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Financial Report on Pioneer Cement

Financial Report on Pioneer Cement

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

TABLE OF CONTENTS
TABLE OF CONTENTS......................................................................................................................................1 ACKNOWLEDGEMENT.....................................................................................................................................3 EXECUTIVE SUMMARY...................................................................................................................................3 PIONEER CEMENT LIMITED..........................................................................................................................5 BRIEF HISTORY ...............................................................................................................................................5 PHILOSOPHY:...............................................................................................................................................5 INCORPORATION:........................................................................................................................................5 PAID-UP CAPITAL/EQUITY............................................................................................................................5 VISION AND MISSION ....................................................................................................................................6 CORPORATE INFORMATION ........................................................................................................................6 COMPANY’S PROFILE.....................................................................................................................................7 .............................................................................................................................................................................7 DATA AND METHODOLOGY..........................................................................................................................7 DATA .................................................................................................................................................................8 METHODOLOGY..............................................................................................................................................8 RATIO ANALYSIS:.......................................................................................................................................8 DEFINITION OF ACCOUNTING RATIOS:.................................................................................................8 ADVANTAGES OF RATIOS ANALYSIS: ..................................................................................................8 LIMITATIONS OF RATIOS ANALYSIS:....................................................................................................9 TOOLS OF ANALYSIS........................................................................................................................................9 5.1. PERCENTAGE ANALYSIS:.....................................................................................................................10 FINANCIAL ANALYSIS....................................................................................................................................10 6.1. PERCENTAGE ANALYSIS......................................................................................................................11 6.1.1. HORIZONTAL ANALYSIS:..............................................................................................................11 6.1.2. VERTICAL ANALYSIS:....................................................................................................................17 6.6. VERTICAL ANALYSIS OF BALANCE SHEET....................................................................................21 6.6.1. ANALYSIS:.........................................................................................................................................24 6.1.3. TREND ANALYSIS...........................................................................................................................26

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7. RATIO ANALYSIS.........................................................................................................................................32 7.1. LIQUIDITY RATIOS.................................................................................................................................32 7.1.1. CURRENT RATIO:.............................................................................................................................32 7.1.2. QUICK RATIO:...................................................................................................................................35 7.1.3. TURNOVER/ACTIVITY RATIOS:...................................................................................................37 7.1.4. DEBTORS TURNOVER RATIO OR RECEIVABLES TURNOVER RATIO:................................39 7.1.5. TOTAL ASSETS TURNOVER RATIO:............................................................................................41 7.1.6. FIXED ASSETS TURNOVER RATIO:.............................................................................................43 7.2. PROFITABLITY RATIOS:.......................................................................................................................45 7.2.1. GROSS PROFIT (GP) RATIO:...........................................................................................................45 7.2.2. OPERATING PROFIT RATIO:..........................................................................................................47 7.2.3. RETURN ON ASSETS:......................................................................................................................50 7.2.4. RETURN ON EQUITY (ROE) RATIO:.............................................................................................51 7.2.5. DEBT RATIOS:...................................................................................................................................53 7.2.6. DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO:.....................................................54 8. GENERAL RATIO ANALYSIS....................................................................................................................57 8.1. PROFITABILITY ANALYSIS:.................................................................................................................57 8.2. LIQUIDITY ANALYSIS:..........................................................................................................................57 8.3. DEBT ANALYSIS:....................................................................................................................................58 8.4. ASSETS:.....................................................................................................................................................58 9. COMPANY ANALYSIS.................................................................................................................................59 10. CONCLUSION..............................................................................................................................................60 11. FUTURE OUTLOOK...................................................................................................................................61 12. BIBLIOGRAPHY..........................................................................................................................................62 13. WORK LOAD MATRIX..............................................................................................................................62

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ACKNOWLEDGEMENT
In the name of “Allah”, the most beneficent and merciful who gave us strength and knowledge to complete this report. This report is a part of our course “Financial Accounting”. This has proved to be a great experience. This report is a combine effort of Abu-Bakar Butt, Mariyum Javaid Sandhu, Shawana Javaid Sandhu and Sareena Khan. We would like to express our gratitude to Mr.Shehzad Moin who gave us opportunity to complete this report. We would also like to thank our colleagues who gave us many helpful comments which helped us a lot in preparing our report.

EXECUTIVE SUMMARY
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Dec 01st, 2009 Mr.Shehzad Moin Course Instructor, Financial Accounting Fast University Lahore. Sir: We herewith present our “Major Assignment” authorized by you as a requirement for this course. In this report, we have tried to provide analysis of financial statements of Pioneer Cement Ltd, Kohat Cement Ltd, Cherat Cement Ltd. We hope we have covered all that was required for the report. If there be any clarification demanded, we would appreciate a call from you to our group members. Sincerely, Abu- Bakar Butt Mariyum Javaid Sandhu Shawana Javaid Sandhu Sareena Khan

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PIONEER CEMENT LIMITED
BRIEF HISTORY
PHILOSOPHY:
The Management of Pioneer Cement Limited is committed to maintaining this quality policy at all levels of the company. For this, as well as to achieve our corporate objectives, we all shall work as a team and pursue continuous improvement.

INCORPORATION:
Pioneer Cement Limited (PCL) was incorporated in Pakistan as a public company limited by shares on February 09, 1986. Its shares are quoted on all stock exchanges in Pakistan. The principal activity of the Company is manufacturing and sale of cement.

PAID-UP CAPITAL/EQUITY

Paid up Capital

199.5 million shares of Rs. 10/= each

1,995

Shareholders’ Equity

2,401

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VISION AND MISSION
Pioneer Cement Limited is committed to make sustained efforts towards optimum utilization of its resources through good corporate governance for serving the interests of all its stakeholders.

CORPORATE INFORMATION

Company Name

PIONEER CEMENT COMPANY LIMITED.

Legal Status

Public Limited Company

7th Floor, Lakson Square Building No.3, Sarwar Shaved Road, Head Office Karachi, Pakistan. Telephone (021) 5685052-55 Fax (021) 5685051 Email: pioneer@pioneercement.com

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COMPANY’S PROFILE

BOARD OF DIRECTORS Chairman Mr. Manzoor Hayat Noon Managing Director & CEO Mr. Javed Ali Khan Directors Mr. Aly Khan Mr. Nadir Rahman Mr. William Gordon Rodgers Mr. Wajahat A. Baqai (NBP) Mr. Rafique Dawood (FDIB) Mr. Cevdet DAL Mr. Etrat Hussain Rizvi Mr. Saleem Shahzada AUDIT COMMITTEE Chairman Mr. Rafique Dawood (FDIB) Members Mr. Aly Khan Mr. William Gordon Rodgers Mr. Etrat Hussain Rizvi Mr. Wajahat A. Baqai (NBP)

CHIEF FINANCIAL OFFICER Mr. Muhammad Saleem COMPANY SECRETARY Syed Anwar Ali CHIEF INTERNAL AUDITOR Mr. Muhammad Zafar Qidwai STATUTORY AUDITORS Ford Rhodes Sidat Hyder & Co. COST AUDITORS Siddiqui & Co. LEGAL ADVISORS Hassan & Hassan Sayeed & Sayeed BANKS The Bank of Punjab National Bank of Pakistan Bank Islami Pakistan Limited Meezan Bank Limited The Royal Bank of Scotland Askari Commercial Bank Limited Bank Al-Habib Limited Habib Bank Limited United Bank Limited

DATA AND METHODOLOGY
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DATA
We have chosen three cement industries for their comparative financial analysis. We have collected the annual reports of our respective companies for five years (2004-2008) .The companies are as follows: • Pioneer Cement Ltd. • Kohat Cement Ltd. • Cherath Cement Ltd. Our main company is Pioneer Cement Ltd; whereas the other two Kohat Cement Ltd. Company and Cherath Cement Ltd are its competitors. We have analyzed the income statement and balance sheet of these three companies by making relative data which is useful for evaluating the results.

METHODOLOGY
RATIO ANALYSIS:
Ratio simply means one number expressed in term of another. A ratio is a statistical yardstick by means of which relationship between two or various figures can be compared or measured. The term accounting ratio is used to describe significant relationship between figures shown on a balance sheet, profit and loss account or in any other part of accounting organization. Accounting ratio thus shows the relationship between the accounting data.

DEFINITION OF ACCOUNTING RATIOS:
The term "accounting ratios" is used to describe significant relationship between figures shown on a balance sheet, in a profit and loss account, in a budgetary control system or in any other part of accounting organization. Accounting ratios thus shows the relationship between accounting data. Ratios can be found out by dividing one number by another number. Ratios show how one number is related to another. It may be expressed in the form of co-efficient, percentage, proportion, or rate.

ADVANTAGES OF RATIOS ANALYSIS:
Ratio analysis is an important and age-old technique of financial analysis. The following are some of the advantages of ratio analysis: 1) SIMPLIFIES FINANCIAL STATEMENTS: It simplifies the comprehension of financial statements. Ratios tell the whole story of changes in the financial condition of the business. 2) FACILITATES INTER-FIRM COMPARISON: It provides data for inter-firm comparison. Ratios highlight the factors associated with successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued and undervalued firms.

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3) HELPS IN PLANNING: It helps in planning and forecasting. Ratios can assist management, in its basic functions of forecasting. Planning, co-ordination, control and communications. 4) MAKES INTER-FIRM COMPARISON POSSIBLE: Ratios analysis also makes possible comparison of the performance of different divisions of the firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. 5) HELP IN INVESTMENT DECISIONS: It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc

LIMITATIONS OF RATIOS ANALYSIS:
The ratios analysis is one of the most powerful tools of financial management. Though ratios are simple to calculate and easy to understand, they suffer from serious limitations. 1) LIMITATIONS OF FINANCIAL STATEMENTS: Ratios are based only on the information which has been recorded in the financial statements. Financial statements themselves are subject to several limitations. Thus ratios derived, there from, are also subject to those limitations. For example, non-financial changes though important for the business are not relevant by the financial statements. Financial statements are affected to a very great extent by accounting conventions and concepts. Personal judgment plays a great part in determining the figures for financial statements. 2) COMPARATIVE STUDY REQUIRED: Ratios are useful in judging the efficiency of the business only when they are compared with past results of the business. However, such a comparison only provide glimpse of the past performance and forecasts for future may not prove correct since several other factors like market conditions, management policies, etc. may affect the future operations. 3) RATIOS ALONE ARE NOT ADEQUATE: Ratios are only indicators; they cannot be taken as final regarding good or bad financial position of the business. Other things have also to be seen. 4) PROBLEMS OF PRICE LEVEL CHANGES: A change in price level can affect the validity of ratios calculated for different time periods. In such a case the ratio analysis may not clearly indicate the trend in solvency and profitability of the company. The financial statements, therefore, be adjusted keeping in view the price level changes if a meaningful comparison is to be made through accounting ratios.

TOOLS OF ANALYSIS

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5.1. PERCENTAGE ANALYSIS:

5.2. RATIO ANALYSIS:

FINANCIAL ANALYSIS
Accounting ratios attempt to highlight the relationships between significant items in the accounts of a firm. Financial ratios are the analyst’s microscope; they allow them to get a better view of the firm’s financial health than just looking at the raw financial statements.

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6.1. PERCENTAGE ANALYSIS
6.1.1. HORIZONTAL ANALYSIS:
Horizontal analysis is also known as index analysis. It is a comparison of a company’s financial condition and performance made across time.
1) INCOME STATEMENT:

Income statement is also named profit and loss account or income and expenditure account or statement of operations and encompasses all sources of revenue, gain and losses and expenses for a particular period, grouped into various headings as per charts of accounts of a company. In other words, it summarizes the results of operations for an accounting period. The net income is closed by transfer to balance sheet after paying the dividends and appropriations. Sometimes an appropriation is made to general reserve and still some portion is left as retained earnings.
2) BALANCE SHEET:

The purpose o balance sheet is to reflect financial position of an entity on a particular date. The balance sheet consists of assets, which are the property of the entity, the liabilities, which are the debts payable to outside investors or suppliers of goods and services, and the shareholder’s equity, which represents owners’ interest in the entity. At any given date, assets must be equal to the contributions of the creditors and owners.

6.1.1.1. FIVE YEARS HORIZONTAL ANALYSIS OF INCOME STATEMENT

PIONEER CEMENT COMPANY LIMITED FIVE YEAR POSITION OF INCOME SATEMENT

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For the year ended June 30
Net Sales Cost of goods sold

2008
55% 54%

2007
2% 52%

2006
50% 34%

2005
55% 47%

2004
40% 31%

Gross Profit
Administrative And Selling expenses

61%
293%

-74%
25%

83%
-15%

74%
55%

73%
19%

Operating Operating/Loss
Other operating expenses Other operating income

-124%
1997% 162%

-84%
-88% -84%

107%
13% 162%

80%
123% -65%

91%
-5% 19%

Profit/loss from operations
Financial & Other Voluntary separation scheme charges

-189%
13%

-84%
-286%

120%
63%

45%
3%

84%
28%

Profit/loss before taxation
Taxation

211%
333%

-120%
-135%

137%
316%

65%
-133%

56%
-44%

Profit/loss after taxation

92%

-114%

104%

-22%

87%

6.1.1.1. ANALYSIS:
Sales of the Company has shown increasing trend and has increased up to 40% in 2004,55% in 2005 and 50% in 2006 and 2% in 2007 and 55% in 2008 and respective from previous years Cost of sales has also shown an increasing trend. In 2004 it is 31%, 2005 it increased 47%, in 2006 in increased 34%, 52% increase in 2007 and 54% in 2008 from respective years cost of sale increase more than increase in sales which result there is loss in 2007. The major reason of this increase in cost was the plant shutdown due to irregular power supply of WAPDA and increase in prices of diesel and empty bags.

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Gross profit of the company has also shown a increasing trend in from 2004 to 2005 up to 2006 respectively and then decrease and got loss in 2007 and then gross profit increase 61% in 2008 company cost of sale increases but sale decrease, in 2007 gross profit decreases -74% and it was 61% in 2008.Selling and distribution expenses also increases in 2008 as 293% and 25% in 2007 respectively. This decrease in gross profit was due to the increase in cost of goods sold and also administrative and selling expenses which cause company got loss. Operating profit showing increasing trend from 2004 to 2006 as 91%, 80% and 107% respectively and then it decrease in 2007 and 2008 as -84% and -124% which show big loss in the year of 2008. Finance cost Decrease in 2007 as 286% and increased in 2008 as 13% which is not at higher side but it is at higher side in 2004 to 2006 as 63% for expansion of new grey and white cement plants. There is a great increase in 2008 which cause the loss of the company. Profit before tax shows decrease in 2007 as 120% and increase in 2008 as 211% and company got loss in 2008. Profit after tax decreased in 2007 by 114% and it was increase 92% in 2008. Company management tries to expand its operations so it needs more finds that were got from short and long term financing. Due to economic crises and dispute with unionized permanent workers, company faces losses. Company is good for long term benefits, because it had declared bonus shares for last five years. It had a great capacity to produce cement and they are improving technology. They had implemented Enterprise Resource Planning software to increase the efficiency and for better management planning.

6.1.1.2. HORIZONTAL ANALYSIS OF BALANCE SHEET
BALANCE SHEET As at June 30 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVE Authorized Share Capital Issue Subscribed & Paid Up Capital Reserves

BALANCE SHEET
2008 2007 2006 2005 2004

0% 18% -22% 10%

0% 5% -43% -10%

0% 5% 847% 43%

0% 62% -118% 197%

0% 26% -28% -2%

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Surplus on Revaluation of fixed assets-net of tax NON-CURRENT LIABILITIES Redeemable capital Long term financing-secured Long term loans-secured Long term Musharaka finance Liabilities against assets subject to finance lease Long term deposits Long term creditor-unsecured Deferred liabilities Deferred tax liabilities CURRENT LIABILITIES Creditors against expansion project Trade and other payables Interest/ Mark up accrued Short term Murabah-secured Short term Musharaka secured Short term finances Short term borrowings Current maturity of redeemable capital Current maturity of long term loan Current portion of long term loan Current portion of liabilities against assets subject to finance lease Current portion of deferred liability Sales tax payable

290%

-5%

-4%

-

-

6% -26% -100% -51% -65% -30% -10% -25% -90% 120% 54% -73% 39% -100% 49% 22%

-83% 27% 7% -7% -26% 17% -100% -3% -5% 7% 70% -100% -100% 761% -99% -100% 43% 2%

-100% -8% 65% -15% -12% 122% 12% -39% 27% -44% -100% -100% -36% 919% 62% 41% 22%

-8% 3% 2780% 187% -21% 9% 251% -25% 93% -64% 112% 340% 158% 61%

9.61% 10.44% 4.41% 0.145% 8.28% 32.8%

10.98% 0.11%

4.90% 3.24% 2.11% 21.34% 11.46%

ASSETS NON CURRENT ASSETS FIXED CAPITAL EXPENDITURE Property, plant and equipment Long term loans Long term deposits Deferred tax assets CURRENT ASSETS Stock in trade Store, spare and loose tools

27% -11% -15% 27% -54% 3%

-2% 43% 28% -2% 55% 11%

20% -25% 169% 21% 70% 31%

74% 13% 55% -100% 66%

52.31% 0.10% 0.105% 52.52%

12% 2.55% 13% 8.01%

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Assets held for disposal Trade Debts Loan & advances Deposits & prepayments Other receivables Current portion of long term deposits Sales tax net Taxation-net Cash & bank balance

-100% 35% 156% -59% 8471% 838% -100% -54% -19% 22%

138% 80% -33% -87% -100% 325% 56% 2%

-34% -78% -16% -73% -11% 310% 34% 22%

-23% 939% -32% 22% -8% -53% 17% 61%

0.21% 1.03% 0.72% 12.52% 23.83%

6.1.1.2.1. ANALYSIS:
1) NON-CURRENT ASSETS:
As we can see from the horizontal balance sheet analysis of five years, the total non-current assets have shown increasing trend. In 2004 it is 52.52%, 2005 it is 66% than it increase 21% in 2006, 21% in 2006 and then it decrease in 2007 by 2% and then again increase in 2008 by 27% as compare to 2007. This shows heavy investment in fixed assets by the management. Operating fixed assets showed increasing trend in from 2004 to 2006 by 74%, 20% respectively it decreases 2% in 2007 and then again increase in 2008 from 2007 by 27%. Long term loans showing mix trend it increased by 13% in 2005 and then it decreased 25% in 2006 and increased by 43% in year 2007 and decrease 11% respectively. Lon-term deposit has shown an increasing trend from 2005 to 2007 by 55%, 169% and 28% from respective years, and it decrease in 2008 by 15% from 2007. Deferred tax assets just in 2005 than no more 2006, 2007, 2008 so it decrease almost 100%

2) CURRENT ASSETS:
Store, spare and tools has shown increasing trend from 2004 to 2008 by 13%, 31%, 11%,and 3% from their respective years, which shows that company is in good position as liquidity point of view. Stock in trade shows increasing trend from 2005 to 2007 by 12% in 2005, 70% in 2006, 55% in 2007 and decrease 54% in 2008.This higher inventory is indication of weak inventory management. Trade debts has shown decreasing trend in 2005 from 2004 by 23% and then decrease by 34% from 2005 an it increased by 138% in 2007 which is at higher side and then it increase by 35% in 2008 from 2007.Receivable management is inefficient in 2007

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and 2008 by showing increasing trend as compare it with 2005 and 2006.Loan and advances shown increasing trend in 2005 in huge amount it increase 939% from 2004 which means company made advances and loans to the employees in huge amounts than it decrease in 2006 by 78% and in 2007 again increase by 80% and also increase in 2008 by 156%.deposits and prepayment showing decreasing trend from 2005 to 2008 by 32%, 16%, 33% and 59% by respective years. Other receivables also showing decreasing trend from 2006 to 2008 just increased in 2005 from 2004 by 22%. Cash and bank balance first decreased in 2005 by 53% from 2004 than it showing increasing trend from 2006 to 2007 by 310% and 325% from respective years and then again it decreased in 2008 54% from 2007. Over all current assets showing increasing from 2004 to 2007 by 17%, 34% and 56% from respective years and it decrease in 2008 by 19% from 2007 which means current assets are decreased in 2008.

3) EQUITY AND LIABILITIES:
Share capital show an increasing trend it increases in 2004 by 42% ,2005 in 62% and 5% in 2006 and 2007 respectively and 18% in 2008 which means that issued subscribed and paid up capital increased throughout all the years. Reserves have decreased in year 2005 by 118% and increased in 2006 by 847%, after that it decreased in next two years in 2007 and 2008 by 43% and 22% respectively which shows that company has utilized all its reserves for expansion of project. Due to expansion of project company has not sufficient reserves and company has not paid any dividend after 2004.

4) NON-CURRENT LIABILITIES:
Non-current liabilities have also shown an increasing trend from 2004 to 2006 by 32.8%, 9% and 12% and decreased in 2007 and 2008 by 3% and 25% from respective years. Capital showing decreasing trend in 2005 and 2006 by 8% and 100%. Long term loans secured increase by 3% in 2005 and then it decreased 8% in 2006 it again increased in 2007 by 27% and decreased in 2008 by 26%. Liabilities against assets subject to finance lease increased from 2005 to 2007 by 2870%, 65% and 7% respectively and it decreased by 51% in 2008 from 2007. Long term deposits increased 187% in 2005 and then it decreased in 2006 to 2008 by 15%, 7% and 65% from respective years. Deferred liabilities decreased in 2005 and 2006 by 21% and 12% and increased 17% in 2007 and decreased 10% in 2008 from respective years.

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5) CURRENT LIABILITIES:
Total current liabilities have also shown an increasing trend. This is also in line with increase in current assets of the company. Short term financing is taken to meet the working capital requirements. Company is meeting its obligation on regular basis which is evident from an increase in the current portion of long term debts under current liabilities head of the balance sheet. Trade payables decreased in 2005 by 251% which is at higher side and increased 27%, 7%, and 120% in 2006, 2007 and 2008 where as 10.98% in 2004 which is unfavorable for the company. Interest and mark up accrued decrease in 2005 by 25% and 44% in 2006 and increase in 2007 and 2008 by 40% and 54% respectively. Sales tax payable increase 340% in 2005 from 2004 which is huge change in 2006 it also increases 62% from 2005 and decrease 100% in 2007. Finally, size of the company has increased during the last five years. More investment is made in capital assets. Company is in expansion phase since the base year. Investment in new expansion project and technology is being made in order to keep pace with changing business environment.

6.1.2. VERTICAL ANALYSIS:
“An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statement items are divided by net sales or revenue” The expression of individual financial statement item as percentages of total helps the analyst spot trends with respect to the relative importance of these items over time.

1) INCOME STATEMENT:
Similar method as applied for balance sheet is also applicable to income statement. The various items of income statement are related as percentage to sales. For example, items like, cost of

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goods sold. Operating expenses, gross profit, taxation etc. are reduced to percentages by treating the sales as 100 %. These ratios are also called vertical ratios and mix percentages.

2) BALANCE SHEET:
Vertical analysis is also called common size analysis. The common size balance sheet is also called 100% balance sheet. The total of assets is the base figures representing 100%. Every item of the balance sheet is related vertically to reflect the vertical mix against the total. The analysis represents internal composition of assets and liabilities. The common size balance sheet analysis reveals the sources of capital and all other sources and the application of sources to assets of the company.

6.1.2.1 VERTICAL ANALYSIS OF INCOME STATEMENT

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2.11.1

Vertical Analysis of Pioneer Cement Company Limited

Five Year Position Of Income Statement

For the year ended June 30
Sales- Net Cost of goods sold

2008
-2697% -2412%

2007
-3349% -3009%

2006
455% 273%

2005
616% 413%

2004
312% 221%

Gross Profit
Administrative And Selling expenses

-285%
-309%

-340%
-151%

182%
17%

203%
40%

91%
20%

Operating Operating/Loss
Other operating expenses Other operating income

24%
83% -17%

-189%
8% -13%

165%
-9% 11%

162%
-16% 8%

71%
-5% 19%

Profit/loss from operations
Financial & Other Voluntary separation scheme charges

89%
230%

-194%
391%

167%
29%

155%
36%

84%
28%

Profit/loss before taxation
Taxation

319%
219%

197%
97%

138%
38%

119%
19%

56%
-44%

Profit/loss after taxation

100%

100%

100%

100%

100%

6.1.2.1.1. ANALYSIS:
As we can see from the vertical income statement the sales revenue increased from 2004 to 2006 by 312%, 6165 and 455% respectively and decreased by 3349% and 2697% in 2007 and

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2008 respectively. Cost of sales also increased in 2004 by 221% in 2005 by 413% and in 2006 by 273% and in next two years it decrease in 2007 by 3009% and in 2008 by 2412%. Gross profit increase in 2004 by 91% 203% increase in 2005, 182% increase in 2006 and in 2007 and 2008 it decreased 340% and 285% respectively. Administrative and Selling expense also increase in 2004 to 2006 by 20%, 40% and 17% respectively and it decreases in 2007 by 151% and in 2008 by 309% from respective years. Other operating expense decreases from 2004 to 2006 by 5% in 2004, 16% in 2005 and 9% in 2006; it increased in 2007 by 8% from 2006 and increase in 2008 by 83% from 2007. Other operating income increased from 2004 to 2006 by 19%, 8% and 11% and decreased in 2007 by 13% and 17% in 2008. Financial and other voluntary separation charges showing increasing trend all five years it increased by 28% in 2004 36% in 2005, 29% in 2006, 391% in 2007 and 230% in 2008 from their respective years. .Profit before taxation has increased by 56% in 2004 119% in 2005, 138% in 2006, 197% in 2007 and 219% in 2008. Profit after taxation the company recorded loss in 2007 and in 2008 from their respective years. Finally the company is improving with the passage of time. Although the profits are not very adequate but the management is very confident that they are working hard and the company will prosper in coming years as most of the capital work has been completed.

6.6. VERTICAL ANALYSIS OF BALANCE SHEET
VERTICAL ANALYSIS VERTICAL ANALYSIS FOR PAST FIVE YEARS OF PIONEER CEMENT FOR LAST FIVE YEARS

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

PIONEER CEMENT COMPANY LIMITED BALANCE SHEET BALANCE SHEET As at June 30 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVE Authorized Share Capital Issue Subscribed & Paid Up Capital Reserves 0% 19% 3% 22% Surplus on Revaluation of fixed assetsnet of tax NON-CURRENT LIABILITIES Redeemable capital Long term financing-secured Long term loans-secured Long term Musharaka finance Liabilities against assets subject to finance lease Long term deposits Long term creditor-unsecured Deferred liabilities Deferred tax liabilities 0% 1% 16% 0% 2% 0% 0% 9% 0% 28% CURRENT LIABILITIES Creditors against expansion project Trade and other payables Interest/ Mark up accrued Short term Murabah-secured 0% 8% 1% 0% 3% 5% 1% 1% 4% 4% 1% 0% 7% 4% 1% 0% 0% 2% 2% 0% 0% 1% 27% 1% 6% 0% 0% 12% 0% 46% 0% 5% 22% 1% 5% 0% 0% 10% 5% 49% 2% 0% 29% 1% 4% 0% 0% 14% 3% 53% 4% 0% 45% 0% 0% 0% 0% 29% 0% 78% 26% 0% 20% 5% 24% 7% 0% 19% 8% 28% 9% 0% 22% 1% 24% 15% 0% 22% -10% 13% 0% 2008 2007 2006 2005 2004

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

Short term Musharaka secured Short term finances Short term borrowings Current maturity of redeemable capital Current maturity of long term loan Current portion of long term loan Current portion of liabilities against assets subject to finance lease Current portion of deferred liability

0% 3% 0% 0% 0% 0% 15%

0% 0% 0% 0% 0% 0% 13%

0% 0% 0% 0% 0% 4% 2%

0% 0% 0% 0% 1% 0% 0%

0% 0% 0% 0% 4% 0% 0%

0%

0%

2%

0%

0%

Sales tax payable

0% 29% 105%

0% 23% 100%

0% 17% 102%

0% 14% 106%

0% 9% 100%

ASSETS

NON CURRENT ASSETS FIXED CAPITAL EXPENDITURE Property, plant and equipment 91% 87% 91% 93% 86%

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

Long term loans Long term deposits Deferred tax assets

0% 1% 0% 92%

0% 1% 0% 89%

0% 1% 0% 93%

0% 1% 0% 93%

0% 1% 5% 91%

CURRENT ASSETS Stock in trade Store, spare and loose tools Assets held for disposal Trade Debts Loan & advances Deposits & prepayments Other receivables Current portion of long term deposits Sales tax net Taxation-net Cash & bank balance

1% 4% 0% 0% 1% 0% 0% 0% 0% 0% 1% 8% 100%

2% 5% 0% 0% 0% 0% 0% 0% 0% 0% 4% 11% 100%

1% 4% 0% 0% 0% 0% 0% 0% 0% 0% 1% 7% 100%

1% 4% 0% 0% 1% 0% 0% 0% 0% 0% 0% 7% 100%

1% 6% 0% 1% 0% 0% 0% 0% 0% 0% 1% 9% 100%

6.6.1. ANALYSIS:
6.6.1.1. NON-CURRENT ASSETS:
As we can see from the vertical balance sheet of the company total fixed assets are constant in relation to total assets with little variations. The management is more focusing on

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

working capital management than on fixed asset in last two years as shown by the vertical balance sheet. Property, plant and equipment have shown an increasing trend it increased in 2004 by 86% in 2005 by 93% in 2006 by 91% 87% in 2007 and 91% in 2008.

6.6.1.2. CURRENT ASSETS:
Total current assets have shown an increasing trend over the last five year period. Stores and spares decreased in year 2008, 2005 and 2006 by 4% and increased in 2004 by 6% and 2007 by 5%. Stock in trade has shown an increasing with a same sequence at the rate of 1% all the years except 2007 which is 2%. Stock in trade is about 1% of the total current assets in 2004, 2005, 2006 and 2008 and it was 2% of total assets in 2007. Stores and spares have the largest portion than stock of the total current assets. Trade debts 1% of total assets in 2004 and then no other year has significant effect on total current Asset affected by trade debts. Cash and bank balance were 1% in 2005, 1% in 2006 and 2008 and 4% in 2007. This trend shows that more funds are tied in receivable, inventories and in stores & spares.

6.6.1.3. EQUITY AND LIABILITIES:
Issued Subscribed and paid up capital showing mix trend in increase 22% in 2004 and 2005 contribute in total liabilities and then it decrease in 2006 by 19% contribution and in 2007 by 20% and in 2008 19% in total liabilities. Currently company is not paying dividends to shareholders. Reserves also decreased in 2004 by 10% and no major contribution in total liabilities in coming years.

6.6.1.4. NON-CURRENT LIABILITIES:
Total long-term liabilities of the company have shown decreasing trend in relation to total liabilities. It contributes in total liabilities by 78% in 2004, 53% in 2005, 49% in 2006, 46% in 2007 and 28% in 2008.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

6.6.1.5. CURRENT LIABILITIES:
Current liabilities have shown an increasing trend during the last five years from 2004 to 2008 as shown in the vertical balance sheet of the company they contribute in total liabilities by 9% in 2004, 14% in 2005, 17% in 2006, 23% in 2007 and 29% in 2008 which is maximum and company got loss in 2007 and 2008. Trade and other payables have shown an increasing trend with a marginal increase in last five years. Trade and other payables increase in 2008 by 8% and 2007 by 5% than their respective years, in 2006 and 2005 they were 4% and 2%in 2004.

6.1.3. TREND ANALYSIS
Trend Analysis is a comparative analysis of a company's financial ratios over time.

SIGNIFICANCE:
It is an aspect of technical analysis that tries to predict the future movement of a stock based on past data. Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future.

BALANCE SHEET

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

BALANCE SHEET As at June 30 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVE Authorized Share Capital Issue Subscribed & Paid Up Capital Reserves

2008

2007

2006

2005

2004

100% 209% -75.8% 422.8% 0%

100% 177.9% -97.3% 384.5% 0%

100% 170.3% -170.4% 425.9% 0%

100% 162.1% -17.9% 297.3% 0%

100% 100% 100% 100% 0%

Surplus on Revaluation of fixed assets-net of tax NON-CURRENT LIABILITIES Redeemable capital Long term financing-secured Long term loans-secured Long term Musharaka finance Liabilities against assets subject to finance lease Long term deposits Long term creditor-unsecured Deferred liabilities Deferred tax liabilities CURRENT LIABILITIES Creditors against expansion project Trade and other payables Interest/ Mark up accrued Short term Murabah-secured Short term Musharaka secured Short term finances Short term borrowings Current maturity of redeemable capital Current maturity of long term loan Current portion of long term loan Current portion of liabilities against assets subject to finance lease Current portion of deferred liability Sales tax payable

0% 0% 89.02% 0% 2493.6% 79.4% 0% 73.2% 0% 87.8% 0% 1046.2% 109.7% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 779.8% -

0% 39.1% 0% 0% 5102.5% 226.1% 0% 81.7% 0% 108.01% 0% 476.1% 71.38% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 521.9% -

0% 231.6% 0% 0% 165.3% 242.5% 0% 69.8% 0% 121.9% 0% 446.5% 41.9% 0% 0% 0% 0% 0% 0% 0% 2158.4% 0% 710.9% 287.1% 364.9%

92.1% 100% 0% 0% 0% 0% 0% 0% 2880.07% 100% 286.5% 0% 78.87% 0% 109.01% 0% 351.04% 75% 0% 0% 0% 0% 192.9% 35.6% 0% 211.9% 0% 440.2% 130.7% 258.3% 100% 0% 100% 0% 100% 0% 100% 100% 0% 0% 100% 0% 0% 100 % 0% 100 % 0% 0% 100% 100%

ASSETS

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

NON CURRENT ASSETS FIXED CAPITAL EXPENDITURE Property, plant and equipment Long term loans Long term deposits Deferred tax assets CURRENT ASSETS Stock in trade Store, spare and loose tools Assets held for disposal Trade Debts Loan & advances Deposits & prepayments Other receivables Current portion of long term deposits Sales tax net Taxation-net Cash & bank balance

261.6% 107.7% 456.5% 249.6% 135.2% 167.6% 162.3% 1062.1% 15.9% 366.1% 80.8% 372.4% 199.3% 244.9%

205.3% 121.7% 343.4% 197.03% 295.8% 163.4% 120% 414.9% 38.8% 4.27% 0% 817.4% 244.6% 201.4%

210.1% 75.37% 268.6% 121.2% 170.3% 130.9% 50.5% 230.3% 57.8% 65.5% 82.16% 192.4% 156.4% 196.6%

174.5% 112.8% 155.4% 165.6% 111.8% 112.6% 76.7% 1038.6% 68.4% 121.8% 92.3% 46.9% 117.1% 161.1%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100 % 100% 100% 100% 100%

6.1.3.1. ANALYSIS:
6.1.3.1.1. NON-CURRENT ASSETS:

As we can see from the balance sheet of the company total fixed assets are constant in relation to total assets with little deviations. The management is more focusing on fixed asset in past years. As property, plant and equipment have shown an increasing trend.
6.1.3.1.2. CURRENT ASSETS:

Total current assets have shown an increasing trend over the last five year period. Stores and spares increased consistently over the years. Stock in trade has shown an increasing with a same

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

sequence. Loans and advances have the largest portion than stock of the total current assets. This trend shows that more funds are needed.
6.1.3.1.2. EQUITY AND LIABILITIES:

Issued Subscribed and paid up capital showing mix trend in increase that there is increase in 2005 andin2006 where as there is a decrease in 2007 and in increase in 2008 in total liabilities as currently company is not paying dividends to shareholders
6.1.3.1.3. NON-CURRENT LIABILITIES:

Total long-term liabilities of the company have shown decreasing trend in relation to total liabilities.
6.1.3.1.4. CURRENT LIABILITIES:

Current liabilities have shown an substantially mix trend during the last five years from 2004 to 2008 as shown in the balance sheet of the company they contribute in total liabilities.

6.1.3.2. INCOME STATEMENT

PIONEER CEMENT COMPANY LIMITED FIVE YEAR POSITION OF INCOME STATEMENT

For the year ended June 30
Gross Turnover Excise Duty Sales Tax

2008
337.4% 288.8% 261.8%

2007
237.3% 238.6% 218.9%

2006
212.0% 210.9% 192.2%

2005
142.9% 115.6% 125.03%

2004
100% 100% 100%

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

Commission

226.2% 275.9%

227.1% 23.78% 236.7% 300.5%

104.8% 169.5% 232.5% 197.1%

98.18% 118.78% 154.6% 146.57%

100% 100% 100% 100%

Net turnover Cost of sales Gross Profit Distribution Cost Administrative And Selling expenses Other operating income-net

367% 463.6%

132.8% 1649.1%
155.2% 39% -

82.3% 192.7%
149.8% 14.8% 311.5% 30.49% -77.4% -48.8% 22.03%

318.2% 138.8%
127.6% 131.2% 90.63% 313.65% 167.7% 25.12% 181.55% 391.6% -138.18% 159.3%

174.08% 241.90%
112.69% 155.03% 34.63% 149.5% 102.8% 222.8% 122.7% 165.3% -33.23% 78.27%

100% 100%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Finance Cost Other Charges

351.8% 639.3% -

Profit before taxation Taxation Profit after taxation

-240.9% -211.7% -42.41%

6.1.3.2.1. ANALYSIS:
As we can see from the income statement the gross turnover has increased from 2004 to 2008 as excise duty and sales tax has increased in these years where as there is a 1%decrease in commission in 2008.There is a substantial increase in net turnover as trend of cost of sales has increased. There was a increase in 2005 and 2006 in gross profit then company start facing losses in 2007 and 2008 because there distribution cost and administrative expenses increases which was due to the flaw in the management of the company. The finance cost and other charges have also increased which assist the losses of the company. Finally the company is improving with the passage of time. Although the profits are not very adequate but the management is very confident that they are working hard and the company will prosper in coming years as most of the capital work has been completed.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7. RATIO ANALYSIS
7.1. LIQUIDITY RATIOS
Liquidity ratios are the ratios for testing short term solvency or financial position of a business. These are designed to test the ability of the business to meet its short term obligation promptly, a class of financial metrics that IS used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover its short-term debts

7.1.1. CURRENT RATIO:
Current ratio may be defined as the relationship between current assets and current liabilities. This ratio is also known as "working capital ratio". It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities. 7.1.1.1. COMPONENTS: The two basic components of this ratio are current assets and current liabilities. Current assets include cash and those assets which can be easily converted into cash within a short period of time, generally, one year, such as marketable securities or readily realizable investments, bills receivables, sundry debtors, (excluding bad debts or provisions), inventories, work in progress, etc. Prepaid paid expenses should also be included in current assets because they represent payments made in advance which will not have to be paid in near future. Current liabilities are those obligations which are payable within a short period of tie generally one year and include outstanding expenses, bills payable, sundry creditors, bank overdraft, accrued expenses, short term advances, income tax payable, dividend payable, etc. However, sometimes a controversy arises that whether overdraft should be regarded as current liability or not. Often an arrangement with a bank may be regarded as permanent and therefore, it may be treated as long term liability. At the same time the fact remains that the overdraft facility may be cancelled at any time. Accordingly, because of this reason and the need for conversion in interpreting a situation, it seems advisable to include overdrafts in current liabilities.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.1.2. LIMITATIONS OF CURRENT RATIO: This ratio is measure of liquidity and should be used very carefully because it suffers from many limitations. It is, therefore, suggested that it should not be used as the sole index of short term solvency 1. It is crude ratio because it measures only the quantity and not the quality of the current assets. 2. Even if the ratio is favorable, the firm may be in financial trouble, because of more stock and work in process which is not easily convertible into cash, and, therefore firm may have less cash to pay off current liabilities. 3. Valuation of current assets and window dressing is another problem. This ratio can be very easily manipulated by overvaluing the current assets. An equal increase in both current assets and current liabilities would decrease the ratio and similarly equal decrease in current assets and current liabilities would increase current ratio. 7.1.1.3. SIGNIFICANCE: This ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety or cushion available to the creditors. It is an index of the firm’s financial stability. It is also an index of technical solvency and an index of the strength of working capital. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been deterioration in the liquidity position of the firm. A ratio equal to or near 2: 1 is considered as a standard or normal or satisfactory. The idea of having double current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. However, the rule of 2:1 should not be blindly used while making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. If a firm's current assets include debtors which are not recoverable or stocks which are slowmoving or obsolete, the current ratio may be high but it does not represent a good liquidity position.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

Current Ratio.

CURRENT RATIO

Formula Years
Pioneer Cement Cherat Cement Kohat Cement

Current Assets/Current Liabilities 2008
0.26 1.07 0.66

2007
0.48 2.28 1.00

2006
0.56 2.45 2.56

2005
0.92 3.07 1.47

2004
1.03 2.47 1.24

7.1.1.4. ANALYSIS: Current Ratio clears the extent to which the claim of short term creditors can be met by assets that are to become cash within a year. The best standard ratio is 2:1 so, the Pioneer Cement has current ratio below standard. There is a decrease in 2004 to 2008. Current Ratio of Kohat Cement is more than Pioneer and Cherat cement. Current ratio shows that how many times current assets are available to meet its current liabilities. Pioneer cement current ratio shows decreasing trend and it has less than 1:1 but only in 2004 it is more than 1:1. Cherat cement also shows decreasing trend in current ratio. Kohat cement current ratio shows increasing trend in 2004, 2005 and in 2006 but decreases in 2007 and 2008 which shows that it has less current assets or current liabilities increases.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.2. QUICK RATIO:
Liquid ratio is also termed as "Liquidity Ratio”,” Acid Test Ratio" or "Quick Ratio". It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short term obligations as and when they become due 7.1.2.1. COMPONENTS: The two components of liquid ratio (acid test ratio or quick ratio) are liquid assets and liquid liabilities. Liquid assets normally include cash, bank, sundry debtors, bills receivable and marketable securities or temporary investments. In other words they are current assets minus inventories (stock) and prepaid expenses. Inventories cannot be termed as liquid assets because it cannot be converted into cash immediately without a loss of value. In the same manner, prepaid expenses are also excluded from the list of liquid assets because they are not expected to be converted into cash. Similarly, Liquid liabilities means current liabilities i.e., sundry creditors, bills payable, outstanding expenses, short term advances, income tax payable, dividends payable, and bank overdraft (only if payable on demand). Some time bank overdraft is not included in current liabilities, on the argument that bank overdraft is generally permanent way of financing and is not subject to be called on demand. In such cases overdraft will be excluded from current liabilities 7.1.2.2. SIGNIFICANCE: The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. Usually a high liquid ratio an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory. Although liquidity ratio is more rigorous test of liquidity than the current ratio, yet it should be used cautiously and 1:1 standard should not be used blindly. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. In the same manner, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid. Hence, a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. On the other hand, a firm having a low liquid ratio may have a good liquidity position if it has a fast moving inventory. Though this ratio is definitely an improvement over current ratio, the interpretation of this ratio also suffers from the same limitations as of current ratio

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

QUICK RATIO
Formula Years Pioneer Cement Cherat cement Kohat Cement 2008 0.24 0.94 0.57 Current Asset-stock/current liabilities 2007 0.41 2.07 0.78 2006 0.47 2.17 2.34 2005 0.81 2.88 1.41 2004 0.9 2.25 1.18

7.1.2.3. ANALYSIS: The acid test ratio is also below standard due to heavy short term borrowings. Pioneer acid test ratio decreased in year 2005, 2006, 2007 and in 2008. The quick ratio of Kohat cement shows that sufficient liquid asset is available to discharge and settle its current obligation. The rise in current liabilities is due to the expansion of project and short and long term financing. Pioneer Cement liquidity is less than standard. Kohat and Cherat cement liquidity is on considerable point. Kohat cement liquid ratio is more than pioneer and Cherat which shows that it has more liquidity. Cherat liquidity position is considerable because it is near to 1 which shows that it has liquid assets to meet its current liabilities. Pioneer position is not at considerable point. It shows decreasing trend and less than 1:1.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.3. TURNOVER/ACTIVITY RATIOS:
Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part, turnover ratios can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable. Or they can be use to evaluate the benefits produced by all a company's assets collectively. These measures help us gauge how effectively the company is at putting its investment to work. A company will invest in assets – e.g., inventory or plant and equipment – and then use these assets to generate revenues. The greater the turnover, the more effectively the company is at producing a benefit from its investment in assets 7.1.3.1. INVENTORY DAYS: The number of day’s inventory is also known as average inventory period and inventory holding period. A high number of days inventory indicates that there is a lack of demand for the product being sold. A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands. The number of day’s inventory and inventory turnover ratios are included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Inventory Days

INVENTORY DAYS
Inventory Days = Inventory / Cost of Sales*365

Formula

Years

2008

2007

2006

2005

2004

Pioneer Cement

6

20

19

15

20

Cherat Cement

24

40

21

23

6.67

Kohat Cement

49

38

28

8

6

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.3.2. ANALYSIS: Pioneer inventory days decreased in 2005 as compare to 2004 and increased in 2006 and in 2007 and show decreasing in 2008 which shows that management is efficient for managing inventory period. The above diagram shows that in 2004 and 2005 Kohat cement has less inventory days required to convert stock in sale which shows that Kohat management is efficient but it decreases with the passage of times and Pioneer trend is opposite to Kohat. It was low in beginning and it increases in 2008, but Cherat Cement shows mixed trend.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.4. DEBTORS TURNOVER RATIO OR RECEIVABLES TURNOVER RATIO:
Debtor’s turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year. 7.1.4.1. SIGNIFICANCE OF THE RATIO: This ratio indicates the number of times the debtors are turned over a year. The higher the value of debtors, turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.
Debtor days.

DEBTOR DAYS

Formula

Trade debtors/Credit sales*365

Years

2008

2007

2006

2005

2004

Pioneer Cement

3

3

1

3

7

Cherat Cement

35

19

10

8

9

Kohat Cement

4

5

3

5

7

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.4.2. ANALYSIS: Graph shows that Pioneer cement has good debtor management to receive the debt or collect the receivables and shows positive trend and debtor’s collection period is less than creditor’s period. Kohat position is also considerable but Cherat management has more time to collect their receivables whish shows inefficient debtor management and in 2008 it is at highest point which indicates unfavorable situation regarding to debtor collection period.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.5. TOTAL ASSETS TURNOVER RATIO:
The total assets turnover ratio measures the use of all assets in terms of sales, by comparing sales with net total assets. This interactive tutorial walks you through the calculations as well as where on the financial statements to find the numbers.
Total Asset Turnover

TOTAL ASSET TURNOVER

Formula

Sales/ Total Assets

Years

2008

2007

2006

2005

2004

Pioneer Cement

0.46

0.36

0.37

0.30

0.31

Cherat Cement

0.68

0.74

0.67

0.74

0.95

Kohat Cement

0.18

0.26

0.76

1.04

1.10

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.5.1. ANALYSIS: In the above graph we can see that total asset turnover ratio of Pioneer cement company showing mix trend in the year 2008 total asset total asset turnover ratio is at highest level and as it compare it with Cherat and Kohat cement it is better in the last two year 2007,2008 so we can say it is using its assets for generating the revenue in a better way than Kohat and Cherat cement in 2004,2005 and 2006 Kohat cement total asset turnover ratio at top so they use much of it for generating revenue. But pioneer overall situation regarding to total asset turnover ratio is better than other two competitors.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.6. FIXED ASSETS TURNOVER RATIO:
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets

Fixed Asset Turnover Ratio

FIXED ASSETS TURNOVER RATIO

Formula

Cost of sales / Fixed Assets

Years

2008

2007

2006

2005

2004

Pioneer Cement

0.51

0.42

0.41

0.32

0.36

Cherat Cement

0.39

0.2

0.35

0.51

0.61

Kohat Cement

1.46

1.52

2.12

2.95

2.32

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.1.6.1. ANALYSIS: It shows the utilization of fixed assets, Pioneer increasing the utilization of its fixed assets but it has lower times than Kohat cement which has more utilization of fixed assets and at highest level in 2005. Cherat Cement shows the mixed trend and has less utilization than Kohat and Pioneer cement.

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.2. PROFITABLITY RATIOS:
Profitability ratios (also referred to as profit margin ratios) compare components of income with sales. They give us an idea of what makes up a company's income and are usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator that we reflect and thus evaluate performance for different aspects of the business: The gross profit margin is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left after costs of goods sold.

7.2.1. GROSS PROFIT (GP) RATIO:
Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales. 7.2.1.1. COMPONENTS: The basic components of the calculation of gross profit ratio are gross profit and net sales. Net sales means sales minus sales returns. Gross profit would be the difference between net sales and cost of goods sold. Cost of goods sold in the case of a trading concern would be equal to opening stock plus purchases, minus closing stock plus all direct expenses relating to purchases. In the case of manufacturing concern, it would be equal to the sum of the cost of raw materials, wages, direct expenses and all manufacturing expenses. In other words, generally the expenses charged to profit and loss account or operating expenses are excluded from the calculation of cost of goods sold. 7.2.1.2. SIGNIFICANCE: Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be reduced without incurring losses on operations. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. There is no standard GP ratio for evaluation. It may vary from business to business. However, the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends.

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GROSS PROFIT TO SALES
Gross profit to Sales: Formula Years Pioneer Cement Cherat Cement Kohat Cement 2008 10.58% 5.95% 6.35% 2007 10.16% 14.41% 22.09% Gross profit/Sales*100 2006 40.00% 40.68% 51.55% 2005 32.91% 35.67% 38.72% 2004 29.23% 34.33% 35.45%

7.2.1.3Analysis: Gross profit of Pioneer cement company increasing in 2004 to 2006 but decrease in 2007 to 2008. Due to inflation and economic instability in Pakistan and irregular power supply of WAPDA in 2007 and 2008. Gross Profit ratio of three competitors show increasing trend in 2004 to 2006 due to good economic and financial situation of world and good market situation in Pakistan. Kohat position is more considerable up to 2006 but shows decreasing trend in 2007 and 2008, and Cherat Cement also has same situation.

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7.2.2. OPERATING PROFIT RATIO:
Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. It measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit to net sales. 7.2.2.1. COMPONENTS: The two basic components for the calculation of operating ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. Financial charges such as interest, provision for taxation etc. are generally excluded from operating expenses. 7.2.2.2. SIGNIFICANCE: Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. Moreover, in some firms, non-operating expenses from a substantial part of the total expenses and in such cases operating ratio may give misleading results

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OPERATING PROFIT RATIO
Formula

Operating Profit Margin = Operating profit /Sale*100 2008 -3.13% 4.38% 1.57% 2007 5.79% 4.18% 17.91% 2006 36.74% 34.14% 49.24% 2005 25.16% 29.57% 35.86% 2004 26.89% 32.31% 32.25%

Years Pioneer Cement Cherat Cement Kohat Cement

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7.2.2.3. ANALYSIS: Pioneer cement company operating profit increasing in 2004 to 2006 and decreasing in 2007 and 2008 and in 2008 they suffer loss by 3.13% due to increase in prices of coal, diesel and empty bag in 2007-2008 Operating profit of all three organization show increasing trend in 2004, 2005, and 2006 but decreases in 2007 and 2008due to increase in operating expenses.

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7.2.3. RETURN ON ASSETS:
Where asset turnover tells an investor the total sales for each $1 of assets, return on assets tells an investor how much profit a company generated for each $1 in assets. The return on assets figure is also a sure-fire way to gauge the asset intensity of a business. Companies such as telecommunication providers, car manufacturers, and railroads are very asset-intensive, meaning they require big, expensive machinery or equipment to generate a profit. Advertising agencies and software companies, on the other hand, are generally very asset-light.

RETURN ON ASSETS
Return on Assets: Formula Years Pioneer Cement Cherat Cement Kohat Cement Net Income / Total Assets*100 2008 -1.72% 0.23% -2.92% 2007 -1.10% 5.21% 0.83% 2006 8.00% 14.88% 25.68% 2005 4.80% 15.99% 23.40% 2004 9.90% 19.50% 22.97%

7.2.3.1. ANALYSIS: This ratio measures the return of total investment of the business. Pioneer cement company show mix trend in 2004 it is at maximum point than decrease in 2005 and again increase in 2006 and then become negative in 2007 and 2008. Kohat cement company return on asset is much better than Cherat and pioneer it decreases in 2004 to 2006 and then decrease in 2007 and becomes negative in 2008, it is at highest point in 2006, Cherat also increase in 2004 to 2005 and then it little decrease in 2006 and at goes down in 2007 and becomes negative in 2008.

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7.2.4. RETURN ON EQUITY (ROE) RATIO:
In real sense, ordinarily shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). The rate of dividends varies with the availability of profits in case of ordinary shares only. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company. Return on equity capital which is the relationship between profits of a company and its equity, can be calculated as follows. 7.2.4.1. COMPONENTS: Equity share capital should be the total called-up value of equity shares. As the profit used for the calculations are the final profits available to equity shareholders as dividend, therefore the preference dividend and taxes are deducted in order to arrive at such profits. 7.2.4.2. SIGNIFICANCE: This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them. Interpretation of the ratio is similar to the interpretation of return on shareholder's investments and higher the ratio better is.
RETURN ON EQUITY RATIO (ROE) Formula Years Pioneer Cement Cherat Cement Kohat Cement [(Net profit after tax − Preference dividend) / Equity share capital] × 100 2008 -7.80% 1.08% -9.55% 2007 -4.46% 29.77% 2.09% 2006 29.11% 54.70% 34.58% 2005 20.48% 77.04% 35.73% 2004 77.81% 80.08% 42.09%

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7.2.4.3. ANALYSIS: In 2004 Pioneer cement company return on equity ratio is at highest point and better, in 2005 it decreases and in 2006 it is better than 2005 but in 2007 and 2008 it goes down and become negative. Kohat Cement Company also shows decreasing trend it is highest point in 2004 and then decrease in 2005 to 2007 and it becomes negative in 2008. Cherat cement company return on equity ratio has mix trend in 2004 it is at lower side and then it increase in 2005 and it decrease in 2006 and it goes down and become negative in 2007 and 2008.

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7.2.5. DEBT RATIOS:
A company can finance its assets either with equity or debt. Financing through debt involves risk because debt legally obligates the company to pay interest and to repay the principal as promised. Equity financing does not obligate the company to pay anything -- dividends are paid at the discretion of the board of directors. There is always some risk, which we refer to as business risk, inherent in any operating segment of a business. Financial leverage ratios are used to assess how much financial risk the company has taken on. There are two types of financial leverage ratios: component percentages and coverage ratios. Component percentages compare a company's debt with either its total capital (debt plus equity) or its equity capital. Coverage ratios reflect a company's ability to satisfy fixed obligations, such as interest, principal repayment, or lease payments. 7.2.5.1. Debt to Equity Ratio: Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as external internal equity ratio. It is determined to ascertain soundness of the long term financial policies of the company.

DEBT TO EQUITY RATIO:

Formula Years Pioneer Cement Cherat Cement Kohat Cement 2008 31:69 13:20 67:33

Total Long Term Debts / Shareholders Funds 2007 52:48 39:50 55:45 2006 48:52 1:9:50 10:90 2005 52:48 1:51:100 10:90 2004 86:14 37:50 22:78

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7.2.5.2. ANALYSIS: Pioneer cement debt to equity ratio is higher point in 2004 and after that it has improved its situation in next coming years and decreases, but Kohat shows increasing trend from 2004 to 2008 which shows that they increasing their debts for expansion of project and their short and long term debts increased. Cherat computation of the ratio brings to life the fact that Cherat cement has not been able to feed its financing through equity as its ratios are considerable higher than the favorable“ 1 or less”. The initial year shows that there was less dependency of debt but there has been a visible increase in the ratio ever since, the last year shows a phenomenal increase and highly unfavorable. The firm must by all means try and reduce its portions as the dependency on debt causes the firm to lose its control and will over the organization as it is then driven to feed the debt.

7.2.6. DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO:

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Interest coverage ratio is also known as debt service ratio or debt service coverage ratio. This ratio relates the fixed interest charges to the income earned by the business. It indicates whether the business has earned sufficient profits to pay periodically the interest charges. 7.2.6.1. SIGNIFICANCE OF DEBT SERVICE RATIO: The interest coverage ratio is very important from the lender's point of view. It indicates the number of times interest is covered by the profits available to pay interest charges.

INTEREST COVERAGE RATIO

Formula Years Pioneer cement Cherat Kohat Cement

Net Profit Before Interest and Tax / Fixed Interest Charges] 2008 0.39 0.30 -4.71 2007 0.31 4.27 1.23 2006 5.73 9.94 20.21 2005 4.26 21.10 25.17 2004 3.03 30.96 17.22

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COMPARITIVE ANALYSIS OF FINANCIAL STATEMENTS

7.2.6.2. ANALYSIS: Interest Cover Ratio shows that how many times interest is earned by the company. Pioneer cement company shows increasing trend from 2004 to 2006 which indicates positive sign and beneficial for the company and it has availability of the funds to pay interest expense. In 2007 and 2008 it goes down which means it is not good sign for the company to pay the interest expense. Kohat Cement Company and Cherat Cement is in better position to Cherat and pioneer cement, In year 2005 Kohat Cement earned 17.22 times interest which is higher among all year and easy to pay the interest expense. In 2007 and 2008 Interest cover ration of all the company is not very healthy and it shows that the financial costs are very high and earnings are very low. Management must look into the matter and should improve this ratio. Cherat cement was able to very comfortably cover this cost in the early years but by its growth the inabilities started to show although revenues are rising but the interest charges to be paid by the enterprise are also rising as the revenues are only resulting due to the rising financing through debt. The debt, especially the short term financing, needs to be curtailed as they will not result in Cherat Cement’s well being.

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8. GENERAL RATIO ANALYSIS
8.1. PROFITABILITY ANALYSIS:
According to the scenario, the cement sector is experiencing strong growth in cement dispatches, but at the same time, is facing decline in profitability during 2008. Although the sales volume in the sector increased, the net sales revenue did not increase as much due to decrease in net retention. Over the years all cement manufacturers undertook huge capacity expansion plans which have now created a situation of excess supply in the local market. Companies resorted to price wars and this led to a fall in prices. As per the industry trend of declining profitability, Pioneer Cement also posted an overall loss of 179 million in 2008. The Profitability ratios of Pioneer Cement indicate that Pioneer, like many other companies in the cement sector, has been plagued by lower earnings. The gross profit margin fell drastically in 2007 and fell slightly in 2008 as well. Pioneer's rising operating expenses and finance costs have led negative net profit margin. Similarly return on assets and return on equity have also fallen. The prices of imported coal had shot up during the last fiscal year and caused a major rise in the cost of production. Crude oil prices had also seen an extraordinary rise last fiscal year. As fuel costs are the largest portion of production costs of the Pioneer Cement, the price increase had deeply hit the profitability of the company in 2008. For Pioneer Cement, the prices of packaging material went up and formed 14% to total production costs. Fuel and electricity costs form 60% of the cost of sales and higher electricity tariffs and fuel costs affected the earnings of the company in 2008.The cost of production went up due to rise in the prices of imported coal. Company had an impact of Rs 149 million on earnings due to devaluation of rupee against the US dollar and Japanese yen in the form of exchange losses. Financial cost also increased due to higher interest rates in the economy. The profitability ratios indicate that Pioneer Cement, like many other companies in the cement sector, has been weighed down by lower earnings. Pioneer's rising operating expenses and financial costs have led to negative impact on the net profit margins. Similarly, return on assets and return on equity have also fallen.

8.2. LIQUIDITY ANALYSIS:
The liquidity position of the company has been weakening over the years, due to substantial rise in the current liabilities. Pioneer felt a liquidity crunch, like many other companies in the cement sector due to the price war and losses caused by that in 2008. The current liabilities of Pioneer have also increased to Rs 2.987 billion during 2008, backed mainly by increased short-term borrowings by the company. To solve the liquidity problem, Pioneer has initiated a process of restructuring its debt by issuing Sukuk of Rs 2.5 billion in 2008. This will help the company to liquidate its excessive current liabilities. It will also help to control company's finance costs. Also, Pioneer will issue shares to the National Bank of Pakistan due to its inability to pay its loans. This restructuring would give a breather to the company whose current ratio was steadily moving downhill. During 2008, the composition of current assets changed such that the most liquid assets: cash and bank balances constituted 18%, trade debts 5% and inventory 9% of total current assets. Stores, spares and tools are highly illiquid assets and they form a major portion of the company's current assets. Industry’s position, though not ideal, is at least much better than the Pioneer Cement. In fact, it is the only company in the cement sector, which has the liquidity ratio of below 0.5.

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8.3. DEBT ANALYSIS:
The debt to assets ratio depicts how Pioneer Cement financed. Each year, the company is being increasingly financed by equity rather than debt. In 2004, debt financed 87% of assets while in 2008 debt only contributed to 56% of the total assets. The company's debt to asset ratio has not fluctuated much because over the years because assets and liabilities have grown more or less in the same proportions. The debt to equity ratio fell during 2005 and 2006 indicating that the company was financing its growth by equity. In 2005, the equity of the company rose by 197% while liabilities increased only by 11%. In 2007 the equity fell as the reserves fell owing to the loss made during that fiscal year. This caused a slight increase in Debt to Equity ratio in 2007. In 2008 the debt to equity ratio has declined owing largely to a fall in the debt. The company is trying to restructure its financing composition in favor of equity by issuing Sukuk financing and convertible loan into equity. This will reduce the current liabilities in the future. In the wake of rising interest rates in the economy, this strategy will prove to be beneficial for Pioneer in the future. The average price/share fell during 2007 to Rs 31.78 and in 2008, it remained around Rs 31.84. The share prices declined due to the losses incurred during both the fiscal years.

8.4. ASSETS:
The asset management of the company seems to be quite effective during 2008 as the operating cycle of Pioneer decreased to 9 days from 23 days in 2007. The operating cycle, however, has reduced due to faster sales turnover while days to collect trade debt remained the same in 2008. The days to sell the average inventory were 19 days in 2007 whereas in 2008 it took the company only 6 days to sell its inventory.

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9. COMPANY ANALYSIS
Pioneer cement limited fulfills all its targets of supplies in the market and also expands its production with the needs of market. In these days company is in its growth stage. Now the company has three production lines including one line for white cement produce and also for grey cement. The growth in demand of cement in Asia, India and Middle East, particularly supply deficit in India and China has geared up export opportunities for Cement Industry of Pakistan. Supply deficit in India has resulted in significant demand for Pakistani Cement due to India's geographic proximity with Pakistan. Bureau of Indian standards have approved Pioneer Cement for import to India. This demand will also be supported by closing down of some cement units in Europe due to their strict laws governing pollution control and other environment hazards. Being one of the big cement units of Pakistan and due to its high quality Pioneer Cement is the prime of choice of the International buyers all over the world. Pioneer Cement is committed to provide high quality cement to its international customers and is being exported to Afghanistan, India, Middle East, Europe and Africa. Pioneer Cement conveniently meets all the International standards including American, British, and Indian and European standards. Pioneer cement is an ISO 9001-2000 and ISO 14001-2004 certified company and follows all rules and regulations of the government. Company’s social performance is also good. It has good cooperation with community and the environment. Company has a good relation with their workers and also trying for their welfare.

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10. CONCLUSION
The company underwent many expansion plans due to which its capacity was increased to 2350 tons per day in 2005 and in 2006 a new production line of 4300 tons per day clinker capacity started production. Its shares are quoted on all the three stock exchanges of the country. It is a part of the Noon group, which holds the majority stake of 60% in the company, followed by a leading brokerage house, First National Equity Limited (FNE) 9% shareholding. Financial institutions, insurance companies and the general public, hold the rest of the shareholding. Pioneer is involved in the manufacturing and marketing of cement. Its products include ordinary Portland cement, suitable for concrete construction and sulphate resistant cement, ideal for construction in or near sea. Thus, the company's sulphate resistant cement is highly preferred in important projects such as the Thai Greater Canal project. PIOC's products are sold under the brand name of 'Pioneer Cement' and it was the winner of "Brand of the Year Awards 2006" in cement sector in the national category. Pioneer Cement is ISO 9001:2000 QMS and ISO: 14001:2004 certified. It meets local as well as international quality standards. Pioneer Cement produces and sells used coal and cement domestically and internationally. The cement sector had shown an impressive growth of 24.3% in the cement dispatches during 2008, owing to a strong demand in the local market and supply deficits in the regional markets. The major boost had come from the export sales (a growth of 142%) while local cement dispatches grew nominally by 6.5%.exports showed a growth of 59.5% and export market share rose from 21.5% in 2008 to 34.1% . However, there is no reflective true performance of Cherat against its competitors; EPS remained above the industry average. Lower value of outstanding number of shares rather than a high net income is mainly responsible for the mentioned trend. The same argument holds true for the higher than average book value per share as well. It has a declining trend. This again can be attributed to shareholder pattern of the company. The outlook for local demand growth for Cherat remains positive as a number of mega housing projects are in their initial stages whereas the government has also started a lot of infrastructure developments projects and might even go for mega water reservoir projects in the future. This would keep the demand upbeat. Earthquake reconstruction in the Northern Areas further strengthens the demand growth. Whereas for the Kohat Cement Company, by going forward, with additional capacities coming on line, the gross margins are likely to decline. However, they are expected to sustain at a reasonable level, allowing a comfortable profitability and cash flow levels for the industry, even at low capacity utilization levels. As Kohat Cement Company is going under sustainable capacity expansion, relative to its existing size, its market share in the production sharing arrangement is expected to increase, signifying ability to achieve higher sales volumes even at low capacity utilization. They should increase the overall profitability of the company as compare to its competitors.

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11. FUTURE OUTLOOK
Cement dispatches are expected to continue growing in the future as the demand for cement may increase in response to construction activities in the private sector. Despite this, the local cement dispatches may be depressed due to slowdown in the economy-led construction activities in the country and also due to inflation. But exports are expected to maintain their strong growth and support the total cement dispatches. Pioneer Cement is expected to have increased exports as it has received orders from new buyers such as Russia, Central Asia, Madagascar and Nigeria. In the budget 2009 the central excise duty on cement was increased to Rs 900 per ton from current Rs 750 per ton Expenses are expected to increase for cement manufacturers due to the hike in coal prices and higher interest rates in our economy. This will negatively impact the gross margins of the cement sector. During the past, our cement manufacturers shifted production from oil to coal or gas. Pakistan has huge reserves of coal but manufacturers need to import coal due to high sulphur content. Coal prices more than doubled during 2008 with average coal prices being around US $176/ton during the fiscal year. Rising coal prices coupled with a depreciating rupee will increase the cost of production for the cement companies and hit their gross margins hard. From a wider perspective, the cement consumption in the domestic market is expected to fall because of the shocking economic situation in the country. The company's lavish expenditure on the social benefit when all the profitability ratios are below the industry average is not a good decision at all. The good asset and debt management is the key to success in future. The current owners will also have to think about increasing the free float of the company, as there is a lot of room for equity in the capital structure. This will have a positive effect on the net profit of the company, as the interest costs will reduce a lot. The stock market recovery should boost this decision. The liquidity position should also be improving in the nest year owing to the dependency of the company in short term borrowings. The impediments in the good future income are of course the power shortages and the fluctuating oil prices but these factors are faced by the industry as a whole. But the local demand will of course pick up due to the construction work in Swat and NWFP. The reduction in the prices of coal will also be also helpful in reducing the costs of the company. However, there is hope for cement sector on the international front. Presently, Pakistan is exporting to Afghanistan and India. Regional shortage of cement has presented a favorable opportunity for our cement manufacturers.

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12. BIBLIOGRAPHY
REFERENCE & SOURCES USED • • • • • • • • • • • • • Pioneer Cement company limited website (www.pioneercement.com) Pioneer Cement company Annual Reports Kohat Cement company Annual Reports. Cherat Cement Company Annual Reports Kohat Cement Company website (www.kohatcement.com) Kohat Cement Company Financial Reports. All Pakistan cement manufacturing Association. www.apcma.com Financial Management by (BPB) Financial Reporting by (BPB) Karachi stock exchange site www.investopedia.com www.brecorder.com Business Recorder www.accountingformanagment.com

13. WORK LOAD MATRIX
Abu-Bakar Butt Mariyum Javaid Sandhu Shawna Javaid Sandhu Sareena Khan (08-0382) (08-0382) (08-0430) (08-0528) 100% 100% 100% 100%

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