Ratio Analysis

AL-NOOR SUGAR MILL LTD.

Ratio Analysis
On
Income Statement
&
Balance Sheet



Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Liquidity Ratios

(1) Current Ratio=





2010 2009

=0.97:1

=1.03:1

Comments:
So company liquidity position in 2010 is not strong as
compared 2009. As we know standard is 2:1 so weak position. Main reason
for this is that because company payable increasing, so company are not
able to make payment to creditor .markup also increasing as well as tax
amount. So company is going down. Company has almost equal cash ability
but more receivable in current period main cause of low ratio in 2010 as
compared 2009 year. Bad debt against receivable also main cause of low
current ratio. Stock also cause of more cash blockage in 2010.




Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Quick/Liquid Ratio




2010 2009

=0.30:1

=0.28:1

Comments:
As we know standard is 1:1, but our 2010 ratio is much
better than 2009, because in 2010 our assets are more liquid as compared
2009.as well as cash balance is more in 2010. So company should use stock
effectively and should use economies order quantity. If company invest low
amount in stock then company can improve their cash ability as well
working capital condition. Company should make proper system of payable
to improve liquidity position of company. Low borrowing will be helpful in
reducing interest cost, and that cost will be use as cash item which lead to
success.






Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Absolute Liquid Ratio




2010 2009

=0.10:1

=0.10:1

Comments:
So this ratio almost is same in both years because cash
items are same, but according to standard (05:1) both are not good. So
company needs proper management of resources. Sugar mill are taking
more loan /borrowing from banking so thats way absolute liquid position is
more low than standard (0.5:1).sugar mill should invest low in inventory and
should follow economic order quantity (EOQ) as well as carrying and
ordering cost should be control. If sugar mill purchase raw material
according to requirement and it will be a better for organization.






Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Profitability Ratios

Gross Profit Ratio


*100

2010 2009

100=15.87%

100=16.07%

Comments:
Gross profit ratio in 2010 year is little less as compared
2009. Reason is that cost are increasing mean to say cost of goods sold is
very high in 2010 not drought sale is high in year 2010, but proportion of
cost to sale is high in current year as compared previous year. So suggestion
is that company should control cost of raw material, production setups and
should redesigning the pricing policy, managing sale price and maintaining
profit margin. Factory overhead should be control, as well labor cost should
be maintaining according to policies.




Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Net Profit Ratio=


*100

2010 2009

*100=4.03%

*100=2.82%

Comments:
So net profit ratio in current period is high as compared in
2009.reason is that company current year sale is more as compared
2009.sale is 50% more than previous year sale .it mean company are utilizing
resources more effectively. And there is proper policies and procedure.
Another reason of high profit in current period is that because share of
associated undertakings is very high in 2010 as compared in 2009.high profit
in current period shown that sugar mill are going toward strong position.
And sugar mill will get good worth in market.

Operating Profit Ratio=


*100

2010 2009

*100=15.99%

*100=16.25%

Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Comments:
As operating profit ratio is 15.99% in 2010 and 16.25% in
2009.so we can see operating profit ratio is little low in 2010 as compared in
2009. Reason of low in 2010 is that because profit from trading activities is
low in 2010 as compared 2009.

Administrative Expense Ratio




2010 2009

*100=3.75%

*100=4.19%

Comments:
Low administrative expense ratio in 2010 show high
profitability and proper managing of expense of company. And
administrative expense has proper proportion with sale revenue. Sale high
in 2010 means expenses is under proper control.




Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Efficiency Ratios

Return on Capital Employed




2010 2009

100=22.82%

100=13.66%

Comments:
Return on capital employed is high in 2010 as compared
2009 because net profit and capital employed is both high in 2010 as
compared 2009.in current period profit is high and and thats way earning
per share is also high in 2010 as compared 2009.

Time interest earned ratio




2010 2009

1.77 Times

1.41 Times

Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Comments:
Sugar mill has more ability to pay interest expenses in
2010 as compared 2011. Because ,company reducing their borrowing in
2010 as compared 2009 so thats way interest expenses reducing and profit
increasing. More earning also main reason of high ability of repayment of
interest expenses.

Return on investment


100

=38.37%

=33.08%

Comments:
Return on investment is high in current period as
compared 2009.because financing is very high in 2010 as compared
2009.not doubt company taking more loan but it making effective use of
thats loans. And high sale also main reason of high returns on investment.
So if sugar mill try to reduce cost more than he can improve this ratio more.

Asset Turnover Ratio



2010 2009
Ratio Analysis

AL-NOOR SUGAR MILL LTD.

2.23 TIMES

7.71 TIMES

Comments:
It show in current period our asset are not using effectively because in
current period ratio is 2.23 times that is 70% less than previous period .so if
company want to improve their asset turnover ratio than company must pay
attention on effective use of resources.

Debtor Turnover Ratio



2010 2009

90 TIMES

72 TIMES

Comments:
This ratio are showing good result of organization because in current period
debtor turnover ratio is very good mean to say our debtor convert in to cash
90 times in year. So if company want to more improve than debtor
collection period should be effective.

Debtor conversion period



2010 2009

4 days

5 days
Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Comments:
It shows after four days debtor convert in to cash that is good period for
collection from debtor.
Credit Turnover Ratio




2010 2009

8.86 TIMES

7.33TIMES

Comments:
In current period credit turnover ratio is high as compared in previous. This
ratio must be low because more cash should not used for payment to
creditor but must be available for maintaining good working capital
condition.

Creditor conversion period
Bays in yeai
Cieuitoi tuinovei iatio


2010 2009

41.20 DAYS

49.80 DAYS


Ratio Analysis

AL-NOOR SUGAR MILL LTD.

Comments:
We can easily observed that in current period we are making payment after
41.20 days that is not good as compared previous period. So we should
make payment to creditor after long time not fastly.
Inventoiy Tuinovei Ratio




2010 2009

5.51 TIMES

3.7 TIMES

Comments:
As we can see our stock are very quickly converting in to finished good
because in current period answer is 5.51 times as compared 2009 in which
answer is 3.7 times. Converting of stock into finished good quickly shows
that there is just in time system operating in organization.

Inventory conversion period
Bays in yeai
Inventoiy tuinovei iatio


2010 2009

66.36 DAYS

98.64 DAYS
Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Comments:
As we can see in current period our inventory are converting to finish within
66.36 days and in 2009 converting period is 98.64 days.

Solvency Ratio

) Debt-Equity Ratio

2010 2009

0.37 Times

0.41 Times

Comments:
So we can observe sugar mill debt are reducing as
compared 2009.in current period company are paying more debt and
interest cost on loan as well as paying more payment to creditor. If company
wants to improve their ratio more than company should reduce more debt
by using other resources like reserves.

Earnings per Share

Ratio Analysis

AL-NOOR SUGAR MILL LTD.
2010 2009

13.70 per share

6.45 per share

Comments:
Earning per share is high in current period as compared
previous year, reason is that net profit after tax is very high in current period
.high earning per share very is very helpful in retaining shareholders of
company as well as show good repute of sugar mill in market. There is no
dilutive effect on the basic earnings per share of the company because no of
share outstanding are same in both period.

Price Earnings Ratio




2010 2009

100=72.99%

=155.03%

Comments:
We can see low price earnings ratio in current period is
better for sugar company ,it shows share price in market is low but our
earnings per share is still high in 2010 as compared 2009.so if sugar mill
want to improve price earnings ratio more than it should be improve his
earning per share. This can be improving if company pays full attention on
his expenses controlling.

Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Dividend Yield Ratio

100=34.81%

=21.68%

Comments:
As dividend ratio in current period is high so we can say
company in growing condition. If company to improve their dividend yield
ratio then company organization must pay attention on their market worth.

) Book Value of Share




2010 2009

6 per share

4.72 per share

Ratio Analysis

AL-NOOR SUGAR MILL LTD.
Z- SCORE MODEL

X
Woiking Capital
Total Asset

2010 2009

0.33*1.2=0.40

0.35*1.2=0.42

X
2

Retain Eaining
Total Asset

2010 2009

0.22*1.4=0.31

0.18*1.4=0.25

X
3

EBIT
Total Asset

2010 2009

Ratio Analysis

AL-NOOR SUGAR MILL LTD.

0.09*3.3=0.31

0.05*3.3=0.18

X
4

Naiket value of shaie
Total Book Bebt

2010 2009

0.0002*0.6=0.0001

0.0002*0.6=0.0001

X
5

Net sale
Total assets

2010 2009

0.25*.99=1.47

1.00*.99=0.96

Sum of values from X
1
to X
5
:
20100.40+0.31+0.31+0.0001+1.47=2.49
2009=0.42+0.25+0.18+0.0001+0.96=1.81
Result:
Ratio Analysis

AL-NOOR SUGAR MILL LTD.
If sum <1.8 or equal= High Insolvency
If sum is 1.81-2.99 =uncertainty
If sum >3.0 or equal=less chance of insolvency