COMSATS INSTITUTE OF INFORMATION TECHNOLOGY ISLAMABAD

Internship Report

M uham ad U an Feroz m sm

Muhammad Usman Feroz Sp08-BBA-046

Dedicated to my loving
Parents, Brother and Sisters

All Right Reserved Copyrights Protected, Usman Feroz, September, 2011

ii

Acknowledgement
I am very thankful to Almighty ALLAH who makes me competent for this task, gives me abilities to do work and to perform well. I am very grateful to honorable NTC relevant authorities who allowed me for internship at such wonderful working environment, where I learned a lot.

I am grateful to Mr. Nauman Khalid (Director Budget); I worked under his kind control and guidance. I am also grateful to Mr. Imran Mushtaq (AD Budget), Mr. Muhammad Ayaz (Accountant), Mr. Ghulam Muhammad (Assistant Accountant), who instructs me kindly and generously.

I am thankful to all the persons and staff members for their support to me during my internship program and also my fellow internee Tahir.

May Allah bless them with success!

Muhammad Usman Feroz

Executive Summary
This report is relevant to practical exposure of my internship duration, that I have done with NTC (National Telecommunication Corporation). The main aim of internship program is to get a command on theoretical knowledge with the help of practical work. After successful completion of my internship program I am familiar with techniques of practical knowledge and work. During my internship program, I worked in Budget allotment, allocation and noting sections. In this report you will find the brief history of the organization right form its establishment to current position. The processes, policies and procedures of the company are also discussed in detail that I have studied and learned during my internship program. The main objective of formation of NTC was to have an independent infrastructure of all other operators that can be used for the purpose of government communication. This report is the comprehensive study that the organization has been done and the practical, management and tactical characteristics have been evaluated to examine the current position of the organization. Along with it, the background analysis, the business process analysis and the internal and external environment of the organization have been discussed Analyses of the various sections especially Budget department, within the department and Financial Analysis of organizations statements are also carried out. In this report, I have also included my observations about the employees satisfaction, motivation and the working environment. In the end recommendations for the improvement have been also made wherever required.

Table of contents

INTRODUCTION OF THE ORGANIZATION

o o o o o Business Sector..04 Overview of the Organization..05 Organization Chart...06 Product Line..07 Introduction of Departments...09

INTERNSHIP LEARNING AND WORKING

o o

Internship Program..12 Training Program.13

RATIO ANALYSIS
o o o o Liquidity Ratios.16 Leverage Ratios.....19 Profitability Ratios....22 Activity Ratio.29

CONCLUSION
o o o Future prospective33 Conclusion.............34 Recommendations.....35

RESOURCES AND ANNEXES

o Resources for data collection...36

Business Sector
In current scenario the organization falls in Telecommunication sector. The main area in which the organization deals includes voice, video, and Internet communications services. Thus the services are restricted to only to its designated customers, which include Federal and Provincial Governments, their departments, autonomous organizations and defense services throughout the country. The business sector can be divided into four sectors. These sectors include wired, wireless, satellite and other telecommunications establishments. The largest sector of the industry continues to be made up of wired telecommunication carriers. Establishment in this sector mainly provides telecommunications services such as wired landline connections, telephone, digital subscriber line (DSL) Internet and internet services. This is also includes own and maintain networks, share networks with other organizations or lease network capacity from other companies. Telecom solutions will remove bandwidth as an obstacle to growth without major capital expenditures or maintenance obligations. Wireless telecommunications carriers provide telephone, Internet, data, and other services to customers through the transmission of signals over networks of radio towers. The signals are transmitted through an antenna directly to customers, who use devices, such as cell phones and mobile computers, to receive, interpret, and send information. A large component of this industry segment consists of companies that provide cellular phone service, which has grown rapidly over the past decade. Another component includes establishments that deliver mobile Internet services to individuals with Internet-enabled cellular phones and computers. Its the only service that allows freedom from all sorts of

telephonic hassle .This unique and innovative service is the beginning of a new era in connecting people. A leased circuit is a dedicated link between two fixed locations for exclusive use of the customer. Other sectors in the telecommunications industry include telecommunications resellers, as well as operators of other communication services ranging from stations to radio networks used other companies.

Overview of the Organization

Brief History of NTC National Telecommunication Corporation was Established Pakistan Telecommunication (Reorganization) Act 1996 to provide the telecommunication services to government department formerly carry out by the Pakistan Telecommunication (PTC). The business was transferred to the corporation on 1st January 1996, under Pakistan Telecommunication act 1996 at which date the corporation took over the properties, rights, assets, obligations, of PTC as specified in vesting order issued by Ministry of Communication, Government of Pakistan vide gazette notification 1209(1)/95, dated 31st December, 1995 and commenced the business. National Telecommunication Corporation performs its dealings and functions under the Ministry of Information Technology and Telecommunication. National Telecommunication Corporation shall be managed by a Management Board consisting of a Chairman and two other members to be appointed by the Federal Government. National Telecommunication Corporation Head Quarter is located in F-5/1, Islamabad. It has many regions, which are expanded in almost all-important parts of the country.

Product Line
Basic purpose to establish the National Telecommunication Corporation is to provide the telecommunication services to the government of Pakistan. NTC Making committed efforts to provide following up to date communication solutions using third generation IP Voice & Data Networking. The main products that are offered by the national telecommunication are as below: Telephone: Basic Telephony Calling Card Integrated Service (ISDN) Basic Rate Interface (BRI). Primary Rate Interface (PRI). Supplementary Services Universal Access Number (UAN) Multi-Services Data Network: Web Hosting facility Electronic mail platform Dialup Internet Access, DDP, ISDN Virtual Private Networking Video Conferencing facility Broad Band Internet Access Radio/Wireless Networking Solution Lease Line Services Customized Data Solutions Transmission Services: Dark Fiber Media (Junction) Co-Location: Space, Dishes/Antennas, Power Supply Servers The brief introduction of, some of the above mentioned products are given below: Telephonic Services: NTC has provided more than 105,000 working connections of telephone to its government subscribers throughout the country. To meet the requirements of its subscribers NTC is operating following switching and transmission media services with various new installations in progress.

 39 main switching units. 69 remote digital line units. Microwave links as its long haul media. Following value added services are also planned for the users: Caller line identification. Abbreviated dialing Switched Hotline Three Parties audio Conferencing Call waiting. Call transfer. NTC Power Platform Hosting Solutions meet specific hosting requirements by simplifying the challenges of any configuration. Our Hosting and Access Solutions provide the service, flexibility, reliability and responsiveness need to satisfy all clients requirements, business and technical. NTC reliable platform gives access to database development tools such as Active Server Pages (ASP), MS Access, Oracle Open Database Connectivity (ODBC) support and helps clients to get the most from latest in Web-authoring excellence. Space (Open, Covered), Dishes/Antennas on NTC Towers and AC/DC Power Supply: NTC has its country wide Network of Microwave stations, exchanges and offices. Now NTC proffer the facility of co-location (Space, Dishes/Antennas on NTC towers, Power Supply) to Licensed Telecom Operators to provide the facility for rapid network expansion/ Growth. Servers: NTC has established its core setup at three prime locations. More over portals from various government, semi-government and private companies are also co-located at NTC multiple data network nodes.

Web Hosting:

Competitors

The basic purpose of the establishment of National Telecommunication Corporation is to provide telecommunication services to the government of Pakistan. PTA has granted license to National Telecommunication Corporation to provide telecommunication services within Pakistan on exclusive basis to the Armed forces, defense dealing authorities, federal government, provincial government, government agencies and institutes in federal and provinces of Pakistan. So, in business sector the organization have no competitor because, it is the only entity that provides services to the government as per law. In law, PTC specified in section 39 of the aforesaid Act, the NTC shall not sell its capacity on telecommunication system any person other then the government agencies or PTCL and government shall not also take the services of the other organizations except National Telecommunication Corporation.

Brief Introduction of departments

National Telecommunication is a large scale organization. It has many regions and offices in all important cities of Pakistan. My specialization is in Finance and I also work in Finance division I will give brief introduction of finance department. GM (General Manager) of Finance is the head of the Finance department and responsible to check and control all the work done by Finance department. The General Manger of National Telecommunication is Mr. Muhammad Hafeez Abbasi. He is also provides his services as the acting CFO (Chief Financial Officer) to the organization. The finance department consists of following sub sections: Cash Accounts section. Revenue section. Finance section. Budget section Introduction and functions of above departments are as follow: Cash Accounts section Cash Accounts section is primarily responsible for preparation of accounts of the Corporation. Mr. Muhammad Tariq accomplishes his duties and provides services as director accounts to National Telecommunication Corporation. A cash account section is

the accounting department of finance and it is mainly deals in handling, maintaining and verifying the accounts and records. Cash Accounts department creates the overall yearly reports of NTC on the basis of these records. This yearly report contains information about Assets, Liabilities, Profit and loss, Marginal trades and Services. This section is also responsible for conducting of External audit. Revenue Section Mr. Muhammad Luqman performs duties and gives services to National

Telecommunication Corporation as Head Revenue. Revenue section is responsible to supporting all Revenue functions, shall also improve existing systems to ensure efficient, effective and timely reporting and drive the Revenue directorate as a fully performing separate unit taking timely decisions in all its defined spheres. Revenue department mainly deals in billing various other telecom companies. These bills are generated on the basis of services being provided by National Telecommunication Corporation. Finance Section Finance section is worked under kind control of the Mr. Muhammad Bashir Khan who is acting as Director Finance. Finance section is responsible for payments, Internal Audit, pay pension and funds related work. It is divided in to three sub-sections. One is the payment section, second Internal Audit section and third is Pay, pension and Fund section. All the three sections are worked under the control of Director Finance. The payment section is responsible to check and control all the cash and payment matters. The Internal Audit section mainly deals with the audit of all the cases related to financial matter prior to its approval within the organization. Pay Pension and Fund Section is responsible to issue pay slips, solve pension related matters and also maintaining a record of Funds. Budget Section Budget section is primarily responsible for preparation of budget of the Corporation. Mr. Numan Khalid is take responsibilities and gives services as director budget. Budget section is responsible to prepare budget and subsequently have a check on it. The expenditure allotment to all the departments, yearly expenditures and employee salaries is

also under consideration of budget section. This section is also responsible to allocate and apportionment of all the expenses and develops short and long-term financial plans and strategies for the Corporation.

Comment on Organizational Structure

As per my observation the Organizational Structure is fulfill the requirements. The overall organizational structure is doing its best. Finance department plays very important part in arranging and preparing its financial statements, generation of revenue and check and balance on its expenses. All the sections assign to make certain approximations, conclusions and assumptions that affect the assets and liabilities. In short, the overall organizational structure doing best for the growth and productivity of the organization.

Internship Program

My study program is BBA (Bachelors in Business Administration); specializing in Finance. I have carried out an Internship with NTC (National Telecommunication Corporation). This is pre requisite for my degree. I have done my internship in the Head Quarter of National Telecommunication Corporation. The Head Quarters building located in G-5/1 Islamabad. NTC has many regions and offices in all the important and big cities of Pakistan. All the regions are connected and reporting to the Head Quarters.

Starting and Ending Dates

I have joined National Telecommunication Corporation on July 08, 2011 as an internee in the Finance Department. I have worked with NTC for 6 weeks. The ending date of my internship is August 22, 2010.

Department
I spend six weeks in budget department particularly in budget allotment and allocation sections. I have been provided all necessary information regarding my work. The focal point of internship is get practical learning and to get familiar with a professional atmosphere and knowledge of the field.

Training program
Details of training and learning I have worked six week with National Telecommunication Corporation as an Internee. During my internship program I have learned a lot. I have learned new techniques, knowledge and familiar with practical work. I have worked in budget department of the Corporation. The finance department of the organization is divided into sub sections. These sub sections are Cash Accounts Section, Revenue Section, Finance Section and Budget Section. During my internship program I have worked mostly in budgeting section. I have assigned different tasks by the supervisor of the sections. The detail of the task and work given to me by the head of the departments is discussed as subsequent. TA/DA allowances treatment I have assigned the work to check the schedule of TA/DA (Travel allowance/Day allowance) allowances. When somebody went for a tour/visit for corporation work he has paid TA/DA allowance by the corporation to meet his expense. TA/DA allowance approved and paid to employees according their designation. After the tour/visit employee will have show the expenses slips to settlement of allowance. If the expense is less than allowance, then he will have to pay back the remaining amount and if the expense is greater than allowance, then extra amount spend by him will paid by corporation. Sales Tax During my work in cash account I have assigned the work to punching the sales tax input and out put information. National telecommunication is directly punching its sales tax to FBR (federal board of revenue) web site. An account is fixed to National Telecommunication Corporation for punching the sales tax. Punching of sales tax is also known as e-filing. Sales tax is paid monthly on all services / revenues/ incomes. Sales tax is paid at a rate of 15 %. NTC also purchased from out sides and paid sales tax on its

purchasing like sales tax paid on electricity bills. This is a type of out put tax while the sales tax on selling of service is known as input tax. The settlement of input tax and output tax is also take place during the process of punching. For example if NTC earns Rs. 1000 then sales tax payable would be Rs. 150 and the sales tax paid on bills is Rs. 100. Then the paid sales tax would be deducted from sales tax payable and the remaining balance of Rs. 50 would be charged to sales tax payable. Settlement of sales tax of all regions of corporation is take place in the head quarters. Pre Deposit: In cash account I also familiar with pre deposit work and its treatment. Pre deposit is a type of advance that is paid by the government general bodies and institutions to National Telecommunication Corporation to done work on their behalf. NTC gives expert services to check the working quality and process of work. Corporation charged 50% payment from armed forces and 100% payment from other government institutions in advance. When a contract is taken by the NTC a PCC (provisional capital cost bill) is issued that encloses the estimated cost and it is signed by the both parties. During the work the experts check the quality and process of the work. If the work is not done as per standards or not on time the discrepancy claim is also responsibility of NTC. NTC take 14% of total cost as service charges. This includes 12% establishment charges and 2% estimation charges. After completion of the work a FCC (final capital cost bill) is issued that confirms the completion of the work and adjustment of the amount. During my internship I have also get knowledge and treatment of Advances to supplier, other Receivables/ account Receivables, and accrued expenses. An advance to supplier holds the work that is done by other to National Telecommunication Corporation. This will take place when the contractors do construction work or any other work to NTC. NTC paid some amount to the contractor in advance to start the work. While during the work payment are made to contractor as per agreement. The agreement also states the reimbursement percentage of advance (that is already taken by the contractor in the start of work), adjustment of sales tax and final payment. Other receivables/Trade receivables includes the firms and persons that have and obligation or owe amount. This also includes the work done by the National Telecommunication Corporation on behalf of others firms. Example of this is web

hosting along with PTCL on behalf of Ministry of Information Technology. The expense are incurred are paid by the NTC but later it is recovered by NTC from concern party. Accrued expenses are the expenses that are incurred in the current accounting periods and yet not paid. In this case these expenses are treated as liability to the corporation. At the end of financial year these are booked as liability while the benefit is already received in current year and treated as per matching concept stated.

Ratio Analysis
Ratio analysis is the estimation and evaluation of ratios which are resulting from the financial statements of corporation. Ratio analysis shows corporation productivity, growth, profit earning capacity, utilization of assts and capacity to pay its obligations. Subsequent financial statements given that are used to calculate ratio & critical analysis.. In this report I will calculate liquidity ratios, leverage ratios and profitability ratios as per course requirements.

a) Liquidity Ratios
Liquidity ratios measure Corporations ability to meet its current liabilities/Obligation. Liquidity ratios include 1. 2. 3. 4. Current ratio. Acid-test ratio. Working capital. Sales to Working Capital ratio

1. Current ratio:
Formula = Current assts/Current Liabilities Year 2007-08 9,050,720,342 2,727,077,252 = 3.32 Year 2008-09 12,844,534,140 2,411,599,011 = 5.32 Year 2009-10 13,074,245,607 2,280,686,630 = 5.73

6 5 4 Value 3 2 1 0

5.32 3.32

5.73

2008

2009 Years Current Ratio

2010

Interpretation: Current ratio shows that NTC have Rs. 3.32 in 2008, Rs. 5.32 in 2009 and Rs 5.73 in 2010 of current assets against Rs. 1.00 of its current liabilities. The value of current ratio is higher in 2009 and in 2010 due to much increase in Advances, Deposits, Prepayments and other receivables, that increases the current assets of the Corporation.

2. Acid-test Ratio:
Formula= Current assets Inventory/Current Liabilities Year 2007-08 Year 2008-09 8,360,123,498 12,296,801,776 2,727,077,252 2,411,599,011 3.06 5.09 Working: Quick Asset = Current assets Store and Spares 2007-08 = 9,050,720,342 - 690,596,844 2008-09 = 12,844,534,140 - 547,732,364 2009-10 = 13,074,245,607 - 479,419,430 Year 2009-10 12,594,826,177 2,280,686,630 5.52

= 8,360,123,498 = 12,296,801,776 = 12,594,826,177

6 5 4 Value 3 2 1 0

5.09 3.06

5.52

2008

2009 Years
Acid-test Ratio

2010

Interpretation: Acid-test ratio shows that NTC have Rs. 3.06 in 2008, Rs. 5.09 in 2009 and Rs 5.52 in 2010 of most current assets against Rs. 1.00 of its current liabilities. The ratio is high in 2009 and 2010 as compare to 2008.Acid test ratio change because the inventory level of the corporation is decreased in last two years. The most currents assets like advances and other receivables are also increased in last two years.

3. Working capital:
Formula = Current Assets Current liabilities Year 2007-08 9,050,720,342 ( 2,727,077,252) 6,323,643,090 Year 2008-09 12,844,534,140 (2,411,599,011) 10,432,935,129 Year 2009-10 13,074,245,607 (2,280,686,630) 10,793,558,977

12 10 Amout in billion 8 6 (Rs.) 4 2 0

10.43 6.32

10.79

2008

2009 Years
Working Capital

2010

Interpretation:

Working capital of National Telecommunication Corporation shows that in 2010 the corporation has higher working capital as compared to 2008 and 2009. The corporation pays out a huge amount to its employees on the account of advances in 2009 and 2010. The other receivable and NTC own investment in securities and government projects is also increased in 2009 and 2010 as compared to 2008

4.

Sales to Working Capital Ratio:

Formula = Sales/ Working capital Year 2007-08 4,377,335,885 6,323,643,090 0.69 Working: Working Capital = Current Assets Current Liabilities 2008 = 9,050,720,342 - 2,727,077,252 = 6,323,643,090 2009 = 12,844,534,140 - 2,411,599,011 = 10,432,935,129 2010 = 13,074,245,607 - 2,280,686,630 = 10,793,558,977
0.7 0.6 0.5 Value 0.4 0.3 0.2 0.1 0 2008 2009 Years 2010

Year 2008-09 4,357,608,528 10,432,935,129 0.42

Year 2009-10 4,707,855,467 10,793,558,977 0.44

0.69 0.42 0.44

Sales to Working Capital

Interpretation: Sales to working capital ratio demonstrate that in 2010 it is improve a bit as compare to 2009. In 2009 the sales to working capital ratio is lowest in recent three years this is because of decrease in sales. Therefore it is also low in 2010 as compared to 2008. The reason behind this is increase in Operating costs of the Corporation in 2010.

b) Leverage Ratios
Leverage ratios measure the degree of protection of suppliers of long term funds. Here I will include and calculate those ratios which are applicable. 1. Time Interest Earned. 2. Debt Ratio. 3. Debt to Tangible net worth.

1. Time Interest Earned.

Formula = Profit (before Financial Charges) / Interest paid. Year 2007-08 1,327,137,184 13,944,515 95 Time
100 No. of Times Interest Earned 95 90 85 80 75 2008 2009 Years 2010 82

Year 2008-09 1,153,546,425 14,056,188 82 Time

Time Intrest Earned 95

Year 2009-10 1,271,074,330 13,659,724 93 Time

93

Interpretation: Time interest earned ratio measure firm potential to pay its interest from its earnings (before financial charges and interest payment) NTC interest earned ratio shows that it has a great capability to pay its financial charges. Thus it is much lower in 2009 due to low operating income.

2. Debt Ratio.
Formula = Total Liabilities / Total Assets.

Year 2007-08 6,517,162,637 22,630,172,697 0.29 Working:

Year 2008-09 6,666,177,601 23,702,448,482 0.28

Year 2009-10 7,148,091,894 25,095,707,535 0.28

Total Liabilities = Current Liabilities + Long-term Liabilities. 2008 = 2,727,077,252 + 3,790,085,385 2009 = 2,411,599,011 + 4,254,578,590 2010 = 2,280,686,630 + 4,867,405,264
Debt Ratio Chart

= 6,517,162,637 = 6,666,177,601 = 7,148,091,894

0.295 0.29 Value 0.285 0.28 0.275 2008 0.29

0.28

0.28

2009 Years

2010

Interpretation: Debt ratio measures the outsider claim on assets of the firm. The above given chart shows that NTC debt ratio have Rs. 0.29 in 2008 and Rs. 0.28 in 2009 and 2010 against Rs. 1.00 of its assets. This is decreased in last two years from 0.29 to 0.28 which is good for corporation. This is because of increase in the total assets of the corporation.

3. Debt to Tangible net worth.

Formula = Total Liabilities / Tangible net worth. Year 2007-08 6,517,162,637 16,113,010,060 0.40 Working: Tangible net worth = Total Assets Liabilities Intangible Assets. 2008 = 22,630,172,697 - 6,517,162,637 0 2009 = 23,702,448,482 - 6,666,177,601 0 2010 = 25,095,707,535 - 7,148,091,894 0 = 16,113,010,060 = 17,036,270,881 = 17,947,615,641 Year 2008-09 6,666,177,601 17,036,270,881 0.39 Year 2009-10 7,148,091,894 17,947,615,641 0.40

Total Liabilities = Current Liabilities + Non-Current Liabilities. 2008 = 2,727,077,252 + 3,790,085,385 2009 = 2,411,599,011 + 4,254,578,590 2010 = 2,280,686,630 + 4,867,405,264
0.405
Value Debt to Tangible net worth Chart

= 6,517,162,637 = 6,666,177,601 = 7,148,091,894

0.4 0.4 0.39 2008 2009

Years

0.395 0.39 0.385

0.4

2010

Interpretation: Debt to tangible net worth ratio shows the claim against its tangible assets. Above graph illustrate that the Debtor claims of Rs. 0.40, Rs. 0.39 and Rs 0.40 respectively in 2008, 2009 and 2010 against its Rs. 1.00 net worth. It is a bit lower in 2009 because of low deferred Taxation in 2009.

b) Profitability Ratios:
Profitability ratios measure the earning ability of a firm. Profitability Ratios Includes following Ratios. 1. 2. 3. 4. 5. 6. 7. 8. Gross Profit Margin. Net Profit Margin. Return on Assets. DuPont Return on Assets. Operating Income Margin. Return on Capital Employed. Sales to Fixed Asset Ratio. Return on Operating Assets.

1.

Gross Profit Margin:

Formula = Gross Profit / Net Sales x 100

Year 2007-08 937,267,036 x 100 4,377,335,885 21.41%

Year 2008-09 632,456,947 x 100 4,357,608,528 14.51%

Year 2009-10 559,833,331 x 100 4,707,855,467 11.89%

Gross Profit Margin Chart.

25.00% 20.00% %age of GP Margin 15.00% 10.00% 5.00% 0.00% 2008 2009 Years 2010
14.51% 11.89% 21.41%

Interpretation: Gross profit margin ratio state that in 2008 the gross profit margin is higher whereas is drop down in 2009 and 2010. This change is due to rise in its operating cost. In 2010 NTC operating cost is increased more as compared to its revenue. In 2009 and 2010 corporations interconnect charges and repair and maintenance cost increased which caused higher the operating cost and lower the Gross Profit Margin.

2.

Net Profit Margin Ratio:

Formula = Net Profit (after tax) / Net Sales x 100 Year 2007-08 941,232,799 x 100 4,377,335,885 21.50% Year 2008-09 774,739,589 x 100 4,357,608,528 17.78% Year 2009-10 822,860,134 x 100 4,707,855,467 17.48%

Net Profit margin Chart

25 20
%age of NP 15 margin 10

21.5

17.78

17.48

5 0 2008 2009 Years 2010

Interpretation: Net profit margin ratio states that in 2008 the net profit margin is higher while it is drop down in 2009 and 2010. This happened because the operating cost of the corporation is high in the current years. Net profit also drop down in last two years due to this the net profit margin ratio decreased.

3.

Return on Assets:
Formula = Net Income/ Total Assets * 100 Year 2007-08 941,232,799 x 100 22,630,172,697 4.16%
5 4
%age of ROA

Year 2008-09 774,739,589 x 100 23,702,448,482 3.27%

Return on Assets Chart

Year 2009-10 822,860,134 x 100 25,095,707,535 3.28%

3 2 1 0 2008 2009
Years

4.16

3.27

3.28

2010

Interpretation: Return on Assets ratio demonstrate that in 2010 the ROA is better as compare to 2009 while in 2008 it seems to be the best. The net profit after tax is decreased in 2009 and 2010 as compared to 2008. Assets of the corporation are also increased in the

following years but the profit of the corporation is not increased. This shows that the corporation not uses its assets efficiently.

4.

DuPont Return on Assets:

Formula = Net income x Sales Sales Total assets Year 2007-08 Year 2008-09 941,232,799 x 4,377,335,885 774,739,589 x 4,377,335,885 4,377,335,885 x 22,630,172,697 4,377,335,885 x 23,702,448,482 0.042 0.033 Working: 2008 941,232,799 x 4,377,335,885 4,377,335,885 22,630,172,697

Year 2009-10 822,860,134 x 4,707,855,467 4,707,855,467 x 25,095,707,535 0.033

2009 774,739,589 x 4,377,335,885 4,377,335,885 23,702,448,482

2010 822,860,134 x 4,707,855,467 4,707,855,467 25,095,707,535 2008 0.22 x 0.19 DuPont Return on Assets: 0.042 2009 0.18 x 0.18 0.033 2010 0.17 x 0.19 0.033

DunPot Rerurn on Assets chart

0.05 0.04
value

0.042 0.033 0.033

0.03 0.02 0.01 0 2008

Years

2009

2010

Interpretation: DuPont return on assets shows that how efficiently firm used it assets. This ratio is combination of tow things; one is profit margins and second is assets turnover. Chart given above Illustrate that NTC DuPont ratio indicates that it is higher in 2008 while same in 2009 and 2010. The net profit of the corporation is decreased in 2009 and 2010 which lower down DuPont ratio.

5.

Operating Income Margin:

Formula = Operating Profit (Profit before taxation) / Net Sales Year 2007-08 1,313,192,669 4,377,335,885 0.30 Year 2008-09 1,139,490,237 4,357,608,528 0.26 Year 2009-10 1,257,414,606 4,707,855,467 0.27

Operating Income Margin Chart

0.31 0.3 0.29
Value

0.3

0.28 0.27 0.26 0.25 0.24 2008 2009

Years

0.26

0.27

2010

Interpretation: Operating Income Margin Ratio measures the ability of a firm that it is how much earn before (payment of income tax) on its sales. In current scenario as per operating margin ratio chart indicates that National Telecommunication Corporation earns Rs. 0.30 in 2008, Rs. 0.26 in 2009 and Rs. 0.27 in 2010 against the sales of Rs. 1.00. This illustrate that the earning capability of the firm is decreased in 2009 and 2010. Operating income margin ratio lower down due to reduction in Operating income and increasing in operating cost.

6.

Return on Capital Employed:

Formula = Profit (before Income Tax) / Capital Employed Year 2007-08 1,313,192,669 19,903,095,445 0.066 Year 2008-09 1,139,490,237 21,290,849,471 0.054 Year 2009-10 1,257,414,606 22,815,020,905 0.055

Working: Capital Employed = Total Assets Current Liabilities. = 19,903,095,445 = 21,290,849,471 = 22,815,020,905 2008 = 22,630,172,697 - 2,727,077,252 2009 = 23,702,448,482 - 2,411,599,011 2010 = 25,095,707,535 - 2,280,686,630
Return on Capital Employed Chart 0.07 0.06 0.05 0.04 Value 0.03 0.02 0.01 0

0.066

0.054

0.055

2008

2009 Years

2010

Interpretation: Return on Capital employed chart illustrate that the corporation earn Rs 0.066, Rs. 0.054 and Rs.0.055 respectively in 2008, 2009 and 2010 against Rs. 1 invested in Capital employed. The ratio goes down in recent two years. This is due to reduction in operating income. The value of capital employed increases but the corporation is not able to generate profit as the capital employed increases.

7.

Sales to Fixed Assets Ratio:

Formula = Net Sales / Net Fixed Assets. Year 2007-08 4,377,335,885 9,757,488,802 0.45
0.5 0.49 0.48 Value 0.47 0.46 0.45 0.44 0.43 2008 2009 Years 2010

Year 2008-09 4,357,608,528 9,629,257,394 0.45

Fixed Assets Turnover Chart

Year 2009-10 4,707,855,467 9,562,064,124 0.49

0.49

0.45

0.45

Interpretation: Sales to fixes assets chart shows that the NTC generate Rs. 0.45 in 2008 and 2009 and Rs. 0.49 in 2010 form each rupee that is invested in fixed assets. This shows that the firm in utilizing its assets more effectively in 2010. The sales to fixed assets ratio low in 2008 and 2009 due to low sales revenue.

8. Return on Operating Assets:

Formula = Net profit / Operating Assets. Year 2007-08 941,232,799 10,615,893,865 0.09 Working: Operating assets = Property, Plant & Equipment + Stores and spares + Cash & bank balances 2008 = 8,314,577,439 + 690,596,844 + 1,610,719,582 = 10,615,893,865 2009 = 7,834,082,538 + 547,732,364 + 1,381,835,425 = 9,763,650,327 2010 = 7,822,544,910 + 479,419,430 + 1,633,150,878 = 9,935,115,218 Year 2008-09 774,739,589 9,763,650,327 0.08 Year 2009-10 822,860,134 9,935,115,218 0.08

Return on Opreating Assets

0.09 0.088 0.086 0.084 Value 0.082 0.08 0.078 0.076 0.074 0.09

0.08 2008 2009 Years

0.08 2010

Interpretation: Return on operating assets ratio measure the earning capacity of organization on the assets that are invested or utilized in operations. In current scenario NTC earns Rs

0.09 in 2008 and Rs 0.08 in 2009 and 2010. The Reasons of low return is low operating assets in last two years which low the earning capacity of the corporation.

d) Activity Ratios
Activity ratios measure a firm's ability to convert different accounts within their balance sheets into cash or sales. Activity Ratio includes these ratios. 1. 2. 3. 4. 5. Total Assets Turnover. Fixed Assets Turnover. Account Receivable Turnover. Capital Turnover. Operating Assets Turnover.

1. Total Assets Turnover.

Formula = Net Sales / Total Assets Year 2007-08 4,377,335,885 22,630,172,697 0.19 Year 2008-09 4,357,608,528 23,702,448,482 0.18
Total Assets Turnover Chart 0.19 0.19

Year 2009-10 4,707,855,467 25,095,707,535 0.19

0.195 0.19
Value 0.185

0.18 0.175 2008 0.18 2009

Years

2010

Interpretation: Total Assts Turnover ratio chart shows that in 2009 it is low as compared to 2008 and 2010 therefore it is same in 2008 and 2010. After comparison it is comes to know that in 2008 the revenue of the firm is lower.

2. Fixed Assets Turnover.

Formula = Net Sales / Net Fixed Assets. Year 2007-08 4,377,335,885 9,757,488,802 0.45 Year 2008-09 4,357,608,528 9,629,257,394 0.45 Year 2009-10 4,707,855,467 9,562,064,124 0.49

0.5 0.49 0.48

Fixed Assets Turnover Chart

0.49

Value

0.47 0.46 0.45 0.44 0.43 2008 0.45 0.45

Years

2009

2010

Interpretation: Fixed assets turnover chart shows that the NTC generate Rs. 0.45 in 2008 and 2009 and Rs. 0.49 in 2010 form each rupee that is invested in fixed assets. This shows that the firm in utilizing its assets more effectively in 2010. The sales to fixed assets ratio low in 2008 and 2009 due to low sales revenue. 3. Account Receivable Turnover Ratio. Formula = Net Sales/ Average Account Receivable Year 2007-08 Year 2008-09 Year 2009-10 4,377,335,885 4,357,608,528 4,707,855,467 4,277,807,497 4,411,835,883 4,545,106,165 1.02 0.99 1.04 Working: Average A/c Receivable = Opening balance + Closing balance / 2 2008 = 4,210,793,304 + 4,344,821,690/2 = 4,277,807,497 2009 = 4,344,821,690 + 4,478,850,076/2 = 4,411,835,883

2010

= 4,478,850,076 + 4,611,362,254/2
A/C Receivable Turnover Ratio

= 4,545,106,165

1.06 1.04
Value

1.02

1.02 1 0.98 0.96 2008

Years

1.04

0.99

2009

2010

Interpretation: Account Receivables Turnover ration measures that how efficiently and continuously a firm collecting it trade receivables. NTC account receivables turnover ratio shows that it is higher in 2010 this is because of increase in receivables.

4. Capital Turnover Ratio:

Formula = Sales / Capital Employed. Year 2007-08 4,377,335,885 19,903,095,445 0.22 Working: Capital Employed = Total Assets Current Liabilities. = 19,903,095,445 = 21,290,849,471 = 22,815,020,905 2008 = 22,630,172,697 - 2,727,077,252 2009 = 23,702,448,482 - 2,411,599,011 2010 = 25,095,707,535 - 2,280,686,630 Year 2008-09 4,357,608,528 21,290,849,471 0.20 Year 2009-10 4,707,855,467 22,815,020,905 0.21

Capital Turnover Ratio Chart.

0.225 0.22 0.215 0.21 Value 0.205 0.2 0.195 0.19 0.22 0.21 0.2 2008 2009 Years 2010

Interpretation: Capital Turnover ratio measure the capability of firm to generate revenue against its capital employed. In above calculation it is seen that it is lowest in 2008 in recent three years. Which shows that capital employed is not efficiently used by the corporation in 2008.

5. Operating Assets Turnover:

Formula = Net Sales / Operating Assets. Year 2007-08 Year 2008-09 Year 2009-10 4,377,335,885 4,357,608,528 4,707,855,467 10,615,893,865 9,763,650,327 9,935,115,218 0.41 0.45 0.47 Working: Operation assets = Property, Plant & Equipment + Stores and spares + Cash & bank balances 2008 = 8,314,577,439 + 690,596,844 + 1,610,719,582 = 10,615,893,865 2009 = 7,834,082,538 + 547,732,364 + 1,381,835,425 = 9,763,650,327 2010 = 7,822,544,910 + 479,419,430 + 1,633,150,878 = 9,935,115,218
Operating Assets Turnover Chart 0.48 0.46 Value 0.44 0.42 0.4 0.38 2008 2009 Years 2010 0.41 0.45 0.47

Interpretation: Operating Assets Turnover Ratio shows the ability of revenue generation of a firm from it assets that are used in operations. The above graph proves that National Telecommunication Corporation has a high operating turnover ratio in 2010 from its recent three years. It is low in 2008 and 2009 due to high operating assets and low revenue generation.

Future Prospective of Corporation

National Telecommunication Corporation is very much conscious about new technologies, changes in the communication sector, demand of new services and coverage of network. The ongoing infrastructure development journey for NTC began in 1996 when it was created with few local exchanges and analog microwave. However, today NTC has developed its infrastructure to an extent where it can be called an independent IT and telecom operator capable of meeting the challenges of the deregulated environment and meeting the objectives for which it was created. These days National Telecommunication is started new different projects in different regions. These are included Next Generation Network (NGN), Deployment of IP Core Network (Routers) for NGN along with 1 x Soft Switch at Karachi, Optical Fiber Access Network for Provision of Telecommunication Services to Foreign Missions and other Places at Islamabad, Creation of E-enabled Environment Connectivity of Ministries LAN on Optic Fiber, Establishment of Coastal Fiber Communication Link from Karachi to Gawadar and Multi-services Data Network Internet Services for government and semi Government Organizations.

Conclusion
At the end of my internship program I am very happy and quite satisfied that I have completed my internship program successfully. National Telecommunication has a great potential to give services to the government and its general bodies. It is growing by the passage of time and improving day by day. Now National Telecommunication Corporation become an enormous telecom services provider organization and becomes an important part of information ministry. It also shares very much burden of PTA (Pakistan Telecommunication Authority). The staff of National Telecommunication Corporation is cooperative and kind. It is a remarkable feature of the National Telecommunication Corporation that NTC gives a very attractive pay and provide incentives to its employees. The entire work force do there work with honesty and integrity. The Finance department is playing a vital role in the growth of organization. All the financial matters handled and solved by the finance department. All the sections of Finance department do their jobs and tasks efficiently. The atmosphere of the corporation is peaceful and it has a great working environment. I have gained much knowledge and techniques which will help me in my professional life. I learned from all persons whom which I was concerned. Every person guided me very kindly and generously. It was a great experience for me to work at such a wonderful place where I became more confident, punctual and responsible.

Recommendations Liquidity Ratios of the Corporation show that it is well establish to meet its
short-term obligations. The corporation should reduce its cash in hand and invest it in other project to generate more revenue.

Working Capital management in NTC needs to be improved. Negotiations

with the government may be carried out to recover the receivables. Loans from outside obtained at reasonable interest rate keeping in view the capital need of the Corporation.

Leverage Ratios and Profitability Ratios of the Corporation states that it has a
protection from long term obligations and have decent earning capacity, thus corporation have to use it assets more effectively to generate more revenue and to increase its profit.

National Telecommunication Activity ratios show that it has an ability to

convert different accounts within their balance sheets into cash or sales. But it should be more productive to generation of revenue.

The operating cost of the Corporation is very much high. Corporation will
have to check it and reduce it.

Entire Finance department of corporation is practicing the paper working

except cash account section. Corporation will take a step forward to introduce software to every section as per there requirements.

Computer training is necessary in this era of information technology. The

proper computer education and training will improve the efficiency of the employees.

Proper check and balance will improve the working atmosphere. Corporation
should be developing a system which appreciates the hardworking employees and gives incentives to them. This will increase the motivation level of workers.

Resources and References

For introduction, Business sector, Future plans and Resource information: All the Relevant data has been extracted from NTC official website and discussion with instruction officer Ratio Analysis Data NTC yearly financial report Supervision of head accountant