Financial Statement Analysis of Pakistan Tobacco Company

Acknowledgement
Pakistan Tobacco Company | Final Project 1

Pakistan Tobacco Company
Pakistan Tobacco Company Limited (PTC) is a part of British American
Tobacco - the world's most international tobacco group - with brands sold
in 180 markets around the world. Pakistan Tobacco's operations in
Pakistan began in 1947, making it one of Pakistan's first foreign
investments.
The company produces high quality tobacco products to meet the diverse
preferences of millions of consumers, and it works in all areas of the
business - from seed to smoke.
The company provides a number of reputed brands of cigarettes to
consumers in Pakistan, including Benson and Hedges, Embassy, Gold
Flake, Capstan and Gold Leaf.
Vision
“Like a lighthouse in a dark, stormy sea... Our vision serves

as a beacon of light and hope, helping us navigates the
waters”
Mission Statement
“Transform PTC to perform responsibly with the speed,

flexibility and enterprising spirit of an innovative, consumer
focused Company”
Strategic Objectives
“Our strategy reflects our vision of being the champions of

Growth, Productivity, Responsibility and a Winning
Organisation”

Company’s Brands
“We have always considered ourselves a consumer focused
company. We aim to offer a product that excels in all
aspects and exceeds the expectations of our consumers”
Pakistan Tobacco Company invests in trying to understand the
consumers’ preferences and ensures that adult smokers make informed
choices about different brands available in the market. We have put in
particular effort in promoting two of our Global Drive Brands, Dunhill and
Pall Mall; and two of our great value for money brands, John Player Gold
Leaf and Gold Flake.
Dunhill
Dunhill, a premium global brand, celebrated its centenary in 2007.
2008 was an exceptional year for Dunhill in Pakistan as the brand
witnessed exponential growth; fuelled by its re-launch in July. Going
forward, Dunhill is poised to strengthen its foothold in the premium
segment.
Benson & Hedges

In 1873, Richard Benson & William Hedges started a partnership in
London.
Benson & Hedges was launched in Pakistan in March 2003 and has since
been able to build strong brand loyalty among its consumers showing
excellent year on year growth.
Gold Leaf
The story of John Player Gold Leaf has to start from the story of its
founder, John Player. An enterprising businessman, John Player started a
small tobacco selling business in 1877 and turned it into a thriving
cigarette company, John Player and Sons.
John Player Gold Leaf has become an institution in itself, becoming one of
the most recognisable cigarette brands in the country. John Player Gold
Leaf has recently been declared the largest Urban Brand in Pakistan,
beating out products across the F.M.C.G. spectrum.

Capstan
Capstan has a rich heritage, originating in Britain in the 19th century. The
brand was created under the auspices of W.D. & H.O. WILLS at Bristol and
London.
Gold Flake
Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O.
WILLS where it was a premium brand around the end of the 19th century.
Launched in 1982, in 'soft cup' packaging, the brand took off when it was
repositioned in the Value For Money (VFM) segment and later a 'hinge lid'
variant was introduced in 2000.
Gold Flake has grown tremendously as a brand since 2004, making it the
largest volume brand in Pakistan, and the second largest brand in British
American Tobacco's Asia Pacific region. The key to Gold Flake’s success
has been its novel engagement schemes which have fuelled growth over
the years. Through consumer relevant initiatives, Gold Flake has
established itself as a fresh and modern offering in the VFM segment and
is all set to consolidate its position as the major volume driver for
Pakistan Tobacco Company.
Embassy
Embassy, is a leading volume brand in Pakistan, and is most popular in
Punjab where it enjoys a leading position. Having built its heritage over a
number of years, Embassy thrives on its brand loyalty and locally tailored
taste characteristics.
Financial Highlights
Gross Turn Over

Year Gross Turnover
2004 25,453 Million Rupees
Financial Highlights
Property Plant and Equipment (Fixed Assets)
Years Property Plant and Equipment

Earnings per Share and Dividend Yield
Year Earnings Dividend Yield

2004 2.60/Share 3.25%
2005 5.17/Share 5.37%

2006 7.46/Share 7.64%
2007 9.47/Share 6.37%
2008 9.91/Share 9.08%
2009 11.83/Share 9.10%
Gross Volume
Year Volume Gross Profit Operating Profit After Tax Profit

2004 27 Billion 3,483 Million 1,077 665 Million
Million
2005 31 Billion 4530 Million 2,081 1,322
Million Million
2006 35 Billion 5534 Million 2,841 1,905
Million Million
2007 37 Billion 6516 Million 3,720 2,420
Million Million
2008 41 Billion 7277 Million 3,860 2,532
Million Million
2009 41 Billion 8224 Million 4,589 3,022
Million Million
Financial Analysis 2004-2005

Balance Sheet (Horizontal Analysis)
ITEMS 2004 2005 Horizontal Analysis
NON CURRENT
ASSETS
Property plant and 3,564,4 4,529,3 4529366 - 3564407÷ 27.07%
Equipment 07 66 3564407
Investment in 5,000 5,000 5000 – 5000 ÷ 5000 ---
Subsidiary
Company
Long term Loans 16,324 17,782 17782 – 16324 ÷ 16324 8.93%
Long Term Deposits 4,433 11,365 11365 – 4433 ÷ 4433 156.3%
CURRENT
ASSETS
Stock in Trade 3,074,0 3,780,9 3780931 – 3074052 ÷ 22.99%

52 31 3074052
Stores and Spares 131,464 125,232 125232 – 131464 ÷ (4.70%
131464 )
Trade Debts 12,486 2,894 2894 – 12486 ÷ 12486 (76.82
%)
Loans and Advances 32,273 32,676 32676 – 32273 ÷ 32273 1.24%
Short term 36,003 31,987 31987 – 36003 ÷ 36003 (11.15

Payments %)
Other Receivables 119,126 104,791 104791 – 119126 ÷ (12.03
119126 %)
Cash and Bank 39,197 57,605 57605 – 39197 ÷ 39197 46.96
Total Current Assets 3,434,6 4,136,1 4136116 – 3434601 ÷ 20.42%
01 16 3434601
Total Assets 7,024,7 7,968,4 7968453 – 7024765 ÷ 13.43%
65 53 7024765
Balance Sheet

SHARE CAPITAL
AND RESERVES
Share Capital 2,554,9 2,554,9 2554938 – 2554938 ÷ ---

38 38 2554938
Revenue Reserves 707,885 1,084,4 1084456 – 707885 ÷ 53.19
56 707885 %
NON CURRENT
LIABILITIES
Retirement Benefits --- --- --- ---
Deferred Taxation 624,475 724,673 724673 – 624475 ÷ 16.04

624475 %
CURRENT
LIABILITIES
Trade and other 2,056,2 2,515,8 2515824 – 2056298 ÷ 22.34

payables 98 24 2056298 %
Accrued Interest 5,041 10,911 10911 – 5041 ÷ 5041 116.44
%
Short term running 996,579 400,662 400662 – 996579 ÷ (59.79
finance 996579 %)
Income tax liability 79,549 676,969 676969 – 79549 ÷ 79549 75.10
%
Total Current 3,137,4 3,604,3 3604366 – 3137467 ÷ 14.88
Liabilities 67 66 3137467 %
Total Liabilities 7,024,7 7,968,4 7968453 – 7024765 ÷ 13.43
65 53 7024765 %
Profit and Loss Account

Gross turnover 25,452,6 30,615,0 30615062 – 25452634 ÷ 20.28
34 62 25452634 %
Excise Duties 12,466,9 14,758,5 14758558 – 12446912 ÷ 18.57
12 58 12446912 %
Sales Tax 3,413,14 4,103,32 4103324 – 3413146 ÷ 20.20
6 4 3416146 %
Net Sales 9,572,57 11,753,1 11753180 – 9572576 ÷ 22.77
6 80 9572576 %
Cost of Sales 6,089,95 7,223,57 7223576 – 6089955 ÷ 18.61
5 6 6089955 %
Gross Profit 3,482,62 4,529,60 4529604 – 3482621 ÷ 30.06
1 4 3482621 %
Selling and 1,442,35 1,578,65 1578656 – 1442356 ÷ 9.44%
distribution 6 6 1442356
Administrative 595,637 573,285 573285 – 595637 ÷ 595637 (3.75
Expenses %)
Other Operating 14,590 8,100 8100 – 14590 ÷ 14590 (44.48
Income %)
Other Operating 381,914 304,462 304462 – 381914 ÷ 381914 (20.27

Expense %)
Operating Profit 1,077,30 2,081,30 2081301 – 1077304 ÷ 93.19

4 1 1077304 %
Finance Income --- 26,317 --- 100
Finance Cost 21,265 25,554 25554 – 21265 ÷ 21265 20.16

%
Profit Before 1,056,03 2,082,06 2082064 – 1056039 ÷ 97.15
Tax 9 4 1056039 %
Income Tax 390,812 760,145 760145 – 390812 ÷ 390812 94.50
Expense %
Profit of the 665,227 1,321,91 1321919 – 665227 ÷ 98.77
Year 9 665227 %
Financial Analysis 2004–2005

Balance Sheet (Vertical Analysis)
ITEMS 2004 2005 Vertical Analysis

NON CURRENT
ASSETS
Property plant and 3,564,4 4,529,3 4529366 ÷ 7968453 56.84%
Equipment 07 66
Investment in 5,000 5,000 5000 ÷ 7968453 0.006%
Subsidiary
Company
Long term Loans 16,324 17,782 17782 ÷ 7968453 0.22%
Long Term Deposits 4,433 11,365 11365 ÷ 7968453 0.14%
CURRENT
ASSETS
Stock in Trade 3,074,0 3,780,9 3780931 ÷ 7968453 47.57%

52 31
Stores and Spares 131,464 125,232 125232 ÷ 7968453 1.57%
Trade Debts 12,486 2,894 2894 ÷ 7968453 0.03%
Loans and Advances 32,273 32,676 32676 ÷ 7968453 0.41%
Short term 36,003 31,987 31987 ÷ 7968453 0.40%

Payments
Other Receivables 119,126 104,791 104791 ÷ 7968453 1.31%
Cash and Bank 39,197 57,605 57605 ÷ 7968453 0.72%

Total Current Assets 3,434,6 4,136,1 4136116 ÷ 7968453 51.90%
01 16
Total Assets 7,024,7 7,968,4 7968453 ÷ 7968453 100%
65 53
Balance Sheet

SHARE CAPITAL
AND RESERVES
Share Capital 2,554,9 2,554,9 2554938 ÷ 7968453 32.06

38 38 %
Revenue Reserves 707,885 1,084,4 1084456 ÷ 7968453 13.62
56 %
NON CURRENT
LIABILITIES
Deferred Taxation 624,475 724,673 724673 ÷ 7968453 9.09%
CURRENT
LIABILITIES
Trade and other 2,056,2 2,515,8 2515824 ÷ 7968453 31.57

payables 98 24 %
Accrued Interest 5,041 10,911 10911 ÷ 7968453 0.13%
Short term running 996,579 400,662 400662 ÷ 7968453 5.03%

finance
Income tax liability 79,549 676,969 676969 ÷ 7968453 8.49%
Total Current 3,137,4 3,604,3 3604366 ÷ 7968453 45.26

Liabilities 67 66 %
Total Liabilities 7,024,7 7,968,4 7968453 ÷ 7968453 100%
65 53

Gross turnover 25,452,6 30,615,0 30615062 ÷ 11753180 260.48

34 62 %
Excise Duties 12,466,9 14,758,5 14758558 ÷ 11753180 125.57
12 58 %
Sales Tax 3,413,14 4,103,32 4103324 ÷ 11753180 34.91
6 4 %
Net Sales 9,572,57 11,753,1 11753180 ÷ 11753180 100%
6 80
Cost of Sales 6,089,95 7,223,57 7223576 ÷ 11753180 61.46
5 6 %
Gross Profit 3,482,62 4,529,60 4529604 ÷ 11753180 62.70
1 4 %
Selling and 1,442,35 1,578,65 1578656 ÷ 11753180 13.43
distribution 6 6 %
Administrative 595,637 573,285 573285 ÷ 11753180 4.8%
Expenses
Other Operating 14,590 8,100 8100 ÷ 11753180 0.06%
Income
Other Operating 381,914 304,462 304462 ÷ 11753180 2.59%

Expense
Operating Profit 1,077,30 2,081,30 2081301 ÷ 11753180 17.70

4 1 %
Finance Income --- 26,317 --- 0.22%
Finance Cost 21,265 25,554 25554 ÷ 11753180 0.21%
Profit Before 1,056,03 2,082,06 2082064 ÷ 11753180 17.71

Tax 9 4 %
Income Tax 390,812 760,145 760145 ÷ 11753180 6.46%
Expense
Profit of the 665,227 1,321,91 1321919 ÷ 11753180 11.24
Year 9 %

Balance Sheet
ITEMS 2005 2006 Horizontal Vertical

Analysis Analysis
NON CURRENT
ASSETS
Property plant and 4,529,3 4,529,3 19.25 51.86
Equipment 66 66
Investment in Subsidiary 5,000 5,000 --- 0.006
Company
Long term Loans 17,782 18,660 4.94 0.21
Long Term Deposits and 11,365 8,424 (25.88) 0.10

Payments
CURRENT ASSETS
Stock in Trade 3,780,9 3,690,8 0.26 43.40

31 93
Stores and Spares 125,23 140,00 11.80 1.60
2 8
Trade Debts 2,894 2,406 (16.86) 0.03
Loans and Advances 32,676 12,205 (62.65) 0.14
Short term Payments 31,987 72,235 125.83 0.83
Other Receivables 104,79 92,360 (11.86) 1.06

1
Cash and Bank Balances 57,605 62,883 9.16 0.72
Total Current Assets 4,136,1 4,172,9 0.89 47.78

16 50
Total Assets 7,968,4 8,734,4 9.61 100
53 00
Balance Sheet

Analysis Analysis
SHARE CAPITAL
AND RESERVES
Share Capital 2,554,9 2,554,9 --- 29.25

38 38
Revenue Reserves 1,084,4 1,584,2 46.08 18.14
56 49
NON CURRENT
LIABILITIES
Deferred Taxation 724,67 845,00 16.60 9.67

3 4
CURRENT
LIABILITIES
Trade and other 2,515,8 2,212,2 (12.07) 25.23
payables 24 41
Accrued Interest 10,911 11,115 1.87 0.13
Short term running 400,66 1,293,1 222.75 14.81

finance 2 14
Income tax liability 676,96 233,71 (65.48) 2.68
9 2
Total Current liability 3,604,3 3,750,2 4.05 42.94
66 09
Total Liabilities 7,024,7 8,734,4 9.61 100
65 00

Analysis Analysis
Gross turnover 30,615,062 35,715,451 16.66 ---
Excise Duties 14,758,558 16,991,172 15.13 ---
Sales Tax 4,103,324 4,833,285 17.79 ---
Net Sales 11,753,180 13,890,994 18.19 100
Cost of Sales 7,223,576 8,357,747 15.70 60.16
Gross Profit 4,529,604 5,533,520 22.16 39.84
Selling and 1,578,656 1,816,198 15.05 13.07

distribution
Administrative 573,285 644,981 12.75 4.64
Expenses
Other Operating 8,100 20,686 155.38 0.15

Income
Other Operating 304,462 251,932 (17.25) 1.81

Expense
Operating Profit 2,081,301 2,841,095 36.51 20.45
Finance Income 26,317 47,402 80.12 0.34
Finance Cost 25,554 27,824 8.88 0.20
Profit Before Tax 2,082,064 2,860,673 37.40 20.59
Income Tax 760,145 955,685 25.72 6.88

Expense
Profit of the Year 1,321,919 1,904,988 44.11 13.74

Balance Sheet

Analysis Analysis
NON CURRENT ASSETS

Equipment 66 26
Investment in 5,000 5,000 --- 0.05
Subsidiary Company
Long term Loans 18,660 12,513 (32.94) 0.13
Long Term Deposits 8,424 13,025 54.62 0.13

and Payments
CURRENT ASSETS
Stock in Trade 3,690,8 3,998,1 5.47 40.69

93 81
8 7
Trade Debts 2,406 2,386 (0.83) 0.02
Loans and Advances 12,205 38,580 216.10 0.39
Short term Payments 72,235 64,887 (10.17) 0.66
Other Receivables 92,360 229,89 148.91 2.34

1
Cash and Bank 62,883 166,66 165.04 1.70
Balances 6
50 68
Total Assets 8,734,4 9,826,2 12.50 100
00 32
Balance Sheet

Analysis Analysis
SHARE CAPITAL AND
RESERVES
Share Capital 2,554,9 2,554,9 --- 26.00

38 38
Revenue Reserves 1,584,2 1,149,7 (27.43) 11.70
49 42
NON CURRENT
LIABILITIES
Retirement Benefits --- 1,149,7 100 4.98

42
Deferred Taxation 845,00 809,109 (4.25) 8.23
4
CURRENT
LIABILITIES
Trade and other 2,212,2 3,548,2 60.39 36.11
payables 41 37
Accrued Interest 11,115 8,401 (24.42) 0.09
Short term running 1,293,1 1,038,5 (19.69) 10.57

finance 14 50
Income tax liability 233,71 227,752 (2.55) 2.32
2
Total Current 3,750,2 4,822,9 28.60 49.08
liabilities 09 40
00 32

Analysis Analysis
Gross turnover 35,715,45 40,889,275 14.49 --
1
Excise Duties 16,991,17 19,311,946 13.66 --
2
Sales Tax 4,833,285 5,534,452 14.51 --
Net Sales 13,890,99 16,042,877 15.49 100

4
Cost of Sales 8,357,747 9,527,306 14.00 59.39
Gross Profit 5,533,520 6,515,571 17.75 40.61
Selling and 1,816,198 1,795,793 (1.12) 11.19

distribution
Administrative 644,981 736,147 14.13 4.59
Expenses
Other Operating 20,686 71,756 246.88 0.45

Income
Other Operating 251,932 335,763 33.28 2.09

Expense
Finance Income 47,402 30,878 (34.86) 0.19
Finance Cost 27,824 25,928 (6.81) 0.16
Income Tax 955,685 1,304,367 36.49 8.13

Expense

Balance Sheet

Analysis Analysis
NON CURRENT ASSETS

Equipment 26 8
Investment in 5,000 5,000 --- 0.05
Subsidiary Company
Long term Loans 12,513 9,244 (26.12) 0.09

and Payments
CURRENT ASSETS
Stock in Trade 3,998,1 4,059,06 1.52 39.05

81 3
7
Trade Debts 2,386 2,666 11.74 0.03

1
Cash and Bank 166,66 69,172 (58.50) 0.67
Balances 6
68 7
Total Assets 9,826,2 10,395,0 5.79 100
32 41

Balance Sheet

Analysis Analysis
SHARE CAPITAL AND
RESERVES
Share Capital 2,554,9 2,554,93 --- 24.58

38 8
42 3
NON CURRENT
LIABILITIES
Retirement Benefits 1,149,7 739,133 51.00 7.11

42
Deferred Taxation 809,10 836,939 3.44 8.05
9
CURRENT
LIABILITIES
Trade and other 3,548,2 4,324,70 21.88 41.60

payables 37 4
Short term running 1,038,5 572,397 (44.88) 5.51

finance 50
Income tax liability 227,75 303,183 33.12 2.92
2
Total Current Liability 4,822,9 5,210,63 8.04 50.13

40 8

32 41


Analysis Analysis
Gross turnover 40,889,275 49,053,928 19.97 --
Excise Duties 19,311,946 23,351,734 20.92 --
Sales Tax 5,534,452 6,829,699 23.40 --
Net Sales 16,042,877 18,872,495 17.64 100
Cost of Sales 9,527,306 11,595,736 21.71 61.44
Gross Profit 6,515,571 7,276,759 11.68 38.56
Selling and 1,795,793 1,933,364 7.66 10.24

distribution
Administrative 736,147 928,358 26.11 4.92
Expenses
Other Operating 71,756 60,551 (15.62) 0.32

Income
Other Operating 335,763 615,458 83.30 3.26

Expense
Finance Income 30,878 59,600 93.02 0.32
Finance Cost 25,928 26,013 0.33 0.14
Income Tax 1,304,367 1,361,422 4.37 7.21

Expense

Balance Sheet

Analysis Analysis
NON CURRENT ASSETS

Equipment 8 8
Investment in Subsidiary 5,000 5,000 0.04
Company
Long term Loans 9,244 7,310 (20.92) 0.06
Long Term Deposits and 41,172 19,915 (51.63) 0.16

Payments
CURRENT ASSETS
Stock in Trade 4,059,06 5,765,36 42.04 47.15

3 7
Trade Debts 2,666 1,684 (36.83) 0.01
Loans and Advances 65,917 48,598 (26.27) 0.40
Short term Payments 105,728 72,483 (31.44) 0.59
Other Receivables 246,675 88,147 (64.27) 0.72
Cash and Bank Balances 69,172 47,874 (30.79) 0.39

7 8
Total Assets 10,395,0 12,226,8 17.62 100
41 61

Balance Sheet

Analysis Analysis
SHARE CAPITAL
AND RESERVES
Share Capital 2,554,93 2,554,93 --- 20.90

8 8
Revenue Reserves 1,053,39 1,705,29 61.89 13.95
3 6
NON CURRENT
LIABILITIES
Retirement 739,133 --- (100) 0.00

Benefits
Deferred Taxation 836,939 1,109,84 32.61 9.08
7
CURRENT
LIABILITIES
Trade and other 4,324,70 5,037,46 16.48 41.20
payables 4 9
Short term 572,397 1,300,83 127.26 10.64

running finance 7
Income tax 303,183 490,815 61.89 4.01
liability
Total Current 5,210,63 6,856,78 31.59 56.08
Liability 8 0
Total Liability 10,395,0 12,226,8 17.62 100
41 61


Analysis Analysis
Gross 49,053,928 57,544,309 17.31 --
turnover
Excise 23,351,734 27,654,345 18.43 --
Duties
Sales Tax 6,829,699 8,223,439 20.41 --
Net Sales 18,872,495 21,666,525 14.80 100
Cost of Sales 11,595,736 13,442,066 15.92 62.04
Gross Profit 7,276,759 8,224,459 13.02 37.96
Selling and 1,933,364 2,246,014 16.17 10.37

distribution
Administrati 928,358 1,100,814 18.58 5.08
ve Expenses
Other 60,551 226,499 274.06 1.05

Operating
Income
Other 615,458 514,665 (16.38) 2.38
Operating
Expense
Operating 3,860,130 4,589,465 18.89 21.18
Profit
Finance 59,600 102,826 72.53 0.47
Income
Finance Cost 26,013 43,802 68.39 0.20
Profit Before 3,893,717 4,648,489 19.38 21.45

Tax
Income Tax 1,361,422 1,626,083 19.44 7.51
Expense
Profit of the 2,532,295 3,022,406 19.35 13.95
Year

Balance Sheet

Analysis Analysis
NON CURRENT ASSETS
Property plant and 5,952,10 5,680,29 (4.5) 39.58

Equipment 8 6
Investment in 5,000 5000 --- 0.03
Subsidiary Company
Long term Loans 7,310 4170 (42.9) 0.02

and Payments
CURRENT ASSETS
Stock in Trade 5,765,36 7,255,00 25.83 50.55

7 7
Trade Debts 1,684 1,554 (7.71) 0.01
Cash and Bank 47,874 56,910 18.87 0.39

Balances
8 5

Total Assets 12,226,8 14,349,4 17.72 100
61 73
Balance Sheet

Analysis Analysis
SHARE CAPITAL
AND RESERVES
Share Capital 2,554,93 2,554,93 --- 17.80

8 8
6 5
NON CURRENT
LIABILITIES
Retirement --- --- --- ---

Benefits
Deferred 1,109,84 1,113,83 0.35 7.76
Taxation 7 3
CURRENT
LIABILITIES
Trade and other 5,037,46 5,815,86 15.45 40.53
payables 9 7
Short term 1,300,83 2,561,36 96.90 17.84

running finance 7 2
Income tax 490,815 199,409 (59.37) 0.13
liability
Total Current 6,856,78 8,630,28 25.86 60.14
Liability 0 6

Total Liability 12,226,8 14,349,4 17.36 100
61 73

Analysis Analysis
Gross 57,544,309 44,458,074 (22.74) 283.24
turnover
Excise 27,654,345 22,347,073 (19.9) 142.37
Duties
Sales Tax 8,223,439 6,414,894 (21.99) 40.86
Net Sales 21,666,525 15,696,107 (27.25) 100
Cost of Sales 13,442,066 10,789,048 (19.73) 68.73
Gross Profit 8,224,459 4,907,059 (40.33) 31.26
Selling and 2,246,014 2,007,158 (10.63) 12.78

distribution
Administrati 1,100,814 943,256 (14.31) 6.00
ve Expenses
Other 226,499 158,253 (30.13) 1.00

Operating
Income
Other 514,665 24,193 (95.29) 0.15
Operating
Expense
Operating 4,589,465 1,822,585 (60.28) 11.61
Profit
Finance 102,826 34,669 (66.28) 0.22
Income
Finance Cost 43,802 101,415 131.5 0.64
Profit Before 4,648,489 1,755,839 (62.22) 11.18

Tax

Income Tax 1,626,083 614,218 (62.22) 3.91
Expense
Profit of the 3,022,406 1,141,621 (62.22) 7.2
Year
Ratio Analysis 2005-2010
Liquidity Ratios
1. Current Ratio
Years Current Assets Current Liabilities Current Ratio
2004 3,434,601 3,137,467 1.094

2005 4,136,116 3,604,366 1.147
2006 4,172,950 3,750,209 1.112
2007 4,641,368 4,822,940 0.962
2008 4,739,867 5,210,638 0.909
2009 6,242,528 6,856,780 0.910
2010 7,893,825 8,630,286 0.914
2. Quick Ratio
Years Quick Assets Current Liabilities Quick Ratio
2004 3,60,549 3,137,467 0.1149

2005 3,55,185 3,604,366 0.098
2006 3,82,097 3,750,209 0.101
2007 6,43,187 4,822,940 0.133

2008 6,80,804 5,210,638 0.130
2009 4,77,161 6,856,780 0.069
2010 6,38,818 8,630,286 0.074
Liquidity Ratios
3. Inventory Turnover
Years Cost of Sales Average Inventory Inventory Turnover
2004 6,089,955 3,069,090 1.98

2005 7,223,576 3,427,491 2.10
2006 8,357,474 3,785,892 2.20
2007 9,527,306 3,894,517 2.44
2008 11,595,736 4,028,622 2.87
2009 13,442,066 4,972,215 2.70
2010 10,789,048 6,510,187 1.67
4. Average Account Receivables Turnover
Years Credit Sales Average A/R A/R Turnover
2004 9,572,576 1,05,266 90.93

2005 11,753,180 1,11,958 104.97
2006 13,890,994 98,575 140.91
2007 16,042,877 1,61,125 99.56
2008 18,872,495 2,38,282 117.15
2009 21,666,525 1,67,411 129.41
2010 15,696,107 1,06,521 147.34

Profitability Ratios
1. Assets Turnover
Years Sales Average Total Assets Turnover

Assets
2004 9,572,576 6,641,792 1.45

2005 11,753,180 7,496,609 1.56
2006 13,890,994 8,351,426 1.66
2007 16,042,877 9,280,316 1.78
2008 18,872,495 10,110,636 1.86
2009 21,666,525 11,310,951 1.91
2010 15,696,107 12,964,936 1.21
2. Profit Margin
Years Sales Cost of Goods Sold Profit Margin
2004 9,572,576 6,089,955 36.38 %

2005 11,753,180 7,223,576 38.53 %
2006 13,890,994 8,357,474 39.83 %
2007 16,042,877 9,527,306 40.61 %
2008 18,872,495 11,595,736 38.55 %
2009 21,666,525 13,442,066 37.95 %
2010 15,696,107 10,789,048 31.27%

3. Return on Assets
Years Net Income Average Total Return on Assets

Assets
2004 665,227 6,641,792 0.10

2005 1,321,919 7,496,609 0.17
2006 1,904,988 8,351,426 0.22
2007 2,420,207 9,280,316 0.26
2008 2,532,295 10,110,636 0.25
2009 3,022,406 11,310,951 0.27
2010 1,141,621 12,964,936 0.80
4. Return on Common Stockholder’s Equity
Years Net Income Average Stock Return on Stock

Holders’ Equity holders’ Equity
2004 665,227 3,262,823 0.20

2005 1,321,919 3,451,118 0.38
2006 1,904,988 3,889,300 0.48
2007 2,420,207 4,081,022 0.59
2008 2,532,295 3,656,505 0.69
2009 3,022,406 3,934,282 0.76
2010 1,141,621 4,065,563 0.28
5. Earnings per Share
Years Net Income Average Shares Earnings per Share
Outstanding
2004 665,227 2,55,494 2.60

2005 1,321,919 2,55,494 5.17
2006 1,904,988 2,55,494 7.46
2007 2,420,207 2,55494 9.47
2008 2,532,295 2,55,494 9.91
2009 3,022,406 2,55,494 11.83
2010 1,141,621 2,55,494 4.47
6. Payout Ratios
Years Dividends per Earnings per Share Payout Ratio
Share
2004 1.61 2.60 0.61

2005 3.69 5.17 0.71
2006 5.48 7.46 0.73
2007 7.88 9.47 0.83
2008 11.62 9.91 1.17
2009 9.53 11.83 0.80
2010 5.99 4.47 1.34
7. Price Earnings Ratio

Years Market Price of Earnings per Share Price Earnings
Share Ratio
2004 2.60
2005 5.17
2006 7.46
2007 9.47
2008 9.91
2009 11.83
2010 4.47
Solvency Ratios
1. Debt to Assets Ratio
Years Total Debts Total Assets Debt to Assets Ratio

2004 1,896,686 7,024,765 0.27
2005 2,916,486 7,968,453 0.33
2006 3,505,382 8,734,400 0.40
2007 4,586,767 9,826,232 0.46
2008 4,897,101 10,395,041 0.47
2009 6,338,306 12,226,861 0.51
2010 8,377,229 13,613,012 0.61
2. Times Interest Earned
Years Operating Income Interest Expense Times Interest Earned
2004 1,056,039 390,812 2.70

2005 2,082,064 760,145 2.73
2006 2,860,673 955,685 2.99
2007 3,724,574 1,304,367 2.85
2008 3,893,717 1,361,422 2.86
2009 4,648,489 1,626,083 2.85
2010 1,755,839 614,218 2.85
Interpretation of Analysis
Liquidity Ratios

The analysis of Pakistan Tobacco Company’s financial statement shows
that it has a high tendency to pay its debts and to convert assets into
liquid form within short intervals of time.
• The current ratio of PTC remained between 0.90 – 1.14 in the last
six years and it shows its ability to pay short term liabilities.
Current Ratio= Current AssetsCurrent Liabilities
• The quick ratio of PTC ranged between 0.069– 0.133 from 2005 to
2010. It shows the company’s ability to convert its current assets
into liquid form (cash form) in order to meet current liabilities.
Quick Ratio= Current Assets-InventoryCurrent Liabilities
• On yearly basis from the year 2005 – 2010, we observed that the
number of times the total inventory or stock of the company was
sold on the average of 2.25 times/year. It shows the sales of the
company are on a very large scale and also gives rise to the
company opportunity to generate huge profits in the long run.
Inventory Turnover= Cost of SalesAverage Inventory
• Average Account Receivables Turnover shows that how many times

a company is able to recover the amount of credit sales to people.
PTC has shown a high Accounts Receivables turnover rate which
shows its high liquidity transformation rate.
Accounts Recieveables Turnover= Credit SalesAverage Accounts Recieveables
Pakistan Tobacco Companies Profitability ratios clearly reflect it’s great

ability to generate huge profits and of generating dividends for its
shareholders.
• Average Assets turnover of the company ranges between 1.21 -

1.91 times per year. It shows the generation of huge sales from the

worth of assets of the company and in the case of Pakistan Tobacco
Company, it shows the firm's efficiency at using its assets in
generating sales or revenue - the higher the number the better.
Assets Turnover= Net SalesAverage Total Assets
• The profit margin of PTC lies between 31.27% - 40.61% in previous

six years. It measures the percentage of each dollars of sales that
results in net income. A higher profit margin indicates a more
profitable company that has better control over its costs compared
to its competitors.
Profit Margin= Net SalesCost of Goods Sold
• The return on assets of PTC ranges among 0.80 to 0.27 according to

preceding six years record. An overall measure of profitability is
return on assets. ROA gives an idea as to how
efficient management is at using its assets to generate earnings.
This number tells you what the company can do with what it
has, i.e. how many rupees of earnings they derive from each rupee
of assets they control.
Assets Turnover= Net IncomeAverage Total Assets
• Return on common stockholder’s equity of PTC varies between 0.28

– 0.76 between the years 2005 to 2006. Another widely used
profitability ratio is return on common stockholder’s equity. It
measures profitability from common stockholder’s point of view.
Return on equity measures a corporation's profitability by
revealing how much profit a company generates with the money
shareholders have invested. Averaging ROE over the past 5-10
years can give you a better idea of the historical growth.
Return on comon stock holders Equity= Net IncomeAverage Stock Holders Equity
• Earnings per share are a measure of net income earned on each

share of common stock. PTC’s earning per share of last six years
lies among 4.47 - 11.83. The EPS formula does not include
preferred dividends for categories outside of continued operations
and net income. Earnings per share serve as an indicator of a
company's profitability.
Earnings per Share= Net IncomeAverage shares Outstanding
• Payout ratio of this company ranges from 0.8 - 1.34. It measures

the percentage of earnings distributed in the form of cash
dividends. The amount of earnings paid out in dividends to
shareholders. Investors can use the payout ratio to determine what
companies are doing with their earnings. Dividend payout
ratio is the fraction of net income a firm pays to its stockholders in
dividend.
Payout Ratio= Dividend per ShareEarnings per Share
• Price earnings ratio is an oft-quoted measure of the ratio of the

market price of each share of common stock to the earnings per
share. It is also called its "P/E", or simply "multiple". The P/E ratio is
a vital ratio for investors. Basically, it gives us an indication of the
confidence that investors have in the future prosperity of the
business. A P/E ratio of 1 shows very little confidence in that
business whereas a P/E ratio of 20 expresses a great deal of
optimism about the future of a business. It is the valuation ratio of a
company's current share price compared to its per-share earnings.
Price Earning Ratio= Market Price of ShareEarnings per Share
SOLVENCY RATIOS
Solvency ratios measure the ability of a company to survive over a long

period of time. It provides a measurement of how likely a company will
be to continue meeting its debt obligations. Different countries use
different methodologies to calculate the solvency ratio, and have
different requirements.

• Debt to total assets ratio measures the percentage of total assets
that creditors provide. A metric used to measure a company's
financial risk by determining how much of the company's assets
have been financed by debt. If the ratio is less than one, most of
the company's assets are financed through equity. If the ratio is
greater than one, most of the company's assets are financed
through debt. Calculated by adding short-term and long-term debt
and then dividing by the company's total assets.
Debt to Asset Ratio= Total DebtsTotal Assets
• The average value of Times interest earned of PTC is approximately

2.8 for previous six years. IT PROVIDES COMPANY’S ABILITY TO
MEET interest payments as they come due. Times interest earned
(TIE) or interest coverage ratio is a measure of a company's ability
to honour its debt payments. The times interest earned lets the
creditor understand whether or not a company has sufficient
income to cover its interest payments requirements. It is calculated
by taking a company's earnings before interest and taxes (EBIT)
and dividing it by the total interest payable on bonds and other
contractual debt.
Times Interest Earned= Operating IncomeInterst Expenses

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Acknowledgement

Pakistan Tobacco Company | Final Project 1

“Like a lighthouse in a dark, stormy sea... Our vision serves

“Transform PTC to perform responsibly with the speed,

“Our strategy reflects our vision of being the champions of

Pakistan Tobacco Company | Final Project 2

Benson & Hedges

Pakistan Tobacco Company | Final Project 3

Gross Turn Over

Property Plant and Equipment (Fixed Assets)

Years Property Plant and Equipment

Earnings per Share and Dividend Yield

Year Earnings Dividend Yield

Pakistan Tobacco Company | Final Project 5

Year Volume Gross Profit Operating Profit After Tax Profit

Financial Analysis 2004-2005

Pakistan Tobacco Company | Final Project 6

ITEMS 2004 2005 Horizontal Analysis

Long Term Deposits 4,433 11,365 11365 – 4433 ÷ 4433 156.3%

Stock in Trade 3,074,0 3,780,9 3780931 – 3074052 ÷ 22.99%

Short term 36,003 31,987 31987 – 36003 ÷ 36003 (11.15

Pakistan Tobacco Company | Final Project 7

Share Capital 2,554,9 2,554,9 2554938 – 2554938 ÷ ---

Retirement Benefits --- --- --- ---

Deferred Taxation 624,475 724,673 724673 – 624475 ÷ 16.04

Trade and other 2,056,2 2,515,8 2515824 – 2056298 ÷ 22.34

Profit and Loss Account

Pakistan Tobacco Company | Final Project 8

Other Operating 381,914 304,462 304462 – 381914 ÷ 381914 (20.27

Operating Profit 1,077,30 2,081,30 2081301 – 1077304 ÷ 93.19

Finance Cost 21,265 25,554 25554 – 21265 ÷ 21265 20.16

Financial Analysis 2004–2005

ITEMS 2004 2005 Vertical Analysis

Long Term Deposits 4,433 11,365 11365 ÷ 7968453 0.14%

Stock in Trade 3,074,0 3,780,9 3780931 ÷ 7968453 47.57%

Trade Debts 12,486 2,894 2894 ÷ 7968453 0.03%

Loans and Advances 32,273 32,676 32676 ÷ 7968453 0.41%

Short term 36,003 31,987 31987 ÷ 7968453 0.40%

Cash and Bank 39,197 57,605 57605 ÷ 7968453 0.72%

Pakistan Tobacco Company | Final Project 10

Share Capital 2,554,9 2,554,9 2554938 ÷ 7968453 32.06

Retirement Benefits --- --- --- ---

Deferred Taxation 624,475 724,673 724673 ÷ 7968453 9.09%

Trade and other 2,056,2 2,515,8 2515824 ÷ 7968453 31.57

Short term running 996,579 400,662 400662 ÷ 7968453 5.03%

Total Current 3,137,4 3,604,3 3604366 ÷ 7968453 45.26

Profit and Loss Account

Pakistan Tobacco Company | Final Project 11

Gross turnover 25,452,6 30,615,0 30615062 ÷ 11753180 260.48

Other Operating 381,914 304,462 304462 ÷ 11753180 2.59%

Operating Profit 1,077,30 2,081,30 2081301 ÷ 11753180 17.70

Finance Cost 21,265 25,554 25554 ÷ 11753180 0.21%

Profit Before 1,056,03 2,082,06 2082064 ÷ 11753180 17.71

Financial Analysis 2005-2006

ITEMS 2005 2006 Horizontal Vertical

Long Term Deposits and 11,365 8,424 (25.88) 0.10

Stock in Trade 3,780,9 3,690,8 0.26 43.40

Loans and Advances 32,676 12,205 (62.65) 0.14

Short term Payments 31,987 72,235 125.83 0.83

Other Receivables 104,79 92,360 (11.86) 1.06

Total Current Assets 4,136,1 4,172,9 0.89 47.78

Pakistan Tobacco Company | Final Project 13

Share Capital 2,554,9 2,554,9 --- 29.25