Table of Contents
Introduction of Mari Gas Company Limited
Mari Gas Company Limited is one of Pakistan’s largest E&P Company operating the country’s 2nd largest gas reservoir at Mari Field, District Ghotki, Sindh. The Shares of the Company are quoted on all the Stock Exchanges of Pakistan. The Company is primarily engaged in Exploration, development and Production of hydrocarbon potentials (Natural gas, Crude oil, Condensate & LPG) in the country. MGCL is also exploring opportunities of expanding its business to become a player in the International hydrocarbon Market.
We focus on perfecting our start by improving field service efficiencies, containing operating costs, and by making the most of the resources available to us. We strive for a winning finish by promoting energy conservation, practicing social responsibility, exploiting new energy resources, and above all creating value for our stakeholders.
In the challenging business environment of today the source of MGCL’s strength and inspiration for future success has been our human capital. At MGCL we foster value-based HR processes and practices for development of our human capital and organizational capabilities which has helped us in achieving competitive edge by realizing personal visions in conjunction with our corporate vision.
Location of office
- Islamabad
Regional offices
- Queta
- Karachi
Product offered:
- Gas
- Oil
Vision
Be the leader in the gas market in Pakistan by expanding and developing the gas value chain including exploration, production, transmission, extraction, processing, distribution and marketing of gas and gas related processes, products and services in order to bridge the increasing demand for gas with a view to meeting the needs of the existing and potential customers.
Exploit any hydrocarbon-based sources, when the opportunities present themselves in order to move beyond the existing gas business with a view to providing superior value to the customers and others through expansion and synthesis of products and services.
Mission
Mari Gas Company Limited will be customer-focused and competitive with a view to continue contributing meaningfully to the national economy, while ensuring viability of the company and profitable dividends to the stakeholders.
Our commitment
- Providing uninterrupted gas supply to customers.
- Maintaining good operational practices.
- Adopting advanced technology, cost effective/efficient operations, increasing operating efficiency and adherence to high environmental standards.
- Exploring and enhancing the potential of our human resources.
- Aligning the interests of our shareholders, human resources, customers and other stakeholders to
create significant business value characterized by excellent financial results, outstanding professional accomplishments and superior performance
Ratio Analysis
2006 – 2010
|
| Ratio Name | Formula | 2006 | 2007 | 2008 | 2009 | 2010 |
| 01 | Liquidity Ratio |
|
|
|
|
| |
| a) | Current Ratio | Current Asset/Current Liabilities | 0.91 | 0.90 | 0.94 | 0.82 | 0.84 |
| b) | Quick Ratio | Current Asset-Inventory/ Current liabilities | 0.69 | 0.61 | 0.68 | 0.54 | 0.66 |
| 02 | Debt Ratio | ||||||
| a) | Debt to Asset | Total Debt/Total liabilities | 0.48 | 0.44 | 0.48 | 0.54 | 0.58 |
| b) | Debt to Equity | Total debts/ Owner’s Equity | 0.07 | 0.09 | 0.20 | 0.44 | 0.35 |
| c) | Long term debt to total Capitalization | Long term liabilities/Total capitalization |
0.07 |
0.08 |
0.17 |
0.30 |
0.26 |
|
03 | Asset Management OR Turnover Ratio | ||||||
| a) | Inventory Turnover | Cost of goods sold/Average inventory | 29.63 | 21.24 | 28.48 | 70.65 | 142.37 |
| Days sales in inventory | 365/ITO | 12 | 18 | 13 | 6 | 2.53 | |
| b) | Receivable Turnover | Net credit sales/Accounts receivable | 38.62 | 31.15 | 16.50 | 61.68 | 140.77 |
| Days sales in receivable | 365/RTO | 10 | 12 | 22 | 6 | 3 | |
| c) | Payable Turnover | Credit Purchases/ Accounts payable | 3.74 | 4.87 | 3.05 | 3 | 2.52 |
| Average payment period | 365/PTO | 98 | 75 | 119 | 124 | 145 | |
| d) | Total Asset Turnover | Net sales/Total Assets | 0.90 | 1.1 | 0.97 | 0.96 | 0.94 |
|
04 |
Profitability Ratios |
Formula |
2005 |
2006 |
2007 |
2008 |
2009 |
| a) | Gross Profit Margin | Gross Profit/Net Sales | 36% | 32% | 36% | 40% | 43% |
| b) | Net Profit Margin | Net Profit/ Net Sales | 19% | 15% | 19% | 21% | 24% |
| c) | Return on Asset | Net income/ Total Asset | 17% | 17% | 18% | 20% | 23% |
| d) | Return on Equity | Net income/ Total Equity | 40% | 36% | 42% | 53% | 68% |
| 05 | Market To Book value | ||||||
| Earning per Share | Net income/ Outstanding shares | 9.92 | 9.39 | 10.86 | 13.22 | 13 | |
| Price Earning Share | Market value per share/Earning per share | 13.81 | 11.24 | 10.93 | 4.44 | 8 | |
| Book value per share | Total Equity/ Outstanding shares | 25.21 | 26.25 | 25.80 | 24.89 | 19.28
| |
| Market to Book value per share | Market value per share/Book value per Share | 5.43 | 4.02 | 4.6 | 2.35 | 5.34 |
Interpretation of Ratios
- Liquidity Ratios
| Liquidity Ratio | 2006 | 2007 | 2008 | 2009 | 2010 |
| Current Ratio | 0.91 | 0.90 | 0.94 | 0.82 | 0.84 |
| Quick Ratio | 0.69 | 0.61 | 0.68 | 0.54 | 0.66 |
Current Ratio:
Current ratio is a financial ratio that measures whether or not a company has enough resources to pay its debt over the next business cycle (usually 12 months) by comparing firm’s current assets to its current liabilities. Higher the value, then good will is the position of a company in the market.
In MGCL, the current ratio has a highest value in 2008. It’s mean that over the period of 5 years from 2006 to 2010, that was the year in which company had a much resources to pay its debts to the creditors and it was in strong position to pay debts to its creditors. In 2008 company was running a strong business operation as compared to remaining years.
Quick Ratio:
The quick ratio, sometimes called the acid-test, is a more stringent test of liquidity than the current ratio. This is because it removes inventory from the equation. Inventory is the least liquid of all the current assets. A business has to find a buyer if it wants to liquidate inventory, or turn it into cash. Finding a buyer is not always easy.
In year 2006, company has a highest quick ratio. It means that a company has an enough assets that can be easily converted into cash to pay its debts to its creditors.
- Debt Ratio/Financial Leverage Ratio
| Debt Ratio | 2006 | 2007 | 2008 | 2009 | 2010 | |
| Debt to Asset | % | 48 | 44 | 48 | 54 | 58 |
| Debt to Equity | % | 7 | 9 | 20 | 44 | 35 |
| Long term debt to total capitalization |
% |
7 |
8 |
17 |
30 |
26 |
Debt to Asset Ratio:
This ratio indicates how much proportion of the company’s assets is being financed through debt.
As the time passes the MGCL financed its asset through debt. In 2006, 48 % assets are financed through and 52% were through equity. In 2007, 44% asset financing through debts and 66% through equity and so on.
A debt to asset ratio above 65% indicates excessive debts. But MGCL has all debts financing less then 60% so it is not a worst condition of company.
Debt to Equity Ratio:
Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds.
In 2009 large part of an equity was financed by debts may be by issuing of bonds, etc.
In 2006 7% capital was raised through debts and 93% was its shareholders.
In 2009 44% capital was through debts and remaining 66% was of shareholders equity.
Long term debt to Total Capitalization Ratio
The debt to asset ratio, the debt to equity ratio, and the long-term debt to total capitalization ratio all measure the extent of the firm’s financing with debt. The long-term debt to total capitalization ratio shows the extent to which long-term debt, like bonds and mortgages are used for the firm’s permanent financing.
In MGCL long term financing is not usually done by debts. It is a good sign for investor. They will take interest in investing. There is a least chance of its solvency.
- Asset Management/Turnover Ratio:
| Turnover Ratio | 2006 | 2007 | 2008 | 2009 | 2010 | |
| Inventory Turnover Ratio |
Times |
29.23 |
21.24 |
28.48 |
70.65 |
142.37 |
| Days sales in inventory | Days | 12 | 18 | 13 | 6 | 3 |
Inventory Turnover Ratio:
Inventory turnover represents the average number of times per year that inventory “turns over” or that all goods are sold from inventory. A higher, more rapid turnover is generally favorable, with goods being sold more quickly.
MGCL has a good demand of its inventory and a maximum day that its inventory takes to convert into cash is 18 days. There is a good demand of MGCL product in market.
| Turnover Ratio | 2006 | 2007 | 2008 | 2009 | 2010 | |
| Receivable Turnover Ratio |
Times |
38.62 |
31.15 |
16.50 |
61.68 |
140.77 |
| Days sales in receivable | Days | 10 | 12 | 22 | 6 | 3 |
Receivable Turnover Ratio:
The accounts receivable turnover ratio indicates how many times, on average, accounts receivables are collected during a year.
During the year MGCL is collecting its accounts receivable within not more than 22 days. It means that costumers are paying their bills in time.
| Turnover Ratio | 2006 | 2007 | 2008 | 2009 | 2010 | |
| Payable Turnover Ratio |
Times |
3.74 |
4.87 |
3.05 |
3 |
2.52 |
| Average Payment Period |
Days |
98 |
75 |
119 |
124 |
145 |
Payable Turnover Ratio:
It is the rate at which a company pays off its suppliers. The accounts payable turnover ratio is a short-term liquidity measure that quantifies how well a company pays its average payable amount over a single accounting period.
In 2010 MGCL has not a well condition because it is paying to its creditors after 145 days mean approximately 3 times in a year. It may be possible that by seeing this suppliers or other creditors may refuse to give things to MGCL on credit basis.
Total Asset Turnover Ratio:
| Turn over Ratio | 2006 | 2007 | 2008 | 2009 | 2010 |
| Total Asset Turnover ratio | 0.90 | 1.1 | 0.97 | 0.96 | 0.94 |
The total asset turnover ratio measures the ability of a company to use its assets to generate sales.
In 2007, MGCL has total asset turnover ratio of 1.1 times. It means that company is generating sales of 1.1 Rupees on every asset of 1 Rupee. 2007 is the ideal year for MGCL in time span from 2006 to 2010.
- Profitability Ratio
In relation of sales
| 2006 | 2007 | 2008 | 2009 | 2010 | |
| Gross Profit Margin |
0.36 |
0.32 |
0.36 |
0.40 |
0.43 |
| Net Profit Margin |
0.19 |
0.15 |
0.19 |
0.21 |
0.24 |
Gross Profit Margin:
Greater the Gross profit Margin, more stable will be the financial condition of a company. Because if a company has a greater number of this, more easy will be for a company to pay its taxes and other expenses.
MGCL has 0.43 of gross profit margin. So after deducting taxes and others expenses in 2010 company had large amount of income.
Net Profit Margin:
Net Profit Margin shows how business is effectively earning profit by selling its inventory.
MGCL has highest net profit margin in year 2010 mean company had earned profit in this year higher as compared to previous years.
In relation on investment
| 2006 | 2007 | 2008 | 2009 | 2010 | |
| Return on Asset |
0.17 |
0.17 |
0.18 |
0.20 |
0.23 |
| Return on Equity |
0.40
|
0.36 |
0.42 |
0.53 |
0.68 |
Return on Asset:
Return on Assets (ROA) measures how profitable a company is relative to its total assets. In turn, it measures how efficiently a company uses its assets.
With the passing of number of years the return on asset of MGCL continues on increasing. It means that company’s asset is profitable to company and they are good enough to produce profit. Company should invest more to keep asset in working condition to continue this profit ratio.
Return on Equity:
The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
In 2010 company has higher return on equity. By this shareholders will also get high return on their investment in the form of dividend. It will company to attract more investors.
- Market value Ratios:
| 2006 | 2007 | 2008 | 2009 | 2010 | |
| Earning per share |
9.92 |
9.39 |
10.86 |
13.22 |
13 |
| Price earning share |
13.81 |
11.24 |
10.93 |
4.44 |
8 |
| Book value per share |
25.21 |
26.25 |
25.80 |
24.89 |
19.28 |
| Market to Book Value per share |
5.43 |
4.02 |
4.6 |
2.35 |
5.34 |
2010 is the year in which firm is getting 12 times more on each share as compared to its actual value. In 2010 MGCL is getting high value of its share.
In 2006, the investor was willing to pay 13.81 on each dollar of firm earnings that was the high payment by investor from year 2006 to 2010.
Ratios Calculations
- 1. Liquidity Ratio
- Current Ratio
- Quick Ratio/Acid test Ratio
Current Ratio
Formula: Current Ratio = Current Asset
Current Liabilities
For Year 2006 11464577 = 0.91
12626153
For Year 2007 9764587 = 0.90
10883988
For Year 2008 10811435 = 0.94
11476393
For Year 2009 9709511 = 0.82
11823641
For Year 2010 14917456 = 0.84
17854574
Quick Ratio
Formula: Quick Ratio = Current Asset-Inventory
Current Liabilities
For Year 2006 = 11464577 – (560472+2154381)
12626153
= 8749787 = 0.69
12626153
For Year 2007 = 9764587 – (952905+2202053)
10883988
= 6609629 = 0.61
10883988
For Year 2008 = 10811435 – (642836+2407988)
11476393
= 7760611 = 0.68
14476393
For Year 2009 = 9709511 – (258094+3034268)
11823641
= 6417194 = 0.54
11823641
For Year 2010 = 14917456 – (2996633+144087)
17854574
= 11776736 = 0.66
17854574
- Debt Ratio/Financial Leverage Ratio
Debt to Asset Ratio
Debt to Equity Ratio
Long term debt to Total Capitalization Ratio
Debt to Asset Ratio
Formula: = Total Debts
Total assets
For Year 2006 = 981078+12626153
28449139
= 13607231 = 0.48
28449139
For Year 2007 = 1193750+10883988
27430281
= 12077738 = 0.44
27430281
For Year 2008 = 2671250+11476393
29241214
= 14147643 = 0.48
29241214
For Year 2009 = 5378214+11823641
31918963
= 17201855 = 0.54
31918963
For Year 2010 = 4578809+17854574
38551582
= 22433383 = 0.58
38551582
Debt to Equity Ratio
Formula: = Total Debt
Owner’s Equity
For Year 2006 981078 = 0.07 = 7%
12440908
For Year 2007 1193750 = 0.09 = 9%
12440908
For Year 2008 2671250 = 0.20 = 20%
12730045
For Year 2009 378214 = 0.44 = 44%
12285213
For Year 2010 4578809 = 0.35 = 35%
13082442
Long Term Debt to Total Capitalization Ratio
Formula: Long term liabilities = LTD
Total capitalization O.E + LTL
For Year 2006→ 981078 = 0.07 = 70 %
(12440908 + 981078)
For Year 2007→ 1193750 = 0.08 = 8 %
(12956543 + 1193750)
For Year 2008→ 2671250 = 0.17 = 17 %
(12730045 + 2671250)
For Year 2009→ 5378214 = 0.30 = 30 %
(12285213 + 53782140)
For Year 2010→ 4578809 = 0.26 = 26 %
(13082442 + 4578809)
- Asset Management/Turnover Ratio
Inventory Turnover Ratio
Receivable Turnover Ratio
Payable Turnover Ratio
Total Asset Turnover ratio
Inventory Turnover Ratio:
Formula: ITO = Cost of goods sold
Average inventory
Days sales in inventory = 365
Inventory turnover
For Year 2006→ Inventory T/O = 16382714 = 29.23 times
560472
Days sales in inventory = 365 = 12 days
29.23
For Year 2007→ ITO = 20242194 = 21.24 times
952905
Days sales in inventory = 365 = 18 days
21.24
For Year 2008→ ITO = 18311525 = 28.48 times
642836
Days sales in inventory = 365 = 13 days
28.48
For Year 2009→ ITO = 18234692 = 70.65 times
258094
Days sales in inventory = 365 = 6 days
70.65
For Year 2010→ ITO = 20515044 = 142.37 times
144087
Days sales in inventory = 365 = 2.53 days
142.37
Receivable Turnover Ratio:
Formula:
RTO = Net Credit Sales/Net Sales
A/R
Days sales in receivable = 365
RTO
For Year 2006→ RTO 25481121 = 38.62 times
659713
Day sales in receivable = 365 = 9.4 days
38.62
For Year 2007→ RTO = 29950873 = 31.15 times
961427
Days sales in receivables = 365 = 11.7 days
31.15
For Year 2008→ RTO = 28429005 = 16.50 times
1722602
Days sales in receivables = 365 = 22 days
16.50
For Year 2009→ RTO = 30592806 = 61.68 times
495929
Days sales in receivables = 365 = 6 days
61.68
For Year 2010→ RTO = 36163174 = 140.77 times
256886
Days sales in receivables = 365 = 3 days
140.77
Payable Turnover Ratio:
Formula PTO = Credit Purchase/Net Purchases
A/P
Average Payment Period = 365
PTO
For Year 2006→ PTO = 25481121 = 3.74times
(6737803+81644)
Average Payment Period = 365 = 98days
3.74
For Year 2007→ PTO = 20242194 = 4.87 times
(4025926+134039)
Average Payment Period = 365 = 75 days
4.87
For Year 2008→ PTO = 18311525 = 3.05 times
(5815276+184430)
Average Payment Period = 365 = 119 days
3.05
For Year 2009 → PTO = 18234692 = 3 times
(5993674+194570)
Average Payment Period = 365 = 124 days
3
For Year 2010→ PTO = 20515044 = 2.52 times
(8002897+147329)
Average Payment Period = 365 = 145 days
2.52
Total Asset Turnover ratio:
Formula: TATO = Net sales
Total Assets
For Year 2006→ TATO = 25481121 = 0.90
28449139
For Year 2007→ TATO = 29950873 = 1.1
2743028
For Year 2008→ TATO = 28429005 = 0.97
29241214
For Year 2009→ TATO = 30592806 = 0.96
31918963
For Year 2010→ TATO = 36163174 = 0.94
38551582
- Profitability Ratio
- a) In relation of sales
- b) Return on Asset
In relation of sales
Gross profit Margin
Net Profit Margin
Gross Profit Margin
Formula: Gross Profit Margin = Gross Profit
Net Sales
For Year 2006→ GP Margin = 9098407 = 0.36
25481121
For Year 2007→ GP Margin = 9708679 = 0.32
29950873
For Year 2008→ GP Margin = 10117480 = 0.36
28429005
For Year 2009→ GP Margin = 12358114 = 0.40
30592806
For Year 2010→ GP Margin = 15648130 = 0.43
36163174
Net Profit Margin:
Formula:
NP Margin = Net Profit
Net Sales
For Year 2006→ NP Margin = 4897336 = 0.19
25481121
For Year 2007→ NP Margin = 4636144 = 0.15
29950873
For Year 2008→ NP Margin = 5360953 = 0.19
28429005
For Year 2009→ NP Margin = 6463808 = 0.21
30592806
For Year 2010→ NP Margin = 8853197 = 0.24
36163174
In relation of investment
Return on investment:
Formula:
Return on investment = Net income
Total Assets
For Year 2006→ ROI = 4897336 = 0.17
28449139
For Year 2007→ ROI = 4636144 = 0.17
27430281
For Year 2008→ ROI = 5360953 = 0.18
29241214
For Year 2009→ ROI = 64633808 = 0.20
31918963
For Year 2010→ ROI = 8853197 = 0.23
38551582
Return on Equity:
Formula:
Return on Equity = Net Income
Total Equity
For Year 2006→ ROE = 4897336 = 0.40
12440908
For Year 2007→ ROE = 4636144 = 0.36
12956543
For Year 2008→ ROE = 5360953 = 0.42
12730045
For Year 2009→ ROE = 6463808 = 0.53
12285213
For Year 2010→ ROE = 8853197 = 0.68
13082442
- Market value Ratio
For Year 2006→
Earnings per Share = Net income
Outstanding shares
= 4897336 = 9.92
493474
Price Earning Share = Market Value per Share
EPS
= 137 = 13.81
9.92
Book Value per Share = Total Equity
Outstanding Shares
= 12440908 = 25.21
493474
Market-to-Book Value per share = 137 = 5.43
25.21
For Year 2007→
Earnings per Share = Net income
Outstanding share
= 4636144 = 9.39
493474
Price Earning Share = Market Value per Share
EPS
= 105.55 = 11.24
9.39
Book Value per Share = Total Equity
Outstanding shares
= 12956543 = 26.25
493474
Market-to-Book Value per share = 105.55 = 4.02
26.25
For Year 2008→
Earning per share = 5360953 = 10.86
493474
Price earning share = 118.75 = 10.93
10.86
Book value per share = 1270045 = 25.80
493474
Market to Book Value per share = 118.75 = 4.6
25.80
For Year 2009→
Earning per share = 6525083 = 13.22
493474
Price earning share = 58.73 = 4.44
13.22
Book value per share = 12285213 = 24.89
493474
Market to Book value per share = 58.73 = 2.35
24.89
For Year 2010→
Earning per share = 8853197 = 13
678527
Price earning share = 102.93 = 8
13
Book Value per share = 13082442 = 19.28
678527
Market to book value per share = 102.93 = 5.34
19.28