Jordan Hashematic Kingdom

Faculty of Economics & Adminstrative Sciences

Course Title : Financial Statement Analysis

( Thus Day )

Analysis Of Financial Statements Of

Al-Ekbal Printing And Packaging
(2005 - 2008)

Instructors : Dr. Mishiel Suwaidan .

Prepaired By : Ahmad Draghmah , ( 2008 7300 23 ) .

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2
First : Theoretical Frame Work:
(A-1) Objectives of the Analysis
(A-2) Al-Ekbal Printing And Packaging:
( A – 2 -1 ) Introduction
( A – 2 -2 ) Management and Board of Directors
( A – 2 -3 ) Share holder owns 5 % or more
( A – 2 -4 ) Risk the company is faced
Significant Policies of accounting and preparation
( A – 2 -5 )
of financial statement
(A-3) sector of Printing and Packaging

3
First: Theoretical Frame Work:

(A-1) Objectives of the Analysis:

The main object from this analysis is to evaluate Al-Ekbal
Printing And Packaging company from many aspects like
liquidity and how efficient to manage it is assets and generate
higher net income and cash flow from its operations , through
compare the performance and financial center over many years
to the same company to see percentage of growth over this years
, and through compare the performance and financial center
with only competitor in Jordanian market ( Union Advanced
Industries ) to see how efficiency of the company .

(A-2) Al-Ekbal Printing And Packaging:

( A – 2 -1 ) Introduction :
The company is established in 27 / 12 / 1994 by JD
8,000,000 capital , but in 2006 the company decide to decrease
its capital from JD 8,000,000 to JD 5,000,000 by JD 3,000,000
, because it is increase of its need . and it is Established to do
Commercial Presses and printing and forming of packaging
materials for cigarettes, detergents, pharmaceuticals , and books
...etc. . the main place to the company – management building
and the factory building – in AL-Naor City south of Amman ,
and it didn’t have any affiliate company and any branches . at

4
 the end of 2008 the investment capital to the company was (J D
8,022.545) , but the company capital is ( J D 5,000,000 ) .
The company get the ISO 9001 – 2000 certificate . After
finish all the requirement to get this certified .
The auditor company is Ibrahim Al-Abbasi & Co. and legal
consular is Osama Sukkary .

( A – 2 -2 ) Management and Board of Directors :

The general manager of the company is Adel Abo Durgham .

The board of director :
1- Mayr Mclnhof Packaging International Co.
2- Neupack Gesellschaft M.B.H Co.
3- Mayr Mclnhof Packaging Austria Co.
4- Company pearl trade and investment for reconstruction.
5- Arabic Gulf for Investment and General Transportation .
Termination Date of the Board: 11-7-2011

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 (A – 2 – 3) Name of Share holder owns 5 % or more and
numbers of they owns shares compared With previous year 1:

Number of Number of
Percent Percent
Name shares 31- shares
% %
12-2006 31-12-2007
Mayr Mclnhof
1,474,464 29.49 1,474,464 29.49
Packaging Austria Co.
Neupack Gesellschaft
1,000.000 20 1,000.000 20
M.B.H Co .
Al-Ekbal Company For
5,000 .1 305,203 6.1
Investing
Jean Joseph Issa
300.2.3 6 0 0
Chamo'un
Bank Of Jordan 292,187 5.84 292,187 5.84
Al-Said For Trade 250,000 5 250,000 5

( A – 2 - 4 ) Risk the company is faced 2:

The main risk the company is faced is little number of

customer , through that its activity is effected directly by any
change happened to that customers , and the company strive to
increase its numbers of customers .
But the risk this firm is in general is international economic
and financing problem which is started in the last quarter in 2008
and still to now .

* annual report for Al-Ekbal Printing And Packaging ( 2008 ) , page 4 ,1

* the same previous references 2

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(A – 2 – 5) Significant Policies of accounting and preparation
of financial statement :

Basis of preparation of the financial statements

- The financial statements have been prepared in accordance with
International Financial Reporting Standards (lFRSs) and related
interpretations, taking into consideration the concession
agreement with the Government.
- The financial statements arc stated in Jordanian Dinar.

Accounts receivable
are stated at net realizable value. After take a provision for
doubtful debts .

Available-for-sale Investments
These represent financial assets the Company does not intend to
classify as trading financial assets or hold to maturity.
Available-for-sale investments arc stated at fair value at the end
of the year. Changes in the fair value of investments arc
recorded in a separate account within shareholders' equity. In
case any of these investments is sold, disposed of, or impaired,
then the recorded amount in shareholders' equity is transferred
to the income statement.
The impairment loss previously recorded in the statement of
income can be recovered if it becomes objectively evident that
the increase in fair value occurred in a period subsequent to the
recording of the impairment .

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 loss. Moreover, the impairment loss of debt instruments can be
recovered through the statement of income, while the
impairment loss in companies shares can be recovered through
the cumulative change in fair value.

Provisions
are recognized when the Company has liabilities at the date of
the balance sheet arising from previous events, settlement of
these liabilities is probable, and their value can be reliably
measured.

Fixed assets
are stated at cost net of accumulated depreciation and
impairment, and depreciated (except for land), when ready for
use, according to the straight-line method over their expected
operating lives at annual rates .
- When the recoverable amount of any fixed asset becomes less
than its net book value, its value is reduced to the recoverable
amount and the impairment in value is taken to the income
statement.
- The productive lives of fixed assets are revalued at the end of
every year. If revaluation differ from previous estimates, the
change is recorded in subsequent years being a change in
estimate.
- Fixed assets are eliminated when disposed of or when no
future benefits are expected from their use or disposal.

8
Finished products
are stated at the lower of cost or ex-refinery selling price.

Spare parts and supplies

are stated at cost according to the weighted average method

Revenue
from fuel sales is recognized upon delivery of goods to the
customer and issuance of the invoice.

(A-3) sector of Printing and Packaging:

The company work in industry the competition in the high level
in the Jordanian market and foreign market .

9
Second : Evaluate Financial Statements
(B-1) Common Size Financial Statement:
( B-1-1 ) Common-Size Balance Sheet
( B-1-2 ) Common-Size Income Statement
(B-2) Trend ratios:
( B-2-1 ) Trend Analysis for Balance Sheet
( B-2-2 ) Trend Analysis for Income Statement
(B-3) Cash flow analysis
(B-4) Structure analysis
(B-5) Ratios Analysis :
( B-5-1 ) Short -Term Liquidity Ratios
( B-5-2 ) Capital Structure & Solvency Ratios
( B-5-3 ) Operating Efficiency & Profitability Ratios
( B-5-4 ) Market Ratios
(B-6) Comparison with industry competitors

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 Second: Evaluate Financial Statements:

(B-1) Common Size Financial Statement:

(B-1-1) Common-Size Balance Sheet :

Table (1)
Common-Size Balance Sheet (%)
Assets 2005 2006 2007 2008 Liability& Equity 2005 2006 2007 2008
Cash on Hand & at 0.09 0.04 0.04 0.04 Accounts and Notes 0.04 0.05 0.02 0.06
Banks Payable
Account 0.08 0.09 0.06 0.11 Credit Banks 0.00 0.00 0.02 0.00
Receivables, Net
Short Term 0.00 0.00 0.00 0.00 Short Term Loans 0.00 0.04 0.06 0.04
Investments
Inventory 0.36 0.37 0.37 0.33 Total Current 0.06 0.15 0.13 0.14
Liabilities
Total Current 0.53 0.53 0.49 0.50 Total Liabilities 0.07 0.31 0.29 0.22
Assets
Fixed Assets, Net 0.45 0.46 0.49 0.48 Compulsory Reserve 0.07 0.08 0.08 0.09

Proposed Cash 0.00 0.04 0.00 0.00

Dividends
Retained Earnings 0.02 0.001 0.02 0.05

Total Shareholders 0.93 0.69 0.71 0.78

Equity
Total Assets 1.00 1.00 1.00 1.00 Total Liabilities & 1.00 1.00 1.00 1.00
Shareholders Equity

From the table above we can to the following:

A : Assets aspect :
( A: 1 ) current Assets : In 2005 & 2006 The table current assets
was formed (53%) of to tall assets – but in 2007 & 2008 this

11
 percentage was in crease to be (49% ) (50% ) respectively and about
the components of current assets we can note that 1) the cash on
hand & at Bank was formed ( 9% ) of table current assets in 2005 but
in 2006 , 2007 , 2008 this percentage was decrease to be ( 4% ) in
each year ,that mentioned .
2) The A/R was formed 8% of table current assets in 2005 and this
percentage was increase to be ( 9% ) in 2006 but in 2007 this
percentage decrease to be (6% ) and then it was returned to increase in
2008 to be (11% ) .
3) there in no short term Investment in all year daring the period of
study .
4) the inventory formed (36% ) of table current assets in 2005 and
this percentage increase to be (37% ) in 2006 & 2007 , but in 2008
this percentage was decrease to be (33% ) of table current assets .

( A :2 ) Fixed Assets : in 2005 the fixed was formed (45% ) of table

assets and this percentage Increase to be (46% ) ( 49% ) in 2006 ,2007
respectively but in 2008 this percentage was decrease to be (48% ) .

B: Liability& Equity Aspects :

( B: 1 ) The Total Liability : in 2005 the total liability was lovmed 7%
of total shareholder and liability and this percentage way Increase a
high Increase to be (31% ) in 2006 but in 2007, 2008 this percentage
was , decrease to be ( 29% ) (22% ) respectively and about the
components of total liability we can note :

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1) The total curate liability was formed about 6% total liability in 2005
but in 2006 this % was increase to be (15% ) of total liability and then
in 2007 this % decrease to be (13%) but also in 2008 this % was
returned to be (14% ) .
2) The Short Term loans was formed zero percentage of total liability
in 2005 but in 2006 , 2007 , 2008 it was ( 4% ) , (6%) , (4%)
respectively .
3) The Credit Banks: it was formed zero percentage of total liability in
2005 , 2006&2008 but in 2007 it was formed 2% of total liability .
4) The account & notes payable: it was formed about (4%) of total
liability in 2005 but in 2006 this % increase to be (5%) in 2006 and
decrease to be (2%) in 2007 and then in 2008 it was increase to be
(6%) .
5) The Total Shareholders Equity : this Itemed was formed (93%) of
total liability & shareholder equity in 2005 but in 2006 this percentage
decrease to be in 2007 it was increase to be (71%) (78%)
respectively.

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The figure below show the Common-Size Balance Sheet:

1 Figure

C.S Asset 2008 0.11

Cash on Hand & at Banks
Account Receivables, Net
0.04 0.00
0.00
Short Term Investments 0.00
0.00
Inventory 1.00 0.33

Total Current Assets 0.50

Long Term Investments
Fixed Assets, Net 0.48 0.48
Total Fixed Assets 0.00 0.01
Other Assets
Total Assets 0.000.00

2 Figure

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 (B-1-2) Common-Size Income Statement:
Table (2)
Common-Size Income Statement (%)
Income statement 2005 2006 2007 2008
Operating Revenues 1.00 1.00 1.00 1.00

Operating Expenses 0.87 0.81 0.79 0.82

Gross Profit 0.13 0.19 0.21 0.18

General and Administrative 0.07 0.09 0.09 0.12

Expenses
Selling and Distribution 0.03 0.02 0.02 0.02
Expenses
Net Operating Income 0.03 0.06 0.07 0.04

Income Before Interest & 0.03 0.07 0.09 0.06

Tax
Net Income before Tax 0.05 0.06 0.06 0.04

Net Income 0.03 0.04 0.04 0.03

From the table above we can to the following:

- The operating Expenses was formed about (87%) of operating

revenue in 2005 and this percentage decrease to be (81%) (79%) in
2006, 2007 respectively, but in 2008 this percentage was increase to be
(82%) .

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 - The gross profit was formed 13% of operating revenue in 2005 and
this percentage was increase to be (19%) (21%) in 2006, 2007
respectively, but in 2008 this percentage was decrease to be (18%).
- The net ins some was formed (3%) of operating revenues in 2005,
2008 and (4%) in 2006,2007.
- The net operating in some & the in some bettor interest & tax was
formed (3%) of operating revenue in 2005 and this percentage increase to
be (6%) in 2006, 2007 respectively but in 2008 this percentage was
decrease to be (4%).
-
Figure 3

Operating Revenues
C.S I/S 2008
Operating Expenses

Gross Profit 0.04 0.02 0.03

0.10
General and 1.00
Administrative Expenses 0.18
Selling and Distribution
Expenses
Net Operating Income 0.82
Income Before Interest &
Tax
Net Income before Tax

Net Income

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 (B-2) Trend ratios:

(B-2-1) Trend Analysis for Balance Sheet:

Table (3)
Trend Analysis for Balance Sheet (%)
Assets 2005 2006 2007 2008 Liability &Equity 2005 200 2007 200
6 8
Cash on Hand & 0.00 -0.53 -0.58 -0.63 Accounts and Notes 0.00 0.11 -0.60 0.30
at Banks Payable
Account 0.00 0.14 -0.29 0.20
Receivables, Net

Inventory 0.00 -0.02 -0.07 -0.22 Total Current 0.00 1.17 0.80 0.81
Liabilities
Total Current 0.00 -0.08 -0.17 -0.22 Total Liabilities 0.00 3.29 2.89 1.65
Assets
Fixed Assets, Net 0.00 -0.04 -0.02 -0.11 Compulsory Reserve 0.00 0.05 0.09 0.12

Retained Earnings 0.00 -0.95 0.43 1.51

Total Shareholders 0.00 -0.31 -0.32 -

Equity 0.30
Total Assets 0.00 -0.07 -0.10 -0.17 Total Liabilities & 0.00 -0.07 -0.10 -
Shareholders Equity 0.17

- Firsts: Assents aspects :

- The percentage change of cash on hand & at banks was ( 0.53) in 2006
and this ∆% was decrease to be (0.58 ) (0.663 ) in 2007 , 2008 respectively
.
- The ∆% of Account Receivables was (0.14) in 2006 and this value was
decrease to be

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(0.29 ) in 2007 and then it was increase to be ( 0.20 ) in 2008.
- The ∆% of lavatory was ( -0.02 ) in 2006 but in 2007 ,2008 this 5%
was decrease to be (0.07) , ( 0.22 ) in 2007 ,2008 respectively .
- The ∆% of total current assets was (-0.08 ) in 2006 and this 5% was
decrease to be
( 0.7), ( 0.22- ) in 2007 , 2008 respectively .
- The ∆% fixed assets was ( 0.04 ) in 2006 but this value was increase
to be ( 0.02- ) in 2007 and in crease to be ( -0.11 ) in 2008 .
- There in no ∆% in short term investment and other assets .

Second: Liability & Equity Aspect :

- The ∆% of accounts and notes payable was ( 0.11 ) in 2006 and in 2007
this value was decrease to be ( 0.60- ) but in 2008 this∆% was in crease to
be
( 0.30) .
- The total current liability was deuces from ( 1.17 ) in 2006 to be . (80 )
in 2007 but in 2008 it was increase to be ( 0.81 ) .
- The ∆% of total liability was ( 3.29 ) in 2006 but in 2007 , 2008 it was
decrease to be ( 2.89 ) , ( 1.65 ) respectively .
- The ∆% of compulsory Reserve was ( 0.05 )in 2006 and then in
2007,2008 it was increase from ( 0.95- ) in 2006 to be ( 0.43 ) ( 1.51 ) in
2007 , 2008 respectively .
- The ∆% of total shareholders was deceased form ( 0.31 ) in 2007 to (
0.32- ) in 2008 but in 2008 was increase to be ( 0.30- )

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 - The ∆% of total liability & shareholders Equity was decrease from (
0.07- ) in 2006 to be ( 0.10- ) ( -0.17 ) in 2007 , 2008 respectively .

(B-2-2) Trend Analysis for Income Statement:

Table (4)
Trend Analysis for Income Statement (%)
Income statement 2005 2006 2007 2008
Operating Revenues 0.00 -0.08 -0.11 -0.11

Operating Expenses 0.00 -0.14 -0.20 -0.17

Gross Profit 0.00 0.35 0.49 0.29

General and Administrative 0.00 0.11 0.13 0.43

Expenses
Selling and Distribution 0.00 -0.34 -0.37 -0.44
Expenses
Net Operating Income 0.00 1.01 1.32 0.41

Income Before Interest & Tax 0.00 0.84 1.29 0.50

Net Income before Tax 0.00 0.00 0.01 -0.30

Net Income 0.00 0.42 0.43 0.04

- The ∆% of operating Revenues was decrease from ( 0.08- ) in 2006 to

be ( 0.11- ) in 2007 , 2008 .
- The ∆% of grass profit was in crease from ( 0.35 ) in 2006 to be ( 0.49 )
in 2007 but in 2008 this ∆% was decrease to be ( 0.29 ) .
- The ∆% of general & administrative Expenses was increase from 0% in
2006 to ( 0.13 ) ( 0.43 ) in 2007 , 2008 respectively .

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 - The ∆% of selling and distribution Expenses was decrease from (
0.34-) in 2006 to be
( 0.37-) ( 0.44- ) in 2007 , 2008 respectively .
- The ∆% of net operating in come was increase from ( 1.01 ) in 2006 to
( 1.32 ) in 2007 but in 2008 it was ( 0.41 ) .
- The ∆% of in come before interest & tax was increase from ( .84 ) in
2006 to ( 1.29 ) in 2007 but in 2008 it was decrease to be ( 0.50 ) .
- The ∆% of net income before tax was increase from ( 0% ) in 2006 to
( 0.01 ) in 2007 and it was decrease to be ( 0.30-) in 2008 .
- The ∆% of net income was increase frame ( 0.42) in 2006 to be ( 0.43
) in 2007 . but in 2008 it was decease to be ( 0.04 ) in 2008 .

(B-3) cash flow analysis :

Table (5)
cash flow from main activities
2008 2007 2006 2005
cash flow from operating
activity 1,097,234 1,117,643 1,224,167 597,796
cash flow from investment
activity -86,852 -670,531 -521,607 24,502
cash flow from finance activity -1,052,671 -489,842 -1,148,415 -408,844
net change in cash flow -42,289 -42,730 -445,855 276,060
add : cash and banks beginning
year 347,718 390,447 836,302 560,242
add : cash and banks ending
year 305,429 347,718 390,447 836,302

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 From the above table , the company can generate cash flow
from operating activity by stable and good way , and cash flow
from financing activity it shows by mince (cash out flow)
which mean is good because the company it is expansion and
investing , and cash flow from financing either shows by mince
(cash out flow) which mean the company pay interest and
dividends to creditor and stock holder .

(B-4) Structure analysis:

The table below shows the capital structure o Al-Ekbal Printing

and Packaging Company.
Table (6)
Liability& Equity 2005 2006 2007 2008
Total Liabilities 0.07 0.31 0.29 0.22
Total Shareholders Equity 0.93 0.69 0.71 0.78
Total Liabilities & Shareholders Equity 1.00 1.00 1.00 1.00
This table the capital structure for the company and show to us
the increase in percent of debt , which mean the company start
finance its project by debt , which is good , because the higher
debt in capital structure make the company take advantages from
pretax expense ,so increase net income –maximize profit- and its
generate higher rate of return equity .

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 (B-5) Ratios Analysis:

(B-5-1) Short -Term Liquidity Ratios:

Table (7)
Short-Term Liquidity Ratios
Ratios 2005 2006 2007 2008 Avg.
Current ratio 8.296 3.530 3.815 3.581 4.806
Acid - test ratio 2.747 1.023 0.946 1.200 1.479
Collection Period 44.521 48.286 35.806 59.996 47.152
Days to sell inventory 237.668 270.433 275.608 222.214 251.481

From table above we note the following:

1- Current Ratio: the current ratio for Al-Ekbal Printing and
Packaging company was (8.296) time in 2005 and if we
compare this ratio with the historical standard of that ratio
(Aug) we found that this ratio is more than the historical
standard so it's almost bad situation which the company must
try to decrease it.
So in 2006, 2007 this ratio was decreased to be (3.530) (3.815)
respectively and this decrease is below the historical standard
(4.806) time that means the current asset could cover the current
liability by (4.81) time approximately. So this company have
surplus about (3.81) JD.
In 2008 this ratio was deceased to be (3.581) time, although it
still less than the historical standard but its good result.
2- Acid –test ratio: in 2005 the acid - test ratio was (2.747)
time and if we compare this result with historical ratio we find

22
that this result is more than the historical standard (1.479) time
but in 2006, 2007, this ratio was decrease to be (1,023),
(0.946), respectively and increase to be (1.200) in 2008 but in
every case it still below the historical standard (1.479).
3- Collection Period: the collection period for this company
was about 45 day in 2005 and this good situation (the lower the
collection period the better the situation), because this ratio is
below it's historical standard (47) day. In 2006 this ratio was
increase to be about (48) day and this value is bad according
the average, but in 2007this ratio decrease to be about (36),
days this result is good situation, but in 2008 the result of this
ratio returned to be bad (about 60 days).
4-Days to sell inventory: the result of this ratio was about
(238) day in 2005, and this result is below it's historical
standard (about 251) day, so this is a good indices. In 2006,
2007 this ratio was increase to be about (270) (276) day
respectively, so the company have to decrease this value. in
2008 this ratio returned to decrease to be about (222) day , and
this result reflect good indices in general.

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 4 Figure

300.000

250.000

acid ratio 200.000

day to sell inventory 150.000

C.R
100.000
coll.period
50.000

0.000
٢٠٠٨ ٢٠٠٧ ٢٠٠٦ ٢٠٠٥

(B-5-2) Capital Structure & Solvency Ratios:

Table (8)
Capital Structure & Solvency Ratios
Ratios 2005 2006 2007 2008 Avg.
Total debt to equity 0.073 0.455 0.417 0.277 0.305
Long-term debt to equity 0.000 0.231 0.227 0.088 0.136
Times interest earned 15.255 4.940 2.844 3.208 6.562
From the table above we note:

1- Total Debt to Equity: the debt burden on this corporation

was about (7.3%) in 2005 and this value is below it's
average (30.5%) so the corporation have to increase this
ratio. In 2006 the debt burden was increase to be (45.5%)
and this increase is above the average. In 2007, 2008 the

24
 debt burden decrease to be (41.7%) and (27.7%)
respectively but the value of 2008 was below the average.
2- Long-Term Debt to Equity: the total long term debt to
equity was zero in 2005 and it increase in 2006 to be (0.231)
and then decrease to be (0.227), (0.088) in 2007, 2008
respectively. and all values are less than the historical
standard (0.136) this indicate that this firm has a few
depend on long term debt to finance it's investment in term
of other companies in the same industry.
3- Time Interest Earned: this company could cover it's dept
by about (15) times in the year 2005 and this value is higher
than the average that about (7) but in 2006, 2007 this value
was decrease to be about (5), (3) respectively so these value
is below the historical standard. In 2008 the ratio was
increase to be (3.208) although this increasing it still below
the average.
5 Figure

16.000
14.000
12.000
10.000
total debt to equity
8.000
long term debt to eaquity
6.000
time interest earned
4.000
2.000
0.000
٢٠٠٨ ٢٠٠٧ ٢٠٠٦ ٢٠٠٥

25
 (B-5-3) Operating Efficiency & Profitability Ratios:
Table (9)
Profitability Ratios
Ratios 2005 2006 2007 2008 Avg.
Return on Assets 0.017 0.026 0.027 0.022 0.023
Return on common equity 0.019 0.038 0.039 0.028 0.031
Gross Profit Margin 0.126 0.185 0.212 0.183 0.177
Operating Profit Margin (pretax) 0.026 0.056 0.067 0.041 0.047
Net Profit Margin 0.028 0.043 0.045 0.033 0.037

From the table above we note:

1- Return on assets: this company increase it's generated
income from it's assets from (0.017) in 2005 to (0.026),
(0.027) in 2006, 2007 respectively and this increase is
above the average (0,23%) but in 2008 the ability of
generating income for this company from it's total assets
decrease to be (0.022) this decrease is around the average
(0.23) in other word it's good result.
2- Return on common equity: this company could generating
income from it's owner equity by (0.019), (0.038), (0.039)
in 2005, 2006, 2007 respectively and this result was above
the historical standard (0.031) but in 2008 this value was
decrease to be less than the historical standard (0.028).
3- Gross profit margin: the gross profit margin for this
company was (12.6%), (18.5%), (21.2%) in the year 2005,
2006, 2007 respectively and this value is above the average
(17.7%) except the value of 2005, in 2008 this ratio

26
 decrease to be (18.3%) but also it still above the average, so
this is perfect situation.
4- Operating profit margin (pre tax): this ratio was increase
from (2.6%) in 2005 to (5.6 %) (6.7%) in 2006, 2007
respectively but in 2008 it was decrease to be (4.1%), but
although this decrease it still around the average (4.7%).
5- Net profit margin: this ratio was increase from (2.8%) in
2005 to (4.3%) (4.5%) in 2006, 2007, respectively but in
2008 it was decrease to be (3.3) and this ratio is around the
average (3.7%) so…(good situation).

Figure 6

0.250

0.200
ROA
ROE 0.150

GPM
0.100
NPM
OPM 0.050

0.000
٢٠٠٨ ٢٠٠٧ ٢٠٠٦ ٢٠٠٥

27
 Table (10)
Activity Ratios

2005 2006 2007 2008 Avg.

Cash Turn Over 7.157 14.135 15.285 17.420 13.499
A/R Turn Over 8.086 7.456 10.054 6.000 7.899
Inv. Turn Over 1.734 1.634 1.657 1.984 1.752
T.A Turn Over 0.618 0.611 0.611 0.663 0.626
W.C Turn Over 1.319 1.619 1.689 1.830 1.614
PPE Turn Over 1.371 1.322 1.238 1.369 1.325

From the table above we note:

1- Cash Turn Over: the efficiency of the firm in utilizing it's
cash was about (7.16) time in 2005 and this vale is less than
the average (about 13.5), in 2006, 2007, 2008 the efficiency
of the firm in utilizing it's cash increase in high percentage
to be about (14.14), (15.29), (17.42) in 2006, 2007, 2008
respectively so this firm increase it's efficiency.
2- A/R Turn Over: this ratio was (8.086) in 2005 and it's
above the average (7.899) but in 2006, this ratio was
decreased to be (7.456) which is less than the average. in
2007 it was increase to be (10.054) so it's become above the
average (7.899) and then it's good result, but in 2008 it
decrease to be less than the average (6), so this company has
to increase this value.
3- Inventory Turn Over: the ability of the firm in generating
sales from it's inventories was (1.734) in 2005 (around the
average (1.752) but the ability of the firm in generating
sales from it's inventories was decrease to be (1.634), in
28
 2006, but in 2007, 2008 this value was increase to be
(1.657), (1.984) in 2007, 2008 respectively. So the company
improve its policy.
4- Total Asset Turn Over: the ability of the firm in
generating it's sales from it's total asset was (0.618) in 2005
and this ability decrease to be (0.611), in 2006, 2007, but in
2008 this value increase to be (0.663) so it's higher than the
average (0.626) and this result is good.
5- Working Capital Turn Over: this ratio was increase from
(1.319) in 2005 to be above the average that is (1.614), and
these value are (1.619), (1.689), (1.830) in 2006, 2007, 2008
respectively. So good result was being.
6- PPE Turn Over: this ratio was decrease from (1.371) in
2005, to be (1.322), (1.238), in 2006, 2007, respectively.
But in 2008 this value was increase to be above the average
(1.325) So this company increase its sales from using fixed
assets.

29
 Figure 7

18.000
16.000
Cash T.O 14.000

A/R T.O 12.000

10.000
PPT T.O
8.000
Inventory T.O
6.000
W.C T.O
4.000
T.A T.O 2.000
0.000
٢٠٠٨ ٢٠٠٧ ٢٠٠٦ ٢٠٠٥

(B-5-4) Market Ratios:

Table (11)
Market Ratios
Ratios 2005 2006 2007 2008 Avg.
EPS 0.086 0.035 0.035 0.076 0.058
P/E 54.962 26.563 36.872 26.628 36.256
Ear. yield 0.018 0.038 0.027 0.038 0.030
Div. yield 0.000 0.056 0.000 0.000 0.014
Div. payout 0.000 1.476 0.000 0.000 0.369
P/B 1.019 1.015 1.434 0.740 1.052

From the table above we note:

1- Earning Per Share (EPS): this ratio was decrease from
(0.086) in 2005 to (0.035) in 2006, 2007 and the value of
this decrease was below than the average (0.058) but after
that it was increase to be (0.076) in 2008, so it became

30
 above the average (0.058) and this result is a benefit to the
stockholders.
2- Price to Earning: this ratio was about (54.96) in 2005 so it
higher than the average (about 36.26) after that it was
decrease to be (26.56) in 2006, and then increase to be
above the average (36.87) in 2007 but in 2008 it was
decrease to be below the average (36.25).
3- Earning Yield: the earning yield for this company was
(0.018) in 2005 and increase in 2006 to be (0.038),but it
decrease to be (0.027) in 2007, and increase to be (0.038) in
2008. So this value is above the average (0.030) and it's
reflect good situation.
4- Dividend Yield: this ratio still zero in 2005, 2007, and 2008
and in 2006 it was (0.056). The average was (0.014). so this
company have to increase this ratio.
5- Dividend Pay Out: this ratio still zero in 2005, 2007, and
2008 and in 2006 it was (1.476). The average was (0.369)
so this company has to increase this ratio.
6- Price to Book Value: in 2005 this ratio was (1.019) and it's
below the average (1.052) but it was decrease in 2006 to be
(1.015). in 2007 it was increase to be (1.434), and in 2008 it
return to decrease to be (0.740) and this below the average.

31
 8 Figure

60.000

50.000
EPS
P/E 40.000

Earning Yeild 30.000

div. yeild
20.000
div pay out
price to B.V 10.000

0.000
٢٠٠٨ ٢٠٠٧ ٢٠٠٦ ٢٠٠٥

( B-6 ) Comparison with industry competitors:

Table (12)
The industrial standard for Printing and Packaging
Industries
(Short Term Liquidity)
Union Advanced AL-Ekbal Ind. Stan.
Industries Printing
C.R 1.31 3.58 2.44
Acid - ratio 0.44 1.20 0.82
Coll. period 38.77 60.00 49.38
Days-sell inv. 239.84 222.21 231.03

From the table above we note:

- Current Ratio: the industrial standard for the current assets is
(2.44) and the historical standard for AL-Ekbal Printing Company

32
is (4.806) so we find that the current ratio of AL-Ekbal Printing
Company is higher than the current ratio of the industrial standard
so this company has a good and positive liquidity, but it has to
decrease it to benefit from cash investment.
- Acid – Ratio: according to the industrial standard to this ratio
which was (0.82) we find that the historical standard which was
(1.479) is higher than the industrial standard and this indicate a
perfect performance to this company in term of it's competitive
firm the market.
- Collection Period: the industrial standard for this ratio is
(49.38) day while AL-Ekbal Printing Company ratio was (47.15)
day so this result is good according to competitive firms.
- Days Sell Inventory: the industrial standard for this ratio was
about (231) day, but the historical ratio of AL-Ekbal Printing
Company was about (251) day and that indicate a bad
performance for his company according to it's competitive firms
in the market, so this company has to decrease this ratio.

33
 Table (13)
The industrial standard for Printing and Packaging
Industries
(Capital Structure. & L.T Solvency.)
Union Advanced AL-Ekbal Ind. Stan.
Industries Printing
D/E 1.15 0.28 0.72
L. D / E 0.40 0.09 0.24
Time I . earned 4.78 3.21 3.99

From the table above we note:

- Debt to Equity Ratio: the industrial standard for this ratio is
equal to (72%) and the historical ratio is (30.5%) so this company
is less depended on debt than it's competitive.
- Long term debt to equity: the industrial standard for this ratio
was (24%) and the historical standard for AL-Ekbal Printing
Company was (13.6%), and this is a good value according to the
market.
- Time Interest Earned: the industrial standard for this ratio
was about (4) times and for the AL-Ekbal Printing Company it
was about (7) times so this company has perfect indices according
to the market.

34
 Table (14)
The industrial standard for Printing and Packaging
Industries
(Operating Efficiency & Profitability)
Union Advanced AL-Ekbal Ind. Stan.
Industries Printing
ROA 10.93 3.38 7.15
ROE 17.75 2.78 10.26
GPM 32.94 18.33 25.64
OPM 28.02 5.83 16.93
NPM 17.99 3.28 10.64

From the table above we note:

- Return on assets: the industrial standard for this ratio was

about (7.15) and for the AL-Ekbal Printing Company the
historical ratio was about (2%) and so this ratio is very low
according to competitive companies and AL-Ekbal Printing
Company has to increase it.
- Return equity : the industrial standard for this ratio was
(10.26) but for AL-Ekbal Printing Company the historical
ratio was about (3%) and we can not make a judgments
about this result because this related to the policy of the
company.
-Gross Profit Margin: the industrial standard for this ratio
was about (26%) but for the AL-Ekbal Printing Company
the historical standard was (17.7%) so this ratio is less
efficient in the AL-Ekbal Printing Company than the
competitive companies.

35
 - Operating Profit Margin: the industrial standard for this
ratio was about (17%) and for the AL-Ekbal Printing
Company it was about (5%) so this company has bad
performance in generating profit.
- Net Profit Margin: the industrial standard for this ratio
was about (11%) but for the AL-Ekbal Printing Company it
was equal to (4.7%) so this ratio is bad for the AL-Ekbal
Printing Company.

Table (15)
The industrial standard for Printing and Packaging
Industries
(Market Ratios)
Union Advanced AL-Ekbal Ind. Stan.
Industries Printing
EPS 0.41 0.03 0.22
P/E 6.15 26.63 16.39
Ear. yield 0.03 0.04 0.03
Div. yield 6.00 0.00 3.00
Div. payout 1.90 0.00 0.95
P/B 1.09 0.74 0.92

From the table above we note:

- Earning per share: the industrial standard for this ratio was
(0.22) and for the AL-Ekbal Printing Company it's has historical
ratio about (6%) so the stock holders in this company receive
earning more than the stock holders in other competitive firms on
the market.

36
- Price to earning: the industrial standard for this ratio was about
(12.30) and for AL-Ekbal Printing Company the historical ratio
was (929.71) so there is very difference between tow ratio behalf
to the AL-Ekbal Printing Company.
- Earning yield: the industrial standard for his ratio was
(16.39%) and for the AL-Ekbal Printing Company it was about
(36.25%) so this ratio behalf the AL-Ekbal Printing Company.
- Dividend yield: the industrial standard for this ratio is (0.95)
and for the AL-Ekbal Printing Company it was (0.014) so this
company did not have high dividend according to the market.
- Price to book value: the industrial standard for this ratio was
(0.92) and the historical ratio for AL-Ekbal Printing Company
was (1.052) so this ratio is good according to the competitive
companies ratio in the market.

37
 Table (16)
The industrial standard for Printing and Packaging
Industries
(Activity Ratios)
Union Advanced AL-Ekbal Ind. Stan.
Industries Printing
Cash Turn Over 737.28 17.42 377.35
A/R Turn Over 9.29 6.00 7.64
Inv. Turn Over 1.50 1.98 1.74
T.A Turn Over 0.46 0.66 0.56
W.C Turn Over 4.26 1.83 3.04
PPE Turn Over 0.90 1.37 1.13

From the table above we note:

- Cash Turn Over: the industrial standard for this ratio was
( 377.35) time, but for the AL-Ekbal Printing Company it's
historical standard was about (13.5) time so it's better for
this company to increase this ratio.
- A/ R turn over: the industrial standard for this firm was
about (8) time and for the AL-Ekbal Printing Company it
was also about (8) so this company's activity is near to the
market.
- Inventory turn over: the industrial standard for this ratio
was about (1.7) time and for AL-Ekbal Printing Company it
was about (1.8) time and so this company's activity is near
to the market.
- Total Asset Turn Over: the industrial standard for his
ratio was about (0.6) and for the AL-Ekbal Printing
Company it was also about (0.6) so this company's activity
is near to the market.

38
- Working capital turn over: the industrial standard for
this ratio was about (3) but for the AL-Ekbal Printing
Company it was positive and about (1.61) so this indicate a
bad performance for this company according to it's
competitive companies in the market.
- PPE Turn Over: the industrial standard for his ratio was
(1.13), and this value is above the historical standard of AL-
Ekbal Printing Company, which was (1.05), so this
company has to try to increase this ratio.

39
Results and Recommendations’ :
1 - The company have problem with liquidity because Current
ratio is too high when we compared with historical standard ,
industrial standard and competitor standard ( Union Advanced
Industries ) . the company should decrease it through more
investment in fixed assets because its more profitable assets .
2 - The company have a problem with collect its receivable
because it is takes too much time to collect its debt . it should
mad more restriction about the credit on sales and improve
collection department ).
3 - The company have littlie debt in its capital structure
component . which is make it lose the advantages from debt like
(pretax deduction , higher rate of return on equity , creditor have
no control on the company and increase time interest earned ) .
so I advice him to finance future project by debt .
4 - The company have problem with managing its assets because
the return on its assets it is very littlie when we compared with
historical standard , industrial standard and competitor standard
( Union Advanced Industries ) . so the company should increase
its profit by finding new market and customers, not just depend
little numbers from customers .
5 - The cost of goods sold is too high when we compared with
sales , which mean little percentage of profit margin . so I advice
him to seek a new market for material and don’t depend on 2
main suppliers .

40
From all previous result and recommendations , I observe bad
performance of management with little development and
improvement in manage its assts compared with its competitor (
Union Advanced Industries ) which reflected in the big
difference of stock prices to both companies .

Figure 9

4
3.5
3 Al-Ekbal
2.5 Printing And
Packaging
2
Union
1.5 Advanced
1 Industries
0.5
0
2008 2007 2006 2005

41
References :

1 – Annual Report Of Al-Ekbal Printing And Packaging for

years ( 2005 – 2008 ) .
2 – Companies' Guide for Jordanian market for years ( 2005 –
2008 ) .
3 – Some Statistic about Al-Ekbal Printing And Packaging on
the web sit : www.moubasher.info .
4 - Some Statistic about Al-Ekbal Printing And Packaging on
the web sit : www.ase.org
5 – Excel Files by stock prices at the end of each month from
year ( 2005 – 2008 ) .
6 – K.R Suberamanyam And John.Wild , Financial Statement
Analysis ,10th , Mc Graw Hill -usa- 2009 .
7 – Gibson ,c.h , financial reporting and analysis : uses financial
accounting information , 11th , western college publishing -usa-
2009 .

42