Final Project National Stat

8/7/2019 Final Project National Stat

1/44

APPLIED STATISTICSANALYSIS

PROJECTStaistics And Financial Analysis

Submitted to:

Dr. Masaud Aslam Mian

On

NATIONAL FOODS LIMITED

Annual Report 2009

Submitted by

TANVEER SALEEM BHATTI ROLL #21

SHAIKH TALLAT HUSSAIN ROLL #52

AIMAN KHAN ROLL #70MHRM-B (SEMSTER-01)

Institute of Administrative Sciences

University of the Punjab, Lahore.

1


2/44


2


3/44


3


4/44


National Foods was founded in 1970 and started out as a Spice company. 3 decades later

it has diversified into a versatile Food Company with over 110 products and 165 andabove SKUs (Stock Keeping Unit) for the domestic market and over 100 different

products for the international markets.

The vision to see National Foods as a professionally managed Human Resource

company, set more then 7 years ago, was realized by transforming a local company into avery dynamic and progressive management structure in line with industry practices.

Competent Human Resources from within the company have fuelled tremendous growth

by excelling in Functional Management. Even after 3 decades the company's focal point

still remains on Customer's needs through Product development in line with thechanging market trends.

In this innovative age of ever changing lifestyles, fuelled by the rampant development oftechnology; consumers have been compelled to change their eating habits. National

Foods responds to this challenge of developing innovative food products based onconvenience and fast preparation in line with modern lifestyles and yet retains traditional

values through its impressive collection of food products.

The brand delivers its ultimate promise by consistently delivering value to its consumers.

National Foods enriches family relationships by bringing people together for familytraditions, feasts, seasonal holidays and of course - everyday life.

Company Information

4


5/44


BOARD OF DIRECTORS:

ABDUL MAJEED Chairman

ABRAR HASSAN M.D / C.E.O

WAQAR HASSAN Director

KHAWAJA MUNIR Director

ZAHID MAJEED Director

EBRAHIM QASSIM Director

IQBAL ALIMOHAMED Director

INTERNAL AUDITORS:

Messrs. Ford Rhodes Sidat Hyder & Co. C.A

AUDITORS:

A.F. Ferguson & Co C.A

SHARE REGISTRATION OFFICE:

NOBLE COMPUTER SERVICES (PVT.) LIMITED

PRINCIPAL BANKERS:

BANK AL HABIB

RBS

MCB

UBL

BANK AL-FALAH

BARCLAYS BANK

MEEZAN BANK

Karachi

Factory Office

Mailing Address F- 160/ C, F- 133, S.I.T.E., Karachi

Landline # 021-257-7707 - 10

Fax # 021-257-2217

E- Mail Address [email protected]

Forum Office

Mailing Address 219, The Forum, G-20, Block-9, Khayaban-e- Jami, Clifton, Karachi

Landline # 021-582-1243 - 46

Fax # 021-582-1247

Corporate Office

Mailing Address 12/ CL- 6, Claremont Road, Civil Lines, Karachi

Landline # 021-566-2687, 567-0793, 567-0646

Fax # 021-568-4870

Bin Qasim Industrial Unit

Mailing Address A-13, North Western Industrial Zone, Bin Qasim, Karachi

Landline # 021-475-0373 - 7

5


6/44


Lahore

Muridke Salt Plant

Mailing Address 5-A/1, New Muslim Town, LahoreFactory Address G.T. Road, Manooabad Meer Muridke

Landline # 042-798-1427, 798-0808Fax # 042-798-1427, 798-0808

Lahore Warehouse

Mailing Address Bagh Stop, Near Saadat Market, 13 Km Multan Road, Thokar Niaz Baig, Lahore.

Landline # 042-541-3709

Fax # 042-541-3141

Multan

Multan Warehouse

Mailing Address Plot No. 1091, Near Al-Madina Islamic Kanta, Bahawalpur Bypass Road, Opposite

Multan Gas Center, Multan

Landline # 061-23-2789

Fax # 061-23-2789

Islamabad

Islamabad Warehouse

Mailing Address Plot No. 119-A, Street # 8, Sector I-10/III, IslamabadLandline # 051-443-6592 - 3

Fax # 051-443-6592 3

VISION AND MISSION STATEMENT:

6


7/44


To be a Rs. 50 billion food company by the year 2020 in then convenience food segment

by launching products and services in the domestic and international markets that

enhance lifestyle and create value for our customers through management excellence atall levels.

OPERATING AND FINANCIAL HIGHLIGHTS:

PROFIT & LOSS STATEMENT:

YEARS 2006 2007 2008 2009

SALES 1847700 2391058 3061746 3758706COST OF SALES 1276437 1572574 2075969 2632255GROSS PROFIT 571263 818484 985777 1126451ADMIN. EXPENSES 73112 91297 129868 152110DISTRIBUTION COST 364758 513902 570218 665664OTHER OP COST 8753 19094 17815 18140ADMIN, SELL EXP 446623 624293 717901 835914FINANCIAL CHARGES 24850 32675 56238 86841CLAIM RECOVERY 0 24096 0 0OTHER INCOME 6681 6110 22309 17006PROFIT BEFORE TAX 106471 191722 233947 220702TAXATION 36107 62430 77401 81241PROFIT AFTER TAX 70364 129292 156546 139461

BALANCE SHEET:

YEARS 2006 2007 2008 2009

SHARE CAPITAL 42505 42505 55257 331542RESERVES 204584 325375 460688 323844SHAREHOLDERS EQ 247089 367880 515925 655386LONG TERM LIAB 206161 193763 197020 140479CURRENT LIAB 514710 626815 1033710 1115911

TOTAL= 967960 1188458 1746655 1911776

7


8/44

,000

,000

00

2004 2005 2006 2007 2008 20

Current Asset Current Liabilities


FIXED ASSET& CWIP 369938 492223 637519 649672OTHER NON CURRENT 2504 2766 4444 5163ASSETSCURREN ASSETS 595518 689469 1104692 1256941

TOTAL= 967960 1188458 1746655 1911776

8

0

100000

200000

300000

400000

500000

600000

700000

2004 2005 2006 2007 2008 2009

RupeesInMillion


9/44


9

500,000

000,000

500,000

000,000

500,000

000,000

,

00


10/44


Ratio Analysis

Of

National FoodsLimited

Financial Year 2009

10


11/44


ACTIVITY RATIO:

Receivable Turnover

Receivable Turnover =Annual Sales

Average Receivable

= 3758706268739

= 13.98 Times

RT ratio provides insight into the quality of the firms receivable and how

successful the firm is in its collection.

This ratio tells us the number of times A/R have been turned over ( turned into

Cash)

Normally higher the RT ratio better it is.

Higher turnover signifies speedy and effective collection.

Average Collection Period

Days Sale Outstanding

/Average Collection Period /

RTD / Debtors Turnover

=365

Receivable Turnover

=

360

13.98

= 26.18 Days

It indicates that in how many days firm is collected their receivables.

High RTD is too bad and Very low RTD may not necessarily be good.

A high RTD mean that customers are too slow in paying their bills.

11


12/44


Calculated ratio indicate the good RTD

Inventory

Turnover

Determine how effectively the firm is managing inventory.

The IT tells us how many times inventory is turned over into receivables through

sales during the year.

Generally, the higher the IT, the more efficient the inventory management of the

firm.

Days of Inventory on Hand

12

Inventory Turnover =C.G.S

Average Inventory

=2632255

801118

= 3.29 Times

Days Of Inventory On Hand =360

Inventory Turnover

=360

3.29

= 111 Days


13/44


It tells us how many days, on average, before inventory is turned into A/R through

sales.

It should be low consider better.

Calculated ratio shows that in 111 days company is turning over the inventory in

receivables through sales.

Payable Turnover \ Credit Turnover

It indicates the speed with which the payments are made to the trade creditors.

It should be minimum.

No of Days Payable

13

Payable Turnover \ Credit Turnover =Purchase .

Average Trade Payable

=2723973

1648785

= 16.52 Times

No of days of payable =360

Payable Turnover

=360

16.25

= 22.1 Days


14/44


It indicates that in how much days company pays their bills.

It should be high.

Calculate

d ratio

shows

that

company

is paying their bills in 22 days.

Total Asset Turnover

This ratio indicates that how much sale is generating by assts.

Low AT means that the company has too much capital tied up in its asset base.

High AT might imply that the firm has too few assets for potential sales.

Fixed Asset Turnover

14

Total Asset Turnover =Revenue

Average Total Asset

=3758706

1829215,5

= 2.055 Times


15/44


Thisratio tells us that how much sale is generating by NFA.

It should be high.

Low FAT ratio indicates that the company has too much capital tied up in its

asset base or is using the asset it has inefficiently

Working Capital Turnover

Increasing Ratio indicates that working capital is more active, it is supporting,

comparatively, higher level of production and sales, it is being used more

intensively.

WC is negative shows that our CL> CA.

15

Fixed Asset Turnover =Revenue

Average Net Fixed Asset

= 781582919770841

= 0.40 Times

Working Capital Turnover = Revenue

Average Working Capital= 3758706

106006

= 35.46 Times


16/44


LIQUIDITY RATIO:

Current Ratio

C.R is also known as working capital ratio or 2:1 ratio.

As a convention 2:1 is regarded as satisfactory level I.E C.A should be double

the C.L.

16

Current Ratio =Current Asset

Current Liabilities

=1256941

1115911

= 1.13:1


17/44


Quick Ratio

Quick Ratio is a more stringent measure of liquidity .1:1 is considered to

satisfactory.

Higher the Q.R is that the company will be able to pay its short terms bills.

0.37 shows that company quick asset can't able to pay their short terms

obligations.

SOLVENCY RATIO:

Debt to Equity

17

Quick Ratio =Cash + Mkt.Securities + Receivables

Current Liabilities

=409964

1115911

= 0.37 : 1

Debt To Equity =Total Debt

Total Shareholder Eqity

=143974

655386

= 21.9%


18/44


Its the measurement the firms use of fixed-cost financing source. It is the

relationship b/w borrowed funds and internal owners.

Increase or decrease in this ratio suggests a greater or lesser dependence on debt

as a source of financing.

It should be minimum

Debtor checks that how much capital of owner is invested in business.

Debt to Capital

This minimum consider better. This ratio suggests how much portion of long term

funds was financed through long term debt.

60:40 ratio is usually is considering being satisfactory.

Debt to Asset

18

Debt To Capital =Total Debt

Total debt + Total S.H Equity

=143974

799360

= 18.01%

Debt To Asset =Total debt

Total Asset

=143974

1911776

= 7.5%


19/44


It is measure of creditor long term risk.

The lower the debt ratio the safer their position.

It should be under 50%.

PROFITABILITY RATIO:

Net Profit Margin

It expresses the relation b/w net profit after tax and sales.

This ratio is a measure of the overall profitability.

The ratio indicates that what portion of the net sales is left for the owner after all

expense has been met.

Higher the net profit margin,

higher is the

profitability of

the business.

Gross Profit Margin

19

Net Profit Margin =Net Income

Net Sales

=139461

3758706= 3.71%

Gross Profit Margin = G.P.Sales

=1126451

3758706

= 29.97%


20/44


The ratio thus reflects the margin of profit that a concern is able to earn on its

trading and manufacturing activity.

GP margin usually b/w 20% and 50%.

Higher the GP rates mean firms are able to meet other operating expenses like

administration, selling and distributions.

Operating Profit Margin

This ratio helps in determining the ability of the management in running the

business.

Higher the ratio, better it is.

Calculated ratio shows that company working is not good.

Pre Tax Margin

Pre Tax margin = EBTSales

=220702

3758706

= 5.87%

20

Operating Profit

Margin=

EBIT

Sales

=307543

3758706

= 8.18%


21/44


That ratio indicates that how much the company is earning before paying their

tax.

Higher the

ratio is

conceder

better.

It measure

profitability

relative to funds invested in the company by suppliers of debt financing.

Return on Asset

This ratio indicates in evaluating whether management has earned a reasonable

return with the asst under the control.

Ratio should be very high.

It indicates how firm is managing their asset and generating income or return.

Return on Asset*

21

Return On

Asset =

Net Income

Average TotalAsset

=139461

1829215.5

= 7.62%


22/44


Operating Return on Assets

It includes

both taxes and

interest in the

numerator

Return on Total Capital

22

Return On

Asset=

Net Income+

Interest exp

(1- tax rate)

Average Total

Asset

=

139461+86841

(1-0.35)

1829215.5

= 10.70%

Operating

Return OnAsset

=

EBIT

Average TotalAsset

=307543

1829215.5

= 16.8%


23/44


Return On total capital =EBIT

Average total capital

=307543

1253625

= 24.5%

It includes EBIT to total capital.

Total capital includes short term debt, preferred equity and common equity.

Return on Equity

Return On Equity =Net income

average total Equity

=139461

585655.5

= 23.81%

It indicates that how much return is earned on the stockholders investments or

owner equity.

Traditionally stock holders have expected to earn an average return of 12% or

more from equity investment in large, financially strong companies.

Return on Common Equity

Return On Common = Net income-

23


24/44


Equity

preferred dividend

average commonEquity

=139461

193399.5

= 72.1%

This ratio differs from the return on total equity.

It only measures the accounting profits available, capital invested, common

stockholder, instead of common and preferred stockholders.

Ratio should be very low.

24


25/44


TWO

WAYS:

THREE WAYS:

25

ROE =Net Profit Margin * Asset Turnover

*Leverage Ratio

= 3.71% * 1.97 * 2.92

= 21.3%


26/44


FIVE WAYS:

26

ROE =Net Profit Margin * Equity Turnover

= 3.71% * 5.74

= 21.3%

ROE =

Tax burden * Interest burden *

EBIT margin * Asset Turnover *Financial Leverage

= 0.632 * 0.72 * 0.082 * 2.917 * 1.97

= 21.3%


27/44


OPERATING CYCLE OF NATIONAL FOODS

LIMITED:

Operating Cycle = Inventory Turnover Days + Receivable Turnover Days

Operating Cycle = 111 + 26.18

Operating Cycle = 137 days

OPERATING CYCLE OF ZIL LIMITED:

Operating Cycle = Inventory Turnover Days + Receivable Turnover Days

Operating Cycle = 85 + 5

27


28/44


Operating Cycle = 90 days

Conclusion

It indicates that in how much days our purchase is converting in sale. It

should be low consider good. So ZIL LIMITD is best then NATIONAL

FOODS LIMITED

CASH CYCLE OF NATIONAL FOODS LIMITED:

Cash Cycle = Inventory Turnover Days + Receivable Turnover Days

Payable Turnover Days

Cash Cycle = 111 + 26.18 - 22.1

Cash Cycle = 115.1 days

CASH CYCLE OF ZIL LIMITED

Cash Cycle = Inventory Turnover Days + Receivable Turnover Days

Payable Turnover Days

Cash Cycle = 85 + 5 - 34

Cash Cycle = 56 days

28


29/44


Conclusion

It should be low, high CCC are considered undesirable. A conversion cycle

is too high implies that the company has an excessive amount of capital

investment in the sale process. Calculated cycle is better.So ZIL LIMITD is

best then NATIONAL FOODS LIMITED.

29


30/44


Earning Per Share of National Food Limited:

E.P.S =

Net income-

Preferred Dividend

Weighted Average

of no. of shares

=13946100

33154194

= 4.21

Earning Per Share of ZIL LIMITED:

E.P.S =

Net income-Preferred Dividend

Weighted Averageof no. of shares

=

51244

4844000

= 10.58

30


31/44


31

0

1

2

3

4

5

2004 2005 2006 2007 2008 2009

Earning Per Sahre

0

2

4

6

810

12

14

16

2004 2005 2006 2007 2008 2009

Earning Per Sahre


32/44


32


33/44


VALUATION RATIO:

RATIOSNATIONAL

FOOS LIMITEDZIL LIMITED GOOD

PRICE TO

EARNING15.91 6.42 ZIL

PRICE TO SALE 590.98 243.77 ZIL

PRICE TO CASH

FLOW4722.4 2202.2 ZIL

Conclusion

By the analysis of valuation ratios of NATIONAL FOODS LIMITED & ZIL

LIMITED we conclude that ZIL LIMITED value is better than NATIONAL

FOODS LIMITED.

33


34/44


Growth Rate of National Food Limited:

34


35/44


G = Retention Rate * ROE

G = 0.53 * 23.81%

G = 12.5%

Growth Rate of ZIL Limited:

G = Retention Rate * ROE

G = 0.91 * 19.5%

G = 17.7%

Conclusion

Calculation shows that both companies rate almost excellent but the

ZIL LIMITED rate is so much better then NATIONAL FOODS

LIMITED.

35


36/44


36

Income Statement Hilight

1533879

1847700

2391058

3061746

3758706

397152571263

818484985777

1126451

30653 70364 129292156546 139461

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

2005 2006 2007 2008 2009

Sale GP Net Income


37/44


37

Ba lance Sh eet H ilig

42505 42505 42505 55257

33154

435491514710

626815

103371

1115911

475727

595518

689469

110469

1256941

230865

369938

496223

63751 64967

90139

206161 191763 1970214047

0

200000

400000

600000

800000

1000000

1200000

1400000

2005 2006 2007 2008 2009

Share Capital Current Liab Current Assets

F ixe d a sse ts L on g te rm o blig atio n


38/44


ACTIVITY RATIO:

38


39/44


RATIOSNATIONAL


RECIVABLE

TURNOVER 13.98 TIMES 73 TIMES ZIL

AVG

COLLECTION

PERIOD

26 DAYS 5 DAYS ZIL

INVENTORY

TURNOVER3.29 TIMES 4.3 TIMES ZIL

INVENTORY

PROCESSING

PERIOD

111 DAYS 85 DAYS ZIL

PAYABLE

TURNOVER16.52 TIMES 10.7 TIMES ZIL

PAYABLE

PAYMENT

PERIOD

22 DAYS 34 DAYS ZIL

TOTAL ASSET

TURNOVER2.05 TIMES 1.97 TIMES NATIONAL

FIXED ASSET

TURNOVER5.8 TIMES 4.96 TIMES NATIONAL

WORKING

CAPITAL

TURNOVER

35.46 TIMES 10.10 TIMES NATIONAL

Conclusion

39


40/44


In that Portion both companies are working almost excellent but the

ZIL LIMITED activities ratios are so much better then NATIONAL

FOODS LIMITED.

LIQUIDITY RATIO:

RATIOSNATIONAL


CURRENT RATIO 1.13 1.59 ZIL

QUICK RATIO 0.37 0.84 ZIL

CASH RATIO 0.0136 0.46 ZIL

DEFENSIVE

INTERVAL42.7 65.5 ZIL

Conclusion

By the analysis of liquidity comparison of NATIONAL FOODS LIMITED

& ZIL LIMITED we conclude that ZIL LIMITED is working better than

NATIONAL FOODS LIMITED. The company ZIL LIMITED working

Capital is efficient then Maple Leaf.

SOLVENCY RATIO:

40


41/44


RATIOSNATIONAL


DEBT TO EQUITY 21.9% 4.5% ZIL

DEBT TO

CAPITAL18.01% 4.3% ZIL

DEBT TO ASSET 7.5% 1.79% ZIL

FINANCIAL

LEVERAGE3.12 2.61 NATIONAL

INTEREST

COVERAGE3.54 13.02 ZIL

FIXED CHARGES

COVERAGE3.24 6.52 ZIL

Conclusion

The comparison of Solvency ratios of NATIONAL FOODS LIMITED

& ZIL LIMITED shows that the working of ZIL LIMITED is good.

ZIL LIMITED is managing their debts very efficiently then

NATIONAL FOODS.

PROFITABILITY RATIO:

41


42/44


RATIOSNATIONAL


NET PROFIT

MARGIN 3.71% 3.8% ZIL

GROSS PROFIT

MARGIN29.97% 26.6% NATIONAL

OP PROFIT

MARGIN8.18% 6.4% NATIONAL

PRETAX MARGIN 5.87% 5.95% ZIL

R.O.A 7.62% 7.5% NATIONAL

R.O.A* 10.71% 8.1% NATIONAL

OP RETURN ON

ASSETS16.8% 12.7% NATIONAL

RETURN ON

TOTAL CAPITAL24.5% 12.7% NATIONAL

RETURN ON

EQUITY23.81% 19.5% NATIONAL

RETURN ON

COMMON EQ.72.1% 110.9% ZIL

42


43/44


Conclusion

The profitability portion of report analysis shows that the GP of

NATIONAL FOODS LIMITED is better then ZIL LIMITED but when

we compare the Companies, the overall working of profitability of

NATIONAL FOODS LIMITED is efficient.

INVESTMENT DECISION:

By the investment point of view we will suggest that we should invest not in ZIL

LIMITED rather in NATIONAL FOODS LIMITED is preferable.

We make decision by the help of Valuation ratio, Profitability ratio of

NATIONAL LIMITED and ZIL LIMITED.

By the analysis of both companies we see that there is difference between

business sizes of both companies.

DEBT/LOAN DECISION:

By the analysis of liquidity ratios and solvency ratios we conclude that ZIL

Limited Debt Condition is best than National Foods Limited.

ZIL used the less Debt than the National Foods Ltd.

Interest Coverage ratio of ZIL is best than National Foods Ltd.

There is some difference in the business size of the both companies.

43


44/44


Documents

Final Project National Stat