3

ANALYSIS OF FINANCIAL STATEMENTS
OF

2 0 20 04 20 05 20 06 20 07 20 08 AC T S ID E T R IO AT SR. NO 2 RATIO TYPE YEAR 2004 2005 2006 2007 2008 ACID TEST TIMES 0. we analyze financial statements with following types of ratios.90 0.6 0. The ability to meet short term obligation has declined in 2008 with respect to prior years. which shows the ability to pay current obligation more quickly without considering inventory and prepaid expenses as liquid assets has decreased.8 0.54 RATIO ANALYSIS: Acid test ratio.4 0. LIQUIDITY RATIOS SR.2 1 0. from 2004 to 2008.09 0.6 0. CUR E R IO R NT AT AC TES RATIO ID T 1 0.1.68 0.91 0.4 0. RATIO ANALYSIS: With Ratio analysis. NO 1 RATIO TYPE YEAR 2004 2005 2006 2007 2008 CURRENT TIMES 1.87 0. This negative trend demands some corrective action from the .2 0 20 04 20 05 20 06 20 07 20 08 1.82 RATIO ANALYSIS: The current ratio is decreasing continuously over the period.The liquidity of the company is decreasing.61 0.69 0. Its shows that there is trouble to firm to meet its current obligation.8 CUR E T RN R IO AT 0. Some corrective action should be taken by management to overcome the liquidity problem.94 0.

34 0. The net working capital is negative except 2004. SR. The situation is alarming.management.38 0. The ability to meet expenses for day to day operation shows constraints.37 0. .36 0. The cash available to pay current liabilities is almost same from 2004 to 2008. NO 4 RATIO TYPE 2004 2005 20 04 20 05 20 06 20 07 20 08 YEAR 2006 2007 2008 NET WORKING Rs 775 (1162) (1119) (666) (2114) CAPITAL ANALYSIS: The net working capital is also declining over the time period. CAS R IO H AT 0.32 2004 2005 2006 2007 2008 NE WOR INGC IT T K AP AL 1000 500 0 C H AS RATIO -500 -1000 -1500 -2000 -2500 NT E W R ING OK CAPIT AL SR.36 0.33 0. So this ratio is satisfactory.34 0.38 0.38 ANALYSIS: cash ratio is increasing slightly over the time period. The organization is in problem to meet its current obligations. NO 3 RATIO TYPE YEAR 2004 2005 2006 2007 2008 CASH RATIO TIMES 0.35 0.39 0.37 0.

it shows the effective management of the credit department. So overall situation is quite satisfactory. So improvement has been made in 2008 in collection of accounts receivables.58 TURNOVER ANALYSIS: The number of times receivables are converted into cash has showed continuous increased from 2004 to 2006. In 2007 the accounts receivables turnover showed decline but again in 2008 it has showed increased.65 36. .95 21.19 27. NO 2 RATIO TYPE YEAR 2004 2005 2006 2007 2008 AVERAGE COLLECTION DAYS 29 15 10 17 13 PERIOD ANALYSIS: The number of days requires to collect receivables have decreased over the time. ACCOUNTR CEIVAB T NOVE E LE UR R AVE AG COLLE T R E C ION PE IOD R 35 30 25 ACCO T UN R CE E IVAB LE T N VE UR O R 40 35 30 25 20 15 10 5 0 20 04 20 05 20 06 20 07 20 08 20 15 10 5 0 20 04 20 05 20 06 20 07 20 08 AVE AGE R CO CT LLE IO NPE IO R D SR.81 24. NO 1 RATIO TYPE YEAR 2004 2005 2006 2007 2008 ACCOUNT RECEIVABLE TIMES 12.ACTIVITY RATIOS SR. So this ratio shows the positive trend as efficiency has improved.

NO RATIO TYPE YEAR 2004 2005 2006 2007 2008 4 INVENTORY TIMES 31. So this ratio shows the positive trend as efficiency has improved.54 55. However it has increased considerably in 2008. .31 25.SR. NO 3 RATIO TYPE YEAR 2004 2005 2006 2007 2008 DAY SALES IN DAYS 29 15 10 17 13 RECEIVABLE ANALYSIS: The number of days requires to collect receivables have decreased over the time.47 29. So improvement has been made regarding converting inventory into sale in 2008. it shows the effective management of the credit department. DA S ESINREC A ES Y AL EIV BL INVE OR T NOVE NT Y UR R 60 50 40 D S SIN AY ALE R CE E IVAB LE 30 20 10 0 2004 2005 2006 2007 2008 20 04 20 05 20 06 20 07 20 08 35 30 25 20 15 10 5 0 IN N O VE T R Y T NO R UR VE SR. It was increased during 2005 and once again showed decline in 2006 and 2007.93 47.20 TURNOVER ANALYSIS: Inventory turnover ratio is fluctuating over the years.

from 2006 to 2008 improvement has been made by the management. . Improvement has been made and overall trend is positive. However improvement has been made in 2008. The “day sales in inventory” has improved as it is only 5 days in 2008. NO 5 RATIO TYPE YEAR 2004 2005 2006 2007 2008 INVENTORY TURNOVER DAYS 11 8 12 14 7 IN DAYS ANALYSIS: The number of days required to convert inventory in ACCOUNTS RECEIVABLES or cash were increased in 2006 and 2007. NO 6 RATIO TYPE YEAR 2004 2005 2006 2007 2008 DAY SALES IN DAYS 12 9 17 13 5 INVENTORY ANALYSIS: The number of days required to convert inventory in ACCOUNTS RECEIVABLES or cash was increased in 2006. INVE OR T NOVE IN DAYS NT Y UR R D S SIN INVE OR AY ALE NT Y 18 16 14 IN N O Y VE T R T N VE UR O R INDAYS 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 DAYS S ALE IN IN N O Y VE T R 16 14 12 10 8 6 4 2 0 20 04 20 05 20 06 20 07 20 08 SR.SR. This was indication of negative trend.however.

4 0.6 0. DEBT RATIO 0.3 0.90 0. As in last 3 years the more than 50% of the total assts are being financed by creditors. NO 2 RATIO TYPE YEAR 2004 2005 2006 2007 2008 DEBT TO SHAREHOLD.1 0 20 04 20 05 20 06 20 07 20 08 D B TO S ET HAR H E OLD R WE H E S ALT 1.2 0 20 04 20 05 20 06 20 07 20 08 DB T ET O S HAR H LD EO E SWE H R ALT SR.TIMES 0.56 0.72 0. It is obvious that amount of funds provided by the 25shareholders is more than creditors.30 0.7 0.8 DE T B R IO AT 0. NO 1 RATIO TYPE YEAR 2004 2005 2006 2007 2008 DEBT RATIO TIMES 0.77 0. so the current situation is quite alarming. It is obvious that amount of funds provided by creditors to purchase total assets are continuously increasing.6 0. 20 15 10 5 0 20 04 20 05 20 06 20 07 20 08 T IME IN E E T TRS E ND AR E .50 0.96 -RS WEALTH ANALYSIS: The amount of funds provided by creditors in relation to shareholders equity has been increasing TIME INTERES EARNED T from 2005 to 2008.62 ANALYSIS: The amount of funds provided by creditors in relation to total assets has been increasing from 2005 to 2008.DEBT MANAGEMENT RATIOS SR.2 0.4 0.5 0. Organization still has capacity to raise loans.22 0.2 1 0.84 0.

THERE IS NO OPERATING LEASE. SO WE CAN’T FIND FIXED COVERAGE RATIO. SR.10 15. Afterwards in 2008.SR.13 14. NO 3 RATIO TYPE YEAR 2004 2005 2006 2007 2008 TIME INTEREST TIMES 17.36. RATIO TYPE YEAR .36 23. Some improvement has occurred in 2008. 4 FIXED COVERAGE RATIO TIMES PROFITABILITY RATIOS SR. The overall ability to pay interest on loan was better in 2005 which was increased from 2004 ratio of 17. IN FAUJI FERTILIZER CASE. it indicates increase in the interest paying ability in 2008.94 12.44 EARNED ANALYSIS: The times interest earned ratio analysis showed fluctuation over the time period. NO RATIO TYPE CAUSE OF NOT FINDING AS OPERATING LEASE IS MUST FOR FIXED COVERAGE RATIO.

But the above time serious analysis clearly implicit.22 15. The management has taken reasonable as well as tremendous efforts to improve profitability.42 36. that the ability of the organization to generate profit is improving.42 35.33 MARGIN ANALYSIS: Although there was slight decline in 2005 from 2004 net profit margin.40 MARGIN ANALYSIS: The gross profit margin of the organization has showed a continuous increased from 2006 to 2008. But the above time serious analysis clearly implicit. NO RATIO TYPE YEAR 2004 2005 2006 2007 2008 . This showed that the management is managing it selling and admin expenses efficiently and effectively with increasing sales profit to add more to net profits.48 18.04 19.59 40.06 32. Although there was slight decline in 2005 from 2004 gross profit margin. that the ability of the organization to generate profit is improving. profit generation capability is showing positive trend over the years % SR.NO 1 2004 2005 2006 2007 2008 GROSS PROFIT 37. % GR SPR ITMAR IN OS OF G 45 40 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 25 20 GR S OS PR F O IT MAR GIN 15 10 5 0 NE PR ITMAR IN T OF G NE PR F T O IT MAR IN G 2004 2005 2006 2007 2008 SR.86 21. NO 2 RATIO TYPE YEAR 2004 2005 2006 2007 2008 NET PROFIT 19.

It’s apparent from the above analysis that management should take some corrective action to 1.79 23.2 0 20 04 20 05 20 06 20 07 20 08 0.6 0.09 0.9 1. But TOTAL AS ETSTURNOVER in S year 2007 and 2008 OPERATING ASSETSTURNOVER there is negative indication.2 0 20 04 20 05 20 06 20 07 20 08 O R IN PE AT GAS E S ST T NO R UR VE . % O ERATINGP F MARGIN P RO IT 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 OP ERATING P ROFIT MARGIN ASSET MANAGEMENT RATIOS SR. So the overall situation is quite satisfactory. However in 2008 a considerable increased has occurred. There utilization of asset was efficient from 2004 to 2006.8 0.3 OPERATING PROFIT 29.8 TT O AL AS E S ST T N VE UR O R 0.6 0.4 0. Operating profit has increased considerably.67 MARGIN ANALYSIS: operating profit was increased in 2005 from 2004.2 improve the current situation.24 27.08 31.59 30.2 1. It was decreased in 2006 as compared to previous year.97 0. NO 1 RATIO TYPE YEAR 2004 2005 2006 2007 2008 TOTAL ASSETS TIMES 0.4 0. 1 1 0.96 TURNOVER ANALYSIS: The utilization of assets to generate more revenue is fluctuating over the time period.8 0.

36 25.08 25. S R T to generate more profit for the ON FIXED AS ETS E S assetsURN ON AS ETS % 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 R T NO E UR N AS E S ST 3.06 1.95 1. Some corrective actions should be taken.5 1 0.10 1. NO 3 RATIO TYPE YEAR 2004 2005 2006 2007 2008 RETURN ON 23.49 ASSETS ANALYSIS: The return on assets is increasing continuously from 2004 to 2008. So there is effective utilization of the RETURN organization.5 3 2.47 26.91 0.SR. It showed that assets are being used by the management effectively and efficiently to ad more to net profit of the organization. SR. In 2007 and 2008 it has decreased.05 TURNOVER ANALYSIS: Operating assets turnover has increased consistently up to 2006.5 2 1. It is apparent that operating assets utilization to revenue generation has been decreased. NO 2 RATIO TYPE YEAR 2004 2005 2006 2007 2008 OPERATING ASSETS TIMES 0.5 0 20 04 20 05 20 06 20 07 20 08 RT N E UR O F E N IX D AS E S ST .73 31.

20 25. % 30 25 R T NO E UR N O R ING PE AT AS E S ST 20 15 10 5 0 2004 2005 2006 2007 2008 20 04 20 05 20 06 20 07 20 08 R T NO E UR N IN S ME VE T N T .12 2. The above trend shows that fixed assets are no utilizing optimal level. NO 4 RATIO TYPE YEAR 2004 2005 2006 2007 2008 RETURN ON FIXED 2.74 2.33 ASSETS ANALYSIS: return on operating assets has increased consistently over the 5 years. % SR. E UR S RT N E UR INVE T utilized analysis RATINGAS ETS operating assets ONareS MENT efficiently and effectively in the generation of the 40 operating profit.40 ASSETS ANALYSIS: Fixed assets utilization was efficient up to year 2006. The return on fixed assets has decreased in year 2007 and 2008. some measures should be taken for effective utilization of fixed assets. So. NO 5 RATIO TYPE YEAR 2004 2005 2006 2007 2008 35 30 25 20 15 10 5 0 RETURN ON OPERATING 23.77 3.SR. The above time series R T N ON OPE shows.76 33. The overall trend is quite 35 satisfactory.91 28.50 26.29 2.

49 32. NO RATIO TYPE YEAR 2004 2005 2006 2007 2008 .41 36. which indicates that funds are being utilized effectively to generate revenue.SR. % INVESTOR ANALYSIS: SR.81 36.94 in 2008.76 34. The return on investment has increased considerably from 2006 to 2008.94 INVESTMENT ANALYSIS: The overall trend is positive over the time period. NO 6 RATIO TYPE YEAR 2004 2005 2006 2007 2008 RETURN ON 26. It is 36.

Earning made on each share of the stockholders equity is increasing. D G E OFF E RE INANCIAL LE R E VE AG E NING PE S AR AR R H E 14 12 10 D GR EO E E F F ANC IN IAL LE R VE AGE 8 6 4 2 0 20 04 20 05 20 06 20 07 20 08 1. This shoed that the PAYOUTRATIO shareholders fund is being usedP/ER IO efficiently and AT effectively to maximize the shareholders wealth.07 1. in 2008 once again it indicate a negative trend. that earning capacity of the organization is improving continuously with the passage of time.09 1.09 1.12 PER SHARE ANALYSIS: Earning per share has been increased continuously.04 1. 20 18 16 14 P AYO UT R IO AT 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 P/ER IO AT 140 120 100 80 60 40 20 0 20 04 20 05 20 06 20 07 20 08 .05 1.06 LEVERAGE ANALYSIS: The degree of financial leverage is fluctuating over the time period. The loan is not being utilized efficiently to made more earnings available to shareholders.11 9.39 10.1 1.1 DEGREE OF FINANCIAL TIMES 1. It was improved in year 2006 and 2007 but.04 1.03 1.06 1. It is apparent.01 20 04 20 05 20 06 20 07 20 08 E N G AR IN P RS AR E H E SR.07 1.92 9.06 1. NO 2 RATIO TYPE YEAR 2004 2005 2006 2007 2008 EARNING Rs 8.08 1.02 1. So the above trend needs corrective action.86 13.

But in 2008 this ratio has increased.89 RATIO 8 ANALYSIS: Dividend payout ratio is fluctuating over the years. It is quite alarming for the marker price of the stock. NO 5 RATIO DIVIDEND YIELD TYPE YEAR 2004 15.19 2005 13.SR. % SR. Although it was decreased in year in 2006 and 2007 as compared to year 2005. which indicates some improvement has been made. Corrective action should be taken immediately.57 % .07 2007 9. SR. It has decreased considerably in 2008.25 122.36 2005 11.23 2007 10.4 133.44 % ANALYSIS: Price/earning ratio has been decreasing continuously over the five years.80 2006 11.12 106. It reflects a very bad indication on the price of the share. NO 4 RATIO P/E RATIO TYPE YEAR 2004 17.39 2006 8. NO 3 RATIO TYPE YEAR 2004 2005 2006 2007 2008 PAYOUT 123.45 101.93 2008 4.43 2008 13.

ANALYSIS: Dividend yield which shows dividend per share in relation to market price per share. DIV IDENDY D IEL 20 15 10 5 0 2004 2005 2006 2007 2008 D IVID ND E YIE LD VERTICAL COMMON SIZE ANALYSIS (INCOME STATEMENT) SALES COST OF SALES 2004 100 62.60 .58 2007 100 64.41 2008 100 59.29 2006 100 67. It was decreasing from 2005 to 2007.57 2005 100 64. So the above analysis shows that some improvement has been made. Dividend yield showed improvement in 2008 as compared to previous 3 years.

04 35.59 8.49 138.66 4.94 114.78 186.86 40.09 19.49 8.44 29.20 139.02 9.77 150.92 126.42 1.21 110.98 19.31 2006 142.21 32.44 153.49 114.GROSS PROFIT DISTRIBUTION COST OPERATING PROFIT FINANCE COST OTHER EXPENSES OTHER INCOME NET PROFIT BEFORE TAX PROVISION FOR TAXATION NET PROFIT AFTER TAX 37.31 9.86 27.08 158.67 208.21 118.63 18.52 167.91 133.44 111.40 1.08 164.51 162.71 9.78 2007 135.28 2.84 15.08 134.17 23.75 134.42 8.62 134.65 28.40 29.82 11.78 115.67 2.02 1.48 35.46 4.33 INDEX ANALYSIS /HORIZONAL ANALSIS (INCOME STATEMENT) SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST OPERATING PROFIT FINANCE COST OTHER EXPENSES OTHER INCOME (DIVIDEND/OTHERS) NET PROFIT BEFORE TAX PROVISION FOR TAX NET PROFIT AFTER TAX EPS 2004 100 100 100 100 100 100 100 100 100 100 100 100 100 2005 121.40 8.97 178.27 2.67 2.70 154.32 7.91 115.35 159.96 163.84 123.31 122.05 116.51 27.38 122.49 21.89 133.72 31.46 5.76 118.17 128.77 2.83 111.38 155.23 87.59 157.45 111.00 .47 2.30 26.08 2.21 23.97 5.51 115.56 136.31 128.35 32.18 124.16 188.22 110.33 131.86 156.42 9.04 151.93 6.31 110.91 2008 145.

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