In the name of

ALLAH
BILAL AHMED
MC080200377
MBA
(Finance)
 Financial Analysis
of
Faisal Spinning Mills Ltd.
&
Fazal Textile Mills Ltd.
 Introduction of the Project
The purpose of this project is to analysis the financial
statements of a two manufacturing companies which
relates to textile sector. One is “Faisal Spinning Mills Ltd
& other Fazal Textile Mills Ltd. Both Spinning Mills
engaged to the production and sale of high quality yarn

Rationale
In this project, I am trying to provide assistance to my
teacher, investors and other stakeholders, by showing
them the performance of two spinning mills.
 Objectives and Significance
Objectives
Major objectives of this project are as follows:
 The primary purpose of financial analysis is to forecast and/or determine
the actual financial status and performance of a project.

 How the spinning mills work, what are the strengths and weakness of the
textile sector, which mills is financially more feasible than the other.

 The ratios will be compared of both spinning mills within the industry to
see where the mills stand.
 Significance

The main important and potential benefits of this analysis

are to see, both business financial condition and recent
activities. For this purpose, I use different ratios to find
out the actual result.

After the completion of this project I am in this position to

see the actual financial position of both textile mills and
decided which mill is better than other and where
she stands. Through facts & figure I can improve the
deficiency of the mills and get better results.
 Data Collection
Data Collection Sources:

Companies published financial Data

Records of the Organization
Handbooks
http://www.fazaltextile.com
http://www.umergroup.com

Data Collection Tools:

Company profile Report

Company comparison Report
Stock exchange
 Data Processing
The collected data from different sources have to put into
computer by using MS Excel, following analysis have to be
done:
 Ratio analysis
 Statement of cash flow
 Histogram will also explaining the particular facts and figures
that are revealed during this research.
 Data Analysis
I have analyzed the data through Ratio Analysis,
Horizontal & Vertical analysis. Graphs & charts are also
used to evaluate the companies current position.
 Current Ratio
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
2009 2008 2007 2009 2008 2007
Analysis
Rupees Rupee in thousand
Current Assets 1,206,600,842 1,287,177,659 1,105,826,312 869,265 1,680,373 1,066,294

Current
Liabilities 1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

             

Formula Current Ratio = Current Assets / Current Liabilities

Working 1,206,600,842 1,287,177,659 1,105,826,312 869,265 1,680,373 1,066,294

  1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Result 0.97 0.90 0.87 0.82 1.10 1.03

Interpretation:
The above ratios shows Faisal Spinning 1.2

Mills Ltd. have a positive trend and can 1

meet its current liabilities with its current 0.8
assets. But the ratio of Fazal textile mills 0.6 Faisal
has lower current ratio in the current year. Fazal
0.4
If we see the previous years current ratio of
0.2
Fazal textile, it was better than Faisal
textile mills. 0
2009 2008 2007
 ACID TEST RATIO/ QUICK RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand

Current Assets 1,206,600,842 1,287,177,659 1,105,826,312 869,265 1,680,373 1,066,294

Current Liabilites 1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Invetory 822,995,766 877,948,501 685,830,829 501,080 601,284 329,953

Prepaid Expense 348,871 884,624 724,764 - - -

Acid Test Ratio = (Current Assets-Inventory-Prepaid Expenses) / Current
Formula Liabilities

Result 0.31 0.29 0.33 0.35 0.71 0.71

0.8
Interpretation: 0.7
0.6
Acid test ratio indicates the immediate 0.5
Faisal
liquidity of the firm. Normally it should 0.4
Fazal
0.3
be 1:1 but the above ratio of both the
0.2
companies is less than normal ratio 0.1
0
2009 2008 2007
 WORKING CAPITAL
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Current Assets 1,206,600,842 1,287,177,659 1,105,826,312 869,265 1,680,373 1,066,294

Current
Liabilites 1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Formula Working Capital=Current Assets-Current Liabilities

(1,206,600,842- (1,287,177,659- (1,105,826,312- (869,265- (1,680,373- (1,066,294-
Working 1,243,805,007) 1,425,326,777) 1,268,123,476) 1,065,894) 1,529,306) 1,031,931)

Result (37,204,165) (138,149,118) (162,297,164) (196,629) 151,067 34,363

Interpretation: 200
150
The above ratio shows the funds used to
100
generate the sales and for operations. But
50
the working capital of both mills are 0 Faisal
negative in the current year but Fazal -50
Fazal

textile working capital is better than Faisal -100

spinning mills. Positive working capital -150

means that the company is able to pay off -200

2009 2008 2007
its short-term liabilities. 
 SALES TO WORKING CAPITAL
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand
Current
Assets 1,206,600,842 1,287,177,659 1,105,826,312 869,265 1,680,373 1,066,294
Current
Liabilites 1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Formula Sales to Working Capital = Sales / Working Capital

Working 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

  (37,204,165) (138,149,118) (162,297,164) (196,629) 151,067 34,363

Result (114.82) (28.14) (20.71) (14.34) 16.20 65.86

Interpretation:
80
The ratio provides some useful information 60
as to how efficiently the company uses its 40
20
funds to generate sales. The above ratios 0
-20 Faisal
show that Fazal Textile Sales to working -40 Fazal
capital ratios are better than Faisal -60
-80
Spinning Ltd. -100
-120
2009 2008 2007
 CASH RATIO OR CASH ASSETS RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Cash & Cash Equivalents 13,326,888 26,622,507 24,151,839 3,610 14,552 1,514

Current Liabilities 1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Formula Cash Ratio = Cash & Cash Equivalents / Current Liabilities

13,326,888 26,622,507 24,151,839 3,610 14,552 1,514

Working
1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Result 0.01 0.02 0.02 0.00 0.01 0.00

0.02
Interpretation: 0.018
0.016
The cash ratio shows that a company's total 0.014
cash and cash equivalents to its current 0.012
0.01 Faisal
liabilities. The cash ratio is most commonly 0.008 Fazal
used as a measure of company liquidity. Both 0.006
0.004
Mills shows lower cash ratio. 0.002
0
2009 2008 2007
 TIME INTEREST EARNED RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

EBIT 358,811,443 301,254,401 293,923,621 169,038 96,415 77,395

Interest Charges 264,678,915 193,595,424 180,938,521 120,819 69,054 76,159

Formula Time Interest Earned Ratio = EBIT / Interest Charges

358,811,443 301,254,401 293,923,621 169,038 96,415 77,395

Working
264,678,915 193,595,424 180,938,521 120,819 69,054 76,159

Result 1.36 1.56 1.62 1.40 1.40 1.02

1.8
1.6
Interpretation:
1.4
Time interest earned ratio shows the 1.2
company’s ability to service its debt. A low 1
Faisal
0.8
ratio indicates an inability to service debt. Fazal
0.6
Both company shows not a good interest 0.4
earned ratio. 0.2
0
2009 2008 2007
 FIXED CHARGE COVERAGE RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

EBIT 358,811,443 301,254,401 293,923,621 169,038 96,415 77,395

Interest Charges 264,678,915 193,595,424 180,938,521 120,819 69,054 76,159

- - -
Fixed Charges 3,485,394 3,693,564 -

Formula fix charges cover Ratio= (EBIT + Fix Charges)/ (Fix charges + Interest)

(358,811,443+3,485,394) (301,254,401+3,693,564) (293,923,621+0) (169,038+0) (96,415+0) (77,395+0)

Working
(3,485,394+264,678,915) (3,693,564+193,595,424) (0+180,938,521) (0+120,819) (0+69,054) (0+76,159)

Result 1.36 1.56 1.62 1.40 1.40 1.02

1.8
Interpretation: 1.6
The fixed charge coverage ratios indicate a 1.4
1.2
firm’s ability to satisfying fixed financing 1
Faisal
expenses such as interest and leases. The 0.8 Fazal
0.6
above analysis shows that both companies 0.4
can meet its fixed financing but they are 0.2
0
not in good financial position 2009 2008 2007
 DEBT RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Total Debt 1,475,654,203 1,781,336,879 1,819,670,136 1,356,753 2,324,313 747,293

Total Assets 2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287

Formula Debt Ratio = Total Debt / Total Assets

1,475,654,203 1,781,336,879 1,819,670,136 1,356,753 2,324,313 747,293

Working
2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287

Result 0.52 0.59 0.61 0.47 0.70 0.41

Interpretation:
0.7
Debt ratio indicates, what proportion of
0.6
debt a company has relative to its assets. 0.5
A debt ratio of less than 1 indicates that a 0.4
Faisal
company has more assets than debt. As 0.3 Fazal

the above ratio shows that are less than 1. 0.2

0.1
In above analysis both mills are showed
0
same debt ratio. There is no big difference 2009 2008 2007

in both mills debt ratios.

 DEBT TO EQUITY RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Total Debt 1,475,654,203 1,781,336,879 1,819,670,136 1,356,753 2,324,313 747,293

Total Equtiy 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

Formula Debt to Equity Ratio = Total debt / Total Equity

1,475,654,203 1,781,336,879 1,819,670,136 1,356,753 2,324,313 747,293

Working
1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

Result 1.43 1.82 1.96 1.84 3.23 1.05

Interpretation: 3.5
This ratio indicates what proportion of 3

equity and debt the company is using to 2.5

2
finance its assets. A high debt/equity ratio Faisal
1.5 Fazal
generally means that a company has been
1
aggressive in financing its growth with 0.5
debt. In 2008 Fazal textile shows a high 0
2009 2008 2007
debt to equity ratio which is not a good sign
 DEBT TO TANGIBAL NET WORTH RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
2009 2008 2007 2009 2008 2007
Analysis
Rupees Rupee in thousand

Total Debt 469,731,719 573,772,398 731,388,758 1,000,000 1,000,000 -

Total Equity 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

DEBT TO TANGIBAL NET WORTH RATIO=LONGTERM DEBT/ SHARE

Formula
HOLDERS EQUITY

Working
469,731,719 573,772,398 731,388,758 1,000,000 1,000,000 -

 
1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908
1.4
Result
Interpretation: 0.45 0.59 0.79 1.36 1.39 0.00
1.2
The debt to tangible net worth ration is
1
physical worth of a company has net of its 0.8
liabilities. According to above result Fazal 0.6 Faisal
Fazal
Textile mill shows a better than Faisal 0.4
Spinning Mills. 0.2
0
2009 2008 2007
 CURRENT WORTH / NET WORTH RATIO

Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.

Ratio Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand

Current Assets 1,206,600,842 1,287,177,659 1,105,826,312 869,265 1,680,373 1,066,294

Current
Liabilities 1,243,805,007 1,425,326,777 1,268,123,476 1,065,894 1,529,306 1,031,931

Total Assets 2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287

Total Liabilities 1,795,644,656 2064399581 2,041,950,901 2,148,722 2,608,783 1,114,379

Formula Current Worth=Total Current Assets-Total Current Liabilities

(138,149,118
Result (37,204,165) ) (162,297,164) (196,629) 151,067 34,363

Formula Net Worth=Total Assets-Total Liabilities

Result 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

According to above result Fazal Textile mill shows a better than Faisal Spinning Mills because the Faisal
spinning
Formulamills ltd. Current worth ratios are negative in all
Current financial
Worth / Netyears
Worthbut Fazal textile shows positive
ratio but very low ratio.
 TOTAL CAPITALIZATION RATIO

Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.

Ratio Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand

Long Term Debt 464,942,756 552,625,609 718,133,345 1,000,000 1,000,000 -

Shareholder's
Equity 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908
Long Term Debt
Formula Total Capitalization Ratio=
Long Term Debt + Shareholder's Equity
Result 0.31 0.36 0.44 0.58 0.58 0.00

Interpretation: 0.6
Total capitalization ratio provides a glimpse 0.5
of a company's long-term stability and
0.4
ability to withstand losses and business
0.3 Faisal
downturns. It is obvious from the above Fazal
0.2
calculations that there are lower ratios of
both companies. 0.1

0
2009 2008 2007
 LONG TERM ASSETS VS LONG TERM DEBT

Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.

Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Long Term Assets 1,624,424,263 1,754,742,231 1,864,039,888 2,015,417 1,648,358 757,993

Long Term Debt 464,942,756 552,625,609 718,133,345 1,000,000 1,000,000 -

Formula L T Assets VS L T Debt=Long Term Assets / Long Term Debt

1,624,424,263 1,754,742,231 1,864,039,888 2,015,417 1,648,358 757,993

Working
464,942,756 552,625,609 718,133,345 1,000,000 1,000,000 -

Result 3.49 3.18 2.60 2.02 1.65 -

3.5
Interpretation:
3
The long term assets versus long term debt 2.5
ratio show the company strength. (Assets 2
Faisal
over debts). Both the mills have sufficient 1.5 Fazal

assets to meet its debts. Faisal Spinning 1

Mills better then the Fazal Textile mills Ltd. 0.5

0
2009 2008 2007
 NET PROFIT MARGIN
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Profit 65,360,140 59,605,010 87,357,567 25,293 10,040 (20,461)

Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Formula Net Profit Margin = Net Profit / Sales x 100

65,360,140*100 59,605,010*100 87,357,567*100 25,293*100 10,040*100 (20461)*100

Working
4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Result 1.53 1.53 2.60 0.90 0.41 (0.90)

Interpretation: 3

The ratio shows how much Profit Company 2.5

2
makes for every Rupee it generate in
1.5
revenue. As like in the above ratios the 1 Faisal
ratio of Faisal Spinning shows higher ratio 0.5
Fazal

as compared to Fazal textile. Which shows 0

the company is in more profit as compare -0.5

to its competitor -1
2009 2008 2007
 RETURN ON ASSETS
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Income 65,360,140 59,605,010 87,357,567 25,293 10,040 (20,461)

Total Assets 2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287

Formula Return On Assets = Net Income / Total Assets x 100

65,360,140*100 59,605,010*100 87,357,567*100 25,293*100 10,040*100 (20,461)*100

Working
2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287

Result 2.31 1.96 2.94 0.88 0.30 (1.12)

Interpretation: 3
ROA is an indicator of how profitable a 2.5
2
company is relative to its total assets. ROA 1.5
gives an idea as to how 1
Faisal
0.5
efficient management is at using its assets 0
Fazal

to generate earnings. In the above ratios -0.5

-1
the ratio of Faisal Spinning Mills Ltd is high -1.5
as compare to other which indicates it is 2009 2008 2007

more efficient than competitor

 DU PONT RETURN ON ASSETS
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand
Net Income 65,360,140 59,605,010 87,357,567 25,293 10,040 (20,461)
Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195
Total Assets 2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287
Formula ROA Du Pont = (Net income / Sales) x (Sales / Total Assets)
(-
(65,360,140/4,271,9 (59,605,010/3,886,9 (87,357,567/3,361,1 (25,293/2819,0 (10,040/2,447, 20,461/2,263,19
08,981) x 05,925) x 09,697) x 19) x 138) x 5) x
Working
(4,271,908,981/2,83 (3,886,905,925/3,04 (2,432,652,263/1,03 (2,819,019/2,8 (2,447,138/3,3 (2,263,195/1,824
1,025,105) 1,919,890) 2,976,248) 84,682) 28,731) ,287)
Result 0.02 0.02 0.03 0.01 0.00 (0.01)

Interpretation:
0.03
DuPont return on Assets is a financial ratio
0.025
that show the return on assets depends on
0.02
both assets turnover and profit margin. This 0.015 Faisal
method breaks out two components from the 0.01
Fazal

return on assets ration is order to determine 0.005

the impact of each on the profitability of the 0
2009 2008 2007
company. In the above ratios the Fazal textile
ratio is lower as compare to Faisal Spinning
 OPERATING INCOME MARGIN
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Operating Income 345,759,975 289,305,931 274,265,279 169,038 96,415 77,395

Net Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Formula Operating Income Margin = Operating Income / Net Sales x 100

345,759,975 289,305,931 274,265,279 169,038 96,415 77,395

Working
4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Result 8.09 7.44 8.16 6.00 3.94 3.42

Interpretation: 9
The operating income is a measurement of 8
7
management efficiency, the higher 6
operating income margin indicate lower 5
Faisal
4 Fazal
fixed cost and a better gross margin. As in 3
the above ratios the ratio Faisal spinning 2
1
mills Ltd is higher as compare to Fazal 0
2009 2008 2007
textile.
 OPERATING ASSETS TURNOVER
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Operating Assets 1,461,869,550 1,603,499,001 1,720,050,799 679,842 719,115 741,516

Formula Operating Assets Turnover= Sales / Operating Assets (Property, Plant & Equip.)

4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Working
1,461,869,550 1,603,499,001 1,720,050,799 679,842 719,115 741,516

Result 2.92 2.42 1.95 4.15 3.40 3.05

Interpretation: 4.5
This ratio indicates how much the company 4
3.5
generate revenue from its operating assets 3
the higher the ratio the higher the better. 2.5
Faisal
2
As in above ratios shows that both the 1.5
Fazal

companies are in positive but the ratio of 1

0.5
Fazal textile is higher as compare to its 0
2009 2008 2007
competitor.
 RETURN ON OPERATING ASSETS
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Profit 65,360,140 59,605,010 87,357,567 25,293 10,040 (20,461)

Operating Assets 1,461,869,550 1,603,499,001 1,720,050,799 679,842 719,115 741,516

Return on Operating Assets= Net Income / Operating Assets (Property, Plant &
Formula Equip.)

65,360,140 59,605,010 87,357,567 25,293 10,040 (20,461)

Working
1,461,869,550 1,603,499,001 1,720,050,799 679,842 719,115 741,516

Result 4.47 3.72 5.08 3.72 1.40 (2.76)

6
Interpretation: 5
The ratio indicates the income margin 4
3
against its operating assets the higher the 2
Faisal
ratio the better is. It means the return on 1 Fazal
0
operating ratio of Faisal Spinning is higher -1
as compare to its competitor. -2
-3
2009 2008 2007
 SALES TO FIXED ASSETS

Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.

Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Fixed Assets 1,624,424,263 1,754,742,231 1,864,039,888 2,015,417 1,648,358 757,993

Formula Sales to Fixed Assets = Net Sales / Fixed Assets

4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Working
1,624,424,263 1,754,742,231 1,864,039,888 2,015,417 1,648,358 757,993

Result 2.63 2.22 1.80 1.40 1.48 2.99

Interpretation: 3

The ratio indicates the utilization of 2.5

resources; higher ratio shows that the 2

assets are efficiently utilized. In the above 1.5 Faisal

Fazal
ratios the ratio of Faisal spinning is higher 1

which shows that the company’s fixed 0.5

assets are more efficiently used as 0

2009 2008 2007
compare to other company.
 RETURN ON INVESTMENT
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Profit Before Tax 94,132,528 107,658,977 112,985,100 48,219 27,361 1,236

Shareholder's Equity 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

Formula Return On Investment = Net Profit Before Tax / Shareholder's Equity

94,132,528 107,658,977 112,985,100 48,219 27,361 1,236

Working
1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

Result 9.09 11.01 12.18 6.55 3.80 0.17

14
Interpretation: 12
ROI ratio is a measure to evaluate the 10

efficiency of an investment. In the above 8

Faisal
ratios the ratio of Faisal spinning mills ltd is 6 Fazal
4
much higher because company’s net profit
2
is much more than its competitor. 0
2009 2008 2007
 RETURN ON TOTAL EQUITY
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand

Net Profit After Tax 65,360,140 59,905,010 87,357,567 25,293 10,040 (20,461)

Shareholder's Equity 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

Formula Return On Total Equity = Net Profit After Tax / Shareholder's Equity*100

65,360,140*100 59,905,010*100 87,357,567*100 25,293*100 10,040*100 (20,461)*100

Working
1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

Result 6.31 6.13 9.41 3.44 1.39 (2.88)

Interpretation: 10
This ratio measures the rate of return on 8

the shareholders equity of the common 6

4
stock owners. It measures a firm's Faisal
2 Fazal
efficiency at generating profits from every
0
dollar of shareholders' equity. Ratio of -2
Faisal spinning is high as compare to -4
2009 2008 2007
competitor.
 GROSS PROFIT MARGIN
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Gross Profit 445,258,431 378,904,877 356,212,079 220,351 139,904 121,177

Net Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Formula Gross Profit Margin = Gross Profit / Sales*100

445,258,431 378,904,877 356,212,079 220,351 139,904 121,177

Working
4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Result 10.42 9.75 10.60 7.82 5.72 5.35

12
Interpretation:
10
The ratio is used to indicate the financial
8
health of the company. The higher the ratio Faisal
6
the better is. Ratio of Faisal spinning is Fazal
4
higher as compare to Fazal Textile.
2

0
2009 2008 2007
 ACCOUNTS RECEIVABLE TURNOVER
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Credit Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Avg. Accounts Receiavble 250,697,595 279,443,240 293,439,063 522,871 744,101 646,461

Accounts Receivable Turnover = Net Credit Sales / Avg. Accounts
Formula Receivable

4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Working
250,697,595 279,443,240 293,439,063 522,871 744,101 646,461

Result 17.04 13.91 11.45 5.39 3.29 3.50

Interpretation:
18
This is the ratio of the number of times that 16
accounts receivable amount is collected 14
12
throughout the year.  A high accounts 10
Faisal
receivable turnover ratio indicates a tight 8 Fazal
6
credit policy. In the above ratios the ratio of 4
Faisal Spinning shows that it has a tight 2
0
credit policy as compare to Fazal Textile 2009 2008 2007

mills
 AVERAGE COLLECTION PERIOD
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Avg. Accounts
Receivable 250,697,595 279,443,240 293,439,063 522,871 744,101 646,461

Net Credit Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Average Collection Period = (Avg. Accounts Receivable * 365) / Net Credit
Formula Sales

(66,154,191*365) (41,001,504*365) (10,240,198*365) (11,314*365) (28,978*365) (43,166*365)

Working
4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Result 21.42 26.24 31.87 67.70 110.99 104.26

Interpretation: 120
This ratio indicates approximate amount of 100
time that it takes for a business to receive 80
payments owed, in terms of receivable 60 Faisal
Fazal
from its customers. The lower the ratio the 40
better the company’s receivable aging 20
Faisal spinning is better as compare to 0
2009 2008 2007
Fazal Textile.
 ACCOUNTS PAYABLE TURNOVER
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Credit Purchase 2,912,743,227 2,947,841,447 2,388,302,864 1,715,415 1,947,941 1,616,721

Avg. Accounts Payable 111,223,169 103,437,724 88,191,332 52,451 36,850 45,731

Accounts Payable Turnover = Net Credit Purchase / Avg. Accounts
Formula Payable

2,912,743,227 2,947,841,447 2,388,302,864 1,715,415 1,947,941 1,616,721

Working
111,223,169 103,437,724 88,191,332 52,451 36,850 45,731

Result 26.19 28.50 27.08 32.71 52.86 35.35

Interpretation:
60
A short-term liquidity measure used to
50
quantify the rate at which a company pays
40
off its suppliers. Increasing turnover ratio Faisal
30
indicates that company is paying of its Fazal
20
supplier at faster rate. As the above ratios
10
shows the Fazal textile ltd is more efficient
0
in paying of its suppliers than Faisal 2009 2008 2007

spinning
 AVERAGE PAYMENT PERIOD
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Credit Purchase 2,912,743,227 2,947,841,447 2,388,302,864 1,715,415 1,947,941 1,616,721

Avg. Accounts Payable 111,223,169 103,437,724 88,191,332 52,451 36,850 45,731

Formula Average Payment Period = (Avg. Trade creditors * 365) / Net Credit Purchase

(111,223,169*365) (103,437,724*365) (88,191,332*365) (52,451*365) (36,850*365) (45,731*365)

Working
2,912,743,227 2,947,841,447 2,388,302,864 1,715,415 1,947,941 1,616,721

Result 13.94 12.81 13.48 11.16 6.90 10.32

60
Interpretation:
50
The ratio indicates the number of days a
40
company takes to pay off credit purchases;
30 Faisal
the above result shows that Faisal Fazal
20
Spinning have more compatibility to pay off
10
its credit purchases.
0
2009 2008 2007
 INVENTORY TURNOVER
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Cost Of goods Sold 3,826,650,550 3,508,001,048 3,004,897,618 2,598,668 2,307,234 2,142,018

Average Inventory 850,472,134 781,889,665 685,830,829 551,182 465,619 329,953

(Opening + closing) / 2            

Formula Inventory Turnover = Cost of goods Sold / Average Inventory

3,826,650,550 3,508,001,048 3,004,897,618 2,598,668 2,307,234 2,142,018

Working
850,472,134 781,889,665 685,830,829 551,182 465,619 329,953

Result 4.50 4.49 4.38 4.71 4.96 6.49

Interpretation: 7

A ratio showing how many times a 6

5
company's inventory is sold and replaced
4
over a period the higher the ratio the better Faisal
3 Fazal
is. In the above ratios both mills ratio are 2
approximately same. 1
0
2009 2008 2007
 AVERAGE AGE OF INVENTORY
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007
Rupees Rupee in thousand
Cost Of goods Sold 3,826,650,550 3,508,001,048 3,004,897,618 2,598,668 2,307,234 2,142,018

Average Inventory 850,472,134 781,889,665 685,830,829 551,182 465,619 329,953

(Opening + closing) / 2            

Formula Average Age of Inventory = (Average Inventory*365) / Cost of goods sold

=(850,472,134*365) =(781,889,665*365) =(685,830,829*365) =(551,182*365) =(465,619*365) =(329,953*365)

Working
3,826,650,550 3,508,001,048 3,004,897,618 2,598,668 2,307,234 2,142,018

Result 81.12 81.35 83.31 77.42 73.66 56.22

Interpretation: 90
The ratio measuring the day’s inventory is 80
70
held and the number of days an average 60
inventory items takes to sell. As in the 50
Faisal
40 Fazal
above ratios shows there are large amount 30
of average inventory and high ratio of 20
10
Faisal spinning as compare to Fazal textile. 0
2009 2008 2007
 OPERATING CYCLE
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Age of inventory 81 81 83 77 74 56

Collection Period 21 26 32 68 111 104

(Opening + closing) / 2            

Formula Operating Cycle  = Age of inventory + Collection period.

Working
=81.12+21.42 =81.35+26.24 =83.31+31.87 =92.20+1.48 =39.99+4.44 =24.62+5.84

Result 102.54 107.60 115.17 145.12 184.65 160.48

Interpretation: 200
The operating cycle reveals how long cash 180
160
is tied up in receivables and inventory; a 140
120
long operating cycle means less cash is 100 Faisal
available to meet short term obligations. 80 Fazal
60
The above ratio also shows that Faisal 40
20
spinning has short time period of operating 0
cycle as compare to Fazal Textile. 2009 2008 2007
 TOTAL ASSETS TURNOVER

Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.

Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Sales 4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Total Assets 2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287

Formula Total Asset Turnover = Total Sales / Total Assets

4,271,908,981 3,886,905,925 3,361,109,697 2,819,019 2,447,138 2,263,195

Working
2,831,025,105 3,041,919,890 2,969,866,200 2,884,682 3,328,731 1,824,287
Result 1.51 1.28 1.13 0.98 0.74 1.24

Interpretation: 1.6
1.4
Assets turnover ratio compares the turnover 1.2
with the assets that the business has used to 1
Faisal
generate that turnover. As the result of above 0.8
Fazal
0.6
ratios shows that both the company’s turnover 0.4
is greater than its assets, but between both 0.2
0
the companies Faisal spinning has high ratio. 2009 2008 2007
 FIXED ASSETS TURNOVER RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Cost Of goods Sold 3,826,650,550 3,508,001,048 3,004,897,618 2,598,668 2,307,234 2,142,018

Net Fixed Assets 1,624,424,263 1,754,742,231 1,864,039,888 2,015,417 1,648,358 757,993

Formula Fixed Assets Turnover Ratio = Cost of Sales / Net Fixed Assets

3,826,650,550 3,508,001,048 3,004,897,618 2,598,668 2,307,234 2,142,018

Working
1,624,424,263 1,754,742,231 1,864,039,888 2,015,417 1,648,358 757,993

Result 2.36 2.00 1.61 1.29 1.40 2.83

Interpretation: 3

The fixed assets turnover ratios 2.5

measures the productivity of the firm and 2
indicate the amount of sale and 1.5 Faisal
generated by each rupee spent on fixed 1
Fazal

assets. As the result of above ratios 0.5

shows Faisal spinning has high ratio as
0
compared to Fazal textile. 2009 2008 2007
 DIVIDEND PER SHARE
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Dividend Amount 7,500,000 10,000,000 7,500,000 9,281 - 15,469

No. of Equity Share 10,000,000 10,000,000 10,000,000 6,187,500 6,187,500 6,187,500

Formula Dividend Per Share= Dividend Amount / No. Of share outstanding

7,500,000 10,000,000 7,500,000 9,281 - 15,469

Working
10,000,000 10,000,000 10,000,000 6,187,500 6,187,500 6,187,500

Result 0.75 1.00 0.75 1.50 - 2.50

3
Interpretation:
DPS shows how much the shareholder 2.5

actually paid by way of dividend. In the 2

above ratios the Faisal spinning is better 1.5 Faisal

Fazal
as it pays more to shareholders as 1
compare to competitor. 0.5

0
2009 2008 2007
 EARNING PER SHARE RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Net Profit After Tax 65,360,140 59,905,010 87,357,567 25,293,000 10,040,000 (20,461,000)

No. of Equity Share 10,000,000 10,000,000 10,000,000 6,187,500 6,187,500 6,187,500

Formula Earning Per Share= Net Income / Number of equity Share

65,360,140 59,905,010 87,357,567 25,293,000 10,040,000 (20,461,000)

Working
10,000,000 10,000,000 10,000,000 6,187,500 6,187,500 6,187,500

Result 6.54 5.99 8.74 4.09 1.62 (3.31)

Interpretation: 10
8
Earning per share serves as an indicator of a
6
company’s profitability. As the above ratio
4
shows the result of both the companies in 2
Faisal
Fazal
which the Faisal spinning ratio is much higher 0
as compare to its competitor that is not much -2
better. -4
2009 2008 2007
 PRICE EARNING RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Market Value Per Share 130 117 106 125 121 118

EPS (Earning Per Share) 6.536 5.991 8.736 4.088 1.623 (3.307)

Formula Price Earning Ratio= Market Value Per Share / Earning Per Shares

130 117 106 125 121 118

Working
6.536 5.991 8.736 4.088 1.623 (3.307)

Result 19.89 19.53 12.13 30.58 74.57 (35.68)

80
Interpretation:
60
According to the above result of both
40
the companies the ratio of price earning
20 Faisal
per share of Fazal textile is higher then Fazal
0
the Faisal spinning.
-20

-40
2009 2008 2007
 DIVIDEND PAYOUT RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Dividend Per Share 0.75 1.00 0.75 1.50 - 2.50

EPS (Earning Per Share) 6.536 5.991 8.736 4.088 1.623 (3.307)

Formula Dividend Payout Ratio = Dividend per Share / Earning per Share

0.75 1 0.75 1.5 - 2.5

Working
6.536 5.991 8.736 4.088 1.623 (3.307)

Result 0.11 0.17 0.09 0.37 - (0.76)

0.8
Interpretation: 0.7
The payout ratio provides an idea of how 0.6
well earnings support the dividend 0.5
0.4 Faisal
payments. More mature companies tend Fazal
0.3
to have a higher payout ratio. As the 0.2
above ratio shows that both companies 0.1

have lower ratio. 0

2009 2008 2007
 DIVIDEND YIELD RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Price Per Share 10.00 10.00 10.00 10.00 10.00 10.00

Dividend Per Share 0.750 1.000 0.750 1.5 0 2.5

Formula Dividend Yield = (Dividend per Share / Price Per Share)*100

(0.75*100) (1*100) (0.75*100) (1.5*100) - (2.5*100)

Working
10.000 10.000 10.000 10.000 10.000 10.000

Result 7.50% 10% 7.50% 15% 0% 25%

Interpretation: 25.00%
The dividend yield ratio shows how much 20.00%
a company payout in dividend in each
15.00%
year relative to its share price. As the Faisal
above ratio shows Fazal textile has high 10.00% Fazal

ratio of dividend yield as compare to its 5.00%

competitor. 0.00%
2009 2008 2007
 BOOK VALUE PER SHARE(BV) RATIO
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Shareholder's
Equity 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908
No. of Equity
Share 10,000,000 10,000,000 10,000,000 6,187,500 6,187,500 6,187,500
Book Value Per Share= (Shareholder's Equity - Preferred Equity)/ No. of equity
Formula Share

Working 1,035,380,449 977,520,309 927,915,299 735,960 719,948 709,908

10,000,000 10,000,000 10,000,000 6,187,500 6,187,500 6,187,500

Result 103.54 97.75 92.79 118.94 116.36 114.73

Interpretation: 120
Book value comparing the market value 100
to the book value can indicate whether or 80
not the stock in overvalued or 60 Faisal
undervalued. In the above ratio the ratio 40
Fazal

Fazal textile is higher as compare to 20

faisal spinning. 0
2009 2008 2007
 OPERATING CASH FLOW / TOTAL DEBT
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Operating Cash
Flow 331,035,042 91,815,398 (13,037,263) 1,406,087 (602,813) 345,962

Total Debt 1,475,654,203 1,781,336,879 1,819,670,136 1,356,753 2,324,313 747,293

Formula Cash Flow to Debt Ratio= Operating Cash Flow / Total Debt

Working 331,035,042 91,815,398 (13,037,263) 1,406,087 (602,813) 345,962

1,475,654,203 1,781,336,879 1,819,670,136 1,356,753 2,324,313 747,293

Result 0.22 0.05 -0.01 1.04 -0.26 0.46

Interpretation: 1.20

This ratio provides an indication of a 1.00

0.80
company’s ability of to cover total debt with its 0.60
operating cash flow. The higher ratio indicates 0.40 Faisal
Fazal
0.20
better the company’s ability to carry its total 0.00
debt. In the above ratios we have seen that the (0.20)

ratio of Faisal spinning is more decline as (0.40)

2009 2008 2007
compare to competitor.
 OPERATING CASH FLOW PER SHARE
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
Ratio
Analysis 2009 2008 2007 2009 2008 2007

Rupees Rupee in thousand

Operating Cash Flow 331,035,042 91,815,398 (13,037,263) 1,406,087 (602,813) 345,962

Total Share 21,651,044 18,826,995 18,826,995 18,570,252 18,570,252 18,570,252

Formula Operating Cash Flow per Share = Operating cash flow / Total Shares

331,035,042 91,815,398 (13,037,263) 1,406,087 (602,813) 345,962

Working
21,651,044 18,826,995 18,826,995 18,570,252 18,570,252 18,570,252

Result 15.29 4.88 (0.69) 0.08 (0.03) 0.02

Interpretation: Cash flow per share is used 16.00

14.00
in valuing a firms stock. The above ratios 12.00
10.00
show positive cash flow per share but the 8.00 Faisal
ratio of Faisal spinning is comparatively 6.00 Fazal
4.00
high. 2.00
0.00
(2.00)
2009 2008 2007
 Faisal Spinning Mills Ltd.
HORIZONTAL ANALYSIS OF
BALANCE SHEET
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees Rupees Rupees Rupees Rupees Rupees
Result In Percentage (%)

SHARE CAPITAL AND RESERVE

Issued , Subscribed, and paid up

Capital 100,000,000 100,000,000 100,000,000 100.00 100.00 100.00

Reserves 850,000,000 840,000,000 740,000,000 114.86 113.51 100.00

Unappropriate Profit 85,380,449 37,520,309 87,915,299 97.12 42.68 100.00

NON CURRENT LIABILITIES

Loan from sponsors and relatives 89,285,715 79,719,388 100,000,000 89.29 79.72 100.00

Long term financeing secured 375,657,041 472,906,221 618,133,345 60.77 76.51 100.00

Obligation under finance lease 4,788,963 21,146,789 13,255,413 36.13 159.53 100.00

infrastructure fee payable 18,524,847 12,487,448 6,795,302 272.61 183.77 100.00

Deferred liabilities 63,583,083 52,812,958 35,643,365 178.39 148.17 100.00

CURRENT LIABILITIES

Trade and other payables 192,778,392 184,805,377 149,653,142 128.82 123.49 100.00
Markup accrued on loans and other
payables 45,104,131 32,956,919 30,188,947 149.41 109.17 100.00
Short term borrowings 831,305,967 902,503,813 794,000,000 104.70 113.67 100.00

Current portion of long term loan 174,616,517 305,060,668 294,281,378 59.34 103.66 100.00
Total Liabilities 2,831,025,105 3,041,919,890 2,969,866,200
ASSETS

Property, Plant and Equip. 1,461,869,550 1,603,499,001 1,720,050,799 84.99 93.22 100.00

Capital work in progress 15,845 225,002 5,223,399 0.30 4.31 100.00

Long term Investment 153,004,719 140,845,121 130,085,811 117.62 108.27 100.00

Long term Loan 2,036,054 2,675,012 4,302,784 47.32 62.17 100.00

Long Term Deposit 7,498,095 7,498,095 4,377,095 171.30 171.30 100.00

CURRENT ASSETS

Store, Spare and losse tools 56,001,019 54,618,631 35,437,734 158.03 154.13 100.00

Stock- in -trade 822,995,766 877,948,501 685,830,829 120.00 128.01 100.00

Trade debt 235,947,772 265,447,417 293,439,063 80.41 90.46 100.00

Loans and advances 8,962,819 7,914,946 19,056,093 47.03 41.53 100.00

Trade deposits & prepayments 17,138,603 12,854,032 9,108,000 188.17 141.13 100.00

other receivable 1,357,906 1,778,458 2,975,864 45.63 59.76 100.00

Taxation 50,870,069 39,993,167 35,826,890 141.99 111.63 100.00

Bank balances 13,326,888 26,622,507 24,151,839 55.18 110.23 100.00

Total Assets 2,831,025,105 3,041,919,890 2,969,866,200

 Faisal Spinning Mills Ltd.
HORIZONTAL ANALYSIS OF
PROFIT AND LOSS ACCOUNT
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees Rupees Rupees Rupees Rupees Rupees
  Result In Percentage (%)

Sales 4,271,908,981 3,886,905,925 3,361,109,697 127.10 115.64 100

Cost of sales 3,826,650,550 3,508,001,048 3,004,897,618 127.35 116.74 100
Gross profit 445,258,431 378,904,877 356,212,079 125.00 106.37 100
other operating income 674,450 990,176 771,352 87.44 128.37 100
445,932,881 379,895,053 356,983,431
Distribution cost 66,205,410 60,670,711 52,509,648 126.08 115.54 100
administration expenses 29,196,581 25,948,416 25,259,248 115.59 102.73 100
other operating expenses 4,770,915 3,969,995 4,949,256 96.40 80.21 100
Finance cost 264,678,915 193,595,424 180,938,521 146.28 107.00 100
364,851,821 284,184,546 263,656,673
81,081,060 95,710,507 93,326,758
share of profit / (loss) of associate-
Undertakings 13,051,468 11,948,470 19,658,342 66.39 60.78 100
profit before taxation 94,132,528 107,658,977 112,985,100 83.31 95.29 100
Provision for taxation
Current 29,567,115 27,794,049 25,627,533 115.37 108.45 100
Prior Year (1,344,392) 80,160   (1,677.14) 100.00 100
Deferred 549,665 20,179,758   2.72 100.00 100
28,772,388 48,053,967 25,627,533 112.27 187.51 100
Net profit for the year 65,360,140 59,605,010 87,357,567 74.82 68.23 100
Earing per share 6.54 5.96 8.74 74.83 68.19 100
 Fazal Textile Mills Ltd.
HORIZONTAL ANALYSIS OF
BALANCE SHEET
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees in thousand
Result In Percentage (%)
ASSETS
Non Current Assets
Property, Plant and Equip.
Operating fixed
679,842 719,115 741,516 91.68 96.98 100.00
assets
Capital work in
1,325,830 914,782 250 530,332 365,913 100.00
progress
2,005,672 1,633,897 741,766 270 220 100.00
Long term loans and
9,213 13,929 15,695 58.70 88.75 100.00
advances
Long term deposits 532 532 532 100.00 100.00 100.00
2,015,417 1,648,358 757,993 265.89 217.46 100.00
CURRENT ASSETS
Store, Spare and losse
43,078 37,880 38,431 112.09 98.57 100.00
tools
Stock- in -trade 501,080 601,284 329,953 151.86 182.23 100.00
Trade debt 204,001 841,740 646,461 31.56 130.21 100.00
Loans and advances 108,622 168,523 42,277 256.93 398.62 100.00
Trade deposits and
8,050 15,901 5,501 146.34 289.06 100.00
prepayments
Taxation-net 824 493 2,157 38.20 22.86 100.00
Cash and bank
3,610 14,552 1,514 238.44 961.16 100.00
balances
869,265 1,680,373 1,066,294 81.52 157.59 100.00
Total Assets 2,884,682 3,328,731 1,824,287 158.13 182.47 100.00
SHARE CAPITAL AND RESERVE
Issued , Subscribed, and paid up
Capital 61,875 61,875 61,875 100.00 100.00 100.00

Reserve 674,085 658,073 648,033 104.02 101.55 100.00

735,960 719,948 709,908 103.67 101.41 100.00

NON CURRENT LIABILITIES
-
Long term finance 1,000,000 1,000,000 100.00 100.00

Deferred gratuity 38,796 29,032 28,338 136.90 102.45 100.00

Deferred taxation 44,032 50,445 54,110 81.37 93.23 100.00

1,082,828 1,079,477 82,448

CURRENT LIABILITIES

Trade and other payables 666,707 156,057 267,442 249.29 58.35 100.00

Accrued markup 42,434 48,936 17,196 246.77 284.58 100.00

Short term finance 356,753 1,324,313 747,293 47.74 177.21 100.00

1,065,894 1,529,306 1,031,931 103.29 148.20 100.00

Total Liabilities 2,884,682 3,328,731 1,824,287
 Fazal Textile Mills Ltd.
HORIZONTAL ANALYSIS OF
PROFIT AND LOSS ACCOUNT
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees in thousand
  Result In Percentage (%)

Sales 2,819,019 2,447,138 2,263,195 124.56 108.13 100

Cost of sales 2,598,668 2,307,234 2,142,018 121.32 107.71 100
Gross profit 220,351 139,904 121,177 181.84 115.45 100
General & administration expenses 35,613 31,903 35,630 99.95 89.54 100
Selling & distribution expenses 17,353 13,384 14,552 119.25 91.97
other operating expenses 2,538 2,028 66 3,845.45 3,072.73 100
55,504 47,315 50,248
164,847 92,589 70,929
other operating income 4,191 3,826 6,466 64.82 59.17 100
Operating profit 169,038 96,415 77,395 218.41 124.58 100
Finance cost 120,819 69,054 76,159 158.64 90.67 100
Net profit before taxation 48,219 27,361 1,236 3,901.21 2,213.67 100
Taxation:
Current 29,324 20,803 28,926 101.38 71.92 100
-
Prior Year 183 167 109.58 - 100

Deferred (6,414) (3,665) (7,396) 86.72 49.55 100

22,926 17,321 21,697

Net profit for the year 25,293 10,040 (20,461) (123.62) (49.07) 100

Earing per share 4.09 1.62 (3.31) (123.56) (48.94) 100

 Faisal Spinning Mills Ltd.
VERTICAL ANALYSIS OF
BALANCE SHEET
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees Rupees Rupees Rupees Rupees Rupees
Result In Percentage (%)
SHARE CAPITAL AND RESERVE

Issued , Subscribed, and paid up Capital 100,000,000 100,000,000 100,000,000 3.53 3.29 3.37

Reserves 850,000,000 840,000,000 740,000,000 30.02 27.61 24.92

Un-appropriate Profit 85,380,449 37,520,309 87,915,299 3.02 1.23 2.96

NON CURRENT LIABILITIES

Loan from sponsors and relatives 89,285,715 79,719,388 100,000,000 3.15 2.62 3.37

Long term financing secured 375,657,041 472,906,221 618,133,345 13.27 15.55 20.81

Obligation under finance lease 4,788,963 21,146,789 13,255,413 0.17 0.70 0.45

infrastructure fee payable 18,524,847 12,487,448 6,795,302 0.65 0.41 0.23

Deferred liabilities 63,583,083 52,812,958 35,643,365 2.25 1.74 1.20

CURRENT LIABILITIES

Trade and other payables 192,778,392 184,805,377 149,653,142 6.81 6.08 5.04
Markup accrued on loans and other
payables 45,104,131 32,956,919 30,188,947 1.59 1.08 1.02

Short term borrowings 831,305,967 902,503,813 794,000,000 29.36 29.67 26.74

Current portion of long term loan 174,616,517 305,060,668 294,281,378 6.17 10.03 9.91
Total Liabilities 2,831,025,105 3,041,919,890 2,969,866,200 100.00 100.00 100.00
ASSETS

Property, Plant and Equip. 1,461,869,550 1,603,499,001 1,720,050,799 51.64 52.71 57.92

Capital work in progress 15,845 225,002 5,223,399 0.00 0.01 0.18

Long term Investment 153,004,719 140,845,121 130,085,811 5.40 4.63 4.38

Long term Loan 2,036,054 2,675,012 4,302,784 0.07 0.09 0.14

Long Term Deposit 7,498,095 7,498,095 4,377,095 0.26 0.25 0.15

CURRENT ASSETS

Store, Spare and losse tools 56,001,019 54,618,631 35,437,734 1.98 1.80 1.19

Stock- in -trade 822,995,766 877,948,501 685,830,829 29.07 28.86 23.09

Trade debt 235,947,772 265,447,417 293,439,063 8.33 8.73 9.88

Loans and advances 8,962,819 7,914,946 19,056,093 0.32 0.26 0.64

Trade deposits & prepayments 17,138,603 12,854,032 9,108,000 0.61 0.42 0.31

other receivable 1,357,906 1,778,458 2,975,864 0.05 0.06 0.10

Taxation 50,870,069 39,993,167 35,826,890 1.80 1.31 1.21

Bank balances 13,326,888 26,622,507 24,151,839 0.47 0.88 0.81

Total Assets 2,831,025,105 3,041,919,890 2,969,866,200 100.00 100.00 100.00

 Faisal Spinning Mills Ltd.
VERTICAL ANALYSIS OF
PROFIT AND LOSS ACCOUNT
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees Rupees Rupees Rupees Rupees Rupees
  Result In Percentage (%)

Sales 4,271,908,981 3,886,905,925 3,361,109,697 100.00 100.00 100.00

Cost of sales 3,826,650,550 3,508,001,048 3,004,897,618 89.58 90.25 89.40
Gross profit 445,258,431 378,904,877 356,212,079 10.42 9.75 10.60
other operating income 674,450 990,176 771,352 0.02 0.03 0.02
445,932,881 379,895,053 356,983,431
Distribution cost 66,205,410 60,670,711 52,509,648 1.55 1.56 1.56
administration expenses 29,196,581 25,948,416 25,259,248 0.68 0.67 0.75
other operating expenses 4,770,915 3,969,995 4,949,256 0.11 0.10 0.15
Finance cost 264,678,915 193,595,424 180,938,521 6.20 4.98 5.38
364,851,821 284,184,546 263,656,673
81,081,060 95,710,507 93,326,758
share of profit / (loss) of associate-
Undertakings 13,051,468 11,948,470 19,658,342 0.31 0.31 0.58
profit before taxation 94,132,528 107,658,977 112,985,100 2.20 2.77 3.36
Provision for taxation
Current 29,567,115 27,794,049 25,627,533 0.69 0.72 0.76

Prior Year (1,344,392) 80,160   (0.03) 0.00 -

Deferred 549,665 20,179,758   0.01 0.52 -
28,772,388 48,053,967 25,627,533
Net profit for the year 65,360,140 59,605,010 87,357,567 1.53 1.53 2.60
Earing per share 6.54 5.96 8.74 0.00 0.00 0.00
 Fazal Textile Mills Ltd.
VERTICAL ANALYSIS OF
BALANCE SHEET
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees in thousand
Result In Percentage (%)
ASSETS
Non Current Assets
Property, Plant and Equip.
Operating fixed assets 679,842 719,115 741,516 23.57 21.60 40.65
Capital work in progress 1,325,830 914,782 250 45.96 27.48 0.01
2,005,672 1,633,897 741,766 69.53 49.08 40.66

Long term loans and advances 9,213 13,929 15,695 0.32 0.42 0.86
Long term deposits 532 532 532 0.02 0.02 0.03
2,015,417 1,648,358 757,993 69.87 49.52 41.55
CURRENT ASSETS
Store, Spare and losse tools 43,078 37,880 38,431 1.49 1.14 2.11
Stock- in -trade 501,080 601,284 329,953 17.37 18.06 18.09
Trade debt 204,001 841,740 646,461 7.07 25.29 35.44
Loans and advances 108,622 168,523 42,277 3.77 5.06 2.32
Trade deposits and prepayments 8,050 15,901 5,501 0.28 0.48 0.30
Taxation-net 824 493 2,157 0.03 0.01 0.12
Cash and bank balances 3,610 14,552 1,514 0.13 0.44 0.08
869,265 1,680,373 1,066,294 30.13 50.48 58.45
Total Assets 2,884,682 3,328,731 1,824,287 100.00 100.00 100.00
SHARE CAPITAL AND RESERVE

Issued , Subscribed, and paid up Capital 61,875 61,875 61,875 2.14 1.86 3.39

Reserve 674,085 658,073 648,033 23.37 19.77 35.52

735,960 719,948 709,908 25.51 21.63 38.91

NON CURRENT LIABILITIES
-
Long term finance 1,000,000 1,000,000 34.67 30.04 -

Deferred gratuity 38,796 29,032 28,338 1.34 0.87 1.55

Deferred taxation 44,032 50,445 54,110 1.53 1.52 2.97

1,082,828 1,079,477 82,448

CURRENT LIABILITIES

Trade and other payables 666,707 156,057 267,442 23.11 4.69 14.66

Accrued markup 42,434 48,936 17,196 1.47 1.47 0.94

Short term finance 356,753 1,324,313 747,293 12.37 39.78 40.96

1,065,894 1,529,306 1,031,931 103.29 148.20 56.57

Total Liabilities 2,884,682 3,328,731 1,824,287 100.00 100.00 100.00
 Fazal Textile Mills Ltd.
VERTICAL ANALYSIS OF
PROFIT AND LOSS ACCOUNT
2009 2008 2007 2009 2008 2007
DESCRIPTION
Rupees in thousand
  Result In Percentage (%)

Sales 2,819,019 2,447,138 2,263,195 100.00 100.00 100.00

Cost of sales 2,598,668 2,307,234 2,142,018 92.18 94.28 94.65

Gross profit 220,351 139,904 121,177 7.82 5.72 5.35

General & administration expenses 35,613 31,903 35,630 1.26 1.30 1.57

Seling & distribution expenses 17,353 13,384 14,552 0.62 0.55 0.64

other operating expenses 2,538 2,028 66 0.09 0.08 0.00

55,504 47,315 50,248

164,847 92,589 70,929

other operating income 4,191 3,826 6,466 0.15 0.16 0.29

Operating profit 169,038 96,415 77,395 6.00 3.94 3.42

Finance cost 120,819 69,054 76,159 4.29 2.82 3.37

Net profit before taxation 48,219 27,361 1,236 1.71 1.12 0.05
Taxation:

Current 29,324 20,803 28,926 1.04 0.85 1.28

Prior Year 183 - 167 0.01 - 0.01

Deferred (6,414) (3,665) (7,396) (0.23) (0.15) (0.33)

22,926 17,321 21,697

Net profit for the year 25,293 10,040 (20,461) 0.90 0.41 (0.90)

Earing per share 4.09 1.62 (3.31) 0.00 0.00 (0.00)

 TREND ANALYSIS
Faisal Spinning & Fazal Textile
Faisal Spinning Mills Ltd. Fazal Textile Mills Ltd.
2009 2008 2007 2009 2008 2009
DESCRIPTION            
Liquidity Ratios
Current Ratio 0.97 0.9 0.87 % 0.82 1.1 1.03
Acid Test Ratio 0.31 0.29 0.33 % 0.35 0.71 0.71
Sales to Working Capital -114.82 -28.14 -20.71 Times -14.34 16.2 65.86
Working capital -37,204,165 -138,149,118 -162,297,164 -196,629 151,067 34,363
Cash ratio 0.01 0.02 0.02 % 0 0.01 0
Leverage Ratios
Time Interest Earned 1.36 1.56 1.62 % 1.4 1.4 1.02
Fixed Charge Coverage 1.36 1.56 1.62 % 1.4 1.4 1.02
Debt Ratio 0.52 0.59 0.61 % 0.47 0.7 0.41
Debt / Equity Ratio 1.43 1.82 1.96 % 1.84 3.23 1.05
Debt to Tangible Net worth Ratio 0.45 0.59 0.79 % 1.36 1.39 0
Current Worth / Net worth Ratio -0.04 -0.14 -0.17 % -0.27 0.21 0.05
Total Capitalization Ratio 0.31 0.36 0.44 % 0.58 0.58 0
Long term Assets versus Long term Debt 3.49 3.18 2.6 % 2.02 1.65 0
Profitability Ratios
Net Profit Margin 1.53 1.53 2.6 % 0.9 0.41 -0.9
Return on Assets 2.31 1.96 2.94 % 0.88 0.3 -1.12
DuPont Return on Assets 0.023 0.02 0.029 % 0.01 0 -0.01
Operating Income Margin 8.09 7.44 8.16 % 6 3.94 3.42
Operating Assets Turnover 2.9 2.4 2 % 4.1 3.4 3.1
Return on Operating Assets 4.47 3.72 5.08 % 3.72 1.4 -2.76
Sales to Fixed Assets 2.63 2.22 1.8 Times 1.4 1.48 2.99
Return on Investment (ROI) 9.09 11.01 12.18 % 6.55 3.8 0.17
Return on Total Equity 6.31 6.13 9.41 % 3.44 1.39 -2.88
Gross Profit Margin 10.42 9.75 10.6 % 7.82 5.72 5.35
Activity Ratios
Accounts Receivable Turnover 17.04 13.91 11.45 Times 5.39 3.29 3.5
Average Collection Period 21.42 26.24 31.87 Days 67.7 110.99 104.26
Accounts Payable Turnover 26.19 28.5 27.08 Times 32.71 52.86 35.35
Average Payment Period 13.94 12.81 13.48 Days 11.16 6.9 10.32
Inventory Turnover 4.5 4.49 4.38 Times 4.71 4.96 6.49
Average Age of Inventory 81.12 81.35 83.31 Days 77.42 73.66 56.22
Operating Cycle 102.54 107.6 115.17 Days 145.12 184.65 160.48
Total Assets Turnover 1.51 1.28 1.13 Times 0.98 0.74 1.24
Fixed Assets Turnover 2.36 2 1.61 Times 1.29 1.4 2.83
Market Ratios
Dividend per share 0.75 1 0.75 % 1.5 0 2.5
Earning per Share 6.54 5.99 8.74 % 4.09 1.62 -3.31
Price/Earning Ratio 19.89 19.53 12.13 % 30.58 74.57 -35.68
Dividend Payout 0.11 0.17 0.09 % 0.37 0 -0.76
Dividend Yield 7.5 10 7.5 % 15 0 25
Book Value per Share 103.54 97.75 92.79 % 118.94 116.36 114.73
Statements of Cash Flow
Operating Cash Flow/Total Debt 0.22 0.05 -0.01 % 1.04 -0.26 0.46
Operating Cash Flow per Share 15.29 4.88 -0.69 % 0.08 -0.03 0.02
 Comparisons with industry Average
Description 2009 2008 2009 2008

Different Industry Current Ratio Working Capital ( Rs.)

Faisal Spinning Mills Ltd. 0.97 0.90 (37,204,165) (138,149,118)

Fazal Textile Mills Ltd. 0.82 1.10 (196,629,000) 151,067,000
Khurshid Spinning Mills Ltd. 0.89 0.61 (12,083,742) (78,292,579)
Sargodha Spinning Mills Ltd. 0.35 0.60 (31,827,700) (18,815,600)

Khoinoor Textile Mills LTd. 0.76 1.06 (1,630,643,000) 279,649,000

Different Industry Debt Ratio Gross Profit Margin (%)

Faisal Spinning Mills Ltd. 0.52 0.59 10.42 9.75
Fazal Textile Mills Ltd. 0.47 0.70 7.82 5.72
Khurshid Spinning Mills Ltd. 0.96 0.74 (18.32) (5.10)
Sargodha Spinning Mills Ltd. 0.15 0.17 1.13 4.55
Khoinoor Textile Mills LTd. 0.66 0.53 14.89 15.39
Different Industry Net Profit Margin Total Assets Turnover

Faisal Spinning Mills Ltd. 1.53 1.53 1.51 1.28

Fazal Textile Mills Ltd. 0.90 0.41 0.98 0.74

Khurshid Spinning Mills Ltd. (31.40) (17.97) 0.67 0.75

Sargodha Spinning Mills Ltd. (9.17) (3.93) 1.15 1.09

Khoinoor Textile Mills LTd. (5.20) (0.05) 0.66 0.53

Different Industry Acid Test Ratio Sales to Working Capital

Faisal Spinning Mills Ltd. 0.31 0.29 (114.82) (28.14)

Fazal Textile Mills Ltd. 0.35 0.71 (14.34) 16.20

Khurshid Spinning Mills Ltd. 0.17 0.13 (24.24) (4.84)

Sargodha Spinning Mills Ltd. 0.13 0.18 (0.04) (0.08)

Khoinoor Textile Mills LTd. 0.45 0.69 (5.19) 27.03

 Conclusion, Recommendations
& Limitations
• Conclusion
• After analysis the financial ratios of faisal spinning mills
and fazal textile mills now I am in this position to
conclude the entire ratio one by one.
• In my opinion,
• Liquidity Ratio of Fazal textile is higher then the Faisal
spinning mills. Ratio of both the mills below then the
average industry ratio standards. Working capital & sales
to working capital of Faisal spinning is also negative in
year 2009,2008 and 2007. On the other hand Working
capital of Fazal textile is also negative in 2009 but
positive in 2008 and 2007.
• Leverage Ratio of Faisal spinning is slightly
higher then the Fazal textile but both the mill
leverage ratio fluctuate in every year. Through
leverage ratios, we measure the percentage of
funds provided by the creditors.
• Profitability ratio of Faisal spinning mills is
higher than fazal textile mills. So obviously
Faisal textile is earned more profit as compare
to Fazal textile mills
• Activity ratio of Fazal Textile is better then the
Faisal spinning Mills. Activity ratios are
concerned with how efficiency the assets of
the firm are managed. These ratios express
 relationship between level of sales and the investment
in various assets inventories, receivables, fixed assets
etc.
• Market ratio of both Mills is below the average
standard of the industry. In comparison, the Fazal
Textile is better then the Faisal spinning..
• From the above ratios, trend analysis and industry
averages & comparisons we see that the sales volume,
current assets, working capital of Fazal textile is
much better as compare to Faisal spinning. Horizontal
and Vertical analysis also highlight the performance
of the Fazal Textile Mills Ltd..
• Suggestion
• My suggestion Faisal spinning & Fazal textile are as follows:-

• Faisal spinning should improve the working capital, sales to

working capital and Current ratio.

• Faisal spinning should improve the current worth / Net Worth

ratio.

• Fazal textile mills ltd. should improve the net profit margin
which is below as compare Faisal spinning mills ltd.

• Fazal textile should pay dividend to stockholder for the year

2008.

• Accounts Receivable Turnover ratio is high of Faisal spinning

Mills Company should control these days.
Thank You