Ratios Analysis

Lahore Leads University

Company history

The conceptualization of what became Sapphire started in East Bengal Sapphires spinning plant first in Pakistan Expansions in yarn spinning - lead it to be one of the largest yarn producers in Pakistan In value addition with its first weaving plant Knit fabrics project Woven fabrics dye house Woven Dying and Finishing Home textiles division

Vision
To be one of the premier textile company recognized for leadership in technology, flexibility, responsiveness and quality. Our customer will share in our success through innovative manufacturing, certifiable quality, exceptional services and creative alliances. Structured to maintain in depth competence and knowledge about our business, our customers and worldwide markets. Our workforce will be the most efficient in industry through multiple skill learning, the fostering of learning and the fostering of teamwork and the security of the safest work environment possible recognized as excellent citizen in the local and regional community through our financial and human resource support and our sensitivity to the environment.

Mission
Our mission is to be recognized as premier supplier to the markets we serve by providing quality yarns, fabrics and other textile products to satisfy the need of our customers. Our mission will be accomplished through excellence in customer service, sales and manufacturing supported by teamwork of all associates. We will continue our tradition of history, fairness and integrity in relationship with our customers, associates, shareholders, community and stakeholders.

Our values

People Relationship Integrity Diversity Environment

Contact Information
7A-K, Main Boulevard, Gulberg II, Lahore Pakistan. Phone: +92 42 35750410 Fax: +92 42 35758783 World Fax: +1 917 5913166 E-Mail: info@sapphire.com.pk

Horizontal Analysis Of Sapphire Financial Year 2012 & 2011

Balance Sheet
As at June 30, 2012 2012 2011 000 ASSETS NON-CURRENT ASSETS Property, plant and equipment long term investment Long term loans Long-term deposits CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade debts Loans & Advances Deposits and short term payments Other receivables Advance income tax Tax refunds due from the govt. Cash and bank balances 1.88 0.93 1.22 0.21 1.26 1.13 1.09 1.40 0.047 0.92 100 100 100 100 100 100 100 100 100 100 1.23 1.36 1.45 1.027 2.78 0.58 1.45 0.97 35.05 1.46 100 100 100 100 100 100 100 100 100 100 1.28 1.36 2.55 2.34 100 100 100 100 1.27 1.26 0.63 1.00 100 100 100 100 2011 2010 000

1.08

100.00

Balance Sheet
As at June 30, 2012 2012 2011 000 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES 2011 2010 000

Authorized capital & reserve Authorized capital 12,000,000(2011: 12,000,000) ordinary shares of Rs.10
Issued, subscribed and paid up capital Reserves Un-appropriated profits NON-CURRENT LIABILITIES Long-term financing Deferred liabilities - employee benefits-unfunded -Deferred tax liability CURRENT LIABILITIES Trade and other payables Mark-up accrued Short term borrowings Current portion of long term financing Provision for taxation

100

100

1 1 1.08

100 100 100

1 1 1.77

100 100 100

100

1.23 1.11

100 100

1.23 1.28

100 100

1.23 0.79 1.20 100 1.16

100 100 100 100 100

1.31 0.87 1.23

100 100 100 -

1.23

100

Profit and Loss Account

for the year ended June 30,2012 2012 Sales Cost of sales Gross profit Other operating income 97.8% 116.7% 49.8 % 41.17 % 2011 100% 100% 100 % 100% 2011 149.03% 138.06% 186.78% 59.91% 2010 100% 100% 100 % 100%

Distribution cost Administrative expenses Other operating expenses Finance cost Share of profit of associate Profit before taxation Provision for taxation Profit for the year

114.8% 89% 43% 116% 77% 20% 122% 15%

100% 100% 100% 100% 100% 100% 100% 100%

104.66% 123.69% 180.14% 105.93% 210.87% 309.52% 107.1% 346.05%

100% 100% 100% 100% 100% 100% 100% 100%

Vertical Analysis Of Sapphire Financial Year 2012 & 2011

Balance Sheet
As at June 30, 2012 2012 ASSETS NON-CURRENT ASSETS Property, plant and equipment long term investment 37% 12% 10% Long term loans 0.016% 0.68% Long-term deposits CURRENT ASSETS Stores, spare parts and loose tools Stock in trade Trade debts Loans & Advances Deposits and short term payments Other receivables Advance income tax Tax refunds due from the govt. Cash and bank balances 1.05% 35% 9% 0.07% 0.014% 0.197% 1.450% 1.507 0.193% 0.90% 41% 8% 0.39% 0.12% 0.18% 1.43% 1.16% 4.5% 0.68% 41% 8.1% 0.53% 6.06 0.44% 1.36% 1.64% 0.17% 0.43% 0.15% 0.21% 0.01% 31% 33% 11% 2011 2010

100.00

100.00

100.00

Balance Sheet
As at June 30, 2012 2012 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES 2011 2010

Authorized capital & reserve Authorized capital 12,000,000(2011: 12,000,000) ordinary shares of Rs.10
Issued, subscribed and paid up capital Reserves Un-appropriated profits NON-CURRENT LIABILITIES Long-term financing Deferred liabilities - employee benefits-unfunded -Deferred tax liability CURRENT LIABILITIES Trade and other payables Mark-up accrued Short-term borrowings Current portion of long term financing Provision for taxation

4.61%

4.9%

6.89

3.955% 4.996% 40.92%

4.2% 5.4 40%

5.9% 7.4% 31%

4.3%

1.433% 0.739%

1.25% 0.71%

1.4% 0.77%

6.815% 0.633% 39.481% 1.020%

5.9% 0.85% 35.5% 4.11%

6.2% 1.3% 39.6% 1.05%

Profit and Loss Account

for the year ended June 30,2012 2012 Sales Cost of sales Gross profit Other operating income 100% 85% 14% 0.07% 2011 100% 71.1% 28% 1.7% 2010 100% 77.4% 42.06% 0.43%

Distribution cost Administrative expenses Other operating expenses Finance cost Share of profit of associate Profit before taxation Provision for taxation Profit for the year

4.9% 1.4% 0.64% 5.45 2.1% 4.08% 1.2% 2.8%

4.2% 1.5% 1.4% 4.6% 2.7% 19% 18% 18.23

6% 1.88% 1.19 6.51% 1.91% 9.26% 1.41% 7.85%

Ratio Analysis Of Sapphire Financial Year 2012

Liquidity Ratios
A liquidity ratio is employed by analysts to determine the firms ability to pay its short terms obligations and reveals the short-term financial strength or weakness. Management is interested in knowing how efficiency working capital is being utilized by the business

Current ratio:

Current Assets / Current Liabilities.

2012
1293849900 / 1247684340 1.04

2011
1402604121 / 1139094038 1.24

2010
955221569 / 841599812 1.13

Interpretation: The companys ratio is now decreasing to 1.04 from 1.24 which shows that companys short term liability is increasing.

Quick ratio:

Current assets - inventories / Current Liabilities

2012 (1293849900 924963661) / 1247684340 0.30

2011 (1402604121 995349917) / 1139094038 0.36

2010 (955221569- 728213474) / 841599812 0.26

Interpretation: The ratio of company is decreasing from 0.36 to 0.30 which shows that current liabilities are now increasing.

Debt Management Ratios

Debt management ratios or solvency ratios give the analysis information on the firms financial leverage (strength) and ability to meet its long term obligations. These ratios indicates that how a firs is managing their long term obligations. Show the firms long term positions or ability.

Debt-to-total-assets ratio: Total debt / Total Asset

2012 1304219294 / 2601955605

2011 47412426 + 1139094038 / 2400888895

2010 112815104 + 841599812 / 1741224151 0.54

0.51

0.49

Interpretation: Ratio is increasing that shows that company is now using more long term debts and they are not utilizing them properly.

Debt to Equity: Total Debt / Total Shareholder Equity

2012 1304219294 / 2601955605 0.5

2011 1186506464 / 1214382431 0.97

2010 954414916 / 786809235 1.21

Interpretation: The ratio shows that shareholder equity is not appropriate to meet their long term debts. And now company is at more risk and cannot take more loans for their company.

Debt to Capital: Total Debt / Total debt + Total S.H Equity

Total capitalization: total debt + total shareholder equity

2012 56534954 / 1354271265 0.041

2011 47412426 / 1261794857 0.037

2010 112815104 / 899624339 0.12

Interpretation: The ratio is decreasing that shows company is using more long term debts and not utilizing them properly.

Coverage ratios: EBIT / Interest expense

2012 104471999 / 140676982 9.75

2011 503156060 / 12097378 4.15

2010 162560022 / 114194114 1.42

Interpretation: The ratio is increasing and showing that now company is paying more intrest on their loans which is not good for long term run of company.

Long term Assets to Long Term Liabilities: Long term assets / Long term
Liabilities

2012 1308105705 / 56534954 23.13

2011 998284774 / 47412426 21.05

2010 786002582 / 112815104 6.9

Interpretation: The companys ratio is increasing from 21.05 to 23.13 it shows companys long-term liabilities is decreasing

Fixed Assets to Equity Ratio: Fix Assets / Shares holders capital

2012 1308105705 / 1297736311 1.007

2011 998284774 / 1214382431 0.82

2010 786002582 / 786809235 0.99

Activity Ratios
That ratios show that how much a company is active. And how effectively they are utilizing their assets.

Receivable turnover: Annual Sales / Receivable

2012 2557935105 / 5127146 499

2011 2613863539 / 4498784 582

2010 1753876366 / 7715801 227

Interpretation: The company is doing better in 2012 as they are getting more turnovers on their receivables.

Receivable turnover in days: 365 / Receivable turnover

2012 365 / 499 74 days

2011 365 / 582 63 days

2010 365 / 227 60 days

Interpretation: The company is getting back their money in 74 days which is as compare to 63 days are not good as they do not trust their contractors because they are not getting their money back in less days.

Payable turnover: Annual credit purchase / payable

Closing inventory + CGS = opening inventory + purchases

2012 2161930285 / 12 177327949

2011 2038283117 / 143300061 14

2010 1967345561 / 109015469 18

Payable turnover in days: 365 / Payable turnover ratio

2012 365 / 12 30

2011 365 / 14 26

2010 365 / 18 20

Interpretation: There is no change in payable turnover ratio.

Inventory activity: CGS / Inventory

2012 2190019412 / 924963661 2.3

2011 1876103475 / 995349917 1.8

2010 1358894611 / 728213474 1.8

Days of inventory on hand: 365 / Inventory turnover

2012 365/2.3 159 days

2011 365 / 1.8 202 days

2010 365 / 1.8 202 days

Interpretation: Now company is having inventory on hand is 159 days from 202 days which shows that now company is reducing their processing days which is good for the company.

Total asset turnover: Revenue or sales / Total assets

2012 2557935105 / 2601955605 0.98

2011 2613863539 / 240088895 1.09

2010 1753876366 / 1741224151 0.10

Interpretation: Ratio shows that company is not generating appropriate profit from their sales and they are not utilizing their assets properly

Fixed asset turnover: Revenue or sales / Fixed assets

2012 2557935105 / 1308105705 1.95

2011 2613863539 / 998284774 2.61

2010 1753876366 / 786002582 2.23

Sales to working capital Ratio: Sales /

working capital

2012 2557935105 / 46165569 55.40

2011 2613863539 / 263510083 9.91

2010 1753876366 / 113621757 15.43

Profitability Ratios
These ratios show that how a firm is generating their profit from its sales It indicates the return which they can get on their investments. These ratios indicate the firms overall effectiveness of operations.

Gross Profit Margin: Net sales-CGS / Net sales

2012 2557935105 2190019412 / 2557935105 0.15 * 100 15 Interpretation:

2011 2613863539 1876103475 / 2613863539 0.28 * 100 28

2010 1753876366 1358894611 / 1753876366 0.22 * 100 22

Gross profit margin is decreasing from 28 to 15 which show that cost of goods sold is now increasing as compare to their net sales.

Net Profit Margin: Net profit / sales

2012 71803326 / 2557935105 2.80

2011 476532191 / 2613863539 18.2

2010 137703182 / 1753876366 7.85

Interpretation: The margin of company is now decreasing from 18.2 to 2.80 percent which is not good for company.

Operating profit margin: Operating profit / Net sales

2012 104471999 / 2557935105 4.08

2011 503156060 / 2613863539 19.24

2010 162560022 / 1753876366 9.26

Return On Asset: Net profit after tax / Total assets

2012 71803326 / 2601955605 2.8

2011 476532191 / 24008888895 19

2010 137703182 / 1741224151 7.9

Interpretation: Now company is not generating appropriate profit from his assets.

Return on Equity: N.P.A.T / Shareholder Equity

2012 71803326 / 1297736311 5.53

2011 476532191 / 1214382431 0.39

2010 137703182 / 786809235 0.17

Interpretation: Company is now generating less profit from his equity.

Return on investment (ROI): Net Income / Long term debt

2012 71803326 /-----

2011 476532191 / -----

2010 13703182 / 75000000 18.2

Operating cycle: Inventory turnover in days + Receivable turnover in days

2012 159 + 74 233

2011 202 + 63 265

2010 202 + 60 262

Interpretation: The ratio show the time period start from purchasing goods and cash received for the specific good and interpretation shows that companys operating cycle is now squeezing from 265 days to 233 days.

Cash cycle: Operating cycle + Payable turnover in days

2012 233 + 30 263

2011 265 + 26 291

2010 262 + 20 282

Interpretation: Now cash cycle is becoming less and falling to 263 from 291.

Marketing Ratios

Earnings per Share: Net Income /

Number of Shares

2012 71803326 / 120000 59.83

2011 476532191 / 1200000 397.11

2010 137703182 / 1200000 114

Dividend per share (DPS): Dividend paid in year / Number of shares

2012 25709918 / 1200000 21.42

2011 20557633 / 1200000 17.13

2010 15426067 / 1200000 12.85

Interpretation:
Higher the ratio better it is for investor point of view investor prefer to invest in companies that show high DPS ratios c