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Financial Analysis of ORIX Leasing Pakistan 201 0

ASSIGNMENT
FINANCIAL ANALYSIS OF ORIX LEASING COMPANY 2010
GROUP MEMBERS: Muntazir Hussain Nasab Hussain Mohammad Siddique Asfandiyar Jan

SUBMITTED TO: Sir. Adnan Javed

SUBJECT: Financial Management

DATE: 10th May, 2011

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Page1 . But for best analyzation industry average ratio as in this case leasing companies average ratio are extremely important but as we do not have their industry average ratio. so for this purpose we make the internal analyzation or comparison by finding the financial ratios of 2009 and 2010 and then we compare them.Financial Analysis of ORIX Leasing Pakistan 201 0 INTRODUCTION: We take the annual report of ORIX Leasing Company which is Japanese Company and tried to analyze its Balance sheet and Income Statement.

Financial Analysis of ORIX Leasing Pakistan 201 0 Page1 .

Financial Analysis of ORIX Leasing Pakistan 201 0 Page1 .

24. ACID TEST OR QUICK RATIO: Quick ratio: For 2010: Current assets . In 2009 the company’s Quick ratio was 1.438.860.888 / 8.426.348 In 2009 the Current Ratio of ORIX Leasing Company was 1.Financial Analysis of ORIX Leasing Pakistan 201 0 ANALYSIS: LIQUIDITY RATIO: Current Ratio: For 2009: Current assets /current liabilities 13.084 = 1.058 = 1.86 which means that if company have 1 Rupee of current liabilities then it have 1.827 / 8. Where as in 2010 it become 1.Inventory / Current liabilities 11.574.574.058 = 1. similar to current . a slight decrease in company’s current ratio.863 For 2010: 11.860. Which is not a good sign for the company.066.857.574.59.345 For 2009: Page1 13.426.084 = 1.530.419 / 7.85.419 .855 It have the same meanings and tells the same thing as the current ratio but it is a more conservative approach.799.857.506.827 .055 / 7.348.86 Rupees of current assets to fulfill or cover those liabilities.530.438.066.799.

016.356.323.524529629 x 1010 / 2. they mainly deals in “Just in Time” inventory.176267042 x 1010 / 2.79 In 2009 the company Debt-to-Equity was 12.866 = 0.79 in 2010 which is a good sign for the company.077.915 .524529629 x 1010 / 27. In 2010 the Quick Ratio of ORIX was 1.Financial Analysis of ORIX Leasing Pakistan 201 0 ratio whish was 1.15 which decrease to 10.244 (Similar to Current Ration in 2010) which means that if Company have 1 Rupee of current liabilities then it have 1.15 Paisa of Financing for each 1 Rupee being provided by the shareholders.780 = 0. FINANCIAL LEVERAGE OR DEBT RATIOS: Debt to equity ratio : For 2009: Total Debt / shareholder’s equity 2. In 2010 the company’s Debt-to-Equity ratio was 10.86 because it is a leasing company which do not have most or huge inventory on the stock.15 For 2010: 2.206.176267042 x 1010 / 23.924 Page1 For 2010: 2.026. In 2009 Debt-to-Equity ratio was 12.344 Rupees of current assets to cover those liabilities.79 Paisa of Financing for each 1 Rupee being provided by the shareholders.15 which tells us that creditors are providing 12.910.485 = 12.79 which tells that the creditors are providing 10. DEBT TO TOTAL ASSETS RATIO : Debt to total assets ratio: Total debt / Total assets For 2009: 2.433 = 10. It is more conservative approach because the current asset do not contain inventories.779.

45 which means that if the company have 1 Rupee of interest expense then it have 1.237 / 1.230. It is a lower ratio and is a threat for company ability to cover its interest payments.998.45 For 2010: 2.45 Rupees of EBIT to cover those interest expenses. While in 2010 the company Debt-to-Total Assets Ratio becomes 0.064.865 COVERAGE RATIO: Interest coverage ratio : For 2009: Earning before interest and taxes / Interest Expense 2.06 Page1 In 2009 the ORIX Leasing Company interest coverage ratio was 1.807.623 / 2.229 / 2.443 = 1.725.988514072 x 1010 = 0.92 which means that 92% of company’s assets were financed with debt and the remaining 8% were equity which is share holder’s equity which is very bad sign and contains a huge risk for the company’s investors that why the ORIX Leasing Company bears a huge loss in 2009.190.91 which is a slight decrease from 2009 but again is a bad sign for the company’s investors and shareholders. RATIO OF LONG TERM CAPITALIZATION: Ratio of long term capitalization: Long term debt / Total capitalization For 2009: 17.426.06 which is again much .382.963.Financial Analysis of ORIX Leasing Pakistan 201 0 In 2009 the company’s Debt to total assets ratio was 0.426. In 2010 the interest ratio becomes 1.064.443 = 1.895 For 2010: 12.244.349 / 1.497960077 x 1010 = 0.

50 (Good Sign) which tells that 3.217.Financial Analysis of ORIX Leasing Pakistan 201 0 lower value and a bad sign for company ability to cover the interest payments.50 = 104 Days If we convert this ratio in days then in 2009 the company takes 125 days to convert account receivables to cash.89 For 2010: 3. ACTIVITY RATIO : Receivable Turnover (RT) ratio: For 2009: Annual credit sales / receivables 3.510.159. The Increase RT ratio from 2009 to 2010 is a good sign for Company.757.527.523.50 In 2009 the company’s Receivable Turnover ratio was 2. According to the company’s annual report the company collection policy was “Net 90” which means that company should have to strict its policies for account receivables and in 2010 the company takes 104 days to convert the account receivable into the cash which is a improvement toward companies collections policy and a good achievements from 2009 to 2010.89 times account receivable have been turnover (In Cash) during 2009.90 = 125 Days For 2010: 365 /3.948 = 2. Page1 PROFITABILITY IN RELATION TO INVESTMENT: .299.50 time account receivable have been turnover during 2010. In 2010 the company RT Ratio Increase to 3.951 = 3.072.316 /1.89 which tells that 2.173 / 1. Activity Ratio in Days: For 2009: Days in the year / Receivable Turnover 365 /2.

While in 2010 the ROI Ratio was 0. the Company bears a loss of 467.44 which tells that the company generates Net Profit of 0.206.866 = 4. It tells that the shareholders have interested 100 Rupees at it generate 22.096. As it is a profit but it seems to be very less and also we do not know the industry average ratios.910.343 For 2010: 104.343 For 2010: 104.026.017 Paisa of loss.4 x 10-3 In 2009 the company’s ROI ratio was -0. While in 2010 the ROE ratio was 0.779.4 Rupees of loss.323.8% .0518 Page1 In 2009 the company’s ROE Ratio was -0.343 /27. Which was a huge loss for the company in 2009. then -ive sign shows the loss.780 = (0.017 which tells that ORIX employs 1 Rupee of Assets and it generate -0.485 = (0. then why the ORIX bears a huge loss in 2009.224 which shows a loss.44 Paisa when 1 Rupee total assets are employed.017)* *In 2009 there was no Profit.096.2247)* *In 2009 Company bears a loss of 467. RETURN ON EQUITY (ROE) RATIO: ROE Ratio: For 2009: Net Profit after Taxes / Share holder’s Equity 467.Financial Analysis of ORIX Leasing Pakistan 201 0 Return on Investment (ROI) or Return on Assets: Assets For 2009: Net Profit after Tax / Total 467.833 /2016356433 = 0.833 /23.096.0518 or 51.483.077.483.343 /2.096.

865 1.348 1.345 10.2247 2010 1.79 0.44 0.924 0.863 1.915 0.45 2.Financial Analysis of ORIX Leasing Pakistan 201 0 and which shows the Profit and it tells that the Company generate 51 Rupees of Profit upon 100 Rupees of shareholder’s Investments.15 0.0518 Page1 .017 -0.89 125 Days -0.5 104 Days 0. SUMMARY Ratios Current Ratio Acid Test or Quick ratio Debt to Equity Ratio Debt to Total Assets Ratio of Long Term Capitalization Interest Coverage Ratio Receivable Turnover Ratio (RT) Receivable Turnover Ratio (RT) In Days Return on Investments (ROI) Return on Equity (ROE) 2009 1.855 12.06 3.895 1.