Chapter No.

1
Profile of Company

1.1. Company History:

The history of Nishat dates back to 1951, when Mian Mohammad Yahya founded Nishat Mills. After
almost half a century of undaunted success, Nishat Group is among the leading business houses of the
country and ranks among the top 5 groups in terms of assets and sales revenue. The group has its roots
firmly planted into four-core business namely.
 Textiles
 Power generation
 Banking
 Cement
The textile business is further subdivided into 2 textile divisions;
 Nishat Faisalabad
 Nishat Chunian

1.1.1. Textile Capacity:

Production process consists of spinning, weaving, processing, and finishing. The processing includes
dyeing, engraving. The textile capacity of the group is the largest in the country. An addition of 20000
new spindles, 100 new air jets looms and new dyeing plant has increased the existing capacity of 24000
spindles, 740 looms and dyeing and finishing capacity of 5 million meters. The group is the largest
exporter of textile products from Pakistan for more than a decade.

1.1.2. Export Oriented Organization:

Nishat mills limited are an export-oriented organization. Nishat mills limited exports more than 90% of
its products mainly to the Far East, Europe and United States.

1.1.3. D.G khan Cement Company limited:

In 1992, Nishat group acquired D.G Khan Cement Company LIMITED from the government of Pakistan.
DGKCC is the second largest project of the group and is ideally located in the heart of the Pakistan.
DGKCC Unit No I has a capacity of 2,200 tons per day, a new unit having the capacity of 3,300 ton was
established in 1997, international Finance Corporation and Common Wealth Development Corporation
have finance this unit. With addition of unit NO 2, DGKCC has become the largest manufacture cement
of Pakistan.

1.1.4. Muslim commercial bank:

In 1991, Nishat Group ventured into the financial sector through the acquisition of Muslim Commercial
Bank. MCB has the grown ever since and is now the largest in the private sector. MCB has a network of
over 1500 branches employing over 12,000 people.

1
1.2. Vision Statement:
“To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished
product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis in
the economy of Pakistan. To transform the Company into a modern and dynamic power generating
Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan”.

1.3. Mission Statement:

“To provide quality products to customers and explore new markets to promote/expand sales of the
Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices
of products of the Company for sustainable and equitable growth and prosperity of the Company”.

1.4. Goals and Objectives:

 To enhance the profitability of the Company.
 To increase the overall efficiency and productivity of the Company.
 To become the market leader by outshining the competitors and be an innovative company by
introducing new ideas.
 To expand sales to the global marketplace by anticipating customer needs and develop and
maintain strong customer base.
 To monitor and improve internal processes to achieve efficiencies, improve organizational
structure and ensure the best use of available resources.
 To follow the latest technology trends and their implementation in the Company to enhance the
overall productivity of the company.
 To develop and promote the reputation and image of the Company for its stakeholders in specific
and non-stakeholders in general.
 To promote awareness and best practices about environmental sustainability and social
responsibility.

1.5. Departments of Company:

Organizational Structure

2
 Marketing Department:

G.M LOCAL
MARKETING

Dy. Manager Sr. assistant

In charge fair price Assistant manager
Quality manager waste

Assistant manager Assistant manager Assistant manager Assistant manager

fair price waste waist sales

 Sales Department:

G.M SALES

Sr. Assistant manager Asst. manager sales Asst. Manager Sales

Sales officer Sales officer Sales officer

Asst. sales officer Asst. sales officer Computer programmer

Computer programmer

 Export Department:
As most of the NML production is exported to different countries, export department has the key
importance in the organization. The management has hired the competent employees who are working
effectively and efficiently and the percentage of the export in the total production is regularly increasing.
The highly educated and experienced team of professional is headed by the GM Export having an
experience of 20 years. These peoples know the importance of good customer relationship this team of
professionals is so dedicated to their work that they often work after office hours even without overtime
payment. These people use this most modern technology available to remain in close contact with the
customers (e.g. telephone, fax, e-mail etc.)
3
  Accounting Department:
In Accounting Department, under the supervision of concerned officers, I came to know different types
of vouchers being prepared and their process of preparation vouchers are simply a written evidence of any
business transaction. The different type of vouchers prepared in different departments of Nishat Textile
which are as follows:
 Cash Payment Vouchers
 Cash Receipts Vouchers
 Bank Payment Vouchers
 Bank Receipts Vouchers
 Journal Vouchers
 Petty Cash Vouchers

 Finance Department:
At Nishat Textile finance department is situated at ground floor of the main office building. Upper level
hierarchy of finance department is as follows:
These are various types of activities performed in finance department:
 Financial decisions under instructions of board of directors
 Handling the accounting activities
 Credit management
 Handling the purchase
 Negotiation with bank

1.6. Products and Services:

It comprises of 3 units:
 Spinning
 Weaving
 Home Textiles

1.6.1. Spinning:
The spinning facility of Nishat Chunian consists of five units with a capacity of 150,000 spindles,
producing 90 million pounds of yarn per annum. To maintain a consistent product quality, stringent
measures are taken not only in the sophisticated in-house labs, but throughout the production process.

1.6.1.1. Spinning Products:

YARN TYPES COUNT RANGE COMPOSITION END USE

CARDED Ne 6/1 – 20/1 100% Cotton Denim Fabrics and

COTTON YARNS Hosiery

COMBED Pakistani, Australian, Extra-Long- Circular Knitted, Hosiery

COTTON YARNS Ne 14/1 – 100/1 Staple CIS, Brazilian, PIMA and Fabrics, Upholstery and
Egyptian Cottons Denim.

4
CORESPUN Ne 7/1 – 40/1 Stretch Lycra accredited by Dupont Stretch Fabrics for Denim
STRETCH Also available in unbranded Spandex. and other Woven Fabrics
YARNS
BLENDED Ne 10/1 – 80/1 Polyester, Acrylic, Viscose-Rayon, Cool Sportswear, Active wear,
YARNS Max ®, eVAP ®, Modal ®, Tencel Sweaters, Upholstery and
Lyocell ®, Amicor, Bamboo fiber, Industrial Fabrics
Soyabean fiber and Metallic Fibers are
available, pure as well as in various
Cotton blends
SLUB YARNS Ne 4.5/1 – 20/1 100% Cotton Denim, Upholstery and
Ne 6/1 – 40/1 Blended Polyester and Viscose-Rayon in various Sweaters
blends
COMPACT Ne 40/1 – 100/1 100% Cotton with properties of low High thread count
YARNS hairiness, improved evenness, strength sheeting and fine shirting
and elongation
PLIED YARNS 2, 3, and 4 ply Our entire count range is also available Knitted as well as Woven
in 2, 3 and 4 ply, auto-spliced and Fabrics
knotless

1.6.2. Weaving:
The weaving mill consists of state of the art Piconol Omni, Omni Plus and Toyota air jet looms in various
widths ranging from 110 – 150 inches, providing greater flexibility in catering to customer needs. The
renowned European company Benninger-Zell manufactures the Sizing and Warping machinery.

1.6.2.1. Weaving Products:

Fabric Category Design Description Composition Count Range Width
Twills
Drills
100% Cotton, blends of
Broken Twills
Shirting fabrics with a Cotton with Polyester, Shirting:
Bedford Cords
weight range of 50-150 Viscose, Linen, Nylon, Ne 40/1 – 120/1
Ottomans 72
APPAREL GSM and Bottoms with Lycra, Elaspan and
Canvases inches
a weight range of 200- Spandex; Cotton Slub, PC Bottoms:
Herringbone
450 GSM. Slub and Slub lycra; Spun Ne 5/1 – 30/1
Matts
Poly and Poly Filament.
Panamas
Rib stops
100% Cotton, blends of
Sheeting fabrics of up
Cotton with Polyester,
Percales to 1000 thread count
SHEETING Cool Max®, T-400™,
Satins with single ply yarn. 141
AND eVAP®, Modal, Tencel, Ne 40/1 – 120/1
Striped sateen’s inches
UPHOLSTERY Bamboo Fiber, Soyabean
Poplins Upholstery fabrics
Fiber, Milk Fiber and
made with plied yarns
Amicor.

5
FANCY Dobby fabrics made 100% Cotton and blends Ne 20/1–Ne 128
Dobby Items
ITEMS using up to 14 frames. of Polyester and Cotton. 80/1 inches
One way and
Sheeting and apparel Cotton blended with lycra Ne 10/1 to Ne
STRETCH two ways
fabrics or spandex 60/1
stretch fabrics
Warp slub, weft
Upholstery and apparel Ne 6/1 tp Ne
SLUB slub and cross 100% cotton and PC slubs
fabrics 40/1
hatch

1.6.3. Home Textiles:

The dyeing and finishing plant has a monthly capacity of 3.0 million yards per month with an equivalent
stitching capacity. These plants are equipped with state of the art machinery specially designed to cater to
high thread count fabric.
During the dyeing, finishing and stitching processes, several measures are taken to ensure timely delivery
of high quality fabric. This includes special care in fabric handling, full width rail stitching, PVA based
size recovery, various devices to avoid creases and band mark variation, special unwinding devices,
efficient squeezers, a computerized dye dispensing system and an on-line measurement and storage of
data at every machine.

1.6.3.1. Home Textile Products:

The dyed and finished Sheeting and Upholstery range comprises of high density fabrics with widths
up to 340 cm and yarn count range of Ne 40/1 – 100/1. This includes Percales up to 350 thread count
6
 and Sateen’s up to 800 thread count. We also produce high thread count sheeting fabric of unmatched
quality with 1000 thread count. Other products in this range include fabric with up to 6 pick insertions,
dobby fabric with intricate designs using 12-14 frames and fabrics made using plied, slub, dyed and
fancy yarns. In addition to 100% cotton, a number of fibers in various blends are used including
Polyester, Viscose, Modal, Tencel, Bamboo, Soyabean and Milk Fiber. Company also use Lycra, Cool
Max®, eVAP, T-400™ and Amicor.

Bed Linen:
Products in this category include Bed Sheet Sets, Valance Sheets, Bed Skirts, Quilt covers and
Comforter Shells.

Curtains:
The product range also includes Curtains, Pelmets, Cushions, Tie Backs, 5 pieces Drapery Set, and
Rod Percillia, which are offered to customers as separate items, as well as complete Curtain Sets. We
also offer Tier Swag Sets for kitchen windows and Shower Curtains.

Table Linen:
NCL produce Tablecloth, Table Runner, Napkins and Ruffles Round.

1.7. SWOT Analysis:

“SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. It
is applicable to either the corporate level or the business unit level and frequently appears in marketing

7
 plans. SWOT (sometimes referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and
Threats”.
A scan of the internal and external environment is an important part of the strategic planning process.
Environmental factors internal to the firm usually can be classified as
 Strengths (S)
 Weaknesses (W),
And those external to the firm can be classified as
 Opportunities (O)
 Threats (T).
Such an analysis of the strategic environment is referred to as a SWOT analysis.
The outcome from a SWOT Analysis enables organizations to focus on strengths, minimize weaknesses,
address threats, and take the greatest possible advantage of opportunities available.

1.7.1. The SWOT Matrix

A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance
at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming
opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a
compelling opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed.
The SWOT matrix (also known as a TOWS Matrix) is shown below:
S-O strategies pursue opportunities that are a good fit to the company's strengths.
W-O strategies overcome weaknesses to pursue opportunities.
S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability
to external threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly
susceptible to external threats.

1.7.2. SWOT Analysis of Nishat Mills:

1.7.2.1. Strengths:
 NCL’s strengths are its resources and capabilities that can be used as a basis for developing a
competitive advantage.
 Nishat Group is the largest group in Pakistan in terms of sales, which were approximately
Rs.16 billion (US$ 400 million equivalent) last year.
 NCL is in businesses namely power generation and textile.
 The product range is 100% cotton yarn, ranging from 6/1 to 30/1 in carded yarns and from
12/1 to 100/1 in combed yarns.
 In addition to the above we are also in core spun stretch yarns of 2 and 3 ply yarns and slub
yarns. The total capacity is 59 million lbs of yarn per annum
 The weaving capacity is 293 air jet looms wider width.
 The fabric is being exported to various companies in Hong Kong, Japan, Korea, USA, South
Africa, India and Europe.
8
  The company believes in product innovation and has successfully leveraged its strength in yarn
manufacturing to make a variety of fabrics.
 NCL timely adds value to its product like addition of dying facility and home textile
manufacturing (mention the year of operations)
 Sales comprises more than 80% as export which saves in taxation
 Internal cost controls
 Availability of Low Cost and Skilled Manpower provides competitive advantage.
 Large varieties of cotton fiber are available and have a fast-growing synthetic fiber industry.
 NCL has large and diversified segments that provide wide variety of products.
 Growing Economy and Potential Domestic and International Market.
 NCL has Manufacturing Flexibility that helps to increase the productivity.
 Qualified and skilled management
 Health working environment

1.7.2.2. Weaknesses:
The absence of certain strengths may be viewed as a weakness. For example, each of the following
may be considered weaknesses:
 NCL Textile Industry is highly Fragmented Industry.
 NCL Textile Industry is highly dependent on Cotton.
 Lower Productivity in various segments.
 There is Declining in Mill Segment.
 Lack of Technological Development that affect the productivity and other activities in whole
value chain.
 Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and
transportation Time.
 Unfavorable labor Laws.
 Lack of Trade membership, that restrict to tap other potential market.
 Lacking to generate Economies of Scale.
 NCL has to pay Higher Indirect Taxes, Power and Interest Rates.

1.7.2.3. Opportunities:
The external environmental analysis may reveal certain new opportunities for profit and growth. Some
examples of such opportunities include:
 Growth rate of Domestic Textile Industry is 6-8% per annum.
 NCL has a Large, Potential Domestic and International Market.
 Product development and Diversification to cater global needs.
 Elimination of Quota Restriction leads to greater Market Development.
 Market is gradually shifting towards Branded Readymade Garment.
 Increased Disposable Income and Purchasing Power of Customer opens New Market
Development.

9
  Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft
and other segments of the industry.
 In NCL greater Investment and FDI opportunities are available.

1.7.2.4. Threats:
Changes in the external environmental also may present threats to the firm. Some examples of such
threats include:
 Competition from other developing countries, especially China.
 Continuous Quality Improvement is need of the hour as there are different demand patterns all
over the world.
 Elimination of Quota system will lead to fluctuations in Export Demand.
 Threat for Traditional Market for Power loom and Handloom Products and forcing them for
product diversification.
 Geographical Disadvantages.
 International labor and Environmental Laws.
 To balance the demand and supply.
 To make balance between price and quality.
 Our competitors are also a threat for us. We should look at them so that we take such steps to
compete them.

10
 Chapter No. 2
Introduction of Study

2. Introduction:
When Pakistan came into being there was only 16 textile mills out of which only 12 were in operation. It
grew to 70 in 1957 as industrial development takes place. Now a day there are 596-textile mills out of which
442 are in operation. The export revenue of textile industry contributes a large share to the GDP of Pakistan.

2.1. Textiles Exports from Pakistan:

Textiles constitute a major exporting sector for Pakistan, which accounts for about 60%of the country’s
total foreign exchange earnings. The major export items are yarn; gray Cloth, finished cloth, towels and
bed sheets and their major customers are the USA, EU, Japan and Hong Kong. Many textile exports take
place under quota arrangements With the EU and the United States. Gray cloth constitutes roughly 16-
18% of total cloth.

2.2. Exports from Pakistan:

Nishat gray cloth exports account for roughly 20 % of Pakistani gray cloth exports. The firm has been
exporting to the USA for many years, and has only recently started to export to EU countries. In Pakistan,
the cotton crop season runs approximately from August to March. Prices are generally high at the start of
the season in August/September, and fall later on as supply increases. Following income tax law, the fiscal
year runs from October to September for textiles sector.

2.3. Methodology:
Financial ratio analysis is the process of calculating financial ratios, which are mathematical indicators
calculated by comparing key financial information appearing in financial statements of a business, and
analyzing those to find out reasons behind the business’s current financial position and its recent financial
performance, and develop expectation about its future outlook. Financial ratio analysis is very useful tool
because it simplifies the process of financial comparison of two or more businesses. Direct comparison of
financial statements is not efficient due to difference in the size of relevant businesses. Financial ratio
analysis makes the financial statements comparable both among different businesses and across different
periods of a single business. Financial ratios can be broadly classified into liquidity ratios, solvency ratios,
profitability ratios and efficiency ratios (also called activity ratios or asset utilization ratios). Other
categories include cash flow ratios, market valuation ratios, coverage ratios, etc.

2.4. Data collection:

Research & Development continues to be the single most important factor driving growth for the company.
As the consumer industry focuses on cost control, and an overall mindset of “more with less”, innovation
is the name of the game. The Research and Development department is tirelessly working to understand
consumer needs and providing innovations on quality, durability, design and structure of products based
on global trends.

11
2.5. Tool and limitation:
The major limitations of this research study were time constraints, cost and research culture. The time to
conduct this research was short and a thorough research could not be carried due to shortage of funds. The
researcher has done analysis using existing previous knowledge and secondary data. This research was
conducted in Pakistan and people of the organizations are reluctant to cooperate and were unwilling to
participate during the survey. Business cases and examples are taken from businesses in Pakistan which
existing researches have highlighted before or they were highlighted in the newspapers or the law
agencies. Limited numbers of organizations were considered as all cannot be included in the research due
to the time and budget constraints.

12
 Chapter No. 3
Project Review

3. Introduction of Financial Statement:

Financial statements for businesses usually include income statements, balance sheets, statements of retained
earnings and cash flows. It is standard practice for businesses to present financial statements that adhere to
generally accepted accounting principles (GAAP) to maintain continuity of information and presentation
across international borders. Financial statements are often audited by government agencies, accountants,
firms, etc. to ensure accuracy and for tax, financing or investing purposes.

3.1. BREAKING DOWN Financial Statements:

Financial analysts rely on data to analyze the performance of, and make predictions about, the future
direction of a company's stock price. One of the most important resources of reliable and audited financial
data is the annual report, which contains the firm's financial statements. The three main financial
statements are:
 Income statement
 Balance sheet
 Cash flow statement

3.1.1. Balance Sheet:

The balance sheet provides an overview of assets, liabilities and stockholders' equity as a snapshot in time.
The date at the top of the balance sheet tells you when the snapshot was taken, which is generally the end
of the fiscal year. The balance sheet equation is assets equals liabilities plus stockholders' equity, because
assets are paid for with either liabilities, such as debt, or stockholders' equity, such as retained earnings
and additional paid-in capital. Assets are listed on the balance sheet in order of liquidity. Liabilities are
listed in the order in which they will be paid. Short-term or current liabilities are expected to be paid within
the year, while long-term or noncurrent liabilities are debts expected to be paid after one year.

3.1.2. Income Statement:

Unlike the balance sheet, the income statement covers a range of time, which is a year for annual financial
statements and a quarter for quarterly financial statements. The income statement provides an overview
of revenues, expenses, net income and earnings per share. It usually provides two to three years of data
for comparison.

3.1.3. Cash Flow Statement: The cash flow statement merges the balance sheet and the income statement.
Due to accounting convention, net income can fall out of alignment with cash flow. The cash flow
statement reconciles the income statement with the balance sheet in three major business activities. These
activities include operating, investing and financing activities. Operating activities include cash flows
made from regular business operations. Investing activities include cash flows due to the buying and
selling of assets such as real estate and equipment.

13
3.2. Meaning and Concept of the study:
Financial statement analysis is an analysis that highlights the important relationship in the financial
statements. Financial statement analysis focuses on the evaluation of past performance of the business
firm in terms of liquidity, profitability, operational efficiency and growth potentiality. Financial
statements analysis includes the method use in assessing and interpreting the result of past performance
and current financial position as they relate to particular factors of interest in investment decisions.
Therefore, financial statement analysis is an important means of assessing past performance and in
forecasting and planning future performance.

3.3. Types of financial analysis and their limitations:

Although analysis of financial statement is essential to obtain relevant information for making several
decisions and formulating corporate plans and policies.

3.3.1. Types of Ratio Analysis:

Financial analysis involves the review of an organization's financial information in order to arrive at
business decisions. This analysis can take several forms, with each one intended for a different use. The
types of financial analysis are:

i. Horizontal Analysis:
This involves the side-by-side comparison of the financial results of an organization for a number
of consecutive reporting periods. The intent is to discern any spikes or declines in the data that
could be used as the basis for a more detailed examination of financial results.

ii. Vertical Analysis:

This is a proportional analysis of the various expenses on the income statement, measured as a
percentage of net sales. The same analysis can be used for the balance sheet. These proportions
should be consistent over time; if not, one can investigate further into the reasons for a percentage
change.

iii. Short term Analysis:

This is a detailed review of working capital, involving the calculation of turnover rates for accounts
receivable, inventory, and accounts payable. Any differences from the long-term average turnover
rate are worth investigating further, since working capital is a key user of cash.

iv. Multi-company Comparison:

This involves the calculation and comparison of the key financial ratios of two organizations,
usually within the same industry. The intent is to determine the comparative financial strengths
and weaknesses of the two firms, based on their financial statements.

v. Industry Comparison:
This is similar to the multi-company comparison, except that the comparison is between the results
of a specific business and the average results of an entire industry. The intent is to see if there are
any unusual results in comparison to the average method of doing business.
14
3.3.2. Limitations of Financial Analysis:
Financial Analysis should be carefully performed as it suffers from a number of the following
limitations:

i. Mislead the user:

The accuracy of financial information largely depends on how accurately financial statements are
prepared. If their preparation is wrong, the information obtained from their analysis will also be
wrong which may mislead the user in making decisions.

ii. Not useful for planning:

Since financial statements are prepared by using historical financial data, therefore, the
information derived from such statements may not be effective in corporate planning, if the
previous situation does not prevail.

iii. Qualitative aspects:

Then financial statement analysis provides only quantitative information about the company's
financial affairs. However, it fails to provide qualitative information such as management labor
relation, customer's satisfaction, and management’s skills and so on which are also equally
important for decision making.

iv. Comparison not possible:

The financial statements are based on historical data. Therefore, comparative analysis of
financial statements of different years cannot be done as inflation distorts the view presented by
the statements of different years.

v. Wrong judgment:
The skills used in the analysis without adequate knowledge of the subject matter may lead to
negative direction. Similarly, biased attitude of the analyst may also lead to wrong judgment and
conclusion.
The limitations mentioned above about financial statement analysis make it clear that the
analysis is a means to an end and not an end to itself. The users and analysts must understand the
limitations before analyzing the financial statements of the company.

3.4. Overview of ratio analysis:

Ratio analysis consists of calculating financial performance using five basic types of ratios:
 Profitability Ratio
 Liquidity Ratio
 Activity Ratio
 Debt Ratio
 Market Ratio

3.4.1. Profitability Ratio:

Profitability ratios (also referred to as profit margin ratios) compare components of income with sales.
They give us an idea of what makes up a company's income and are usually expressed as a portion of each
15
 dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator
that we reflect and thus evaluate performance for different aspects of the business: The gross profit margin
is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left
after costs of goods sold.

3.4.2. Liquidity Ratio:

Liquidity ratios are the ratios for testing short term solvency or financial position of a business. These are
designed to test the ability of the business to meet its short-term obligation promptly. A class of financial
metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally,
the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-
term debts.

3.4.3. Activity Ratio:

Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part,
turnover ratios -- can be used to evaluate the benefits produced by specific assets, such as inventory or
accounts receivable. Or they can be used to evaluate the benefits produced by all a company's assets
collectively.
These measures help us gauge how effectively the company is at putting its investment to work. A
company will invest in assets – e.g., inventory or plant and equipment – and then use these assets to
generate revenues. The greater the turnover, the more effectively the company is at producing a benefit
from its investment in assets.

3.4.4. Debt Ratio:

A company can finance its assets either with equity or debt. Financing through debt involves risk because
debt legally obligates the company to pay interest and to repay the principal as promised. Equity financing
does not obligate the company to pay anything -- dividends are paid at the discretion of the board of
directors. There is always some risk, which we refer to as business risk, inherent in any operating segment
of a business. But how a company chooses to finance its operations -- the particular mix of debt and equity
-- may add financial risk on top of business risk Financial risk is the extent that debt financing is used
relative to equity. Financial leverage ratios are used to assess how much financial risk the company has
taken on.

3.4.5. Market Ratio:

Relationship of gains from investments (including realized capital gains) resulting from insurance
operations to earned premiums. It relates a firm’s market value, as measured by its current share price, to
certain accounting values.

16
 Chapter No 4
Analysis and Interpretations

4. Analysis and Interpretations:

The process by which sense and meaning are made of the data gathered in qualitative research, and by which
the emergent knowledge is applied to clients' problems. This data often takes the form of records of group
discussions and interviews, but is not limited to this.

4.1. Time Series Analysis:

Time series analysis can be useful to see how a given asset, security or economic variable changes over
time. It can also be used to examine how the changes associated with the chosen data point compare to
shifts in other variables over the same time period.

4.1.1. Liquidity Ratios:

Ratios 2016 2015 2014 2013 2012
Current Ratios 1.32 1.26 1.34 1.51 1.31
Quick ratios 0.75 0.65 0.68 0.83 0.60

Liquidity Ratios
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2016 2015 2014 2013 2012

Current Ratios Quick Ratio

Explanation:
 The average current ratio of five years is 1.34 which is fairly satisfied for the company. This ratio measures
that the company has enough resources to pay its current debts, usually for 12-month period.

17
  The average quick ratio is 0.70 This excludes inventory and measures the ability to use its quick assets to
pay its current liabilities. This is normal as compared to the current ratio which shows that company is not
depending heavily on inventory.

4.1.2. Activity Ratios:

Ratios 2016 2015 2014 2013 2012
Inventory Turnover 4.12 3.91 3.93 4.20 3.90
Average Collection Period 18.22 17.22 11.87 10.77 15.05
Average Payment Period 4.65 5.84 7.25 8.01 8.46
Total Asset Turnover 0.45 0.51 0.56 0.65 0.79

Activity Ratios
20
18
16
14
12
10
8
6
4
2
0
2016 2015 2014 2013 2012

Inventory Turnover Average Collection Period Average Payment Period Total Asset Turnover

Explanation:
 The average of this ratio is 4.01 of last five years. It measures the activity or liquidity of a firm’s inventory.
This ratio is higher in 2013 with 4.20.
 The average collection period is the average age of accounts receivables which is useful in evaluating
credit and collection policies. This is the average amount of time needed to collect accounts receivables.
The average collection period is higher in 2012 with 15.05.
 The average payment period is the average age of accounts payable. This is the average amount of time
needed to pay accounts payable. The average payment period is higher in 2012 with 8.46.
 The average of this ratio is 0.59. This indicates the efficiency with which the firm uses its assets to generate
sales. The highest asset turnover is in 2012 with 0.79, which means that more efficiently the firm’s assets
have been used.
18
4.1.3. Debt Ratios:
Ratios 2016 2015 2014 2013 2012
Debt Ratio 5.64% 7.33% 9.38% 5.35% 9.07%
Times Interest Earned Ratio 6.47 3.52 4.71 4.93 3.32
Fixed Payment Coverage Ratio 2.80% 24.81% 32.80% 27.83% 37.60%

Debt Ratios
40

35

30

25

20

15

10

0
2016 2015 2014 2013 2012

Debt Ratio Times Interest Earned Ratio Fixed Payment Coverage Ratio

Explanation:
 The average for this ratio is 7.35%. It measures the proportion of total assets financed by the firm’s
creditors. The higher this ratio, the greater the firm’s degree of indebtedness and the more financial
leverage it has. The ratio was high in 2014, that is 9.38%.
 The average for this ratio is 4.59. The high is the ratio, the beneficial is for the company. When this is
below 1, it means that company is no able to meet its interest obligations. So, the company is safe at
present conditions. That ratio is high in 2016 because of the factor of the gain on the sale of investment.
 This ratio shows that how much of the company assets have been formed with the debts. The average ratio
is28.76 %. The lower the ratio, the better is for the company. When the ratio is higher it depicts that
company is more leveraged. The figure was highest in 2012, that is 37.60% this shows that company had
low assets.

19
4.1.4. Profitability Ratios:
Ratios 2016 2015 2014 2013 2012
Gross Profit Margin 13.05% 11.81% 14.44% 17.25% 15.11%
Operating Profit Margin 18.62% 16.13% 16.76% 17.81% 15.81%
Net Profit Margin 10.26% 7.64% 10.13% 11.15% 7.85%
Earnings Per Share (in rupees) 14 11.13 15.68 16.63 10.04
Return on Total Assets 4.62% 3.87% 5.68% 7.25% 6.22%
Return on Common Equity 6.22% 5.41% 8.65% 12.10% 9.65%

Profitability Ratios
20
18
16
14
12
10
8
6
4
2
0
2016 2015 2014 2013 2012

Gross Profit Margin Operating Profit Margin Net Profit Margin

Earning Per Share Return on total Assets Return on Common Equity

Explanation:
 The average for this ratio is 14.33%. It is a measurement of how much from each Rupee of a company's
revenue is available to cover overhead, other expenses and profits. The higher the ratio the better is for
the company. It also shows that the company has control on its production cost. It was high in 2013 with
17.25%.
 The average for this ratio is 17.02%. It measures each sales rupee remaining after all costs and expenses
other than interest, taxes and preferred stock dividends are deducted, the ‘’pure profits’’ earned on each
sales rupee. This ratio is higher in 2016 with 18.62%.
 The average for this ratio is 9.40%. Net profit margin measures how much of each Rupee earned by the
company is translated into profits. Low net profit margin indicates low margin of safety. Net Profit Margin
is high as 11.15% in 2013. Net profit margin is affected by more factors as production, administration,
selling, financing, pricing or tax factors.
 The earning per share represents the number of dollars earned during the period on behalf of each
outstanding share of common stock. Earnings per share is higher in 2013 with 16.63 rupees.
20
  The average of return on total assets is 5.52%. It measures the overall effectiveness of management in
generating profits with its available assets. The higher return on assets is in 2013 which is 7.25%.
 The average of return on common equity is 8.40%. It measures the return earned on the common
stockholders’ investment in the firm. This return is higher in 2013, which is 12.10%.

4.1.5. Market Ratios:

Ratios 2016 2015 2014 2013 2012
Price/earnings Ratio 7.71 10.26 7.14 5.67 4.74

Price/Earnings Ratio
12

10

0
2016 2015 2014 2013 2012

Price/Earnings Ratio

Explanation:
 The average of earnings ratio is 7.10. It measures the amount that investors are willing to pay for each
rupee of the firm’s earnings. When the price earnings ratio is higher, the investor’s confidence also
increases. This ratio is higher in 2015, which is 10.26, it means that the investor’s confidence is higher in
2015.

21
4.2. Vertical Analysis:

4.2.1. Common Size Balance Sheet:

2016 2015 2014 2013 2012
Total Equity 77.07% 75.28% 70.68% 73.07% 66.69%
Non-Current Liabilities 4.59% 5.76% 7.12% 4.53% 6.60%
Current Liabilities 18.34% 18.95% 22.21% 22.41% 26.71%
Total Liabilities 22.93% 24.72% 29.32% 26.93% 33.31%
Total Equity & Liabilities 100% 100% 100% 100% 100%
Assets
Non-current Assets 75.75% 76.08% 70.35% 66.26% 64.95%
Current Assets 24.25% 23.92% 29.65% 33.74% 35.05%
Total Assets 100% 100% 100% 100% 100%

Explanation:
 Non-Current Assets:
A vertical review of the non-current assets for the last five years shows that share of non-current assets
has increased from 64.95% in financial year 2012 to 75.75% mainly on account of regular long-term
investments and continuous additions in property plant and equipment.

 Current Assets:
The ratio of current assets to total assets has also decreased gradually from 35.05% to 24.25% over the
last five years as a result of efficient financial management of the company whose focus is to reduce stocks
level and decrease accounts receivables.

 Equity and Liabilities:

 Equity:
During the last five years, share of equity has increased from 66.69% in the financial year 2012 to
77.07% in the financial year 2016 due to increase in profitability and fair value reserves on
investments.

 Liabilities:
Both the non-current and current liabilities have decreased during the last five years in relation to
equity due to continuous improvement in profitability.

22
4.2.2. Common size Income Statement:
Particulars 2016 2015 2014 2013 2012
Sales 100% 100% 100% 100% 100%
Cost of Sales 86.95% 88.19% 85.56% 82.75% 84.89%
Gross Profit 13.50% 11.81% 14.44% 17.25% 15.11%
Distribution Cost 4.45% 4.74% 4.69% 4.82% 5.69%
Administrative Expenses 2.33% 2.15% 1.90% 1.66% 1.63%
Other Expenses 0.66% 0.72% 0.63% 0.78% 0.77%
7.44% 7.61% 7.22% 7.27% 8.08%
5.61% 4.20% 7.22% 9.99% 7.03%
Operating Income 8.50% 7.78% 6.71% 5.22% 5.97%
Profit from Operations 14.11% 11.99% 13.93% 15.21% 13.00%
Finance Cost 2.18% 3.41% 2.96% 3.09% 3.92%
Profit Before Taxation 11.93% 8.57% 10.98% 12.13% 9.09%
Provision for Taxation 1.67% 0.93% 0.85% 0.97% 1.23%
Profit After Taxation 10.26% 7.64% 10.13% 11.15% 7.85%

Explanation:
 Cost of Sales:
Cost of sales as a percentage of sales has decreased by 1.24% as compared to financial year 2015. Reason
for decrease in this percentage is attributable to the use of optimal fuel and power mix and better cost
control.

 Distribution Expenses:
Distribution expenses as a percentage of sales has been at a lowest level in current financial year as
compared to preceding five financial years. Distribution expenses of the company have remained
consistent during the last six financial years i.e. between 4.45% to 5.69%.

 Administrative expenses:
Increase in administrative expenses is consistent during the last five years. The increase is due to the
inflation impact and expansion in operations of the company during last five financial years.

 Other Income:
Other income as a percentage of sales has increased considerably during the last five financial years. This
is due to optimum utilization of surplus funds of the Company by investing in lucrative and diversified
investment portfolio which is the source of regular dividend income and capital gain.

 Profit after Tax:

Profit after tax as a percentage of sales for the current financial year (10.26%) was at second highest level
as compared to last five years. The highest profit percentage of 11.15% was achieved in financial year
2013. Increase in profit after tax is mainly due to the decrease in fuel and power expenses and financial
cost along with increase in other income.

23
4.3. Horizontal Analysis:
4.3.1. Balance Sheet:
2016 2015 2014 2013 2012
Total Equity: 117.5% 101.6% 81.6% 56% 100%
Fixed Liabilities 130.8% 156.0% 84.8% 17.34% 100%
Current Liabilities 129.2% 126.7% 142.4% 19.4% 100%
Total Liabilities 134% 152% 116% 101% 100%
Total Equity and Liabilities 188.2% 178.6% 171.3% 142.3% 100%
Assets:
Fixed Assets 119.5% 109% 84.8% 145.2% 100%
Current Assets 130.2% 121.8% 144.9% 137.9% 100%
Total Assets 88.2% 78.6% 71.3% 42.3% 100%

Explanation:
 Balance Sheet:
 Assets:
Total assets of the Company have increased 88.2% in financial year 2012 to financial year 2016.

 Non-Current Assets:
Out of total assets, non-current assets increased by 119.5% in financial year 2012 to financial year
2016 mainly on account of increase in long term investments, increase in investment properties
and increase in property, plant and equipment’s. The Company maintains a healthy portfolio of
long term investments which significantly contributes towards its profitability each year.

 Current Assets: Current assets of the Company have increased by 30.2% in financial year 2012
to financial year 2016. The main reason for increase is the increase in loans and advances which
includes working capital loans provided to subsidiary companies. However, other current assets
such as stocks and accounts receivables of the Company decreased due to increased focus of the
Company to improve working capital management.

 Equity and Liabilities:

 Non-Current Liabilities:
Non-current liabilities of the Company in financial year 2016 have been increased by 30.8% over
the non-current liabilities in financial year 2012.

 Current Liabilities:
Current liabilities also increased by 29.2% from financial year 2012 to the financial year 2016
mainly on account of increase in trade and other payables.

24
4.3.2. Income Statement:

Particulars 2016 2015 2014 2013 2012

Sales 16.8% 114% 111.2% 106.6% 100%
Less: Cost of Goods Sold 111% 114% 127% 129% 100%
Gross Profit 87.73% 101% 126% 133.2% 100%
Less: Distribution Cost 111% 117% 115% 117% 100%
Administrative Expenses 116% 115% 113.3% 111% 100%
Other Operating Expenses 85% 80% 95% 80% 100%

Operating Profit 125.8% 116.3% 128.5% 131.4% 100%

Less: Other Operating Income 116% 114.6% 112.1% 110% 100%
Profit from Operations 152% 148.2% 136.1% 120.6% 100%
Finance Cost 111% 101% 101% 1111% 100%
Profit before Taxes 140.2% 1755% 146.4% 155.7% 100%
Less: Taxes 84% 82% 90% 97% 100%
Profit After Taxes 139.5% 142% 121% 123% 100%

Explanation:
 Profit and Loss Account:
 Sales:
Sales have decreased by 7.2% in the current financial year. The decrease is mainly attributable to
severe competition as a result of decline in global demand of textile products.

 Cost of Sales:
Cost of sales decreased by 3% in the financial year 2016. A horizontal review of cost of sales for
the last five years reveals that increase in cost of sales was always higher than increase in sales.

 Distribution Cost:
Distribution cost normally moves up and down in harmony with sales volume. Distribution cost
has decreased by 6% in the financial year 2016. This decrease is more than reduction in sales as a
result of austerity measures introduced by the management of the Company.

 Administrative Expenses:
Compound annual increase in administrative expenses is at 16% per annum which is in line with
the yearly increase in non-current assets of the Company.

 Other Income:
Other income increased by 34% from Rs. 2,683,685 in financial year 2012 to Rs. 4,079,054 in
financial year 2016. This massive increase in other income is due to increase in dividend income
over the years because of the investment by the Company in well diversified and perfect portfolio.

25
  Finance Cost:
Finance cost of the Company recorded a decrease of 35% in the current year as compared to
financial year 2012 due to availability of loans at subsidized rates and stringent financial
management policies of the Company.

 Profit after Tax:

Profit after tax increased by 39.5% from financial year 2012 to financial year 2016.

4.4. Cross Sectional Analysis:

Cross-sectional analysis is a type of analysis that an investor, analyst or portfolio manager may conduct
on a company in relation to that company's industry or industry peers. The analysis compares one company
against the industry in which it operates, or directly against certain competitors within the same industry,
in an attempt to assess performance and investment opportunities.
In this analysis, the two companies are Nishat Mills and Gul Ahmad. The analysis of these companies are
as follows:

Ratios 2016 2016

Nishat Mills Gul Ahmad
Liquidity Ratios:
Current Ratio 1.32 1.05
Quick Ratio 0.75 0.24
Activity Ratios:
Inventory Turnover 4.12 2.35
Total Asset Turnover 0.45 1.34
Average Payment Period 4.65 3.10
Average Collection Period 18.22 20.33
Debt Ratios:
Debt Ratio 5.64% 0.34
Times Interest Earned Ratio 6.47 1.59
Fixed Payment Coverage Ratio 2.80% 1.67
Profitability Ratios:
Gross Profit Margin 13.05% 18.27%
Operating Profit Margin 18.62% 19.65%
Net Profit Margin 10.26% 1.81%
Earnings per share (in rupees) 14 2.65
Return on Total Assets 4.62% 2.42%
Return on Common Equity 6.22% 8.75%
Market Ratios:
Price Earnings Ratios 7.71 18.51

26
 Chapter No 5
Findings and Suggestions

Organizations big or small profit or unprofitable have problems and there are always chances of improvements.
This is also the condition for Nishat textile. As problems and difficulties have been identified, now here are some
suggestions that may help the organization to improve.
 There should be female artists and designers in design department as females have naturally more
esthetical qualities than males. They will really improve the quality of designs and will introduce more
innovative designs.
 Expanding product lines that will give more variety to people of country could extend local marketing and
ultimately sales would be increased. There should be more staff in local marketing department to enhance
the sales figure and to capture wide area of local market.
 Job analysis should be done to know what are the jobs needed in the organization. I know some persons
who are doing the job of two or three persons.
 Compensation and reward system should be brought at higher level in order to let the employees be
motivated and happy. There should be more fringe benefits for the employees taking into consideration
their devotion skill and experience. This higher level would make the employees more efficiency &
effective.
 There should be little compensation for trainees as well, as they can fulfill their day to day traveling and
food expenses. By doing this, trainees will show more interest, more devotion, more potentials and will
work with their full mental and physical efforts.
 The first aid and other medical facilities should be provided to the employees with in the mill area. There
is continuous working in the mill and every time there are chances of any accident or unpleasant incident.
So, in order to handle this type of situation the first aid dispensary should be there with in the mill area.
 Company should have proper planning to purchase raw material as it is purchased sometimes without
planning in every season that is the cause of high level of inventory and blockage of funds and ultimately
affects the liquidity.

27
 Chapter No 6
Conclusions

Nishat Textile is considered to be the leading organization in the field of textile. The name Nishat has become
has become a symbol of quality and standard.
The quality of cloth is dependent of textile yarn to finished cloth. Which is totally imported from various countries.
Major machine are mercerizing machines, sober machine and J-Zimmer that con print cloth with 12 colors.
All the sub department of processing like bleaching, dyeing, printing, and finishing are working under laboratory
instructions so laboratory is playing role of executive in quality control. All the schedules of bleaching, dyeing
printing and finishing are prepared by the laboratory.
The customer satisfaction is a basic criterion of Nishat Textile. They are producing good quality products and
80% products are exported. Great care is taken for export products regarding. Marketers of Nishat Textile know
the competition in the international market. They put their level best efforts to satisfy the customer keeping in
view the costs of products and quality.
Nishat has also a big share in local market. Local market. Local marketers are performing their jobs efficiently
to enhance the sales and to satisfy the customers however in local market quality is lower than export market. So,
Nishat has greater capability to preclude what they claim for.
If we turn to human resource department we see that there are certain gaps in human resources management of
Nishat Textile. This department is not established and not considered to be very much important. Low attention
is paid to this department by upper level management. There is lack of human resources planning, lack of
recruiting activities lack of job analysis, compensation and reward system is not very much attractive and
employees are not well motivated in Nishat textile. One good thing of this department is that the department let
the employees follow the rules and regulations set by the organization strictly. Attendance is strictly checked 7
leaves as well. So, there are good and bad both present in the human resources management of Nishat Textile.
Nishat textile has the ability to produce what their customers want through excellent machinery and skilled
workers in processing department and qualified marketing staff. But there are problems regarding human resource
management and financial management. Despite having problems Nishat has good and increasing sales figures
that will lead the organization to prosperity again.

28
 Appendix I

1. Gross Profit Margin Ratio

Gross Profit
Gross Profit Margin = x100
Sales

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
Gross Profit 6789191 9044485 7863774 6046784 6264308 6094389
Sales 44924101 52426030 54444091 51200223 47999179 33354784
Ratio 15.1% 17.2% 14.44% 11.81% 13.05% 18.27%

2. Operating Profit Margin Ratio

Operating Profit
Operating Profit Margin = x100
Sales

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
Operating 7101295 9334670 9125677 2213262 2692205 2117616
Profit
Sales 44924101 52426030 54444091 51200223 47999179 33354784
Ratio 15.6% 17.8% 16.76% 16.13% 10% 6.34%

29
 3. Net Profit Margin Ratio
Earning available for Common Stock
Net Profit Margin =
Sales

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016

Earnings 3528567 5846853 5512552 3911925 4923038 604943
Available for
Common Stock

Sales 44924101 52426030 54444091 51200223 47999179 33354784

Ratio 7.85 11.15 10.13 7.64 10.26 1.81%

4. EPS Ratio
Earning available for Common Stock
EPS =
No. of shares of Common Stock Outstanding

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
Earnings 3528567 5846853 5512552 3911925 4923038 604943
Available for
Common Stock
No. Of Shares 9665849 11939028 14468124 11524143 10475657 2285228
Ratio 10.04 16.63 15.68 11.13 14 0.26

30
 5. Current Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016

Current 19847671 27204560 28774992 24190444 25850830 15728300

Assets
Current 15126751 18068412 118601796 19553041 19553041 14971853
Liabilities
Ratio 1.32 1.5 0.24 1.23 1.32 1.05

6. Quick ratio
Current Assets−Inventory
Quick Ratio =
Current Liabilities

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016

Current 19847671 27204560 25874992 24190444 25850830 15728300
Assets
- - - - - - -
Inventory 9695133 10945439 12752495 10350193 9933746 11283818

Current 15126751 18068412 118601796 19553041 10123041 14971853

Liabilities
Ratio 0.67 0.89 0.12 0.63 1.57 0.29

31
 7. Inventory Turnover ratio
CGS
Inventory Turnover Ratio =
Inventory

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
CGS 38134910 43381545 46580317 45153439 41734871 27260395
Inventory 9695133 1094539 14068974 11685956 13456614 11283818
Ratio 3.93 3.48 3.31 3.91 3.10 2.41

8. No. of days Stock ratio

365
No. of days Stock Ratio =
Inventory Turnover

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
365 365 365 365 365 365 365
Inventory 3.93 3.48 3.31 3.91 3.10 2.41
Turnover
Ratio 93 105 110 93 117 152

9. No. of days Sales in Trade ratio

Trade Debts
No. of days Sales in Trade Ratio =
Annual Sales/365

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016

Trade Debts 7544404 4362880 3227560 45153439 2023092 1913872
Annual 123079.72 1436329 149161.8 11685956 131504.6 91382.96
Sales/365
61.29 30.37 30.75 3.91 20 20.94
Ratio

32
 10. Total Asset Turnover Ratio

Net Sales
Total Asset Turnover Ratio =
Total Assets

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
Net Sales 44924101 52426030 54444091 51200223 47999179 33354784
Total Assets 56626383 27204560 97048577 10114000 106599219 24943347

Ratio 0.79 1.93 0.56 0.50 0.45 1.33

11.Average Payment Period

A/Payable
Average Payment Period Ratio =
Average Purchases per Day

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
A/Payable 4354000 14468124 11524143 5737896 5737896 33354784

Average 1589093 149161.8 146274.58 4131504.6 4131504.6 7169472

Purchases per
Day
Ratio 2.74 50.34 62.50 43 43 4.65

12. Debt Ratio

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
Total Liabilities 24444064 24997177 28549401 21717556 10163634
Total Assets 56626383 80634594 97048577 101140000 106599219
Ratio 0.43 0.31 0.29 0.21 0.10

33
 13.Times Interest Earned Ratio
Earning before Interest and Taxes
Times Interest Earned Ratio =
Interest

Company Nishat Mills Gul Ahmad

Years 2012 2013 2014 2015 2016 2016
Earnings before 7101295 9334690 91254677 8260046 5725038
Interest and Taxes
Interest 312104 6595588 5472636 2213262 802000
Ratio 22.73 1.42 4.71 3.7 6.47

34
 Appendix II

Balance Sheet:
2016 2015 2014 2013 2012
Non-current Assets
Property, plant & equipment 24,715,095 24,357,269 22,964,388 15,530,320 14,318,639
Long term investments 55,399,080 51,960,454 44,771,715 37,378,224 21,912,790
Other non-current assets 634,214 631,833 537,482 521,490 547,283
Current Assets
Stores, spares and loose tools 1,269,509 1,335,763 1,316,479 1,285,371 1,019,041
Stock in trade 9,933,736 10,350,193 12,752,495 10,945,439 9,695,133
Short term investments 2,065,217 2,189,860 3,227,560 4,362,880 1,589,093
Other current assets 12,582,368 10,314,628 11,478,458 10,610,870 7,544,404
Total Assets 106,599,219 101,140,000 97,048,577 80,634,594 56,626,383
Shareholders’ Equity 82,155,155 76,142,823 68,589,176 58,917,035 37,762,749
Non-Current Liabilities
Long term financing 4,629,456 5,582,220 6,431,304 3,149,732 3,426,578
Deferred tax 261,567 247,462 474,878 499,415 310,305
Current Liabilities
Short term borrowings 10,475,657 11,524,143 14,468,124 11,939,028 9,665,849
Current portion of non- 1,980,768 1,783,250 1,595,652 1,310,769 1,106,902
current liabilities
Other current liabilities 7,096,616 5,860,102 5,489,443 4,818,615 4,354,000
Total Equity and 106,599,219 101,140,000 97,048,577 80,634,594 56,626,383
Liabilities

Profit & Loss Account:

Particulars 2016 2015 2014 2013 2012
Sales 47,999,179 51,200,223 54,444,091 52,426,030 44,924,101
Gross profit 6,264,308 6,046,784 7,863,774 9,044,485 6,789,191
EBITDA 8,937,616 8,260,046 9,125,677 9,334,690 7,101,295
Other Income 4,079,054 3,982,009 3,653,041 2,739,102 2,683,685
Profit before tax 5,725,038 4,389,925 5,975,552 6,356,853 4,081,567
Profit after tax 4,923,038 3,911,925 5,512,552 5,846,853 3,528,567

35
Statement of Cash Flows:
Particulars 2016 2015 2014 2013 2012
Cash flow from operating activities 4,704,482 5,298,151 4,887,376 491,795 2,760,562
Cash flow from investing activities 735,980 (3,042,332) (7,909,028) (2,695,026) 37,326
Cash flow from financing activities (3,377,513) (5,005,916) 4,695,106 973,537 (1,572,033)
Changes in cash & cash equivalents 2,062,949 (2,750,097) 1,673,454 (1,229,694) 1,225,855
Cash and cash equivalent-year end 2,115,168 52,219 2,802,316 1,128,862 2,358,556

36