Mithchell's Financial Analysis

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FINANCIAL STATEMETN ANALYSIS OF MITCHELL’S
UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

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History
Mitchell’s is the oldest food company in Pakistan. It was
established in 1933 by Francis J. Mitchell under the name of
Indian Mildura Fruit Farms Ltd. After the country gained
independence in 1947, the company's name was changed to
"MITCHELL’S Fruit Farms (Pvt.) Ltd." with the brand name of
"MITCHELL’S".
Since its inception, Mitchell’s has gone from strength to
strength, not only expanding its product line but also
maintaining quality through the years to become one of the
largest food companies in the country. From the
procurement of best quality raw materials, fresh from our
own farms and orchards to the adoption of latest production
techniques, Mitchell’s has been in sync with the evolving
times.
The result of our efforts is that today we are among the
market leaders in all our product categories. Not only that,
but our products are also gaining a market abroad with
exports to several parts of the world including UK, USA,
Canada, the Middle-East and South-West Asia where already
Mitchell’s is a name to reckon with.
Current Situation
Mitchell’s is the only major food company in Pakistan today
with fully integrated operations having its own growing and
processing facilities at one location. Modern high-volume
industrial equipment, professional management and a
trained workforce all combine to ensure that Mitchell’s
continues its dominance as the innovator, market leader and
trend setter. In this regard a major step was taken in 1998,
when Mitchell’s became the first food company in Pakistan
to achieve ISO 9001 accreditation, thus becoming more
competitive on the international stage also.
Countrywide sales are managed by fully computerized and
inter-linked regional sales offices ensuring a smooth
distribution system with nationwide coverage. Highly
qualified executives, using modern management tools,

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handle marketing, commercial, financial and accounting

functions from the Head Office in Lahore.
Institutional Clients
Mitchell’s has successfully catered to the demands of its
prestigious clients such as the Pakistan International Airlines
(PIA), leading five star hotels and clubs, Utility Stores
Corporation, Canteen Stores Department, main stores and
reputed restaurants in major cities.
Foreign Licensees
In recognition of its dedication to quality and technical
expertise, Mitchell’s was also given proprietary rights by L.
Rose and Company Ltd. of England in 1946 to become the
sole manufacturer and distributor of their world famous
Rose’s brand of Lime Juice Cordial and Lime Marmalade in
Pakistan and Afghanistan.
Corporate Philosophy
The success of Mitchell’s brands is the result of the corporate
emphasis laid upon Quality Control reinforced by Research &
Development. The R & D section prepares new recipes and
formulations whereas the QC section ensures selection of
the finest fruits and error free processing and packaging,
thus ensuring that all products live up to the consumers’
high expectations.
Human Resource is also of the pivotal importance for the
Management and employee skills are constantly being
updated through training courses and study tours both at
home and abroad.

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Factory & Farms:

Renala Khurd, District Okara, Pakistan
Phones: (044) 2622908, 2635907 & 8
Fax: (044) 2621416
Email: rnk@mitchells.com.pk
Head Office:
39 A, D-1, Gulberg III,
Lahore, Pakistan
Phones: (042) 5872392 - 96
Fax: (042) 5872398
Email: ho@mitchells.com.pk
Regional Sales Office (Central):

Syed House, Canal Berg,
13 K.M. Multan Road, Lahore
Phones: (042) 5419350 & 5425478
Fax: (042) 5423732
Email: rsoc@mitchells.com.pk

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Products
It is our aim at Mitchell's to provide you with healthy,
innovative and best quality food that will tempt your
appetite at all times. And not only that, but we also promise
convenience and variety at affordable prices.
With six categories encompassing over sixty products, we
are proud to present the Mitchell's family - products to grace
your dining table on the breakfast and dinner occasions as
well as products to appease your sweet tooth.
SAUCES
Spice up your life with Mitchell's rich sauces - just what every
snack needs!! Prepared from selected, ripe, fresh tomatoes,
chillies, garlic and ginger, under strict hygienic conditions,
our range of sauces is a culinary treat and includes a host of
great tasting concoctions from the ever popular, favorite of
the young and old, Tomato Ketchup to the hottest new
addition – the Mexican Salsa.
Our sauces line is not only a local favorite but is also rapidly
gaining a market abroad. The latest addition to the category
is the Cooking Paste, a fine blend of Tomatoes, Ginger and
Garlic which acts as a quick mixing and cooking ingredient.
Complete Range
1. Tomato Ketchup
2. Chilli Garlic Sauce
3. Chilli Ginger Sauce
4. Imli Sauce
5. Mexican Salsa
6. Mango Chutney
7. Cooking Paste

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JAMS, JELLIES & MARMALADE

Mitchell’s ensures that you enjoy the delicate taste and
flavor of the finest fruits of nature the whole year round with
its Jams, Jellies and Marmalade. No artificial color and no
artificial flavor is our motto! Therefore, our range of fruit
preserves is made from the finest, most delicious, sun
soaked, freshly plucked apples, apricots, cherries, guavas,
mangoes, pineapples, raspberries, strawberries and black
currant.
Processed under strict hygienic conditions and according to
recipes perfected by experts over decades – Mitchell’s
products retain the natural aroma, flavor and taste of fruits
and preserve the best in nature. With MITCHELL’S you get
much more – both in quality and in quantity!
Complete Range
1. Golden Apple Jam
2. Strawberry Jam
3. Mango Jam
4. Mixed Fruit Jam
5. Apricot Jam
6. Black Cherry Jam
7. Blackcurrant Jam
8. Golden Mist Marmalade
9. Rose's Lime Marmalade
10. Olde English Marmalade
11. Apple Jelly
12. Strawberry Jelly
13. Raspberry Jelly
14. Pineapple Jelly
15. Guava Jelly
16. Blackcurrant Jelly
17. Diet Golden Apple Jam
18. Diet Golden Mist Marmalade
19. Diet Mixed Fruit Jam
20. Diet Strawberry Jam
SQUASHES

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Want a refreshing and natural drink? Tired of the same old

sherbets? Get refreshed with Mitchell's squashes - just the
right thirst quenchers for you and your family. Processed
from fresh and sun ripened fruits especially grown on our
orchards in Renala, we offer you a range of energizing
natural fruit flavors that promise to liven up your day.
Complete Range
1. Mango Squash
2. Orange Squash
3. Pineapple Squash
4. Guava Squash
5. Mixed Fruit Squash
6. Lemon Squash
7. Lemon Barley
8. Lime Cordial
9. Rose' Lime Juice Cordial
10. Lemon Juice
11. Banana Syrup
12. Pomegranate Syrup
PICKELS
We can safely vouch for the fact that no meal is complete
without Mitchell’s Pickles! Our pickles are a delicate
assortment of fruits and vegetables matured through natural
processes, and carefully selected spices, made in a truly
traditional way and carrying an authentic homemade flavor.
New, mouth watering recipes are constantly being
formulated to complement the existing range.
Complete Range
1. Mango Pickle
2. Mango Kasaundi
3. Mixed Pickle

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4. Chilli & Lime Pickle

5. Lime Pickle
6. Garlic Pickle
7. Mango Chutney
8. Tomato Kasaundi
9. Fruit Vinegar
CANNED FOOD
For those conscious of time and quality, our range of canned
fruits & vegetables remains the favorite. Our ready-to-use
products bring convenience along with taste to every
kitchen. Mitchell’s offers a pure and consistent quality
throughout the year whether it is the “in season” or not.
Complete Range
1. Apple Jam (1050 Gm)
2. Golden Mist Marmalade (1050 Gm)
3. Mixed Fruit Jam (1050 Gm)
4. Mango Jam (1050 Gm)
5. Garden Peas (450 & 850 Gm)
6. Sweet Corn (450 & 850 Gm)
7. Tomato Puree (450 Gm)
8. Fruit Cocktail (850 Gm)
9. Pear Halves (850 Gm)
10. Peach Halves (850 Gm)
CHOCOLATE
Festival
Enjoy the delightful and irresistible collection of twenty
centre-filled morsels wrapped in the finest chocolate
containing the purest ingredients. Elegantly presented in an
attractive box of gold hues, Mitchell’s Festival is available in
ten distinct varieties.
Rainbow

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An assortment of the most popular chocolates made by

Mitchell’s ensures that you savour the experience of all our
mouth watering recipes in one go!
Golden Hearts
An effective way to win the heart of that special person in
your life! Smooth milky chocolate with raisins and rice
crispies, Golden Hearts expresses your sentiments like no
words can. Share it with that special person in your life and
travel the exhilarating journey into someone’s affections and
win that golden heart!
Jubilee
The best selling chocolate in Pakistan! Jubilee is an
energizing chocolate bar with a centre of caramel and
nougatine. It is now also available in smaller size as Jubilee
Junior to meet the smaller pockets.
Discoveree
An original recipe! Discoveree
combines roasted almonds, pure
honey and caramel, cloaked in real
chocolate.
Unitee
A hard to resist deal! Unitee is a
delectable bar consisting of a centre
of roasted peanuts, covered with a
thick layer of caramel and milk
chocolate – appetizing and nutritious.
Twentee – 1
Take a bit and tantalize those taste-
buds! Twenty-1 is a crispy, crunchy

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wafer, enrobed in real chocolate that leaves a pleasant,

lingering aftertaste.
Luxuree
Enjoy a taste of the exotic tropical! Luxuree is a wonderful
treat consisting of a pure, white coconut core wrapped in
rich, milky smooth chocolate.
CONFECTIONARY
Milk Toffees
Pure butter and creamy milk – umm mouth watering!!! Enjoy
our MILK TOFFEE, immensely popular for its taste, texture
and flavor both with children and grown-ups alike.
Butter Scotch
Deliciously scrumptious! The pure, smooth taste of dairy
butter gives Mitchell’s Butterscotch an irresistible appeal!
Milk Chocolate Éclairs

A two-in-one treat! Our Milk Chocolate Éclairs are delectable
caramel nuggets filled with soft milk chocolate making them
a combination that is hard to resist.
Mango Man
A special confection with an authentic aroma of mangoes
and a unique, fresh and fruity taste! Mango Man provides an
opportunity to enter the world of exotic taste.

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PRODUCTION FACILITIES
CHOCOLATE FACTORY
CHOCOLATE: From Cacao Pods to Chocolate Bar

Chocolate ranks as the favorite flavor of most people - adults
as well as children. And yet, few of us know how this popular
treat is made. Chocolate making is an art as well as science.
Read on and find out how this unique blend is achieved.
Born in the Jungle

Chocolates are made from cacao beans which grow inside
pods on trees called Cacao tress. Cacao frees are found in
tropical jungles in Brazil, Indonesia, Ivory Coast and Ghana.
Each pod contains about 20 - 40 cocoa beans.
After the beans are removed from the

pods, they are fermented in large heaps or
piles. The fermentation process takes
about a week to complete. After
fermentation, the beans are dried. During
this time, the shells harden, the beans
darken, and the rich cocoa flavor develops.
After drying, the beans are ready for
transport to the chocolate factory.
At the chocolate factory, these beans are cleaned and

stored. They are then roasted in large, revolving roasters at
very high temperatures. A special hulling machine then
takes the dry, roasted cacao beans and separates the shell

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from the bean - called the "nib." This part of the bean is
actually used to make chocolate.
The nibs now are ready for milling. Milling is a grinding

process which turns the nibs into a liquid called chocolate
liquor/ cocoa mass - a smooth, dark stream of pure chocolate
flavor without any alcohol content. Sometimes instead of
using Cocoa liquor/ cocoa mass directly, cocoa powder and
cocoa butter are separated from it. Now the cocoa liquor is
ready for the rest of the ingredients.
Mixing it up
The main ingredients in chocolate are the
cocoa powder, cocoa butter, sugar and
milk. The whole milk-sugar mixture is
slowly dried until it turns into a thick
material.
At the heart of the chocolate factory goes

the central blending operation where the
cocoa powder is combined with the milk and sugar. This new
mixture is dried into a coarse, brown powder called
chocolate crumb.
Crumbing the Chocolate Liquor

The raw mixture of milk, liquor, sugar,
and cocoa butter is churned until it
becomes a coarse, brown powder called
"crumb."
Perfecting the Product

The chocolate crumb powder is used to
make milk chocolate. The crumb travels

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through special steel rollers which grind and refine the

mixture, making it smoother.
The crumb becomes a thick liquid called chocolate paste.

The paste is poured into huge metallic vats called conches.
Once inside the conch, large granite rollers smooth out the
gritty particles from the crumb. Now the chocolate paste has
the smooth and creamy familiar look of milk chocolate and
it's ready to be made into our favorite Mitchell's products.
The paste is tempered, or cooled in a controlled manner to
the right texture and consistency. Other ingredients like
Hazelnuts/Almonds can be mixed into the paste during
refining to boost up natural taste & flavor.
Tempering the Chocolate

The refined chocolate is warmed &
cooled in a controlled condition before
coating or filling in the moulds in a
process called "tempering." This gives
chocolate its glossy sheen, and ensures
that it will melt properly.
Chocolate Bars
Most chocolate bars are made by pouring the warm liquid
chocolate paste into moulds. The filled moulds then take a
bumpy, vibrating ride to remove air bubbles and allow the
chocolate to settle evenly. Finally, they wind their way
through a long cooling tunnel where the liquid chocolate is
gently chilled into a solid shiny chocolate bar.
One important point to remember is that chocolate needs to

be stored at appropriate temperatures otherwise its fat
content will separate resulting in the appearance of
yellowish fat spots on the chocolate surface. This problem is
called a fat-bloom.
The chocolate bars are now ready for wrapping…... fresh,

delicious Mitchell's chocolate! A sophisticated distribution

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system makes sure that our chocolate arrives at retail

outlets across the country.
Thanks for visiting our chocolate factory!
FINANACIAL ANALYSIS
LIQUIDITY RATIOS
RATIO 2005 2004 RESULT

Current ratio 1.73 1.25 Unfavorable
Quick ratio 1.70 1.10 Favorable
Cash ratio .082 .035 Unfavorable
Working 103691513 43313716 Favorable
capital
Current Ratio
2
1.5
Ratio
1 Current Ratio
0.5
0
2005 2004
Ye a rs
Quick Ratio
2
1.5
1 Quick Ratio
0.5
0
2005 2004

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Cash Ratio
0.1
0.08
0.06
Ratio
Cash Ratio
0.04
0.02
0
2005 2004
Years
Working Capital
150000000
100000000
Working Capital
50000000
0
2005 2004
Years
Comments;

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Overall the liquidity position of the company has been

improved but still there is need to increase the most liquid
assets to enhance the liquidity of the company.
The improvement in the current ratio is due to increase in

the slow moving assets, like inventory and stock in trade, of
the company. The current liabilities of the company also
decreased due to the reason that the installments of asset
subject to finance lease ended in the year 2004.
The company is having no investment in marketable

securities. Due to this factor the cash ratio of the company is
below standard. The improvement is only due to the
increase in cash in 2005 with comparison of 2004.
The change in the working capital which is almost 100% is
favorable for the company. The increase in the working
capital is due to increase in the stock in trade and decrease
in current liabilities.
ACTIVITY RATIOS
Inventory turn 4.48 5.03 Unfavorable

over
Inventory turn 80 days 72 days Unfavorable
over in days
Debtors turn 801.78 348.38 Favorable
over
Debtor turn .45 days 1.03 days Favorable

over in days
Total assets 1.67 1.56 Favorable
turn over
Fix Asset turn 3.49 3.06 Favorable
over
Accounts 3.28 1.88 Unfavorable

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payable turn
over
Accounts 109 days 191 days Unfavorable
payable
turnover in
days
Operating 81 days 73 days Unfavorable
Cycle
Inventory Turn Over
5.2
5
4.8
I.T.O
Inventory Turn Over

4.6
4.4
4.2
2005 2004
Years
Inventory Turn Over In Days
85
80
Days
Inventory Turn
75
Over In Days
70
65
2005 2004
Years
Debtor Turn Over Ratio

Debtor Turn Over
1000
800
600 Debtor Turn Over
400 Ratio
200
0
2005 2004
Years

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Debtor Turn Over Ratio In Days
1.5
1
Days
Debtor Turn Over

0.5 Ratio In Days
0
2005 2004
Years
Total Assets Turn Over Ratio

Total Assets Turn
1.7
1.65
1.6 Total Assets Turn
Over
1.55 Over Ratio

1.5
1.45
2005 2004
Years
Fixed Assets Turn Over Ratio

Fixed Assets Turn
3.6
3.4
Fixed Assets Turn
Over
3.2
Over Ratio
3
2.8
2005 2004
Years
Accounts Payable Turn Over
250
200
Accounts
150
Payable Turn
100
Over
50
0
2005 2004

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Operating Cycle
85
80
Days
75 Operating Cycle
70
65
2005 2004
Years
Comments;
Overall the effectiveness of management has been improved

in this year as compared to its performance in the previous
year. But more control over stock in trade is required in
order to gain better activity.
The inventory turn over ratio is unfavorable for the company.

The inventory turn over ratio is increased due to increase in
the stock in trade. As a result of this increase in inventory
turn over ratio the average age of inventory also increased.
Therefore the company will have to greater carrying cost but
it will also provide protection to the company about
becoming stock out.
The debtor turn over ratio is favorable for the company. The
collection period of the company is decreased. The reason of
this decrease is due to the application of strict credit policy
by the management. Now the company is in a position to do
investment in the marketable securities to enjoy benefits
from the early collection of cash from its debtors. The debtor
turn over in days also shows that the collection period is less

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than one days. Therefore it can be analyzed that most of the

sales are on cash.
The assts are also utilized well by the management as

compared to the previous year which resulted in better total
asset turn over ratio in 2005.
The increase in the operating cycle is unfavorable for the

company. The reason for this increase is increase in the
stock in trade which resulted in increase in the average age
of the inventory and ultimately the operating cycle
increased.
SOLVENCY RATIOS
Times 3.68 8.29 Unfavorable

Interest
Earned
Proprietary 52% 53% Satisfactory
ratio
Debt ratio 48% 47% Satisfactory
Debt to .357 to 1 .146 to 1 Unfavorable

Equity ratio Time Interest Earned
10
8
6 Time Interest
Rs.
4 Earned
2
0
2005 2004
Years

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Proprietory Ratio
54%
53%
Ratio
53% Proprietory Ratio

52%
52%
2005 2004
Years
Debt Ratio
49%
48%
Ratio
48% Debt Ratio

47%
47%
2005 2004
Years
Debt Ratio
0.4
0.3
Ratio
0.2 Debt Ratio

0.1
0
2005 2004
Years
Comments;

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Overall the solvency position of the company is satisfactory

and long term investors are in protection against the danger
of liquidation of the company.
The time interest earned ratio is decreased which is negative

for the company. This decrease is due to the increase in the
financial charges as the company has obtained loan from
ABN AMRO BANK in the year 2005. Now the company has
approximately 3 rupees to pay 1 rupee of interest. Therefore
it will not favorable for the company to take more long term
loan from any source.
The amount of loan has also put negative impact on the debt
to equity ratio which has increased upto almost 150% as
compared to the previous year.
The company has no intangible assets. So the debt to

tangible net worth will provide same results as debt to equity
ratio. So it can be said that the company is in a better
position to pay the long term debts from its assets currently
in operation.
PROFITABILITY RATIOS
RATIOS 2005 2004 RESULT
Net Profit 2.57 3.059 Unfavorable

ratio
Operating 5.18 5.823 Unfavorable

Profit ratio
Gross Profit 15.52 17.08 Unfavorable
ratio
Operating 11.15 12.49 Favorable
ratio

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Return on 4.3 4.76 Unfavorable

Assets
Equity
Investment
Return on Fix 8.98 9.3 Unfavorable
Assets
Net Profit Ratio
3.2
3
Ratio
2.8
Net Profit Ratio
2.6
2.4
2.2
2005 2004
Years
Operating Profit Ratio
6
5.5 Operating Profit
Ratio
5 Ratio
4.5
2005 2004
Years
Gross Profit Ratio
18
17
Ratio
16 Gross Profit Ratio

15
14
2005 2004
Years

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Operating Ratio
13
12
Ratio
Operating Ratio
11
10
2005 2004
Years
Return On Assets
4.8
4.6
Ratio
4.4 Return On Assets

4.2
4
2005 2004
Years
Return On Fixed Assets
9.4
9.2
Return On Fixed
Ratio
9
Assets
8.8
8.6
2005 2004
Years
ReturnonOn
Return Equity
Investment
9.5
4.80%
4.60%9
Ratio
Return Return
On Equity
on
8.5
4.40%
Investment
4.20%8
4.00% 2005 2004
2005 Years 2004

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Comments;
In overall profitability perspective the efficiency of the

management has been decreased. There are some
controllable and some uncontrollable factor behind the scene
which caused this result.
The gross profit ratio is decreased while the sales of the

company has been increased by 16% as compared to year
2004, while the cost of goods sold increased by 18% as
compared to previous year. This greater percentage changes
in CGS with relevant to increase in sales caused decrease in
Gross Profit Ratio. Where as the increase in the CGS is due
to some uncontrollable factors like inflation rate, increase in
carriage, and increase in prices of Raw Material.
The operating expenses of the company are controlled by

the management well which resulted in decrease in
operating ratio, but the operating profit ratio is decreased a
little which is only due to increase in CGS and it also effected
the all profitability ratios of the company.
Return on investments decreased because the company has

no investment outside the business while the company
collects their accounts receivables a lot before their

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accounts payable. Therefore a lot of cash remains idle in the

hands of management. There is no amount available in the
account of other income.
Return on Equity also decreased due to decrease in net

profit and increase in the amount of Equity
MARKET RATIOS
Degree of 37.24 13.70 Unfavorable

Financial
Leverage
Earning Per 4.09 4.22 Unfavorable
Share
P/E ratio 15.91 15.45 Favorable
B/V per share 49.14 47.04 Favorable
Dividend Yield .03 .03 No Effect

ratio
Dividend Payout .48 .47 Favorable
ratio
%age of .52 .53 Favorable
Earnings
Retained

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Dagree Of Financial Leverges
40
30
Dagree Of
Ratio
20
Financial Leverges
10
0
2005 2004
Years
Earning Per Share
4.25
4.2
Ratio
4.15
Earning Per Share
4.1
4.05
4
2005 2004
Years
Price Earning Ratio
16
15.8
Price Earning
15.6
Ratio
15.4
15.2
2005 2004
Book Value Per Share
50
49
Book Value Per
Ratio
48
47 Share
46
45
2005 2004
Years

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Dividend Yield Ratio
0.04
0.03
Dividend Yield
0.02
Ratio
0.01
0
2005 2004
Dividend Payout Ratio
0.49
0.48 Dividend Payout
Ratio
0.47 Ratio
0.46
2005 2004
Years
Percentage Of Earning Retained
0.53
0.52 Percentage Of
Ratio
0.51 Earning Retained
0.5
2005 2004
Years
Comments;

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Overall the performance of the company is improved and it

is giving signal of security to the prospective investors to
invest in the company.
There are two types of investors which are interested in

these ratios. These are short term investors and long term
investors. The position of the company is secure for both
long term and short term investors of the company.
The Price Earning ratio increased which is due to decrease in

the EPS. Therefore the P/E ratio is providing positive signal to
the investors
EPS ratio is decreased only due to the fewer earnings

available for stock holders and earnings decreased due to
greater percentage of increase in the Cost of Goods Sold.
Book Value per Share is also improved which is due to
increase in the amount of equity. This also shows that the
company is having suitable equity which will increase the
market price of shares.
The financial burden of outsiders on the company is

increased upto alarming stage. The company was previously
not in a position to afford more financial burden but the
management decided to take more loan from ABN AMRO
Bank which increased the financial burden on company and
also due to this reason the earning of the company
decreased and the company have to decide to keep less
percentage of earning retained in order to maintain their
previous amount of dividend.
For the long term investors it is a positive signal that the

company is satisfying its share holders by keeping fewer
amounts itself to pay the same amount of dividend n this
year even their earnings decreased as compared to previous
year .

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Operating cash to 15.36% 30.36% Unfavorable

currently maturity
of long term debt
+ current
payables
Operating cash 4.102 10.289 Unfavorable
per share
Operating cash to 2.05 5.149 Unfavorable
dividend
Operating cash to 8.9% 24.8% Unfavorable
total debt
CASH FLOW ANALYSIS
Operating Cash to Currently Mutuirity
40.00%
30.00%
Operating Cash to
Ratio
20.00%
Currently Mutuirity
10.00%
0.00%
2005 2004
Years

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Operating Cash Per Share
15
10 Operating Cash
Ratio
5 Per Share
0
2005 2004
Years
Operating Cash to Dividend
6
4 Operating Cash to
Ratio
2 Dividend
0
2005 2004
Years
Operating Cash to Total Assets
30.00%
20.00% Operating Cash to
Ratio
10.00% Total Assets
0.00%
2005 2004
Years
Comments;

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The overall position of the company can be said satisfactory

as per analysis of statement of cash flow. The operating cash
has been decreased upto almost 60% as compared to the
previous year which has caused decrease in all the cash flow
ratios. The reason for decrease in the operating cash is
decrease in the amount of net profit in this year as well as
the increase in the stock in trade.
Due to decrease in the amount of operating cash the debt

paying ability of the company from its internal sources has
decreased upto almost 50%. This shows that company is not
in a position to get further financial burden from any
financial institution.
Operating cash to dividend ratio is decreased but still it is

positive for the company because the company is still having
2 rupees of cash from its operations in order to give dividend
of 1 rupee.
The operating cash to total debt also decreased in this year.

The reasons behind this decrease are decrease in operating
cash and increase in the amount of total debt due to taking
loan from ABN AMRO Bank.

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TREND ANALYSIS
HORIZONTAL ANALYSIS OF INCOME STATEMENT
FACTOR 2001 2002 2003 2004 2005 RESULT
Sales 100% 101.8 109.5 102.17 118.17 Favorable

change of
4.54%
CGS 100% 101.78 107.5 104.2 122.76 Unfavorable

change of
5.69%
Gross 100% 101.9 118.2 93.3 98.2 Unfavorable
Profit change of .
45%
Operating 100% 184.8 104.08 69.69 72.05 Unfavorable
Profit change of
7%
Profit 100% 79.6 103.73 86.66 55.52 Unfavorable
before change of
Tax 11.12%
Net Profit 100% 83.51 98.4 56.11 54.52 Unfavorable
change of

34
11.39%
EPS 100% 83.57 118.18 67.34 65.41 Unfavorable
change of
8.65%
Sales
120
110
100
90
2001 2002 2003 2004 2005
Sales
Cosr Of Goods Sold
150
100
50
0
2001 2002 2003 2004 2005
Years
Cosr Of Goods Sold
Gross Profit
150
100
50
0
2000 2001 2003 2004 2005
Years
Gross Profit

35
Operating Profit
150
100
50
0
2000 2001 2003 2004 2005
Years
Operating Profit
Profit Before Tax
150
100
50
0
2000 2001 2003 2004 2005
Years
Profit Before Tax
Net Profit
150
100
50
0
2000 2001 2003 2004 2005
Years
Net Profit
Earining Per Share
150
100
50
0
2000 2001 2003 2004 2005
Years
Earining Per Share

36
Comments;
Overall there is decreasing trend in the income statement of

the company, if comparison is made by taking year 2001 as
base year.
In sales there is increasing trend with 4.54% increase on the

average in all the five years and this increase is favorable for
the company. But the CGS of the company is also increasing
every year with a percentage of 5.69% which is greater than
increase in the sales. Therefore this increase in the CGS is
not favorable for the company. If the increase in the CGS is
less than increase in the amount of sale then it is favorable
but greater increase in CGS affects the whole performance of
the company because the CGS has direct relationship with
all other factors of Income Statement.
Gross Profit also shows a decreasing trend with .45%

decrease on average in all the five years. This decrease is
also directly related to the increase in the amount of CGS.
The operating profit is fluctuating every year. Sometime

there is sudden increase then in the next year there is

37
sudden downfall. It shows that the management does not

have better control over its operating expenses because
there is no much greater fluctuation in Gross Profit. So
fluctuations in Operating Profit are due to changes in
Operating Expenses.
There is on the average 11% decrease in the earnings before

tax and it is not favorable for the company. The reason for
this decrease is that the company has to pay a huge amount
of interest on account of interest on loan.
In Net Profit there is decrease of 9% approximately on

average in all the five years. This decrease in earnings
available for stock holders caused an average decrease of
11% in the EPS of the company. Since there were
fluctuations in the net profit of the company so the EPS
changed every year and there is decreasing trend in EPS on
everage in all the years.
HORIZOTAL ANALYSIS OF BALANCE SHEET
FACTOR 200 2002 2003 2004 2005 RESULT

1
Total 100 112.33 134.21 150.41 161.25 Favorable
Assets % % % % % change of
15.25%
Total 100 113.9 138.56 136.07 153.65 Favorable
Current % % % % % change of
Assets 13.41%
Total Fix 100 110.5 128.78 167.2 169.56 Favorable
Assets % % % % % change of
17.25%
Cash 100 41.40 84.05 56.53 108.16 Favorable
% % % % % change of
2%
Total 100 117.07 156.78 184.10 150.12 Unfavorabl
Current % % % % % e change
Liabilitie of 12.5%
s

38
Total 100 64.41 84.12 96.48

106.44 Unfavorabl
Liabilitie % % % % e change%
s of 1.5%
Total 100 242.33 270.11 296.73 309.96 Favorable
Equity % % % % % change of
52.25%
Total Assets
200
150
100
50
0
2001 2002 2003 2004 2005
Years
Total Assets
Total Current Assets
200
150
100
50
0
2001 2002 2003 2004 2005
Years
Total Current Assets
Total Fixed Assets
200
150
100
50
0
2001 2002 2003 2004 2005
Years
Total Fixed Assets

39
Cash
150
100
50
0
2001 2002 2003 2004 2005
Years
Cash
Total Current Liabilities
200
150
100
50
0
2001 2002 2003 2004 2005
Years
Total Current Liabilities

40
Totol Debts
150
100
50
0
2001 2002 2003 2004 2005
Years
Totol Debts
Shareholder's Equity
400
300
200
100
0
2001 2002 2003 2004 2005
Years
Shareholder's Equity
Comments;
Assets
The overall horizontal analysis predicts the positive trend on

the asset side of the company.
In Total Assets, there is overall increasing trend with the

average percentage of 15.25% increase over last five years.
The very first reason of this increase is that stock in trade

41
amount is very high in years 2004-5, and second reason is

that company has acquire a Assets Subject to Finance Lease
so why these are obviously favorable for the company.
In Total Current Assets, there is also increasing trend with

the average percentage of 13.41% over the last five years.
So, there is a smooth and positive increase in the current
assets. This positive increase in the Current Assets is the
result of Strategic Planning formulation and implementation
by the management.
Total Fixed Assets are also increasing with average

percentage of 17.25% over the last five years which is also
favorable for the company. The major changes in year 2004-
5 in which the company acquire an asset subject to finance
lease.
There are lot of fluctuations in cash & cash equivalent in last

five year but there is overall 2% increase in cash & cash
equivalent in five years. The major fluctuations are in the
sudden increase of 52% from year 2004 to year 2005.
So, there is overall positive trend in assets side of the

balance sheet but when we consider the utilization of asset
towards profit, then there is negative result for the company.
Liabilities
As per investment pattern current assets are financed by

current liabilities so there is 12.5% average increase in
current liabilities of the company which is less than increase
in total current assets, so this increase is affordable for the
company.
In the same way total liabilities are also increasing with the
average percentage of 1.5% which is also less as compare to
the total assets which is obviously favorable for the
company.

42
However, there is also positive increase in equity. Equity is

also increasing with the average percentage of 52.25% in
last five year. The major change in year 2002 is only due to
the issuance of common stock revaluation of assets by the
company. Equity is also playing positive role in the smooth
increasing of total fixed assets
VERTICAL ANALYSIS OF INCOME STATEMENT

(All amounts in %)
FACTOR 2001 2002 2003 2004 2005
Sales 100 100 100 100 100
CGS 81.29 81.28 79.81 82.91 84.45
Gross 18.71 18.71 20.17 17.08 15.55

Profit
Operatin 10.201 11.63 12.09 12.49 11.15
g
Expense
s
Operatin 8.51 7.08 8.08 5.8 5.19
g Profit
EBT 1.305 1.59 7.047 5 3.5

43
Net 4.64 3.8 5.01 3.06 2.57

Profit
CGS
85
80
75
2001 2002 2003 2004 2005
Years
CGS
Gross Profit
30
20
10
0
2001 2002 2003 2004 2005
Years
Gross Profit

44
Operating Expenses
30
25
20
15
10
5
0
2001 2002 2003 2004 2005
Years
Operating Expenses
Operating Profit
20
15
10
5
0
2001 2002 2003 2004 2005
Years
Operating Profit
EBT
10
7
4
1
-2 2001 2002 2003 2004 2005
Years
EBT
Net Profit
10
8
6
4
2
0
2001 2002 2003 2004 2005
Years
Net Profit

45
Comments;
Overall most of the factors of vertical analysis of Income

Statement are showing decreasing trend which is not
favorable for the company.
On average there is increasing trend in the CGS but this

increasing trend is due to the inflation factor which is out of
control of management. This negative result of CGS has
affected the Gross Profit trend which is decreasing and is not
favorable for the company. There is increasing trend in
operating expenses but overall there is better control of
management over the operating expenses. There is also
decreasing trend in operating profit which is due to less
amount of Gross Profit available.
The decreasing trend in the EBT is due to increase in the

amount of interest to be paid. The asset subject to finance
lease and loan taken from ABN AMRO Bank are the reasons
of this decrease in EBT. This decrease in EBT resulted in a
decreasing trend in the Net Profit of the company.

46
VERTICAL ANALYSIS OF BALANCE SHEET

(All amounts in %)
FACTOR 2001 2002 2003 2004 2005
Total 100 100 100 100 100

Assets
Operatin 34.72 44.62 42.42 34.50 48.06
g Fix
Assets
Capital 10.98 .338 .774 15.76 0
Work in
Progress
Live .27 .265 .31 .25 .48
Stock
Store & 2.6 2.26 1.95 1.86 2.16
Spares
Stock in 34.13 39.18 32.70 25.69 31.65
Trade
Trade 1.21 1.37 1.66 3.06 2.95
Debts
Advance 12.34 10.57 17.12 16.84 12.22
s

47
Cash 3.67 1.35 2.30 1.37 2.46
FACTOR 2001 2002 2003 2004 2005
Issued 14.15 12.60 12.65 11.29 16.53

Capital
Reserves 3.25 5.41 2.42 2.16 2.01
Retained 43.21 40.08 39.12 39.67 39.21

Earnings
Defferd 3.32 4.74 4.41 4.38 4.83
Taxation
Retiremen 4.09 3.85 3.43 3.07 2.87
t Benefits
Short 15.35 18.58 19.76 23.57 12.9
Term
Running
Finance
Creditors 11.66 10.96 13.51 15.10 13.43
Accrued

48
Operating Fix Assets
60
40
20
0
2001 2002 2003 2004 2005
Years
Operating Fix Assets
Capital Work in Progress
20
10
0
2001 2002 2003 2004 2005
Years
Capital Work in Progress
Live Stock
0.6
0.4
0.2
0
2001 2002 2003 2004 2005
Years
Live Stock
Store & Spares
3
2
1
0
2001 2002 2003 2004 2005
Years
Store & Spares

49
Stock in Trade
45
30
15
0
2001 2002 2003 2004 2005
Years
Stock in Trade
Trade Debts
4
2
0
2001 2002 2003 2004 2005
Years
Trade Debts
Advances
20
10
0
2001 2002 2003 2004 2005
Years
Advances
Cash
4
2
0
2001 2002 2003 2004 2005
Years
Cash

50
Issued Capital
20
10
0
2001 2002 2003 2004 2005
Years
Issued Capital
Reserves
6
4
2
0
2001 2002 2003 2004 2005
Years
Reserves
Retained Earnings
45
40
35
2001 2002 2003 2004 2005
Years
Retained Earnings
Defferd Taxation
6
4
2
0
2001 2002 2003 2004 2005
Years
Defferd Taxation

51
Retirement Benefits
6
4
2
0
2001 2002 2003 2004 2005
Years
Retirement Benefits
Short Term Running Finance
30
20
10
0
2001 2002 2003 2004 2005
Years
Short Term Running Finance
Creditors Accrued
20
10
0
2001 2002 2003 2004 2005
Years
Creditors Accrued

52
Comments;
Overall there is decreasing trend in the factors considered
for the vertical analysis of Balance Sheet. This decreasing
trend also indicates poor performance of the company in five
comparative years.
There is overall increasing trend in the amount of Operating

Fix Assets and this trend is favorable for the company.
Capital work in Progress is showing increasing trend but in
the year 2005 there is no capital work in progress. Live stock
is also increasing which is favorable for the company
because the company will be in a position to utilize its own
live stock at the time of shortage of raw material.
The contribution of stock in trade in total assets is showing

decreasing pattern. But in 2005 this contribution has been
increased which is due to the greater amount of stock in
trade. Increasing trend of trade debts is favorable for the
company because it means that company is paying after
greater period to its creditors. The decreasing trend of cash
& equivalents is negative for the company because it
reduces the ability of the company to invest outside the
business in marketable securities.
Issued Capital is showing decreasing trend. So it can be

analyzed that the company is getting loan with a greater
percentage than their amount of equity. This thing will
increase the financial burden on the company.
Reserves are also showing decreasing trend which is

dependent on the management policy to create reserves
from the profit or capital or not. In the same way the
retained earnings also dependent upon the decision taken by
the management to keep how much portion of profit as
retained earnings.

53
Short term running finance is indicating increasing trend and

it is not favorable for the company. This shows that the
company is not abler to meet its current nature expenses
and it has to take loan to meet these expenditures. But in
the year 2005 it has decreased which is due to better control
of management over its operating expenses.
There is increasing trend in the Creditors & Accrued. This

increasing trend is favorable for the company.

54
SWOT ANALYSIS
Strengths;
 Enough amount of quickly liquidate able assets.
 Sufficient working capital is available.
 Debt vs. equity position is favorable.
 Collection period of the company is very good.
 Well utilization of assets to generate sales.
 Keeping the amount of creditors for a longer period of
time than its receivable period.
 Operating Expenses are well managed by the company.
 Favorable P/E ratio will improve the image of the
company.
 Book Value per share.
 Dividend payout ratio.
Weaknesses;
 Extra investment in stock in trade.
 No investment outside the business.
 Age of inventory increased.
 Operating cycle increased.
 Return on investment.
 Return on equity.
 Net profit ratio.
 Increased financial burden on the company.
 Decrease in EPS.
 Low Operating cash.

55
Opportunities
 Due to a huge difference between the accounts
receivable and accounts payable period the company
has the opportunity to invest for short term in
marketable securities.
 Long term investors can be attracted due to better
dividend payout ratio of the company.
Threats;
 The company will have to bear carrying cost due to
increase in the average age of inventory.
 The increase in financial leverage will create limitation
for the company in selection of source of financing.
 Due to low operating cash the company will have to
take short term financing which will be available on
greater rate.

Mithchell&#39;s Financial Analysis

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1

FINANCIAL STATEMETN ANALYSIS OF MITCHELL’S

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

handle marketing, commercial, financial and accounting

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Factory & Farms:

Regional Sales Office (Central):

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

JAMS, JELLIES & MARMALADE

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Want a refreshing and natural drink? Tired of the same old

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

4. Chilli & Lime Pickle

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

An assortment of the most popular chocolates made by

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

wafer, enrobed in real chocolate that leaves a pleasant,

Milk Chocolate Éclairs

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

CHOCOLATE: From Cacao Pods to Chocolate Bar

Born in the Jungle

After the beans are removed from the

At the chocolate factory, these beans are cleaned and

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

The nibs now are ready for milling. Milling is a grinding

At the heart of the chocolate factory goes

Crumbing the Chocolate Liquor

Perfecting the Product

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

through special steel rollers which grind and refine the

The crumb becomes a thick liquid called chocolate paste.

Tempering the Chocolate

One important point to remember is that chocolate needs to

The chocolate bars are now ready for wrapping…... fresh,

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

system makes sure that our chocolate arrives at retail

RATIO 2005 2004 RESULT

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Overall the liquidity position of the company has been

The improvement in the current ratio is due to increase in

The company is having no investment in marketable

RATIO 2005 2004 RESULT

Inventory turn 4.48 5.03 Unfavorable

Debtor turn .45 days 1.03 days Favorable

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Inventory Turn Over

Inventory Turn Over

Inventory Turn Over In Days

Debtor Turn Over Ratio

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Debtor Turn Over Ratio In Days

Debtor Turn Over

Total Assets Turn Over Ratio

1.55 Over Ratio

Fixed Assets Turn Over Ratio

Accounts Payable Turn Over

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Overall the effectiveness of management has been improved

The inventory turn over ratio is unfavorable for the company.

UNIVERSITY OF THE PUNJAB (Gujranwala Campus) MBA 4th Semester

Mithchell's Financial Analysis

Mithchell's Financial Analysis