7/21/2019 financial statement analysis

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Capital University of science and technology, Islamabad.

Report:

Financial statement analysis of “Descon chemical ltd.”

Submitted by:

Faheem ul Hassan (BF 133002)

Asad ur ehman (BF 133003)

!ain "ha#eel (BF 133010)

"a$i% ohail (BF 13300&)

Subject:

Financial "tatement Analysis

Submitted to:

"ir. !ia ul 'slam

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Introduction:

Descon is one of the larest conlomerates in a#istan o*eratin for o+er three

decades. Founded in 1,-- initially it /as a multifaceted enineerin and manufacturin

concern that has no/ %ecome the larest nineerin rocurement onstruction

ommissionin 45 com*any in the country.

A fe/ years after its esta%lishment the focus turned to chemicals materials and *o/er eneration. For o+er three decades no/ Descon hemicals 6imited has %uilt Descon7s culture

into /hat it is today 8 a *lace for creatin and %rinin ideas to life. Descon7s hemical

Business com*rises of Descon hemicals 6imited 9':' esins 6imited Descon or*oration

6imited and Descon ;<ychem 6imited. From the manufacturin of a /ide +ariety of chemicalsto their tradin they *ro+ide a onesto* solution for all industrial chemicals needs.

Ha+in a /or#force of o+er =00 *ersons and o*eratin from 6ahore a#istan /e offer a /ide

rane of around 200 inno+ati+e *roducts and ser+ices for mar#ets includin oatin

mulsion a*er and ac#ain >e<tile Au<iliaries rintin 'n#s and ?nsaturated olyester.

;ur enter*rise is more than a collection of successful %usinesses that are o/ned under one roof.

@e stri+e to ain com*etiti+e ad+antae from o**ortunities for constructi+e colla%oration.

Descon ;<ychem 6imited is an addition to the Descon chemical %usiness area that manufactures

Hydroen ero<ide. @ith the stateoftheart chemical *lant and latest technoloy ;<ychemaims to create sustaina%le solutions essential for a %etter safer healthier life for *eo*le

e+ery/here. >he *lant has an annual ca*acity of 2000 metric tons and is s*read o+er 2 acres.

@e en+ision *ro+idin technical su**ort and after sale ser+ices in order to %uild and maintain the

Brand $uity not only in a#istan %ut around the lo%e as /ell. Descon ;<ychem also is the *roud *ioneer of food rade hydroen *ero<ide *roduction in a#istan. @e ha+e started sellin

our food rade *roduct to the local industries. @e also e<*ort Hydroen ero<ide to >ur#ey

'ndia "ri 6an#a Banladesh "outh Africa and ?A.

@ith the aim to %rin the %est $uality solutions to its clients all o+er the /orld Descon7shemicals Business fast emeres as a name e*itomiin e<cellence and dedication /ith the

+ision

“o become a leading chemicals solutions provider to industry !orld!ide." 

Competitor “Colgate#$almolive"

>he olatealmoli+e om*any is an American multinational consumer *roducts com*any

focused on the *roduction distri%ution and *ro+ision of household health care and *ersonal

 *roducts such as soa*s deterents and oral hyiene *roducts (includin tooth*aste and

tooth%rushes). ?nder its CHillsC %rand it is also a manufacturer of +eterinary *roducts.

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Company%s internal analysis:

&i'uidity ratio:

om*any faces hue losses from *ast fe/ years due to some lia%ilities. "o the li$uidity ratios

decrease from the %ase year %ut in+entory turno+er increase from the %ase year. ;*eratin cycle

increase from %ase year due to com*any *erformance decline from *ast year. %ut their account

recei+a%le turno+er increase from its %ase year this /ill affect their *erformance in %ad manner.

>heir cash flo/ ratio increase from its *ast years this sho/ com*any is enerated more cash then

its *ast year from its o*eration /hich ha+e a%ility to *ay its current lia%ilities as /ell its lonterm lia%ilities.

 6on term de%t*ayin a%ilityE

'ts sho/s that com*any ha+e %etter de%t*ayin a%ility from its *ast years. >he cash enerated

from its o*eration hel* to im*ro+e its de%t*ayin a%ility.

$rofitability:

om*any has %ad im*ression from its return on in+estment due to some %ad decision of its

mem%er com*any face some hue losses. Althouh com*any doin e+erythin to sur+i+e %utthese %ad decision had %ad im*ression on its *rofita%ility ratio from its *ast year.

>hese ratio decreases from the %ase year.

Investor (nalysis:

Due to some hue losses and its lia%ilities com*any cannot offer any di+idend from *ast fe/ year 

so in+estor can7t et any return on in+estment from this com*any. Althouh its mar#et share

 *rice increase from *ast year /hich /ill i+e ood im*ression on its ood/ill and in+estor can

earn from sellin and %uyin of its shares.

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)ertical analysis:

>he com*any7s cost of ood increase /hile the ross *rofit decreases as com*are to its *ast

years.

't7s o*eratin income decrease as com*are to its *ast year. @hile its interest e<*enses increases.

'ts net income also decreases %ut its current assets increase. ;n the other side its lonterm assets

decrease due to sale and con+erted into scra*.

'ts total lia%ilities also decreasin /hich a ood sin for com*any and its e$uity also increasin.

;+erall com*any *erformance ettin %etter than *ast year.

*ori+ontal analysis:

'ts sales decreases from %ase year as /ell ross *rofit %ut its income increases from its %ase year.

'ts total assets decreases from its %ase year due to some %ad in+estment and fi<ed assets con+ert

into scra*. But its lia%ilities also deceasin /hich a ood sin for this com*any.

'ts total e$uity also increases /hich /ill i+e ood im*ression to *u%lic.

;+erall com*any *erformance oin %etter than its %ase year.

Comparison from competitor:

&i'uidity ratios:

'ts com*etitor has %etter im*ression from its analysis %ecause they earn hue *rofit from its

o*eration. >heir recei+a%le turno+er and in+entory turno+er far %etter than this com*any.

>hey much more /or#in ca*ital than this com*any. >heir acid test current cash increase from

their *ast year due to their hue *rofit.

But their sales to /or#in ca*ital decrease from their *ast year .

>he %asic difference %et/een this com*any and its com*etitor is that this com*any ha+e hue

lia%ilities and face losses e+ery year from its in+estment on the other side its com*etitor ha+e lesslia%ilities and face hue *rofit from its o*eration.

;+erall descon chemical ha+e *oor *erformance than its com*etitor on li$uidity ratios.

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&ong#term ebt#paying (bility:

>his com*any ha+e %etter de%te$uity de%tassets de%t ratio from its com*etitor althouh

com*any faces some hard time %ut Descon chemicals ltd. do anythin to reco+er from its fall

and they are doin ood Go%. But cash flo/total de%t of its com*etitor has %etter im*ression then

this com*any.Descon chemicals ltd. >ry to *ay off their lia%ilities from anythin they enerated to sur+i+e and

 %etter future.

$rofitability:

'ts com*etitor has %etter *rofita%ility ratio than this com*any. +ery year they earn hue *rofit as

com*are to this com*any their return on e$uity in+estment assets are far %etter than this

com*any.

Investor analysis:

'ts com*etitor has %etter earnin *er share. >hey ha+e %etter *rice on share and they *ay di+idend

on %etter *ercent.

>here is a lot of difference %et/een this com*any and its com*etitor.

;+erall its com*etitor has %etter financial *osition then this com*any.

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