You are on page 1of 54

COMPANY NAME YEARS CURRENT RATIOS ACID TEST RATIO DEBT EQUITY RATIO (%) DEBT RATIO TIME

INTEREST EARNED INVENTORY TURN OVER RATIO INVENTORY HOLDING PERIOD

Engro Chemicals Ltd. 2005 1.79 1.10 108.33 .48 12.5 11.1 32 2006 1.56 1.31 31.58 .25 7.18 9.4 38 2007 3.11 0.26 38.9 .18 8.92 10.1 36

Fauji Fertilizer Co. 2005 1.094 1.01 20.48 0.76 11.92 16.41 21.93 2006 .897 0.81 8.70 0.53 14.94 16.1 22.36 2007 0.942 0.89 7.53 0.57 12.22 22.95 15.7

NET FIXED ASSETS TURNOVER RATIO TOTAL ASSET Turnover RATIO RECEIVABLES TURNOVER RATIO Average Collection Period Gross Profit Margin (%) Operating Profit MARGIN (%) Net Profit Margin (%)

1.4437 1.30 34.3 11 14.45 19.15 12.69

1.5148 1.1 30.2 12 24.07 21.63 14.47

1.9397 1.45 22.8 16 21.22 20.58 13.61

1.44 1.30 44.62 8.1 34.6 17.6 16.09

1.7 1.1 25.57 14.41 32.42 25 15.48

1.54 1.45 19 18.95 35.6 29.93 18.86

Earning per share (Rs./Share)

14.37

15.47

17.17

12.96

9.39

10.86

RATIO ANALYSIS

(Engro Chemical Pakistan Ltd.)


Ratios simply mean a number expressed in terms of another. A ratio is a statistical yardstick by mean of which relationship between two or various figures can be compared or measured. Thus Ratio Analysis shows the relationship between accounting data. Ratio can be found out by dividing on number by another number. Ratio analysis is an important and age old technique of financial analysis. Following are some of the advantages of ratio analysis.

Types of Ratios Analysis

Let us now have a detailed analysis of all the following four ratios for Engro chemicals Pakistan Ltd: Liquidity Ratios Leverage Ratios Activity Ratios Profitability Ratios

Liquidity Ratios:

Current Ratio: Current Ratio is equal to current assets divided by current liabilities Current Ratio = Current Assets Current Liabilities 2006 2007: Current Ratio = 16397198000 5264674000 Current Ratio = 3.11

2005 - 2006: Current Ratio = 5684446000 3642415000 Current Ratio = 1.56 2004 - 2005: Current Ratio = 5011555000 2800094000 Current Ratio = 1.79

Leverage ratios:
Debt Equity Ratio: Debt equity ratio is equal to long term debts divided by stockholders equity. Debt Equity ratio = Long Term Debts Stockholders equity 2006 2007: Debt equity ratio = 17410060000 1934692000 Debt equity ratio = 1.5348

2005 - 2006: Debt equity ratio = 370,501,304 233,187,729 Debt equity ratio = 1.588 2004 - 2005: Debt equity ratio = 316,314,578000 190,255,511000 Debt equity ratio = 1.6625 Debt Ratio:

Debt ratio is equal to total liabilities divided by total assets. Debt Ratio = Total Liabilities Total Assets 2006 2007: Debt Ratio = 7005734000 38156651000 Debt Ratio = 0.18 2005 - 2006 Debt Ratio = 3939349000

15980816000 Debt Ratio = 0.25 2004 - 2005 Debt Ratio = 6736064000 14111630000 Debt Ratio = 0.48

Times Interest Earned = Profit before Interest and Taxes Interest Expense 2006 2007: Interest coverage Ratio = 4770535000 535023000 Interest Coverage Ratio = 8.92 times 2005 - 2006:

Interest coverage Ratio = 2602207000 362551000 Interest Coverage Ratio = 7.18 times 2004 - 2005: Interest coverage Ratio = 34996421000 280070000 Interest Coverage Ratio = 12.5 times .

Activity Ratios
Inventory Turnover Ratio: Inventory Turnover Ratio is equal to Cost of Goods Sold divided by Average Inventory. Inventory Turnover ratio = Cost of Goods Sold Avg. Inventory 2006-2007 Inventory Turnover Ratio = 18262793000 1808192327 Inventory Turnover Ratio = 10.1 times 2005 2006

Inventory Turnover Ratio = 13364524000 1421757872 Inventory Turnover Ratio = 9.4 times 2004 - 2005: Inventory Turnover Ratio = 14332824000 1291245405 Inventory Turnover Ratio = 11.1 times Total asset turnover ratio measures that how much sales are generated through the total assets of the organization. Total Asset Turnover Ratio = Sales

Total assets 2006 2007: Total asset turnover ratio= 23183222000 15980816000 Total asset turnover ratio = 1.45 times 2005 - 2006: Total asset turnover ratio = 17601783000 15980816000 Total asset turnover ratio = 1.1 times

2004 - 2005: Total asset turnover ratio = 18276277000 14111630000 Total asset turnover ratio = 1.30 times Receivables turnover ratio 2006 2007: Receivables turnover ratio in days = 360 22.8 Receivables turnover ratio in days = 16 days

2005 - 2006: Receivables turnover ratio = 360 30.2 Receivables turnover ratio = 12 days 2004 - 2005: Receivables turnover ratio = 360 34.3

Profitability Ratios:
Gross Profit Margin: Gross profit margin is equal to the ratio of gross profit to sales. Gross Profit Margin = Gross Profit Sales 2006 2007: Gross profit margin = 4920429000 X 100 23183222000 Gross profit margin = 21.22 %

2005 - 2006: Gross profit margin = 4237259000 X 100 17601783000 Gross profit margin = 24.07 % 2004 - 2005: Gross profit margin = 2641286000 X 100 18276277000 Gross profit margin = 14.45 % Operating Profit Margin:

Operating Profit Margin is equal to earning before interest and tax divided by sales. Operating Profit Margin = EBIT/Operating Profit Sales 2006 2007: Operating Profit Margin = 4770535000 X 100 23183222000 Operating Profit Margin = 20.58 % 2005 - 2006:

Operating Profit Margin = 3807207000 X 100 17601783000 Operating Profit Margin = 21.63 % 2004 - 2005: Operating Profit Margin = 3499621 X 100 18276277000 Operating Profit Margin = 19.15 %

Net Profit Margin:

Net Profit Margin is equal to net profit divided by sales. Net Profit Margin = Net Profit Sales 2006 2007: Net Profit Margin = 3154583000 X 100 23183222000 Net Profit Margin = 13.61 % 2005 - 2006: Net Profit Margin = 2547326000 X 100

17601783000 Net Profit Margin = 14.47 % 2004 - 2005: Net Profit Margin = 2319082000 X 100 18276277000 Net Profit Margin = 12.69 %

Earning per share:

This ratio shows that how much amount per share does a common stock holder attains. Earning per share = Earning Available for Common Stock Holders No. Of Common Stock Shares 2006 2007: Earning per share = 3154583000 183737000 Earning per share = Rs. 17.17 / share 2005 - 2006: Earning per share = 2547326000

164650000 Earning per share = Rs.15.47 /share 2004 - 2005: Earning per share = 2319082000 1161350000 Earning per share = Rs. 14.37 /share It equals to the ratio of market price per share divided by earning per share.

RATIO ANALYSIS Fauji Fertilizer Company Ltd.


Types of Ratios Analysis:
Let us now have a detailed analysis of all the following four ratios for Fauji

Fertilizer Company Limited

Liquidity Ratios Leverage Ratios Activity Ratios Profitability Ratios

Liquidity Ratios:
Current Ratio: Current Ratio = Current Assets Current liabilities

2006 2007: Current Ratio = 10,811,435000 11,476,393000 Current Ratio = 0.942 2005 - 2006: Current Ratio = 9,764,587000 10,883,988000 Current Ratio = .897 2004 - 2005:

Current Ratio = 20,463,506000 18,707,783000 Current Ratio = 1.094 Current liabilities 2006 2007: Quick Ratio = 10, 811, 435000-642, 836000 11,476,393000 Quick Ratio = 0.89

2005 - 2006: Quick Ratio = 9, 764, 587000-952, 905000 10,883,988000 Quick Ratio = 0 .81 2004 - 2005: Quick Ratio = 20, 463, 506000- 1,583,429000 18,707,783000 Quick Ratio = 1.01

Leverage / Debt ratios:


Debt Equity Ratio: Debt Equity ratio = Long Term Debts Stockholders equity 2006 2007: Debt Equity ratio = 216,171,622 51,741,235 Debt Equity ratio = 108.33

2005 - 2006: Debt Equity ratio = 254,355,262 62,565,620 Debt Equity ratio = 4.0654 2004 - 2005: Debt Equity ratio = 272,265,545 53,055,841 Debt Equity ratio = 5.1316 Debt Ratio:

Debt Ratio = Total liabilities Total assets 2006 2007: Debt Ratio= 16511169000 29,241,214000 Debt Ratio= 0.57 2005 - 2006 Debt Ratio= 14473738000 27,430,281000

Debt Ratio= 0.53 2004 - 2005 Debt Ratio= 36392141000 48,010,511000 Debt Ratio= 0.76 Times Interest Earned (Coverage Ratio): Times Interest Earned = Profit before Interest and Taxes Interest expense 2006 2007:

Interest coverage Ratio = 8511360000 696,407000 Interest Coverage Ratio = 12.22 times 2005 - 2006: Interest coverage Ratio = 7486385000 501,241000 Interest Coverage Ratio = 14.94 times 2004 - 2005: Interest coverage Ratio = 6981075000

585,816

000

Interest Coverage Ratio = 11.92 times

Activity Ratios:
Inventory Turnover Ratio: Inventory Turnover ratio = Cost of Goods Sold Avg. Inventory 2006 2007:

Inventory Turnover Ratio = 18,311,525000 797870500 Inventory Turnover Ratio = 22.95 times 2005 - 2006: Inventory Turnover Ratio = 20,242,194000 126817000 Inventory Turnover Ratio = 16.1 times 2004 - 2005: Inventory Turnover Ratio = 25,987,200000

1,583,429000 Inventory Turnover Ratio = 16.41 times Inventory turnover ratio 2006 2007: Inventory turnover in days = 360 22.95 Inventory turnover in days = 15.7 days 2005 - 2006: Inventory turnover in days = 360

16.1 Inventory turnover in days = 22.36 days 2004 - 2005: Inventory turnover in days = 360 16.41 Inventory turnover in days = 21.93 days Net Fixed Assets Turnover Ratio: Net Fixed Asset Turnover Ratio = Sales Net Fixed assets

2006 2007: Fixed asset turnover ratio= 28,429,005000 18429779000 Fixed asset turnover ratio = 1.54 times 2005 - 2006: Fixed asset turnover ratio = 29,950,873000 17665694000 Fixed asset turnover ratio = 1.7 times 2004 - 2005:

Fixed asset turnover ratio = 39,757,510000 27547005000 Fixed asset turnover ratio = 1.44 times Total Asset Turnover: Total Asset Turnover Ratio = Sales Total assets 2006 2007: Total asset turnover ratio= 28,429,005000 29,241,214000

Total asset turnover ratio = .97 times 2005 - 2006: Total asset turnover ratio = 29,950,873000 27,430,281000 Total asset turnover ratio = 1.10 times 2004 - 2005: Total asset turnover ratio = 39,757,510000 48,010,511000 Total asset turnover ratio = 0.833 times

Receivables Turnover Ratio: Receivables Turnover Ratio = Net credit Sales Avg. Receivables 2006 2007: Receivables Turnover Ratio = 28,429,005000 1497076500 Receivables Turnover Ratio = 19 times 2005 - 2006: Receivables Turnover Ratio = 29,950,873000

1171132000 Receivables Turnover Ratio = 25.57 times 2004 - 2005: Receivables Turnover Ratio = 39,757,510000 890,874000 Receivables Turnover Ratio = 44.62 times Gross Profit Margin = Gross Profit Sales 2006 2007: Gross profit margin = 10,117,480000X 100

28,429,005000 Gross profit margin = 35.6 % 2005 - 2006: Gross profit margin = 9,708,679000 X 100 29,950,873000 Gross profit margin = 32.42 % 2004 - 2005: Gross profit margin = 13,770,310000 X 100 39,757,510000

Gross profit margin = 34.6 % dividends. Operating Profit Margin: Operating Profit Margin = EBIT/Operating Profit Sales 2006 2007: Operating Profit Margin = 8511360000X 100 28,429,005000 Operating Profit Margin = 29.93 %

2005 - 2006: Operating Profit Margin = 7486385000X 100 29,950,873000 Operating Profit Margin = 25 % 2004 - 2005: Operating Profit Margin = 6981075000X 100 39,757,510000 Operating Profit Margin = 17.6 %

Net Profit Margin: Net Profit Margin = Net Profit Sales 2006 2007: Net Profit Margin = 5,360,953000 X 100 28,429,005000 Net Profit Margin = 18.86 2005 - 2006: Net Profit Margin = 4,636,144000X 100

29,950,873000 Net Profit Margin = 15.48 % 2004 - 2005: Net Profit Margin = 6,395,259000X 100 39,757,510000 Net Profit Margin = 16.09 % Earning per share: Earning per share = Earning Available for Common Stock Holders No. Of Common Stock Shares

2006 2007: Earning per share = 5,360,953000 493,474000 Earning per share = Rs. 10.86/share 2005 - 2006: Earning per share = 4,636,144000 493,474000 Earning per share = Rs. 9.39/share 2004 - 2005:

Earning per share = 6,395,259000 493,474000 Earning per share = Rs. 12.96 /share Price earning ratio: Price Earning Ratio = Market price per share Earning per share 2006 2007: Price Earning Ratio = 118.75 10.86

Price Earning Ratio = Rs. 10.93 2005 - 2006: Price Earning Ratio = 105.55 9.39 Price Earning Ratio = Rs.11.24 2004 - 2005: Price Earning Ratio = 137 12.96