A PROJECT REPORT

Submitted by

MUHAMMAD BILAL (30)

&

MIAN ALI HASSAN (41)

In partial fulfillment for the award of the degree

Of
Master of Marketing in FINANCIAL ACCOUNTING
At
Institute of Administration Science

UNIVERSITY OF THE PUNJAB

SESSION (2020-2022)
 BALANCE SHEET OF MILLAT TRACTORS COMPANY

BALANCE SHEET ITEMS/DETAILS 2016 2017 2018 2019

RS. RS. RS. RS.

PROPERTY, PLANT AND EQUIPMENT 448130 717873 700763 718559

CAPITAL WORKINGG IN PROGRESS 225134 6974 26648 12827
INTENGIBLE ASSETS 3295 897 0 4048
INVESTMENT PROPERTY 255708 255708 255708 255708
LONG TERM INVESTMENT 396928 484279 709300 1383879
LONG TERM LOANS 1483 2575 2587 2826
EMPLOYEE BENEFITS - 39962 - 219519
STORES AND SPARES 111913 118431 131266 150799
STOCK IN TRADE 2545484 3646581 4157062 3148589
TRADE DEBTS 286194 194311 65578 46637
LOANS AND ADVANCES 72071 54488 39031 113876
TRADE DEPOSITS AND PREPAYMENTS 24366 19611 16282 46461
BALANCE WITH STATUTORY AUTHORITY 1184143 2526588 1909792 2250219
OTHERS RECEIVABLES 104756 97246 44118 87023
TAXATION-NET 629148 185886 725454 1268429
SHORT TERM INVESTMENT 800317 6718196 7267636 -
CASH AND BANK BALANCES 2562252 2061003 520140 851988
TOTAL ASSESTS 9651322 17130609 16571365 10574184
         
SHARE HOLDER'S EQUITY 4141760 5749853 5654824 4833167
NON CURRENT LIABILITIES 102171 30635 94310 12731
CURRENT LIABILITIES 5407391 11350121 10822231 5728286
TOTAL LIABILITIES AND EQUITY 9651322 17130609 16571365 10574184

INTERPRETATION:-
It is the balance sheet of the MILLAT TRACTORS CO.

The balance sheet which shows the company financial position, either the
company goes on a profit or on a loss from the previous year to current year.
 By this balance sheet we show that in which year the expenses are high of the
company and in which expense are low of the company. To find out the reasons
of the higher rate of profit in which year and lower rate of profit due to which
reasons.

BALANCE SHEET HORIZONTAL ANALYSIS

BALANCE SHEETS 2016 2017 2018 IN/DEC 2019 IN/DEC
ITEMS/ DETAILS Increase/(Decrease)% IN/DEC% % %
PROPERTY, PLANT AND
EQUIPMENT -7.7 60.19302435 56.37493584 60.34610492
CAPITAL WORKINGG IN
PROGRESS 7.4 -96.9022893 -88.16349374 -94.30250429
INTENGIBLE ASSETS -14.8 -72.77693475 -100 22.85280728
INVESTMENT PROPERTY - - - -
LONG TERM INVESTMENT 7.4 22.00676193 78.697396 248.6473617
LONG TERM LOANS -22.4 73.63452461 74.44369521 90.55967633
EMPLOYEE BENEFITS -100 - - -
STORES AND SPARES 4.5 5.824166987 17.29289716 34.74663355
STOCK IN TRADE 4.8 43.2568816 63.31126026 23.69313655
TRADE DEBTS 55.2 -32.10514546 -77.08617232 -83.7044103
LOANS AND ADVANCES 4.9 -24.3967754 -45.84368192 58.00530033
TRADE DEPOSITS AND
PREPAYMENTS 7.1 -19.51489781 -33.17737831 90.67963556
BALANCE WITH STATUTORY
AUTHORITY 54.3 113.3684867 61.28052102 90.02932923
OTHERS RECEIVABLES 70.3 -7.169040437 -57.88498988 -16.92790866
TAXATION-NET -22.8 -70.45432871 15.30736806 101.6105908
SHORT TERM INVESTMENT 14.3 739.4418712 808.0946675 -
CASH AND BANK BALANCES 136.8 -19.56282989 -79.699889 -66.74846971
77.4949483
TOTAL ASSESTS 25.2 6 71.70046756 9.562026839
         
SHARE HOLDER'S EQUITY -12.1 38.82632021 36.53190914 16.6935554
NON CURRENT LIABILITIES 391 -70.01595365 -7.693964041 -87.53951708
CURRENT LIABILITIES 81.6 109.9001348 100.1377559 5.934377595
TOTAL LIABILITIES 77.4949483
AND EQUITY 25.2 6 71.70046756 9.562026839
INTERPRETATION:-
As we are taking 2016 is our base year which is
compared with every coming year. The company assets and liabilities are
increasing from 2016 to 2017 but there is decrease after the 2017. In 2019 there
is a huge decrease in the assets and liabilities of the company.

The reason which increase in our assets that is short term investment which is
gradually increase from 2016 to 2018 but in 2019 it was the reason to decrease in
total assets.

The equity in 2016 in -12%.1 in 2017 it was 38.8% from that period there is
decline.

Current liabilities of the company is high in 2017 and mostly less in 2019 which is
good for the company from decreasing in their liabilities.

VERTICAL ANALYSIS OF BALANCE SHEET

2016 2017 2018 2019
Increase/(Decrease) IN/DEC IN/DEC IN/DE
BALANCE SHEET ITEMS % % % C%
PROPERTY, PLANT AND EQUIPMENT 4.6 4.2 4.2 6.8
CAPITAL WORKINGG IN PROGRESS 2.3 0 0.2 0.1
INTENGIBLE ASSETS 0 0 0 0
INVESTMENT PROPERTY 2.6 1.5 1.5 2.4
LONG TERM INVESTMENT 4.1 2.8 4.3 13.1
LONG TERM LOANS 0 0 0 0
EMPLOYEE BENEFITS - 0.2 - 2.1
STORES AND SPARES 1.2 0.7 0.8 1.4
STOCK IN TRADE 26.4 21.3 25.1 29.8
TRADE DEBTS 3 1.1 0.4 0.4
LOANS AND ADVANCES 0.7 0.3 0.2 1.1
TRADE DEPOSITS AND PREPAYMENTS 0.3 0.1 0.1 0.4
BALANCE WITH STATUTORY AUTHORITY 12.3 14.7 11.5 21.3
OTHERS RECEIVABLES 1.1 0.6 0.3 0.8
TAXATION-NET 6.5 1.1 4.4 12
SHORT TERM INVESTMENT 8.3 39.2 43.9 0
CASH AND BANK BALANCES 26.5 12 3.1 8.1
TOTAL ASSESTS 100 100 100 100
         
SHARE HOLDER'S EQUITY 53.7 33.6 34.1 45.7
NON CURRENT LIABILITIES 1.3 0.2 0.6 0.1
CURRENT LIABILITIES 70.1 66.3 65.3 54.2
TOTAL LIABILITIES AND EQUITY 100 100 100 100

INTERPRETATION:-
In vertical analysis we use the formula to get in % each item
/total assets *100

The reason to increase in assets and maintain their assets is the company closing
stock which is less in 2017 but it was high in other years as compared to 2017.

The cash and bank balance of the company is also constant mostly in every year.

The short term investment is also increasing in every year but it was 0 in 2019.

The current liabilities of the company is decreasing in every year which is pretty
good for the company financial position. The shares holder equity of the
company was high in 2016 53.7% and which is decreasing in 2017 to 2018 again it
was increase in 2019 45.7%
 INCOME STATEMENT
PROFIT AND LOSS ITEMS/ 2016 2017 2018 2019
DETAILS RS. RS. RS. RS.
NET SALES 16913832 30013921 38517147 31144057
COST OF SALES 13577972 22916592 30082372 25197690
GROSS PROFIT 3335860 7097329 8434775 5946367
DISTRIBUTION AND MARKETING
EXP 350155 536522 629779 579004
ADMIN EXP 425327 471550 492280 446327
OPERATING PROFIT 2636106 610091 1046461 5124905
OTHER OPERATING INCOME 272249 454934 57819 800474
OTHER OPERATING EXP 196621 6244414 7782358 596605
FINANCE COST 15300 2181 2490 42044
PROFIT BEFORE TAX 2620806 6242233 7779868 5082861
TAXATION 870508 1984700 2445506 1444816
PROFIT AFTER TAX 1750298 4257533 5334362 3638045

INTERPRETATION:-
This is the income statement of the 4 years to compare
their expenses and profits of the company at which year they gain higher rate of
profit and at which year they gain lower rate of profit due to which reasons.
 HORIZONTAL ANALYSIS OF INCOME STATEMENT

PROFIT AND LOSS

2016
ITEMS/ 2017 2018 2019
Increase/(Decrease)
DETAILS IN/DEC% IN/DEC% IN/DEC %
%
NET SALES -26.3 77.4519281 127.7257277 84.13365463
COST OF SALES -26.8 68.77772321 121.5527621 85.57771367
GROSS PROFIT -24.1 112.758599 152.8515885 78.25589203
DISTRIBUTION AND
MARKETING EXP -32 53.22414359 79.85720609 65.35648499
ADMIN EXP 1.4 10.86763831 15.74153534 4.937377594
--
OPERATING PROFIT -23.9 76.85635555 -60.30277235 94.41194702
OTHER OPERATING
INCOME -32.6 67.10217485 -78.76245643 194.0227512
OTHER OPERATING
EXP -25.7 3075.863209 3858.050259 203.4289318
FINANCE COST 63.5 -85.74509804 -83.7254902 174.7973856
PROFIT BEFORE TAX -27 138.1798958 196.8502056 93.94266497
TAXATION -28.1 127.9933097 180.9286072 65.97389111
143.246178
PROFIT AFTER TAX -26.5 7 204.7687879 107.8528913

INTERPRETATION:-
In horizontal analysis we compared our current year with
the base year. 2016 is our base year which is compared with the year of 2017,
2018 and 2019. We paid much TAX in 2018 and the profit of this year is very high
as compared to remaining years. In 2017 the profit is less as compared to 2018
but it was high as compared to 2019. We gain less profit in 2019 due to more
expenses such as operating expenses are high and the taxation rate is very low in
2019.
 VERTICAL ANALYSIS OF INCOME STATEMENT
PROFIT AND LOSS 2016 2019
2017 2018
ITEMS Increase/(Decrease) IN/DEC
IN/DEC% IN/DEC%
DETAILS % %
NET SALES 100 100 100 100
COST OF SALES 80.3 76.4 78.1 80.9
GROSS PROFIT 19.7 23.6 21.9 19.1
DISTRIBUTION AND MARKETING
EXP 2.1 1.8 1.6 1.9
ADMIN EXP 2.5 1.6 1.3 1.4
OPERATING PROFIT 15.6 2 2.7 2.6
OTHER OPERATING INCOME 1.6 1.5 1.5 1.9
OTHER OPERATING EXP 1.2 20.8 20.2 16.5
FINANCE COST 0.1 0 0 0.1
PROFIT BEFORE TAX 15.5 20.8 20.2 16.3
TAXATION 5.1 6.6 6.3 4.6
PROFIT AFTER TAX 10.3 14.2 13.8 11.7
INTERPRETATION:-
The vertical analysis shows that the higher profit of company gain in 2017 and less
profit of company is in 2016.

In 2016 the operating expenses of the company is very high as compared to the
other years. In the remaining years the company controls most of their expenses
that’s why they earn more profit in these years.

In 2017 the company paid the higher rate of TAX after controlling their expenses.

Other operational expense is high in those years 2017, 2018, and in 2019 as
compared to 2016.

In 2016 the admin and marketing expenses is very high as compared to other
years that’s why in this year profit is also low.
IN SHORT, if the company controls most of their expenses and paid the tax so the
ratio of the profit will be high if it consumed expenses continuously so the profit
will be decrease.

RATIO ANALYSIS
LIQUDITY
RATIO     2016 2017 2018 2019
CURRENT
ASSETS/CURRENT
LIQUDITY RATIO LIABILITIES TIMES 1.54 1.38 1.37 1.39

INTERPRETATION
Current ratio show the relationship between current assets and current liabilities and
show the ability of the company to pay back its current liabilities by
Utilizing its current assets. The current ratio for MILLAT TRACTORS in 2016 was 1.54 that
Decrease in 2017 to 1.38. That was a good sign for a company. But due to economic
downfall in 2018, its ratio was Disturb to 1.37 gradually its decrease but in 2019 it was
increase 1.39. But that was also a good ratio.

QUICK
ASSETS/CURRENT
QUICK RATIO LIABILITES TIMES 1.05 1.04 0.98 0.81

INTERPRETATION
This ratio shows the relationship between the quick asset and the current liabilities and
shows the company ability to pay back its current liability within its short period of time.
There is a slight change in this ratio since last three years. This ratio is gradually decrease
which is not good for the company it should be improve.

INVENTORY CGS/AVERAGE
TURNOVER RATIO INVENTORY TIMES 5.23 7.14 7.36 6.1

INTERPRETATION
This ratio show the relationship between cost of sales and opening and closing
inventories of the company. In 2016 the ratio was 5.23 but it increase in 2017 was 7.14.
In 2018 it also increase by 7.36 ratios and in 2019 it was decrease with the ratio of 6.1.

NET
RECEIVABLE SALES/AVERAGE
TURNOVER RATIO RECEIVABLE TIMES 71 127.99 310.12 555.08

INTERPRETATION
This ratio shows the relationship between the net sales and the bill receivable.
Which the assets of the company it means that how much company have to received
from others. It was gradually increase in every year that was good for the company
position.

SOLVANCY RATIO ANALYSIS

 
 
TOTAL
DEBT TO ASSET LIABILITIES/TOTAL          
RATIO ASSESTS TIMES 0.57 0.66 0.65 0.54

INTERPRETATION
This ratio show that how much portion of the assets are covered by
the liabilities of the organization. In 2017 maximum assets are covering by liability, but in
2016 and 2019 it was decreasing in the liability portion as compared to the 2017 and
2018.

TOTAL
DEBT TO EQUITY LIABILITIES/TOTAL
RATIO EQUITY TIMES 1.3 1.9 1.9 1.1

INTERPRETATION
This ratio shows the relationship between Long term debt and total
equity of the company. This ratio is mostly constant in every year. The company should
decrease their liabilities to increase in the equity that was good for the company.
 PROFITABLITY RATIO

PROFIT MARGIN   % 15.97 21.04 20.42 16.72

INTERPRETATION
This ratio interprets the net profit as a percentage of net sales. The
profit margin in 2017
It was pretty good. But in 2018 the profit is less as compared to 2017 profit. In 2016 and
2019 the profit margin is
not to good 2016 give the company less profit as compared to other years.

RETURN ON
EQUITY   % 42.26 74.05 94.33 75.27

INTERPRETATION
This ratio is showing volatile trend. In 2018 the return equity
was very high due to the much higher rate of profit as compared to equity. In 2016 it is
very low due to greater expenses as compared to others years.

RETURN ON
ASSETS   % 27.15 36.44 46.95 48.07
INTERPRETATION
 This ratio shows the relationship between net profit and total
assets. It is the main objective of an organization to maximize its return on assets.
The ROA was maximums in 2019 but there is gradually decrease in other years.