Ratio Analysis Slides

BERGER PAINTS
History of BEGER Paints

• In Pakistan, history of Berger is as old as history
of Pakistan.
• Berger started its operations in Pakistan in 1950
and was the first organized Paint Company to offer
premium products through import from the United
Kingdom.
• Berger Paints has succeeded in staying at the
forefront of Pakistan's paint industry.
• Berger was established two centuries ago and
now it has grown to become one of the world's
largest paints manufacturer.
• BERGER PAINTS PAKISTAN LTD. became a
public limited company in 1974, when 49.38% of its
shares were acquired by Pakistani investors, while
the remaining 50.62% were held by U.K. parent
company, Jenson & Nicholson Limited.
Vision
We will become the leading paints and associated

products manufacturing and marketing company in
Pakistan ensuring best returns to our investors &
highest customer satisfaction.
Mission
• We will ensure highest level of commitment to
achieve best quality products and services.
• We will vigorously promote and safeguard the
interests of employees, shareholders, business
associates & all other stakeholders.
• We will act as a good corporate citizen ensuring
service towards community and shall focus on
environment, health and safety.
Ratio Analysis
ACCOUNTING Management a study of the

relationships between different amounts or numbers
in a company's financial records in order to see how
successful the company is.
Classification of Ratios
Balance Sheet Ratio P&L Ratio or Balance Sheet and
Income/Revenue Profit & Loss Ratio
Statement Ratio
Financial Ratio Operating Ratio Composite Ratio

Current Ratio Gross Profit Ratio Fixed Asset Turnover
Quick Asset Ratio Operating Ratio Ratio, Return on Total
Proprietary Ratio Expense Ratio Resources Ratio,
Debt Equity Ratio Net profit Ratio Return on Own Funds
Stock Turnover Ratio Ratio, Earning per Share
Ratio, Debtors’ Turnover
Ratio
LIABILITIES ASSETS
Format of balance sheet for ratio analysis
NET WORTH/EQUITY/OWNED FUNDS FIXED ASSETS : LAND & BUILDING, PLANT &
Share Capital/Partner’s Capital/Paid up Capital/ MACHINERIES
Owners Funds Original Value Less Depreciation
Reserves ( General, Capital, Revaluation & Other Net Value or Book Value or Written down value
Reserves)
Credit Balance in P&L A/c
LONG TERM LIABILITIES/BORROWED NON CURRENT ASSETS
FUNDS : Term Loans (Banks & Institutions) Investments in quoted shares & securities
Debentures/Bonds, Unsecured Loans, Fixed Old stocks or old/disputed book debts
Deposits, Other Long Term Liabilities Long Term Security Deposits
Other Misc. assets which are not current or fixed in
nature
CURRENT LIABILTIES CURRENT ASSETS : Cash & Bank Balance,
Bank Working Capital Limits such as Marketable/quoted Govt. or other securities, Book
CC/OD/Bills/Export Credit Debts/Sundry Debtors, Bills Receivables, Stocks &
Sundry /Trade Creditors/Creditors/Bills Payable, inventory (RM,SIP,FG) Stores & Spares, Advance
Short duration loans or deposits Payment of Taxes, Prepaid expenses, Loans and
Expenses payable & provisions against various items Advances recoverable within 12 months
INTANGIBLE ASSETS
Patent, Goodwill, Debit balance in P&L A/c,
Preliminary or Preoperative expenses
LIQUIDITY RATIOS
(2016-17)
1. Net working capital
Net Working Capital

NWC= Current Assets – Current Liabilities
= 2819267 – 2529426
= 289841
Comparison
Net Working Capital
YEAR BP INDUSTORY
2016 289841 980956
2017 1427645 854462.5

2. Current Ratio
Current Ratio=(Current Assets/Current Liabilities)

= 2819267/2529426
=1.11
Comparison
Current Ratio
YEAR BP INDUSTORY
2016 1.11 1.236
2017 1.12 1.223

3. Quick ratio
Quick Ratio =(Current Assets – Inventory)

/(Current Liabilities)
=(2819267-1031683)/(2529426)=0.70
Comparison
Quick Ratio
YEAR BP INDUSTORY
2016 0.70 0.919
2017 0.71 0.869

PROFITABILITY RATIO
(2016-17)
1. Gross Profit Margin
Gross Profit Ratio = (Gross Profit / Net Sales ) x 100
=(1304503/5453221)x100
= 23.92%
Comparison
Gross Profit
YEAR BP INDUSTORY
2016 23.92% 22.09
2017 29.08% 22.81

2. Net Profit Margin
Profit Margin=(Net profit after taxes/Net Sales)

= (102105/5453221)
=0.0187x100
= 1.87%
Comparison
Net Profit Margin
YEAR BP INDUSTORY
2016 1.87% 5.25
2017 3.94% 6.03

3. Return On Investment
Return on investment
= (Net profit after taxes/Total assets)

=(102105/4270644)
=0.0239x100=2.39%
Comparison
Return on Investment
YEAR BP INDUSTORY
2016 2.39% 2.50
2017 4.82% 3.30

4. Return On Equity
RETRUN ON EQUITY CAPITAL (ROE) :
ROI= Net Profit after Taxes / Shareholders’ equity

= (102105/1519661)
=0.0671
Comparison
Return on Equity
YEAR BP INDUSTORY
2016 0.06 0.18
2017 0.14 0.19

LEVERAGE RATIO
(2016-17)
1. Debt Ratio
debt ratio = ( total debt/total assets )
=(69965+1137989)/(4270644)
=0.282
Comparison
Debt Ratio
YEAR BP INDUSTORY
2016 0.282 0.65
2017 0.259 0.63

2. Debt to Equity Ratio
debt to equity ratio:
=(total debt/equity)
=(69965+1137984)/(181864+828666)
=1.195
Comparison
Debt to Equity Ratio
YEAR BP INDUSTORY
2016 1.195 1.61
2017 1.199 1.56

3. Interest coverage ratio
Interest Coverage Ratio:

=(EBIT/Interest charges)
=(251173/88142)
=2.84
Comparison
Interest Coverage Ratio
YEAR BP INDUSTORY
2016 2.84 95.74
2017 4.81 130.03

4. Total Capitalization
Total Capitalization=(Total Debt/Total Capitalization)
=(69965+1137984)/(181864+828666+69965)
=(1207949)/(1080495)
=1.11
Comparison
Total Capitalization
YEAR BP INDUSTORY
2016 1.11 1.27
2017 1.04 0.96

ACITIVITY RATIO
(2016-17)
1. Account receivable turnover
A/R turnover:
= (annual net credit sales/receivables)
=(5453221/1164907+16363)
=4.61
Comparison
A/R Turnover
YEAR BW INDUSTORY
2018 4.61 246.8
2017 4.01 243.8

2. Average collection period
Avg. collection period:
=(days in the year/receivable turnover)

=(365/4.61)
=79 days
Comparison
Avg. Collection Period
YEAR BP INDUSTORY
2016 79 days 47 days
2017 91 days 48 days

3. Inventory turnover
Inventory turnover:
=(cost of good sold/inventory)
=(4148718/1015911+15772)
=(4148718/1031683)
=4.0
Comparison
Inventory Turnover
YEAR BP INDUSTORY
2016 4.0 339
2017 3.5 5.19

4. Payable turnover
Payable turnover:
=(annual credit purchases/accounts payable)

=(CGS/Accounts payable)
=(4148718/1301918)
=3.18
Comparison
Payable Turnover
YEAR BP INDUSTORY
2016 3.18 3.41
2017 2.51 3.23

5. Total assets turnover
Total assets turnover:

=(Net sales/Total assets)
=(5453221/4270644)
=1.2769x100
=127.69%
Comparison
Total Assets Turnover
YEAR BP INDUSTORY
2016 1.27 1.18
2017 1.22 1.26

6. Operating cycle
Operating cycle=(Inventory turnover in days +

Receivables turnover in days)
=(365/4 days) + ( 79 days )
= (91 + 73)
= 164 days
Comparison
Operating Cycle
YEAR BP INDUSTORY
2016 155 12414.7
2017 164 102

MARKET VALUE RATIOS
(2016-17)
1. Earning per share
EPS=(net income – preferred stock)/(common stock

outstanding)
EPS=(102105-0/18187)
= Rs. 5.61 per share
= (share capital/per share price)
= (181864/10)
=1816.4
Comparison
ESP
YEAR BP INDUSTORY
2016 5.61 627.68
2017 11.11 789.8

2. P/E Ratio
P/E Ratio = (market price per share/earning per share)

=(91.34/5.61)
=16.28
Comparison
P/E Ratio
YEAR BP INDUSTORY
2016 16.28 17.58
2017 8.22 6.44

3. Earning yield
Earning Yield=(earning per share/market price per

share)
=(5.61/91.34)
=0.0614
=0.0614x100
=6.14%
Comparison
Earning Yield
YEAR BP INDUSTORY
2016 6.14% 542.6
2017 11.90% 1102.1

4. Book value per share
Book value per share:
=(total stock holder’s equity – preferred stock)/(share

outstanding)
=(1519661-0/18186.4)
=83.56 Rs. Per share
Comparison
Book Value Per Share
YEAR BP INDUSTORY
2016 83.56 95.9
2017 78.50 102.4

5. Price to book value
Price to book value=(market price per share/book value

per share)
= (93.34/83.56)
=1.12 Rs.
Comparison
Price to Book Value
YEAR BP INDUSTORY
2016 1.12 254
2017 1.02 0.913

5.Dividend Yield
Dividend Yield=(cash dividend per share/market price

per share)
=(dividend/MKT price)
=(1.25/93.34)
=0.0134x100
=13.4%
Comparison
Dividend Yield
YEAR BP INDUSTORY
2016 13.4% 4.48
2017 12.2% 6.12

6. Dividend Pay Out Ratio
Dividend pay out ratio= (dividend paid per

share/earning per share)
=(1.25/5.61)
=22.28%
Comparison
Dividend Payout Ratio
YEAR BP INDUSTORY
2016 22.28% 7.72
2017 11.25% 5.8

COMMON SIZE OF BALANCE
SHEET
Assets 2016 2017 2016(Commo 2017(commo
n size) n size)
Cash 21420 44356 0.50 1.0
A/R 1181270 1263187 27.66 30.15
Inv. 1031683 1035160 24.15 24.71
Other CA 584894 474475 13.69 11.32
Total CA 2819267 2817178 66.00 67.25
Net FA 1263846 1183671 29.59 28.25
LT INV. 161647 165497 3.7 3.9
Other LT 25884 20774+1875 0.6 0.54
Total Assets 4270644 4188179 100 100

L+E 2016 2017 2016(commo 2017(commo
n size) n size)
Note Pay 1206287 1016823 28.24 24.27
A/P 1301918 1444161 30.48 34.47
Accr. Tax 16465 13394 0.38 0.31
Other Accr. 4756 28716 0.11 0.68
Total CL 2529426 2503094 59.22 59.75
LT Debt 221557 258240 5.1 6.1
Equity 1519661 1427645 35.58 34.08
Total L+E 4270644 4188979 100 100

INCOME STATEMENT
COMMON SIZE
2016 2017 2016(common 2017(common
size) size)
Sales 5453221 5122570 100 100
CGS 4148718 3632609 76.07 70.9
Gross Profit 1304503 1489961 23.9 29.0
Adm. 1090253 295452 19.9 5.7
EBIT 251173 360749 4.6 7.0
Int Exp. 88142 74960 1.4 1.4
EBT 147211 265931 5.6 5.1
EAT 102105 2012111 3.9 3.9
Cash Dividend 23960 137750 1.7 2.6

INDEXED ANALYSIS OF
BALANCE SHEET
Assets 2016 2017 2016 2017
Cash 21420 44356 100 207
A/R 1181270 1263187 100 106.9
Inv. 1031683 1035160 100 100.3
Other CA 584894 474475 100 81.12
Total CA 2819267 2817178 100 99.9
Net FA 1263846 1183671 100 93.6
LT INV. 161647 165497 100 102.3
Other LT 25884 20774+1875 100 80.2
Total Assets 4270644 4188179 100 98.0

L+E 2016 2017 2016 2017
Indexed(%) Indexed(%)
Note Pay 1206287 1016823 100 84.2
A/P 1301918 1444161 100 110.9
Accr. Tax 16465 13394 100 81.3
Other Accr. 4756 28716 100 603.7
Total CL 2529426 2503094 100 98.9
LT Debt 221557 258240 100 116.5
Equity 1519661 1427645 100 93.9
Total L+E 4270644 4188979 100 98

INDEXED ANALYSIS OF
INCOME STATEMENT
2016 2017 2016 2017
Sales 5453221 5122570 100 93.9
CGS 4148718 3632609 100 87.5
Gross Profit 1304503 1489961 100 114
Adm. 191387 295452 100 154
EBIT 251173 360749 100 143
Int Exp. 88142 74960 100 85.0
EBT 147211 265931 100 180.6
EAT 102105 202111 100 197.9
Cash Dividend 23960 137750 100 5.74

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BERGER PAINTS

History of BEGER Paints

We will become the leading paints and associated

ACCOUNTING Management a study of the

Financial Ratio Operating Ratio Composite Ratio

Net Working Capital

2016 289841 980956

2017 1427645 854462.5

Current Ratio=(Current Assets/Current Liabilities)

2016 1.11 1.236

2017 1.12 1.223

Quick Ratio =(Current Assets – Inventory)

2016 0.70 0.919

2017 0.71 0.869

Gross Profit Ratio = (Gross Profit / Net Sales ) x 100

2016 23.92% 22.09

2017 29.08% 22.81

Profit Margin=(Net profit after taxes/Net Sales)

2016 1.87% 5.25

2017 3.94% 6.03

= (Net profit after taxes/Total assets)

2016 2.39% 2.50

2017 4.82% 3.30

RETRUN ON EQUITY CAPITAL (ROE) :

ROI= Net Profit after Taxes / Shareholders’ equity

2016 0.06 0.18

2017 0.14 0.19

debt ratio = ( total debt/total assets )

2016 0.282 0.65

2017 0.259 0.63

debt to equity ratio:

2016 1.195 1.61

2017 1.199 1.56

Interest Coverage Ratio:

2016 2.84 95.74

2017 4.81 130.03

Total Capitalization=(Total Debt/Total Capitalization)

2016 1.11 1.27

2017 1.04 0.96

2018 4.61 246.8

2017 4.01 243.8

Avg. collection period:

=(days in the year/receivable turnover)

2016 79 days 47 days

2017 91 days 48 days

2016 4.0 339

2017 3.5 5.19

=(annual credit purchases/accounts payable)

2016 3.18 3.41

2017 2.51 3.23

Total assets turnover:

2016 1.27 1.18

2017 1.22 1.26

Operating cycle=(Inventory turnover in days +

2016 155 12414.7

2017 164 102

EPS=(net income – preferred stock)/(common stock

2016 5.61 627.68