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Presented by: Sohail Hamayon Khan

1PRESENTED TO: MR. NOMAN SHAFI

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Out line of the presentationy Brief introduction of the company

y Findings of my Financial Analysis in comparison to other

companies in our group table showing the result of your ratios

y Main factors of your report given to the potential investor

y business analysis

y

My recommendations in relation to my findings of thefinancial and business analysis

y Assumptions for Sales forecast and adjustment your AFN

PRESENTED TO: MR. NOMAN SHAFI 2

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Brief introduction of the companyy It is sister concern of Quetta group

Textile

Live stock Confectionary

leather

y Formed in 1970

y

Manufacturers of organic and sustainable textileproducts, including cu certified organic cotton, lyocell,bamboo fiber and other specialized yarns


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Brief introduction of the companyy Activities

Spinning Waving

y Exports to Europe USA Far East

y DIRECTORS Mr. Khalid Iqbal (Chief

Executive) Mr. Tariq Iqbal

Mr. Daanish Javed Mr. Asim Khalid Mr. Omer Khalid Mrs. Najma Javed Mrs. Tabbasum Tariq

y AUDITORS

Mushtaq and Company CharteredAccountants 407 / 4th Floor,Commerce Centre Hasrat

Mohani Road, Karachiy REGISTERED OFFICE

Nadir House (Ground Floor)

I. I. Chundrigar Road

Karachi

y

MILLS P/3, S.I.T.E., Kotri

B/4, S.I.T.E Kotri

47.5 K.M. Lahore Multan Road,Bhai Pheru


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Brief introduction of the companyy Vision statement

become a market leader by producing high quality products with latesttechnologies

integrate its supply chain and diversify its customer portfolio strives toexplore new markets worldwide

to be fittest in a changing market

y Mission secure & rewarding investment for its shareholders & investors

reliable source of high quality yarns & fabrics at affordable prices to itscustomers

secure place of work to its employees & an ethical partner to its businessassociates


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Findings of my Financial Analysisy Vertical analysis

Current assets

Noncurrent AssetsNoncurrent Liabilities

Current Liabilities

Share holder Equity

Gross profitEBIT

EBT


39.56538 39.31994 43.32105 43.28283 41.75265

60.43462 60.68006 56.67895 56.71717 58.24735

40.63269 47.3723 42.46319 36.20848 25.13818

46.72785 39.68537 47.49727 49.47235 47.82537

12.63251 12.94234 10.03954 14.31917 27.03645

8.6792127 10.1859 10.29342 14.21428 18.29816

8.4143953 10.03831 9.39157 12.90816 14.33345

2.0008343 2.937917 0.806982 1.37442 4.023859

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Findings of my Financial Analysisy Horizontal analysisTotal Assets

Current assetsNoncurrent Assets

Noncurrent Liabilities

Current Liabilities

Share holder Equity

Gross profit

EBIT

EBT


100 109.3334 145.1012 172.116 164.3147

100 108.6552 158.8746 188.2875 173.3984

100 109.7775 136.084 161.5288 158.3678

100 92.85549 147.4904 182.225 168.1741

100 127.4682 151.638 153.3755 101.6564

100 127.4682 151.638 153.3755 101.6564

100 126.367 149.9602 258.4669 431.3048

100 128.4554 141.1275 242.1039 348.4859

100 158.1041 50.99753 108.4098 411.4233

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Findings of my Financial Analysis


Current Ratio

Quick Ratio

Cash Ratio

Net Working Capital

0.89949966

0.22051642

0.01981693

-279077558

LiquidityAnalysis

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Profitability Analysis

Gross profit margin

profit margin Analysis

Return On Assets

Return on equity

Return on Capital Employed

0.12334195

0.01295443

0.01238042

0.07300073

0.01038743

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Leverage Analysis

debt ratio

Debt-Equity ratio

Capitalization ratio

Interest Coverage Ratio

Cash flow to Debt Ratio

0.84604607

6. 70 688

0. 88 689

- . 6 84 7

-0.0003 3

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Operating performance Analysis

Account receivable turnoverAverage collection Period(ACP)

inventory Turnover

Average Age of Inventory(AAI)

Operating Cycle

Fixed asset turnover

Total Asset turnover

7.14826026

53.6646958

3.33250274

112.10793

165.772626

1.59668759

0.88437999

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Market value/ cash flow investmentEarnings per share

Price/ earnings ratio

Book value per share

Dividend Yield

operating cash flow to sales

ratio

cash flow coverage ratio

Dividend Payout

18.0510074

2.79191201

269.678071

0.02187818

-0.008969

0.00363995

1276.73875

0.06180392

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Liquidity Measurement Ratio

Current Ratio

Quick Ratio

Cash Ratio

Net Working CapitalProfitability Indicator Ratio

Gross profit margin

profit margin Analysis

Return n Assets

Return on equity

Return on Capital EmployedDebt Ratio/ Leverage

debt ratio

ebt-Equity ratio

Capitalization ratio

Interest Coverage Ratio

Cash flow to ebt Ratio

Industrial Average Analysis

0.940459522 it is similar to industrial average no change

0.366116029 need ti increase the quick Assets

0.029924063 increased cash balance needed

-45710693.49Quetta textile has better Net working capital thenMarket

0.141625572 similar to industry



0.041709908 Better then industry

0.008662444 Better then industry

0.734205468 bit high in debt financing should increase equity finance

3.370285139 too high


-1.179188811 similar to industry

0.018685035 too low

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Activity/Operating Performance Ratios

Account reciveable turnover

Average collection Period(ACP)

inventory Turnover

Average Age of Inventory(AAI)

Operating Cycle

Fixed asset turnover

Total Asset turnover

Market Value/Cash flow indicator

Earning per share

Price/ earning ratioBook value per share

Devidend Yeild

operating cashflow to sales ratio

cashflow coverage ratio

Dividend Payout

5.225457373 better then industry

78.093329 more the


104.0077932 beter then industry182.1011223 better then industry

1.986064603 better then industry


4.49135898 better than industry

-85104.62793 better than industry60.41316597 better than industry






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Criteria for investors decision making


Criteria Quantitativeanalysis %age

Qualitativeanalysis %age

Decision

makingweightage

Pakistani

economyanalysis

70 30 0.2

Textile industry

analysis

70 30 0.3

Firms financial

performanceanalysis

60 40 0.5

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Criteria for investors decision makingy Pakistani economy analysisy Quantitative Measures

Exports = 20

Pakistan share of textile in the world = 30

Stock market situation in Pakistan = 20

y Qualitative Measures

Social condition in Pakistan = 5

Political Stability = 15

War on terror effect = 10

y Textile Industry

y Quantitative Measures

Textile share in total exports = 25

Textile industry growth in Pakistan = 25

Textile industry in Large scale

Manufacturing(LSM) =10

Cost competence of Pakistan textile = 10


Growth perspective of textile industry =10

Threat of substitutes =10

Threat of competition from the foreignindustries =10

y Firms financial performanceanalysisy Quantitative Measures

Vertical analysis =5

Horizontal analysis =5

Ratio analysis of individualfirm =15

Ratio analysis with the industryaverage =20

Future forecasting ofStatements =15

y

Qualitative Measures Position of firm in industry = 10

Account operations =10

Management assessment =10

System and control =5

Maturity of obligor =5


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Criteria for investors decision making

y Investor in stock: the conclusion will help this user todecide whether the investment in stock will be profitable

and also if that investor uses the portfolio what should itexpect

y Debtor both financial institution & individual: theconclusion will help the lender to make the decision that is

it feasible to lend to that particular companyy Management: the conclusion will help the management

to make decision to improve the performance of the firm


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B

usiness analysisy Pakistani economy analysisy Quantitative Measures

Exports = 12

Pakistan share of textile in the world = 28

Stock market situation in Pakistan = 10


Social condition in Pakistan = 2

Political Stability = 8

War on terror effect = 4

y Textile Industry

y Quantitative Measures

Textile share in total exports = 23

Textile industry growth in Pakistan = 20

Textile industry in Large scale

Manufacturing(LSM) =9

Cost competence of Pakistan textile = 7


Growth perspective of textile industry =8

Threat of substitutes =8

Threat of competition from the foreignindustries =4

y Firms financial performanceanalysisy Quantitative Measures

Vertical analysis =5

Horizontal analysis =4

Ratio analysis of individualfirm =14

Ratio analysis with the industryaverage =19

Future forecasting ofStatements =13

y

Qualitative Measures Position of firm in industry = 9

Account operations =7

Management assessment =7

System and control =3

Maturity of obligor =5


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Business analysisy Pakistani economy analysis

(12+28+10+2+8+4)*0.2 = 12.8

y Textile Industry(23+9+7+20+8+8+4)*0.3 = 23.7

y Firms financial performance analysis

(5+4+14+19+13+9+7+7+3+5)*0.5 = 43y Total

43+23.7+12.8= 79.5


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Recommendationsy Investor in stock: there is very good opportunity and

future prospect for their investors in stock because the

firm has good profitability and operationsy Investor in credit: the firm has good cash flow and

profitably so It will be benefit for the creditor to giveshort term loan

y

Management: the manager has to focused onincreasing cash on hand and reduce long term debt


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AssumptionsIn percentage

Sales

forcasting 2006 2007 2008 2009 2010 Average

%age salesincrease tren 7.6749 17.4307 24.8141 29.6274 19.88682

Tax rate 10.0690 12.3969 3.5749 7.3424 9.0109 8.478872

Divi en

payout ratio 8.6559 5.42611 16.7695 0 0.05036 6.180392


The current ratio and debt ratio will be same as last year 0.87 and 0.73Firms future market share price will be PKR 40

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Adjustment of AFN


AFN 1256634914

Forecasted Additional

New Current liabilities CA/Current ratio 4878231930 758121218

Total liability total assets * debt ratio 7442349245 1183456880

Long term liability total liability- CL 2564117315 425335662

Equity total assets-total liabilities 2757743420 73178033.7

AFN E uity+LTL+CL 1256634914

Share capital Issued Number of share Amount

ordinary share issue @10 1829451 18294510

Share premium @30 1829451 54883530

73178040

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www.financeministry.com

Ministry of textiles

All Pakistan textile trade association

SBP website

www.quettagroup.com/home.html


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