Comparative Analysis of Gul Ahmed Textile with Industry
ANALYSIS OF FINANCIAL STATEMENTS Final Project Gul Ahmed Textiles Limited Submitted to: Prof. Asif Bashir Submitted by:
Muhammad Naseem Hayat L1F09MBAM2036
Rustam Javed L1F09MBAM2034
Hasan Mir L1F09MBAM0016 Section: A Dated: Friday, 31 August 2012
Contents
Gul Ahmed 3 Firms Comparability: 3 Industry 3 Size of the firm: capitalization 4 Sales 4 Ownership: 5 International: 5 short term credit analysis 6 Analysis of Current Assets and Liabilities: 6 Current Asset Composition: 6 Current Liabilities Composition: 7 Working Capital and Related Ratios: 8 Working Capital: 8 Working Capital of Gul Ahmed:- 8 Current Ratio: 9 Current Asset= current Assets/ Current Liabilities. 9 Current Ratio of Gul Ahmed:- 9 Net Trade Cycle: 10 Net Trade cycle of Gul Ahmed:- 11 Cash Ratio: 12 Cash Ratio of Gul Ahmed:- 12 Operating Measures, Account Receivables: 13 Account Receivable Turnover Ratio: 13 Gul Ahmed Receivable Turn Over Ratio:- 13 Collection Period: 14 Days Sales in Receivables: 14 Days to Sell Inventory: 15 Account payable turnover ratio: 16 Gul Ahmed Account Payable:- 16 Days payable Outstanding (DPO): 16 Gul Ahmed’s DPO:- 16 Conversion Period:- 17 Financial flexibility, alternatives 18 Conclusion 19 Proforma statement 21 Income Statement 21 Pro-forma balance sheet 22 Cash Flows 24 Long Term Solvency Analysis: 26 Deferred Liability:- 26 Gul Ahmed’s Deferred Liability:- 26 Contingencies:- 27 Total Debt to Total Equity:- 27 Gul Ahmed’s Total Debt to Equity:- 27 Profitability Analysis 29 1. Return on Investment 29 2. Return on equity 30 Disaggregation: 31 Return on net operating assets 31 Conclusion: 33 Return on equity (3 step): 33 Return on equity (5 steps): 35 Conclusion: 39 Z-Score: 39 VALUATION 40 b) DDM 40 I. Estimated Dividend 40 II. Estimated Sustainable Growth 40 Observed Price 41 1. Risk Return Comparative Framework 42 Price Comparison 44 Recommendation: 45 Conclusion: 46
Gul
Muhammad Naseem Hayat L1F09MBAM2036
Rustam Javed L1F09MBAM2034
Hasan Mir L1F09MBAM0016 Section: A Dated: Friday, 31 August 2012
Contents
Gul Ahmed 3 Firms Comparability: 3 Industry 3 Size of the firm: capitalization 4 Sales 4 Ownership: 5 International: 5 short term credit analysis 6 Analysis of Current Assets and Liabilities: 6 Current Asset Composition: 6 Current Liabilities Composition: 7 Working Capital and Related Ratios: 8 Working Capital: 8 Working Capital of Gul Ahmed:- 8 Current Ratio: 9 Current Asset= current Assets/ Current Liabilities. 9 Current Ratio of Gul Ahmed:- 9 Net Trade Cycle: 10 Net Trade cycle of Gul Ahmed:- 11 Cash Ratio: 12 Cash Ratio of Gul Ahmed:- 12 Operating Measures, Account Receivables: 13 Account Receivable Turnover Ratio: 13 Gul Ahmed Receivable Turn Over Ratio:- 13 Collection Period: 14 Days Sales in Receivables: 14 Days to Sell Inventory: 15 Account payable turnover ratio: 16 Gul Ahmed Account Payable:- 16 Days payable Outstanding (DPO): 16 Gul Ahmed’s DPO:- 16 Conversion Period:- 17 Financial flexibility, alternatives 18 Conclusion 19 Proforma statement 21 Income Statement 21 Pro-forma balance sheet 22 Cash Flows 24 Long Term Solvency Analysis: 26 Deferred Liability:- 26 Gul Ahmed’s Deferred Liability:- 26 Contingencies:- 27 Total Debt to Total Equity:- 27 Gul Ahmed’s Total Debt to Equity:- 27 Profitability Analysis 29 1. Return on Investment 29 2. Return on equity 30 Disaggregation: 31 Return on net operating assets 31 Conclusion: 33 Return on equity (3 step): 33 Return on equity (5 steps): 35 Conclusion: 39 Z-Score: 39 VALUATION 40 b) DDM 40 I. Estimated Dividend 40 II. Estimated Sustainable Growth 40 Observed Price 41 1. Risk Return Comparative Framework 42 Price Comparison 44 Recommendation: 45 Conclusion: 46
Gul