1

Packages limited Lahore Statement of profit and loss For the year ended December 31, 2006
(Rupees in thousands) Local sales Export sales Total sales Less: sales tax and excise duty Commission Net sales Cost of sales Gross profit Adminstrative expenses Distabution and marketing cost Other operating expenses Other operating income Profit from operations Finance costs Investment income Profit before tax Taxation Profit for the year Earnings per share Rupees 8,869,068 158,820 9,027,907 1,172,430 8,878 1,181,308 7,846,599 (6,551,995) 1,294,604 (349,934) (255,587) (213,475) 252,005 757,613 (78,909) 5,669,136 6,347,840 (247,060) 6,100,780 87.30

Packages limited Lahore Statement of profit and loss For the year ended December 31, 2007 (Rupees in thousands)
Local sales Export sales Total sales Less: sales tax and excise duty Commission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing cost Other operating expenses Other operating income Profit from operations Finance costs Investment income (Loss)/Profit before tax Taxation (Loss)/Profit for the year (Loss)/Earnings per share 10,365,224 174,771 10,539,995 1,501,230 10,130 1,511,360 9,028,635 (7,829,362) 1,199,273 (348,064) (240,357) (145,439) 122,185 587,598 (367,378) 4,412,728 4,632,948 (307,000) 4,325,948 Rupees 51.27

Packages limited Lahore Statement of profit and loss For the year ended December 31, 2008
(Rupees in thousands) Local sales Export sales Total sales Less: sales tax and excise duty Commission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing cost Other operating expenses Other operating income Profit from operations Finance costs Investment income (Loss)/Profit before tax Taxation (Loss)/Profit for the year (Loss)/Earnings per share 13,697,837 603,086 14,300,923 2,056,475 19,669 2,076,144 12,224,779 (11,281,480) 943,299 (512,189) (362,425) (324) 336,965 405,326 (1,662,094) 948,879 (307,889) (112,064) (195,825) Rupees (2.32)

Packages limited lahore Statament of profit and loss For the year ended december 31,2010 (Rupees in thousands)
Local sales Export sales Total sales Less:sales tax and excise duty Commisison Net sales Cost of sales Gross profit Adminstrative expenses Distribution and marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment Loss from operations Finance costs Investment income (Loss) before tax Taxation (Loss) for the year (Loss)/Earnings per share Basic Diluted 20,598,198 1,239,235 21,837,433 3,266,556 34,969 3,301,525 18,535,908 (17,740,467) 795,441 (521,269) (565,638) (15,185) 202,368 (104,283) (1,210,323) 997,260 (317,346) (15,079) (332,425) Rupees Rupees (3.94) (3.94)

Packages limited lahore Statament of profit and loss For the year ended december 31,2009 (Rupees in thousands)
Local sales Export sales Total sales Less:sales tax and excise duty Commisison Net sales Cost of sales Gross profit Adminstrative expenses Distribution and marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment Loss from operations Finance costs Investment income Profit before tax Taxation Profit for the year Earnings per share Basic Diluted 15,775,713 757,575 16,533,288 3,266,556 34,969 2,489,455 14,043,833 (13,736,498) 307,335 (467,582) (444,210) (118,682) 385,299 (1,793,991) (2,131,831) (1,278,433) 9,179,837 5,769,573 (1,705,649) 4,063,924 Rupees Rupees 48.16 44.72

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2006 (Rupees in thousands) ASSETS:
NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Assets Subject to finance lease Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Cash and blank balance Total current assets Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital Issued, subscribed, and paid up capital Reserves Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances Liabilites against assets subject to finance lease Deferred liabilities Total Non current liabilites CURRENT LIABILITES: Current portion of liabilites against Assets subject to finance lease Finances under mark up arrangements-secured Derivation foreign currency forward options Creditors , accured and other liabilities Provisions for taxation Total current liabilites Contingences and commitments Total liabilities and equity 3,071,115 2,532 14,423 1,901 10,143,195 5,775,665 180,618 69,805 19,259,254 485,665 1,647,173 821,160 353,521 106,703 3,414,222 22,673,476

1,000,000 698,795 6,872,336 6,101,666 13,672,797 6,000,000 _ 688,455 6,688,455 851 1,280,857 _ 1,030,516 _ 2,312,224 _ 22,673,476

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2007 (Rupees in thousands)
ASSETS: NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Cash and blank balance Total current assets Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital Issued, subscribed, and paid up capital Reserves Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances -secured Deferred liabilities Total Non current liabilities CURRENT LIABILITES: Current portion of long term finances-secured Finances under mark up arrangements-secured Trade and other payables Total current liabilities Total liabilities and equity 10,361,253 363 26,055 7,800,683 10,080,259 244,166 88,262 28,601,041 715,840 2,206,191 1,288,928 525,421 101,022 4,837,402 33,438,443 1,500,000 733,735 13,110,240 4,326,797 18,170,772 12,346,500 955,790 13,302,290 _ 401,019 1,564,362 1,965,381 33,438,443

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2008 (Rupees in thousands) ASSETS:
NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Cash and blank balance Total current assets Non current assets classified as held For sale-investment in related party Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital Issued, subscribed, and paid up capital Reserves Unappropriated profit /(Loss) Total Equity NON-CURRENT LIABILITES Long term finances secured Deferred liabilities Total Non current liabilities CURRENT LIABILITES: Current portion oflong term finances secured Finances under mark up arrangements-secured Trade and other payables Total current liabilities Liabilities associated with non current asssets Classified as held for sale advance against sale of shares Total current liabilities Total liabilities and equity 11,285,293 241 25,294 8,155,293 8,362,485 155,102 127,518 28,111,172 841,487 3,652,261 1,523,049 692,076 199,188 6,908,061 15,400 6,923,461 35,034,633 1,500,000 843,795 15,624,602 (195,825) 16,272,572 12,304,400 840,788 13,145,188 550,000 2,587,819 1,461,904 4,599,723 1,017,150 5,616,873 35,034,633

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2009 (Rupees in thousands)
ASSETS: NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Income tax receivable Cash and blank balance Total current assets Total current and non current assets 19,161,332 137 55,335 65,578 8,099,401 139,577 107,900 27,629,260 870,951 4,102,396 1,752,216 203,817 593,669 455,720 7,978,769 35,608,029

10

EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital 150,000,000 (2009:150,000,000) ordinary share of Rs. 10 each 22,000,000(2009:22,000,000) 10% non-voting cumulative Preference shares/convertible stock of Rs. 190 each Issued, subscribed, and paid up capital 84,379,504(2009:84,379,504) ordinary share of Rs. 10 each Reserves Preference shares/convertible stock reserve Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances Deferred income tax liabilites Retirement benefits Deferred liabilities Total Non current liabilites CURRENT LIABILITES: Current portion of long-term finances-secured Finances under mark up arrangements-secured Trade and payables Accured finance cost Total current liabilites Contingences and commitments Total liabilities and equity

1,500,000 4,180,000 843,795 17,099,138 1,605,875 3,868,099 23,416,907 7,970,577 2,353,000 124,852 10,488,429 86,496 1,406,516 249,681 1,742,693 _ 35,608,029

11

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2010 (Rupees in thousands)
ASSETS: NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Income tax receivable Cash and blank balance Total current assets Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital 150,000,000 (2009:150,000,000) ordinary share of Rs. 10 each 22,000,000(2009:22,000,000) 10% non-voting cumulative Preference shares/convertible stock of Rs. 190 each Issued, subscribed, and paid up capital 84,379,504(2009:84,379,504) ordinary share of Rs. 10 each Reserves Preference shares/convertible stock reserve Unappropriated profit Total Equity 17,861,486 2,392 31,588 753,328 12,219,037 128,429 94,557 31,090,817 1,049,950 3,669,151 1,643,275 265,361 766,107 1,140,143 8,533,987 39,624,804

1,500,000 4,180,000 843,795 24,218,774 1,605,875 261,441 26,929,885

12

NON-CURRENT LIABILITES Long term finances Deferred income tax liabilites Retirement benefits Deferred liabilities Total Non current liabilites

7,956,291 2,168,000 167 149,173 10,273,631

CURRENT LIABILITES: Current portion of long-term finances-secured Finances under mark up arrangements-secured Trade and payables Accured finance cost Total current liabilites Contingences and commitments Total liabilities and equity

14,286 141,231 1,794,059 471,712 2,421,288 _ 39,624,804

13

Packages limited Lahore CASH FLOW STATEMENTS For the last five years

Operating activities:

2010

2009

2008

2007

2006

Cash generated from operations 2,048,790 618,112 Finance cost paid -988,292 -1,479,667 Taxes paid -490,263 -285,615 Payments for accumulating compensated absences -16,805 -6,971 Retirement benefits paid -50,488 -44,236 Net cash from operating activities 502,942 -1,198,377 Cash flow from investing activities: fixed capital expenditure -633,758 -972,975 Investments 50,968 -10,000 advance against disposal of investments --Net dec./inc. in long term loans and deposit 11,148 15,525 proceeds from disposal of property,plant and equipment 25,034 23,543 proceed from disposal&invest ment 7,865,000 Dividends received 946,292 313,087 Net cash 399,684 7,234,180 14

-708,816 -1,800,985 -220,937

326,117 -1,051,738 -139,191

774,099 -38,270 -194,335

-12,268 -35,564 -2,778,570 -2,447,617

-6,783 -30,339 -901,936 -4,841,392 -12,903

-7,299 -27,384 506,811 -7,325,683 -20,504

1,017,150 89,064

-63,548

-164,418

21,252

48,401 71,428

12,493

948,879 -371,272

646,650 -4,151,364

822,990 -6,675,122

genreated from/used in investing act. Cash flow from financing activities: payment of long term finances -7,354,400 Proceeds from long-term finances proceeds from issuence of preference shares/convertib le stock/net 4,076,452 proceeds from issue finance 1,061,208 Payment of finance lease liabilities proceeds from issuance of ordenary shares DIVIDENT PAID -272,938 Net (decrease) / increase in cash and cash equivalents 2,7 (2,088,634 629,688 57,855 ) Net cash(used in)/genrated from financing activites -272,938 Net increase/decreas e in cash and cash equivalent 369,224 Cash and cash quivalent at the beginning of the year cash and cash 629,688 998,912 2,757,855 369,224 15 -2,088,634 -2,388,631 -299,997 -3,277,948 1,061,208

6,346,500

5,000,000

-851 -418,194

-5,159 -417,914

874,157

(1,591,384 )

5,927,455

4,576,927

-1,174,154

417,230

874,157 -299,997

-1,591,384 -

quivalent at the end of the year 2,388,63 1 1,174,15 4

Statement of Owners Equity

Rupees in Thousands)

Share Capital

Share Fair Value Premium Reserve

General Reserve

Hedging reserve

Balance as on December 31, 2005 Final Dividend for the year ended December 31,2005 Rs. 6.00 Per share Transferred from Profit And loss Account Fair value gain during The year Transferred from Profile And loss Account on disposal of Shares of the resource Group (TRG) Pakistan Limited

698,795

2,986,953 19,500

3,090,936

(76,902)

596,000

178,250

697

Gain arising on foreign _ Currency forward options Entered into as part of Cash flow hedge for the

1,905

16

Purchase of plant Transferred to CWIP On expiry of foreign Currency forward Options (note 110) Profit for the year Balance as on December 31, 2006 698,795 _ _ _ _ 74,187

_ 198,477

_ 3,686,936 _

2,968,953

(continued)

Statement of Owners Equity

(Rupees in thousands)

Unappropriated Profit & loss Account 1,016,163

Total

Balance as on December 31, 2005

7,736,255

Final Dividend for The year ended December 31,2005 Rs. 6.00 Per share Transferred from Profit and loss Account Fair value gain during The year Transferred from Profit And loss Account on disposal of

(419,277)

(491,277)

(596,000)

178,250

17

Shares of the resource group (TRG) Pakistan Limited

697

Gain arising on foreign Currency forward options Entered into as part of Cash flow hedge for the Purchase of plant Transferred to CWIP On expiry of foreign Currency forward Options (note 110) Profit for the year Balance as on December 31, 2006

1,905

_ 6,100,780

74,185 6,100,780

6,101,666

13,672,797

Statement of owners Equity (Rupees in Thousands) Share Capital 698,795 Share Premium 2,968,953 Fair Value Reserve 198,477 General Reserve 3,686,936

Balance as on December 31, 2006 Final Dividend for the year ended December 31,2005 Rs. 6.00 Per share Transferred from Profit And loss Account 3,493,975 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Fair value gain

5,646,600

34,940

18

during The year Transferred from Profit And loss Account on disposal of Shares of the resource group (TRG) Pakistan Limited & Nestle Pakistan limited Profit for the year Balance as on December, 31 2007

2,476,829

_ _ 733,735

_ _ 2,986,953

(1,885,525) _ 789,751

_ _ 9,333,536

Statement of owners Equity (Rupees in Thousands) Balance as on December 31, 2006 Final Dividend for the year ended December 31,2005 Rs. 6.00 Per share Transferred from Profit And loss Account 3,493,975 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Fair value gain during The year Transferred from Profit And loss Account on disposal of Shares of the resource group (TRG) Pakistan Limited & Nestle Pakistan limited Unappropriated Profit & Loss account 6,101,666 13,672,797 Total

(419,277)

(419,277)

(5,646,600)

(34,940) _

_ 2,476,829

_ 19

(1,885,525)

Profit for the year Balance as on December, 31 2007

4,325,948 4,326,797

4,325,948 18,170,772

Statement of owners Equity (Rupees in Thousands) Share Capital Share Premium Fair Value Reserve General Reserve

Balance as on December, 31 2007 11,006,022 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Transferred from Profit And loss Account Fair value loss during The year Loss for the year Balance as on December, 31 2008

733,735

2,986,953

789,751

9,333,536

110,060

(110,060)

_ _ _

_ _ _

4,326,797 _ _

(1,072,375) _

843,795

2,876,893

(912,624) 13,660,333 ( continued)

20

Statements of Owners Equity (Rupees in Thousands) Unappropriated Profit & Loss account Total

Balance as on December, 31 2007 11,006,022 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Transferred from Profit And loss Account Fair value loss during The year Loss for the year Balance as on December, 31 2008

4,326,797

18,170,772

(4,326,797) _ (195,825) (195,825)

_ (1,702,375) (195,825) 16.272,572

21

Profit & Loss account

(Rupees in thousands) Local Sales Exports sales Less; Sales & Excise Duty Commission

2009 15,775,713 757,575 16,533,288 2,466,027 23,428 2,489,455 (14,043,833) 13,736,498 307,335 (467,582) (444,210) (118,682) 385,299 (1,793,991) ( 2,131,831) (1,278,433) 9,179,837 5,769,573 (1,705,649) 4,063,924

Cost of sales Gross Profit Administrative expenses Distribution & marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment Loss from operations Finance costs Investment Income (Loss)/Profit before tax Taxation (Loss) / Profit for the year (Loss) / earning per share 22

Basic Diluted

48.16 44.72

Statement of Comprehensive Income

(Rupees in thousands) (Loss) / Profit after taxation Other Comprehensive income; Surplus / (Deficit) on re-measurement of available For sale financial assets Implement loss transferred to profit & loss account Other comprehensive income for the year Total comprehensive income for the year

2009 4,063,924

319,455 1,793,991 1,474,536 5,538,460

Statement of Owners Equity

(Rupees in Thousands)

Share Capital

Share Premium

Fair Value Reserve

General Reserve

Preference Shares/ Convertible Stock Reserve

Balances on December 31, 2008 Equity components of Preference shares/ conVertable stock as referred To in note 72 (net of Transaction cost)

843,795

2,876,993

(912,624) 13,660,333

_ 23

1,605,875

Total comprehensive Income for the year Balance on December 31, 2009

1,474,536

843,795

2,876,993

561912

13,660,333

1,605,875 (continued)

Statement of Owners Equity

(Rupees in Thousands)

Unappropriated (loss) / Profit (195,825)

Total

Balances on December 31, 2008 Equity components of Preference shares/ conVertable stock as referred To in note 72 (net of Transaction cost) Total comprehensive Income for the year Balance on December 31, 2009

16,272,572

1,605,875

4,063,924

5,538,460

3,868,099

23,416,907

24

Profit & Loss account

(Rupees in thousands Local Sales Exports sales

2010 20,598,198 1, 239,235 21,837,433 3,266,556 34,969 3,301,525 18,535,908 (17,740,467) 795,441 (521,269) (565,638) (15,185) 202,368 . (104,283) (1,210,323) 997,260 (317,346) (15,079) (332,425) 25

Less; Sales & Excise Duty Commission

Cost of sales Gross Profit Administrative expenses Distribution & marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment Loss from operations Finance costs Investment Income (Loss)/Profit before tax Taxation (Loss) / Profit for the year

(Loss) / earning per share Basic Diluted

(3.94) (3.94)

Statement of Comprehensive Income

(Rupees in thousands) (Loss) / Profit after taxation Other Comprehensive income; Surplus / (Deficit) on re-measurement of available For sale financial assets Implement loss transferred to profit & loss account Other comprehensive income for the year

2010 (332,425)

4,119,636 . 4,119,636

Total comprehensive income for the year

3,787,211

26

Statement of Owners Equity

For the year ended 2010 (Rupees in Thousands) Share Capital Share Premium Fair Value Reserve General Reserve Preference Shares/ Convertible Stock Reserve 1,605,875

Balance on December 31, 2009

843,795

2,876,993

561912

13,660,333

Transfers from profit & loss account Final dividend for the Year ended December 31, 2009 Rs. 3.25 per Share

3,000,000

Total comprehensive Income or ( loss) for the Year

4,119,636

Balance on December 31, 2010

843,795

2,876,993

4,681,548

16,660,333

1,605,875

(continued)

27

Statement of Owners Equity

(Rupees in Thousands)

Unappropriated (loss) / Profit 3,868,099

Total

Balances on December Transfers from profit & loss account Final dividend for the Year ended December 31, 2009 Rs. 3.25 per Share Total comprehensive Income or ( loss) for the Year Balance on December 31, 2010

23,416,907

(3,000,000)

(274,233)

(274,233)

(332,425)

3,787,211

261,441

26,929,885

28

Chapter 6

Horizon tal & vertical analysi s

29

Financial Analysis Financial analysis means that the analysis of the financial statements i.e Analysis of income statement, balance sheet etc. in financial analysis various ratios and graphs are shown. Which depict the past performance of last 4 or 5 years? The question may arise that what is the benefit of financial analysis? The answer is quite simple that many parties are interested in financial analysis like the investors before making investment in the company see the financial trends of business, because they will invest in those firms which will give them low risk and high return. Moreover the financial institutions before sanctioning loans also evaluate the solvency of the applicant through financial analysis. There are two main tools of financial analysis. Vertical Analysis Vertical as name shows it is y axis analysis of financial statements. It is a useful way of analyzing statements and to convert them into common size statement by expressing absolute rupee amounts into percentages of a base figure. The income statement thus exhibits expense as a percentage of sales, and each asset/liability as a percentage of total assets and total liabilities. Statements so prepared are called common size statements the analysis facilitates the comparison with prior period and also highlights the relative importance of each item the analysis can be equally useful for inter firm comparison.

Horizontal Analysis
Horizontal as the name shows it is the x axis analysis. The computation of percentage and changes in the same item over time is referred to as a trend analysis this spotlights trends and establishes relationships between items that appear on the same row of a comparative statement there by disclosing changes on items in financial statements.

Vertical Analysis 30

(Profit and Loss Account) local sales export sales gross sales Less :sales tax and excise duty comission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing costs Other operating expenses Other operating income Impairment charged on available for sale investment (Loss) / profit from operations Finance costs Investment income (Loss) / profit before tax taxation (Loss) / profit for the year EPS - basic EPS - diluted 2010 % 94.33 5.67 100 14.96 -0.16 84.88 81.24 3.64 -2.39 -2.59 -0.07 0.93 -0.48 (5.54) 4.57 -1.45 -0.07 -1.52 0 0 2009 % 95.42 4.58 100 14.92 -0.14 84.94 83.08 1.86 -2.83 -2.69 -0.72 2.33 10.85 12.89 -7.73 55.52 34.9 10.32 24.58 0 0 2008 % 95.78 4.22 100 14.38 -0.14 85.48 78.89 6.6 -3.58 (2.53) 0 2.36 0 2.83 11.62 6.64 -2.15 0.78 -1.37 0 0 2007 % 98.34 1.66 100 14.24 -0.1 85.66 74.28 11.38 -3.3 -2.28 -1.38 1.16 0 5.57 -3.49 41.87 43.96 -2.91 41.04 0 0 2006 % 98.24 1.76 100 12.99 -0.1 86.91 72.57 14.34 -3.88 -2.5 -2.36 2.79 0 8.39 -0.87 62.8 70.31 -2.74 67.58 0 0

Comments: Local sales are continuously decreasing in every year but export sales are increasing. Operating income increase in 2009 but again decrease in 2010. Company faced loss from operations in 2009 and 2010 and also face Loss before tax in 2010. Company is facing net loss in 2008 and 2010.

31

Local sales Local sales Export sales Total sales Less: sales tax and excise duty commissio n

Profit and loss account of horizontal/trend analysis 2006 2007 % 2008 % 2009 % 2010% % 100 116.8 154.4 177.8 232.2 100 100 110 116.7 379.7 158.4 477 183.1 780.2 241.8

100 100 100 100 100 100 100

128 114 127.9 115 119.4 92.6 99.4

175.4 221.5 175.7 155.7 172.1 72.8 146.3

210.3 263.8 210.7 178.9 209.6 23.7 133.6

278.6 393.8 279.4 236.2 270.7 61.4 148.9

Net sales Cost of sales Gross profit Adminstrat ive expenses Distabutio n and marketing cost Other operating expenses Other operating income Loss /Profit from operation s Finance costs Investment income Loss 100 /Profit before

100 100 100

94 68.1 48.4

141.8 0.15 133.7

173.7 55.5 152.8

221.3 7.1 80.3

100 100 100

77.5 465.5 77.8 72.9

53.5 2106.3 16.7 -4.8

-281.3 1620.1 161.9 90.8

13.7 1533.8 17.5 4.9

32

tax Taxation Loss /Profit for the year Earning per share

100 100 100

124.2 70.9 58.7

45.3 -3.20 -2.65

690.3 66.6 55.1

6.1 5.4 4.5

Comments: Net sales of packages limited are continuously increasing as compared to base year. Gross profit is continuously decreasing due to increase in cost of sales. Profit from operations is decreasing due increase in distribution and marketing cost and administrative expenses. Net profit of company is less as compared base year and in 2008 company has to face loss.

Horizontal/Trend analysis of balance sheet: 2006 2007 2007 2008 2008 2009 2009 2010 201 0

ASSETS: NON-CURRENT ASSETS Propert y, plant and 0.337 equipm 3,071 10,36 37756 11,28 ent ,115 1.25 5 5,293 Intangi 14.33 ble 64928 assets 2,532 363 9 241 Investm ent 180.6 propert 14,42 26,05 48963 25,29 y 3 5 5 4 Assets Subject to finance lease 1,901 0 0 0 Capital work-in76.90 progres 10,14 7,800 55805 s 3,195 ,683 4 Investm 5,775 10,08 174.5 ents ,665 0,259 29842

367.4 65659 9 9.518 16745 7 175.3 72668 7

623.9 19,16 21018 1,332 9 5.410 74249 137 6 383.6 55,33 58046 5 2

581. 17,86 596 1,486 1 94.4 707 2,392 7 219. 31,58 011 8 3

80.40 8,155 16190 ,293 2 144.7 8,362 88262 ,485 5 33

0.646 65,57 52212 8 6 140.2 8,099 33219 ,401 9

753,3 7.42 28 693 211. 12,21 560 9,037 7

Longterm loans and deposit 180,6 244,1 s 18 66 Retirem ent 69,80 88,26 benefits 5 2 Total Non curren t 19,25 28,60 assets 9,254 1,041 CURRENT ASSETS: Stores and 485,6 715,8 spares 65 40

135.1 83647 3 126.4 40799 4 148.5 05445 7

85.87 155,1 29473 02 3 182.6 127,5 77458 18 6 145.9 28,11 61894 1,172 5

139,5 77.27 77 74585 154.5 107,9 73454 00 6 143.4 27,62 59658 9,260 4 179.3 870,9 31638 51 1 249.0 4,102 56777 ,396 9 213.3 1,752 83019 ,216 1

71.1 128,4 053 29 2 135. 94,55 458 7 8 161. 31,09 433 0,817 1 216. 1,049 188 ,950 1 222. 3,669 754 ,151 4 200. 1,643 116 ,275 3

147.3 173.2 93779 841,4 64904 7 87 8 133.9 221.7 Stock1,647 2,206 38025 3,652 29047 in-trade ,173 ,191 9 ,261 3 156.9 185.4 Trade 821,1 1,288 64294 1,523 75303 debts 60 ,928 4 ,049 2 Loans, advances, deposits, prepayments And other rceivabl es Cash and blank balance Total curren t assets Total curren t and NON curren t assets EQUITY 195.7 692,0 66588 76 1 186.6 199,1 75163 88 8 202.7 6,923 82976 ,461 6

353,5 525,4 148.6 21 21 25117 94.67 106,7 101,0 58760 03 22 3 141.6 3,414 4,837 83874 ,222 ,402 1

57.65 203,8 34350 17 2 427.0 455,7 92021 20 8 233.6 7,978 92155 ,769 9

265,3 75.0 61 623

1,140 106 ,143 8.52 249. 8,533 954 ,987 1

147.4 22,67 33,43 78238 35,03 3,476 8,443 4 4,633 AND LIABILITIES: CAPITAL AND RESERVES Authori 1,000 1,500 150 1,500 34

154.5 18138 3 150

157.0 35,60 47066 8,029 8 1,500 150

174. 39,62 762 4,804 8 1,500 150

zed capital Issued, subscri bed, and paid up capital Reserv es Unappr opriate d profit

,000

,000

,000

,000

,000

105.0 698,7 733,7 00035 95 35 8 6,872 13,11 190.7 ,336 0,240 68321

843,7 95 15,62 4,602 195,8 25 16,27 2,572

70.91 6,101 4,326 17313 ,666 ,797 2 132.8 Total 13,67 18,17 97255 Equity 2,797 0,772 8 NON-CURRENT LIABILITES Long term finance s Liabilite s against assets subject to finance lease Deferre d liabilitie s Total Non curren t liabilit es

120.7 50005 4 227.3 55036 2 3.209 36937 6 119.0 14214 9

120.7 843,7 50005 95 4 248.8 17,09 11146 9,138 6 63.39 3,868 41451 ,099 4 171.2 23,41 66398 6,907 5

843,7 120. 95 75 352. 24,21 409 8,774 6 4.28 261,4 474 41 8 196. 26,92 959 9,885 6

6,000 12,34 205.7 ,000 6,500 75

205.0 12,30 73333 4,400 3

7,970 132.8 ,577 4295

132. 7,956 604 ,291 9

0 122.1 840,7 26791 88 1

0 18.13 124,8 50996 52 1

0 21.6 149,1 677 73 9

138.8 688,4 955,7 31150 55 90 9

198.8 6,688 13,30 84346 13,14 ,455 2,290 2 5,188 CURRENT LIABILITES: Current portion of liabilites against 851 0 0 550,0 Assets 00 subject to finance 35

196.5 35492 9 64629 .8472 4

156.2 10,44 15882 8,429 4 0 0

153. 10,27 602 3,631 5 14,28 167 6 8.73 1

lease Finance s under mark up arrange mentssecured Derivati on foreign currenc y forward options Creditor s, accured and other liabilitie s Provisio ns for taxatio n Total curren t liabilit es Conting ences and commit ments Total liabiliti es and equity

1,280, 857

401 ,01 9

31.30 86472 6

202.0 2,587 38088 ,819 6

86,49 6.752 6 97867

11.0 141,2 262 31 9

1,030, 516

0 84.99 95934 6

0 242.9 5,616 20798 ,873 3

0 75.36 1,742 86926 ,693 5

0 104. 2,421 716 ,288 8

1,9 2,312, 65, 224 381

0 22,67 3,476

0 33, 438 ,44 3

0 147.4 78238 4 154.5 35,03 18138 4,633 3

0 157.0 35,60 47066 8,029 8

0 174. 39,62 762 4,804 8

Comments for trend analysis of balance sheet: Property plants and equipment are decreas in 2008and again increase in2009 and again decrease in2010. Capital work in progress increase in 2010 as compared to previous years. Cash and bank balances also increase in 2010 as compared to previous years. Long term finances decrease but current portion of finances increases, trade and other payables also increase. Reserves decrease in 2007 to 2009 but again increase in 2010. In 2007, 2008 and 2010 company has faced inappropriate loss and in 2009 has faced inappropriate profit. 36

Chapter 7

RATIO ANALY SIS

37

Ratios Analysis:
Ratio analysis involves methods of calculating and interpreting financial ratios to analyze and monitor the firms performance.

1. Liquidity ratios: The liquidity of a firm is measured by its ability to satisfy its short term obligations as they come due. Liquidity refers to the solvency of the firms over all financial position the ease with which it can pay its bills. a) Net Working Capital: The formula for Net Working Capital is: Net Working Capital = Current Assets Current Liabilities It is a safety cushion to creditors. A large balance is required when the entity has difficulty on short notice. s years Net working capital(Rs in thousands) 2006 1102998 2007 2872,021 2008 1306,588 2009 6236,000 2010 6113,000

38

Interpretation: It is a safety cushion to creditors. A large balance is required when the entity has difficulty on short notice.Net working capital has increased from 2006 to 2007, but again decrease in 2008,because in 2008 its current liabilites increased as compared to previous years to greater extent.again in 2009 this ratio increased due to incresase in current assets and decrease in current liabilites.company paid its current liabilites and purchase some new current assets which is a good sign for packages.in 2010 current assets are greater than 2009 but current liabilites are also increased due to which this ratio is less than 2009.

b) Current ratio:

This ratio, which is subject to seasonal fluctuations, is used to measure the ability of a firm to meet its current liabilities out of current assets. Generally, the higher the current ratio, the more liquid the firm is considered to be. The formula for Current Ratio is: Current Ratio = Current Assets /Current liabilites years Current Ratio(times) 1.48 2.46 1.23 4.58 3.52 2006 2007 2008 2009 2010

39

Interpretation: This ratio, is used to measure the ability of a firm to meet its current liabilities out of current assets. Generally, the higher the current ratio, the more liquid the firm is considered to be.Current ratio has increased from 2006 to 2007, but again decrease in 2008,because in 2008 its current liabilites increased as compared to previous years to greater extent.again in 2009 this ratio increased which means packages is more liquid in 2009.in 2010 current assets are greater than 2009 but current liabilites are also increased due to which this ratio is less than 2009.

c)Quick or acid test ratio: Acid-test or quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. Quick assets include those current assets that presumably can be quickly converted to cash at close to their book values. A company with a Quick Ratio of less than 1 can not currently pay back its current liabilities. 40

years Quick Ratio (times)

2006

2007

2008

2009

2010

0.55

0.97

0.43

1.72

1.57

Interpretation: Quick ratio of packages limited is increasing from 2006 to 2007 but decrease in 2008 which means company can not pay back its liabilites in this year.in 2009 this ratio again increases which means company has enough assets to pay back its current liabilities.in 2010 this ratio is again more than 1. 2) Activity ratio: Activity Ratios are used to determine how quickly various accounts are converted into sales or cash.

41

a) Inventory turnover ratio: If a company is holding a access inventory it means that funds which could be invested else where are being tied up in inventory. In addition, there will be high carrying cost for storing the goods, as well as the risk of obsolescence on the other hand, if inventory is too low the company may loose customers because it has run out of merchandise. The formula for inventory turnover is: Inventory turnover= cost of goods sold/average inventory years Inventory Turnover 6.14 5.36 5.02 5.52 7.52 2006 2007 2008 2009 2010

b)Fixed Assets Turnover Ratio: Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the firm.Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets. Formula of Fixed Assets Turnover Fixed Assets Turnover Ratio = Cost of Sales / Net Fixed Assets 42

years Fixed Assets Turnover Ratio(times)

2006 2.92

2007 1.01

2008 0.86

2009 0.86

2010 1.22

Interpretation: Fixed asset turnover ratio is higher in 2006,after that it tends to decrease in 2007,2008 and 2009 again increase in 2010 but this increase is less than 2006.which means packages has to incraese its efficiency to utilize its fixed assets to earn profit. b) Total Asset turnover: It is helpful in evaluating a companys ability to use its asset efficiently to generate revenue. The formula for total asset turnover is: Total Asset turnover = Sales / Total Assets years Total Assets Turnover Ratio(times) 2006 0.4 2007 0.32 2008 0.46 2009 0.46 2010 0.55

43

Interpretation: Total assets turnover ratio is continuously increasing from 2008 to 2010. 3. Profitability Ratios: An indication of good financial health and how effectively the firm is being managed is the companys ability to earn a satisfactory profit and return on investment. a) Gross profit margin: The gross profit margin measures the percentage of each sales rupee remaining after the firm has paid for its goods. The higher the gross profit margin, the better position of company would be. The formula for gross Profit Margin is: Gross Profit Margin = Gross Profit / Sales years Gross Profit Ratio (%) 2006 14.34 2007 11.38 2008 1.86 2009 1.86 2010 3.64

44

Interpretation: Gross profit margin is decreasing from 2006 to 2010.which is not a good sign for packages limited. b)Return on Assets: The return on total assets (ROA) indicates the efficiency with which management has used its available resources to generate income. It is also called Return on Investment. If ROA ratio decreases over the year, it indicates inefficient use of assets. The formula for ROA is: ROA = Net Income / Average Total Assets years Return on Assets(%) 2006 27 2007 13 2008 11 2009 11 2010 (1)

45

Interpretation: Return on assets ratio is continuously decreasing from 2006 to 2010 .which shows inefficiency of its employees. b) Return on Equity: ROE measures the return on common stockholders investment in the firm. Generally, the higher this return, the better off is the owners. The formula for ROE is: ROE = Earnings available for common stockholders / common stock equity years Return on Equity (%) 14.8 4.39 2006 2007 2008 (1.20) (13.05) (1.23) 2009 2010

46

Interpretation: Return on equity is continuously decreasing from 2006 to 2010.which is due to the decrease in net income of packages limited.

4. Leverage Ratios: a) Debt ratios: It can be defined as how much sufficient our assets are in retrieving the total debts. It indicates the firms long run debt paying ability. The formula for debt ratio is Debt ratio=Total liabilities/total assets years Debt ratio % 39 45 53.5 34 32.03 2006 2007 2008 2009 2010

47

Interpretation: Debt ratio of packages is increasing from 2006 to 2009 which is good for stockholders of packages.but not for its creditors. In 2009 and 2010 debt ratio again decreased.which is not good sign for packages stock holders.

5. Market Value Ratios: Market ratios relate to the firms market value as measured by its current share price, to certain accounting values. a) Earning Per Share: It indicates how much amount firm is earning on its one share. Earning per share is useful indicator of the operating performance of the company as well as of the dividends that may be expected. The formula for EPS is: EPS = (Net income Preferred Dividends) / Common stock outstanding

years Basic EPS (Rs.)

2006

2007

2008 (2.32)

2009

2010

30.05

40.6

48.16

(3.94)

48

Interpretation: Earning per share increase in 2007 but decrease in 2008,again increase in 2009. In 2010 earning per share again decrease.ss b) Price/Earning Ratio: It measures the amount that investors are willing to pay for each dollar of a firms earning; the higher the price earning ratio, the greater the investors confidence. The formula for Price Earning Ratio is: Price Earning Ratio = Market Price per share / Earning per share years Price Earning Ratio 2006 2007 2008 (34.98) 58.96 58.96 2.99 (32.65) 2009 2010

49

Interpretation : Price to earning ratio is continuously decreasing from 2007 to 2010.which is not a good sign for packages limited.s Dividend Yield Ratio: Dividend yield ratio is the relationship between dividends per share and the market value of the shares.Share holders are real owners of a company and they are interested in real sense in the earnings distributed and paid to them as dividend. Therefore, dividend yield ratio is calculated to evaluate the relationship between dividends per share paid and the market value of the shares. Formula of Dividend Yield Ratio: Following formula is used for the calculation of dividend yield ratio: Dividend Yield Ratio = Dividend Per Share / Market Value Per Share

years Dividend Yield (%)

2006

2007

2008 -

2009

2010

2.41

6.17

2.26

2.53

50