SUBMITTED BY:

M.ABDULLAH
ID: 30352

SUBMITTED TO:
DR. MUDEER
KHATTAK
FINANCIAL
MANAGEMEN
T
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INTRODUCTION

Nishat Chunian LTD is a vertically integrated Textile Company that was founded in 1990 and
over the years. With an annual sale of over 49.284 billion, it has become Pakistan’s largest
textile industry in terms of its sales. Today, Nishat Chunian Group of companies consists of 3
big companies which include Nishat Chunian Textile Company, Nishat Chunian Power
Generation Company, and Nishat Chunian USA. The Company is located in Lahore with
over 1480 employees across all of its locations.
The company has an annual spinning production of over 85000 tons of yarns, it has greige
fabric of over 54 million meters and 36 million meters of the finished fabric. The company
has a setup of a 200 MV independent power plant to cope up with the current escalating
energy demand.
The Purpose of the company is to generate value for its customers through commitment and
integrity and the business principle of the company is to manufacture Fibre, Yarn, and thread
mills and then sell them to various markets.
The purpose and objective of this project are to basically compare the financial statement of
Nishat Chunian LTD for 2019 and 2020 and take their ratios which involves (current ratio,
Debt to net worth ratio, Return on equity and return on asset ratio) and interpret them
according to their given numbers. Secondly to find the Risk and Return analysis of the
company through (Expected return, risk of a stock, risk of market, return on the stock, and
return on portfolio) with the help of MS excel.

Email: matif@nishat.net
Lahore Tel: +92 42 35761730-9
Fax: +92 42 35878696-7
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CURRENT RATIOS

 FORMULA: L.R= Current Assets/Current liabilities

 Results:

ACCOUNT 2020 2019 18,072,999/14,49

20,376,070/11,254,499
4,409
Current For 2020
20,376,07 18,072,99
BAR CHART:
Asset 0 9 For 2019
Current 1.810
11,254,49 14,494,40
1.246
Liabilities 9 9

Current ratios

2
1.8
1.6
1.4
RATIOS

1.2
1.81
1
0.8 1.246
0.6
0.4
0.2
0
2020 2019

Series 1 Series 2 Column1

Conclusion:
FINDINGS: In 2020 and 2019 the current ratio is 1.810 and 1.246 respectively.
INTERPRETATION and Discussion: As we can see from the chart is that the current assets for
2019 and 2020 is higher than its current liabilities by a large margin which indicates that the
company has higher liquidity and can pay its current liabilities very easily and is performing
well.
Conclusion: The current Ratio for Nishat chunian LTD is 1.810 and 1.246 respectively,
currently finding and analysing the values of the Current ratio Analysis.
No recommendations required as the company is performing well

DEBT TO NET WORTH RATIO

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 Formula: F.L.R=DEBT/NET WORTH

 Results
Account 9,705,011/30,950,706
2020 2019 10,767,661/29,570
,763
Debt 9,705,011 10,767,66
For 2020 BAR CHART:
1 For 2019
Net Worth0.313
30,950,70 29,570,76
0.364
6 3

DEBT TO NET WORTH RATIO

0.37
0.36
0.35
0.34
RATIOS

0.33 0.364
0.32
0.31 0.313
0.3
0.29
0.28
2020 2019

Series 1 Series 2 Series 3

CONCLUSION
Findings: In 2020 and 2019 the current ratio is 0.313 and 0.364 respectively.
INTERPRETATION and Discussion: As we can see from the chart is that the Debt to net
worth ratio for 2019 is greater than for 2020 which means that the company is performing
well to generate profit which means that they have focused on their debt and overcome their
debt on time which has improved the financial health of the company.
Conclusion: Debt to net worth ratio for 2019 and 2020 which is 0.313 and 0.364, currently
finding the debt to net worth ratio analysis.
Recommendations: The Company should focus on their current liabilities and debt to
overcome payable debt within time to reduce their debt to net worth.

RETURN ON EQUITY

 Formula: P= Net profit after taxes/shareholder equity

 Results
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Account 2020 2019

4,605,770/18,965,940 3,416,558/14,360,170
Net profit 4,605,770 3,416,558
For 2020 For 2019
after tax
0.242 0.237
Shareholder 18,965,94 14,360,17
Equity 0 0

BAR CHART:

RETURN ON EQUITY

0.16
0.14
0.12
0.1
RATIOS

0.148
0.08
0.115
0.06
0.04
0.02
0
2020 2019

CONCLUSION
FINDINGS: In 2020 and 2019 the current ratio is 0.242 and 0.237 respectively.
INTERPRETATION and Discussion: In 2020 the return on equity is higher than 2019
which indicates that the company has utilization better capital than 2019 which means that
the company is operating their capital in different assets so the company can generate more
capital next year.
CONCLUSION: Calculation & analysis of Nishat Chunian Ltd Company, the return on
equity of 2020 & 2019 is 0.242 & 0.237 and are currently finding & analysing the return on
equity analysis.
No recommendations required as their company is utilizing their capital well

RETURN ON ASSET RATIO

 Formula: P= NET INCOME/TOTAL ASSETS

 Results
Account 2020 2019
4,605,770/3,416,558 30,950,706/29,570,763
NET 4,605,770 30,950,70
INCOME 6 For 2020 For 2019

TOTAL 3,416,558 29,570,76 1.348 1.046

3
ASSETS
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BAR CHART:

Return on Asset ratio

1.4
1.2
1
0.8 1.348
1.046
0.6
0.4
0.2
0
2020 2019

Column1 Series 2 Series 3

CONCLUSION
Findings: In 2020 and 2019 the current ratio is 1.348 and 1.046 respectively.
Interpretation and Discussion: As we can see from the chart is the Return on asset is
increasing in 2020 as compared to 2019 which means that the company is performing well
and is improving in profits with each investment rupee
Conclusion: Calculation & analysis of Nishat Chunian Ltd Company, the return on asset of
2020 & 2019 is 1.348 & 1.046 and are currently finding & analysing the return on equity
asset.No recommendations are needed as the company is improving and maintaining its
profits well.
Risk and Return ANALYSIS
Risk and Return analysis is used to tell us about the market value of a company according to
the given numbers and basically examine the risk and return and how will the market affect
their stock according to which investors get to know about the company and decide to either
invest in the firm or not.
NISHAT CHUNIAN LTD.
Expected Risk and Return of Stocks: As we can see from the Above Data from Table 1 is that
BOP expected return+ -8.137845884 including variance of= 1.191106894 and standard
deviation od 1.091378438 which suggests that the risk of the firm is High and the expected
return is slow as shown by the given figures on Table 1.
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Time Price Return (Rj) Excess Return on stock (Rj-Rf) in % Y-Mean (Y-Mean)2
01-Nov-21 47.55
02-Nov-21 46.51 -1.04 -2.187171399 -10.1371714 -1.791705099 3.21020716
03-Nov-21 47.7 1.19 2.558589551 -5.391410449 2.954055851 8.726445969
04-Nov-21 47.78 0.08 0.167714885 -7.782285115 0.563181185 0.317173047
05-Nov-21 47.59 -0.19 -0.397655923 -8.347655923 -0.002189623 4.79445E-06
08-Nov-21 46.68 -0.91 -1.912166422 -9.862166422 -1.516700122 2.300379259
09-Nov-21 45.05 -1.63 -3.491859469 -11.44185947 -3.096393169 9.587650655
10-Nov-21 44.75 -0.3 -0.665926748 -8.615926748 -0.270460448 0.073148854
11-Nov-21 44.27 -0.48 -1.072625698 -9.022625698 -0.677159398 0.458544851
12-Nov-21 43.16 -1.11 -2.507341315 -10.45734131 -2.111875015 4.460016078
15-Nov-21 43.14 -0.02 -0.046339203 -7.996339203 0.349127097 0.12188973
16-Nov-21 44.31 1.17 2.712100139 -5.237899861 3.107566439 9.656969173
17-Nov-21 43.46 -0.85 -1.918302866 -9.868302866 -1.522836566 2.319031207
18-Nov-21 43 -0.46 -1.058444547 -9.008444547 -0.662978247 0.439540156
19-Nov-21 44.18 1.18 2.744186047 -5.205813953 3.139652347 9.857416857
22-Nov-21 43.4 -0.78 -1.765504753 -9.715504753 -1.370038453 1.877005363
23-Nov-21 43.01 -0.39 -0.898617512 -8.848617512 -0.503151212 0.253161142
24-Nov-21 42.88 -0.13 -0.302255289 -8.252255289 0.093211011 0.008688292
25-Nov-21 43.08 0.2 0.46641791 -7.48358209 0.86188421 0.742844392
26-Nov-21 42.82 -0.26 -0.603528319 -8.553528319 -0.208062019 0.043289804
29-Nov-21 44.28 1.46 3.409621672 -4.540378328 3.805087972 14.47869448
30-Nov-21 43.6 -0.68 -1.535682023 -9.485682023 -1.140215723 1.300091896

Sum -175.2547913 70.23219315

Expeted Return and risk of stock in %

ER -8.345466252 beta 1.193229674
variance 3.34439015 alpha 1.364852937
SD 1.828767385

Time Price Return (Rj) in % Excess Return on market (Rm-Rf) % x X-Mean (X-Mean)2
01-Nov-21 46,946.21
02-Nov-21 47,112.92 166.71 0.355108538 -7.594891462 0.542954422 0.294799504
03-Nov-21 47,032.44 -80.48 -0.17082363 -8.12082363 0.017022254 0.000289757
04-Nov-21 47,219.18 186.74 0.397045103 -7.552954897 0.584890987 0.342097467
05-Nov-21 47,295.80 76.62 0.162264571 -7.787735429 0.350110455 0.122577331
08-Nov-21 47,115.04 -180.76 -0.382190385 -8.332190385 -0.194344501 0.037769785
09-Nov-21 46,399.91 -715.13 -1.517838041 -9.467838041 -1.329992157 1.768879137
10-Nov-21 46,629.88 229.97 0.495625961 -7.454374039 0.683471845 0.467133763
11-Nov-21 46,348.18 -281.70 -0.604119076 -8.554119076 -0.416273192 0.17328337
12-Nov-21 45,749.15 -599.03 -1.29245636 -9.24245636 -1.104610476 1.220164303
15-Nov-21 45,736.26 -12.89 -0.028175387 -7.978175387 0.159670497 0.025494668
16-Nov-21 46,542.91 806.65 1.763699087 -6.186300913 1.951544971 3.808527773
17-Nov-21 46,194.42 -348.49 -0.748749917 -8.698749917 -0.560904033 0.314613334
18-Nov-21 46,110.50 -83.92 -0.181666963 -8.131666963 0.006178921 3.81791E-05
19-Nov-21 46,489.41 378.91 0.821743421 -7.128256579 1.009589305 1.019270564
22-Nov-21 45,745.00 -744.41 -1.601246391 -9.551246391 -1.413400507 1.997700994
23-Nov-21 44,948.52 -796.48 -1.741130178 -9.691130178 -1.553284294 2.412692098
24-Nov-21 44,363.70 -584.82 -1.301088445 -9.251088445 -1.113242561 1.239309
25-Nov-21 43,935.75 -427.95 -0.96464001 -8.91464001 -0.776794126 0.603409114
26-Nov-21 44,114.16 178.41 0.406070228 -7.543929772 0.593916112 0.352736348
29-Nov-21 45,330.05 1,215.89 2.756235186 -5.193764814 2.94408107 8.667613348
30-Nov-21 45,072.38 -257.67 -0.568430875 -8.518430875 -0.380584991 0.144844936

Sum -170.8947636 25.01324477

Expected Return and Risk of market in %

ER -8.137845884
variance 1.191106894
SD 1.091378438

Expected Risk and Return on KSE-100 for Market: As looking at Table 2 Expected return on
KSE-100= -8.147845884, variance=1.191106894 and standard deviation of 1.091378438
which suggests that expected return Is low and the investors should think before investing
in the firm.
Excess return of KSE-100 on Stock(BOP): The negative values for the stock suggest that it
has not performed well as compared as we can see from the expected returns with are
considerably low.
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0
-12 -11 -10 -9 -8 -7 -6 -5 -4
EXCESS RETURN OF STOCK

-2

-4

-6

-8

-10

-12

EXCESS RETURN OF MARKET

The approximate BETA is 1.193229674 which is considered to be more than 1 which
suggests that the BETA is aggressive which concludes that the stock has a higher systematic
risk of a security or portfolio as compared to the broader market.

REFERENCE:
https://www.nishat.net/investor-relations/financial-reports
https://dps.psx.com.pk
https://www.m1finance.com/articles-2/what-is-beta/