Financial Ratio Analysis
Assignment # 2
Course Instructor: Ayesha Zaman
Submitted by:
Dated:
Assignment # 2
Financial Management
Instructions
 You are supposed to answer all the questions, fill in all the blank spaces and
give comments where required.
 Submit this assignment via email.
 Send your emails to ayeshazaman.bu@gmail.com
 I will stop checking emails and marking assignments the day your finance
mid-term exam commences.
Additional Information
No. of shares outstanding
Market value of share
Total dividends paid
2010
41,442,743
68.49
49,731,291.60
2009
33,154,194
79.40
82,885,485.00
Page
2
* For calculating EPS multiply NI by 1000 since each figure is less 3 zeros for making IS and
BS easier to understand.
* Inventory is equal to Stores, spare parts and loose tools and stock in trade.
* Receivables equal trade debts and other receivables.
Assignment # 2
Financial Management
National Foods
Comparative Balance Sheet (Vertical Analysis)
For the year ended 31.12.2010
Long term deposits
CURRENT ASSETS
Stores, spare parts and loose tools
Stock in trade
Trade debts
Advances
Trade deposits and prepayments
Other receivables
Cash and bank balances
654,835
824,968
5,432
846,977
274,556
29,044
6,660
2,632
15,205
5,360
1,502,232
253,050
43,867
10,118
20,664
14,101
Total Current Assets
1,180,506
1,849,392
Total Assets
1,835,341
2,674,360
331,542
323,844
414,427
327,518
655,386
741,945
60,000
13,700
59,999
6,780
140,479
20,000
2,260
72,621
10,707
105,588
460,626
17,764
485,536
530,063
28,319
1,189,769
40,000
12,510
8,397
14,643
40,000
10,238
12,407
16,031
Total Current Liabilities
1,039,476
1,826,827
Total Liabilities and Equity
1,835,341
2,674,360
SHARE CAPITAL AND RESERVES
Issued, subscribed and paid up capital
Unappropriated profits
NON CURRENT LIABILITIES
Long term financing
Liabilities against assets subject to finance lease
Deferred tax
Retirement benefits obligations
CURRENT LIABILITIES
Trade and other payables
Accrued interest/markup
Short term borrowings
Current maturity of:
Long tem financing
Liabilities against assets subject to finance lease
Taxation-Provision less payment
Due to government
%
2010
794,771
25,688
4,509
%
3
2009
614,004
35,668
5,163
Page
ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Intangibles
Assignment # 2
Financial Management
National Foods
Comparative Income Statement (Vertical Analysis)
For the year ended 31.12.2010
2010
4,489,946
-3,163,199
1,326,747
Distribution Costs
Administration Expenses
Other Operating Expenses
Other Operating Income
-665,664
-149,802
-20,448
17,006
-818,908
-909,818
-164,303
-17,295
23,214
-1,068,202
EBIT/Operating Profit
Finance Costs
EBT/Net Profit Before Tax
Taxation
Profit After Taxation
Other Comprehensive Income
Total Comprehensive Income
307,543
-86,841
220,702
-81,241
139,461
258,545
-99,364
159,181
-72,622
86,559
139,461
86,559
4
2
Earnings Per Share
%
4
%
Page
Sales
COGS
Gross Profit
2009
3,758,706
-2,632,255
1,126,451
Assignment # 2
Financial Management
National Foods
Comparative Income Statement (Index Analysis)
For the year ended 31.12.2010
Base Year %
2010
4,489,946
-3,163,199
1,326,747
Distribution Costs
Administration Expenses
Other Operating Expenses
Other Operating Income
-665,664
-149,802
-20,448
17,006
-818,908
-909,818
-164,303
-17,295
23,214
-1,068,202
EBIT/Operating Profit
Finance Costs
EBT/Net Profit Before Tax
Taxation
Profit After Taxation
Other Comprehensive Income
Total Comprehensive Income
307,543
-86,841
220,702
-81,241
139,461
258,545
-99,364
159,181
-72,622
86,559
139,461
86,559
4
2
Earnings Per Share
Indexed %
5
2009
3,758,706
-2,632,255
1,126,451
Page
Sales
COGS
Gross Profit
Assignment # 2
Financial Management
National Foods
Comparative Balance Sheet (Index Analysis)
For the year ended 31.12.2010
Long term deposits
CURRENT ASSETS
Stores, spare parts and loose tools
Stock in trade
Trade debts
Advances
Trade deposits and prepayments
Other receivables
Cash and bank balances
654,835
824,968
5,432
846,977
274,556
29,044
6,660
2,632
15,205
5,360
1,502,232
253,050
43,867
10,118
20,664
14,101
Total Current Assets
1,180,506
1,849,392
Total Assets
1,835,341
2,674,360
331,542
323,844
414,427
327,518
655,386
741,945
60,000
13,700
59,999
6,780
140,479
20,000
2,260
72,621
10,707
105,588
460,626
17,764
485,536
530,063
28,319
1,189,769
40,000
12,510
8,397
14,643
40,000
10,238
12,407
16,031
Total Current Liabilities
1,039,476
1,826,827
6
Total Liabilities and Equity
1,835,341
2,674,360
SHARE CAPITAL AND RESERVES
Issued, subscribed and paid up capital
Unappropriated profits
NON CURRENT LIABILITIES
Long term financing
Liabilities against assets subject to finance lease
Deferred tax
Retirement benefits obligations
CURRENT LIABILITIES
Trade and other payables
Accrued interest/markup
Short term borrowings
Current maturity of:
Long tem financing
Liabilities against assets subject to finance lease
Taxation-Provision less payment
Due to government
2010
794,771
25,688
4,509
Indexed
%
2009
614,004
35,668
5,163
Page
Base
year %
ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Intangibles
Assignment # 2
Financial Management
PROFITABILITY RATIOS
1. INCREASE/DECREASE IN SALES PERCENTAGE
1. Sales (Increase/decrease)
Percentage Increase/decrease= S1-So/So
where S1=
and So=
Percentage Increase/decrease
COMMENTS:
2. GROSS PROFIT MARGIN
2010
2009
2010
2009
Gross Profit
Sales
2. Gross Profit/Sales
COMMENTS:
3. NET PROFIT MARGIN
Net profit after tax
Sales
3. Net Profit after tax/Sales
Page
7
COMMENTS:
Assignment # 2
Financial Management
4. RETURN ON ASSETS
2010
2009
2010
2009
2010
2009
Net profit after tax
Total assets
5. ROA=Net profit after tax/Total assets
COMMENTS:
5. RETURN ON EQUITY
Net profit after tax
Owner's equity
6. ROE=Net profit after tax/Owner's equity
COMMENTS:
6. RETURN ON CAPITAL EMPLOYED
EBIT
Capital Employed
7. ROCE=EBIT/Capital Employed
Capital Employed=Total assets-Current liabilities
Page
8
COMMENTS:
Assignment # 2
Financial Management
LIQUIDITY AND ASSET MANAGEMENT RATIOS
1. WORKING CAPITAL
2010
2009
2010
2009
Current Assets
Current liabilities
1. Working capital= Current assets-Current liabilities
COMMENTS:
2. CURRENT RATIO
Current Assets
Current liabilities
2. Current Ratio=Current Assets/Current Liabilities
COMMENTS:
3. QUICK RATIO
2010
2009
Current Assets (Excluding inventory and prepaid exp.)
Current liabilities
3. Quick Ratio=Current Assets (Excluding inventory and
prepayment)/Current Liabilities
Page
9
COMMENTS:
Assignment # 2
Financial Management
4. ACCOUNT'S RECEIVABLE TURNOVER
2010
2009
2010
2009
Sales
Account's Receivable
4. Account's Receivable turnover (times)=Sales/
Account's receivable
Account's Receivable turnover (days)
COMMENTS:
6. INVENTORY TURNOVER
COGS
Inventory
6. Inventory turnover (times)=COGS/Inventory
Inventory turnover (days)
COMMENTS:
7. WORKING CAPITAL CYCLE
2010
2009
7. Working Capital Cycle
Account's receivable turnover (days)
Inventory turnover (days)
Page
COMMENTS:
10
Account's payable turnover (days)
Cash conversion (days)
Assignment # 2
Financial Management
DEBT RATIOS
1. INTEREST COVERS
2010
2009
2010
2009
2010
2009
EBIT
Interest
1. Interest covers (times)=EBIT/Interest
COMMENTS:
2. LONG TERM DEBT TO TOTAL CAPITALIZATION
Long term liabilities
Total Capitalization
2. LTD to TC ratio=long term liabilities/Total
capitalization
COMMENTS:
3. DEBT RATIO
Total liability
Total assets
3. Debt ratio=Total liability/Total assets
Page
11
COMMENTS:
Assignment # 2
Financial Management
MARKET VALUE RATIOS
1. EARNING PER SHARE
2010
2009
NI cs
# of shares out.
5. EPS = NI cs / # of shares out.
COMMENTS:
2. EARNING YIELD RATIO
2010
2009
EPS
Market value of share
1. Earning yield ratio=EPS/Market value of share
COMMENTS:
3. DIVIDEND YIELD RATIO
2010
2009
Dividend per Share
Market value of share
2. Dividend yield ratio=DPS/Market value of share
Page
12
COMMENTS:
Assignment # 2
Financial Management
4. DIVIDEND PAYOUT RATIO
2010
2009
Total Dividend paid
NI cs
3. Dividend payout ratio= Total Dividend paid / NI cs
COMMENTS:
5. PRICE/EARNING RATIO
2010
2009
Market value of share
Earning per share
5. P/E ratio (times)= Market value of share/EPS
Page
13
COMMENTS
Assignment # 2
Financial Management
Match your Answers for the Ratios
2009
GPM
29.97%
29.55%
NPM
3.71%
1.93%
ROA
7.60%
3.24%
ROE
21.28%
11.67%
ROCE
38.64%
30.51%
WC
141,030
22,565
CR
1.135674128
1.012352018
QR
0.315636917
0.187100366
AR (x)
13.56013247
16.40378643
AR (days)
26.91714117
22.25096026
IT (x)
3.08801878
2.098179746
IT (days)
118.198763
173.9603104
64.29%
72.26%
TD/TA
LTD/LTD+Equity
17.65%
12.46%
EBIT/Interest
3.541449315
2.601998712
EPS
4.206436145
2.088640706
EYR
3.05%
5.30%
DPS
2.50
1.20
DPS/MV
3.15%
1.75%
DPR=Divid./N.I
59.4%
57.5%
18.87619763
32.79166197
P/E ratio
14
19.45%
Page
Inc. dec. in sales %
2010