Ratio Analysis

1
NATIONAL FOODS
LIMITED
Sr. #.
TOPICS
PAGE #.
1.
Executive Summary
7-8
2.
Introduction of National Foods
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
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
The Company
Condensed Income Statement

A. Net sales
B. Gross profit
C. Operating profit
D. Profit before tax
Net profit
Condensed Balance Sheet

A. Total current assets
B. Total non-current assets
C. Total fixed assets
Total assets
A. Total short-term liabilities
B. Total non-current liabilities
Total long-term liabilities
Total owner's equity
Total liabilities and owner's

equity
4
Liquidity Ratio
Current Ratio
Quick Ratio
Cash Flow From Operations Ratio
Working Capital Ratio
Operating Cycle(days)
Activity Ratio
A/R Turnover(times)
Aging Of A/R(Days)
Inventory Turnover(Times)
Days Sale in Inventory(Days)
Working Capital Turnover(Times)
Current Asste Turnover(Times)
Fixed Assets Turnover(Times)
Total Asset Turnover(Times)
Prifitability Ratios
Gross Profit Margin(%age)
Operating Profit Margin(%age)
Profit Befor Tax Margin(%age)
Net Profit Margin(%age)
Return On Assets(%age)
Data
National Foods Limited
2005
1,533,879
397,152
57,021
42,271
30,653
2005
475,727
477,732
226,575
2006
1,847,700
571,263
133,393
106,471
70,364
2006
595518
6568
365,874
2007
2,391,058
818,484
213,285
191,722
129,292
2007
689,469
691,476
493,444
2008
3,061,746
985,777
285,691
233,947
156,546
2008
1,104,692
1,106,700
635,325
3,758,706
1,126,451
308,677
220,702
139,461
2009
1,256,941
1,258,950
614,004
708,731
967960
1,188,458
1,746,655
1,911,776
435491
11,808
78,331
525,630
514710
11,467
526,177
1,052,354
626,815
35,357
662,172
1,324,344
1,033,710
70,758
1,104,468
2,208,936
1,115,911
3,027,687
4,143,598
655,386
708,731
2005
1.09:1
0.26:1
0.17
40,236,000
134.05
2005
20.21
18.05
3.15
116
38.12
3.13
6.7
2.16
2005
26
3.7
2.7
2
4.3
967960
2006
1.16:1
0.43:1
0.29
80,808,000
121.56
2006
20.78
17.56
3.49
104
22.8
2.93
6.2
2.2
2006
31
7.2
5.8
3.8
8.3
1,188,458
2007
1.09:1
0.33:1
0.38
62,654,000
115.24
2007
22.29
16.37
3.69
98
38.1
3.24
5.6
2.21
2007
34
8.9
8
5.4
11.99
1,746,655
2008
1.07:1
0.33:1
0.31
70,982,000
131.45
2008
16.47
22.15
3.33
109
43.13
2.58
5.42
2.08
2008
32
9.3
7.6
5.1
10.67
1,911,776
2009
1.12:1
0.36:1
0.32
141,030,000
137.81
2009
14.08
25.91
3.25
111
26.61
2.8
6.01
2.05
2009
30
8.2
5.9
3.7
7.6
2009
Return On Equity(%age)
Return On Investment(%age)
Operating Asset Turnover(%age)
Dupont Return on Operating
Asset(%age)
Long term Analysis
Time Interest Earned Ratio(times)
Debt Service Coverage Ratio(Times)
Fixed Charge Coverage Ratio(Times)
Debt Ratio(% age)
Debt Equity ratio
Fixed Assets Coverage Ratio(Times)
Investor Ratio
Degree of Financial Leverage
Earning Per Share
Price Earning Ratio
Book Value Per Share
Composite Ratio
16
22
8.58
33
25
1.83
42
32
23.28
35
34
21.05
24
29
17.44
2.6
1.3
2.04
1.2
1.4
2005
3.56
2.59
2.41
74.16
29.4
2.98
2005
1.34
7.21
17.34
43.1
0.65
2006
5.36
2.62
2.5
74.47
43.3
1.93
2006
1.25
16.55
6.71
58.1
0.41
2007
6.52
2.71
2.52
69.04
28
3.45
2007
1.11
23.4
8.89
86.5
0.61
2008
5.08
2.87
2.56
70.46
16.23
6.35
2008
1.22
28.32
12.82
93.4
0.91
2009
3.55
2.43
2.21
65.71
8.4
1.02
2009
1.39
4.21
20.67
19.8
1.22
Introduction of National Foods

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.
Mission
The primary objective of our social initiative is to improve the quality of life in
Pakistan by eradicating illiteracy throughout Pakistan.
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.
10
Founders Philosophy
National Foods must focus on customers 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
11
through building a reliable brand.
National Foods Ltd. must get itself recognized as leader

in Pakistan and abroad.
Core Values
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 solutionnever the problem. We act like owners

and have a positive influence on others.
Ethics
We dont run our business at the cost of human or ethical values.
Excellence in Execution
We saywe do we deliver. We talk with our actions. We strive
for nothing but the best. Execution is the key to winning!
12
Accountability
We see, we act. We take full responsibility for our actions and
results. We dont blame others for our mistakes; we analyze them
and correct them.
A. Liquidity Ratio
1. Current Ratio
Current Assets
Current Liabilities
Years
Current assets
Current liabilities
2005
2006
2007
2008
2009
475,727,000
595,518,000
89,469,000
1,104,692,000
1,256,941,000
435,491,000
514,710,000
626,815,000
1,033,710,000
1,115,911,000
2005
1.09:1
2006
1.16:1
2007
1.09:1
2008
1.07:1
2009
1.12:1
13
Interpretation:
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
Current assets
Current liabilities
Inventories
2005
2006
2007
2008
2009
475,727,000
595,518,000
89,469,000
1,104,692,000
1,256,941,000
435,491,000
514,710,000
626,815,000
1,033,710,000
1,115,911,000
359,954,000
370,698,000
481,329,000
762,758,000
852,409,000
2005
0.26:1
2006
0.43:1
2007
0.33:1
2008
0.33:1
2009
0.36:1
14
Interpretation:
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
Current liabilities
Operating Profit
Depreciation
Non Cash Items
2005
2006
2007
2008
2009
435,491,000
514,710,000
626,815,000
1,033,710,000
1,115,911,000
57,021,000
133,393,000
213,285,000
285,691,000
308,677,000
16,350,000
19,894,000
24,747,000
36,229,000
50,906,000
2005
0.17
2006
0.29
2007
0.38
2008
0.31
2009
0.32
15
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
Current assets
475,727,000
Current liabilities
435,491,000
2005
2006
40,236,000 80,808,000
2006
595,518,00
0
514,710,00
0
2007
2008
2009
89,469,000
1,104,692,000
1,256,941,000
626,815,000
1,033,710,000
1,115,911,000
2007
2008
62,654,000 70,982,000
2009
141,030,000
16
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
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
Inventory
Turnover in Days
18.05
17.56
16.37
22.15
25.91
116
104
98.87
109.3
111.9
2005
134.05
2006
2007
2008
2009
121.56 115.24 131.45 137.81
17
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.
B. Activity Ratio
1. Accounts Receivable Turnover Ratio
Net Credit Sales

Average Account Receivables
Years
Sales
2005
1,533,879,000
2006
2007
184,700,000 2,391,058,000
2008
2009
3,061,746,000
18
3,758,706,000
Average account receivable
75,877,000
88,908,500
107,262,500
2005
2006
2007
2008
2009
20.21
20.78
22.29
16.47
14.08
185,838,000
266,823,500
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
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
Average Gross
receivable
2005
75,877,000
2006
2007
88,908,500 107,262,500
2008
185,838,000
19
2009
266,823,500
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
Interpretation:
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
20
Years
2005
2006
2007
2008
2009
Cost of good sold
Average inventory
1,136,727,000
1,276,437,000 1,57 2,574,000
2,075,969,000 2,632,255,000
359,954,000
365,326,000
622,043,500
426,013,500
2005
2006
2007
2008
2009
3.15
3.49
3.69
3.33
3.25
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 firms inventory has increased in
2008 and in 2009 and the company fails to convert its more inventories into
CGS.
4. Days sales in inventory:
21
807,583,500
Average inventory
CGS/365
Years
2005
2006
2007
2008
2009
622,043,500
807,583,500
Average inventory
359,954,000
365,326,000
426,013,500
3114320.548
3,497087.671 4,308,421.981
CGS/365
2005
2006
2007
2008
2009
116
104
98.87
109.3
111.9
5,687,586.301 7,211,657.534
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 firms 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
22
Working Capital
Years
Net Sales
Working Capital
2005
2006
2007
1,533,879,000
1,847,700,000
2,391,058,000
3,061,746,000
3,758,706,000
80,808,000
62,654,000
70,982,000
141,030,000
40,236,000
2008
2005
2006
2007
2008
2009
38.12
22.8
38.1
43.13
26.61
2009
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
23
Years
CGS
2005
2006
2007
2008
2009
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
475,727,000
595,518,000
89,469,000
1,104,692,000
1,256,941,000
Current Assets
2005
3.13
2006
2007
2008
2009
2.93
3.24
2.58
2.80
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
24
Years
Net Sales
Avg. Fixed
Assets
2005
2006
1,533,879,000
226,575,000
1,847,700,000
2007
2008
2,391,058,000
296,224,500 429,659,000
2009
3,061,746,000
3,758,706,000
564,384,500 624,664,500
2005
2006
2007
2008
2009
6.7
6.2
5.6
5.42
6.01
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
25
Years
Net Sales
Avg. Total Assets
2005
2006
2007
2008
1,533,879,000
1,847,700,000
2,391,058,000
3,061,746,000
3,758,706,000
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
2009
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
26
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
26%
2006
31%
2007
34%
2008
32%
2009
30%
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
27
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
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
3.7%
2006
7.2%
2007
8.9%
2008
9.3%
2009
8.2%
28
Interpretation:
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 firms 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
2.7%
2006
5.8%
2007
8.0%
2008
7.6%
2009
5.9%
29
Interpretation:
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 firms 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
2.0%
2006
3.8%
2007
5.4%
2008
5.1%
2009
3.7%
30
Interpretation:
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 companys interest and tax expenses have
increased and firms 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
4.3%
2006
8.3%
2007
11.99%
2008
10.67%
2009
7.6%
31
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 thats why there is low
profitability in 2008 and 2009.
6. Return on equity:
Net Income Preferred Dividend
Average Total Equity
Years
Net Income
2005
2006
2007
30,653,000
70,364,000
129,292,000
2008
156,546,000
2009
139,461,000
Preferred Dividend
Average Total Equity
183,101,000
247,089,000
367,880,000
515,925,000
655,386,000
2005
16%
2006
33%
2007
42%
2008
35%
2009
24%
Interpretation:
This measures the return to both common and preferred share holders.
32
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
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%
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.
33
8. Operating Assets Turnover:

Operating Profit
Avg. operating assets
Years
2005
Operating Profit
Avg. operating
assets
2006
57,021.000
664,844,000
2005
8.58%
133,393,000
7,296,075,000
2006
1.83%
2007
2008
213,285,000
285,691,000
916,040,500
1,356,777,00
2007
2008
23.28% 21.05%
2009
308,677,000
1,769,707,500
2009
17.44%
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 firms low efficiency of operating assets to generate sales. Firm has
not utilized its operating assets efficiently to generate sales
34
9. Dupont Return On Operating Asset

Operating Profit margin x Total Asset turnover
Years
Operating Profit Margin

Total Asset turnover
2005
2.6%
2006
1.3%
2005
2006
2007
2008
2009
3.8
5.4
5.1
3.7
2.16
2.20
2.21
2.08
2.05
2007
2.04%
2008
1.2%
2009
1.4%
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.
35
D. Long Term Analysis

1. Time Interest Earned Ratio
Earning before Interest and Tax
Interest Expense
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
3.56
2006
5.36
2007
6.52
2008
5.08
2009
3.55
Interpretation:
This ratio indicates a firms 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
36
indicates a poor record of the company.

From the above table it can be seen that firms 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 firms 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.
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
Interest expense
Current maturity
Of LTD
16,006,000
24,850,000
32,675,000
56,238,000
86,841,000
6,000,000
26,000,000
46,000,000
43,000,000
40,000,000
2005
2.59
2006
2.62
2007
2.71
2008
2.87
2009
2.43
Interpretation:
This ratio measures that how much time a firm has earned after paying the
37
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
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
Interest expense
Current maturity
Of LTD
Lease Finance
16,006,000
24,850,000
32,675,000
56,238,000
86,841,000
6,000,000
26,000,000
46,000,000
43,000,000
40,000,000
1,627,000
2,306,000
6,041,000
12,341,000
12,510,000
2005
2.41
2006
2.50
2007
2.52
2008
2.56
2009
2.21
38
Interpretation:
This ratio is an extension of Time interest Earned ratio and indicates the
firms long term debt paying ability from the income statement view. It also
indicate the firms 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
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
Total Liabilities
Total Assets
2005
2006
2007
2008
2009
525,630,000
720,871,000
820,578,000
1,230,730,000
1,256,390,000
708,731,000
967,960,000
1,188,458000
1,746,655,000
1,911,776,000
2005
74.16
2006
74.47
2007
69.04
2008
70.46
2009
65.71
39
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
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
LTD
Equity
2005
2006
2007
2008
2009
76,000,000
189,000,000
143,000,000
100,000,000
60,000,000
183,101,000
247,089,000
367,880,000
515,925,000
655,386,000
2005
29.4:70.6
2006
43.3:56.7
2007
28:72
2008
16.23:83.77
2009
8.4:91.6
Interpretation:
40
This ratio determine the long term debt paying ability of the firm by
comparing the total debt with total shareholders 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
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 companys 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
Net Fixed Assets

Long Term Debt
2005
2006
2007
2008
2009
226,575,000
365,874,000
493,444,000
635,325,000
614,004,000
76,000,000
189,000,000
143,000,000
100,000,000
60,000,000
2005
2.98
2006
1.93
2007
3.45
2008
6.35
2009
1.02
41
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.
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
1.34
2006
1.25
2007
1.11
2008
1.22
2009
1.39
42
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
43

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
No. of C/S Outstanding
4,251,000
4,251,000
5,526,000
5,526,000
33,154,000
2005
7.21
2006
16.55
2007
23.40
2008
28.32
2009
4.21
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
44
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
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
Market Price/Share
125
111
208
Earning/Share
7.21
16.55
23.40
2005
17.34
2006
6.71
2007
8.89
2008
363
28.3
2
2008
12.82
22009
87
4.21
2009
20.67
Interpretation:
45
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
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
No. of C/S Outstanding
4,251,000
4,251,000
5,526,000
5,526,000
33,154,000
2005
43.1
2006
58.1
2007
86.5
2008
93.4
2009
19.8
46
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.
47
Rs. In Thousands
Particulars
2005
2006
2007
2008
2009
5,579
75,877
83,025
101,940
18,146
112,585
13,496
259,091
15,205
274,556
91,662
68,487
119,740
76,766
356,655
3,299
NIL
14,029
1,822
913
17,553
475,727
109,346
59,219
97,603
101,067
367,235
3,463
1,637
13,586
4,290
1,063
19,279
595518
163,939
74,501
139,695
98,872
477,007
4,322
NIL
11,794
2,520
25,393
37,702
689,469
301,738
85,646
213,773
154,102
755,259
7,499
NIL
18,965
2,333
1,199
46,850
1,104,692
356,650
82,932
235,844
171,551
846,977
5,432
NIL
29,044
6,660
2,632
76,435
1,256,941
Assets
Current assets
Cash and bank balances
Trade debts
Stock in trade
Raw material
Packing material
Work in progress
Finished goods
Total stock in trade
Store,spare parts and loose tools

Accrued interest/mark up
Advances
Trade deposit and prepayments
Other receivables
Tax refunds adjustable with government
Total current assets
Non-current assets
Long term deposits
Intangibles
Total non-current assets
Fixed assets(property,plants,equipments)
Fixed assets at cost
Accumulated depreciation
Book value
Work in progress
Total fixed assets
2,139
4,290
6,429
2,504
4,064
6568
2,766
2,779
5,545
4,444
2,194
6,638
5,163
35,668
40,831
327,909
(145,221)
182,688
43,887
226,575
353,976
(161,691)
192,285
173,589
365,874
532,564
(189,868)
342,696
150,748
493,444
805,439
(240,925)
564,514
70,811
635,325
875,622
(309,823)
565,799
48,205
614,004
Total assets
708,731
967,960
1,188,458
1,746,655
1,911,776
2005
2006
2007
2008
2009
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
Particulars
Liabilities and Owner's equity
Short-term liabilities
48
4,688
8,491
10,184
17,186
17,764
6,000
26,000
46,000
43,000
40,000
1,627
2,306
6,041
12,341
12,510
Current maturity of:

Long term financing
Liabilities against assets subject to financial
lease
49
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
11,808
11,467
35,357
70,758
59,999
NIL
NIL
NIL
NIL
6,780
11,808
11,467
35,357
70,758
66,779
Long term financing

lease
76,000
189,000
143,000
100,000
60,000
2,331
5,694
15,406
26,262
13,700
78,331
194,694
158,406
126,262
73,700
42,505
42,505
42,505
55,257
331,542
6102
6102
6,102
6102
NIL
Unapproperiated profit
134,494
198,482
319,273
454,566
323,844
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
Non-current liabilities
Deffered tax
Retirement benefits obligations
Total non-current liabilities
Long-term liabilities
Owner's equity
Paid up capital
Share premium-capital reserve
50
National Food Limited

Summarized Income Statement
For The Year Ended On June 30
Rs. In thousands
2005
2006
2007
2008
2009
1,533,879
1,847,700
2,391,058
3,061,746
3,758,706
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)
(1,136,727)
(1,276,437)
(1,572,574)
(2,075,969)
(17,449)
(2,632,255)
397,152
571,263
818,484
985,777
1,126,451
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
Financial cost or interest expenses
(16,006)
(24,850)
(32,675)
Total financial&other expense/income
(11,937)
(19,221)
(7,122)
(56,238)
(34,115)
16,223
(86,841)
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
(11,618)
(36,107)
(62,430)
(77,401)
(81,241)
30,653
70,364
129,292
156,546
139,461
Particulars
Net sales
Cost of production
Cost of good sold
Gross profit
Operating expenses
Taxes
Net profit
51
(70,618)
Changes In Absolute Data w.r.t Base Year

As of June 30
Rs. In Thousands
Particulars
Rs. in Thousands
2005
2006
2007
2008
2009
5,579
75,877
356,655
3,299
NIL
14,029
1,822
913
17,553
475,727
77,446
26,063
10,580
164
1,637
(443)
2,468
150
1,726
119791
12,567
36,708
120,352
1,023
NIL
(2,235)
698
24,480
20,149
213,742
7,917
183,214
398,604
4,200
NIL
4,936
511
286
29,297
628,965
9,626
198,679
490,322
2,133
NIL
15,015
4,838
1,719
58,882
781,214
Assets
Current assets
Trade debts
Stock in trade

Advances
Other receivables
Non-current assets
Long term deposits
Intangibles
Book value
Work in progress
Total fixed assets
2,139
4,290
6,429
365
(226)
139
627
(1,511)
(884)
2,305
(2,096)
209
3,024
31,378
34,402
327,909
145,221
182,688
43,887
226,575
26,067
16,470
9,597
129,702
139,299
204,655
44,647
160,008
106,861
266,869
477,530
95,704
381,826
26,924
408,750
547,713
164,602
383,111
4,318
387,429
Total assets
708,731
2,592,229
479,727
1,037,924
1,203,045
2005
2006
2007
2008
2009
270,718
29,407
111,051
4,688
(74,793)
(12,935)
117,465
3,803
(59,446)
9,479
165,381
5,496
265,623
6,404
222,703
12,498
214,818
14,374
305,794
13,076
6,000
20,000
40,000
37,000
34,000
1,627
NIL
12,000
435,491
679
NIL
25,000
79,219
4,414
NIL
26,000
191,324
10,714
13,277
30,000
598,219
10,883
17,475
70,000
680,420
11,808
NIL
11,808
(341)
NIL
(341)
23,549
NIL
23,549
58,950
NIL
58,950
48,191
6,780
48,191
Particulars
Trade
Other payables
Long term financing
lease
Deffered tax
52
Long term financing
lease
Owner's equity
Paid up capital
76,000
113,000
67,000
24,000
-16,000
2,331
78,331
3,363
116,363
13,075
80,075
23,931
47,931
11,369
-4,631
42,505
6102
134,494
183,101
708,731
0
0
63,988
63,988
259229
0
0
184,779
184,779
479,727
12,752
0
320,072
332,824
1,037,924
289,037
NIL
189,350
472,285
1,203,045
53
Changes in absolute Data

Summarized Income Statement
For The year Ended On June 30
Rs. In thousands
Particulars
Net sales
2005
2006
2007
2008
2009
1,533,879
313,821
857,179
1,527,867
2,224,827
Cost of production
Raw material
Labour and wages
Depriciation
Overhead
Cost of good sold
973,109
96,841
16,350
66,230
1,152,530
15,803
1,136,727
85,486
27,737
3,544
31,441
148,208
8,498
139,710
786,262
81,875
19,949
90,653
978,739
39,427
939,242
1,231,615
105,038
34,556
116,965
1,488,174
1,646
1,495,528
Gross profit
397,152
174,111
293,616
60,704
8,397
55,132
417,849
-13608
435,847
421,330
588,625
729,299
Operating expenses
Selling expenses
51,842
288,289
340,131
21,270
76,469
97,739
39,455
225,613
265,068
78,026
281,929
359,955
100,268
377,375
477,643
57,021
4,069
16,006
11,937
76,372
1,560
8,844
7,284
156,264
21,484
16,669
(4,815)
228,670
18,054
40,232
22,178
251,656
12,154
70,835
45,084
2,813
69,088
4,888
161,079
11,628
206,492
14,816
192,975
14,544
Taxes
42,271
11,618
64,200
24,489
149,451
50,812
191,676
65,783
178,431
69,623
Net profit
30,653
39,711
98,639
125,893
108,808
Operating profit

Workers fund
Profit before tax
54
58,681
Horizontal Analysis w.r.t Base Year

As of June 30
Rs. In Thousands
Particulars
% Age
2005
2006
2007
2008
2009
100
100
1,488
134
325
148
242
341
273
362
100
100
100
100
100
100
100
100
100
100
100
100
119
87
82
132
103
105
0
97
235
116
110
125
179
109
117
129
134
131
NIL
84
138
2,781
215
145
329
125
179
201
212
227
NIL
135
128
131
267
232
389
121
170
223
237
165
NIL
207
366
288
435
264
100
100
100
117
95
102
129
65
86
208
51
103
241
831
635
100
100
100
100
100
100
108
111
105
395
161
162
131
188
343
218
246
166
309
161
280
267
213
310
110
271
137
168
246
270
2005
2006
2007
2008
2009
100
100
100
100
72
56
206
181
78
132
249
217
198
122
300
366
179
149
375
379
100
433
767
717
667
100
NIL
142
NIL
371
NIL
758
0
769
0
Assets
Current assets
Trade debts
Stock in trade
Raw material
Packing material
Work in progress
Finished goods

Advances
Other receivables
Non-current assets
Long term deposits
Intangibles
Book value
Work in progress
Total fixed assets
Total assets
Particulars
Trade
Other payables
Long term financing
lease
55

Deffered tax
Long term financing
lease
Owner's equity
Paid up capital
100
100
308
118
317
144
350
237
683
256
100
NIL
100
97
NIL
97
299
NIL
299
599
NIL
599
508
0
508
100
249
188
131
79
100
100
244
248
661
202
1,127
161
588
94
100
100
100
100
100
100
147
135
100
100
237
201
130
100
338
282
780
0
241
358
100
136
168
246
270
56
Horizontal Analysis
Summerized Income Statement
For The year Ended On june 30
Rs. In
thousands
2005
2006
2007
2008
2009
100
120
156
200
245
Cost of production
Raw material
Labour and wages
Depriciation
Overhead
Cost of good sold
100
100
100
100
100
100
100
109
128
122
147
112
154
112
181
184
221
237
185
349
183
227
217
140
277
230
110
232
Gross profit
100
1,538
130
162
151
183
136
14
138
206
248
284
Operating expenses
Selling expenses
100
100
100
141
127
129
176
178
178
251
198
178
293
231
240
100
100
100
100
234
138
155
161
374
628
204
60
501
544
351
286
541
28
542
100
100
253
273
457
513
558
627
528
617
Taxes
100
100
252
310
454
537
553
666
522
699
Net profit
100
229
422
511
455
Particulars
Net sales
Operating profit

Workers fund
Profit before tax
57
592
Vertical Analysis
Summerized Balance Sheet
For the Year Ended On June 31
Particulars
Assets
Current assets
Trade debts
Stock in trade
Raw material
Packing material
Work in progress
Finished goods
Advances
Other receivables
Non-current assets
Long term deposits
Intangibles
Book value
Work in progress
Total fixed assets
Total assets
Particulars
Trade
Other payables
Long term financing
lease
Rs. In Thousands
2005
2006
% Age
2007
2008
2009
0.78
10.70
8.60
10.50
1.53
9.47
0.77
14.83
0.79
14.36
12.90
9.66
16.89
10.80
50.30
0.46
NIL
1.90
0.26
0.20
2.50
67.10
11.30
6.10
10.10
10.40
37.90
0.35
0.20
1.40
0.44
0.11
1.99
61.52
13.79
6.27
11.75
8.31
40.14
0.36
NIL
9.96
0.21
2.14
3.17
58.01
17.27
4.90
12.23
8.82
43.24
0.43
NIL
1.08
0.13
0.07
2.68
63.24
18.65
4.34
12.34
8.97
44.30
0.28
NIL
1.52
0.35
0.14
6.08
65.74
0.30
0.61
0.91
0.26
0.42
0.68
0.23
0.23
0.46
0.25
0.13
0.38
0.27
1.86
2.13
46.30
0.21
25.80
6.20
31.90
100
36.57
16.70
19.86
17.93
37.79
100
44.81
15.97
28.83
12.68
41.52
100
46.11
13.79
32.32
4.05
36.37
100
45.80
16.20
29.59
2.52
32.11
100
2,005
2,006
2,007
2,008
2,009
38.19
4.15
15.67
0.66
20.24
1.70
23.61
0.88
17.78
3.27
23.26
0.86
30.71
2.05
19.11
0.98
25.40
2.29
21.80
0.93
0.85
2.69
3.87
2.46
2.09
0.23
0.24
0.51
0.71
0.65
58

Deffered tax
Long term financing
lease
Owner's equity
Paid up capital
NIL
1.69
61.44
NIL
3.82
53.17
NIL
3.19
52.74
0.76
2.40
59.18
0.91
4.28
58.37
1.66
NIL
1.66
1.18
NIL
1.18
2.97
NIL
2.97
4.05
NIL
4.05
3.14
0.35
3.49
10.72
19.53
12.03
5.73
3.14
0.33
10.89
0.59
20.12
1.29
13.32
1.50
7.23
0.72
3.86
5.99
0.86
18.98
25.83
100
4.39
0.63
20.50
25.52
100
3.57
0.51
26.86
30.94
100
3.16
0.35
26.02
29.53
100
17.34
NIL
16.94
34.28
100
59
Vertical analysis
Summerized Income Statement
For The year Ended On june 30
Particulars
Net sales
Cost of production
Raw material
Labour and wages
Depriciation
Overhead
Cost of good sold
Gross profit
Operating expenses
Selling expenses
Operating profit
Workers fund
Profit before tax
Taxes
Net profit
2,005
100
2,006
100
2,007
100
% Age
2,008
100
2,009
100
63.44
6.31
1.07
4.32
75.14
1.03
74.10
25.89
57.29
6.74
1.08
5.29
70.40
1.32
69.08
30.92
52.98
6.59
1.03
5.08
65.68
0.09
65.77
34.23
57.46
5.84
1.18
5.12
69.60
1.80
67.80
32.19
58.66
5.62
1.35
4.87
70.50
0.46
70.03
29.97
3.38
18.79
22.17
3.72
0.27
1.04
0.78
2.94
0.18
2.76
0.76
1.99
3.96
19.74
23.70
7.22
0.30
1.34
1.04
6.18
0.42
5.76
1.95
3.81
3.82
21.49
25.31
8.92
1.07
1.37
0.29
8.62
0.60
8.02
2.61
5.41
4.24
18.62
22.86
9.33
0.72
1.84
1.11
8.22
0.58
7.64
2.53
5.11
4.05
17.71
21.76
8.21
0.43
2.31
1.88
6.33
0.46
5.87
2.16
3.71
Activity Ratios:
60
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
=88,908,500 /5,062,191.781
61
=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:
Inventory Turnover =
1,276,437,000
365,326,000
=3.49 times
62
For 2007:
Inventory Turnover =1,57 2,574,000
426,013,500
=3.69 times
For 2008:
Inventory Turnover = 2,075,969,000
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:
Sales Days in Inventory =
365,326,000______
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
63
For 2008:
Sales Days in Inventory
For 2009:
Sales Days in Inventory
= 622,043,500___
2,075,969 /365
= 622,043,500 /5,687,586.301
=109.3 days
=
807,583,500______
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
64
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:
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:
1,572,574,000 + 605,199,000+ 62,430,000

689,469,000
2,240,203,000
689,469,000
=
=
For 2008:
=
=
=
For 2009:
=
=
=
3.24 times
2,075,969,000+ 700,086,000+ 77,401,000
1,104,692,000
2,853,456,000
1,104,692,000
2.58times
2,632,255,000 + 817,774,000+ 81,241,000
1,256,941,000
3,531,270,000
1,256,941,000
2.80times
Fixed Assets Turnover:
65
Formula is:
Fixed Assets Turnover
Net Sales______
Avg.Fixed assets
For 2005:
1,533,879,000
226,575,000
6.7times
=
For 2006:
=
=
For 2007:
=
=
For 2008:
=
=
For 2009:
=
=
1,847,700,000
296,224,500
6.2times
2,391,058,000
429,659,000
5.6times
3,061,746,000
564,384,500
5.42times
3,758,706,000
624,664,500
6.01times
Total Assets turnover:

Formula is:
Total Assets Turnover
= Net Sales___
Avg.total assets
For 2005:
= 1,533,879,000
708,731,000
= 2.16times
66
For 2006:
For 2007:
= 1,847,700,000
838,345,500
= 2.20times
=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
For 2005:
Current Ratio
For 2006:
Current Ratio
For 2007:
Current Ratio
For 2008:
Current Ratio
= Current Assets__
Current liabilities
= 475,727,000
435,491,000
= 1.09: 1
= 595,518,000
514,710,000
= 1.16: 1
= 689,469,000
626,815,000
= 1.09: 1
= 1,104,692,000
1,033,710,000
= 1.07: 1
For 2009:
67
Current Ratio
= 1,256,941,000
1,115,911,000
= 1.12: 1
Acid Test Ratio:

Formula is:
Acid Test Ratio
For 2005:
Acid Test Ratio
For 2006:
Acid Test Ratio
= Current Assets Inventories

Current Liabilities
= 475,727,000-359,954,000
435,491,000
=115,773,000
435,491,000
=0.26:1
= 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
Cash Flow From operating Ratio:

68
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
69
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:
70
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:
71
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
Net Sales
* 100
72
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
=5.4%
73
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%
74
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
1,769,707,500
=0.17%
75
Return On Equity:
Return On Equity
Net Income Preferred Stock
Dividend
Average
Total Equity
For 2005
=
30,653,000 - 0
183,101,000
16%
70,364,000 - 0
For 2006
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%
76
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
=
32%
For 2008
= 156,546,000 + [(56,238,000) (1 0.35)]
77
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
= 1.2%
For 2009:
DuPont return on assets = 8.2* 0.17
= 1.4%
78
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
Debt Service Coverage ratio:

Formula is:
Debt Service Coverage ratio = Earning before interest and tax
Interest exp + current maturity
79
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
Fixed charge coverage ratio;

Formula is:
80
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:
Formula is:
Debt ratio = Total liabilities *100
Total assets
For 2005:
81
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
= 76,000,000
259,101,000
=29.4:70.6
For 2006;
Debt Equity Ratio = 189,000,000
82
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:
189,000,000
= 1.93
For 2007:
143,000,000
83
= 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
For 2008
=
285,691,000
156,546,000
1.82
84
For 2009
=
308,677,000
139,461,000
=
Degree of Financial Leverage
2.21
=
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
1.22
For 2009
=
308,677,000
220,702,000
85
1.39
Earning Per Share:

EPS

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
33,154,000
4.21 Rs.
Price-Earning Ratio:
86
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
363
For 2008
28.32
=
12.82 Times
For 2009
=
87
4.21
20.67 Times
Book Value Per Share:
87
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

Multivariate Model:
Z-Score = 0.012X1 + 0.014X2 + 0.033X3 + 0.066X4
+0.010X5
88
X1
Working Capital
Total Assets
40,236,000
708,731,000
For 2005
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
=
X2
0.074
Retained Earnings
Total Assets
140,596,000
708,731,000
For 2005
0.20
89
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
X3
0.17
Earning Before Interest And
Taxes
Total Assets
For 2005
=
=
57,021,000
708,731,000
0.080
For 2006
=
133,393,000
967,960,000
0.14
For 2007
90
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
=
X4
0.16
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
8.85
For 2008
=
20,058,291,000
91
1,505,730,000
=
13.32
For 2009
=
28,844,154,000
1,601,953,000
=
X5
18.0
Net Sales
Total Assets
1,533,879,000
708,731,000
For 2005
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
3,061,746,000
For 2008
1,746,655,000
=
1.75
3,758,706,000
For 2009
1,911,776,000
92
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
93
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 companys total assets have increased
but liabilities also increased at a faster rate and owners equity decreased.
The firms efficiency is going worse from 2005 to 2009 which is not a favorable
sign for the company
The firms liquidity position is better than the previous year which is a favorable
sign for the company.
94
The overall profitability of the firm is decreasing from 2005 to 2009 which is
not a good sign for the company.
The firms 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 companys 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.
The company should also focus on maximizing shareholders value to

get more capital.
The company should also try to attract the new investors so that the
capital for the company increases.
95
96

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1

Introduction of National Foods

Long Term Analysis

Conclusions and Recommendations

Summarized Balance Sheet

Summarized Income statement

Changes in Absolute Data

Common Size Analysis or Vertical Analysis

Long Term Analysis

Condensed Income Statement

Condensed Balance Sheet

Total liabilities and owner's

Introduction of National Foods

National Foods must focus on customers needs and serve

Our products must be pure and conform to international

Our research must continuously produce new

We must create environment in our offices and factories

We must prove to be recognized as good corporate

Reserves must be built, new factories created, sound

through building a reliable brand.

National Foods Ltd. must get itself recognized as leader

We are a part of the solutionnever the problem. We act like owners

3. Cash Flow From Operations Ratio

4. Working Capital Ratio

Net Credit Sales

Average account receivable

2. Aging of Account Receivable:

4,202,408.219 5,062,191.781 655, 0843.83 8,388,345.205 10,297,824.66

Cost of good sold

1,276,437,000 1,57 2,574,000

4. Days sales in inventory:

5. Working Capital Turnover

6. Current Asset Turnover

7. Fixed Assets Turnover:

8. Total Assets turnover:

Avg. Total Assets

2. Operating Profit Margin

3. Profit Before Tax Margin

Profit Before Tax

4. Net Profit Margin

Avg. total assets

Average Total Equity

Net Income + [(Interest)(1 Tax Rate)]

8. Operating Assets Turnover:

9. Dupont Return On Operating Asset

Operating Profit Margin

D. Long Term Analysis

indicates a poor record of the company.

2. Debt Service Coverage Ratio

interest and current maturity of long term debt.

3. Fixed Charge Coverage Ratio

5. Debt Equity Ratio

6. Fixed Asset Coverage Ratio

Net Fixed Assets

2. Earning Per Share

Net Income Preferred Dividend

No. of C/S Outstanding

3. Price Earning Ratio

2005 2006 2007

4. Book Value Per Share

No. of C/S Outstanding

Store,spare parts and loose tools

Current maturity of:

Adjustables with government