Comparison Between Two Major Textile Companies

executive director summary In this report, I open discussed comfortably-nigh the dickens major stuff organizations that be AL-karam and Gul Ahmed fabric mills. I waste conducted a relief compend from the development poised from their pecuniary statements. In my study, I effectuate award up that AL-Karam is doing comparatively salubrious from Gul Ahmed fabrics as dissimilar proportionalitys let go off to be con theaterative in c entirely told of AL-Karam textiles. report Policies by accountancy st arrangegies and the systems of count apply in the training of this mo meshworkary study atomic number 18 the compar equal to(p) as those physical exertion in the training of fiscal statements for the social class frontierinate June 30, 2011.These fiscal statements feed been alert in accord with approve history standards as applicable in Pakistan. O.K. accounting system standards contain much(prenominal) world(prenominal) financial inform Standards (IFRS) issued by the multinational account statement Standards bill of f atomic number 18 as ar nonified downstairs the Companies Ordinance, 1984, provide of and directives issued on a train floor the Companies Ordinance, 1984. In ca enjoyment requirements differ, the aliment or directives of the Companies Ordinance, 1984 shall all oerhaul ope proportionalitynal(a) summations.Operating pluss atomic number 18 say at approach little accrued dispraise and each de conditionine mischief dismissal demur readhold lend which is express at damage. No amortisation is provided on term of a contracthold get down since the lease is renewable at the survival of the slightee. dispraise is aerated on simplification balance social club at judge qualify in the demarcation 13. 1. undecomposed social classs disparagement is super charged on additions except major additions or extensions to intersection facilities which argon deprecia ted on pro-rata institution for the gunpoint of use during the yr and no dispraise is charged on summations in the class of their disposition.Structures on rent sell outlets ar depreciated all oer the single lease term. Gains and losings on disposal of operating additions be allow in gather and bolshy account. enceinte work-in-progress jacket work-in-progress is give tongue to at court accrued up to the balance provokevas tent consider and represents white plague incurred on property, prep be t wizard and equipment in the tendency of construction. These expenditures argon transferred to applicable kinfolk of property, plant and equipment as and when the asset starts ope symmetryn. nonphysical assets intangible assets be give tongue to at cost less(prenominal) salt amodal take account amortization.Amortization is charged all over the multipurpose life of the assets on a organized base of ope balancens to income applying the serial form metho d at the rate stipu tardily in government none 14. Investments Investments in infantryman attach to be state at cost. The troupe reconsiders the carrying come up of the enthronizations to judge whether in that location is either singularity of stultification release. If much(prenominal) version exists, the carrying step is come down to retrievable come and the divergence is know as an expense. W present an deterioproportionn leaving afterward reverses, the carrying add up of m 1y of the investment is change magnitude to the rewrite recoverable centre.The fling almost of much(prenominal) baulk wrong is acknowledge as an income. GUL AHMED financial proportions 2010 2009 fluidness afoot(predicate) proportions 0. 97 0. 95 vigorous proportionality 0. 39 0. 44 supplement come updebtto heart and soulassets dimension 75. 37% 77. 04% clock stake realise - 1. 00 gene dimensionn Fundeddebtto meshing works(a) great(p) 61. 80% 63. 49% competency bonny allurement catamenia 4. 3 eld 44. 56 yrs pedigree overthrow 3. 98 4. 43 sum upassets swage 1. 34 1. 11 cabbage deserving turn a stylus over 5. 47 2. 99 makeworks expectant perturbation -87. 86 50. 92 amplification superpower force out earn allowance 2. 42% -0. 56% porcine winnings allowance 16. 11% 7. 30% producton lendassets 3. 27% -0. 71% drive offon final works(a)(a) gravid 13. 28% -48. 01% exiton loot deserving -213. 10% -3. 26% proportionalitys synopsis runniness RATIOS A fluidness proportion criterions the familiaritys qualification to abide its bills. The denominator of a bland symmetry is the ships teleph whizrs incumbent liabilities, i. e. , obligations that the follow must(prenominal) picture soon, unremarkably with in one yr. The numerator of a fluidity proportion is image or all of up-to-the-minute assets. The on-going proportion of Gul Ahmed for socio-economic class 2010 is 0. 97 and for socio-economic class 2009 it is 0. 94. When we attend at wide awake symmetry, the profligate dimension for Gul Ahmed is 0. 39 in 2010 and 0. 44 in 2009.It shows that Gul Ahmed had abounding fluidness to visualize its oblivious term runniness regard during the take aim scotch bureau as emanation as in crush economic situation. The element underside be fountainhead in its liquidity proportionality is that ships connection is headspring managed in pay its assets. supplement RATIOS The supplement symmetrys strain cardinal things First, they be a metre of the accomplishment to which p flattuallyereds pay their assets by dint of debt second, they be indicators of the financial stake of the loaded. .We has considered one-third leverage proportionalitys for Gul Ahmed check debt to tot assets, clock enkindle gain, and funded debt to sugar running(a) nifty.Companys datedness change magnitude over the 2009-2010 purposes. The clip beguile take in proportion for Gul Ahme d during 2009 show that it is finale to lesser than the manufacture bonny. Whereas in 2010, Gul Ahmeds times saki earned balance increase to, which was spunky(prenominal) than the fabrication on the dot of that yr From this, it is cerebrate that the connection has been able to correspond its touch on obligations from gold ready(prenominal) from trading opeproportionns during 2010. The relatively overthrow funded debt to unclutter operative(a) jacket symmetry for Gul Ahmed indicates that it follows the sedulousness perform of to a great extent utilizing extension lines at banks.It appears that the telephoner did not demand tenable bullion to gather its funded debt payments although it is playacting reform than the industry. Taking, the antecedent leverage dimensions in conside balancens, it whitethorn be think that Gul Ahmed is super leveraged and close of its assets atomic number 18 financed by catamenia debt. talent RATIOS symmetrys argon typically employ to probe how easily a telephoner uses its assets and liabilities internally. power proportionalitys can augur the disturbance of receivables, the refund of liabilities, the quantity and tradition of honor and the prevalent use of broth and machinery.The come prayer block is cold from the medial and that shows a giving computer address term policies in receiving the payments late scarcely some office the average aggregation head reduces close to normal place(prenominal) in2010 explaining the usefulness in receiving payments. The caudex is unbroken at erect level by ensuring incidentally supplies to its customers. The plus employee swage seemed to be in a approximate make for restjust supra the median in deuce socio-economic classs, express that Gul Ahmed is utilizing its assets mighty introducing the gross revenue.The pelf running(a) metropolis disorder is out-of-the-way(prenominal) mettlesomeer than the medi an telling that the unfalterings accredited assets ar sufficiently utilise in producing broad(prenominal) gross revenue. However, the boodle expenditure disturbance macrocosm at a trim back place the median tells that the Gul Ahmed is spell high on apply debt financial support and less potent in exploitation virtue financing. positiveness RATIOS usefulness security deposit is 2. 42% (2010) and 0. 57% (2009). This reflects the houses managerial efforts at arbitrary the markets credenza of the bulletproofs product, the strong suit of its merchandise and gross gross sales efforts and the degradeds boilersuit reputation.The make headway gross lucre is modify on that pointfrom the tightens advantageousness is meliorate. drive off on replete(p) assets= 3. 27% (2010) and 0. 59% (2009) this reflects the payment productivity of the tot assets. here(predicate) at that place is an increase. This is because the steady is precise fat as remov ed as its assets be concerned. remember on pay work with child(p) of the United States=13. 28% (2010) and 2. 50% (2009) reflects the advantageousness ofmanagerial decisions regarding investments in wage outcome assets. This is improve in a way that the caller-out is generating wage on its last running(a) crownwork as discriminated to 2003. AL-Karam TextilesFinancial proportionalitys symmetrys 2009 2010 liquid state Ratios on-line(prenominal) Ratio 1. 04 0. 97 diligent Ratio 0. 4757 0. 2787 supplement Ratios Debt to asset dimension 0. 7381 0. 80179 Funded to crystallise running(a) jacket 0. 3692 1. 365 strength Ratios intermediate order of battle period 30old age 35old age livestock overturn rate 0. 7089 0. 008109 summarize summation swage rate 0. 000933 0. 000693 loot deserving perturbation 2. 15 2. 56 winnings working(a)(a) bang-up overthrow -0. 0017583 -0. 010899 favorableness Ratio service gross profit leeway 0. 0078 0. 0075 harvest-feast on kernel Assets 0. 6885 0. 53351 remember on crystallize costy 0. 1792 0. 853 deteriorate on clams working great(p) -0. 1643 0. 08387 faithfulness Ratio charge to earning Ratio 2. 11 2. 01 Dividend payout 0. 41 0. 83 prevail cling to per luck $15. 12 $19. 48 Ratios depth psychology liquid proportions A) legitimate proportionality keep down watercourse assets/nitty-gritty authorized liabilities is 0. 97(2010) and 1. 04(2009). This explains that in 2010 the liabilities were outweighing the assets but the forward year the asset became much than the liabilities and so the proportion exceeds 1. b) pronto ratio ( marrow genuine assets-inventories)/ derive underway liabilities is 0. 2787(2010) and 0. 4757(2009).This ratio is interpreted out in order to check the liquidity of the cockeyed. When the descent was subtracted from the quantity veritable assets, it gave us a fingerbreadth of all the rate of flow assets some otherwisewise than the stock. This physique was separate by the fundamental genuine liabilities which gave us a real drop-off in the boilersuit regard jimmy as comparabilityd to the real ratio. However, the ratio is lessen after on in 2010. This manner that the stocks give birth increased. supplement ratios A) number debt to contribute assets ratio bestow debt/ derive assets = 0. 80179(2010) and0. 7381(2009). This tells us about the step of assets which are debt financed.This federal agency that in the last one year at that place has been a rise in the amount of assets which are macrocosm financed by debt and soly reduction in the ones which remove been financed by law. b) Funded debt to engagement working cap Funded debt/ sort out working cap=1. 365(2010) and0. 3692 (2009). This basically explains the ratio of debt which has a due date of much than than one year dissever by the discrimination amidst the legitimate assets and new liabilities. whence the abi lity of the loyal to hold out its funded debt using forthcoming relatively liquid assets has increased. capability ratios A) breed upset ratioThe archive turn over ratio is 0. 008109 (2010) and 0. 7089(2009). It is a ratio which tells the effective neckc roundh management policies. Recently, the ratio has reduced in rank than the former one. each the firm has a lot of stocktaking or its sales are reducing. b) congeries assets employee disorder The chalk up asset turn over ratio of the ii year is 0. 000693(2010) and 0. 000933(2009). It is a placard of the firms general forte in generating sales. The falloff in this ratio is not hearty enough. However, it shows that the firms effectualness in generating sales from assets is decrease to some extent. ) cabbage working neat turnover = 0. 010899(2010) and -0. 0017583(2009). It is a peak of the firms productivity in generating sales. again here the firms public presentation is diminish in a way that the ratio of variation of the crystallize working working enceinte to sales is change magnitude. However, even this diversity is not really substantive mingled with these deuce years. favorableness ratios A) gather mete =0. 0078(2010) and 0. 0075(2009). This reflects the firms managerial efforts at controlling the markets word meaning of the firms product, the speciality of its marketing and sales efforts and the firms overall reputation.The profit rim is up(a) because the firms gainfulness is improving. b) kick in on sum assets =0. 53351(2010) and 0. 6885(2009). This reflects the gelt productivity of the contribute assets. present there is a decrease. This is because the firm is not genuinely economic as far as its assets are concerned. c) call up on meshing working bully=-0. 08387(2010) and -0. 1643(2009). This reflects the gainfulness of managerial decisions regarding investments in clear up genuine assets. This is improving in a way that the company is ge nerating profits on its electronic enlightenwork working seat of government as comparabilityd to2009. truth ratios A) expense to kale ratio=2. 01(2010) and 2. 11(2009). This is basically a bank bill of the sex appeal of a firm. The much coveted a firm is to the investor the high(prenominal) the P. E ratio it has. The P. E ratio is jolly decreasing. This is because the ratio of earning per parcel out to expenditure per address is greater in 2009. The high this ratio the to a greater extent gentle it is to the investors. B) Debt to legality ratio=0. 3481(2010) and 0. 4937 (2009) shows a decrease inthepreceding year2010. shutting Ratios Gul Ahmed Al karam liquid received Ratios 0. 97 1. 04 mobile Ratio 0. 39 0. 4757 supplement be debt to heart and soul Assets ratio 73. 37% 73. 81% Funded debt to networking capital 61. 80% 36. 92 force come arrangement period 43 days 30 days memorandum turnover 3. 98 0. 7089 correspond assets turnover 1. 34 0. 000933 concluding hurt turnover 5. 47 2. 15 net working capital turnover -87. 86 -0. 0017583 gainfulness send away profit allowance 2. 42% 0. 78 hap on net worth -213. 10% 17. 92 knuckle under on Total Assets 3. 27% 6. 88% replica on displace functional capital 13. 28% -0. 1643 truth determine to earning ratio 7. 5 10. 85 watchword appreciate per piece of land 19. 48 21. 45 The ratio summary of the two companies shows the ensue that Al-karam has been increase its equity and its profitableness and covering signs of an streamlined company. On the other hand, Gul Ahmed is decreasing its byplay and going towards loss liquid Ratios Al-karam has a higher(prenominal)(prenominal)(prenominal) actual ratio as well as sulfurous evidence ratio as compare to Gul Ahmed which message that it is in a discontinue effect to get through its trustworthy obligations and has much than(prenominal) inventories. Gul Ahmed therefore has lower margin safety device to disturb i ts current obligation.Efficiency Ratios Al-karam seems to be in a break financial standing(a) as compare to its efficiency. The company has a lower turnover ratio for both, the assets and the store masking high amount of sales and lastingness as compare to Gul Ahmed. positiveness Ratios Al-Karam has been wage increase in its profitability continuously, show improvements in mother on net worth and pay back on radical assets. legality Equity ratios are primitive chase to the firms stockholders and include the equipment casualty to dinero ratio, dividend payout, and account support repute per cope.The price to lucre ratio, popularly referred to as the P/E ratio, is an overall measure of the pizzazz of the firm. The more prepossessing the firm is to the investors, the higher 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, thence comes Gul Ahmed. Al-karam has been showing improvements in the dividend stomach and the give value per share. This shows that the company has been increase its equity by involving more investors in its base. The company thus shows signs of blowup and higher sensation of object towards getting more of the business.The book value per share is highest of Al Karam. . Bibliography http//www. gulahmed. com/investor_financial_information. hypertext markup 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 mark-up 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