Final Project

Cost & Managerial Accounting

Company: National Foods Ltd

Submitted to: Sundas Munir

Submitted by:
Maham Siddiq- 22l-6371
Taymur Ahmed- 22l-6363
Table of Contents
Company overview......................................................................................................................................5
A Symphony of Flavors...............................................................................................................................5
50 Years and Counting.................................................................................................................................5
Mission:.......................................................................................................................................................6
Vision:.........................................................................................................................................................6
Masala overview..........................................................................................................................................7
Explanation :...............................................................................................................................................9
Analysis:....................................................................................................................................................11
Income Statement......................................................................................................................................11
Cost of sales..............................................................................................................................................12
Gross Profit...............................................................................................................................................12
Profit before/after tax................................................................................................................................13
Units sold..................................................................................................................................................13
Summary...................................................................................................................................................13
Balance Sheet............................................................................................................................................14
Liabilities:.................................................................................................................................................14
Share Capital and Reserves.......................................................................................................................14
Assets........................................................................................................................................................15
Summary...................................................................................................................................................15
Conclusion of Income Statement & Balance Sheet...................................................................................15
Appendix...................................................................................................................................................17
Income Statement.................................................................................................................................17
Balance Sheet........................................................................................................................................17
Unit Estimate.........................................................................................................................................18
Company overview

A Symphony of Flavors
We began our journey in 1970 as a Spices company with a product that brought the idea of clean

and healthy foods to life. Since then, we resolved to make hygienic food, reduce time spent in the

kitchens, and foster good health. And on a daily basis, we strive to elevate our communities and

create a better lifestyle for those around us.

50 Years and Counting

We are celebrating 50 years of inspiring new traditions and bringing families together through

innovative food products. Traditions connect and expand the human spirit, and at National

Foods, we pay our respects to the cultural heritage of Pakistan.

Since inception in 1970, we have evolved into a leading multicategory food company that

produces 250 different products across 13 categories. We hold ISO 9001, ISO 18001, ISO 22000
and HACCP certifications along with SAP Business Technologies to ensure that our customers

receive the highest quality products.

With our changing eating habits as a result of technology in our kitchens or globalization and

migration, we have also transformed our cooking and shopping experiences along with our

attitudes towards health, hygiene, food, waste, choice, and consumption.

At National Foods, we respond to these changes by pioneering easy-to-prepare and convenient

food products that bring warmth to our customers and communities. Our products enable modern

lifestyles while retaining the traditional taste and values which are so close to our hearts.

With a history spanning over five decades, National Foods has trudged through various

challenges of – economic booms/depressions, wars, globalization, changing consumer lifestyles,

technological advancements and has successfully catered to the changing needs of its customers.

And how did we manage this? Through our easy-to-prepare products that are tailor-made to

bring warmth into your life and enhance your lifestyle.

Mission:
We will achieve our vision by designing and manufacturing food and related products, conforming to

international standards and guidelines for nutrition, health, wellness and bringing joy and happiness to

people everywhere.

Vision:
Creating food that enriches the lives of people everywhere.
Masala overview
National Chaat Masala is the perfect blend of spices for your favourite savories & salads. You can make

every meal more delicious with a pinch of National Chaat Masala. Available at Pakistan Supermarket.

National Chaat Masala is the perfect blend of spices for your favourite savories & salads.

Since inception in 1970, we have evolved into a leading multicategory food company that produces 250

different products across 13 categories. We hold ISO 9001, ISO 18001, ISO 22000 and HACCP

certifications along with SAP Business Technologies to ensure that our customers receive the highest

quality products.

Production flowchart:

Start

Raw Material Procurement:

Cleaning and Sorting:

Grinding and Milling:

Blending:
 V

Packaging:

Labelling and Coding:

Quality Control:

Storage and Warehousing:

Distribution:

Sales and Marketing:

Customer Service:

v
 Research and Development (R&D):

Regulatory Compliance:

End

Explanation :

1. Start: This is the starting point of the production process.

2. Raw Material Procurement: The company begins by sourcing raw materials, which in

this case are various spices and herbs used in making masalas. This step involves

procuring these materials from trusted suppliers.

3. Cleaning and Sorting: Once the raw materials are received, they undergo cleaning and

sorting processes to remove any impurities or foreign particles. This ensures that only

high-quality spices are used in the production process.

4. Grinding and Milling: The cleaned and sorted spices are then ground or milled into fine

powders. Grinding helps to break down the spices into smaller particles, which enhances

their flavor and aroma.

5. Blending: After grinding, the different spice powders are blended together according to

specific recipes or formulations. Blending ensures that the final masala mix has a

consistent flavor profile and meets the company's quality standards.

6. Packaging: The blended masala mixture is then filled into packaging containers such as

sachets, pouches, or jars. Proper packaging is essential for preserving the freshness and

quality of the masalas.

7. Labeling and Coding: Once packaged, labels containing important product information

such as the name of the masala, ingredients, nutritional facts, and expiry date are applied

to the packaging containers. Additionally, batch or lot codes are added for traceability

purposes.

8. Quality Control: Throughout the production process, quality control checks are

conducted to ensure that the masalas meet the company's quality standards and regulatory

requirements. This step helps to identify and address any issues or deviations from the

desired quality.

9. Storage and Warehousing: Packaged masalas are stored in designated warehouse

facilities before they are ready for distribution. Proper storage and inventory management

are crucial for maintaining the quality and freshness of the products.

10. Distribution: Once stored, the packaged masalas are distributed to various distribution

centers or directly to retailers for sale to consumers.

11. Sales and Marketing: The company engages in sales and marketing activities to promote

its products and attract customers. This may involve advertising, promotions, and other

marketing strategies to increase product visibility and sales.

12. Customer Service: National Foods Masala Pvt Ltd provides customer service support to

address inquiries, feedback, or complaints from customers. This helps to maintain good

customer relations and ensures customer satisfaction.

 13. Research and Development (R&D): The company invests in research and development

efforts to innovate and develop new masala blends or products. This step helps to keep

the product offerings fresh and relevant to changing consumer preferences.

14. Regulatory Compliance: Throughout the production process, the company ensures

compliance with food safety regulations and standards. This includes staying updated on

industry regulations and making necessary adjustments to operations to meet regulatory

requirements.

15. End: This indicates the conclusion of the production process flowchart, signifying the

accomplishment of all associated and production-related tasks.

Analysis:

Income Statement
The company's sales trajectory from 2018 to 2022 illustrates how market demand, price

strategies, and economic factors interact in a dynamic way. Sales grew yearly, peaking at

26,843,062 units in 2022 with a price increase to $245. This was in addition to an increase in

product price from $150 in 2018 to 16,178,301 units in 2022. Although selling units and inflation

rates fluctuate, the general trend points to strong market demand and successful management

techniques. This expansion was probably caused by a number of things, such as strong marketing

campaigns, innovative products, and consumer confidence. The company's resilience and

strategic skill in negotiating financial constraints and adapting to market dynamics are shown by

its ability to adjust to shifting market conditions while maintaining stable sales growth.
Cost of sales
The expenses incurred in creating the commodities sold are reflected in the cost of sales from

2018 to 2022, which has an immediate effect on the profitability of the business. Costs started at

-$10,614,639 in 2018 and increased yearly until they reached -$17,875,419 in 2022. The cost of

sales increased proportionately even if the volume of sales increased, suggesting causes such

rising production costs or inflationary pressures. Nonetheless, the business's gross profit was

positive over the entire time, indicating that manufacturing expenses were effectively managed

in relation to sales income. Maintaining profitability in the face of increased expenses was

probably made possible by strategies to minimise cost increases, streamline manufacturing

procedures, and bargain for advantageous terms with suppliers.

Gross Profit
The gross profit numbers in this income statement reflect the difference between the company's total sales

revenue and the cost of goods sold (COGS), representing the amount of money remaining after

accounting for the direct costs associated with producing the goods sold. From 2018 to 2022, the gross

profit steadily increased, indicating consistent growth in sales revenue outpacing the corresponding

increase in the cost of goods sold. This growth trajectory suggests effective management of production

costs, potentially through measures such as economies of scale, efficient supply chain management, or

negotiation with suppliers. Additionally, it could also signify successful pricing strategies and robust

market demand, allowing the company to maintain healthy profit margins. The significant increase in

gross profit from 2021 to 2022 is particularly noteworthy, possibly indicating accelerated sales growth or

improved cost efficiencies. Overall, the positive trend in gross profit reflects the company's ability to

generate revenue while effectively managing production costs, contributing to its overall financial health

and profitability.
Profit before/after tax
The company's financial performance is described in the income statement, with an emphasis on

profitability both before and after taxes. After operational expenses are subtracted from gross

profit, the earnings are shown as profit before tax. This number grew steadily between 2018 and

2022, suggesting higher operational effectiveness and revenue generation. The big increase in

2022 points to either improved cost control or substantial growth potential. A similar growing

trend was seen in profit after tax, which represents net earnings after tax deductions and shows

the company's ongoing profitability and financial stability.

Units sold
The income statement's units sold provide information about how many products were sold by

the business within the given time frame, providing an overview of its sales performance. Unit

sales fluctuations from 2018 to 2022 are a reflection of various factors, including pricing

policies, market demand, and prevailing economic conditions. Notwithstanding these variations,

the general pattern points to an increase in sales volume over time, which can be ascribed to

elements like a broader market reach or effective marketing campaigns. On the other hand, a

decline in units sold could be an indication of problems like increased competition or changes in

customer preferences. Unit sales analysis along with other financial variables allows for a

thorough knowledge of the sales performance of the company and its capacity to hold onto or

grow market share.

Summary
In summary, the income statement analysis shows that the company's financial performance from

2018 to 2022 was dynamic. Consistent increase in sales is a result of strong market demand and

successful marketing initiatives. The company's ability to sustain robust gross profit margins in
the face of inflationary pressures and cost variations is indicative of effective cost management

and pricing strategies. This has resulted in a consistent rise in profit before taxes, demonstrating

the business's capacity to boost sales while skillfully controlling costs. Furthermore, the increase

in units sold highlights how well the business has been able to meet customer demand and gain

market share. All things considered, the income statement presents an image of a strong and

flexible business, ready to sustain development and profitability even in the face of shifting

market conditions.

Balance Sheet

Liabilities: The balance sheet's liabilities column lists the company's outstanding debts. Both
current and non-current liabilities have fluctuated between 2018 and 2022. Long-term financing,

deferred taxes, deferred liabilities, lease obligations, and long-term provisions are examples of

non-current liabilities. The company's long-term financial commitments, including loans,

deferred taxes, and leasing obligations, are represented by these liabilities. Trade and other

payables, unclaimed dividends, accumulated markup, short-term borrowings, long-term

financing that is considered current, taxes, contractual obligations, and sales tax payable are all

considered current liabilities. These responsibilities, which include monies owed to suppliers,

short-term loans, and accumulated taxes, are due in full within a year.

Share Capital and Reserves:

The company's equity and retained earnings are shown in the share capital and reserves section.

Authorised, issued, subscribed, and paid-up capital make up share capital. Revenue reserves and

unappropriated profit are examples of reserves. The growth in share capital and reserves over

time is indicative of increased shareholder investments as well as retained earnings from

successful operations. The company's stability and strength in terms of finances are indicated by

this growth in equity

Assets
The company's investments and resources are listed in the assets section. Property, plant, and

equipment, intangibles, long-term deposits, long-term investments, and deferred assets are

examples of non-current assets. These resources are retained for extended periods of time and

enhance the business's operational capacities. Stores, loose tools, spare parts, trade debts,

advances, trade deposits, prepayments, other receivables, sales tax refundable, cash and bank

balances, and short-term investments are all considered current assets. These resources facilitate

daily operations and are easily transformed into cash. Overall, the assets have grown steadily,

demonstrating the company's capacity to make long-term investments while preserving cash on

hand for unforeseen expenses.

Summary
In conclusion, a thorough understanding of the company's financial situation across time is

provided by the balance sheet analysis. The business has shown financial stability and expansion

in spite of swings in liabilities and assets. The steady increase in shareholders' equity is

indicative of their trust in the company's performance and prospects going forward. Investing in

assets and managing obligations well have improved the company's overall financial situation.

Looking ahead, maintaining growth and profitability will need ongoing strategic planning in

addition to careful financial management.

Conclusion of Income Statement & Balance Sheet

The examination of the income statement and balance sheet spanning the years 2018 through

2022 offers a thorough comprehension of the organization's financial status and achievements.

Effective cost control, efficient operations, and sales tactics are demonstrated by the income

statement's steady growth in sales, gross profit, and profit before taxes. The company's tenacity

and consistent profitability, in spite of variations in expenses and taxation, contributed to its

long-term financial survival. In the meantime, the balance sheet shows consistent asset growth,

which is the result of increases in current assets to support operations as well as investments in

property, plant, and equipment. Effective management of liabilities has kept a healthy balance

between short- and long-term commitments, and growth in shareholders' equity over time has

demonstrated investor confidence and value creation. Going forward, maintaining performance

and accomplishing long-term growth goals will need strategic planning, responsible financial

management, and flexibility to market conditions.

Appendix

Income Statement

Balance Sheet
Unit Estimate