Documente Academic
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Technology
Department of Management Sciences
FINANCIAL MANAGEMENT
Final Project Report
Submitted To:
Sir Khalid Sohail
Submitted By:
UBAID ULLAH JAN FA09-
MBE-021
Mian Murtaza Shahid FA09-MBE-011
Salleha Satti FA09-MBE-020
Umer Naseh FA09-MBE-014
Inam Ullah FA09-MBE-006
DATE: 10.01.11
The Exordium
ACKNOWLEDGEMENT
First of all we are thankful to Almighty
ALLAH for giving us much cooperation and
supporting parents who have given us this
opportunity to study in COMSATS. I would like
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to thanks Sir Khalid Sohail for giving us the
confidence and opportunity to prove ourselves.
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The Business policy of the company is based on the principles of honesty, integrity and
professionalism at every stage.
Product Quality:
Regularly update ourselves with technological advancements in the solid of cement production
to produced cement under highest standards and maintain all relevant technical and
professional standards.
Provide congenial work atmosphere where all employees are treated with respect and dignity.
Recognize and reward employees based on their performance and their ability to meet goals
and objectives.
To be objective, fair and transparent in our dealings with people who have reposed their
confidence in U.S.
To implement an effective and transparent system of financial reporting and internal controls
to safeguard the interest of our shareholders and fulfill the regulatory requirements.
Only purchase goods and services that are tailored to our requirements and are priced
appropriately. Before taking decision about procurement of any good or service, obtain
quotation from various sources.
Conflict of Interest:
All the ads and decisions of the management to be motivated by the interest of the company
and activities and involvements of the directors and employees in no way conflict with the
interest of the company.
To fulfill all statutory requirement of the Government and its regulator bodies and follow
relevant and applicable laws of the country.
Environmental Protection:
To protect environment and ensure health and safety of the work force and well- being of the
people living in the adjoining areas of our plant.
We recognize the need for working with optimum efficiency to attain desired levels of
performance. We endeavor to conduct our business with honesty and integrity and produced
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and supply cement with care and competence, so that that customer
receive the quality they truly deserve.
Board Of Directors
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-:Different Competitors of Charat Cement:-
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Financial Information & Decision Making:
Financial statement is about the company’s account, which they produce at the
end of every trading year. The balance sheet and income statement (profit and loss
accounts) are the main part of financial statements. Financial information provides
invaluable statistics and evidence on which company can make decisions and plans for
future.
The stakeholders have great concern about these financial statements
(Stakeholders are all those who are directly or indirectly related to the operations of the
organization).These stake holders are tax authority, management, customers, employees,
bank, competitors etc.
Tax Authority:
They are interested in the income of the organization (after payment of interest) in
order to charge tax accordingly.
Management:
The management uses the financial statements for financial assessment of the
company. A management responsibility requires to cut costs or to make other finance
related decisions.
The Employees:
The employees are interested in the financial statement of the company to know
about the real profit, so that they may claim for their bonuses and fringe benefits etc from
the company.
Share Holders:
Shareholders are also interested to know about the real earnings from the study
of financial statement of the company for their claims of dividends.
The Creditors:
The Creditors are interested in the financial statements of the company to know
about the financial position of the company for their re-payment of loans.
A financial statement provides information that is otherwise not available from the
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general study of the accounts of a company. This statement must be supplemented with
other information also, which includes company’s management, investment advisors and
trade associations etc. The finance department of a company generates a variety of
information that is very useful and help out company as well as stake holders to make
decisions, it includes:
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MAJOR CONTENTS OF BALANE SHEET AND
INCOME STATEMENT IN 2009 & 2010
Balance Sheet 2010 (Rs. “000”) 2009 (Rs. “000”)
Current Assets 1,239,483 1,343,431
Inventory 201,186 280,588
Quick Assets 1,038,297 1,062,483
Accounts Receivable 25,467 16,437
Total Assets 4,857,419 4,743,510
Current Liabilities 1,622,417 1,070,994
Total Debt 2,611,454 2,475,106
Shareholder’s Equity 2,245,965 2,268,404
Net Worth / 3,235,002 3,672,516
Capitalization
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Classification of Ratios
Different ratios are used for different purposes; these ratios can be grouped into various
classes according to the financial activity. Ratios are classified into four broad categories.
• Liquidity Ratio
• Leverage Ratio
• Profitability Ratio
• Activity Ratio
• Market Value Ratio
Liquidity Ratio
Liquidity ratio measures the firm’s ability to meet its current obligations i.e. ability to
pay its obligations and when they become due. Commonly used ratios are:
• Current Ratio
• Acid Test Ratio or Quick Ratio
• Working Capital
1. Current Ratio:
These are most widely used measure of short term debt paying ability is the current ratio.
This ratio is computed by dividing current assets by total current liabilities.
The higher the current ratio, the more liquid the company appears to be. It is believed
that a current ratio of at least two or greater quality as a good credit risk.
Current Assets
Current Ratio =
Current Liabilities
1. Quick Ratio:
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Inventories and prepaid expenses are least liquid assets. It take many month to
convert inventory into cash. Quick ratio include cash, accounts receivables, marketable
securities i.e. short term investments that can be converted quickly into cash. It is
believed that a quick ratio of at least one or greater qualify as a good credit risk.
Quick Assets
Quick Ratio =
Current Liabilities
Total debts
Debt to total asset ratio: X 100
Total assets
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To assess the extent to which uses borrowed money, we use debt to equity ratio.
The higher the ratio the higher the level of firm’s contribution that is being provided by
shareholders. The larger the creditor’s cushion in event of shrinking values or assets
losses.
Total debts
Debt to equity ratio: X 100
Equity
.3058 .3824
Profitability Ratio
Profitability ratios are used to determine that how much company revenues is eaten up by
expenses. How much a company earns relative to sale generated and the amount earned
relative to firm’s total assets.
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better the sales cost control compared to its sales revenue. This ratio shows how well a
firm generates revenue compared to its sales revenue.
Gross Profit
Gross Profit Margin: X 100
Sales
Net Profit
Net Profit Margin: X 100
Sales
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Net Profit After Tax or (13,755) 159,287
Loss
Total Assets 4,857,419 7,743,510
Return on assets (.0028) .0336
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• Account Receivables Turnover Rate in days:
It indicates the days taken to collect account receivables.
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