FM Project

Members List
1.Sajid Hussain (Group
Leader)
Roll No. 019 MBA2008

2. M.Adil Shakir
3. Haseeb Khalid
Roll No. 07 MBA2008 Roll
No 076 MBA 2008

Submitted
To
Sir Shahid Mehmood
FM Project

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FM Project

1.Dedication
“WE dedicate this project to our Teacher
Proffessor Shahid Mehmood’’
Our teacher is special because he is an example of
what hard work and dedication can achieve. He is truly
a role model for all of her students.

he is kind, caring and enthusiastic. he makes learning

interesting and fun. Each new day in his class is an
adventure. he is always there to lend a helping hand
and has time for all of her students. he makes sure we
all understand our lessons. he believes in us,
continually encouraging us to do our best.

We respect him as a teacher and he respects us as

students. he gives us praise which helps us develop our
self confidence and helps us become a stronger, more
independent person. he has shown us that with hard
work you can achieve greatness.
Mr. Professor Professor Shahid Mehmood is loyal and
dedicated to his students. he is the true definition to
the word:

T E A C H E R.
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FM Project
TENDER
ENCOURAGING
ADVENTUROUS
CARING
HELPFUL
ENTHUSIASTIC
RESPECTFUL

2.Acknowledgement

The most important acknowledge is to our Lord Most

Merciful Most Wise by Whose mercy we were able to
begin this project, His Mercy is such that unworthy
slaves like ourselves are given the ability to work hard
and to be grateful towards all He has given us.

Allah states in the Holy Quran:

"Then remember Me; I will remember you. Be

grateful to Me,
And do not reject Me"

We would like to express our love, gratitude and

sincere regards to the following people to whom we are
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FM Project
grateful for their support and help without which
we would not have been able to make this
“Project”

➢ Prof. Shahid (IBA, P.U. Lahore)

Shell Pakistan for the year

2008

Liquidity Ratios

Working Capital:
=Current Assets – Current
Liabilities
=30220209-
23307811=6912398

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Current Ration:
=Current Assets/Current Liabilities
=30220209/23307811=1.297
Acid Test Ratio:
=(Current Assets-Inventories)/Current Liabilities
=30220209-18095523/23307811=0.520

Solvency Ratios
Debt to Equity Ration:
=Long Term Debt/Shareholders’ Equity
=2693836/13611638=0.198
Debt to Assets Ration:
=Long Term Debt/Total
Assets=2693836/39664859=0.068

Debt to Capitalization Ratio:

=Long Term Debt/Total Capitalization
=2693836/16305474=0.165
Total Capitalization= Long Term Debt+ Shareholders’
Equity

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Coverage Ratios
Interest Coverage:
=Earning Before Interest and Taxes/Interest Expenses
=8481359/970267=8.741

Activity Ratios
Inventory Turnover Ratio:
=Cost of Goods Sold/Inventory
=124694471/18095523=6.891
No. of Days Average Inventory is Sold:
=No. of Days in a Year/Turnover Ratio
=365/6.891=53 Days
Total Assets Turnover Ratio:
=Net Sales/Total Assets
=139844689/39664859=3.526

Profitability Ratios

Gross Profit Ratio:

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=Gross Profit/Net Sales
=15150218/139844689=0.108
Net Profit Margin:
=Net Profit/Net Sales
=7723340/139844689=0.055
Return on Investment:
=Net Profit after Taxes/Capitalization
=5137094/16305474=0.315

Return on Equity:
=EAT/Sales* Sales/Total Assets* Total Assets/Equity
=5137094/139844689* 139844689/39664859*
39664859/13611638
=0.037* 3.526* 2.914
=0.377

Market Ratios

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Earning per Share:
=Earning after Taxes/No. of Shares Outstanding
=5137094/54790313=93.76

Dividend per Share:

=Dividend/No. of Shares Outstanding
=2739516000/54790313= Rs. 50/Share
Dividend Yield Ratio:
=Dividend per Share/Market Value per Share
=50/422=0.118
Book Value of Share:
=Shareholders’ Equity/No. of Shares Outstanding
=13611638000/54790313=248.431
Total Assets-Total Liabilities= Shareholders’ Equity
Dividend Pay Out Ratio:
=Dividend per Share/Earning per Share
=50/93.76=0.533

Market Book Value:

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FM Project
=Market Value of Share/Book Value of Share
=422/248.431=1.699
Price Earning Ratio:
=Market Value per Share/Earning per Share
=422/93.76=4.50

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FM Project

Shell Pakistan for the Year

2007

Liquidity Ratios
Working Capital:

=Current Assets- Current Liabilities

=19713632-19612115=101517
Current Ration:
=Current Assets/Current Liabilities
=19713632/19612115=1.005
Acid Test Ration:
=Current Assets-Inventory/Current Liabilities
=19713632-8244054/19612115=0.584

Solvency Ratios
Debt to Equity:
=Long Term Debt/Shareholders’ Equity
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FM Project
=139041/9460771=0.015

Debt to Assets:
=Long Term Debt/Total Assets
=139041/29211927=0.0005
Debt to Capitalization:
=Long Term Debt/Total Capitalization
=1390421/9599812=0.014
Capitalization=Long Term Debt+ Shareholders’ Equity

Coverage Ratio
Interest Coverage Ratio:
=EBIT/Interest Charges
=1134584/878098=1.292

Activity Ratios
Inventory Turnover Ratio:
=Cost of Goods Sold/Inventory
=1086664932/8244054=13.181

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Age of Average Inventory:
=No. of Days in a Year/Activity Ratio
=365/13.181=27.691
Assets Turnover Ratio:
=Net Sales/Total Assets
=115045434/29211927=3.938
Note Credit sales and credit purchases so no receivable
and payable turnover ratios

Profitability Ratios
GP to Net Sales:
=Gross Profit/Net Sales
=6380502/115045434=0.055
Net Profit Margin:
=Net Profit before Taxes/Net Sales
=3781736/115045434=0.033
Return on Investment:
=NP before Taxes/Capitalization
=706659/9599812=0.074
Return on Equity:

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FM Project
=EAT/Sales* Sales/Total Assets* Total
Assets/Share Equity
=706659/115045434* 115045434/29211927*
29211927/9460771
=0.006* 3.938* 3.088=0.075

Market Ratios
Earning per Share:
=Earning after Taxes/No. of Shares Outstanding
=706659/54780=12.90
Dividend per Share:
=Dividend/No. of Shares Outstanding
=876480000/54780000=16
Dividend Yield Ratio:
=Dividend per Share/Market Value per Share
=16/410.22=0.039
Balance Sheet Value of Share:
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=Shareholders’ Equity/No. of Shares Outstanding
=9460771/54780=172.705
Dividend Payout Ratio:
=Dividend per Share/Earning per Share
=16/12.90=1.240
Market Book Value:
=Market Value of Share/Book Value of Share
=410.22/172.705=2.375
Price Earning Ratio:
=Market Value of Share/Earning of
Shared=410.22/12.90=31.80

Internal Comparison

Ratios 2008 2007

Liquidity Ratios:
Net Working Capital 69123 101517
98
Current Ratio 1.297 1.005
Acid Test Ratio 0.520 0.584
Solvency Ratios:
Long Term Debt to 0.198 0.015
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Equity
Long Term Debt to 0.068 0.0005
Assets
Long Term Debt to 0.165 0.014
Capitalization
Coverage Ratio:
Interest Coverage Ratio 8.741 1.292
Activity Ratios:
Inventory Turnover Ratio 6.891 13.181
Average Age of 53 28
Inventory
Total Assets Turnover 3.526 3.938
Ratio
Profitability:
Gross Profit Margin 0.108 0.055
Net Profit Margin 0.055 0.003
Return on Investment 0.129 0.024
Return on Equity 0.377 0.075
Market Ratios:
Earning per Share 93.76 12.90
Dividend per Share 50 16
Dividend Yield Ratio 0.118 0.039

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FM Project
Book Value of Share 248.4 172.705
31
Dividend Payout Ratio 0.533 1.240
Market Book Value 1.699 2.375
Price Earning Ratio 4.50 31.80

Common Size Analysis

Balance Sheet Size Common Size Analysis

ASSETS 2008 2007
Non Current Assets
Fixed assets 17.21 22.52
Long Term Investment 5.380 6.90
Long Term Loans & Advances 0.369 6.25
Long Term Deposits & 0.509 0.38
Prepayments
Long Term Debtors 0.341 1.123
Deffered Taxation Net _ 0.962
Total Non Current Assets 23.811 32.520
Current Assets
Stores & Spares 0.034 0.104
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Stock in Trade 45.621 28.222

Trade Debts 12.336 14.553
Loans & Advances 0.119 0.1460.1
46
Trade Deposits & Short Term 0.524 0.4800.4
Payments 80
Other Receivables 15.326 20.439
Taxation _ 0.752
Cash & Bank Balances 2.199 2.788
Total Current Assets 76.189 67.485
Total Assets 100 100
Equity & Liabilities
Equity
Share Capital 1.381 1.876
Reserves 5.630 7.644
Unappropriated Profit 27.306 22.876
Total Equity 34.32 32.387
Liabilities
Non Current Liabilities
Deffered Taxation Net 0.130 _
Liabilities Against Assets 0.006 0.002
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FM Project
Long Term Loans 6.303
Assets Refirement Obligation 0.483 0.474
Total Non Current Liabilities 6.922 0.476
Current Liabilities
Current Maturity of Liabilities 0.143 0.110
Against Assets
Short Term Running Finance 10.937 2.485
Short Term Loans 3.782 23.312
Trade & Other Payables 41.556 40.780
Mark up Accrued 0.396 0.450
Taxation 1.947 _
Total Current Liabilities 58.762 67.137

Total Equity & 100 100

Liabilities

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Income Statement Common Size

Analysis
2008 2007
Total Revenue 100 100
Less Sales Tax 11.551 12.002
Net Revenue 88.449 87.998
Cost of Products Sold 78.867 83.117
Gross Profit 9.582 4.880
Distribution Expenses 1.866 2.575
Administrative&Marketing 1.334 1.313
Expenses
6.382 0.992
Other Operating Income 0.194 0.165
6.576 1.157
Other Operating Expenses 1.212 0.289
Operating Profit 5.364 0.868

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FM Project
Finance Cost 0.614
0.672
4.751 0.196
Share of profit of associate-net 0.134 0.093
of tax
Profit before taxation 4.885 0.290
Taxation 1.636 0.251
Profit after taxation 3.249 0.541

Index Analysis
Balance Sheet Index Analysis
Assets 2008 2007
Non Current Assets 2008 2007
Fixed Assets 103.8 100
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Long term investment 106 100
Long term loans&advances 80.2 100
Long term 181.74 100
deposits&prepayments
Long term debtors 41.106 100
Deffered taxation 280967 100
Total non current assets 99.44 100
Current assets 99.44 100
Stores&spares 44
Stock in trade 2195 100
Trade debts 115.4 100
Loans&advances 110 100
Trade deposits&short 148.2 100
prepayments
Other receivables 101.80 100
Taxation _ 219715
Cash and bank balances 107.1 100
Total current assets 153.3 100

Total assets 136 100

Equity and Liabilities
Equity
Share capital 100 100
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Reserves 100 100

Unappropriated profit 162.2 100
Total equity 144 100
Liabilities
Non Current Liabilities
Deffered taxation 51574 100
Liabilities against assets 405 100
Long term loans 2500000 100
Asset retirement obligation 138.4 100
Total non current liabilities 1974.6 100
Current Liabilities
Current maturity of liabilities 176.2 100
Short term running finance 598 100
Short term loans 22 100
Trade and other payables 138.4 100
Mark up accrued 119.5 100
taxation 772454 _
Total non current liabilities 118.8 100
Total current&non current 132 100
liabilities
Total equity and liabilities 136 100
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FM Project

Income Statement Index Analysis

2008 2007
Revenue 121 100
Less sales taxes 116.4 100
Net revenue 122 100
Cost of goods sold 115 100
Gross profit 237.5 100
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Distribution expenses 88 100
Administrative & marketing 122.9 100
expense
778 100
Other operating income 142 100
687.4 100
Other operating expenses 506.8 100
Operating profit 747.5 100
Finance cost 110.5 100
2928.5 100
Share of profit of associate 173.6 100
Profit before taxation 2039.2 100
Taxation 789 100
Profit after taxation 727 100

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FM Project

Ratios of PSO
Profitability Ratios
Gross Profit Ratio 5.1 3
Net Profit Ratio 2.4 1.14
EBITDA margin 4.10 2.29
Return on equity 45.4 22.4
Return on total assets 11.1 6.30
Return on capital employed 68.1 35.4

Assets Valuation
Inventory turnover ratio 12.7 11.7
Debtors turnover ratio 24.6 32.5
Total assets turnover ratio 5.78 5.70
Fixed assets turnover ratio 74.3 52

Investment
Earning per share 81.94 27.3
Market value per share 417.24 391.5
Break up value 180 121.7
Price earning ratio 5.1 14.3
Dividend per share 23.5 21

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FM Project
Dividend payout 28.68
76.8
Dividend yield 5.63 5.36
Dividend cover ratio 3.48 1.30

Leverage
Interest cover ratio 16.4 6.86
Current ratio 1.24 1.22
Quick ratio 0.57 0.64

Now Let US See These One by

One

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FM Project
Findings: From the above diagram we can see that
company is in most liquid position as compared to
previous year. And as compared to PSO working capital of shell
is less in both years.

Findings: From the above diagram we see that the current ratio
of this year is more as compared to previous year. To pay one
current liability the company has 1.296 current assets. And as
compared to PSO shell current ratio in this year is high, but in
previous year current ratio of PSO was higher.

Findings: Acid test ratio of the company is less as compared to

previous year. In this ratio calculating inventory is deducted
from current assets. To pay one current liability the company
has 0.520 quick assets. And acid test ratio of PSO is higher in
both of year.
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FM Project

Findings: Solvency ratio of this year is higer as compared to

previous year. In current year to pay 0.202 long term debt
company has one share holder equity. And as compared to PSO
ratio of PSO is much higher in both of the years.

Findings: long term debt to total assets ratio of this year is

much higher as compared to previous year. To pay 0.069 long
term debt company has one total assets. Ratio of shell is higher
but in previous year ratio of PSO is higher.

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FM Project

Findings: Debt to total capitalization ratio of company is much

higher as compared to previous year. To pay 0.168 long term
debt company has one total capitalization. And as compared to
PSO ratio of shell is higher but in previous year ratio of PSO is
higher.

Findings: Interest coverage of the Shell company is greater as

compared to previous year. To pay one interest expense
company has 8.741 operating profit. And as compared to PSO
ratio of PSO is higher

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FM Project
Findings: Inventory turnover ratio of the company is less
as compared to previous year. Turn over ratio of this
year is 6.891 which means average inventory of the company
is sold near about seven times in a year. But in previous year it
was 13. And ratio of PSO is higher but in previous year ratio of
shell is higher.

Findings: Average age of inventory means, before selling the

average inventory how many days it is kept in warehouses.
Average age of inventory of this year is high which is negative
sign, because inventory is kept many days before selling.
Because when inventory is kept company has to bear many
expenses like carrying expenses. In this year shell is in better
position as compared to PSO, but in previous year average age
of inventory of PSO was higher.

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Findings: Assets turnover ratio of this year is higher as

compared to previous year,it is also higher from standard ratio
which is 2. But the company ratio is 3.526 which means one
total asset company generats 3.526 sales. Ratio of shell is
much less as compared to PSO.

Findings: Gross profit ratio of this year is greater as compared

to previous year which is 0.108. it means from one rupee of
sale there is 0.108 gross profit. Profitability ratio of PSO is
much greater as compared to shell. It means gross profit
margin of PSO is greater as compared to shell.

Findings: Net profit ratio is also higer as compared to previous

year which is 0.055 which means from one rupee of sale there
is 0.055 net profit. This ratio of shell is also much less as
compared to PSO, because net profit margin of PSO is much
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FM Project
higher as compared to shell.

Findings: it is clear from the above graph that return on

investment ratio is higher as compared to previous year which
is 0.129 it means one of each total assets generates 0.129 net
profit. Shell is much behind in this ratio also.

Findings: Return on equity ratio is also higher as compared to

previous year, which is 0.377. it means one rupee of share
holder equity generates 0.377 net income. PSO is much higher
in this ratio,

Findings: Earning per share is much higher from last year ,

which is 93.76, it means each share of the company earns
rupees 93.76. shell is better in this ratio in this year, but in
previous year PSO is higher.

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Findings:Dividend per share ratio is also is greater as compared

to last year which is 50. It means on each share company pays
dividend of rupees fifty. Dividend per share of shell is higher in
this year but in previous PSO was higher.

Findings: Dividend yield ratio is also higher as compared to

previous year which is 0.118. it means If there is one rupee of
market value then the dividend is 0.118. dividend yield ratio of
shell is much lesser in both years.

Findings: Book value of share is also is higher as compared to

last year which is 248.431 which means in the books of
account the value of each share is 248.431. if the company is
dissolved on book value amount, per share value will be given
248.431. in this ratio also PSO is much better in both of the
year.

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Findings: Dividend payout ratio is less as compared to previous

year which is 0.533, which means if one rupee is earned, from
one rupee 0.533 is distributed among share holders and
remaning 1-0.533= 0.467 is kept as retained earnings.
Dividend pay out ratio of PSO is higher in both years.

Findings: Market book value of the company is also less as

compared from last year, which is 1.699. it means if the book
value of share is rupee one then the market value is 1.699. in
this ratio also PSO is much better

Findings: Price earning ratio of the company is higher as

compared to last year which is 4.50, which means if the
earning per share is rupee one then the market value is 4.50.
in this year price earning ratio of PSO is higher but in previous
year shell was in better position.

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