Professional Documents
Culture Documents
Submitted to
Sir Bilal Sarwar
Submitted by
M.Ali Naqvi (G.L) [L1F11MCOM0164]
Table of Contents
Company Overview .......................................................................................................... 3 Important Facts ................................................................................................................ 3 Products of National Foods Limited................................................................................... 4 Analysis of Financial Ratios ............................................................................................. 13 (A) Liquidity ratios ............................................................................................................... 13 (i) Current ratio ................................................................................................................ 13 (ii) Acid test or Quick ratio .............................................................................................. 14 (iii) Operation cash flow ratio .......................................................................................... 14 (B) Activity ratios ................................................................................................................. 15 (i) Asset turnover Ratio .................................................................................................... 15 (ii) Debt ratio.................................................................................................................... 16 (C) Leveraging ratios ............................................................................................................ 17 (i) Debt to equity ratio ..................................................................................................... 17 (D) Profitability Ratios ......................................................................................................... 17 (i) Gross Margin ............................................................................................................... 18 (ii) Net Profit margin ......................................................................................................... 19 (iii) Return On Assets ....................................................................................................... 19 (E) Market ratios.................................................................................................................. 20 (i) Earnings per share ....................................................................................................... 20 (ii) Price-Earnings Ratio .................................................................................................... 21 Horizontal Analysis of Income Statement and Balance Sheet ........................................... 22 Vertical Analysis of Income Statement and Balance Sheet ............................................... 23 Share Price of National Food Limited (1998-2012) .......................................................... 24 Appendix A ..................................................................................................................... 25 Appendix B ..................................................................................................................... 29
Company Overview
National Foods Limited is a Pakistani company founded in 1970 which started out as a Spice company. In 1988, National Foods became the certified vendor of McCormick, USA. In the same year, National Foods, then a Private Limited company was converted into a Public Limited, listed in all the three stock exchanges of Pakistan. It is the only food company in Pakistan to have ISO 9001 and HACCP certifications along with SAP business technology to drive the company's strong commitment to quality and management excellence. NFL is an international brand sold in over 35 countries and it aims to be a Rs. 50 billion company under its Vision 2020. Today, National Foods provides a complete food experience to its customers in 35 countries with over 400 distributers around the world. National Foods produces over 300 products in 12 major product categories including meal solutions, pickles, sauces, ketchups, jams and desserts etc. During the fiscal year ended June 30, 2012, the Company's actual production of plants was 50,975 metric tons of food.
Important Facts
$ 40 years of innovation $ Rs. 3 billion in sales $ 300 products $ 6 manufacturing units (Karachi, Bin Qasim, Lahore) $ Central Warehousing (Lahore, Gujranwala, Multan, Islamabad) $ Rs. 1 million to the economy every day in shape of taxes $ Annualized Growth Rate of 23% for the last 35 years
National Foods is an international brand sold in over 35 countries with over 400 distributers around the world. National Foods produces over 300 products in 12 major product categories.
Current Ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 2011 2010
The current ratio is 1.23 in 2011 which is more than 0.22 as compared to 2010. In 2011 assets are on increasing tend where as in current ratio in 2009 was 1.14. In 2010 assets are on declining trend whereas liabilities see an increasing trend.
(ii) Acid test or Quick ratio An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company. The quick ratio is calculated as: Quick Ratio = (Current Assets - Inventories) / Current Liabilities Year 2011 2010 Quick Ratio 0.18 0.15
Quick Ratio
0.19 0.18 0.17 0.16 0.15 0.14 0.13 2011 2010
Quick ratios are always less than current ratios; same is the case in both the years. In 2011, the Quick ratio is 0.18 and in 2010 the Quick ratio is 0.15, which is less than 2009 and 2008, indicating that the inventory is less in 2011 and 2010. Keeping excess inventory is not good for the company as the capital amount is invested in carrying and holding cost. Quick ratio in both the years is less than 1, which makes a company inefficient. (iii) Operation cash flow ratio A measure of how well current liabilities are covered by the cash flow generated from a company's operations. Formula: OCF Ratio = Cash flow provided by operations / Current Liabilities
The Operation cash flow ratio is 0.21 in 2011 where as in 2010 it was (0.20).
Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue the higher the number the better it is. Assets turnover ratio shows an increasing trend in 2011 and 2010. (ii) Debt ratio A ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. Formula: Debt ratio= Total Liabilities / Total Assets Year 2011 2010 Debt ratio 0.68 0.72
Debt Ratio
0.73 0.72 0.71 0.7 0.69 0.68 0.67 0.66 2011 2010
The debt ratio in 2011 was 0.68 and in 2010 it was 0.72. It was less by 0.04, which shows the efficiency of company.
The Debt to equity ratio in 2011 was 2.09 and in 2010 it was 2.60. It was less by 0.51, which shows the efficiency of company.
Gross Margin
30 29.5 29 28.5 28 27.5 2011 2010
The gross profit margin in 2010 was 29.55, while in 2011 it was 28.51, which is bad for the company because it indicates that in 2010 the cost of goods sold was 70.45% and profit was 29.55%, whereas in 2011 the cost of goods sold was 71.49% while the profit was 28.51%.
Profit Margin
5 4 3 2 1 0 2011 2010
The Net profit margin in 2010 was 1.93% whereas in 2011 it was 4.18%. (iii) Return On Assets An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. The formula for return on assets is: Return on Assets = Net Income / Total Assets Year 2011 2010 ROA 12.67 5.95
ROA
15 10 5 0 2011 2010
The higher the ROA ratio the good is the company is, ROA in 2010 was 5.95%, where as in 2011 it was 12.67%, which is good for the company because the ratio of ROA increase by 6.72%.
EPS
6 4 2 0 2011 2010
EPS
25 20 15 10 5 0 2011 2010
400
350
300
250
200
Share Price
150
100
50
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Appendix A
Appendix A
IN THIS SECTION:
Calculation of Liquidity ratios Calculation of Activity ratios Calculation of Debt ratios Calculation of Profitability ratios Calculation of Market ratios
1. Liquidity ratios
1.1 Current Ratio Current Assets Particulars Cash & bank balance Trade Debt Inventories Other current assets Total Current Liabilities Particulars Short term Secured loans Other current liabilities Total Current Ratio
2011 727,940 950,338 1,678,278 1.231647558 1.2 Acid Test or Quick ratio
Particulars Cash & bank balance Trade Debt Total Acid Ratio 1.3 Operation cash flow Particulars Cash flows from operations Long term secured loans Other non-current liabilities Long term Debts Current Liabilities Total Liabilities Operation cash flow ratio
2. Activity ratios
2.1 Asset turnover
Particulars Net Sales Capital work in progress Operating fixed assets after deducting accumulated depreciation Intangible assets Other non-current assets Fixed Assets Current Assets Total Assets Asset turnover 2.2 Debt ratio Particulars Total Liabilities Total Assets Debt ratio 2011 2010 1931930 1932415 2854741 2674360 0.676744405 0.722571008 2011 5,520,780 22,338 2010 4,489,946 63,604
752,018 731,167 8,958 25,688 4,380 4,509 787,694 824,968 2067047 1849392 2,854,741 2,674,360 1.933898732 1.678886163
3. Debt ratios
3.1 Debt to equity ratio Particulars Total Liabilities Average Share Holder equity Debt to equity ratio 2011 2010
4. Profitability ratios
4.1 Gross margin Particulars Gross Profit Sales Gross margin ratio 2011 1,573,981 5,520,780 28.51 2010 1,326,747 4,489,946 29.55
4.2 Profit margin Particulars Net Profit Sales Gross margin ratio 4.3 Return on assets Particulars Net Income Total Assets Return on assets ratio 2011 361,751 2,854,741 12.67 2010 159,181 2,674,360 5.95 2011 230,597 5,520,780 4.18 2010 86,559 4,489,946 1.93
5. Market ratios
5.1 Earnings per share Particulars Net Income Numbers Of Shares EPS 5.2 P/E ratio Particulars Market price per share EPS P/E ratio 2011 75 5.56 13.48 2010 43.92 2.09 21.03 2011 230,597,000 41,443,000 5.56 2010 86,559,000 41,443,000 2.09
Appendix B
Appendix B
IN THIS SECTION:
Annual Report of 2011