Introduction to

Business Finance
SEMESTER
PROJECT

 GROUP MEMBERS
ABUBAKAR SIDDUQE
SAAD ALI
MOHALIL MEHMOOD
OBAID UR REHMAN
ABDUL AHAD ABBASI

Submitted To: Ma’am Nayyab Javed

Table of Contents
INTRODUCTION...........................................................................................................................................
Ratio Analysis...........................................................................................................................................
Liquidity ratio:......................................................................................................................................
Leverage Ratio.....................................................................................................................................
Coverage ratio:....................................................................................................................................
Activity ratio:.......................................................................................................................................
Profitability..........................................................................................................................................
Ratios.......................................................................................................................................................
Risk and Return.......................................................................................................................................
Graphs.....................................................................................................................................................
Conclusion.............................................................................................................................................
INTRODUCTION
Incorporated in 1992, Fauji Cement Company Limited has been the benchmark setter in the
cement industry for the last thirty-one years in Pakistan, this claim is supported by our
superior quality product. Fauji Cement Company Limited (FCCL) is an ISO 9001:2008, ISO
14001:2004, and OHSAS 18001:2007 2018-certified company with a total annual production
capacity of 8.4 million tons.
After completing the acquisition of Askari Cement Company Limited (ACL) in 2021, FCCL
is strategically placed near hydroelectric power projects and has qualified for mega
construction projects in the country. Currently, there are 3 manufacturing locations namely
Jhang Bahtar,
Nizampur and Wah. The company has recently made some substantial developments such as
the commissioning of Line 3 in Nizampur which exemplifies our ability to provide quality
and sustained yield. To bolster FCCL’s efforts to reduce suspended dust around its
production areas, all manufacturing plants use cutting-edge dust sequestration technologies
such as Bag House Filters, Electrostatic Precipitators, Bag Filters, and CEMS.

A Greenfield project is currently under construction in D.G Khan which is expected to come
to be completed by the second quarter of 2024. Cementing a renewed path of eco-friendly
industrial production on an increasingly larger scale and after the commissioning of the D.G
Khan manufacturing facility, Fauji Cement Company Limited will further solidify its
leadership as the second largest cement manufacturer in the northern region and third largest
cement producer nationally.

Sustainable development and reduction of carbon emissions in our operations are one of
FCCL’s top priorities. An extensive CSR footprint in communities that we operate in sets
FCCL apart from traditional companies. FCCL remains committed to producing top-quality
cement in the country while contributing towards national growth. Fauji Cement Company
pays high attention to sustainability and community welfare and it has been one of the main
objectives during the company’s operations trailing 31 years of excellence.
Fauji Cement Company Limited (FCCL) is a firm that maintains a perfect balance between
profitability and sustainability. It plays all positive possible efforts for our stakeholder’s
rights and comfort. In the continuous efforts of keeping the manufacturing process
environment-friendly and reduce carbon emissions, FCCL uses a mix of Solar, Waste Heat
Recovery, and Alternative fuels to satisfy over 40% of its energy, reducing carbon emissions
in our operations by over 140,680 tons.

-: Financial Statement Analysis: -

Ratio Analysis: To find out the Condition of an organization.

Ratio: To analyze its current situation. (Past debt)

Competitions & Competition. / Comparison
What is an industry average?
Liquidity ratio:
Measures a firm's ability to meet short-term obligations.
Higher Ratio → Good Thing (Can meet- more debts with current assets)

Inventory & Prepaid Assets.

least liquid Assets (Liquidity)
Current Ratio:
Current Assets/ Current Liabilities
Quick ratio
Current Assets – Inventories/ Current Liabilities.

Leverage Ratio
 These ratios show the extent to which the firm is financed by debt.
 Company Finance itself through two methods
 Common Equity
 Debt
 Balance should be kept in mind

Equity debt:
 This ratio should be lower (debt should be lower)
 Total debt/Shareholder's equity.

Debt to Total Assets:

Total debt/Total Assets (should be lower)

Coverage ratio:
These ratios relate the financial charges of a firm to its ability to cover them.
 3.1 Interest Coverage / Time Interest Earn (TIE): (SHOULD BE HIGHER)
 EBIT/ => Earnings before interest & Operating taxes (should be higher)
EBIT/ Interest expense.
Activity ratio:
 Measure how efficiently utilizing the Assets (any firm)
 Linked with Assets.

Receivable Turnover: (RT) (Credit.)

 Short-term Assets.
Annual net credit sales/ Receivables.
3.4 Receivables Turnover in days: (Average Collection period) (RTD)
365/RT

Inventory turnover (IT):

Cost of goods sold/Inventory.

Inventory Turnover in days: (ITD)

365/Inventory turnover (IT)
3.7 Total Asset Turnover / Capital Turnover (IAT)
 Simple Sales-Cash Sales = Net Sales
Net Sales/Total Assets

Profitability
Ratios that relate profits to sales and investment.

Net profit Margins

Net profit after taxes/Net Sales:
 EBIT
 Interest/Earning before taxes.
 Taxes/Earnings after taxes / Net profit /Net Income

Return on Investment / Asset: (ROI) / (ROA)

Net profit after Taxes/Total Asset
ROI= Net profit margin (NPM) x Total asset turnover (TAT)

Return on equity: (ROE)

Net profit after taxes/ Shareholder's equity.
ROE= NPM x TAT x Equity Multiplier
 Ratios   2022 2021 2020 2019 2018
1 Liquidity Ratios            

S# Ratios 2022 2021 2020 2019 2018

Liquidity
1
Ratios
Current Assets/ Current 1.
2 Current ratio
Liabilities 1.06 2.02 1.35 1.51 49
Current Assets-
1.
3 Quick ratio Inventories /Current
0.92 1.83 1.12 1.26 20
Liabilities

               
1 Leverage ratios            
Total debt/ Shareholder's
2 Debt to Equity 0.38 0.04 0.04 0.03 0.05
Equity
Debt to Total 0.
3 Total debt/ Total assets
Assets 0.49 1.64 0.37 0.28 29

               
1 Coverage ratio            
Interest coverage
2 EBTI/ Interest expense 0.26 42 29
Ratio 11 48

               
3 Activity ratio            
Receivable Annual Net Credit Sales / 0.
4
Turnover (RT) Receivables 0.31 2.73 0.78 3.62 20
Receivable
5 No of days / RT 13 19 19 19 20
Turnover in days
Inventory Turnover Cost of goods Sold / 1 1 1.
6
(IT) Inventory 10.78 5.31 3.96 1.59 12
Inventory Turnover
7 No of days / IT 22 24 23 26 26
in days
Total Assets
8 Net Sales / Total Assets 0.06 0.71 0.59 0.72 0.73
turnover
               
Profitability
1            
ratios
Net profit after taxes /
2 Net Profit Margin 13% 14% 0% 14% 16%
Net Sales
Return on Net Profit after Taxes /
3 6% 10% 0% 10% 12%
Investment Total Assets
Net Profit after Taxes/
4 Return on Equity 12% 0.30%
Shareholder's Equity 14.91% 13.51% 16.74%
 Risk and Return
SUMMARY OUTPUT
Regression Statistics
0.05754346
Multiple R 6
0.00331125
R Square 1
Adjusted R Square 0.00250552
Standard Error 2.42676213
Observations 1239

ANOVA
  df SS MS F Significance F
Regression 1 24.20229794 24.20229794 4.109624907 0.042853908
Residual 1237 7284.908777 5.889174435
Total 1238 7309.111075      

  Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lo

-
0.00203663
Intercept 1 0.068943219 -0.0295407 0.976438124 -0.137295201 0.133221939 -0.
0.00031147
X Variable 1 9 0.000153648 2.027220981 0.042853908 1.0039E-05 0.000612919

Graphs

Quick ratio
2.5 Current Ratio
2
2021; 2.02 2021; Quick ratio;
2 1.8 1.83
1.6
1.5 Debt to2019;
Equity
1.51 2018; 1.49
Debt to Total Assets
1.4
2020; 1.35
1.8 2021; Debt to Total
Total
2019; Quick Assets
ratio; turnover
2018; Quick ratio;
1.2 1.26
2020; Quick ratio;
1 2022; 1.06 Inventory
Interest coverage Turnover (IT)
Ratio Assets ; 1.64
2022 1.12
1.2 Quick ratio
1
2018; Debt 2018
2019 to Equity;
1.6 2022; Quick ratio;
0.92
Receivable Turnover (RT)
Total Assets turnover
0.5 Inventory Inventory
0.05; 9%Turnover
Turnover 2022 0.8 2018 2%
2019; Debt to(IT) 2022 1.4Total Assets 2018 2021
(IT) 0.03; 6% Inventory 0.6turnover Total Assets
Equity; 3% 8%Turnover 1%
4%
2018 26% turnover
0 2020;
22%Debt to (IT) 1.2
0.4 2019 25%
Equity;
2020 2022 0.04; 7%
2021 2020 25%2019 2018 23% 2022
Inventory 2022 0.2 Years
1 Debt to Total Assets 2021
Turnover 2022
2021 0 2022
(IT)
2021; Debt to 2021 2020
33% 0.04; 7% 2020 0.8 2022 2021 2020 2019 2018 2021
Equity; 2020 2019
2019 2020
Current Ratio 2019 0.6 2018
2018 Years 2019
2018 2020; Debt to Total 52%
20212022; Debt to 2020
2022; Debt to Total Assets 2018;
; 0.37
2019; Debt to Debt
Totalto Total 2018
37% 0.4 5%
Assets ; 0.49
Equity; 0.38; 70% Assets ;Assets
0.28 ; 0.29
0.2
2019 2020
2021 2021 Total Assets
2019 Inventory 0 Total Assets
32% 17%
turnover turnover
Turnover 2022 2021 2020 2019 2018
2022 2021 2020
2020 2019 2018 26% 2022 21%
(IT)
0% 2%
36%
 Profitability Ratios
16%
14.91%
14% 14% 14%
13.51%
12%

10% 10% 10%

8%

6%

4%

2%

0% 0.30%
0%
12/31/2021 12/31/2020 12/31/2019

Net Profit Margin Return on Investment Return on Equity

Risk and return

SUMMARY
OUTPUT

Regression Statistics
0.05754346
Multiple R 6
0.00331125
R Square 1
Adjusted R
Square 0.00250552
Standard Error 2.42676213
Observations 1239

ANOVA
Significance
  df SS MS F F
 24.2022979 4.10962490 0.04285390
Regression 1 24.20229794 4 7 8
5.88917443
Residual 1237 7284.908777 5
Total 1238 7309.111075      

Standard Lo
  Coefficients Error t Stat P-value Lower 95% Upper 95% 9
- -
0.00203663 0.97643812 0.13729520 0.13322193 0.13
Intercept 1 0.068943219 -0.0295407 4 1 9
0.00031147 2.02722098 0.04285390 0.00061291
X Variable 1 9 0.000153648 1 8 1.0039E-05 9 1.0
CAPM
 Rs=rf+(rm-rf)B
 CAPM= 0.15599+0.000311479002083584*(0.008773-
0.15599)=0.1559
WACC
rs=
WACC 0.155944145
rd= Total Interest Expense/Total Debt
2022 0.017270159

2021 0.0014178
2020 0.024410662
2019 0.013234539
2018 0.012461763

Rd (1-T)
2022 0.012261813
2021 0.001006651
2020 0.01733157
2019 0.009396523
2018 0.008847852
 Capital Budgeting
Timeline
0 1 2 3 4 5
-22624413 321930 5557926 1013426 5739097 7567564

Capital Budgeting
PAYBACK
PERIOD

comulativ
e cash
years cash flow flow
0 -22624413
1 3219300 -1.9E+07
2 5557926 -1.4E+07
Column Column
3 1013426 -1.3E+07 1 2
4 5739097 -7094664 year 4
5 7567564 472900 months 0

Column
Column1 2
NPV 0.15599
PI 1

Conclusion
After analyzing the financial reports of Fauji cement company limited, we came to the
point that the Fauji Cement Industry as per its financial analysis, is one of the best companies for
investors. As its profitability analysis shows that the company is exceeding towards betterment and
can provide good opportunities for making a profit. The share price and value of the company had
decreased as was highest in 2017 and touched the lowest in 2019. But in recent years quite
Constance betterment have been seen. Overall the company is very good and is performing quite
consistently over the years.