Fauji Cement Financial Anlysis

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OXFORD BROOKES UNIVERSITY

Research Report
(RR)

The Business and Financial Performance of
Fauji Cement Company Limited
Over a period of three years
(FY2008 to FY2010)

May 2010
Word count:

Contents| Page No.|
1.| PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH| 3.| | 1.1 Introduction| 3.|
| 1.2 Reasons for selecting the topic and the organization| 3.| | 1.3 Project objectives| 3.|
| 1.4 Research questions| 4.|
| 1.5 Research approcah| 5.|
2.| INFORMATION GATHERING AND ACCOUNTING/ BUSINESS TECHNIQUES| 6.| | 2.1 Information gathering| 6.|
| 2.2 Limitations of information gathering| 7.|
| 2.3 Ethical issues| 7.|
| 2.4 Accounting and business techniques used and their limitations| 7.| | | |
3.| RESULTS, ANALYSIS, CONCLUSION AND RECOMMENDATIONS| 10.| | 3.1 industry overview| 10.|
| 3.2 Company history and profile| 10.|
| 3.3 Ratio analysis| 11.|
| 3.4 PEST analysis| 25.|
| 3.5 SWOT analysis| 27.|
| 3.6 Peer analysis| 30.|
| 3.7 Conclusion and recommendations| 31.|
| |
Annexure A – Bibliography/Referencing| |
Annexure B – Statement of Financial Position| |
Annexure C – Income Statement| |
Annexure D – Ratio Sheet| |
Annexure E – Spreadsheet FormulasAnnexure F – Graphs | |

1. PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH

1.1 INTRODUCTION
The topic I chose for my research and analysis project is “The business and financial performance of an organisation over a three year period” and the company that I have selected is Fauji Cement Company Limited. 1.2 Reasons for selecting the topic and the organisation

With a perspective of getting the OBU BSc (Hons) degree, the first task I faced was the selection of a suitable topic and an organisation on which my research would be based. In reaching my decision, the following factors played an important role; * In my previous studies including my A’ levels and ACCA, I have come across techniques used to assess business and financial position of a company on many occasions, in my classes and also in my exams. I was fairly familiar with what this topic required of me. * I consider this topic as one of my strong areas and I feel that I have generally performed well whenever I have come across it previously. * I considered this as an opportunity to practically apply techniques such as ratio analysis, SWOT and PEST analysis to a real company as opposed to applying them to a hypothetical scenario. This would enable me to enhance my understanding of my previous studies and build a professional approach. * Most of the information gathering required to conduct this analysis was relatively easier. * I only had a lay man’s perspective of the cement sector before starting my project, so I took this opportunity as a challenge to expose myself to this important industrial sector. I chose FCCL, in particular, because it has a strong reputation and there was sufficient information available about the company. * FCCL is a listed company and a profitable one as well.

1.3 Project objectives
The key objective as the topic clearly suggests is to analyse the business and financial performance of FCCL over a three year period. This can be broken down into several smaller areas; * Obtain an understanding of the cement sector as a whole and the company in particular from a historical and current point of view. * Analyse trends in sales both in terms of sales price and sales volume and determine reasons for variations. * Perform profitability analysis for the company. Profitability analysis is defined as classification, measurement and assessment of a company’s performance in terms of the profit it earns in relation to sales, capital employed or shareholders’ investments. (Michael Armstrong, 2001)

* Evaluate the company’s liquidity position i.e. the ability of the company to meet its short-term financial obligations....
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