RATIO ANALYSIS

LIQUIDITY
RATIOS
200
2

200 200
3
4
1.22
1.87 2
1.41
0.85
0.26
2
0.52 4

Current Ratio
Quick Ratio

200
5

200
6
1.41
1.49 5
0.21 0.21
1
2

20
07
1.1
6
0.3
7

20
08
1.0
1
0.3

20
09
1.0
2
0.1
8

2010
1.03
0.18

2
1.8
1.6
1.4
1.2
Current Ratio

Quick Ratio

0.8
0.6
0.4
0.2
0
2002

2003

2004

2005

2006

2007

2008

2009

2010

Analysis:
The liquidity position of the company which has been decreasing from 2005
has now started to stabilize. The current ratio of the company has increaed by
0.01 each year from 2008 to 2010 as is currently standing at 1.03 which is
significantly lower than the industry which stands at 2.05. wheras the quick
ratio has remained the same from 2009 to 2010 at 0.18 also relatively lower
than the industry.
EFFICIENCY RATIOS
200
200 200 20
2
2003 4
5
06
Inventory turnover
3.22 3.6
2.28 2.61 2.5
16.5
71.4 181.
Receivables turnover
4
22.2 4
5
181
Inventory turnover in
101. 159.
days
113 4
7
140 146
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2007
2.11
10.6
1
172.
7

2008
3.04
54.6
2
120.
12

2009
3.1
69.8
1
117.
75

2010
3.83
123.8
1
95.26

Receivables turnover in
16.4
days
22.1 4

Total asset turnover

A/P turnover

1.24 1.1
14.3 14.5

1.1
3.5

A/P turnover in days

25.5 25

104

Fixed asset turnover

2.81 1.81
117.
135 84

Operating Cycle
3.5

2
1.5
1.43 3
8.31 4.1

43.9 89
2.7
1.86 2.43 5
164.
7
142 148

10.6
1

6.68

5.23

3.04

1.37
3.65
99.7
8

1.55
5.69

72.6

1.48
4.66
78.3
3

2.97
183.
31

2.86
126.
8

2.35
122.
98

2.4

1.28
5.02

200
180

160

2.5

Inventory
turnover in
days

140

Total asset
turnover

1.5

Fixed asset
turnover

120

Receivables
turnover in
days

100
80
60

A/P turnover in
days

40

0.5

Operating
Cycle

20

Analysis:
The companys overall efficieny has increased. The companys managemnt
has been able to reduce its inventory turnover from the previous year from
117.75 days in 2009 to 95.26 days in 2010. Moreover its receivable turnover
and its payable turnover has also declined from the past years and currently
stand at 3.04 days and 64.11 days respectively. All of this has led to the
decrease in the operating cycle of the company from 122.98 days in 2009 to
98.3 days in 2010.
The companys management has also managed its assets efficiently as both
the fixed asset turnover and the total asset turnover of the company has
increased. The fixed asset turnover has improved slightly from 2.35x in 2009
to 2.4x in 2010, whereas the total asset turnover of the company has seen a
reasonable hike of 13% from 1.37x in 2009 to 1.55x in 2010.
PROFITABILITY
RATIOS
200
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200

20

20

200

20

200

200

2010

64.11

98.3

Gross margin
Operating margin
Return on equity
Return on asset

2
31.3
3
10.6
5

3
04
31.2 37.
3
1
3.4
3.9
3

05

20.4 6.9
5.8
18.7
2
7.33 5.5

3.9
4.3
3

40
1.7
5

07
38.
41
8
2.4
4.25 8
10.8 7.1
2
8
4.5
8.68 5

8
9
31.9 30.0
6
2
30.03
1.3

2.43 8.32

4.44 3.66 14.38

3.14 3.31 10.19

45
40
35
30
Gross margin

25

Operating margin

20

Return on equity
Return on asset

15
10
5
0
2002

2003

2004

2005

2006

2007

2008

2009

2010

Analysis
The overall profitability of the company is strengthening which shows a
positive sign about the company in the future. With its operating margin,
return on assets, and return on equity increasing significantly by 242%, 208%
and 293% respectively. The company is trying their best to earn the faith of
their investors after the financial turmoil of 2008. The companys operating
margin has gone up from 2.43 in 2009 to 8.32 2010. Similarly the companys
return on assets has shifted upwards from 3.31 in 2009 to 10.19 in 2010
alongwith the increase in the companys return on equity from 3.66 in 2009 to
14.38 in 2010. However the companys gross margin has remained all most
the same at 30.02% in 2009 to 30.03% in 2010. This is due to high cost of
sales which the company is incurring mainly due to double digit inflation,
energy crisis in the country and high production costs.
LEVERAGE RATIOS

Total

debt

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to

200 200 200 200 200 200 200 200

2
3
4
5
6
7
8
9
2010
total 34.9 39.5 35.0 35.2 39.9 55.7 56.7 63.2 63.38

asset

4
4
10.3
8.78 9
9.33
11.6 28.0
4
5
9.1

Debt to equity
Time interest ratio

5
5
9
3
11.5 14.2 15.2 20.0 59.4
8
2
2
2
7
81.8
9.13 5.22 2.39 1.8

2.18 6.21

90
80
70
60
50

Total debt to total asset

40

Debt to equity
Time interest ratio

30
20
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010

Analysis:
The company has increased its leverage position significantly. From the 2008
the company has relyied heavily on debt as a source of financing since its
debt to equity ratio has increased tremendously from 20.02 in 2008 to 81.8 in
2010 an overall increase of more than 300% within the tw years. However
this debt has served the company well as they have been able to increase
their assets and increase their sales over the last two years. This can be seen
by the companys total debt to total assets which has been stable from 63.23
in 2009 to 63.38 in 2010 whereas its times interest earned ratio has shot up
from 2.18x in 2009 to 6.21x in 2010.
EQUITY
RATIOS

Dividend payout

200
2
0.71

200
3
0.84

EPS

6.96

Book value
Dividend/share

34.1
5

2.38
34.4
8
2

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200
4
2.1
2
36.
4
-

200
5
-

200
6
0.33

1.47
38.0
7
-

4.47
41.2
9
1.5

200
7
0.4

200 200
8
9
2010
0.52 0.18
1.6
3.08 1.92 1
5.68
42.8 43.2 43.
7
9
9
39.44
1.25 1
1

8
7
6
5
Dividend/share

EPS

3
2
1
0
2002

2003

2004

2005

2006

2007

2008

2009

2010

Analysis
The companys equity has improved from the past year however its book
value per share has dropped down Rs.43.9 in 2009 to Rs.39.44 in 2010.
During the year 2010 the company earning per share increased by 350% from
Rs. 1.61 in 2009 to Rs. 5.68 in 2010 particularly due to high sales and high
profits that the company earned during the year 2010. As a result the
company announced the dividend of Rs. 1/share in 2010 as opposed to 2009
where the company declared no dividends.
CONCLUSION
The company has boosted high net profit margin for the year 2010 which shows
the strength of the companys management in controlling its assets as well its
liabilities along with controlling cost and increasing its operating capacity. The
company shows bright prospects in the years to come if the management keeps
on working the way it has during the time of difficulty both in Pakistan and across
the globe.

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