53374070 Financial Management Pso Project Report

Pakistan State Oil

Acknowledgement

In the name of Allah, the most Gracious and the most Merciful. We thank to Allah Almighty who enables us to accomplish our project Analysis of Financial Statement of PSO. We are also very thankful to our parents whose prayers and efforts support us to complete our project successfully. We pay regards and gratitude to our most respectable and hardworking instructor Mr. M. Taimoor Hassan Abbasi who gave us his precious time and knowledge along with proficient skills to help us in learning how to handle difficulties in real situations and how to meet with challenges in the actual business environments. By giving us difficult tasks in this project he actually indulge us in the practice of our Quaids sayings work, work and work. Working on this project with such a sincere instructor is great honor and pleasure for us. We are also very thankful to our Department of Management Sciences and The Islamia University of Bahawalpur which provides us great opportunity to work on such an informative project in a small period of time and the faculty of management sciences who provides us with all possible intellectual human and economic resources to fulfill the requirements of this project. By the combination of all these blessings prayers and mental and physical aids we ultimately completed our project in a period of four months.

Introduction

PSO is the market leader in Pakistans energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow.

Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. The companys current market share of 82.3% in the black oil market and 59.4% share in the white oil market.

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL).

Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO).

After PSOs inception, the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. This program over the years included the revamping of the organizational architecture, rationalization of staff, employee empowerment and transparency in decision making through cross functional teams. This new corporate renewal program has divided the companys major operations into independent activities supported by legal, financial, informative and other services. In order to reinforce and monitor this structural change, related check and balances have been established by incorporating monitoring and control systems. Human Resource Development became one of the main priorities on the companys agenda under this corporate reform.

It is due to this effective implementation of corporate reform and consistent application of the best industrial practices and business development strategies, that PSO has been able to maintain its market leadership in a highly competitive business environment.

January 1, 1974

The federal government took over the management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited), renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum Products (Federal Control Act, 1974).

June 6, 1974

The government incorporates Petroleum Storage Development Corporation PSDC.

August 23, 1976

PSCDC renamed to State Oil Company Limited (SOCL).September 15, 1976

The Government purchases ESSO undertakings, vests their control in SOCL.December 30, 1976

The Government merges PNO and POCL into SOCL (State Oil Company Limited) and renames it Pakistan State Oil Company Limited (PSO).1999

The new vision program is launched with the new logo of PSO.

Vision and Mission of PSOVision

To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first.

Mission

We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers.

Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development.

Lowest cost operations and assured access to long-term and cost effective supply sources.

Sustained growth in earnings in real terms.

Highly ethical, safe environment friendly and socially responsible business practices.

Table of Content

iiIntroduction

Income Statement1Balance Sheet3Cash Flow Statement4Vertical Analysis of Income Statement5Interpretation5Horizontal Analysis of Income Statement11Interpretation12Vertical Analysis of Balance Sheet18Interpretation19Horizontal Analysis of Balance Sheet27Interpretation28Vertical Analysis of Cash Flow Statement36Interpretation36Horizontal Analysis of Cash Flow Statement43Interpretation43Ratio Analysis50Interpretation51 1. Short-term Solvency Ratios51 2. Activity Ratios53 3. Long-term Solvency Ratios57 4. Profitability Ratios59Bankruptcy Analysis65Interpretation65Conclusion & Recommendations66Income Statement

For The Period of 5 Years ended on June 31st, 2009

Particulars2005 (Rs. In '000)2006 (Rs. In '000)2007 (Rs. In '000)2008 (Rs. In '000)2009 (Rs. In '000)

Sales Revenue254,362,981353,833,345411,989,979583,298,190719,412,244

Less:

Trade Discount & Allowances(586,061)(1,318,472)(932,387)(84,231)(130,068)

Sales Tax(32,673,120)(44,539,632)(52,418,310)(74,249,472)(97,386,723)

Inland Freight Equalization Margin(8,600,150)(9,725,202)(8,932,956)(13,685,954)(9,199,864)

Net Sales212,503,650298,250,039349,706,326495,278,533612,695,589

Less Cost of Goods Sold:

Opening Stock14,992,09720,604,75728,190,08929,583,51162,381,523

Purchases204,369,979288,628,145338,840,318498,052,919588,023,620

Cost of Product Available for Sale219,362,076309,232,902367,030,407527,636,430650,405,143

Closing Stock(20,604,757)(28,190,089)(29,583,510)(62,381,522)(40,719,664)

Cost of Sales198,757,319281,042,813337,446,897465,254,908609,685,479

Gross Profit / Loss13,746,33117,207,22612,259,42930,023,6253,010,110

Less Operating Expenses:

Transportation Cost:

Cost Incured During The Year6,766,4296,409,2996,860,6228,219,9299,482,779

Realized Against IFEM(8,600,150)(9,725,202)(8,932,956)(13,685,954)(9,199,864)

Refinery Share2,774,0283,382,2513,042,4845,998,784835,398

Adjustments from Other Oil Companies(627,038)299,447(600,822)(194,873)(604,640)

313,269365,795369,328337,886513,673

Distribution & Marketing Expenses:

Salaries, Wages & Benefits1,251,5581,225,4671,332,3171,672,4772,070,788

Rent, Rates & Taxes221,354185,600232,589274,614381,626

Repair & Maintenance330,379468,563493,732548,540596,548

Insurance35,94551,80865,32173,907127,893

Travelling & Office Transport48,76158,43282,63289,824105,234

Utilities107,53995,10896,733104,029123,989

Sales Promotion & Advertisement209,065236,364241,522285,152310,861

Others153,508171,291200,443229,660244,014

2,358,1092,492,6332,745,2893,278,2033,960,953

Administrative Expenses:

Salaries, Wages & Benefits618,451631,721673,542765,027801,145

Repairs & Maintenance26,65835,83165,79068,05558,988

Insurance44,95762,75166,01363,48567,479

Donations22,12238,83830,74198,16249,826

Others148,587166,448166,626152,408174,355

860,775935,5891,002,7121,147,1371,151,793

Depreciation & Amortization984,0171,082,3941,140,0651,166,8261,194,313

Other Operating Expenses:

Workers' Profits Participation Fund485,600573,472364,8161,132,598-

Workers' Welfare Fund-235,790139,834436,276-

Exchange Loss - Net-110,8346,4981,558,9473,508,030

Provision Against:-

Doubtful Trade Debts325,0001,045,600150,748158,680477,345

Disputed Demands for Custom Duty161,219215,492-37,604-

Others84,433217,45344,53725,6142,385

Miscellaneous19,62062,29048,9873,2506,629

1,075,8722,460,931755,4203,352,9693,994,389

Operating Expenses5,592,0427,337,3426,012,8149,283,02110,815,121

8,154,2899,869,8846,246,61520,740,604(7,805,011)

Add Other Operating Income:

Commission & Handling Services206,924138,565290,963281,898384,751

Income from CNG Operations121,616203,798354,709345,738385,863

Handling, Services & Other Recoveries593,028565,793602,075707,824609,952

Others264,48342,69431,18561,06771,100

Other Operating Income1,186,051950,8501,278,9321,396,5271,451,666

Operating Profit / Loss9,340,34010,820,7347,525,54722,137,131(6,353,345)

Less Finance Cost:

Mark-up on Borrowings256,990622,346891,590745,5022,953,427

Banks & Other Charges113,709261,807266,522622,3963,278,629

Finance Cost370,699884,1531,158,1121,367,8986,232,056

8,969,6419,936,5816,367,43520,769,233(12,585,401)

Add Other Income:

Share of Profit of Associates221,8081,038,939330,306294,318451,850

Dividends-10,33113,20060,90665,821

Markup & Delayed Payment Charges-3,745--445,065

Liabilities Written Back-305,450184,793113,12931,026

Penalties & Other Recoveries-84,611100,09484,23157,637

Others-38,654126,15155,594177,137

Other Income221,8081,481,730754,544608,1781,228,536

Profit / Loss before Tax9,191,44911,418,3117,121,97921,377,411(11,356,865)

Less Taxation:

Current - for The Year3,236,8574,099,9302,483,7257,392,666201,536

- for Prior Year250,53477,236(58,802)(62,749)(233,929)

Deferred - for The Year48,185(283,556)7,259(6,300)(4,625,936)

Taxation3,535,5763,893,6102,432,1827,323,617(4,658,329)

Net Profit / Loss5,655,8737,524,7014,689,79714,053,794(6,698,536)

Balance Sheet



Assets

Current Assets:

Cash & Bank Balances1,921,9361,898,8941,522,2763,018,6402,883,118

Short-term Investments10,081----

Taxation - Net----709,627

Other Receivables10,358,00614,562,62815,751,19815,681,79012,806,779

Deposits & Short-term Prepayments726,1571,287,8931,583,913401,433551,803

Loans & Advances213,248275,729365,974396,220418,015

Trade Debts6,791,07811,715,86813,599,96633,904,72880,509,830

Stock in Trade20,583,30128,168,63329,562,05562,360,06740,698,209

Stores, Spare Parts & Loose Tools130,559125,030127,891115,814112,143

Total Current Assets40,734,36658,034,67562,513,273115,878,692138,689,524

Non-Current Assets:

Deferred Tax124,740408,296401,037407,3375,033,273

Long-term Deposits & Prepayments105,16374,66265,91379,09883,655

Long-term Loans, Advances & Receivables769,674698,146627,972477,745405,780

Long-term Investments2,317,8103,278,9702,990,5912,701,0972,153,514

Intangibles144,647154,819126,212105,50268,872

Property, Plant & Equipment8,111,4827,518,9568,012,3177,460,5496,987,025

Total Non-Current Assets11,573,51612,133,84912,224,04211,231,32814,732,119

Total Assets52,307,88270,168,52474,737,315127,110,020153,421,643

Liabilities & Equity

Liabilities:

Current Liabilities:

Taxation - Net1,344,2681,695,25069,398726,703-

Short-term Borrowings4,811,6057,648,9199,064,78110,997,90818,654,526

Accrued Interest / Mark-up63,924120,731131,961217,928556,380

Provisions754,227777,276688,512726,116688,512

Trade & Other Payables25,790,18136,814,40241,431,07581,067,565110,123,702

Total Current Liabilities32,764,20547,056,57851,385,72793,736,220130,023,120

Non-Current Liabilities:

Retirement & Other Service Benefits1,323,6881,554,8931,644,0631,574,1481,673,020

Long-term Deposits & Prepayments675,170743,994768,308834,598854,718

Total Non-Current Liabilities1,998,8582,298,8872,412,3712,408,7462,527,738

Equity:

Share Capital1,715,1901,715,1901,715,1901,715,1901,715,190

Reserves15,829,62919,097,86919,224,02729,249,86419,155,595

Total Equity17,544,81920,813,05920,939,21730,965,05420,870,785

Total Liabilities & Equity52,307,88270,168,52474,737,315127,110,020153,421,643

Cash Flow Statement



Cash Generated from Operating Activities:

Cash Generated from Operations7,350,9906,553,7759,103,69812,479,0552,905,661

Long-term Loans, Advances & Receivables142,92171,52874,511149,74771,965

Long-term Deposits & Prepayments(33,970)30,5018,749(13,185)(4,557)

Long-term Deposits---66,29020,120

Taxes Paid(1,636,104)(3,826,184)(4,050,775)(6,672,612)(1,403,937)

Finance Costs Paid(337,220)(827,346)(1,146,882)(1,281,931)(5,893,604)

Payment against Provisions(80,258)(184,050)(10,126)-(37,604)

Retirement Benefits Paid(160,700)(184,450)(287,721)(610,949)(486,598)

Net Cash Generated / Used In5,245,6591,633,7743,691,4544,116,415(4,828,554)

Cash Flows from Investing Activities:

Purchases of Fixed Assets(1,506,408)(751,350)(1,609,467)(620,293)(694,157)

Proceeds from Disposal of Operating Assets12,087261,86330,74057,18920,167

Dividends Received274,753291,143870,774390,178671,101

Proceeds from Liquidation of Subsidiaries-24,657-

Net Cash Generated / Used In(1,219,568)(173,687)(707,953)(172,926)(2,889)

Cash Flows from Financing Activities:

Repayment of Long-term Loan(4,753)----

Proceeds from / Repayment of Long-term Deposits62,16268,82424,314--

Proceeds from / Repayment of Short-term Finances534,000216,0003,210,474(5,335,878)3,472,487

Dividends Paid(3,616,669)(4,389,267)(4,800,295)(4,380,252)(2,960,697)

Net Cash Generated / Used In(3,025,260)(4,104,443)(1,565,507)(9,716,130)511,790

Total Net Cash Generated / Used In for The Year1,000,831(2,644,356)1,417,994(5,772,641)(4,319,653)

Cash at Beginning of The Year(1,192,500)(191,669)(2,836,025)(1,418,031)(7,190,672)

Cash at End of The Year(191,669)(2,836,025)(1,418,031)(7,190,672)(11,510,325)

Vertical Analysis of Income Statement


Particulars20052006200720082009

Sales Revenue100%100%100%100%100%

Trade Discount & Allowances(0.23%)(0.37%)(0.23%)(0.01%)(0.02%)

Sales Tax(12.85%)(12.59%)(12.72%)(12.73%)(13.54%)

Inland Freight Equalization Margin(3.38%)(2.75%)(2.17%)(2.35%)(1.28%)

Net Sales83.54%84.29%84.88%84.91%85.17%

Opening Stock5.89%5.82%6.84%5.07%8.67%

Purchases80.35%81.57%82.24%85.39%81.74%

Cost of Product Available for Sale86.24%87.40%89.09%90.46%90.41%

Closing Stock(8.10%)(7.97%)(7.18%)(10.69%)(5.66%)

Cost of Sales78.14%79.43%81.91%79.76%84.75%

Gross Profit / Loss5.40%4.86%2.98%5.15%0.42%

Transportation Cost0.12%0.10%0.09%0.06%0.07%

Distribution & Marketing Expenses0.93%0.70%0.67%0.56%0.55%

Administrative Expenses0.34%0.26%0.24%0.20%0.16%

Depreciation & Amortization0.39%0.31%0.28%0.20%0.17%

Other Operating Expenses0.42%0.70%0.18%0.57%0.56%

Other Operating Income0.47%0.27%0.31%0.24%0.20%

Operating Profit / Loss0.15%0.25%0.28%0.23%0.87%

Finance Cost0.15%0.25%0.28%0.23%0.87%

Other Income0.09%0.42%0.18%0.10%0.17%

Profit before Tax / Loss3.61%3.23%1.73%3.66%(1.58%)

Taxation1.39%1.10%0.59%1.26%(0.65%)

Net Profit / Loss2.22%2.13%1.14%2.41%(0.93%)

Interpretation

1. Sales

Years20052006200720082009

Percentage100%100%100%100%100%

Interpretation

In vertical analysis we took sales as base so sales of all the years will 100%.

2. Trade Discount

Years20052006200720082009

Percentage0.23%0.37%0.23%0.01%0.02%

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 0.23%, 0.37%, 0.23%, 0.01%, and 0.02% of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

3. Sales Tax

Years20052006200720082009

Percentage12.85%12.59%12.72%12.73%13.54%

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 12.85%,12.59 %, 12.72%, 12.73%, and 13.54% of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

4. Inland Freight equalization margin

Years20052006200720082009

Percentage3.38%2.75%2.17%2.35%1.28%

.Interpretation


5. Net Sales

Years20052006200720082009

Percentage83.54%84.29%84.88%84.91%85.17%

Interpretation


6. Opening Stock

Years20052006200720082009

Percentage5.89%5.82%6.84%5.07%8.67%

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 5.89, 5.82%, 6.84%, 5.07%, and 8.67% of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

7. Purchases

Years20052006200720082009

Percentage80.35%81.57%82.24%85.39%81.74%

Interpretation


8. Cost of Products available for Sale

Years20052006200720082009

Percentage86.24%87.40%89.09%90.46%90.41%

Interpretation


9. Closing Stock

Years20052006200720082009

Percentage(8.10%)(7.97%)(7.18%)(10.69%)(5.66%)

Interpretation


10. Gross profit / Loss

Years20052006200720082009

Percentage5.40%4.86%2.98%5.15%0.42%

Interpretation


11. Transportation Cost

Years20052006200720082009

Percentage0.12%0.10%0.09%0.06%0.07%

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 0.12%, 0.10%, 0.09%,0.06%, and 0.07% of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

12. Distribution and marketing expenses

Years20052006200720082009

Percentage0.93%0.70%0.67%0.56%0.55%

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 0.93%, 0.70%, 0.67%,0.56%, and 0.55% of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

13. Administrative Expenses

Years20052006200720082009

Percentage0.34%0.26%0.24%0.20%0.16%

Interpretation


14. Depreciation & Amortization

Years20052006200720082009

Percentage0.39%0.31%0.28%0.20%0.17%

Interpretation


15. Other Operating Expenses

Years20052006200720082009

Percentage0.42%0.70%0.18%0.57%0.56%

Interpretation


16. Other Operating Income

Years20052006200720082009

Percentage0.47%0.27%0.31%0.24%0.20%

Interpretation


17. Other Operating Profit/ Loss

Years20052006200720082009

Percentage0.15%0.25%0.28%0.23%0.87%

Interpretation


18. Finance Cost

Years20052006200720082009

Percentage0.15%0.25%0.28%0.23%0.87%

Interpretation


19. Other Income

Years20052006200720082009

Percentage0.09%0.42%0.18%0.10%0.17%

Interpretation


20. Profit before Tax

Years20052006200720082009

Percentage3.61%3.23%1.73%3.66%(1.58%)

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 3.61%, 3.23%, 1.73%, 3.66%, and (1.58%) of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

21. Taxation

Years20052006200720082009

Percentage1.39%1.10%0.59%1.26%(0.65%)

Interpretation

Since the computed value of cost of sales under vertical analysis taking sales as base is covering almost 1.39%, 1.10%, 0.59%, 1.26%, and (0.65%) of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

22. Net Profit / Loss

Years20052006200720082009

Percentage2.22%2.13%1.14%2.41%(0.93%)

InterpretationSince the computed value of cost of sales under vertical analysis taking sales as base is covering almost 2.22%, 2.13%, 1.14%, 2.41%, and (0.93%) of respective sales in the last five consecutive years. The overall tendency of the cost of sales is increasing.

Horizontal Analysis of Income Statement


Particulars20052006200720082009

Sales Revenue100%139.11%161.97%229.32%282.83%

Trade Discount & Allowances100%224.97%159.09%14.37%22.19%

Sales Tax100%136.32%160.43%227.25%298.06%

Inland Freight Equalization Margin100%113.08%103.87%159.14%106.97%

Net Sales100%140.35%164.56%233.07%288.32%

Opening Stock100%137.44%188.03%197.33%416.10%

Purchases100%141.23%165.80%243.70%287.73%

Cost of Product Available for Sale100%140.97%167.32%240.53%296.50%

Closing Stock100%136.81%143.58%302.75%197.62%

Cost of Sales100%141.40%169.78%234.08%306.75%

Gross Profit / Loss100%125.18%89.18%218.41%21.90%

Transportation Cost100%116.77%117.89%107.86%163.97%

Distribution & Marketing Expenses100%105.70%116.42%139.02%167.97%

Administrative Expenses100%108.69%116.49%133.27%133.81%

Depreciation & Amortization100%110.00%115.86%118.58%121.37%

Other Operating Expenses100%228.74%70.21%311.65%371.27%

Other Operating Income100%80.17%107.83%117.75%122.39%

Operating Profit / Loss100%115.85%80.57%237.01%(68.02%)

Finance Cost100%238.51%312.41%369.01%1681.16%

Other Income100%668.02%340.18%274.19%553.87%

Profit before Tax / Loss100%124.23%77.48%232.58%(123.56%)

Taxation100%110.13%68.79%207.14%(131.76%)

Net Profit / Loss100%133.04%82.92%248.48%(118.44%)

Interpretation

1. Sales

Years20052006200720082009

Percentage100%139.11%161.97%229.32%282.83%

Interpretation

Since the sales of Pakistan State Oil Limited have increased as compared to base Year (2005) significantly we conclude that PSO has improved its sale to more than 182% in 5 years.

2. Trade DiscountYears20052006200720082009

Percentage100%224.97%159.09%14.37%22.19%

Interpretation

The trade discount of PSO shows an increase in year 2006. Also in 2007 its value is showing increase as compared to base year. After 2007 decreased significantly and same is for the year 2009. Hence this trend showed that PSO has decreased its trade discounts.

3. Sales Tax

Years20052006200720082009

Percentage100%136.33%160.43%227.25%298.06%

Interpretation

From the above values it is obvious that sales tax is continuously increasing from 2006 to 2009 as compared to base year. It also shows that the sales volume is increasing each year as compared to base ear.4. Inland Freight equalization margin

Years20052006200720082009

Percentage100%113.08%103.87%159.14%106.978%

Interpretation

From the above values we can see an increasing and decreasing trend of freight margin when compared to the base year. It shows a significant increase in year 2008 as compared to base year.5. Net SalesYears20052006200720082009

Percentage100%140.35%164.56%233.07%288.32%

Interpretation

Since the computed value of net sales are showing a continuous increase from 2006 to 2009 as compared to base year we can conclude that the net sales of PSO has been increasing continuously.6. Opening StockYears20052006200720082009

Percentage100%137.44%188.03%197.33%416.10%

Interpretation

The above values show an increasing trend in the opening stock of the PSO as compared to the base year, even in the year 2009 it shows a significant increase i.e. 416%.

7. PurchasesYears20052006200720082009

Percentage100%141.23%165.80%243.70%287.73%

Interpretation

Since the above values show an increasing trend as compared to the base year so we can say that the Purchases of the company have increased more than double from the base year till 2009.

8. Cost of Products SoldYears20052006200720082009

Percentage100%140.97%167.32%240.53%296.50%

Interpretation

The above calculated values are showing an increase in comparison to the base year but this increase is not negative as the volume of production is also increasing that caused increase in cost of production hence we conclude that it is a positive sign as sales are also increasing.9. Closing StockYears20052006200720082009

Percentage100%136.81%143.58%302.75%197.62%

Interpretation

The values of closing stock are increasing as compared to the base year from 2006 to 2009.10. Gross profit / LossYears20052006200720082009

Percentage100%125.18%89.18%218.41%21.90%

Interpretation

The calculated values of the gross profit show a see-saw model. It increased in next year i.e. 2006 when compared to base year then decreased in 2007. Again it increased sufficiently in 2008 and then decreased again in 2009.11. Transportation CostYears20052006200720082009

Percentage100%116.77%117.89%107.86%163.97%

Interpretation

From the above calculated values the transportation cost is showing a mixed stream of increasing and decreasing behavior. In first two subsequent years it increased up to 17% and then it decreased in 2008. Again it shows a significant increase in 2009.

12. Distribution and Marketing Expenses

Years20052006200720082009

Percentage100%105.70%116.42%139.02%167.97%

Interpretation

The above values shows a continuously increase in distribution and marketing expenses in years 2006 to 2009 as compared to base year 2005.

13. Administrative Expenses

Years20052006200720082009

Percentage100%108.69%116.49%133.27%133.81%

Interpretation

The calculated values of administrative expenses are continuously increasing from years 2006 to 2009 as compared to base year 2005.

14. Depreciation & Amortization

Years20052006200720082009

Percentage100%110.00%115.86%118.58%121.37%

Interpretation

Depreciation and amortization expenses are continuously increasing as compared to the base year but this is not a significant increase.15. Other Operating ExpensesYears20052006200720082009

Percentage100%228.74%70.21%311.65%371.27%

Interpretation

Since the calculated value shows a continuous increase in the operating expenses of PSO limited as compared to the base year yet there is a significant decrease in the year 2007 but again in subsequent years this value increased significantly.16. Other Operating IncomeYears20052006200720082009

Percentage100%80.17%107.83%117.75%122.39%

Interpretation

The above values of operating income when compared with the base year decreased in first year but it increased continuously in the subsequent years.17. Other Operating Profit/ LossYears20052006200720082009

Percentage100%115.85%80.57%237.01%(68.02%)

Interpretation

Since the computed values of operating profit are does not show a continuous trend so we can say that the profit increased in two non-subsequent year i.e. 2006 and 2008 but it decreased in 2007 as compared to base year. In 2009 it shows a significant loss.18. Finance CostYears20052006200720082009

Percentage100%238.51%312.41%369.01%1681.16%

Interpretation

The finance cost of the PSO limited shows a significant increase over the years when compared to the base year. It means that the finance cost of the company in increasing continuously.19. Other IncomeYears20052006200720082009

Percentage100%668.02%340.18%274.19%553.87%

Interpretation

From the above computed values we can see that the other income of the company increased in 2006 very significantly but in next subsequent years it increased with a decreased rate.20. Profit before TaxYears20052006200720082009

Percentage100%124.23%77.48%232.58%(123.56%)

Interpretation

The calculated values of profit before tax show an increase as compared to base year in the first year and then a decrease in the next year. However it shows significant positive change in the next year as compared to the base year. Yet in the year 2009 it showed a very significant decrease that is signifies a tax bracket.21. TaxationYears20052006200720082009

Percentage100%110.13%68.79%207.14%(131.76%)

Interpretation

The above computed values of taxation are showing increase in 2006 as compared to base year and decrease in the next year 2007. Again the value of tax increases in 2008. However the firm got tax bracket due to operating loss in the year 2009.22. Net Profit / Loss

Years20052006200720082009

Percentage100%133.04%82.92%248.48%(118.44%)

Interpretation

The computed values of net profits here also show the above zigzag pattern as compared to the base year. However in the last year i.e. 2009 the company shows a significant loss.Vertical Analysis of Balance Sheet


Particulars20052006200720082009

Assets

Current Assets:

Cash & Bank Balances3.67%2.71%2.04%2.37%1.88%

Short-term Investments0.02%----

Taxation - Net----0.46%

Other Receivables19.80%20.75%21.08%12.34%8.35%

Deposits & Short-term Prepayments1.39%1.84%2.12%0.32%0.36%

Loans & Advances0.41%0.39%0.49%0.31%0.27%

Trade Debts12.98%16.70%18.20%26.67%52.48%

Stock in Trade39.35%40.14%39.55%49.06%26.53%

Stores, Spare Parts & Loose Tools0.25%0.18%0.17%0.09%0.07%

Total Current Assets77.87%82.71%83.64%91.16%90.40%

Non-Current Assets:

Deferred Tax0.24%0.58%0.54%0.32%3.28%

Long-term Deposits & Prepayments0.20%0.11%0.09%0.06%0.05%

Long-term Loans, Advances & Receivables1.47%0.99%0.84%0.38%0.26%

Long-term Investments4.43%4.67%4.00%2.13%1.40%

Intangibles0.28%0.22%0.17%0.08%0.04%

Property, Plant & Equipment15.51%10.72%10.72%5.87%4.55%

Total Non-Current Assets22.13%17.29%16.36%8.84%9.60%

Total Assets100%100%100%100%100%


Liabilities:


Taxation - Net2.57%2.42%0.09%0.57%-

Short-term Borrowings9.20%10.90%12.13%8.65%12.16%

Accrued Interest / Mark-up0.12%0.17%0.18%0.17%0.36%

Provisions1.44%1.11%0.92%0.57%0.45%

Trade & Other Payables49.30%52.47%55.44%63.78%71.78%

Total Current Liabilities62.64%67.06%68.76%73.74%84.75%


Retirement & Other Service Benefits2.53%2.22%2.20%1.24%1.09%

Long-term Deposits & Prepayments1.29%1.06%1.03%0.66%0.56%

Total Non-Current Liabilities3.82%3.28%3.23%1.90%1.65%

Equity:

Share Capital3.28%2.44%2.29%1.35%1.12%

Reserves30.26%27.22%25.72%23.01%12.49%

Total Equity33.54%29.66%28.02%24.36%13.60%

Total Liabilities & Equity100%100%100%100%100%

Interpretation1. Cash & Bank BalancesYears20052006200720082009

Percentage3.67%2.71%2.04%2.37%1.88%

Interpretation

Since the computed value of cash & bank balances under vertical analysis taking total assets as base is covering almost 3.67%, 2.71%, 2.04%, 2.37%, and 1.88% of total volume of balance sheet in the consecutive last five years. The overall tendency of the cash & bank balances is decreasing.

2. Short-term Investments

Years20052006200720082009

Percentage0.02%----

Interpretation

Since the computed value of Short-term Investments under vertical analysis taking total assets as base is covering almost 0.02% of total volume of balance sheet in the year 2005. In the coming years till 2009 company did not invest in short-term assets.

3. Taxation - Net

Years20052006200720082009

Percentage----0.46%

InterpretationSince the computed value of Taxation - Net under vertical analysis taking total assets as base is covering almost 0.46% of total volume of balance sheet in the last five consecutive years.

4. Other ReceivablesYears20052006200720082009

Percentage19.80%20.75%21.08%12.34%8.35%

Interpretation

Since the computed value of Other Receivables under vertical analysis taking total assets as base is covering almost 19.80%, 20.75%, 21.08%, 12.34%, and 8.35% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Other Receivables is increasing in first three years than decreasing in last two years.

5. Deposits & Short-term PrepaymentsYears20052006200720082009

Percentage1.39%1.84%2.12%0.32%0.36%

Interpretation

Since the computed value of Deposits & Short-term Prepayments under vertical analysis taking total assets as base is covering almost 1.39%, 1.84%, 2.12%, 0.32%, and 0.36% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Deposits & Short-term Prepayments is increasing in first three years than decreasing in last two years.

6. Loans & Advances

Years20052006200720082009

Percentage0.41%0.39%0.49%0.31%0.27%

Interpretation

Since the computed value of Loans & Advances under vertical analysis taking total assets as base is covering almost 0.41%, 0.39%, 0.49%, 0.31%, and 0.27% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Loans & Advances is decreasing.

7. Trade Debts

Years20052006200720082009

Percentage12.98%16.70%18.20%26.67%52.48%

Interpretation

Since the computed value of Trade Debts under vertical analysis taking total assets as base is covering almost 12.98%, 16.70%, 18.20%, 26.67%, and 52.48% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Trade Debts is increasing.

8. Stock in TradeYears20052006200720082009

Percentage39.35%40.14%39.55%49.06%26.53%

Interpretation

Since the computed value of Stock in Trade under vertical analysis taking total assets as base is covering almost 39.35%, 40.14%, 39.55%, 49.06%, and 26.53% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Stock in Trade is increasing.

9. Stores, Spare Parts & Loose ToolsYears20052006200720082009

Percentage0.25%0.18%0.17%0.09%0.07%

Interpretation

Since the computed value of Stores, Spare Parts & Loose Tools under vertical analysis taking total assets as base is covering almost 0.25%, 0.18%, 0.17%, 0.09%, and 0.07% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Stores, Spare Parts & Loose Tools is decreasing.

10. Total Current AssetsYears20052006200720082009

Percentage77.87%82.71%83.64%91.16%90.40%

Interpretation

Since the computed value of Total Current Assets under vertical analysis taking total assets as base is covering almost 77.87%, 82.71%, 83.64%, 91.16%, and 90.40% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Total Current Assets is increasing.

11. Deferred TaxYears20052006200720082009

Percentage0.24%0.58%0.54%0.32%3.28%

Interpretation

Since the computed value of Deferred Tax under vertical analysis taking total assets as base is covering almost 0.24%, 0.58%, 0.54%, 0.32%, and 3.28% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Deferred Tax is increasing.

12. Long-term Deposits & PrepaymentsYears20052006200720082009

Percentage0.20%0.11%0.09%0.06%0.05%

Interpretation

Since the computed value of Long-term Deposits & Prepayments under vertical analysis taking total assets as base is covering almost 0.20%, 0.11%, 0.09%, 0.06%, and 0.05% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Long-term Deposits & Prepayments is decreasing.

13. Long-term Loans, Advances & ReceivablesYears20052006200720082009

Percentage1.47%0.99%0.84%0.38%0.26%

Interpretation

Since the computed value of Long-term Loans, Advances & Receivables under vertical analysis taking total assets as base is covering almost 0.23%, 0.37%, 0.23%, 0.01%, and 0.02% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Long-term Loans, Advances & Receivables is increasing.

14. Long-term InvestmentsYears20052006200720082009

Percentage4.43%4.67%4.00%2.13%1.40%

Interpretation

Since the computed value of Long-term Investments under vertical analysis taking total assets as base is covering almost 4.43%, 4.67%, 4.00%, 2.13%, and 1.40% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Long-term Investments is decreasing.

15. Intangibles

Years20052006200720082009

Percentage0.28%0.22%0.17%0.08%0.04%

Interpretation

Since the computed value of Intangibles under vertical analysis taking total assets as base is covering almost 0.28%, 0.22%, 0.17%, 0.08%, and 0.04% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Intangibles is decreasing.

16. Property, Plant & EquipmentYears20052006200720082009

Percentage15.51%10.72%10.72%5.87%4.55%

Interpretation

Since the computed value of Property, Plant & Equipment under vertical analysis taking total assets as base is covering almost 15.51%, 10.72%, 10.72%, 5.87%, and 4.55% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Property, Plant & Equipment is decreasing.

17. Total Non-Current AssetsYears20052006200720082009

Percentage22.13%17.29%16.36%8.84%9.60%

Interpretation Since the computed value of Total Non-Current Assets under vertical analysis taking total assets as base is covering almost 22.13%, 17.29%, 16.36%, 8.84%, and 9.60% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Total Non-Current Assets is decreasing.

18. Total AssetsYears20052006200720082009

Percentage100%100%100%100%100%

Interpretation

We take total assets as base in this vertical analysis so total assets are 100% in every year.19. Taxation - NetYears20052006200720082009

Percentage2.57%2.42%0.09%0.57%-

Interpretation

Since the computed value of Taxation - Net under vertical analysis taking total assets as base is covering almost 2.57%, 2.42%, 0.09% and 0.57% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Taxation - Net is decreasing.

20. Short-term BorrowingsYears20052006200720082009

Percentage9.20%10.90%12.13%8.65%12.16%

Interpretation

Since the computed value of Short-term Borrowings under vertical analysis taking total assets as base is covering almost 9.20%, 10.90%, 12.13%, 8.65%, and 12.16% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Short-term Borrowings is increasing.

21. Accrued Interest / Mark-upYears20052006200720082009

Percentage0.12%0.17%0.18%0.17%0.36%

Interpretation

Since the computed value of accrued Interest / Mark-up under vertical analysis taking total assets as base is covering almost 0.12%, 0.17%, 0.18%, 0.17%, and 0.36% of total volume of balance sheet in the last five consecutive years. The overall tendency of the accrued Interest / Mark-up is increasing.

22. ProvisionsYears20052006200720082009

Percentage1.44%1.11%0.92%0.57%0.45%

Interpretation

Since the computed value of Provisions under vertical analysis taking total assets as base is covering almost 1.44%, 1.11%, 0.92%, 0.57%, and 0.45% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Provisions is decreasing.23. Trade & Other PayablesYears20052006200720082009

Percentage49.30%52.47%55.44%63.78%71.78%

Interpretation

Since the computed value of Trade & Other Payables under vertical analysis taking total assets as base is covering almost 49.30%, 52.47%, 55.44%, 63.78% and 71.78% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Trade & Other Payables is increasing.24. Total Current LiabilitiesYears20052006200720082009

Percentage62.64%67.06%68.76%73.74%84.75%

InterpretationSince the computed value of Total Current Liabilities under vertical analysis taking total assets as base is covering almost 62.64%, 67.06%, 68.76%, 73.74%, and 84.75% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Total Current Liabilities is increasing.

25. Retirement & Other Service BenefitsYears20052006200720082009

Percentage2.53%2.22%2.20%1.24%1.09%

InterpretationSince the computed value of Retirement & Other Service Benefits under vertical analysis taking total assets as base is covering almost 2.53%, 2.22%, 2.20%, 1.24%, and 1.09% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Retirement & Other Service Benefits is decreasing.

26. Long-term Deposits & PrepaymentsYears20052006200720082009

Percentage1.29%1.06%1.03%0.66%0.56%

InterpretationSince the computed value of Long-term Deposits & Prepayments under vertical analysis taking total assets as base is covering almost 1.29%, 1.06%, 1.03%, 0.66%, and 0.56% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Long-term Deposits & Prepayments is decreasing.

27. Total Non-Current LiabilitiesYears20052006200720082009

Percentage3.82%3.28%3.23%1.90%1.65%

InterpretationSince the computed value of Total Non-Current Liabilities under vertical analysis taking total assets as base is covering almost 3.82%, 3.28%, 3.23%, 1.90%, and 1.65% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Total Non-Current Liabilities is decreasing.

28. Share CapitalYears20052006200720082009

Percentage3.28%2.44%2.29%1.35%1.12%

InterpretationSince the computed value of Share Capital under vertical analysis taking total assets as base is covering almost 3.28%, 2.44%, 2.29%, 1.35%, and 1.12% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Share Capital is decreasing.

29. ReservesYears20052006200720082009

Percentage30.26%27.22%25.72%23.01%12.49%

Interpretation

Since the computed value of Reserves under vertical analysis taking total assets as base is covering almost 30.26%, 27.22%, 25.72%, 23.01%, and 12.49% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Reserves is decreasing.

30. Total EquityYears20052006200720082009

Percentage33.54%29.66%28.02%24.36%13.60%

InterpretationSince the computed value of Total Equity under vertical analysis taking total assets as base is covering almost 33.54%, 29.66%, 28.02%, 24.36%, and 13.60% of total volume of balance sheet in the last five consecutive years. The overall tendency of the Total Equity is decreasing.

31. Total Liabilities & EquityYears20052006200720082009

Percentage100%100%100%100%100%

Interpretation

As we take total assets as base for this analysis so total liabilities & equity is also 100% in every year.Horizontal Analysis of Balance Sheet


Particulars20052006200720082009

Assets

Current Assets:

Cash & Bank Balances100%98.80%79.21%157.06%150.01%

Short-term Investments100%----

Taxation - Net----100%

Other Receivables100%140.59%152.07%151.40%123.64%

Deposits & Short-term Prepayments100%177.36%218.12%55.28%75.99%

Loans & Advances100%129.30%171.62%185.80%196.02%

Trade Debts100%172.52%200.26%499.25%1185.52%

Stock in Trade100%136.85%143.62%302.96%197.72%

Stores, Spare Parts & Loose Tools100%95.77%97.96%88.71%85.89%

Total Current Assets100%142.47%153.47%284.47%340.47%

Non-Current Assets:

Deferred Tax100%327.32%321.50%326.55%4035.01%

Long-term Deposits & Prepayments100%71.00%62.68%75.21%79.55%

Long-term Loans, Advances & Receivables100%90.71%81.59%62.07%52.72%

Long-term Investments100%141.47%129.03%116.54%92.91%

Intangibles100%107.03%87.26%72.94%47.61%

Property, Plant & Equipment100%92.70%98.78%91.98%86.14%

Total Non-Current Assets100%104.84%105.62%97.04%127.29%

Total Assets100%134.15%142.88%243.00%293.31%


Liabilities:


Taxation - Net100%126.11%5.16%54.06%0.00%

Short-term Borrowings100%158.97%188.39%228.57%387.70%

Accrued Interest / Mark-up100%188.87%206.43%340.92%870.38%

Provisions100%103.06%91.29%96.27%91.29%

Trade & Other Payables100%142.75%160.65%314.33%427.00%

Total Current Liabilities100%143.62%156.83%286.09%396.85%


Retirement & Other Service Benefits100%117.47%124.20%118.92%126.39%

Long-term Deposits & Prepayments100%110.19%113.79%123.61%126.59%

Total Non-Current Liabilities100%115.01%120.69%120.51%126.46%

Equity:

Share Capital100%100.00%100.00%100.00%100.00%

Reserves100%120.65%121.44%184.78%121.01%

Total Equity100%118.63%119.35%176.49%118.96%

Total Liabilities & Equity100%134.15%142.88%243.00%293.31%

Interpretation1. Cash & Bank Balances

Years20052006200720082009

Percentage100.00%98.80%79.21%157.06%150.01%

Interpretation

Since the computed values of Cash & Bank Balances are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Cash & Bank Balances of PSO has been increasing continuously.2. Short-term Investments

Years20052006200720082009

Percentage100.00%----

Interpretation

Since the computed value of Short-term Investments is showing that company made short term investment only in 2005 from last five years.

3. Taxation - Net

Years20052006200720082009

Percentage----100.00%

InterpretationSince the computed values of Taxation Net is showing that the company has only earned the benefit of taxation in 2009.

4. Other Receivables

Years20052006200720082009

Percentage100.00%140.59%152.07%151.40%123.64%

Interpretation

Since the computed values of Other Receivables are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Other Receivables of PSO has been increasing continuously.5. Deposits & Short-term Prepayments

Years20052006200720082009

Percentage100.00%177.36%218.12%55.28%75.99%

Interpretation

Since the computed values of Deposits & Short-term Prepayments are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Deposits & Short-term Prepayments of PSO has been increasing continuously.6. Loans & Advances

Years20052006200720082009

Percentage100.00%129.30%171.62%185.80%196.02%

Interpretation

Since the computed values of Loans & Advances are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Loans & Advances of PSO has been increasing continuously.7. Trade Debts

Years20052006200720082009

Percentage100.00%172.52%200.26%499.25%1185.52%

Interpretation

Since the computed values of Trade Debts are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Trade Debts of PSO has been increasing continuously.8. Stock in Trade

Years20052006200720082009

Percentage100.00%136.85%143.62%302.96%197.72%

Interpretation

Since the computed values of Stock in Trade are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Stock in Trade of PSO has been increasing continuously.9. Stores, Spare Parts & Loose Tools

Years20052006200720082009

Percentage100.00%95.77%97.96%88.71%85.89%

Interpretation

Since the computed values of Stores, Spare Parts & Loose Tools are showing a decrease from 2006 to 2009 as compared to base year we can conclude that the Stores; Spare Parts & Loose Tools of PSO has been decreasing continuously.10. Total Current Assets

Years20052006200720082009

Percentage100.00%142.47%153.47%284.47%340.47%

Interpretation

Since the computed values of Total Current Assets are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Current Assets of PSO has been increasing continuously.11. Deferred Tax

Years20052006200720082009

Percentage100.00%327.32%321.50%326.55%4035.01%

Interpretation

Since the computed values of Deferred Tax are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Deferred Tax of PSO has been increasing continuously.12. Long-term Deposits & Prepayments

Years20052006200720082009

Percentage100.00%71.00%62.68%75.21%79.55%

Interpretation

Since the computed values of Long-term Deposits & Prepayments are showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Long-term Deposits & Prepayments of PSO has been decreasing continuously.13. Long-term Loans, Advances & Receivables

Years20052006200720082009

Percentage100.00%90.71%81.59%62.07%52.72%

Interpretation

Since the computed values of Long-term Loans, Advances & Receivables are showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Long-term Loans, Advances & Receivables of PSO has been decreasing continuously.14. Long-term Investments

Years20052006200720082009

Percentage100.00%141.47%129.03%116.54%92.91%

InterpretationSince the computed values of Long-term Investments are showing a significant increase from 2006 to 2008 and decrease in 2009 as compared to base year we can conclude that the Long-term Investments of PSO has been increasing continuously. However Long-term Investments decreased in 2009. 15. Intangibles

Years20052006200720082009

Percentage100.00%107.03%87.26%72.94%47.61%

Interpretation

Since the computed values of Intangibles are showing a significant decrease from 2007 to 2009 as compared to base year we can conclude that the Intangibles of PSO has been decreasing continuously.16. Property, Plant & Equipment

Years20052006200720082009

Percentage100.00%92.70%98.78%91.98%86.14%

Interpretation

Since the computed values of Property, Plant & Equipment are showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Property, Plant & Equipment of PSO has been decreasing continuously.17. Total Non-Current Assets

Years20052006200720082009

Percentage100.00%104.84%105.62%97.04%127.29%

Interpretation

Since the computed values of Total Non-Current Assets are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Non-Current Assets of PSO has been increasing continuously except in 2008.18. Total Assets

Years20052006200720082009

Percentage100.00%134.15%142.88%243.00%293.31%

Interpretation

Since the computed values of Total Assets are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Assets of PSO has been increasing continuously.19. Taxation - Net

Years20052006200720082009

Percentage100.00%126.11%5.16%54.06%0.00%

Interpretation

Since the computed values of Taxation - Net are showing a significant decrease from 2007 to 2009 as compared to base year we can conclude that the Taxation - Net of PSO has been decreasing continuously.20. Short-term Borrowings

Years20052006200720082009

Percentage100.00%158.97%188.39%228.57%387.70%

Interpretation

Since the computed values of Short-term Borrowings are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Short-term Borrowings of PSO has been increasing continuously.21. Accrued Interest / Mark-up

Years20052006200720082009

Percentage100.00%188.87%206.43%340.92%870.38%

Interpretation

Since the computed values of Accrued Interest / Mark-up are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Accrued Interest / Mark-up of PSO has been increasing continuously.22. Provisions

Years20052006200720082009

Percentage100.00%103.06%91.29%96.27%91.29%

Interpretation

Since the computed values of Provisions are showing a significant decrease from 2007 to 2009 as compared to base year we can conclude that the Provisions of PSO has been decreasing continuously.23. Trade & Other Payables

Years20052006200720082009

Percentage100.00%142.75%160.65%314.33%427.00%

InterpretationSince the computed values of Trade & Other Payables are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Trade & Other Payables of PSO has been increasing continuously.24. Total Current Liabilities

Years20052006200720082009

Percentage100.00%143.62%156.83%286.09%396.85%

InterpretationSince the computed values of Total Current Liabilities are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Current Liabilities of PSO has been increasing continuously.25. Retirement & Other Service Benefits

Years20052006200720082009

Percentage100.00%117.47%124.20%118.92%126.39%

InterpretationSince the computed values of Retirement & Other Service Benefits are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Retirement & Other Service Benefits of PSO has been increasing continuously.26. Long-term Deposits & Prepayments

Years20052006200720082009

Percentage100.00%110.19%113.79%123.61%126.59%

InterpretationSince the computed values of Long-term Deposits & Prepayments are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Long-term Deposits & Prepayments of PSO has been increasing continuously.27. Total Non-Current Liabilities

Years20052006200720082009

Percentage100.00%115.01%120.69%120.51%126.46%

InterpretationSince the computed values of Total Non-Current Liabilities are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Non-Current Liabilities of PSO has been increasing continuously.28. Share Capital

Years20052006200720082009

Percentage100.00%100.00%100.00%100.00%100.00%

InterpretationThe computed values of Share Capital are showing that the capital of the company is remained same over the years.29. Reserves

Years20052006200720082009

Percentage100.00%120.65%121.44%184.78%121.01%

Interpretation

Since the computed values of Reserves are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Reserves of PSO has been increasing continuously.30. Total Equity

Years20052006200720082009

Percentage100.00%118.63%119.35%176.49%118.96%

InterpretationSince the computed values of Total Equity are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Equity of PSO has been increasing continuously.31. Total Liabilities & Equity

Years20052006200720082009

Percentage100.00%134.15%142.88%243.00%293.31%

Interpretation

Since the computed values of Total Liabilities & Equity are showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Liabilities & Equity of PSO has been increasing continuously.Vertical Analysis of Cash Flow Statement


Particulars20052006200720082009


Cash Generated from Operations(3,835.3%)(231.09%)(642%)(173.55%)(25.24%)

Long-term Loans, Advances & Receivables(74.57%)(2.52%)(5.25%)(2.08%)(0.63%)

Long-term Deposits & Prepayments17.72%(1.08%)(0.62%)--

Long-term Deposits---(0.92%)(0.17%)

Taxes Paid853.61%134.91%285.66%92.80%12.20%

Finance Costs Paid175.94%29.17%80.88%17.83%51.20%

Payment against Provisions41.87%6.49%0.71%0.00%0.33%

Retirement Benefits Paid83.84%6.50%20.29%8.50%4.23%

Net Cash Generated / Used In Operations(2,736.8%)(57.61%)(260.3%)(57.25%)41.95%


Purchases of Fixed Assets785.94%26.49%113.50%8.63%6.03%

Proceeds from Disposal of Operating Assets(6.31%)(9.23%)(2.17%)(0.80%)(0.18%)

Dividends Received(143.35%)(10.27%)(61.41%)(5.43%)(5.83%)

Proceeds from Liquidation of Subsidiaries-(0.87%)---

Net Cash Generated / Used In Investments636.29%6.12%49.93%2.40%0.03%


Repayment of Long-term Loan2.48%----

Proceeds from / Repayment of Long-term Deposits(32.43%)(2.43%)(1.71%)--

Proceeds from / Repayment of Short-term Finances(278.61%)(7.62%)(226.40%)74.21%(30.17%)

Dividends Paid1886.93%154.77%338.52%60.92%25.72%

Net Cash Generated / Used In Financing1578.38%144.73%110.40%135.12%(4.45%)

Total Net Cash Generated / Used In for The Year(522.17%)93.24%(100%)80.28%37.53%

Cash at Beginning of The Year622.17%6.76%200%19.72%62.47%

Cash at End of The Year100%100%100%100%100%

Interpretation1. Cash Generated from Operations

Years20052006200720082009

Percentage(3,835.25%)(231.09%)(642.00%)(173.55%)(25.24%)

Interpretation

Since the computed value of Cash Generated from Operations under vertical analysis taking Cash at End of The Year as base is covering almost 3,835.25%, 231.09%, 642.00%, 173.55%, and 25.24% of respective Cash at End of The Year in the last five consecutive years. It is showing that Company using more cash than it generated from operations.

2. Long-term Loans, Advances & Receivables

Years20052006200720082009

Percentage(74.57%)(2.52%)(5.25%)(2.08%)(0.63%)

Interpretation

Since the computed value of Long-term Loans, Advances & Receivables under vertical analysis taking Cash at End of The Year as base is covering almost 74.57%, 2.52%, 5.25%, 2.08%, and 0.63% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Long-term Loans, Advances & Receivables is decreasing.

3. Long-term Deposits & Prepayments

Years20052006200720082009

Percentage17.72%(1.08%)(0.62%)--

InterpretationSince the computed value of Long-term Deposits & Prepayments under vertical analysis taking Cash at End of The Year as base is covering almost 17.72%, 1.08%, and 0.62% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Long-term Deposits & Prepayments is decreasing.

4. Long-term Deposits

Years20052006200720082009

Percentage---(0.92%)(0.17%)

Interpretation

Since the computed value of Long-term Deposits under vertical analysis taking Cash at End of The Year as base company made long term deposits at 0.92% and 0.17% of respective Cash at End of The Year only in 2008 and 2009.

5. Taxes Paid

Years20052006200720082009

Percentage853.61%134.91%285.66%92.80%12.20%

Interpretation

Since the computed value of Taxes Paid under vertical analysis taking Cash at End of The Year as base is covering almost 853.61%, 134.91%, 285.66%, 92.80%, and 12.20% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Taxes Paid is decreasing.

6. Finance Costs Paid

Years20052006200720082009

Percentage175.94%29.17%80.88%17.83%51.20%

Interpretation

Since the computed value of Finance Costs Paid under vertical analysis taking Cash at End of The Year as base almost 175.94%, 29.17%, 80.88%, 17.83%, and 51.20% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Finance Costs Paid is decreasing.

7. Payment against Provisions

Years20052006200720082009

Percentage41.87%6.49%0.71%0.00%0.33%

Interpretation

Since the computed value of Payment against Provisions under vertical analysis taking Cash at End of The Year as base is covering almost 41.87%, 6.49%, 0.71%, 0.00%, and 0.33% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Payment against Provisions is decreasing.

8. Retirement Benefits Paid

Years20052006200720082009

Percentage83.84%6.50%20.29%8.50%4.23%

Interpretation

Since the computed value of Retirement Benefits Paid under vertical analysis taking Cash at End of The Year as base is covering almost 83.84%, 6.50%, 20.29%, 8.50%, and 4.23% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Retirement Benefits Paid is decreasing.

9. Net Cash Generated / Used In

Years20052006200720082009

Percentage(2,736.83%)(57.61%)(260.32%)(57.25%)41.95%

Interpretation

Since the computed value of Net Cash Generated / Used In under vertical analysis taking Cash at End of The Year as base is covering almost 2,736.83%, 57.61%, 260.32%, 57.25%, and 41.95% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Net Cash Generated / Used In is decreasing.

10. Purchases of Fixed Assets

Years20052006200720082009

Percentage785.94%26.49%113.50%8.63%6.03%

Interpretation

Since the computed value of Purchases of Fixed Assets under vertical analysis taking Cash at End of The Year as base is covering almost 785.94%, 26.49%, 113.50%, 8.63%, and 6.03% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Purchases of Fixed Assets is decreasing.

11. Proceeds from Disposal of Operating Assets

Years20052006200720082009

Percentage(6.31%)(9.23%)(2.17%)(0.80%)(0.18%)

Interpretation

Since the computed value of Proceeds from Disposal of Operating Assets under vertical analysis taking Cash at End of The Year as base is covering almost 6.31%, 9.23%, 2.17%, 0.80%, and 0.18% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Proceeds from Disposal of Operating Assets is decreasing.

12. Dividends Received

Years20052006200720082009

Percentage(143.35%)(10.27%)(61.41%)(5.43%)(5.83%)

Interpretation

Since the computed value of Dividends Received under vertical analysis taking Cash at the End of The Year as base is covering almost 143.35%, 10.27%, 61.41%, 5.43%, and 5.83% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Dividends Received is decreasing.

13. Proceeds from Liquidation of Subsidiaries

Years20052006200720082009

Percentage-(0.87%)---

Interpretation

Since the computed value of Proceeds from Liquidation of Subsidiaries under vertical analysis taking Cash at End of The Year as base is covering 0.87% of respective Cash at End of The Year only in 2006.


Years20052006200720082009

Percentage636.29%6.12%49.93%2.40%0.03%

Interpretation

Since the computed value of Net Cash Generated / Used In under vertical analysis taking Cash at End of The Year as base is covering almost 636.29%, 6.12%, 49.93%, 2.40%, and 0.03% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Net Cash Generated / Used In is decreasing.

15. Repayment of Long-term Loan

Years20052006200720082009

Percentage2.48%----

Interpretation

Since the computed value of Repayment of Long-term Loan under vertical analysis taking Cash at End of The Year as base is repay 0.02% of respective Cash at End of The Year only in 2005.

16. Proceeds from / Repayment of Long-term Deposits

Years20052006200720082009

Percentage(32.43%)(2.43%)(1.71%)--

Interpretation

Since the computed value of Proceeds from / Repayment of Long-term Deposits under vertical analysis taking Cash at End of The Year as base is covering almost 32.43%, 2.43% and 1.71% of respective Cash at End of The Year in the years from 2005 to 2007. The overall tendency of the Proceeds from / Repayment of Long-term Deposits is decreasing.

17. Proceeds from / Repayment of Short-term Finances

Years20052006200720082009

Percentage(278.61%)(7.62%)(226.40%)74.21%(30.17%)

Interpretation

Since the computed value of Proceeds from / Repayment of Short-term Finances under vertical analysis taking Cash at End of The Year as base is covering almost 278.61%, 7.62%, 226.40%, 74.21%, and 30.17% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Proceeds from / Repayment of Short-term Finances is decreasing.

18. Dividends Paid

Years20052006200720082009

Percentage1886.93%154.77%338.52%60.92%25.72%

Interpretation

Since the computed value of Dividends Paid under vertical analysis taking Cash at End of The Year as base is covering almost 1886.93%, 154.77%, 338.52%, 60.92%, and 25.72% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Dividends Paid is decreasing.


Years20052006200720082009

Percentage1578.38%144.73%110.40%135.12%(4.45%)

Interpretation

Since the computed value of Net Cash Generated / Used In under vertical analysis taking Cash at End of The Year as base is covering almost 1578.38%, 144.73%, 110.40%, 135.12%, and 4.45% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Net Cash Generated / Used In is decreasing.

20. Total Net Cash Generated / Used In for the Year

Years20052006200720082009

Percentage(522.17%)93.24%(100%)80.28%37.53%

Interpretation

Since the computed value of Total Net Cash Generated / Used In for the Year under vertical analysis taking Cash at End of The Year as base is covering almost 522.17%, 93.24%, 100%, 80.28%, and 37.53% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Total Net Cash Generated / Used In for the Year is decreasing.

21. Cash at Beginning of the Year

Years20052006200720082009

Percentage622.17%6.76%200%19.72%62.47%

Interpretation

Since the computed value of Cash at Beginning of the Year under vertical analysis taking Cash at End of The Year as base is covering almost 622.17%, 6.76%, 200%, 19.72%, and 62.47% of respective Cash at End of The Year in the last five consecutive years. The overall tendency of the Cash at Beginning of the Year is decreasing.

22. Cash at End of the Year

Years20052006200720082009

Percentage100%100%100%100%100%

Interpretation

Since the computed value of Cash at End of the Year under vertical analysis is taking as base year.Horizontal Analysis of Cash Flow Statement


Particulars20052006200720082009


Cash Generated from Operations100%89.15%123.84%169.76%39.53%

Long-term Loans, Advances & Receivables100%50.05%52.13%104.78%50.35%

Long-term Deposits & Prepayments100%(89.79%)(25.76%)38.81%13.41%

Long-term Deposits---100%30%

Taxes Paid100%233.86%247.59%407.84%85.81%

Finance Costs Paid100%245.34%340.10%380.15%1747.70%

Payment against Provisions100%229.32%12.62%-46.85%

Retirement Benefits Paid100%114.78%179.04%380.18%302.80%

Net Cash Generated / Used In100%31.15%70.37%78.47%(92.05%)


Purchases of Fixed Assets100%49.88%106.84%41.18%46.08%

Proceeds from Disposal of Operating Assets100%2166.48%254.32%473.14%166.85%

Dividends Received100%105.97%316.93%142.01%244.26%

Proceeds from Liquidation of Subsidiaries-100%---

Net Cash Generated / Used In100%14.24%58.05%14.18%0.24%


Repayment of Long-term Loan100%----

Proceeds from / Repayment of Long-term Deposits100%110.72%39.11%--

Proceeds from / Repayment of Short-term Finances100%40.45%601.21%(999.23%)650.28%

Dividends Paid100%121.36%132.73%121.11%81.86%

Net Cash Generated / Used In100%135.67%51.75%321.17%(16.92%)

Total Net Cash Generated / Used In for The Year100%(264.22%)141.68%(576.78%)(431.61%)

Cash at Beginning of The Year100%16.07%237.82%118.91%602.99%

Cash at End of The Year100%1479.65%739.83%3751.61%6005.31%

Interpretation

1. Cash Generated from Operations

Years20052006200720082009

Percentage100%89.15%123.84%169.76%39.53%

Interpretation

Since the computed values of are Cash Generated from Operations showing a significant increase in 2007 and 2008 as compared to base year we can conclude that the Cash Generated from Operations of PSO has been increasing continuously. However there is a significant decrease in 2009.

2. Long-term Loans, Advances & Receivables

Years20052006200720082009

Percentage100%50.05%52.13%104.78%50.35%

Interpretation

Since the computed values of Long-term Loans, Advances & Receivables showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Long-term Loans, Advances & Receivables of PSO has been decreasing continuously.

3. Long-term Deposits & Prepayments

Years20052006200720082009

Percentage100%(89.79%)(25.76%)38.81%13.41%

Interpretation

Since the computed values of Long-term Deposits & Prepayments showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Long-term Deposits & Prepayments of PSO has been decreasing continuously.

4. Long-term Deposits

Years20052006200720082009

Percentage---100%30%

Interpretation

Since the computed values of Long-term Deposits are showing that company has made investment in long term deposits only in last two years from last consecutive five years.

5. Taxes Paid

Years20052006200720082009

Percentage100%233.86%247.59%407.84%85.81%

Interpretation

Since the computed values of Taxes Paid showing a significant increase from 2006 to 2008 as compared to base year we can conclude that the Taxes Paid of PSO has been increasing continuously. However there is a significant decrease in 2009.

6. Finance Costs Paid

Years20052006200720082009

Percentage100%245.34%340.10%380.15%1747.70%

Interpretation

Since the computed values of Finance Costs Paid showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Finance Costs Paid of PSO has been increasing continuously.

7. Payment against Provisions

Years20052006200720082009

Percentage100%229.32%12.62%-46.85%

Interpretation

Since the computed values of Payment against Provisions showing a significant decrease from 2007 to 2009 as compared to base year we can conclude that the Payment against Provisions of PSO has been decreasing continuously.

8. Retirement Benefits Paid

Years20052006200720082009

Percentage100%114.78%179.04%380.18%302.80%

Interpretation

Since the computed values of Retirement Benefits Paid showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Retirement Benefits Paid of PSO has been increasing continuously.


Years20052006200720082009

Percentage100%31.15%70.37%78.47%(92.05%)

Interpretation

Since the computed values of Net Cash Generated / Used In showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Net Cash Generated / Used In of PSO has been decreasing continuously.

10. Purchases of Fixed Assets

Years20052006200720082009

Percentage100%49.88%106.84%41.18%46.08%

Interpretation

Since the computed values of Purchases of Fixed Assets showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Purchases of Fixed Assets of PSO has been decreasing continuously.

11. Proceeds from Disposal of Operating Assets

Years20052006200720082009

Percentage100%2166.48%254.32%473.14%166.85%

Interpretation

Since the computed values of Proceeds from Disposal of Operating Assets showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Proceeds from Disposal of Operating Assets of PSO has been increasing continuously.

12. Dividends Received

Years20052006200720082009

Percentage100%105.97%316.93%142.01%244.26%

Interpretation

Since the computed values of Dividends Received showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Dividends Received of PSO has been increasing continuously.

13. Proceeds from Liquidation of Subsidiaries

Years20052006200720082009

Percentage-100%---

Interpretation

Since the computed values of Proceeds from Liquidation is showing that company made investment in Proceeds from Liquidation only in 2006, from 2005-09.


Years20052006200720082009

Percentage100%14.24%58.05%14.18%0.24%

InterpretationSince the computed values of Net Cash Generated / Used In showing a significant decrease from 2006 to 2009 as compared to base year we can conclude that the Net Cash Generated / Used in of PSO has been decreasing continuously.

15. Repayment of Long-term Loan

Years20052006200720082009

Percentage100%----

Interpretation

Since the computed values of Repayment of Long-term Loan showing that company made repayment of long term loan only in base year.

16. Proceeds from / Repayment of Long-term Deposits

Years20052006200720082009

Percentage100%110.72%39.11%--

Interpretation

Since the computed values of Proceeds from / Repayment of Long-term Deposits showing a significant increase 2006 as compared to base year. However there is a significant decrease in 2007.

17. Proceeds from / Repayment of Short-term Finances

Years20052006200720082009

Percentage100%40.45%601.21%(999.23%)650.28%

Interpretation

Since the computed values of Proceeds from / Repayment of Short-term Finances showing a significant increase in 2007 and 2009 as compared to base year. However there is a significant decrease in 2006.

18. Dividends Paid

Years20052006200720082009

Percentage100%121.36%132.73%121.11%81.86%

Interpretation

Since the computed values of Dividends Paid showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Dividends Paid from Operations of PSO has been increasing continuously. However there is a decrease in 2009.


Years20052006200720082009

Percentage100%135.67%51.75%321.17%(16.92%)

Interpretation

Since the computed values of Net Cash Generated / Used In showing a significant increase from 2006 to 2008 as compared to base year we can conclude that the Net Cash Generated / Used in of PSO has been increasing.

20. Total Net Cash Generated / Used In for the Year

Years20052006200720082009

Percentage100%(264.22%)141.68%(576.78%)(431.61%)

Interpretation

Since the computed values of Total Net Cash Generated / Used In for the Year showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Total Net Cash Generated / Used In for the Year of PSO has been increasing continuously.

21. Cash at Beginning of the Year

Years20052006200720082009

Percentage100%16.07%237.82%118.91%602.99%

Interpretation

Since the computed values of Cash at Beginning of the Year showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Cash at Beginning of the Year of PSO has been increasing continuously.

22. Cash at End of the Year

Years20052006200720082009

Percentage100%1479.65%739.83%3751.61%6005.31%

Interpretation

Since the computed values of Cash at End of the Year showing a significant increase from 2006 to 2009 as compared to base year we can conclude that the Cash at End of the Year of PSO has been increasing continuously.

Ratio Analysis


Particulars20052006200720082009

Short-term Solvency Ratios

Current Ratio1.241.231.221.241.07

Acid Test Ratio0.590.600.610.570.75

Net Working Capital7,970,16110,978,09711,127,54622,142,4728,666,404

Activity Ratios

Accounts Receivable Turnover Ratio31.2925.4625.7114.617.61

Average Collection Period11.5014.1414.0024.6447.30

Accounts Payable Turnover Ratio7.717.638.145.745.54

Average Payment Period46.7147.1644.2062.7365.02

Inventory Turnover Ratio9.669.9811.417.4614.98

Average Conversion Period37.2836.0831.5448.2524.03

Total Asset Turnover Ratio406.26%425.05%467.91%389.65%399.35%

Gross Fixed Assets63.68%91.57%54.28%177.04%(90.61%)

Long-term Solvency Ratios

Long-term Debt Equity Ratio0.110.110.120.080.12

Debt Equity Ratio1.982.372.573.106.35

Time Interest Earned Ratio25.2012.246.5016.18(1.02)

Total Capitalization Ratio0.100.100.100.070.11

Debt Ratio0.660.700.720.760.86

Profitability Ratios

Gross Profit Ratio6.47%5.77%3.51%6.06%0.49%

Net Profit Ratio2.66%2.52%1.34%2.84%(1.09%)

Earning Per Share32.9843.8727.3481.94(39.05)

Price Earning Ratio310.21%276.60%446.48%220.33%(311.57%)

Earning Yield Ratio32.24%36.15%22.40%45.39%(32.10%)

Dividend Per Share26.0034.0021.0023.505.00

Dividend Payout Ratio78.85%77.50%76.80%28.68%12.80%

Dividend Yield Ratio25.42%28.02%17.20%13.02%4.11%

ROE (Return On Equity)32.24%36.15%22.40%45.39%(32.10%)

ROI (Return On Investment)105.17%131.69%87.10%278.87%(85.94%)

Interpretation1. Short-term Solvency Ratios

i. Current Ratio

Years20052006200720082009

Current Assets

Current Liabilities1.24:1 1.23 :11.22:1 1.24 :11.07 :1

Interpretation

The computed values of Current Ratio shows decreasing trend from year 2005-09. It is decreasing because the current liabilities of firm increasing but the current assets are not increasing. It is therefore suggested that the company should lower its current liabilities; increase the value of current assets thus by maintaining an optimum Capital Structure.

ii. Acid Test Ratio

Years20052006200720082009

Current Assets - (Prepaid Expenses + Inventory)

Current Liabilities0.59:10.60:10.61:10.57:10.75:1

Interpretation

The computed value of Acid Test Ratio is showing an increasing trend from year 2005-09. It is increasing because increase in the inventory of the. It is therefore suggested that the company should increase its level of inventory thus by maintaining an optimum Capital Structure.

iii. Net Working Capital

Years20052006200720082009

Current Assets - Current Liabilities(Rs.)7,970,16110,978,09711,127,54622,142,4728,666,404

Interpretation

The Net Working Capital of the company has remained positive throughout the last five years. It happens due to increase in the current assets of the firm. So it is therefore suggested that the company should maintain this level of current assets & liabilities, or it can be improved.

2. Activity Ratios

i. Accounts Receivable Turnover Ratio

Years20052006200720082009

Net Credit Sales

Average Accounts ReceivableX (Times)31.2925.4625.7114.617.61

Interpretation

The computed values of Account Receivables Turnover Ratio shows decreasing trend from year 2005-09. It is decreasing because the receivables of the firm increased and company make sales on credit basis of firm. It is therefore suggested that the company should lower its receivables thus by maintaining an optimum Capital Structure.

ii. Average Collection Period

Years20052006200720082009

360

Accounts Receivable Turnover RatioDays11.5014.1414.0024.6447.30

Interpretation

The computed values of Average collection period shows increasing trend from year 2005-09. The value of the average collection period increases because the firm mostly has relaxed its credit terms due to which it takes more time to collect its debt from its creditors. It is therefore suggested that the company should lower its credit sales and tight its credit terms thus by maintaining an optimum Capital Structure.

iii. Accounts Payable Turnover Ratio

Years20052006200720082009

Net Credit Purchases / C.G.S.

Average Accounts PayableX (Times)7.717.638.145.745.54

Interpretation

The computed value of Accounts Payable Turnover Ratio shows decreasing trend from year 2005-09, which is a positive sign for the company. The reason for this decrease is that the proportion increase in accounts payable is greater than the proportion increase in cost of sales.

iv. Average Payment Period

Years20052006200720082009

360

Accounts Payable Turnover RatioDays46.7147.1644.2062.7365.02

Interpretation

The computed value of Average Payment Period shows increasing trend from year 2005-09. This increase in the value is due to the lower value of the Account Payable Turnover Ratio. It is a positive sign for the company.

v. Inventory Turnover Ratio

Years20052006200720082009

C.G.S.

Average InventoryX (Times)9.669.9811.417.4614.98

Interpretation

The computed value of Inventory Turnover Ratio shows increasing trend from year 2005-09. The increase in the value is due the cost of goods sold of the firm is increasing consistently as compare to the cost of inventory. It is therefore suggested that the company should maintain this level or it can be improved to gain optimum Capital Structure.

vi. Average Conversion Period

Years20052006200720082009

360

Inventory Turnover RatioDays37.2836.0831.5448.2524.03

Interpretation

The computed value of Average Conversion Period is showing decreasing trend from year 2005-09. The decrease in the value of conversion period shows the firm becomes efficient in selling of inventory and converts its inventory into cash in fewer time frames. It is therefore suggested that the company should keeps its conversion period low thus by maintaining an optimum Capital Structure.

vii. Total Assets Turnover Ratio

Years20052006200720082009

Annual Sales

Total Gross AssetsX 100406.26%425.05%467.91%389.65%399.35%

InterpretationThe computed value of Total Assets Turnover Ratio shows a mix trend from year 2005-09, but mainly decreasing. This happens due to decrease in the sales volume a

Documents

53374070 Financial Management Pso Project Report