SERIAL #

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PTC VS LACKSON

PARTICULARS
01 02 03 04 05 06 07 08

TABLE OF CONTENTS ACKNOWLEDGMENT DEDICATION VISSION AND MISSION STATEMENT OF LAKSON VISION AND MISSION STATEMENT OF PTC BRIEF SUMMARY OF RATIO ANALYSIS INTERNAL ANALYSIS OF LAKSON INTERNAL ANALYSIS OF PAKISTAN TOBACCO COMPANY EXTERNAL ANALYSIS OF LAKSON AND PTC BALANCE SHEETS AND PROFIT AND LOSS OF LAKSON BALANCE SHEETS AND PROFIT AND LOSS OF PTC

02 03 04 05 05 06 10 26

09 10

44

11

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DEDICATION
This project is dedicated to our parents, who taught us that the best kind of knowledge to have is that which is learned for its own sake. And that even the largest task can be accomplished if it is done one step at a time

LAKSON TOBACCO COMPANY

VISION AND MISSION STATEMENT:
Our mission is to build a successful business model that encompasses the needs of our customers, shareholders, and employees, providing a dynamic, responsive organization that ensures a rapid response to opportunity and competition and invest in a balanced portfolio of short, medium, and long-term business opportunities of measured risk. Now this is what we call plan of action (though its hard to tell whether they do take all this into action or not. Our corporate

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responsibility is commendable. The Hismanal Karabhai foundation is a set example for this sole purpose.

PAKISTAN TOBBACO COMPANY

VISION AND MISSION STATEMENT:

We believe in the provision of accurate, clear health messages about the risks of tobacco consumption. We believe the health impact of tobacco consumption should be reduced whilst respecting the right of informed adults to choose the products they

FINANCIAL 2005 RATIOS

2006

2007

2008

2009

Current ratio 2.59 4.18 5.1 1.99 1.98 Acid test ratio 1.783 1.785 1.68 0.246 0.243 prefer. We believe that relevant and meaningful information about our products should continue to be available. We believe that underage people should not consume tobacco products. We believe in the appropriate taxation of tobacco products and the elimination of illicit trade. We believe in regulation that balances the interests of all sections of society, including tobacco consumers and the tobacco industry. We believe that public smoking should be approached in a way that balances the interests of smokers and non-smokers.

LIQUIDITY RATIOS:
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LEVERAGE RATIOS:
FINANCIAL 2005 RATIOS
Debt to equity Debt to total asset Total Capitalization 37.1% 27% 35.6%

2006
20.6% 17.1% 19.9%

2007
18.4% 15.56% 17.5%

2008
57.5% 36.5% 53.9%

2009
55.32% 35.62% 52.3%

PROFITABILITY RATIOS:
FINANCIAL 2005 RATIOS
Net profit margin ROI G.P margin ROE 9.44% 29.57% 22.86% 40.64%

2006
8.60% 26% 23.11% 31.37%

2007
8.93% 26.35% 23.1% 31.2%

2008
9.78% 11.7% 38.2% 18.4%

2009
7.15% 9.1% 37.1% 1.41%

ACTIVITY RATIOS:
FINANCIAL 2005 RATIOS
Interest coverage Total assets turnover Inventory turnover Conversion Ratio Receivable 284.28 3.135 12.468 29 days 90.3

2006
224.40 3.021 8.93 40 days 41.52

2007
138.42 2.95 6.59 55 days 209.4

2008
40.99 1.196 .888 405 days 186.2

2009
18.22 1.265 1.5 239 days 266.68

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turnover ACP Payable turnover APP

4 33 11

9 26 14

1.71 25.7 14

1.933 10.4 34

1.34 7.2 50

FINANCIAL 2005 RATIOS

Current ratio Acid test ratio 1.147 .098

2006
1.11 0.10

2007
.962 .133

2008
.909 .130

2009
0.910 .0695

LIQUIDITY RATIOS:

LEVERAGE RATIOS FINANCIAL RATIOS

Debt to equity Debt to total asset Total Capitalization

2005
118.95% 54.32% 99.19%

2006
111% 53% 92%

2007
165.2% 62.2% 122.35%

2008
188% 65% 130.9%

2009
186.9% 65.15% 148.3%

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PROFITABILITY RATIOS:
FINANCIAL 2005 RATIOS
Net profit margin ROI G.P margin ROE 4.98% 16.58% 17.08% 36.32%

2006
6.16% 21.8% 17.9% 46.8%

2007
15.08% 24.6% 40.6% 65.32%

2008
13.4% 24.36% 38.6% 70.1%

2009
13.94% 24.7% 37.95% 70.9

ACTIVITY RATIOS: FINANCIAL 2005 RATIOS

Interest coverage Total assets turnover Inventory turnover Conversion Ratio Receivable turnover APC Payable turnover APP
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2006
59.69 3.54 6.84 53 days 11654 0.030 10.72 33

2007
75.02 1.63 2.44 147 days 6696 0.053 3.37 106

2008
74.02 1.81 2.87 125 days 7471 0.048 2.96 121

2009
104.77 1.77 2.736 132 days 9961 .036 3.23 111

52.42 3.32 5.81 62 days 3447 0.104 10 36

ANALYSIS OF RATIOS OF LAKSONS

LIQUIDITY RATIOS: 1. Current Ratio: LAKSONS 2005 2006 2007 2008 2009 Current assets/ current liabilities 3538297000/1365019000 3501389000/836094000 3774072000/739396000 6078190000/3052919000 6703558000/3381825000
1.2 1 0.8 0.6 0.4 0.2 0 2009 2008 2007 2006 2005 East

End Result 2.59 4.18 5.1 1.99 1.98

Analysis:
It is necessary for the company that its current ratio remains above 2 time to meet its short term obligations and we can see that from 2005-2007 the LKASONS current ratio is been increasing but in 2006 and 2007 this ratio is too high that means companys cash is staying idle and is not been utilized efficiently. But after that, decline starts that Shows Companys short term borrowings have been increased more as compare to that of current assets.

2. Acid Test Ratio: LAKSONS 2005

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2006

Current assets - inventory/ current liabilities 35382970001104197000/1365019000 3501389000-

End Result 1.783 1.785

2007 2008 2009

2009053000/836094000 37740720002532953000/739396000 60781900005327107000/3052919000 67035580005880236000/3381825000

1.68 0.246 0.243

Analysis:
Here we can see that there is quite clear difference between Current and quick ratio of the company. Quick ratios are remarkably lower than current one. That means company is holding a huge amount of inventory i.e. less liquid asset. So the companys ability to meet its current liabilities with its most liquid assets is not much strong.

FINANCIAL LEVERAGE RATIO: 3. Debt-To-Equity Ratio: LAKSONS

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2005

Total debts/shareholders equity 1539097000/4145491000

End Result 37.1%

2006 2007 2008 2009

1024722000/4956281000 1026216000/5566993000 3445823000/5993961000 3772825000/6819929000

20.6% 18.4% 57.5% 55.32%

Analysis:
From 2005 to 2007 ratios is been decreasing that shows the companys debt financing is going to reduce i.e. total debts of the company may be increasing at a decreasing rate. In initial years there was less dependency on the debts and it keeps on decreasing up to 2007 but after that there was a drastic increase in debt financing which again declined a bit in 2009.

4. Debt-to-Assets Ratio: LAKSONS 2005 2006

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Total debts/total assets 1539097000/5692861000 1024722000/5981003000 1026216000/6593209000

End Result 27% 17.1% 15.56%

2007

2008 2009

3445823000/9439784000 3772825000/10592754000

36.5% 35.62%

Analysis:
It shows the percentage of firms assets that are financed by the debts. In 2005 27% means 27% of the assets are financed by debts but the ratio has fallen in 2006 and 2007 which shows a decline in risk factor too. While in 2008-9 the percentage again increased i.e. Debt. Company is again increasing its debt financing.

5.

Total Capitalization Ratio: Total Debts/LTD + Equity 1539097000/4319569000 1024722000/5144909000 1026216000/5853813000 End Result 35.6% 19.9% 17.5%

LAKSONS 2005 2006

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2007

2008 2009

3445823000/6386865000 3772825000/7210929000

53.9% 52.3%

Analysis:
It shows the percentage of firms total debts with respect to the long term liabilities and equity proportion. In 2005 35.6% shows that the 35.6% of the total debts are borrowed from the long term debts and from equity also. After 2005 the ratio was declined in 2006-7, but in 2008 there was a significant change and in 2009 it again declined in 2009 but a little bit.

COVERAGE RATIOS: 6. Interest Coverage Ratio:

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LAKSONS

EBIT/Interest Charges

End Result

2005 2006 2007 2008 2009

2581029000/9079000 2390778000/10654000 2650444000/19148000 1870836000/45639000 1627386000/89336000

284.28 224.40 138.4 40.99 18.22

Analysis:
This ratio shows the ability of the firm to cover its interest charges. As here we can see that the ratio is declining continuously over the period, which means firm may face more difficulty in 2008-9 in making payments of interest charges, and there will be a higher risk.

ACTIVITY RATIOS:
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7. Total Assets Turnover:

LAKSONS 2005 2006 2007 2008 2009

Net sales/total assets 17848005000/5692861000 18072396000/5981003000 19454415000/6593209000 11297221000/9439784000 13400669000/10592754000

End Result 3.135 3.021 2.95 1.196 1.265

Analysis:
In 2005 it shows that the sales are 3.135 times of total assets. But after that the ratio is continuously declining. It indicates that the overall effectiveness of the firm in utilizing of assets to generate sales is declining every year, which also result in less sales revenue per $ of asset investment.

8. Inventory turnover:
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LAKSONS 2005 2006 2007 2008 2009

CGS/ average inventory 13767718000/1104197000 13895849000/1556625000 14963940000/2271003000 6980754000/7860060000 8431334000/5603671500

End Result 12.46 8.93 6.59 .888 1.5

Analysis:
It indicates that the inventory is turned over 12.46 times into receivables through sales in the year of 2005, which means the inventory is fresher, and more liquid. But after 2005 the ratio declined till 2008. This shows that the company is less efficient in inventory management. In 2009 the ratio is increased a bit.

9. Conversion ratio:

LAKSONS
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2005

No. of days(360)/ Inventory turnover 360/12.46

End Result 29 days

2006 2007 2008 2009

360/8.93 360/6.59 360/.888 360/1.5

40 days 55 days 405 days 239 days

Analysis:
Here we can see that in 2005 the inventory turnover in days is 29 days and then continuously increasing. And in 2009 it is changed into 239 days. These all figures tell us how many days, on average, before inventory is turned into accounts receivable through sales.

10.
LAKSON
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Receivable turnover:
Net sales/ average a/c receivable End Result 17848005/197630 90.3

2005

2006 2007 2008 2009

300 250 200 150 100 50 0

18072396/435254 19454415/92873 11297221/60640 13400669/51014

41.52 209.4 186.2 266.68

lackson

2009 2008 2007 2006 2005

Analysis:
Receivable turnover ratio of LAKSON declined in 2006 which was not good for the company as it shows that our money remains outstanding for a long period of time. But it increased in 2007 that mean company has changed the policy and now the debtors of company are converting into cash quite rapidly. In 2008 the ratio declined a bit but it was maintained again in 2009.

11.
LAKSON 2005 2006
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Average Collection period:

No. of days(360)/receivable turnover 360/90.3 360/41.52 360/209.4 End Result 4 9 1.71

2007

2008 2009

360/186.2 360/266.68

1.93 1.34

10 8 6 4 2 0 2009 2008 2007 2006 2005 lackson

Analysis:
Average collection period should be low if a company needs to operate efficiently. Here this collection period rise in 2006 representing a inefficiency in managing the debtors. But after that it again declined that is favorable for the company as in 2007 it shows that companys account receivables are converted into cash after every 1.7 days.

12.

Payable turnover:

LAKSON 2005 2006 2007

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Net purchases/ average a/c payable 13405705/406321 14800705/569739 15487840/602004 9774908/936280

End Result 33 26 25.7 10.4

2008

2009

8984463/1236888

7.2

35 30 25 20 15 10 5 0 2009 2008 2007 2006 2005 Lackson

Analysis:
Payable turnover of the company shows how rapidly we pay our debts. But in case of LAKSON this ratio is not showing a favorable trend as it is continuously declining throughout the last 5 years. That mean companys financial position may not be as good to pay off its debts rapidly.

13.
LAKSON 2005 2006 2007 2008
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Average payment period:

No. of days(360)/ payable turnover 360/33 360/26 360/25.7 360/10.4 360/7.2 End Result 11 14 14 34 50

2009

50 40 30 20 10 0 2009 2008 2007 2006 2005 Lackson

Analysis:
Average payment period is increasing in the last 5 years that is not favorable as this payment period should be low. This increasing trend shows that companys financial position is not good due to which company is not paying off its debts efficiently.

PROFITABILITY RATIOS: 14. G.P Margin :

LAKSONS 2005 2006 2007

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G.P/Net sales 4080287000/17848005000 4176547000/18072396000 4490475000/19454415000 4316467000/11297221000

End Result 22.86% 23.11% 23.1% 38.2%

2008

2009

4969335000/13400669000

37.1%

Analysis:
The gross profit margin is showing an increasing trend. The reason may be increase in profit per unit or decrease in cost on goods sold.

15.

Net Profit Margin: Net profit/ net sales 1685037000/17848005000 1554885000/18072396000 1737633000/19454415000 1105400000/11297221000 End Result 9.44% 8.60% 8.93% 9.78%

LAKSONS 2005 2006 2007

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2008

2009

958384000/13400669000

7.15%

Analysis:
Net profit margin is decreased from 2005 to 2006 which shows increase in expense of the company may be due to inefficient management of operations. While, there is again an increase in next 2 years showing a possible decrease in expenses. In 2009 again net profit margin is decreased.

16.

ROI: Net Profit After taxes/ Total Assets 1685037000/5692861000 1554885000/5981003000 1737633000/6593209000 1105400000/9439784000 958384000/10592754000 End Result 29.57% 26% 26.35% 11.7% 9.1%

LAKSONS 2005 2006 2007 2008 2009

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Analysis:
As we can see here the ratio is continuously declining in these 5 years that means benefits ripened from the investments are declining. But in 2008 and 2009 there is drastic decrease that means the companies operations are not going efficiently.

17.

ROE: Net Profit After Taxes/Shareholders Equity 1685037000/4145491000 1554885000/4956281000 1737633000/5566993000 1105400000/5993961000 958384000/6819929000 End Result 40.64% 31.37% 31.2% 18.4% 1.41%

LAKSONS 2005 2006 2007 2008

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2009

Analysis:
Returns on equity are declining throughout the period of 5 year. Initially it was quite favorable i.e. 40.64%. Later in the years it is clearly seen that with increase in equity funds the profit margin could not be kept up especially in 2009 where the ratio has dropped down to 1.41%. This was due to the high cost and low prices in 2009.

ANALYSIS OF RATIOS OF PTC

LIQUIDITY RATIOS:

1. Current ratio:
PTC 2005 2006 2007 2008 2009
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Current assets/ current liabilities 4136116000/3604366000 4172950000/3750209000 4641368000/4822940000 4739867000/5210638000 6242528000/6856780000

End Result 1.147 1.11 .962 .909 .910

Analysis:

In all years the position of the company to pay off its short term debt is not very good as it is necessary for the company that its current ratio remains 2 or above to meet its short term obligations. Also that here is a continuous decline in current ratio over the five years that shows companys current liabilities are consistently higher than current assets. Or we can say that companys assets are not enough to cover the current/ short term liabilities.

2. Quick ratio:

PTC 2005 2006 2007 2008 2009

Current assets-inventory/ current liabilities 355185000/3604366000 382090000/3750209000 643187000/4822940000 680804000/5210638000 477161000/6856780000

End Result 0.098 0.10 0.133 0.130 0.0695

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Analysis:
Ratios of all the years are not satisfactory as all years ratios are below the optimum level and also all are remarkably less than their respective current ratios. This shows company has a large amount of inventory in its current assets, which is increasing consistently over the 5 years. Here we conclude that company is investing more in non current assets.

FINANCIAL LEVERAGE RATIO: 3. Debt-To-Equity Ratio:

PTC 2005 2006 2007 2008 2009

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Total debts/shareholders equity 4329039000/3639414000 4595213000/4139187000 6121552000/3704680000 6786710000/3608331000 7966627000/4260234000

End Result 118.95% 111% 165.2% 188% 186.9%

Analysis:
Here from the graph we can see that the ratio is almost increasing in all the years that mean dependency on debts is consistently increasing. As the percentage of debts, with respect to equity is increasing.

4. Debt-to-Assets Ratio: PTC 2005 2006 2007 2008 2009

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Total debts/total assets 4329039000/7968453000 4595213000/8734400000 6121552000/9826232000 6786710000/10394861000 7966627000/12226861000

End Result 54.32% 53% 62.2% 65% 65.15%

Analysis:
It shows the percentage of firms assets that are financed by the debts. Its showing an increasing trend, showing that company is increasing its debts financing that means increase in risk factor too. Most of its assets are financed by debts.

5. Total Capitalization Ratio:

PTC 2005 2006

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Total Debts/LTD + Equity 4329039000/4364087000 4595213000/4984191000 6121552000/5003292000

End Result 99.19% 92% 122.35%

2007

2008 2009

6786710000/5184403000 7966627000/5370081000

130.9% 148.3%

Analysis:
It shows the percentage of firms total debts with respect to the long term liabilities and equity proportion. The total debt to capitalization ratio show the proportion of the debt to the amount of funds available to enterprise in order to undertake long term business. Lower this ratio more favorable will it be for the company. But as we can see in case of PTC this ratio is showing an increasing trend that is unfavorable.

COVERAGE RATIOS: 6. Interest Coverage Ratio: PTC 2005 2006

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EBIT/Interest Charges 2377663000/45351000 3048201000/51060000 3774891000/503517000

End Result 52.42 59.69 75.02

2007

2008 2009

3947041000/53324000 4589465000/43802000

74.02 104.77

120 100 80 60 40 20 0 2009 2008 2007 2006 2005 PT C

Analysis:
This ratio indicates a firms ability to cover the interest expenses. As we can see in the table that ratio of all the years is satisfactory for the company to cover its debts. Only in 2008 the ration declined a bit that means expenses may be increased and company is not able to cover the interest expense at higher margin.

ACTIVITY RATIOS: 7. Total Assets Turnover:

PTC
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Net sales/total assets 26511738000/7968453000

End Result 3.32

2005

2006 2007 2008 2009

30882166000/8734400000 16042877000/9826232000 18845789000/10394861000 21666525000/12226861000

3.54 1.63 1.813 1.771

4 3.5 3 2.5 2 1.5 1 0.5 0 2009 2008 2007 2006 2005

PT C

Analysis:
It measures the turnover of all the firm assets and help us to identify when problem occur that is a problem in fixed assets or in current assets. The company has been facing a decline in assets turnover as par the years under consideration. Therefore company should raise its revenues to take this turnover to optimum level.

8. Inventory turnover:

PTC
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CGS/ average inventory 21982134000/3780931000

End Result 5.81

2005

2006 2007 2008 2009

7 6 5 4 3 2 1 0

25348646000/3705892000 9527306000/3894517000 11569030000/4028622000 13442066000/4912215000

6.84 2.446 2.87 2.736

PT C

2009 2008 2007 2006 2005

Analysis:
Inventory Turnover Ratio indicates the effectiveness of the inventory management practices of the firm. In 2005 this turnover is 5.8 that mean inventory is converted into cash 5.8 times in a financial year. That is just reasonable. But as we go further, from 2007-2009 inventory turnover of PTC is decreased much i.e. 2.44 and 2.73 this is not favorable. This may be due to the fact that company is investing more in inventory.

9. Conversion ratio:

PTC 2005 2006

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No. of days(360)/ Inventory turnover 360/5.80 360/6.84 360/2.446

End Result 62 days 53 days 147 days

2007

2008 2009

360/2.87 360/2.736

125 days 132 days

160 140 120 100 80 60 40 20 0 2009 2008 2007 2006 2005

PT C

Analysis:
Credit policy is defined as the maximum time period allowed to the customer to pay back. Conversion ratio of inventory is increasing in case of PTC showing inefficient management functions. It means inventory is not converting into the account receivables by sales rapidly.

10.
PTC 2005 2006 2007 2008
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Receivable turnover:
Net sales/ average a/c receivable 26511738/7690 30882166/2650 16042877/2396 18872495/2526 21666525/2175 End Result 3447 11654 6696 7471 9961

2009

12000 10000 8000 6000 4000 2000 0 2009 2008 2007 2006 2005 PTC

Analysis:
Receivable turnover represents the efficiency to convert our accounts receivable into cash. PTCs receivable turnover ratio is too high showing that PTC is managing its debtors quite efficiently. But in 2007 its fallen down showing some discrepancy in operations but still it was quite enough.

11.
PTC 2005 2006 2007 2008 2009
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Average Collection period:

No. of days(360)/receivable turnover 360/3447 360/11654 360/6696 360/7471 360/9961 End Result .104 .030 .053 .048 .036

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2009 2008 2007 2006 2005

PTC

Analysis:
Lower the average collection period, better it will be for the company. Here in case of PTC this collection period is consistently low that is a positive indication.

12.

Payable turnover:

PTC 2005 2006 2007 2008 2009

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Net purchases/ average a/c payable 22689013/2288581 25358568/2364032 9734634/2880239 11656618/3936471 15148370/4681087

End Result 9.91 10.72 3.37 2.96 3.23

12 10 8 6 4 2 0 2009 2008 2007 2006 2005 PTC

Analysis:
The payable turnover shows how many times we pay to our creditors within a financial year. A high value of it is favorable. In case of PTC the ratio just increased from 2005-6 and then fallen down rapidly that is a bad signal for the company. It shows we are not efficiently paying off our debts.

13.
PTC 2005 2006 2007 2008 2009
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Average payment period:

No. of days(360)/ payable turnover 360/9.91 360/10.72 360/3.37 360/2.96 360/3.23 End Result 36 34 106 121 112

140 120 100 80 60 40 20 0 2009 2008 2007 2006 2005 PTC

Analysis:
After 2006 onward this average payment period is increased representing a sudden mismanagement of companys operations. It shows PTC is not that much efficient in paying off its debts as it was, before.

PROFITABILITY RATIOS: 14. PTC 2005 2006 2007 2008 2009

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G.P Margin : G.P/Net sales 4529604000/26511738000 5533520000/30882166000 6515571000/16042877000 7276759000/18845789000 8224459000/21666525000 End Result 17.08% 17.9% 40.6% 38.6% 37.95%

Analysis:
The gross profit ratio show increasing trend up to 2007 but after this it start decreasing in next two year. The reason may be decrease in sale price or increase in cost of good sold so we have to examine the both reasons.

15.

Net Profit Margin:

PTC 2005 2006 2007 2008 2009

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Net profit/ net sales 1321919000/26511738000 1904988000/30882166000 2420207000/16042877000 2532295000/18845789000 3022406000/21666525000

End Result 4.98% 6.16% 15.08% 13.4% 13.9%

Analysis:
Profit margin is been increasing for the 3 years showing efficient management of operations but after that in 2008-9 it declined may be because of the high cost or expenses which occurs because of inefficient operations.

16. PTC 2005 2006 2007 2008 2009

ROI: Net Profit After taxes/ Total Assets 1321919000/7968453000 1904988000/8734400000 2420207000/9826232000 2532295000/10394861000 3022406000/12226861000 End Result 16.58% 21.8% 24.6% 24.36% 24.7%

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Analysis:
Return on Assets shows an increase in almost every year except in 2007 where it was declined a bit. Its also clear from the figures that total asset have also increased that means the company uses its assets more efficiently over these years which also increased net income over the years.

17.
PTC 2005 2006 2007 2008 2009

ROE:
Net Profit After Taxes/Shareholders Equity 1321919000/3639414000 1904988000/4139187000 2420207000/3704680000 2532295000/3608331000 3022406000/4260234000 End Result 36.32% 46.8% 65.32% 70.17% 70.9%

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Analysis:
This ratio is the most important ratio for investor point of view. This ratio shows that how much investors get return on their money that they have invested in company stocks. As it is clear that return is increasing consistently year after year that shows a positive sign to investors. This positive increase shows that companys operations are quite much efficient and profitable.

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EXTERNAL ANALYSIS FOR THE YEAR 2009 RATIO

CURRENT RATIO ACID TEST RATIO DEBT TO EQUITY DEBT TO TOTAL ASSET TOTAL CAPITALIZATION INTEREST COVERAGE TOTAL ASSETS TURNOVER INVENTORY TURNOVER RATIO CONVERSION RATIO NET PROFIT MARGIN ROI G.P MARGIN ROE RECEIVABLE TURNOVER ACP PAYABLE TURNOVER APP

PTC
0.910 .0695 186.9% 65.15% 148.3% 104.77 1.77 2.736 132 days 13.94% 24.7% 37.95% 70.9% 9961 0.036 3.23 111

LAKSON
1.98 0.243 55.32% 35.62% 52.3% 18.22 1.265 1.5 239 days 7.15% 9.1% 37.1% 1.41% 266.68 1.34 7.2 50

EXTERNAL ANALYSIS OF 2009

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In 2009 the current ratio of LAKSON is better than that of PTC that shows LAKSON has skills to accomplish short term debts better than PTC.

Quick ratio of PTC is higher than LAKSON that means LAKSON is having much of the inventory portion in its current assets. Talking about the debt equity, Debt to Total Asset and Total capitalization ratios, these Ratios are higher in PTC that means most of the investment in PTC are through loans. Interest Coverage of PTC is also higher than LAKSON therefore PTC is in more favorable situation to cover its interest expenses with its EBIT. In Assets turnover ratio again PTC is better than LAKSON that means is exploiting its assets more efficiently. Inventory turnover ratio of PTC is higher than LAKSON it means inventory/stock of PTC is converted in to finished goods more rapidly than LAKSON. Conversion Ratio of PTC is less than LAKSON that shows that PTC holds its finished goods for less time than LAKSON therefore we can say that PTC is having a more strong position. While in case of receivable turnover PTC is very efficient in managing its trade debts as its receivable turnover is higher than LAKSON that shows PTCs money does not remain outstanding with the debtors for much time. Average collection period is showing an opposite trend but means exactly the same as lower the collection period more efficient the companys operations will be.

Payable turnover of LAKSON is higher than PTC here LAKSON is more efficient in paying off its debts. That means it doesnt let its debtors to wait for much time likewise in PTC average payment period is higher that means PTC pays off its debts after longer time than LAKSON. Gross profit Ratio, Net Profit Ratio, ROI and ROE all are higher for PTC may be due to low cost and high sales volume than LAKSON.
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SUGGESTIONS
As per the situations in 2009 PTC needs to increase its current ratio by managing its current assets and liabilities more efficiently than before. Additionally it should also try to lessen its debt financing which is much greater than that of LAKSON. PTC should also try to make its credit policies more effective to get payments from its debtors earlier. To increase its ACP that is lower than LAKSON. While LAKSONS needs to manage its operating and other expenses in order to make its interest coverage ratio more impressive as PTC. In addition to these LAKSONs inventory holding time is too high which is not favorable for it, so it should better organize its inventory turnover in a way that its inventory take less time in conversion to finished products. It should also minimize its expenses to get more return as its ROI and ROE are too low relative to that of PTC.

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Current Ratio:

Acid Test Ratio:

Debt to Equity:

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Debts to Total Assets:

LTD to Capitalization:

Interest Coverage Ratio:

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Total Asset Turnover:

Inventory Turnover Ratio:

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Conversion Ratio:

Net Profit Margin:

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ROI:

GP Margin:

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ROE:

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