Professional Documents
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Project OF "Financial Decision Making": Topic: Financial Statement Analysis Submitted To
Project OF "Financial Decision Making": Topic: Financial Statement Analysis Submitted To
OF
TOPIC:
Submitted To:
SIR.AHMED HASSAN
Submitted By:
LAHORE
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Networks of PIA (Domestic Network)
International Network
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Vision
PIA to be a world class profitable air line exceeding customer
Mission Statement
Offering quality customer services and innovative products.
MISSION STATEMENT
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Mission statement is an overriding statement inline with business and
Organizational value
Organization philosophy
Target market
Mission of PIAC
As a symbol of National pride, Pakistan International must strive to be an airline of choice
operating profitably on modern commercial concepts, capable of competing with the best in its
should be a choice employer deploying modern technology in all spheres of its activities.
Modernization: In airline industry modernization is the key success factor. The airline
should be responsive to the changes that are taking place in the environment. Modernization
of the communication system and the fleet replacement & and up-gradation is of massive
importance in this regard. As far as PIA is concerned modernization has been the hallmark of
it. From communication side PIA has recently upgraded its previous communication system
REPAK by the new and state of the art SABRE system which is directly connected to
Singapore. PIA also maintains very close interaction with its agents and provides them with
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PIA has been upgrading its fleet periodically keeping in view the changing customer needs.
Recently it has signed a contract with Boeing company to purchase eight Boeing 777 aircrafts,
which fall in the category of wide body aircraft and will fulfill the requirements of class one
passengers Organizational value
Customer responsiveness:
PIA is very responsive towards its valued customers and customer responsiveness is
embedded in the organization culture. It believes on the slogan that “Customers are the
king”. It has continuously been offering special incentives and schemes for its customers like
AWARD PLUS and many others. Initiation of telephonic reservation is also worth
mentioning in this regard. Moreover the customers place suggestion boxes at its domestic and
organization is capable of competing with the best in the industry, nothing can hinder its
Target market: PIA has always kept its market broad. If we compare its domestic and
international route map over the period of time will come across that it has expanded its
Values
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FINANCE DEPARTMENT
The major function of the finance department is the reporting of all the financial events of all
departments. All the departments in the organization give their reports to the finance
department and it makes and presents the final report for the decision making purpose. The
finance department gets all the documents and then compiles them in the form of a report.
DISBURSEMENT
Refunds of tickets
Salaries
Utilities bills
Works
Others…………………….
AUTOMATION
The Finance section is totally computerized and linked with Head Office. The COSSAP is
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REPORTING SYSTEM
There 11 types of reports maintained by the Finance Department and in evening the whole
R1- Passenger sales report on counter & Agents (SAR & ASR)
R8- Invoicing
CREDIT ALLOWANCE
The credit sales either for the tickets or for the cargo is also recorded into computer system and
relevant reports are generated and the whole record of these sales is also maintained.
IT department is one of those departments that is considered to be the backbone o the whole
organization. IT department in PIA RWP Station is not only responsible for maintaining network
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among different stations but it deals with different operations like Telephone Billing, E-ticketing
,managing Inventory and the whole Communication structure. Following are the Subsections that
Data Communication.
Telephone Exchange.
Network.
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BALANCE SHEET
AS AT DECEMBER 31ST, 2009
2009 2008
NON CURRENT ASSETS Rupees in Thousand
Fixed Assets
Property-plant and equipment 132,470,820 51,263,914
Intangibles 2067,117 112,421
134,537,937 51,376,335
Long Term Investment 188,465 323,705
Long term advances and other receivables 1,755,298 6,635,933
Long term deposits and prepayments 4,242,703 1,804,977
140,724,403 60,140,950
CURRENT ASSETS
Stores and spares 3,286,170 2,790,137
Trade Debts 5,395,745 5,222,534
Advances 549,900 513,917
Trade deposits and prepayments 1,257,980 581,175
Accrued interest 32,789 39,708
Other receivables 1,170,866 481,449
Short term investment 182,771 363,855
Taxation-advance tax net of provision 310,239 149,087
Cash and bank balance 4,233,180 2,614,691
16,419,640 12,756,553
157,144,043 72,897,503
SHARE CAPITAL AND RESERVES
Share capital 20,878,074 17,980,659
Reserves 4,280,712 4,280,712
Unrealized(loss)/gain on remeasurement of
investment-net 97,366
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CURRENT LIABILITIES
Trade and other payables 21,652,372 14,983,921
Accrued Interest/mark-up 978,317 607,769
Short Term Borrowing 18,105,884
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Profit and Loss Account Statement
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RATIO ANALYSIS
CURRENT RATIO
Current Ratio is obtained by dividing current assets by current liabilities. It shows a firm’s ability
= Current Assets
Current Liabilities
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2009 =1641964000 0.30
53849037000
2008 =12756553000 0.60
21237101000
ANALYSIS
Result of this ratio is that during the year the ratio is declining rapidly. PIA could face problem if
QUICK RATIO
Current assets less inventory divided by current liabilities. It shows a firm’s ability to meet its
Current Liabilities
53849037000
2008 =1275655000-279013000 0.46
21237101000
ANALYSIS
Here, the same case with acid test ratio. Ratio is decreasing continuously. Result shows that more
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Debt Ratio
Dividing the firm’s total liabilities by its total assets derives the Debt Ratio.
= Total Liabilities
Total Assets
157144043000
2008 = 62451265000 0.86
72897563000
ANALYSIS
Debt ratio in the year 2006 was not so much efficient but it is going to efficient in the coming
years.
Total Equity
2,060,8660
2008 = 62451265 5.97
10,446,298
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= ____Sale
Total Asset
157,144,043
2008 = 64,047,470 0.88
72,897,503
Net Sales
78554483000
2008 =(4411657000) (6.88%)
64074470000
ANALYSIS
Shareholder’s Equity
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2009 =(13215655000) (64.12%)
2060866000
2008 =(4411657000) (42.23%)
10446298000
ANALYSIS
Total assets
Year Calculations
2009 =16,419,640 - 53,849,037 -0.8
157,144,043
2008 = 12,756,553 - 21,237,101 -0.11
72,897,503
assets
157,144,043
2008 = -4,411,657 -0.06
72,897,503
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CONCLUSION
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Pakistan International Airlines Corporation (PIAC) is a giant organization and enjoys complete
monopoly at national level. Being a semi government organization, PIA is highly affected by any
change in political or economic frontier. Airline industry due to heavy capital requirement poses
great barrier to entry. So PIA has no literal threat of any potential competitor. As far as core
competences of PIAC are concerned, even its single activities are not less than its competences,
e.g. huge infrastructure, technologically advanced operational system and a well established
centre to train its workforce. Any a few linkages can be created like between technology
prices. PIA’s management style is centralized and the direction of strategy development can be
viewed as market development. Its financial position has also been improved over the year due to
sound management policies (cost controlling measures are the important ones).
INTERNATIONAL AIRLINES
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Decentralization
PIA should decentralize its structure that would lead to the easy management, increased
motivation, easy access to information and resolution of the conflicts (as they would be resolved
by the immediate manger time span would then reduced). Since employees issues regarding their
behavior would lessen, so it would ultimately lead to more satisfied employees that would result
PIA should make its different departments into Strategic Business Unit. Every SBU should have
a defined business strategy and a manager with sales and profit responsibility. As PIA is a large
Different factors should be determined for the success of SBUs which as follows:
The degree to which an SBU shares functional programs and facilities with other SBU's
The manner in which the corporation evaluates and rewards the performance of its SBU
managers
Employee Empowerment
PIA should make efforts towards empowering the employees that is going to lead to more
employee participation in the decision making process and also result in more employee
satisfaction and enhanced motivation. Apart from this, employees would feel more independent
to discuss the issues explicitly without hesitation. This would also enhance team work process at
PIA as quality team and cross-functional teams. The employees will work with more
commitment and dedication and every employee would work to his/her fullest due to increased
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motivation. However, with empowerment comes accountability, so it is suggested that while they
empower their employees, there should also be a “controlled check’’ on them to ensue the
correct usage of power delegated to every employees within their circumscribed limits.
Overhead Costs
PIA should also reduce its overhead costs that are it should mange its resources: labor more
effectively, so that with less input, more out put can be achieved and the saved resources can be
utilized in other areas such as introducing more training courses for the employees so that the
quality of the workforce could be increased. Hiring the services of expertise can improve the
efficiency of their services, so by saving the overhead costs, they can utilize that money for the
expertise services. So by analyzing the various segments of the organization and making the
Two-Way Communication
The suggestions of the employees can prove to be very effective in improving the operations as
they are the ones who manage them. Therefore, a top-down approach should be replaced with
two-way communications. In this way, the employees would feel motivated and valued as they
Total quality management should be catered to within the work groups and implementation of
various skill enhancement programs for quality and productivity improvements such as Six
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