Chapter-4:

Analysis
Formula-
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
Current Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Year 2020 2021

Current assets 7197429207 7940480421
Current liabilities 11845614367 14330889022
Current ratio 0.61 0.55

Interpretation-
Current Ratio of Premier Cement Mills Limited was bellow,1 from 2020 to 2021. It is
slightly lower than previous year. But it's not good enough. It indicates that the
company can meet up its short-term obligations rarely in time. So, the liquidity
position of the company is not good enough. . But it may face liquidity risk in future.

Formula-
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Quick Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Year 2020 2021

Current assets 7197429207 7940480421
Inventory 968898820 1400664085
Current liabilities 11845614367 14330889022
Quick Ratio 0.53 0.43

Interpretation-
Quick Ratio of Premier Cement Mills Limited was bellow,1 from 2020 to 2021. It is
slightly lower than previous year.This is bad for the company because it indicates its
current liabilities were always higher than difference between current assets and
inventory. So, the liquidity position of the company is poor. It cannot meet its
short-term obligation in time. It will face liquidity risk in future.
 Formula-
𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
Inventory Turnover = 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

Year 2020 2021

Cost of goods sold 8967636055 10885694417
Inventory 968898820 1400664085
Inventory Turnover 9.26 7.77

Interpretation-
Inventory Turnover of Premier Cement Mills Limited was bellow,1 from 2020 to
2021.It is lower then previous year. It initiates that the company can manage its
inventories more efficiently in 2021 than in the company did in the previous years.

Formula-
𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
Average Collection Period =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦

Year 2020 2021

Accounts receivable 2492404124 2485703023
Average sales per day 28659371.75 35097093.92
Average collection period 86.97 days 70.82days

Interpretation-
Average Collection Period of Premier Cement Mills Limited is higher than previous
year.Which is good but not good enough. It indicates that the company takes much
more time to collect it’s accounts receivable in recent year which is not good for the
firm.
 Formula-
𝑆𝑎𝑙𝑒𝑠
Total Assets Turnover = 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Year 2020 2021

Sales 10460670694 12810439280
Total Assets 21556158748 26645428568
Total Assets Turnover 0.49 0.48

Interpretation-
Total Assets Turnover of Premier Cement Mills Limited is slightly lower than
previous year. In 2021, it turned into 0.48. The amount is not good enough. It
indicates that the company can utilize its total assets to generate sales but the amount
is not that much to be fluently efficiently to generate sales.

Formula-
𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt Ratio = 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Year 2020 2021

Total Liabilities 16294698000 18209867175
Total Assets 21556158748 26645428568
Debt Ratio 75% 68.%

Interpretation-
Debt Ratio of Premier Cement Mills Limited is slightly lower than previous year.
which is a good sign for the company. It indicates that the firm may repay its financial
obligations in time. It may not face any financial risk in future.
 Formula-
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥𝑒𝑠
Times Interest Earned Ratio = 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡

Year 2020 2021

Earnings Before Interest and 1037271135 1400948233
Taxes
Interest 688697437 616215149
Time Interest Earned Ratio 1.51 2.27

Interpretation-
Time Interest Earned Ratio of Premier Cement Mills Limited is slightly higher than
previous year It indicates that the company's operating profit is 2.27 times more than
its interest which is not bad. So, it may repay its financial obligations in time. It may
not face any financial risk in future.

Formula-
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡𝑠
Gross Profit Margin = 𝑆𝑎𝑙𝑒𝑠

Year 2020 2021

Gross Profits 1503034639 1924744863
Sales 10460670694 12810439280
Gross Profit Margin 14% 15%

Interpretation-
Gross Profit Margin of Premier Cement Mills Limited is slightly higher than previous
year. It is good for the company. It indicates that the company can manage its costs of
goods sold or increased sales efficiently.
 Formula-
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡
Operating Profit Margin = 𝑆𝑎𝑙𝑒𝑠

Year 2020 2021

Operating Profits 1037271135 1400948233
Sales 10460670694 12810439280
Operating Profit Margin 9% 10%

Interpretation-
Operating Profit Margin of Premier Cement Mills Limited is slightly higher than
previous year. It manage its operating expense more efficiently or it indicates that the
company can manage its operating costs properly.

Formula-
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠
Net Profit Margin = 𝑆𝑎𝑙𝑒𝑠

Year 2020 2021

Earnings available for common 271242268 3279550646
stockholders
Sales 10460670694 1281043928
Net profit Margin 2.59% 2.56%

Interpretation-
Net Profit Margin of Premier Cement Mills Limited is lower than previous year. Its
manage its operating expense and financial expense more efficiently the profit margin
of the company is good enough to meet up the financial obligations.
 Formula-
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠
Earnings per Share = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Year 2020 2021

Earnings available for common 271242268 3279550646
stockholders
Number of Shares of common stock 106369516.9 530671625.6
Outstanding
Earnings Per Share 2.55 6.18

Interpretation-
Earnings Per Share of Premier Cement Mills Limited is significantly higher than
previous year.. In 2021, earnings per share was the highest among the previous years.
It indicates that the profitability position of the company is good for its common
stockholders.

Formula-
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠
Return on Total Assets (ROA) = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Year 2020 2021

Earnings available for 271242268 3279550646
common stockholders
Total Assets 21556158748 26645428568
Return on Total Assets 1.26% 1.23%

Interpretation-
Return On Total Assets of Premier Cement Mills Limited is lower than previous
year.It indicates that the company can utilize its total assets to generate income
efficiently.
 Formula-
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠
Return on Equity (ROE) = 𝐶𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑒𝑞𝑢𝑖𝑡𝑦

Year 2020 2021

Earnings available for common 271242268 3279550646
stockholders
Common Stock Equity 8417731316 524513582
Return on Equity 3.22% 6.25%

Interpretation-
Return on Equity of Premier Cement Mills Limited is significantly higher than
previous year. In 2021, it was at its best. It indicates that the company can utilize its
common stock to generate Income efficiently.
Summary :-

The liquidity position of Premier Cement Mills Limited Company is not that good. It
cannot meet up its short-term obligations in time. It may face liquidity risk in future.

Premier Cement Mills Limited Company’s performance is not that good in terms of
Activity Ratio. Also because of excessive Inventory turnover, there is a possibility of
stock out. Excessive lower average collection period may further cause reduction in
sales in future. But it total assets efficiently to generate sales.

The debt ratio of Premier Cement Mills Limited Company is good. Company’s debt
ratio has been moving downward, which indicates that the company can meet up its
financial obligations in time. Times Interest Earned Ratio has rather been increasing
comparatively, it indicates that the company can may meet up its financial obligations
in time.

The profitability position of Premier Cement Mills Limited Company’s is good. It

indicates that the company can manage its cost of goods sold, operating expenses,
overall cost, total assets, and common stock equity efficiently to increase its sales.