2. Definition of Ratio Analysis
Ratio analysis is the process of examining and
comparing financial information by calculating
meaningful financial statement figure percentages
instead of comparing line items from each financial
statement.
3. Traditional classification of ratios has four types, namely
❑ Liquidity Ratios.
❑ Activity Ratios.
❑ Profitability Ratios.
❑ DuPont Ratios.
Classification of Ratios
4. Introduction to Best-way Cement
❑ About
Bestway Cement Limited is a Pakistani building materials company which is a subsidiary of
British company Bestway Group. Its symbol is BWCL.
❑ Key Person:
Mohammad Anwar Pervez is a British billionaire who founded Bestway Group under which
Bestway cement works. This group works in United Kingdom and Pakistan.
❑ Headquarter:
Bestway cement was founded in 1993 and its headquarter is in Islamabad, while plants are
working in;
▪ Hattar, KPK
▪ Farooqia, KPK
▪ Chakwal
5. Continue…
❑ Revenue:
Bestway Cement Ltd (BWCL) has announced its financial results for the year ended 30 June 2019
on 8 August by declaring of net profit of PKR 10.09 Billion.
❑ Product:
The product being manufactured here is cement which is used in building and construction sector all
over the country. It is the second largest cement manufacturing industry in Pakistan fulfilling the needs of
cement in construction sector.
❑ Market Rivals:
As DG cement is largest cement factory in Pakistan according to production per day, it has certainly
its rival in market those give tough competition to DGKC, these includes;
▪ Maple Leaf cement
▪ Askari cement
▪ Lucky cement
▪ DG cement
6. Ratio Analysis Of Bestway Cement
FINANCIAL TERMS
(FY 2015 ~ 2019)
Financial Term for
Ratio Analysis
2015
Rs. (1,000)
2016
Rs. (1,000)
2017
Rs. (1,000)
2018
Rs. (1,000)
2019
Rs. (1,000)
Sales 32,693,050 45,721,040 71,440,848 77,119,557 79,000,314
Earning before tax 12,067,768 17,077,994 18,664,166 14,964,464 13,245,550
Net Income 9,620,818 11,880,417 13,292,640 13,157,706 10,097,285
Total Equity 36,443,043 41,983,375 47,769,255 53,309,872 57,605,918
Long-term debts 23,298,584 16,500,000 10,000,000 5,500,000 -
Total Current Liabilities 12,497,080 9,734,424 13,525,729 26,552,069 24,734,012
Total Debt 35,795,664 26,234,424 23,525,729 32,052,069 24,734,012
Total Fixed Assets 67,887,632 66,055,533 66,231,147 75,667,954 77,928,666
Inventory 6,942,150 7,497,983 9,728,510 11,999,322 8,200,653
Accounts Receivables 862,410 762,230 1,317,800 1,776,089 641,090
Total Current Assets 11,973,559 11,764,621 15,533,975 19,302,686 15,053,645
Total Assets 79,861,191 77,820,154 81,765,122 94,970,640 92,982,311
No. of Shares Outstanding 579,384,918 579,384,918 579,384,918 596,252,783 596,252,783
Stock Price (Rs.) 135.80 190.00 141.78 114.90 113.50
Earning Per Share (EPS) 16.56 20.16 22.29 22.07 16.93
7. Continue…
RATIO ANALYSIS
(FY 2015 ~ 2019)
Ratios 2015 2016 2017 2018 2019
Company
Average
Industry
Average
Profitability Ratio
Return on Assets 12% 15% 16% 14% 11% 14% 10.1%
Return on Equity 26% 28% 28% 25% 18% 25% 17.0%
Profit Margin 29% 26% 19% 17% 13% 21% 19.9%
Debt Management Ratio
Debt Ratio 45% 34% 29% 34% 27% 34% 30.4%
Assets Management Ratio
Total Asset Turnover 41% 59% 87% 81% 85% 71% 52.9%
Fixed Asset Turnover 48% 69% 108% 102% 101% 86% 69.1%
Market Value Ratio
Market/Book Ratio 2.2 2.6 1.7 1.3 1.2 1.8 1.6
Price/Earnings Ratio 8.2 9.4 6.4 5.2 6.7 7.2 9.3
Liquidity Ratio
Current Ratio 1.0 1.2 1.1 0.7 0.6 0.9 1.5
Quick Ratio 0.4 0.4 0.4 0.3 0.3 0.4 0.9
Day Sales Outstanding 10 6 7 8 3 7 16
Inventory Turnover 4.7 6.1 7.3 6.4 9.6 6.8 5.0
8. Introduction to DG Cement
❑ About:
DG Cement is a Pakistani building materials company which is owned by Nishat
Group. It is the largest cement manufacturer of Pakistan with a production capacity of
14,000 tons per day. Its symbol is DGKC.
❑ Key Person:
Mian Muhammad Mansha is the chairman of Nishat Group and in 1992, Nishat
Group acquired the company under privatization scheme and has been listed on Pakistan
Stock Exchange.
❑ Headquarter:
Its headquarter is in Lahore while the company has three active plants where
cement is manufactured, which are present in;
▪ Khairpur, Chakwal
▪ Dera Ghazi Khan
▪ Hub, Balochistan
9. Continue…
❑ Revenue:
DG cement’s revenue has been reported as PKR 40.38 billion.
❑ Product:
As their name depicts, the product being manufactured here is cement which is used in
building and construction sector all over the country.
❑ Market Rivals:
As DG cement is largest cement factory in Pakistan according to production per day, it has
certainly its rival in market those give tough competition to DGKC, these includes;
▪ Maple Leaf cement
▪ BESTWAY cement
▪ Askari cement
▪ Lucky cement
So in the market, DGKC competes its rivals to maintain its position in and its revenue and financial
reports tell everything loud and clear.
10. Ratio Analysis of DG Cement
FINANCIAL TERMS
(FY 2015 ~ 2019)
Financial Term for
Ratio Analysis
2015
Rs. (1,000)
2016
Rs. (1,000)
2017
Rs. (1,000)
2018
Rs. (1,000)
2019
Rs. (1,000)
Sales 26,104,611 29,703,758 30,136,165 30,668,428 40,516,525
Earning before tax 9,547,177 12,480,744 11,158,107 7,370,078 1,990,841
Net Income 7,624,680 8,789,672 7,975,341 8,837,608 1,609,759
Total Equity 62,296,071 65,783,429 74,868,879 77,134,421 70,928,415
Longterm debts 714,261 2,400,000 12,520,000 17,730,324 15,985,030
Total Current Liabilities 6,583,476 10,056,634 14,849,803 22,553,193 34,247,052
Total Debt 7,297,737 12,456,634 27,369,803 40,283,517 50,232,082
Total Fixed Assets 42,965,101 52,582,744 81,070,635 92,813,391 92,318,165
Inventory 4,824,234 4,772,814 6,102,334 6,491,823 12,954,322
Accounts Receivables 1,321,817 1,017,583 3,512,204 5,907,812 4,859,064
Total Current Assets 31,426,342 30,835,521 27,300,684 29,075,626 33,623,260
Total Assets 74,391,443 83,418,265 108,371,319 121,889,017 125,941,425
No. of Shares Outstanding 438,119,118 438,119,118 438,119,118 438,119,118 438,119,118
Stock Price (Rs.) 142.77 190.49 213.16 114.50 56.54
Earning Per Share (EPS) 17.40 20.06 18.20 20.17 3.67
11. Continue…
RATIO ANALYSIS
(FY 2015 ~ 2019)
Ratios 2015 2016 2017 2,018 2019
Company
Average
Industry
Average
Profitability Ratio
Return on Assets 10% 11% 7% 7% 1% 7% 10.1%
Return on Equity 12% 13% 11% 11% 2% 10% 17.0%
Profit Margin 29% 30% 26% 29% 4% 24% 19.9%
Debt Management Ratio
Debt Ratio 10% 15% 25% 33% 40% 25% 30.4%
Assets Management Ratio
Total Asset Turnover 35% 36% 28% 25% 32% 31% 52.9%
Fixed Asset Turnover 61% 56% 37% 33% 44% 46% 69.1%
Market Value Ratio
Market/Book Ratio 1.0 1.3 1.2 0.7 0.3 0.9 1.6
Price/Earnings Ratio 8.2 9.5 11.7 5.7 15.4 10.1 9.3
Liquidity Ratio
Current Ratio 4.8 3.1 1.8 1.3 1.0 2.4 1.5
Quick Ratio 4.0 2.6 1.4 1.0 0.6 1.9 0.9
Day Sales Outstanding 18 13 43 70 44 38 16
Inventory Turnover 5.4 6.2 4.9 4.7 3.1 4.9 5.0
12. Introduction to Maple Leaf Cement
❑ About:
Maple Leaf Cement is a Pakistani building Materials Company which is owned by
Kohinoor Group.It was set up in 1956 as a joint collaboration between the West Pakistan
Industrial Development Corporation and the government of Canada. It is strategically
located at Daudkhel (District Mianwali) in Northern Pakistan, which is an area rich in raw
materials required for the production of cement. Kohinoor acquired the ownership and
management of Maple Leaf Cement under the privatization policy of the government of
Pakistan in 1992.
❑ Key Person:
The company was founded by Amin Saigol in the 1930s with a small shop that
eventually developed into the Kohinoor Rubber Works.
13. Continue…
❑ Headquarter:
Its headquarter is in Lahore while its plants are in;
▪ Daudkhel, Mianwali.
❑ Revenue:
Its net income had been reported as PKR 650 Million.
❑ Product:
At Maple Leaf cement, the product being manufactured is cement which is used in building and
construction sector all over the country. It is the third largest cement manufacturing industry in
Pakistan fulfilling the needs of cement in construction and building.
❑ Market Rivals:
As DG cement is largest cement factory in Pakistan according to production per day, it has
certainly its rival in market those give tough competition to DGKC, these includes;
▪ Bestway cement
▪ Askari cement
▪ Lucky cement
▪ DG cement
14. Ratio analysis of Maple Leaf cement
FINANCIAL TERMS
(FY 2015 ~ 2019)
Financial Term for
Ratio Analysis
2015
Rs. (1,000)
2016
Rs. (1,000)
2017
Rs. (1,000)
2018
Rs. (1,000)
2019
Rs. (1,000)
Sales 20,720,054 23,432,696 23,992,079 25,699,113 26,005,944
Earning before tax 4,500,911 7,117,538 6,870,356 4,395,236 1,664,176
Net Income 3,454,295 4,884,585 4,777,081 3,632,201 1,465,299
Total Equity 17,662,740 21,337,135 23,708,061 29,911,139 30,514,586
Long term debts 666,344 1,406,541 3,070,841 12,942,080 16,990,227
Total Current Liabilities 8,144,461 5,027,065 7,764,031 11,953,924 14,164,518
Total Debt 8,810,805 6,433,606 10,834,872 24,896,004 31,154,745
Total Fixed Assets 23,782,112 23,543,989 28,405,142 45,996,847 51,750,897
Inventory 5,402,287 6,256,570 8,051,821 7,698,789 8,947,776
Accounts Receivables 148,366 361,041 291,684 44,713 37,591
Total Current Assets 7,439,205 8,477,707 10,411,631 12,731,681 14,206,878
Total Assets 31,221,317 32,021,696 38,816,773 58,728,528 65,957,775
No. of Shares Outstanding 593,700,666 593,700,666 593,700,666 593,700,666 593,700,666
Stock Price (Rs.) 78.56 105.51 111.36 50.74 23.89
Earning Per Share (EPS) 6.55 9.26 9.05 6.29 2.47
15. Continue…
RATIO ANALYSIS
(FY 2015 ~ 2019)
Ratios 2015 2016 2017 2,018 2019
Company
Average
Industry
Average
Profitability Ratio
Return on Assets 11% 15% 12% 6% 2% 9% 10.1%
Return on Equity 20% 23% 20% 12% 5% 16% 17.0%
Profit Margin 17% 21% 20% 14% 6% 15% 19.9%
Debt Management Ratio
Debt Ratio 28% 20% 28% 42% 47% 33% 30.4%
Assets Management Ratio
Total Asset Turnover 66% 73% 62% 44% 39% 57% 52.9%
Fixed Asset Turnover 87% 100% 84% 56% 50% 75% 69.1%
Market Value Ratio
Market/Book Ratio 2.6 2.9 2.8 1.0 0.5 2.0 1.6
Price/Earnings Ratio 12.0 11.4 12.3 8.1 9.7 10.7 9.3
Liquidity Ratio
Current Ratio 0.9 1.7 1.3 1.1 1.0 1.2 1.5
Quick Ratio 0.3 0.4 0.3 0.4 0.4 0.4 0.9
Day Sales Outstanding 3 6 4 1 1 3 16
Inventory Turnover 3.8 3.7 3.0 3.3 2.9 3.4 5.0
17. Profitability Ratios (ROA, ROE & PM)
During 2015 to 2017; Profitability Ratios were found better than the Industrial Average however in 2018 &
2019 they have seen a decline.
Debt Management Ratio (Debt Ratio)
During 2015 to 2017; Debt Ratio was found better/lower than the Industrial Average however in 2018 &
2019 they were quite high.
Asset Management Ratio (TATO & FATO)
During 2015 to 2017; Asset Management Ratios were found better/higher than the Industrial Average
however in 2018 & 2019 they have seen a decline.
Market Value Ratios (M/B & P/E)
During 2015 to 2017; Market Value Ratios were found better/higher than the Industrial Average however in
2018 & 2019 they have seen a decline.
Liquidity Ratios (CR, QR, DSO & ITO)
During 2015 to 2019, Liquidity ratios i.e. CR & QR have remain lower as compared with the Industrial
Average.
COMMENTS ON RATIO ANALYSIS
MAPLE LEAF CEMENT
18. Profitability Ratios (ROA, ROE & PM)
During 2015 & 2016; ROA was closer and better than the Industrial Average but from 2017 to 2019 it has
significantly decreased. During 2015 to 2019; ROE has significantly declined as compared to the Industrial
Average. Profit Margin was quite good during 2015 to 2018 while due to lesser Net Income in 2019; it has
significantly declined.
Debt Management Ratio (Debt Ratio)
During 2015 to 2017; Debt Ratio was found better/lower than the Industrial Average however in 2018 & 2019 they
were quite high.
Asset Management Ratio (TATO & FATO)
Both TATO & FATO have been found lower than the Industrial Average during 2015 to 2019 due to lower Sales.
Market Value Ratios (M/B & P/E)
During 2015 to 2019 M/B ratio has significantly reduced as compared to the Industrial Average however except
2016 & 2019 P/E ratio has remained comparatively lower than Industrial Average.
Liquidity Ratios (CR, QR, DSO & ITO)
During 2015 to 2017, CR has remained higher than the Industrial Average however it declined in 2018 & 2019.
During 2015 to 2018, QR has remain higher than the Industrial Average however it declined in 2019. DSO was
found quite higher than the Industrial average during 2015 to 2019 except 2016. ITO has remained better during
2015 & 2016 while it has declined significantly during 2017 to 2019.
COMMENTS ON RATIO ANALYSIS
DG CEMENT
19. Profitability Ratios (ROA, ROE & PM)
During 2015 to 2019; ROA & ROE have remained better than the Industrial Average due to better Net Income. Profit
Margin was quite good during 2015 & 2016 while due to lesser Net Income during 2017 to 2019; it has significantly
declined.
Debt Management Ratio (Debt Ratio)
During 2015 to 2019; Debt Ratio was found higher than the Industrial Average due to higher debts and current
liabilities.
Asset Management Ratio (TATO & FATO)
Both TATO & FATO have been found better than the Industrial Average during 2016 to 2019 due to higher Sales.
Market Value Ratios (M/B & P/E)
Prolonged political unrest in the country and transition of government process, increase in State Bank Policy rate has
severely impacted stock market performance resulting in massive decline in market capitalization of the Company.
During 2015 to 2017 M/B ratio was better than the Industrial Average however it declined in 2018 & 2019 while
except 2016; P/E ratio has remained comparatively lower than Industrial Average.
Liquidity Ratios (CR, QR, DSO & ITO)
During 2015 to 2019, both CR & QR have remained significantly lower than the Industrial Average. DSO was found
better than the Industrial average during 2015 to 2019. ITO has remained better than the Industrial Average during
2015 to 2019.
COMMENTS ON RATIO ANALYSIS
BESTWAY CEMENT
