10-24-2011, 10:01 PM
hey guys... i am so struck,, i dont get any idea how to solve this assignment. please share idea solution if you people have any
Assignment No. 01 Marks: 20
Objectives of the Assignment:
If a student completes this assignment with full understanding of ratio analysis, he/she would be able:
• To read and extract the required information from the financial statements.
• To calculate, compare and interpret the results of the ratios.
• To apply the concepts effectively in the upcoming courses of Finance.
• To prepare well for the courses of internship or final project of Finance.
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
Note:
Cross company analysis refers to the comparison of the ratios of two or more companies within
same business sector (industry) for the same period. Interpretations carry reasonable marks so
they should not only be based upon individual figures but also on the comparison of the ratios
for both companies.
It is important to note that annual reports for the year 2010 should be used for analysis. The annual
reports are available on the following companies’ websites:
Crescent Textile Mills: Crescent Textile Mills Limited
Kohinoor Textile Mills: www. kmlg . com
The annual reports must be downloaded from the companies’ websites only. Annual reports downloaded
from any other source would not be acceptable.
Points to Remember:
• The financial statements in the annual report 2010 not only contain the data for the year 2010 but
also for the year 2009.
• The term “Total Debt” refers to the total liabilities of the company.
• Interest expense includes mark up on short-term and long-term borrowings which can be found in
the details of Finance Cost under Notes to the Financial Statements e.g. Note # 32 in the annual
report 2010 of Crescent Textile Mills.
• Inventory is mentioned as Stock-in-trade in the balance sheet.
Important Tips
Assignment No. 01 Marks: 20
Objectives of the Assignment:
If a student completes this assignment with full understanding of ratio analysis, he/she would be able:
• To read and extract the required information from the financial statements.
• To calculate, compare and interpret the results of the ratios.
• To apply the concepts effectively in the upcoming courses of Finance.
• To prepare well for the courses of internship or final project of Finance.
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
Note:
Cross company analysis refers to the comparison of the ratios of two or more companies within
same business sector (industry) for the same period. Interpretations carry reasonable marks so
they should not only be based upon individual figures but also on the comparison of the ratios
for both companies.
It is important to note that annual reports for the year 2010 should be used for analysis. The annual
reports are available on the following companies’ websites:
Crescent Textile Mills: Crescent Textile Mills Limited
Kohinoor Textile Mills: www. kmlg . com
The annual reports must be downloaded from the companies’ websites only. Annual reports downloaded
from any other source would not be acceptable.
Points to Remember:
• The financial statements in the annual report 2010 not only contain the data for the year 2010 but
also for the year 2009.
• The term “Total Debt” refers to the total liabilities of the company.
• Interest expense includes mark up on short-term and long-term borrowings which can be found in
the details of Finance Cost under Notes to the Financial Statements e.g. Note # 32 in the annual
report 2010 of Crescent Textile Mills.
• Inventory is mentioned as Stock-in-trade in the balance sheet.
Important Tips