Title:

Ratio Analysis of “Altas Battery”

Institute of Business and Leadership

Subject; Financial Statement Analysis

Discipline; BBA (Hons) 8th Semester

Submitted by: Himmat Ali

Submitted To: Dr Adnan

ABOUT THE COMPANY
Atlas Battery Limited was incorporated in 1966 and it had signed a technical
collaboration agreement with Japan Storage Battery Co. Ltd., Japan in 1969 (now
known as GS Yuasa Corporation) for production and sale of Japanese quality batteries
in Pakistan. Atlas Battery started production in 1969 with the genesis of the brand
“AGS” – “A” for Atlas and “GS” for Genzo Shimadzu (the founder of Japan Storage
Battery Co. Ltd., Japan). The Company manufactures a wide range of polypropylene
batteries suitable for passenger cars, heavy vehicles, motorcycles, construction
equipment.

COMPANY INTRODUCTION
Starting with an initial capital of Rs.500,000/-, Mr Yusuf H. Shirazi, the Founder of
Atlas Group, established an investment company, Shirazi Investments (Private)
Limited (SIL). This event marked the birth of Atlas Group. During this period Atlas
Group grew rapidly. With this momentum, in 1966, Mr. Yusuf H. Shirazi signed a
technical collaboration agreement with Japan Storage Battery Co. Ltd. Japan (now
Known as GS Yuasa Corporation) for production and sale of Japanese quality
batteries in Pakistan. The fruitful partnership started production in 1969 with the
genesis of the brand “AGS” – where “A” stands for Atlas and “GS” stands for Genzo
Shmadzu (the founder of Japan Storage battery Co. Japan).

The Company manufactures a wide range of lead acid batteries suitable for
passenger cars, trucks, tractors, heavy vehicles, motor cycles, construction
and road-building equipment. as well as stationary and industrial applications.

Having the Spark to move ahead, the company has experienced tremendous
success over the years and expanded its production capacity to meet the
market demand. With the latest Japanese technology, a large dealership
network and a comprehensive after sale service, the company today has
earned a reputation as manufacturer of highest quality products and thus
living up to our tagline.

The Company is cognizant of the high demand for batteries in the country due
to prevailing energy crisis and increasing number of vehicles on the road.
Hence your company is dedicated to providing the Power that Moves you.

MISSION
Ensuring customer satisfaction through the highest degree of quality and service with
innovation and dynamic management while meeting stakeholders’ expectations and
serving as a model corporate citizen

VISION
A leading innovative organization, manufacturing and marketing superior quality
automotive, motorcycle and industrial batteries for domestic and international market.
Financial Analysis
• Liquidity Ratios

• Turnover Ratios

• Long Term Debt Ratios

• Profitability Ratios
Liquidity Ratios
Net Working Capital (NWC)
NWC = Current Assets - Current Liabilities
Net working capital is the aggregate amount of all current assets and current
liabilities. It is used to measure the short-term liquidity of a business, and can also be
used to obtain a general impression of the ability of company management to utilize
assets in an efficient manner

2018 2017
Current Assets 5,951,957 5,161,939
Current Liabilities 5,299,961 3,670,255
NWC 651,996 1,491,684

Current ratio:
The current ratio is a liquidity ratio that measures whether a firm has enough
resources to meet its short-term obligations. It compares a firm's current assets to its
current liabilities
CR= Current Asset/Current Liabilities
2018 2017

Current Assets 5,951,957 5,161,939

Current Liabilities 5,299,961 3,670,255

Current Ratio = 1.12 1.40

Quick Ratio:
It is the same as current ratio but with the exclusion of inventory.

QR= (Current Assets-Inventory)/Current Liabilities

2018 2017

Inventory 3,507,588 2,321,164

QR= 0.46 0.78

ACTIVITY RATIOS
• Fixed Asset Turnover Ratio (FAT) ;
• The amount of sales generated for every dollar's worth of fixed assets
only. It is calculated by dividing sales in dollars by assets in dollars.
• FAT= Sales/Net Fixed Assets
2018 2017

• Sales 19,372,522 18,871,448

• Net Fixed Assets 828,804 714,732

• FAT 23.37 26.40

Total Asset Turnover Ratio ;

• The amount of sales generated for every dollar's worth of assets. It is
calculated by dividing sales in dollars by assets in dollars
• TAT= Sales/Total Assets
2018 2017

• Sales 19,372,522 18,871,448

• Total Assets 6,785,457 5,881,331

• TAT 2.855 3.208

 • Average Collection Period (ACP) in days:
• The approximate amount of time in days that it takes for a business to
receive payments owned, in terms of receivables, from its customers
and clients.

ACP = Accounts Receivable/(Annual Sales/360)

2018 2017

Accounts receivable 69,670 23,995

Annual Sales (19,372,522 /360) (18,871,448/360)

ACP 1.29 0.45

 Inventory Turnover (IT):
• A ratio showing how many times a company's inventory is sold and
replaced over a period.

• IT = COGS/Inventory

2018 2017

Inventory 3,507,588 2,321,164

COGS 14,707,038 13,611,710

IT 4.19 5.86

Debt Ratio
• This measure shows the proportion of assets bought from borrowed fund.

• Financial Health & Measure of Solvency

 • Higher Debt Ratio? Low Debt Ratio?

Debt – Equity Ratio

A measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity. It indicates what proportion of equity and debt the
company is using to finance its asset\
Time Interest Earned Ratio
It is used to measure a company's ability to meet its debt obligations. 

Gross Profit Margin

Used to assess a firm's financial health by revealing the proportion of money left over
from revenues
• GPM= Gross Profits/Sales

GPM 2018 GPM 2017

Gross profit = 4,665,484 Gross profit =5,259,738

Sales = 19,372,522 Sales = 18,871,448

GPM = 24.08% GPM = 27.87%

Operating Profit Margin

• OPM= Operating Profits (EBIT)/ Sales
2018 2017

Operating profit= 3,860,403 operating profit =4,585,942

sales= 19,372,522 Sales =18,871,448

OPM=19.92% OPM =24.30%

Net Profit Margin (NPM)
It measures how much out of every hundred dollar of sales a company earns after paying
taxes

• NPM= Net Profit After Taxes/ Sales

2018 2017

Net profit after taxes= 2,452,514 Net profit after taxes = 3,123,120

Sales= 19,372,522 Sales =18,871,448

NPM= 12.65% NPM =16.54%

Return on Total Assets (ROA)

• It measures the amount of profit earned relative to the firm's level of

investment in total assets. 

• The higher the percentage, the better, because that means the company is

doing a good job using its assets to generate sales.

• ROA = Net Profit After Taxes/ Total Assets

2018 2017

Net profit after taxes= 2,452,514 Net profit after taxes= 3,123,120

Total Assets= 6,785,457 Total Assets= 5,881,331

ROA= 36.14% ROA =53.10%

Return On Equity (ROE)
A measure of a corporation's profitability that reveals how much profit a company

generates with the money shareholders have invested

• ROE= Net Profit After Taxes /Stockholders’ Equity

2018 2017

Net profit after taxes= 3,860,403 Net profit after taxes=4,585,942

Stockholders’ Equity= 1,369,397 Stockholders’ Equity= 2,125,816

ROE = 281.90% ROE = 215.72%

Earning per shares (EPS)

2018

EPS = 3,860,403 ⁄ 57964.201 =66.59

2017

EPS = 4,585,942 ⁄ 57964.201 =79.11

 Operating Cycle:
The operating cycle (Cash Cycle) of a company is an activity ratio measuring
the average period of time required for turning the company’s inventories
into cash.
Formula for Operating Cycle:
The operating cycle composed of main two components, Inventory Turnover
in Days and Account Receivable Turnover in Days.

Operating Cycle = Inventory Turnover in Days + Account Receivable Turnover in Days.

2018 2017

Operating profit= 3,860,403 operating profit =4,585,942

sales= 19,372,522 Sales =18,871,448

OPM=19.92% OPM =24.30%

Debt Ratio:
The debt ratio indicates the firms’ long term debt paying ability. The debt ratio indicates
the percentage of assets financed by creditors, and it helps to determine how well
creditors are protected in case of insolvency.

Formula for Debt Ratio:

The debt ratio is computed as follows,

Debt Ratio =

T.L 4,286,194 11,713,246

T.A 9,463,013 18,279,110

45.30% 64.1

Debt/Equity Ratio:
The Debt/Equity ratio is another computation that determines the entity long
term debt paying ability. From the prospective of long term debt paying
ability, the lower this ratio is, better the company debt position.

Formula for Debt/Equity Ratio:

The computation compares the total debt with the shareholder equity’s.

Debt/Equity Ratio =
YEARS 2017 2018

T.L 4,286,194 11,713,246

S.E 5,176,819 6,565,865

82.80% 178.4

Debt to Tangible Net Worth:

The debt to tangible net worth ratio also determines the equity’s long term
debt paying ability. The debt to tangible net worth is a more conservative
ratio than either the debt ratio or the debt/equity ratio. It eliminates
intangible assets, such as goodwill, trademarks, patents and patents, because
they do not provide resources to pay creditors a conservative position.

Formula for Debt to Tangible Net Worth:

Compute the debt to tangible net worth ratio as follows:
Debt to Tangible Net Worth = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠/ 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝐸𝑞𝑢𝑖𝑡𝑦 −𝐼𝑛𝑡𝑎𝑛𝑔𝑖𝑏𝑙𝑒 𝐴𝑠𝑠𝑒𝑡𝑠

YEARS 2017 2018 2019 2020

T.L 4,286,194 11,713,246 16,196,362 17,227,740

S.E 5,176,819 6,565,865 6,359,673 6,906,342

IN.A 2,831 9,262 11,816 20,856

82% 178 255 250

Operating Income Margin:

Operating Income Margin is a profitability ratio measuring the amount of
operating income (gross profit minus operating expenses) generated by sales.
Operating income margin measures the percentage of money that is left after
excluding costs of goods sold and operating expenses from the net revenue,
comparing to company's net sales.

Formula for Operating Income

Margin: Operating Income Margin =

The formula for calculating Operating Income Margin is:

YEARS 2017 2018 2019 2020

OP.I 575,817 458,528 -249,144 -1,289,450

N.S 6,032,704 7,847,537 11,571,117 14,628,061

OP-Inc-
Mrgn 9.54% 5.84 -2.15 -8.81