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Oct 9, 2009
Financial Analysis Ratio Analysis of Gul Ahmed Textile Mills for year 2005
Textile Industry When we think manufacturing industry, Pakistan, it is the textile industry that immediately come to the mind that is playing an important role in term of the employment generation and value added special with strong base of raw material has started its journey from non existence in 1947 with 3000 looms that is too in the unorganized sector, with only one textile unit. It could supply only 8% of the domestic demand derived from its population 76 million people. The industry has gone through a long way and now possesses 443 units, 8.4 million spindles and 166,000 rotors. 20,000 shuttle less looms, 200,000 power looms, 8,000 terry towel looms, 7620 canvas looms, 157,000 woolen / worsted installed spindles, 15,000 woolen looms, 12,000 knitting machines, over 600 processing units and over 2500 garments units. The textile industry at present is a passing through a transition phase. It is sailing smoothly under the protected cover of the quota system; however it has to face the rough waters of the open sea when globalization of trade is implemented under WTO agreement in 2004. three years have already gone unnoticed the fast approaching deadline sounding a note of warning for restructuring of all the segments of the cotton and textile industries on war footings to enable it to face the future challenges of fierce competitio0n amongst the low cost Asians manufacturers to capture share of their higher
cost European counter –parts when the gates of the global economies are open. 116 million per annum 8. which carry some failures also to weep on. Textile industry economic contribution Description Exports Manufacturing Employment Investment Market capitalization Interest Salaries and wages Contribution to research and development Gross domestic product (GDP) Contribution 64% of total exports (US$ 4. 4 billion per annum Rs. Year No of Spindles (000) mills Installed Working % growth 1948 1959-59 1964-65 1974-75 1984-85 1994-95 1998-99 70 83 144 219 494 442 78 1581 1967 3366 4445 8610 8358 Looms (000) Installed 78 1488 1852 2823 2872 6262 6631 Working % growth 3 76 26 2.08 Contribution in employment Textile unit constitute 38% of employment generated by the manufacturing sector while textile being largest industry has got other forward and back ward relation where it must had played its role in generating employment in related industries for example shipping industry will definitely by mainly depended upon textile industry. 40 billion per annum Rs.82 31 .05 23 2.67 -23.5% of Total GDP This sounds a triumph like situation at a glance. Growth of textile sector in Pakistan.33 -4.17 -6.9 billion) 46% of total manufacturing 38% total employment 31% of total investment 7% of total market capitalization Rs. This industry has not performed as well as it should have.27 14 -. It is struggling for its survival for the past 7years.12 10 3 24 28 25 10 5 5 333 -3. There is however much more than it meets the eyes when you go into details.60 29 4. .
DEUTSCHE BANK AG HABIB BANK AG ZURICH HABIB BANK LIMITED MEEZAN BANK LIMITED NATIONAL BANK OF PAKISTAN NDLC-IFIC BANK LIMITED STANDARD CHARTERED BANK THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED UNION BANK LIMITED UNITED BANK LIMITED . N. RAZAK HAJI SATTAR .Member ZAIN BASHIR .Member BANKERS ABN AMRO BANK NV BANK AL HABIB LIMITED CITIBANK. ALIMOHAMMED .Chairman & Chief Executive A.RAZAK HAJI SATTAR YASIN HAJI KASSAM YOUNUS HAJI LATIF ZAIN BASHIR ZIAD BASHIR ABDUL AZIZ YOUSUF COMPANY SECRETARY MOHAMMED SALIM GHAFFAR AUDIT COMMITTEE A.Chairman YOUNUS HAJI LATIF .A.COMPANY PROFILE Company Information BOARD OF DIRECTORS BASHIR H.
.com URL www. Hence. whereas the corresponding figures are for full year. the accounts now being presented are for nine months ended June 30.gulahmed. CHANGE IN FINANCIAL YEAR END As per directive of the Central Board of Revenue. 2005. HT/3A LANDHI INDUSTRIAL AREA KARACHI-75120 MILLS LANDHI INDUSTRIAL AREA KARACHI-75120 E-MAIL finance@gulahmed. Chartered Accountants REGISTERED OFFICE PLOT NO. KARACHI-75120 SHARES DEPARTMENT PLOT NO. 2005.com Directors’ Report Your Directors take pleasure in presenting 53 rd Annual Report and the audited accounts for the nine months ended June 30.82 MAIN NATIONAL HIGHWAY LANDHI. your Company changed the closing date of financial year from 30th September to 30th June.AUDITORS GARDEZI & CO.
54%. operational excellence and pursuing new business opportunities. i. BONUS SHARES Your Directors are pleased to recommend issue of 10% bonus shares. 20/= per share including premium of Rs.371 Appropriations General reserves 75.000 Amount carried forward 5. The right shares are being issued to improve the liquidity of the Company. The increasing fuel prices and continuing increase in mark-up rates are areas of main concern.000 Profit after taxation 75.000s Profit after providing depreciation/amortization of Rs. there are many new entrants in export market.OPERATING RESULTS Operating results of the Company are noted below: Rs. These bonus shares will be issued out of the capital reserves of the Company. RIGHT SHARES Your Directors have decided to issue 10% right shares on the existing paid.371 80. FUTURE PROSPECTS In the fierce competitive environment as a result of the quota free trade.908 Less: Provision for taxation 46.908 Add: Unappropriated profit brought forward 4. However the Company’s profit has decreased due to steep rise in mark-up rates resulting in higher finance cost.371 On an annualized basis sales have grown by 17. The right shares will be issued at an issue price of Rs. 275 million 121. 10/= per share.e.463 Amount available for appropriation 80.up capital of the Company (before the issue of bonus shares) in the ratio of one share for every ten shares held. To succeed we are focusing on efficiency. in the ratio of one share for every ten shares held. CORPORATE GOVERNANCE We are pleased to report that your Company has taken necessary steps to comply with the provisions of the Code of Corporate Governance as incorporated in the Listing Rules of .
AUDITORS The present auditors Gardezi & Co. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. There are no significant doubts upon the Company’s ability to continue as a going concern. 2005 is included in the annual report. BOARD OF DIRECTORS At the Extraordinary General Meeting of the Company held on March 28. in a summarized from. prepared by the management of the company. Mr. is annexed. There has been no material departure from the best practices of corporate governance. retire and offer themselves for reappointment. PATTERN OF SHAREHOLDING A statement showing the pattern of shareholding in the Company as at June 30. if any. as detailed in the listing regulations. Bashir H. Proper books of account of the company have been maintained.the Stock Exchanges. Abdul Aziz Yousuf were unanimously elected uncontested. have been followed in preparation of financial statements and departure. ACKNOWLEDGMENT Your Directors are pleased to record their appreciation for the continued dedication. 2005 election of directors was held and all the retiring directors. Mr. For and on behalf of the Board . Ziad Bashir and Mr. Mr. International Financial Reporting Standards. commitment and loyalty of the employees of the Company. cash flows and changes in equity. During the year three board meetings were held and the attendance by each Director is included in the annual report. Razak Haji Sattar. The present Board of Directors consists of the above noted persons.. Mr. present fairly its state of affairs. 2005 of the Company and its subsidiaries Gul Ahmed International Limited (FZC) and GTM (Europe) Limited are attached. The system of internal control is sound in design and has been effectively implemented and monitored. has been adequately disclosed. Younus Haji Latif. Zain Bashir. We also appreciate the assistance and continued support of the various Government Departments and Bankers. as applicable in Pakistan. the result of its operations. Mr. AliMohammed. The process of review will continue and any weaknesses in controls will be removed. A. Mr. Chartered Accountants. The financial statements. CONSOLIDATED ACCOUNTS Consolidated accounts for the nine months ended June 30. The key operating and financial data for the last six years.Yasin Haji Kassam.
000 ordinary Shares of Rs. ALIMOHAMMED October 01. 2005 Chairman & Chief Executive Gul Ahmed Textile Mills Limited Balance Sheet As At June 30. 2005 Note Note Share capital Authorized.000s 9076238 Sep. capital 50.2004 Rs.2005 Rs.2005 Rs.000s Sep.000 383.000s 11 12 3486380 542129 3009318 460301 .000 340733 1805053 4463 42592 2192841 1386906 110713 6 7 Current Liabilities Short term bank borrowings Current maturity of long term loans Trade and other payable Provision for taxation 8 9 4375827 73993 943201 39000 5432021 4541962 99798 684018 60000 5385778 Contingencies and commitments Note Property. 10/.325 1841721 5371 38332 2268749 2036250 68273 500.Karachi BASHIR H.000s 500.2004 Rs.each Issued subscribe and paid up Capital Reserved Inappropriate profit Proposed bonus share Non-current liabilities Long term loans Deferred liabilities 4 5 June o0. plant and equipment Operating assets Capital work-in-progress 10 Note 9805293 June 30. 30.000. 30.
spares and loose tools Stock-in-trade Trade debts Loans and advances Deposits and prepayments Other receivables Short term investment Cash and bank balance 15 16 17 18 19 20 21 22 338375 2408648 1925491 166061 18935 183200 551497 115546 5707753 9805293 13 14 58450 7021 3560 3469619 58450 8365 3560 356553 2043870 2058428 258548 2478 170555 546785 99027 5536244 9076238 PROFIT AND LOSS ACCOUNT For the period from October 01. 30.2005 Rs.000s 5876261 4912888 963373 350789 253435 604224 359149 6719 For the year ended sep.000s 6665898 5621084 1044814 411309 270558 681867 362947 11454 Sales Cost of goods sold Gross profit Operating Express Administration Distribution cost Operating profit 23 24 25 26 Other operating income 27 .2004 Rs. 2004 to June 30.4028509 Long Term Investment Long term loans and advances Long term deposits Current assets Stores. 2005 Note Note For nine month ended June 30.
98 374401 109594 13240 900 123734 250667 47917 202750 5. debt ratios.168. It is calculated as follows. activity. profitability ratios measure return. and debt ratios primarily measure risk. Liquidity. Liquidity refers to the solvency of the firm’s over all financial position the case with which it can pay its bills. Current Ratio: The current ratio is one of the most commonly cited financial ratios.) Gul Ahmed Textile Mills Limited 28 236912 6448 600 243960 121908 29 46000 75908 1.866.492 = 58. Liquidity Ratios The liquidity of a business firm is measured by its ability to satisfy its short – term obligations as they come due. and profitability ratios.377 The figure is quite useful for internal control. measures of the . Networking Capital Networking capital though not actually a ratio is commonly used to measure a firm’s over all liquidity.365868 Finance cost Workers profit participation fund Workers welfare fun Profit for the period/year before taxation Provision after taxation Profit after taxation Earning per share (Rs.786. A time series comparison of the firm’s net working capital is often helpful in evaluating its operations.652. Net working capital = current assets – current liability The networking capital = capital o Net working capital = . activity ratios.199 – 277.29 Ratio Analysis of the Company Financially ratios can for convenience be divided into four basic groups or categories: liquid ratios.
847 = 0.5219 2000 Quick Ratios = =0. accounts receivable and accounts payable are converted into sales or cash.492 = 0. inventory. Inventory Turnover Commonly measures the activity.7414 Quick Ratio (Acid Test) A measure of liquidity calculated by dividing the firm’s current assets minus inventory by current liabilities.6446 2000 Current ratios = 168. It is calculated as follows.063.119 / 227. It is calculated as .firm’s ability to meet its short-term obligations.4805 Activate Ratio Activity ratios can be used to asses the speed with which current accounts. The quick ratio of the company is calculated as follows.786.242. or liquidity of a firm’s inventory.705 / 157.652. For the year in 1999 Current ratio = current assets / current liabilities =101. 1999 Quick Ratio = = .
is useful in evaluating credit and collection policies. It is arrived at by dividing the average daily sales into the account receivable balance.46days Average Collection Period Average collection period or average age of accounts receivable.49 =38.82) 138. The number of days in a year. For the SUNRAYS TEXTIEL MILLS LIMITED the average age of inventory would by (365/27.82 times Inventory turnover can easily be converted into an average age of inventory by dividing it into 365 days.Inventory turnover = 1999 Inventory turnover = =27.49 times Average age of inventory = 365 / 9.2 days. 2000 Inventory Turnover = =9. Average Collection Period: = accounts receivables/average sales per day .
761 =1. Total Asset Turnover It indicates the efficiency with which the firm uses all its assets to generate sales.034 =1. Debt The debt position of a firm indicates the amount of other people’s money being used in attempting to generate profit. the more efficiently its assets have been used.161. Total Asset Turnover = Sales / Total Assets 1999 =612.45 times a year.30days This shows that the companies average collection period has been increased as compared to the past year of 2000. or earning.29 times which shows that the higher fixed asset turnover are preferred.09 times 2000 =662.068. In general the financial analyst is most concerned with its .987/457.09 times in a year 1999 and in 2000 the net fixed asset turnover is 2.29times This means that the company turns over its net fixed asset 2.368.395.5 days.271 =2.068.96 =2.700.555 =2. This difference may be for operating efficiencies.189.874 =1.379 / 1.314/398. 3839. 2000 Average collection period =4.987/288. It is calculated by dividing the firm’s sales by its net fixed assets: Fixed asset turnover = sales / net fixed assets 1999 =612.314 / 293.4865 or 1.1999 =2.238.349.45times This is acceptable because of nominal change in the company’s therefore turn its assets over 1.165. assets to generate sales. which is not a good sign for the company. since it indicates whether the firm’s operations have been financially efficient. Generally the higher a firms total assets turnover. This measure is probably of greatest interest OT management.527. Fixed Asset Turnover The fixed asset turnover measures the efficiency.031/1. The total asset turnover is calculated as follow for the year.165.54 times 2000 =662.589. since they reflect greater efficiency of fixed asset utilization. with which the firm has been using its fixed.
037.525.149 or 15% The CGS has decreased due to more efficient production process.161. assets.436/45.797.83 Time Interest Earned Ratio The time interest earned ratio measures the ability to make contractual interest payments. P Margin = G.long-term debts.932.034 =0.941 =1. The higher this ratio.665/48. Debt – Equity Ratio The debt equity ratio indicates the relationship between the long-term funds provided by creditors and those provided by the firm’s owners.926/24.363. or Financial average a firm uses. and equity or share value. The more debt a firm uses in relation to its total assets. Debit ratio can be measured as follow. The higher the value of this ratio.36 Analyzing Profitability A firm’s profitability can be assessed relative to sales. Debt ratio = total liabilities / total assets 1999 =388. Time interest = earning before interest and taxes / interest 1999 =50. Gross Profit Margin The gross profit margin measures the percentage of each sales dollar remaining after the firm has paid for its goods.910/396. the greater its financial average a term used to describe the magnificent of risk and return introduced through the used of fixed cost financing such as debt and preferred stock. G.687.395.068. Debt equity ratio = long term debts / stock holder’s equity 1999 = 54.157 =1.064.816/7.458. the greater will be its risk and expected return. the more financial leverage the firms have.696 =1.086.95 or 95% This indicates the firm this year has financed 95% of its assets with debts.717/457.589. Debt Ratio The debt ratio measures the proportion of total assets financed by the firm’s creditors.586/662. Operation Profit Margin .89 or 98% 2000 =433.124 =7. the better able the firm is fulfills its interest obligations.P / Sale 1999 = 76.251/612.555.314 =0.165.874 =0.113 2000 =65.987 =0.46 2000 =44.980.124 or 12% 2000 = 98. In other words the more fixed cost debt. The higher the gross profit margin the better and the lower the relative cost of merchandising sold and vice versa. since these commit the firm to paying its interest over the long run as well as eventually repaying the principle borrowed. less wastage of material.
000.314 =8.363.373 0.470.589.481 38.942/662.9% Net Profit Margin It measures the percentage of each sales dollar remaining after all expenses.701. Return on total assets.034 =1. /6.45 95% 1.689/396.It measures the percentage earned on each sales dollar before interest and taxes.701.5% Returns on a Total Assets It measures the overall effectiveness of management in generating profits with its available assets. Operating profit margin = operating profit / sales 1999 =50. Net profit margin = net profit after taxes / sales 1999 =5.874 =3.701.161.645 0.113 12% 8.033 / 24.987 =2.142 0.189.124 =70.2% 2000 58.701.000 = 0.9% Time series Ok Good Ok Poor Ok Ok Ok OK Ok Good OK .659/7.7414 0.314 =0.426/612.189.3 days 2.165.3% =16.866.064.000.165.659/612.157 =69.42 1.09 1.821.6% Return on Equity It measure the return earned on the owner’s investment in the firm Return on equity = net profit after tax / stockholder’s equity 1999 =5. have deducted.89 2000 = 16. also called return on investment.377.000 = 2.54 98% 1. = net profit after / total assets =5.5% 2000 = 16.033/6.189.4 15% 9.86 2.85% 2000 =16. including taxes.5 days 2.2% 2000 =65.066.4% Earning Per Share ESP = earning available for common stock holders / share out standing 1999 = 5.033/662.8 Ratios Liquidity Networking capital Current ratio Quick ratio Activity Inventory turnover Average collection period Fixed assets turnover Total assets turnover Debt DO indebtedness ratios Time interest earned Profitability Gross profit margin 1999 55.987 =9.3 1. 189.068.522 13. 659.033/457.
87 2.8 Very good Ok Good Reactions: Labels: Automobiles Cars Vehicles.OP margin Net profit margin Return on total assets EPS 0.4% 2.85% 70.5% 69. Finance.5% 0. yet the front page doesn't show all. Please type in the right-side box to get your desired reports. Say bye bye to Internet Explorer. Categories • • • • • • • • • • • • • • • • Agriculture Articles Automobiles Cars Vehicles Bangladesh Banks and Financial Institutions Business Communication Business Research Methods BRM Case Studies Chemicals Paint and Coatings Industry Compensation System Development Computer Science and Information Technology Construction and Building Business Consumer Products Current Affairs and Politics Customer Relation Management Defense and Weapons . use Google Chrome for fastest browsing. Ratio Analysis Financial Analysis 0 comments: Post a Comment Links to this post Create a Link Newer Post Older Post Home Subscribe to: Post Comments (Atom) Note: Hundreds of Free MBA Reports are available on this website.
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