VERTICAL ANALYSIS:

Vertical analysis (also known as common-size analysis) is a popular method

of financial statement analysis that shows each item on a statement as a percentage of a
base figure within the statement.

To conduct a vertical analysis of balance sheet, the total of assets and the total of
liabilities and stockholders equity are generally used as base figures. All individual
assets (or groups of assets if condensed form balance sheet is used) are shown as a
percentage of total assets. The current liabilities, long term debts and equities are shown
as a percentage of the total liabilities and stockholders equity.

To conduct a vertical analysis of income statement, sales figure is generally used as the
base and all other components of income statement like cost of sales, gross profit,
operating expenses, income tax, and net income etc. are shown as a percentage of sales.

In a vertical analysis the percentage is computed by using the following formula:

 A basic vertical analysis needs an individual statement for a reporting period but
comparative statements may be prepared to increase the usefulness of the analysis.

Statement of Financial Position Rupees Rupees

ASSETS 2016 %age 2015 %age

Property, plant and equipment 8253968815 31.12 4342003331 20.19

Investment property 31750000 0.12 162237097 0.75

Intangible assets 2878869 0.01 4627824 0.02

Long term investments 8782567920 33.11 10200468290 47.44

Long term loans 20000 0.00 340000 0.00

Long term deposits 28236645 0.11 28221645 0.13

Stores, spare parts and loose tools 183035986 0.69 185025614 0.86

Stock-in-trade 2892976240 10.91 2543316114 11.83

Trade debts 1265131685 4.77 1118913594 5.20

Loans and advances 158626922 0.60 46086110 0.21

Trade deposits and short term prepayments 3339843 0.01 13246526 0.06

Short term investments 3403993067 12.83 1921844053 8.94

Other receivables 349536167 1.32 387465779 1.80

Tax refunds due from Government 1069011845 4.03 417883638 1.94

Cash and bank balances 101213600 0.38 132197163 0.61

Total assets 26526287604 100 21503876778 100

EQUITY AND LIABILITIES

Issued, subscribed and paid-up capital 196875000 0.74 196875000 0.92

Reserves 5231064026 19.72 6006216187 27.93

Unappropriated profit 9936475908 37.46 8730329881 40.60

Long term finances 2114448632 7.97 60697585 0.28

Staff retirement benefit gratuity 283847228 1.07 257188963 1.20

Deferred taxation 179983406 0.68 139260190 0.65

Long term security deposit 0 0.00 2100000 0.01

Trade and other payables 1494734160 5.63 1323817736 6.16

Accrued mark-up / interest 71181315 0.27 73937828 0.34

Short term borrowings 6894488380 25.99 4456347830 20.72

Current portion of long term finances 14052666 0.05 12712666 0.06

Provision for taxation 109136883 0.41 244392912 1.14

Total equity and liabilities 26526287604 100 21503876778 100

Profit and Loss Account

2016 %age 2015 %age
Sales 12478390364 100 13347275852 100

Cost of sales -11388671684 -91.27 -11909451443 -89.23

Gross profit 1089718680 8.73 1437824409 10.77

Distribution cost -379138764 -3.04 -487085225 -3.65

Administrative expenses -269453034 -2.16 -248185998 -1.86

Other income 1633722398 13.09 986570200 7.39

Other expenses -148411522 -1.19 -91007598 -0.68

Profit from operations 1926437758 15.44 1598115788 11.97

Finance cost -424439095 -3.40 -356424531 -2.67

Profit before taxation 1501998663 12.04 1241691257 9.30

Taxation -100268380 -0.80 -245837421 -1.84

Profit after taxation 1401730283 11.23 995853836 7.46

HORIZONTAL ANALYSIS:
This technique is also known as comparative analysis. It is conducted by setting
consecutive balance sheet, income statement or statement of cash flow side-by-side and
reviewing changes in individual categories on a year-to-year or multiyear basis. The
most important item revealed by comparative financial statement analysis is trend. A
comparison of statements over several years reveals direction, speed and extent of a
trend(s). The horizontal financial statements analysis is done by restating amount of
each item or group of items as a percentage. Such percentages are calculated by
selecting a base year and assign a weight of 100 to the amount of each item in the base
year statement. Thereafter, the amounts of similar items or groups of items in prior or
subsequent financial statements are expressed as a percentage of the base year amount.
The resulting figures are called index numbers or trend ratios.

Formula:
Horizontal Analysis = (Current year amount- Base Year amount) 100
Base year amount

Statement of Financial Position Rupees

16Vs 15vs
ASSETS 2016 2015 2014
14 14
Property, plant and equipment 8253968815 115.8 4342003331 13.5 3824088383
Investment property 31750000 -80.6 162237097 -0.6 163273406
Intangible assets 2878869 0.2 4627824 61.1 2871886
1020046829
Long term investments 8782567920 -1.3 14.6 8901214827
0
Long term loans 20000 -89.6 340000 76.2 193000
Long term deposits 28236645 1.5 28221645 1.4 27822285
Stores, spare parts and loose tools 183035986 4.0 185025614 5.2 175919748
Stock-in-trade 2892976240 -9.0 2543316114 -20.0 3180774748
Trade debts 1265131685 -9.1 1118913594 -19.6 1392428704
Loans and advances 158626922 495.0 46086110 72.9 26658228
Trade deposits and short term
3339843 -6.2 13246526 272.0 3560503
prepayments
Short term investments 3403993067 114.9 1921844053 21.3 1584090779
Other receivables 349536167 4.5 387465779 15.8 334578455
Tax refunds due from Government 1069011845 222.2 417883638 26.0 331758527
Cash and bank balances 101213600 -32.5 132197163 -11.8 149916610
2652628760 2009915008
Total assets 32.0 21503876778 7.0
4 9
EQUITY AND LIABILITIES
Issued, subscribed and paid-up
196875000 0.0 196875000 0.0 196875000
capital
Reserves 5231064026 -20.7 6006216187 -8.9 6594226401
Unappropriated profit 9936475908 24.1 8730329881 9.1 8005667352
Long term finances 2114448632 3134.5 60697585 -7.1 65371251
Staff retirement benefit gratuity 283847228 34.5 257188963 21.9 210997693
Deferred taxation 179983406 218.4 139260190 146.3 56532945
Long term security deposit 0 -100.0 2100000 0.0 2100000
Trade and other payables 1494734160 23.5 1323817736 9.4 1210134150
Accrued mark-up / interest 71181315 21.6 73937828 26.3 58542707
Short term borrowings 6894488380 107.5 4456347830 34.1 3322831087
Current portion of long term
14052666 -91.3 12712666 -92.1 160904749
finances
Provision for taxation 109136883 -49.2 244392912 13.7 214966754
2652628760 2009915008
Total equity and liabilities 32.0 21503876778 7.0
4 9

Profit and Loss Account

16vs 15vs
2016 14 2015 14 2014
Sales 12478390364 -16.28 13347275852 -10.45 14905609584

Cost of sales -11388671684 -14.64 -11909451443 -10.73 -13341671246

Gross profit 1089718680 -30.32 1437824409 -8.06 1563938338

Distribution cost -379138764 -27.55 -487085225 -6.93 -523335900

Administrative expenses -269453034 26.29 -248185998 16.32 -213367611

Other income 1633722398 29.40 986570200 -21.86 1262562726

Other expenses -148411522 15.00 -91007598 -29.48 -129051130

Profit from operations 1926437758 -1.75 1598115788 -18.49 1960746423

Finance cost -424439095 -8.17 -356424531 -22.89 -462221487

Profit before taxation 1501998663 0.23 1241691257 -17.14 1498524936

Taxation -100268380 -45.89 -245837421 32.67 -185305853

Profit after taxation 1401730283 6.74 995853836 -24.17 1313219083

Liquidity Analysis Ratios:

 Current ratio:

Current ratio = Current assets

Current liabilities
2016 2015
Current ratio 1.11 : 1 1.10: 1

Quick ratio:

Quick ratio= Quick assets

Current liabilities
(Quick Assets = Current Assets Inventories)
2016 2015
Quick ratio 1.09: 1 1.07: 1

Net working capital ratio:

Networking capital ratio = Net working capital

Total assets
(Net Working Capital = Current Assets - Current Liabilities)
2016 2015
Net working capital 0.037 0.030

Debt to equity ratio:

Debt to equity ratio = Total liabilities

Total stock holders equity
2016 2015
Debt to equity ratio 0.86 times 0.43 times

Profitability Analysis Ratio:

 ROA = Profit margin x Assets turnover ratio

ROA = Net income = Net income x Sales x 100

Average total assets Sales Average total assets

(Profit Margin = Net Income / Sales)

(Assets Turnover Ratio = Sales / Averages Total Assets)
2016 2015
ROA 5.17 % 4.27 %

Return on equity: (ROE)

Return on equity = Net income x 100

Average stock holders equity
2016 2015
ROE 9.12% 6.66%

Profit margin:

Profit margin = Net income x 100

Sales

2016 2015
Profit margin 11.23% 7.46%