Maple Leaf Cement

Ratio Analysis
Prepared By: Muhammad Shiraz Khan
Regd. I.D: 53304
Submited to: Mr. Munawar Hameed

1
December 30, 2009

To,

Mr. Munawar Hameed

Course: Fiancial Accounting
PAF KIET University City Campus
Karachi.

Respected Sir,

I herewith present this Final Project Report which was assigned by you as a
requirement of this course. In this report, I have tried my best to provide Ratio
Analysis of Financial Statement for Maple Leaf Cement Public Limited.

I have tried my best to cover all the requirements for the Final Project report.

Yours Sincerely
Muhammad Shiraz Khan

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 ACKNOWLEDGEMENT

In the name of “Allah”, the most beneficent and merciful who gave me strength and

knowledge to complete this report. This report is a part of our course “Financial

Accounting”. I would like to express our gratitude to our Accounts teacher Mr. Munawar

Hameed; who gave us this opportunity to fulfill this report. I would also like to thank our

class mates who participated in a focus group session. They gave me many helpful

comments which helped me a lot in preparing my report.

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Vision
In order to remain competitive in the market the management at Maple Leaf continuously
re evaluates its business strategies. With the increase of furnace oil prices the company
adopted coal as a more cost efficient and environmentally friendly fuel for kiln firing.
Today the management believes that the future lies in exploring the possibilities of
alternative and cheaper fuels such as waste firing. This would further reduce production
costs whilst promoting a culture of environmental awareness, health and safety.

Mission Statement
“The Maple Leaf Cement Factory Limited stated mission is to achieve and then remain as
the most progressive and profitable company in Pakistan in terms of industry standards
and stakeholders interests”

Values
Maple Leaf Cement is committed to run an efficient and profitable business and therefore
aims to employs cutting edge technology to ensure energy efficiency and the optimum
use of natural resources. The visionary and experienced management drives the company
to set goals that position Maple Leaf ahead of the competition and as a key player in the
cement industry.

Capacity
At the time of privatization in 1992, the capacity of Maple Leaf to produce Ordinary
Portland Cement (OPC) was 1000 tones per day (tpd). A second plant of 4000 tpd was
commissioned in 1998 and a third plant of 6700 tpd came into production in 2006. It
increased the total capacity to 11,700 tpd. The capacity of White Cement has also
increased from 100 tpd to 500tpd with the addition of a new plant. This plant also has
provisions for doubling the capacity to 1000tpd. Presently Maple Leaf cement has 9% of
the market share of OPC and is a leading brand in Pakistan with a diverse customer base.
It is also the largest producer of White Cement in the country with 80% of market share.

Technology
The plants of 4000 tpd, 6700 tpd and of White Cement are state of the art and have been
supplied by FLSmidth in Denmark. In order to ensure the highest efficiency and process
control the plants comprise of equipment with the latest design and technology. To
maintain the highest quality standards a laboratory has also been set up at site for the
testing of raw materials and cement. All Maple Leaf plants comply with National
Environment Control standards

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Sales Graph

Total Sale

10000000

8000000

6000000
Sale

4000000

2000000

0
2008 2007 2006

Years

Local & Export Sale

Local & Export Sale

5000000
4000000
3000000 Export
2000000 Local
1000000
0
2008 2007

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Liquidity Ratios

Ratios 2009 2008 2007

Current Ratio 0.51:1 0.81 :1 1.08:1

The decrease in ratio of FY08 is due to the increase in current liabilities (96%)
while current assets were increased only by 48%.

Current Ratio Graph

CURRENT RATIO

1.50

1.00
TIMES

Series1
0.50

-
2004 2005 2006 2007 2008
YEARS

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Profitability Ratios

Ratios 2008 2007 2006

Gross Profit Margin 16.94% 8.35% 37.63%

Net Profit Margin -8.65% 1.13% 18.55%

Return on Asset -2.59% 0.18% 5.53%
Return on Equity -8.09% 0.47% 14.02%

Profitability Ratios
 The Profit of MLCFL declined drastically because of an excess supply situation in
industry and falling net retention prices.

 Financial charges formed 20% of production cost increased by 96% because of

the increase interest rate in the economy.

profit (loss) after taxation

1,200,000

900,000

600,000

300,000
Series1
-
2,006 2,007 2,008
(300,000)

(600,000)

(900,000)

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 0
700000
1400000
2100000
2800000
3500000
4200000
Fu e l & p o w e r

R aw
& p a c k in g
M a te ria l

S a la rie s

D e p re c ia tio n
&
A m o rtiz a tio n

A d m in &
Production cost (2007& 2008)

S e llin g
Total Production Cost for the year 2008-07

F in a n c ia l
c h a rg e s
2008
2007

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Asset Management Ratios

Ratios 2008 2007 2006

Inventory turnover Ratio 14.96 9.20 17.72

Days to sell inventory 24.06 39.13 20.31

Days sale Outstanding 34.24 18.88 10.31

Operating Cycle 58.30 58.01 30.62

Total asset turnover 0.30 0.16 0.30

Asset Management
 The inventory turnover rate increase showing that it took lesser days for the
company to sell its stock trade. However the company average collection period
of account receivable increase and so did its operating cycle.

 The total asset turnover ratio Improved in FY08 indicating that the company was
able to generate sufficient sales volume given it total asset investment.

Asset Management Graph

Asset management

70.00
60.00 Days sales
50.00 outstanding
tim es

40.00 Inventory Turnover in

30.00 Days
20.00 operating cycle(days)
10.00
-
2008 2007 2006 2005
years
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Debt Management Ratios

Ratios 2008 2007 2006

Debt to asset 0.68 0.62 0.61

Debt / Equity (times) 2.13 1.61 1.53

Time interest earned (times) 0.25 0.59 5.79

Long Term debt to equity 0.03 0.98 1.04

Debt Management
 Firms profitability decline when economy takes a downturn and in tight monitory
policy.
 As interest rate increase in FY08 the cost of borrowing for the firm has increased.
 The firm can’t pay for its expenses through earnings and will have to take extra
debt to pay its obligation

Debt Management Graph

.
Debt Management

7.00
6.00
5.00
Debt To Asset
4.00
Debt To Equity
3.00
Time interst earned
2.00
1.00
-
2005 2006 2007 2008
years

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 Balance Sheet
Maple Leaf Cement Factory
For the year (2008, 207, 2006)

Balance Sheet for Non- Current Assets

Non Current Assets 2008 2007 2006

Property, Plant And Equipment 20,081,448 19,330,866 16,088,505

Intangible Assets 15,082 4,578 -

Investments - - 368,881

Loans to employees 6,121 6,373 7,127

Deposits and prepayments 54,014 43,200 15,923

Total 20,156,665 19,385,017 16,480,436

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Balance Sheet for Current Assets
Current Assets 2008 2007 2006

Stores,Spare and loose tools 33,25,744 2,014,580 1,847,926

Stock in trade 433,952 369,709 200,946

trade debts 743,366 194,587 163,459

Fair value derivative financial 365,748 242,226 -

instruments
Loans and advances 82,814 85,544 299,257

Investments 734,859 944,669 -

Deposits and short term 54,532 15,373 7,314

prepayments
Accrued profit 763 402 559

Sale tax, customs and excise 57,769 37,742 34,611

duty
Due from gratuity fund trust 9,768 8,539 -

Other receivables 21,780 1,198 9,452

Taxation - net 44,907 14,029 -

Cash and bank balances 118,894 123,359 100,938

TOTAL ASSETS 5,994,896 4,051,957 2,664,462

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Balance Sheet for Equity & Liabilities
EQUITY AND LIABILTIES 2008 2007 2006

Share Capital and Reserves

Authorized Capital 5,000,000 5,000,000 5,000,000
Issued, subscribed and paid up 4,264,108 4,264,108 3,519,581
capital
Reserves 4,644,355 4,457,328 3,063,529

Unappropriated profit (547,574) 271,601 972,594

Total Equity 8,360,889 8,993,037 7,555,704

Balance Sheet for Non-Current Liabilities

NON - CURRENT 2008 2007 2006
LIABILTIES
Loans from related parties 35,224 250,000 -

Long Term loans and finance 241,539 8,576,657 7,868,948

Redeemable capital 8,000,000 - -

Syndicated term finance 1,000,000 - -

Liabilities against assets 957,434 268,040 12,226
subject to finance lease
Lease finance advances and - 979,676 76,146
accured interest thereon
Long Term deposits 2,582 2,702 2,977

Deferred taxation 154,741 897,183 971,128

Employee' compensated 16,688 13,192 10,250

absences
TOTAL NON -CURRENT 10,408,208 10,687,450 8,939,675
LIABILTIES

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Balance Sheet for Current Liabilities
CURRENT LIABILTIES 2008 2007 2006
Current portion of:
redeemable capital - - 41,650

Long Term loans and finances - 1,792,519 538,530

syndicated term finance 1,080,000 - -

Liabilities against assets 188,011 13,858 4,481

subject to finance lease
Short term finance 3,369,738 797,585 947,160

Trade and other payable 2,495,559 719,311 752,172

Accured profit and interest / 194,568 378,675 279,112

mark-up
Taxation -net - - 31,828

Dividends 54,588 54,539 54,586

TOTAL EQUITY AND 26,151,561 23,436,974 19,144,898

LIABILTIES

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 Income Statement
Maple Leaf Cement Factory
For the year (2008, 207, 2006)

2008 2007 2006

Sale 7,815,829 3,711,081 5,709,792

Less: cost of sale (6,491,999) (3,401,188) (3,561,212)

Gross profit 1,323,830 309,893 2,148,580

Administrative expenses (121,236) (67,291) (60,474)

Distribution cost (834,849) (69,021) (20,961)

Other operating expenses (24,838) (18,371) (118,024)

Other operating income 105,656 43,224 26,671

Operating profit from operation 448,563 198,434 1,975,792

Finance cost (1,812,807) (338,453) (340,978)

Profit / (Loss) before taxation (1,364,244) (140,019) 1,634,814

Taxation
Current: 44,815 (94,77) (28,536)
Deferred: (732,924) (172,589) (547,038)

Profit (loss) after taxation (676,135) (42,047) (1,059,240)

Earning Per Share (1.96) (0.03) 3.38

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