Financial Management Pso Project Report

Pakistan State Oil
Acknowledgement
In the name of Allah, the most Gracious and the most Merciful. We thank to Allah
Almighty who enables us to accomplish our project Analysis of Financial Statement of
PSO. We are also very thankful to our parents whose prayers and efforts support us to
complete our project successfully. We pay regards and gratitude to our most respectable
and hardworking instructor Mr. M. Taimoor Hassan Abbasi who gave us his precious
time and knowledge along with proficient skills to help us in learning how to handle
difficulties in real situations and how to meet with challenges in the actual business
environments. By giving us difficult tasks in this project he actually indulge us in the
practice of our Quaids sayings work, work and work. Working on this project with such
a sincere instructor is great honor and pleasure for us. We are also very thankful to our
Department of Management Sciences and The Islamia University of Bahawalpur which
provides us great opportunity to work on such an informative project in a small period of
time and the faculty of management sciences who provides us with all possible
intellectual human and economic resources to fulfill the requirements of this project. By
the combination of all these blessings prayers and mental and physical aids we
ultimately completed our project in a period of four months.
Department of Management Sciences
Page 1
Pakistan State Oil
Introduction
PSO is the market leader in Pakistans energy sector. The company has the largest
network of retail outlets to serve the automotive sector and is the major fuel supplier to
aviation, railways, power projects, armed forces and agriculture sector. PSO also
provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports.
The company takes pride in continuing the tradition of excellence and is fully committed
to meet the energy needs of today and rising challenges of tomorrow.
Pakistan State Oil, the largest oil marketing company in the country, is currently engaged
in storage, distribution and marketing of various POL products. The companys current
market share of 82.3% in the black oil market and 59.4% share in the white oil market.
The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on
January 1st; the government took over and merged Pakistan National Oil (PNO) and
Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL).
Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC)
came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on
August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th
September 1976 and control was vested in SOCL. The end of that year (30th December
1976) saw the merger of the Premier Oil Company Limited and State Oil Company
Limited, giving way to Pakistan state Oil (PSO).
After PSOs inception, the corporate culture underwent a comprehensive renewal
program which was fully implemented in 2004. This program over the years included the
revamping of the organizational architecture, rationalization of staff, employee
empowerment and transparency in decision making through cross functional teams. This
new corporate renewal program has divided the companys major operations into
independent activities supported by legal, financial, informative and other services. In
order to reinforce and monitor this structural change, related check and balances have
been established by incorporating monitoring and control systems. Human Resource
Development became one of the main priorities on the companys agenda under this
corporate reform.
It is due to this effective implementation of corporate reform and consistent application of
the best industrial practices and business development strategies, that PSO has been
able to maintain its market leadership in a highly competitive business environment.
January 1, 1974
INCLUDEPICTURE
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%20Settings\\M.AHSAN\\Local%20Settings\\Temp\\Temporary%20Directory
%201%20for%20PSO.zip\\History.mht!/about_us/images/logo_national.jpg"
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MERGEFORMAT
The federal government took over the management
Page 2
Pakistan State Oil

of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited), renamed into
POCL (Premier Oil Company Limited) under marketing of Petroleum Products (Federal
Control Act, 1974).
June 6, 1974
The government incorporates Petroleum Storage Development

Corporation PSDC.
August 23, 1976
PSCDC renamed to State Oil Company Limited (SOCL).
September 15, 1976
The Government purchases ESSO undertakings, vests their control in

SOCL.
December 30, 1976
The Government merges PNO and POCL into SOCL (State Oil Company
Limited) and renames it Pakistan State Oil Company Limited (PSO).
1999
The new vision program is launched with the new logo of PSO.
Page 3
Pakistan State Oil
Vision and Mission of PSO
Vision
To excel in delivering value to customers as an innovative and dynamic energy company

that gets to the future first.
Mission
We are committed to leadership in energy market through competitive advantage in

providing the highest quality petroleum products and services to our customers.
Professionally trained, high quality, motivated workforce, working as a team in an

environment, which recognizes and rewards performance, innovation and
creativity, and provides for personal growth and development.
Lowest cost operations and assured access to long-term and cost effective
supply sources.
Sustained growth in earnings in real terms.
Page 4
Pakistan State Oil
Highly ethical, safe environment friendly and socially responsible business

practices.
Table of Content
Introduction ii
Income Statement
1
Balance Sheet 3
Cash Flow Statement 4
Vertical Analysis of Income Statement
5
Interpretation
5
Horizontal Analysis of Income Statement 11
Interpretation
12
Vertical Analysis of Balance Sheet 18
Interpretation
19
Horizontal Analysis of Balance Sheet27
Interpretation
28
Vertical Analysis of Cash Flow Statement 36
Interpretation
36
Horizontal Analysis of Cash Flow Statement 43
Interpretation
43
Ratio Analysis 50
Interpretation
51
1. Short-term Solvency Ratios
51
2. Activity Ratios 53
3. Long-term Solvency Ratios
57
4. Profitability Ratios
59
Bankruptcy Analysis 65
Interpretation
65
Conclusion & Recommendations
66
Page 5
Pakistan State Oil
Income Statement
For The Period of 5 Years ended on June 31st, 2009
Particulars
Sales Revenue
2005 (Rs. In '000)
2006 (Rs. In '000)
2007 (Rs. In '000)
2008 (Rs. In '000)
2009 (Rs. In '000)
254,362,981
353,833,345
411,989,979
583,298,190
719,412,244
Less:
Trade Discount & Allowances
Sales Tax
(586,061)
(1,318,472)
(932,387)
(84,231)
(130,068)
(32,673,120)
(44,539,632)
(52,418,310)
(74,249,472)
(97,386,723)
Inland Freight Equalization Margin
(8,600,150)
(9,725,202)
(8,932,956)
(13,685,954)
(9,199,864)
Net Sales
212,503,650
298,250,039
349,706,326
495,278,533
612,695,589
Less Cost of Goods Sold:

Opening Stock
14,992,097
20,604,757
28,190,089
29,583,511
62,381,523
Purchases
204,369,979
288,628,145
338,840,318
498,052,919
588,023,620
Cost of Product Available for Sale
219,362,076
309,232,902
367,030,407
527,636,430
650,405,143
Closing Stock
(20,604,757)
(28,190,089)
(29,583,510)
(62,381,522)
(40,719,664)
Cost of Sales
198,757,319
281,042,813
337,446,897
465,254,908
609,685,479
Gross Profit / Loss
13,746,331
17,207,226
12,259,429
30,023,625
3,010,110
Less Operating Expenses:

Transportation Cost:
Cost Incured During The Year
Realized Against IFEM
Refinery Share
Adjustments from Other Oil
Companies
6,766,429
6,409,299
6,860,622
8,219,929
9,482,779
(8,600,150)
(9,725,202)
(8,932,956)
(13,685,954)
(9,199,864)
2,774,028
3,382,251
3,042,484
5,998,784
835,398
(627,038)
299,447
(600,822)
(194,873)
(604,640)
313,269
365,795
369,328
337,886
513,673
Distribution & Marketing Expenses:

Salaries, Wages & Benefits
1,251,558
1,225,467
1,332,317
1,672,477
2,070,788
Rent, Rates & Taxes
221,354
185,600
232,589
274,614
381,626
Repair & Maintenance
330,379
468,563
493,732
548,540
596,548
Insurance
35,945
51,808
65,321
73,907
127,893
Travelling & Office Transport
48,761
58,432
82,632
89,824
105,234
Utilities
107,539
95,108
96,733
104,029
123,989
Sales Promotion & Advertisement
209,065
236,364
241,522
285,152
310,861
Others
153,508
171,291
200,443
229,660
244,014
2,358,109
2,492,633
2,745,289
3,278,203
3,960,953
Salaries, Wages & Benefits
618,451
631,721
673,542
765,027
801,145
Repairs & Maintenance
26,658
35,831
65,790
68,055
58,988
Insurance
44,957
62,751
66,013
63,485
67,479
Donations
22,122
38,838
30,741
98,162
49,826
Others
148,587
166,448
166,626
152,408
174,355
860,775
935,589
1,002,712
1,147,137
1,151,793
984,017
1,082,394
1,140,065
1,166,826
1,194,313
485,600
573,472
364,816
1,132,598
235,790
139,834
436,276
Administrative Expenses:
Depreciation & Amortization

Other Operating Expenses:
Workers' Profits Participation Fund
Workers' Welfare Fund
Page 6
Pakistan State Oil

Exchange Loss - Net
Provision Against:
110,834
6,498
1,558,947
3,508,030
Doubtful Trade Debts
325,000
1,045,600
150,748
158,680
477,345
Disputed Demands for Custom Duty
161,219
215,492
37,604
Others
84,433
217,453
44,537
25,614
2,385
Miscellaneous
19,620
62,290
48,987
3,250
6,629
1,075,872
2,460,931
755,420
3,352,969
3,994,389
5,592,042
7,337,342
6,012,814
9,283,021
10,815,121
8,154,289
9,869,884
6,246,615
20,740,604
(7,805,011)
Commission & Handling Services
206,924
138,565
290,963
281,898
384,751
Income from CNG Operations
121,616
203,798
354,709
345,738
385,863
Handling, Services & Other Recoveries
593,028
565,793
602,075
707,824
609,952
Others
264,483
42,694
31,185
61,067
71,100
Operating Expenses
Add Other Operating Income:
Other Operating Income
1,186,051
950,850
1,278,932
1,396,527
1,451,666
Operating Profit / Loss
9,340,340
10,820,734
7,525,547
22,137,131
(6,353,345)
Mark-up on Borrowings
256,990
622,346
891,590
745,502
2,953,427
Banks & Other Charges
113,709
261,807
266,522
622,396
3,278,629
Finance Cost
370,699
884,153
1,158,112
1,367,898
6,232,056
8,969,641
9,936,581
6,367,435
20,769,233
(12,585,401)
451,850
Less Finance Cost:
Add Other Income:

Share of Profit of Associates
221,808
1,038,939
330,306
294,318
Dividends
10,331
13,200
60,906
65,821
Markup & Delayed Payment Charges
3,745
445,065
Liabilities Written Back
305,450
184,793
113,129
31,026
Penalties & Other Recoveries
84,611
100,094
84,231
57,637
Others
38,654
126,151
55,594
177,137
Other Income
Profit / Loss before Tax
221,808
1,481,730
754,544
608,178
1,228,536
9,191,449
11,418,311
7,121,979
21,377,411
(11,356,865)
3,236,857
4,099,930
2,483,725
7,392,666
201,536
250,534
77,236
(58,802)
(62,749)
(233,929)
Less Taxation:
Current - for The Year
- for Prior Year
Deferred - for The Year
48,185
(283,556)
7,259
(6,300)
(4,625,936)
Taxation
3,535,576
3,893,610
2,432,182
7,323,617
(4,658,329)
Net Profit / Loss
5,655,873
7,524,701
4,689,797
14,053,794
(6,698,536)
Page 7
Pakistan State Oil
Balance Sheet
Particulars
2005 (Rs. In '000)
2006 (Rs. In '000)
2007 (Rs. In '000)
2008 (Rs. In '000)
2009 (Rs. In '000)
Cash & Bank Balances
1,921,936
1,898,894
1,522,276
3,018,640
2,883,118
Short-term Investments
10,081
709,627
10,358,006
14,562,628
15,751,198
15,681,790
12,806,779
Deposits & Short-term Prepayments
726,157
1,287,893
1,583,913
401,433
551,803
Loans & Advances
213,248
275,729
365,974
396,220
418,015
Assets
Current Assets:
Taxation - Net
Other Receivables
Trade Debts
6,791,078
11,715,868
13,599,966
33,904,728
80,509,830
Stock in Trade
20,583,301
28,168,633
29,562,055
62,360,067
40,698,209
130,559
125,030
127,891
115,814
112,143
40,734,366
58,034,675
62,513,273
115,878,692
138,689,524
Deferred Tax
124,740
408,296
401,037
407,337
5,033,273
Long-term Deposits & Prepayments
105,163
74,662
65,913
79,098
83,655
Long-term Loans, Advances & Receivables
769,674
698,146
627,972
477,745
405,780
2,317,810
3,278,970
2,990,591
2,701,097
2,153,514
144,647
154,819
126,212
105,502
68,872
8,111,482
7,518,956
8,012,317
7,460,549
6,987,025
Total Non-Current Assets
11,573,516
12,133,849
12,224,042
11,231,328
14,732,119
Total Assets
52,307,882
70,168,524
74,737,315
127,110,020
153,421,643
Taxation - Net
1,344,268
1,695,250
69,398
726,703
Short-term Borrowings
4,811,605
7,648,919
9,064,781
10,997,908
18,654,526
Accrued Interest / Mark-up
63,924
120,731
131,961
217,928
556,380
Provisions
754,227
777,276
688,512
726,116
688,512
Trade & Other Payables
25,790,181
36,814,402
41,431,075
81,067,565
110,123,702
Total Current Liabilities
32,764,205
47,056,578
51,385,727
93,736,220
130,023,120
Retirement & Other Service Benefits
1,323,688
1,554,893
1,644,063
1,574,148
1,673,020
675,170
743,994
768,308
834,598
854,718
1,998,858
2,298,887
2,412,371
2,408,746
2,527,738
Stores, Spare Parts & Loose Tools

Total Current Assets
Non-Current Assets:
Long-term Investments
Intangibles
Property, Plant & Equipment
Liabilities & Equity

Liabilities:
Current Liabilities:
Non-Current Liabilities:
Total Non-Current Liabilities

Equity:
Share Capital
1,715,190
1,715,190
1,715,190
1,715,190
1,715,190
Reserves
15,829,629
19,097,869
19,224,027
29,249,864
19,155,595
Total Equity
17,544,819
20,813,059
20,939,217
30,965,054
20,870,785
Total Liabilities & Equity
52,307,882
70,168,524
74,737,315
127,110,020
153,421,643
Page 8
Pakistan State Oil
Cash Flow Statement

Particulars
2005 (Rs. In '000)
2006 (Rs. In '000)
2007 (Rs. In '000)
2008 (Rs. In '000)
2009 (Rs. In '000)

2,905,661
Cash Generated from Operating Activities:

7,350,990
6,553,775
9,103,698
12,479,055
142,921
71,528
74,511
149,747
71,965
(33,970)
30,501
8,749
(13,185)
(4,557)
66,290
20,120
Cash Generated from Operations
Long-term Deposits
(1,636,104)
(3,826,184)
(4,050,775)
(6,672,612)
(1,403,937)
Finance Costs Paid
(337,220)
(827,346)
(1,146,882)
(1,281,931)
(5,893,604)
Payment against Provisions
(80,258)
(184,050)
(10,126)
(37,604)
Retirement Benefits Paid
(160,700)
(184,450)
(287,721)
(610,949)
(486,598)
5,245,659
1,633,774
3,691,454
4,116,415
(4,828,554)
(1,506,408)
(751,350)
(1,609,467)
(620,293)
(694,157)
Proceeds from Disposal of Operating Assets
12,087
261,863
30,740
57,189
20,167
Dividends Received
274,753
291,143
870,774
390,178
671,101
24,657
(1,219,568)
(173,687)
(707,953)
(172,926)
(2,889)
Taxes Paid
Net Cash Generated / Used In

Cash Flows from Investing Activities:
Purchases of Fixed Assets
Proceeds from Liquidation of Subsidiaries

Cash Flows from Financing Activities:
Repayment of Long-term Loan
Proceeds from / Repayment of Long-term Deposits
Proceeds from / Repayment of Short-term
Finances
Dividends Paid
Total Net Cash Generated / Used In for The Year
Cash at Beginning of The Year
Cash at End of The Year
(4,753)
62,162
68,824
24,314
534,000
216,000
3,210,474
(5,335,878)
3,472,487
(3,616,669)
(4,389,267)
(4,800,295)
(4,380,252)
(2,960,697)
(3,025,260)
(4,104,443)
(1,565,507)
(9,716,130)
511,790
1,000,831
(2,644,356)
1,417,994
(5,772,641)
(4,319,653)
(1,192,500)
(191,669)
(2,836,025)
(1,418,031)
(7,190,672)
(191,669)
(2,836,025)
(1,418,031)
(7,190,672)
(11,510,325)
Page 9
Pakistan State Oil
Vertical Analysis of Income Statement

Particulars
2005
100%
Sales Revenue
2006
100%
2007
100%
2008
100%
2009
100%
(0.23%)
(0.37%)
(0.23%)
(0.01%)
(0.02%)
Sales Tax
(12.85%)
(12.59%)
(12.72%)
(12.73%)
(13.54%)
(3.38%)
(2.75%)
(2.17%)
(2.35%)
(1.28%)
83.54%
84.29%
84.88%
84.91%
85.17%
Net Sales
Opening Stock
5.89%
5.82%
6.84%
5.07%
8.67%
Purchases
80.35%
81.57%
82.24%
85.39%
81.74%
86.24%
87.40%
89.09%
90.46%
90.41%
Closing Stock
(8.10%)
(7.97%)
(7.18%)
(10.69%)
(5.66%)
Cost of Sales
78.14%
79.43%
81.91%
79.76%
84.75%
Gross Profit / Loss
5.40%
4.86%
2.98%
5.15%
0.42%
Transportation Cost
0.12%
0.10%
0.09%
0.06%
0.07%
Distribution & Marketing Expenses
0.93%
0.70%
0.67%
0.56%
0.55%
Administrative Expenses
0.34%
0.26%
0.24%
0.20%
0.16%
0.39%
0.31%
0.28%
0.20%
0.17%
Other Operating Expenses
0.42%
0.70%
0.18%
0.57%
0.56%
0.47%
0.27%
0.31%
0.24%
0.20%
0.15%
0.25%
0.28%
0.23%
0.87%
Finance Cost
0.15%
0.25%
0.28%
0.23%
0.87%
Other Income
0.09%
0.42%
0.18%
0.10%
0.17%
Profit before Tax / Loss
3.61%
3.23%
1.73%
3.66%
(1.58%)
Taxation
1.39%
1.10%
0.59%
1.26%
(0.65%)
Net Profit / Loss
2.22%
2.13%
1.14%
2.41%
(0.93%)
Interpretation
1. Sales
Years
2005 2006 2007 2008
Percentage 100% 100% 100% 100%
2009
100%
Interpretation
In vertical analysis we took sales as base so sales of all the years will 100%.
2. Trade Discount
Page 10
Pakistan State Oil

Years
Percentage
2005
0.23%
2006
0.37%
2007
0.23%
2008
0.01%
2009
0.02%
Interpretation
Since the computed value of cost of sales under vertical analysis taking sales as base is
covering almost 0.23%, 0.37%, 0.23%, 0.01%, and 0.02% of respective sales in the last
five consecutive years. The overall tendency of the cost of sales is increasing.
3. Sales Tax
Years
Percentage
2005
12.85%
2006
12.59%
2007
12.72%
2008
12.73%
2009
13.54%
Interpretation
covering almost 12.85%,12.59 %, 12.72%, 12.73%, and 13.54% of respective sales in
the last five consecutive years. The overall tendency of the cost of sales is increasing.
4. Inland Freight equalization margin

Years
Percentage
2005
3.38%
2006
2.75%
2007
2.17%
2008
2.35%
2009
1.28%
.
Interpretation
5. Net Sales
Years
Percentage
2005
83.54%
2006
84.29%
2007
84.88%
2008
84.91%
2009
85.17%
Interpretation
covering almost 83.54%, 84.29%, 84.88%, 84.91%, and 85.17% of respective sales in
6. Opening Stock
Page 11
Pakistan State Oil

Years
Percentage
2005
5.89%
2006
5.82%
2007
6.84%
2008
5.07%
2009
8.67%
Interpretation
covering almost 5.89, 5.82%, 6.84%, 5.07%, and 8.67% of respective sales in the last
7. Purchases
Years
Percentage
2005
80.35%
2006
81.57%
2007
82.24%
2008
85.39%
2009
81.74%
Interpretation
8. Cost of Products available for Sale

Years
Percentage
2005
86.24%
2006
87.40%
2007
89.09%
2008
90.46%
2009
90.41%
Interpretation
9. Closing Stock
Years
Percentage
2005
(8.10%)
2006
(7.97%)
2007
(7.18%)
2008
(10.69%)
2009
(5.66%)
Interpretation
covering almost 8.10%, 7.97%, 7.18%, 10.69%, and 5.66% of respective sales in the
last five consecutive years. The overall tendency of the cost of sales is increasing.
10. Gross profit / Loss

Page 12
Pakistan State Oil

Years
Percentage
2005
5.40%
2006
4.86%
2007
2.98%
2008
5.15%
2009
0.42%
Interpretation
11.Transportation Cost
Years
Percentage
2005
0.12%
2006
0.10%
2007
0.09%
2008
0.06%
2009
0.07%
Interpretation
covering almost 0.12%, 0.10%, 0.09%,0.06%, and 0.07% of respective sales in the last
12. Distribution and marketing expenses

Years
Percentage
2005
0.93%
2006
0.70%
2007
0.67%
2008
0.56%
2009
0.55%
Interpretation
covering almost 0.93%, 0.70%, 0.67%,0.56%, and 0.55% of respective sales in the last
13. Administrative Expenses

Years
Percentage
2005
0.34%
2006
0.26%
2007
0.24%
2008
0.20%
2009
0.16%
Interpretation
14. Depreciation & Amortization

Page 13
Pakistan State Oil

Years
Percentage
2005
0.39%
2006
0.31%
2007
0.28%
2008
0.20%
2009
0.17%
Interpretation
15. Other Operating Expenses

Years
Percentage
2005
0.42%
2006
0.70%
2007
0.18%
2008
0.57%
2009
0.56%
Interpretation
16. Other Operating Income

Years
Percentage
2005
0.47%
2006
0.27%
2007
0.31%
2008
0.24%
2009
0.20%
Interpretation
17. Other Operating Profit/ Loss

Years
Percentage
2005
0.15%
2006
0.25%
2007
0.28%
2008
0.23%
2009
0.87%
Interpretation
18. Finance Cost

Page 14
Pakistan State Oil

Years
Percentage
2005
0.15%
2006
0.25%
2007
0.28%
2008
0.23%
2009
0.87%
Interpretation
19. Other Income

Years
Percentage
2005
0.09%
2006
0.42%
2007
0.18%
2008
0.10%
2009
0.17%
Interpretation
20. Profit before Tax

Years
Percentage
2005
3.61%
2006
3.23%
2007
1.73%
2008
3.66%
2009
(1.58%)
Interpretation
covering almost 3.61%, 3.23%, 1.73%, 3.66%, and (1.58%) of respective sales in the
21. Taxation
Years
Percentage
2005
1.39%
2006
1.10%
2007
0.59%
2008
1.26%
2009
(0.65%)
Interpretation
22. Net Profit / Loss

Page 15
Pakistan State Oil

Years
Percentage
2005
2.22%
2006
2.13%
2007
1.14%
2008
2.41%
2009
(0.93%)
Interpretation
Horizontal Analysis of Income Statement

Particulars
2005
100%
2006
139.11%
2007
161.97%
2008
229.32%
2009
282.83%
100%
224.97%
159.09%
14.37%
22.19%
Sales Tax
100%
136.32%
160.43%
227.25%
298.06%
100%
113.08%
103.87%
159.14%
106.97%
100%
140.35%
164.56%
233.07%
288.32%
Opening Stock
100%
137.44%
188.03%
197.33%
416.10%
Purchases
100%
141.23%
165.80%
243.70%
287.73%
100%
140.97%
167.32%
240.53%
296.50%
Sales Revenue
Net Sales
100%
136.81%
143.58%
302.75%
197.62%
Cost of Sales
100%
141.40%
169.78%
234.08%
306.75%
Gross Profit / Loss
100%
125.18%
89.18%
218.41%
21.90%
Transportation Cost
100%
116.77%
117.89%
107.86%
163.97%
Distribution & Marketing Expenses
100%
105.70%
116.42%
139.02%
167.97%
Administrative Expenses
100%
108.69%
116.49%
133.27%
133.81%
100%
110.00%
115.86%
118.58%
121.37%
Other Operating Expenses
100%
228.74%
70.21%
311.65%
371.27%
100%
80.17%
107.83%
117.75%
122.39%
100%
115.85%
80.57%
237.01%
(68.02%)
Finance Cost
100%
238.51%
312.41%
369.01%
1681.16%
Other Income
100%
668.02%
340.18%
274.19%
553.87%
Profit before Tax / Loss
100%
124.23%
77.48%
232.58%
(123.56%)
Closing Stock
Taxation
100%
110.13%
68.79%
207.14%
(131.76%)
Net Profit / Loss
100%
133.04%
82.92%
248.48%
(118.44%)
Page 16
Pakistan State Oil

Interpretation
1. Sales
Years
Percentage
2005
100%
2006
139.11%
2007
161.97%
2008
229.32%
2009
282.83%
Interpretation
Since the sales of Pakistan State Oil Limited have increased as compared to base Year
(2005) significantly we conclude that PSO has improved its sale to more than 182% in 5
years.
2. Trade Discount
Years
Percentage
2005
100%
2006
224.97%
2007
159.09%
2008
14.37%
2009
22.19%
Interpretation
The trade discount of PSO shows an increase in year 2006. Also in 2007 its value is
showing increase as compared to base year. After 2007 decreased significantly and
same is for the year 2009. Hence this trend showed that PSO has decreased its trade
discounts.
3. Sales Tax
Years
Percentage
2005
100%
2006
136.33%
2007
160.43%
2008
227.25%
2009
298.06%
Interpretation
From the above values it is obvious that sales tax is continuously increasing from 2006
to 2009 as compared to base year. It also shows that the sales volume is increasing
each year as compared to base ear.
4. Inland Freight equalization margin

Years
Percentage
2005
100%
2006
113.08%
2007
103.87%
2008
159.14%
2009
106.978%
Interpretation
From the above values we can see an increasing and decreasing trend of freight margin
when compared to the base year. It shows a significant increase in year 2008 as
compared to base year.
Page 17
Pakistan State Oil

5. Net Sales
Years
Percentage
2005
100%
2006
140.35%
2007
164.56%
2008
233.07%
2009
288.32%
Interpretation
Since the computed value of net sales are showing a continuous increase from 2006 to
2009 as compared to base year we can conclude that the net sales of PSO has been
increasing continuously.
6. Opening Stock
Years
Percentage
2005
100%
2006
137.44%
2007
188.03%
2008
197.33%
2009
416.10%
Interpretation
The above values show an increasing trend in the opening stock of the PSO as
compared to the base year, even in the year 2009 it shows a significant increase i.e.
416%.
7. Purchases
Years
Percentage
2005
100%
2006
141.23%
2007
165.80%
2008
243.70%
2009
287.73%
Interpretation
Since the above values show an increasing trend as compared to the base year so we
can say that the Purchases of the company have increased more than double from the
base year till 2009.
8. Cost of Products Sold

Years
Percentage
2005
100%
2006
140.97%
2007
167.32%
2008
240.53%
2009
296.50%
Interpretation
The above calculated values are showing an increase in comparison to the base year
but this increase is not negative as the volume of production is also increasing that
caused increase in cost of production hence we conclude that it is a positive sign as
sales are also increasing.
Page 18
Pakistan State Oil

9. Closing Stock
Years
Percentage
2005
100%
2006
136.81%
2007
143.58%
2008
302.75%
2009
197.62%
Interpretation
The values of closing stock are increasing as compared to the base year from 2006 to
2009.
10. Gross profit / Loss

Years
Percentage
2005
100%
2006
125.18%
2007
89.18%
2008
218.41%
2009
21.90%
Interpretation
The calculated values of the gross profit show a see-saw model. It increased in next
year i.e. 2006 when compared to base year then decreased in 2007. Again it increased
sufficiently in 2008 and then decreased again in 2009.
11. Transportation Cost

Years
Percentage
2005
100%
2006
116.77%
2007
117.89%
2008
107.86%
2009
163.97%
Interpretation
From the above calculated values the transportation cost is showing a mixed stream of
increasing and decreasing behavior. In first two subsequent years it increased up to 17%
and then it decreased in 2008. Again it shows a significant increase in 2009.
12. Distribution and Marketing Expenses

Years
Percentage
2005
100%
2006
105.70%
2007
116.42%
2008
139.02%
2009
167.97%
Interpretation
The above values shows a continuously increase in distribution and marketing expenses
in years 2006 to 2009 as compared to base year 2005.
Page 19
Pakistan State Oil

13. Administrative Expenses
Years
Percentage
2005
100%
2006
108.69%
2007
116.49%
2008
133.27%
2009
133.81%
Interpretation
The calculated values of administrative expenses are continuously increasing from years
2006 to 2009 as compared to base year 2005.
14. Depreciation & Amortization

Years
Percentage
2005
100%
2006
110.00%
2007
115.86%
2008
118.58%
2009
121.37%
Interpretation
Depreciation and amortization expenses are continuously increasing as compared to the
base year but this is not a significant increase.
15. Other Operating Expenses

Years
Percentage
2005
100%
2006
228.74%
2007
70.21%
2008
311.65%
2009
371.27%
Interpretation
Since the calculated value shows a continuous increase in the operating expenses of
PSO limited as compared to the base year yet there is a significant decrease in the year
2007 but again in subsequent years this value increased significantly.
16. Other Operating Income

Years
Percentage
2005
100%
2006
80.17%
2007
107.83%
2008
117.75%
2009
122.39%
Interpretation
The above values of operating income when compared with the base year decreased in
first year but it increased continuously in the subsequent years.
Page 20
Pakistan State Oil

17. Other Operating Profit/ Loss
Years
Percentage
2005
100%
2006
115.85%
2007
80.57%
2008
237.01%
2009
(68.02%)
Interpretation
Since the computed values of operating profit are does not show a continuous trend so
we can say that the profit increased in two non-subsequent year i.e. 2006 and 2008 but
it decreased in 2007 as compared to base year. In 2009 it shows a significant loss.
18. Finance Cost

Years
Percentage
2005
100%
2006
238.51%
2007
312.41%
2008
369.01%
2009
1681.16%
Interpretation
The finance cost of the PSO limited shows a significant increase over the years when
compared to the base year. It means that the finance cost of the company in increasing
continuously.
19. Other Income

Years
Percentage
2005
100%
2006
668.02%
2007
340.18%
2008
274.19%
2009
553.87%
Interpretation
From the above computed values we can see that the other income of the company
increased in 2006 very significantly but in next subsequent years it increased with a
decreased rate.
20. Profit before Tax

Years
Percentage
2005
100%
2006
124.23%
2007
77.48%
2008
232.58%
2009
(123.56%)
Interpretation
The calculated values of profit before tax show an increase as compared to base year in
the first year and then a decrease in the next year. However it shows significant positive
change in the next year as compared to the base year. Yet in the year 2009 it showed a
very significant decrease that is signifies a tax bracket.
Page 21
Pakistan State Oil

21. Taxation
Years
Percentage
2005
100%
2006
110.13%
2007
68.79%
2008
207.14%
2009
(131.76%)
Interpretation
The above computed values of taxation are showing increase in 2006 as compared to
base year and decrease in the next year 2007. Again the value of tax increases in 2008.
However the firm got tax bracket due to operating loss in the year 2009.
22. Net Profit / Loss

Years
Percentage
2005
100%
2006
133.04%
2007
82.92%
2008
248.48%
2009
(118.44%)
Interpretation
The computed values of net profits here also show the above zigzag pattern as
compared to the base year. However in the last year i.e. 2009 the company shows a
significant loss.
Page 22
Pakistan State Oil
Vertical Analysis of Balance Sheet

Particulars
2005
2006
2007
2008
2009
3.67%
2.71%
2.04%
2.37%
1.88%
0.02%
0.46%
Other Receivables
19.80%
20.75%
21.08%
12.34%
8.35%
1.39%
1.84%
2.12%
0.32%
0.36%
Loans & Advances
0.41%
0.39%
0.49%
0.31%
0.27%
Trade Debts
12.98%
16.70%
18.20%
26.67%
52.48%
Stock in Trade
39.35%
40.14%
39.55%
49.06%
26.53%
0.25%
0.18%
0.17%
0.09%
0.07%
77.87%
82.71%
83.64%
91.16%
90.40%
Deferred Tax
0.24%
0.58%
0.54%
0.32%
3.28%
0.20%
0.11%
0.09%
0.06%
0.05%
1.47%
0.99%
0.84%
0.38%
0.26%
4.43%
4.67%
4.00%
2.13%
1.40%
Intangibles
0.28%
0.22%
0.17%
0.08%
0.04%
15.51%
10.72%
10.72%
5.87%
4.55%
22.13%
17.29%
16.36%
8.84%
9.60%
100%
100%
100%
100%
100%
Taxation - Net
2.57%
2.42%
0.09%
0.57%
9.20%
10.90%
12.13%
8.65%
12.16%
0.12%
0.17%
0.18%
0.17%
0.36%
Provisions
1.44%
1.11%
0.92%
0.57%
0.45%
49.30%
52.47%
55.44%
63.78%
71.78%
62.64%
67.06%
68.76%
73.74%
84.75%
2.53%
2.22%
2.20%
1.24%
1.09%
1.29%
1.06%
1.03%
0.66%
0.56%
3.82%
3.28%
3.23%
1.90%
1.65%
Share Capital
3.28%
2.44%
2.29%
1.35%
1.12%
Reserves
30.26%
27.22%
25.72%
23.01%
12.49%
Total Equity
33.54%
29.66%
28.02%
24.36%
13.60%
100%
100%
100%
100%
100%
Assets
Current Assets:
Taxation - Net

Non-Current Assets:

Total Assets
Liabilities:

Equity:
Page 23
Pakistan State Oil

Interpretation
1. Cash & Bank Balances
Years
Percentage
2005
3.67%
2006
2.71%
2007
2.04%
2008
2.37%
2009
1.88%
Interpretation
Since the computed value of cash & bank balances under vertical analysis taking total
assets as base is covering almost 3.67%, 2.71%, 2.04%, 2.37%, and 1.88% of total
volume of balance sheet in the consecutive last five years. The overall tendency of the
cash & bank balances is decreasing.
2. Short-term Investments
Years
Percentage
2005
0.02%
2006
-
2007
-
2008
-
2009
-
Interpretation
Since the computed value of Short-term Investments under vertical analysis taking total
assets as base is covering almost 0.02% of total volume of balance sheet in the year
2005. In the coming years till 2009 company did not invest in short-term assets.
3. Taxation - Net
Years
Percentage
2005
-
2006
-
2007
-
2008
-
2009
0.46%
Interpretation
Since the computed value of Taxation - Net under vertical analysis taking total assets as
base is covering almost 0.46% of total volume of balance sheet in the last five
consecutive years.
4. Other Receivables
Years
Percentage
2005
19.80%
2006
20.75%
2007
21.08%
2008
12.34%
2009
8.35%
Interpretation
Since the computed value of Other Receivables under vertical analysis taking total
volume of balance sheet in the last five consecutive years. The overall tendency of the
Other Receivables is increasing in first three years than decreasing in last two years.
Page 24
Pakistan State Oil

5. Deposits & Short-term Prepayments
Years
Percentage
2005
1.39%
2006
1.84%
2007
2.12%
2008
0.32%
2009
0.36%
Interpretation
Since the computed value of Deposits & Short-term Prepayments under vertical analysis
taking total assets as base is covering almost 1.39%, 1.84%, 2.12%, 0.32%, and 0.36%
of total volume of balance sheet in the last five consecutive years. The overall tendency
of the Deposits & Short-term Prepayments is increasing in first three years than
decreasing in last two years.
6. Loans & Advances

Years
Percentage
2005
0.41%
2006
0.39%
2007
0.49%
2008
0.31%
2009
0.27%
Interpretation
Since the computed value of Loans & Advances under vertical analysis taking total
Loans & Advances is decreasing.
7. Trade Debts
Years
Percentage
2005
12.98%
2006
16.70%
2007
18.20%
2008
26.67%
2009
52.48%
Interpretation
Since the computed value of Trade Debts under vertical analysis taking total assets as
base is covering almost 12.98%, 16.70%, 18.20%, 26.67%, and 52.48% of total volume
of balance sheet in the last five consecutive years. The overall tendency of the Trade
Debts is increasing.
8. Stock in Trade
Years
Percentage
2005
39.35%
2006
40.14%
2007
39.55%
2008
49.06%
2009
26.53%
Interpretation
Since the computed value of Stock in Trade under vertical analysis taking total assets as
of balance sheet in the last five consecutive years. The overall tendency of the Stock in
Trade is increasing.
Page 25
Pakistan State Oil

9. Stores, Spare Parts & Loose Tools
Years
Percentage
2005
0.25%
2006
0.18%
2007
0.17%
2008
0.09%
2009
0.07%
Interpretation
Since the computed value of Stores, Spare Parts & Loose Tools under vertical analysis
of the Stores, Spare Parts & Loose Tools is decreasing.
10.

Years
Percentage
2005
77.87%
2006
82.71%
2007
83.64%
2008
91.16%
2009
90.40%
Interpretation
Since the computed value of Total Current Assets under vertical analysis taking total
assets as base is covering almost 77.87%, 82.71%, 83.64%, 91.16%, and 90.40% of
total volume of balance sheet in the last five consecutive years. The overall tendency of
the Total Current Assets is increasing.
11.Deferred Tax
Years
Percentage
2005
0.24%
2006
0.58%
2007
0.54%
2008
0.32%
2009
3.28%
Interpretation
Since the computed value of Deferred Tax under vertical analysis taking total assets as
base is covering almost 0.24%, 0.58%, 0.54%, 0.32%, and 3.28% of total volume of
balance sheet in the last five consecutive years. The overall tendency of the Deferred
Tax is increasing.
12.

Years
Percentage
2005
0.20%
2006
0.11%
2007
0.09%
2008
0.06%
2009
0.05%
Interpretation
Since the computed value of Long-term Deposits & Prepayments under vertical analysis
of the Long-term Deposits & Prepayments is decreasing.
Page 26
Pakistan State Oil

13.

Years
Percentage
2005
1.47%
2006
0.99%
2007
0.84%
2008
0.38%
2009
0.26%
Interpretation
Since the computed value of Long-term Loans, Advances & Receivables under vertical
analysis taking total assets as base is covering almost 0.23%, 0.37%, 0.23%, 0.01%,
and 0.02% of total volume of balance sheet in the last five consecutive years. The
overall tendency of the Long-term Loans, Advances & Receivables is increasing.
14.
Years
Percentage
2005
4.43%
2006
4.67%
2007
4.00%
2008
2.13%
2009
1.40%
Interpretation
Since the computed value of Long-term Investments under vertical analysis taking total
Long-term Investments is decreasing.
15.
Intangibles
Years
Percentage
2005
0.28%
2006
0.22%
2007
0.17%
2008
0.08%
2009
0.04%
Interpretation
Since the computed value of Intangibles under vertical analysis taking total assets as
balance sheet in the last five consecutive years. The overall tendency of the Intangibles
is decreasing.
16.

Years
Percentage
2005
15.51%
2006
10.72%
2007
10.72%
2008
5.87%
2009
4.55%
Interpretation
Since the computed value of Property, Plant & Equipment under vertical analysis taking
total assets as base is covering almost 15.51%, 10.72%, 10.72%, 5.87%, and 4.55% of
the Property, Plant & Equipment is decreasing.
Page 27
Pakistan State Oil

17.

Years
Percentage
2005
22.13%
2006
17.29%
2007
16.36%
2008
8.84%
2009
9.60%
Interpretation
Since the computed value of Total Non-Current Assets under vertical analysis taking
total assets as base is covering almost 22.13%, 17.29%, 16.36%, 8.84%, and 9.60% of
the Total Non-Current Assets is decreasing.
18.
Total Assets
Years
Percentage
2005
100%
2006
100%
2007
100%
2008
100%
2009
100%
Interpretation
We take total assets as base in this vertical analysis so total assets are 100% in every
year.
19.
Taxation - Net
Years
Percentage
2005
2.57%
2006
2.42%
2007
0.09%
2008
0.57%
2009
-
Interpretation
Since the computed value of Taxation - Net under vertical analysis taking total assets as
base is covering almost 2.57%, 2.42%, 0.09% and 0.57% of total volume of balance
sheet in the last five consecutive years. The overall tendency of the Taxation - Net is
decreasing.
20.
Years
Percentage
2005
9.20%
2006
10.90%
2007
12.13%
2008
8.65%
2009
12.16%
Interpretation
Since the computed value of Short-term Borrowings under vertical analysis taking total
Short-term Borrowings is increasing.
Page 28
Pakistan State Oil

21.

Years
Percentage
2005
0.12%
2006
0.17%
2007
0.18%
2008
0.17%
2009
0.36%
Interpretation
Since the computed value of accrued Interest / Mark-up under vertical analysis taking
total assets as base is covering almost 0.12%, 0.17%, 0.18%, 0.17%, and 0.36% of total
accrued Interest / Mark-up is increasing.
22.
Provisions
Years
Percentage
2005
1.44%
2006
1.11%
2007
0.92%
2008
0.57%
2009
0.45%
Interpretation
Since the computed value of Provisions under vertical analysis taking total assets as
balance sheet in the last five consecutive years. The overall tendency of the Provisions
is decreasing.
23.

Years
Percentage
2005
49.30%
2006
52.47%
2007
55.44%
2008
63.78%
2009
71.78%
Interpretation
Since the computed value of Trade & Other Payables under vertical analysis taking total
assets as base is covering almost 49.30%, 52.47%, 55.44%, 63.78% and 71.78% of
the Trade & Other Payables is increasing.
24.

Years
Percentage
2005
62.64%
2006
67.06%
2007
68.76%
2008
73.74%
2009
84.75%
Interpretation
Since the computed value of Total Current Liabilities under vertical analysis taking total
assets as base is covering almost 62.64%, 67.06%, 68.76%, 73.74%, and 84.75% of
the Total Current Liabilities is increasing.
Page 29
Pakistan State Oil

25.

Years
Percentage
2005
2.53%
2006
2.22%
2007
2.20%
2008
1.24%
2009
1.09%
Interpretation
Since the computed value of Retirement & Other Service Benefits under vertical analysis
of the Retirement & Other Service Benefits is decreasing.
26.

Years
Percentage
2005
1.29%
2006
1.06%
2007
1.03%
2008
0.66%
2009
0.56%
Interpretation
of the Long-term Deposits & Prepayments is decreasing.
27.

Years
Percentage
2005
3.82%
2006
3.28%
2007
3.23%
2008
1.90%
2009
1.65%
Interpretation
Since the computed value of Total Non-Current Liabilities under vertical analysis taking
total assets as base is covering almost 3.82%, 3.28%, 3.23%, 1.90%, and 1.65% of total
Total Non-Current Liabilities is decreasing.
28.
Share Capital
Years
Percentage
2005
3.28%
2006
2.44%
2007
2.29%
2008
1.35%
2009
1.12%
Interpretation
Since the computed value of Share Capital under vertical analysis taking total assets as
balance sheet in the last five consecutive years. The overall tendency of the Share
Capital is decreasing.
Page 30
Pakistan State Oil

29.
Reserves
Years
Percentage
2005
30.26%
2006
27.22%
2007
25.72%
2008
23.01%
2009
12.49%
Interpretation
Since the computed value of Reserves under vertical analysis taking total assets as
of balance sheet in the last five consecutive years. The overall tendency of the Reserves
is decreasing.
30.
Total Equity
Years
Percentage
2005
33.54%
2006
29.66%
2007
28.02%
2008
24.36%
2009
13.60%
Interpretation
Since the computed value of Total Equity under vertical analysis taking total assets as
of balance sheet in the last five consecutive years. The overall tendency of the Total
Equity is decreasing.
31.

Years
Percentage
2005
100%
2006
100%
2007
100%
2008
100%
2009
100%
Interpretation
As we take total assets as base for this analysis so total liabilities & equity is also 100%
in every year.
Page 31
Pakistan State Oil
Horizontal Analysis of Balance Sheet

Particulars
2005
2006
2007
2008
2009
100%
98.80%
79.21%
157.06%
150.01%
100%
100%
Other Receivables
100%
140.59%
152.07%
151.40%
123.64%
100%
177.36%
218.12%
55.28%
75.99%
Loans & Advances
100%
129.30%
171.62%
185.80%
196.02%
Trade Debts
100%
172.52%
200.26%
499.25%
1185.52%
Stock in Trade
100%
136.85%
143.62%
302.96%
197.72%
100%
95.77%
97.96%
88.71%
85.89%
100%
142.47%
153.47%
284.47%
340.47%
Deferred Tax
100%
327.32%
321.50%
326.55%
4035.01%
100%
71.00%
62.68%
75.21%
79.55%
100%
90.71%
81.59%
62.07%
52.72%
100%
141.47%
129.03%
116.54%
92.91%
Intangibles
100%
107.03%
87.26%
72.94%
47.61%
100%
92.70%
98.78%
91.98%
86.14%
100%
104.84%
105.62%
97.04%
127.29%
Total Assets
100%
134.15%
142.88%
243.00%
293.31%
Taxation - Net
100%
126.11%
5.16%
54.06%
0.00%
100%
158.97%
188.39%
228.57%
387.70%
100%
188.87%
206.43%
340.92%
870.38%
Provisions
100%
103.06%
91.29%
96.27%
91.29%
100%
142.75%
160.65%
314.33%
427.00%
100%
143.62%
156.83%
286.09%
396.85%
100%
117.47%
124.20%
118.92%
126.39%
100%
110.19%
113.79%
123.61%
126.59%
100%
115.01%
120.69%
120.51%
126.46%
100%
100.00%
100.00%
100.00%
100.00%
121.01%
Assets
Current Assets:
Taxation - Net

Non-Current Assets:

Liabilities:

Equity:
Share Capital
Reserves
100%
120.65%
121.44%
184.78%
Total Equity
100%
118.63%
119.35%
176.49%
118.96%
100%
134.15%
142.88%
243.00%
293.31%
Page 32
Pakistan State Oil

Interpretation
1. Cash & Bank Balances
Years
Percentage
2005
100.00%
2006
98.80%
2007
79.21%
2008
157.06%
2009
150.01%
Interpretation
Since the computed values of Cash & Bank Balances are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Cash & Bank
Balances of PSO has been increasing continuously.
2. Short-term Investments
Years
Percentage
2005
100.00%
2006
-
2007
-
2008
-
2009
-
Interpretation
Since the computed value of Short-term Investments is showing that company made
short term investment only in 2005 from last five years.
3. Taxation - Net
Years
Percentage
2005
-
2006
-
2007
-
2008
-
2009
100.00%
Interpretation
Since the computed values of Taxation Net is showing that the company has only
earned the benefit of taxation in 2009.
4. Other Receivables
Years
Percentage
2005
100.00%
2006
140.59%
2007
152.07%
2008
151.40%
2009
123.64%
Interpretation
Since the computed values of Other Receivables are showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Other Receivables of
PSO has been increasing continuously.
Page 33
Pakistan State Oil

5. Deposits & Short-term Prepayments
Years
Percentage
2005
100.00%
2006
177.36%
2007
218.12%
2008
55.28%
2009
75.99%
Interpretation
Since the computed values of Deposits & Short-term Prepayments are showing a
significant increase from 2006 to 2009 as compared to base year we can conclude that
the Deposits & Short-term Prepayments of PSO has been increasing continuously.
6. Loans & Advances

Years
Percentage
2005
100.00%
2006
129.30%
2007
171.62%
2008
185.80%
2009
196.02%
Interpretation
Since the computed values of Loans & Advances are showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Loans & Advances of
7. Trade Debts
Years
Percentage
2005
100.00%
2006
172.52%
2007
200.26%
2008
499.25%
2009
1185.52%
Interpretation
Since the computed values of Trade Debts are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Trade Debts of PSO has
been increasing continuously.
8. Stock in Trade
Years
Percentage
2005
100.00%
2006
136.85%
2007
143.62%
2008
302.96%
2009
197.72%
Interpretation
Since the computed values of Stock in Trade are showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Stock in Trade of PSO
has been increasing continuously.
Page 34
Pakistan State Oil

9. Stores, Spare Parts & Loose Tools
Years
Percentage
2005
100.00%
2006
95.77%
2007
97.96%
2008
88.71%
2009
85.89%
Interpretation
Since the computed values of Stores, Spare Parts & Loose Tools are showing a
decrease from 2006 to 2009 as compared to base year we can conclude that the Stores;
Spare Parts & Loose Tools of PSO has been decreasing continuously.
10.

Years
Percentage
2005
100.00%
2006
142.47%
2007
153.47%
2008
284.47%
2009
340.47%
Interpretation
Since the computed values of Total Current Assets are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Total Current
Assets of PSO has been increasing continuously.
11.Deferred Tax
Years
Percentage
2005
100.00%
2006
327.32%
2007
321.50%
2008
326.55%
2009
4035.01%
Interpretation
Since the computed values of Deferred Tax are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Deferred Tax of PSO has
12.

Years
Percentage
2005
100.00%
2006
71.00%
2007
62.68%
2008
75.21%
2009
79.55%
Interpretation
Since the computed values of Long-term Deposits & Prepayments are showing a
significant decrease from 2006 to 2009 as compared to base year we can conclude that
the Long-term Deposits & Prepayments of PSO has been decreasing continuously.
Page 35
Pakistan State Oil

13.

Years
Percentage
2005
100.00%
2006
90.71%
2007
81.59%
2008
62.07%
2009
52.72%
Interpretation
Since the computed values of Long-term Loans, Advances & Receivables are showing a
the Long-term Loans, Advances & Receivables of PSO has been decreasing
continuously.
14.
Years
Percentage
2005
100.00%
2006
141.47%
2007
129.03%
2008
116.54%
2009
92.91%
Interpretation
Since the computed values of Long-term Investments are showing a significant increase
from 2006 to 2008 and decrease in 2009 as compared to base year we can conclude
that the Long-term Investments of PSO has been increasing continuously. However
Long-term Investments decreased in 2009.
15.
Intangibles
Years
Percentage
2005
100.00%
2006
107.03%
2007
87.26%
2008
72.94%
2009
47.61%
Interpretation
Since the computed values of Intangibles are showing a significant decrease from 2007
to 2009 as compared to base year we can conclude that the Intangibles of PSO has
been decreasing continuously.
16.

Years
Percentage
2005
100.00%
2006
92.70%
2007
98.78%
2008
91.98%
2009
86.14%
Interpretation
Since the computed values of Property, Plant & Equipment are showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the
Property, Plant & Equipment of PSO has been decreasing continuously.
Page 36
Pakistan State Oil

17.

Years
Percentage
2005
100.00%
2006
104.84%
2007
105.62%
2008
97.04%
2009
127.29%
Interpretation
Since the computed values of Total Non-Current Assets are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Total
Non-Current Assets of PSO has been increasing continuously except in 2008.
18.
Total Assets
Years
Percentage
2005
100.00%
2006
134.15%
2007
142.88%
2008
243.00%
2009
293.31%
Interpretation
Since the computed values of Total Assets are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Total Assets of PSO has
19.
Taxation - Net
Years
Percentage
2005
100.00%
2006
126.11%
2007
5.16%
2008
54.06%
2009
0.00%
Interpretation
Since the computed values of Taxation - Net are showing a significant decrease from
2007 to 2009 as compared to base year we can conclude that the Taxation - Net of PSO
has been decreasing continuously.
20.
Years
Percentage
2005
100.00%
2006
158.97%
2007
188.39%
2008
228.57%
2009
387.70%
Interpretation
Since the computed values of Short-term Borrowings are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Short-term
Borrowings of PSO has been increasing continuously.
Page 37
Pakistan State Oil

21.

Years
Percentage
2005
100.00%
2006
188.87%
2007
206.43%
2008
340.92%
2009
870.38%
Interpretation
Since the computed values of Accrued Interest / Mark-up are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Accrued
Interest / Mark-up of PSO has been increasing continuously.
22.
Provisions
Years
Percentage
2005
100.00%
2006
103.06%
2007
91.29%
2008
96.27%
2009
91.29%
Interpretation
Since the computed values of Provisions are showing a significant decrease from 2007
to 2009 as compared to base year we can conclude that the Provisions of PSO has
been decreasing continuously.
23.

Years
Percentage
2005
100.00%
2006
142.75%
2007
160.65%
2008
314.33%
2009
427.00%
Interpretation
Since the computed values of Trade & Other Payables are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Trade &
Other Payables of PSO has been increasing continuously.
24.

Years
Percentage
2005
100.00%
2006
143.62%
2007
156.83%
2008
286.09%
2009
396.85%
Interpretation
Since the computed values of Total Current Liabilities are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Total Current
Liabilities of PSO has been increasing continuously.
Page 38
Pakistan State Oil

25.

Years
Percentage
2005
100.00%
2006
117.47%
2007
124.20%
2008
118.92%
2009
126.39%
Interpretation
Since the computed values of Retirement & Other Service Benefits are showing a
the Retirement & Other Service Benefits of PSO has been increasing continuously.
26.

Years
Percentage
2005
100.00%
2006
110.19%
2007
113.79%
2008
123.61%
2009
126.59%
Interpretation
Since the computed values of Long-term Deposits & Prepayments are showing a
the Long-term Deposits & Prepayments of PSO has been increasing continuously.
27.

Years
Percentage
2005
100.00%
2006
115.01%
2007
120.69%
2008
120.51%
2009
126.46%
Interpretation
Since the computed values of Total Non-Current Liabilities are showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Total
Non-Current Liabilities of PSO has been increasing continuously.
28.
Share Capital
Years
Percentage
2005
100.00%
2006
100.00%
2007
100.00%
2008
100.00%
2009
100.00%
Interpretation
The computed values of Share Capital are showing that the capital of the company is
remained same over the years.
Page 39
Pakistan State Oil

29.
Reserves
Years
Percentage
2005
100.00%
2006
120.65%
2007
121.44%
2008
184.78%
2009
121.01%
Interpretation
Since the computed values of Reserves are showing a significant increase from 2006 to
2009 as compared to base year we can conclude that the Reserves of PSO has been
increasing continuously.
30.
Total Equity
Years
Percentage
2005
100.00%
2006
118.63%
2007
119.35%
2008
176.49%
2009
118.96%
Interpretation
Since the computed values of Total Equity are showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Total Equity of PSO has
31.

Years
Percentage
2005
100.00%
2006
134.15%
2007
142.88%
2008
243.00%
2009
293.31%
Interpretation
Since the computed values of Total Liabilities & Equity are showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Total Liabilities &
Equity of PSO has been increasing continuously.
Page 40
Pakistan State Oil
Vertical Analysis of Cash Flow Statement

Particulars
2005
2006
2007
2008
2009
(3,835.3%)
(74.57%)
(231.09%)
(642%)
(173.55%)
(25.24%)
(2.52%)
(5.25%)
(2.08%)
(0.63%)
17.72%
(1.08%)
(0.62%)
(0.92%)
(0.17%)
Taxes Paid
853.61%
134.91%
285.66%
92.80%
12.20%
Finance Costs Paid
175.94%
29.17%
80.88%
17.83%
51.20%
41.87%
6.49%
0.71%
0.00%
0.33%
83.84%
(2,736.8%
)
6.50%
20.29%
8.50%
4.23%
(57.61%)
(260.3%)
(57.25%)
41.95%

Long-term Deposits

Net Cash Generated / Used In Operations
785.94%
26.49%
113.50%
8.63%
6.03%
(6.31%)
(9.23%)
(2.17%)
(0.80%)
(0.18%)
(5.83%)
(143.35%)
(10.27%)
(61.41%)
(5.43%)
(0.87%)
Net Cash Generated / Used In Investments
636.29%
6.12%
49.93%
2.40%
0.03%
Dividends Received

2.48%
(32.43%)
(2.43%)
(1.71%)
(278.61%)
(7.62%)
(226.40%)
74.21%
(30.17%)
1886.93%
154.77%
338.52%
60.92%
25.72%
Net Cash Generated / Used In Financing
1578.38%
144.73%
110.40%
135.12%
(4.45%)
(522.17%)
93.24%
(100%)
80.28%
37.53%
622.17%
6.76%
200%
19.72%
62.47%
100%
100%
100%
100%
100%

Finances
Dividends Paid

Interpretation
1. Cash Generated from Operations
Years
Percentage
2005
(3,835.25%)
2006
(231.09%)
2007
(642.00%)
2008
(173.55%)
2009
(25.24%)
Interpretation
Since the computed value of Cash Generated from Operations under vertical analysis
taking Cash at End of The Year as base is covering almost 3,835.25%, 231.09%,
642.00%, 173.55%, and 25.24% of respective Cash at End of The Year in the last five
consecutive years. It is showing that Company using more cash than it generated from
operations.
Page 41
Pakistan State Oil

2. Long-term Loans, Advances & Receivables
Years
Percentage
2005
(74.57%)
2006
(2.52%)
2007
(5.25%)
2008
(2.08%)
2009
(0.63%)
Interpretation
Since the computed value of Long-term Loans, Advances & Receivables under vertical
analysis taking Cash at End of The Year as base is covering almost 74.57%, 2.52%,
consecutive years. The overall tendency of the Long-term Loans, Advances &
Receivables is decreasing.
3. Long-term Deposits & Prepayments

Years
Percentage
2005
17.72%
2006
(1.08%)
2007
(0.62%)
2008
-
2009
-
Interpretation
taking Cash at End of The Year as base is covering almost 17.72%, 1.08%, and 0.62%
of respective Cash at End of The Year in the last five consecutive years. The overall
tendency of the Long-term Deposits & Prepayments is decreasing.
4. Long-term Deposits
Years
Percentage
2005
-
2006
-
2007
-
2008
(0.92%)
2009
(0.17%)
Interpretation
Since the computed value of Long-term Deposits under vertical analysis taking Cash at
End of The Year as base company made long term deposits at 0.92% and 0.17% of
respective Cash at End of The Year only in 2008 and 2009.
5. Taxes Paid
Years
Percentage
2005
853.61%
2006
134.91%
2007
285.66%
2008
92.80%
2009
12.20%
Interpretation
Since the computed value of Taxes Paid under vertical analysis taking Cash at End of
The Year as base is covering almost 853.61%, 134.91%, 285.66%, 92.80%, and 12.20%
of respective Cash at End of The Year in the last five consecutive years. The overall
tendency of the Taxes Paid is decreasing.
Page 42
Pakistan State Oil

6. Finance Costs Paid
Years
Percentage
2005
175.94%
2006
29.17%
2007
80.88%
2008
17.83%
2009
51.20%
Interpretation
Since the computed value of Finance Costs Paid under vertical analysis taking Cash at
End of The Year as base almost 175.94%, 29.17%, 80.88%, 17.83%, and 51.20% of
respective Cash at End of The Year in the last five consecutive years. The overall
tendency of the Finance Costs Paid is decreasing.
7. Payment against Provisions

Years
Percentage
2005
41.87%
2006
6.49%
2007
0.71%
2008
0.00%
2009
0.33%
Interpretation
Since the computed value of Payment against Provisions under vertical analysis taking
Cash at End of The Year as base is covering almost 41.87%, 6.49%, 0.71%, 0.00%, and
0.33% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Payment against Provisions is decreasing.
8. Retirement Benefits Paid

Years
Percentage
2005
83.84%
2006
6.50%
2007
20.29%
2008
8.50%
2009
4.23%
Interpretation
Since the computed value of Retirement Benefits Paid under vertical analysis taking
Cash at End of The Year as base is covering almost 83.84%, 6.50%, 20.29%, 8.50%,
and 4.23% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Retirement Benefits Paid is decreasing.
9. Net Cash Generated / Used In

Years
Percentage
2005
(2,736.83%)
2006
(57.61%)
2007
(260.32%)
2008
(57.25%)
2009
41.95%
Interpretation
Since the computed value of Net Cash Generated / Used In under vertical analysis
taking Cash at End of The Year as base is covering almost 2,736.83%, 57.61%,
Page 43
Pakistan State Oil

consecutive years. The overall tendency of the Net Cash Generated / Used In is
decreasing.
10.

Years
Percentage
2005
785.94%
2006
26.49%
2007
113.50%
2008
8.63%
2009
6.03%
Interpretation
Since the computed value of Purchases of Fixed Assets under vertical analysis taking
Cash at End of The Year as base is covering almost 785.94%, 26.49%, 113.50%, 8.63%,
and 6.03% of respective Cash at End of The Year in the last five consecutive years. The
overall tendency of the Purchases of Fixed Assets is decreasing.
11.Proceeds from Disposal of Operating Assets

Years
Percentage
2005
(6.31%)
2006
(9.23%)
2007
(2.17%)
2008
(0.80%)
2009
(0.18%)
Interpretation
Since the computed value of Proceeds from Disposal of Operating Assets under vertical
analysis taking Cash at End of The Year as base is covering almost 6.31%, 9.23%,
consecutive years. The overall tendency of the Proceeds from Disposal of Operating
Assets is decreasing.
12.
Dividends Received
Years
Percentage
2005
(143.35%)
2006
(10.27%)
2007
(61.41%)
2008
(5.43%)
2009
(5.83%)
Interpretation
Since the computed value of Dividends Received under vertical analysis taking Cash at
the End of The Year as base is covering almost 143.35%, 10.27%, 61.41%, 5.43%, and
overall tendency of the Dividends Received is decreasing.
13.

Years
Percentage
2005
-
2006
(0.87%)
2007
-
2008
-
2009
-
Interpretation
Since the computed value of Proceeds from Liquidation of Subsidiaries under vertical
analysis taking Cash at End of The Year as base is covering 0.87% of respective Cash
at End of The Year only in 2006.
Page 44
Pakistan State Oil

14.

Years
Percentage
2005
636.29%
2006
6.12%
2007
49.93%
2008
2.40%
2009
0.03%
Interpretation
taking Cash at End of The Year as base is covering almost 636.29%, 6.12%, 49.93%,
2.40%, and 0.03% of respective Cash at End of The Year in the last five consecutive
years. The overall tendency of the Net Cash Generated / Used In is decreasing.
15.

Years
Percentage
2005
2.48%
2006
-
2007
-
2008
-
2009
-
Interpretation
Since the computed value of Repayment of Long-term Loan under vertical analysis
taking Cash at End of The Year as base is repay 0.02% of respective Cash at End of
The Year only in 2005.
16.

Years
Percentage
2005
(32.43%)
2006
(2.43%)
2007
(1.71%)
2008
-
2009
-
Interpretation
Since the computed value of Proceeds from / Repayment of Long-term Deposits under
vertical analysis taking Cash at End of The Year as base is covering almost 32.43%,
2.43% and 1.71% of respective Cash at End of The Year in the years from 2005 to 2007.
The overall tendency of the Proceeds from / Repayment of Long-term Deposits is
decreasing.
17.
Proceeds from / Repayment of Short-term Finances

Years
Percentage
2005
(278.61%)
2006
(7.62%)
2007
(226.40%)
2008
74.21%
2009
(30.17%)
Interpretation
Since the computed value of Proceeds from / Repayment of Short-term Finances under
7.62%, 226.40%, 74.21%, and 30.17% of respective Cash at End of The Year in the last
Page 45
Pakistan State Oil

five consecutive years. The overall tendency of the Proceeds from / Repayment of
Short-term Finances is decreasing.
18.
Dividends Paid
Years
Percentage
2005
1886.93%
2006
154.77%
2007
338.52%
2008
60.92%
2009
25.72%
Interpretation
Since the computed value of Dividends Paid under vertical analysis taking Cash at End
of The Year as base is covering almost 1886.93%, 154.77%, 338.52%, 60.92%, and
overall tendency of the Dividends Paid is decreasing.
19.

Years
Percentage
2005
1578.38%
2006
144.73%
2007
110.40%
2008
135.12%
2009
(4.45%)
Interpretation
taking Cash at End of The Year as base is covering almost 1578.38%, 144.73%,
consecutive years. The overall tendency of the Net Cash Generated / Used In is
decreasing.
20.
Total Net Cash Generated / Used In for the Year

Years
Percentage
2005
(522.17%)
2006
93.24%
2007
(100%)
2008
80.28%
2009
37.53%
Interpretation
Since the computed value of Total Net Cash Generated / Used In for the Year under
93.24%, 100%, 80.28%, and 37.53% of respective Cash at End of The Year in the last
five consecutive years. The overall tendency of the Total Net Cash Generated / Used In
for the Year is decreasing.
Page 46
Pakistan State Oil

21.
Cash at Beginning of the Year

Years
Percentage
2005
622.17%
2006
6.76%
2007
200%
2008
19.72%
2009
62.47%
Interpretation
Since the computed value of Cash at Beginning of the Year under vertical analysis taking
Cash at End of The Year as base is covering almost 622.17%, 6.76%, 200%, 19.72%,
and 62.47% of respective Cash at End of The Year in the last five consecutive years.
The overall tendency of the Cash at Beginning of the Year is decreasing.
22.
Cash at End of the Year

Years
Percentage
2005
100%
2006
100%
2007
100%
2008
100%
2009
100%
Interpretation
Since the computed value of Cash at End of the Year under vertical analysis is taking as
base year.
Page 47
Pakistan State Oil
Horizontal Analysis of Cash Flow Statement

Particulars
2005
2006
2007
2008
2009
100%
89.15%
123.84%
169.76%
39.53%
100%
50.05%
52.13%
104.78%
50.35%
100%
(89.79%)
(25.76%)
38.81%
13.41%
100%
30%
Taxes Paid
100%
233.86%
247.59%
407.84%
85.81%
Finance Costs Paid
100%
245.34%
340.10%
380.15%
1747.70%
100%
229.32%
12.62%
46.85%
100%
114.78%
179.04%
380.18%
302.80%
100%
31.15%
70.37%
78.47%
(92.05%)
Long-term Deposits

100%
49.88%
106.84%
41.18%
46.08%
100%
2166.48%
254.32%
473.14%
166.85%
Dividends Received
100%
105.97%
316.93%
142.01%
244.26%
100%
100%
14.24%
58.05%
14.18%
0.24%

Finances
100%
100%
110.72%
39.11%
100%
40.45%
601.21%
(999.23%)
650.28%
100%
121.36%
132.73%
121.11%
81.86%
100%
135.67%
51.75%
321.17%
(16.92%)
100%
(264.22%)
141.68%
(576.78%)
(431.61%)
100%
16.07%
237.82%
118.91%
602.99%
100%
1479.65%
739.83%
3751.61%
6005.31%
Dividends Paid
Interpretation
1. Cash Generated from Operations
Years
Percentage
2005
100%
2006
89.15%
2007
123.84%
2008
169.76%
2009
39.53%
Interpretation
Since the computed values of are Cash Generated from Operations showing a
significant increase in 2007 and 2008 as compared to base year we can conclude that
the Cash Generated from Operations of PSO has been increasing continuously.
However there is a significant decrease in 2009.
Page 48
Pakistan State Oil

2. Long-term Loans, Advances & Receivables
Years
Percentage
2005
100%
2006
50.05%
2007
52.13%
2008
104.78%
2009
50.35%
Interpretation
Since the computed values of Long-term Loans, Advances & Receivables showing a
the Long-term Loans, Advances & Receivables of PSO has been decreasing
continuously.
3. Long-term Deposits & Prepayments

Years
Percentage
2005
100%
2006
(89.79%)
2007
(25.76%)
2008
38.81%
2009
13.41%
Interpretation
Since the computed values of Long-term Deposits & Prepayments showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the Longterm Deposits & Prepayments of PSO has been decreasing continuously.
4. Long-term Deposits
Years
Percentage
2005
-
2006
-
2007
-
2008
100%
2009
30%
Interpretation
Since the computed values of Long-term Deposits are showing that company has made
investment in long term deposits only in last two years from last consecutive five years.
5. Taxes Paid
Years
Percentage
2005
100%
2006
233.86%
2007
247.59%
2008
407.84%
2009
85.81%
Interpretation
Since the computed values of Taxes Paid showing a significant increase from 2006 to
2008 as compared to base year we can conclude that the Taxes Paid of PSO has been
increasing continuously. However there is a significant decrease in 2009.
Page 49
Pakistan State Oil

6. Finance Costs Paid
Years
Percentage
2005
100%
2006
245.34%
2007
340.10%
2008
380.15%
2009
1747.70%
Interpretation
Since the computed values of Finance Costs Paid showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Finance Costs Paid of
7. Payment against Provisions

Years
Percentage
2005
100%
2006
229.32%
2007
12.62%
2008
-
2009
46.85%
Interpretation
Since the computed values of Payment against Provisions showing a significant
decrease from 2007 to 2009 as compared to base year we can conclude that the
Payment against Provisions of PSO has been decreasing continuously.
8. Retirement Benefits Paid

Years
Percentage
2005
100%
2006
114.78%
2007
179.04%
2008
380.18%
2009
302.80%
Interpretation
Since the computed values of Retirement Benefits Paid showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Retirement
Benefits Paid of PSO has been increasing continuously.
9. Net Cash Generated / Used In

Years
Percentage
2005
100%
2006
31.15%
2007
70.37%
2008
78.47%
2009
(92.05%)
Interpretation
Since the computed values of Net Cash Generated / Used In showing a significant
decrease from 2006 to 2009 as compared to base year we can conclude that the Net
Cash Generated / Used In of PSO has been decreasing continuously.
Page 50
Pakistan State Oil

10.

Years
Percentage
2005
100%
2006
49.88%
2007
106.84%
2008
41.18%
2009
46.08%
Interpretation
Since the computed values of Purchases of Fixed Assets showing a significant decrease
from 2006 to 2009 as compared to base year we can conclude that the Purchases of
Fixed Assets of PSO has been decreasing continuously.
11.Proceeds from Disposal of Operating Assets

Years
Percentage
2005
100%
2006
2166.48%
2007
254.32%
2008
473.14%
2009
166.85%
Interpretation
Since the computed values of Proceeds from Disposal of Operating Assets showing a
the Proceeds from Disposal of Operating Assets of PSO has been increasing
continuously.
12.
Dividends Received
Years
Percentage
2005
100%
2006
105.97%
2007
316.93%
2008
142.01%
2009
244.26%
Interpretation
Since the computed values of Dividends Received showing a significant increase from
2006 to 2009 as compared to base year we can conclude that the Dividends Received of
13.

Years
Percentage
2005
-
2006
100%
2007
-
2008
-
2009
-
Interpretation
Since the computed values of Proceeds from Liquidation is showing that company made
investment in Proceeds from Liquidation only in 2006, from 2005-09.
Page 51
Pakistan State Oil

14.

Years
Percentage
2005
100%
2006
14.24%
2007
58.05%
2008
14.18%
2009
0.24%
Interpretation
decrease from 2006 to 2009 as compared to base year we can conclude that the Net
Cash Generated / Used in of PSO has been decreasing continuously.
15.

Years
Percentage
2005
100%
2006
-
2007
-
2008
-
2009
-
Interpretation
Since the computed values of Repayment of Long-term Loan showing that company
made repayment of long term loan only in base year.
16.

Years
Percentage
2005
100%
2006
110.72%
2007
39.11%
2008
-
2009
-
Interpretation
Since the computed values of Proceeds from / Repayment of Long-term Deposits
showing a significant increase 2006 as compared to base year. However there is a
significant decrease in 2007.
17.
Proceeds from / Repayment of Short-term Finances

Years
Percentage
2005
100%
2006
40.45%
2007
601.21%
2008
(999.23%)
2009
650.28%
Interpretation
Since the computed values of Proceeds from / Repayment of Short-term Finances
showing a significant increase in 2007 and 2009 as compared to base year. However
there is a significant decrease in 2006.
Page 52
Pakistan State Oil

18.
Dividends Paid
Years
Percentage
2005
100%
2006
121.36%
2007
132.73%
2008
121.11%
2009
81.86%
Interpretation
Since the computed values of Dividends Paid showing a significant increase from 2006
to 2009 as compared to base year we can conclude that the Dividends Paid from
Operations of PSO has been increasing continuously. However there is a decrease in
2009.
19.

Years
Percentage
2005
100%
2006
135.67%
2007
51.75%
2008
321.17%
2009
(16.92%)
Interpretation
increase from 2006 to 2008 as compared to base year we can conclude that the Net
Cash Generated / Used in of PSO has been increasing.
20.
Total Net Cash Generated / Used In for the Year

Years
Percentage
2005
100%
2006
(264.22%)
2007
141.68%
2008
(576.78%)
2009
(431.61%)
Interpretation
Since the computed values of Total Net Cash Generated / Used In for the Year showing
a significant increase from 2006 to 2009 as compared to base year we can conclude that
the Total Net Cash Generated / Used In for the Year of PSO has been increasing
continuously.
21.
Cash at Beginning of the Year

Years
Percentage
2005
100%
2006
16.07%
2007
237.82%
2008
118.91%
2009
602.99%
Interpretation
Since the computed values of Cash at Beginning of the Year showing a significant
increase from 2006 to 2009 as compared to base year we can conclude that the Cash at
Beginning of the Year of PSO has been increasing continuously.
Page 53
Pakistan State Oil

22.
Cash at End of the Year

Years
Percentage
2005
100%
2006
1479.65%
2007
739.83%
2008
3751.61%
2009
6005.31%
Interpretation
Since the computed values of Cash at End of the Year showing a significant increase
from 2006 to 2009 as compared to base year we can conclude that the Cash at End of
the Year of PSO has been increasing continuously.
Page 54
Pakistan State Oil
Ratio Analysis
Particulars
2005
2006
2007
2008
2009
1.24
1.23
1.22
1.24
1.07
Short-term Solvency Ratios

Current Ratio
0.59
0.60
0.61
0.57
0.75
7,970,161
10,978,097
11,127,546
22,142,472
8,666,404
Accounts Receivable Turnover Ratio
31.29
25.46
25.71
14.61
7.61
Average Collection Period
11.50
14.14
14.00
24.64
47.30
Acid Test Ratio

Net Working Capital
Activity Ratios
Accounts Payable Turnover Ratio
7.71
7.63
8.14
5.74
5.54
Average Payment Period
46.71
47.16
44.20
62.73
65.02
Inventory Turnover Ratio
9.66
9.98
11.41
7.46
14.98
Average Conversion Period
37.28
36.08
31.54
48.25
24.03
Total Asset Turnover Ratio
406.26%
425.05%
467.91%
389.65%
399.35%
Gross Fixed Assets
63.68%
91.57%
54.28%
177.04%
(90.61%)
0.11
0.11
0.12
0.08
0.12
Long-term Solvency Ratios

Long-term Debt Equity Ratio
Debt Equity Ratio
1.98
2.37
2.57
3.10
6.35
Time Interest Earned Ratio
25.20
12.24
6.50
16.18
(1.02)
Total Capitalization Ratio
0.10
0.10
0.10
0.07
0.11
Debt Ratio
0.66
0.70
0.72
0.76
0.86
Gross Profit Ratio
6.47%
5.77%
3.51%
6.06%
0.49%
Net Profit Ratio
2.66%
2.52%
1.34%
2.84%
(1.09%)
Earning Per Share
32.98
43.87
27.34
81.94
(39.05)
Price Earning Ratio
310.21%
276.60%
446.48%
220.33%
(311.57%)
Earning Yield Ratio
32.24%
36.15%
22.40%
45.39%
(32.10%)
Dividend Per Share
26.00
34.00
21.00
23.50
5.00
Dividend Payout Ratio
78.85%
77.50%
76.80%
28.68%
12.80%
Dividend Yield Ratio
25.42%
28.02%
17.20%
13.02%
4.11%
Profitability Ratios
ROE (Return On Equity)
32.24%
36.15%
22.40%
45.39%
(32.10%)
ROI (Return On Investment)
105.17%
131.69%
87.10%
278.87%
(85.94%)
Page 55
Pakistan State Oil

Interpretation
1. Short-term Solvency Ratios
i.
Current Ratio
Years
Current Assets
Current Liabilities
2005
1.24:
1
2006
2007
2008
2009
1.23 :1
1.22:1
1.24 :1
1.07 :1
Interpretation
The computed values of Current Ratio shows decreasing trend from year 200509. It is decreasing because the current liabilities of firm increasing but the
current assets are not increasing. It is therefore suggested that the company
should lower its current liabilities; increase the value of current assets thus by
maintaining an optimum Capital Structure.
Page 56
Pakistan State Oil

ii.
Acid Test Ratio
Years
Current Assets - (Prepaid Expenses + Inventory)
Current Liabilities
2005
2006
2007
2008
2009
0.59:1
0.60:1
0.61:1
0.57:1
0.75:1
Interpretation
The computed value of Acid Test Ratio is showing an increasing trend from year
2005-09. It is increasing because increase in the inventory of the. It is therefore
suggested that the company should increase its level of inventory thus by
iii.
Net Working Capital
Years
Current Assets Current Liabilities
(Rs.)
2005
2006
2007
2008
2009
7,970,161
10,978,097
11,127,546
22,142,472
8,666,404
Interpretation
The Net Working Capital of the company has remained positive throughout the
last five years. It happens due to increase in the current assets of the firm. So it
is therefore suggested that the company should maintain this level of current
assets & liabilities, or it can be improved.
Page 57
Pakistan State Oil

2. Activity Ratios
i.

Years
Net Credit Sales
Average Accounts Receivable
X (Times)
2005
2006
2007
2008
2009
31.29
25.46
25.71
14.61
7.61
Interpretation
The computed values of Account Receivables Turnover Ratio shows decreasing
trend from year 2005-09. It is decreasing because the receivables of the firm
increased and company make sales on credit basis of firm. It is therefore
suggested that the company should lower its receivables thus by maintaining an
optimum Capital Structure.
ii.
Average Collection Period

Years
360
Days
2005
2006
2007
2008
2009
11.50
14.14
14.00
24.64
47.30
Interpretation
The computed values of Average collection period shows increasing trend from
year 2005-09. The value of the average collection period increases because the
firm mostly has relaxed its credit terms due to which it takes more time to collect
its debt from its creditors. It is therefore suggested that the company should
lower its credit sales and tight its credit terms thus by maintaining an optimum
Capital Structure.
Page 58
Pakistan State Oil

iii.

Years
Net Credit Purchases / C.G.S.
Average Accounts Payable
X (Times)
2005
2006
2007
2008
2009
7.71
7.63
8.14
5.74
5.54
Interpretation
The computed value of Accounts Payable Turnover Ratio shows decreasing
trend from year 2005-09, which is a positive sign for the company. The reason for
this decrease is that the proportion increase in accounts payable is greater than
the proportion increase in cost of sales.
iv.
Average Payment Period

Years
360
Days
2005
2006
2007
2008
2009
46.71
47.16
44.20
62.73
65.02
Interpretation
The computed value of Average Payment Period shows increasing trend from
year 2005-09. This increase in the value is due to the lower value of the Account
Payable Turnover Ratio. It is a positive sign for the company.
Page 59
Pakistan State Oil

v.

Years
C.G.S.
Average Inventory
X (Times)
2005
2006
2007
2008
2009
9.66
9.98
11.41
7.46
14.98
Interpretation
The computed value of Inventory Turnover Ratio shows increasing trend from
year 2005-09. The increase in the value is due the cost of goods sold of the firm
is increasing consistently as compare to the cost of inventory. It is therefore
suggested that the company should maintain this level or it can be improved to
gain optimum Capital Structure.
vi.
Average Conversion Period

Years
360
Days
2005
2006
2007
2008
2009
37.28
36.08
31.54
48.25
24.03
Interpretation
The computed value of Average Conversion Period is showing decreasing trend
from year 2005-09. The decrease in the value of conversion period shows the
firm becomes efficient in selling of inventory and converts its inventory into cash
in fewer time frames. It is therefore suggested that the company should keeps its
conversion period low thus by maintaining an optimum Capital Structure.
Page 60
Pakistan State Oil

vii.
Total Assets Turnover Ratio

Years
Annual Sales
Total Gross Assets
X 100
2005
2006
2007
2008
2009
406.26%
425.05%
467.91%
389.65%
399.35%
Interpretation
The computed value of Total Assets Turnover Ratio shows a mix trend from year
2005-09, but mainly decreasing. This happens due to decrease in the sales
volume as compare to the total assets of the company, which have not increased
with the same proportion. It is therefore suggested that the company should
maintain its sales and total assets level. Thus it can maintain an optimum Capital
Structure.
viii.
Gross Fixed Assets Turnover Ratio

Years
Annual Sales
Gross Fixed Assets
X 100
2005
2006
2007
2008
2009
63.68%
91.57%
54.28%
177.04%
(90.61%)
Interpretation
The computed value of Gross Fixed Assets Turnover Ratio shows increasing
trend for the years 2005-08, but a loss in 2009. This increase is due to the low
increase in the values of both tangible and intangible assets of the firm. So it is
suggested that the company should increase its non-current assets.
Page 61
Pakistan State Oil

3. Long-term Solvency Ratios
i.
Long-term Debt Equity Ratio

Years
Long-term Debt
X (Times)
Equity
2005
2006
2007
2008
2009
0.11
0.11
0.12
0.08
0.12
Interpretation
The computed value of Long-term Debt Equity Ratio shows a consistent trend
from year 2005-09. This is because the company has not obtained any long-term
loan & equity. It is therefore suggested that the company should increase its
long-term debt; thus by maintaining an optimum Capital Structure.
ii.
Debt Equity Ratio

Years
Total Debt
X (Times)
Equity
2005
2006
2007
2008
2009
1.98
2.37
2.57
3.10
6.35
Interpretation
The computed value of Debt Equity Ratio shows increasing trend from year
2005-09. It means the ratio of debt in the business structure is not an
appropriate, which is not a healthy sign for the business. It is therefore suggested
that the company should lower the value of debt or increase the value of equity to
maintain the ratio of 60:40 as per the rules of State Bank of Pakistan, thus by
Page 62
Pakistan State Oil

iii.
Time Interest Earned Ratio

Years
EBIT
Interest Expense
2005
25.20:
1
2006
2007
2008
2009
12.24:1
6.50:1
16.18:1
(1.02):1
Interpretation
The computed value of Time Interest Earned Ratio shows decreasing trend from
year 2005-09. The decrease in the value is due to the slight increase in the
interest charges on short term borrowings of the company in comparison to the
earning for the same year. It is therefore suggested that the company should
improve its interest payment on borrowings, thus by maintaining an optimum
Capital Structure.
iv.
Total Capitalization Ratio

Years
Long-term Debt
Long-term Debt + Equity
X (Times)
2005
2006
2007
2008
2009
0.10
0.10
0.10
0.07
0.11
Interpretation
The computed value of Total Capitalization Ratio shows a consistent trend from
year 2005-09. This shows that company is maintain this ratio of debt and equity
for the last five years. It is therefore suggested that the company should improve
this ratio so that it can be able to capture a bigger portion of market.
Page 63
Pakistan State Oil

v.
Debt Ratio
Years
Total Liabilities
Total Assets
2005
0.66:
1
2006
2007
2008
2009
0.70:1
0.72:1
0.76:1
0.86:1
Interpretation
The computed value of Debt Ratio shows increasing trend from year 2005-09.
The increase in the Debt Ratio shows that the debt paying ability of the company
has increased because the company is increasing its total assets and company
is moving towards growth.
4. Profitability Ratios
i. Gross Profit Ratio
Years
Gross Profit
X 100
Net Sales
2005
2006
2007
2008
2009
6.47%
5.77%
3.51%
6.06%
0.49%
Interpretation
The computed value of Gross Profit Ratio shows decreasing trend from year
2005-09.The decrease in the value shows that the companys sales are
decreasing and the cost of goods sold of the firm is also increasing which
ultimately decreases the gross profit of the company. It is therefore suggested
that the company should increase its sales and decrease its cost of goods sold,
thus by maintaining an optimum Capital Structure.
ii.
Net Profit Ratio

Years
2005
2006
2007
2008
2009
Page 64
Pakistan State Oil

Net Profit
Net Sales
X 100
2.66%
2.52%
1.34%
2.84%
(1.09%)
Interpretation
The computed value of Net Profit Ratio shows decreasing trend from year 200509. The decrease in the value is due to the decrease in the profit of the firm due
to increase in the operating expenses largely and finance cost of the firm also
increased. It is therefore suggested that the company should reduce its operating
expenses and also finance cost, thus by maintaining an optimum Capital
Structure.
iii.
Earning Per Share

Years
EACS
Number of Share Outstanding
Rs.
2005
2006
2007
2008
2009
32.98
43.87
27.34
81.94
(39.05)
Interpretation
The computed value of Earning per Share Ratio shows increasing trend from
year 2005-08, but in 2009 the company did not earn any profit so it became
negative. The increase in the value shows that the earning per share of the
company increased up to Rs 81.94. In year 2008 it is maximum after that
company experience the loss. It is therefore suggested that the company should
increase its profits, thus by maintaining an optimum Capital Structure.
iv.
Price Earning Ratio
Page 65
Pakistan State Oil

Years
Market Price Per Share
Earning Per Share
X 100
2005
2006
2007
2008
2009
310.21%
276.60%
446.48%
220.33%
(311.57%)
Interpretation
The computed value of Price Earning Ratio shows fluctuating trend from year
2005-08, but in 2009 company incurred loss. The fluctuation is due to increase or
decrease in the market price of the shares of the company. It is therefore
suggested that the company should maintain the level of its shares in the market,
thus by maintaining an optimum Capital Structure.
v.
Earning Yield Ratio

Years
Earning Per Share
X 100
2005
2006
2007
2008
2009
32.24%
36.15%
22.40%
45.39%
(32.10%)
Interpretation
The computed value of Earning Yield Ratio shows increasing trend from year
2005-08, but in 2009 company incurred loss. The increase in the value is due to
the consistent value of market price. It is therefore suggested that the company
should increase its market price so it can attain the optimum Capital Structure.
Page 66
Pakistan State Oil

vi.
Dividend Per Share

Years
Dividend Paid
Number of Shares Outstanding
Rs.
2005
2006
2007
2008
2009
26.00
34.00
21.00
23.50
5.00
Interpretation
Since the computed value of Dividend Per Share Ratio shows decreasing trend
from year 2005-09. The decrease in the value is due to the less amounts of
dividend paid. It is therefore suggested that the company should lower its number
of shares outstanding or increase the value of dividend paid thus by maintaining
an optimum Capital Structure.
vii.
Dividend Payout Ratio

Years
Dividend Per Share
Earning Per Share
X 100
2005
2006
2007
2008
2009
78.85%
77.50%
76.80%
28.68%
12.80%
Interpretation
The computed value of Dividend Payout Ratio shows decreasing trend from year
2005-09. There is a continuous decrease in the ratio which is due to distributing
lower portion of earning as dividend by the company. It also clarifies that
company is retaining the maximum portion of profit to capture high market share.
It is therefore suggested that the company should maintains proper policy for the
distribution of its dividend, thus by maintaining an optimum Capital Structure.
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Pakistan State Oil

viii.
Dividend Yield Ratio

Years
Dividend Per Share
X 100
2005
2006
2007
2008
2009
25.42%
28.02%
17.20%
13.02%
4.11%
Interpretation
The computed value of Dividend Yield Ratio shows decreasing trend from year
2005-09. The decrease in the value is due to the larger amounts of market price
& Lower levels of dividend per share. It is therefore suggested that the company
should increase the value of dividend per share and decrease the market price
per share so that it can achieve an optimum Capital Structure.
ix.
ROE (Return On Equity)

Years
EACS
X 100
Equity
2005
2006
2007
2008
2009
32.24%
36.15%
22.40%
45.39%
(32.10%)
Interpretation
The computed value of ROE shows a mix trend from year 2005-09. This ratio
increase in first two years but in 2007 it decreases than again in 2008 it
increases, but in 2009 company incurred a loss. So it is therefore suggested that
the company should increase the value of net profit, thus by maintaining an
optimum Capital Structure.
x.
ROI (Return On Investment)

Years
2005
2006
2007
2008
2009
Page 68
Pakistan State Oil

Operating Profit
Average Operating Assets
X 100
105.17%
131.69%
87.10%
278.87%
(85.94%)
Interpretation
The computed value of the ratio shows mix trend. The ROI has increased in year
2005 and 2008 which is a positive sign for both investors and company. The
reason for increase in the return on investment is an increase in the operating
profit of the company. In year 2009 the ratio is showing weak position of the
company because it is negative in this year which is alarming sign for the
company. It is therefore suggested that the company should increase the value of
return on investment thus by maintaining an optimum Capital Structure.
Bankruptcy Analysis
Page 69
Pakistan State Oil

Univariate Model
Years
Particulars
2006
(5.746
)
10.724
2007
(2.636
)
6.2750
2008
(7.479
)
11.056
(8.684)
(Net Income / Total Assets)*100
2005
(0.551
)
10.813
(Total Debt / Total Assets)*100
66.459
70.339
71.983
75.639
86.397
2005
2006
2007
2008
2009
.012 * ((X1 = Networking Capital / Total Assets)*100)
0.1828
0.1877
0.1787
0.2090
0.0678
.014 * ((X2 = Retained Earnings / Total Assets)*100)
0.4237
0.3810
0.3601
0.3222
0.1748
.033 * ((X3 = Earnings Before Interest & Taxes / Total Assets)*100)
0.6033
0.5786
0.3656
0.5905
0.1102
.006 * ((X4 = Market Value of Equity / Book Value of Total Debt)*100)
1.1427
0.8049
0.7384
0.4132
0.2997
.010 * ((X5 = Sales / Total Assets)*100)
4.0626
4.2505
4.6791
3.8965
3.9935
6.4150
6.2027
6.3219
5.4313
4.4256
(Cash Flow / Total Debt)*100
2009
(4.366)
Multivariate Model / Z - Score

Particulars
Z Score
Interpretation
Univariate
Since the computed values of first two ratios are showing decreasing trend and the last
one is showing increasing trend so we can conclude that the company is moving
towards bankruptcy.
Multivariate
Since the computed values of Z-score in each year is above then our bench mark i.e.
more than 2.675 so we can conclude that the company is far away from bankruptcy but
actually the trend of Z-score is showing a decreasing rate which may be alarming in the
future if it continues.
Page 70
Pakistan State Oil

Conclusion & Recommendations
As the financial position of the company shows that the overall profitability of the company is
decreasing. The volume of profit is decreasing from year 2004 to year 2009 continuously. This
continuous decrease in profit is not a good sign for the PSO because due to this the firm may
suffers a lot and the price of the shares can be decreases. So company should improve its
operations so that it can earn more profits.
In bankruptcy analysis, the company shows weak financial position in univariate model. On the
basis of this we can conclude that the company is not working efficiently and not provides any
opportunity of dividend or capital gain to its investors. Due to this weak position the chances of
bankruptcy increase rapidly. But in multivariate the company is showing good results. But the
trend analysis of the last five years is showing decreasing trend. So we can say that the company
may become bankrupt in the future. So company should mange its assets efficiently so that this
situation can be solved.
However the sale of the company increases over the period of last five years it shows that the
company is moving towards progress and try to improve its operations by this the profit of the
company increases. So it is recommended that the company needs a lot of efforts so it is
necessary that the company should have to improve its operations to compete with others and
capture the market share.
Page 71

Financial Management Pso Project Report

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Pakistan State Oil

Department of Management Sciences

Pakistan State Oil

The federal government took over the management

Department of Management Sciences

Pakistan State Oil

The government incorporates Petroleum Storage Development

August 23, 1976

PSCDC renamed to State Oil Company Limited (SOCL).

September 15, 1976

The Government purchases ESSO undertakings, vests their control in

December 30, 1976

Department of Management Sciences

Pakistan State Oil

Vision and Mission of PSO

To excel in delivering value to customers as an innovative and dynamic energy company

We are committed to leadership in energy market through competitive advantage in

Professionally trained, high quality, motivated workforce, working as a team in an

Sustained growth in earnings in real terms.

Department of Management Sciences

Pakistan State Oil

Highly ethical, safe environment friendly and socially responsible business

Department of Management Sciences

Pakistan State Oil

2005 (Rs. In '000)

2006 (Rs. In '000)

2007 (Rs. In '000)

2008 (Rs. In '000)

2009 (Rs. In '000)

Inland Freight Equalization Margin

Less Cost of Goods Sold:

Cost of Product Available for Sale

Gross Profit / Loss

Less Operating Expenses:

Distribution & Marketing Expenses:

Rent, Rates & Taxes

Repair & Maintenance

Travelling & Office Transport

Sales Promotion & Advertisement

Salaries, Wages & Benefits

Repairs & Maintenance

Depreciation & Amortization

Department of Management Sciences

Pakistan State Oil

Doubtful Trade Debts

Disputed Demands for Custom Duty

Commission & Handling Services

Income from CNG Operations

Handling, Services & Other Recoveries

Other Operating Income

Operating Profit / Loss

Banks & Other Charges

Less Finance Cost:

Add Other Income:

Markup & Delayed Payment Charges

Liabilities Written Back

Penalties & Other Recoveries

Net Profit / Loss

Department of Management Sciences

Pakistan State Oil

2005 (Rs. In '000)

2006 (Rs. In '000)

2007 (Rs. In '000)