1. J. A TEXTILE MILLS LIMITED
By
SYED MUHAMMAD HASSAN
FA06-BB-0105
To
SIR.JAMIL AHMED SABRI
NOV 3rd, 2007
IBF
SECTION-D
MUHAMMAD ALI JINNAH UNIVERSITY
2. 2
ACKNOWLEDGEMENT
First of all I would like to thanks to all mighty ALLAH that HE
courage me to complete this project. Secondly I would like to
thanks to my respected teacher Mr.Jamil Ahmed Sabri, he has
assigned me to write this report. I have putted my best to complete
this report. It is honor for me to write a final report
of J. A. TEXTILE MILLS LIMITED. At last but not the least I
really great full
to Mr. Khalid Haseeb, he helped me a lot to complete this report.
3. 3
TABLE OF CONTENTS
Serial# PARTICULARS PAGE#
1. COMPANY PROFILE
2. RATIO ANALYSIS
3. GRAPHICAL REPRESENTATION
4. TABLE OF RATIO ANALYSIS
5. INTERPRETATION
6. COMMON SIZE INCOME STATEMENT
7. COMMON SIZE BALANCE SHEET
8. GROWTH RATE
9. PROFORMA INCOME STATEMENT
10. PROFORMA BALANCE SHEET
11. CONCLUSION
12. RECOMENDATION
4
5
11
16
18
20
21
22
23
24
25
26
4. 4
BORD OF DIRECTORS
CHIEF EXECUTIVE MR. IMRAN ZAHID
DIRECTORS MS. QURATUL-AIN-ZAHID
MR. JAMIL AHMED TAHIR
MR.RIAZ AHMED
MR.NAVEED EJAZ
MR. MUHAMMAD
ZAHID BASHIR
MR. MUHAMMAD SHEHZAD
AUDIT COMMITTEE:
CHAIRMAN MR. IMRAN ZAHID
MEMBER MR. RIAZ AHMED
MEMBER MR. JAMIL AHMED TAHIR
SECRETARY: MR. KHALID JABBAR
FINANCIAL OFFICER: MR. MUMTAZ AHMED
BANKERS UNITED BANK LTD
HABIB BANK LTD
NATIONAL BANK LTD
AL-BARAKA ISLAMIC BANK
B.S.C. (E.C)
KASAB BANK LTD
REGISTERED OFFICE AND
SHARE DEPARTMENT: 16-C,PEOPLES COLONY,
FAISLABAD.
MILLS: 29-KM, SHEIKHUPURA ROAD,
FAISLABAD.
WEBSITE www.jatm.com
6. 6
(A)
LIQUIDITY
1- CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITIES
C.R 2006 = 62,587,249
40,007,447
= 1.564
C.R 2005 = 62,932,153
68,213,975
= 0.922
2. QUICK RATIO = QUICK ASSETS
CURRENT LIABILITIES
Q.R 2006 = 35,521,598
40,007,447
= 0.887
Q.R 2005 = 14,296,682
68,213,975
= 0.021
3. CASH RATIO = CASH
CURRENT LIABILITIES
C.R 2006 = 1,395,766
40,007,447
= 0.034
C.R 2005 = 9,439,030
68,213,975
= 0.138
7. 7
(B)
ACTIVITY
1. INVENTORY TURN OVER = COST OF GOOD SOLD
AVERAGE INVENTORY
I .T 2006 = 434,783,999
21,545,471
= 20.179
I .T 2005 = 190,707,845
29,907,970
= 6.376
2. AVERAGE COLLECTION PERIOD = A/c RECEIVABLE
Avg. Sales/ day
Avg.coll.period 2006 = 2,248,932
1,299,570
= 1.730
Avg.coll.period 2005 = 1,732,781
5, 65,551
= 3.064
3. AVERAGE PAYMENT PERIOD = A/c PAYABLE
Avg. Purchase/day
Avg. Payment Period 2006 = 18,375,343
8, 17,076
= 22.489
Avg. Payment Period 2005 = 50,547,715
3, 83,244
= 131.894
8. 8
4. TOTAL ASSETS TURNOVER = Total net sale x 100 = Ans %
Total Assets
Total assets turnover 2006 = 467,845,051
256,787,835
= 1.8 x 100
= 182 %
Total assets turnover 2005 = 203,598,318
269,783,587
= 0.75 x 100
= 75.467 %
(C)
PROFITIBILITY
1. Gross Profit margin = Gross profit x 100
Total net sale
G.P 2006 = 33,061,052
467,845,051
= 0.0706 x 100
= 7.06%
G.P 2005 = 12,890,473
203,598,318
= 0.063 x 100
= 6.33%
2. Net Profit Margin = Net Profit after Taxes x 100
Sales
N.P 2006 = 7,669,156 x 100
467845051
= 1.639%
9. 9
N.P 2005 = (15,528,654) x 100
203,598,318
= (7.6%)
3. Operating Profit Margin = Operating Profits
Sales
O.P 2006 = 7,669,156
467,845,051
= 0.016
O.P 2005 = (15,528,654)
203,598,318
= (0.076)
4. Return on Total Asset = Net Profit after Taxes x 100
Total Assets
R.A 2006 = 7,669,156 x 100
256,787,835
= 2.98%
R.A 2005 = (15,528,654) x 100
269,783,587
= 5.75%
5. Return on Equity = Net Profit after Taxes x 100
Stockholder’s Equity
R.E 206 = 7,669,156 x 100
(113,656,902)
= (6.75%)
R.E 2005 = (15,528,654) x 100
10. 10
(126,703,532)
= 12.25%
6. Earning per Share = Earning Available for Common Stock
No. Of Shares of Common Stock
E.S 2006 = 7,669,156
12,601,160
= 0.608
E.S 2005 = (15,528,654)
12,601,160
= 1.232
17. 17
TABLE
RATIOS ANALYSIS COMPUTATION FOR YEAR 2006 RATIOS
RESULTS
R U P E E S
Working Capital
62,587,249.00 40,007,447.00
Rs22,579,802.00
Current Ratio
62,587,249.00 40,007,447.00
Rs1.56
Cash Ratio
1,395,766.00 40,007,447.00
Rs0.03
Acid Test Ratio
35,521,598.00 40,007,447.00
Rs0.89
Inventory Turnover times)
434,783,999.00 21,545,471.00
Rs20.18
Inventory Turnover days)
365.00
6.37 Rs57.30
Account Receivable (times)
467,845,051.00 1,990,856.50
Rs235.00
Account Receivable (days)
365.00
Rs235.00 Rs1.55
Total Days Of Operating Cycle 57.30 1.55 Rs36.97
Debt Ratio
298,711,025.00 256,787,835.00
Rs116.33
Equity Ratio
(113,656,902.00) 256,787,835.00
Rs44.26-
Asset Turnover
467,845,051.00 256,787,835.00
Rs182.19
Earning Per Share
7,669,159.00 12,601,160.00
Rs0.61
Price Earning Ratio 5.75
20,000,000.00
Rs0.00
Book Value Per share
(113,656,902.00) 20,000,000.00
Rs5.68-
Rate Of Return On Share Holder's
Equity 7,669,156.00 (113,656,902.00)
Rs6.75-
Rate Of Return On Total Assets
7,669,159.00 256,787,587.00
Rs2.99
Rate Of Cost Of Goods Sold
434,783,999.00 467,845,051.00
Rs92.93
Rate Of Gross Profit OR (Loss)
33,061,052.00 467,845,051.00
Rs0.07
Rate Of Operating Expenses
23,315,924.00 467,845,051.00
Rs4.98
Rate Of Net Profit OR (Loss)
7,669,159.00 467,845,051.00
Rs0.02
Market Ratio 5.75 10.00 Rs4.25-
19. 19
TIME SERIES RATIO ANALYSIS:
Liquidity:
The overall liquidity of the industry is good in 2006. But it is at the very low stage in
2005, because industry has current ratio is 1.56 in 2006 but in 2005 is 0.922, which
means industry is not doing well.
Quick ratio indicates that industry has high inventory level and increases as compared to
previous years.
The industry had low cash ratio in two years comparing with the company.
Asset Management:
Asset management of the industry was good because the inventory turnover is increasing
in 2006.
Average collection period of the industry is increasing gradually in two years. But the
company has very low average collection period, which means that company is not able
to collect its receivables.
Average payment period of the industry is very low in 2006 as compare 2005, which
means that company is not paying it payables quicker than the industry.
Total asset turnover is increasing in year 2006 as compare 2005, the company has very
low total assets turnover than industry.
Profitability:
Gross Profit margin is increasing gradually in 2006 as compare to 2005. The change in
margin is 0.73%. Over all its better.
Industry Operating Profit margin is also good in 2006 than 2005.
Net profit margin for the industry is increasing gradually but it is negative for the
company in 2005 and good in 2006..
20. 20
COMMON SIZE INCOME STATEMENT
Sale net 501,389,541
Cost of sales 465,958,012
Gross profit 35,431,529
Operating Expenses 12,857,079
Distribution and selling cost 8,221,618
Administrative and general expenses 730,031
Other operating expenses 3,178,947
Finance cost 24,987,676
Other operating income 10,443,854
Operating profit 299,101
Taxation 10,742,954
Net profit/ (loss) for the year/ period after taxation 2,523,920
8,219,034
2006 (Rs) COMMON SIZE
Sale net 467,845,051 100%
Cost of sales 434,783,999 92.93%
Gross profit 33,061,052 7.60%
Operating Expenses
Distribution and selling cost 11,996,901 2.56%
Administrative and general expenses 7,671,567 63.95%
other operating expenses 681,190 8.88%
Finance cost 2,966,266 35.45%
23,315,924 86.04%
9,745,128 41.80%
Other operating income 279,090 2.86%
operating profit 10,024,218 2.14%
Taxation 2,355,062 23.49%
Net profit/(loss) for the year/ period after
taxation 7,669,156 325.65%
21. 21
COMMON SIZE BALANCE SHEET
2006 Rs.
COMMON
SIZE
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized capital
20,000,000 ordinary shares of Rs. 10/- each 200,000,000 100%
Issued, subscribed and paid up capital
12,601,160 ordaiary shares of Rs. 10/- each
fully paid in cash 126,011,600
Accumulated loss
-
239,668,502
-
113,656,902
SURPLUS ON REVALUATION OF FIXED ASSETS 71,733,712
NON CURRENT LIABILITIES
Long term financing 215,470,750 83.28%
Deferred liabilities 43,232,828 16.71%
258,703,578 100%
CURRENT LIABILITIES
Trade and other payables 19,346,653 48.35%
Mark up/interest on long term financing 17,188,830 42.96%
Provision for taxation 3,471,964 8.67%
40,007,447 100%
256,787,835
ASSETS
NON CURRENT ASSETS
Property, plant and equipment-Tangible 191,019,549 98.36%
Long term investment 17,875 0.01%
Long term deposits 3,163,162 1.62%
194,200,586 100%
CURRENT ASSETS
Stores and spares 3,741,147 5.97%
Stock in trade 13,182,972 21.06%
Trade debts 2,248,932 3.59%
Short term investment 141,532 0.22%
Loans and advances 30,287,443 48.39%
Prepayments 116,659 0.19%
Other receivable 11,472,798 18.33%
Cash and bank bakance 1,395,766 2.23%
62,587,249 99.98%
256,787,835
22. 22
GROWTH RATE
IGR = ROA x b
1-(ROA x b)
ROA = Net Income
Total Assets
= 7,669,156
256,787,835
= 0.029
b = 0.999
IGR = 0.029 x 0.999
1-(0.029 x 0.999)
IGR = 0.0297
SGR = ROE x b
1-(ROE x b)
ROE = Net Income
Total Share Holder’s Equity
= 7,669,156
(113,656,902)
= (0.067)
SGR = (0.067) x 0.999
1-((0.067) x 0.999)
SGR = 0.0716
23. 23
PERFORMA INCOME STATEMENT
Sale net 501,342,757
Cost of sales 465,914,533
Gross profit 35,428,223
Operating Expenses
Distribution and selling cost 12,855,879
Administrative and general expenses 8,220,851
other operating expenses 729,963
Finance cost 3,178,651
24,985,344
10,442,879
Other operating income 299,073
operating profit 10,741,952
Taxation 2,523,684
Net profit/(loss) for the year/ period after taxation 8,218,268
24. 24
PERFORMA BALANE SHEET
EQUITY AND LIABILITIES Rs.
SHARE CAPITAL AND RESERVES
Authorized capital
20,000,000 ordinary shares of Rs. 10/- each 200,000,000
Issued, subscribed and paid up capital
12,601,160 ordaiary shares of Rs. 10/- each
fully paid in cash 126,011,600
Accumulated loss/Retained earning -232007015.2
-105,995,415
SURPLUS ON REVALUATION OF FIXED ASSETS 71,733,712
NON CURRENT LIABILITIES
Long term financing
Deferred liabilities 353,168,972
2,113,349,529
CURRENT LIABILITIES
Trade and other payables 158,042,808
Mark up/interest on long term financing 140,415,552
Provision for taxation 28,362,474
326,820,835
2,097,699,824
-1,136,151,249
ASSETS
NON CURRENT ASSETS
Property, plant and equipment-Tangible 1,560,438,696
Long term investment 146,021
Long term deposits 25,839,870
1,586,424,587
CURRENT ASSETS
Stores and spares 30,561,430
Stock in trade 107,691,698
Trade debts 18,371,526
Short term investment 1,156,175
Loans and advances 247,418,122
Prepayments 952,987
Other receivable 11,402,012
Cash and bank bakance 511,275,237
2,097,699,824
25. 25
CONCLUSION
The overall summary of this project analysis is that the common size income statement is
good in the year 2006; because sales are increasing 10% and cost of sales are constant for
both the year. A huge increase and cost of sales are 93% in that year and other expenses
are also increasing while gross profit is constant in both years. Operating profit is
increasing in 2006, but it’s very low in 2005. Profit before taxation is increasing by
23.49%. Net income is increasing in 2006.While analyzing balance sheet asset are
utilized in good manner and sales are increasing every year therefore asset are increasing
every year and liabilities are also good. The overall liquidity of the company is good
because company has current ratio is 1.564 which means company had 1 liability for
every 1.564 in assets in 2006. Quick ratio indicates that in 2006 company had low
inventory but it increases gradually in two years. Company had low cash ratio in both
years. The company is highly leveraged because debt ratio was less than one which
means that for every one asset the company had 0.56 liabilities in 2006. Debt equity ratio
is increasing and very high. It is quite high because of the reason of smaller equity. Long
term debt ratio is lower but increases gradually. Cash coverage ratio is increasing
gradually. Asset management of the company was good because the inventory turnover is
increasing gradually. Receivable turnover is increasing. Profit margin is increasing in
2006. Market to book ratio is increasing gradually. The industry average is better than the
company because almost every ratio of the industry is high with comparison to the
company in case of liquidity, leverage, asset management, profitability and market value
measure is better of textile industry, industry performance is better and improving every
year, in conclusion company and industry is doing well and in future growth is take place
which increase the revenues and dividends and it better for the country.
26. 26
RECOMMENDATION
For J. A TEXTILE MILLS LTD, Which is a profitable company, i recommend that
they should increase their cash & bank, according to me it’s compartively less for those
companies like reliance weaving mills.
On the other hand they should pay their liabilities as soon as they can, and increase its
owner’s equity than its liabilties. Cost and expenses should be reduced so the company
can generate more profit.company should sale their shares on the high market rates and
pay more dividend to their investors.
