All financial ratios of bata shoe of last five years
7 likes7,075 views
The document presents a financial analysis of Bata Pakistan, highlighting challenges in the footwear industry such as high energy costs, lack of skilled labor, competition from cheaper imports, and outdated production methods. Despite these challenges, Bata has maintained a strong retail network and gained a reputation for quality products, with significant growth noted in its financial metrics from 2011 to 2015, including improvements in profit margins and working capital. The analysis also includes detailed vertical and horizontal assessments of the company's assets, liabilities, and earnings over the specified period.
All financial ratios of bata shoe of last five years
- 1. BATA SHOES COMPANY FINANCIAL ANALYSIS OF FIRM FINANCIAL STATEMENT Presented by Imtiaz nawaz #26 Farman hassan #31 Faiz subhani #43 Adeel bashir #46 Umar farooq #142
- 2. PAKISTAN SHOE INDUSTRY ANALYSIS Challenges: One of the most important problems hindering the growth of footwear industry is higher energy prices. Increasing energy and inputs prices leads to an increase in the cost of production that influences the expected production of the industries and thereby exports. Industries do not have footwear training institutes of quality and repute and in result there is a lack of skilled labor force. Thus there exists a problem of absorption capacity in advanced machinery. Industry is facing high competition from China providing cheaper footwear product in markets. Heavy taxes in the form of sales tax and income tax on retail businesses.
- 3. Outdated production methods are still prevailing in the shoe factories. Improper availability of raw material. There is no mechanism of collaboration between Industry units and other related research organization and academic institution to improve their productivity. Transport and utility infrastructure facilities are not adequate. Shoe industry in Pakistan is growing rapidly and a lot of companies are competing for market share so the rivalry among the firms is intense.
- 4. BATA (PAKISTAN) Since 1942 Bata Pakistan has been rendering its services to its valued customers by offering quality products. It was incorporated in Pakistan as Bata Shoe Company (Pakistan) Limited in 1951 and went public to become Bata Pakistan Limited in the year 1979. Self-concept: Since its inception, the company has not only maintained a good reputation of manufacturing high quality footwear for all segments but has also been designing shoes in accordance with the changing fashions and trends. Networking: Bata Pakistan is serving its valued customers through a strong retail network comprising of more than 400 retail outlets, 467 registered wholesale dealers, 13 wholesale depots, 28 wholesale distributors and 41 DSP wholesale franchises across the country. Besides catering local market, Bata Pakistan also shows its presence in an international footwear market through its export department which is constantly exploring new potential market in order to earn foreign exchange.
- 5. VERTICAL & HORIZONTAL ANALYSIS Balance sheet (vertical analysis) Items 2011 2012 2013 2014 2015 Non-current assets Property plant & equipment 15.86% 14.78% 17.47% 18.84% 17.85% Intangible asset 0.227% 0.14% 0.077% 0.067% 0.052% Long term investment 0.79% 0.656% 0.59% 0.51% 0.55% Long term deposit & payment 0.80% 0.464% 0.368% 0.63% 0.43% Current asset Store & spare 0.0044% 0.001% 0.0042% Stock in trade 48.58% 39.11% 37.06% 36.93% 36.01% Trade debt unsecure 2.81% 5.98% 5.7% 6.82% 9.57% Advance is unsecure 0.52% 0.157% 0.44% 0.82% 0.52% Deposit short payment & other receivable 7.43% 7.725% 8.17% 7.97% 7.51% Interest accrued 0.029% 0.089% 0.12% 0.053% 0.027% Short term investment 2.16% 8.87% 15.15% 15.29% 15.78% Tax refunds due from govt 11.47% 9.02% 7.96% 6.88% 6.17% Cash & bank balances 9.32% 13% 6.88% 5.19% 5.53% Total assets 100% 100% 100% 100% 100%
- 6. Share capital % reserves Capital reserve 0.01% 0.0086% 0.0075% 0.0065% 0.0058% Issue subscribed & paid up capital 1.63% 1.34% 1.183% 1.02% 0.92% Revenue reserve 69.21% 68.19% 69.25% 70.07% 72.52% Noncurrent liabilities Long term deposits 0.791% 0.656% 0.59% 0.51% 0.55% Deferred liabilities 1.71% 1.51% 0.85% 0.72% 0.83% Deferred taxation 0.74% 0.72% 0.78% 0.91% 0.59% Current liabilities Trade & other payable 20.43% 21.11% 19.96% 19.68% 17.03% Short term borrowing Provision for taxation 5.47% 6.46% 7.37% 7.07% 7.55% Total liabilities 100% 100% 100% 100% 100%
- 7. INCOME STATEMENT (VERTICAL ANALYSIS) Items 2011 2012 2013 2014 2015 sales 100% 100% 100% 100% 100% cost of sales 63.93% 62.89% 60.9% 60.92% 59.37% Gross profit 36.07% 37.11% 39.09% 39.07% 40.63% Distribution cost 18.65% 17.91% 18.59% 18.91% 19.29% Administrative expenses 6.10% 6.11% 6.4% 6.37% 6.34% Other operating expenses 0.78% 1.04% 1.15% 1.03% 1.19% Other operating income 0.43% 0.49% 0.67% 1.18% .62% Operating profit 10.96% 12.53% 13.63% 13.94% 14.45% Finance cost 0.52% 0.46% 0.21% 0.22% .21% Profit before taxation 10.44% 12.07% 13.63% 13.71% 14.21% taxation 2.82% 3.18% 3.77% 3.98% 4.43% Profit after taxation 7.6% 8.9% 9.65% 9.73% 9.78% Other comprehensive income - - - 0.036% (.05%) Total comprehensive income for year 7.6% 8.9% 9.65% 9.76% 9.73% Earnings per share 98.96 135.03 163 177.17 191.20
- 8. BALANCE SHEET (HORIZONTAL ANALYSIS) Items 2011 2012 2013 2014 2015 Non-current assets Property plant & equipment 100% 113.57 152.15 189.76 200.00 Intangible asset 100% 76.28 47.04 46.93 40.56 Long term investment 100% 101.11 103.84 103.84 122.97 Long term deposit & payment 100% 70.65 63.44 125.44 94.75 Current asset Store & spare 100% 247.00 _ 77.00 343.00 Stock in trade 100% 98.11 105.37 121.45 132.02 Trade debt unsecure 100% 259.13 279.74 387.15 605.94 Advance is unsecure 100% 36.72 115.70 250.59 177.78 Deposit short payment & other receivable 100% 126.73 151.91 171.41 180.08 Interest accrued 100% 443.02 568.71 292.28 171.25 Short term investment 100% 500.00 968.00 1130 1300 Tax refunds due from govt 100% 95.84 95.84 95.84 95.84 Cash & bank balances 100% 170.19 102.11 89.06 105.69 Total assets 100% 121.87 138.11 159.76 178.10
- 9. Share capital % reserves Capital reserve 100% 100.00 100.0 0 100.00 100.0 0 Issue subscribed & paid up capital 100% 100.00 100.0 0 100.00 100.0 0 Revenue reserve 100% 120.08 138.1 9 161.77 186.6 2 Noncurrent liabilities Long term deposits 100% 101.11 103.8 4 103.84 122.9 7 Deferred liabilities 100% 107.25 64.02 67.04 86.80 Deferred taxation 100% 119.41 122.2 5 196.10 142.6 9 Current liabilities Trade & other payable 100% 125.91 107.1 6 153.88 148.4 9 Short term borrowing 100% _ _ _ _ Provision for taxation 100% 143.98 185.9 7 206.55 245.6 4 Total liabilities 100% 121.87 0 138.11 159.76 178.1 0
- 10. INCOME STATEMENT (HORIZONTAL ANALYSIS) Items 2011 2012 2013 2014 2015 Sales 100% 116.91% 130.13% 140.25% 150.58% cost of sales 100% 115% 123.98% 133.66% 139.85% Gross profit 100% 120.28% 141.05% 151.92% 169.6% Distribution cost 100% 123.17% 129.66% 142.2% 141% Administrative expenses 100% 117.1% 136.41% 146.4% 156.32% Other operating expenses 100% 155.72% 192.21% 185.1% 229.53% Other operating income 100% 133.37% 201.28% 383.46% 214.70% Operating profit 100% 133.71% 161.76% 178.34% 198.08% Finance cost 100% 104.38% 51.78% 61.33% 59.57% Profit before taxation 100% 135.18% 167.26% 184.19% 205% Taxation 100% 131.77% 174.10% 198.13% 236.88% Profit after taxation 100% 136.44% 164.72% 179% 193.2% Other comprehensive income - 100% -100% Total comprehensive income for year 100% 136.44% 164.72% 179.69% 192.25% Earnings per share 98.96 135.03 163 177.17 191.20
- 11. LIQUIDITY OF SHORT TERM ASSET RELATED DEBT PAYING ABILITY In 2011 firm has 4.83 days for convert sales into receivable In 2012 firm has 10.7 days for convert sales into receivable In 2013 firm has 10.40 days for convert sales into receivable In 2014 firm has 13.36 days for convert sales into receivable In 2015 firm has 19.47 days for convert sales into receivable Account receivable turnover Liquidity of receivable time per year has decreasing trend ( how much collection has made year to year) Ratios 2011 2012 2013 2014 2015 Day sale in receivable 4.83 10.7 10.40 13.36 19.47 Account receivable turnover 128.79 49.12 36.44 31.73 22.88
- 12. Account receivable turnover in days This ratio shows turnover in days has increasing year to year which has negative trend( how days are required to collection ) Days sales in inventory This ratio shows the length of inventories convert into sales so this trend has no significant change Account receivable turnover in days 2.83 7.43 10.02 11.50 15.95 Days sales in inventory 130.72 111.5 111.11 118.78 123.40 Inventory turnover 3.33 3.24 3.40 3.27 3.08 Inventory turnover This ratio shows how much time required to convert into sale. Which has moderate change in year to year.
- 13. Inventory turnover in a days Days to convert into sales also has moderate change. Operating cycle This ratio is combination of a/r turnover in a days & inventory turnover in a days It is useful to compare period to period ratios for similar firms like service shows Inventory turnover in a days 109.77 112.6 107.28 110.92 118.46 Operating cycle 112.6 120.03 117.30 122.42 134.41 Working capital 2609950 3178932 3460195 3931845 4658537 Working capital it shows the solvency of the firm so it is increasing period to period
- 14. Current ratio It shows debt paying ability of the firm so this firm has better ability because of over 2:1 ratio acid-test ratio This ratio relates to most liquid asset to current liabilities minus inventory because of many reason ( slow moving trend) so it showing the positive trend over period to period cash ratio This ratio is used for an extremely conservative point of view if it is high means firm not using cash and if it is low firm has low paying ability. So there firm has no significant change ( moderate level) sale to working capital It indicates turn over in working capital year to year so in 2011 ratio is 4.12 and than decreasing in next years means working capital increasing after 2011. it shows less profitable use of working capital after 2011. Current ratio 3.18:1 3.04:1 2.98:1 2.99:1 2.99:1 acid-test ratio 0.55 1.01 1.02 1.02 1.26 cash ratio 0.44 0.79 0.81 0.76 0.87 sale to working capital 4.12 3.97 3.85 3.72 3.44
- 15. FINANCIAL RATIOS Time interest earned ratio 21.02 times 26.92 times 65.66 times 61.12 times 69.88 times Fixed charge coverage Ratio 21.02 times 26.92 times 65.66 times 61.12 times 69.88 times Time interest earned ratio The time interest earned ratio indicate a firms long term debt paying ability from the income statement It is relatively low in 2011 and 2012, stable, and high in the next three years. Fixed charge coverage Ratio It is extension of time interest ratio and include rental interest portion in numerator and denominator. It is same as fixed interest ratio because Bata Company has no rental interest
- 16. Debt ratio It indicates how many assets creditor finances and it helps to determine of creditors protection. It is decreasing in five years from 29% to 26%, which is a good indicator. Debt to Equity ratio It is alternative of debt ratio but it include all the liabilities and tell how well are creditors are protected. It is less than 50%, which is a good indicator. Debt to tangible net worth ratio It is same as last two ratios but it does not include tangible assets because tangible assets are not providing resources to pay creditors. It is almost low in all five years. Debt ratio 29.15% 30.46% 29.56% 28.90% 26.56% Debt to Equity ratio 41.14% 43.81% 41.96% 40.64% 36.16% Debt to tangible net worth ratio 41.27% 43.90% 42% 40.68% 36.18%
- 17. Financial ratios 2011 2012 2013 2014 2015 Net profit margin 7.6% 8.9% 9.65% 9.76% 9.73% Total assets turn over 2.23 times 2.24 times 2.12 times 1.99 times 1.89 times Net profit margin measure the net income rupee generated by each dollar of sale. This ratio of years 2011-2015 is increasing respectively which shows that income rupee generated is increasing respectively against each rupee of sale Total assets turn over measure the activity of assets and the ability of firm to generate sales through use of assets. This ratio is showing decreasing trend in five years that shows the ability of firm generating sale is decreasing but not significantly PROFITABILITY RATIOS
- 18. Return on assets 17% 19.9% 20.5% 19.5% 19.4% Operating income margin 10.96% 12.5% 13.6% 13.94% 14.4% Operating assets turnover 14.38 14.65 13.10 10.97 10.32 Return on assets measure the firm’s ability to utilize its assets to create profits by comparing profit with the assets that generate the profit. This ratio is increasing in first three years and a little decreasing trend in last two years Operating income margin measures the operating income generated by each rupee of sale. This ratio shows increasing trend from 2011 to 2015 that’s mean company operating income is increasing per rupee of sale Operating assets turn over measures the ability of operating assets to generate sales. This ratio is showing decreasing trend shows that ability of operating assets is decreasing.
- 19. Return on operating assets 157.7% 184.6% 178.5% 153.0% 148.9% Sale to fixed assets 12.78 times 13.32 times 13.24 times 10.33 times 9.73 times Return on investment 24.92% 23.92% 28.68% 27.08% 25.22% Return on operating assets measures the ability of firms utilizes its operating assets to generate operating income. This ratio shows increasing trend in in first three years (2011-2013) and decreasing trend in last two years (2014 & 2015) Sale to fixes assets measure the firm’s ability to make productive use of its assets (plant property equipment etc.) it exclude construction in progress. This ratio shows increasing trend in in first three years (2011- 2013) and decreasing trend in last two years (2014 & 2015). Return on investment measure the income earned on the invested capital. This ratio shows the average increasing trend of Bata income on invested capital
- 20. Return on total equity 24.85% 28.36% 29.22% 27.45% 25.56% Return on common equity 24.86% 28.36% 29.22% 27.45% 25.56% Gross profit margin 36.07% 37.11% 39.09% 39.07% 40.63% Return on total equity measures the return on both common and preferred stock. This ratio shows increasing trend in in first three years (2011-2013) and decreasing trend in last two years (2014 & 2015) Return on common equity measures the return on common stockholders (residual owners). It shows the same trend as return on total equity shows because it has no preferred stock. Gross profit margin measures the gross profit margin in net sales. Shows the gross profit of firm increasing respectively on net sales
- 21. Financial ratios 2011 2012 2013 2014 2015 Financial leverage 2.33 2.00 1.02 1.02 1.01 Earnings per share 13.50 9.89 16.30 17.72 19.03 Price earnings ratio 8.27 10.00 17.13 19.70 17.10 Financial leverage measures the cost of debts in other words net income change as compare to change in EBIT this ratio shows the decreasing trend which states that cost of finance of company is decreasing Earnings per share measures the amount of income earned on each share of common stock during an accounting period. This shows the earning per share is increasing of Bata. Price earnings ratio measure what is being paid for dollar of recurring earning. This is showing the increasing trend in 2011-2015 INVESTING RATIOS
- 22. Percentage of earning retained 79.37% 49.96 46.40 56.20 55.89 Dividend yield 2.44% 3.71 3.15 2.33 2.69 Dividend payout ratio 20.64% 50.07 53.61 43.81 44.10 Book value 43.36 51.86 59.53 65.52 80.04 Percentage of earning retained measures the proportion current earning retained for the internal growth. This ratio shows the reducing trend which interprets that Bata starts retained less cash for growth now Dividend yield measures the dividend paid rate to total earning. This ratio shows increasing trend in in first three years (2011-2013) and decreasing trend in last two years (2014 & 2015) Dividend payout ratio measures the portion of current earnings per common share being paid as dividend. This ratio shows increasing trend in in first three years (2011- 2013) and decreasing trend in last two years (2014 & 2015) Book value per share measures the book value of each outstanding share. Book value of shares is increasing which shows the strong position of organization
- 23. Financial ratios 2011 2012 2013 2014 2015 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤/𝑡𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡𝑠 14.05% 90.39% 66.78% 51.09% 54.1% 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 2.5 20.5 16.68 14.43 15.66 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤/𝑐𝑎𝑠ℎ 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 89.9% 414% 190.9% 185.9% 186.5 % Cash flow ratios Operating cash flow/ total debts measures the firm’s ability to cover total debt with the yearly operating cash flow .This ratio is very low in 2011, in 2012 there was high and relatively good in 2013, 2014 & 2015 Operating cash flow per share measures the fund flow per common share outstanding. It is usually higher than earning per share because deprecation has not been deducted. This ratio is very low in 2011, in 2012 there was high and relatively good in 2013, 2014 & 2015 Operating cash flow over cash dividend Firms ability to cover cash dividend through yearly operating cash flow it also show same trend