Financial Statement Analysis Of Pakistan Tobacco Company 1o3i6l
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Acknowledgement
Pakistan Tobacco Company | Final Project
1
Pakistan Tobacco Company Pakistan Tobacco Company Limited (PTC) is a part of British American Tobacco - the world's most international tobacco group - with brands sold in 180 markets around the world. Pakistan Tobacco's operations in Pakistan began in 1947, making it one of Pakistan's first foreign investments. The company produces high quality tobacco products to meet the diverse preferences of millions of consumers, and it works in all areas of the business - from seed to smoke. The company provides a number of reputed brands of cigarettes to consumers in Pakistan, including Benson and Hedges, Embassy, Gold Flake, Capstan and Gold Leaf.
Vision “Like a lighthouse in a dark, stormy sea... Our vision serves as a beacon of light and hope, helping us navigates the waters”
Mission Statement
“Transform PTC to perform responsibly with the speed, flexibility and enterprising spirit of an innovative, consumer focused Company”
Strategic Objectives “Our strategy reflects our vision of being the champions of Growth, Productivity, Responsibility and a Winning Organisation”
Pakistan Tobacco Company | Final Project
2
Company’s Brands “We have always considered ourselves a consumer focused company. We aim to offer a product that excels in all aspects and exceeds the expectations of our consumers” Pakistan Tobacco Company invests in trying to understand the consumers’ preferences and ensures that adult smokers make informed choices about different brands available in the market. We have put in particular effort in promoting two of our Global Drive Brands, Dunhill and Pall Mall; and two of our great value for money brands, John Player Gold Leaf and Gold Flake.
Dunhill Dunhill, a global brand, celebrated its centenary in 2007. 2008 was an exceptional year for Dunhill in Pakistan as the brand witnessed exponential growth; fuelled by its re-launch in July. Going forward, Dunhill is poised to strengthen its foothold in the segment.
Benson & Hedges In 1873, Richard Benson & William Hedges started a partnership in London. Benson & Hedges was launched in Pakistan in March 2003 and has since been able to build strong brand loyalty among its consumers showing excellent year on year growth.
Gold Leaf The story of John Player Gold Leaf has to start from the story of its founder, John Player. An enterprising businessman, John Player started a small tobacco selling business in 1877 and turned it into a thriving cigarette company, John Player and Sons. John Player Gold Leaf has become an institution in itself, becoming one of the most recognisable cigarette brands in the country. John Player Gold Leaf has recently been declared the largest Urban Brand in Pakistan, beating out products across the F.M.C.G. spectrum.
Pakistan Tobacco Company | Final Project
3
Capstan Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created under the auspices of W.D. & H.O. WILLS at Bristol and London.
Gold Flake Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS where it was a brand around the end of the 19th century. Launched in 1982, in 'soft cup' packaging, the brand took off when it was repositioned in the Value For Money (VFM) segment and later a 'hinge lid' variant was introduced in 2000. Gold Flake has grown tremendously as a brand since 2004, making it the largest volume brand in Pakistan, and the second largest brand in British American Tobacco's Asia Pacific region. The key to Gold Flake’s success has been its novel engagement schemes which have fuelled growth over the years. Through consumer relevant initiatives, Gold Flake has established itself as a fresh and modern offering in the VFM segment and is all set to consolidate its position as the major volume driver for Pakistan Tobacco Company.
Embassy Embassy, is a leading volume brand in Pakistan, and is most popular in Punjab where it enjoys a leading position. Having built its heritage over a number of years, Embassy thrives on its brand loyalty and locally tailored taste characteristics.
Financial Highlights Gross Turn Over Pakistan Tobacco Company | Final Project
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Year 2004 2005 2006 2007 2008 2009
Gross Turnover 25,453 Million Rupees 30,615 Million Rupees 35,715 Million Rupees 40,889 Million Rupees 49,054 Million Rupees 57,544 Million Rupees
Financial Highlights Property Plant and Equipment (Fixed Assets) Years 2004 2005 2006 2007 2008 2009
Property Plant and Equipment 3,564 3,798 4,529 5,154 5,600 5,952
Million Million Million Million Million Million
Rupees Rupees Rupees Rupees Rupees Rupees
Earnings per Share and Dividend Yield Year 2004 2005
Earnings 2.60/Share 5.17/Share
Dividend Yield 3.25% 5.37%
Pakistan Tobacco Company | Final Project
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2006 2007 2008 2009
7.46/Share 9.47/Share 9.91/Share 11.83/Share
7.64% 6.37% 9.08% 9.10%
Gross Volume Year 2004
Volume 27 Billion
2005
31 Billion
2006
35 Billion
2007
37 Billion
2008
41 Billion
2009
41 Billion
Gross Profit Operating Profit 3,483 Million 1,077 Million 4530 Million 2,081 Million 5534 Million 2,841 Million 6516 Million 3,720 Million 7277 Million 3,860 Million 8224 Million 4,589 Million
After Tax Profit 665 Million 1,322 Million 1,905 Million 2,420 Million 2,532 Million 3,022 Million
Financial Analysis 2004-2005 Pakistan Tobacco Company | Final Project
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Balance Sheet (Horizontal Analysis) ITEMS
2004
2005
Horizontal Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
3,564,4 07 5,000
4,529,3 66 5,000
4529366 - 3564407÷ 3564407 5000 – 5000 ÷ 5000
27.07%
16,324
17,782
17782 – 16324 ÷ 16324
8.93%
Long Term Deposits
4,433
11,365
11365 – 4433 ÷ 4433
156.3%
3,074,0 52 131,464
3,780,9 31 125,232
22.99%
Trade Debts
12,486
2,894
3780931 – 3074052 ÷ 3074052 125232 – 131464 ÷ 131464 2894 – 12486 ÷ 12486
Loans and Advances
32,273
32,676
32676 – 32273 ÷ 32273
Short term Payments Other Receivables
36,003
31,987
31987 – 36003 ÷ 36003
119,126
104,791
Cash and Bank
39,197
57,605
104791 – 119126 ÷ 119126 57605 – 39197 ÷ 39197
Total Current Assets
3,434,6 01 7,024,7 65
4,136,1 16 7,968,4 53
4136116 – 3434601 ÷ 3434601 7968453 – 7024765 ÷ 7024765
NON CURRENT ASSETS ---
CURRENT ASSETS Stock in Trade Stores and Spares
Total Assets
(4.70% ) (76.82 %) 1.24% (11.15 %) (12.03 %) 46.96 20.42% 13.43%
Balance Sheet
Pakistan Tobacco Company | Final Project
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ITEMS
2004
2005
Horizontal Analysis
2,554,9 38 707,885
2,554,9 38 1,084,4 56
2554938 – 2554938 ÷ 2554938 1084456 – 707885 ÷ 707885
53.19 %
---
---
---
---
624,475
724,673
724673 – 624475 ÷ 624475
16.04 %
2,056,2 98 5,041
2,515,8 24 10,911
2515824 – 2056298 ÷ 2056298 10911 – 5041 ÷ 5041
22.34 % 116.44 %
Short term running finance
996,579
400,662
400662 – 996579 ÷ 996579
(59.79 %)
Income tax liability
79,549
676,969
676969 – 79549 ÷ 79549
75.10 %
Total Current Liabilities
3,137,4 67
3,604,3 66
3604366 – 3137467 ÷ 3137467
14.88 %
Total Liabilities
7,024,7 65
7,968,4 53
7968453 – 7024765 ÷ 7024765
13.43 %
SHARE CAPITAL AND RESERVES Share Capital Revenue Reserves
---
NON CURRENT LIABILITIES Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables Accrued Interest
Profit and Loss
Pakistan Tobacco Company | Final Project
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ITEMS
2004
2005
25,452,6 34 12,466,9 12 3,413,14 6 9,572,57 6 6,089,95 5 3,482,62 1 1,442,35 6
30,615,0 62 14,758,5 58 4,103,32 4 11,753,1 80 7,223,57 6 4,529,60 4 1,578,65 6
30615062 – 25452634 ÷ 25452634 14758558 – 12446912 ÷ 12446912 4103324 – 3413146 ÷ 3416146 11753180 – 9572576 ÷ 9572576 7223576 – 6089955 ÷ 6089955 4529604 – 3482621 ÷ 3482621 1578656 – 1442356 ÷ 1442356
20.28 % 18.57 % 20.20 % 22.77 % 18.61 % 30.06 % 9.44%
595,637
573,285
573285 – 595637 ÷ 595637
(3.75 %)
Other Operating Income
14,590
8,100
8100 – 14590 ÷ 14590
(44.48 %)
Other Operating Expense
381,914
304,462
304462 – 381914 ÷ 381914
(20.27 %)
Operating Profit
1,077,30 4 ---
2,081,30 1 26,317
2081301 – 1077304 ÷ 1077304 ---
93.19 % 100
Finance Cost
21,265
25,554
25554 – 21265 ÷ 21265
Profit Before Tax Income Tax Expense Profit of the Year
1,056,03 9 390,812
2,082,06 4 760,145
2082064 – 1056039 ÷ 1056039 760145 – 390812 ÷ 390812
665,227
1,321,91 9
1321919 – 665227 ÷ 665227
20.16 % 97.15 % 94.50 % 98.77 %
Gross turnover Excise Duties Sales Tax Net Sales Cost of Sales Gross Profit Selling and distribution istrative Expenses
Finance Income
Horizontal Analysis
Financial Analysis 2004–2005 Pakistan Tobacco Company | Final Project
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Balance Sheet (Vertical Analysis) ITEMS
2004
2005
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
3,564,4 07 5,000
4,529,3 66 5,000
4529366 ÷ 7968453
56.84%
5000 ÷ 7968453
0.006%
16,324
17,782
17782 ÷ 7968453
0.22%
Long Term Deposits
4,433
11,365
11365 ÷ 7968453
0.14%
3,074,0 52 131,464
3,780,9 31 125,232
3780931 ÷ 7968453
47.57%
125232 ÷ 7968453
1.57%
Trade Debts
12,486
2,894
2894 ÷ 7968453
0.03%
Loans and Advances
32,273
32,676
32676 ÷ 7968453
0.41%
Short term Payments Other Receivables
36,003
31,987
31987 ÷ 7968453
0.40%
119,126
104,791
104791 ÷ 7968453
1.31%
Cash and Bank
39,197
57,605
57605 ÷ 7968453
0.72%
Total Current Assets
3,434,6 01 7,024,7 65
4,136,1 16 7,968,4 53
4136116 ÷ 7968453
51.90%
7968453 ÷ 7968453
100%
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Total Assets
Balance Sheet
Pakistan Tobacco Company | Final Project
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ITEMS
2004
2005
Vertical Analysis
2,554,9 38 707,885
2,554,9 38 1,084,4 56
2554938 ÷ 7968453
---
---
---
---
624,475
724,673
724673 ÷ 7968453
9.09%
2,056,2 98 5,041
2,515,8 24 10,911
2515824 ÷ 7968453 10911 ÷ 7968453
31.57 % 0.13%
Short term running finance
996,579
400,662
400662 ÷ 7968453
5.03%
Income tax liability
79,549
676,969
676969 ÷ 7968453
8.49%
Total Current Liabilities
3,137,4 67
3,604,3 66
3604366 ÷ 7968453
45.26 %
Total Liabilities
7,024,7 65
7,968,4 53
7968453 ÷ 7968453
100%
SHARE CAPITAL AND RESERVES Share Capital Revenue Reserves
1084456 ÷ 7968453
32.06 % 13.62 %
NON CURRENT LIABILITIES Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables Accrued Interest
Profit and Loss Pakistan Tobacco Company | Final Project
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ITEMS
2004
2005
25,452,6 34 12,466,9 12 3,413,14 6 9,572,57 6 6,089,95 5 3,482,62 1 1,442,35 6
30,615,0 62 14,758,5 58 4,103,32 4 11,753,1 80 7,223,57 6 4,529,60 4 1,578,65 6
30615062 ÷ 11753180
595,637
573,285
573285 ÷ 11753180
4.8%
Other Operating Income
14,590
8,100
8100 ÷ 11753180
0.06%
Other Operating Expense
381,914
304,462
304462 ÷ 11753180
2.59%
Operating Profit
1,077,30 4 ---
2,081,30 1 26,317
2081301 ÷ 11753180 ---
17.70 % 0.22%
Finance Cost
21,265
25,554
25554 ÷ 11753180
0.21%
Profit Before Tax Income Tax Expense Profit of the Year
1,056,03 9 390,812
2,082,06 4 760,145
2082064 ÷ 11753180
17.71 % 6.46%
665,227
1,321,91 9
1321919 ÷ 11753180
Gross turnover Excise Duties Sales Tax Net Sales Cost of Sales Gross Profit Selling and distribution istrative Expenses
Finance Income
Vertical Analysis
14758558 ÷ 11753180 4103324 ÷ 11753180 11753180 ÷ 11753180
260.48 % 125.57 % 34.91 % 100%
7223576 ÷ 11753180
61.46 % 62.70 % 13.43 %
4529604 ÷ 11753180 1578656 ÷ 11753180
760145 ÷ 11753180
11.24 %
Financial Analysis 2005-2006 Pakistan Tobacco Company | Final Project
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Balance Sheet ITEMS
2005
2006
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
4,529,3 66 5,000
4,529,3 66 5,000
19.25
51.86
---
0.006
17,782
18,660
4.94
0.21
Long Term Deposits and Payments
11,365
8,424
(25.88)
0.10
3,690,8 93 140,00 8 2,406
0.26
43.40
11.80
1.60
Trade Debts
3,780,9 31 125,23 2 2,894
(16.86)
0.03
Loans and Advances
32,676
12,205
(62.65)
0.14
Short term Payments
31,987
72,235
125.83
0.83
Other Receivables
104,79 1 57,605
92,360
(11.86)
1.06
62,883
9.16
0.72
4,136,1 16 7,968,4 53
4,172,9 50 8,734,4 00
0.89
47.78
9.61
100
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Cash and Bank Balances Total Current Assets Total Assets
Balance Sheet Pakistan Tobacco Company | Final Project
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ITEMS
2005
2006
Horizontal Analysis
Vertical Analysis
2,554,9 38 1,084,4 56
2,554,9 38 1,584,2 49
---
29.25
46.08
18.14
---
---
---
---
724,67 3
845,00 4
16.60
9.67
2,212,2 41 11,115
(12.07)
25.23
Accrued Interest
2,515,8 24 10,911
1.87
0.13
Short term running finance
400,66 2
1,293,1 14
222.75
14.81
Income tax liability
676,96 9
233,71 2
(65.48)
2.68
Total Current liability
3,604,3 66
3,750,2 09
4.05
42.94
Total Liabilities
7,024,7 65
8,734,4 00
9.61
100
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables
Profit and Loss Pakistan Tobacco Company | Final Project
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ITEMS
2005
2006
Horizontal Analysis
Vertical Analysis
Gross turnover
30,615,062
35,715,451
16.66
---
Excise Duties
14,758,558
16,991,172
15.13
---
Sales Tax
4,103,324
4,833,285
17.79
---
Net Sales
11,753,180
13,890,994
18.19
100
Cost of Sales
7,223,576
8,357,747
15.70
60.16
Gross Profit
4,529,604
5,533,520
22.16
39.84
Selling and distribution istrative Expenses
1,578,656
1,816,198
15.05
13.07
573,285
644,981
12.75
4.64
Other Operating Income
8,100
20,686
155.38
0.15
Other Operating Expense
304,462
251,932
(17.25)
1.81
Operating Profit
2,081,301
2,841,095
36.51
20.45
Finance Income
26,317
47,402
80.12
0.34
Finance Cost
25,554
27,824
8.88
0.20
Profit Before Tax
2,082,064
2,860,673
37.40
20.59
Income Tax Expense Profit of the Year
760,145
955,685
25.72
6.88
1,321,919
1,904,988
44.11
13.74
Financial Analysis 2006-2007 Pakistan Tobacco Company | Final Project
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Balance Sheet ITEMS
2006
2007
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
4,529,3 66 5,000
5,154,3 26 5,000
13.80
52.45
---
0.05
18,660
12,513
(32.94)
0.13
Long Term Deposits and Payments
8,424
13,025
54.62
0.13
3,998,1 81 140,77 7 2,386
5.47
40.69
0.55
1.43
Trade Debts
3,690,8 93 140,00 8 2,406
(0.83)
0.02
Loans and Advances
12,205
38,580
216.10
0.39
Short term Payments
72,235
64,887
(10.17)
0.66
Other Receivables
92,360
148.91
2.34
Cash and Bank Balances Total Current Assets
62,883
229,89 1 166,66 6 4,641,3 68 9,826,2 32
165.04
1.70
11.23
47.23
12.50
100
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Total Assets
4,172,9 50 8,734,4 00
Balance Sheet Pakistan Tobacco Company | Final Project
16
ITEMS
2006
2007
Horizontal Analysis
Vertical Analysis
2,554,9 38 1,584,2 49
2,554,9 38 1,149,7 42
---
26.00
(27.43)
11.70
---
1,149,7 42 809,109
100
4.98
(4.25)
8.23
60.39
36.11
(24.42)
0.09
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
Retirement Benefits Deferred Taxation
845,00 4
CURRENT LIABILITIES Trade and other payables Accrued Interest
2,212,2 41 11,115
3,548,2 37 8,401
Short term running finance
1,293,1 14
1,038,5 50
(19.69)
10.57
Income tax liability
233,71 2
227,752
(2.55)
2.32
Total Current liabilities
3,750,2 09
4,822,9 40
28.60
49.08
Total Liabilities
8,734,4 00
9,826,2 32
12.50
100
Profit and Loss
Pakistan Tobacco Company | Final Project
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ITEMS
2006
2007
Horizontal Analysis
Vertical Analysis
35,715,45 1 16,991,17 2 4,833,285
40,889,275
14.49
--
19,311,946
13.66
--
5,534,452
14.51
--
16,042,877
15.49
100
Cost of Sales
13,890,99 4 8,357,747
9,527,306
14.00
59.39
Gross Profit
5,533,520
6,515,571
17.75
40.61
Selling and distribution istrative Expenses
1,816,198
1,795,793
(1.12)
11.19
644,981
736,147
14.13
4.59
Other Operating Income
20,686
71,756
246.88
0.45
Other Operating Expense
251,932
335,763
33.28
2.09
Operating Profit
2,841,095
3,719,624
30.92
23.19
Finance Income
47,402
30,878
(34.86)
0.19
Finance Cost
27,824
25,928
(6.81)
0.16
Profit Before Tax
2,860,673
3,724,574
30.20
23.22
Income Tax Expense Profit of the Year
955,685
1,304,367
36.49
8.13
1,904,988
2,420,207
27.05
15.09
Gross turnover Excise Duties Sales Tax Net Sales
Pakistan Tobacco Company | Final Project
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Financial Analysis 2007-2008 Balance Sheet ITEMS
2007
2008
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
5,154,3 26 5,000
5,599,75 8 5,000
8.64
53.87
---
0.05
12,513
9,244
(26.12)
0.09
Long Term Deposits and Payments
13,025
41,172
216.10
0.40
4,059,06 3 190,646
1.52
39.05
35.42
1.83
Trade Debts
3,998,1 81 140,77 7 2,386
2,666
11.74
0.03
Loans and Advances
38,580
65,917
70.86
0.63
Short term Payments
64,887
105,728
62.94
1.02
Other Receivables
229,89 1 166,66 6 4,641,3 68 9,826,2 32
246,675
7.30
2.37
69,172
(58.50)
0.67
4,739,86 7 10,395,0 41
2.12
45.60
5.79
100
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Cash and Bank Balances Total Current Assets Total Assets
Pakistan Tobacco Company | Final Project
19
Balance Sheet ITEMS
2007
2008
Horizontal Analysis
Vertical Analysis
Share Capital
2,554,9 38
2,554,93 8
---
24.58
Revenue Reserves
1,149,7 42
1,053,39 3
(8.38)
10.13
Retirement Benefits
1,149,7 42
739,133
51.00
7.11
Deferred Taxation
809,10 9
836,939
3.44
8.05
Trade and other payables
3,548,2 37
4,324,70 4
21.88
41.60
Accrued Interest
8,401
10,354
23.25
0.10
Short term running finance
1,038,5 50
572,397
(44.88)
5.51
Income tax liability
227,75 2
303,183
33.12
2.92
Total Current Liability
4,822,9 40
5,210,63 8
8.04
50.13
Total Liabilities
9,826,2 32
10,395,0 41
5.79
100
SHARE CAPITAL AND RESERVES
NON CURRENT LIABILITIES
CURRENT LIABILITIES
Pakistan Tobacco Company | Final Project
20
Profit and Loss ITEMS
2007
2008
Horizontal Analysis
Vertical Analysis
Gross turnover
40,889,275
49,053,928
19.97
--
Excise Duties
19,311,946
23,351,734
20.92
--
Sales Tax
5,534,452
6,829,699
23.40
--
Net Sales
16,042,877
18,872,495
17.64
100
Cost of Sales
9,527,306
11,595,736
21.71
61.44
Gross Profit
6,515,571
7,276,759
11.68
38.56
Selling and distribution istrative Expenses
1,795,793
1,933,364
7.66
10.24
736,147
928,358
26.11
4.92
Other Operating Income
71,756
60,551
(15.62)
0.32
Other Operating Expense
335,763
615,458
83.30
3.26
Operating Profit
3,719,624
3,860,130
3.78
20.45
Finance Income
30,878
59,600
93.02
0.32
Finance Cost
25,928
26,013
0.33
0.14
Profit Before Tax
3,724,574
3,893,717
4.54
20.63
Income Tax Expense Profit of the Year
1,304,367
1,361,422
4.37
7.21
2,420,207
2,532,295
4.63
13.42
Pakistan Tobacco Company | Final Project
21
Financial Analysis 2008-2009 Balance Sheet ITEMS
2008
2009
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
5,599,75 8 5,000
5,952,10 8 5,000
6.29
48.68
9,244
7,310
(20.92)
0.06
Long Term Deposits and Payments
41,172
19,915
(51.63)
0.16
4,059,06 3 190,646
5,765,36 7 218,375
42.04
47.15
14.54
1.79
2,666
1,684
(36.83)
0.01
Loans and Advances
65,917
48,598
(26.27)
0.40
Short term Payments
105,728
72,483
(31.44)
0.59
Other Receivables
246,675
88,147
(64.27)
0.72
69,172
47,874
(30.79)
0.39
4,739,86 7 10,395,0 41
6,242,52 8 12,226,8 61
31.70
51.06
17.62
100
NON CURRENT ASSETS
0.04
CURRENT ASSETS Stock in Trade Stores and Spares Trade Debts
Cash and Bank Balances Total Current Assets Total Assets
Pakistan Tobacco Company | Final Project
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Balance Sheet ITEMS
2008
2009
Horizontal Analysis
Vertical Analysis
2,554,93 8 1,053,39 3
2,554,93 8 1,705,29 6
---
20.90
61.89
13.95
Retirement Benefits
739,133
---
(100)
0.00
Deferred Taxation
836,939
1,109,84 7
32.61
9.08
4,324,70 4 10,354
5,037,46 9 27,659
16.48
41.20
167.13
0.23
Short term running finance
572,397
1,300,83 7
127.26
10.64
Income tax liability
303,183
490,815
61.89
4.01
Total Current Liability
5,210,63 8
6,856,78 0
31.59
56.08
Total Liability
10,395,0 41
12,226,8 61
17.62
100
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
CURRENT LIABILITIES Trade and other payables Accrued Interest
Pakistan Tobacco Company | Final Project
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Profit and Loss ITEMS
2008
2009
Horizontal Analysis
Vertical Analysis
Gross turnover Excise Duties Sales Tax
49,053,928
57,544,309
17.31
--
23,351,734
27,654,345
18.43
--
6,829,699
8,223,439
20.41
--
Net Sales
18,872,495
21,666,525
14.80
100
Cost of Sales
11,595,736
13,442,066
15.92
62.04
Gross Profit
7,276,759
8,224,459
13.02
37.96
Selling and distribution istrati ve Expenses
1,933,364
2,246,014
16.17
10.37
928,358
1,100,814
18.58
5.08
Other Operating Income Other Operating Expense Operating Profit Finance Income Finance Cost
60,551
226,499
274.06
1.05
615,458
514,665
(16.38)
2.38
3,860,130
4,589,465
18.89
21.18
59,600
102,826
72.53
0.47
26,013
43,802
68.39
0.20
3,893,717
4,648,489
19.38
21.45
1,361,422
1,626,083
19.44
7.51
2,532,295
3,022,406
19.35
13.95
Profit Before Tax Income Tax Expense Profit of the Year
Pakistan Tobacco Company | Final Project
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Financial Analysis 2009-2010 Balance Sheet ITEMS
2009
2010
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
5,952,10 8 5,000
5,680,29 6 5000
(4.5)
39.58
---
0.03
7,310
4170
(42.9)
0.02
Long Term Deposits and Payments
19,915
29,721
49.2
0.20
5,765,36 7 218,375
7,255,00 7 249,632
25.83
50.55
14.31
1.73
1,684
1,554
(7.71)
0.01
Loans and Advances
48,598
68,559
41.07
0.47
Short term Payments
72,483
135,267
86.61
0.94
Other Receivables
88,147
124,896
41.69
0.87
Cash and Bank Balances Total Current Assets
47,874
56,910
18.87
0.39
6,242,52 8
7,893,82 5
26.45
55.01
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares Trade Debts
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Total Assets
12,226,8 61
14,349,4 73
17.72
100
Balance Sheet ITEMS
2009
2010
Horizontal Analysis
Vertical Analysis
2,554,93 8 1,705,29 6
2,554,93 8 1,313,95 5
---
17.80
(22.94)
9.15
---
---
---
---
1,109,84 7
1,113,83 3
0.35
7.76
5,815,86 7 53,648
15.45
40.53
Accrued Interest
5,037,46 9 27,659
93.96
0.37
Short term running finance
1,300,83 7
2,561,36 2
96.90
17.84
Income tax liability
490,815
199,409
(59.37)
0.13
Total Current Liability
6,856,78 0
8,630,28 6
25.86
60.14
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables
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Total Liability
12,226,8 61
14,349,4 73
17.36
100
Profit and Loss ITEMS
2009
2010
Horizontal Analysis
Vertical Analysis
Gross turnover Excise Duties Sales Tax
57,544,309
44,458,074
(22.74)
283.24
27,654,345
22,347,073
(19.9)
142.37
8,223,439
6,414,894
(21.99)
40.86
Net Sales
21,666,525
15,696,107
(27.25)
100
Cost of Sales
13,442,066
10,789,048
(19.73)
68.73
Gross Profit
8,224,459
4,907,059
(40.33)
31.26
Selling and distribution istrati ve Expenses
2,246,014
2,007,158
(10.63)
12.78
1,100,814
943,256
(14.31)
6.00
Other Operating Income Other Operating Expense Operating Profit Finance Income Finance Cost
226,499
158,253
(30.13)
1.00
514,665
24,193
(95.29)
0.15
4,589,465
1,822,585
(60.28)
11.61
102,826
34,669
(66.28)
0.22
43,802
101,415
131.5
0.64
4,648,489
1,755,839
(62.22)
11.18
Profit Before Tax
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Income Tax Expense Profit of the Year
1,626,083
614,218
(62.22)
3.91
3,022,406
1,141,621
(62.22)
7.2
Ratio Analysis 2005-2010 Liquidity Ratios 1. Current Ratio Years
Current Assets
Current Liabilities
Current Ratio
2004
3,434,601
3,137,467
1.094
2005
4,136,116
3,604,366
1.147
2006
4,172,950
3,750,209
1.112
2007
4,641,368
4,822,940
0.962
2008
4,739,867
5,210,638
0.909
2009
6,242,528
6,856,780
0.910
2010
7,893,825
8,630,286
0.914
2. Quick Ratio Years
Quick Assets
Current Liabilities
Quick Ratio
2004
3,60,549
3,137,467
0.1149
2005
3,55,185
3,604,366
0.098
2006
3,82,097
3,750,209
0.101
2007
6,43,187
4,822,940
0.133
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2008
6,80,804
5,210,638
0.130
2009
4,77,161
6,856,780
0.069
2010
6,38,818
8,630,286
0.074
Liquidity Ratios 3. Inventory Turnover Years
Cost of Sales
Average Inventory
Inventory Turnover
2004
6,089,955
3,069,090
1.98
2005
7,223,576
3,427,491
2.10
2006
8,357,474
3,785,892
2.20
2007
9,527,306
3,894,517
2.44
2008
11,595,736
4,028,622
2.87
2009
13,442,066
4,972,215
2.70
2010
10,789,048
6,510,187
1.67
4.
Average Receivables Turnover
Years
Credit Sales
Average A/R
A/R Turnover
2004
9,572,576
1,05,266
90.93
2005
11,753,180
1,11,958
104.97
2006
13,890,994
98,575
140.91
2007
16,042,877
1,61,125
99.56
2008
18,872,495
2,38,282
117.15
2009
21,666,525
1,67,411
129.41
2010
15,696,107
1,06,521
147.34
Pakistan Tobacco Company | Final Project
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Profitability Ratios 1.
Assets Turnover Years
Sales
Average Total Assets
Assets Turnover
2004
9,572,576
6,641,792
1.45
2005
11,753,180
7,496,609
1.56
2006
13,890,994
8,351,426
1.66
2007
16,042,877
9,280,316
1.78
2008
18,872,495
10,110,636
1.86
2009
21,666,525
11,310,951
1.91
2010
15,696,107
12,964,936
1.21
2. Profit Margin Years
Sales
Cost of Goods Sold
Profit Margin
2004
9,572,576
6,089,955
36.38 %
2005
11,753,180
7,223,576
38.53 %
2006
13,890,994
8,357,474
39.83 %
2007
16,042,877
9,527,306
40.61 %
2008
18,872,495
11,595,736
38.55 %
2009
21,666,525
13,442,066
37.95 %
2010
15,696,107
10,789,048
31.27%
Pakistan Tobacco Company | Final Project
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Profitability Ratios 3. Return on Assets Years
Net Income
Average Total Assets
Return on Assets
2004
665,227
6,641,792
0.10
2005
1,321,919
7,496,609
0.17
2006
1,904,988
8,351,426
0.22
2007
2,420,207
9,280,316
0.26
2008
2,532,295
10,110,636
0.25
2009
3,022,406
11,310,951
0.27
2010
1,141,621
12,964,936
0.80
4. Return on Common Stockholder’s Equity Years
Net Income
Average Stock Holders’ Equity
Return on Stock holders’ Equity
2004
665,227
3,262,823
0.20
2005
1,321,919
3,451,118
0.38
2006
1,904,988
3,889,300
0.48
2007
2,420,207
4,081,022
0.59
2008
2,532,295
3,656,505
0.69
2009
3,022,406
3,934,282
0.76
2010
1,141,621
4,065,563
0.28
Profitability Ratios Pakistan Tobacco Company | Final Project
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5. Earnings per Share Years
Net Income
Average Shares Outstanding
Earnings per Share
2004
665,227
2,55,494
2.60
2005
1,321,919
2,55,494
5.17
2006
1,904,988
2,55,494
7.46
2007
2,420,207
2,55494
9.47
2008
2,532,295
2,55,494
9.91
2009
3,022,406
2,55,494
11.83
2010
1,141,621
2,55,494
4.47
6. Payout Ratios Years
Dividends per Share
Earnings per Share
Payout Ratio
2004
1.61
2.60
0.61
2005
3.69
5.17
0.71
2006
5.48
7.46
0.73
2007
7.88
9.47
0.83
2008
11.62
9.91
1.17
2009
9.53
11.83
0.80
2010
5.99
4.47
1.34
Profitability Ratios 7. Price Earnings Ratio Pakistan Tobacco Company | Final Project
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Years
Market Price of Share
Earnings per Share
2004
2.60
2005
5.17
2006
7.46
2007
9.47
2008
9.91
2009
11.83
2010
4.47
Price Earnings Ratio
Solvency Ratios 1.
Debt to Assets Ratio
Years
Total Debts
Total Assets
Debt to Assets Ratio
Pakistan Tobacco Company | Final Project
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2004
1,896,686
7,024,765
0.27
2005
2,916,486
7,968,453
0.33
2006
3,505,382
8,734,400
0.40
2007
4,586,767
9,826,232
0.46
2008
4,897,101
10,395,041
0.47
2009
6,338,306
12,226,861
0.51
2010
8,377,229
13,613,012
0.61
2. Times Interest Earned Years
Operating Income
Interest Expense
Times Interest Earned
2004
1,056,039
390,812
2.70
2005
2,082,064
760,145
2.73
2006
2,860,673
955,685
2.99
2007
3,724,574
1,304,367
2.85
2008
3,893,717
1,361,422
2.86
2009
4,648,489
1,626,083
2.85
2010
1,755,839
614,218
2.85
Interpretation of Analysis Liquidity Ratios
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The analysis of Pakistan Tobacco Company’s financial statement shows that it has a high tendency to pay its debts and to convert assets into liquid form within short intervals of time.
•
The current ratio of PTC remained between 0.90 – 1.14 in the last six years and it shows its ability to pay short term liabilities. Current Ratio= Current AssetsCurrent Liabilities
•
The quick ratio of PTC ranged between 0.069– 0.133 from 2005 to 2010. It shows the company’s ability to convert its current assets into liquid form (cash form) in order to meet current liabilities. Quick Ratio= Current Assets-InventoryCurrent Liabilities
•
On yearly basis from the year 2005 – 2010, we observed that the number of times the total inventory or stock of the company was sold on the average of 2.25 times/year. It shows the sales of the company are on a very large scale and also gives rise to the company opportunity to generate huge profits in the long run. Inventory Turnover= Cost of SalesAverage Inventory
•
Average Receivables Turnover shows that how many times a company is able to recover the amount of credit sales to people. PTC has shown a high s Receivables turnover rate which shows its high liquidity transformation rate. s Recieveables Turnover= Credit SalesAverage s Recieveables
Profitability Ratios Pakistan Tobacco Companies Profitability ratios clearly reflect it’s great ability to generate huge profits and of generating dividends for its shareholders. •
Average Assets turnover of the company ranges between 1.21 1.91 times per year. It shows the generation of huge sales from the Pakistan Tobacco Company | Final Project
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worth of assets of the company and in the case of Pakistan Tobacco Company, it shows the firm's efficiency at using its assets in generating sales or revenue - the higher the number the better. Assets Turnover= Net SalesAverage Total Assets
•
The profit margin of PTC lies between 31.27% - 40.61% in previous six years. It measures the percentage of each dollars of sales that results in net income. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit Margin= Net SalesCost of Goods Sold
•
The return on assets of PTC ranges among 0.80 to 0.27 according to preceding six years record. An overall measure of profitability is return on assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. This number tells you what the company can do with what it has, i.e. how many rupees of earnings they derive from each rupee of assets they control. Assets Turnover= Net IncomeAverage Total Assets
•
Return on common stockholder’s equity of PTC varies between 0.28 – 0.76 between the years 2005 to 2006. Another widely used profitability ratio is return on common stockholder’s equity. It measures profitability from common stockholder’s point of view. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Averaging ROE over the past 5-10 years can give you a better idea of the historical growth. Return on comon stock holders Equity= Net IncomeAverage Stock Holders Equity
•
Earnings per share are a measure of net income earned on each share of common stock. PTC’s earning per share of last six years lies among 4.47 - 11.83. The EPS formula does not include preferred dividends for categories outside of continued operations and net income. Earnings per share serve as an indicator of a company's profitability. Pakistan Tobacco Company | Final Project
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Earnings per Share= Net IncomeAverage shares Outstanding
•
Payout ratio of this company ranges from 0.8 - 1.34. It measures the percentage of earnings distributed in the form of cash dividends. The amount of earnings paid out in dividends to shareholders. Investors can use the payout ratio to determine what companies are doing with their earnings. Dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividend. Payout Ratio= Dividend per ShareEarnings per Share
•
Price earnings ratio is an oft-quoted measure of the ratio of the market price of each share of common stock to the earnings per share. It is also called its "P/E", or simply "multiple". The P/E ratio is a vital ratio for investors. Basically, it gives us an indication of the confidence that investors have in the future prosperity of the business. A P/E ratio of 1 shows very little confidence in that business whereas a P/E ratio of 20 expresses a great deal of optimism about the future of a business. It is the valuation ratio of a company's current share price compared to its per-share earnings. Price Earning Ratio= Market Price of ShareEarnings per Share
SOLVENCY RATIOS Solvency ratios measure the ability of a company to survive over a long period of time. It provides a measurement of how likely a company will be to continue meeting its debt obligations. Different countries use different methodologies to calculate the solvency ratio, and have different requirements. Pakistan Tobacco Company | Final Project
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•
Debt to total assets ratio measures the percentage of total assets that creditors provide. A metric used to measure a company's financial risk by determining how much of the company's assets have been financed by debt. If the ratio is less than one, most of the company's assets are financed through equity. If the ratio is greater than one, most of the company's assets are financed through debt. Calculated by adding short-term and long-term debt and then dividing by the company's total assets. Debt to Asset Ratio= Total DebtsTotal Assets
•
The average value of Times interest earned of PTC is approximately 2.8 for previous six years. IT PROVIDES COMPANY’S ABILITY TO MEET interest payments as they come due. Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honour its debt payments. The times interest earned lets the creditor understand whether or not a company has sufficient income to cover its interest payments requirements. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. Times Interest Earned= Operating IncomeInterst Expenses
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Pakistan Tobacco Company | Final Project
1
Pakistan Tobacco Company Pakistan Tobacco Company Limited (PTC) is a part of British American Tobacco - the world's most international tobacco group - with brands sold in 180 markets around the world. Pakistan Tobacco's operations in Pakistan began in 1947, making it one of Pakistan's first foreign investments. The company produces high quality tobacco products to meet the diverse preferences of millions of consumers, and it works in all areas of the business - from seed to smoke. The company provides a number of reputed brands of cigarettes to consumers in Pakistan, including Benson and Hedges, Embassy, Gold Flake, Capstan and Gold Leaf.
Vision “Like a lighthouse in a dark, stormy sea... Our vision serves as a beacon of light and hope, helping us navigates the waters”
Mission Statement
“Transform PTC to perform responsibly with the speed, flexibility and enterprising spirit of an innovative, consumer focused Company”
Strategic Objectives “Our strategy reflects our vision of being the champions of Growth, Productivity, Responsibility and a Winning Organisation”
Pakistan Tobacco Company | Final Project
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Company’s Brands “We have always considered ourselves a consumer focused company. We aim to offer a product that excels in all aspects and exceeds the expectations of our consumers” Pakistan Tobacco Company invests in trying to understand the consumers’ preferences and ensures that adult smokers make informed choices about different brands available in the market. We have put in particular effort in promoting two of our Global Drive Brands, Dunhill and Pall Mall; and two of our great value for money brands, John Player Gold Leaf and Gold Flake.
Dunhill Dunhill, a global brand, celebrated its centenary in 2007. 2008 was an exceptional year for Dunhill in Pakistan as the brand witnessed exponential growth; fuelled by its re-launch in July. Going forward, Dunhill is poised to strengthen its foothold in the segment.
Benson & Hedges In 1873, Richard Benson & William Hedges started a partnership in London. Benson & Hedges was launched in Pakistan in March 2003 and has since been able to build strong brand loyalty among its consumers showing excellent year on year growth.
Gold Leaf The story of John Player Gold Leaf has to start from the story of its founder, John Player. An enterprising businessman, John Player started a small tobacco selling business in 1877 and turned it into a thriving cigarette company, John Player and Sons. John Player Gold Leaf has become an institution in itself, becoming one of the most recognisable cigarette brands in the country. John Player Gold Leaf has recently been declared the largest Urban Brand in Pakistan, beating out products across the F.M.C.G. spectrum.
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Capstan Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created under the auspices of W.D. & H.O. WILLS at Bristol and London.
Gold Flake Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS where it was a brand around the end of the 19th century. Launched in 1982, in 'soft cup' packaging, the brand took off when it was repositioned in the Value For Money (VFM) segment and later a 'hinge lid' variant was introduced in 2000. Gold Flake has grown tremendously as a brand since 2004, making it the largest volume brand in Pakistan, and the second largest brand in British American Tobacco's Asia Pacific region. The key to Gold Flake’s success has been its novel engagement schemes which have fuelled growth over the years. Through consumer relevant initiatives, Gold Flake has established itself as a fresh and modern offering in the VFM segment and is all set to consolidate its position as the major volume driver for Pakistan Tobacco Company.
Embassy Embassy, is a leading volume brand in Pakistan, and is most popular in Punjab where it enjoys a leading position. Having built its heritage over a number of years, Embassy thrives on its brand loyalty and locally tailored taste characteristics.
Financial Highlights Gross Turn Over Pakistan Tobacco Company | Final Project
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Year 2004 2005 2006 2007 2008 2009
Gross Turnover 25,453 Million Rupees 30,615 Million Rupees 35,715 Million Rupees 40,889 Million Rupees 49,054 Million Rupees 57,544 Million Rupees
Financial Highlights Property Plant and Equipment (Fixed Assets) Years 2004 2005 2006 2007 2008 2009
Property Plant and Equipment 3,564 3,798 4,529 5,154 5,600 5,952
Million Million Million Million Million Million
Rupees Rupees Rupees Rupees Rupees Rupees
Earnings per Share and Dividend Yield Year 2004 2005
Earnings 2.60/Share 5.17/Share
Dividend Yield 3.25% 5.37%
Pakistan Tobacco Company | Final Project
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2006 2007 2008 2009
7.46/Share 9.47/Share 9.91/Share 11.83/Share
7.64% 6.37% 9.08% 9.10%
Gross Volume Year 2004
Volume 27 Billion
2005
31 Billion
2006
35 Billion
2007
37 Billion
2008
41 Billion
2009
41 Billion
Gross Profit Operating Profit 3,483 Million 1,077 Million 4530 Million 2,081 Million 5534 Million 2,841 Million 6516 Million 3,720 Million 7277 Million 3,860 Million 8224 Million 4,589 Million
After Tax Profit 665 Million 1,322 Million 1,905 Million 2,420 Million 2,532 Million 3,022 Million
Financial Analysis 2004-2005 Pakistan Tobacco Company | Final Project
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Balance Sheet (Horizontal Analysis) ITEMS
2004
2005
Horizontal Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
3,564,4 07 5,000
4,529,3 66 5,000
4529366 - 3564407÷ 3564407 5000 – 5000 ÷ 5000
27.07%
16,324
17,782
17782 – 16324 ÷ 16324
8.93%
Long Term Deposits
4,433
11,365
11365 – 4433 ÷ 4433
156.3%
3,074,0 52 131,464
3,780,9 31 125,232
22.99%
Trade Debts
12,486
2,894
3780931 – 3074052 ÷ 3074052 125232 – 131464 ÷ 131464 2894 – 12486 ÷ 12486
Loans and Advances
32,273
32,676
32676 – 32273 ÷ 32273
Short term Payments Other Receivables
36,003
31,987
31987 – 36003 ÷ 36003
119,126
104,791
Cash and Bank
39,197
57,605
104791 – 119126 ÷ 119126 57605 – 39197 ÷ 39197
Total Current Assets
3,434,6 01 7,024,7 65
4,136,1 16 7,968,4 53
4136116 – 3434601 ÷ 3434601 7968453 – 7024765 ÷ 7024765
NON CURRENT ASSETS ---
CURRENT ASSETS Stock in Trade Stores and Spares
Total Assets
(4.70% ) (76.82 %) 1.24% (11.15 %) (12.03 %) 46.96 20.42% 13.43%
Balance Sheet
Pakistan Tobacco Company | Final Project
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ITEMS
2004
2005
Horizontal Analysis
2,554,9 38 707,885
2,554,9 38 1,084,4 56
2554938 – 2554938 ÷ 2554938 1084456 – 707885 ÷ 707885
53.19 %
---
---
---
---
624,475
724,673
724673 – 624475 ÷ 624475
16.04 %
2,056,2 98 5,041
2,515,8 24 10,911
2515824 – 2056298 ÷ 2056298 10911 – 5041 ÷ 5041
22.34 % 116.44 %
Short term running finance
996,579
400,662
400662 – 996579 ÷ 996579
(59.79 %)
Income tax liability
79,549
676,969
676969 – 79549 ÷ 79549
75.10 %
Total Current Liabilities
3,137,4 67
3,604,3 66
3604366 – 3137467 ÷ 3137467
14.88 %
Total Liabilities
7,024,7 65
7,968,4 53
7968453 – 7024765 ÷ 7024765
13.43 %
SHARE CAPITAL AND RESERVES Share Capital Revenue Reserves
---
NON CURRENT LIABILITIES Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables Accrued Interest
Profit and Loss
Pakistan Tobacco Company | Final Project
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ITEMS
2004
2005
25,452,6 34 12,466,9 12 3,413,14 6 9,572,57 6 6,089,95 5 3,482,62 1 1,442,35 6
30,615,0 62 14,758,5 58 4,103,32 4 11,753,1 80 7,223,57 6 4,529,60 4 1,578,65 6
30615062 – 25452634 ÷ 25452634 14758558 – 12446912 ÷ 12446912 4103324 – 3413146 ÷ 3416146 11753180 – 9572576 ÷ 9572576 7223576 – 6089955 ÷ 6089955 4529604 – 3482621 ÷ 3482621 1578656 – 1442356 ÷ 1442356
20.28 % 18.57 % 20.20 % 22.77 % 18.61 % 30.06 % 9.44%
595,637
573,285
573285 – 595637 ÷ 595637
(3.75 %)
Other Operating Income
14,590
8,100
8100 – 14590 ÷ 14590
(44.48 %)
Other Operating Expense
381,914
304,462
304462 – 381914 ÷ 381914
(20.27 %)
Operating Profit
1,077,30 4 ---
2,081,30 1 26,317
2081301 – 1077304 ÷ 1077304 ---
93.19 % 100
Finance Cost
21,265
25,554
25554 – 21265 ÷ 21265
Profit Before Tax Income Tax Expense Profit of the Year
1,056,03 9 390,812
2,082,06 4 760,145
2082064 – 1056039 ÷ 1056039 760145 – 390812 ÷ 390812
665,227
1,321,91 9
1321919 – 665227 ÷ 665227
20.16 % 97.15 % 94.50 % 98.77 %
Gross turnover Excise Duties Sales Tax Net Sales Cost of Sales Gross Profit Selling and distribution istrative Expenses
Finance Income
Horizontal Analysis
Financial Analysis 2004–2005 Pakistan Tobacco Company | Final Project
9
Balance Sheet (Vertical Analysis) ITEMS
2004
2005
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
3,564,4 07 5,000
4,529,3 66 5,000
4529366 ÷ 7968453
56.84%
5000 ÷ 7968453
0.006%
16,324
17,782
17782 ÷ 7968453
0.22%
Long Term Deposits
4,433
11,365
11365 ÷ 7968453
0.14%
3,074,0 52 131,464
3,780,9 31 125,232
3780931 ÷ 7968453
47.57%
125232 ÷ 7968453
1.57%
Trade Debts
12,486
2,894
2894 ÷ 7968453
0.03%
Loans and Advances
32,273
32,676
32676 ÷ 7968453
0.41%
Short term Payments Other Receivables
36,003
31,987
31987 ÷ 7968453
0.40%
119,126
104,791
104791 ÷ 7968453
1.31%
Cash and Bank
39,197
57,605
57605 ÷ 7968453
0.72%
Total Current Assets
3,434,6 01 7,024,7 65
4,136,1 16 7,968,4 53
4136116 ÷ 7968453
51.90%
7968453 ÷ 7968453
100%
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Total Assets
Balance Sheet
Pakistan Tobacco Company | Final Project
10
ITEMS
2004
2005
Vertical Analysis
2,554,9 38 707,885
2,554,9 38 1,084,4 56
2554938 ÷ 7968453
---
---
---
---
624,475
724,673
724673 ÷ 7968453
9.09%
2,056,2 98 5,041
2,515,8 24 10,911
2515824 ÷ 7968453 10911 ÷ 7968453
31.57 % 0.13%
Short term running finance
996,579
400,662
400662 ÷ 7968453
5.03%
Income tax liability
79,549
676,969
676969 ÷ 7968453
8.49%
Total Current Liabilities
3,137,4 67
3,604,3 66
3604366 ÷ 7968453
45.26 %
Total Liabilities
7,024,7 65
7,968,4 53
7968453 ÷ 7968453
100%
SHARE CAPITAL AND RESERVES Share Capital Revenue Reserves
1084456 ÷ 7968453
32.06 % 13.62 %
NON CURRENT LIABILITIES Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables Accrued Interest
Profit and Loss Pakistan Tobacco Company | Final Project
11
ITEMS
2004
2005
25,452,6 34 12,466,9 12 3,413,14 6 9,572,57 6 6,089,95 5 3,482,62 1 1,442,35 6
30,615,0 62 14,758,5 58 4,103,32 4 11,753,1 80 7,223,57 6 4,529,60 4 1,578,65 6
30615062 ÷ 11753180
595,637
573,285
573285 ÷ 11753180
4.8%
Other Operating Income
14,590
8,100
8100 ÷ 11753180
0.06%
Other Operating Expense
381,914
304,462
304462 ÷ 11753180
2.59%
Operating Profit
1,077,30 4 ---
2,081,30 1 26,317
2081301 ÷ 11753180 ---
17.70 % 0.22%
Finance Cost
21,265
25,554
25554 ÷ 11753180
0.21%
Profit Before Tax Income Tax Expense Profit of the Year
1,056,03 9 390,812
2,082,06 4 760,145
2082064 ÷ 11753180
17.71 % 6.46%
665,227
1,321,91 9
1321919 ÷ 11753180
Gross turnover Excise Duties Sales Tax Net Sales Cost of Sales Gross Profit Selling and distribution istrative Expenses
Finance Income
Vertical Analysis
14758558 ÷ 11753180 4103324 ÷ 11753180 11753180 ÷ 11753180
260.48 % 125.57 % 34.91 % 100%
7223576 ÷ 11753180
61.46 % 62.70 % 13.43 %
4529604 ÷ 11753180 1578656 ÷ 11753180
760145 ÷ 11753180
11.24 %
Financial Analysis 2005-2006 Pakistan Tobacco Company | Final Project
12
Balance Sheet ITEMS
2005
2006
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
4,529,3 66 5,000
4,529,3 66 5,000
19.25
51.86
---
0.006
17,782
18,660
4.94
0.21
Long Term Deposits and Payments
11,365
8,424
(25.88)
0.10
3,690,8 93 140,00 8 2,406
0.26
43.40
11.80
1.60
Trade Debts
3,780,9 31 125,23 2 2,894
(16.86)
0.03
Loans and Advances
32,676
12,205
(62.65)
0.14
Short term Payments
31,987
72,235
125.83
0.83
Other Receivables
104,79 1 57,605
92,360
(11.86)
1.06
62,883
9.16
0.72
4,136,1 16 7,968,4 53
4,172,9 50 8,734,4 00
0.89
47.78
9.61
100
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Cash and Bank Balances Total Current Assets Total Assets
Balance Sheet Pakistan Tobacco Company | Final Project
13
ITEMS
2005
2006
Horizontal Analysis
Vertical Analysis
2,554,9 38 1,084,4 56
2,554,9 38 1,584,2 49
---
29.25
46.08
18.14
---
---
---
---
724,67 3
845,00 4
16.60
9.67
2,212,2 41 11,115
(12.07)
25.23
Accrued Interest
2,515,8 24 10,911
1.87
0.13
Short term running finance
400,66 2
1,293,1 14
222.75
14.81
Income tax liability
676,96 9
233,71 2
(65.48)
2.68
Total Current liability
3,604,3 66
3,750,2 09
4.05
42.94
Total Liabilities
7,024,7 65
8,734,4 00
9.61
100
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables
Profit and Loss Pakistan Tobacco Company | Final Project
14
ITEMS
2005
2006
Horizontal Analysis
Vertical Analysis
Gross turnover
30,615,062
35,715,451
16.66
---
Excise Duties
14,758,558
16,991,172
15.13
---
Sales Tax
4,103,324
4,833,285
17.79
---
Net Sales
11,753,180
13,890,994
18.19
100
Cost of Sales
7,223,576
8,357,747
15.70
60.16
Gross Profit
4,529,604
5,533,520
22.16
39.84
Selling and distribution istrative Expenses
1,578,656
1,816,198
15.05
13.07
573,285
644,981
12.75
4.64
Other Operating Income
8,100
20,686
155.38
0.15
Other Operating Expense
304,462
251,932
(17.25)
1.81
Operating Profit
2,081,301
2,841,095
36.51
20.45
Finance Income
26,317
47,402
80.12
0.34
Finance Cost
25,554
27,824
8.88
0.20
Profit Before Tax
2,082,064
2,860,673
37.40
20.59
Income Tax Expense Profit of the Year
760,145
955,685
25.72
6.88
1,321,919
1,904,988
44.11
13.74
Financial Analysis 2006-2007 Pakistan Tobacco Company | Final Project
15
Balance Sheet ITEMS
2006
2007
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
4,529,3 66 5,000
5,154,3 26 5,000
13.80
52.45
---
0.05
18,660
12,513
(32.94)
0.13
Long Term Deposits and Payments
8,424
13,025
54.62
0.13
3,998,1 81 140,77 7 2,386
5.47
40.69
0.55
1.43
Trade Debts
3,690,8 93 140,00 8 2,406
(0.83)
0.02
Loans and Advances
12,205
38,580
216.10
0.39
Short term Payments
72,235
64,887
(10.17)
0.66
Other Receivables
92,360
148.91
2.34
Cash and Bank Balances Total Current Assets
62,883
229,89 1 166,66 6 4,641,3 68 9,826,2 32
165.04
1.70
11.23
47.23
12.50
100
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Total Assets
4,172,9 50 8,734,4 00
Balance Sheet Pakistan Tobacco Company | Final Project
16
ITEMS
2006
2007
Horizontal Analysis
Vertical Analysis
2,554,9 38 1,584,2 49
2,554,9 38 1,149,7 42
---
26.00
(27.43)
11.70
---
1,149,7 42 809,109
100
4.98
(4.25)
8.23
60.39
36.11
(24.42)
0.09
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
Retirement Benefits Deferred Taxation
845,00 4
CURRENT LIABILITIES Trade and other payables Accrued Interest
2,212,2 41 11,115
3,548,2 37 8,401
Short term running finance
1,293,1 14
1,038,5 50
(19.69)
10.57
Income tax liability
233,71 2
227,752
(2.55)
2.32
Total Current liabilities
3,750,2 09
4,822,9 40
28.60
49.08
Total Liabilities
8,734,4 00
9,826,2 32
12.50
100
Profit and Loss
Pakistan Tobacco Company | Final Project
17
ITEMS
2006
2007
Horizontal Analysis
Vertical Analysis
35,715,45 1 16,991,17 2 4,833,285
40,889,275
14.49
--
19,311,946
13.66
--
5,534,452
14.51
--
16,042,877
15.49
100
Cost of Sales
13,890,99 4 8,357,747
9,527,306
14.00
59.39
Gross Profit
5,533,520
6,515,571
17.75
40.61
Selling and distribution istrative Expenses
1,816,198
1,795,793
(1.12)
11.19
644,981
736,147
14.13
4.59
Other Operating Income
20,686
71,756
246.88
0.45
Other Operating Expense
251,932
335,763
33.28
2.09
Operating Profit
2,841,095
3,719,624
30.92
23.19
Finance Income
47,402
30,878
(34.86)
0.19
Finance Cost
27,824
25,928
(6.81)
0.16
Profit Before Tax
2,860,673
3,724,574
30.20
23.22
Income Tax Expense Profit of the Year
955,685
1,304,367
36.49
8.13
1,904,988
2,420,207
27.05
15.09
Gross turnover Excise Duties Sales Tax Net Sales
Pakistan Tobacco Company | Final Project
18
Financial Analysis 2007-2008 Balance Sheet ITEMS
2007
2008
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
5,154,3 26 5,000
5,599,75 8 5,000
8.64
53.87
---
0.05
12,513
9,244
(26.12)
0.09
Long Term Deposits and Payments
13,025
41,172
216.10
0.40
4,059,06 3 190,646
1.52
39.05
35.42
1.83
Trade Debts
3,998,1 81 140,77 7 2,386
2,666
11.74
0.03
Loans and Advances
38,580
65,917
70.86
0.63
Short term Payments
64,887
105,728
62.94
1.02
Other Receivables
229,89 1 166,66 6 4,641,3 68 9,826,2 32
246,675
7.30
2.37
69,172
(58.50)
0.67
4,739,86 7 10,395,0 41
2.12
45.60
5.79
100
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares
Cash and Bank Balances Total Current Assets Total Assets
Pakistan Tobacco Company | Final Project
19
Balance Sheet ITEMS
2007
2008
Horizontal Analysis
Vertical Analysis
Share Capital
2,554,9 38
2,554,93 8
---
24.58
Revenue Reserves
1,149,7 42
1,053,39 3
(8.38)
10.13
Retirement Benefits
1,149,7 42
739,133
51.00
7.11
Deferred Taxation
809,10 9
836,939
3.44
8.05
Trade and other payables
3,548,2 37
4,324,70 4
21.88
41.60
Accrued Interest
8,401
10,354
23.25
0.10
Short term running finance
1,038,5 50
572,397
(44.88)
5.51
Income tax liability
227,75 2
303,183
33.12
2.92
Total Current Liability
4,822,9 40
5,210,63 8
8.04
50.13
Total Liabilities
9,826,2 32
10,395,0 41
5.79
100
SHARE CAPITAL AND RESERVES
NON CURRENT LIABILITIES
CURRENT LIABILITIES
Pakistan Tobacco Company | Final Project
20
Profit and Loss ITEMS
2007
2008
Horizontal Analysis
Vertical Analysis
Gross turnover
40,889,275
49,053,928
19.97
--
Excise Duties
19,311,946
23,351,734
20.92
--
Sales Tax
5,534,452
6,829,699
23.40
--
Net Sales
16,042,877
18,872,495
17.64
100
Cost of Sales
9,527,306
11,595,736
21.71
61.44
Gross Profit
6,515,571
7,276,759
11.68
38.56
Selling and distribution istrative Expenses
1,795,793
1,933,364
7.66
10.24
736,147
928,358
26.11
4.92
Other Operating Income
71,756
60,551
(15.62)
0.32
Other Operating Expense
335,763
615,458
83.30
3.26
Operating Profit
3,719,624
3,860,130
3.78
20.45
Finance Income
30,878
59,600
93.02
0.32
Finance Cost
25,928
26,013
0.33
0.14
Profit Before Tax
3,724,574
3,893,717
4.54
20.63
Income Tax Expense Profit of the Year
1,304,367
1,361,422
4.37
7.21
2,420,207
2,532,295
4.63
13.42
Pakistan Tobacco Company | Final Project
21
Financial Analysis 2008-2009 Balance Sheet ITEMS
2008
2009
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
5,599,75 8 5,000
5,952,10 8 5,000
6.29
48.68
9,244
7,310
(20.92)
0.06
Long Term Deposits and Payments
41,172
19,915
(51.63)
0.16
4,059,06 3 190,646
5,765,36 7 218,375
42.04
47.15
14.54
1.79
2,666
1,684
(36.83)
0.01
Loans and Advances
65,917
48,598
(26.27)
0.40
Short term Payments
105,728
72,483
(31.44)
0.59
Other Receivables
246,675
88,147
(64.27)
0.72
69,172
47,874
(30.79)
0.39
4,739,86 7 10,395,0 41
6,242,52 8 12,226,8 61
31.70
51.06
17.62
100
NON CURRENT ASSETS
0.04
CURRENT ASSETS Stock in Trade Stores and Spares Trade Debts
Cash and Bank Balances Total Current Assets Total Assets
Pakistan Tobacco Company | Final Project
22
Balance Sheet ITEMS
2008
2009
Horizontal Analysis
Vertical Analysis
2,554,93 8 1,053,39 3
2,554,93 8 1,705,29 6
---
20.90
61.89
13.95
Retirement Benefits
739,133
---
(100)
0.00
Deferred Taxation
836,939
1,109,84 7
32.61
9.08
4,324,70 4 10,354
5,037,46 9 27,659
16.48
41.20
167.13
0.23
Short term running finance
572,397
1,300,83 7
127.26
10.64
Income tax liability
303,183
490,815
61.89
4.01
Total Current Liability
5,210,63 8
6,856,78 0
31.59
56.08
Total Liability
10,395,0 41
12,226,8 61
17.62
100
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
CURRENT LIABILITIES Trade and other payables Accrued Interest
Pakistan Tobacco Company | Final Project
23
Profit and Loss ITEMS
2008
2009
Horizontal Analysis
Vertical Analysis
Gross turnover Excise Duties Sales Tax
49,053,928
57,544,309
17.31
--
23,351,734
27,654,345
18.43
--
6,829,699
8,223,439
20.41
--
Net Sales
18,872,495
21,666,525
14.80
100
Cost of Sales
11,595,736
13,442,066
15.92
62.04
Gross Profit
7,276,759
8,224,459
13.02
37.96
Selling and distribution istrati ve Expenses
1,933,364
2,246,014
16.17
10.37
928,358
1,100,814
18.58
5.08
Other Operating Income Other Operating Expense Operating Profit Finance Income Finance Cost
60,551
226,499
274.06
1.05
615,458
514,665
(16.38)
2.38
3,860,130
4,589,465
18.89
21.18
59,600
102,826
72.53
0.47
26,013
43,802
68.39
0.20
3,893,717
4,648,489
19.38
21.45
1,361,422
1,626,083
19.44
7.51
2,532,295
3,022,406
19.35
13.95
Profit Before Tax Income Tax Expense Profit of the Year
Pakistan Tobacco Company | Final Project
24
Financial Analysis 2009-2010 Balance Sheet ITEMS
2009
2010
Horizontal Analysis
Vertical Analysis
Property plant and Equipment Investment in Subsidiary Company Long term Loans
5,952,10 8 5,000
5,680,29 6 5000
(4.5)
39.58
---
0.03
7,310
4170
(42.9)
0.02
Long Term Deposits and Payments
19,915
29,721
49.2
0.20
5,765,36 7 218,375
7,255,00 7 249,632
25.83
50.55
14.31
1.73
1,684
1,554
(7.71)
0.01
Loans and Advances
48,598
68,559
41.07
0.47
Short term Payments
72,483
135,267
86.61
0.94
Other Receivables
88,147
124,896
41.69
0.87
Cash and Bank Balances Total Current Assets
47,874
56,910
18.87
0.39
6,242,52 8
7,893,82 5
26.45
55.01
NON CURRENT ASSETS
CURRENT ASSETS Stock in Trade Stores and Spares Trade Debts
Pakistan Tobacco Company | Final Project
25
Total Assets
12,226,8 61
14,349,4 73
17.72
100
Balance Sheet ITEMS
2009
2010
Horizontal Analysis
Vertical Analysis
2,554,93 8 1,705,29 6
2,554,93 8 1,313,95 5
---
17.80
(22.94)
9.15
---
---
---
---
1,109,84 7
1,113,83 3
0.35
7.76
5,815,86 7 53,648
15.45
40.53
Accrued Interest
5,037,46 9 27,659
93.96
0.37
Short term running finance
1,300,83 7
2,561,36 2
96.90
17.84
Income tax liability
490,815
199,409
(59.37)
0.13
Total Current Liability
6,856,78 0
8,630,28 6
25.86
60.14
SHARE CAPITAL AND RESERVES
Share Capital Revenue Reserves NON CURRENT LIABILITIES
Retirement Benefits Deferred Taxation CURRENT LIABILITIES Trade and other payables
Pakistan Tobacco Company | Final Project
26
Total Liability
12,226,8 61
14,349,4 73
17.36
100
Profit and Loss ITEMS
2009
2010
Horizontal Analysis
Vertical Analysis
Gross turnover Excise Duties Sales Tax
57,544,309
44,458,074
(22.74)
283.24
27,654,345
22,347,073
(19.9)
142.37
8,223,439
6,414,894
(21.99)
40.86
Net Sales
21,666,525
15,696,107
(27.25)
100
Cost of Sales
13,442,066
10,789,048
(19.73)
68.73
Gross Profit
8,224,459
4,907,059
(40.33)
31.26
Selling and distribution istrati ve Expenses
2,246,014
2,007,158
(10.63)
12.78
1,100,814
943,256
(14.31)
6.00
Other Operating Income Other Operating Expense Operating Profit Finance Income Finance Cost
226,499
158,253
(30.13)
1.00
514,665
24,193
(95.29)
0.15
4,589,465
1,822,585
(60.28)
11.61
102,826
34,669
(66.28)
0.22
43,802
101,415
131.5
0.64
4,648,489
1,755,839
(62.22)
11.18
Profit Before Tax
Pakistan Tobacco Company | Final Project
27
Income Tax Expense Profit of the Year
1,626,083
614,218
(62.22)
3.91
3,022,406
1,141,621
(62.22)
7.2
Ratio Analysis 2005-2010 Liquidity Ratios 1. Current Ratio Years
Current Assets
Current Liabilities
Current Ratio
2004
3,434,601
3,137,467
1.094
2005
4,136,116
3,604,366
1.147
2006
4,172,950
3,750,209
1.112
2007
4,641,368
4,822,940
0.962
2008
4,739,867
5,210,638
0.909
2009
6,242,528
6,856,780
0.910
2010
7,893,825
8,630,286
0.914
2. Quick Ratio Years
Quick Assets
Current Liabilities
Quick Ratio
2004
3,60,549
3,137,467
0.1149
2005
3,55,185
3,604,366
0.098
2006
3,82,097
3,750,209
0.101
2007
6,43,187
4,822,940
0.133
Pakistan Tobacco Company | Final Project
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2008
6,80,804
5,210,638
0.130
2009
4,77,161
6,856,780
0.069
2010
6,38,818
8,630,286
0.074
Liquidity Ratios 3. Inventory Turnover Years
Cost of Sales
Average Inventory
Inventory Turnover
2004
6,089,955
3,069,090
1.98
2005
7,223,576
3,427,491
2.10
2006
8,357,474
3,785,892
2.20
2007
9,527,306
3,894,517
2.44
2008
11,595,736
4,028,622
2.87
2009
13,442,066
4,972,215
2.70
2010
10,789,048
6,510,187
1.67
4.
Average Receivables Turnover
Years
Credit Sales
Average A/R
A/R Turnover
2004
9,572,576
1,05,266
90.93
2005
11,753,180
1,11,958
104.97
2006
13,890,994
98,575
140.91
2007
16,042,877
1,61,125
99.56
2008
18,872,495
2,38,282
117.15
2009
21,666,525
1,67,411
129.41
2010
15,696,107
1,06,521
147.34
Pakistan Tobacco Company | Final Project
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Profitability Ratios 1.
Assets Turnover Years
Sales
Average Total Assets
Assets Turnover
2004
9,572,576
6,641,792
1.45
2005
11,753,180
7,496,609
1.56
2006
13,890,994
8,351,426
1.66
2007
16,042,877
9,280,316
1.78
2008
18,872,495
10,110,636
1.86
2009
21,666,525
11,310,951
1.91
2010
15,696,107
12,964,936
1.21
2. Profit Margin Years
Sales
Cost of Goods Sold
Profit Margin
2004
9,572,576
6,089,955
36.38 %
2005
11,753,180
7,223,576
38.53 %
2006
13,890,994
8,357,474
39.83 %
2007
16,042,877
9,527,306
40.61 %
2008
18,872,495
11,595,736
38.55 %
2009
21,666,525
13,442,066
37.95 %
2010
15,696,107
10,789,048
31.27%
Pakistan Tobacco Company | Final Project
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Profitability Ratios 3. Return on Assets Years
Net Income
Average Total Assets
Return on Assets
2004
665,227
6,641,792
0.10
2005
1,321,919
7,496,609
0.17
2006
1,904,988
8,351,426
0.22
2007
2,420,207
9,280,316
0.26
2008
2,532,295
10,110,636
0.25
2009
3,022,406
11,310,951
0.27
2010
1,141,621
12,964,936
0.80
4. Return on Common Stockholder’s Equity Years
Net Income
Average Stock Holders’ Equity
Return on Stock holders’ Equity
2004
665,227
3,262,823
0.20
2005
1,321,919
3,451,118
0.38
2006
1,904,988
3,889,300
0.48
2007
2,420,207
4,081,022
0.59
2008
2,532,295
3,656,505
0.69
2009
3,022,406
3,934,282
0.76
2010
1,141,621
4,065,563
0.28
Profitability Ratios Pakistan Tobacco Company | Final Project
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5. Earnings per Share Years
Net Income
Average Shares Outstanding
Earnings per Share
2004
665,227
2,55,494
2.60
2005
1,321,919
2,55,494
5.17
2006
1,904,988
2,55,494
7.46
2007
2,420,207
2,55494
9.47
2008
2,532,295
2,55,494
9.91
2009
3,022,406
2,55,494
11.83
2010
1,141,621
2,55,494
4.47
6. Payout Ratios Years
Dividends per Share
Earnings per Share
Payout Ratio
2004
1.61
2.60
0.61
2005
3.69
5.17
0.71
2006
5.48
7.46
0.73
2007
7.88
9.47
0.83
2008
11.62
9.91
1.17
2009
9.53
11.83
0.80
2010
5.99
4.47
1.34
Profitability Ratios 7. Price Earnings Ratio Pakistan Tobacco Company | Final Project
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Years
Market Price of Share
Earnings per Share
2004
2.60
2005
5.17
2006
7.46
2007
9.47
2008
9.91
2009
11.83
2010
4.47
Price Earnings Ratio
Solvency Ratios 1.
Debt to Assets Ratio
Years
Total Debts
Total Assets
Debt to Assets Ratio
Pakistan Tobacco Company | Final Project
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2004
1,896,686
7,024,765
0.27
2005
2,916,486
7,968,453
0.33
2006
3,505,382
8,734,400
0.40
2007
4,586,767
9,826,232
0.46
2008
4,897,101
10,395,041
0.47
2009
6,338,306
12,226,861
0.51
2010
8,377,229
13,613,012
0.61
2. Times Interest Earned Years
Operating Income
Interest Expense
Times Interest Earned
2004
1,056,039
390,812
2.70
2005
2,082,064
760,145
2.73
2006
2,860,673
955,685
2.99
2007
3,724,574
1,304,367
2.85
2008
3,893,717
1,361,422
2.86
2009
4,648,489
1,626,083
2.85
2010
1,755,839
614,218
2.85
Interpretation of Analysis Liquidity Ratios
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The analysis of Pakistan Tobacco Company’s financial statement shows that it has a high tendency to pay its debts and to convert assets into liquid form within short intervals of time.
•
The current ratio of PTC remained between 0.90 – 1.14 in the last six years and it shows its ability to pay short term liabilities. Current Ratio= Current AssetsCurrent Liabilities
•
The quick ratio of PTC ranged between 0.069– 0.133 from 2005 to 2010. It shows the company’s ability to convert its current assets into liquid form (cash form) in order to meet current liabilities. Quick Ratio= Current Assets-InventoryCurrent Liabilities
•
On yearly basis from the year 2005 – 2010, we observed that the number of times the total inventory or stock of the company was sold on the average of 2.25 times/year. It shows the sales of the company are on a very large scale and also gives rise to the company opportunity to generate huge profits in the long run. Inventory Turnover= Cost of SalesAverage Inventory
•
Average Receivables Turnover shows that how many times a company is able to recover the amount of credit sales to people. PTC has shown a high s Receivables turnover rate which shows its high liquidity transformation rate. s Recieveables Turnover= Credit SalesAverage s Recieveables
Profitability Ratios Pakistan Tobacco Companies Profitability ratios clearly reflect it’s great ability to generate huge profits and of generating dividends for its shareholders. •
Average Assets turnover of the company ranges between 1.21 1.91 times per year. It shows the generation of huge sales from the Pakistan Tobacco Company | Final Project
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worth of assets of the company and in the case of Pakistan Tobacco Company, it shows the firm's efficiency at using its assets in generating sales or revenue - the higher the number the better. Assets Turnover= Net SalesAverage Total Assets
•
The profit margin of PTC lies between 31.27% - 40.61% in previous six years. It measures the percentage of each dollars of sales that results in net income. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit Margin= Net SalesCost of Goods Sold
•
The return on assets of PTC ranges among 0.80 to 0.27 according to preceding six years record. An overall measure of profitability is return on assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. This number tells you what the company can do with what it has, i.e. how many rupees of earnings they derive from each rupee of assets they control. Assets Turnover= Net IncomeAverage Total Assets
•
Return on common stockholder’s equity of PTC varies between 0.28 – 0.76 between the years 2005 to 2006. Another widely used profitability ratio is return on common stockholder’s equity. It measures profitability from common stockholder’s point of view. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Averaging ROE over the past 5-10 years can give you a better idea of the historical growth. Return on comon stock holders Equity= Net IncomeAverage Stock Holders Equity
•
Earnings per share are a measure of net income earned on each share of common stock. PTC’s earning per share of last six years lies among 4.47 - 11.83. The EPS formula does not include preferred dividends for categories outside of continued operations and net income. Earnings per share serve as an indicator of a company's profitability. Pakistan Tobacco Company | Final Project
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Earnings per Share= Net IncomeAverage shares Outstanding
•
Payout ratio of this company ranges from 0.8 - 1.34. It measures the percentage of earnings distributed in the form of cash dividends. The amount of earnings paid out in dividends to shareholders. Investors can use the payout ratio to determine what companies are doing with their earnings. Dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividend. Payout Ratio= Dividend per ShareEarnings per Share
•
Price earnings ratio is an oft-quoted measure of the ratio of the market price of each share of common stock to the earnings per share. It is also called its "P/E", or simply "multiple". The P/E ratio is a vital ratio for investors. Basically, it gives us an indication of the confidence that investors have in the future prosperity of the business. A P/E ratio of 1 shows very little confidence in that business whereas a P/E ratio of 20 expresses a great deal of optimism about the future of a business. It is the valuation ratio of a company's current share price compared to its per-share earnings. Price Earning Ratio= Market Price of ShareEarnings per Share
SOLVENCY RATIOS Solvency ratios measure the ability of a company to survive over a long period of time. It provides a measurement of how likely a company will be to continue meeting its debt obligations. Different countries use different methodologies to calculate the solvency ratio, and have different requirements. Pakistan Tobacco Company | Final Project
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•
Debt to total assets ratio measures the percentage of total assets that creditors provide. A metric used to measure a company's financial risk by determining how much of the company's assets have been financed by debt. If the ratio is less than one, most of the company's assets are financed through equity. If the ratio is greater than one, most of the company's assets are financed through debt. Calculated by adding short-term and long-term debt and then dividing by the company's total assets. Debt to Asset Ratio= Total DebtsTotal Assets
•
The average value of Times interest earned of PTC is approximately 2.8 for previous six years. IT PROVIDES COMPANY’S ABILITY TO MEET interest payments as they come due. Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honour its debt payments. The times interest earned lets the creditor understand whether or not a company has sufficient income to cover its interest payments requirements. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. Times Interest Earned= Operating IncomeInterst Expenses
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