TABLE OF CONTENT

ACKNOWLEDGEMENT
2
Vision and Mission 3
COMPANY PROFILE
4
TIME SERIES ANALYSIS
CALCULATION 7
TABLE
12
INTERPRETATION
15

COMMON SIZE
INCOME STATEMENT 16
BALANCE SHEET 17
INTERNAL GROWTH RATE
18
SUSTAINABLE GROWTH RATE
19
PRO FORMA INCOME STATEMENT
20
PRO FORMA BALANCE SHEET
21
CONCLUSION
23
RECOMMENDATION
24

1
 ACKNOWLEDGMENT

In the name of Allah, the most gracious and merciful. First, I am very
thankful from bottom of our hearts to our Allah who helped us to make this
project complete. Second, we would like to thank all the people who helped
us through out this project. Specially, the staff of Hajra textile who gave us
their precious time & ideas.

I specially would like to thank Mr. Jamil Ahmed Sabri & Mr. Muhammad
Mumtaz Khan and my friend Imran saeed who helped us through out this
project with their ideas, concept, time & most of all their knowledge.

2
 VISION
To attain a leadership position in the textile sector through
commitment,integrity,honesty and team work.

MISSION STATEMENT
The company will conduct its prudently assuring customer
satisfaction and to provide profits as well as growth to its
shareholder through:
 Striving hard to develop new market for sale of our
product.

 Providing quality product to our customer mainly

engaged in the manufacturing of textile product.

 Protecting environment and contributing towards the

economic growth of the country as a good corporate
citizen.

3
Corporate Information:

BOARD OF DIRECTORS

Mr. Noor Ellahi chairman

Mr. Ahmed Ellahi

Mr. M.Hussain Ellahi

Mr. Rukhsani Ellahi

Mr. Salman Yaqub Sheikh

Mr. Muhammad Shafique Bhati

Mr. Shahid Aziz

COMPANY Chief Executive

Mr. Noor Ellahi

CHIEF FINANCIAL OFFICER

Mr.Ahmed Ellahi

AUDIT COMMITEE

Mr. Noor Ellahi

Mr. Salman Yaqub Sheikh

Mr. Muhammad Saeed Rana

AUDITORS

4
 M.Hussain Chudhri

BANKERS

ALLIED Bank Of Pakistan

Bank Of Punjab
Saudi Pak Bank

REGISTERED OFFICE

45-50 Industrial Area ,Gulburg -111,Lahore

Tel(042)5756181-5756183

Fax :(042)5756194-5759466

Email:hajra@pol-net.pk

MILLS AT

Jhamke macheke

8-9KM Sheikhpura ,Sarguda Road,Sheilhpura

RATIO ANALYSIS

5
1. WORKING CAPITAL
Working Capital = Current Assets – Current Liabilities
2006
= 903168109 – 1056843432
= (153675323)
2005
=1040477758 – 893642102
=146835656

2. CURRENT RATIO
Current Ratio = Current Assets
Current Liabilities
2006 2005
= 903168109 = 1040477758
1056843432 893642102
= 0.85: 1 = 1.16:1

3. CASH RATIO
Cash Ratio = Cash
Current Liabilities
2006 2005
= 23858850 = 12223409
1056843432 893642102
= 0.022:1 = 0.013:1

4. QUICK RATIO
Quick Ratio = Quick Assets
Current Liabilities
2006 2005
= 404992337 = 173715775
1056843432 893642102
= 0.32:1 = 0.19:1

5. (a) INVENTORY TURNOVER

Inventory Turn Over = Cost of Goods Sold
Average Inventory
2006 2005
= 2249574997 = 967362954
594.35718 785418763
= 3.78times = 1.23times

(b) INVENTORY TURNOVER DAYS

6
 Inventory Turn Over Days = 360
Times
2006 2005
= 360 = 360
3.78 12.3
= 95 days = 29 days

6. (a) ACCOUNTS RECEIVABLE TURNOVER

Receivable Turn Over = Net Credit Sales
Average Accounts Receivables
2006 2005
= 2671677837 = 1174792736
180966914 154973530
= 14.76 times = 7.8 times

(b) ACCOUNTS RECEIVABLE TURNOVER DAYS

Receivable Turn Over Days = 360
Times
2006 2005
= 360 = 360
14.76 7.8
= 25 days = 47days

7. (a) ACCOUNTS PAYABLE PAYMENT PERIOD

Payable payments = Net Credit Purchases
Average Accounts Payable
2006 2005
= 1277075128 = 1120799093
247214643 130398939
= 5.17 times = 8.5 times

(b) PAYABLE PAYMENT DAYS

Payable Payments Days = 360
Times
2006 2005
= 360 = 360
5.17 8.5
= 71 days = 42 days

8. TOTAL DAYS OF OPERATING CYCLE

Total Days of Operating Cycle = Accounts Receivable Turnover days
+ Inventory Turnover Days
2006 2005
= 25 + 95 = 120 days = 47 + 29 = 76 days

9. DEBT RATIO

7
 Debt Ratio = Total Liabilities x 100
Total Assets
2006 2005
= 1155582990 x 100 = 973895594 x 100
3070491272 2369940076
= 37.63% = 41.10%

10. EQUITY RATIO

Equity Ratio = Total Shareholder’s Equity x 100
Total Assets
2006 2005
= 737169995 x 100 = 614592756 x 100
3070491272 236940076
= 62.36% = 58.90%

11. ASSETS TURNOVER

Assets Turnover = Total Net Sales x 100
Total Assets
2006 2005
= 1277075128 x 100 =1174792736 x 100
3070491272 236940076
= 87.01% = 40.57%

12. EARNING PER SHARE

Earning per Share = Net Income
No. of Shares
2006 2005
= 137577239 = 88350864
3000000 3000000
= 45.86 = 29.45

13. PRICE EARNING RATIO

Price Earning Ratio = Market Price
Earning per Share
2006 2005
= 62 = 62
45.86 29.45
= 1.35 =2.11

14. DIVIDEND PER SHARE

Dividend per Share = Dividend
No. of Shares
2006 2005
= 150000000 = 150000000

8
 3000000 3000000
=5 =5

15. DIVIDEND YIELD

Dividend Yield = Dividend per Share
Market Price
2006 2005
=5 =5
62 62
= 0.08 = 0.08

16. BOOK VALUE PER SHARE

Book Value per Share = Total Shareholder’s Equity
No. of Shares
2006 2005
= 737169995 = 614592756
3000000 3000000
= 245.72 = 204.86

17. RATE OF RETURN ON TOTAL ASSETS

Return on Total Assets = Net Income x 100
Total Assets
2006 2005
= 137577239 x 100 = 88350864 x 100
3070491272 2369940076
= 4.48% = 3.72%

18. RATE OF RETURN ON SHAREHOLDER’S EQUITY

Return on Shareholder’s Equity = Net Income x 100
Total Shareholder’s Equity
2006 2005
= 137577239 x 100 = 88350864 x 100
737169995 614592756
= 18.66% = 14.37%

19. RATE OF COST OF GOODS SOLD

Rate of Cost of Goods Sold = Cost of Goods Sold x 100
Total Net Sales
2006 2005
= 2249574997 x 100 = 967362954 x 100
2671677837 1174792736
= 84.2% = 82.30%

9
 20. RATE OF GROSS PROFIT
Rate of Gross Profit = Gross Profit x 100
Total Net Sales
2006 2005
= 422102840 X 100 = 207429782 X 100
2671677837 1074792736
= 15.8% = 17.66%

21. RATE OF OPERATING EXPENSES

Rate of Operating Expenses = Operating Expenses x 100
Total Net Sales
2006 2005
= 80816975 x 100 = 56596253 x 100
2671677837 1174792736
= 3.02% = 4.81%

22. RATE OF NET PROFIT

Rate of Net Profit = Net Profit x 100
Total Net Sales
2006 2005
= 137577239 x 100 = 88350864 x 100
2671677837 1174792736
= 5.15% = 7.5%

23. CASH FLOW MARGIN

Cash flow Margin = Cash from Operation x 100
Total Net Sales
= 622607854 x 100 = (232326719) x 100
2671677837 1174792736
= 2.32% = (19.7) %

INTERPRETATION

10
WORKING CAPITAL:
In 2005 company have (78694)perform business operations. In 2006 company have
(17549)as compare to past year company have improve their working capital but
still its liabilities are more then their asset.In this situation company should not take
more liabilities and try to pay their liabilities in order to decrease its liabilities..

CURRENT RATIO :
It is the ability to pay its current liability with current asset in 2005 company has
0.59Rsurrent assets to pay of 1Rs current liability. In 2006 company has 0.89current
asset to pay 1Rs current liability, as compare to 2005 it is increase.

Cash Ratio:
In 2005 company have cash of 0.036Rs to pay 1Rs current liability and in 2006
company have cash 0.19 to pay current liability. As compare to previous year
company take loans and other finance to pay its current liability.

Quick Asset Ratio:

It is the ability to pay 1 Rs current liability to pay it from most liquid asset.
In 2005 company have 0.22 to pay 1Rs of current liability . In 2006 it is increase by
0.56Rsshows company has improve its position to meet current obligation.

Inventory Turnover :
Indicate the sale ability of inventory in 2005 is 7times. In 2006 it is increase by 12 t
times which may be the good sign that company selling its goods by increasing its
time.

Account Receivable Turnover :

Measure collection ability of receivables. In 2005 is 23times that is 2 days. In 2006 it
is increase to 85 times that is 4 days which may be company should improve the
collection ability .

Operating Cycle;
The days which required completing the operational activity of the company.
In 2005 the operating cycle is 158day which were increase in 2006 to 103 day this
shows that the operating activities is increase in 2006.

Debt Ratio :
It indicates percentage of assets through borrowing
In 2005 107.89% of debt ratio tells us the proportion of the company assets that it
has financed with debt . In 2006 it is 91.53% it indicate a fairly high debt position in
comparison .

Equity Ratio :

11
Indicate percentage of assets which stockholder own .In 2005 it is 38.51% and in
2006 it are 8.47% which show increment.

Asset Turnover:
Show the percentage of net income on assets. In 2005 it is 86.84%. In 2006 it is
increased to 105.75%

Earning Per Share :

Gives the amount of earning per one share of common stock . In 2005 the amount of
earning per share is -33.55Rs and in 2006 it is -14.56Rs which may be improve.

Dividend per Share :

The dividend per share in both the year is nil because company is facing loss.

Rate of Cost of goods sold :

It indicate the percentage of cost on sale or the part of cost in sales
In 2005 it is 99.72% which is increase in 2006 to 99.72% this rate of cost of godd
sold is in the retain position..

Rate of return on Asset:

It indicates the percentages of net income on total assets. In 2005 it is -40.46% which
were increase in 2006 to -33.95%this show the increase in net income.

Rate of return on Stock Holder Equity:

It indicates the percentage of net income on total stock holder equity . In 2005 it is
-5.12%. This show the improvement in net income of the company by the company

Rate of Gross profit :

Indicate the percentage of Gross profit on sale or the part of profit in sale
In 2005 it is 0.28% which is reducing in 2006 to 0.28 is in the retaining position.

Book Value per Share :

Book value per share is the value of share on total stock holder’s equity.
In 2006 the book value par share is 6.54 which increase in 2006 to 3.68per share
Rate of Operating Expenses :
It indicates the percentage of operating expense on sale or the part of expense in
sales. In 2005 it is 1.91% which is decrease in 2006 to 2.40% due to increase the
operating expense the net profit is increased.

RATE OF NET PROFIT :

12
It indicates the percentage of net loss on sale or the part of net loss in sales. In 2005
it is -46.73% which is reducing in 2006 to -32.10% due to increase in cost the net
profit is reducing .but company should improve its credit policy to improve it bet
profit. Company facing because of there liabilities other item of income statement
are higher then their profit.

RATIO ANALYSIS
2006 2005
WORKING CAPITAL (153675323) 146835656
CURRENT RATIO 0.85:1 1.16:1
CASH RATIO 0.022:1 0.013:1
QUICK RATIO 0.32:1 0.19:1
INVENTORY TURNOVER 3.78 Times 12.3 Times
INVENTORY TURNOVER DAYS 95 Days 29 Days

13
ACCOUNTS RECEIVABLE TURNOVER 14.76 Times 7.8 Times
ACCOUNTS RECEIVABLE TURNOVER DAYS 25 Days 47 Days
ACCOUNTS PAYABLE PAYMENT PERIOD 5.16 Times 8.5 Times
PAYABLE PAYMENT DAYS 71 Days 42 Days
TOTAL DAYS OF OPERATING CYCLE 120 Days 76 Days
DEBT RATIO 37.63% 41.1%
EQUITY RATIO 62.36% 58.90%
ASSETS TURNOVER 87.01% 40.57%
EARNING PER SHARE 45.86 29.45
PRICE EARNING RATIO 1.35 2.11
DIVIDEND PER SHARE 5 5
DIVIDEND YIELD 0.08 0.08
BOOK VALUE PER SHARE 245.72 204.86
RATE OF RETURN ON TOTAL ASSETS 4.48% 3.72%
RATE OF RETURN ON SHAREHOLDER’S EQUITY 18.66% 14.37%
RATE OF COST OF GOODS SOLD 84.2% 82.30%
RATE OF GROSS PROFIT 15.8% 17.66%
RATE OF OPERATING EXPENSES 3.02% 4.81%
RATE OF NET PROFIT 5.15% 7.5%
CASH FLOW MARGIN 2.32% (19.7)%

BHANERO TEXTILE LIMITED

COMMON SIZE INCOME STATEMENT

Sales 100% 100%

Cost of goods sold 84.20% 86.57%
Gross Profit 15.80% 82.34%
Other operating income 0.626% 17.66
Distribution cost 1.02% 1.11%
Administrative expense 1.64% 2.72%

14
Other operating expenses 0.36% 0.99%
Finance cost 6.90% 4.15%
Profit before tax 6.49% 8.75%
Provision for taxation 1.34% 1.23%
Profit after tax 5.15% 7.52%

BHANERO TEXTILE LIMITED

COMMON SIZE BALANCE SHEET

15
 2006 2005
Assets
Fixed Asset
Property , plant & Equipment 70.07% 55.20%
Long term investment 0.01% 0.01%
Long term loans 0.20% 0.27%
Long term deposits 0.30% 0.62%
Current Assets
Stores, spare parts & loose tools 0.80% 1.02%
Stock in trade 19.35% 33.14%
Trade debts 5.89% 6.54%
Loans & advances 1.27% 1.81%
Trade deposit & short-term prepayments 0.63% 0.35%
Other receivables 0.01% 0.28%
Taxations 0.70% 0.26%
Bank balances 0.78% 0.52%
Total Assets 100% 100%
Equity and liabilities
Share capital And Reserves
Authorized Capital
6,500,000 (2005: 6,500,000) ordinary shares of Rs. 10 each 60000000 60000000
Issued, subscribed and paid-up-capital 0.98% 1.27%
General reserves 21.1% 32.1%
Unappropriated profit 1.86% 1.46%
Non Current liabilities
Long-term financing 36.29% 27.85%
Liabilities against assets subject to finance lease 0.52% 2.37%
Long –term murabaha 1.21% 2.48%
Infrastructure fee payable 0.34% 0.27%
Deferred liabilities:
-employee benefits 1.11% 1.31%
- deferred taxation 2.11% 2.07%
Current liabilities
Trade and other payables 9.91% 6.82%
Make-up accrued on loans 0.92% 0.79%
Short-term barrowing 16.82% 26.73%
Current portion of L long term financing 4.75% 0.84%
Liabilities against assets subject to finance lease 1.31% 1.60%
Total Equity & Liabilities 100% 100%

16
 INTERNAL GROWTH RATE:

Internal Growth Rate = ROA x b x 100

1 – (ROA x b)

= 0.045 x 0.89 x 100

1 – (0.045 x 0.89)

= 0.04005 x 100
0.95995

= 4.17%

17
 SUSTAINABLE GROWTH RATE:

Sustainable Growth Rate = ROE x b x 100

1 – (ROE x b)

= 0.186 x 0.89 x100

1 – (0.186 x 0.89)

= 0.1650 x 100
0.8350

= 19.76%

BHANERO TEXTILE LIMITED

18
 PRO FORMA INCOME STATEMENT

Sales 2778544950
Cost of goods sold 2339557997
Gross Profit 438986953
2006
Other operating income
Assets 17231361.68
Fixed Asset
Distribution cost 2254016089
28227974.32
Current Assets expense
Administrative 9392948833.4
45693388
Total Assets
Other operating expenses 3193310923
10128291.68
Equity and liabilities
Finance cost 191766559.90
Share Capital and Reserve 741934248.5
Profit before tax 180402101.40
Non Current liabilities 1352259506
Provision for taxation 37321772.80
1099117169
Current liabilities
Profit after tax 143080328.6
3193310923
Total Equity & Liabilities

BHANERO TEXTILE LIMITED

COMMON SIZE BALANCE SHEET

19
PLUG VARIABLE

20
Debt Before Projection = 98739558
Debt After Projection = 1352259506
Financing of debt = 1253519948

CONCLUSION:

In preparing this report I focus on all financial concepts that I

learn in the course of business finance. The financial position
of Hajra textile is in worst condition so the finance manager
of this company must think about to maintain the position and
take some important steps for betterment of Hajra textile.

21
 Company need some financial changing according to its ratio
analysis because sustainable growth can be improve more its
means there is a chance of betterment in future so
management need full concentration to handle this situation.

“The only room of the earth is the room of improvement”

RECOMMENDATION
• The short term solvency ratio of the company is in worse
condition. The company should increase its assets or decrease
liabilities.

• The long term solvency ratio of the company is in worse condition

ratio which is in better condition to increase its term solvency.
The company should increase its total assets or decrease total
liabilities.

22
• If Assets utilization ratio of the company can improve. The
company should increase its net sales.

• Profitability ratio of the company is in worst better condition,

company is facing loss if its like this company will be close or
demolished financial manger of company its not able take right
decision as far as company’ betterment is concern., so it should be
fire.

23