Balochistan Glass Limited

PROFITABLILTY RATIOS 2008 2007 2006

Mark up on CGS= Sales – Cost of good sold -13.10% 15.82% 24.40%

Cost of good sold

Gross profit
-15.076% 13.662% 19.612%
margin= Sales – Cost of good sold
Sales

Operating profit
-21.762% 4.894% 13.314%
margin= Profits before interest and taxes
Sales

Net profit margin= Profits after taxes -38.397% -6.193% 2.225%

Sales

Return on total
-0.166 -0.028 0.011
assets= Profits after taxes
Total assets

Return on Capital
Employed -26.973% -4.568% 1.757%
(ROCE)= Profits after taxes
Capital Employed

Return on common Profits after taxes-Preferred stock - -

5.635%
equity= dividends 129.531% 20.160%
Total stockholders’ equity- Par value of
preferred stock

Earnings per Profits after taxes-Preferred stock

-0.004 -0.002 0.001
share= dividends
Number of shares of common stock
outstanding
Analysis:-
Profitability ratio shows condition of profits and losses of a company this company
profitability ratio shows very bad condition in 2008 and 2007 but in 2006 the condition of
company is much better then 2007 and 2008. The assets in 2007 is more then 2007 its
means this company is not properly use its assets for profits generation in other hand
liabilities in 2007 also increase. In 2008 assets are also increase and liabilities decrease its
means assets are not properly use for profit generation.
Sales in 2006 1162192 in 2007 1235225 and in 2008 1188199 this shows sales
condition but this shows one side the cost of good sold is maximum in 2008 and
minimum in 2006 that means CGS help to generate profit in 2006.
The net profit margin is used for measuring profit or return on sales. The net profit
margin of ETNL is -38.39% for years 2008 in 2007 -6.19%and 2006 2.22% that means
company ETNL is in dangerous condition in 2008. This has happened although sales are
more in this year than other two years. The reason for this was due to high cost of goods
sold in year 2008. This has reduced net income although sales are more in this year; this
resulted in reduction in net profit margin in year 2008 and 07.. Because even if the sales
are higher in 2008, the net profit margin also increase but the actual situation is not like
that high sales fail to play positive role in ETNL due to increase in CGS indicating
efficient operations of ETNL .Net Profit Margin is indicating good profit gained by
ETNL in three years. As ETNL is maintaining good profits this can be reason why
investors are not reluctant to invest in ETNL. Net profit margin for 2008 is low this
means that company fail to generate more income and maximum benefit from sales.

LIQUIDITY RATIOS 2008 2007 2006

Current ratio= Current assets 1.334 1.161 1.272

Current liabilities

Quick/Acid Test
1.048 0.876 0.965
Ratio= Current assets-Inventory
Current liabilities

Cash Ratio= Cash 0.016 0.013 0.014

Current Liabilities

Inventory to net
0.857 1.767 1.130
working capital= Inventory
Current assets-Current liabilities

Analysis:-
Liquidity ratio is important ratio for all companies because it shows the correct condition
of liquid asset. This company is not financially strong.
The current ratio of 2008 is 1.33% which is 0.173% more than 2007 but it is less then
2006 current ratio .This shows that company has more assets then its liabilities in 2006
because the current ratio of 2006 is much better then 2007 and 2008. In 2006 we have
more assets then its liabilities.
In 2006 our assets are 1137756 and liabilities are 1080260 in 2007 assets 1275368 and
liabilities are 1431136 that show assets increase by 137612 and liabilities increase by
350876 which is more then double then asset.
So this double increase in liabilities affects all liquidity ratios. In 2008 asset increased by
138741 and liabilities decrease by 371151. So this increase in asset and decrease in
liabilities show upward move in liquidity ratio in 2008.
The company liquid cash condition is best in 2006 as compare with 2007 and 2008.
. This show that firm ability to pay its short term loan is going to decrease. One of its
reason is that firm is investing in fix asset due to this firms current asset decrease.
Firm should invest in fix asset but keep in mind its current ratio.
 LEVERAGE RATIOS / LONG-TERM SOLVENCY
2007 2006
MEASURES 2008

Total assets-
Total
0.872 0.863 0.807
Total Debt / Debt- stockholders’
to-assets Ratio= equity t-Total Equity
Total assets

Total assets-Total stockholders’

6.811 6.307 4.190
Debt-to-equity= equity
Total stockholders’ equity

Long-term debt-to-
0.396 1.141 0.407
equity ratio= Long-term debt
Total stockholders’ equity

Interest / Fixed-
charge coverage -1.188 0.364 1.211
Ratio= Profits before interest and taxes
Interest charges

Profits before ore interest

taxes and and
-1.188 0.364 1.133
Fixed-charge interest+Lease taxes+Lease
coverage= obligations payments
Total interest charges+Lease ease
obligations payments

Cash Coverage
-0.491 1.055 1.969
Ratio= EBIT+Depreciation
Interest

Analysis:-
This ratio shows about the long term solvency measure. The first ratio tells us about the
ratio between total debt and total assets it shows that debt generate how much of total
asset if we take debt then this debt generate assets or not if this ratio is low it shows that
we are in utilizing debt properly.

This company is not in good condition so its debt coverage ratio is also not good in 2008
and 2007 but it is much better in 2006.Its Interest coverage ratio condition is very bad in
2008 it become -1.188 .Times interest earned indicates the firm’s long term debt paying
ability with respect to income statement view. This explains whether company will be
able to meet its interest obligations. ETNL is most able in year 2006 to meet its interest
obligations because at that time the interest cost was less as compared with other two
years. Interest cost is continuously rising over the years. The figures of ETNL indicate
that it has good coverage of interest which will result in no problem in paying the
principle when it will come due, in the long term. The reason for increase in finance cost
in year 2008-07 was major rise in mark-up on long term borrowings and Finance Lease..

Debt ratio is also an indication of firm’s long term debt paying ability. Debt ratio
indicates the percentage of assets financed by creditors. The debt ratio of ETNL hadn’t
showed much variation during three years. However debt ratio in year 2006 is 0.807
which was good for ETNL, but this in 2007 0.863 and 0.872 in 2008. This is indicating
a risk in case of insolvency. Because ETNL may not be able to protect creditors in case of
insolvency. It helps to find out the long term debt paying ability of the firm. In simple
word we could say that it shows that how much assets a company utilizes to pay its
liabilities and how much the creditors are secured. From lay man prospective the lower
this ratio the better the company position will be. Above calculations show that in 2008,
company have very high assets as compared to other two years but the liabilities are low
then 2007.But its debt ratio is higher then last year which is dangerous for company.

ACTIVITY RATIOS / EFFICIENCY RATIOS 2008 2007 2006

Inventory turnover
4.504 3.408 3.398
ratio= Cost of goods sold (times)
Inventory of finished goods
Day's Sales In
81.046 107.094 107.403
Inventory 365 days
Inventory turnover ratio

Fixed assets
0.898 0.848 0.961
turnover= Sales
Fixed assets

Total assets
0.432 0.445 0.491
turnover= Sales
Total assets

Capital Intensity
2.316 2.245 2.036
Ratio= Total assets
Sales

Accounts
receivable 15.437 25.771 29.929
turnover= Annual credit sales
 Accounts receivable

Average collection
period / Day's
23.645 14.163 12.195
Sales in
Receivables= 365 days
Accounts receivable turnover

Analysis:-
Inventory turnover indicates the liquidity of the inventory. This is related with next ratio.
If day’s sales in receivable are higher then inventory turnover will be lower. Inventory
turnover is indicating how many times in a year ETNL”s inventory is converted into
sales. By keeping in view the nature of business of ETNL, the inventory turnover of
average 98 times during previous three years is good. ETNL has not able to decrease its
cost of goods sold in year 2008 and is also maintaining more inventory than previous
years; but it efficiency in operations by ETNL. Inventory turnover shows the liquidity of
the inventory means how much company is utilizing its inventories. Year 2006 shows
that inventory turnover is 3.99times which is lower than other two years. Means
company is not making better use of inventory in 2006 as compared to other two years.
Its also shows that in 2008 there is high stock in trade which is idle as compared to other
two years. But in 2007 company again shows a positive result and utilizes its inventory
efficiently.

OTHER RATIOS 2008 2007 2006

Dividend payout
-0.362 -1.685 5.000
ratio= Annual dividends per share
After tax earnings per share

Cash flow per

-0.003 0.001 0.002
share= After tax profits Depreciation
Number of common shares outstanding

Book Value= Total Equity 0.003 0.008 0.009

Number of common shares outstanding

Mark-to-Book
0.000 0.000 0.000
ratio= Current market price per share
Par value of preferred stock
 Equity Multiplier= Total Assets 7.811 7.307 5.190
Total Equity

The Du Pont Profit Margin * Total Asset Turnover *

-0.734 0.159 0.339
Identity Analysis= Equity Multiplier

Analysis:-
In 2008 and 07 our company is in loss so that our dividend payout ratio is -0.362 and
-1.685 which shows that we are not in that condition to pay dividend to the shareholders
because our company financial condition is very bad.
Our book value of common shares are decreasind.

 TREND ANALSIS

Common size Analysis

Index Analysis

Common Size Balance Sheet

ASSETS 2008 2007 2006
Current Asset:
Stores,spares and loose tools 11.03% 11.2% 11.6%
Stock in trade 21.3% 21.7% 23.44%
Trade Debts 12.3% 8.3% 8.6%
Loan and advances 2% 1.3% 1.15%
Trade deposits 3% 1.7% 1.64%
Taxes recoverable 2% 1% 1%
Cash and Bank Balances 1% 0.5% 0.53%
Non-Current Asset:
Property, Plant and Equipment 48.0% 52.5% 51.0%
Long term deposits & prepayments 0.53% 1.4% 0.8%
Liabilities & Equity 2008 2007 2006
Current Liabilities:
Trade and other payables 8% 12.8% 14.1%
Markup accrued 2% 1% 0.48%
Short term borrowings 23.1% 25.7% 23.2%
Current portion of long term loans 0% 8% 5.2%
Current and overdue finance lease 5.0% 4% 2.4%
Current portion of long term morabaha ------------ 0.18% 0.2%
Non-Current Liabilities:
Subordinated loan 18% 17.38% 16.2%
Long term loans 0% 10.8% 12.1%
Liabilities against finance lease 29.% 5% 3.1%
Deferred liabilities 1% 1.7% 3.3%
Total Equity 12.8% 13.7% 19.2%

Analysis:-
In this type of analysis shows the portion of individual item. we also check this method
to evaluate the portion of individual item. Firstly in 2008 current assets is 53% of total
assets and non-current assets are 47% of total assets now the situation is that current
assets are more then non-current assets. In 2007 current assets is 45.7% of total assets and
non-current assets are 54.3% of total assets.

Although there is also an increase in the current liabilities of the

company from common size analysis

In 2007 the inventory of the company has been decreased by 1.7% but the total current
assets of the company have been decrease by 2.4% so the quick ratio decrease in 2007. in
2008 the inventory of the company decrease by 0.17% and current assets increased by
8% but current liabilities decreased by 8%. So, again an increase in quick ratio of the
company in this year.

The Analysis of non current assets over all shows an increasing trend. The property, plant
& equipment and Employees benefits both show an increasing trend from the previous
years. Its mean property is continuously increased. Investment in associate and long term
deposits and prepayment remain same.

There is fluctuation in %age of interest accrued and other receivables

Profit and loss items
Cost of good sold shows fluctuation in its trend so there is also fluctuation in gross profit.
Operating profit shows decreasing trend it decreases from 12.6% in 2006 to 4.4% in 2007
and -21.8% in 2008.overall profit after taxation show a decreasing.

Common size Income Statement:

2008 2007 2006
Net Sales --- --- ---
Less: cost of Goods Sold 115.0% 86.3% 80.3%
Gross Profit -15.0% 13.6% 19.6%
Less: Admistrative expenses 6.7% 9.1% 7%
Other Operating income -21.8% 4.4% 12.6%
Less: Finance costs 18.3% 13.4% 11%
Workers profit ------------- ---------- 0%
Profit/loss for the year -40.1% -9% 1.5%
Add: other income 0.12% 0.39% 0.79%
Profit/loss before taxation -40.0% -8.5% 2.3%
Less: taxes -1.68% -2.3% 0.9%
Profit/loss after taxation -38.3% -6.19% 2.2%

Index Balance Sheet:

ASSETS 2008 2007 2006
Current Asset:
Stores,spares and loose tools 101.4% 113.8% --------
Stock in trade 105.7% 108.7% ---------
Trade Debts 165% 113% -------
Loan and advances 153.7% 139.5% --------
Trade deposits 198.2% 123.4% -------
Taxes recoverable 205.6% 114.4% -------
Cash and Bank Balances 136.6% 110.1% -------
Non-Current Asset: --------
Property, Plant and Equipment 109.3% 120.4% ---------
Long term deposits & prepayments 749.2% 207.2% -------
Liabilities & Equity 2008 2007 2006
Current Liabilities:
Trade and other payables 64.9% 106.8% --------
Markup accrued 574.4% 232.6% -------
Short term borrowings 116.01% 130.1% --------
Current portion of long term loans ----------- 178.9% -------
Current and overdue finance lease 245.2% 186.9% -------
Current portion of long term morabaha --------- 100% -------
Non-Current Liabilities:
Subordinated loan 125.5% 125.5% ---
Long term loans 277.05% 104.0% ---
Liabilities against finance lease 43.65% 174.4% ---
Deferred liabilities 33.74% 59.9% ---
Total Equity 77.2% 83.22% ---

Analysis:-
Taking 2006 as a base year in index analysis current liabilities and
current assets is 100 but in 2007 Stores and spares, stock in trade,
loans and advances and sales tax. While there is an increase in case
of trade debts, trade deposits, other receivables and cash and bank
balances have been raised. Same case is with current liabilities. Trade
debts have been increased , due to these reasons there is an overall
increase in current ratio . Investment in associates and long term deposits shows a
fluctuation from year 06 -08 .Current asset and loan and advances again show
fluctuations.Stores and spares decrease from 113.8% to 101.4% from year 2007 to
2008.Cash and cash balance show continually increasing trend.The over all total assets
show increasing trend.
Profit and loss items
Gross sales are increases from year 2006 to 2007 but in ease in decreases in 2008.Cost of
good sold are also increases from last 3 year. Profit after tax decrease from -296% to
-1764%.the main reason of this decrease is an extra ordinary increase in operating
expenses Taxation shows fluctuation.

Index size Income Statement:

2008 2007 2006
Net Sales --- --- ---
Less: cost of Goods Sold 146.3% 114.1% ---
Gross Profit -78.5% 74.0% ---
Less: Admistrative expenses 99.5% 139.7% ---
Other Operating income -176.8% 37.7% ---
Less: Finance costs 170.4% 129.9% ---
Workers profit ---
Profit/loss for the year -2690.4% -622.7% ---
Add: other income 13.12% 53.2% ---
Profit/loss before taxation -1764.0% -391.1% ---
Less: taxes -1761.3% -2559.3% ---
Profit/loss after taxation -1764.1% -295.8% ---

Conclusion:-
Balochistan Glass Limited financial statement shows very critical condition for last two
years 2007 and 2008. In these years company goes down and down. But in 2006 it earn
some profits. Assets are not utilizing properly from last two years . Every item of
company goes down. They have to take check in the current condition of a company.