Analysis Of Financial

Statement

Group Member:
Khurram Mansoor
Muhammad Noman Shaf
Mubasher Rehman
MBA (Morning) 4th A
Submitted To :
Sir Mehmood ul Hassan
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BALANCE SHEET (Honda Atlas Cars)

ASSETS

property, plant and equipment

intangible asses

capital work-in-progress

long term loans, advance and deposits

deferred taxation

NON-CURRENT ASSETS

stores and spares

stock-in-trade

trade and other receivables

cash and bank balances

CURRENT ASSETS

TOTAL ASSETS

Equity and Liabilities

authorized capital

issued, subscribed and paid up capital

Year -08

4,082,955

65,903

191,842

32,196

251,008

4,623,904

50,316

2,704,946

706,092

219,859

3,681,213

8,305,117

750,000

714,000
Rs. In Thousands

Year-09

3,864,527

64,636

80,746

33,141

338,165

4,381,215

83,101

1,612,696

507,852

231,880

2,435,529

6,816,744

2,000,000

1,428,000
Year-10

5,190,535

195,830

19,226

35,545

571,214

6,012,350

101,942

2,954,091

853,218

20,487

3,929,738

9,942,088

2,000,000

1,428,000
reserves 1,991,000 1,727,000 1,801,500

inappropriate proft -264,332 74,678 -401,655

SHARE CAPITAL AND RESERVES 2,440,668 3,229,678 2,827,845

NON-CURRENT LIABILITIES 1,958,334 500,000 1,500,000

- -
current portion of long term fnances 583,333
- -
short term borrowings 2,151,601

mark up accrued on loans and other 39,627 32,029 75,048

payables

trade and other payables 3,283,155 3,055,037 3,387,594

CURRENT LIABILITIES 3,906,115 3,087,066 5,614,243

TOTAL EQUITY AND LIABILITIES 8,305,117 6,816,744 9,942,088

INCOME STATEMENT (Honda Atlas Cars)

Rupees in Thousands
Income Statement
Year 2008 Year 2009 Year 2010

Sales 17,055,115 14,715,495 14,149,646

Cost of Sales 16,955,181 14,088,001 13,973,144

Gross Profit 99,934 627,494 176,502

Less: Distribution and Marketing 214,889 209,677 190,088

Costs

Less: Administrative Expenses 147,274 139,163 139,749

Add: Other Operating Income 150,585 23,589 64,844

Less: Other Operating Expenses 64,514 4,975 311,025

Profit/Loss from Operations 176,158 297,268 399,516

Less: Finance Cost 305,491 233,651 222,769

Profit/Loss before taxation 481,649 63,617 622,285

Taxation 217,109 11,393 220,452

Profit/Loss after taxation 264,540 75,010 401,833

Earnings per Share (rupees) 2.08 0.55 2.81

Financial Analysis
Ratio Analysis

Liquidity Ratios

Ratios 2007 2008 2009

Current Ratio 0.94 0.80 0.70

Quick Ratio 0.23 0.24 0.15

Its current ratio has been less than one for three years which shows that its current liabilities
are greater than its current assets. Although its current assets increased by 61% in Financial
Year 2009 but its current liabilities also increased by 82% so current ratio further decreased.

Apparently it looks that its liquidity position is very weak but actually it is not true because of
the nature of its current liabilities. In its current liabilities one main portion is its trade
payables, as it purchases its raw material from parent company Honda Japan so it can get a
lot of relaxation in making payment to its parent company.

In its current liabilities one portion consist of advances from dealers which are not likely to
demand all of their money in near future. So if we consider these factors then its liquidity
position looks better even with low quick and current ratios.

It has to pay its payables in Japanese Yens so change in currency rate can affect the figure of
payables so a risk is also involved.

Its quick ratio is very low as most of the current assets consist of inventory, other assets like
receivables and cash are very low. Its receivables are very low or are nil as it makes sales on
cash even gets money in advance which further increases its current liabilities.

Its cash position is very low as it did its expansion in plant capacity in 2007 and a lot cash was
used there.
Asset Management Ratios

2007 2008 2009

Inventory Turnover (Days) 58.50 43.33 78.73

Total Asset turnover 2.05 2.16 1.42

I have not calculated its receivable turnover as I have explained that it either does not has its
receivables or they are very low.

Its inventory turnover increased showing that it took longer for the company to sell its stock in
trade. It has increased from 43 to 79. Its basic reason is decrease in over all demand of cars
due to bad financing condition. The company has to make big batches of each model to
reduce set up cost but this over production takes time in selling as demand has decreased
due to due to high interest rates.

The total asset turnover ratio has decreased showing that the assets are not being used
efficiently as it has been discussed that capacity is much higher than production and sales.

Debt Management Ratios

2007 2008 2009

Debt/Equity (Times) 2.40 1.11 2.52

Times Interest Earned -0.58 1.27 -1.79

(Times)

The total liabilities of the company have almost doubled during 2009. Its major reason is that
it long term debt has doubled.

Negative ratio is due to loss in 2007 and 2009. Long term debt is paid through profit which
Honda is not generating but still this loss does not show very weak position as major expense
is depreciation expense which is converting profit into loss and we know that the company
does not has to pay this expense. It is a non cash expense. If we exclude this expense then
company can show some better debt position. But overall position is not so good as demand
of cars has decreased in last three years.

Profitability Ratios

2007 2008 2009

Net Profit Margin -1.55 0.51 -2.84

Return on Asset -3.19 1.10 -4.04

Return on Equity -10.84 2.32 -14.21

Earning Per Share -3.71 0.55 -2.81

As the company is in loss therefore all profitability ratios are negative. Actually in this type of
business big fixed cost is involved which can only be recovered if production is done at large
scale but due to low demand it is very difficult to recover and which converts the contribution
generated from sale into loss. Although it looks that its shareholders are in loss but that is not
the reality its parent company sells parts to it and earns profit on this sale so even if Honda
Atlas is in loss still parent company is earning profit.

ROA went down because of the dual reason of decreasing returns and increase in asset size.
The asset base of the company widened during 2007 due to capacity expansion and
introduction of new models because there was increasing trend of demand when this
expansion was started.

The company was able to keep its cost of sales in a bit low during 2009. The cost of sales in
2009 due to restricted production of cars and cost minimization. However, lower costs could
not restrict the impact of lower sales revenue on the profitability of the company.

Common Size Analysis of Balance Sheet (Assets Side)

Rs. In Thousands Common Size (%)
ASSETS
Year Year- Year- Year Year Year
-08 09 10 2008 2009 2010

property, plant and equipment 4,082,9 3,864,5 5,190,5 49% 57% 52%
55 27 35

intangible asses 65,903 64,636 195,830 1% 1% 2%

capital work-in-progress 191,842 80,746 19,226 2% 1% 0%

long term loans, advance and 32,196 33,141 35,545 0% 0% 0%

deposits
deferred taxation 251,008 338,165 571,214 3% 5% 6%

NON-CURRENT ASSETS 4,623,9 4,381,2 6,012,3 56% 64% 60%

04 15 50

stores and spares 50,316 83,101 101,942 1% 1% 1%

stock-in-trade 2,704,9 1,612,6 2,954,0 33% 24% 30%

46 96 91

trade and other receivables 706,092 507,852 853,218 9% 7% 9%

cash and bank balances 219,859 231,880 20,487 3% 3% 0%

CURRENT ASSETS 3,681,2 2,435,5 3,929,7 44% 36% 40%

13 29 38

TOTAL ASSETS 8,305,1 6,816,7 9,942,0 100% 100% 100%

17 44 88

Common Size Analysis of Balance Sheet (Equity and Liabilities Side)

Equity and Liabilities Rs. In Thousands Indexed (%)

Year Year Year Year Year Year

2008 2009 2010 2008 2009 2010

authorized capital 750,00 2,000,0 2,000,0 9% 29% 20%

0 00 00

issued, subscribed and paid up 714,00 1,428,0 1,428,0 9% 21% 14%

capital 0 00 00

reserves 1,991,0 1,727,0 1,801,5 24% 25% 18%

00 00 00

inappropriate proft - 74,678 - -3% 1% -4%

264,33 401,65
2 5

SHARE CAPITAL AND RESERVES 2,440,6 3,229,6 2,827,8 29% 47% 28%
68 78 45
NON-CURRENT LIABILITIES 1,958,3 500,00 1,500,0 24% 7% 15%
34 0 00

current portion of long term 583,33 7% 0% 0%

fnances 3

short term borrowings 2,151,6 0% 0% 22%

01

mark up accrued on loans and 39,627 32,029 75,048 0% 0% 1%

other payables

trade and other payables 3,283,1 3,055,0 3,387,5 40% 45% 34%
55 37 94

CURRENT LIABILITIES 3,906,1 3,087,0 5,614,2 47% 45% 56%

15 66 43

TOTAL EQUITY AND LIABILITIES 8,305, 6,816, 9,942, 100% 100% 100%
117 744 088

Index Analysis of Balance Sheet (Assets Side)

ASSETS Rs. In Thousands Indexed (%)

Year Year Year Year Year Year

2008 2009 2010 2008 2009 2010

property, plant and 4,082,9 3,864,5 5,190,5 100% 95% 127%

equipment 55 27 35

intangible asses 65,903 64,636 195,83 100% 98% 297%

0

capital work-in-progress 191,84 80,746 19,226 100% 42% 10%

2

long term loans, advance 32,196 33,141 35,545 100% 103% 110%
and deposits

deferred taxation 251,00 338,16 571,21 100% 135% 228%

8 5 4

NON-CURRENT ASSETS 4,623,9 4,381,2 6,012,3 100% 95% 130%

 04 15 50

stores and spares 50,316 83,101 101,94 100% 165% 203%

2

stock-in-trade 2,704,9 1,612,6 2,954,0 100% 60% 109%

46 96 91

trade and other receivables 706,09 507,85 853,21 100% 72% 121%
2 2 8

cash and bank balances 219,85 231,88 20,487 100% 105% 9%

9 0

CURRENT ASSETS 3,681,2 2,435,5 3,929,7 100% 66% 107%

13 29 38

TOTAL ASSETS 8,305, 6,816, 9,942, 100% 82% 120%

117 744 088

Index Analysis of Balance Sheet (Equity & Liabilities Side)

Equity and Liabilities Rs. In Thousands Indexed (%)
Year Year Year Year Year Year
2008 2009 2010 2008 2009 2010
authorized capital 750,000 2,000,000 2,000,00 100% 267% 267%
0
issued, subscribed and paid 714,000 1,428,000 1,428,00 100% 200% 200%
up capital 0
reserves 1,991,000 1,727,000 1,801,50 100% 87% 90%
0
unappropriated profit (264,332) 74,678 (401,655) 100% -28% 152%
SHARE CAPITAL AND 2,440,668 3,229,678 2,827,84 100% 132% 116%
RESERVES 5
NON-CURRENT LIABILITIES 1,958,334 500,000 1,500,00 100% 26% 77%
0
current portion of long term 583,333 100% 0% 0%
finances
short term borrowings 2,151,60 100%
1
mark up accrued on loans 39,627 32,029 75,048 100% 81% 189%
and other payables
trade and other payables 3,283,15 3,055,03 3,387,59 100% 93% 103%
5 7 4
CURRENT LIABILITIES 3,906,11 3,087,06 5,614,24 100% 79% 144%
5 6 3
TOTAL EQUITY AND 8,305,11 6,816,74 9,942,0 100% 82% 120%
LIABILITIES 7 4 88

Common Size Analysis of Income Statement

Income Statement Rupees in Thousands Common Size (%)

Year Year Year Year Year Year

2008 2009 2010 2008 2009 2010

Sales 17,055,11 14,715,49 14,149,64

100% 100% 100%
5 5 6

Cost of Sales 16,955,18 14,088,00 13,973,14

99% 96% 99%
1 1 4

Gross Profit 99,934 627,494 176,502 1% 4% 1%

Less: Distribution and

214,889 209,677 190,088 1% 1% 1%
Marketing Costs

Less: Administrative
147,274 139,163 139,749 1% 1% 1%
Expenses

Add: Other Operating

150,585 23,589 64,844 1% 0% 0%
Income

Less: Other Operating

64,514 4,975 311,025 0% 0% 2%
Expenses

Profit/Loss from Operations 176,158 297,268 399,516 1% 2% 3%

Less: Finance Cost 305,491 233,651 222,769 2% 2% 2%

Profit/Loss before taxtation 481,649 63,617 622,285 3% 0% 4%

Taxation 217,109 11,393 220,452 1% 0% 2%

Profit/Loss after taxation 264,540 75,010 401,833 2% 1% 3%

Earnings per Share

2.08 0.55 2.81
(rupees)
Index Analysis of Income Statement

Rupees in Thousands Common Size (%)

Income Statement
Year Year Year
Year 2008 Year 2009 Year 2010
2008 2009 2010

Sales 17,055,115 14,715,495 14,149,646 100% 86% 83%

Cost of Sales 16,955,181 14,088,001 13,973,144 100% 83% 82%

Gross Profit 99,934 627,494 176,502 100% 628% 177%

Less: Distribution and 214,889 209,677 190,088 100% 98% 88%

Marketing Costs

Less: Administrative 147,274 139,163 139,749 100% 94% 95%

Expenses

Add: Other Operating 150,585 23,589 64,844 100% 16% 43%

Income

Less: Other Operating 64,514 4,975 311,025 100% 8% 482%

Expenses

Profit/Loss from 176,158 297,268 399,516 100% 169% 227%

Operations

Less: Finance Cost 305,491 233,651 222,769 100% 76% 73%

Profit/Loss before 481,649 63,617 622,285 100% 13% 129%

taxtation

Taxation 217,109 11,393 220,452 100% 5% 102%

Profit/Loss after taxation 264,540 75,010 401,833 100% 28% 152%

Earnings per Share 2.08 0.55 2.81

(rupees)
 INTRODUCTION

The General Tyre and Rubber Company of Pakistan Limited (Gentipak) is Pakistans premier industry. It
was established in 1963 by General Tire USA and has been in production since 1964.

Gentipak has a Technical Services Agreement (TSA) with CONTINENTAL AG (Germanys largest tyre
manufacturer) which enables it to produce tyres of GENERAL brand and provides the latest technology
for production of tyres based on Continentals, R&D.

The Plant and the Offices are located in suburb of Karachi. Initial production capacity was only 120,000
tyres per annum but is now around 2,000,000 tyres per annum. The plant is constantly upgraded and is
equipped with the most modern technology in tyre manufacturing.
Income Statement (Profit and Loss Account)
Analysis of Income Statement (Profit and Loss Account)

CC.2 shows the income statement of The General Tyre and Rubber Company from year 2006 to 2010. It
shows that the sales of the company have increased over the years in FY 2006 to FY 2010.The Sales have
been increased by the 58 percent if we compare it to FY 2006. The distribution cost the company has been
increasing over the years. However, the Administrative expense has shown fluctuations and it is showing a
decreasing trend from FY 06 to FY 10. The Finance Cost of the company has increased drastically from a
very small value in FY 06 to a relatively very high value in FY 09and this drastic increase tells us that the
company has started to rely heavily on debts and it is giving out huge amount of interests on these loans. The
taxes of the company are showing a declining trend and taxation value for FY 09 is negative because of the
fact that the EBT of the company for this year is negative but in the FY 10 the company EBT is positive and
company gave tax, the positive trend in the FY 2010 is due the new contracts with the Toyota and
AltasHonda. The Net income of the company is showing a declining trend and it has incurred huge amount
of losses in FY 08 and FY 09. The increasing amount of interest expenses has played a huge role in the
decline and eventual loss of the company. Overall, the net income of the General Tyre and Rubber Company
shows that the performance of the company over the years is getting poorer and poorer but in FY 2010 the
company made a record increase in the net income because in the FY 2010 the after myth of recession are
decreased and on the same time the company got the two major contracts and they have increased the
prices of their tyre as compare to the other brands and in the year FY 09 two long liabilities have come to
end so the FY 10 starts with the lesser obligation so at that year company have given lesser interest so thats
why the net income of the company at that time period is positive.
Balance Sheet
Analysis of Balance Sheet

CC.3 includes the balance sheet of The General Tyre and Rubber Company from FY 2006 to FY 2010.

The total no. of share outstanding from FY 06 to FY 10 is same. This shows that the company hasnt been
increasing its no. of shareholders. However, the total amount of equity has shown a slight decrease and it is
because of the decrease in the value of reserves that the company has been holding from the FY 06 to FY 09
but in the FY 2010 the equity portion is increased as compare to the previous years this is because the
inappropriate profit is increased because in the FY 10 company reinvested its profit to expand the business
rather than giving dividends to its shareholders. Total long-term liabilities of the company have increased
from FY 06 to FY 07 but then it decreased from the FY 08 to FY 10. It seems like a good strategy on the
part of the company because the company has decreased its liabilities due to adverse political and economic
conditions in Pakistan. The Current liabilities of the company show an upward trend from FY 06 to FY 10.
The total sum of Liabilities and Equity shows an uptrend because of the drastic increase in current liabilities
from FY 05 to FY 09. Fixed Assets of the company do not show a drastic change they are rather same over
the years. However, the current assets have increased from FY 06 to FY 10. This could be the counter effect
of the increase in the current liabilities. Total Assets of the company also show an uptrend due to the
increase in current assets.
Common Size Income Statement:

2010 2009 2008 2007 2006

Net Sales 100.00% 100.00 100.00 100.00 100.00
% % % %
Cost of Sales 84.81% 88.75% 88.94% 88.16% 86.03%
Gross Profit 15.19% 11.25% 11.06% 11.84% 13.97%
Administrative Expenses 1.38% 1.49% 1.60% 2.32% 2.03%
Distribution Cost 3.25% 4.38% 4.45% 4.13% 4.19%
Operating Profit 10.55% 5.38% 5.01% 5.40% 7.75%
Other operating expenses 0.81% 3.24% 2.22% 0.33% 0.57%
other operating income 0.78% 0.83% 1.34% 0.79% 0.78%
Finance Cost 4.09% 5.62% 3.97% 3.17% 2.33%
(loss)/profit before taxation 6.44% -2.66% 0.16% 2.68% 5.63%
Taxation 3.00% -0.61% 0.52% 1.09% 2.23%
(loss)/profit after taxation 3.44% -2.05% -0.36% 1.59% 3.40%

Analysis of Common Size Income Statement:

CC.6 shows us the Common size Income Statement for the FY 2005 to FY 2009. It is calculated by dividing
each component of income statement with sales of that year.

This common size income statement shows us that COGS has the highest percentage of sales and it has
increased over the years. The cost of goods sold ratio decreased in FY 2010 it is good for the company
because gross profit ratio have increased. In the FY 2010 General tyre import all the nylon, filler and bead
from the Bangladesh which was cheap from the previous imports so in that why they reduced the CoGS by
3.94%. The gross profit in the income statement has the second highest percentage in the income statement
and shows a downward trend from the FY 2006 to FY 2009 but there is an increase of 3.94 % in the FY
2010. Other operating income has the lowest percentage in the table although it shows an increasing trend
over the 5 fiscal years. The net income of the company is continuously decreasing from the FY 2006 to FY
2009 but there is an increase in FY 2010 due to decrease in the CoGS.The company needs to generate more
sales to survive in the market because there Net income is not enough as compare to their capital.

Common Size Balance Sheet:

2010 2009 2008 2007 2006

PROPERTY, PLANT AND 39.00% 47.76% 42.60% 46.13% 42.92%
EQUIPMENT
INTANGIBLE ASSETS 0.00% 0.00% 0.00% 0.01% 0.01%
INVESTMENTS 0 0 0 0 0
LONG-TERM LOANS AND 0.12% 0.06% 0.09% 0.11% 0.12%
ADVANCES
DEFERRED TAXATION 0 0 0 0 0
LONG-TERM DEPOSITS AND 0.15% 0.18% 0.18% 0.20% 0.22%
PREPAYMENTS
CURRENT ASSETS
Stores and spares 7.40% 9.34% 9.47% 10.18% 8.88%
Stocks 28.51% 18.30% 26.24% 25.80% 29.84%
Trade debts 17.80% 17.15% 15.96% 13.29% 12.07%
Loans and advances 0.43% 0.54% 0.39% 0.43% 0.45%
Deposits and prepayments 0.70% 0.77% 1.91% 0.74% 1.02%
Other receivables 0.53% 0.74% 0.65% 0.88% 0.94%
Taxation 3.30% 1.48% 0.00% 0.00% 1.18%
Cash and back balances 2.07% 3.69% 2.51% 2.23% 2.33%
Total Assets 100.00 100.00% 100.00 100.00 100.00
% % % %

SHARE CAPITAL AND RESERVE

Issued, subscribed and paid-up 12.42% 15.07% 14.91% 17.00% 17.61%
Reserve 15.23% 12.98% 15.58% 18.23% 20.56%
LONG TERM MURABAHA 0.00% 0.00% 0.00% 0.00% 0.00%
FINANCING
LONG TERM LOANS 3.60% 8.10% 8.42% 10.13% 5.89%
LIABILITIES AGAINST ASSETS 0 0 0.38% 1.22% 1.97%
SUBJECT TO FINANCE LEASES
STAFF BENEFITS 2.95% 3.45% 3.26% 3.54% 3.52%
DEFERRED CREDIT 0.00% 0.00% 0.00% 0.01% 0.01%
DEFERRED TAXATION 3.38% 0.23% 1.11% 1.25% 0.98%
LONG-TERM DEPOSITS FROM 0.18% 0.25% 0.24% 0.27% 0.28%
DEALERS

CURRENT LIABILITIES AND

PROVISIONS
Current maturity of
long-term murabaha financing 0.00% 0.00% 2.49% 2.84% 2.95%
long-term loans 4.27% 6.07% 2.96% 3.38% 0.00%
liabilities against assets subject to 0.00% 0.38% 0.69% 0.70% 0.68%
finance leases
Short-term finances 9.41% 8.28% 24.97% 11.76% 12.10%
Running finances under mark-up 24.53% 22.82% 5.62% 6.60% 2.88%
arrangements
Trade and other payables 21.21% 18.86% 17.49% 16.14% 20.75%
Accrued mark-up 1.72% 1.85% 0.51% 0.40% 0.23%
Taxation 0.00% 0.00% 0.02% 0.02% 0.00%
Provisions 1.12% 1.67% 1.35% 3.68% 3.69%

Total Equity and Liability 100.00 100.00% 100.00 100.00 100.00

% % % %
Analysis of Common Size Balance Sheet.

CC.7 shows the Common Size Balance of General Tyre and Rubber Company for Fiscal Years 2006 to 2010.
This is calculated by dividing each component of asset side with total assets and also by dividing each
component of liability and equity side with total liabilities and equity.

The Plant, Property and Equipment account makes the largest part of the total assets and it has an increasing
trend over the years.In the FY 09 General Tyre purchased rubber and tyre recycling plant so thats why in the
FY 09 the plant asset and machinery acquires more percentage. In current assets stocks make has the highest
proportion of total assets. However, it shows a decline as a percentage of total assets over the 4 years but it
increased by 10 percent in the FY 10 this was because General Tyre got 2 contracts for that reason they
needed for stock to fulfill their targets. The whole table also shows us that that the total current assets make
up a larger part of the total assets as opposed to the non-current assets.

In the liabilities and equity side, Accounts payable has the highest percentage to the total liabilities and
assets. Running finances under markup arrangements of FY 10 has the highest percentage in the whole table.
This was due to the purchase of plant, equipments and stocks. The second highest percentage of liability
component to total liability and equity is of issued, subscribed and paid-up capital. However, it has a
downtrend over the five fiscal years.
Return on Invested Capital Ratio:
Analysis of Return on Invested Capital Ratio:

CC.21 includes the return on invested capital ratio of The General Tyre and Rubber Company for the fiscal
years 2006 to 2010.

There is an increase in the ROA from the FY 06 to FY 10 this shows that the return on asset is increasing
which is a positive sign. ROA gives an idea as to how efficient management is at using its assets to generate
earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. In the FY 2010 there is an abnormal increase in the ROA this shows that in the FY 2010 the
company uses its total asset more efficiently and at the same time in the fiscal year 2010 the net income is
also increased because due to decrease in the CoGS.This also shows that over company is perform good in
the FY 2010 as compare to the industrial average.

ROE (return of equity) measures how much the company is making profits using the investments made by
investors. The ROE for our company has been decreasing massively over the years and it has become
negative in the FY 08 and FY09. It tells us that our company hasnt been utilizing the investments efficiently
and it really needs to work on that area. But on contrary the ROCE is increased in the FY 2010 this was also
due to the increase Net income.

The equity growth model shows us the growth of the company using the dividend payout ratio and ROE.
Unfortunately, the growth of the company has been decreasing drastically over the years and it has become
negative in the FY 07,08and09. The industry average of the companies is very high than our company
growth and it tells that company needs to work really hard to improve its performance.

As the ROE exceeds the ROA this means that the company is using the debt profitability, same is applied
here because in the year 2006 and 2010 the ROE is greater than the return on ROA this means that the
company is on the debt profitability.

The asset turnover ratio shows us the total no. of sales in each year with respect to total no. of assets in that
particular year. Asset turnover ratio shows fluctuated trend over the years and its highest value is in the FY
09. And our companys value is almost the same as the industry average.

Profit Margin Ratio:

Analysis of Profit Margin Ratio:

These ratios simply show us the strength or potential of the company to generate profits over the years.
Gross profit margin ratio which is a ratio of gross profit to sales gives us the idea how much income remains
relative to sales once we subtract cost of goods sold from the sales. This ratio has a downtrend from FY 06
to FY 09. But there is an increase in the gross profit as compare to the previous this was due to the decrease
in the CoGS.

The operating profit margin increase which means that companyhas enough money to give up its interests on
loan and other obligations due.

Market Measures:
CC26 General Tyre and Rubber Company
Market Measures
For the year 2006 through
2010

price of 30th july, 2006 28.2

Price of 30th june,2010 23.4

Average Share Price 25.8

2010 2009 2008 2007 2006

Price to Earning(range) 70.633 -140.416 -934.323 245.093 121.427
Price to Book(range) 11.589 13.864 12.618 12.450 11.905
Earnings Yield 0.014 -0.007 -0.001 0.004 0.008
Dividend Yield 0.000 0.000 0.000 -0.008 -0.007
Dividend Payout Ratio 0.000 0.000 0.006 -1.886 -0.819

Industry Average
Price to Earning(range) 30.75
Price to Book(range) 21.65
Earnings Yield -0.22
Dividend Yield 317.7
Dividend Payout Ratio -317.83

Analysis of Market Measures:

CC.26 includes the market measures of The General Tyre and Rubber Company for the fiscal years 2006 to
2010. To calculate the market measures we have first calculated the average price by adding up the 1 st July,
2006 and 30th July, 2010 and dividing the both prices with 2.
The price to earnings ratio has been increasing from FY 05 to 07 and then it becomes negative in the FY 08
and FY 09 but it shows a dramatic increase in the year 2010 which is 70.33. The high P/E ratio is good for
the investor because he is willing to earn more on it.

A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current
closing price of the stock by the latest quarter's book value per share. There is a decrease in the ratio in the
FY 201o as compare to FY 2009. Similarly, the price to book ratio is showing an uptrend over the years
which implies that the companys share price has been increasing relative to its worth, but this value is also
well below the industry average.
 PAK SUZUKI MOTOR COMPAY LIMITED
RATIO ANALYSIS

Working Capital = Current Assent Current liabilities

Years Current Current W. Capital

Assets Liabilities
2000 3152839 2710563 442276

2001 2768706 2087090 681616

2002 7183211 5511463 1671748

2003 8541540 5603769 2937771

Comment:

Pak Suzuki Motor Company Limited has enough working capital which is a good sign. You can
see that Assets are growing up and Current liabilities are also going to increase and when you
see the proportion of working capital that is also growing.
Current Ratio: Current Assets / Current Liabilities

Years Current Current Current

Assets Liabilities ration
2000 3152839 2710563 1.16

2001 2768706 2087090 1.33

2002 7183211 5511463 1.3

2003 8541540 5603769 1.5

Comments:

In year 2003Pak Suzuki Motor company Limited is in very strong position if you compare this
to the other years you can easily to reach the decision that 2003 is the best year and 2000
year is not satisfactory.

Acid Test Ratio = Quick Assets / Current Liabilities

Years Quick Assets Current Ratio

Liabilities
2000 4502145 2710563 1.66

2001 4725149 2087090 2.26

2002 5190168 5511463 0.94

2003 5797749 5603769 1.03

Comments:

The ideal Acid test ration is 1:1 and you can see in 2002 the company has over quick
assets which goes idol but in 2003 it is good because it is very close to an ideal ratio.
Inventory Turnover Ratio = Cost of goods sold / Average Inventory

Years Cost of goods Average Ratio

sold Inventory
2000 6578898 1999521 3.29

2001 7599439 2054251 3.70

2002 9614256 2088767 4.6

2003 15840739 NA

Comments:

In all the years the company has high turnover which is a good sign for company it means
company earning a lot of profit and that has overcome its expenses.

Debt Ratio = Total Debts / Total Assets

Years Total Debts Total Asset Ratio

2000 2807563 4567695 0.61

2001 2132090 3993930 0.53

2002 551463 8159447 0.07

2003 5603769 9674550 0.58

Comments:
In all years the company has very satisfactory debt ratio but in 2002 it is not good it means
that company has more self proportion in the investment that should take more money as a
loan and in other years company has good ration that can take ratio without any hesitation.

Total Asset Turn Over Ratio = Net sales / Total Assets

Years Net Sales Total Assets Ratio

2000 6889145 4567695 1.51

2001 7976122 3993930 1.20

2002 10994067 8159447 1.35

2003 18484220 9674550 1.91

Comments:
The companys total asset turnover ratio is very good it has minimum ratio in 2001 and
maximum ratio in 2003 it means the company ratio is growing up steady which is a good sign.
It means the company utilizing its fewer resources and getting high profit.

(8) Gross Proft Ratio = Gross profit / Net Sales

Years Gross proft Net sales Ratio

2000 310247 6889145 0.045

2001 376683 7976122 0.05

2002 1379811 10994067 0.13

 2003 2643481 18484220 0.14

Comments:
The companys gross profit ratio is not enough in 2000 it has very less but in 2003 it is
comparatively growing, in a nut shell we can say the gross profit ratio is growing.

(9) Proft Margin Ratio = Net Income / Net Sales

Years Net Income Net sales Ratio

2000 (26600) 19816 (1.34)

2001 141013 20434 6.9

2002 850097 29484 28.83

2003 1570191 49503 31.72

Comments:
The companys profit merging ratio result is very proficient because in 2000 the companys
ratio was in negative but with passing of year it gain very good result and in 2003 it got very
good result.
Working Capital Turnover Ratio
= Cost of goods sold / net working capital

Years Cost of goods Working Ratio

sold capital
2000 6578898 442276 14.88

2001 7599439 681616 11.15

2002 9614256 1671748 5.75

2003 15840739 2937771 5.39

Comments
If the working capital ratio is less it is benefited for the company its means the company is
spending less and getting more products.