Corporate Profile for Gul Ahmed Textile Mills

Gul Ahmed Textile Mills Limited (GATM) is a Karachi based group playing a major role in the industrialization of the countrys economy. The Group's principal activities are to manufacture and market cotton cloth, yarn and other textile products for domestic and export markets. The Group also weaves and processes all types of cotton, blended fabrics, bed linen, home furnishings and garment manufacturing. The Gul Ahmed Group began trading in textiles in the early 1900s. In 1953, the group decided to enter the field of manufacturing under the name Gul Ahmed Textile Mills Limited, and was incorporated as a privately limited company. In 1972, it was listed on the Karachi Stock Exchange. Since then, the company has made rapid progress and is currently one of the leading composite textile houses in the world. Gul Ahmed has its roots in the textile industry. Gul Ahmed Textile Mills has achieved both local & international recognition through continuously improving the quality & reliability of its products. Today, Gul Ahmed is one of the leading textile set-ups in Asia offering fine woven fabric products which represent a delightful blend of old traditions of every corner of the world. The purest of cotton fibers produced from the fertile lands of the Indus Valley are spun, woven and processed through a combination of most latest technology, high skills and proper craftsmanship of versatile traditions. The company is vertically integrated textile concern with state of the art manufacturing facilities including spinning, weaving and processing & finishing. Moreover, during 2003, the company also got engaged in upstream integration activities by extending its operation into retail venturing (ideas) with an aim to grab the opportunity of growing trend of retail outlets in Pakistan and to safeguard margins against rising cotton prices by focusing on development of value added products. Primarily, Gul Ahmed group has foothold in textile manufacturing business. Moreover, besides textile manufacturing, the group has also stake in power and retail outlet sector, financial and distribution sectors via joint ventures & licensing which include, Gul Ahmed Textile Mills Limited, Gul Ahmed International Limited (FZC)-UAE, and Ideas. Ideas is a retail venture of Gul Ahmed Textile Mill Limited established in 2003. From very onset, the company remained leading exporter of textile products. Imposition of anti dumping duty by European Union on Pakistani textile in 2003 and strengthening competition in international arena from regional countries including China, India and Bangladesh veer the direction of company to domestic front. The companys move into retail venturing was an apt move amid of healthy domestic economy and rising per capita income. Recently, Ideas outlets have flourished all over the country, the venture is targeting higher income group and competing against well known brands.

Horizontal Analysis for Gul Ahmed Textile Mills

Balance sheet Analysis for 2009-2008 & 2008-2007 GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE BALANCE SHEET JUNE 30, 2009 AND 2008 2009 ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Long term investment Long term loans and advances Long term deposits Total Non-Current Assets CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts Loans and advances Deposits and prepayments Accrued interest Other receivables Tax refunds due from government Cash and bank balances Total Current Assets Total Assets LIABILITIES NON-CURRENT LIABILITIES Long term loans Deferred tax liability Deferred liability for staff gratuity Total Non-Current Liabilities 2008 Increase (decrease) Amount Percentage

6,105,833 28,883 58,450 2,262 29,034 6,224,462

5,827,621 28,215 58,450 3,505 15,599 5,933,390

278,212 668 0 (1,243) 13,435 291,072

4.77% 2.37% 0.00% -35.46% 86.13% 4.91%

447,063 3,886,171 2,532,581 145,431 33,931 18,598 142,151 53,679 99,667 7,359,272 13,583,734

485,957 2,915,550 2,490,258 217,115 40,633 0 69,269 176,496 69,034 6,464,312 12,397,702

(38,894) 970,621 42,323 (71,684) (6,702) 18,598 72,882 (122,817) 30,633 894,960 1,186,032

-8.00% 33.29% 1.70% -33.02% -16.49% 0.00% 105.22% -69.59% 44.37% 13.84% 9.57%

2,566,604 149,280 0 2,715,884

2,354,317 124,773 5,471 2,484,561

212,287 24,507 (5,471) 231,323

9.02% 19.64% -100.00% 9.31%

CURRENT LIABILITIES Short term borrowings Current maturity of long term loans Trade and other payables Accrued interest Provision for taxation Total Current Liabilities Total Liabilities SHARE CAPITAL AND RESERVES Authorized capital 75,000,000 ordinary shares of Rs.10 each Issued, subscribed and paid-up capital Reserves Unappropriated profit Total Equity

5,332,208 503,087 1,735,918 0 0 7,749,618 10,465,502

5,214,385 593,671 1,132,738 144,318 66,000 7,151,112 9,635,673

117,823 (90,584) 603,180 (144,318) (66,000) 598,506 829,829

2.26% -15.26% 53.25% -100.00% -100.00% 8.37% 8.61%

750,000 634,785 2,400,446 83,001 3,118,232 13,583,734

750,000 551,987 2,102,052 107,990 2,762,029 12,397,702

0 82,798 298,394 (24,989) 356,203 1,186,032

0.00% 15.00% 14.20% -23.14% 12.90% 9.57%

Interpretation:

The company performance in the year 2009 deteriorated in comparison with the company performance in 2008. Total increase in total assets in the current fiscal year 2009 was 9.57% which was due to more increase in the current assets of the company, which mainly comprised of deposits, receivables and cash balances. No major increase was witnessed in the plant and property part of the company assets. Liabilities of the company increased hand in hand with its assets long term liabilities grew more than the current ones. Indicating financial problems the company might be facing then. Moving on to the stockholders equity part, an increase of 9.57% occurred. This was because of the additional shares that the company offered for sale. Moreover a decrease in the companys retained earning were seen which coincide with the reason for increase in liabilities that the company must have been facing some form of financial constraints to keep its current operations running.

GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE BALANCE SHEET JUNE 30, 2008 AND 2007 2008 ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Long term investment Long term loans and advances Long term deposits Total Non-Current Assets CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts Loans and advances Deposits and prepayments Other receivables Tax refunds due from government Cash and bank balances Total Current Assets Total Assets LIABILITIES NON-CURRENT LIABILITIES Long term loans Deferred tax liability Deferred liability for staff gratuity Total Non-Current Liabilities CURRENT LIABILITIES Short term borrowings Current maturity of long term loans Trade and other payables Accrued interest Provision for taxation Total Current Liabilities Total Liabilities 2007 Increase (decrease) Amount Percentage

5,827,621 28,215 58,450 3,505 15,599 5,933,390

4,702,826 30,435 58,450 4,943 10,579 4,807,233

1,124,795 (2,220) 0 (1,438) 5,020 1,126,157

23.92% -7.29% 0.00% -29.09% 47.45% 23.43%

485,957 2,915,550 2,490,258 217,115 40,633 69,269 176,496 69,034 6,464,312 12,397,702

387,278 2,254,144 2,164,671 171,747 19,050 63,999 188,273 27,845 5,277,007 10,084,240

98,679 661,406 325,587 45,368 21,583 5,270 (11,777) 41,189 1,187,305 2,313,462

25.48% 29.34% 15.04% 26.42% 113.30% 8.23% -6.26% 147.92% 22.50% 22.94%

2,354,317 124,773 5,471 2,484,561

1,772,007 91,773 6,052 1,869,832

582,310 33,000 (581) 614,729

32.86% 35.96% -9.60% 32.88%

5,214,385 593,671 1,132,738 144,318 66,000 7,151,112 9,635,673

4,010,209 495,900 879,529 95,288 74,291 5,555,217 7,425,049

1,204,176 97,771 253,209 49,030 (8,291) 1,595,895 2,210,624

30.03% 19.72% 28.79% 51.45% -11.16% 28.73% 29.77%

SHARE CAPITAL AND RESERVES Authorized capital 75,000,000 ordinary shares of Rs.10 each Issued, subscribed and paid-up capital Reserves Unappropriated profit Total Equity

750,000 551,987 2,102,052 107,990 2,762,029 12,397,702

750,000 551,987 1,942,052 165,152 2,659,191 10,084,240

0 0 160,000 (57,162) 102,838 2,313,462

0.00% 0.00% 8.24% -34.61% 3.87% 22.94%

Interpretation:

Gul ahmed incurred an increase in its total assets in 2008 by 22.94% in comparison to its assets in 2007. It experienced an increase in the almost all its assets during the fiscal year 2008. This may be an indication of any increase in its operations. On the other hand liabilities increased more than its assets did. They increased by 29.77% over the year 08 which were due to the loans that the company acquired during the year to finance its operations. The stockholders equity too increased in the same fiscal year by 22.94%. The company did not issue any additional capital thus, the increase took place sue to additional retained earning of the company. The company horizontal analysis for the year 2008 and 2007 gives a satisfactory picture. Any increase in assets is a good indicator if company performance while increase in liabilities does not give a poor indicator of performance. More retaining of earnings in the company can be seen as expansion of business activity.

Income Statement Analysis for 2009-2008 & 2008-2007 GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE INCOME STATMENTS FOR THE YEARS ENDED JUNE 30, 2009 AND 2008 2009 2008 11,650,143 9,951,072 1,699,071 563,336 203,258 14,959 781,553 917,518 16,797 934,315 732,477 201,838 99,000 102,838 Increase (decrease) Amount Percentage 19.37% 16.25% 37.62% 21.70% 122.77% 16.28% 47.88% 28.89% 56.44% 29.38% 41.85% -15.84% -9.44% -22.00% 2,256,322 1,617,067 639,255 122,230 249,533 2,436 374,199 265,056 9,480 274,536 306,513 (31,977) (9,349) (22,628)

Sales Cost of sales Gross profit Administrative expenses Distribution cost Other operating expenses

13,906,465 11,568,139 2,338,326 685,566 452,791 17,395 1,155,752

Operating profit Other operating income

1,182,574 26,277 1,208,851

Finance cost Profit for the year before taxation Provision for taxation Profit for the year after taxation y Interpretation:

1,038,990 169,861 89,651 80,210

For the year 2009 GATM witnessed an increase in sales and a decrease in its cost of sales by 19.37% and 16.25% in comparison with the last year 2008. Thus gross profit margin increased significantly to 36.72% compared to 19.6% in the year 2008. This indicates an improvement in the companys utilization of resources. Following the increase in the profit margin the operating expenses of the business increased significantly. An increase of 47.88% occurred which was largely due to the distribution expense. The consistent increase in the financial cost of the company prevented the net profit margin from raising and it decreased by 22% in the year 2009. An increase in the expenses of the business indicates poor management performance. Further action needs to be taken by the management of the company to improve its ongoing operations.

GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE INCOME STATMENTS FOR THE YEARS ENDED JUNE 30, 2008 AND 2007 2008 2007 Increase (decrease) Amount Sales Cost of sales Gross profit Administrative expenses Distribution cost Other operating expenses Operating profit Other operating income Finance cost Profit for the year before taxation Provision for taxation Profit for the year after taxation y Interpretation: 11,650,143 9,951,072 1,699,071 563,336 203,258 14,959 781,553 917,518 16,797 934,315 732,477 201,838 99,000 102,838 9,798,338 8,372,437 1,425,901 473,867 200,443 19,432 693,742 732,159 6,277 738,436 476,245 262,191 97,791 164,400 1,851,805 1,578,635 273,170 89,469 2,815 (4,473) 87,811 185,359 10,520 195,879 256,232 (60,353) 1,209 (61,562) Percentage 18.90% 18.86% 19.16% 18.88% 1.40% -23.02% 12.66% 25.32% 167.60% 26.53% 53.80% -23.02% 1.24% -37.45%

The income statement part of the horizontal analysis shows an increase in sales of 18.90% accompanied by an increase in cost of sales by nearly the same percentage. However, the gross profit margin for the year increased more than the cost of sales adding to the profitability of the business that is by 19.6%. Administrative expenses of the company increased significantly whereas operating expenses incurred a decrease of 23% nearly. Overall operating expenses increased 12.66%. Gul Ahmed experienced a significant increase in income for other operations which boosted its profitability figures. However, increase in the financial cost of the company of53.80% lead to a decrease in the net profit margin for the year 2008 to 37.45%. Further study into the expenses and additional comparisons and analysis needs to be made before making conclusions for the companys performance in the fiscal year 2008.

Vertical Analysis for Gul Ahmed Textile Mills

y Balance sheet Analysis for 2009-2008 & 2008-2007 GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE BALANCE SHEET JUNE 30, 2009 AND 2008 2009 Amount Percentage ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Long term investment Long term loans and advances Long term deposits Total Non-Current Assets CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts Loans and advances Deposits and prepayments Accrued interest Other receivables Tax refunds due from government Cash and bank balances Total Current Assets Total Assets LIABILITIES NON-CURRENT LIABILITIES Long term loans Deferred tax liability Deferred liability for staff gratuity Total Non-Current Liabilities CURRENT LIABILITIES Short term borrowings Current maturity of long term loans Trade and other payables Accrued interest 2008 Amount Percentage

6105833 28883 58450 2262 29034 6224462 447063 3886171 2532581 145431 33931 18598 142151 53679 99667 7359272 13583734

44.95% 0.21% 0.43% 0.02% 0.21% 45.82% 3.29% 28.61% 18.64% 1.07% 0.25% 0.14% 1.05% 0.40% 0.73% 54.18% 100.00%

5,827,621 28,215 58,450 3,505 15,599 5,933,390 485,957 2,915,550 2,490,258 217,115 40,633 0 69,269 176,496 69,034 6,464,312 12,397,702

47.01% 0.23% 0.47% 0.03% 0.13% 47.86% 0.00% 3.92% 23.52% 20.09% 1.75% 0.33% 0.00% 0.56% 1.42% 0.56% 52.14% 100.00%

2566604 149280 0 2715884

18.89% 1.10% 0.00% 19.99% 0.00% 39.25% 3.70% 12.78% 0.00%

2,354,317 124,773 5,471 2,484,561

18.99% 1.01% 0.04% 20.04% 0.00% 42.06% 4.79% 9.14% 1.16%

5332208 503087 1735918 0

5,214,385 593,671 1,132,738 144,318

Provision for taxation Total Current Liabilities Total Liabilities SHARE CAPITAL AND RESERVES Authorized capital 75,000,000 ordinary shares of Rs.10 each Issued, subscribed and paid-up capital 4 Reserves Unappropriated profit Total Equity

0 7749618 10465502

0.00% 57.05% 77.04%

66,000 7,151,112 9,635,673

0.53% 57.68% 77.72%

750000 634785 2400446 83001 3118232 13583734

0.00% 5.52% 4.67% 17.67% 0.61% 22.96%

750,000 551,987 2,102,052 107,990 2,762,029 12,397,702

0.00% 6.05% 4.45% 16.96% 0.87% 22.28%

Interpretation:

The business witnessed a change in its non-current assets from 47.86%to 45.81% in the year 2009 as a percentage of total assets. This change occurred as the company sold some of its plant, property and equipment which decreased from 47% to 44.95% during the fiscal year of 2009. Current assets increased in percentage of total assets from 52.14% in 2008 to 54.18% in 2009. This was nearly due to the decrease in fixed assets of the company with no momentous change in the companys short term assets. There was no change in the non-current and current liability figures in percentage to total liabilities and equity and the figures changed by a few points. The short term loans decreased and current long term loans of the company shrunk in volume too but the increase in trade payables hampered the fall in percentage for current liabilities to fall in line with the total liabilities. Thus current liabilities changed from 57.04% to 57.68%. The substantial change in the total equity portion of the balance sheet occurred in the paid up capital which increased from 4.45% to 4.67% indicating a sale of shares by the company. This in line lead to increase in the shares issued.

GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE BALANCE SHEET JUNE 30, 2008 AND 2007 2008 Amount Percentage ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Long term investment Long term loans and advances Long term deposits Total Non-Current Assets CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts Loans and advances Deposits and prepayments Accrued interest Other receivables Tax refunds due from government Cash and bank balances Total Current Assets Total Assets LIABILITIES NON-CURRENT LIABILITIES Long term loans Deferred tax liability Deferred liability for staff gratuity Total Non-Current Liabilities CURRENT LIABILITIES Short term borrowings Current maturity of long term loans Trade and other payables Accrued interest Provision for taxation Total Current Liabilities 2007 Amount Percentage

5,827,621 28,215 58,450 3,505 15,599 5,933,390 485,957 2,915,550 2,490,258 217,115 40,633 0 69,269 176,496 69,034 6,464,312 12,397,702

47.01% 0.23% 0.47% 0.03% 0.13% 47.86% 3.92% 23.52% 20.09% 1.75% 0.33% 0.00% 0.56% 1.42% 0.56% 52.14% 100.00%

4,702,826 30,435 58,450 4,943 10,579 4,807,233 387,278 2,254,144 2,164,671 171,747 19,050 0 63,999 188,273 27,845 5,277,007 10,084,240

46.64% 0.30% 0.58% 0.05% 0.10% 47.67% 3.84% 22.35% 21.47% 1.70% 0.19% 0.00% 0.63% 1.87% 0.28% 52.33% 100.00%

2,354,317 124,773 5,471 2,484,561

18.99% 1.01% 0.04% 20.04% 0.00% 42.06% 4.79% 9.14% 1.16% 0.53% 57.68%

1,772,007 91,773 6,052 1,869,832

17.57% 0.91% 0.06% 18.54% 0.00% 39.77% 4.92% 8.72% 0.94% 0.74% 55.09%

5,214,385 593,671 1,132,738 144,318 66,000 7,151,112

4,010,209 495,900 879,529 95,288 74,291 5,555,217

Total Liabilities SHARE CAPITAL AND RESERVES Authorized capital 75,000,000 ordinary shares of Rs.10 each Issued, subscribed and paid-up capital 4 Reserves Unappropriated profit Total Equity

9,635,673

77.72%

7,425,049

73.63%

750,000 551,987 2,102,052 107,990 2,762,029 12,397,702

0.00% 6.05% 4.45% 16.96% 0.87% 22.28%

750,000 551,987 1,942,052 165,152 2,659,191 10,084,240

0.00% 7.44% 5.47% 19.26% 1.64% 26.37%

Interpretation:

Gul Ahmed Textile Mills experienced no substantial change in part of operational activity during the years 2008 and 2007. Its currents assets increased to 52.14% from 52.33% in the year 2008 in comparison to 2007 as a percentage of total assets respectively which show no substantial change in operations over the year. Changes in current asset components remained fairly constant. Similar is the case with noncurrent assets, the figures changed from 46.6% in 2007 to 47% in 2008. In addition to this long term liabilities figures witnessed an increase in all its components as compared to those in 2007 which were close to 20% for non current liabilities as a percentage of total liabilities which is greater than the 18.54% in 2007. Current liabilities of the company increased due to the increase experienced in the short term borrowings and trade payables of the company. Current liabilities as a percentage of total liability and equity increased slightly in relative terms but in absolute terms this increase must be significant. Total equity similar to assets and liabilities did not incur any significant change. The major change occurred in reserves which decreased in percentage to total equity from 19.26% to 16.96% in 2008. No other component of total equity contributed to a significant change for the year.

Income Statement Analysis for 2009-2008 & 2008-2007 GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED JUNE 30, 2009 AND 2008 2009 Amount Percentage 2008 Amount Percentage 100.00% 11,650,143 9,951,072 1,699,071 563,336 203,258 14,959 781,553 917,518 16,797 934,315 732,477 201,838 99,000 102,838 85.42% 14.58% 4.84% 1.74% 0.13% 6.71% 7.88% 0.14% 8.02% 6.29% 1.73% 0.85% 0.88%

Sales Cost of sales Gross profit Administrative expenses Distribution cost Other operating expenses

13,906,465 11,568,139 2,338,326 685,566 452,791 17,395 1,155,752

100.00% 83.19% 16.81% 4.93% 3.26% 0.13% 8.31% 8.50% 0.19% 8.69% 7.47% 1.22% 0.64% 0.58%

Operating profit Other operating income

1,182,574 26,277 1,208,851

Finance cost Profit for the year before taxation Provision for taxation Profit for the year after taxation y Interpretation:

1,038,990 169,861 89,651 80,210

The vertical analysis of the income statement for GATM for the years 2009 and 2008 show a decrease in the cost of sales as a percentage of sales signifying efficient use of resources. The figure decreased by 85.42% in 2008 to 83.19% in the year 2009. This lead to an increase in gross profit margins from 14.58% in the previous fiscal year of 2008 to 16.81% in the 2009. The other substantial change in the percentage change was for the distribution cost which changed from 1.74% to 3.26% along with increase in the financial cost of the company from 6.29% to 7.47% in the current fiscal year. Hence, net profit margin decreased from 0.88% to 0.58%. the change in percentage figures might be seen as a small one but in absolute terms these changes may go in thousand of rupees therefore to conclude over the liquidity and profitability situation of the company further reading of the companys financial statement should be done.

GUL AHMED TEXTILE MILLS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED JUNE 30, 2008 AND 2007 2008 Amount Percentage 11,650,143 100.00% 9,951,072 85.42% 1,699,071 14.58% 563,336 4.84% 203,258 1.74% 14,959 0.13% 781,553 6.71% 917,518 7.88% 16,797 0.14% 934,315 8.02% 732,477 6.29% 201,838 1.73% 99,000 0.85% 102,838 0.88% 2007 Amount Percentage 9,798,338 100.00% 8,372,437 85.45% 1,425,901 14.55% 473,867 4.84% 200,443 2.05% 19,432 0.20% 693,742 7.08% 732,159 7.47% 6,277 0.06% 738,436 7.54% 476,245 4.86% 262,191 2.68% 97,791 1.00% 164,400 1.68%

Sales Cost of sales Gross profit Administrative expenses Distribution cost Other operating expenses Operating profit Other operating income Finance cost Profit for the year before taxation Provision for taxation Profit for the year after taxation y Interpretation:

The company witnessed no substantial percentage in its cost of sales as a percentage of net sales. The company figures fro the profit and loss statement remained fairly stable as a percentage to sales. The only thing that seemed to change by a percentage was the financial cost which increased as a percentage of sales from 4.86% to 6.29%. This decreased the profit margins of the company which decreased to 1.73% in 2008 from 2.68% in the year 2007. This indicates consistent performance of the company over the year 2008 when compared to 2007.

Ratio Analysis for Gul Ahmed Textile Mills

1. Working Capital= Current Assets Current Liabilities 2008 Rs. 000s 6,398,312 7,085,112 -686,800 2009 Rs. 000s 7,359,272 7,749,618 -390,346

Current Assets Current Liabilities Working Capital 2. Current ratio = Current Assets Current Liabilities

2008 Current Ratio 0.903

2009 0.950

3. Quick ratio= Quick Assets Current Liabilities 2008 2956172.000 0.417 2009 2992107.000 0.386

Quick Current Assets Quick Ratio 4. Accounts receivable turnover = Net Sales Average Accounts receivable

Net Sales Accounts Receivable: At Beginning of the Year AT End of the Year Total A/R Average A/R Accounts Receivable Turnover

2008 11725851.000 2164671.000 2490258.000 4654929.000 2327464.500 5.038

2009 13906465.000 2490258.000 2532581.000 5022839.000 2511419.500 5.537

5. Number of Days Sales in Receivables = Average Accounts receivable Average daily sales 2008 Average Accounts Receivable 2327464.500 Average Daily Sales 32125.619 Number of Days Sales in Receivables 72.449

2009 2511419.500 38099.904 65.917

6. Inventory Turnover = Cost of goods sold Average Inventory 2008 9951072.000 2254144.000 2915550.000 5169694.000 2584847.000 3.850 2009 11568139.000 2915550.000 3886171.000 6801721.000 3400860.500 3.402

Cost of Goods Sold Inventory: At Beginning of the Year At End of the Year Total Inventory Average Inventory Inventory Turnover

7. Number of days sales in inventory = Average Inventory Average daily cost of goods sold 2008 2584847.000 27263.211 94.811 2009 3400860.600 31693.532 107.305

Average Inventory Average Daily Cost of goods sold Number of Days Sales in Inventory

8. Ratio of fixed assets to long term liabilities = Total fixed assets Total long term liabilities 2008 5287621.000 2354317.000 2.246 2009 6105833.000 2566604.000 2.379

Net Fixed Assets Long-Term Liabilities Ratio of Fixed Assets to Long-Term Liabilities

9. Ratio of liabilities to shareholders equity = Total liabilities Total shareholders equity 2008 2484561.000 2762029.000 0.900 2009 2715884.000 3118232.000 0.871

Total Liabilities Total Shareholders Equity Ratio of Liabilities to Shareholders Equity

10. Number of times interest charged = EBIT Interest Expense 2008 201838.00 733839.00 935677.00 1.28 2009 169861.00 1038990.00 1208851.00 1.16

Income before Income Tax Interest Expense Amount available to meet interest charges Number of Times Interest Charges Earned

11. Ratio of net sales to assets = Net sales Average Total assets (excl. long term investments) 2008 11725851.00 10025790.00 12339252.00 22365042.00 11182521.00 1.05 2009 13906465.00 12339252.00 13525284.00 25864536.00 12932268.00 1.08

Net Sales Total Assets(excluding Long Term Investments): At the Beginning of the Year At the End of the Year Total Average Total Assets Ratio of Net Sales to Assets

12. Rate earned on total assets = Net income + Interest Expense Average total assets 2008 102,838 733,839 836,677 10,084,240 12,331,702 22,415,942 11207971 0.9175% 2009 80,210 1,038,990 1,119,200 12,331,702 13,583,734 25,915,436 12957718 0.6190%

Net Income Interest Expense Total Total Assets: At the Beginning of the Year At the End of The Year Total Average Total Assets Rate Earned on Total Assets

13. Rate earned in shareholders equity = Net income Average shareholders equity 2008 102,838 2,659,191 2,762,029 2009 80,210 2,762,029 3,118,232

Net Income Stockholder's Equity: At Beginning of the Year At End of the Year

Total Shareholder's Equity Average Shareholder's Equity Rate Earned on Shareholder's Equity

5,421,220 2710610 3.79%

5,880,261 2940130.5 2.73%

14. Rate earned on common shareholders equity = Net income Average common shareholders equity 2008 102,838 551,987 551,987 1,103,974 551987 18.63% 2009 80,210 551,987 634,785 1,186,772 593386 13.52%

Net Income Common Stockholder's Equity: At Beginning of the Year At End of the Year Total Common Shareholder's Equity Average Common Shareholder's Equity Rate earned on Common Shareholder's Equity

15. Earnings per share (EPS) = Net income common stock outstanding 2008 2009 102,838,000 80,210,000 (Number of Shares) 55,198,738 55,266,791 1.86 1.45

Net Income Shares of Common Stock Outstanding Earning per Share on Common Stock 16. Price earnings ratio (P/E) = EPS Market price per share

2008 Market Price per Share on Common Stock Earning per Share of Common Stock Price Earning Ratio 40 1.86304984 21.47

2009 38.84 1.451323635 26.76

17. Dividend per share of common stock = Dividends common stock outstanding 2008 2009 55,199,000 0 (Number of Shares) 55,198,738 55,266,791 1.00 0

Dividends Shares of Common Stock Outstanding Dividend per Share of Common Stock

18. Dividend yield = Dividend per common share market price per common share 2008 Dividend per Share of Common Stock Market Price per Share of Common Stock Dividend Yield 1.00 40.00 0.03 2009 0 38.84 0

Interpretation: Working Capital shows the ability of the firm to meet its current liabilities from its current assets. Gul Ahmad is having a negative working capital over 2008-09, as its current liabilities are exceeding its current assets but this excess of current liabilities has decreased to $390,346,000 in 2009.Current assets has increased more than the current liabilities as a result the current ratio has slightly improved from 0.90:1 to 0.95:1 but still its far away from the ideal current ratio (2:1). Quick ratio has worsened off because the proportion of inventories has increased in current assets. Quick ratio has decreased from 0.42:1 to 0.39:1, increasing its deviation from ideal quick ratio of 1:1. Gul Ahmad needs to devise new policies in order to overcome the liquidity crisis. Accounts Receivable Turnover has improved over years from 5.04 to 5.54 and Number of Days sales in receivables has also improved from 72 days in 2008 to 66 days in 2009, indicating that the firm is collecting its debts more efficiently, that would help improve the cash conversion cycle and to some extend overcome cash flow problems. Inventory turnover has decreased from 3.85 to 3.40 and Number of days sales in inventory has decreased by almost 12 days over the period, indicating that companys inventory is converting into sales with a lower pace. Ratio of fixed assets to long term liabilities has slightly decreased from 2.48 to 2.38, because of an increase in long term liabilities. Thus indicating that the margin of safety of the note and bondholders of the company has slightly decreased and the company will have to make an extra effort in acquiring external debt. Ratio of liabilities to stockholders equity has slightly improved from 0.90 to 0.87 because of increase in stockholders equity due to increase in common stock equity. Number of times interest charges earned has decreased slightly from 1.28 to 1.16 due to increase in interest expense incurred by the company. Interest expense has increased due to increase in external debt. Ratio of Net sales to total assets shows how effectively the firm is using its assets in generating sales. The ratio has improved from 1.05 to 1.08 due to increase in Net sales of the company. Rate earned on Total assets has decreased from 0.91% to 0.61%, because of a huge decrease in Net Income of the company over the years. Rate Earned on stockholders equity has also decreased from 3.79% to 2.72%, because of decrease in net income and increase in stockholders equity over the years. Thus both of these had caused the leverage to decrease from 2.88% to 2.11%. Rate earned on common stock holders equity has decreased by almost 5.1% due to increase in common stock equity and decrease in net income.

Earning per share on common stock has slightly decreased form 1.86Rs to 1.26Rs; this has been because of an increase in number of common stock outstanding and decrease in net income over 2008-09. Price-Earning ratio has improved from 21.5 to 26.8, indicating that the company in future would be doing well in future. This also indicates that the company is selling its common stock almost 5.3 times the amount of earning per share, more as before. In 2008 the company declared a dividend of Rs.1 per share but in 2009 it didnt declared any dividends. Thus the dividend per share in 2009 is zero. As the company didnt declared any dividend in 2009, the dividend yield decreased from 3% to zero percent, which is a disincentive for shareholders to invest in the company.