Kohinoor Textile Mills

Executive summery
K.M.L has grown from a cotton export house into the premier business group of Pakistan
with 5 listed companies, concentrating on 3 core businesses; Textiles, Cement and Power
Generation. Today, K.M.L is considered to be at par with multinationals operating locally in
terms of its quality products and management skills.
Then I have discussed about my learning in the whole internship that is all about the
Textile Terminologies and process of the human behavior. I have made it possible to write each
and every thing that I have learnt there. I have all my practical efforts in the form of this
manuscript that’s the asset for my future career. I have also given the scenario of the whole
divisions and also gave the detailed processes that are been running in my internship division
(Hosiery including all the departments that are working under Hosiery). I have also mentioned
the exporting country’s names to which K.M.L is exporting their products. I have also given the
analysis of the organization according to the ratio, horizontal and vertical analysis and findings
on the basis of this analysis. Finally I have also made my findings and suggestions and if I were
the manager of the organization then what would be my decision

A. Activity Ratio
Inventory Turnover in times (1)

Formula 2010 2009

Inventory Turnover = CGS 8692529 = 3.63 7198993 = 4.04

Inventory 2393113 1779826
Comment

The inventory in times in the 2009 is 4.04 and in 2010 is 3.63 that the further improving in the
future. That is good for a company to reduced the times in this company cannot pay the stock
rent. A low inventory turnover ratio implies over investment in inventories dull business ,poor
quality of goods

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 Kohinoor Textile Mills

Inventory Turnover in days (2)

Formula 2010 2009

Inventory Turnover = inventory 2393113 = 100days 1050101 = 53days

CGS 8692529 7198993
Comment

In the 2009 the company has the53days for the inventory but in the 2010 the company has
100days. 100days means sale inventory is decreased and cost of goods raised.

Account Receivable Collection Period (3)

Formula 2010 2009

= Account Receivable × 365 1329065 × 365 = 45days 1050101 ×365 = 45days

Sales 10693338 8458899
Comment

In the 2009 and the 2010 the collection period is same in the 45days the company should reduced
the collection period because in this way the company can make further investment

Account Receivable turnover in times (4)

Formula 2010 2009

= sale × 365 10693338 =8 8458899 = 8.05

Account Receivable 1329065 1050101
Comment

The company should go for further improving because in 2010 the account receivable is 8 but in
the 2009 the company has the 8.05

Days Payable Payment Period (5)

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 Kohinoor Textile Mills

Formula 2010 2009

= Account Payable × 365 788562 × 365 = 82days 700490 × 365 = 80days

Purchases 3498981 3279933
Comment

It is better for company to delay foursome period in the payment so in the 2009 the payment
period is 80days but in the 2010 the tie period id 82 days

Accounts payable turnover (6)

Formula 2010 2009

= Purchases 3498981 = 4.44 3279933 = 4.68

Accounts Payable 788562 700490

Comment

The company can shows that in the 2009 have the 4.68 times but in the 2010 the company has
the 4.44 that shows because of the loss on the2009 give bad image on the other financial
institutions

Working Capital Turnover (7)

Formula 2010 2009

= Sales 10693338 = (6.63) 8458899 = (5.19)

Working Capital (1613030) (1630643)
Comment

Working capital in the 2009(5.19) but in the 2010 (6.63) that is not suitable for the company to
shows that the company has not the better liquidity to meet the day to day expenses

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Fixed Asset Turn Over (8)

Formula 2010 2009

= Sale 10693338 = 1.65 8458899 = 2

Fixed Asset 3498981 4140233
Comment

The company can has the fixed assets turnover in the 2009 is 2 but in the 2010 is 1.65 that can
shows that the company should in 2010 the company cannot best utilize the assets.

Total Asset Turnover (9)

Formula 2010 2009

= Sales 10693338 =3.18 8458899 = 2.76

Total Asset 3361268 3059341
Comment

That can shows in the 2009 the total asset turnover 2.76 and in the but in the 2010 is3.18. The
increase the amount of assets shows how the company best can utilize the assets to generate
revenue

Return on Assets (10)

Formula 2010 2009

= net income 277861 = 0.02 (439811) = (0.03)

Average assets 17057299 13275539

Comment

That can shows that the impact of income on the assets. In 2009 the return on assets is (0.03) but
in the 2010 the company earns net profit and that’s why generate revenue

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B. Liquidity Ratio
Current Ratio (1)

Formula 2010 2009

= Current Ratio 6556108 = 0.80 5131884 = 0.76

Current Liabilities 8169138 6762527

Comment

The company current ratio shows that the company has not in the liquid from to pay its short
term debts but in 2009 (0.76) the in the 2010 increase current ratio0.80 that not a good image for
the company because now a company should current ratio 2:1.

Quick Ratio (2)

Formula 2010 2009

= Quick Asset 4162995 = 0.51 3352058 = 0.50

Current Liability 8169138 6762527

Comment

In the 2009 the company has the 0.50 against the liability 1 but in 2010 the company slightly
increases 0.51. That is not the good form of the company.

Absolute Liquid Ratio (3)

Formula 2010 2009

= Absolute Liquid Asset 94429 = 0.01 364135= 0.05

Current Liabilities 8169138 6762527
Comment

The company increases the liquidity in the 2010 is 0.01 But in the 2009 the company has not
good form for quickly cash payment

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C. Solvency Ratio
Debt to Equity Ratio (1)

Formula 2010 2009

Total Debt × 100 1628067 × 100 = 48% 1918571 × 100 = 62%

Total Equity 3361268 3059341
Comment

That can shows that the company in 2009 the debt is62% but in the 2010 is 48% that can shows
that the in the 2009 company get debt because of loss on net income.

Financial Leverage Ratio (2)

Formula 2010 2009

= Total Asset × 100 17075299 × 100 = 51.8% 13275539 × 100 =43.4%

Total Equity 3361268 3059341
Comment

That shows in 2009 the ratio is 43.4% but in the 51.8% in the 2010 that shows that the company
has the raised its assets to due to the financial leverage is high

Interest Coverage Ratio (3)

Formula 2010 2009

= EBIT 1449216 = 1.35 723554 = 0.57

Interest Expenses 1072768 1260230

Comment

That can shows that because of the highly debt the company pay high debt interest. In the 2010
ratio is 1.35 because of low debt but in case the 2009 the company gown into losses that’s why it
get it debt and pay interest expenses

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 Kohinoor Textile Mills

Return on total capital (4)

Formula 2009 2008

= EBIT × 100 = 1449216×100 = 8% = 723554×100 = 5.5%

Debt+equity 17057299
13275539

Comment

Return on capital in 2009 is 5.5% and then in the 2010 is 8% in the 2010 the company can get
low interest in the 2010 due to the return on capital is low

Return on Equity (5)

Formula 2010 2009

= Net Income × 100 = 277861× 100 = 8.3% = ( 439811)× 100 = (5.7%)

Equity 3361268 1260230
Comment

The company has retire on equity is in 2009 is (5.7%) but in the 2010 the 8.3%. that shows that
the in the 2010 the company earn profit but in the 2009 go to loss.

D.Profitability ratios
Gross Profit Ratio (1)

Formula 2010 2009

= Gross Profit × 100 = 2000809 × 100 = 18.71% 1259906 × 100 = 14.89%

Sales 10693338 8458899

Comment

The company has the 14.89% gross profit in the 2009.the company in the 2010 increase the gross
profit 18.7% because of the reducing in the cost of goods sold

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 Kohinoor Textile Mills

Net Profit Ratio (2)

Formula 2010 2009

= Net Profit × 100 = 277861 × 100 = 2.60% = (439811) × 100 =( 5.20)%

Sales 10693338 8458899
Comment

The company in 2009 (5.20%) gone to loss because the interest expenses are higher but in the
2010 the company controlee operating expenses and profit is 2.6%

Operating Profit Ratio (3)

Formula 2010 2009

= Operating Profit Ratio × 100 = 1449216 × 100 = 13.55% = 723554 × 100 = 8.55%
Sales 10693338 8458899
Comment

In the operating profit the company has the profit in the 20098.5% and in the2010 the company
has the13.55% operating profit

E. Price valuations

Earning Per Share

Formula 2010 2009

= Net Profit = 277861 = 1.91 = (439811) = ( 3.02)

No of share 145526.2 145526.2
Comment

In the 2009 the company is into losses that’s why EPS (3.02) and in the 2010 the company
utilized its assets best and earning per share is 1.91

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Kohinoor Textile Mills