Submitted to: Madam Tanzeela Submitted By:

Muhammad Awais khan Registration # 2010-ag-1195 MBA (Finance)

Institute of Business Management sciences University Of The Agriculture Faisalabad

DEDICATION

This Report is dedicated to

My Honorable Teachers Whose Guidance is Always With me.

ACKNOWLEDGE

My report will remain incomplete if I do not mention the efforts of those people who helped me in completing this work. First of all I will thank to Madam Tanzeela who gave me opportunity to work in such a prestigious project. All my friends who help me in completing this project

At last, I would like to thank all those persons who helped me in completing this report.

Muhammad Awais khan MBA

CONTENTS
S.NO
1 2 3 4 5 6 7 8 9 10 11 12 13 14

Particulars
Object of the Project Methodology Balance sheet Profit &loss account Common size analysis Index analysis Ratio analysis Graphical presentation Comments Liquidity ratio Activity ratio Profitability ratio Leverage ratio Coverage ratio

Page No.
5 5 6 7 8-9 10 - 11 12 13 - 23 24 24 24 25 25 26

OBJECTIVE OF THE PROJECT

The main objective of the PROJECT is to analyses financial statement of Ibrahim Fibers Limited through the following way:

Making a thorough analysis of the company s financial statements over the last 3 years by using ratio analysis, common size analysis and index analysis.

Evaluating the financial condition (using ratios) of Ibrahim Fibers Limited on the basis of Annual Reports for the five consecutive financial years from 2009 to 2011

METHODOLOGY
As the report is related with business, it is a business research. Hence the report has been prepared based on a research process. The process is shown below

1. STATISTICAL TECHNIQUE
To analyze quantitative data we have used different statistical tools like charts and graphs with trend analysis for making comments on ratio analysis.

2. NATURE OF DATA
MY research is based on secondary data. Secondary data was collected in the form of Balance Sheet and Income Statement from Annual Reports of Ibrahim Fibers Limited for the period 2009 to 2011.

LIMITATION OF THE STUDY

Due to time constraints we could not visit the premise of Ibrahim Fibers Limited to incorporate more recent information and views of the Top Management about the performance & position of the company.

Ibrahim Fibers Limited

BALANCE SHEET
Non Current Assets
Property, plant and equipment Intangible Assets Investment in associate Long term loans Long term deposits

2011
8,828,907,710 11,092,969 13,769,491,023 20,540,808 3,573,063 832,525,351 2,676,081,437 162,236,487 863,787,917 8,052,309 537,943,429 155,378,775 2,240,815,548 30,110,426,826

2010

2009

7,190,413,467 7,817,013,285 14,005,376 8,927,930 14,318,835,540 13,572,873,559 0 25,182,879 3,735,923 3,746,923 722,603,343 696,901,126

Current Assets
Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Prepayments Other receivables Cash and bank balances Non current assets held for sale

2,909,687,606 2,355,115,641 162,983,366 138,789,546 692,073,405 702,856,751 6,835,414 6,636,260 433,033,358 1,106,222,684 169,514,922 72,753,720 0 364,846,339 27,016,931,023 26,478,657,340 1,190,623,805 179,909,644 1,569,438,291 1,686,208,334 150,000,000 461,282,445 4,325,000,000 0 1,814,476,909 401,887,210 3,105,069,950 1,157,521,457 2,765,133,372 253,542,922 1,497,561,488 1,481,916,666 300,000,000 94,430,370 6,011,208,334 150,000,000 1,741,441,544 312,579,575 3,105,069,950 1,150,373,350

Current Liabilities
Trade and other payables Markup / interest payables Short term bank borrowings Current portion of: Long term financing Long term mudarbaha Provision for taxation income tax 3,001,543,155 154,623,130 703,649,354 1,783,333,334 0 644,189,393 2,541,666,666 0 1,980,013,457 525,355,864 3,105,069,950

Non-current Liabilities
Long term financing Long term mudarbaha

Deferred liabilities:
Deferred taxation Staff retirement gratuity

Share capital and reserves

Share capital Capital reserves

1,164,673,343

Revenue reserves

14,506,318,180 10,975,512,978
30,110,435,826 Profit and loss Account 2011 37,300,680,078 34,177,382,738 3,123,297,340 152,781,541 577,500,576 113,699,275 828,974,533 1,450,341,415 199,696,578 1,650,037,993 3,224,500,000 4,874,537,993 722,718,801 4,151,819,192 27,016,931,023

7,615,399,769 26,478,657,340

Net sales Cost of goods sold Gross profit Selling and distribution expenses Administrative expenses Other operating expenses Finance cost operating income Other incomes Share of profit of associate net Profit before taxation Provision for taxation Profit for the year

2010 27,123,868,602 24,374,579,289 2,749,289,313 158,860,859 501,916,251 113,546,299 1,262,092,608 712,873,296 201,242,257 914,115,553 2,979,689,000 3,893,804,553 533,691,344 3,360,113,209

2009 22,059,606,789 19,748,550,789 2,311,056,000 126,674,952 423,594,936 24,977,054 1,387,287,978 348,521,080 77,089,140 425,610,220 1,500,542,000 1,926,152,220 300,773,643 1,625,378,577

Common Size Analysis'

2011
Non Current Assets
Property, plant and equipment Intangible Assets Investment in associate Long term loans Long term deposits 29.32 0.04 45.73 0.07 0.14 0.00 2.76 8.89 0.54 2.87 0.03 1.79 0.52 7.44 100 26.61 0.03 53.00 0.09 0.01 0.00 2.67 8.72 0.51 2.60 0.02 4.09 0.27 1.35 100.00 4.41 0.67 5.81 0.00 6.24 0.56 1.71 0.00 16.01 0.00 0.00 6.72 1.49 0.00 11.49 29.52 0.05 51.26 0.00 0.01 0.00 2.63 10.99 0.62 2.61 0.03 1.64 0.64 0.00 100.00 10.44 0.96 5.66 0.00 5.60 1.13 0.36 0.00 22.70 0.57 0.00 6.58 1.18 0.00 11.73

2010

2009

Current Assets
Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Prepayments Other receivables Cash and bank balances Non current assets held for sale

Current Liabilities
Trade and other payables Markup / interest payables Short term bank borrowings Current portion of: Long term financing Long term mudarbaha Provision for taxation income tax 9.97 0.51 2.34 0.00 5.92 0.00 2.14 0.00 8.44 0.00 0.00 6.58 1.74 0.00 10.31

Non-current Liabilities
Long term financing Long term mudarbaha

Deferred liabilities:
Deferred taxation Staff retirement gratuity

Share capital and reserves

Share capital

Capital reserves Revenue reserves

3.87 48.18 100.00

4.28 40.62 100.00

4.34 28.76 100.00

Profit and Loss Account

Net sales Cost of goods sold Gross profit Selling and distribution expenses Administrative expenses Other operating expenses Finance cost operating income Other incomes Share of profit of associate net Profit before taxation Provision for taxation Profit for the year 100.00 91.63 8.37 0.41 1.55 0.30 2.22 3.89 0.54 33.85 8.64 13.07 1.94 11.13 100.00 89.86 10.14 0.59 1.85 0.42 4.65 2.63 0.74 23.48 10.99 14.36 1.97 12.39 100.00 89.52 10.48 0.57 1.92 0.11 6.29 1.58 0.35 22.10 6.80 8.73 1.36 7.37

Index Analysis
2011 Non Current Assets
Property, plant and equipment Intangible Assets Investment in associate Long term loans Long term deposits 112.94 79.21 101.45 95.64 119.46 91.97 99.54 124.81 117.80 124.23 91.66 91.98 63.75 105.50 100.29 103.69 80.94 85.16 101.56 97.09 255.46 42.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 0.00 113.72 102.03 43.06 70.96 104.80 113.79 50.00 488.49 71.95 0.00 104.19 128.57 100.00 100.62 144.12 102.03 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

2010

2009

Current Assets
Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Prepayments Other receivables Cash and bank balances Non current assets held for sale

Current Liabilities
Trade and other payables Markup / interest payables Short term bank borrowings Current portion of: Long term financing Long term mudarbaha Provision for taxation income tax 108.55 60.98 46.99 120.34 0.00 682.18 42.28 0.00 113.70 168.07 100.00 101.24 190.49 113.72

Non-current Liabilities
Long term financing Long term mudarbaha

Deferred liabilities:
Deferred taxation Staff retirement gratuity

Share capital and reserves

Share capital Capital reserves Revenue reserves

PROFIT & LOSS

Net sales Cost of goods sold Gross profit Selling and distribution expenses Administrative expenses Other operating expenses Finance cost operating income Other incomes Share of profit of associate net Profit before taxation Provision for taxation Profit for the year 100.10 169.09 173.06 135.15 120.61 136.33 455.21 59.76 259.05 387.69 214.89 253.07 240.29 255.44 100.05 122.96 123.42 118.96 125.41 118.49 454.60 90.98 261.05 214.78 198.57 202.15 177.44 206.73 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Raito Analysis Liquidity Ratio

Current Ratio Liquid Ratio Cash Ratio

2011
1.19 0.07 0.02

2010
1.04 0.13 0.01

2009
0.79 0.34 0.03

Activity Ratio
Account Receivable Turnover in Time Inventory Turnover in Time Account Receivable Turnover in Days inventory Turnover in Days 247.82 12.77 1.45 28.19 0.81 8.37 2.49 3.08 4.94 60.37 37.64 60.40 2.99 179.76 9.26 2.00 38.88 1.00 10.14 1.40 1.41 2.50 77.30 43.60 77.34 1.72 135.35 6.79 2.66 53.04 1.20 10.48 0.57 0.47 1.05 123.06 55.17 123.20 1.31

Profitability Raito
Total Asset Turnover in time Gross Profit Margin Net profit Margin Return on asset/investment Return on Equity

Leverage Ratio
Debt-to-Equity Ratio Total debt-to-total asset Ratio Debt-to-tangible Net worth ratio

Coverage Ratio
Time interest Earned in Time

Common Size Analysis

60.00 Property, plant and equipment Intangible Assets 50.00 Investment in associate Long term loans 40.00 Long term deposits Current Assets % 30.00 0f Assets Stores, spare parts and loose tools Stock in trade 20.00 Trade debts Loans and advances 10.00 Prepayments Other receivables Stock in trade 2011 2010 2009

0.00

COMMON SIZE ANLYSIS BALNCE SHEET

60.00 Trade and other payables Markup / interest payables 50.00 Short term bank borrowings Current portion of: 40.00 Long term financing % OF LIABILITY Long term mudarbaha 30.00 Provision for taxation income tax Non-current Liabilities 20.00 Long term financing Long term mudarbaha 10.00 Deferred liabilities: Deferred taxation 0.00 2011 2010 YEAR 2009 Staff retirement gratuity

COMMON SIZE ANALYSIS PROFIT&LOSS

100.00 Cost of goods sold 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 Other incomes 0.00 2011 2010 YEAR 2009 Share of profit of associate net Gross profit Selling and distribution expenses Administrative expenses Other operating expenses Finance cost

operating income

INDEX ANALYSIS BALANCE SHEET

800.00 Property, plant and equipment Intangible Assets 600.00 Investment in associate Long term loans 500.00 Long term deposits %OF 400.00 ASSETS &LABILIIES 300.00 Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Prepayments 100.00 Other receivables Cash and bank balances 2011 2010 YEAR 2009 Non current assets held for sale Trade and other payables 700.00

200.00

0.00

INDEX ANALYSIS PROFIT & LOSS

500.00 Net sales Cost of goods sold 400.00 Gross profit 350.00 Selling and distribution expenses Administrative expenses Other operating expenses % 250.00 Finance cost 200.00 operating income Other incomes Share of profit of associate net Profit before taxation 50.00 Provision for taxation Profit for the year 2011 2010 YEAR 2009

450.00

300.00

150.00

100.00

0.00

LIQUIDITY RATIO
1.40

1.20

1.00

0.80 CURRENT RATIO LIQUID RATIO CASH RATIO 0.60 Current Ratio Liquid Ratio Cash Ratio 0.40

0.20

0.00 2009 2010 YEAR 2011

ACTIVITY RATIO
300.00 250.00 200.00 A/R &INVENTORY 150.00 TURNOVER 100.00 50.00 0.00 2011 2010 YEAR 2009 Account Receivable Turnover in Time Inventory Turnover in Time

ACTIVITY RATIO
60.00

50.00

40.00

A/R & INVENTORY 30.00 TURNOVER IN DAY

20.00

10.00

0.00 2011 INVENTORY TURNOVER IN DAYS 2010 A/T TURNOVER IN DAYS 2009

PROFITABILITY RATIO
12.00

10.00

8.00 GROSS & PROFIT MARGIN RETURN ON ASSET & EQUITY

6.00

4.00

2.00

0.00 2011 2010 YEAR GROSS PROFIT MARGIN RETURN ON ASSETS NET PROFIT MARGIN RETURN ON EQUITY 2009

LEVERAGE RATIO

140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 2011 2010 YEAR 2009

DEBT-TO-EQUITY RATIO Debt-to-tangible Net worth ratio

Total debt-to-total asset Ratio

Time interest Earned in Time

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00 2011 2010 Time interest Earned in Time 2009

COMMENTS
LIQUIDITY RATIOS
Ratios that show the relationship of a firm s cash and other current assets to its current liabilities. We have calculated two liquidity ratios such as current ratio and quick ratio.

Current Ratio:
Current Ratio is a measurement of short term liquidity. The result shows how much current asset the organization is holding for every taka in current liabilities. Current ratio increase from year (FY) 2009 to 2011 Comparing with previous year the current Ratio of Ibrahim Fibers Limited (IFL) is in good position. That means IFL has a better liquidity position in terms of current ratio compared to previous years.

Quick Ratio:
Quick ratio is a more severe measure of liquidity which measures a company s ability to pay off its short term liability without relying on inventory sale. From FY 2009to 2011 quick ratio has decreased gradually. The reason behind the fall of the quick ratio is the pill up of inventory. This may bring benefit for the company if there is inflation in the next year. More over in the next year company expecting drastically growth in sales which could be back up by the piled up inventories.

ACTIVITY RATIOS
A set of ratios that measures how effectively a firm is managing its assets i.e. using its assets to generate sales. Account receivable turnover Inventory turnover, inventory turnover in days total asset turnover ratio.

Account receivable turnover ratio:

The account receivable turnover in FY 2009 to 2011 is increased. It show the account receivable management of company good

Account receivable turnover in days

Account receivable turnover in day decrease FY 2009 to 2011. It mean that account receivable collection policy of company is good. it investment in account receivable not tide for long time

Inventory turnover ratio:

Inventory Turnover Ratio is one of the efficiency ratios and measures the number of times, on average, the inventory is sold and replaced during the fiscal year. A good rule of thumb is that if inventory turnover ratio multiply by gross profit margin (in percentage) is 100 percent or higher, than the average inventory is not too high. According to that rule from 2009 to 2011 it is 5.841, 9.885 and 11.376 respectively which represent company had high investment during last three year but now company have improved its inventory management policy.

Inventory turnover in days

Days in Inventory measures the average number of days the company holds its inventory before selling it. During last 3 year company has improved its inventory turnover ratio in days from 53 days to 28 days which in represent efficient inventory management policy.

Total Asset Turnover:

Total Asset turnover of IFL significantly decrease during the period 2009 to 2011. This is a good sign that IFL utilization of asset in generating sales increased.

Profitability ratio Gross profit margin

From 2009 to 2011 company s gross profit ratio was almost the same for 3 year but it decline in 2011 due to increased in cost of production due to high cost of raw material, fuel and power and inventory losses which affected the gross profit ratio.

Net profit margin

In last 4 year net profit ratio of the company has shown it increased from 7.36% to 12.38% and then decreased in 2011 to 11.13% due to increased in cost of production and operating expenses which ultimately decrease the net profit ratio.

Return on asset
It provides an idea of the overall return on investment earned by the firm. Investors always expect high return on investment but from the graph we can see that there upward trend in ratio and in FY 2009

Return on equity
The Return on equity ratio is a measure of profitability. In last 3 year from 2009 to 2011 it has shown the increasing trend which mean share holders are getting more return on their investment and the profitability of the company in increasing

Leverage ratio Debt to-equity ratio

Debt to equity ratio represents how much company has its own funds as compare to debts. During last 4 years from 2008 to 2009 it increased from .66 to .77 then it start declining from 2009 to 2011 from .49 in 2010 to .24 in 2011 which represent company is using more internal funds then the external funds.

Debt-to-total asset
Debt to total fund ratio represent the long term solvency of the company, if the company can pay its debts in the long run. In last 3 years it was almost the same 2009 then it decline during 2009 to 2011 which mean company position in long run have improved, company s ability to pay it debts in long term has improved.

Debt to net worth ratio

An extension of times interest earned ratio, also indicates a firms long term debts paying ability from the income statement view.

Coverage ratio
Time interest earned ratio:
An extension of times interest earned ratio, also indicates a firms long term debts paying ability from the income statement view. During last 3 years from stars improving, from 2009 to 2011 it increase from 1.11 to 1.7 in 2011. This means company has improved its fixed interest charged ratio.