ratio analysis of pak suzuki motors

Ratio Analysis on Pak Suzuki Motors

Pak Suzuki Motors



Pak Suzuki Motors

International Islamic University Islamabad

(Faculty of Management Sciences)

SUBMITTED TO: Prof. Ch. Mazhar Hussain

GROUP MEMBERS: REGISTRATION NO:

Muhammad Badar-ud-Duja 6230-FMS/MBA/F13

Muhammad Wasim 6256-FMS/MBA/F13

Sehree Mumtaz 6253-FMS/MBA/F13

Wasim Aslam 6248-FMS/MBA/F13

Ishfaq Ali 6259-FMS/MBA/F13


Pak Suzuki Motors

ACKNOWLEDGEMENT:

First of all, we thanks to Allah, the almighty, for giving us the strength and will

to do work on this project.

We take this opportunity to express our profound gratitude and deep

regards to our respectable teacher “Sir Ch. Mazhar Hussain” for his

exemplary guidance, monitoring and constant encouragement throughout

the course of semester . The encouragement and guidance given by him will

help us in future life of study.

We also like to pay gratitude to our group members (M. Badar-ud-Duja,

Muhammad Wasim, Wasim Aslam, ishfaq Ali & Sehree Mumtaz) for their

constant encouragement and participation without which this project

would not be possible.

.


Pak Suzuki Motors

Contents

INTRODUCTION: ........................................................................................................................... 1

VISION ......................................................................................................................................... 1

MISSION................................................................................................................................... 1

PRODUCT CATEGORIES.............................................................................................................. 2

Year of Listing:.............................................................................................................................. 2

Statement of Corporate Governance: ............................................................................................ 2

Ratio Analysis: .............................................................................................................................. 3

Liquidity Ratio........................................................................................................................... 3

Leverage Ratios ........................................................................................................................ 5

Coverage Ratios ........................................................................................................................ 7

Activity Ratios........................................................................................................................... 8

Profitability Ratios .................................................................................................................. 13

COMMON SIZE ANALYSIS OF BALANCE SHEET .............................................................................. 17

ASSET SIDE.......................................................................................................................... 17

COMMON SIZE ANALYSIS OF PROFIT AND LOSS ACCOUNT ........................................................ 19

INDEX ANALYSIS OF BALANCE SHEET ........................................................................................... 20

INDEX ANALYSIS OF PROFIT AND LOSS ACCOUNT...................................................................... 22

TREND ANALYSIS ........................................................................................................................ 23

Explanation of Trend Analysis .................................................................................................. 23

Conclusion: ................................................................................................................................ 25

References: ................................................................................................................................ 25


Suzuki motors Page 1

INTRODUCTION:

Pak Suzuki Motor Company Limited (PSMCL) is public limited company with its shares

quoted on Stock Exchanges in Pakistan. The Company was formed in August 1983 in

accordance with the terms of a joint venture agreement between Pakistan Automobile

Corporation Limited (representing Government of Pakistan) and Suzuki Motor Corporation

(SMC) - Japan.

The Company started commercial production in January 1984 with the primary objective of

progressive manufacturing, assembling and marketing of Cars, Pickups, Vans and 4 x 4

vehicles in Pakistan. The Company’s long term plans inter-alia includes tapping of export

markets. The foundation stone laying ceremony of the Company’s existing plant located at

Bin Qasim was performed in early 1989 by the Prime Minister then in office.

This Plant has total area of 259000 m2 and the cost for building it accounted up to Rs. 11.096

billion. This plant has production capacity of 150000 units / annum and works in double

shifts.

Pak Suzuki Motors has largest distribution network in Pakistan. There are currently 74

dealers of Pak Suzuki which are spread all over the cities of Pakistan

VISION

To be recognized as a leading organization that values Customer’s needs and provides

motoring solutions with strong customer care.

MISSION

Strive to market value packed vehicle that meet customer’s expectations.

Provide a platform where over stake holders passionately contribute, invest and excel.

Make value able contribution to social development of Pakistan.



PRODUCT CATEGORIES

AUTOMOBILES MOTORCYCLES HEAVY BIKES

Swift GS 150 Hayabusa

Liana GD 110 Intruder

Cultus Raider Inazuma

Mehran Sprinter Eco

Bolan

Cargo van

Ravi pickup

Year of Listing: Pak Suzuki Motor Company Limited (PSMCL) was incorporated as a public limited

company in August 1983.

Statement of Corporate Governance: o Statement of corporate governance has been developed and written by the Board of

the Directors of the company. This statement is prepared to comply with the

regulation of Karachi Stock Exchange for the purpose of establishing a frame work

of good governance. The company encourages representation of independent non-

executive directors. The company also make sure that none of them is working in

more than seven listed companies and also checked by the company that none of their

spouse and family members are engaged in the business of brokerage and shareholder

of that company where he is appointed as a director.

o The board of directors also fill the casual vacancies in the company and the code of

conduct is also being prepared by the board. Vision and mission of the company,

overall corporate strategy and significant policies of the company are developed by

the board.

o The power of the board have been duly exercised and decision on material

transactions, appointment, remuneration, terms and conditions, employment of CEO

have been taken by the Board.

o Board also held annual and interim meetings, appointment of CFO, Company

Secretary, and Head of Internal Audit including their remuneration, terms and

conditions of the employment.

o All of the rules and regulations are briefly given in the corporate of governance,

which are compulsory for the running of business of the company. Audit reports,

statutory meetings are issued with approval of the CFO and CEO.

o The Directors, CEO and Executives do not hold any interest in the shares of the

company other than that disclosed in the pattern of shareholding.

http://en.wikipedia.org/wiki/Pak_Suzuki_Motors



Ratio Analysis:

We analysed the data of Suzuki motors of three years from 2009 to 2011. The sources of data

are given at the end of this report.

Liquidity Ratio

Current Ratio

Definition:

Current ratio means that to know about the company liquidity current position, which can be

calculate through total current assets over the total current liabilities.

Formula:

Current ratio = Total current assets / Total current liabilities

Table:

Company 2009 2010 2011

Suzuki Motors 3.70 3.01 2.30

Graph:

0

0.5

1

1.5

2

2.5

3

3.5

4

2009 2010 2011

Current Ratio

CR



Quick Ratio

Definition:

Quick ratio are those which can easily be converted it into any financial institution, which

are cash and marketable securities add account receivable over the total current liabilities.

Formula:

Quick ratio = cash+ marketable securities+ account receivable / total current liabilities

Table:

Company 2009 2010 2011


Graph:

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2009 2010 2011

Quick Ratio



Leverage Ratios

Debt to Equity Ratio

Definition:

Debt to equity ratio is that how much ratio is available in debt and equity, which can be

calculated total debts to total common stock equity.

Formula:

Debt to Equity ratio = total debts / total common stock equity

Table:

Company 2009 2010 2011


Graph:

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2009 2010 2011

Debt Equity Ratio



Debt Ratio

Definition:

Debt ratio is that ratio where financing side of liabilities are been performed in operation to

know about their liabilities ratios, which can be done through total debts to the total assets.

Formula:

Debt ratio = total debts / total assets

Table:

Company 2009 2010 2011


Graph:

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2009 2010 2011

Debt Ratio



Coverage Ratios

Interest Coverage Ratio

Definition:

A ratio used to determine how easily a company can pay interest on outstanding debt

Formula:

ICV = Earnings before income tax / Financial charges

Table:

Company 2009 2010 2011


Graph:

0

10

20

30

40

50

60

70

80

90

2009 2010 2011

Interest Coverage Ratio



Activity Ratios

Account Receivable turnover

Definition:

Account receivable turnover tells how much we have utilized thee cash in the business that

can be known with the total credit sales over the average account receivable.

Formula:

Account Receivable Turnover Ratio = Net Credit Sales / Average Account Receivable

Table:

Company 2009 2010 2011

Suzuki Motors 73.00 101.00 107.00

Graph:

0

20

40

60

80

100

120

2009 2010 2011

Activity Ratio



Average Collection Period

Definition:

Average collection period is known that how much account receivable turnover are been

done in one year, which is been done through 365 days divided by account receivable

turnover.

Formula:

Average collection period = 365 / Account Receivable Turnover

Table:

Company 2009 2010 2011


Graph:

0

1

2

3

4

5

6

2009 2010 2011

Average Collection Period



Inventory Turnover Ratio

Definition:

A ratio showing how many times a company’s inventory is sale out

Formula:

Inventory Turnover Ratio= Cost Of Goods Sold/ Average Inventory

Table:

Company 2009 2010 2011


Graph:

0

1

2

3

4

5

6

2009 2010 2011

Inventory Rurnover Ratio



Inventory in Days

Definition:

It shows how many days a company inventory into sales

Formula:

Inventory in Days= Days in Year / Inventory Turnover Ratio

Table:

Company 2009 2010 2011

Suzuki Motors 135.18 83.52 68.35

Graph:

0

20

40

60

80

100

120

140

160

2009 2010 2011

Inventory In Days



Total Assets Turnover

Definition:

Total assets turnover known that more we are utilizing assets turnover then we are more

contributing to generate in revenue, that can be done when average total sales over the

average total assets.

Formula:

Total assets turnover = Net Sales / Total Assets

Table:

Company 2009 2010 2011


Graph:

0

0.5

1

1.5

2

2.5

2009 2010 2011

Total Assests Turnover



Profitability Ratios

Gross Profit Ratio

Definition:

Gross profit ratio mean that how much we have get the profit in operation in the form of

ratio, that can be calculate through gross profit over the average total sales.

Formula:

Gross Profit Ratio = Gross profit / Net Sales

Table:

Company 2009 2010 2011


Graph:

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

0.04

0.045

2009 2010 2011

Gross Profit Ratio



Net Profit Ratio

Definition:

Net profit ratio is known that how much net profit ratio has been calculated in operation with

the net income over the average total sales.

Formula:

Net profit ratio = Net Income/Total sales

Table:

Company 2009 2010 2011


Graph:

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Category 1 Category 2 Category 3

Net Profit Ratio



Return On Assets

Definition:

Return on assets mean that in operation how much we get return of assets in business, that

can done through net income over the average total assets.

Formula:

Return on assets = Net Income / Total assets

Table:

Company 2009 2010 2011


Graph:

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

2009 2010 2011

Return On Assets



Return On Equity

Definition:

Return on equity means that in business how you are getting the return of equity by

performing operation, which can be calculate through net income over the average total

shareholder equity.

Formula:

Return on Equity = Net Income / Total shareholder equity

Table:

Company 2009 2010 2011


Graph:

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2009 2010 20

Return On Equity



COMMON SIZE ANALYSIS OF BALANCE SHEET

ASSET SIDE

Assets 2009 2010

2011

Property 26.5% 21.9% 18%

Intangible

Assets

1.9% 2.62% 1.3%

28.5% 24.5% 19.32%

L.T

Investment

0.02% 0.02% 0.01%

L.T Loans 0.01% 0.005% 0.006%

L.T Deposits 0.1% 0.14% 0.08%

L.T sales

receivables

0.8% 0.88% 0.79%

Deferred

Taxes

- - -

29.6% 25.6% 20.2%

Stores 0.23% 0.33% 0.27%

Stock in

Trade--

38.9% 45.4% 55.45%

Trade

Debts

2.1% 1.2% 1.38%

Sales

Receivables

1.16% 1.3% 1.3%

Loans 1.2% 0.7% 0.9%

Trade Deposits 0.17% 0.22% 0.35%

Accrued

Mark-up

Income

0.04% 0.04% 0.02%

Other

Receivables

0.43% 0.55% 0.6%

Sales Tax 1.4% 2.02% 4.3%

Income Tax

Refundable

4.4% 7.3% 10.13%

Bank

Balances

20.0% 15.15% 4.8%

70.3% 74% 79.76%

TOTAL

ASSETS

100% 100% 100%



LIABILITIES & OWNER’S EQUITY SIDE

Liabilities &

Owner’s

Equity

2009 2010

2011

Authorized

Capital

8.4% 7.7% 6.4%

Paid up

Capital

4.6% 4.27% 3.5%

Reserves 76% 71% 62%

81% 75.3% 65.6%

Trade &

other

Payables

10.4% 16.00% 13.7%

Advances 2.5% 1.6% 13%

Accrued

Mark-up

0.008% - -

Short term

Borrowing

0.45% 0.25% 0.32%

Deposits

against

display of

vehicles

4% 5.5% 6%

Security

Deposits

0.49% 0.46% 0.3%

Provision for

Sales Tax

0.78% 0.71% 0.5%

18.8% 24.6% 34%

TOTAL

EQUITY &

LIABILITIES

100% 100% 100%

Explanation:

Common size analysis of balance sheet of Suzuki motors is improving year by year like as in

2010 it has larger amount then 2009 and as compare to 2010 it also increases in2011. There is

improvement in the company year by year.



COMMON SIZE ANALYSIS OF PROFIT AND LOSS ACCOUNT

ITEMS 2009 2010

2011

Turnover net 100% 100% 100%

Cost of sales (97.5%) (97.64%) (96%)

Gross profit 2% 2.3% 3.5%

Distribution

Cost

(0.81%) (0.46%) (0.5%)

Administrative

expenses

(1.8%) (1.4%) (1.3%)

Other

Operating

Income

2.3% 1.3% 1.17%

Finance cost (0.04%) (0.05%) (0.03%)

Other

operating

Expenses

(0.14%) (0.13%) (0.20%)

(0.53%) (0.78%) (0.95%)

Profit Before

Taxation

1.63% 1.5% 2.5%

Taxation 0.65% 1.07% 1.08%

Profit After

Taxation

0.97% 0.49% 1.5%

Earnings Per

Shares

3.10 2.57 9.65



INDEX ANALYSIS OF BALANCE SHEET INDEX ANALYSIS OF BALANCE SHEET (BASE YEAR 2009)

ASSET SIDE

Assets 2009 2010

Increase or

Decrease

% 2011

Increase or

Decrease

%

Property 4684671 (458089) -9.7% (484354) -10.3%

Intangible

Assets

347732 158028 45.44% (43955) -12.6%

5032403 (300061) -5.96% (528309) -10.49%

L.T

Investment

4449 964 21.66% (259) -5.82%

L.T Loans 3162 (2052) -64.89% (1639) -51.8%

L.T Deposits 34609 (6110) -17.65% (14122) -40.80%

L.T sales

receivables

153478 16386 10.6% 32351 21.07%

Deferred

Taxes

- - - - -

5228101 (290869) -5.5% (511978) -9.79

Stores 41749 22167 53.09% 22718 54.4%

Stock in

Trade

6879729 1868302 27% 6042667 87.8%

Trade

Debts

376508 (135789) -36.06% (53831) -14.29%

Sales

Receivables

205680 45574 22.15% 98271 47.77%

Loans 226388 (91425) -40.38% (9802) -4.32%

Trade

Deposits

31738 11728 36.95% 51533 162.37%

Accrued

Mark-up

Income

7837 815 10.39% (1692) -21.58%

Other

Receivables

76685 31094 40.54% 63263 82.49%

Sales Tax 255609 133844 52.36% 767790 300.3%

Income Tax

Refundable

780089 627624 80.45% 1582585 202.8%

Bank

Balances

3545621 (628435) -17.72% (2406141) -67.86%

12427633 1885499 15.17% 6157361 49.54%

TOTAL

ASSETS

17655734 1594630 9.03% 5645383 31.97%



LIABILITIES & OWNER’S EQUITY SIDE

Liabilities &

Owner’s

Equity

2009 2010

Increase or

Decrease

% 2011

Increase or

Decrease

%

Authorised

Capital

1500000 - - - -

Paid up

Capital

822999 - - - -

Reserves 13502601 172315 1.2% 967432 7.16%

14325600 172315 1.2% 967432 7.16%

Trade &

other

Payables

1853034 1227317 66.23% 1358140 73.2%

Advances 441781 (114750) -25.97% 2623625 593.8%

Accrued

Mark-up

1512 (1512) -100% (1512) -100%

Short term

Borrowing

80000 (30000) -37.5% (5000) -6.25%

Deposits

against

display of

vehicles

723554 344285 47.58% 713279 98.5%

Security

Deposits

86778 1975 2.27% 5581 6.43%

Provision for

Sales Tax

138475 - - - -

3325134 1427315 42.92% 4682951 140.8%

TOTAL

EQUITY &

LIABILITIES

17655734 1594630 9.0% 5645383 31.9%

Explanation:

Suzuki motor is improving their business year by year as in 2010 there was larger amount the

in 2009 and as in 2011 it also increases, By their effective operation in the business. Suzuki

motors maintain their good will in the market.



INDEX ANALYSIS OF PROFIT AND LOSS ACCOUNT

BASE YEAR 2009

ITEMS 2009 2010

Increase or

Decrease

% 2011

Increase or

Decrease

%

Turnover net 26234061 16408701 62.5% 26484502 100.9%

Cost of sales (25664762) 15974213 62.2% 25184391 98.1%

Gross profit 569299 434488 76.3% 1300111 228.3%

Distribution

Cost

(214550) (17189) -8.0% 49101 22.8%

Administrative

expenses

(495200) 141132 28.5% 240735 48.6%

Other

Operating

Income

619572 (44494) -7% 818 0.13%

Finance cost (12564) 8785 69.9% 5281 42%

Other

operating

expenses

(38714) 17094 44.1% 68358 176%

(141456) 194316 137% 362657 256%

Profit Before

Taxation

427843 240172 56.13% 937454 219.1%

Taxation 172624 284248 164% 398252 230%

Profit After

Taxation

255219 (44076) -17.2% 539202 211%

Earnings Per

Shares

3.10 (0.53) -17% 6.55% 211%

Explanation:

index analysis of Income statement of Suzuki motors in 2010 is decreasing as compared to

2009 but in 2011 the operation was performed very well by the organization so they

increased their net income.



TREND ANALYSIS

Name of Ratio 2009 2010 2011

Current Ratio 3.7 3.01 2.3

Quick Ratio 1.66 1.16 0.7

Debt Equity 0.23 0.71 0.54

Debt Ratio 0.19 0.25 0.34

Interest Coverage Ratio 34.05 31.3 76.5

Account Receivable Turnover 73 101 107

Average Collection Period 5 3.6 3.4

Inventory Turnover 2.7 4.37 5.34

Inventory In Days 135 84 68

Total Asset Turnover 1.5 2.2 2.26

Gross Profit Ratio 0.02 0.02 0.04

Net Profit Ratio 0.1 0.05 0.02

Return On Asset 0.01 0.01 0.03

Return On Equity 0.02 0.75 0.05

Explanation of Trend Analysis

Current Ratio:

Current ratio of Suzuki motors in 2009 was working well but in 2010 and 2011 it was been

decreased. The rate of increase in current liability is more than rate of increase in current

asset.

Quick Ratio:

Quick ratio of Suzuki motors is increasing in 2009 but it decreases in 2010 and 2011.unsold

stock increase due to that reason quick ratio increases.

Debt to Equity Ratio:

Debt to equity ratio of Suzuki motors is increasing in 2010 and then decreasing in 2011. The

rate of increase in total debt is more than the rate of increase in total equity due to this debt

equity ratio increases.

Debt Ratio:

Debt ratio of Suzuki motors is increasing year by year in 2009, 2010, 2011. Debt portion in

total asset has been increasing due to which debt ratio increase.



Interest Coverage Ratio:

The rate of increase in financial cost is more than rate of increase in earnings before taxes that is why interest coverage ratio decrease.

Account Receivable turnover:

The credit collection mechanism of Suzuki Motors is strong, that is why Account receivable

increases every year.

Average Collection Period:

Average collection period of Suzuki motors in 2009 is working well but it decreases in 2010

and 2011. Due to high Account Receivable Turnover ratio the average collection period

decreases at every year.

Inventory Turnover Ratio:

Account receivable turnover of activity ratio of Suzuki motor is increasing in2009, 2010 and

2011. Inventory turnover ratio increases shows that overall performance of company is

improving &their unsold stock decreases time to time.

Inventory in Days:

Inventory in days decrease due to high inventory turnover ratio

Total Assets Turnover:

Total assets turnover of Suzuki motors is improving their performance in 2010 and 2011.The

rate of increase in net sales is higher than rate of increase in total assets because of this

portion of revenue obtain from total asset is increased.

Gross Profit Ratio:

Gross profit ratio of Suzuki motors is not generating the profit to much in 2009, 2010 and

2011. In 2009&2010 gross profit ratio remain same in 2011, Gross profit ratio is increase

because rate of gross profit more than rate increase in net sales.

Net Profit Ratio:

Net profit margin of Suzuki motors is working at average level in 2009, 2010 and 2011. The

net profit ratio is increasing because the rate of increase in net profit is higher than the rate of

net sales.

Return on Assets:

Return on assets of Suzuki motors in 2009, 2010 and 2011 is working in average. Due to high

performance of company return assets is increase in 2011.



Return on Equity:

Return on equity of Suzuki motors is positively working in 2009, 2010 and 2011. Return on

equity is increase from 2009 to 2010 it indicates the stakeholder profitability increasing & it

decreases from 2010 to 2011 that indicate the profitability of shareholder decreases.

Conclusion: Suzuki motors maintain a good relationship in the market.

In 2011 they maintain business and make the effective operation, so for that they

increased their business and get benefits from that year.

Index analysis of income statement of Suzuki motors in 2009 had get the profit in

their business but in 2010 they get less amount of profit as compare to 2009.

In 2011 they get highly amount of profit as compare to 2009.

Common size analysis of balance sheet of Suzuki motors has been increased year by

year in 2009, 2010 and 2011.

Common size analysis of income statement increased the profit in 2011 but it was

been decreased in last year of 2010.

In 2009 the liquidity ratio analysis has showing the positive relation.

Suzuki motors of liquidity ratio analysis had the positive relation such as in 2009 has

fewer amount then 2010 and in 2011 it has higher amount then 2010.

Suzuki motors of activity ratio analysis had the greater ratio year by year in 2009,

2010 and 2011.

Suzuki motors of profitability ratio in 2010 maintain their position but in 2011 it were

been decreased.

Suzuki motors of marketable ratio in 2009, 2010 and 2011 are increasing year by

year.

References:

Reference of the Website

PAK SUZUKI MOTORS

http://www.paksuzuki.com.pk/Automobile/PDF%20file/Financial/Suzuki%20Annual%20Repo

rt%202011.pdf

PRODUCT CATEGORIES

http://www.paksuzuki.com.pk/Automobile/Pages/Home.aspx

introduction

http://www.paksuzuki.com.pk/Automobile/PDF%20file/Financial/Suzuki%20Annual%20Repo

rt%202011.pdf

http://www.paksuzuki.com.pk/Automobile/PDF%20file/Financial/Suzuki%20Annual%20Report%202011.pdf


http://www.paksuzuki.com.pk/Automobile/Pages/Home.aspx



ratio analysis of pak suzuki motors

Business

dealers of pak suzuki

ratio analysis

public limited company

social development of

cities of pakistan visionto

constant encouragement

fmsmbaf13muhammad wasim

muhammad badarud