Final Report of Financial Statement Analysis of Packages Limited Lahore

Packages Limited Lahore
ACKNOWLEDGEMENT
In the name of “Allah”, the most beneficent and merciful who gave
us strength and knowledge to complete this report. This report is a
part of our course “Financial Statement Analysis”. This has proved
to be a great experience. We would like to express our gratitude to
our teacher Mr. Muhammad Ali Wallana who gave us this
opportunity to fulfill this report. We would also like to thank our
fellows who participated in a focus group session. They gave us
many helpful comments which helped us a lot in preparing our
report.
Financial Statement Analysis 1 of 138

DEDICATION
We would like to dedicate this project to our BELOVED

parents who have always encouraged us throughout in our
academic career and make possible for us to stand where
we are today and our Honorable teacher Mr. Muhammad
Ali Wallana who make us able to do such task.

PREFACE
As the world is growing rapidly, the businesses are also moving to
become the huge one. And by that result, more and more people
want to become a master in these businesses. The main purpose in
the finance field is to know how the financial analysis is done. We
all know that finance is the blood of any business and without it no
business can run. Financial analysis of a company is very difficult
and the most important task and by doing this we are able to know
the whole financial position and financial structure of the company.
Simply by looking at how much cash a company has does not
provide enough information. The financial statements need to be
analyzed to measure a company’s performance and to compare it
with other firm’s in the same industry. The resulting information is
intended to be useful to owners, potential investors, creditors,
analysts, and others as the analysis evaluates the past performance,
future potential and financial position of the firm.
This report is an analysis of financial statements of Packages
Limited Lahore. This report has been prepared with an objective to
develop analytical skills required to interpret the information
(explicit as well as implicit) provided by the financial statements
and to measure the company’s performance during the past few
years i.e. 2004 to 2008. The financial statements are analyzed using
traditional evaluation techniques such as horizontal analysis, vertical
analysis and trend analysis. Ratios are an important tool in analyzing
the financial statements & the company’s profitability, solvency &
liquidity. Sincere attempts have been made to make this report error
free but if any errors and omissions are found then we apologize for
that.
Rabia Chaudhary

TABLE OF CONTANTS
Sr. No. Description Page No.

1 Executive Summary 6
2 Introduction to the Company 9
3 Financial Ratio Analysis 57
4 Activity Analysis of Company 58
5 Liquidity Analysis of Company 67
6 Profitability Analysis of Company 75
7 Investors Analysis of Company 88
8 Long Term Analysis of Company 96
9 Conclusion 104
10 Recommendation 106
11 Bibliography 108

TABLE OF ANNEXURE
Sr. No. Description Page No.
I Summarized Balance Sheet 110
II Summarized Income Statement 112
III Horizontal Analysis of Income Statement 113
IV Vertical Analysis of Income Statement 114
V Horizontal Analysis of Balance Sheet 115
VI Vertical Analysis of Balance Sheet 117
VII Activity Analysis of Company 119
VIII Liquidity Analysis of Company 123
IX Profitability Analysis of Company 126
X Investors Analysis of Company 132
XI Long Term Analysis of Company 135

EXECUTIVE SUMMARY
Amount in Thousands

SR
DESCRIPTION DATA
NO.
1 The Company Packages Limited Lahore
Condensed Income
2 2008 2007 2006 2005 2004
Statement
A. Net sales 12,224,779 9,028,635 7,846,599 7,098,765 5,986,977
B. Gross profit 943,299 1,199,273 1,294,604 1,352,979 1,308,602
C. Operating profit 405,650 733,037 918,252 995,782 873,409
D. Profit before tax (307,889) 4,632,948 6,347,840 1,329,925 1,186,621
Net profit (195,825) 4,325,948 6,100,780 1,015,364 957,502
3 Condensed Balance Sheet 2008 2007 2006 2005 2004
A. Total current assets 6,923,461 4,837,402 3,414,222 4,558,737 2,424,817
B. Total non-current assets 282,861 10,413,050 6,028,620 775,367 755,126
C. Total fixed assets 27,828,311 18,187,991 13,230,634 6,286,300 3,294,543
Total assets 35,034,633 33,438,443 22,673,476 11,620,404 6,474,486
A. Total short-term
840,788 955,790 688,455 547,468 527,390
liabilities
B. Total non-current
840,788 955,790 688,455 547,468 527,390
liabilities
C. Total long-term
12,304,400 12,346,500 6,000,000 1,000,851 6,351
liabilities
D. Total owner's equity 16,272,572 18,170,772 13,672,797 7,736,255 4,191,860
Total liabilities and
35,034,633 33,438,443 22,673,476 11,620,404 6,474,486
owner's Equity
4 Activity Ratio 2008 2007 2006 2005 2004
A/R Turnover(times) 8.69 8.56 9.77 9.96 9.35
Aging Of A/R(Days) 41.98 42.65 37.35 36.64 39.05
Inventory Turnover(Times) 3.04 3.10 3.56 3.80 3.17
Days Sale in
120 118 103 96 115
Inventory(Days)
Working Capital
9.36 3.14 7.12 3.19 8.86
Turnover(Times)
Current Asste
1.72 1.78 2.10 1.41 2.20
Turnover(Times)
Fixed Assets Turnover(Times) 0.53 0.57 0.80 1.48 1.82
Total Asset
0.36 0.32 0.46 0.78 0.92
Turnover(Times)
5 Liquidity Ratio 2008 2007 2006 2005 2004
Current Ratio 1.23 :1 2.46 :1 1.48 :1 1.95 :1 1.39 :1
Quick Ratio 0.43 :1 1.66 :1 1.60 :1 2.94 :1 1.64 :1
Cash Ratio 0.04 :1 0.05 :1 0.05 :1 0.86 :1 0.08 :1
Cash Flow From Operations
0.23 :1 0.64 :1 0.55 :1 0.59 :1 0.73 :1
Ratio
Operating Cycle(days) 162 160 140 133 154
Working Capital Ratio 1,306,588 2,872,021 1,101,998 2,222,907 675,932
6 Profitability Ratios 2008 2007 2006 2005 2004
Gross Profit Margin(%age) 7.72% 13.28% 16.50% 19.06% 21.86%
Operating Profit Statement Analysis
Financial 7 of 138
3.32% 8.12% 11.70% 14.03% 14.59%
Margin(%age)

COMPANY PROFILE
Packaging Limited was born out of a dream to set up in Pakistan industries of

excellence based on local raw material and talent. Packages Limited is a
leading packaging manufacturing company of Pakistan. It is the sole largest
industry in Pakistan. Syed Baber Ali Shah, who was the first managing director
of Packages Limited, went to Sweden in 1954 to negotiate the contract with AB
Akerland & Rausing of Sweden. AB Akerland and Rausing had been the
leading paper converters in Europe. Pakistanis needed technical collaboration
with their Swedish partners. In the beginning, the first problem was the
selection of the site. Finally, Lahore was selected due to the following reasons:
• Easy availability of workers.

• Easy availability of raw material.
• Easy transportation all over the country.
A B Akerlund & Rausing packaging company brought machinery and expert

technicians while the Ali Family provided the necessary capital, land, labor,
local expertise and management. Syed Baber Ali was the first Managing
Director.
Established in 1956 as a joint venture between the Ali Group of Pakistan and
Akerlund and Rausing of Sweden, Packages Limited provides premium
packaging solutions for exceptional value to individuals and businesses. It is
the only packaging facility in Pakistan offering a complete range of packaging
solutions including offset printed cartons, shipping containers and flexible

packaging materials to individuals and businesses world-wide. Its clientele

includes illustrious names such as Unilever and Pakistan Tobacco Company,
who have been its customers for over 50 years. It employs over 3000 people
and had sales of over US $ 136 million in 2005.
Listed on all three stock exchanges in Pakistan, Packages Limited has
maintained a long-time credit rating of AA. Its joint ventures and business
alliances with some of the world's biggest names reflect its forward-looking
strategy of continuously improving customer value through improvements in
productivity.
Packages have always been at the forefront of new developments in packaging
research and have pioneered several innovations, including the use of wheat
straw as a raw material for paper and board manufacture. Its on-site paper and
board mill, established in 1968, has constantly increased its production
capacity. A new plant with even greater capabilities is planned for the near
future.
OVER THE YEARS
Over the years, Packages has continued to enhance its facilities to meet the growing
demand of packaging products.
Packages Limited started operating in May 1957 with a paid up capital of Rs. 4.94
million as a joint venture between the Ali group and Akerland & Rausing of Sweden.
Initially, Packages produced cartons for the cigarette, tea, confectionery, soap,
pharmaceutical products and other consumer products. These cartons were produced
from paper and board supplied from mills in Chittacong, Khulna, Charsadda and
Peshawar. However the quality and quantity of paper and board supplied was

insufficient. Over the years, the company continued to enhance its facilities to meet
the growing demand of packaging products. Additional capital was raised from
sponsors, International Finance Corporation and from the public in making the total
paid up capital to Rs. 31 million in 1965.
As a first step, Packages commissioned its own paper mill in 1968 having production
capacity of 24,000 tons of paper & paper board based on waste paper, agricultural
waste, wheat straw and kahi grass.
Since 1982, Packages Limited has had a joint venture with Tetra Pak International in
Tetra Pak Pakistan Limited to manufacture paperboard for liquid food packaging and
to market Tetra Pak packaging equipment.
Packages commissioned its own paper mill with a production capacity of 24,000
tonnes in 1968. The mill produces paper and paperboard based on waste paper and
agricultural by-products like wheat straw and river grass. With growing demand the
capacity was increased periodically and in 2003 was nearly 100,000 tonnes per year.
In 1993, a joint venture agreement was signed with Mitsubishi Corporation of Japan
for the manufacture of Polypropylene films at the Industrial Estate in Hattar, NWFP.
This project, called Tri-Pack Films Limited, commenced production in 1995 with
equity participation by Packages Limited, Mitsubishi Corporation, Altawfeek
Company for Investment Funds, Saudi Arabia and the public. Packages Limited owns
33% of Tri-Pack Films Limited's equity.
In 1994, Coates Lorilleux Pakistan Limited, in which Packages Limited has 55%
ownership, commenced production and sale of printing inks.
In 1996, a joint venture agreement was signed with Printcare (Ceylon) Limited for the
production of flexible packaging materials in Sri Lanka. Packages Lanka (Private)
Limited commenced production in 1998. Packages Limited now owns 79% of this
company.
In 1999-2000, Packages Limited successfully completed the expansion of the flexible
packaging line by installing a new rotogravure printing machine and expanded the
carton line by adding a new Lemanic rotogravure inline printing and cutting creasing
machine. A new 8-color Flexographic printing machine was also installed in the
Flexible Business Unit in 2001.
Packages Limited has also started producing corrugated boxes from its plant in
Karachi from 2002.

In 2003, Packages entered into an agreement with Vimpex of Austria to provide

management and technical assistance to help in the operation, production optimization
and capacity expansion of a paperboard mill in Syria. A team from Packages is
currently providing these services and is close to optimizing mill production. At the
moment Packages Limited had 5 Paper Machines; four for paper & board and one for
tissue.
The Bulleh Shah Project: Packages is planning to relocate its paper manufacturing
facilities from the existing location, which has limited capacity for expansion, to a
new site 54 km from the present one. This will enable us to radically increase our
paper and paperboard production from 100,000 to 300,000 tonnes per year. The
packaging operation shall continue concurrently at the Lahore site.
MISSION STATEMENT
TO BE
• A market leader by providing quality products and superior service to our

customers, while learning from their feedback to set even higher standards for
our products.
• A company that continuously enhances its superior technological competence
to provide innovative solutions to cater to customer needs.
• A company that attracts and retains outstanding people by creating a culture
that fosters openness and innovation, promotes individual growth, and rewards
initiative and performance.
• A company which combines its people, technology, management systems, and
market opportunities to achieve profitable growth while providing fair returns
to its shareholders.

• A company that endeavors to set the highest standards in corporate ethics in

serving the society.
Company CORE VALUES
Underlying everything Packages does and everything it believes in is a set of core

values. These guide it to deal with every aspect of any issue it might encounter in its
personal and professional lives. These values help Packages grow inside and outside,
personally and as an organization.
• Smart Governance
Packages is committed to running its business successfully and efficiently, providing
long term benefits to its employees and shareholders, and enriching the lives of those
whom it serves by fulfilling our corporate responsibility to the best of our ability. It
expects excellence from all processes, whether they relate to policy formation and
accounting procedures or product development and customer service.
• Work Environment
The policies and core values are aimed towards creating an informal yet stimulating
team-oriented work environment with a culture of sharing and open communication.
It cherishes the diversity of viewpoint of every individual.
All employees have the right to a stress- and injury-free work environment. Packages
ensure employee safety and health by providing various in-house facilities such as a
gym and making sure that all staff understand and uphold our safety policy. All its
employees are permitted and encouraged to afford time and attention to personal
concerns.

• Our People
The success of any organization is largely dependent on the people working for it.
Each member of the team is considered equally important and provided constant
training, motivation and guidance. Packages has a dedicated staff of the highest
caliber dedicated to making our business a success.
It ensures that every employee has the opportunity for maximum professional
development. To achieve this goal, it seeks to provide challenging work prospects for
all employees. Each person is compensated and rewarded for his or her performance
and hard work on a strict merit basis.
• Conservation
Packages expects and encourages its employees to actively participate in community
service and to take care of the environment entrusted to us as citizens sharing the
earth's resources.
• Customer Satisfaction
Packages is customer-driven; it goes the extra mile to make sure our clients'
expectations are met and exceeded on every issue. It partners with leading companies
to arm itself with the latest technology and provide customers with innovative
solutions in the most cost-effective manner available.
• Ethical behavior
Packages makes it clear that being a sincere, honest and decent human being takes
precedence over everything else. In the Packages family, there is an all-round respect
for elders, tolerance for equals and affection for youngsters. Managers are expected to
lead from the front, train junior colleagues through delegation, resolve conflicts
speedily, be visible at all times and act as role models for others.
It makes sure that all its processes and methods conform to the highest ideals of
professional behavior. The organizational structure is straight-forward and need-
based; accountability is transparent, consistent and both horizontal and vertical.

CORPORATE STRUCTURE
Packages Limited has three main manufacturing divisions:

• The Paper and Board Division, which manufactures paper and board from a
mixture of wood, pulp and other raw materials, and treats effluent
• The Packaging Division, which takes materials from the Paper and Board
Division and converts customer ideas into finished products
• The Consumer Products Division, which manufactures off-the-shelf branded

consumer products
Packages Lanka is a joint venture between Packages Limited and the Print Care
Group of Sri Lanka, and DIC Pakistan a joint venture between Packages Limited and
Dainippon Ink and Chemicals, Inc. of Japan.

OUR PEOPLE
People are key for Packages Limited. It actively seeks and retains people who feel
there is no compromising on excellence, and a corporate culture in which its family
can grow and thrive. Heading a multi-talented team is its leadership of experienced
senior management. Together, they know how to combine all their skills and
knowledge to deliver state-of-the-art solutions to its customers.
BOARD OF DIRECTORS
As Kamal Afsar Shamim Ahmad Khan

adul
lah
Kha
waj
a
(Cha
irma
n)
Muj
eeb
Ras
hid
Khalid Yacob Syed Hyder Ali
(Managing Director)
Kirsten Rausing Syed Shahid Ali
Markku Juha Pentikainen Tariq Iqbal Khan
ADVISOR COMPANY SECRETARY

Syed Babar Ali Adi J. Cawasji

EXECUTIVE COMMITTEE AUDIT COMMITTEE

Syed Hyder Ali - Chairman Shamim Ahmad Khan - Chairman
(Non-Executive Director)
Mujeeb Rashid - Member
Tariq Iqbal Khan - Member
Khalid Yacob - Member (Non-Executive Director)
Syed Shahid Ali - Member
(Non-Executive Director)
Mujeeb Rashid - Member
(Director & General Manager)
Adi J. Cawasji – Secretary
BUSINESS ALLIANCES
One of the best ways for a business to leverage its products and increase
growth is through association. Its business alliances help manage business
more effectively, as well as helping it and its partners develop and diversify our
interests. Customers also benefit from the increased knowledge base, as
Packages transform its market awareness and shared technology into
innovative and cost effective solutions for customers.
The Packages Group is proud of its long standing network of friends and
family, with key business partners as diverse as Print Care, Coca-Cola, Tetra
Pak and Mitsubishi Corporation.
Nestle Milkpak Ltd (NML)

Milkpak was established in 1981. It collects milk
from the rural areas, processes it by the UHT
method, and sells it in Tetra Pak containers. In
1988, Nestle of Switzerland bought into Milkpak
and expanded its scope and activities - Nestle now

owns 58% of the enlarged company. NML sales in

year 2004 were Rs. 12.8 billion with 1,560
employees.

Tetra Pak Pakistan Ltd
Tetra Pak Pakistan Limited is a joint venture

between Packages Limited and Tetra Pak
International, the world's leading liquid food
packaging company. It was established in 1982.
Tri-Pack Films Ltd
Tri-pack manufactures BOPP film with an annual
capacity of 11,000 tonnes. Tri-Pack sales in 2004
were Rs.2.05 billion. The number of employees of
the company is 220. Packages Limited has 33.3%
ownership while Mitsubishi Corporation of Japan
holds 25% shares in the company. The Company
has increased its capacity to 26,000 tonnes with a
new plant in Port Qasim, Karachi, which started
production in 2004.
DIC Ltd
A joint venture between Packages Limited (55%)
and Dainippon Ink and Chemicals Singapore Pte.
Limited (45%). DIC Limited has an annual
capacity of 3,075 tonnes of printing ink. Sales for
2004 were Rs. 640 million. Number of employees:
131. Dainippon Ink and Chemicals is one of the
largest printing ink manufacturing groups
worldwide.

Packages Lanka PVT. Ltd

A joint venture between Packages Limited and
Print care (Ceylon) Limited of Sri Lanka. This
project was set up for the manufacture of flexible
packaging material. Packages Limited owns 79%
of this company. Packages Lanka Private Limited
has an annual capacity of producing 54 million
meters flexible packaging. Packages Lanka Private
Limited had sales of Pak Rs. 265 million in the
year 2004. The number of employees of the
company is 122.
International General Insurance Company of Pakistan Ltd. (IGI)
IGI, the insurance company of the Group, was
established in 1953. It had a gross premium of Rs.
423 million in the year 2004. Number of
employees: 81. Recently IGI has acquired the
insurance business of Pakistan branch of Royal &
Sun Alliance Insurance Plc.
First International Investment Bank Ltd. (Interbank)
Established in 1990, a joint venture between
American Express Bank, International Finance
Corporation, and the Packages Group with an
issued share capital of Rs. 404 million. In the year
2003-2004 the Bank had an after-tax profit of
Rs.42 million. The number of employees is 83.
Coca-Cola Beverages Pakistan Ltd.
Packages Group is a minor shareholder in Coca-
Cola Beverages Pakistan Limited (CCBPL) of
which The Coca-Cola Company; Atlanta, U.S.A.
holds 92% shares.

QUALITY FOCUS
Manufacturing top quality products has always been top priority for Packages
Limited. To achieve this, it has implemented sound engineering policies which we are
constantly improving. Today, the idea of processes includes not only manufacturing
policies but also business and management processes. Supporting these processes are
stringent quality assurance procedures and a comprehensive system of internal audits.
HIGHLIGHTS
 The organization complies with the ISO 9001 standard.
 Packages was the 6th company in Pakistan to adopt the ISO series as its
quality standard.
 It has 57 Quality Improvement Teams in various departments to ensure
continuous improvement focus in the organization.
 Key performance indicators (KPI) concept: Each division in the company
sets SMART (specific, measurable, achievable, recordable and time-based)
targets for the annual improvement of its key process parameters, reviewed
by the management every quarter.
 It has a comprehensive set of engineering tools, rules, processes, training
materials, guidelines, best practices and other supporting documents to
make sure our products comply with every possible customer requirement.
Details of ISO certification
In chronological order, Business Units were certified on the following dates:
 The Flexible Packaging Division was the first division to be certified under
ISO 9001 in 1995.

 This was followed by the certification of the Carton Business Unit in 1997,
 The Consumer Products Division in 1998
 The Corruwal Business Unit in 1999, and
 The Pulp, Paper and Board Mill in 1999.
By the year 2000, the whole organization had been certified under ISO 9001 and a
sequence of acquiring certification renewals had been successfully put into place.
Continuous Improvement
The first ISO 9001 certification in 1995 was also made the basis of the ultimate goal
of total quality management. In 2000, the concept of Quality Improvement Teams
(QIT) was introduced in various departments. There are 57 QITs today, working on
the Japanese principle of continuous incremental improvement called KAIZEN. Their
performance is also monitored quarterly and cash awards and certificates of
achievement given to the top performing team.
. . . And what does being ISO certified mean?
 Enhanced product quality and reliability at a reasonable price.

 Greater compatibility and interoperability of goods.
 Simplification for improved usability.
 Improved health, safety and environment protection.
 Reduction of waste.
 Increased distribution efficiency and maintenance.
QUALITY POLICY
We at Packages Limited are committed to producing quality products

which conform to our customer requirements and strengthen our position
as a quality-managed company. Our pledge is to provide the market with
the best quality products at competitive prices through a customer-driven

and service-oriented, dynamic management team. To meet this

obligation, the company will continue updating skills of its employees by
training, acquisition of new technology, and regular re-evaluation of its
quality control and assurance systems. Appropriate resources of the
company will be directed towards achieving the quality goals through
employee participation.

COMMUNITY INITIATIVES
We believe that the community in which we operate should benefit not only
from our economic success, but from the time and energy which we invest.
Packages, as a responsible corporate citizen, has always undertaken to make a
positive contribution to the community it works in through employee volunteer
efforts and corporate initiatives.
Our community efforts reflect our corporate culture by building strength and
value through mutual assistance and goodwill.
Rural Sector Improvement
Pakistan is rated amongst the world's top five milk producers, even though it
has no organized milk sector. Transport to the cities had traditionally been the
domain of the contractors, who were unable to maintain the quality of the milk
during transit. Consequently, when Packages' milk packaging plant needed a
reliable daily source of milk, they were forced to buy directly from the dairy
farmers when they were unable to reach an agreement with the contractors.
Today, the estimated daily intake of the aseptic dairy plants in the country
exceeds 3 million liters and has become a constant source of substantial income
to a large sector of the rural population. This, in itself, has been a major
contribution from Packages towards the uplift of the rural sector.

Propagating Horticulture
Today, Packages is as well known for its roses as for its industrial activities.
The number of varieties of roses in our gardens exceeds 300 and includes
plants, bushes and creepers, as well as exotic specimens such as miniature,
green and even black roses. The company also holds an annual rose show for 2
to 3 days in spring for its patrons, customers, employees and their families.
The company has established a fair-sized nursery from which, till recently,
almost 500 rose cuttings per year were provided, free of cost, to institutions and
people interested in horticulture. Apart from growing its own roses, Packages
has also taken a keen interest in the activities of the Horticulture Society of
Pakistan and, for the last four decades, has been responsible for managing the
annual Chrysanthemum and Spring Flower Show in Lahore.
ENCOURAGING SPORT
To encourage young sportsmen all over the country, Packages has been
organizing the annual Jafar Memorial Interschool Hockey Tournament for the
last thirty six years in memory of Syed Muhammad Jafar, an ex-Olympian who
died in his youth. This popular tournament has proved very useful in the early
selection of promising hockey players of the future. 41 schools participated in
the 36th championship held in Lahore and an estimated 35 players of the
National Hockey Team have been identified through these competitive matches
over the years.
Worldwide TECHNICAL aid programs
The first involvement of Packages in a foreign assignment was in 1970, when a

contract for providing technical services to Kibo Paper Industries Ltd.,
Tanzania, was signed. The corrugated board manufacturing plant, set up in
1966, was operating at a low capacity and had accumulated substantial

financial losses. The management was taken over by a team of four experts
from Packages, and company operations started generating profits within the
first year of this switchover.
The second opportunity followed soon after. In 1971, Packages extended
similar services to a company called P T Guru in Jakarta, which was set up as a
printing/packaging operation in 1970 and had run into serious financial and
production problems. Packages sent another team of experts to Indonesia in
1971, and succeeded in turning the company around in a very short time
period.
In the same year, the National Development Corporation of Tanzania requested

Packages to take over the operation of another of its companies called Printpak
Tanzania. The same success was achieved here, and a printing ink
manufacturing plant was installed. A team of experts also commissioned,
constructed and operated Tanzania's first paper mill. In 1979, a six million
dollar plant called Nasco Packages was set up in Jos, Nigeria for the
manufacture of offset cartons, flexible packaging and corrugated containers.
The plant went on to become one of the main packaging companies in Northern
Nigeria, and a great financial success.
Towards the end of 1979, Packages provided expertise in the installation and
management of a modern corrugated box manufacturing plant in Kuwait named
Carton Industries Company SAK. A packaging plant in Yemen, engaged in the
manufacture of polyethylene film was also technically supported for a short
while during 1983.
Just when its assistance to these countries was coming to an end, Packages
accepted the singular challenge of helping a floundering company in Russia.
Tetra Pak AB (Kuban) was a packaging complex of three factories with
facilities for manufacturing folding cartons, flexible packaging and corrugated
boxes. In a two-and-a-half years' association, assistance was provided in

formulating a management information system, streamlining production

operations and training local staff.
Thus, in its history of about five decades, Packages has somewhat repaid the
debt of gratitude it owes to the developed world by helping needy and
disadvantaged companies in other developing countries.

ENVIRONMENTAL POLICY
Packages is committed to the environment. It realizes that we live in a world

where resources are finite and the eco-system has a limited capacity to absorb
the load mankind is placing on it. That is why Packages makes every effort to
make sustainable development a reality. The numerous projects and plants
implemented in and around the site bear ample testimony to our dedication.
Some of the objectives are to increase recycling rates, improve effluent and
waste management, and reduce water loss. These and other environmental
concerns are exemplified in its environmental policy, which every employee is
expected to uphold and implement.
Environment, Health and Safety (EH&S) Policy
Packages Limited shall:

 Minimize its environmental impact, as is economically and
practically possible.
 Save raw materials including energy and water, avoid waste.
 Ensure that all its present and future activities are conducted
safely, without endangering the health of its employees, its
customers and the public.
 Develop plans and procedures and provide resources to
successfully implement this policy and for dealing effectively with
any emergency.

 Provide environmental, health and safety training to all employees

and other relevant persons to enable them to carry out their duties
safely without causing harm to themselves, to other individuals
and to environment.
 Ensure that all its activities comply with national environmental,
health and safety regulations.
This policy shall be reviewed as and when required for betterment of the same.
Recycling Paper
Packages has the capability of producing 100% recycled paper. Various grades
of paper and board (shipping, cartons, newsprint, magazines, and imported
waste paper) are collected and then shredded. This is fed to a huge mixer where
a controlled percentage of virgin pulp and used paper are mixed together to
produce material for recycled paper.
Effluent and Waste Management

Discharged water from the paper and board mill goes to a septic tank where
heavy, unsolvable material settles down and is constantly scooped out.
Specialized cleaning equipment removes the remaining mud and suspended
particles. The suspended solids are separated and treated on mud de-watering
equipment and thickened for disposal.
The introduction of the new method of using wheat straw as a raw material was
a bold step partly aimed at reducing the chemical load of the waste matter. An
even bolder step was taken with the import of Chemical Recovery Plant in
1997. Black liquid, which poses severe difficulties in the waste matter
treatment system in any pulp mill, is concentrated in this plant to 58% solids
and then incinerated in a waste heat boiler, where organic impurities are
destroyed and the steam generated is utilized for evaporating the incoming
liquor. The ash, containing inorganic compounds, is dissolved in water to
recover any available chemicals.

Water Management
This is a recent part of the green policy adopted by Packages. It includes
reduction of the usage of water in all stages of its processes. Better water
management has led to better utilization of water and other raw inputs.
At 300 tonnes per ton of pulp produced, the quantity of water itself poses
serious problems of extraction and disposal. To reduce it, a dissolved air
flocculation system and special filters have been added to different streams of
reusable water and wherever possible, fresh water in various processes has
gradually been replaced with this water.
Independent Energy House

Packages is self-sufficient in its power generation capabilities with an installed
capacity of 26MW. A local boiler meets the company's steam demands.
Results
These efforts were streamlined in 1997 through the formation of a committee
of internal experts to look regularly into issues concerning environment, health
and safety. The committee is currently involved in the management of fresh
water use, effluent management, and control on air emissions, energy
conservation and maintenance of health and safety standards in the company. It
uses guidelines provided by the National Environment Quality Standards
(NEQS) as a benchmark, even modifying processes to conform to its
objectives.
As a result of combined efforts, the quantity of water used, as well as its BOD
and COD has been reduced significantly. Steam consumption and heat energy
consumption in 2003 have both shown a reduction of over 16% each compared
to 1999. The electricity use in the same period has gone down by an impressive
25%.

These activities have acquired such importance for the company that out of
US$ 100 million spent on new processes and technology in the last few years,
20% were spent on environmental issues alone.

P R
H O C C
F E A
O Y
F P R
T F L R
L S T
O I O F
E E O
P N D L
X N
O T
P D U E
I C
A E C X
CPD
L B O L
Y P R T I I
L L I R
E S B N
Packaging
M E R
A
R O L E
E N U
R T E
P E W
C
A
Packaging Division
L
Division
SO A
L
P C I
N L
I
L K N
A V N
A E L
T E E
Financial Statement Analysis

G I P
E R
S I N A
T E
N P
I
G E
N
B
R
G
O
PBD
PBD
A
F R
D
Packages Limited
A
C
T
I
O
A
I
L
L
E P
T P
Production Divisions of Packages Limited
T A
I A P
S P E
R
E
S R N
O
R
U A
L C
CPD
E P
L
P U
S K
SL P
S I
A
N
T
32 of 138
S
E
S
Products of Packages Limited

PAPER & BOARD
Packages is producing high quality paper and board since 1965
using environment friendly manufacturing processes. It
specializes in making a variety of duplex boards and paper.
The products are tested for high performance in terms of
strength, stiffness and gloss.
CARTON BUSINESS UNIT
The carton business unit is an integral part of the
manufacturing facilities at Packages. Continuous
improvements in technology help its customers exert exact
control over each stage of the manufacturing process.
Customized packaging and consistent quality give all our
cartons superior shelf visibility.
CORRUWAL BUSINESS UNIT
Packages has been manufacturing corrugated cartons since
1974. Produced in a variety of sizes, these cartons are of
great value for in-country goods distribution and export.
Capacity increase and product development continue to be a
high priority.
FLEXIBLE BUSINESS UNIT
With improved barrier properties and lower cost compared
to rigid packaging, flexible packaging is steadily gaining
importance in the packaging industry. The flexible line
makes high quality packaging films and laminates, and
offers other specialized services such as rotogravure
printing and sleeve-making.
CONSUMER PRODUCTS

A range of products for those annoying problems in life:

The consumer products feature innovative ideas for
making everyday living easier and more comfortable, both
indoors and out. The consumer product division has
consistently been gaining importance, and its projected
share of the overall business at Packages now stands at
over 11%.
PAPER & BOARD
Packages is producing high quality paper and board since 1965 using
environment friendly manufacturing processes. We specialize in making a
variety of duplex boards and paper. All products are tested for high
performance in terms of strength, stiffness and gloss. From coffee cups to the
books we read, from Tetra Pak juice containers to huge shipping containers,
paper and board products touch our lives in a thousand ways every day.
PAPER

Packages produces:
High gloss writing paper.

Machine glazed / special poster paper.
Fluting paper.
Liner for shipping cartons.
Corrugating medium paper.
Wood-free writing/printing paper.
Paper quality and weight is determined by the

client's specific requirements and Packages ensures
this is carried out to the exact specifications
provided.
Paper is available in the following weights:
Type of Paper Weight (g/m2)

Test liner 125-220
Corrugated medium
120-170
Paper/Fluting
Wrapping Paper 70-90
High gloss writing paper 58-68
Poster Paper 40-90

BOARD
Packages manufactures several types of board.

Food Board, a basic raw material in liquid food
packaging, is being manufactured since 1979
for Tetra Pak Pakistan Limited. This material is
used in making aseptic packaging for milk,
cream, oil, fruit juices and other perishable food
items.
Some of our board products are:

• Liquid packaging board
• Food grade board
• Duplex board / chipboard
• Bleached board
• Tobacco board and cardboard
• Liner board
Board is available in the following weights:
Type of White Board Weight (g/m2)

Bleached Board 195 - 205
Duplex Board 150 - 450
Cardboard 160 - 250
Liquid Packaging Board 150 - 290
Poster Paper 40 - 90
TECHNICAL EXPERTISE
Production capacity exceeds 100,000 tonnes per annum, from four main paper
machines of different capabilities. These paper machines are supported by two
pulp mills and a chemical recovery and effluent treatment plant along with
allied support services.

Packages Limited is among the first companies in the world to manufacture

paper & paper board using a pulp mixture of wheat straw, kahi grass, cotton
linter, recycled pulp and wood pulp. These environment-friendly processes use
fewer chemicals, resulting in improved strength properties and increased
stacking strength of containers.
Paper and Board Products
1. Board.
 Coated Bleached Board.

 Coated Tea Duplex Board.
 Coated White Duplex Board.
 Coated White Lined Grey Back Board.
 Coates WLC Board.
 Duplex Board.
 Kraft Lined Board.
 Special Liner.
 Special Clay Coated Tetra Board.
 Special White Duplex Board.
 Stiffener Board for Soap.
 Tetra Classic Paperboard.
 Tetra Duplex Board.
 TM liner.
 Uncoated Tea Board.
 Unlined Grey Board.
 White Bleached Board.
 White Card Board.
 Coated White Card Board.
 White Duplex Board.

 WLC Board.
2. Paper.
 Corrugating Machine Paper.

 MF offset Paper.
 MF writing Printing Paper.
 MG sulphate Paper.
 MG Kite Sulphate Paper.
 Photo copy Paper.
 White MG Poster Paper.
 White Poster Paper.
 Special Poster Paper.
 Special Brown Kraft Paper.
 Brown Kraft Paper.
 Gumming Kraft Paper.
 Golden Kraft Paper.
 Tissue Paper.
 Toilet Paper.
 Recycled Tissue Paper.

CARTON BUSINESS UNIT

The carton business unit is an integral part of the manufacturing facilities at
Packages. Constant improvements in technology help our customers exert exact
control over each stage of the manufacturing process. Customized packaging
and consistent quality give all Packages cartons superior shelf visibility.
The foundations of this business line were laid about 50 years ago with the
formation of the offset printing department. Carton Business Unit production
experts work closely with pre-press and technical staff to deliver a durable,
aesthetically pleasing and technically sound package to the customer.
The total board consumption of the carton line is around 18 - 20 thousand
tonnes per annum. The strong backward integration within the Packages value
chain has given the carton line a competitive edge in terms of backend material
availability. Prompt material availability reduces turn around time and ensures
timely delivery.
Industries
Carton products of packages serve

following industries:
• Food and Beverages
• Soap / Detergent
• Pharmaceuticals
• Match
• Electronics
• Shoe

• Tobacco
• Paper Cup
TECHNICAL EXPERTISE
The Carton Business Unit's technical competence is reflected through two

modes of printing: offset and rotogravure. The former is a high end tool for
more complex design themes while the latter consistently services high volume
orders. Packages expanded the line through installation of a new Lemanic
rotogravure printing and inline cutting creasing machine in the year 2000.
New lines have been introduced with the addition of a Roland 700 double
coater in the Offset Printing department, a Bobst Evoline in the Cutting and
Creasing and a Bobst Media 100 in the Folding and Gluing departments. The
state-of-the-art Roland 700 with twin coating has enabled Packages to
introduce innovative printing with special effect coating and gold coatings.
The commissioning of the new in-house CIM Line has made advanced counter
milling, laser cutting, and blade bending machines available for high quality
die making. Customers can now take advantage of even higher precision and
consistency in cutting and creasing.

CORRUWAL BUSINESS UNIT
Packages has been manufacturing corrugated cartons since 1974. Produced in a

variety of sizes, these cartons are of great value for in-country goods
distribution and export. Capacity increase and product development continue to
be of high priority.
Corrugated cartons are of great value to its diverse portfolio of customers for
secure transportation of their products to local and international markets. With
the commissioning of our corrugated plant in Karachi, it has the capability of
producing seven million corrugated cartons to cater to the ever-increasing
demand of high quality shipping cartons.
Industries
Packages corruwal business unit serves
• Textile
• Food
• Tobacco
• Soap
• Detergent
TECHNICAL EXPERTISE
The corrugated finishing division can print in up to three colours. Customers
have the flexibility to choose from regular slotted containers (RSC), glued,
RSC stitched or die cut cartons.
PRODUCT DEVELOPMENT

After customer feedback and extensive research, Packages has developed

special liner and fluting that gives extra strength to containers, in particular
increasing their stacking strength and their resistance to bursting.
FLEXIBLE BUSINESS UNIT
With improved barrier properties and lower cost compared to rigid packaging,
flexible packaging is steadily gaining importance in the packaging industry.
Packages flexible line makes high quality packaging films and laminates, and
offers other specialized services such as rotogravure printing and sleeve-
making.
Flexible packaging combines different plastic films, aluminum foil and paper
to produce laminates of two or more layers for providing layered protection
against moisture, gases and odours. Used where colourful package design and
preserving product quality are important, such as in the food and
pharmaceutical industries, flexographic printing offers economy with quality.

Industries
The flexible business unit serves

• Soap
• Tobacco
• Tea
• Food
• Diary Ice-Cream
• Milk powder
• Confectionery
• Shampoo
• Pesticide
• Pharmaceutical

CONSUMER PRODUCTS
A range of products for those annoying problems in life: consumer products

feature great ideas for making everyday living easier and more comfortable,
both indoors and out.
 Tissue Products
 Personal Hygiene
 Paper Products
Reflecting core values of exceeding customer expectations through innovation,

leadership and teamwork, the Rose Petal and Tulip brands continue to hold
over 80% of the domestic market share of the tissue paper market in Pakistan.
It also has a leading market share in the away-from-home business: it supplies
custom-printed boxes, table napkins, coasters and paper cups to institutions
such as hotels, fast food chains, restaurants, businesses and the airline industry.

Various customers of Packages Limited
There is hardly any product in the market which is delivered to customer

without packing. Packages is a giant in paper, board, packaging and consumer
products like facial tissues, toilet rolls, paper cups, paper plates , napkins and
sanitary pads. Following is a list of some of renowned companies who are
regular customers of packages limited and have benefited from packages’s
customizable solutions.
 Unilever Pakistan.
 Nestle Pakistan.
 Walls Ice Cream.
 Proctor & Gamble.

 Rafhan Maze Products.

 Kolson Pakistan Limited.
 Murree Brewery.
 Reckitt Benkiser.
 Tetra-Pak Pakistan.
 National Foods Limited.
 Shan Foods.
 Pakistan Tobacco Company Limited.
 Tetley Clover.
 Pakistan International Airlines.
 McDonalds Pakistan.
 Colgate Palmolive.
 Chaman Ice-Cream The Mall Lahore.
 Punjab TextBook Board.
 Pak Electron Limited (PEL).
 Mitchell Pakistan.
 Nirala Sweets.
 Sufi Banaspati.
 Nishat Mills.
 Glaxo-Smith Kline.
 Qarshi Pakistan.
 Pakistan Oil Mills.
 Knorr Foods Limited

NATURE OF BUSINESS & MANUFACTURING

PROCESS
Packages Limited is the manufacturer of Paper & Paperboard and its

conversion into packaging products.
Packages Limited has the following three divisions:

1. Paper Board Division.
2. Packaging Division.
3. Tissue Division.
PAPER & BOARD DIVISION
Manufacturing process of Paper Board Division is divided into following:
a) Pulp Making.
b) Paper & Paperboard Manufacturing.
1. PULP MAKING
Following processes are involved in the pulp manufacturing
o Straw Preparation
o Straw Cooking
o Straw Washing & Screening
o Straw Pulp Bleaching
o Straw Pulp Beating

o Straw Preparation:
Raw materials i.e. straw and kahi are cut and cleaned with dry and wet process
and transferred to New Fibre Line for cooking and washing.
o Cooking in New Fibre Line:

Cleaned material received from straw preparation department is cooked in
continuous digester tubes with steam and chemicals.
o Straw Pulp Washing & Screening:

Cooked material is washed and screened in this process and transferred to
beater house as unbleached straw pulp or to Bleaching House for bleaching for
this pulp.
o Straw Pulp Bleaching:

Unbleached straw pulp received after washing and screening process is
processed with bleaching chemicals and transferred to Beater House as
bleached straw pulp.
o WASTE PAPER PULP:

Waste paper is fed into pulper, where material is washed & cleaned and
transferred to Beater House for processing.
o IMPORTED PULP:
Imported pulp is fed to refiners for treatment of fibres to get the desired
strengths and properties. After this process pulp is transferred to Beater House.
o Straw Pulp Beating:

Different types of pulps are blended and chemicals are added according to the
required specification of paper and paperboard and processed pulp is fed
to Paper Machine.

2. PAPER AND BOARD MANUFACTURING PROCESS

The blend of stocks is then transferred to the machine chest for feeding into the
paper machine, first to the perforated wire through Head Box. The Head Box or
forming zone spreads fibres evenly on the perforated wire; water is gradually
removed by natural and mechanical means. After the wire part, the sheet of
fibres “wet web” is pressed to de-water further to dryness in the press section
and thereafter the sheet is dried in the drying section, where it passes over the
steam heated roll to get the final dry sheet as finished paper and paperboard.
PROCESS INVOLVED IN THE MANUFACTURING OF BOX BOARD

AND CONE BOARD (CHIP BOARD) BASED ON WHEATSTRAW
AND WASTEPAPER.
o PULPING OF WHEAT STRAW:

Wheat straw/kahi is employed for making pulp for use in the manufacturing of
various kinds of paper and paperboard including box board, cone board (chip
board). Wheat straw can be pulped by various processes, however, at Packages
Limited we follow Neutral Sulphite Process and sodium sulphite is the main
cooking chemical.
Wheat straw received by various means of transportation at the factory undergo

dedusting and cleaning operation where dust and unwanted materials like sand,
stones, grains are removed from the wheat straw. The cleaned straw is fed to
the mixing tank through conveyers and the cooking chemicals are added, then
the straw is fed to the continuous digesters where the delignification process
takes place at a temperature at 170° C and steam pressure of 11 bars for a
period of 45 minutes. The cooked straw which undergoes the delignification
and the fibres are separated from the black liquor by washing and screening is
stored as unbleached straw pulp in silo (high density tower).

Part of unbleached pulp after bleaching operation in the sequence of Hypo-

Hypo to make bleached straw pulp of brightness 80° GE is also stores in high
density tower for onward supply to the board machine as required.

o MANUFACTURING OF BOX BOARD:

Box board consists of a three layers board with top layer of bleached straw pulp
and wood pulp in the ratio of 75% and 25% plus additive chemicals, body
mainly of recycled waste paper pulp and the under layer of wheat straw pulp
(bleached or semi-bleached).
These pulps are blended in different chests for feeding the board machine with
three four drinier wires. Forming system which produces a triplex board called
box board in substance ranging from 200-450 gm2. The forming zone produces
a uniform wet sheet and all three layers are married together as single sheet
which is dewatered through presses to a dry content of 40% and later dried by
passing over multi steam heated cylinder (dryer). The board is calendared to a
uniform smooth surface and is rolled a smother reel which is later slitted to the
required size of reminder for marketing as finished goods.
o MANUFACTURING OF CONE BOARD (CHIP BOARD):
The product is mainly produced from waste paper pulp which can be blended
with a certain ratio of straw pulp (unbleached).
o WASTE PAPER PULP PROCESS:

The waste paper is re-pulped in hydro pulper with water and no chemical is
used. The impurities present in the waste paper like plastic, magnetic, stones
and other contraries are removed through successive cleaning and screening.
Waste paper pulp is similarly stored in a silo for supply to the paper machine as
required. Cone board (chip board) is a multilayer board. The manufacturing is
similar to box board except it is not sized whereas the box board is sized board,
however, the surface could be smooth and uniform and normally it is in the
substance ranging from 300-460 gm2.

PACKAGING DIVISION
MANUFACTURING PROCESS
Packages has following production lines in Packaging Division;

1. Carton Line
2. Flexible Line
3. Corrugation Line
1. CARTON LINE
Carton line produces paper-board cartons for its customers for various needs
like:
o Cigarette cartons
o Tea cartons
o Food cartons
o Medicine cartons
o Detergent cartons etc.
Major raw materials used are coated/uncoated board, offset inks and roto inks.
Carton Line consists of following departments & activities/processes:
Coating :
o Clay Coating.
o Poly Coating
o Slitting
Paper Store :
Sheeting
Guillotine
Slitting

Reproduction :
o Cylinder Engraving
o Photopolymer Making
o Offset Plate Making
Art & Camera :

Designing
Offset Printing
Cutting Creasing
Breaking
Folding Gluing
Packing
Paper cup making
Lemanic:
Inline Roto printing, embossing & cutting & creasing
2. FLEXIBLE LINE
Flexible Packaging Line produces various kinds of packing materials to satisfy
packaging requirements of the customers for soap, cigarette, tea, food,
confectionery etc. Major raw materials used in flexible line are plastic films,
poly granules, al-foil, paper, liquid inks and laminating materials.
Flexible Line consists of following departments & processes:
i. Paper Converting :
• Flexographic Printing
• Slitting
• Bag Making

• Packing
ii. Flexible Packaging:

• Rotogravure Printing
• Lamination (Solvent less & Solvent based Lamination)
• Extrusion (Mono, Three & Five Layer Extrusion)
• Waxing
• Slitting
• Bag Making
• Sleeve Making
• Sealing
• Packing
Main products of Flexible Line are:
• Oil Films
• Poly Bags
• Cone Wrappers
• Sleeves
• Shampoo Sachets
• Tea Sachets
• Toffee Paper
• Soap Wrappers
• Cigarette Parceling Paper
• Various laminates for food packing
3. CORRUGATION

Corrugation line produces single wall and double wall corrugated boxes for
Textile, Detergents, Cigarette and Food industries. Raw materials used in
manufacturing process are liner, fluting paper, water base inks and starch glue.
Corrugation line consists of following processes:
Corrugation
Sheeting
Flexographic Printing
Slotting & creasing
Stitching / gluing
Packing
Main products of Corrugation are:
Single Wall Corruwalls

Double Wall Corruwalls
Partitions
CONSUMER PRODUCTS DIVISION (CPD)
MANUFACTURING PROCESS
It consists of the following departments;
• Tissue Manufacturing
• Tissue Conversion
• TISSUE MANUFATURING

Tissue Manufacturing consists of following plants:
 Waste paper plant

 Paper Machine ΙV
The basic raw materials used in tissue manufacturing are soft wood pulps,
Eucalyptus pulp, Bleached linter pulp, Waste paper pulps and different types of
dyes and chemicals.
The wood pulp and waste paper are repulped with water. The impurities in
waste paper are removed through cleaning and screening. Waste paper pulps
are stored in the chests and supplied to the Paper machine.
• TISSUE CONVERSION (CPD)
Tissue conversion consists of the following processes:
I. Inter folding
II. Cup Making
III. Roll Making
IV. Paper plates
V. Coaster
VI. Wet Tissue
VII. Sanitary Napkins Making
VIII. Packing
Main products of CPD Conversion are:
 Facial Tissues
 Kitchen & Toilet Rolls
 Wet Tissues

 Paper Napkins
 Paper Cups
 Coasters
 Paper Plates
 Sanitary Napkins

ORGANIZATIONAL CHART
Board of
Director
Chairman
Managing Executive
Advisor
Director Board
General
Manager
Project Director
Deputy GM
BSPM
Mill Manager
Finance
Marketing Sales & Product
Manager
Manager Manager BU Carton Flexible
Corruwall
Stores & Tech
Consumer
Inventory Manager
Product Manager Rubber Manager
Manager Mech Power
CSD Group Brand QC Manager

Manager Manager ERP manager
Commercial IR Manager R&D

Manager Manager
HRD
Manager
Liaison &
Admin
Manager Tissue
Manager
Production
I/C CPD
Production IP Manager

FINANCIAL RATIO ANALYSIS
Financial ratios are useful indicators of a firm's performance and financial

situation. Financial ratios can be used to analyze trends and to compare the
firm's financials to those of other firms. Ratio analysis is the calculation and
comparison of ratios which are derived from the information in a company's
financial statements. Financial ratios are usually expressed as a percent or as
times per period. Ratio analysis is a widely used tool of financial analysis. It is
defined as the systematic use of ratio to interpret the financial statements so
that the strength and weaknesses of a firm as well as its historical performance
and current financial condition can be determined. The term ratio refers to the
numerical or quantitative relationship between two variables. With the help of
ratio analysis conclusion can be drawn regarding several aspects such as
financial health, profitability and operational efficiency of the undertaking.
Ratio points out the operating efficiency of the firm i.e. whether the
management has utilized the firm’s assets correctly, to increase the investor’s
wealth. It ensures a fair return to its owners and secures optimum utilization of
firm’s assets. Ratio analysis helps in inter-firm comparison by providing
necessary data. An inter firm comparison indicates relative position. It provides
the relevant data for the comparison of the performance of different
departments. If comparison shows a variance, the possible reasons of variations
may be identified and if results are negative, the action may be initiated
immediately to bring them in line.
Ratios are used by both internal and external analysts

Internal uses
· Planning
· Evaluation of management
External uses
• Credit granting
• Performance monitoring

• Investment decisions
• Making of policies
For the purpose of analysis we use following kinds of ratios: -
A. Activity Ratio
B. Short Term Liquidity Ratios
C. Profitability Ratios
D. Investor Ratios
E. Long Term Analysis
ACTIVITY RATIO
An indicator of how rapidly a firm converts various accounts into cash or sales.
In general, the sooner management can convert assets into sales or cash, the
more effectively the firm is being run. In activity ratios we have calculated
following ratios: -
• Account Receivable Turnover
• Aging of A/R
• Inventory Turnover
• Days Sales in Inventory
• Working Capital Turnover
• Currents Assets turnover
• Fixed Asset Turnover
• Total Assets Turnover
Account Receivable Turnover
An accounting measure used to quantify a firm's effectiveness in extending

credit as well as collecting debts. The receivables turnover ratio is an activity

ratio, measuring how efficiently a firm uses its assets. Account receivable
turnover for Packages Limited Lahore is given below: -
2008 2007 2006 2005 2004
8.69 Times 8.56 Times 9.77 Times 9.96 Times 9.35 Times
Series1
12.00
10.00 9.96 9.77

9.35
8.56 8.69
8.00
6.00
4.00
2.00
0.00
2004 2005 2006 2007 2008
This ratio tends to increase when credit sales increase or account receivables
decreases and vice versa. This ratio is reliable if company’s business is not
seasonal. The higher the turnover ratio the shorter the time period between the
credit sales and cash collection.
Here from above computation it can be directly observed that firm’s Account
receivable turnover ratio has been fluctuating from 2004 to 2008. This ratio
increase from 2004 to 2005 and then starts decreasing in next 3 years. This is
due to company has increased its credit sales in these years but the times credit
collection has been made decreased which is not a favorable indicator for the
company. However slight increase in 2008 is showing company’s strength than
2007 but overall. But overall the company has lost its efficiency of credit
collection than the past.

Aging of Account Receivables

Average number of days a firm takes to collect payments on goods sold.
Numbers much higher than 40 to 50 days indicate collection problems and
significant pressure on cash flows. Numbers much lower than 40 to 50 days
indicate overly-strict credit policies that might be preventing higher sales
revenue. Also called days sales in receivables or debtor days. The account
receivable days for Packages limited Lahore for the year 2004-2008 has been
given below: -
2008 2007 2006 2005 2004
41.98 Days 42.65 Days 37.35 Days 36.64 Days 39.05 Days
Series1
50.00
42.65 41.98
40.00 39.05
36.64 37.35
30.00
20.00
10.00
0.00
2004 2005 2006 2007 2008
On the basis of evaluation made we can clearly see that the average days of
collecting account receivable has been revolving around 40 days in the
analyzed years which is favorable sign for the company. The company had
strict credit policies from year 2004 to 2006 but after that attractive credit
policy encourages the sales and the sale has been increased.
Inventory Turnover
Number of times a firm's investment in inventory is recouped during an
accounting period. Normally a high number indicates a greater sales efficiency

and a lower risk of loss through un-saleable stock. However, an inventory

turnover that is out of proportion to industry norms may suggest losses due to
shortages, and poor customer-service. Inventory Turnover of Packages limited
for the years 2004-2008 has been given below: -
2008 2007 2006 2005 2004
Series1
5.00
4.00
3.80
3.56
3.17 3.10 3.04
3.00
2.00
1.00
0.00
2004 2005 2006 2007 2008
The inventory turnover for the company has been revolved in the rage of 3 to 4
times in the analyzed years. Initially in 2005 the company has improved its
inventory turnover but after 2005 there is decline which shows the slow effect
in company production process. The inventory mobilization in to finished
goods has been weakened over the last year which is not good sign for the
company showing inefficiency of the company because the company is not
able to convert its inventory into sales than the past.
Days Sales in Inventory

This ratio measures the number of days an item is held as inventory before it is
sold. The lower the days inventory, the more efficient the company is, all other
things being equal. Day’s inventory is the first step measured in the cash
conversion cycle, followed by Days Sales Outstanding and days payable

outstanding. Day’s sales in inventory for the Packages Limited Lahore have
been given as under: -
2008 2007 2006 2005 2004
120 Days 118 Days 103 Days 96 Days 115 Days
140 Series1
120 118 120

115
100 103
96
80
60
40
20
0
2004 2005 2006 2007 2008
The lowest number of Days Company’s inventory held for sale is in 2005 with
compare to all other years because in all other years inventory to sales
operations take more days than 2004. After 2005 the number of days is
continuously increasing which is not good indicator for the company because
the time taken by the company to convert its inventory into sales has been
increasing which show the inefficiency of the inventory to sales operations of
the company.
Working Capital Turnover

This ratio provides some useful information as to how effectively a company is
using its working capital to generate sales. A company uses working capital
(current assets - current liabilities) to fund operations and purchase inventory.
These operations and inventory are then converted into sales revenue for the
company. The working capital turnover ratio is used to analyze the relationship
between the money used to fund operations and the sales generated from these
operations. In a general sense, the higher the working capital turnover, the

better because it means that the company is generating a lot of sales compared
to the money it uses to fund the sales. The working capital turnover for
Packages Limited Lahore from the year 2004-2008 has been given below: -
2008 2007 2006 2005 2004
Series1
10.00
9.36
9.00 8.86
8.00
7.00 7.12
6.00
5.00
4.00
3.00 3.19 3.14
2.00
1.00
0.00
2004 2005 2006 2007 2008
This ratio over the year has been 1st increased and then decreased over the
years. In the year 2008 the ratio highly increased and shows the efficiency of
the company funding, utilizing these funds to convert in generating sales
however the past trend is indicating that this ratio will be decreased next year.
The year 2008 has been proved the best year among all shows the greater effort
and efficiency of the management.
Currents Assets turnover

Current Assets Turnover ratio shows the productivity of the company's current
assets. This ratio indicates how efficiently a firm is using its current assets to
generate revenue to meet its short term expenses. Higher the ratio is favorable

sign for the company. The current asset turnover of the Packages Limited
Lahore for the year 2004 to 2008 is given below: -
2008 2007 2006 2005 2004
Series1
2.50
2.20
2.10
2.00
1.78 1.72
1.50
1.41
1.00
0.50
0.00
2004 2005 2006 2007 2008
This ratio measures the number of times the firm’s current assets has
contributed in generating sales. This ratio shows the highest figure in 2004
among all the years. After the increase in the year 2006 this ratio has been
continuously decreasing in next years. We can clearly see that after the year
2006 the firm has decreased its efficiency in using its current assets to generate
the revenue. This happened because the increasing amount of CGS over the
years. The company has to bear high cost of CGS and operating expensed than
earlier. The company’s current assets are not growing rapidly as compare to
CGS and expenses. This is not a good sign for the company.
Fixed Asset Turnover

Measure of the productivity of a firm, it indicates the amount of sales generated
by each unit spent on fixed assets, and the amount of fixed assets required to

generate a specific level of revenue. Changes in this ratio over time reflect
whether or not the firm is becoming more efficient in the use of its fixed assets.
The fixed asset turnover of the Packages Limited Lahore is given below: -
2008 2007 2006 2005 2004
Series1
2.00
1.80 1.82
1.60
1.48
1.40
1.20
1.00
0.80 0.80
0.60 0.57 0.53
0.40
0.20
0.00
2004 2005 2006 2007 2008
This ratio measures the efficiency of the management in using its fixed assets
for generating sales that how many times firm has converted its fixed assets in
generating sales. Higher the ratio is the favorable indicator for the company.
This ratio of the firm has been decreasing year after year which is not favorable
indicator for the company. This ratio shows that the firm is loosing its
efficiency of using fixed assets to generate the sales. This ratio is also
indicating that the percentage of increase in fixed assets is greater that the
percentage of increase in sales which leads to the inefficiency of firm’s
management in using its fixed assets.
Total Assets Turnover

Asset turnover is a financial ratio that measures the efficiency of a company's
use of its assets in generating sales revenue or sales income to the company.
Higher the ratio shows the efficiency of the management i.e. using its total

assets efficiently in generating sales. The total assets turnover for the Packages
Limited Lahore is given as under: -
2008 2007 2006 2005 2004
Series1
1.00
0.90 0.92
0.80 0.78
0.70
0.60
0.50
0.46
0.40
0.32 0.36
0.30
0.20
0.10
0.00
2004 2005 2006 2007 2008
This ratio measures that how many times the firm has converted its total assets
in generating sales. This ratio has been continuously decreased from the year
2004 to 2007 showing the inefficiency of firm’s in using its total asset in
generating sales. However in 2008 there is a slight increase in this ratio
interpreting little bit efforts of management with compare to previous year but
overall this ratio has been showing inefficiency of the management which is
not good sign for the company.

Short Term Liquidity Ratios

Liquidity ratios provide information about a firm's ability to meet its short-term
financial obligations. They are of particular interest to those extending short-
term credit to the firm. To measure the short term liquidity of the company we
will calculate the following ratios: -
• Current Ratio
• Acid Test Ratio
• Cash Ratio
• Cash Flow from Operations Ratio
• Operating Cycle
• Working Capital
Current Ratio
Indicator of a firm's ability to meet short-term financial obligations, it is the
ratio of current assets to current liabilities. Though every industry has its range
of acceptable current-ratios, a ratio of 2:1 is considered desirable in most
sectors. Since inventory is included in current assets, acid test ratio is a more
suitable measure where salability of inventory is questionable. The current ratio
of the Packages Limited Lahore from the year 2004 to 2008 has been given
below: -
2008 2007 2006 2005 2004
1.23:1 2.46:1 1.48:1 1.95:1 1.39:1

3.00 Series1
2.50 2.46
2.00 1.95
1.50 1.39 1.48
1.23
1.00
0.50
0.00
2004 2005 2006 2007 2008
The current ratio shows how a firm is able to cover its current liabilities with its
current assets it shows the liquidity of the company.
The ratio signifies variant pattern with rising and falling observations. The ratio
shows that firm has managed to create a good combination of the current assets
and liabilities making it financially sound and liquid enough to cover its
liabilities.
There is however a substantial increase in the year 2007 as compares to the
remaining ones. This phenomenon is because the firm has comparatively little
abound of current liabilities.
Acid Test Ratio

Key measure of a firm's liquidity, it answers the question "Can this firm meet
its current obligations from its liquid assets if suddenly all sales stop?" More
stringent than 'current ratio,' it excludes inventories (typically the least liquid of
current assets) to concentrate on the more liquid assets of the firm. Usually an
acid test ratio of 1.0 or higher is considered satisfactory by lenders and
investors. Also called acid ratio or quick ratio. The acid test ratio of Packages
Limited Lahore for the year 2004 to 2008 has been given as under: -
2008 2007 2006 2005 2004
0.43 :1 1.66 :1 1.60 :1 2.94 :1 1.64 :1

3.50 :1 Series1
3.00 :1 2.94 :1
2.50 :1
2.00 :1
1.50 :1 1.64 :1 1.60 :1 1.66 :1
1.00 :1
0.50 :1 0.43 :1
0.00 :1
2004 2005 2006 2007 2008
The above comparison shows the falling and rising patterns in the ratio.
However the after increasing in 2005 there is decrease in this ratio of the firm
but in the year 2008 there is a great decline in this ratio. This is due to the
couple of reasons.
• The increase in current liabilities of the company is near about 3 times
to the previous year 2007.
• Second firm’s inventories increase near about 2 times with compare to
the previous year 2007.
As inventory is least liquid current asset which can not meet the firm’s current
liabilities that is why after deducting the inventory from current assets firm has
43% of current assets to meets its current liabilities which is not favorable
indicator for the company. This ratio shows the poor liquidity position of the
company.
Cash Ratio
Comparison of cash plus cash equivalents to current liabilities. Also called
liquidity ratio, it is a refinement of quick ratio and indicates the extent to which
the readily available funds can pay off the current liabilities. Higher the ratio is
the favorable sign for the company. The cash ratio of Packages Limited Lahore
for the year 2004 to 2008 is: -

2008 2007 2006 2005 2004
0.04 :1 0.05 :1 0.05 :1 0.86 :1 0.08 :1
Series1
1.00 :1
0.86 :1
0.80 :1
0.60 :1
0.40 :1
0.20 :1
0.08 :1 0.05 :1
0.05 :1 0.04 :1
0.00 :1
2004 2005 2006 2007 2008
This ratio will measure how much firm has cash and cash equivalents to meet
its current liabilities. There is not so much variation in this ratio except 2005.
This is due to in the year 2005 the firm has lower amount of current liabilities.
This ratio is showing lower figure because the company has most of its current
assets in the form of net receivables and inventories. Second the firm has not
even single short term marketable security. Packages ltd have very low amount
in hand as compare to its current liability. It seems to be not a favorable sign
for the company.
Cash Flow from Operations Ratio
The Cash Flow from Operations ratio (also: Operating Cash Flow) is used to
determine the extent to which cash flow differs from the reported level of either
Operating Income or Net Income. (Under both IFRS and US GAAP a company
can still easily report healthy income figures, even while its cash resources are
poor).

In other words: it is a check on the quality of a company's earnings. It's

arguably a better measure of a business's profits than earnings, because a
company can show positive net earnings and still not be able to pay its debts.
A difference in this ratio and Reported Earnings is indicative of substantial

non-cash expenses or sales in the reported income figures and if a firm reports
record earnings but negative Operating Cash Flows, it may be using aggressive
accounting techniques. If the Cash Flow from Operations ratio is substantially
less than one or decreasing / poor over a longer period of time, cash flow
problems are likely. The cash flow from operation of Packages Limited Lahore
for the year 2004 to 2008 is given below: -
2008 2007 2006 2005 2004
0.23 :1 0.64 :1 0.55 :1 0.59 :1 0.73 :1
Series1
0.80 :1
0.73 :1
0.70 :1
0.64 :1
0.60 :1 0.59 :1
0.55 :1
0.50 :1
0.40 :1
0.30 :1
0.23 :1
0.20 :1
0.10 :1
0.00 :1
2004 2005 2006 2007 2008
This ratio of the firm has been decreased from 2004 to 2006 and after increase
in 2007 there is abrupt decline in the year 2008. The reasons behind the abrupt
change in this ratio are: -
• The increase in firm’s Current liabilities is 5 times higher with compare

to the previous year 2007. The increase in current liabilities is due to

abrupt increase in Finance under markup arrangement and firm’s current

maturity of long term debt.
• Second major reason is that the firm has decreased 50% its operating
profit with compare to 2007. The reason behind is that firm CGS has
been increased up to 69% during the year 2008.
Overall this ratio is indicating not a healthy sign for the company.
Operating Cycle
One complete process that any input-output system undergoes, and in which
the initial and final states are identical. Average time taken by a firm in
converting merchandise or raw material back into cash. Lower the answer of
the ratio is the favorable sign for the company and vice versa. The operating
cycle for Packages Limited Lahore for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
162 Days 160 Days 140 Days 133 Days 154 Days
Series1
160 160 162

154
140
133
120
80
40
0
2004 2005 2006 2007 2008
This ratio measure the time taken by the firm to complete its operating cycle
starting from inventory to receiving amount from creditors. This ratio after

declining in 2005 has been increased since 2008. However increase in 2007
and 2008 is unusual. This is because of following reasons: -
• The days of account receivable collection of the company has been

increased in these two years.
• Company is taking so much time to convert its inventory into sales than
earlier.
This ratio is not showing the healthy sign for the company because the
operating cycle days of the company has been increased leading towards slow
progress of firm’s operations.
Working Capital
Cash or equivalent to cash or inventory available for day to day operations of a

firm. Strictly speaking, one borrows cash (and not working capital) to be able
to buy assets or to pay for obligations. Also called current capital. This is the
indication of the short run solvency of the company. Higher the amount of
working capital, showing strength of the company. The working capital for
Packages Limited Lahore for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
1,306,588,000 2,872,021,000 1,101,998,000 2,222,907,000 675,932,000
Series1
3,500,000
Thousands
3,000,000
2,872,021
2,500,000
2,222,907
2,000,000
1,500,000
1,306,588
1,000,000 1,101,998
675,932
500,000
-
2004 2005 2006 2007 2008

This ratio for the firm shows the rising and falling patterns. It increase and then
decrease year after year respectively. The highest figure is shown in the year
2007 in which the firm has highest working capital with compare to all the
years. Both the current assets and current liabilities of the firm have been
increased in the year 2008 but working capital is decreased in the year 2008.
The reason behind this fact is: -
• Increase in firm’s current liability is much larger than the change in

increase in the current assets. The current liabilities have been increased
3 times while the current assets increase 1.5 times with compare to the
previous year from the year 2007 to 2008.
This ratio is not showing good sign for the company because the spread
between the current liabilities and current assets is not lesser.

C) Profitability Ratios
A class of financial metrics that are used to assess a business's ability to

generate earnings as compared to its expenses and other relevant costs incurred
during a specific period of time. For most of these ratios, having a higher value
relative to a competitor's ratio or the same ratio from a previous period is
indicative that the company is doing well.
Some examples of profitability ratios are profit margin, return on assets and
return on equity. It is important to note that a little bit of background
knowledge is necessary in order to make relevant comparisons when analyzing
these ratios.
For instances, some industries experience seasonality in their operations. The

retail industry, for example, typically experiences higher revenues
and earnings for the Christmas season. Therefore, it would not be too useful to
compare a retailer's fourth-quarter profit margin with its first-quarter profit
margin. On the other hand, comparing a retailer's fourth-quarter profit
margin with the profit margin from the same period a year before would be far
more informative.
In this section we will calculate following ratios: -
• Net profit margin
• Operating profit margin
• Profit before tax Margin
• Gross profit margin
• Return on asset
• Return on Total Equity
• Return on common equity
• Return on investment
• Operating Asset Turnover

• Return on Operating Asset

• Duo Pont return on Total Asset
• Duo Pont return on Operating Asset
Net profit margin

This ratio measures how much out of every unit of sales a company actually
keeps in earnings. Profit margin is very useful when comparing companies in
similar industries. A higher profit margin indicates a more profitable company
that has better control over its costs compared to its competitors. Profit margin
is displayed as a percentage; a 20% profit margin, for example, means the
company has a net income of 0.20 for each unit of sales. It is also known as Net
Profit Margin.
Looking at the earnings of a company often doesn't tell the entire story.
Increased earnings are good, but an increase does not mean that the profit
margin of a company is improving. For instance, if a company has costs that
have increased at a greater rate than sales, it leads to a lower profit margin.
This is an indication that costs need to be under better control. The net profit
margin of Packages Limited Lahore for the year 2004 to 2008 is: -
2008 2007 2006 2005 2004
(1.60) 47.91% 77.75% 14.30% 15.99%

Series1
83.00
77.75%
61.00
47.91%
39.00
17.00 15.99% 14.30%
(5.00) (1.60)
2004 2005 2006 2007 2008
This ratio after a little bit decreasing in 2005 increase highly in 2006 and then
started declining and at the end there is negative profit / loss in 2009. The
highest value among all is during the year 2006 i.e. 77.75% of net sales. This is
because the company has highest net profit during this year. The extraordinary
increase in profit is due to following reasons: -
• Company has gained dividend income from the other related parties.
• Company has earned so much on the sale of loan of long term
investments i.e. gain on sale of long term investments.
However in 2008 company has to face loss. The reasons behind facing this loss
are as under: -
• Company’s CGS cost has been increased 1.5 times as compare to
previous year 2007.
• The company has to pay huge amount of interest rate for his debts
including Interest and mark up including commitment charges on
o Long-term finances
o Finances under mark up arrangements
o Finance lease
o Loan handling charges
o Loss on cross currency swap
o Exchange loss
o Bank charges

Decrease in this ratio is not a favorable indicator for the company, it is very
dangers for the health of the company.
Operating profit margin

Operating profit for a certain period divided by revenues for that period.
Operating profit margin indicates how effective a company is at controlling the
costs and expenses associated with their normal business operations. Higher the
ratio is to be considered a favorable sign for the company and vice versa. The
operating profit margin for Packages Limited Lahore for the year 2004 to 2008
is as under: -
2008 2007 2006 2005 2004
3.32% 8.12% 11.70% 14.03% 14.59%
Series1
20.00%
15.00% 14.59% 14.03%

11.70%
10.00%
8.12%
5.00%
3.32%
0.00%
2004 2005 2006 2007 2008
This ratio has been declining over the years. The parentage of decrease in the
year 2008 is higher among all. Though net sales of the company have been
increasing over the years but the operating profit has been decreased more than
the increase in the sales. The major reason behind the decrease in operating
profit is: -
• The continuous increase in firm’s Cost of Goods Sold.
• The continuous increase in firm’s operating expenses.

Overall this ratio is not favoring the company. This ratio is not a good indicator
for the health of company.
Profit / Loss before tax Margin

The amount by which net income before tax exceeds expenditure. It represents
the amount of sales revenue that a company earns as pre-tax profits. It is useful
way of comparing businesses in the same industry because it eliminates the
variable of taxation which can be effected by many things. The profit / loss
before tax margin for Packages Limited Lahore for the year 2004 to 2008 is: -
2008 2007 2006 2005 2004
(2.52) 51.31% 80.90% 18.73% 19.82%
Series1
100.00
80.00 80.90%
60.00
51.31%
40.00
20.00 19.82% 18.73%
- (2.52)
2004 2005 2006 2007 2008
(20.00)
This ratio same like net profit margin after a little bit decreasing in 2005
increased highly in 2006 and then started declining and at the end there is
negative profit / loss in 2009. The highest value among all is during the year
2006 i.e. 80.90% of net sales. This is because the company has highest profit
before tax during this year. The reasons behind extraordinary increase in profit
are same as net profit margin i.e.: -
• Company has gained dividend income from the other related parties.
• Company has earned so much on the sale of loan of long term
investments i.e. gain on sale of long term investments.

However in 2008 company has to face loss. The reasons behind facing this loss
are same as net profit margin i.e.: -
• Company’s CGS cost has been increased 1.5 times as compare to
previous year 2007.
• Company’s financial cost and interest expense has been increased highly
which caused loss to the company.
The expense of the company after the year 2006 has been increasing and
increase in such expense during the year 2008 is very high which is not good
for the health of the company. This ratio is indicating unfavorable sign for the
company.
Gross profit margin
What remains from sales after a company pays out the cost of goods sold. To
obtain gross profit margin, divide gross profit by sales. Gross profit margin is
expressed as a percentage. Higher the ratio is the favorable sign for the
company and vice versa. The gross profit margin for Packages Limited Lahore
for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
7.72% 13.28% 16.50% 19.06% 21.86%
Series1
25.00%
21.86%
20.00% 19.06%
16.50%
15.00%
13.28%
10.00%
7.72%
5.00%
0.00%
2004 2005 2006 2007 2008
The gross profit margin for Packages Limited Lahore has been decreasing year
after year. However company’s sales are increasing year by year but the change
in company’s CGS is higher than the change in sales which leads to continuous

decrease in this ratio. Especially in the year 2008 this ratio highly decreased
than early years because of CGS increased near about 1.5 times and the sale is
only increase 1.35 times witch comparing to the last year. The major reasons
behind the increase in CGS are: -
• Cost of Raw material has been increased 1.5 times with compare to the
last year.
• Company’s FOH has also been increased 1.6 times with compare to the
last year.
This ratio is indicating that the increase in CGS is lower than the increase in
sales year after year which is not a good sign for the health of the company.
Return on asset
ROA. A measure of a company's profitability, equal to a fiscal year's earnings

divided by its total assets, expressed as a percentage. Return on assets (ROA)
reveals managements effectiveness in generating profits from the assets has available,
and is perhaps the single most important measure of return. This ratio of Packages
Limited Lahore for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
15.42% 35.58% 11.22% 14.79%

-
Series1
40
35 35.58%
30
25
20
15 14.79% 15.42%
10 11.22%
5
- -
2004 2005 2006 2007 2008
This ratio measures how efficiently management is using its assets to generate
the sales. Higher the ratio is favorable indicator for the company and shows the

efficiency of assets utilization in generating income. This ratio after showing

slight decrease in 2005 has been increased highly in 2006 and afterward
decreasing continuously showing that the firm is not using its assts efficiently
and effectively.
The reason behind continuous decrease in this ratio is that the increase in
company’s average total asset is higher than the increase in net income. The
reasons behind abrupt decrease in this ratio is abrupt increase in Total assets in
the year 2007 are as under:-
• Company has increased its fixed assets like property plan and
equipments in the year 2007 twice than the previous year.
• Company has increased its investment and makes investments in long
term assets.
However decrease in this ratio in 2008 is not caused by the increase in fixed
asset but the company has to face loss during this year due to current maturity
of long term debts and interest and finance charges. Over all this ratio is
indicating that the firm is not using its assets efficiently and effectively to
generate the income.
Return on Total Equity

A measure of how well a company used reinvested earnings to generate
additional earnings, equal to a fiscal year's after-tax income (after preferred
stock dividends but before common stock dividends) average total equity,
expressed as a percentage. It is used as a general indication of the company's
efficiency; in other words, how much profit it is able to generate given the
resources provided by its stockholders. Investors usually look for companies
with returns on equity that are high and growing. The return on total equity for
2008 2007 2006 2005 2004

-1.14% 27.17% 56.99% 17.02% 22.84%
60.00% Series1
56.99%
50.00%
40.00%
30.00% 27.17%
20.00% 22.84%
17.02%
10.00%
0.00% -1.14%
-10.00%2004 2005 2006 2007 2008
The pattern shown in graphical representation is same like the return on asset
and net profit margin and profit before tax margin. The best figure is shown in
the year 2006 this is because of highest net income among all the years. After
2006 this ratio has been continuously decreased because company’s net income
continuously decreased due to the reasons mentioned above. In the year 2008
company has to face loss. The continuous decline after 2006 is also because of
company has raised more funds through equity by issuing new shares in the
year 2007 and 2008. However the decline in the ratio is not a good sign for the
health of the company. It is not a good indicator to encourage investors.
Return on common equity
A variation of the Return on Equity formula which subtracts preferred

dividends from net income and preferred equity from shareholders' equity. This
variation shows the effect of common shares on profitability.
This ratio of the company is same as above because the company has not even
a single preferred stock.
Return on investment

A measure of a corporation's profitability, equal to a fiscal year's income

divided by common stock and preferred stock equity plus long-term debt. ROI
measures how effectively the firm uses its capital to generate profit; the higher
the ROI, the better. More generally, the income that an investment provides in
a year. The ROI for Packages Limited Lahore for the year 2004 to 2008 is as
under: -
2008 2007 2006 2005 2004
2.99% 18.19% 43.31% 17.56% 24.96%
Series1
50.00%
43.31%
40.00%
30.00%
24.96%
20.00% 17.56% 18.19%
10.00%
2.99%
0.00%
2004 2005 2006 2007 2008
The pattern of this ratio is just like most of the profitability ratios. The highest
figure is shown in 2006 due to the highest net income earned by the company
and one other reason is that the company has lower long term debts and equity
than all rest of the years. How ever the ratio is continuously decreased in next
year i.e. 2007 and 2008 due to the several reasons: -
• The firm long term debts and equity has been increased 1.77 times and
2.08 times with compare to the 2006. In 2008 the increase in long term
debt and equity is 1.18 times to the year 2007.
Overall the ratio is not indicating the favorable sign for the company because
the company is not utilizing its investments efficiently and effectively to
generate profits.
Operating Asset Turnover

This ratio measure that how many times the firm has converted its operating
assets into sales. The higher the answer of the ratio reflects the efficiency of
management using its operating assets. Higher the answer of the ratio is the
favorable sign for the company. The operating asset turnover for Packages
2008 2007 2006 2005 2004
Series1
20.00
18.70
15.00
10.00
8.86
5.00 4.54
1.76 0.96
0.00
2004 2005 2006 2007 2008
This ratio after the continuous declining till 2007 has been sharply increased in
2008. Because the operating assets of the firm have been continuously
increased till 2007 but sales is not increase up to that extent. The increase in
operating asset is higher than the increase in sales. However in 2008 the
operating assets has been decrease but sales has been increased which shows
the efficiency of the management in using its current assets to generate the
sales. Except 2008 this ratio is indicating not a good sign for the help of the
company because the firm is unable to use its operating assets efficiently and
effectively with compare the past year.
Return on Operating Asset
This measure varies somewhat from the preceding return on assets employed,
because only those assets actively used to create revenue are used in the
denominator. This focuses management attention on the amount of assets
actually required to run the business, so that it has a theoretical targeted asset

level to achieve. A typical result of this measurement is an ongoing campaign

to eliminate unnecessary assets. The return on operating asset turnover for
Packages Limited Lahore for the year 2004 to 2008 is as follows: -
2008 2007 2006 2005 2004
62.04% 7.81% 20.65% 63.69% 129.22%
Series1
140.00%
129.22%
120.00%
100.00%
80.00%
60.00% 63.69% 62.04%
40.00%
20.00% 20.65%
7.81%
0.00%
2004 2005 2006 2007 2008
This ratio after sharply declining till 2007 has been increased in 2008. The
reason behind sharp decline is that thought the operating assets of the firm have
been increase over the years but net income is not increase up to that extent.
The increase in operating asset is higher than the increase in net income.
However in 2007 operating asset increase 2.11 times but the net income of the
company has been decreased 1.25 times with compare to the previous year.
This indicate that the company is not using its operating assets efficiently and
effectively to generate the net income. However the increase in 2008 is because
of the decrease in operating assets due to the increase in current liabilities. Here
the decrease in operating asset is higher than the decrease in net income of the
company that is why the answer of this ratio is higher. This year is showing the
efficiency of the management that however the operating assets has been
decrease but management has used its operating assets more efficiently and
effectively with compare to the previous years. Overall this ratio is not
indicating the good sign for the company health because the company is unable
to use its assets efficiently and effectively to generate net income.

DuPont return on Total Asset

Return on Assets Duo Pont is a financial ratio that shows how the return on
assets depends on both asset turnover and profit margin. The Duo Pont method
breaks out these two components from the return on assets ratio in order to
determine the impact of each on the profitability of the company. The duo
DuPont return on total asset for Packages Limited Lahore for the year 2004 to
2008 is as under: -
2008 2007 2006 2005 2004
-0.57% 15.42% 35.58% 11.22% 14.79%
Series1
40.00%
35.00% 35.58%
30.00%
25.00%
20.00%
15.00% 14.79% 15.42%
10.00% 11.22%
5.00%
0.00% -0.57%
-5.00%2004 2005 2006 2007 2008
The pattern shown in graphical representation is same like the return on asset
and net profit margin, profit before tax margin and total asset turnover. The
best figure is shown in the year 2006 this is because of highest net income
among all the years. After 2006 this ratio has been continuously decreased
because company’s net income continuously decreased due to the reasons
mentioned above. In the year 2008 company has to face loss. This ratio like all
the profitability ratios is not showing the favorable indicator for the company.

D) Investor Ratios
Most of the investor ratios that we might need to use is relatively simple both
to use and to understand. We can contrast these ratios with others, such as stock
and debtors' turnover; and the relationships between the ROCE and the profit
margin and assets turnover ratios, at the top of the pyramid of ratios.
The basic ratios we are interested in are:
• Financial Leverage
• Earning Per Share
• Price Earning Ratio
• Book Value Per Share
• Dividend Payout Ratio
• Dividend Yield
• Percentage of Earning Retained
Financial Leverage
This measure the use of interest as fixed charges to increase the income is
called financial leverage. The financial leverage for Packages Limited Lahore
for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
- 0.16 0.14 0.75 0.74

Series1
1
0.74 0.75
1
1
1
0
0
0
0.14 0.16
0
- -
2004 2005 2006 2007 2008
This ratio sharply decline after 2006. This ratio is telling that the earnings are
not increase more than the earning before tax & interest just because of interest
as a fixed cost. The firm has to bear high interest rates and financing cost but
the increase in net income is not up to that extent. In year 2008 company has to
face loss just because of this interest rate and current maturity of long term
debt. Firm has paid high amount of interest rate in 2008. This ratio is not
indicating a good sign for the health of the company. The interest as a fixed
cost is not proved to be good tool to increase the income for the company.
Earning Per Share
Earning per share measure the cash flow towards the stock holders. It reflects
that how much income is generated by the company for its stockholders.
Higher the earning per share shows the positive sign for the company and cause
attraction to the investors in raising new capital if needed. The earning per
share for Packages Limited Lahore for the year 2004 to 2008 is given below: -
2008 2007 2006 2005 2004
- 58.96 87.30 14.53 20.14

Series1
100
87.30
80
60 58.96
40
20 20.14
14.53
- -
2004 2005 2006 2007 2008
This ratio has been fluctuating over the years. Again 2006 are proven to be the
best year for the company in which it generate highest earning per share
because of the significance increase in the net income. The ratio tends to be
decline in next two years because of decrease in net income of the company
due to the several reasons already discussed. In the year 2008 this ratio tends to
be zero because company has to face loss. This ratio is not showing the good
sign for the company. This result will discourage the investors as the EPS is
declining.
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. The higher the price in relation to
earnings, the higher the P/E ratio which indicates the higher the premium an
investor is prepared to pay for the share. This occurs because the investor is
extremely confident of the potential growth and earnings of the share. This
ratio is also called earnings multiple. The earnings multiple for Packages
Limited Lahore for the year 2004 to 2008 is given as under: -
2008 2007 2006 2005 2004
- 7.10 2.34 12.44 10.15

Series1
14
12 12.44
10 10.15
8
7.10
6
4
2 2.34
- -
2004 2005 2006 2007 2008
This ratio over the year has been fluctuating increasing and than decreasing
trend. High P/E generally reflects lower risk and/or higher growth prospects for
earnings. The above ratio shows that the shares were traded at a much higher
premium in 2005 than were in 2006. In 2005 the price was 12.44 times higher
than earnings while in 2006, the price was only 2.34 times higher than its
earning. In 2008 this ratio is decrease to the zero because of zero earning per
share. This ratio is also not showing the good sign for the company’s health.
The investor will also not consider it good.
Book Value per Share

A figure frequently publish in the annual reports is book value per share, which
indicates the amount of stockholders equity that relates to each share of
outstanding common stock. The book value per share for Packages Limited
Lahore for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
192.85 247.65 195.66 110.71 88.18

Series1
300.00
250.00 247.65
200.00 195.66 192.85
150.00
100.00 110.71
88.18
50.00
0.00
2004 2005 2006 2007 2008
This ratio of the company started increasing and increase till 2007 but in the
year 2008 it decline. The reasons for increase in ratio till 2007 are the
continuous increase in the equity of the company and the no of common stock
outstanding till 2007. The reasons behind declining this ratio in 2008 are: -
• Company’s total equity has been declined due to the inappropriate loss
faced by the company during the year 2008.
• Company’s total no of common stock has also been increased in 2008.
This ratio has been remained a positive indicator for the company till 2007 but
in 2008 it is not indicating a good sign for the health of the company because
this ratio is started declining in 2008.
Dividend Payout Ratio

This ratio looks at the dividend payment in relation to net income Dividends
paid divided by company earnings over some period of time, expressed as a
percentage. This ratio is also called payout ratio. The dividend payout ratio for
Packages Limited Lahore for the year 2004 to 2008 is given as under: -
2008 2007 2006 2005 2004
11.12% 6.85% 35.47% 43.25%

-

Series1
50.0
43.25%
40.0
35.47%
30.0
20.0
10.0 11.12%
6.85%
- -
2004 2005 2006 2007 2008
This ratio year after year has been declining showing that the company is distributing
lower proportion of its earning as dividend. In 2007 this ratio increase with compare
to previous year 2006 but this ratio is zero in the year 2008 as company has faced loss
and earning per share is zero in this year generally, the low growth companies have
higher dividends payouts and high growth companies have lower dividend payouts.
This ratio is showing positive indicator for the company as it seems to be that the
company is growing gradually. On the other hand with respect to the investors this
ratio has two impacts.
• The investor who is interest in the high dividend will consider it bad because
the dividend is decreasing year by year.
• While on the other hand the investor who are interested in the higher capital
gains will consider good
Dividend Yield
The yield a company pays out to its shareholders in the form of dividends. It is
calculated by taking the amount of dividends paid per share over the course of
a year and dividing by the stock's price. Mature, well-established companies
tend to have higher dividend yields, while young, growth-oriented companies
tend to have lower ones, and most small growing companies don't have a
dividend yield at all because they don't pay out dividends. The dividend yield for

2008 2007 2006 2005 2004
- 1.57% 2.93% 2.85% 4.26%
Series1
5
4.26%
4
3 2.85% 2.93%
2
1.57%
1
- -
2004 2005 2006 2007 2008
This ratio has been declining year after year except 2006 because in this year
there is a slight increase in this ratio because of increase in dividend per share
to the stockholders. However after 2006 there is continuous decline in this
ratio. The decrease in this ratio in 2007 is due to the following reasons: -
• There is increase in the market price per share of the company i.e. 1.78
times of the previous year.
• Secondly, the dividend rather than increasing has been decreasing with
compare to the previous year.
In the year 2008 however the market price per share has been decreased 4.5
times to the previous year but the company has face loss so the dividend is zero
due to which this ratio is zero.
This ratio is also not indicating the favorable sign for the company because the
market price per share has been decreased abruptly in the last analyzed year.
Percentage of Earning Retained

The proportion of current earnings retained for internal growth. The percentage
of earning retained s better for trend analysis if nonrecurring items are
removed. This indicates what is being retained of recurring earning. The
percentage of earning retained of Packages Limited Lahore for the year 2004 to
2008 is as under: -

2008 2007 2006 2005 2004
- 90.33% 93.15% 60.36% 57.91%
Series1
100
93.15% 90.33%
80
60 57.91% 60.36%
40
20
- -
2004 2005 2006 2007 2008
This ratio has been continuously increased till 2006 because of continuous
increase in the net income and than started decline till the last year however
company’s dividend has been slightly increasing year after year. The ratio has
been decreased because in 2007 company’s net income decreased almost 1.5
times and the reason for an abrupt decrease in 2008 the company has to face
loss due to which company is unable to keep retained earnings. This ratio was
favorable indicator for the company till 2007 but after that this is not showing
the positive indicator of the company.

E) Long Term Analysis
• Time Interest Earned Ratio

• Debt Service Coverage Ratio
• Fixed Charge Coverage
• Debt Ratio
• Debt Equity Ratio
• Fixed Asset Coverage
Time Interest Earned Ratio

The interest coverage ratio tells us how easily a company is able to pay interest
expenses associated to the debt they currently have. The ratio is designed to
understand the amount of interest due as a function of company’s earnings
before interest and taxes (EBIT). This ratio measures the extent to which
operating income can decline before the firm is unable to meet its annual
interest cost. The time interest earned ratio for Packages Limited Lahore for the
year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
0.24 2.00 11.64 5.37 6.28
Series1
14.00
12.00 11.64
10.00
8.00
6.00 6.28
5.37
4.00
2.00 2.00
0.00 0.24
2004 2005 2006 2007 2008

This ratio over the year has been showing fluctuating trend. The highest figure
is again in the year 2006, because the interest expense of the company has been
decreased 2.35 times to the previous year. After 2006 there is continuous
decline in this ratio because of multiple reasons i.e.: -
• There is continuous decrease in company’s EBIT i.e. 1.25 and 1.80
times in 2007 and 2008 respectively.
• On the other hand company’s interest expenses are continuously
increasing due to the increase in the long term debts.
In the year 2008 company has to pay huge amount of markup and has to bear
high finance cost and bank charges in paying this markup. Overall the ratio is
not indicating a favorable sign for the company because the net income is
decreasing and on the other hand interest expenses of the company are
increasing by the increase in use of debt.
Debt Service Coverage Ratio

A measurement of a property's ability to generate enough revenue to cover the
cost of its mortgage payments. It is calculated by dividing the net operating
income by the total debt service. For example, a property with a net operating
income of $50,000 and a total debt service of $40,000 would have a debt
service ratio of 1.25, meaning that it generates 25% more revenue than required
to cover its debt payment. The debt service coverage ratio for Packages
2008 2007 2006 2005 2004
0.18 2.00 11.64 5.37 6.28

Series1
14.00
12.00 11.64
10.00
8.00
6.00 6.28
5.37
4.00
2.00 2.00
0.00 0.18
2004 2005 2006 2007 2008
This ratio over the year has been showing fluctuating trend. The highest figure
is again in the year 2006, because the interest expense of the company has been
decreased 2.35 times to the previous year. After 2006 there is continuous
decline in this ratio because of multiple reasons i.e.: -
• There is continuous decrease in company’s EBIT i.e. 1.25 and 1.80
times in 2007 and 2008 respectively.
• On the other hand company’s interest expenses are continuously
increasing due to the increase in the long term debts and company has to
bear financing cost etc.
• In 2008 the company has to pay the huge amount of current maturity of
long term debts i.e. Rs: 550 Million.
Overall the ratio is not indicating a favorable sign for the company because the
net income is decreasing and on the other hand interest expenses of the
company are increasing by the increase in use of debt.
Fixed Charge Coverage

Profits before income taxes and interest payments, divided by long-term
interest, for a given period of time. The fixed charge coverage ratio for
Packages Limited Lahore for the year 2004 to 2008 is as below: -
2008 2007 2006 2005 2004
0.18 2.00 11.64 5.37 6.28

Series1
14.00
12.00 11.64
10.00
8.00
6.00 6.28
5.37
4.00
2.00 2.00
0.00 0.18
2004 2005 2006 2007 2008
This ratio is same as above because the company’s rentals amount on long term
debts is zero.
Debt Ratio
This will tell you how much the company relies on debt to finance assets.
When calculating this ratio, it is conventional to consider both current and non-
current debt and assets. In general, the lower the company's reliance on debt for
asset formation, the less risky the company is since excessive debt can lead to a
very heavy interest and principal repayment burden. However, when a
company chooses to forgo debt and rely largely on equity, they are also giving
up the tax reduction effect of interest payments. Thus, a company will have to
consider both risk and tax issues when deciding on an optimal debt ratio. The
debt ratio for Packages Limited Lahore for the year 2004 to 2008 is as under: -
2008 2007 2006 2005 2004
53.55% 45.66% 39.70% 33.43% 35.26%

Series1
60.00%
53.55%
50.00%
45.66%
40.00% 39.70%
35.26% 33.43%
30.00%
20.00%
10.00%
0.00%
2004 2005 2006 2007 2008
This ratio of the company has been continuously increasing year by year except
in 2006 there is a slight decrease in this ratio because the increase in firm’s
total asset in higher than the increase in firm’s liability. The continuous
increase in this ratio is because year after year the percentage of increase in
debt is higher than the percentage of increase in assets.
This ratio is not a good sign for the company because company is mostly
relying on short term and long term debt as a source of funding due to which
company has to bear high cost of markup and arranging finance cost.
Debt Equity Ratio

This ratio indicates what proportion of equity and debt the company is using to
finance its assets. A high debt/equity ratio generally means that a company has
been aggressive in financing its growth with debt. This can result in volatile
earnings as a result of the additional interest expense.
If a lot of debt is used to finance increased operations (high debt to equity), the
company could potentially generate more earnings than it would have without
this outside financing. If this were to increase earnings by a greater amount
than the debt cost (interest), then the shareholders benefit as more earnings are
being spread among the same amount of shareholders. However, the cost of
this debt financing may outweigh the return that the company generates on the
debt through investment and business activities and become too much for the
company to handle. This can lead to bankruptcy, which would leave
shareholders with nothing. The debt to equity ratio for Packages Limited
Lahore for the year 2004 to 2008 is as under: -

2008 2007 2006 2005 2004
43.06% 40.46% 30.50% 11.46% 0.15%
Series1
50.00%
43.06%
40.00% 40.46%
30.00% 30.50%
20.00%
10.00% 11.46%
0.00% 0.15%
2003 2004 2005 2006 2007 2008 2009
This ratio of the company has been continuously increasing year by year
because year after year company’s is relying more in debt as a source of
funding rather than equity. This ratio is not a good sign for the company
because company is mostly relying on short term and long term debt as a
source of funding due to which company has to bear high cost of markup and
arranging finance cost.
Fixed Asset Coverage

The Fixed average coverage ratio is an indicator of how efficiently the
resources and facilities of a firm (the fixed assets) are being utilized by
equating them with the amount generated through sales. For a greater value the
ratio indicates a satisfactory performance of the organization's operations and a
lower value of the ratio indicates poor performance. This ratio expresses the
number to times the fixed assets are being turned over in a stated period and it
accounts critically the efficiency with which the assets are being employed.
The fixed asset coverage for Packages Limited Lahore for the year 2004 to
2008 is as below: -
2008 2007 2006 2005 2004
2.26 1.47 2.21 6.28 518.74

Series1
600.00
500.00 518.74
400.00
300.00
200.00
100.00
0.00 6.28 2.21 1.47 2.26
2004 2005 2006 2007 2008
This ratio of the company has sharply decreased after 2006 and fluctuates year
after year. Actually in 2006 the amount of debt is so smaller with compare to
the amount of assets. After 2006 company has increase the use of debt as a
source of funding and this ratio sharply declined. This ratio is showing the
strength of the company the company’s debt paying ability because the
company has more assets than its debt amount.


CONCLUSION
Microsoft is one of the leading manufacturing company in General
Industrial sectors of Pakistan remains on top among other competitors. .
From the above study we conclude that Packages Limited Lahore due
to the addition in business units year to year and new product has been
launched by the company the sales of the company is increasing sharply. But
along with the increase in sales CGS has also been increased with higher rate
than sales, which is not favorable for the company. Operating expenses of the
company has been increasing year after year. Operating profit of the company
was increased till 2006 but after that there is a sharp declined due to increase in
CGS which is not good for the company. There is increase in interest expense
and financial cost of the company year after year because the firm has been
increasing the use of debts as a source of funding rather than equity. Net
income of the company was increasing till 2006 but after that it has also been
decreased due to the reasons already discussed in detail.
Company has increased its Current assets, non current assets and net fixed
asses year after year but these assets have not been utilized properly efficiently
and effectively by the company except in the year 2006. Company’s liabilities
have been increased with the passage of time especially long term debts have
been increased with the high percentage year after year. There is also
increasing trend in the company’s equity except 2009 because of
unappropriated loss. The financial conditions of the company after carefully
analyzing its financially statements with the help of ratio analysis is as under: -
 The firm’s activities are not showing the favorable situation for the company.
Firm’s turnover of various items e.g. Account receivable, inventory, working
capital and current asset, fixed asset and ultimately total asset was increased
till 2006 but after that these are declined sharply and same is the case with

days of inventory, aging of accounts receivables showing the inefficiency of

the management of utilization of these assets in generating earnings for the
company.
 The liquidity position of the company was stronger till 2007 but in 2008
it shows the worse condition for the company due to the increase in
firm’s liabilities with high percentages than liquidate able assets.
 The profitability situation of the company was going favorable for the
company till 2006 but after that the situation is not in the favor of the
company as the profits are declining even company has to face loss in
2008 due to various reasons discussed in detail.
 From the investors points of view the company was very attractive till
2007 as dividend was increasing price of the share was also increasing
but after that there is dividend, market price, earning per share has been
declined which is not favorable situation for the company.
 The firm’s long term debt paying ability is showing different variations
in these five years. The debt paying ability is of the company is
increasing year after year because of increase in firms net fixed assets.
We may conclude that the current financial position of the company is not well.
The year 2006 has been proved a golden year for the company but after that year
the financial conditions of the company are wakening with the passage of time
which is not a favorable indicator for the health of the company.

SUGGESTIONS
Financial statements are most significant part of a company because
financial statement analysis involves a comparison of a firm’s performance
with its past performance and with the copmetitors in the industry. The
analysis is used to determine the firm’s financial position so as to identify
its current strength and weakness and to suggest actions the firm might
pursue to take advantage of the strengths and correct any weakness. Here is
our recommendations about this company are as follows:
 Our evaluations of the acid test ratio suggest that Packages Limited
Lahore has liquidity position currently is poor. Packages’s acid test ratio
seems inadequate.
 The average selling time of inventories in 2006 is 103 days and in 2008
it is 120 days. So their turn over rate is very high in the company, which
is harmful for the country. So they should need to maintain the standard.
 The Earning per Share of Packages Limited Lahore in 2006, 2007 and
2008 is 87.30, 58.96 and 0 respectively which is decreasing year by year
is not good for the company and they should try to increase the level of
the earning per share.
 Our assessment of the time interest earned ratio suggests that Packages
earned ratio is decreasing after 2007 which is not good sign they should
try to decrease the interest expense by low usage of debt as debt is not a
good tool for the company to generate earnings.
 The company should carefully examine its inventory to sales process.
There is need of improvement in this process. The company should try
to decrease the time period of this process.
 Our judgment of dividend per share suggests that Packages Ltd should
try to increase its dividend per share.
 The company should control its production costs. He should try to
decrease its material cost.

 The company should decrease use of debts and go for equity funding
because firm has to bear high costs of debts.
 The company should improve its assets utilization. Assets should be
utilized efficiently and effectively to generate the profit.
 After carefully analyzing the company should remove its non
operational assets by selling them.

BIBLIOGRAPHY
• ANNUAL REPORTS OF PACKAGES LIMITED LAHORE
• WWW.PACKAGES.COM.PK
• WWW.GOOGLE.COM
• WWW.WIKIPEDIA.COM
• WWW.ANSWER.COM
• WWW.ACCOUNTING TOOLS.COM
• WWW.INVESTORWORDS.COM
• WWW.BUISNESSDIRECTORY.COM
• WWW.INVESTOPEDIA.COM
• BOOK OF FINANCIALY STATEMENT ANALYSISBY CHARLOS

H GIBSON
• BOOK OF FINANCIAL MANAGEMENT


ANNEXURE - I
PACKAGES LIMITED
Summarized Balance Sheet
As at December 31, ____________
ASSETS RS IN THOUSANDS
2008 2007 2006 2005 2004
CURRENT ASSETS
Cash and bank balances 199,188 101,022 106,703 2,019,950 144,886
Investment - - - - 9,067
Trade Debts 1,523,049 1,288,928 821,160 784,638 640,537
Stock in Trade
Raw material 2,133,360 1,461,641 1,023,695 647,090 632,259
Work in process 205,551 117,400 97,561 80,980 77,127
Finished goods 1,313,350 627,150 525,917 415,973 384,943
Store and spare 841,487 715,840 485,665 407,439 380,556
Total Stock in Trade 4,493,748 2,922,031 2,132,838 1,551,482 1,474,885
Loans, advances, deposits,
prepayments and other 692,076 525,421 353,521 202,667 155,442
receivables
Other Current Assets 15,400 - - - -
Total Current Assets 6,923,461 4,837,402 3,414,222 4,558,737 2,424,817
NON-CURRENT ASSETS
Investment - 10,080,259 5,775,665 693,576 691,176
Long-term loans and deposits 155,102 244,166 180,618 16,200 5,840
Intangible assets 241 363 2,532 5,300 6,385
Retirement benefits 127,518 88,262 69,805 60,291 51,725
Total NON Current Assets 282,861 10,413,050 6,028,620 775,367 755,126
FIXED ASSETS
Fixed Assets at cost 17,509,880 15,765,666 7,946,165 7,521,193 7,110,625
Less: Accumulated
(6199293) (5378358) (4860627) (4508991) (4158104)
Depreciation
Book Value 11,310,587 10,387,308 3,085,538 3,012,202 2,952,521
Add: Capital work-in-progress 8,362,485 7,800,683 10,143,195 3,265,517 329,867
Assets subject to finance lease 8,155,239 - 1,901 8,581 12,155
Total Fix Assets 27,828,311 18,187,991 13,230,634 6,286,300 3,294,543
TOTAL ASSETS 35,034,633 33,438,443 22,673,476 11,620,404 6,474,486
LIABILITIES
CURRENT LIABILITIES
Finance under markup
2,587,819 401,019 1,280,857 1,602,720 234,197
arrangement -secured
Trade Creditor 290,551 300,952 - - -

Other Payable 1,171,353 1,263,410 - - -

Creditor, Accrued and other
- - 1,030,516 619,215 601,173
liability
Current maturity of long term
550,000 - - - -
finances-secured
Current portion for liabilities
against assets subject to finance - - 851 5,159 859,330
lease
Provision for taxation - - - 17,777 54,185
Other Current liabilities 1,017,150 - - 90,959 -
Total Current liabilities 5,616,873 1,965,381 2,312,224 2,335,830 1,748,885
NON-CURRENT LIABILITIES
Deferred liabilities 840,788 955,790 688,455 547,468 527,390
Total Non-Current Liabilities 840,788 955,790 688,455 547,468 527,390
LONG TERM DEBT
Long-term finances - secured 12,304,400 12,346,500 6,000,000 1,000,000 -
Liabilities against assets subject
- - - 851 6,351
to finance lease
Total Long Term Debts 12,304,400 12,346,500 6,000,000 1,000,851 6,351
Total liabilities 18,762,061 15,267,671 9,000,679 3,884,149 2,282,626
EQUITY
Paid up Capital 843,795 733,735 698,795 698,795 475,371
Reserves 15,624,602 13,110,240 6,872,336 6,021,297 2,752,625
Un-appropriated (loss) / profit (195825) 4,326,797 6,101,666 1,016,163 963,864
Total Equity 16,272,572 18,170,772 13,672,797 7,736,255 4,191,860
TOTAL LIABILITIES & EQUITY 35,034,633 33,438,443 22,673,476 11,620,404 6,474,486

ANNEXURE - II
PACKAGES LIMITED
Summarized Income Statement
For the year Ended on Dec 31, _____
RS IN THOUSANDS
2008 2007 2006 2005 2004
Net Sales 12,224,779 9,028,635 7,846,599 7,098,765 5,986,977
Cost of Production
Raw matrial 7,639,296 5,108,396 4,246,956 3,520,644 2,710,306
Labor and Wages 681,050 533,893 469,680 427,139 412,247

Depriciation 858,377 529,558 348,173 375,573 397,330
FOH 2,877,108 1,778,587 1,613,711 1,457,313 1,280,754
Work in process adjustment (+,-) (88151) (19839) (16581) (3853) (11506)
Total Cost of Production 11,967,680 7,930,595 6,661,939 5,776,816 4,789,131

Inventory Adjustments (+,-) (686200) (101233) (109944) (31030) (110756)
Cost of Goods Sold 11,281,480 7,829,362 6,551,995 5,745,786 4,678,375
Gross Profit 943,299 1,199,273 1,294,604 1,352,979 1,308,602
Operating Expenses
General and Administrative
(512189) (348064) (349934) (346565) (347030)
expenses
selling expenses (25460) (118172) (26418) (10632) (88163)
(466,236 (376,352 (357,197
Total Operating Expenses (537,649)
) ) )
(435,193)
Operating Profit 405,650 733,037 918,252 995,782 873,409
Other Income/expenses 948,879 4,412,728 5,721,972 613,047 536,919
Financial Cost or interest

(1662094) (367378) (78909) (185529) (139008)
expenses
Total Finanicial Cost and
(713,215) 4,045,350 5,643,063 427,518 397,911
Other expenses/Income
Profit before Tax and work
(307,565) 4,778,387 6,561,315 1,423,300 1,271,320
fund
Work fund (324) (145439) (213475) (93375) (84699)
Profit before Tax (307,889) 4,632,948 6,347,840 1,329,925 1,186,621
Tax (112064) (307000) (247060) (314561) (229119)
Net Profit After Tax (195,825) 4,325,948 6,100,780 1,015,364 957,502

ANNEXURE - III
PACKAGES LIMITED
Horizontal Analysis of Income Statement
RS IN THOUSANDS
2008 2007 2006 2005 2004
Net Sales 156% 115% 100% 90% 76%
Cost of Production
Raw matrial 180% 120% 100% 83% 64%
Labor and Wages 145% 114% 100% 91% 88%

Depriciation 247% 152% 100% 108% 114%
FOH 178% 110% 100% 90% 79%
Work in process adjustment (+,-) 532% 120% 100% 23% 69%
Total Cost of Production 180% 119% 100% 87% 72%
Inventory Adjustments (+,-) 624% 92% 100% 28% 101%
Cost of Goods Sold 172% 119% 100% 88% 71%
Gross Profit 73% 93% 100% 105% 101%
Operating Expenses
General and Administrative expenses 146% 99% 100% 99% 99%
selling expenses 96% 447% 100% 40% 334%
Total Operating Expenses 143% 124% 100% 95% 116%
Operating Profit 44% 80% 100% 108% 95%
Other Income/expensess 17% 77% 100% 11% 9%
Financial Cost or interest expenses 2106% 466% 100% 235% 176%
Total Finanicial Cost and Other

-13% 72% 100% 8% 7%
expenses/Income
Profit before Tax and work fund -5% 73% 100% 22% 19%
work fund 0% 68% 100% 44% 40%
Profit before Tax -5% 73% 100% 21% 19%
Tax 45% 124% 100% 127% 93%
Net Profit After Tax -3% 71% 100% 17% 16%

ANNEXURE - IV
PACKAGES LIMITED
Vertical Analysis of Income Statement
RS IN THOUSANDS
2008 2007 2006 2005 2004
Net Sales 100% 100% 100% 100% 100%
Cost of Production
Raw matrial 62.5% 56.6% 54.1% 49.6% 45.3%
Labor and Wages 5.6% 5.9% 6.0% 6.0% 6.9%

Depriciation 7.0% 5.9% 4.4% 5.3% 6.6%
FOH 23.5% 19.7% 20.6% 20.5% 21.4%
Work in process adjustment (+,-) 0.7% 0.2% 0.2% 0.1% 0.2%
Total Cost of Production 97.9% 87.8% 84.9% 81.4% 80.0%
Inventory Adjustments (+,-) 5.6% 1.1% 1.4% 0.4% 1.8%
Cost of Goods Sold 92.3% 89.0% 86.3% 81.8% 81.8%
Gross Profit 7.7% 11.0% 13.7% 18.2% 18.2%
Operating Expenses
General and Administrative expenses 4.2% 3.9% 4.5% 4.9% 5.8%
selling expenses 0.2% 1.3% 0.3% 0.1% 1.5%
Total Operating Expenses 4.4% 5.2% 4.8% 5.0% 7.3%
Operating Profit 3.3% 8.1% 11.7% 14.0% 14.6%
Other Income/expensess 7.8% 48.9% 72.9% 8.6% 9.0%
Financial Cost or interest expenses 13.6% 4.1% 1.0% 2.6% 2.3%
Total Finanicial Cost and Other

-5.8% 44.8% 71.9% 6.0% 6.6%
expenses/Income
Profit before Tax and work fund -2.5% 52.9% 83.6% 20.0% 21.2%
work fund 0.0% 1.6% 2.7% 1.3% 1.4%
Profit before Tax -2.5% 54.5% 86.3% 21.4% 22.6%
Tax 0.9% 3.4% 3.1% 4.4% 3.8%
Net Profit After Tax -1.6% 47.9% 77.8% 14.3% 16.0%

Packages Limited Lahore ANNEXURE - V
PACKAGES LIMITED
Horizontal Analysis of Balance Sheet
As at December 31, ____________
2008 2007 2006 2005 2004
CURRENT ASSETS
Cash and bank balances 197.17% 94.68% 5.28% 1394.17% 100%
Investment 0.00% 0.00% 0.00% 0.00% 100%
Trade Debts 118.16% 156.96% 104.65% 122.50% 100%
Stock in Trade
Raw matrial 145.96% 142.78% 158.20% 102.35% 100%
Work in process 175.09% 120.33% 120.48% 105.00% 100%
Finished goods 209.42% 119.25% 126.43% 108.06% 100%
Total Stock in Trade 165.55% 133.94% 143.98% 104.54% 100%
Store and spare 117.55% 147.39% 119.20% 107.06% 100%
Loans, advances, deposits, 131.72% 148.63% 174.43% 130.38% 100%
prepayments and other receivables
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0%
Total Current Assets 143.12% 141.68% 74.89% 188.00% 100%
NON-CURRENT ASSETS
Investment 0.00% 174.53% 832.74% 100.35% 100%
Long-term loans and deposits 63.52% 135.18% 1114.93% 277.40% 100%
Intangible assets 66.39% 14.34% 47.77% 83.01% 100%
Retirement benefits 144.48% 126.44% 115.78% 116.56% 100%
Total NON Current Assets 2.72% 172.73% 777.52% 102.68% 100%
FIXED ASSETS
Fixed Assets at cost 111.06% 198.41% 105.65% 105.77% 100%
Less: Accumulated Depriciation 115.26% 110.65% 107.80% 108.44% 100%
Book Value 108.89% 336.64% 102.43% 102.02% 100%
Add: Capital work-in-progress 107.20% 76.91% 310.62% 989.95% 100%
Assets subject to finance lease 0.00% 0.00% 22.15% 70.60% 100%
Total Fix Assets 153.00% 137.47% 210.47% 190.81% 100%
TOTAL ASSETS 104.77% 147.48% 195.12% 179.48% 100%
LIABILITIES
CURRENT LIABILITIES
Finance under markup arrangment 645.31% 31.31% 79.92% 684.35% 100%
-secured
Trade Creditor 96.54% 0.00% 0.00% 0.00% 0%
Other Payable 92.71% 0.00% 0.00% 0.00% 0%
Creditor,Accured and other
0.00% 0.00% 166.42% 103.00% 100%
liability
Current maturityof long term 0.00% 0.00% 0.00% 0.00% 0%
finances-secured

Current portion for liabilites against 0.00% 0.00% 16.50% 0.60% 100%
assets subject to finance lease
Provision for taxation 0.00% 0.00% 0.00% 32.81% 100%
Other Current liabilities 0.00% 0.00% 0.00% 0.00% 0%
Total Current liabilities 285.79% 85.00% 98.99% 133.56% 100%
Deferred liabilities 87.97% 138.83% 125.75% 103.81% 100%
Total Non-Current Liabilities 87.97% 138.83% 125.75% 103.81% 100%
LONG TERM DEBT
Long-term finances - secured 99.66% 205.78% 600.00% 0.00% 0%
Liabilities against assets subject to - - 0.00% 13.40% 100%
finance lease
Total Long Term Debts 99.66% 205.78% 599.49% 15758.95% 100%
Total liabilities 122.89% 169.63% 231.73% 170.16% 100%
EQUITY
Paid up Capital 115.00% 105.00% 100.00% 147.00% 100%
Reserves 119.18% 190.77% 114.13% 218.75% 100%
Unappropriated (loss) / profit -4.53% 70.91% 600.46% 105.43% 100%
Total Equity 89.55% 132.90% 176.74% 184.55% 100%
TOTAL LIABILITIES & EQUITY 104.77% 147.48% 195.12% 179.48% 100%

ANNEXURE - VI
PACKAGES LIMITED
Vertical Analysis of Balance Sheet
As at December 31, ____________
2008 2007 2006 2005 2004
CURRENT ASSETS
Cash and bank balances 0.57% 0.30% 0.47% 17.38% 2.24%
Investment 0.00% 0.0% 0.0% 0.0% 0.1%
Trade Debts 4.35% 3.9% 3.6% 6.8% 9.9%
Stock in Trade
Raw matrial 6.09% 4.4% 4.5% 5.6% 9.8%
Work in process 0.59% 0.4% 0.4% 0.7% 1.2%
Finished goods 3.75% 1.9% 2.3% 3.6% 5.9%
Total Stock in Trade 10.42% 6.6% 7.3% 9.8% 16.9%
Store and spare 2.40% 2.1% 2.1% 3.5% 5.9%
Loans, advances, deposits, 1.98% 1.6% 1.6% 1.7% 2.4%
prepayments and other receivables
Other Current Assets 0.04% 0.0% 0.0% 0.0% 0.0%
Total Current Assets 19.76% 14.5% 15.1% 39.2% 37.5%
NON-CURRENT ASSETS
Investment 0.00% 30.15% 25.47% 5.97% 10.68%
Long-term loans and deposits 0.44% 0.73% 0.80% 0.14% 0.09%
Intangible assets 0.00% 0.00% 0.01% 0.05% 0.10%
Retirement benefits 0.36% 0.26% 0.31% 0.52% 0.80%
31.14% 26.59% 6.67% 11.66%

Total NON Current Assets 0%
FIXED ASSETS
Fixed Assets at cost 49.98% 47.15% 35.05% 64.72% 109.83%
Less: Accumulated Depriciation 17.69% 16.08% 21.44% 38.80% 64.22%
Book Value 32.28% 31.06% 13.61% 25.92% 45.60%
Add: Capital work-in-progress 23.87% 23.33% 44.74% 28.10% 5.09%
Assets subject to finance lease 23.28% 0.00% 0.01% 0.07% 0.19%
Total Fix Assets 79.43% 54.39% 58.35% 54.10% 50.89%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00%
LIABILITIES
CURRENT LIABILITIES
Finance under markup arrangment 7.39% 1.20% 5.65% 13.79% 3.62%
-secured
Trade Creditor 0.83% 0.90% 0.00% 0.00% 0.00%
Other Payable 3.34% 3.78% 0.00% 0.00% 0.00%
Creditor,Accured and other
0.00% 0.00% 4.55% 5.33% 9.29%
liability

Current maturityof long term 1.57% 0.00% 0.00% 0.00% 0.00%

finances-secured
Current portion for liabilites against 0.00% 0.00% 0.00% 0.04% 13.27%
assets subject to finance lease
Provision for taxation 0.00% 0.00% 0.00% 0.15% 0.84%
Other Current liabilities 2.90% 0.00% 0.00% 0.78% 0.00%
Total Current liabilities 16.03% 5.88% 10.20% 20.10% 27.01%
Deferred liabilities 2.40% 2.86% 3.04% 4.71% 8.15%
Total Non-Current Liabilities 2.40% 2.86% 3.04% 4.71% 8.15%
LONG TERM DEBT
Long-term finances - secured 35.12% 36.92% 26.46% 8.61% 0.00%
Liabilities against assets subject to 0.00% 0.00% 0.00% 0.01% 0.10%
finance lease
Total Long Term Debts 35.12% 36.92% 26.46% 8.61% 0.10%
Total liabilities 53.55% 45.66% 39.70% 33.43% 35.26%
EQUITY
Paid up Capital 2.41% 2.19% 3.08% 6.01% 7.34%
Reserves 44.60% 39.21% 30.31% 51.82% 42.51%
Unappropriated (loss) / profit -0.56% 12.94% 26.91% 8.74% 14.89%
Total Equity 46.45% 54.34% 60.30% 66.57% 64.74%
TOTAL LIABILITIES & EQUITY 100.00% 100.00% 100.00% 100.00% 100.00%

ANNEXURE - VII
ACTIVITY RATIOS:
1) Account Receivable Turnover

2) Aging of A/R
3) Inventory Turnover
4) Days Sales in Inventory
5) Working Capital Turnover
6) Currents Assets turnover
7) Fixed Asset Turnover
8) Total Assets Turnover
1) Account Receivable Turnover
Net Sales
Avg. Trade Receivables
Years 2008 2007 2006 2005 2004

Net Sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
Avg. Trade
1,405,988,500 1,055,044,000 802,899,000 712,587,500 640,537,000
Receivables
2008 2007 2006 2005 2004
8.69 8.56 9.77 9.96 9.35
2) Aging of Account Receivables
Average Gross Receivables

Net Sale/365
Years 2008 2007 2006 2005 2004

Average Gross
1,405,988,500 1,055,044,000 802,899,000 712,587,500 640,537,000
Receivables
Net Sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
2008 2007 2006 2005 2004

41.98 42.65 37.35 36.64 39.05
3) Inventory Turnover
Cost of Good Sold

Average Inventory
Years 2008 2007 2006 2005 2004

Cost of Good
11,281,480,000 7,829,362,000 6,551,995,000 5,745,786,000 4,678,375,000
Sold
Average
3,707,889,500 2,527,434,500 1,842,160,000 1,513,183,500 1,474,885,000
Inventory
2008 2007 2006 2005 2004
3.04 3.10 3.56 3.80 3.17
4) Days Sales in Inventory
Avg. Inventory
C.G.S/365
Years 2008 2007 2006 2005 2004

Avg. Inventory 3,707,889,500 2,527,434,500 1,842,160,000 1,513,183,500 1,474,885,000
C.G.S 11,281,480,000 7,829,362,000 6,551,995,000 5,745,786,000 4,678,375,000
2008 2007 2006 2005 2004
120 118 103 96 115

5) Working capital turnover
Net Sales
Working Capital
Years 2008 2007 2006 2005 2004

Net Sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
Working Capital 1,306,588,000 2,872,021,000 1,101,998,000 2,222,907,000 675,932,000
2008 2007 2006 2005 2004
9.36 3.14 7.12 3.19 8.86
6) Current Asset Turnover
C.G.S + Operating Expenses + Tax

Current Asset
Years 2008 2007 2006 2005 2004
C.G.S 11,281,480,000 7,829,362,000 6,551,995,000 5,745,786,000 4,678,375,000
Operating
537,649,000 466,236,000 376,352,000 357,197,000 435,193,000
Expenses
Tax 112,064,000 307,000,000 247,060,000 314,561,000 229,119,000
Current Asset 6,923,461,000 4,837,402,000 3,414,222,000 4,558,737,000 2,424,817,000
2008 2007 2006 2005 2004
1.72 1.78 2.10 1.41 2.20

7) Fix Asset Turnover
Net Sales
Avg. Fixed Assets
Years 2008 2007 2006 2005 2004

Net Sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
Avg. Fixed
23,008,151,000 15,709,312,500 9,758,467,000 4,790,421,500 3,294,543,000
Assets
2008 2007 2006 2005 2004
0.53 0.57 0.80 1.48 1.82
8) Total Asset Turnover
Net Sales
Avg. Total Assets
Years 2008 2007 2006 2005 2004

Net Sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
Avg. Total
34,236,538,000 28,055,959,500 17,146,940,000 9,047,445,000 6,474,486,000
Assets
2008 2007 2006 2005 2004
0.36 0.32 0.46 0.78 0.92

SHORT TERM LIQUIDITY RATIOS: ANNEXURE - VIII
1) Current Ratio
2) Acid Test Ratio (Quick Ratio)
3) Cash Ratio
4) Cash Flow from Operations Ratio
5) Defensive Interval
6) Operative Cycle
7) Cash Cycle
8) Working Capital
1) Current Ratio
Current Assets
Current Liabilities
Years 2008 2007 2006 2005 2004
Current Assets 6,923,461,000 4,837,402,000 3,414,222,000 4,558,737,000 2,424,817,000
Current Liabilities 5,616,873,000 1,965,381,000 2,312,224,000 2,335,830,000 1,748,885,000
2008 2007 2006 2005 2004
1.23 :1 2.46 :1 1.48 :1 1.95 :1 1.39 :1
2. Acid Test Ratio (Quick Ratio)
C.A – Inventories
Current Liabilities
Years 2008 2007 2006 2005 2004

Current Assets 6,923,461,000 4,837,402,000 3,414,222,000 4,558,737,000 2,424,817,000
Inventories 4,493,748,000 2,922,031,000 2,132,838,000 1,551,482,000 1,474,885,000
2008 2007 2006 2005 2004
0.43 :1 1.66 :1 1.60 :1 2.94 :1 1.64 :1
3. Cash Ratio

Cash + Mkt. Securities

Current Liabilities
Years 2008 2007 2006 2005 2004

Cash 199,188,000 101,022,000 106,703,000 2,019,950,000 144,886,000
Mkt. Securities - - - - 9,067
2008 2007 2006 2005 2004
0.04 :1 0.05 :1 0.05 :1 0.86 :1 0.08 :1
4. Cash flow from operation
Cash flow from Operation (Operating Profit + Deperication)

Current Liabilities
Years 2008 2007 2006 2005 2004

Operating Profit 405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
Deperication 858,377,000 529,558,000 348,173,000 375,573,000 397,330,000
Current
5,616,873,000 1,965,381,000 2,312,224,000 2,335,830,000 1,748,885,000
Liabilities
2008 2007 2006 2005 2004
0.23 :1 0.64 :1 0.55 :1 0.59 :1 0.73 :1
5. Operation Cycle
A/R in days + Inventory turn over in days
Years 2008 2007 2006 2005 2004

A/C rec in days 42 43 37 37 39
Inventory turn
120 118 103 96 115
over in days
2008 2007 2006 2005 2004
162 160 140 133 154

6. Working Capital
Current Assets-Current Liabilities
Years 2008 2007 2006 2005 2004

Current Assets 6,923,461,000 4,837,402,000 3,414,222,000 4,558,737,000 2,424,817,000
Current
5,616,873,000 1,965,381,000 2,312,224,000 2,335,830,000 1,748,885,000
Liabilities
2008 2007 2006 2005 2004

1,306,588,00 2,872,021,00 1,101,998,00 2,222,907,00
675,932,000
0 0 0 0

PROFITABILITY ANALYSIS: ANNEXURE - IX
1) Net profit margin

2) Operating profit margin
3) Profit before tax
4) Net profit margin
5) Return on asset
6) Return on investment
7) Return on equity
8) Return on common equity
9) Operating asset turnover
10) Return on Operating asset
11) Dupont return on Op. asset
12) Dupont return on Total Asset
13) Contribution Margin
1. Net profit Margin
Net Profit / Loss

Net sales
Years 2008 2007 2006 2005 2004

Net Profit / Loss (195,825,000) 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
Net sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
2008 2007 2006 2005 2004

(1.6
47.91% 77.75% 14.30% 15.99%
0)

2. Operating profit Margin
Operating profit
Net sales
Years 2008 2007 2006 2005 2004

Operating profit 405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
Net sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
2008 2007 2006 2005 2004
3.32% 8.12% 11.70% 14.03% 14.59%
3. profit/(Loss) before tax Margin
Profit/loss before tax

Net sales
Years 2008 2007 2006 2005 2004
Profit/loss
(307,889,000) 4,632,948,000 6,347,840,000 1,329,925,000 1,186,621,000
before tax
Net sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
2008 2007 2006 2005 2004

(2.5
51.31% 80.90% 18.73% 19.82%
2)
4. Gross profit/(Loss) Margin
Gross Profit
Net sales
Years 2008 2007 2006 2005 2004

Gross Profit 943,299,000 1,199,273,000 1,294,604,000 1,352,979,000 1,308,602,000
Net sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
2008 2007 2006 2005 2004

7.72% 13.28% 16.50% 19.06% 21.86%
5. Return on Asset
Net income
Avg total asset
Years 2008 2007 2006 2005 2004

Net income (195,825,000) 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
Avg total asset 34,236,538,000 28,055,959,500 17,146,940,000 9,047,445,000 6,474,486,000
2008 2007 2006 2005 2004
15.42% 35.58% 11.22% 14.79%

-
6. Return on Total Equity:-
Net income / loss – Divined on P/S

Avg. total equity
Years 2008 2007 2006 2005 2004

Net income /
(195,825,000) 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
loss
Divid.on P/S - - - - -
Avg. total equity 17,221,672,000 15,921,784,500 10,704,526,000 5,964,057,500 4,191,860,000
2008 2007 2006 2005 2004
-1.14% 27.17% 56.99% 17.02% 22.84%
7. Return on Common Equity:-
Net income – dividend on P/S

Common equity
Years 2008 2007 2006 2005 2004

Net income (195,825,000) 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
Divid.on P/S - - - - -

Common
17,221,672,000 15,921,784,500 10,704,526,000 5,964,057,500 4,191,860,000
equity
2008 2007 2006 2005 2004
27.17% 56.99% 17.02% 22.84%

-
8. Return on Investment:-
Net income+[interest ×(1-tax rate)]

Avg.(LTD+equity)
Years 2008 2007 2006 2005 2004

Net income (195,825,000) 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
Interest Expense 1,662,094,000 367,378,000 78,909,000 185,529,000 139,008,000
Tax Rate 35% 35% 35% 35% 35%
Long Term Debt 12304400000 12346500000 6000000000 1000851000 6351000
Equity 16272572000 18170772000 13672797000 7736255000 4191860000
Avg.(LTD+equity) 29547122000 25095034500 14204951500 6467658500 4198211000
2008 2007 2006 2005 2004
2.99% 18.19% 43.31% 17.56% 24.96%
9. Operating Asset turnover:-
Net Sales
Avg. operating asset
Years 2008 2007 2006 2005 2004

Net Sales 12,224,779,000 9,028,635,000 7,846,599,000 7,098,765,000 5,986,977,000
Avg. operating
653,897,000 9,385,722,000 4,446,485,000 1,563,369,000 675,932,000
asset
2008 2007 2006 2005 2004
18.70 0.96 1.76 4.54 8.86
10. Return on Operating Asset
Operating income

Avg. operating asset
Years 2008 2007 2006 2005 2004

Operating
405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
income
Avg. operating
653,897,000 9,385,722,000 4,446,485,000 1,563,369,000 675,932,000
asset
11. Dupont Return on Operating Asset .
Operating income margin x Operating Asset Turnover
Years 2008 2007 2006 2005 2004

Operating
3.32% 8.12% 11.70% 14.03% 14.59%
income margin
Operating Asset
18.70 0.96 1.76 4.54 8.86
Turnover
2008 2007 2006 2005 2004
62.04% 7.81% 20.65% 63.69% 129.22%
12. Dupont Return on Total Asset .
Net income / loss margin x Total Asset Turnover
Years 2008 2007 2006 2005 2004

Net income
-1.60% 47.91% 77.75% 14.30% 15.99%
margin
Total Asset
0.36 0.32 0.46 0.78 0.92
Turnover
2008 2007 2006 2005 2004
-0.57% 15.42% 35.58% 11.22% 14.79%

Investor Analysis: ANNEXURE - X
1) Earning Per Share

2) Price Earning Ratio
3) Book Value per Share
4) Payout Ratio
5) Dividend Yield
6) Percentage of Earning Retained
7) Financial Leverage
1. Earning Per Share
Net Income - Pref: Stock Dividend

No. of Common Stock Outstanding
Years 2008 2007 2006 2005 2004

Net Income (195,825,000) 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
Pref: Stock
- - - - -
Dividend
No. of Common
84,379,504 73,373,482 69,879,507 69,879,507 47,537,080
Stock Outstanding
2008 2007 2006 2005 2004
58.96 87.30 14.53 20.14

-
2. Price Earning Ratio

Market Price Per Share
Earning Per Share
Years 2008 2007 2006 2005 2004

Market Price Per
81.19 363.80 204.00 202.00 198.85
Share
Earning Per Share (2.32) 51.27 87.30 16.24 19.60
2008 2007 2006 2005 2004
7.10 2.34 12.44 10.15

-
3. Book Value per share.
Total Equity - Pref: Stock Equity

No. of Common Stock Outstanding
Years 2008 2007 2006 2005 2004

Total Equity 16,272,572,000 18,170,772,000 13,672,797,000 7,736,255,000 4,191,860,000
Pref: Stock
- - - - -
Equity
No. of Common
Stock 84,379,504 73,373,482 69,879,507 69,879,507 47,537,080
Outstanding
2008 2007 2006 2005 2004
192.85 247.65 195.66 110.71 88.18
4. Dividend Payout ratio.

Dividend Per Share
Earning Per Share
Years 2008 2007 2006 2005 2004

Dividend Paid - 418,194,000 417,914,000 402,496,000 402,996,000
No. of Common
84,379,504 73,373,482 69,879,507 69,879,507 47,537,080
Stock Outstanding
Dividend Per Share - 5.70 5.98 5.76 8.48
Earning Per Share (2.32) 51.27 87.30 16.24 19.60
2008 2007 2006 2005 2004
11.12% 6.85% 35.47% 43.25%

-

5. Dividend Yield.
Dividend Per Share
Market Price Per Share
Years 2008 2007 2006 2005 2004

Dividend Per Share - 5.70 5.98 5.76 8.48
Market Price Per Share 81.19 363.80 204.00 202.00 198.85
2008 2007 2006 2005 2004
1.57% 2.93% 2.85% 4.26%

-
6. Percentage of retained earning.

Net Income – Dividend
Net Income
Years 2008 2007 2006 2005 2004

Net Income - 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
Dividend - 418,194,000 417,914,000 402,496,000 402,996,000
Net Income - 4,325,948,000 6,100,780,000 1,015,364,000 957,502,000
2008 2007 2006 2005 2004
90.33% 93.15% 60.36% 57.91%

-
7. Financial Leverage
Earning Before Interest & Taxes
Earning Before Tax
Years 2008 2007 2006 2005 2004

Earning Before
405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
Interest & Taxes
Earning Before Tax (307,889,000) 4,632,948,000 6,347,840,000 1,329,925,000 1,186,621,000
2008 2007 2006 2005 2004
0.16 0.14 0.75 0.74

- ANNEXURE - XI
Long Term Analysis

1) Time Interest Earned Ratio

2) Debt Service Coverage Ratio
3) Fixed Charge Coverage
4) Debt Ratio
5) Debt Equity Ratio
6) Fixed Asset Coverage
1. Time Interest earned Ratio.

Interest Expenses
Years 2008 2007 2006 2005 2004

Earning Before
Interest & 405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
Taxes
Interest
1,662,094,000 367,378,000 78,909,000 185,529,000 139,008,000
Expenses
2008 2007 2006 2005 2004
0.24 2.00 11.64 5.37 6.28
2. Debt Service Coverage Ratio.

Int: Exp: + Current Maturity of LTD
Years 2008 2007 2006 2005 2004

Earning Before
405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
Interest & Taxes
Interest
1,662,094,000 367,378,000 78,909,000 185,529,000 139,008,000
Expense
Current Maturity
550,000,000 - - - -
of LTD
2008 2007 2006 2005 2004
0.18 2.00 11.64 5.37 6.28
3. Fix Charge Coverage Ratio.


Int: Exp: + Current Maturity of LTD + Rentals of LTD
Years 2008 2007 2006 2005 2004

Earning Before
405,650,000 733,037,000 918,252,000 995,782,000 873,409,000
Interest & Taxes
Interest Expense 1,662,094,000 367,378,000 78,909,000 185,529,000 139,008,000
Current Maturity
550,000,000 - - - -
of LTD
Rentals of LTD - - - - -
2008 2007 2006 2005 2004
0.18 2.00 11.64 5.37 6.28
4. Debt Ratio.
Total Liabilities
Total Assets
Years 2008 2007 2006 2005 2004

Total
18,762,061,000 15,267,671,000 9,000,679,000 3,884,149,000 2,282,626,000
Liabilities
Total Assets 35,034,633,000 33,438,443,000 22,673,476,000 11,620,404,000 6,474,486,000
2008 2007 2006 2005 2004
53.55% 45.66% 39.70% 33.43% 35.26%

5. Debt Equity Ratio.

Long Term Debt
Capitalization (LTD + Equity)
Years 2008 2007 2006 2005 2004
Long Term Debt 12,304,400,000 12,346,500,000 6,000,000,000 1,000,851,000 6,351,000
Capitalization
28,576,972,000 30,517,272,000 19,672,797,000 8,737,106,000 4,198,211,000
(LTD + Equity)
2008 2007 2006 2005 2004
43.06% 40.46% 30.50% 11.46% 0.15%
6. Fix Asset Coverage Ratio
Net Fixed Assets

Long Term Debt
Years 2008 2007 2006 2005 2004

Net Fixed
27,828,311,000 18,187,991,000 13,230,634,000 6,286,300,000 3,294,543,000
Assets
Long Term
12,304,400,000 12,346,500,000 6,000,000,000 1,000,851,000 6,351,000
Debt
2008 2007 2006 2005 2004
2.26 1.47 2.21 6.28 518.74

Final Report of Financial Statement Analysis of Packages Limited Lahore

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final Report of Financial Statement Analysis of Packages Limited Lahore

Uploaded by

Copyright:

Available Formats

Packages Limited Lahore

Financial Statement Analysis 1 of 138

We would like to dedicate this project to our BELOVED

Financial Statement Analysis 2 of 138

Financial Statement Analysis 3 of 138

Sr. No. Description Page No.

Financial Statement Analysis 4 of 138

Financial Statement Analysis 5 of 138

Financial Statement Analysis 6 of 138

Financial Statement Analysis 8 of 138

Packaging Limited was born out of a dream to set up in Pakistan industries of

• Easy availability of workers.

A B Akerlund & Rausing packaging company brought machinery and expert

Financial Statement Analysis 9 of 138

packaging materials to individuals and businesses world-wide. Its clientele

OVER THE YEARS

Financial Statement Analysis 10 of 138

Financial Statement Analysis 11 of 138

In 2003, Packages entered into an agreement with Vimpex of Austria to provide

• A market leader by providing quality products and superior service to our

Financial Statement Analysis 12 of 138

• A company that endeavors to set the highest standards in corporate ethics in

Company CORE VALUES

Underlying everything Packages does and everything it believes in is a set of core

Financial Statement Analysis 13 of 138

Financial Statement Analysis 14 of 138

Packages Limited has three main manufacturing divisions:

• The Consumer Products Division, which manufactures off-the-shelf branded

Financial Statement Analysis 15 of 138

As Kamal Afsar Shamim Ahmad Khan

ADVISOR COMPANY SECRETARY

Financial Statement Analysis 16 of 138

EXECUTIVE COMMITTEE AUDIT COMMITTEE

Nestle Milkpak Ltd (NML)

Financial Statement Analysis 17 of 138

owns 58% of the enlarged company. NML sales in

Financial Statement Analysis 18 of 138

Tetra Pak Pakistan Ltd

Tetra Pak Pakistan Limited is a joint venture

Financial Statement Analysis 19 of 138

Packages Lanka PVT. Ltd

Financial Statement Analysis 20 of 138

Details of ISO certification

In chronological order, Business Units were certified on the following dates:

Financial Statement Analysis 21 of 138

. . . And what does being ISO certified mean?

 Enhanced product quality and reliability at a reasonable price.

We at Packages Limited are committed to producing quality products

Financial Statement Analysis 22 of 138

and service-oriented, dynamic management team. To meet this

Financial Statement Analysis 23 of 138

Rural Sector Improvement

Financial Statement Analysis 24 of 138

Worldwide TECHNICAL aid programs

The first involvement of Packages in a foreign assignment was in 1970, when a

Financial Statement Analysis 25 of 138

In the same year, the National Development Corporation of Tanzania requested

Financial Statement Analysis 26 of 138

formulating a management information system, streamlining production

Financial Statement Analysis 27 of 138

Packages is committed to the environment. It realizes that we live in a world

Environment, Health and Safety (EH&S) Policy

Packages Limited shall:

Financial Statement Analysis 28 of 138