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Abdul Basit 073605-041

Sher Jan 073605-047


Jawad Ahmed 073605-051
Hassan Tahir 073605-050
BALANCE SHEET DG CEMENT

2009 2008
EQUITY AND LIABILITIES (Rupees in thousand)

CAPITAL AND RESERVES


Authorised capital
950,000,000 (2008: 950,000,000) ordinary shares of Rs 10 each 9,500,000 9,500,000
50,000,000 (2008: 50,000,000) preference shares of Rs 10 each 500,000 500,000
10,000,000 10,000,000
Issued, subscribed and paid up capital 3,042,494 2,535,412
Reserves 17,401,220 27,595,698
Accumulated (loss) / profit 474,728 -50,853
20,918,442 30,080,257
NON-CURRENT LIABILITIES
Long term finances 4,375,837 8,411,051
Liabilities against assets subject to finance lease - -
Long term deposits 73,765 73,890
Retirement and other benefits 78,622 54,018
Deferred taxation 1,441,576 1,319,000
5,969,800 9,857,959

CURRENT LIABILITIES
Trade and other payables 1,435,420 1,370,336
Accrued markup 531,772 364,664
Short term borrowing - secured 9,068,575 7,597,020
Current portion of non - current liabilities 4,763,942 2,687,608
Provision for taxation 35,090 35,090
15,834,799 12,054,718

CONTINGENCIES AND COMMITMENTS

42,723,041 51,992,934
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment 24,345,793 22,977,894
Assets subject to finance lease - 5,135
Capital work in progress 1,750,208 2,488,307
Investments 3,172,508 6,795,961
Long term loans, advances and deposits 166,940 523,046
29,435,449 32,790,343
CURRENT ASSETS
Stores, spares and loose tools 2,935,880 2,299,250
Stock-in-trade 899,836 445,856
Trade debts 513,966 366,173
Investments 7,785,968 15,082,582
Advances, deposits, prepayments and other receivables 908,100 782,358
Cash and bank balances 243,842 226,372
13,287,592 19,202,591

42,723,041 51,992,934

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2008

Notes 2009 2008


(Rupees in thousand)
Sales - net 18,038,209 12,445,996
Cost of sales 29 -12,358,479 -10,530,723
Gross profit 5,679,730 1,915,273
Administrative expenses 30 -141,852 -111,658
Selling and distribution expenses -1,871,517 -561,465
Other operating expenses -795,854 -581,913
Other operating income 770,137 847,344
Impairment on investment -257,386 -
Profit from operations 3,383,258 1,507,581
Finance cost -2,606,358 -1,749,837
Share of loss of associated companies - -8,674
(Loss) / profit before tax 776,900 -250,930
Taxation -251,319 197,700
(Loss) / profit for the year 525,581 -53,230

(Loss) / earnings per share - basic and diluted 1.96 -0.21


Market Price per share 29.58 -
Book value 10 -
29
Cost of sales 2009
Raw and packing materials consumed 1,527,430
Salaries, wages and other benefits 641,408
Electricity and gas 1,427,631
Furnace oil/coal 6,603,908
Stores and spares consumed 879,772
Repair and maintenance 131,911
Insurance 45,573
Depreciation on property, plant and equipment 1,354,851
Depreciation on assets subject to finance lease 80
Royalty 86,514
Excise duty 30,023
Vehicle running 18,208
Postage, telephone and telegram 4,188
Printing and stationery 8,149
Legal and professional charges 2,856
Traveling and conveyance 6,297
Estate development 10,285
Rent, rates and taxes 7,731
Freight charges 5,600
Other expenses 16,150
12,808,565

30
Administrative expenses 2009
Salaries, wages and other benefits 73,858
Electricity, gas and water 3,482
Repair and maintenance 6,753
Insurance 1,707
Depreciation on property, plant and equipment 12,679
Depreciation on assets subject to finance lease 9
Vehicle running 4,259
Postage, telephone and telegram 3,353
Printing and stationery 3,423
Legal and professional charges 8,014
Traveling and conveyance 5,289
Rent, rates and taxes 185
Entertainment 1,441
School expenses 9,790
Fee and subscription 3,818
Other expenses 3,792
141,852
Deprecation 1,367,619
Liquidity ratios:
Current Ratio = Current assets / current liabilities = 0.84 Times
Analysis:
Company ability to pay off its short term debts is not good. Its current ratio is .8391 times. And this should be
more than 1 time or equal to 1. And Lucky cement has also low current ratio but this current ratio is batter than
DG cement current ratio. its current ratio is .85 times. it indicates that Lucky cement is more able to pay off its
shorts term debts compare to DG cement.

Assets utilization ratios:


Inventory turnover ratio = Cost of goods sold or sales / Inventory = 13.73 Times
Analysis:
Inventory turnover ratio is 13.73 times in a year. Means that DG cement is purchasing approximately 14 times
inventory in a year. And Lucky cement purchasing 18.51 times. So we can say Lucky cement doing more
sales than DG cement.

A/R sales outstanding ratios = A/R / Credit sales/365 = 18.38 Days


Analysis:
It means DG cement is receiving its account receivable with in 18 day. So it’s very effective. But might be
possible due to this collection rate they are loosing their customers. Lucky cement average collection period is
19.04 day which is not effective like DG cement. But we can expect that they are not loosing their customers
because they are also doing more credit sales.

Fix assets turnover ratio = Sales / Net fixed assets = 0.74 Times
Analysis:
This ratio measures how effective firm is utilizing its fix assets. And role of fix assets to support sales. Fix
assets turnover ratio for DG cement is .074 times and for Lucky cement is .61 times. So we can conclude that
Lucky Cement is utilizing its fix assets effectively compare to DG cement.

Total assets ratio = Sales / Total assets = 0.42 Times


Analysis:
This ratio measures how effective firm is utilizing its total assets. And role of total assets to support sales.
Lucky cement is utilizing its total assets effectively as compare to DG cement. Because total assets ratio for
DG cement is 0.42 times. And for Lucky cement this ratio is .48 times. Which is more than DG cement.

Debt utilization ratio = Debt / Assets = 51.04%


Analysis:
Debt ratio is 51%. It means company 51% financing is through debts. And for Lucky cement this ratio is 63%.
This is not batter as compare to DG cement. So we can say DG cement is in batter condition.

Times interest earned ratio = EBIT / Interest expense = 1.30 Times


Analysis:
It indicates firm ability to cover its interest expense. This is 1.29 times for DG cement. And for Lucky cement it
is 3.58 times. So we can conclude that Lucky cement is more capable to cover its interest expenses compare
to DG cement.
EBIT coverage ratio = EBIT+ Deprecation amortization+ Lease payments / interest+ Principal
payments+ lease payments

= 1.07 Times
Analysis:
For DG cement this ratio is 1.07 times. And for lucky cement this is 1.56 times. So we can say that Lucky
cement is more capable to cover their interest and taxes.

Profit ability ratios:


Profit margin = Net income / Sales = 2.91%
Analysis:
For DG cement profit margin is 2.91%. And for lucky cement profit margin is 20%. we can say that Lucky
cement has high profit margin compare to DG cement. And Lucky cement is earning more profit at its per unit
sale.

Basic earning power = EBIT / Total assets = 7.92%


Analysis:
It tells us raw earning power of firm assets before tax and interest. This ratio for DG cement is 7.91%. And for
Lucky cement is 11.9%. So we can see DG cement has Less operating profit than Lucky cement.

Return on assets = Net income / Total assets = 1.23%


Analysis:
It shows that how much company has earned on its assets. So this ratio for DG cement is 1.23%. And for
lucky cement is 9.9%. So we can say DG cement is utilizing its assets with batter manner compare to Lucky
cement.

Return on equity = Net income / Equity = 4.19%


Analysis:
This ratio is very important for the investor point view. This ratio shows that how much return investor is
gaining over their investments. For DG cement this return is 4.19% and for Lucky cement return is 27.2%. So
we can say share holder of lucky cement will be more satisfied than DG cement.

DU point ratio = Net income / Sales * Sales / Total assets * Total assets / common equity
= 4.19%
Market value ratios:
P/E ratio = Market price per share / EPS = 15.09 Times
Analysis:
P/E shows that how much investors are willing to pay per rupee of reported profit. This ratio for DG cement is
15.09 times and for Lucky cement this ratio is 13.13 times. So we can say lucky cement is more risky than DG
cement.
Market to book ratio = Market price per share / Book value per share = 2.96 Times
Analysis:
This ratio shows that how much more money stock holders are willing to pay than their accounting book value.
This ratio for DG cement is 2.95 and for Lucky cement is 3.57 times. So we can Lucky cement is standing at
strong position compare to DG cement. And customers are giving more regard to Lucky cement than DG
cement.

Conclusion:

According to the Ratio analysis we should not invest in DG Cement because liquidity ratio for DG cement is
low compare to lucky cement. And other thing is that we can generate more profit by investing in Lucky
cement. Because ROE ratio of DG cement is low as compare to lucky cement. And market to book ratio of
lucky cement is also high compare to DG cement. And at the base of this ratio we can say that customers are
giving more regard to Lucky cement over DG cement. Basic earning power of DG cement also low compare to
Lucky cement. It means DG cement is not utilizing its assets with batter manner. We can say its operations
are also not well. Lucky cement profit margin is high as compare to Dg cement so we are now able to
conclude that Lucky cement has stronger position than DG cement.
We are using lucky cement ratios for bench marking to analyze the position of DG cement. And those
ratios are given blow.

Ratios names Ratios figures


Current ratio .85 times
Inventory turn over ratio 18.51 times
Average collection period 19.04
Fix assets turn over .616 times
Total asset turnover ratio .48 times
Debt ratio 63.60%
Time interest earned 3.59 times
Profit margin 20.30%
Basic earning power 11.90%
Return on assets 9.90%
Return on equity 27.20%
P/E ratio 13.13times
Market book value ratio 3.57 times
EBIT coverage ratio 1.56 times