project on pakistan state oil

8/12/2019 Project on Pakistan State Oil

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ADVANCEFINANCIALANALYSIS

TERM PROJECT

PAKISTAN STATE OIL (PSO): AFINANCIAL DISSECTION

SU BMI TT

E D

TO:

DR. NAUMAN AFGAN

SUBMITTED BY:

FAHD BIN HAFEEZ

FAIZAN HAYAT

HASAN ALTAF

HASSAN SHABBIR


2/30

HINA ILYAS

Intr!"#t$n

P%&$'t%n St%t O$ (PSO):

PSO is a globally competitive, state-owned mega corporation and market leader in Oil industry

in Pakistan. It is included in KSE-3 Inde! and is "ead#uartered in Karac"i. PSO also "as well

establis"ed presence in countries abroad.

PSO was $ounded in %&'( as a result o$ integration o$ private sector t"roug" t"e nationali)ation

program. *"e +overnment o$ Pakistan "olds ( s"are in PSO t"roug" direct "olding and also

t"roug" indirect "olding by +overnment owned institutions. PSO currently "as '3 s"are o$

black oil market, & s"are o$ t"e w"ite oil market and 3 participation in lubricant industry.

It "as 3 outlets constituting o$ t"e participation in total industry network.

/espite t"e pro$itable per$ormance o$ t"e corporation, PSO is under "uge pressure because o$ t"e

circular debt w"ic" "as e!ceeded ( billion 0s. /ue to t"e power1energy sector being unable to

pay $or t"e $uel prices, t"e payables o$ PSO are rising. 2owever t"e receivables are at t"e

moment $ar more t"an t"e payables. s per 4%4, PSO5s payables were at %6 billion w"ereas t"e

receivables stood at 4(( billion.

An%*'$':

*"e purpose o$ t"is study is to analy)e t"e $inancial per$ormance o$ PSO t"roug" t"e period 4'

to 4%%. s mentioned in introduction, PSO "as been a success$ul and one o$ t"e very $ew

pro$itable state owned corporations in Pakistan despite t"e circular debt situation, so it is #uiteuse$ul to analy)e t"e way $inancial statements depict t"e w"ole picture.

*"e scope o$ t"e study is to analy)e t"e $inancial per$ormance o$ PSO based on7

0atio nalysis

8as" 9low nalysis

8ommon Si)e nalysis

R%t$ An%*'$':

*"ere are a lot o$ ratios t"at can be calculated to :udge t"e $inancial and operational per$ormanceo$ an organi)ation7 "owever, eac" ratio serves a di$$erent purpose $or t"e investors and creditors

o$ t"e $irm. *"ese ratios "elp analy)e t"e $inancial strengt"s and weaknesses o$ a company.

*"ese may include t"e ability to pay s"ort-term and long-term obligations and to e$$iciently use

t"e available resources.


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9igure % presents a general overview o$ di$$erent $inancial ratios t"at can be used to analy)e a

company5s per$ormance.

SUMMARY OF FINANCIAL RATIOS

F$+"r ,: D$--rnt F$n%n#$% R%t$'

Suc" ratios can also "elp compare di$$erent $irms in same line o$ business. *"e ratio analysis in

t"is study includes7

;i#uidity 0atios

Solvency 0atios

sset


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5/30

FIGURE 2: CURRENT RATIO

lt"oug", t"e average industry current ratio is greater t"an t"e average company current ratio but

it is not revealing a greater di$$erence w"ile PSO "olds o$ t"e market s"are in Pakistan so,

it5s #uite reasonable to di$$erence between t"e company and average industry current ratio.

3"$#& R%t$:

*"e >uick ratio presents a very "ealt"y scenario o$ t"e company to meet its most current

obligations as t"e average company #uick is .6& against t"e industry ratio o$ .'%. *"e company

"as consistently improved its ability to meet its current obligations wit"out t"e consideration o$

inventory into its current assets as a$ter 9? 4, t"e company "as s"own a progress in its ability

to meet current obligations wit"out t"e consideration o$ inventory in current assets. In $ive years

$rom 4' to 4%%, company "as grown its potential to meet current obligations to %4. w"ic"

is a very positive notion $or t"e investors and s"ort term loan providers to trust in company5s

ability to respond to t"eir s"ort term obligations wit"out any "urdles.


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FIGURE 3: QUICK RATIO

CFFO t C"rrnt L$%4$$t* R%t$:

*"is ratio s"ows t"e ability o$ t"e company to meet its most current credit claims wit" t"e "elp o$

cas" $low $rom operations. It depends on "ow well t"e generate cas" $low consistently to meet its

current obligations.

D' N+%t$5 C%' F/ -r0 O6r%t$n' % Pr407

Its depends on t"e ability o$ t"e company to generate its sale into cas" but un$ortunately,

companies sell t"eir product mostly on credits so identi$ying negative cas" $low $rom operations

would not be :ustice wit" t"e operational measurement o$ any company. So, a negative 899O to

current liability ratio doesn5t present t"e weak operational ability to meet its current liabilities but

it may "ave impact $rom sales on credit. s PSO sells most o$ its product on credits to di$$erent

ot"er organi)ations w"ic" may increase t"e level o$ account receivables and "ence, decrease t"e

899O to current liability ratio.


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FIGURE 4: LIQUIDITY RATIO

8 Bn-$t -r0 L$2"$!$t* R%t$ An%*'$'7

*"e stake"olders w"o "ave s"ort run stakes in t"e company5s ability to meet its current

obligations take more interest to measure li#uidity ratio as t"ey provide or invest in company

stokes $or s"orter period o$ time so t"ey are more in interested to measure t"e ability o$ t"e

company to meet t"eir current obligations.


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*"ese ratios measure t"e abilities o$ a company to repay its long term debts and t"e interests on

t"e debts. Solvency is a company5s long term de$ault risk. *"ese ratios give t"e analysis o$ t"e

company5s survival in t"e long run. 8reditors and S"are"olders are particularly interested in

knowing t"e debt servicing abilities o$ a company and t"at is w"ere t"ese ratios come in.

Petroleum industry is a capital intensive and "ig" levels o$ debt can seriously "amper its growt"

and e!pansion. Solvency ratios in suc" industries are very widely used to "ave a better

understanding o$ use o$ debt and e#uity levels. ;et us analy)e eac" o$ t"ese important ratios $or

t"e company we "ave c"osen t"at is Pakistan State Oil @PSOA.

D4t t E2"$t*:

/ebt to E#uity ratio is one o$ t"e most widely used ratio in any $inancial analysis. s t"e name

suggests it5s a ratio o$ debts to t"e e#uity and is o$ten calculated to "ave an idea about t"e long

term solvency o$ a company. *"e e#uation can be e!pressed as

*"e ratio can be interpreted di$$erently $or di$$erent sectors. Bsually companies wit" "ig"er

ratios are riskier $or investments. On t"e ot"er "and lower values depict t"e e#uity is being used

alone to service t"e debts.

T%4 9: An%*'$' - -$n%n#$% 't%t0nt' -r0 9; 9, 9,,

Ln+ Tr0

L$%4$$t$'4(%(3'% 4('(6 44''3 43644' 34'4(

S%r!r'

E2"$t*

4&3&4%' 3&6( 4'' 4&336 (%&4&

D4t t

E2"$t* R%t$.%%4 .'' .%4%% .&6' .'''

D4t t E2"$t* R%t$ $ntr6rt%t$n:


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*"e /ebt to E#uity 0atio $or PSO s"ows t"at it "as sustained values over t"e period o$ time and

"as been repaying its obligations primarily t"roug" its e#uity $inancing. *"e average value o$ t"e

ratios over t"e time period o$ study $rom 4' to 4%% is .&& and t"e value "as been

decreasing $or t"e last couple o$ years.

G%r$n+:

lso known as t"e Cet +earing 0atio or /ebt to ssets 0atio, it is $inancial ratio t"at compares

total assets to borrowed $unds. It is a measure o$ $inancial leverage, t"e e!tent to w"ic" a

company5s activities are $unded by ownerDs $unds versus creditorDs $unds.

T%4 ?: G%r$n+ R%t$' -r0 9; 9, 9,,

Ln+ Tr0

L$%4$$t$'4(%(3'% 4('(6 44''3 43644' 34'4(

Tt% A''t' '('3'3% %4'%%4 %3(4%6(3 444(''(% 4646'3(6

G%r$n+ R%t$ .343 .%& .%6 .%( .%4(

D4t t C%6$t%$1%t$n:

/ebt to capitali)ation ratio gives an insig"t into a company5s use o$ leverage. *"is ratio measures

t"e component o$ debt as it is used to support growt" and operations. *"e amount o$ debt is not

$i!ed $or an organi)ation and company may use di$$erent amounts to support its operations and

ot"er activities. low level o$ debt compared to t"e e#uity portion is usually considered a sign o$

company5s $inancial $itness. Proper utili)ation o$ t"e debt increases t"e number o$ available

resources and "elps in e!pansion. Pro$itability o$ a "ig"ly leveraged company may be limited by

t"e large amount o$ interest payments w"ic" could spell trouble in times o$ economic

uncertainty.


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T%4 @: T !4t t #%6$t%$1%t$n -r0 t F$n%n#$% St%t0nt' - PSO

Y%r 9; 9= 9> 9, 9,,

Ln+ Tr0

L$%4$$t$' 4(%(3'% 4('(6 44''3 43644' 34'4(

S%r!r'

E2"$t*4&3&4%' 3&6( 4'' 4&336 (%&4&

D4t t

C%6$t%$1%t$n.%33 .'44 .% .4 .'4%

Intr6rt%t$n - D4t t C%6$t%$1%t$n:

0atios $or PSO, w"ic" are lesser t"an %, reveal t"at it relies less on debt and t"e assets are

primarily $inanced by e#uity. *"e company "as consistently maintained a low debt to capital

ratio t"roug"out t"e past years. *"e "ig" levels o$ e#uity $inancing reveal investor5s con$idence

in t"e company as it does in t"e petroleum sector in general.

A''t M%n%+0nt R%t$'

sset management ratios basically compare t"e assets to its sales revenue. It indicates t"at "ow

e$$iciently a $irm is utili)ing its assets to generate revenue. So it5s a way to analy)e t"at "ow

e$$iciently and e$$ectively a company is using its assets and to w"at e!tent its assets are

contributing towards t"e sales and revenue generation. *"ese ratios provide important insig"ts

into di$$erent $inancial areas o$ t"e company and its "ig"lig"ts its strengt"s and weaknesses.

*"e various ratios t"at are under t"e "ead o$ sset management ratios are

ccount receivable *urnover

Inventory *urnover

0eceivable turnover in days Inventory turnover in days

*otal sset turnover

9i!ed sset turnover


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So t"ese 0atios attempt to measure t"e $irmDs success in managing its assets to generate

sales. =elow is t"e table s"owing t"e calculations o$ t"e ratio over t"e year period ranging

4'-4%%. *"e e!planation o$ t"e ratios is covered under eac" "eading separately.

T%4 : A''t M%n%+0nt R%t$ S"00%r*

Y%r 9; 9= 9> 9, 4%%

AR

t"rn5r

%(.'33(( %(.''66663 %.66'%% '.'(%%(43 6.&%%433

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In5ntr*

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A##"nt R#$5%4 t"rn5r:

*"e ccount 0eceivables *urnover assess t"e $irmDs management o$ its ccounts 0eceivables

and, "ence, its credit policy. *"e ratio basically tells t"e number o$ times t"e account receivablesare turned over t"at is 0eceivables *urnover 0atio is one o$ t"e e$$iciency ratios and measures

t"e number o$ times receivables are collected, on average, during t"e $iscal year. *"e "ig"er t"e

0eceivables *urnover 0atio t"e better since t"is implies t"at t"e $irm is collecting on its accounts

receivables sooner. =ut i$ t"e ratio is too "ig" t"en t"is s"ows t"at t"e $irm may be o$$ering too

large discounts or it may be "aving too muc" restrictive credit terms. *"e 0eceivables *urnover

0atio is calculated by dividing Sales by ccounts 0eceivables.


12/30

A##"nt R#$5%4 T"rn5r Nt Cr!$t S%' A5+. A##"nt R#$5%4

+iven above are t"e calculations $or ccount 0eceivable turnover $or t"e period o$ 4'-4%% o$

Pakistan State Oil @PSOA. s its evident $rom t"e above calculation t"at t"e turnover ratio

declined signi$icantly $rom 4'-4%%. s its mentioned above t"at t"e "ig"er t"e turnover ratio,

t"e better it is as it tells you t"at at w"at rate t"e receivables are being turned over in a given

period. So t"e low ratio can be due to multiple reasons. Possibly it could be poor and ine$$ective

credit policies. So t"e company needs to reassess and revise its credit terms. *"e account

receivable @as a percentage o$ total assetsA increased $rom 4'-4%%

*"e trade debt alone increased $rom almost % to (. Cet Sales as a percentage o$ total sales

remain consistent during t"is time. *"at is w"y t"e account receivable turnover declined. So t"e

account receivables are being collected at a lower rate. +rap" is presented in appendi!.

R#$5%4 T"rn5r $n D%*'A5r%+ C#t$n 6r$!:

0eceivable turnover in days actually tells t"e number o$ days $or w"ic" t"e receivables remain

outstanding. It5s a number o$ days on average t"at it takes a company to collect its accounts

receivables, i.e. t"e average number o$ days re#uired to convert receivables into cas". *"e lesser

number o$ days it takes to collect t"e receivables, t"e better it is. =elow is t"e table s"owing t"e

calculation $or t"e receivable turnover in days. s t"e ratio is calculated $rom t"e receivable

turnover so it is "ig"ly correlated to it. s you can see in t"e table below t"at t"e number o$ days

to collect receivables $or PSO "as increased $rom 4( days to 4 days. *"is can be attributed to

t"e results o$ ccount receivable turnover, t"e ratio calculated previously. *"e number o$ days

"as increased because o$ lower turnover ratio w"ic" can be t"e result o$ ine$$ective or too lenientcredit policies. +rap" o$ t"e values is presented in appendi!.

R#$5%4 T"rn5r $n D%*'? A##"ntR#$5%4 T"rn5r

In5ntr* t"rn5r r%t$:

It5s a ratio t"at tells t"e number o$ times t"e inventory gets rolled over in a year. It s"ows "ow

many times a companyDs inventory is sold and replaced over a period.

In5ntr* T"rn5r C't - G!' S!A5r%+ In5ntr*

*"e above table s"ows t"e result o$ inventory turnover calculation $or PSO $or t"e period o$

4'-4%%. *"e calculation s"ow a mi!ed trend t"at is t"e ratio is not contant over t"e period

rat"er it "as $luctuated over t"e time. =ut t"e e!tent o$ $luctuation is not t"at "ig", its in narrow

range. ;ow inventory turnover is a signal o$ ine$$iciency and poor sales or e!cess inventory. It

could be because o$ overstocking and t"us leads to poor li#uidity, w"ereas "ig" ratio indicates

better li#uidity. +enerally t"e inventory turnover $or PSO "as been ade#uate. =ut it can improve


13/30

t"e ratio as ade#uately "ig"er ratio is desirable t"oug" it s"ould not be too "ig". *"e inventory as

a percentage o$ total assets increased s"arply in 4 $rom 3& in 4' to (& in 4 and t"en

it declines substantially till 4%%. nd 8O+S remain almost contents $rom 4'-4%%. So t"e

ratio declined in 4 and t"en increased $rom t"en on till 4%%. +rap" is presented in appendi!.

In5ntr* T"rn5r $n !%*':

*"e ratio actually tells t"e number o$ days $or it takes t"e inventory to turnover or converted to

sales be it cas" or account receivable.

In5ntr* T"rn5r $n !%*'? In5ntr* T"rn5r

*"e above table s"ows t"e inventory turnover in days5 calculation $or PSO $or t"e period o$

4'-4%%. gain t"e number o$ days varies across t"e period. *"e ratio is dependent upon t"e

Inventory *urnover ratio. *"e "ig"er t"e Inventory turnover ratio, t"e lesser is t"e number o$

days it takes to convert t"e inventory to sales. *"e less number o$ days are desirable as it s"ows

t"at t"e inventory is converting to sales #uickly. *"e lowest number o$ days $or PSO is t"at o$ 4

days in 9? 4% and "ig"est is t"at o$ 36 days in 4. +rap" related to t"e computation is given

in appendi!.

Tt% A''t T"rn5r:

*"e ssets turnover ratio actually measures t"e e$$iciency o$ t"e assets to generate sales. 2ig"er

t"e number, t"e better. 8ompanies "aving low pro$it margins tend to "ave "ig" asset turnover,

w"ile t"ose wit" "ig" pro$it margins "ave low asset turnover.

Tt% A''t T"rn5r Nt '%'A5r%+ tt% %''t'

*"e above table s"ows t"e calculations related to t"e asset turnover $or PSO $or t"e period o$

4'-4%%. *"e asset turnover ratio is on a lower side w"ic" mig"t be due to a number o$ $actors.

*"is may indicate a problem wit" one or more o$ t"e asset categories composing total assets.

+rap" is presented in appendi!.

F$! A''t' T"rn5r:*"e $i!ed-asset turnover ratio measures t"e ability o$ a company to generate sales $rom $i!ed-

asset investments- speci$ically property, plant and e#uipment. *"e "ig"er t"e ratio t"e better it is

as t"e "ig"er $i!ed asset turnover indicates t"at t"e company "as been more e$$ective in using t"e

investment in $i!ed assets to generate revenues.

F$! A''t' T"rn5r Nt '%'nt -$! %''t'


14/30

*"e above table s"ows t"e calculations o$ $i!ed asset turnover $or PSO $or t"e period o$ 4'-

4%%. *"is ratio s"ows a remarkable increase $rom 4' to 4%%. *"e increase in ratio over t"e

period indicates t"e e$$iciency o$ t"e PSO5s $i!ed assets in generating sales so its $i!ed assets are

adding to t"e revenues o$ t"e company. 9i!ed assets as percentage o$ total assets decreased $rom

4'-4%%. nd net sales as percentage o$ total sales remain almost constant over 4'-4%%.

*"at is t"e reason $or increase in t"e turnover. e calculated t"e ratio by taking t"e net $i!ed

assets amount in t"e balance s"eet and we divided net sales by t"is amount* +rap" is presented

in appendi!.

Pr-$t%4$$t* r%t$'

PSO $inancial statements were analy)ed to assess t"e pro$itability based on t"e $ollowing $our

pro$itability assessment ratios7

Operating Income 0eturn on Investment @OI0OIA

Operating Pro$it


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*"e $ormula $or calculation o$ eac" o$ t"e ratios is given in ppendi!.

O6r%t$n+ In#0 Rt"rn n In5't0nt:

*"is is t"e measure o$ t"e operating income relative to t"e assets and is t"e measure o$ t"e

e$$ectiveness o$ t"e $irm to generate pro$it on $irm5s assets. e can see $rom t"e above table t"at

t"e ratio "as somew"at stable outlook in year 4' and 4, and increase in 4.( times in gross

pro$it in 4 compared to 4', and again in 4% and 4%%. 2owever we see a great dip in t"e

ratio $rom roug"ly %' in 4 to -3 in 4&. *"is is mainly because o$ t"e company going

into an operating loss instead o$ pro$it. *"e negative value o$ t"e loss amount translated into a

negative ratio amount.

*"is decrease in operating income can be attributed to decrease in gross pro$it margin and

increase in general operating e!pense o$ t"e company. Gertical analysis o$ t"e pro$it and loss

account s"ows t"at cost o$ goods sold was also more relative to t"e revenue compared to t"e

4 period.

*"e grap"ical representation o$ t"e year term ratio can be seen in ppendi!.

O6r%t$n+ Pr-$t M%r+$n:

Operating pro$it margin is a part o$ OI0OI and "ence its movement is similar to t"at o$ OI0OI. It

is t"e measure o$ pro$itability relative to sales. *"e data in t"e table s"ows a similar trend w"ere

OP< increased in 4 compared to 4', almost a % :ump. /ue to t"e decrease in t"e

operating income, resulting $rom increased 8O+S and general e!penses, 4& saw a signi$icant

dip w"ere t"e ratio went into negative scale. *"is was due to decrease in operating income and

also a smaller percentage s"ows t"at t"e overall revenues in 4& increased.

*"e per$ormance during 4% and 4%% stabili)ed. 4%% s"owed increase in revenues but also

s"owed increased e!penses. lso, slig"t improvement in 4%% was due to t"e decreased accounts

payable and increased account receivables as percentage o$ total assets.

*"e grap"ical trend o$ t"e operating pro$it margin $rom year 4' to 4%% is presented in

ppendi!.

Tt% A''t T"rn5r:

*otal asset turnover @**A is t"e second part o$ OI0OI. It is t"e comparative analysis o$ t"e

e$$ectiveness o$ t"e management to generate sales relative to t"e total assets presented in t"e

balance s"eet. *"e ratio remained $airly stable $rom 4 to 4%7 "owever we see di$$erences in

year 4' and t"en again in 4%%.


16/30

9rom t"e perspective o$ a base year o$ 4, total assets "ad a % increase $rom %(3 to

4(3, t"e revenues did not increase by t"e same percentage and was only increased by 6

$rom %64 to 43. 2ence we see t"at t"e ** value $ell $rom nearly . to (.. Similarly i$ we

compare year 4% and 4%% taking 4 as a base year, sales increases were only 3 more but

total assets in 4%% increased by %, $rom 3' in 4% to 4 in 4%%. 2ence we see **

value o$ nearly 3.' in 4%%.

+rap"ical depiction o$ t"e trends o$ ** $rom 4' to 4%% is sown in ppendi!.

T$0' Intr't E%rn!:

It is t"e ability o$ a $irm to cover its interest e!penses as measured by operating income relative

to interest e!pense. *"is ratio seems #uite stable in 4% and 4%%. 2owever, $rom t"e 4' to

4& period, it seemed #uite volatile. 9inancing e!penses were "ig" compared to sales in 4'

relative to 4. Operating income increased by 3 times in 4 compared to 4' w"ereas t"e

$inancing cost increased by only %.4 times. Percentage o$ $inancing costs wit" 46 as base yeardecreased in 4 compared to 4'.

In 4&, t"ere were two problems $aced. 9irstly, t"e revenues $ell and company went into a loss.

Secondly, t"e $inancing costs increased at a dramatic rate. 9inancing costs were .' o$ t"e

revenues in 4& as compared to 4. ;ong-term liabilities increased and payables also

increased by a signi$icant amount. In 4%, even-t"oug" t"e $inancing costs increased, but t"e

revenue generated also increased by a signi$icant amount "ence resulting in an increased score o$

*IE. +rap" depicting t"e $ive year trend o$ *IE is presented in t"e ppendi!.

An%*'$' - Pr-$t%4$$t* R%t$':

F$+"r : Pr-$t%4$$t* R%t$' 9; < 9,,

F$+"r: Trn! - Pr-$t%4$$t* R%t$'


17/30


18/30

F$+"r : Rt"rn n E2"$t* trn!' 9;


19/30

element w"ic" is weakening t"e situation is 899O w"ic" is "ig"ly volatile and in two years was

negative, a$$ecting t"e ratio.

CFFO t tt% $%4$$t$':

*"is ratio "elps us in accessing t"at "ow muc" t"e current cas" $lows would "elp a company tocover its total liabilities.

*"e $ollowing table contains t"e values o$ t"e ratio

T%4 >: CFFO t $%4$$t* r%t$ t%4

R%t$ 9; 9= 9> 9, 9,,

CFFOtt%$%4$$t$'

.66%6%4 .(4%4%& -.36(4'&43 .46'%'% -.3%4466

It is evident $rom t"e table t"at t"is ratio is unstable over t"e period o$ time and t"e main reason

is t"e increasing debt w"ic" was also evident in t"e case o$ t"e previous ratio w"ere $inance cost

was "ig" adversely a$$ecting t"e ratio.

9ollowing grap" s"ows t"e 899O ratios.

F$+"r ;: C06%r$'n - t t/ CFFO r%t$'


20/30


21/30

C%' F/ An%*'$'

*"ere are mainly two main items to be considered more important in t"e analysis o$ cas" $low

statement7 one is net cas" $rom operations w"ile ot"er is net cas" available to company at t"e end

o$ t"e $iscal period.*"e $ive year data o$ PSO s"ows t"at t"e company is obtaining a positive sum o$ $ree cas" $low

$rom its cas" $low statement reveals low involvement in s"ort term and medium term investment.

TABLE ,,: CASH FLO8 ANALYSIS (9;


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FIGURE >: CASH FLO8 ANALYSIS

*"ere could be anot"er reason w"y company is consistently keeping a larger sum o$ money as

$ree cas" $low as di$$erent companies eit"er reali)e it to save t"e cas" $or $uture uncertainties and

long term pro:ect or keeping a track on t"e operational o$ t"e business as large companies re#uire

larger sum o$ money reserved $or t"eir daily operations and uncertainties.

company "olding ma:ority o$ t"e industry s"are makes little investment in di$$erent pro:ect

represents little development activities but t"ere could ot"er reasons o$ t"is positive $ree cas"

$low as sale o$ assets and operational e!cellence could be t"e reasons to obtain t"ese results.

*"e company is consistently giving positive net income in t"ese $ive years $rom 4' to 4%% and

little investing activities and t"is makes t"e company to reserve "ig"er $ree cas" $low amount.

*"ere could be ot"er obligations as well to keep a larger sum o$ money unused in any s"ort run

pro:ect as t"is implies di$$erently to di$$erent industries.


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C00n S$1 An%*'$'

s was introduced in t"e beginning, common si)e analysis "elps us analy)e t"e trends in t"e

$inancial statements w"ic" can "elp us $ind out reasons $or c"ange


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A66n!$ I

S5n#* R%t$' Gr%6'


25/30


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A66n!$ II

A''t M%n%+0nt R%t$' Gr%6'

A##"nt R#$5%4 T"rn5r

R#$5%4 T"rn5r $n !%*'

Inventory Turnover


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Inventory Turnover n !"y#

A''t t"rn5r

F$e! A##et# Turnover


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A66n!$ III

Pr-$t%4$$t* R%t$' Gr%6'

Operating Income 0eturn on Investment

Operating Pro$it


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R-rn#'

project on pakistan state oil

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