Ratio Analysis of Mitchals Fruit

University of the Punjab, Gujranwala Campus
Submitted to: PROF.IRFAN University of the Punjab, Gujranwala campus
Submitted by:
Group E MBA (morning) 1st semester

MB09045 NIDA AJMAL MB09044 NAZRA SHREEF MB09018 KIRAN ABDUL RASHEED MB09032 NAFEESA NAZ MB09062 SUNDAS
Financial Analysis of Mitchells Food Farm
ACKNOWLEDGEMENT
All the Acclimations and Appreciation are for Almighty ALLAH, the Compassionate; the Benevolent. That knows the mysteries & secrets of universe. Doing a project in such critical situation was not an easy job but we got succeeded just because of our PARENTS who are always busy in prayers behind us. Indeed we could not perform, until and unless someone like PROF. IRFAN assign us. So we are highly thankful to him for providing us such a magnificent task. We are also thankful to PROF. NAVEED IQBAL CHUDHARY who guided us for the project. At the most we are thankful to ALMIGHTY ALLAH not just for giving an opportunity to do such a task but also because HE made us human being and then made us a part of UNIVERSITY OF THE PUNJAB. At the end, we would like to thank all who directly or indirectly help us in making the report.
DEDICATION
To our Parents whose unconditional love and support helped us in making the report? To our Teachers for their corporation and assistance. To our Siblings for their encouragement and valuable support.
LETTER OF AUTHORIZATION
PROF.IRFAN University of the Punjab, Gujranwala campus.
I PROF.IRFAN here by authorize you to prepare a report on MITCHELLS FRUIT FARM LIMITED to analyze their ratios and their comparison with previous year. Submitted at the Date10th February, 2010.
TEACHER S NAME: PROF.IRFAN
LETTER OF ACCEPTANCE
To: Respected Sir Irfan Lecturer in PUGC
From: Group E MBA (morning) 1st semester
Respected Sir
We, the group members anxiously want to inform you that we have accepted the project assigned by you on topic of Financial Ratio Analysis. We ll report you on February 10; 2010.We ll keep all the instruction in our mind and will try our best to fulfill all the requirements. May ALLAH give us the strength, patience, courage to complete this report?
Cordially, MB09045 NIDA AJMAL MB09044 NAZRA SHREEF MB09018 KIRAN ABDUL RASHEED MB09032 NAFEESA NAZ MB09062 SUNDAS
6 Financial Analysis of Mitchells Food Farm
LETTER OF TRANSMITTAL
Group members of accounting project MBA 1st morning February 10, 2010
Prof .Sir Irfan Lecturer in PUGC IBA Department University of the Punjab GUJRANWALA PAKISTAN
Respected Sir Here is the report you asked us to prepare. In the provided report we tried our best to fulfill all the requirements as directed by you. In this report we discussed following five important accounting ratios of a well reputed MITCHELLS FRUIT FARM LIMITED
I. Liquidity Ratios. II. Solvency Ratios. III. Activity Ratios. IV. Profitability Ratios. V. Market Ratios.
In the provided report we used the Annual Report of MITCHELLS FRUIT FARM LIMITED 2007 & 2008copied from web site of Lahore Stock Exchange. We visited the company twice and took important information from them.
This report is just for the purpose of practical implementation of our knowledge. Since we are not professionals so we hope that any shortcoming will be forgiven with an open heart. Moreover this is to tell you that all the figures used in this report for calculation of ratios are taken from the listed Annual Reports of company itself and any miscalculation is not challengeable in the court in or outside the country.
At the most we are thankful to Almighty Allah who is so kind to us and because of whom we did this task with such an accuracy.
Regards Cordially, MB09045 MB09044 MB09018 MB09032 MB09062 NIDA AJMAL NAZRA SHREEF KIRAN ABDUL RASHEED NAFEESA NAZ SUNDAS
TABLE OF CONTENT
CONTENTS
Introduction History Vision Statement Mission Statement Corporate philosophy Departments Products Marketing Strategies Swot analysis Ratio analysis y y y y y Liquidity ratios Activity ratios Solvency ratios Profitability ratios Marketing ratios
PAGE NO.
11 13 17 18 19 21 23 50 59 64 74 80 92 103 115 159
Recommendation & Conclusion Annual reports Glossary Bibliography
Introduction Of Mitchells Fruit Farm Limited

INTRODUCTION
Mitchell's Fruit Farms Limited is the oldest and most trusted Food Company in Pakistan. Since starting its operations in 1933, the Company has gone from strength to strength. Modern high-volume industrial equipment, professional management and a trained workforce all combine to ensure that Mitchell s continues its dominance as the innovator, market leader and trend setter. In this regard a major step was taken in 1998, when Mitchell s became the first food company in Pakistan to achieve ISO 9001 ACCREDITATION, thus becoming more competitive on the international stage also. Today the Mitchell s family continues to grow, reaching more and more households worldwide with an ever-increasing array of farm-fresh products ranging from Thirst-quenching Squashes & Syrups; Fruity Jams, Jellies and Marmalade; Rich Tomato Ketchup & savory Sauces; Tasty Pickles; refreshingly nutritious Canned Fruits & Vegetables; And a wholesome assortment of Candies & Chocolate from its wide range of confectionery products.
Institutional Clients
Mitchell s has successfully catered to the demands of its prestigious clients such as the Pakistan International Airlines (PIA), leading five star hotels and clubs, Utility Stores Corporation, Canteen Stores Department, main stores and reputed restaurants in major cities.
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Foreign Licenses
In recognition of its dedication to quality and technical expertise, Mitchell s was also given proprietary rights by L. Rose and Company Ltd. of England in 1946 to become the sole manufacturer and distributor of their world famous Rose s brand of Lime Juice Cordial and Lime Marmalade in Pakistan and Afghanistan.
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History Of Mitchells Fruit Farm Limited
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HISTORY
PHASE I: BEFORE INDEPENDENCE...
Francis J. Mitchell arrived in Bombay from Scotland at the end of World War I. He had been invited by his brother who was already established in North Western India as contractor to the government for construction of the railway network in this part of the subcontinent. At that time, when Francis was already an old man of over sixty years, an opportunity came his way in the form of the emerging irrigation system being laid out in the canal colony districts of West Punjab. He was successful in obtaining the lease of 720 acres of agricultural land in the then Montgomery district. The area allotted to him extended for nearly seven miles from Renala Khurd to Kissan, sandwiched between the arterial lower Bari Doab Canal and the Lahore/Karachi railway. He initiated the business of growing grapes for eventual sale as dried raisins and sent his younger son Richard to Australia for training at Mildura which was well known as a center of specialization in the field of horticulture. The Company, with Francis Mitchell as its Governing Director and his two sons Leonard and Richard as Directors, was incorporated in 1933 and given the name Indian Mildura Fruit Farms Ltd. The North Western Railway had opened to traffic a few years before the acquisition of the land by the Mitchell family. Francis Mitchell was asked by the railway authorities to propose a name for the adjoining station. Hence the word "Kissan" which subsequently became a familiar brand name.
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The trial planting of grapes, which began in 1921 and lasted until 1924, unfortunately did not prove to be a success. The vines suffered serious damage from pests during the rainy season, just when the grapes needed dry weather for ripening. The entire plantation was replaced with citrus, which, fortunately, proved to be profitable. The elder son, Leonard, was sent specially to South Africa to look for good rootstock, which was the foundation of Valencia orange trees these are well established on the farms today. With the outbreak of World War II, demand for canned fruits and vegetables for the allied troops, stationed in India, began to grow rapidly. To cost-effectively cater to this growing demand, a factory was established in Bangalore, South India. A new joint-stock company by the name of Kissan Products Ltd. was registered.
PHASE II: AFTER INDEPENDENCE

As a sequel to Independence in 1947, Indian Mildura Fruit Farms Limited lost nearly 75% of its Indian market. The company's name was changed to "Mitchell's Fruit Farms (Pvt.) Ltd." and the brand name "MITCHELL'S" became the exclusive property of the Pakistani company. Likewise, the Indian company acquired exclusive use of the "KISSAN" brand name. Francis Mitchell died in 1933 and his elder son, Leonard, became Chairman. After his brother's tragic death in an air accident, Richard took over the chairmanship in 1949 and continued in this capacity until his death in 1987. The family sold its shares gradually, having inducted Pakistani shareholders in 1957, and retired to Eastbourne, U.K., in 1959. Richard's wife, Betty, retained her links with the Company in the capacity of Director until 1991. She died in 1995.
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Vision & Mission Statements
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VISION STATEMENT
MITCHELL's VISION is to provide its customer with healthy, innovative and best quality food that will tempt their appetite at all times. Above all, Mitchell s also promise convenience & variety at affordable prices.
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MISSION STATEMENT
i To be a leader in the markets we serve by providing quality products and
efficient services to our consumers while learning from their feedback to set even higher standards for our products.
i To be a company that continuously enhances its superior technological

competence to provide innovative solutions and superior products as per requirement of the market place.
i To be a company that attracts and retains outstanding people by

creating a culture that fosters openness and innovation, promotes individual growth, and rewards initiative and performance.
i To be a company which combines its people, technology, management

systems, and market opportunities to achieve profitable growth while providing fair returns to its investors.
i To be a company that endeavors to set the highest standards in

corporate ethics in serving society.
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Corporate Philosophy
The success of Mitchell s brands is the result of the corporate emphasis laid upon Quality Control reinforced by Research & Development. The R & D section prepares new recipes and formulations whereas the QC section ensures selection of the finest fruits and error free processing and packaging, thus ensuring that all products live up to the consumers high expectations. Human Resource is also of the pivotal importance for the management and employee skills are constantly being updated through training courses and study tours both at home and abroad.
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Departments Of Mitchells Fruit Farm Limited

Departments of Mitchells Fruit Farm Limited

Following are departments at Mitchell s food Farm limited
1. 2. 3. 4. 5. 6. 7. 8. 9.
Human Resource Department Commercial Department System Department Finance Department Production Department Planning and Stores Department Technical Services Department Quality Control Department Marketing Department
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Human Resource Department Production Department
Finance Department Planning and Stores Department Quality Control Department Commercial Department
Marketing Department Technical Services Department System Department
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Products Of Mitchells Fruit Farm Limited

Jam, Jellies & Marmalade:

Mitchell's ensures that you enjoy the delicate taste and flavour of the finest fruits of nature the whole year round with its Jam, Jellies and Marmalade. No artificial colour and no artificial flavour is our motto! Therefore, our range of fruit preserves is made from the finest, most delicious, sun soaked, freshly plucked apples, apricots, cherries, guavas, mangoes, pineapples, raspberries, strawberries and black currant. Processed under strict hygienic conditions and according to recipes perfected by experts over decades - Mitchell's products retain the natural aroma, flavour and taste of fruits and preserve the best in nature. With MITCHELL'S you get much more - both in quality and in quantity!
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AVAILABLE PRODUCTS IN JAM & JELLY:

y Apple jelly junior y Apricot jam y Mango jam y Mixed fruit jam y Plum jam y Black currant jam y Strawberry jam y Pine apple jam y Chocolate spread jam y Pineapple jelly y Raspberry jelly y Rose's lime marmalade y Strawberry jam junior y Strawberry jelly y Golden apple jam y Golden mist marmalade y Old English marmalade TOTAL PRODUCTS: 20
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Squashes & Syrups:

y y Want a refreshing and natural drink? Tired of the same old sherbets?
Get refreshed with Mitchell's squashes

Just the right thirst quenchers for you and your family. Processed from fresh and sun ripened fruits especially grown on our orchards in renala, we offer you a range of energising natural fruit flavours that promise to liven up your day.
AVAILABLE PRODUCTS IN SQUASHES & SYRUPS:

y Lemon squash y Lime cordial kissan y Mango squash y Orange squash y Pineapple squash y Mixed fruit squash y Strawberry squash y Apple squash y Banana squash
TOTAL PRODUCTS: 22
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Ketchup & Sauces:

Prepared from selected, ripe, fresh tomatoes, chillies, garlic and ginger, under strict hygienic conditions, our range of sauces is a culinary treat and includes a host of great tasting concoctions from the ever popular, favourite of the young and old, Tomato Ketchup to the hottest new addition - the Hot & Sweet Sauce. Our sauces line is not only a local favourite but is also rapidly gaining a market abroad.
SPICE
WITH RICH
UP YOUR LIFE
MITCHELL'S SAUCES - JUST
WHAT EVERY SNACK NEEDS!!

Mitchell's has launched its existing Green Chilli sauce in 800gms glass bottles for the convenience and economy of its consumers. Now you can have even more chilli experience than before. Mitchell's has introduced a new variant of Ketchup with the name of
"MITCHELL'S YUM! KETCHUP"

The delicious ketchup will be an excellent treat for the consumers in economical price.
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AVAILABLE PRODUCTS IN KETCHUP & SAUCES:

TOTAL PRODUCTS: 20
y Green chilli sauce y Ginger paste y Ginger garlic paste y Garlic paste y Cooking paste y Chilli garlic sauce y Mile sauce y Mango chutney y Mexican salsa y Plum chutney y Tomato ketchup y Hot & sweet sauce
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Canned Food
For those conscious of time and quality, our range of canned fruits & vegetables remains the favourite. Our ready-to-use products bring convenience along with taste to every kitchen. Mitchell's offers a pure and consistent quality throughout the year whether it is the "in season" or not.
AVAILABLE PRODUCTS IN CANNED FOOD:

y Chick Peas y Chick Peas Curry y Fruit Cocktail y Garden Peas y Golden Sweet Corn y Sarson Ka Saag y Spinach Puree y Sweet Corn
y Tomato Puree
TOTAL PRODUCTS: 19
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CANNED FOOD
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Fruit Drinks:
Natural juices are enjoying steady demand, replacing traditional carbonated soft drinks consumption. So seeing this phenomenon Mitchell's launched Fruit Drinks (Ready-to-Drink) with pure fruits' pulp & concentrates to give its consumers maximum satisfaction. It is a good source of energy along with refreshing taste.
AVAILABLE PRODUCTS IN FRUIT DRINKS:

y Mango Fruit Drink y Lemon Fruit Drink y Orange Fruit Drink y Apple Fruit Drink y Leeches Fruit Drink
TOTAL PRODUCTS: 13
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Pickles & Vinegar:

We can safely vouch for the fact that no meal is complete without Mitchell's Pickles! Our pickles are a delicate assortment of fruits and vegetables matured through natural processes, and carefully selected spices, made in a truly traditional way and carrying an authentic homemade flavour. New, mouth watering recipes are constantly being formulated to complement the existing range sHyderabadI Pickles are a delicate assortment of fruits and vegetables matured through natural processes, and carefully selected spices, made in a truly traditional way and carrying an authentic homemade flavour. New, mouth watering recipes are constantly being formulated to complement the existing range.
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AVAILABLE PRODUCTS IN PICKLES & VINEGAR:
y y y y
Chilli & Lime Pickle Garlic Pickle Green Chilli Pickle Lime Pickle
y Mango Hyderabadi Pickle y Mixed Hyderabadi Pickle y Mixed Pickle
y Synthetic White Vinegar y y Carrot Pickle Garlic Pickle
TOTAL PRODUCTS:17
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Bottled Water:
With changing needs of consumers and their shifting towards hygienic products, like bottled drinking water, Mitchell's launched Natural Drinking Water, Balance
AVAILABLE PRODUCTS IN BOTTLED WATER:
Mitchell's Balance
1500 ml
500ml
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CHOCOLATES
TOTAL PRODUCTS: 22
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AVAILABLE PRODUCTS IN CHOCOLATES
y Anniversary y Discoveree y Festival y Golden Hearts y Jubilee (Maxi) y TopMilk Fruit & Nut y Luxuree y Unitee (Smart Pack) y Silver Hearts
TOTAL PRODUCTS:22
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Sugar Confectionery:
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AVAILABLE PRODUCTS IN SUGAR COATED CONFECTIONARY:

y ButterScotch y Coconut Affair y Fresh n Cool y Fruit Bon Bons y Fruit Yum y Milk Chocolate Eclairs y MilkToffees
y
Super MilkToffees
TOTAL PRODUCTS :10
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Fruit Punch
Extending its existing product line of Fruit Drinks, Mitchell's has introduced an irresistible combination of Fruits in a drink as Mitchell's Fruit Punch. So, now can enjoy the taste of not only one but many fruits in a single drink.
Fruitica Orange (Instant Drink)

Keeping in view the increasing demand of powdered drinks, Mitchell's has launched its powder instant drinks range in 25gm Sachets. The ideal thirst quenchers will be available in Orange flavour.
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Fruitia Lime (Instat Drink):

Keeping in view the increasing demand of powdered drinks, Mitchell's has launched its powder instant drinks range in 25gm Sachets. The ideal thirst quenchers will be available in Lime flavour.
Yum! Ketchup Stand-up Pouch:

Mitchell's has launched its existing Yum! Ketchup in 500g stand-up pouch for the convenience and economy of its consumers.
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Top Milk Fruit & Nut:

A superb combination of Fruit & Nuts with Milk Chocolate to indulge your sweet-tooth.
Luxuree 30g:
Enjoy a taste of the exotic tropical! Luxuree is a wonderful treat consisting of a pure, white coconut core wrapped in rich, milky smooth chocolate
Apple Jelly Junior

Mitchell's has launched its classic preserves in smaller packaging, i.e., 200g Jars, so that you can enjoy more flavours in lower price.
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Golden Mist Marmalade Junior:

Strawberry Jam Junior:

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Hot & Sweet Sauce

Neither too sweet nor too spicy, Mitchell's has introduced a delicious combination of Tomatoes and Chillies with the name of Mitchell's Hot & Sweet Sauce.
Synthetic White Vinegar:

In addition to its pure Fruit Vinegar, Mitchell's is also launching Synthetic White Vinegar, which can be taken with soups and garnishing of salads. Moreover, it can be used from being a food enhancer or condiment, to meat tenderizer and natural food preservative.
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Lychee Fruit Drink:

Mitchell's Fruit Drinks are made from real fruits picked from its own gardens that will refresh your body and soul. Keeping in view the increasing demand of fruit drinks flavours, Mitchell's has launched another refreshing flavour, Lychee Fruit Drink, in its respective category.
Jaam-eHayat:
Keeping in view the growing demand of Red Syrups, Mitchell's has launched New Red Syrup in 810ml and 1.5Litres Pet Bottles. Be ready to taste the refreshing experience.
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Apple Fruit Drink:

Mitchell's Fruit Drinks are made from real fruits picked from its own gardens that will refresh your body and soul. Keeping in view the increasing demand of fruit drinks flavours, Mitchell's has launched another refreshing flavour, Apple Fruit Drink, in its respective category.
Mixed Hyderabadi Pickle:

We can safely guarantee for the fact that no meal is complete without Mitchell's Pickles! Hyderabadi Pickles are a delicate assortment of fruits and vegetables matured through natural processes, and carefully selected spices, made in a truly traditional way and carrying an authentic homemade flavour. New, mouth watering recipes are constantly being formulated to complement the existing range.
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Spinach Puree:
Spinach Puree is made from the freshest spinach leaves and packed in tin can. Open the can to cook and prepare a delicious meal with either vegetables like Potatoes, or with meat. You just need to add spices and oil to cook. It can be eaten with Bread, Paratha or Rice. Spinach Puree is packed in 800gms cans for the pure convenience of consumers.
Anniversary:
To commemorate the company's Platinum Jubilee, we take great pride in the launch of Anniversary - a delectable selection of chocolates especially created for the discerning consumer - as our way of saying "Thank You" to our loyal clientele for their support and patronage spanning three generations.
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Super Milk Toffees:

Mitchell's new Super Milk Toffees are bigger in size and better in taste than any other Milk Toffees, which will bring lots of fun and excitement for you to share with your friends and family. Mitchell's Milk Toffees are made with pure butter and creamy milk - umm mouth watering! Which are immensely popular for their taste, texture and flavour both with children and grown-ups alike for the last two decades
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Marketing Strategies Of Mitchells Fruit Farm Limited

MARKETING STRATEGIES
The most interesting part of commerce is the marketing; this is the latter addition of the business tools. starts with conceiving idea of presenting a product, traditionally producers were interested in producing those goods only which has existing pull, whereas now because of marketing tools they are producing with the intention of pushing the product into consumer s hand. Marketers use numerous tools to elicit desired response from their target markets. These tools constitute a marketing mix. Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups that he called the four P's of marketing:
y y y y
Product Price Place Promotion
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Product
Defining the characteristics of your product or service to meet the customers' needs.
Place or distribution
Looking at location (e.g. of a library) and where a service is delivered (e.g. are search results delivered to the user's desktop, office, and pigeonhole - or do they have to collect them).
Price
Deciding on a pricing strategy. Even if you decide not to charge for a service, it is useful to realize that this is still a pricing strategy. Identifying the total cost to the user (which is likely to be higher than the charge you make) is a part of the price element.
Promotion
This includes advertising, personal selling (e.g. attending exhibitions), sales promotions (e.g. special offers), and atmospherics (creating the right impression through the working environment). Public Relations are included within promotion by many marketing people.
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MITCHELL S MARKETING STRATEGIES

1. Pricing Strategy:
Mitchells pricing goal is to increase sales volume and maintain or increase the market share. In order to seek higher sales volume we often apply discounting techniques or other aggressive pricing strategies. Mitchells had charged premium price due to there brand image in the market for a long time. But, due to shift in demand it has become almost to its competitors.They cannot afford to fall below certain level of prices as they have to maintain certain profit level.
Price Structure
The prices of Mitchell s products are within the customer s buying power. Mitchell s also give discounts to their regular customers. Mitchell s has set prices in such a way that it offers the most quality products with acceptable prices. Its prices are very much comparable with its competitors. It also considers the fact that Pakistani market is not as much economically viable as the other foreign markets. So it keeps in mind all the below line factors while setting the prices of the products.
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2. PLACE STRATEGY
Mitchell s adopted the channel-Structure Strategy for distribution. They believe that product should be distributed directly from manufacturer to customer or indirectly through one or more intermediaries. They sell their products sometimes directly and sometimes they sell their products through retailers. Like in Lahore they need to sell their products between the months of March till November where as on the other side in Karachi the demand of the Squashes remain the same throughout the year since there need to have other distribution channels as compare to Lahore. Although Mitchell s make use of the direct distribution strategy and indirect distribution strategy and hence that is why the eye level is always filled with the products of Squashes, which leads to a good result of increase in sales. As they have firm distribution network they follow the path Producer----- Wholesaler ---- Retailer ---- Consumer They also distribute directly to some retailers for example they supply directly to the Airlines and Hotels like PIA and Pearl Continental.
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3. Promotion Strategy
Target market:
In this particular add, the company has targeted a child of 6 years of age ranging to 65 years old grandfather. As there are number of products shown in this ad which are directed toward different age groups.
Core message of ad:

The core message of the ad is that the company wants to develop its corporate image. They are celebrating there 75 years of farm freshness. That means that this company is serving the customers from the last 75 years and they have been consistent upon there quality and providing the customers fresh products which is actually there USP. The first line of the ad Bach pan ki kuch yadein hain . We remember our childhood when we grow up. So Mitchells is associated with the child hood memories as it is a brand which is used by generation to generation. There is an affiliation associated with it for years and the reason for this relationship between the company and the customers is the fresh raw material used for the products.
Sales Promotions:
Public Relations Mitchell's has joined hands with the village communities as well as the British Council, the Department for International Development (UK) and Voluntary Service Overseas (UK) in an effort to promote education in rural areas. Twenty-five girls' schools have been set up in the Okara district in an endeavour to boost the levels of female literacy. Also a Teachers Training Institute has been set up to provide quality teaching staff to the local schools
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Advertisements
Advertisement plays very important role in promoting the image and name of the company. Because you can give your massage and persuade the person (person may be Customer, client etc) to buy your product, therefore effective advertisement plays important role in the success of product. They give full-page coverage in newspaper and also made advertisement in the television. Also providing advertisements on online facility through creating Web Page, giving all required information about the products. They also advertise in weekly newspapers and magazine.
Promotional themes
It also uses other below line activities to promote its product like by using the following techniques:
y Free sampling y Door to selling y Prizes
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4. Product Strategy
Mitchell s is a famous group of companies. It is well known for its rendered services in food sector. Mitchell s has expertise in baby food, cereal, milk, dairy, mineral water, pet food etc. Mitchell s has more than 50 conumer products in Pakistan. Good nutrition is essential from the very beginning. That's why Mitchell s strives to provide the best for everyone. Mitchell s has recognized the special nutritional requirements of infants and young children from about 4 6 months p to 3 years by introducing a complete range of candies, jams, toffees specially adapted to their needs. They add specific nutrients to their products and encourage children to consume nutritious products with different flavors, colors and shapes. A balanced diet can also include chocolates, biscuits and ice creams. For small children, Mitchell s offers smaller sizes and portion able packs.
Main brands:
y y y y y James Jellies Pickles Squashes chocolates
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SWOT Analysis Of Mitchells Fruit Farm Limited

Swot Analysis:
In SWOT Analysis we check the strengths, weaknesses, Opportunities and the Threats of the organization which is helpful to make the proper strategies for the organization. In short,
It is a simple and powerful way to analyze the current market situation.
S W O T
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STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

SWOT ANALYSIS OF MITCHELLS FRUIT FARM LIMITED:

SWOT Analysis of MITCHELLS FRUIT FARM LIMITED involves two type of analysis.
1. Internal Analysis 2. External Analysis
INTERNAL ANALYSIS:
While doing the Internal Analysis of MITCHELLS FRUIT FARM LIMITED we will check their,
y Strengths y Weaknesses
EXTERNAL ANALYSIS:
External Analysis involves the analysis of the External Environment Of the organization. In the External Analysis Of MITCHELLS FRUIT FARM LIMITED we will check the,
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y Opportunities y Threats
Strengths:
y Having its own growing and processing facilities y Modern high-volume industrial equipment y Professional management and a trained workforce y A smooth distribution system with nationwide coverage y Right products, quality and reliability.
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University of the Punjab, Gujranwala Campus y
Management is committed and confident
Weaknesses
MITCHELLS FRUIT FARM LIMITED like all other organizations also has some weak points. The detail description of the weaknesses is as under:
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y Customer lists not tested y Some gaps in range for certain sectors y Customer service staff needs training y More budget needed for Human Resource Development y A big deficiency is the high cost of the products y Lack in promotional and advertising policies y They have limited number of distribution channels in Pakistan.
Opportunities
MITCHELLS FRUIT FARM LIMITED has following opportunities in the external and internal environment.
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y Can maintain its position as market leader y Can also continue to be a trend setter y International and domestic market expansion y Introducing new verities of food products y Local competitors have poor products y End-users respond to new ideas y Can surprise competitors
Threats
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y Political instability y International Financial crises y Challenge of work force diversity y Changing technology and concept y Legislation could impact y Retention of key staff critical y Possible negative publicity y Market demand very seasonal
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Ratio Analysis Of Mitchells Fruit Farm Limited
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FINANCIAL ANALYASIS
Analysis of Financial Statements:
While assessing the financial position of any organization one should be very careful about the figures because mostly organization based on its financial structure and right effective & efficient allocation of money to different needs. Best technique in this regard is of , ratio analysis, which without any complexities provides as an increase look of company. For the assessments of financial resources Mitchell s we also use the ratio analysis in order to get a clear vision with simple interpretation.
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RATIO:
RATIO IS THE
MATHEMATICAL EXPRESSION THAT WILL EXPLAIN THE RELATIONSHIP
BETWEEN TWO VARIABLES.
ACCOUNTING RATIO:
THE RATIO WHICH WILL EXPLAIN THE RELATIONSHIP
AMONG THE VALUES OF DIFFERENT ITEMS THOSE WILL APPEAR ON THE FINANCIAL STATEMENT OF AN ENTERPRISE.
For this purpose we analysis the financial statements following ways:
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TYPES OF ACCOUNTING RATIOS

There are five types of ratios. Those are
y Solvency ratio y Liquidity ratio y Activity ratio y Profitability ratio
y Market ratio
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Now we will explain these ratios briefly.
1- Liquidity ratio
Liquidity refers to the solvency of the firms overall financial position _the ease with which it can pays its bills
Ratio that will mere explains the ability of a business to fulfill its short term obligations are called as liquidity ratio.
Three basic measures of liquidity ratio are:
y Current Ratio
CURRENT ASSETS Current Liabilities
y Quick Ratio
Quick Assets Current Liabilities
y Absolute Liquid Ratio =
Absolute Liquid Assets Current Liabilities
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2- Activity Ratio
Activity ratio are used to measure the speed with which various account are converted into sales & cash . With regards to current account, measure s of liquidity are inad equate
These ratios will relate the efficiency of the management with the utilization of the resources of the enterprise to generate profit.
Five basic measures of Activity ratio are:
y Stock Turnover Ratio = Cost of goods Sold Average Stock
y Debtors Turnover Ratio = Net Credit Sales Avg. Account Receivables
y Creditor Turnover Ratio= Net Credit Purchases Average Accounts Payable
y Working Capital Turnover Ratio=Cost of Sales Net Working Capital
y Fixed Assets Turnover Ratio = Cost of Sales Net Fixed Assets
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3-Solvency Ratio
The debt position of a company indicates the amount of others peoples money being used in generating profits in general financial analyst most concerned with long term benefits.
The ratios that will indicate the ability of an enterprise to fulfill its long term obligation are called solvency ratio.
Basic measures of Solvency ratio are:
y Debt Equity Ratio = External Debt Internal Debt
y Total Long-Term To Shareholders Fund = Total Long-Term funds Shareholders Fund
y Debt Service or Interest Coverage Ratio =
N P B I T Fixed Interest Charges
y Fixed Asset Ratio = Net Fixed Asset Long Term Funds y Capital Gearing Ratio = y Proprietary Ratio = Equity Total Long Term Debts
Equity Total Fixed Assets
y Fixed Assets To Net Worth Ratio = Net Fixed Assets Equity
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4- Profitability Ratio
There are many measures of profitability. Each related the return of the firm to its sales, assets, equity, or share value. As a group, these measures allow the analyst to evaluate the firms earnings with respect to a given level of sales a certain level of assets, the owners investment, or share value. With out profit, a firm could not attract outside capital.
These ratios measure the performance of the company with reference to its competitors are called profitability ratio.
Basic measures of Profitability ratio are:
*100 y Gross Profit Ratio= G.P Net Sales y Operating Profit Ratio = NPBIT *100 Net Sales
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y Operatiing Ratiio = CGS+Operatiing Exp *100 y Operat ng Rat o = CGS+Operat ng Exp *100 Net Salles Net Sa es y Return on sharehollder fund/equiity y Return on shareho der fund/equ ty = Net Profiit After Interest & Tex = Net Prof t After Interest & Tex Equiity Equ ty y Return on Gross Capiitall Emplloyed y Return on Gross Cap ta Emp oyed = Net Profiit After Interest & Tex = Net Prof t After Interest & Tex Gross Capiitall Emplloyed Gross Cap ta Emp oyed y Net Profiit Ratiio y Net Prof t Rat o = = Net Profiit Net Prof t Net Salles Net Sa es y Return on net capiitall emplloyed = NPBIT * 100 y Return on net cap ta emp oyed = NPBIT * 100 Net capiitall emplloyed Net cap ta emp oyed 100 100 100 100 100 100
72
5- Marketing Ratio
These ratios relate to the enterprise market value as measured by its current share price to certain accounting value.
RATIO ANALYSIS BASED ON :

y Comparative analysis y Time Series Analysis y Cross sectional analysis
Comparative Analysis:
THE ANALYSIS OF AN ENTERPRISE ON THE BASIS OF ITS FINANCIAL DATA OF ANY TWO YEARS TO COMPARE ITS PERFORMANCE.
Time Series Analysis:

THE RATIO ANALYSIS OF AN ENTERPRISE BY USING ITS FINANCIAL DATA OF MORE
THAN TWO YEARS TO FIND ITS AVERAGE TREND OF PERFORMANCE DURING THAT PERIOD OF TIME.
Cross sectional analysis:

THE RATIO ANALYSIS OF TWO OR MORE ORGANIZATIONS HAVING THE SAME NATURE
OF BUSINESS BY USING THEIR FINANCIAL DATA OF THE SAME YEAR TO COMPARE THEIR PERFORMANCE
73
Liquidity Ratios
74
1- Liquidity Ratio
Current Ratio= Current Asset Current liabilities
2007 = Rs.305, 663,238 Rs. 253025248 2008 = Rs.391, 583,837 Rs. 403,565,238
= 1.21:1
= 0.97:1
ANALYSIS:
y Comparison To Standard:
Current ratio of the company does not meet the required standard of 2:1.
y Comparison with previous year:

As compare to the previous year 2007 the current ratio has a decreasing trend .It decrease by 24% which is unfavorable sign for the company.
Current Ratio
Trend
Rate(%) Required decreasing/ Standard increasing
Comments
0.97
Decreasing
24%
2:1
Short term financial position is unfavorable as quick ratio decreased from last year and not fulfills the required standard.
75
Quick Ratio = Quick Assets Current Liabilities

2007 = Rs. 83,502,124 Rs. 253,025,248 2008 = Rs.63,283,351 Rs.403, 565,238 = 0.33:1
= 0.16:1
Analysis:
Quick ratio of the company does not meet the required standard of 1.5:1.

As compare to the previous year 2007 the current ratio has a decreasing trend. It decreases by 17% which is unfavorable sign for the company.
Quick Ratio
Trend
Rate(%) Required decreasing/ Standard increasing
Comments
0.16
Decreasing
17%
1.5:1
Short term financial position is unfavorable as quick ratio decreased from last year and not fulfills the required standard.
76
Absolute Liquid Ratio = Absolute Liquid Assets Current Liabilities

2007 = Rs.26,665,574 Rs. 253,025,248 2008 = Rs. 10,909,851 Rs. 403,565,238 = 0.11:1
= 0.03:1
Analysis:
Quick ratio of the company does not meet the required standard of 0.5:1.

As compare to the previous year 2007 the current ratio has a decreasing trend. It Absolute Ratio Trend Rate(%) Required decreasing/ Standard increasing Comments
0.03
Decreasing
8%
0.5:1
Short term financial position is unfavorable as current ratio decreased from last year and not fulfills the required standard.
decreases by 8% which is unfavorable sign for the company.
77
Overall Analysis of Liquidity Position

Liquidity Ratios are showing that the short term financial position of MITCHELLS Foods is unfavorable as all of the three Liquidity Ratios has decreasing trend and are not up to required standard.
Liquidity Ratios Current Ratio
2007
2008
Trend
Comments
1.21
0.97
Decreasing
Company does not have enough current assets to pay its current liability. Company does not have enough ready cash to pay its current liability. Company does not have enough cash to pay its current liability.
Quick Asset Ratio Absolute Liquid Ratio
0.33
0.16
Decreasing
0.11
0.03
Decreasing
So, after complete analysis of liquidity ratios we conclude that Mitchells Food Farm is not in a position to fulfill its short term obligations.
78
2007
2008
Liquidity Ratios
Absolute Liquid Ratio
Quick Asset Ratio
Current Ratio
0.2
0.4
0.6
0.8
1.2
1.4
79
ACTIVITY RATIOS
80
2- Activity Ratio
Stock Turnover Ratio = Cost of goods Sold Average Stock
2007 = Rs.706,265,864 = 3.82 times Rs.185, 037,159 2008 = Rs.848, 823,705 = 3.58 times Rs.236, 868,065.5
Analysis:
As compare to the previous year 2007 the stock turnover ratio has a decreasing trend. It decreases by 24% which is unfavorable sign for the company.
Stock turnover ratio of the company does not meet the required standard of increasing trend.
Stock turnover Ratio
Trend
Required trend
Rate(%) decreasing / increasing
Comments
3.58
Decreasi ng
increasin g
24%
As it is decreased from last year so it is unfavorable which shows that lesser time, stock is disposed of in to sales.
81
Inventory conversion = No. of days in a year Period Inventory turn over ratio
2007 = 360 days = 90 days 3.82 times 360 days 3.58 times = 90 days
2008 =
Analysis:
As compare to the previous year 2007 the inventory conversion period remains stable. It means that company s stock take 90 days to be sold.
Although the Inventory conversion ratio of the company remain unchanged but it is not fulfilling the required standard of increasing trend.
Inventory conversion period
Trend
Required trend
Rate(%) decreasing/ increasing
Comments
90 days
Stable
increasing
As it remains the same so management has stability in its sale policies.
82
Debtors Turnover Ratio = Net Credit Sales Avg. Account Receivables

2007 = Rs. 866,618,994 = 19 times Rs. 45,932,040 2008 = Rs. 1,038,637,296 = 24 times Rs.42, 499,889.5
Analysis:
As compare to the previous year 2007 the Debtors Turnover Ratio is increasing. It means that company s management has ability to create more debtors.
Debtors turnover ratio of the company has met the required standard of increasing trend.
Debtors turnover ratio
Trend
Required trend
Comments
24 times
increasing increasing
79%
Debtors turnover ratio is increasing so it is favorable for the company as it shows that management create more debtors.
83
Average collection period= No. of days in a year Inventory turn over ratio
2007 2008 Analysis:
360 days 19 times 360 days 24 times
= 19 days
= 15 days

As compare to the previous year 2007 the Average collection period is decreasing. It means that company s management more efficiently recover cash from debtors as compare to the previous year.
Average collection period of the company has met the required standard of
Average collection period
Trend
Required trend
Comments
15 days
decreasing decreasing
79%
Average collection period is decreasing so it is favorable for the company as it shows that management has ability to recover cash from debtors in lesser days.
decreasing trend.
84
Creditor Turnover Ratio= Net Credit Purchases Average Accounts Payable

2007 = Rs.599,462,240 = 7 times Rs.89,142,916 2008 = Rs.683,238,738 = 8 times Rs.89,805,848
Analysis:
As compare to the previous year 2007 the Creditors Turnover Ratio is increasing. It means that company bears good repute among creditors and has more credibility.
Creditors turnover ratio
Trend
Required trend
Comments
8 times
increasing decreasing
87%
As it has increasing trend so it is favorable for the company which shows that management has more credibility as compare to last year and efficiently arrange fund from creditors.
85
Average Payment Period: = No. of days in a Year

Creditors turnover Ratio
2007 = 360 = 51 Days 7 2008 = 360 = 45 Days 8
Analysis:
As compare to the previous year 2007 the Average payment period is decreasing. It means that company s management is not efficiently use public funds for more time.
Average Payment period
Trend
Required trend
Comments
45 days
decreasing increasing
90%
Average payment period is decreasing so it is unfavorable for the company as it shows that management does not have ability to use funds for more time.
86
Working Capital Turnover Ratio=Cost of Sales Net Working Capital

2007 = Rs.706, 265,864 = 13 times
Rs.52, 637,990
2008 = Rs.848, 823,705 = Rs. (11,981,401) 71 times
Analysis:
As compare to the previous year 2007 the Working Capital Turnover Ratio is increasing. It means that company does not have enough working capital to pay running finance.
Working capital ratio
Trend
Required trend
Comments
71 times increasing decreasing
18%
As it has increasing trend so it is unfavorable for the company which shows that company is unable to pay its short term expenses.
87
Fixed Assets Turnover Ratio = Cost of Sales Net Fixed Assets

2007 = Rs.706, 265,864 =2.58 times Rs.272, 725,302 = Rs.848, 823,705 =2.57 times Rs.329, 787,878
2008
Analysis:
As compare to the previous year 2007 the Fixed Asset Turnover Ratio is almost stable. It means that company has slightly same fixed assets to meet its running Fixed asset turnover ratio Trend Required trend Rate(%) decreasing / increasing Comments
2.57 times
Stable
decreasin g
1%
As it has stable trend so company is using its fund in maintain its fixed assets
expenses as in last year.
88
Overall Findings of Activity Ratios

After complete Analysis of Activity Ratios we find that over all the management activities remains inefficient as there are many symptoms which show the lack of effectiveness and efficiency in management s policies and control. Following Ratios shows the efficiency of management:
Creditors Turnover Ratio Debtors Turnover Ratio
Following Ratios shows the inefficiency of management Stock Turnover Ratio Average Collection Period Working Capital Turnover Ratio
89
Activity Ratios
Stock Turnover Ratio
2007
2008 Trend
Comments
3.82
3.58
Decreasing Unfavorable as lesser times the stock has been made and sold. There is stability as stock is sale out after regular period.
Inventory Conversion Period
90
90
Stable
Debtors Turnover Ratio Average Collection Period Creditors Turnover Ratio Average Collection Period
19 24 Increasing
Favorable as more debtors have been created.
19
15
Decreasing Unfavorable as recovery is made in more days. Increasing Favorable as credibility have been increased. Decreasing Unfavorable as lesser time is available to use the funds.
51
45
Working Capital Turnover Ratio
13
71
Increasing Unfavorable as there is not enough working capital to cover CGS.

Almost Stable Favorable `
Fixed Assets 2.58 Turnover Ratio
2.57
90
Activity Ratio
Fixed Assets Turnover Ratio
Working Capital Turnover Ratio
Average Collection Period
Creditors Turnover Ratio
Average Collection Period
Debtors Turnover Ratio
Inventory Conversion Period
Stock Turnover Ratio
10
20
30
40
50
60
70
80
90
100
2007
2008
91
SOLVENCY RATIOS
3-Solvency ratio
Debt Equity Ratio = External Debt Internal Debt
2007 2008
= Rs.460, 541,469 Rs.262, 572,706 = Rs.848, 823,705 Rs.260, 830,246
=1.75:1
=3.25:1
Analysis:
As compare to the previous year 2007 the Debt Equity Ratio is increasing which shows that company obtains more debts in 2008.
Debt equity ratio
Trend
Required trend
Comments
3.25:1
As it has increasing trend so it is unfavorable increasing decreasing for the company which shows that company is under the burden of extra debts.
93
Total Long-Term Debt to Shareholders Fund = Total Long-Term funds Shareholders Fund
2007 2008
= Rs.62,790,586 Rs.262, 572,706 = Rs.56,976,231 Rs.260, 830,246
= 0.24:1
= 0.22:1
Analysis:
As compare to the previous year 2007 the Long Term Debts to Shareholders Equity Ratio is Decreasing which shows that company obtain more debts from internal resources in 2008.
L/T debts to Equity
Trend
Required trend
Comments
0.22:1
As it has decreasing trend so it is favorable for decreasing decreasing the company which shows that company s internal equity is increasing.
94
Debt Service or Interest Coverage Ratio

= N P B I T Fixed Interest Charges
2007 2008
= Rs.61,033,471 = 29 times Rs.21,267,849 = Rs.45,436,673 = 1 times Rs.32,323,268
Analysis:
As compare to the previous year 2007 the Debts Service Ratio is decreasing which shows that company earns a small profit which can cover its interest expense only one time in 2008.
debts service ratio
Trend
Required trend
Comments
1 time
As it has decreasing trend so it is unfavorable decreasing increasing for the company which shows that company s current year profit is not sufficient to pay its interest charges.
95
Fixed Asset Ratio
= Net Fixed Asset Long Term Funds
2007 2008
= Rs.272,725,302 = 4.3:1 Rs. 62,790,586 = Rs.329,787,878 = 5.8:1 Rs.56,976,231
Analysis:
As compare to the previous year 2007 the Fixed Asset Ratio is increasing which shows that company s long term funds are used in purchase of fixed asset at a higher rate in 2008 as compared to previous year.
Fixed asset ratio
Trend
Required trend
Comments
5.8:1
As it has increasing trend so it is favorable increasing increasing for the company which shows that company s current year long term funds are used in an efficient way to purchase fixed asset.
96
Capital Gearing Ratio =
Equity Total Long Term Debts
2007 2008
= Rs. 262, 572,706 = 4 times Rs. 62,790,586 = Rs.260,830,246 = 5 times Rs.56, 976,231
Analysis:
As compare to the previous year 2007 the Capital gearing Ratio is increasing which shows that company s shareholder equity has a lower proportion as compared to fixed cost bearing securities in 2008.
Capital bearing ratio
Trend
Required trend
Comments
5times
As it has increasing trend so it is favorable for increasing increasing the company .
97
Proprietary Ratio =
Equity Total Assets
2007 2008
= Rs. 262, 572,706 = 0.45:1 Rs. 578,388,540 = Rs.260,830,246 = 0.36:1 Rs.721, 371,715
Analysis:
As compare to the previous year 2007 the Proprietary Ratio is decreasing which shows that in financing the total business of company 64% of funds have been supplied by outside creditors in 2008 which is higher then 2007 and 36% are by shareholders.
Proprietary ratio
Trend
Required trend
Comments
0,36:1
As it has decreasing trend so it is favorable decreasing decreasing for the company.
98
Fixed Asset to Net worth Ratio = Net Fixed Asset

Shareholders Fund
2007 2008
= Rs.272, 725,302 = 1.04:1 Rs. 262,572,706 = Rs.329,787,878 = 1.26 :1 Rs.260,830,246
Analysis:
As compare to the previous year 2007 the Fixed Asset to net worth Ratio is increasing which shows worth of business of company is in 2008 increase as compare to 2007.
F/A to net worth
Trend
Required trend
Comments
0,36:1
As it has increasing trend so it is favorable for increasing increasing the company showing greater worth of business.
99
OVERALL FINDINGS OF SOLVENCY RATIOS

After complete Analysis of Solvency Ratios we find that, on one side the equity and the fixed assets have been increased due to which following ratios are showing favorable signs for current year as compared to previous year : Capital gearing ratio Long term debt to equity Proprietary ratio Fixed assets ratio Fixed Asset Ratio
On the other hand interest expense and total debt have also been increased due to which following ratios are showing unfavorable signs for the concern: Debt equity ratio Debt ratio Debt service ratio
100
Solvency Ratios
2007 2008
Trend
Comments Unfavorable, as debts have increased in 2008
Debt Equity Ratio Long Debt to Shareholders Fund
1.75
3.25
Increasing
0.24
0.22
Favorable, as it shows that Decreasing internal equity is increasing. Unfavorable due to increase Decreasing in interest expenses as compare to profit. Favorable, as it shows the equity is increasing as compare to last year.
Debt Service Ratio
29
Capital Gearing Ratio
Increasing
Proprietary Ratio
0.45
0.36
Favorable as internal decreasing liabilities are decreasing as compared to fixed assets. Favorable, company s current year long term funds are used in an efficient way to purchase fixed asset at a higher rate. Favorable as it shows the funds are being properly utilized in long term benefit of business at a higher rate.
Fixed Asset Ratio
4.3
5.8
Increasing
Fixed Assets to Long Term Funds Ratio
1.04
1.26
increasing
101
2007
2008
Solvency Ratio
Fixed Assets to Long Term Funds Ratio
Fixed Asset Ratio
Proprietary Ratio
Capital Gearing Ratio
Debt Service Ratio
Long Debt to Shareholders Fund
Debt Equity Ratio
10
15
20
25
30
35
102
PROFITABILITY RATIOS
103
4- Profitability Ratios
Gross Profit Ratio= gross profit * Net sales
2007
100
= RS.160, 353,130 * 100 = 18.5% RS.866, 618,994
2008
= RS.189, 813,591
* 100 = 18.3% RS.1, 038, 637,296
ANALYSIS;
As compare to the previous year 2007 the Gross Profit Ratio is decreasing which Gross Profit Ratio Trend Required trend Comments
18.3%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing lesser gross profit as compare to previous year.
shows less gross profit as compare to 2007.
104
Operating Profit Ratio = operating profit Net Sales * 100
2007
= RS.61, 033, 471 * 100 = 7.0% RS.866, 618,994
2008
= RS.45, 436, 673 * 100 = 4.4% RS.1, 038, 637,296
ANALYSIS:
As compare to the previous year 2007 the Operating Profit Ratio is also decreasing which shows less operating profit in 2008 as compare to 2007.
Operating Profit Ratio
Trend
Required trend
Comments
4.4%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing lesser operating profit as compare to previous year.
105
Operating Ratio = CGS+Operating Exp * 100 Net Sales

2007 = RS.809, 597, 370 * 100 = 93.4% RS.866, 618,994 = RS.45, 436, 673 * 100 = 96.2% RS.1, 038, 637,296
2008
ANALYSIS:
As compare to the previous year 2007 the Operating Ratio is increasing which shows less operating profit and higher operating expenses in 2008 as compare to 2007.
Operating Ratio
Trend
Required trend
Comments
96.2%
As it has increasing trend so it is unfavorable increasing decreasing for the company showing less profitability inefficiency of management
106
Net Profit Ratio =
Net Profit Net Sales
100
2007
= RS.25, 665, 622 * 100 = 2.96% RS.866, 618,994
2008
= RS.8, 337, 540 * 100 = 0.8% RS.1, 038, 637,296
ANALYSIS:
As compare to the previous year 2007 the Net Profit Ratio is decreasing at a higher rate which is alarming for company as it shows that overall profitability is very lowing 2008 as compare to 2007.
Net Profit Ratio
Trend
Required trend
Comments
0.8%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing less portion of net sales is left for the owners after all expenses have been met.
107
Return on shareholder fund/equity = Net Profit After Interest & Tax * Shareholder Equity
2007 = RS.25, 665, 622 * 100 = 9.8% RS.262, 572, 706 = RS.8, 337, 540 * RS.260, 830, 246 100 = 3.2%
100
2008
ANALYSIS:
As compare to the previous year 2007 the Return on equity Ratio is decreasing at a higher rate as it shows that overall net profit is very low in 2008 to pay to shareholders, as compare to 2007.
Return on equity
Trend
Required trend
Comments
3.2%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing net profit available for shareholder is very small.
108
Return on Gross Capital Employed = Net Profit After Interest & Tax Gross Capital Employed
2007 2007
100
= RS.25, 665, 622 * 100 = 7.9% = RS.325, 363, 292 = RS.8, 337, 540 * RS.317, 806, 477 100 = 2.6%
2008
ANALYSIS:
As compare to the previous year 2007 the Return on Gross capital employed is decreasing at a higher rate as it shows that profit available to total investment including investment outside the business is very low in 2008, as compare to 2007.
Return on GCE
Trend
Required trend
Comments
2.6%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing profit available is very small.
109
Return on net capital employed = Net Profit before Interest and Tax Net capital employed
2007
100
= RS. 61, 033, 471 * 100 = 18.8% RS.325, 363, 292 = RS. 45, 436, 673 * RS.317, 806, 477 100 = 14.3%
2008
ANALYSIS:
As compare to the previous year 2007 the Return on Net capital employed is decreasing at a higher rate .It shows that profit available to total investment excluding investment in fixed asset outside the business is very low in 2008, as compare to 2007.
Return on NCE
Trend
Required trend
Comments
14.3%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing poor profitability.
110
Earnings per share: = Net Profit 100 No of equity shares

2007 2007 = RS.25, 665, 622 = RS.5, 040,000 = RS.8, 337, 540 RS.5, 040,000
100 = 5.09%
2008
100 = 1.65%
ANALYSIS:
As compare to the previous year 2007 the Earnings per Share is decreasing at a higher rate .It shows that per share dividend available to each share holder is very low in 2008, as compare to 2007.
Earnings per Share
Trend
Required trend
Comments
1.65%
As it has decreasing trend so it is unfavorable decreasing increasing for the company showing poor profitability.
111
OVERALL FINDINGS OF PROFITABILITY RATIOS

After complete Analysis of Profitability Ratios we find that overall profitability ratios of Mitchells Foods have been decreased. We find that company made a very low profit in year 2008 due to which: Operating expenses are more than profit of company. Return on gross and net capital has also been decreased in 2008. Per Share Earning is also decrease at a very high Rate.
112
Profitability Ratio
Gross Profit Ratio Operating Profit Ratio Net Profit Ratio
2007
2008
Trend
Comments
18.5%
18.3%
Decreasing Unfavorable as gross profit is decreasing. decreasing Unfavorable as operating profit is decreasing. Unfavorable as more interest expenses have been paid.
4.4% 7%
Decreasing 2.96% 0.8%
Return on Shareholders fund Return On Gross Capital Employed Return on Net Capital Employed Earnings Per Share
Unfavorable as profits are not increasing with reference to funds. Unfavorable as profit not increase to total investment.
Unfavorable as profit not increase to the net investment in business. Unfavorable as EPS has decreased than 2007.
Rs.5.09
Rs.1.65
decreasing
113
2007
2008
Return on Net Capital Employed
Return On Gross Capital Employed
Return on Shareholders fund
Net Profit Ratio
Operating Profit Ratio
Gross Profit Ratio
0.00%2.00%4.00%6.00%8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00%
114
Marketing Ratios
5- Marketing Ratio
Price Earning Ratio:
= Market price per share of common stock Earning per share
2007
= RS.10 = RS.5.09
=1.96%
2008 ANALYSIS:
= RS.10
RS.1.65
=6.06%
As compare to the previous year 2007 the Price Earnings Ratio is increasing in 2008, as compare to 2007.
Price Earnings Ratio
Trend
Required trend
Comments
6.06%
As it has increasing trend so it is favorable for increasing increasing the company showing increase in worth of shares.
116
Market to book value ratio:

= Market price per share of common stock
Book value per share
2007
= RS.10 = RS.10
=1%
2008
= RS.10
RS.10
=1%
ANALYSIS:
As compare to the previous year 2007 the Market to book Value Ratio is remain stable in 2008 and 2009.
Market to book Value
Trend
Required trend
Comments
6.06%
stable
As it has stable trend so it is favorable for the increasing company.
117
OVERALL FINDINGS OF MARKETING RATIOS

Marketing Ratio
Price Earnings Ratio 1.96% 6.06% increasing As it has increasing trend so it is favorable for the company showing increase in worth of shares. As it has stable trend so it is favorable for the company.
2007
2008
Trend
Comments
Market to book Value
6.06%
6.06% increasing
Price Earnings Ratio Market to book Value
0.00%
5.00%
10.00%
15.00%
118
Recommendations & Conclusion
119
RECOMMENDATIONS
y Management of Mitchells Fruit Farm Limited should take steps in increasing its current assets because its Short term financial position is unfavorable as quick ratio decreased from last year and not fulfills the required standard Long term debts are increasing with the passage of time, so there must be sufficient control on debts.
Cost of goods has been increasing so steps must be taken to have control on these expenses.
Proper and efficient steps must be taken to reduce the operating expenses.
Management of Mitchells Fruit Farm Limited must take some steps to increase the its sales with the help of proper and effective marketing.
Proper terms and conditions must be settled for collection from debtors
120
CONCLUSION
Mitchell s is very much conscious and careful about its sales and about the customer level satisfaction and since 1933 they tried to maintain a same graph of satisfaction level and give customer a quality, fresh farm products direct from their own farms. Mitchell s is very much concerned about its SWOT analysis and keeping a closer eye on every action it can take for the better of its products. Every SBU has its own strategies to make and to implement and here at SBU level business strategy focus more narrowly on their own products. The MD plays an important and central role for the strategic planning to be more effective not just as a MD but also as a strategic thinker and corporate culture leader. Mitchell s management deals with developing a marketing mix to serve a designated market. Their main focus is on the strategies at SBU level where Mitchell s make their strategies considering three forces: Customer Competition Corporation
121
And in addition to this internal and external factors also play an important role to develop strategy. Mitchell s is concerned about the external information pertains o social, economic, political and technological trends and product/market environment. The information is analyzed to identify the SBU s strengths and weaknesses, which together with competition and customer define the objective of SBU. Mitchell s is also very concerned about the Corporate Appraisal and for this they keep a closer interact with all the groups of corporate publics having a stake in the organization. In this context Mitchell s is very much concerned about the Financial Position of the company. And they evaluate this factor very closely for the further decision making of their products.
122
Annual Reports 2007 & 2008

124
125
126
127
128
129
Glossary
Accountant: A person who is involved in the profession of accountancy. Accounting Policies: The accounting principles that will be followed by an enterprise for the preparation of its financial statements Accounting concepts: These are the assumptions of accounting which can be taken to prepare the financial statement of an enterprise. Accounting convention: these are tradition and customs of accounting which will be followed at all over the world to complete the work of accounting. Accounting cycle: The accounting process that begins with analyzing and journalizing transaction and ends with summarizing and reporting this transaction. Accounting Principles: These are the rules and regulation which will be followed by the accountants and all over the world for the works of accounting. Accounting ratios: The ratios which will explain the relationship among the value of different items those which will appear on the financial statements of an enterprise. Accounting: An Art of recording, classifying and summarizing in a significant manner and in terms of money, transaction and events which are, in part at least , of a financial Accrued expenses: accrued expenses or accrued liabilities are the liabilities which have been incurred but not have been recorded in the accounts. Activity Ratio: To check the overall management of an enterprise. Adjusting entries: At the last day of accounting period adjusting entries will be passed to fulfill the requirements of matching concept. A financial statement: statements which will provide financial information. Annual report: Formal financial statements, the auditors report, together with the director s report issued by a company. Assets: What the company owns and various debts owing to it. Average collection period: Shows whether the management efficient to make recoveries from the debtors in lesser days.
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Average payment period: Shows the efficiency of management to use public funds for more period of time. Balance sheet ratios: The ratios which are derived from two variables appearing in the balance sheet. Balance sheet: It shows the worth of the business. Bonds: Fixed income securities, which entitle the holder to pre-determined returned during their life and repayment of principle at maturity. Book closing: The closure of books by a company to determine the shareholders right to receive bonus, dividend, rights etc. No transfers are recorded during this period. Book keeping: An art of recording monetary transaction in the books of account in a proper manner. Book value: The value on which the share is recorded in the books of accounts of an enterprise. Boom: Denotes greater activity on the stock exchange. Broker: A person who provides services against the commission. Business: Any legal activity which is done for the purpose of earning profit is known as profit. Capital gain: Profit from the sale of a capital asset, including securities. Capital gearing ratio: measures whether equity is increasing at higher ratio as compared to its internal liabilities. Capital loss: Loss from the sale of a capital asset, including securities. Capital: funds invested by the owners. Cash Flow statement: It will provide information about the inflows and outflows of cash. Comparative Analysis: The ratio analysis of an enterprise on the basis of its financial data of its any two years to compare is performance. Creditor turnover ratio: indicates the credibility of an enterprise. Credits: Amount entered on the right side of an account. Cross sectional analysis: The ratio analysis of two or more organization having the same nature of business by using their financial data of the same year to compare their performance. Current assets: assets which can be converted into cash within one year.
Current liabilities: The external dues that will be due within a short time of one year.
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Current ratio: It is a way of expressing the relationship between current assets and current liabilities. Debits: Amount entered on the left side of an account. Debt service ratio: Shows how much profit the business has to cover interest expense. Debtor turnover ratio: Shows how many times accounts receivables have been created by making credit sales. Depreciation: Decrease in the value of asset due to wear and . . Tear and its usage. .
Dividend cover ratio: This ratio shows that whether the enterprise has enough profit to cover the dividend payable to the shareholders. It must have an increasing trend. Dividend: That part of a company s profits which is distributed among the shareholders. Drawings: The amount that is taken away by the owner for his personal use from the business. Earning per share: A profitability indicator calculated by dividing the net profit after interest and taxes by the number of shares held by a stockholder Equity: The owners interest in a company s capital. Expenses: All the payments made and assets consumed in order to generate revenues. Face value: The value which is printed on the face of a share . Financial assets: provide benefits for more than one year. Financial Statement: The statements which represent the monetary information about the affairs of an enterprise. Fiscal year: Annual accounting period adopted by a business. Gross profit: difference between sales and cost of goods sold. Income Statement: It provides information about the income and expense of a business during a particular period of time. Income summary: An account where the expenses and the revenue accounts balances are transferred at the end of accounting period. Intangible assets: which do not have physical existence? Inventory conversion period: shows whether management is efficient in disposing off the stocks in few days. Investment: To commit in order to earn a financial return.
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Investor: A company which issues shares and uses its capital to buy securities and shares in other companies. Journal: In this book, all the transaction will be recorded in a chronological order. Liabilities: external claims of an enterprise. Liquid assets: Assets which are near to cash. Liquidity ratio: It tells us the short term financial position of an enterprise. Liquidity ratio: Measures the short term financial position of an enterprise. Listed company: A company whose securities are admitted for listing on a stock exchange. Market ratio: These ratio relates to the enterprise market value as measured by its current share price to certain accounting period. Market value: The price on which the share is available in the Market. Material Information: Any information that is important for the stock holder will be known as material information. Natural business year: A fiscal year that ends when the business activities have reached the lowest point in its annual operating cycle. Nominal account: The accounts which will deal with the transactions of expenses and revenues. Non current liabilities: Liabilities payable after one year. Notes receivable: Notes receivable are the amount customers owe and they are written Operating income: Difference between gross profit and operating expenses or income before interest and taxes. Operating expenses: Include administration expenses, distribution expenses and marketing expenses. Organization: It is an open system which has an interact with environment. Owner s equity Statement: It will provide information about the investment of owners. Owner s equity: The finance which are provided by the owners to a business. Portfolio: A collection of investment. Prepayments: Expenses paid in advance but not increased yet.
Price earning ratio: This ratio must have an increasing trend because it shows that the market price per share is increasing at a higher rate as compare to the earning per share.
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Profit and loss account ratios: The ratios which are derived from the variables appearing in the manufacturing, trading and profit and loss account . Profit: Profit is the end result of an enterprise. Profitability ratio: To compare the financial position with the competitors. Proprietory ratio: indicates that profits are increasing at higher rates as compared to its internal liabilities. Ratio: It is a mathematical expression that will explain the relationship between two variables. Real accounts: The accounts which deals with the transaction of assets and liabilities and equity. Retained earning: Profits earned and retained in the business to meet operating expenses or for acquiring additional assets or for any other purpose. Revenue: Earning of a business is called revenue. SECP: Security and Exchange commission of Pakistan, An institution who is responsible to control the working of companies and auditors in Pakistan. Share: Capital of an enterprise divided into smaller units, each unit is called share. Solvency ratio: It tells us the long term financial position of an enterprise. Solvency ratio: These ratios indicate the long term financial position of an enterprise. Solvency: The ability of an enterprise to pay its debts. Stake Holder: Any person who has any financial relation with an organization. Stock holder: Any person who will make investment in an organization. Stock market: a market where shares are sold and bought. Stock turn over ratio: Indicates how many times stock has been made and sold. Tangible assets: Assets which have physical existence. Time series analysis: The ratio analysis of an enterprise by using its financial data of more than two years to find its average trends of performances during that period of time. Transaction: Happening of an event Trial balance: All the final balances of account will be transferred to the trial balance to confirm that all debit balances must be equal to all credit balances. Working capital turnover ratio: Shows whether the company has enough working capital to cover cost of goods sold. Working capital: The excess of current assets of a business over its current liabilities.
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BIBIOLIGRAPHY
To complete this project we take references from a number of books, internet and company itself.
Web Base References www.mitchells.com www.wikipedia.com www.google.com www.altavista.com
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University of the Punjab, Gujranwala Campus

Submitted to: PROF.IRFAN University of the Punjab, Gujranwala campus

Group E MBA (morning) 1st semester

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

PROF.IRFAN University of the Punjab, Gujranwala campus.

TEACHER S NAME: PROF.IRFAN

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

From: Group E MBA (morning) 1st semester

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Recommendation & Conclusion Annual reports Glossary Bibliography

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Introduction Of Mitchells Fruit Farm Limited

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

History Of Mitchells Fruit Farm Limited

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

PHASE II: AFTER INDEPENDENCE

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Vision & Mission Statements

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

i To be a company that continuously enhances its superior technological

i To be a company that attracts and retains outstanding people by

i To be a company which combines its people, technology, management

i To be a company that endeavors to set the highest standards in

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Departments Of Mitchells Fruit Farm Limited

University of the Punjab, Gujranwala Campus

Departments of Mitchells Fruit Farm Limited

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Human Resource Department Production Department

Marketing Department Technical Services Department System Department

Financial Analysis of Mitchells Food Farm

University of the Punjab, Gujranwala Campus

Products Of Mitchells Fruit Farm Limited

University of the Punjab, Gujranwala Campus

Jam, Jellies & Marmalade: