Bachelor Of Science in Business Administration (Final Project Finance)

Final Project
Profitability Ratio Analysis
Cherat Cement, DG Khan Cement & Fauji Cement
For The
FY2013, FY2014 & FY2015
A REPORT
SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES,
VIRTUAL UNIVERSITY OF PAKISTAN
Submitted By
ABDUL MAJID
Department of Management Sciences
Virtual University of Pakistan
Date of submission
July 01, 2016

Acknowledgement
In the name of ALLAH ALMIGHTY, the most kind and the most merciful
First of all, I am grateful to my ALLAH ALMIGHTY, who bestowed me to complete this project
in a successful manner and without HIS help I was unable to perform this task.
I am thankful to all my family members, Friends especially those who helped me during the
project when problem arises, specially my friends Khurram & Aamir for their kind help and
guidance during my project.

Executive Summary
The main purpose of this project was to analyze the financial position of the selected
companies in terms of profitability. In this project, the researcher tried to show the actual
profitability position of the companies. Mostly investors firstly see the how the performance of
company in terms of profit and net earnings. They also want to know that whether company can
fulfill their requirement or not in term of money, profits and in the form of dividend. The
researcher used the companies’ Profit and loss statement, Balance sheet, equity statement; and
cash flow statement to extract the required result and to implement different type of profitability
ratios.
After the complete analysis, interpretations and results, the researcher found that Gross
margin profitability position of Fauji Cement is good compare to two other sleeted companies.
Position of Cherat Cement is below standard due to heavy burden of new expansion of projects.
And DG Khan Cement is also declining trend in current FY 2105 due to low exports in
Afghanistan. While in analysis of Operating and net profits ratios of selected companies, the
researcher found that all the selected companies were facing little downfall in due to ongoing
expansion of projects are in under process. Over all Fauji Cement and DG khan cement is
showing better performance in operating and Net Profit Margin, due to improved gross profits
and effecting control of cost of goods sold and low exports also decreased freight charges. Over
all Low profits, high cost of sales specially increased of electricity bills, royalty on limestone and
imposition of Super tax. However, decrease in coal price, efficient cost effecting has managed
the profitability during the FY2015
In Cherat cement capital employed decreased due to increase of shareholder equity. ROE also
has declined respective to previous years because shareholder equity increase in current year.
ROE is expected to increase in future after commissioning of new projects.
DG khan Cement and Fauji cement is performing well especially Fauji Cement is in sound ratio
with turnover on operating assets. Fauji cement is also good in respect of ROA and sales to
fixed assets ratio.

In Cherat cement capital employed decreased due to increase of shareholder equity. ROE
also has declined respective to previous years because shareholder equity increase in current
year. ROE is expected to increase in future after commissioning of new projects.
As, DG Khan is in a better position with gross profit margin, operating profit margin and
net profit margin position as compare to other selected companies, so, it is recommended to all
investors to prefer DG Khan for investment purposes.

Table of Content
Section I
Page #
Chapter1 Introduction 1-06
1.1 Financial Period ………………………………… 07
1.2 Objectives of Project …...………………………. 07
1.3 Significance of Study …………………………… 08
Chapter 2 Data Processing & Analysis: 09
2.1 Data Collection Sources ………………………. 09
2.2 Data processing & Analysis Tools ………………. 09
2.3 Trend Analysis 09
Chapter 3 Data Analysis …………………………………… 10
3.1 Gross Margin ….………………………………...10-12
3.2 Operating Margin...…………………………………… 13-15
3.3 Net profit Margin ...……………… 16-18
3.4 Return on Assets ………………………………... 18-21
3.5 DuPont Return on Assets …………………… 21-25
3.6 Operating assets Turnover ………………………… 25-30
3.7 Return on Operating Assets ………………………… 31-33
3.8 Return on Total Equity ……………… 33-35
3.9 Sales to Fixed Assets ……………. 36-39
Chapter 4 Conclusion & Recommendations 40
4.1 Conclusion ………………………….…………… 40-42
4.2 Recommendations ……………………………… 43
Section II
a) Introduction of the student ….…….………….44
b) Appendix / Appendixes ………………………… 45
c) Bibliography ……………………………………. 46

Chapter 1
Introduction
After carefully searching and analyzing all the topics related to finance project, the researcher
selected “Profitability Ratio analysis”. There are lot of topics who have great significance in
finance and great value but Profitability Ratio analysis is more valuable and interesting in so
many ways e.g. these ratios are helpful in determining the financial strength and weaknesses of
industry, there ratios are helpful to administration of the business by providing sparkler clear
picture regarding important aspects like, financial health net profit margins, gross profit margins,
expense ratio, ROA, ROE, ROCE, Total shareholder equity, EPS, DPS, and P/E ratio
etc.Profitability is measured in often in percentage term, in order to facilitate to making a
comparisons s of company s financial performance against past years’ performance and against
the other companies in same industry.
Without the profitability the businesses go declines and are not able to perform in long
runProfitability ratios are very useful to assess business performance and its ability to generate
earning as compared to all other cost and expenses incurred during a specific time frame.
This project is all about performing profitability ratio analysis by using the available
financial data in the annual reports of the selected companies for the last three years i.e. 2013,
2014 and 2015. The main purpose to select the topic of profitability ratio analysis is that it tells
the profitability strength of the company as compare to its competitors in cement industry, which
company is more profitable, which company s income is exceeding to expenses and the result
will helpful for investors, shareholders, debtor and for creditors to assess the overall
profitabilityperformance view which company it returning more as compare to its competitors.
Profitability ratios are mostly use in financial analysis and its main aim to compare
current performance with past. These ratios measure management overall effectiveness of
earning and investing to cost and expenses.

Pakistan Cement Industry:
The south of Pakistan is Baluchistan and Sindh, while North is Punjab, KPK, FATA, PATA,
Gilgit and Baltistan. Total cement industry of Pakistan is about 43 Million tons of annualized
clinker production and about 45.6 Million Tons of annualized cement production.
Pakistani cement industry is playing vital role in economic development sector. Pakistani cement
industry is now recognizing as a major player in regional market. The government is taking
concrete step to revive the national economy and it has positive effects on the cement sector.
Greater spending by private sector is also increasing demand od cement domestic level which
needs more production to fulfill the need of customers. During the year the cement industry
recorded growth from last year. While domestic demand was strong because of low inflation,
lower interest rates which leads to higher investment, while exports declined in this year mainly
due to decline export to Afghanistan. Exports decline by uncertainty of peace.
In future prospect the industry will boost from improving law and order situation of Pakistan and
the neighbor countries which increase and foreign demand. Pak – china economic corridor is also
expected to stabilized which may increase the reconstruction activates in the country.
Below are the selected companiesfor profitability ratio analysis
Cherat Cement, DG Khan Cement & Fauji Cement
Cherat Cement Company Limited:
It was incorporated in 1981 and listed in Islamabad, Lahore and Karachi Stock Exchanges and it
is situated near Nowshera, Khyber Pakhtunkhwa. It has the premier name in the field of cement
manufacturing. It uses thelatest and advanced equipment for the production and has a
certificationof ISO9001:2000 forthe high quality grey Portland cement.
Cherat Cement Company Limited is a Ghulam Faruque Group (GFG) Company. It’s main
Business activity is manufacturing, marketing and sale of Ordinary Portland Cement. The
Company is amongst the pioneers of cement industry in Pakistan and is the number 1 cementin
its region. Quality is our business; therefore, there are no compromises on Quality

The Company’s annual installed capacity is 1 million tons of clinker. The plantis located at
Village Lakrai, District Nowshera, and Khyber Pakhtunkhwa (KPK) province. Due to
Plant’s geographical position, it is ideally located to export cement to Afghanistan as well as
To cater the local market needs in the KPK, FATA, Punjab and Azad Kashmir. The Company is
Registered on Karachi, Lahore and Islamabad stock exchanges and is also ISO 9001 and
14001 certified. The Company is in the process of installing another cement line at the same
location with an annual clinker capacity of more than 1.3 million tons.
Plant Expansion:
In view of strong projected growth for cement and noticeable improvement inbusiness climate in
the country, the installation of new production line withclinker production capacity of 4,200 tons
per day at the same location isbelieved to earn fruitful benefits in the near and long-term future
for all thestakeholders of the Company.
The work on the expansion project is in full swing and progressing on schedule.Major shipment
of machinery has reached Pakistan and rest will arrive in acouple of months. The contracts for
fabrication and erection works have beenawarded and the civil work has gained momentum.
The project is benefiting from recent decline in discount rates and stable foreigncurrency
exchange rates.
The overall progress of the project is satisfactory and the plant is expected to becommissioned by
January 2017. The management has ordered a Waste HeatRecovery System for this new cement
line which is planned to be commissionedalong with commissioning of line II.
It is one of the leading producers and suppliers of cement in Khyber Pakhtunkhwa and Punjab
and enjoys strong brand loyalty amongst its exporters. Cherat has also become Afghanistan’s
leading brand.
Vision:
For the benefit of all stakeholders, Growththrough the best value creation
Mission:

• Invest in projects that will optimizethe risk-return profile of the Company.
• Achieve excellence in business.
• Maintain competitiveness byleveraging technology.
• Continuously develop our human resource.
• To be regarded by investors as amongstthe best blue-chip stocks in the country.
Core Values:
Always deliver the best qualityproduct to our customers.
• Maintain the highest level ofintegrity, honesty and ethics.
• Use technology to continuouslyimprove our processes.
• Develop the capability of ourworkforce on an ongoing basis.
• Safeguard the interests of all ourstakeholders.
DG Khan Cement Company Limited:
DG khan cement Company Limited is a part of Nishat Group. It is one of largest cement
manufactures of Pakistan.
It’s corporate in Lahore under management control of state cement corporation of Pakistan. It
starts its commercial production in April 1986 with capacity of 2,000 TPD.
It’s acquired by Nishat Group in May 1992 and got listed on stock exchanges in Pakistan.
Its head office at Lahore and Manufacturing units are located in Dera Ghazi Khan and Khair Pur
district Chakwal, Punjab.
Its annualized clinker production is near about 4.02 million tones and annualized cement
production is about 4.221 million tones.
DG khan Cement stocks are blue chips stocks in Pakistan stock Exchange. It has large sales units
which are more than 2000 nationwide dealers’ whole country.
Also have a large share in foreign market. Afghanistan, India, Sri Lanka, Ethiopia, Mozambique
etc. are its big foreign markets.

DG khan cement has state of the art technology, innovative and business success. Its production
capacity is about 9% of total country capacity.
Vision Statement:
To transform the Company into modern and dynamic cement manufacturing company with
qualified
Professionals and fully equipped to play a meaningful role on sustainable basis in the economy
of Pakistan.
Mission Statement:
To provide quality products to customers and explore new markets to promote/ expand sales of
the
Company through good governance and foster a sound and dynamic team, so as to achieve
optimum
Prices of products of the Company for sustainable and equitable growth and prosperity of the
Company
Objectives:
 Penetrate Local & Exports Markets
 Leader in use of Cutting Edge technology
 Cost Saving Through Innovation
 Committed Employees
 Broad Base & Satisfied Suppliers
 Better Returns to Shareholders
 Environment Friendly Operations
 Strong Supply Chain
 Safe Workplace
DG Khan Cement Company Limited (DGKC) is

Fauji Cement Company Limited:
Fauji Cement Company is playing role of leader in cement industry since a long time. It
is incorporated by Fauji Foundation in 1992. Its head quarter is located in Rawalpindi and
production plant is situated in JhangBahatur, Tehsil Fateh Jang and District Attock. It maintains
its goodwill by providing best services, quality and reliability sported by strong supply line for
its products. It started its operations in 1997 with 3,150 TPD F.L. Smidth Plant of DENMARK.
It extends its production 7,560 TPD to meet its demand in 2011 with German plant.
The cement plant operation in the Fauji Cement is one of the most efficient and best
maintained in the Country and has an annual production capacity of 1.165 million tons of
cement. The quality Portland cement produced at this plant is the best in the country and is
preferred in the construction of highways, bridges commercial and industrial complexes,
residential homes and myriad of other structures needing speedy strengthening bond,
fundamental to Pakistan’s economic vitality and quality of life.
Fauji Cement Company increases its profit by reducing its costs. It installed first ever
used Refuse Derived Fuel (RDF) processing plant on a cost of 320 Million which provide
economic fuel and also demonstrate a in a better financial position as compare to other selected
companies way of disposing municipal garbage. Fauji Cement is also expanding its coverage in
neighboring and other countries like Sri Lanka, Afghanistan, India, South Africa, Middle East
and Africa. FCCL is an ISO 9001:2008 and ISO 14001: 2004 Certified Company with a total
capacity of 11, 445TPD. The quality Portland cement produced at this plant is preferred in the
construction of highways residential homes and government projects due to its quality and
reliability.
1.1Financial Period:
Profitability ratio analysis has been performed by using the available financial data in the
annual reports of the selected companies for the recent three financial years. FY2013,
FY2014 & FY2015

1.2 Objective of Profitability Ratio analysis:
 The major objectives of the resent study are to know about financial strengths and
weakness of Cement Industries of Pakistan
 To evaluate the profitability of cement industries of Pakistan by using ratio analysis, this
is key evaluating performance measure of efficiency and financial strength.
 To evaluate and analyze various facts of the financial performance of the company. To
make comparisons between the ratios during different periods.
 To study the present financial health of Major Player of cement industry and to determine
the Profitability Ratios.
 To analyze the capital structure of the company with the help of ratios.
 To offer appropriate suggestions for the better performance of the organization
 Profitability ratios measure the operating efficiency of the firm and its ability to ensure
educate return to its shareholders.
 In Profitability ratio, making a comparisons s of company s financial performance against
past years’ performance and against the other companies in same industries
1.3Significance of Project
 After successful completion of project, researcher is able to interpret the profitability of
companies and can be suggest, how to increase profitability of industry.
 Result of financial ratio analysis has great significance and provides more benefits to
various stakeholders whom directly or indirectly linked with the company, like investor,
creditors, shareholders, tax department, banks and Government etc.
 It is helpful to administration of the business by providing sparkler clear picture
regarding important aspects like, financial healthnet profit margins, gross profit margins,
expense ratio, ROA, ROCE, Total shareholder equity, EPS, DPS, and P/E ratio etc.
 The study is also beneficial to employees and offers motivation by showing how actively
they are contributing for company’s growth and profitability.

 The investors who are interested in investing in the company’s shares will also get
benefited by going through the study and can easily take a decision whether to invest or
not to invest in the company’s shares.

Chapter 2
Methodology
2.1 Data Collection Sources:
Researcher will use mostly available data on companies’ website and annual financial reports
over internet. Website of selected companies will be use to collect to current financial data for
the period of FY2013, FY2014 & FY2015
i- Primary Sources:
Nil
ii- SecondarySources:
Accounting and financeBooks, website, Newspapers, journals, and annual financial reports and
articles on internet.
Secondary source will also use for collecting relevant data, definition of ratios, formulas, and
industry benchmark etc. This data will be collected from secondary source like websites,
accounting and finance books and Finance Journals etc.
2.2 Data Proceeding & Analysis:
Microsoft word 2007, and Microsoft Excel 2007 will be use to write project, perform ratio
analysis, making charts/graph, making interpretations, conclusion and for recommendations.
Calculator will be also use for convince.
2.3Trend Analysis:
Trend analysis studies the financial history of a firm for comparison. It is the comparative
analysis of a company's financial ratios over time. This helps to detect problems or observe good

management. Ratios are plotted on graph to see whether the ratios are falling, rising, or
remaining relatively constant. So, trend analysis was also performed to analyze the trends in
liquidity and leverage position of the selected companies for the recent three years.

Chapter 3
Data Analysis
Following ratios will be calculatedto achieve the profitability objectives of selected companies.
Profitability Ratio:
Profitability ratios basically shows how well companies can achieve profits from their
operations, investors and creditors can use profitability ratios to judge a company s return of
investments. Profitability ratios how well companies are using their assets for generating profits.
3.1 Gross Profit Margin:
Introduction:
This ratio indicates that how companies compare the gross margin of a business to the net sales.
It measures how a company profitable sells its inventory or merchandise. This is pure profit
which a company get to pay its operating expenses.Gross margin calculates the on the bases of
cost of goods sold and it measure the profitability of selling inventory. Higher ratios are more
favorable because the companies able selling their inventory at higher profit percentage.
There are two ways to get higher ratios. One way is to buy inventories in cheap prices buy
getting big discount from supplier. And the second way is selling way to sale in high prices, but
in competitive condition it’s difficult to sell in high prices. When a company with higher gross
margin ratios, it indicates that company have more money to pay all operating expenses like
salaries, rent, utilities and other operating expenses.
Formula:
Gross Margin is calculated, dividing gross margin by net sales.
Gross profit Margin = Gross Profit / Netsale * 100

Analysis Table:
(PKR. in Millions)
Compani
es
FY 2015 FY 2014 FY 2013
Cherat
Cement
1983.545/6565.416*100=3
0.21%
2102.650/6451.330*100=32
.59%
2190/6294*100=34.79 %
DG
Khan
Cement
9455.2/26104.611*100=36
.22%
9257.568/26542.509*100=3
4.87%
9326.007/24915.924*100=3
7.42%
Fauji
Cement
7027/18642*100=37.69% 6084/17532*100=34.70 % 5080/15968*100=31.82%
Graphical PresentationofRatio / Trend Analysis:
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
2015 2014 2013
Cherat
Cement
DG Khan
Cement
Fauji
Cement

Interpretation and Comparison:
It can be observed from the above table the gross profit margin ration of Cherat Cement was
found 30.21%, 32.59% and 34.79% for the years of FY2015, FY 2014, and FY2013 respectively.
It can be observed from the above table Cherat Cement Gross profit margin is decreasing trend
respectively. Its main cause is increases cost of sales, also less net sales trend respectively and
less effective measurement is taken for cost of goods sold management.
It can be observed from the above table the gross profit margin ration of DG Khan Cement was
found 36.22%, 34.87% and 37.42% for the years of 2015, 2014, and 2013 respectively.
It can be observed from the above table DG Khan Cement Gross profit margin is increasing trend
in FY 2015 respective to previous years. It increased mainly due to continuously increasing trend
of sales and effective management control of expenses. Net sales increase with local sale
expansion, local market prices remain stables in FY2105 and also supply was not affected by
flood.
It can be observed from the above table the gross profit margin ration of Fauji Cement was found
37.69%, 34.70% and 31.82% for the years of FY2015, FY 2014, and FY2013 respectively.
It can be observed from table in FY 2015 there is increasing trend in net sales and gross profit
margin of Fauji Cement as compare to previous years. Gross profit margin increased by low and
effective cost of goods sold control and effective and rapid net sales also have positive effect in
increasing trend of Gross profit margins of Fauji cement in FY 2015.
Conclusion:
After carefully interpreting results of Gross Profit margins of the all selected companies, I found
Fauji cement is number one with its highest sales and gross profit margin ratio as compare to
others. DG khan cement is number second and Cherat Cement in number three respectively.
3.2 Operating Profit Margin:

Introduction:
It is also known as operating profit margin. In this ratio company show how much revenues are
left over by paying all operating expenses like rent, salaries etc. this ratio show whatproportion
of revenue is remaining for covering non-operating cost like interest expenses. Higher the ratio
means ability to pay interest expenses easily and the company financial health is sound. Investors
and creditors can use profitability ratios to judge a company s return of investments.
Operating income also called income from operation and it is separately mention in income
statementbefore interest, taxes and dividend income.Higher the ratio company is more stable in
its operations. Higher operating margin is more favorable compare to low operating margin. It
shows the company is making enough money from its ongoing operations to pay for its variable
costs as well as fixed costs.
Formula:
Gross Margin is calculated, dividing the operating by net sales.
Operating profit Margin = Operating Profit / Net sale * 100
Analysis Table:
(PKR. in Millions)
Compani
es
FY 2015 FY 2014 FY 2013
Cherat
Cement
1709/6565.42*100=26.03
%
1716/6451.33*100=26.60
%
1585/6294*100= 25.18 %
DG
Khan
Cement
9828.681/26104.611*100=
37.65 %
8460.256/26542.509*100=
31.87 %
8090.737/24915.924*100=
32.47 %

Fauji
Cement
6386/18642*100=34.25 % 5552/17532*100=31.67 % 4598/15968*100=28.79 %
It can be observed from the above table the operating profit margin ration of Cherat Cement was
Above figure show the operating profit margins of Cherat cement. It can be observed from above
table, there is little decreasing trend in FY 2015, due to less control of expenses and also it net
sale is also decreasing trend, so operating profit margin is low trend which can affect the income
after tax paid.
It can be observed from the above table the operating profit margin ration of DG Khan Cement
was found 37.65%, 31.87% and 32.47% for the years of FY2015, FY 2014, and FY2013
respectively.
In above table DG Khan cement ratio show increasing trend in FY 2015 respectively to FT 214
and FY 2013. Increase of net sale, and decreasing of expenses it has reasonable increasing trend
0
5
10
15
20
25
30
35
40
2015 2014 2013
Cherat Cemnet
DG Khan Cement
Fauji Cement

which is showing positive trend of profitability. Due to low freight charges increase operating
profit margin in DG Khan Cement. Sales and increasing trend of gross profit also have great
impact on operating profit margin.
It can be observed from the above table the operating profit margin ration of Fauji Cement was
Excellent control on expenses, increases trend on sales and controlling the cost of gold sold
behavior can be seen in above ratios of Fauji cement, which has continued increasing trend of
operating profit margin in respective of last three financial years of FY2015, FY 214 and FY
2013.
Conclusion:
After carefully interpreting results of operating Profit margins of the all selected companies, I
found DG KhanCement is number one with its highest operating profit margin and also have
good and effective control on expenses and cost effective strategies which increase trends of net
sales and gross profit margin also, as compare to others. Fauji khan cement is number second and
Cherat Cement in number three respectively of FY 2015, FY 2014 and FY 2013.
3.3 Net Profit Margin:
Introduction:
Net profit margin in one of the most profitability ratio, Shareholder like high net profit margin
because this show how effectively a company converting revenue into profits available for

shareholders. Net profit margin is a percentage of sales, and it use to compare companies within
same industry and see which company most effective at converting sales into profits.
Formula:
Net Profit Margin = Net Profit/ sales *100
(Net Profit = Revenue- COGS-All Expenses- Interest & taxes)
Analysis Table:
(PKRinMillions)
Companie
s
FY 2015 FY 2014 FY 2013
Cherat
Cement
1288/6565.42*100=19.61
%
1316/6451.33*100=20 % 1228/6294*100=19.51 %
DG Khan
Cement
7624.68/26104*100=29.2
1 %
5965.498/26542*100=22.
48 %
5502.169/24915*100=22.
08 %
Fauji
Cement
4116/18642*100=22.07
%
2626/17532*100=14.97 % 2097/15968*100=13.13 %

It can be observed from the above table the net profit margin ration of Cherat Cement was found
19.61%, 20% and 19.5% for the years of FY2015, FY 2014, and FY2013 respectively.
Net profit Show Company’s sound position of net earnings and investor prefer increasing trend
of net profit which increases their wealth. In the above figure it can be seen bit decreasing trend
of Cherat cement current year ratio as compare to previous years. Their low operating profit
margin and interest and tax reduce more net profit respective to previous years.
It can be observed from the above table the net profit margin ratioof DG Khan Cement was
Although super tax is affecting badly on net income but Cost effective management control,
sales trend increasing effect positively on net profit. This is increasing investorwealth and also
increasing competitive position. In above figure a positive trend on increasing of net profit can
be seen in DG khan net profit ratio. There is continuous increase in net profit from FY 2015, FY
2014 and FY 2013 respectively.
It can be observed from the above table the operating profit margin ration of Fauji Cement was
0
5
10
15
20
25
30
35
2015 2014 2013
Cherat Cement
DG Khan Cement
Fauji Cement

In above paragraph Fauji cement net profit ratio is showing positive increasing trend in
respective last three years. Cost of sales getting down, and expenses control increasing net profit
margin ratio of the Fauji cement Company.
Conclusion:
After carefully interpreting results of net Profit margins of the all selected companies, I found
DG Khan Cement is number one with its highest net profit margin, which is showing their best
performance in industry and creditworthiness and also have good and effective control on
expenses and cost effective strategies which increase trends of net sales and gross profit margin
also. In DG khan cement over all finance cost decreased. This is due to better margin on sales.
This company gave reason able cash flows to cater its fund requirements Effective financial
management between local and foreign and local currencies increases profit ratio. As compare to
others. Fauji Cement is number second and Cherat Cement in number three respectively of FY
2015, FY 2014 and FY 2013.

3.4Return on Assets:
Introduction:
It is often called the return on total asset. It measures how a company can manage its assets to
produce profits. Assets play main role to earn revenue and earn profits. ROA helps all
stakeholders specially management and investors, how effectively the company produces income
from its assets and convert their investments into assets. It also shows how profitable company s
assets are going. Higher the ratio favorable for investors, because company in position to
effectively converting its investment to huge income. Positive ROA show positive profit trend.
Formula:
Return on Asset = Net income / Average TotalAssets *100
(PKR in Millions)
Analysis Table:
Companies FY 2015 FY 2014 FY 2013
Cherat
Cement
1288/7947.5*100=16.20
%
1316/4978.5*100=26.44
%
1228/4888*100=25.12
%
DG Khan
Cement
7624.68/73836.756*100=
10.33%
5965.498/68404.394*100
=8.72%
5502.16/57105*100=9.6
4%
Fauji
Cement
4116/29954.5*100=13.74
%
2626/29843.1905*100=8.
94%
2097/30504.257*100=6.
88%
Working:

(PKR in Millions)
Average Total Assets = Beginning Total Asset + Ending Total Assets/2
Cherat Cement (2015) 7947.5 =6431 + 9464 /2
Cherat Cement (2014) 4978.5 = 6431+3526/2
Cherat Cement (2013) 4888 = 5065+4711/2
DG Khan Cement (2015) 73836.756 = 73282.069 +74391.443/2
DG Khan Cement (2014) 68404.394 = 63526.719+73282.069/2
DG Khan Cement (2013)57105 = 50685.198+63526.719/2
Fauji Cement (2015) 29954.5 = 29381.332 +30528.290/2
Fauji Cement (2014)29843.1905 = 30305.049 +29381.332/2
Fauji Cement (2013) 30504.257 = 30703.465+30300.1+5049/2
0
5
10
15
20
25
30
2015 2014 2013
Cherat Cement
DG Khan Cement
Fauji Cement

It can be observed from the above table the ROA of Cherat Cement was found 16.20%, 26.44%
and 25.12% for the years of FY2015, FY 2014, and FY2013 respectively.
Decreasing trend on ROA of Cherat in FY 2015 can be seen on above table due to expansion of
new project with compare to previous FY 2014 and FY 2013 respectively.
It can be observed increasing trend on ROA of DG Khan Cement of all FY 2015, FY 2104 and
FY 2103 respectively. It positive sign of increasing ROA continues.
It can be observed from the above table the ROA of DG Khan Cement was found 10.33%, 8.72%
and 4% respectively FY2015, FY 2014, and FY2013.
It can be observed from the above table the ROA of Fauji Cement was found 13%, 8% and 6%
for the years of FY2015, FY 2014, and FY2013 respectively.
ROA of Fauji Cement have increasing trend of all Financial Years can be seen on above figures.
It is showing its best performance to increasing ROA and best utilizing of its assets.
Conclusion:
After carefully interpreting results of ROA selected companies for the FY 215, FY 2014 and FY
2013, Cherat Cement is number one, Fauji Cement is number two and DG khan cement is on
number three positions.

3.5 DuPont Return on Assets:
Introduction:
It was started by the DuPont Corporation in the 1920. In this ratio assets are measured by
their Gross book value rather than net book value. This method increases ROE. In DuPont
analysis ROE is affected by three ways
1. Operating efficiency, which is measure through Profit margin.
2. Financial Leverage, it is measured by equity multiplier.
3. Asset use efficiency, measured through the total asset turnover.
DuPont financial ratio is used to measured company s ability on the base of return on equity. It
was developing how different business measured how on ROE. DuPont analysis pinpoints the
area, whether profit margin, asset turnover or financial leverage is the cause of problem, in this
way management can correct it easily.
Formula:
ROE = Profit margin * TotalAssetturnover *FinancialLeverage
(Profit margin =Net profit/sales)
(Total asset Turnover= Net Sales/Average Total Assets)
(Equity Multiplier= Total Assets/Total equity)
Analysis Table:
(PKR in Millions)
Cherat
Cement
19.61*82.80*1.179/100=29.4% 20*129.59*1.32/100=34.21% 19.51*128.76*1.3/100=32.65
DG Khan
Cement
29.21*35.35*1.19/100=12.28% 22.48*38.801*1.193/100=10.40% 22.08*43.63*1.32/100=12.71%

Working:
(PKR in Millions)
Profit margin=Net profit/sales
CheratCement 1288/6565.42*100=19.61 1316/6451.33*100=20 1228/6294*100=19.51
DGKhanCement 7624.68/26104*100=29.21 5965.498/26542*100=22.48 5502.169/24915*100=22.08
Fauji Cement 4116/18642*100=22.07 2626/17532*100=14.97 2097/15968*100=13.13
(PKR in Millions)
(Total asset Turnover= Net Sales/AverageTotal Assets)
Fauji
Cement
22.07*62.23*1.75/100=24.03% 14.97*58.7*1.94/100=17.04% 13.13*52.34*1.90/100=13.06%
Cherat
Cement
6565.42/7947.5*100=82.60% 6451.33/4978.5*100=129.59
%
6294/4888*100=128.76
%
DG Khan 26104/73836*100=35.35% 26542/68404.394*100=38.80
1%
24915/57105*100=43.6
3%

(PKR in Millions)
EquityMultiplier= Total Assets/Total equity
Companies FY2015 FY2014 FY 2013
DG Khan 74391/62296= 1.19Times73282/61516=1.191Times63526/47596= 1.32 Times
Cherat Cement 9464/8026=1.179 Times6431/4864=1.32 Times5065/3709= 1.3Times
Fauji Cement 30528/17418= 1.75 Times29381/15188=1.94 Times30305/15936=1.90Times
It can be observed from the above table the ROE of Cherat Cement was found 29.4%, 34.21%
0
5
10
15
20
25
30
35
40
2015 2014 2013
Cherat Cement
Dg Khan Cement
Fauji Cement
Fauji
Cement
18642/29954.5*100=62.23% 17532/29841.905*100=58.7% 15968/30504.254*100=
52.34%

Above figures of Cherat Cement are sowing some declining in FY 215 respective to previous
years. It main problem is lower profit margin. Asset turnover ratio is declining in FY 2015 as
expansion of new projects and equity multiplier is almost same with respective to previous years.
It can be observed from the above table the ROE of DG Khan was found 12.28%, 10.40% and
12.71% for the years of FY2015, FY 2014, and FY2013 respectively.
It can be observed increasing trend in ROE of Dg Khan Cement with High profit margin, and
equity multiplier and little declined in asset turnover ratio.
It can be observed from the above table the ROE of Fauji Cement was found 24.3%, 17.4 and
13.06% for the years of FY2015, FY 2014, and FY2013 respectively.
Fauji cement ROE having increasing trend from previous three years continuously, because of
high profit margins, High turnover ratio, and high equity multiplier.
Fauji cement ROE having increasing trend from previous three years continuously, because of
high profit margins, High turnover ratio, and high equity multiplier.
Conclusion:
After carefully interpreting results of ROE of three companies, Cherat cement having the highest
figures with number one position, Fauji Cement which is number two and DG KhanCement is on
number three position
3.6 Operating Assets Turnover
Introduction:

Return on operating assets is very important profitability ration, because it shows how many
assets are performing well to generate revenue and how many pc of assets are not included to
generating revenue and such assets can be reducing or converted to cash for profitability. These
assets are included like accounts receivable, plant, machinery and equipment which are using in
operations and total inventory in that time is using in operations. This ration can be calculating,
operating assets divided by total assets less cash. It is used to analyze which company assets are
not taking part in revenue generation and such assets can be reducing or eliminate to increase
operating assets turn over. Nonproductive assets like obsolete inventory, overdue accounts
receivable, and cash balance is not used to calculate total assets.
Formula:
Operating Assets Turn over = Operating Assets/ Total Non-Cash Assets.
Analysis Table:
(PKR in Millions)
Cherat Cement 3244178/9464000-
18354= 34.34%
3320210/6431000-
17116= 51.77%
3061855/5065000-
25548=60.76%
DG Khan
Cement
29958970/74391443-
257723= 40.42%
29,832,625/73282069-
1309026= 41.45%
28951966/74391443-
468881= 39.17%
Fauji Cement 23880553/30528290-
2296603=84.85%
23881426/29381332-
842983= 83.49%
24734325/30305049-
1702171 =86.47%
Working:
Operating Assets (Property, Plant and equipment)
(PKR in 000)

Cherat Cement FY 2015 FY 2014FY 2013
Free hold land 1605 1605 1605
Lease hold land7065 7065 7065
Building on lease 263190 282781 196541
Plant & machinery 2553142 2662585 25180944
Power & other installation 84678 79361 63173
Furniture &fitting 13184 12840 13283
Factory & lab equip. 201852 175122 173010
Motorcycles107628 90539 78189
Office equipment40367 3050 3687
Computers 7467 5262 7208
Total Opt Assets. 3244178 3320210 3061855
Cash & bank balance FY 2015 FY 2014 FY 2013
18354 17116 25548
Total Assets 9464000 6431000 5065000
Operating Assets Turn over = Operating Assets / Total Assets- cash Assets.
2015 3244178/9464000-18354= 32441789/9445646*100=34.34%
2014 3320210/6431000-17116= 3320210/6413884*100= 51.77%
20133061855/5065000-25548= 3061855/5039452*100= 60.76%

(PKR in 000)
DG Khan Cement FY 2015 FY 2014 FY 2013
Operating assets 27,979,032 28,951,96627,247,974
Capital Work in progress 1,874,469 634318 1,475,581
Major Spare &Equipment 105,469 246,311 228,411
Total Operating Assets 29,958,970 29,832,62528,951,966
Cash& bank balance257,7231309026 468,881
Total Assets 74,391,443 73,282,069 63526,719
Operating Assets Turn over = Operating Assets / Total Assets- cashAssets.
2015 = 29958970/74391443-257723*100= 40.42%
2014 = 29,832,625/73282069- 1309026*100= 41.45%
2013= 28951966/74391443-468881*100= 39.17%
(PKR in 000)
Fauji Cement FY 2015 FY 2014 FY 2013
Land Free hold 148452 148452 148452
Building on free hold 3733372 3711541 38899913
Plant & M/C 19845432 19567814 20585039
Store hold for capital expense 22802 26046 29290
Office equipment 5636 2665 2692

Computers 6796 9609 6363
Electric installation 11597 6833 7973
Furniture & fitting 8595 8221 8005
Motor vehicles 57103 42177 39666
Capital work in progress 40768 360768 6932
Total Operating Assets 23880553 23881426 24734325
Cash & Bank Balances 2296603 842983 1702171
Total Assets 30528290 29381332 30305049
Operating Assets Turn over = Operating Assets / Total Assets- cash Assets.
2015 23880553/30528290-2296603= 23880553/28231687*100= 84.85%
2014 23881426/29381332-842983= 23881426/28538349*100=83.68%
2013 24734325/30305049-1702171 = 24734325/28602878*100= 86.47%

It can be observed from the above table and chart that the Cherat Cement operating assets
turnover ratio is 34.34%, 51.77% and 60.76% in the FY 2015, FY 2014 And FY 2013
respectively
It can be observed it he above table and chart that there is decreasing trend in operating assets
turnover ratio in Cherat cement Company. Primarily there is expansion of new lines and
therefore maximum assets are still in under process. Thisnon-revenue generated assets also
reduced, eliminates and converted to be cash for better performance.
It can be observed from the above table and chart that the DG KHAN CEMENT operating
assets turnover ratio is40.42, 51.77% and 60.76% in the FY 2015, FY 2014 And FY 2013
respectively. Non-revenue generated assets are burden in the company, these converted into
cash for sound health, one another cause is low exports that why many assets are not utilizing
in Current year FY 2015.
It can be observed from the above table and chart that the Fauji Cement operating assets
turnover ratio is 84.85%, 83.849% and 86.47% in the FY 2015, FY 2014 And FY 2013
respectively
In the above table and chart it can be absorbed that Fauji cement although is decline assets
ratio but maximum utilizing its assets which is good sign of performance.
0
10
20
30
40
50
60
70
80
90
100
2015 2014 2013
Cherat cement
DG Khan Cement
Fauji Cement

Conclusion:
After carefully interpreting results of operating assets turnover ratio of three companies I
conclude that Fauji cement is at number one with utilizing its maximum assets for generating
revenue and in good health, Cherat Cement in number two and DG Khan Cement in number
three positions as compared to other selected companies.
3.7 Return on Operating Assets
Introduction:
It is one of the important profitability ratio, it is just like ROA but difference is that it is
calculated earning before tax and interest rather than net income. Operating return on assets
show the company’s s operating income per dollar invested in total assets. Like other
profitability ratio it is also like higher than low ratio.
Formula:
Operating ROA = EBIT/ Average total Asset
(Average total asset = Opening +EndingAssets/2)
Analysis Table:
(PKR in Millions)
Cherat
Cement
1671/7947.5*100=21.02% 1688/4978.51*100=33.90% 1585/4888*100=32.42%
DG Khan
Cement
9545.18/73836.75*100=12.92% 7851.39/68404.39*100=11.47% 7095.86/57102*100=12.42%

Fauji
Cement
5679.89/29954.50*100=18.96% 4509.50/29843.19*100=15.10% 3085.52/30504.25*100=10.11%
Working:
(PKR in Millions)
EBIT
Cherat Cement (2015) 1671
DG Khan Cement (2015) 9545.18
Fauji Cement (2015) 5679.89
(PKR in Millions)
Average Total Assets = Beginning Total Asset + Ending Total Assets/2
Cherat Cement (2015) 7947.5 = 6431 + 9464 /2

Cherat Cement (2014) 4978.5 = 6431+3526/2
Cherat Cement (2013) 4888 = 5065+4711/2
DG Khan Cement (2015) 73836.756 = 73282.069 +74391.443/2
DG Khan Cement (2014) 68404.394 = 63526.719+73282.069/2
DG Khan Cement (2013) 57105 = 50685.198+63526.719/2
Fauji Cement (2015) 29954.5 = 29381.332 +30528.290/2
Fauji Cement (2014) 29843.1905 = 30305.049 + 29381.332/2
Fauji Cement (2013) 30504.257 = 30703.465+30305.049/2
0
5
10
15
20
25
30
35
40
2015 2014 2013
Cherat Cement
DG Khan Cement
Fauji Cement

It can be observed from the above table the return on operating assets of Cherat Cement was
It can be observed in above table of Cherat Cement there is decreasing trend in FY 2105 as
compared to previous years, its main cause is new expansion of projects. FY 2014 and FY 2013
have increasing trends.
It can be observed from the above table the return on operating assets of DG Khan Cement was
DG Khan performance is better in FY 2015 as compared to FY 2104 which is decreasing trend
and FY 2014 also have increasing trend to previous years.
It can be observed from the above table the return on operating assets of Fauji Cement was found
18.96%, 15.10% and 10.11% for the years of FY2015, FY 2014, and FY2013 respectively.
In above % figures Fauji cement is going well with increasing trend of all three financial of FY
215, FY 214 and FY 2103 respectively.
Conclusion:
After carefully interpreting results of three selected companies, although Cherat cement is
decline trend due to expansion of new line but as compare to other companies this have greater
ratio of returning and previous years also have better performance, so Cherat cement is number
one with greater ratio, Fauji is on number two and DG Khan is one number three position.
3.8 Return on Total Equity:

Introduction:
It is important profitability ratio for investor because they interested to know how
much a company makes for each dollar that investor put into it. ROE is important indicator
that show how management using efficiency and effectively equity financing for its
operations and for the desirable profits. It’s only calculated for common stock holder not for
preferred shareholders. Investors like big increase in ROE, which indicate that company is
using more effectively their investment and making more profits. Higher ratio is more
favorable than low ratio. Unlike other ratio of profitability ROE is ratio of investor point of
view, not the company view, because they are interested to know how company their
investment converting into profits.
Return on Equity = Netincome / shareholderInvestment *100
Analysis Table :( PKR in Millions)
Cherat
Cement
1288/8026*100=16.04% 1316/4864*100=27.05 1228/3709*100=33.10%
DG Khan
Cement
7624.68/62296.07*100=12.24% 5965.49/61516.535*100=9.639% 5508.16/47956.79*100=11.48%
Fauji
Cement
4116/17418.984*100=23.63% 2626/15788.187*100=16.64% 2097/15936.36*100=13.16%

It can be observed from the above table the ROE of Cherat Cement was found 16.04%, 27.05%
Above figures showing Cherat cement ROE, Dividend distributed 30% the year ended 2015, also
have declining trend of ROE due to increase of shareholders and expansion of domestic lines.
Previous years are showing increasing results, Issuance of new share declining current ROE and
increasing capital work is also big cause of decline. ROE is expected to improve after
commissioning of new line.
It can be observed from the above table the ROE of DG Khan Cement was found 12.24%,
9.639% and 11.48% for the years of FY2015, FY 2014, and FY2013 respectively.
DG Khan Cement ROE has increasing trend of three last Financial Years, FY 2015, FY 2014
and FY 2013 respectively.
It can be observed from the above table the ROE of Fauji Cement was found 23.63%, 16.24%
Well performance of Fauji Cement with increasing trend in ROE, which showing best position in
investor point of view. ROE is increasing in FY 2015, FY 2014 and FY 2013 respectively.
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2015 2014 2013
Cherat Cement
DG Khan Cement
Fauji Cement

Conclusion:
After carefully interpreting results of three selected companies, Cherat Cement is on number one
position due to highest ratio and Fauji in number two with its ROE ratio and DG Khan is at
number Three position.
3.9 Sales to Fixed Assets/ Assets Turnover Ratio:
Introduction:
Sales to fixed assets ratio is function of the capital intensity of company. It is generally used
to measure operating performance, it another name is “Sales to fixed Assets”. This ratio
indicates how a company generates net sales from its fixed assets investment. Fixed assets
are tangible assets like Property, Plant and Machinery. A higher ratio indicated that assets are
utilizing very efficiently and large amount of sales are generated with using a small amount
of assets.
Formula:
Sales to Fixed Assets = Sales Revenue/Fixed Assets or
(Net sales/FixedAssets)
(Net sales= Gross sales- returns)
(Fixed Assets= Property, Plant and Machinery etc.)
Analysis Table:
(PKR in Millions)
Cherat
Cement
6565.42/3244.178=2.02Times 6451.33/3220.210=2.0Times 6294/2473.4325=2.54Times

DG Khan
Cement
26104.611/29958.970=0.871Times 26542.509/29832.625=0.889Times 24915.924/28934.979=0.8611
Times
Fauji
Cement
18642.358/23880.553=0.77 Times 17532.277/23881.426=0.74Times 15968/24734.325=0.64 Times
Working:
(Cherat Cement
P, P&Equipment etc.
(PKR in Millions)
2015 1065+7065+263190+255342+84678+13184+201852+107628+4367+7467
=3244178
2014 1605+7665+282781+2662585+79.36+12840+175122+90539+43050+5262 =3220210
201314.84+389.9913+2058.5039+2.929+2.692+6.363+7.973+8.005+39.666+6.932
=2473.4325
DG Khan Cement:
(PKR in Millions)
201527979.0321+1874.169+105.469 = 29958.970
2014 28951.966+634.318+246.341 = 29832.625
2013 28951.966+634.318+246.341 = 28934.979
Fauji Cement
(PKR in Millions)
2015:148.425+3733.372+19845.432+22.802+5.636+6.796+11.597+85.951+571.103+407.68
= 23880.553

2014: 148.452+3711.541+19567.814+26.046+2.665+6.909+6.833+8.221+42.177+360.768
=23881.426
2013:148.452+3899.913+20585.039+29.290+2.692+6.363+7.973+8.005+39.666+6.932
=24734.325
It can be observed from the above table the Sales to Fixes assets ratio of Cherat Cement was
found 2.02 Times, 2 Times and 2.54 Times for the years of FY2015, FY 2014, and FY2013
respectively.
The negative variances in Cherat cement are primarily due to ongoing expansion of projects and
also low export to Afghanistan due to peace condition is not well. Above figure show almost
same position in FY 2015 wit respective to FY 2014 and FY 2013 results showing higher than
FY 2015, and FY 2014.
0
0.5
1
1.5
2
2.5
3
3.5
2015 2014 2013
Chirat Cement
DG Khan
Cement
Fauji Cemnet

It can be observed from the above table the Sales to Fixes assets ratio of DG Khan Cement was
found, 0.871Times 0.889 Times and 0.8611 Times for the years of FY2015, FY 2014, and
FY2013 respectively.
DG Khan Result can be seen in above paragraph, there is decreasing trend in FY 2015 as
compared to FY 2014, and FY 2013 respectively. DG Khan exports are low due to peace
conditions is not good in Afghanistan, so trend are decreasing.
It can be observed from the above table the Sales to Fixes assets ratio of Fauji Cement was found
0.77 Times, 0.74 Times and 0.64 Times for the years of FY2015, FY 2014, and FY2013
respectively.
Fauji cement ratio is showing little increasing in FY 2015 as compared to FY 2014 and these
both years sowing lesser ratios with respect to FY 2103.
Conclusion:
After carefully interpretation of result it has been observed that Cherat Cement sales to fixed
asset Ratio is greater than other selected companies. So Cherat is number one with higher ratio
and DG Khan is second and Fauji is on third position, respective to other two companies.

Chapter 4
Conclusion & Recommendations
4.1- Conclusion:
As per Gross profit ratio of three selected companies there is Fauji Cement is increasing trend in
gross profit margin and in good position as compared to other two companies. Fauji cement is at
higher ratio with net sales and effective cost control management system. DG khan is showing
declining performance due to low exports to Afghanistan because of peace issues. Cherat cement
is also with low sale and low gross profit margin due to primarily expansion of new line which
are under process.
As per operating profit margins DG Khan Cement is number one with its highest operating profit
margin and also have good and effective control on expenses and cost effective strategies which
increase trends of net sales and gross profit margin also, as compare to others. Fauji cement is
also with good position in increasing trend of operating profit margin and good cost/ expense
effective management and Cherat Cement sales increased 1.7%, profit margin increasing trends
due to improve gross profit margins, reducing finance cost and with increase investment income.
Fauji cement operating profit also has increasing trend in FY 2015, FY 2014 and FY 2013
respectively.
As per net profit margins After carefully interpreting results of net Profit margins of the all
selected companies, I found DG Khan Cement is number one with its highest net profit margin,
which is showing their best performance in industry with large increasing trend in net profits and
creditworthiness and also have good and effective control on expenses and cost effective
strategies which increase trends of net sales and gross profit margin also. In DG khan cement
over all finance cost decreased. This is due to better margin on sales. This company gave reason
able cash flows to cater its fund requirements Effective financial management between local and
foreign and local currencies increases profit ratio. As compare to others. Fauji Cement is number
is also with good performance continues increasing net profit margins with compare d to FY
2015, FY 2014 and FY 2013 respectively. Cherat Cement is low net profit margins respectively

in the FY 2015, FY 2014 and FY 2013 respectively. The negative variances are primarily due to
ongoing expansion projects are in line.
As per return on assets ratio although Cherat cement has declining trend in current year but in
good ratio with compared to other selected companies like DG Khan and Fauji cement. DG Khan
is increasing trend in FY 2015, FY 2014 and FY 2013 respectively and in number three position
Fauji is also performing well with increasing trend of all financial years.
As per DuPont analysis, it pinpoints the area, whether profit margin, asset turnover or financial
leverage is the cause of problem, in this way management can correct it easily. Cherat Cement is
sowing some declining in FY 215 respective to previous years. It main problem is lower profit
margin. Asset turnover ratio is declining in FY 2015 as expansion of new projects and equity
multiplier is almost same with respective to previous years. ROE of Dg Khan Cement with High
profit margin, and equity multiplier and little declined in asset turnover ratio.Fauji cement ROE
having increasing trend from previous three years continuously, because of high profit margins,
High turnover ratio, and high equity multiplier. Fauji cement ROE having increasing trend from
previous three years continuously, because of high profit margins, High turnover ratio, and high
equity multiplier.
As per ROA decreasing trend on ROA of Cherat Cement in FY 2015 can be seen on above table
due to expansion of new project with compare to previous FY 2014 and FY 2013 respectively.
DG Khan Cement was found 10.33%, 8.72% and 4% respectively FY2015, FY 2014, and
FY2013. ROA of Fauji Cement have increasing trend of all Financial Years can be seen on
above figures. It is showing its best performance to increasing ROA and best utilizing of its
assets.
As per operating assets turnover there is decreasing trend in operating assets turnover ratio in
Cherat cement Company. Primarily there is expansion of new lines and therefore maximum
assets are still in under process. This non-revenue generated assets also reduced, eliminates and
converted to be cash for better performance. DG KHAN CEMENT operating assets turnover ratio
is 40.42, 51.77% and 60.76% in the FY 2015, FY 2014 And FY 2013 respectively. Non-revenue
generated assets are burden in the company, these converted into cash for sound health, one
another cause is low exports that why many assets are not utilizing in Current year FY 2015.

Fauji Cement operating assets turnover ratio is 84.85%, 83.849% and 86.47% in the FY 2015,
FY 2014 And FY 2013 respectively. Fauji cement although is decline assets ratio but maximum
utilizing its assets which is good sign of performance.
As per return on operating assets there is Cherat Cement there is decreasing trend in FY 2105 as
compared to previous years, its main cause is new expansion of projects. FY 2014 and FY 2013
have increasing trends. DG Khan performance is better in FY 2015 as compared to FY 2104
which is decreasing trend and FY 2014 also have increasing trend to previous years. Fauji
cement is going well with increasing trend of all three financial of FY 215, FY 214 and FY 2103
respectively
As per Return on Equity Cherat cement ROE, Dividend distributed 30% the year ended 2015,
also have declining trend of ROE due to increase of shareholders and expansion of domestic
lines. Previous years are showing increasing results, Issuance of new share declining current
ROE and increasing capital work is also big cause of decline. ROE is expected to improve after
commissioning of new line. DG Khan Cement ROE has increasing trend of three last Financial
Years, FY 2015, FY 2014 and FY 2013 respectively. Well performance of Fauji Cement with
increasing trend in ROE, which showing best position in investor point of view. ROE is
increasing in FY 2015, FY 2014 and FY 2013 respectively
As per sales to fixed assets,the negative variances in Cherat cement are primarily due to ongoing
expansion of projects and also low export to Afghanistan due to peace condition is not well. DG
Khan Result can be seen in above paragraph, there is decreasing trend in FY 2015 as compared
to FY 2014, and FY 2013 respectively. DG Khan exports are low due to peace conditions is not
good in Afghanistan, so trend are decreasing Fauji cement ratio is showing little increasing in FY
2015 as compared to FY 2014 and these both years sowing lesser ratios with respect to FY 2103.

4.2- Recommendations:
According to the conclusion, I suggest that the selected companies can improve their profitability
ratio and position by using following strategies
 Cherat Cement and Fauji should improve their and complete project in time for
increasing their sales ratio to increase their Gross profit, operating profit net profit
margins.
 DG Khan Cement and Fauji Cement should improve their domestic sales to cover
the sales losses due to low export in Afghanistan and other countries for peace
problem
 All three companies especially Cherat Cement face negative operating assets
turnover ratio, as well as DG khan also increase revenue generation its assets or
converted into cash for strong health.
 DG khan Cement and Cherat Cement can improve their ROA ratio to improve
their sales and use cost cutting effective control for sound health.
 DG Khan Cement and Cherat Cement should increase their profit margins, equity
multipliers and total assets turn over to increase Return on Equity.
 DG Khan Cement and Fauji Cement should increase more domestics sale to
increase net for shareholder point of view, in this way they can increase dividend
for investors
 DG khan Cement search new exports markets or increase supply domestically and
utilize their all plant for increasing sales to fixed assets ratio.

Section ii
---------------------------------------------------------------------------------------
a)
Introduction of Student:
Name: Abdul Majid
Last Degree: BBA
Organization:
Designation:
Experience:

b)
Appendix / Appendixes:
All financial statements are available online for the selected companies for the FY 2013, FY
2014 & FY 2015 on their websites.
So there is no need to paste scan copies of financial statements, Reference are given in
Bibliography in APA format.

c)
Bibliography
 Fauji Cement Company Limited, (2015) Company Information.Available
atwww.fccl.com.pk/
 DG Khan Cement Company Limited, (2015) Company Information.Available at
http://www.dgcement.com/financial.html
 Fauji Cement Company Limited. (2015, 2014 and 2013) Annual Reports Available
athttp://fccl.com.pk/&http://fccl.com.pk/marketing-sales/
 Cherat Cement Company Limited, (2015) Company Information.Available
athttp://gfg.com.pk/ccl/
 Cherat Cement Company Limited, Annual Reports. Available at
http://www.gfg.com.pk/ccl/page.php?page=27&cat=4444
 Fauji Cement Company Limited, http://fccl.com.pk/
 Fauji Cement Company Limited Annual report 2015.
http://www.fccl.com.pk/main/financial_statements/annualreport2015.pdf
 Ghani, M.A., (1996). Advance Accounting, Pakistan.
 Ravi Magazine Lahore information available at http://www.ravimagazine.com/
 Cherat Cement Company Limited, (2015) Company Information. Available
athttp://www.gfg.com.pk/uploads/files/CCCL_Annual_Report_2015%282%29.pdf
 Dawn News Paper Pakistan Information available at
http://www.dawn.com/news/1231705
 Ravi Magazine information available at http://www.ravimagazine.com/analysis-of-
pakistani-cement-industry-a-report/
 The All Pakistan Cement Manufacturers Association (APCMA) available
athttp://www.apcma.com/
 A digital document library Scribd information available at
https://www.scribd.com/doc/26152245/Cement-Industry-Pakistan-a-Strategic-Analysis
 Pakistan Stock Exchange information available at http://www.psx.com.pk/

Bachelor Of Science in Business Administration (Final Project Finance)

Bachelor Of Science in Business Administration (Final Project Finance)

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