Presentation To:

Prof.Asim Din
Financial Statement Analysis
 Executive Summary
 Horizontal Analysis
 Vertical Analysis
 Ratio Analysis
 Conclusions/Recommendations
 Perception
Introduction of Kohinoor Mills Limited

Incorporated in 1987 as a small weaving mill

Today broadly undertakes three major
businesses weaving, dyeing and power
generation.
 Kohinoor Mills undertakes to provide
superior products to its customers. With an
annual turnover of over PKR 8.5 billion
Today Kohinoor Mills employs about 1,700
employees
It aims to create superior value for
Kohinoor’s customers and stakeholders
without compromising its commitment to
safety.
Nishat Mills Limited is the flagship company
of Nishat Group.
 It was established in 1951.
It is one of the most modern, largest
vertically integrated textile companies in
Pakistan.
 Nishat Mills Limited has 227,640 spindles,
805 Toyota air jet looms.
The Company also has the most modern
textile dyeing and processing units, 2
stitching units for home textile, 2 stitching
units for garments and Power Generation
facilities with a capacity of 120 MW.

The Company's production facilities

comprise of spinning, weaving, processing,
stitching and power generation.
As per the given instructions we have
selected two companies.

 Kohinoor Mills Limited.

 Nishat Mills Limited
 Kohinoor mills limited is Located in 8th K.M.
Manga Raiwind Road, District Kasur. Lahore,
Pakistan.

 Nishat
mills limited’s Head office is in 7,
Main Gulberg,Lahore.
 Kohinoor mills limited is Located in
state of Punjab
 Nishat mills limited is Located in state
of Punjab
 www.kohinoormills.com
 nishat@nishatmills.com
 Kohinoor mills limited stock symbol is KML

 Nishat mills limited stock symbol is NML

 Fiscal year of Kohinoor Mills Limited is

Fiscal Year Ends: June 30

Most Recent: June 30, 2016

 Fiscal year of Nishat Mills Limited is

Fiscal Year Ends: June 30

Most Recent: June 30, 2016

Kohinoor mills:
 Mr. Riaz Ahmed Chairman
 Mr. Rashid Ahmed Member
 Mr. Ali Fayyaz Sheikh Member
 Mr. Shahbaz Munir Member
Nishat mills:
 Mr. Khalid Qadeer Qureshi
 Syed Zahid Hussain
 Ms. Nabiha Shahnawaz Cheema
Kohinoor mills limited:
The Company is principally engaged in the
business of textile manufacturing covering:
 Weaving
 Bleaching
 Dyeing
 Dealing in yarn
 Cloth and other goods and fabrics made from raw
cotton
 Synthetic fiber
 Generate, and supply electricity
Nishat mills limited:
 Spinning
 Weaving
 Processing
 Home textile
 Power generation
 Garments
 InIncome statement year by year, Gross
profit of K.M.L. is increase as compare to
N.M.L. because K.M.L. cost of goods sold are
more and sales are more than N.M.L. K.M.L.
Profit from operation more than N.M.L.
because K.M.L. expenses are same of both
companies but other income are less than
N.M.L. Net profit of K.M.L. is less than
N.M.L.
 In Balance Sheet year by year, K.M.L. non-
current assets and current assets are less
than N.M.L. Total assets of K.M.L. are less.
K.M.L. current liabilities and non-current
liabilities are less than N.M.L. Total equity of
K.M.L. is less than N.M.L. Total liabilities and
equity of K.M.L. are less than N.M.L.
 InCash flows statement year by year, Cash
generated from operation of K.M.L. is less
than N.M.L. Net increase/decrease in cash
and cash equipment of K.M.L. is less than
N.M.L. because operating activities of K.M.L.
are less and Investment activities are more
and financing activities are less than N.M.L.
 In Income Statement year by year, Gross
profit of K.M.L. is decrease as compare to
N.M.L. because K.M.L. cost of goods sold
more than N.M.L. It should always be
included as part of any financial analysis.
Here, percentages are computed in relation
to Sale which is considered to be 100%. .
K.M.L. Profit from operation less than N.M.L.
because K.M.L. expenses are more and other
income is less. K.M.L. net profit is less than
N.M.L.
 Vertical Analysis on the Balance Sheet
normalizes the Balance Sheet and expresses
each item in percentage of total
assets/liabilities. It helps us to understand
how each item of the balance sheet has
moved over the years. In Balance Sheet year
by year, K.M.L. non-current assets and
current assets are less than N.M.L. Total
assets of both companies are 100%. K.M.L.
current liabilities and non-current liabilities
are more than N.M.L. Total equity of K.M.L.
is less than N.M.L. Total liabilities and equity
of both companies are 100%.
Current ratio:
 shows a firm’s ability to covers its current
liabilities with its current assets.

1.80
1.60
1.40
1.20
KML
1.00
0.80 NML
0.60
0.40
0.20
-
2016 2015 2014
Acid test ratio:
 shows a firm’s ability to meet current
liabilities with its most liquid assets.

1.80
1.60
1.40
1.20
1.00
KML
0.80
NML
0.60
0.40
0.20
-
2016 2015 2014
Debt to equity ratio:
 Shows the extent to which the firm is
financed by debt.

7.00
6.00
5.00
4.00
KML
3.00
NML
2.00
1.00
0.00
2016 2015 2014
Debt to total asset ratio:
 shows the % age of the firm assets that are
supported by debt financing.

0.80
0.70
0.60
0.50
0.40 KML
0.30 NML
0.20
0.10
0.00
2016 2015 2014
Total capitalization:
 shows the relative importance of L.T. debt
to the L.T financing of the firm.

0.80
0.70
0.60
0.50
0.40 KML
0.30 NML
0.20
0.10
0.00
2016 2015 2014
Receivable turnover ratio:
 indicates quality of receivables and how
successful the firm is in its collections.

35.00
30.00
25.00
20.00
KML
15.00
NML
10.00
5.00
0.00
2016 2015 2014
Average collection period:
 Average number of days tells that
receivables are outstanding.

35.00
30.00
25.00
20.00
KML
15.00
NML
10.00
5.00
0.00
2016 2015 2014
Payable turnover:
 Payable Turnover Ratio indicates the
promptness of payment to suppliers by the
firm.

25.00
20.00
15.00
KML
10.00
NML
5.00
0.00
2016 2015 2014
Payable turnover in days:
 Average numbers of day that payable are
outstanding.

50.00

40.00

30.00
KML
20.00 NML

10.00

0.00
2016 2015 2014
Inventory turnover:
 Inventory Turnover Ratio indicates the
effectiveness of the inventory management
practices of the firm.

60.00
50.00
40.00
KML
30.00
NML
20.00
10.00
0.00
2016 2015 2014
 Total asset turnover:
 Total Assets Turnover Ratio indicates the
overall effectiveness of the firm in utilizing
its assets to generate sales.

1.50

1.00
KML
0.50 NML

0.00
2016 2015 2014
Return on equity:
 ROE indicates the profitability to the
shareholders of the firm (after all expenses
and taxes).

30.0%

25.0%

20.0%

15.0% KML

10.0% NML

5.0%

0.0%
2016 2015 2014
Return on asset:
 ROA indicates the profitability on the assets
of the firm (after all expenses and taxes).

30.0%
25.0%
20.0%
15.0% KML

10.0% NML

5.0%
0.0%
2016 2015 2014
Gross profit margin:
 G.P.M. indicates the efficiency of operations
and firms pricing policies.

20.00%

15.00%

10.00% KML
NML
5.00%

0.00%
2016 2015 2014
Operating profit margin:
 O.P.M. means profit earned from operations.

15.00%

10.00%
KML
5.00% NML

0.00%
2016 2015 2014
Net profit margin:
 N.P.M. indicates the firm’s profitability after
taking account of all expenses and income
taxes.

12.00%

10.00%

8.00%

6.00% KML
NML
4.00%

2.00%

0.00%
2016 2015 2014
Earnings per share:
 represents the relationship between the
earnings made during an accounting period
and the Number of shares issued.

$18.00
$16.00
$14.00
$12.00
$10.00
KML
$8.00
NML
$6.00
$4.00
$2.00
$-
2016 2015 2014
Price earning ratio:
 indicates the dollar amount an investor can
expect to invest in a company in order to
receive one dollar of that company’s
earnings.
12.00

10.00

8.00

6.00 KML
NML
4.00

2.00

-
2016 2015 2014
Market to book:
 Market to book ratio shows that how much
investors willing to pay for company.

12.00
10.00
8.00
6.00 KML
4.00 NML

2.00
0.00
2016 2015 2014
Dividend per share:
 Earnings distributed to shareholders as cash
dividends.

$6.00
$5.00
$4.00
$3.00 KML

$2.00 NML

$1.00
$-
2016 2015 2014
Pay-out ratio:
 It is measured of how much earnings a
company is paying out to its shareholders as
compared to how much it is retaining for
reinvestment.
90.00%
80.00%
70.00%
60.00%
50.00%
KML
40.00%
NML
30.00%
20.00%
10.00%
0.00%
2016 2015 2014
Dividend yield:
 reflects the relationship between the
dividends per share paid to shareholders and
the current market price of a share.

12.00%
10.00%
8.00%
6.00% KML
4.00% NML
2.00%
0.00%
2016 2015 2014
Earning yield:
 Earnings yield are the earnings per share for
the most recent 12-month period divided by
the current market price per share.

16.00%
14.00%
12.00%
10.00%
8.00% KML
6.00% NML
4.00%
2.00%
0.00%
2016 2015 2014
 Liquidity ratio:
 Current ratio:
In 2016 K.M.L., Current Ratio is weaker than
industry average.

Year 2016

KML 0.75

Industry 2.45
 Acid test ratio:
Year 2016
KML 0.63

Industry 1.27

In 2016 K.M.L., Quick Ratio is weaker than

industry average.
 Debt to equity ratio:
Year 2016

KML 5.08

Industry 47.61

 In 2016 K.M.L. has less debt utilization

relative to the industry average.
 Debt to total asset ratio
Year 2016
KML 0.69
Industry 50.1

 In 2016 K.M.L., Total debts to assets are less than industry

average.
 Total capitalization:
Year 2016
KML 0.69
Industry 18.01

 In 2016 K.M.L., Total capitalization has less long term debt

utilization relative to the industry average.
 Receivable turnover ratio
Year 2016

KML 17.98

Industry 16.14

 In 2016 K.M.L. Receivables turnover is more than industry average.

 Average collection period:
Year 2016

KML 20.30

Industry 22.61

 In 2016 K.M.L. has improved the average collection period to that of the
industry average.
 Payable turnover ratio:

Year 2016

KML 8.47

Industry 6.7

 In 2016 K.M.L. Payable turnover is less than industry average.

 Payable turnover in days:

Year 2016

KML 43.11

Industry 54.47

 In 2016 K.M.L. Payable turnover in days are less than industry.

 Inventory turnover:
Year 2016
KML 18.28
Industry 3.3

 In 2016 K.M.L. has a very good Inventory turnover ratio than industry.
 Total asset turnover:
Year 2016

KML 1.35

Industry 1.11

 In 2016 K.M.L. has a strong Total assets turnover ratio than industry.
 Return on equity:
Year 2016

KML 13.7

Industry 27.60

 In 2016 K.M.L. has a poor Return on Equity than industry.

 Return on asset:

Year 2016

KML 13.6

Industry 19.34

 In 2016 K.M.L. has weak Return on assets than industry.

 Gross profit margin:
Year 2016

KML 16.29

Industry 23.89

 In 2016 K.M.L. has a weak Gross Profit than industry.

 Operating profit margin:

Year 2016

KML 7.64

Industry 88.44

 In 2016 K.M.L. has a less Operating margin than industry.

 Net profit margin:

Year 2016

KML 1.39

Industry 79.24

 In2016 K.M.L. has a poor net profit margin

than industry.
 Earnings per share:

Year 2016

KML 2.33

Industry 7.99

 In 2016 K.M.L. has a poor Earning per share than industry.

 Price earning:

Year 2016

KML 8.65

Industry 21.27

 In 2016 K.M.L. has less price earning than industry.

 Market to book:
Year 2016

KML 2.02

Industry 30.15

 In 2016 K.M.L. has weak Market to Book Ratio than industry.

Corporation valuation ratio:
 Dividend per share:

Year 2016

KML 1.40

Industry 6.00

 In 2016 K.M.L. has fewer Dividends per Share Ratio than industry.
 Payout ratio:
Year 2016

KML 60.24

Industry 18.61

 In 2016 K.M.L. Pay-out Ratio is more than industry.

 Dividend yield:

Year 2016

KML 5.20

Industry 1.97

 In 2016 K.M.L. Dividend Yield is stronger than industry.

 Earning yield:

Year 2016

KML 8.63

Industry 5.20

 In 2016 K.M.L. Earning Yield is stronger than

industry.
 Liquidity ratio:
 Current ratio:
 Year 2016

NML 1.65

Industry 1.42

 In 2016 N.M.L. Current Ratio is weaker than industry average.

 Quick ratio:

Year 2016

NML 1.57

Industry 0.7

 In 2016 N.M.L. Quick Ratio is stronger than industry average.

 Debt to equity:
Year 2016

NML 0.40

Industry 112.74

 In 2016 N.M.L. has less debt utilization relative to the industry average.
 Debt to total asset:

Year 2016

NML 0.28

Industry 15.7

In 2016 N.M.L., Total debts to assets are less than industry average.
 Total capitalization:
Year 2016

NML 0.28

Industry 32.1

 In 2016 N.M.L., Total capitalization has less long term debt utilization
relative to the industry average.
Activity ratio:
 Receivable turnover ratio:

Year 2016

NML 11.28

Industry 10.34

 In 2016 N.M.L. Receivables turnover is more than industry average.

 Average collection period:
Year 2016

NML 82.35

Industry 35.29

 In 2016 N.M.L. has improved the average collection period to that of the
industry average.
 Payable turnover ratio:

Year 2016

NML 10.25

Industry 9.1

 In 2016 N.M.L. Payable turnover is less than industry average.

 Payable turnover in days:
Year 2016

NML 35.6

Industry 40.01

 In 2016 N.M.L. Payable turnover in days are less than industry.

 Inventory turnover:
Year 2016

NML 36.08

Industry 3.6

 In 2016 N.M.L. has a very good Inventory turnover ratio than industry.
 Total asset turnover:
Year 2016

NML 0.62

Industry 0.78

 In 2016 N.M.L. has a Weak Total assets turnover ratio than industry.
Profitability ratio:
 Return on equity:

Year 2016

NML 8

Industry 4.38

 In 2016 N.M.L. has a more Return on Equity than industry.

 Return on assets:
Year 2016

NML 7

Industry 4.47

 In 2016 N.M.L. has strong Return on assets than industry.

 Gross profit margin:

Year 2016

NML 18

Industry 13.24

 In 2016 N.M.L. has a strong Gross Profit than industry.

 Operating profit margin:
Year 2016

NML 12

Industry 8.88

 In 2016 N.M.L. has a more Operating margin than industry.

 Net profit margin:

Year 2016

NML 10.7

Industry 6.45

 In 2016 N.M.L. has a strong net profit margin than industry.

 Earnings per share:
Year 2016

NML 14.00

Industry 33.29

 In 2016 N.M.L. has a poor Earning per share than industry.

 Price earning:

Year 2016

NML 7.71

Industry 23.34

 In 2016 N.M.L. has less pricing earning than industry.

 Market to book:
Year 2016

NML 10.79

Industry 0.88

 In 2016 N.M.L. has strong Market to Book Ratio than industry.

Valuation ratio:
 Dividend per share:

Year 2016

NML 5.00

Industry 4.00

 In 2016 N.M.L. has more Dividends per Share Ratio than industry.
 Payout ratio:
Year 2016

NML 35.71

Industry 12.02

 In 2016 N.M.L. Pay-out Ratio is more than industry.

 Dividend yield:

Year 2016

NML 4.63

Industry 3.05

 In 2016 N.M.L. Dividend Yield is stronger than industry.

 Earning yield:
Year 2016

NML 12.97

Industry 8.21

 In 2016 N.M.L. Earning Yield is stronger than

industry.
 Nishat Mills Limited is good in liquidity. Kohinoor Mills limited is
better in financing. Nishat Mills limited is successful in receiving it’s
collection from creditors and have good payment policy but requiring
more days to pay. Nishat mills limited have good inventory
management. Kohinoor mills limited are utilizing their assets in a
good ways. Nishat mills limited is earning more from their
shareholders as compare to Kohinoor mills limited. Nishat mills
limited are utilizing its assets in a good way. Nishat mills limited have
less cost of goods sold, indirect expenses and interest expenses which
results in more gross profit, operating profit and net profit. Nishat
mills limited have more net income which means that their earning
per share is more. Kohinoor mills limited are good in paying to
investors. Nishat mills limited are getting more from their investors.
Nishat mills limited are good in investing.
According to us Nishat mills limited is best
company as compare to Kohinoor mills
limited.