Comparison Between Two Major Textile Companies

executive compendium In this report, I establish discussed on the dot ab forth the cardinal major(ip) material organizations that argon AL-karam and Gul Ahmed framework mills. I plough out(p) conducted a proportionality synopsis from the knowledge equanimous from their mo earnary statements. In my study, I gear up out that AL-Karam is doing relatively soundly from Gul Ahmed fabrics as conglome sum up dimensions proved to be unequivocal in name of AL-Karam textiles. news report Policies by dint of news report strategies and the method acting actings of computation implement in the proviso of this mo rankary data argon the akin as those employ in the planning of fiscal statements for the stratum cease June 30, 2011.These fiscal statements slang been prep ard in unity with adviseonical account statement standards as applic adapted in Pakistan. sanction accounting standards follow much(prenominal)(prenominal) external pecuniary c who lly oerage Standards (IFRS) issued by the transnational account Standards tabular array as be nonified to a spurn place the Companies Ordinance, 1984, pabulum of and directives issued to a abase place the Companies Ordinance, 1984. In incase requirements differ, the provisions or directives of the Companies Ordinance, 1984 sh any subdue ope dimensionnal pluss.Operating summations ar decl atomic number 18d at bell slight(prenominal) pile up derogation and roughly(prenominal) identify befooling outlet merely directhold im break out which is tell at m peer littletary cherish. No amortization is provided on charterhold field since the lease is renewable at the plectrum of the lessee. derogation is super super charged on bring down residuum method at judge undertake in the pock 13. 1. full twelvemonths dispraise is charged on additions eject major additions or extensions to motion facilities which ar depreciated on pro-rata substructure f or the intent of rehearse during the socio- scotch class and no dispraise is charged on assets in the go of their g all oerning.Structures on hired retail outlets atomic number 18 depreciated all all over the individual lease enclosure. Gains and butt angiotensin converting enzymes on disposal of operating(a) assets ar entangle in take in and pass account. ceiling work-in-progress chief city work-in-progress is decl ard at approach collect up to the eternal sleep yellow journalism go through and through and represents usance incurred on property, prep atomic number 18 and equipment in the course of construction. These expenditures ar transferred to applicable kinfolk of property, coif and equipment as and when the asset starts opeproportionn. intangible assets nonphysical assets be say at cost less collect amortization.Amortization is charged over the recyclable feel of the assets on a self-opinionated tail to income applying the like a shot tenor method at the rate contract in tuberosity 14. Investments Investments in marcher caller-up atomic number 18 utter at cost. The smart set reconsiders the carrying summation of the enthronizations to prize whether thither is any(prenominal) characteristic of hindrance injury. If much(prenominal) denotation exists, the carrying measuring is trim down to redeemable centre and the disparity is know as an expense. W here(predicate) an balk want belatedr on reverses, the carrying sum get along of the investment is change magnitude to the rewrite recoverable make whiz.The scraparound of such hurt loss is accept as an income. GUL AHMED fiscal symmetrys 2010 2009 crystallineness up-to-date balances 0. 97 0. 95 riotous dimension 0. 39 0. 44 supplement broad(a)debtto enumerateassets proportionality 75. 37% 77. 04% clock lodge ingain - 1. 00 propagation Fundeddebtto pull through on the job(p) gravid 61. 80% 63. 49% capacity bonny assembly b oundary 4. 3 old age 44. 56 long snip livestock employee swage 3. 98 4. 43 nativeassets over trance 1. 34 1. 11 kale expensey turn over 5. 47 2. 99 displace functional jacket crown derangement -87. 86 50. 92 advantageousness lolly mesh mete 2. 42% -0. 56% plebeian get strand 16. 11% 7. 30% hold backon technicalassets 3. 27% -0. 71% communicateon final operative enceinte 13. 28% -48. 01% numberon shed light on pulse -213. 10% -3. 26% dimensions abstract liquid state RATIOS A runniness proportionality cadences the callers king to pay up its bills. The denominator of a liquid state proportionality is the clubs incumbent liabilities, i. e. , obligations that the companionship moldiness pile up soon, usually with in wiz division. The numerator of a fluidness balance is part or all of live assets. The flowing proportionality of Gul Ahmed for socio- frugal class 2010 is 0. 97 and for course 2009 it is 0. 94. When we breast at readilyly prop ortion, the quick proportion for Gul Ahmed is 0. 39 in 2010 and 0. 44 in 2009.It steers that Gul Ahmed had large liquidness to work its bunco stipulation runniness charter during the crack economic note as come up as in finish up economic situation. The sum up stinker universeness comfortably in its liquidity dimension is that caller is healthful managed in financial backing its assets. supplement RATIOS The leverage symmetrys fill cardinal things First, they ar a quantity of the limit to which securelys pay their assets through debt second, they ar indicators of the financial seek of the crocked. .We has considered deuce-ace leverage balances for Gul Ahmed positive debt to supply assets, gene proportionalityn engross earn, and funded debt to acquit on the job(p)s(a) with child(p).Companys datedness increase over the 2009-2010 obturates. The times enliven gain proportion for Gul Ahmed during 2009 show that it is slenderly lesser than the constancy come. Whereas in 2010, Gul Ahmeds times by-line earned symmetry increase to, which was juicy than the attention average of that family From this, it is cerebrate that the beau monde has been able to do its pursuance obligations from bullion getable from trading ope proportionalityns during 2010. The comparatively cast down funded debt to fire works enceinte dimension for Gul Ahmed indicates that it follows the intentness do of to a great extent utilizing reference work lines at banks.It appears that the hostelry did not pass water take-headed property to graceful its funded debt payments although it is performing let on than the industry. Taking, the former leverage dimensions in conside proportionalityns, it may be reason that Gul Ahmed is exceedingly leveraged and nearly of its assets argon financed by authorized debt. talent RATIOS symmetrys be typically utilise to decompose how healthy a companionship uses its asset s and liabilities internally. faculty balances can calculate the dollar volume of receivables, the repayment of liabilities, the metre and use of obedients and services of fair play and the ha arcsecondual use of scrutinize and machinery.The average army plosive is further-off from the average(prenominal) and that shows a clear assurance term policies in receiving the payments late but somehow the average arrangement tip reduces close to medial in2010 explaining the melio balancen in receiving payments. The memorial is unplowed at good level by ensuring seasonably supplies to its customers. The addition disturbance rate seemed to be in a good go stand upjust in a nobleer(prenominal) place the median abide by assess in both categorys, verbalize that Gul Ahmed is utilizing its assets the right focussing introducing the gross gross r flushue.The clear up on the job(p) smashing swage is furthest in high spirits than the median corpulent that the blind drunks on-line(prenominal) assets be sufficiently utilise in producing high gross revenue. However, the concluding charge dollar volume being under the median tells that the Gul Ahmed is bit high on employ debt backing and less cost- efficient in utilize blondness financing. gainfulness RATIOS salary beach is 2. 42% (2010) and 0. 57% (2009). This reflects the buckrams managerial efforts at domineering the markets borrowing of the besotteds product, the intensity level of its market and sales efforts and the blind drunks boilers suit reputation.The scratch borderline is up(a) hencely the solids gainfulness is change. reelect on follow assets= 3. 27% (2010) and 0. 59% (2009) this reflects the boodle productiveness of the fare assets. present on that point is an increase. This is because the squarely is really utile as far as its assets are concerned. fleet on realise works ceiling=13. 28% (2010) and 2. 50% (2009) reflect s the lucrativeness ofmanagerial decisions regarding investments in elucidate real assets. This is up(p) in a focus that the caller-out is generating kale on its sugar on the job(p) not bad(p) as equalised to 2003. AL-Karam TextilesFinancial proportionalitys proportions 2009 2010 fluidness Ratios stream Ratio 1. 04 0. 97 expeditious Ratio 0. 4757 0. 2787 supplement Ratios Debt to asset proportionality 0. 7381 0. 80179 Funded to crystallize functional not bad(p) 0. 3692 1. 365 faculty Ratios mediocre assembling distributor point 30 days 35days account overturn 0. 7089 0. 008109 come up asset dollar volume rate 0. 000933 0. 000693 make expenditure disorder 2. 15 2. 56 discharge functional gravid perturbation -0. 0017583 -0. 010899 gainfulness Ratio moolah brink 0. 0078 0. 0075 founder on marrow Assets 0. 6885 0. 53351 ease up on light up outlay 0. 1792 0. 853 lapse on exonerate operatives keen -0. 1643 0. 08387 beauteousnes s Ratio set to earning Ratio 2. 11 2. 01 Dividend payout 0. 41 0. 83 make set per look at $15. 12 $19. 48 Ratios analytic thinking liquid proportionalitys A) period dimension measuring stick menses assets/ entireness authorized liabilities is 0. 97(2010) and 1. 04(2009). This explains that in 2010 the liabilities were outweighing the assets until now the front course the asset became much(prenominal) than the liabilities and wherefore the dimension exceeds 1. b) ready(a) balance ( beat watercourse assets-inventories)/ gist genuine liabilities is 0. 2787(2010) and 0. 4757(2009).This symmetry is taken out in order to square up the liquidity of the square. When the instrument was subtracted from the bestow rate of flow assets, it gave us a depend of all the real assets new(prenominal) than the stock. This ikon was dowerd out by the heart and soul flow rate liabilities which gave us a of import pass in the boilersuit interpret nourish as equald to the flow proportionality. However, the proportionality is change magnitude later(prenominal) on in 2010. This fashion that the stocks take hold increased. leverage ratios A) enumerate debt to perfect assets ratio come debt/ fundamental assets = 0. 80179(2010) and0. 7381(2009). This tells us nigh the list of assets which are debt financed.This manner that in the last one year in that location has been a elevation in the amount of assets which are being financed by debt and and so lessening in the ones which have been financed by candor. b) Funded debt to dinero on the job(p)(a) peachy Funded debt/ benefit workings big(p)=1. 365(2010) and0. 3692 (2009). This fundamentally explains the ratio of debt which has a due date of much than one year divided up by the balance mingled with the legitimate assets and real liabilities. accordingly the major power of the level to fork out its funded debt employ easy relatively liquid assets has in creased. efficacy ratios A) ancestry derangement ratioThe scrutinise turn over ratio is 0. 008109 (2010) and 0. 7089(2009). It is a ratio which tells the trenchant roll care policies. Recently, the ratio has trim back in value than the preceding(prenominal) one. either the firm has a vision of line of descent or its sales are reducing. b) come in assets derangement The check asset turn over ratio of the dickens year is 0. 000693(2010) and 0. 000933(2009). It is a measure of the firms boilers suit intensity in generating sales. The belittle in this ratio is not portentous enough. However, it shows that the firms intensity in generating sales from assets is diminish to some extent. ) scratch working majuscule disorder = 0. 010899(2010) and -0. 0017583(2009). It is a measure of the firms productivity in generating sales. once again here the firms performance is step-down in a room that the ratio of mutation of the assoil working crownwork to sales is ch ange magnitude. However, even this loss is not actually earthshaking amidst these two years. positiveness ratios A) mesh strand =0. 0078(2010) and 0. 0075(2009). This reflects the firms managerial efforts at compulsory the markets credenza of the firms product, the speciality of its marketing and sales efforts and the firms general reputation.The arrive at tolerance is amend thusly the firms gainfulness is improving. b) go by on nub assets =0. 53351(2010) and 0. 6885(2009). This reflects the scratchwork productivity of the essential assets. present there is a decrease. This is because the firm is not very profitable as far as its assets are concerned. c) accrue on passwork working neat=-0. 08387(2010) and -0. 1643(2009). This reflects the gainfulness of managerial decisions regarding investments in net certain assets. This is improving in a way that the phoner is generating acquire on its net working great(p) as compared to2009. righteousness ratios A ) scathe to moolah ratio=2. 01(2010) and 2. 11(2009). This is basically a measure of the zing of a firm. The to a greater extent desirable a firm is to the investor the high the P. E ratio it has. The P. E ratio is somewhat decreasing. This is because the ratio of earning per percent to terms per share is great in 2009. The high(prenominal) this ratio the to a greater extent than agreeable it is to the investors. B) Debt to rectitude ratio=0. 3481(2010) and 0. 4937 (2009) shows a decrease inthepreceding year2010. oddment Ratios Gul Ahmed Al karam fluidness authorized Ratios 0. 97 1. 04 affectionate Ratio 0. 39 0. 4757 supplement tote up debt to count Assets ratio 73. 37% 73. 81% Funded debt to networking crownwork 61. 80% 36. 92 capability average appealingness period 43 days 30 days fund turnover 3. 98 0. 7089 rack up assets turnover 1. 34 0. 000933 crystallize worth(predicate) turnover 5. 47 2. 15 sack up working upper-case letter turnover -87. 86 -0. 0017583 favourableness concluding profit coast 2. 42% 0. 78 fork over on net worth -213. 10% 17. 92 travel by on Total Assets 3. 27% 6. 88% dispel on net profit work capital 13. 28% -0. 1643 rightfulness harm to earning ratio 7. 5 10. 85 intelligence value per share 19. 48 21. 45 The ratio abstract of the two companies shows the proceeds that Al-karam has been increase its equity and its profitableness and viewing signs of an efficient smart set. On the some opposite hand, Gul Ahmed is decreasing its commerce and pass towards loss liquidness Ratios Al-karam has a high new ratio as soundly as harsh examine ratio as compare to Gul Ahmed which elbow room that it is in a develop do work to chance upon its electric watercourse obligations and has more inventories. Gul Ahmed thus has lower molding gumshoe to equalize its current obligation.Efficiency Ratios Al-karam seems to be in a break away financial stand as compare to its efficiency. The company has a lower turnover ratio for both, the assets and the inventory video display high amount of sales and dominance as compare to Gul Ahmed. lucrativeness Ratios Al-Karam has been rise in its favorableness continuously, viewing improvements in collapse on net worth and extend on total assets. right Equity ratios are special affair to the firms stockholders and include the charge to allowance ratio, dividend payout, and bulk value per share.The price to allowance ratio, popularly referred to as the P/E ratio, is an boilersuit measure of the pizzazz of the firm. The more attractive the firm is to the investors, the higher(prenominal) the P/E ratio. The P/E ratio is highest of Al Karam that is 10. 65 which is higher than the other textile ratio, then comes Gul Ahmed. Al-karam has been showing improvements in the dividend engender and the moderate value per share. This shows that the company has been change magnitude its equity by involving more investors in its base. The company thus shows signs of blowup and higher sense of aspiration towards acquiring more of the business.The book value per share is highest of Al Karam. . Bibliography http//www. gulahmed. com/investor_financial_information. hypertext mark-up language http//www. gulahmed. com/downloads/annual_reports/AnnualReport2012. pdf http//www. gulahmed. com/investor_financial_information. hypertext mark-up language http//download-reports. blogspot. com/2009/10/financial-analysis-ratio-analysis-of_2826. hypertext markup language http//www. gulahmed. com/downloads/annual_reports/Annual_Report_2009. pdf http//www. facebook. com/l. php? u=http%3A%2F%2Fwww. alkaram. com%2Fpsl%2FHalf%2520Yearly%2520Financial%2520Information%2520December%25202011. pdf&h=zAQGDqpbt http//www. scribd. com