Cement Industry Financial Analysis

Topics: Income statement, Portland cement, Financial ratio Pages: 24 (5251 words) Published: January 6, 2011
Table of Content

Executive Summary3
Ratio and other analysis of the company6
Liquidity Ratios7
Activity Analysis8
Debt Analysis10
Profitability Analysis11
Market Analysis14
Benchmarking of your company with industry15
Analysis of company’s strength and weakness15
recommendations for company17
Realized rate of return:18
Beta of the D.G. Khan Cement18
Expected Return of the D.G. Khan Cement19
Standard Deviation20
Required rate of return (CAPM)20
Expected Return Vs. Required Return21
Portfolio Planning21
Dividend growth model24
Corporate Valuation Model24
Constant & non-constant growth of dividend27
Actual prices Vs. Expected Prices27
Weighted average cost of capital (WACC)28
Trend of financial statements in last five years30


First of all we all are thankful to one and only the Almighty Allah for always guiding us in the thick and thin and giving us strengths and courage to complete this project without Him nothing would have been possible .We also like to thank our parents who have shown their trust and always encouraged us to move ahead.

No one can work alone and without the guidance and help of others. But we are fortunate enough that we got assistance from our most respected teacher Miss Munazza Asad. We acknowledged that we could never complete this Project without her guidance in a most effective and efficient manner. She always offered helpful suggestions in improving the technical areas involved in the preparation of this report.

Last but not the least; we will never forget the sincere efforts of all group members who have take an active part to complete this research project. We pray for each member for their success at every stage of their lives and finally obliged to our Mam who has made an opportunity for us to experience practical implementation of our knowledge. God Bless us all.

Thank you.

Executive Summary

Our project is based on the financial values of our principle company D.G. Khan Cement Company. The term “Financial Analysis” also known as analysis and interpretation of financial statements refers to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items the balance sheet, profit and loss account and other operative data. Financial statement analysis is largely a study of relationship among the various financial factors in a business is disclosed by a single set of statements, and a study of the trend of these factors as shown in a series of statement. In this project we have discussed all the financial activities of DG Khan Cement, Pioneer Cement, Lucky Cement and Fuji Cement. Here we have analyzed the financial position of the companies by calculating different financial ratios and methodologies. Through this project we have a clear picture to analyze the company financial status. The first part consists of the financial ratios which are on the basis of all the four companies. In the second part we have calculated the returns of our principle company and we also checked the portfolio returns in which the portfolio consist of all four cement companies. The third part is based on the calculation of corporate value and the stock valuation. In the fourth part we used the book value and market value to calculate the WACC. In the fifth part we projected the financial statements for the year 2008, in this part we were required to calculate the additional finance needed. This project is completely based on the financial analysis of DGKC. There are few limitations like the assumption of few values due to the unavailability.

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