SHORT TERM

Current, quick and acid test ratio of Engro in 2007 and 2008 are quite fluctuation because
company’s M/S investments in short term running finance at high point and trade debts
also increases because company most of the sales are on credit basis and trade debts also
increases due to credit purchases but in 2008 trade debts decreases by huge margin. it
shows that company’s r/a collection is good.

DAYS SALES IN R/A

Days sales in R/A of Engro from 2004 to 2007 are quite stable but in year 2007 and 2008
there is large difference because company’s trade debts decreases in 2008 as compared to
preceding year that is why days sales in R/A quite low. It shows that company’s have
good collection of trade debts

A/R TURNOVER AND A/R TURNOVER IN DAYS

A/R turnover and A/R turnover in days for the year 2004 and 2005 are slightly differ
because of sales. Company’s sales in 2005 are greater than 2005 and no change in trade
debts. While in the following 2006-2008 trade debts increases so the net result remain the
same.

DAY’S SALES IN INVENTORY

For the Engro days sales in inventory are quite fluctuating because of increase and
decrease in stock in trade and C.G.S. in 2005 company’s purchased f/g and also increase
its production. But in 2006 stock in trade decreases because of decrease in r/m.
In 2007 and 2008 company’s stock in trade increase because finished good increases. But
in 2008 company has recognized the write down of inventories of r/m and finished to net
realized value.

INVENTORY TURN OVER & INVENTORY TURN OVER IN DAYS

In 2005 company’s raw material and finish products increases and stock in trade also
increases as compare to 2004. CGS also increases but not with the same proportion
In 2008 inventory decreases company’s purchased products decreases.

OPERATING CYCLE

Operating cycle for Engro in 2008 is maximum because company’s A/R turnover in days
and inventory turn over in days are maximum.

WORKING CAPITAL

Engro’s working capital for 2007 and 2008 are maximum because of increase in stock in
trade and trade debt.
LONG-TERM ANALYSIS

Engro’s TIER & FCCR is same because there is no operating lease of company so that’s
why interest portion of rentals are zero. Both ratios are continuously decreasing from year
2006 to 2007 but increases in 2005.
The main reason of decreasing in TIER & FCCR is increase in financial charges which
includes interest on long term loans and short term borrowings.

DEBT RATIO

Debt ratio in 2006 is low because of slight decrease in total liabilities and increase in total
assets, and redeemable capital decreases and increase in short term investment.