MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

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MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

Dedication
I dedicating my valuable project to our parents, Prof’s, friends and to the whole
class.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

Acknowledgement
I thank to our Allah AL-Mighty and off course thankful to our honorable teacher
who has always been guiding us in a good way through understanding this course
as well as the whole project. He has given us an opportunity to show abilities in the
subject. I also like to thank our class mates because of their friendly attitude and
maintaining lovely environment in the class.

Income statement

PERIOD ENDING Sep 30, 2009 Sep 30, 2008 Sep 30, 2007
Assets
Current Assets

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY
Cash And Cash Equivalents 74,591 14,899 52,746
PERIOD ENDING Sep 30, Sep 30, Sep 30,
2009 2008 2007

Short Term Investments - 57,210 31,057

Net Receivables 150,046 198,959 177,669
Inventory 117,318 231,479 163,196
Other Current Assets 26,828 59,361 42,667
Total Current Assets 368,783 561,908 467,335
Long Term Investments 44,973 43,314 45,436
Property Plant and Equipment 859,990 826,990 805,064
Goodwill - - 33,595
Intangible Assets - - -
Accumulated Amortization - - -
Other Assets 482,999 340,443 289,723
Deferred Long Term Asset Charges 5,273 - -
Total Assets 1,762,018 1,772,655 1,641,153
Liabilities
Current Liabilities
Accounts Payable 141,168 454,775 401,051
Short/Current Long Term Debt 129,800 160 40,160
Other Current Liabilities 28,172 24,269 32,454
Total Current Liabilities 299,140 479,204 473,665
Long Term Debt 389,240 389,181 355,522
Other Liabilities 300,412 194,563 157,946
Deferred Long Term Liability Charges 256,196 222,761 225,068
Minority Interest - - -
Negative Goodwill - - -
Total Liabilities 1,244,988 1,285,709 1,212,201
Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - 627
Preferred Stock - 467 -
Common Stock 517,030 21,993 21,646
Retained Earnings - 312,808 268,761
Treasury Stock - - -
Capital Surplus - 147,241 136,061
Other Stockholder Equity - 4,437 1,857
Total Stockholder Equity 517,030 486,946 428,325
Net Tangible Assets $517,030 $486,946 $394,730

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY
Total Revenue 1,895,198 2,208,973 2,021,594
Cost of Revenue 27,818 1,962,870 797,924
Gross Profit 1,867,380 246,103 1,223,670
Operating Expenses
Research Development - - -
Selling General and 1,705,565 99,453 1,084,324
Administrative
Non Recurring - - -
Others 36,751 35,303 34,080
Total Operating Expenses - - -

Operating Income or Loss 125,064 111,347 105,266

Income from Continuing Operations
Total Other Income/Expenses Net 1,453 1,881 6,812
Earnings Before Interest And 126,517 113,228 112,078
Taxes
Interest Expense 29,746 29,477 37,229
Income Before Tax 96,771 83,751 74,849
Income Tax Expense 32,509 26,190 25,035
Minority Interest - (35) (43)
Net Income From Continuing Ops 64,247 57,526 49,771
Non-recurring Events
Discontinued Operations - 20,396 -
Extraordinary Items - - -
Effect Of Accounting Changes - - -
Other Items - - -

Net Income 64,247 77,922 49,771

Preferred Stock And Other Adjustments (15) - -
Net Income Applicable To Common $64,232 $77,922 $49,771
Shares

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

Ratio Analysis
Liquidity Ratio:

2008 2009

Current Ratio: Current Ratio:

Interpretation:

Current ratio measures whether or not a company has enough resources to pay its debt over the
next business cycle. The higher the current ratio is, the more capable the company is to pay its
obligations. In 2009 current ratio is comparatively below than the previous year. In 2009 current
liabilities exceed current assets. This shows that the company may have problems paying its
bills on time.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Quick Ratio: Quick Ratio:

Interpretation:

Quick Ratio is also known as the "acid test" ratio; it is a refinement of the current ratio and is a
more conservative measure of liquidity. The ratio expresses the degree to which a company's
current liabilities are covered by the most liquid current assets. The quick ratio is incresing from
previous year. It seems that company caring asses liabilities.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

Profitability Ratio:

2008 2009

Gross Profit Margin: Gross Profit Margin:

Interpretation:

Gross profit margin measures company's manufacturing and distribution efficiency during the
production process. Gross profit increases from 2008 to 2009 .The cost of goods sold slightly
increase as compare to previous..

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Operating Profit Margin: Operating Profit Margin:

Interpretation:

Operating margin is used to measure company's pricing strategy and operating efficiency.
Operating profit is increasing as compare to previous year. It shows that the company is earning
more on per dollar of Sale. This high profit also shows that sales are increasing faster than cost
and the firm is in a relatively liquid position.

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2008 2009

Net Profit Margin: Net Profit Margin:

Interpretation:

There is little bit decrease in the net profit margin which is a good sign of company efficiency
and also shows that company reduces its expense. Increase in net profit also indicates that
company efficiently converts its revenue into actual profit.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Return on Total Assets: Return on Total Assets:

Interpretation:

Return on Assets shows how many dollars of earnings result from each dollar of assets the
company controls. Return on total assets decrease from 4.39% to 3.64% which indicate that
company is not efficiently use its assets to generate profit.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Return on Total Equity: Return on Total Equity:

Interpretation:

Return on Equity is also referred as Stockholder's return on investment, it tells the rate that
shareholders are earning on their shares. LG is earning a very low on shareholder's equity as
compare to the previous year. It shows the weakness of company..

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

Debt Ratio:

2008 2009

Time Interest Earned Ratio: Time Interest Earned Ratio:

Interpretation:

Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great
tool to measure a company's ability to meet its debt obligations. In 2009 there is a increase from
3.77 times to 4.20 times. It shows that the company has generating enough cash from its
operations EBIT to meet its interest obligations.

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2008 2009

Debt Ratio: Debt Ratio:

Interpretation:

This ratio expresses the relationship between capital contributed by creditors and that contributed
by owners. It expresses the degree of protection provided by the owners for the creditors. The
debt ratio in 2009 seems to increasing as compare to previous year show that company increase
their debt. It is the weakness of company..

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2008 2009

Debt to Equity Ratio: Debt to Equity Ratio:

Interpretation:

There is a bit fall fall in debt to equity ratio as compare to previous year. It is the strength of
company.

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Activity Ratio:

2008 2009

Average Age of Inventory: Average Age of Inventory:

Interpretation:

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Average age of inventory is the average number of days it takes for a company to sell a product.
In 2009 average age of inventory increasing . It shows that firm is not properly managing its
inventory and it also the strength of company.

2008 2009

Average Collection Period: Average Collection Period:

Interpretation:

The average collection period ratio represents the average number of days for which a firm has
to wait before its receivables are converted into cash. Average collection period is very bad
because previously we receive collection in 33.18 days and in current year we are receiving
collection in 60 days. It is also the weakness of company and it also show the management of
company is not good.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Average Payment Period: Average Payment Period:

Interpretation:

Average payment period ratio represents the average number of days taken by the firm to pay
its creditors. Average payment period is very bad because previously we are paying collection in
75.25 days but in current year we are paying collection in 27.19 days .

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY
nokia

View: Annual Data | Quarterly Data All numbers in thousands

PERIOD ENDING Dec 31, Dec 31, Dec 31,

2009 2008 2007
Total Revenue 58,802,000 71,485,887 75,203,328
Cost of Revenue 39,772,000 46,995,169 49,716,267
Gross Profit 19,031,000 24,490,718 25,487,062
Operating Expenses
Research Development 8,478,000 8,413,090 8,317,466
Selling General and 7,533,000 9,077,058 5,408,489
Administrative
Non Recurring 1,303,000 - -
Others - - -
Total Operating Expenses - - -

Operating Income or Loss 1,717,000 7,000,570 11,761,107

Income from Continuing Operations
Total Other (337,000) 266,433 480,165
Income/Expenses Net
Earnings Before Interest 1,380,000 7,267,004 12,241,272
And Taxes
Interest Expense - 260,795 63,335
Income Before Tax 1,380,000 7,006,209 12,177,937
Income Tax Expense 1,007,000 1,523,886 2,241,754
Minority Interest - 139,560 676,061
Net Income From 373,000 5,621,884 10,612,245
Continuing Ops
Non-recurring Events
Discontinued Operations - - -
Extraordinary Items - - -
Effect Of Accounting - - -
Changes
Other Items - - -

Net Income 373,000 5,621,884 10,612,245

Preferred Stock And Other - - -
Adjustments
Net Income Applicable To $373,000 $5,621,884 $10,612,245
Common Shares

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

View: Annual Data | Quarterly Data All numbers in thousands

Dec 31, Dec 31, Dec 31,

PERIOD ENDING
2009 2008 2007

Assets
Current Assets
Cash And Cash Equivalents 1,639,000 2,404,948 3,129,913
Short Term Investments 11,092,000 7,209,206 14,181,081
Net Receivables 11,471,000 13,455,587 16,726,252
Inventory 2,676,000 3,570,770 4,236,060
Other Current Assets 7,002,000 7,854,848 4,873,826
Total Current Assets 33,879,000 34,495,359 43,147,133
Long Term Investments 960,000 895,160 995,680
Property Plant and Equipment 2,679,000 2,946,273 2,816,185
Goodwill 7,419,000 8,820,493 2,038,494
Intangible Assets 3,963,000 5,860,123 4,029,854
Accumulated Amortization - - -
Other Assets 214,000 14,097 64,808
Deferred Long Term Asset
2,162,000 2,767,241 2,287,414
Charges
Total Assets 51,276,000 55,798,745 55,379,567

Liabilities
Current Liabilities
Accounts Payable 16,434,000 17,266,006 20,897,505
Short/Current Long Term
1,106,000 5,062,233 1,577,476
Debt
Other Current Liabilities 4,251,000 6,366,205 5,474,769
Total Current Liabilities 21,791,000 28,694,444 27,949,750
Long Term Debt - - -
Other Liabilities 6,454,000 1,311,021 474,274
Deferred Long Term Liability
1,869,000 2,519,134 1,418,403
Charges

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Minority Interest 2,383,000 3,245,129 3,777,989

Negative Goodwill - - -
Total Liabilities 30,114,000 35,769,728 33,620,415

Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - -
Preferred Stock - - -
Common Stock 353,000 346,786 362,333
Retained Earnings 14,537,000 16,482,212 20,429,123
Treasury Stock (977,000) (2,651,646) (4,633,743)
Capital Surplus 400,000 623,087 948,548
Other Stockholder Equity 4,465,000 5,228,577 4,652,891
Total Stockholder Equity 18,778,000 20,029,018 21,759,152
Net Tangible Assets $7,396,000 $5,348,402 $15,690,804

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

Ratio Analysis
Liquidity Ratio:

2008 2009

Current Ratio: Current Ratio:

Interpretation:

Current ratio measures whether or not a company has enough resources to pay its debt over the
next business cycle. In 2009 current ratio is comparatively above than the previous year. In 2009
current assets exceed Current liabilities. This shows that the company is capable to pay its
obligations.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Quick Ratio: Quick Ratio:

Interpretation:

Quick Ratio is also known as the "acid test" ratio; it is a refinement of the current ratio and is a
more conservative measure of liquidity. The ratio expresses the degree to which a company's
current liabilities are covered by the most liquid current assets. There is a slightly increase in the
quick ratio as compare to previous year. This indicates that the company relies too much on
inventory or other assets to pay its short-term liabilities.

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Profitability Ratio:

2008 2009

Gross Profit Margin: Gross Profit Margin:

Interpretation:

Gross profit margin measures company's manufacturing and distribution efficiency during the
production process. Gross profit decrease in 2009 as compare to 2008. Which is not better than
previous year.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Operating Profit Margin: Operating Profit Margin:

Interpretation:

Operating profit margin is used to measure company's pricing strategy and operating efficiency.
In operating profit margin there is a great change as compare to previous year. Operating profit
decreases. It shows that the company is earning less as compare to previous years..

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Net Profit Margin: Net Profit Margin:

Interpretation:

Net profit margin measures how much of each dollar earned by the company is translated into
profits. Net profit margin provides clues to the company's pricing policies, cost structure and
production efficiency. There is huge decrease in the net profit margin than previous year. It
shows that company in bad condition..

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Return on Total Assets: Return on Total Assets:

Interpretation:

Return on Assets shows how many dollars of earnings result from each dollar of assets the
company controls. Return on total assets decrease from 10.07% to 0.72% and this is big change
which indicate that company is not doing well.

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2008 2009

Return on Total Equity: Return on Total Equity:

Interpretation:

Return on Equity is also referred as Stockholder's return on investment, it tells the rate that
shareholders are earning on their shares. Nokia is earning 1.98% on shareholder's equity as
compare to the previous year. It indicates the weakness of company.

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Debt Ratio:

2008 2009

Time Interest Earned Ratio: Time Interest Earned Ratio:

Interpretation:

Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great
tool to measure a company's ability to meet its debt obligations. In 2009 there is increase from
0.30 to 3.24%. It shows that the company is able to meet its interest obligations because earnings
are significantly greater than annual interest obligations.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Debt Ratio: Debt Ratio:

Interpretation:

This ratio expresses the relationship between capital contributed by creditors and that contributed
by owners. It expresses the degree of protection provided by the owners for the creditors. The
debt ratio in 2009 seems to be slightly decreased as compare to previous year and tis is not good
sign for Nokia company.This ratio indicates that company increases their debt.

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY

2008 2009

Debt to Equity Ratio: Debt to Equity Ratio:

Interpretation:

Debt to equity ratio seems to be decrease as compare to previous years.. this indicates that
company has no financed its growth mostly via debt.

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Activity Ratio:

2008 2009

Average Age of Inventory: Average Age of Inventory:

Interpretation:

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 MUHAMMAD QAISAR SADIQ SUPERIOR UNIVERSITY
Average age of inventory is the average number of days it takes for a company to sell a product.
In 2009 average age of inventory increase.. It shows that firm is not properly managing its
inventory and it also the strength of company.

2008 2009

Average Collection Period: Average Collection Period:

Interpretation:

The average collection period ratio represents the average number of days for which a firm has to
wait before its receivables are converted into cash. Average collection period is no good because
previously we receive collection in 68.73 days and in current year we are receiving collection in
71.15 days. It is also the weakness of company.

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2008 2009

Average Payment Period: Average Payment Period:

Interpretation:

Average payment period ratio represents the average number of days taken by the firm to pay its
creditors. Average payment period is very good because previously we are paying collection in
88.14days but in current year we are paying collection in 102.24 days. It shows that management
of company is quite good.

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Conclusion

I have calculated the ratio of LG and Nokia from this i understands the strength and weakness of
both company. The main purpose of this project is to how to invest in a company. Which factors
is important for investor while investing in any company. A financial Ratio analysis also tells us
that which companies it better or profitable. I take the decision of investment on following ratios
such as net profit, return on total assets, return on total equity and debt ratio. The comparison of
net profit of both company shows that LG has greater profit than Nokia. Return on total asset is
also better of LG as compare to Nokia. Return on total equity of is not good for 2009.. It is clear
that LG pay more dividends to stockholders of a company.

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