PROJECT PROPOSAL OF NISHAT MILLS LIMITED And ...

transcript

Come & Join Us at VUSTUDENTS.net

For Assignment Solution, GDB, Online Quizzes, Helping Study material, Past Solved Papers, Solved MCQs, Current Papers, E-Books & more.

Go to http://www.vustudents.net and click Sing up to register.

VUSTUENTS.NET is a community formed to overcome the disadvantages of distant learning and virtual environment, where pupils don’t have any formal contact with their mentors, This community provides its members with the solution to current as well as the past Assignments, Quizzes, GDBs, and Papers. This community also facilitates its members in resolving the issues regarding subject and university matters, by providing text e-books, notes, and helpful conversations in chat room as well as study groups. Only members are privileged with the right to access all the material, so if you are not a member yet, kindly SIGN UP to get access to the resources of VUSTUDENTS.NET » » Regards » » VUSTUDENTS.NET TEAM. Virtual University of Pakistan

Come & Join Us at www.vustudents.net

Accepted

Satisfactory work

Some deficiencies are highlighted in the document below. View the complete file evaluated by us and improves your work.

You are allowed to start work on Final project. You are always welcome to get guidance from us via email.

Also do read uploaded lessons, view the files available in “Downloads” that will be useful for you.

You will also have to follow the given instructions in the document “Essentials of Financial Statement Analysis” for preparation of final project as well as the final project format.

You can contact via email for further guidance.

Wish you best of luck.

Project Proposal for MBA (Finance)

FINANCIAL STATEMENTS ANALYSIS

NISHAT MILLS LIMITED

BHANERO TEXTILE MILLS LIMITED

A PROPOSAL FOR REPORT TO BE SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES,

VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

THE DEGREE OF MASTER IN BUSINESS ADMINISTRATION (MBA)

Submitted By: Muhammad Shakil

MC-080401819 MBA (Finance), 4th Semester Submission Date: 25.04.2009 Duet Date: 30th April, 2010

Department of Management Sciences VIRTUAL UNIVERSITY OF PAKISTAN

Proposal for Project on (Financial Statement Analysis) 1

Table of Contents

1 INTRODUCTION 03 1.1 HISTORY 03 1.2 TOPIC/PROJECT INTRODUCTION 04

1.2.1 Introduction 04 1.2.2 Description 04

1.3 Objectives 05 1.4 Significance 05

2 PROJECT PROCEEDINGS 06

2.1 Companies’ Profiles 06 2.2 Ratio Analysis 06 2.3 Common Size Analysis 06 2.4 Review of Descriptive Information 06 2.5 Comparisons 06

3 METHODOLOGY 09

3.1 Data Collection Sources 09 3.2 Data Collection Tools 09 3.3 Data Processing Tools 09

4 BIBLIOGRAPHY 10

1. Introduction:

1.1. History:

Pakistan is known as an agricultural country. Pakistan is prominent in the world due to its finest

quality cotton. The raw cotton is converted into yarn and this yarn is then weaved into fabrics.

The processed fabrics and garments made through are the major contributor to the Pakistani

economy. Textile sector is playing a key role in GDP, exports and employment as it is one of the

most important sector of Pakistani Industry. In the long run, textile sector is believed to be the

backbone of the Pakistani economy. This raw cotton is also used other textile axillaries like cloth,

towel, knits, bed linen, socks etc.). In the year 2004, Ministry of Textile Industry was established

by the Govt. of Pakistan for better progress. However, the rules and regulations are determined by

All Pakistan Textile Mills Association (APTMA) in the industry.

The textile sector employs over 38% of industrial labor force and earns over 60% foreign

exchange of total exports. It also contributes 8.50% of total national income and shares 9% in

GDP. The Pakistan’s textile industry has total spinning capacity of 1550 million kgs of yarn. The

weaving & finishing capacities are more than 4368 and 4000 million square meters of fabric,

similarly. The capacity of production is 670 million units of garments, 400 million units of

knitwear and 53 million kgs of towels. In the last few years, the textile and garment machinery

has imported in Pakistan about 5.2 billion US dollars, due to which the quality and production

efficiency has been increased extensively. The Govt. of Pakistan is estimated the target of exports

of textiles and garments over US$10 billion. Pakistan is the 8th largest country in Asia as exporter

of textile products.

The issue of comparison of the feasibility of one organization with other organization is very

important for stakeholders. They are eager to know the operations of their organizations. They

have craved to identify that how much they have to get in touch with the organizations for

benefits. Comparison of financial statements of two different organizations in same industry

always presents the important and helpful insights and hints for stakeholders. The stakeholders

sort out the possibility of profit and loss by this comparison process. This process also provides

help to the stakeholders to find out the way of improvement in performance, if the organization is

in loss.

1.2. Topic /Project Introduction:

1.2.1. Introduction:

The theme of the study is comparison of financial statements of two listed companies in the

same sector which put emphasis on evaluating their money matters. It is a fundamental

requirement by law for all listed companies to prepare their financial statements.

Operational & monetary feasibility of the business becomes easy by using these financial

statements, which provides a helpful picture of financials of the organizations. To predict

the future of a company, these financial statements and ratios are not much helpful due to

different perspectives of the firms and their economies. Every firm/organization various

standards, different backgrounds, special averages and varied capital structure. To evaluate

and determine the performance of a firm, comparison of its benchmark, standards or

averages is the compulsory. This functional tool commonly used to understand the

profitability and liquidity of the firm by the investors, lenders and financial institutions. The

importance of this tool is still colossal for all (approximately) stakeholders of the firm, even

though, these tools are always slammed for inadequacy of their results due to unsure

financial figures reported in financial statements and not thinking about the various

intangible , non-financial aspects.

1.2.2. Description:

The study tackles the comparative analysis and investigates the financial facts of Nishat

Mills Limited and Bahnero Textile Mills Limited, which are the leading firms of textile

industrial sector of Pakistan. The said firms are playing the significant role in textile sector.

The comparison and analysis of their financial statements shall provide us important

imminent of their performance and efficiency. The analysis shall provide the facts for static

trade off theory and picking order theory for financing decisions in textile sector of

Pakistan. The purpose of the project is to make a three years comparative analysis of

financial statements of aforementioned companies. The aim of the project is to compare the

profitability, liquidity and performance of both companies with each other as well as with

industry averages. The study shall elaborate the financial analysis of financial ratios which

incorporated horizontal & vertical rations and trend ratios etc. The other techniques include

the common size analysis, review of descriptive material and comparisons of results with

other types of data.

1.3. Objectives:

The objective of this study is to discuss and apply the knowledge of financial statements analysis

on both said major listed companies. Further, to analyze and compare the financial performance

of the both said companies. This research work shall help us to understand and write down the

notions/concepts of financial statements analysis. Analysis of various financial rations and

comparison of using the different techniques for the period of three years also incorporated.

Further aims of the project are as under:

i) To analyze the performance through compare and assess the consistent financial information within and between both firms and with industry averages.

ii) To examine the proficiency & competency of operations by indentifying the major changes in trends amounts and relationships.

iii) To find out and investigate the causes behind major changes.

1.4. Significance:

The study will improve, modify or broaden the financial facts of the firms. The process of

comparison & analysis the financial statements of two listed companies is very important for the

stakeholders. Most of the stakeholders are keen to know that their lending to firm is beneficial for

them or not? The project is relevant to short term lenders, long term lender, suppliers and

investors.

The study describes the importance of analyzing financial statements and comparison of two

listed companies and with industry averages. This research work also identifies the importance of

financial information and their significance for different stakeholders of the firms. The project

provides help to understand the importance of comparison and analysis the financial statements of

two listed companies. It also facilitates to know that how we can improve the performance of a

firm while comparing with other firm and industry averages.

The outcomes of the project shall be disseminated among the stakeholders. The results of this

study shall be provided so that the research work contributes to the solutions or developments.

2. Project Proceedings:

Good but you will have to follow the final project format along with the document “Essentials of Financial analysis” i.e. you

are required to merge both documents in your project work and you can use information of these both documents in preparation of project proceedings.

2.1. COMPANIES’ PROFILES:

2.2. RATIO ANALYSIS:

2.2.1. Liquidity Ratios

2.2.2. Leverage Ratios

2.2.3. Profitability Ratios

2.2.4. Activity Ratios

2.2.5. Market Ratios

2.2.6. Cash Flow Ratios

2.3. COMMON SIZE ANALYSIS:

2.3.1. Horizontal Analysis:

• Balance Sheet Statement

• Profit & Loss Account

2.3.2. Vertical Analysis:

• Balance Sheet Statement

• Profit & Loss Account

2.4. REVIEW OF DESCRIPTIVE INFORMATION:

The review of descriptive information shall be made and writ thoroughly.

2.5. COMPARISONS:

A comparison of the financial statements of both listed companies shall be made and writ downs the conclusions of these comparisons. The following tools shall also be utilized to analyze these statements:

2.5.1. Trend Analysis:

• Liquidity Ratios

• Financial Leverage Ratios

• Profitability Ratios

• Activity Ratios

• Market Ratios

• Cash Flow Ratios

2.5.2. Trend Analysis:

• Activity Ratios

• Market Ratios

2.5.3. Industry Average:

• Activity Ratios

• Market Ratios

2.6. Interpretations:

2.7. Conclusions:

2.8. Recommendations:

2.9. Bibliography

2.10. Annexes (soft and physical form)

3. Methodology:

3.1. Data Collection Sources:

Data shall be collected from various published financial reports, articles, magazines and etc. The financial Data of both listed companies shall be attained from their websites using online resource. Their online links are as under:

• Nishat Mills Limited:

The following link of the firm contains all required information related to the project:

Link: http://www.nishatmillsltd.com/nishat/main.php?val=1

• Bahnero Textile Mills Limited:

The following link of the firm contains all required information related to the project:

Link: http://www.umergroup.com/textile/Bhanero/Default.htm

3.2. Date Collection Tools/Instruments:

Requisite Data shall be collected using following tools/instruments, according to the need of the project.

• Questionnaire (if required and possible)

• Structured Interview (if required and possible)

• Observations

3.3. Data Processing & Analysis:

Data processing shall be made using the following facilities:

• MS. Excel

• Calculator and other requisite source

4. Bibliography:

Use APA format for referencing. You can take help from the document available on VULMS of the course in the “Downloads” with name “APA”.

• http://www.textile.gov.pk/

• http://www.aptma.org.pk/

• http://www.textileasia.com.pk/pakistan_textile.htm

• http://www.textileguides.com/merchandising/22-merchandising/94-history-of-pakistan-textile-industry

• http://ezinearticles.com/?The-Pakistan-Textile-Industry---An-Overview&id=708009

PROJECT PROPOSAL OF NISHAT MILLS LIMITED And ...

Documents