58619593 financial-analysis-final-thesis-fauji-cement-pioneer-cement-1

Zahoor Ahmad Page 1 24-06-2011

INDUS INSTITUTE OF HIGHER EDUCATION KARACHI.
Financial Analysis of Cement Industry of
Pakistan
Fauji Cement & Pioneer Cement
(Comparison With Kohat & Cherat
Cement)
(This thesis is submitted in partial fulfillment of
requirements for the MBA. Degree in Finance).
SUPERVISED BY:
SIR. TARIQ MEHMOOD.
FACULTY MEMBER.
Email:tariqphdszabist@gmail.com
SUBMITTED BY:
Zahoor Ahmed
IIHE/08E/2008
Email:zahoor_gr8@yahoo.com
MBA (Finance)
A PROJECT SUBMITTED TO
THE FACULTY OF BUSINESS ADMINISTRATION.

JUNE, 2011.
Financial Analysis of Cement Industry of
Pakistan
(This thesis is submitted in partial fulfillment of
requirements for the MBA. Degree in Finance).
SUPERVISED BY:
SIR. TARIQ MEHMOOD.
FACULTY MEMBER.
Email:tariqphdszabist@gmail.com
SUBMITTED BY:
Zahoor Ahmed
IIHE/08E/2008
Email:zahoor_gr8@yahoo.com
MBA (Finance)
A PROJECT SUBMITTED TO
THE FACULTY OF BUSINESS ADMINISTRATION.
JUNE, 2011.

ABSTRACT SUBMITTED BY: ZAHOOR AHMAD.
DISCIPLINE: MBA (FINANCE).
TITLE OF PROJECT REPORT: FINANCIAL ANALYSIS OF
CEMENT INDUSTRY OF PAKISTAN.
(Fauji Cement & Pioneer Cement
Compare with Kohat & Cherat)
MONTH OF SUBMISSION: JUNE , 2011.
NAME OF PROJECT SUPERVISOR: SIR. TARIQ MEHMOOD.

Faculty of Business Administration
INDUS INSTITUTE OF HIGHER EDUCATION
Karachi.
Certificate
I am pleased to certify that Mr. Zahoor Ahmed s/o Muhammad Maroof
has satisfactorily carried out a research work, under my supervision on
the topic of “Financial Analysis of Cement Industry of Pakistan.
(Surway of two units): (2004 to 2008)”
I further certify that his distinctive original research and his thesis is
worthy of presentation to the Faculty of Business Administration,
INDUS INSTITUTE OF HIGHER EDUCATION
Karachi for the degree of MBA(Finance).
Dean Business Administration: ---------------------------
HOD Business Administration: ----------------------------
Supervisor: ------------------------------

ACKNOWLEDGEMENT
God Almighty is worthy of all acknowledgments…………..
No one can say that I am perfect, everyone should admit that without the
help of ALLAH and His people a man can’t get anything so I bow my head before
almighty Allah with gratitude. I am also very much thankful and presents salute to many
individuals who have helped me in shaping this research paper
I am gratitude to Almighty ALLAH, Who has given me strength and mentor to
accomplish this mammoth task.
I extend my thanks to SIR. TARIQ MEHMOOD for his candid guidance and
continuous support and encouragement during the accomplishment of my Project
Report on “Financial Analysis of Cement Industry of Pakistan (Survey of Two Units)”,
which is compulsory for my degree of M.B.A (Finance).
I am thankful to my teacher for giving me this opportunity and build up
confidence. I hope this effort on my part will come up to your expectations.
The last but not least, I would feel incomplete without thanking to my
parents who pray for my brilliant success and bright future.
By:
Zahoor Ahmad.
DATED: 10TH
JUNE 2011.

2. Dedication
I dedicate this research to our parents
and teachers, who taught us to think,
understand and express. I earnestly feel
that without their inspiration, able guidance
and dedication, I would not be able to pass
through the tiring process of this research.

3. ABSTRACT
The purpose of this research report is to evaluate, analyze and compare the financial
statements of M/S Fauji Cement Company Limited & (Pioneer Cement Comparison with
Kohat & Cherat Cement comparative analysis. I have chosen these two companies on the basis
of their financial performance, they are also listed on all major stock exchanges of the country.
After researching, surveying, observing, collection of data, I have arrived at the written
analysis follows hereafter. As the requirement of the report, I have conducted a detailed study
of the analysis the financial statements and ratios.
On the basis of above information, I have arrived on specific recommendations from
strategic management’s viewpoint. I have supported suggestions through strategic theories,
matrices and exhibits, present in the report.
The report includes the whole financial status of both the companies through which a
reader can get the financial strengths & weakness of both the organizations.
The fundamentals of the research is to build the reader’s capability to evaluate the
financial data & information into projective manner as to compare the financial stability &
growth with each other in consequence either for enhancement & for decrement.
Pakistan currently has a per capita consumption of 120kg of cement, which is
comparable to that for India at 135kg per capita but substantially below the World Average
270kg and the regional average of over 400kg for peers in Asia and over 600kg in the Middle
East. Over the years a number of tax policy and administrative measures have been introduced
to attract investment and facilitate growth of the cement industry. The Government has reduced
central excise duty (CED) on cement in the budget for 2007-08 in order to boost construction
activity.

In Pakistan APCMA plays a significant role in projecting the cement industry to the
Government and coordinating various activities in respect of formulation of Government
policies for the cement industry. Cement demand is significantly affected by the Public Sector
Development Program (PSDP), construction of dams, elevated and concrete roadways,
residential construction as well as exports.
Table Of Contents
S.# Chapter Title Page
1 Acknowledgement 1
2 Dedication 2
3 Abstract 3
4 Chap-1 - 1.1 Introduction 7
5 1.2 Data 9
6 1.3 Problem Statement 10
7 1.4 Purpose of Study 10
8 1.5 Research objective 11
9 1.6 Limitation of research 12
10 Chap-2 - 2.1 Literature review 12
11 2.2 Growth of Cement Industry 13
12 2.3 Export & International Market 14
13 2.4 National Scenario 15
14 2.4.1 Production 15
15 Chap-3 – 3.1 Methodology (Theories) 17
16 3.2 Financial Analysis Procedure 17
17 3.2.1 Percentage Analysis 17
18 3.2.2 Trend Analysis (Horizontal Analysis) 17

19 3.2.3 Common Size Statement – Vertical Analysis 17
20 3.2.4 Ratio Analysis 17
21 3.3 Data Collection Procedure 18
22 3.4 Analysis Procedure 18
23 3.5 Sample 20
24 3.6 Test of Analysis 21
25 Chap-4 – 4.1 Data analysis, results / findings and Discussion. 22
26 (1) - 4.2 Fauji Cement Company Limited. 22
27 4.3 Financial Analysis M/S Fauji Cement (Balance Sheet) 22
28 4.4 Income Statement 25
29 4.5 Balance Sheet Trend Analysis(Horizontal Analysis) 26
30 4.6 Balance Sheet Vertical Analysis 30
31 4.7 Income Statement Trend Analysis(Horizontal Analysis) 33
32 4.8 Income Statement (Vertical Analysis) 35
33 4.9 Ratio Analysis 37
34 4.9.1 Liquidity Ratio 37
35 4.9.2 Longterm Liquidity / Long Term Debt Paying Ability 42
36 4.9.3 Activity Ratio / Asset Turnover Ratio/ efficiency
Ratio
45
37 4.9.4 Profitability Ratio 50
38 4.9.5 Financial Leverage Ratio. 60
39 4.9.6 Dividend Policy Ratio 61
40 4.9.7 Ratio Analysis Chart 63
41 4.9.8 Conclusion (Fauji Cement) 64
42 (2) - 4.2.1 Pioneer Cement Limited (Comparative Analysis with
Kohat & Cherat Cement)
65
43 4.2.2 Five Years Horizental Analysis of Income Statement 65

44 4.2.3 Five Years Horizental Analysis of Balance Sheet 67
45 4.2.4 Vertical Analysis of Income Statement 71
46 4.2.5 Vertical Analysis of Balance Sheet 73
47 4.2.6 Trend Analysis (Balance Sheet) 77
48 4.2.7 Trend Analysis (Income Statement) 80
49 4.3 Ratio Analysis 81
50 4.3.1 LiquidityRatios 81
51 4.3.2 Current Ratio 81
52 4.3.3 Quick Ratio 84
53 4.3.4 Turnover /Activity Ratio 86
54 4.3.5 DebtorsTurnoverRatioorReceivableTurnover 87
55 4.3.6 Total assets Turnover Ratio 89
56 4.3.7 FixedAssetsTurnoverRatio 91
57 4.4.1 Profitability Ratio 92
58 4.4.2 Gross Profit (GP) Ratio 93
59 4.4.3 Operating Profit ratio 94
60 4.4.4 Return on Assets 95
61 4.4.5 Return on Equity (ROE) Ratio 96
62 4.4.6 Debt Ratio 98
63 4.4.7 Debt Service Ratio Interest Coverage Ratio 100
64 4.5 General Ratio analysis 101
65 4.6 Company Analysis 103
66 Chap-5 - 5.1 Conclusion 104
67 Chap-6 – 6.1 Recommendation 105
68 6.2 Future Outlook 106
69 6.3 Bibliography (References) 107

Chapter.1
Introduction
The research report is carried out as the analysis of cement industry of Pakistan by comparing
the financial performance of two units (Fauji Cement Co. Ltd. & Pioneer Cement Ltd.)
Analysis will be made for Profit and Loss A/c, Balance Sheet and Cash flow statement; the
following financial ratios will also be analyzed.
Balance Sheet Trend Analysis (Horizontal Analysis / Vertical Analysis).
Income Statement Trend Analysis (Horizontal Analysis / Vertical Analysis).
Ratio Analysis.
FINANCIALANALYSIS
Financial Analysis is the summary of all transactions that have occurred over a particular
period.
Financial Analysis refers to the assessment of a business to deal with the planning, budgeting,
monitoring, forecasting, and improving of all financial details within an organization.
These indicate a firm's financial health and stability.
Two key financial statements are:
BALANCE SHEET
• A balance sheet or statement of financial position is a summary of the financial
balances of a sole proprietorship, a business partnership or a company. Assets,
liabilities and ownership equity are listed as of a specific date, such as the end of its
financial year. A balance sheet is often described as a "snapshot of a company's
financial condition”. Of the four basic financial statements, the balance sheet is the only
statement which applies to a single point in time of a business' calendar year.

• A standard company balance sheet has three parts: assets, liabilities and ownership
equity. The main categories of assets are usually listed first and typically in order of
liquidity. Assets are followed by the liabilities. The difference between the assets and
the liabilities is known as equity or the net assets or the net worth or capital of the
company and according to the accounting equation, net worth must equal assets minus
liabilities.
INCOME STATEMENT
Income statement (also referred as profit and loss statement (P&L), statement of financial
performance, earnings statement, operating statement or statement of operations)
• Is a company's financial statement that indicates how the revenue (money received
from the sale of products and services before expenses are taken out, also known as the
"top line") is transformed into the net income (the result after all revenues and expenses
have been accounted for, also known as the "bottom line"). It displays the revenues
recognized for a specific period, and the cost and expenses charged against these
revenues, including write-offs (e.g., depreciation and amortization of various assets)
and taxes.
• The purpose of the income statement is to show managers and investors whether the
company made or lost money during the period being reported.
• The important thing to remember about an income statement is that it represents a
period of time. This contrasts with the balance sheet, which represents a single moment
in time
Horizontal Analysis
The analysis is based on a year-to-year comparison of a firm's ratios,
Vertical Analysis
The comparison of Balance Sheet accounts either using ratios or not, to get useful information
and draw useful conclusions
RATIO ANALYSIS:
A comparison of relationship among account balances.
FINANCIAL RATIOS
Financial Rations are helpful in analyzing the actual performance of the company compared to
its financial objectives. They also provide insights into the firm’s performance
compared to other firms in the industry. Ratio simply means one number expressed in

term of another. A ratio is a statistical yardstick by means of which relationship
between two or various figures can be compared or measured. The term accounting
ratio is used to describe significant relationship between figures shown on a balance
sheet, profit and loss account or in any other part of accounting organization.
Accounting ratio thus shows the relationship between the accounting data.
ACCOUNTING RATIOS
The term "accounting ratios" is used to describe significant relationship between figures shown
on a balance sheet, in a profit and loss account, in a budgetary control system or in any other
part of accounting organization. Accounting ratios thus shows the relationship between
accounting data. Ratios can be found out by dividing one number by another number. Ratios
show how one number is related to another. It may be expressed in the form of co-efficient,
percentage, proportion, or rate.
ADVANTAGES OF RATIOS ANALYSIS
Ratio analysis is an important and age-old technique of financial analysis. The following are
some of the advantages of ratio analysis:
SIMPLIFIES FINANCIAL STATEMENTS
It simplifies the comprehension of financial statements. Ratios tell the whole story of changes
in the financial condition of the business.
INTER PERIOD COMPARISON
It provide data for inter period comparison.
FACILITATES INTER-FIRM COMPARISON
It provides data for inter-firm comparison. Ratios highlight the factors associated with
successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued
and undervalued firms.
HELPS IN PLANNING
It helps in planning and forecasting. Ratios can assist management, in its basic functions of
forecasting. Planning, co-ordination, control and communications.
MAKES INTER-FIRM COMPARISON POSSIBLE
Ratios analysis also makes possible comparison of the performance of different divisions of the
firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely
performance in the future.

HELP IN INVESTMENT DECISIONS
It helps in investment decisions in the case of investors and lending decisions in the case of
bankers etc
1.2. DATA.
1) I chose the cement sector of Fauji Cement for inter period analysis from 2004 to 2008
2) Three cement industries for their comparative financial analysis(Inter firm & inter
period Analysis). We have collected the annual reports of our respective companies for
five years (2004-2008) .The companies are as follows:
• Pioneer Cement Ltd.
• Kohat Cement Ltd.
• Cherat Cement Ltd.
1.3 .Problem Statement
Analysis will be made for Balance Sheet and Profit & loss A/c .the following financial
statement analysis and ratio analysis will also be analyze.
Trend analysis (Horizontal Analysis).
Common size statement (Vertical Analysis)
Ratio Analysis
• Liquidity ratios.
• Long term Liquidity / Long term Debt paying ability.
• Activity ratios / Asset turnover ratios / Efficiency ratios.
• Profitability ratios.
• Financial leverage ratios.
• Dividend policy ratios
• Comparison will be made on the entire above ratio to find how good the business of the
company is going.
1.4 Purpose of Study

The purpose of the this research report is to extract the most out of the financial performance of
the Cement Industry by comparing the performance of the surveying units (Fauji Cement Co.
& Pioneer Cement Co. Ltd.Comparison with Kohat & Cherat).
Fauji Cement analysis will be made by inter period analysis from 2004 to 2008 and the other
same unit / sector is Pioneer Cement comparative analysis will be made by both inter period
and inter firm analysis is comparison with kohat Cement & Cherat Cement.
The main objective of this research is to find out the financially analysis of cement Industry of
Pakistan and also the current position of the cement industry in comparison of highly
developed and automated cement industry of the world and suggest the improvements needed
to reach at the same level, in term of trading process, trading volume and automation as well in
term of recognition as other the cement Industry have. Financial literacy for the business
students is the secondary purpose of this report especially for those students who don’t select
course related to the finance.
1.5. Research Objectives
The objective of this study is to analyze the financial performance of the companies based on
the financial ratio during the period of 2004 to 2008.
Other objectives of this research report is to give the better investment opportunities to the
investors as well as to give the opportunity to the students to learn and have some knowledge
about the financial & comparative analysis of the industries.
1.6. Limitations of Report
There are many performance measurements using financial ratio analysis. There might be
difficult to use all the measure. This study will select a certain financial ratio only. So, different
performance measurement will give different result.
This study based on the data collected through annual report, there could be some error in the
data sources, which could make the result not accurate.

This study limited to Five years research period from 2004 to 2008 for the ratio analysis in
order to determine the analysis and conclusion.
This research report is only the comparison of financial performance of two units of the
Cement Industry (i.e. Fauji Cement Co. Ltd. & Pioneer Cement compare with Kohat &
Cherat.) and not the analysis of Cement Industry as a whole.
Chapter .2
2.1 LITERATURE REVIEW
Business Recorder reported that Pakistan’s cement exports witnessed a healthy growth of 65%,
to over 6 million tons during 7 months of the current fiscal year mainly due to rise in
international demand. The exports may reach to 11 million tons and earn approx $ 700 million
during 2008-09 (PCMA, 2010).
The statistics of All Pakistan Cement Manufacturers Association also showed that cement
exports had mounted to over 6 million tons in 7 months as compared to 3.62 million tons of
same period of last fiscal year, depicting an increase of 2.38 million tons (PCMA, 2010).
Cement exports during January 2009 went up by 30% to 0.81 million tons as compared to
0.623 million tons in January 2008.
However, slow construction activities in the country during the period badly upset domestic
sale of cement, which depicted decline of 15%, to 10.77 million tons as compared to 12.59
million tons of last fiscal year (FCCL, 2010).
On MoM basis, local dispatches of cement during January 2009 showed a decline of 8%, to
1.51 million tons from 1.65 million tons of January 2008. Overall dispatches, including export
and local sales, reached 16.77 million tons during July to January of 2008-09 as against 16.20
million tons of last fiscal year, depicting an increase of 3%.
By September 2009, after witnessing substantial growth in all three quarters of fiscal year
(FY) 2008-09, cement sector concluded the fourth quarter with a handsome growth of 1,492

percent on yearly basis (PCCL, 2010). All Pakistan Cement Manufacturers Association’s
report revealed on 29th September 2009.
Higher retention prices (up 59 percent) and high rupee based export sales amid rupee
depreciation (20 percent) drove profits up north. However, this growth is magnified, as
FY2007-08 was an abnormally low profit period for the sector.
Moreover, the performance is skewed towards large players with export potential as profitable
companies in both years posted increase of just 109 percent, said analyst at JS Research Atif
Zafar.
He said that cumulative profitability of companies in FY09 stood at Rs 6.2 billion or $78.2
million as compared to Rs 386 million or $6.2 million depicting a massive growth of 1,492
percent (FCCL, 2010). Companies with profits in both the years posted 109 percent earnings
improvement.
Though total dispatches were down 2 percent, net sales grew by 55 percent to Rs 101.4 billion
or $1.3 billion on the back of higher net retention prices (up 59 percent) and improved export
based revenues. Cost of sales/tonne also rose by 33 percent on yearly basis amid higher
realised coal prices and inflationary pressures, the analyst maintained.
2.2. Growth of Cement Industry

Growth of cement industry is rightly considered a barometer for economic activity. In 1947,
Pakistan had inherited 4 cement plants with a total capacity of 0.5 million tons. Some
expansion took place in 1956-66 but could not keep pace with the economic development and
the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95
(PCCA, 2010). The industry was privatized in 1990 which led to setting up of new plants.
Although an oligopoly market, there exists fierce competition between members of the cartel
today.
The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the
installed production capacity of 44.09 million tons. The north with installed production
capacity of 35.18 million tons (80 percent) whiles the south with installed production capacity
of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons.
There are four foreign companies, three armed forces companies and 16 private companies
listed in the stock exchanges (PCCL, 2010). The industry is divided into two broad regions, the
northern region and the southern region. The northern region has around 80 percent share in
total cement dispatches while the units based in the southern region contributes 20 percent to
the annual cement sales.
Cement industry is indeed a highly important segment of industrial sector that plays a pivotal
role in the socio-economic development. Since cement is a specialized product, requiring
sophisticated infrastructure and production location. Mostly of the cement industries in
Pakistan are located near/within mountainous regions that are rich in clay, iron and mineral
capacity. Cement industries in Pakistan are currently operating at their maximum capacity due
to the boom in commercial and industrial construction within Pakistan.
The cement sector is contributing above Rs 30 billion to the national exchequer in the form of
taxes (KCC, 2010).
Cement industry is also serving the nation by providing job opportunities and presently more
than 150,000 persons are employed directly or indirectly by the industry.
The industry had exported 7.716 million tons cement during the year 2007-08 and had earned
$450 million, while is expected to export 11.00 million tons of cement during 2008-09 and
earn approximately $700 million.

2.3. Exports & International Markets
The cement industry of Pakistan entered the export markets a few years back, and has
established its reputation as a good quality product. Deregulation after accession of Pakistan to
WTO is expected to open the window of competition from cheaper markets (Baughn, Bodie,
and McIntosh, 2007). The recent acquisition of Chakwal Cement by an Egyptian giant,
Orascom may be a beginning of such an entry in Pakistan by multinationals (Adekoya, 2003).
New avenues for export of cement are opening up for the indigenous industry as Sri Lanka has
recently shown interest to import 30,000 tons cement from Pakistan every month. If the
industry is able to avail the opportunity offered, it may secure a significant share of Sri Lanka
market by supplying 360,000 tons of cement annually (Adewuyi, 2002).
In 2007, 130,000 tons cement was exported to India. In 2007, the exports to Afghanistan, UAE
and Iraq touched 2.13 million tons.
At present, the economies of major countries are facing recession, but Pakistan’s cement sector
is still maintaining a healthy growth (Aigbedion, and Iyanyi, 2007). Cement export to India has
already slowed after imposition of duty by Indian authorities.
Export of Clinker and Cement
(Qty/Tonnes
)
|------------------Cement-------------------| |---Clinker---|
Years Afghanistan India Other Countries Other Countries Total %age
Via Land Via Sea & Land Via Sea Via Sea Incr/(Decr)
2001-2002 106,620 - - - 106,620 100.00%
2002-2003 430,322 - - 41,500 471,822 342.53%
2003-2004 1,118,293 - - -
1,118,29
3
137.02%
2004-2005 1,407,900 - 157,270 -
1,565,17
0
39.96%
2005-2006 1,413,994 - 91,165 -
1,505,15
9
-3.83%
2006-2007 1,725,526 - 1,071,928 390,973
3,188,42
7
111.83%
2007-2008 2,777,826 786,672 3,045,995 1,106,127
7,716,62
0
142.02%
2008-2009 3,201,953 669,700 6,567,042 942,137
11,380,83
0
47.48%

2.4. National Scenario.
CEMENT INDUSTRY IN PAKISTAN
2.4.1 Production
In Pakistan, there are 29 cement manufacturers that are playing a vital role in the building up
the country’s economy and contribution towards growth and prosperity. After 2002-3, most of
the cement manufacturers expanded their operations, and increased production. This sector has
invested about $1.5 billion in capacity expansion over the last six years.
The operating capacity of cement in 1991 was 7 million tons, which increased to become 18
million tons by 2005-06 and by end of 2007 rose to above 37 million tones, and currently the
production capacity is 44.07 million tons.
Cement production capacity in the north is 35.18 million tons (80 percent) while in the south it
is only 8.89 million tons (20 percent).
The cement manufacturers in 2007-08 added above eight million tons to the capacity and the
total production was expected to exceed 45 million tons by the end of 2010. It may result in a
supply glut of seven million tons in 2009 and 2010.

CHAPTER .3
3.1. Methodology:
This study used a comparative analysis (horizontal analysis) as a methodology because it is
most suitable and easy to interpret and compare the performance of this companion’s. I will
begin by looking at the comparative ratios of the company for a Five -Years period by using
trend analysis.
Trend Analysis (Horizental) & ( Common size statement or Vertical)
Ratio Analysis

3.2. FINANCIALANALYSIS PROCEDURE
3.2.1. PERCENTAGE ANALYSIS
3.2.2. TREND ANALYSIS - HORIZONTAL ANALYSIS
For this purpose comparative financial statements are prepared horizontally.
3.2.3.COMON SIZE STATEMENT - VERTICAL ANALYSIS
For this purpose comparative financial statements are prepared vertically.
3.2.4. RATIO ANALYSIS
A comparison of relationship among account balances. The term accounting ratio is used to
describe significant relationship between figures shown on a balance sheet, profit and
loss account or in any other part of accounting organization.
1. Profitability
its ability to earn income and sustain growth in both short-term and long-term. A company's
degree of profitability is usually based on the income statement, which reports on the
company's results of operations;
2. Solvency
Its ability to pay its obligation to creditors and other third parties in the long-term;
3. Liquidity
Its ability to maintain positive cash flow, while satisfying immediate obligations;
4. Stability
The firm's ability to remain in business in the long run, without having to sustain significant
losses in the conduct of its business. Assessing a company's stability requires the use of both
the income statement and the balance sheet, as well as other financial and non-financial
indicators
3.3. Data Collection Procedures
The data has been collected from the annual report of selected company from the web site of
the respective company. Financial statement in the annual report will be used as a main source

for financial ratio analysis. For this study, the financial statement for three years (2004 to 2008)
will be used to get the result.
I choose one industry of Fauji Cement for their financial analysis by inter period. And choose
Pioneer Cement comparative analysis with kohat & Cherat Cement.
Data has been collected from annual report (Balance Sheet & Income Statement) of five years
2004 to 2008 will be used to get the result.
3.4. Analysis Procedures
The financial ratio will be used in the analysis of the performance for the companies. The
selected company will be tested on the Trend Analysis / Vertical Analysis , profitability,
liquidity and solvency; certain financial ratio will be used such as;
Test of profitability
Return on Assets (ROA)
Return on Equity (ROE)
Profit margin
Earnings per share (EPS)
The test profitability ratios as its self described which include that how a company or an
organization can get its profitability factor enhance which influenced by its return on assets;
equity; margin & earning per share. The whole mechanism directly proportional to the
capability of firm or organization.
Test of liquidity
Current ratio
Quick/ acid test ratio
The test liquidity ratio defines that how quickly a firm or an organization transform its assets
i.e. cash securities; inventory & others into the form of cash its also enable the decision maker
to make corrective & proactive decisions which impact as increment in profitability of the
organization or firm.

Assets Turnover Ratio / Efficiency Ratio
Receivable Turn Over
Inventory Turn Over
The asset turnover ratio also known as efficiency ratio, the main emphasize in both the ratio on
the capability of how the company receivable convert quickly from the suppliers & the
inventory in similar way.
Financial Leverage Ratio
Debt-equity ratio
Debt-assets ratio
Times Interest Earned
The financial leverage ratios including debt-equity to asset & to time interest earned as a part
from those it’s essential to conclude the financial stability of the organization which might be
essential for the company’s whole structure including production, overhauling; forecasting &
utilizing the parameters into growth & corrective measures.
Dividend Policy Ratio
Dividend Yield
Payout Ratio
3.5. S a m p l e
For this study, two companies, which are randomly selected, will be used as a sample for the
test. Both companies are selected from the same sector. The names of the companies are as
follows;
a.Fauji Cement Company Ltd.(Inter Period Analysis).
b.Pioneer Cement Comparative Analysis with Kohat Cement &
Cherat Cement Company Ltd.(Inter Period & Inter firm Analysis).

3.6. TOOLS OF ANALYSIS

.
PERCENTAGE ANALYSIS:
RATIO ANALYSIS:
Chapter .4
4.1 Data Analysis , Results / Findings and Discussions.

4.2 Fauji Cement Company Ltd
A longtime leader in the cement manufacturing industry, Fauji Cement Company,
headquartered in Islamabad, operates a cement plant at Jhang Bahtar, Tehsil Fateh Jang,
District Attock in the province of Punjab. The Company has a strong and longstanding
tradition of service, reliability, and quality that reaches back more than 11 years. Sponsored by
Fauji Foundation, the Company was incorporated in Rawalpindi in 1992.
4.3. Financial Analysis M/S Fauji Cement (Balance Sheet)
Balance Sheet
Fauji Cement Company Limited
Balance Sheet
As on December….. RS(000)
2004 2005 2006 2007 2008
CURRENT ASSETS 574460
117276
5
157938
2
195352
7 5294083
Cash and bank balances 197088 603110 847590 423133 3783909
Deposit accounts 137433 560177 798122 402907 3756611
Current accounts 21326 25840 49253 20048 27039
Collection accounts 38275 16831 0 0 0
Cash in hand 54 262 215 178 259
Advances, Deposits, prepayments and
other receivables: 73583 46041 70340 858758 345567
To suppliers 34044 18148 31523 815588 15521
To employees 449 783 1639 621 2473
Due from associated undertaking - unsecured 1127 1125 3190 0 0
Deposits 1313 1486 1865 1795 5737
Prepayments 10606 4314 9937 3125 3966
Excise duty 9911 3057 0 0 0
Advance tax –net 0 7891 13874 13104 23302
Sales tax refundable -net 3774 0 0 0 82719
Derivative foreign currency options used as
hedging instrument 0 0 0 0 84364
Interest accrued 2175 1002 5476 5077 14828
Prepaid arrangement fee for loans 0 0 0 11000 74670
Margin on letters of credit 0 0 0 0 29369
Other receivables- Considered goods 645 8235 2836 2084 7179
Others 9539 0 0 6364 1439
TRADE DEBTS 44789 107231 25475 19558 26927
Unsecured 23833 25021 27042 16117 4848
Considered goods 22266 23454 25475 7769 0

Considered doubtful 1567 1567 1567 8348 4848
Secure-considered goods 22523 83777 0 11789 26927
Less: Provision for doubtful debts -1567 -1567 -1567 -8348 -4848
STOCK IN TRADE 61600 55931 145090 183309 230089
Raw and packing material 15224 18469 28012 23931 31271
Work in process 27761 11624 93671 115221 152529
Finished goods 18615 25838 23407 44157 46289
STORES, SPARES AND LOOSE TOOLS 197400 360452 490887 468769 907591
Stores 71837 107633 198485 61997 415358
Spares 118324 244514 280183 394046 478579
Loose tools 7239 8305 12219 12726 13654
DEFERRED TAX ASSETS - NET 570039 337140 0 0 0
LONG TERM DEPOSITS 36600 46611 46611 46611 46611
Islamabad Electric Supply Company Limited 21600 21600 21600 21600 21600
Sui Northern Gas Pipelines Limited 15000 25011 25011 25011 25011
LONG TERM ADVANCES - Considered
goods 0 9000 9000 8100 7200
Sui Northern Gas Pipelines Limited 0 0 0 9000 8100
Less: Amount receivables within 12 months
shown under current assets 0 0 0 -900 -900
FIXED ASSETS - Tangible:
472925
4
465827
2
456311
5
439245
0 7106599
Property, Plant and equipment
472925
4
465827
2
456311
5
439245
0 7106599
Total Assets
591035
3
622378
8
619810
8
640068
8 12454493
CURRENT LIABILITIES 372116
120694
6
126719
8
144228
7 2454761
Current portion of long term financing: 86508 552995 550000 550000 550000
Short term borrowings - secured: 0 308876 236353 375510 1378365
Markup accrued: 13132 69357 59771 48330 33186
Trade and other payables: 272476 275718 421074 468447 493210
Creditors 45651 45969 59763 81766 65997
Accrued liabilities 63425 67119 63470 118828 174692
Retention money 10819 10533 12843 11986 15517
Security deposits 25462 28982 37986 39051 36916
Advances from customers 23121 42444 58744 67770 41344
Workers' (Profit) Participation Fund 0 39949 93562 41483 24413
Workers' Welfare fund 0 0 0 16085 25362
Sales tax payable- net 22304 31300 39235 32599 0
Excise duty payable 58 3537 10264 8582 57629
Other liabilities 81636 5885 9052 40708 45323

Compensated absences 0 0 33990 3626 3686
Unclaimed dividend 0 0 2165 5963 2331
NON - CURRENT LIABILITIES
359910
3
256721
8
164829
4
122319
5 715751
Retention money payables: 0 0 0 0 18129
Deferred tax liability - net: 0 0 215381 339918 363154
Deferred liability 40264 45213 7912 8277 9468
Long term financing:
355883
9
252200
5
142500
1 875000 325000
Loans from banking companies - Secured:
Habib Bank Limited 916667 598485 431818 265152
MCB Bank Limited 916667 598485 431818 265152
United Bank Limited 458333 299243 215909 132576
Bank Al Falah Limited 458333 299243 215909 132576
NIB Bank Limited 0 0 129546 79544
PICIC Commercial Bank Limited 275000 179545 0 0
Loan from related party:
Fauji Foundation- Unsecured 50000 0 0 0
Total Liabilities
397121
9
377416
4
291549
2
266548
2 3170512
Less: amount payable within 12 months
shown under current liabilities -552995 -550000 -550000 -550000
SHARE CAPITAL AND RESERVES
193913
4
244962
4
328261
6
373520
6 9283981
Reserves: 0 0 0 -459216 1864094
Accumulated loss
-
225528
8
-
174479
8 -911806 0 0
Share capital:
419442
2
419442
2
419442
2
419442
2 7419887
Total Liabilities + Owner's Equity
591035
3
622378
8
619810
8
640068
8 12454493

4.4. Income Statement
Income Statement
For the Year Ended June…… RS(000)
2004 2005 2006 2007 2008
Sales
324726
2
392136
2
568345
5
478003
6 4749217
Less: Government Levies -951031
-
107621
9
-
139731
7
-
131675
3
-
1203315
Net Sales
229623
1
284514
3
428613
8
346328
3 3545902
Less: Cost of sales
155540
7
176356
7
209502
7
237178
8 2887790
Raw material Consumed 115164 136819 205751 235379 227413
Packing material consumed 155487 147994 182873 221116 281916
Stores and spares consumed 5285 6573 6052 11171 10914
Spares written off 0 0 18528 931 0
Salaries, wages and benefits 91289 87091 142070 133780 133451
Rent, rates and taxes 952 1378 2562 2213 5284
Insurance 14920 18078 12689 12363 12221
Fuel consumed 564591 699818 843909 979044 1441919
Power consumed 310041 332383 393785 431609 451419
Depreciation 243056 251981 261566 276244 290477
Others 63185 72538 104859 110238 85730
156397
0
175465
3
217464
4
241408
8 2940744
Add: Opening work-in-
process 5817 27761 11624 93671 115221
Less: Closing work-in-
process -27761 -11624 -93671 -115221 -152529
Cost of goods
manufactured
154202
6
177079
0
209259
7
239253
8 2903436
Add: Opening finished goods 31996 18615 25838 23407 44157
Less: Closing finished goods -18615 -25838 -23408 -44157 -46289

155540
7
176356
7
209502
7
237178
8 2901304
Less: Own consumption
capitalized 0 0 0 0 -13514
155540
7
176356
7
209502
7
237178
8 2887790
Gross profit 740824
108157
6
219111
1
109149
5 658112
Other income 42744 11216 43323 73835 107574
Distribution cost: 20416 21333 31694 40645 53383
Export freight and other
charges 0 0 0 0 24482
Traveling and entertainment 1034 1857 1488 705 1127
Vehicle running and
maintenance expenses 0 0 0 2745 1641
Repairs and maintenance 411 872 625 173 288
Printing and stationery 509 640 403 416 545
Depreciation 781 734 1083 1746 2704
Others 4526 4973 5595 12856 2337
Administrative expenses: 39535 42292 66627 71302 76495
Traveling and entertainment 2053 3319 4769 3487 7483
Vehicle running and
maintenance expenses 0 0 0 2385 2145
Insurance 312 356 532 594 602
Repairs and maintenance 711 1110 2304 960 590
Printing and stationery 856 868 1463 1941 1318
Depreciation 1969 3568 3883 5464 9475
Others 10753 9986 13711 8098 7264
Other Operating expenses: 533 40493 94127 58098 34290
Audits' remuneration 533 544 565 530 600
Workers' (Profit)
Participation Fund 0 39949 93562 41483 24413
Workers' Welfare Fund 0 0 0 16085 9277
Finance Cost: 204222 229633 264296 207105 146954
Fee and charges on loans 11615 10564 500 500 500
Interest/mark-up on long
term finance 57324 175784 254030 200642 129928
Interest/mark-up on long
term loan from related party 873 3185 456 0 0
Interest on short term 0 4352 1095 779 11609

borrowings and other
charges
Interest on Workers' Profit
Participation Fund 0 0 2972 93 0
Guarantee commission 111947 32201 483 972 665
Bank charges and
commission 4557 3547 4760 4119 4252
Foreign exchange risk
insurance(FERI) contract 17906 0 0 0 0
Amortization of deferred
cost 762152 0 0 0 0
Net profit before taxation -243290 759041
177769
0 788180 454564
Less: Taxation 557439 -248548 -573951 -141857 -40966
Net profit after taxation 314149 510493
120373
9 646323 413598
4.5 . Balance Sheet (Trend Analysis)
Formula
Trend Analysis (Horizontally)= 100X
BaseYear
rCurrentYea
Trend Analysis (Horizontally= %15.204100
574460
1172765
=X
Balance Sheet (Trend Analysis)
2004 2005 2006 2007 2008
CURRENT ASSETS
100.00
% 204.15% 274.93% 340.06% 921.58%
Cash and bank balances
100.00
% 306.01% 430.06% 214.69% 1919.91%
Deposit accounts 100.00% 407.60% 580.74% 293.17% 2733.41%
Current accounts 100.00% 121.17% 230.95% 94.01% 126.79%
Collection accounts 100.00% 43.97% 0.00% 0.00% 0.00%
Cash in hand 100.00% 485.19% 398.15% 329.63% 479.63%
Advances, Deposits, prepayments and
other receivables:
100.00
% 62.57% 95.59% 1167.06% 469.63%
To suppliers 100.00% 53.31% 92.59% 2395.69% 45.59%
To employees 100.00% 174.39% 365.03% 138.31% 550.78%
Due from associated undertaking –
unsecured 100.00% 99.82% 283.05% 0.00% 0.00%

Deposits 100.00% 113.18% 142.04% 136.71% 436.94%
Prepayments 100.00% 40.68% 93.69% 29.46% 37.39%
Excise duty 100.00% 30.84% 0.00% 0.00% 0.00%
Advance tax –net 100.00% 175.82% 166.06% 295.30%
Sales tax refundable –net 100.00% 0.00% 0.00% 0.00% 2191.81%
Derivative foreign currency options used
as hedging instrument 100.00%
Interest accrued 100.00% 46.07% 251.77% 233.43% 681.75%
Prepaid arrangement fee for loans 100.00% 678.82%
Margin on letters of credit 100.00%
Other receivables- Considered goods 100.00% 1276.74% 439.69% 323.10% 1113.02%
Others 100.00% 0.00% 0.00% 66.72% 15.09%
TRADE DEBTS
100.00
% 239.41% 56.88% 43.67% 60.12%
Unsecured
100.00
% 104.98% 113.46% 67.62% 20.34%
Considered goods 100.00% 105.34% 114.41% 34.89% 0.00%
Considered doubtful 100.00% 100.00% 100.00% 532.74% 309.38%
Secure-considered goods 100.00% 371.96% 0.00% 52.34% 119.55%
Less: Provision for doubtful debts 100.00% 100.00% 100.00% 532.74% 309.38%
STOCK IN TRADE
100.00
% 90.80% 235.54% 297.58% 373.52%
Raw and packing material 100.00% 121.32% 184.00% 157.19% 205.41%
Work in process 100.00% 41.87% 337.42% 415.05% 549.44%
Finished goods 100.00% 138.80% 125.74% 237.21% 248.67%
STORES, SPARES AND LOOSE
TOOLS
100.00
% 182.60% 248.68% 237.47% 459.77%
Stores 100.00% 149.83% 276.30% 86.30% 578.20%
Spares 100.00% 206.65% 236.79% 333.02% 404.46%
Loose tools 100.00% 114.73% 168.79% 175.80% 188.62%
DEFERRED TAX ASSETS – NET
100.00
% 59.14% 0.00% 0.00% 0.00%
LONG TERM DEPOSITS
100.00
% 127.35% 127.35% 127.35% 127.35%
Islamabad Electric Supply Company
Limited 100.00% 100.00% 100.00% 100.00% 100.00%
Sui Northern Gas Pipelines Limited 100.00% 166.74% 166.74% 166.74% 166.74%
LONG TERM ADVANCES –
Considered goods 100.00% 100.00% 90.00% 80.00%
Sui Northern Gas Pipelines Limited 100.00% 90.00%
Less: Amount receivables within 12
months shown under current assets 100.00% 100.00%
FIXED ASSETS – Tangible:
100.00
% 98.50% 96.49% 92.88% 150.27%

Property, Plant and equipment 100.00% 98.50% 96.49% 92.88% 150.27%
Total Assets
100.00
% 105.30% 104.87% 108.30% 210.72%
CURRENT LIABILITIES
100.00
% 324.35% 340.54% 387.59% 659.68%
Current portion of long term financing:
100.00
% 639.24% 635.78% 635.78% 635.78%
Short term borrowings – secured: 100.00% 76.52% 121.57% 446.25%
Markup accrued:
100.00
% 528.15% 455.16% 368.03% 252.71%
Trade and other payables:
100.00
% 101.19% 154.54% 171.92% 181.01%
Creditors 100.00% 100.70% 130.91% 179.11% 144.57%
Accrued liabilities 100.00% 105.82% 100.07% 187.35% 275.43%
Retention money 100.00% 97.36% 118.71% 110.79% 143.42%
Security deposits 100.00% 113.82% 149.19% 153.37% 144.98%
Advances from customers 100.00% 183.57% 254.07% 293.11% 178.82%
Workers’ (Profit) Participation Fund 100.00% 234.20% 103.84% 61.11%
Workers’ Welfare fund 100.00% 157.67%
Sales tax payable- net 100.00% 140.33% 175.91% 146.16% 0.00%
Excise duty payable 100.00% 6098.28% 17696.55%
14796.55
% 99360.34%
Other liabilities 100.00% 7.21% 11.09% 49.87% 55.52%
Compensated absences 100.00% 10.67% 10.84%
Unclaimed dividend 100.00% 275.43% 107.67%
NON – CURRENT LIABILITIES
100.00
% 71.33% 45.80% 33.99% 19.89%
Retention money payables: 100.00%
Deferred tax liability – net: 100.00% 157.82% 168.61%
Deferred liability
100.00
% 112.29% 19.65% 20.56% 23.51%
Long term financing:
100.00
% 70.87% 40.04% 24.59% 9.13%
Loans from banking companies –
Secured:
Habib Bank Limited 100.00% 65.29% 47.11% 28.93%
MCB Bank Limited 100.00% 65.29% 47.11% 28.93%
United Bank Limited 100.00% 65.29% 47.11% 28.93%
Bank Al Falah Limited 100.00% 65.29% 47.11% 28.93%
NIB Bank Limited 100.00% 61.40%
PICIC Commercial Bank Limited 100.00% 65.29% 0.00% 0.00%
Fauji Foundation- Unsecured 100.00% 0.00% 0.00% 0.00%

Less: amount payable within 12 months
shown under current liabilities 100.00% 99.46% 99.46% 99.46%
100.00
% 126.33% 169.28% 192.62% 478.77%
Reserves: 100.00% -405.93%
Accumulated loss
100.00
% 77.36% 40.43% 0.00% 0.00%
Share capital:
100.00
% 100.00% 100.00% 100.00% 176.90%
Total Liabilities + Owner’s Equity
100.00
% 105.30% 104.87% 108.30% 210.72%
4.6. Balance Sheet (Vertical Analysis)
Formula
Common Size Statement(Vertically)= 100
.
X
TotalAsset
Item
Example:- Vertical Analysis = %72.9100
5910353
574460
=X

Balance Sheet (Vertical Analysis)
2004 2005 2006 2007 2008
CURRENT ASSETS 9.72% 18.84% 25.48% 30.52% 42.51%
Cash and bank balances 3.33% 9.69% 13.67% 6.61% 30.38%
Deposit accounts 2.33% 9.00% 12.88% 6.29% 30.16%
Current accounts 0.36% 0.42% 0.79% 0.31% 0.22%
Collection accounts 0.65% 0.27% 0.00% 0.00% 0.00%
Cash in hand 0.00% 0.00% 0.00% 0.00% 0.00%
Advances, Deposits, prepayments
and other receivables: 1.24% 0.74% 1.13% 13.42% 2.77%
To suppliers 0.58% 0.29% 0.51% 12.74% 0.12%
To employees 0.01% 0.01% 0.03% 0.01% 0.02%
Due from associated undertaking –
unsecured 0.02% 0.02% 0.05% 0.00% 0.00%
Deposits 0.02% 0.02% 0.03% 0.03% 0.05%
Prepayments 0.18% 0.07% 0.16% 0.05% 0.03%
Excise duty 0.17% 0.05% 0.00% 0.00% 0.00%
Advance tax -net 0.00% 0.13% 0.22% 0.20% 0.19%
Sales tax refundable -net 0.06% 0.00% 0.00% 0.00% 0.66%
Derivative foreign currency options
used as hedging instrument 0.00% 0.00% 0.00% 0.00% 0.68%
Interest accrued 0.04% 0.02% 0.09% 0.08% 0.12%
Prepaid arrangement fee for loans 0.00% 0.00% 0.00% 0.17% 0.60%
Margin on letters of credit 0.00% 0.00% 0.00% 0.00% 0.24%
Other receivables- Considered goods 0.01% 0.13% 0.05% 0.03% 0.06%
Others 0.16% 0.00% 0.00% 0.10% 0.01%
TRADE DEBTS 0.76% 1.72% 0.41% 0.31% 0.22%
Unsecured 0.40% 0.40% 0.44% 0.25% 0.04%
Considered doubtful 0.03% 0.03% 0.03% 0.13% 0.04%
Secure-considered goods 0.38% 1.35% 0.00% 0.18% 0.22%
Less: Provision for doubtful debts -0.03% -0.03% -0.03% -0.13% -0.04%
STOCK IN TRADE 1.04% 0.90% 2.34% 2.86% 1.85%
Raw and packing material 0.26% 0.30% 0.45% 0.37% 0.25%
Work in process 0.47% 0.19% 1.51% 1.80% 1.22%
Finished goods 0.31% 0.42% 0.38% 0.69% 0.37%
STORES, SPARES AND LOOSE
TOOLS 3.34% 5.79% 7.92% 7.32% 7.29%
Stores 1.22% 1.73% 3.20% 0.97% 3.34%
Spares 2.00% 3.93% 4.52% 6.16% 3.84%

Loose tools 0.12% 0.13% 0.20% 0.20% 0.11%
DEFERRED TAX ASSETS - NET 9.64% 5.42% 0.00% 0.00% 0.00%
LONG TERM DEPOSITS 0.62% 0.75% 0.75% 0.73% 0.37%
Islamabad Electric Supply Company
Limited 0.37% 0.35% 0.35% 0.34% 0.17%
LONG TERM ADVANCES -
Less: Amount receivables within 12
months shown under current assets 0.00% 0.00% 0.00% -0.01% -0.01%
FIXED ASSETS - Tangible: 80.02% 74.85% 73.62% 68.62% 57.06%
Property, Plant and equipment 80.02% 74.85% 73.62% 68.62% 57.06%
Total Assets
100.00
%
100.00
%
100.00
%
100.00
% 100.00%
CURRENT LIABILITIES 6.30% 19.39% 20.44% 22.53% 19.71%
Current portion of long term
financing: 1.46% 8.89% 8.87% 8.59% 4.42%
Short term borrowings - secured: 0.00% 4.96% 3.81% 5.87% 11.07%
Markup accrued: 0.22% 1.11% 0.96% 0.76% 0.27%
Trade and other payables: 4.61% 4.43% 6.79% 7.32% 3.96%
Creditors 0.77% 0.74% 0.96% 1.28% 0.53%
Accrued liabilities 1.07% 1.08% 1.02% 1.86% 1.40%
Retention money 0.18% 0.17% 0.21% 0.19% 0.12%
Security deposits 0.43% 0.47% 0.61% 0.61% 0.30%
Advances from customers 0.39% 0.68% 0.95% 1.06% 0.33%
Workers' (Profit) Participation Fund 0.00% 0.64% 1.51% 0.65% 0.20%
Workers' Welfare fund 0.00% 0.00% 0.00% 0.25% 0.20%
Sales tax payable- net 0.38% 0.50% 0.63% 0.51% 0.00%
Excise duty payable 0.00% 0.06% 0.17% 0.13% 0.46%
Other liabilities 1.38% 0.09% 0.15% 0.64% 0.36%
Compensated absences 0.00% 0.00% 0.55% 0.06% 0.03%
Unclaimed dividend 0.00% 0.00% 0.03% 0.09% 0.02%
NON - CURRENT LIABILITIES 60.89% 41.25% 26.59% 19.11% 5.75%
Retention money payables: 0.00% 0.00% 0.00% 0.00% 0.15%
Deferred tax liability - net: 0.00% 0.00% 3.47% 5.31% 2.92%
Deferred liability 0.68% 0.73% 0.13% 0.13% 0.08%
Long term financing: 60.21% 40.52% 22.99% 13.67% 2.61%
Loans from banking companies -
Secured:
Habib Bank Limited 0.00% 14.73% 9.66% 6.75% 2.13%
MCB Bank Limited 0.00% 14.73% 9.66% 6.75% 2.13%
United Bank Limited 0.00% 7.36% 4.83% 3.37% 1.06%

Bank Al Falah Limited 0.00% 7.36% 4.83% 3.37% 1.06%
NIB Bank Limited 0.00% 0.00% 0.00% 2.02% 0.64%
PICIC Commercial Bank Limited 0.00% 4.42% 2.90% 0.00% 0.00%
Fauji Foundation- Unsecured 0.00% 0.80% 0.00% 0.00% 0.00%
Less: amount payable within 12
months shown under current liabilities 0.00% -8.89% -8.87% -8.59% -4.42%
SHARE CAPITAL AND
RESERVES 32.81% 39.36% 52.96% 58.36% 74.54%
Reserves: 0.00% 0.00% 0.00% -7.17% 14.97%
Accumulated loss -38.16% -28.03% -14.71% 0.00% 0.00%
Share capital: 70.97% 67.39% 67.67% 65.53% 59.58%
Total Liabilities + Owner's Equity
100.00
%
100.00
%
100.00
%
100.00
% 100.00%
4.7. Income Statement (Trend Analysis)
Income Statement (Trend Analysis)

2004 2005 2006 2007 2008
Sales 100.00% 120.76% 175.02% 147.20% 146.25%
Less: Government Levies 100.00% 113.16% 146.93% 138.46% 126.53%
Net Sales
100.00
% 123.90% 186.66% 150.82% 154.42%
Cost of sales
100.00
% 113.38% 134.69% 152.49% 185.66%
Raw material Consumed 100.00% 118.80% 178.66% 204.39% 197.47%
Packing material consumed 100.00% 95.18% 117.61% 142.21% 181.31%
Stores and spares consumed 100.00% 124.37% 114.51% 211.37% 206.51%
Spares written off 100.00% 5.02% 0.00%
Salaries, wages and benefits 100.00% 95.40% 155.63% 146.55% 146.19%
Rent, rates and taxes 100.00% 144.75% 269.12% 232.46% 555.04%
Insurance 100.00% 121.17% 85.05% 82.86% 81.91%
Fuel consumed 100.00% 123.95% 149.47% 173.41% 255.39%
Power consumed 100.00% 107.21% 127.01% 139.21% 145.60%
Depreciation 100.00% 103.67% 107.62% 113.65% 119.51%
Others 100.00% 114.80% 165.96% 174.47% 135.68%
100.00% 112.19% 139.05% 154.36% 188.03%
Add: Opening work-in-process 100.00% 477.24% 199.83% 1610.30% 1980.76%
Less: Closing work-in-process 100.00% 41.87% 337.42% 415.05% 549.44%
Cost of goods manufactured
100.00
% 114.84% 135.70% 155.16% 188.29%
Add: Opening finished goods 100.00% 58.18% 80.75% 73.16% 138.01%
Less: Closing finished goods 100.00% 138.80% 125.75% 237.21% 248.67%
100.00% 113.38% 134.69% 152.49% 186.53%
Less: Own consumption
capitalized 100.00%
100.00% 113.38% 134.69% 152.49% 185.66%
Gross profit
100.00
% 146.00% 295.77% 147.34% 88.84%
Other income
100.00
% 26.24% 101.35% 172.74% 251.67%
Distribution cost:
100.00
% 104.49% 155.24% 199.08% 261.48%
Export freight and other charges 100.00%
Traveling and entertainment 100.00% 179.59% 143.91% 68.18% 108.99%
Vehicle running and maintenance
expenses 100.00% 59.78%
Repairs and maintenance 100.00% 212.17% 152.07% 42.09% 70.07%
Printing and stationery 100.00% 125.74% 79.17% 81.73% 107.07%
Depreciation 100.00% 93.98% 138.67% 223.56% 346.22%

Others 100.00% 109.88% 123.62% 284.05% 51.63%
Administrative expenses:
100.00
% 106.97% 168.53% 180.35% 193.49%
expenses 100.00% 89.94%
Insurance 100.00% 114.10% 170.51% 190.38% 192.95%
Depreciation 100.00% 181.21% 197.21% 277.50% 481.21%
Others 100.00% 92.87% 127.51% 75.31% 67.55%
Other Operating expenses:
100.00
%
7597.19
%
17659.85
%
10900.19
% 6433.40%
Audits' remuneration 100.00% 102.06% 106.00% 99.44% 112.57%
Workers' (Profit) Participation
Fund 100.00% 234.20% 103.84% 61.11%
Workers' Welfare Fund 100.00% 57.67%
Finance Cost:
100.00
% 112.44% 129.42% 101.41% 71.96%
Fee and charges on loans 100.00% 90.95% 4.30% 4.30% 4.30%
Interest/mark-up on long term
finance 100.00% 306.65% 443.15% 350.01% 226.66%
Interest/mark-up on long term loan
from related party 100.00% 364.83% 52.23% 0.00% 0.00%
Interest on short term borrowings
and other charges 100.00% 25.16% 17.90% 266.75%
Participation Fund 100.00% 3.13% 0.00%
Guarantee commission 100.00% 28.76% 0.43% 0.87% 0.59%
Bank charges and commission 100.00% 77.84% 104.45% 90.39% 93.31%
insurance(FERI) contract 100.00% 0.00% 0.00% 0.00% 0.00%
Amortization of deferred cost
100.00
% 0.00% 0.00% 0.00% 0.00%
Net profit before taxation
100.00
% -311.99% -730.69% -323.97% -186.84%
Less: Taxation 100.00% -44.59% -102.96% -25.45% -7.35%
Net profit after taxation
100.00
% 162.50% 383.17% 205.74% 131.66%

4.8. Income Statement (Vertical Analysis)
Income Statement (Vertical Analysis)
2004 2005 2006 2007 2008
Sales
100.00
%
100.00
%
100.00
%
100.00
% 100.00%
Less: Government Levies -29.29% -27.45% -24.59% -27.55% -25.34%
Net Sales 70.71% 72.55% 75.41% 72.45% 74.66%
Less: Cost of sales 47.90% 44.97% 36.86% 49.62% 60.81%
Raw material Consumed 3.55% 3.49% 3.62% 4.92% 4.79%
Packing material consumed 4.79% 3.77% 3.22% 4.63% 5.94%
Stores and spares consumed 0.16% 0.17% 0.11% 0.23% 0.23%
Spares written off 0.00% 0.00% 0.33% 0.02% 0.00%
Insurance 0.46% 0.46% 0.22% 0.26% 0.26%
Fuel consumed 17.39% 17.85% 14.85% 20.48% 30.36%
Power consumed 9.55% 8.48% 6.93% 9.03% 9.51%
Depreciation 7.48% 6.43% 4.60% 5.78% 6.12%
Others 1.95% 1.85% 1.84% 2.31% 1.81%
48.16% 44.75% 38.26% 50.50% 61.92%
Add: Opening work-in-process 0.18% 0.71% 0.20% 1.96% 2.43%
Less: Closing work-in-process -0.85% -0.30% -1.65% -2.41% -3.21%
Cost of goods manufactured 47.49% 45.16% 36.82% 50.05% 61.14%
Add: Opening finished goods 0.99% 0.47% 0.45% 0.49% 0.93%
Less: Closing finished goods -0.57% -0.66% -0.41% -0.92% -0.97%
47.90% 44.97% 36.86% 49.62% 61.09%
Less: Own consumption capitalized 0.00% 0.00% 0.00% 0.00% -0.28%
47.90% 44.97% 36.86% 49.62% 60.81%
Gross profit 22.81% 27.58% 38.55% 22.83% 13.86%
Other income 1.32% 0.29% 0.76% 1.54% 2.27%
Distribution cost: 0.63% 0.54% 0.56% 0.85% 1.12%
Export freight and other charges 0.00% 0.00% 0.00% 0.00% 0.52%

expenses 0.00% 0.00% 0.00% 0.06% 0.03%
Depreciation 0.02% 0.02% 0.02% 0.04% 0.06%
Others 0.14% 0.13% 0.10% 0.27% 0.05%
Administrative expenses: 1.22% 1.08% 1.17% 1.49% 1.61%
expenses 0.00% 0.00% 0.00% 0.05% 0.05%
Insurance 0.01% 0.01% 0.01% 0.01% 0.01%
Depreciation 0.06% 0.09% 0.07% 0.11% 0.20%
Others 0.33% 0.25% 0.24% 0.17% 0.15%
Other Operating expenses: 0.02% 1.03% 1.66% 1.22% 0.72%
Audits' remuneration 0.02% 0.01% 0.01% 0.01% 0.01%
Workers' (Profit) Participation Fund 0.00% 1.02% 1.65% 0.87% 0.51%
Workers' Welfare Fund 0.00% 0.00% 0.00% 0.34% 0.20%
Finance Cost: 6.29% 5.86% 4.65% 4.33% 3.09%
Fee and charges on loans 0.36% 0.27% 0.01% 0.01% 0.01%
Interest/mark-up on long term
finance 1.77% 4.48% 4.47% 4.20% 2.74%
Interest/mark-up on long term loan
from related party 0.03% 0.08% 0.01% 0.00% 0.00%
Interest on short term borrowings
and other charges 0.00% 0.11% 0.02% 0.02% 0.24%
Participation Fund 0.00% 0.00% 0.05% 0.00% 0.00%
Guarantee commission 3.45% 0.82% 0.01% 0.02% 0.01%
Bank charges and commission 0.14% 0.09% 0.08% 0.09% 0.09%
insurance(FERI) contract 0.55% 0.00% 0.00% 0.00% 0.00%
Amortization of deferred cost 23.47% 0.00% 0.00% 0.00% 0.00%
Net profit before taxation -7.49% 19.36% 31.28% 16.49% 9.57%
Less: Taxation 17.17% -6.34% -10.10% -2.97% -0.86%
Net profit after taxation 9.67% 13.02% 21.18% 13.52% 8.71%

4.9. Ratio Analysis
4.9.1. Liquidity Ratio
Current ratio =
bilitiesCurrentLia
etsCurrentAss
Liquidity Ratio Analysis
2004 2005 2006 2007 2008
CURRENT RATIO 1.54 0.97 1.25 1.35 2.16
CURRENT ASSETS 574460 1172765 1579382 1953527 5294083
CURRENT LIABILITIES 372116 1206946 1267198 1442287 2454761
liquidity Ratio
1.54
0.97
1.25
1.35
2.16
0.00
0.50
1.00
1.50
2.00
2.50
2004 2005 2006 2007 2008
Years
Ratios
Current Ratio
The amount of Current Assets in the year 2004 was Rs.574460 and the amount of current
liabilities in the first year 2004 was Rs.372116 and current ratio was 1.54 in the year 2004.

And the amount current assets increases to Rs.1172765 in the year 2005 with an increment of
Rs.598305 and the amount of current liabilities becomes Rs.1206946 in the year 2005 with
increment of Rs.834830 and current ratio becomes 0.97 in the year 2005.
And the amount of current assets increases to Rs.1579382 in the year 2006 with an increment
of Rs.406617 and the amount current liabilities becomes Rs.1267198 in the year 2006 with
increment of Rs.60252 and the current ratio becomes 1.25 in the year 2006.
The amount of current assets increases to Rs.1953527 in the year 2007 with an increment of
increment of Rs.175089 and current ratio becomes 1.35 in the year 2007.
of Rs.3340556 and the amount of current liabilities becomes Rs.2454761 in the year 2008 with
increment of Rs.1012474 and the current ratio becomes 2.16 in the year 2008.
Net Working Capital = current assets – current liabilities
Liquidity Ratios Analysis
2004 2005 2006 2007 2008
Net Working Capital 202344 -34181 312184 511240 2839322
CURRENT ASSETS 574460 1172765 1579382 1953527 5294083

Liquidity Ratio
202344
-34181
312184
511240
2839322
-500000
0
500000
1000000
1500000
2000000
2500000
3000000
2004 2005 2006 2007 2008
Years
NetWorkingCaptical
Net Working Capital
liabilities in the first year 2004 was Rs.372116 and Net Working Capital was 202344 in the
year 2004.
increment of Rs.834830 and Net Working Capital becomes -34181 in the year 2005.
increment of Rs.60252 and the Net Working Capital becomes 312184 in the year 2006.
increment of Rs.175089 and Net Working Capital becomes 511240 in the year 2007.
increment of Rs.1012474 and the Net Working Capital becomes 2839322 in the year 2008.
Acid ratio =
bilitiesCurrentLia
InventoryetCurrentAss )( −

2004 2005 2006 2007 2008
Acid Ratio 1.38 0.93 1.13 1.23 2.06
CURRENT ASSETS 574460 1172765 1579382 1953527 5294083
STOCK IN TRADE 61600 55931 145090 183309 230089
CURRENT IABILITIES 372116 1206946 1267198 1442287 2454761
Liquidity Ratio
1.38
0.93
1.13
1.23
2.06
0.00
0.50
1.00
1.50
2.00
2.50
2004 2005 2006 2007 2008
Years
Ratio
Acid Ratio
liabilities in the first year 2004 was Rs.372116 and the amount of Stock In Trade in the first
year 2004 was Rs.61600 due to witch the Acid Ratio becomes 1.38 in the year 2004
increment of Rs.834830 and the amount of Stock In Trade decreases to Rs.55931 in the year
2005 with decrement of Rs.5669 and the Acid Ratio becomes 0.93 in 2005.
increment of Rs.60252 and the amount of Stock In Trade increases to Rs.145090 in the year
2006 with increment of Rs.55931 and the Acid Ratio becomes 1.13 in 2006.
The amount of current assets increases to Rs.1953527 in the year 2007 with an increment of

increment of Rs.175089 and the amount of Stock In Trade becomes Rs.183309 in the year
2007 with increment of Rs.38219 and the Acid Ratio becomes 1.23 in 2007.
increment of Rs.1012474 and the amount of Stock In Trade becomes Rs.230089 in the year
2008 with increment of Rs.46780 and Acid Ratio becomes 2.06 in 2008.
Cash ratio =
bilitiescurrentlia
uritiesmarketablentcashequilecash )sec&( +
2004 2005 2006 2007 2008
Cash Ratio 0.53 0.50 0.67 0.29 1.54
Cash and bank balances 197088 603110 847590 423133 3783909
Liquidity Ratio
0.53 0.50
0.67
0.29
1.54
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2004 2005 2006 2007 2008
Years
Ratio
Cash Ratio
The amount of Cash and bank balances in the year 2004 was Rs.197088 and the amount of
current liabilities in the first year 2004 was Rs.372116 due to which the Cash Ratio becomes
0.53 in the year 2004.

And the amount of Cash and bank balances increases to Rs.603110 in the year 2005 with an
increment of Rs.406022 and the amount of current liabilities becomes Rs.1206946 in the year
2005 with increment of Rs.834830 and Cash Ratio becomes 0.50 in the year 2005.
increment of Rs.244480 and the amount current liabilities becomes Rs.1267198 in the year
2006 with an increment of Rs.60252 and the Cash Ratio becomes 0.67 in the year 2006.
The amount of Cash and bank balances decreases to Rs.423133 in the year 2007 with
decrement of Rs.424457 and the amount of current liabilities becomes Rs.1442287 in the year
2007 with an increment of Rs.175089 and Cash Ratio becomes 0.29 in the year 2007.
increment of Rs.3360776 and the amount of current liabilities becomes Rs.2454761 in the year
2008 with an increment of Rs.1012474 and the Cash Ratio becomes 1.54 in the year 2008.
4.9.2. Long Term Liquidity / Long Term Debt Paying Ability
Debt/equity ratio = sequityrshareholde
litiestotalliabi
'
2004 2005 2006 2007 2008
Debt/Equity Ratio 3.05 2.54 1.89 1.71 1.34
Total Liabilities 5910353 6223788 6198108 6400688 12454493
SHARE CAPITAL AND
RESERVES 1939134 2449624 3282616 3735206 9283981

Debt Ratio
3.05
2.54
1.89
1.71
1.34
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2004 2005 2006 2007 2008
Years
Ratios
Debt/Equity Ratio
The amount of Total liabilities in the first year 2004 was Rs.5910353 and the amount of
SHARE CAPITAL AND RESERVES was Rs.1939134 due to which Debt/Equity Ratio
becomes 3.05 in the year 2004.
And the amount of Total liabilities becomes Rs.6223788 in the year 2005 with an increment of
Rs.313435 and the amount of SHARE CAPITAL AND RESERVES becomes Rs.2449624 in
the year 2005 with an increment of Rs.510490 and the Debt/Equity Ratio becomes 2.54 in the
year 2005.
And the amount of Total liabilities becomes Rs.6198108 in the year 2006 with decrement of
year 2006.
year 2007.
And the amount of Total liabilities becomes Rs.12454493 in the year 2008 with an increment
of Rs.6053805 and the amount of SHARE CAPITAL AND RESERVES becomes Rs.9283981
in the year 2008 with an increment of Rs.5548775 and the Debt/Equity Ratio becomes 1.34 in
the year 2008.

Debt to tangible net worth =
)int'( etsangibleasssequityrshareholde
litiestotalliabi
−
2004 2005 2006 2007 2008
Debt to tangible net worth 3.05 2.54 1.89 1.71 1.34
Total Liabilities
591035
3 6223788
619810
8
640068
8 12454493
SHARE CAPITALAND RESERVES
193913
4 2449624
328261
6
373520
6 9283981
Intangible assets 0 0 0 0 0
Debt Ratio
3.05
2.54
1.89
1.71
1.34
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2004 2005 2006 2007 2008
Years
Ratios
Debt to tangible net worth
The amount of Total liabilities in the first year 2004 was Rs.5910353 and the amount of
SHARE CAPITAL AND RESERVES was Rs.1939134 due to which Debt/Equity Ratio
becomes 3.05 in the year 2004.
year 2005.

And the amount of Total liabilities becomes Rs.6198108 in the year 2006 with decrement of
year 2006.
year 2007.
And the amount of Total liabilities becomes Rs.12454493 in the year 2008 with an increment
of Rs.6053805 and the amount of SHARE CAPITAL AND RESERVES becomes Rs.9283981
in the year 2008 with an increment of Rs.5548775 and the Debt/Equity Ratio becomes 1.34 in
the year 2008.
4.9.3. Activity Ratio
Day’s Sales in account receivable = )365/(netsales
eceivablessaccountraveragegro
2004 2005 2006 2007 2008
Day's Sales in account receivable 7.12 13.76 2.17 2.06 2.77
TRADE DEBTS 44789 107231 25475 19558 26927
Net Sales 2296231 2845143 4286138 3463283 3545902

Activity Ratio
7.12
13.76
2.17 2.06
2.77
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2004 2005 2006 2007 2008
Years
Ratios
Day's Sales in account receivable
The amount of Trade debts in the year 2004 was Rs.44789 and the amount of Net Sales in the
first year 2004 was Rs.2296231 and the Day's Sales in account receivable becomes 7.12 in the
year 2004.
And the amount Trade debts increases to Rs.107231 in the year 2005 with an increment of
Rs.62442 and the amount of Net Sales becomes Rs.2845143 in the year 2005 with increment
of Rs.548912 and the Day's Sales in account receivable becomes 13.76 in the year 2005.
And the amount Trade debts decreases to Rs.25475 in the year 2006 with decrement of
Rs.81756 and the amount of Net Sales becomes Rs.4286138 in the year 2006 with increment of
Rs.1440995 and the Day's Sales in account receivable becomes 2.17 in the year 2006.
Rs.5917 and the amount of Net Sales becomes Rs.3463283 in the year 2007 with decrement of
Rs.8228885 and the Day's Sales in account receivable becomes 2.06 in the year 2007.
And the amount Trade debts increases to Rs.26927 in the year 2008 with increment of Rs.7369
and the amount of Net Sales becomes Rs.3545902 in the year 2008 with increment of Rs.82619
and the Day's Sales in account receivable becomes 2.77 in the year 2008.
Account receivable turn over= ablesountreceivaverageacc
netsales

2004 2005 2006 2007 2008
Account Receivable Turn Over 51.27 26.53 168.25 177.08 131.69
Net Sales 2296231
284514
3
428613
8
346328
3 3545902
TRADE DEBTS 44789 107231 25475 19558 26927
Activity Ratio
51.27
26.53
168.25
177.08
131.69
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
2004 2005 2006 2007 2008
Years
Ratios
Account Receivable Turn Over
The amount of Trade debts in the year 2004 was Rs.44789 and the amount of Net Sales in the
first year 2004 was Rs.2296231 and the Account Receivable Turn Over becomes 5.27 in the
year 2004.
And the amount Trade debts increases to Rs.107231 in the year 2005 with an increment of
of Rs.548912 and the Account Receivable Turn Over becomes 26.53 in the year 2005.
Rs.81756 and the amount of Net Sales becomes Rs.4286138 in the year 2006 with increment of
Rs.1440995 and the Account Receivable Turn Over becomes 168.25 in the year 2006.
Rs.5917 and the amount of Net Sales becomes Rs.3463283 in the year 2007 with decrement of
Rs.8228885 and the Account Receivable Turn Over becomes 177.08 in the year 2007.
And the amount Trade debts increases to Rs.26927 in the year 2008 with increment of Rs.7369
and the amount of Net Sales becomes Rs.3545902 in the year 2008 with increment of Rs.82619
and the Account Receivable Turn Over becomes 131.69 in the year 2008.

Day’s sales in inventory = )365/(CGS
ntiryendinginve
2004 2005 2006 2007 2008
Day's sales in inventory 14.46 11.58 25.28 28.21 29.08
STOCK IN TRADE 61600 55931 145090 183309 230089
Cost of sales 1555407 1763567 2095027
237178
8 2887790
Activity Ratio
14.46
11.58
25.28
28.21 29.08
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2004 2005 2006 2007 2008
Years
Ratios
Day's sales in inventory
The amount of Stock In trade in the year 2004 was Rzs.61600 and the amount of Cost of sales
in the first year 2004 was Rs.1555407 and the Day's sale in inventory was 14.46 in the year
2004.
And the amount Stock in trade decreases to Rs.55931 in the year 2005 with decrement of
Rs.5669 and the amount of Cost of sales becomes Rs.1763567 in the year 2005 with an
increment of Rs.208160 and the Day's sale in inventory becomes 11.58 in the year 2005.
And the amount Stock in trade increases to Rs.145090 in the year 2006 with an increment of

Inventory turn over = entoryaverageinv
CGS
2004 2005 2006 2007 2008
Inventory turnover 61.46 79.34 85.08 70.21 63.86
Cost of sales 1555407 1763567 2095027 2371788 2887790
STOCK IN TRADE 61600 55931 145090 183309 230089
Activity Ratio
61.46
79.34
85.08
70.21
63.86
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2004 2005 2006 2007 2008
Years
Ratios
Inventory turnover
The amount of Stock In trade in the year 2004 was Rs.61600 and the amount of Cost of sales in
the first year 2004 was Rs.1555407 and the Inventory turnover was 61.46 in the year 2004.
And the amount Stock in trade decreases to Rs.55931 in the year 2005 with decrement of
increment of Rs.208160 and the Inventory turnover becomes 79.34 in the year 2005.

increment of Rs.516002 and the Inventory turnover becomes 63.86 in the year 2008
Total asset turn over = alassetsaveragetot
netsales
2004 2005 2006 2007 2008
Total asset turnover 0.39 0.46 0.69 0.54 0.28
Net Sales 2296231 2845143 4286138 3463283 3545902
Total Assets 5910353 6223788 6198108 6400688 12454493
ActivityRatio
0.39
0.46
0.69
0.54
0.28
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2004 2005 2006 2007 2008
Years
Ratios
Total asset turnover
The amount of Net Sales in the year 2004 was Rs.2296231 and the amount of Total Assets in
the first year 2004 was Rs.5910353 and Total asset turnover was 0.39 in the year 2004.
And the amount Net Sales increases to Rs.2845143 in the year 2005 with an increment of
Rs.548912 and the amount of Total Assets becomes Rs.6223788 in the year 2005 with
increment of Rs.313435 and Total asset turnover becomes 0.46 in the year 2005.
decrement of Rs.25680 and Total asset turnover becomes 0.69 in the year 2006.
And the amount Net Sales decreases to Rs.3463283 in the year 2007 with decrement of

4.9.4. Profitability
Gross profit margin =
netsales
tgrossprofi
2004 2005 2006 2007 2008
Gross profit margin (%) 32.26% 38.01% 51.12% 31.52% 18.56%
Gross profit 740824 1081576 2191111 1091495 658112
Net Sales 2296231 2845143 4286138 3463283 3545902
Profitability Ratio
32.26%
38.01%
51.12%
31.52%
18.56%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
2004 2005 2006 2007 2008
Years
Ratios
Gross profit margin
The amount of Gross Profit in the year 2004 was Rs.740824 and the amount of Net Sales in the
first year 2004 was Rs.2296231 and Gross Profit Margin was 32.26% in the year 2004.
And the amount of Gross Profit increases to Rs.1081576 in the year 2005 with an increment of
of Rs.548912 and the Gross Profit Margin becomes 38.01% in the year 2005.
And the amount of Gross Profit increases to Rs.2191111 in the year 2006 with an increment of

And the amount of Gross Profit decreases to Rs.1091495 in the year 2007 with decrement of
Rs.1099616 and the amount of Net Sales becomes Rs.3463283 in the year 2007 with
decrement of Rs.822855 and the Gross Profit Margin becomes 31.52% in the year 2007.
And the amount of Gross Profit decreases to Rs.658112 in the year 2008 with decrement of
Operating income margin =
netsales
ncomeoperatingi
2004 2005 2006 2007 2008
Operating income margin (%) 1.70% 34.75% 47.64% 28.74% 16.96%
Operating Profit 39068 988673 2041984 995285 601518
Net Sales 2296231 2845143 4286138
346328
3 3545902
Profitability ratio
1.70%
34.75%
47.64%
28.74%
16.96%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
2004 2005 2006 2007 2008
Years
Ratios
Operating income margin
The amount of Operating Profit in the year 2004 was Rs.39068 and the amount of Net Sales in
the first year 2004 was Rs.2296231 and Operating Income Margin was 1.70% in the year 2004.
And the amount of Operating Profit increases to Rs.988673 in the year 2005 with an increment
of Rs.949605 and the amount of Net Sales becomes Rs.2845143 in the year 2005 with
increment of Rs.548912 and the Operating Income Margin becomes 34.75% in the year 2005.

And the amount of Operating Profit increases to Rs.2041984 in the year 2006 with an
increment of Rs.1053311 and the amount of Net Sales becomes Rs.4286138 in the year 2006
with increment of Rs.1440995 and the Operating Income Margin becomes 47.64% in the year
2006.
And the amount of Operating Profit decreases to Rs.995285 in the year 2007 with decrement of
Rs.1046699 and the amount of Net Sales becomes Rs.3463283 in the year 2007 with
decrement of Rs.822855 and the Operating Income Margin becomes 28.74% in the year 2007.
And the amount of Operating Profit decreases to Rs.601518 in the year 2008 with decrement of
of Rs.82619 and the Operating Income Margin becomes 16.96% in the year 2008
Net profit margin =
netsales
netincome
2004 2005 2006 2007 2008
Net profit margin 13.68% 17.94% 28.08% 18.66% 11.66%
Net profit after taxation 314149 510493 1203739 646323 413598
Net Sales 2296231 2845143 4286138
346328
3 3545902

Profitability Ratio
13.68%
17.94%
28.08%
18.66%
11.66%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2004 2005 2006 2007 2008
Years
Ratios
Net profit margin
The amount of Net Profit after taxation in the year 2004 was Rs.314149 and the amount of Net
Sales in the first year 2004 was Rs.2296231 and Net Profit Margin was 13.68% in the year
2004.
And the amount of Net profit after taxation increases to Rs.510493 in the year 2005 with an
with increment of Rs.548912 and the Net Profit Margin becomes 17.94% in the year 2005.
with increment of Rs.1440995 and the Net Profit Margin becomes 28.08% in the year 2006.
And the amount of Net profit after taxation decreases to Rs.646323 in the year 2007 with
decrement of Rs.557416 and the amount of Net Sales becomes Rs.3463283 in the year 2007
with decrement of Rs.822855 and the Net Profit Margin becomes 18.66% in the year 2007.
decrement of Rs.232725 and the amount of Net Sales becomes Rs.3545902 in the year 2008
with increment of Rs.82619 and the Net Profit Margin becomes 11.66% in the year 2008
Return on asset = alassetsaveragetot
netincome

Ratio Analysis
2004 2005 2006 2007 2008
Return on asset (%) 5.32% 8.20% 19.42% 10.10% 3.32%
Total Assets 5910353 6223788 6198108 6400688 12454493
Profitability Ratio
5.32%
8.20%
19.42%
10.10%
3.32%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2004 2005 2006 2007 2008
Years
Ratios
Return on asset
The amount of Net Profit after taxation in the year 2004 was Rs.314149 and the amount of
Total Assets in the first year 2004 was Rs.5910353 and the Return on asset was 5.32% in the
year 2004.
increment of Rs.196344 and the amount of Total Assets becomes Rs.6223788 in the year 2005
with increment of Rs.313435 and the Return on asset becomes 8.20% in the year 2005.
increment of Rs.693246 and the amount of Total Assets becomes Rs.6198108 in the year 2006
with decrement of Rs.25680 and the Return on asset becomes 19.42% in the year 2006.
decrement of Rs.557416 and the amount of Total Assets becomes Rs.6400688 in the year 2007
with increment of Rs.202580 and the Return on asset becomes 10.10% in the year 2007.
decrement of Rs.232725 and the amount of Total Assets becomes Rs.12454493 in the year
2008 with increment of Rs.6053805 and the Return on asset becomes 3.32% in the year 2008

Return on sales to fixed assets = etsalfixedassaveragetot
netsales
Ratio Analysis
2004 2005 2006 2007 2008
Return on Sales to fixed assets 0.49 0.61 0.94 0.79 0.50
Net Sales 2296231 2845143 4286138
346328
3 3545902
FIXED ASSETS - Tangible 4729254 4658272 4563115
439245
0 7106599
Profitability Ratio
0.49
0.61
0.94
0.79
0.50
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
2004 2005 2006 2007 2008
Years
Ratios
Return on Sales to fixed assets
The amount of Net Sales in the year 2004 was Rs.2296231 and the amount of Fixed Assets in
the first year 2004 was Rs.4729254 and the Return on Sales to fixed assets was 0.49 in the year
2004.
Rs.548912 and the amount of Fixed Assets becomes Rs.4658272 in the year 2005 with
decrement of Rs.70982 and the Return on Sales to fixed assets becomes 0.61 in the year 2005.
And the amount Net Sales decreases to Rs.3463283 in the year 2007 with decrement of

increment of Rs.2714149 and the Return on Sales to fixed assets becomes 0.50 in the year
2008
Return on total equity = alequityaveragetot
ndtockdividepreferredsredeemablenetincome −
Ratio Analysis
2004 2005 2006 2007 2008
Return on total equity 16.20% 20.84% 36.67% 17.30% 4.45%
193913
4 2449624 3282616 3735206 9283981
Profitability Ratio
16.20%
20.84%
36.67%
17.30%
4.45%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2004 2005 2006 2007 2008
Years
Ratios
Return on total equity
The amount of Net Profit after taxation in the year 2004 was Rs.314149 and the amount of
Share Capital and Reserves in the first year 2004 was Rs.1939134 and the Return on total
equity was 16.20% in the year 2004.
increment of Rs.196344 and the amount of Share Capital and Reserves becomes Rs.2449624 in
the year 2005 with increment of Rs.510490 and the Return on total equity becomes 20.84% in
the year 2005.

increment of Rs.693246 and the amount of Share Capital and Reserves becomes Rs.3282616 in
the year 2006 with increment of Rs.832992 and the Return on total equity becomes 36.67% in
the year 2006.
decrement of Rs.557416 and the amount of Share Capital and Reserves becomes Rs.3735206
in the year 2007 with increment of Rs.452590 and the Return on total equity becomes 17.30%
in the year 2007.
decrement of Rs.232725 and the amount of Share Capital and Reserves becomes Rs.9283981
in the year 2008 with increment of Rs.5548775 and the Return on total equity becomes 4.45%
in the year 2008
Earning Per Common Share = dingtsmonshareouagenoofcomweightaver
ividendpreferreddnetincome
tan
−
Fuji Cement Company Limited
Ratio Analysis
2004 2005 2006 2007 2008
Earning per common share 0.85 1.38 3.25 1.73 0.85
Net profit after taxation
31414
9
51049
3
120373
9
64632
3 413598
No. of common shares 37074
3
37074
3 370743
37447
3 489456
Profitability Ratio
0.85
1.38
3.25
1.73
0.85
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2004 2005 2006 2007 2008
Years
Ratios
Earning per common share

The amount of Net Profit after taxation in the year 2004 was Rs.314149 and the Number of
common shares in the first year 2004 was 370743 and the Earning per common share was
0.85 in the year 2004.
increment of Rs.196344 and the Number of common shares becomes 370743 in the year 2005
and the Earning per common share becomes 1.38 in the year 2005.
increment of Rs.693246 and the Number of common shares becomes 370743 in the year 2006
and the Earning per common share becomes 3.25 in the year 2006.
decrement of Rs.557416 and the Number of common shares becomes 374473 in the year 2007
with increment of 3730 and the Earning per common share becomes 1.73 in the year 2007.
decrement of Rs.232725 and the Number of common shares becomes 489456 in the year 2008
with increment of 114983 and the Earning per common share becomes 0.85 in the year 2008
Price/earning ratio =
DilutedEPS
onShareicePerCommMarket Pr
Ratio Analysis
2004 2005 2006 2007 2008
Price/earning ratio 18.89 10.48 6.75
13.1
7 20.91
Market price 14.15 12.76 19.3
8
20.0
9
16.06
Earning per share - Diluted 0.75 1.22 2.87 1.53 0.77

Profitability Ratio
18.89
10.48
6.75
13.17
20.91
0.00
5.00
10.00
15.00
20.00
25.00
2004 2005 2006 2007 2008
Years
Ratios
Price/earning ratio
The market price in the year 2004 was Rs.14.15 and the Earning per share in the first year 2004
was 0.75 and Price/earning ratio was 18.89 in the year 2004.
And the market price decreases to 12.76 in the year 2005 with decrement of 1.39 and the
Earning per share becomes 1.22 in the year 2005 with increment of 0.47 and the Price/earning
ratio becomes 10.48 in the year 2005.
And the market price increases to 19.38 in the year 2006 with increment of 6.62 and the
Earning per share becomes 2.87 in the year 2006 with increment of 1.65 and the Price/earning
And the market price increases to 20.09 in the year 2007 with increment of 0.71 and the
Earning per share becomes 1.53 in the year 2007 with decrement of 1.34 and the Price/earning
And the market price decreases to 16.06 in the year 2008 with decrement of 4.03 and the
Earning per share becomes 0.77 in the year 2008 with decrement of 0.76 and the Price/earning
4.9.5. Finencial Leverage Ratio - Analysis for Investor
Degree of financial leverage =
ITchandeinEB
tincomechangeinne
%
%

Ratio Analysis
2004 2005 2006 2007 2008
Degree of financial leverage 0.20 0.68 0.56 0.70
Net profit after taxation 314149
51049
3 1203739
64632
3 413598
Net profit before taxation -243290
75904
1 1777690
78818
0 454564
Ratio Analysis
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2004 2005 2006 2007 2008
Years
Ratios
Degree of financial leverage
Percentage of earnings Retained
Percentage of earnings retained = Net income –All dividends / Net income
It is better for trend analysis if non recurring items are remove.
4.9.6. Dividend Policy Ratio
Dividend payout Ratio
The dividend payout ratio measures the portion of current earnings per common share
being paid out in dividends.
Dividend payout = Dividend per common share / Diluted earnings per share

Dividend yield
The dividend yield indicates the relationship between the dividends per common share and
the market price per common share.
Dividend yield = Dividend per common share / market price per common share
Book Value per Share
It indicates the amount of shareholder’s equity that relates to each share of outstanding
common stock.
Book value per share= Total shareholder’s equity-preferred stock equity/Number of
common share outstanding
Book value is of limited use to the investment analyst since it is based on Historical cost.
When market value is below book value, investors view the company as lacking potential.
A market value above book value indicates that investors view the company as having
enough potential to be worth more than the un recovered cost.
Book Value Per Share (Amounts in Rs. “000”)
2003 2004 2005 2006 2007
Total Shareholder's Equity 1,624,98
6
1,939,13
4
2,449,62
4
3,282,61
6
3,735,206
Preferred Stock Equity 486,992 486,992 486,992 486,992 486,992
No. of Common Stock O/S 370743 370743 370743 370743 370743
Book Value Per Share 3.07 3.92 5.29 7.54 8.76
3.07
3.92
5.29
7.54
8.76
0.00
2.00
4.00
6.00
8.00
10.00
2003 2004 2005 2006 2007
Years
BookValurPerShare
Series1
The book value per share is increasing in the coming years. The reason of that rise is that
the total common shareholder’s equity is increasing in the coming years. That is very good
for the investors to earn more on their investments. The owners of the cement company are
increasing as compared to the base year

4.9.7. Ratio Analysis charts.
2004 2005 2006 2007 2008
Net Working Capital 202344 -34181 312184 511240 2839322
Current Ratio 1.54 0.97 1.25 1.35 2.16
Acid Ratio 1.38 0.93 1.13 1.23 2.06
Cash Ratio 0.53 0.50 0.67 0.29 1.54
Debt/Equity Ratio 3.05 2.54 1.89 1.71 1.34
Debt to tangible net
worth 3.05 2.54 1.89 1.71 1.34
Day's Sales in account
receivable
7.11948623
6
13.7565370
2
2.16940635
1
2.06124362
3 2.771750319
Account Receivable
Turn Over
51.2677443
1
26.5328403
2
168.248792
9
177.077564
2 131.6857429
Day's sales in
inventory
14.4553804
9
11.5758658
4
25.2778842
5
28.2098505
4 29.08192251
Inventory turnover
61.4639611
2
79.3434561
6
85.0841489
7
70.2086318
2 63.85666586

Net profit margin 13.68% 17.94% 28.08% 18.66% 11.66%
Total asset turnover 0.39 0.46 0.69 0.54 0.28
Return on asset 5.32% 8.20% 19.42% 10.10% 3.32%
Operating income
margin 1.70% 34.75% 47.64% 28.74% 16.96%
Return on Sales to
fixed assets
0.48553767
7
0.61077219
2
0.93930089
4
0.78846270
3 0.498959066
Return on total equity 16.20% 20.84% 36.67% 17.30% 4.45%
Gross profit margin 32.26% 38.01% 51.12% 31.52% 18.56%
Degree of financial
leverage 0.20 0.68 0.56 0.70
Earning per common
share 0.85 1.38 3.25 1.73 0.85
Price/earning ratio 18.89 10.48 6.75 13.17 20.91
4.9.8. Conclusion
From the above information we conclude that cement sector in one of the prosperous sector in
the Pakistan’s economy. The potential investors should take their chances investing in the
cement sector through stock exchanges. The Fauji cement country has proved itself as one of
the leading cement factories of the country. The trade mark of Fauji Foundation gives a sign of
credibility in the minds of the investors.
Since Pakistan is a developing country and for expanding infrastructure and developmental
projects, the need of the cement is very obvious. Fauji cement has been providing 63% of the
cement in the country as well as exporting to countries like Afghanistan and Bangladesh.
I foresee growth in earrings of cement companies in the years to come. Similarly the said
position will be with FCC. I expect positive earnings of FCCL in the coming years; currently
we maintain our stance by recommend “BUY” on FCCL.

4.2.1. Pioneer Cement Comparative Analysis (Compare with Kohat
& Cherat Cement)
PIONEER CEMENT LIMITED
4.2.2. FIVE YEARS HORIZONTAL ANALYSIS OF INCOME STATEMENT

ANALYSIS:
Sales of the Company has shown increasing trend and has increased up to 40% in 2004,55% in
2005 and 50% in 2006 and 2% in 2007 and 55% in 2008 and respective from previous years
Cost of sales has also shown an increasing trend. In 2004 it is 31%, 2005 it increased 47%, in
2006 in increased 34%, 52% increase in 2007 and 54% in 2008 from respective years cost of
sale increase more than increase in sales which result there is loss in 2007. The major reason
of this increase in cost was the plant shutdown due to irregular power supply of WAPDA
and increase in prices of diesel and empty bags.
Gross profit of the company has also shown a increasing trend in from 2004 to 2005 up to 2006
respectively and then decrease and got loss in 2007 and then gross profit increase 61% in 2008
PIONEER CEMENT COMPANY LIMITED
FIVE YEAR POSITION OF INCOME SATEMENT
For the year ended June 30 2008 2007 2006 2005 2004
Net Sales 55% 2% 50% 55% 40%
Cost of goods sold 54% 52% 34% 47% 31%
Gross Profit 61% -74% 83% 74% 73%
Administrative And Selling expenses 293% 25% -15% 55% 19%
Operating Operating/Loss -
124%
-84% 107
%
80% 91%
Other operating expenses 1997
%
-88% 13% 123% -5%
Other operating income 162% -84% 162% -65% 19%
Profit/loss from operations -
189%
-84% 120
%
45% 84%
Financial & Other Voluntary
separation scheme charges
13% -286% 63% 3% 28%
Profit/loss before taxation 211% -120% 137
%
65% 56%
Taxation 333% -135% 316% -133% -44%
Profit/loss after taxation 92% -114% 104
%
-22% 87%

company cost of sale increases but sale decrease, in 2007 gross profit decreases -74% and it
was 61% in 2008.Selling and distribution expenses also increases in 2008 as 293% and 25% in
2007 respectively. This decrease in gross profit was due to the increase in cost of goods
sold and also administrative and selling expenses which cause company got loss.
Operating profit showing increasing trend from 2004 to 2006 as 91%, 80% and 107%
respectively and then it decrease in 2007 and 2008 as -84% and -124% which show big loss in
the year of 2008.
Finance cost Decrease in 2007 as 286% and increased in 2008 as 13% which is not at higher
side but it is at higher side in 2004 to 2006 as 63% for expansion of new grey and white
cement plants. There is a great increase in 2008 which cause the loss of the company. Profit
before tax shows decrease in 2007 as 120% and increase in 2008 as 211% and company got
loss in 2008. Profit after tax decreased in 2007 by 114% and it was increase 92% in 2008.
Company management tries to expand its operations so it needs more finds that were got from
short and long term financing. Due to economic crises and dispute with unionized permanent
workers, company faces losses. Company is good for long term benefits, because it had
declared bonus shares for last five years. It had a great capacity to produce cement and
they are improving technology. They had implemented Enterprise Resource Planning
software to increase the efficiency and for better management planning.
4.2.3. HORIZONTAL ANALYSIS OF BALANCE SHEET
BALANCE SHEET
As at June 30 2008 2007 2006 2005 2004
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVE
Authorized Share Capital 0% 0% 0% 0% 0%
Issue Subscribed & Paid Up Capital 18% 5% 5% 62% 26%
Reserves -22% -43% 847% -118% -28%
10% -10% 43% 197% -2%
Surplus on Revaluation of fixed assets-net
of tax
290% -5% -4% - -
NON-CURRENT LIABILITIES
BALANCE SHEET

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