Analysis of Financial Statements

ANALYSIS OF
FINANCIAL STATEMENT
Company: Aisha Steel Mill Ltd.

Group Member Seat No.
RIAZ RASOOL QADRI ME-077
MUHAMMAD ABDULLAH ME-078
UMAIR AFTAB ME-081
FINANCIAL & ACCOUNTING

Course
MANAGEMENT
MR. KASHIF NOOR
Teacher Assistant Professor
Department of Mechanical Engineering
DEPARTMENT OF MECHANICAL ENGINEERING

NED UNIVERSITY OF ENGINEERING AND TECHNOLOGY
Analysis of Financial Statements
CONTENTS
1 COMPANY PROFILE ................................................................................................................................... 4
1.1 NATURE OF BUSINESS ....................................................................................................................... 4
1.2 Product ................................................................................................................................................ 4
1.2.1 Cold Rolled Coils ............................................................................................................................ 4
1.2.2. Hot Dipped Galvanized Coils ....................................................................................................... 4
1.3 Machinery and Production Process ............................................................................................... 5
1.3.1 Push Pull Pickling Line .................................................................................................................. 5
1.3.2 Cold Rolling Mill ............................................................................................................................ 5
1.3.3 Batch Annealing Furnace .............................................................................................................. 5
1.3.4 Skin Passing and Recoiling Mills .................................................................................................. 5
1.3.5 Surface Preparation ...................................................................................................................... 5
1.3.6 Galvanizing .................................................................................................................................... 5
2. BALANCE SHEET ....................................................................................................................................... 7
2.1 COMPARITIVE BALANCE SHEET...................................................................................................... 8
2.2 COMMON SZE BALANCE SHEET .....................................................................................................10
3 INCOME STATEMENT..............................................................................................................................12
3.1 COMAPARITIVE INCOME STATEMENT ........................................................................................13
3.2 COMMON SIZE INCOME STATEMENT ...........................................................................................15
4 CASH FLOWS ............................................................................................................................................17
5 LIQUIDITY RATIO ....................................................................................................................................20
5.1 CURRENT RATIO ..............................................................................................................................20
5.2 QUICK RATIO ....................................................................................................................................20
6 LEVERAGE RATIO ....................................................................................................................................20
6.1 DEBT TO EQUITY RATIO.................................................................................................................20
6.2 DEBT TO ASSET RATIO ...................................................................................................................21
6.3 COVERAGE RATIO ............................................................................................................................21
7 ASSET UTILIZATION RATIO ..................................................................................................................21
7.1 AVERAGE COLLECTION PERIOD ....................................................................................................21
7.2 INVENTORY TURNOVER .................................................................................................................22
7.3 FIXED ASSET TURNOVER RATIO ...................................................................................................22
8 PROFITABILITY RATIO ..........................................................................................................................23
8.1 OPERATING PROFIT MARGIN ........................................................................................................23
PAGE| 1
8.2 GROSS PROFIT MARGIN ..................................................................................................................23

8.3 NET PROFIT MARGIN ......................................................................................................................23
PAGE| 2
INTRODUCTION
PAGE| 3
1 COMPANY PROFILE
Aisha Steel Mills Limited (“ASML”) is a public limited company incorporated in Pakistan
under repealed Companies Ordinance, 1984. The shares of the Company are listed on
Pakistan Stock Exchange. ASML is part of Arif Habib group and is one the largest private
sector investments in the value added flat-rolled steel industry in Pakistan. The principal
activity of the Company is manufacturing and selling cold rolled coils (CRC) and hot dipped
galvanized coils (HDGC).
1.1 NATURE OF BUSINESS

ASML is one of the major producers of flat steel products i.e. CRC and HDGC in Pakistan. It is
a state-of-the-art steel rolling complex with the name-plate capacity of 700,000 tons per
annum.
1.2 Product
1.2.1 Cold Rolled Coils
CRC has wide applications in various sectors including auto, engineering, appliances and
pipe manufacturing. These sheets and coils are further processed into a wide variety of value
added products for domestic as well as industrial applications in different sectors.
ASML is the only manufacturer that uses Electrolytic Cleaning Line (ECL) for Auto Grade
sector. These coils are provided as coils or sheets, as per customer demand. Currently, ASML
is producing CRC of following specifications:
Annual Capacity: 450,000 tons
Size (mm): 0.15mm – 3mm
Width (mm): 914, 1000, 1120, 1219
Manufacturing standard: JIS-G3141, ASTM CS 1008 and equivalent
Grade: SPCC, SPCD, SPCE, SPCG Quality
Surface Finish: Matt / Bright
1.2.2. Hot Dipped Galvanized Coils
ASML started production of HDGC and sheets in SGCC, SGCH and SGCD grades from April
2019. HDGC is used in vast applications including HVAC, pipes, containers, ceilings, light
gauge steel structures and canopies. Your company started production of HDGC from May
10, 2019. HDGC is available as coils as well as sheet as per customer requirement. Currently,
ASML is producing HDGC of following specifications:
Annual Capacity: 250,000 tons
Size (mm): 0.15mm – 3mm
Width (mm): 914, 1000, 1219
Manufacturing standard: JIS-G3302, ASTM A653/A653M and equivalent
Spangle: Zero / Regular
Grade: SGCC, SGCH, SGCD Quality
Coating thickness Z06 – Z27
Anti-finger coating is also available on customer demand.
PAGE| 4
1.3 Machinery and Production Process

The production process of CRC from HRC is highly automated and can be divided into the
following:
1.3.1 Push Pull Pickling Line

This line cleans HRC by using acid solution to eliminate oxide scale and other deposits on the
surface. After initiation of commercial operations of the new push pull pickling line from June
26, 2019 the total pickling capacity of the ASML accounts to 850,000 tons per annum.
1.3.2 Cold Rolling Mill

The Rolling Mill is heart of the cold rolling complex. In this equipment, the pickled HRC is
rolled into thin gauges, at room temperature, by applying hydraulic force through set of
roles. Cold rolled steel possesses better surface, enhanced strength and better dimensional
accuracy compared to HRC. The output from this mill can be sold as “Full Hard CRC” or
further processed into “Annealed CRC”.
1.3.3 Batch Annealing Furnace

Batch Annealing Furnace (BAF) transforms “Full Hard CRC” into “Annealed CRC” in
controlled atmosphere furnaces. Currently, the Company is equipped with 8 heating bells
and 7 cooling bells, with an annealing capacity of approximately 350,000 tons of CRC every
year.
1.3.4 Skin Passing and Recoiling Mills

Skin passing is done to improve mechanical properties and achieve specified surface finish,
hardness and flatness. After skin passing, the finished product is passed through a recoiling
line and coated with corrosion protection oil. The coil size is also adjusted according to
customer needs.
Moreover, the production process of HDGC from CRC is as follows:
1.3.5 Surface Preparation

Full Hard CRC coils are degreased, pickled and then rinsed to remove impurities, scales and
to prepare surface for application of zinc coating.
1.3.6 Galvanizing
Hot dip galvanizing is the process of coating steel with a layer of zinc by immersing the metal
in a bath of molten zinc (coating thickness Z06-Z27) at a temperature of around 400-450°C.
PAGE| 5
FINANCIAL
STATEMENTS
PAGE| 6
2. BALANCE SHEET
Statement of Financial Position

As at June 30, 2019
2019 2018
Rupees '000
ASSETS
Non-current assets
Property, plant and equipment 20,133,384 13,373,822

Intangibles 5,826 7,412
Long-term loans and advances 6,974 4,697
Long-term deposits 76,574 47,426
Deferred tax 1,343,955 932,904
21,566,713 14,366,261
Current assets
Stores and spares 379,561 112,006

Stock-in-trade 6,919,983 4,312,261
Trade debts 598,537 105,243
Advances, deposits and prepayments 937,592 405,930
Other receivables 144,500 145,834
Tax refunds due from Government - Sales tax 883,010 247,539
Taxation - payments less provision 1,092,365 685,149
Cash and bank balances 208,648 45,565
11,164,196 6,059,527
Total assets 32,730,909 20,425,788
EQUITY AND LIABILITIES
Share capital and reserves

Share capital
Ordinary shares 7,655,293 8,322,979
Cumulative preference shares 472,272 472,272
Difference on conversion of cumulative preference shares into
ordinary shares -1,313,789 -1,313,789
6,813,776 7,481,462
Accumulated loss -246,194 -548,080

Capital reduction reserve 667,686 0
Surplus on revaluation of fixed assets 1,511,560 1,557,724
8,746,828 8,491,106
Liabilities
Non-current liabilities
Long-term finance 7,171,280 4,848,164

Liabilities against assets subject to finance leases 37,212 33,836
Staff retirement benefit 64,493 51,536
7,272,985 4,933,536
Current liabilities
Trade and other payables 1,233,907 1,209,923

Accrued mark-up 854,036 238,452
Short-term borrowings 14,111,977 5,045,107
Current maturity of long-term finance 500,000 500,000
Current maturity of liabilities against assets
subject to finance leases 11,176 7,664
16,711,096 7,001,146
Total liabilities 23,984,081 11,934,682
Contingencies and commitments
Total equity and liabilities 32,730,909 20,425,788
PAGE| 7
2.1 COMPARITIVE BALANCE SHEET

As at June 30, 2019
Increase
2019 2018 Percentage
Decrease
Rupees '000
ASSETS
Non-current assets
Property, plant and equipment 20,133,384 13,373,822 6,759,562 50.54%

Intangibles 5,826 7,412 -1,586 -21.40%
Long-term loans and advances 6,974 4,697 2,277 48.48%
Long-term deposits 76,574 47,426 29,148 61.46%
Deferred tax 1,343,955 932,904 411,051 44.06%
21,566,713 14,366,261 7,200,452 50.12%
Current assets
Stores and spares 379,561 112,006 267,555 238.88%

Stock-in-trade 6,919,983 4,312,261 2,607,722 60.47%
Trade debts 598,537 105,243 493,294 468.72%
Advances, deposits and prepayments 937,592 405,930 531,662 130.97%
Other receivables 144,500 145,834 -1,334 -0.91%
Tax refunds due from Government - Sales tax 883,010 247,539 635,471 256.72%
Taxation - payments less provision 1,092,365 685,149 407,216 59.43%
Cash and bank balances 208,648 45,565 163,083 357.91%
11,164,196 6,059,527 5,104,669 84.24%
Total assets 32,730,909 20,425,788 12,305,121 60.24%

Share capital
Ordinary shares 7,655,293 8,322,979 -667,686 -8.02%
Cumulative preference shares 472,272 472,272 0 0.00%
ordinary shares -1,313,789 -1,313,789 0 0.00%
6,813,776 7,481,462 -667,686 -8.92%
Accumulated loss -246,194 -548,080 301,886 55.08%

Capital reduction reserve 667,686 0 667,686
Surplus on revaluation of fixed assets 1,511,560 1,557,724 -46,164 -2.96%
8,746,828 8,491,106 255,722 3.01%
Liabilities
Long-term finance 7,171,280 4,848,164 2,323,116 47.92%

Liabilities against assets subject to finance leases 37,212 33,836 3,376 9.98%
Staff retirement benefit 64,493 51,536 12,957 25.14%
7,272,985 4,933,536 2,339,449 47.42%
Current liabilities
Trade and other payables 1,233,907 1,209,923 23,984 1.98%

Accrued mark-up 854,036 238,452 615,584 258.16%
Short-term borrowings 14,111,977 5,045,107 9,066,870 179.72%
Current maturity of long-term finance 500,000 500,000 0 0.00%
subject to finance leases 11,176 7,664 3,512 45.82%
16,711,096 7,001,146 9,709,950 138.69%
Total liabilities 23,984,081 11,934,682 12,049,399 100.96%
Total equity and liabilities 32,730,909 20,425,788 12,305,121 60.24%
PAGE| 8
Comments:
 The balance sheet shows the current and noncurrent liabilities are
RS.16711096(51.05%) and RS.7272985(22.22%) respectively which is 73.27% in
2019 but in 2018 current and noncurrent liabilities are RS.7001146(34.27%) and
RS.4933536(24.153%) respectively which is 58.429%. If the liabilities increase it is
negative sign for business. Liabilities mean responsibilities or loan so increase in
responsibilities or loan not good for business.
 The balance sheet show in 2019 the current and noncurrent assets are
RS.11164196(34.109%) and RS.21566713(65.891%) respectively but in 2018 the
current and noncurrent assets are RS.6059527(29.66%) and RS.14366261(70.33%)
respectively. if the fixed assets increase it is negative sign for business because fixed
assets (machinery, equipment’s) value decrease year by year but current assets(cash)
value does not decrease.
 Capital value in 2019 is RS.8746828(26.723%) and in 2018 RS.8491106(41.57%) so
if the capital increase that’s mean it is positive sign for business.
 ASSETS = LIABILITIES + CAPITAL
100% = 73.27% + 26.72% (IN 2019)
100% = 58.42% + 41.57% (IN 2018)
PAGE| 9
2.2 COMMON SZE BALANCE SHEET

As at June 30, 2019
2019 Percentage 2018 Percentage

Rupees '000 Rupees '000
ASSETS
Non-current assets
Property, plant and equipment 20,133,384 61.512% 13,373,822 65.475%

Intangibles 5,826 0.018% 7,412 0.036%
Long-term loans and advances 6,974 0.021% 4,697 0.023%
Long-term deposits 76,574 0.234% 47,426 0.232%
Deferred tax 1,343,955 4.106% 932,904 4.567%
21,566,713 65.891% 14,366,261 70.334%
Current assets
Stores and spares 379,561 1.160% 112,006 0.548%

Stock-in-trade 6,919,983 21.142% 4,312,261 21.112%
Trade debts 598,537 1.829% 105,243 0.515%
Advances, deposits and prepayments 937,592 2.865% 405,930 1.987%
Other receivables 144,500 0.441% 145,834 0.714%
Tax refunds due from Government - Sales tax 883,010 2.698% 247,539 1.212%
Taxation - payments less provision 1,092,365 3.337% 685,149 3.354%
Cash and bank balances 208,648 0.637% 45,565 0.223%
11,164,196 34.109% 6,059,527 29.666%
Total assets 32,730,909 100.000% 20,425,788 100.000%

Share capital
Ordinary shares 7,655,293 23.389% 8,322,979 40.747%
Cumulative preference shares 472,272 1.443% 472,272 2.312%
ordinary shares (1,313,789) -4.014% (1,313,789) -6.432%
6,813,776 20.818% 7,481,462 36.628%
Accumulated loss (246,194) -0.752% (548,080) -2.683%

Capital reduction reserve 667,686 2.040% -
Surplus on revaluation of fixed assets 1,511,560 4.618% 1,557,724 7.626%
8,746,828 26.723% 8,491,106 41.571%
Liabilities
Long-term finance 7,171,280 21.910% 4,848,164 23.736%

Liabilities against assets subject to finance leases 37,212 0.114% 33,836 0.166%
Staff retirement benefit 64,493 0.197% 51,536 0.252%
7,272,985 22.221% 4,933,536 24.153%
Current liabilities
Trade and other payables 1,233,907 3.770% 1,209,923 5.924%

Accrued mark-up 854,036 2.609% 238,452 1.167%
Short-term borrowings 14,111,977 43.115% 5,045,107 24.700%
Current maturity of long-term finance 500,000 1.528% 500,000 2.448%
subject to finance leases 11,176 0.034% 7,664 0.038%
16,711,096 51.056% 7,001,146 34.276%
0.000%
Total liabilities 23,984,081 73.277% 11,934,682 58.429%
Total equity and liabilities 32,730,909 100.000% 20,425,788 100.000%
PAGE| 10
Comments:
 ASML has invested in currents assets, that is about 34% of the total assets,
especially in stock in trade which is about the 21% of the total assets.
 The current assets have increased from 29% to 34% of the total assets.
 There is a decline in the percentage of property, plant and equipment’s (fixed
assets). They have decreased from 65% to 61% which means their assets are losing
its value.
 Major source of financing were short term borrowings.
 Short term borrowings have shown great inclination from 24% to 43% of the total
assets.
 ASML is not relying on long term financing any more as it has decreased for 2% over
the past year.
PAGE| 11
3 INCOME STATEMENT
Statement of Profit or Loss Account

andOther Comprehensive Income
For the year ended June 30, 2019
2019 2018
Rupees '000
Revenue 20,230,797 18,903,907

Cost of sales -18,552,531 -15,589,753
Gross profit 1,678,266 3,314,154
Selling and distribution cost -25,070 -19,128

Administrative expenses -249,346 -192,255
Other expenses -2,684 -143,595
Other income 51,711 35,345
Profit from operations 1,452,877 2,994,521
Finance cost -1,865,306 -1,078,941

(Loss) / profit before taxation -412,429 1,915,580
Taxation 666,127 -631,598

Profit for the year 253,698 1,283,982
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurements of staff retirement benefit 2 ,024 -954

Gain on revaluation of land and buildings - 442,301
Impact of deferred tax - -82,241
- 360,060
Other comprehensive income for the year 2,024 359,106
Total comprehensive income for the year 255,722 1,643,088
PAGE| 12
3.1 COMAPARITIVE INCOME STATEMENT

Increase
2019 2018 Percentage
Decrease
Rupees '000
Revenue 20,230,797 18,903,907 1,326,890 7.02%

Cost of sales -18,552,531 -15,589,753 -2,962,778 19.00%
Gross profit 1,678,266 3,314,154 -1,635,888 -49.36%
Selling and distribution cost -25,070 -19,128 -5,942 31.06%

Administrative expenses -249,346 -192,255 -57,091 29.70%
Other expenses -2,684 -143,595 140,911 -98.13%
Other income 51,711 35,345 16,366 46.30%
Profit from operations 1,452,877 2,994,521 -1,541,644 -51.48%
Finance cost -1,865,306 -1,078,941 -786,365 72.88%

(Loss) / profit before taxation -412,429 1,915,580 -2,328,009 -121.53%
Taxation 666,127 -631,598 1,297,725 -205.47%

Profit for the year 253,698 1,283,982 -1,030,284 -80.24%
Remeasurements of staff retirement benefit 2 ,024 -954 2,978 -312.16%

Gain on revaluation of land and buildings - 442,301
Impact of deferred tax - -82,241
- 360,060
Other comprehensive income for the year 2,024 359,106 -357,082 -99.44%
Total comprehensive income for the year 255,722 1,643,088 -1,387,366 -84.44%
PAGE| 13
Comments:
 Gross profit in 2018 is RS. 3,314,154(17.532%) but in 2019 it is RS. 1,678,266(8.296%)

which shows cost of sales is more in 2019, negative sign for business.
 Profit after operation in 2019 is RS. 1,452,877(7.182%) but in 2018 it was RS. 2,994,521
(15.84%) this mean selling and distribution, administrative expenses, other expenses is
increase in 2019, negative sign for business.
 Most important point is profit for the year in 2019 is RS. 253,698(1.254%) and in 2018
is RS. 1,283,982 (6.792%) this shows that in 2019 finance cost and taxation is increase
that’s why decrease in profit, negative sign for business.
 Total comprehensive income for the year in 2019 is Rs. 255,722(1.264%) which is much
less than as compared to total comprehensive income of 2018 which is Rs. 1,643,088
(8.692%). Difference between total comprehensive income of two is 7.428% this occur
because taxation, operation cost marketing cost is increasing in 2019.
PAGE| 14
3.2 COMMON SIZE INCOME STATEMENT

2019 Percentage 2018 Percentage

Rupees '000 Rupees '000
Revenue 20,230,797 100.000% 18,903,907 100.000%

Cost of sales -18,552,531 -91.704% -15,589,753 -82.468%
Gross profit 1,678,266 8.296% 3,314,154 17.532%
Selling and distribution cost -25,070 -0.124% -19,128 -0.101%

Administrative expenses -249,346 -1.233% -192,255 -1.017%
Other expenses -2,684 -0.013% -143,595 -0.760%
Other income 51,711 0.256% 35,345 0.187%
Profit from operations 1,452,877 7.182% 2,994,521 15.841%
Finance cost -1,865,306 -9.220% -1,078,941 -5.708%

(Loss) / profit before taxation -412,429 -2.039% 1,915,580 10.133%
Taxation 666,127 3.293% -631,598 -3.341%

Profit for the year 253,698 1.254% 1,283,982 6.792%
Remeasurements of staff retirement benefit 2,024 0.010% -954 -0.005%

Gain on revaluation of land and buildings - 442,301 2.340%
Impact of deferred tax - -82,241 -0.435%
- 360,060 1.905%
Other comprehensive income for the year 2,024 0.010% 359,106 1.900%
Total comprehensive income for the year 255,722 1.264% 1,643,088 8.692%
PAGE| 15
Comments:
 Gross profit in 2018 is RS. 3,314,154(17.532%) but in 2019 it is RS. 1,678,266(8.296%)

which shows cost of sales is more in 2019, negative sign for business.
 Profit after operation in 2019 is RS. 1,452,877(7.182%) but in 2018 it was RS. 2,994,521
(15.84%) this mean selling and distribution, administrative expenses, other expenses is
increase in 2019, negative sign for business.
 Most important point is profit for the year in 2019 is RS. 253,698(1.254%) and in 2018
is RS. 1,283,982 (6.792%) this shows that in 2019 finance cost and taxation is increase
that’s why decrease in profit, negative sign for business.
 Total comprehensive income for the year in 2019 is Rs. 255,722(1.264%) which is much
less than as compared to total comprehensive income of 2018 which is Rs. 1,643,088
(8.692%). Difference between total comprehensive income of two is 7.428% this occur
because taxation, operation cost marketing cost is increasing in 2019.
PAGE| 16
4 CASH FLOWS
PAGE| 17
Comments:
 Cash was used in operations which means cash out flow will increase.
 Interest on bank deposits received, which shows an increase in cash inflow.
 Increase in fixed assets indicates the inclination of cash out flows.
 Cash out flow increased as the short termed and long term financing were returned.
 Cash in flow increased as more long term loan was obtained from the bank.
PAGE| 18
FINANCIAL RATIOS
PAGE| 19
5 LIQUIDITY RATIO
5.1 CURRENT RATIO
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
For 2019
Current Assets: 11,164,196 Rs.
Current Liabilities: 16,711,096 Rs.
Current Ratio: 0.668
For 2018
Current Ratio: 0.866
5.2 QUICK RATIO
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 − 𝑃𝑟𝑒𝑝𝑎𝑖𝑑 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
For 2019
Stores & Spares (Inventories): 379,561 Rs.
Advance Deposits & Prepayments (Prepaid Expense): 937,592 Rs.
Quick Ratio: 0.590
For 2018
Stores & Spares (Inventories): 112,006 Rs.
Advance Deposits & Prepayments (Prepaid Expense): 405,930 Rs.
Quick Ratio: 0.792
6 LEVERAGE RATIO
6.1 DEBT TO EQUITY RATIO
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑇𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 =
𝑆𝑡𝑜𝑐𝑘 𝐻𝑜𝑙𝑑𝑒𝑟 𝐸𝑞𝑢𝑖𝑡𝑦
PAGE| 20
For 2019
Total Liabilities: 23,984,081 Rs.
Stock Holder Equity: 8,746,828 Rs.
Debt to Equity Ratio: 2.742
For 2018
Stock Holder Equity: 8,491,106 Rs.
Debt to Equity Ratio: 1.406
6.2 DEBT TO ASSET RATIO
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑇𝑜 𝐴𝑠𝑠𝑒𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
For 2019
Total Assets: 32,730,909 Rs.
Debt To Asset Ratio: 0.733
For 2018
Debt To Asset Ratio: 0.584
6.3 COVERAGE RATIO
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒+ 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
𝑇𝑖𝑚𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑅𝑎𝑡𝑖𝑜 = =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
For 2019
Loss/Profit Before Taxation: -412,429 Rs.
Finance Cost (Interest Expense): 1,865,306 Rs.
Time Interest Earned Ratio: -0.779
For 2018
Loss/Profit Before Taxation: 1,915,580 Rs.
Finance Cost (Interest Expense): 1,078,941 Rs.
Time Interest Earned Ratio: 2.775
7 ASSET UTILIZATION RATIO

7.1 AVERAGE COLLECTION PERIOD
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑖𝑒𝑣𝑎𝑏𝑙𝑒𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛 𝑃𝑒𝑟𝑖𝑜𝑑 =
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑃𝑒𝑟 𝐷𝑎𝑦
PAGE| 21
For 2019
Trade Debts (Accounts Receivable): 598,537 Rs.
Revenue (Net Sales): 20,230,797 Rs.
Average Collection Period: 10.800 Days
For 2018
Trade Debts (Accounts Receivable): 105,243 Rs.
Average Collection Period: 2.032 Days
7.2 INVENTORY TURNOVER
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑 𝑆𝑜𝑙𝑑
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
For 2019
Cost of Sales (Cost of Goods Sold): 20,230,797 Rs.
Stores & Spares (Inventory): 379,561 Rs.
Inventory Turnover: 53.300
For 2018
Cost of Sales (Cost of Goods Sold): 18,903,907 Rs.
Stores & Spares (Inventory): 112,006 Rs.
Inventory Turnover: 168.776
7.3 FIXED ASSET TURNOVER RATIO
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 =
𝑁𝑒𝑡 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
For 2019
Property, Plant & Equipment (Net Fixed Asset): 20,133,384 Rs.
Fixed Asset Turnover Ratio: 1.005
For 2018
Property, Plant & Equipment (Net Fixed Asset): 13,373,822 Rs.
Fixed Asset Turnover Ratio: 1.414
PAGE| 22
8 PROFITABILITY RATIO
8.1 OPERATING PROFIT MARGIN
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 − 𝐶𝑂𝐺𝑆 − 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =
For 2019
Cost of Sales (Cost Of Goods Sold): 18,552,531 Rs.
Operating Expenses: 277,100 Rs.
Operating Profit Margin: 0.069
For 2018
Operating Expenses: 354,978 Rs.
Operating Profit Margin: 0.157
8.2 GROSS PROFIT MARGIN
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 − 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =
For 2019
Gross Profit Margin: 0.083
For 2018
Gross Profit Margin: 0.175
8.3 NET PROFIT MARGIN
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =
For 2019
Total Comprehensive Income for the Year (Net Income): 255,722 Rs.
Net Profit Margin: 0.01
For 2018
Total Comprehensive Income for the Year (Net Income): 1,643,088 Rs.
Net Profit Margin: 0.087
PAGE| 23
8.4 BOOK RETURN ON ASSETS

𝑁𝑒𝑡 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒 × (1 − 𝑇𝑎𝑥)
𝐵𝑜𝑜𝑘 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡 =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
For 2019
Profit From Operations (Net Operating Income): 1,452,877 Rs.
Tax: 29%
Book Return on Assets: 0.032
For 2018
Profit From Operations (Net Operating Income): 2,994,521 Rs.
Tax: 29%
Book Return on Assets: 0.104
PAGE| 24

Analysis of Financial Statements

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Analysis of Financial Statements

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ANALYSIS OF

Company: Aisha Steel Mill Ltd.

FINANCIAL & ACCOUNTING

DEPARTMENT OF MECHANICAL ENGINEERING

8.2 GROSS PROFIT MARGIN ..................................................................................................................23

1.1 NATURE OF BUSINESS

1.3 Machinery and Production Process

1.3.1 Push Pull Pickling Line

1.3.2 Cold Rolling Mill

1.3.3 Batch Annealing Furnace

1.3.4 Skin Passing and Recoiling Mills

Moreover, the production process of HDGC from CRC is as follows:

1.3.5 Surface Preparation

Statement of Financial Position

Property, plant and equipment 20,133,384 13,373,822

Stores and spares 379,561 112,006

EQUITY AND LIABILITIES

Share capital and reserves

Accumulated loss -246,194 -548,080

Long-term finance 7,171,280 4,848,164

Trade and other payables 1,233,907 1,209,923

Total liabilities 23,984,081 11,934,682

Contingencies and commitments

Total equity and liabilities 32,730,909 20,425,788

2.1 COMPARITIVE BALANCE SHEET

Property, plant and equipment 20,133,384 13,373,822 6,759,562 50.54%

Stores and spares 379,561 112,006 267,555 238.88%

EQUITY AND LIABILITIES

Share capital and reserves

Accumulated loss -246,194 -548,080 301,886 55.08%

Long-term finance 7,171,280 4,848,164 2,323,116 47.92%

Trade and other payables 1,233,907 1,209,923 23,984 1.98%

Total liabilities 23,984,081 11,934,682 12,049,399 100.96%

Contingencies and commitments

Total equity and liabilities 32,730,909 20,425,788 12,305,121 60.24%

2.2 COMMON SZE BALANCE SHEET

Statement of Financial Position

2019 Percentage 2018 Percentage

Property, plant and equipment 20,133,384 61.512% 13,373,822 65.475%

Stores and spares 379,561 1.160% 112,006 0.548%

EQUITY AND LIABILITIES

Share capital and reserves

Accumulated loss (246,194) -0.752% (548,080) -2.683%

Long-term finance 7,171,280 21.910% 4,848,164 23.736%

Trade and other payables 1,233,907 3.770% 1,209,923 5.924%

Contingencies and commitments

Total equity and liabilities 32,730,909 100.000% 20,425,788 100.000%

Statement of Profit or Loss Account

Revenue 20,230,797 18,903,907

Selling and distribution cost -25,070 -19,128

Finance cost -1,865,306 -1,078,941

Taxation 666,127 -631,598

Other comprehensive income:

Items that will not be reclassified to profit or loss

Remeasurements of staff retirement benefit 2 ,024 -954

Total comprehensive income for the year 255,722 1,643,088

3.1 COMAPARITIVE INCOME STATEMENT

Statement of Profit or Loss Account

Revenue 20,230,797 18,903,907 1,326,890 7.02%

Selling and distribution cost -25,070 -19,128 -5,942 31.06%

Finance cost -1,865,306 -1,078,941 -786,365 72.88%

Taxation 666,127 -631,598 1,297,725 -205.47%

Other comprehensive income: