Ratios 2006 Industry Result

Short Term Solvency Ratios

Current Ratio 0.85 2 Worse
Quick Ratio 0.374 1.5 Worse
Cash Ratio 0.021 1.25 Worse
Working Capital (67,126,687) 5,500,000 Worse
Long Term Solvency Ratios/Stability Ratios
Debt Ratio 0.714 0.7 Average
Debt to Equity Ratio 2.49 0.10 Worse
Time Interest Earned 2.195 times 20 times Worse
Assets Utilization Ratios
Account Receivable Good
48.71 times 14 times
Turnover
Average Collection Good
7.5 days 25 days
Period
Inventory Turnover 3.54 days 21 days Worse
Fixed Assets Turnover 0.701 times 10 times Worse
Total Assets Turnover 0.737 times 6 times Worse

Profitability Ratios
Gross Profit Margin 15.1% 30% Worse
Operating Profit Margin 9.4% 25% Worse
Net Profit Margin 0.89% 20% Worse
Return on Assets 0.6% 18% Worse
Return on Equity 1.45% 12% Worse
Earning per Share 0.86
Dividend per Share 1.48
 Ratios 2006 2005 2004 Result
Short Term Solvency Ratios
Current Ratio 0.853 1.082 0.777 Average
Quick Ratio 0.236 0.550 0.341 Average
Cash Ratio 0.021 0.014 0.004 Worse
Working Capital (67,126,687) 17,219,191 (65,722,452) Average
Long Term Solvency Ratios/Stability Ratios
Debt Ratio 0.714 0.502 0.637 Average
Debt to Equity Ratio 2.494 1.011 1.759 Average
Time Interest Earned 2.195 times 1.043 times 1.743 times Average
Assets Utilization Ratios
Account Receivable Good
48.71 times 58.13 times 174.8 times
Turnover
Average Collection Period 7.5 days 6.27 days 2.1 days Good
Inventory Turnover 3.54 days 10.8 days 7.49 days Average
Fixed Assets Turnover 0.701 times 1.233 times 1.219 times Average
Total Assets Turnover 0.737 times 1.202 times 1.341 times Good

Profitability Ratios
Gross Profit Margin 15.1% 15.8% 12.1% Worse
Operating Profit Margin 9.4% 10.8% 7.3% Worse
Net Profit Margin 0.89% 6.3% 3.5% Worse
Return on Assets 0.6% 7.6% 4.7% Worse
Return on Equity 1.4% 15.3% 13.0% Worse
 Recommendations
The company has an average position that in 2004 it is in
worse condition but in 2005 again it become in stable
position but again it gone to worse condition in 2006.
The recommendations which can help this company are as
follows:

♦ As the short term solvency ratios of this company are in

worse condition so the company should payoff his liabilities
so that it is in position to maintain its current ratio, quick
ratio, cash ratio and its working capital.
♦ The company should payoff his Liabilities to maintain its
Debt Ratio and Debt to Equity Ratio and it should maintain
its sales so that it can increase its Time Interest Earned.
♦ To maintain the inventory turnover the company should
increase its sales so that it can maintain its Inventory
Turnover, and it should also increase its net sales by offering
discount to its customer to maintain its Fixed and Total
Assets Turnover.
♦ The company should increase its net sales to maintain its
Gross Profit Margin, Operating Profit Margin and Net Profit
Margin, it should increase its sales to get more profit so that
it is able to maintain its Return On Assets and Return on
Equity.
 Cross Sectional Graphical
Representation
2004
2005
2006

By seeing overall results of 2004, 2005 and 2006, in cross

sectional analysis, company performance is better in 2005
then 2004 and 2006.

Time Series Graphical

Representation

50

40

30

20

10

0
2004 2005 2006
By seeing overall results of 2004, 2005 and 2006, in time
series analysis, company performance is better in 2005 then
2004 and 2006.

About a company;
The company which is being selected for this report is
Kohinoor Sugar Mills Ltd.
FAROOQ AHMED is a company secretary. Its registered office is in
29 – G, GULBERG – II, LAHORE and mills are in JAUHARABAD,
DISTRICT KHUSHAB.

STATEMENT OF ETHICS AND BUSINESS PRACTICE

Code of ethics is a pre-requisite for all directors and employees of

Kohinoor Sugar Mills Limited. We endeavor to have fully groomed
employees committed to carry out honestly activities assigned to
them. Our aim is to have high standard of excellence for the products
and for all those involved with our Company.

VISION STATEMENT

To become a market leader in the Industry setting out high quality

standards for the Company and others to follow.

MISSION STATEMENT

To produce/manufacture quality sugar and molasses by maintaining a

high standard of efficiency and staying competitive to ensure
customer satisfaction and to provide a comfortable level of return to
all stakeholders.
Financial statement analysis:
It is a set of four related accounting reports which shows the position and
results of operations of an entity during a particular period of time.
It includes;

• Income statement
• Balance sheet
• Statement of cash flows
• Statement of retained earning

Types of Analysis;

1. Cross sectional analysis

2. Time series analysis

Cross sectional analysis:

Financial results of the firm are compared with the result of industry.

Time series analysis:

Evaluation of the firm financial performance over time (using financial ratio
analysis) is known as Time series analysis.

We do this analysis to;

• Know the strengths and weakness

• Know the historical performance
• Know the current financial position of firm