PAF-Karachi Institute of Economics &

Technology

RATIOS ANALYSIS

Presented by:
TOUFEEQ AHMED
Registration # 55302

Introduction to Business Finance

Course Facilitator: Sir Sikandar Taj
 ENGRO FOODS LIMITED
Overview:
Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in
2004. Using dairy as a stepping stone to enter into the food business, the Company
has established state-of-the-art processing units in Sukkur and Sahiwal, along with an
ice cream production facility in Sahiwal.

Top quality brands like Olper’s, Olwell, Tarang, Omore and Owsum have been
successfully launched under the helm of Company’s dairy products. To support these
brands and their highest standards of quality, Engro Foods has invested heavily in
milk processing and milk collection infrastructure.
ENGRO FOODS

Ratio Analysis
Ratio Analysis
 Ratio Analysis
1. Liquidity – the ability of the firm to pay its way

2. Investment/shareholders – information to enable decisions to be made on

the extent of the risk and the earning potential of a business investment

3. Gearing – information on the relationship between the exposure of the

business to loans as opposed to share capital

4. Profitability – how effective the firm is at generating profits given sales and
or its capital assets

5. Financial – the rate at which the company sells its stock and the efficiency
with which it uses its assets
 Ratio Analysis
Financial Data Values in '000

Input Data 2008 2009 2010

Current assets 12,042,221 10,748,871 3,114,550
Fixed assets 45,122,518 82,960,567 27,896,393
Total assets 57,164,739 93,709,438 31,010,943
Average total assets 28,582,370 46,854,719 15,505,472
Cash and cash equivalents 1,687,038 3,955,342 808,584
Inventory 4,680,896 422,607 2,551,752
Average inventory 4,680,896 2,551,752 1,487,179
Current liabilities 5,999,353 6,395,469 3,654,457
Total liabilities 36,111,133 66,821,200 3,657,304
Owners' equity 21,053,606 26,888,238 27,053,639
Number of common shares 212,816,117 297,942,563 327,736,819
Average number of common shares 212,816,117 255,379,340 312,839,691
Average owners' equity 21,053,606 23,970,922 26,970,939
Market price per share 96.46 183.27 193.81
Devidend Paid 425,632 595,885 555,473
Book Value per share 98.93 105.29 86.48
Total Sales 23,317,198 30,171,520 26,744,359
Operating expenses 1,657,815 195,176 388,652
Operating income 4,538,748 4,986,168 4,762,458
Other expense 579,556 424,110 38,773
Earnings before interest and taxes 6,713,522 6,535,525 1,904,106
Interest expense 1,508,948 1,320,579 92,131
Net income 4,240,430 3,957,250 1,675,959
 1. Liquidity Ratio

Ratio Analysis
1. Current Ratio:
Current Assets
Current Liabilities

2008 2009 2010

12,042,221 2.01 10,748,871 1.68 3,114,550 0.85
= = =
5,999,353 6,395,469 3,654,457

Comments:
 1. Liquidity Ratio

Ratio Analysis
2. Quick Ratio::

Current Assets – Inventory

Current Liabilities

2008 2009 2010

12,042,221 - 4,680,896 = 1.23 10,748,871 - 422,607 = 1.61 3,114,550 - 2,551,752 = 0.15
5,999,353 6,395,469 3,654,457

Comments:
 1. Liquidity Ratio

Ratio Analysis
3. Net Working Capital Ratio:

Current Assets – Current Liability

Total Assets

2008 2009 2010

12,042,221 - 5,999,353 = 0.11 10,748,871 - 6,395,469 = 0.05 3,114,550 - 3,654,457 = (0.02)
57,164,739 93,709,438 31,010,943

Comments:
 1. Liquidity Ratio

Ratio Analysis
4. Cash Ratio:

Cash & Cash Equivalent

Current Liability
2008 2009 2010
1,687,038 = 0.28 3,955,342 = 0.62 808,584 = 0.22
5,999,353 6,395,469 3,654,457

Comments:
 1. Liquidity Ratio

Ratio Analysis
5. Operating Ratio:

Operating Expenses
Operating Income
2008 2009 2010
1,657,815 = 0.37 195,176 = 0.04 388,652 = 0.08
4,538,748 4,986,168 4,762,458

Comments:
 1. Liquidity Ratio

Ratio Analysis
6. Operating Expenses to Sales:

Operating Expenses
Total Net Sales

2008 2009 2010

1,657,815 = 7.11% 195,176 = 0.65% 388,652 = 1.45%
23,317,198 30,171,520 26,744,359

Comments:
 2. Assets Ratio

Ratio Analysis
7. Inventory Turnover Ratio:

Total Sales
Average Inventory

Comments:
 2. Assets Ratio

Ratio Analysis
8. Fixed Assets Turnover Ratio::

Total Sales
Fixed AssetsIf

2008 2009 2010

52% = 23,317,198 36% = 30,171,520 96% = 26,744,359
45,122,518 82,960,567 27,896,393

Comments:
 2. Assets Ratio

Ratio Analysis
9. Total Assets Turnover Ratio:

Total Sales
Total Assets
2008 2009 2010
41% = 23,317,198 32% = 30,171,520 86% = 26,744,359
57,164,739 93,709,438 31,010,943

Comments:
 2. Assets Ratio

Ratio Analysis
10. Assets to Equity Ratio:

Total Assets
Owner’s Equity

2008 2009 2010

2.72 = 57,164,739 3.49 = 93,709,438 1.15 = 31,010,943
21,053,606 26,888,238 27,053,639

Comments:
 3. Profitability Ratio

Ratio Analysis
11. Return on Assets Ratio:

Net Income
Average Total Assets

2008 2009 2010

15% = 4,240,430 8% = 3,957,250 11% = 1,675,959
28,582,370 46,854,719 15,505,472

Comments:
 3. Profitability Ratio

Ratio Analysis
12. Return on Equity Ratio:

Net Income
Average Owner’s Equity

2008 2009 2010

0.20 = 4,240,430 0.17 = 3,957,250 0.06 = 1,675,959
21,053,606 23,970,922 26,970,939

Comments:
 3. Profitability Ratio

Ratio Analysis
13. Profit Margin Ratio:

Net Income
Total Net Sales
2008 2009 2010
18% = 4,240,430 13% = 3,957,250 6% = 1,675,959
23,317,198 30,171,520 26,744,359

Comments:
 3. Profitability Ratio

Ratio Analysis
14. Basic Earning Ratio:
Earning Before Interest & Taxes
Total Assets

2008 2009 2010

12% = 6,713,522 7% = 6,535,525 6% = 1,904,106
57,164,739 93,709,438 31,010,943

Comments:
 4. Debt Ratio

Ratio Analysis
15. Total Debt Ratio:
Total Liabilities
Total Assets
2008 2009 2010
0.63 = 36,111,133 0.71 = 66,821,200 0.12 = 3,657,304
57,164,739 93,709,438 31,010,943

Comments:
 4. Debt Ratio

Ratio Analysis
16. Interest Coverage Ratio:
EBIT
Interest Expense

2008 2009 2010

4.45 = 6,713,522 4.95 = 6,535,525 20.67 = 1,904,106
1,508,948 1,320,579 92,131

Comments:
 4. Debt Ratio

Ratio Analysis
17. Debt/Equity Ratio:
Total Liability
Owner’s Equity

2008 2009 2010

1.72 = 36,111,133 2.49 = 66,821,200 0.14 = 3,657,304
21,053,606 26,888,238 27,053,639

Comments:
 5. Market Ratio

Ratio Analysis
18. Earning Per Share (EPS) Ratio:
Net Income
Average No. of Common Stock

2008 2009 2010

19.93 = 4,240,430,000 15.50 = 3,957,250,000 5.36 = 1,675,959,000
212,816,117 255,379,340 312,839,691

Comments:
 5. Market Ratio

Ratio Analysis
19. Prince to Earning Ratio:

Market Price Per Share

Earning Per Share

2008 2009 2010

4.84 = 96.46 11.83 = 183.27 36.18 = 193.81
19.93 15.50 5.36

Comments:
 5. Market Ratio

Ratio Analysis
20. Dividend Payout Ratio:
Dividend Paid
Net Income

2008 2009 2010

0.10 = 425,632 0.15 = 595,885 0.33 = 555,473
4,240,430 3,957,250 1,675,959

Comments:
Questions