National College of Business Administration & Economics

Final Project
Financial Analysis of National Foods Ltd
 Submitted To: Submitted By:
Sir Zahid Pervaiz Taifoor Khan

CONTENTS

 Introduction to the company

 Vision Statement
 Company overview
 Founder philosophy
 Core values
 Our Brands
 Analysis of Financial Statement
a) Ratios
b) Horizontal analysis
c) Vertical analysis
 Balance sheet analysis
 Cash flow analysis
 Value addition
 Conclusion
 COMPANY INTRODUCTION

Discovering the Symphony of Flavors

National Foods began its journey in 1970 as a Spice company with a revolutionary product that popularized the concept of having
clean, healthy food. National foods’ initiatives since then is to make hygienic food, reduce time spent in the kitchens, foster health and
contribute towards a positive and a more rewarding lifestyle.
 NATIONAL FOODS JOURNEY

The journey of National Foods to its present status of being Pakistan’s leading
food brand is marked by many milestones. 
National Foods continues to accelerate towards accomplishing its Vision 2020 by
conquering many more horizons through commitment to excellence, continuous
innovation and quality products for its consumers. 
 VISION STATEMENT
To be a Rs.50 billion company in the convenience food segment by launching
products and services in the domestic and international markets that enhance
lifestyle and create value for our customers through management excellence at
all levels.

OVERVIEW
Keeping in mind how our eating habits have changed, our diets have been influenced by factors like the
technologies in our kitchens, the modes of transport supplying our shops, media, the government and by trade and
migration trends. The eating habits of our parents, grandparents and great-grandparents would be completely
unrecognizable to many of us today. Our experiences of shopping and cooking have been transformed as have our
attitudes towards health, table manners, ‘foreign’ foods, waste and even choice.

All along National Foods has responded meticulously to these rapid changes and challenges by pioneering
developing of innovative food products based on convenience and quick preparation. These diverse food products
are perfectly in line with contemporary lifestyles while retaining the traditional taste and values which are so close
to our hearts.

With a history spanning over four decades, National Foods has trudged through various challenges of – economic
booms/depressions, wars, globalization, changing consumer lifestyles, technological advancements and has
successfully catered to the changing needs of its customers. National Foods has managed this with its consumer
centric and innovative product development which keeps into account the ever changing market trends.

FOUNDER’S PHILOSOPHY
 National Foods must focus on customer needs and serve them with quality products at affordable prices.
 Our products must be pure and should conform to international standards.
 Our research must continuously produce new and adventurous products that are scientifically tested and
hygienically wrapped in safe and attractive packaging.
 We must create an environment in our offices and factories where talent is groomed and people have every
opportunity to advance in their careers.
 We must provide ourselves to be good corporate citizens, support charitable causes and bear fair share of taxes.
 Reserves must be built, new factories created, sound profits made and fair dividend should be paid to our stock
holders.
 Through building a reliable brand, National Foods must get itself recognized as a leader in Pakistan and
abroad.
 With the help of Almighty God, the company can achieve its targets in times to come.

CORE VALUES
1. PASSION 
GO ABOVE AND BEYOND

2. CUSTOMER CENTRIC 
PRIORITIZE CUSTOMER EXPERIENCE (INTERNAL & EXTERNAL)

3. TEAMWORK 
TRUST EACH OTHER AND ACHIEVE TOGETHER

4. EXCELLENCE IN EXECUTION
LEAD, COMMIT AND DELIVER THE BEST

5. OWNERSHIP 
OWN IT AND DELIVER IT
 OUR BRANDS
In a history that now spans over four decades, National Foods success is attributed to its ability to respond to changing needs of the consumers,
the technological advancements and its innovative product development. With its wide array of brands, National Food’s focus on innovation has
altered the kitchen habits of millions of consumers who now have the advantage of preparing healthy and delicious food with a lot of convenience.
OUR BRANDS
 Analysis of
Financial Statement
 RATIOS
Financial Ratios Unit 2018 2017 2016 2015 2014 2013

Profitability Ratios
Gross Profit Ratio % 31.05 32.17 33.13 35.36 35.05 34.61
Operating Profit to Sale % 6.34 8.48 8.97 12.64 11.8 12.4
Net Profit before  Tax  to Sales % 5.43 7.86 8.37 12.26 10.88 11.53
Net Profit after Tax  to Sales % 4.76 5.8 5.87 8.51 7.55 7.95
EBITDA Margin to Sales % 8.26 10.1 10.57 14.31 13.38 13.75
Operating Leverage Ratio % -13.51 71.94 -110.39 142.69 60.01 87.52
Return on Equity % 27.77 32.8 29.88 39.57 37.55 44.18
Return on Capital Employed % 32.19 42.36 43.89 55.92 54.68 63.75
Return on Assets % 9.39 10.34 11.82 17.78 14.75 16.03
Liquidity Ratios
Current Ratio Times 0.88 1.05 1.13 1.49 1.42 1.3
Quick / Acid Test Ratio Times 0.31 0.41 0.33 0.64 0.56 0.51
Cash to Current Liabilities Times -0.15 -0.12 -0.16 -0.04 -0.33 -0.32
Cash Flow from Operations to Sales % 6.07 8.48 3.63 12.09 5.65 4.03
Working Capital Turnover Times -26.68 64.91 24.66 8.91 8.97 11.69

Efficiency Ratios
Asset Turnover Times 2.12 2.08 2.2 2.21 2.11 2.31
Inventory Turnover Times 4.19 3.4 3.27 3.36 3.05 3.22
Receivables Turnover Times 17.07 14.61 13.53 12.49 13.4 18.16
Payables Turnover Times 17.56 26.08 27.51 21.29 23.71 21.5
Revenue / Employee Rs. 41,430 34,034 28,668 23,986 21,485 20,208
Net Income / Employee Rs. 1,480 1,442 1,188 1,459 1,189 1,186
 
Investment / Market Ratios
Earnings Per Share Rs. 9.74 9.2 7.69 9.61 7.09 6.56
Price Earnings Ratio Times 32.75 29.46 36.52 35.37 113.03 54.97
Dividend Cover Ratio Times 2.64 2.21 2.8 0.96 1.77 4.1
Cash Dividend Per Share Rs. 3.75 4.25 2.75 10 8 4
Cash Dividend  % 75 85 55 200 80 40
Stock Dividend Per Share Rs. 1 –  – –  – –  – –  – 2.5
Stock Dividend % 20 –  – –  – –  – –  – 25
Market Value Per Share Rs. 318.99 271 281 339.73 801.43 360.65
Capital Structure Ratios
Financial Leverage Ratio % 74.22 56.75 51.55 13.76 42.68 56.78
Debt to Equity Ratio % 4.98 20.35 –  – –  – –  – –  –
Interest Coverage Ratio Times 7 13.58 15 33.1 12.83 14.16
No. of Ordinary Shares (in millions) EA 103.61 103.61 103.61 103.61 51.8 41.44

HORIZONTAL ANALYSIS
National Foods Limited 
Horizontal Analysis
  2018 2017 2016 2015 2014 2013
INCOME STATEMENT % % % % % %
Sales 28.40% 23.93% 16.05% 20.18% 13.85% 19.21%
Cost of Sales 30.79% 25.45% 20.04% 19.63% 13.06% 15.53%
Gross Profit 23.39% 20.09% 8.75% 21.21% 15.32% 26.86%
Administrative Cost 75.54% -0.31% 10.55% 24.93% 40.41% 32.16%
Distribution cost 22.03% 29.67% 24.16% 15.48% 16.10% 35.75%
Other Operating Expense 110.64% 10.15% -18.88% 45.23% 0.41% 10.31%
 
Administration, Distribution & Other Operating Exp. 31.16% 24.35% 19.92% 18.09% 18.76% 33.93%
Financial Charges 86.73% 17.58% 99.56% -50.08% 19.50% 5.41%
Other Income -45.99% 202.80% -67.14% 41.35% 5.19% 56.39%
Profit before Tax -11.04% 16.18% -20.81% 35.47% 7.46% 17.79%
Taxation -57.65% 2.18% -22.89% 35.47% 6.09% 20.66%
Profit after taxation 5.52% 22.09% -19.89% 35.47% 8.07% 16.54%
 

BALANCE SHEET

% % % % % %
Issued, subscribed and paid up capital 0.00% 0.00% 0.00% 0.00% 25.00% 0.00%
Unappropriated Profit 20.35% 32.83% -10.98% 31.97% 36.63% 28.23%
Non-controlling interest –  – 100% –  – –  – –  –
Exchange revaluation reserve 671.33% 155.63% 203.41% 183.17% –  – –  –
Long Term Obligations -39.28% 629.64% -16.23% -21.96% 3.11% 24.53%
Total Long-term Liabilities and shareholder equities 8.37% 54.70% -9.16% 21.85% 31.32% 20.21%
Fixed Assets, CWIP & Intangibles  37.04% 84.03% 32.16% 22.04% 19.05% 12.67%
Other Non-current assets 21.02% 10.45% -10.90% 57.14% 89.17% 101.24%
Current Assets 1.91% 20.19% 16.22% 8.77% 16.64% 43.28%
Total Assets 16.11% 39.64% 20.49% 12.39% 17.45% 34.17%
Current Liabilities & Provisions 22.04% 29.96% 52.48% 3.70% 7.06% 46.94%
Net Assets 8.37% 54.70% -9.16% 21.85% 31.32% 20.21%

VERTICAL ANALYSIS
National Foods Limited 
Vertical Analysis
2018 2017 2016 2015 2014 2013
INCOME STATEMENT % % % % % %
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of Sales 68.95% 67.69% 66.87% 64.64% 64.95% 65.39%
Gross Profit 31.05% 32.60% 33.13% 35.36% 35.05% 34.61%
Administration 4.23% 3.10% 3.85% 4.04% 3.88% 3.15%
Distribution cost 19.66% 20.68% 19.77% 18.48% 19.23% 18.86%
Other operating cost 1.07% 0.65% 0.73% 1.05% 0.87% 0.98%
Financial Charges 0.91% 0.62% 0.66% 0.38% 0.92% 0.88%
Other Income 0.25% 0.59% 0.24% 0.85% 0.72% 0.78%
Profit before Tax 5.43% 7.85% 8.36% 12.26% 10.88% 11.53%
Taxation 0.68% 2.06% 2.49% 3.75% 3.33% 3.57%
Profit after taxation 4.76% 5.60% 5.87% 8.51% 7.55% 7.95%
 
 BALANCE SHEET

% % % % % %
Issued, subscribed and paid up capital 11.71% 12.69% 19.63% 17.84% 21.73% 22.83%
Unappropriated Profit 73.11% 65.83% 76.67% 78.24% 72.24% 69.44%
Non-controlling interest 4.49% 4.39% – – – –
Exchange revaluation reserve 1.27% 0.18% 0.11% 0.03% -0.05 –
Long Term Obligations 9.47% 16.91% 3.58% 3.89% 6.07% 7.73%
Total Long-term Liabilities 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
and shareholder equities
Other Non-current assets 0.94% 0.83% 1.17% 1.20% 0.93% 0.64%
Current Assets 128.86% 137.03% 176.38% 137.85% 154.43% 173.86%
Total Assets 247.15% 230.90% 255.57% 192.67% 208.90% 233.57%
Current Liabilities & Provisions 147.15% 130.90% 155.56% 92.67% 108.90% 133.57%
Net Assets 100% 100% 100.00% 100.00% 100.00% 100.00%

BALANCE SHEET ANAYLSIS

BALANCE SHEET ANAYLSIS
CASH FLOW
VALUE ADDITION
 CONCLUSION

The Group's customer base is diverse with no single customer accounting for more than 10%
of net sales. Sales to domestic customers in Pakistan are 94.8% (2017: 94.03%) and to
customer outside Pakistan are 5.2% (2017: 5.97%) of the revenue.

Non-current assets of the Group are located in Pakistan except non-current assets amounting
to Rs. 107.08 million (2017: 155.37 million) million are located outside Pakistan. 40.8 The
Group's customer base is diverse with no single customer accounting for more than 10% of net
sales. Sales to domestic customers in Pakistan are 94.8% (2017: 94.03%) and to customer
outside Pakistan are 5.2% (2017: 5.97%) of the revenue.