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Submitted to: Sir Abdullah Hafeez

Submitted By: Muhammad Farhan
Enrollment NO: 01-121172-027

Rafhan Maize Products Co. Ltd.


Rafhan is a Pakistani food brand of Unilever and one of the biggest food brands in Pakistan. [1]
The brand was started by the Pakistani Unilever for corn oil and desserts. It produces the corn oil,
corn flour, custard, ice cream, jelly and pudding. Rafhan brand was established by Ingredion
Incorporate (Formally Corn Products International USA) and was sold out in 1998 to Uniliver.
Rafhan brand is also using by Rafhan Maize for the industrial selling.

Rafhan Maize Products Company Limited manufactures and sells industrial products, such as
industrial starches, liquid glucose, dextrose, dextrin and gluten meals using maize as the basic raw
material. The Company provides integrated solutions for industrial applications, such as textile,
paper, corrugation, chemicals, laundry and personal care. It offers portfolio of solutions, products
and services to the textile industry, which includes Rafhan, Penetrose, Amisol, Tex-o-Film and
Coratex. Its Animal Nutrition product lines include Prairie Gold and Rafhan maize gluten meals,
Bualo Maize Bran, Rafhan Maize Germ Cake and Enzose Hydrol. Its food segment includes a
range of products, such as Globe, Snowflake, Rafhan Liquid Glucose, Flow Sweet EE Liquid
Glucose, Cerelose Dextrose Monohydrate, Rafhan Liquid Caramel and Golden Syrup. It focuses
on corn refining in Pakistan, and the Company has three plants, of which two are located in Central
Punjab and a plant located in Interior Sindh.


A ratio analysis is a quantitative analysis of information contained in a company’s financial
statements. Ratio analysis is used to evaluate various aspects of a company’s operating and
financial performance such as its efficiency, liquidity, profitability and solvency.

Four categories of ratios to be covered are:

1. Activity ratios - the liquidity of specific assets and the efficiency of managing assets
2. Liquidity ratios - firm's ability to meet cash needs as they arise;
3. Debt and Solvency ratios - the extent of a firm's financing with
debt relative to equity and its ability to cover fixed charges; and
4. Profitability ratios - the overall performance of the firm and its efficiency in managing
investment (assets, equity, capital)

Short-term (operating) activity ratios

1) Inventory Turnover Ratio:
(COGS)/ (Average inventory)
2) No. of days of inventory= 365 / (Inventory Turnover Ratio)

2016 2015

1) 18345146/649729+3692891 =4.22 times 1) (19,163,936)/ 614,537+3,523,547=4.63times

2) 365/4.22 =86.49 days(DSI) 2) 365/4.63 = 78.83 days(DSI)

Measures the efficiency of the firm in managing and selling inventory. Inventory does not languish
on shelves. High ratio represents fewer funds tied up in inventories -- efficient management. High
inventory can also represent understocking and lost orders.

In 2016, A low turnover rate indicates poor liquidity, possible overstocking, and obsolescence, a
low ratio may also be the result of maintaining excessive inventories needlessly. Maintaining
excessive inventories unnecessarily indicates poor inventory management. In 2015, company was
efficiently managing the inventory management because the number of days to convert inventories
into sales is less in 2015 than in 2016.

Receivable Turnover Ratio:

1) Sales/ (Average receivable)
2) Average no of days receivable is outstanding = 365/ (Receivable Turnover)

2016 2015

1) 25060830/981253 = 25.54 1) 24618077/1004129=24.52

365/25.54 =14.29 days(DSO) 2) 365/24.52=14.89 days(DSO)

The receivable turnover ratio (debtor’s turnover ratio, accounts receivable turnover ratio) indicates
the velocity of a company's debt collection, the number of times average receivables are turned
over during a year. This ratio determines how quickly a company collects outstanding cash
balances from its customers during an accounting period.

In 2016, the company has greater velocity of a debt collection. It means the company quickly
collects outstanding cash balances from its customers during an accounting period. In 2015, low
turn ratio is a sign that implies inefficient management of debtors or less liquid debtors.

In 2016, company is effective management in collecting of account receivables due to an

efficient credit department that is quick to follow up on late payers.

Payable Turnover Ratio:

1) cost of goods sold / (Account payable)
2) Days Payables Outstanding = 365/ Payable Turnover Ratio
2016 2015

1) 18345,146/2284354 = 8.03 1) 19,163,936/2099989=9.13

365/8.03 =45.45 days(DSO) 2) 365/24. = 39.97days(DSO)


There may be occasions when a firm wants to study its own promptness of payment to suppliers
or that of a potential credit customer. Accounts payable turnover is the ratio of net credit purchases
of a business to its average accounts payable during the period. It measures short term liquidity of
business since it shows how many times during a period, an amount equal to average accounts
payable is paid suppliers by a business.

Accounts payable turnover is a ratio that measures the speed with which a company pays its
suppliers. If the turnover ratio declines from one period to the next, this indicates that the company
is paying its suppliers more slowly, and may be an indicator of worsening financial condition.
If a company is paying its suppliers very quickly, it may mean that the suppliers are demanding
fast payment terms, or that the company is taking advantage of early payment discounts This ratio
declines from 2015 to 2016 which indicates that the company is paying its suppliers more slowly.

The variation in ratios as compared to FY2015 to FY2016 is because of the following:

 Inventory Turnover Ratio in FY2015 is more than FY 2016 due to effective inventory
 In 2016 , the company has holds excessive inventory stock.
 In 2016, low Inventory Turnover Ratio show is a sign of excessive, slow-moving, or
obsolete items in inventory.
 In 2015 , the recievable turnover is low because inefficient credit department.
 In 2016 , high recievable turnover ratio often indicates an efficient credit department that
is quick to follow up on late payers.
 In 2015 , company is effiecnt in managing short term liquidity and paying its suppliers
more quickly.
 In 2016 , low ratio is an indicator of worsening financial condition.



Cash Conversion Cycle= Inventory conversion period+ Receiveable collection period-payabale

deferral period.

Cash conversion cycle=inventory conversion period+receiveable collection period-payable
deferral period
= 86.49 + 14.29 - 45.45
= 55.33 days

Cash Conversion Cycle= Inventory conversion period+ Receivable collection period-payabale
deferral period.

= = 78.83 + 14.89 - 39.98 = 44.99 days

The cash conversion cycle is calculated with a three-part formula that expresses the time that a
company takes to sell inventory, collect receiveables, and pay its accounts th cash converson
cycle reperesent the liquidity of an compnay, it represent the the how effevtive an compnay
change its into cash and with that cash how well they pay to its supplier. In 2015 the ccc of a
company represents its 44.99 days as compared to 2016 that is days 55.33 days.

Cash conversion is most useful in conducting trend analysis for companies in the same industry.
Generally, short cash conversion cycle is better because it tells that the company’s management
is selling inventories and recovering cash from those sales as quickly as possible while at the
same time paying the suppliers as late as possible.

In 2015 , the ccc of a company is 44.99 days which is better than 55.33 , shows that company’s
management in selling inventories and recovering cash from those sales as quickly as possible
while at the same time paying the suppliers as late as possible.