this is analysis for case aurora textile industryFull description
Descripción: pestel analysis of textioe lindustry in india
pestel analysis of textioe lindustry in india
present situation of indian textile industryFull description
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different key player in cement industry.
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At First we like to thank our beloved Allah we would like to thank our Professor Miss Munazza Asad for giving us the opportunity to enhance our knowledge on the subject. We are also grateful…Full description
The perspective of such a report is to make us familiar with the financial instruments along with ratio analysis to measure the financial situation of corporation.
Textile Industry Presantation.
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ratio analysis
Ratios
Ratios
This will be very helpful for Anna University MBA Examination. I Did M.B.A 2011-2013 at Jei Mathaajee College of Engineering (Affiliated to Anna University).
RATIO ANAL RATIO ANALYSIS SIS-- TEX TEXTIL TILEE INDUSTRY
Presented by: Aleen Al eena a In Inay ayat at Hassan Hanif Has asee eeb b Abi bid d Ki Kian anii M. Na Naee eem m Ri Riaz az
Presentation Prese ntation layout layout
Introduction of textile sector
Introduction of companies Ahmad Hassan Textile Mills Bhanero Textile Textile Mills Mi lls Nishat Mills Limited
Ratio Analysis An alysis
Comparison of the companies
Conclusion
Textile sector sector of Pakist akistan an
4th largest largest cotton producer in the world
8th largest largest exporter of textile products products
Contrib Contributio utionn to to GDPGDP- 8.5 8.5% %
Employment Employment to 15 million people- 30% of the workforce Annual volume of world textile trade growing growing at 2.5%- Pakistan's akistan's share share less than than one percent percent
Textile sector sector of Pakist akistan an
Growth from 2005 to 2007 Decline in 20082008- global global financial financial and and economic economic meltdown Government·s vision for textile industry 2005-2010 Whole
of textile sector is included in list of value added industries 5% custom duty on imported machinery if not manufactured locally Tax relief: Initial Depreciation allowance (IDA) at 50% of machinery & equipment cost
Textile sector of Pakistan
Export plan 2006-13 Increase exports to $24.36 billion
Introduction of companies- Ahmad Hassan Textile Mills
Mission statement To achieve & sustain good reputation in international market by manufacturing quality products. Management of timely deliveries & quality assurance. Ensure a consistent quality & timely deliveries & shipments, by carrying all the time cotton yarn stock of 90-180 days production
Introduction of companies- Ahmad Hassan Textile Mills
Incorporated in 1989 Products Cotton fabrics Cotton yarn Textile all sorts
Main business type- exporter Major importers of its yarn America Hong Kong Sri Lanka
Introduction of companies- Bhanero Textile Mills
Vision statement A Premier Quality Company, Providing Quality Products and Maintaining an Excellent Level of Ethical and Professional Standards
Mission statement To become a leading manufacturer of textile products in the International & local markets and to explore new era to Achieve the highest level of success
Introduction of companies- Bhanero Textile Mills
Umar group of companies established in 1982 Bhanero textile mills Faisal spinning mills ltd Blessed textiles ltd
Products Cotton yarn High and medium end cotton products
Introduction of companies- Bhanero Textile Mills
State of the art equipment
Diverse product range
Weak
Small international market share
Weak
R&D facilities brand name
Introduction of companies- Nishat Mills Limited
Vision statement To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan
Mission statement To provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company
Introduction of companies- Nishat Mills Limited
Flagship Company established in 1951
At par with multinationals operating locally
Products Cotton fabrics Cotton yarn Textile all sorts
Ahmad Hassan Textile Mills Days· sales in receivables
Days· sales in
2006
2007
2008
2009
2010
20.20
19.51
23.20
31.79
21.72
receivables
Except for in 2009 where trade debts rose significantly as compared to increase in net sales the ratio has been fairly consistent. Days· sales in receivables 35 30 25 20 Days· sales in receivables
15 10 5 0 2006
2007
2008
2009
2010
Accounts Receivable turnover Accounts
2006
2007
2008
2009
2010
17.63
19.08
18.18
13.654
15.41
receivable turnover
The ratio indicates a poor ability of the company to manage its receivable which improved only slightly after 2009.
days· sales in receivable the ratio is significantly higher in 2009 due to an increase in trade debts.
30
Accounts receivable turnover in days
25 20 15
Accounts receivable turnover in days
10 5 0 2006
2007
2008
2009
2010
Days· sales in inventory
Days· sales in
2006
2007
2008
2009
2010
86.07
78.99
90.50
104.53
75.70
inventory
The ratio has been consistent until it started rising after 2008 and in 2009 because of increase in inventory the ratio was the highest after which the sales improved and the ratio started improving. Days· sales in inventory 120 100 80 60 Days· sales in inventory 40 20 0 2006
2007
2008
2009
2010
Inventory turnover Inventory
2006
2007
2008
2009
2010
4.55
4.59
4.66
3.78
4.56
turnover
The ratio is fairly consistent except for in 2009 due to increase in the average inventory. Inventory turnover 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Inventory turnover
2006
2007
2008
2009
2010
Inventory turnover in days Inventory
2006
2007
2008
2009
2010
80.26
79.57
78.33
96.50
80.03
turnover in days
The ratio increased in 2009 due to disproportionate increase in inventory as compared to net sales. Inventory turnover in days 120 100 80 60 Inventory turnover in days 40 20 0 2006
2007
2008
2009
2010
Operating cycle Operating
2006
2007
2008
2009
2010
100.95
98.72
98.4
123.23
103.98
cycle
The operating cycle increased in 2009 due to increase in inventory turnover in days. Operating cycle 140 120 100 80 Operating cycle
60 40 20 0 2006
2007
2008
2009
2010
Current ratio Current ratio
2006
2007
2008
2009
2010
0.85
0.82
0.67
0.76
0.73
The firm·s current ratio is already indicating that its current liabilities are greater than current assets and to make matter worst the ratio is deteriorating from 2006 to 2010.
Acid-test ratio Acid-test ratio
2006
2007
2008
2009
2010
0.16
0.17
0.14
0.18
0.16
Uses current assets to indicate the short term debt paying ability. In 2009 due to increase in trade debts the company·s acid-test ratio increased.
Cash ratio Cash ratio
2006
2007
2008
2009
2010
0.011
0.026
0.0075
0.001
0.00087
The fluctuations in the cash ratio are due to changes in the shortterm investments held for sale by the company.
Debt ratio Debt ratio
2006
2007
2008
2009
2010
0.78
0.80
0.71
0.74
0.703
Debt ratio indicates the firm·s long-term debt paying ability. On average over 70% of the company·s assets are financed by its creditors indicating a poor debt paying ability.
Debt/Equity ratio Debt/equity
2006
2007
2008
2009
2010
3.5
4.02
7.19
8.49
6.73
ratio
This ratio helps determine how well creditors are protected in case of insolvency. An increase in the ratio till 2009 indicates that the creditors are well protected.
Net income margin Net income
2006
2007
2008
2009
2010
1.42%
0.13%
-0.041%
-1.93%
1.7%
margin
The company was doing very poorly because of lower sales and higher administrative and other expenses but sales soared and the company gained profit to increase its net profit margin in 2010.
Total Asset Turnover Total asset
2006
2007
2008
2009
2010
1.25
1.22
0.89
0.093
1.17
turnover
It indicates the activity of assets and the ability of the company to generate sales through the use of its assets. The drastic decrease in 2009 is a result of not enough sales for the company for the year and the company ending up in loss. Total asset turnover 1.4 1.2 1 0.8 Total asset turnover
0.6 0.4 0.2 0 2006
2007
2008
2009
2010
Return on Assets
Return on
2006
2007
2008
2009
2010
-0.40%
0.174%
-3.02%
-2.189%
2.03%
assets
Due to the fact the company reported losses in the year 2008 and 2009 the company·s return on assets was negative. After 2009 its sales increased and so did the return on assets. Return on assets 3 2 1 0 -1 -2 -3 -4
2006
2007
2008
2009
2010
Return on assets
Operating income margin Operating income
2006
2007
2008
2009
2010
7.4%
6.205%
3.31%
8.913%
8.38
margin
This ratio includes only the income from the main line of operations of the business. The company was not doing well in 2008 because of lower sales and greater expenses.
Operating asset turnover Operating
2006
2007
2008
2009
2010
2.074
0.195
1.27
1.379
1.88
asset turnover
The decrease in 2007 was due to increase in the operating assets but a decrease in operating income for the year.
Return on operating assets Return on
2006
2007
2008
2009
2010
15.34%
12.10%
12.19%
12.29%
15.7%
operating assets
It is an indicative of how muc h return you are receiving on your operating assets. It shows and increase towards an end due to increase in sales and subsequently the operating income.
Return on total equity 2006 Return on total 1.76%
2007
2008
2009
2010
0.84%
-30.7%
-23.61%
23.03%
equity
Due to the fact that the company reported loss in 2008 and 2009 the return on total equity for the two year was negative after improving in 2010 when the company·s operations improved.
Gross profit margin Gross profit
2006
2007
2008
2009
2010
9.77
0.084
8.05%
12.14
12.39
margin
Conforming to the industry standards because of changes in the process of textile products the gross profit margin increased after 2007. In 2007 the significant decrease was due to increase in cost of sales.
Earnings per Share Earnings per
2006
2007
2008
2009
2010
-0.48
0.21
-6.03
-4.43
4.07
Share
This reflects the company·s report of loss in the year 2008 and 2009.
Bhanero
Textile Mills
Days· sales in receivables 2006 Days· sales in 24.76
2007
2008
2009
2010
39.26
44.39
43.34
30.17
receivables
The ratio has increased from 2006 to 2009 after decreasing in 2010. This can be attributed to the increased number of sales on credit out of which a large portion could not be recovered.
Accounts Receivable turnover Accounts
2006
2007
2008
2009
2010
15.59
12.58
8.67
8.67
11.27
receivable turnover
The overall trend here is negative because the company·s position in 2006 was fairly stronger after which it started deteriorating because the company increased its credit sales to boost the overall sales and thus the accounts receivable turnover decreased till 2009.
Accounts Receivable turnover in days Accounts receivable
2006
2007
2008
2009
2010
23.40
29.01
42.07
42.08
32.38
turnover in days
Similar to days· sales in receivables this ratio is deteriorating till 2008 after which it reaches stability in 2009 before it starts improving. This can be attributed to a better credit policy on behalf of the company that increases sales as well as improves receivable collectability
Days· sales in inventory Days· sales in
2006
2007
2008
2009
2010
96.38
100.54
114.44
88.85
89.09
inventory
It took a hit in 2008 but recovered strongly 2009 onwards.
Inventory turnover
Inventory
2006
2007
2008
2009
2010
3.26
4.25
3.41
3.73
4.45
turnover
The overall trend for this ratio is positive with a minor setback in 2008 which was overcome. Overall the company performed close to the market leader.
Inventory turnover in days Inventory
2006
2007
2008
2009
2010
111.91
85.88
107.10
97.86
81.98
turnover in days
The company has been showing positive trends suggesting a better and effective way of managing its inventory.
Operating cycle Operating
2006
2007
2008
2009
2010
135.31
114.89
149.17
139.94
114.36
cycle
Except for the time period between 2007 and 2008 the operating cycle of the company is becoming shorter and conforming with the industry standards.
Current ratio Current ratio
2006
2007
2008
2009
2010
0.85
0.93
0.96
1.02
1.07
It is increasing from 2006 to 2010 indicating that the company is increasing its ability to pay its current liabilities using current assets.
Acid-test ratio
Acid-test ratio
2006
2007
2008
2009
2010
0.19
0.29
0.27
0.35
0.30
The company is able to effectively manage its receivables and increase its cash equivalents. However, there is a slight decrease in the year 2010.
Cash ratio Cash ratio
2006
2007
2008
2009
2010
0.02
0.04
0.01
0.02
0.03
The ratio is the highest in 2007 and lowest in 2008 where the firm·s cash reserves depleted after it started improving its position thereafter.
Debt ratio
Debt ratio
2006
2007
2008
2009
2010
0.38
0.72
0.71
0.66
0.53
The ratio shows an increase in 2007 which was due to increased short term borrowings secured after which the company developed its assets compared to its liabilities and the position started getting better.
Debt/Equity ratio
Debt/Equity
With
2006
2007
2008
2009
2010
1.57
2.88
2.65
2.09
1.20
the exception of 2007 the creditors of the company are fairly protected and the firm·s debt paying ability is strengthening.
Net income margin
Net income
2006
2007
2008
2009
2010
6.49%
5.27%
2.87%
2.63%
9.02%
margin
The company·s margin was decreasing till 2009 because of the increased finance costs after which in 2010 its sales soared and net income margin reached 9.02%.
Total Asset Turnover
Total asset
2006
2007
2008
2009
2010
0.98
1.08
1.02
1.16
1.50
turnover
The company has improved its ability to utilize its total asset to produce net income 2006 onwards with only a slight and insignificant decrease in 2008.
Return on Assets
Return on
2006
2007
2008
2009
2010
5.06%
3.81%
1.88%
2.48%
13.37%
assets
Return on assets was deteriorating until 2008 after which it increased slightly in 2009 and significantly in 2010 due to increased number of sales.
Operating income margin Operating
2006
2007
2008
2009
2010
13.39%
10.78%
9.23%
10.29%
13.91%
income margin
The operating income margin is fairly stable but declining from 2006 to 2008 after which it started increasing.
Operating asset turnover
Operating
2006
2007
2008
2009
2010
0.77
1.71
1.81
2.12
2.87
asset turnover
The ratio has increased significantly from 2006 to 2010 indicating an increased ability of the company to utilizing its operating assets for its core line of business.
Return on operating assets Return on operating assets
With
2006
2007
2008
2009
2010
10.34%
18.75%
16.72%
21.84%
39.97%
the exception of 2008 where the net sales were comparatively lower the return on operating assets showed a positive trend.
Return on total equity Return on
2006
2007
2008
2009
2010
20.3%
15.56%
7.25%
8.54%
35.37%
total equity
It declined from 20% in 2006 to 7% in 2008 after which it increased slightly and then soared to 35% which was the highest of the three companies in consideration.
Gross profit margin Gross profit
2006
2007
2008
2009
2010
15.8%
13.53%
11.78%
13.12%
17.69%
margin
The gross profit margin decreased but not as significantly as it rose after 2008. The changes were due to increase in the prices of the textile products.
Earnings per Share
Earnings per
2006
2007
2008
2009
2010
45.86
41.26
21.30
26.96
140.61
share
The most the earning per share the more attractive it becomes for the investor. As the company performed tremendously in 2010 the earnings per share also increased dramatically. Earnings per share 160 140 120 100 80 Earnings per share 60 40 20 0 2006
2007
2008
2009
2010
Ratio analysis- Nishat Mills
Days· sales in receivables Days¶ sales in
2006
2007
2008
2009
2010
31.882 days
24.53 days
32.186 days
24.82 days
32.01 days
receivables
Days· sales in receivables 35 30 25 20 Days· sales in receivables
15 10 5 0 2006
2007
2008
2009
2010
Accounts receivable turnover Accounts
2006
2007
2008
2009
2010
12.16 times
13.27 times
13.50 times
14.09 times
14.34 times
receivable turnover
Accounts receivable turnover 15 14.5 14 13.5 13
Accounts receivable turnover
12.5 12 11.5 11 2006
2007
2008
2009
2010
Accounts receivable turnover in days Accounts
2006
2007
2008
2009
2010
30.01 days
27.49 days
27.03 days
25.90 days
25.40 days
receivable turnover in days
Accounts receivable turnover in days 31 30 29 28 27
Accounts receivable turnover in days
26 25 24 23 2006
2007
2008
2009
2010
Days· sales in inventory Days¶ sales in
2006
2007
2008
2009
2010
80 days
79.09 days
91.89 days
76.53 days
86.56 days
inventory
Days· sales in inventory 100 90 80 70 60 50
Days· sales in inventory
40 30 20 10 0 2006
2007
2008
2009
2010
Inventory turnover Inventory
2006
2007
2008
2009
2010
4.64 times
4.69 times
4.52 times
4.73 times
5.03 times
turnover
Inventory turnover 5.1 5 4.9 4.8 4.7 4.6
Inventory turnover
4.5 4.4 4.3 4.2 2006
2007
2008
2009
2010
Inventory turnover in days Inventory
2006
2007
2008
2009
2010
78.59 days
77.78 days
80.732 days
77.19 days
72.51 days
turnover in days
Inventory turnover in days 82 80 78 76 Inventory turnover in days
74 72 70 68 2006
2007
2008
2009
2010
Operating cycle Operating
2006
2007
2008
2009
2010
108.6 days
105.27 days
107.73 days
103.09 days
97.91 days
cycle
Operating cycle 110 108 106 104 102 100
Operating cycle
98 96 94 92 2006
2007
2008
2009
2010
Current ratio Current ratio
2006
2007
2008
2009
2010
1.38
1.74
1.19
0.86
1.11
Current ratio 2 1.8 1.6 1.4 1.2 1 Current ratio
0.8 0.6 0.4 0.2 0 2006
2007
2008
2009
2010
Acid-test ratio Acid-test
2006
2007
2008
2009
2010
1.35
1.22
0.76
0.33
0.42
ratio
Acid-test ratio 1.6 1.4 1.2 1 0.8 Acid-test ratio
0.6 0.4 0.2 0 2006
2007
2008
2009
2010
Cash ratio Cash ratio
2006
2007
2008
2009
2010
0.624
1.07
0.61
0.16
0.16
Cash ratio 1.2 1 0.8 0.6
Cash ratio
0.4 0.2 0 2006
2007
2008
2009
2010
Debt ratio Debt ratio
2006
2007
2008
2009
2010
0.32
0.24
0.51
0.39
0.32
Debt ratio 0.6 0.5 0.4 0.3
Debt ratio
0.2 0.1 0 2006
2007
2008
2009
2010
Debt/equity ratio Debt/equity
2006
2007
2008
2009
2010
0.48
0.31
0.51
0.63
0.47
ratio
Debt/equity ratio 0.7 0.6 0.5 0.4 Debt/equity ratio
0.3 0.2 0.1 0 2006
2007
2008
2009
2010
Net income margin Net
income
2006
2007
2008
2009
2010
10.7%
10.59%
6.94%
6.54%
10.42%
margin
Net income margin 12.00% 10.00% 8.00% 6.00%
Net income margin
4.00% 2.00% 0.00% 2006
2007
2008
2009
2010
Total asset turnover Total asset turnover
2006
2007
2008
2009
2010
0.61
0.49
0.50
0.67
0.81
Total asset turnover 0.9 0.8 0.7 0.6 0.5 0.4
Total asset turnover
0.3 0.2 0.1 0 2006
2007
2008
2009
2010
Return on assets R eturn on
2006
2007
2008
2009
2010
6.15%
4.78%
3.31%
3.53%
7.51%
assets
Return on assets 8.00% 7.00% 6.00% 5.00% 4.00%
Return on assets
3.00% 2.00% 1.00% 0.00% 2006
2007
2008
2009
2010
Operating income margin Operating
2006
2007
2008
2009
2010
12.1%
12.03%
11.65%
12.60%
13.99%
income margin
Operating income margin 16.00% 14.00% 12.00% 10.00% 8.00%
Operating income margin
6.00% 4.00% 2.00% 0.00% 2006
2007
2008
2009
2010
Operating asset turnover Operating
2006
2007
2008
2009
2010
1.67
1.62
1.82
2.10
2.74
asset turnover
Operating asset turnover 3 2.5 2 1.5
Operating asset turnover
1 0.5 0 2006
2007
2008
2009
2010
Return on operating assets R eturn on
2006
2007
2008
2009
2010
20.1%
19.50%
21.14%
26.54%
38.31%
o perating assets
Return on operating assets 45.00% 40.00% 35.00% 30.00% 25.00% Return on operating assets
20.00% 15.00% 10.00% 5.00% 0.00% 2006
2007
2008
2009
2010
Return on total equity R eturn on
2006
2007
2008
2009
2010
9.63%
6.62%
4.64%
5.53%
11.50%
total equity
Return on total equity 14.00% 12.00% 10.00% 8.00% Return on total equity
