TABLE OF CONTENTS

TABLE OF CONTENTS

INDUSTRY OVERVIEW............................................................................................................................................................. 2
INDUSTRY RATIOS..................................................................................................................................................................... 5
COMPANY “A” OVERVIEW...................................................................................................................................................... 8
GHANDHARA NISSAN FINANCIAL RATIOS..................................................................................................................14
NISSAN’S FINANCIAL STATEMENT.................................................................................................................................16
NISSAN’S PROFIT AND LOSS STATEMENT..................................................................................................................18
GHANDHARA NISSAN RATIO ANALYSIS.......................................................................................................................19
COMPANY B: INTRODUCTION TO HINO PAK LTD....................................................................................................30
HINO PAK FINANCIAL RATIO.............................................................................................................................................32
HINO PAK STATEMENT OF AFFAIRS .............................................................................................................................34
HINO PAK PROFIT AND LOSS STATEMENT ................................................................................................................36
HINO PAK FINANCIAL ANALYSIS.....................................................................................................................................38

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 INDUSTRY OVERVIEW
There are several automobile manufacturing companies operating in Pakistan and even listed in
Karachi stock exchange. But not all are dealing the same product line some are manufacturing
luxury cars and some only commercial vehicles. Our industry comprises of two companies
GHANDHARA NISSAN and HINOPAK LIMITED. Both manufactures commercial vehicles like light
and heavy duty trucks and buses and relatively a very few cars are made by Nissan.

The basic objective is to achieve and create loyal customer base by providing high quality after
sale service, enabling them to get most value of their investment and building trust in their
product;

• High quality products

• Customer satisfaction

• Market leadership

• Contribution in economic growth

• Compliance with all regulatory requirements

• Making user friendly environment

• Increasing technical innovation

 RAWMTERIALS:
 Steel products
 Aluminum
 Special fibers
 Chemicals
 Nonferrous metals
 Plastic
 Fuel
 Petroleum.

 OPPORTUNITIES:
 Large market segment with potential purchasing power.
 Sustainability in growth of economy.
 Consistency of political government.

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 Strict import policies.
 Regional stability.
 Cost effective and fuel efficient vehicle required by customer.

 THREATS:
 Unavailability of highly skilled labor.
 Expensive raw material.
 New entrant in the same industry.
 Existence of strong competitors with powerful global image which can counterfeit
strategies

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  ECONOMIC DATA
ANALYSIS:

PAKISTAN PER CAPITA

INCOME USD:

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PAKISTAN GDP GROWTH RATE:

PAKISTAN FISCAL DEFECIT

INDUSTRY
RATIOS

5|Page
 2018 2017 2016 2015 2014
LIQUIDITY RATIOS

CURRENT RATIO 2.24 1.52 1.37 1.92 1.31

QUICK RATIO 1.32 0.79 0.65 1.00 0.51

CASH RATIO 1.12 0.64 0.52 0.59 0.25

ACTIVITY RATIOS

INVENTORY TURNOVER 3.29 5.93 4.97 4.73 3.96

DOH 111.94 66.75 75.59 84.46 119.16

RECEIVABLE TURNOVER 32.62 42.98 19.47 13.61 15.76

DSO 21.47 10.00 18.77 27.00 23.77

PAYABLES TURNOVER 3.38 4.06 3.78 4.45 5.05

DAYS IN PAYABLES 107.89 89.95 99.47 94.02 94.96

WORKING CAPITAL TURNOVER 4.75 9.67 6.68 6.75 11.65

FIXED ASSET TURNOVER 4.81 5.35 5.33 4.53 3.82

TOTAL ASSET TURNOVER 1.31 1.75 1.67 1.58 1.49

SOLVENCY RATIOS
DEBT TO EQUITY 6% 9% 9% 17% 14%
DEBT TO ASSET 4% 6% 5% 7% 5%

EQUITY MULTIPLIER 1.87 1.82 2.40 4.03 3.71

TIMES INTEREST COVERAGE 29.71 57.07 26.40 11.13 8.50

PROFITIBILITY RATIOS
GROSS PROFIT MARGIN 15% 15% 19% 18% 16%
OPERATING PROFIT MARGIN 7% 10% 13% 13% 11%
NET PROFIT MARGIN 26% 7% 9% 9% 7%
RETURN ON ASSETS 15% 11% 13% 14% 10%
RETURN ON EQUITY 25% 20% 31% 56% 37%

DUPONT
NPM 26% 7% 9% 9% 7%

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ASSET TURNOVER 1.31 1.75 1.67 1.58 1.49

FINANCIAL LEVERAGE 1.87 1.82 2.40 4.03 3.71

DUPOT 0.25 0.20 0.31 0.56 0.37

FIVE WAY DECOMPOSITION

TAX BURDEN 0.76 0.61 0.65 0.67 0.66

INTEREST BURDEN 0.85 0.97 0.91 0.99 0.97

MARGIN ON OPERATING
PROFIT 0.33 0.12 0.14 0.14 0.11

ASSET TURNOVER 1.31 1.75 1.67 1.58 1.49

FINANCIAL LEVERAGE 1.87 1.82 2.40 4.03 3.71

TOTAL 0.25 0.20 0.31 0.56 0.37

COMPANY “A” OVERVIEW

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GHANDHARA NISSAN
COMPANY PROFILE:
GNL is a group of Company of Bibojee Services (Pvt.) Limited. The company was incorporated in
the year 1981 as a Private Limited Company having a licensee for the sale of the distribution of
Nissan Vehicles in CBU condition in Pakistan. Later on it was converted into a Public Limited
Exchange. It has a Technical Assistant Agreement with Nissan Motor Co. Japan, and a joint
Venture Agreement with Nissan Diesel Company.

BUSINESS ANALYSIS:
 BUSINESS OBJECTIVES:
The company has committed to achieve and create loyal customer base by providing high
quality after sale service, enabling them to get most value of their investment and building trust
in their product;

• High quality products

• Customer satisfaction

• Market leadership

• Contribution in economic growth

• Compliance with all regulatory requirements

• Making user friendly environment

• Increasing technical innovation

 PRODUCTS:
The only Automobile Co. in country assembling range of products;

 Cars
 Light commercial vehicles
 Heavy-duty trucks and buses

 PRODUCT LINE:

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  Cars
 DONGFENG TRUCKS
 JAC TRUCKS
 RENAULT

 SERVICE ACTIVITIES:
It can be effectively defined as;

 Trouble free operations/ optimum performance of vehicle.

 Fix It Right the FIRST TIME.
 Regular training programs to strengthen dealer’s base.
Service Department has its team of professionals whom are aiming to achieve following goals
effectively;

• Expansion/ strengthen authorized dealer network

• Customer follow-up
• Periodic visits to dealerships
• Free checkup campaigns
• Customer Complaint Handling
• Training programs
• Service Publications

 SERVICE WARRINTY:
The warranty of the vehicle is valid for 12 months or 100,000 km whichever covers first, from
the date of sold to the retail buyer.

 PLANTS:
GNL’s cars and trucks plants are situated at PORT BIN QASIM:

 Truck Plant
 Car plant

 SWOT ANALYSIS:

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  SUMMARY OF INTERNAL FACTORS

STRENGTHS:
 Competent top level management with intensive and comprehensive experience of
industry.
 Ability to extend further vertically in market through utilization of existing
infrastructure.
 Sound financial position of the company.
 Successful expansion through new joint ventures.
 Growth and diversification in range of auto products
WEAKNESSES:
 Recent introduced vehicles were unable to capture the market share therefore, the
annual sales decline.
 Company was unable to attain effectively economies of scale.
 Mainly focusing on short-term objectives and neglecting to clearly define long-term
objective.
 Lack of ownership among employees.
 Unable to effectively minimize the cost.
 Certain lacking in R&D.

 SUMMARY OF EXTERNAL FACTORS

OPPORTUNITIES:
 Large market segment with potential purchasing power.
 Sustainability in growth of economy.
 Consistency of political government.
 Strict import policies.
 Regional stability.
 Cost effective and fuel efficient vehicle required by customer.
THREATS:
 Unavailability of highly skilled labor.
 Expensive raw material.
 New entrant in the same industry.

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  Existence of strong competitors with powerful global image which can counterfeit
strategies.

 RISKS:
TYPES OF RISKS: PROBABLE IMPACT HOW IT IS MITIGATED

IMPACT ON SALES Demand declined and the company Increase technical innovation and gain
production plants were kept idle. back the market share.

PLANT RISK No capital was generated as plants Selling off idle merchandise and assets.
were kept idle.

CREDIT RISK Financial loss if counterparty fails to Management performs credit reviews
perform as contracted or discharge an taking into account the customer’s
obligation. financial position, past experience and
other relevant factors.

LIQUIDITY RISK Difficulty in meeting short term The company’s treasury department aims
obligations associated with financial at maintaining flexibility in funding by
liabilities. keeping committed credit lines available.

EXCHANGE RATE RISK Fluctuations in the fair market value Efficiently managing by analyzing because
due to change in foreign exchange rate. the company is mainly exposed to this risk
due to its imports.

INTEREST RISK Fluctuations in the fair market value Efficiently managing by handling and
due to change in market interest rates. keeping up to date track of interest rates.

PRICE RISK Fluctuation in fair value due to change Investing in good and fruitful opportunities
in market prices other than those and keeping update of market prices.
arising from foreign exchange risk or
interest rate risk.

CAPITAL RISK If any uncertainty comes up in ongoing The company maintains its capital
MANAGEMET operations i.e. unable to provide structure by monitoring return on net

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 returns to shareholders or unable to assets and market adjustment to it in
reduce capital cost. the light of changes in economic
condition.

 PRODUCTION DATA:

PLANT CAPACITY:
The production plants are located at Port Bin Qasim.

Against the total production capacity of 4,800 trucks and buses on single shift basis, the
company produced only 4,884 (2017: 4,923) trucks and buses of JAC, DONGFENG and ISUZU.
The company has also processed 4,754 (2017: 4616) truck cabs through paint shops.

And against the designed annual production capacity of 6,000 vehicles produced through car
plant, on single shift basis, the company has not produced any vehicle and the plant was kept
idle during the year ended June 30, 2018 and June 30, 2017.

 DYNAMIC VIEW:
 NISSAN’S PRODUCTION plants are concentrated at PORT BIN QASIM and its local
production capacity generated by truck plants is 4800. Recently its local production and
consumption was 4884 (2017: 4923) trucks and buses on single shift of JAC, DONGFENG
and ISUZU. On the other hand the annual production capacity of vehicles at car plant is
6000, on single shift basis. The company did not assemble any vehicles during the year
2018 and 2017 and the plants were kept idle. However, the company processed 4754
(2017: 4616) truck cabs through paint shop.
 RECENTLY ON FEB 06, 2019 GNL UPDATED ON PAKISTAN STOCK EXCHANGE TO
ENHANCE ITS PLANT CAPACITY THROUGH ITS BROWNFIELD PROJECT: The Company is
currently in the process of procuring plant and machinery for project including jigs and
fixtures. Additionally, they are also working on enhancing the plant’s capacity to meet
the forecasted sales volumes. Other than this, the company has recently conducted a
detailed market study through an independent research agency to evaluate the project
variables considering the existing market conditions and external factors.

 ECONOMIC ANALYSIS: The Country’s economy witnessed quite a few challenges over
the recent past having a significant impact on the affairs of automobile industry in
general and the company’s Datsun project in particular. The company endeavored to

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accommodate such factors in its business plan and has accordingly engaged banks to
conclude financial close (which is in advance stages) for Datsun car project.

GHANDHARA NISSAN FINANCIAL RATIOS

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RATIOS 2018 2017 2016 2015 2014
LIQUIDITY RATIOS

CURRENT RATIO 3.20 1.60 1.30 2.31 1.23

QUICK RATIO 2.01 0.97 0.49 1.01 0.48

CASH RATIO 1.69 0.71 0.33 0.52 0.15

DEFENSIVE INTERVAL RATIO

ACTIVITY RATIOS

INVENTORY TURNOVER 2.99 7.57 5.81 6.12 5.83

DAYS OF INVENTORY 122.07 48.19 62.81 59.67 62.55

RECEIVABLES TURNOVER 10.05 26.30 18.74 14.69 13.25

DAYS OF SALES OUTSTANDING 36.33 13.88 19.47 24.84 27.56

PAYABLES TURNOVER 3.42 4.15 4.43 6.03 7.52

NO OF DAYS IN PAYABLES 106.73 87.87 82.30 60.55 48.57

WORKING CAPITAL TURNOVER 1.96 12.58 7.99 9.14 18.73

FIXED ASSETS TURN OVER 0.78 1.88 2.19 2.80 2.72

TOTAL ASSETS TURNOVER 0.46 1.22 1.31 1.55 1.53

SOLVENCY RATIOS
DEBT TO EQUITY 7% 13% 13% 20% 15%
DEBT TO ASSET 6% 9% 8% 13% 8%

FINANCIAL LEVERAGE 1.30 1.47 1.55 1.67 1.83

INTEREST COVERAGE 55.96 92.00 46.14 10.12 6.37

PROFITABILITY RATIOS
GROSS PROFIT MARGIN 20% 19% 22% 21% 18%
OPERATING PROFIT MARGIN 7% 13% 15% 16% 12%

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NET PROFIT MARGIN 47% 8% 11% 9% 7%
RETURN ON ASSETS 21% 10% 14% 15% 10%
RETURN ON EQUITY 28% 15% 22% 24% 19%

DUPONT
NET PROFIT MARGIN 47% 8% 11% 9% 7%

ASSET TURNOVER 0.46 1.22 1.31 1.55 1.53

FINANCIAL LEVERAGE 1.30 1.47 1.55 1.67 1.83

DuPont 28% 15% 22% 24% 19%

FIVE WAY DECOMPOSITION

TAX BURDEN 0.83 0.55 0.66 0.65 0.64

INTEREST BURDEN 0.98 0.99 0.98 0.90 0.84

MARGIN ON OPERATING PROFIT 0.57 0.15 0.17 0.16 0.12

TOTAL ASSET TURNOVER 0.46 1.22 1.31 1.55 1.53

FINANCIAL LEVERAGE 1.30 1.47 1.55 1.67 1.83

FVD/ ROE 28% 15% 22% 24% 19%

Book value 103.72 62.04 90.69 51.61 41.74

P/E RATIO 4.51 6.82 7.47 4.56 10.81

NISSAN’S FINANCIAL STATEMENT

AS PER ON JUNE 30, 2018

YEARS 2018 2017 2016 2015 2014

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 (Rupees in'000)
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 2,133,465 1,983,445 1,852,218 1,749,285 1,764,038
Intangible assets 2,744 50 66 88 118
Long term investments 222,906 242,630 242,630 192,630 152,630
Long term loans 6,972 9,546 9,438 6,477 4,864
Long term deposits 20,247 19,266 17,487 16,633 8,031
Due from Subsidiary Company 766,944 313,140 478,444 - -
TOTAL OF NON CURRENT ASSETS 3,153,328 2,568,077 2,600,283 1,965,113 1,929,681
CURRENT ASSETS
Stores, spares and loose tools 91,767 86,474 68,048 50,174 44,055
stock-in-trade 738,323 277,690 604,689 623,847 692,474
Trade debts 260,537 181,088 188,332 345,727 395,583
Loans and advances 72,190 49,773 51,116 40,212 25,451
Deposits and prepayments 11,260 16,625 18,317 39,094 15,721
Investment 100,928 0 0 30,092 38,109
Other receivables 64,605 18,082 86,131 30,749 49,102
Accrued interest/ mark-up 17,755 7,669 6,648 - -
Taxation – net - - 82,118 117,341 96,070
Bank balances 1,314,660 514,390 375,408 328,915 148,618
TOTAL OF CURRENT ASSESTS 2,672,025 1,151,791 1,480,407 1,606,151 1,505,273
Non-current asset classified as held for sale - 137,909 - - -
TOTAL ASSETS 5,825,353 3857777 4,081,090 3,571,264 3,434,954
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
share capital 450,025 450,025 450,025 450,025 450,025
subscription money against right issue 1,054,319 - - - -
Capital reserve
-share premium 40,000 40,000 40,000 40,000 40,000
-surplus on revaluation of fixed assets 972,241 988,570 1,017,664 1,048,295 1,054,188
1,012,241 1,028,570 1,057,664 1,088,295 1,094,188
Revenue reserve - unappropriated profits 2,151,296 1,313,543 1,111,191 784,086 334,375
4,667,88 2,322,40
TOTAL EQUITY 1 2,792,138 2,618,880 6 1,878,588
NON CURRENT LIABILITIES
Liabilities against assets subject to finance lease 47,439 53,699 40,177 45,635 13,006
long term deposits 9,611 9,611 8,611 9,611 10,611
Deferred gain on sale and lease back transaction - 6 11 111,969 94,795
Deferred taxation 264,738 282,527 273,566 268,329 158,039
TOTAL NON CURRENT LIABILITIES 321,788 345,843 322,365 435,544 276,451
CURRENT LIABILITIES

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Trade and other payables 695,581 621,077 1,121,197 642,881 767,840
Accrued mark-up on running finance 6,736 347 0 7,985 5,178
Short term finances 0 0 0 32,259 448,861
Current portion of liabilities against assets subject to finance
lease 17,721 18,474 13,659 11,387 3,656
Taxation-net 104,971 72,166 0 0 0
Unclaimed dividend 10,675 7,732 4,853 - -
TOTAL CURRENT LIABILITIES 835,684 719,796 1,139,845 694,512 1,225,535
TOTAL LIABILITIES 1,157,452 1,065,639 1,462,210 1,129,056 1,501,986
TOTAL EQUITY AND LIABILITIES 5,825,353 3,857,777 4,081,190 3,451,462 3,380,574

NISSAN’S PROFIT AND LOSS STATEMENT

YEARS 2018 2017 2016 2015 2014

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 …RUPEES IN '000'...
REVENUE 2,218,734 4,858,178 5,005,148 5,445,392 2,619,910
COST OF SALES 1,785,430 3,927,183 3,912,947 4,314,378 2,148,821
GROSS PROFIT 433,304 930,995 1,092,201 1,131,014 471,089
DISTRIBUTION COST 53,669 39,842 55,528 56,435 19,318
ADMINISTRATIVE EXPENSES 213,207 201,836 204,369 168,995 124,565
OTHER INCOME 1,130,227 114,320 80,351 26,335 12,695
OTHER EXPENSES 21,667 54,889 61,701 58,348 19,988
PROFIT FROM OPERATIONS 1,274,978 748,748 850,954 873,571 319,913
FINANCE COST 22,782 8,139 18,443 86,294 50,218
PROFIT BEFORE TAXATION 1,252,196 740,609 832,511 787,277 269,695
TAXATION 214,675 330,649 286,248 278,410 95,765
PROFIT AFTER TAXATION 1,037,521 409,960 546,263 508,867 173,930
…
(RUPEES)...
EARNINGS PER SHARE- BASIC AND DILUTED 23.02 9.1 12.14 11.31 3.86
FOR THE YEAR JUNE 30, 2018

GHANDHARA NISSAN RATIO ANALYSIS

 GRAPHS:

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 ANALSIS OF LIQUIDITY RATIOS:

3.25 LIQUIDITY RATIOS

2.75

2.25

1.75

1.25

0.75

0.25
2018 2017 2016 2015 2014
3.197410743
c 1.600163101 1.3 2.312632467 1.228257862
u 77396 76772 1136 89253
r
r
Liquidity e ratio
n
measures t the
company’s ability to
r
meet its short-term obligations. GNM’s current ratio has had an overall rising trend from 2014-
a
2018. However it did rise and fall sharply
t in the year 2015 and 2016 respectively. The company
has a very favorable current ratio of 3.20;
i compare to the industry average which is at 2.24.
Although favorable the ratio is too higho from the industry average which indicates that GNM
has more money idly kept which could2.236301254
i have been invested1.374149486
1.516929795 in somewhere profitable.
1.918665682 1.307752112The
n 31367
evidence of this in efficiency can be seen 91443
in the company’s 1625 balances
bank 40949which1631hold 1.3Million,
d
funds which could have been used more u productively. The quick ratio provides a much
narrower view of a company’s liquiditys only using the most liquid current assets. A similar trend
t
can be seen in the quick ratio i.e. the quick ratio rose from 2014 to 2018. Similarly, it
r
experiences a sharp growth in 2015 with y a sharp decline in 2016. GNM has a favorable quick
ratio of 2.01 which is higher than the industry average of 1.32. GNM can easily pay back its
short-term obligations (2 times). Howeverc this figure is very high the company is keeping to
much cash in hand even greater than the u industry average. Ideally a quick ratio of one is
r
preferred. r
e
n
t
19 | P a g e
r
a
t
i
ANALYSIS OF EFFICIENCY RATIOS:

130.00 EFFICIENCY RATIOS

110.00
90.00
70.00
50.00
30.00
10.00
2018 2017 2016 2015 2014
2.99003394
i 7.57484658 5.81091331 6.11729892 5.83499359
n587751 612539 924518 595087 835119
v
e
n
t
o
r
y
t
u
r a company performs day to day task, such as the
Efficiency ratio measures how efficiently
n of inventory. Inventory turnover ratio tells how
collection of receivables and management
o
effectively inventory is managed by comparing cost of goods sold with average inventory.
v
GNM’s inventory turnover remained stable from 2014 to 2016 and remained higher than the
e turnover rose from 2016 to 2017 however, declined
industry average of that period. Inventory
sharply from 2017 to 2018. GNM has ar current inventory turnover of 2.99 which when
compared to industry which is at 3.29 shows that GNM is less efficient than industry. This
decline can be attributed to sharp fall3.28772707
iin revenue
5.92644748
and in4.97081262
subsequent4.72894152 3.95575931
increase in inventory held;
n 210384 725415 914193 470114 878078
both factors contributing to a lower inventory turnover. The company has too much inventory
d
that is yet unable to sell it showing inefficiency. The higher the inventory turnover the fewer
u
days it requires to convert inventory into sales and similarly vice versa.
s
t
r 20 | P a g e
y
i
 EFFICIENCY RATIOS (PAYABLES)
110.00

90.00
EFFICIENCY RATIO (DSO)
47.50
70.00
42.50
37.50
50.00
32.50
27.50
30.00
22.50
17.50
10.00
12.50
7.50 2018 2017 2016 2015 2014
2.50
p 3.41980377592
2018 4.15389313047
2017 4.43479596707
20166.02793890499 7.515498020422014
2015
a 359 202 175 964 092
y r 10.0480452872 26.3016512370 18.7438017147 14.6912681604 13.2458169334
e 913 743 918 187 88
ac
be
l i
ev
sa
b
l
t e
The account receivable turnover measures how many times a business can turn its
u
account receivables s into cash during a period. GNM’s receivable turnover rose steadily
r However, fell drastically in 2018. This is because of decreased revenues
from 2014 to 2017.
nt
the subsequent inuaverage account receivables indicating why it has fallen. Compare to the
o r see that GNM has receivable turnover of 10.05 while the industry is at
industry average we
vn
32.62. It means that
e o our company is inefficient in its ability to collect its receivables. The
days of sales outstanding measures the average number of days it takes a company to
rv
collect payment after
e a sale has been made. GNM has had a very lenient policy in collecting
of its debts wheni 3.38348082205
compare
r 4.05984548255
to the industry. 3.78200471593 4.44540591653
In 2018, it gives it debtors5.04883668218
an average of 36 days
to pay them back n iwhile046the industry
32.6195345874 451gave only 21.5
42.9816126125 778 days. On332
19.4696635538 standalone 07 15.7585085980
this
13.6065625850 ratio tells us
d
that GNM credit policy
n is988
strict however65it is more lenient
174 than the677 industry it operates
97 at.
ud
su
ts
r tr
yy
pr
ae
y c.
. t
tu 21 | P a g e
ur
rn
no
 19.00
17.00
ACTIVITY RATIOS
15.00
13.00
11.00
9.00
7.00
5.00
3.00
1.00
2018 2017 2016 2015 2014
1.956265738
W 12.57687911 7.994160681 9.141341489 18.73116988
/ 40912 70101 87136 72156 03881
C

The T accounts
payable
U turnover
R
N indicates a
O company’s
ability V to pay off
its E accounts
R turnover ratios has had a falling trend from 2014 to
payable during a period. GNM payable
2018 which means that company does 4.745298053
I not pay9.668142932 6.684304709as6.748606599
its creditors frequently 11.64810534
as it used to do.
N 47245 46501 4654 59666 4495
We see that payable turnover is aligned with that of the industry i.e. the overall industry
pay their suppliers 3.4 times a yearD so we see that this ratio figure is okay. The day’s
U
payable outstanding ratio indicatesS the average time a company takes to pay its bills and
invoices to its trade creditors. GNMT has also had an increasing no of payables trend from
2014 to 2018. Its current days in payable
R is 106 days while the industry is at 108.79
which means that it is taking longerY to pay back its debts. However it’s still slightly takes
less time than the overall industry it operates. This increase in number of days in payable
W
from previous years can be because / of availing credit terms or because of insufficient funds
which is very unlikely since the company
C has substantial amount of money or funds in
bank.
0.775590611
f 1.879968887 2.192645720 2.796241341 2.715381454
i 047461 61619 1084 64734 24036
x
e
d
a
s
s
e
t
t 22 | P a g e
u
r
n
o
Working capital turnover measures how efficiently the company uses its working capital
support a given level of sales. GNM’s working capital fell from 2014 to 2018 overall fluctuating
heavily constant ups and downs. The company’s current working capital ratio is 1.96 which
when we compare to the industry tells us that the company is less efficient in using its short
term assets and liabilities for supporting sales while the industry generates 4.75 rupees amount
of sales for every rupees of the working capital used. The fall in this ratio is mostly because of a
decline in revenues with the subsequent increase in the average working capital hence leading
to a lower working capital ratio. The fixed asset turnover ratio measures a company’s return
heron their investment i.e. property plants and equipment’s by comparing net sales with their
fixed assets. GNM’s fixed asset turnover ratio has had a falling trend from 2014 to 2018.
Currently it is at 0.78 while the industry is at 4.81. This indicates that the assets are not being
utilized efficiently and very low amount of sales are being generated with the given amount of
assets. The low turnover can be related to over estimating demand and over investments in
machine to produce the products as it shows even in 2018 they had no production their cars
product line and plants were kept idle. The total asset turnover ratio measures the company’s
ability to generate sales from its assets. GNM’s total asset turnover has had a falling trend from
2014 to 2018. Its current total asset turnover ratio is at 0.46 while the industry is at 1.31 this
means that the GNM is less efficient than other companies in the industry. The company isn’t
using its assets efficiently and has production problems.

ANALYSIS OF SOLVENCY RATIOS:

23 | P a g e
 23% SOLVENCY RATIOS
18%

13%

8%

3%
2018 2017 2016 2015 2014
0.07417605
d 0.13060385 0.12830828 0.19588134 0.15186139
e5473565 9837873 4457478 0299672 8028732
b
t
t
o
e
q
u
i
t
y
0.05514125
i 0.05897931 0.05636759 0.14915183 0.12469269
86952738
n 00902376 76733888 159972 5762403
d
The debt to equity ratio is use
u to evaluate a company’s financial leverage. GNM has had a
s
falling debt to equity ratio from
t 2014 to 2018. Is current debt to equity is at 7% which is good
r
because industry average is yat 6%; this lower debt to equity that the company is less risky and
can easily handle more debt.D The debt to assets ratio indicates a company’s financial leverage.
GNM’s debt to assets rose from O 2014 to 2015 however declining from 2016 and remains stable
E
falling slightly in 2018. Its current debt
0.05943759
d to asset
0.09452697 ratio is0.12738234
0.08233682 at 6% which is good since the industry
0.08305351
97471741
e 7583204 66811073 9778678 39626324
average is at 4%. We understand b from this ratio that the company is heavily equity financed
t
rather than debt financed. It also shows that the company has low financial risk.
t
o
a
s
s
e
t
0.03980250
i 0.06123543 0.05367425 0.07472236 0.05186408
40205209
n 57821568 18232373 10038043 67281563
d
u
s
t
r
y
d
e
b
t
t
o
a
s
s
e
t
24 | P a g e
 95.00
SOLVENCY RATIOS
85.00
75.00
65.00
55.00
45.00
35.00
25.00
15.00
5.00
2018 2017 2016 2015 2014
f 1.29800339650 1.46716699149 1.54865636192 1.66775244144 1.82847649404
i 609 772 683 6 766
n
a
n
c
i
a
l
l
The interest coverage ratio measures the company’s ability makes interest payments on its
e
debt in a timely manner. GNM interest coverage ratio raised from2014 to 2017 and then fell in
v interest coverage ratio is 55.96 times which we know is good as the industry
2018. The current
e
is at 29.71. This shows that the GNM is capable of supporting additional debt and can easily pay
r
back its interest.
a This ratio is very high because our EBIT is very high while the finance cost or
interest payments
g are extremely low because our debt is quite low. This ratio can be seen as
e year as there was a single investment sale which contributed heavily to why
unreliable for this
the ratio is high if we remove this anomaly the interest coverage ratio is falling.
i 1.86833123937 1.82276208415 2.39902017999 4.02931642778 3.71047196448
n 326 525 62 575 205
d
u
s
t
r
y
l
e
v
e
r
a
25 | P a g e
g
e
t 55.9642700377 91.9950853913 46.1396735888 10.1231951236 6.37048468676
ANALYSIS OF PROFITABILITY RATIOS:

PROFITABILITY RATIOS
23%

18%

13%

8%

3%

2018 2017 2016 2015 2014

g 0.19529335197 0.19163460046 0.21821552529 0.20770111683 0.17981113855
r 4595 1325 5156 4197 0561
o
s
s
p
r
o
f
i
The gross profit margint shows how much profit a company makes after paying of all of its cost
m profit margin has remained steady from 2014 to 2018 its current
of goods sold. GNM’s gross
margin is at 20% whicha we know is good because the industry is at 15%. Even though revenue
r
has fallen GNM has efficiently its raw materials and labor in production process. The operating
g
profit margin measures how much revenues are left after all variable cost have been paid.
GNM’s operating profiti margin had a rising trend from 2014 to 2016 and started falling from
n profit margin is at 7% which is okay since the industry is at 7% as
2018. Its current operating
well.
i 0.15465272342 0.15067440665 0.18546367868 0.18193456536 0.16220325986
n 5608 7721 6026 5974 7152
d
u
s
t 26 | P a g e
r
y
 NET PROFIT MARGIN

48%
43%
38%
33%
28%
23%
18%
13%
8%
3%
2018 2017 2016 2015 2014
0.46761847
n 0.08438554 0.10914022 0.09344910 0.06638777
e 0713479 53628912 9219995 33887 66793516
t
p
r
o
f
The net profit margin indicates how
much net income the company achieves from total sales.
i
t
GNM’s net profit margin remained steady between 2014 and 2017 hovering around 7 to 8%.
m
However, it grows rapidly from 2017 to 2018. GNM’s current net profit margin is at 47% which
a
we know is really good because the
r
g
industry is at 26%. Although net profit margin is very high it
again has been influence by other
i
n
income so may fall heavily in the next year.
0.25540179
i 0.06710437 0.08534869 0.08919050 0.06707261
n4700278 53874051 13107498 37207679 0205099
d
55% u ROA/ROE
s
45% t
r
y
35%
n
25% p
m
15%

5%
2018 2017 2016 2015 2014
R 0.21429455145 0.10327922107 0.14276992413 0.14526153767 0.10127064292
O 1855 7768 0536 9815 564
A
I 0.15399883275 0.10840939494 0.13363315286 0.14073668983 0.10016450216
N 0677 8229 322 576 2142
D
U
S
T
The return on assets ratioR measures net income produced by totals assets. GNM’s ROA rose
Y
from 2014 to 2015 remained steady till 2016 but then fell in 2017 only to rise again in 2018.Its
R
current ROA is at 21% which
O we know is good because the industry is only at 15% showing that
A
GNM is more efficient in converting its money invested in assets to profits or net income.
R 0.27815505563 0.15152786407 0.22110155129 0.24226028411 0.18517099012
Return on equity is a measure
O of financial2897
7258 performance 6565 it can also
3712be said as to be return on
6627
E
net assets. GNM’s return on equity rose overall between the period of 2014 to 2018 fluctuating
I 0.25333250287 0.19942879933 0.31281905073 0.55638693863 0.36957582520
yearly between 15 and 25%.
N Currently
414 it has
066 an ROE of56828% which is good because
5227 2364 it is higher
D
U
S
T
R 27 | P a g e
Y
R
O
E
than industry average of 25% which means that GNM is above average at using its assets to
generate profits.

ANALYSIS OF DUPONT:

0.95
0.85
DUPONT
0.75
0.65
0.55
0.45
0.35
0.25
0.15
0.05
2018 2017 2016 2015 2014
D0.278155055 0.151527864 0.221101551 0.242260284 0.185170990
U 637258 072897 296565 113712 126627
P
O
N
T
G
N
M
4.25
3.75
U 111022
DUPONT
D0.228509950 0.247329734 0.404536550 0.870513593 0.553980660
588422 174795 156742 278101
3.25
P
O
2.75
N
2.25
T
1.75
H
1.25
P
0.75
M
0.25
I0.253332502 0.199428799 0.312819050 0.556386938 0.369575825
N 87414 2018 2017
33066 2016
73568 2015
635227 2014
202364
D 0.467618470
N 0.084385545 0.109140229 0.093449103 0.066387776
U P 713479 3628912 219995 3887 6793516
S M
T
R 0.255401794
I 0.067104375 0.085348691 0.089190503 0.067072610
Y N 700278 3874051 3107498 7207679 205099
D
U
S
T
Axis Title R
Y
N
P
M
DuPont basically breaks the ROE ratio to study more comprehensively the impact of firm’s
0.458267936
A 1.223897062 1.308132896 1.554445493 1.525441097
profitability, solvency and efficiency ratios. GNM
/ 090913 38938 profitability
09968 is indicated
98834 from
61004 net profit margin
T
which tends to increase steadily from
O 2017 to 2018 and is even higher than industry ratio in the
following period due to its sudden I increase
1.314034471 in other 1.665292395
1.751373101 incomes. 1.579111292
Secondly,1.493698253
its asset turnover ratio
N 94911 33213 94156 35733 57304
tends to be declining which indicates
D that the company is less efficient in using its assets more
U
productively. The financial leverage
S indicates how much company’s assets are financed through
T
R
Y 28 | P a g e
A
/
T
O
1.298003396
F 1.467166991 1.548656361 1.667752441 1.828476494
debt or equity. GNM’s assets are financed more through equity than debts which is relatively
good and is comparatively lower than industry too.

Further decomposing it we get to know the higher the tax burden and interest burden the
company receives more return on its ROE. For like the current tax burden of the company
has 83% in its profit and remaining 17% it only bear its tax to pay to government whereas
industry is at 76%. This shows that company is going good similarly its current interest
burden ratio reveals 98% of profit and only 2% are used in its interest payments where
industry.

FIVE 1.10
WAY
0.90
DECOMPOSITION
0.70

0.50

0.30

0.10
2018 2017 2016 2015 2014
T 0.82856118371 0.55354444788 0.65616310174 0.64636335114 0.64491369880
A 2454 0055 8806 5785 7913
X ANALYSIS
OF
B
U
R
D
E
N

VALUATION RATIO:I 0.75849800878 0.60679355934 0.65041737131 0.66880566234 0.65611478236

N 5839 7964 1891 5953 2102
These ratios are used inDinvestment decision making. The P/E ratio helps investors determine
. as compared to the company’s earnings. In short, the P/E ratio
the market value of a stock
T
shows that the market is willing to pay today for a stock based on its past or future earnings.
A
GNM’S P/E ratio demonstrates a declining trend which means that either company may be
X
undervalued or that the company is doing exceptionally well relative to its past trends.
Conversely, if there wasB a high P/E could mean that a stock’s price is high relative to earning
and possibly overvalued.D
I 0.98213145638 0.98912985410 0.97832667805 0.90121695889 0.84302607271 29 | P a g e
N 5914 3116 7803 63 3519
T
E
COMPANY B: INTRODUCTION TO HINO PAK LTD

COMPANY’S PROFILE:
Hino Motors Japan and Toyota Tsusho Corporation in collaboration with Al-Futtaim Group
of UAE and PACO Pakistan formed Hinopak Motors Limited in 1986.

OVERVIEW:
Hinopak Motors Limited assembles, manufactures and markets world renowned Hino
diesel trucks and buses in Pakistan. The Company has held the top position in the domestic
market for medium and heavy-duty vehicles for 17 consecutive years and is highly
acclaimed for quality and technological excellence.

Backed by Hino's expertise Hinopak has achieved standard of quality and excellence that
rival the best in the region. With over 60,000 vehicles on road, Hinopak has gained 50%
market share making it the largest manufacturer in medium and heavy-duty truck and bus
industry in Pakistan.

HinoPak's product range has been designed and built in Hino's traditions of automotive
excellence to be the leader in its category and the main emphasis has been given to
passengers' safety & comfort.

OBJECTIVES:
 The basic aim of Hinopak Motors Limited is to provide the society with safe,
economical, comfortable and environment friendly means of transportation by
manufacturing and supplying commercial vehicles and services.

 For individual, institutional and international customers:

To deliver: high quality, safe, durable, reliable, comfortable environment friendly

and economical products and services with their total satisfaction.

30 | P a g e
  For employees:

To foster corporate culture of mutual trust, respect for fundamental rights at

work, opportunities for professional growth and personal welfare so that they
are proud of being a member of the “Hinopak Family”

 For community and our nation:

Contribution towards economic and social development by providing means of

transportation and by progressive localization of the vehicles.

 For the shareholders:

To act in compliance with the norms expected of a subsidiary of the Toyota Group
of Companies and make a meaningful financial return to the shareholders.
PRODUCT LINE:

1. BUSES: Hinopak’s Bus Line Up includes the Road liner Supreme Luxury Bus
for long journeys, Citi liner Intercity Buses, Citi liner Urban Buses, luxury
Senator Coach and Rapid liner Deluxe Coach.
2. TRUCKS: Hino 500 Series, DUTRO – Light Duty Truck
Hino 300 Series
3. SPECIALIZED VEHICLES:

SERVICES:
Hinopak is first in commercial vehicles sector to start the establishment of 3S Dealership
network, which offers Sales, Service and Spare parts facilities all under one roof. This
comprehensive network of offices, 3S Service Dealers and Spare parts Dealers are
strategically located throughout the country.

Hinopak also maintains a fleet of mobile workshops, which provide prompt and efficient
back-up service to Hino consumers even at remotest of locations. Hinopak also maintains
an inventory at its own warehouses to ensure that genuine spare parts are readily
available throughout the country.

Hinopak has also established a state of the art product support training center which is
largest of its kind in the country which is fully equipped with all relevant Training Aids to
conduct a wide range of highly professional training courses for Mechanics, Drivers and
Supervisory Technical Personal, such as Foremen, Workshop Supervisors/ Managers etc.
engage with customers and fleet operator.
MAJOR EXPORTERS:
“Hinopak is Pakistan’s first automobile company to export its buses to Middle-east
and African countries”.

31 | P a g e
 HINO PAK LTD FINANCIAL RATIO
RATIOS
LIQUIDITY RATIO 2018 2017 2016 2015 2014
CURRENT RATIO 127.52% 143.37% 144.83% 152.47% 138.72%
QUICK RATIO 62.51% 62.28% 81.27% 98.40% 54.53%
CASH RATIO 54.46% 57.28% 71.38% 65.76% 35.52%
DEFENSIVE INTERVAL RATIO

ACTIVITY RATIO 2018 2017 2016 2015 2014

INVENTORY TURNOVER -3.59 -4.28 -4.13 -3.34 -2.08
DAYS OF INV -101.80 -85.32 -88.36 -109.26 -175.77
REC TURNOVER 55.19 59.66 20.20 12.52 18.27
DAYS OF SALE OUTSTANDING 6.61 6.12 18.07 29.15 19.98
PAYABLE TURNOVER -3.85 -4.17 -3.54 -2.44 -2.95
NO OF DAYS OF PAYABLES -94.77 -87.61 -103.05 -149.88 -123.91
WORKING CAPITAL TURNOVER 7.53 6.76 5.37 4.36 4.57
FIXED ASSET TURNOVER 8.85 8.81 8.47 6.27 4.93
TOTAL ASSET TURNOVER 2.17 2.28 2.02 1.60 1.46

SOLVENCY RATIO 2018 2017 2016 2015 2014

DEBT TO ASSET 2% 3% 3% 2% 2%
DEBT TO CAPITAL 5% 6% 5% 13% 11%
DEBT TO EQUITY 6% 6% 6% 15% 12%
FINANCIAL LEVERAGE RATIO 244% 218% 325% 639% 559%

PROFITABILITY RATIO 2018 2017 2016 2015 2014

GROSS PROFIT MARGIN 11% 11% 15% 16% 14%
OPERATING PROFIT MARGIN 8% 7% 10% 9% 7%
NET PROFIT MARGIN 5% 7% 6% 8% 7%
RETURN ON ASSETS 11% 16% 12% 14% 10%
RETURN ON EQUITY 27% 35% 40% 87% 54%

DUPONT ANALSYS 2018 2017 2016 2015 2014

NET PROFIT MARGIN 5% 7% 6% 8% 7%
ASSET TURNOVER 217% 228% 202% 160% 146%
FINANCIAL LEVERAGE 244% 218% 325% 639% 559%
Dupont 27% 35% 40% 87% 54%

32 | P a g e
FIVE WAY DECOMPOSITION 2018 2017 2016 2015 2014
TAX BURDEN 82% 94% 63% 69% 65%
INT BURDEN 71% 95% 85% 108% 109%
MARGIN ON OPERATING PROFIT 9% 8% 11% 11% 9%
FINANCIAL LEVERAGE 244% 218% 325% 639% 559%
TOTAL ASSET TURNOVER 217% 228% 202% 160% 146%
FIVE WAY DECOMPOSITION 27% 35% 40% 87% 54%

33 | P a g e
 HINO PAK STATEMENT OF AFFAIRS
2018 2017 2016 2015 2014
ASSETS
Non-current assets

Property, plant and equipment 3,096,033 2,823,965 2,187,347 1,995,543 1,964,836

Intangible assets 13,335 17,733 20,374 10,649 4,905

Long-term investments 72 72 72 423 2,266

Long-term loans and advances 21,452 23,659 13,979 14,215 14,303

Long-term deposits 7,770 6,921 6,541 6,821 6,758

Staff retirement benefit - prepayment - 1,967 - 12,544

3,138,662 2,874,317 2,228,313 2,040,195 1,993,068

Current assets

Stores, spares and loose tools 20,718 23,335 19,555 26,940 45,212

Stock-in-trade 4,914,595 3,259,661 2,769,839 1,814,191 2,656,382

Trade debts 714,935 249,536 503,964 1,287,210 731,067

Loans and advances 23,274 88,788 40,510 17,465 42,044

Trade deposits and prepayments 97,616 68,547 88,822 48,128 24,231

Refunds due from the government 295,743 253,229 66,866 115,349 333,624

Other receivables 438 1,273 3,726 36,356 28,253

Taxation - payments less provision 418,426 369,044 271,008 160,167 258,249

Accrued mark-up 6,248 2,935 7,016 9,738 4,805

Cash and bank balances 4,838,879 2,872,070 3,664,707 2,665,997 1,419,489

11,330,872 7,188,418 7,436,013 6,181,541 5,543,356

Total assets 14,469,534 10,062,735 9,664,326 8,221,736 7,536,424

EQUITY AND LIABILITIES

Share capital and reserves
Share capital

34 | P a g e
 124,006 124,006 124,006 124,006 124,006

Reserves 3,319,366 2,984,494 2,964,733 2,645,919 2,011,087

Revaluation surplus on land and
building 1,848,727 1,659,138 1,199,558 2,769,925 2,135,093

5,292,099 4,767,638 4,288,297 1,216,150 1,249,576

LIABILITIES
Non-current liabilities

Deferred taxation 123,436 126,270 95,808 76,102 59,583

Staff retirement benefit - obligations 168,377 154,922 145,913 105,289 96,230

291,813 281,192 241,721 181,391 155,813

Current liabilities

Trade and other payables 8,393,894 4,708,753 5,134,308 4,054,270 3,995,942

Unclaimed dividend 10,997 9,901 -

Unpaid dividend 178,214 - -

Provisions 302,517 295,251

8,885,622 5,013,905 5,134,308 4,054,270 3,995,942

Total liabilities 9,177,435 5,295,097 5,376,029 4,235,661 4,151,755

Contingency and commitments

Total equity and liabilities 14,469,534 10,062,735 9,664,326 8,221,736 7,536,424

35 | P a g e
 HINO PAK PROFIT AND LOSS STATEMENT

2018 2017 2016 2015 2014

Sales 26,615,071 22,477,498 18,086,850 12,636,288 9,208,420

(23,580,63 (20,011,39 (15,324,77 (10,662,90 (7,876,92

Cost of sales 1) 7) 4) 4) 5)

Gross profit 3,034,440 2,466,101 2,762,076 1,973,384 1,331,495

Distribution cost (440,146) (427,304) (397,964) (303,227) (306,117)

Administrative expenses (420,586) (385,651) (393,836) (359,074) (254,986)

Other income 300,789 254,505 192,661 261,044 164,274

Other expenses (125,947) (130,717) (131,192) (137,709) (80,113)

Profit from operations 2,348,550 1,776,934 2,031,745 1,434,418 854,553

Finance cost (679,002) (80,224) (304,703) 118,171 80,445

Profit before taxation 1,669,548 1,696,710 1,727,042 1,552,589 934,998

Taxation (520,173) (576,809) (613,667) (479,365) (311,059)

Profit after taxation 1,149,375 1,119,901 1,113,375 1,073,224 623,939

Other comprehensive income

Not be reclassified to profit or loss

Loss on measurements of post-employment
benefit obligations (23,728) (27,239) (29,305) (4,000) (17,530)

Impact of deferred tax 7,118 8,172 8,796 1,400 5,960

(16,610) (19,067) (20,509) (2,600) (11,570)

36 | P a g e
Reclassified to profit or loss

Gain on revaluation of land and buildings 247,674 532,160

Impact of deferred tax (16,088) (40,329) (20,739) (3,821)

231,586 491,831

Change in value financial assets (2,168)

Impact of deferred tax 737

(1,431)

Other comprehensive income for the year 214,976 472,764

Total comprehensive income for the year 1,364,351 1,592,665 1,092,636 1,069,403 610,938

Earnings per share - basic Rs. 92.69 Rs. 90.31 Rs. 89.78 Rs. 86.54 Rs. 50.31

37 | P a g e
 HINO PAK FINANCIAL ANALYSIS

LIQUIDITY RATIO
CURRENT RATIO INDUSTRY CURRENT RATIO
QUICK RATIO INDUSTRY QUICK RATIO

2.25
1.75
1.25
0.75
0.25
2018 2017 2016 2015 2014
CUR- 1.27519176485338 1.43369649006114 1.44829897232499 1.52469889770538 1.38724636143367
RENT
RATIO
INDUS- 2.23630125431367 1.51692979591443 1.3741494861625 1.91866568240949 1.3077521121631
TRY
CUR-
RENT
RATIO
QUICK 0.62508308366032 0.62284367174886 0.81265031236926 0.98403979014717 0.54525541161508
RATIO 2 7 2 8 4
INDUS- 1.31538771334954 0.79452954972669 0.65361316464192 0.99937901917799 0.51020150010962
TRY 1 1 6 2
QUICK
RATIO
Liquidity ratio measures the company’s ability to fulfill the short-term obligations. Current ratio of
HPL’s is almost constant through out the year but the industry’s current ratio is slightly increasing
from 2014-2018. Current ratio of HPL is comparatively low as compared to industry ratio.

The quick ratio provides the narrower view of a company’s liquidity only using the most liquid
current assets. As seen in the graph, quick ratio of the company increased from 2014-2015. It
decreased from 2015-2016, it decreased more in 2016-2017. In 2017-2018 it remained almost
constant. In comparison with industry’s quick ratio, the quick ratio of HPL was almost same in
2014-2017. The industry’s quick ratio increased sharply in 2018 and the quick ratio of HPL
remained almost constant. The quick ratio of HPL is not to very good as compared to industry.

38 | P a g e
EFFICIENCY RATIO

INVENTORY TURNOVER AND DOH

INVENTORY TURNOVER INDUSTRY INVENTORY TURNOVER
DOH INDUSTRY DOH

170.00
130.00
90.00
50.00
10.00
2018 2017 2016 2015 2014
INVEN- 3.58542019833016 4.27804838838291 4.13071193903869 3.34058412345141 2.07652503921037
TORY
TURNO
VER
INDUS- 3.28772707210384 5.92644748725415 4.97081262914193 4.72894152470114 3.95575931878078
TRY IN-
VEN-
TORY
TURNO
VER
DOH 101.801178051597 85.3192780593979 88.3624918383788 109.262328536391 175.774427520892
Efficiency ratio measures how efficiently a company performs day to day task, such as the collection
of receivables and management
INDUS- 111.936685372337of inventory.
66.752536215799Inventory turnover
75.5876686231003 ratio tells
84.4645927485003 how effectively
119.164026138024
inventory is managed
TRY by comparing cost of goods sold with average inventory. Inventory turnover
of HPL is comparatively
DOH lower than the industry averages. As it can be analyzed that the inventory
turnover of HPL improved from 2014-2017, but it sharply dropped in 2018. The inventory turnover
of HPL is comparatively low from the industry. The DOH of the HPL is high then the industry
average as it is directly effected by the inventory turnover.

39 | P a g e
 REC TURNOVER AND DOS
REC TURNOVER INDUSTRY REC TURNOVER
DSO INDUSTRY DSO
65.00
45.00
25.00
5.00
2018 2017 2016 2015 2014
REC 55.1910238877063 59.6615739880557 20.1955253928429 12.5218570097167 18.271200262706
TURNO
VER
INDUS- 32.6195345874988 42.981612612565 19.4696635538174 13.6065625850677 15.758508598097
TRY REC
TURNO
VER
DSO 6.61339424944611 6.11784060663691 18.0733104437755 29.1490311474382 19.976793793072

INDUS- 21.46943373488 9.99764815561205 18.7732072179526 26.9968604664284 23.7663315393291

TRY
DSO receivable turnover measures how many times a business can convert its rec into
The account
cash in a period. The receivables of HPL decreased in 2014-2015 and increased little in 2016 but
then increased drastically in 2017. However it again decreased a little in 2018. It can be clearly seen
that company has a higher rec turnover as compared to industry which states that company is
efficient in collecting its receivables. The days of sales outstanding shows that how much time does
it take to convert the receivables into cash after the sales are made. The DOS of the company varies
in all year but the company is not too lenient in collecting its rec. The DOS of HPL is higher as
compared to industry which states that company is more efficient in collecting its receivables.

40 | P a g e
 PAYABLE TURNOVER AND DOP
PAYABLE TURNOVER INDUSTRY PAYABLE TURNOVER
DOP INDUSTRY DOP

130.00
90.00
50.00
10.00
2018 2017 2016 2015 2014
PAYABL 3.34715786817732 3.96579783463701 3.1292134648038 2.86287292806699 2.58217534394048
E
TURNO
VER
INDUS- 3.38348082205046 4.05984548255451 3.78200471593778 4.44540591653332 5.0488366821807
TRY
PAYABL
E
TURNO
VER
DOP 109.047739716788 92.036965881648 116.642729588563 127.494307002459 141.353684929467
The payable turnover shows the company’s ability to pay its debt in a period. The trend of
payables of HPL has increased from 2014-2017 and dropped a little in 2018. It shows that the
company’s payable INDUS- 107.889504835714
turnover 89.9531712603721
has fallen down in the 99.4732016217382
period. This 94.0228419042143 94.9599970213729
indicates that HPL has improved its
policy in paying its debt and becoming efficient in paying the debts. Days in payable shows the
TRY
average time taken by a company to pay back it’s debt. It shows that days of payable have
decreased slightlyDOPin the term 2014-2017 and has increased in 2018. However in the 2018, the
industry’s DOP is 108 days and the company takes 109 days to pay its debts.

41 | P a g e
 WORKING CAPITAL AND FIXED ASSET
TURNOVER
WORKING CAPITAL TURNOVER IND WORKING CAPITAL TURNOVER
FIXED ASSET TURNOVER IND FIXED ASSET TURNOVER
13.00
9.00
5.00
1.00
2018 2017 2016 2015 2014
WORK- 7.53433036853577 6.75940674791989 5.37444873705945 4.35587170947177 4.56504080860199
ING
CAPITAL
TURNO
VER
IND 4.74529805347245 9.66814293246501 6.6843047094654 6.74860659959666 11.648105344495
WORK-
ING
CAPITAL
TURNO
VER
Working capital turnover measures how efficiently the company uses its working capital support a
given level of sales.FIXED
Working capital of8.8101618185132
8.85254081213322 HPL increased from 2014-2018.
8.47455363794562 The4.93461187253763
6.26603720114458 comparative analysis
shows that HPL is ASSET
more efficient in using its short term assets and liabilities for supporting sales.
HPL generates 7.53 TURNOrs for 1 rs used in working capital. It shows that HPL is more efficient in
working capital turnover
VER as compared to industry. The fixed asset turnover ratio measures a
company’s return on their investment which is property plants and equipment by comparing sales
IND It4.81406571159034
with their fixed assets. can be analyzed5.34506535306469
that HPL’s5.33359967902701
fixed asset4.53113927139596
turnover have 3.824996663389
been increased from
FIXED
2014-2016 and almost constant from 2016-2018. This indicates that the HPL is more efficient in
ASSETturnover and is currently very high as compared to industry.
managing fixed asset
TURNO
VER

42 | P a g e
 TOTAL ASSET TURNOVER
T ASSET TURNOVER IND T ASSET TURNOVER

2.25

1.75

1.25

0.75

0.25
2018 2017 2016 2015 2014
T ASSET 2.16980100780731 2.27884914027487 2.02245189578343 1.60377709072633 1.46195540953603
TURNO
VER
IND T 1.31403447194911 1.75137310133213 1.66529239594156 1.57911129235733 1.49369825357304
ASSET
TURNO
VER

The total asset turnover ratio measures the company’s ability to generate sales from assets. The
HPL total asset turnover have been increased from 2014-2018. This graph states that HPL is more
efficient in managing its total assets. This means that HPL is using its assets efficiently.

SOLVENCY RATIOS

43 | P a g e
 DEBT TO ASSET AND DEBT TO EQUITY RATIO
DEBT TO ASSET IND DEBT TO ASSET DEBT TO EQUITY IND DEBT TO EQUITY

13%
9%
5%
1%
2018 2017 2016 2015 2014
DEBT 0.02016740829386 0.02794389398110 0.02501167696536 0.02206237222893 0.02067465949368
TO AS- 77 95 73 07 03
SET
IND 0.04717173188371 0.07927387690949 0.07665998071142 0.10897185626430 0.08626802876120
DEBT 63 14 26 1 63
TO AS-
SET
DEBT 0.05514125869527 0.05897931009023 0.05636759767338 0.14915183159972 0.12469269576240
TO EQ- 38 76 88 3
UITY
IND 0.05728942922122 0.07675314383672 0.06935221217724 0.13826709068919 0.10387310486251
DEBT 4 08 8 9 8
Debt to asset ratio TO
indicates
EQ- the company’s financial leverage. The company’s debt to asset
remained constant over
UITY the years. The debt to asset ratio of the company is not to good as
compared to industry as industry have a ratio of 5% in 2018 while HPL has 2% only. This states
that company is not heavily equity financed. It shows that company have a higher financial risk.
Debt to equity ratio indicates the financial leverage of the company. The debt to equity ratio of HPL
increased in 2015 while it decreased in 2015-2018. Current debt to equity of industry is 6% while
the HPL’s debt to equity is almost same. The higher debt to equity indicates the company is more
risky and can not easily handle more debts.

44 | P a g e
 FINANCIAL LEVERAGE AND INT COVERAGE
FINANCIAL LEVERAGE IND FINANCIAL LEVERAGE
INT COVERAGE IND INT COVERAGE
55.00
45.00
35.00
25.00
15.00
5.00
2018 2017 2016 2015 2014
FINAN- 2.43865908224042 2.17835717681278 3.24938399806556 6.3908804141255 5.59246743491645
CIAL
LEVER-
AGE
IND FI- 1.86833123937326 1.82276208415525 2.3990201799962 4.02931642778575 3.71047196448205
NAN-
CIAL
LEVER-
AGE
Interest
INT 3.45882633629945 22.1496559633028 6.66795207136129 12.138494216009 10.6228230468022 coverage ratio
COVER- measures the
AGE to make interest payment on it’s debts in a timely manner. The HPL interest
company’s ability
coverage ratio increased in 2014-2015, decreased in 2016, drastically increased in 2017 and
IND INT 29.7115481870243 57.0723706773142 26.4038128301284 11.130844669828 8.49665386678393
drastically decreased in 2018. The industry ratio also moved in the same manner. The current
COVER-
interest coverage ratio is 3.46 while the industry has a ratio of 29.71. this indicates that HPL is not
AGE
capable of supporting additional debts and can not easily pay its interest. The income statement
clearly shows that the huge amount of debt has been taken and the cost of payment is very high
now.

45 | P a g e
PROFITABILTY RATIOS

GROSS AND OPERATING PROFIT MARGIN

19%
17%
15%
13%
11%
9%
7%
5%
3%
1%
2018 2017 2016 2015 2014
GP 0.1140120948766 0.1097142128541 0.1527118320768 0.1561680138977 0.1445953811837
MAR- 21 17 96 52 43
GIN
IND GP 0.1546527234256 0.1506744066577 0.1854636786860 0.1819345653659 0.1622032598671
MAR- 08 21 26 74 52
GIN
OP 0.0769399037109 0.0790539053768 0.1123327168633 0.1135157729864 0.0928012623229
MAR- 463 351 57 97 61
GIN
GP MARGIN IND GP MARGIN OP MARGIN IND OP MARGIN
IND OP 0.0710923842876 0.1048218019096 0.1331473987525 0.1345517349434 0.1050320345302
MAR- 62 69 64 61 98
The gross profit margin shows how much profit a company makes after paying all of its cost of good
GIN
sold. Gross profit margin has increased in 2015 and 2016, decreased in 2017. The gross profit
margin of the HPL is low as compared to industry average. Even though the revenue have increased
all years but the GP margin did not increased which indicates that HPL is not much efficient in
managing raw material and labor in process. The Operating profit margin measures how much
revenue is left after all variable costs are paid. The op of HPL increased in 2015, remained constant
in 2016, decreased in 2017 and remained constant in 2018. The current operating profit margin is
8% while the industry has 7% which indicates that it is good.

46 | P a g e
 NET PROFIT MARGIN
NP MARGIN IND NP MARGIN

28%

23%

18%

13%

8%

3%
2018 2017 2016 2015 2014
NP 0.04318511868707 0.04982320541191 0.06155715340150 0.08493190405283 0.06775744373084
MAR- 77 91 44 58 63
GIN
IND NP 0.25540179470027 0.06710437538740 0.08534869131074 0.08919050372076 0.06707261020509
MAR- 8 51 98 79 9
GIN

The net profit margin ratio indicates that how much net profit does company achieves from total
sales. The net profit margin decreased in 2018 which indicates that they have been paying more
interest cost or taxes. The current net profit margin is just 4% while the industry’s average np is
26% which shows that HPL is not doing well while industry is very high.

47 | P a g e
 RETURN ON ASSET AND EQUITY
ROA IND ROA ROE IND ROE

85%
65%
45%
25%
5%
2018 2017 2016 2015 2014
ROA 0.09370311404949 0.11353956881869 0.12449638159590 0.13621184199170 0.09905836139864
95 4 5 4
IND 0.15399883275067 0.10840939494822 0.13363315286322 0.14073668983576 0.10016450216214
ROA 7 9 2
ROE 0.22850995011102 0.24732973458842 0.40453655017479 0.87051359315674 0.55398066027810
2 2 5 2 1
IND 0.25333250287414 0.19942879933066 0.31281905073568 0.55638693863522 0.36957582520236
ROE 7 4

The Return on asset ratio measures net income produced by total assets. The ROA of HPL
increased in 2015 and decreased every year. The current ROA of HPL is 9% while the industry has
15% which shows it is not too good. It indicates that HPL is not much efficient in converting it
money invested in assets into profits. Return on equity ratio indicates the financial performance.
ROE of HPL increased in 2015 and then decreased every year till 2018. The current ROE of HPL is
23% while the industries have 25% which indicates that company is not doing to good as the ratio
is higher in the industry.

48 | P a g e
DUPONT ANALYSIS

DUPONT
650%
450%
250%
50%
2018 2017 2016 2015 2014
N P 0.04318511868707 0.04982320541191 0.06155715340150 0.08493190405283 0.06775744373084
MAR- 77 91 44 58 63
GIN
INDUS- 0.25540179470027 0.06710437538740 0.08534869131074 0.08919050372076 0.06707261020509
TRY NP 8 51 98 79 9
MAR-
GIN
ASSET 2.16980100780731 2.27884914027487 2.02245189578343 1.60377709072633 1.46195540953603
TURNO
VER
INDUS- 1.31403447194911 1.75137310133213 1.66529239594156
N P MARGIN 1.57911129235733 1.49369825357304
INDUSTRY NP MARGIN
TRY AS-
SET ASSET TURNOVER INDUSTRY ASSET TURNOVER
TURNO FINANCIAL LEVERAGE INDUSTRY FINANCIAL LEVERAGE
DuPont analysis
VER
basically breaks the ROE ratio to study more comprehensively the impact of firm’s profitability,
FINAN-The
solvency and efficiency. 2.43865908224042 2.17835717681278
net profit margin 3.24938399806556
is very 6.3908804141255
low as compared 5.59246743491645
to industry which indicates
that there are manyCIAL
finance cost and taxes. Secondly the asset turnover is high which indicates that
company is very much efficient in managing its assets more productively. The financial leverage
LEVER-
indicates that how much company’s assets are financed through debt or equity. HPL assets are
AGE
more financed by debt as compared to equity which is higher then industry too.
INDUS- 1.86833123937326 1.82276208415525 2.3990201799962 4.02931642778575 3.71047196448205
TRY FI-
NAN-
CIAL
LEVER- 49 | P a g e
AGE
 DUPONT
0.95
0.85
0.75
0.65
0.55
0.45
0.35
0.25
0.15
0.05
2018 2017 2016 2015 2014
DUPON 0.22850995011102 0.24732973458842 0.40453655017479 0.87051359315674 0.55398066027810
T 2 2 5 2 1
IND 0.25333250287414 0.19942879933066 0.31281905073568 0.55638693863522 0.36957582520236
DUPON 7 4
T

DUPONT IND DUPONT

5 WAY DECOMPOSITION:

50 | P a g e
 5 WAY DECOMPOSITION
6.50
4.50
2.50
0.50
2018 2017 2016 2015 2014
TAX 0.68843483385922 0.66004267081587 0.64467164087497 0.69124797354612 0.66731586591629
BUR- 4 3 6 2 1
DEN
IND TAX 0.75849800878583 0.60679355934796 0.65041737131189 0.66880566234595 0.65611478236210
BUR- 9 4 1 3 2
DEN
INT 0.71088458836303 0.95485257190193 0.85002891603030 1.08238254121184 1.09413693474834
BUR- 3 9 9
DEN
IND INT 0.TAX
84650802237447
BURDEN 0.97199121300252IND0.TAX91417779704405
BURDEN 0.99179975005406
INT BURDEN 0.96858150373093
BUR- 3 8 6 8 1
DEN IND INT BURDEN OP MARGIN IND OP MARGIN
T A TURNOVER IND T A TURNOVER FINANCIAL LEVERAGE
OP 0.08824135768790 0.07905390537683 0.11233271686335 0.11351577298649 0.09280126232296
Further
MAR- IND FIN55ANCIAL LEVERAGE 51 7 7 1
decomposing it, weGIget
N to know that the higher the tax burden, the company receives more return
on its ROE. For like the current tax burden of the company is 69% in its profit and remaining 31% it
IND OP 0.33144173670848 0.11658752971956 0.14117423432266 0.13696983450360 0.10745482767968
only bears its tax to pay the government whereas industry is at 76%. HPL interest burden ratio
MAR- 3 1 3
reveals that 71% are profits remained in 29% to pay the interest payment whereas industry have 1
GIN
51 | P a g e
T A 2.16980100780731 2.27884914027487 2.02245189578343 1.60377709072633 1.46195540953603
TURNO
only to pay 15%.

52 | P a g e