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INSTITUTE OF BUSINESS MANAGEMENT Course : Financial Management Prog : BBA (H) Faculty : Sanam Taimoor ------------------------------------------------- Group Members : Huda A. S. Qureshi (9930) Javeria Khalid (9937) Saad Anjum (9977) Topic : Assignment 1 Announced Date : Wed, 25-01-2012 Due Date : Wed, 01-02-2012 Ratios to be Calculated * Net Operating Working Capital * Total Working Capital * Net Operating Profit after Taxes * Free Cash Flows * Market Value Added Net Operating Working Capital = Current Assets – Current Liabilities Rupee (000) | 2011 | 2010 | 2009 | Current Assets | 3262718 | 1779477 | 2143328 | Current Liabilities |…show more content…
From 2009-2010 their liquidity decreased while from 2010-2011 it increased. The negative amount of liability shows that they have paid more than they were required to pay. The company's accounts payable staff can use to offset future payments to suppliers. So they could have done this to ensure that they get the resources required by them from the supplier in the future and there will be no need to pay for it and they won’t have any liability at that time. Positive working capital means that the company is able to pay off its short-term liabilities. Total Working Capital While in Total Working Capital has decreased from 2009-2010 while in 2010-2011 period the total working capital has increased showing the company’s sustainability. Companies that have a lot of working capital will be more successful since they can expand and improve their operations. NOPAT NOPAT is decreasing from 2009-1010 and furthermore from 2010-2011 which shows that the company’s profit after taxes are reducing. It also means that Sitara chemicals is generating less amount of profit if it has no debt and held no financial assets and held only operating assets. It is a more accurate look at operating efficiency for leveraged companies. It does not include the tax savings many companies get because they have existing debt. Free cash flow Free cash flows of Sitara chemicals have decreased from 2009-2010 which shows that the cash,
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