7/28/2019 Gul Ahmed Report
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Gul Ahmed Textile Mills Pvt. Ltd. (Brief Recordings)
ANALYSIS OF FINANCIAL STATEMENTS (FY 2001 FY 2010)
ul Ahmed Textile Mills Ltd. was incorporated as a private
limited company, in the year 1953. In 1972 it was
subsequently
listed on the Karachi Stock Exchange. Since then the company
has been making rapid progress and is one of the best
composite
textile houses in the world. The mill is presently a composite
unit with
an installed capacity of 130,296 spindles, 223 wide width air
jet looms,
and a state of the art processing and finishing unit in Landhi
Industrial
Area Karachi. In addition Gul Ahmed has 16 outlets in different
parts of
the country.
Sales:Sales has been increased from 2001 to 2010 by 394%. It has
increased
gross profit to 260%. However, the increase in cost of
sales,
distribution expenses and finance cost were the main factors
eroding
the profit margins. The profit before taxation is increased to
137%. In
the current economic environment it is important for the Company
to
not only maintain but also improve the liquidity position.
Despite the
need for improved liquidity the Directors proposed dividend of
12.5%
(Rs. 1.25 per share of Rs. 10 each).
Industry vs Gul Ahmed Textile Mills Performance:Below is the Gul
Ahmed performance compared with Industry
performance. Financial performance for the decade is illustrated
after.
Financial Performance (2001-2010):Financial performance of Gul
Ahmed Textile Mills is given below:
1. LiquidityGul Ahmed has less liquid in terms of assets. By the
ratios analyzed
below it is clear that the current assets were more than current
liabilities from 2001 to 2006. However in recent years the ratio
of
current assets to current liabilities is equal. S imilarly, the
inventories
have been increased which is a major factor for liquidity. If
the
inventories will be selling and amount received quicker the firm
is
more liquidated. Current ratio has been increased from 0.98 to
0.99 for
FY2009- 2010. However, Quick ratio has decreased from 0.42 to
0.36.
2. Profitability:Profitability of the company has been
decreased. Gross Profit Margin
has decreased from 16.81% to 16.12 from FY 2009 to 2010. Net
Profit
Margin has increased from 0.58% to 2.43% from FY 2009 to
2010.
Return on assets has been increased from 0.58% to 3.23% from
FY
2009 to 2010. Return on equity is also increased from 2.12% to
12.22%
for FY 2009-2010. This means that the company is getting more
return
from assets and shareholders equity.
3. Capital Efficiency:Total assets turnover is high throughout
the decade. It shows that the
total assets contribute in generating sales revenue to the
company.
TATO has increased from 2.38 times to 3.27 for FY 2009-2010.
Inventory turnover has also increased from 3.37 to 3.70 times in
FY
2009-2010, which is an indication of high sales and generating
revenue
to the company.
4. Financial Gearing:Debt-to-equity ratio is indication of the
relative proportion of
shareholders' equity and debt used to finance a company's
assets.
Debt-to-equity ratio has decreased from 0.98 to 0.81 for FY
2009-2010.This shows that the company has lessen the debt as
compared to
shareholders equity. It was however much higher from FY
2004-2008.
5. Market Performance:EPS has remarkabely increased from Rs.
1.45 to Rs. 7.52 for FY 2009-
2010. P/E ratio has decreased from 26.79 to 2.46 for FY
2009-2010.
Dividend Payout ratio is decreased which means that company
has
given dividend from the net income in less ratio than in
previous years.
Dividend cover ratio has increased from 1.87 in FY 2008 to 6.02
in FY
2010.
Common Size Analysis:Common Size analysis shows that the net
income
decreased from FY 2001 to FY 2010. Similarly there
gross profit margin and net profit margin. COGS hav
due to inflation and economic crisis in the countr
lessen the long term loans but receivables have been
resulted in a high inventory turnover. Company has
projects in FY 2010.
Indexed Analysis:Index Analysis shows that sales have been
increase
394% from FY 2001 to FY 2010. There is increase in gr
but no change in net income. There is an increase in
investments done by the company. Company liab
increased during the decade by 246%. Receiva
increased which shows the company liquid position
little bit.
Future Outlook:Gul Ahmed Textile Mills Pvt. Ltd. is looking for
a su
growth and market share. Sales have been increased
sold has also increased due to shortage of cotton
materials, as the affect of floods. Company can incre
raise the sales and net income. Gul Ahmed Textile has
million in projects which will give benefit to the compa
Company has opened many outlets and a lot mor
increase in sales.
Prepared By: Muzammil Shahabuddin
Student of MBA (Executive)
STD ID: 2010-3-45-10969Institute of Business Management
Disclaimer: No reliance should be placed on the [above
any one for making any financial, investment and b
The [above information] is general in nature and has n
for any specific decision making process.
G
