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Financial Management Group Project
Financial Management Group Project
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CHAPTER 4: DATA ANALYSIS
DYNEA PAK LTD.
1. Horizontal/Trend Analysis
ASSETS
These are the stores and spare parts that the company currently has in possession.
The simple reason for such a decline up to 2021 in stores and spares is many of these assets (on rent) were
given up due to less business because of COVID and the political instability but in 2022 most of the
restrictions (due to COVID) were lifted hence, the sudden increase in this asset.
Stock-in-trade
As business was slow the company felt the need to reduce stock in hand to reduce risk of wastage but once
sales rose again, due to no restrictions and people being employed, working, and earning again the company
Trade debts
Most people lost jobs and salaries in the past years hence they tried to take as little loans as possible hence,
the decrease in trade debts of the company, but now that the situation is stabilizing trading loans are again
becoming a norm.
These are basically the short-term loans and advance payments the company has made, these do not include
credit sales, but other short-term debts that are owed to the company.
Due to the money situation in the country i.e., recession and covid restrictions, people naturally tried their
best to avoid taking new loans and advance payments, and they paid off old loans as quickly as possible
Other receivables
Exide Pakistan Ltd. was also affected greatly by the recession and situation in the country hence, it could not
make more prepayments and deposits to increase this particular asset greatly.
Taxes recoverable
This item represents the tax that the company was overcharged and now, is to be paid back.
Taxes, during the crisis in the country may have been over-charged a lot to meet the government’s tax
collection goals as Exide was one of the few companies that was still operational when many other
businesses failed, but once the situation normalized, the taxation returned to normal as well.
This is the cash at hand and the money in the company’s ban account.
The company’s most liquid asset declined by a huge margin, most likely due to the inflation decreasing
peoples buying power and making batteries less of a priority, resulting in less sales and less cash inflow, as
well as the company spending money to survive during the crisis e.g., in the form of salaries, utility bill, and
rents etc.
The company’s current assets kept decreasing as they were being used to survive, and the company was not
able to make many advance payments or give out many loans, but now as business is booming again, they
Fixed assets
The fixed assets decreased most likely due to depreciation but the sudden increase in 2022 could be due to
inflation and price inflation rather than an actual increase in the quantity of fixed assets.
Long-term loans
This item represents the long-term loans that Exide Pakistan Ltd. is owed.
Long term loans normally decrease as their loaning period ends but in 2021 it may have increased as, in
order to stabilize after the recession period, a lot of customers and other stakeholders may not have had cash
Long-term deposits
These are utilities and other deposits that the company has made in advance.
These most likely saw a constant decrease due to the company spending more on survival and having less
This item was listed, as increased as the company had a few long-term assets (land and building) that it
wanted to sell/dispose.
Total Assets
They kept decreasing due to the unstable business environment (the pandemic and political situation) but in
2022 they increased, showing signs of recovery and further betterment in the future.
Liabilities + O.E.
T/P
These are all the debts owed by the company due to credit purchases.
These normally keep decreasing as the company pays its debts quickly but in 2020, they increased by a lot
most likely due to the low liquid assets, but since then they trade payables have continued their downward
trend.
Unclaimed dividend
These are dividends that have been announced by the company but are not yet paid or claimed.
These exist due to the shareholders not yet claiming the dividend, but when they demand it, the dividend
Accrued Profit
This is basically the profit the company has earned in advance of the sale or in simple words profit from
prepayments.
In 2021 it suddenly decreased due to huge price increase and uncertainty of sales, but normally this item has
This increases or decreases depending on how much the company borrows from him and how much it pays
Short-term borrowings
The company did try to lower them but in 2022 they saw an increase likely due to inflation and money
This refers to the portion of the long-term loan that must be paid in this year.
This refers to the portion of the deferred government grant that must be paid in this year.
SBP payment
This refers to the portion of the SBP payment that must be paid in this year.
The sum of all the liabilities that must be paid within the year/accounting period.
Long-term liabilities
These decreased because the company first paid off all existing loans. Then it borrowed again, and the loan
Accumulated profit
This item refers to the retained earnings that remain after the dividends are paid.
Revaluation surplus
This is the increase or decrease in the value of the capital assets of the company when they are re-assessed at
The revaluation may have increased in 2020 due to inflation in the real estate market but other than that it
2. Vertical Analysis
Assets:
In the assets section, throughout the 5 years, the bulk of the assets are made up of the stock-in-trade
(inventory), the trade debts (accounts receivable) and the fixed assets while other items take up a small
Liabilities:
The financing sides is mostly made of short-term borrowings and trade payables for liabilities and revenue
reserves for the owner equity hence, other items take only a comparatively small portion of the financing
side.
3. Horizontal/Trend Analysis
Sales
Sales have showed a decreasing trend till 2020 but since then they have started increasing each year, the
increase may be changing each year, but it is indicating an upward trend, likely due to stabilizing conditions
Cost of Sales
This is item directly related to sales, hence, it changed almost proportionately to the change in sales each
year.
Gross Profit
This is a number directly derived from sales and COS hence it has change according to those 2 items
These expenses increase in 2019 but then they kept decreasing for 2 years before increasing by a large
proportion in 2022. The reason for this could be the lockdowns where less batteries were sold and distributed
and once the restrictions were lifted a lot of products had to be distributed in a short period of time which
increased costs.
These expenses did decrease by a small percentage in 2020, likely due to laying off some of the workforce,
but before and after that, it has maintained an upward trend, due to both, Increasing production and inflation
(COS).
Other Income
This item maintained an upward trend up to 2020 but since, it has had a decreasing percentage.
Other than then the 2 years (2020 and 2021) these have maintained an upward trend likely due to more
doubtful debts, bad debts, employee welfare costs and other such increasing expenses.
Finance Cost
This item has maintained an upward trend except the year 2021, because the company has lower liabilities in
Penalty
This is a one-time, unusual expense which was most likely a punishment for some form of misconduct by
the company.
Taxation
Despite lower profit, taxation maintained an upward trend, which may have been caused by the government
imposing a higher percentage of tax on the company due to the economy’s condition.
4. Vertical Analysis
Inventory turnover
Definition: it is the number of times a company has sold and restocked its inventory.
Average = 4.562
In this case the turnover in 2018 was high but after that it has been fluctuating between high and low 4.00,
recently going dangerously close to the lower end meaning less inventory is being sold. The main reason for
this could be the inflation which reduces demand a while also increasing the products price.
Definition: it is the average number of days it takes a firm to sell all its inventory.
Average = 80.78
The age of inventory, with a decrease in only 2020 has been increasing which is a bad sign as it means, it is
taking longer to sell a set amount of good, which ultimately means less sales in the same period of time. This
Average = 134.96
The ratio was initially decreasing but it has taken a sudden jump that indicates better performance which it
will hopefully maintain as it did for 2 years now. This is likely due to the stabilizing situation in the country,
Average = 1.59
The company’s current ratio has fluctuated quite a lot, but other than 2019, it has stayed between 1.5 and 2
which is considered a good current ratio and means that the company can pay off all its short-term debts.
The reason for this is that while the current assets of the company have been decreasing, the current
liabilities have been decreasing as well hence, maintaining the current ratio.
Quick Ratio
Definition: this ratio tells how well a company can pay off its short-term debts using only its most liquid
assets.
Average = 1.01
The company’s quick ratio has fallen below 1 in recent years which is not a good thing. This is likely
because while the company does have current assets (as seen in the current ratio), it is short on the most
Debt ratio
Definition: this ratio represents the total debt of a company as a portion/percentage of the company’s total
assets.
Average = 53.50
The debt ratio has remained around 50 to 55 indicating that this percentage of the company’s assets are
financed by debts which is not a good sign. This may be because the company has a lot of unissued shares
Debt/equity ratio
Definition: this ratio measures the company’s debt relative to the original investment and retained earnings.
Average = 115.52
The ratio, while fluctuating, has remained close to, but above one, indicating more debt than equity. Likely
Average = 10.20
The gross profit margin of the company has remained around 10%. While the consistency is a good thing,
Profit margin
Definition: this ratio simply shows the net income of an organization as a percentage of the net sales.
Average = -2.27
The NPM of the company has remained very low and even negative resulting loss. This is mainly due to
Average = -2.40
The ROA is very low and has been negative, representing losses. This is likely due to having a lot of assets
Return on equity
Definition: this ratio indicates the net profit in relation to the shareholder’s equity.
Average = -5.36
the return on equity of Exide Pakistan Ltd. is extremely low and the average is negative, indicating a loss on
equity. This is due to consecutive net losses rather than profits for 3 years while the investment and
Definition: this is a ratio of the company’s earnings relative to the number of outstanding shares.
Average = -26.08
The average is negative and the two years it is positive, the EPS has been very low. The number of
outstanding shares has remained constant so the reason for this ratio is the low profits and losses.
Price/earnings ratio
Average = -11651.50
This ratio is either negative or very high, meaning the company is losing money and when it does earn, it
requires a very high investment per share. The reason for this is the high cost which leads to less profit and
1. Horizontal/Trend Analysis
Fixed Assets:
Depreciation most certainly caused the fixed assets to decline, but inflation and price inflation may have
caused the sudden increase in 2022 rather than a rise in the total amount of fixed assets.
These are long term asset of the company that they have life more than one year. And also We can check
that the long term asset of the company increases from it base year because due to CVOID 19 company
faced critical situation even in those year company faced loss. But after the COVID 19 session company
come to his normal routine an earn huge profit and they invest in long term asset.
these are the long term loan that owed by Atlas Battery ltd.
Long-term loans typically decline when the loaning period comes to an end, but in 2021 they may have
climbed since many customers and other stakeholders may not have had enough cash to stabilize after the
recession period and instead turned to long-term loans from the company.
Long-term deposits;
These are deposits that the business has already paid for utilities and other services.
Due to the corporation spending more on survival and having less assets to develop into long- term assets,
Current assets;
The simple explanation for this decline in stores and spares up until 2021 is that many of these assets (on
rent) were abandoned due to lower business due to COVID and the political unrest, but in 2022 most of the
restrictions (due to COVID) were lifted, leading to the unexpected increase in this asset.
Stock-in-trade;
When business was slow, the company felt the need to lower its stock on hand to lower the risk of wastage.
However, as business picked up again, thanks to the removal of limitations and more people finding jobs and
Trade debts;
The majority of individuals lost their jobs and wages in the previous years, so they made an effort to take out
as few loans as possible, which led to a fall in the company's trade debts. However, now that things are
These are essentially the short-term advances and loans that the business has made; credit sales are not
included here, but there are other short-term debts that the business is due.
People naturally did their best to avoid taking out new loans and advance payments as a result of the
country's financial situation—namely, the recession and COVID restrictions—and they paid off existing
debts as quickly as they could, which led to a decline in the company's assets.
Due COVID company was unstable but after the recovery of COVID they able to made prepayment of the
company.
Other receivables;
Atlas Battery Ltd. was also affected greatly by the recession and situation in the country hence, it could not
Bank balances:
The company’s most liquid asset declined by a huge margin, most likely due to the inflation decreasing
peoples buying power and making batteries less of a priority, resulting in less sales and less cash inflow, as
well as the company spending money to survive during the crisis e.g., in the form of salaries, utility bill, and
rents etc.
The company’s current assets kept decreasing as they were being used to survive, and the company was not
able to make many advance payments or give out many loans, but now as business is booming again, they
Total Assets:
They kept decreasing due to the unstable business environment (the pandemic and political situation) but in
2022 they increased, showing signs of recovery and further betterment in the future.
Liabilities+O.E.
Retirement and pension benefits are given to a retired company official to make sure that they have a
The staff retirement benefits of the company decrease because the uncertainty situation of the company in
Deferred taxation:
The amount of income tax payable in future periods in respect of taxable temporary differences.
Unfortunately, it was all time in minus digits because of net income and profit.
These decreased because the company first paid off all existing loans. Then it borrowed again and the loan
These normally keep decreasing as the company pays its debts quickly but in 2020 they increased by a lot
most likely due to the low liquid assets, but since then they trade payables have continued their downward
trend.
Accrued mark-up:
This is basically the profit the company has earned in advance of the sale or in simple words profit from
prepayments.
In 2021 it suddenly decreased due to huge price increase and uncertainty of sales, but normally this item has
The business made an effort to reduce them, but in 2022 they witnessed an increase that was probably
caused by inflation and the necessity for cash to maintain the business in the face of rising manufacturing
costs.
Unclaimed dividend:
These are dividends that have been announced by the company but are not yet paid or claimed.
These exist due to the shareholders not yet claiming the dividend, but when they demand it, the dividend has
The sum of all the liabilities that must be paid within the year/accounting period.
2. Vertical Analysis
Balance sheet (see table 4.3)
Assets:
In the assets section, Inventory, trade debts (accounts receivable), and fixed assets make up the majority of
the assets during the course of the five years, with other things making up a minor portion of the total assets.
Liabilities:
The majority of the financing side's components are short-term borrowings, trade payables for liabilities, and
revenue reserves for owner equity; as a result, other elements make up a relatively small proportion of the
financing side.
3. Horizontal/Trend Analysis
Sales:
Sales had a declining pattern up until 2020, but after that, they began to rise gradually each year. This rising
trend is probably the result of conditions normalizing, such as the ending of lockdowns and other disruptive
events.
Cost of Sales:
This is item directly related to sales, hence, it changed almost proportionately to the change in sales each
year.
Gross Profit:
This is a number directly derived from sales and COS hence it has change according to those 2 items
Distribution cost:
These expenses increase in 2019 but then they kept decreasing for 2 years before increasing by a large
proportion in 2022. The reason for this could be the lockdowns where less batteries
were sold and distributed and once the restrictions were lifted a lot of products had to be distributed in a
Administrative cost:
These expenses did decrease by a small percentage in 2020, likely due to laying off some of the workforce,
but before and after that, it has maintained an upward trend, due to both, Increasing production and inflation
(COS).
Other Income:
This item maintained an upward trend up to 2020 but since, it has had a decreasing percentage.
Other than then the 2 years (2020 and 2021) these have maintained an upward trend likely due to more
doubtful debts, bad debts, employee welfare costs and other such increasing expenses.
Finance cost:
This item has maintained an upward trend except the year 2021, because the company has lower liabilities in
Despite lower profit, taxation maintained an upward trend, which my have been caused by the government
imposing a higher percentage of tax on the company due to the economy’s condition.
4. Ratio Analysis
The ratio was initially good but it has taken a sudden jump back that indicates better weak performance but
in the year of 2022 was fair good and it will hopefully maintain as it did for 2 years now. This is likely due
to the stabilizing situation in the country, which is allowing better efficiency for the company.
Current Ratio
The company’s current ratio has fluctuated quite a lot, but other than 2020, it has stayed between 2.20 and 3
which is considered a good current ratio and means that the company can pay off all its short-term debts.
The reason for this is that while the current assets of the company have been decreasing, the current
liabilities have been decreasing as well hence, maintaining the current ratio.
Quick Ratio
Definition: this ratio tells how well a company can pay off its short-term debts using only its most liquid
assets.
The company’s quick ratio has fallen below 1 in 5 years which is not a good thing. This is likely because
while the company does have current assets (as seen in the current ratio), it is short on the most liquid assets
The gross profit margin of the company has remained around 10%. While the consistency is a good thing,
Profit margin
The NPM of the company has remained very low and even negative resulting loss. This is mainly due to
The ROA is very low and has been negative, representing losses. This is likely due to having a lot of assets
Definition: this is a ratio of the company’s earnings relative to the number of outstanding shares.
In this one years is negative and the two years it is positive; the EPS has been very low. The number of
outstanding shares has remained constant so the reason for this ratio is the low profits and losses.
Price/earnings ratio
This ratio is either negative or very high, meaning the company is losing money and when it does earn, it
requires a very high investment per share. The reason for this is the high cost which leads to less profit and
1. Horizontal/Vertical Analysis
Assets
Fixed assets
They are carried at cost less accumulated depreciation and any impairment losses, except for land owned by
recognized at cost less impairment. These Fixed assets includes Intangible assets which are carried at cost
less accumulated amortization and any impairment losses. Over the Past 5 years the assets have increased
from 1,605,709 000 to 2,500,629 000 which we can see in the balance sheet. The change can also be seen in
the Horizontal and vertical analysis. In Horizontal analysis we can see an increase from -23.88% in 2019 to
-6.00% in 2022. And vertical analysis change can be noticed as in the 2018 it was 101.32% and by the time
CURRENT ASSETS
Current assets on the balance sheet include cash, cash equivalents, short-term investments and other assets
that can be converted into cash quickly - in 12 months or less. Because these assets can be easily converted
into cash, they are sometimes referred to as "liquid assets". Over the Past 5 years the Current assets has
increased from 3,709,267 000 to 4,194,910 000 which we can see in the balance sheet. The change can also
be seen in the Horizontal and vertical analysis. In Horizontal analysis we can see an increase from -7.99% in
2019 to -17.24% in 2022. And vertical analysis change can be noticed as in the 2018 it was 234.05% and
by the time 2022 it was 339.51%. There was a big of a change because during 2019 there wasn’t much of an
Total Assets:
The balance sheet is calculated by balancing the company's assets against its liabilities and equity. The
formula is as follows: total assets = total liabilities + total equity. Total assets are calculated as the sum of all
short-term, long-term, and other assets. Over the Past 5 years the total assets have increased from Rs.
5,314,976 000 to 6,695,539 000 which we can see in the balance sheet. The change can also be seen in the
Horizontal and vertical analysis. In Horizontal analysis we can see an increase from -13.45% in 2019 to
6.32% in 2022. And vertical analysis change can be noticed as in the 2018 it was 335.37% and by the time
Total Equity:
Equity is the sum of assets less the sum of liabilities. All these numbers can be found in the company's
balance sheet for the company. Over the Past 5 years the Total Equity has decreased from 4,700,680
000 to 4,521,207 000 which we can see in the balance sheet this was because the paid-up capital Reserves
Was used over the years mostly would have been used to finance the purchase of assets. The change can also
be seen in the Horizontal and vertical analysis. In Horizontal analysis we can see change from -13.34%
In 2019 to 27.64% in 2022. And vertical analysis change can be noticed as in the 2018 it was 2712.09%
Liabilities:
Liabilities are debts that the company owes to third party creditors. Notes to be paid and bank debt may be
part of the liabilities. Companies borrow to grow faster. The balance between a company's debts and its
assets makes it stable. Can see too that over the time the liabilities have also increased over the time and this
change is due to the facts that the new assets purchased were financed through these liabilities.
Total Equity and liability is the sum of all the equity and liabilities that are equal to the Asset side. Over the
Past 5 years the total assets have increased from Rs. 5,314,976 000 to 6,695,539 000 which we can see in the
balance sheet. The change can also be seen in the Horizontal and vertical analysis. In Horizontal analysis we
can see an increase from -13.45% in 2019 to 6.32% in 2022. And vertical analysis change can be noticed as
in the 2018 it was 2657.49% and by the time 2022 it was 3347.77%
2. Horizontal/Vertical Analysis
Gross profit
It is calculated by subtracting direct costs or cost of goods sold from net. This number is divided by net
revenue and then multiplied by 100% to calculate the gross margin ratio. We can see a fluctuation in Gross
Profit over the last five year in 2018 the Gross profit was Rs. 1,592 200 000 however in 2020 the Gross
profit fall to Rs. 251 466 000 however this was then covered in the coming years 2022 where gross profit
was maintained back to Rs.1 018 464 000, yet not as much as it was back in 2018 but the company is trying
to increase gross profit. This drop was Due to Covid where sales were dropped due to lock down. This
Change could also be noticed in Horizontal analysis where we can see in 2019 the ratio changed from -
Operating profit
Operating income is the total income a company earns from sales after paying off all operating expenses
such as rent, employee salaries, equipment and inventory costs. Operating income does not include interest,
tax and investment gains or losses. We can see a fluctuation in operating Profit too over the last five year in
2018 the operating profit was Rs. 1 239 064 000 however in 2020 the operating profit fall to Rs. -71102 000
however this was then covered in the coming years 2022 where operating profit was maintained back to Rs.
642907 000, yet not as much as it was back in 2018 but the company is trying to increase operating profit.
This drop was Due to Covid where sales were dropped due to lock down.
Net income is the amount of money your business makes after deducting all operating, interest, and tax
expenses over a given period of time. To get this value, you need to know the company's gross margin. If the
value of net profit is negative, then it is called net loss. We can see a fluctuation in net Profit over the last
five year in 2018 the net profit was Rs. 959717 000
however, in 2020 the net profit fall to Rs -108438 000 however this was then covered in the coming years
2022 where net profit was maintained back to Rs. 30 4009 000, yet not as much as it was back in 2018 but
the company is trying to increase net profit. This drop was Due to Covid where sales were dropped due to
lock down.
3. Ratio Analysis.
Inventory turnover
Definition: it is the number of times a company has sold and restocked its inventory.
In this case the turnover in 2018 was high but after that it has been fluctuating between high and low,
recently going dangerously close to the lower end meaning less inventory is being sold. The main reason for
this could be the inflation which reduces demand a while also increasing the products price.
The ratio was initially decreasing but it has taken a sudden jump that indicates better performance which it
will hopefully maintain as it did for 2 years now. This is likely due to the stabilizing situation in the country,
Current Ratio
1 which is considered a good current ratio and means that the company can pay off all its short-term debts.
The reason for this is that while the current assets of the company have been decreasing, the current
liabilities have been decreasing as well hence, maintaining the current ratio.
Quick Ratio
Definition: this ratio tells how well a company can pay off its short-term debts using only its most liquid
assets.
The company’s quick ratio has fallen below 1 in recent years which is not a good thing. This is likely
because while the company does have current assets (as seen in the current ratio), it is short on the most
Debt ratio
Definition: this ratio measures the total debt of a company as a percentage of its total assets.
The debt ratio has shoot to 113.39 indicating that this percentage of the company’s assets are financed by
debts which is not a good sign. This may be because the company has a lot of unused assets as comparison
to Debts
Debt/equity ratio
Definition: this ratio measures the company’s debt relative to the original investment and retained earnings.
The ratio has remained higher indicating more debt than equity. Likely because the company prefers debt
The gross profit margin of the company has fall over the time. As we could see after covid now the company
Profit margin
The NPM of the company has remained very low and even negative resulting loss. This is mainly due to
Return on equity
Definition: this ratio indicates the net profit in relation to the shareholder’s equity.
The return on equity of the company is low indicating a loss on equity too in 2020. This is due to net losses
rather than profits while the investment and shareholder’s equity remained constant and even increased.
Definition: this is a ratio of the company’s earnings relative to the number of outstanding shares.
The EPS has been low. The number of outstanding shares has remained constant so the reason for this ratio
Price/earnings ratio
This ratio is high, meaning the company is losing money or when it does earn, it requires a very high
investment per share. The reason for this is the high cost which leads to less profit and ultimately a very high