University of Education Okara Campus

Preface
I present my “Term Report” authorized by you as a requirement for this
course .In this report, I have tried to provide analysis of financial
statements of PAKISTAN State Oil Ltd. I hope I have covered all financial
ratio of my course.

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

DEDICATICATION
My great mother

AND

Loving father whose prayers are great sources

Of Strength to me in every venture.

MY

Loving brothers and sisters who supported me with lovely attitude and long
Passion for completing
My work and who’s sincere invoke success throughout my life.

AND

My teachers who helped me through out the process

AND

All of those who love and help me in this process

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

ACNOWLEDGMENT

All praise and countless thanks to Almighty Allah, the Compassionate, the
Merciful who guide us in darkness and shows us the right oath and who is
Master of the Day of Judgment. We seek to help in all the traits of life, all
respect the Holy messenger of Allah, Hazrat Muhammad (PBUH), who
brought the light of knowledge and truth when the humanity was
wandering in the desert of ignorance and who was torch bears off all the
values of all the mankind.
I would like to express my gratitude to my Finance teacher Mr.Yasir; who
gave me this opportunity to fulfill this report.

UMAIR AHMED

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By: Umair Ahmed: Ph: +923157532007

 University of Education Okara Campus

TABLE OF CONTENTS

1 Company’s Overiew 5
VISION 6
MISSION 7
2 Financial Statements 8
3 Ratio Analysis 9
Long Term Analysis 9
Short Term analysis 9
Profitability Analysis 10
Debt Paying Ability 11
Investor analysis 11
Dupont system 12
4 Conclusion 13

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Company’s Overview
PSO is the market leader in Pakistan’s energy sector. The company has
the largest network of retail outlets to serve the automotive sector and is
the major fuel supplier to aviation, railways, power projects, armed forces
and agriculture sector. PSO takes pride in continuing the tradition of
excellence and is fully committed to meet the energy needs of today and
rising challenges of tomorrow.

Pakistan State Oil, the largest oil marketing company in the country, is
currently engaged in storage, distribution and marketing of various POL
products. The company’s current value of Rs. 75 billion, its 82.1% share in
the black oil market and 61.2% share in the white oil market, alone speak
volumes about its success.

Board of Management:

Sardar Yasin Malik Irfan K. Qureshi

Chairman BOM Managing Director

Mr. Muhammad Ejaz Chaudhry Mr. Mahmood Akhtar

Member Member

Mr. Iskander Mohammed Khan Mr. Istaqbal Mehdi

Member Member

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Vision
To excel in delivering value to
customers as an innovative and
dynamic energy company that
gets to the future first.

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Mission

We are committed to leadership in energy market through competitive

advantage in providing the highest quality petroleum products and
services to our customers, based on:

 Professionally trained, high quality,

 motivated workforce, working as a
 team in an environment, which
 recognizes and rewards performance,
 innovation and creativity, and
 provides for personal growth and
 development

 Lowest cost operations and assured

 access to long-term and cost effective
 supply sources

 Sustained growth in earnings in

 real terms

 Highly ethical, safe environment

 friendly and socially responsible
 business practices

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By: Umair Ahmed: Ph: +923157532007

 University of Education Okara Campus

Financial Statement
PAKISTAN STATE OIL LIMITED
Balance Sheet
For the year ended on December 31,2008

ASSETS 2008 2007

Rs.(000) Rs.(000)
Fixed Assets 11231328 12224042
Current Assets 115878692 62513273
Total Net Assets 127110020 74737315
EQUITY AND LIABILITIES
Equity 30965054 20939217
Non-Current Liabilities 2408746 2412371
Current Liabilities 93736220 51385727
Total Equity and Liabilities 127110020 74737315

PAKISTAN STATE OIL LIMITED

Income statement
For the year ended on December 31,2008
Description 2008 2007
Rs.(000) Rs.(000)
Sales 495278533 349706326
Cost of products sold (465254907) (337446896)
Gross Profit 30023626 12259430
Operating Expenses (9283021) (6012814)
Profit after operating expenses 20740605 6246616
Other Income 313860 424238
Other operating income 1396527 1278932
Profit from operations 22450992 7949786
Finance costs (1367898) (1158112)
Share of profit of association net of 294318 330306
tax
profit before taxation 21377412 7121980
Taxation (7323617) (2432182)
Profit for the year 14053795 4689798

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Ratio Analysis
Long-Term Analysis

Income Statement ratio:

Time Interest Earned

( Earning before income tax / Years 2008 2007
interest exp) 98.09 53.97
PSO Times Times
Balance Sheet ratio:

Debt Ratio Years 2008 2007

(Total Liabilities / Total Assets)*100
PSO 76% 72%

Debt / Equity Ratio Years 2008 2007

(Debt / Total Equity)
PSO 3.10 Times 2.57 Times

Total Capitalization
(LTD / LTD+C/S+P/S) Years 2008 2007
0.072 0.451
PSO Times Times
Analysis:
Increase in TIER shows that the debt paying ability in2008 is better than
2007 but increase in Debt ratio and debt to equity ratio shows that the risk
of company is also increases.

Short Term Analysis:

Years 2008 2007
Average collection period Days =
(365 Days / A/R Turnover) PSO 21 12

Years 2008 2007

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Average payment period Days =

(365 Days / A/P Turnover) PSO 64 45

Average age of inventory

(365days / Inventory Turnover)
Years 2008 2007
Days =
PSO 19 14

Analysis:
Increase in ACP shows that chances for bad debts also increases and
increase in APP Shows that company uses better its financial
resources, but increases in Avg age of inventory shows management
not properly work.

Profitability analysis:

Net profit margin Years 2008 2007

(Net income / net sales)*100 PSO 2.84% 1.34%

Total Asset turnover Years 2008 2007

(Net sales / total asset) 3.89 4.68
PSO Times Times

Return on asset
(Net income / total asset)*100 Years 2008 2007
PSO 11.06% 6.28%

Operating profit margin

(Operating income / Net Years 2008 2007
sales)*100
PSO 4.53% 2.27%

Fixed asset turnover

(Net sales / total fixed asset) Years 2008 2007
44.00 29.00
PSO Times Times

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Return on total equity

(Net income-P/S / owner’s Years 2008 2007
equity)*100
PSO 45.00% 22.00%

Gross profit margin

(Gross profit / net sales)*100 Years 2008 2007
PSO 6.00% 3.50%

Analysis:
The profitability of the firm is rapidly increases but the risk of
insolvency also increases.

Debt Paying Ability:

Net working capital

(Current asset – current Years 2008 2007
liability)
PSO 22142472 11127546

Current ratio
(Current asset / current Years 2008 2007
liability) 1.24 1.22
PSO Times Times

Analysis:
The Debt paying ability of the firm increases which is good.

Investor Analysis:

Earning per share

(Earnings available for common Years 2008 2007
stock holders / No. of shares of
PSO 5.1 14.3
common stock outstanding)

Years 2008 2007

PSO 81.94 27.34
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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Times Times
Price earning ratio
(Market price of share / EPS)

Dividend Payout
(Dividend Per Share / EPS)*100 Years 2008 2007
PSO 28.68% 76.80%

Analysis:
Company has unable to attract big invester because of low dividend
payourt and price earning ratio

DuPont System of Analysis

ROA
(Net profit margin * Total asset Years 2008 2007
turnover)*100
PSO 11.06% 6.28%

ROE
(ROA * FLM) Years 2008 2007
PSO 45.00% 22.00%

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By: Umair Ahmed: Ph: +923157532007

University of Education Okara Campus

Conclusion
I learn a lot of things about making decision to investment in any company.
With help of these ratios I can easily identify which sector is better for
investment.

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By: Umair Ahmed: Ph: +923157532007