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Submitted by: Group Members Muhammad Zahoor Madiha Wajahat Sufia Erum Kiran Shumaila Fozia Shafi Fareeha Irshad Anma Younus
MISSION STATEMENT
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VISION COMPANY INTRODUCTION: SALIENT FEATURES EARNING PER SHARE: PRICE EARNING RATIO: DIVIDEND YIELD: BOOK VALUE PER SHARE (WITHOUT SURPLUS): BOOK VALUE PER SHARE (WITH SURPLUS): RETURN ON TOTAL ASSETS: RETURN ON STOCKHOLDER EQUITY: (BEFORE TAX) RETURN ON STOCK HOLDER EQUITY: (AFTER TAX) EQUITY RATIO: (WITH SURPLUS) DEBT RATIO: PROFIT MARGIN (BEFORE TAX): GROSS MARGIN: DEBT TO EQUITY: CURRENT RATIO: INVENTORY TURNOVER: QUICK RATIO: TRADE DEBTOR TURNOVER: TREND ANALYSIS OF ATLAS BATTERY
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Mission Statement
To achieve market leadership through technological edge, distinguished by quality service and customers satisfaction, emphasis on employee long term welfare and ensure adequate return to shareholders. Be a good corporate citizen of the society and country through harmonized endeavor.
Vision
A leading group in all respects through effective use of resources, technology and good business practices, attracting and retaining high quality associates and developing them to their fullest potential, keeping customers in the highest esteem and giving attractive sustained returns to shareholders.
Company Introduction:
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 fields of research and development. The brand has, over the years, earned a solid reputation 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 ABLs Quality Department with its exacting standards and state-of-the-art lab facilities manned by highly trained professionals monitoring the quality of batteries being produced .The entire process is overseen by a Technical Advisor from Japan Storage Battery Company Limited stationed at Karachi. He is attached to the factory and monitors and guides the technical Division in ensuring and meeting the international standards of quality. The focal point of the companys philosophy is customer satisfaction through continued product excellence. Atlas Battery Limited aims at maintaining its lead in technology with the help of its inhouse research and development program, interfacing with Japan Storage Battery Company Limited. ABLs 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 and efficient resolution of operational complaints.
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History:
2000 ISO- 9002 Certification 1999 2nd Plant Expansion with Automatic Assembly Line. 1998 Export of Automotive Batteries 1998 PSI Certification (Quality) Motor cycle Batteries 1996 Export of Motor cycles Batteries 1994 PSI certification (Quality) for Automotive Batteries 1986 Introduced PP Batteries 1984 Plant Expansion 1974 Motorcycle Battery Production Started 1969 Automotive Battery Production Started 1969 Technical Collaboration with Japan Storage battery Co. Ltd. Japan 1966 Established (Karachi- Pakistan)
Salient Features
Vast experience of more than 30 years, having been incorporated in 1966 in collaboration with Japan Storage Battery Company Limited Leading OEM & Motorcycle battery manufacturer in Pakistan. Pioneer in Dry-Charge and Heavy Duty Batteries. The only battery company in the industry having a joint venture with a foreign company (G.S. Yuasa Japan). The first company to launch Maintenance Free batteries in Pakistan. Equipped with sophisticated Laboratory having the latest equipment for testing the performance of battery and Spectrophotometer of testing metals engaged in manufacturing of lead acid batteries. The key technical and management staffs are foreign qualified and trained. First one to introduce UPS, CNG, Diesel & Rickshaw Batteries. Frequent visits by Japanese battery experts to ensure the international quality. Well-equipped In-house research & development facility. Automatic assembly plant. Obtained ISO-9002 Certificate for Quality Standard. Obtained World Quality Commitment Award, awarded by BID Madrid, Spain. Largest dealer and service network in Pakistan. The 2nd largest manufacturer of automotive batteries; therefore tries that much harder to beat the market leader in quality. |5
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Ratio Analysis
Definition: A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. Ratios are used by both internal and external analysts: Internal uses Planning Evaluation of management
External uses Credit granting Performance monitoring Investment decisions Making of policies
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COMMENTS: Earning per share is increasing regularly due to increase in earning. While Atlass earning per share is less than Exide-Pakistan. Excide earning per share is 39.14 while Atlas earning per share is 35.21.
Market Price per Share Price Earning Ratio = Earning Per Share
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217.02 Price Earning Ratio (2011) = 35.21 181 Price Earning Ratio (2010) = 26.52 144 Price Earning Ratio (2009) = 25.42 154.9 Price Earning Ratio (2008) = 15.28 167.8 Price Earning Ratio (2007) = 14.39 73.9 Price Earning Ratio (2006) = 7.81 2006 Price Earning ratio 9.5 2007 11.7 2008 10.1 2009 5.7 2010 6.8 2011 6.2 = 9.5 = 11.7 = 10.1 = 5.7 = 6.8 = 6.2
15 10 5 0 2006 2007
2008
2009
2010
2011
Comments: Price Earnings ratio is decreasing from 2009, while it was higher in 2007. The reason of decreasing this ratio is the increase in Market Price per share. While Atlas battery price earnings ratio is higher than Exide-Pakistan.
Dividend Yield:
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for
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a stock. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. Investors who require a minimum stream of cash flow from their investment portfolio can secure this cash flow by investing in stocks paying relatively high, stable dividend yields. To better explain the concept, refer to this dividend yield example: If two companies both pay annual dividends of $1 per share, but ABC Companys stock is trading at $20 while XYZ Companys stock is trading at $40, then ABC has a dividend yield of 5% while XYZ is only yielding 2.5%. Thus, assuming all other factors are equivalent, an investor looking to supplement his or her income would likely prefer ABC's stock over that of XYZ.
Dividend per Share Dividend Yield = Market Price per Share 12 Dividend Yield (2011) = 217 12 Dividend Yield (2010) = 181 12 Dividend Yield (2009) = 144 7.5 Dividend Yield (2008) = 154.9 7.5 Dividend Yield (2007) = 167.8 4.5 Dividend Yield (2006) = 73.9 2006 6.1% 2007 4.5% 2008 4.8% 2009 8.3% 2010 6.6% 2011 5.5% x 100 = 6.1 % x 100 = 4.5 % x 100 = 4.8 % x 100 = 8.3 % x 100 = 6.6 % x 100 = 5.5 % X 100
Dividend Yield
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Dividend Yield
9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2006 2007 2008 2009 2010 2011 Dividend Yield
Comments: Dividend Yield is higher in 2009, as 8.3 while in 2011it is 5.5%. Dividend yield has satisfactory position and it is higher than Exide-Pakistan which is 2.73%.
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406,000,000 Book Value per Share (2008) = 6,992,579 336,000,000 Book Value per Share (2007) = 6,080,504 264,400,000 Book Value per Share (2006) = 5,287,395 2006 Book Value per Share(without surplus) 50 2007 55.3 2008 58.1 2009 76 2010 81.5 2011 94.8 = 50 = 55.3 = 58.1
Comments: Book Value per share of Atlas Battery has increased approx 92% from 2006 to 2011 (50-94.8). This increase in ratio is due to slow increment in share capital at the rate of average 6.7% from 2006 to 2011 and higher increment in retained earning at the average rate of 12% for 2006 to 2011. The change shows a satisfactory position of the company because of value maximization.
112,850,000 Book Value per Share (2011) = 10,069,312 857,940,000 Book Value per Share (2010) = 8,391,094 705,332,000 Book Value per Share (2009) = 6,992,579 580,098,000 Book Value per Share (2008) = 6,992,579 336,000,000 Book Value per Share (2007) = 6,080,504 264,400,000 Book Value per Share (2006) = 5,287,395 2006 Book Value per Share(with surplus) 50 2007 55.3 2008 83 2009 100.9 2010 102 2011 112 = 50 = 55.3 = 83 = 100.9 = 102 = 112
(With Surplus)
Comments: Book Value per share of Atlas Battery has increased approx 124% from 2006 to 2011 (52-112). This is because of slow increment in share capital at the average rate of 6.7% and higher increment in retained earning average rate of 12% and specially increases in surplus and revolution of property, plant and equipment with the average rate of 12.3% from 2008 to 2011. | 16
Net Income + Interest Expense Return on Total Assets = Average Total Assets 525,100,000 Return on Total Assets (2011) = 1,797,250,000 361,145,000 Return on Total Assets (2010) = 1,370,185,500 316,417,000 Return on Total Assets (2009) = 1,188,343,500 205,667,000 Return on Total Assets (2008) = 939,479,000 144,299,000 Return on Total Assets (2007) = 642,759,500 84,101,000 Return on Total Assets (2006) = 526,413,000 2006 Return on Total Assets 16% 2007 42.4% 2008 21.9% 2009 26.6% 2010 26.3% 2011 29.2% X 100 = 16% X 100 = 42.4% X 100 = 21.9% X 100 = 26.6% X 100 = 26.3% X 100 = 29.2% X 100
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Comments:
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Net Income + Preferred Dividend Return on Stockholder Equity = Average Common Stock Holders Equity 525,101,000 Return on Shareholder Equity (2011) = 954,745,000 341,288,000 Return on Shareholder Equity (2010) = 684,154,000 272,880,000 Return on Shareholder Equity (2009) = 531,546,000 164,131,000 Return on Shareholder Equity (2008) = 406,312,000 122,257,000 Return on Shareholder Equity (2007) = 335,998,000 66,224,000 Return on Shareholder Equity (2006) = 246,350,000 X 100 = 25.1% X 100 = 36.4% X 100 = 40.4% X 100 = 51.3% X 100 = 49.9% X 100 = 55% X 100
2006 25.1%
2007 36.4%
2008 40.4%
2009 51.3%
2010 49.9%
2011 55%
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Comments: Return on share holders equity ratio has increased from 2006 to 2011. Atlas Battery income is increasing every year which cause of increasing in the ratio. Net Income before tax has increased 693% from 2006 to 2011. Return ratio is 55% in 2011 which shows a good return on equity.
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Comments: Return on share holders equity ratio has increased from 2006 to 2011. Atlas Battery income is increasing every year which cause of increasing in the ratio. Net Income before tax has increased 693% from 2006 to 2011. Return ratio is 55% in 2011 which shows a good return on equity.
1,150,256,000 335,998,000 Equity Ratio (2007) = 728,702,000 264,350,000 Equity Ratio (2006) = 556,817,000 2006 Equity Ratio (with surplus) 47.5% 2007 46.1% 2008 50.4% 2009 57.5% 2010 56.7% 2011 54.2% X 100 = 47.5% X 100 = 46.1%
Equity Ratio
(with surplus) 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2006 2007 2008 2009 2010 2011 Equity Ratio (with surplus)
Comments: Equity Ratio is satisfactory because Equity is more than 50% of total assets. This ratio is increased due to revaluation of fixed assets from 2008.
Debt Ratio:
A ratio that indicates what proportion of debt a company has relative to it assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more debt than assets mean while, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk. Total Liabilities Debt Ratio = Total Assets X 100
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952,136,000 Debt Ratio (2011) = 2,080,600,000 656,000,000 Debt Ratio (2010) = 151,390,000 521,099,000 Debt Ratio (2009) = 1,226,431,000 570,158,000 Debt Ratio (2008) = 1,150,256,000 392,704,000 Debt Ratio (2007) = 728,702,000 292,467,000 Debt Ratio (2006) = 556,817,000 X 100 = 52.5% X 100 = 53.9% X 100 = 49.6% X 100 = 42.5% X 100 = 43.3% X 100 = 45.8%
2007
2008
2009
2010
2011
Debt Ratio
60.00% 50.00% 40.00% 30.00% Debt Ratio 20.00% 10.00% 0.00% 2006 2007 2008 2009 2010 2011
Comments:
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Debt ratio in 2006 and 2007was unfavorable, while now it is 45.8% in 2011. This shows a favorable condition of the company, because equity is more than debts. This is due to increase in assets of surplus on revaluation of property, plant and equipment.
Net Income Profit Margin = Total Revenues 525,101,000 Profit Margin (2011) = 5,868,260,000 341,288,000 Profit Margin (2010) = 4,024,422,000 272,880,000 Profit Margin (2009) = 3,156,807,000 164,131,000 Profit Margin (2008) = 2,628,820,000 122,257,000 Profit Margin (2007) = 1,585,648,000 66,224,000 Profit Margin (2006) = 1,209,033,000 2006 2007 2008 2009 2010 2011 X 100 = 5.6% X 100 = 7.7% X 100 = 6.2% X 100 = 8.6% X 100 = 8.5% X 100 = 8.9% X 100
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5.6%
7.7%
6.2%
8.6%
8.5%
8.9%
Profit Margin
(Before Tax) 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2006 2007 2008 2009 2010 2011 Profit Margin (Before Tax)
Comments: Profit before tax of Atlas battery for 2011 is 8.9%, while it was 5.6% of revenue in 2006. This shows a regular growth in profit after tax. Sales are increasing regularly and expenditures also are increased approx in the same ratio.
Gross Margin:
A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations. Gross Profit Gross Margin = Total Sales 860,839,000 Gross Margin (2011) = 5,868,260,000 591,200,000 Gross Margin (2010) = 4,024,422,000 530,067,000 Gross Margin (2009) = 3,156,807,000 386,883,000 Gross Margin (2008) = X 100 = 14.7% | 25 X 100 = 16.8% X 100 = 14.7% X 100 = 14.5% X 100
2,628,820,000 291,622,000 Gross Margin (2007) = 1,585,648,000 189,063,000 Gross Margin (2006) = 1,209,033,000 2006 Gross Margin 2007 2008 2009 2010 2011 X 100 = 15.6% X 100 = 18.4%
Gross Margin
20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2006 2007 2008 2009 2010 2011
Gross Margin
Comments: Gross profit ratio is 14.5% which it was 15.6% in 2006. There is fluctuation in gross profit ratio in 2007 it is highest at 18.4% but decreasing after 2008 due to high cost of sales. Company should control its cost of sale to increase gross profit margin.
Debt to Equity:
A measure of a company's financial leverage is calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing. | 26
The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5.
Total Liabilities Debt to Equity = Total Share Holders Equity 952,136,000 Debt to Equity (2011) = 1,128,500,000 656,000,000 Debt to Equity (2010) = 857,940,000 521,099,000 Debt to Equity (2009) = 705,332,000 570,158,000 Debt to Equity (2008) = 580,098,000 392,704,000 Debt to Equity (2007) = 336,000,000 292,467,000 Debt to Equity (2006) = 264,400,000 2006 Debt to Equity 1.11 2007 1.17 2008 0.98 2009 0.74 2010 0.76 2011 0.84 = `1.11 = 1.17 = 0.98 = 0.74 = 0.76 = 0.84
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Comments: Debt to Equity ratio shows a favorable condition in 2011. While during 2006 & 2007 it was showing worse condition. Again this ratio improved by surplus and revaluation of property, plant and equipment.
Current Ratio:
A liquidity ratio that measures a company's ability to pay short-term obligation. The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt - as there are many ways to access financing - but it is definitely not a good sign. The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations. Because business operations differ in each industry, it is always more useful to compare companies within the same industry. This ratio is similar to the acid-test ratio except that the acid-test ratio does not include inventory and pre-paid as assets that can be liquidated. The components of current ratio (current assets and current liabilities) can be used to derive working capital (difference between current assets and current liabilities). Working capital is frequently used to derive the working capital ratio, which is working capital as a ratio of sales.
Total Liabilities Current Ratio = Total Assets 1,172,913,000 Current Ratio (2011) = = 1.4 | 28
813,725,000 756,814,000 Current Ratio (2010) = 544,754,000 588,698,000 Current Ratio (2009) = 435,472,000 628,382,000 Current Ratio (2008) = 508,335,000 413,695,000 Current Ratio (2007) = 329,823,000 313,695,000 Current Ratio (2006) = 201,950,000 2006 1.6 2007 1.3 2008 1.2 2009 1.4 2010 1.4 2011 1.4 = 1.6 = 1.3 = 1.2 = 1.4 = 1.4
Current Ratio
Current Ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006 2007 2008 2009 2010 2011 Current Ratio
Comments: Current Ratio shows that company has the ability to pay off current liabilities but for better liquidity position company should increase this ratio up to 2 times of the current assets.
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Inventory Turnover:
A ratio showing how many times a company's inventory is sold and replaced over a period. Although the first calculation is more frequently used, COGS (cost of goods sold) may be substituted because sales are recorded at market value, while inventories are usually recorded at cost. Also, average inventory may be used instead of the ending inventory level to minimize seasonal factors. This ratio should be compared against industry averages. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying. High inventory levels are unhealthy because they represent an investment with a rate of return of zero. It also opens the company up to trouble should prices begin to fall. Cost of Goods Sold Inventory Turnover = Average Inventory 5,007,421,000 Inventory Turnover (2011) = 650,950,000 365 Inventory Holding Period = 7.7 501,363,000 Inventory Turnover (2010) = 3,433,222,000 365 Inventory Holding Period = 6.8 262,674,000 Inventory Turnover (2009) = 436,178,000 365 Inventory Holding Period = 6 2,241,937,000 Inventory Turnover (2008) = 370,271,500 365 Inventory Holding Period = 6.1 1,294,026,000 Inventory Turnover (2007) = 271,786,000 | 30 = 4.8 times = 60 days = 6.1 times = 61 days = 6 times = 53 days = 6.8 times = 47 days = 7.7 times
365 Inventory Holding Period = 4.8 1,019,970,000 Inventory Turnover (2006) = 222,461,000 365 Inventory Holding Period = 4.6 2006 Inventory Turnover Inventory Holding Period 4.6 80 2007 4.8 77 2008 6.1 60 2009 6 61 2010 6.8 53 2011 7.7 47 = 80 days = 4.6 times = 77 days
Inventory Turnover
9 8 7 6 5 4 3 2 1 0 2006 2007 2008 2009 2010 2011
Inventory Turnover
Comments:
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Atlas Battery inventory turnover in 2011 is 7.7 times, which shows that company sells and replaces its inventory 7.7 or approx 8 times over a period while inventory holding period shows days it takes to sell the inventory. Atlas Battery takes 47 days to sell inventory. This period was 80 days in 2006. It means company has improved its selling policy.
Quick Ratio:
An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio the better the position of the company. The quick ratio is more conservative than the current ratio, a more well-known liquidity measure, because it excludes inventory from current assets. Inventory is excluded because some companies have difficulty turning their inventory into cash. In the event that short-term obligations need to be paid off immediately, there are situations in which the current ratio would overestimate a company's short-term financial strength. Total Inventory Current Assets Quick Ratio = Current Liabilities 425,000,000 Quick Ratio (2011) = 813,700,000 202,800,000 Quick Ratio (2010) = 544,754,000 139,900,000 Quick Ratio (2009) = 435,472,000 204,700,000 Quick Ratio (2008) = 508,335,000 91,800,000 Quick Ratio (2007) = 329,823,000 86,400,000 Quick Ratio (2006) = 201,950,000 = 0.4 = 0.3 = 0.4 = 0.3 = 0.4 = 0.5
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2007 0.3
2008 0.4
2009 0.3
2010 0.4
2011 0.5
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Quick Ratio
0.6 0.5 0.4 0.3 Quick Ratio 0.2 0.1 0 2006 2007 2008 2009 2010 2011
Comments: Quick ratio in 2011 is 0.5 which shows that half of the current liabilities are immediately converttable to cash. This ratio is satisfactory and company has ability to pay 50% of current liabilities of it has to pay immediately.
Net Credit Sales Trade Debtor Turnover = Average Accounts Receivable 5,868,260,000 Trade Debtor Turnover (2011) = 95,010,500 365 Trade Debt Period = 61.8 4,024,422,000 Trade Debtor Turnover (2010) = 94,458,500 365 Trade Debt Period = 42.6 3,156,807,000 = 9 days = 42.6 times = 6 days = 61.8 times
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= 82,954,000 365
= 38.1 times
= 38.1 2,628,820,000
= 10 days
= 64,610,500 365
= 40.7 times
= 40.7 1,585,648,000
= 47 days
= 48,849,000 365
= 32.5 times
= 32.5 1,209,033,000
= 11 days
= 42,700,000 365
= 28.3 times
= 13 days
2009 38.1 10
2010 42.6 9
2011 61.8 6
28.3 13
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Comments: Trade debit turnover has increased in 2011 which decreased the trade debit period. This change shows that now company has improved collection policy of accounts receivable. In 2006 company takes 13 days to collect accounts receivable now in 2011 it takes 6 days to collect accounts receivable.
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Cost of Sales
6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2006 2007 2008 2009 2010 2011 Cost of Sales (Rupees in '000')
Gross Profit
1,000,000 800,000 600,000 400,000 200,000 0 2006 2007 2008 2009 2010 2011 Gross Profit (Rupees in '000')
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Distribution Cost
180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2006 2007 2008 2009 2010 2011
Administrative Cost
120,000 100,000 80,000 60,000 40,000 20,000 0 2006 2007 2008 2009 2010 2011 Administrative Cost (Rupees in '000')
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Finance Cost
50,000 40,000 30,000 20,000 10,000 0 2006 2007 2008 2009 2010 2011 Finance Cost (Rupees in '000')
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Taxation
180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2006 2007 2008 2009 2010 2011
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1. Comparison
Exide Battery Short Term Analysis:
of
ATLAS
BATTERY
LIMITED
and
In short term analysis Exide has performed better than the Atlas Ltd. By analyzing all three ratios it is clear that Exide battery Pakistan has more capability to pay off its current liability.
Profitability Analysis: By analyzing profitability ratios it can be seen that Atlas battery are earning more profits than the Exide Pakistan. Although sales of Exide are high but there cost of sales is also high which affects its profits where as Atlas Battery has control over its cost.
Long Term Analysis: Both companies are not fully utilizing their assets to contribute into sales. But in 2009 Exide step ahead in both ratios which results in increase sales. DEBT ANALYSIS: By comparing both companies we see that the proportion of equity in total capital is high in Atlas than Exide. As far as debt to equity is concerned Exide has more debt against $1 equity, which means in comparison atlas is somehow in a better position and less chances of liquidation.
2. Sector Comparison:
Sector Average Current Ratio Quick Ratio Cash Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Net Profit Ratio Gross Profit Ratio 2009 1.315774 0.311664 0.14435 6.675601 Atlas 2009 1.300917 0.230585 0.05674 4.969049 Exide 2009 1.330632 0.392742 0.23196 8.382154
Analysis: In comparison with sector Exides short and long term position is better and for Atlas profitability and debt ratios are better, but overall the industry is not performing well due to economic downturn. The poor state of the industry is reflected in Business Monitor International (BMI)s Business Environment Rating for the automotive industry in Asia Pacific, where Pakistan is in last place on a score of 42.4 out of a possible 100. The market is held back by low production growth potential and an average rating for sales growth. However, as a signatory to the Trade Related Intellectual Property Rights Agreement (TRIPS) under the auspices of the World Trade Organization (WTO), the countrys regulatory environment scores well. A number of free trade agreements also contribute to this criterion, although forming FTAs with non-Asian countries would improve this rating further. Despite low marks for bureaucracy and corruption, the market does score well for its long-term economic risk and policy continuity.
According to Daily Times, as many as 60,000 workers and staffers in Pakistan's auto sector have lost their jobs from July, 2008 to January, 2009 due to falling demand for cars. More jobs cuts are feared with continuing weakness in demand. But as the current financial crisis ebbs, there will be significant pent-up demand for automobiles in Pakistan that will drive the growth in auto industry.
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Since the company position starts getting better from year 2006 the Fixed assets section increased in huge amount which tells us that the company really invested in the buying of the fixed assets for much better capacity and storage so they can improve and increase their production. The current assets section as it is clear that the stores, spares and loose tools and stock in trade were almost just enough as much they needed. It seems that the company is utilizing their inventory as much they needed. The current assets section was in the greater proportion as compared to rest of assets that how well the company not in the long term but also in short term is keeping it better in the market and improved their position over the last few years.
4. Horizontal Analysis of Balance Sheet The company increased their share capital in the year 2005 and it is still the same until now. Because of this the companys issued, subscribed and fully paid section also increased. The companys noncurrent liabilities increased in huge amount from year 2007 and in year 2008. The Long provision taxation also increased by a huge amount in percentage over the last two to three years as compared to last five years. The trade and other payable section also increased by a huge amount especially from year 2007 so the company increased most of their liabilities in this section. The company also increased the short term borrowing amount by a much greater percentage from year 2005 until now which tells the company really increased most of their liabilities in this particular section. So overall the taxation, total liabilities and equity section increased in much greater percentage from year 2006 and until now which tells how much the company increased their liabilities.
The fixed assets section increased by a very greater proportion in percentage as the companys position started getting better from year 2007 until now. The percentage increase in the fixed assets was very huge which tells how much the company has invested to buy more fixed assets to increase their production and sales. So over the last five years we see how much the Atlas Battery Limited has improved in perspective of all kinds of noncurrent and especially current assets and how better they are managing it.
5. Vertical Analysis of Income Statement As we seen the companys strengthens from year 2006 it improved in all kinds of section. If we talk about their sales are increasing a lot year after years. So because of this the cost of goods sold also increased in much greater amount The company also improved year after year in the gross profit section as well which better tells the company how much they improved over the past few years and the big reason for that in not only better sales but also a decline in cost of sales percentage. The company maintained its distribution cost from 2005 to 2008 which were around 4 to 6 percent. As the company improved in increasing sales and decreasing their cost of sales and maintain their distribution cost they also made a healthier operating profit over the last few years. So because all these reason the company improved in maintain their before tax and after tax profit to a much better position. 6. Horizontal Analysis of Income Statement As we know the Atlas Battery Limited position started getting stronger and stronger from year 2007 they improved in almost all kinds of sections in which they can earn profit increase their sales and make more money by every ways by buying assets. Since the company bought lot of fixed assets that definitely have improved their production capacity and this was definitely due to much bigger demand and supply. So the company really improved in
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much greater proportion in increasing their sales from year 2007 and continued their progress until now. As the increase in the sales we know the cost of sales also increased so the amount of cost of sales was also quiet high but the company did make some efforts in year 2007 to reduce its cost of sales in order to make much more profit. Since the increase in sales much in greater proportion as compare to cost of sales the companys gross profit also rose year after year. With all the increase in the sales and cost of sales the distribution cost also rose with greater proportion as compare to last eight years. Due to all the steps taken by the company to reduce their expenses with the increase in the sales that company also made a huge amount of operating profit which better tells the companys position that how better they are getting year after year. This progress tells us also one more thing that the company will really earn a lot of profit with increased sales the future as well. Other expense also rose with the increase in the sales and as compared to the countrys condition this up and down will continue in upcoming years so the company should be aware of it and should have primitive measures for it. The before tax profit was also high year after year from year 2007 and still rising over the last three years. The taxation amount also rose especially in the year 2009 due to the increased taxes but the companys good progress is not affected by it. The Atlas Battery Limited net profit after taxation also rose to much greater proportion over all the last three years but raised much in year 2009 as compare to the last few years due to the increased demand and supply.
This horizontal analysis of balance sheet shows that Fixed Assets of the Company increase from last two years. It means Company has much productive assets. It shows a good trend of fixed assets. Company also invests in long term investment and this asset also has increasing trend from 2005 to 2008 but in percentage went down with huge margin. Company also has long term deposits and these also have increasing trend. Current Assets of the Company also have increased in last two year. Trade debts of the Company also have increasing trend and its debts are not in a good position.
11.Du-Pont Analysis:
Du-Pont basis of ROE. is Return on equity. There are three main components who measure the effectiveness Financial leverage Asset Turnover Profit margin
ATLAS BATTERY LIMITED Atlas return on equity is 33% in 2009, which is greater than 2008 which were 26%. It depicts a high return on equity with little or no debt which enables it to grow without large capital expenditures, allowing the owners of the business to withdrawal cash and reinvest it elsewhere. Net profit margin has increased in 2009 to 5.6%, which also effect the return on equity. Due to better working capital management and negotiation of lower markup rates with banks, finance cost increased marginally by 4.8%. Thus the company achieved profit before tax of Rs. 272.9 million for the year 2008-09 as against Rs. 164.1 million achieved during last year. After providing taxation of Rs. 95.2 million profit after tax stood at Rs. 177.7 million with growth of 66.4% as compared to previous year. The company earned Rs. 25.41 per share against Rs. 15.27 per share last year. Return on equity rose to 33.4% as against 26.4% last year. Exide Battery: Exide Batterys return on equity is 16% in 2009 which has only increased by 0.003929% from 2008.
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Exides has high leverage ratios which mean that company is relying on more debts than equity which is about 93% in 2008 which allows it to reduce the tax burden. In 2009 ROE has increased because cost of sales is very high. It shows the managements weakness to control inventory. Finance cost has been increased from 2008 to 2009, which ultimately impact the return on equity.
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