Financial

Analysis

HINOPAK; WHAT IS IT ABOUT?

Hinopak Motors Limited assembles, manufactures and markets world renowned Hino
diesel trucks and buses in Pakistan. The Company has held the top position in the
domestic market for medium and heavy-duty vehicles for 15 consecutive years and is
highly acclaimed for quality and technological excellence. Backed by Hino’s expertise
Hinopak has achieved standard of quality and excellence that rival the best in the region.
With over 33,000 vehicles on road, Hino has gained 70% market share making it the
largest manufacturer in medium and heavy-duty truck and bus industry in Pakistan.
Hinopak’s product range has been designed and built in Hino’s traditions of automotive
excellence to be the leader in its category and the main emphasis has been given to
passengers’ safety & comfort.

MISSION STATEMENT

"The mission of Hinopak Motors Limited is to provide the society with safe, economical,
comfortable and environment friendly means of transportation by manufacturing and
supplying commercial vehicles and services".

VISION

“Total Customer Satisfaction, a set vision for the company. In pursuit new concepts have
been introduced such as mobile workshops, 3S/2S dealership facilities, training programs
and free service camps for the vehicle owners and drivers”.

THE HISTORY

Hinopak Motors Limited was formed in 1985 by a diverse group of sponsors. These
included Hino Motors Limited, Toyota Tsusho Corporation of Japan, Al-Futtaim group of
UAE and PACO.
Hinopak family in Pakistan & under the guidance of our Japanese sponsors, Hinopak
today has achieved standards of quality and excellence that rival the best in the region. In
recognition of these efforts, the company has received a number of excellence awards for
its management practices and quality standards. In 1998, Hino Motors Ltd., and Toyota
Tsusho Corporation obtained majority shareholding in the company after disinvestments
by the other two founding sponsors. This decision to invest in Hinopak at a time when
the country's economy was passing through a depression and the sale of commercial
vehicles was at an all time low reflects the confidence our Principals have in our
company and their commitment to the Pakistani market.
It is the enduring success of Hinopak that has made the Hino name and symbol of quality
& reliability and Hino vehicles a prize possession for its owners.
By continuing to move forward and staying alert to ever-changing market & social needs,
Hinopak will continue to be a successful and well-respected corporate citizen of Pakistan.

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Analysis
CORPORATE FEATURES

 Building on seventeen years of success, the Hinopak continues to play a leading role
in marketing commercial vehicles with superior and advanced Japanese technology.

 Market Leader in Pakistan, holding over 65% of the truck and bus market share.

 First Pakistani automobile company and Hino affiliate to receive ISO-9001

certificate.

 Voluntary initiative for ISO 14001 certification.

 First company to export buses from Pakistan.

 Recipient of Quality Excellence Awards.

 First automotive company to introduce "3S" concept in heavy-duty commercial

vehicles market.

 First company to supply busses under "Urban Transport Scheme" in Pakistan.

 Recipient of Employers' Federation of Pakistan's Golden Jubilee Award for Human

Resource and Industrial Relations.

 Recipient of Corporate Excellence Award from Management Association of

Pakistan.

 Recipient of Employers' Federation of Pakistan's Golden Jubilee Award for

"Excellence in Productivity."

HINO’S ROLE AS CORPORATE CITIZEN

Hinopak has been a good member of the society as a corporate citizen. Our activities
include environment protection, guarding against pollution, safety measures for
operators, passengers & other read users and so on.

Hinopak also holds regular sports festival day in which the management, employees and
their families participate with great zeal. Hinopak has participated in various horticultural
events and it has won a lot of merit awards and trophies for its well-kept gardens which
surrounds Hinopak’s offices. Hinopak has always been conscious of raising its safety
standard for drivers, passengers and even pedestrians that’s why special emphasis is
placed at preserving the environment and use minimum of wood for body manufacturing
which all contributes finally to the attainment of the objective of the Company.

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 Financial
Analysis

HINOPAK Motors Ltd

Balance Sheet
AS AT DECEMBER 31, 2006

Rupees in Thousands 2006 2005

CAPITAL AND RESERVES
Share capital 124006 124006
Reserves 291000 291000
Inappropriate profit 1007847 752509
Total capital and reserves 1422853 1167515

SURPLUS ON REVALUATION OF FIXED ASSETS 290541 296401

LIABILITIES
Non-current Liabilities
Liabilities against assets subject to Finance Lease 5691 9310
Deferred taxation 48670 54332
Current liabilities
Current maturity of liabilities against assets subject to
finance lease 3634 3295
Trade and other payables 1978927 1301885
Running finance under mark-up arrangements 262486 272014
Accrued mark-up 496 5711
Taxation 129322 56547
2374865 1639452
CONTINGENCIES AND COMMITMENTS
Total Liabilities 2429226 1703094
Total share holders' equity and liabilities 4142620 3167010

ASSETS

Non-Current Assets
Property, plant and Equipment 864530 831265
Intangible Assets 714 2412
Investments --- ---
Loans and Advances 6755 6397
Trade Deposits 8299 6317
880298 846391
Current assets
Stores, spares and loose tools 25915 29802
Stocks in trade 2381286 1790708
Trade debts 503226 323086
Loans and advances 92324 70743
Trade Deposits and prepayments 58643 40865
Accrued mark-up on term deposit account 2842 850
Other Receivables 79789 6572
Cash and bank balances 118297 57993
3262322 2320619
Total assets 4142620 3167010

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Analysis

HINOPAK Motors Ltd

Profit and Loss Account
AS AT DECEMBER 31, 2006

Rupees in Thousands 2006 2005

Sales 6392282 6367606

Cost of Goods Sold (5557702) (5706089)
Gross Profit 834580 661517
Distribution Expanses (188528) (149218)
Administration Expanses (119721) (107363)
Other Incomes 72620 64531
Other Expanses (38772) (34407)
Profit from Operations 560179 435060
Finance Cost (48416) (53480)
Profit before Taxation 511763 381580
Taxation (187882) (138624)
Profit after Taxation 323881 242956

Earnings per Share Rs. 26.12 Rs. 19.59

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Analysis

RATIO ANALYSIS

CURRENT RATIO

Current Assets
• Current Ratio =-------------------------------------
Current Liabilities

2006 2005

3262322 2320619
1.37 1.41
2374865 1639452

Analysis:

Shows a firm’s ability to cover its current liabilities with its current assets. Here the firm
is showing decreasing trend from 2005 to 2006 which means the firm’s ability to recover
its current liabilities from its current assets has slightly decreased.

QUICK RATIO

Current Assets — Inventory or Stock in trade

• Quick Ratio = ----------------------------------------------------------------
Current Liabilities

2006 2005

881036 529911
0.37 0.32
2374865 1639452

Analysis:

Quick ratio that is computed by excluding inventory from current assets also slightly
increased in 2006. The ratio shows a firm’s ability to meet current liabilities with its most
liquid assets. Firm is now much able than previous year to pay the short term liabilities
through its most liquid assets. Quick ratio of less than 1 is clearly indicating that
company is not much liquid to pay its short term debts.

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Analysis
CASH RATIO
Cash
• Cash Ratio = --------------------------------------------------------------

Current Liabilities
2006 2005

118297 57993
0.05 0.035
2374865 1639452

Analysis:
This ratio shows an immediate liquidity of firm. It is the extremely conservative
point of view that an analyst computes the liquidity from Cash ratio. This ratio shows an
immediate liquidity of firm so short term creditors are very much interested in cash ratio.
Here the firm shows a slight increasing trend in the cash account which means the firm
has improved its utilizing of the cash to its best advantages and putting cash to work in
the operations of the company. Still firm has the room for increase in cash ratio as it is
still les than 1, cash ratio of more than 1 will help them in doing cash investment in both
short term and long term. It has increased because of healthy increase in cash and bank
balances.

TOTAL DEBT RATIO

Total Assets — Total Equity

• Total Debt Ratio = -------------------------------------------
Current Liabilities

2006 2005

4142620—1713394 3167010—1463916
0.586 0.537
4142620 3167010

Analysis:
The debt ratio indicates the percentage of assets financed by the creditors and it
helps to determine how well creditors are protected in case of insolvency. The percentage
increase in total debt is only 4.9% which is mush less than 30% increase in total assets.
So lower percentage of assets is now financed by other people money and thus less is the
degree of indebtedness and less is the financial leverage than past year.

DEBT-EQUITY RATIO

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Analysis

Total Debt
• Debt-Equity Ratio = --------------------------------------------------
Total Equity

2006 2005

2429226 1703094
1.41 1.16
1713394 1463916

Analysis:
This ratio also indicates the firm long term debt paying ability. These
computations compare the total debt with the total shareholder equity. This ratio also
determines that how well the creditors are protected in case of insolvency.

EQUITY MULTIPLIER RATIO

Total Assets
• Equity Multiplier Ratio = ---------------------------------------------
Total Equity

2006 2005

4142620 3167010
2.41 2.16
1713394 1463916

Analysis:
This ratio has increased from 2.16 in 2005 to 2.41 in 2006.

INTEREST COVERAGE RATIO

EBIT
• Interest Coverage Ratio = ---------------------------------------------
Interest

2006 2005

560179 435060
11.57 8.135
48416 53480

Analysis:

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 Financial
Analysis
The time interest earned ratio indicates a firm’s long term debt paying ability
from the income statement view. If this ratio is high so it shows that the firm is in a good
position to pay the long term debt. In case of HINOPAK Motors the increase was from
8.135 to 11.57 so it shows that the HINOPAK Motors have improved their position to
pay long term debt but still it is not so easy for them to get the fund from any where with
a very reasonable interest rate because it has a low coverage of the interest obligation.

CASH COVERAGE RATIO

EBIT + Depreciation
• Cash Coverage Ratio = ------------------------------------------
Interest

2006 2005

560179+78588 435060+57412
13.19 9.20
48416 53480

Analysis:
Cash coverage ratio gives better measure of the company ability to pay financing
cost. It tells the cash earned in the year available to pay financing cost (Note: This is not
the cash net flow). This is calculated by adding in the depreciation which is the non cash
expense. The ratio analysis depicts that there is increase in cash coverage from 9.20 to
13.19; it means that firm that firm in good position to pay its interest obligation through
cash.

INVENTORY TURNOVER RATIO

Cost of Goods Sold

• Inventory Turnover Ratio = ------------------------------------------
Inventory

2006 2005

5557702 5706089
2.83 3.186
2381286 1790708

Analysis:

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 Financial
Analysis
The calculation shows a slight decrease in 2006 to 2.83 from 3.186 in 2005. The
firm is facing ineffectiveness in the utilization of its inventory management practices.
The firm should plan for the nice perfection of the inventory management practices.

DAYS SALES IN INVENTORY

365
• Days Sales in Inventory = ------------------------------------------
Inventory Turnover

2006 2005

365 365
156.65 114.56
2.33 3.186

Analysis:
Day’s sale in inventory has increased considerably from 114.56 to 156.65 in
2006. That is the average period in which inventory is sold finally. This change is
because investment in inventory is more than expected increase in sales of finished
goods. This resulted in increase in average days inventory is kept in stock. Thus reducing
the times average inventory is sold in a year. One inference drawn from this can be that
company fails to achieve the expected level of increase in sales.

RECEIVABLE TURNOVER RATIO

Sales
• Receivable Turnover Ratio = ------------------------------------------
Accounts Receivables

2006 2005

6392282 6367606
540.8 968.89
11820 6572

Analysis:
Computation of this ratio provides how many times firm is effectively converting
accounts receivable to sales and eventually into profit. Higher the receivable turnover
ratio, good is the firm’s credit and collection policies. In above case, the receivable
turnover ratio has decreased it means that firm’s credit and collection policies have
changed to some extent.

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 Financial
Analysis
DAYS SALES IN RECEIVABLE
365
• Days Sales in Receivable = ------------------------------------------
Receivable Turnover

2006 2005

365 365
0.67 0.37
540.8 968.89

Analysis:
Computation of this ratio provides that on average how many days firm is
effectively using to convert into profit. Lesser will be the days sales in receivables; good
is the firm’s credit and collection policies. In above case, the days sales in receivables
have increased it means negative effect on firm.

TOTAL ASSETS TURNOVER

Sales
• Total Assets Turnover = ------------------------------------------
Total Assets

2006 2005

6392282 6367606
1.543 2.01
4142620 3167010

Analysis:
This ratio shows how effectively total assets are being used to generate sales and
ultimately the profit. It has decreased in above case from 2.01 to 1.543 in 2006, which
shows that firm is not effectively using its assets to generate high volume of sales. The
reason behind is that percentage increase in assets is much more than percentage increase
in sales. Assets increased by 30% where as increase in rupee sales is only .003%.

CAPITAL INTENSITY RATIO

Total Assets
• Capital Intensity Ratio = ------------------------------------------
Sales

2006 2005

4142620 3167010
0.648 0.497
6392282 6367606
Analysis:

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 Financial
Analysis
Capital intensity ratio is reciprocal of total assets turnover. It depicts how much
sales are required to increase assets by a unit. In above case the capital intensity ratio has
increased from 0.497 to 0.648 in 2006. It means that in 2005, $1 increase in sales caused
$0.497 increase in total assets. Whereas, in 2006 $1 increase in sales caused $0.648
increase in total assets. It shows that sales contribution in assets have increased than the
previous year.

PROFIT MARGIN

Net Income
• Profit Margin = ------------------------------------------
Sales

2006 2005

323881 242956
0.050 0.038
6392282 6367606

Analysis:
A commonly used profit measure is return on sale, often termed net profit margin.
This ratio gives a measure of net income dollars generated by each dollar of sales. The
high it is, the better is the firm position. Is in our case the firm has slightly improved its
position to generate profit against the each dollar sale. There are some factors which
affect this ratio like competitive forces, economic condition, use of debt etc.

RETURN ON ASSETS

Net Income
• Return on Assets = ---------------------------------------
Total Assets

2006 2005

323881 242956
0.078 0.076
4142620 3167010

Analysis:
Return on assets measures the firm’s ability to utilize its assets to create profits by
comparing profits with the assets that generate the profits. As in our case the firm has
increased utilization of assets in a little better way than before. However, A little increase
observed as compared to the previous year is not affecting the firm negatively.

RETURN ON EQUITY

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 Financial
Analysis

Net Income
• Return on Equity = ------------------------------------------
Total Equity

2006 2005

323881 242956
0.189 0.165
1713394 1463916

Analysis:
This ratio basically shows the total return against the total equity. It shows the
return to both the common shareholder as well as to preferred stock holder. HINOPAK
will provide a better return of 0.189 in the recent year as compared to 0.165 in the
previous year.

EARNING PER SHARE

Net Income
• Earning Per Share = ------------------------------------------
No. of Shares outstanding

2006 2005

323881 242956
26.12 19.59
12400 12402

Analysis:
This ratio shows to investor the return on the shares. Higher the return more will
be the willingness of investor to invest in the firm. Higher EPS clearly indicates that
Company is giving return of Rs. 26.12 in 2006 on every share as compared to Rs. 19.59
on behalf of every share in 2005. The improved EPS is very good sign for the investor.

PRICE EARNING RATIO

Price per Share

• Price Earning Ratio = ------------------------------------------
Earning per Share

2006 2005

600 590
22.97 30.11
26.12 19.59

Analysis:

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 Financial
Analysis
Price earning ratio shows how much investor is willing to pay for Rs.1 earning.
Price Earning Ratio has decreased from 30.11 to 22.97 in 2006. It means that the
confidence of Investor has decreased in 2006.

BOOK VALUE PER SHARE

Total Equity
• Book Value Per Share = ------------------------------------------
No. of Shares Outstanding

2006 2005

1713394 1463916
138.17 118.03
12400 12402

Analysis:
The Book value per share has increased from 118.03 to 138.17 in 2006. The 17%
increase in book value is due to 17% increase in the total equity.

MARKET TO BOOK RATIO

Market Value / share

• Market to Book Ratio = ------------------------------------------
Book Value / share

2006 2005

600 590
4.34 4.99
138.17 118.03

Analysis:
Market Book ratio shows to the firm the market value per share against book
value per share. Higher will be the market to book ratio, better it is for firm. In above
case, the market to book ratio has decreased from 4.99 to 4.34. It is not a very good sign
for the firm.

DUPONT ANALYSIS

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 Financial
Analysis
ROE = Return on Equity = Net Income
Total Equity

Multiplying by Assets/Assets

ROE = Net Income x Assets

Assets Total Equity

ROE = ROA x Equity Multiplier

ROE = ROA x (1 + Debt-Equity Ratio)

For 2006 For 2005

ROE = 0.078 x (1 + 1.41) ROE = 0.076 x (1+ 1.16)

= 0.078 x 2.41 = 0.076 x 2.16
= 0.18 = 0.16

Then further decomposing ROE by multiplying with the top and bottom by total sales we
get,

ROE = Net Income x Assets x Sales

Total Equity Assets Sales

ROE = Net Income x Sales x Assets

Sales Assets Total Equity

ROE = Profit Margin x Total Assets Turnover x Equity Multiplier

ROE = 0.050 x 1.54 x 2.41 ROE = 0.038 x 2.01 x 2.16

= 0.18 =. 16

INTERPRETATION

The increase in ROE in 2006 is the cause of both increased FLM and ROA. The increase
of equity multiplier is because more equity is raised by issuance of stocks but the
percentage increase in equity is less than percentage increase in assets. In last year 1rs
rise in equity results in Rs. 2.16 rise in assets but now it results in Rs. 2.41 in 2006.
By going through financial of the firm we discovered that its ROE did not increased by
much amount, it’s almost negligible. We see that in 2006 its ROA was higher than 2005
similarly higher FLM which produced high value of ROE. We see that in 2006 firm was
better utilizing its assets and profit margin was also high while in 2005 it was less than
2006.
Common-Size Analysis HINOPAK Motors Ltd
Balance Sheet

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 Financial
Analysis
AS AT DECEMBER 31, 2006

Rupees in Thousands 2006 2005

CAPITAL AND RESERVES
Share capital 2.99 3.91
Reserves 7.02 9.18
Inappropriate profit 24.32 23.76
Total capital and reserves 34.34 36.86

SURPLUS ON REVALUATION OF FIXED ASSETS 7.01 9.35

LIABILITIES
Non-current Liabilities 1.31 2.00
Liabilities against assets subject to Finance Lease 0.14 0.29
Deferred taxation 1.17 1.71
Current liabilities
Current maturity of liabilities against assets subject to .087 0.10
finance lease
Trade and other payables 47.77 41.10
Running finance under mark-up arrangements 6.34 8.59
Accrued mark-up .012 0.18
Taxation 3.12 1.79

CONTINGENCIES AND COMMITMENTS 57.33 51.77

Total Liabilities 58.64 53.78
Total share holders' equity and liabilities 100 100

ASSETS

Non-Current Assets
Property, plant and Equipment 20.87 26.24
Intangible Assets 0.017 0.076
Investments ---- ---
Loans and Advances 0.163 0.20
Trade Deposits 0.20 0.19
21.25 26.72
Current assets
Stores, spares and loose tools 0.625 0.657
Stocks in trade 57.48 56.54
Trade debts 12.15 10.20
Loans and advances 2.23 2.23
Trade Deposits and prepayments 1.41 1.30
Accrued mark-up on term deposit account 0.069 0.027
Other Receivables 1.93 0.21
Cash and bank balances 2.86 1.83
78.75 73.28
Total assets 100 100

INTERPRETATION

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Analysis
Common Size Analysis of HINOPAK Motor Company Ltd.

Balance Sheet:

Vertical Analysis for the years 2005 and 2006:

While doing the vertical analysis of HINOPAK Motors co. we have taken the total assets
as a base.

 Share Capital and reserves share:

Vertical analysis of 2005 and 2006 shows different percentages: in year 2006
shared capital were 2.99 as compared to 3.91 in year 2005. It means that shared capital
has decreased by 1.92%.
In the case of reserves the reserves for the firm are classified as capital and
revenue. The reserves amounts have decreased in 2006 from 9.18 to 7.02

 Liabilities
The firm relied heavily on loans to fulfill its financing needs. The firm’s reliance
on the liabilities increased from 53.78% to 58.64% in the year 2006.

ASSETS:

 Fixed Assets:
The fixed assets of the firm show a decrease year from 26.72 in 2005 to 21.25 in
2006. This mainly shows that the cash flow situation of the firm should be improved.
This also suggests that the firm is facing cash shortage problems.

 Current Assets:
In current assets the firm stores, spares and loose tools decreased from 0.657 to
0.625. Stocks percentage in total assets has increased from 56.54% to 57.48%., showing
slight increase. There was increase in trade debts from 10.20% to 12.15%. The over all
current assets of 2005 and 2006 have little difference except little big differences in
liabilities and fixed assets.

Common-Size Analysis HINOPAK Motors Ltd

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 Financial
Analysis
Profit and Loss Account
AS AT DECEMBER 31, 2006

Rupees in Thousands 2006 2005

Sales 100 100

Cost of Goods Sold 86.9 89.6
Gross Profit 13.1 10.4
Distribution Expanses 2.94 2.34
Administration Expanses 1.87 1.68
Other Incomes 1.13 1.01
Other Expanses 0.60 0.54
Profit from Operations 8.76 6.83
Finance Cost 0.76 0.84
Profit before Taxation 8.00 5.99
Taxation 2.90 2.18
Profit after Taxation 5.06 3.81

Earnings per Share .0004 0.0003

INTERPRETATION

Vertical analysis gives a more insight of the cost and revenue structure of the firm during
the years.

The gross profits of the firm increased from 10.40% in 2005 to 13.10% in 2006. This
represents production efficiency or reduced cost of inputs in the year. The increase in
gross profit is due to decrease in percentage of cost of goods sold from 89.6 % in 2005 to
86.9% in 2006.
The distribution expanses slightly increased from 2.34% to 2.94% in 2006 and
administration expenses increases in 2006 with 0.19% but it does not create severe effect
on the operating profit of the firm.

Operating profit of the firm slightly increased in 2006 to 8.76% from 6.83% in 2005.
Finance cost slightly decreased 0.08 % than finance cost in year 2006. Taxation increased
in 2006 with the percentage of 0.72 as compared to its previous year

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Analysis

Index Analysis: HINOPAK Motors Ltd

Balance Sheet
AS AT DECEMBER 31, 2006
Rupees in Thousands 2006 2005 Index Analysis
CAPITAL AND RESERVES
Share capital 124006 124006 100
Reserves 291000 291000 100
Inappropriate profit 1007847 752509 133.93
Total capital and reserves 1422853 1167515 121.87

SURPLUS ON REVALUATION OF FIXED

ASSETS 290541 296401 98.02
1713394 1463916 117.04
LIABILITIES
Non-current Liabilities
Liabilities against assets subject to Finance Lease 5691 9310 61.12
Deferred taxation 48670 54332 89.59
Current liabilities
Current maturity of liabilities against assets subject
to finance lease 3634 3295 110.28
Trade and other payables 1978927 1301885 152.00
Running finance under mark-up arrangements 262486 272014 96.49
Accrued mark-up 496 5711 8.682
Taxation 129322 56547 228.69
2374865 1639452 144.85
CONTINGENCIES AND COMMITMENTS
Total Liabilities 2429226 1703094 142.63
Total share holders' equity and liabilities 4142620 3167010 130.80

ASSETS

Non-Current Assets
Property, plant and Equipment 864530 831265 104.01
Intangible Assets 714 2412 29.60
Investments --- --- ---
Loans and Advances 6755 6397 105.59
Trade Deposits 8299 6317 131.37
880298 846391 104.01
Current assets
Stores, spares and loose tools 25915 29802 86.95
Stocks in trade 2381286 1790708 132.98
Trade debts 503226 323086 155.75
Loans and advances 92324 70743 130.50
Trade Deposits and prepayments 58643 40865 143.50
Accrued mark-up on term deposit account 2842 850 334.35
Other Receivables 79789 6572 1214.07
Cash and bank balances 118297 57993 203.98
3262322 2320619 140.57
Total assets 4142620 3167010 130.80
INTERPRETATION

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 Financial
Analysis

So, according to the Index Analysis of the whole Balance Sheet, we get to know that in
the comparison of year 2005 and 2006 the value of total equity that comes from shared
capital and reserves is same in both years. The value of Non-Current liabilities decreased
due to decrease in liabilities subject to finance and decrease in deferred taxes. Same as
the value of TOTAL LIABILITIES increased to 142% in 2006. TOTAL ASSETS value
has increased 130% than previous year.

Index Analysis: HINOPAK Motors Ltd

Profit and Loss Account
AS AT DECEMBER 31, 2006

Rupees in Thousands 2006 2005 Index Analysis

Sales 6392282 6367606 100.38

Cost of Goods Sold (5557702) (5706089) 97.39
Gross Profit 834580 661517 126.16
Distribution Expanses (188528) (149218) 126.34
Administration Expanses (119721) (107363) 111.51
Other Incomes 72620 64531 112.53
Other Expanses (38772) (34407) 112.68
Profit from Operations 560179 435060 128.75
Finance Cost (48416) (53480) 90.53
Profit before Taxation 511763 381580 134.11
Taxation (187882) (138624) 135.53
Profit after Taxation 323881 242956 133.30

Earnings per Share Rs. 26.12 Rs. 19.59 133.33

INTERPRETATION

In 2006, the gross profit increased 126.16% as compared to 2005 because of decrease in
cost of goods sold to 97% than the previous year. Looking at the operating profit, it
increased to128.75% than the previous year operating profit due to much increase in
gross profit and other income to 112.53% in 2006. Finance cost of the firm decreased to
90.53%, it means that the company has financed less by outside sources or we have
focused on short term borrowings. Net profit of our firm increased to 133.30% in year
2006 due to which our earning per share increased to 133.33%.Increase in earning per
share is a very good sign for the investor.

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 Financial
Analysis
CONCLUSION

The Financial Analysis of HINOPAK MOTORS CORPORATION depicts that the

financial position of HINOPAK improved in year 2006. We came to conclusion that
firm’s profitability or other ratios have not been changed so much; change in liquidity
measures is almost negligible because current ratio decreased while quick ratio and cash
ratio has increased because inventory is not included in quick and cash ratios. Increase in
earning per share from Rs. 19.59 to Rs 26.12 is healthy sign for investor to invest in
HINOPAK.

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