GUL AHMED TEXTILE MILLS LTD KARACHI

COMPANY PROFILE
The Gul Ahmed Group began trading in textiles in the early 1900s. In 1953, the group
decided to enter the field of manufacturing under the name Gul Ahmed Textile Mills Limited,
and was incorporated as a privately limited company and converted into public limited
company in 1955. In 1972, it was listed on the Karachi Stock Exchange. Since then, the
company has made rapid progress and is currently one of the leading composite textile houses
in the world.

Gul Ahmed Textile Mills Ltd

The

Type
Industry
Founded
Founder(s)
Headquarters
Area served
Key people
Products
Revenue
Employees
Parent

Public
Textile Retail
April 1, 1953
Haji Ali Mohammad
Karachi, Pakistan
Worldwide
Bashir Ali Muhammad -Chairman & CEO
Fabrics, bedding, yarn, apparel, accessories
US$300 million (2014)
7000
Gul Ahmed Group

Companys registered office is situated at Plot No. 82, Main National highway, Landhi,
Karachi.

Equipments: The mill is presently a composite unit with an installed capacity of

130,000 spindles, 250 wide widthair jet looms, 90 Sulzers, 297 conventional looms, and a
state-of-the-art processing and finishing unit.

Financial Statement of GUL AHMED TEXTILE MILLS LTD

Financial statements
Financial statements are declarations of information in financial terms about an enterprise
that are believed to be fair and accurate. They describe certain attributes of the enterprise that
are important for decision makers, particularly investors (owners) and creditors.

Income Statement - a summary of a companys revenues and expenses for a specific

period of time

Revenue - Amounts earned by delivering goods or services to customers.

Expense - The using up of assets or the accrual of liabilities in the course of delivering goods
or services to the customers.

Balance Sheet - a summary of a companys assets, liabilities, and owners equity on a

specific date.

Financial Statement Analysis of Gul Ahmad Textile mills limited

There is an increase in the return on shareholders equity in 2014 as compared to in

2013. Because the company net income has increased in 2014 as compared to in 2013.
The gross profit margin of the 2014 year is 2 % more than from 2013 year, which is a
good sign. It means that the Gul Ahmed Textile Mill has kept its cost of sale under

control.
There is a decrease in the operating expenses in 2014 as compared to in 2013. The

company sales and operating profit of 2014 has increased as compared to in 2013.
There is an increase in the profit margin in 2014 as compared to in 2013. This is due
to increase in net income and sales of the company in 2014.

DEPRICIATION
Definition of Depreciation
Decrease in the value of asset due to its use is called depreciation.
OR
Depreciation is a systematic and rational way to allocate the cost of long-lived tangible assets
over their useful lives. This satisfies the goal of matching costs and revenues. Done because
fair values change and are difficult to measure.

Depreciationlong-lived tangible assets.

Depletionnatural resources.
Amortizationintangible assets.

Methods of Depreciation
1)
2)
3)
4)
5)

Straight line method

Unit output method
Declining method
Double declining method
Sum year digit method

Straight-Line Method

Units-of-Production Method

The same amount of A

different

amount

Declining-Balance Method

of This

method

is

called

an
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depreciation expense is depreciation

charged each full year depending
the asset is used.

is
on

recorded accelerated method as it results in

the

plant more depreciation expense in the

assets usage.

early years of a plant assets life

and less depreciation in the latter

years of its life.

The formula for straight- A two-step process is needed A three-step process is needed to
line depreciation is:
(Cost-Savage

to compute depreciation:

Value)

compute depreciation:

(1) Calculate

(1) Calculate the straight-line

divided by useful life in

depreciation per unit:

periods.

(Cost-Salvage Value)

rate (percentage)
(2) Double the straight-line

divided by total units

rate (percentage)

of production.

(3) Multiply

(2) Multiply depreciation

per

unit

number

by
of

the

rate

(percentage) determined in

the

step 2 by the assets book

units

value. The book value is

produced.

its cost less accumulated

depreciation.
Salvage value is not considered.
However, depreciation stops once
the book value equals the salvage
value.

1. Straight-Line

Assumes that the asset will contribute to earning revenue equally during each period

Depreciation expense is the same for every year of the assets useful life.

Annual Expense:

Cost - Salvage Value

Estimated Useful Life

2. Units of Output

An equal amount of depreciation is charged for each unit produced.

Appropriate when the amount of use of an asset varies from period to period.

Suitable only when units of output over assets entire useful life can be estimated with
reasonable accuracy.

Annual Expense:

Cost - Salvage Value *Number of Units of produced

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Estimated Productive Life

3. Accelerated Depreciation

Recognition of relatively large amounts of depreciation in early years and less in later

years.
Assets more efficient and provide better services earlier.
Therefore should allocate greater portion of assets cost to match this greater output.
Popular for tax purposes reduces tax burden in current year

4. Double-Declining Balance
Double straight-line depreciation rate.
This constant rate is applied to the Net Book Value (NBV) of the asset to determine

the amount of depreciation for the period (NBV = Cost - Accumulated Depreciation).
Continue depreciating until the NBV = Salvage Value
Annual Expense = NBV * constant rate

5. Sum-of-Years Digits (SYD)

Depreciation rate to be used is a fraction.

The numerator is remaining years of useful life

The denominator = sum of years of useful life

Annual Expense:
(Cost - useful life at beginning of period Salvage Value)
Sum of the years of useful life

Depreciations Impact on Financial Statements

The choice of depreciation method will have an impact on the income statement.

Using an accelerated method of depreciation (SYD, declining balance) results in a

lower net income figure initially and then a higher net income figure near the end of
its useful life.

GAAP requires the consistent application of one depreciation method (consistency

principle).

But, the same method is not required for different types of plant assets.

FORMATE OF COST OF GOODS SOLD STATMENT

Company Name:
Cost of goods Manufactured& Sold Statement.
For the Year Ended:
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Details
Opening Raw Material
Add-Purchases

Amount

Amount

----------------

Less-Discount on purchase --------Less Return on purchase ---------Add- Freight in

Add- Carriage in
=Material to be use
Less-Closing Raw Material
=Material Consumed/Used
Add-Direct Labour Cost
Add-FOH(w1)
=Total Manufacturing Cost
Add-Opening W-I-P
=Cost of goods to be manufacturing
Less-Closing W-I-P
=Cost of goods manufactured
Add-Opening Finished goods
=Cost of goods to be sales
Less-Closing Finished goods
(Add or Less FOH working 2)
=Cost of goods Sold

WORKING 1:
If the FOH (factory overhead) is given applied at the direct labour or any other
thing which is in the CGS statement then in the CGS statement FOH applied written if not
given the applied FOH then written in the CGS statement Actual FOH.
WORKING 2:
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If actual and applied both are given in the CGS statement.

First of all Calculation of the Actual FOH
Details
Actual Factory overhead(FOH)

Amount

Less-Factory Overhead(FOH) Applied

=Under / Over Applied
NOTE:
1:(If FOH applied less than Actual FOH
then extra amount add in the CGS
Statement named over applied )
2:(If FOH applied more than Actual FOH
then extra amount less in the CGS
statement named under applied)
Company Name: -------------Income Statement: ----------------As the Year Ended: --------------Details
Sales
Less discount on sales
Less return on sales
=Net sales
Less- CGS
=Gross Profit / Loss
Less Other Expenses:
Marketing Exp.
Selling Exp.
Distribution Exp.
Administrative Exp.
=Net Profit / Loss

Amount

Amount

Some Important Formulas:

1: Prime Cost=
Material used + Direct Labour
2: Conversion Cost =
Direct Labour + Factory Overhead (applied)
3: Total Manufacturing Cost (T.M.C) =
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Material used + Direct Labour + FOH

4:No.of Units Manufactured =
Units sold + Finish Goods Closing Finish Goods Opening
5: Per Unit Manufactured Cost =
Cost of Goods Manufactured Units Manufactured
6: Gross Profit Rate on Cost =
Gross Profit C.G.S 100
Ans= --------%
7: Gross Profit On Sale =
G.P Sale 100
Ans= --------%
8: Net Profit Rate on Cost =
N.P C.G.S 100
Ans= --------%
9: Net Profit Rate on Sale =
Net Profit Sale 100
Ans= --------%
10: Gross Profit Per Unit Cost =
G.P Units Sold = Rs. ----------Per Unit Cost.
11: Net Profit Per Unit Cost =
N.P Units Sold = Rs. ------------Per Unit Cost.
Note 1: If find out the per unit cost of Net or Gross Profits (N.P, G.P) then should be taken
the No. of Units is Units Sold always.
Note 2: When obtain the per unit cost of anything then not multiply the 100 and when we
change the anything in percentage then multiply the 100.
Note 3: If FOH applied more than 100% then apply this formula.
Amount 100 rate of applied
For Example = 150 % FOH of Direct Labour = 9000
It is solved by this method
9000 100 150
Calculation of Actual FOH:
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Details
Heat and power

Amount

Indirect material consumed

Indirect labour
Depreciation of any Asset
Tool expenses
Fire insurance
Misc. FOH
Factory office salaries
Superintendence
Factory taxes
Employers contribution provident fund
(any other expense which is related to
Factory)
Indirect Materials:

Cotton waste
Factory office supplies
Fuel, oil coal etc.
Lubricants
Perishable tools
Repair and maintenance stores.

Indirect Labour:

Cleaners, janitors, helpers

Factory office staff
Foreman, supervisors etc
Idle time wages
Overtime premiums
Payroll contributions and taxes
Paid leaves
Quality inspectors

Other indirect Expenses:

Depreciations
Electricity and gas bills
Insurance
Normal rework on defective production
Normal spoilage
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Property taxes
Rent
Service departments expenses

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