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Financial Analysis of Dewan Mushtaq Group
Financial Analysis of Dewan Mushtaq Group
MR.MAZHAR HUSSAIN
FINANCIAL ANALYSIS
Ahmer Javed 4291 Farman Saddique 4293 Zubair Bajwa Waqas Tahir 4279 Syed Nayyar Sajjad 4253
4281
History of Dewan Mushtaq Group: The history of Dewan Mushtaq Group goes way back to the year 1916 to the State of Patiyala in the Punjab Province of India when a small cottage industry was set up by Dewan Mohammad and his son Dewan Mushtaq Ahmed to manufacture garments. During 1918, another establishment was started in Karachi to import clothing and other multifarious commodities which were then sold all over India. In 1947, the Dewan family migrated to Pakistan. They settled in Karachi, formed Dewan Mushtaq Sons, and started trading in commodities like tea, sugar, second-hand clothing, garments and fabrics. Due to hard work and honest dealings of the family, the business rose to new heights and by late fifties, the turnover of the firm was as significant as Rs. 60 million per annum. In 1968, the Dewan Family, under the leadership of Dewan Mohammad Umer Farooqui, ably supported by his younger brother, Dewan Salman Farooqui, decided to enter the industrial arena. The first industrial unit was set up in 1970 under the name and style of Dewan Textile Mills Limited with a capacity of 25,080 spindles which has since been increased to 61,704 spindles. The Group strengthened its footing in the textile field by taking over another textile unit in 1975, now known as Dewan Mushtaq Textile Mills Limited with an installed capacity of 25,776 spindles. Thereafter, the Group established another spinning unit Dewan Khalid Textile Mills limited, consisting of 26,624 spindles.
By mid of 1980's, the Group with its characteristics of honesty, integrity and determination, became one of the major textile groups in the country. At this stage, the Group decided to diversify its activities to other spheres and entered the sugar industry. In 1987, the Group established Dewan Sugar Mills Limited with a sugar cane crushing capacity of 3,500 metric tons/day which has been gradually expanded to 9,000 metric tons/day, thus making it one of the largest sugar plants of the country. The Mills obtained ISO Certification in 1998.
The Group further diversified its range of business by setting up capital-intensive polyester staple fiber plant under the name and style of Dewan Salman Fiber Limited. The
Group's credibility is evident from the fact that Dewan Group was able to obtain the collaboration with the world's giant conglomerates like Mitsubishi Corporation of Japan and Sam Yang Company Limited, Republic of Korea and set up the state-of-the-art plant in 1990. The Company signed an agreement with Messrs Noyvallesina Engineering, an Italian company, for establishing an Acrylic Fiber and Tow Plant as part of its expansion plan. The Acrylic Plant with an installed total capacity of 55,000 tons per annum commenced commercial production operations from 1st July, 2000. In the first phase, the Acrylic Plant is producing 25,000 tons acrylic fiber. In phase II, the output will be raised by 30,000 tons. The Group manifested its decision to diversify into automobile industry of Pakistan through the incorporation of Dewan Farooque Motors Limited on December, 1998. Within this month, two more milestones were reached: the signing of Technical License and Exclusive Distributor agreements with Hyundai Motor Company, Korea's No. 1 and world's seventh largest automobile manufacturer. 1999 marked another important year in the history of the Group when Dewan Farooque Motors signed the Technical Collaboration Agreement with KIA Motors Corporation of South Korea, in July, 1999. Hyundai-Kia Together, are now the world's six largest automobile manufacturers. Dewan Farooque Motors is now a key player in the automobile industry of the country offering an impressive lineup of passenger cars and commercial vehicles. Its state-ofthe-art plant has a capacity of 10,000 vehicles per annum on single shift basis and is equipped with the latest facilities which include CED paint system and robots for the final coat. June, 2000, marked another important milestone in the history of the Group when its flagship company Dewan Salman Fiber Limited, acquired Dhan Fiber Limited and fully merged and incorporated its facilities into its operations .The total output of Dewan Salman Fiber Limited's 3 polyester units is 700 tons per day. The company today enjoys a market leader's position and commands market share of 60% in the country's fiber industry.
Introduction to Dewan cement: Dewan Cement Limited (DCL) formerly Pakland Cement Limited, incorporated in 1980 and listed on the Karachi and Lahore stock Exchanges is majority owned by Dewan Mushtaq Group through its different companies since 2004. The Group, a long established conglomerate in the country, has interests in synthetic fibers, automotive and allied, sugar and allied, textiles, oil and gas, cement, and general trading sectors. It also enjoys the privilege of having business associations with respected multinational corporations. The cement plant is located near Port Qasim, Sindh, mainly serving the countrys south zone. Professionals, mainly serving the group in different capacities, dominate the companys BOD, with only one member of Dewan family. The chief executive officer, a chartered accountant by
profession, joined the company in August 2004 and is supported by a team of experienced professionals.
Mission Statement: The mission of Dewan Mushtaq Group is to be the finest Organization, and to conduct business responsibly in a straightforward way. Our basic aim is to benefit the customers, employees and shareholders, and to fulfill our commitments to the society. Our hallmark is honesty, initiative and teamwork of our people and our ability to respond effectively to change on all aspects of life including technology, culture and environment. We will create a work environment, which motivates, recognizes, and rewards achievements at all levels of the organization, because IN ALLAH WE TRUST & IN PEOPLE WE BLIEVE
Vision: I.T Department is dedicated to provide reliable information base using most modern technology to potential users at all levels. Our professionals individually and collectively, will constantly improve their competitive skills and excel in providing quality service covering all the aspects of the technology. By embarking into the digital age we will accelerate the positive effects and mitigate the challenges as knowledge grows when shared. We will innovate in a research-oriented manner with technologies to create our own future and value added activities for profitable relationships with our stakeholders, thus encouraging intellectual curiosity for our products, service and insight that will help people around the world, shape the ways business and education will be done in future. Our professionals and their competitive skills will be the hallmark that combined with technology innovation, expert skills and teamwork, will keep us leaders in "CHANGE" to open new doors. Dewan Far Eastern Co. Ltd. Dewan Far Eastern is the overseas sales office and responsible for obtaining export orders for cotton yarn, produced by DMG Textile Division. This office is looked after by Mr. Taro Ishikawa. Business Intelligence Unit: Business Intelligence Unit functions as the market research and intelligence cell of DMG. Though its principal responsibility is to collect and analyze the data about Fiber Industry, its key players including its users, namely fabric producers, it also carries out specialized market studies in other fields namely, textiles, automobiles, sugar etc, and it also performs financial analyses Dewan Executive Development Centre: Dewan Executive Development Centre was established in June 2000. It was formally inaugurated on July 28, 2000 by Mr. Dewan Mohammad Yousuf Farooqui and was followed by a seminar on the Seven Habits.
Objectives: To spark a new and innovative ideas for the individuals so that they are competitive enough to face the global economic and market environment. To equip DMG individuals with a thorough understanding of managerial and technological skills in a manner that has a profound effect on their personality and character. To build leadership qualities in individuals so that they can make use of it efficiently and effectively in order to make every unit productive. To help to bring about a paradigm shift by creating a dynamic and positive learning environment and changing our corporate culture. To help DMG to cope with knowledge-based economy. To provide DMG staff with basic conceptual training and impart latest managerial concepts / skills, so as to make them "knowledge workers" and on-line to deal with the challenges of modern business.
Our Assurance: We believe that DMG members are our most precious resource, our human capital. We also believe 'human progress' to be the worthiest of goals through recruiting, developing, motivating, rewarding and retaining personnel of exceptional competence and providing them with a healthy working environment, competitive compensation, excellent opportunities for growth and a high degree of job security. Seminars / Training Courses Conducted: The Seven Habits of Highly Effective People Star Office Training Communication Concepts and Skills, Level-I Communication Concepts and Skills, Level-II Seminar on Business Ethics Finance for Non-Finance Executives Presentation Skills Office Etiquettes and Mannerism
Future Programs: Teamwork Time Management Effective Meetings Basic Supervision Skills (Urdu) Industrial Safety, Firefighting & First Aid Motivation & Leadership Knowledge Management Emotional Intelligence Negotiation Skills Change Management Conflict Management Skills in Selling Customer Service
Social & Community Welfare: The Group is fully committed to the vision and principles laid down by its founding fathers. In keeping with its corporate philosophy and the spirit of social service and human respect, it strives to fulfill its corporate social responsibility. As an exemplary corporate citizen, the Group has set high standards in the area of public service and community welfare through a variety of philanthropic contributions.
Dewan Group has made following humble contributions to the nation: Fully financed the construction (including purchase and installation of medical equipment) of Dewan Farooque Medical Complex near Civil Hospital. This was the single largest donation of Rs. 250 millions. The Project was completed in a record time and handed over to the Sindh Institute of Urology and Transplantation (SIUT).
Played a key role in the realm of education, health and religion financing of following projects:
A mosque at Sujawal, Dewan City, District Thatta Dewan Farooque Medical Centre ( 250-bed Hospital complete with Operation Theatre and a Dialysis Unit), Sujawal, Dewan City, Thatta Dewan Farooque Memorial High School, Sujawal, Dewan City, Thatta Dewan Farooque Memorial High School, Hattar, District Haripur, NWFP Dewan Farooque Memorial High School, Hattar, District Haripur, NWFP Dewan Farooque Memorial High School, Kotri, Sindh Dewan Salman Dispensary Thatta, Sindh Dewan Mushtaq Coronary Care Unit (Civil Hospital) Hyderabad Dewan Mushtaq Coronary Care Unit (Civil Hospital) Sukkur Dewan Mushtaq Mosque at Old Clifton, Karachi Dewan Farooque Mosque at Federal 'B' Area, Karachi Dewan Mosque at Sector F-10, Markaz, Islamabad
DATA COLLECTION SOURCES Main source of data collection [www.dewangroup.com.pk] Net searching
Years of Analysis:
2007 2009
RATIO ANALYSIS Liquidity ratios Leverage ratios Activity ratios Trend Analysis Common Size Analysis Index Analysis Ratios
Dewan Cement Ltd. Years 2009 Liquidity Ratio Current Ratio Quick Ratio Leverage Ratio Debt to Equity Ratio Total Debt to Assets Debt Ratio to Total Capitalization Coverage Ratio Activity/Turnover Ratio Receivable Turnover Ratio Average Collection Period Inventory Turnover Ratio Inventory Turnover Ratio Days Operating Cycle Assets Turnover Ratio Gross Profit Margin Net Profit Margin Return on Investment Return on Equity 0.29 0.22 3.16 0.61 0.08 0.93 5.5 66 20.5 17 83 0.26 7.6 2.87 0.75 4.5 2008 0.39 0.36 3.718 0.61 0.68 (0.79) 7.5 49 21.8 17 66 0.61 (0.18) (10.8) (2) (11) 2007 0.75 0.71 2.846 0.603 0.74 1.298 10.7 34 13.7 26 60 0.195 14.1 4.77 0.93 4.3
2. Quick ratio: It is also not highly liquid because inventory is deducted from the current asset so, it do not becomes more liquid. 3. Debt to equity ratio: In this ratio the percentage of the debts is 3.16% in share holder equity which means company prefer borrowing. 4. Total debt to asset ratio: In this ratio the percentage of the debt in the total asset is 61%.It is anot a good sign for the company that the asset have high debt .Therefore element of the risk is there. 5. Debt ratio to total capitalization: This ratio relates to the capital structuring. As the ratio is 8% which means that there are 8% long term debts in the total capitalization. 6. Coverage ratio: Coverage ratio relates that how many times a company can meet its financial cost (interest expense).As the ratio is 93 times which means that a company meet its interest/financial cost 93 times. 7. Receivable turnover ratio: This ratio relates that how fast account receivable converting into cash as the ratio is 5.5 which mean it is below the benchmark average. 8. Average collection period: The ratio is 66 days, it is a very longer period for the collection, which means that the the acceptance standard s of the company are not good towards the account receivables.
9. Inventory turnover ratio: This ratio means that how many times the inventory converted into sales. As the ratio is 20.5, which means that the sale is rapid. 10. Inventory turnover ratio in days: The ratio is 17 which mean that the demand of stock is too much high.
11. Operating cycle: The operating cycle of the company is 83.There we notice two things ,as in the previous two ratio s inventory turnover ratio is 20.5 & the average collection period is 66 which means that their inventory very rapidly out of stock but there collection method are not so good thats why their operating cycle is lengthy. 12. Asset turnover ratio: The ratio is 26% which means that they do not use their assets well. 13. Gross profit margin: Gross profit relates to the operating expense .As the gross profit is 7.6% of the sales & our operating expense are 55% which means the cost f the company is not efficiently controlled. 14. Net profit/loss margin: Net profit/loss margin relates to the overall expenses of the business. As the net profit/loss are (78.99) % of the sales. 15. Return on investment: This ratio is 0.75% which means that company is in a good position & it is below the benchmark average. 16. Return on equity: This ratio increases the overall performance as it 4.5% & it is the above the industry average (19%) which means investors will not invest their investment.
2. Quick ratio: It is also not highly liquid because inventory is deducted from the current asset so; it does not become more liquid. 3. Debt to equity ratio: In this ratio the percentage of the debts is 3.718% in share holder equity which means company prefer borrowing. 4. Total debt to asset ratio: In this ratio the percentage of the debt in the total asset is 61%.It is anot a good sign for the company that the asset have high debt .Therefore element of the risk is there. 5. Debt ratio to total capitalization: This ratio relates to the capital structuring. As the ratio is 68% which means that there are 68% long term debts in the total capitalization. 6. Coverage ratio: Coverage ratio relates that how many times a company can meet its financial cost (interest expense).As the ratio is (.79) times which means that a company is not able to meet its interest/financial cost. 7. Receivable turnover ratio: This ratio relates that how fast account receivable converting into cash as the ratio is 7.5 which mean it is below the benchmark average. 8. Average collection period: The ratio is 49 days, it is a very longer period for the collection, which means that the the acceptance standard s of the company are not good towards the account receivables. 9. Inventory turnover ratio: This ratio means that how many times the inventory converted into sales. As the ratio is 21.8, which means that the sale is rapid. 10. Inventory turnover ratio in days: The ratio is 17 which mean that the demand of stock is too much high.
11. Operating cycle: The operating cycle of the company is 66.There we notice two things ,as in the previous two ratio s inventory turnover ratio is 21.8 & the average collection period is 66 which means that their inventory very rapidly out of stock but there collection method are not so good thats why their operating cycle is lengthy.
12. Asset turnover ratio: The ratio is 61% which means that they use their assets very well. 13. Gross profit margin: Gross profit relates to the operating expense .As the gross profit is (18%) of the sales & our operating expense are 97% which means the cost f the company is not efficiently controlled. 14. Net profit/loss margin: Net profit/loss margin relates to the overall expenses of the business. As the net profit/loss are (141%) of the sales. 15. Return on investment: This ratio is (2) % which means that company is not in good position & it is below the benchmark average. 16. Return on equity: This ratio increases the overall performance as it (-11%) & it is the above the industry average (+19%) which means investors will not invest their investment.
3. Debt to equity ratio: This ratio 2.8% which means that there is 2.8% debt in shareholder equity.
4. Total debt to asset: This ratio is 60.3% which means that assets are 60.3% finance by debts. 5. Debt ratio to total capitalization: There are 74% long term debts in a capital structuring. 6. Coverage ratio: It is 1.298 times the company is not in a very good position as it can meet 1.298 times its financial costs. 7. Receivable turnover ratio:
This ratio is 10.7 this is below the benchmark average. 8. Average collecting period: This ratio is 34 which mean that the acceptance standards are not good towards account receivable.
9. Inventory turnover ratio: This ratio is 13.7, it is not much high, this means that sales is not much rapid. 10. Inventory turnover ratio in days: It is 26 which mean that demand of stock is high but company is not meeting the market requirements. 11. Operating cycle: The operating cycle is 60 days. It is again not efficient for the company. 12. Asset turnover ratio: This ratio is 19.5% which means that assets are not efficiently used. 13. Gross profit margin: This ratio is 14.1%, here again the operating expense of the company is handled very well. 14. Net profit margin: It is 4.7% it includes overall expense of the business. This profit is very low as compared to benchmark. 15. Return on investment: This ratio 0.93% which means company is not in good position it is below the benchmark average. 16. Return on equity: The ratio is 4.3% which is below the benchmark average (20%) which can not help to attract the investors.
TREND ANALYSIS
4. Total debt to asset: In 2009 it is 61% & in 2008 it is 61% & in 2007 it is 60%. It is clear from the figures the assets are financed by debts lowest in 2007 & then percentage of debts in total assets increases in 2008 & further increases in 2009 up to some extent. 5. Debt ratio to total capitalization: In 2009 it is 8%, in 2008 it is 68% & in 2007 it is 74%. It means that the percentage of the long term debts in the capital structuring is lowest in 2009, it increases in 2008 & it further increases in 2007. 6. Coverage ratio: In 2009 it is 93 times & in 2008 (79) times & in 2007 is 129.8 times. It is lowest in 2008 it increase in 2008 & it again increase in 2007.
7. Receivable turnover ratio: It is 5.5 in 2009 & in 2008 it is 7.5 & in 2007 it is 10.7.It is highest in 2007, it is the decreases in 2008 & further decreases in 2009.
8. Average collecting period: It is 66 days in 2009 & 49 in 2008 & 34 days in 2007.So, 2007 is the most efficient year as the number of days is minimum & then it increases in 2008 & it further increases in 2009.
9. Inventory turnover ratio: It is 21 in 2009, it is 22 in 2008 & it is 13.7 in 2007. The growth of the sales is lowest in 2007 & then it increases in 2008 & remains constant approx. in 2009. 10. Inventory turnover ratio in days: It is 17 days in 2009, it is 17 days in 2008 & it is 26 days in 2007. This shows that the inventory turnover is highest in 2008 & 2009 then lowers in 2007 also. But the expansion of the days is definite vice versa. 11. Operating cycle: It is 83 days in 2009, 66 days in 2008 & 60 days in 2007. It is maximum in 2009 & then decreases in 2008 & 2007. But the most efficient year is 2007. 12. Asset turnover ratio: It is 26% in 2009, it is 61% in 2008, it is 20% in 2007.It is lowest in 2007 & then increases in 2008 & then decreases in 2009. 13. Gross profit margin: It is 7.6% in 2009, it is (18%) % in 2008, & 14.1% in 2007.There is almost same trend accepted in 2008 as it is in loss.
14. Net profit margin: It is (2.87) % in 2009, it is (10.8%) in 2008 & it is 4.77% in 2007.It is highest in 2007, it then decreases in 2008 & then it increases in 2009.
15. Return on investment: It is 0.75% in 2009, (2%) in 2008, & 0.93% in 2007. It is best in 2007 it then decreases in 2008 & increases in 2009. It means that 2007 is the most efficient year for the company. 16. Return on equity: It is (4.5%) in 2009, it is (11%) in 2008 & it is 4.3% in 2007.There is almost the trend accepted in 2007, the return on equity in 2007 & 2009 is maximum which is the most attracted years for the investors.
Common Size %
2009 2008 2007
Property, plant and equipment Intangible asset Long-term loans Total Non Current Assets
92.307% 92.34%
CURRENT ASSETS
Stores and spares Stock-in-trade Trade debts Loans and advances Trade deposits and short-term prepayments Short Term Investment Other receivables Advance Tax Cash and bank balances
Total Current Assets Total Assets
1.75% 1.7% 1.46% 0.6% 0.12% 0.09% 0.01% 0.49% 0.56% 7.69%
1.83% 0.59% 3.3% 0.6% 0.15% 0.18% 0.021% 0.082% 0.61% 7.66%
3.08% 1.36% 2.3% 0.49% 0.28% 0.42% 0.413% 0.087% 1.01% 13.04%
Common Size %
2009 2008 2007 2009 2008 2007
NON-CURRENT LIABILITIES
Long term financing Deferred Employee Benefits Debentures Mark up payable Long term deposits Liabilities against assets 1701547 1750444 923029 31494 2275462 2065797 3850000 922894 88949 2430054 2192143 4110825 141252 861539 120843 7.8% 8.1% 4.2% 0.14% 10.5% 4.2% 17.81% 9.6% 0.4% 17.8% 10.9% 9.8% 18.52% 0.636% 3.88% 0.54%
CURRENT LIABILITIES
Trade and other payables
Provision for Taxation
1624625
-
1649766
-
1305183
-
660875
1042708 35339 1746914 5110461
348021
555916 16850 1114022 4084575
497695 248644
345134 14743 1124364 3535763
Common Size %
2008 4598002 4706326 (108324) 94741 246815 88325 281025 (538205) 325142 (582322) 83185
(499137)
2007 4329503 (3718979) 610524 22210 136223 17745 283751 718097 553115 164982 41624
206606
2009
2008
2007 100.00% (85.8%) 14.10% (0.51%) (30.8%) (0.40%) (6.5%) 16.58% (12.77%) 3.8% 0.96%
5682571 5249197 433374 192475 157534 27609 30945 (55756) 463191 (376490) 213282
(163208)
100.00% 100.00% (92.3%) (102.3%) 7.6% (3.38%) (2.77%) (0.48%) (0.54%) (0.98%) (8.1%) (6.6%) 3.7% (2.87%) (2.35%) (2.06%) (5.36%) (1.92%) (6.11%) (11.7%) (7.07%) (12.66%) 1.8%
(10.85%) 4.77%
Interpretations:
After completing common size analysis we came to know that companys non-current assets increases during the time of 2007-2009 and its current assets decreases in same span of time. Non-current liabilities of the company also decreases which is a good sign for financial health but current liabilities increases which is not a good sign. Now we can see that companys current assets had decreased and current liabilities had increased which shows that companys liquidity is not good. In profit and loss statement we can see that cost of goods sold had increased during the time of 2007-2009 it means companys overall external expenses had increased. In the result Gross Profit had decreased. Administrative expenses had been controlled by the company durin the same span of time. Distribution cost had also increased which resulted in shrinkage of profit which is currently converted into loss.
INDEX ANALYSIS
Dewan Cement Limited
Index Size Analysis
Index Size %
2009 2008 2007
303.96% 100.00%
CURRENT ASSETS
Stores and spares Stock-in-trade Trade debts Loans and advances Trade deposits and short-term prepayments Other receivables Short Term Investment Advance Tax Cash and bank balances
Total Current Assets
55.55% 126% 62% 135% 29% 32.08% 23% 53.54% 53.63% 97.3%
58.13% 42.20% 140.27% 118.75% 33.8% 62.92% 50.8% 108.7% 59.04% 57.14% 97.4%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Assets
21596724
21611087
22187512
Index Size %
2009 2008 2007 2009 2008 2007
NON-CURRENT LIABILITIES
Long term financing Deferred Employee Benefits Debentures Mark up payable Long term deposits Liabilities against assets 1701547 1750444 923029 31494 2275462 2065797 3850000 922894 88949 2430054 2192143 4110825 141252 861539 120843 70% 79% 107% 26% 93.63% 94.2% 93.65% 107% 65.96% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
CURRENT LIABILITIES
Trade and other payables
Provision for Taxation
1624625
-
1649766
-
1305183
-
660875
1042708 35339 1746914 5110461
348021
555916 16850 1114022 4084575
497695 248644
345134 14743 1124364 3535763
115.52% 100.00%
Index Size %
2008 4598002 (4706326)
(108324)
2009 131% 141% 10% 866% 155% 115% 12.8% 10% 83.7%
2008 106% 126.54% (20.54%) 267% 497.7% 181.18% (123.9%) 99.03% 58.78%
2007 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5682571 (5249197)
433374
Distribution Cost Other Operating Expenses Administration and general expenses Operating Profit/Loss Other Operating Income Finance Cost
EBIT/ Loss Before Tax
Taxation
Profit/Loss for the Year
Interpretations:
After completing Index analysis (taking 2007 as base year). we came to know that companys non-current assets increases during the time of 2007-2009 and its current assets decreases in same span of time. Non-current liabilities of the company also decreases which is a good sign for financial health but current liabilities increases which is not a good sign. Now we can see that companys current assets had decreased and current liabilities had increased which shows that companys liquidity is not good. In profit and loss statement we can see that cost of goods sold had increased during the time of 2007-2009 it means companys overall external expenses had increased. In the result Gross Profit had decreased. Administrative expenses had been controlled by the company during the same span of time. Distribution cost had also increased which resulted in shrinkage of profit which is currently converted into loss. As we can see in the results the margin of loss is very high which shows that the company is currently in deep trouble. Company must start taking notice of its cost of the goods and operating expenses so that they can bring the company back on track.
Lucky Cement Limited Years Average 2009 0.4766 0.43 3.24 0.607 0.5 0.479 7.9 50 18.6 20 70 0.355 7.173 (1.053) (0.106) (0.733) 0.86 0.73 0.65 0.39 0.26 5.83 20.78 18 17.33 21 39 0.69 0.37 0.117 14.21 0.19 2008 1.08 0.991 0.84 0.46 0.42 24.27 23.54 15 18.18 20 35 0.5 0.25 0.16 9.84 0.14 2007 0.85 0.75 1.75 0.64 1.07 3.55 26.27 14 16 23 37 0.48 0.3 0.20 9.67 0.27 Average 0.93 0.823 1.11 0.50 0.58 11.36 23.53 16 17.17 21 37 0.56 0.306 0.16 11.24 0.2
Years Ratios Liquidity Ratio Current Ratio Quick Ratio Leverage Ratio Debt to Equity Ratio Total Debt to Assets Debt Ratio to Total Capitalization Coverage Ratio Activity/Turnover Ratio Receivable Turnover Ratio Average Collection Period Inventory Turnover Ratio Inventory Turnover Ratio Days Operating Cycle Assets Turnover Ratio Gross Profit/Loss Margin Net Profit/Loss Margin Return on Investment Return on Equity 2009 0.29 0.22 3.16 0.61 0.08 0.93 5.5 66 20.5 17 83 0.26 7.6 2.87 0.75 4.5 2008 0.39 0.36 3.718 0.61 0.68 (0.79) 7.5 49 21.8 17 66 0.61 (0.18) (10.8) (2) (11) 2007 0.75 0.71 2.846 0.603 0.74 1.298 10.7 34 13.7 26 60 0.195 14.1 4.77 0.93 4.3
Quick Ratio:
As it is mentioned in the current ratio that DCL is not in good liquidity position as compared to the LCL and it is almost as the current ratio except it is not liquid.
Activity/Turnover Ratio
Operating Cycle:
This ratio is lower in DCL than LCL, which means that the collection procedures are better in LCL and inventory turnover ratio duration is higher in LCL, so there is lesser chance of inventory shortage in LCL thats why this ratio is lower in DCL.
Return on Equity:
The overall performance of DCL is not very well as compared to the LCL thats why the return on equity is lower in DCL. There are good opportunities for the investors in LCL but it doesnt mean that DCL is performing not well it is also performing well.
CONCLUSION
After having taking into account all the ratios, namely short term liquidity, long term debt paying ability, profitability ratios and last but not the least the investors point of view, we have come to the conclusion that the company does not holds great attraction for the investors, the reason being that its short term liquidity is not good to say the least, its long term debt paying ability does not looks good. It is also not doing well on its profitability front, and it is running a huge risk by financing its assets by excessively putting the borrowed money to use. So all said and done the future of the company does not look promising given its performance and its track record on all fronts.