Final Project of Financial Analysis

(Financial Analysis of PTCL)

Submitted to:
Prof:waqas zaki
Submitted by:
Ilas Ahmad Farooqi
L1F10MCOM0155

UNIVERSITY OF CENTRAL PUNJAB

(Faculty of Commerce)

CONTENTS

ACKNOWLEDGMENT

CHAPTER # 1
Objective
Corporate history
Company profile
Portfolios

CHAPTER # 2
Financial statements

CHAPTER # 3
Ratio analysis/Common size Analysis and their Interpretations
Part 1: Activity Ratio
Part 2: Liquidity Ratio
Part 3: Leverage Ratio
Part 4: Profitability Ratio

Trend analysis

Conclusions/Suggestions

ACKNOWLEDGMENT
In the name of ALLAH, the most beneficent the most merciful, who gave us strength and
knowledge to complete this report. This has proved to be great experience. We would like to
express our gratitude to our professor waqas zaki who provided us assistance to fulfill this report
and all our friends who supported us to accomplish this report.

CHAPTER # 1
OBJECTIVE
The objective is to study the annual report of PTCL and make its financial analysis so that
following persons can be suggested in taking their decisions.
1. Bankers
2. Small Investors
3. Creditors
4. Auditors
5. Competitors
6. Acquirers

Corporate History
Pakistan Telecommunication Corporation (PTC) has established in December 1990,
taking over operations and functions from Pakistan Telephone and Telegraph Department
under Pakistan Telecommunication Corporation Act 1991.
In 1994, the PTCL becomes the company limited (Pakistan Telecommunication Company
Limited) by issued six million vouchers exchangeable into 600 million shares of the
PTCL in two separate placements. Each had a par value of Rs. 10 per share. These
vouchers were converted into PTCL shares in mid-1996.
In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed the basis for
PTCL monopoly over basic telecommunication sector in the country. It also paved the
way for the establishment of an independent regulatory regime. The provisions of the
Ordinance were lent permanence in October 1996 through Pakistan telecommunication
act.
The year 2006-07 in the telecom sector was marked by the phenomenal growth in the
mobile sector in Pakistan, which doubled its subscriber base to 60 million. PTCLs

mobile phone subsidiary Ufones subscriber base grew by more than 87% from 7.49
million to 14 million. The year also witnessed the entry of major telecom companies,
most notably China Telecom and Singtel, into market.
The privatization of the company was completed in the FY06; following the purchaser of
26% B class ordinary shares by Etisalat International Pakistan L.L.C. EIP took over
management control on 12 April 2006.
Industry Analysis:
What is the Industry?
As apparent from the name of PTCL (Pakistan Telecommunication Ltd.), PTCL is a
telecommunication service company. As the telecommunication sector around the world is going
to a process of rapid change in Information Technology and convergence with focus on mobiles,
internet and value added services, so in order to meet the emerging demand, major initiatives
have been taken by the company to upgrade its network.
Relative Size and Significance:
PTCL is relatively large industry with coverage of almost all aspects of communication. PTCL is
providing following services:
1. EVO-3G Wireless Broadband
2. U-fone cellular service provider
3. PTCL calling cards
4. Wireless local loop(V-fone)
Portfolio / Competitors:
PRODUCTS

COMPETITORS

11. EVO-3G Wireless

Broadband

Cyber Net, World Online, Apollo World call.

12. U-fone cellular

service provider

Mobilink, Telenor and Warid Telecommunication.

13. PTCL calling

cards
14. Wireless local
loop(V-fone)

Hello cards, Call mate cards, Global telecom cards.

Wateen telecom and World Call.

 Geographical Presence:
PTCL Companys principal activity is to provide telecommunication services. The group
provides domestic and international services and also other communication services throughout
Pakistan. The group also provides services to territories in Azad Jammu and Kashmir and
Northern Areas. It also provides cellular mobile telephonic services all over the Pakistan.
Business Strategy:
Primary Focus of Operations:
The primary focus of operations of PTCL is to make the communication more convenient along
with providing the quality services.
Most Important Strategy:
In order to expand the market share, PTCL is trying to reduce the cost and is also offering
packages to the customers. Its important strategies are as follows:
a. Broadband and value added services
b. Fixed line telephony
c. Wireless local loop
Major Operating Segments:PTCL divide the market as follows:
a. Budget conscious subscribers
b. Subscribers avoiding bill depositing hassles
c. People requiring casual connections
d. Students living in hostels
Corporate Forecast:
Going forward PTCL is poised to align itself into more customer friendly and commercially
oriented organization. This will be achieved through:

a. Improved customers experience

b. Offering better quality of services
c. Introducing new products and emerging services to satisfy market segment needs.

Company Profile

PTCL is all set to redefine the established boundaries of the telecommunication market and is
shifting the productivity frontier to new heights. Today, for millions of people, we demand
instant access to new products and ideas. More importantly we want them for their better living
standards with increased values in this ever-shrinking globe of ours. We are setting free the spirit
of innovation.PTCL is going to be your first choice in the future as well, just as it has been over
the past six decades.
Business & Corporate Users:
For clear communication the first choice of business circles is PTCL telephone for local,
nationwide and international calling. Today businesses can have 10-100 lines with modern day
services to meet their needs. Now you get options like Caller-ID, call-forwarding, call-waiting,
Call Barring, to name a few.
Other business specific services include:
0800-Toll free number, 0900-Preminum rate services, VPN-Virtual Private Network, Audio
Conference Service, Digital Cross Connect (DXX), ISDN (Policy), Teleplus (ISDN/BRI), Digital
Phone Facilities/ Modification Charges, UAN, UIN.
Nationwide Infrastructure:
We have the largest Copper infrastructure spread over every city, town and village of Pakistan
with over million installed lines. The network has over 6 million PSTN lines installed across

Pakistan with more than 3 million working. Furthermore installed capacity of broadband is more
than 0.6 million ports spread across 318 cities and town of the country
National Long-haul Core Network:
We have over 10,400 km fully redundant, fiber optics DWDM backbone network. It connects
over 840 cities and towns with 270G bandwidth.
Carriers Services
As carriers-carrier, we provide the core infrastructure services to the cellular, LDIs, Local Loop
operators, ISPs, Call Centers and payphone operators.
We provide all carrier services, right from inter-connects and telehousing to DPLC and IPLC
connectivity. Our interconnect services are provided from our 3200 exchange locations that
connect your carriers networks domestically, in addition to providing IPLC bandwidths to
connect you internationally through our four international gateways and SEA-ME-WE3 and
SEA-ME-WE4 international submarine, also IMWE submarine cable will be added by the end of
the year.
Furthermore to provide connectivity to operators in the extreme remote areas of the country,
PTCL launched its state of the art satellite service (Skylink).
PTCL satellite service (Skylink) is provided using the Intelsat Satellite System, an undisputed
leader in satellite communications.
White Label Services:
PTCL customers can now provide uninterrupted services to their clients without undertaking
large scale investment in infrastructure or developing expertise in their own network.
PTCL White Label Services are focused on speed and simplicity at minimal capex. This will
enable our customer to offer their own branded WLL, DSL etc to customers nationally, together
with an array of key support services.
EVO Wireless Broadband
PTCL EVO 3G Wireless Broadband is Pakistans fastest wireless internet which offers its
customers superior 3G internet experience. EVO Wireless Broadband is enabling the
wireless broadband revolution in Pakistan with flexibility to roam freely like never before. PTCL
EVO has revolutionized the way people connect to the internet by offering true mobility. PTCL
EVO is currently offering its services in more than 18 cities on EV-DO technology offering
speeds up to 3.1 Mbps. PTCL EVO gives its customers the advantage of nationwide roaming
with seamless internet connectivity across Pakistan. The coverage of EVO is not limited to 18
cities as EVO customers can enjoy CDMA-1X data rates of up to 153.6 Kbps at more than 1000
destinations across Pakistan.

The portable, small & stylish EVO USB device is a multipurpose device which not only delivers
fastest wireless internet but can also be used for Voice Calls by inserting a Vfone SIM and for
data storage by inserting a standard Micro SD Card
Broadband Pakistan
PTCL Broadband is the largest and the fastest growing Broadband service in Pakistan. In less
than three years of it launch, PTCL has acquired approximately 392,648 Broadband customers in
over 318 cities and towns across Pakistan, leading the proliferation and awareness of Broadband
services across Pakistan.
With its entry in this market segment, PTCL opened up a broadband culture in Pakistan, where
till a couple of years back there was very little awareness in the country about broadband & high
speed internet services. PTCL made the broadband technology affordable by lowering the
barriers to entry, by geographically bringing the service within the reach of a common user
across Pakistan and by continuous improvements in customer care for the service.
Unique offers that makes PTCLs Broadband unmatchable are special packages for the student
segment, FREE modem and installation, Availability of Wi-Fi Modems, FREE dial up service for
its Broadband customers and FREE access to movies, music, classical Pakistani dramas, cricket
matches, online gaming, educational and religious content on PTCLs entertainment portal
BUZZ, (the access to PTCL Buzz & Gaming lounge is exclusive to PTCL Broadband
subscribers). PTCL also offers multiple FREE personalized e-mail accounts exclusively to its
broadband users. In addition, PTCL recently doubled its broadband speed for all its existing and
new customers at the same price, making 1 MB as its minimum offered speed.
For a connection you simply dial 0800 8 0800 or visit www.ptcl.com.pk
IPTV Service (Smart TV):
PTCL SMART TV Using its state of the art Broadband network, PTCL entered the media sector
on 14th August 2008, by launching a digital interactive television service for the first time in
Pakistan. Employing the IPTV (Internet Protocol TV) technology, PTCL brought Pakistan in the
list of a few countries across the globe that offer this state of the art interactive TV service to its
subscribers.
Branded under PTCL Smart Line, the service includes Interactive Television, Broadband and
voice telephony all at the same time on PTCLs telephone line. Besides offering the highest
digital quality TV picture, the most revolutionary section of this offering is the ability to rewind
and pause live TV channels through TSTV ( Time Shift Television) feature, the ability to
block / unblock any TV channel for parental lock and the ability to search through video on
demand content. Currently PTCL Smart TV offers its viewers 125 live channels and over 500
Movie titles through its Videoon Demand service. The service is available in 16 cities including
Karachi - Lahore - Islamabad - Rawalpindi - Gujranwala - Faisalabad - Peshawar - Sialkot -

Multan - Sargodha - Jehlum - Wah Cantt - Taxila - Hyderabad - Abbotaba and Sukkur however it
is planned to be expanded to all the major cities and towns across Pakistan during the year 2010

Pak Internet Exchange:

It is the only IP enabled network with 40 (number increase) point-of-presences (POP) in 26
cities. The existing 16G active bandwidth is used for internet, data, video and video-conferencing
services and for voice of LDI. All PTCL Broadband users, narrow band users, corporates, mobile
operators, and ISP are connected to this network.
V-fone:
PTCL also continues to be the largest CDMA operator in the country with approximately 1.25
million V-fone customers. It offers fixed wireless telephone for your homes & business. With
CDMA2000 1X technology, ours is the largest WLL network with a capacity of 2.6M, covering
over 10,000 urban & rural areas. The network is already enabled for Voice, Dialup-Internet
access (153.6kbps) and EVDO Broadband. V-fone can be bought from our franchises or by
dialing 1236 and it will be delivered within 48-72 hours.
International Network
SEAMEWE-3 Submarine Cable System:
PTCL is a member of SEAMEWE 3 Cable Consortium with its Cable Landing Station at
Karachi. SMW-3 cable connects 39 cable landing stations in 33 countries and four continents.
SMW-3 is the longest system of the world with a total length of 39,000 Km.
SMW-4 Submarine Cable System:
SMW-4 is a relatively new submarine cable system (inaugurated in December 2005) and links 14
countries with 16 landing stations across Europe, Middle East and Asia. The system is using
Terabit DWDM technology to achieve. The link between any two destinations is STM-1. SMW-4
is designed for relatively higher traffic volumes.
I ME WE cable details and Status with Map:
IMEWE Submarine Cable is a Tera bit capacity submarine cable system connecting India to
Western Europe through Middle East. The Cable system is 13,000 km long with 10 landing
points in 8 countries.

Satellite Communication:
PTCL has Intelsat Standard Earth Stations near Karachi and Islamabad. These installations
provide the diversity for International voice connectivity and also work as Hub for domestic
satellite users. There are four Intelsat Standard B Earth Stations at Islamabad, Gilgit, Skardu and
Gwadar.

PTCL investment to pay off in five years.

As it celebrates its winning bid for a 26% stake in Pakistan Telecommunications Co Ltd
(PTCL), Etisalat of the UAE has predicted that its investment in the telco will have paid off
within five years.
Meanwhile, there has also been reaction to the sale from the also-rans in the contest.
Etisalat, or Emirates Telecommunications Corp to give it its full name, is confident its US$2.59
billion bid, well above expectations and representing 40% more than the Pakistani incumbent's
average share price over the past six months, was pitched at the right level.
"We feel this is the right value, and the investment will be repaid in five years or less,"
chief executive Obaid Saeed Bin Meshar told a press conference in Dubai.
He said one reason for this is because Etisalat is guaranteed management control of PTCL and so
will reap the benefits of being the leading player in a large but undeveloped market.
The runner-up in Pakistan's biggest privatization was China Mobile (Hong Kong) Ltd, which
offered US$1.4 billion, while SingTel came in third with a $1.17 billion bid. Five other
shortlisted telcos, including Telekom Malaysia, did not stump up the $40 million deposit required
to lodge a bid.
In a statement quoted by the Business Times Telekom Malaysia said its international investment
holding company TM International has decided to concentrate on its existing Pakistani
investment, broadband service provider Multinet, and therefore did not pursue a PTCL bid. The
Malaysian incumbent added that its decision "does not in any way reflect on either the
investment opportunity in PTCL, or the overall bidding process, which was found to be of the
highest quality. From an investment perspective, the company continues to remain interested in
Pakistan and the region."
In China, analysts shrugged off China Mobile's failure to win the PTCL race. The official China
Daily reported China Securities analyst Dai Chunrong as saying Etisalat is much more confident
about the Pakistan market. The bid failure is par for the course for a company which is just
testing the waters prior to overseas expansion, she continued. "Lack of experience in
international purchasing as well as international operations may As it celebrates its winning

bid for a 26% stake in Pakistan Telecommunications Co Ltd (PTCL), Etisalat of the UAE
has predicted that its investment in the telco will have paid off within five years.
Meanwhile, there has also been reaction to the sale from the also-rans in the contest.
PTCL SWOT Analysis
Strengths, weaknesses, opportunities and threats of PTCL in detail.
Strengths
Oldest Telecommunication Company of Pakistan founded in 1947.
All the telecommunication companies operating in Pakistan directly or indirectly dependent
upon PTCL network.
PTCL maintain the records of customers in an organize way that is not the case with other
private
Telecommunication companies in which the numbers are allocated without proper verification.
PTCL can be used as a backup network if the mobile networks are down due to any reasons.
It has been offering speedy Internet DSL connection to the customers and also offers
concession to the students
PTCL is offering multiple services which includes TV, Internet and Telephone using local loop.
The largest landline network of Pakistan.
It offers low rates for the national calls as compared to mobile networks.
Weaknesses
Flat organizational structure
Bureaucratic environment.
Political intervention in decision making.
Extra employee overhead due to extra hiring.
Customer service is very poor specially in Internet services

 Vwireless coverage and service is very poor.

Functional units are not well organized.
Bad debts due to non payments of bills.
Weak marketing of new services.
Lack of technical staff in DSL technical support.
People used to give bribe for new connection of Landline.
Form processing for new connection takes more time in larger cities.
Opportunities
Joint ventures with other telecommunication companies for introducing new services.
Improvement in customer services.
Hire technical staff to reduce the level of DSL issues in order to increase customer satisfaction.
Proper planning and implementation is required to Improve wireless PTCL and Evdo services
in Pakistan.
Aggressive marketing is required to promote offered services and give hard time to
competitors.
Increase market share of Internet services.
Adopt latest technology.
Threats
Strong competition from telecommunication companies.
Inflation in the country may increase the cost of services which will finally transferred to
customers.
Energy crises throughout the country.
Rapid raise in Government taxes.
New players in the industry.

 Political instability.
Security issues.
Cyber crimes percentage is increasing.
Inconsistent and Adhoc decisions by Company management

Hierarchy of PTCL:

MR. WALID
IRSHAD
President & chief
executive officer
BOARD OF
DIRECTORS
HIFZ-UR-REHAMN
Chairman PTCL
Board

ABDULRAHIM A.AL
NOORANI
Chairman & chief
executive officer

FARRAKH QAYYUM
Secretary (Govt. of
Pakistan)

ABDULAZIZ A. AL
SAWALEH
Human Resource
Officer

FARAH QAMER
Company Secretary

FADHIL AL ANSARI
Executive Vice
President

NOOR-UD-DINBAQAI
Member (Telecom)

AHSANULLAH
KHAN
Ambassador (U.A.E.)

ABDULAZIZ H.
TARYAM
General Manager

CHAPTER # 2
FINANCIAL STATEMENTS

CHAPTER # 3

RATIO ANALYSIS/COMMON SIZE ANALYSIS & THEIR INTERPRETATIONS

Part 1: Activity Ratios:
Activity ratios measure the speed with which various accounts are converted into sales or cash
inflows or outflows.
a. Receivable Turnover Ratio
b. Inventory Turnover Ratio
c. Total Assets Turnover Ratio
d. Fixed Assets Turnover Ratio
Receivable Turnover ratio in times=Sales / Average Account Receivables
(2010)

=57174527/18776188
=3.045 times

(2009)

=59239001 / 12063595
=4.91 times

(2008)

=66336042 / 12063595
=5.49 times

Receivables turnover is also called average collection period or average age of accounts
receivables.

Benchmark:
The receivable turnover ratio should reduce over the number of years to be the best because as
the ratio reduces it shows that companys recovery policy is getting better.
Interpretations:
Receivable turnover ratio is showing that PTCL collects cash from its accounts receivables 3.045
times during a year which is less than the previous year and it is a good sign.
Receivable turnover ratio in days= 365/Receivable turnover ratio in times
(2010)

=365/3.045
=120 days

(2009)

=365/ 4.91
=74.33 days

(2008)

=365/5.49
=66.48 days

Interpretation:
PTCL takes 120 days to collect cash from an account receivable.

Fixed Assets Turnover

(2010)

=Sales / Fixed Assets

=57174527/99827838
=0.57 times

(2009)

=59239001 / 80265471
=0.74 times

(2008)

=66336042/46911824
=1.41 times

Interpretations:
Fixed Assets turnover is showing that PTCL employs 1 time fixed assets to get 0.57 times sales.
It is reducing in 2010 which shows that company is not using its fixed assets efficiently.

Total Assets Turnover

(2010)

=Net Sales / Total Assets

=57174527/150767727
=0.38times

(2009)

=59239001 / 46911824
=1.26 times

(2008)

=66336042 /17911683
=1.41 times

Benchmark:
The higher a companys total assets turnover, the more efficiently its assets have been used.
There is a significant change in 2009 and 2010.

Interpretations:
Total assets turnover ratio indicates the efficiency with which the firm uses its assets to generate
its sales. This ratio is showing that when the PTCL uses its assets 1 time then it will be able to
make the sales 0.38 times.
Overall analysis of activity ratios:
Activity ratios show that overall efficiency of company has not increased in 2010 because there
is not significant change in figures of 2009 and 2010.

Part 2: Liquidity Ratios:

Liquidity ratios measure the companys ability to meet its short term obligations as they come
due.

a. Current Ratio
b. Quick Ratio/Acid Test Ratio

Current Ratio
(2010)

= Current Assets / Current Liabilities

=45450236/30192778
=1.5 times

(2009)

=54220241 / 36086322
=1.50 times

(2008)

=39603406/21913959
=1.80 times

Benchmark:
The benchmark of current ratio is 2 because the companys current assets must be doubled to its
current liabilities.
Interpretations:
This ratio is showing that PTCL have Rs.1.5 of current assets to pay its one rupee of currently
maturing liabilities. It is showing that the PTCL has the ability to pay its liabilities.
Quick Ratio
(2010)

= Quick Assets/Current Liabilities

=41374373/ 30192778
=1.4 times

(2009)

=11906448 + 21017790 + 10760974 / 36086322

=1.21times

(2008)

=4545145+10344379+13366216/21913959
=1.28 times

Benchmark:
The benchmark of quick ratio is 1 to 1.5
Interpretations:
This ratio is showing that PTCL have Rs.1.4 to repay the currently maturing obligation of Rs.1.
Part 3: Leverage Ratios
Leverage ratios show the debt position of the firm which indicates the amount of other peoples
money being used to generate profits. The more debt a firm has, the greater its risk of being
unable to meet its contractual debt payments and becoming bankrupt.
a. Debt to equity ratio
b. Debt to total assets Ratio
c. Long Term Debt to Equity Ratio

Debt to equity ratio

(2010)

=Total Liabilities/shareholder Equity

=51009016/ 99758711
=51.13%

(2009)

= 54658520 / 99389559
=55%

(2008)

= 54658520/ 99389559
=54.99%

Debt to total assets Ratio

(2010)

=Total Liabilities / Total Assets

=51009016/150767727
=34%

(2009)

=54658520 / 154048079

=35.48 %
(2008)

=39559478 / 137447852
=28.78%

Benchmark:
The higher this ratio shows that the firms degree of financial leverage is more i.e. greater the
amount of other peoples money being used to generate profits.
Interpretation:
It shows that company has taken 34% loan to finance its assets through debt and it is less than
the previous year.

Long Term Debt to Equity

(2010)

=Long Term Liabilities / Total Stockholders Equity

=20816238/ 99758711
= 0.21 times

(2009)

=18572198 / 99389559
=0.19 times

(2008)

=17645519 / 97888374
=0.18 times

Interpretations:
It has increased from the previous year which shows that PTCLs long term debt has increased.
Overall Analysis of Leverage Ratios:
Leverage ratios are showing that debt of PTCL has increased from previous year but in
proportion equity is more than debt.
Part 4: Profitability Ratios
a. Gross Margin Ratio

b. Net Profit Margin

c. Return on Investment Ratio
d. Return on Total Equity Ratio

Gross Margin Ratio =Gross Profit / Sales

(2010)

=18915816/ 57174527
=33%

(2009)

=21506719 / 59239001
=36 %

(2008)

=28989173/66336042
=43.70%

Interpretations:
It indicates that company earns 33 % out of its 100 % sales.

Net Profit Margin

=Net Income / Sales

(2010)

=9294152/57174527
=16.25%

(2009)

=9151185 / 59239001
=15.44 %

(2008)

=2824890 / 66336042
= 4.25%

Interpretation:

16.25% tells that there are increasing sales which are also increasing companys net income.
Company earns 16.25 % out of its 100 % sales.

Return on Investments
(2010)

=Net Income /Total Assets

=9294152/150767727
=6.16%

(2009)

=9151185 / 154048079
=5.9 %

(2008)

=2824890 / 1457
= 1.94%

Interpretation:
It shows that company is generating 6.16% net income by using its 1% available resources or its
total assets.
Return on Total Equity
(2010)

=Net Profit / Total Stockholders Equity

=9294152/99758711
=9.3%

(2009)

=9151185 / 99389559
=9.2 %

(2008)

=2824890 / 98638967
=2.68%

Interpretation:
It tells that company is generating 9.3% net income by using 1% stockholders investment.

TREND ANALYSIS
EPS TREND ANALYSIS:

Interpretation:
The above graph shows that EPS (Earning per share) stared declining from 2004 and became
negative in 2008 but in 2009 it has increased again.

Receivable Turnover ratio in times:

6
5
4
3
2
1
0
1

Interpritation.
PTCL has high ratio implies either that a company operates on a cash basis or that its extension
of credit and collection of accounts receivable is efficient. The rate of change is -1.2225 and
co-efficient is 6 .926667.which means that receivable turnover ratio changes every
year with a rate of -1.2225.

Fixed Assets Turnover :

Interpritation.
PTCL make these large sales, and from above graph its shows that PTCL has effective
investments in the fixed assets. The slope or rate of change of fixed asset turn over is -0.42. and
co-efficient of variation is 1.746667.

Total Assets Turnover :

Interpretations.
PTCL Shows the high the number is better. It also indicates pricing strategy:
companies shows with high profit margins have low asset turnover.

LIQUIDITY RATIOS TREND ANALYSIS:

Current Ratio:

Interpretation.
There is a gradual decrease in the graph which shows that current ratio is fall in 2009 and it
increases in 2010respectivly. The rate of change is -0.15 and co-efficient is 1.9 which shows that
current ratio changes at the rate of-0 .15 every year.

Quick ratio:

Interpretation:
The above figures show that the firm had more liquid before privatization. In 2006 when company
was privatized the companys liquidity position went down but afterwards increase again and then
there is gradual decrease in liquidity position.the rate of change is 0.06 and co-eficient is 1.176667.

LEVERAGE RATIOS TREND ANALYSIS

Debt to total asset ratio:

Interpretation:

The above figures show that the firm had short debt in 2008 and there is a gradual increse in the
debt to asset ration from 2008 to 2009 and decrease in 2009 to 2010. The rate of change is 2.61 and
co-efficient is 27.53333.which shows that ratio changes every year at the rate of 2.61.

Long Term Debt to Equity :

Interpretation:
Debt equity ratio shows that PTCL after privatization use more aggressive financing for its
operations, and its debts continuously increase after privatization.
In case of Interest Earned Ratio, the ability to pay its interest payments before privatization
continuously improving but after privatization it shows decline, even that in 2008 it shows negative
or unfavorable result which is (4.26) Timesthe rate of change is 0.015.

PROFITABILITY RATIOS TREND ANALYSIS:

Gross Margin Ratio:

Interpretation.
In above combination of lines it shows the best gross margin ratio in PTCl. It means company
This number represents the proportion of each rupee of revenue that the company retains as gross
profit.the rate of change is -5.35 and co-efficient is 48.26667,which shows that gross profit ratio
changes every year at the rate of -5.35.

Net Profit Margin:

Interpretation.
This metric describes that PTCl is running very effectively the net profit margin increases from
2008 to 2010. So we can say that company is running in good manor .the rate of change is 6 and
co-efficient is -0.02.which shows that net profit ratio chages every year at the rate of 6

Return on Investments :

Interpretation.
Graph shows that there is an incrnse in return on investment from 2008 to 2010 in PTCL it
means ptcl in running there assets in good way.the rate of change is 2.11 and co efficient is
0.446667.which shows that return on investment changes at the rate of 2.11.

Return on Total Equity:

Interpretation:
Operating Profit Margin of PTCL before privatization is above 40% of sales and in 2004 it is
51.37%, but after privatization is constantly decreasing and in 2009 it is only 18.15% of sales
.the rate of change is 3.31 and co efficient is 0.444.which shows that ratio changes every year at
the rate of 3.31.

Stock Chart of PTCL.

CONCLUSION AND SUGGESTIONS

CONCLUSION
Because of privatization, there are both positive and negative impacts on PTCL.
Negative impacts:
Some negative impacts are as follows:

PTCL is in the process of layoff and provides a huge amount for this purpose while its
competitors have skilled personnel and offer attractive packages.

The debt ratio of PTCL has increased as compared to the previous years.

Due to competition, revenue of PTCL has decreased from 66,336,042 to 5923001(Rupees

in thousands).

As compared to the major telecom competitors, the number of subscribers is also

decreasing from year to year because of poor customer services and higher prices.

Positive impacts:
Some positive impacts are as follows:

PTCL has introduced new technology in different areas like internet facility.

Before and after privatization EPS (earning per share of company) was decreasing
constantly but now in 2009 and 2010 earning per share of PTCL has increased.

Conclusion:
As compared to the previous years all Ratios i.e activity, profitability, liquidity, leverage and EPS
has decreased up to 2009 but in 2010 there is a positive change.

SUGGESTIONS
Suggestion to Banks and Creditors:
Debt to equity ratio of PTCL in 2010 is 16:84 and previous years trend of debt is also near about
this ratio, so PTCL does not have a huge proportion of debt, so if the bank will give loan to the
PTCL then there is less risk factor.
Payable turnover ratio shows that PTCL pays to its creditors 2.47 times during an year or pays
after each 148 days.
Suggestion to small Investors:
The ratios needed to small investors are
EPS= Rs1.42/ share
Return on sales= 16.25%
Gross margin ratio= 33%
Current ratio=1.5 times
Quick ratio=1.4 times

Earning per share has increased as compared to the previous year which is showing that
there is a positive change.

Return on sales and gross margin ratio has also increased as compared to the previous
years.

Current and quick ratios are also favorable according to their benchmarks.

So the investors should invest in PTCL because companys figures of 2010 are showing that
there would be prospective returns for the investors.
Suggestion to auditors:
The auditors should focus on current and non current liabilities and earnings before interest and
tax in balance sheet and profit and loss account respectively because there is an abrupt decrease
in leverage ratio and EPS in 2008 which should be 2006 when the company was privatized.

Suggestion to Competitors:
Competitors should focus on new strategies like PTCL has introduced new strategies

Broadband and value added services

Wireless local loop

These strategies are cost effective having different packages.

Suggestion to Acquirers:
Operating ratios are showing constant efficiency which is not too bad and not excellent.
Liquidity position of company is showing the company in more liquid position and leverage
ratios of PTCL are showing that there is more proportion of equity as compared to proportion
of debt so risk of being bankrupt is low, so if someone acquire the PTCL then it will be
profitable for the acquirer.