DECLARATION

I hereby declare that the work contained in the report written by Muhammad
Jahanzaib Chughtai, Registration No MBM-023R13-32, Master in Business
Administration, Institute of Southern Punjab, and has been carried out under the
supervision of Ms. Lala Rukh Shabbir. I also hereby declare that this report has not
been submitted for any degree elsewhere and is free from plagiarism.

Muhammad Jahanzaib Chughtai

1
 APPROVAL

This internship report "Faisal Sharif & Co. by Muhammad Jahanzaib Chughtai is
accepted in its present form by the Department of Business Administration as
satisfying the report requirement for the degree of Master in Business Administration.

Supervisor Name _____________

Supervisor Signature _____________

2
 DEDICATION
It is with my deepest gratitude and warmest affection that I dedicate this
internship report to my beloved Parents. I could never have done without their faith,
support, and constant encouragement. Thanks to my parents for teaching me to
believe in myself, in ALLAH and in my dreams.
May ALLAH bless my parents (Ameen)

Muhammad Jahanzaib Chughtai

3
 ACKNOWLEDGEMENT

First of all, with great reverence, I wish to express deep gratitude towards
Almighty ALLAH who has blessed and enables me to innovate this internship report.
Then I owe a debt of gratitude to my parents for their prayers, support and constant
encouragement which helps me in completion of this internship report.
I would like to acknowledge with gratitude to my internship supervisor Ms.
LalaRukh Shabbir, to give me opportunity to make this internship report through
which I gained valuable information. Continuous and in time guidance from my
internship supervisor make it possible for me to successfully complete this research
thesis.
Finally, I would like to thank to all my friends, family members, colleagues
and all those persons who help & cooperate me in any way for the successful
completion of this dissertation.

Muhammad Jahanzaib Chughtai

4
 Executive summary:
The cause of audit of an issue is to get an unbiased opinion about
the creditability of the economic Statements whether or not it
represents a real and truthful view of the employer financial
statement or not

I also have the chance to work in Faisal Sharif & Co. for the period of
2 months.

Faisal Sharif & Co. provide the following services to the industry:

Assurance
Tax Consulting
Financial Consulting
Business consulting
Business Process Outsourcing

These services cover the all spheres of the business. By this the firm
provides all services under single roof. The management team is
well reputed and very experienced.

The major clients are corporate level firms, banks, manufacturing

and servicing authorities.
The definition of audit is Auditing is a way to describe that are the
financial statements of any organization give the true and fare view
of Companys position or not by telling that either the company is
using given standards or not ."

Audit under the guidance of international standards for the audit

process. In late 1970 the International Federation of Accountants
Council (IFAC) was established for the International Commission of
Audit Practice (HICP), which would be a standing committee for the
global Federation of Accountants Council and subsequently to the
Council of the International Federation accountants (May 2000
changed its name to the International Federation of accountants
Council of the Council of the International accountants Federation).

5
Between 1980 and 1991 IAPC International Auditing issued guidance
(IAG) and additions to this. Launched the first International Standard
on Auditing (ISA) in 1991 and this number has remained until today.
The steps involved in conduct of an audit are as follows:
1. First of all the management of the audit firm check the
internal control system of the client, to check the weakness
in the system and also extend of the test checking to be
applied.
2. The next step in the audit is to prepare the audit plan. In this
all the process and the scope, the no of employees
appointed, the time frame, strategy of audit, system notes,
and important points of previous and current year are
mentioned. It is the planning of all the audit work to be
conducted during the audit.
3. The next step is to check the compliance of the management
with the rules and regulations.
4. The next step is the conduct of audit according to the audit
plan. In this vouching, verification, stock take and other audit
processes are conducted according to the time frame
provided for the audit.
5. The next step is the analytical procedure in which the
material differences and variance analysis is conducted for
through checking of the matters of concern.
6. The next step is to point out the errors, frauds and mistakes
to the management of the business and get their clarification
on them.
7. After that the audit team makes the reports of the errors and
mistakes in the accounting record for the review of the
manager and the partner or owner of the firm.
8. The partner completely examines the points of concern and
then made them the part of his report. This report is
presented to the financial statements of the company.

6
 9. After the audit team makes the client file access and also his
performance in the audit and makes recommendations for
improving the process.
10. I have not been provided by the financial statements of
the firm thats why I have done the financial analysis of the
client. The following ratios are being calculated:

Table of Contents

CHAP. PAGE
CHAP. NAME.
NO. NO.
1 Introduction 8
1.1.1 About 8
1.1.2 Profile 8
1.2 Principles & values 9
1.3 Field of Activities 10
Management 11
2
Hierarchy
3 My Learning 14
3.1 Objective of Study 14
3.2 Scope of the study 15
3.3 Importance of Study 15
3.4 Limitations of Study 15
4 SWOT Analysis 16
Report of Audit 21
5
Performance
5.1 Operating results & 21
performance
5.2 Analysis of Operating 22
Results and performance
5.3 Financial Summary 23
5.4 Balance sheet analysis 24
5.5 Ratios and Ratio Analysis 26

7
 Chapter 1
1.1 Introduction:
1.1.1 About the Organization:
Faisal Sharif & Co. is a chartered accountant firm registered in 1989 under the
Chartered Accountants Ordinance, 1961. It is QCR (Quality Control Review) rated
firm and is entitled to perform audit of listed and unlisted entities. Besides audit the
firm also provide tax consultancy and perform sectorial practices.

Muhammad Younus Ghazi is the principal of the firm and engagement partner in all
audit engagements of the firm. Staff consists of trainee students (article students of
CA) and temporary students who are internees from various accounting and business
studies.

This firm is currently run by Mr. Imran Ghazi, who is the son of Mr.Younus Ghazi.
Qualification Highlights of Mr. Imran Ghazi are:

1.1.2 BRIEF PROFILE OF Faisal Sharif & Co. :

Name: Faisal Sharif & Co. CHARTERED ACOUNTANTS
Year of establishment: 2006
Owners/partners: Faisal Sharif
Address: Office no. 301, 3rd floor, land mark plaza, jail road, Lahore
Telephone: Off. 042- 35775532

Area of services
1. Audit & Assurance
2. Advisory
3. Taxation & Corporate Services
4. Sourcing
5. HR Services

1.2 Faisal Sharif & Co. Chartered Accountant Core

Principles and Values:

8
Working with Clients:

Faisal Sharif & Co. Chartered Accountants trusts that in order to

provide real value to its clients, it must have the planning to
anticipate and hold the necessary capabilities to address the
challenges appearing from the speedy changing business
environment.

The business world is becoming so competitive due to information

technology and with the improvement in Telecommunication, which
has increased the expectations of client in terms of quality and
timing of services to be provided. FAISAL SHARIF & CO. Chartered
Accountant has a clear sight about its clients aiming to provide at
best standards.

Our Vision:

To be among the leading audit, accountancy, taxation and advisory

firms providing services through ethical & professional team, in light
of correct ideology standards.

The Team:

Faisal Sharif & Co. believes that in order to deliver real value to its
clients it must have the foresight to anticipate and capabilities to
address the emerging challenges arising from globalization.

Faisal Sharif & Co. has a managing team of professional and

qualified partners and professionals fostering extensive professional
knowledge.

Internal Quality Control:

Faisal Sharif & Co. places great emphasis on quality so that our
clients receive the best possible services. Vital to this is the internal
system of quality control which helps maintain a constant level of
excellence in services.

9
1.3 Field of Activities:
Services Offered:

We follow a multidisciplinary approach considering quality control

compliance through our professional staff to ensure the best service
can be provided.

Audit and Assurance:

Assurance and Advisory are at the heart of what Faisal Sharif & Co.
firms do. Services such as audit, financial reporting and risk
management advice gives your business the stability you need to
manage effectively and achieve your objectives.

Assurance:

As a decision maker, you need to be sure you are acting on reliable

information. You need to be aware of your business risks and know
that they are managed effectively. You need faith in your underlying
systems and controls, and that you are compliant with key legal
requirements. Moreover, you need to be able to install your
shareholders, investors and customers with the same confidence.
Faisal Sharif & Co. member firms can give you the assurance you
need.

Advisory:

A Faisal Sharif & Co. member firm can help you design and improve
your systems and arrangements to meet your needs, anticipating
problems and finding their relevant solutions. It is about ensuring
that your creative ideas make sense financially.

10
 Chapter 2
Management Hierarchy

In Multan more or less 12 Accountancy firms are currently operating,

details of these firms are as follow

Audit Firms In Multan

1. Abdul Sattar & Co.

Chartered Accountants
Opp. Govt. Pilot SchoolAbdali Road, Multan-60000
Off. 4510031, 4546467 Fax. 4510031
Email: abdulsattar_fca@yahoo.com

2. Amer Haroon & Co.

Chartered Accountants
209-A, WAPDA TownBosan Road By Pass, Multan
Off. 0300-86332100, 6221607, 6521607
Email: amer9@mul.paknet.com.pk

3. Ashiq & Co.

Chartered Accountants
23-Auto Plaza,Dera Adda, Multan
Off. 6515031, 0303-6670544

11
4. Asif Niaz & Co.
Chartered Accountants
103/3K, Fiesta GardensOpp. Income Tax HouseNawaz Shehr, Multan
Off. 4511842, 0321-6326183 Fax. 4783018
Email: asifniaz2001@hotmail.com, asifniaz2004@yahoo.com

5. Faisal Sharif & Co.

Chartered Accountants
Tawakkal Autos Plaza Chowk Civil Hospital Abdali Road, Multan
Off. 4585960-61, 4518031, 8130707, 0303-7960680 Fax.4585961
Email: ghazifca@mul.paknet.com.pk

6. M. Sajid & Co.

Chartered Accountants
Room# 4-5, First floor Khawaja Center,LMQ Road, Multan
Off. 4517850, 4517950, 8132367 Fax.4517850
Email: msajidco@yahoo.com

7. M. Yousuf Adil Saleem & Co.

Chartered Accountants
Abdali Tower3rd Floor77-Abdali Road, Multan
Off. 4783979, 8060190, 4785211-13, 4511979, and 111-55-2626
Fax.4785214
Email: tjaved@deloitte.com

8. Mahboob Sheikh & Co.

Chartered Accountants
Near Auto Plaza,Dera Adda, Multan
Off. 6515248, 6589205 Fax. 6588410
Email: mahboob-ca@hotmail.com

9. Mudassar Ehtisham & Co.

Chartered Accountants
Room No. 24,25, Hajveri ArcadeKutchery Road, Multan
Off. 4500967, Fax. 4500968
Email: khalidwaqas@hotmail.com

10. Nazir Chaudhri & Co.

Chartered Accountants
Near Auto PlazaDera Adda, Multan
Off. 6515248, 6589205 Fax. 6588410
Email: mahboob-ca@hotmail.com

12
11. Talib Zafar Associates
Chartered Accountants
327-B, Gulgasht Colony., Multan
Off. 6220346, Fax. 6220346
Email: muhammadtalib@mbmtc.com, muhammadtalib@gmail.com

12. Waqas & Co.

Chartered Accountants
Room No. 24,25, Hajveri ArcadeKutchery Road, Multan
Off. 4500967, Fax. 4500968
Email: khalidwaqas@hotmail.com

13
 Chapter 3
My Learning

My internship at Faisal Sharif & Co. chartered accountants started on 24 June 2016.
The manager of the firm after meeting me on 20 June, calls me on 27 th of July to start
my internship officially. During my whole internship I reported to Mr. Faisal Sharif
(Audit manager).

I was told to join Mr. Bilal to set clients documents in closets and create a list of
closets with clients files in them alphabetically and paste codes according to lists on
closets.

I was assigned to make a financial report of Evergreen Animal Foods Pvt. Ltd.
which I complete by the end of first month. During my project at Evergreen Animal
Foods Pvt. Ltd I was assigned the responsibilities of junior trainee auditor and assisted
senior auditor (Mr. Sohail) and senior auditor (Mr. Imran Ghazi) with their workings
and operations.

For two months, I enjoyed to work in this refreshing environment where I did not
notice any difference or joint organization policies. There was no discrimination
between employees. The reason for the success of the company was that it is
remarkable company among employees

3.1 Objective of the study:

For a master's degree in business administration department asked each student to
spend at least two months at internship in a recognized organization. Students
required to work in their specialization fields.

Main purpose of this program is to make students familiar with the practical work, as
there is great difference between what they have learnt during their master program
and how job is practically done.

Another aspect of the internship program is a student, who is placed in most

departments through job rotation in the organization. It provides a view of each
department, and this period is too short to learn in detail.

14
3.2 Scope of the study:
It is compulsory requirement for the Masters Degree for Business Administration. It
will help the present and prospective students of the department in making
assignments and writing reports on the Audit firms

It can also provide help to Audit firm management in identifying their Strengths,
Opportunities, Weaknesses and Threats.

It can also provide help to students seeking financial data for analysis.

3.3 Importance of study:

Accountancy firm play a central and important role in the economic life of a country,
thats why they are considered as the lifeblood of modern economy. Today nobody
can refuse the importance of Accountancy firm. They facilitate and expedite trade and
commerce and provide variety of services that one cant imagine without
Accountancy firm.

3.4 Limitation of the Report:

There were however some limitations and that is the two months durations of
internship are nothing to gain entire knowledge of Accountancy firm. Moreover the
Accountancy firm does not share the data particularly about the rightsizing of
employees due to various reasons, so the reader must also keep this in mind.

15
 Chapter 4
SWOT ANALYSIS:

SWOT analysis is a completely valuable tool to judge the placement

of an organization inside a given surroundings. It facilitates to
determine that what's going to be the reaction and techniques of
the business enterprise upon facing sure internal and external
environmental stimuli. As a whole, this analysis best captures the
photograph of the business enterprise within a given context. I have
completed the following SWOT analysis, based totally by myself
remark at some stage in my internship application.

1. Strength:
Following are the organization's main strengths.

Good Governance and Policies:

The proprietors of this employer lead the organization through
suitable governance. They provide proper steerage to every
member of the business enterprise. There is no verbal exchange
gap between the workers and the owners. Even a worker from
the lowest stage of the enterprise can come to the owner(s) and
may tell his trouble or provide a few pointers for improving some
vicinity. Once within the month of July, a sizer was hired for the
weaving unit. He faced troubles at the same time as doing his
job. Even though he become exceeded via the path session but
he changed into no longer happy with the kind of process he was
requested to do. He came immediately to the director for
weaving and defined his problem. The director endorsed him and
positioned him in every other department of the weaving unit in
which he can be satisfied. He additionally visited the employee,
afterward, to look that whether or not he was happy at his task.
Now, the worker could also visit the Foreman, or workplace
manager or Mill Manger or any other supervisor however the
culture of the company enabled him to go immediately to the

16
director and provide an explanation for his problem. So there's no
verbal exchange hole between people and executives.
Furthermore the policies of the proprietors are correct and well
timed. They take correct and well-timed selections to help
employer keep pace with the converting surroundings. Recently
they've got ISO 9002 certificate for their ROOMI companies. Even
though it is very small employer but the proprietors have
determined it necessary to get it ISO 9002 certified to hold their
compliance with the current traits.

The owners of the organization additionally have a completely

sturdy manage on the operations of the agency. Even a invoice of
tea or ballpoints is first passed via the director after which they're
bought and used. The owners additionally exert a good manage
on the running and conduct of the personnel. The way of life of
the corporation as defined earlier than is very tough running and
rule oriented. So the proprietors have maintained one of these
manage that no person is ever seen sitting idle and having a talk
with a person.

Team Work:
Groups are actually replacing the conventional organizational
hierarchy because of their many benefits. Theyre no longer
threatened to alternate, encourage progressive ideas, foster
social courting and clear up troubles unexpectedly. In Evergreen
Animal Foods Pvt. Ltd fabric turbines, teamwork is preferred.
Teams output and no longer is man or woman output taken into
consideration. Humans paintings carefully with one another,
remedy issues together and provide new and modern thoughts to
the control. The teams are made inside the departments.
Participants of the crew tolerate one

Some other's errors and faults. Within the head office, every time
a few new man or woman is employed, he is made the member
of the team and through this, he learns the task and brings in

17
him continuous enhancements to adapt himself with the lifestyle
of the company.

Communication between Units:

Evergreen Animal Foods Pvt. Ltd fabric mills have 4 spinning
gadgets and one weaving unit. There may be loose conversation
among those five gadgets. The workplace supervisor of, say,
weaving unit is absolutely privy to the manufacturing and stock
of yam in those units and efficiency of those spinning units. The
workplace control gets diverse reviews approximately output and
stock of yam from the spinning units via faxes, and thru daily
mail. That is very a great deal necessary for a complete-
incorporated company.

In addition, he keeps non-stop touch with the managers of the

spinning devices thru phone. The pinnacle workplace of the
organization additionally has a robust contact with the five units.
All the managers within the export, purchase, audit, account and
import departments have a non-stop contact with the managers
of the manufacturing units regarding stock inventory out,
purchase requirement, dispatch and lots of different activities.

So this sort of communication binds the business enterprise

collectively and is a wonderful power for the company.

Healthy Resources:
The company has a certified capital of 150,000,000 rupees which
is a great strength for the business enterprise. The agency isn't
underneath strain of lenders. The current ratio of the origination
for the year 1999 is 0.89 which is ideal. Similarly, the enterprise
has very highly-priced and modern day plant life

Available of their numerous spinning and weaving units. In

spinning units, all the plant is completely automated and
automated. This permits the agency to hold employees energy at
a low degree. All the employees need to do is to take readings

18
from various machines working there. So modern machinery is
also employer's energy.

Product Quality:
First-class is important energy of the employer. Due to brand new
plants and gadget established, company is able to offer the
neighborhood and foreign clients, splendid quality. The level of
high-quality may be judged from the truth that among the entire
textile generators working in Multan, Evergreen Animal Foods
Pvt. Ltd Mill have high costs of its products (each yarn and gray
material) because of superior nice compared to other fabric mills.
This fine has now not handiest been evolved thru putting in ultra-
modern or modem gadget however this has happened thru
company's sturdy subculture in which people and the managers
are fully committed to great. They placed their high-quality
efforts to beautify the great in their products.

Direct Contact with the Buyers:

Direct touch with the overseas shoppers is an awful lot valuable
than contact through buying and selling homes. Evergreen
Animal Foods Pvt. Ltd fabric Mill's foremost exports are thru
direct touch with the customers. This has enabled the employer
to expand and hold strong relationships with the consumers and
relaxed big orders.

Low workers strength:

In comparison with different fabric generators, Evergreen Animal
Foods Pvt. Ltd fabric mills have relatively low employees
electricity. However notwithstanding this the productiveness of
the mill is better than other generators. The great of the products
is also higher than other turbines. For this reason all of the
personnel in the company are being optimally applied.

2. WEAKNESSES:
As far as the perspectives of the overall manager Finance are
concerned, he reveals no weak spot within the enterprise.

19
However to my point of view, organization is unable to provide its
center managers great profits. Center managers in each unit
bitch approximately their profits. There may be a hell of
distinction among salary of the mill manager or fashionable
supervisor and the workplace supervisor or senior accountant or
chief accountant. Blessings offered to the overall managers are
accurate however the benefits provided to middle managers
aren't at all first-class. Plainly the center managers are most
effective operating inside the company due to the commonplace
price of unemployment and poor monetary situations in our
country.

3. OPPORTUNITIES:
Current Markets:
Currently, majority of the organization exports are in Japan, Korea
and Hong Kong. There is a possibility to increase similarly in
those markets. This opportunity has been given to the employer
via its merchandise best and on- time delivery. Jap is especially
quality aware human beings and may don't tolerate any loophole
inside the best. Moreover additionally they cost on time shipping
of the product. Evergreen Animal Foods Pvt. Ltd fabric mills have
the ability to offer superior satisfactory and brief transport and
this capacity offers the enterprise opportunity to make bigger
within the foreign marketplace.

New Markets:
In addition to these nations, super possibility lies in the Middle
East countries. Those countries have markets with super capacity
and capability to pay first-class top class. Business enterprise has
currently started out to make the most those possibilities. In July
numerous orders had been fulfilled from Bahrain.

20
 4. Threats
Government Policies and Interference
No region in our country is satisfied with the authoritys policies
and guidelines and policies. Fabric quarter is likewise unsatisfied
with the governmental guidelines and regulations. Each year,
government officials make regulations and impose such policies and
regulations that tend to avert the overall performance of fabric
enterprise. So authoritys rules are a major threat to the agency.

Recently authorities have made a rule according to which each

fabric mill has to give 40% dividend from the profit. This makes a
completely massive amount. This rule is to be carried out from
cutting-edge year. Corporations with low monetary energy and
vulnerable sources will find it very tough to show their compliance
with this regulation.

Moreover government has surpassed every other rule in line with

which a fabric mill has to provide 10% tax on its reserves. That is
also a chance for the company. So authoritys policies, rules and law
are a continuous and ongoing danger to Evergreen Animal Foods
Pvt. Ltd generators and different corporations, specially the
organizations with low financial electricity

Non Availability of Raw Material:

This is every other threat. This year cotton quotes are very
excessive. In some regions cotton is being offered at 1100/40 kg.
That is very higher rate as compared to the preceding 12
months price of virtually 500/40 kg. The price is high because of
shortage of cotton in the United States. Therefore cotton is not to
be had at affordable fees. Furthermore government has
additionally now not completed any element to make available to
the fabric enterprise, the raw cotton at a reasonable fee.

21
 Chapter 5
Report of Audit Performance

5.1 Operating Results and performance:

Description June30, June 30, June 30, June 30, June 30,
2014 2013 2012 2011 2010

Sales Rupees

Local 2,413,020,471 2,307,474,059 2,675,387,417 2,802,379,474 -

Export 13,062,201,813 11,918,032,353 11,470,146,243 12,295,957,778 -

Total sales 15,475,222,284 14,225,506,412 14,145,533,660 15,098,337,252 8,135,551,381

Gross profit 1,359,444,562 1,936,139,072 1,656,421,510 2,227,526,901 1,507,128,176

PBT 474,636,964 817,722,335 632,675,377 1,275,196,405 933,129,406

PAT 471,699,841 668,925,394 474,653,358 1,122,773,617 578,199,790

Retained
earnings 4,141,302,955 3,819,603,114 3,450,677,720 3,065,369,362 2,092,685,811

Earnings
per share 31.45 44.60 31.64 74.90 38.55

22
 5.2 Analysis of Operating Results and performance:

If we look at the company position from 2010 to 2014, data show that in 2010 when
total sale were 8,135,551,381, company was in good financial position but as the next
year starts in 2011 financial figures show a tremendous increase in its figures almost
sales increased by 85% in 2011 as compared to 2010. With the coming years
company show a satisfactory progress in sales but never exceeds the sales that were in
2011, only increased by 6.3 %. While only of .5% increase in 2013 and of 8.07%
increase in sales occur in 2014.

If we look at Earing per share there was great change in EPS from 2010 till 2014, as it
was 38.55 in 2010 and reached to its maximum level 74.90 of in 2011 that was almost
double of EPS in 2010 but then EPS fall in 2012 and again increase in 2013 and then
again in 2014 it fall to 31.45, the main reason of this up and down ward trend of EPS
is due to different economic factors and threat of terrorism, energy crises arose in
country.

Year 2014 2013 2012 2011 2010

% change in EPS -29.5% 37.41% 57.76% 94.29% -

From the past five years if we look at the retained earnings of the Mahmood Textile
we came to know that retained earnings is increasing from past five years 2010 it was
2,092,685,811 which increase till 2014 and came up to 4,141,302,955 which almost of
50% that was retained earnings in 2010, if we look at increase with % in each year
from 2010 to 2014 we have a situation like following:

2014 2013 2012 2011 2010

Rt. 4,141,302,955 3,819,603,114 3,450,677,720 3,065,369,362 2,092,685,811
Earnings
% increase 8.43% 10.7% 12.56% 46.48% ----

23
 5.3 Financial Summary SIX YEARS REVIEW AT A GLANCE

Rupees in Million
2014 2013 2012 2011 2010 2009

ASSETS :
3,035 3,057 2,426 2,298 1,774 1,632
FIXED ASSETS

1,212 1,074 921 839 562 338

LONG TERM INVESTMENTS

9 8 44 42 7 7
LONG TERM DEPOSITS

4,866 5,046 3,566 3,560 2,672 2,441

CURRENT ASSETS

TOTAL ASSETS 9,122 9,185 6,957 6,739 5,015 4,418

FINANCED BY:
4,449 4,127 3,608 3,283 2,250 1,711
EQUITY

LONG TERM LIABILITIES 1,040 1,144 830 987 689 595

DEFFERED LIABILITIES 115 115 115 115 120 140

CURRENT LIABILITIES
3,518 3,799 2,404 2,354 1,956 1,972

TOTAL FUNDS INVESTED 9,122 9,185 6,957 6,739 5,015 4,418

PROFIT AND LOSS:

SALES NET 15,475 14,226 14,146 15,098 8,136 6,811

OPERATING PROFIT 888 1,127 1,012 1,604 933 523

PROFIT BEFORE 475 818 633 1,275 646 190

TAXATION
472 669 475 1,123 578 103
PROFIT AFTER TAXATION
100% 100% 100% 100% 60% 40%
CASH DIVIDENDS
4,291 3,970 3,451 3,126 2,093 1,604
PROFIT C/F

24
5.4 Balance sheet analysis:

When we see at financial figures of last 6 years we came to know the financial
position of company from 2009, in the first glance it appears that company is going in
profit and in=s in good condition as when we look at fixed assets they are
continuously increasing from 2009 till 2014 which are showing that company is going
in good condition and their Assets are increasing, if we further penetrates in the assets
we see that fixed assets are continuously increasing in worth from 2009 to 2014 this
shows that company is doing well we see the trend of increase in fixed asset over the
six year we have a situation like that , in 2009 company has assets of worth 1,632M
which increased to 1,774M in 2010 showing the increase of 8.01% i.e. companys
fixed assets in 2010 increased by 8.01%, in 2011 by 23%, in 2012 by 5.27%, in 2013
by 20.64% and by .72% in 2014.

When we see total asset that are reported till 2014 company shows that total assets are
increasing but we cannot say that as assets are increasing so company is in good
condition because these assets are increasing on the cost of many other things like
notes payable, loans, long term and short term liabilities so one cannot says that if
assets are increasing that defiantly its a good condition for company there are other
things too that have it be kept in mind to find out whether company is in good
condition or not.

Percentage change in total assets from 2009 to 2014 is highlighted in table

Year 2014 2013 2012 2011 2010 2009

Total Assets 9,122 9,185 6,957 6,739 5,015 4,418
%age change -0.68% 32.02% 3.23% 39.02% 13.51% --

If we analyze equity and liability section of Balance sheet then we came to know that
from which Circumstances Company is going through, how their assets keep
increasing from 2009 to 2014.

Firstly there in Equity if we see , in 2009 company has equity of 1,711M which
increase to 2,250M that is %age change of about 31.50% but for the same time period
if we look at long term and short term liabilities we came to know that long term
liabilities increased by 15.80% and short term liabilities in decreased by 0.81% this

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situation shows that company in increasing its assets on the cost of its long term
liabilities and offsetting some portion of its current liabilities we can say that this time
period was good for company when they are generating their assets along with long
term liabilities and paying its current liabilities that is increasing its liquidity for
current year. Company has maximum percentage increase in its current liabilities in
2013 that of 58.02% from the previous year.

If we draw %age changes in liabilities of firm with equity along with its equity from
2009 to 2014 we have situation like:

%age Change in 2014 2013 2012 2011 2010 2009

Equity 7.80% 14.38% 9.89% 45.91% 31.50% --
Long term Liabilities -9.09% 37.82% -15.90% 43.25% 43.25% --
Current Liabilities -7.39% 58.02% 2.12% 20.34% -81% --

If we see the figures then 2011 is the year when equity was increased by maximum
percentage share from the previous year that is showing that company has major
increased in its equity but for the same year long term liabilities and short term
liabilities are also increasing by large numbers thus we cannot state that 2011 is good
year for company when they were showing maximum percentage change in its equity
because along this liabilities are also increasing that is an alarming situation for
company because if company keeps on increasing its liabilities then one day these
became burden for it that became difficult to off set .

2013 is the year where companys current liabilities are increased by maximum
change of 58.02% . we can say that 2014 is good for company because in 2014 equity
of company is increasing by 7.80% while liabilities have negative changes which is
showing that company is decreasing its liabilities both long term as well as short term.

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 5.5 Ratios and Ratio Analysis:

Financial statements give the over view of firms position today from the past on
events of some time. These values of financial statement helps to find out about the
current worth of firm and also help to predicts about firms future i.e. dividends and
earnings in future. From an investors point of view; predicting the future is what
monetary statement analysis is all approximately, whilst from controls point of view;
financial announcement analysis is beneficial each to help count on future conditions
and, extra critical, as a place to begin for planning moves in order to enhance the
firms future performance.

Liquid Ratios
Ratios that display the connection of a companys cash and different modern property
to its contemporary liabilities. This deals with liquid assets of firm; liquid asset is one
that trades in a marketplace and for this reason may be fast converted to coins at the
going marketplace price, and a firms liquidity role deals with this query: Will the
company be capable of repay its debts as they come due over the following year or so.

Current Ratio:
This ratio is calculated by way of dividing contemporary belongings by means of
modern liabilities.

Current ratio = Current assets\Current liabilities

Current ratios for the company from 2009 to 2014 is given as,

Year 2014 2013 2012 2011 2010 2009

Current ratio 1.38 1.32 1.48 1.51 1.36 1.23

Comments:

If we look at current ratio trend of company of last 6 years if see that ration is
decreasing after 2011, If an organization is getting into financial problem, it begins
paying its bills payable greater slowly, borrowing from its financial institution. If
current liabilities are rising faster than current assets, the current ratio will fall, and
this can spell problem because the current ratio offers the high-quality unmarried

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indicator of the quantity to which the claims of quick-term creditors are blanketed by
way of property that are anticipated to be transformed to cash fairly quickly, it's far
the most usually used measure of short-time period solvency.

The Days Sales Outstanding (DSO):

This shows common series duration of firm, the DSO represents the
common duration of time that the firm should wait after creating a sale
earlier than receiving cash.

Receivables Receivables
DSO = Average sales per day = Annual sales/365

Year 2014 2013 2012 2011 2010

DSO 1.56 1.81 3.96 2.64 4.03

Comments:

Average collection period of a firm defines that how effectively and efficiently a firm
is collecting or receiving its receivables it is the time (days) that any company has to
wait to collect the cash after making a sale. If the credit policy of a firm is tight than
DSO would be minimum that every firm want. Management always trying to get its
receivables as soon as possible.

In this table if we see , we came to know that in 2010 the DSO position of firm is not
good enough as this ratio is very high but in next year it came down , this shows that
management striving to get this ratio to minimum level. As we see in 2014 this ratio
came to very low as compared to previous years which is showing that company in
collection is receivables very effectively.

The Total Assets Turnover Ratio:

The very last asset control ratio, the whole assets turnover ratio, measures the
turnover of the complete firms belongings; it's calculated by dividing sales by using
total belongings

Sales
Total assets turnover ratio = Total assets

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 Year 2014 2013 2012 2011 2010
Total asset turnover 1.70 1.54 2.03 2.24 1.62

Comments:

Asset turn shows that to which extent a company is using its assets to generate its
sales, higher the ratio higher the performance of firm with respect to that they are
using their current assets to convert them in to sales. Ratio was high during 2011,
2012 but then came down due to number of problems company face in coming years.

Profit Margin on Sales:

This ratio measures net profits consistent with dollar of income; it's calculated via
dividing net income through sales.

Net income available

Profit margin on sales = common stockholders
Sales

Year 2014 2013 2012 2011 2010

Profit Margin on 0.30 0.04 0.03 0.07 0.07
Sale
Comments:
This ratio also indirectly measures how nicely a business enterprise manages its
expenses relative to its net sales. That is why corporations try to achieve higher ratios.
They can do this through either producing more revenues why retaining costs constant
or hold revenues steady and lower expenses. We see the earnings margin of
organization is growing and reached to 0.30 in 2014 this is showing a good condition
for agency.

Basic Earning Power (BEP):

This ratio shows the ability of the firms assets to generate operating profits;
calculated via dividing EBIT by using overall belongings.

EBIT
Basic earning power ratio (BEP) = total assets

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 Year 2014 2013 2012 2011 2010
BEP 0.05 0.08 0.09 0.18 0.12

Comments:

This ratio indicates the raw earning strength of the companys assets, before the
influence of taxes and leverage, and it is useful for comparing corporations with
extraordinary tax conditions and unique degrees of financial leverage. Because of its
low turnover ratios and occasional profit margin on income.

Return on Total Assets:

The ratio of net profits to total assets measures the return on total belongings (ROA)
after interest and taxes.

Net income available

Return on total assets = ROA = common stockholders
Total assets

Year 2014 2013 2012 2011 2010

ROA 0.05 0.07 0.06 0.16 0.11

Comments:

The extra an agency's income in proportion to its assets the more efficiently that
organization is said to be the usage of its belongings. The ROA offers investors an
idea of the way successfully the organization is converting the money it has to invest
into net profits. The higher the ROA quantity, the higher, due to the fact the
organization is earning extra cash on less investment. For the Mahmood fabric ROA is
lowering with appreciate to its fee inside the previous years. ROA fall from 0.11 to
0.05 that is almost 55% trade from 2010.

Gross Profit Margin:

Gross profit
Gross Profit Margin = Sales

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 Year 2014 2013 2012 2011 2010
G.P Margin 0.87 0.13 0.11 0.15 0.18
Comments:

A high gross income margin is one of the first-rate signs that an organization is in
good financial health. It is the ratio of gross profit in a given length to revenue, and it
is used as a measure of profitability. An excessive gross income margin indicates
business enterprise is efficient inside the production and distribution techniques. If we
see the figures, those are increasing for the reason that 2012 that conveys that
organization is in good role in 2014.

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