SAPPHIRE FIBRES LIMITED

HORIZONTAL
ANALYSIS

PROFIT & LOSS

ACCOUNT
 SAPPHIRE FIBRES LIMITED

PROFIT & LOSS ACCOUNT

HEAD
YEAR

2007 2006 2005

Increase in Sales 17.18 14.68 (24.57)
Increase in CGS 16.94 48.78 (28.26)
Increase in Gross 23.47 37.61 11.48
profit
14.99 45.68 (12.3)
Increase in Selling &
Admn exp 94.0 80.96 24.89

Increase in Operating 32.36 41.7 16.62

income
13.72 133.1 33.2
Increase in Operating 7
profit 73.16 13.16 11.82

Increase in Finance 78.99 14.71 14.47

cost 25.82 14.42 12.57
Increase in Profit
before Tax

Increase in Profit after Tax

 SAPPHIRE FIBRES LIMITED

Earning per share

ALL THE VALUES REPORTED IN THE FIGURE ARE IN PERCENTAGE EXCEPT

EARNING PER SHARE

Sales
We can see from the table that sales of the company
have decreased up to a very much significant amount in
financial year 2005 as compared to the financial year 2004.
It has a down fall of 24.57% which is not good. The major
reason of this downfall is no export of YARN in 2005.
Previous Year Company made a significant amount of export
of YARN which constitutes a major portion of the sales. In FY
2006 Company improved its sales and an increase of 47.25%
was observed. In 2006 major reason for the increase was
increase in almost 100% sales of GARMENTS as compared to
previous year in local as well as in international market. FY
year 2007 has shown an increase of 17.18% in sales. This
time almost every product which company manufactures has
improved by its sales YARN, FABRIC, and GARMENT etc.

Looking at overall position of these sales records

I can say that company position in FY 2005 wasn’t very good
but in FY 2006 and FY 2007 it has improved a lot. I can say
that now it is in a good position because company has
recovered its down fall which occurred in FY2005 and is
progressing.

Cost of good sold

 SAPPHIRE FIBRES LIMITED

Looking at the C.G.S of FY 2005 it has

gone down to 28.26% simply because this year company
sales was reduced by 24%.we can say that company is
earning a net profit of almost 4% but it isn’t good as far as
company tempo of sales has reduced a lot and this 4%
doesn’t hold any value over here. Looking at the increase in
C.G.s of the FY 2006 it is very sales have increased by
47.50% and C.G.S has increased by 48.78%. Major reasons
for this increase are prices of raw material purchases were
increased and maintained as reasonable stock along with
increase in fuel and power factor prices, an increase of 47%
was observed in fuel and power prices. The amount of
insurance paid and depreciation charged was increased by
105.57% which is very much significant. There was also little
increase found in head of STAFF RETIREEMENT BENEFIT
which is a good factor and will have good impact on the
performance of the employees. We can say that company
has improved its sales by increasing in the prices of the
items that company manufactures.

FY 2007 has shown an

increase of 17.18% in sales and increase in C.G.S was found
16.94%. This is good sign as comparing it with the
performance of company in FY 2006 where there was an
abrupt increase was found in cost of goods sold as well as in
sales. But looking at the overall performance in this criteria
company needs to improve a lot, because it is not maintain
reasonable differences between the sales and cost of goods
sold in order to improve its profit margins.

GROSS PROFIT
Gross profit is simply the difference of
excess of sales on cost of goods sold mean that it is a
dependant quantity. Company earned a gross profit of
 SAPPHIRE FIBRES LIMITED

11.48% in FY 2005 despite having a significant down fall in

its sales. But it is not a good factor because company has
lost major portion of its sales in that financial year.

In 2006 gross profit

increased by 37.61. It is a very good sign because company
was facing an increase of almost 48% in cost of good sold
but it managed to get a handsome amount of gross profit.
But how much it was good it will become clear from the
upcoming expenses that we will found in later part of the
analysis. Gross profit ratio faced a down fall and remains
23.47% in year 2007. But still it is a good one.

SELLING & DISTRIBUTION COST

Selling and distribution
cost faced a down fall in year 2005 because that year
company sales were reduced especially export of yarn.
Because of this a large amount of payment was not made
which company makes every year in freight & dock charges
related to export material. This down fall isn’t good one.
Overall looking one can say that there is a down fall in this
head so it is a good impact but frankly speaking it is not a
good impact. Because this down fall has occurred after
loosing a large portion of its sales & no one believes that
reduction in sales is a good sign. Year 2006 faced an
increase of 34.60 in this head. Main reasons were more
contribution in staff retirement benefits account along with
increase in salaries of the employees by the company this
year. Almost this year it has been raised by 35% as
compared to previous year.
 SAPPHIRE FIBRES LIMITED

This will have a good impact on the employee’s

productivity. Year 2007 has faced an increase of 38.23%.
Mainly it is because of increase in travelling & conveying
expenses because company sales have increased so its
delivery will also increase its circulation expenses. A very
bad impact is the of doubtful debts ranging up to 5,000,000
Rs(5 millions) and last year there was not even a single
rupee doubtful debt. If we remove this portion of doubtful
debts from selling and distribution head then there would an
increase of only 3% in selling and distribution cost of
company this year. So this is having a very bad impact on
the company’s position and surely it is not a good sign.

ADMINSTRATIVE EXPENSES
Administrative expenses
faced a down fall of 7.5% in FY 05 but we can’t say that it is
a good sign because it has occurred after a decline of almost
25% in sales. In FY 06 an increase of 48.34%was observed in
this head. This increase is mainly because of two factors
1)55% increase observed in the head of director’s
remuneration 2) 44% increase in salaries of the
administrative staff along with the retirement fund that
company offers to its employees. 2nd factor will have a
greater impact on the performance of the employees as they
will be getting more benefits.

Last year an increase of 9.94 % was observed.

Major reasons this year were also like the previous year i.e.
increases in the salaries, directors’ remuneration, and
depreciation and insurance premium. Overall looking
company is going in a better condition because its
administrative cost is matching with the inflation rate that
we normally have in Pakistan.
 SAPPHIRE FIBRES LIMITED

OPERATING EXPENSES
The other operating expenses of
the company in FY 05 has increased by almost 21% but it is
not a good sign because the company has lost a lot part of
its sales so its expenses should also decrease but it hasn’t
happened over here. But in FY 06 this expense has increased
by only 4.29%. It’s a good sign because the company sales
have been increasing but this expense has not increased
with the same proportion.

In FY 07 it has increased by 44.45% .it is not a

good sign. Basic increase was found in the head of the
workers participation and workers welfare fund. Last year
not even a single rupee was given to the workers welfare
fund.

OPERATING PROFIT
Operating profit increase by 17.68%
in FY 05 despite having a downfall in its sales. It is good that
company is still going in a profitable condition. In FY 06 it
has increased by 41.7%. Company is still marinating a profit
range. Operating profit increased by 32.36 percent in FY 07.
So looking it over all company maintains a trend of profit.

FINANCE COST
Finance cost in FY 05 increased by 32.36%.
Main reason for the increase in the finance cost were
increased in the markups of long term loans along with the
 SAPPHIRE FIBRES LIMITED

short term borrowings. Mean that company is getting more

and more loans for the increase its assets to increase its
production to meet the market demand. FY 06 faced an
increase of 133.17% relative to the previous financial year.
An abrupt increase was found in every sub head of finance
cost. Looking at the head of the liabilities its liabilities are
not increased in that proportion as the finance cost has
increased. Broadly looking it is not a good sign because we
can say that company isn’t is a position to hold enough cash
to meet its demands. FY 07 faced an increase of 13.72%.
Looking at the figure it looks very much good that finance
cost hasn’t increased much. Going into depth a minute
change was found in every head. So company is marinating
a good control on its finance cost.

PROFIT AFTER TAXATION

Profit after tax of the company
is raised by 14.71% in FY 05.thing is to be noted that in that
financial year company had lost a large portion of its sales.
But company manages to earn a good range of profit after
losing its sales. Going ahead in financial year 06 company
again raised profit with increasing proportion of 15.09%.
Again this is a good impact that company is keep on
increasing its efficiency and making profit. And in financial
year 07 its profit was increased by 78.99%. This is a great
achievement for the company that it is maintaining a profit
trend every year. So company is going in a flourishing mood.

EARNING PER SHARE

 SAPPHIRE FIBRES LIMITED

FY04 got an earning per share of

10.98 and it was raised to 12.64 in year 05. It is good that
earning per share of the company is raised despite having a
down fall in its sales that year. Investors along with the
creditors have a confidence on the company management
ad they will be happy to give them credit on easy conditions.
Again in year 06 it was raised to the price of 14.42 mean still
maintaining an increasing pattern in it’s earning for the
share holders. In FY 07 earning per share was raised to the
25.82 Rs. This is a good sign for the company that it has
increased EPS almost 80%. It will raise company’s image in
the eyes of the investors and creditors. So it is a good sign
for the company that it is keep on increasing its EPS and
gaining confidence among investors and creditors.
 SAPPHIRE FIBRES LIMITED

BALANCE SHEET

ASSETS
Non Current Assets
 SAPPHIRE FIBRES LIMITED

PROPERTY, PLANT & EQUIPMENT

INTANGIBLE ASSETS

LONG TERM IVESTMENT 200 200 20

LONG TERM LOANS 7 6 05
3.99 11.12 20.9
LONG TERM SECURITY DEPOSITS
28.31 100 0

86.82 111.4 57.1

Current Assets 8 4
(26.59 (18.4 9.53
) 6)
STORES SPARES & LOSE TOOLS (1.49)
(3.70) 3.45
5.41 1.49
(3.18
2.49 (6.74) ) 71.53
STOCK IN TRADE
31.73 22.47 (1.01
TRADE DEBTS
)
LOANS AND ADVANECES (20.65 96.60 71.35
)
DEPOSITS AND OTHER RECIEVEBLES 21.57 (43.58 (10.7
) 9)
SHORT TERM INVESTMENTS 48.34 133.57 309.4
3
TAX REFUND DUE FROM GOVT (52.69 (48.63 61.23
) )
CASH & BANK BALANCE (21.23 (15.33 (30.2
) ) 6)
LIABILITES

ISSUED, PAID UP, SUBSCRIBED 0 0 0

CAPITAL
79. 119.03 35.25
87
21. 14.91 14.97
77
 SAPPHIRE FIBRES LIMITED

RESERVES

UNAPPROPRIATED PROFIT

NON CURRENT LIABILITIES

14.32 6.80 25.63

LONG TERM LOANS
18.53 (22.36 12.73
STAFF RETIREMENT BENEFITS – )
GRATITUTY 34.91 35.87 65.64

DEFFERED TAXATION

CURRENT LIABILITIES

27.83 21.70 (21.05

TRADE & OTHER PAYABLES
)
MARK UP ACCRUED (0.6) 34.91 343.74

SHOR TERM BORROWINGS 13.41 2.37 55.25

DUE TO DIRECTOR 0 0 0

CURRENT MATURITY OF LONG TERM (16.13 15.15 380.97

LIABILITIES )
5.17 (43.68 1.14
PROVISION FRO INCOME TAX )

• ALL THE VALUES ARE EXPRESSED IN PERCENTAGE (%) FORM

FIXED ASSETS
 SAPPHIRE FIBRES LIMITED

The property, plant and other equipments

of the company has increased in FY 05 by 20.9%. It is a good
sign for the company that its fixed assets are increasing
.More over we must realize that in this year Company has los
its sales by 25%. So Company that next year that its sales
will increase and it made necessary steps to meet the
upcoming challenges in the market. And it proved good fro
the company in next year and its sales were increased with a
great margin mean in FY 06. Again that year company
increased its property plant equipment by 11.12% and next
year i.e. FY 07 by 4% almost. So company is having a good
financial position and keeps on increasing its fixed assets
related to production to meet the challenges of the
upcoming days.

In FY Company developed its own

software (INTANGIBLE ASSET) to meet the daily working and
its happened for the first time in its history so it is a good
sign that it is progressing with the day to day challenges of
upcoming days. Next year again more custom made soft
wares were developed by the company. It is a good sign for
the custom.

Talking about the long term investments that

company has made them has increased by every passing
financial year. It means that custom is in a good financial
position and has good cash balance so that after meeting its
own requirements of cash it is investing out of the company.
Talking about the loans that company has advanced to
others has increased in FY 06 by 18.46% & in FY 07 by
26.57%. People can think that it is a bad sign but I feel that it
is a good sign because company is getting and recovering
cash because cash is always good. So it is a good factor for
the creditors of the company that they will gain confidence
on company’s financial position. Same is the case with the
 SAPPHIRE FIBRES LIMITED

security deposits of the company i.e. they have decreased in

FY 05, 06 & 07 by 3.18, 5.4, and 3.70 respectively.

CURRENT ASSETS

Stores, spares and lose tools

increase minutely in year 05 by 1.49% and then in FY 06
decreased by 3.45% & in FY 07 by 1.49%. Company doesn’t
need to have much more lose tools which are related to the
production and reducing the inventory level of all these
items. It will reduce the holding cost and save expense of
the company. Talking about the stock in trade it increased
by 71% almost in year 05 and then decrease by 6.74% then
increases by 2.49%. It is a not a good sign not a bad sign it
depends upon only on the sales volume of the company. If
sales are increasing then it is a good sign no matter how
much stock in trade has increased or decreased.

Trade debts of the company have

increased by 22.47%, 31.73 in FY 06 & 07 respectively. It
decreased by only 1% almost in year 05. Increasing trade
debts are not good sign no doubt. But it is obvious that when
your sales will increase then your chance of trade debts will
also increase. But it would be better that company has
stopped its trade debt at a low level not much high as it has
happened in year 06 % 07. Loans and other advances of the
company of are as FY 05 71.35% increase, FY 06 96.60%
 SAPPHIRE FIBRES LIMITED

increase, FY 07 20.65% decrease. It is a good sign that

shows that company was in a good liquidity position and
made a large amount of loans and advances. It is a good
sign for the creditors as well as the investors of the company
that it has got a good liquidity position. Again in year 06 it
increase by 96.60% was observed in this head of the
account, again a good sign for the credibility of the company
in front of creditors as well as investors. More we can say the
foreign companies that are working with the company as the
customer will also get confidence in company. Because they
can easily see the financial position of the company that it is
increasing its sales and more and more reserves are
creating. There will be not a chance of the company for
going into liquidation.

Deposits and other receivables of the company

have decreased by 10.79 & 43.58 % respectively in FY 05 &
06. We can say that it is a bad sign for the company but I
feel that it is a good sign why? Because company is getting
cash is this way from its creditors and the chance of
conversion of these creditors into trade debts is minimized in
this way. As cash is always good so it’s a good sign for the
company. But in FY 07 it was raised by 21.57% a good sign
that it will gain cash for company in coming days. Short term
investments of the company have a great trend of
increasing. In FY 05 when company wasn’t doing well these
were increased by 309.43% mean showing a very good
position to the company. Next year they were increased by
133.57 % and in year 07 increased by 48.43%. But point is
to note here that if company is having a lot of reserves with
it then why company is getting short term loans from banks
and other financial institutions? It should think about it
positively and use its own money for meeting its day to day
demands and it will reduce its finance cost. Tax refund that
has been due on govt was increased by 61.23% in year 05
 SAPPHIRE FIBRES LIMITED

and it was paid by the Govt in year 06 & 07 and it faced a

down fall by 48.6 and 52.69 % respectively. That decrease is
a very good sign that company has recovered its money
which was due on govt. Its really good one because anything
related to cash and balances that u has to get from the govt
is really very much difficult. But it’s the management of the
company that has done it with great efficiency and in future
this cash will help the company to meet its liquidity
demands.

Cash & bank balance of the

company has decreased by every passing financial year.
There were a lot of cash reserves for the company that we
have seen during the analysis but they haven’t increased
over here. All the cash reserves that we have seen were
converted into short term and long term investments. But
it’s an alarming situation for the company and it should
maintain a good level of its cash & bank balance.

LIABILITIES

The issued, paid up and the subscribed capital of the

company has not changed in all these financial year whose
analysis is going on. I can say that company is meeting its
demand with its existing resources and not in need of extra
capital it’s a good situation. Heading towards the reserves of the
company they have been piling up by every passing year. But not
a very good sign I can say this is the liability and must be paid as
early as possible. A good thing is that the company is increasing
its reserve in the head of unrealized gain on remeasurement in
which the amount is specified for the sale investment i.e. this will
be invested for the promotion of the sales of the company. But
this reserve is increasing and hasn’t seen in action still.
 SAPPHIRE FIBRES LIMITED

The un appropriated profit has

increased by every passing year. The increases were 14.97%,
14.91% &21.77% in years 05, 06, & in 07 respectively. Company
is retaining money which is related to the shareholders only so
they must pay to them in order to win there confidence.

LONG TERM LIABILITIES

Long term loans of the company
were increased by 25.63% in year 05. At that time company
position in terms of its sales wasn’t very good. Again in year
06 the long term loans of the company increased by 6.80%.
This time the increase in this head as compared to the
increase in fixed assets in is comfortable one. Next year it
increased by 14.32% i.e. in years 07. It is a relatively a
stable condition of the company that it is increasing its sales
and for this purpose. But we have seen that the investments
of the company in short run and long run were increased
tremendously showing that it has a good stock of liquidity in
its hand then why company is getting loans from out of its
sources. It’s a question mark on its management.

Staff retirement benefits were increased by 12.73% in year

05 and faced a down fall in year 06 by 22.36% and then
again increase by 18.53%. All these increase in these staff
retirement benefit funds are good for the efficiency of the
company employees. This will surely have a good impact on
the courtesy of the employees towards company. Talking
about deferred taxation they have increased by every
passing year. 65.64, 35.87, 34.91 were the increases in the
head in year 05, 06, 07 respectively. This is an alarming
situation for the company that their deferred taxes are
pilling up. But on the other hand they are retaining cash as
to meet the demands of the company. But the company
must think about it positively in time otherwise it will create
problem fro it in coming days.
 SAPPHIRE FIBRES LIMITED

CURRENT LIABILITIES
Trade and other payables of the
company were decreased by 21.05% in FY 05 but raised by
21.70% and again in year 07 by 27.83%. Relatively it is a
stable condition of the company not so much trade& other
payables are piling up & company is maintaining a good eye
on these liabilities. Mark up accrued has been piling up in
year 05 & 06 by 343.74% &34.91% respectively but
company paid it all in a huge amount and was reduced by .
6% in year 07. So now there isn’t a great burden of the
markup on the company’s liabilities which had been a great
burden in year 05. Moving towards short term borrowings of
the company they are relatively in a stable condition. In year
05 they were increased by 55.25% and in year 06 by 2.37%
only. Mean that company has a lot of its reserves of its own
so that there was no need of getting loans from the
outsiders. This will have surely reduced the finance cost of
the company and will create reserves. The company is also
debtor of director but not a heavy amount so this head
doesn’t make any difference but this must be treated in any
other head rather than making a part of main front balance
sheet. The liabilities that has become payable now are
reduced by 16.13% only but they were piled up in financial
year 06 by 15.15% and in 05 by 380.97 %. It was very much
alarming situation for the company but now there is nothing
to worry and this portion is in the grip of company.

The last
head in these current liabilities is the provision for income
tax. It has nothing much impact on balance sheet but it
represents a good accounting policy of a company.
SAPPHIRE FIBRES LIMITED
 SAPPHIRE FIBRES LIMITED

VERTICAL ANALYSIS

SALES
2007 2006 2005
HEAD
Local sales 27.61 32.94 27.74
Exports 72.39 67.06 72.26
100 100 100
TOTAL
 SAPPHIRE FIBRES LIMITED

COST OF GOOD MANUFACTURED

2007 2006 2005
HEAD
Work in process 1.23 1.16 2.60
Raw material consumed 69.16 68.40 65.12
Factory over heads 29.61 30.44 32.28
100 100 100
TOTAL

SELLING & DISTRIBUTION COST

2007 2006 2005
HEAD
Salaries and other benefits 35.89 55.83 55.22
Sample expenses 7.37 10.15 17.53
Provision for doubtful debts 25.38 - -
Travelling & conveyance and entertainment 15.70 13.07 13.36
Postage 6.28 7.33 2.89
Others 9.38 13.62 17.53
TOTAL 100 100 100

ADMINISTRATIVE EXPENCES
2007 2006 2005
HEAD
Directors remuneration 5.22 3.75 3.57
Salaries and other benefits 43.99 45.0 46.21
Travelling & conveyance 5.73 3.86 6.07
Printing & stationary 2.63 2.48 2.89
Electricity gas and water 1.87 3.18 1.94
Repair & maintenance 2.97 2.78 2.74
Depreciation 7.62 7.43 7.62
Legal and professional charges 3.01 6.77 3.73
 SAPPHIRE FIBRES LIMITED

Others 26.69 24.75 25.23

100 100 100
TOTAL

OTHER OPERATING EXPENCES

2007 2006 2005
HEAD
Workers profit participation fund 93.8 90.4 91.60
Others 6.2 9.3 8.40
100 100 100
TOTAL

OTHER OPERATING INCOME

2007 2006 2005
HEAD
Dividend income 75.25 76.21 72.69
Scrap sales 8.73 15.37 20.59
Gain on disposal of fixed assets 1.28 6.73 6.52
Others 14.74 1.69 0.20
100 100 100
TOTAL

FINANCE COST
2007 2006 2005
HEAD
Mark up on long term loans 21.89 22.5 15.17
Mark up on short term loans 61.84 65.48 68.07
Interest on workers profit participation fund .58 0.34 0.49
Bank and other financial charges 15.69 11.68 15.74
100 100 100
TOTAL
 SAPPHIRE FIBRES LIMITED

ASSETS

PROPERTY, PLANT & EQUIPMENT

2007 2006 2005
HEAD
Tangible fixed assets 98.37 97.3 93.93
Capital work in progress 1.27 2.7 6.07
100 100 100
TOTAL

Capital work in progress

2007 2006 2005
HEAD
Buildings 11.30 51.32 23.32
Computer hardware - 0 .62
Computer software 4.69 4.47 -
Plant and machinery 8.32 15.0 58.74
Advance payments 75.69 29.21 17.32
100 100 100
TOTAL

LONG TERM INVESTMENTS

2007 2006 2005
HEAD
Reliance cotton spinning mills limited 12.08 1.98 4.02
Diamond fabric limited 8.26 12.17 22.0
Amer cotton mills Pvt limited 2.72 4.32 7.72
Sapphire power generations limited 1.85 3.2 0.73
Sapphire finishing mills limited 5.29 30.26 53.65
Sapphire electric company limited 25.49 - -
Others 44.31 48.07 11.88
100 100 100
 SAPPHIRE FIBRES LIMITED

TOTAL

LONG TERM LOANS

2007 2006 2005
HEAD
Loans to executive 54.59 60.62 53.85
Loans to employees 45.41 39.38 46.15
100 100 100
TOTAL

STORES, SPARES & LOOSE TOOLS

2007 2006 2005
HEAD
Stores 30.35 29.92 35.90
Spares 64.80 61.79 55.42
Loose tools 0.17 015 0.13
Items in transit 4.68 8.14 8.55
100 100 100
TOTAL

STOCK IN TRADE
2007 2006 2005
HEAD
Raw material 83.32 82.77 87.75
Work in process 4.80 4.55 3.46
Finished goods 11.94 12.68 3.76
100 100 100
TOTAL
 SAPPHIRE FIBRES LIMITED

TRADE DEBTS
2007 2006 2005
HEAD
Unsecured considered goods 7.3 19.2 25.0
Secured considered goods 92.7 80.80 75.0
100 100 100
TOTAL

LOAN & ADVANCES

2007 2006 2005
HEAD
Advances – considered goods 70.17 53.02 47.12
Advances from associated Co SPGL 7.52 8.38 21.44
Others 22.31 38.6 30.84
100 100 100
TOTAL

DEPOSITS & OTHER RECIEVABLES

2007 2006 2005
HEAD
Advance income tax 76.62 63.35 74.78
Dividend receivable 0.32 14.07 9.44
Others 21.06 22.58 15.78
100 100 100
TOTAL

TAX REFUND DUE FROM GOVT

2007 2006 2005
HEAD
Sales tax 94.37 100 44.57
Income tax 5.63 - 55.43
100 100 100
TOTAL
 SAPPHIRE FIBRES LIMITED

CASH & BANK BALANC

2007 2006 2005
HEAD
Cash in hand 14.78 9.78 1.69
Cash at bank 85.52 90.92 98.31
100 100 100
TOTAL

LIABILITIES
RESERVES

2007 2006 2005

HEAD
Capital reserves 3.05 8.83 12.04
General reserves 11.54 20.76 45.47
Unrealized gain on remeasurement 85.41 70.41 42.49
100 100 100
TOTAL

LONG TERM LOANS

2007 2006 2005

HEAD
Standard charted bank 37.0 12.45 22.08
MCB bank limited 23.20 39.79 56.68
NBP - - 21.24
Bank Alfalah limited 31.32 47.76 -
Habib bank limited 41.87 - -
100 100 100
TOTAL
 SAPPHIRE FIBRES LIMITED

TRADE & OTHER PAYABLES

2007 2006 2005

HEAD
Trade creditors 25.13 18.35 34.89
Bills payable 17.66 21.27 10.05
Accrued expenses 35.21 35.43 32.69
Sind govt infrastructure fee 9.71 10.06 9.76
Others 12.29 14.79 12.61
100 100 100
TOTAL

MARK UP ACCRUED

2007 2006 2005

HEAD
On secured long term loans 28.35 33.23 28.30
On short term borrowings 71.65 66.77 71.70
100 100 100
TOTAL

SHORT TERM BORROWNIGS

2007 2006 2005

HEAD
Running banks 99.34 99.44 99.3
Book overdraft 0.64 0.56 0.7
100 100 100
TOTAL

CURRENT MATURITY OF LONG TERM LIABILITIES

2007 2006 2005

HEAD
 SAPPHIRE FIBRES LIMITED

Standard charted bank - TF 1 8.77 7.35 8.47

Standard charted bank - TF 2 9.34 7.80 9.02
National bank of Pakistan - DF - 36.78 63.54
MCB bank limited - DF 29.24 24.52 14.12
Bank Alfalah limited - TF 26.31 22.0 -
Habib bank limited - DF 26.31 - -
Suppliers credit - 1.0 4.85
100 100 100
TOTAL
 SAPPHIRE FIBRES LIMITED

RATIO ANALYSIS

PROFITIBILITY RATIOS

FY07 FY06 FY05

GROSS PROFIT MARGIN 13.45% 12.80%
13.70%

We can see the gross profit margin

ratios of three consecutive financial years. In FY 05 it is
relatively good than that of other two financial years. But
 SAPPHIRE FIBRES LIMITED

which is really good it will depend on the expenses which will

appear later.

OPERATING PROFIT RATIO

13.56% 12.07%
12.64%

Here are the operating profit ratios

of the company. They have minutely changed i.e. we can
say that a minute amount of money is spent on the selling,
administration and distribution cost of sales. But it isn’t like
that actually the great difference isn’t because of the other
operating of the company. We can even see that in year 07
where gross profit margin is 13.5 and the operating profit
margin is 13.56. Mean it has increased just because of its
other operating income factor. In year 07 the other operating
income of the company is much more than the company
selling, distribution, administration and other expenses. So
it’s a good sign but company must not always depend on
these incomes.

FY07 FY06 FY05

NET PROFIT BEFORE TAX
 SAPPHIRE FIBRES LIMITED

10.14%
6.9% 8.97%

Net profit after tax ratio is as given

where we can almost 3% of the profit of the year 07 has
been paid in amount of financial charges & much amount
was paid in years 06 & 05. Mean the borrowings in current
year were reduced by the company and this has reduced the
amount to be paid in the form of finance cost. This is a good
sign for all of parities related with the company because it is
mostly working on its own resources rather than on
borrowed money.

NET PROFIT AFTER TAX

8.33%
5.48% 7.04%

The ultimate earning of the

company after paying all the expenses is given above. The
best earning is shown in year 07 as compared to the other
years. Mean that company is going right now in its best
position in terms of profit & will enjoy the confidence of the
creditors, investors and other related parties.

RETURN ON EQUITY

13.20%
8.58% 8.21%

There is a significant change in ROE of

the company in the year 07 as compared to the year 06 and
year 05. Mainly it is because of the increase in the increase
in the profit of the company. It is a good sign for all of the
people who are related with the company in any way. So in
 SAPPHIRE FIBRES LIMITED

future company can enjoy its credibility among its creditors

and investors as well.

FY07 FY06 FY05

RETURN ON INVESTMENT

12.25%
8.39% 8.21%

The return on investment of the

company is significantly increased in year07 as compared to
the year 06 and 05. The cost of borrowing is 11.06 percent.
So it is relatively good return on equity for company as
compared to its cost of borrowing. We can see the company
is earning a profit of almost 1.25% on utilizing its
borrowings. So a profit is always good one so it’s a good
financial position of the company.

EARNING PER SHARE

25.82
14.42 12.57

Currently the best earning per share is

going on the basic value of the share which is 10 rupees per
share written in balance sheet. And company has declared a
dividend of 25% cash on its basic value i.e. 2.50 rupees
which I think isn’t good .the company must pay much
towards its share holders but on the other hand it is good
because it will use that money to be used again in operation
of company. It will reduce the expenses of in terms of
finance cost.

P/E RATIO
 SAPPHIRE FIBRES LIMITED

The P/E ratio of the company in the year 07 is 8.59.

mean we are paying 8.59 rupees to earn one rupee in return
from the company. It is very much decent amount of P/E
ration of the company. The more the low is this ratio the
more it is beneficent for the investors. So it is a very good
P/E ratio and will surely attract the investors.

FY07 FY06 FY05

CURRENT RATIO

1.03:1
1.03:1 1.06:1

The current ratios of the company are given

above and don’t look good to me. As we can see that
company is almost working on the loaned money which it
has got through different means. Working capital is almost
zero of the company. Its an alarming situation for the short
run creditors of the company that if company defaults from
where they will get there money. Looking this ratio the
creditors would be in fix wheather to give further loan to
company or not. Company must reduce its current liabilities
and increase its net working capital in order to gain the
advantage of the creditors.

QUICK RATIO

0.45:1
0.40:1 0.35:1

The most portion of the company belongs to

the inventories and prepayments because the current ratio
 SAPPHIRE FIBRES LIMITED

when converted into quick ration is less than the half of the
current ratio. And it’s a god sign in a sense that when
company has to obtain loan against pledge then a large
amount of inventory is available for this purpose. But it gives
the sense that is manufacturing but not selling which doesn’t
give good impression. Main purpose is to sell and get profit
not to pile up the good downs.

DEBT-EQUITY RATIO

29.58:70.42
29.69:70.31 30.10:69.9

The debt equity ratio of the company is

almost constant one as we can see. We can see that debts
account for 29.58

FY07 FY06 FY05

Percent in assets value and 70 percent is the share of the

company. Mean it shows that company has so much
resources that most part of the its fixed assets are paid by
company itself. And it has got a good financial leveragre.
More over if there had been more debts than there would be
more financial expenses to be paid by the company which
will ultimately reduce the profit of the company.

DEBT SECURITY RATIO

1.33
1.33 0.74

The debt security ration of the

company is very good one. It can be seen that for every debt
of rupee one company has offered a security of 1.33 rupees.
It a very good assurance to creditors for the recovery of their
 SAPPHIRE FIBRES LIMITED

loan. More the security the company will offer the more it
will be earning the credibility among the creditors.

DEBT SECURITY COVERAGE RATIO

1.03
0.58 -

The debt service

coverage ration of the company is neither good nor bad. The
sources are just equal to pay all the debts of the company in
a single time. Its an alarming situation for the creditors to
make it clear the if company makes any fault then from
where they will get there money.

ASSETS TURN OVER RATIO

1.99
1.76 1.33

The assets turn over ratio of the

company in year 07 is an ideal one. We can see that
company has sold the thing double

FY07
FY06 FY05

in amount as compared to the its operative fixed assets. It is

a good sign that operating assets of the company are not
idle but is working.

DAYS RECIEVEBLE

57.91
51.79 62.27
 SAPPHIRE FIBRES LIMITED

We can see that company is selling almost

two months of its things on credit. It’s relatively not a good
and not a bad situation. Company must increase its sales in
terms of cash sales and reduce credit sales as much as
possible. Because credit sales can lead into bad debts in
future.

DAYS INVENTORY

13 15
16

It’s a good sign that company maintains a

very low level of the finished good inventory. It will reduce
the holding cost of the company which will ultimately result
in increase in profit. Another thing we can conclude that
what ever company produces is immediately sold and
delivered to the purchasers.
 SAPPHIRE FIBRES LIMITED

FINANCIAL ANALYSIS

OF

SAPPHIRE FIBRES LIMITED

PRESENTED TO

Sir FIDA HUSSAIN BUKHARI

PREPARED BY

MUBASHER NAZIR
(M06BBA014)
BBA (B&F) 4TH SEME

UNIVERSITY OF THE PUNJAB