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Project of Financial Statement Analysis

Atlas Battery 2012
Presented to:
Prof. Mubeen Khalid Sb.
Presented by:
Hafiz Muhammad Shiraz Sarwar
12-MHRM-S- 111
Session 2012-2014

Institute of Administrative Sciences
UNIVERSITY OF THE PUNJAB, LAHORE

Table of Content

Topic Page No.
Liquidity Ratio 3
Profitability Ratio 7
Leverage Ratio 9
Coverage Ratio 10
Activity Ratio 11
Common Size Analysis 14
Index Analysis 17

| | | | | | | | | |
| Liquidity Ratio|
| i)Current Ratio |
| Definition| | | | | | | |
| This ratio represents the relationship between the current assets and current liabilities of the company. It is also known as working capital ratio. The two basis components of this ratio are: current assets and current liabilities. Current asset includes cash, inventories, work in progress and other assets that are readily convertible into cash. Current liabilities are those obligation that are payable in short term, generally one year, and include bills payable, accrued expenses, dividend payable, etc.| | |

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| | | | | | | | | |
| Formula|  | | | | | | | |
| This ratio is calculated as follows:| | | | | | | | | Current Ratio = | Current Assets | | | | | |
| | | Current Liabilities| | | | |
| | | | | | | | | |
| Ratio Standard| | | | | | | |
| | | | | | | | | |
| 2:1 is the standard of the working capital ratio.| |
| | | | | | | | | |
| Significance of the Ratio|  | | | | | | |
| | | | | | | | | |
| This ratio is calculated for assessing the liquidity of company in short period, generally one year.| | | |  | | | | | | |
| Company's Ratio|  | | | | | | |
| | | | | | | | | |
| | | | 2012| 2011| | | | |
| | | | Rupees '000'| | | | |
| | Current assets| | 1,496,313 | 1,172,913 | | | | | | | Current Liabilities| | 938,546 | 813,725 | | | | | | | | | | | | | | |

| | Current Ratio = | 1,496,313 | 1,172,913 | | | | | | | | 938,546 | 813,725 | | | | |
| | | | | | | | | |
| | | =| 1.6| 1.4| | | | |
| | | | | | | | | |

| Reason for Variance|  | | | | | | |
| | | | | | | | | |
| The reason for the variance in the ratio is due to changes in the components of ratio is as follows:| | | | 1-| Increase in Investments | | | | | | | |
| | | | 2012| 2011| Variance| | |
| | | | Rupees '000'| %| | |
| | | | 436,291 | 204,863 | 231,428| 1.13| | | | | | | | | | | | |
2-| Increase in Trade Debts| | | | | | | |
| | | | 2012| 2011| Variance| | |
| | | | Rupees '000'| %| | |
| | | | 112,423 | 89,625 | 22,798| 0.25| | | | | | | | | | | | |
3-| Increase in Other Payables| | | | | | | |
| | | | 2012| 2011| Variance| | |
| | | | Rupees '000'| %| | |
| | | | 494,461 | 356,874 | 137,587| 0.39| | | | | | | | | | | | |
| Conclusion| | | | | | | |
| | | | | | | | | |
| The increase in the ratio shows good working capital management of company from previous year and hence, increases the company financial stability. | | |
| | | | | | | | | |

| ii)Quick Ratio |
| | | | | | | | | |
| Definition| | | | | | | |
| | | | | | | | | |
| This ratio represents the relationship between the liquid assets and current liabilities of the company. It is also known as acid test ratio. The two basis components of this ratio are: liquid...
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