Financial Statement ANalysis of National Foods Limited Pakistan From 2005-2009

In the Name of Allah,
The Most Beneficent,

The Most Merciful.
Read:
In the Name of your Lord
Who Created, Created Man from a Clot.
Read:
And your Lord is the most Bounteous,
Who taught by the pen,
The man that which he did not Know
Al-Quran
ALLAH DOSE NOT LOOK AT
YOUR FORMS AND POSSESSIONS
BUT HE LOOKS AY YOUR
HEARTS AND DEEDS.
(MUSLIM)
1
Acknowledgement
All praises & humble thanks for Almighty ALLAH the

most
beneficial most merciful potentially upon us to

accomplish the
present report successful with all sincerity our gratitude

to
Holy Prophet Mohammad (SAW) who is the source of
Enlightenment, guidance, wisdom and knowledge for

the entire
Humanity in all sphere of life.
We would also like to pay gratitude to Mr. Muhammad

Ali Wallana for providing this opportunity to apply our
knowledge practically.
Thanks
From:
All group
Members
2
3
NATIONAL FOODS
LIMITED
4
5
Sr. #. TOPICS PAGE #.
1. Executive Summary 7-8
2. Introduction of National Foods 9
3. Liquidity Analysis 14
4. Activity Analysis 19
5. Profitability Analysis 27
6. Long Term Analysis 35
7. Investor Analysis 42
8. Composite Analysis 46
9. Conclusions and Recommendations 95-96
6
Sr. #. TOPICS PAGE #.
1. Summarized Balance Sheet 46
2. Summarized Income statement 49
3. Changes in Absolute Data 52
4. Horizontal Analysis 58
5. Common Size Analysis or Vertical Analysis 60
6. Activity Analysis 61
7. Liquidity Analysis 67
8. Profitability Analysis 71
9. Long Term Analysis 79
10. Investor Analysis 84
11. Composite Analysis 89
Sr# Description Data

1 The Company National Foods Limited
2 Condensed Income Statement 2005 2006 2007 2008 2009
7
A. Net sales 1,533,879 1,847,700 2,391,058 3,061,746 3,758,706
B. Gross profit 397,152 571,263 818,484 985,777 1,126,451
C. Operating profit 57,021 133,393 213,285 285,691 308,677
D. Profit before tax 42,271 106,471 191,722 233,947 220,702
Net profit 30,653 70,364 129,292 156,546 139,461
3 Condensed Balance Sheet 2005 2006 2007 2008 2009
A. Total current assets 475,727 595518 689,469 1,104,692 1,256,941
B. Total non-current assets 477,732 6568 691,476 1,106,700 1,258,950
C. Total fixed assets 226,575 365,874 493,444 635,325 614,004
Total assets 708,731 967960 1,188,458 1,746,655 1,911,776
A. Total short-term liabilities 435491 514710 626,815 1,033,710 1,115,911
B. Total non-current liabilities 11,808 11,467 35,357 70,758 3,027,687
Total long-term liabilities 78,331 526,177 662,172 1,104,468 4,143,598
Total owner's equity 525,630 1,052,354 1,324,344 2,208,936 655,386
Total liabilities and owner's

equity 708,731 967960 1,188,458 1,746,655 1,911,776
4 Liquidity Ratio 2005 2006 2007 2008 2009
Current Ratio 1.09:1 1.16:1 1.09:1 1.07:1 1.12:1
Quick Ratio 0.26:1 0.43:1 0.33:1 0.33:1 0.36:1
Cash Flow From Operations Ratio 0.17 0.29 0.38 0.31 0.32
Working Capital Ratio 40,236,000 80,808,000 62,654,000 70,982,000 141,030,000
Operating Cycle(days) 134.05 121.56 115.24 131.45 137.81
5 Activity Ratio 2005 2006 2007 2008 2009
A/R Turnover(times) 20.21 20.78 22.29 16.47 14.08
Aging Of A/R(Days) 18.05 17.56 16.37 22.15 25.91
Inventory Turnover(Times) 3.15 3.49 3.69 3.33 3.25
Days Sale in Inventory(Days) 116 104 98 109 111
Working Capital Turnover(Times) 38.12 22.8 38.1 43.13 26.61
Current Asste Turnover(Times) 3.13 2.93 3.24 2.58 2.8
Fixed Assets Turnover(Times) 6.7 6.2 5.6 5.42 6.01
Total Asset Turnover(Times) 2.16 2.2 2.21 2.08 2.05
6 Prifitability Ratios 2005 2006 2007 2008 2009
Gross Profit Margin(%age) 26 31 34 32 30
Operating Profit Margin(%age) 3.7 7.2 8.9 9.3 8.2
Profit Befor Tax Margin(%age) 2.7 5.8 8 7.6 5.9
Net Profit Margin(%age) 2 3.8 5.4 5.1 3.7
Return On Assets(%age) 4.3 8.3 11.99 10.67 7.6
Return On Equity(%age) 16 33 42 35 24
Return On Investment(%age) 22 25 32 34 29
Operating Asset Turnover(%age) 8.58 1.83 23.28 21.05 17.44
Dupont Return on Operating
2.6 1.3 2.04 1.2 1.4
Asset(%age)
7 Long term Analysis 2005 2006 2007 2008 2009
Time Interest Earned Ratio(times) 3.56 5.36 6.52 5.08 3.55
Debt Service Coverage Ratio(Times) 2.59 2.62 2.71 2.87 2.43
Fixed Charge Coverage Ratio(Times) 2.41 2.5 2.52 2.56 2.21
Debt Ratio(% age) 74.16 74.47 69.04 70.46 65.71
Debt Equity ratio 29.4 43.3 28 16.23 8.4
Fixed Assets Coverage Ratio(Times) 2.98 1.93 3.45 6.35 1.02
8 Investor Ratio 2005 2006 2007 2008 2009
8
Degree of Financial Leverage 1.34 1.25 1.11 1.22 1.39
Earning Per Share 7.21 16.55 23.4 28.32 4.21
Price Earning Ratio 17.34 6.71 8.89 12.82 20.67
Book Value Per Share 43.1 58.1 86.5 93.4 19.8
9 Composite Ratio 0.65 0.41 0.61 0.91 1.22
Introduction of National Foods
9
National Foods was founded in 1970 and started out as a Spice company. 3
decades later it has diversified into a versatile Food Company with over 110
products and 165 and above SKUs (Stock Keeping Unit) for the domestic
market and over 100 different products for the international markets.
Competent Human Resources from within the company have fuelled

tremendous growth by excelling in Functional Management. Even after 3
decades the company's focal point still remains on Customer's needs through
Product development in line with the changing market trends.
In this innovative age of ever changing lifestyles, fuelled by the rampant

development of technology; consumers have been compelled to change their
eating habits. National Foods responds to this challenge of developing
innovative food products based on convenience and fast preparation in line with
modern lifestyles and yet retains traditional values through its impressive
collection of food products.
The brand delivers its ultimate promise by consistently delivering value to its
consumers. National Foods enriches family relationships by bringing people
together for family traditions, feasts, seasonal holidays and of course - everyday
life.
10
Mission
‘The primary objective of our social initiative is to improve the quality of life in
Pakistan by eradicating illiteracy throughout Pakistan.
11
Vision
To be a Rs. 50 billion food company by the year 2020 in the
convenience food segment by launching products and services in the
domestic and international markets that enhance lifestyle and create value
for our customers through management excellence at all levels.
12
Founder’s Philosophy
 National Foods must focus on customer’s needs and serve
them with quality products at affordable prices at their
doorsteps.
 Our products must be pure and conform to international
standards.
 Our research must continuously produce new
adventurous products scientifically tested, hygienically
produced in safe and attractive packaging.
 We must create environment in our offices and factories
where talents are groomed and have opportunity to
advance in their careers.
 We must prove to be recognized as good corporate
citizens, support good causes-charity and bear fair share
of taxes.
 Reserves must be built, new factories created, sound
profits made and fair dividend paid to our stock holders
through building a reliable brand.
 National Foods Ltd. must get itself recognized as leader
in Pakistan and abroad.
Core Values
13
 Passion
We act with intense positive energy and are not afraid of taking
risks. We challenge ourselves continuously and have pride for what
we do and are good at it.
 Customer Focus
We see the world through the eyes of our customers. We do

everything possible that makes them happy.
 People Centric
We put our people first. Treat them with respect and actively
contribute towards their development.
 Teamwork
Our roles are defined, not our responsibilities. We believe in going

the extra mile to accomplish our goals. We coach and support each
other ensuring everyone wins. We have a WE versus I mindset.
 Leadership
We are a part of the solution…never the problem. We act like owners

and have a positive influence on others.
 Ethics
We don’t run our business at the cost of human or ethical values.
 Excellence in Execution
We say…we do … we deliver. We talk with our actions. We strive

for nothing but the best. Execution is the key to winning!
 Accountability
We see, we act. We take full responsibility for our actions and

results. We don’t blame others for our mistakes; we analyze them
and correct them.
14
A. Liquidity Ratio
1. Current Ratio
Current Assets
Current Liabilities
Years 2005 2006 2007 2008 2009

Current assets 475,727,000 595,518,000 89,469,000 1,104,692,000 1,256,941,000
Current liabilities 435,491,000 514,710,000 626,815,000 1,033,710,000 1,115,911,000
2005 2006 2007 2008 2009

1.09:1 1.16:1 1.09:1 1.07:1 1.12:1
Current Ratio
1.18
1.16 1.16
Value in Ratio
1.14
1.12 1.12 Series1
1.1
1.09 1.09
1.08
1.07
1.06
2005 2006 2007 2008 2009
Years
Interpretation:
15
This ratio measures short term debt paying ability of a company. The ratio
tends to increase when current assets increase or liabilities fall and vice versa.
The ideal current ratio for a company is 2:1. When firm are not successful in
maintaining current ratio of 2 this indicates a decline in the liquidity of the firm.
The graph shows that ratio has increased in 2005 to 2006 because a new current
asset (i.e. Accrued interest/mark up) is added in 2006.the ratio than decreasing
from 2007 to 2008 because current liabilities are increased including short term
borrowings, provision for income tax that tend to decrease the current ratio.
2. Quick Ratio
Current Assets - Inventories

Current Liabilities
Years 2005 2006 2007 2008 2009

Current assets 475,727,000 595,518,000 89,469,000 1,104,692,000 1,256,941,000
Inventories 359,954,000 370,698,000 481,329,000 762,758,000 852,409,000
2005 2006 2007 2008 2009

0.26:1 0.43:1 0.33:1 0.33:1 0.36:1
Quick Ratio
0.5
0.43
0.4
Value in Ratio
0.36
0.33 0.33
0.3
0.26 Series1
0.2
0.1
0
2005 2006 2007 2008 2009
Years
Interpretation:
16
It measures short term debt paying ability including most liquid assets. The
ideal situation is 1:1.if firm is not able to maintain 1:1situation, it indicates a
decline in the liquidity of the firm. This ratio is increasing from 2005 to
2006 and than remains consistent in 2007 and 2008 and again increasing in
2009.The reason of increasing this ratio in 2006 (i.e. Accrued interest/mark
up) is added.
As we can see that current liabilities are increasing from 2005 to 2009 as
compared to current assets that are why this ratio is decreasing from 2005 to
2009.
3. Cash Flow From Operations Ratio
Operating Profit + Dep. +Non Cash Item

Current Liabilities
Years 2005 2006 2007 2008 2009

Operating Profit 57,021,000 133,393,000 213,285,000 285,691,000 308,677,000
Depreciation 16,350,000 19,894,000 24,747,000 36,229,000 50,906,000
Non Cash Items 0 0 0 0 0
2005 2006 2007 2008 2009

0.17 0.29 0.38 0.31 0.32
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2005 2006 2007 2008 2009
17
Interpretation:
It measures the liquidity of the firm by comparing the cash flow from current
liabilities. Greater this ratio greater will be the liquidity of the firm. The ratio is
increasing from 2005 to 2007 and than decreasing in 2008 and in 2009.the
reason for the decrease in 2008 is due to increase in current liabilities.
4. Working Capital Ratio
Current Assets - Current Liabilities
Years 2005 2006 2007 2008 2009

595,518,00
Current assets 475,727,000
0
89,469,000 1,104,692,000 1,256,941,000
514,710,00
Current liabilities 435,491,000
0
626,815,000 1,033,710,000 1,115,911,000
2005 2006 2007 2008 2009

40,236,000 80,808,000 62,654,000 70,982,000 141,030,000
Working Capital Ratio
160,000,000
140,000,000 141,030,000
120,000,000
100,000,000
80,000,000 80,808,000 Series1
70,982,000
60,000,000 62,654,000
40,000,000 40,236,000
20,000,000
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio measures the short term solvency of business. It tells that how
much working capital a firm has for its operations. The ratio is increasing
from 2005 to 2006 and than decreasing in 2007 and increasing in
18
2009.greater this ratio lesser the chance of insolvency of the firm.
As we can see that the lesser chance of the firm insolvency in 2006 and in
2009 because the value of current liabilities is greater in 2006 as compared
to 2005 and in 2009 as compared to 2008.
5. Operating Cycle
A/R in Days + Inventory Turnover in

days
Years 2005 2006 2007 2008 2009

A/R in Days 18.05 17.56 16.37 22.15 25.91
Inventory
Turnover in Days 116 104 98.87 109.3 111.9
2005 2006 2007 2008 2009

134.05 121.56 115.24 131.45 137.81
Operating Cycle
150
Values in Days
121 131
120 134 137
115
90
60
30
2005 2006 2007 2008 2009
Years
Interpretation:
It basically measures the time period b/w the acquisition of goods and final cash
realized resulting from cash and subsequent collections. lower the ratio lesser
will be time required to realize cash from ending inventory. the ratio is
decreasing from 2005 to 2007 and than increasing up to 2009.the firms highest
efficiency is in 2007.
19
B. Activity Ratio
1. Accounts Receivable Turnover Ratio
Net Credit Sales

Average Account Receivables
Years 2005 2006 2007 2008 2009

Sales 1,533,879,000 184,700,000 2,391,058,000 3,061,746,000 3,758,706,000
Average account receivable 75,877,000 88,908,500 107,262,500 185,838,000 266,823,500
2005 2006 2007 2008 2009
20.21 20.78 22.29 16.47 14.08
A/R Turnover
25
22.29
20 20.21 20.78
Value in Times
16.42
15 14.08
Series1
10
0
2005 2006 2007 2008 2009
Years
Interpretation:
The ratio tends to increase when credit sales increase or account receivables
decreases and vice versa. This ratio measures how many times you convert your
account receivables into cash or net sales in a year. Greater this ratio greater the
20
efficiency of the firm. The graph shows that this ratio is increasing from 2005 to
2007 and than decreasing from 2008 to 2009, which shows greater efficiency
from 2005 to 2007 and lower efficiency in 2008 and 2009.
The lower efficiency of the firm in 2008 and in 2009 is due to because account
receivables are growing rapidly.
2. Aging of Account Receivable:
Average Gross receivable

Net Sales/365
Years 2005 2006 2007 2008 2009

Average Gross 75,877,000 88,908,500 107,262,500 185,838,000 266,823,500
receivable
Net Sales/365
4,202,408.219 5,062,191.781 655, 0843.83 8,388,345.205 10,297,824.66
2005 2006 2007 2008 2009
18.05 17.56 16.37 22.15 25.91
Aging of A/R
30
25 25.91
22.15
Value in Days
20
18.05 17.56 16.37
15 Series1
10
5
0
2005 2006 2007 2008 2009
Years
Interpretation:
21
This ratio measures that how many days’ sales remain in form of account
receivable and how quickly firm converts account receivables into cash. Greater
this ratio lesser will be the firm efficiency. This ratio is decreasing from 2005 to
2007 and than increasing from 2008 to 2009.The decrease in this ratio is due to
the inefficiency of the firm.
The lower efficiency of the firm is due to because its average gross receivables
are increasing more rapidly in 2008 & 2009.
3: Inventory Turnover:
Cost of good sold

Average inventory
Years 2005 2006 2007 2008 2009

Cost of good sold
1,136,727,000 1,276,437,000 1,57 2,574,000 2,075,969,000 2,632,255,000
Average inventory 359,954,000 365,326,000 426,013,500 622,043,500 807,583,500
2005 2006 2007 2008 2009

3.15 3.49 3.69 3.33 3.25
Inventory Turnover
3.8
3.7 3.69
Value in Times
3.6
3.5 3.49
Series1
3.4
3.3 3.33
3.25
3.2
3.15
3.1
2005 2006 2007 2008 2009
Years
22
Interpretation:
This ratio measures that how many times a firm converts its inventory into CGS
in a year. Greater this ratio higher will be the firm efficiency. The graph shows
that inventory turnover is high from 2005 to 2007 and than decreasing in 2008
& 2009 which is not favorable sign for company.
The reason behind the decrease in 2009 is that firm’s inventory has increased in
2008 and in 2009 and the company fails to convert its more inventories into
CGS.
4. Days sales in inventory:
Average inventory
CGS/365
Years 2005 2006 2007 2008 2009

Average inventory
359,954,000 365,326,000 426,013,500 622,043,500 807,583,500
CGS/365
3114320.548 3,497087.671 4,308,421.981 5,687,586.301 7,211,657.534
2005 2006 2007 2008 2009

116 104 98.87 109.3 111.9
Days sales in inventory
120
115 116
110 111
Days
109
Series1
105 104
100
98
95
2005 2006 2007 2008 2009
23
Years
Interpretation:
This ratio measures that in how many days a company converts its inventory
into CGS. Greater this ratio lesser will be the efficiency of the firm. The
graph shows that ratio is decreasing from 2005 to 2007 and than increasing
from 2008 to 2009.So; firm is not efficient in 2008 &2009.
Here firm’s inventory has increased in 2008 and in 2009 and company daily
sales are not increasing as compared to last years, so, company fails to
convert its inventory into CGS.
5. Working Capital Turnover
Net Sales
Working Capital
Years 2005 2006 2007 2008 2009

Net Sales 1,533,879,000 1,847,700,000 2,391,058,000 3,061,746,000 3,758,706,000
Working Capital 40,236,000 80,808,000 62,654,000 70,982,000 141,030,000
2005 2006 2007 2008 2009

38.12 22.8 38.1 43.13 26.61
24
Interpretation:
The ratio tends to increase when credit sales increase or account receivables
decreases and vice versa. It measures that how many times a firm converts its
working capital into net sales in a year. Greater this ratio greater will be the firm
efficiency. The graph shows that ratio is first decreasing from 2005 to 2006,
than increasing to 2008 and again decreasing in 2009.so.we can say that firm
efficiency is high in 2008.
6. Current Asset Turnover
CGS + Operating Expenses + Tax

Current Assets
Years 2005 2006 2007 2008 2009

CGS 1,136,727,000 1,276,437,000 1,572,574,000 2,075,969,000 2,632,255,000
Operating Expenses 340,131,000 437,870,000 605,199,000 700,086,000 817,774,000
Tax 11,618,000 36,107,000 62,430,000 77,401,000 81,241,000
Current Assets 475,727,000 595,518,000 89,469,000 1,104,692,000 1,256,941,000
2005 2006 2007 2008 2009

3.13 2.93 3.24 2.58 2.80
25
2
1.5
1
0.5
0
2005 2006 2007 2008 2009
Years
Interpretation:.
It measures how many current assets a firm has to fulfill its expenses or we can
say that how many times a firm uses its current assets to meet its expenses.
Greater this ratio higher the firm efficiency to meet its expenses. The highest
current assets turnover is in 2007 as shown in graph.
The reason behind low efficiency of company is that its expenses like CGS,
operating expenses and tax have increased in 2008 and in 2009.
7. Fixed Assets Turnover:
Net Sales______
Avg. Fixed assets
Years 2005 2006 2007 2008 2009

Net Sales 1,533,879,000 1,847,700,000 2,391,058,000 3,061,746,000 3,758,706,000
Avg. Fixed 226,575,000 296,224,500 429,659,000 564,384,500 624,664,500
Assets
2005 2006 2007 2008 2009

6.7 6.2 5.6 5.42 6.01
26
Fixed Asset Turnover
8
7 6.7
6.2
Value in Times
6 6
5.6 5.4
5
4 Series1
3
2
1
0
2005 2006 2007 2008 2009
Years
Interpretation:
It measures how efficiently firm uses its fixed assets to generate sales. Greater
this ratio greater will be the efficiency of the firm. The graph shows that ratio is
decreasing from 2005 to 2008 and than increasing in 2009.which shows higher
efficiency of the firm in 2009.
8. Total Assets turnover:
Net Sales______
Avg. Total Assets
Years 2005 2006 2007 2008 2009

Net Sales 1,533,879,000 1,847,700,000 2,391,058,000 3,061,746,000 3,758,706,000
Avg. Total Assets

708,731,000 838,345,500 1,078,209,000 1,467,556,500 1,829,215,500
2005 2006 2007 2008 2009

2.16 2.20 2.21 2.08 2.05
27
Total Asset Turnover
2.25
2.2 2.2 2.21

Value in Times
2.15 2.16
Series1
2.1
2.08
2.05 2.05
2
2005 2006 2007 2008 2009
Years
Interpretation:
This measures the activity of assets and firm ability to generate sales through
maximum use of total assets. Greater total assets turnover represents greater
efficiency of firm. The graph shows that ratio is increasing in 2005 to 2007 and
than decreasing from 2008 to 2009 which shows lower efficiency of firm in
2008 & 2009.
Lower efficiency of the firm is due to firm has not utilized its fixed assets in an
efficient way.
C. Profitability Ratio
1. Gross Profit Margin
Gross Profit
Net Sales
Years 2005 2006 2007 2008 2009

Gross Profit 397,152,000 571,263,000 818,484,000 985,777,000 1,126,451,000
Net Sales 1,533,879,000 184,770,000 2,391,058,000 3,061,746,000 3,758,706,000
2005 2006 2007 2008 2009

26% 31% 34% 32% 30%
28
Gross Profit Margin
40%
35% 34%
Values in % Age
31% 32%
30% 30%
25% 26%
20%
Series1
15%
10% Series2
5% Series3
0% Series4
2005 2006 2007 2008 2009 Series5
Years
Interpretation:
The ratio tends to rise whenever cost of goods sold decreases and gross profit
rise and when sales decreases. Gross profit margin decline because of number of
factors like when selling prices have declined due to competition, when cost of
buying inventory increases more rapidly than selling prices, when sales are not
recorded (the cost of goods sold figure in relation to the sales figure is very
high).
Greater this ratio greater will be firm profitability. this ratio has increased from
2005 to 2007 and than decreased in 2008 and 2009.this ratio shows highest
profitability in 2007.
The reason behind decrease in 2008 and 2009 is that cost of good sold has
29
increased and gross profit has decreased,
2. Operating Profit Margin
Operating Profit
Net Sales
Years
2005 2006 2007 2008 2009
Operating Profit 57,021.000 133,393,000 213,285,000 285,691,000 308.677,000
Net Sales 1,533,879,000 184,770,000 2,391,058,000 3,061,746,000 3,758,706,000
2005 2006 2007 2008 2009

3.7% 7.2% 8.9% 9.3% 8.2%
Operating Profit Margin
10.00%
9% 9.30%
8.20%
Values In % Age
8.00% Series1
7.20%
Series2
6.00%
Series3
4.00% 3.70% Series4
2.00% Series5
0.00%
2005 2006 2007 2008 2009
Years
Interpretation:
30
It measures the operating profit of firm. It measures profit remaining before
paying interest and taxes. A firm must at least earn operating profit to survive.
Greater this ratio greater will be the firm profitability. The graph shows that
operating profit margin has increased from 2005 to 2008 and than decreased in
2009.the firm largest profitability in 2008.
The decrease in 2009 is that firm’s operating expenses has increased and
operating profit has decreased. Moreover sales are not growing as compared to
last years.
3. Profit Before Tax Margin
Profit Before Tax

Net Sales
Years 2005 2006 2007 2008 2009

Profit Before Tax 42,271,000 106,471,000 191,722,000 233,947,000 220,702,000
Net Sales 1,533,879,000 184,770,000 2,391,058,000 3,061,746,000 3,758,706,000
2005 2006 2007 2008 2009

2.7% 5.8% 8.0% 7.6% 5.9%
Profit before Tax Margin
10.00%
8.00% 8.00%
Value in % Age
7.60%
6.00% 5.80% 5.90%
4.00%
2.70% Series1
2.00%
Series2
0.00% Series3
2005 2006 2007 2008 2009
Series4
Years Series5
Interpretation:
31
This ratio measures the profit of the firm before paying taxes. Greater this ratio
greater will be the profitability of firm. The graph shows that profit before tax
margin has increased from 2005 to 2007 and than decreased in next two years.
This ratio shows highest profitability in 2007.
The decrease in 2009 is that firm’s operating expenses has increased and
operating profit has decreased. Moreover sales are not growing as compared to
last years.
4. Net Profit Margin
Net Profit
Net Sales
Years 2005 2006 2007 2008 2009

Net Profit 30,653,000 70,364,000 129,292,000 156,546,000 139,461,000
Net Sales 1,533,879,000 184,770,000 2,391,058,000 3,061,746,000 3,758,706,000
2005 2006 2007 2008 2009

2.0% 3.8% 5.4% 5.1% 3.7%
Net Profit Margin
6.0%
5.4%
5.0% 5.1%
Value in % Age
4.0% 3.8% 3.7%

3.0%
2.0% 2.0%
Series1
1.0%
Series2
0.0% Series3
2005 2006 2007 2008 2009 Series4
Years Series5
Interpretation:
32
This ratio measures the net income generated by sales after paying all expenses.
This is desirable that this ratio to be high for more profitability we can see from
graph that ratio is increasing from 2005 to 2007 and than decreasing in 2008
and 2009.maximum profit is in 2007.
Net profit has decreased because company’s interest and tax expenses have
increased and firm’s sales are not growing so rapidly.
5. Return On Assets:
Net income
Avg. total assets
Years 2005 2006 2007 2008 2009

Net income 30,653,000 70,364,000 129,292,000 156,546,000 139,461,000
Avg. total assets 708,731,000 838,345,500 1,078,209,000 1,467,556,500 1,829,215,500
2005 2006 2007 2008 2009

4.3% 8.3% 11.99% 10.67% 7.6%
Return On Assets
15
Value in % Age
11.99
10 10.67
8.3 7.6 Series1
5 4.3
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio measures the firm ability to utilize its assets to create profits by
comparing profits with assets that generate profits, higher this ratio greater will
be the firm profitability. The graph shows that return on assets has increased
from 2005 to 2007 and than decreased in 2008 and 2009.it means that firm has
generated maximum return on assets in 2007.
Here firm has not utilized its assets efficiently that’s why there is low
33
profitability in 2008 and 2009.
6. Return on equity:
Net Income – Preferred Dividend

Average Total Equity
Years 2005 2006 2007 2008 2009

Net Income 30,653,000 70,364,000 129,292,000 156,546,000 139,461,000
Preferred Dividend 0 0 0 0 0
Average Total Equity 183,101,000 247,089,000 367,880,000 515,925,000 655,386,000
2005 2006 2007 2008 2009

16% 33% 42% 35% 24%
Return On Equity
50
42
Value In % Age
40
33 35
30
24 Series1
20
16
10
0
2005 2006 2007 2008 2009
Years
Interpretation:
This measures the return to both common and preferred share holders.
The graph shows the value increases from 2005 to 2007 and than decreasing
in 2008 and 2009, which is not favorable for the firm. The highest ROE is in
2007.
7. Return on Investment
Net Income + [(Interest)(1 – Tax Rate)]

Average LTD + Average Equity
34
Years 2005 2006 2007 2008 2009
Net Income 30,653,000 70,364,000 129,292,000 156,546,000 139,461,000
Interest Expenses 16,006,000 24,850,000 32,675,000 56,238,000 86,841,000
Tax Rate 0.35 0.35 0.35 0.35 0.35
Average LTD 6,000,000 132,500,000 166,000,000 121,500,000 80,000,000
Average Equity 183,101,000 215,095,000 307,484,500 441,902,500 585,655,500
2005 2006 2007 2008 2009

22% 25% 32% 34% 29%
Return On Investm ent

Values In % Age
40
30 32 34
25 29
20 22 Series1
10
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio measures the ability of the firm to reward those who provide the
long term debt and attract the providers of future funds.
It measures the earning performance of the firm without regard to the way
investment is financed. Higher this ratio higher the profitability of the firm.
It also indicates that how well a firm is utilizing its assets base.
8. Operating Assets Turnover:
Operating Profit
Avg. operating assets
35
Years 2005 2006 2007 2008 2009
Operating Profit 57,021.000 133,393,000 213,285,000 285,691,000 308,677,000
Avg. operating
assets 664,844,000 7,296,075,000 916,040,500 1,356,777,00 1,769,707,500
2005 2006 2007 2008 2009

8.58% 1.83% 23.28% 21.05% 17.44%
Operating Asset Turnover
25
23.28
20 21.05
Vaue in % Age
17.44
15
Series1
10
8.58
5
1.83
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio measures the ability of operating assets to generate sales. Greater this
ratio greater will be the ability of the firm to generate sales. This ratio is
increasing from 2005 to 2007 and than decreasing in 2008 and 2009.
It shows the firm’s low efficiency of operating assets to generate sales. Firm has
not utilized its operating assets efficiently to generate sales
9. Dupont Return On Operating Asset
Operating Profit margin x Total Asset turnover
Years 2005 2006 2007 2008 2009
36
Operating Profit Margin 2 3.8 5.4 5.1 3.7
Total Asset turnover 2.16 2.20 2.21 2.08 2.05
2005 2006 2007 2008 2009

2.6% 1.3% 2.04% 1.2% 1.4%
Dupont Return on Operating Assets
5
value in % Age
4 Series1
3 2.6 Series2
2.04
2 1.3 1.2 1.4 Series3
1 Series4
2005 2006 2007 2008 2009 Series5
Years
Interpretation:
Assets, the net profit margin, the total assets turnover and return on assets
are usually reviewed together because of direct influence that net profit
margin and total assets turnover have return on assets. When these ratios are
reviewed together it is called the DuPont return on assets.
Greater this ratio greater will be the profitability of the firm. The graph
indicates that value increases from 2005 to 2007 and than decreasing in next
two years. Its shows low profitability of the firm in 2008 and 2009.
D. Long Term Analysis
1. Time Interest Earned Ratio
Earning before Interest and Tax

Interest Expense
37
Years 2005 2006 2007 2008 2009
EBIT 57,021.000 133,393,000 213,285,000 285,691,000 308.677,000
Interest expense 16,006,000 24,850,000 32,675,000 56,238,000 86,841,000
2005 2006 2007 2008 2009

3.56 5.36 6.52 5.08 3.55
Time Interest Earned Ratio
7
6.52
6
5.36
Value in Times
5 5.08
4
3.56 3.55
3
2 Series1
1 Series2
0 Series3
2005 2006 2007 2008 2009
Series4
Years Series5
Interpretation:
This ratio indicates a firm’s long-term debt paying ability from the income
statement view.
The ratio tends to rise whenever earning before interest and tax increases and
when interest expense decreases and vice versa is also true. A relative high,
stable coverage of interest over the years indicates a good record. A low ratio
indicates a poor record of the company.
From the above table it can be seen that firm’s ratio has increased from the year
2005 to 2007 and the ratio shows a sharp decline in 2008 and 2009.
This sharp decrease in ratio is due to the increase in firm’s short term borrowing
which has increased 17.78% in 2007 to 30.71% in 2008 which has increased the
mark up that ultimately reduced its interest coverage ratio.
38
2. Debt Service Coverage Ratio

Interest Expense + Current Maturity Of LTD
Years 2005 2006 2007 2008 2009

EBIT 57,021.000 133,393,000 213,285,000 285,691,000 308.677,000
Current maturity
Of LTD
6,000,000 26,000,000 46,000,000 43,000,000 40,000,000
2005 2006 2007 2008 2009

2.59 2.62 2.71 2.87 2.43
Debt Service Coverage ratio
2.9
2.87
2.8 Series1
Value in Times
2.71 Series2
2.7
Series3
2.6 2.62
2.59 Series4
2.5 Series5
2.43
2.4
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio measures that how much time a firm has earned after paying the
interest and current maturity of long term debt.
This ratio increases when EBIT increases, interest expense and current
maturity of long term debt decreases.
Greater the ratio, greater the ability of the firm to increase its earning before
interest and taxes after paying the debt.
As we can see from the graph that the debt service coverage ratio increases
from 2005
39
to 2008 and in 2009 there is a sharp decline.
This sharp decline is due to the reason that the firm has borrowed more in
2009 so interest expense increases from 1.84% in 2008 to 2.31% in 2009.
3. Fixed Charge Coverage Ratio

Interest Expense + Current Maturity Of LTD + Rental or Lease Finance
Years 2005 2006 2007 2008 2009
EBIT 57,021.000 133,393,000 213,285,000 285,691,000 308.677,000
Current maturity
6,000,000 26,000,000 46,000,000 43,000,000 40,000,000
Of LTD
Lease Finance 1,627,000 2,306,000 6,041,000 12,341,000 12,510,000
2005 2006 2007 2008 2009

2.41 2.50 2.52 2.56 2.21
Fixed Charge Coverage Ratio

Series1
2.6 Series2
2.55 2.56 Series3
2.5 2.5 2.52
Value in Times
Series4
2.45
2.4 2.41 Series5
2.35
2.3
2.25
2.2 2.21
2.15
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio is an extension of Time interest Earned ratio and indicates the
firm’s long term debt paying ability from the income statement view. It also
indicate the firm’s ability to cover fixed charges.
This ratio increases when earning before interest and taxes increases, and
when interest expense, current maturity of long term debt and rental lease
40
decreases. Greater this ratio, greater the ability of the firm to pay its fixed
charges
As we can see from the graph that the ratio is increasing from 2005 to 2008
and then there is the sharp decline in 2009.
The reason for this sharp decline is that the fixed cost of the company
increases from 2008 to 2009 like interest and lease finance.
4. Debt Ratio
Total Liabilities
Total Assets
Years 2005 2006 2007 2008 2009

Total Liabilities 525,630,000 720,871,000 820,578,000 1,230,730,000 1,256,390,000
Total Assets 708,731,000 967,960,000 1,188,458000 1,746,655,000 1,911,776,000
2005 2006 2007 2008 2009

74.16 74.47 69.04 70.46 65.71
Debt Ratio
80
74.16 74.47
69.04 70.46
65.71
Value in % Age
60
40
Series1
20 Series2
Series3
0
Series4
2005 2006 2007 2008 2009
Series5
Years
Interpretation:
This ratio tells about risky ness of lending to the company. It measures the
percentage of assets financed by the creditors ,and it also help to determine
how well creditors are protected in case of insolvency.
This ratio decreases when total liabilities decreases and total assets
41
increases. Lower the ratio, greater will be the company position.
The graph shows that the ratio is decreasing from 2005 to 2007 and then
increases in 2008 and then again decreased in2009. The lowest debt ratio is
in 2009 because the firm has not taken so much debt in this year which is
the favorable sign for the company.
5. Debt Equity Ratio
Long Term Debt

LTD + Equity
Years 2005 2006 2007 2008 2009

LTD 76,000,000 189,000,000 143,000,000 100,000,000 60,000,000
Equity 183,101,000 247,089,000 367,880,000 515,925,000 655,386,000
2005 2006 2007 2008 2009

29.4:70.6 43.3:56.7 28:72 16.23:83.77 8.4:91.6
Debt Equity ratio
50
43.3
40
Value in ratio
30 29.4 28
Series1
20
16.23
10 8.4
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio determine the long term debt paying ability of the firm by
comparing the total debt with total shareholder’s equity.
This ratio increases when assets when long term debt increases and equity
decreases. Lower this ratio, greater will be the debt position of the company.
The ratio increases from 2005 to 2006 and then show a sharp decline in
42
2007, 2008 and in 2009. the lowest ratio is in the year 2009 which shows
that the company take low debt in this year for its operations while the
major portion is of the equity of the company. So in 2009 the company
position is very favorable. while in 2006 the company’s debt to equity ratio
is very high means that the company took highest debt in this year for its
operations which is not favorable for the company.
6. Fixed Asset Coverage Ratio
Net Fixed Assets

Long term Debt
Years 2005 2006 2007 2008 2009

Net Fixed Assets 226,575,000 365,874,000 493,444,000 635,325,000 614,004,000
Long Term Debt 76,000,000 189,000,000 143,000,000 100,000,000 60,000,000
2005 2006 2007 2008 2009

2.98 1.93 3.45 6.35 1.02
Fixed Asset Coverage Ratio

Series1
7 Series2
6.35
6 Series3
Value in Times
5 Series4
4 Series5
3.45
3 2.98
2 1.93
1 1.02
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio shows the ability of the firm to pay its long term debt after selling the
fixed assets in case of liquidation.
This ratio increases when net fixed assets increases and the long term debt
decreases. Greater the ratio, greater will be the ability of the firm to pay its long
term debt from the fixed assets.
43
The graph indicates that the ratio increases from 2005 to 2008 and show a sharp
decline in 2009. The highest ratio is in the year 2008 which shows greater
ability of the firm to pay its long term debt in 2008.
The reason for sharp decline is that the fixed assets of the company has
decreased from 36.37% in 2008 to 32.11% in 2009 which is not favorable sign
for the company.
E. Investor Ratio
1. Degree Of Financial Leverage
Earning Before Interest and Taxes

Earning Before Tax
Years 2005 2006 2007 2008 2009
EBIT 57,021.000 133,393,000 213,285,000 285,691,000 308.677,000
EBT 42,271,000 106,471,000 191,722,000 233,947,000 220,702,000
2005 2006 2007 2008 2009

1.34 1.25 1.11 1.22 1.39
Degree Of Financial Leverage
1.6
1.4 1.34 1.39
1.2 1.25 1.22
1.11
1
0.8 Series1
0.6
0.4
0.2
0
2005 2006 2007 2008 2009
Years
44
Interpretation:
The use of finances with fixed charges is known as financial leverage. Financial
leverage will be successful if the firm earn more on the borrowed funds than it
pays to use them. And vice versa
This ratio increases when earning before interest and taxes increases and
earning before taxes decreases. If earning before interest increases, the financial
leverage will be favorable. So greater ratio will be favorable for the company.
The graph shows that the leverage decreases from 2005 to 2007 and the start
increasing from 2008. the highest ratio is in 2009 that is 1.39 which is favorable
for the company. The reason for this increase is that the EBIT increased at faster
rate from 2008 as compared with EBT.
2. Earning Per Share
Net Income – Preferred Dividend

No. Of Common Stock Outstanding
Years 2005 2006 2007 2008 2009

Net Income 30,653,000 70,364,000 129,292,000 156,546,000 139,461,000
Preferred Dividend 0 0 0 0 0
No. of C/S Outstanding 4,251,000 4,251,000 5,526,000 5,526,000 33,154,000
2005 2006 2007 2008 2009

7.21 16.55 23.40 28.32 4.21
45
Earning Per Share
30
28.32
25
Value in Rupees
23.4
20
16.55
15 Series1
10
7.21
5 4.21
0
2005 2006 2007 2008 2009
Years
Interpretation:
It is the amount of income earned on a share of common stock during an
accounting period.
This ratio increases when net income increases. Greater he earning per
share, more the investor are attracted towards the firm and more the firm get
funds for working. So greater ratio is a good sign.
The graph indicates that the earning per share increases from 2005 to 2008
and then show a sharp decline in 2009. The reason for this decline is that the
net income of the company decreases in 2009 while the number of share
outstanding increases in the same year so in this way the earning per share
decreases. This decrease in earning per share is not favorable for the
46
company because it looses the attraction of the company for the investor and
they will not be willing to purchase the shares of the company and in this
way company will not be able to generate more funds.
3. Price Earning Ratio

Market Price Per Share
Earning Per Share
Years 2005 2006 2007 2008 22009
Market Price/Share 125 111 208 363 87
28.3
Earning/Share 7.21 16.55 23.40 4.21
2
2005 2006 2007 2008 2009

17.34 6.71 8.89 12.82 20.67
Price Earning Ratio
25
20 20.67
Value in Times
17.34
15
12.82 Series1
10
8.89
6.71
5
0
2005 2006 2007 2008 2009
Years
Interpretation:
This ratio is considered as a gauge of the future earning power of the firm. It
measures how much the investors are willing to pay as price in relation to
earnings.
Companies having high growth opportunities have high P/E ratio.
This ratio increases when market price per share increases. Greater the ratio
Lesser will be the ability of the firm to increase its future earnings.
The graph shows that the ratio is high in 2005 and then shows a great
47
decline in 2006 and start increasing from 2007. the highest price earning
ratio is in 2009 which is the not favorable sign for the company to attract the
investors.
4. Book Value Per Share
Shareholder Equity – Preferred Equity

No. Of Common Stock Outstanding
Years 2005 2006 2007 2008 2009

Shareholder Equity 183,101,000 247,089,000 367,880,000 515,925,000 655,386,000
Preferred Equity 0 0 0 0 0
No. of C/S Outstanding 4,251,000 4,251,000 5,526,000 5,526,000 33,154,000
2005 2006 2007 2008 2009

43.1 58.1 86.5 93.4 19.8
Book Value Per Share
100
93.4
86.5
80
Value in Rupees
60 58.1
Series1
40 43.1
20 19.8
0
2005 2006 2007 2008 2009
Years
48
Interpretation:
This ratio indicates the value of the company inside the company.
It indicates the amount of shareholder equity that relates to each share of
outstanding common stock.
The book value increases if the company have earned the premium and
when retained earning increases. Greater the ratio, better will be the
condition of the company.
The graph shows that the book value increases from 2005 to 2008 and then
decline sharply in 2009. The highest book value per share is in 2007and
decrease in 2009 is not a favorable sign for the company. The reason for this
decrease is that the increase in number of share is more as compared to
Equity.
Rs. In Thousands
Particulars 2005 2006 2007 2008 2009
Assets
Current assets
Cash and bank balances 5,579 83,025 18,146 13,496 15,205
Trade debts 75,877 101,940 112,585 259,091 274,556
Stock in trade
Raw material 91,662 109,346 163,939 301,738 356,650
Packing material 68,487 59,219 74,501 85,646 82,932
Work in progress 119,740 97,603 139,695 213,773 235,844
49
Finished goods 76,766 101,067 98,872 154,102 171,551
Total stock in trade 356,655 367,235 477,007 755,259 846,977
Store,spare parts and loose tools 3,299 3,463 4,322 7,499 5,432
Accrued interest/mark up NIL 1,637 NIL NIL NIL
Advances 14,029 13,586 11,794 18,965 29,044
Trade deposit and prepayments 1,822 4,290 2,520 2,333 6,660
Other receivables 913 1,063 25,393 1,199 2,632
Tax refunds adjustable with government 17,553 19,279 37,702 46,850 76,435
Total current assets 475,727 595518 689,469 1,104,692 1,256,941
Non-current assets
Long term deposits 2,139 2,504 2,766 4,444 5,163
Intangibles 4,290 4,064 2,779 2,194 35,668
Total non-current assets 6,429 6568 5,545 6,638 40,831
Fixed assets(property,plants,equipments)
Fixed assets at cost 327,909 353,976 532,564 805,439 875,622
Accumulated depreciation (145,221) (161,691) (189,868) (240,925) (309,823)
Book value 182,688 192,285 342,696 564,514 565,799
Work in progress 43,887 173,589 150,748 70,811 48,205
Total fixed assets 226,575 365,874 493,444 635,325 614,004
Total assets 708,731 967,960 1,188,458 1,746,655 1,911,776
Particulars 2005 2006 2007 2008 2009

Liabilities and Owner's equity
Short-term liabilities
Short-term borrowing 270,718 195,925 211,272 536,341 485,536
Trade 29,407 16,472 38,886 35,811 43,781
Other payables 111,051 228,516 276,432 333,754 416,845
Accrued interest/mark up 4,688 8,491 10,184 17,186 17,764
Current maturity of:
Long term financing 6,000 26,000 46,000 43,000 40,000
Liabilities against assets subject to financial
lease 1,627 2,306 6,041 12,341 12,510
Adjustables with government NIL NIL NIL 13,277 17,475

Provision for income tax 12,000 37,000 38,000 42,000 82,000
Total short-term liabilities 435491 514710 626,815 1,033,710 1,115,911
Non-current liabilities
Deffered tax 11,808 11,467 35,357 70,758 59,999
Retirement benefits obligations NIL NIL NIL NIL 6,780
Total non-current liabilities 11,808 11,467 35,357 70,758 66,779
Long-term liabilities
50
lease 2,331 5,694 15,406 26,262 13,700
Total long-term liabilities 78,331 194,694 158,406 126,262 73,700
Owner's equity
Paid up capital 42,505 42,505 42,505 55,257 331,542
Share premium-capital reserve 6102 6102 6,102 6102 NIL
Unapproperiated profit 134,494 198,482 319,273 454,566 323,844
Total owner's equity 183,101 247,089 367,880 515,925 655,386
Total liabilities and owner's equity 708,731 967960 1,188,458 1,746,655 1,911,776
51
National Food Limited
Summarized Income Statement
For The Year Ended On June 30
Rs. In thousands
Particulars 2005 2006 2007 2008 2009
Net sales 1,533,879 1,847,700 2,391,058 3,061,746 3,758,706
Cost of production
Raw material 973,109 1,058,595 1,266,725 1,759,371 2,204,724
Labour and wages 96,841 124,578 157,545 178,716 210,879
Depriciation 16,350 19,894 24,747 36,229 50,906
Overhead 66,230 97,671 121,362 156,883 183,195
Total cost of production 1,152,530 1,300,738 1,570,379 2,131,199 2,649,704
Inventory adjustment (15,803) (24,301) 2195 (55,230) (17,449)
Cost of good sold (1,136,727) (1,276,437) (1,572,574) (2,075,969) (2,632,255)
Gross profit 397,152 571,263 818,484 985,777 1,126,451
Operating expenses
General admn expenses (51,842) (73,112) (91,297) (129,868) (152,110)
Selling expenses (288,289) (364,758) (513,902) (570,218) (665,664)
Total operating expenses (340,131) (437,870) (605,199) (700,086) (817,774)
Operating profit 57,021 133,393 213,285 285,691 308,677
Other operating income/expense 4,069 5,629 25,553 22,123 16,223
Financial cost or interest expenses (16,006) (24,850) (32,675) (56,238) (86,841)
Total financial&other expense/income (11,937) (19,221) (7,122) (34,115) (70,618)
Profit before workers fund and taxes 45,084 114,172 206,163 251,576 238,059
Workers fund (2,813) (7,701) (14,441) (17,629) (17,357)
Profit before tax 42,271 106,471 191,722 233,947 220,702
Taxes (11,618) (36,107) (62,430) (77,401) (81,241)
Net profit 30,653 70,364 129,292 156,546 139,461
52
Changes In Absolute Data w.r.t Base Year
Summarized Balance Sheet
As of June 30
Rs. In Thousands Rs. in Thousands
Particulars 2005 2006 2007 2008 2009
Assets
Current assets
Cash and bank balances 5,579 77,446 12,567 7,917 9,626
Trade debts 75,877 26,063 36,708 183,214 198,679
Stock in trade 356,655 10,580 120,352 398,604 490,322
Store,spare parts and loose tools 3,299 164 1,023 4,200 2,133
Accrued interest/mark up NIL 1,637 NIL NIL NIL
Advances 14,029 (443) (2,235) 4,936 15,015
Trade deposit and prepayments 1,822 2,468 698 511 4,838
Other receivables 913 150 24,480 286 1,719
Tax refunds adjustable with government 17,553 1,726 20,149 29,297 58,882
Total current assets 475,727 119791 213,742 628,965 781,214
Non-current assets
Long term deposits 2,139 365 627 2,305 3,024
Intangibles 4,290 (226) (1,511) (2,096) 31,378
Total non-current assets 6,429 139 (884) 209 34,402
Fixed assets at cost 327,909 26,067 204,655 477,530 547,713
Accumulated depreciation 145,221 16,470 44,647 95,704 164,602
Book value 182,688 9,597 160,008 381,826 383,111
Work in progress 43,887 129,702 106,861 26,924 4,318
Total fixed assets 226,575 139,299 266,869 408,750 387,429
Total assets 708,731 2,592,229 479,727 1,037,924 1,203,045
Particulars 2005 2006 2007 2008 2009

Short-term borrowing 270,718 (74,793) (59,446) 265,623 214,818
Trade 29,407 (12,935) 9,479 6,404 14,374
Other payables 111,051 117,465 165,381 222,703 305,794
Accrued interest/mark up 4,688 3,803 5,496 12,498 13,076
lease 1,627 679 4,414 10,714 10,883
Adjustables with government NIL NIL NIL 13,277 17,475
Provision for income tax 12,000 25,000 26,000 30,000 70,000
Total short-term liabilities 435,491 79,219 191,324 598,219 680,420
Deffered tax 11,808 (341) 23,549 58,950 48,191
Retirement benefits obligations NIL NIL NIL NIL 6,780
Total non-current liabilities 11,808 (341) 23,549 58,950 48,191
53
Long term financing 76,000 113,000 67,000 24,000 -16,000
lease 2,331 3,363 13,075 23,931 11,369
Total long-term liabilities 78,331 116,363 80,075 47,931 -4,631
Owner's equity
Paid up capital 42,505 0 0 12,752 289,037
Share premium-capital reserve 6102 0 0 0 NIL
Unapproperiated profit 134,494 63,988 184,779 320,072 189,350
Total owner's equity 183,101 63,988 184,779 332,824 472,285
Total liabilities and owner's equity 708,731 259229 479,727 1,037,924 1,203,045
54
Changes in absolute Data
Summarized Income Statement
For The year Ended On June 30
Rs. In thousands
Particulars 2005 2006 2007 2008 2009
Net sales 1,533,879 313,821 857,179 1,527,867 2,224,827
Cost of production
Raw material 973,109 85,486 293,616 786,262 1,231,615
Labour and wages 96,841 27,737 60,704 81,875 105,038
Depriciation 16,350 3,544 8,397 19,949 34,556
Overhead 66,230 31,441 55,132 90,653 116,965
Total cost of production 1,152,530 148,208 417,849 978,739 1,488,174
Inventory adjustment 15,803 8,498 -13608 39,427 1,646
Cost of good sold 1,136,727 139,710 435,847 939,242 1,495,528
Gross profit 397,152 174,111 421,330 588,625 729,299
Operating expenses
General admn expenses 51,842 21,270 39,455 78,026 100,268
Selling expenses 288,289 76,469 225,613 281,929 377,375
Total operating expenses 340,131 97,739 265,068 359,955 477,643
Operating profit 57,021 76,372 156,264 228,670 251,656
Other operating income/expense 4,069 1,560 21,484 18,054 12,154
Financial cost or interest expenses 16,006 8,844 16,669 40,232 70,835
Total financial&other expense/income 11,937 7,284 (4,815) 22,178 58,681
Profit before workers fund and taxes 45,084 69,088 161,079 206,492 192,975
Workers fund 2,813 4,888 11,628 14,816 14,544
Profit before tax 42,271 64,200 149,451 191,676 178,431
Taxes 11,618 24,489 50,812 65,783 69,623
Net profit 30,653 39,711 98,639 125,893 108,808
55
Horizontal Analysis w.r.t Base Year
Summarized Balance Sheet
As of June 30
Rs. In Thousands % Age

Particulars 2005 2006 2007 2008 2009
Assets
Current assets
Cash and bank balances 100 1,488 325 242 273
Trade debts 100 134 148 341 362
Stock in trade
Raw material 100 119 179 329 389
Packing material 100 87 109 125 121
Work in progress 100 82 117 179 170
Finished goods 100 132 129 201 223
Total stock in trade 100 103 134 212 237
Store,spare parts and loose tools 100 105 131 227 165
Accrued interest/mark up 100 0 NIL NIL NIL
Advances 100 97 84 135 207
Trade deposit and prepayments 100 235 138 128 366
Other receivables 100 116 2,781 131 288
Tax refunds adjustable with government 100 110 215 267 435
Total current assets 100 125 145 232 264
Non-current assets
Long term deposits 100 117 129 208 241
Intangibles 100 95 65 51 831
Total non-current assets 100 102 86 103 635
Fixed assets at cost 100 108 162 246 267
Accumulated depreciation 100 111 131 166 213
Book value 100 105 188 309 310
Work in progress 100 395 343 161 110
Total fixed assets 100 161 218 280 271
Total assets 100 137 168 246 270
Particulars 2005 2006 2007 2008 2009

Short-term borrowing 100 72 78 198 179
Trade 100 56 132 122 149
Other payables 100 206 249 300 375
Accrued interest/mark up 100 181 217 366 379
Long term financing 100 433 767 717 667
lease 100 142 371 758 769
Adjustables with government NIL NIL NIL 0 0
56
Provision for income tax 100 308 317 350 683
Total short-term liabilities 100 118 144 237 256
Deffered tax 100 97 299 599 508
Retirement benefits obligations NIL NIL NIL NIL 0
Total non-current liabilities 100 97 299 599 508
Long term financing 100 249 188 131 79
lease 100 244 661 1,127 588
Total long-term liabilities 100 248 202 161 94
Owner's equity
Paid up capital 100 100 100 130 780
Share premium-capital reserve 100 100 100 100 0
Unapproperiated profit 100 147 237 338 241
Total owner's equity 100 135 201 282 358
Total liabilities and owner's equity 100 136 168 246 270
57
Horizontal Analysis
Summerized Income Statement
For The year Ended On june 30
Rs. In
thousands
Particulars 2005 2006 2007 2008 2009
Net sales 100 120 156 200 245
Cost of production
Raw material 100 109 130 181 227
Labour and wages 100 128 162 184 217
Depriciation 100 122 151 221 140
Overhead 100 147 183 237 277
Total cost of production 100 112 136 185 230
Inventory adjustment 100 154 14 349 110
Cost of good sold 100 112 138 183 232
Gross profit 100 1,538 206 248 284
Operating expenses
General admn expenses 100 141 176 251 293
Selling expenses 100 127 178 198 231
Total operating expenses 100 129 178 178 240
Operating profit 100 234 374 501 541
Other operating income/expense 100 138 628 544 28
Financial cost or interest expenses 100 155 204 351 542
Total financial&other expense/income 100 161 60 286 592
Profit before workers fund and taxes 100 253 457 558 528
Workers fund 100 273 513 627 617
Profit before tax 100 252 454 553 522
Taxes 100 310 537 666 699
Net profit 100 229 422 511 455
58
Vertical Analysis
Summerized Balance Sheet
For the Year Ended On June 31
Rs. In Thousands % Age
Particulars 2005 2006 2007 2008 2009
Assets
Current assets
Cash and bank balances 0.78 8.60 1.53 0.77 0.79
Trade debts 10.70 10.50 9.47 14.83 14.36
Stock in trade
Raw material 12.90 11.30 13.79 17.27 18.65
Packing material 9.66 6.10 6.27 4.90 4.34
Work in progress 16.89 10.10 11.75 12.23 12.34
Finished goods 10.80 10.40 8.31 8.82 8.97
Total stock in trade 50.30 37.90 40.14 43.24 44.30
Store,spare parts and loose tools 0.46 0.35 0.36 0.43 0.28
Accrued interest/mark up NIL 0.20 NIL NIL NIL
Advances 1.90 1.40 9.96 1.08 1.52
Trade deposit and prepayments 0.26 0.44 0.21 0.13 0.35
Other receivables 0.20 0.11 2.14 0.07 0.14
Tax refunds adjustable with government 2.50 1.99 3.17 2.68 6.08
Total current assets 67.10 61.52 58.01 63.24 65.74
Non-current assets
Long term deposits 0.30 0.26 0.23 0.25 0.27
Intangibles 0.61 0.42 0.23 0.13 1.86
Total non-current assets 0.91 0.68 0.46 0.38 2.13
Fixed assets at cost 46.30 36.57 44.81 46.11 45.80
Accumulated depreciation 0.21 16.70 15.97 13.79 16.20
Book value 25.80 19.86 28.83 32.32 29.59
Work in progress 6.20 17.93 12.68 4.05 2.52
Total fixed assets 31.90 37.79 41.52 36.37 32.11
Total assets 100 100 100 100 100
Particulars 2,005 2,006 2,007 2,008 2,009

Short-term borrowing 38.19 20.24 17.78 30.71 25.40
Trade 4.15 1.70 3.27 2.05 2.29
Other payables 15.67 23.61 23.26 19.11 21.80
Accrued interest/mark up 0.66 0.88 0.86 0.98 0.93
Long term financing 0.85 2.69 3.87 2.46 2.09
lease 0.23 0.24 0.51 0.71 0.65
59
Adjustables with government NIL NIL NIL 0.76 0.91
Provision for income tax 1.69 3.82 3.19 2.40 4.28
Total short-term liabilities 61.44 53.17 52.74 59.18 58.37
Deffered tax 1.66 1.18 2.97 4.05 3.14
Retirement benefits obligations NIL NIL NIL NIL 0.35
Total non-current liabilities 1.66 1.18 2.97 4.05 3.49
Long term financing 10.72 19.53 12.03 5.73 3.14
lease 0.33 0.59 1.29 1.50 0.72
Total long-term liabilities 10.89 20.12 13.32 7.23 3.86
Owner's equity
Paid up capital 5.99 4.39 3.57 3.16 17.34
Share premium-capital reserve 0.86 0.63 0.51 0.35 NIL
Unapproperiated profit 18.98 20.50 26.86 26.02 16.94
Total owner's equity 25.83 25.52 30.94 29.53 34.28
Total liabilities and owner's equity 100 100 100 100 100
Vertical analysis
60
Summerized Income Statement
For The year Ended On june 30
% Age
Particulars 2,005 2,006 2,007 2,008 2,009
Net sales 100 100 100 100 100
Cost of production
Raw material 63.44 57.29 52.98 57.46 58.66
Labour and wages 6.31 6.74 6.59 5.84 5.62
Depriciation 1.07 1.08 1.03 1.18 1.35
Overhead 4.32 5.29 5.08 5.12 4.87
Total cost of production 75.14 70.40 65.68 69.60 70.50
Inventory adjustment 1.03 1.32 0.09 1.80 0.46
Cost of good sold 74.10 69.08 65.77 67.80 70.03
Gross profit 25.89 30.92 34.23 32.19 29.97
Operating expenses
General admn expenses 3.38 3.96 3.82 4.24 4.05
Selling expenses 18.79 19.74 21.49 18.62 17.71
Total operating expenses 22.17 23.70 25.31 22.86 21.76
Operating profit 3.72 7.22 8.92 9.33 8.21
Other operating income/expense 0.27 0.30 1.07 0.72 0.43
Financial cost or interest expenses 1.04 1.34 1.37 1.84 2.31
Total financial&other expense/income 0.78 1.04 0.29 1.11 1.88
Profit before workers fund and taxes 2.94 6.18 8.62 8.22 6.33
Workers fund 0.18 0.42 0.60 0.58 0.46
Profit before tax 2.76 5.76 8.02 7.64 5.87
Taxes 0.76 1.95 2.61 2.53 2.16
Net profit 1.99 3.81 5.41 5.11 3.71
Activity Ratios:
61
Account Receivable turnover:
Formula is:
Account Receivable turnover = Net Sales /Avg.trade receivables
For 2005:s
Account Receivable turnover = 1,533,879,000 /75,877,000
=20.21 times
For 2006:
Account Receivable turnover = 1,847,700,000 /88,908,500
=20.78 times
For 2007:
Account Receivable turnover =2,391,058,000 /107,262,500
=22.29 times
For 2008:
Account Receivable turnover =3,061,746,000 /185,838,000
=16.47 times
For 2009:
Account Receivable turnover = 3,758,706,000 / 266,823,500
=14.08 times
Aging of Account Receivable:
Formula is:
Aging of Account Receivable =Avg. gross Rec

net sales /365
For 2005:
Aging of Account Receivable = 75,877,000______

1,533,879,000 /365
= 75,877,000___
4,202,408.219
=18.05 days
For 2006:
Aging of Account Receivable = 101,940,000 +75,877,000 /2

1,847,700,000 /365
62
=88,908,500 /5,062,191.781
=17.56 days
For 2007:
Aging of Account Receivable = 112,585,000 +101,940,000/2
2,391,058,000 /365
=107,262,500 /655, 0843.83
=16.37 days
For 2008:
Aging of Account Receivable = 259,091,000 +112,585,00

3,061,746,000/365
=185,838,000 /8,388,345.205
=22.15 days
For 2009:
Aging of Account Receivable = 2,745,556,000 + 259,091,000 /2
3,758,706,000 /365
=266,823,500 /10,297,824.66
=25.91 days
Inventory Turnover:
Formula is:
Inventory Turnover = CGS /Avg.inventory
For 2005:
Inventory Turnover = 1,136,727,000

359,954,000
=3.15 times
For 2006:

365,326,000
=3.49 times
63
For 2007:
Inventory Turnover =1,57 2,574,000
426,013,500
=3.69 times
For 2008:
622,043,500
=3.33 times
For 2009:
Inventory Turnover =2,632,255,000
807,583,500
=3.25 times
Days Sales in Inventory:
Formula is:
Days Sales in Inventory = Avg. inventory
CGS /365
For 2005:
Sales Days in Inventory = 359,954,000______

1,136,727,000 /365
=359,954,000 /3114320.548
=116 days
For 2006:

1,276,437,000 /365
=365,326,000 /3,497,087.671
=104 days
For 2007:
Sales Days in Inventory = 426,013,500_______
1,572,574,000 /365
= 426,013,500 /4,308,421.981
= 98.87 days
64
For 2008:
Sales Days in Inventory = 622,043,500___
2,075,969 /365
= 622,043,500 /5,687,586.301
=109.3 days
For 2009:
2,632,255,000 /365
= 807,583,500
7,211,657.534
= 111.9 days
Working Capital Turnover:
Formula is:
Working Capital Turnover = Net Sales /working Capital
For 2005:
Working Capital Turnover = 1,533,879,000___________

475,727,000 – 435, 491,000
= 38.12 times
For 2006:
Working Capital Turnover = 1,847,700,000___________
595,518,000 - 514,710,000
= = 22.8 times
For 2007:
Working Capital Turnover = 2,391,058,000____________

689,469,000 – 6,269,815,000
= 38.1 times
For 2008:
Working Capital Turnover = 3,061,746,000______________
1,104,692,000 – 1,033,710,000
= 43.13 times
For 2009:
Working Capital Turnover = 3,758,706,000_____________
1,256,941,000 – 1,115,911,000
= 26.65 times
65
Current Assets Turnover:
Formula is:
CGS +Operating expenses +tax
= Current Assets
For 2005:
Current Assets turnover = 1,136,727,000 + 340,131,000 + 11,618,000
475,727,000
= 1,488,476,000
475,727,000
= 3.128 times
For 2006:
Current Assets turnover = 1,276,437,000 + 437,870,000+ 36,107,000
595,518,000
= 1,750,414,000
595,518,000
= 2.93 times
For 2007:
689,469,000
= 2,240,203,000
689,469,000
= 3.24 times
For 2008:
Current Assets turnover = 2,075,969,000+ 700,086,000+ 77,401,000
1,104,692,000
= 2,853,456,000
1,104,692,000
= 2.58times
For 2009:
1,256,941,000
= 3,531,270,000
1,256,941,000
= 2.80times
66
Fixed Assets Turnover:
Formula is:
Fixed Assets Turnover = Net Sales______

Avg.Fixed assets
For 2005:
Fixed Assets Turnover = 1,533,879,000
226,575,000
= 6.7times
For 2006:
296,224,500
= 6.2times
For 2007:
429,659,000
= 5.6times
For 2008:
564,384,500
= 5.42times
For 2009:
624,664,500
= 6.01times
Total Assets turnover:
Formula is:
Total Assets Turnover = Net Sales___

Avg.total assets
For 2005:
Total Assets Turnover = 1,533,879,000

708,731,000
= 2.16times
67
For 2006:
Total Assets Turnover = 1,847,700,000

838,345,500
= 2.20times
For 2007:
Total Assets Turnover =2,391,058,000
1,078,209,000
=2.21times
For 2008:
Total Assets turnover =3,061,746,000
1,467,556,500
=2.08 times
For 2009;
Total Assets Turnover =3,758,706,000
1,829,215,500
=2.05 times
Liquidity Ratios:
Current Ratio:
Formula is:
Current Ratio = Current Assets__

Current liabilities
For 2005:
Current Ratio = 475,727,000
435,491,000
= 1.09: 1
For 2006:
514,710,000
= 1.16: 1
For 2007:
626,815,000
= 1.09: 1
For 2008:
Current Ratio = 1,104,692,000
1,033,710,000
= 1.07: 1
For 2009:
68
Current Ratio = 1,256,941,000
1,115,911,000
= 1.12: 1
Acid Test Ratio:
Formula is:
Acid Test Ratio = Current Assets –Inventories

Current Liabilities
For 2005:
Acid Test Ratio = 475,727,000-359,954,000
435,491,000
=115,773,000
435,491,000
=0.26:1
For 2006:
Acid Test Ratio = 595,518,000-370,698,000
514,710,000
=224,820,000
514,710,000
=0.43:1
For 2007:
Acid Test Ratio = 689,469,000-481,329,000
626,815,000
=208,140,000
626,815,000
=0.33:1
For 2008:
Acid Test Ratio = 1,104,692,000-762,758,000
1,033,710,000
=341,934,000
1,033,710,000
=0.33:1
For 2009:
Acid Test Ratio = 1,256,941,000-852,409,000
1,115,911,000
=404,532,000
1,115,911,000
=0.36:1
69
Cash Flow From operating Ratio:
Formula Is:
Cash Flow From operating Ratio = Operating profit +Deprecation +non-cash

items
Current Liability
For 2005:
Cash Flow From operating Ratio = 57,021,000 +16,350,000
434,591,000
= 73,371,000_
434,591,000
= 0.17
For 2006:
514,710,000
= 153,287,000_
514,710,000
= 0.29
For 2007:
626,815,000
= 238,032,000_
626,815,000
=0.38
For 2008:
Cash Flow from operating Ratio = 285,691,000 +36,229,000
1,033,710,000
= 321,920,000_
1,033,710,000
= 0.31
For 2009:
1,115,911,000
= 359,583,000_
1,115,911,000
= 0.32
Working Capital:
Formula is:
Working Capital = Current Assets – current Liabilities
70
For 2005:
Working Capital = 475,727,000 – 434,591,000
= 40,236,000
For 2006:
Working Capital = 595,518,000 – 514,710,000
= 80,808,000
For 2007:
Working Capital = 689,469,000 – 626,815,000
= 62,654,000
For 2008:
Working Capital = 1,104,692,000 – 1,033,710,000
= 70,982,000
For 2009:
Working Capital = 1,256,941,000 – 1,115,911,000
= 141,030,000
Operating Cycle:
Formula is:
Operating Cycle =Account receivables in days + inventory turnover in days
For 2005:
Operating Cycle = 18.05 + 116

=134.05 days
For 2006:
Operating Cycle = 17.56 + 104

=121.56 days
For 2007:
71
Operating Cycle = 16.37 + 98.87
= 115.24 days
For 2008:
Operating Cycle = 22.15 + 109.3

= 131.45days
For 2009:
Operating Cycle = 25.91+ 111.9

= 137.81days
Profitability Ratios:
Gross Profit margin:
Formula is:
Gross profit margin = gross profit *100

Net sales
For 2005:
Gross profit margin = 397,152,000 *100

1,533,879,000
=26%
For 2006:
184,770,000
=31%
For 2007:
2,391,058,000
=34%
For 2008:

3,061,746,000
=32%
For 2009:
72
Gross profit margin = 1,126,451,000 *100
3,758,706,000
=30%
Operating Profit margin:
Formula is;
Operating Margin = Operating profit *100

Net sales
For 2005:
Operating profit margin = 57,021,000 *100
1,533,879,000
=30.7%
For 2006:

1,847,700,000
=7.2%
For 2007:

2,391,058,000
=8.9%
For 2008:

3,061,746,000
=9.3%
For 2009;

3,758,706,000
=8.2%
Profit before Tax margin;
Formula is:
Profit before tax = profit before tax * 100
73
Net Sales
For 2005:
Profit before Tax = 42,271,000 * 100

1,533,879,000
=2.7%
For 2006:
Profit before Tax = 1,06,471,000 * 100
1,847,700,000
= 5.8%
For 2007:
2,391,058,000
= 8.0%
For 2008:
Profit before Tax = 233.947,000 * 100
3,061,746,000
= 7.6%
For 2009:
3,758,706,000
= 5.9%
Net Profit margin;
Formula is:
Net profit margin = Net profit * 100

Net sales
For 2005:
Net profit margin = 30,653,000 * 100
1,533,879,000
=2.0%
For 2006:
1,847,700,000
=3.8%
For 2007:
2,391,058,000
74
=5.4%
For 2008:
3,061,746,000
=5.1%
For 2009:
3,758,706,000
=3.7%
Return on Assets:
Formula is;
Return on assets = Net income * 100

Avg.total assets
For 2005:
Return on assets = 30,653,000 * 100
708,731,000
= 4.3%
For 2006:
Return on assets = 70,364,000 * 100
838,345,500
= 8.3%
For 2007:
Return on assets = 129,292,000 * 100
1,078,209,000
= 11.99%
For 2008:
Return on assets = 156,546,000 * 100
1,467,556,500
= 10.67%
For 2009:
Return on assets = 139,461,000 * 100
1,829,215,500
= 7.6%
75
Operating Assets Turnover:
Formula is ;
Operating assets turnover = operating income____
Avg.operating assets
For 2005:
Operating assets turnover = 57,021,000_____________
664,844,000
=57,021,000__
664,844,000
=0.085%
For 2006:
664844000 + 794,371,000/2
=133,393,000__
1,459,215,000/2
= 133,393,000
7,296,075,000
=0.18%
For 2007:
1,037,710,000 + 794,371,000/2
=213,285,000
1,832,085,000/2
= 213,285,000
916,040,500
=0.23%
For 2008:
1,037,710,000 + 1,675,844,000/2
=285,691,000
2,713, 554,000/2
= 285,691,000
135,677,700
=0.21%
For 2009:
Operating assets turnover = 308,677,000____________
1,675,844,000 + 1,863,571,000/2
=308,677,000
3,539,415,000/2
= 308,677,000
76
1,769,707,500
=0.17%
Return On Equity:
Return On Equity = Net Income – Preferred Stock

Dividend Average
Total Equity
For 2005
= 30,653,000 - 0
183,101,000
= 16%
For 2006
= 70,364,000 - 0
215,095,000
= 33%
For 2007
= 129,292,000 - 0
307,484,500
= 42%
For 2008
= 156,546,000 - 0
441,902,500
= 35%
For 2009
= 139,461,000 - 0
585,655,500
= 24%
77
Return On Investment:
Return On Investment = Net Income + [(Interest) (1 –

Tax Rate)]
Average LTD + Average
Equity
For 2005
=30,653,000 + [(16,006,000)(1 - 0.35)]
6,000,000 + 183,101,000
= 30,653,000 + 10,403,900
189,101,000
= 22%
For 2006
= 70,364,000 + [(24,850,000) (1 –
0.35)]
132,500,000 + 215,095,000
= 70,364,000 + [16,152,500]
347,595,000
= 25%
For 2007
= 129,292,000 + [(32,675,000) (1 – 0.35)]
166,000,000 + 307,484,500
= 129,292,000 + [21,238,750]
473,484,500
78
= 32%
For 2008
= 156,546,000 + [(56,238,000) (1 – 0.35)]
121,500,000 + 441,902,500
= 156,546,000 + [36,554,700]
563,402,500
= 34%
For 2009
= 139,461,000 + [(86,841,000) (1 – 0.35)]
80,000,000 + 585,655,500
= 139,461,000 + [56,446,650]
665,655,500
= 29%
Dupont Return on assets:
Formula is;
DuPont return on assets = operating profit margin * operating assets turnover
For 2005:
DuPont return on assets = 30.7 * 0.085

= 2.6%
For 2006:
DuPont return on assets = 7.2 * 0.18

= 1.3%
For 2007:
Dupont return on assets = 8.9 * 0.23
= 2.04%
For 2008:
DuPont return on assets = 9.3* 0.21
79
= 1.2%
For 2009:
DuPont return on assets = 8.2* 0.17
= 1.4%
Long Term Analysis:
Time interest earned ratio;
Formula is:
Time interest earned ratio = earning before interest and tax

Interest expense
For 2005:
Time interest earned ratio = 57,021,000
16,006,000
=3.56times
For 2006:

24,850,000
=5.36times
For 2007:
32,675,000
=6.52times
For 2008:
56,238,000
=5.08times
For 2009:
86,841,000
=3.55times
80
Debt Service Coverage ratio:
Formula is:
Debt Service Coverage ratio = Earning before interest and tax

Interest exp + current maturity
Of long term debt
For 2005:
Debt Service Coverage ratio = 57,021,000___________

24,850,000 + 6,000,000
= 57,021,000
22,006,000
=2.59times
For 2006:
Debt Service Coverage ratio = 133,393,000_________

24,850,000 + 26,000,000
= 133,393,000
50,850,000
=2.62times
For 2007:
Debt Service Coverage ratio = 213,285,000_________

32,675,000 + 46,000,000
= 213,285,000
32,675,000
=2.71times
For 2008:
Debt Service Coverage ratio =285,691,000_________

56,238,000 + 43,000,000
= 285,691,000
99,238,000
=2.87times
For 2009:
Debt Service Coverage ratio =308,677,000_________

86,841,000 + 40,000,000
= 308,677,000
126,841,000
=2.43times
81
Fixed charge coverage ratio;
Formula is:
Fixed charge coverage ratio = Earning before interest and tax

Interest exp+current maturity of
LTD +rental or lease finance
For 2005;
Fixed charge coverage ratio = 57,021,000___________________
16,006,000 + 6000,000 +1627,000
= 57,021,000
23,633,000
= 2.41
For 2006;
24,850,000 + 26,000,000 +2,306,000
= 133,393,000
53,156,000
= 2.50
For 2007;
32,675,000 + 46,000,000 +6,041,000
= 213,285,000
84,716,000
= 2.52
For 2008;
56,238,000 + 43,000,000 +12,341,000
= 285,691,000
111,579,000
= 2.56
For 2009;
86,841,000 + 40,000,000 +12,510,000
= 308,677,000
139,351,000
= 2.21
Debt ratio:
82
Formula is:
Debt ratio = Total liabilities *100

Total assets
For 2005:
Debt ratio = 525,630,000 *100

708,731,000
= 74.16%
For 2006:
Debt ratio = 720,871,000 *100

967,960,000
= 74.47%
For 2007:
Debt ratio = 820,578,000 *100

118,458,000
= 69.04%
For 2008:
Debt ratio = 1,230,730,000 *100

1,746,655,000
= 70.46%
For 2009:
Debt ratio = 1,256,390,000 *100

1,911,776,000
= 65.71%
Debt Equity Ratio:
Formula is:
Debt Equity Ratio = Long term debt

LTD + equity
For 2005;
Debt Equity Ratio = 76,000,000_____________

76,000,000+ 183,101,000
83
= 76,000,000
259,101,000
=29.4:70.6
For 2006;
Debt Equity Ratio = 189,000,000

189,000,000+ 247,089,000
= 189,000,000
259,101,000
= 43.3:56.7
For 2007;
143,000,000+ 367,880,000
= 143,000,000
510,880,000
= 28:72
For 2008;

100,000,000+ 515,925,000
= 100,000,000
615,925,000
= 16.23:83.77
For 2009;

60,000,000+655,386,000
= 60,000,000
715,386,000
= 8.4:91.6
Fixed Assets Coverage Ratio:
Formula is:
Fixed Charge Coverage Ratio = Net fixed assets

Long term debt
For 2005:
Fixed Charge Coverage Ratio = 226,575,000
76,000,000
= 2.98
For 2006:
84
189,000,000
= 1.93
For 2007:
143,000,000
= 3.45
For 2008:
100,000,000
= 6.35
For 2009:
60,000,000
= 1.02
Investor Ratios:
Financial Leverage Effect
Financial Leverage Effect = Operating Income

Net Income
For 2005
= 57,021,000
30,653,000
= 1.86
For 2006
= 133,393,000
70,364,000
= 1.89
For 2007
= 213,285,000
129,292,000
= 1.65
85
For 2008
= 285,691,000
156,546,000
= 1.82
For 2009
= 308,677,000
139,461,000
= 2.21
Degree of Financial Leverage = Earning Before Interest

and Tax Earning
Before Tax
For 2005
= 57,021,000
42,271,000
= 1.34
For 2006
= 133,393,000
106,471,000
= 1.25
For 2007
= 213,285,000
191,722,000
= 1.11
For 2008
= 285,691,000
233,947,000
86
= 1.22
For 2009
= 308,677,000
220,702,000
= 1.39
Earning Per Share:
EPS = Net Income – Preferred Dividend

No. of Common Stock
Outstanding
For 2005
= 30,653,000 - 0
4,251,000
= 7.21 Rs.
For 2006
= 70,364,000 - 0
4,251,000
= 16.55 Rs.
For 2007
= 129,292,000 - 0
5,526,000
= 23.40 Rs.
For 2008
= 156,546,000 - 0
5,526,000
= 28.32 Rs.
For 2009
= 139,461,000 - 0
87
33,154,000
= 4.21 Rs.
Price-Earning Ratio:
Price-Earning Ratio = Market Price per Share
Earning Per Share
For 2005
= 125
7.21
= 17.34 Times
For 2006
= 111
16.55
= 6.71 Times
For 2007
= 208
23.40
= 8.89 Times
For 2008
= 363
28.32
= 12.82 Times
For 2009
= 87
4.21
= 20.67 Times
88
=
Book Value Per Share:
Book Value Per Share = Stockholder Equity – Preferred

Equity No. of Common
Stock Outstanding
For 2005
= 183,101,000 - 0
4,251,000
= 43.1 Rs.
For 2006
= 247,089,000 - 0
4,251,000
= 58.1 Rs.
For 2007
= 367,880,000 - 0
4,251,000
= 86.5Rs.
For 2008
= 515,925,000 - 0
5,526,000
= 93.4 Rs.
For 2009
= 655,386,000- 0
33,154,000
= 19.8 Rs.
Composite Or Expended Analysis
89
Multivariate Model:
Z-Score = 0.012X1 + 0.014X2 + 0.033X3 + 0.066X4
+0.010X5
X1 = Working Capital
Total Assets
For 2005
= 40,236,000
708,731,000
= 0.057
For 2006
= 80,808,000
967,960,000
= 0.083
For 2007
= 62,654,000
1,188,458,000
= 0.053
For 2008
= 70,982,000
1,746,655,000
= 0.041
For 2009
= 141,030,000
1,911,776,000
= 0.074
X2 = Retained Earnings
Total Assets
90
For 2005
= 140,596,000
708,731,000
= 0.20
For 2006
= 204,584,000
967,960,000
= 0.21
For 2007
= 325,375,000
1,188,458,000
= 0.27
For 2008
= 460,668,000
1,746,655,000
= 0.26
For 2009
= 323,844,000
1,911,776,000
= 0.17
X3 = Earning Before Interest And

Taxes
Total Assets
For 2005
= 57,021,000
708,731,000
= 0.080
For 2006
91
= 133,393,000
967,960,000
= 0.14
For 2007
= 213,285,000
1,188,458,000
= 0.18
For 2008
= 285,691,000
1,746,655,000
= 0.16
For 2009
= 308,677,000
1,911,776,000
= 0.16
X4 = Market Value Of Equity
Book Value Of Total Asset

For 2005
= 5,313,125,000
563,510,000
= 9.4
For 2006
= 4,718,055,000
806,269,000
= 5.85
For 2007
= 8,841,040,000
998,590,000
92
= 8.85
For 2008
= 20,058,291,000
1,505,730,000
= 13.32
For 2009
= 28,844,154,000
1,601,953,000
= 18.0
X5 = Net Sales
Total Assets
For 2005
= 1,533,879,000
708,731,000
= 2.16
For 2006
= 1,847,700,000
967,960,000
= 1.91
For 2007
= 2,391,058,000
1,188,458,000
= 2.01
For 2008
= 3,061,746,000
1,746,655,000
= 1.75
93
For 2009
= 3,758,706,000
1,911,776,000
= 1.97
Z-Score = 0.012X1 + 0.014X2 + 0.033X3 + 0.066X4 + 0.010X5
For 2005
Z-Score = 0.012(0.057) + 0.014(0.20) 0.033(0.080) + 0.066(9.4) +

0.010(2.16)
= 0.000684 + 0.0028+ 0.00264 + 0.6204 + 0.0216
= 0.65
For 2006
Z-Score = 0.012(0.083) + 0.014(0.21) + 0.033(0.14) + 0.066(5.85) +

0.010(1.91)
= 0.000996 + 0.00294 + 0.00462 + 0.3861 + 0.0191
= 0.41
For 2007
Z-Score = 0.012(0.053) + 0.014(0.27) + 0.033(0.18) + 0.066(8.85)+

0.010(2.01)
= 0.000636 + 0.00378 + 0.00594 + 0.5841 + 0.0201
= 0.61
For 2008
Z-Score = 0.012(0.041) + 0.014(0.26) + 0.033(0.16) + 0.066(13.32) +

0.010(1.75)
= 0.000492 + 0.00364 + 0.00528 + 0.87912 + 0.0175
= 0.91
For 2009
Z-Score = 0.012(0.074) + 0.014(0.17) + 0.033(0.16) + 0.066(18.0) +

0.010(1.97)
= 0.000888 + 0.00238 + 0.00528 + 1.188+ 0.0197
= 1.22
94
Conclusion.
We may conclude that the National foods is the top ten gainer of Pakistan,
during these five years although firm sales have increased but there is increase
in expenses at a faster rate as compare to net sales. Due to this reason there is a
decline in the profit.
During these five years especially in 2009 company’s total assets have increased
but liabilities also increased at a faster rate and owner’s equity decreased.
95
The firm’s efficiency is going worse from 2005 to 2009 which is not a favorable
sign for the company
The firm’s liquidity position is better than the previous year which is a favorable
sign for the company.
The overall profitability of the firm is decreasing from 2005 to 2009 which is
not a good sign for the company.
The firm’s long term debt paying ability is showing different variations in these
five years. The debt paying ability is high in 2009 which is a favorable sign for
the company.
Due to decrease in net profit the earning per share, book value per share etc. are
going in worse condition which is unfavorable for the company because
investor will not invest in companies in which they earn less.
So, we conclude that the company’s overall financial position is not going well
in 2009 as compared with previous years, so company should try to improve it.
Suggestions
 The company should utilize its assets efficiently.

 The company should try to decrease its expense so that the net profit
increases and the profitability of the company improve.
 The company should try to maintain its liquidity position in order to
meet its current liabilities.
 The company should not only focus on its current liabilities, it should
also try to meet its long term obligations.
96
 The company should also focus on maximizing shareholder’s value to
get more capital.
 The company should also try to attract the new investors so that the
capital for the company increases.
97

Financial Statement ANalysis of National Foods Limited Pakistan From 2005-2009

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Financial Statement ANalysis of National Foods Limited Pakistan From 2005-2009

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In the Name of Allah,

The Most Beneficent,

All praises & humble thanks for Almighty ALLAH the

beneficial most merciful potentially upon us to

present report successful with all sincerity our gratitude

Holy Prophet Mohammad (SAW) who is the source of

Enlightenment, guidance, wisdom and knowledge for

Humanity in all sphere of life.

We would also like to pay gratitude to Mr. Muhammad

1. Executive Summary 7-8

2. Introduction of National Foods 9

6. Long Term Analysis 35

9. Conclusions and Recommendations 95-96

1. Summarized Balance Sheet 46

2. Summarized Income statement 49

3. Changes in Absolute Data 52

5. Common Size Analysis or Vertical Analysis 60

9. Long Term Analysis 79

10. Investor Analysis 84

11. Composite Analysis 89

Sr# Description Data

Introduction of National Foods

Competent Human Resources from within the company have fuelled

In this innovative age of ever changing lifestyles, fuelled by the rampant

To be a Rs. 50 billion food company by the year 2020 in the

convenience food segment by launching products and services in the

for our customers through management excellence at all levels.

 National Foods must focus on customer’s needs and serve

them with quality products at affordable prices at their

 Our products must be pure and conform to international

 Our research must continuously produce new

adventurous products scientifically tested, hygienically

produced in safe and attractive packaging.

 We must create environment in our offices and factories

where talents are groomed and have opportunity to

advance in their careers.

 We must prove to be recognized as good corporate

citizens, support good causes-charity and bear fair share

 Reserves must be built, new factories created, sound

profits made and fair dividend paid to our stock holders

through building a reliable brand.

 National Foods Ltd. must get itself recognized as leader

in Pakistan and abroad.

We see the world through the eyes of our customers. We do

Our roles are defined, not our responsibilities. We believe in going

We are a part of the solution…never the problem. We act like owners

We don’t run our business at the cost of human or ethical values.

We say…we do … we deliver. We talk with our actions. We strive

We see, we act. We take full responsibility for our actions and

Years 2005 2006 2007 2008 2009

2005 2006 2007 2008 2009

Current Assets - Inventories

Years 2005 2006 2007 2008 2009

2005 2006 2007 2008 2009

3. Cash Flow From Operations Ratio

Operating Profit + Dep. +Non Cash Item

Years 2005 2006 2007 2008 2009

2005 2006 2007 2008 2009

4. Working Capital Ratio

Current Assets - Current Liabilities

Years 2005 2006 2007 2008 2009

2005 2006 2007 2008 2009

Working Capital Ratio