Professional Documents
Culture Documents
FAC 14
Presented to
Mr. Mian Saqib Mehmood
Faculty of Management and Administrative Sciences, UOG
Presented By
Zaryab Azam 13024854-139
Saad Anwar Barq 13024854-045
Adeel 13024854-053
Introduction:
PEL contributes in your lives every day, by providing you not just appliances for a better
lifestyle, but with Power products like transformers, switch gears and energy meters. We
are the pioneers of electrical manufacturing in Pakistan and we are here to make a
difference in your lives whether it is through taking care of your home, your lifestyle,
making your day to day activities easier or by helping you save energy.
Vision:
To Excel in providing engineering goods and services through continuous improvement.
Mission:
To provide quality products and services to the complete satisfaction of our customers and
maximize returns for all stake holders through optimal use of resources.
To promote good governance, corporate values, and safe working environment with strong sense
of social responsibility.
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Organizational Chart:
Chairman
BOD
Executives
670
Managers
200
Workers
4274
Products:
Refrigerator
Microwave Oven
Water Dispenser
Deep Freezer
Air Conditioner
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Part 2
Introduction of ratios
Financial ratios
Financial ratios are one of the most common tools of managerial decision
making. A ratio is a comparison of one number to anothermathematically, a
simple division problem. Financial ratios involve the comparison of various
figures from the financial statements in order to gain information about a
company's performance. It is the interpretation, rather than the calculation,
that makes financial ratios a useful tool for business managers. Ratios may
serve as indicators, clues, or red flags regarding noteworthy relationships
between variables used to measure the firm's performance in terms of
profitability, asset utilization, liquidity, leverage, or market valuation.
RATIO ANALYSIS
It refers to the systematic use of ratios to interpret the financial
statements in terms of the operating performance and financial
position of a firm. It involves comparison for a meaningful
interpretation of the financial statements.
In view of the needs of various uses of ratios the ratios, which can be
calculated from the accounting data are classified into the following
broad categories
A. Liquidity Ratio
B. Turnover Ratio
C. Solvency or Leverage ratios
D. Profitability ratios
A. LIQUIDITY RATIO
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The various ratios that explains about the liquidity of the firm are
1. Current Ratio
2. Acid Test Ratio / quick ratio
3. Absolute liquid ration / cash ratio
1. CURRENT RATIO
The current ratio measures the short-term solvency of the firm. It
establishes the relationship between current assets and current
liabilities. It is calculated by dividing current assets by current
liabilities.
Quick assets are those current assets, which can be converted into
cash immediately or within reasonable short time without a loss of
value. These include cash and bank balances, sundry debtors, bills
receivables and short-term marketable securities.
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B. TURNOVER RATIO
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1. INVENTORY TURNOVER RATIO
This ratio indicates the number of times the inventory has been
converted into sales during the period. Thus it evaluates the efficiency
of the firm in managing its inventory. It is calculated by dividing the
cost of goods sold by average inventory.
Net credit sales consist of gross credit sales minus sales return. Trade
debtor includes sundry debtors and bills receivables. Average trade
debtors (Opening + Closing balances / 2)
When the information about credit sales, opening and closing balances
of trade debtors is not available then the ratio can be calculated by
dividing total sales by closing balances of trade debtor
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Net credit purchases consist of gross credit purchases minus purchase
return
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Net fixed assets represent the cost of fixed assets minus depreciation.
The solvency or leverage ratios throws light on the long term solvency
of a firm reflecting its ability to assure the long term creditors with
regard to periodic payment of interest during the period and loan
repayment of principal on maturity or in predetermined instalments at
due dates. There are thus two aspects of the long-term solvency of a
firm.
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1. DEBT EQUITY RATIO
Debt equity ratio shows the relative claims of creditors (Outsiders) and
owners (Interest) against the assets of the firm. Thus this ratio
indicates the relative proportions of debt and equity in financing the
firms assets. It can be calculated by dividing outsider funds (Debt) by
shareholder funds (Equity)
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5. FIXED ASSETS TO LONG TERM FUNDS RATIO
Fixed assets to long term funds ratio establishes the relationship
between fixed assets and long-term funds and is calculated by dividing
fixed assets by long term funds.
PROFITABILITY RATIOS
The profitability ratio of the firm can be measured by calculating
various profitability ratios. General two groups of profitability ratios
are calculated.
a. Profitability in relation to sales.
b. Profitability in relation to investments.
Gross profit is the difference between sales and cost of goods sold.
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2. NET PROFIT MARGIN OR RATIO
It measures the relationship between net profit and sales of a firm. It
indicates managements efficiency in manufacturing, administrating,
and selling the products. It is calculated by dividing net profit after tax
by sales.
4. EXPENSES RATIO
While some of the expenses may be increasing and other may be
declining to know the behavior of specific items of expenses the ratio
of each individual operating expenses to net sales should be
calculated. The various variants of expenses are
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PROFITABILITY IN RELATION TO INVESTMENTS
1. Return on gross investment or gross capital employed
2. Return on net investment or net capital employed
3. Return on shareholders investment or shareholders capital
employed.
4. Return on equity shareholder investment or equity shareholder
capital employed.
Return on net capital employed = Earnings Before Interest & Tax (EBIT)
X 100
Net capital employed
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Return on equity share capital employed = Earnings after tax (EAT), preference
dividends X 100
Equity share capital employed
Dividend pay our ratio (Pay our ratio) = Total dividend paid to equity share
holders
Total earnings available to equity share
holders
Or
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Dividend Yield = Dividend Per share
Market value of ordinary share
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Earnings yield = Earnings per share
Market value of ordinary share
Horizontal Analysis
Pak Electron Limited
Increase (Decrease)
2015 2014 2013 2013-2014 2014-2015
ITEMS (000) (000) (000)
%
Amount % age Amount
age
1104216
Gross Sales
0 8075382 6077006 1998376 32.88 2966778 36.74
-
Sales Return
1634142 1287500 6077006 4789506 -78.81 346642 26.92
Other Operating Expense 25,108 23,625 17,063 6,562 38.46 1,483 6.28
Total Operating Expense 878,002 711,649 460,076 251,573 54.68 166,353 23.38
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1,169,66
Net Operating Income
5 777,744 610,305 167,439 27.44 391,921 50.39
Other operating Incomes 76,499 44,085 12,519 31,566 252.14 32,414 73.53
126.3
Income of non-recurring Items
36,054 15,929 9,676 6,253 64.62 20,125 4
Worker's Participation
Fund 25,108 23,625 17,063 6,562 38.46 1,483 6.28
Profit Before tax 514,980 363,245 236,436 126,809 53.63 151,735 41.77
3219.4 -
Current Year
47,609 95,701 2,883 92,818 9 -48,092 50.25
Profit after Taxation 467,371 267,544 233,553 33,991 14.55 199,827 74.69
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Total Assets 10068930 7993355 6895541 1,097,814 628.12 2,075,575 385.12
Current Labilities 0 0.00 0 0.00
Trade& other Payables 1599580 836697 816,858 19,839 4117.44 762,883 109.68
Interest 226709 140210 113,205 27,005 419.20 86,499 162.09
Short Term borrowings 3795340 2879827 1897577 982,250 193.19 915,513 314.56
Current Portion of long term
Labilities 426628 425112 404774 20,338 1990.24 1,516 28,041.69
Long Term Financing 321496 362825 0 362,825 0.00 -41,329 -877.89
Liabilities against assets/Finance
Lease 105132 62287 0 62,287 0.00 42,845 145.38
Provision for Taxation 0 8685 47654 -38,969 -122.29 -8,685 -100.00
Non-Current Labilities 0 0.00 0 0.00
Long Term Financing 250365 393924 703910 -309,986 -227.08 -143,559 -274.40
Liabilities against assets/Finance
Lease 182487 123092 74646 48,446 154.08 59,395 207.24
Deferred Labilities 258980 -258,980 -100.00 0 0.00
Taxation 409093 345996 0 345,996 0.00 63,097 548.36
Employees Benefits 62 0 0 0 0.00 62 0.00
Deferred Income 69814 73488 77356 -3,868 -1999.90 -3,674 -2,000.22
Total Labilities 6960078 5227031 4347306 879,725 494.17 1,733,047 301.61
Share Holders Equity 0 0.00 0 0.00
Share Capital 1215873 1136194 500000 636,194 78.59 79,679 1,425.96
Reserves 1467619 1167070 77725 1,089,345 7.14 300,549 388.31
Unappropriated Profit 0 849356 509634 339,722 150.02 -849,356 -100.00
Total Share Holder Equity 2683492 3152620 1087359 2,065,261 52.65 -469,128 -672.02
Vertical Analysis
Pak Elektron Limited
Condensed Comparative Income Statement
For the Year Ended June 2013 ~ 2015
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2,047,66 1,070,38
Gross Profit On Sales 7 22 1,489,393 22 1 22
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Pak Elektron Limited
Condensed Comparative Balance Sheet
For the Year Ended June 2004 ~ 2006
2015 2014 2013
(000) (000) (000)
Items
% Amoun
Amount Amount % age % age
age t
Non-Current Assets
31. 2,716,40 33.9 333422 48.3
Property, Plant and Equipment 3144904 23 1 8 6 5
5. 3.1 5.2
Intangible Assets 602465 98 249880 3 364579 9
0. 0.7 1.4
Long Term Investments 11227 11 60711 6 96701 0
0.1
Long Term Deposits - - 13073 9
Current Assets - - -
0. 0.6 0.7
Stores,Spares,and loose tools 58543 58 52713 6 49157 1
2,576,02 25. 24.5 130913 18.9
Stock In trade 6 58 1963765 7 1 9
25. 23.1 14.2
Trade Debts 2614396 96 1853889 9 980491 2
2. 2.7 2.8
Loans and Advances 225113 24 218179 3 195077 3
2. 2.9 1.8
Trade Deposits & short term Payments 287034 85 236489 6 127316 5
0. 3.3 4.2
Other Receivables 9266 09 270471 8 290344 1
0. 0.4 0.2
Other Financial Assets 91022 90 35596 5 17530 5
4. 4.1 1.7
Cash and Bank Balances 448934 46 335261 9 117916 1
1006893 100. 100. 689554 100.0
Total Assets 0 00 7993355 00 1 0
Current Labilities
22. 16.0 18.7
Trade& other Payables 1599580 98 836697 1 816,858 9
3. 2.6 2.6
Interest 226709 26 140210 8 113,205 0
54. 55.0 189757 43.6
Short Term borrowings 3795340 53 2879827 9 7 5
Current Portion of long term 6. 8.1 9.3
Labilities 426628 13 425112 3 404774 1
4. 6.9
Long Term Financing 321496 62 362825 4 0 -
1. 1.1
Liabilities against assets/Finance Lease 105132 51 62287 9 0 -
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0.1 1.1
Provision for Taxation 0 - 8685 7 47654 0
Non-Current Labilities - - -
3. 7.5 16.1
Long Term Financing 250365 60 393924 4 703910 9
2. 2.3 1.7
Liabilities against assets/Finance Lease 182487 62 123092 5 74646 2
5.9
Deferred Liabilities - - 258980 6
5. 6.6
Taxation 409093 88 345996 2 0 -
0.
Employees Benefits 62 00 0 - 0 -
1. 1.4 1.7
Deferred Income 69814 00 73488 1 77356 8
100. 100. 434730 100.0
Total Labilities 6960078 00 5227031 00 6 0
Share Holders Equity
45. 36.0 45.9
Share Capital 1215873 31 1136194 4 500000 8
54. 37.0 7.1
Reserves 1467619 69 1167070 2 77725 5
26.9 46.8
Unappropriated Profit 0 - 849356 4 509634 7
100. 100. 108735 100.0
Total Share Holder Equity 2683492 00 3152620 00 9 0
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