Hubco Horizontal Analysis

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NET INCOME:

Net income as percentage of sales has been increased in 2015 which was 7.79% of sales as compared to 2010 it was 5.57%. It has decreased in 2011 and 2012 by 4.40% and 4.69% of sales as compared to 2010. It again increased in 2013 by 5.66% and decreased in 2014 by 4.05% but as the operating cost decreased it again increased in 2015 by 7.79%.

CONCLUSION:

From the above vertical analysis we can conclude that the net income as a percentage of sales has been increased by 7.49% in 2015 as compared to 2010 which was 5.57%. The main reason for this increase in net income is the decrease in operating cost and increase in gross profit as percentage of sales.

RATIOS:

PROFITABILITY RATIOS:

- GROSS PROFIT MARGIN:

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INTRA COMPANY: The gross profit of HUBCO has been increased from 7.71% in 2010 to 10.94% in 2015.The same increase in gross profit has been observed from the trends and it reflects that the increase in sales is more than operating costs which is a reflection that company is managing its operating costs well. The operating costs of the company has been decreased due to lower NEO, lower RFO prices, lower repair and maintenance expenditure and lower efficiency loss.

PEER COMPANY: As compare Nishat power the gross profit of HUBCO is not satisfactory. Our company has the gross profit of 10.94% whereas nishat power is making gross profit of 21.02%.

As compare to Kohinoor energy limited HUBCO is making gross profit of 10.94% whereas Kohinoor is making the gross profit of 11.73%.

INDUSTRY: As compare to industry the company is not doing good as it is not meeting industry averages i.e. 14.56%.

- OPREATING PROFIT MARGIN:

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INTRA COMPANY: The operating profit of the HUBCO has been increased from 7.32% in 2010 to 10.24% in 2015. This reflects that every Rs.1 sales will generate profit of 0.10 paisa. Trends also reflecting an increase it has been observed from trends that there is more increase in operating profit than gross profit in 2015 and the reason for this is the increase in other income was due to recognition of dividend income received from laraib energy limited- subsidiary company and also because of gain on disposal of fixed asset. The gross profit margin ratio and operating margin ratio are almost same in 2015 i.e.10.94% and 10.24% which indicates that company is making improvements in controlling it’s operating costs.

PEER COMPANY: As compared to Nishat powers the operating profit margin of the company are not satisfactory. HUBCO has the current operating profit margin of 10.24% whereas nishat power has made 20.22%.

As compared to Kohinoor energy limited the HUBCO is doing well as it making operating profit of 10.24% whereas Kohinoor has the current operating profit of 9.45%.

INDUSTRY: As compared to industry the operating profit of HUBCO is not meeting industry average i.e. 13.30%.

- PRE TAX MARGIN:

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INTRA COMPANY: The pre-tax margin of HUBCO shows the increase from 2010 which is 5.57% to 7.61% in 2015. This increase reflects that it is due to some irregular item which is the increase in other income because of recognition of dividend income from LEL- subsidiary company and gain on disposal of fixed assets there is also increase in other expenses which is due to write off of damaged assets at narowal plant. The incidents are covered under the insurance policies.

PEER COMPANY: As compared to Nishat powers the pre-tax margin of HUBCO is 7.61% and Nishat has 13.97%.

As compared to Kohinoor energy limited HUBCO is making pre-tax has margin of 7.61% and Kohinoor has a pre-tax margin of 9.40%.

INDUSTRY: As compared to industry the company is still not meeting the industry averages as industry has an average of 10.33%.

- NET PROFIT MARGIN:

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INTRA COMPANY: The net profit of HUBCO has been increased from 5.57% in 2010 to 7.49% in 2015. The same increase has been observed from trends as we compare 2010 to 2015, but there is was decrease in 2014 and it again increased in 2015 the main reason for the increase in net income is due the decrease in operating costs and increase in gross profit and income from operations.

PEER COMPANY: As compared to Nishat powers the net profit margin of HUBCO is less i.e. 7.49% whereas nishat powers is making the net profit margin on 13.96%.

As compared to Kohinoor, HUBCO is doing satisfactory and is making net profit margin of 7.49% as Kohinoor is making the net profit margin of 7.20%.

INDUSTRY: As compared to industry the HUBCO is not doing good as it is not meeting the industry average i.e. 9.55%.

CONCLUSION:

From the above ratios analysis we can conclude that bottom lines are satisfactory intra has increased but as compared to peer companies and industry it is telling that the company is not doing good.