Finanical Accouting Auditing report

Bisco MisrAudit Report 2012 / 2013

1

• Introduction

2• Liquidity

3• Operating Profitability

4• Financing Decisions

5• Return on Equity

6• General conclusion about the co. performance in the 2 years

INTRODUCTION AND HISTORY

About Bisco Misr :

• The Egyptian company for foods , Bisco Misr , an egyptian joint stock

company

• Established by virtue of a presidential decree issued January 1957

• Was privatized in the late 90’s

• The company’s purpose is manufacturing food stuff; Pies, Biscuits,

Bread …etc

• It provides schools, companies ,other entities and local and foreign

markets of the same products.

• The Company undertakes its own importation transactions and

participating with local and foreign entitles in the same business ,

helping the company achieving it’s purpose in Egypt or abroad .

• By 2010, new activities were added as a long term plan to improve

and upgrade the company’s financial position and stability, such as :

1. Real state investment

2. Developing Infrastructure

3. Providing Residential and Touristic Services

1- FIRM LIQUIDITY

HOW LIQUID IS THE FIRM ?

1- Current Ratio

2- Acid–Test Ratio

3- Average Collection Period

4- Accounts Receivable Turn Over

5- Inventory Turn Over

2013 2012AMOUNT

%

Inventories 40146891 39239498 907393 2.30%

Trade receivable 11600203 7258755 4341448 59.80%

Suppliers -advance payment 150002 293130 143128)) 48.40%

Debtors & other debit balance 6318578 4967272 1351306 27.20%

Cash at banks & on hands 64003401 37582085 26421316 70.30%

Current assets 122219075 89610740 32608335 36.38%

Loans installments due in one year 11000002 3666666 7333336 2.00%

Suppliers 41985463 44445353 2459890)) 0.055%

Trade receivables-advance payments 625645 1008694 383049 0.379%

Due to related parties 134364 678100 543736 0.8%

Creditors and other credit balances 21087899 34958712 13870813 0.396%

Dividends payable 188515 188515 0 0

Provisions 1974402 1758240 (216162) 0.122%

Current liabilities 76996290 86704280 9707990 0.112%

Horizontal Analysis for Data Ratio

Vertical Analysis for Data Ratio

2013 2012 % of total % of total

Inventories 40146891 39239498 13.20% 14.30%

Trade receivable 11600203 7258755 3.80% 2.65%

Suppliers -advance payment 150002 293130 0.05% 0.1%

Debtors & other debit balance 6318578 4967272 2.00% 1.80%

Cash at banks & on hands 64003401 37582085 21.10% 13.70%

Current assets 122219075 89610740 40.30% 32.8%

Loans installements due in one year 3666666 11000002 4.23% 14.29%

Suppliers 44445353 41985463 51.26% 54.53%

Trade receivables-advance payments 1008694 625645 1.16% 0.81%

Due to related parties 678100 134364 0.78% 0.17%

Creditors and other credit balances 34958712 21087899 40.32% 27.39%

Dividends payable 188515 188515 0.22% 0.25%

Provisions 1974402 1758240 2.28% 2.28%

Current liabilities 86704280 76996290 100 100

Current ratio : Current Assets

Current Liabilities

20122013Current ratio

89,610,740

=

76,996,290

122,219,075

=

86,704,280

Current Assets

Current Liabilities

1.164 times1.410 timesRatio

Comment :

There is a reasonable increase in the Current Ratio from 2012 to 2013.

Good sign of the efficiency of the company’s operating cycle.

1

20122013Acid-test ratio

89,610,740 – 39,239,498

=

76,996,290

122,219,075 – 40,146,891

=

86,704,280

Current Assets -

Inventory

Current Liabilities


ACID-TEST RATIO : Current Assets - Inventory

Current Liabilities

Comment:

By excluding inventories, there was also an increase observed in the ratios from

2012 to 2013. An indication of the improvement of the company’s financial

position.

2

Horizontal Analysis for Data Ratio

Average collection period:

20132012Average collection

period

11,600,203

(480,347,869/365)

7,258,755

(420,588,653/365)

A/R

Daily credit sales

=8.81 Days=6.29 DaysRatio

Comment :

From 2012 to 2013 number of days increased and this means that the A/R

collection took longer time in 2013 and it seems that the company’s

management intentionally extend longer credit terms as we see the amount of

A/R increased.

Accounts Receivables

Daily Credit Sales

3

Accounts Receivable Turnover : Credit Sales

Accounts Receivable

20132012A/R Turnover

480,347,869

=

11,600,203

420,588,653

7,258,755

Credit Sales

Account Receivable

41.4 Times / Year57.94 Times / YearRatio

Comment :

It decreased from 2012 to 2013, so Bisco-Misr was slower in

collecting its receivables in 2013 than in 2012 the reason for that reduction might

be occurred because of company’s management .

4

20132012Inventory Turnover

314,009,024

=

40,146,891

287,120,405

=

39,239,498

Cost Of Goods Sold

Inventory


Inventory Turnover : Cost of Goods Sold

Inventory

Comment :

There is a slight increase in 2013 this means that Bisco-Misr was trying to

manage its inventory better and increase the times of turning over its inventory,

the higher this ratio is, the more efficiently the company was managing its

inventory and the liquidity in the company would be better.

5

Days sales in inventory:

20132012Days sales in inventory

365

7.82

365

7.32

365 Days

Inventory Turnover

= 46.66 Days= 49.88 DaysRatio

Comment :

In 2013 the number of days reduced this means that the company could convert

its inventory into cash more quickly in 2013 than 2012 and this is a good

indication for the company’s liquidity by the time.

365

Inventory Turnover

6

2- OPERATING PROFITABILITY

IS THE MANAGEMENT GENERATING ADEQUATE OPERATING

PROFITS ON THE FIRM’S ASSETS ?

1- Operating Income Return on Investment

2- Operating Profit Margin

3- Total Asset Turn Over

4- Accounts Receivable Turn Over

5- Inventory Turn Over

6- Fixed Assets Turn Over

20132012Operating income

return on investment

81,308,739

303,320,008

53,964,615

273,324,978

Operating income

Total assets

26.8%19.7%Ratio

Comment :

the company in 2013 is earning much more return on investment than in 2012, So

management is generating significantly more income in 2013 on 1EGP assets

than in 2012.

We separated the operating income return on investment , OIROI into two

important pieces to know the reason that the company earned in 2013 much more

return on the firm's assets than 2012.

OIROI(Operating Income Return On investment) :

Operating incometotal assets

1

Total Assets Turnover : Sales

Total Assets

20132012Total assets turn over

480,347,869

303,320,008

420,588,653

=

273,324,978

Sales

Total assets


Comment :

the company in 2013 generated 1.6 EGP from every 1 EGP of assets in

comparable with 2012 generated 1.5 EGP from every 1 EGP of assets , so the

company use the assets more efficient in 2013 than in 2012 which was reflected on

OIROI

2

Operating Profit Margin = Operating Income

Sales

20132012 Operating profit

margin

81,308,739

480,347,869

53,964,615

420,588,653

= operating income

Sales

16.9%12.8% Ratio

Comment :

Operating profit margin in 2013 is much more 2012 .

From the income statement we found that one of the main driving force of the

operating profit margin is

Total sales ( number of units sold times sales price per unit ) in 2013 is more than

2012 so, management is effective in managing this forces.

as they keep costs & expenses in the line relative to sales

3

Account Receivable Turn Over : NET SALES

ACCOUNT RECEIVABLES

20132012Ratio Turn Over

480,347,869

=

11,600,203

420,588,653

=

7,258,755

Credit Sales

Accounts Receivable


= 6.29

days

365= 8.8

days

365Average Collection

Period of Accounts

Receivable 57.9441.4

Comment :Account Receivables Turn Over reflects how many times average trade receivables are recorded and collected

during the accounting period .

2012: We can say that in year 2012 Account Receivable turn over is 41.4 times per year . Where the average

collection period is 8.8 days .

2013 : we can say that the Turn over of accounts receivable is higher than in year 2012 , where it turns over

57.94 times /year . From this we conclude that 2013 is a much profitable year than 2012. as it takes only 6.29

days to collect their receivables.

4

20132012Inventory Turn Over

314,009,024

=

40,146,891

287,120,405

=

39,239,498

Cost Of Goods Sold

Inventory


=46.8

Days

365

= 51

Days

365(1 year)Average Amount of Days

to Sell Inventroy =

365 / Inventory Turn

Over

7.87.1317

Inventory Turn Over : COST OF GOODS SOLD

INVENTORY

Comment :Inventory Turn Over reflects how many times average inventory has been sold during an accounting

period .

Year 2013 :Here we can see that BISCO MISR turns over inventories about 7.8 times per every 1

year .

Year 2012 : BISCO MISR turns over 1.733times per every 1 year of Inventory.

We conclude that in year 2013 BISCO MISR WAS MORE PROFITABLE THAN IN YEAR 2012 .

5

Fixed Assets Turn Over: SALES

NET FIXED ASSETS

20132012Fixed Assets Turn Over

314,009,024

=

181,100,933

420,588,653

=

183,714,238

Sales

Net Fixed Assets


Comment :

Fixed Assets Turn Over measures the company’s ability to generate net

sales from fixed assets .

2012: the Ratio of Fixed Asset turn Over is 1.733 times/year

2013:The ratio shows that Fixed Assets Turn Over is higher than 2012

We conclude that 2013 has been more profitable in generating sales

using it’s Fixed Assets .

6

0

10

20

30

40

50

60

70

2012 2013

Account

Receivable

Turn over

Inventroy

Turn Over

Fixed Assets

Turn Over

3- FINANCING DECISIONS NADA

1- Debit Ratio

2- Times Interest Earned

Horizontal Analysis for Ratio Data

%Variance Increase / (decrease)

20122013

(1)(2613305)183714238181100933Non Current Assets

363260833589610740122219075Current Assets

1129995030273324978303320008Total Assets

1397079907699629086704280Current Liabilities

(3)(748713)2744435426695641Noncurrent Liabilities

98959277104440644113399921Total Liabilities

Debit Ratio : Total Debits

Total Assets

20122013Ratio Components

7699629086704280Current liabilities

2744435426695641Non Current Liabilities

104440644113399921Total Debts

89610740122219075Current Assets

183714238181100933Non Current Assets

273324978303320008Total Assets

0.380.37Debit Ratio

Biscomisr debit ratio for the 2 years was less than 1 indicating that the company had more

assets than debts providing a stable financing leverage and no risks of operations. where

company can handle obligations and had an advantage of obtaining new loans if acquired.

For year 2013, the assets were financed 37% through debts while for 2012 38 % of only 1

% improvement between the 2 years.

Horizontal Analysis for Ratio Data

% Variance Inc/ Dec 20122013

3377979823664393146237other operating Revenue114932518(45709711)(50642229)Selling and disturbing expense41367705(34697476)(36065181)General and administrative expense

2167000(317000)(384000)board of directors Remuneration (5)(60925)(1145885)(1084933)other operating expenses 51273441245396461581308739Operating Income

(40)(904195)(2251203)(1347008)Interest Expense 62470116259921Finance Income

51213043864143136762735753Net Income

Vertical Analysis for Ratio Data% of the total

2012% of the total

201320122013

4423664393146237other operating Revenue862(45709711)(50642229)Selling and disturbing expense

6444(34697476)(36065181)General and administrative expense0.60.5(317000)(384000)board of directors Remuneration 21(1145885)(1084933)other operating expenses

130%130%5396461581308739Operating Income 360%8%(2251203)(1347008)Interest Expense

62470116259921Finance Income 4143136762735753Net Income

Times of Interest Earned : Operating Income

Interest Expense


5396461581308739Operating Income

29111472251203Interest Expense

18.54 times36.12 timesT.I.E

In year 2013 Biscomisr showed an interest coverage ratio of 36.12times by around 17.58 times

than in year 2012 of 18.54times which is really double the number of times.

Showing that the company proceed a better financial leverage in 2013 than in 2012 to pay its

interests on its debts ,which would encouraged creditors to invest more and for the company had

more funds for its operations.

4- RETURN ON EQUITY

Horizontal Analysis for Ratio Data% Variance

Inc/Dec 20122013

2532870597133468248166338845Gross profit51273441245396461581308739Operating income

16010012906247011625991finance income(17)(7675649)4627534983599700net profit before income tax51%213043864143136762735753total net profit for the year

009200000092000000Issued and capital paid920715682241355424485122Reserves

(18)(2340201)1303941310699212Retained earnings512130436641431367627357533Net profit

12%21035753168884334189920087Total equity

Vertical Analysis for Ratio Data% of total

2012% of total

2013 20122013

322265133468248166338845Gross profit1301305396461581308739Operating income1536247011625991finance income

11113324627534983599700net profit before income tax4143136762735753total net profit for the year

009200000092000000Issued and capital paid13132241355424485122Reserves 861303941310699212Retained earnings

25%33%4143136762735753Net profit 168884334189920087Total equity

Return on Equity : Net Income

Common Equity


4143136762735753Net Income

158257967189920087Common Equity

0.26

26 %

0.33

33 %

R.O.E

In 2013 the company was more efficient in generating income from the shareholder’s

investments by 33% recording an improvement of 7% more than in year 2012 which

showed 26%.

In 2013 the management showed a progress using the equity investments in funding

operations and growing the company than in 2012 indicating an improvement.

FINAL CONCLUSION

2013 2012Firm Lquidity

1-Current Ratio 1.410 times 1.164 times

2-Acid Test Ratio 0.947 times 0.654 times

3-Average Collection Period 8.81 days 6.29 days

4-Accounts Receivable Turn Over 41.4 times / year 57.94 times / year

5-Inventory Turn Over 7.82 times / year 7.32 times / year

6-Days Sales In Inventory 46.66 days 49.88 days

Operating Profitabilty

1- Operating Income Return on Investment

26.80% 19.70%

2-Operating Profit Margin 16.90% 12.80%

3-Total Assets Turn Over 1.6 times 1.5 times

4-Inventory Turn Over 7.82 times / year 7.32 times / year

5-Fixed Assets Turn Over 2.289 times / year 1.733 times / year

6-Account Receivable Turn Over 6.29 days 8.8 days

Financing Decisions

1-Debit Ratio 0.37 0.38

2-Times Interest Earned 36.12 times 18.54 times

Return On Equity

1-Return On Equity 33% 26%

Business

Finanical Accouting Auditing report