Analysis of Financial Statements

Final Project

BS-BA 6th

Submitted by:
Saqib Liaqat

Registration No.
04151713051

Submitted to:
Dr. Ibrahim khan
 National Foods Limited

5 years balance sheets of NATF (2014-2018)

Years. 2018. 2017. 2016. 2015. 2014

ASSETS

Non-current assets

Property, plant 4,150,606 3,049,019 1097030 1518286 1239996

and equipment

Intangibles 85,652. 85,564 61295 39089 36128

Long term investment 31,719 31,719 31719 31719 31719

Long term deposits 40,473 33,612 30979 34768 22125

Total Fixed assets. 4,308,450 3,199,914 2121032 1823862 1329168

Current assets

Stores, spare parts. 41,880 10,880 6605 5897 5534

and loose tools

Stock-in-trade 3,072,291 3,008,831 3250375 2254723. 2226562

Trade debts 889,385 1,273,8260 1000468 1150666 796624

Advances 102,144 209,476 95455 50404. 52307

Trade deposits 36,863 13,779 38068. 29736 18076

and prepayments

Other receivables 5,764 70,982 6272 13452 13375

Sales tax refundable 121,424 40,633 - 389245 461585

Cash and bank balances 229,728 90,288 56979 37041 78418

Total CA 4,499,479 4,718,695 4454221 3931164 3652481

TOTAL ASSETS 8,807,929 7,918,609 6575253 5555026 4982449

EQUITY AND LIABILITIES:

Shareholders' equity

Share capital and reserves

Authorised capital 1,000,000 750,000.
200,000,000 (30 June 2017: 150,000,000) ordinary shares of Rs. 5 each

Share capital 518,034 518,034. 518034 518034 518034

Issued, subscribed and paid-up capital

Revenue reserve

Unappropriated profit 3,140,259 2,661,655 1965738 2238854 1689884

Shareholders' equity 3,658,293 3,179,689 2483772 2756888 2207918

Non-current liabilities

LT liabilities - secured -- 141,794

Deferred taxation - net 117,010 142,393. 80934 93414 114920

Deferred liabilities 42,366 6,023 13434 19495 29735

Total non-CL 159,376 290,210. 94560 112909. 144655

Current liabilities

Trade and other payables 2,330,786 2,364,134 1960435 1672683 1372410

Unclaimed dividend 18,323 10,471 -- -- --

Mark-up accrued 14,766 8,691 8974 2520 11341

Short-term borrowings-secured 2,148,720 1,549,528 1311326 384094 953789

Long term finance

classied as current - secured 193,152 -- -- -- --

Taxation - net 284,513 515,886 93457 141453 168004

Total 4,990,260 4,448,710 3996313 2685229 2629876

Total Liabilities 5,149,636 4,738,920 4091481 2796138 2797880

Commitments 21

TOTAL EQUITY AND LIABILITIES 8,807,929 7,918,609 6575253 5555026 4982449

Income statements of NATF for 5 years (2018-2014)

Years 2018 2017 2016 2015 2014

Sales 16,178,301 14,767,390 13183185 11581436 9725268

Cost of sales (10,614,639) (9,910,728 ) (8937467) (7541804) (6316132)

Gross profit 5,563,662 4,856,662 4245718 4039632 3409126

Distribution costs (3,468,766) (2,940,098) (2518731) (2102512) (1921722

Administrative expenses (767,127) (515,662 ) (505866) (458844) 355675

Other expenses (210,531) (101,661 ) (97681) (120719) 83033

Other income 53,920 82,344 55850 111965 71148

Operating profit 1,171,158 1,381,585 1179291 1469522 1119844

Finance costs (108,388) (68,567 ) (67338) (37269) (87513)

Profit before taxation 1,062,770 1,313,018 1111953 1432353 1032331

Taxation - net (116,164) (328,121 ) (338277) (438690) (323839)

Profit after tax 946,606 984,897 773676 993563 708492

Other comprehensive income (Items that will not be reclassified to profit and loss account) :

Remeasurements of
retirement benefit liability (37,491) (5,530 ) (14712) (41148) (6461)

Related deferred tax thereon 9,818 1,469 3989 10982 1911

(27,673) (4,061 ) (10723) (30166) 3550

Total comprehensive 918,933 980,836 762953 963397 704942

income for the year
5 year cash flow statement values( 2018-2014)

Years 2018 2017 2016 2015 2014

Cash received from customers 21,685,050 16,382,637 13,709,694 11,416,540 9,580,403

Cash paid for goods & services (19,808,411) (14,463,131) (12,908,168 ) (9,742,647) (8,763,322 )

Cash generated from operations 1,876,639 1,919,506 801,526 1,673,893 817,081

Financial cost paid (181,164 ) (102,522 ) (82,689 ) (53,490 ) (101,683 )

Net increase in LT deposite (6,716) (3,209 ) 3,789. (12,643 ) (10,429 )

Deferred rent 17,596. 1,898. - - - - - -

Retirement benefit obligation (6,023 ) (17,881 ) (23,876 ) (61,382 ) (3,811 )

Income tax refund / (paid) (389,804 ) (372,357 ) (208,625 ) (132,640 ) (151,202 )

Net cash flow from 1,310,528 1,425,435 490,125 1,413,738 549,956

operating activities

Purchase of property, (1,657,468 ) (1,299,100 ) (684,088 ) (467,793 ) (346,618 )

plant & equipment

Purchase of intangible assets (42,031 ) (96,948 ) (46,958 ) (22,740 ) (21,212 )

Sale proceeds from 23,176 22402 21,767 29,988 7,761

disposal of property, plant and equipment

Sale proceeds of open - - - - 546,048 884,555 50,000

ended mutual fund units

Purchased of open - - - - (150,000 ) (777,988 ) (150,000 )

ended mutual fund units

Acquisition of subsidiary. - - (182,429 ) - - - - - -

Purchase of treasury bills - - - - (147,810 ) - - - -

Proceeds from sale of treasury bills - - - - 148,731 - - - -

Net cash flow from (1,676,323) (1,556,075) (312,310 ) (353,978) (460,069)

investing activities

Proceeds from ST borrowings 288,000 1,262,000 1,000,000 508,696 550,000

Proceeds from long term finance 325,290 289,613 - - - - - -

Repayment of ST borrowings - - (1,100,000) (700,000) (808,722) (980,000)

Decrease in long term financing-net (55,416) - - - - - - - -

Deferred consideration paid (126,531 ) - - - - - - - -

Dividend paid (432,477) (284,158) (1,031,839). (412,814) (166,781)

Net cash flow from financing activities (1,134 ) 167,455 (731,839 ) (712,840) (596,781)

Net cash flows (366,929) 36,815 (554,024) 346,920 (506,894)

Common size analysis of Income statements (2018-2014)

INCOME STATEMENT

Year 2018 2017 2016 2015 2014

Sales 100.00% 100.00% 100.00% 100.00% 100.00%

Cost of Sales 68.95% 67.69% 66.87% 64.64% 64.95%

Gross Profit 31.05% 32.60% 33.13% 35.36% 35.05%

Administration 4.23% 3.10% 3.85% 4.04% 3.88%

Distribution cost 19.66% 20.68% 19.77% 18.48% 19.23%

Other operating cost 1.07% 0.65% 0.73% 1.05% 0.87%

Financial Charges 0.91% 0.62% 0.66% 0.38% 0.92%

Other Income 0.25% 0.59% 0.24% 0.85% 0.72%

Profit before Tax 5.43% 7.85% 8.36% 12.26% 10.88%

Taxation 0.68% 2.06% 2.49% 3.75% 3.33%

Profit after taxation 4.76% 5.60% 5.87% 8.51% 7.55%

Trend analysis of NATF of past five years shows that there is gradual decrease jn the net profit of the
firm. The sales of the cost has alos been increasing gradually. Gross profit of the firm has also heen
decereasing from 2014 towards 2018. Not only cost of goods sold but also there is seen to be
gradual increase in the other exoenses of the firm. That’s why there is gradual decerease in every
successive year.

Statement of financial position:

Years 2018 2017 2016 2015 2014

Issued, subscribed 11.71% 12.69% 19.63% 17.84% 21.73%

and paid up capital

Unappropriated Profit 73.11% 65.83% 76.67% 78.24% 72.24%

Non controlling interest 4.49% 4.39% - - -

Exchange revaluation 1.27% 0.18% 0.11% 0.03% (0.05)

reserves

Long Term Obligations 9.47% 16.91% 3.58% 3.89% 6.07%

Total Long-term Liabilities. 100.00% 100.00% 100.00% 100.00% 100.00%
and shareholder equities

Fixed Assets, 117.36% 92.81% 78.00% 53.63% 53.55%

CWIP & Intangibles

Other Non current assets 0.94% 0.83% 1.17% 1.20% 0.93%

Current Assets 128.86% 137.03% 176.38% 137.85% 154.43%

Total Assets 247.15% 230.90% 255.57% 192.67% 208.90%

Current Liabilites 147.15% 130.90% 155.56% 92.67% 108.90%

& Provisions will

Net Assets 100% 100% 100%. 100% 100%

The financial postion of the furm shows that the decerease in assets in both current and fixed assets
from 2014 towards 2018. The decerease in fixed assets shows that company has been selling its
fixed assets in order to overcome the decerease in its profits. But there is increase in its fixed assets
in 2018 as compared to 2017. The piabilities of the firm are also seen to be increase in every
successive year in both cases that is current liabilities and longter liabilities. So this comparison
shows decerease jn total assets and increase total liabilities that shows decerease in performance in
every succussive year.

Unit 2018 2017 2016 2015 2014

Profitability Ratios
Gross Profit Ratio % 31.05 32.17 33.13 35.36 35.05
Net Profit after Tax to Sales % 4.76 5.80 5.87 8.51 7.55
Return on Equity % 27.77 32.80 29.88 39.57 37.55
Return on Assets % 9.39 10.34 11.82 17.78 14.75
Profitability Ratios graphical illustration:

Gross profit ratio:

 Series 1

2014

2015

2016

2017

2018

28 29 30 31 32 33 34 35 36

Series 1

As earlier mentioned in the common size analysis of the income statement, there is seen to be
decerease jn the gross profit margin in every successive uear. The highest gross profit margin was
seen in 2015 that was 35.36 . But since then there is gradual decerease in the gross profit margin as
compared to every previous uear.

Net profit margin:

Column1

2014

2015

2016

2017

2018

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00%

Column1

Net profit margin has also show the same kind of fluctuations as we saw in gross profit margin. That
is highest net profit was seen in 2015 and since then there is gradual decerease in the net profit of
the firm.

Return on equity ratio:

2014 37.55
 2015 39.57

2016 29.88

2017 32.80

2018 27.77

- 10.00 20.00 30.00 40.00 50.00 60.00

Return on equity is also decereasimg since the year 2015. There was slight increase in it in 2017 but
again in 2018 it declined. That means on average this firm is producing around 28% return on its
equity.

Return on assets:

Series 1

2014

2015

2016

2017

2018

0 2 4 6 8 10 12 14 16 18 20

Series 1

Return in assets has also shown gradual decerease since the year 2015. On average this firm is
producing almost 12% reutrn on its assets.

Efficiency Ratios 2018 2017 2016 2015 2014

No. of Days in Payables Days 20.79 14.00 13.27 17.14 15.40 16.98
Asset Turnover Times 2.12 2.08 2.20 2.21 2.11 2.31
Inverntory Turnover Times 4.19 3.40 3.27 3.36 3.05 3.22
Receivables Turnover Times 17.07 14.61 13.53 12.49 13.40 18.16
Payables Turnover Times 17.56 26.08 27.51 21.29 23.71 21.50
No. Of days of payables

2014 15.40

2015 17.14
 2016 13.27

2017 14.00

2018 20.79

- 5.00 10.00 15.00 20.00 25.00 30.00

No. of days of payable have been increasing in every successive year since 2014. Then there was
decline in number if days in 20116 and 17 but then again it increased to 20.79. That means they
were paying their account payables after 20 days.

Series 1

2014
2015
2016
2017
2018

2 2.05 2.1 2.15 2.2 2.25

Series 1

Assets turn over Asset turnover is seen to be very low of this firm. And there is also gradual decline
in this since 2015. Turnover was seen to be Only 2.5 percent of the total assets.

Inventory turnover:

Series 1
2014

2015

2016

2017

2018

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

Series 1

Inventory turniver is seen ti be inncrease in everysuccessive year. Inventiry turnover indicates how
efficiently the management js cinverting inventory in to cost of goods sold.

Receivables turnover:
 Series 1

2014

2015

2016

2017

2018

0 2 4 6 8 10 12 14 16 18

Series 1

Recievable turnover graph shows that company has increased its percentage in every successive
year since 2015. But the percentage kf this turniver is not very satisfying.

Payables turnover:

Series 1
2014

2015

2016

2017

2018

0 5 10 15 20 25 30

Series 1

Payable turnover is also seen to be decerease in the recent years that means firm js not paying early
payables.

Solvency ratios:

Year 2018 2017 2016 2015 2014

LT Debt to 4.44 9.12 3.80 4.09 4.80
equity
Debt to total 56.45 59.84 62.22 50.33 56.15
assets
Total debt to 58.46 59.84 62.22 50.33 56.15
equity

Graphical illustration of solvency ratios.

Debt to equity:

Series 1
12

10

0
2018 2017 2016 2015 2014

Series 1

Longterm debt to equity ratio shows that what percentage of the equity is financed by longterm
debt. The percentages show that about 4 to 5 percent of equity is financed by longterm debt. And
there is no significant change in this percentage during the previous years except for 2017 when this
percentage was increased to 10% that is seen to be highest during the past 5 years.

Debt to total assets:

Series 1
2014
2015
2016
2017
2018

0 10 20 30 40 50 60 70

Series 1

Debt to total assets ratioshows that what ercentage if assets are finaced by debt. The comparison
shows that in average 55 to 60 percent of assets of the firm are financed by debt. And there is no
significant change seen in these percentages during the past five years.

Total debt to equity:

 Series 1
70

60

50

40

30

20

10

0
2018 2017 2016 2015 2014

Series 1

Total debt to total equity ratios show that what percentage of firm’s equity is financed by otal debt.
It is seen that 50 to 55% of firm’s total equity is financed by debt sources. And again there is not any
significant amount of increase seen in this type of ratio during the past 5 years that means it keeps
on increasing or decereasing by 1-2 percent every year.

Cashflowr ratios:

Year 2018 2017 2016 2015 2014

Operating 8.10 9.65 3.71 12.20 5.65
cashflow ratio
Asset 14.87 18.00 7.45 25.44 11.03
efficiency
ratio
Current 26.26 30.07 11.97 50.56 19.65
liability
coverage ratio

Operating. Cashflow graphical illustration:

Operate g cashflow ratio

 Series 1

2014

2015

2016

2017

2018

0 2 4 6 8 10 12 14

Series 1

Operating cashflow ratio basically shows to what percentage of cash you receive fr your sales. The
graph of opeartng cashflows shows that on average NATF is able to get 8 percent cash from ts
operations. That mean for every 1 dollar they receive 8 cents of cash. And this graph also shows
highest percentage was seen in 2015. And since then there is gradual decerease in this percentage.

Asset efficiency ratio:

Series 1

2014

2015

2016

2017

2018

0 5 10 15 20 25 30

Series 1

This ratio basically shows how efficiently assets if the firm are being used to henerate cash for the
firm. Highest percentage of this cashflow was seen in 2015 when organization was able to generat
25% cash if the total assets of the firm. Then there was sudden fall in this percentage in 2016 but
and again increase in 2017 when firm generate 18% cash if its total assets. This shows that
management is not using its assets effeiciently since 2016.

Current liability coverage ratio:

This ratio shows that to what extent the firm is able to meet it current laibilities from cash ibtained
through opeartions. The highest civerage was seen again in 2015 when firm was able to cover its
50% of current liabilities from its cash of operations. Then there was sudden dropfall in this civerage
in 2016. But in 2017 and 18 the firm has again shown an improvement in its ability to civer current
liabilities thus cubering upto 27% of its liabilities. But this percentage is still far behind because it
covers inly 1/4th of the corrent liabilities.