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J. A TEXTILE MILLS LIMITED
By
SYED MUHAMMAD HASSAN
FA06-BB-0105
To
SIR.JAMIL AHMED SABRI
NOV 3rd, 2007
IBF
SECTION-D
MUHAMMAD ALI JINNAH UNIVERSITY
ACKNOWLEDGEMENT
First of all I would like to thanks to all mighty ALLAH that HE courage me to complete this project. Secondly I would like to thanks to my respected teacher Mr.Jamil Ahmed Sabri, he has
assigned me to write this report. I have putted my best to complete this report. It is honor for me to write a final report
of J. A. TEXTILE MILLS LIMITED. At last but not the least I really great full
to Mr. Khalid Haseeb, he helped me a lot to complete this report.
2
TABLE OF CONTENTSSerial# PARTICULARS PAGE#
1. COMPANY PROFILE
2. RATIO ANALYSIS
3. GRAPHICAL REPRESENTATION
4. TABLE OF RATIO ANALYSIS
5. INTERPRETATION
6. COMMON SIZE INCOME STATEMENT
7. COMMON SIZE BALANCE SHEET
8. GROWTH RATE
9. PROFORMA INCOME STATEMENT
10. PROFORMA BALANCE SHEET
11. CONCLUSION
12. RECOMENDATION
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5
11
16
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BORD OF DIRECTORS
CHIEF EXECUTIVE MR. IMRAN ZAHID
DIRECTORS MS. QURATUL-AIN-ZAHID MR. JAMIL AHMED TAHIR MR.RIAZ AHMED MR.NAVEED EJAZ MR. MUHAMMAD ZAHID BASHIR MR. MUHAMMAD SHEHZAD
AUDIT COMMITTEE:CHAIRMAN MR. IMRAN ZAHIDMEMBER MR. RIAZ AHMEDMEMBER MR. JAMIL AHMED TAHIR
SECRETARY: MR. KHALID JABBAR
FINANCIAL OFFICER: MR. MUMTAZ AHMED
BANKERS UNITED BANK LTD HABIB BANK LTD
NATIONAL BANK LTDAL-BARAKA ISLAMIC BANK
B.S.C. (E.C)KASAB BANK LTD
REGISTERED OFFICE AND SHARE DEPARTMENT: 16-C,PEOPLES COLONY, FAISLABAD.
MILLS: 29-KM, SHEIKHUPURA ROAD,
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FAISLABAD.
WEBSITE www.jatm.com
FINANCIALRATIO ANALYSIS
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(A)
LIQUIDITY
1- CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES
C.R 2006 = 62,587,249 40,007,447
= 1.564
C.R 2005 = 62,932,153 68,213,975
= 0.922
2. QUICK RATIO = QUICK ASSETS CURRENT LIABILITIES
Q.R 2006 = 35,521,598 40,007,447
= 0.887
Q.R 2005 = 14,296,682 68,213,975
= 0.021
3. CASH RATIO = CASH CURRENT LIABILITIES
C.R 2006 = 1,395,766 40,007,447
= 0.034
C.R 2005 = 9,439,030 68,213,975
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= 0.138
(B)
ACTIVITY1. INVENTORY TURN OVER = COST OF GOOD SOLD
AVERAGE INVENTORY
I .T 2006 = 434,783,999 21,545,471
= 20.179
I .T 2005 = 190,707,845 29,907,970
= 6.376
2. AVERAGE COLLECTION PERIOD = A/c RECEIVABLE Avg. Sales/ day
Avg.coll.period 2006 = 2,248,932 1,299,570
= 1.730
Avg.coll.period 2005 = 1,732,781 5, 65,551
= 3.064
3. AVERAGE PAYMENT PERIOD = A/c PAYABLE Avg. Purchase/day
Avg. Payment Period 2006 = 18,375,343 8, 17,076
= 22.489
Avg. Payment Period 2005 = 50,547,715 3, 83,244
= 131.894
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4. TOTAL ASSETS TURNOVER = Total net sale x 100 = Ans % Total Assets
Total assets turnover 2006 = 467,845,051 256,787,835
= 1.8 x 100 = 182 %
Total assets turnover 2005 = 203,598,318 269,783,587
= 0.75 x 100 = 75.467 % (C)
PROFITIBILITY
1. Gross Profit margin = Gross profit x 100 Total net sale
G.P 2006 = 33,061,052 467,845,051
= 0.0706 x 100 = 7.06%
G.P 2005 = 12,890,473 203,598,318
= 0.063 x 100
= 6.33%
2. Net Profit Margin = Net Profit after Taxes x 100 Sales
N.P 2006 = 7,669,156 x 100
8
467845051
= 1.639%
N.P 2005 = (15,528,654) x 100 203,598,318
= (7.6%)
3. Operating Profit Margin = Operating Profits Sales
O.P 2006 = 7,669,156 467,845,051
= 0.016
O.P 2005 = (15,528,654) 203,598,318 = (0.076)
4. Return on Total Asset = Net Profit after Taxes x 100 Total Assets
R.A 2006 = 7,669,156 x 100 256,787,835
= 2.98%
R.A 2005 = (15,528,654) x 100 269,783,587
= 5.75%
5. Return on Equity = Net Profit after Taxes x 100 Stockholder’s Equity
R.E 206 = 7,669,156 x 100 (113,656,902)
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= (6.75%)
R.E 2005 = (15,528,654) x 100 (126,703,532)
= 12.25%
6. Earning per Share = Earning Available for Common Stock No. Of Shares of Common Stock
E.S 2006 = 7,669,156 12,601,160
= 0.608
E.S 2005 = (15,528,654) 12,601,160
= 1.232
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GRAPHICAL REPRESENTATION
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(A)
LIQUIDITY
Current Ratio
00.5
11.5
2
1 2
years
amo
un
t
Series1
Quick Ratio
0
0.5
1
1 2
yeras
amo
un
t
Series1
Cash Ratio
00.010.020.030.04
1 2
years
amo
un
t
Series1
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(B)ACTIVITY
Inventory turnover
0
10
20
30
1 2
years
amo
un
t
Series1
Average collection period
01234
1 2
years
amo
un
t
Series1
Average Payment period
0
50
100
150
1 2
years
amo
un
t
Series1
13
Total assets turnover
0%50%
100%150%200%
1 2
yearsam
ou
nt
Series1
(C)PROFITIBILITY
Gross profit margin
5.50%6.00%6.50%7.00%7.50%
1 2
yeras
amo
un
t
Series1
net profit margin
-10.00%
-5.00%
0.00%
5.00%
1 2
years
amo
un
t
Series1
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Operating Profit Margin
-0.1
-0.05
0
0.05
1 2
yearsam
ou
nt
Series1
Return on total assets
0.00%2.00%4.00%6.00%8.00%
1 2
years
amo
un
t
Series1
Return on Equity
-10.00%
0.00%
10.00%
20.00%
1 2
years
amo
un
t
Series1
Earning per share
0
0.5
1
1.5
1 2
years
amo
un
t
Series1
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TABLE OF
RATIO ANALYSIS
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TABLE
RATIOS ANALYSIS
COMPUTATION FOR YEAR 2006 RATIOS RESULTS
R U P E E S
Working Capital 62,587,249.0
0 40,007,447.0
0 Rs22,579,802.00
Current Ratio 62,587,249.0
0 40,007,447.0
0 Rs1.56
Cash Ratio 1,395,766.0
0 40,007,447.0
0 Rs0.03
Acid Test Ratio 35,521,598.0
0 40,007,447.0
0 Rs0.89
Inventory Turnover times) 434,783,999.0
0 21,545,471.0
0 Rs20.18
Inventory Turnover days) 365.0
0 6.37 Rs57.30
Account Receivable (times) 467,845,051.0
0 1,990,856.5
0 Rs235.00
Account Receivable (days) 365.0
0 Rs235.00 Rs1.55
Total Days Of Operating Cycle 57.30 1.55 Rs36.97
Debt Ratio 298,711,025.0
0 256,787,835.0
0 Rs116.33
Equity Ratio (113,656,902.0
0) 256,787,835.0
0 Rs44.26-
Asset Turnover 467,845,051.0
0 256,787,835.0
0 Rs182.19
Earning Per Share 7,669,159.0
0 12,601,160.0
0 Rs0.61
Price Earning Ratio 5.75 20,000,000.0
0 Rs0.00
Book Value Per share (113,656,902.0
0) 20,000,000.0
0 Rs5.68-
Rate Of Return On Share Holder's Equity
7,669,156.00
(113,656,902.00)
Rs6.75-
Rate Of Return On Total Assets 7,669,159.0
0 256,787,587.0
0 Rs2.99
Rate Of Cost Of Goods Sold 434,783,999.0
0 467,845,051.0
0 Rs92.93
Rate Of Gross Profit OR (Loss) 33,061,052.0
0 467,845,051.0
0 Rs0.07
Rate Of Operating Expenses 23,315,924.0
0 467,845,051.0
0 Rs4.98
Rate Of Net Profit OR (Loss) 7,669,159.0
0 467,845,051.0
0 Rs0.02
Market Ratio 5.75 10.00 Rs4.25-
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INTERPRETATION
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TIME SERIES RATIO ANALYSIS:
Liquidity:
The overall liquidity of the industry is good in 2006. But it is at the very low stage in 2005, because industry has current ratio is 1.56 in 2006 but in 2005 is 0.922, which means industry is not doing well.Quick ratio indicates that industry has high inventory level and increases as compared to previous years. The industry had low cash ratio in two years comparing with the company.
Asset Management :
Asset management of the industry was good because the inventory turnover is increasing in 2006.Average collection period of the industry is increasing gradually in two years. But the company has very low average collection period, which means that company is not able to collect its receivables. Average payment period of the industry is very low in 2006 as compare 2005, which means that company is not paying it payables quicker than the industry. Total asset turnover is increasing in year 2006 as compare 2005, the company has very low total assets turnover than industry.
Profitability:
Gross Profit margin is increasing gradually in 2006 as compare to 2005. The change in margin is 0.73%. Over all its better.Industry Operating Profit margin is also good in 2006 than 2005.Net profit margin for the industry is increasing gradually but it is negative for the company in 2005 and good in 2006..
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COMMON SIZE INCOME STATEMENT
2006 (Rs) COMMON SIZE Sale net 467,845,051 100%Cost of sales 434,783,999 92.93%Gross profit 33,061,052 7.60%
Operating Expenses
Distribution and selling cost 11,996,901 2.56%Administrative and general expenses 7,671,567 63.95%other operating expenses 681,190 8.88%Finance cost 2,966,266 35.45%
23,315,924 86.04%9,745,128 41.80%
Other operating income 279,090 2.86%operating profit 10,024,218 2.14%Taxation 2,355,062 23.49%Net profit/(loss) for the year/ period after taxation 7,669,156 325.65%
Sale net 501,389,541Cost of sales 465,958,012Gross profit 35,431,529Operating Expenses 12,857,079Distribution and selling cost 8,221,618Administrative and general expenses 730,031Other operating expenses 3,178,947Finance cost 24,987,676Other operating income 10,443,854Operating profit 299,101Taxation 10,742,954
Net profit/ (loss) for the year/ period after taxation 2,523,920
8,219,034
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COMMON SIZE BALANCE SHEET
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2006 Rs.COMMON
SIZEEQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES
Authorized capital 20,000,000 ordinary shares of Rs. 10/- each 200,000,000 100%Issued, subscribed and paid up capital 12,601,160 ordaiary shares of Rs. 10/- each fully paid in cash 126,011,600
Accumulated loss-
239,668,502
-
113,656,902 SURPLUS ON REVALUATION OF FIXED ASSETS 71,733,712 NON CURRENT LIABILITIES
Long term financing 215,470,750 83.28%Deferred liabilities 43,232,828 16.71%
258,703,578 100% CURRENT LIABILITIES
Trade and other payables 19,346,653 48.35%Mark up/interest on long term financing 17,188,830 42.96%Provision for taxation 3,471,964 8.67%
40,007,447 100% 256,787,835 ASSETS NON CURRENT ASSETS
Property, plant and equipment-Tangible 191,019,549 98.36%Long term investment 17,875 0.01%Long term deposits 3,163,162 1.62%
194,200,586 100%CURRENT ASSETS
Stores and spares 3,741,147 5.97%Stock in trade 13,182,972 21.06%Trade debts 2,248,932 3.59%Short term investment 141,532 0.22%Loans and advances 30,287,443 48.39%Prepayments 116,659 0.19%Other receivable 11,472,798 18.33%Cash and bank bakance 1,395,766 2.23%
62,587,249 99.98% 256,787,835
GROWTH RATE
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IGR = ROA x b 1-(ROA x b)
ROA = Net Income Total Assets
= 7,669,156 256,787,835
= 0.029
b = 0.999
IGR = 0.029 x 0.999 1-(0.029 x 0.999)
IGR = 0.0297
SGR = ROE x b 1-(ROE x b)
ROE = Net Income Total Share Holder’s Equity
= 7,669,156 (113,656,902)
= (0.067)
SGR = (0.067) x 0.999 1-((0.067) x 0.999) SGR = 0.0716
PERFORMA INCOME STATEMENT
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Sale net 501,342,757
Cost of sales 465,914,533
Gross profit 35,428,223
Operating Expenses
Distribution and selling cost 12,855,879
Administrative and general expenses 8,220,851
other operating expenses 729,963
Finance cost 3,178,651
24,985,344
10,442,879
Other operating income 299,073
operating profit 10,741,952
Taxation 2,523,684
Net profit/(loss) for the year/ period after taxation 8,218,268
PERFORMA BALANE SHEET
EQUITY AND LIABILITIES Rs.
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SHARE CAPITAL AND RESERVESAuthorized capital20,000,000 ordinary shares of Rs. 10/- each 200,000,000Issued, subscribed and paid up capital12,601,160 ordaiary shares of Rs. 10/- eachfully paid in cash 126,011,600 Accumulated loss/Retained earning -232007015.2
-105,995,415
SURPLUS ON REVALUATION OF FIXED ASSETS 71,733,712
NON CURRENT LIABILITIESLong term financingDeferred liabilities 353,168,972
2,113,349,529
CURRENT LIABILITIESTrade and other payables 158,042,808Mark up/interest on long term financing 140,415,552Provision for taxation 28,362,474
326,820,835 2,097,699,824 -1,136,151,249ASSETS
NON CURRENT ASSETSProperty, plant and equipment-Tangible 1,560,438,696Long term investment 146,021 Long term deposits 25,839,870
1,586,424,587 CURRENT ASSETS
Stores and spares 30,561,430 Stock in trade 107,691,698 Trade debts 18,371,526 Short term investment 1,156,175 Loans and advances 247,418,122 Prepayments 952,987 Other receivable 11,402,012 Cash and bank bakance 511,275,237 2,097,699,824
CONCLUSION
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The overall summary of this project analysis is that the common size income statement is good in the year 2006; because sales are increasing 10% and cost of sales are constant for both the year. A huge increase and cost of sales are 93% in that year and other expenses are also increasing while gross profit is constant in both years. Operating profit is increasing in 2006, but it’s very low in 2005. Profit before taxation is increasing by 23.49%. Net income is increasing in 2006.While analyzing balance sheet asset are utilized in good manner and sales are increasing every year therefore asset are increasing every year and liabilities are also good. The overall liquidity of the company is good because company has current ratio is 1.564 which means company had 1 liability for every 1.564 in assets in 2006. Quick ratio indicates that in 2006 company had low inventory but it increases gradually in two years. Company had low cash ratio in both years. The company is highly leveraged because debt ratio was less than one which means that for every one asset the company had 0.56 liabilities in 2006. Debt equity ratio is increasing and very high. It is quite high because of the reason of smaller equity. Long term debt ratio is lower but increases gradually. Cash coverage ratio is increasing gradually. Asset management of the company was good because the inventory turnover is increasing gradually. Receivable turnover is increasing. Profit margin is increasing in 2006. Market to book ratio is increasing gradually. The industry average is better than the company because almost every ratio of the industry is high with comparison to the company in case of liquidity, leverage, asset management, profitability and market value measure is better of textile industry, industry performance is better and improving every year, in conclusion company and industry is doing well and in future growth is take place which increase the revenues and dividends and it better for the country.
RECOMMENDATION
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For J. A TEXTILE MILLS LTD, Which is a profitable company, i recommend that they should increase their cash & bank, according to me it’s compartively less for those companies like reliance weaving mills.
On the other hand they should pay their liabilities as soon as they can, and increase its owner’s equity than its liabilties. Cost and expenses should be reduced so the company can generate more profit.company should sale their shares on the high market rates and pay more dividend to their investors.
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