ACC501 Business Finance assignment no 1 spring fall 2011

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RATIO ANALYSIS
The Crescent Textile Mills Ltd. (Crestex) is one of the leading public limited companies incorporated
under the Companies Ordinance 1984. Its shares are quoted on all the Stock Exchanges in Pakistan. The
Crestex is engaged in business of textile manufacturing comprising of made ups, processed fabric, greige
fabric and yarn made from raw cotton and synthetic fiber(s). Crestex also operates a cold storage and a
power generation house. The financial statements of the company reveal that it is one of the financially
viable companies of the textile industry in Pakistan.
Q1. Using the audited financial statements with accompanying information for the year ended
June 30, 2010 provided in the Annual Report 2010 of The Crescent Textile Mills, you are
required to conduct “Time-series Analysis” of solvency measures of the company by
computing and interpreting the results of the following ratios for the years 2009 & 2010:
􀂃 Total Debt Ratio
􀂃 Debt-Equity Ratio
􀂃 Times Interest Earned (TIE) Ratio
Note:
“Time series Analysis” refers to the analysis of ratios of the same company for different time
periods. Interpretations carry reasonable marks so they should not only be based upon
individual figures but also on the comparison of the ratios for both years.
Similarly, Kohinoor Textile Mills Ltd. (KTML) is one of the leading companies in the same business
sector and having close competition with Crestex.
Q2. Using the audited financial statements with accompanying information for the year ended
June 30, 2010 provided in the Annual Reports 2010 of The Crescent Textile Mills and Kohinoor
Textile Mills, you are required to conduct “Cross company Analysis” of liquidity measures of
the companies by computing and interpreting the results of the following ratios for Crestex &
KTML for the year 2010 only:
􀂃 Current Ratio
􀂃 Quick Ratio (Acid-test Ratio)
􀂃 Cash Ratio