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Afs Final Report

Afs Final Report

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Published by: hammy86 on Dec 29, 2009
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04/24/2012

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ANALYSIS OF FINANCIAL STATEMENTS
LETTER OF TRANSMITTAL
I would like to thank all those who assisted us in compiling this report. In this report Itried to cover as many aspects of 
ANALYSIS OF FINANCIAL STATEMENTS
alongwith the jargons that we learned in the course. Due to scarcity of time I was not able to put in as much efforts as we would have liked to, hence this report by no means is acomprehensive one. I would like to offer our gratitude to our teacher 
Mr. Maqbool UrRehman
for giving us the opportunity to express myself both through this report andduring lecture hours, the difference in teaching will always be memorable.
DEWAN MOTORS AND HONDA ATLAS MOTORS LTD
 
ANALYSIS OF FINANCIAL STATEMENTS
TABLE OF CONTENTS
LETTER OF TRANSMITTAL ........................................................................................... 1TABLE OF CONTENTS ....................................................................................................2EXECUTIVE SUMMARY ................................................................................................ 3Automobile Industry in Pakistan ......................................................................................... 4Sector Overview ...............................................................................................................5DEWAN FAROOQUE MOTOR COMPANY ................................................................... 8Introduction: .....................................................................................................................8Mission Statement: ...........................................................................................................9Corporate Philosophy .....................................................................................................10Historical Perspective: ...................................................................................................10Present Past and Future of DFML: ................................................................................11DEWAN FARROQ MOTORS ..........................................................................................12FINANCIAL RATIOS ......................................................................................................12INTERNAL ANALYSIS ..................................................................................................13Liquidity ratios ...............................................................................................................13Efficiency Ratios ............................................................................................................14Profitability Ratios .........................................................................................................18Debt and leverage ratios ................................................................................................20Equity Ratios .................................................................................................................22External analysis ............................................................................................................... 25Liquidity ratio ................................................................................................................25Efficiency ratios .............................................................................................................26Profitability Ratios .........................................................................................................27RETURN ON ASSET AND EQUITY .......................................................................... 28Equity ratios ..................................................................................................................30Market measures ........................................................................................................... 31Creditor Guidelines ........................................................................................................... 32Investors Guidelines ..........................................................................................................33Conclusions and Recommendations ..................................................................................34APPENDIX ........................................................................................................................35Dewan motors ltd financial statements ......................................................................... 35BALANCE SHEET AS AT JUNE 30, 2004 ................................................................. 36PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED JUNE 30, 2004 ...................................................................37Balance sheet 2006 &2005 ............................................................................................ 38Income statement 2006 & 2005 ..................................................................................... 39Balance sheet 2007 & 2006 ........................................................................................... 40Income statement 2007 & 2006 ..................................................................................... 41
DEWAN MOTORS AND HONDA ATLAS MOTORS LTD
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ANALYSIS OF FINANCIAL STATEMENTS
EXECUTIVE SUMMARY
Dewan motors and Honda atlas motors need to maintain their liquidity as it is going low from 1.0 in quick ratio and even incurrent ratio if this would be continuous dewan motors might faceliquidity crunch Dewan motors need to focus on their inventoriessystem and receivables because of this they are facing a lots of problems in other heads of balance sheet and income statements.Total asset turnover for both of the companies is quite efficient.Gross profit margins and returns are nominal should bemaintained. The main problem can be seen in net profit margindue to the high interest expenses which led the companies intolow profitability.Dewan motors need to utilize their asset more effectively in order to move away from the problem of finance cost. As I said abovedewan motors interest coverage ratio is also very week the mainreason is high finance cost the company is obtaining too much of debt in the last three years. Price to earning ratio was too weak instart but it stabilize gradually dewan motors company need tofocus on improving their shareholders wealth Dividend seems tobe quite optimum except last year due to low profits As far ascreditors is concerned dewan motors is more credit worthy in year 2007 as compare to Honda as they have profit other wise Hondawas going good from year 2003-2006.For investment point of viewHonda atlas is much better company then dewan motors as theyproviding high return in the form of capital gain and higher dividends. Its share prices are also progressing even in the lossyear of 2007
DEWAN MOTORS AND HONDA ATLAS MOTORS LTD
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