pak suzuki motor company limited repaired)

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1 Financial Management Term Report Pak Suzuki Ltd Indus Motors Ltd Presented to : Sir Amyn Wahid Presented by: Sana Taqi 9843 Asadullah-9897 Babar Ansari- 10055

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Page 1: Pak Suzuki Motor Company Limited Repaired)

1

Presented by:

Sana Taqi 9843

Asadullah-9897

Babar Ansari-10055

Shafiq-10713

Presented to : Sir Amyn Wahid

Page 2: Pak Suzuki Motor Company Limited Repaired)

Acknowledgement:

We are thankful to Allah, the gracious, the merciful for Helping us at every step and giving us

the strength to complete this report on time.

We are really grateful to our course facilitator Sir Amyn Wahid who guided us and provided

with all his possible assistance during the obstacles faced in the creation of this report, which

would not have been possible without his guidance and support.

We would like to thank our family who supported us and gave us time to complete our report.

2

Page 3: Pak Suzuki Motor Company Limited Repaired)

Table of Contents

INTRODUCTION OF COMPANIES...................................................................4

PAK SUZUKI MOTOR COMPANY LIMITED..............................................4

INDUS MOTORS...............................................................................................6

LIQUIDITY RATIO:..............................................................................................8

FINANCIAL LEVERAGE RATIOS...................................................................12

EFFICIENCY RATIOS........................................................................................17

PROFITABILITY RATIOS.................................................................................25

COMMON SIZE ANALYSIS..............................................................................34

INDEXED ANALYSIS.........................................................................................42

REFERENCES:.....................................................................................................52

APPENDICES........................................................................................................53

3

Page 4: Pak Suzuki Motor Company Limited Repaired)

INTRODUCTION OF COMPANIES

Pak Suzuki Motor Company Limited

Pak Suzuki Motor Company was formed in August 1983 as a joint venture between

Pakistan Automobile Corporation Limited (representing government of Pakistan) and

Suzuki Motors Corporation Japan for the manufacturing, assembling and marketing of

Suzuki vehicles in Pakistan.

PSMCL started production in 1984. In 1989 the foundation stone of the new Bin Qasim

plant was laid.

Over the years PSMCL has expanded its capacity to 150,000 vehicles per annum. On

25th April 2007 the board of directors of Pak Suzuki Motor Corporation Limited and

Suzuki Motorcycles Pakistan (SMPL) Limited decided to amalgamate SMPL into

PSMCL.

It has the largest dealership network in Pakistan. PSMCL also has the highest market

share and has become a household name in Pakistan.

It is manufacturing eight car models; this is the highest number of models manufactured

by any automobile manufacturer in Pakistan.

OUR VISION

To be Excellent All Around.

OUR MISSION

To provide vehicles of international quality at competitive price.

To iprove skills of employees by imparting training and inculcating in them sense of

participation.

4

Page 5: Pak Suzuki Motor Company Limited Repaired)

To achieve maximum indigenization and promote the automobile vending industry.

To contribute to Pakistani society through development of industry in general and

automobile industry in particular.

Product range

Automobile Motorcycles

Cultus: Swift: GS 150

Alto Jimmy Sprinter

Liana Cargo

van

Sprinter

Eco

Mehran Ravi

pickup

Shogun

Bolan

van

APV and

Jimny

INTRODUCTION OF INDUS MOTORS

Indus Motor Company Limited is an assembler, manufacturer and marketer of Toyota

vehicles in Pakistan since July 01, 1990.

5

Page 6: Pak Suzuki Motor Company Limited Repaired)

The company is engaged in sole distributorship of Toyota and Daihatsu Motor Company

Ltd. vehicles in Pakistan through its dealership network. IMC is a joint venture between

the House of Habib, Toyota Motor Corporation Japan (TMC), and Toyota

Tsusho Corporation Japan (TTC). Indus Motor Company was incorporated in 1989 and is

listed on all the three stock exchanges of Pakistan.

It has a market share of 41%, slightly behind Pak Suzuki Motors (market share: 46%).

Thus Indus Motor Company is one of the two leading car manufacturers in Pakistan. The

market share of Pak Suzuki declined to 46% in YEAR 2010 from 48% in YEAR 2009.

Dewan Motor's market share also decreased from 0.38% in YEAR 2009 to 0% in YEAR

2010.

However, Indus Motor and Honda Atlas gained in terms of market share. Honda Atlas'

market share increased from 12.22% in YEAR 2009 to 12.49% in YEAR 2010.

Indus Motor Company performed better than the other companies in the auto sector

during YEAR 2010.The market share of Indus Motors surged from 39% in YEAR 2009

to 41% in YEAR 2010.

Vision

IMC’s Vision is to be the most respected and successful enterprise, delighting customers with

a wide range of products and solutions in the automobile industry with the best people and the

best technology".

The most respected.

The most successful.

Delighting customers.

Wide range of products.

The best people.

The best technology.

Mission

Mission of Toyota is to provide safe & sound journey.

Automobiles

6

Page 7: Pak Suzuki Motor Company Limited Repaired)

Camry Hilux

Corolla Imported vehicles

Cuore

Liquidity Ratio:

a. Current Ratio = Current Assets

Current Liabilities

7

Page 8: Pak Suzuki Motor Company Limited Repaired)

Rs

Indus Motors Ltd 2009 16,715,319.00/

9,884,850.00

1.69

Indus Motors Ltd 2010 23,791,253.00

/14,224,866.00

1.67

Pak Suzuki Co Ltd 2009 12,427,633,000/

3,325,134,000

3.74

Pak Suzuki Co Ltd 2010 14,313,132,000/

4,752,499,000

3.01

Current Ratio Indus Motors Ltd Pak Suzuki Co Ltd

2009 1.69 3.74

2010 1.67 3.01

2009 20100

0.5

1

1.5

2

2.5

3

3.5

4

1.69 1.67

3.74

3.01

Indus Motors Ltd Pak Suzuki Co Ltd

Internal analysis of Indus Motors

Since the company has increased its current assets has increased by 7075934, and our liabilities

has increased by 4340016,therefore our current ratio has increased because current assets grew

less in comparison to current liabilities.

The ratio is mainly used to give an idea of the company to pay back its short tern liabilities with

its short term assets.

8

Page 9: Pak Suzuki Motor Company Limited Repaired)

Internal analysis of Pak Suzuki

Current ratio shows firm`s ability to cover its current liabilities over its current assets. As the

current ratio decreased by 0.73 in 2010 due to increase in current liabilities by 1427365000,

which causes decrease in the liquidity position of Pak Suzuki in 2010 in comparison of 2009 CR.

External Analysis

Paki Suzuki is in a better position than Indus motors to pay off its current liabilities with its

current assets. Pak Suzuki both current assets and current liabilities are much higher than Indus

motors. However both firms have shown improvement in 2010 in terms of current ratio.

b. Quick Ratio = Current Assets – Inventories

Current Liabilities

Rs

Indus Motors Ltd 2009 (16,715,319.00-4,217,341.00)/9,884,850.00 1.26

Indus Motors Ltd 2010 (23,791,253.00 -5,309,934.00)/14,224,866.00 1.30

Pak Suzuki Co Ltd 2009 (12,427,633,000 – 6,879,729,000) /3,325,134,000 1.67

Pak Suzuki Co Ltd 2010 (14,313,132,000 – 8,748,031,000) /4,752,499,000 1.147

9

Page 10: Pak Suzuki Motor Company Limited Repaired)

Quick Ratio Indus Motors Ltd Pak Suzuki Co Ltd

2009 1.26 1.67

2010 1.30 1.14

Indus Motors Ltd Pak Suzuki Co Ltd0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

1.26

1.67

1.31.14

2009 2010

Internal analysis of Indus Motors

The company is able to pay off its short term obligations with its current assets other than

inventories, which denotes that company is managing its inventories efficiently inventories.

Internal analysis of Pak Suzuki

Quick ratio of Pak Suzuki decreased by 0.523 which show Pak Suzuki is in not position to cover

its current liabilities with most liquidating of its assets. This decrease in Quick ratio shows

increase in obsolete inventory which shows inefficient inventory management and have got less

liquidate items to pay off its debts

External Analysis

Indus motors are not having any inventory issues, which is evident by quick ratio which is

increasing in 2010. But Pak Suzuki quick ratio declined which means that its not managing its

inventory well in 2010.

10

Page 11: Pak Suzuki Motor Company Limited Repaired)

Financial Leverage Ratios a. Debt to Asset ratio: Total Debt

Total Assets

Rs

Indus Motors Ltd 2009 10,388,550.000/ 20,685,523.00 50.22%

Indus Motors Ltd 2010 14,550,663.00/ 27,138,278.00 53.62%

Pak Suzuki Co Ltd 2009 3,330,134,000 / 17,655,734,000 19%

11

Page 12: Pak Suzuki Motor Company Limited Repaired)

Pak Suzuki Co Ltd 2010 4,752,449,000 / 19,250,364,000 25%

Indus Motors Ltd Pak Suzuki Co Ltd

2009 50.22% 19%

2010 53.62% 25%

Indus Motors Ltd Pak Suzuki Co Ltd 0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00% 50%

19%

54%

25%

2009 2010

Internal analysis of Indus Motors

This ratio indicates that the proportion of total debt relative to its total assets. This shows in year

2009 we had debt financing of 50.22% and equity financing was 49.78%, however in 2010, our

debt financing was increased to 53.62 and equity financing is 46.38%.

Internal analysis of Pak Suzuki

Debt to total assets shows the percentage of the firm`s assets supported by the debt financing. As

in 2009 23.2% debts were of assets to 2010 33% of the total assets. This shows that 23.2% of the

assets are being financed by liabilities and rest 76.8% are being financed by equity. This

variation of 9.8% occurs because of increase in total debts by 1422315 and also increases in total

assets by 172315.

12

Page 13: Pak Suzuki Motor Company Limited Repaired)

External Analysis

Both the companies has shown that total debt to total assets ratio have increased in 2010.however

Indus motors finance almost half of its assets by debt financing, which is very risky, while Pak

Suzuki is financing very less with debt and more with equity financing, which makes the

company less risky and leading to less interest expense.

b. Debt to Equity Ratio = Total Debt

Shareholder’s Equity

Rs

Indus Motors Ltd 2009 10,388,550.00/10,296,973.00 1.01

Indus Motors Ltd 2010 14,550,663.00/12,587,615.00 1.16

Pak Suzuki Co Ltd 2009 3,330,134,000 / 14,325,600,000 0.23

Pak Suzuki Co Ltd 2010 4,752,449,000 / 14,497,915,000 0.33

Debt to Equity Ratio Indus Motors Ltd Pak Suzuki Co Ltd

2009 1.01 0.23

2010 1.16 0.33

13

Page 14: Pak Suzuki Motor Company Limited Repaired)

Indus Motors Ltd Pak Suzuki Co Ltd0

0.2

0.4

0.6

0.8

1

1.2 1.01

0.23

1.16

0.33

2009 2010

Internal analysis of Indus Motors

This ratio indicates the proportion of liquidity and debt the company uses to finance its assets. As

the ratio is more than 1 in both years, therefore its prone to risk as its doing more of debt

financing in both years as compares to equity financing. This has happened because debt has

increased four times in year from 2009 to 2010, while equity rose only twice the time.

Internal analysis of Pak Suzuki

Debt to equity ratio shows the extent by which the firm is financed by its debt. In 2009

company`s liability were 0.19 times the equity of the company and in 2010 liability of Pak

Suzuki was 0.25 times the company`s equity. As increase by 0.6 shows increase in debt finance.

As the company increases its debt finance which causes more risk to them.

14

Page 15: Pak Suzuki Motor Company Limited Repaired)

External Analysis

As mentioned earlier in the above ratio. Pak Suzuki is using more of equity financing to play on

the safe side, which is indicated through ratio 0f 0.23 and 0.33 which is less than 1 , means more

equity financing, while Indus motor is using more of debt financing.

c. Interest Coverage Ratio = ___ EBIT_______

Interest Charges

Rs

Pak Suzuki Co Ltd 2009 14,02500/62,000 22.62

Indus Motors Ltd 2010 36,47600/15,33900 2.38

Indus Motors Ltd 2009 427,843/ 20,607 20.762

Pak Suzuki Co Ltd 2010 668,015/ 20,278 32.942

Interest Coverage Ratio Indus Motors Ltd Pak Suzuki Co Ltd

2009 22.62 20.762

2010 2.38 32.942

15

Page 16: Pak Suzuki Motor Company Limited Repaired)

Indus Motors Ltd 20100

5

10

15

20

25

30

35

22.6220.762

2.38

32.942

2009 2010

Internal analysis of Indus Motors

There is a massive decline in interest coverage ratio in 2010, because our interest expense has

increased with a huge amount. Hence its proved through that increased debt financing in 2010

lead to increased interest expense.

Internal analysis of Pak Suzuki

Interest coverage ratio of Pak Suzuki shows its ability to cover its interest charges from its

profits. As there is increase in ICR by 12.18% which shows that firm`s ability has increased to

covers its interest charges because they have increased their profitability in 2010 by 240172 and

there is less increase in interest charges in 2010 as comparison of 2009.

External Analysis

In 2010,Indus motors interest charges increased drastically more than double, which lead to

decreased coverage ratio, while for Pak Suzuki, interest charges had decreased almost same for

two years but its EBIT has increased , due to decreased expenses. Therefore Pak Suzuki is in a

better position to cover its interest charges with its EBIT.

16

Page 17: Pak Suzuki Motor Company Limited Repaired)

Efficiency Ratios

a. Receivable Turnover = _Annual Credit Sales_

Receivables

Rs

Indus Motors Ltd 2009 37,864,604/1,845,900 20.51

Indus Motors Ltd 2010 60,093,139.00/1,737,600.00 34.58

Pak Suzuki Co Ltd 2009 26,234,061,000/376,508,000 69.68

Pak Suzuki Co Ltd 2010 42,642,762,000/240,719,000 177.15

Receivable Turnover Indus Motors Ltd Pak Suzuki Co Ltd

2009 20.51 69.68

2010 34.58 177.15

Indus Motors Ltd Pak Suzuki Co Ltd 0

20

40

60

80

100

120

140

160

180

20.51

69.68

34.58

177.15

2009 2010

17

Page 18: Pak Suzuki Motor Company Limited Repaired)

Internal analysis of Indus Motors

This ratio indicates the quality of receivables and how successful the firm is in its collection

Receivable turnover has increased in year 2010 to 34.58 from 20 because receivables have

declined in 2010 by 6% while have sales Increased drastically. This means that the company is

much more effective in collection of its receivables.

Internal analysis of Pak Suzuki

Receivable turnover ratio shows the quality of receivables and how Pak Suzuki efficiently

collects its receivables. As the ratio increased by 107.447 in 2010 which shows credit sales have

been increased by 16408701 and also shows a decrease in account receivable of 56%

External Analysis

Both the companies are doing well in collection of its receivables and are managing its

receivables well. However in 2010, receivables for Pak Suzuki declined by 56%, while its sales

have almost doubled, means that more sales were made on cars and company was providing

some incentive to creditors that they were paying quickly so less receivables.

b. Average Collection Period = Days in the Year

Receivable Turnover

Indus Motors Ltd 2009 360/20.51 17.55 days

Indus Motors Ltd 2010 360/34.58 10.40 days

Pak Suzuki Co Ltd 2009 360/69.68 5.17 days

Pak Suzuki Co Ltd 2010 360/177.15 2.03 days

18

Page 19: Pak Suzuki Motor Company Limited Repaired)

Average Collection Period Indus Motors Ltd Pak Suzuki Co Ltd

2009 17.55Days 5.17 days

2010 10.40 days 2.03 days

Indus Motors Ltd Pak Suzuki Co Ltd 0

2

4

6

8

10

12

14

16

18

17.55

5.17

10.4

2.03

2009 2010

Internal analysis of Indus Motors

This indicates that in how many days the firm collects its receivables. Average collection period

for Indus motors in 2010 have decreased to 10 days from 17 days, which means that the

company is giving some kind of discounts to creditors, so that they are paying early. As the

receivable turnover ratio has increased for Indus motor for 2010, Average collection period has

decreased in 2010.

Internal analysis of Pak Suzuki

As the Average collection period ratio shows a drastic decrease in average collection period

which shows very weaker receivable turnover. As in 2009 Pak Suzuki takes 6 days in collecting

receivables where as in 2010 it takes 2 days. It takes 3 less days for collecting receivables in

2010 in comparison of 2009.

19

Page 20: Pak Suzuki Motor Company Limited Repaired)

External Analysis

As evident from average collection ratio for Pak Suzuki, it has decreased the days that it was

taking to convert account receivables to cash to only 2 days. While Indus motor is taking 10 days

in 2010, therefore Pak Suzuki is doing well in 2010 as compared to Indus motors.

c. Inventory Turnover = Cost Of Goods Sold or Net Sales

Inventory

Rs

Indus Motors Ltd 2009 35,540,418.00/4,217,341.00 8.43

Indus Motors Ltd 2010 55,382,306.00/5,309,934.00 10.43

Pak Suzuki Co Ltd 2009 25,664,762,000/ 6,879,729,000 3.73

Pak Suzuki Co Ltd 2010 41,638,975,000/ 8,748,031,000 4.46

Inventory Turnover Indus Motors Ltd Pak Suzuki Co Ltd

2009 8.43 3.73

2010 10.43 4.46

20

Page 21: Pak Suzuki Motor Company Limited Repaired)

Indus Motors Ltd Pak Suzuki Co Ltd 0

2

4

6

8

10

12

8.43

3.73

10.43

4.46

2009 2010

Internal analysis of Indus Motors

This ratio indicates how effective is the company in converting its inventory to cash and generate

sales. As the ratio of inventory turnover has increased from 8.43 to 10.43, this shows that

inventory are now pulled out two times faster and Indus motor inventory is improving. This may

be due increased quality good products, or some relaxation in credit policies of the company.

Internal analysis of Pak Suzuki

Inventory turnover ratio indicates the effectiveness of the inventory management practice of the

company. The inventory turnover ratio of Pak Suzuki has increased by 0.73. This shows Pak

Suzuki efficiently converts cash better than previous year. And the cost of goods sold also

increased in 2010.

External Analysis

Indus motors are taking around 10 times to covert its inventory to sale, while Pak Suzuki is

taking 4 times in 2010 to convert inventory to cash. This may be due to the fact that Indus motor

produce cars that are luxurious and expensive, so upper class buys it and few units are sold but

which give increase amount of revenue but Pak Suzuki cater to masses and produce

comparatively low price cars, which are purchased regularly by masses.

21

Page 22: Pak Suzuki Motor Company Limited Repaired)

d. Inventory Turnover in Days = Days in the Year

Inventory Turnover

Indus Motors Ltd 2009 360/8.43 42.72 days

Indus Motors Ltd 2010 360/10/43 34.52 days

Pak Suzuki Co Ltd 2009 360/3.73 96.50 days

Pak Suzuki Co Ltd 2010 360/4.46 75.63 days

Inventory Turnover in Days Indus Motors Ltd Pak Suzuki Co Ltd

2009 42.72 days 96.50 days

2010 34.52 days 75.63 days

Indus Motors Ltd Pak Suzuki Co Ltd0

20

40

60

80

100

120

42.72

96.5

34.52

75.63

2009 2010

Internal analysis of Indus Motors

This ratio indicates the days taken by the company to convert its inventory to account

receivables. Indus motors have decreased its inventory turnover days by 8 days in 2010. This

may be due increased quality good products, or some relaxation in credit policies of the

company.

22

Page 23: Pak Suzuki Motor Company Limited Repaired)

Internal analysis of Pak Suzuki

From this analysis, we came to know that Pak Suzuki is taking more time in converting its

inventory. This shows company is taking 15 days more in 2010 than in 2009 for inventory

conversion which shows a weaker inventory management system than as was in 2009.

External Analysis

Inventory turnover in days have decreased for both companies in 2010, which shows that both

companies are selling cars fast in 2010, as compared to 2009, this may be due to increased car

financing and increased disposable income of consumers.

e. Total Asset Turnover = Net Sales

Total Assets

Rs

Indus Motors Ltd 2009 37,864,604.00/20,685,523.00 1.83

Indus Motors Ltd 2010 60,093,139.00/27,138,278.00 2.21

Pak Suzuki Co Ltd 2009 26,234,061,000/ 17,655,734,000 1.49

Pak Suzuki Co Ltd 2010 42,642,762,000/ 19,250,364,000 2.22

Total Asset Turnover Indus Motors Ltd Pak Suzuki Co Ltd

2009 1.83 1.49

2010 2.21 2.22

23

Page 24: Pak Suzuki Motor Company Limited Repaired)

Indus Motors Ltd Pak Suzuki Co Ltd 0

0.5

1

1.5

2

2.5

1.83

1.49

2.21 2.22

2009 2010

Internal analysis of Indus Motors

This ratio indicates how effective the firm is utilizing it total assets to generate sales. Total assets

have increased by 31% in 2010, while sales have increased by 58%. This shows that Indus

motors have utilized its total assets very effectively to generate sales. And it has doubled its sales

over time. This all is evident in the profit and loss account and by inventory turnover ratio, that

inventory is selling fast, leading to increased sales.

Internal analysis of Pak Suzuki

Total assets turnover of any company shows how a firm is performing in terms of economic

utilization of its assets; from the use of these assets they generate revenues. As the ratio shows

that Pak Suzuki is efficiently utilizing its assets as there is increase in net sales by 61.52%. This

shows Pak Suzuki is efficiently using its assets for revenue generation. Total sales and assets

both decreased in 2010.

External Analysis

Indus motors and Pak Suzuki total asset turnover is almost the same in 2010, which indicates

both companies are using its assets well to generate sales. Total assets and sales have increased

for both the companies in 2009 and 2010.

24

Page 25: Pak Suzuki Motor Company Limited Repaired)

Profitability Ratios:

a) Gross Profit Margin = Gross profit

Sales

Rs

Indus Motors Ltd 2009 2,324,186.00/37,864,604.00 6.14

Indus Motors Ltd 2010 4,710,833.00/60,093,139.00 7.84

Pak Suzuki Co Ltd 2009 569,299,000/26,234,061,000 2.17%

Pak Suzuki Co Ltd 2010 1,003,787,000/42,642,762,000 2.35%

Gross Profit Margin Indus Motors Ltd Pak Suzuki Co Ltd

2009 6.14% 2.17%

2010 7.84% 2.35%

2009 20100.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

0.0614

0.0784

0.0217 0.0235

Indus Motors Ltd Pak Suzuki Co Ltd

25

Page 26: Pak Suzuki Motor Company Limited Repaired)

Internal analysis of Indus Motors

The gross ratio for Indus has increased in 2010 from 2009 as Sales have increased by 59% and

Cost of goods sold by 55% in 2010 from 2009 year.

Internal analysis of Pak Suzuki

After analyzing the income statement we got increase in sales by 56.71% which shows an

efficient profitability of Pak Suzuki in 2010.in 2010 gross profit of the company has increased

due to increased sales in 2010 and reduction in cost of goods sold cost.

External Analysis

Indus motors have much better gross margins than Pak Suzuki, which means that its operations

are much better than Pak Suzuki and is producing goods in cost efficient manner.

b. Net Profit Margin = Net Profit After Taxes

Net Sales

Rs

Indus Motors Ltd 2009 1,385,102.00/37,864,604.00 3.66

Indus Motors Ltd 2010 3,443,403.00/60,093,139.00 5.73

Pak Suzuki Co Ltd 2009 255,219,000/26,234,061,000 0.97%

Pak Suzuki Co Ltd 2010 211,143,000/42,642,762,000 0.50%

Net Profit Margin Indus Motors Ltd Pak Suzuki Co Ltd

2009 3.66% 0.97%

2010 5.73% 0.50%

26

Page 27: Pak Suzuki Motor Company Limited Repaired)

Indus Motors Ltd Pak Suzuki Co Ltd 0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

3.66%

0.97%

5.73%

0.50%

2009 2010

Internal analysis of Indus Motors

From 2009, NOPAT increased by 148% in 2010, as the operating income tremendously

increased from 727080 to 1801459. Financing cost has also decreased from 26450 to 23576.

Internal analysis of Pak Suzuki

Net profit margin of Pak Suzuki has declined drastically in 2010 by 47.2% because of higher

operating cost, and of other expenses also.

External Analysis

Net profit for Indus motors have decreased in 2010 due to increased expenses due to which its

Net profit margin ratio declined. Indus motor had better profitability in 2010, while Pak Suzuki

profitability declined in 2010. Therefore an Indus motor was in a better position in 2010.

27

Page 28: Pak Suzuki Motor Company Limited Repaired)

c. Return on assets: Net Profit After Taxes

Total Assets

Rs

Indus Motors Ltd 2009 1,385,102.00/20,685,523.00 6.70%

Indus Motors Ltd 2010 3,443,403.00/27,138,278.00 12.69%

Pak Suzuki Co Ltd 2009 255,219,000/17,655,734,000 1.45%

Pak Suzuki Co Ltd 2010 211,143,000/19,250,364,000 1.10%

Return on assets: Indus Motors Ltd Pak Suzuki Co Ltd

2009 6.70% 1.45%

2010 12.69% 1.10%

Indus Motors Ltd Pak Suzuki Co Ltd0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

6.70%

1.45%

12.69%

1.10%

2009 2010

Internal analysis of Indus Motors

Return on assets form Indus motors have doubled in 2010 over 2009, as our total assets have

increased by31.19%.

28

Page 29: Pak Suzuki Motor Company Limited Repaired)

Internal analysis of Pak Suzuki

The ROI ratio has declined in 2010 by 35%, as the sales decreased in 2010 as compared to 2009

by 44,076 and also investments in total assets also increased which causes a gap in ROI.

External Analysis

Indus motors have increased ROI as compared to Pak Suzuki declining ROI in 2010. As evident

from Pak Suzuki declining net income in 2010, it was obvious that its ROI willed cline too,

While Indus motors had increased net income and increased assets in 201, making the company

better off.

d. Return on Equity= Net Profit After Taxes

Shareholder’s Equity

Rs

Indus Motors Ltd 2009 1,385,102.00/10,396,973.00 13.32%

Indus Motors Ltd 2010 3,443,403.00/13,587,615.00 25.34%

Pak Suzuki Co Ltd 2009 255,219,000/14,325,600,000 1.78%

Pak Suzuki Co Ltd 2010 211,143,000/14,497,915,000 1.46%

Return on Equity Indus Motors Ltd Pak Suzuki Co Ltd

2009 13.32% 1.78%

2010 25.34% 1.46%

29

Page 30: Pak Suzuki Motor Company Limited Repaired)

Indus Motors Ltd Pak Suzuki Co Ltd 0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

13.32%

1.78%

25.34%

1.46%

2009 2010

Internal analysis of Indus Motors

Return on equity for Indus motors have increased in 2010 , as our reserves have increased by

22.4% in 2010 from 2009.

Internal analysis of Pak Suzuki

RoE indicates the profitability to the shareholders of the firm. As RoE has also decreased by

32%, this cause because of decrease in net income as well as increase in shareholder’s equity

External Analysis

Indus motors look more interesting to investors in 2010 because its ROE has increased to 25%

which is beneficial for shareholders while Pak Suzuki ROE declined, which causes decrease in

RoE, Which is obviously due to decreased net income in 2010?

30

Page 31: Pak Suzuki Motor Company Limited Repaired)

e. Earning per share= Net income

Number of shares

Rs/ No of Shares

Indus Motors Ltd 2009 1,385,102.00/78,600.00 17.62

Indus Motors Ltd 2010 3,443,403.00/78,600.00 43.81

Pak Suzuki Co Ltd 2009 255,219,000/82,329,000 3.10

Pak Suzuki Co Ltd 2010 211,143,000/82,157,000 2.57

Earning per share Indus Motors Ltd Pak Suzuki Co Ltd

2009 17.62 3.10

2010 43.81 2.57

Indus Motors Ltd Pak Suzuki Co Ltd0

5

10

15

20

25

30

35

40

45

17.62

3.1

43.81

2.57

2009 2010

Internal analysis of Indus Motors

Earning per share has increased to 43rs from 17 rs, because our net income has increased for

2010, as described above, however the company has not issued extra shares in 2010, and the

number of shares had remained to 78600 in 2010 and 2009. This means more wealth

maximization for share holder has increased.

31

Page 32: Pak Suzuki Motor Company Limited Repaired)

Internal analysis of Pak Suzuki

Earnings per share of Pak Suzuki has also fallen because of decrease in profit as the number of

share as same in both years but the profit earned has difference of 44076, that causes decrease in

earning per share by 0.535.

External Analysis

Indus motors earning per share ratio has increased drastically to 43.81 in 2010 from 17 in 2009,

which making the firm more desirable to investors as they would earn more wealth, while Pak

Suzuki ratio has declined leading to decreased shareholder value and which is a cause of

decreased net income in 2010.

f. Price to Earnings Ratio = Price (Market Price)

Earnings per Share

Rs

Indus Motors Ltd 2009 107.65/17.62 6.11

Indus Motors Ltd 2010 262.42/43.81 5.99

Pak Suzuki Co Ltd 2009 NA 23.9

Pak Suzuki Co Ltd 2010 NA 31.7

Price to Earnings Ratio Indus Motors Ltd Pak Suzuki Co Ltd

2009 6.11 23.9

2010 5.99 31.7

32

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Indus Motors Ltd Pak Suzuki Co Ltd 0

5

10

15

20

25

30

35

6.11

23.9

5.99

31.7

2009 2010

Internal analysis of Indus Motors

Its a valuation ratio of a company's current share price compared to its per-share earnings Price

to earning ratio has decreased in 2010, because earning per share have increased much more

heavily in 2010 than the market price of shares, which have also increased in 2010.

Internal analysis of Pak Suzuki

Pak Suzuki P/E ratio has increased in 2010,

External Analysis

As price to earning ratio was Pak Suzuki is not avail

33

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Common size analysis

Profit and Loss account for Indus motors

         

Profit an Loss account Regular Common

size

 

As at June 30, 2010 2010 2009 2010 2009

  (Rupees in '000)    

         

Net sales 60,093,139 37,864,604 100.00% 100.00

%

Cost of sales 55,382,306 35,540,418 92.16% 93.86%

Gross profit 4,710,833 2,324,186 7.84% 6.14%

Distribution expenses 468,496 469,985 0.78% 1.24%

Administrative expenses 381,575 352,249 0.63% 0.93%

  850071 822,234 1.41% 2.17%

  3,860,762 1,501,952 6.42% 3.97%

Other operating expenses 416,106 156,479 0.69% 0.41%

  3,444,656 1,345,473 5.73% 3.55%

Other operating income 1,801,459 727,080 3.00% 1.92%

  5246115 2,072,553 8.73% 5.47%

Finance costs 3,576 26,540 0.01% 0.07%

Profit before taxation 5,242,539 2,046,013 8.72% 5.40%

Taxation 1,799,136 660,911 2.99% 1.75%

Profit after taxation 3,443,403 1,385,102 5.73% 3.66%

(Rupees)        

Earnings per share 44 17.62    

         

34

Page 35: Pak Suzuki Motor Company Limited Repaired)

Analysis:

In this common size analysis of profit and loss account we have seen that cost of goods sold have

decreased in 2010 as a percentage of sales, while gross profit has also increased in 2010 to

7.84% as a percentage of sales, however distribution expenses have declined to 0.78% in 2010

along with administrative expenses while other operating expenses have increased to 0.69% as a

percentage of sales.net income of Indus motors have increased to 5.73% as a percentage of sales,

which shows that company has good income available with itself to distribute to shareholders in

2010.

Balance sheet for Indus motors

Balance Sheet        

As at June 30, 2010 Regular Common size

  2010 2009  2010  2009

  (Rupees in '000)    

ASSETS        

Non-current assets        

Fixed Assets 3,324,333 3,934,473 19.02% 12.25%

Long-term loans and advances 15,570 28,509 0.14% 0.06%

Long-term deposits 7,122 7,222 0.03% 0.03%

Total Non current Assets 3,347,025 3,970,204 19.19% 12.33%

         

Current assets        

Stores and spares 111,567 128,483 0.62% 0.41%

Stock-in-trade 5,198,367 4,088,858 19.77% 19.16%

Trade debts 1,613,247 1,736,631 8.40% 5.94%

Loans and advances 839,819 894,459 4.32% 3.09%

35

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Short-term prepayments 18,778 16,876 0.08% 0.07%

Accrued return on bank deposits 57,254 50,944 0.25% 0.21%

Other receivables 196,241 67,902 0.33% 0.72%

Cash and bank balances 15,755,980 9,731,166 47.04% 58.06%

Total Current Assets 23,791,253 16,715,319 80.81% 87.67%

         

TOTAL ASSETS 27,138,278 20,685,523

100.00

%

100.00

%

         

EQUITY        

Share capital        

Authorized capital    

100,000,000 (2009: 100,000,000) Ordinary

shares of Rs 10 each 1,000,000 1,000,000 4.83% 3.68%

Issued, subscribed and paid-up capital 786,000 786,000 3.80% 2.90%

Reserves 11,801,615 9,510,973 45.98% 43.49%

Total Equity 12,587,615 10,296,973 49.78% 46.38%

         

LIABILITIES        

Non-current liabilities        

Deferred taxation 325,797 503,700 2.44% 1.20%

Total non current liabilties 325,797 503,700 2.44% 1.20%

         

Current liabilities        

Trade, other payables and provisions 5,905,062 3,942,988 19.06% 21.76%

Advances from customers and dealers 8,076,281 5,926,529 28.65% 29.76%

Accrued mark-up 944 673 0.00% 0.00%

Short-term running finance - -    

Taxation – net 242,579 14,660 0.07% 0.89%

36

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  14,224,866 9,884,850 47.79% 52.42%

         

TOTAL EQUITY AND LIABILITIES 27,138,278 20,685,523

100.00

%

100.00

%

Analysis:

For Indus motors the total current assets have increased to 19 % in 2010 as a percentage of total

assets. However total current assets declined in 2010 to 80% from 87% in 2009, due to decline in

receivables and cash

Total equity also increased to 48% in 2010 from 46% in 2009 due to increased reserves in the

company which improved the equity percentage increased. Total current liabilities decreased to

47% in 2010 from 52% in 2009, due to decreases in payables in 2010.

37

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Balance sheet (common) for Pak Suzuki

Pak Suzuki Motor Company Limited        

Common Size Balance Sheet        

As at December 31, 20__        

  2010   2009

  (Rs. 000) % (Rs. 000) %

ASSETS        

Non-current assets        

Fixed Assets        

Property, plant & equipment 4,226,582 21.96 4,684,671 26.53

Intangible leases 505,760 2.63 347,732 1.97

  4,732,342 24.58 5,032,403 28.50

Long-term investments 5,413 0.03 4,449 0.03

Long-term loans 1,114 0.01 3,162 0.02

Long-term deposits & prepayments 28,499 0.15 34,609 0.20

Long-term installment sales receivables 169,864 0.88 153,478 0.87

  4,937,232 25.65 5,228,101 29.61

Current assets        

Stores, spares and loose tools 63,916 0.33 41,749 0.24

Stock-in-trade 8,748,031 45.44 6,879,729 38.97

Trade debts 240,719 1.25 376,508 2.13

Current portion of long-term installments

Sales receivables 251,254 1.31 205,680 1.16

Loans, advances and advances 134,963 0.70 226,388 1.28

Trade deposits & short-term prepayments 43,466 0.23 31,738 0.18

Accrued markup income 8,652 0.04 7,837 0.04

Other receivables 107,779 0.56 76,685 0.43

38

Page 39: Pak Suzuki Motor Company Limited Repaired)

Sales tax & excise duty adjustable 389,453 2.02 255,609 1.45

Income tax refundable - net 1,407,713 7.31 780,089 4.42

Cash and bank balances 2,917,186 15.15 3,545,621 20.08

  14,313,132 74.35 12,427,633 70.39

TOTAL ASSETS 19,250,364 100.00 17,655,734 100.00

         

EQUITY & LIABILITIES        

         

Authorised share capital 1,500,000   1,500,000  

150,000,000 (2009: 150,000,000)

Ordinary shares of Rs 10 each        

Issued, subscribed and paid-up capital 822,999 4.28 822,999 4.66

Reserves 13,674,916 71.04 13,502,601 76.48

  14,497,915 75.31 14,325,600 81.14

         

Non-current liabilities        

Deferred taxation 0 0.00 5,000 0.03

         

Current liabilities        

Trade, other payables 3,080,351 16.00 1,853,034 10.50

Advances from customers 327,031 1.70 441,781 2.50

Accrued mark-up 0 0.00 1,512 0.01

Short-term borrowing 50,000 0.26 80,000 0.45

Deposits against display of vehicles 1,067,839 5.55 723,554 4.10

Security deposits 88,753 0.46 86,778 0.49

Provision for custom duties and sales tax 138,475 0.72 138,475 0.78

  4,752,449 24.69 3,325,134 18.83

TOTAL EQUITY AND LIABILITIES 19,250,364 100.00 17,655,734 100.00

39

Page 40: Pak Suzuki Motor Company Limited Repaired)

Analysis:

In year 2010, total assets of Pak Suzuki consists of 74.35% of current assets and 25.65% of non-

current assets as compared to 70.39% and 29.61% respectively in 2009. The increase in current

assets was because of increase in stores, spares & loose tools by 0.09%, stock-in-trade by 6.47%,

trade deposits & short-term prepayments by 5%, other receivables by 0.13%. The decrease in

non-current assets was a result of decrease in fixed assets by 4.57%. The equity side of the

balance sheet indicates the decline from 81.14% to 75.31% however the liabilities side of the

balance sheet shows an increase from 18.83% to 24.69%

Income statement (common) for Pak Suzuki

Pak Suzuki Motor Company

Limited        

Common Size Profit & Loss

Account        

For the year ended December 31,

20__        

  2010   2009

  (Rs. 000) % (Rs. 000) %

         

Turnover - net 42,642,762 100.00 26,234,061 100.00

Cost of sales (41,638,975) 97.65 (25,664,762) 97.83

Gross profit 1,003,787 2.35 569,299 2.17

Distribution costs (197,361) 0.46 (214,550) 0.82

Administrative expenses (636,332) 1.49 (495,200) 1.89

Other operating income 575,078 1.35 619,572 2.36

Finance costs (21,349) 0.05 (12,564) 0.05

40

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Other operating expenses (55,808) 0.13 (38,714) 0.15

  (335,772) 0.79 (141,456) 0.54

Profit before taxation 1,339,559 3.14 710,755 2.71

Taxation (456,872) 1.07 (172,624) 0.66

Profit after taxation 882,687 2.07 538,131 2.05

         

Analysis:

In the year 2010 the cost of goods sold was decrease which resulted in increase in gross profit

from 2.17% to 2.37%. the overall cost structure was decreasing i.e. the administration cost &

distribution cost by 0.40% & 0.36% respectively .the overall tax or the company increased from

0.66% to 1.07% but still the company profit after taxation

Indexed Analysis

41

Page 42: Pak Suzuki Motor Company Limited Repaired)

Profit and Loss account for Indus motors

Profit an Loss account Regular Indexed  

As at June 30, 2010 2010 2009 2009 2010

  (Rupees in '000)    

         

Net sales 60,093,139 37,864,604 100%

158.71

%

Cost of sales 55,382,306 35,540,418 100%

155.83

%

Gross profit 4,710,833 2,324,186 100%

202.69

%

Distribution expenses 468,496 469,985 100% 99.68%

Administrative expenses 381,575 352,249 100%

108.33

%

  850071 822,234 100%

103.39

%

  3,860,762 1,501,952 100%

257.05

%

Other operating expenses 416,106 156,479 100%

265.92

%

  3,444,656 1,345,473 100%

256.02

%

Other operating income 1,801,459 727,080 100%

247.77

%

  5246115 2,072,553 100%

253.12

%

Finance costs 3,576 26,540 100% 13.47%

Profit before taxation 5,242,539 2,046,013 100%

256.23

%

Taxation 1,799,136 660,911 100% 272.22

42

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%

Profit after taxation 3,443,403 1,385,102 100%

248.60

%

(Rupees)        

Earnings per share 44 17.62 100%

248.64

%

 

Analysis:

In indexed analysis for profit and loss account for Indus motors, we have seen that all items have

increased drastically over the next year of 2010 from 2009. Net sales increased by 158% , with

COGS being increased in the same proportion and gross profit getting doubled with 200%

increase. However distribution expenses have declined and other expenses increased in 2010.

One thing is to be notices that our finance cost has decreased to 13.47%, leading to almost

double increase of 248% in net income in 2010, showing effectiveness of companies operations

and how desirable the company for investors.

Balance sheet for Indus motors

Balance Sheet        

As at June 30, 2010 Regular Indexed

  2010 2009 2009 2010

  (Rupees in '000)    

ASSETS        

Non-current assets        

Fixed Assets 3,324,333 3,934,473 100.00% 84.49%

Long-term loans and advances 15,570 28,509 100.00% 54.61%

Long-term deposits 7,122 7,222 100.00% 98.62%

Total Non current Assets 3,347,025 3,970,204 100.00% 84.30%

43

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Current assets        

Stores and spares 111,567 128,483 100.00% 86.83%

Stock-in-trade 5,198,367 4,088,858 100.00% 127.13%

Trade debts 1,613,247 1,736,631 100.00% 92.90%

Loans and advances 839,819 894,459 100.00% 93.89%

Short-term prepayments 18,778 16,876 100.00% 111.27%

Accrued return on bank deposits 57,254 50,944 100.00% 112.39%

Other receivables 196,241 67,902 100.00% 289.01%

Cash and bank balances 15,755,980 9,731,166 100.00% 161.91%

Total Current Assets 23,791,253 16,715,319 100.00% 142.33%

         

TOTAL ASSETS 27,138,278 20,685,523 100.00% 131.19%

         

EQUITY        

Share capital        

Authorized capital        

100,000,000 (2009: 100,000,000)

Ordinary shares of Rs 10 each 1,000,000 1,000,000 100.00% 100.00%

Issued, subscribed and paid-up capital 786,000 786,000 100.00% 100.00%

Reserves 11,801,615 9,510,973 100.00% 124.08%

Total Equity 12,587,615 10,296,973 100.00% 122.25%

         

LIABILITIES        

Non-current liabilities        

Deferred taxation 325,797 503,700 100.00% 64.68%

Total non current liabilities 325,797 503,700 100.00% 64.68%

         

Current liabilities        

Trade, other payables and provisions 5,905,062 3,942,988 100.00% 149.76%

44

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Advances from customers and dealers 8,076,281 5,926,529 100.00% 136.27%

Accrued mark-up 944 673 100.00% 140.27%

Short-term running finance - -    

Taxation - net 242,579 14,660 100.00%

1654.70

%

  14,224,866 9,884,850 100.00% 143.91%

         

TOTAL EQUITY AND LIABILITIES 27,138,278 20,685,523 100.00% 131.19%

Analysis

In balance sheet for indexed analysis, its observed that current assets have decreased to 84% in

2010 while current assets have increased to 142% in 2010, however trade debt and inventory

decreased in 2010. Total equity increased to 122% in 2010, as our reserves increased to 124% in

2010.however our total liabilities have increased to 143% in 2010, with decreased in total non

current liabilities of 64% in 2010. Total equity and liabilities have increased by 131% making the

company in a good financial position.

45

Page 46: Pak Suzuki Motor Company Limited Repaired)

Pak Suzuki Ltd Balance sheet Indexed

Pak Suzuki Motor Company Limited        

Indexed Balance Sheet        

As at December 31, 20__        

  2010   2009

  (Rs. 000) % (Rs. 000) %

ASSETS        

Non-current assets        

Fixed Assets        

Property, plant & equipment 4,226,582 90.22 4,684,671 100.00

Intangible leases 505,760 145.45 347,732 100.00

  4,732,342 94.04 5,032,403 100.00

Long-term investments 5,413 121.67 4,449 100.00

Long-term loans 1,114 35.23 3,162 100.00

Long-term deposits & prepayments 28,499 82.35 34,609 100.00

Long-term installment sales receivables 169,864 110.68 153,478 100.00

  4,937,232 94.44 5,228,101 100.00

Current assets        

Stores, spares and loose tools 63,916 153.10 41,749 100.00

Stock-in-trade 8,748,031 127.16 6,879,729 100.00

Trade debts 240,719 63.93 376,508 100.00

46

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Current portion of long-term installments

Sales receivables 251,254 122.16 205,680 100.00

Loans, advances and advances 134,963 59.62 226,388 100.00

Trade deposits & short-term prepayments 43,466 136.95 31,738 100.00

Accrued markup income 8,652 110.40 7,837 100.00

Other receivables 107,779 140.55 76,685 100.00

Sales tax & excise duty adjustable 389,453 152.36 255,609 100.00

Income tax refundable - net 1,407,713 180.46 780,089 100.00

Cash and bank balances 2,917,186 82.28 3,545,621 100.00

  14,313,132 115.17 12,427,633 100.00

TOTAL ASSETS 19,250,364 109.03 17,655,734 100.00

         

EQUITY & LIABILITIES        

         

Authorized share capital 1,500,000 100.00 1,500,000 100.00

150,000,000 (2009: 150,000,000)

Ordinary shares of Rs 10 each        

Issued, subscribed and paid-up capital 822,999 100.00 822,999 100.00

Reserves 13,674,916 101.28 13,502,601 100.00

  14,497,915 101.20 14,325,600 100.00

         

Non-current liabilities        

Deferred taxation 0 0.00 5,000 100.00

         

Current liabilities        

Trade, other payables 3,080,351 166.23 1,853,034 100.00

Advances from customers 327,031 74.03 441,781 100.00

Accrued mark-up 0 0.00 1,512 100.00

Short-term borrowing 50,000 62.50 80,000 100.00

Deposits against display of vehicles 1,067,839 147.58 723,554 100.00

47

Page 48: Pak Suzuki Motor Company Limited Repaired)

Security deposits 88,753 102.28 86,778 100.00

Provision for custom duties and sales tax 138,475 100.00 138,475 100.00

  4,752,449 142.93 3,325,134 100.00

TOTAL EQUITY AND LIABILITIES 19,250,364 109.03 17,655,734 100.00

Analysis:

In the year 2010 the companies current assets increased by 15.17% however non current assets

decreased by 5.56%. The equity of the company increased by 1.02% however noncurrent

liabilities increased by 42.93% which resulted in 9.03% increased the overall assets and

liabilities and equity in the balance sheet. Major increase was indicated in the deposits against

displaying vehicles which was 47.58%

Pak Suzuki Income statement (indexed)

Pak Suzuki Motor Company Limited        

Indexed Profit & Loss Account        

For the year ended December 31,

20__        

  2010   2009

  (Rs. 000) % (Rs. 000) %

         

Turnover - net 42,642,762 162.55 26,234,061

100.0

0

Cost of sales (41,638,975) 162.24

(25,664,762

)

100.0

0

Gross profit 1,003,787 176.32 569,299

100.0

0

Distribution costs (197,361) 91.99 (214,550) 100.0

48

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0

Administrative expenses (636,332) 128.50 (495,200)

100.0

0

Other operating income 575,078 92.82 619,572

100.0

0

Finance costs (21,349) 169.92 (12,564)

100.0

0

Other operating expenses (55,808) 144.15 (38,714)

100.0

0

  (335,772) 237.37 (141,456)

100.0

0

Profit before taxation 668,015 156.14 427,843

100.0

0

Taxation (456,872) 264.66 (172,624)

100.0

0

Profit after taxation 211,143 82.73 255,219

100.0

0

         

Analysis:

Net turnover and cost of sales both increased by 62.55% and 62.24% respectively in year 2010

resulting in an increase in gross profit by 76.32%. Distribution costs decreased by 8.01%,

administrative expenses increased by 28.50%, other operating income decreased by 7.18%,

finance costs increased by 69.92% and other operating expenses increased by 44.15% in year

2010 resulting in an enormous increase in profit before taxation by 137.37%. The decrease in net

profit after taxation by 17.27% in year 2010 was because of increase in taxation by 164.66%

causing a declining net profit margin.

49

Page 50: Pak Suzuki Motor Company Limited Repaired)

Conclusion and Recommendations;

In terms of liquidity Pak Suzuki is doing better in comparison to Indus motors , as Pak Suzuki

enjoy higher liquidity and ability to meet its short term obligation with its current assets,

however Pak Suzuki is having inventory issues and its inventory is stuck up in 2010,where Indus

motors having improving inventory management.

Pak Suzuki is in a good position in 2010 to cover its interest charges with its profit, however

Indus motors had huge amount of interest charges to incur in 2010, that why its interest charges

declined.

50

Page 51: Pak Suzuki Motor Company Limited Repaired)

When it comes tor receivables, Pak Suzuki is doing in terms of converting its receivables to cash

with comparatively less days in 2010, where as Indus motors has increased the number of days in

2010.

Pak Suzuki is managing its inventory well as told above and its taking less days to convert its

inventory to cash than Indus motors.

Both the companies are using their assets well to produce sales.

Gross profit margin has increased for both the companies in 2010, but net profit margin

decreased for Pak Suzuki in 2010 as compared to Indus motors, due to increased expenses of Pak

Suzuki. This is because of a substantial increase in assets for Indus motors, especially the stock-

in-trade and cash balance.

However in terms of profitability, Indus motor is providing good shareholder wealth for its

shareholders in 2010 as compared to Pak Suzuki.

Earning per share has improved for Indus motors as compared to Pak Suzuki in year 2010.

From the analysis, we have concluded that Indus motor is

doing well in terms of profitability and efficiently therefore it

looks more desirable to investors.

However Pak Suzuki should reduce its expenses, so that its net

income can be increased and can provide to wealth to

shareholders.

51

Page 52: Pak Suzuki Motor Company Limited Repaired)

References: Annual report of Pak Suzuki Ltd for Year 2010-2009

Annual report of Pak Suzuki Ltd for Year 2010-2009

52

Page 53: Pak Suzuki Motor Company Limited Repaired)

Appendices

Detailed Financial statement of Indus motors Ltd

  2009 2010

 Profit and Loss account    

TOTAL REVENUES 37,864.60

60,093.1

0

Cost of Goods Sold 35,566.60 55,266.60

GROSS PROFIT 2,298.00 4,826.50

Selling General & Admin Expenses, Total 915.5 1,214.20

Other Operating Expenses -20.1 -35.4

OTHER OPERATING EXPENSES, TOTAL 895.5 1,178.90

OPERATING INCOME 1,402.50 3,647.60

Interest Expense -8.8 -77.7

53

Page 54: Pak Suzuki Motor Company Limited Repaired)

Interest and Investment Income 628.9 1,611.60

NET INTEREST EXPENSE 620 1,533.90

Currency Exchange Gains (Loss) 8.1 -42.1

Other Non-Operating Income (Expenses) -14 -22.5

EBT, EXCLUDING UNUSUAL ITEMS 2,016.70 5,116.90

Gain (Loss) on Sale of Investments 1.8 25.2

Gain (Loss) on Sale of Assets 10.7 3.2

Other Unusual Items, Total 16.9 97.3

Other Unusual Items 16.9 97.3

EBT, INCLUDING UNUSUAL ITEMS 2,046.00 5,242.50

Income Tax Expense 660.9 1,799.10

Earnings from Continuing Operations 1,385.10 3,443.40

NET INCOME 1,385.10 3,443.40

NET INCOME TO COMMON INCLUDING

EXTRA ITEMS 1,385.10 3,443.40

NET INCOME TO COMMON EXCLUDING

EXTRA ITEMS 1,385.10 3,443.40

Balance sheet for Indus motors Ltd

  2010 2010

Assets

Cash and Equivalents 9,731.20 15,756.00

Short-Term Investments -- --

Trading Asset Securities -- --

54

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TOTAL CASH AND SHORT TERM

INVESTMENTS 9,731.20 15,756.00

Accounts Receivable 1,736.60 1,613.20

Notes Receivable 10.2 8.4

Other Receivables 99.1 116.1

TOTAL RECEIVABLES 1,845.90 1,737.60

Inventory 4,217.30 5,309.90

Prepaid Expenses 16.9 18.8

Other Current Assets 904.1 968.9

TOTAL CURRENT ASSETS 16,715.30 23,791.30

Gross Property Plant and Equipment 7,629.60 7,834.50

Accumulated Depreciation -3,699.10 -4,513.60

NET PROPERTY PLANT AND EQUIPMENT 3,930.50 3,320.90

Loans Receivable, Long Term 9.3 5.2

Other Intangibles 4 3.5

Other Long-Term Assets 26.4 17.5

TOTAL ASSETS 20,685.50 27,138.30

 

LIABILITIES & EQUITY Accounts Payable 635.5 1,384.20

Accrued Expenses 2,019.60 2,206.60

Current Income Taxes Payable 14.7 242.6

Other Current Liabilities, Total 1,288.50 2,315.20

Unearned Revenue, Current 5,926.50 8,076.30

TOTAL CURRENT LIABILITIES 9,884.90 14,224.90

Deferred Tax Liability Non-Current 503.7 325.8

TOTAL LIABILITIES 10,388.60 14,550.70

Common Stock 786 786

Additional Paid in Capital 196.5 196.5

Retained Earnings 9,308.40 11,572.80

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Comprehensive Income and Other 6.1 32.4

TOTAL COMMON EQUITY 10,297.00 12,587.60

TOTAL EQUITY 10,297.00 12,587.60

TOTAL LIABILITIES AND EQUITY 20,685.50 27,138.30

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