Description
In the summer of 1895, Tomáš found himself facing financial difficulties, and debts abounded. To overcome these serious setbacks, Tomáš decided to sew shoes from canvas instead of leather. This type of shoe became very popular and helped the company grow to 50 employees.
Financial Project Report on Bata
Bata Ratio Analysis Bata Pakistan Limited
Brief Introduction Bata Pakistan Limited is incorporated in Pakistan as a Public Limited company and is engaged in the manufacturing of footwear. Bata Pakistan Limited having its registered office at BATA, G.T. Road Lahore and factories at Maraka, Multan Road Lahore and Bata Lahore with its Liaison office at Mai Kolachi Bypass, Karachi. It is also listed on Karachi and Lahore Stock Exchanges. Their vision is to grow as dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture an d environment in which we operate. Bata Pakistan Limited is a public limited company incorporated in Pakistan and is quoted on Lahore and Karachi stock exchanges. The company is engaged mainly in manufacturing and sale of footwear of all kinds.
Vision
To grow as dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture and environment in which we operate.
Mission
To be successful as the most dynamic, flexible and market responsive organization, with footwear as its core business.
Current State of Entity
This year, overall sales turnover grew by 12% for the year, despite a very poor first quarter and negative effect of the earthquake in the last quarter. The sales growth came predominantly from the retail division which managed to achieve a very creditable growth
of 17% in sales. The performance in the very important last quarter was particularly impressive with sales growing 30% over the corresponding period of year. During 2005 they opened a total of 15 new retail stores including new flagship “City” store on MM Alam Road in Lahore. The results from this large format upgraded store have been extremely positive and apart from additional turnover generated, this store plus the four other newly opened city concept stores have done much for enhancing the image of Bata brand. The operating profit for the year was Rs. 184.5 million which was only marginally better than previous year due to higher expenses. Profit before tax amounted to Rs. 128.5 million compared to Rs. 178.2 million the previous year. Directors have decided to recommend a final cash dividend at 40% for 2005. The sum of Rs. 53 million is being transferred to general reserves. At the end of fiscal year, the total number of employees in all divisions numbered 3226 which was 39 fewer than at the end of year 2004.
Product
Obviously Bata Pakistan’s products are footwear.
Target Customer
Footwear for children, young, old, male & female is the target customers for Bata Pakistan.
Target Market
The target market for Bata Pakistan is the whole Pakistan market.
Analysis Tools Financial analyses are basic techniques used by investors and managers to analyze basic financial statements. These analysis are generally begins with the calculation of a set of financial ratios designed to reveal the relative strengths and weaknesses of a company with other companies in the same industry and to show whether to company’s position has been improving or deteriorating over time.
These analyses are also helpful for the future planning. We can say that these analyses provide a sound base for making future planning. For example these financial analyses can be used for:
Ø Innovation of new products. Ø Determines the interest rates at which money should be borrowed. Ø Reducing the continue losses by making effective planning. Ø Determines the strength of the firm to pay it’s debt as well as its fix cost. Ø Gives the information about the wealth of owner.
Ratio analyses has limitations, but used with care and judgment can be most helpful.
Actual Balance Sheet (As At Dec 31st 2005)
2005 CAPITAL AND RESERVES
2004
Authorize d capital 1000000 0 ordinary shares of Rs. 10 100,000,0 100,000,0 each 00 00 Issued subscribe d and paid up 75,600,00 75,600,00 capital 0 0 Reserves & Surplus Capital reserve 483,000 483,000 General 510,000, 457,000, Reserve 000 000 Unappropri 32,099,0 ated profit 00 12,523,000 542,582,0 470,006,0 00 00
SHAREHOLD ERS' EQUITY DEFERRED LIABILITIES
618,182,0 00
545,606,0 00
Provision for gratuity
LONG TERM DEPOSITES CURRENT LIABILITES
67,836,0 00 20,467,00 0 19,361,000
66,322,000
Trade and other payables Mark-up Accrued Short term borrowin gs Provision for taxation
431,112,0 00 8,607,00 0
448,462,00 0 2,196,00 0
215,766, 000 3,211,00 0 658,696, 000
168,564,00 0
24,397,000 643,619,0 00
Contingent Liabilities & Capital
Commitme nts
FIXED CAPITAL EXPENDITU RE Operating fixed assets-
1,365,181, 000
1,274,908, 000
282,645,0 00
266,487,0 00
tangible -intangible 1,295,000 283,940,0 00 2,589,000 269,076,0 00
LONG TERM INVESTMEN TS LONG TERM DEPOSITS AND PREPAYMEN 31,672,0 00 TS DEFERED TAXATION CURRENT ASSETS
20,467,00 0
19,361,000
21,906,00 0 9,925,00 0 3,508,000
Stores and 29,998,0 37,922,0 spares 00 00 Stock in 606,765, 541,247,0 trade 000 00 trade 317,722,0 314,364,0 debts 00 00 Loan and 4,234,00 advances 691,000 0 Deposits, short term prepaym ents and other receivabl 28,953,00 22,803,00 es 0 0 Cash and bank 35,048,0 balance 00 40,487,000 1,019,177, 961,057,0 000 00
1,365,181, 1,274,908, 000 000 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2005 2005 2004 Rs. '000s Rs. '000s NET SALES 2,543,344 2,279,556 COST OF SALES 1,605,938 1,443,722 GROSS PROFIT 937,406 835,834 OPERATING EXPENSES Selling and distribution 542,283 462,070 Administrative 210,654 190,186 752,937 652,256 OPERATING PROFIT 184,469 183,578 FINANCE COST 40,087 19,877 144,382 163,701 OTHER INCOME 2,784 28,807 PROFIT FOR THE YEAR 147,166 192,508 OTHER OPERATING EXPENSES 18,631 14,311 PROFIT BEFORE TAXATION 128,535 178,197 PROVISION FOR TAXATION Current 54,402 60,562 Prior years (3,366) (2,539) Deferred (6,417) (1,698) 44,619 56,325 PROFIT AFTER TAXATION 83,916 121,872
EARNING PER SHARE Rs. 11.10 Rs. 16.12 Cash Flow Statement for the year ended December 31, 2005 2005
2004
Rs.'000s Rs.'000s CASH FLOW FROM OPERATING ACTIVITIES Profit Before Taxation Adjustment For Non Cash Charges And Other Items: Depreciation Amortization 1,294 Provision For Gratuity Profit On Fixes Assets Sold And Scrapped Finance Cost 128,535 178,197
39,657 1,295 4,547 (1,360) 40,087 84,225
29,273 5,915 (24,347) 19,228 31,368
Operating Profit Before Working Capital Changes 212,760 209,565 Net Changes In Operating Assets And Liabilities (92,367) Financing Cost Paid Income Taxes Paid Gratuity Paid Net Cash Generated From Operating Activities 14,260 CASH FLOW FROM INVESTING ACTIVITIES Purchase Of Fixed Assets - Tangible Purchase Of Fixed Assets Sold Increase In Long Term Investments Net Cash Used In
(26,753) (33,676) (18,807) (69,424) (57,375) (3,033) (1,802)
104,828
(57,689) (44,218) 3,234 24,951
(1,106) (648) (55,561) (19,915)
Investing Activities CASH FLOW FROM FINANCING ACTIVITIES Change In Short Term Borrowings Dividend Paid Net Cash Provided / (Used In) Financing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENT AT END OF YEAR Statement for Sources & Uses Items Changes All Capital & Reserve Provision For Gratuity Long Term Deposit Trade & Other Payables Markup Accrued Short Term Borrowings Provision For Taxation Operating Fixed Assets Tangible & Intangible Long Term Investment Long Term Deposit & Prepayments Deferred Taxation Stores And Spares Stock In Trade Trade Debts Loans And Advances Receivables 72,576 1,514 1,106 (17,350) 6,411 47,202 (21,186) 47,202 (48,734) (11,340) (52,920)
35,862
(101,654)
(5,439)
(16,741)
40,487
57,228
35,048 Sources 72,576 1,514 1,106 17,350 6,411 47,202 21,186 Uses
40,487
14,864 1,106 9,766 6,417 (7,924) 65,518 3,358 (3,543) 6,150
14,864 1,106 9,766 6,417 7,924 65,518 3,358 3,543 6,150
Cash And Bank Balance
(5,439)
5,439
Total 145,715 145,715 CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2005 Rs. 000’s CASH FLOWS FROM OPERATING ACTIVITIES Net Profit after Tax. Add: Depreciation Cash Flow from operating Activities Changes in Assets except changes in Cash Stores & Spares Stock in Trade Trade Debts Loans and Advances Deposits & Other Receivables Deferred Taxation Long-term Investments Long-term Deposits & Prepayments Changes in All CL Trade & Other Payables Accrued Mark-up Provision for Taxation Provision for Gratuity 83,916 39,657 123,573
7,924 (65,518) (3,358) 3,543 (6,150) (6,417) 1,106 (9,766) (17,350) 6,411 (21,186) 1,514 NET CASH FROM OPERATING ACTIVITIES
14,326
14,326
CASH FLOWS FROM INVESTING ACTIVITIES Additions in Fixed Assets Disposals of Fixed Assets (Tangible) Disposals of Fixed Assets (In-tangible)
(57,689) 1,874 1,294
Increase in Long-term Investments
(1,106) NET CASH USED BY INVESTING ACTIVITIES (55,627) (55,627)
CASH FLOWS FROM FINANCING ACTIVITIES Increase in Short-term Borrowings Dividend Paid NET CASH FROM FINANCING ACTIVITIES
47,202 (11,340)
TOTAL CHANGE IN CASH Verification CASH AT THE BEGINING OF THE YEAR 40,487 CASH AT THE END OF THE YEAR 35,048 RATIO ANALYSIS OF BATA PAKISTAN LIMITED 2005 There are five ratios: 1. 2. 3. 4. 5. Liquidity Ratios Activity Ratios Leverage Ratios Profitability Ratios Marketability Ratios
35,862 35,862 (5,439)
We will discuss all of above thoroughly in the following area.
1: Liquidity Ratios:
Ø Current Ratio = Current Assets / Current Liabilities Current ratio (2004) = 961057 / 643619 = 1.49 Current ratio (2005) = 1019177 / 658696 =1.54 Ø Quick (Acid Test) Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio (2004) = (961057 - 579169) / 643619 = 0.59 Quick Ratio (2005) = (1019177-636763) / 658696 = 0.58
Ø Net Working Capital Ratio
Net Working Capital = CA – CL if it is positive then we calculates Shrinkage = NWC / CA Net Working Capital (2004) = CA – CL = 961057 – 643619 = 317438 Shrinkage = NWC/ CA = 317438 / 961057 = 33.03% Net Working Capital (2005) = CA- CL = 1019177-658696 = 360481 Shrinkage = NWC / CA = 360481 / 1019177 = 35.36 % Ø Cash to Current Liabilities Ratio = (Cash + C.E) / CL Cash to Current Liabilities Ratio (2004) = 40487 / 643619 =0.0629 =6.29% Cash to Current Liabilities Ratio (2005) = 35048 / 658696 = 5.32% Ø Cash to Total Assets Ratio = (Cash + C.E) / TA Cash to Total Assets Ratio (2004) = 40487 / 1274908 =0.0317 = 3.17% Cash to Total Assets Ratio (2005) = 35048 / 1365181 =0.0256 = 2.56% Interpretation The importance of adequate liquidity in the sense of the ability of a firm to meet current/short-term obligations when they become due for payment can hardly be overstressed. In fact, liquidity is a prerequisite for the very survival of a firm. The short-term creditors of the firm are interested in short-term solvency or liquidity of a firm. Current ratio of company improves from 1.49 to 1.54 which is a good sign and but the Acidtest ratio, at the same time, decrease which is not a good sign. Furthermore Acid-test ratio is just satisfactory because obviously it implies that for every 1 Rs. of liability only Rs. 0.58 available quickly.
Both of the cash ratios of company declines w.r.t previous year. Since keeping all these things into mind we can say that Bata Pakistan limited is not in a very good liquid condition. But it might be the sign that the company is investing more in fixed assets which are more productive as compared to current assets. 2: Activity / Efficiency Ratios: Ø Inventory Turnover = Cost of goods sold / Ending Stock Inventory Inventory turnover ratio (2004) = 2279556 / 579169 = 3.93 times Inventory turnover ratio (2005) = 1605938 / 636763 = 2.52 times i) Average age of Inventory =No. of Working days / Inventory turnover Average age of Inventory (2004) = 360 / 3.93 = 91.6 Average age of Inventory (2005) = 360 / 2.52 =142.85 Ø Average collection Period = Accounts Receivable / Average credit Sales per day Average collection Period (2004) = 314364 / 6332 = 50 days Average collection Period (2005) = 317722 / 7064 = 45 days ii) Accounts Receivable turnover = No. of Working days / Average collection Period Accounts Receivable turnover (2004) = 360 / 50 = 7.2 Accounts Receivable turnover (2005) = 360 / 45 = 8 Ø Average Payment Period = Accounts Payable / Average Credit Purchase per day Average Payment Period (2004) = (448462 x 360) / 753985 = 212.4 Average Payment Period (2005) = (431112 x 360) / 702322 = 219.6 iii) Accounts Payable Turnover = No. of Working days / APP Accounts payable turnover (2004) = 360 / 212.4 =1.69 Accounts payable turnover (2005) = 360 / 219.6 =1.63
Ø Fixed Assets Turn Over Ratios = Sales / Fixed Assets Fixed Assets turn over ratios (2004) = 2279556 / 269076 = 8.47 Fixed Assets turn over ratios (2005) = 2543344 / 283940 = 8.95 Ø Total Assets Turn Over Ratio = Sales / Total Assets Total Assets turn over (2004) = 2279556 / 1274908 = 1.78 Total Assets turn over (2005) = 2543344 / 1365181 = 1.86 Ø Sales To Net Worth Ratio = Sales / Net worth Or SHE Net worth turn over (2004) = 2279556 / 545606 = 4.17 Net worth turn over (2005) = 2543344 / 618182 = 4.11 Interpretation Activity ratios measure the speed with which accounts are converted into sales or cash. The inventory turnover of the company declines as compared to last year which implies that company is not so much active while dealing with its inventory as compared to last year. AAI also raises w.r.t last year which is not a good sign. ACP is a little bit less than last year which is a good sign. APP is less by 5 days as compared to last year. Overall the activity ratios of Bata show that company’s activity has declined as compared to last year. 3: Leverage / Gearing Ratios: Ø Debt ratio = Total Liabilities / Total Assets Debt ratio (2004) = 729302 / 1274908 = 0.572 = 57.2% Debt ratio (2005) = 746999 / 1365181= 0.547 = 54.7% Ø Debt Equity Ratio = Total Debt / Stock holders Equity Debt Equity Ratio (2004) = 0 / 545606 = 0:100 times Debt Equity Ratio (2005) = 0 / 618182 = 0:100 times
Ø Equity Multiplier = Total Assets / Stock holders Equity Equity Multiplier (2004) = 1274908 / 545606 = 2.33 Equity Multiplier (2005) = 1365181 / 618182 = 2.2 Ø Times Interest earned ratio = EBIT / Interest Times Interest earned ratio (2004) = 183578 / 19877 = 9.2 times Times Interest earned ratio (2005) = 184469 / 40087 = 4.6 times Interpretation Company’s debt ratio decreases as compared to last year and debt-equity ratio is 0:100 times which means that company is not using any financing which obviously declines company’s profitability. Since company doesn’t have any long term debts only short term borrowings are being utilized in this year. Times interest earned ratio declines from 9.2 times to 4.6 times which is very bad apparently but in fact it’s because of reduction of debts. 4: Profitability Ratios: Ø Gross Profit Ratio = (Gross Profit / Sales) x 100 Gross profit ratio (2004) = (835834 / 2279556) x 100 = 36.66% Gross profit ratio (2005) = (937406 / 2543344) x 100 = 36.85% Ø Operating Profit Ratio = (Operating profit / Sales) x 100 Operating Profit Ratio (2004) = (183578 / 2279556) x 100 = 8.05% Operating Profit Ratio (2005) = (184469 / 2543344) x 100 = 7.25% Ø Net Profit Ratio = (NPAT / Sales) x 100 Net Profit ratio (2004) = (121872 / 2279556) x 100 = 5.34% Net Profit ratio (2005) = (83916 / 2543344) x 100 = 3.29% Ø Basic Earning Power = (EBIT / TA) x 100 Basic Earning Power (2004) = (183578 / 1274908) x 100 = 14.39%
Basic Earning Power (2005) = (184469 / 1365181) x 100 = 13.51% Ø Return on Assets = (NPAT / TA) x 100 Return on Assets (2004) = (121872 / 1274908) x 100 =9.5% Return on Assets (2005) = (83916 / 1019177) x 100 = 8.23% Ø Return on Equity = (NPAT / S.H.E) x 100 Return on Equity (2004) = (121872 / 545606) x 100 = 22.33% Return on Equity (2005) = (83916 / 618182) x 100 = 13.57% Interpretation Gross profit ratio is almost same as of the last year but operating profit ratio decrease which show that company increases its operating expenses which is not good. Due to this entire net profit ratio also decreases. Overall firm’s profitability this year is not very good, even, return on equity decreases even by almost 50%. 5: Marketability Ratios: Ø Earning Per Share = (NPAT – Dividend on P.S.) / Outstanding common stock Earning Per Share (2004) = 121872000 / 7560000 = Rs. 16.12 Earning Per Share (2005) = 83916000 / 7560000 = Rs. 11.10 Ø Dividend Per Share = Dividend Paid / Outstanding common stock Dividend per share (2004) = 52920000 / 7560000 = Rs. 7 Dividend per share (2005) = 11340000 / 7560000 = Rs. 1.5 Ø Dividend payout ratio = Dividend per share / Earning per share Dividend payout ratio (2004) = 7 / 16.12 = 0.4342 = 43.42% Dividend payout ratio (2005) = 1.5 / 11.1 = 0.1351 = 13.51%
Ø Flow Back Ratio = (1 – Dividend payout) x 100 Flow Back Ratio (2004) = 56.58% Flow Back Ratio (2005) = 86.49% Ø Dividend Yield = (Dividend per share / Current market price) x 100 Dividend Yield (2004) = 6.34% Dividend Yield (2005) = 4.44% Ø Price Earning Ratio = Current M.P of C.S / EPS Price Earning Ratio (2004) = 4.4 times Price Earning Ratio (2005) = 8.11 times Break up Value per share (2004) = Rs. 72.17 Break up Value per share (2005) = Rs. 81.77 Market Price per share (2004) = Rs. 71 Market Price per share (2005) = Rs. 90 Interpretation It measures the return earned on owner’s investment in the firm. Company’s EPS declines by Rs. 5 which is due to decrease in net profit & a very less amount of profit is paid as dividend this year as compared to last years which is not a good sign with the point of view of investor. Common Statement Analysis In common statement analysis we are having two types of analysis these are given below: 1. Vertical Analysis 2. Horizontal Analysis We will discuss these in the light of Profit & Loss Account as well as Balance Sheet.
Common Statement Analysis Profit And Loss Account Vertical Analysis 2005 Rs. '000s %AGE NET SALES COST OF SALES 1,605,938 63.14 GROSS PROFIT 937,406 36.86 OPERATIN G EXPENSES Selling and distribution 542,283 Administrativ e 210,654 2,543,34 4 100% 1,443,722 835,834 2,279,556 63.33 36.67 2004 Rs. %AG '000s E 100%
462,070 190,186 752,937 29.60 183,578 19,877 144,382 8.05 0.87 163,701 28,807 1.26 652,25 6 28.61
OPERATIN G PROFIT 184,469 FINANCE COST 40,087 OTHER INCOME PROFIT FOR THE YEAR OTHER OPERATIN G EXPENSES PROFIT
7.25 1.58
2,784
0.11
147,166
5.79
192,508
8.44
18,631 128,535
0.73 5.05
14,311 178,197
0.63 7.82
BEFORE TAXATION PROVISION FOR TAXATION Current Prior years Deferred PROFIT AFTER TAXATION 83,916 Horizontal Analysis NET SALES COST OF SALES 2005 GROSS PROFIT 54,402 (3,366) (6,417) 44,619 1.75 (2,539) (1,698) 56,325 2.47 60,562
3.30
121,872
5.35
2004
CHANGE
%AGE CHANGE
2543344000 OPERATIN G EXPENSES 1605938000 937406000 OPERATIN Selling and 54228300 G PROFIT distribution 0 Administrativ 21065400 e 0 FINANCE 75293700 COST 0 184469000 OTHER INCOME 40087000 PROFIT FOR THE 14438200 YEAR 0 2784000 OTHER OPERATIN 147166000
227955600 0 263,788,000 11.57 144372200 0 162,216,000 11.24 835834000 101,572,000 12.15 462070000 190186000 100,681,00 652256000 0 15.44 183578000 891,000 0.49 19877000 20,210,000 101.68
163701000 (26,023,000 28807000 ) (90.34) (45,342,000 192508000 ) (23.55)
G EXPENSES PROFIT BEFORE TAXATION PROVISION FOR TAXATION 18631000 128535000 Current PROFIT AFTER TAXATION Prior years Deferred
4,320,000 30.19 (49,662,000 178197000 ) (27.87) 54402000 60562000
14311000
-3366000
-2539000 -1698000 56325000 (37,956,000 121872000 ) (31.14) (11,706,000 ) (20.78)
Balance Sheet Vertical Analysis 2005 Rs. '000s CAPITAL AND RESERVES Authorize d capital 1000000 0 ordinary shares of Rs. 10 each 100,000 Issued subscribe d and paid up capital 75,600 Reserves & 2004 Rs. %AGE '000s %AGE
100,00 0
5.54% 75,600 5.93%
Surplus Capital reserve 483 General 510,00 Reserve 0 Unappropriat 32,09 ed profit 9 12,523 542,58 2 SHAREHOLDE RS' EQUITY DEFERRED LIABILITIES Provision for gratuity LONG TERM DEPOSITES CURRENT LIABILITES Trade and other payables Mark-up Accrued Short term borrowin gs Provision for taxation 20,467 618,182 45.28% 545,606 42.80% 483 457,00 0
39.74% 470,006 36.87%
67,83 6 4.97%
66,322 5.20%
1.50% 19,361 1.52%
431,11 2 8,607
448,462 2,196
215,76 6
168,564
3,211
24,397 658,69 6 48.25% 1,365,1 81 643,61 9 50.48% 100.00 1,274,90100.00 % 8 %
Balance Sheet Horizontal Analyses 2005 2004 %age Change Chan
ge CAPITAL AND RESERVES Authorized capital 10000000 ordinary shares of 100,000,0 100,000, Rs. 10 each 00 000 Issued subscribed and paid 75,600,00 up capital 0 75,600,0000.00% Reserves & Surplus Capital reserve 483,000 483,000 General 510,000,0 457,000,0 Reserve 00 00 Unappropri 32,099,00 ated profit 0 12,523,000 542,582,0 470,006,0 72,576,0 15.44 00 00 00 % SHAREHOLD 618,182,0 545,606,00 ERS' EQUITY 00 0 72,576,000 13.30% DEFERRED LIABILITIES Provision 67,836,00 for gratuity 0 66,322,000 1,514,000 2.28% LONG TERM 20,467,0 DEPOSITES 00 19,361,000 1,106,000 5.71% CURRENT LIABILITES Trade and other 431,112,00 448,462,00 payables 0 0 Mark-up Accrued 8,607,000 2,196,000 Short term 215,766,0 168,564,00 borrowings 00 0
Provision for taxation 3,211,000 658,696,0 00
24,397,000 643,619,00 0 15,077,000 2.34% 1,365,181, 1,274,908, 000 000
FIXED CAPITAL EXPENDITU RE Operating fixed 282,645, assets-tangible 000
266,487,00 0 -intangible 1,295,000 283,940,0 00
2,589,000 269,076,0 14,864,0 00 00 5.52%
LONG TERM INVESTMENT20,467,0 S 00 19,361,000 LONG TERM DEPOSITS AND PREPAYMEN 31,672,00 TS 0 21,906,000 DEFERED 9,925,00 TAXATION 0 3,508,000 CURRENT ASSETS Stores and 29,998,00 spares 0 Stock in 606,765,0 trade 00 317,722,0 trade debts 00 Loan and advances 691,000 Deposits, short term prepaymen ts and 28,953,00 other 0
1,106,000 5.71%
9,766,000 44.58% 6,417,000 182.92%
37,922,000 541,247,00 0 314,364,00 0 4,234,000
22,803,00 0
receivables Cash and bank 35,048,00 balance 0 1,019,177, 000 1,365,181, 000 Answers to Analytical Questions
40,487,000 961,057,00 58,120,0 0 00 6.05% 1,274,908, 000
Q#1: Would you like to invest as an equity investor in this company? Ans. NO I don’t like to invest in Bata Pakistan Limited because its current year Because Þ Result of activity ratios for this year is not very good Þ Company didn’t handle operating expenses in good manner for this year Þ Its EPS declines By Rs. 5 this year Þ Only 0.4% dividend is given in this year Q#2: would you like to extend a long-term loan to this company? Ans. Yes, I would like to extend long term loan to the company because Þ Company’s times interest earned ratio is satisfactory Þ It has a good reputation in market Þ Its debt ratio decreases this year Þ Its debt equity ratio is 0:100 times i.e. currently it is not using any long term financing Þ Company is continuously growing from last many years only this year its performance in a bit low because of earthquake otherwise it has very good growth in previous years. Q#3: would you like to extend a short-term loan to Bata? Ans. Yes, I would like to extend short term loan to the company because Þ Company’s liquidity ratios yield sufficient results
Þ It has a good reputation in market Þ No risk involved Þ Its activity ratios are very satisfactory in previous years Þ Its debt ratio decreases this year Þ Its cash flows are satisfactory for this year Þ Its debt equity ratio is 0:100 times i.e currently it is not using any long term financing. Q # 4 Suppose you are existing owner of Bata Pakistan how do you find it? Ans. To be an existing owner of Bata Pakistan I really would like to improve some of its features like customer service etc. Conclusion I really enjoyed so much while preparing this report. It’s really very useful for me in my professional career. Thanks God I have finished it. I think Bata should try to reduce its operating expenses and furthermore think about its activity ratios it is more important for them. And the fact that I want to say here again Bata’s performance in previous years was very good, in this year company has to bear some losses and make some improvements due to which its performance looks not so attractive this year.
doc_188520992.docx
In the summer of 1895, Tomáš found himself facing financial difficulties, and debts abounded. To overcome these serious setbacks, Tomáš decided to sew shoes from canvas instead of leather. This type of shoe became very popular and helped the company grow to 50 employees.
Financial Project Report on Bata
Bata Ratio Analysis Bata Pakistan Limited
Brief Introduction Bata Pakistan Limited is incorporated in Pakistan as a Public Limited company and is engaged in the manufacturing of footwear. Bata Pakistan Limited having its registered office at BATA, G.T. Road Lahore and factories at Maraka, Multan Road Lahore and Bata Lahore with its Liaison office at Mai Kolachi Bypass, Karachi. It is also listed on Karachi and Lahore Stock Exchanges. Their vision is to grow as dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture an d environment in which we operate. Bata Pakistan Limited is a public limited company incorporated in Pakistan and is quoted on Lahore and Karachi stock exchanges. The company is engaged mainly in manufacturing and sale of footwear of all kinds.
Vision
To grow as dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture and environment in which we operate.
Mission
To be successful as the most dynamic, flexible and market responsive organization, with footwear as its core business.
Current State of Entity
This year, overall sales turnover grew by 12% for the year, despite a very poor first quarter and negative effect of the earthquake in the last quarter. The sales growth came predominantly from the retail division which managed to achieve a very creditable growth
of 17% in sales. The performance in the very important last quarter was particularly impressive with sales growing 30% over the corresponding period of year. During 2005 they opened a total of 15 new retail stores including new flagship “City” store on MM Alam Road in Lahore. The results from this large format upgraded store have been extremely positive and apart from additional turnover generated, this store plus the four other newly opened city concept stores have done much for enhancing the image of Bata brand. The operating profit for the year was Rs. 184.5 million which was only marginally better than previous year due to higher expenses. Profit before tax amounted to Rs. 128.5 million compared to Rs. 178.2 million the previous year. Directors have decided to recommend a final cash dividend at 40% for 2005. The sum of Rs. 53 million is being transferred to general reserves. At the end of fiscal year, the total number of employees in all divisions numbered 3226 which was 39 fewer than at the end of year 2004.
Product
Obviously Bata Pakistan’s products are footwear.
Target Customer
Footwear for children, young, old, male & female is the target customers for Bata Pakistan.
Target Market
The target market for Bata Pakistan is the whole Pakistan market.
Analysis Tools Financial analyses are basic techniques used by investors and managers to analyze basic financial statements. These analysis are generally begins with the calculation of a set of financial ratios designed to reveal the relative strengths and weaknesses of a company with other companies in the same industry and to show whether to company’s position has been improving or deteriorating over time.
These analyses are also helpful for the future planning. We can say that these analyses provide a sound base for making future planning. For example these financial analyses can be used for:
Ø Innovation of new products. Ø Determines the interest rates at which money should be borrowed. Ø Reducing the continue losses by making effective planning. Ø Determines the strength of the firm to pay it’s debt as well as its fix cost. Ø Gives the information about the wealth of owner.
Ratio analyses has limitations, but used with care and judgment can be most helpful.
Actual Balance Sheet (As At Dec 31st 2005)
2005 CAPITAL AND RESERVES
2004
Authorize d capital 1000000 0 ordinary shares of Rs. 10 100,000,0 100,000,0 each 00 00 Issued subscribe d and paid up 75,600,00 75,600,00 capital 0 0 Reserves & Surplus Capital reserve 483,000 483,000 General 510,000, 457,000, Reserve 000 000 Unappropri 32,099,0 ated profit 00 12,523,000 542,582,0 470,006,0 00 00
SHAREHOLD ERS' EQUITY DEFERRED LIABILITIES
618,182,0 00
545,606,0 00
Provision for gratuity
LONG TERM DEPOSITES CURRENT LIABILITES
67,836,0 00 20,467,00 0 19,361,000
66,322,000
Trade and other payables Mark-up Accrued Short term borrowin gs Provision for taxation
431,112,0 00 8,607,00 0
448,462,00 0 2,196,00 0
215,766, 000 3,211,00 0 658,696, 000
168,564,00 0
24,397,000 643,619,0 00
Contingent Liabilities & Capital
Commitme nts
FIXED CAPITAL EXPENDITU RE Operating fixed assets-
1,365,181, 000
1,274,908, 000
282,645,0 00
266,487,0 00
tangible -intangible 1,295,000 283,940,0 00 2,589,000 269,076,0 00
LONG TERM INVESTMEN TS LONG TERM DEPOSITS AND PREPAYMEN 31,672,0 00 TS DEFERED TAXATION CURRENT ASSETS
20,467,00 0
19,361,000
21,906,00 0 9,925,00 0 3,508,000
Stores and 29,998,0 37,922,0 spares 00 00 Stock in 606,765, 541,247,0 trade 000 00 trade 317,722,0 314,364,0 debts 00 00 Loan and 4,234,00 advances 691,000 0 Deposits, short term prepaym ents and other receivabl 28,953,00 22,803,00 es 0 0 Cash and bank 35,048,0 balance 00 40,487,000 1,019,177, 961,057,0 000 00
1,365,181, 1,274,908, 000 000 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2005 2005 2004 Rs. '000s Rs. '000s NET SALES 2,543,344 2,279,556 COST OF SALES 1,605,938 1,443,722 GROSS PROFIT 937,406 835,834 OPERATING EXPENSES Selling and distribution 542,283 462,070 Administrative 210,654 190,186 752,937 652,256 OPERATING PROFIT 184,469 183,578 FINANCE COST 40,087 19,877 144,382 163,701 OTHER INCOME 2,784 28,807 PROFIT FOR THE YEAR 147,166 192,508 OTHER OPERATING EXPENSES 18,631 14,311 PROFIT BEFORE TAXATION 128,535 178,197 PROVISION FOR TAXATION Current 54,402 60,562 Prior years (3,366) (2,539) Deferred (6,417) (1,698) 44,619 56,325 PROFIT AFTER TAXATION 83,916 121,872
EARNING PER SHARE Rs. 11.10 Rs. 16.12 Cash Flow Statement for the year ended December 31, 2005 2005
2004
Rs.'000s Rs.'000s CASH FLOW FROM OPERATING ACTIVITIES Profit Before Taxation Adjustment For Non Cash Charges And Other Items: Depreciation Amortization 1,294 Provision For Gratuity Profit On Fixes Assets Sold And Scrapped Finance Cost 128,535 178,197
39,657 1,295 4,547 (1,360) 40,087 84,225
29,273 5,915 (24,347) 19,228 31,368
Operating Profit Before Working Capital Changes 212,760 209,565 Net Changes In Operating Assets And Liabilities (92,367) Financing Cost Paid Income Taxes Paid Gratuity Paid Net Cash Generated From Operating Activities 14,260 CASH FLOW FROM INVESTING ACTIVITIES Purchase Of Fixed Assets - Tangible Purchase Of Fixed Assets Sold Increase In Long Term Investments Net Cash Used In
(26,753) (33,676) (18,807) (69,424) (57,375) (3,033) (1,802)
104,828
(57,689) (44,218) 3,234 24,951
(1,106) (648) (55,561) (19,915)
Investing Activities CASH FLOW FROM FINANCING ACTIVITIES Change In Short Term Borrowings Dividend Paid Net Cash Provided / (Used In) Financing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENT AT END OF YEAR Statement for Sources & Uses Items Changes All Capital & Reserve Provision For Gratuity Long Term Deposit Trade & Other Payables Markup Accrued Short Term Borrowings Provision For Taxation Operating Fixed Assets Tangible & Intangible Long Term Investment Long Term Deposit & Prepayments Deferred Taxation Stores And Spares Stock In Trade Trade Debts Loans And Advances Receivables 72,576 1,514 1,106 (17,350) 6,411 47,202 (21,186) 47,202 (48,734) (11,340) (52,920)
35,862
(101,654)
(5,439)
(16,741)
40,487
57,228
35,048 Sources 72,576 1,514 1,106 17,350 6,411 47,202 21,186 Uses
40,487
14,864 1,106 9,766 6,417 (7,924) 65,518 3,358 (3,543) 6,150
14,864 1,106 9,766 6,417 7,924 65,518 3,358 3,543 6,150
Cash And Bank Balance
(5,439)
5,439
Total 145,715 145,715 CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2005 Rs. 000’s CASH FLOWS FROM OPERATING ACTIVITIES Net Profit after Tax. Add: Depreciation Cash Flow from operating Activities Changes in Assets except changes in Cash Stores & Spares Stock in Trade Trade Debts Loans and Advances Deposits & Other Receivables Deferred Taxation Long-term Investments Long-term Deposits & Prepayments Changes in All CL Trade & Other Payables Accrued Mark-up Provision for Taxation Provision for Gratuity 83,916 39,657 123,573
7,924 (65,518) (3,358) 3,543 (6,150) (6,417) 1,106 (9,766) (17,350) 6,411 (21,186) 1,514 NET CASH FROM OPERATING ACTIVITIES
14,326
14,326
CASH FLOWS FROM INVESTING ACTIVITIES Additions in Fixed Assets Disposals of Fixed Assets (Tangible) Disposals of Fixed Assets (In-tangible)
(57,689) 1,874 1,294
Increase in Long-term Investments
(1,106) NET CASH USED BY INVESTING ACTIVITIES (55,627) (55,627)
CASH FLOWS FROM FINANCING ACTIVITIES Increase in Short-term Borrowings Dividend Paid NET CASH FROM FINANCING ACTIVITIES
47,202 (11,340)
TOTAL CHANGE IN CASH Verification CASH AT THE BEGINING OF THE YEAR 40,487 CASH AT THE END OF THE YEAR 35,048 RATIO ANALYSIS OF BATA PAKISTAN LIMITED 2005 There are five ratios: 1. 2. 3. 4. 5. Liquidity Ratios Activity Ratios Leverage Ratios Profitability Ratios Marketability Ratios
35,862 35,862 (5,439)
We will discuss all of above thoroughly in the following area.
1: Liquidity Ratios:
Ø Current Ratio = Current Assets / Current Liabilities Current ratio (2004) = 961057 / 643619 = 1.49 Current ratio (2005) = 1019177 / 658696 =1.54 Ø Quick (Acid Test) Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio (2004) = (961057 - 579169) / 643619 = 0.59 Quick Ratio (2005) = (1019177-636763) / 658696 = 0.58
Ø Net Working Capital Ratio
Net Working Capital = CA – CL if it is positive then we calculates Shrinkage = NWC / CA Net Working Capital (2004) = CA – CL = 961057 – 643619 = 317438 Shrinkage = NWC/ CA = 317438 / 961057 = 33.03% Net Working Capital (2005) = CA- CL = 1019177-658696 = 360481 Shrinkage = NWC / CA = 360481 / 1019177 = 35.36 % Ø Cash to Current Liabilities Ratio = (Cash + C.E) / CL Cash to Current Liabilities Ratio (2004) = 40487 / 643619 =0.0629 =6.29% Cash to Current Liabilities Ratio (2005) = 35048 / 658696 = 5.32% Ø Cash to Total Assets Ratio = (Cash + C.E) / TA Cash to Total Assets Ratio (2004) = 40487 / 1274908 =0.0317 = 3.17% Cash to Total Assets Ratio (2005) = 35048 / 1365181 =0.0256 = 2.56% Interpretation The importance of adequate liquidity in the sense of the ability of a firm to meet current/short-term obligations when they become due for payment can hardly be overstressed. In fact, liquidity is a prerequisite for the very survival of a firm. The short-term creditors of the firm are interested in short-term solvency or liquidity of a firm. Current ratio of company improves from 1.49 to 1.54 which is a good sign and but the Acidtest ratio, at the same time, decrease which is not a good sign. Furthermore Acid-test ratio is just satisfactory because obviously it implies that for every 1 Rs. of liability only Rs. 0.58 available quickly.
Both of the cash ratios of company declines w.r.t previous year. Since keeping all these things into mind we can say that Bata Pakistan limited is not in a very good liquid condition. But it might be the sign that the company is investing more in fixed assets which are more productive as compared to current assets. 2: Activity / Efficiency Ratios: Ø Inventory Turnover = Cost of goods sold / Ending Stock Inventory Inventory turnover ratio (2004) = 2279556 / 579169 = 3.93 times Inventory turnover ratio (2005) = 1605938 / 636763 = 2.52 times i) Average age of Inventory =No. of Working days / Inventory turnover Average age of Inventory (2004) = 360 / 3.93 = 91.6 Average age of Inventory (2005) = 360 / 2.52 =142.85 Ø Average collection Period = Accounts Receivable / Average credit Sales per day Average collection Period (2004) = 314364 / 6332 = 50 days Average collection Period (2005) = 317722 / 7064 = 45 days ii) Accounts Receivable turnover = No. of Working days / Average collection Period Accounts Receivable turnover (2004) = 360 / 50 = 7.2 Accounts Receivable turnover (2005) = 360 / 45 = 8 Ø Average Payment Period = Accounts Payable / Average Credit Purchase per day Average Payment Period (2004) = (448462 x 360) / 753985 = 212.4 Average Payment Period (2005) = (431112 x 360) / 702322 = 219.6 iii) Accounts Payable Turnover = No. of Working days / APP Accounts payable turnover (2004) = 360 / 212.4 =1.69 Accounts payable turnover (2005) = 360 / 219.6 =1.63
Ø Fixed Assets Turn Over Ratios = Sales / Fixed Assets Fixed Assets turn over ratios (2004) = 2279556 / 269076 = 8.47 Fixed Assets turn over ratios (2005) = 2543344 / 283940 = 8.95 Ø Total Assets Turn Over Ratio = Sales / Total Assets Total Assets turn over (2004) = 2279556 / 1274908 = 1.78 Total Assets turn over (2005) = 2543344 / 1365181 = 1.86 Ø Sales To Net Worth Ratio = Sales / Net worth Or SHE Net worth turn over (2004) = 2279556 / 545606 = 4.17 Net worth turn over (2005) = 2543344 / 618182 = 4.11 Interpretation Activity ratios measure the speed with which accounts are converted into sales or cash. The inventory turnover of the company declines as compared to last year which implies that company is not so much active while dealing with its inventory as compared to last year. AAI also raises w.r.t last year which is not a good sign. ACP is a little bit less than last year which is a good sign. APP is less by 5 days as compared to last year. Overall the activity ratios of Bata show that company’s activity has declined as compared to last year. 3: Leverage / Gearing Ratios: Ø Debt ratio = Total Liabilities / Total Assets Debt ratio (2004) = 729302 / 1274908 = 0.572 = 57.2% Debt ratio (2005) = 746999 / 1365181= 0.547 = 54.7% Ø Debt Equity Ratio = Total Debt / Stock holders Equity Debt Equity Ratio (2004) = 0 / 545606 = 0:100 times Debt Equity Ratio (2005) = 0 / 618182 = 0:100 times
Ø Equity Multiplier = Total Assets / Stock holders Equity Equity Multiplier (2004) = 1274908 / 545606 = 2.33 Equity Multiplier (2005) = 1365181 / 618182 = 2.2 Ø Times Interest earned ratio = EBIT / Interest Times Interest earned ratio (2004) = 183578 / 19877 = 9.2 times Times Interest earned ratio (2005) = 184469 / 40087 = 4.6 times Interpretation Company’s debt ratio decreases as compared to last year and debt-equity ratio is 0:100 times which means that company is not using any financing which obviously declines company’s profitability. Since company doesn’t have any long term debts only short term borrowings are being utilized in this year. Times interest earned ratio declines from 9.2 times to 4.6 times which is very bad apparently but in fact it’s because of reduction of debts. 4: Profitability Ratios: Ø Gross Profit Ratio = (Gross Profit / Sales) x 100 Gross profit ratio (2004) = (835834 / 2279556) x 100 = 36.66% Gross profit ratio (2005) = (937406 / 2543344) x 100 = 36.85% Ø Operating Profit Ratio = (Operating profit / Sales) x 100 Operating Profit Ratio (2004) = (183578 / 2279556) x 100 = 8.05% Operating Profit Ratio (2005) = (184469 / 2543344) x 100 = 7.25% Ø Net Profit Ratio = (NPAT / Sales) x 100 Net Profit ratio (2004) = (121872 / 2279556) x 100 = 5.34% Net Profit ratio (2005) = (83916 / 2543344) x 100 = 3.29% Ø Basic Earning Power = (EBIT / TA) x 100 Basic Earning Power (2004) = (183578 / 1274908) x 100 = 14.39%
Basic Earning Power (2005) = (184469 / 1365181) x 100 = 13.51% Ø Return on Assets = (NPAT / TA) x 100 Return on Assets (2004) = (121872 / 1274908) x 100 =9.5% Return on Assets (2005) = (83916 / 1019177) x 100 = 8.23% Ø Return on Equity = (NPAT / S.H.E) x 100 Return on Equity (2004) = (121872 / 545606) x 100 = 22.33% Return on Equity (2005) = (83916 / 618182) x 100 = 13.57% Interpretation Gross profit ratio is almost same as of the last year but operating profit ratio decrease which show that company increases its operating expenses which is not good. Due to this entire net profit ratio also decreases. Overall firm’s profitability this year is not very good, even, return on equity decreases even by almost 50%. 5: Marketability Ratios: Ø Earning Per Share = (NPAT – Dividend on P.S.) / Outstanding common stock Earning Per Share (2004) = 121872000 / 7560000 = Rs. 16.12 Earning Per Share (2005) = 83916000 / 7560000 = Rs. 11.10 Ø Dividend Per Share = Dividend Paid / Outstanding common stock Dividend per share (2004) = 52920000 / 7560000 = Rs. 7 Dividend per share (2005) = 11340000 / 7560000 = Rs. 1.5 Ø Dividend payout ratio = Dividend per share / Earning per share Dividend payout ratio (2004) = 7 / 16.12 = 0.4342 = 43.42% Dividend payout ratio (2005) = 1.5 / 11.1 = 0.1351 = 13.51%
Ø Flow Back Ratio = (1 – Dividend payout) x 100 Flow Back Ratio (2004) = 56.58% Flow Back Ratio (2005) = 86.49% Ø Dividend Yield = (Dividend per share / Current market price) x 100 Dividend Yield (2004) = 6.34% Dividend Yield (2005) = 4.44% Ø Price Earning Ratio = Current M.P of C.S / EPS Price Earning Ratio (2004) = 4.4 times Price Earning Ratio (2005) = 8.11 times Break up Value per share (2004) = Rs. 72.17 Break up Value per share (2005) = Rs. 81.77 Market Price per share (2004) = Rs. 71 Market Price per share (2005) = Rs. 90 Interpretation It measures the return earned on owner’s investment in the firm. Company’s EPS declines by Rs. 5 which is due to decrease in net profit & a very less amount of profit is paid as dividend this year as compared to last years which is not a good sign with the point of view of investor. Common Statement Analysis In common statement analysis we are having two types of analysis these are given below: 1. Vertical Analysis 2. Horizontal Analysis We will discuss these in the light of Profit & Loss Account as well as Balance Sheet.
Common Statement Analysis Profit And Loss Account Vertical Analysis 2005 Rs. '000s %AGE NET SALES COST OF SALES 1,605,938 63.14 GROSS PROFIT 937,406 36.86 OPERATIN G EXPENSES Selling and distribution 542,283 Administrativ e 210,654 2,543,34 4 100% 1,443,722 835,834 2,279,556 63.33 36.67 2004 Rs. %AG '000s E 100%
462,070 190,186 752,937 29.60 183,578 19,877 144,382 8.05 0.87 163,701 28,807 1.26 652,25 6 28.61
OPERATIN G PROFIT 184,469 FINANCE COST 40,087 OTHER INCOME PROFIT FOR THE YEAR OTHER OPERATIN G EXPENSES PROFIT
7.25 1.58
2,784
0.11
147,166
5.79
192,508
8.44
18,631 128,535
0.73 5.05
14,311 178,197
0.63 7.82
BEFORE TAXATION PROVISION FOR TAXATION Current Prior years Deferred PROFIT AFTER TAXATION 83,916 Horizontal Analysis NET SALES COST OF SALES 2005 GROSS PROFIT 54,402 (3,366) (6,417) 44,619 1.75 (2,539) (1,698) 56,325 2.47 60,562
3.30
121,872
5.35
2004
CHANGE
%AGE CHANGE
2543344000 OPERATIN G EXPENSES 1605938000 937406000 OPERATIN Selling and 54228300 G PROFIT distribution 0 Administrativ 21065400 e 0 FINANCE 75293700 COST 0 184469000 OTHER INCOME 40087000 PROFIT FOR THE 14438200 YEAR 0 2784000 OTHER OPERATIN 147166000
227955600 0 263,788,000 11.57 144372200 0 162,216,000 11.24 835834000 101,572,000 12.15 462070000 190186000 100,681,00 652256000 0 15.44 183578000 891,000 0.49 19877000 20,210,000 101.68
163701000 (26,023,000 28807000 ) (90.34) (45,342,000 192508000 ) (23.55)
G EXPENSES PROFIT BEFORE TAXATION PROVISION FOR TAXATION 18631000 128535000 Current PROFIT AFTER TAXATION Prior years Deferred
4,320,000 30.19 (49,662,000 178197000 ) (27.87) 54402000 60562000
14311000
-3366000
-2539000 -1698000 56325000 (37,956,000 121872000 ) (31.14) (11,706,000 ) (20.78)
Balance Sheet Vertical Analysis 2005 Rs. '000s CAPITAL AND RESERVES Authorize d capital 1000000 0 ordinary shares of Rs. 10 each 100,000 Issued subscribe d and paid up capital 75,600 Reserves & 2004 Rs. %AGE '000s %AGE
100,00 0
5.54% 75,600 5.93%
Surplus Capital reserve 483 General 510,00 Reserve 0 Unappropriat 32,09 ed profit 9 12,523 542,58 2 SHAREHOLDE RS' EQUITY DEFERRED LIABILITIES Provision for gratuity LONG TERM DEPOSITES CURRENT LIABILITES Trade and other payables Mark-up Accrued Short term borrowin gs Provision for taxation 20,467 618,182 45.28% 545,606 42.80% 483 457,00 0
39.74% 470,006 36.87%
67,83 6 4.97%
66,322 5.20%
1.50% 19,361 1.52%
431,11 2 8,607
448,462 2,196
215,76 6
168,564
3,211
24,397 658,69 6 48.25% 1,365,1 81 643,61 9 50.48% 100.00 1,274,90100.00 % 8 %
Balance Sheet Horizontal Analyses 2005 2004 %age Change Chan
ge CAPITAL AND RESERVES Authorized capital 10000000 ordinary shares of 100,000,0 100,000, Rs. 10 each 00 000 Issued subscribed and paid 75,600,00 up capital 0 75,600,0000.00% Reserves & Surplus Capital reserve 483,000 483,000 General 510,000,0 457,000,0 Reserve 00 00 Unappropri 32,099,00 ated profit 0 12,523,000 542,582,0 470,006,0 72,576,0 15.44 00 00 00 % SHAREHOLD 618,182,0 545,606,00 ERS' EQUITY 00 0 72,576,000 13.30% DEFERRED LIABILITIES Provision 67,836,00 for gratuity 0 66,322,000 1,514,000 2.28% LONG TERM 20,467,0 DEPOSITES 00 19,361,000 1,106,000 5.71% CURRENT LIABILITES Trade and other 431,112,00 448,462,00 payables 0 0 Mark-up Accrued 8,607,000 2,196,000 Short term 215,766,0 168,564,00 borrowings 00 0
Provision for taxation 3,211,000 658,696,0 00
24,397,000 643,619,00 0 15,077,000 2.34% 1,365,181, 1,274,908, 000 000
FIXED CAPITAL EXPENDITU RE Operating fixed 282,645, assets-tangible 000
266,487,00 0 -intangible 1,295,000 283,940,0 00
2,589,000 269,076,0 14,864,0 00 00 5.52%
LONG TERM INVESTMENT20,467,0 S 00 19,361,000 LONG TERM DEPOSITS AND PREPAYMEN 31,672,00 TS 0 21,906,000 DEFERED 9,925,00 TAXATION 0 3,508,000 CURRENT ASSETS Stores and 29,998,00 spares 0 Stock in 606,765,0 trade 00 317,722,0 trade debts 00 Loan and advances 691,000 Deposits, short term prepaymen ts and 28,953,00 other 0
1,106,000 5.71%
9,766,000 44.58% 6,417,000 182.92%
37,922,000 541,247,00 0 314,364,00 0 4,234,000
22,803,00 0
receivables Cash and bank 35,048,00 balance 0 1,019,177, 000 1,365,181, 000 Answers to Analytical Questions
40,487,000 961,057,00 58,120,0 0 00 6.05% 1,274,908, 000
Q#1: Would you like to invest as an equity investor in this company? Ans. NO I don’t like to invest in Bata Pakistan Limited because its current year Because Þ Result of activity ratios for this year is not very good Þ Company didn’t handle operating expenses in good manner for this year Þ Its EPS declines By Rs. 5 this year Þ Only 0.4% dividend is given in this year Q#2: would you like to extend a long-term loan to this company? Ans. Yes, I would like to extend long term loan to the company because Þ Company’s times interest earned ratio is satisfactory Þ It has a good reputation in market Þ Its debt ratio decreases this year Þ Its debt equity ratio is 0:100 times i.e. currently it is not using any long term financing Þ Company is continuously growing from last many years only this year its performance in a bit low because of earthquake otherwise it has very good growth in previous years. Q#3: would you like to extend a short-term loan to Bata? Ans. Yes, I would like to extend short term loan to the company because Þ Company’s liquidity ratios yield sufficient results
Þ It has a good reputation in market Þ No risk involved Þ Its activity ratios are very satisfactory in previous years Þ Its debt ratio decreases this year Þ Its cash flows are satisfactory for this year Þ Its debt equity ratio is 0:100 times i.e currently it is not using any long term financing. Q # 4 Suppose you are existing owner of Bata Pakistan how do you find it? Ans. To be an existing owner of Bata Pakistan I really would like to improve some of its features like customer service etc. Conclusion I really enjoyed so much while preparing this report. It’s really very useful for me in my professional career. Thanks God I have finished it. I think Bata should try to reduce its operating expenses and furthermore think about its activity ratios it is more important for them. And the fact that I want to say here again Bata’s performance in previous years was very good, in this year company has to bear some losses and make some improvements due to which its performance looks not so attractive this year.
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