Comparison between Dewan Motors & Suzuki Motors Limited

The automobile has become an important and indispensable means of transport. Quick and reliable mobility is essential both for personal needs as well as business. The automobile industry is a key industry in many countries, and its development is directly related to the development of the nation as a whole. The present situation of the automobile industry in Pakistan is exactly in the middle of the historic path of development. There are a number of challenges to be overcome, such as realizing economies of scale, generating a bigger market, and ensuring fair and healthy competition among the manufacturers for the benefit of consumers. Automobile companies throughout the world are faced with the challenge of global competition.

DEWAN FAROOQUE MOTORS AND PAK SUZUKI MOTORS The Dewan Farooque Motors is belongs to the corporate group of Dewan Farooque, which is the one of the leading groups of Pakistan. The key brand of Dewan Farooque Motors is the Santro brand by Hyundai. The car comes under the 1000cc segment and has registered the rapid growth after the introduction of its new model. Pak Suzuki motor company ltd is a public limited company with its shares quoted on stock exchanges in Pakistan. The Suzuki management immediately after privatizationstarted expansion of the Bin Qasim Plant to increased its capacity to 50,000 vehicles per year. The company continues to be in the forefront of automobile industry of Pakistan.

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RATIO ANALYSIS PAK SUZUKI MOTOR COMPAY LIMITED (1) Working Capital = Current Assent – Current liabilities Current Assets 3152839 2768706 7183211 8541540 Years 2000 2001 2002 2003 Current Liabilities 2710563 2087090 5511463 5603769 W. You can see that Assets are growing up and Current liabilities are also going to increase and when you see the proportion of working capital that is also growing. Capital 442276 681616 1671748 2937771 Comment: Pak Suzuki Motor Company Limited has enough working capital which is a good sign. 2 .

(3) Acid Test Ratio = Quick Assets / Current Liabilities Years 2000 2001 2002 2003 Quick Assets 4502145 4725149 5190168 5797749 Current Liabilities 2710563 2087090 5511463 5603769 Ratio 1.66 2.94 1.3 1.33 1.(2) Current Ratio: Current Assets / Current Liabilities Years 2000 2001 2002 2003 Current Assets 3152839 2768706 7183211 8541540 Current Liabilities 2710563 2087090 5511463 5603769 Current ration 1.26 0.5 Comments: In year 2003Pak Suzuki Motor company Limited is in very strong position if you compare this to the other years you can easily to reach the decision that 2003 is the best year and 2000 year is not satisfactory.16 1.03 3 .

9 5.70 4.Comments: The ideal Acid test ration is 1:1 and you can see in 2002 the company has over quick assets which goes idol but in 2003 it is good because it is very close to an ideal ratio. (4) Inventory Turn over Ratio = Cost of goods sold / Average Inventory Years 2000 2001 2002 2003 Cost of goods sold 6578898 7599439 9614256 15840739 Average Inventory 1999521 2054251 2088767 Ratio 3.6 NA Comments: In all the years the company has high turnover which is a good sign for company it means company earning a lot of profit and that has overcome its expenses.9 4.29 3.9 3. Liabilities 1171204 1024085 1665193 1896971 Ratio 3. (5) Ratio of Plant Assets to Long Tem Liabilities = Plant Assets / Total Liabilities Years 2000 2001 2002 2003 Plant Assets 4567695 3993930 8159447 9674550 L.1 4 .

53 0.Comments: The ratio is growing year by year which is a good sign it means if company want to take some extra debts that can take because company has very good ratio.91 5 .07 0. (6) Debt Ratio = Total Debts / Total Assets Years 2000 2001 2002 2003 Total Debts 2807563 2132090 551463 5603769 Total Asset 4567695 3993930 8159447 9674550 Ratio 0.35 1. (7) Total Asset Turn Over Ratio = Net sales / Total Assets Years 2000 2001 2002 2003 Net Sales 6889145 7976122 10994067 18484220 Total Assets 4567695 3993930 8159447 9674550 Ratio 1.20 1.58 Comments: In all years the company has very satisfactory debt ratio but in 2002 it is not good it means that company has more self proportion in the investment that should take more money as a loan and in other years company has good ration that can take ratio with out any hesitation.51 1.61 0.

34) 6.83 31. in a nut shell we can say the gross profit ratio is growing.Comments: The company’s total asset turn over ratio is very good it has minimum ratio in 2001 and maximum ratio in 2003 it means the company ratio is growing up steady which is a good sign.045 0. (8) Gross Profit Ratio = Gross profit / Net Sales Years 2000 2001 2002 2003 Gross profit 310247 376683 1379811 2643481 Net sales 6889145 7976122 10994067 18484220 Ratio 0.14 Comments: The company’s gross profit ratio is not enough in 2000 it has very less but in 2003 it is comparatively growing. (9) Profit Margin Ratio = Net Income / Net Sales Years 2000 2001 2002 2003 Net Income (26600) 141013 850097 1570191 Net sales 19816 20434 29484 49503 Ratio (1. It means the company utilizing its fewer resources and getting high profit.72 6 .13 0.9 28.05 0.

(10) Working Capital Turnover Ratio = Cost of goods sold / net working capital Years 2000 2001 2002 2003 Cost of goods sold 6578898 7599439 9614256 15840739 Working capital 442276 681616 1671748 2937771 Ratio 14.39 Comments If the working capital ratio is less it is benefited for the company its means the company is spending less and getting more product.Comments: The company’s profit marging ratio result is very proficient because in 2000 the company’s ratio was in negative but with passing of year it gain very good result and in 2003 it got very good result.75 5. DEWAN FAROOQUE MOTORS LIMITED 7 .88 11.15 5.

The company must have working capital to run the daily expenses. The current assets and currents liabilities are equal which not a good sign is.(1) Working Capital = Current Assent – Current liabilities Years 2000 2001 2002 2003 Current Assets 2454084 1852563 1815632 1730866 Current Liabilities 2454084 1852563 1815632 1730866 W. (2) Current Ration: Current Assets / Current Liabilities Years 2000 2001 2002 2003 Current Assets 2454084 1852563 1815632 1730866 Current Liabilities 2454084 1852563 1815632 1730866 Current ration 1.0 1.0 1. Capital 0 0 0 0 Comment: Dewan Motor Company has not working capital which is impossible.0 1. The company must have some extra current assets over the current liabilities.0 Comments: Current Assets ratios is 1:1 which is not good. (3) Acid Test Ratio = Quick Assets / Current Liabilities 8 .

56 1.99 Comments: Acid test ratio is satisfactory this is growing up steady which is a good sign it means the company has more quick assets over the current liabilities.08 1.87 1.5 5.Years 2000 2001 2002 2003 Quick Assets 2650411 3464293 2832386 3444423 Current Liabilities 2454084 1852563 1815632 1730866 Ratio 1.3 Comments: Inventory turn over ratio is very proficient because it is up standing year by year it mean the company has over come its extra expenses.1 4. (5) Inventory Turn over Ratio = Cost of goods sold / Average Inventory Years 2000 2001 2002 2003 Cost of goods sold 903329 3204532 3882778 4063378 Average Inventory 311493 1033720 862840 766675 Ratio 2.9 3. 9 .

9 2. Liabilities 1171204 1024085 1665193 1896971 Ratio 2.8 4.15 0.8 3. (6) Debt Ratio = Total Debts / Total Assets Years 2000 2001 2002 2003 Total Debts 998767 1095867 1236849 2743710 Total Asset 4567695 3993930 8159447 9674550 Ratio 0.9 Comments: The plant assets are more as compared to the long term liabilities.28 Comments: The debt ratio is not good because company has invested its own amount in the business but at the moment the financial institutions are giving loan at low rate the companies should take this facility and enhance its business by taking the loan at low rate (7) Total Asset Turn Over Ratio = Net sales / Total Assets 10 .(5)Ratio of Plant Assets to Long Tem Liabilities = Plant Assets / Total Liabilities Years 2000 2001 2002 2003 Plant Assets 2726181 3476846 3516853 3477741 L.22 0. ratio is growing upward by passing of the year and it is good sign but keep in mind that the assets should not be keep idle.15 0.

37 0.35 Comments: The Company’s total asset turn over ratio is very good it is enhancing with the passage of time and its grown rate is also very high.21 1.Years 2000 2001 2002 2003 Net Sales 1001294 3389370 4256192 4695993 Total Assets 2726181 3476846 3516853 3477741 Ratio 0. (8) Gross Profit Ratio = Gross profit / Net Sales Years 2000 2001 2002 2003 Gross profit 97965 184838 373414 632615 Net sales 1001294 3389370 4256192 4695993 Ratio 0.09 0.13 Comments: The company’s gross profit ratio is also satisfactory in 2001 it is bad but when it cross the 2001 its profit ratio increased and in 2003 the ratio is highest as compare to the other years.05 0.97 1. (9) Profit Margin Ratio = Net Income / Net Sales 11 .10 0.

03 Comments: Net profit margin ratio is not bad because its ratio in 2001 it goes to negative and in 2002 its ratio is less as compare to the 2000 when we talk about the 2003 it is not satisfactory as compared to the 2000.01) 0.06 (0. (10) Working Capital Turnover Ratio = Cost of goods sold / net working capital Years 2000 2001 2002 2003 Cost of goods sold 903329 3204532 3882778 4063378 Working capital 0 0 0 0 Ratio NA NA NA NA Comments: 12 .Years 2000 2001 2002 2003 Net Income 63557 (31150) 11942 139709 Net sales 1001294 3389370 4256192 4695993 Ratio 0.01 0. in a nut shell we can say the company can perform well in net profit margin point of view.

and its ratio goes to zero. Comparison between Dewan Motors & Suzuki Motors Limited 3000000 2500000 2000000 1500000 1000000 500000 0 Suzuki M otor D an M ew otor 1 2 year 3 4 13 .Working capital turnover ratio is very bad because company has not working capital.

5 0 1 2 y ear 3 4 Ratio S zu M to u ki o r D w n M to e a o r A idT s R tio c et a Ratio 3 2 1 0 1 2 Y ear 3 4 S zu M to u ki o r D w n M to e a o r In e to tu o e ra v n ry rn v r tio 6 ratio 4 2 0 20 00 20 01 y ears 20 02 20 03 S zu M to u ki o r D w n M to e a o r P n a s t tolo gte m b la t s e n r lia ility 6 5 4 3 2 1 0 1 2 3 4 S z k M to uui o r D w nM to ea o r 14 .5 1 0 .C rre t ra u n tio 2 1 .

8 0 .2 0 1 2 Ya e r 3 4 Ratio S z k M to uui o r D w nM to ea o r Go sp o R tio r s r fit a Ratio 0 5 .6 0 .T ta A s t tu no e r tio o l se r vr a Ratio 3 2 1 0 1 2 Ya e r 3 4 S z k M to uui o r D w nM to ea o r D b R tio et a 0 .4 0 .1 0 5 .1 0 .0 0 1 2 Ya e r 3 4 S z k M to uui o r D w nM to ea o r W rk gc p l tu o e ra o in a ita rn v r tio 2 0 1 5 1 0 5 0 1 2 y r ea 3 4 Ratio S z ki M to uu o r D w nM to e a o r 15 .

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APPENDIX 17 .

paksuzuki.References ANNUAL REPORTS: • DEWAN FAROOQUE MOTORS • PAK SUZUKI MOTORS LTD BOOK • Fundamentals Of Financial Management 5th Edition INTERNET • www.com • www.dewan_motors.pk 18 .com.

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