Business Finance

Final Project

SUBMITTED BY
PHILIP MORRIS
SS:
F
FINNCIAL ANALYSIS

SUBMITTED BY:
Sherjeel Zubair 021
Faraz Waseem 028
M. Arslan 012
Hunzla 001
Zain Haider 015
 PHILIP MORRIS

 EXECUTIVE SUMMARY:

The core purpose of this study is to highlight the financial analysis and
interpretation of PHILIP MORRIS. This financial analysis paper examines the
financial statements of PHILIP MORRIS PAKISTAN LIMITED. In addition to
analyzing the financial statements, this paper discusses the relationship between
the financial statements, how the financial statements differ from industry, how the
rating meetings differ in affecting presentation, and the making of financial
estimates. Analyzing previous concepts and financial estimates is important for
organizations like PHILIP MORRIS PAKISTAN LIMITED to understand their
financial situation. It is important that regular monitoring of the financial
statements is done. The organizations that make up the analyst allow their
operations to have an easy view of all operations and give management the
opportunity to make sound financial decisions. All the factors are collected from
my studied information, somehow from authentic websites and the knowledge I
acquired from findings. In the very first section of the study background of stock
market, flaws of recent years and financial statements are discussed. Additionally
the study reveals comparison between the current future and past performances of
PHILIP MORRIS. Later on current issues of the PHILIP MORRIS are being
discussed along with ratio analysis. Ratio analysis and SWOT analysis re
discussed thoroughly to highlight key factors causing problem and providing
facilities to PHILIP MORRIS. The study also highlight the financial policies being
used and provides hint to future policies. The study seeks to mention the solutions
that how to overcome the weaknesses of the PHILIP MORRIS in order to make
their strengths. The report also indicated the impact of COVID-19 on company and
its financial circle.
 PHILIP MORRIS

BACKGROUND OF COMPANY
1. Introduction:
Philip Morris (Pakistan) Limited (“PMPKL”), a public limited tobacco
manufacturing company, listed on the Pakistan Stock Exchange. PMPKL is an
affiliate of Philip Morris (“PMI”), a leading tobacco company, listed on the New
York Stock Exchange with its Operational Headquarters in Lausanne and
Corporate Headquarters in New York. We are one of the largest manufacturers of
cigarettes in Pakistan and support a wide range of charitable projects in
communities where we source and manufacture our tobacco. These include
providing economic opportunity, empowering women and access to education.
2. Existence:
The company was founded in 1969 as LAKSON Tobacco.
In 2007, Philip Morris acquired the company by increasing its shareholding to 97
percent. In 2015, the company shut down its plant in MANDRA, Rawalpindi
District due to rising costs and smuggling of tobacco in Pakistan. 141 employees
lost their jobs. In 2019, the company announced that they are shutting down
KOTRI plant in order to restructure their finances. As a result, 193 employees lost
their job.
3. Ownership and Legal entity:
Philip Morris is a public Limited Company that is owned by its Members i.e. share
Holders. Philip Morris (Pakistan) Limited, an affiliate of Philip Morris Inc. (PMI),
is a public limited company listed on the Pakistan Stock Exchange. Philip Morris
acquired a majority stake in a local business in 2007.
4. MISSION:
We’re the only tobacco company in history to commit to a smoke-free future -
why? Because change needs to happen, quickly.
Philip Morris Mission Statement “We are committed to being a great
employer and a good corporate citizen. We strive to be environmentally and
socially responsible. We are dedicated to fighting the illegal cigarette trade.
And we proudly support the communities where we source tobacco and where
our employees live and work”
5. VISSION:
 PHILIP MORRIS
 Meet the expectations of adult smokers by offering innovative tobacco
products of the highest quality available in their preferred price category
 Generate superior returns to our stockholders
 Be a responsible corporate citizen and to conduct our business with the
highest degree of integrity
a) LOCATION:
PHILIP MORRIS is a Public company in Pakistan having headquarters in
KARACHI with trading floors in
I. Sahiwal
. The Philip Morris (Pakistan) Limited (PMPK) became operational from April 29
(Wednesday) in Sahiwal, informed the company in a statement to the Pakistan
Stock Exchange (PSX) on Thursday.
The statement further said that the company has in place established SOPs in line
with provincial directives and has taken all relevant measures to ensure safety of its
employees.
Earlier, the factory of Philip Morris (Pakistan) Limited (PMPK) was closed in
compliance with the directives of provincial governments to contain the
outbreak of COVID-19.
II. MARDAN
The second branch of PHILP MORRIS PAKISTAN is operating successfully in
MARDAN Khyber Pakhtunkhwa.
b) ACHHEIVEMENTS:
On January 09, 2019 Philip Morris (Pakistan) Limited becomes the first company
in Pakistan to obtain Equal Salary Certification.
6. HISTORY:
Philip Morris (Pakistan) Limited (PSX: PMPK) is one of the two largest tobacco
companies operating in the legal sector, along with Pakistan Tobacco Company
Limited (PSX: PAKT). PMPK traces the origins of its operations in Pakistan to
fifty years. The company is involved in the manufacture and sale of tobacco and
tobacco products. PMPK is a company affiliate of Philip Morris Inc. (PMI).
Nearly a decade ago, PMI global had officially entered Pakistan after acquiring a
local tobacco company, Larson Tobacco. Philip Morris Investments B.V.
 PHILIP MORRIS
(incorporated in the Netherlands) by the PMPK holding company, with 77.65
percent from December at the end of 2018. Philip Morris Brands SARL is a
subsidiary of PMPK, with a 20% stake in the firm. The latest standard PMPK share
pattern is given below:
The company has had three operating centers since 2018. It owned a single tobacco
plant in Mardan, Khyber Pakhtunkhwa, with the exception of two tobacco centers,
one in Sahiwal, the Punjab and Kotri, in Sindh. In March 2019, PMPK informed its
shareholders that it was in the process of closing its Kotri factory in order to refine
its production trajectory in line with market trends. This follows a similar trend in
2015 when PMPK closed its Mandra factory in Punjab.
Like PAKT, PMPK also owns a diverse product portfolio. Its types include high-
end products (e.g. Marlboro), medium-grade products (e.g. Morven Gold) and low-
end products (e.g. Diplomat). The firm has historically ordered a fifth of the
tobacco market in terms of volume (cigarette sticks).

 Overview regrading past performances

 Recent performance
Financial performance in PMPK is a matter of high-end growth, as the firm
operates in a highly regulated market. In recent years, ups and downs, and ups and
downs, the PMPK's fortune has been closely linked to the wider market. The legal
tobacco industry - almost entirely controlled by PAKT and PMPK - has been under
a cloud of illegal tobacco sales in the country. Most of that illicit tobacco is
attributed to unpaid tobacco (DNP), which is collected locally but falls into the
control cracks to avoid taxes and duties paid for the production and distribution of
tobacco. This creates a price gap between the legal sector and the DNP sector,
which benefits the latter.
PMPK has seen its overall profits stand at around RS40 billion in CY15 & CY16.
The following year the funds dropped dramatically. Faced with declining prices
around 2HCY16 and 1HCY17, the PMPK, like its counterparts, began raising
concerns about the threat posed by DNP cigarettes, which had ordered, at a rate of
about a third of the market at that time.
 PHILIP MORRIS
The government, alarmed by the loss of billions of cigarettes so far, responded by
introducing the third phase of the FED in May 2017. That section had the FED
designated in the monetary component. It has helped the legal sector to reduce the
price gap and restore the market share in the informal sector that exceeds taxes.
Not only has PMPK sales increased almost two years since the launch of the three-
level FED program, the event has also helped the company maintain its full sales.
For example, in the two years prior to the launch of the third phase of the FED, the
PMPK maintained, on average, 36 percent of its total profit as a total profit. Two
years after this financial intervention, the PMPK maintained an average of 46
percent as a full profit.
This very high savings, in addition to the growth of the top line that makes it back,
is a good way for the company’s financial health going forward. One can see
significant financial progress in the first full calendar year (CY18) since the third
phase was implemented.
In practice, to a great extent, the PMPK revenue statement paints a better picture
compared to the previous decade. However, the cost of the goods sold - which
accounted for 28 percent of the revenue and 63 percent of the total profit in CY18 -
needs to be reinvested. 31 percent of total profits hold on despite the difficult
working conditions.
7. Challenges:
 advertising of tobacco products
SRO 1086 2013, recently issued by the Federal Ministry of Health Services,
Regulation and Coordination, prohibits the advertising of tobacco products -
currently permitted despite restrictions - altogether, according to the company.
Tobacco manufacturers are not allowed to advertise their products on mainstream
channels, such as news and TV media, according to an industry official.
However, the industry is allowed to advertise tobacco brands in the tobacco store
are as long as it does not exceed its (current) legal limit of square meters, the
official added. "This will also be closed when the SRO in question comes into
operation on May 31."
 IMPACT OF Covid-19
The purpose of this study is to determine the impact of COVID-19 on the
performance of the Phillip Morris Pakistan. Phillip Morris is concerned about soft
volumes of cigarettes for a while now, as the situation continues in the first quarter
 PHILIP MORRIS
of 2020. Also, in its first-quarter lead call, the company warned that the
coronavirus epidemic would have a negative impact on its performance in 2020
and had a significant impact on second-quarter operations. However, Phillip
Morris is focused on increasing the risk of high-risk products (RRP) in the face of
declining tobacco prices due to increased health regulations and government
regulations. Calling for the first quarter, Phillip Morris informed that he expects
low tax-free sales, due to travel restrictions from coronavirus, to measure its
effectiveness. Also, with regard to the acquisition of IQOS users, the company is
unable to engage with adult smokers by using the marketing power and touch areas
due to the limitations associated with locks.
Phillip Morris however was looking forward to a soft second-quarter exhibition
due to the tough comparisons of the year, certain costs and unpredictable power in
Indonesia. Managers now expect to continue operating poorly due to the effects of
COVID-19. In fact, the second quarter is likely to bear the brunt of the larger
quarter-class coronavirus this year. In the second quarter, neutral revenue is
expected to decline by 8-12% due to coronavirus-led complications, including
reduced IQOS sales. In addition, managers expect a second quarter to earn between
$ 1 and $ 1.10 per share, including currency headwinds for about 12 cents. Wages
are expected to bear the brunt of distributors and sellers, tax-free sales and lower
price delays in Indonesia.
Apart from this, the decline in tobacco sales has had a significant impact on Philip
Morris' performance for a long time now. In the first quarter of 2020, the volume
of cigarettes and warm-ups of tobacco units fell by 1.2% to 173.7 billion. Tobacco
exports fell by 4% to 157 billion units a quarter. We recognize that the number of
tobacco exports is negatively affected by low tobacco demand, resulting from anti-
tobacco campaigns and increased consumer health. In addition, regulatory barriers
created cigarette marketing restrictions, which further hindered sales prices.

 FLAWS LEFT IN 2019

 There are many factors that give rise to negative points table in stock exchange
most influenced of them are listed below:
I. Closure of factory in KOTRI During the year, the Company has closed its
factory in KOTRI due to which following major impacts have been presented in
the annexed financial statements: The items of plant and machinery having a
net book value of RS 1,137.304 million which cannot be disposed of except as
 PHILIP MORRIS
scrap material in accordance with the Company's policy have been written
down to the expected recoverable amount of RS0.00. Thereafter, these items
have been transferred to non-current assets held for disposal.

II. Sales analysis

Commercial Analysis. Philip Morris (Pakistan) Limited reported sales of 13.33
billion Pakistani Rupees ($ 83.07 million) in the year ending December 2019. This
represents a decrease of 17.7% compared to 2018, when the company's sales were
R20 000 in Pakistan Rupees. The sales rate in 2019 was very close to the level five
years ago: in 2014, Philip Morris (Pakistan) Limited had sold 13.76 billion Rupees.
III. Production losses
Philip Morris Pakistan (PMPK) Limited, Pakistan's second-largest tobacco
company, announced its financial performance in the first nine months of 2019 last
week. It is one of two major tobacco companies operating in the legal sector, along
with Pakistan Tobacco Company Limited. The company is involved in the
production and sale of tobacco and tobacco products. PMPK is an ambassador for
Philip Morris Inc. (PMI).This huge cigar reported a massive loss of RS. 1.37
billion Over the period mentioned above. It reported a profit of RS. 881.42 million
Over the same period last year.
IV. Lack of management
According to the financial statements, the loss was largely due to management's
decision to restructure their operations by closing its factory in Kotri. During the
third quarter, the company faced a difficult situation as it reported a loss of RS. 782
million compared to the profit of RS. 157.28 million Last year.
V. Decrease in sales
In total, within nine months, the company posted sales for RS. 11.0 billion
Decreased by 1.05% compared to RS. 11.15 billion Last year. The cost of selling
the company increased by 14.90% to RS. 7.23 billion Compared to RS. 6.29 billion
Last year. In Pakistan, their product portfolio includes tobacco products such as
Marlboro, Parliament, Master of Chesterfield, Diplomat, Philip Morris, L&M, and
Red & White.
VI. Rise in financial cost
 PHILIP MORRIS
The company's financial costs also increased by 154.90% to RS. 40.73 million
Compared to RS. 15.98 million. Distribution costs decreased by 18.50% and other
costs saw a significant increase, an increase of 6.2 times. Reported to RS. 2.82
billion Compared to RS. 390 million over the same period last year.

VII. Operational losses

The company posted a significant operating loss of RS. 1.72 billion From
operating income of RS. 1.19 billion Last year, mainly because its costs and costs
are not commensurate with weak sales. Despite low productivity, sales costs have
been affected by higher prices, rising costs of services and the impact of paper
losses this year.
VIII. Challenges from illegal sectors
According to a company official who requested anonymity, the tax-regulating
industry is facing challenges from the illegal sector. He called on the government
to do more to curb the country's tobacco trade, which is hurting the taxpayers’
industry. He added that production costs had risen which had an impact on this
year's results. Among the most economically difficult manufacturing sectors in
recent months is the tobacco industry.
IX. Decline in production
General production has also declined during this period as this may have been the
price of tobacco in recent months in the legal industry. In just 2019, so far, the
FED on tobacco has doubled in size which has affected the company’s results.

 Core objectives
If I would have been CFO of this company I would work in following fields in
order to score high on index points table:
1. Treasury duties
In order to maintain company’s current financial position it is crucial to invest at
right time and right place so it would be my prime importance to investment in
more returning business. In addition, to this I would have strong eye on the capital
structure of the company, determining the best mix of debt, equity, and internal
financing and addressing the issues surrounding capital structure .
 PHILIP MORRIS

2. Controllership duties
As company’s financial performance strongly depends upon presenting and
reporting accurate and timely historical financial information to shareholders,
analysts, creditors, employees, and other members of management.so, I will deliver
accurate and up to date financial information in order to have timely decisions.
3. Economic strategy and forecasting
I would put my efforts to identify and report what areas of a company are most
efficient and how the company can capitalize on this information. Moreover, I
would try to predict multiple scenarios the best way to ensure the company's
success in the future.
4. promote foreign investment
Capital flows have significant potential benefits for economies around the world.
Countries with sound macroeconomic policies and well-functioning institutions are
in the best position to reap the benefits of capital flows and minimize the risks.
5. attention to pandemics
As pandemics (covid-19)and disasters have negative effects on majority business
sectors but there are some businesses that earn great in these situations as CFO I
will have keen eye where to invest in these periods in order to rise financial status
of my company.

 Financial statements
Financial statements are written records that convey the business activities and the
financial performance of a company. Financial statements are often audited by
government agencies, accountants, firms, etc. to ensure accuracy and for tax,
financing, or investing purposes. Financial statements include.
 TYPES OF FINANCIAL STATEMENTS
1. income statement
Income statement summarizes REVENUE AND EXPENSES over given period
of time.
2. balance sheet
 PHILIP MORRIS
Balance sheet provides a snap shot of financial position of a firm at a point of
time.
3. statement of owners’ equity
SEO shows how much firms earnings were retained rather than pain dividends.

4. cash flow statement

Cash flow statements Is responsible of reporting impact of firms activities on cash
inflow and cash outflow over given time frame.

 BALANCE SHEET(Statement of financial position)

PHILIP MORRIS
Balance sheet
As on …JUNE 30 2021……………….

Assets Debit Equities Credit

       
 AUTHRIZED
 NON-Current assets   CAPITAL 12,000,000
 Property and
equipment  7,000,000  SHARED CAPITAL 615,803
 RESERVED
 Right of use asset  480,000 CAPITAL 10,464,000
 SURPLUS
 Intangible asset *  6,000 CAPITAL
 Investment in
associates* 2,000  Total 10650883
 Long term  NON-CURRENT
investments*   LIABILITIES  
 Long term deposits  60,000  Lease liability 205,180
 Long term loans    
 Deferred tax assets 1,400,000  
 PHILIP MORRIS

 TOTAL  8,948,000  TOTAL

       
 CURRENT  CURRENT
ASSETS   LIABILITIES  
 Store and spare net  160,000  Short term borrowing 4,000,000
 Stock in trade-net 6,000,000  Net payables 540,237
 Prepayments  22,000  Trade  2,000,000
 Other receivables  247,000    
 advances      
Retirement funds 789,000
 Taxation – net  9,00,000    
Cash and bank
balance   330,300    
ASSETS FOR
DISTRIBUTION 8448300
 TOTAL 8448300    
       
 TOTAL ASSETS  17396300  Total   17396300

 INCOME STATEMENT
PHILIP MORRIS
Income statement
As on …JUNE 30 2021……………….

Description Amount

 Net profit 9,000,000

 Company accruals  (674300)

 PHILIP MORRIS

 Associate accruals  (19000)

Total 8306700

 Tax effects on actuarial loss  

 Company  87000

  Associate  900

 Total  6600

  surplus on PPE  130987

 EQUITY INVS.  30000

   

 TOTAL  1488487

 CASH FLOW STATEMENT:

Description Debit

 Capital expenditure  (40000)

 Capital work-in-progress  (17000)
 Proceeds from sale of fixed assets  50000
 Dividend received  70800
 Dividend income from associates  15000
 Investments sold  7,080,345
 Investments purchased  (7,00,000)
 Increase in long term deposits  20879
 Decrease / (increase) in long term loans  6070
 PHILIP MORRIS
 Net Cash Generated from / (used in) Investing
Activities  6486094
Cash Flows from Financing Activities
Net Cash used in Financing Activities (150,000)
Net Decrease in Cash 3130768

Cash Equivalents at the end of the Year 9466862

 STATEMENT OF OWNER’S EQUITY:

PHILIP MORRIS Company

Statement of Owner Equity
For the Year Ended December 2021

Strauss, Capital – beginning $   120,000

Add: Additional Contributions   10,000

  Net Income   57,100

Total $   187,100

Less: Strauss, Drawings   20,000

Strauss, Capital – ending

$   167,100

 NOTES TO FINNACIAL STATEMENT

 PHILIP MORRIS
1. Philip Morris (Pakistan) Limited (Company) was deported to Pakistan on
February 10, 1969 limited company under the Companies Act, 1913 (now
the Companies Act, 2017).
2. The company is listed as Pakistan Stock Exchange. The Company's main
function is to produce and sell tobacco as well tobacco products
3. Property, plant and equipment Estimates in respect of residual value and
useful life are subject to the recommendations of the Company's technical
team. In addition, the Company reviews external and internal indicators of
annual asset damage.
4. Commercial stock estimates and estimates used to record commercial stocks
for their fair value.
5. The carrying amount is determined on the basis of the estimated selling price
of the product in the normal course of business the estimated cost of
completion and the estimated cost required to obtain its sale.
6. Income taxation in making estimates of income paid by the Company, the
management shall consider the current tax law and the decisions of the
appellate authorities in certain cases issued in the past.
7. Where the final tax result is different from the amounts initially recorded,
that difference will affect the provision of income tax at the time the final
result is determined.
8. Deferred taxes Reversed tax assets are recognized only to the extent that
future taxable tax benefits will be realized when the assets are not used.
9. Employee Retirement Benefits Certain actuarial assumptions as disclosed
are used to measure the present value of defined benefit obligations and the
fair value of plan assets.
10.Shared Payment Plans Estimates based on the number of employees who are
expected to receive last parent shares when they are satisfied with the
conditions of acquisition.
11.Provisions Conditions are based on an excellent management rating. Any
change in estimates in the coming years may affect the carrying amount of
the provision for the same effect on the profit or loss statement and other
Company's gross revenue.
12.The process of identifying and collecting all the relevant information on a
lease is complex and estimates of the use of the lease right and liability are
 PHILIP MORRIS
based on assumptions such as discount rates and lease terms, including
termination and renewal options.
13. Lease payments to be made under certain extension options are included in
the credit rating. Lease payments are reduced using the interest rate on the
lease. If that amount cannot be easily determined, which is usually the case
at a lease to the Company, using the Company's increasing borrowing
amount.
14.The Company's growing borrowing rate is the level at which the Company
will have to repay borrowing funds required to acquire assets of equal value
and assets to be used in the same economic environment with the same
terms, security and conditions.
15.Commercial stocks Commercial stocks are denominated in the lowest price
and the highest price available.
16. The cost of materials includes the cost of purchasing goods other than
equipment used in storage and travel, which is reflected in the tax rates and
other costs incurred.
17.The cost of recycled tobacco includes the cost of purchasing the product and
the additional income earned from the re-launch of the tobacco leaf. Costs in
respect of finished goods and operations-continuous include more than equal
production.
18.Costs in respect of commercial assets of the lower moving average price and
the carrying amount of the residual value, excluding transit items specified
in the invoice prices and other costs incurred.
19.Trade liabilities and other receivables Trade and other receivables are
recognized in the amount of the original invoice minus the estimated
allowance for questionable receivables based on the 'Expected Credit Loss'
model. Rates that are considered bad and undetectable are derecognized
when identified.
20. Non-current assets (or disposal groups) reserved for sale Non-current assets
(or disposal groups) are classified as assets held for sale where their
acquisition value is primarily acquired through a transaction and the sale is
considered the highest possible. It refers to a lower administrative fee and a
fair value rather than sales costs.
21.Lease Debt The lease liability is initially measured at the present value of
unpaid lease payments on the effective date, deducted using the interest rate
 PHILIP MORRIS
included in the lease, or if that amount is not easily determined, the
Company's increase in the borrowing rate.
22.Rental payments include fixed payments, variable rental based on reference
or rate, amounts expected to be paid by the Company under a residual value
guarantee, operating price purchase option if the Company is sure to use the
termination lease option.
23. If the lease term shows the tenant using that option, deducting any lease
benefits available. Extension and termination options are included in the
lease term only when the Company is reasonably sure to use these options.

5. COMPARISON WITH 2019

1. COMAPSRIONS OF BALANCESHEETS:
2019 2021
TOTAL ASSETS TOTAL ASSETS
16,357,821 17396300
TOTAL LIABILITIES TOTAL LIABILITIES
16,357,821 17396300

 There is total increase of 1038479 PKR AS during 2020 there was a wide
contraction in economy but now business are again in mode of financial
activities i.e. is investment in order to overcome covid-19 losses. Dividend
and interest payments from stock and bond investments also increase cash
levels. Selling surplus fixed asset investments, such as regional offices,
distribution centers, surplus equipment or unused automobiles increase cash
on the balance sheet.

2. COMPARISON OF INCOME STATEMENT:

Total Comprehensive Income for the Total Comprehensive Income for the
Year 2019 Year 2021
205,503 268,144
.
3. COMPARISON OF CASH FLOW STATEMENT:
 PHILIP MORRIS

Cash at the end of the Year Cash at the end of the Year
243,585 163076
 There is less cash at the end of 2021 because more money is spent in
financial The decline in payable accounts will also mean a decrease in the
company's statement of cash flows normally companies are facing this
situation due to lack of financial activities because of COVID-19.
 It doesn’t matter what business you are in, your potential for profit (or loss)
is closely tied to your number of production units. As you can see, none of
these factors stand alone as either the problem or the solution. They all work
together to determine your profitability. Consider each factor. Examine each
cost. Know how cost cuts will affect production before you make the cut.
Watch overhead costs, your management can easily become dominated by
the need to maintain what you have, rather than the desire to get what you
want. If an enterprise is continually unprofitable, then get rid of it, don’t
“ride a dead horse.” Carefully consider options. Take an honest look at the
productive capability of your land. Trying to get your land to produce above
its capability is both expensive and frustrating
.

6. Explanation to comparison

Tracking financial performance over many years allows business leaders to direct
their organization effectively. In particular, monitoring key components of the
balance and income statement, among other financial reports, helps to ensure that
the entity remains financially viable and able to meet its operational objectives.
Otherwise, the company may run out of money, not pay off loans or overdue.
The most important benefit of analyzing your company's financial statements is
that they allow you to make strategic decisions that support growth and long-term
profit.
The Balance Sheet, Income Statement, Income Statement, and Income Statement
are the most important documents in understanding how your business is
performing. You can check departmental performance, interest marks, debt on
equity ratios, and more. If you have investors, or are looking for investors, this
information will drive their desire to invest - and determine whether spending is a
viable investment.
 PHILIP MORRIS

1. Improved credit management:

As you will know, credit can impede the progress of any company, outside the
industry. While there may be many different types of financial reporting in terms
of purpose or software, almost all of the solutions will help you track your current
assets divided by current debts into your balance to help you manage your money
and manage your debts properly.
2. Trend identification:
No matter what field of financial activity you want to pursue, all forms of this type
of reporting will help you identify trends, both past and present, that will empower
business to deal with potential weaknesses while helping you create the kind of
development that will benefit your business.
3. Real-time tracking:
By gaining access to a medium-term, real-time understanding, you will be able to
make accurate, informed decisions quickly, thus protecting any potential
roadblocks while maintaining your financial balance at all times.
4. Debts:
Managing your debts is a critical part of your company's ongoing health. Business
loans, credit cards, credit cards, and extended credit from merchants are all
regulatory debt. Using the financial report template, if you plan to apply for a
business extension loan, you can check the financial statements data and decide if
you need to reduce existing debts before making a formal application.
5. Progress and compliance:
As the information provided by financial reporting software is accurate and
powerful, not only does access to this level of analytical reporting provide an
opportunity to improve your financial performance over time, but it will also
ensure you stay 100% compliant - which is important if you want your business to
remain viable.

 RATIO ANALYSIS

Financial estimates are useful tools that help business managers and investors to
analyze and compare financial relationships between accounts in a company's
 PHILIP MORRIS
financial statements. They are the only tool that makes financial analysis possible
throughout the history of a firm, industry, or business sector.
Financial rating analysis uses data collected from the calculation of ratios to make
decisions about improving corporate profits, solvency, and liquidity.
Financial measurement analysis is a single measurement tool used by business
managers to gather important information on business profitability, solvency,
efficiency, monetization, coverage and market value. Measurement analysis
provides this information to business executives by analyzing the data contained in
the company's balance sheet, income statement, and cash flow statement. The
information gathered in the analysis of the financial position is very important for
managers who have to make financial decisions for the business and for external
parties, such as investors, in order to assess the financial viability of the business.

LIQUIDITY RATIO:

i. QUICK RATIO:
There are three major amounts of money that business managers are looking
at:
Quick assets refer to the more liquid types of current assets which include: cash
and cash equivalents, marketable securities, and short-term receivables. Inventories
and prepayments are not included. Hence, the quick ratio can also be computed as:
 FORMULA
Quick ratio = (Cash and cash equivalents + Marketable securities + Short-
term receivables) ÷ Current liabilities,
 SOLUTION
QUICK RATIO= 6486094+9466862+247000
6540237
= 2.47
 PHILIP MORRIS

ii. CURRENT RATIO

 formula
Current assets / current liabilities
CURRENT RATIO= 8948000 / 6540237
=1.379
PROFITABILITY RATIO
Profitability ratios measure a business’ ability to earn profits, relative to their
associated expenses. Recording a higher profitability ratio than in the previous
financial reporting period shows that the business is improving financially. A
profitability ratio can also be compared to a similar firm’s ratio to determine how
profitable the business is relative to its competitors.

ROA = Net Income / Average Assets

1488487/ [8448300/8]
=1.409
EFFICIENCY RATIO
Efficiency ratios measure how well the business is using its assets and liabilities to
generate sales and earn profits. They calculate the use of inventory, machinery
utilization, turnover of liabilities, as well as the usage of equity. These ratios are
important because, when there is an improvement in the efficiency ratios, the
business stands to generate more revenues and profits.

=7080345 / [8448300/8]
=6.7
 PHILIP MORRIS
1. CASH RATIO
CASH RATIO:
Monetary estimate is the company's financial position, in particular the company's
financial ratio and financial equity in its current companies. The metric calculates
the company's ability to repay its short-term debt in cash or in close proximity to
finance, such as easy-to-sell security. This information is useful for lenders when
deciding how much money, if any, they would like to lend to a company.

6486094+ 9466862/ 6540237

=2.43

 SWOT ANALYSIS
The SWOT Analysis Framework helps the organization identify internal strategic
aspects such as strengths and weaknesses, and external strategic factors such as
opportunities and threats.
Strength-Weakness-Opportunity-Threats (SWOT) / Matrix Analysis assists Philip
Morris executives to develop four types of strategies:

One of the leading companies in its industry, Philip Morris has a lot of power that
enables it to thrive in the market. These powers not only help to protect market
share in existing markets but also help to enter new markets.
 Strengths:
1. Powerful distribution network
Over the years Philip Morris has built a reliable distribution network that can
reach most potential markets.
2. Highly skilled employees
 PHILIP MORRIS
Through effective training and learning programs. Philip Morris is investing
heavily in the training and development of its staff which results in not only highly
skilled workers but also motivated to achieve more.
It is very successful in Go to Market strategies for its products.
3. Good Returns on Spending
Philip Morris is increasingly successful in developing new projects and has
generated significant benefits from capital expenditure by building new revenue
streams.
4. Strong Brand Portfolio
Over the years Philip Morris has invested in building a strong product portfolio.
The SWOT analysis of Philip Morris simply emphasizes this fact. This product
portfolio can be very useful if an organization wants to expand into new product
categories.
5. Reliable suppliers
It has a solid foundation of a reliable raw material supplier that enables the
company to overcome any barriers to procurement.
The automation of services has brought about similarities in the products of Philip
Morris products and empowered the company to rise and fall depending on the
demands on the market.
6. High level of customer satisfaction
A company with its dedicated customer management department has been able
to achieve a high level of customer satisfaction among existing customers and a
good product balance among potential customers.
 WEAKNESSES:

Weaknesses are areas where Philip Morris can improve. Strategic decision-making
and weaknesses are areas where the firm can improve using SWOT analysis and
build on its competitive advantage and strategic position.It is not very good at
predicting product demand which leads to a higher level of lost opportunities
compared to competitors. One of the reasons why the counting of dates is high
compared to its competitors is that Philip Morris is not good at predicting and
therefore ends up keeping high prices inside the house and at the station.
 PHILIP MORRIS
The organizational structure only works with the current business model and
therefore limits the increase in adjacent product categories.
1. Product marketing
Product marketing has left you unpopular. Although the product is successful in
terms of sales but its structure and promotion of different sales is not well defined
which can lead to attacks in this category from competitors.
2. Financial planning
Financial planning is not done properly and efficiently. The current level of assets
and prices of liquid assets suggests that the company can spend more money than it
currently does.
3. High level of recruitment
High level of recruitment compare with other organizations in the industry Philip
Morris has a high level of recruitment and you have to spend a lot more than your
competitors in training and developing its employees.
4. Need more money for new technology.
Given the scale of expansion and the various geographies the company plans to
expand on, Philip Morris needs to invest more in technology to integrate processes
across the board. Currently investment in technology is not in line with the
company's vision. There are gaps in the product range that a company sells. This
lack of choice could give new competition a place in the market.
 Philip Morris Opportunities - External Strategic Strategies
The new technology provides an opportunity for Philip Morris is to develop
different pricing strategies in the new market. It will help the company to keep its
loyal customers with good service and attract new customers with some value
propositions.
1. New customers from an online channel
Over the past few years the company has invested heavily in the online platform.
This investment has opened a new marketing channel for Philip Morris. Over the
next few years the company can take advantage of this opportunity to get to know
its customer better and provide for their needs using big data analytics.
2. New styles of consumer behavior
 PHILIP MORRIS
New styles of consumer behavior can open up new Philip Morris market. It
provides an excellent opportunity for an organization to build revenue streams and
split new product categories as well.
3. Low inflation rate
Low inflation brings market stability, creating low interest rates for Philip Morris
customers.
Market development will lead to the purity of the competition rival and enable
Philip Morris to increase its competition compared to other competitors.
4. Economic growth
Economic growth and consumer spending, after years of recession and slow
growth in the industry, is an opportunity for Philip Morris to attract new
customers and boost their market share.
5. New environmental policies
New opportunities will create a quality playground for all players in the industry. It
represents a great opportunity for Philip Morris to capitalize on new technologies
and gain market share in a new product category.
 Threats to Philip Morris - External Strategic Strategies
Rising wage rates especially movements such as $ 15 per hour and rising prices in
China could lead to significant pressure on Philip Morris gains
Imitation of counterfeit and substandard products is also detrimental to Philip
Morris’s product especially in emerging markets and low-income markets.
1. Rising green assets
Rising green assets could threaten Philip Morris’s profits. New technologies
developed by a competitor or market disruptor could be a major threat to the
industry in the future for the long term.
2. New environmental regulations under the Paris agreement (2016) can be
detrimental to certain existing product categories.
The Company may face claims in the various markets offered - different rules and
ongoing fluctuations regarding product levels in those markets.
 PHILIP MORRIS
As the company operates in many countries it is facing financial instability mainly
due to the volatile political situation in many markets around the world.
 Limits to SWOT Analysis by Philip Morris
Although SWOT analysis is widely used as a strategic planning tool, analysis has
its limitations.
Certain strengths or organizational characteristics can be strengths and weaknesses
at the same time. This is one of the major limitations of SWOT analysis. For
example, changing environmental regulations can be detrimental to a company and
can be an opportunity in the sense that it will make the company more competitive
or reward its competitors if they can develop products faster than competitors.
SWOT does not show how to achieve competitive advantage, so it should not be
the end of itself.

 POLICY SECTION
Another option for smokers who choose to continue smoking
The only way to completely avoid the dangers of smoking-related diseases is to
stop smoking altogether. For current donkeys, the best option is to quit. However,
for smokers who may continue to smoke, our aim is to offer other non-smoking
alternatives that have the potential to reduce the risk of smoking-related infections
compared to continued smoking. We design these products to appeal to current
adult smokers so they can be completely transformed.

1. Providing non-smoking alternatives for adult

Providing non-smoking alternatives for adult smokers is a sensible, complementary

addition to existing tobacco control strategies. Given the number of smokers who
will continue to smoke cigarettes, it makes sense to provide them with safer
alternatives if technology makes it possible, and if such products are not made
available. Applicable policies and regulations should allow smokers to obtain
scientifically-reduced Reduced Products. They should also enable smokers to make
 PHILIP MORRIS
informed decisions based on accurate information about these products. At the
same time, it is our view that the protection of vulnerable people, such as youth,
can still be ensured when all stakeholders work together.
For a company that has generated more than $ 26 billion in revenue from global
tobacco sales, kicking off the practice sounds like a lot better, especially when
world governments put roadblocks in place to do so, but introduce new products
that could help quit smoking.
2. Kick the practice
So having an intention to get out of the tobacco business is not a bad idea, as it
sounds as far as it sounds. But to do this, Philip Morris invests heavily in other
forms of smoking such as electronic cigarettes, especially his IQOS device sold as
Heat Sticks under the brand name Marlboro.
3. Vaporizing the industry
While that would seemingly be something regulators would promote, considering
the societal costs associated with smoking, governments are still erecting barriers.
4. Deeming regulations
In the U.S., the FDA's so-called "deeming regulations" are expected to devastate
the nascent electronic cigarette and vaping markets. So onerous and costly are the
regulations -- Philip Morris' application to the FDA for a reduced-risk label for the
IQOS runs to 2 million pages that only the biggest, best-financed companies will
be able to comply. Smaller manufacturers will probably be wiped out, as third-
party estimates put the cost of compliance somewhere between $3 million and $20
million per application.
5. E-cigarette
Elsewhere, e-cig users are being treated just like regular smokers, segregated to
special areas where they can use their devices, or being banned altogether from
using the devices in public places, just like with cigarettes.

6. A brave new world

Philip Morris, of course, is big enough that it can afford complying with the new
rules, but even it recognizes the changeover to a smoke-free future won't be easy,
or quick. Bloomberg News quotes CEO Andre Calantzopolous as saying the
 PHILIP MORRIS
tobacco company can't stop selling cigarettes immediately, as "decades of history
are not going to be changed in one afternoon."
And though critics might be wary of any pronouncement a tobacco company
makes, any increase in the number of people quitting smoking has to be a benefit.
Many people will just find it odd that it's Philip Morris International that may be
leading the way forward.

Conclusion
This Project has been very helpful to me because I have learned how to prepare
cash flow statements and rate analysis. I came to the following conclusion while
preparing for this project:
The analysis of the financial statements helps to identify areas where managers
have shown better performance and areas of inefficiency during the global
pandemic situation like COVID-19 and other disasters. .
On the basis of financial analysis, the profitability of a business concern can be
calculated. In addition to this, the potential for worrying future gains can also be
predicted. All external account users, especially investors and potential investors
are interested in this Judging Success Management.