Project Proposal: FINANCIAL STATEMENT

ANALYSIS OF TWO LISTED

COMPANIES IN THE SAME
INDUSTRIES GUL AHMED
TEXTILE MILLS LIMITED AND
FAZAL TEXTILE MILLS LTD.

Submitted By: NIGAH-E-NAZAR FATIMI

ID: MC070400183.
MBA FINANCE
+92-332-2332082,+92305-2290080.

Date of Submission: April 13, 2011.

 Contents
1. Chapter No 1 Page No

1.1 Project title 1

1.2 Introduction 1

1.3 Objective 1

1.4 Significance 1

2 Chapter No 2:

2.1 Project proceedings 2

3 Chapter No 3: Methodology

3.1 Data Collection Sources 5

3.2 Data Collection tools 5

3.3 Data Processing 5

4 Bibliography 6
1. Chapter No 1
1.1 Introduction
This project is about the Financial Statement Analysis of the two listed companies in the
same industry that are Gul Ahmed Textile Mills Limited And Fazal Textile Mills Ltd.
.The basic reason is to check the difference between the financial statements of two
different companies regarding to the work
Textile sector is the Play an important role in our economy, and Gul Ahmed
Textile Mills Limited And Fazal Textile Mills Ltd..are the main key player of this
sector in this region. Financial statement analysis of these two companies will show the
financial position and will give us the result that which company has better standing in
this period of world wide recession.

1.3 OBJECTIVE
This is individual based project rather group work. Objective is to analyze
financial statements of both worthwhile companies by using the different methods to find
their performance in the Textile sector and also find there contribution in the growth of
economy. We also have to analyze the companies comparatively which one is more
suitable for investment.

1.4 SIGNIFICANCE

The main significance of the project to explore main players of the sector which
consider being the backbone of Pakistan textile exports. This will not only enhance my
knowledge but also helpful for others to take the financing decision in these industries.
The advantages that this analysis can provide to the companies are to increase the
financial health of the company. The analysis will provide an overview of the common
person about the companies. This will help the company to make improvements in the
financial health.
Further this study will help me to understand the current position of textile
industry and the problems faced by this industry. Moreover, it will enable me to furnish
my accounting concept and financial statement analysis techniques. Because calculating
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the ratios and other analysis of financial statement requires complete respective
knowledge. In absence of required knowledge one can not conclude such study.

Chapter No 2:
2.1 Project proceedings
Following are the main parts and heading of the main project

1) Introduction
2) Industry comparison
3) Common size analysis
 Vertical analysis
 Horizontal Analysis
4) Ratio Analysis
(a) Liquidity Ratios

 Current Ratio
 Quick Ratio
 Working Capital
 Sales to Working Capital

(b) Leverage Ratios

 Time Interest Earned

 Fixed Charge Coverage
 Debt Ratio
 Debt / Equity Ratio
 Debt to Tangible Net worth Ratio
 Current Worth / Net worth Ratio
 Total Capitalization Ratio
 Fixed Asset Ratio / Equity Ratio
 Long term Assets versus Long term Debt
 Debt Coverage Ratio

(c) Profitability Ratios

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  Net Profit Margin
 Return on Assets
 DuPont Return on Assets
 Operating Income Margin
 Operating Assets Turnover
 Return on Operating Assets
 Sales to Fixed Assets
 Return on Investment (ROI)
 Return on Total Equity
 Gross Profit Margin

(d) Activity Ratios

 Accounts Receivable Turnover

 Average collection period
 Accounts payable turnover
 Average payment period
 Inventory Turnover
 Average age of inventory
 Operating cycle
 Total Asset Turnover

(e) Market Ratios

 Dividend per share

 Earning per Share
 Price/Earning Ratio
 Percentage of Earning Retained
 Dividend Payout
 Dividend Yield
 Book Value per Share
(f) Statements of Cash Flow

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  Operating Cash Flow/Current Maturities of Long Term Debt and Current
Notes payable
 Operating Cash Flow/Total Debt
 Operating Cash Flow per Share
 Operating Cash Flow/Cash Dividends

5) Trend Analysis

6) Industry averages and comparisons with competitors

7) Summary

8) Conclusion

9) Recommendations

10) Bibliography

11) Annexes

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 Chapter No 3:

Methodology
3.1 Data Collection Sources:

In this project, the source used to collect the data is the Secondary Source. The
data is being collected from the annual reports and newsletters of APTMA (All Pakistan
Textile Mills Association). Another secondary source used is the website of the
companies. and Ministry of Commerce and trade of Pakistan.
My scope of analysis is on the basis of financial statements of these two
companies provided on their website.

3.2 Data Processing:

Finding financial ratios through applying formulas on excel and finding there
performance in the industry. I will conclude the progress comparison by comparing the
installed and utilized capacity and addition in the machinery and growth in sales. My
other main data processing handling of project is from the business news on different
news website indicating the performance of these both Companies.

4 Bibliography do follow APA format

 http://www.gulahmed.com/html/sec_1024/corp.html
 http://www.fazaltextile.com/html/fazal_textile_mills.htm
 www.aptma.com.pk,
 www.kse.com.pk,
 http://www.textile.gov.pk/,
 www.brecorder.com,
 http://www.fazaltextile.com

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 http://www.gulahmed.com/,
 www.ptj.com.pk/