Financial Analysis

FFBL

We have features for every step of the way

To be a premier organization focused on

quality and growth, leading to enhanced
stakeholders value.
3

Mission

Company Introduction
FFC was established in 1978 as a joint venture ofFauji
FoundationandHaldor Topsoe. The firstureacomplex
was commissioned in 1982. Plant-1 was improved in
1992, and a second plant was built in 1993. In the year
2002, FFC acquired exPak Saudi Fertilizers Limited(PSFL)
Urea Plant situated atMirpur Mathelo,District
GhotkifromNational Fertilizer Corporation(NFC) through
a privatizationprocess of theGovernment of Pakistan.
Fauji Fertilizer Bin Qasim Limited(FFBL) is another
company where FFC has controlling shares.

SWOT Analysis

Strengths

It provides the good quality products to its

customers to get the better advantages and
maximizes their profits.

Demand is heavy because, being an agriculture

country and due to increasing awareness about
the balanced use of fertilizer, demand for the
fertilizer will increase.

Industry has well distribution centers.

Weaknesses

Due to the existence of black market and heavy

demand, farmers have to pay above then the
stated price.

Demand is more and capacity of plants to

produce fertilizers is less.

Fertilizer sector is backward in technology and

also lack in resources.

Opportunities
There is no quota restriction by WTO since 2005,
so there are more chances of export.
Availability of gas from Iran can increase the
production of plants and industry can fulfill the
demands.
Government is giving support to fertilizer sector.
It means that Government has decided to
increase fertilizer industry funding.

Threats

As natural gas is the main raw material, load

shedding of natural gas is big threat.

Imported fertilizer is available at cheap prices

than local fertilizer.

Unstable political condition in the country is also a

big threat to fertilizer industry.

10

Financial Position

11

INCOME STATEMENT OF FFBL AND

EFERT

12

Sales

87,615,258
52,182,072

Cost Of Sales

(55,435,451)
44,967,864

Gross Profit

32,179,807
7,214,208

Gross Profit Margin

36.73%
14%

Operating Profit

24,049,79
1,568,556

Operating Profit Margin

3%
Other Income

27.45%
1,707,059

5,683,100
EBIT Margin

29%
14%

Interest Expense

(4,587,926)
(1,867,774)

Profit Before Tax

21,168,930
5,383,882

Taxation

(6,141,449)
(1,322,295)

Net Profit

13

15,027,481
4,061,587

ANALYSIS OF INCOME STATEMENT OF FFBL AND

EFERT
Gross profit margin of FFBL in less than engro its mean that there is
two factors selling price per unit of FFBL product is low and cost of
goods sold per unit price is high as compare to engro fertilizer.
Operating profit margin of EFERT is also good because they have less
operating expense, while FFBL has high operating expense.
The other income of FFBL is high and that other income increase
EBIT margin up to 11% while other income of EFERT is low as
compare to FFBL and increase is EBIT margin up to 2%.
The net profit margin of FFBL is 8% and EFERT is 17%. Because FFBL
has high interest expense and high taxation.
How much a firm is returning to its stockholder only in the case if the
firm is earning profit FFBL have return on investment ratio 7%
whereas EFERT has14% means EFERT is returning more than FFBL so
it is better to invest in EFERT.

Ratio Analysis:
Five categories of ratios.
Liquidity ratios
Activity ratios
Leverage ratios
Profitability ratios
Market ratios

Liquidity ratios:
Current Ratio
Current Ratio = Current Assets/ Current Liabilities.
2015

2014

2013

0.89 times

1.10 times

0.73 times

Current ratio tells us the short term

solvency of the firm and tells the ability of
the firm to repay its short term loan
Current ratio in 2013 was not effective to
pay off the current liabilities but in 2014
there is a sudden increase in the assets
ratio to pay off the liability because of
efficiency and decrease in liability might
be due to low credit purchases. 2015 the
company assets decline with the normal
ratio to pay off the liabilities

1.2
1

1.1
0.89
0.73

0.8
0.6
0.4
0.2
0
2015

2014

2013

QUICK RATIO:
Current Assets-inventory/ current liabilities
2015

2014

2013

0.67

0.90

0.56

Quick ratio measures the firms ability to

pay off short term loan without relying on
the sale of inventory. Fauji has 0.90
chances to repay his loan without laying on
the inventory. In 2015 has 0.67 and in
2014 0.9 chance. In 2014 Fauji is in better
position.

0.9

1
0.8

0.67

0.56

0.6
0.4
0.2
0
2015

2014

2013

CASH FLOW LIQUIDITY RATIO:

Cash + Marketable Securities + CFO / Current Liabilities
2013

2014

2015

0.13

0.25

0.27

It shows that the companys cash flow

liquidity ratio has increased in 2015 due
to having less current liabilities. In 2015
the company faces huge increase in
cash generated from its cash flows from
operations, whereas in 2013 company
faces huge decline cash flow liquidity
ratio due more current liquidity compare
to 2014

0.3

0.27
0.25

0.25
0.2
0.13

0.15
0.1
0.05
0
2015

2014

2013

DAYS INVENTORY HELD:

Inventory/ Average daily cost of sales

2013

2014

2015

10.32

14.82

36.93

Days inventory held has increased,

10.32 in 2013 which means the
company has managed to sell its
inventory more effectively and
converted it in to sales. 2014 is the
preferred but recent data reveals
2015 company either work in
progress ratio was high or we not
manage effectively due to which at
the end of 2015 inventory was high.

36.93
40
35
30
25
20
15
10
5
0

14.82
10.32

2015

2014

2013

DAYS PAYABLE OUTSTANDING:

Account Payable/ Average daily cost of sales

2013

2014

76.59 days

131.90 days

Days payable outstanding decrease in

2013 which means company is taking
fewer days to pay its suppliers. The
company gradually grown in this phase
as the company paid its liabilities
frequently given in quick ratio as well,
Effective usage of working capital and
availability of long term debts and cash
is being used to minimize the debts.

2015

13.days

150
100
50
0
2015

2014

2013

ACTIVITY RATIO
INVENTORY TURNOVER:
COGS/ inventory
2013

2014

2015

27 days

13 days

25. days

The inventory turnover ratio in 2015

is 25 times, in 2014 is 13 times and
in 2013 is 27 times Inventory
turnover is a ratio showing how
many times a company's inventory is
sold and replaced over a period.

30
25
20
15
10
5
0
2015

2014

2013

ACCOUNT PAYABLES TURNOVER:

COGS/ account payable
2013

2014

2015

4.77

2.78

3.51

Accounts payable turnover decreases in 2014

which means the company is taking longer to pay
off its payable whereas 2013 account payable
turnover is high that means the company is paying
its payable very fast as compare to 2015

5
4
3
2
1
0
2015

2014

2013

FIXED ASSETS TURNOVER:

NET SALE/ NET FIXED ASSETS
2013

2014

2015

4.17 times

4.05 times

4.30 times

Fauji foods effectively and gradually raised its

ability to generate its sales and revenue from its
fixed assets, in 2015 the company generates
4.30 times on each dollar invested for fixed
assets.

4.3
4.25
4.2
4.15
4.1
4.05
4
3.95
3.9
2015

2014

2013

TOTAL ASSETS TURNOVER:

NET SALES / TOTAL ASSETS:
2013

2014

2015

1.50 times

1.07 times

88.times

The asset turnover ratio is an efficiency ratio that

measures a company's ability to generate sales from
its assets by comparing net sales with average total
assets. In other words, this ratio shows how
efficiently a company can use its assets to generate
sales.
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2015

2014

2013

PROFITABILITY RATIO
GROSS PROFIT MARGIN: Gross profit/ Net sale
2013

2014

2015

26.65%

22.43%

13.83%

It tells that how much a firm will receive

against $ 1 sales. In 2013 Fauji has higher gross
profit margin ratio has 26.65 % and earning
more profit in 2013 against 1$ of sales.
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2015

2014

2013

OPERATING PROFIT MARGIN:

Operating profit/ Net sales
2013

2014

2015

21.01%

17.14%

16.58%

The higher the margin, the better it is

for company.2013 the company is in better
position although the company has high
operating expenses in 2013 but high gross
profit margins are there. Whereas In 2015
25.00%
20.00%
operating profit margin was lower as compare
15.00%
to previous year but other income was high. 10.00%
5.00%
0.00%
2015

2014

2013

NET PROFIT MARGIN:

Net Profit / Net sale
2013

2014

2015

10.65%

8.12%

7.78%

The 2015 high COGS as compared to other two

years which have decreased the G.P with the
ultimate impact on net profit margin but in 2015
company finance cost reduces which cause a raise
in net profit margins as compare to 2014 plus
other income was more than 2014.
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2015

2014

2013

CASH FLOW MARGIN:

CFO / Net sale
2013

2014

2015

18.25

17.20

(0.12)

In 2013 the company effectively generates cash

from its sales, but with the declining ratio. In
2015 the CFO margin reduced with the very
low cash generated from operations in the cash
flow statement might be the company have
large share of its sale as credit sales plus
company not able to convert some of its sale in
cash at all.

20
15
10
5
0
-5
2015

2014

2013

RETURN ON ASSETS:
Net profit / Total Assets
2013

2014

2015

16.01%

8.68%

6.84%

The percentage of ROA for Fauji group is

decreased, which indicates that the company
ca. The gradual decrease shows the ineffective
usage of companys investment for generating
profits, and company will face some problems
in future.
20.00%
15.00%
10.00%
5.00%
0.00%
2015

2014

2013

RETURN ON EQUITY:
Net profit / shareholder Equity
2013

2014

2015

43.18%

17.14%

17.17%

It indicates management may ineffectively

managing the profits earned based on the
owner investment in the company. It is a very
bad sign for shareholder indicating that they
will go to earn 17.17% in 2015 against their 50.00%
40.00%
investment as compare to 43.18% in 2013 30.00%
20.00%
10.00%
0.00%
2015

2014

2013

CASH RETURN ON ASSETS:

CFO/ Total Assets
2013

2014

2015

27.44

18.39

(10.22)

In 2015 company generate no revenue in term of cash from its assets thats why COA
is negative

30
20
10
0
-10
-20
2015

2014

2013

MARKET SHARE RATIOS:

PRICE TO EARNING: Market price of common stock / EPS
2013

2014

2015

7.06

10.51

12.12

Due to increase in price to earnings ratio in

2015 as compared to 2014 and 2013. The
investors will be willing to invest in the
company based on the high amount they are
getting in return. Also 2015 P/E ratio is also
higher than 2014 it is predicted brighter future
performance of the company.

15
10
5
0
2015

2014

2013

DIVIDEND PAYOUT:
Dividend per share / EPS
2015

2014

2013

87.39%

93.03%

83.19%

For the smooth earning seekers, the shareholders will go for buying shares of Fuaji because
of 87.39% of its earning is being distributed, in 2014 the ratio is higher then 2013 and 2015.

95.00%
90.00%
85.00%
80.00%
75.00%
2015

2014

2013

The Du Point System

Net profit margin x Total Asset turnover = return on investment
Net income/ net sales x net sales/ total assets = net income/ total asset
4,061,587/ 52,182,072 x 52,182,072/ 59,407,356 = 6.84%
Return on investment x financial leverage = return on equity
Net income/ total asset x total assets/ stockholders equity = net income/ stockholders
equity
4,061,587/ 59,407,356 x 59,407,356/ 14,281,016 = 28.44%

THANKS

THANK
S

TNAN
KS

THANKS

..??
Any Question.???
36