INTERNATIONAL ISLAMIC UNIVERSITY

Financial Accounting
FINAL PROJECT

COURSE Instructor: Rifaat sultana

SECTOR: CEMENT
GROUP MEMBERS:
MANAHIL KHAN-652/FMS/BSAF/S21
LAIBA ASHFAQ-
SHAZMEENA BAIG-
MANAHIL TARIQ-
AYESHA FAROOQ-
SHERBANO-
 
Contents:
• About us
•Introduction to cement industry
•Attock cement report
◦Introduction
◦financial analysis

•Bestway cement report

About us:
This is a group project on cement industry done by all
members of the group. There are 6 members in group
and each one is assigned to prepare a report on two
industries of cement in Pakistan.
Group members:
• Manahil Khan- 652/FMS/BSAF/S21
• Sherbano-641/FMS/BSAF/S21
• Ayesha Farooq-634/FMS/BSAF/S21
• Shazmeena beig-650/FMS/BSAF/S21
• Laiba Ashfaq-640/FMS/BSAF/S21
• Manahil Tariq -

Introduction to Cement Industry

c ement is the prime ingredient used in the construction industry.
Cement consumption has a direct correlation to economic growth and
improvement in the living standards of society. Historically, growth in
global cement trade has been lower than increase in world trade on account of
high freight cost and availability of raw material.
Pakistan has a well-developed cement industry with abundant raw material
availability in the country. The country ranks amongst the top 5 exporters and
14th largest cement producer in the world. However, per capita cement
consumption at 140kg is on the lower side as compared to most regional peers
and global average of 400kg. Lower per capita consumption in the country is
reflective of significant room for future growth.

Cement Industry’s contribution to the Economy

The cement industry contributes billions to Pakistan’s economy. In 2016, it
contributed approximately Rs. 20 billion to the national exchequer alone, over
Rs. 40 billion is added to country’s GDP annually.
The Karachi Stock Exchange lists 21 companies in the cement sector with the
net worth of these companies around Rs. 25 billion. Some of the companies
operate multiple plants in various cities. As per APCMA, there are currently 24
cement plants in Pakistan.
According to Pakistan stock exchange there are 23 industries registered.
In this report we will take a deeper look into 12 main industries of cement
sector.
Presented by:
Manahil khan-
652/FMS/BSAF/S2
1
1:

Attock Cement Pakistan Limited, branded as Falcon Cement, was

incorporated in Pakistan on October 14, 1981 as a Public Limited
Company. The company is a subsidiary of Pharaon Investment Group
Limited Holding S.A.L, Lebanon. Its main business activity is
manufacturing and sale of cement.
Founder: Ghaith Pharaon
Founded: 1981
Headquarters: Karachi
Parent organizations: Attock Oil Company, Pharaon Investment
Group Limited Holding S.A.L.
Key people :
•Laith Pharaon (chairman)
• Babar Bashir Nawaz (chief executive officer)
Products:
• OPC Ordinary Portland Cement
•SRC Suplhate Resistant Cement
•FBC Falcon Block Cement
Parent:
Pharaon Investment Group Limited Holding S.A
 Financial Analysis (2016-2020)

Ratio Analysis
Ratio analysis of Attock cement has been done from year 2016 to
2020. All the data is collected from annual reports of the company.
Interpretation:
Current ratio

years current assets current liabilities current ratio

2016 7196874 2740679 2.625945614

2017 3171362 5953512 0.532687597

2018 6728950 7898033 0.851977955

2019 7646946 8403569 0.909964088

2020 10059777 9336931 1.077417944

Generally, your current ratio shows the ability of your business to generate
cash to meet its short-term obligations. A decline in this ratio can be
attributable to an increase in short-term debt, a decrease in current assets, or
a combination of both. As we can see in above table that the company current
ratio drops from 2.6 to 0.9 from year 2019 to 2019 and then increases from 0.9
to 1.07 in year 2020.

Working capital management

working capital
management
years current assets current liabilities
 4456195
2016 7196874 2740679
-2782150
2017 3171362 5953512
-1169083
2018 6728950 7898033
-756623
2019 7646946 8403569
722846
2020 10059777 9336931

The working capital decreases in 2016 to 2019 and is temporarily negative, it

typically indicates that the company may have incurred a large cash outlay or a
substantial increase in its accounts payable as a result of a large purchase of
products and services from its vendors. It then again has a positive value in
2020. Positive working capital shows that your business has sufficient liquid
assets to pay off immediate debts.

Quick ratio:
current liabilities Quick assets Quick ratio
years
2740679 4969544 1.813252847
2016
5953512 227634 0.038235247
2017
7898033 548899 0.06949819
2018
8403569 583605 0.069447279
2019
9336931 1581577 0.169389385
2020

There is decline in quick ratio in year 2019 to 2018 and then it again started
going upwards which indicates that Attock Company suffered from financial
crisis for a short period of time.

Debt ratio:
years Total total Assets Debt ratio
 liabilities

3979557 14426400 0.275852396

2016
8761745 20709380 0.42308099
2017
11533419 26406054 0.436771772
2018
11217145 27316604 0.410634682
2019
11060412 32081619 0.344758536
2020

In general, many investors look for a company to have a debt ratio between

0.3 and 0.6. From a pure risk perspective, debt ratios of 0.4 or lower are
considered better, while a debt ratio of 0.6 or higher makes it more difficult to
borrow money.
Times interest earned ratio:
times interest earned
operating income interest expense ratio
years
4257015 78275 54.38537209
2016
4472290 88489 50.54063217
2017
3380551 44766 75.51603896
2018
3026980 38019 79.61755964
2019
3512536 17149 204.8245379
2020

Times interest earned ratio measures a company's ability to continue to service

its debt. It is an indicator to tell if a company is running into financial trouble. A
high ratio means that a company is able to meet its interest obligations
because earnings are significantly greater than annual interest obligations.

Inventory management ratio:

years COGS Average inventory inventory management ratio

2016 8331840 7196874 1.157702636

 2017 8842960 3171362 2.788379252
2018 11697583 3649066 3.205637552
2019 15978032 3395522 4.705618753
2020 18107543 4096871 4.419847

Inventory management ratio is increasing gradually over the years The higher
the inventory turnover, the better, since high inventory turnover typically
means a company is selling goods quickly, and there is considerable demand
for their products

Accounts receivable turnover ratio:

net sales Avg receivable Accounts receivable turnover
13918340 114864 121.1723429
14735172 105787 139.2909526
16495659 201370 81.91716244
20780934 235807 88.12687494
23948118 43003 556.8941237

For accounts receivable turnover a higher number is better. It means that your
customers are paying on time and your company is good at collecting debts.
Attock Company is however seen with increase of accounts receivable turnover
ratio from year 2016 to 2017 after which the ratio declines to 88.12 in year
2019 and then a sudden increase of ratio is shown in 2020.

Profitability ratio
Return on sales:
net sales Net income Return on sales
years
2016 13918340 2890023 0.207641357
 14735172 3034057 0.205905774
2017
16495659 4399784 0.266723748
2018
20780934 2073201 0.099764573
2019
23948118 2567101 0.107194296
2020

Return on sales are almost constant for first three years and then are slightly
decreased which signals a very small impending financial troubles.

Return on Assets:
Net income total assets Return on total Assets
years
2890023 14426400 0.200328772
2016
3034057 20709380 0.146506414
2017
4399784 26406054 0.166620276
2018
2073201 27316604 0.075895269
2019
2567101 32081619 0.080017813
2020
An ROA that rises over time indicates the company is doing a good job of
increasing its profits with each investment dollar it spends. A falling ROA
indicates the company might have over-invested in assets that have failed to
produce revenue growth, a sign the company may be trouble. Attock Company
has relative small changes in ROA. There is no drastic change so we can say
that the company is doing just fine.

EPS ratio:
preferred
Net income dividend no of shares EPS
years
2890023 12016831 114501.7036 25.24
2016
2017 3034057 1430045 114535.9381 26.49
 4399784 1544647 137407.3704 32.02
2018
2073201 914996 137389.0656 15.09
2019
2567101 916180 318498.8834 8.06
2020

EPS indicates how much money a company makes for each share of its
stock and is a widely used metric for estimating corporate value. A higher EPS
indicates greater value because investors will pay more for a company's shares
if they think the company has higher profits relative to its share price. Attock
Company has increased EPS from 25.24 to 32.3 in year 2016-18, and then the
EPS is declined to 8.06 in year 2020.

Price to earning ratio:

Market price per
EPS share Price to earnings ratio
years
25.24 239 9.469096672
2016
26.49 303 11.4382786
2017
32.02 135 4.216114928
2018
15.09 71 4.705102717
2019
8.06 125 15.50868486
2020

Price to earnings ratio is increased from 9.4 to 11.4 in year 2017 and then it is
decreased to 4.7 in year 2019 and in year 2020 it is again increased to 15.5.The
P/E shows what the market is willing to pay today for a stock based on its past
or future earnings. A high P/E could mean that a stock's price is high relative to
earnings and possibly overvalued. Conversely, a low P/E might indicate that the
current stock price is low relative to earnings. 

Book value per share

Book value per
no of shares preferred equity Total equity share
years
 114501.7036 1145225 10446843 10442051.26
2016
114535.9381 1145225 11947635 11943855.38
2017
137407.3704 11455225 14872635 14787781.48
2018
137389.0656 1347279 16099459 16080483.24
2019
318498.8834 1374270 21021207 21010212.84
2020

The book value per share is increased gradually in the years 2016 to 2020 the
higher the book value, the more the share is worth.

Vertical Analysis and its interpretation

2016 2017 2018 2019 2020

Income
statement
analysis values % values % values % values % values %

139183 100.00 147351 1649565 100.00 2078093 100.00 3712872 100.00

Revenue 4 % 7 100 9 % 4 % 6 %
1169758 1597803 1810754
cost of sales 833184 59.86% 884296 60.01% 3 70.91% 2 76.89% 3 48.77%
- -
gross profit 558650 40.14% 884296 60.01% 4798076 29.09% 4802902 23.11% 5840575 15.73%
distribution
costs 95475 6.86% 90353 6.13% 782218 4.74% 1414820 6.81% 1840494 4.96%
Administrati
ve expenses 40179 2.89% 41938 2.85% 533111 3.23% 505149 2.43% 542149 1.46%
other
expenses 31405 2.26% 33365 2.26% 163000 0.99% 149756 0.72% 92274 0.25%
-
net income 104995 -
before tax 391591 28.13% 2 71.25% 3129379 18.97% 2403201 11.56% 2992101 8.06%
income tax
expense 134568 9.67% 140986 9.57% 1270405 7.70% 330000 1.59% 425000 1.14%
net income 289002 20.76% 303406 20.59% 4399784 26.67% 2073201 9.98% 2567101 6.91%

Balance
sheet
Analysis
Assets
total current 1005977
assets 719687 49.89% 317136 15.31% 6728950 25.48% 7646946 27.99% 7 31.36%
total non-
current 175380 1967710 1966965 2202184
assets 722953 50.11% 2 84.69% 4 74.52% 8 72.01% 2 68.64%
144264 100.00 207093 100.00 2640605 100.00 2731660 100.00 3208161 100.00
Total Assets 0 % 8 % 4 % 4 % 9 %

104468 119476 1487263 1609945 2102127

Total equity 4 72.41% 4 57.69% 5 56.32% 9 58.94% 0 65.52%
non-current
liabilities 123887 31.13% 280823 32.05% 3835386 33.25% 2813576 25.08% 1723481 15.58%
current
liabilities 274068 68.87% 595351 67.95% 7698003 66.75% 8403569 74.92% 9336931 84.42%
total 1153341 1121714 1106041
liabilities 397956 27.59% 876174 42.31% 9 43.68% 5 41.06% 2 34.48%

total equity
and 144264 100.00 207093 100.00 2640605 100.00 2731660 100.00 3208161 100.00
liabilities 0 % 8 % 4 % 4 % 9 %
Interpretation
The above vertical analysis of income statement is done by taking revenue as a
reference point and all other particulars are divided by revenue of certain year
to calculate ratios. As we can see that in year 2016 revenue is 100% as it is a
reference point. COGS is calculated by dividing value of COGS by revenue
which is 59.86%. Gross profit is 40.14% calculated by dividing its value by
revenue and so on.The vertical analysis of balance sheet is done by taking total
assets as reference point and then the % of current and noncurrent assets are
calculated with this reference point.Similarly, the total equity and total
liabilities are calculated by using total equity and liabilities as a reference point.
 Horizontal analysis and its interpretation

(base
year) years
Income statement
analysis 2016 2017 2018 2019 2020
values values % values % values % values %
147351
Revenue 1391834 7 5.87% 16495659 1085.17% 20780934 1393.06% 23948118 1620.62%
cost of sales 833184 884296 6.13% 11697583 1303.96% 15978032 1817.71% 18107543 2073.29%
-
gross profit 558650 -884296 258.29% 4798076 758.87% 4802902 759.73% 5840575 945.48%
distribution costs 95475 90353 -5.36% 782218 719.29% 1414820 1381.87% 1840494 1827.72%
Administrative
expenses 40179 41938 4.38% 533111 1226.84% 505149 1157.25% 542149 1249.33%
other expenses 31405 33365 6.24% 163000 419.03% 149756 376.85% 92274 193.82%
-
net income 104995 -
berfore tax 391591 2 368.12% 3129379 699.14% 2403201 513.70% 2992101 664.09%
income tax
expense 134568 140986 4.77% 1270405 844.06% 330000 145.23% 425000 215.83%
net income 289002 303406 4.98% 4399784 1422.41% 2073201 617.37% 2567101 788.26%

Balance sheet
Analysis
Assets
total current
assets 719687 317136 -55.93% 6728950 834.98% 7646946 962.54% 10059777 1297.80%
total non current 175380
assets 722953 2 142.59% 19677104 2621.77% 19669658 2620.74% 22021842 2946.10%
207093
Total Assets 1442640 8 43.55% 26406054 1730.40% 27316604 1793.51% 32081619 2123.81%

119476
Total equity 1044684 4 14.37% 14872635 1323.65% 16099459 1441.08% 21021270 1912.21%
non current
liabilities 123887 280823 126.68% 3835386 2995.87% 2813576 2171.08% 1723481 1291.17%
current liabilities 274068 595351 117.23% 7698003 2708.79% 8403569 2966.24% 9336931 3306.79%
total liabilities 397956 876174 120.17% 11533419 2798.16% 11217145 2718.69% 11060412 2679.31%

total equity and 1442640 207093 43.55% 26406054 1730.40% 27316604 1793.51% 32081619 2123.81%
libilities 8

Interpretation:
In this horizontal analysis we have taken 2016 as a base year. All the analysis is
done by applying the
Horizontal trend analysis formula = (value of current year-value of base
year)/base year.
The trend that we get from the analysis is shown in the graphs below:
REVENUE TREND:

As the trend shows that the revenue of the company is increasing from year
2017 to 2020.

NET INCOME:
The net income shows the mixed trend as it is increased from 4.98 to 1422.41
from year 2017 to 2018 and from year 2018 to 2019 it started decreasing from
1422 to 617 and in 2020 it was again increased to 788.26.
TOTAL ASSETS:

The total assets of Attock company ltd are increasing in the years 2017 to
2020.the increase from year 2017 to 2018 is the highest and after 2018 there
are slight increasing in assets of the company.

Equity and liabilities:

The equity and liabilities of the Attock company are showing an increased
trend from year 2017 to 2020.
2)

Bestway cement ltd