1.Current Ratio Current assets / Current liabilities 2010 16,410,135 /75,507,095 =0.22 2009 15,977,260 /67,914,318 =0.

24 2008 15,039,282 /72,528,401 =0.21 INTERPRETATION Comparison for three years PIA current ratio has gradually decreased from 2009 and there is slightly increase in the previous year 2009. This is considered nominal. So we can say that PIA is maintained its bad liquidity position. This gradual decrease is due to gradual in current maturities, creditors accused expenses and other liabilities. Overall it presents management deficiency and less ability to pay its current liabilities. A decline trend of current ratio shows weakening of financial positions of the organization. 2: Quick Ratio / Acid Test Ratio: Current assets - Inventories/ Current liabilities

2010

16,410,135 - 3,842,539 /75,507,095 =0.17

2009

15,977,260 - 3,987,423 /67,914,318 =0.18

2008

15,039,282 - 3,726,940/ 72,528,401 =0.16

INTERPRETATION this ratio is used along with the current ratio in analyzing liquidity. This ratio concentrates primarily on more liquid current assets cash, marketable securities and receivables in relation to current obligations. PIAs acid test is gradually decreasing over the past few years and then there is little bit improvement in 2009. The whole situation was a result of change in sale policy and RTD. But due to economical conditions it declined again in 2010 as compared to previous year.

This decrease is really harmful for the company because if it goes on decreasing in future it would not be possible for the company to meet its liabilities and result will be bank corrupting of the company. 3.Inventory turnover Sales / Inventories 2010 107,531,590 /3,842,539 =27.98 2009 94,563,765 /3,987,423 =23.72 2008 88,863,258 /3,726,940 =23.84 INTERPRETATION To determine how effectively the firm is managing inventory and an indication of the liquidity of inventory, this ratio is computed. PIA showed some fluctuation in inventory turnover from 2008 to 2010. It increased to 27.98 times in 2010, which is a good sign for company.

4.DSO
Receivables / Average sales per day = Receivables / Sales/36 2010 8,283,109 /107,531,590 /36 =2.77 2009 7,978,187 /94,563,765 /36 =3.04 2008 5,757,849/ 88,863,258 /36 =2.33

5.FA turnover Sales / Net fixed assets 2010 107,531,590 /96,714,938 =1.11 2009 94,563,765 /133,647,522 =0.71 2010 88,863,258 /115,123,491 =0.77 6.TA turnover= Sales / Total assets 2010 107,531,590 /126,860,357 =0.85 2009 94,563,765 /162,751,865 =0.58 2008 88,863,258/ 142,437,404 =0.62

7.Debt ratio= Total debt / Total assets (long term debt+ total current liability)/total assets. 2010 (107,770,116 + 75,507,095 )/ 126,860,357 =1.44% 2009 (111,968,404 +67,914,318 )/ 162,751,865 =1.11% 2008 (100,471,189 +72,528,401 )/ 142,437,404 =1.21% INTERPRETATION This ratio highlights the relative importance of debt financing to the firm by showing the %age of the firms assets that are supported by debt. Thus in 2010, debt ratio of the firms is 1.44% .It is due to continuous losses suffered by the company and it is covering the loss through creditors fund. Here the financial risk is very high and the cushion of protection afforded the firms creditors are very large. It is not in the favor of the PIA. As far as debt management by the company is concerned, PIA has had a very highly leveraged financial structure. Its debt to assets ratio has been generally very high. This shows a highly unstable financial base, with most of the financing achieved through leveraging and a minimal equity base.

8.TIE= EBIT / Interest expense 2010 720,076 /9,299,818 =0.08

2009

-3,190,548 /9,243,768 = -0.35

2008

-31,636,127/ 8,351,648 = -3.79

Times interest earned (TIE) for the company has been generally low, being below 0. 00 for the last two years of 2008 and 2009 it upgraded in 2010 and reached in the positive value but yet this is nomial. This is primarily because of high financial costs for the corporation over the years in the wake of greater dependency on debt financing. Finance cost has increased primarily due to increased mark-up on short-term borrowings. increase in interest rates in the country also contributed to the increased financing cost. Consequently, the effect of rising financial costs, combined with a disturbingly fast decline in operating profits contributed to a quite low TIE. This indicates that the company needs to manage its marketing, distribution and administrative expenses well to achieve higher operating margins, and also needs to cut down on its borrowing to keep its financial costs under control.

9.EBITDA coverage

(EBITDA+ Lease pmts) Int exp + Lease pmts + Principal pmts

PIAs ability to meet interest obligations are not improving rather it has decreased to an extent which shows that, so it is becoming very crucial for the company to pay its outstanding debt. The much decrease in this ratio can cause PIA bank corrupt in future.

10.Profit margin= Net income / Sales 2010 -20,785,123 /107,531,590 = -0.19% 2009 -4,947,983 /94,563,765

= -0.05% 2008 -36,138,642 /88,863,258 = -0.41% Gross Profit Margin and Net Profit Margin for the period falls under the steep downward trend . They highlight the significance of the challenge management faces in engineering a turnaround. Rather than generating positive operating income, PIA relies on short-term borrowing and trade payables to pay its bills and keep it afloat. All these scenarios shows that PIA is not effectively using its resources to generate profit.

Basic Earning Power: 11.BEP= EBIT / Total assets 2010 720,076 /126,860,357 =0.01% 2009 -3,190,548 /162,751,865 = -0.02% 2008 -31,636,127 /142,437,404 = -0.22%

Profitability Return on assets and Return on equity

ratios:

12.ROA= Net income / Total assets 2010 -20,785,123 /126,860,357 = -0.16% 2009 -4,947,983/ 162,751,865 = -0.03% 2008 -36,138,642 /142,437,404 = -0.25% The return on assets have grown from negative 0.25% in the CY08 to negative 0.16% in the CY10 . the corporation has faced a declining trend over the past couple of years The declining trend can be primarily attributed to a sharp rise in the current liabilities of the company over the years. Mainly, current liabilities have increased in the form of greater long-term financing and short term borrowing.

13.ROE= Net income / Total common equity 2010 -20,785,123/ -62,244,183 = 2009 0.33 %

-4,947,983/ -45,412,760 = 0.11 %

2008

-36,138,642 /-44,754,886 = 0.81 %

INTERPRETATION PIA return on equity is negative which shows that company is not utilizing its equity base in a good way. In resulting the return on investment to the investors is not zero even it has gone in negative. It means that PIA is going completely in losses. The future of PIA is in danger. As investors will not invest their money in PIA rather they will withdraw their investments which will give PIA even more tough time.

Calculate the Price/Earnings, Price/Cash flow, and Market/Book ratios.

14.P/E = Price / Earnings per share 2010 2.26/-8.39 = -0.27 2009 2.61/-2.72 = -0.96 2008 3.51/-17.79 =-0.19 The market price of PIA shares has showed a negative trend over the past years but recently it is minimizing the negative trend.. The effect of a rise in equity has been mitigated by the rising number of weighted average number of outstanding shares. The EPS of the company is also very discouraging, standing negative level in last three years owing to the high level of losses as discussed earlier. PIA needs radical business restructuring to come out of the crisis and meet customers expectations. Overall, PIA has been facing a severe financial crisis in terms of profitability, asset and debt management, as well as liquidity and needs to bring up its financial results to a more positive level. Heightened fuel prices and financial costs are a severe setback for the company and it needs to manage its distribution, administrative and marketing costs well in order to show better margins in the later years. 15.P/CF Price / Cash flow per share Price / {(N.Inc + Depr) /No of shares} 2010 2.26/ {( -20,785,123 + 6191044)/2949250} = -0.46

2009

2.61/ {( -4,947,983 +9474887)/2949250} = 1.70

2008

3.51/{( -36,138,642 +8015110)/2949250} = -0.37

Calculate the Price/Earnings, Price/Cash flow, and Market/Book ratios. 16.M/B Mkt price per share / Book value per share Mkt price per share/(total equity/no. of shares) 2010 2.26/(-62244183/2949250) = -0.11 2009 2.61/(-45,412,760 /2949250) = -0.17 2008 3.51/(-44,754,886 /2949250) = -0.23

17.ROE (Profit margin) x (TA turnover) x (Equity multiplier) (Profit margin) x (TA turnover) x (T.A/T.Equity)

2010

- 0.19 x

0.85 x (126,860,357 / -62,244,183 ) =0.33%

2009

-0.05

x 0.58 x (162,751,865 / -45,412,760 ) = 0.10%

2008

-0.41

x 0.62 x (142,437,404 / -44,754,886 ) =0.81%

ROE = (NI/Sales) x (Sales/TA) x (TA/Equity)

ROE reflects profitability on these assets. PIA is maintaining loss on assets. It does not go in its favor. It presents a bad situation ROE us the earning shows very drastic and alarming situation about continuous losses.