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FINAL PROJECT
ZOHAIB AFTAB
SP08-MBA-
100
SECTION “B”
1
LIQUIDITY RATIOS
ACTIVITY RATIOS
Working Capital
Turnover Sales/Working Capital
SOLVENCY RATIOS
PROFITABILITY
RATIOS
MARKET ANALYSIS
Degree of Financial
Leverage EBIT/EBT
Percentage of Retained
Earnings (Total Income-Dividend)/Total Income
Current Assets
Current Liabilities
Inventory
Cash
Marketable Securities
CURRENT RATIO
Current Assets
Current Ratio =
Current Liabilities
QUICK RATIO
LIQUDITY ANALYSIS
RATIOS YEARS RESULTS REASON OF
CHANGE
2007 2006
CURRENT RATIO 1.12 1.03 Favorable Increase in Book
Debts, A/R and
Cash.
QUICK RATIO 0.86 0.68 Favorable Increase in Book
Debts, A/R and
Cash.
ABSOLUTE RATIO 0.05 0.012 Favorable Increase in Cash
WORKING 76,852,450 12,523,260 Favorable Increase in
CAPITAL current assets
NEW WORKING 0.067 0.01367 Favorable Increase in
CAPITAL RATIO working capital
by 513.67 %.
ACTIVITY RATIOS
Activity ratios indicate of how efficiently the firm utilizes its assets.
They sometimes are referred to as efficiency ratios, asset utilization
ratios, or asset management ratios.
Annual Sales
Purchases
Accounts Receivable
Accounts Payable
Net Fixed Assets
Total Assets
360
Average Collection Period =
Accounts Receivable Turnover
Purchases
Account Payables Turnover =
Accounts Payables
360
Average Payment Period =
Accounts Payable Turnover
Sale
Fixed Asset Turnover =
Net Fixed Asset
ACTIVITY ANALYSIS
RATIOS YEARS RESULTS REASON OF
CHANGE
2007 2006
INVENTORY 6.20 4.68 Favorable Decrease in
TURNOVER Times Times Inventory more as
compare to CGS
INVENTORY 58 77 Favorable Decrease in
TURNOVER IN DAYS Days Days Inventory more as
compare to CGS
DOBTORS 4.32 6.03 Unfavorable Increase in sales by
TURNOVER 27.10%
COLLECTION 84 58 Unfavorable Increase in sales by
PERIOD Days Days 27.10%
CREDITORS 32 20.03 Favorable Creditors decreased
TURNOVER by 20.82.
PAYMENT PERIOD 11 18 Favorable Creditors decreased
Days Days by 20.82.
FIXED ASSETS 2.58 2.18 Favorable Increase in Fixed
TURNOVER Assets by 4.02%
TOTAL ASSETS 0.90 0.88 Favorable Increase in Total
TURNOVER Assets by 24.41%.
WORKING CAPITAL 13.43 65 Unfavorable Working capital
TURNOVER RATIO Times Times increased by
513.67%
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SOLVENCY RATIOS
The solvency ratios measure business risk, which shows the ability if
the business to pay its long term debts. Investors are very interested
in these ratios because they indicate the amount of debt your company
can handle. They also indicate the amount of investment you have in
your company
EBIT
Interest Expense
Total Debts
Total Assets
Net Profit
Equity
EBIT
Times Interest Earned =
Interest Expense
DEBT RATIO
12
Equity
Equity Ratio =
Total Assets
Total Debt
Debt to Equity Ratio =
Equity
SOLVENCY ANALYSIS
RATIOS YEARS RESULTS REASON OF
CHANGE
2007 2006
TIME INTEREST 1.61 1.01 Favorable Increase in profit
EARNED margin
DEBT RATIO 0.626 0.636 Favorable Increase in total
assets by 24.41 %
PROPERITY/EQUITY 37.35% 36.1% Favorable Increase in equity
RATIO by 28.7% & Total
Assets by 24.41%
DEBT TO EQUITY 1.678 1.76 Favorable Increase in Equity
RATIO by 28.7%
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14
Sales
Cost of Goods Sold
Net Profit
Total Assets
Shareholder’s Equity
Operating Profit
Operating Profit Margin =
Sales
15
OPERATING RATIO
Operating Expenses
Operating Ratio =
Sales
RETURN ON ASSETS
Net Income
Return on Assets =
Total Assets
RETURN ON EQUITY
Net Income
Return on Equity =
Shareholder Equity
RETURN ON INVESTMENT
Net Income
Return on Investment =
Investment
Net Income
Return on Fixed Asset =
Fixed Assets
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17
Trend Analysis
18
1. Horizontal Analysis
Horizontal Analysis 19
Vertical Analysis
20
21
22
23
CURRENT ASSETS
Cash
0.65 2.73 2.08 Upward Favorable
Prepayments,
Advances and 20.8 24.81 4.01 Upward Favorable
Deposits
Book Debts 14.71 21 6.28 Upward Favorable
FIXED ASSETS
Property, Unfavorable
Plant and 41.11 32.81 (0.83) Downward
Equipment
Fixed Assets Subject Favorable
To Finance 0.76 2.21 1.45 Upward
Lease
Capital Work in
2.45 1.46 (0.98) Downward Unfavorable
Progress
Total Fixed
44.33 36.49 (7.84) Downward Unfavorable
Assets
Long Term
1.24 0.17 (1.07) Downward Unfavorable
Deposits
TOTAL ASSETS 100 100 - - -
EQUITY
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CURRENT LIABILITIES
Short term
46.61 55.05 8.44 Upward Unfavorable
Borrowings
Long term
4.01 0 (4.01) Downward Favorable
financing
Trade & Other
2.41 1.53 (0.87) Downward Favorable
payables
Current
53.04 56.6 3.55 Upward Unfavorable
Liabilities
25