Institute of Business and Information technology

“In the name of ALLAH the Most Beneficent and

the Merciful”

Many people have contributed in a variety of ways in

the completion of this project. We would like to
dedicate our these humble efforts to our beloved
parents, our respected teacher SIR SHAHID
MAHMOOD and to those who'd a part to play in giving
us time to complete the project, motivation, and
prayers. We never lose sight of the fact that our work
"stands out in the crowd" because of you.

THANKS!

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

INTRODUCTION TO THE COMPANY

Pak Suzuki motor company limited was in cooperated in August 1983 as a public limited
company. Its share is listed on all stock exchanges of the country. The company is a joint
venture between Pakistan automobile corporation limited and Suzuki Motor
Coporation,Japan.PSMC main operation include manufacturering,assembling,and marketing of
cars,vans,pickups,and 4x4 vehicle in Paksitan.At present, the whole range of the Suzuki products
currently marketed in Pakistan is being produced at Bin Qasim plant.

PSMC continues to be in the forefront in the automobile industry of Pakistan. Through effective
marketing, wide network of sales, service and spare parts dealers, the company has successfully
maintained its market share in the local market in terms of both productions especially in the
low-end car segment. This segment is very popular in the middle class income group of the
country due to its affordability. Thus the company enjoys high demand and consequently high
sales volume. Apart from this it has a meager presence of 11% in the high end car segment. In
the high end segment company has Laina only. Previously it assembled Baleno locally which
has been replaced by more advanced model of Laina.

PSMC currently working on its capacity expansion. The company has undergone three phases of
capacity expansion which were completed in FY05,FY06 and FY07 when a capacity improves
to a level of 80000,120000 and 150000.the enhanced capacity has been absorbed and owes much
to the rising demand ,easy availability and booming GDP growth.

MARKET SHARE (SALES WISE)

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

LIQUIDITY RATIO

YEAR 2008 YEAR 2007

RATIO

CURRENT RATIO
=11807612 ÷ 2657462 =16215508 ÷ 7125308

=4.44 =2.27

ACID TEST RATIO

= (11807612 – 7732518) ÷ = (16215508 – 9182019) ÷
2657462 7125302

=1.53 =0.98

ANALYSIS
Pak Suzuki enjoys a fairly strong liquidity position of company which depicts good trend and increase in
the current assets of the company. The current ratio has increased from last year. The current ratio is
greater than 1 which shows that current assets of the company far exceed the current liabilities. The

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

increase in liquidity can be attributed to increase in other receivables of the company. The acid test ratio
also indicates that company has enough margins to pay in case of emergency to its stockholders.

PROFITABILITY RATIO

Ratio Year 2008 Year 2007

Gross profit margin

=590606 ÷ 39669730 = 4760232 ÷ 50844632

=0.015 × 100 = 0.09 × 100

=1.5% =9.4%

Net profit margin

=624785 ÷ 39669730 = 2774532 ÷ 50844632

=1.6 =5.5

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

Return on investment =624785 ÷ 16956143 =2774532 ÷ 21201337

=3.6
=13

Return on equity =624785/14152681 =2774532/13977035

=4.41% =19.8%

ANALYSIS
Profitability ratio weakens as compared to last year. Gross profit declined from 9.4 % to 1.5% due to
decrease in net profit margin. Profit margin also declined in 2008 and did not post a healthy trend due to
increase in cost of goods manufactured. This declined have many factors among which one is decrease in
net sales. Return on investment and equity also show a negative trend due to decrease in net profit after
taxes.

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

COVERAGE RATIO

Ratio Year 2008 Year 2007

Coverage ratio
=223469 ÷ 53470 =3822136 ÷ 143786

=4.17 =26.5

ANALYSIS

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

The coverage ratio depicts a negative trend. The company interest paying ability has decreased
as compared to 2007 due to decreased in EBIT.The coverage ratio is lass as compared to
2007 which shows that debt burden of Pak Suzuki is higher.

ACTIVITY RATIOS

Ratio Year 2008 Year 2007

Inventory turn over

=39079124÷ 7732518 = 46084400 ÷ 9182019

=5.05 =5.01

Asset turn over

= 39669730 ÷ 16956143 = 50844632 ÷ 21201337

=2.4 = 2.4

Receivables turn over

=39669730/286697 =50844632/185739

=138.36 =273.74

Avg collection period

=365/138.36 =365/273.74

=2.63 days =1.33 days

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

Payable turn over

=1794774/1315584 =1206673/3173554

=1.36 =0.38

PT in days
=365/1.36 =365/0.38

=268.38 days =960.5 days

ANALYSIS
Due to demand in automobile, inventory level has risen thus giving rise to higher inventory
turnover.ITO ratio depict show quickly the company is able to sell off its inventory. The graph
shows a relative higher ITO as compared to 2007.It is increasing also due to decrease in
inventory.

The company is efficient in converting its assets into sales because as compared to last year asset
turnover has the same ratio.

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

Average collection period shows how quickly the company is able to collect the dues from its
debtors but as compared to 2007 the number of days increases which shows that company’s
average time taken to recover cash from sales has increased. Payable turnover ratio depicts in
how much time Pak Suzuki pay its payables. As compared to last 2007 payable days decreases.

MARKET RATIOS

Ratio Year 2008 Year 2007

EPS
=624785 ÷ 82300 2774532 ÷ 82300

=0.0759 x100 =0.0337 x100

=7.59 =33.7

DPS
=82300 ÷ 82300 =411499 ÷ 82300

=1.00 =5.00

Dividend payout ratio

=0.1 ÷ 0.759 =5.00÷ 33.7

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

=0.13x 100

=13 =0.148x 100

=14.8

Dividend yield
=1.00/65.52 ---------

=1.52

Book value per share

=14152681/82300 =13977035/82300

=171.9 =169.83

Market to book value

=65.52/171.9 --------

=0.38

Price earning ratio

=65.52/7.59 --------------

=8.63

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

ANALYSIS
Eps value decreased due to decrease in net income. Also company DPS followed a decreasing
trend, showing that the company is not passing its profits to its share holders in the form of good
return.

Pak Suzuki book value per share shows a positive trend on account of increasing mainly due to
increase in shareholder equity compared to no change in the number of share outstanding. This
shows that shareholders willingness to pay more for a share of the company.

LEVERAGE RATIOS

Ratio Year 2008 Year 2007

Debt_to_equity ratio
= 146000 ÷ 14152681 = 99000 ÷ 13977035

= 1.03 = 0.70

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

Debt_to_Total Assets
= 146000 ÷ 16956143 = 99000 ÷ 21201337

= 0.86 = 0.46

Debt ratio
= 2803462 ÷ 16956143 = 7224302 ÷ 21201337

= 0.16 = 0.34

Working capital
=11807612 – 2657462 =16215508 – 7125302

=9150150 = 9090206

Total capitalization
=146000 ÷ = 99000 ÷ (99000+13977035)
(146000+14152681)
=0.70
=1.02

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Financial Analysis of Pak Suzuki
 Institute of Business and Information technology

ANALYSIS
As far as debt management is concerned D/E and D/A show have increased as compared to 2007
owing to increase in long term debt

Debt to equity ratio of the company remained below 1 in 2007 but increased in 2008 which
shows that company was more debt financed than equity financed showing that company
reduced its leverage performance. Increase in debt to total asset indicates that total liabilities
have increased. Working capital shows a healthy trend and increased by 59944 million. Total
capitalization ratio indicates increase in long term debt as compared to 2007

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Financial Analysis of Pak Suzuki