GUL AHMED

RATIO ANALYSIS
• NABEEL UR RAHMAN
• MIR YOUSUF
• MUNEEB AHMED
• ZOHAIB NADEEM
• FAISAL NAZIR
INTRODUCTION
• Formed in 1953 listed in 1970
• Formed by Gul ahmed group founder Haji Ali Muhammad
• Capacity of 51840 spindles 300 state of the weaving machines
• Make everything from yarn to finish products
• Have our own power plant
KEY FACTORS TO BE CONSIDERED
• Textile giant and also strong presence in retail business
• Entered in retail by launching ideas brand
• Excessive chain of more than 40 retail stores
• Main three businesss Gul ahmed textile Gul ahmed energy and Habib metro
politan bank
 RATIO ANALYSIS

Liquidity 2018 2017 2016 Sapphire Nishat

ratios Textile Mills Textile Mills
2018 2018
Current ratio 1.14 1.11 1.08 1.18 1.37

Quick ratio 0.4 0.37 0.26 0.76 0.71

Liquidity ratios analysis
1. Long term borrowing 1.27 billion under state bank financing to textile sector
2. Golden opportunity because of low interest rates
3. Opportunity buying of inventory and enhanced operational spinning.
4. Deferred liabilities and staff retirement benefits have reduced by 73%
5. Repayments of loans have decreased by 3%
 ACTIVITY RATIOS

Activity 2018 2017 2016 Sapphire Nishat Textile

ratios Textile Mills Mills
2018 2018
Inventory 2.52 2.5 1.99 5.28 3.86
Turnover
Inventory 145 146 184 112 94.5
turnover days
Avg collection 10.44 14.04 15.09 9.8 21.32
Period
 Activity Ratios

Activity ratios 2018 2017 2016 Sapphire Nishat Textile

Textile Mills Mills
2018 2018
Avg Collection 35 26 24 20.1 21.32
period days
Avg payment 3.26 4.41 3.38 3.91 4.23
period
Avg payment 107 84 120 95 81.84
period days
Total assets 1.05 1.09 1.00 0.68 0.52
turnover
Activity ratios analysis
• Inventory turnover ratio has improved during the year because of higher
turnover and efficiency in supply chain.
• Debtors’ turnover has decreased due to higher yarn sales volume in local market
with higher credit period and strategic non-discounting of export bills.
• Creditors’ turnover ratio has increased as the Company had negotiated better
credit terms from suppliers rather than relying on short term borrowings
• Total assets has slightly decreased because of disposal but higher profits have
maintained that.
 Financial Leverage Ratios

Financial 2018 2017 2016 Sapphire Nishat Textile

leverage ratios Textile Mills Mills
2018 2018
Debt ratio 0.35 0.40 0.36 0.62 0.28

Debt equity 0.55 0.65 0.53 0.80 0.06 (6.8%)

Interest earned 3.36 1.92 2.47 8.57 5.99

ratio
Financial leverage ratios analysis
• Long-term loans were obtained but repayments during the year have ensured
that the debt ratio has been sustained.
• Higher earning has also improved debt equity ratio
• Due to lower debt level and higher profitability, the interest coverage ratio
• has increased to 3.36 from 1.92 last year
 Market ratios

Market ratios 2018 2017 2016 Sapphire Nishat Textile

Textile Mills Mills
2018 2018
Earning per 5.82 2.5 3.92 16.01 11.65
share
Price earning 7.38 16.36 9.23 14.93 6.24
ratio
Market ratios analysis
• Earnings per share had increased to Rs. 5.82 from Rs. 2.50 (restated) in the
current year due to higher profitability.
• Price earnings ratio decreased to 7.38 times from 16.36 times which is a
combined result of higher earnings per share and improvement in market price
of the shares
 Profitability Ratios
Profitability 2018 2017 2016 Sapphire Nishtat
ratios Textile Mills Textile Mills
2018 2018
GP ratio 20.99% 17.99% 22.64% 12.24% 16.03%

Operation 11.37% 8.16% 10.44% 6.74% 15.63%

profit margin
Net profit 4.55% 2.04% 3.54% 5.52% 8.60%
margin
ROE 17.63% 8.34% 14.37% 9.96% 7.31%

ROCE 17.45% 10.52% 18.97% 7.19% 6.10%

Profitability ratio analysis
• Prior investment in inventory and operational efficiencies has provided with
massive increase in profits
• Cost of raw materials and energy has increased but the company has still
managed to generate good numbers.
• Increase in vast amount of sales numbers has increased selling and distribution
expenses
• Increased profitability has helped in impressive ROE and ROCE ratios
 Gul Ahmed

Sapphire Textile

Nishat Textile
Share Price
Questions