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ABSTRACT:
Profitability is the most discussed issue of the business sector. A number of factors have been suggested to increase the profits of a firm. Those factors are not always useful for all companies of a specific industry. Sometimes situations deviate from what theories say. We have discussed the same in this report that whether the profitability of our industry is consistent with the theories. We have analyzed Fertilizer industry of Pakistan, taking under consideration the statistics of four listed companies of KSE, which are as follow: 4. Fouji Fertilizer Company Limited (FFCL) 5. Engro Chemicals Pakistan Limited (Engro) 6. Fouji Fertilizer Bin Qasim Limited (FFBL) 7. Dawood Hercules Chemicals Limited (DHCL)
Research Topic:
Linkage of following financial and economic profitability of Fertilizer sector in Pakistan; 8. Liquidity (Current Ratio & Quick Ratio) 9. Leverage 10.Market Price Per Share 11.Year to Year Growth In Revenues 12.GDP 13.GNP indicators with
In a noninflationary world of family firms using one-period capital inputs with no taxes or debt, measuring profit would be a relatively straightforward matter of deducting expenses from receipts. The accountant's books and the economist's books would coincide. But in the presence of long-lived assets of various maturities, price changes, debt financing, and taxation, the two book keeping systems diverge and researchers face some difficult questions. Should profit-type income include net interest payments? How holding gains on real assets or on net financial liabilities should be treated? Should profitability be measured on gross capital stock (including depreciation in the numerator) or net stock (excluding depreciation), and indeed are average accounting rates of profit meaningful at all? Trade-off theory of capital structure basically entails offsetting the costs of debt against the benefits of debt. MM 1963 introduced the tax benefit of debt. Later work led to an optimal capital structure which is given by the trade off theory. The first element usually considered as the cost of debt is usually the financial distress costs or bankruptcy costs of debt. It is important to note that this includes the direct and indirect bankruptcy costs. Trade-off theory can also include the agency costs from agency theory as a cost of debt to explain why companies dont have 100% debt as expected from MM 1963. 95% of empirical papers in this area of study look at the conflict between managers and shareholders. The others look at conflicts between debt holders and shareholders. Both are equally important to explain how the agency theory is related to the trade-off theory. Following is a brief description of profitability in term of several financial and economic indicators.
6.8mntpa. This excessive demand ensures sales of total production. Pakistans fertilizer manufacturers have low resource costs due to feedstock gas subsidy advanced by the government. Through this subsidy manufacturers are able to get feed stock gas at significantly lower rates than the market which improves their profitability. This subsidy is expected to remain in place at least for the next three to four years i.e. until the industry faces an excess supply situation. Later on the subsidy may be withdrawn from that portion of production which is exported. Production directed towards local sales is expected to continue receiving the subsidy. The Companies in our coverage are dominant players who hold attractive investment portfolios. This includes FFCs investments in FFBL and ENGROs investments in various subsidiaries.
Types of fertilizer
Urea, which represents 65% of total fertilizer consumed and di-ammonium phosphate (DAP), which accounts for 18%, are the main types of fertilizer used in Pakistan, but there is a total of eight different fertilizer products which fall into three categories. Urea, along with calcium ammonium nitrate (CAN) and ammonium sulphate (AS) together make up almost three fourths of total fertilizer consumption and come under the nitrogenous category. Under the phosphatic category which makes up about 27%, is DAP, triple super phosphate (TSP), single super phosphate (SSP) and nitrophosphate (NP). And under the last category, potassic is sulphate of potash which makes up only 1%. Since the soil in Pakistan generally tends to be deficient in nitrogen, urea is the most used fertilizer. DAP is used, as most phosphatic fertilizers are to counter the effect of the acidic urea and maintain levels of fertility in the soil. Pakistans agricultural output has suffered in the recent past due to adverse weather conditions and crop spoilage. The government is omitted to improve agriculture performance through the following measures 1) Irrigation system improvement 2) Subsidy to farmers. 3) Encouraging use of fertilizer. 4) Above average credit disbursements As a result of these policies, yield per hectare of Pakistan is showing gradual improvement although it is still low as compared to other countries. Currently it stands at 1.44tn per hectare.
Statistical Analysis
HYPOTHESIS TESTING H0: Liquidity, measured by current ratio has no significant effect on profitability.
H0: Higher degree of leverage does not lead to change in profitability in fertilizer sector firms listed on KSE. H0: MARKET PRICE PER SHARES has no significant effect on profitability. H0: GDP has no significant effect on profitability. H0: GNP has no significant effect on profitability. H0: Growth in Revenues has no significant effect on profitability.
Before going to an industry analysis, there is an individual analysis of each firm how the profitability of the firm is affected by liquidity ratio.
Testing tool: CHI SQUARE and LINEAR REGRESSION LINKAGE OF CURRENT RATIO ON PROFITABILITY
FAUJI FERTILIZERS:Fauji Fertilizer is directly affected by liquidity, as the co-efficient of determination (R=76%) indicates strong relationship between the two variables. Also looking at related graph, we find upward trend in profitability as liquidity increases. For Fouji Fertilizer, there is positive relationship between profitability and current ratio of liquidity.
Model 1
R .760(a)
R Square .577
Durbin-Watson 2.227
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FAUJI FERTILIZERS BIN QASIM:Model of FFBL indicates that the company is not as much dependent on the liquidity as Fouji Fertilizers. Again strong correlation can be seen in the above table. But the co efficient of determination is weaker, which shows that though a positive relation exist between profitability and liquidity, but the height of strength is not as much as for others. D-W value is more than 2, which mean that there is no auto correlation in the data.
Adjusted R Std. Error of R R Square Square the Estimate .627(a) .393 .190 62.30031 a Predictors: (Constant), Current Ratio b Dependent Variable: %age change in EBIT Model 1
Durbin-Watson 2.805
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DAWOOD HERCULES:Dawood Hercules has less affect of liquidity, as R2 is 12.9% which mean that the relation is not significantly strong. Also adjusted R square is negative, which is also clearly indicating that the liquidity is not a big consideration in Dawood Hercules. We also ran regression and F-stats for Dawood Hercules, so that we should have better insight of the liquidity and profitability. That showed no any significant relation between the two variables.
Model Summary(b)
Adjusted R Std. Error of R R Square Square the Estimate .359(a) .129 -.162 45.09484 a Predictors: (Constant), Current Ratio b Dependent Variable: %age change in EBIT Model 1 ANOVA(b) Sum of Squares Regressi on Residual Total 901.015 6100.633
Durbin-Watson 3.288
Model
Df 1 3
F .443
Sig. .553(a)
7001.648 4 a Predictors: (Constant), Current Ratio b Dependent Variable: %age change in EBIT Coefficients(a) Unstandardized Coefficients B Std. Error (Constant 36.348 43.596 ) Current -14.602 21.936 Ratio a Dependent Variable: %age change in EBIT Standardized Coefficients Beta .834 -.359 -.666 .466 .553
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ENGRO CHEMICALS:Engro Chemicals is surprisingly different from the rest of industry, while analyzing for liquidity. The company has no significant effect of current ratio on profits. Very low values of R and R 2 mean that the positive relation between CR and profitability has no any significance. For certainty, we also analyzed this company by running regression and constructing ANOVA table, but it did not show any indication which can prove strong relation between liquidity and profitability.
Model Summary(b) Adjusted R R R Square Square .047(a) .002 -.497 a Predictors: (Constant), Current ratio b Dependent Variable: EBIt % age change Model 1 Std. Error of the Estimate 17.10329
Model
df 1 2
F .004
Sig. .953(a)
586.352 3 a Predictors: (Constant), Current ratio b Dependent Variable: EBIt % age change
Coefficients(a) Unstandardized Coefficients B (Constan 27.257 t) Current -.898 ratio a Dependent Variable: EBIt % age Std. Error 28.322 13.433 change -.047 Standardized Coefficients Beta .962 -.067 .437 .953
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Durbin-Watson 2.183
Also Adjusted R square is negative, which tells that after the adjustment we dont see any strong relation between profitability and leverage. But positive value of beta (.486) tells that an upward slope exist between variables, so at
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FAUJI FERTILIZERS BIN QASIM LIMITED:Model Summary Adjusted R Std. Error of R R Square Square the Estimate .808(a) .653 .538 .81198 a Predictors: (Constant), EBIT %age change Model 1
Durbin-Watson 1.708
The negative value of beta (-0.808) in the following table indicates an inverse relationship between debt and profitability. The results are surprising in this industry. There are some valid reasons for this, we will discuss them later. So even the theory is opposite to it, but there is no dependence of profitability on leverage.
Unstandardized Coefficients B Std. Error (Constant) 69.600 .460 EBIT %age -.014 .006 change a Dependent Variable: Levergae %
95% Confidence Interval for B Lower Bound 68.137 -.033 Upper Bound 71.063 .005
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DAWOOD HERCULES:Model Summary Adjusted R Std. Error of R R Square Square the Estimate .535(a) .287 .049 40.80494 a Predictors: (Constant), leverage% b Dependent Variable: %age change in EBIT Model 1
Durbin-Watson 2.634
Following table of coefficients shows a negative beta (-0.535), which mean the debt and profitability are oppositely related. Because there is no positive relation between two variables, discussion of strength of correlation is useless.
Coefficients
Unstandardized Coefficients
Standardized Coefficients
B Std. Error Beta (Consta 81.926 67.470 nt) leverage -2.574 2.345 -.535 % a Dependent Variable: %age change in EBIT
1.214 -1.098
.312 .353
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ENGRO CHEMICALS:Model Summary(b) Adjusted R Std. Error of R R Square Square the Estimate .261(a) .068 -.398 16.52835 a Predictors: (Constant), Leverage b Dependent Variable: EBIT % age change ANOVA(b) Model 1 Sum of Squares Regressi on Residual Total 39.979 546.373
Model
df 1 2
F .146
Sig. .739(a)
Positive value of beta (0.261) indicates a positive relation between leverage and profitability. Engros profits are related to debt, though not strongly. There are very low values of R2 and a negative value of adjusted R2, which mean that the correlation is weak.
Coefficients(a) Unstandardized Coefficients Standardized Coefficients
B Std. Error (Consta 15.868 26.383 nt) Leverag .321 .840 e a Dependent Variable: EBIt % age change
We also constructed ANOVA table to see deeply, that either the relation is really weak. The answer is, yes. This is due to the low F-value, which is not significant for the hypothesis to be accepted.
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INDUSTRY ANALYSIS AND HYPOTHESIS TESTING H0: Liquidity, measured by current ratio has no significant effect on profitability.
TEST OF ASSOCIATION USING CHI SQUARE:Chi-Square Tests Value 304.000( a) 106.344 .046 19 Df 289 289 1 Asymp. Sig. (2-sided) .261 1.000 .830
a 324 cells (100.0%) have expected count less than 5. The minimum expected count is .05.
Results:
Pearson chi square test rejects the above described null hypothesis.
200
167.4 150
61.8 50 37.46 23.78 10.5 0 1 0.94 2 2.1 0.9 3 11.6 0.91 4 1.07 5 10.5 1.04 6 3.8 1.17 7 3.15 12 -30.2 -50 EBIT % age change ]Curre 2.07 14 15 2.03 16 -26.4 35.67 22.9 1.34 -4 1.46 8 9 1.53 10 1.53 11 1.2 13 1.7 0.45 3.1 17 6.99 1.6 18 1.8 1.54 19 46.2 39.07 32.79
REGRESSION ANALYSIS:Model Summary(b) Adjusted R Std. Error of R R Square Square the Estimate .050(a) .003 -.056 43.03341 a Predictors: (Constant), Current Ratio b Dependent Variable: %age change in EBIT Model 1 ANOVA(b) Sum of Squares Regressi on Residual 80.414
Model
Df 1
F .043
Sig. .837(a)
Running simple regression on the fertilizer industry, the hypothesis is rejected, due to insignificant value of F-stats. Thus we can interpret that the fertilizer sectors profitability is dependent upon liquidity measured by current ratio.
Coefficients(a) Unstandardized Coefficients B Std. Error (Constant 28.480 24.197 ) Current -3.035 14.565 Ratio a Dependent Variable: %age change in EBIT Standardized Coefficients Beta 1.177 -.050 -.208 .255 .837
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H0: Higher degree of leverage does not lead to change in profitability in fertilizer sector firms listed on KSE.
TEST OF ASSOCIATION USING CHI SQUARE:200
150
EBIT% Change
100
50
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
REGRESSION ANALYSIS:-
Coefficients(a) Unstandardized Coefficients B Std. Error (Constan 4.153 26.130 t) Leverage .426 .524 % a Dependent Variable: %age change in EBIT Result: Standardized Coefficients Beta .159 .193 .813 .876 .428
We shall reject the null hypothesis. So the leverage is significant in increasing the profitability.
Histogram Normal P-P Plot of Regression Standardized Residual
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Results:
The regression and chi square tests conclude that the fertilizer industry has positive association with debt in term of profitability. Thus the correlations are not strong enough, but the positive values of R and beta mean that leverage effects the industry according to the theory.
PRICE
PER
SHARES
WITH
FAUJI FERTILIZERS
Model Summary (b) Adjusted R Std. Error of R R Square Square the Estimate .260(a) .068 -.398 16.53155 Predictors: (Constant), Market price per share B Dependent Variable: EBIT % age change ANOVA (b) Model 1 Sum of Squares Regressi on Residual 39.768 546.584
Model
Df 1 2
F .146
Sig. .740(a)
Total 586.352 3 Predictors: (Constant), Market price per share B Dependent Variable: EBIT % age change Coefficients (a) Unstandardized Coefficients B (Constant) 36.787 Market price -.062 per share a Dependent Variable: EBIT % age change Std. Error 30.843 .163 Standardized Coefficients Beta 1.193 -.260 -.381 .355 .740
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Hence we concluded that there is no significant relationship between profits before taxes and interests and market price per share.
LINKAGE OF GDP WITH PROFITABILTY H0: GDP has no significant effect on profitability.
FAUJI FERTILIZERS:Positive value of beta indicates relationship of profitability and GDP. Increasing the GDP, increases the profits of fertilizer companies. Though the
Model
df 1 3
F .213
Sig. .676(a)
239.048 4 a Predictors: (Constant), GDP b Dependent Variable: %age change in EBIT Coefficients(a) Unstandardized Coefficients B (Consta nt) GDP 2.778 Std. Error 19.665 Standardized Coefficients Beta .141 .462 .897 .676
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The trend can be seen from the graph above, that GDP is an indicator of increasing profits.
FAUJI FERTILIZERS BIN QASIM:Model Summary(b) Adjusted R Std. Error of R R Square Square the Estimate .204(a) .041 -.278 78.27698 a Predictors: (Constant), GDP b Dependent Variable: %age change in EBIT Model 1
Fouji Fertilizer BIN Qasim also has positive relation with GDP. The positive value of beta (.204) means the profitability is dependent upon GDP. But the relation is not so significant due to negative value of adjusted R2 and low value of F in the ANOVA table.
ANOVA(b) Sum of Squares Regressi on Residual 795.240
Model
df 1
F .130
Sig. .743(a)
18381.85 3 8 Total 19177.09 4 9 a Predictors: (Constant), GDP b Dependent Variable: %age change in EBIT
Coefficients(a) Unstandardized Coefficients B (Consta nt) GDP -14.979 Std. Error 178.466 Standardized Coefficients Beta -.084 .360 .938 .743
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2007 -50
Observed Cum Prob
2006
2005
2004
2003
If we see the graph, we can conclude that the relation is not as much stronger as should be.
DAWOOD HERCULES:-
Model Summary(b) Adjusted R Std. Error of R R Square Square the Estimate .302(a) .091 -.212 46.05497 a Predictors: (Constant), GDP b Dependent Variable: %age change in EBIT Model 1
Dawood Hercules has a positive and greater value of beta than that of previous. Mean there is positive slope between GDP and profitability of Dawood Hercules.
ANOVA(b) Sum of Squares Regressi on Residual Total 638.467 6363.181
Model
df 1 3
F .301
Sig. .621(a)
The value of F is not so significant that we can conclude a strong relationship between the two variables.
Coefficients(a) Unstandardized Coefficients B (Consta nt) GDP -45.870 Std. Error 105.002 Standardized Coefficients Beta -.437 .549 .692 .621
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Looking at the graph we cannot conclude a relationship, but the positive value of R and beta cannot be ignored so easily.
ENGRO CHEMICALS:
Engro Chemicals is strongly correlated with GDP. The very high value of R and beta (0.869) mean a positive slope between profitability and GDP. The value of R2 (75.6%) and adjusted R2 are both consistent with the relationship.
Model Summary (b) Adjusted R R R Square Square .869(a) .756 .634 a Predictors: (Constant), GDP b Dependent Variable: EBIT % age change Model 1 Std. Error of the Estimate 8.45896
While we constructed ANOVA table, we see that the value of F is significantly large indicating strong relationship between profitability and GDP.
Model
Df 1 2
F 6.195
Sig. .131(a)
586.352 3 a Predictors: (Constant), GDP B Dependent Variable: EBIT % age change Coefficients (a) Unstandardized Coefficients B (Consta nt) -61.659 Std. Error 35.255 Standardized Coefficients Beta -1.749 .222
.869
2.489
.131
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% of sales
GDP
EBIT
From the graph, the results can be interpreted, that the fluctuations in profitability are connected to the GDP.
LINKAGE OF GNP WITH PROFITABILTY H0: GNP has no significant effect on profitability.
FAUJI FERTILIZERS:The relation between GNP and EBIT (profitability) is not much significant. The reason is negative value of beta (-0.070). The values of R and R2 are of no use that the relation is inverse between the two variables.
Model Summary(b)
Adjusted R Std. Error of R R Square Square the Estimate .070(a) .005 -.327 8.90487 a Predictors: (Constant), GNP b Dependent Variable: %age change in EBIT Model 1
ANOVA table also does not give any strong relation between two variables as the F value is very low.
ANOVA(b) Sum of Squares Regressi on Residual Total 1.158 237.890
Model
df 1 3
F .015
Sig. .911(a)
239.048 4 a Predictors: (Constant), GNP b Dependent Variable: %age change in EBIT Coefficients(a) Unstandardized Coefficients B (Consta nt) GNP 15.692 Std. Error 33.441 Standardized Coefficients Beta .469 -.121 .671 .911
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The insignificance can be seen in the above graph between EBIT and GNP, for Fouji Fertilizer.
FAUJI FERTILIZERS BIN QASIM:The value of beta is negative again, so the relation is inverse between GNP and EBIT. Adjusted R2 is also negative, insisting to not accept the correlation between the variables.
Model Summary(b) Adjusted R Std. Error of R R Square Square the Estimate .226(a) .051 -.265 77.89087 a Predictors: (Constant), GNP b Dependent Variable: %age change in EBIT Model 1
ANOVA table gives very low F-value, indicating no significant relation between two variables.
ANOVA(b) Sum of Squares Regressi on Residual 976.137
Model
df 1
F .161
Sig. .715(a)
18200.96 3 6066.987 2 Total 19177.09 4 9 a Predictors: (Constant), GNP b Dependent Variable: %age change in EBIT Coefficients(a) Unstandardized Standardized Coefficients Coefficients B (Consta nt) GNP 164.562 -16.225 Std. Error 292.511 40.450 -.226 Beta .563 -.401 .613 .715
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The graph tells the opposite fluctuations among the two variables, indicating weak relationship.
DAWOOD HERCULES:Model Summary (b) Adjusted R R R Square Square .507(a) .257 .009 a Predictors: (Constant), GNP b Dependent Variable: %age change in EBIT Model 1 Std. Error of the Estimate 41.64856
The negative beta value (-.507) tells that the variables are again inversely related. So apparently there is no relationship between EBIT and GNP.
ANOVA(b) Sum of Squares Regressi on Residual Total 1797.841 5203.807
Model
df 1 3
F 1.036
Sig. .384(a)
ANOVA is also unable to build any significant relation between two variables.
Coefficients(a) Unstandardized Coefficients B (Consta nt) GNP 168.719 Std. Error 156.407 Standardized Coefficients Beta 1.079 -1.018 .360 .384
ENGRO CHEMICALS:Model Summary(b) Adjusted R R R Square Square .656(a) .431 .146 a Predictors: (Constant), GNP B Dependent Variable: EBIT % age change Model 1 Std. Error of the Estimate 12.91730
Engro is positively correlated with GNP, like in GDP, in term of profitability. The significance is strengthened by large and significant value of F in ANOVA table.
ANOVA (b) Sum of Squares Regressi on Residual Total 252.638 333.713
Model
df 1 2 3
F 1.514
Sig. .344(a)
Coefficients (a) Standardized Coefficients Beta -.699 .656 1.230 .557 .344
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% of sales
GNP
EBIT
The fluctuations in the graph can be noticed. They are along the same
LINKAGE OF PROFITABILITY:
GROWTH
IN
REVENUE
WITH
Model
df 1 3
F 2.604
Sig. .205(a)
239.048 4 a Predictors: (Constant), MKT PRICE b Dependent Variable: %age change in EBIT
The value of F-stats is also significantly high that we can easily conclude the strong relationship between the two variables.
Coefficients(a) Unstandardized Coefficients B Std. Error (Constan -20.823 20.352 t) MKT .273 .169 PRICE a Dependent Variable: %age change in EBIT Standardized Coefficients Beta -1.023 .682 1.614 .382 .205
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FAUJI FERTILIZERS BIN QASIM:Model Summary(b) Adjusted R Std. Error of R R Square Square the Estimate .981(a) .963 .950 15.44412 a Predictors: (Constant), GROWTH IN REVENUES b Dependent Variable: %age change in EBIT Model 1 Fauji Fertilizer Bin Qasim is also strongly correlated with Revenues in term of profitability, due to very strong R values (98.1%). ANOVA (b) Sum of Squares 18461.53 6 715.563
df 1 3
F 77.400
Sig. .003(a)
19177.09 4 9 a Predictors: (Constant), GROWTH IN REVENUES b Dependent Variable: %age change in EBIT Coefficients(a) Unstandardized Coefficients B (Constant) 6.433 GROWTH IN 1.283 REVENUES a Dependent Variable: %age change in EBIT Std. Error 8.373 .146 Standardized Coefficients Beta .768 .981 8.798 .498 .003
Total
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Looking at the graph, we can see the strong relation between two variables.
DAWOOD HERCULES:The profitability of Dawood Hercules is strongly dependent upon the change in revenues. The R value is high which shows strong correlation.
Model Summary (b) Adjusted R Std. Error of R R Square Square the Estimate 1.000(a) 1.000 1.000 .00000 a Predictors: (Constant), GROWTH IN REVENUES % b Dependent Variable: %age change in EBIT Model 1
Model
df 1 3
F .
Sig. .(a)
7001.648 4 a Predictors: (Constant), GROWTH IN REVENUES % b Dependent Variable: %age change in EBIT Coefficients(a) Unstandardized Coefficients B (Constant) .000 GROWTH IN 1.000 REVENUES % a Dependent Variable: %age change Std. Error .000 .000 in EBIT Standardized Coefficients Beta . 1.000 . . .
The graph also tells strong association between profitability and growth in revenues.
ENGRO CHEMICALS:Model Summary (b) Adjusted R Std. Error of R R Square Square the Estimate .278(a) .077 -.384 16.44862 a Predictors: (Constant), Growth in revenues B Dependent Variable: EBIT % age change Model 1
Though the relationship is direct due to positive values of R and beta, but the strength is not as high as in the other company case.
ANOVA(b) Sum of Squares Regressi on Residual Total 45.237 541.114
Model
df 1 2
F .167
Sig. .722(a)
586.352 3 a Predictors: (Constant), Growth in revenues b Dependent Variable: EBIT % age change
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CONCLUSION
The four firms are analyzed in our study of fertilizer sector of Pakistan. We came with following results. 14.Liquidity has statistically significant positive effect on the profitability of fertilizer industry. 15.In fertilizer sector, leverage does not significantly affect the profitability of firm. 16.Average market Price per Share has no significant effect on profitability of fertilizer industry. 17.Year to year Growth in Revenues has significant effect on the profitability of firms in Fertilizer Industry of Pakistan 18.GNP of country has profitability of firms. significantly positive effect on the
19.GDP of Pakistan has statistically significant effect on the profitability of the firms in Fertilizer Industry of Pakistan.
KEY FINDINGS
20.After having deep insight of the fertilizer sector, we see that the sector keeps high level of liquidity. Because this is a chemical industry, and all chemical industries keep high liquidity. Because the chemicals used in the production cannot be acquired once in a year due to their vulnerability to expire. So they have to buy on regular basis. So their liquidity is high. 21.We came with another finding, that the current ratio and quick ratios are almost same. Which simply mean that they dont have high inventory piled up? That is why; we didnt use the quick ratio along with current ratio. 22.All over the world, the corporations and financial institutes are moving toward debt financing to be saved against government taxes. But contrary to this all, the fertilizer sector in Pakistan is mostly not depending upon it, as per statistical analysis. 23.The reason for above said implications is simple. The fertilizer sector is a selling sector like automobile industry. Whatever they produce is must be sold because of higher demand. So they dont have high level of receivables, instead they take money in advance. So they dont have any risk in the business, and the profits are not highly related to the leverage.
REFERENCES:
http://wiki.answers.com www.levy.org/pubs www.engro.com www.ffc.com.pk www.ffbl.com www.dawoodhercules.com www.sbp.org.pk www.fertilizer.org www.pakistaneconomist.com www.allbusiness.com www.goliath.ecnext.com