1. fsafsa

2. A nalyzing F inancial P erformance Atlas Battery Pvt Limited

3. Presented by Khuram Shahzad083268 Sajid Siddique081113 Naveed Hassan083106 Salman Rasheed082119 Faran Majeed083114 Umar Javed081158

4. fsafsa A nalyzing F inancial P erformance Financial ratios du pont analysis s tandardized financial s tatements Applications of financial analysis Problems in using FSA SUMMARY

5. fsafsa A nalyzing F inancial P erformance Financial ratios Ratio is an arithmetic relationship between two figures FRA is a study of ratios between various items in fin statements

6. fsafsa Is drawing conclusions to serve as basis for decisions and actions Interpretation

7. fsafsa A nalyzing F inancial P erformance Financial Ratios- Classification Liquidity Leverage Turnover Profitability Valuation

8. fsafsa Atlas Battery: P/L Account for the year ending 31 st March, 20x9 20x920x8 (Rs in Mil) Net Sales31572628 COGS26262242 Stocks 421 370 wages & salaries 68 55 other Mfg Exp 63 50 Gross Profit 530 387 Operating Expenses 60 49 Distributin 124 115 Gn Adm 71 56 Op Expenses 21 12 Other Op Income 2.2 1.9 Operating Profit316 206 Non Operating surplus/deficit -- -- Interest 44 42 Profit before tax273 164 Tax 95 57 Profit after tax178 1 07 Per Share Data (Rs) EPS25.4115.27 Mkt Price Per Share171.81167.8 Book Value per share76.01658.106

9. fsafsa Atlas Battery: Balance Sheet as on 31 st March,20x9 (Rs in Mill) 20x920x8  Current Liabilities  Provisions  Current Assets  Loans & Advances I Equity and Liabilities 1 Share Capital & Reserve532406 a) Share Capital7070 b) Reserves & Surplus462336 3 Surples on Revaluation174174 2 Liabilities598627 a) Non Current8662 Deffered Liabilities8662 b) Current 509565 Trade & Other Payables331192 Short Term Borrowings104313 Provision For Taxation 7759 13001207

10. fsafsa Atlas Battery: Balance Sheet as on 31 st March,20x9 (Rs in Mill) 20x920x8  Current Liabilities  Provisions  Current Assets  Loans & Advances I Assets 1 Fixed Assets635518 2 Long term Deposits 2 4 3 Current Assets662685 Inventories435 411 debtors116 165 Cash & Bank Balance 29 49 Loans & Advances 2 1 Othe Receivables 81 59 13001207

11. fsafsa Liquidity Ratios

12. fsafsa Current Ratio = Current Assets Current Liabilities Acid Test Ratio = Current Assets-inventory Current Liabilities Working Capital = Current Assets – Current Liabilities 662/509 =1.31 (662-435)/509 =0.447 662 - 509 =153.22

13. fsafsa Leverage Ratios (Refers to use of debt finance)

14. fsafsa Leverage Ratios Debt Equity Ratio = Debt Equity Debt Asset Ratio = Debt Assets Interest Coverage Ratio = Profit before Int and Taxes Interest 316/43.5 = 7.268 Financial Leverage Refers to Use of Debt Finance 435 / 532 =0.817 =81.77% 435 /1300 = 0.334 = 33.43%

15. fsafsa Turnover Ratios (Measure how efficiently assets are employed)

16. fsafsa Turnover Ratios activity Ratios how assets are employed Inventory Turnover Cost of Goods Sold Average Inventory Debtors’ Turnover Net Credit Sales Average Sundry Debtors Average Collection Period Average Sundry Debtors Av. Daily Credit Sales 2627/423 =6.22 3157/80.74 =39.09 80.74 (3157/365) =9.34 days 365 Debtors’ Turnover 365 39.09 =9.34 days

17. fsafsa Turnover Ratios Activity Ratios How Assets Are Employed Fixed Assets Turnover Total Assets Turnover Net Sales Average Total Assets 3157/85.627 =36.867 3157/1300.156 =2.428 Net Sales Av. Net fixed assets

18. fsafsa Profitability Ratios Profit Margin Ratios Rate of Return Ratios

19. fsafsa  Gross Profit Margin Ratio  Net Profit Margin Ratio  Return on Assets  Earning Power  ROCE  Return on Equity

20. fsafsa Profitability Margin Ratios GP Margin Ratio Gross Profit Net Sales NP Margin Ratio Net Profit Net Sales 530/3157 =16.79% 178/3157 =5.63%

21. fsafsa Profitability Return Ratios Equity Earnings Av. Equity Return on Equity 178/531.54 =33.4% ROCE PBIT(1-Tax Rate) Av.total Assets 316(1-0.5)/1300.56 =12.15% Earning Power EBIT Av. total Assets 316/1300.56 =24.34% Profit after Tax Av. Total Assets Return on Assets 178/1300.156 =13.7%

22. fsafsa Valuation Ratios (How Equity Stock is assessed in Capital Market)

23. fsafsa Valuation Ratios Market Price Per Share Earning per Share Price Earning Ratio 171.81/25.41 =6.76 Market Price Per Share Book Value per Share Market Value to Book Value Ratio 171.81/76.02 =2.26 Common Stock Equity Outstanding Shares Book Value Per Share 532/6992579 =76.016

24. fsafsa Comparison with Industry Time Series of Financial Ratios

25. fsafsa Comparison Comparison of Ratios of Atlas Battery with Industry Average Ratio Atlas Ltd Industry Av. Liquidity Current Ratio 1.311.26 Acid Test Ratio 0.440.40 Leverage Debt Equity ratio0.811.15 Debt Ratio0.340.46 Interest Coverage Ratio7.25.14 Turnover Inventory turnover6.226.43 Acct Receivable TO38.124.06 FA Turnover5.05.79 Total Assets Turnover2.41.96 Profitability GP Margin Ratio16.8%18.0% NP Margin Ratio13.7%11.0% Return on Assets7.7%6.9% Earning power20.0%17.7% ROCE40%31.96% Return on Equity33.4%22.03%

26. fsafsa Time Series Times Series of Certain Ratios 1 2 3 4 5 Debt-Equity ratio 0.84 1.08 1.25 1.13 1.16 Total Assets turnover 2.4 2.2 2.1 2.1 1.9 Net P margin(%) 5.6 4.1 5.5 3.4 4.3 Return on Equity(%) 33.4 26.3 26.0 15.6 17.4 Earning Power 5.7 10.1 11.7 9.5 8.7

27. fsafsa du pont analysis

28. fsafsa Profile of Profitability of a Firm (DU PONT ANALYSIS) Overall Profitability depends upon 2 elements Profit Margin On Sales Selling Price Cost and Expenses Turnover of Firm Total Assets Sales Du pont added another Dimension to it

29. fsafsa A nalyzing F inancial P erformance du pont analysis Du Pont Company pioneered this system of FA Analyze Return on Assets With the help of Net Profit Margin (NPM) & Total Assets Turnover Ratio (TATR) Extended to get Return on Equity (ROE)

30. fsafsa A nalyzing F inancial P erformance du pont analysis ROA Net Profit Net Sales Av.Total Assets x ROE Net Profit Net Sales Av.Total Assets x Av Equity x NPMTATR NPMTATREFR

31. fsafsa A nalyzing F inancial P erformance du pont analysis ROA Net Profit Net Sales Av.Total Assets x ROE Net Profit Net Sales Av.Total Assets x Av Equity x NPMTATR 1783157 31571300 x =13.69% 13.69 x 2.44 = 33.45 %

32. fsafsa A nalyzing F inancial P erformance du pont analysis 1783157 31571300 x 1300 532 X 5.6 X2.42 X 2.44 = 33.45 How these results can be improved?

33. fsafsa Common-Size Statements standardized financial statements

34. fsafsa Common-Size Statements Net sales Net sales is usually the base and is expressed as 100%.

35. fsafsa Common-Size Statements 2008 Cost ÷ 2008 Sales × 100% ( Rs2,241,937 ÷ Rs2,628,820 ) × 100% = 85.3% 2009 Cost ÷ 2009 Sales × 100% ( Rs 2,626,740 ÷ Rs3,156,807 ) × 100% = 83.2%

36. fsafsa Common-Size Statements

37. fsafsa A nalyzing F inancial P erformance Applications of financial analysis Assessing Corporate Excellence Judging Creditworthiness 4c’s-character,capital,capacity,collatral Forecasting Bankruptcy Valuing Equity Shares Estimating Market Risk Indicators of Corporate Excellence (IDBI) Growth rate of Sales Growth rate of Assets PBT to C Employed WC to Gross Sales Debt Equity Ratio

38. fsafsa A nalyzing F inancial P erformance Using financial statement analysis Problems Price Level Changes Variations in Accounting Policies Window Dressing Interpretation of Results Correlation among Results

39. fsafsa A nalyzing F inancial P erformance SUMMARY Compara tive Analysis

40. fsafsa A nalyzing F inancial P erformance SUMMARY (Cont’d) Sales increasd from 2628.83 mil to 3156.81 mil. Net income raised from 106.79 mil to 177.68 mil. Cash and Cash equilents have decrased down to 28.89 mil. Basic earning per share increased from Rs. 15.27 to Rs. 25.41 per share Overall Performance has been better as Compared to Previous Year Compara tive Analysis