Financial Statement Analysis of Kohat Cement Company Limited

Financial Statement Analysis of Kohat
Cement Company Limited.
Presented By:
Mansoor
Abdul Qadeer
Ali Nawaz
M. Abdullah
Roll # E11
Roll # E44
Roll # E43
Roll # E37
INTRODUCTION TO KOHAT CEMENT

COMPANY
Kohat Cement Company Limited is a public

limited company incorporated in Pakistan
under the Companies Act, 1913 (incorporated
in 1980) and is an ISO 9001-2008 certified
company, listed on Karachi, Lahore and
Islamabad Stock exchanges. The Company is
engaged in the Manufacturing and sale of
cement. The registered office is situated at
Rawalpindi Road, Kohat, Pakistan. The plant
is located in Kohat about 60 kilometers from
Peshawar
2
VISION
Be the best in the eyes of all stakeholders
OUR MISSION IS TO PROVIDE
Our Customers with quality cement at competitive pricing
Our Shareholders with good returns and sustainable growth
Our Employees with care and career development opportunities
CORPORATE STRATEGY
Stay ahead of competition by adopting latest technology with
efficient and progressive teamwork in an environment of
good governance and professionalism
OTHER INFORMATION
Symbol of Company assigned by Stock
Exchanges KOHC
Free Float of the Shares of Company is 22,828,967
number of shares as on 30/06/2011.
Based on Annual Audited Accounts of 30.06.2011 &
share price on 30.06.2011
i. EPS = 0.49
ii. P/E ratio = 12.46
iii. Breakup value =16.33
PRODUCT
KOHAT
Cement
Company
Limited
engaged
in
manufacturing of Grey and White Cements.
GREY CEMENT
Kohat Ordinary Portland Cement is manufactured under
strict quality Control on state of the art plant with latest
technology
Available in 50 Kg paper or polypropylene bags (20 bags
to a metric ton).
Bulk cement can be delivered in Khyber Pakhtoonkhwa
areas.
PRODUCT
WHITE CEMENT
A state of the art plant with technology from BabcockGrenzebach Germany is installed at Kohat. Kohat Super
White Cement is the product of unique decolorizing
process, which prevents oxidation of iron in the clinker
and maximizes whiteness. High refractive index and
opacity of Kohat Super White Cement impart a brilliant
luster and smooth finish, even when mixed with pigments.
It also mixes easily with inorganic pigments which do not
fade in sunshine and alkaline attack. The comprehensive
strength of Kohat Super White Cement is at par or more
than the strength of Ordinary Portland Cement. Therefore
it can conveniently be used in place of grey cement in all
kinds of concrete and mortar mix.
6
CAPACITY
Line I
Line II
Line III
Total Capacity
Grey Cement
Tons/Anum
594,000
-
White Cement
Tons/Anum
148,500
2,211,000
2,805,000
148,500
Overview
In the year 2011 The economic slowdown coupled
with high inflation severely affected the cement
industry in the country. There was a negative growth
of 8% in the cement sector where by domestic
consumption of cement declined by 6.6% to 22 million
tons and Exports declined by 11.7% to 9.4 million
tons. And in the same year the Kohat Cement
Company managed the highest ever sales volume of
1,494,955 tons of grey cement during the current
financial year compared to 1,191,833 tons in the
previous year showing an increase of 25.4% in sales
volume.
8
Production and Sale Volumes
Financial results
10
Kohat Cement Company Limited

Balance Sheet
As on December 31st ,2006,2007,2008,2009,2010,2011
2006
2007
Assets:
2008
2009
2010
2011
(Amounts in Rupees)
Current Assets
Stores, Spares And Loose Tools
117,594,905
157,436,002
699,954,682
841,844,312
638,000,427
850,571,198
Stock In Trade
87,869,995
125,147,740
174,317,806
139,293,693
290,433,057
507,527,333
Trade Debts
21,642,079
21,381,453
15,341,081
17,792,165
20,010,133
12,567,298
Investments
Advances, Deposits, Repayments
& Other Receivables
6,600,000
36,156,000
98,589,010
120,072,947
406,020,470
612,373,810
430,703,292
506,114,913
Cash And Bank Balances
656,886,230
132,401,943
36,994,967
34,371,413
28,021,733
40,681,734
Total Current Assets
989,182,219
556,440,085
1,332,629,006 1,645,675,393 1,407,168,642 1,953,618,476
Non Current Assets

Property, Plant And Equipment
Operating Fixed Assets
Capital Work-In-Progress
Total Property, Plant And Equipment
Intangible Assets
1,095,105,981 1,023,528,041
984,287,376
941,431,201
4,234,731,837 5,307,288,753
6,352,852,944 6,368,030,446 7,140,840,908

584,965,206
861,363,339
2,079,393,357 5,258,259,878 6,248,719,954 6,937,818,150 7,229,393,785 7,140,840,908

-
2,689,912
2,587,653
2,355,963
Long Term Loans And Advances
2,565,634
45,731,201
38,142,100
33,313,347
28,832,286
23,706,054
Long Term Deposits
4,969,240
3,879,440
4,429,440
5,397,440
5,397,440
3,879,440
Total Non Current Assets
2,086,928,231 5,307,870,519 6,291,291,494 6,979,218,849 7,266,211,164 7,170,782,365
Total Assets
11
3,076,110,450 5,864,310,604 7,623,920,500 8,624,894,242 8,673,379,806 9,124,400,841
Equity And Liabilities:

Current Liabilities
Trade And Other Payables
Interest And Markup Accrued
215,249,060
1,973,686
178,982,959
12,260,606
Short Term Running Finances Secured
57,397,506
146,434,421
44,148,330
-
218,120,218
625,022,321
680,933,125
-
596,370,138
-
40,050,000
-
34,064,784
32,760,357
1,475,601
-
385,593,723
555,798,204
Current Portion Of Non-Current Liabilities

Long Term Finances
Long term finances secured
Liabilities Against Assets Subject To
Finance Lease
Provision For Taxation
Total Current Liabilities
244,465,133
50,719,344
554,458,612
312,801,576
734,312,487
504,895,065
973,628,527
433,182,170
1,096,066,075 1,398,198,921 1,406,895,249 1,363,678,773
2,017,748,474 2,946,392,234 3,242,472,939 2,810,539,470
Non Current Liabilities

Long Term Finances-Secured
Liabilities Against Assets Subject
To Finance Lease
Long Term Security Deposits
Deferred Liabilities
Derivative Financial Liabilities
237,500,000
Total Non Current Liabilities
406,577,034
2,358,098
5,451,100
161,267,836
-
2,703,308,354 2,981,785,715 2,989,387,373 3,049,320,000 3,536,870,000

106,808,320
158,739,583
-
3,686,712
135,837,621
155,732,831
-
2,040,128
154,209,127
101,197,782
160,120,433
155,923,337
62,669,613
202,024,046
163,656,829
323,097,976
187,420,429
2,968,856,257 3,277,042,879 3,406,954,843 3,469,936,996 4,211,045,234
Share Capital And Reserves

Authorized Capital 150,000,000 Ordinary Shares Of Rs. 10 Each
Issued, Subscribed & Paid-Up Capital
General Reserve
Accumulated Profit
925,312,540
389,397,905
969,229,248
1,017,843,800 1,170,520,370 1,287,572,410 1,287,572,410 1,287,572,410

396,306,773
235,805,586
34,078,866
51,278,714
129,409,009
925,505,570
922,803,191
949,895,889
622,118,747
685,834,718
Total Equities
2,283,939,693 2,339,656,143 2,329,129,147 2,271,547,165 1,960,969,871 2,102,816,137
Total Liabilities & Equities
3,076,110,450 5,864,310,604 7,623,920,500 8,624,894,242 8,673,379,806 9,124,400,841
12

Income Statement
For the year ended Dec 31st, 2006, 07, 08,09,10,11
2006
2007
2008
2009
(Amount in Rupees)
2010
2011
Sales Net
2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517
Cost of Goods Sold
1,127,575,661 1,210,466,340 1,288,570,903 2,591,021,469 3,341,872,196 5,158,302,614
Gross Profit
1,199,661,918
343,266,916
87,401,851
804,559,290
350,166,222
927,131,903
Selling & Distribution Expanses
15,533,247
18,701,815
24,878,363
111,490,601
56,245,683
41,199,134
Administrative And General Expanses
38,279,574
46,338,529
40,894,043
30,094,507
35,943,591
48,845,016
Total Operating Expanses
53,812,821
65,040,344
65,772,406
141,585,108
92,189,274
90,044,150
1,145,849,097
278,226,572
21,629,445
662,974,182
257,976,948
837,087,753
71,433,971
7,640,715
20,958,970
3,291,944
4,835,758
16,484,515
1,074,415,126
270,585,857
670,475
659,682,238
253,141,190
820,603,238
Other Operating Income
19,106,540
75,624,748
35,978,496
34,218,809
23,210,906
20,424,475
Income From Operations
1,093,521,666
346,210,605
36,648,971
693,901,047
276,352,096
841,027,713
54,097,507
18,370,018
48,935,320
549,902,638
658,589,707
715,246,906
Loss On Derivative Financial Instrument
122,813,948
Voluntary Separation Scheme
267,286,401
54,097,507
18,370,018
316,221,721
672,716,586
658,589,707
715,246,906
1,039,424,159
327,840,587
(279,572,750)
21,184,461
(382,237,611)
125,780,807
Taxation
249,557,198
79,472,319
(57,133,384)
(5,908,237)
(54,460,469)
62,064,836
Profit / (Loss) After Taxation

Earning / (Loss) Per Share - Basic &
Diluted
789,866,961
248,368,268
(222,439,366)
27,092,698
(327,777,142)
63,715,971
Operating Income
Other Operating Expanses
Sub total
Finance Cost
Total Other Expanses

Profit /(Loss) Before Taxation
13
9.06
2.12
(1.73)
0.21
(2.55)
0.49

Analysis of Balance Sheet
As on December 31st , 2006,07,08,09,10,11
2006
Assets:
Current Assets
Stores, Spares & Loose Tools
Stock In Trade
Trade Debts
Investments
Advances, Deposits,
Repayments & Other Receivables
Non Current Assets
3.82
2.86
0.70
0.21
2007
Vertical Analysis
2008
2009
2010
2011
%
%
%
%
2.68 %
2.13 %
0.36 %
- %
9.18 %
2.29 %
0.20 %
- %
9.76 %
1.62 %
0.21 %
- %
7.36 %
3.35 %
0.23 %
- %
9.32
5.56
0.14
0.40
3.20 %
21.35 %
32.16 %
2.05 %
2.26 %
9.49 %
5.33 %
0.49 %
17.48 %
7.10 %
0.40 %
19.08 %
4.97 %
0.32 %
16.22 %
5.55 %
0.45 %
21.41 %
35.60 %
17.45 %
12.35 %
73.66 %
73.42 %
78.26 %
Total Property Plant & Equipment
Intangible Assets
Long Term Deposits
32.00 %
67.60 %
- %
0.08 %
0.16 %
67.84 %
72.21 %
89.67 %
- %
0.78 %
0.07 %
90.51 %
69.61 %
81.96 %
- %
0.50 %
0.06 %
82.52 %
6.78 %
80.44 %
0.03 %
0.39 %
0.06 %
80.92 %
9.93 %
83.35 %
0.03 %
0.33 %
0.06 %
83.78 %
- %
78.26 %
0.03 %
0.26 %
0.04 %
78.59 %
Total Assets
100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %
14
%
%
%
%
Equity and Liabilities:

Current Liabilities
Short Term Running Finances Secured
Current Portion Of Non-Current Liabilities
Long Term Finances
Liabilities Against Assets
Subject To Finance Lease
7.00 %
0.06 %
1.87 %
3.05 %
0.21 %
2.50 %
3.21 %
0.67 %
14.38 %
6.43 %
3.63 %
16.21 %
8.47 %
5.82 %
16.22 %
10.67 %
4.75 %
14.95 %
1.44 %
- %
- %
3.72 %
- %
8.20 %
7.89 %
- %
6.88 %
- %
0.44 %
- %
1.11 %
1.06 %
12.54 %
- %
- %
9.48 %
0.02 %
- %
26.47 %
- %
- %
34.16 %
- %
- %
37.38 %
- %
- %
30.80 %
7.72 %
46.10 %
39.11 %
34.66 %
35.16 %
38.76 %
0.08 %
0.18 %
5.24 %
- %
13.22 %
- %
1.82 %
2.71 %
- %
50.63 %
0.05 %
1.78 %
2.04 %
- %
42.98 %
0.02 %
1.79 %
1.17 %
1.86 %
39.50 %
- %
1.80 %
0.72 %
2.33 %
40.01 %
- %
1.79 %
3.54 %
2.05 %
46.15 %
Authorized Capital 150,000,000 Ordinary Shares Of Rs. 10 Each

Issued, Subscribed & Paid-Up Capital
30.08 % 17.36 %
General Reserve
12.66 % 6.76 %
Accumulated Profit
31.51 % 15.78 %
Total Equity
74.25 % 39.90 %
15.35 %
3.09 %
12.10 %
30.55 %
14.93 %
0.40 %
11.01 %
26.34 %
14.85 %
0.59 %
7.17 %
22.61 %
14.11 %
1.42 %
7.52 %
23.05 %

Differed Liabilities
Share Capital & Reserves
15
100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %

Analysis of Income Statement
For the year ended Dec 31st, 2006, 7,8,9,10,11
Vertical Analysis
2008
2009
2006
2007
Sales net
Cost of goods sold
Gross profit
Selling & distribution expanses
Administrative and general expanses
Total Operating expanses
Operating income
Other operating expanses
Sub total
Other operating income
100.00%
48.45%
51.55%
0.67%
1.64%
2.31%
49.24%
3.07%
46.17%
0.82%
100.00%
77.91%
22.09%
1.20%
2.98%
4.19%
17.91%
0.49%
17.42%
4.87%
100.00%
93.65%
6.35%
1.81%
2.97%
4.78%
1.57%
1.52%
0.05%
2.61%
Profit from operations

Finance cost
46.99%
2.32%
22.28%
1.18%
Loss on derivative financial instrument

Voluntary separation scheme
0.00%
0.00%
Total Other expanses

Profit /(Loss) before taxation
Taxation
Profit / (loss) after taxation
Earning / (loss) per share - basic and diluted
2010
2011
100.00%
76.31%
23.69%
3.28%
0.89%
4.17%
19.52%
0.10%
19.43%
1.01%
100.00%
90.52%
9.48%
1.52%
0.97%
2.50%
6.99%
0.13%
6.86%
0.63%
100.00%
84.76%
15.24%
0.68%
0.80%
1.48%
13.76%
0.27%
13.48%
0.34%
2.66%
3.56%
20.44%
16.19%
7.49%
17.84%
13.82%
11.75%
0.00%
0.00%
0.00%
19.43%
3.62%
0.00%
0.00%
0.00%
0.00%
0.00%
2.32%
44.66%
10.72%
33.94%
1.18%
21.10%
5.11%
15.99%
22.98%
(20.32%)
(4.15%)
(16.17%)
19.81%
0.62%
(0.17%)
0.80%
17.84%
(10.35%)
(1.48%)
(8.88%)
11.75%
2.07%
1.02%
1.05%
9.06
2.12
(1.90)
0.21
(2.55)
16
0.49

Analysis of Balance Sheet
As on December 31st , 2006,07,08,09,10,11
Horizontal Analysis
2008
2009
2006
2007
2010
2011
Stores, Spares And Loose Tools
100.00 %
133.88 %
595.23 %
715.89 %
542.54 %
723.31 %
Stock In Trade
100.00 %
142.42 %
198.38 %
158.52 %
330.53 %
577.59 %
Trade Debts
100.00 %
98.80 %
70.89 %
82.21 %
92.46 %
58.07 %
Investments
Advances, Deposits,
Repayments & Other Receivables
100.00 %
- %
- %
- %
- %
547.82 %
100.00 %
121.79 %
411.83 %
621.14 %
436.87 %
513.36 %
100.00 %
20.16 %
5.63 %
5.23 %
4.27 %
6.19 %
100.00 %
56.25 %
134.72 %
166.37 %
142.26 %
197.50 %
100.00 %
93.46 %
85.97 %
580.11 %
581.50 %
652.07 %
100.00 %
430.23 %
539.20 %
59.43 %
87.51 %
- %
Total Property, Plant And Equipment

Intangible Assets
100.00 %
- %
252.87 %
- %
300.51 %
- %
333.65 %
2,689,912 %
347.67 %
2,587,653 %
343.41 %
2,355,963 %
100.00 % 1,782.45 %
1,486.65 %
1,298.45 %
1,123.79 %
923.98 %
Long Term Deposits
100.00 %
78.07 %
89.14 %
108.62 %
108.62 %
78.07 %
100.00 %
254.34 %
301.46 %
334.43 %
348.18 %
343.60 %
Total Assets
100.00 %
190.64 %
247.84 %
280.38 %
281.96 %
17
296.62 %
Assets:
Current Assets
Non Current Assets

Equity And Liabilities:

Current Liabilities
100.00 %
83.15 %
113.57 %
257.59 %
341.15 %
452.33 %
100.00 %
621.20 %
2,569.78 %
15,848.60 %
25,581.33 %
21,947.88 %
Short Term Running Finances Secured 100.00 %

Current Portion Of Non-Current
Liabilities
Long Term Finances
100.00 %
255.12 %
1,909.61 %
2,435.99 %
2,451.14 %
2,375.85 %
- %
- %
1,542.38 %
1,350.83 %
90.72 %
- %
- %
- %

- %
218,120,218 625,022,321
100.00 %
- %
4.33 %
- %
- %
- %
100.00 %
- %
- %
- %
- %
- %
100.00 %
144.14 %
523.28 %
764.12 %
840.90 %
728.89 %
1,255.49 %
1,258.69 %
1,283.92 %
1,489.21 %
156.34 %
86.52 %
- %
- %
2,491.93 %
2,828.95 %
2,860.40 %
3,002.27 %
62.75 %
38.86 %
200.35 %

100.00 % 1,138.24 %
100.00 % 1,959.39 %
Differed Liabilities
100.00 %
98.43 %
96.57 %
- %
- %
- %
100.00 %
730.21 %
806.01 %
837.96 %
853.45 %
1,035.73 %
Share Capital And Reserves

Authorized Capital 150,000,000 OrdinaryShares Of Rs. 10 Each
Issued, Subscribed And Paid-Up
Capital
100.00 % 101.77 %
126.50 %
139.15 %
139.15 %
139.15 %
General Reserve
100.00 %
95.49 %
60.56 %
8.75 %
13.17 %
33.23 %
Accumulated Profit
100.00 %
102.44 %
95.21 %
98.01 %
64.19 %
70.76 %
Total Equities
100.00 %
110.00 %
101.98 %
99.46 %
85.86 %
92.07 %
100.00 %
190.64 %
247.84 %
280.38 %
281.96 %
18
296.62 %

100.00 %
- %
160,120,433% 202,024,046% 187,420,429%

Analysis of Income Statement
For the year ended Dec 31st, 2006, 7,8,9,10,11
Horizontal Analysis
2006
2007
2008
2009
2010
2011
Sales net
100.00%
66.76%
59.12%
145.91%
158.64%
261.49%
Cost of goods sold
100.00%
107.35%
114.28%
229.79%
296.38%
457.47%
Gross profit
100.00%
28.61%
7.29%
67.07%
29.19%
77.28%
Selling & distribution expanses
100.00%
120.40%
160.16%
717.75%
362.10%
265.23%
Administrative and general expanses
100.00%
121.05%
106.83%
78.62%
93.90%
127.60%
Total Operating expanses
100.00%
120.86%
122.22%
263.11%
171.31%
167.33%
Operating income
100.00%
24.28%
1.89%
57.86%
22.51%
73.05%
Other operating expanses
100.00%
10.70%
29.34%
4.61%
6.77%
23.08%
Sub total
100.00%
25.18%
0.06%
61.40%
23.56%
76.38%
Other operating income
100.00%
395.81%
188.30%
179.09%
121.48%
106.90%
Profit from operations
100.00%
31.66%
3.35%
63.46%
25.27%
76.91%
Finance cost
100.00%
33.96%
90.46%
1,016.50%
1,217.41%
1,322.14%
Loss on derivative financial instrument
100.00%
100.00%
100.00%
1,228,139 %
100.00%
100.00%
Voluntary separation scheme
100.00%
100.00%
2,672,864 %
100.00%
100.00%
100.00%
Total Other expanses
100.00%
33.96%
584.54%
1,243.53%
1,217.41%
1,322.14%
Profit /(Loss) before taxation
100.00%
31.54%
(26.90%)
2.04%
(36.77%)
12.10%
Taxation
100.00%
31.85%
(22.89%)
(2.37%)
(21.82%)
24.87%
Profit / (loss) after taxation
100.00%
31.44%
(28.16%)
3.43%
(41.50%)
9.06
2.12
(1.90)
0.21
(2.55)
8.07%
19
0.49
Earning / (loss) per share - basic and diluted
RATIO ANALYSIS
Financial ratios are usually expressed as a percentage or as times per
period. There are five main types of ratios:
Liquidity ratios
Activity test ratios
Solvency Ratio
Profitability Ratio
Investor specific ratio
The Time-series analysis is method of comparing company present
performance with their past performances. Here we analyze
KOHAT Cement Company Limited performance by comparing its
present ratios with past 6 years.
1. Liquidity Ratio:
The liquidity of firm is measured by its ability to satisfy its short-term
obligations. Liquidity refers to solvency of firms overall financial
position-the ease with which it can pay its bills. They may include
ratios that measure the efficiency of the use of current assets. We
measure liquidity of KOHAT Cement Company Limited by
calculating following ratios:
20
a) Current ratio:
Current ratio is the measure of short term debt paying ability of the firm calculated as:
Rule of thumb is 2:1
Current ratio = Current assets
Current liabilities
Year
2006
2007
2008
2009
2010
2011
Total Current
Assets
942,182,219
556,440,085
1,332,629,006
1,645,675,393
1,407,168,642
1,953,618,476
Total Current
Liabilities
385,593,723
555,798,204
2,017,748,474
2,946,392,234
3,242,472,939
2,810,539,470
Current ratio
2.44:1
1.00:1
0.66:1
0.56:1
0.43:1
0.70:1
Ratio
Current Ratio
3
2.5
2
1.5
1
0.5
0
2.44
2006
2007
0.66
0.56
2008
2009
0.43
2010
0.7
2011
21
b) Quick ratio / acid test ratio:

At a time it is desirable to access a more immediate position than that indicated by the current ratio.
The acid test or quick ratio relates to most liquid assets to current liabilities. Measures assets that
are quickly converted into cash and they are compared with current liabilities. Calculated as:
Quick ratio = current asset inventory
Current liabilities
Rule of thumb is 1:1
Year
2006
2007
2008
2009
2010
2011
Total Current
Assets
942,182,219
556,440,085
1,332,629,006
1,645,675,393
1,407,168,642
1,953,618,476
Total Current
Liabilities
385,593,723
555,798,204
2,017,748,474
2,946,392,234
3,242,472,939
2,810,539,470
Stock in trade
87,869,995
125,147,740
174,317,806
139,293,693
290,433,057
507,527,333
Acid test ratio
2.22:1
0.78:1
0.57 :1
0.51 :1
0.34:1
0.51:1
Acid Test Ratio
2.5
2.22
Ratio
2
1.5
0.78
0.57
0.51
0.5
0.34
0.51
2006
2007
2008
2009
2010
2011
22
c) Cash ratio
Sometimes the analysts need to view the ability of a firm from an extremely conservative point
of view. For example the company may have pledged and its inventory or the analyst suspects
severe liquidity problem with inventory & receivables. The best indicator to the companys
short-run liquidity may be the cash ratio. Calculated as:
Cash ratio = Cash + marketable securities
Current liabilities
Year
2006
2007
Cash & Bank

Balances
656,886,230 132,401,943
Investments
6,600,000
Total Current
Liabilities
385,593,723 555,798,204
172.07 %
Ratios
Cash ratio
200 %
180 %
160 %
140 %
120 %
100 %
80 %
60 %
40 %
20 %
-%
23.82 %
2008
2009
2010
2011
36,994,967
34,371,413
28,021,733
40,681,734
36,156,000
2,017,748,474
2,946,392,234
3,242,472,939
2,810,539,470
1.83 %
1.17 %
Cash Ratio
0.86 %
2.73 %
172.07 %
23.82 %
2006
2007
1.83 %
1.17 %
0.86 %
2.73 %
2008
2009
2010
2011
Year
23
d) Networking capital :
The working capital of a business is an indication of the short-run solvency of
the business. Reveal the portion of current assets that have been financed by
the long term liabilities calculated as:
Networking capital= Current assets current liabilities
Year
2006
2007
2008
2009
2010
2011
Total
Current Assets
942,182,219
556,440,085
1,332,629,006
1,645,675,393
1,407,168,642
1,953,618,476
Total
Current Liabilities
385,593,723
555,798,204
2,017,748,474
2,946,392,234
3,242,472,939
2,810,539,470
Networking capital
556,588,496
641,881
(685,119,468)
(1,300,716,841)
1,835,304,297
(856,920,995)
24
e) Defensive interval:
For how long cash resources are sufficient for operating expenditure without taking financial support
calculated as:
Defensive interval = Cash + Marketable Securities + Accounts Receivables
Projected expenditures x 365 days
Projected expenditures = Cost of Goods Sold + Other Operating Expanses except depreciation
Year
2006
2007
2008
2009
2010
2011
1,127,575,661
1,210,466,340
1,288,570,903
2,591,021,469
3,341,872,196
5,158,302,614
71,433,971
7,640,715
20,958,970
3,291,944
4,835,758
16,484,515
53,812,821
65,040,344
65,772,406
141,585,108
92,189,274
90,044,150
930,133
1,127,077
1,069,070
1,922,723
2,868,981
2,608,756
1,251,892,320
1,282,020,322
1,374,233,209
2,733,975,798
3,436,028,247
5,262,222,523
656,886,230
132,401,943
36,994,967
34,371,413
28,021,733
40,681,734
Investments
6,600,000
36,156,000
Trade Debts
Defensive
Interval days
21,642,079
21,381,453
15,341,081
17,792,165
20,010,133
12,567,298
197
43
14
Cost of Goods
Sold
Other Operating
Expanses
Total operating
Expanses
Depreciation
Expanse
Projected
expenditures
Cash & Bank
Balances
Defensive Interval
250
197
Time In Days
200
150
100
43
50
14
2008
2009
2010
2011
0
2006
2007
25
f) Length of operation cycle:

Operating cycle represents the period of time elapsing between the acquisition of goods and the final
cash realization resulting from sales and subsequent collection calculated as:
Length of operation cycle = average # of days account
average # of days
Receivables outstanding
+
inventory in stock
Year
2006
2007
2008
2009
2010
2011
Average # of days accounts

Receivable outstanding
Average # of days
inventory in stock
18
32
42
22
23
28
Length of Operating
cycle days
22
37
47
24
25
29
Time in Days
Length of Operating Cycle

50
45
40
35
30
25
20
15
10
5
0
47
37
22
2006
2007
2008
Year
24
25
2009
2010
29
2011
26
g) Length of cash cycle:

Cash cycle is the period of time for which firm have cash resources to run their
operations. Calculated as:
Length of cash cycle = operating cycle average # of days account payables outstanding
Year
2006 2007 2008 2009 2010 2011

payable outstanding
28
46
55
42
63
50
Operating cycle
22
37
47
24
25
29
Length of Cash cycle days
(6)
(9)
(8)
(18)
(38)
(21)
Time in Days
Length of Cash Cycle
0
-5
-10
-15
-20
-25
-30
-35
-40
2006
-6
2007
2008
-9
-8
2009
2010
-18
-21
-38
Year
2011
27
2. Activity Ratio
Activity ratio is the measure of the managements efficiency in utilizing the assets
of the organization. Activity ratios measure the sped with which various accounts
are converted into sales or cash inflows or outflows.
a) Inventory turnover ratio:
Inventory turnover indicates the liquidity of the inventory. Calculated as:
Inventory turnover ratio = Cost of goods sold
Average inventory
Year
Stock In
Trade
22,336,658
Average Stock in trade
2006
2007
2008
2009
2010
2011
87,869,995
125,147,740
174,317,806
139,293,693
290,433,057
507,527,333
55,103,327
106,508,868
149,732,773
156,805,750 214,863,375
398,980,195
Cost of Goods Sold
1,127,575,661
1,210,466,340
1,288,570,903
2,591,021,469
3,341,872,196
5,158,302,614
Inventory turnover
20.46
11.36
8.61
16.52
15.55
12.93
Inventory Turnover Ratio
Times a year
25
20
20
17
15
11
10
16
13
5
0
2006
2007
2008
2009
2010
2011
28
Year
b) Average # of days inventory in stock:
The inventory turnover figures are also can expressed in number of days instead of times
per year. This is comparable to the computation that expressed accounts receivables
turn over in days calculate as:
Average # of days inventory in stock =
Year
360 days
Inventory Turnover
2006 2007 2008 2009 2010 2011
Inventory turnover
Average # of days inventory in
stock
20.46
11.36
8.61
16.52
15.55
12.93
18
32
42
22
23
28
Time in Days
Average No of Days Inventory In Stock

45
40
35
30
25
20
15
10
5
-
42
32
18
2006
2007
2008
Year
22
23
2009
2010
28
2011
29
c) Accounts receivable turnover:

Account receivable turnover indicates the liquidity of the receivables. Calculated as:
Accounts receivable turnover = Net sales
Average accounts receivable
Year
2005
Sales Net
Trade
Debts
23,799,056
Average
Trade debts
Accounts
Receivable turnover
2006
2007
2008
2009
2010
2011
2,327,237,579
1,553,733,256
1,375,972,754
3,395,580,759
3,692,038,418
6,085,434,517
21,642,079
21,381,453
15,341,081
17,792,165
20,010,133
12,567,298
22,720,568
21,511,766
18,361,267
16,566,623
18,901,149
16,288,716
102.43
72.23
74.94
204.97
195.33
373.60
Times a year
Accounts Receivable Turnover

400
350
300
250
200
150
100
50
0
374
102
2006
72
75
2007
2008
205
195
2009
2010
2011
30
Year
d) Average number of days accounts receivables outstanding:

The accounts receivable turn over can be expressed in term of days instead of times per
year. Turnover in number of days can also give a comparison with number of days
sales in the ending receivables.
Average # of days account receivables outstanding = 360
Accounts receivable turnover
Year
2006 2007 2008 2009 2010 2011
Accounts receivable turnover

receivable outstanding
102.43
72.23
74.94
204.97
195.33
373.60
Time in Days
Average No of Days Account Receivable Outstanding
6
5
4
3
2
1
0
4
2
2
1
2006
2007
2008
2009
Year
2010
2011
31
e) Account payable turn over:

Number of time accounts payables comes due within a year.
Account payable turn over = Net sale
Year
2005
Sales Net
Average accounts payables

2006
2007
2008
2009
2010
2011
2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517
Trade &
Other
Payables
149,394,418
215,249,060
178,982,959
244,465,133
554,458,612
734,312,487
973,628,527
Average
account payables
182,321,739
197,116,010
211,724,046
399,461,873
644,385,550
853,970,507
Accounts
payable turnover
12.76
7.88
6.50
8.50
5.73
7.13
Times a year
Accounts Payable Turnover

14
12
10
8
6
4
2
0
12.76
7.88
2006
2007
8.5
6.5
5.73
2008
2009
Year
2010
7.13
2011
32
f) Average # of days accounts payables outstanding:

The number of days firm can retain accounts payables.
Average # of days accounts payables outstanding = 360
Account payable turn over
Year
2006 2007 2008 2009 2010 2011
Accounts payable turnover
12.76
7.88
6.50
8.50
5.73
7.13

payable outstanding
28
46
55
42
63
50
Time in Days
Average No of Days Account Payable Outstanding

70
60
50
40
30
20
10
-
63
55
50
46
42
28
2006
2007
2008
2009
2010
2011
Year
33
g) Fix asset turnover ratio:

The ratio measures the firms ability to make productive use of is property, plant,
& equipment by generating sales dollars. Since construction in progresses does
not contribute to current sales it should be excluded from net fixed assets calculated as:
Year
Operating
Fixed
Assets
Fix asset turn over = Net sales

Average fix assets
2006
2007
2008
2009
2005
581,007,037
2010
2011
1,095,105,981
1,023,528,041
941,431,201
6,352,852,944
6,368,030,446
7,140,840,908
2,327,237,579
1,553,733,256
1,375,972,754
3,395,580,759
3,692,038,418
6,085,434,517
Average fix assets
838,056,509
1,059,317,011
982,479,621
3,647,142,073
6,360,441,695
6,754,435,677
Fix asset turn over
2.78
1.47
1.40
0.93
0.58
0.90
Times
Sales Net
3
2.5
2
1.5
1
0.5
0
Fix Asset Turnover
2.78
1.47
1.4
0.93
2006
2007
2008
2009
Year
0.58
2010
0.9
2011
34
h) Total asset turn over ratio:

Return on assets measures the firms ability to utilize its assets to create profits by
comparing profits with the assets that generate the profits. Calculated as:
Total asset turnover = Net sales
Average total asset
Year
Total
Assets
2006
2008
2009
2010
2011
7,623,920,500
8,624,894,242
8,673,379,806
9,124,400,841
2,327,237,579 1,553,733,256
1,375,972,754
3,395,580,759
3,692,038,418
6,085,434,517
2,363,998,939 4,470,210,527
6,888,648,730
8,124,407,371
8,649,137,024
8,898,890,324
0.19
0.42
0.43
0.68
2005
2007
1,651,887,427 3,076,110,450 5,864,310,604
Net sales
Average
total assets
Total
asset turnover
0.98
0.34
Times
Total Asset Turnover

1.2
1
0.8
0.6
0.4
0.2
0
0.98
0.68
0.34
0.42
0.43
2009
2010
0.19
2006
2007
2008
2011
35
Year
3. Solvency Ratio
Is the ability to pay the debts mostly long term as indicated by the income statement and the
others considered the firms ability to carry debts as indicated by the balance sheet. Creditors
and mostly banks and lending institutions are interested because they have to ascertain
about to recoup their finance .
a) Debt to equity ratio:
Debt to equity is a computation that determines the entitys long run debt paying ability
This computation compares the total debts with the total share holders equity. The debt to
equity ratio also helps to determine how well creditors are protected In case of insolvency.
Debt to equity ratio = Total debts x 100

Total stock holders equity
Year
Total Current
Liabilities
Total Non Current
Liabilities
Total Equities
2006
2007
2008
2009
2010
2011
385,593,723
555,798,204
2,017,748,474
2,946,392,234
3,242,472,939
2,810,539,470
406,577,034
2,968,856,257
3,277,042,879
3,406,954,843
3,469,936,996
4,211,045,234
2,283,939,693
2,339,656,143
2,329,129,147
2,271,547,165
1,960,969,871
2,102,816,137
34.68 %
150.64 %
227.33 %
279.69 %
342.30 %
333.91 %
Debt to equity ratio
%age
Debt To Equity Ratio

400 %
350 %
300 %
250 %
200 %
150 %
100 %
50 %
0%
342 %
334 %
2010
2011
280 %
227 %
151 %
35 %
2006
2007
2008
2009
Year
36
b) Debt to capital ratio:
Companies can finance their operations through either debt or equity. The debt-to-capital ratio gives users an
idea of a company's financial structure, or how it is financing its operations, along with some insight into
its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its
equity. This tells investors whether a company is more prone to using debt financing or equity financing.
A company with high debt-to-capital ratios, compared to a general or industry average, may show weak
financial strength because the cost of these debts may weigh on the company and increase its default
risk... .
Debt to Capital Ratio = Total Debts X 100
Total Capital (long term debts + stock holders equity)
Year
Total Current
Liabilities
Total Non Current
Liabilities
Total Equities
Debt to capital ratio
2006
2007
2008
2009
2010
2011
385,593,723
555,798,204
2,017,748,474
2,946,392,234
3,242,472,939
2,810,539,470
406,577,034
2,968,856,257
3,277,042,879
3,406,954,843
3,469,936,996
4,211,045,234
2,283,939,693
2,339,656,143
2,329,129,147
2,271,547,165
1,960,969,871
2,102,816,137
29.44 %
66.40 %
94.45 %
111.88 %
123.60 %
111.21 %
%age
Debt To Equity Ratio

140 %
120 %
100 %
80 %
60 %
40 %
20 %
0%
112 %
124 %
111 %
94 %
66 %
29 %
2006
2007
2008
2009
2010
2011
37
Time Interest Earn Ratio:

Indicate a firms long term debt paying ability from the income statement view. If the time interest
earn is adequate little danger exist that the firm will not be able to meet its interest obligation.
Time Interest Earn Ratio = EBIT X 100
Interest Expanse
Year
2006
Profit /(Loss)
Before Taxation
Finance Cost
EBIT
2007
2008
2009
2010
2011
1,039,424,159 327,840,587 (279,572,750) 21,184,461 (382,237,611) 125,780,807

54,097,507
18,370,018
48,935,320
549,902,638 658,589,707 715,246,906
1,093,521,666 346,210,605 (230,637,430) 571,087,099 276,352,096 841,027,713
Time interest earn
20.21
18.85
(4.71)
1.04
0.42
1.18
Times a year
Time Interest Earn Ratio

25
20
15
10
5
5 10 -
20.21
2006
18.85
2007
2008
5.00 -
1.04
0.42
1.18
2009
2010
2011
38
4. Profitability Ratio
Profitability ratio is a barometer of organizations profit & loss. Using this ratio they
quantify which would be the best mode of financing that would yield the higher
profitability. Profitability is the ability of a business to earn profit over a period of time.
There are various measure of profitability which indicates the efficiency of operations
and generating of revenues and profits. They include following
a) Gross Margin:
It determines the managements expertise in managing the cost of goods sold. If cost of
Goods sold is higher the gross margin would be lower or vice versa.
Gross margin = Gross profit x 100
Net sales
Year
2006
2007
2008
2009
2010
2011
Gross Profit
1,199,661,918
343,266,916
87,401,851
804,559,290
357,020,526
927,131,903
Sales Net
2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517
Gross margin
52 %
22 %
6%
24 %
10 %
15 %
Gross Margine Ratio
60 %
52 %
50 %
40 %
30 %
24 %
22 %
20 %
10 %
6%
10 %
15 %
-%
2006
2007
2008
Year
2009
2010
2011
39
b) Operating Income to Sale:

Measure of firms income they are generating from operations. Recognize the effect
and the magnitude of operating expanses.
Operating income margin = Operating income x 100
Net sales
Year
2006
Income From
Operations
2007
1,093,521,666 346,210,605
2008
2009
2010
2011
36,648,971
693,901,047
276,352,096
841,027,713
Sales net
2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517
Operating
income To sale
46.99 %
22.28 %
2.66 %
20.44 %
7.49 %
13.82 %
Operating Income Margine

50 %
45 %
40 %
35 %
30 %
25 %
20 %
15 %
10 %
5%
-%
47 %
22 %
20 %
14 %
7%
3%
2006
2007
2008
2009
Year
2010
2011
40
c) Margin before Interest & Taxes:

Margin before Interest & Taxes = EBIT x 100
Net sales
Year
2006
EBIT
1,093,521,666
Sales Net
Margin before
interest & taxes
2007
346,210,605
2008
(230,637,430)
2009
2010
2011
571,087,099
283,206,400
841,027,713
2,327,237,579
1,553,733,256
1,375,972,754
3,395,580,759
3,692,038,418
6,085,434,517
46.99 %
22.28 %
( 16.76 ) %
16.82 %
7.67 %
13.82 %
%ages
Margine before Interest and Taxes

60 %
50 %
40 %
30 %
20 %
10 %
-%
10 %20 %-
47 %
22 %
17 %
8%
2006
2007
2008
2009
2010
14 %
2011
17 %Year
41
d) Margin before Taxes:

Margin before Taxes = EBT x 100
Net sales
Year
2006
Profit /(Loss)
Before
Taxation
1,039,424,159
Sales Net
2007
2008
2009
2010
2011
327,840,587
(279,572,750)
21,184,461
(382,237,611)
125,780,807
2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517
Margin before
taxes
44.66 %
21.10 %
(20.32 %)
0.62 %
(10.35 %)
2.07 %
%ages
Margine before Taxes

50 %
40 %
30 %
20 %
10 %
-%
10 %20 %30 %-
45 %
21 %
2%
1%
2006
2007
2008
2009
20 %Year
2010
10 %-
2011
42
e) Net Profit Margin, Return on sale ratio:

Commonly used profit measure is return on sales, often termed net profit margin.
This ratio gives measure of net income dollars generated by each dollar of sales.
Net Profit Margin, Return on sale ratio = Net income x 100
Net sales
Year
Net income
Sales Net
Net profit margin
2006
2007
2008
2009
2010
2011
789,866,961
248,368,268
(222,439,366)
27,092,698
(327,777,142)
63,715,971
2,327,237,579
1,553,733,256
1,375,972,754
3,395,580,759
3,692,038,418
6,085,434,517
33.94 %
15.99 %
(16.17 %)
0.80 %
(8.88 %)
1.05 %
Net Profit Margine

40 %
33.94 %
%ages
30 %
15.99 %
20 %
10 %
1.05 %
0.80 %
-%
10 %20 %-
2006
2007
2008
2009
16.17 %Year
2010
8.88 %-
2011
43
f) Return on Asset:
The rate of return on total assets indicates the degree of efficiency with which
management has used the assets of the enterprise during an accounting period.
Calculated as:
Return on assets = EBIT x 100
Average total assets
Year
2006
2005
EBIT
Total
assets
Average
total assets
Return
on assets
2007
1,093,521,666
1,651,887,427
346,210,605
2008
(230,637,430)
2009
571,087,099
2010
283,206,400
2011
841,027,713
3,076,110,450 5,864,310,604 7,623,920,500 8,624,894,242 8,673,379,806 9,124,400,841

2,363,998,939 4,470,210,527 6,744,115,552 8,124,407,371 8,649,137,024 8,898,890,324
46.26 %
7.74 %
(3.42 %)
7.03 %
3.27 %
9.45 %
Return on Assets
50 %
46.26 %
%ages
40 %
30 %
20 %
7.74 %
10 %
7.03 %
3.27 %
9.45 %
2010
2011
-%
10 %-
2006
2007
2008
2009
3.42 %Year
44
g) Return on total asset:

Income is earned by using the assets of a business productively. The more efficient the
production, the more profitable the business. This is an important ratio for all users of
financial statements. Calculated as:
Return on total asset = Net income
Avg. total assets
Year
2006
2007
2008
2009
2010
2011
789,866,961
248,368,268
(222,439,366)
27,092,698
(327,777,142)
63,715,971
2005
Net income
Total
assets
1,651,887,427
Average
total assets
3,076,110,450 5,864,310,604 7,623,920,500 8,624,894,242 8,673,379,806 9,124,400,841

2,363,998,939 4,470,210,527 6,744,115,552 8,124,407,371 8,649,137,024 8,898,890,324
Return
On total assets
33.41 %
5.56 %
3.30 %-
0.33 %
3.79 %-
0.72 %
%ages
Return on total Assets

35 %
30 %
25 %
20 %
15 %
10 %
5%
-%
5 %10 %-
33.00 %
6.00 %
0.72 %
0.33 %
2006
2007
2008
-3.3
2009
2010
-3.79
2011
45
h) Return on total capital:

This ratio measures the ability of the firm to reward those who provide long term funds
and to attract to providers of future funds. Calculated as below for reporting purpose:
Return on total capital = EBIT x 100
Total capital
Year
2006
EBIT
1,093,521,666
Total Equities
Total Non
Current
Liabilities
Return on
total capital
2007
2008
346,210,605
(230,637,430)
2009
2010
2011
571,087,099
283,206,400
841,027,713
2,283,939,693
2,339,656,143
2,329,129,147
2,271,547,165
1,960,969,871
2,102,816,137
406,577,034
2,968,856,257
3,277,042,879
3,406,954,843
3,469,936,996
4,211,045,234
40.64 %
6.52 %
(4.11 %)
10.06 %
5.21 %
13.32 %
%ages
Return on Capital
45 %
40 %
35 %
30 %
25 %
20 %
15 %
10 %
5%
-%
5 %10 %-
40.64 %
6.52 %
2006
2007
2008
4.11 %-Year
10.06 %
5.21 %
13.32 %
2009
2010
2011
46
i) Return on equity:
The return on total equity measures the return to both common and proffered
shareholders. Compute as follows:
Return on equity = EBT x 100
Average stock holders equity
Year
2005
Profit /(Loss)
Before Taxation
Stockholders
equity
1,081,732,345
Average stockholders equity
%ages
Return on equity
70 %
60 %
50 %
40 %
30 %
20 %
10 %
-%
10 %20 %30 %-
2006
2007
2008
2009
2010
2011
1,039,424,159
327,840,587
(279,572,750)
21,184,461
(382,237,611)
125,780,807
2,283,939,693
2,339,656,143
2,329,129,147
2,271,547,165
1,960,969,871
2,102,816,137
1,682,836,019
2,311,797,918
2,334,392,645
2,300,338,156
2,116,258,518
2,031,893,004
61.77 %
14.18 %
(11.98 %)
0.92 %
(18.06 %)
6.19 %
Return on Equity
61.77 %
14.18 %
6.19 %
0.92 %
2006
2007
2008
2009
11.98 %-
2010
2011
19.06 %-
47
Year
j) Return on equity:
Drill down return and fetch decisive return on equity it is for internal use for management
Decision making. So that management can effectively scrutinize their decision of
investment by visualizing more factual consequences.
Return on equity = Net income x 100
Average stock holders equity
Year
2006
Net income
Average stockholders equity
Return on equity
789,866,961
2007
2008
248,368,268 (222,439,366)
2009
2010
2011
27,092,698
(327,777,142)
63,715,971
1,682,836,019 2,311,797,918 2,334,392,645 2,300,338,156 2,116,258,518 2,031,893,004

46.94 %
10.74 %
(9.53 %)
Return on Equity
1.18 %
(15.49 %)
3.14 %
60 %
50 %
46.94 %
%ages
40 %
30 %
20 %
10.74 %
10 %
3.14 %
1.18 %
-%
2006
2007
2008
2009
2010
2011
10 %20 %-
9.53 %-
48
Year
15.49 %-
k) Return on common stock equity:

This ratio measures the return to the common stock holder, the residual owners.
The owner is retrieving by doing business.
Return on common stock equity = Net income preferred stock dividend x 100
Average common stockholders equity
Year
2005
Net income
Issued,
Subscribed
& Paid-Up
Capital
493,500,020
Average common
stock holders equity
Return on common
Stock holders equity
2006
2007
2008
2009
2010
2011
789,866,961
248,368,268
(222,439,366)
27,092,698
(327,777,142)
63,715,971
925,312,540
1,017,843,800
1,170,520,370
1,287,572,410
1,287,572,410
1,287,572,410
709406280
971578170
1094182085
1229046390
1287572410
1287572410
111.34 %
25.56 %
(20.33 %)
2.20 %
(25.46 %)
4.95 %
Return on Common Stock Holder's Equity

120 %
111 %
100 %
%ages
80 %
60 %
40 %
26 %
20 %
5%
2%
-%
20 %-
40 %-
2,006 %
2,007 %
2,008 %
20 %-
2,009 %
Year
2,010 %
25 %-
2,011 %
49
5. Investor specific ratios

Investor specific ratios measure the various accounts for which
investors have specific concerns. These ratios are also called
Market ratios because of their nature. We measure KOHATs
marketability test by calculating following market ratios:
a) Earning per share:

Whatever income remains in the business after all prior claims,
other than owners claims (i.e. ordinary dividends) have been
paid, will belong to the ordinary shareholders who can then make
a decision as to how much of this income they wish to remove
from the business in the form of a dividend, and how much they
wish to retain in the business. The shareholders are particularly
interested in knowing how much has been earned during the
financial year on each of the shares held by them
50
a) Earning per share:
Profit / (Loss)
After Taxation
Issued,
Subscribed
& Paid-Up
Capital
Outstanding
Common Shares
Earning / (Loss)
Per
Share - Basic &
Diluted
2006
2007
789,866,961
248,368,268
925,312,540
Out standing common stock

2008
2009
2010
(222,439,366)
27,092,698
(327,777,142)
2011
63,715,971
1,017,843,800 1,170,520,370 1,287,572,410 1,287,572,410 1,287,572,410
92,531,254
101,784,380
117,052,037
128,757,241
128,757,241
128,757,241
9.06
2.12
(1.73)
0.21
(2.55)
0.49
10
Amount in Rs
Year
EPS = Net income preferred stock dividend x 100
Earning/share
9.06
8
6
4
2.12
0.49
0.21
0
-2
2006
2007
2008
-1.73
2009
2010
2011
-2.55
-4
51
Year
b) %age of earning retained:

The portion of current earrings retained for internal growth or to maximize the
shareholders wealth.
Retained earning ratio = Net income all dividends x 100
Net income
%age of earning retained is 100 % in all 6 years because no dividend is
declared or paid during the period.
c) Price earning ratio:

P/E ratio is a useful indicator of what premium or discount investors are
prepared to pay or receive for the investment.
Price earning ratio = Market price per share x 100
EPS
Market value is not available there fore it is not possible to calculate price
earning ratio.
52
d) Dividend payout ratio:

This ratio indicates the percentage of each dollar earned that is distributed
to the owners inform of cash. It is calculated by dividing the firms cash
dividend per share by its EPS.
Dividend payout ratio = Dividend/common share x 100
EPS
No dividend declared or paid during these periods there fore the ratio is zero.
e) Dividend Yield:
This ratio is the percentage return provided by the dividends paid on
common stock.
Dividend yield ratio = Dividend/common share x 100
Market price/share
No dividend declared or paid during these periods therefore dividend yield
is zero %.
53
f) Book value per share:

This ratio shows the book value per share, which is the amount invested by the owners
of the business by holding stocks. It also shows potential investors into the business
what they might hope to receive as a return on the basis of its book value comparable
with its market value.
Book
Value =
Total stock
holders equity
Year
2006
2007
2008
2009
2010
2011
2,283,939,693
2,339,656,143
2,329,129,147
2,271,547,165
1,960,969,871
2,102,816,137
92,531,254
101,784,380
117,052,037
128,757,241
128,757,241
128,757,241
Total Equities
# Outstanding
Common Shares
Book value per share
(preferred stock equity + preferred

stock dividend in arrears)
Out standing common stock
24.68
22.99
19.90
17.64
15.23
16.33
Amount in Rs
Book value per share

30
25
20
15
10
5
0
24.68
2006
22.99
2007
19.9
17.64
2008
2009
Year
15.23
16.33
2010
2011
54
DuPont analysis using return on total asset:

The rate of return on assets can be broken down on two component ratios: the net profit
Margin and the total assets turnover these ratios allow the improved analysis of
changes in the return on assets %age. E.I DuPont De Nemours & Company
developed this method of separating the rate of return ratios into its components parts.
Computed as follows:
Return on total asset
Net income
Avg. total assets
=
=
Net profit margin x

Net income
x
Net sales
Total asset turnover

Net sales
Avg. total assets
Year
2006
2007
2008
2009
2010
2011
Net profit margin
33.94 %
15.99 %
(16.17 %)
0.80 %
(8.88 %)
1.05 %
0.98
0.34
0.19
0.42
0.43
0.68
33.41 %
5.56 %
(3.30 %)
0.33 %
(3.79 %)
0.72 %
Total asset turnover
Return
On total assets
55
DuPont analysis using return on operating assets:

DuPont analysis could also be done using return on operating assets i.e. a combination
of return on operating assets and operating asset turnover. Operating items provide
refined picture of managements performance.
Return on Operating asset
Operating income
Avg. Operating assets
Year
Operating
Profit margin
Operating
asset turnover
Return on
Operating asset
=
=
Operating profit margin

Operating income
Net sales
x Operating asset turnover

x
Net sales
Avg. Operating assets
2006
2007
2008
2009
2010
2011
46.99 %
22.28 %
2.66 %
20.44 %
7.49 %
13.82 %
277.69
146.67
140.05
93.10
58.05
90.10
130.48 %
32.68 %
3.73 %
19.03 %
4.34 %
12.45 %
56
Degree of financial leverage:

The use of financing with a fix charge such as
interest is termed financial leverage. Financial
leverage is successful if the firm earns more
on the borrowed funds than it pays to use
them. Using financial leverage results in a
fixed financing charge that can materially
affect the earning available to the common
shareholders.
57
Degree of financial leverage:

Degree of financial leverage =
EBIT
EBIT-I
Year
Income before
interest & taxes
Finance Cost
Degree of
financial leverage
2006
2007
2008
2009
2010
2011
1,093,521,666
346,210,605
36,648,971
693,901,047
276,352,096
841,027,713
54,097,507
18,370,018
48,935,320
549,902,638
658,589,707
715,246,906
1.06 %
(2.98 %)
4.82 %
(0.72 %)
6.69 %
1.05 %
Degree of Financial leverage

8%
6.69 %
%age
6%
4.82 %
4%
2%
1.05 %
1.06 %
2006
2007
0%
2 %4 %-
2008
2009
2.98 %-
2010
0.72
%-
2011
58
Year
Degree of operating leverage:

A type of leverage ratio summarizing the effect a particular amount
of operating leverage has on a company's earnings before interest
and taxes (EBIT). Operating leverage involves using a large
proportion of fixed costs to variable costs in the operations of the
firm. The higher the degree of operating leverage, the more volatile
the EBIT figure will be relative to a given change in sales, all other
things remaining the same. This ratio is useful as it helps the user in
determining the effects that a given level of operating leverage has
on the earnings potential of the firm. This ratio can also be used to
help the firm determine the most appropriate level of operating
leverage in order to maximize the company's EBIT.
59
Degree of operating leverage:

Degree of operating leverage =
DCL
DFL
Year
2006
DCL
Degree of
financial leverage
Degree of
operating leverage
2007
2009
2010
2011
1.91 % (6.58 %) (17.23 %)
15.53 %
13.48 %
15.77 %
1.05 %
(2.98 %)
4.82 %
(0.72 %)
6.69 %
(5.78 %)
3.22 %
(18.72 %)
2.35 %
1.06 %
1.81 % (6.20 %)
2008
Degree of Operating leverage

5%
3.22 %
1.81 %
2.35 %
%age
0%
5 %10 %-
2006
2007
2008
6.20 %-
5.78 %-
2009
2010
2011
18.72 %-
60
15 %20 %Year
Degree of combine leverage:

The Degree of Combined Leverage (DCL) is the leverage ratio
that sums up the combined effect of the Degree of Operating
Leverage (DOL) and the Degree of Financial Leverage (DFL)
has on the Earning per share or EPS given a particular change
in shares. This ratio helps in ascertaining the best possible
financial and operational leverage that is to be used in any
firm or business.
This ratio has been known to be very useful to a company or
firm as it helps a firm understand the effects of combining
financial and operating leverage on the total earnings of the
company. A high level of combined leverage shows the risk
involved in the company as there are more fixed costs in the
company, while a low combined leverage would mean better
for the company.
61
Degree of combine leverage:

Degree of combine leverage =
%age change in EPS
%age change in sale volume

Year
2005
2006
2007
2008
2009
2010
2011
4.50
9.06
2.12
(1.73)
0.21
(2.55)
0.49
EPS
volume
1,715,426,515 2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517
%age Change in EPS

%age change
in Sales volume
50.33 %
(327.36 %)
(222.54 % )
923.81 %
(108.24 %)
620.41 %
26.29 %
(49.78 %)
(12.92 %)
59.48 %
8.03 %
39.33 %
DCL
1.91 %
(6.58 %)
(17.23 %)
15.53 %
(13.48 %)
15.77 %
%age
Degree of Combine leverage

20 %
15 %
10 %
5%
0%
5 %10 %15 %20 %-
15.53 %
13.48 %
15.77 %
1.91 %
2006
2007
6.58 %-
2008
17.23 %Year
2009
2010
2011
62
CONCLUSIONS
Liquidity
The overall liquidity of Kohat Cement seems to exhibit reasonable trend, having
being maintained the level which is prevailing in whole industry. The
companys liquidity seems to be satisfactory.
Financial Leverage/Debt
In the initial debt ratio is low and continuously increasing with the passage of time
as business is flourishing. In the year 2011Company debt ratio is higher we see
same trend is prevailing in the industry. All firms have same high level of debts
and most of company asset are financed by debts. So we can say regarding
debt Ratio Company is with the passage of time increasing this ratio which is
healthy sign, company is improving its business and creditors are willingly
providing debts to Kohat Cement.
Activity
Kohat Cement Inventory management system is not looking smart. The company
may be experiencing some problems with account receivables. In 2006 its
collection period is above industry average. In 2007 it is brought down but not
competing industry average. The total utilization of company asset is less than
that of industry which shows efficiency is not yet achieved.
63
CONCLUSIONS
Profitability
Though company has high cost good sold received, yet it faces loss .There
may be various reasons for this.
High interest charges.

The high dumping rate.
Tariff and Quota effects.
High tax rate.
Investor specific/Market
Kohat market ratio also good as compare to other companies in the
industries because its market price per share increases (the market price
per share is given of 2 years only) although its earning per share
decreases and must have to focus on this.
64
RECOMMENDATIONS
Company should improve its inventory management system for efficient
use of resources
There should be an improvement in receivables collection as company
have large amount of receivables yet to collect.
Company should focus on increasing profit instead of innovation. They
should outsource innovations from the research firms or advanced
companies indigenously or from abroad.
Company has to focus those countries for import where there is less tariff
and no quota implications. It should increase its business in free trade
areas and common markets.
Company should efficiently utilize assets to generate sales. Qualified new
talent should be hired for the managerial posts.
Company should capture markets. Because we know that company have a
huge idle capacity creating fix costs it can be utilized in condition of
increase in sales.
65
RECOMMENDATIONS
There should be increase in promotion to increase in sales worldwide.
There should be efficient management which is fully aware with industry
trends.
Kohat Cement should maintain the degree of combined leverage so as to
minimize the risks involved in the business. Maintaining the risk and not
increasing it from where it is.
The Company should try to lower or minimize the financial leverage in
order to balance the operating leverage and by minimizing the operating
leverage when the financial leverage is to be balances.
The balanced degree of combined leverage (DCL) is likely to provide with
an increase in the earnings per share of the equity holders.
66
THANK YOU
67

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Financial Statement Analysis of Kohat Cement Company Limited

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Financial Statement Analysis of Kohat

Cement Company Limited.

INTRODUCTION TO KOHAT CEMENT

Kohat Cement Company Limited is a public

Production and Sale Volumes

Kohat Cement Company Limited

Cash And Bank Balances

Total Current Assets

1,332,629,006 1,645,675,393 1,407,168,642 1,953,618,476

Non Current Assets

6,352,852,944 6,368,030,446 7,140,840,908

2,079,393,357 5,258,259,878 6,248,719,954 6,937,818,150 7,229,393,785 7,140,840,908

Long Term Loans And Advances

Long Term Deposits

Total Non Current Assets

2,086,928,231 5,307,870,519 6,291,291,494 6,979,218,849 7,266,211,164 7,170,782,365

Equity And Liabilities:

Short Term Running Finances Secured

Current Portion Of Non-Current Liabilities

1,096,066,075 1,398,198,921 1,406,895,249 1,363,678,773

2,017,748,474 2,946,392,234 3,242,472,939 2,810,539,470

Non Current Liabilities

Total Non Current Liabilities

2,703,308,354 2,981,785,715 2,989,387,373 3,049,320,000 3,536,870,000

2,968,856,257 3,277,042,879 3,406,954,843 3,469,936,996 4,211,045,234

Share Capital And Reserves

1,017,843,800 1,170,520,370 1,287,572,410 1,287,572,410 1,287,572,410

2,283,939,693 2,339,656,143 2,329,129,147 2,271,547,165 1,960,969,871 2,102,816,137

Total Liabilities & Equities

3,076,110,450 5,864,310,604 7,623,920,500 8,624,894,242 8,673,379,806 9,124,400,841

Kohat Cement Company Limited

2,327,237,579 1,553,733,256 1,375,972,754 3,395,580,759 3,692,038,418 6,085,434,517

Cost of Goods Sold

1,127,575,661 1,210,466,340 1,288,570,903 2,591,021,469 3,341,872,196 5,158,302,614

Selling & Distribution Expanses

Administrative And General Expanses

Total Operating Expanses

Other Operating Income

Income From Operations

Loss On Derivative Financial Instrument

Voluntary Separation Scheme

Profit / (Loss) After Taxation

Total Other Expanses

Kohat Cement Company Limited

100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %

Equity and Liabilities:

Authorized Capital 150,000,000 Ordinary Shares Of Rs. 10 Each

Non Current Liabilities

Total Liabilities & Equities

100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %

Kohat Cement Company Limited

Profit from operations

Loss on derivative financial instrument

Total Other expanses

Kohat Cement Company Limited

Stores, Spares And Loose Tools

Cash And Bank Balances

Total Current Assets

Operating Fixed Assets

Total Property, Plant And Equipment

Long Term Loans And Advances

Long Term Deposits