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The automobile has become an important and indispensable means of transport. Quick
and reliable mobility is essential both for personal needs as well as business. The
automobile industry is a key industry in many countries, and its development is directly
related to the development of the nation as a whole.
The present situation of the automobile industry in Pakistan is exactly in the middle of
the historic path of development. There are a number of challenges to be overcome, such
as realizing economies of scale, generating a bigger market, and ensuring fair and healthy
competition among the manufacturers for the benefit of consumers. Automobile
companies throughout the world are faced with the challenge of global competition.
The Dewan Farooque Motors is belongs to the corporate group of Dewan Farooque,
which is the one of the leading groups of Pakistan. The key brand of Dewan Farooque
Motors is the Santro brand by Hyundai. The car comes under the 1000cc segment and has
registered the rapid growth after the introduction of its new model.
Pak Suzuki motor company ltd is a public limited company with its shares quoted on
stock exchanges in Pakistan. The Suzuki management immediately after privatization-
started expansion of the Bin Qasim Plant to increased its capacity to 50,000 vehicles per
year. The company continues to be in the forefront of automobile industry of Pakistan.
1
RATIO ANALYSIS
Comment:
Pak Suzuki Motor Company Limited has enough working capital which is a good sign.
You can see that Assets are growing up and Current liabilities are also going to increase
and when you see the proportion of working capital that is also growing.
2
(2) Current Ratio: Current Assets / Current Liabilities
Years Current Assets Current Current ration
Liabilities
2000 3152839 2710563 1.16
Comments:
In year 2003Pak Suzuki Motor company Limited is in very strong position if you
compare this to the other years you can easily to reach the decision that 2003 is the best
year and 2000 year is not satisfactory.
Comments:
3
The ideal Acid test ration is 1:1 and you can see in 2002 the company has over quick
assets which goes idol but in 2003 it is good because it is very close to an ideal ratio.
(4) Inventory Turn over Ratio = Cost of goods sold / Average Inventory
2003 15840739 NA
Comments:
In all the years the company has high turnover which is a good sign for company it means
company earning a lot of profit and that has overcome its expenses.
Comments:
4
The ratio is growing year by year which is a good sign it means if company want to take
some extra debts that can take because company has very good ratio.
Comments:
In all years the company has very satisfactory debt ratio but in 2002 it is not good it
means that company has more self proportion in the investment that should take more
money as a loan and in other years company has good ration that can take ratio with out
any hesitation.
(7) Total Asset Turn Over Ratio = Net sales / Total Assets
Comments:
5
The company’s total asset turn over ratio is very good it has minimum ratio in 2001 and
maximum ratio in 2003 it means the company ratio is growing up steady which is a good
sign. It means the company utilizing its fewer resources and getting high profit.
Comments:
The company’s gross profit ratio is not enough in 2000 it has very less but in 2003 it is
comparatively growing, in a nut shell we can say the gross profit ratio is growing.
Comments:
6
The company’s profit marging ratio result is very proficient because in 2000 the
company’s ratio was in negative but with passing of year it gain very good result and in
2003 it got very good result.
Comments
If the working capital ratio is less it is benefited for the company its means the company
is spending less and getting more product.
7
(1) Working Capital = Current Assent – Current liabilities
Comment:
Dewan Motor Company has not working capital which is impossible. The current assets
and currents liabilities are equal which not a good sign is. The company must have
working capital to run the daily expenses.
Comments:
Current Assets ratios is 1:1 which is not good, The company must have some extra
current assets over the current liabilities.
(3) Acid Test Ratio = Quick Assets / Current Liabilities
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Years Quick Assets Current Ratio
Liabilities
2000 2650411 2454084 1.08
Comments:
Acid test ratio is satisfactory this is growing up steady which is a good sign it means
the company has more quick assets over the current liabilities.
(5) Inventory Turn over Ratio = Cost of goods sold / Average Inventory
Comments:
9
(5)Ratio of Plant Assets to Long Tem Liabilities
Comments:
The plant assets are more as compared to the long term liabilities, ratio is growing
upward by passing of the year and it is good sign but keep in mind that the assets should
not be keep idle.
Comments:
The debt ratio is not good because company has invested its own amount in the business
but at the moment the financial institutions are giving loan at low rate the companies
should take this facility and enhance its business by taking the loan at low rate
(7) Total Asset Turn Over Ratio = Net sales / Total Assets
10
Years Net Sales Total Assets Ratio
Comments:
The Company’s total asset turn over ratio is very good it is enhancing with the passage
of time and its grown rate is also very high.
Comments:
The company’s gross profit ratio is also satisfactory in 2001 it is bad but when it cross the
2001 its profit ratio increased and in 2003 the ratio is highest as compare to the other
years.
11
Years Net Income Net sales Ratio
Comments:
Net profit margin ratio is not bad because its ratio in 2001 it goes to
negative and in 2002 its ratio is less as compare to the 2000 when we
talk about the 2003 it is not satisfactory as compared to the 2000, in a
nut shell we can say the company can perform well in net profit margin
point of view.
2000 903329 0 NA
2001 3204532 0 NA
2002 3882778 0 NA
2003 4063378 0 NA
Comments:
12
Working capital turnover ratio is very bad because company has not working capital, and
its ratio goes to zero.
3000000
2500000
2000000
1500000
Suzuki Motor
1000000
500000 Dewan Motor
0
1 2 3 4
year
13
Current ratio
Ratio 2
1.5
Suzuki Motor
1
Dewan Motor
0.5
0
1 2 3 4
year
3
Ratio
2 Suzuki Motor
1 Dewan Motor
0
1 2 3 4
Year
6
ratio
4 Suzuki Motor
2 Dewan Motor
0
2000 2001 2002 2003
years
6
5
4 Suzuki Motor
3
2 Dewan Motor
1
0
1 2 3 4
14
Total Asset turn over ratio
Ratio 3
2 Suzuki Motor
1 Dewan Motor
0
1 2 3 4
Year
Debt Ratio
0.8
Ratio
0.6
Suzuki Motor
0.4
Dewan Motor
0.2
0
1 2 3 4
Year
0.15
Ratio
20
Ratio
15
Suzuki Motor
10
Dewan Motor
5
0
1 2 3 4
year
15
16
APPENDIX
17
References
ANNUAL REPORTS:
BOOK
INTERNET
• www.dewan_motors.com
• www.paksuzuki.com.pk
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