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Analysis of Financial statement

Project report on
Horizontal/Trend Analysis

Team Member
Salamat Ali (8933)

Shakeel Ahmed (10758)

Submitted To: MR. Sajjad Ahmed


HORIZENTAL ANALYSIS Page |2

ACKNOWLEGEMENT

We are grateful to the number of people for their encouragement,


inspiration and information. Specially,

We are deeply thankful to Honourable Sir Sajjad Ahmed who has given
us opportunity and also encourage for working on this project
report “Horizontal Analysis of DG Khan Cement limited and lucky
cement limited”

Secondly, thanks &appreciation for whole group members specially,


Shakeel Ahmed, and Salamat Ali for contributions, cooperation,
support and feedback.
HORIZENTAL ANALYSIS Page |3

DEDICATIONS
TO THE FACULTY OF FINANCE & SPECIALLY MR. SAJJAD AHMED WHOSE

CONTRIBUTION ENHANCES THE FUTURE OF FINANCE STUDENTS .

SECONDLY,

TO THE HUNDREDS OF STUDENTS WHO HAVE LEARNED ABOUT ANALYSIS OF FINANCIAL

MANAGEMENT COURSE FROM IQRA UNIVERSITY.


HORIZENTAL ANALYSIS Page |4

s.no Description Page #

1 Acknowledgement 2

2 Dedications 3

3 Executive summary 5

4 Overview of Cement industry 6

Overview of D.G Khan cement 6

Overview of Lucky cement 6

Horizontal analysis 7

Lucky 7

Horizontal analysis-Balance sheet base year 2005 10

Horizontal analysis- income statement base year 2005 7

D.G Khan 12

Horizontal analysis-Balance sheet base year 2005 15

Horizontal analysis- income statement base year 2005 12

Conclusion & recommendation 21


HORIZENTAL ANALYSIS Page |5

Executive summary:

This study is based on percentage comparative measurement of performance between


of D.G khan cement and lucky cement company. Horizontal analysis is used as Tool for the
purpose of comparison. The data is related period from (2005 to 2010). The goal of
horizontal analysis is to compare the figures of the current period with that of the past period.
This helps the company and its shareholders analyze their performance and find out areas of
improvement. Horizontal analysis is done for both income statements and balance sheets.
The main factors behind increase in demand of cement were 60 percent higher Public Sector
Development Projects (PSDP) allocation, seven percent GDP growth, increasing number of
real estate development projects for commercial and residential use, developing export
market and expected construction of mega dams. In balance sheets horizontal analysis, base
year 2005 as well as compare year to year basis we have compared the items including
assets, liabilities, and Share Capital & Reserves, Non Current Liabilities, Current Liabilities,
Total Equity & Liabilities, Non Current Assets, Current Assets, and Total Assets while in
income statement analysis, Cost of Sales, Gross Profit, Distribution Cost, Distribution Cost,
Administrative Cost, Operating Profit, Finance Cost and Profit after taxation. As regarding
the analysis of lucky cement, financial cost, and operating cost has increasing dramatically y
due to increase in markup by SBP and energy crisis, and fuel cost increased. There is
increasing trends in sales because of after flood re-construction increase demand of cement in
local market. Luky cement is controlling its current obligations by hedging credit risk

Overview of cement industry:


HORIZENTAL ANALYSIS Page |6

The cement Industry of Pakistan has around 25 active Players. Around 10% have less than
2% market share each. At the same time the top 4 players control more than 40% production
capacity in the industry. The cement sector is divided into the north and south zones.
Presently, north zone accounts for around 80% of the rated capacity with 19 plants, while
south zone accounts for 20% with 10 plants. The cement industry of Pakistan entered the
export markets a few years back, and has established its reputation as a good quality product.
The latest information is that India will import more cement from Pakistan. So far 130,000
tonnes cement has been exported to the neighbouring country. The last few years have been a
golden period for cement manufacturers, when the government increased spending on
infrastructure development. High commercial activity and rising demand for housing on
account of higher per capita income has kept cement offtake growth in double digits. The
main factors behind increase in demand of cement were: 60 percent higher Public Sector
Development Projects (PSDP) allocation, seven percent GDP growth, increasing number of
real estate development projects for commercial and residential use, developing export
market and expected construction of mega dams. it is estimated that the price would increase
in domestic as well in regional markets that may surely boost the profitability and give relief
to the industry on its new investment.

Overview: D.G KHAN: DGKC was established in 1978 under the management control of
State Cement Corporation of Pakistan Limited (SCCP). The company is a unit of Nishat
group, which is a leading and diversified business group with a strong presence in three most
important sectors of Pakistan: textiles, cement and financial services. it is presently the
second largest cement producer of the sector. The company had a total installed capacity of
37,156,750 metric tons as at June 2008. DGKC had a market share of 13% in the local
cement industry. DGKC has two plants at Dera Ghazi Khan and a new Greenfield cement
plant at Khairpur village.

Overview of lucky Cement: Lucky Cement Limited is currently one of the largest
manufacturers of cement in Pakistan. During FY10, in order to decrease cost of production,
Lucky Cement signed an MoU with Oracle Coal Fields for coal supply and also implemented
the Waste Heat Recovery Project in Karachi . LUCK is the market leader & has 21% of
the total market share. LUCK sales comprise of 44% exports & 56% local sales and
similar mix is expected to continue.

Horizontal/trend analysis:

Horizontal analysis is one of the most important parts of financial analysis. But what
is horizontal analysis in accounting and financial management. the horizontal analysis is the
financial statements of a company of successive years presented side-by-side. The goal of
horizontal analysis is to compare the figures of the current period with that of the past period.
This helps the company and its shareholders analyze their performance and find out areas of
improvement. Horizontal analysis is done for both income statements and balance sheets.

Importance of horizontal/Trend Analysis


HORIZENTAL ANALYSIS Page |7

Horizontal analysis is an important part of the financial statements and annual reports.
It places the facts very simply in front of the shareholder and makes the job of analyzing the
improvements or the lack of it very simple for the shareholder. Horizontal analysis helps the
shareholder understand the change and the percentage change. And if there is no
improvement or in fact a reduction, then the board is compelled to explain the situation to the
shareholder and what they intend to do in the future to fix it.

Calculation of Horizontal analysis and interpretation

(Current year – base year)/ base year


Horizontal Analysis income statement (lucky cement)

2005 2006 2007 2008 2009 2010 20 2006 2007 200 2009 2010
05 8
Net sales 3,980,109 7,984,529 12,521, 16,957 26,330 24,508 10 100. 214. 326. 561.5 206.9
861 ,879 ,404 ,793 0 6 611 07 498 535
Cost of sales 2,600,589 5,073,797 8,846,7 12,595 16,519 16,529 10 95.1 240. 384. 535.2 225.7
08 ,158 ,138 ,932 0 181 32 076 902
Gross profit 1,379,520 2,910,732 3,675,1 4,362, 9,811, 7,978, 10 111 166. 216. 611.2 174.1
53 721 266 861 0 408 25 087 187
Distribution cost 23,817 33,917 497,729 1,155, 2,427, 3,433, 10 42.4 1989 474 1009 1002
054 837 047 0 1 .81 9.7 3.71 1.91
Administrative 61,355 106,740 111,311 131,30 165,93 303,24 10 73.9 81.4 114 170.4 184.0
expenses 0 6 4 0 7 212 523 959
85,172 140,657 609,040 1,286, 2,593, 3,736, 10 65.1 615. 141 2945. 2556.
354 773 291 0 4 071 0.3 335 314
Operating profit 1,294,348 2,770,075 3,066,1 3,076, 7,217, 4,242, 10 114 136. 137. 457.6 53.15
13 367 493 570 0 885 68 161 722

Finance cost 21,691 82,809 862,847 126,74 1,236, 569,18 10 281. 3877 484. 5602. 587.3
3 971 4 0 8 .9 31 692 456
Other operating (1141) -203.00 - - (23,25 (1,902 10 - 5505 13.3 1938. 836.9
income 629289. 1293.0 5) ) 0 82.2 2.4 22 124 458
00 0 1
Other charges 63,847 134,493 142,204 644,38 826,77 257,77 10 110. 122. 909. 1194. 91.66
8 6 4 0 6 726 27 933 351
84,397 217,099 375,762 769,83 2,040, 825,05 10 157. 345. 812. 2317. 280.0
8 492 6 0 2 231 16 73 368
Profit before taxation 1,209,951 2,552,976 2,690,3 2,306, 5,177, 3,417, 10 111 122. 90.6 327.8 33.86
51 529 001 514 0 352 3 686 393
Taxation 383,364 617,026 63,146 85,394 580,45 280,05 10 60.9 - - 51.41 -
2 7 0 5 83.5 77.7 015 54.61
284 25 18
Profit after taxation 826,587 1,935,950 2,547,2 2,677, 4,596, 3,137, 10 134. 208. 223. 456.0 62.06
92 670 549 457 0 2 17 94 877 291
Other comprehensive
income for the year
Total comprehensive 826,587 1,935,950 2,547,2 2,677, 4,596, 3,137, 10 134. 208. 223. 456.0 62.06
income for the year 92 670 549 457 0 2 17 94 877 291
Earnings per share - 3.14 7.35 9.67 9.84 14.21 9.7 10 134. 207. 213. 352.5 31.97
basic and diluted 0 1 962 38 478 279

ANALYSIS:
HORIZENTAL ANALYSIS Page |8

Net sales: Below graph show the net sales trend based on 2005, increase by 100.6% in 2006, in 2007
it increase double by 214.611% which is huge increase, in 2008 there is 326.07% increase and there is
huge increase in 2009 which is positive sign for any company. And in 2010 the increase in sales by
206.95%. The increase in sales revenue was thus mainly due to lesser prices as although sales
volume had increased, sales price remained constant. Lucky Cement decreased exports which
had increasing distribution cost.
Cost of sales of the company increased by 0. 07% during FY10. The cost per ton of cement
decreased by 11% due to the implementation of Waste Heat Recovery Project and using
lesser expensive coal from a local supplier.

Net sales

Financial cost:
FC is the sum all cost including Mark-up on long term finances, Mark-up on short term
borrowings Interest on workers' profit participation fund, and Bank charges and commission
etc. SBP had increased its mark-up rate- hence a higher financing cost in 2009 and 2010.
Lucky adopt the strategy to wound up in cross currency swap transactions which were
providing interest rates hedging this help to prevent the company further from interest rates.

Gross profit % Profit after tax %

Gross profit: The fuel and coal costs are 62% of the total costs which went down by 16. 2%.
In the previous years, the Gross profit of the lucky cement was greatly affected as cost of
sales had increased by 31% in FY09

Profit after tax: in above graph there is increasing trends from base year 2005 to subsequent
years. The highest change in 2009 by 327.8686% in profit. if we look at the figure of sales
in 2009 there is huge increase in demand of cement and sales increase by 561.5498%
HORIZENTAL ANALYSIS Page |9

Earning per Share:

Earnings per share: The portion of a company's profit allocated to each outstanding share of
common stock is refereed as Earnings per share serves as an indicator of a company's profitability. In
above graph base year is 2005 compare with 2006, there is increase by 17% which is better indication
of profitability and shareholder wealth while in 2007 to 2010, there is declining trends and its is not
good indication for company as well as for shareholders.

total assets: in above graph, there is increasing trends from base


year to following year which is positive sign for company if it is using
them efficiently

Fixed assets: fixed assets are the plant, machinery, buildings, land etc. in
above graphs trends in increasing in 2006 to 2008 while in 2009 and 2010
there is decline in fixed assets
HORIZENTAL ANALYSIS P a g e | 10

Share holders’ equity: A firm's total assets minus its total liabilities.
Equivalently, it is share capital plus retained earnings minus treasury
shares. Shareholders' equity represents the amount by which a company
is financed through common and preferred shares. From base year 2005 ,
following years are increasing trends shown in graph.

LUCKY CEMENT Aanysis of balance sheet


2005 2006 2007 2008 2009 2010
rupees in
ASSETS 000
NON-CURRENT ASSETS
1346215
Property, plant and equipment 0 19165108 20,318,908 25,829,520 31,378,255 30,476,872
Long term deposits 2175 2175 2,175 2,175 2,175 2,175
Intangible assets 0 0 0 0 2,977 0
Long term advance 0 0 0 0 55,373 55,373
1346432
5 19167283 20321083 25831695 31438780 30534420
CURRENT ASSETS
Stores and spares 863978 1267000 1,993,573 4,160,146 3,411,549 4,008,288
Stock-in-trade 115771 431418 676,256 709,372 1,196,608 608,813
Trade debts - considered good 22808 98389 476,667 720,314 1,267,248 779,305
Loans and advances 134795 202238 241,821 163,844 108,876 105,915
Trade deposits and short term
prepayments 10100 285121 9,661 189,641 9,761 48,807
Other receivables 19936 83912 183,138 890,204 59,251 184,805
Tax refunds due from the
government 538,812 538,812 538,812 538,812
Taxation-net 33694 23661 50,057 130,899 176,584 145,151
Sales tax refundable 0 634,136 40,162 117,939
Cash and bank balances 141429 2063755 1,239,158 270,011 1,049,091 333,629
1342511 4455494 5409143 8407379 7857942 6871464
1480683
Total assets 6 23622777 25,730,226 34,239,074 38,392,362 38,310,244
EQUITY AND LIABILITIES
Share capital 2633750 2633750 2,633,750 3,233,750 3,233,750 3,233,750
2,499,93
Reserves 3 4435883 6,719,800 15,421,673 20,018,222 21,862,179
HORIZENTAL ANALYSIS P a g e | 11

5133683 7069633 9353550 18655423 23251972 25095929


NON - CURRENT
LIABILITIES
6,530,16
Long term finance 3 10156595 8,335,604 6,633,333 4,300,000 1,658,600
Long term deposits 858,519 1435622 25,863 30,252 28,589 31,957
Deferred liabilities 116,346 181623 147,245 174,171 234,633 319,217
Deferred taxation 25,362 27269 1,515,535 1,058,998 1,478,490 1,562,850
7530390 11801109 10024247 7896754 6041712 3572624
CURRENT LIABILITIES
Trade and other payables 597,853 1451086 1,546,699 3,549,543 2,677,356 3,043,320
Accrued mark-up 125,021 190130 326,181 288,977 233,381 155,500
Short term borrowings 786,543 645872 2,864,397 3,606,710 6,187,941 6,267,112
Current portion of long term
finance 616,667 2382576 1,615,152 241,667 0 175,759
2142763 82371 6352429 7686897 9098678 9641691
TOTAL EQUITY AND 1480683
LIABILITIES 6 23622777 25730226 3423907 38392362 38310244

LUCKY CEMENT Horizontal Analysis of balance sheet (Base Year 2005)


ASSETS In
% 2005 2006 2007 2008 2009 2010
NON-CURRENT ASSETS
Property, plant and equipment 100 42% 51% 92% 133% 126%

Long term deposits 100 0% 0% 0% 0% 0%

Intangible assets 100 100% 0%

Long term advance 100 100% 0%


0.4235
100 6 0.509 0.919 1.335 1.268
CURRENT ASSETS
Stores and spares 100 47% 131% 382% 295% 364%

Stock-in-trade 100 273% 484% 513% 934% 426%

Trade debts - considered good 100 331% 1990% 3058% 5456% 3317%

Loans and advances 100 50% 79% 22% -19% -21%


Trade deposits and short term
prepayments 100 2723% -4% 1778% -3% 383%

Other receivables 100 321% 819% 4365% 197% 827%

Tax refunds due from the government 100 100% 0% 0% 0%

Taxation-net 100 -30% 49% 288% 424% 331%

Sales tax refundable 100 100% -94% -81%


HORIZENTAL ANALYSIS P a g e | 12

Cash and bank balances 100 1359% 776% 91% 642% 136%
2.3187
100 8 3.029 5.262 4.853 4.118
Total assets 100 60% 74% 131% 159% 159%

EQUITY AND LIABILITIES


Share capital 100 0% 0% 23% 23% 23%

Reserves 100 77% 169% 517% 701% 775%


0.3771
100 1 0.822 2.634 3.529 3.888
NON - CURRENT LIABILITIES
Long term finance 100 56% 28% 2% -34% -75%

Long term deposits 100 67% -97% -96% -97% -96%

Deferred liabilities 100 56% 27% 50% 102% 174%

Deferred taxation 100 8% 5876% 4076% 5730% 6062%


0.5671
100 3 0.331 0.049 -0.2 -0.53
CURRENT LIABILITIES
Trade and other payables 100 143% 159% 494% 348% 409%

Accrued mark-up 100 52% 161% 131% 87% 24%

Short term borrowings 100 -18% 264% 359% 687% 697%

Current portion of long term finance 100 286% 162% -61% -100% -71%

100 -0.9616 1.965 2.587 3.246 3.5

TOTAL EQUITY AND LIABILITIES 100 0.5954 0.738 -0.77 1.593 1.587

D.G. Khan Cement Company Limited


Income Statement (2005-2010) Rs; 0000
2010 2009 2008 2007 2006 2005
18,038,20
Sales - net 16,275,354 9 12,464,347 6,419,625 7,955,665 5,279,560
(12,358,47
Cost of sales (13,569,994) 9) (10,528,046) (4,387,640) (3,992,822) (3,330,769)
Gross profit 2,705,360 5,679,730 1,936,301 2,031,985 3,962,843 1,948,791
Administrative expenses (172,436) (141,852) (110,745) (104,169) (121,953) (76,480)
Selling and distribution (1,871,517
expenses (994,418) ) (562,970) (65,122) (34,352) (60,905)
HORIZENTAL ANALYSIS P a g e | 13

Other operating expenses (189,015) (795,854) (595,687) (139,307) (191,850) (93,786)


Other operating income 911,672 770,137 846,606 479,420 294,114 707,692
Impairment on investment 0 (257,386)
Profit from operations 2,261,163 3,383,258 1,513,505 2,202,807 3,908,802 2,425,312
(2,606,358
Finance cost (1,902,760) ) (1,766,298) (468,173) (450,696) (304,041)
Profit before tax 358,403 776,900 (175,273) 1,720,471 3,448,533 2,121,271
Taxation (125,381) (251,319) 200,958 (98,000) (1,030,078) (439,193)
Profit for the year 233,022 525,581 25,685 1,622,471 2,418,455 1,682,078
Earnings per share 0.72 1.63 0.12 6.43 9.14 7.82
Rs;
Income Statement Horizontal Analysis (Bais Year 2005) %
2010 2009 2008 2007 2006 2005
241.
Sales - net 208.3 7 136.1 21.6 50.7 100.0
271.
Cost of sales 307.4 0 216.1 31.7 19.9 100
191.
Gross profit 38.8 4 (0.6) 4.3 103.3 100

Administrative expenses 125.5 85.5 44.8 36.2 59.5 100


Selling and distribution 2,97 (43.6
expenses 1,532.7 2.8 824.3 6.9 ) 100
748.
Other operating expenses 101.5 6 535.2 48.5 104.6 100
(58.4
Other operating income 28.8 8.8 19.6 (32.3) ) 100
100.
Impairment on investment (100.0) 0

Profit from operations (6.8) 39.5 (37.6) (9.2) 61.2 100


757.
Finance cost 525.8 2 480.9 54.0 48.2 100
(63.4 (108.3
Profit before tax (83.1) ) ) (18.9) 62.6 100
(42.8 (145.8
Taxation (71.5) ) ) (77.7) 134.5 100
(68.8
Profit for the year (86.1) ) (98.5) (3.5) 43.8 100
(79.2
Earnings per share (90.8) ) (98.5) (17.8) 16.9 100
HORIZENTAL ANALYSIS P a g e | 14

The net sales of DG Khan Cemet Pvt Ltd has low rate of sales growth in trande of first two
steadied years, while it attained the highe sales growth in year 2009 with respect to its base
year sales 2005. The reasion behind the low trande of first two years might be low demandof
market or inflationary factor of the country. The financing costs of the firm have highly
increased in last three years, it shows that firm has higly borrowed short term loans in the last
threeyears. Its better sign to have tax shield but at a certain limit. It is possative sign for
compony to export product and increase its sales volume, while the financig cost might be
delimma for firm.

The net sales of DG Khan Cemet Pvt Ltd has low rate of sales growth in trande of first two
steadied years, while it attained the highe sales growth in year 2009 with respect to its base
year sales 2005. The reasion behind the low trande of first two years might be low demandof
market or inflationary factor of the country. The financing costs of the firm have highly
increased in last three years, it shows that firm has higly borrowed short term loans in the last
threeyears. Its better sign to have tax shield but at a certain limit. It is possative sign for
compony to export product and increase its sales volume, while the financig cost might be
delimma for firm.
HORIZENTAL ANALYSIS P a g e | 15

The absolute amount of the EPS shows diminishing trand after 2006, absolute EPS of 2008 is
.12 with respect to EPS of base year 2005 which is 7.82. the Base year graph shows
percentage change in EPS of the year with rspect to EPS of Base year. Net earnigs has
diminished in the last three years, there fore EPS is also diclining.

DG Khan Cement Company Limited


Balance Sheet (2005-2010)
ASSETS 2010 2009 2008 2007 2006 2005
CURRENT ASSETS:
Stores, spares and loose tools 3,017,742 2,935,880 2,299,250 1,496,291 836,049 1,035,081
Stock-in-trade 1,036,876 899,836 445,856 295,140 226,286 100,994
Trade debts 303,949 513,966 366,173 144,245 74,165 76,238
Investments 10,740,972 7,785,968 15,082,582 16,933,790 8,543,763 2,769,134
Advances, deposits, prepayments and
other receivables 1,087,161 908,100 782,358 229,315 152,465 121,486
Cash and bank balances 230,792 243,842 226,372 116,173 77,167 93,836
Total Current Assets 16,417,492 13,287,592 19,202,591 19,214,954 9,909,895 4,196,769

Fixed Assets:
Property, plant and equipment 25,307,302 24,345,793 22,977,894 22,117,551 7,521,723 6,637,237
Assets subject to finance lease 5,135 133,376 295,058 317,262
Capital work in progress 465,650 1,750,208 2,488,307 1,907,063 11,759,677 3,983,175
Investments 4,696,922 3,172,508 6,795,961 8,174,474 4,482,213 2,610,634
Long term loans, advances and deposits 158,677 166,940 523,046 196,913 335,810 271,428
Total Fixed Assets 30,628,551 29,435,449 32,790,343 32,529,377 24,394,481 13,819,736
Total Assets 47,046,043 42,723,041 51,992,934 51,744,331 34,304,376 18,016,505

Liabilities & Shareholder's


Equity
Current Liabilities
Trade and other payables 1,679,749 1,435,420 1,370,336 1,027,274 1,406,869 1,154,426
Accrued markup 346,425 531,772 364,664 342,612 340,757 960,620
Short term borrowing - secured 9,585,642 9,068,575 7,597,020 3,942,972 2,613,695 306,048
Current portion of non-current
liabilities 2,139,283 4,763,942 2,687,608 2,042,281 1,619,025 599,674
Provision for taxation 35,090 35,090 35,090 35,090 35,090 35,090
Total Current Liabilities 13,786,189 15,834,799 12,054,718 7,390,229 6,015,436 3,055,858

Fixed Liabilities

Long term finances 5,089,507 4,375,837 8,411,051 8,686,447 7,372,468 4,899,225


HORIZENTAL ANALYSIS P a g e | 16

Liabilities against assets subject to


finance lease 1,141 28,886 131,985
Long term deposits 81,138 73,765 73,890 79,467 33,814 28,674
Retirement and other benefits 104,029 78,622 54,018 39,862 26,572 45,765
Deferred taxation 1,465,960 1,441,576 1,319,000 1,624,000 1,559,000 537,000
Total Fixed Liabilities. 6,740,634 5,969,800 9,857,959 10,430,917 9,020,740 5,642,649

CAPITAL AND RESERVES

ordinary shares of Rs 10 each 9,500,000 9,500,000 9,500,000 9,500,000 2,500,000 2,500,000


preference shares of Rs 10 each 500,000 500,000 500,000 500,000 500,000 500,000
10,000,000 10,000,000 10,000,000 10,000,000 3,000,000 3,000,000
Issued, subscribed and paid up
capital 3,650,993 3,042,494 2,535,412 2,535,412 1,843,937 1,843,937
Share deposit money 8,351
Reserves 22,160,477 17,401,220 27,595,698 29,630,084 15,085,354 7,196,568
1,757,68
Accumulated profit 707,750 474,728 (50,853) 9 2,330,558 277,493
26,519,220 20,918,442 30,080,257 33,923,185 19,268,200 9,317,998

CONTINGENCIES AND 47,046,04 42,723,04 51,992,93 51,744,33 34,304,37 18,016,50


COMMITMENTS 3 1 4 1 6 5

DG Khan Cement Company Limited


Horizontal Analysis of Balance Sheet Base Year 2005
ASSETS 2005 2006 2007 2008 2009 2010
CURRENT ASSETS:
Stores, spares and loose tools 100% -19% 45% 122% 184% 192%
Stock-in-trade 100% 124% 192% 341% 791% 927%
Trade debts 100% -3% 89% 380% 574% 299%
Investments 100% 209% 512% 445% 181% 288%
Advances, deposits, prepayments and
other receivables 100% 26% 89% 544% 647% 795%
Cash and bank balances 100% -18% 24% 141% 160% 146%
Total Current Assets 100% 136% 358% 358% 217% 291%

Fixed Assets:
Property, plant and equipment 100% 13% 233% 246% 267% 281%
Assets subject to finance lease 100% -100% -100%
Capital work in progress 100% 195% -52% -38% -56% -88%
Investments 100% 72% 213% 160% 22% 80%
Long term loans, advances and deposits 100% 24% -27% 93% -38% -42%
Total Fixed Assets 100% 77% 135% 137% 113% 122%
Total Assets 100% 90% 187% 189% 137% 161%

Liabilities & Shareholder's Equity


HORIZENTAL ANALYSIS P a g e | 17

Current Liabilities
Trade and other payables 100% 22% -11% 19% 24% 46%
Accrued markup 100% -65% -64% -62% -45% -64%
Short term borrowing - secured 100% 754% 1188% 2382% 2863% 3032%
Current portion of non-current liabilities 100% 170% 241% 348% 694% 257%
Provision for taxation 100% 0% 0% 0% 0% 0%
Total Current Liabilities 100% 97% 142% 294% 418% 351%

Fixed Liabilities

Long term finances 100% 50% 77% 72% -11% 4%


Liabilities against assets subject to
finance lease 100% -78% -99% -100% -100% -100%
Long term deposits 100% 18% 177% 158% 157% 183%
Retirement and other benefits 100% -42% -13% 18% 72% 127%
Deferred taxation 100% 190% 202% 146% 168% 173%
Total Fixed Liabilities. 100% 60% 85% 75% 6% 19%

CAPITAL AND RESERVES

ordinary shares of Rs 10 each 100% 0% 280% 280% 280% 280%


preference shares of Rs 10 each 100% 0% 0% 0% 0% 0%
100% 0% 233% 233% 233% 233%
Issued, subscribed and paid up capital 100% 0% 37% 37% 65% 98%
Share deposit money 100%
Reserves 100% 110% 312% 283% 142% 208%
Accumulated profit 100% 740% 533% -118% 71% 155%
100% 107% 264% 223% 124% 185%

CONTINGENCIES AND
COMMITMENTS 100% 90% 187% 189% 137% 161%

The total assets increased from that of the base year due to the phenomenal increase in sales
and the reduction of the in efficient assets by the company but still, the DGKC has invested in
the expansion projects, which has increased rate of trend, it shows the company’s operating
HORIZENTAL ANALYSIS P a g e | 18

cycle has been relatively stable. Current Assets of the firm has also increased, it indicated that
firm could face its short term claims

Fixed assets of the firm has increased with respect to its base year, which is good sign for
company, and it is possative sign for its investors, but the highely increased short term
liabilities of the firm is not in favour of shareholders objectives which could diminise their
EPS. While firm have ability to face for short term borrowing decisions.

Comparative Balance Sheet Analysis:


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Current liabilities of DG are greater than current liabilities of Lucky, while both firms current
liabilities are increasing gradually. Lucky has higher current assets as compare to its current
liabilities than DG khan, which shows that Lucky has greater ability to face its short term
claims, so, its good sign for firm as well as creditors and investors.

Conclusion and recommendation:

Fixed Liabilities of both firm are significantly increasing while Lucky Cement has
diminishing trend in 2009-2010. It shows that Lucky is performing well. Fixed Assets of both
firms are gradually increasing with respect to its base year, which shows both firms are
investing in new projects and equipments.

Share holder equity of Lucky Cement has highly increased from 2008 to 2010, which
indicates that Lucky Cement is more emphasis over equity financing rather to finance long
term liabilities. Worth of assets of both firm is in good position, but the DG assets have
significant posative shift in 2006-07, while Lucky Cement’s assets are gradually increasing.

Comparative Income Statement Analysis:


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DG Khan Cement’s net sales is increasing gradually, while Lucky Cements sales is highly
increasing. Which shows firm is performing well to grow its sales by exporting or placing
efficiently its product in the country. Gross profit of Lucky Cement is too much higher then
DG Khan Cement, which shows that Lucky Cement has controled its distributin and othe
costs, while DG Khan Cement has 1% decling gross profit with respect to its base year. Over
all trend for GP is good of Lucky Cement Ltd.

AS Lucky cement has higher sales, gross profit and current liabilities, so the firm is facing
higher financing costs with respect to its base year, it may resulted in decline of its net
income, but profit before tax also shows that lucky is in good position.

Profit after tax and EPS of Lucky Cement shows that Lucky cement is managing its financing
cost efficiently and availing sales growth opportunities efficiently, so its EPS and Net income
is in good position as compared to DG Khan Cemen Pvt Ltd. DG Cement Should controle its
cost of goods sold because it has good share of sales but it gross profit is not in good position
which became the delima for DG Khan Cement.

Lucky :
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Conclusion:
The future outlook on the international front seems dull, while the local demand is expected
to pick up in the aftermath of floods. the cement sector as not only the year which saw growth
in cement prices, both locally and internationally, helping the companies to secure more
profits; but also the year in which they faced massive growth in operation costs, primarily
fuel and electricity costs. This led the most of cement companies of the country to face
massive problems in continuing productions and even to obtain profits from sales after the
deduction of operation costs. Many cement companies were faced losses due to these costs.

• SBP had increased its mark-up rate- hence a higher financing cost in 2009 and 2010.
Lucky adopt the strategy to wound up in cross currency swap transactions which were
providing interest rates hedging this help to prevent the company further from interest
rates.

• Energy and fuel crisis has also been spotted by the company in due time and
preventive measures are employed with the hope that as possible to reduce operations
and fuel costs in the future.

• It is highly recommended that lucky should to reduce financial cost which can be
create difficulties regarding debt policy as well as reduce as profit.