Name: Hibba Adeel (B-24103), Abdul Karim (B-24087)

Semester: 5th
Subject: Business Finance
Submitted to: Sir Muhammad Naveed
Date: 22 January 2022
 ZIL Limited

F OOD & PERSONAL CARE PRODUCTS

“Every successful business starts with a great idea.”

The idea behind ZIL is to offer reliable beauty solutions to the customers and make their
lives easier with access to quality products.

Contents
.................................................................................................................................................................5
Introduction:............................................................................................................................................5
Vision:.....................................................................................................................................................6
Mission:...................................................................................................................................................6
Objectives:...............................................................................................................................................6
• Sustainability:...............................................................................................................................6
• Customer Centric:.........................................................................................................................6
• Innovation:....................................................................................................................................6
• Learning:.......................................................................................................................................6
• Empowerment:..............................................................................................................................6
Company Profile:.....................................................................................................................................7
Board of Directors...............................................................................................................................7
Management details:............................................................................................................................8
Product Line:...........................................................................................................................................9
Financial Ratios Calculations:...............................................................................................................10
1. Liquidity Ratio:..............................................................................................................................10
Definition:......................................................................................................................................10
Years involved:..............................................................................................................................10
Interpretations:...............................................................................................................................10
2. Solvency Ratios:............................................................................................................................11
Definition:......................................................................................................................................11
 Years involved:..............................................................................................................................11
Interpretations:...............................................................................................................................12
3. Activity Ratios:..............................................................................................................................12
Definition:......................................................................................................................................12
Years involved:..............................................................................................................................12
Interpretation:................................................................................................................................13
4. Profitability Ratio:.........................................................................................................................13
Definition:......................................................................................................................................13
Years involved:..............................................................................................................................13
Interpretations:...............................................................................................................................14
Horizontal Analysis...............................................................................................................................16
Interpretation of horizontal analysis of balance sheet:......................................................................16
 Non-Current Assets.................................................................................................................17
 Current Assets.........................................................................................................................17
 Total Assets.............................................................................................................................17
 Equity......................................................................................................................................17
 Non-Current Liabilities...........................................................................................................17
 Current Liabilities...................................................................................................................18
Interpretation of Horizontal Analysis of Profit and loss account:.....................................................19
Sales...............................................................................................................................................19
CGS...............................................................................................................................................19
GP..................................................................................................................................................19
Operating Expenses.......................................................................................................................19
Operating Profit.............................................................................................................................19
Profit of the year............................................................................................................................19
Vertical Analysis...................................................................................................................................20
Interpretation of Vertical analysis of balance sheet:..........................................................................20
 Non-Current Assets and Current Assets.................................................................................20
 Equity......................................................................................................................................21
 Non-Current Liabilities...........................................................................................................21
 Current Liabilities...................................................................................................................21
 Interpretation of Vertical analysis of Income statement:...................................................................21
CGS...............................................................................................................................................22
GP..................................................................................................................................................22
Operating Expenses.......................................................................................................................22
Operating Profit.............................................................................................................................22
Profit of the year............................................................................................................................22
References:............................................................................................................................................22

Introduction:
 Journey of 50 Years ZIL limited company

 Started in 1954 in Karachi

 A factory incorporated in 1960 as a private limited company

 In November 198 it was converted to  public limited company

 Their journey of over 5 decades has helped their streamline

  Improve their process operations and products

 To meet the needs of their customers.

Vision:
“To be admired as a leading and innovative consumer goods company offering delightful
propositions that rivals any other major company”.

Mission:
“Enrich everyday lives of individuals, families and communities by providing products which
offer quality, convenience and affordability”.

Objectives:
• Sustainability: They consider balancing long term goals with short term needs. So that
they will be able to survive in future not only focus on their short term needs but also are
working hard to achieve their long term goals.
• Customer Centric: Goal is to understand, satisfy customer needs, wants and
expectations. For an organization, their customers are everything and they also give
preferences to the needs and wants of their customers and to provide them in the best
possible way.
• Innovation: They add value to delight their customers. Not only the products but also the
value addition in it, like packaging and some rich minerals.
• Learning: Their outstanding quality through continuous improvement. For satisfaction of
customers, they are continuously improving their product and bring new products to the
market.
• Empowerment: To grow their people to be autonomous, responsible and engaged. So
that their employees are motivated in such a way that they are able to compete in the
economy.
Company Profile:
Board of Directors
 Management details:

• Mr. Mubashir Hasan Ansari (Chief Executive Officer)

• Mr. Ata-ur-Rehman Shaikh (General Manager Finance)

• Syed Shiblee Abdullah (General Manager Supply Chain)

• Mr. Shabbir Hussain (National Sales Manager)

• Mrs. Sahrish Rehan (Marketing Manager)

• Mr. Faisal Ajmal (Head of Human Resources)

 Product Line:

Product Line:
 Financial Ratios Calculations:
1. Liquidity Ratio:

Definition: Liquidity Ratios are used to measure short-term debt-paying ability of the firm.

Years involved: 2018, 2019, and 2020

Interpretations:
▪ Although, company’s current ratio is greater than previous but for an ideal business it should be
greater than 1.5 and ZIL limited 2019’s current ratio is 1.10 which is less than 1.5. But they
have improves in 2020.

▪ This shows they are properly managing their working capital and they are not able to pay their
short term liabilities using their current assets.
 ▪ Their quick ratio is favorable but it should be greater than 1. As, their ratio is 0.66 greater
than previous year but is not up to the mark same goes in 2020. Therefore, they don’t have
enough in their cash form to pay off their short term liabilities.

▪ Same goes with absolute liquid ratio, it should be greater than 0.5. However, it is greater
than previous year but is 0.15 and in 2020 is 0.24. Thus, they cannot pay off their short
term debts using their current assets.

2. Solvency Ratios:

Definition: Solvency Ratios are used to measure Long-term debt-paying ability of the firm.

Years involved: 2018, 2019, and 2020

Interpretations:
▪ They are relying too much on debts which is unfavorable for the business. They should rely on
equity rather than debts. It is very unfavorable that company is not capable of paying of their
long term debts.

▪ ZIL Limited interest coverage ratio is favorable and also their EBIT is greater than
previous year and now they can pay their interest more times than previous years.
▪ Their debt ratio is greater than last years which is unfavorable for them.

▪ Their equity ratio is lesser than previous years which is unfavorable for them.
3. Activity Ratios:

Definition: Activity ratios are used to check the company’s efficiency and effectiveness.

Years involved: 2018, 2019, and 2020

Interpretation:
 Account receivable turnover ratio is greater than previous years which means it is
favorable for the business as they have now more cash to invest.

 Their collection period is reduced than previous year that means the company is receiving
money from their receivables in fewer days than before which is favorable for the
business as they have more cash in hand now.

 As their asset turnover ratio is greater than previous year that means they are earning on
what they have invested that is their net sales are more than their assets. Although it
decreased in 2020 but not a drastic change.

 Their account payable ratio is lesser times than previous year that means they have more
cash in hand and they have time to pay their suppliers.

 They are now paying in more days than previous years which is favorable for business.

4. Profitability Ratio:

Definition: Profitability ratios show how efficiently a company generates profit and value for
shareholders.

Years involved: 2018, 2019, and 2020

Interpretations:
 Its gross profit margin increased in 2019 which was favorable that they were generating
profits with the sale of their inventory but it declined in 2020 which is unfavorable for ZIL
limited.
 Company’s operating profit margin is higher than previous year which means that
company is profitable after paying off its operational expenses and is favorable and it even
decreased in 2020 which is unfavorable.
 Company’s net profit margin in 2019 is greater than previous year which means the
company is profitable after paying all expenses i.e. CGS, Operating and Financial Expenses
and even decreased in 2020.
 Earnings per share serve as an indicator of a company's profitability. It’s higher in 2019
than previous year which is favorable for the business and it decreased in 2020 which is
unfavorable.
 Return on Assets is higher than previous year which means the company is utilizing
assets to produce profit. Although its higher but very low as ratio thus, company need to work
on it to improve it and it even decreased in 2020.
Horizontal Analysis
Interpretation of horizontal analysis of balance sheet:

 2018 is the base year

 2019 and 2020 are comparative years.

 Non-Current Assets

 The overall Non-Current assets were increased in 2019 but it eventually has a
comparatively less increase in 2020. As, in 2019 it increased by 6.42% but in 2020 only
by 1.30% as compared with the base year i.e. 2018.
 Although, there is a drastically increase in intangible assets by 3000+ % while the other
% ages are decreasing even negatively.
 Not favorable for the business

 Current Assets
 There is an overall increase in Current Assets both in 2019 and 2020 as compared to
2018. As it is an overall increase by 15.86% in 2019 and 38.50% in 2020 as compared to
2018.
 Trade Debts has decreased but it might be their receivables are paying them early
(because we have seen their sales have increased). Thus, receivables are converting into
cash.
 Other current assets as in 2019 (compared to 2018) are more than 2020 (compared to
2018).
 Favorable for the business.

 Total Assets
 Total assets as compared to 2018 have increased in 2019 by 9.73% and even more in
2020 i.e. 14.32%.
 Favorable for the business.
  Equity
 The Equity is 7.69% in 2019 but decreased in 2020 i.e. 6.84% as compared to 2018.
 This is unfavorable for the company as their equity financing is decreasing.

 Non-Current Liabilities
 This is unfavorable for the business as their debt financing is increasing
 The Non-current liability is 87.40% in 2019 but increased in 2020 i.e. 113.77% (as
compared to 2018).

 Current Liabilities
 The current liabilities were negative in 2019 which was favorable for the business but it has
increased in 2020
Interpretation of Horizontal Analysis of Profit and loss account:

Sales
 The sales have been increased in 2019 as well as in 2020 by almost 1%
 Increment in sales is favorable for the company.

CGS
 The cost also has been increased in 2019 as well as in 2020.
 Increment in cost is unfavorable for the company as there is almost 10% increase in
cost in 2020 as compared to 2019 with 2018 as base year.
GP
 Due to increase in cost more than increase in sales the gross profit has decreased by
21% almost.
 Not favorable for the company.

Operating Expenses
 Overall decreased as decrease in admin and selling expenses as well.
 Favorable for the company.
Operating Profit
 Such a drastically decrease in operating profit as it has become negative in % in
2020 but it was approx. 127% of 2018’profit.
 Alarming point for Zil limited
Profit of the year
 Same interpretation as Operating profit
 They should adopt strategies to increase their profit as it has drastically decreased in
2020 as was almost 100+ % in 2019.
Vertical Analysis
Interpretation of Vertical analysis of balance sheet:

 Analysis as percentage of Total Assets. .

 Non-Current Assets and Current Assets

 Non-Current assets as % age of assets has decreased in 2019 and 2020
 As now company is acquiring less non-current assets in total assets.
 Their land and properties have decreased.
 However they are having more % age of short term assets rather than Non-current assets.

 Equity
 Equity financing decreasing year by year as % age of assets.
 unfavorable

 Non-Current Liabilities
 Increased as % age of assets have increased overtime
 unfavorable

 Current Liabilities
 Decreased in 2019 but increased in 2020 but not more than 2018
 As % age of asset
Interpretation of Vertical analysis of Income statement:

 Analysis as % age of sales

CGS
 Cost was almost 71% of sales in 2018 in decreased in 2019 by 1% but it increased
by 5% in 2020
 Unfavorable for business
GP
 Due to high cost gross profit is lower

Operating Expenses
 Operating expenses as % age of sales has decreased
 Favorable
Operating Profit
 Operating profit as % age of sales was 4% of sales in 2018 but it increased to 7% in
2019 and again decreased in 2020 even less than 2018 to 3 % almost.
 Alarming situation
 Very low operating profit

Profit of the year

 Same interpretation as Operating profit.
References:
 https://www.zil.com.pk/wp-content/uploads/2021/04/ZIL-Annual-Report-2020.pdf

 https://www.zil.com.pk/wp-content/uploads/2019/04/ZIL-Annual-Report-2019.pdf

 https://www.zil.com.pk/wp-content/uploads/2018/04/ZILAnnualReport2018-5.pdf