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(Rupees in Thousands)
EQUITY AND LIABILITIES 2007 2008 % of Sales 2009 2010
Sales 10,961,438 11,174,014 12,274,922 13,484,296
Authorised capital
20,000,000 (June 30, 2007: 20,000,000) ordinary shares of Rs. 10/- each 200,000 200,000
7,960,006 8,720,416
AFN / EFN 2009 AFN / EFN 2010
For projected Balance Sheet of 2009 and 2010, I took 2008 as base year and then calculated the % of sales of some of the heads of Balance Sheet.
With the help of these calculated % of sales, i calculate the Balance Sheet for Years 2009 and 2010 while keeping growth rate of 9.85% as shown in
Income Statement.
After calculating EFNof 2009 I came to know that my company, Millat Tractors needed External financing of Rs. 10,513 in assets in order to equalize
the balance sheet. Similarly, in 2010 Millat Tractors needed External financing of Rs. 21,306 in assets in order to equalize the balance sheet.
INCOME STATEMENT (Rupees in Thousands)
PROFIT and LOSS ACCOUNT 2007 2008 % of Sales 2009 2010
Rupees In thousands
Sales-net 10,961,438 11,174,014 12,274,922 13,484,296
Cost of sales 9,832,853 9,701,298 86.82% 10,657,108 11,707,089
Gross profit 1,128,585 1,472,716 1,617,814 1,777,207
5 YEARS
PV 6,984,922
FV 11,174,014
n 5
4 YEARS
PV 6,984,922
FV 11,174,014
n 4
First I took out the graowth rate of Income Statement for 5, 4 and 3 years respectively. Their growth rate will be 9.85% for 5 years, 7.63% for 4 years
and 4.69% for 3 years. So, I took the highest growth rate 9.85% of 5 years. My base year was 2008 and then I found the % sales of heads of Income
Statements. For projected Income Statement of 2009 and 2010, I used this growth rate and % of sales.
Trading Results (Sales)
Taxation 27.65%
From Sensitivit Analysis of Cost of Sales I came to know that if I increases my Cost of Slaes by 15%, my Income Statement will
become negative which shows the loss for my company and definetely same is the case with 30% increase in Cost of Sales. If I
decreases my Cost of Sales by 15 %, then my company will be in +ve and same is the case with 30% decrease in cost of Sales
Sensitivity Analysis of Sales (Rs.)
Taxation 27.65%
From Sensitivit Analysis of Sales - Net, I came to know that if I decreases my Slaes by 15%, my Income Statement will become
negative which shows the loss for my company and definetely same is the case with 30% decrease in Sales. If I increases my
Sales by 15 %, then my company will be in +ve and same is the case with 30% increase in Sales
Sensitivity Analysis of Expenses (Rs.)
PROFIT and LOSS ACCOUNT Base (2008) 30% 15% -30% -15%
Taxation 27.65%
From Sensitivit Analysis of Expenses, I came to know that with the increase or decreases in my expenses by 15% and 30%, my
Income Statement remains same. It has no affect on my income statement and Millat Tractors remains stable.
` Sensitivity Analysis of Financial Cost (Rs.)
PROFIT and LOSS ACCOUNT Base (2008) 30% 15% -30% -15%
Taxation 27.65%
From Sensitivit Analysis of Financial Cost, I came to know that with the increase or decreases in my expenses by 15% and 30%,
my Income Statement remains same. It has no affect on my income statement and Millat Tractors remains stable.
Breakeven Analysis & Liverages
Projected
Accounting Breakeven (FC/1-(VC*Q)/(P*Q) 2008 2009 2010
Administrative Expense FC 210,120 230,822 253,563
CGS V*Q 9,701,298 10,657,108 11,707,089
Sales P*Q 11,174,014 12,274,922 13,484,296
Accounting Breakeven 210,119 230,821 253,562
Degree of Levearage
(%change in EBIT / %Change in Sales Projected
2007 2008 2009 2010
EBIT 931,636 1,222,709 1,343,175 1,475,510
Sales 10,961,438 11,174,014 12,274,922 13,484,296
Degree of Leverage 16.11 1.00 1.00
From Breakeven Analysis I came to know that Millat Tracrors Accounting Breakeven of 2009 will be at the cost Rs.
230,821 and year 2010 breakeven will be at the cost of Rs. 253,562. At these costs the firm will be in a NO PROFIT NO
LOSS point.
From Breakeven Analysis I came to know that Millat Tracrors Cash Breakeven of 2009 will be at the cost Rs. 1666,735 and
year 2010 breakeven will be at the cost of Rs. 1839283. At these costs the firm will be in a NO PROFIT NO LOSS point.
Scanerio Analysis
In Scenario Analysis, in its worst case sales decrases and Cost increases, whereas in its best case, sales increases and cost
decreases.
WACC
Stock Price Market Index Relative Index
2006 June 322 9,989.41 99.8941
July 328 10,497.63 104.9763
August 351.1 10,064.13 100.6413
September 340 10,512.48 105.1248
October 290 11,327.71 113.2771
November 289 10,618.75 106.1875
December 282 10,058.46 100.5846
2007 January 294 11,272.33 112.7233
February 286.1 11,179.97 111.7997
March 275 11,271.59 112.7159
April 300.25 12,369.70 123.697
May 342.45 12,961.26 129.6126
June 331.5 13,772.46 137.7246
July 330 13,738.87 137.3887
August 315.5 12,214.26 122.1426
September 302 13,351.79 133.5179
October 282.5 14,319.42 143.1942
November 281 14,070.05 140.7005
December 270.5 14,075.83 140.7583
2008 January 271.4 14,017.01 140.1701
February 297 14,934.30 149.343
March 297 15,125.29 151.2529
April 292.5 15,122.47 151.2247
May 265.25 12,130.51 121.3051
Covariance -108.523393403
Variance 626.0916259058
β -0.17333468284 β UL -0.002182
rRF 9%
RPM 11%
Beta -0.173335
Risk Free Rate,Rf 9.45%
June,2008
Market Risk 8%
CAPM=k= 0.0806332254
WACC 3.91%
Dividend Policy % Change in Net Income
The dividend policy is calculated by dividend per share and dividend payout ratio in previous years it has decreasing trend this is shown by
the table. Company is paying dividend in cash and as bonus shares as well. In 2008 company has decreased its cash dividend and its payout
ratio has decreased
OPTIMAL CAPITAL STRUCTURE
Through Optimal Capital Structure I calculated proposed % of Equity and % of Debt for year 2009 & 2010. In optima capital structure
WACC and multiplies by short term borrowings, accrued mark up and provisions.WACC is calculated by finding company share price
and market index, I obtained the beta. Beta is the measure to which the portfolio return should exceed the risk free rate. Here the
share price is the measure which increases the risk free rate.
INCOME STATEMENT (Rupees in Thousands)
PROFIT and LOSS ACCOUNT 2008 2008 2008
Rupees In thousands
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