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Umar Apparel private Ltd.
Session
Submitted to:
Sir.Omer Sharif
Submitted By: Faiza Andleeb 2009-ag-857
Numera Ali 2009-ag-952
Maryam Nisar 2009-ag-1273
Hira Amjad 2009-ag-1274
Khalid Farooq 2009-ag-725
DEGREEM.com 3rd
Table of Content
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Umar Apparel private Ltd.
SERIAL
NO.
SUBJECTS PAGE
No.
EXECUTIVE SUMMARY
1 COMPANY INTRODUCTION1.1 INCORPORATION /COMMENCEMENT
1.2 BUSINESS OPERATIONS
1.3 SOWT ANALYSIS
1.4 RESOURSES
2 FIRM ANALYSIS
2.1 COMMON SIZE ANALYSIS
2.2 RATIO ANALYSIS
3 PERFORMA STATMENT.
3.1 BASIS OF ANALYSIS.
4 PRACTICES OF FIRM
4.1 ACQUASATION OF CAPITAL
4.2 FINANCIAL FORCASTING
4.3 INVESTMENT AVENUES
4.4 WORKING CAPITAL MANAGEMENT
4.5 DIVIDEND POLICY
5 EVELUATION
6 VISIT REPORT
7 CONCLUSIONS
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Umar Apparel private Ltd.
EXECUTIVE SUMMARY
We accept the project of finance and select Umar Apparel private Ltd.
The motive of accepting the MTM was to have an exposure of textile
sector and potential to avail a sound and promising career. We devoted
our time to learn about Umar Apparel , which will be beneficial to us if
we join textile sector. In this visits,
The object of this report that we have placed is to express what we
observed and what are the necessary measures that can help to capitalize
the strengths to overcome weakness and remove the threats.Umar Apperal is one of the largest knitted garment manufacturers
of Pakistan. The company is 100% export oriented. U.S.A. and Europe
are major markets of Umar Apperal . It is a quality conscious company.
The company is ISO 9002 certified. Company’s mission statement is,
“To be the world’s Best Apparel Company.”
1 Introduction of CompanyThe company was initially established in 1990 by Mr. Sajjad Nazir in Pakistan. Later
on, as an expansion project, Umer Apparels was established in Pakistan nearly two
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Umar Apparel private Ltd.
decades ago to accommodate the growth of orders to the Worldwide and European
countries. The company has been running successfully since its inception, currently
we have the strength of more than 2000 people consisting of, a team of highly
professional and efficient management, workers in our manufacturing unit.
Umer Apparels has a state of the apparels manufacturing setup; it is equipped with
most modern and advanced technologies. This combination with our highly
experienced management has enabled the company to become one of the best
apparel manufacturers and suppliers in the region. Strict quality controls are followed
through out the entire process, from the selection of raw materials, to the production
and delivery of the garments. Complete customer satisfaction is our prime objective.
At Umer Apparels, every garment we sell is of the highest quality, simply because we
care, and simply because it has your name on it. Our products are designed to reflect
the pride we have in our company. Thus we place meticulous attention to every
single detail of the garment and assert a great deal of care in every aspect of the
manufacturing process. We want you to "feel good" and be proud when wearing one
of our "Umer Apparels" with your company logo embroidered or printed on it. We
value the opportunity to work with you and guarantee to provide; cutting-edge
technology, on time delivery, superb customer service and outstanding quality.
Umer Apparels has customers all over the world, a global variety of garments in a
variety of fabrics and colors. You can also customizing your own garments utilizing
our unmatched service, and much, much more…
Umer Apparels has never hesitated in adapting the latest manufacturing
technologies. The engineering and sampling department is equipped with latest,
Gerber Garment Technology (GGT) Accumark, designing, grading and markingsystem.Garments designed at Umer Apparels are engineered to perfection. Being
the backbone of the entire manufacturing facility the pattern making and sampling
department at Umer Apparels take great pride in creating unmatchable quality
garments.
Vision Statement
A leading producer of textile products by producing the highest quality of
products ad services to its customers.
To strive for excellence through commitment, integrity, honesty and team work.
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Umar Apparel private Ltd.
Highly ethical company and be repeated corporate citizen to continue playing due
role in the social and environmental sectors of the company.
To develop and extremely motivated and professional trained work force, witch
would drive growth through innovation and renovation. Sustained growth in earning in real terms.
Mission Statement:
Our mission is to be a dynamic, profitable and growth oriented
Company by providing good return on investment to its shareholders
And investors, quality products to its customers, a secured and
Friendly environment at workplace
to its employees and to project Pakistan’s image in the international market.
COMPANY INTRODUCTION
CHAIRMAN/CEO: MR. SHAHID NAZIR
DIRECTORS: CH. MUHAMMAD AMIN
: CH. MUNIR AHMAD
: MR. FAZAL ELAHI
: MR. NASEER AHMASHAH
: MR. MUHAMMADARSHAD
: MR. MUAMMAD NAWAZ
DIRECTOR FINANCE: MR. MUHAMMADFAROOQ
CHIEF FINANCIAL OFFICER : MR. BINYAMIN
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Umar Apparel private Ltd.
COMPANY SECRETARY: MR. ABDUL BARIHAQQANI
AUDITORS: M/S RIAZ AHMADCHARTERED ACCOUNTANTS
COMNPANY 10-B, Saint Mary Park, Main Boulevard,
Gulberg –III, Lahore-54660.
Tel: 042-5718137-39-26 Fax: 5714340
E-mail: [email protected]
RATING OF SBP
Riaz Ahmed & Co.is at A11 no.by SBP
BANKERS: HABIB BANK LIMITED
UNITED BANK LIMITED
MCB LIMITED
THE BANK OF PUNJAB
HABIB BANK A.G. ZURICH
REGISTERED OFFICE: UNIVERSAL HOUSE, WEST
CANAL ROAD, FAROOQABAD,
FAISALABAD.
MILLS: 32-K.M SHEIKUPURA ROAD,
FAISALABAD.
22 Business operationsBusiness operations
Business operations of Business operations of Umar Apperal Limited include following areasinclude following areas
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Umar Apparel private Ltd.
Products Products
⇒ Yarn
⇒ Knitted Fabric
⇒ Garments
(1)(1) Yarn:Yarn:
Umar Apperal Limited produces high quality yarn according to the
demand of the market. 80 to 90% yarn is exported rest of the yarn is used
is in Umar Apperal Limited .
Single knit Strippers Double knit
Flat knit Textures Jacquards
(2) Knitted Fabric:(2) Knitted Fabric:
One of the largest Fabric facility in Pakistan having the capability to
produce all kinds of knitted fabrics in 100% cotton & blends. Following
are types of fabric
Jersey
Pique
Inter Lock
Rib
Waffle
Min Thermal
o Fleece
GarmentsGarments: Umar Apperal Limited is a leading apparel company in
Pakistan having expertise & machinery capable of transforming customer
ideas into superior quality garments, which are taken as the most famous
brands in the world.
These includes the
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Umar Apparel private Ltd.
Loungewear
Sportswear
Activewear
Sleepwear
Athletic
Countries of Export:
Umar Apperal Limited is making a good effort to increase
the market share. Today company is exporting its products to many
countries like,
o USA.
o Hong Kong
o Japan
o Germany
o Thailand
o Malaysia
Customer profileCustomer pr ofile
Umar Apperal Limited has also proud of work with world best Labels
like
• JC Penney (Stafford, Arizona, St. John’s Bay)
• War Naco (Chaps Ralph Lauren, Calvin Klein)
• Indus (Vantage, Champs, Tom Taller)
• Vanity fair Lee, Wrangler
• Perry Ellis
• Levi’s
Departments;
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Umar Apparel private Ltd.
1. Merchandising
2. Production Planning & Control (PPC)
3. Industrial engineering
4. production
i. Cutting
ii. Stitching
iii. Finishing
iv. Clipping
v. Packing
vi. Shipment
2. Quality assurance
3. Quality control
4. Human Resource
5. Information Technology
6. Procurement
7. Finance
8. Forwarding
9. Stores
10. Marketing
11. Transportation
12. Compliance
13. Washing
Management Hierarchy in MTM
Top Management Chief Executive
Officer
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Umar Apparel private Ltd.
Middle Management
Lower Level Management
General Manager
Manager
Deputy
Manager
Assistant
Manager
Senior
Officer Officer
Supervisor
ForemanOperators
Helpers
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Umar Apparel private Ltd.
1.3 Swot analysis
SWOT analysis is a tool for auditing an organization and its environment. It is the
first stage of planning and helps marketers to focus on key issues.
Once key issues have been identified, they feed into marketing objectives
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Umar Apparel private Ltd.
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and
weaknesses are internal factors.
STRENGTHS WEAKNESSES
1. ISO 9002 Certification.
2. WRAP Certified
3. Vertically integrated.
4. High quality products.
5. Excellent market image in the local
and international market.
6. Highly qualified management.
7. Adequate financial resources.
8. Competitive advantage.
9. Adopting information technology.
10. Recruitment on merit.
11. Loyal customers.
12. Skilled Labor.
13. Broad and motivational vision.
1. Increased employee turnover
2. Centralized management system
3. High cost of production.
4. Low production capacity.
5. De-motivated Staff.
6. Non-Corporative culture.
7. Insufficient benefits for the
employees.
8. Stereotype machinery for
processing.
9. Communicational gap among
different departments.
10. High percentage of debts
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Umar Apparel private Ltd.
14. Back Track System
OPPORTUNITIES
THREATS
1. Can expand its division
such as entering in weaving sector
also.2. Can introduce its own label
in domestic as well in
international market
3. Can capture new market
segment.
4. Full potential of
entertaining the local market.
5. Can reduce the cost by
proper utilization of resources.6. End of quota restrictions
by the end of year 2004.
7. Can hire well-educated and
experienced staff.
1. Entry of new competitors just like
China & India or local companiesKamal Spinning Mills Fsd.
2. Buyer need and demand changes.
3. Political instability.
4. Changing geopolitical situation.
5. Change of government policies.
6. Low price offered by competitor
7. Globalization.
8. Increase in inflation
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Umar Apparel private Ltd.
1.4 RESOURCES
PHYSICAL RESOURCE
Umar Apperal Limited is leaders in creating, developing and manufacturing of knitted apparel products right from basic to highly fashioned garments thus
responding to emerging trends in the industry.
They have spinning, knitting, and processing and apparel divisions. In this apparel
division they have these sections.
Umar Apperal Limited. is the largest vertical integrated setup in Pakistan in knitwear
industry. We have our own Spinning, Knitting, Dyeing, Processing, cutting and
sewing facilities. Our capacities are as follows:
- 300 yarn bags per day
- Plus 50 Ton fabric production per day
- 5 Million Pieces Cutting Capacity per month
- 4.50 to 5 Million Pieces export per month
Cutting:
Cutting units working under the supervision of skilled unit managers, these cuttingunits are well equipped with latest machinery including Gerber Plotter, Spreader etc.
Machine Quantity
Gerber cutter
Max. Cutable height 7.2cm, Max Cutable width 68″3
Max. Cutable height 7.2cm, Max Cutable width 78″1
Max. Cutable height 7.2cm, Max Cutable width 94″1
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Umar Apparel private Ltd.
Band knife
Model-EC-700N 220V 50/60 Hz Knife size 3500mm2
Model-EC-900N 220V 50/60 Hz Knife size 3860mm
2
Gerber spreader
Max.Load 100 kg, Max width 70″Max. roller 65cm.2
Gerber Tublar Spreader
Max.Load 100 kg, Max width 38″3
Synchron Spreader 101
Max.Load 100 kg, Max width 96″Max.roller 65cm.3
Synchron Spreader 55B
Max.Load 100 kg, Max width 70″Max. roller 50cm.2
Tesan Spreader
Max.Load 50 kg, Max width 38″3
Bierrebi
Total Machines22
Stitching:
With over 1,749 stitching machines, manned with the most skilled and expert
operators, Masood is capable of producing about 120,000 dozens per month versatile
garments ranging from basic to high fashion, men’s, women’s and kids with
maximum flexibility in size and color assortments.
Stitching Units Quantity
Apparel 1168
Apparel III 188
Apparel IV 289
Apparel II Warehouse 227
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Umar Apparel private Ltd.
Falcon 341
Falcon-2 161
Leopard 155
Lion 220
Panther 286
Zain Godown 1
Total Machines 3036
Finishing:
Our Finishing Capacity in
kg
: 66,000 / Day
: 2,046,000 / Month
: 22,552,000 / Year
lbs
: 145,502 / 24Hrs
: 4,510,562 / Month
: 54,126,744 / Year
HUMAN RESOURCES
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Umar Apparel private Ltd.
No. of Employees
2005
2006
2007
2008
2009
2010
2 COMPREHENSIVE ANALYSIS OF FINANCIAL STATEMENT
The financial analysis of the company presents us the true picture of the
company and its performance regarding the utilization of resources, worth and its
profitability.
Usually there are three types of financial analysis in which one analysis the financial
statements of the company mostly Balance Sheet Analysis and Income Statement
Analysis.
Following are the three types of analysis:
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Umar Apparel private Ltd.
2.1 Common size analysis
(a)Horizontal analysis
(b)Vertical analysis
2.2 Ratio Analyses
Umar Apperal LimitedPROFIT AND LOSS ACCOUNT
Horizontal analysis
Notes 2010% 2009% 2008%
SALES 22
86.7
0
38.8
3
100.0
0
COST OF SALES 23
87.9
9
37.6
8
100.0
0
GROSS PROFIT
81.0
0
43.8
7
100.0
0
DISTRIBUTION COST 24
140.1
7
73.7
3
100.0
0
ADMINISTRATIVE EXPENSES 2556.9
414.6
7100.0
0
OTHER OPERATING EXPENSES 26216.0
3138.0
7100.0
0
122.1
0
61.5
2
100.0
058.3
2
34.1
4
100.0
0
OTHER OPERATING INCOME 27
63.7
0
31.0
0
100.0
0
PROFIT FROM OPERATIONS
58.3
7
34.1
1
100.0
0
FINANCE COST 2810.4
533.5
6100.0
0
PROFIT BEFORE TAXATION
121.6
7
34.8
3
100.0
0
PROVISION FOR TAXATION 29
93.2
9
32.5
2
100.0
0
PROFIT AFTER TAXATION
127.9
8
35.3
4
100.0
0
EARNINGS PER SHARE - BASIC 30
75.6
5
17.6
1
100.0
0
- DILUTED 30
55.2
3
(10.4
6)
100.0
0
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Umar Apparel private Ltd.
Umar Apperal LimitedPROFIT AND LOSS ACCOUNT
VERTICAL ANAYSIS
DSECRIPTION2010
%2009
% 2008%
SALES 100 100 100
COST OF SALES 82.10 80.86 81.53
GROSS PROFIT 17.90 19.14 18.47
DISTRIBUTION COST 5.68 5.53 4.42
ADMINISTRATIVE EXPENSES 1.49 1.46 1.77
OTHER OPERATING EXPENSES 0.64 0.65 0.38
7.81 7.64 6.57
10.09 11.50 11.90
OTHER OPERATING INCOME 0.10 0.10 0.11
PROFIT FROM OPERATIONS 10.19 11.60 12.01
FINANCE COST 4.04 6.58 6.84
PROFIT BEFORE TAXATION 6.14 5.03 5.17
PROVISION FOR TAXATION 0.98 0.90 0.94
PROFIT AFTER TAXATION 5.17 4.13 4.23
Sales
Sale of the company increases 86% as compared to last two years the increase in sale
is due to increase in export sales that are result of better management of operationsCost of goods sold
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Umar Apparel private Ltd.
in 2010 cost of goods sold is 82.10 % of total sale and as compared to previous years
is is increased from 37.68% to 87.99% this increase in cogs is due to increase in
production and increasing cost of raw material
Gross profit
In 2010 gross profit margin is 17% of sale that is less than previous year % as
compared to previous year gross profit increased from 43.87 % to81% that showsalthough prices of raw material increases but company’s gross profit increase over
year due to increase in sales
Distribution Expenses
Distribution expenses of the company in 2010 is 5.68% of sale that is more than last
two years as compared to last year’s distribution expenses increase from 73.73%
to140.17% this increase in expenses is due to more expenses on advertisement and
distribution of more stock
Administrative expenses
In 2010 administrative expenses are 1.49% of sale and as compared to last years it
increase froms14.67% to56.94% this huge increase is due to increase in workers and
administrative services to meet current requirements of productionOther operating expenses
Other operating expenses are 0.64% of sale in 2010 that is less than previous year %
but as compared to last year’s operating expenses increase from 138.07 % to
216.03% this increase is due to increase in capacity of company
Other operating income
Other operating income as a percentage of sale remains same as compared to last year
sale percentage in comparison of last year’s income it increases from 31% to 63.70%
Profit from operations
Profit from operations of the company as a percentage of sale as compared to last year
% due to high cost of operations to meet more production as compared to previous
year’s profits it increases from34.1% to 58.3 %
Finance cost
Finance cost of company as a % of sale decrease as compared to last year from 6.58%
to 4.04% and also decrease over the year from 33.56% t0 10.45 % this decrease is
due to acquisition of mark up free loans
Profit before taxation
Profit before taxation of company increases over the year from 34.83% to 121.67 %
the major increase is due to decrease in finance cost as a percentage of sale it increase
from 5.03% to 6.14 %
Profit after taxation
Companies net profit is 5.17 % of total sale that is more than last year’s % company’snet profit as compared to last year’s increases from 35.34% to 127.98%
The overall analysis of company’s profitability shows company is growing over year
the major cost are of increasing raw material cost
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Umar Apparel private Ltd.
Umar Apperal Limited
Balance SheetHorizontal analysis
EQUITY AND LIABILITIES
Note
s 2010% 2009% 2008%
SHARE CAPITAL AND RESERVES
Authorized share capital
65 000 000 (2009: 65 000 000 ) ordinary shares
of Rupees 10 each62.5 62.5 100
60 000 000 (2009: 60 000 000 ) preference shares
of Rupees 10 each- -
Issued, subscribed and paid up share capital 3 26.9 - 100
Reserves 4 136.2 35.9 100
Total equity 81.9 18.1 100
Surplus on revaluation of operating fixed assets - 100
Deferred income on sale and lease back of
operating fixed assets (92.8) (48.6) 100
NON-CURRENT LIABILITIES
Long term financing 5 (17.3) (5.4) 100
Liabilities against assets subject to finance lease 6 (46.3) (41.7) 100
Deferred liability for gratuity 7 72.5 38.0 100
(15.7) (7.0) 100
CURRENT LIABILITIES
Trade and other payables 8 101.1 32.6 100
Accrued mark-up 9 61.4 132.0 100
Short term borrowings 10 64.8 25.3 100
Current portion of non-current liabilities 11 69.5 45.0 100
Provision for taxation 93.3 32.5 100
73.9 30.7 100
TOTAL LIABILITIES 42.8 17.6 100
CONTINGENCIES AND COMMITMENTS 12
TOTAL EQUITY AND LIABILITIES 49.3 16.8 100
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Umar Apparel private Ltd.
A S S E T S
Nots 2010% 2009% 2008%
NON-CURRENT ASSETS
Property, plant and equipment 13 30.31 4.10 100
Long term advances 14 (46.90) (19.79) 100
Long term security deposits (45.88) (25.07) 100
29.74 3.89 100
CURRENT ASSETS
Stores, spare parts and loose tools 15 32.15 17.88 100
Stock in trade 16 51.70 (6.03) 100
Trade debts 17 82.99 65.36 100
Loans and advances 18 23.98 (11.65) 100
Short term deposits and prepayments 19 49.08 8.58 100
Other receivables 20 2.84 (22.28) 100
Cash and bank balances 21 251.23 133.89 100
60.85 24.46 100
TOTAL ASSETS 49.34 16.85 100
Umar Apperal Limited
Balance Sheet Account
Vertical analysis
DESCRIPTION 2010% 2009% 2008%
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
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Umar Apparel private Ltd.
Authorized share capital
65 000 000 (30 June 2008: 40 000 000 ) ordinary shares
of Rupees 10 each 5.29 6.76 4.86
60 000 000 (30 June 2008: 60 000 000 ) preference shares
of Rupees 10 each 4.88 6.24 7.29
10.16 12.99 12.14
Issued, subscribed and paid up share capital 9.28 9.35 10.93
Reserves 17.51 12.87 11.07
Total equity 26.79 22.23 22.00
Surplus on revaluation of operating fixed assets 3.09 3.94 4.61
Deferred income on sale and lease back of operating fixed assets 0.00 0.03 0.06
NON-CURRENT LIABILITIES
Long term financing 11.90 17.39 21.49
Liabilities against assets subject to finance lease 0.96 1.33 2.67
Deferred liability for gratuity 1.51 1.55 1.31
14.37 20.26 25.46
CURRENT LIABILITIES
Trade and other payables 14.82 12.49 11.00
Accrued mark-up 1.11 2.05 1.03
Short term borrowings 35.13 34.14 31.84
Current portion of non-current liabilities 3.51 3.84 3.10
Provision for taxation 1.17 1.02 0.90
55.75 53.54 47.87
TOTAL LIABILITIES 70.12 73.81 73.34
CONTINGENCIES AND COMMITMENTS
TOTAL EQUITY AND LIABILITIES 100 100 100
Umar Apperal Limited
Balance Sheet Account
Vertical analysis
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DESCRIPTION 2010% 2009% 2008%
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A S S E T S
NON-CURRENT ASSETS
Property, plant and equipment32.0
632.7
336.7
4
Long term advances0.0
30.0
50.0
7
Long term security deposits0.0
70.1
30.2
0
32.16
32.91
37.01
CURRENT ASSETS
Stores, spare parts and loose tools3.9
44.4
94.4
6
Stock in trade22.6
817.9
622.3
3
Trade debts28.7
833.2
423.4
9
Loans and advances
1.6
7
1.5
2
2.0
1
Short term deposits and prepayments2.0
21.8
82.0
2
Other receivables4.8
34.6
77.0
2
Cash and bank balances3.9
23.3
41.6
7
67.84
67.09
62.99
TOTAL ASSETS 100 100 100
Equity
Total equity of company increases over year from 18.1% to 81.9% the increase in
equity is through increase in the reserves of the company from its profit
Equity as a percentage of total equity and liability increases over the year from
22.23% to 26.79% this increase is due to increase in reserves that is 17.51% over
the year but issued capital decrease from 9.35% to 9.28% reserves are 136.2%
increase over year Noncurrent liabilities
Liabilities of the company decrease over the year from 7% to 15.7% major decrease
is due to decrease in the long term financing 17.3% and liabilities against asset
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subject to finance lease 46.3% percentage of noncurrent liabilities as a percentage of
total liabilities and equity decrease over year from 20.26% to 14.37 %
Current liabilities
Current liabilities of the company increase over the year from 30.7% to73.9% this
major increase is due to increase in payables and short term borrowing .current
liabilities as a percentage of total equity and libilites increases over from 53.54% to55.75% these are more than half of total amount.
Noncurrent assets
Noncurrent assets of the company increases over year from 3.89% to 29.74% this
increase is due to increase in plant ,property and equipment that is 4.10% to 30.31%
other noncurrent assets decreases over year as a percentage of total assets noncurrent
assets decreases over year from 32.91% to 32.16 % this shows company’s major
investment in expanding ist plant
Current assets
Current assets of the company in 2010 increases from 24.46% to 60.85% the major
increase in current assets is due to increase in trade debts stock cash current asserts
contribution in total assets increases from 67.09% to 67.84% this shows company isnon risk taking firm and do not go for long term investments
Umar Apperal Limited
CASH FLOW STATEMENT
HORIZONTAL ANALYSIS
2010 2009 2008
(Rupees in Thousand)
CASH FLOWS FROM OPERATING ACTIVITIES 837,370 632,821(981,748)
CASH FLOWS FROM INVESTING ACTIVITIES (966,607) (370,513)(415,397)
CASH FLOWS FROM FINANCING ACTIVITIES 290,285 (78,537)
1,458,8
32
NET INCREASE IN CASH AND CASHEQUIVALENTS 161048 183771 61687
Interpretation
Analysis of cash flow shows that over the year company’s cash generated from
operations increases and this cash is utlize in fixed assets cash flow from financing
activity increases as compared to last year it is mainly from short term borrowing and
equity company generating its finance from debts
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Umar Apparel private Ltd.
Ratio analysis.
Ratio analysis is very useful approach to keep the management,
shareholder and creditors in making various decisions about company.
Types of ratios
Some of the different types of ratios that can be calculated from
data in the financial statements and used to evaluate a business
include:
Liquidity ratios
Activity ratios
Coverage ratios
Profitability ratios
Solvency ratios
No. Descriptions 2010 2009 2008Liquidity ratio
1. Current Ratio% 122 125 132
2. Acid Test Ratio 0.81 0.92 0.85
3. Cash Ratio% 7.303 6.23 3.48
4.
5. Working Capital(In Thousands) 1487135 1303484 1244555
Activity Ratio
6. Days Sales In
Receiveables(days)
87 107 90
7. A/R Turnover(Times) 4.37 4.27 4.08
8. A/R Turnover In Days(Times) 84 85 89
9. Days Sales In Inventroy(Days) 85 71 104
10 Inventory Turnover(Times) 5.35 4.96 3.5
11. Inventory Turnover In Days.
(Days)
68 74 104
12. Operating Cycle(Days) 152 159 193
13 Net sale/fixed asset 0.96 1.14 0.96
14. Cash Cycle(Days) 118 127 14215
16. Labor Cost % 13.33 12.92 12.19
Coverage Ratios
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Umar Apparel private Ltd.
17. Time Interest Earned(Times) 2.52 1.76 1.76
Profitability Ratios
19. Net Profit Margin% 5.17 4.13 4.23
20. T.A Turnover(Times) 1.32 1.23 0.96
21. Fixed Asset Turnover
Ratio(Times)
4.15 3.55 2.61
22. Earning Per Share 30.09 19.17 17.92
23. Return On Asset% 6.94 5.06 4.05
24. Dupont Return On Assets% 6.82 5.08 4.06
25. Operating Income Margin% 10.19 11.60 12.01
26. Operating Asset Turnover 1.34 1.33 1.15
27. Return On Operating Assets 15.4 13.7 13.8
28. Dupont Return On Operating
Asset
13.65 15.43 13.81
30. Return On Total Equity% 24.27 19.22 14.41
31. Return On Common Equity% 13.98 13.22 36.40
Relationship Between
Profitability Ratios
32. Return on Total Assets
Variation%
12.37 13.12 10.60
33. G.P Margin% 17.90 19.14 18.47
Solvency ratios
34. Solvency Ratio% 4.11 9.86 9.27
35. Debt Ratio% 70.12 73.81 73.34
36. Debt/Equity Ratio% 261.75 332 333
37. Debt To Tangible Net Worth% 188 133 148
Interpretation
Liquidity ratio:
The liquidity ratio measured by the current assets over current
liabilities. The company performance to meet their current obligation forms their
current assets. The company has decreasing trend in current ratio in 2010 as compared
to 2008 due to increase in trade payable and short term liabilities.
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Umar Apparel private Ltd.
The quick ratios /acid test ratio of the company continuously decrease due to increase
in stock trade with is unfavorable trend. The liquidity of a business firm is measured
by its ability to satisfy its short-term obligations as they come due. Liquidity refers to
the solvency of the firms overall financial position.
The company is good liquidity position as compared to previous year 2008,
because in 2010, the company has sufficient net working capital. Cash ratio also
shows that company is in a position to meet its short-term obligation.
Activity ratio.
Inventory turnover ratio is increasing, which shows
the high speed of inventory converting into cost of goods
sold. The days to sell the average inventory are
decreasing. The receivable turnover rate is also
increasing. Days to collect average accounts receivable
are decreasing as compared to previous years.
All activity Fixed assets utilization ratio shows the net sale
in relation to fixed assets. Ratio shows the decreasing
trend in 2010 as compared to 2009 which shows that
company not utilizing its fixed assets properly
ratios show favorable trends.
Coverage ratio
The interest coverage ratio shows the increasing trend to meet the
financial charges. Because company repay loans so its annual interest
expenses is decreasing as compared to their profitability.
Profitability ratio.
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Umar Apparel private Ltd.
Profitability analysis shows that company gross
profit increase and then decrease from 2008 to 2010.
There is decrease in operating income in 2010 as
compared to 2009 and 2008 while there is continuously
increase in distribution and admin expenses. So
company’s overall performance is satisfactory because net
profit continuously increase due to increase in operating
income and decrease in financial cost.
Profitability ratios shows an increasing trend this shows
increase in profitability
Solvency ratio.
The solvency analysis has to do with testing the
organization ability to meet the liabilities and remain
solvent.
The solvency of Masood textile shows that the
organization total liabilities are greater than the equity of
the company however the assets of the company are
greater than the liabilities which describe that in the long
run the firm is quite solvent. Debt to equity ratio shows
the favorable trend in 2010 as compared to 2009 which
shows the liabilities are decreasing in relation to current
and fixed assets of the company.
PROJECTED STATEMENT FOR 2011
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Umar Apparel private Ltd.
Umar Apperal Limited
BALANCE SHEET FOR THE YEAR 2011
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Umar Apparel private Ltd.
Basis of projected statement
Increase in Sal 25% =18401037 Net profit margin 5% = 920051
Dividend 19% = 174810
Retained earnings
Net income= 920051
Assets 2011 LIABILITIES 2011
RS RS
Cash 552031 Trade payables220812
4
Receivables 736041 Accrued markup 165609
Prepayments 368020 Short term borrowings533630
0
Loan sources 239213Current portion in noncurrentassets 552031
Trade debts441624
9 Provision for taxation 165609
Stock in trade349619
7
stock andspares 552031Total currentassets
10359782 Total current liabilities
8427673
0perating fixedassets
Long termliabilities
Property plant&equipment
4968280
Long termfinance
2165807
Long term
advances 3680
Liabilities against asset subject to
finance leas 88614Long termdeposits 11040
Defferd liability forgratuity 241652
Total long term assets498300
0Total long termliabilities
2496073
equity114166
7Surplus on revaluation of fixedassets 379420
Reserves 600000Retainedearnings
2297949
TOTALASSETS
15342782
TOTAL LIABILITIES &EQUITY
15342782
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Umar Apparel private Ltd.
Less dividend = 174810
745241
Add retained earnings 1552708
2297949
AFN 834030
All afn is ful filled by long term finance
4 corporate PracticesFollowing is an analysis of corporate practices
4.1 Acquisition of capital
In routine practices company acquire capital from 5 sources share
capital that include ordinary and preferred shares .
reserves of the company that include genral reserves for working capital need and
capital reserves for meeting specific functions
long term loans for meeting long term need and short term loans for working capital
need but sometimes company use long term loans to meat working capital needscompany also go for financial lease
4.2 capital budgeting
in routine practices company use all four techniques for analysis but give
preference to pay back period .all these techniques mostly used for paper work
in real scenario company do not go for proper analysis for capital budgeting
plans they just invest in those projects where they see potential of growth
4.3 Financial forecasting
While preparing forecasting Company use previous year averages, trends and
also consider orders in hand for the next year their capacity of production .they
also consider economic conditions in market availability of resources
4.4 Investment avenues
Umar Apperal Limited don’t go for any long term and short term investment
4.5 Working capital/Inventory management system
The requirement of working capital and inventory increase over the time due
to increase in sales and increase in prices company meat its working capital
requirement from short term loans and soma time from long term loans
company manage its inventory according to orders company has wellestablished internally linked inventory management system
4.6 Dividend policy
In last two years Umar Apperal Limited declare dividend @15% the company
consider following matters while deciding dividend amount
Attraction of new share holders
To maintain existing share holders
To maintain market value of share
Future investment
As the company is debt based and mostly fulfill financial requirement through debts
so company’s main focus is on maintenance of existing share holders and marketvalue of share
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Umar Apparel private Ltd.
5 Evaluation
According to our evaluation we give following suggestions and recommendations for Umar Apperal Limited
SUGGESTIONS & RECOMMENDATIONS
There is no doubt Umar Apperal Limited is very organized textile mills.
Still there is always room for improvements and following are some
measures we suggest for improving the performance of the company.
i) Decisions making should be decentralized. Middle and lower
level management should have participation in decision
making.
ii) Company should have separate organized marketing
department.
iii) Company should introduce products with its own brandname.
iv) Company should capture Middle East markets.
v) Company should start its own “Apparel Stores Chain”.
vi) Promotions, increments and other benefits should be
performance based in the company.
vii) The company should build a dispensary for workers in the
premises.
viii) Company shouldn’t depend upon large customers it should
also try to capture small ones.
ix) Company should try to develop over all thinking in
employees, not only departmental thinking.
x) Company should try to create interdepartmental coordination
and harmony.
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Umar Apparel private Ltd.
xi) Company should try to control wastage of fabric. It reduces
cost of production.
xii) Company should try to enhance its customer portfolio by
increasing marketing efforts.
6 Visit report6 Visit report
We conducted two visits of Umar apparel division at Sargodha road FaisalabadWe conducted two visits of Umar apparel division at Sargodha road Faisalabad
during our visit we conduct interview of Mr. shahid naveed and discuss issues relatedduring our visit we conduct interview of Mr. shahid naveed and discuss issues related
to our project and get useful informationto our project and get useful information
7 CONCLUSION:
Umar Apperal is a big name in knitted garments. Its working environment is
simply the best in Faisalabad.
The company has fully equipped cutting, stitching and packing units. Its quality
assurance system is one of the best in Pakistan. It wins “Best supplier awards 2001-
02” from JC Penny the World Wide stores chain. The company’s infrastructure is
good. Offices are fully furnished. The company is centrally air-conditioned. The
company is working in “Papers less” environment. Computerized bar coding and back
tracking system are there.
Company has good warehousing capacity for fabrics and garments. Customer
portfolio of the company is very broad. World leaders in Apparel are working with .
Umar Apperal
Company has no separate marketing department. CEO and Marketing Manager of thecompany perform marketing functions individually.
Company is engaged in merchandising and its merchandising department is very
efficient for taking orders and fulfilling them accordingly. Company’s decision
making is centralized. All major decisions are made by higher management and
implemented by lower management.
Now Company is giving preference to its personals separate personnel
department is established and a ladies wing is also incorporated.
Financially the company is performing well. Its sales are increasing and its profits are
rapidly growing.
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Umar Apparel private Ltd.
Simply we can say that Umar Apparel Division is performing well.
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