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FINANCIAL MANAGEMENT
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Atlas Battery
Preface
FINANCIAL MANAGEMENT
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Atlas Battery
Acknowledgement
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Atlas Battery
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Atlas Battery
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Atlas Battery
Executive Summary
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Atlas Battery
Introduction
Company information:
Atlas Battery Limited pioneered the manufacture of dry charged Hard Rubber batteries
in Pakistan. Now the company manufactures a complete range of Polypropylene and hard rubber
batteries which caters to the needs of passenger cars of varied capacities, trucks, tractors, heavy
vehicles, construction and road building equipment, as well as host of stationary and industrial
applications. Motorcycle batteries have also been added to this range. The company has always
been at the vanguard of development in the automotive industry in Pakistan making great strides
in the field’s research and development. The brand has, over the years, earned a solid reputation
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Atlas Battery
as a product of latest Japanese technology with consistently high levels of performance and
reliability.
The sustained and continued high level of quality is ensured by ABL’s Quality Department with
its exacting standards and state-of-the-art lab facilities manned by highly trained professionals
The focal point of the company’s philosophy is customer satisfaction through continued product
excellence. Atlas Battery Limited aims at maintaining its lead in technology with the help of its
in-house research and development program, interfacing with Japan Storage Battery Company
Limited.
ABL’s technological superiority is matched by its vast national network of over 600 dealers and
retail outlets ensuring availability and prompt delivery of its products. All our regional and zonal
offices are equipped with service center and are staffed with trained to provide technical
personnel to provide an efficient service backup. The technical personnel also regularly tour
their sales and territories monitoring service needs, problem and trouble-shooting. Our
associates are ably supported by a steady supply of instruments and equipment imported and
supplied by us, to enable them to carry out testing and repairing services with prompt attention
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Atlas Battery
Project information:
This is the project of my course “Financial Management” in this project I have required
to analysis the financial position of atlas battery to analysis the position I need to calculate the
following requirement.
• Analyzing firm Dividend policy, Retention rate, Growth rate, Market share, industry
position.
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Atlas Battery
2008 2007
The market value of 2008 (154.88) is greater than the book value of 2008(58.11) it shows that
The market value of 2007 (167.8) which is also greater than the book value of 2007 (55.26) it
shows that the company position is also better in 2007 and its shows that company maintaining
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Atlas Battery
The net income of 2006 which is 41,323 is lower than the net income of 2007 and 2008 but from
2006 to 2007 the net income increased by 111.77% which clearly shows that company double
his profit but from 2007 to 2008 it will increased by 22.04% only which lower than 2007 but
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Atlas Battery
122,2 66,22
Profit before taxation 164,131 57 4
- -
Taxati 34,74 24,90
on -57,334 7 1
106,79 87,51 41,32
Profit after taxation 7 0 3
Average tax in
2008 = 34.93%
Average tax in
Annexure 3
2007 = 28.42%
Average tax in
2006 = 37.60%
Tax bracket for the firm is 35% but in 2006 the firm actually pays 37.60% of its net income for
tax. In 2007 it pays 28.42% and in 2008 it pays 34.93% of its net income for tax.
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Atlas Battery
RATIO ANALYSIS
A statistic has little value in isolation. Hence, a profit figure of Rs.100 million is meaningless
unless it is related to either the firm’s turnover (sales revenue) or the value of its assets.
Accounting ratios attempt to highlight the relationships between significant items in the
accounts of a firm.
Financial ratios are the analyst’s microscope; they allow them to get a better view of the firm’s
financial health than just looking at the raw financial statements Ratios are used by both internal
Internal uses
• Planning
• Evaluation of management
External uses
• Credit granting
• Performance monitoring
• Investment decisions
• Making of policies
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Atlas Battery
CATEGORIES OF FINANCIAL RATIOS
1. Liquidity Ratios shows the extent to which the firm can meet its financial obligations.
2. Asset Management Ratios shows that how effectively the firm is managing its assets.
3. Debt Management Ratios shows the extent to which a firm uses debt financing or financial
leverages.
LIQUIDITY RATIOS
1. Current Ratio:
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Atlas Battery
Current
Current Assets
ratio = current
Liabilities
2. Quick ratio
Current Assets -
Quick Inventories
ratio =
Current liabilities
2008 0.4854
= 51 If we compare quick ratio to current ratio
Annexur
e 4 (ii)
2007 0.3762 its clearly indicate that company holding
= 01
lot of inventory which is not good sign but
if we compare the quick ratio of 2007 which is 0.38 to 2008 which is 0.49 that shows in 2008
But my evaluation suggests that Atlas battery’s liquidity position currently is fairly poor.
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Atlas Battery
5.28 which indicate that Atlas battery very effectively control its inventory as compare to
previous year.
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Atlas Battery
Receivab
Days sale
les
outstandin
Average
g=
sales
2008 1
= 1 days
Annexur DSO in year 2007 was 12 days which has
e 4 (iv)
2007 1 now decreased to 11 days in 2008 which
= 2 days
shows that the company is more effective in
collecting receivables now in comparison of previous year. It also shows that the credit policy of
was in previous years. In 2007, it was 5.68 times and now it has been increased to 6.28 times.
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Atlas Battery
Total Net sale
assets
turnover Avg total
ratio= assets If we compare the total assets turnovers
2008 2.6
2007 to 2008 it increased 2.41 times to
= 8
Annexur 2.68 times which is slightly increased .but
e 4 (vi)
2007 2.4
= 1 Times the company is not generating sufficient
volume of business given its investment in total assets company need to increase its sale to get
7. Debt Ratio
200
8 = 0.52 Annexu The debt ratio in 2007 was 0.55 which shows
51.93 re 4
% (vii) that 55.51% of the firm’s assets are debt
200
7 = 0.56 financed and 44.49% are by equity finance. In
55.51
% 2008 the debt ratio decreased to 0.5193 which
means that 51.93% of the firm’s assets are debt financed and 48.07% are equity financed. It
shows clearly that the company managing it debt against its assets .
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Atlas Battery
Time EBIT
-interest-
earned interest
ratio= charge The time interest ratio in 2008 is 4.95
2008 the company is covering its interest expense by relatively low margin of safety.
EBITDA+lease
EBITDA
payments
coverage
intrest+principal+
ratio = In 2007 EBITDA is 8.08 times, the reason
leas payments
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Atlas Battery
compare to previous year and there is also no repayment and principal. It decreased because this
PROFITABILITY RATION
2008 4.06
= % The profit margin has decreased from
Annexur
e 4 (x) 5.52% in 2007, to 4.06% in 2008.
2007 5.52
= %
According to the figures, company’s sale
in 2008 is low as compare in 2007 because costs are high and the company is using heavy debt.
Basic EBIT
earning Avg total
power = assets
2008 20.97
= %
Annexu
re 4 (xi)
2007 21.89
= %
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Atlas Battery
The BEP has decreased from 21.89% in 2007, to 20.97% in 2008. This decrease was due to
equity has also increased as the company is increase debt financing, but the increase in
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Atlas Battery
Price per
Price
share
earning
Earnings
s ratio = The ratio shows how much the investors are
per share
200 10. Tim Annexu willing to pay per Rupee of reported profits. It
8 = 14 es re 4
(xiv) can be seen from calculations that in year 2008
200 11. Tim
7 = 66 es the ratio has decreased from 11.66 to 10.14.
share over the year are increased with great difference but in 2008 this will not increased much.
price per
Price cash share
flow = cash flow
per share In year 2008 the ratio is decreased from 8.40
2008 7.6 times to 7.60 times. This was due to the fact
= 0 Annexu
re 4 that the price per share in 2007 better than
2007 8.4 time (xv)
= 0 s 2008 price per share .
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Atlas Battery
16. Market price ratio
Market
Market
price
price ratio
Book value
= The market price ratio is decrease in 2008
per share
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Atlas Battery
Analyzing firm Dividend policy, Retention rate, Growth rate, Market share,
industry position
Dividend Policy:
2008
RUPEES IN '000'
2007
RUPEES IN '000'
2006
RUPEES IN '000'
Final Dividend in respect of financial year 2006 11,494
Bonus share @ of 15% 6,897
Total 18,391
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Atlas Battery
From last 10 year company pays annually dividends to its shareholders but my analysis is just
based on last three years. In 2006 company pays 18,391 Rs. in thousands. In 2007 it pays 23,793
Rs. In thousand at the rate of 3.91 Rs/- per share and in 2008 it pays 42,604 Rs In thousands at
the rate of 6.52 Rs. /- per share. It shows that company has constantly growing in the market.
Retention Rate:
After paying the dividend the company still have 57.30% of its net income to retained in 2008
this rate is less than as compare to 2007 rate which is 72.81% .However, most important thing is
company is retaining half of its net income every year based on last year.
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Atlas Battery
Growth Rate:
Growth Rate
Retention rate * ROE
=
Avg Growth
0.119
Rate =
11.87
Annexure 5 (vi)
%
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Atlas Battery
The growth rate in 2008 which is 15.06% and 2007 which is 18.96% if we compare them we can
say that the growth rate of 2008 is normal growth but if we compare 2007 growth which is
18.96% to 2006 growth which is 8.67% the 2007 growth is super normal growth.
Market Share
Industry Position
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Atlas Battery
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Atlas Battery
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Atlas Battery
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