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Answers for Pakistan

www.siemens.com.pk

SIE
MENS
Subject
FINANCIAL MANAGEMENT

Overview
To Analyze the Financial Situation of Siemens

Submit To:

Sir. Usman Saeed

Submit By:

Muhammad Imran
B.com (Hons)
Contents

Introduction 1
Introduction of scope of work 2
Profitability Ratio 3
Liquidity Ratio 5
Capital Structure 8
Investors Ratio 9
Review of Report 11

1
Introduction
Siemens is a global powerhouse in electrical engineering and electronics. The company
has around 400,000 employees working to develop and manufacture products, design and
install complex systems and projects, and tailor a wide range of services for individual
requirements. Siemens provides innovative technologies and comprehensive know-how
to benefit customers in 190 countries. Founded more than 160 years ago, the company
focuses on the areas of Information and Communications, Automation and Control,
Power, Transportation, Medical, and Lighting. In fiscal 2007 (ended September 30),
Siemens had sales from continuing operations of €72,4 billion and net income of €3.9
billion.

2
Scope of work
I have preparing report of Siemens Company in that report I will highlight the
following things:
(i) All the financial ratios of the company, which includes:
(a) Profitability Ratio
(b) Liquidity Ratio
(c) Capital Structure
(d) Investors Ratio
(ii) I have also analyzed those ratios and given the brief comments on those
ratios.

3
Profitability Ratio
Gross Margin Ratio 2007 2006
(GP/Sales × 100) 3,125,129 × 100 2,451,757 × 100
21,901,752 20,795,847
14.26 11.78
Comments:
The company grow margin ratio in 2007 is 14.27% and in 2006 is 11.78% which is
increase by 2.49% which shows that company profit is increase and company is
in good financial position as compared to the previous year.

Operating Margin Ratio 2007 2006


(PBIT/Sales × 100) 1,964,574 x 100 1,508,320 x 100
21,901,752 20,795,847
8.96 7.25
Comments:
In 2006 the company operating margin ratio is 7.25% and in 2007 is
8.96%, which is increase by almost 1.71% as compared with the
previous year. Which shows company is generating more profit.

Net Profit Margin Ratio 2007 2006


(Net Profit/Sales x 100) 2,481,322 x 100 724,536 x 100
21,901,752 20,795,847
11.32 3.48
Comments:
In 2006 company profit is 3.48% and in 2007 11.32% the profit is increase by
7.84% as compared with the previous year which shows the company is
generating much and heavy profit as compared with the previous year.

4
Profitability Ratio Comments
The company grow margin ratio in 2007 is 14.27% and in 2006 is 11.78% which is
increase by 2.49% which shows that company profit is increase and company is
in good financial position as compared to the previous year. And in 2006 the
company operating margin ratio is 7.25% and in 2007 is 8.96% which
is increase by 1.71% as compared with the previous year. In 2006
company profit is 3.48% and in 2007 11.32% the profit is increase by 7.84% as
compared with the previous year which shows the company is generating much
and heavy profit as compared with the previous year.

5
Liquidity Ratio
Current Ratio 2007 2006
(Current assets/Current Liabilities) 14,484,573 10,258,300
12,115,914 9,693,190
1.20 1.06
Comments:
The current ratio of Siemens Company in 2006 is 1.06:1 and 2007 is 1.20:1. If we
analyze both the ratios of two years we reach to the result is that the company
has improve its assets position as compare to the previous year. And increase by
0.14% which really shows the good position of the assets.

Quick Ratio 2007 2006


(Current Assets– Stock/Current Liabilities) 14,484,573– 3,166,741 10,258,300– 2,452,339
12,115,914 9,693,190
0.93 0.81
Comments:
The quick ratio of Siemens Company in 2006 is 0.8:1 and in 2007 is 0.93:1. The company
is also improving its quick ratio by 0.12% to the previous year which really shows the
fast turn over of the company as compared to the previous year.

Debtor Days 2007 2006


(Trade Debtors/Sales x 365) 6,634,051 x 365 5,336,901 x 365
21,901,752 20,795,847
110 days 93 days
Comments:
The payment received in 2006 is 93 days and in 2007 is 110days.which is 17days less if
we compare it with the previous year the company has received the money quickly
from the debtors compared to 2007.

Creditor Days 2007 2006


(Trade Creditors/COS x 365) 7,058,499 x 365 7,665,891 x 365
18,776,623 18,344,090
137 days 152 days
Comments:
In 2006 the company has paid to its creditors in 152 days and in 2007 the company paid
to the creditors in 137 days, which shows the difference of 15 days. The company has
taken extra 15days to pay to its creditors.

6
Inventory Days 2007 2006
(COS/Stock x 365) 3,166,741 x 365 2,452,339 x 365
18,776,623 18,344,090
61 days 48 days
Comments:
In 2007 the stock turn over was 61 days and in 2006 the stock turn over was 48 days.
Which is less then 13 days it indicates that company has fastest its trading and
investment in stock is becoming less.

7
Liquidity Ratio Comments
The current ratio of Siemens Company in 2006 is 1.06:1 and 2007 is 1.20:1. If we analyze
both the ratios of two years we reach to the result is that the company has improve its
assets position as compare to the previous year. And increase by 0.14%. The quick ratio
of Siemens Company in 2006 is 0.8:1 and in 2007 is 0.93:1. The company is also
improving its quick ratio by 0.12% to the previous year. The payment received in 2006 is
93 days and in 2007 is 110days.which is 17days less if we compare it with the previous
year the company has received the money quickly from the debtors. In 2006 the
company has paid to its creditors in 152 days and in 2007 the company paid to the
creditors in 137 days which shows the difference of 15 days. The company has taken
extra 15days to pay to its creditors. In 2007 the stock turn over was 61 days and in 2006
the stock turn over was 48 days. This is less then 13 days. And company improved
liquidity ratio compare to previous year.

8
Capital Structure
Debt Equity Ratio 2007 2006
(Total Debt / Total Debt + Equity) 113,680 124,290
113,680 + 5,351,422 124,290 + 2,721,812
0.02% 0.04%
Comments:
The debt equity ratio of Siemens Company in 2006 the equity ratio was 0.04% and in
2007 the debt equity ratio was 0.02% which is less then 0.002% as compare to the
previous year. The company has received fewer amounts of debtors as compared to the
previous year. Which that the performance of the company has devalued becoming the
company is receiving less amount of debtors.

9
Investors Ratio
Basic & Diluted Earning Per Share 2007 2006
(Profit Attributable to Share Holders) 2,481,322 727,006
No of ordinary Shares 8,247,037 7,769,597
300.87 93.57
Comments:
The investor ratio in 2006 was 93.57 and in 2007 were 300.87, which show as increase of
207 as compared to previous year. It also shows that investors are investing more and
more in the company as compared with previous year.

Price Earning Ratio 2007 2006


(Market Value of Share / EPS) 1,689 980
300.87 93.57
5.61 10.47
Comments:
The earning per share in 2006 was 10.47 and in 2007 was 5.61 the company earning per
share is decreased by almost 4.86 as compared with previous year and company is
losing its cash flows.

10
Investors Ratio Comments:
The investor ratio of Siemens Company in 2006 was 93.57 and in 2007 were 300.87
which show as increase of 207 as compared to previous year. It also shows that
investors are investing more and more in the company as compared with previous year.
The earning per share in 2006 was 10.47 and in 2007 was 5.61 the company earning per
share is decreased by almost 4.86 as compared with previous year and company is
losing its cash flows. And it is a way of value decreasing in market. It is danger for the
company.

11
Overview of Report
The situation of Siemens company grow margin ratio in 2007 is 14.27% and in 2006 is
11.78% which is increase by 2.49%. And in 2006 the company operating margin
ratio is 7.25% and in 2007 is 8.96%, which is increase by 1.71% as compared
with the previous year. In 2006 company profit is 3.48% and in 2007 11.32% the
profit is increase by 7.84% as compared with the previous year. The current ratio of
Siemens Company in 2006 is 1.06:1 and 2007 is 1.20:1. If we analyze both the ratios of
two years we reach to the result is that the company has improve its assets position as
compare to the previous year. And increase by 0.14%. The quick ratio of Siemens
Company in 2006 is 0.8:1 and in 2007 is 0.93:1. The company is also improving its quick
ratio by 0.12% to the previous year. The payment received in 2006 is 93 days and in 2007
is 110days.which is 17days less if we compare it with the previous year the company
has received the money quickly from the debtors. In 2006 the company has paid to its
creditors in 152 days and in 2007 the company paid to the creditors in 137 days, which
shows the difference of 15 days. In 2007 the stock turn over was 61 days and in 2006 the
stock turn over was 48 days. This is less then 13 days. And company improved liquidity
ratio compare to previous year. The debt equity ratio of Siemens Company in 2006 the
equity ratio was 0.04% and in 2007 the debt equity ratio was 0.02% which is less then
0.002% as compare to the previous year. Which that the performance of the company
has devalued becoming the company is receiving less amount of debtors.
The investor ratio of Siemens Company in 2006 was 93.57 and in 2007 were 300.87,
which show as increase of 207 as compared to previous year. The earning per share in
2006 was 10.47 and in 2007 was 5.61 the company earning per share is decreased by
almost 4.86 as compared with previous year and company is losing its cash flows. The
Siemens company have good financial position but some points lack for the company.