%. Account receivable increase by 86%. Inventory increase by 27%. The company is very stable with respect to asset to liabilities. Company is increasing its asset at sustainable pace. Thought company current assets are increasing which does not show a company internal position but its fixed assets are increasing as compared to total liabilities.

Horizontal Analysis of Profit and Loss Statement:


Income Statement
Revenue Cost of Goods Sold Interest Expense Tax Expense Income from Cont Operations Net Income

2011 In thousand
7,711,452 -6,643,630 -128,489 -153,336 558,215 276,390

2010 Horizontal In thousand Analysis


6,189,135 -5,413,928 -78,948 -106,267 382,502 197,287 25% 23% 63% 44% 46% 40%

if u want the report just call me or send me a text at 03135001665 Note: values in the table are taken directly from annual report of Exide of 2011.

Comments:
Revenue from sales increased by 25% and so does the cost of sales also increased by 23%. These revenues are the net sales, which takes in account the sales tax, excise duty and commission and discount to distributors. The interest expense increased in two years is of 63%, the interest expense increased because of two major heads of interest expense 1. Short term finance, 2. Loan from a director. Tax expense increased by 44%. Net income increased by 40%.

2. VERTICAL ANALYSIS
Vertical Analysis of Balance Sheet:
2011 In Vertical thousand analysis 2011
567,426 317,367 36,358 1,856,140 2,959,417 1,051,084 1,027,910 4,010,501 2,366,350 2,412,097 1,148,488 14.1% 7.9% 0.9% 46.3% 73.8% 26.2% 25.6% 100.0% 59.0% 60.1% 28.6%

Balance Sheet
Cash Short Term Investments Accounts Receivable Inventory Current Assets Long Term Investments Net Fixed Assets Total Assets Current Liabilities Total Liabilities Total Stockholders' Equity

2010 Vertical In analysis thousand 2010


286,206 203,098 19,563 1,457,671 2,107,704 796,908 776,542 2,904,612 1,710,480 1,754,611 900,499 9.9% 7.0% 0.7% 50.2% 72.6% 27.4% 26.7% 100.0% 58.9% 60.4% 31.0%

Note: values in the table are taken directly from annual report of Exide of 2011.

Comments:
The company current assets increase stably but inventory decreased by -3.9%in 2011. The company long term assets decreased by small amount because the company gave loans free of interest to purchase motorcycle and payback the loan with in one year. Whereas current liabilities increased by small percentage.

if u want the report just call me or send me a text at 03135001665 Equity of the company decreased because of the National bank of Pakistan which held 789,686
number of shares in 2010 sold back the shares which it held in 2010.

Vertical Analysis of Income Sheet:


2011 In vertical thousand analysis
7,711,452 -6,643,630 -128,489 -153,336 558,215 276,390 100.0% 86.2% 1.7% 2.0% 7.2% 3.6%

Income Statement
Revenue Cost of Goods Sold Interest Expense Tax Expense Income from Cont Operations Net Income

2010 In vertical thousand analysis


6,189,135 -5,413,928 -78,948 -106,267 382,502 197,287 100.0% 87.5% 1.3% 1.7% 6.2% 3.2%

Note: values in the table are taken directly from annual report of Exide of 2011.

Comments:
Watching this, we first come at operating Efficiency which shows that how effective is the company in lowering its cost of sales. Exide operating efficiency has increased. The company is decreasing its cost as it increases its sales during the year of 2010-2011. Interest expense increase because company considered short term financing in order to fulfill the short term needs. Tax expense increases because of the increase in operating profits (income).

3. RATIO ANALYSIS & NOTES ANALYSIS


Growth Ratios:
In growth ratio we consider three ratios. These ratios are as follows; 1. Sales Growth: The sales growth for 2009-2010 increased by 9.9% and sales growth for 2010-2011 is 24.6%. Increase in sales is of 14.7% which means that company is progressive sales growth. 2. Income Growth:

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The income of the company increased from 44.6% in period of 2009-2010 to 45.9% in period 2010-2011. 3. Asset Growth: The asset growth ratio tells the percentage amount of asset increased or decreased between two years. The company total assets decrease in 2010-2011 as compared to asset in 2009-2010. The asset decreased by 4.5% proportion.

Activity Ratios:
Activity ratio captures the effect of inventory, asset and receivable on revenues. Following are the ratios that define activity ratio: 1. Receivable Turnover: The companys receivable decrease from 2010 to 2011. This means that company is trying to decrease its receivable in order minimize its opportunity cost and keeping more money at its own disposal. 2. Inventory Turnover: Inventory turnover of the company is decreasing as it falls from 4.7 to 4.0. The decrease of 0.7 in inventory. 3. Fixed Asset Turnover: Fixed of the company are decreasing. This decrease is because of the reason that company is making more revenue but not increasing its fixed asset with same proportion.

Profitability Ratios:
The long term success of a company depends upon the funds it can generate for reinvestment and growth, along with its ability to provide a satisfactory return on investment. Profitability of the company can be shown through number of ways. Each of these ratios are important to see the full picture. 1. Profit Margin: It is the ratio of revenues to income from continued operations. The profit margin of the company increased by 1% that means that each additional revenue of the company adds on to the profit of the company.

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2. Return on Asset(ROA): Return on asset shows the effect of income from continued operations on total asset. ROA is 16.1% in year 2011 and 15.5% in 2010. The ROA increase over the year. 3. Return on Equity(ROE): Return on equity is the ratio of income from continued operations to total stockholder equity. Income generated from stockholder equity is 54.5% in year 2011 and in 2010 it was 47%. The ROE increase over year. 4. Dividend Payout Ratio: It is the ratio of dividend paid to net income. The company paid less dividends then pervious year. In 2010 dividend payout ratio was 16% , in 2011 it was 12%. Which means that the company paid less dividends as compare to the pervious year and keeping in mind that the net income increased 2011.

Liquidity Ratios:
1. Current Ratio: Current Ratio= current asset/current liabilities 2011=1.25% 2010=1.23% 2. Quick Ratio: Quick Ratio= (cash + account receivable + short term investment) / current liabilities 2011=0.39% 2010=0.30%

Solvency Ratios:
Solvency means ability of a company to meet its liabilities. Solvency or credit worthiness ratios are calculated to determine the degree of financial risk existing in a business entity before and after making an investment in a project. 1. Debt to Total Asset: It is the ratio of total liability to total asset. It gives us the proportion of how much part is of liability of the total asset. This shows that for two years the company maintains its debt 60% of the total asset.

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3. TREND ANALYSIS:

REVENUE TREND

$8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 5 Years Ago4 Years Ago3 Years Ago Prior Year Current Year

Keeping in view the revenue of the company from 2007 to up till now, the percentage change in revenue fall after 2008. The percentage changes in revenues are calculated as 51.53%, 1.54%, 9.92%, and 25% for year 2007, 2008, 2009, 2010 and 2011. As it is clear from the figure that company had slum after year 2008 but started to recover on progressive trend. In the future company will be able to generate more revenue in percentage change bases unless meet with some unusual circumstances. NET INCOME TREND
$600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 5 Years Ago 4 Years Ago 3 Years Ago Prior Year Current Year

Same is the case with net income trend. The companys net income graph shows positive increase as shown in the table. So we can say that company will have high income in next year also unless meet with some unusual circumstances.

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INCOME TO CASH FLOW COMPARISON


$600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 3 Years Ago Prior Year Current Year
Cash Flow from Operations Income Continuing Operations

Cash flow of the company is very uncertain. The company cash flow was more than its income in 2009, but dramatically it went in negative in year 2010 and then again went up in 2011. In year 2010 the company increased its stock in trade, spares and trade debts. Because of this reason the cash flow from operating activity was negative. ASSET CHANGES
$4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 3 Years Ago

Total Assets

Prior Year

Current Year

The company is increasing its asset over the period of time. It is expected to increase further with same proportion. Keeping other things constant.

Altmans Z-score:
If the company has a Z score that falls above a 3.0, the company is said to be safe and has an excellent chance of being successful in the next year. A score that is from 2.7 to 2.99 indicates that the company should be worried. Cutting back on expenses would be a good strategy. A score from 1.8 to 2.7 shows a company will go bankrupt within next two years. The Altman Z Score of EXIDE Pakistan Limited is 4.5554. That means that company is financially very stable and profitable.