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financial statement analysis MSC textile
SPREED SHEET MSC TEXTILE MILLS (PVT) LTD As at Year 2003 Year 2004 Year 2005 Current Assets Audited Audited Audited Cash & Bank 83,599,569 154,461,108 154,911,973 Stock in trade / Inventory 426,533,640 490,121,810 729,804,251 Debtors 134,381,257 194,725,241 356,984,972 Investment & Other Receivable 91,461,447 90,081,103 118,959,116 Total Current Assets 768,153,468 964,705,125 1,419,098,670 Current Liabilities Short term financing 545,915,376 685,922,921 848,873,173 Creditor 137,920,528 155,104,403 188,050,572 Taxation 15,591,004 14,386,216 12,422,874 Dividends 35,851,449 59,755,429 59,926,740 Other liabilities 52,508,217 62,181,176 316,735,546 Total Current Liabilities 748,083,801 963,936,789 1,418,777,721 Working Capital 20,069,667 768,336 320,949 Fixed Assets & Investments Freehold Land 12,903,280 17,936,880 126,900,000 Building 92,969,459 95,408,696 102,308,234 Plant & Machinery 156,029,632 165,805,937 364,890,295 Office Equipment (Fur & Fix) 1,386,759 1,248,083 1,123,275 Capital Work in Progress 1,972,924 1,215,980 64,154,333 Long Term Investment 45,921,466 48,739,846 60,882,666 Long Term Deposits 7,001,520 10,672,359 8,792,359 Other Assets 30,569,685 37,736,393 46,744,099 Total Fixed Assets 502,760,058 545,478,407 1,004,020,775 Capital Employed 522,739,725 546,246,743 1,004,341,724 Less: Long term debt 139,599,950 121,732,073 432,555,670 Net Worth 383,139,775 424,514,670 571,768,054 General Reserve 150,049,334 165,000,000 190,000,000 Unappropriated Profit 123,090,441 149,514,670 271,786,054 Share Capital / Issued Capital 110,000,000 110,000,000 110,000,000 Share Holder Interest 383,139,775 424,514,670 571,768,054 Sales 1,696,098,797 1,547,316,864 1,566,866,012 Less: Cost of good sold 1,448,059,673 1,287,641,679 1,181,477,655 Gross Profit 248,039,124 259,675,185 385,388,357 Less: Operating expense 110,066,356 108,594,850 130,555,059 Operating Profit 137,972,768 151,080,335 254,833,298 Add: Non Trading Income 71,087 70,213 50,269 138,043,855 151,150,548 254,883,567 Less Financial & Other Charges Financial 51,075,826 50,782,374 64,237,768 Other Charges 9,368,804 17,317,286 16,310,618 Net profit before taxes 35,901,608 35,412,572 129,761,354 Less: Taxes 15,591,004 14,386,216 12,422,874 Net profit after taxes 20,310,604 21,026,356 117,338,480 Operating Cash Flow 199,837,544 10,005,579 27,313,703 COMMON SIZE ANALYSIS MSC TEXTILE MILLS (PVT) LTD As at Year 2003 Year 2004 Year 2005 Current Assets Audited % Audited % Audited % Cash & Bank 6.48 10.23 6.39 Stock in trade / Inventory 33.09 32.47 30.11 Debtors 10.42 12.9 14.73 Investment & Other Receivable 7.09 5.96 4.9 Total Current Assets 59.6 63.91 58.56 Current Liabilities Short term financing 42.35 45.44 35.03 Creditor 10.7 10.27 7.76 Taxation 1.2 0.95 0.51 Dividends 2.78 3.95 2.74 Other liabilities 4.07 4.11 13.07 Total Current Liabilities 58.04 63.86 58.55 Working Capital 1.55 0.05 0.01 Fixed Assets & Investments Freehold Land 1 1.18 5.23 Building 7.21 6.32 4.22 Plant & Machinery 12.1 10.98 15.05 Office Equipment (Fur & Fix) 0.1 0.08 0.04 Capital Work in Progress 0.15 0.08 2.64 Long Term Investment 3.56 3.22 2.51 Long Term Deposits 0.54 0.7 0.36 Other Assets 2.37 2.5 1.92 Total Fixed Assets 39 36.13 41.43 Capital Employed 40.55 36.18 41.44 Less: Long term debt 10.83 8.06 17.85 Net Worth 29.72 28.12 23.59 General Reserve 11.64 0.93 7.84 Unappropriated Profit 9.55 9.9 11.21 Share Capital / Issued Capital 8.53 7.28 4.53 Share Holder Interest 29.72 28.12 23.59 Sales 100 100 100 Less: Cost of good sold 85.37 83.21 75.4 Gross Profit 14.62 16.78 24.59 Less: Operating expense 6.48 7.01 8.33 Operating Profit 8.13 9.76 16.26 Add: Non Trading Income 0.004 0.004 0.003 8.13 9.76 16.26 Less Financial & Other Charges Financial 3.01 3.28 4.09 Other Charges 0.55 1.11 1.04 Net profit before taxes 2.11 2.28 8.28 Less: Taxes 0.91 0.92 0.79 Net profit after taxes 1.19 1.35 7.48 Operating Cash Flow 11.78 0.64 1.74 INDEX ANALYSIS MSC TEXTILE MILLS (PVT) LTD As at Year 2003 Year 2004 Year 2005 Current Assets % % % Cash & Bank 100 184.76 185.3 Stock in trade / Inventory 100 114.9 171.1 Debtors 100 144.9 265.65 Investment & Other Receivable 100 98.49 130.06 Total Current Assets 100 125.58 184.74 Current Liabilities Short term financing 100 125.64 155.49 Creditor 100 1.12 1.36 Taxation 100 92.27 79.67 Dividends 100 1.66 0.16 Other liabilities 100 118.42 603.21 Total Current Liabilities 100 123.88 182.34 Working Capital 100 7.73 3.23 Fixed Assets & Investments Freehold Land 100 139.01 983.47 Building 100 102.62 110.04 Plant & Machinery 100 106.26 233.85 Office Equipment (Fur & Fix) 100 89.99 81 Capital Work in Progress 100 61.63 3251.73 Long Term Investment 100 106.13 132.57 Long Term Deposits 100 152.42 125.57 Other Assets 100 1.23 1.52 Total Fixed Assets 100 108.49 199.7 Capital Employed 100 3.82 1.59 Less: Long term debt 100 621.08 309.85 Net Worth 100 110.79 149.23 General Reserve 100 109.96 126.62 Unappropriated Profit 100 121.46 220.8 Share Capital / Issued Capital 100 100 100 Share Holder Interest 100 110.79 149.23 Sales 100 789.04 92.38 Less: Cost of good sold 100 88.92 81.59 Gross Profit 100 104.69 155.37 Less: Operating expense 100 98.66 118.61 Operating Profit 100 109.5 184.69 Add: Non Trading Income 100 98.77 70.71 100 109.49 184.63 Less Financial & Other Charges Financial 100 99.42 125.76 Other Charges 100 184.83 174.09 Net profit before taxes 100 98.63 361.43 Less: Taxes 100 92.27 79.67 Net profit after taxes 100 103.73 577.72 Comments on Common Size Analysis The Common Size analysis of assets side of balance sheet shows that percentage of current assets in relation with total assets first increase but in last year it decreases. In fixed assets it increases. But in deposits and advances has been decline three-year relation with the total of assets. The liabilities side shows that current liabilities in percentage in relation with total assets has also decrease so company must be careful to control current liabilities, other items of liabilities are also declining over three Years in relation with the percentage of total assets. The income statement analysis shows that gross profit is increasing but operating profit is declining. The overall net profit increasing over two years and also grows in third year. Comments on Index Analysis Index analysis of balance sheet shows that by taking 2003 as base year the total liabilities and shareholder’s equity has been increased over the next two years, and same like as the case with assets which also increased over the next two years. From the income statement point of view gross profit has also increased over the next two years as compared with the base year. The same is the case with operating profit and ultimately net profit. Table of Contents • Preface • Spread Sheet • Trend Analysis • Graphical representation of ratio • Comments on Trend analysis • Common Size Analysis • Comments on common size analysis • Index Size Analysis • Comments on index analysis Preface Title: Financial Statement Analysis of “ MSC Textile mills (Pvt.) Ltd.” Objectives: • To furnish information for making investment and credit decision. • To identify performance to aid decision-making. • Identify that how much a firm financial by external debt. • Measure the performance of the assets. • To know firm profitability and its market value. Benefits: • Use financial information’s to improve managerial decision. • We will evaluate the financial condition and performance of a firm over the year. • Ratio can tell a comparison between assets and liabilities. • Analyze whether a company invest more or not. • To see the relationship between cash flows and accounting profit. Sources: • Financial Management By “van Horn” • Managerial finance By “Lawrence j. Gitman” • Annual report of “MSC Textile Mills (pvt) Ltd”. Trend Analysis MSC Textile Mills (pvt) Ltd Years 2003 2004 2005 Liquidity Ratio: Current Ratio 1.02:1 1.00:1 1.00:1 Quick Ratio 0.41:1 0.46:1 0.46:1 Cash Ratio 1.02:1 1.56:1 1.70:1 N.W.Capital Ratio 0.02:1 0.0007:1 0.0002:1 Debt Ratio: Total Debt to Total Assets 0.10:1 0.12:1 0.14:1 Long Term Debt to Total Assets 0.01:1 0.08:1 0.17:1 Total Capitalization Ratio 1.09:1 1.36:1 1.45:1 Total Debt to Total Equity 63.35%: 37.65% 51.05%: 48.95% 52.05%: 47.95% Long Term Debt to Total Equity 36.70%: 64.30% 45.75%: 55.25% 47.03%: 52.07% Coverage Ratio: Financial Charges Coverage Ratio1.70 Times 1.97 Times 2.96 Times Assets Efficiency Ratio: Receivable Turnover Ratio 2.36 Times 2.42 Times 3.14 Times Inventory Turnover Ratio 4.79 Times 2.80 Times 1.95 Times Payable Turnover Ratio 0.63 Times 0.41 Times 0.63 Times Total Assets Turnover Ratio 0.01 Times 0.01 Times 0.04 Times Payable Turnover in Days 571 Days 878 Days 571 Days Inventory Turnover in Days 75 Days 128 Days 184 Days Receivable Turnover in Days 152 Days 148 Days 114 Days Operating Cycle 227 Days 276 Days 298 Days Cash Cycle 334 Days 602 Days 273 Days Profitability Ratio: Gross Profit Margin 14.62% 16.78% 24.59% Operating Profit Margin 8.13% 9.76% 16.26% Net Profit Margin 1.19% 1.35% 7.88% ROA / ROI 0.01% 0.01% 0.04% ROE 1.81% 0.09% 0.24% Liquidty Ratio 0 1 2 3 4 2003 2004 2005 Years Values N.W.Capital Ratio Cash Ratio Quick Ratio Current Ratio Debt Ratio 0 0.5 1 1.5 2 2003 2004 2005 Years Values Total Capitalization Ratio Long Term Debt to Total Assets Total Debt to Total Assets Total Debt to Total Equity Ratio 0% 50% 100% 2003 2004 2005 Total Debt Ratio Total Equity Ratio Long term Debt to Total Equity Ratio 0% 50% 100% 2003 2004 2005 Long term Debt Ratio Total Equity Ratio Coverage Ratio 0 1 2 3 4 2003 2004 2005 Years Times Financial Charges Coverage Ratio [...]... Company financial coverage is also better and company enjoys better investment and more good financial position Company’s profit is also stable during the required time period Company gets sufficient return on investment and assets Comments on Trend Analysis As can be seen, the current ratio and acid test ratio has been increased over year by year but the company needs more improvement in order to get financial