Final Project

Financial Statement Analysis

Fauji Fertilizer Company Limited
Submitted By
Fall2011/M.Sc.EM/018
Muhammad Aatif Saif Khan

Acknowledgement
I acknowledge our Instructor (Fin 619). He helped me in our project completion.
When I was facing any Problem about Financial Ratio Formulas and other
Queries then I was e-mail to Instructor, he was giving response immediately. I am
also appreciates our friend who have completed the Master in Business
Administration (Finance) from Federal Urdu university Islamabad. He helped me
during any difficulty.

Executive Summary
Financial Statement Analysis has different technique for example
comparative statement, Schedule of changes in working capital, common size of
percentage and ratio analysis. In financial statement analysis I am using the two
types of comparison. Firstly the trend analysis and secondly the ratio analysis. In
trend analysis we will compare Present value with future and past values and
check the companys financial position is improving or deteriorate overtime.
Secondly in the ratio analysis we will calculate the ratio of the two values and
then interpreted these two values of Fauji Fertilizer Company Limited and Fauji
Fertilizer Bin Qasim.
The Purpose of the Project to identify the company strong and weakness
points. Check the Market situation and give the suggestion how to increase the
sale and production of the urea and DAP in the market The major purpose of the
companies is to determine the Profitability situation and how to improve the
further profitability situation. Identity the debt burden and how to decrease the
debt burden. Financial ratio is used as the methodology of the study.

1.

Chapter1 Overview
1.1
1.2

Chapter 2
2.1

Page #

Theme Project. 5
Introduction of the Companies. 6
Financial Analysis Techniques:
Ratio Analysis

3
4

2.2
2.3
2.4
2.5
2.6
2.7
Chapter 3
Chapter 4

Liquidity Ratio.. 7-12

Leverage Ratio.. 13-22
Profitability Ratio. 23-32
Activity Ratio
33-43
Market Ratio. 44-50
Statement of Cash Flow Ratio.
51-55
Horizontal Analysis..
56-63
Vertical Analysis 64-70

Chapter 5

Review of Descriptive Information.

71-75

Chapter 6

7
8.

Comparisons

6.1
6.2

Trend Analysis 76-102

Industry Averages and Comparisons with Competitors

Chapter 7

Conclusion 110-117

Annexure
Financial Statements of FFBQ
Financial Statement of FFC

CHAPTER
1.1

OVERVIEW

Theme of the Project:

What is the Financial Analysis?

The calculation of analytical ratios from financial
statements and interpretation of these ratios to determine their trends as a basis for
management decisions.
Financial statement analysis is the procedure of examining associations
among the elements of the Balance sheet, Profit and Loss and Cash flow and
making comparisons with relevant information. Financial Ratio is the important
tool used financial analysts for the decision-making processes related to
Profitability, Performance, Leverage, Market condition. Financial Analysis
techniques such as ratio analysis and common size financial statements can
provide
valuable
insight
into
a
companys
operations,
risk
Characteristics, and valuation beyond what is readily apparent by examining raw
data. When data is presented analytically, differences across time
periods, Interrelationships of financial statement accounts and comparisons
among companies are more easily understood. An effective analysis encompasses
both computations and interpretations. A well reasoned analysis differs from a
mere complication of various pieces of information, computations, tables, and
graphs by integrating the data collected into a cohesive whole. Analysis of the
past performance through Vertical and Horizontal Analysis. After the analysis of
the Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim Limited
performance giving the recommendations for the further improvement.

1.2
Introduction of Fauji Fertilizer Company :
Fauji Fetilizer Company(FFC) was incorporated in 1978 as a Private Limited
company. This was a Joint venture between Haldor Topsoe company of denmark
and Fauji Foundation. Fauji Fertilizer company started the Production in 1982. In
the begining Fauji Fertilizer Company starts with annual Production of 570,000
metric tons. The authorized capital of the company was 820 Million rupees. The
share capital of the company stands at Rs.3.0 Billion. The Production capacity of
the existing plant increased to 695,000 metric tons per year.Production capacity
was enhanced by establishing second plant in 1993 with annual capacity of
635,000 metric tons of urea. In the year 2002, FFC acquired ex Pak Saudi
Fertilizers Limited (PSFL) Urea Plant situated at Mirpur Mathelo, District Ghotki
from National Fertilizer Corporation (NFC) through privatization process of the
Government of Pakistan.

Objectives
The following are the objectives of this research
1. To provide information to the shareholder of company that which
thing brought in management of the company so that company
performance and financial position become strong.
2. To give valuable information and comments of the shareholders to
the management of the company so that can they make good
decision and also increase their profit.
3. To give investor true picture of the companies he can easily make
his invest because all financial position of the companies are clear.
4.
To analysis the company return on common stockholders, EPS,
Dividend Yield and P/E ratio and give the recommendation where
investment is suitable or not.
5.
The objective the Project is the common size analysis i.e vertical
analysis, horizontal analysis therefore we will check the relative size of
the items of the financial statement on the basis of Total Assets, Sales
and give the recommendation how to improve the relative size

6.
To analysis the short tem obligation and give the suggestion to the
management How to decrease the short the loans and meet short term
obligation.
7.
To Analysis the Profitability ratio and give the recommendation
how to increase the profit i.e. improves the quality of fertilizer this will
increase the demand of the fertilizer.
8.
To analysis the expense of the company and give the
recommendation how to decrease the expensed.
9.
Analysis the Market ratio and give the proposal to the shareholders
what is the increase or decrease the share price and dividend in the
market.
10. To analysis the long term creditors and long term solvency and
give the suggestion how to meet the creditors.
11. To analysis the financial position against competitors of Fauji
Fertilizer companies give the proposal to the management how you
improve the Financial strength and avail the opportunities.

Significance
Financial Statements are prepared for decision making. We cannot drawn
conclusion from these statements if we are not analysis and interpretation
therefore the financial statements analysis is very vital role for the
decision making. Ratio is very important technique of Financial Statement.
Financial statements tell us the changes in the financial condition of the
business. Financial Statements Analysis helps the management about the
planning forecasting, controlling the long term and short term solvency.
The Financial statement analysis is very significant for the decision
making abut investment.
The Financial Statement analysis of the FFBL and FFC will be suggested
for the management in decreasing the Salaries, Wages and Benefits
especially for the officers Retiring Benefits (gratuity, PF & Earned
Leaved).Through this project Management will investment in other Project
like Energy Sector, Oil and Gas etc. This project will suggested for the
Government of Pakistan about the increasing the subsidies on Electricity
and gas. As per Fertilizer Policy, 1989 rate of Feed gas being utilized by
the company has been fixed for the period of Ten years. This Period has
expired at 2008. Government of Pakistan should fixed the rate of feed gas
for next Ten Years. The leverage ratio of both the companies should
suggest for the companies in decreasing the loan from other institutions.

The companies should produce the Nitrogenous fertilizer, Zorawar, CAN

Fertilizer because these fertilizers are producing by competitors.

CHAPTER
2.1

Financial Analysis Techniques

Ratio Analysis
The calculation of methodical ratios from financial statements and

interpretation of these ratios to determine their trends as a basis for management

decisions.

2.2

Liquidity Ratios:

Liquidity Ratios measure a firms ability to meet its current obligations or short
term obligations.

Current Ratio:
=

Current Assets
Current Liability

FFC
2006
2006
11,322,594 9,764,587
8,429,327 10,883,988

2007
2008
10,811,435 9,709,511
11,476,393 11,823,641

1.34

0.942

0.897

0.8211

Current Ratio

RATIO

2
1

FFBQ

FFC

0
2006

2007

2008

YEARS

Interpretation:
Ideal Ratio

2:1

The ratio is mainly used to give an idea of the company's ability to pay back its
short-term liabilities (debt and payables) with its short-term assets (cash,
inventory, receivables). The higher the current ratio, the more capable the
company is of paying its obligations. When i compare the current ratio of boht the
companies its has been observed that FFBL has higher current ratio as compared
to FFC that indicates that FFBL has the ability to pay off his short term debt and
payable .The current ratio of FFC was not good which indicates that if company
liquidated its cannot in a position to pay its short term debt and payable

Acid Test Ratio:

=

Quick
Assets

2006
11,322,594800,535
10,522,059
8,429,327

Current Assets-Inventories
Current Liability
FFBL
2007
11,161,329587,946
10,573,383
9,483,655

2008
28,492,5695,676,739
22,815,830
26,219,469
8

2006
9,764,587952,905
8,811,682
10,883,988

FFC
2007
10,811,435642,836
10,168,599

2008
9,709,511258,094
9,451,417
11,823,641

11,476,393
1.248

1.11

0.87

0.809

0.886

0.799

Acid Test/ Quick Ratio

RATIO

2
1

FFBQ

FFC

0
2006

2007

2008

YEARS

Interpretation:
Ideal Ratio

1:1

A stringent test that indicates whether a firm has enough short-term assets to
cover its immediate liabilities without selling inventory.
Companies with ratios of less than 1 cannot pay their current liabilities and should
be looked at with extreme caution. Furthermore, if the acid-test ratio is much
lower than the working capital ratio, it means current assets are highly dependent
on inventory. Retail stores are examples of this type of business. In 2006 and
2007 acid test ratio of FFBL good that means its cover short term liabilites easily
but in 2008 its not good and in extreme danger .The FFC has very low test ratio
which is very bad in future context because creditor and supplies do not trsut
them.

Working Capital:
Current Assets-Current Liability
FFBL
2006
2007
11,322,594 11,161,329-8,429,327 9,483,655

2008
28,492,56926,219,469

2006
9,764,58710,883,988

FFC
2007
2008
10,811,435 9,709,51111,823,641
11,476,393

2,893,267

1,677,674

2,273,100

(1,119,401)

(664,958)

(2,114,130)

RATIO

Working Capital
4,000,000
3,000,000
2,000,000
1,000,000
0
-1,000,000
-2,000,000
-3,000,000

FFBQ
FFC
2006

2007

2008

YEARS

Interpretation:
A measure of both a company's efficiency and its short-term financial health. The
FFBL has Positive working capital for 2006 to 2008 means that the company is
able to pay off its short-term liabilities. Whereas FFC has Negative working
capital for last three year means that a company currently is unable to meet its
short-term liabilities with its current assets (cash, accounts receivable and
inventory).FFBL has good position to pay off its short term liabilities .

Sales to Working Capital:

=
2006
14,707,288/
11,322,594
-8,429,327

FFBL
2007
12,242,888/
11,161,3299,483,655

14,707,288/ 12,242,888/
2,893,267
1,677,674

Sales__________
Working Capital
2008
26,820,812/
28,492,56926,219,469

2006
29,950,873/
9,764,58710,883,988

FFC
2007
28,429,005/
10,811,43511,476,393

2008
30592,806/
9,709,51111,823,641

26,820,812/
2,273,100

29,950,873/
(1,119,401)

28,429,005/
(664,958)

30592,806/
(2,114,130)

10

5.083

7.297

11.79

(26.75)

(42.75)

RATIO

Sales to Working Capital

20
10
0
-10
-20
-30
-40
-50

2006

2007

2008

FFBQ
FFC

YEARS

Interpretation:
Sales to working capital of FFBL are increasing from year 2006 to year 2008
because of increasing the sales. On the other hand FFC has negative because his
working capital is negative.

11

(14.47)

2.3

LEVERAGE RATIOS:

Leverage ratio measure the degree of protection of suppliers of long term loans
and funds.

Time interest earned:

=

EBIT
Total Interest Expenses

EBIT =
Earning before Finance cost and Taxation
= Earning Before Taxation- Finance cost
Total Interest Expenses= Finance Cost

2006
3344,044/
412,870

FFBL
2007
3269,416/
630,513

2008
1,612,904/
2791,971

2006
6483903/
501,241

FFC
2007
7,118,546/
696,407

2008
9345,712/
695,371

8.099

5.1853

0.577

12.93

10.22

13.439

Time Interest Earned

RATIO

15
10

FFBQ
FFC

5
0
2006

2007
YEARS

12

2008

Interpretation:
FFC has more ability to pay the interest expensed than FFBQ

Debt Ratio:
=

Total Debt

Total
Debt
Total
Debt
Ratio

Total Debt
Total Assets
Assets - Equity

FFBL
2007
29045,971
-8508,927
20,537,04
4
20537,044
/29045,97
1
0.707

2006
27681,356
-8537,696
19,143,66
0
19143,660
/27681,35
6
0.691

FFC
2007
29,241,21412730,045
16,511,169

2008
46771,67110486,371
36,285,300

2006
27430,28112,956,543
14,473,738

36,285,300/
46771,671

14473,738/2 16511,169/2 19,633,750/

7430,281
9241,214
31918,963

0.775

0.527

0.564

Debt Ratio

RATIO

1
1
1

FFBQ

0
0

FFC

0
2006

2007
YEARS

Interpretation:
13

2008

2008
31918,96312285,213
19,633,750

0.615

Ideal Ratio

36% and Less

A ratio that indicates what proportion of debt a company has relative to its assets.
The measure gives an idea to the leverage of the company along with the
potential risks the company faces in terms of its debt-load.
Both the company has the debt ratio less than 1 indicates that a company has
more assets than debt. FFBL debit ratio indicates that company has more assets
than debts

Debt/Equity Ratio:
The relationship between borrowed funds and internal owner funds measured by
debt equity ratio
=
Total Debt

Assets - Equity
FFBL
2007
29045,971
-8508,927
20,537,04
4
20537,044
/8508,927
2.4135

2006
27681,356
-8537,696
19,143,66
0
19143,660
/8,537,696
2.242

FFC
2007
29,241,21412730,045
16,511,169

2008
46771,67110486,371
36,285,300

2006
27430,28112,956,543
14,473,738

36,285,300/
10486,371
3.46

14473,738/1 16511,169/1 19,633,750/

2,956,543
2,730,045
12,285,213
1.117
1.29
1.596

Debt Equity Ratio

4
RATIO

Total
Debt
Total
Debt
Ratio

Total Debt________
Share holder Equity

3
FFBQ

FFC

1
0
2006

2007
YEARS

14

2008

2008
31918,96312285,213
19,633,750

Interpretation
A high debt/equity ratio of FFBL generally means that a company has been
aggressive in financing its growth with debt. This can result in volatile earnings
as a result of the additional interest expense.
FFC debit /equity ratio was low mean that company not taking so much interest in
financing its growth with debt which is good for future purpose.

Debt To Tangible Net Worth Ratio:

Total Debt

Tangible Net Worth =

=

2006
27681,356
-8537,696

Assets - Equity
Total Assets-Liabilities-Intangible Assets
Total Debt________
Tangible Net Worth

FFBL
2007
29045,9718508,927

2008
Total
46771,671
Debt
10486,371
Total
19,143,66 20,537,044
36,285,30
Debt
0
0
Tangibl 27681,356 29045,971- 46771,671
e Net 20,537,044 - Worth
19,143,66 Nil
36,285,30
0 - Nil
0 -Nil

8537,696
8508,927
10486,371
Ratio
19143,660 20537,044/8 36,285,30
/8,537,696 508,927
0/10486,3
71
2.242
2.4135
3.46

15

2006
27430,28112,956,543

FFC
2007
29,241,21412730,045

2008
31918,96312285,213

14,473,738

16,511,169

19,633,750

27430,28114,473,7381,569,234

29,241,21416,511,1691,569,234

31918,96319,633,7501,569,234

11,387,309
11,160,811
10715,979
14473,738/1 16511,169/1 19,633,750/
1387,309
1,160,811
10715,979
1.271

1.479

1.832

Debt to Tangible Net Worth Ratio

RATIO

4
3
FFBQ

FFC

1
0
2006

2007

2008

YEARS

Interpretation:
FFBQ has comparatively good position as compare to FFC in the financial
markets, tangible net worth represents the amount of physical assets a company
has net of its liabilities. Thus, it represents the supposed liquidation proceeds a
company would fetch if its operations were to cease immediately and the firm
was sold off.

Current Worth/Net worth Ratio:

Current Worth =
Net Worth
=

Current
Worth

Net
Worth

Current Assets Current Liability

Total Assets Total Liabilities

FFBL
2007
11,161,3299,483,655

2008
28,492,56926,219,469

2,893,267

1,677,674

2,273,100

27681,356
19,143,66
0
8537,696

29045,97120,537,044

46771,67136,285,300

8508,927

10486,371

2006
11,322,59
48,429,327

16

FFC
2006
2007
9,764,587- 10,811,43510,883,98 11,476,393
8
(1,119,401
)
27430,281
14,473,73
8
12956,543

2008
9,709,51111,823,641

(664,958)

(2,114,130)

29,241,21416,511,169

31918,96319,633,750

12,730,045

12,285,213

Ratio

2,893,267/ 1,677,674/
8537,696
8508,927

2,273,100/1
0486,371

0.338

0.216

0.1971

(1,119,401 (664,958)/
)/12956,5 12730,045
43
-0.086
-0.0522

(2,114,130)/
12,285,213
-0.172

Current Worth to Net Worth

RATIO

0
0
0

FFBQ

FFC

0
0

2006

2007

2008

0
YEARS

Total Capitalization Ratio:

=

Long
term
Debt
Long
term
debt+
Equit
y

Ratio

Long Term Debt_______

Long Term Debt + Equity

2006
10714,333

FFBL
2007
11,053,38
9

10714,333
+8,537,69
6

11,053,38 10,065,831+ 3,589,750+1 5,034,776+

9+8508,92 10486,371
2956,543
12730,045
7

7,810,109
+12285,213

19252,029

19562316

10714,333
/19252,02
9

11,053,38 10,065,831/
9/1956231 20552202
6

2008
10,065,831

20552202

17

2006
3,589,750

FFC
2007
5,034,776

2008
7,810,109

16,546,293

17,764,821

20,095,322

3,589,750/1
6,546,293

5,034,776/1
7,764,821

7,810,109/2
0,095,322

0.556

0.565

0.489

0.2169

0.2834

0.388

RATIO

Total Capitalization Ratio

1
1
0
0
0
0
0

FFBQ
FFC

2006

2007

2008

YEARS

Interpretation:
FFBQ has low level of debt and a healthy proportion of equity in a company's
capital structure is an indication of financial fitness.
FFC Company considered too highly leveraged (too much debt) may find its
freedom of action restricted by its creditors and/or have its profitability hurt by
high interest costs

Fixed Assets /Equity Ratio:

Ratio
Ratio

FFBL
2006
2007
16358,762 17,884,64
/8,537,696 3/8,508,92
7
1.916
2.101

FFC
2008
2006
2007
2008
18279,102/10,48 17665,694 18429,779/1 22,209,452/
6,371
/12,956,54 2,730,045
12,285,213
3
1.743
1.363
1.447
1.8078

18

Fixed Assets to Equity Ratio

RATIO

3
2
2

FFBQ

1
1

FFC

0
2006

2007

2008

YEARS

Interpretation:
Computation that indicates the company's ability to satisfy long-term debt. The
ratio equals fixed assets divided by equity capital. Both the company have greater
than 1 ratio means that some of the fixed assets are financed by debt.

Long Term Assets versus Long Term Debt:

Ratio
Ratio

2006
16358,762
/10714,33
3
1.52

FFBL
2007
17,884,64
3/11053,3
89
1.618

2008
2006
18279,102/10,06 17665,694
5,831
/3589,750

FFC
2007
2008
18429,779/5 22,209,452/
034,776
7810,109

1.8159

3.66

19

4.92

2.843

Long term Assets VS Long term

Debt

RATIO

6
4

FFBQ

FFC

0
2006

2007

2008

YEARS

Interpretation:
Ratio of FFBQ is increasing due to increasing of long term assets. Long term loan
of FFC is increasing therefore the ratio is decreasing.

20

2.4

Profitability Ratio:
Profitability ratios measure the earning ability of a firm.

Net Profit Margin:

= Net Profit after Tax
Sales

Ratio

Ratio

2006
2,444,858
/
12,242,88
8 *100
19.96

FFBL
2007
5,360,953/
12242,888
*100

2008
2,899,621
26,820,812
*100

43.78

10.81

2006
/ 4,636,144
/
29,950,87
3 *100
15.47

FFC
2007
2008
5,360,953 / 6,525,083 /
28429,005
30,592,806
*100
*100
18.85

Net Profit Ratio

RATIO

50
40
30

FFBQ

20
10

FFC

0
2006

2007

2008

YEARS

Interpretation:
Profitability ratios are the financial statement ratios which focus on how well a
business is performing in terms of profit
FFBQ profitability ratio increase in 2007 because decrease in cost of sale .in year
2008 profitability ratio decrease due to increase in the cost of sales and seller of
the fertilizer.
FFC profitability ratio increase by (3% to 4 %) over the last three year because
21

21.32

reduction in cost of goods sold and increase the sales.

Return on Assets:
=

Ratio

Ratio

2006
2,444,858
/
27,681,35
6 *100
8.832

Net Profit *100

Total Assets

FFBL
2007
2540,033/
29,045,97
1 *100
8.7448

2008
2006
2,899,621
/ 4,636,144
46,771,671 *100 /
27,430,28
1 *100
6.199
16.90

FFC
2007
2008
5,360,953 / 6,525,083 /
29,241,214
31,918,963
*100
*100
18.33

Return on Assets

RATIO

25
20
15

FFBQ

10
5

FFC

0
2006

2007

2008

YEARS

Interpretation:
An indicator of how profitable a company is relative to its total assets. ROA gives
an idea as to how efficient management is at using its assets to generate earnings
The assets of the company are comprised of both debt and equity. Both of these
types of financing are used to fund the operations of the company. The ROA
figure gives investors an idea of how effectively the company is converting the
money it has to invest into net income. The FFC has higher ROA number, the
better, because the company is earning more money on less investment. . When
you really think about it, management's most important job is to make wise
choices in allocating its resources. Anybody can make a profit by throwing a ton
22

20.44

of money at a problem, but very few managers excel at making large profits with
little investment. FFBL has a lower ROA because its management not use its
effort to generates its earning from assets.

Du Pont Return on Assets:

=

Net
income/
Sales

2006
2,444,858
/
14,707,28
8
0.1662

Net Income * Sales

*100
Sales
Total Assets

FFBL
2007
2540,033/
12242,888

2008
2,899,621
26,820,812

0.207

0.108

Sales/To 14,707,28 12,242,88 26,820,812

tal
8
/ 8
/ 46,771,671
Assets
27,681,35 29,045,97
6
1

0.531
0.421
0.573
Ratio

0.1662
*0.531
*100
8.82

0.207 *
0.421
*100
8.7

0.108 * 0.573
*100
6.1884

23

2006
/ 4,636,144
/
29,950,87
3
0.154

FFC
2007
2008
5,360,953 / 6,525,083 /
28429,005
30,592,806
0.188

0.213

/ 29,950,87 28429,005 / 30,592,806

3
/ 29,241,214
/31,918,963
27,430,28
1
1.0918
0.9722
0.958
0.154*
1.0918
*100
16.81

0.188*
0.9722 *100

0.213*
0.958 *100

18.27

20.405

Du Pont Return on Assets

RATIO

25
20
15

FFBQ

10
5

FFC

0
2006

2007

2008

YEARS

Interpretation:
Return on assets (ROA) is a percentage of the after-tax income as compared to
the total assets of the company. Management at Du Pont came up with Return on
Assets (Du Pont), an approach that determines the impact of asset turnover and
profit margin on profits. The higher the ROA number, the better, because the
company is earning more money on less investment when we compare both
companies the FFC has better ROA ratio as compare to FFBQ .

Operating Income Margin:

=

Operati
ng
Income

Ratio

G.P- Operating Expenses

Sales

2006
4684,2441523,544

FFBL
2007
4822,5781199,998

2008
8226,0601984,247

3160,700
3160,700/
14,707,28
8 *100

3622,580
3622,580/
12242,888
*100

6241,813
6241,813
26,820,812
*100

24

2006
9708,6792,746,782
6,961,897
/ 6,961,897
/
29,950,87
3 *100

FFC
2007
10117,4802,418,793

2008
12,358,1142,668,571

7,698,687
9,689,543
7,698,687 / 9,689,543 /
28429,005
30,592,806
*100
*100

Ratio

21.49

29.589

23.27

23.244

27.08

31.67

Operating Income Margin

RATIO

40
30
FFBQ

20

FFC

10
0
2006

2007

2008

YEARS

Interpretation:
If a company's margin is increasing, it is earning more per rupees of sales. The
higher the margin is the better. In 2006 FFC has slightly high margin and in 2007
FFBQ had high margin. The FFC has high margin in 2008 its mean company
earning more per rupees of sale.

Operating Assets Turnover:

=

Ratio
Ratio

2006
14,707,28
8/16358,7
62 *100
89.90

FFBL
2007
12,242,88
8/17,884,6
43 *100
68.45

Sales______
*100
Operating Assets

2008
2006
26,820,812/1827 29950,873
9,102 *100
/17665,69
4 *100
146.72
169.54

25

FFC
2007
28429,005/1
8429,779
*100
154.25

2008
30592,806/2
2,209,452
*100
137.74

Operating Assets Turnover Ratio

RATIO

200
150
FFBQ

100

FFC

50
0
2006

2007

2008

YEARS

Interpretation:
Operating Assets Turnover of the FFC is the higher than FFBQ. His Operating
assets is more than other company

Return on Operating Assets:

=

Ratio

Ratio

2006
2,444,858
/
16358,762
*100
14.94

Net Profit *100

Operating Assets

FFBL
2007
2008
2006
2,540,033/ 2,899,621
/ 4,636,144
17,884,64 18279,102 *100 /
3 *100
17665,694
*100
14.20
15.86
26.24

26

FFC
2007
2008
5,360,953 / 6,525,083 /
18429,779
22,209,452
*100
*100
29.08

29.379

Return on Operating Assets

RATIO

40
30
FFBQ

20

FFC

10
0
2006

2007

2008

YEARS

Interpretation
Return on Operating Assets of the FFC is more than FFBQ because his
profit is more than and other company his assets is also is more than FFBQ.

Sales to Fixed Assets:

=

Ratio

Ratio

2006
14,707,28
8
/
16358,762
*100
89.9

Sales______*100
Fixed Assets

FFBL
2007
2008
12,242,88 26,820,812
/
8/17,884,6 18279,102 *100
43 *100
68.45

146.72

27

2006
29,950,87
3
/
17665,694
*100
169.54

FFC
2007
28,429,806
/18429,779
*100

2008
30,592,806 /
22,209,452
*100

154.26

137.74

Sales to Fixed Assets

RATIO

200
150
FFBQ

100

FFC

50
0
2006

2007

2008

YEARS

Interpretation:
FFC has higher fixed-asset turnover ratio shows that the company has been more
effective in using the investment in fixed assets to generate revenues. FBQ has
higher fixed asset turnover ratio in 2008 that mean company is efficient in using
fixed Assets investment.

Return on Total Equity:

=

Ratio

Ratio

2006
2,444,858
/
8,537,696
*100
28.63

Net Income *100

Share Holder Equity

FFBL
2007
2,540,033/
8,508,927
*100

2008
2,899,621
10,486,371
*100

29.85

27.65

28

2006
/ 4,636,144
/
12,956,54
3 *100
35.78

FFC
2007
2008
5,360,953 / 6,525,083 /
12,730,045
12,285,213
*100
*100
42.11

53.11

RATIO

Return on Equity Ratio

60
50
40
30
20
10
0

FFBQ
FFC

2006

2007

2008

YEARS

Interpretation:
FFC has a high return on equity is more likely to be one that is capable of
generating cash internally. For the most part, the higher a company's return on
equity compared to its industry, the better

Gross Profit Margin:

=

Ratio

2006
4684,244/
14,707,28
8 *100
31.84

FFBL
2007
4822,578/
12242,888
*100
39.39

Gross Profit*100
Sales

2008
8226,060/26,8
20,812 *100
30.67

29

2006
9708,679/
29,950,87
3 *100
32.415

FFC
2007
10117,480/2
8429,005
*100
35.58

2008
12,358,114/
30,592,806
*100
40.39

RATIO

Gross Profit Margin

60
50
40
30
20
10
0

FFBQ
FFC

2006

2007

2008

YEARS

Interpretation:
FFC has higher gross profit margins that mean company sales increase during
the year while FFBQ has equal ratio in 2006 then its decrease when I compare its
to FFBQ

2.5 Activity Ratio:

Activity ratios measure a firms ability to convert different accounts
within their balance sheets into cash or Sales.
Accounts Receivable Turnover:
=

Net Credit Sales___

Average Accounts Receivable

Accounts Receivable= Trade Debt+ Other Receivable

FFBL
2006
2007
2008
2006
115081+ 231,272+1 243,751+818,2 659713+5
336266
346,867
92
79802

Opening
Accounts
Receivabl
e(2005)
closing
231,272
+1346,8
67
Average
1014743
Accounts
Receivabl
e

FFC
2007
961,427+14
51,390

2008
1722,602+1
542,763

243,751+8 285,454+591,0 961,427+1 1722,602+1

18,292
43
451,390
542,763

495,929+1,2
33,479

1320091

2497387

969270

30

1826166

2839091

Ratio

14,707,2
88/1014
743
14.49

12,242,88
8/132,009
1
92.74

26,820,812/96
9270

29950,873
/1826166

28,429,005/
2839091

30,592,806/
2497387

27.67

16.40

10.01

12.249

Accounts Receivable Turnover Ratio

RATIO

100
80
60

FFBQ

40
20

FFC

0
2006

2007

2008

YEARS

Interpretation:
FFBQ high ratio implies either that a company operates on a cash basis or that its
extension of credit and collection of accounts receivable is efficient .FFC low
ratio implies the company should re-assess its credit policies in order to ensure
the timely collection of imparted credit that is not earning interest for the firm.
AVERAGE COLLECTION PERIOD:
=

Openin
g
Accoun
ts

2006
115081+3
36266

Average Accounts Receivable*365

Net Credit Sale

FFBL
2007
2008
2006
231,272+1 243,751+818,2 659713+5
346,867
92
79802

31

FFC
2007
961,427+14
51,390

2008
1722,602+1
542,763

Receiva
ble(200
5)
closing 231,272+1
346,867
Averag 1014743
e
Accoun
ts
Receiva
ble
Ratio
1014743/1
4,707,288
*365
25.18

243,751+8 285,454+591,0 961,427+1 1722,602+1

18,292
43
451,390
542,763
1320091
969270
1826166
2839091

495,929+1,2
33,479
2497387

132,0091/
12,242,88
8 *365
39.35

2497387/30,
592,806
*365
29.79

969270/26,820 1826166/2 2839091/28,

,812 *365
9950,873
429,005
*365
*365
13.19
22.25
36.45

Average Collection Period

RATIO

50
40
30

FFBQ

20
10

FFC

0
2006

2007

2008

YEARS

Interpretation:
FFC has lower average collection period is seen as optimal, because this means
that it does not take a company very long to turn its receivables into cash.
Ultimately, every business needs cash to pay off its own expenses (such as
operating and administrative expenses). FFBQ has higher collection period which
mean that company take short period to turn its debtors into cash

32

Accounts Payable Turnover:

=

Net Credit Purchases

Average Accounts Payable

2008
2,377,952

2674,903

2,377,952

2790449

619,760
2790449
0.222

2006
6737803

FFC
2007
4,025,926

2008
5,815,276

6,264,669

4,025,926

5,815,276

5,993,674

2526428

4321311

5381865

4920601

5904475

157,752
2526428
0.062

119,390
4321311
0.027

7,491,114
5381865
1.391

5147,869
4920601
1.046

2418,130
5904475
0.41

Accounts Payable Turnover

2
RATIO

Openin
g
Accoun
ts
Payable
Closing

Averag
e
Accoun
ts
Payable
Ratio

2006
2905995

FFBL
2007
2674,903

FFBQ

FFC

0
2006

2007
YEARS

33

2008

Interpretation:
FFBQ turnover ratio is falling from one period to another, this is a sign that the
company is taking longer to pay off its suppliers than it was before. The FFC
turnover ratio is decreasing, which means that the company is paying of suppliers
at a Lower rate.

Average Payment Period:

= Average AccountsPayable

*365

Net Credit Purchase

Openin
g
Accoun
ts
Payable
Closing

Averag
e
Accoun
ts
Payable
Ratio

2006
2905995

FFBL
2007
2674,903

2008
2,377,952

2006
6737803

FFC
2007
4,025,926

2008
5,815,276

2674,903

2,377,952

6,264,669

4,025,926

5,815,276

5,993,674

2790449

2526428

4321311

5381865

4920601

5904475

2790449/
619,760
*365

2526428/1 4321311/119,3 5381865/7 4920601/51

57,752
90 *365
,491,114
47,869
*365
*365
*365

5904475/24
18,130
*365

1643

5845

891

13211

34

262.22

348.88

Average Payment Period

RATIO

15,000
10,000

FFBQ
FFC

5,000
0
2006

2007

2008

YEARS

Interpretation:
FFC has lower credit period ratio signifies that the creditors are being paid
promptly. This situation enhances the credit worthiness of the company. However
a very favorable ratio to this effect also shows that the business is not taking the
full advantage of credit facilities allowed by the creditors FFBQ has high creditor
period ratio implies that creditor not paid periodically.
Inventory Turnover:
=

Cost of Good Sold

Average Inventory
Inventory = Stores and Spares + Stock in trade
FFBL
2006
2007
2008
2006
Openin 577082+1 797314+
1266,570+587, 2154318+5
g
022957
800,535
946
60472
Invento
ry
Closing 797314+
1266,570+ 1422,567+567 2202,053+9

800,535
587,946
6,739
52,905
Averag 1598944
1726183
4476911
2934874
e
Invento
ry
Ratio
10023,044 7420,310
18,594,752
20,242,194
1598944
1726183
4476911
2934874
6.26
4.298
4.153
6.897

35

FFC
2007
2202,053+
952,905

2008
2407,988+6
42836

2407,988+
642836
3102891

3034268+25
8,094
3171593

18,311,525 18,234,692
3102891
3171593
5.9
5.749

Inventory Turnover Ratio

RATIO

8
6
FFBQ

FFC

2
0
2006

2007

2008

YEARS

Interpretation:
FFBQ low turnover implies poor sales and, therefore, excess inventory. while
FFC high ratio implies either strong sales or ineffective buying. High inventory
levels are unhealthy because they represent an investment with a rate of return of
zero. It also opens the company up to trouble should prices begin to fall.

Average age of inventory:

=

Openin
g
Invento
ry
Closing

Averag
e
Invento
ry
Ratio

Average Inventory____ *360

Cost of Goods Sold

2006
577082+1
022957

FFBL
2007
797314+
800,535

FFC
2007
2202,053+
952,905

2008
2407,988+6
42836

797314+
800,535
1598944

1266,570+ 1422,567+567
587,946
6,739
1726183
4476911

2202,053+9 2407,988+
52,905
642836
2934874
3102891

3034268+25
8,094
3171593

1598944/1 1726183/7 4476911/18,59 2934874/20 3102891/1

0023,044
420,310
4,752 *365
,242,194
8,311,525
*365
*365
*365
*365

3171593/18,
234,692
*365

2008
2006
1266,570+587, 2154318+5
946
60472

36

58.22

84.90

87.897

52.92

61.84

63.485

Average Age of inventory

RATIO

100
80
60

FFBQ

40
20

FFC

0
2006

2007

2008

YEARS

Interpretation:
FFBQ has a high average age of inventory can indicate that a firm is not properly
managing its inventory or that it has a substantial amount of goods that are
proving difficult to sell .The higher a firms average age of inventory, the greater
its exposure to obsolescence risk, the risk that the accumulated products will lose
value in a soft market .FFC has low average age of inventory mean their sales
good as compared to FFBQ

Operating Cycle:
=

2006
58.22

Averag
e age of
invento
ry
Averag 25.18
e
collecti
on
Period
Ratio
83.4

Age of Inventory + Average Collection Period

FFBL
2007
84.90

2006
52.92

FFC
2007
61.84

2008
87.897

2008
63.485

39.35

13.19

22.25

36.45

29.79

124.25

101.087

75.17

98.29

93.275

37

Operating Cycle

RATIO

150
100

FFBQ
FFC

50
0
2006

2007

2008

YEARS

Interpretation:
FFBQ has high operating cycle its mean that longer a company has money out
there on the street (uncollected), the more risk it is taking. While FFC has short
operting cycle. For example, strict (short) payment terms might restrict sales.
Minimal inventory levels might mean that a company cannot fulfill orders on a
timely basis, resulting in lost sales. Thus, it would appear that if a company is
experiencing solid sales growth and reasonable profits, its operating cycle
components should reflect a high degree of historical consistency

Total Asset Turnover:

=

Ratio

Ratio

FFBL
2006
2007
14707,288/2 12242,8
7,681,356
88/29,04
*100
5,971
*100
53.13
42.15

Sales___
Total Assets

2008
26,820,812/
46,771,671
*100

FFC
2006
2007
2008
29,950,873/ 28,429,005 30,592,806/
27,430,281 /29,241,21 31,918,963
*100
4 *100
*100

57.344

109.18

38

92.22

95.84

RATIO

Total Assets Turnover

120
100
80
60
40
20
0

FFBQ
FFC

2006

2007

2008

YEARS

Interpretation:
FFC has low profit margins tend to have high asset turnover, and FFBQ has high profit
margins have low asset turnover - it indicates pricing strategy.
This ratio is more useful for growth companies to check if in fact they are growing
revenue in proportion to sales

MARKET RATIOS:
Dividend Per Share
=

Ratio

Dividend_________
No of Equity Share

2006
1167,637
934,110

FFBL
2007
934,110
934,110

2008
2101,747
934,110

1.249

2.2499

39

2006
1924,549
493,747

FFC
2007
1727,160
493,747

2008
1480,422
493,747

3.89

3.49

2.998

Dividend Per Share

RATIO

5
4
3

FFBQ

2
1

FFC

0
2006

2007

2008

YEARS

Interpretation:
The the sum of declared dividends for every ordinary share issued. Dividend per
share (DPS) is the total dividends paid out over an entire year (including interim
dividends but not including special dividends) divided by the number of
outstanding ordinary shares issued .FFC has a growing dividend per share a sign
that the company's management believes that the growth can be sustained .The
dividend par share of FFBQ has very low in 2006 and 2007 but in 2008
comparatively its growing .

Earning Per Share

=

Ratio

Net Profit after Tax

No of Outstanding shares

2006
2,444,858
934,110

FFBL
2007
2,540,033
934,110

2008
2,899,621
934,110

2.6173

2.7192

3.1

40

2006
4636,144
493,747

FFC
2007
5360,953
493,747

2008
6525,083
493,747

9.389

10.85

13.215

Earning Per Share

RATIO

15
10

FFBQ
FFC

5
0
2006

2007

2008

YEARS

Interpretation:
The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serves as an indicator of a company's profitability.
When i looked the earning par share of both the company its clear that FFC has
higher earning par share for consecutive 3 year that company was more efficient
at using its capital to generate income .

Price Earning Ratio:

=

EPS

Stock
Price
Per
share
Ratio

2006
2,444,858
934,110

FFBL
2007
2,540,033
934,110

2008
2,899,621
934,110

2.6173

2.7192

Stock Price
EPS

2006
4636,144
493,747

FFC
2007
5360,953
493,747

2008
6525,083
493,747

3.1

9.389

10.85

13.215

42.05

58.73

118.5

12.7

42.05/2.71
92

58.73/3.1

118.5/10.8
5

12.7/13.215

41

15.46

18.94

10.92

0.96

Price Eearning Ratio

RATIO

20
15
FFBQ

10

FFC

5
0
2006

2007

2008

YEARS

Interpretation:
A valuation ratio of a company's current share price compared to its per-share
earnings. In 2007 and 2008 FFBQ has a high P/E suggests that investors are
expecting higher earnings growth in the future compared to FFC with a lower
P/E.

Dividend Payout Ratio:

=

Annual Dividend Per Share

Earning Per Share

EPS

2006
2,444,858
934,110

FFBL
2007
2,540,033
934,110

2008
2,899,621
934,110

2006
4636,144
493,747

FFC
2007
5360,953
493,747

2008
6525,083
493,747

EPS

2.6173

2.7192

3.1

9.389

10.85

13.215

2.2499

3.89

3.49

2.998

Annual 1.249
Dividen
d Per

42

Share
Ratio

1.249/2.617
2
0.4776

1 /2.7192

2.2499/3.1

3.89/9.389

3.49/10.85

0.369

0.725

0.7862

0.322

2.998/13.215
0.227

Dividend Payout Ratio

RATIO

1
1
1

FFBQ

0
0

FFC

0
2006

2007

2008

YEARS

Interpretation:
The payout ratio provides an idea of how well earnings support the dividend
payments. In 2006 FFC has higher payout ratio but after this its tend to decrease
in 2007 and 2008 .While FFBQ has low payout ratio in 2006 but its improved in
2007 and 2008 .FFBL companies tend to have a higher payout ratio.

Percentage of Earning Retained:

=

Ratio

2006
10.4776/2.61
72
0.20

FFBL
2007
10.369/2.71
92
0.232

1-Dividend Payout Ratio

Earning Per Share

2008
1-0.725/3.1

2006
1-0.7862/9.389

0.088

0.02277

43

FFC
2007
10.322/10.
85
0.0624

2008
1-0.227
/13.215
0.0584

Percentage of Earning Retained

RATIO

0
0
0

FFBQ

0
0

FFC

0
2006

2007

2008

YEARS

Interpretation:
Percentage of Retained Earning of FFBQ has more than the FFC.

Dividend Yield:
=

2006
1.249

Annual
Dividen
d Per
Share
Stock
Price
Per
share
Ratio
-

Annual Dividend per Share

Market per share

FFBL
2007
1

2008
2.2499

2006
3.89

FFC
2007
3.49

2008
2.998

42.05

58.73

118.5

12.7

1 /42.05
0.0237

2.2499/58.73
0.038

3.49/118.5
0.02945

2.998/12.7
0.2360

44

Dividend Yield

RATIO

0
0
0

FFBQ

0
0

FFC

0
2006

2007

2008

YEARS

Interpretation:
A financial ratio that shows how much a company pays out in dividends each
year relative to its share price. In the absence of any capital gains, the dividend
yield is the return on investment for a stock .Dividend yield is a way to measure
how much cash flow you are getting for each dollar invested in an equity
position .FFC comparatively paid high dividend to its share holder as compared
to FFBL.

Book Value Per Share:

=

Ratio

Equity Share Capital

Share outstanding

2006
8,537,696
934,110

FFBL
2007
8,508,927
934,110

2008
10,486,371
934,110

2006
12,956,543
493,474

FFC
2007
2008
12,730,045 12,285,213
493,474
493,474

9.139

9.109

11.22

26.25

25.78

45

24.89

RATIO

Book Value Per Share

30
25
20
15
10
5
0

FFBQ
FFC

2006

2007

2008

YEARS

Interpretation:
FFBQ has the increasing Book Value per Share because Equity share Capital
increased due to increase the Accumulated profit. Book value per share of FFC is
slightly decreasing due to decreasing the Accumulated profit.

2.7 Statement of Cash Flow:

Operating Cash Flow/Total Debt
Total Debt= Short term Debt + Long Term Debt

Total
Debt
Total
Debt
Ratio

2006
27681,356
-8537,696
19,143,66
0
2,260,861
19143,660
0.118

FFBL
2007
29045,971
-8508,927
20,537,04
4
3,653,112
20537,044
0.177

2008
46771,67110486,371
36,285,300

2006
27430,28112,956,543
14,473,738

FFC
2007
29,241,21412730,045
16,511,169

(9,556,835)
36,285,300
(0.2633)

(396,291)_
14473,738
(0.0273)

5913,601
16511,169
0.358

46

2008
31918,96312285,213
19,633,750
8165,914
19,633,750
0.4159

Operating Cash Flow/ Total Debt

1
RATIO

0
0

FFBQ

FFC

2006

2007

2008

0
YEARS

Interpretation:
FFBQ has increase the Operating Cash Flow ratio due to Cash generated from
Operations increasing and further operating cash flow is decreasing. Operating
Cash Flow is increasing of the FFC because of increasing the cash generating
from operating.

Operating Cash Flow Per Share:

Ratio

2006
2,260,861
934,110

FFBL
2007
3,653,112
934,110

2008
(9,556,835)
934,110

2.42

3.91

(10.23)

47

2006
(396,291)_
493,474

FFC
2007
5913,601
493,474

2008
8165,914_
493,474

(0.80)

11.98

16.54

RATIO

Operating Cash Flow Per Share

20
15
10
5
0
-5
-10
-15

FFBQ
FFC
2006

2007

2008

YEARS

Interpretation:
FFBQ has increase the Operating Cash Flow ratio due to Cash generated from
Operations increasing and further operating cash flow is decreasing. Operating
Cash Flow is increasing of the FFC because of increasing the cash generating
from operating.

48

CHAPTER 3

COMMON SIZE ANALYSIS:

VERTICAL ANALYSIS:
It is the technique used by the analysts to calculate each items on the single
financial Statements as a Percentage of total. In the income statement the analysis
used sales revenue as a total and calculation of other items as the percentage of on
the basis of sales but in the balance sheet the total assets is used as 100% and
other items are calculating on the basis total assets.

Balance Sheet
As at 31 December 2006,2007,2008
FFBL
2006

2007

FFC
2008

2006

2007

2008

9341,100
19.97%

4934,742
17.99%

4934,742
16.8%

4934,742
15.46%

228,350
0.48%

160,000
0.58%

160,000
0.54%

160,000
1.35%

572,399
1.22%

Share Capital and Reserve:

9341,100
33.74%

9341,100
32%

Capital Reserve
228,350
0.824%

228,350
0.78%

Translation Reserve
-

49

FFBL
2006

2007

FFC
2008

2006

2007

2008

7,861,801
28.66%

7,635,303 7,190,471
26.11%
22.53%

Acculamated Profit/Loss
(1,031,754)
(3.7)%

(1,060,523)
(3.65)%

344,522
0.73%

8,537,696
8,508,927
10,486,371
12,730,04512,285,213

12,956,543

30.84%

0.73%

43.5%

47.23%

625,416
3.5%

1,193,750
1.33%

2,671,250
4.35%

9.1%

58,017
0.33%

4196,793
13.7%

2,396,000
8.97%

2,363,526
8.7%

8.08%

29.2%

38.48%

Non-Current Liabilities:
Long Term Finance
1,459,304
1,042,360
5,378,214 5.2%
16.48%
Long term MurDabaha
135,373
0.12%

96,694
0.48%

Deferred Liability
2,634,339
3,994,235
2,431,895 9.5%
7.6%
Long Term Loan
6,482,007

5,833,806

5185,605

23.4%

20%

11.08%

10714,333
38.7%

11,053,389
38.05%

10,065,831
21.52%

3,589,750
13.08%

5034,776
17.21%

50

7810,109
24.46%

FFBL
2006

2007

FFC
2008

2006

2007

4,025,926
13.39%

5,815,276
14.67%

134,039
0.48%

184,430
0.63%

2008

Current Liability:
Creditors /Other Payable
2,674,903
2377,652
5,993,674 9.6%
18.7%

6,264,669
8.1%

19.8%

Interest and Markup Accrued

104,952
0.37%

123,887
0.42%

593,586
1.26%

194,570
0.6%

Short Term Borrowings

4531,887
5875,341
18,257,082
3,114,000 16.37%
20.2%
39%
9.75%

4531,090
3,141,081
16.51%
10.7%

Current Portion of Long term Fin

1,106,410
3.99%

1,106,475
3.8%

1,103,824
2.3%

887,327
3.23%

1,022,500
3.49%

743,036
2.3%

1305,606
0.0006%

1,313,106
4.7 %

4.49%

Provision for Income/Sale Tax

11,226
1,778,361 0.04
5.57%

308
-

51

FFBL
2006

FFC

2007

2008

2006

2007

10,883,988
32.94%

56.05%

2008

Current Liability
8,429,327
9,569,949
26,219,469
11,476,39311,823,641 30.45%
39.24%
37%

39.6%

Total Liability
27,681,356 29,045,971
31,918,963 100%
100%

46,771,671
100%

27,430,281
100%

FFBL
2006

100%

29,241,214
100%

FFC

2007

2008

2006

2007

2008

15,847,104
59.1%

8970,675
27.64%

10160,047 13400,329
31.57%
35.3%

1569,234
1569,234
4.83%
4.83%

Assets:
Fixed Assets:
Property, Plant & Equipment
14,930,339
53.93%

16,458,265
56.6%

Goodwill:
1569,234
4.1%
Long Term Investment
1,411,150
1,411,150
2,416,770
8414,295 5.09%
0.48%
18.94%
22.17%
52

5772,100
5.16%

6094,688
17.78%

Long Term loans & Advances

832,618
21.93%

835,891
87,659
2.57%
0.27%

FFBL
2006

2007

FFC
2008

2006

2007

2008

2,474
0.0076%

2,144
0.0066%

671,040
1.76%

17150,374
39%

17913,772
52.85%

1422,567
3.04%

1564,770
4.8%

2177,547
6.76%

3034,268
7.93%

5676,793
12.1%

952,905
2.93%

642,836
1.99%

258,094
0.68%

285,454
0.06%

961,427
2.96%

1722,602
5.35%

495,929
1.3%

Long Term Deposits

17,273
0.062%

15,228
0.05%

15,228
0.032%

Fixed Assets:
16,358,762 16,614,643
18,279,102
24887,516 59%
57%
55.67%
65.57%

Current Assets:
Stores and Spares (loose tools)
797,314
2.88%

1266,570
4.36%

Stock in Trade
800,535
2.89%

587,946
2.02%

Trade Debtors
231,272
0.83%

243,751
0.83%

Short term Investment

53

502,387
3894,662
3511,563 1.74%
9.25%

11.05%

2452,850

3027,664
7.559%

64,637
0.13%

95,245
0.29%

83,917
0.26%

9.4%

Loans & Advances

61,180
0.22%

79,519
0.273%

136,944
0.36%

Trade deposits and prepayment

5,058

8,467
0.018

4,876
0.029

0.01

Interest Accrued
91,218
0.329%

96,526
0.33%

65,637
0.14%

Income and Sales Tax Refund

251,034
0.9%

365,026
12.5%

Due from GOP Subsidy

-

729,181
12,440,060
2.5%
26.59%

591,043
1.56%

814,108
1.26%

1367,403
2.5%

4.24%

7,941,524
16.97%

8457,425
26.06%

5242,402
16.29%

4395,596
11.58%

Receivables
1346,867
454,137
1233,479 4.86%
3.24%
Cash & bank Balances
7,235,749
26.13%

3,800,569
13.08%

54

Current Assets:
11,322,594 11,661,328
29,492,569
13065,873 38.4%
40.9%
44.32%
34.42%

15298,730
60.9%

14264,371
47.14%

32449,104
100%

32178,143
100%

Total Assets:
27,681,356 29,045,971
37953,389 100%
100%

46,771,671
100%

100%

Profit and Loss Statement

As on 31 December 2006,2007,2008

FFBL
2006

2007

FFC
2008

2006

2007

29950,873
100%

28429,005
100%

2008

Sales
14707,288
12,242,888
30592,806 100%
100%

26,820,812
100%

100%

Cost of goods Sold

(10,023,044) (7,420,310)
(68.15)%
(60.61)%

(18,594,752) (20242,194) (18311,525) (18234,692)

(69.32)%
(67.58)%
(64.41)%
(59.6)%

Gross Profit

55

4,684,244
4822,578
8,226,060
9708,679
10117,480
12358,114 31.84% 39.39%
30.67%
32.41%
35.58%
40.39%
Distribution Cost
(1420,401)
(1068,629)
(1776,864)
(2746,782)
(2668,571) (9.65)% (8.72)%
(6.62)%
(9.17)%
(8.72)%

(2418,793)
(8.50)%

Administrate Cost
(103,143)
(0.70)%

(131,369)
(1.073)%

(207,383)
(0.77)%

(735,331)
(2.455)%

(845,327)
(2.97)%

(895,647)
(2.92)%

(630,513)
(5.15)%

(2791,971)
(10.40)%

(501,241)
(1.67)%

(703,612)
(2.47)%

(695,371)
(2.27)%

(343,813)
(2.8)%

(564,516)
(2.08)%

1,252,158
1,251,675
1942,558 8.5%
6.34%

1,519,549
10.22%

1259,819
5.66%

1665,205
4.2%

5.85%

Finance Cost
(412,870)
(2.807)%

Other Operating Exp

(243,074)
(1.65)%
Other Income

Net Profit before Taxation

3,756,914
3,899,929
4,404,875
6985,144
7814,953
10041,083 27.19% 34.66%
18.52%
23.32%
27.48%
32.82%
Taxation
(1312,056)
(1359,896)
(1505,254)
(2349,000)
(3516,000) (8.921)% (11.10) %
(5.61) %
(7.84) %
(11.49) %
Net Profit after Taxation

56

(2454,000)
(8.63)
%

2,444,858
16.62%

3.2

2,540,033
20.74%

2,899,621
10.81%

4636,144
15.47%

5360,953
18.85%

6525,083
21.32%

HORIZONTAL ANALYSIS:

Horizontal Analysis is used when an analysts compares financial information for

the two or more years for a single company. The oldest period take as a base and
calculate the percentage on the basis of base period value.

Balance Sheet
As at 31 December 2006,2007,2008
FFBL
2006

2007

FFC
2008

2006

2007

2008

9341,100
100%

4934,742
100%

4934,742
100%

4934,742
100%

228,350
100%

160,000
100%

160,000
100%

160,000
100%

Share Capital and Reserve:

9341,100
100%

9341,100
100%

Capital Reserve
228,350
100%

228,350
100%

Translation Reserve
572,399

57

Acculamated Profit
(1,031,754)
(100)%

(1,060,529) 344,522
102%
33%

8537,696
8,508,927
12,285,213 100%
95%

10,486,371
100%

7,861,801
100%

7,635303
97%

12,956,543
123%

100%

1,193,750
43%

2,671,250
100%

7,190,471
91%
12,730,045
98%

Non-Current Liabilities:
Long Term Finance
1,459,304
1,042,360
625,416
5,378,214 100%
71%
223.7%
450%
Long Term Murabaha
135,373
100%

96,694
71%

58,017
43%

FFBL
2006

2007

FFC
2008

2006

2007

2008

2,396,000
100%

2,363,526
98.6%

Deferred Liability
2,634,339
100%

4,080,529
155%

4,196,793
159%

Long Term Loan

6,482,007

5,833,806

5158,605

100%

90%

80%

16885,895
100%

16422,355
97.25%

22690,903
134.3%

Current Liability:

58

7098,035
101%

Creditors Other Payable

2,674,903
100%

2,377,952
89%

6,264,669
234%

4,025,926
100%

5,815,276 5,993,674
144%
149%

134,039
100%

184,430
137.5%

4531,090
403%

3141,081
100%

1,103,824
99%

887,327
100%

1,022,500
115%

308
-

1,305,606
2.7%

1,313,106
100
%

26,219,469
113%

10,883,988
311%

1,476,393
100%

Interest and Markup Accrued

104,952
100%
145.15%

123,887
118.04%

593,586
565%

194,570

Short Term Borrowings

4531,836
5875,341
18257,082
3114,000 100%
130%
69.32%
68.72%
Current Portion of long term
1,106,410
100%

1,106,475
100%

743,036
83%

Provision for Income Tax

11,226
1,778,361 100%
100.5%

136.2%

Current Liability
8,429,327
9,483,655
11,823,641 100%
108%

105%

Total Liability
27,681,356 29,045,971
46,771,671
31,918,963 100%
122.5%
106.6%
116%

Assets:
Fixed Assets:
59

27,430,28
213.5%

129,241,214
100%

FFBL
2006

FFC

2007

2008

2006

2007

2008

10,390,490
108%

Property, Plant & Equipment

14,930,339 15,458,265
12,730,813 100%
132%

15,847,104
110.23%

9,607,957
106%

100%

1569,234
100%

1,569,234
100%

2,416,770
171%

6,409,382
100%

6,325,129 7,744,779
99%
121%

76,647

142,782
163,102
186%

Goodwill
-

1569,234
100%

Long Term Investment

1,411,150
100%

1,411,150
100%

Long Term loans & Advances

-

100%
212%
Long Term Deposits
17,273
100%

15,228
88%

15,228
88%

2,474
100%

2,144
86.6%

1,524
61.6%

Current Assets:

FFBL
2006

2007

FFC
2008

2006

2007

2,202,053
178%

2,407,988
100%

2008

Stores and Spares (loose tools)

797,314
1266,570
3,034,268 100%
138%

1422,567
159%

Stock in Trade

60

109%

800,535
100%
27.08%

587,946
73%

5,676,793
709%

952,905
100%

642,836
67.46%

961,427
123%

1,722,602
100%

2,452,850
100%

3,027,664
123.4%

64,637
106%

95,245
100%

83,917
88.1%

591,043
33.7%

1,451,390
43.88%

1,542,763
100%

4,876
94%

25,488
100%

33,665
132%

258,094

Trade Debtors
231,272
243,751
285,454
495,929 100%
105%
179.1%
51.58%
Short term Investment
502,387
100%

3894,662
775%

3511,563
143.1%

Loans & Advances

61,160
100%

79,519
130%

136,944
143.7%

Other Receivables
1346,867
454,137
1,233,479 100%
85%

106%

Trade deposits
5,058
100%

8,467
167%

107,369
421%

Interest Accrued
91,218
100%

96,526
106%

65,669
72%

12,440,060
1706%

Due from GOP Subsidy

-

729,181
100%

Cash & bank Balances

61

7,235,749
3,800569
931,865 100%
57%

7,941,524
52%

1,623,229
109%

1,350,000
100%

83%

28,492,569
107.34%

9,764,587
272.5%

10,811,435
100%

110%

46,771,671
105%

27,430,281
169%

Current Assets:
11,322,594 11,161,329
9,709,511 100%
99%
Total Assets:
27,681,356 29,045,971
31,918,963 100%
116%

100%

29,241,214
107%

Profit and Loss Statement

As on 31 December 2006, 2007,2008

FFBL
2006

2007

FFC
2008

2006

2007

2008

Sales
14707,288
100%

12242,888
83.24%

26820,812
182.36%

62

29,950,873 28,429,005 30,592,806

100%
94.91% 102.1%

Cost of goods Sold

(10,023,044) (7,420,310) (18,594,752)(20,242,194)(18,311,525)
(18,234,692) (100)% (74.03)%
(1856)%
(100)%
(90.08)%

(90.46)%

Gross Profit
4684,244
100%

4822,578
102.95%

8226,060
175.61%

9,708,679 10,117,480
100%
104.2%

12,358,114
127.28%

Distribution Cost
(1420,401)
(1,068,629) (1,776,864) (2746,782)
(2,668,571) (100)% (75.23)%
(125.1)%
(100)%
(97)%

(2,418,793)
(88)%

Administrate Cost
(103,143)
(100)%

(131,369)
(127.3)%

(207,383)
(201.63)%

(630,513)
(152.71)%

(2,791,971)
(676.23)%

(501,241)
(100)%

(703,612)
(140.3)%

(695,371)
(138.7)%

(564,516)
(232)%

(735,331)
(100)%

(845,327)
(115)%

(895,647)
(122)%

1252,158
1251,675
1519,549
1,942,558 100%
99.96%
132.1%
154.19%

1259,819
121.35%

1,665,205
100%

6985,144
117%

7,814,953
100%

Finance Cost
(412,870)
(100)%

Other Operating Exp

(243,074)
(100)%

(343,813)
(141)%

Other Income

Net Profit before Taxation

3,756,914
3,899,929
4,404,875
10,041,083 100%
103.64%
111.87% 144.19%

63

Taxation
(1312,056)
(1,359,896) (1,505,254) (2349,000)
(3516,000) (100)% (103.64) % (114.72) % (100) %)
(149.68)%

(2454,000)
(104.46)%

Net Profit after Taxation

2,444,858
100%

2,540,033
104%

2,899,621
119%

4636,144
100%

5,360,953 6,525,083
115.63% 140.74%

Analysis of Balance Sheet and Income Statement:

Area
Long
Liability

Conclusion
Fauji Fertilizer Bin Qasim Fauji
Fertilizer
Limited
Company Limited
term Long term liability decrease Logn term Liability
in 2008 due to decrease the Increase the due to
long term financing and increase the loans from
long term loan
banking companies i.e
De-Bottle Necking , long
term , For purchasing
the Capital goods.

Current Liability

Share Capital

Fixed Assets

Current Assets

Approximately
200%
increase
the
Current
liability because increase
the short term borrowing
and Creditors.
Equity
share
capital
increase by 23% because
accumulated
Losses
converted into Profit in the
year 2008
Fixed Assets increased by
_____ in year 2008

Decrease in 2007 by

64

Current
liability
increase by 3% in
creditors and 36% in
Taxation against the
year 2007.
Equity share capital
Decrease by 3% due to
decrease
in
capital
Reserve.

Increased by ______ in
year 2008 because 32%
incrased the Property
plant and Equipment
and
long
term
investment by 21%.
2% Current
Assets

Sales

Gross Profit

Net Profit

and increase by 151 % in

2008 due to
1. Receipt of Govt
Subsidy.
2. Store and spare
Parts increased by
78%.
3. Stock
in trade
increased by 5.6
Million in 2008

increased by 10% and

decrease by 1% due to
following reasons.
1 Store and spare parts
by 9%
2
Trade debtors
incrased by 79% in
2007.
3 Short term investment
increased by 23% in
2007 and 43% in year
2008.

Decrease by 17% in 2007

and increased by 82% in
2008 because successful
completion of Balancing
Modernization
Replancement(BMR) and
DAP Plant
Increased by 3% in 2007
due to
1 Decrease in CGS
2 Increased by 76%
due to increased in
sales.
Increased by 4% in 2007
and 19% in 2008 due to
increased the sales of
Fertilizer (completion of
DAP Plant)

Decrease by 5% in 2007
and increased 2% in
2008.

65

Increased by 4% due to
reduction in cost of
goods sold. Secondly
increased by 27% due to
increased in sales of
Fertilizer.
Increased by 16% in
2007 and 41% in 2008
due to
1. Decrease in cost
of goods of Sold
in 2007
2. Increase the sale
of Fertilizer.

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