Business 321 project (Section F)

Industry: Textile
1) Crescent Textile Mills
2) Hira Textile Mills
3) Nishat Textile Mills
4) Din Textile Mills
5) Shams Textile Mills

Members
Hamnah Lateef (22-1437046)

Abdullah Shahnawaz (221-436207)

Hassam-ur-Rehman (221-434595)

Messum Abbas Bhatti (221-437173)

Muhammad Ibrahim Khan (221-436167)

Submitted To
Rao Zia-ur-Rehman
 :

1. Crescent Textile Mills

-Financials from income statement and balance sheet
-All the financial values of the respective company used in calculations. (All values in Millions of
rupees except stock, sales profitability, days, market price)

Entries 2020 2019 2018 2017 2016

Current Assets 7541 6713 7398 6444 5923

Current Liabilities 9035 8344 8399 7196 6606

Inventory 3384 2541 2778.6 2198.36 1827.28

Total debt 112060.8 112042.19 84537 106336.45 44520.28

Shareholder’s 8640 7907 8370 9855 6766

Equity

Total Assets 18795 17371 17614 18115 13875

EBIT 177 396 10 81 347

Interest Charges 129.19 222.47 9.8 63.28 174.37

Ann. Net Credit 12095 15888 11730 11180 9460

sales

Receivables 2419 2648 2346 2236 2365

Day in year 350 390 370 385 340

Annual credit 14898 14928 11904 11090 8244

purchases

Acc. Payable 2483 1866 1488 1109 916

Cogs 11715 12309 10214 9901 9239

Net Sales 13264 13946 11314 10873 10579

Gross Profit 1540 1637 1100 972 1340

NP after tax 34 239 8 113 251

Sales profitability 0.256 1.713 0.071 1.039 2.37

Market price 22.68 26.68 32.4 32.03 -

# of common stock 80 Million 80 Million 80 Million 80 Million 80 Million

Liquidity Ratios:
 Current Ratio = Current Assets/ Current Liabilities)
Quick Ratio = (current assets – inventory)/current Liabilities

Ratios 2020 2019 2018 2017 2016

Current 0.83 0.80 0.88 0.90 0.90

Quick 0.46 0.5 0.55 0.59 0.62

Financial Leverage Ratios:

Debt to Equity ratio = Total Debt/Shareholder Equity,
Debt to total assets ratio =Total Debt/Total Assets,
Total Capitalization Ratio = Total debt/Total capitalization

Ratios 2020 2019 2018 2017 2016

Debt to equity 12.97 14.17 10.10 10.79 6.58

Debt to Total Assets 5.96 6.45 4.8 5.87 3.21

Total Capitalization 11.48 12.41 9.17 9.73 6.17

Coverage Ratios:
Interest Coverage Ratio = EBIT/Interest charges

Ratio 2020 2019 2018 2017 2016

Interest cov. 1.37 1.78 1.02 1.28 1.99

Activity ratios:
Receivable turnover ratio = Annual net credit sales/ receivables,
Avg. collection Period = Days in year/receivable turnover,
Payable turnover ratio = Annual credit purchases/acc. Payable,
Payable turnover in days =days in year/payable turnover,
inventory turnover ratio = cogs/inventory,
Total Assets turnover ratio = Net sales/total assets

Ratios 2020 2019 2018 2017 2016

Receivable turnover 5 6 5 5 4

Avg. collection 70 65 74 77 85
Period

Payable turnover 6 8 8 10 9

Payable turnover in 64 47 44 35 38
days

Inventory turnover 4 5 4 5 6
Total Assets 0.71 0.8 0.64 0.60 0.76
turnover

Profitability Ratios:
Gross profit margin =Gross Profit/Net sales,
Net profit margin =Net profit after tax/Net sales.
Return on investment ratio =NP after taxes/ Total Assets.
Return on equity =NP after taxes/Shareholder’s Equity.
Earning power = Sales profitability x Asset efficiency
Return on equity =Net profit margin x Total assets turnover x equity multiplier,
Equity multiplier = Total assets/shareholder equity

Ratios 2020 2019 2018 2017 2016

Gross profit 11.68 11.74 9.72 8.94 12.67

margin

Net profit 0.25 1.71 0.07 1.04 2.37

margin

Return on 0.0018 0.014 0.00045 0.0062 0.018

investment
ratio

Return on 0.39 3.02 0.10 1.15 3.70

equity ratio

Earning 0.182 1.3711 0.045 0.624 1.803

Power

Return on 52.63 420.1 10.8 124.6 391.1

equity

Equity 2.18 2.197 2.1 1.838 2.05

multiplier

Growth ratios:
Ratio 2020 2019 2018 2017 2016

Growth ratio -4.99 24.23 4.32 0.63 -

Stock Ratios:
Dividend/Share = Distributed profit/# of shares.
Book value = Shareholder equity/#of common stock,
Market price to book value ratio = Market price/ book value,
Earnings per share= Net profit/ # of shares.

Ratios 2020 2019 2018 2017 2016

Dividend/Sha 0 2.29 0 0 6.09
re

Book value 108 98.83 104.63 123.2 84.6

Market price 0.21 0.27 0.31 0.26 -

to book value

Earnings per 0.42 2.98 0.11 1.42 -

share

2. Hira Textile Mills

-Financials from income statement and balance sheet
-All the financial values of the respective company used in calculations. (All values in rupees except
stock, sales profitability, days, market price)

Entries 2020 2019 2018 2017 2016

Current Assets 815828 1164764 2257623 2627405 2255468

Current Liabilities 1776007 2459510 2280329 2951446 2464531

Inventory 47189641 85680534 34182034 46219026 40282337

Total debt 114122355 112250006 112768241 42607700 46598421

Shareholder’s 413000000 97000000 19478600 24978640 19452370

Equity

Total Assets 3221975 3713199 5434614 5967465 5514606

EBIT 101m 1101m 225m 176m 328.3m

Interest Charges 134m 198m 205m 220m 228m

Ann. Net Credit 1462280000

sales

Receivables 263m 766m 175m 185m 128m

Day in year 365 365 365 365

Annual credit 4015m 4993m 4340m 3118m 2665m

purchases

Acc. Payable 182m 699m 234m 353m 218m

Cogs 4015m 4993m 4340m 3118m 2665m

Net Sales 1463374 2645989 2171757 3361275 3523396

Gross Profit 66415 1061512 153669 255013 334666

NP after tax 303789 2015842 546949 7456 93537

Sales profitability 20.75 76.18 25.18 0.22 2.6

# of common stock 86,577,920 86,577,920 86,577,920 86,577,920 86,577,920

Liquidity Ratios:
Current Ratio = Current Assets/ Current Liabilities,
Quick Ratio = (current assets – inventory)/current Liabilities

Ratios 2020 2019 2018 2017 2016

Current 0.46 0.47 0.99 0.89 0.92

Quick 0.17 0.16 0.16 0.35 0.273

Financial Leverage Ratios:

Debt to Equity ratio = Total Debt/Shareholder Equity,
Debt to total assets ratio =Total Debt/Total Assets,
Total Capitalization Ratio = Total debt/Total capitalization

Ratios 2020 2019 2018 2017 2016

Debt to equity 0.27 1.1 5.7 1.7 2.4

Debt to Total Assets 0.35 0.3 0.21 0.07 0.08

Total Cap. 2.39 3.17 1.15 1.2 1.04

Coverage Ratios:
Interest Coverage Ratio = EBIT/Interest charges

Ratio 2020 2019 2018 2017 2016

Interest 2.75 9.42 3.64 0.80 1.44

coverage

Activity ratios:
Receivable turnover ratio = Annual net credit sales/ receivables,
Avg. collection Period = Days in year/receivable turnover,
Payable turnover ratio = Annual credit purchases/acc. Payable.
Payable turnover in days =days in year/payable turnover,
Inventory turnover ratio = cogs/inventory,
Total Assets turnover ratio = Net sales/total assets

Ratios 2020 2019 2018 2017 2016

Receivable turnover 5.56 3.46 12.35 18.11 27.62

Avg. collection 65 105 29 20 13

Period

Payable turnover 12.22 8.8 18.58 7.14 22.06

Payable turnover in 30d 41d 20d 51d 16.5d
days

Inventory turnover 5.07 10.51 1.26 1.67 2.26

Total Assets 0.45 0.71 0.40 0.56 0.64

turnover

Profitability Ratios:
Gross profit margin =Gross Profit/Net sales,
Net profit margin =Net profit after tax/Net sales,
Return on investment ratio =NP after taxes/ Total Assets,
Return on equity =NP after taxes/Shareholder’s Equity,
Return on equity =Net profit margin x Total assets turnover x equity multiplier,
Equity multiplier = Total assets/shareholder equity

Ratios 2020 2019 2018 2017 2016

Gross profit -4.54 -40.12 -7.08 7.59 9.5

margin

Net profit 20.76 76.18 25.19 0.22 2.65

margin

Return on 0.094 0.542 0.1006 0.00125 0.017

investment
ratio

Return on 4.4 20.6 0.280 0.003 0.048

equity ratio

Earning 9.34 54.08 10.07 0.123 1.664

power

Return on 87.2 1648 101.5 0.015 2.768

equity

Equity 46.7 38.1 2.79 2.39 2.83

multiplier

Growth ratios:
Ratio 2020 2019 2018 2017 2016

Growth ratio -44.69 22.47 -35.47 -4.98 0

Stock Ratios:
Dividend/Share = Distributed profit/# of shares,
Price earnings ratio =Market price/ earnings per share,
Book value = Shareholder equity/#of common stock,
Market price to book value ratio = Market price/ book value,
Earnings per share= net profit/ # of shares.

Ratios 2020 2019 2018 2017 2016

Dividend/Sha 0 0 0 0 0
re

Book value O.80 -1.13 22.5 28.85 28.8

Market price 3.68x -4.34x 0.39x 0.42x -

to book value

Earnings per 3.51 23.28 6.32 0.09 1.08

share

3. Nishat Textile Mills

-Financials from income statement and balance sheet
-All the financial values of the respective company used in calculations. (All values in thousands of
rupees except stock, sales profitability, days, market price)

Entries 2020 2019 2018 2017 2016

Current Assets 40522*10^3 35795*10^ 29041*10^ 28995*10^ 25849*10^3

3 3 3

Current Liabilities 39233054 33930122 21260216 22738558 13166041

Inventory 8319707.7 14618436. 12479968. 11335353. 10135870.9

6 6 8

Total debt 39233054 33930122 27022888 28767479 24444064

Shareholder’s 71427860 66615270 75713145 88762796 82155155

Equity

Total Assets 110660914 100545392 102736033 117530275 106599219

EBIT 8719892 11211441 8395775 8233100 8937616

Interest Charges 2190927 2185466 1529285 1268582 1381393

Ann. Net Credit 53627970 55842428 48172679 43867819 41759788
sales

Receivables 3978336 3843250 2813824 2004011.8 2291975.19

2

Day in year 365 364 364 364 365

Annual credit - - - - -
purchases

Acc. Payable 6689294 6238841

Cogs 53627970 55842428 48172679 43867819 41759788

Net Sales 60904096 63499029 53729124 49247657 47999179

Gross Profit 7276126 7656601 5550445 5379838 6239391

NP after tax 3506284 5859048 4097127 4262342 4923038

Sales profitability 5.75 9.26 7.63 8.65 10.3

Market price 78.01 93.34 140.92 158.68 107.90

# of common stock 351mill 351mill 351mill 351mill 351mill

Liquidity Ratios:
Current Ratio = Current Assets/ Current Liabilities,
Quick Ratio = (current assets – inventory)/current Liabilities

Ratios 2020 2019 2018 2017 2016

Current 1.36 1.26 1.37 1.28 1.32

Quick 0.59 0.55 0.71 0.62 0.75

Financial Leverage Ratios:

Debt to Equity ratio = Total Debt/Shareholder Equity,
Debt to total assets ratio =Total Debt/Total Assets,
Total Capitalization Ratio = Total debt/Total capitalization

Ratios 2020 2019 2018 2017 2016

Debt to equity 12.91 7.9 6.86 5.91 5.64

Debt to Total Assets 0.35 0.33 0.26 0.24 0.22

Total Capitalization 0.48 0.47 0.33 0.3 0.28

Coverage Ratios:
 Interest Coverage Ratio = EBIT/Interest charges

Ratio 2020 2019 2018 2017 2016

Interest 3.98 5.13 5.99 6.49 6.47

coverage

Activity ratios:
Receivable turnover ratio = Annual net credit sales/ receivables,
Avg. collection Period = Days in year/receivable turnover,
Payable turnover ratio = Annual credit purchases/acc. Payable,
Payable turnover in days =days in year/payable turnover,
inventory turnover ratio = cogs/inventory,
Total Assets turnover ratio = Net sales/total assets

Ratios 2020 2019 2018 2017 2016

Receivable turnover 13.48 14.53 17.12 21.89 18.22

Avg. collection 27.15 25.12 21.32 16.67 20.09

Period

Payable turnover 3.49 4.39 4.46 4.3 4.65

Payable turnover in 104.87 83.14 81.84 84.88 78.71

days

Inventory turnover 2.84 3.82 3.86 3.87 4.12

Total Assets 0.55 0.63 0.52 0.42 0.45

turnover

Profitability Ratios:

Gross profit margin =Gross Profit/Net sales,

net profit margin =Net profit after tax/Net sales,
Return on investment ratio =NP after taxes/ Total Assets,
Return on equity =NP after taxes/Shareholder’s Equity,
Return on equity =Net profit margin x Total assets turnover x equity multiplier.
Earning Power ratio= sales profitability x asset efficiency
Equity multiplier = Total assets/shareholder equity

Ratios 2020 2019 2018 2017 2016

Gross profit 0.11 0.12 0.1 0.1 0.12

margin

Net profit 0.05 0.09 0.06 0.08 0.1

margin

Return on 7.82 11.16 6.75 6.53 8.01

investment
ratio

Return on 5.08 8.23 4.98 4.99 6.22

equity ratio

Return on 0.0924 0.0375 0.067 0.055 0.06

equity

Earning 3.16 5.83 3.96 3.63 4.63

Power
Ratio

Equity 1.54 1,5 1.3 1.32 1.29

multiplier

Growth ratios:
Ratio 2020 2019 2018 2017 2016

Growth Ratio -7.66% 14.59% 10.57% 8.13% -

Stock Ratios:
Dividend/Share = Distributed profit/# of shares,
Price earnings ratio =Market price/ earnings per share,
Book value = Shareholder equity/#of common stock,
Market price to book value ratio = Market price/ book value,
Earnings per share= net profit/ # of shares

Ratios 2020 2019 2018 2017 2016

Dividend/Sha 4 4 4.75 4 5
re

Book value 203 189.5 215 252 233.7

Market price 0.34

to book value
0.35 0.48 0.79 1.39

Earnings per 9.97 16.66 11.65 12.12 14

share

4. Din Textile Mills

-Financials from income statement and balance sheet
-All the financial values of the respective company used in calculations. (All values in Millions of
rupees except stock, sales profitability, days, market price)

Entries 2020 2019 2018 2017 2016

Current Assets 6631 6532 5393 4411 3010

Current Liabilities 5676 5980 5023 4681 3040

Inventory 3693.1 3671.3 3176.6 2240.3 1455.6

Total debt 9348 8374 7151 5664 3881

Shareholder’s 3110 2163 1801 1658 1748

Equity

Total Assets 12458 10537 8952 7322 5629

EBIT 178 419 231 1 201

Interest Charges 145.9 252.4 139.2 0.99 112.9

Ann. Net Credit 12476.9 34171 9478.7 7423.2 7598.5

sales

Receivables 2236 4532 1231 709 799

Day in year 365 365 365 365 365

Annual credit 30458.7 95326.14 111937.1 88536 56119.2

purchases

Acc. Payable 3501 3081 3509 2380 1608

Cogs 11190 10243 8672 6945 6943

Net Sales 12483 11560 9479 7422 7603

Gross Profit 1293 1317 807 477 660

NP after tax 37 362 145 -63 61

Sales profitability 0.29 3.13 1.53 -0.84 0.8

# of common stock

Liquidity Ratios:
Current Ratio = Current Assets/ Current Liabilities,
Quick Ratio = (current assets – inventory)/current Liabilities

Ratios 2020 2019 2018 2017 2016

Current 1.17 1.09 1.07 0.94 0.99

Quick 0.56 0.43 0.39 0.31 0.48

Financial Leverage Ratios:

Debt to Equity ratio = Total Debt/Shareholder Equity,
Debt to total assets ratio =Total Debt/Total Assets,
Total Capitalization Ratio = Total debt/Total capitalization

Ratios 2020 2019 2018 2017 2016

Debt to equity 114.57 125.82 126.75 77.01 68.01

Debt to Total Assets 0.45 0.47 0.38 0.42 0.38

Total Capitalization 0.53 0.55 0.55 0.43 0.40

Coverage Ratios:
Interest Coverage Ratio = EBIT/Interest charges

Ratio 2020 2019 2018 2017 2016

Interest 1.22 1.66 1.66 1.01 1.78

coverage

Activity ratios:
Receivable turnover ratio = Annual net credit sales/ receivables,
Avg. collection Period = Days in year/receivable turnover,
Payable turnover ratio = Annual credit purchases/acc. Payable,
Payable turnover in days =days in year/payable turnover,
inventory turnover ratio = cogs/inventory,
Total Assets turnover ratio = Net sales/total assets

Ratios 2020 2019 2018 2017 2016

Receivable turnover 5.58 7.54 7.70 10.47 9.51

Avg. collection 65.38 48.38 47.39 34.85 38.38

Period

Payable turnover 8.70 30.94 31.19 37.24 34.88

Payable turnover in 71.10 12.35 13.68 10.51 10.94

days

Inventory turnover 3.03 2.79 2.73 3.10 4.77

Total Assets 1.00 1.10 1.06 1.01 1.35

turnover

Profitability Ratios:
Gross profit margin =Gross Profit/Net sales,
Net profit margin =Net profit after tax/Net sales.
Return on investment ratio =NP after taxes/ Total Assets.
Return on equity =NP after taxes/Shareholder’s Equity.
Earning power = Sales profitability x Asset efficiency.
Return on equity =Net profit margin x Total assets turnover x equity multiplier.
Equity multiplier = Total assets/shareholder equity

Ratios 2020 2019 2018 2017 2016

Gross profit 10.36 11.39 8.52 6.43 8.68

margin

Net profit 1.42 3.62 2.44 0.02 2.65

margin

Return on 0.54 7.95 3.69 2.40 2.34

investment
ratio

Return on 1.18 16.76 8.05 3.82 3.46

equity ratio

Return on 5.68 18.4 12.77 0.08 11.49

equity

Equity 4 4.87 4.97 4.41 3.22

Multiplier

Earning 1.42 3.98 2.57 0.02 3.57

Power

Growth ratios:
Ratio 2020 2019 2018 2017 2016

Growth ratio 7.94% 22.80% 27.20% -2.66% 0

Stock Ratios:
Dividend/share= Distributed profit/ # of shares.
Earnings Power ratio= sales profitability x asset efficiency
Book value = Shareholder equity/#of common stock,
Market price to book value ratio = Market price/ book value,
Earnings per share= net profit/ # of shares

Ratios 2020 2019 2018 2017 2016

Dividend/Sha 0 4.97 0 0 2.16

re

Book value 68 96 83 24 93

Market price 0.41 0.81 0.94 1.13 0.84

to book value

Earnings per 0.86 10.46 4.97 2.82 2.70

share
 5. Shams Textile Mills:
-Financials from income statement and balance sheet
-All the financial values of the respective company used in calculations. (All values in thousands of
rupees except stock, sales profitability, days, market price)

Entries 2020 2019 2018 2017 2016

Current Assets 895,829 844,456 849,772 921,751 1,016,169

Current Liabilities 1,176,252 1,031,235 1,012,618 1,201,212 1,261,469

Inventory 697452 470962 301634 599007 671135

Total debt 1190288 1045271 1039721 1253882 1365703

Shareholder’s 533616 676,428 676,428 591,951 641,448

Equity

Total Assets 1,723,904 1,734,225 1,741,952 1,854,355 2,013,577

EBIT 36,311 140,035 203,406 26,719 (43,989)

Interest Charges 57,558 42,925 38,696 44,721 40,240

Ann. Net Credit 4,175,298 5,291,753 4,685,847 3,315,682 2,802,613

sales

Receivables 159168.5 202290 135578.5 87777.5 112603

Day in year 365 365 365 365 365

Annual credit 4,080,438 5,057,572 4,409,798 3,198,776 2,749,993

purchases

Acc. Payable 8588011 766915.5 639378.5 612619 571451.5

Cogs 4080438 5,057,572 4,409,798 3,198,776 2,749,993

Net Sales 4175298 5,291,753 4,685,847 3,315,682 2,802,613

Gross Profit 94,860 234,181 276,049 116,906 52,620

NP after tax 140206 43,386 101,184 50,392 111,098

Sales profitability 3.35 0.82 2.16 1.52 3.96

# of common stock 86400 86400 86400 86400 86400

Liquidity Ratios:
Current Ratio = Current Assets/ Current Liabilities,
 Quick Ratio = (current assets – inventory)/current Liabilities

Ratios 2020 2019 2018 2017 2016

Current 0.76 0.82 0.84 0.77 0.81

Quick 0.17 0.36 0.44 0.27 0.27

Financial Leverage Ratios:

Debt to Equity ratio = Total Debt/Shareholder Equity,
Debt to total assets ratio =Total Debt/Total Assets,
Total Capitalization Ratio = Total debt/Total capitalization

Ratios 2020 2019 2018 2017 2016

Debt to equity 2.23 1.55 1.53 2.12 2.12

Debt to Total Assets 0.69 0.60 0.60 0.68 0.68

Total Capitalization 2.17 1.51 1.47 1.94 1.83

Coverage Ratios:
Interest Coverage Ratio = EBIT/Interest charges

Ratio 2020 2019 2018 2017 2016

Interest 0.63 3.26 5.26 0.59 1.09

coverage

Activity ratios:
Receivable turnover ratio = Annual net credit sales/ receivables,
Avg. collection Period = Days in year/receivable turnover,
Payable turnover ratio = Annual credit purchases/acc. Payable,
Payable turnover in days =days in year/payable turnover,
inventory turnover ratio = cogs/inventory,
Total Assets turnover ratio = Net sales/total assets

Ratios 2020 2019 2018 2017 2016

Receivable turnover 26.23 26.16 34.56 37.77 24.89

Avg. collection 13.91 19.5 10.56 9.66 14.66

Period

Payable turnover 4.81 5.22 6.89 6.59 4.75

Payable turnover in 75.88 69.92 52.98 55.38 76.84

days

Inventory turnover 5.9 10.7 10.9 5.3 4

Total Assets 2.4 3.05 2.69 1.78 1.39
turnover

Profitability Ratios:
Gross profit margin =Gross Profit/Net sales,
Net profit margin =Net profit after tax/Net sales,
Return on investment ratio =NP after taxes/ Total Assets,
Return on equity =NP after taxes/Shareholder’s Equity
Earning power = Sales profitability x Asset efficiency
Return on equity =Net profit margin x Total assets turnover x equity multiplier,
Equity multiplier = Total assets/shareholder equity

Ratios 2020 2019 2018 2017 2016

Gross profit 2.27 4.43 5.89 3.53 1.88

margin

Net profit 3.36 0.82 2.16 1.52 3.96

margin

Return on 8.13 2.50 5.81 2.72 5.52

investment
ratio

Return on 26.2 6.41 14.8 8.51 17.3

equity ratio

Earning 8.04 2.47 5.78 2.68 5.50

power

Return on 26.04 6.40 14.87 8.46 17.23

equity

Equity 3.23 2.56 2.55 3.13 3.14

multiplier

Growth ratios:
Ratio 2020 2019 2018 2017 2016

Growth ratio -21.1 12.93 41.32 18.3 -29.46

Stock Ratios:
Dividend/Share = Distributed profit/# of shares,
Book value = Shareholder equity/#of common stock,
Market price to book value ratio = Market price/ book value,
Earnings per share= net profit/ # of shares.
Ratios 2020 2019 2018 2017 2016

Dividend/Share 0 1.05 2.35 0 0

Book value 61.76 78.29 78.83 68.51 74.24

Market price 0.41 0.33 0.56 0.39 0.30

to book value

Earnings per 16.23 5.02 11.71 5.83 12.86

share

Industrial Analysis of the Following Ratios

Current Ratio
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0.99 0.81 1.32 0.9 0.92 0.988

2017 0.94 0.77 1.28 0.9 0.89 0.956

2018 1.07 0.84 1.37 0.88 0.99 1.03

2019 1.09 0.82 1.26 0.8 0.47 0.892

2020 1.17 0.76 1.36 0.83 0.46 0.908

The current proportion is a liquidity proportion that gauges an organization's capacity to pay transient
commitments or those due inside one year. It tells speculators and examiners how an organization can
amplify the current resources on its monetary record to fulfill its present obligation and different
payables. In many cases, a creditor would consider a high current ratio to be better than a low current
ratio, because a high current ratio indicates that the company is more likely to pay the creditor back.
So, with reference to our available values we would conclude that for almost all years the values of
Nishat Textiles indicate exceptional liquidity and this shows they may be able to liquidate their funds
in a relatively better way compared to the others. We observe there to be an improvement in liquidity
state if we observe the values of Din textile as they have significantly improved over the time,
whereas it's the opposite state for Hira textiles, their liquidity state has decreased over the years which
indicates that they would face difficulty in meeting their short term liabilities. Whereas for Shams
Textiles and Crescent I would state that the values are satisfactory but not ideal since they indicate
more or less consistency, and the values below 1 indicate that the liabilities are greater than the
respective assets.

Receivable turnover Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg
2016 9.51 24.89 18.22 4 27.62 16.8

2017 10.47 37.77 21.89 5 18.11 18.65

2018 7.7 34.56 17.12 5 12.35 15.35

2019 7.54 26.1 14.53 6 3.46 11.53

2020 5.58 26.23 13.48 5 5.56 11.17

The receivables turnover proportion is a bookkeeping measure used to evaluate an organization's

viability in gathering its receivables or cash owed by customers. The proportion shows how well an
organization utilizes and deals with the credit it reaches out to clients and how rapidly that momentary
obligation is gathered or is paid. A high accounts receivables turnover ratio can indicate that the
company is conservative about extending credit to customers and is efficient or aggressive with its
collection practices. It can also mean the company's customers are of high quality, and/or it runs on a
cash basis. And in our given ratios we observe high receivable turnover ratio in Shams Textiles
(highest), Nishat (second highest), din textiles and then Hira textiles(which has a very weird and
unusual trend over the years from being very aggressive to going to single figure values post 2018.
Whereas the lowest set of ratios would be observed of Crescent group and this may indicate that the
company may be having a poor collection process, bad credit policies, or customers that are not
financially viable or creditworthy.

AVG collection period Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 38.38 14.66 20.09 85 13 34.23

2017 34.85 9.66 16.67 77 20 31.64

2018 47.39 10.56 21.32 74 29 36.5

2019 48.38 13.95 25.12 65 105 51.5

2020 65.38 13.91 27.15 70 65 48.3

The average collection period represents the average number of days between the date a credit sale is
made and the date the purchaser pays for that sale. A company's average collection period is
indicative of the effectiveness of its accounts receivable management practices. As we may have
assumed from our the receivable turnover ratio we may have an idea that the most effective accounts
receivable management system would be of Shams Textiles, and that is true since they have the
lowest values of collection period which displays their monetary collection power. Secondly comes
Nishat textiles then comes din group which are doing good-satisfactory performance and much better
than crescent group which has the highest collection period rates and they are consistent with the high
values which display the company's low effectiveness in terms of collection of dues from debtors.
Finally describing Hira Textiles I would say that this company was a very good performer and had a
strong collection system till 2018 in comparison to post 2018 where the values go out of expectation
high and take a drastically high turn, from 29 to 105. I observe that crescent has a significant impact
on the industrial averages as well since they are relatively higher than the other values
 Debt to Equity Ratio:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0.6801 2.12 5.64 6.58 2.4 3.48

2017 0.7701 2.12 5.91 10.79 1.7 4.26

2018 1.2675 1.53 6.86 10.1 5.7 5.029

2019 1.2582 1.55 7.9 14.17 1.1 5.192

2020 1.1457 2.23 12.91 12.97 0.27 5.906

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity
and debt used to finance a company's assets. A low debt-to-equity ratio indicates a lower amount of
financing by debt via lenders, versus funding through equity via shareholders whereas on the other
end a higher ratio indicates that the company is getting more of its financing by borrowing money,
which subjects the company to potential risk if debt levels are too high. Overall the highest ratios are
of Crescent group and Nishat group, which may indicate that the company is getting more financing
by borrowing money from other individuals which puts them in chances of potential threat. Overall
Din Textiles may be in the most ideal scenario at the moment because their low values indicate that
the company has less amount of debt being financed this pay put the company away from certain
threats, moving forward if we observe the values of shams textile we observe them to be relatively
higher than the values of din textile but we observe them to satisfactory, even the values of Hira
textiles are observed to be satisfactory but I observe there to be an abnormal value which is of 2018,
otherwise they managed to score the lowest value in the 2020 year of 0.27 which is very satisfactory.

Acid-Test Ratio:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0.48 0.27 0.75 0.62 0.273 0.48

2017 0.31 0.27 0.62 0.59 0.35 0.43

2018 0.39 0.44 0.71 0.55 0.16 0.45

2019 0.43 0.36 0.55 0.5 0.16 0.4

2020 0.56 0.17 0.59 0.46 0.17 0.39

Quick ratio evaluates the liquidity of a company by comparing its cash plus almost cash current assets
with its entire current financial obligations. It assists in verifying if the business or company has the
capacity to pay off its current liabilities by means of the most liquid assets

The formula for calculating this is: Current Assets-Inventory/Current Liabilities.

Shams, Din, Hira, Crescent and Nishat textiles have their acid-test ratio and industrial average below
1 which shows their poor liquidity states and that their businesses are dwindling which clearly shows
 that either they are losing its financial goodwill to meet its short term and long term liabilities which
happens only when the company cannot convert its receivables into cash. It also shows that their
assets are much less than their liabilities.

Payable Turnover Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 34.88 4.75 4.65 9 22.06 15.068

2017 37.24 6.59 4.3 10 7.14 13.05

2018 31.79 6.89 4.46 8 18.58 13.94

2019 30.94 5.22 4.39 8 8.8 11.47

2020 8.7 4.81 3.49 6 12.22 7.044

The accounts payable turnover ratio indicates to creditors the short-term liquidity and, to that extent,
the creditworthiness of the company. A high ratio indicates prompt payment is being made to
suppliers for purchases on credit. A low ratio indicates slow payment to suppliers for purchases on
credit.

The formula for calculating Payable Turnover Ratio: Annual Credit Purchases/ Accounts
Payable.

Din Textiles has the Highest Payable turnover ratio from 2016-2019 i.e. (34.88, 37.24, 31.79 and
30.94) in comparison to its industrial average which is between 10-15 whereas its payable turnover
ratio came down to 8.70 but it’s still higher than the industrial average. This indicates that the
company is paying off suppliers at a faster rate than in previous periods. An increasing ratio means
the company has plenty of cash available to pay off its short-term debt in a timely manner. As a result,
an increasing accounts payable turnover ratio could be an indication that the company managing its
debts and cash flow effectively.

Hira Textiles has the Highest Payable turnover ratio in 2016 i.e. 22.06 in comparison to industrial
average i.e. 15.068 and then in 2017 it came down in comparison to its industrial average and in 2018
it again goes up to 18.58 which is much higher than its industrial average which is 13.94 and in 2019
it again came down lower than its industrial average and in 2020 it got higher i.e. 12.22 than its
industrial average i.e. 7.044.

Shams and Nishat Textiles and Crescent has the lowest Payable Turnover ratio throughout from 2016-
2020 in comparison to its industrial average and it indicates that these companies are taking longer to
pay off its suppliers and are in financial distress.

Payable turnover in days:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 10.94 76.84 78.71 38 16.5 44.198

2017 10.51 55.38 84.88 35 51 47.35

2018 13.68 52.98 81.84 44 20 42.5

2019 12.35 69.92 83.14 47 41 50.68

2020 71.1 75.88 104.87 64 30 69.17

The accounts payable turnover in days shows the average number of days that a payable remains
unpaid.

The formula for calculating accounts payable turnover in days: 365 days/ payable turnover
ratio.

Din textiles shows low payable turnover ratio in days in comparison to its industrial average from
2016 to 2019 which indicates that Din had a slow rate of payment to its creditors for whole of the year
but in 2020 its payable turnover ratio in days i.e. 71.1 is higher than the industrial average i.e. 69.17
which shows that in 2020 it has faster mode of payment to its creditors. Crescent textiles also shows
low payable turnover ratio in days in comparison to their industrial average from 2016 to 2017 then it
goes higher in 2018 in comparison to its industrial average and from 2019 to 2020 it has lower
payable turnover ratio in days in comparison to its industrial average.

Whereas, Hira textiles only shows higher payable turnover ratio in days only in 2017 in comparison to
its industrial average and a constant decrease in it payable turnover ratio in days from 2018-2020 in
comparison to its industrial averages. It clearly indicates that Hira textiles had a payment problem to
its creditors/ suppliers which in turn shows that it has liquidity issues.

In the case of Nishat textiles and Shams Textiles, their payable turnover ratio in days from 2016- 2020
is increasing and much higher than its industrial averages which means that they had a quick payment
mode to its creditors and a good liquidity state.

Debt to Total Assets Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0.37 0.68 0.22 3.21 0.085 0.912

2017 0.42 0.68 0.24 5.87 0.07 1.46

2018 0.37 0.6 0.26 4.8 0.20 1.25

2019 0.46 0.6 0.33 6.45 0.30 1.628

2020 0.44 0.69 0.35 5.96 0.35 1.56

The debt to total assets ratio is an indicator of a company's financial leverage. It tells you the
percentage of a company's total assets that were financed by creditors. In other words, it is the total
amount of a company's liabilities divided by the total amount of the company's assets.

Formula for calculating Debt to Total Assets: Total Debt/ Total Assets.
 Shams, Din, Hira and Nishat textiles showing their debt to total assets ratio from 2016-2020 less than
1 in comparison to its industrial averages. This financial state indicates that these companies have a
much higher debt/liabilities than their assets which do not provide them the flexibility in financial
terms either to borrow or lend money. Whereas, Crescent has a high number of assets than its total
Debt/ Liabilities which means Crescent has the high financial leverage for borrowing and has the
capacity to sell on credit. Their debt to total assets ratios are much higher than 1 in comparison to
their industrial averages from 2016-2020.

Total Capitalization Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0.40 1.83 0.28 6.17 1.04 1.944

2017 0.43 1.94 0.3 9.73 1.2 2.72

2018 0.55 1.47 0.33 9.17 1.15 2.53

2019 0.55 1.51 0.47 12.41 3.17 3.62

2020 0.53 2.17 0.48 11.48 2.39 3.41

Capitalization ratios are indicators that measures the proportion of debt in a company’s Capital. The
debt to Capital Ratio is calculated by dividing a company’s total debt by its total capital, which is total
debt plus shareholders equity. The formula to calculate total capitalization ratio is:

Total Capitalization Ratio= Total debt/ Total Capital (Long term debt+ shareholders equity)

Generally, a good capitalization ratio should be less than 1 or we can say it should be somewhere
between 0.4-0.6. In other Words long term debt should between 40%-60% of the company’s total
capitalization. The overall trend of debt to Capital wasn’t good in this industry as the overall
capitalization ratio is 1.944 to 3.41 which shows the unsatisfactory case in this industry. Only two
companies showed capitalization ratios less than zero. Low capitalization ratio means the company is
not taking much long term debts. Nishat Textiles is leading among all as it shows the lowest values of
capitalization ratios every year. Din Textiles is the second best company as its capitalization ratios are
constantly less than 1. Crescent textiles had worse while crescent and Hira textiles had the worst
cases. Crescent Textiles has the highest values which shows that their long term debts are increasing
incredibly every year and was worst among all textile mills.

Total Asset Turnover:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 1.35 1.39 0.45 0.76 0.64 0.92

2017 1.01 1.78 0.42 0.60 0.56 0.87

2018 1.06 2.69 0.52 0.64 0.40 1.1

2019 1.10 3.05 0.63 0.8 0.71 1.26

2020 1 2.4 0.55 0.71 0.45 1.022

Total assets turnover ratio compares the sales of a company to its asset base. The ratio measures the
 ability of a company to efficiently produce sales and it is usually measured by third parties. It is
calculated by the following formulae:

Total asset turnover ratio= Net sales/ Total Assets

Asset Turnover is the ratio of total sales to average assets. This metrics helps investors understand
how effectively companies are using their assets to generate sales. A higher asset Turnover ratio is
favorable as it indicates more efficient use of Assets. Conversely, lower Asset turnover ratio shows
that the company is not using its assets more efficiently. A good asset turnover ratio differ from
business to business but generally a good asset turnover ratio more than 1 is considered good. In the
textiles industry the asset turnover ratio has improved with the passage of time. The stats shows that
the industry was lacking efficiency as the asset turnover ratio was less than 1 in 2016 and 2017, but
with the passage of time it improved efficiently in the next three years and remained between 1.02 to
1.26. In the above selected companies shams textiles has the most efficient asset turnover ratio which
shows that shams textiles had used their assets very effectively. Din Textiles was also efficient as their
asset turnover ratio is more than 1. Nishat, Crescent and Hira Textiles had less than 1 ratio. Overall,
Nishat Textiles showed less efficient ratio than the others which shows they need to improve their
efficiency in terms of using their assets.

Dividend/ Share:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 2.16 0 5 6.09 0 2.65

2017 0 0 5 0 0 1

2018 0 2.35 4.75 0 0 1.42

2019 4.97 1.05 4 2.29 0 2.5

2020 0 0 4 0 0 1

Dividend per share would simply be total dividend divided by the shares outstanding. It is
calculated as:
Dividend Ratio= Distributed Profit/ no. Of shares
A range of 35% to 55% dividend ratio is usually considered as healthy dividend ratio. If a company is
roughly distributing almost half of its earnings in dividends, then the company is said to be well
established and a leader in its industry. Among the five selected companies Nishat is constantly
paying dividends over its shares every year and is strongest firm among them. In 2016 Crescent
Textiles paid maximum dividends, a percentage of 6.09 which is more than the 4 others as Nishat paid
5 percent and Din Textiles paid 2.16 percent on the invested shares. But in the very next year’s Nishat
paid some percentage on its dividends unlike other companies. Hira textiles didn’t pay any dividend
on its shares at all which shows that Hira textiles remained the weakest firm throughout. The overall
trend in the industry remained between 0.8% -8.38 percent which looked quite suitable to some extent
for the investors as the Textiles industry is paying throughout over its dividen ds.

Book Value Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 93 61.76 233.7 84.6 27.68 100.1

2017 24 78.29 252 123.2 28.85 101.3

2018 83 78.83 215 104.63 22.50 100.8

2019 96 68.51 189.5 98.83 -1.13 90.3

2020 68 74.24 203 108 0.80 90.8

Book value isn’t the same as market value. Book value is actually ratio of Shareholders equity to total
outstanding stock. It is calculated as:

Book value = Shareholders Equity/ no. Of common stock

Book value is considered very important in terms of valuation because it shows the real and accurate
picture of company's worth because it enables them to find bargain deals on stock, especially in a
situation when the company is undervalued or poised to grow and then the price of stock is going to
rise. In other words book value is literally the value of company in its books. The book value per
share is the amount of that asset that will go to common equity in liquidation. So higher book value
means that shares have more liquidation value. In other words higher the book value, more the share
is worth. Higher book value is usually suitable for the shareholders as the price of share is strong. In
the above selected companies the overall book value is suitable for shareholders and overall trend of
the industry is also higher. Except for Hira textiles in 2019. It shows negative book value which
means that year was more suitable for the investors. Negative book value means that shareholders
equity is producing better returns for investors over the long term. Nishat textiles is the strongest firm
among these. It shows higher book values than the other companies every year. It shows that it is
more suitable for the shareholders as the price per share is higher than the others. Hira textiles shows
the lowest values in all these five years. In 2019 it incurred negative book value and it wasn’t suitable
for shareholders. Now if we compare the overall distribution we observe that Hira textiles has the
lowest set of values in book ratio, otherwise the others are categorized as the following, Nishat being
the highest, then crescent group then din group then Shams textiles, we observe abnormalities in the
tables but over the other years we observe the companies to being able to retain and keep a hold of
themselves

Market to book Value Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0.84 0.41 0.34 0 0 0.318

2017 1.13 0.33 1.39 0.26 0.42 0.706

2018 0.94 0.56 0.79 0.31 0.39 0.60

2019 0.81 0.39 0.48 0.27 -4.34 0.49

2020 0.41 0.30 0.35 0.21 3.68 0.99

Market to Book value also known as price to Book ratio is a financial metric used to evaluate
company’s current market value relative to its book value. Here the market value is current stock price
of all outstanding shares that is the price that market believes the company is worth.

Market Price to Book value ratio= Market Price/Book value

Investors favored this ratio a lot and it is widely used by the market analysts. Generally, any price
book value under 1.0 is considered good price book value, indicating potentially undervalued stock.
However investors often consider under 3.0 as a good price book value. Higher the Price book ratio,
more expensive the stock and vice versa. If we see the price book value of above mentioned
companies, it shows that textiles industry shares aren’t valued much in market. All the companies had
shown market value less than 1. In the last five years only din textiles and Nishat textiles had the
highest market price among others. Shams and crescent textiles showed better price on shares to some
extent while Hira textiles remained the worst throughout from 2016 to 2019 and then shown positive
value in the market in 2020.

Return on Equity:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 3.46 17.46 6.22 3.70 0.048 6.178

2017 3.82 8.53 4.99 1.15 0.003 3.698

2018 8.05 15.52 4.98 0.10 0.28 5.78

2019 16.76 6.52 8.23 20.6 3.02 11.008

2020 1.18 26.60 5.08 0.39 4.4 7.53

It indicates the total Profitability to all the shareholders of the firm after all the taxation and expenses.
A firm with a good return to equity Ratio with average greater ratio than industrial average will be
more profitable to shareholders. On the other hand, a firm with weak return to Equity Ratio will be of
low profitability for stakeholders.

Return to Equity Formula:

Return to Equity Ratio= Net Profit after taxation

Shareholders’ Equity

Analysis For the last 5 years:

Shams textile has the best return to Equity Ratio overall for the last 5 years except 2019. The
industrial values for shams textile were 17.46, 8.53, 15.52 and 26.60 in years 2016,2017,2018,2020
respectively where the industrial AVG was than the ROE ratio of shams textile, however in 2019
shams textile had the profitability for shareholders where the industrial average was 11.02 but return
rate for the firm was only 6.52.
 After shams textile, Din textile had the best return to Equity Ratio followed by Nishat. In the year
2017, 2018 and 2019, Return to Equity Ratio for din textile was good with ratio 3.82, 8.05 and 16.76
respectively however in the years 2016 and 2020 return on equity Ratio was way below than the
industrial average of the textile Sector.

Nishat occupied the third spot for the best return on equity Ratio with good ROE outcomes for the
years 2016-2017, their values were above the industrial average of the textile Sector in 2016, 2017
with ratios of 6.22 and 4.22. However for the last years, Profitability for shareholders remained low,
which is evident from their weak return to Equity ratios.

Crescent Textile occupies fourth spot in the list with a strong ROE ratio in year 2019, which was
20.6, however for the other four years, profitability remained low for the shareholders of the firm
because of the week ROE ratio industrial average.

Hira Textile has the worst ROE ratio with the lowest profitability for shareholders. Because of mega
losses over the years, Hira Textile was unable to meet stakeholder’s expectations with a very weak
Return to Equity Ratio in the last five years. That’s why Hira textile is last in the list for ROE Ratios

Gross Profit Margin:

Year Din Shams Nishat Crescent Hira Indus. Avg

2020 10.36 2.27 0.12 11.68 -4.54 3.978

2019 11.39 4.43 0.1 11.74 -40.12 -2.492

2018 8.52 5.89 0.1 9.72 -7.08 3.43

2017 6.43 3.53 0.12 8.94 7.59 5.322

2016 8.68 1.88 0.11 12.76 9.50 6.586

It basically indicates the efficiency of operations and firm’s pricing policy. If a firm has a high gross
Profit Margin, It means that they are using their resources efficiently. The financial condition of the
firm is better and it will be able to pay more to its shareholders as well however a company with
negative gross profit margin like Hira textile for the past few years means that the company is
receiving high loss and its financial condition is not so good.

Gross Profit margin Ratio formula:

Gross Profit margin Ratio= Gross profit/ Net Sales

Analysis for the last five years:

Nishat and Crescent textile have the best gross Profit margin Ratio for the last 5 years. Both of the
firm’s had Gross profit margin ratios way above the industrial averages. For Crescent textiles, Gross
Profit Margin Ratios were 12.67,8.94,9.74,11.74,11.68 while for Nishat textile Profit Margin Ratios
were 11.95,12.06,10.33,10.92 and 13 for the years 2016-2020 respectively and the industrial average
for the last 5 years were 9.06,9.9,8.6,7.48 and 9.14 respectively . It means that both the companies
were able to efficiently utilize resources and were able to make a handsome gross Profit margin over
the last 5 years.

Now comes Hira and din textile at the second spot for the best gross profit Ratio in the last 5 years.
Ratio for Hira textile was best in 2016 and 2017 with Gross profit margin of 9.5 and 7.5 respectively
and the industrial ratio was 9.14(2016) and 7.48 (2017). For din textile, 2019 and 2020 were the best
years and if we talk about gross profit margin with 11.39 and 10.36 Gross profit margin respectively
and the industrial average value was 9.06 in 2020 and 9.9 in 2019. Apart from that , gross profit was
very weak from the very recent last three years for Hira textile because of major losses .While for din
textile first three years were weak in terms of the gross profit .

Now let’s talk about shams textile that has a very steady gross profit margin over the last 5 years
which is very weak. It means that shams textile has least efficiency for allocating the resources and
produces the required output out of it from the last 5 years. Values for the last 5 years of gross profit
for shams textile were 2.27 , 4.43 ,5.89 ,3.53 and 1.88 which is very low as compared to the industrial
averages for the last five year that were 9.06, 9.9 ,8.6,7.48 and 9.14 from the year 2020-2016 . Hence
this proves that shams textile has a very weak gross profit margin Ratio for the last five years from
2016 to 2020

Return on Investment Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg
2016 2.34 14.90 8.01 - 3.07 6.09
2017 2.40 7.82 6.53 0.76 0.21 3.54
2018 3.69 14.29 6.75 0.05 14.94 7.94
2019 7.95 6.28 11.16 1.53 17.29 8.84
2020 0.54 25.60 7.82 0.21 16.12 10.06

It basically indicates the profitability on assets of a firm after all the taxation and all expenses. A firm
with a good return on investment values will gain more profit on acquired assets of the firm after all
the dues while a Firm with a weak value of ROI will indicate a low profitability of the firm on the
acquired assets of firm after all the taxation and all expenses.

Return on investment Ratio =Net Profit after Taxation/Total Assets.

If we look at the comparison for the last 5 years then Shams textile has the best Return on investment
Ratio for the Last 5 years among all 5 firms except 2019. Return on investment Ratios were 25.60,
14.29,7.82,14.90 that are way above then the industrial averages for years 2020
(10.06),2018(7.94),2017(3.54 ) and 2016 ( 6.09) however for the year 2019 ROI ratio was weak that
means return on asset for the firm was not so good in 2019 .

Second comes Hira Textiles and Nishat textile. Values for both the firm were strong in 3 out of 5
years if during the 2016-2020 tenure. Hira textile has values of 16.12, 17.29, and 14.94 for the last 3
years as compare to industrial average that was 10.06, 8.84 and 7.94. Similarly Nishat has values of
11.16(2019),

6.53(2017), 8.01(2016) as compared to industrial average of the textile that was 8.84, 3.53, 6.09 for
the respective years. This means that the both the companies have at least 3 years out of 5 in which
they had the best return to Equity Ratio which means that profitability on assets for the firm after all
the taxation and expenses was maximum . However If we talk about the other years , they had weak
Return to Equity Ratio as mentioned in the above table that means that profitability on the acquired
assets of the firm was not so good as compared other firms in textile Sector .

Crescent and Din textile are at the last spot of this list. The reason behind that is both the firms have
very poor return to Equity Ratio for the last 5 years. Consecutively return on investment Ratio for the
firms were less than that of the industrial average of the textile Sector. Crescent Textile has values of
0.21, 1.53, 0.05, 0.76 and 2.11 and Din has values of 0.54, 7.95, 3.69, 2.40, and 2.34 for the last five
years starting from 2016 to 2020 respectively. Return on investment ratios for both firms depict in the
above given table that the return to investment ratios are weak as compare to industrial AVG that has
values of 10.06 , 8.84 , 7.94 , 3.54 and 6.09 for the last 5 years from 2020-2016 respectively . It means
that profitability for the firms on the acquired assets is very low and compare to other firms in the
same textile Sector.
 Earnings per share:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 2.70 12.86 14 1.08 1.08 6.344

2017 2.82 5.83 12.12 0.09 0.09 4.19

2018 4.97 11.7 11.65 0.11 6.32 6.95

2019 10.46 5.02 16.66 2.98 23.28 11.68

2020 0.86 16.23 9.97 0.42 3.51 6.198

It indicates that the how much money a company for each share of its stock and is widely used as a
matrix to estimate company’s cooperate Value . A strong earning per share value depicts that
company is making healthy amount of money per share of its stock. On the other Side, a weak
earnings per share value means that firm’s profitability per share is very low or zero.

Earnings Per share (EPS) = Total Earnings of firm/ Outstanding Shares.

If we talk about the best Earning per share ratio, then Nishat is at first position among all five firms.
Nishat textile’s Earning per share(9.97,16.66,11.65,12.12 and 14) is continuously above the industrial
average over the years that is (6.19,11.68,6.95,4.46 and 6.35 ) for last 5 years from 2016-2020 ,which
means company is Earning hefty amount of profit from each share sold .

At second is Shams textile, whose Earning per share is strong for 4 out of last 5 years accept 2019.
Values were 16.23, 11.7, 5.83 and 12.86 for 2020,2018,2017,2016 respectively. Strong Earning per
share means more profitable for shams textile over the years. In 2019, Earning per share dropped from
strong to weak, during the whole profit earning for the firm over the whole year was low.

Hira textile’s Earning per share was strong only for 1 year (2019) with ratio of 23.28 in last five
years. This means the company made profit from shares sold in 2019 only. For the other years , values
were 3.51 , 6.32,0.09 and 1.08 for years 2020 ,2018,2017 and 2016 respectively that was way below
the market average that was 6.19, 6.95,4.46 and 6.35 for the respective years . So the profitability per
share was very low for the firm from the last few years except 2019.

For Crescent and Din textile Earning per share was very low for the last five years. Values for
Crescent textile are 0.42,2.98,0.11,1.42 and 1.1 and values for Din Textile were
0.86,10.46,4.97,2.82,2.70 over the last five years from 2016-2020 however the industrial value was
way above these ratios which was 6.19 , 11.68, 6.95 ,4.46 and 6.35 . This means that the Earning per
share ratio for both the firm is very weak as compare to the other firms of the textile Sector hence
their profitability for the share sold of their stock is also very low as compare to the other firms like
Nishat and Shams .

Equity Multiplier:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 3.22 3.23 1.29 2.05 2.83 2.52

2017 4.41 2.56 1.3 1.838 2.39 2.50

2018 4.97 2.55 1.3 2.1 2.79 2.74

2019 4.87 3.13 1.5 2.197 38.1 9.96

2020 4 3.14 1.54 2.18 46.7 11.51

The equity multiplier is a financial leverage ratio that measures the amount of a firm’s assets that are
financed by its shareholders by comparing total assets with total shareholder’s equity.

The equity multiplier formula is calculated by dividing total assets by total stockholder’s equity.

The equity multiplier is a ratio used to analyze a company’s debt and equity financing strategy. A
higher ratio means that more assets were funding by debt than by equity. In other words, investors
funded fewer assets than by creditors.

In this case Hira Textiles has the highest equity multiplier ratio at around 46 in 2020, which is not
favorable at all, as compared to Crescent Textiles which has maintained their equity multiplier ratio as
well as Nishat Textiles which maintained their equity multiplier at around 1 on average

Return on Equity (The Du Pont Approach):

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 11.49 26.04 0.06 391.1 2.768 86.3

2017 0.08 6.40 0.055 124.6 0.015 26.23

2018 12.7 14.87 0.067 10.8 101.5 27.98

2019 18.4 8.46 0.0375 420.1 1648 418.99

2020 5.68 17.23 0.0924 52.63 87.2 32.56

The return on equity is a measure of the profitability of a business in relation to the equity.

Return on equity (ROE) is a measure of financial performance calculated by dividing net

income by shareholders' equity.

Whether ROE is deemed good or bad will depend on what is normal among a stock’s peers. For
example, utilities have many assets and debt on the balance sheet compared to a relatively small
amount of net income. A normal ROE in the utility sector could be 10% or less. A technology or retail
firm with smaller balance sheet accounts relative to net income may have normal ROE levels of 18%
or more.

In this case, Crescent textiles has been getting the highest return on equity of around more than 100 on
 average, and Nishat Textiles getting the lowest return on equity.

Net Profit margin Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 2.65 3.36 0.1 2.37 2.65 2.23

2017 0.02 0.82 0.08 1.04 0.22 0.44

2018 2.44 2.16 0.06 0.07 25.19 5.98

2019 3.62 1.52 0.09 1.71 76.18 16.6

2020 1.42 3.96 0.05 0.25 20.76 5.28

The net profit margin is equal to how much net income or profit is generated as a percentage of
revenue. Net profit margin is the ratio of net profits to revenues for a company or business segment.

To find the margin, divide gross profit by the revenue. To make the margin a percentage,
multiply the result by 100.

Net profit margin is one of the most important indicators of a company's financial health. By tracking
increases and decreases in its net profit margin, a company can assess whether current practices are
working and forecast profits based on revenues. Because companies express net profit margin as a
percentage rather than a dollar amount, it is possible to compare the profitability of two or more
businesses regardless of size.

In this case, Hira Textiles has been generating the maximum net profit margin ratio at around 20% in
2020, whereas Nishat Textiles generating the minimum net profit margin ratio less than 1 in average.

Inventory Turnover Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 4.77 5.9 4.12 6 2.26 4.61

2017 3.10 10.7 3.97 5 1.67 4.89

2018 2.73 10.9 3.86 4 1.26 4.55

2019 2.79 5.3 3.82 5 10.51 5.48

2020 3.03 4 2.84 4 5.07 3.79

In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in
a time period such as a year. It is calculated to see if a business has an excessive inventory in
comparison to its sales level.

Calculating the average inventory, which is done by dividing the sum of beginning inventory
 and ending inventory by two, and then dividing sales by average inventory.

Inventory turnover measures how fast a company sells inventory and how analysts compare it to
industry averages. A low turnover implies weak sales and possibly excess inventory, also known as
overstocking. It may indicate a problem with the goods being offered for sale or be a result of too
little marketing.

A high ratio implies either strong sales or insufficient inventory. The former is desirable while the
latter could lead to lost business. Sometimes a low inventory turnover rate is a good thing, such as
when prices are expected to rise (inventory pre-positioned to meet fast-rising demand) or when
shortages are anticipated.

In this case, Shams Textiles has the highest inventory turnover ratio at around 7 on average followed
by Crescent textile whereas, Din Textiles and Nishat Textiles the lowest inventory turnover ratio at
around 3 on average.

Interest Coverage Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 1.78 0.63 6.47 1.99 1.44 2.46

2017 1.01 3.26 6.49 1.28 0.80 2.57

2018 1.66 5.26 5.99 1.02 3.64 3.51

2019 1.66 0.59 5.13 1.78 9.42 3.71

2020 1.22 1.09 3.98 1.37 2.75 2.1

The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a
company can pay interest on its outstanding debt.

The interest coverage ratio may be calculated by dividing a company's earnings before interest
and taxes (EBIT) by its interest expense during a given period by the company's interest
payments due within the same period.

The interest coverage ratio is used to see how well a firm can pay the interest on outstanding debt.
Also called the times-interest-earned ratio, this ratio is used by creditors and prospective lenders to
assess the risk of lending capital to a firm. A higher coverage ratio is better, although the ideal ratio
may vary by industry.

In this case Nishat Textiles has the highest interest coverage ratio at around 5 on average, whereas
Din and Crescent Textiles having the lowest interest coverage at around 1 on average

Earning Power Ratio:

Year Din Shams Nishat Crescent Hira Indus. Avg

2016 3.57 5.50 4.63 1.803 1.664 3.43

2017 0.02 2.68 3.63 0.624 0.123 3.86

2018 2.57 5.78 3.96 0.045 10.07 4.49

2019 3.98 2.47 5.83 1.371 54.08 13.5

2020 1.42 8.04 3.16 0.182 9.34 4.43

Basic earning power (BEP) ratio is a measure that calculates the earning power of a business before
the effect of the business' income taxes and its financial leverage.

It is calculated by dividing earnings before interest and taxes (EBIT) by total assets.

The higher the BEP Ratio the better.

Firstly, BEP is not ultimate. Like all the other financial ratios, it need to be further analyzed. More
importantly, it is an indicative factor. To conclude, the inference can be made only with combining
other ratios, and comparing with Industry Standards

In this case Hira Textiles having the highest earning power ratio at around 15 on average, whereas
Crescent Textiles Having the lowest earning power ratio at around 1

Growth Ratio:
Year Din Shams Nishat Crescent Hira Indus. Avg

2016 0 -29.46 0 0 0 -5.892

2017 -2.66 18.30 8.13 0.63 -4.98 3.88

2018 27.20 41.32 10.57 4.32 -35.47 9.60

2019 22.80 12.93 14.59 24.23 22.47 19.40

2020 7.94 -21.10 -7.66 -4.99 -44.69 -14.1

Price earnings growth ratio (PEG ratio) expresses the relationship among current stock price, a
company’s earnings per share, and earnings expected future growth. Similar to the Price earnings
ratio, the lower the PEG, the more undervalued the stock is.

Use the following formula to calculate price earnings growth ratio:

Price to sales ratio = Price per earnings ÷ Annual EPS growth

An ideal for a stock is one. It means that when any stock has it is as one, the current price of the stock
is said to be consistent with its estimated earnings, which in turn means that the stock is priced at par.
When the ratio is greater than one, it indicates that the stock is overvalued as the growth expectations
are very much high. On the other hand, if the ratio is less than one, it would mean that the stock is
undervalued as the growth expectations are very less.

In this case, Hira Textiles has the minimum growth rate at an average of -15 growth rate, while Din
Textiles being having the highest growth rate at an average of around 14

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