Financial Management Policy Ssgc Presentation (29 04-2014)

Financial Management Policy

Financial Management Policy

A Project onRatio Analysis

SUBMITTED BY

FARUKH EJAZ (10251)KALEEM MEHMOOD (1779)OMAIR FAISAL (10403)USAMA HAMID (10396)SHAKIR ULLAH (10159)

SUBMITTED TO

SIR. NAVEED SAJWANI

IQRA UNIVERSITY (NORTH NAZIMABAD CAMPUS)

COMPANY

SUI SOUTHERN GAS COMPAY (SSGC)

COMPANY

SUI SOUTHERN GAS COMPAY (SSGC)

COMPARISON YEARS

2011(SSGC) to 2012(SSGC)

COMPARISON YEARS

2011(SSGC) to 2012(SSGC)

SUI SOUTHREN GAS COMPANY LIMITED (SSGC) ANALYZING THE RATIOS

FOR PERIOD OF 2012 & 2011 YEARS.



Liquidity RatioLiquidity Ratio

With reference to provided comparison it’s to observe that the current assets ratio (SSGC) year of 2012 is increased 33.25% as compare to the previous year i.e. (2011) same as also observed that current liability ratio (SSGC) year of 2012 is increased 35.89% as compare to the previous year liabilities. Consequently the ratio of current year (2012) is weaker to the previous year (2011).

1. Current Ratio1. Current Ratio





Liquidity RatioLiquidity Ratio

After the comparison we observed that (2012) year inventory is decreased 2.27% but the other side current assets are increased 33.25% and on the liability side 35.89% are also increased as compare to the previous year liabilities. So therefore due to increase current liabilities and decreasing inventories this is a weak acid test ratio as compare to previous year (2011).But It is not a potential problem for the firm as both ratios are on positive side.

2. Acid Test Ratio2. Acid Test Ratio





Financial Leverage RatiosFinancial Leverage Ratios

As the calculation and comparison of both year ratios we observed that Total Debt of (2012) is increased 29.23% as compared to previous year (2011) which is not good for running the business and on the other side in the current year (2012) equity are also increase 1.9% which is small percent if we compare to the increasing the percentage of debt equity ratio.Therefore current year is weaker to previous year (2011).

1. Debt to Equity Ratio1. Debt to Equity Ratio





Financial Leverage RatiosFinancial Leverage Ratios

After the calculations and comparison of both years ratio we observed that about the total debt which we have discussed on the debt to equity ratio same percentage is increased here but on the other side total assets are also increased 23.63 % so therefore the ratio is average debt utilization relative to the comparison of previous year (2011) because there is big impact in the percentage of 2012. this ratio is better then previous ratio.

2. Debt to Total Assets Ratio2. Debt to Total Assets Ratio





COVERAGE RATIOSCOVERAGE RATIOS

We observed that after the calculations and comparison of both years interest converge ratios the year of (2012) Earnings Before Interest and Taxes is increased 0.94% as compare to the previous year (2011) which is not a big impact but on the other side interest charges of year (2012) are increased 30.16% to previous year which is not a good so therefore the current year (2012) is not good to compare of previous year(2011) because Interest Coverage Ratio is indicates a firm’s ability to cover interest charges and the current year (2012) ratio is going downward.

• INTEREST COVERAGE RATIO• INTEREST COVERAGE RATIO





ACTIVITY RATIOACTIVITY RATIO

Receivable Turnover Ratio the Year of (2012) is going downward which is not a good for business due to increasing the Annual Net Credit Sales of year (2012).

1. Receivable Turn Over Ratio1. Receivable Turn Over Ratio






Receivable Turnover Ratio in Days of Year (2012) is going upward in term of Days which is not a good for business due to decreasing of Receivable Turnover Ratio in year (2012).

2. Average Collection Period2. Average Collection Period






We observed that after calculations and comparison Payable Turnover Ratio (2012) Percentage is decreasing due to increasing the payables ratio of (2012) 37.64% as compare to the previous year (2011) which is good in the term of business

3. Payable Turnover Ratio3. Payable Turnover Ratio

• Inventory Turnover Ratio






After the calculation and comparisons we observed that in the year of (2011) the company (SSGC) was paying 1.65 payable turnover ratios in days to the whole year but in the next year (2012) they was paying their dues in 1.37% which is small percent to the previous year so therefore at the end of comparison payable turnover ratio in days of (2012) is increased to the previous year (2011) which is good in term of business.

4. Payable Turnover Ratio in days4. Payable Turnover Ratio in days







With reference to provided the calculations it is stated that inventory Turnover of SSGC is increased due to increase 14.34% in COGS & decreasing 2.27% in Inventory so this year (2012) which shows SSGC have efficient Management and more stock are frequently sold.

5. Inventory Turnover Ratio5. Inventory Turnover Ratio







with reference to provided calculations it is stated that Total Assets Turnover of (2012) of SSGC is decreased due to increase in total assets, which shows that they are not effectively utilizing there assets to generate there sales as compare to previous year. Therefore the current year (2012) Total Assets Turnover Ratio has a weak ratio.

6. Total Assets Turn Over Ratio6. Total Assets Turn Over Ratio






PROFITABILITY RATIOSPROFITABILITY RATIOS

With respect to the provided calculation it is stated that in the current year (2012) Gross Profit is increased 13.79% and Net Sales is increased 14% so that’s why Gross Profit Margin ratio of (2012) percentage is going to decreased side which is not a good and current year ratio (2012) has a weak Gross Profit Margin to comparison of the previous year (2011)

1. Gross Profit Margin1. Gross Profit Margin






PROFITABILITY RATIOSPROFITABILITY RATIOS

With respect to the provided calculation it is stated that Net Profit Margin is decreased as compare to previous year (2011) due to increase in expenses and other taxes which is the current year (2012) has a poor Net Profit Margin.

2. Net Profit Margin2. Net Profit Margin


Date post:	20-Jan-2015
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Financial Management Policy Ssgc Presentation (29 04-2014)

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