Introduction to Business Finance
Final Project
Ratio analysis of Al Abbas Sugar Mills
Submitted To Syed Salman Ahmed
Submitted by Umer Ali
Class ID 10402
Table of Content
Part. 1
Al Abbas Sugar Mills Ratio Analysis……………………………………………….3
Part. 2
Establishing Industry Benchmark…………………………………………………..5
JDW Sugar Mills…………………………………………………………………………….5
Mehran Sugar Mills……………………………………………………………………….7
Chasma Sugar Mills……………………………………………………………………….9
Mirpurkhas Sugar Mills…………………………………………………………………11
Part. 3
Calculation of Industry Average…………………………………………………….12
Part. 4
Index…………………………………………………………………………………………...14
Part. 5
2 Years Financial Reports of Respective Mills……………………………….15
Al Abbas Sugar Mills Ratio Analysis
PAGE 3
Current ratio = current assets/current liabilities
= 4595232/3093325
= 1.49 vs 0.84 performing great
Acid test ratio = (current assets – inventories)/current liabilities
= (4595232-1493394)/3093325
= 1.00 vs 0.42 performing great
Inventory turnover ratio = cost of goods sold/inventories
= 5399707/1493394
= 3.62 vs 1.84 performing great
Day sales outstanding = receivables/ (annual sales/360)
= 393796/ (7164862/360)
= 20 vs 26.4 performing good
Fixed assets turnover ratio = net sales/net fixed assets
= 7164862/1817385
= 3.94 vs 1.64 performing great
Total assets turnover ratio = net sales/total assets
= 7164862/6412617
= 1.12 vs 0.87 performing good
Debt ratio = total debt/total assets
= 3185366/6412617
= 0.5 vs 0.49 performing at par
Profit margin on sales = net income/net sales
= 1111978/7164862
= 0.16 vs 0.06 performing well
Gross profit margin on sales = (net sales-cost of goods sale)/net sales
= (7164862-5399707)/7164862
= 0.24 vs 0.17 performing well PAGE 4
Return on total assets = net income/total assets
= 1111978/6412617
= 0.17 vs 0.59 performing good
Return on common equity = net income available to common stockholders/common equity
= net income – preferred dividends / common equity
= 1111978-0 /3227251
= 0.34 vs 0.34 performing at par
Earnings per share = income available to common stockholders/number of common shares outstanding
= 1111978/17361
=64.05 vs 14.54 performing great
Price to earnings ratio = market price per share/ earning per share
= 325/64.05
= 5.07 vs 22.68 performing very bad
Book value per share = common equity/ number of common shares outstanding
= 3227251/17361
= 185.89 vs 112.92 performing good
Market to book ratio = market price per share/book value per share
=325/185.89
= 1.75 vs 6.21 performing bad
Establishing industry benchmark (Industry analysis) PAGE 5
JDW Sugar mills
Current ratio = current assets/current liabilities
= 23,762,939,730/ 33,576,408,072
= 0.70
Acid test ratio = (current assets – inventories)/current liabilities
= 23,762,939,730-13,032,859,672/33,576,408,072
= 0.32
Inventory turnover ratio = cost of goods sold/inventories
= 43,903,667,735/13,032,859,672
= 3.37
Day sales outstanding = receivables/ (annual sales/360)
= 8,099,323,530/ (54,724,042,194/360)
=53
Fixed assets turnover ratio = net sales/net fixed assets
= 54,724,042,194/24,497,285,147
= 2.23
Total assets turnover ratio = net sales/total assets
= 54,724,042,194/48,260,224,877
= 1.13
Debt ratio = total debt/total assets
= 5,910,952,329/48,260,224,877
=0.12
Profit margin on sales = net income/net sales
= 553,296,423/ 54,724,042,194
= 0.01
Gross profit margin on sales = (net sales-cost of goods sale)/net sales
=54,724,042,194-43,903,667,735/54,724,042,194
= 0.20
Return on total assets = net income/total assets
= 553,296,423/48,260,224,877
= 2.13 PAGE 6
Return on common equity = net income available to common stockholders/common equity
= net income – preferred dividends / common equity
= 553,296,423-0/ 597,766,610
=0.93
Earnings per share = income available to common stockholders/number of common shares outstanding
= 553,296,423/59751234
=2.96
Price to earnings ratio = market price per share/ earning per share
=230/2.96
= 77.70
Book value per share = common equity/ number of common shares outstanding
=597,766,610/59751234
= 10.0
Market to book ratio = market price per share/book value per share
= 230/10
= 23
Mehran Sugar mills
PAGE 7
Current ratio = current assets/current liabilities
= 3409528894/3410036232
= 1.0
Acid test ratio = (current assets – inventories)/current liabilities
= (3409528894-1163019124)/( 3410036232)
= 0.66
Inventory turnover ratio = cost of goods sold/inventories
= 4491460810/ 1163019124
= 0.39
Day sales outstanding = receivables/ (annual sales/360)
= 396695428 / (5311773145/360)
=26.88
Fixed assets turnover ratio = net sales/net fixed assets
= 5311773145/3553920430
= 1.49
Total assets turnover ratio = net sales/total assets
= 5311773145/6963449325
= 0.76
Debt ratio = total debt/total assets
= 4548552474/6963449324
=0.65
Profit margin on sales = net income/net sales
=403834231 /5311773145
=0.08
Gross profit margin on sales = (net sales-cost of goods sale)/net sales
= 5311773145-4491460810/5311773145
= 0.15
Return on total assets = net income/total assets PAGE 8
= 403834231/3409528894
= 0.12
Return on common equity = net income available to common stockholders/common equity
=403834231/2414896850
=0.17
Earnings per share = income available to common stockholders/number of common shares outstanding
= 403834231/40504938
= 9.97
Price to earnings ratio = market price per share/ earning per share
= 59.50/9.97
= 5.97
Book value per share = common equity/ number of common shares outstanding
= 2414896850/40504938
= 59.62
Market to book ratio = market price per share/book value per share
= 59.50/59.62
= 1.0
Chasma Sugar mills
Current ratio = current assets/current liabilities PAGE 9
= 4187304/4532166
= 0.92
Acid test ratio = (current assets – inventories)/current liabilities
= (4187304-2194537)/4532166
= 0.44
Inventory turnover ratio = cost of goods sold/inventories
= 10183656/2194537
= 0.54
Day sales outstanding = receivables/ (annual sales/360)
= 395956 / (12420711/360)
= 11.47
Fixed assets turnover ratio = net sales/net fixed assets
= 12420711/9339037
= 1.33
Total assets turnover ratio = net sales/total assets
= 12420711/13526341
= 0.92
Debt ratio = total debt/total assets
= 7204882/13526341
= 0.53
Profit margin on sales = net income/net sales
= 578648/12420711
= 0.05
Gross profit margin on sales = (net sales-cost of goods sale)/net sales
= (12420711-10183656)/ 12420711
= 0.18
Return on total assets = net income/total assets PAGE 10
= 578648/12420711
= 0.05
Return on common equity = net income available to common stockholders/common equity
= 578648/6321459
= 0.09
Earnings per share = income available to common stockholders/number of common shares outstanding
= 578648/28689
= 20.17
Price to earnings ratio = market price per share/ earning per share
= 83/20.17
= 4.12
Book value per share = common equity/ number of common shares outstanding
= 6321459/28689
= 220.344
Market to book ratio = market price per share/book value per share
= 83/220.344
= 0.38
Mirpurkhas Sugar Mills
Current ratio = current assets/current liabilities PAGE 11
= 1827130/2547469
= 0.72
Acid test ratio = (current assets – inventories)/current liabilities
= (1827130-739410)/4532166
= 0.24
Inventory turnover ratio = cost of goods sold/inventories
= 2247806/739410
= 3.04
Day sales outstanding = receivables/ (annual sales/360)
= 113278 / (2855760/360)
=14.28
Fixed assets turnover ratio = net sales/net fixed assets
= 3728986/2482420
= 1.5
Total assets turnover ratio = net sales/total assets
= 3728986/5800571
= 0.64
Debt ratio = total debt/total assets
= 3816666/5800571
= 0.66
Profit margin on sales = net income/net sales
= 307188/3728986
= 0.08
Gross profit margin on sales = (net sales-cost of goods sale)/net sales
= (3728986-3121032)/ 3728986
= 0.16
Return on total assets = net income/total assets
= 307188/5800571 PAGE 12
= 0.05
Return on common equity = net income available to common stockholders/common equity
= 307188/1983905
= 0.15
Earnings per share = income available to common stockholders/number of common shares outstanding
= 307188/12268
= 25.04
Price to earnings ratio = market price per share/ earning per share
= 73.17/25.04
= 2.92
Book value per share = common equity/ number of common shares outstanding
= 1983905/12268
= 161.7
Market to book ratio = market price per share/book value per share
= 73.17/161.7
= 0.45
Calculation of Industry Average
Current ratio= 0.72+0.92+1.0+0.70 / 4 PAGE 13
=0.835
Acid test ratio= 0.24+0.44+0.66+0.32 / 4
= 0.415
Inventory turnover ratio = 3.04+0.54+0.39+3.37 / 4
= 1.835
Day sales outstanding = 14.28+11.47+26.88+53 / 4
= 26.4075
Fixed assets turnover ratio = 1.5+1.33+1.49+2.23 / 4
= 1.6375
Total assets turnover ratio = 0.64+0.92+0.76+1.13 / 4
= 0.8625
Debt ratio = 0.66+0.53+0.65+0.12 / 4
= 0.49
Profit margin on sales = 0.08+0.05+0.08+0.01 / 4
= 0.055
Gross profit margin on sales = 0.16+0.18+0.15+0.20 / 4
= 0.1725
Return on total assets = 0.05+0.05+0.12+2.13 / 4
= 0.5875
Return on common equity = 0.15+0.09+0.17+0.93 / 4
= 0.335
Earnings per share = 25.04+20.17+9.97+2.96 / 4
= 14.535
Price to earnings ratio = 2.92+4.12+5.97+77.70 / 4
= 22.6775
Book value per share = 161.7+220.344+59.62+10 / 4
= 112.916 PAGE 14
Market to book ratio = 0.45+0.38+1.0+23 / 4
= 6.2075
Index
Current ratio 3, 5, 7, 9, 12 earning per share 4, 6, 8, 10, 12
Acid test ratio 3, 5, 7, 9, 12 Book value per share 4, 6, 8, 10, 12
Inventory turnover ratio 3, 5, 7, 9, 12 Price to earnings ratio 4, 6, 8, 10, 13
Fixed assets turnover ratio 3, 5, 7, 9, 12 Market to book value 4, 6, 8, 10
Total assets turnover ratio 3, 5, 7, 9, 12 Total assets 3, 5, 8, 9
Debt ratio 3, 5, 7, 9, 12 Fixed assets 3, 5, 7, 9
Day sales outstanding 4, 6, 8, 10, 12 Net sales 4, 6, 8, 10
Profit margin on sales 4, 6, 8, 10 Net income 3, 5, 7, 9
Gross profit margin on sales 4, 6, 8, 10, 12 Receivables 3, 5, 7, 9
Return on total assets 4, 6, 8, 10, 12 Common equity 4, 6, 8, 10
Return on common equity 4, 6, 8, 10, 12 Current assets 3, 5, 7, 9
Income available to common shareholders 4, 6, 8, 10
Current liabilities 3, 5, 7, 9 Total debt 3, 5, 7, 9
Number of common shares outstanding 4, 6, 8, 10
Above is the balance sheet of Al Abbas sugar mills.
Above is the profit and loss state of Al Abbas Sugar mills.
Above is the JDW sugar mills balance sheet for 2018 and 2019.
Above is the JDW Sugar mills Statement of profit and loss.
Above is the data for Mehran Sugar mills.
Above is the P/L statement for Mehran Sugar mills.
Above are the horizontal analysis for Mirpurkhas Sugar mills.
