Engro Foods

Group Members

• M.Abdullah 190024
• Ashar javed 190157
• Usama khalid 190037
Contents
• Introduction
• Liquidity Ratios
• Management Efficiency Ratios
• Profitability Ratios
• Investment Ratios
• Long Term Solvency Ratios
Introduction
• Subsidiary of Engro Corporation
• One of the most reputed enterprises in Pakistan
• More than 40 years of diversified business
operations in the areas of fertilizer and
chemicals.
• Engro Foods started its business operations in
2005-06
Ratios Analysis
Liquidity Ratios
S. No Ratio Formula Results Analysis
2018 2017

In 2018, to pay off 1Rs liability,

Current Assets/Current Company had 1.08 Rs asset. In
1 Current ratio 1.08:1 1.2:1 2017, to pay off liability of 1Rs
Liabilities
company had asset of 1.2Rs.

In 2018, to pay off 1Rs liability on

Quick Assets/Current short notice, Company had asset of
2 Quick ratio 0.74:1 0.83:1 0.74 Rs. In 2017, to pay off 1Rs
Liabilities liability on short notice, Company
had asset of 0.83 Rs.

Cash and Cash Cash available on hand to pay off 1

Absolute cash
3 equivalents/Current 0.011:1 0.008:1 liability instantly in 2018 was 0.011
ratio and in 2017 0.0081.
Liabilities
Management Efficiency Ratios
S. No Ratio Formula Results Analysis
2018 2017

Decreasing from 2017 to

Net credit sales/ Avg 113.6 288.45
1 Debtor Turnover Ratio
debtors times times
2018.Comany is not performing good
at collecting from receivables.

From 2017 to 2018, the debtor

Avg debtor/Net credit collection period is increasing. In
2 Debtor Collection Period
sales x 360
3.2 days 1.3 days other words customers are delaying
payments

Net credit Company’s credit turnover Ratio has

5.6 rdecreased which indicates that
3 Creditors Turnover Ratio Purchase/Avg 4.24 times
times company is paying less times to its
creditors creditors.
Company is taking more time to pay
Avg Creditors/Net 63.59 its debts.
4 Creditor Payment Period
credit purchase x 360
84.88 days
days
Management Efficiency Ratios
S. No Ratio Formula Results Analysis
2018 2017
From 2017 to 2018, company’s
Cost of goods sold/
5 Inventory Turnover Ratio
Avg Inventory
9.6 9..1 inventory turnover has increased
Inventory Management is improving.

Decreasing from 20177 to

Inventory Conversion Avg. Inventory/Cost
6 Period of Goods Sold x 360
37.9 days 40.3 days 2018.Manufacturing less so it takes
less days to sell

Debtors collection Company has a -43.76 cash

conversion cycle; it means that the
Period+ Inventory
7 Cash Conversion Cycle
Conversion- Credits
-43.76 -21.99 company needs less time to sell its
inventory and receive cash from its
payment Period customers
Profitability Ratios
S. No Ratio Formula Results Analysis
2018 2017
In 2017 company have
1.1 Rs income with every
1 Net profit ratio Net profit / Net sales x 100 0.20% 1.10% sale of 100 Rs.While in
2018 it decreased to 0.2rs
Company was making
2 Gross profit ratio Gross profit / Net sales x 100 15.9% 16.3% higher profit from sales
in 2017
A increase in the %age
Cost of Sales /Net Sales x
3 Cost of goods sold ratio 84.1% 83.7% from shows that cost of
100 sales has been increased.
Operating Expense /Net Sales Operating Expenses are
4 Operating expense ratio 16% 14% increasing and profit
x 100 margin is decreasing

For every asset of 1

rupee, the company’s
5 Return on assets Profit after tax / Total Assets 0.02 0.26 ability to generate profit
is decreasing
Investment Ratios
S. No Ratio Formula Results Analysis
2018 2017

Earning 0.08Rs per share in 2018

Profit after interest and
1 Earnings per share 0.08 0.49 and 0.49 in 17.Decrease shows
tax / Total shares company is making less profit

As increase in this ratio states that

Market price per earning against market price per
2 Price earnings ratio share / Earnings per 996 162.6 share is decreased
share drastically.In2018 on spending
996Rs investor is earning just 1 Rs.

The profit distributed in 2017

Total dividends paid / increased from 0.009 per share to
3 Dividends per share 0.03 0.009 0.03 per share in 2018. The
Total shares
company is trying to get stable
Long Term Solvency Ratios
S. No Ratio Formula Results Analysis
2018 2017

Total long-term debt It increased from 1.28 to 1.44 means

1 Debt-to-Equity 1.44 1.28 liabilities are increased against equity
/ Total equity in 2018.

Company were able to pay its interest

total interest
2 Interest coverage 0.74 2.07 two times from its earning in 2017 but
expense / PBIT in 2018 not even one time.

Total Debt/ Total In 2017 57% assets were financed

3 Debt-to-total assets 0.59 0.57 from debts and in 2018 59%.
assets

In 2017 43% assets were financed

Total Equity / Total
4 Equity-to-total assets 0.41 0.43 from equity and in 2018 41%.
fixed Assets
Conclusion
• Internal comparison is not enough to show actual picture
• Should be Compared with Industry Performance
• However,According to this analysis
• Liquidity is decreasing
• Efficiency is also decreasing ,little bit improvement in inventory turnover
• Earning per share is also decreasing
• Company should have to Focus on its performance and position
• Keeping in view the interest of every share holder