ANALYSING THE FINANCIAL MANAGEMENT OF A PUBLIC LIMITED COMPANY IN

PAKISTAN

NATIONAL FOODS (NK)

GROUP MEMBERS:• AQSA SALAM 9782

• KALSOOM PARVEEN 9893• MUHAMMAD UZAIR 11511• SYED ASAAD NADEEM 11487

SUBMITTED TO: MISS ISMA ZAIGHAM

HISTORY OF NATIONAL FOODS

• FOUNDED IN 1970, A SPICE COMPANY• IN 1988, CERTIFIED VENDOR OF MCCORMICK• ENGAGED IN THE MANUFACTURE AND SALE OF CONVENIENCE BASED FOOD

PRODUCTS• LISTED ON KARACHI, LAHORE AND ISLAMABAD STOCK EXCHANGES.

CORPORATE NEWS OF NATIONAL FOODS:

9MFY15: NATIONAL FOODS’ EARNINGS UP 19%• COUNTRY’S BIGGEST MAKER OF SPICES AND PICKLES FOR OVER 30 YEARS• THE COMPANY REPORTED AN AFTER-TAX PROFIT OF DURING THE PERIOD RS519

MILLION OR RS5 PER SHARE (DURING THE FIRST NINE MONTHS OF FISCAL YEAR 2014)

• RAISED TO RS618 MILLION OR RS6 PER SHARE • QUARTERLY RESULTS RS139 MILLION OR RS1.34 PER SHARE TO INCREASING BY 24%

TO RS173 MILLION OR RS1.67 PER SHARE ( 2014 TO 2015)• IN FY13, TO RS8 BILLION NINE-MONTH PERIOD RS6.7 BILLION • IN FY13 , QUARTERLY BASIS RS2.5 BILLION IN JAN-MARCH 2015 TO RS2.1 BILLION

NATIONAL FOODS SEES PROFITS GROW 35% TO RS588M• REPORTED A PROFIT GROWTH OF 35% FOR THE FIRST NINE MONTHS OF FISCAL

2013 TO RS588 MILLION AS ITS LOCAL SALES WENT UP DESPITE• NO SUPPORT FROM EXPORTS BECAUSE GLOBAL RECESSION• 20/20 VISION, TO BOOST LOCAL AND EXPORT SALES THROUGH PROMOTIONAL

EVENTS. NATIONAL FOODS AIMS TO BECOME AN RS50 BILLION COMPANY.• LOCAL SALES CLIMBED 14% TO RS5.53 BILLION , WHILE EXPORT REVENUES FELL

MARGINALLY, WHICH MEANS THAT NATIONAL FOODS’ PROMOTIONAL CAMPAIGNS ARE ATTRACTIVE OVERALL

• INVEST IN MUTUAL FUNDS, WHICH TURNED OUT A GREAT RETURN ON INVESTMENT OVER THE PERIOD,

• OTHER INCOME JUMPED 91% TO RS53.24 MILLION.

NATIONAL FOODS GOOD IN CLEARING ITS DEBT• INITIAL SALE OF RS16,487 IN 1970 AND HAS NOW REACHED A LEVEL OF RS854 MILLION• INVENTORY TURNOVER IN 2012 WAS 2.9 TIMES AND IN 2013 IT WAS 3.2 TIMES• RECEIVABLES TURNOVER IS BECOMING WORSE AS IT WAS 24 TIMES IN 2012 AS COMPARED TO

2013 WHICH IS 18.16 TIMES. THIS SHOWED THE INEFFICIENCY • IN 2013 THE COMPANY PAID OFF ITS ENTIRE CREDITOR 21 TIMES AND IT TOOK 16 DAYS. IT IS

MORE FAVORABLE• TOTAL ASSET TURNOVER IS CETERIS PARIBUS FOR THE PERIOD OF 2012-2013 WHICH IS 2.3

TIMES. IT SHOWED THAT THE COMPANY IS MANAGING ITS TOTAL ASSETS LESS EFFICIENTLY• . FIXED ASSET TURNOVER IN 2013 WAS 8.56 WHICH WERE HIGHER IN RESPECT OF 2012. IT

MEANS THE COMPANY HAS LESS MONEY TIED UP IN FIXED ASSETS NOT OVER-INVESTED • NATIONAL FOODS CONVERTED ITS WORKING CAPITAL ONLY 13 TIMES INTO NET SALE AND 15

TIMES IN 2012. AN INCREASING WORKING CAPITAL TURNOVER IS USUALLY A POSITIVE SIGN FOR THE NATIONAL FOODS

• COMPANY IS GOOD ENOUGH IN CLEARING ITS DEBT WHICH DOESN’T SPOIL ITS REPUTATION OR RELATIONSHIP WITH CREDITORS

1 2 3 4 5 6 70.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Current Ratios

1 2 3 4 5 6 7 -

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

Working Capital Management

1 2 3 4 5 6 70.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Fixed Assets Turnover Ratio

1 2 3 4 5 6 70.00

0.50

1.00

1.50

2.00

2.50

Total Assets Turnover Ratio

1 2 3 4 5 6 70.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

Debt Ratio

1 2 3 4 5 6 70.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

Debt Equity Ratio

1 2 3 4 5 6 70.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Operqating Margin

1 2 3 4 5 6 70.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

Profit Margin

1 2 3 4 5 6 7 -

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.20

Return on Total Assets

1 2 3 4 5 6 7 -

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Return On Common Equity

1 2 3 4 5 6 7 -

20.00

40.00

60.00

80.00

100.00

120.00

Price per Share

1 2 3 4 5 6 7 -

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Marekt/ Book Ratio

1 2 3 4 5 6 70

200000

400000

600000

800000

1000000

1200000

Total Book Assets

Series1 Series2

1 2 3 4 5 6 70

200000

400000

600000

800000

1000000

1200000

1400000

Total Debt

Series1 Series2

1 2 3 4 5 6 70

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

Sale , General & Administrative Expense

Series1 Series2

2016 2015 2014 2013 2012 2011 20100.00

0.50

1.00

1.50

2.00

2.50

3.00

Total Leverage

Series1

2016 2015 2014 2013 2012 2011 20106.40

6.50

6.60

6.70

6.80

6.90

7.00

7.10

7.20

Firm Size

Series1

2016 2015 2014 2013 2012 2011 20101.50

1.55

1.60

1.65

1.70

1.75

1.80

1.85

1.90

1.77

1.861.85

1.80

1.76

1.84

1.64

Tangibility

Series1

• INVESTORS PERSPECTIVE:IF WE TALK ABOUT THE PROSPECTIVE OF ANY INVESTOR, IF AN INVESTOR WANTS TO INVEST IN NATIONAL FOODS THEN HE MUST HAVE TO SEE PORTFOLIO AND THE LAST PREVIOUS YEAR INFORMATION OF THE FIRM. THE NATIONAL FOODS HAVE A STRONG ASSETS FINANCING AND THERE IS NO DEBT FINANCING IN LAST 4 YEARS SO AN INVESTOR CAN EASILY INVEST IN THE NATIONAL FOODS BECAUSE IF HE OR SHE INVESTS IN THIS FIRM, HE OR SHE WILL GET BETTER RETURN AS COMPARE TO THE FIRMS WHO HAVE DEBT FINANCING.