““Financial analysisFinancial analysisOf Suzuki”Of Suzuki”

PRESENTED BYPRESENTED BY::

FARHAN BADARFARHAN BADAR

INTRODUCTIONPak Suzuki Motor Company Limited (PSMC) is a public limited

company with its shares quoted on Stock Exchanges in Pakistan. The Company was formed in August 1983 in accordance with the terms of a joint venture agreement concluded between Pakistan Automobile Corporation Limited (representing Government of Pakistan) and Suzuki Motor Corporation (SMC) - Japan.

Pak Suzuki remain market leader with 48% market share. The company launched new 1300cc car (SWIFT) in January 2010. This has been well accepted by the customers

 

• The Pak Suzuki Motors Company’s major revenues are collective from the Authorized dealerships across the country. So if the PSMC (Pak Suzuki Motors Company Limited) continues to meet the customer’s requirements it will also enable the dealerships to work in profitability because the dealership’s profitability (Suzuki Islamabad Motors, I-9 Islamabad) is directly related with the production of PSMC (Pak Suzuki Motors Company Limited) as per customer and societal demands

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

VISION

“To be excellent all around”

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

MISSION

“To provide automobile of international quality at competitive price”

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

SWOT Analysis

Strengths:Highest Market Share Low Price VehiclesHighly Innovative and deep product linkWell Managed and highly competitive staffEasy availability of spare parts

Weaknesses:

Increasing Accounts Receivable Lack of training of employeesReflect economic crises

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

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Opportunities

SWOT Analysis

Increasing Demand for CarsProvision of cheap servicesOpportunity to improve skills

Threats

Uncertain economic competition.Political instabilityIncrease in cost expenditure of car assembling and makingGrowing global technological advancement.Change in preferences of customers.

Financial Analysis

Liquidity ratios

Profitability ratio

Activity analysis ratios

Over all ratio analysis

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

Liquidity RatioCURRENT RATIO

Current Assets / Current Liabilities

INTERPRETATION:

An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Here in Year 2008 the ratio was 0.92 : 1 which means the company has Rs. 0.92 to pay off their short term liabilities of Rs. 1. In year 2009 it reduced 0.1 but in year 2010 it increased to 1.15, this means the company has Rs. 1.15 assets to pay off their short term liabilities of Rs. 1

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

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Conclusion

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Questions

YEAR RATIO

2008 0.91

2009 1.15

QUICK RATIO:

Liquidity Ratio

Quick Assets / Current Liabilities

INTERPRETATION

The Quick Assets are those which can be converted into cash with in the period of 90 days. This ratio also means that the company has quick assets in order to pay off their liabilities. The situation here is the same, in the first two years i.e., 2008 and 2009 the company has Rs. 0.89 and 0.87 quick assets to pay off their short term liabilities but in year 2010 the ratio increased to 1.12 means now the company has Rs. 1.12 quick assets to pay off their short term liabilities of Rs. 1

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

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YEAR RATIO

2008 0.87

2009 1.12

Profitability RatioNET PROFIT MARGIN

Net Profit / Sales*100

INTERPRETATION

Net Profit Margin Ratio tells us about the percentage of Net Profit in the amount of Sales.In this case in year 2008 the N.P Margin was 17 % that means it was the percentage of Net Profit in the amount of Sale. In the next year it reduced to 11.54 % and in third year it went to 13.61 %

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

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YEAR RATIO

2008 11.54 %

2009 13.61 %

Gross Profit Margin Ratio tells us about the percentage of Gross Profit in amount of Sales. In this case in year 2008 the G.P Margin was 44.31 % that means it was the percentage of Gross Profit in the amount of Revenue. In the next year it increased to 46.19 % and in year 2010 it goes 3 year high at 46.58 %

Profitability RatioGROSS PROFIT MARGIN

Gross Profit / Sales * 100

INTERPRETATION

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

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YEAR RATIO

2008 46.19 %

2009 46.58 %

Activity Analysis RatioASSETS TURNOVER RATIO

Sales / Total Assets

INTERPRETATION

The asset turnover ratio calculates the total revenue for every dollar of assets a company owns. Here in this case, in year 2008 the ratio was 0.58 : 1 which means that by utilizing Rs. 1 Assets the company generates Rs. 0.58 in year 2009 it reduced to Rs. 0.51 and in year 2010 it reduced to Rs. 0.46

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

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YEAR RATIO

2008 46.19 %

2009 46.58 %

Activity Analysis Ratio ACCOUNTS RECEIVABLE TURNOVER

Sales / Av. Accounts Receivable

INTERPRETATION

By maintaining accounts receivable, firms are indirectly extending interest-free loans to their clients. This is the ratio of the number of times that accounts receivable amount is collected throughout the year. A high accounts receivable turnover ratio indicates a tight credit policy. A low or declining accounts receivable turnover ratio indicates a collection problem, part of which may be due to bad debts. Here in this case, in year 2009 the accounts receivable were collected 7 times and in year 2010 the company collected them 8 times

Introduction

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SWOT Analysis

Financial Analysis

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YEAR RATIO

2008 7 Times

2009 8 Times

Activity Analysis Ratio RETURN ON ASSETS

Net income / Sales x Sales / Average Total Assets

INTERPRETATION

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. So in year 2009 the return on the assets were 5.5 % and in year 2010 it increase to 7%

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

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YEAR RATIO

2008 5.5 %

2009 7 %

Over all Analysis Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

RATIO 2006-2007 2007-2008 2008-2009

Current Ratio 0.92 0.91 1.15

Quick Ratio 0.89 0.87 1.12

N.P Margin 17% 11.54% 13.61%

G.P Margin 44.31% 46.19% 46.58%

Assets T/O 0.58 0.51 0.46

A/R T/O - 7 8

R.O.A - 5.5% 7%

YEAR 2008-2009:

Over all Analysis

In this year the current assets reduced to 54.01% as compared to Year 2008, Noncurrent assets increased to 45.99 % as compared to Year 2008. And in year 2009 Current assets and Non Current assets were 54.01% and 45.99 %. Current Liability also decreased to 59.06 as compared to year 2008. Owner’s equity increased and retained earnings were reduced as it was mentioned in the introduction that in year 2009 the automobile industry faced some depression hence it reduced the company’s retained earnings

Introduction

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SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

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Over all AnalysisYEAR 2009-2010:

In this year we can witness the increasing of Current Assets as compared to previous year and reduction of Non Current Assets. Current Liability also decreased and a slight increase in the owner’s equity and increase in the retained earning can be seen as the demand for the cars in year 2010 increased.

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

CONCLUSIONFrom the above analysis we can easily say that the organization is using modern day techniques in operations & in working. As we know that no such organization in the world is free from problem. It is the responsibility of management to cope with the problems and resolve them for the growth of the organization. The managers realize the problems but they have not given proper opportunity to implement their strategies in their respective departments. The top management also has to realize the prevailing situation in the organization; they have to listen to their employees as they are the major stakeholders of the policies which are being implemented by the organization. Upon some problems the organization also has some good aspects of it like, beautiful premises, strong customer relations, deep product line of Pak Suzuki Motors Limited is placed in the organization’s showroom. The automobile sector is one of the fastest growing sectors of the country, but the implication of new taxes by the government will surely going to hurt it, which will ultimately reduce the profits of dealership businesses like Suzuki Islamabad Motors.

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

RECOMMENDATION Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

The problem of obtaining the source documents and misappropriation of expense from can be solved by issuing the expense voucher before making the actual expense by forecasting the expense amount and they should be paid in advance.

The delay in decision making is being caused by the complex centralized structure of the organization. The organization can solve this matter by giving autonomy and liberty to the managers so that they can make timely decisions regarding their department matters

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

RECOMMENDATION

The loyalty of the employees was extremely low the reason was they were not being trusted by the management. The management should put their trust on the organization’s employees in order to gain the organizational loyalty.The environment of the organization should be made friendly with the employees by giving them proper time, listening to their problems and solving them in the best way the managers can

Introduction

Vision

Mission

SWOT Analysis

Financial Analysis

Liquidity Ratio

Profitability Ratio

Activity Ratios

Over all Analysis

Conclusion

Recommendation

Questions

THANKS