Liquidity Ratios

Ratio
Current
Ratio
Quick
Ratio

2010
1.63

2011
1.76

2012
1.58

2013
1.75

2014
1.59

1.55

1.35

1.35

1.42

1.24

Current Ratio (Attock)

1.80
1.70
1.60
1.50
1.40
2010

2.00
1.50
1.00
0.50
0.00

Current Ratio (Attock)

2011

2012

2013

2014

Quick Ratio
Quick Ratio

2015

Current Ratio:
The Current Ratio in fiscal year 2010 for Attock Petroleum was 1.63x this means
that the company can pay off its current liabilities 1.63 times. The current ratio in
fiscal year 2011 rose to 1.76x because the current asset of Attock rose by Rs
2.8(000)m while the current liabilities only rose by Rs 0.6(000)m. The current asset
rose by a higher rate than the rise in the current liabilities. In the fiscal year 2012
the current ratio fell to 1.58x which was because the current liabilities rose from Rs
12,613,827 to 17,735,089 which is an increase of 40.6%. However the rise in
current assets was only 26.14% i.e from Rs 22,247,396 to 28,062,795. This
significant increase in current liabilities was caused by the growing problem of
circular debt in Pakistan at that time. Between the fiscal years of 2012 and 2013 the
current ratio rose from 1.58x to 1.75x. This increase was caused by a 12% decline in
current liabilities as compared to a relatively smaller decrease in current asset of
2.5%. The decrease in current liabilities was caused by the payment of circular debt
by the government. From fiscal year 2013 to 2014 the current ratio again fell from
1.75x to 1.59x. This was caused by a 26.3% increase in current liabilities while the
current assets only rose by 14.23%. This low increase in current assets was caused
due the use of cash in operations. Trade debts increased by Rs 4,938,185
representing an increase in receivable balance from power producers and others
and also contributed corresponding increase in trade payables primarily due to
increase in customer base.

Quick ratio:

Now coming on to the quick ratio the change in which occurs due to the changes in
inventory. Inventory is the least liquid asset and the quick ratio shows the liquidity
position of the company after it is subtracted. Although there was an increase in
current ratio from fiscal year 2010 to 2011 the quick ratio decreased from fiscal
year 2010 to 2011 due to a 428% increase in stock in trade. The quick ratio
remained constant between fiscal year 2011 and 2012. Although there was a 20.5%
fall in stock in trade, this change was set off from the significant rise in current
liabilities. From fiscal year 2012 to 2013 the quick ratio increased to 1.42x because
of a 23.7% increase in inventory. In the fiscal year 2014 the quick ratio again fell to
1.24x because stock in trade rose by 31.6%.

Industry Averages
Ratio
Current
Ratio
Quick
Ratio

201
0
1.02

2011

2012

2013

2014

1.11

1.13

1.17

1.33

0.82

0.81

0.74

0.81

1.10

2.00

2.00

1.50

1.50

1.00

Current Ratio

1.00

Quick Ratio

0.50

Current Rate
(Industry)

0.50

Quick Ratio
(Industry)

0.00

0.00

As it is clearly evident from the graphs above the liquidity position of Attock
petroleum is better than the petroleum industry of Pakistan. This is mainly because
Attock petroleum is able to keep their current liabilities relatively lower than the
other companies in the petroleum marketing business. Companies like Byco
petroleum have huge amounts of current liabilities. In 2010 the current liabilities of
Byco petroleum accounted for 81.9% of its total book value, the situation was not
any different in 2011 when the current liabilities were 80.9% of the total book value.
The same case continued in the preceding years. Although companies like PSO and

Burshane lpg have better liquidity the industry average was pulled down
significantly because of the poor liquidity performance of Byco. The higher quick
ratio was because Attock has better inventory management systems.

Profitability Ratios
Ratio
Gross Profit Margin
Net Profit Margin
Return on Equity
Return on Capital
Employed
Ratio
Gross Profit
Margin

2010
4.54%
4.34%
38.91%
37.73%

2010
4.54%

2011
4.19%
3.89%
36.87%
35.87%

2011
4.19%

2012
3.08%
2.70%
33.27%
32.20%

2012
3.08%

2013
3.14%
2.37%
27.82%
26.93%

2013
3.14%

2014
2.90%
2.11%
31.35%
30.09%

2014
2.90%

Gross Profit Margin

5.00%
4.00%
3.00%
2.00%
1.00%
0.00%

Gross Profit
Margin

Gross profit margin is a profitability ratio that measures how much of every dollar of
revenues is left over after paying cost of goods sold. The chart above clearly shows
that the gross profit margin for Attock is continuously decreasing with every passing
year. Between fiscal years 2010 to 2011 the gross profit margin fell by 0.35%.
Although the increase in net sales was 32% the subsequent increase in cost of
products by 32.45% brought about this change. The large increase in cost of goods
sold was because the company in order meet the increasing demands purchased
large amounts of raw material. From fiscal year 2011 to 2012 the fall in the gross
profit margin was of 1.11%. Although, the higher oil prices in the international
markets along with an increase in volume sold, increased net sales by 40% the large
increase of 41.6% in cost of goods sold caused this decrease in gross profit margin.
This is due to fact that Attock is getting its product from its supplier at higher prices
which is causing the cost of goods sold to increase at a higher rate than the sales
revenue. Also price decrease in last quarter of the year, stiff competition and ban on
export of
Petroleum products to Afghanistan during the year led to this decrease in gross
profit margin. In fiscal year 2013 the gross profit margin increased by 0.06%. The

increase in sales revenue for fiscal year 2013 was only 8% but a lower increase of
7.6% in cost of goods sold led to this increase. Again between fiscal year 2013 and
2014 the gross profit margin fell by 0.24%. The net sales figures increased by
24.55% however a rise of 24.8% in cost of goods sold led to this change. The main
reason for this was stiff completion which led to a higher cost of goods sold.

Industry Averages
Ratio

2010

Gross Profit
Margin

4.39%

201
1
4.49
%

201
2
2.48
%

201
3
3.80
%

201
4
2.99
%

5.00%
4.00%
3.00%
2.00%

Gross Margin
Gross Profit Margin
(Industry)

1.00%
0.00%
2010 2011 2012 2013 2014 2015

It is apparent from the graph above from FY 2010 to 2012 there was a sharp decline
in the gross profit margin was mainly due to the fact that the crude oil prices rose
dramatically between the years 2010 and 2012. The main reason for this was
political unrest in Egypt, Libya and other oil rich countries which led to the fear
about the supply of crude oil. Also an increased demand of crude oil India, China
and other developing economies caused this spike in the crude oil prices. This led to
higher prices at petrol pumps which led to people switching to CNG and causing the
net sales to rise by a slower rate the cost of goods sold. Between the FY 2012 to
2013 there was an increase 1.32% in the industry gross profit margin whereas the
gross profit margin of Attock only rose by 0.06%. This was because Attock has a
relatively lower market share in the petroleum industry and was not able to take full
advantage of the oil boom in the international markets. Between the fiscal years
2013 and 2014 the industry experienced a sharp decline of 0.81% whereas the
gross profit margin of Attock remained relatively constant.

Ratio
Net Profit
Margin

2010
4.34%

2011
3.89%

2012
2.70%

2013
2.37%

2014
2.11%

Net Profit Margin

5.00%
4.00%
Net Profit Margin

3.00%
2.00%
1.00%
0.00%
2010

2011

2012

2013

2014

2015

Net profit margin is the percentage of revenue left after all expenses have been
deducted from sales. The measurement reveals the amount of profit that a business
can extract from its total sales. It can be seen from the graph above the overall
profitability of Attock petroleum was in constant decline between FY 2010 to 2014.
From FY 2010 to 2011 the net profit margin of Attock decreased by 0.45%, now
although net sales increased by 32.12% the increase of only 18.42% in net profit
brought about this decline. This low increase in net profit was due to a 113.4%
increase in finance cost and a 27.12% increase in operating expense. Due to stiff
competition in the petroleum industry the company had to increase its expenditure
on marketing and advertising, also an increase of 12.9% in property, plant and
equipment caused depreciation to rise. Between the fiscal year 2011 to 2012 the
net profit margin fell by 1.19%. The rise in net sales during the year was 39.7%, but
this change was offset due to a 77.4% rise in finance cost and a 45.5% in operating
expense. Now the most part of the 77.4% increase in finance cost was due to late
payments made by the company. Between the fiscal years 2012 to 2014 the net
profit margin fell by 0.59%. This was because net profit in this period only rose by
5.01% whereas the increase in sales was 36.05%. This low increase in net profit was
caused by a significant increase of 117.6% in operating cost, this was because in
order to increase its market share the company had to substantially increase its
expenditure on marketing and establishing new outlets.

Industry Averages
Ratio
Net Profit
Margin

2010
1.3%

2011
0.8%

2012
-2.0%

2013
0.6%

2014
-0.4%

5.00%
4.00%
3.00%
2.00%

Net Profit Margin

1.00%
0.00%
2010
-1.00%

Net Profit Margin

(Industry)
2011

2012

2013

2014

2015

-2.00%
-3.00%

The overall portability of Attock petroleum is far better than the industry average.
The main reason for this is Attock petroleum is mainly financed through equity and
not debt. This means that Attock petroleum has to pay low amounts of finance cost.
Companies like PSO and Byco have large amount of debt which means that they
have to pay a lot in finance cost. PSO has a debt ratio of more than 75% between
the fiscal year 2010 to 2014 whereas the debt ratio of Attock was close to an
average of 55%. Also because of small companies like Byco which have a high
operating cost, because they are not able to take advantage of economies of scale,
the market average is pulled down.

Ratio
Return on
Equity

2010
38.91%

2011
36.87%

2012
33.27%

2013
27.82%

2014
31.35%

Return on Equity
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2010

Return on Equity

2011

2012

2013

2014

Return on equity is the amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by
revealing how much profit a company generates with the money shareholders have
invested. Between the fiscal year 2010 to 2011 the fall in ROE was of 2.04%. This
was because the company increased the number of its outstanding shares from
57,600,000 to 69,120,000, this increase in the number of shares outstanding
decreased ROE despite the fact that there was an increase of 18.42% in net profit.
The company had to increase its shareholding because in order to increase sales
the company needed more money to establish more outlets. Between the fiscal year
2011 to 2013 the ROE dropped by 9.05%. This large decline in ROE was caused due
to an 8.22% decline in net profit and although the share capital remained constant
the increase in shareholders equity by 21.6% caused this decline. The cause of this
decline in net profit was because the company significantly increased its
expenditure on increasing in marketing activities which increased the companys
operating cost. We can see from the graph that in the FY2013-2014 the ROE
increase by 3.53%. The main reason for this was that the shareholders equity of
Attock fell by 1.73% and the net profit rose by 10.53%.

Industry Averages
Ratio
Return on
Equity

2010

2011

2012

2013

2014

29.54
%

2.29%

-45.36%

8.15%

-12.09%

50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2010
-10.00%

ROE (Attock)
2011

2012

2013

2014

ROE (Industry)

-20.00%
-30.00%
-40.00%
-50.00%

Return on equity for Attock petroleum is better than the industry average. This
means that Attock is generating more earnings from the money invested by the
shareholders. This is mainly because Attock is largely financed by equity rather than
debt so it has to pay low interest expense as compared to other companies like
Byco which has an average debt ratio of more than 70%. Moreover Attock has a
better marketing mix which leads to it selling a higher volume which increase profit.
It can be seen from the graph than between the fiscal year 2011-2012 the industry
experienced a sharp fall in ROE, this was due the poor performance of Byco which
had the ROE of -270%.
Ratio
Return on Capital
Employed

2010
37.73
%

2011
35.87
%

2012
32.20
%

2013
26.93
%

2014
30.09
%

Return on Capital Employed

40.00%
Return on Capital
Employed

30.00%
20.00%
10.00%
0.00%
2010

2011

2012

2013

2014

Return on Capital Employed (ROCE) is a financial ratio that measures a company's

profitability and the efficiency with which its capital is employed.