Comparative Analysis of Gul Ahmed Textile with Industry

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ANALYSIS OF FINANCIAL STATEMENTS
Final Project
Gul Ahmed Textiles Limited
Submitted to: Prof. Asif Bashir
Submitted by:
Muhammad Naseem Hayat L1F09MBAM2036
Rustam JavedL1F09MBAM2034
Hasan MirL1F09MBAM0016
Section: A
Dated: Friday, 31 August 2012
Contents
Gul Ahmed3
Firms Comparability:3
Industry3
Size of the firm: capitalization4
Sales4
Ownership:5
International:5
short term credit analysis6
Analysis of Current Assets and Liabilities:6
Current Asset Composition:6
Current Liabilities Composition:7
Working Capital and Related Ratios:8
Working Capital:8
Working Capital of Gul Ahmed:-8
Current Ratio:9
Current Asset= current Assets/ Current Liabilities.9
Current Ratio of Gul Ahmed:-9
Net Trade Cycle:10
Net Trade cycle of Gul Ahmed:-11
Cash Ratio:12
Cash Ratio of Gul Ahmed:-12
Operating Measures, Account Receivables:13
Account Receivable Turnover Ratio:13
Gul Ahmed Receivable Turn Over Ratio:-13
Collection Period:14
Days Sales in Receivables:14
Days to Sell Inventory:15
Account payable turnover ratio:16
Gul Ahmed Account Payable:-16
Days payable Outstanding (DPO):16
Gul Ahmed’s DPO:-16
Conversion Period:-17
Financial flexibility, alternatives18
Conclusion19
Proforma statement21
Income Statement21
Pro-forma balance sheet22
Cash Flows24
Long Term Solvency Analysis:26
Deferred Liability:-26
Gul Ahmed’s Deferred Liability:-26
Contingencies:-27
Total Debt to Total Equity:-27
Gul Ahmed’s Total Debt to Equity:-27
Profitability Analysis29
1.Return on Investment29
2.Return on equity30
Disaggregation:31
Return on net operating assets31
Conclusion:33
Return on equity (3 step):33
Return on equity (5 steps):35
Conclusion:39
Z-Score:39
VALUATION40
b)DDM40
I.Estimated Dividend40
II.Estimated Sustainable Growth40
Observed Price41
1.Risk Return Comparative Framework42
Price Comparison44
Recommendation:45
Conclusion:46

Gul Ahmed
Firms Comparability:
Industry
SEC code: GATM
Gul Ahmed is textile mills which start its process from spinning to the final stitching of the cloth. It was started in 1953 with installing its manufacturing plant in Landi Industrial area Karachi. Diversification:

Initially they only involved in manufacturing of the cloth and have no company owned outlets in Pakistan and abroad and now they have established their own channel of distribution and marketing which is Ideas by Gul Ahmed in Pakistan and also in abroad. They have made related diversification in their business and started readymade garments. Competitors:

Gul Ahmed has many competitors which are Nishat textile, sapphire textile, AMTEX, Sitara Textile, MTM, Crescent Textiles etc Total sales of the textile industry in the year 2011 are Rs.202.9 billions. Company| Sales in billions| Market share|

Gul ahmed| 25.6432| 12.64|
Sapphire| 22.9372| 11.30|
nishat | 48.5651| 23.94|
Sitara textiles| 14.7593| 7.27|
Other| 90.9952| 44.85|

Size of the firm: capitalization
The company has an authorized capital of RS.1500 Million and its have issued, subscribed and paid up capital of 63,478,548 ordinary shares of Rs.10 each. And company has revenue reserves and capital reserves of Rs.2933 Million. Sales

There is an increasing trend in the sales of Gul Ahmed in the previous five years as shown by the graph

Ownership:
a) Independent or Subsidiary:-
Gul Ahmed is an independent company in Pakistan and it have subsidiaries in the foreign countries for the purpose of export to those countries. a) Other firms have significant interest?
Other firms have no significant interest in Gul Ahmed and it have issued 63,478,548 shares on which dividend is paid by the company. International:
a) Sales to other countries:
Out of the total sales of 2011, 67.38% of sales of Gul Ahmed are sales outside of Pakistan...
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