Calculate ratios

1 Gross profit margin 7.5

2 Profit before tax margin 5.9

3 Net profit margin 4.2

4 Return on capital employed 37.4

5 Return on equity - after tax 28.2

6 Shareholders' funds 44.3

7 Return on Shareholders' funds 26.6

8 Return on assets 12.3

9 Earnings before interest 9123.8

10 Operating leverage ratio 122.7

11 Assets turnover 2.9

12 Fixed assets turnover 13.1

13 Inventory turnover 20.0

14 Current ratio 1.5

15 Quick ratio 1.2

16 Market price per share for the year 394.0

17 Debt to equity ratio 1.56

comments on the ratios:

 Profitability Ratios
 Gross Profit Margin: 7.5%
The company's gross profit margin is relatively low, indicating that it may face challenges in
maintaining its pricing power or controlling its costs.
 Profit Before Tax Margin: 5.9%
The company's profit before tax margin is relatively low, indicating that it may face challenges in
generating profits from its operations.
 Net Profit Margin: 4.2%
The company's net profit margin is relatively low, indicating that it may face challenges in
generating profits for its shareholders.
 Efficiency Ratios
 Return on Capital Employed (ROCE): 37.4%
The company's ROCE is relatively high, indicating that it is generating strong returns from its
capital employed.
 Return on Equity (ROE): 28.2%
The company's ROE is relatively high, indicating that it is generating strong returns for its
shareholders.
 Return on Assets (ROA): 12.3%
The company's ROA is relatively moderate, indicating that it is generating moderate returns
from its assets.
 Liquidity Ratios
 Current Ratio: 1.5
The company's current ratio is relatively moderate, indicating that it has sufficient current assets
to cover its current liabilities.
 Quick Ratio: 1.2
The company's quick ratio is relatively moderate, indicating that it has sufficient liquid assets to
cover its current liabilities.
 Solvency Ratios
 Debt-to-Equity Ratio: 1.56
The company's debt-to-equity ratio is relatively high, indicating that it has a significant amount
of debt in its capital structure.
 Asset Utilization Ratios
 Assets Turnover: 2.9
The company's assets turnover is relatively moderate, indicating that it is generating moderate
sales from its assets.
 Fixed Assets Turnover: 13.1
The company's fixed assets turnover is relatively high, indicating that it is generating strong sales
from its fixed assets.
 Inventory Turnover: 20.0
The company's inventory turnover is relatively high, indicating that it is generating strong sales
from its inventory.
  Market Performance Ratios
 Market Price per Share: 394.0
The company's market price per share is relatively high, indicating that investors have a positive
outlook on the company's future prospects.
 Leverage Ratios
 Operating Leverage Ratio: 122.7
The company's operating leverage ratio is relatively high, indicating that it has a significant
amount of fixed costs in its operations.
Vertical analysis :

1 Issued, subscribed and 1,428,000

paid up capital

2 Reserves 15,956,000

3 Unappropriated profit / 2,576,725

(Accumulated loss)

4 Deferred grant 787,677

5 Gratuity
250,977

6 Deferred taxation 521,177

7
Deferred revenue 18,197

8 Current portion of non- 357,011

current liabilities

9 Short term borrowings - -

secured

10 Accrued mark- up 37,293

11 Trade, dividend and other 45,590,870

payables
12 Capital work-in-progress 2,364,549

13 Long term trade debts 27,216

14 Long term loans and 254,558

advances

15 Long term deposits 4,042

16 Stock-in-trade 22,866,173

17 978,728
Trade debts

18 Advances, prepayments 15,398,259

comments on Vertical analysis:

_Equity and Reserves_

1. _Issued, Subscribed, and Paid-up Capital_: Rs 1,428,000

The company's paid-up capital is relatively low, indicating a moderate level
of equity.
2. _Reserves_: Rs 15,956,000
The company has a significant amount of reserves, indicating a strong
financial position.
3. _Unappropriated Profit / (Accumulated Loss)_: Rs 2,576,725
The company has a moderate amount of unappropriated profit, indicating a
relatively stable financial position.

_Liabilities_

1. _Short-term Borrowings_: Rs 37,293

The company has a relatively low amount of short-term borrowings,
indicating a moderate level of debt.
2. _Trade, Dividend, and Other Payables_: Rs 45,590,870
 The company has a significant amount of trade payables, indicating a high
level of credit extended to suppliers.
3. _Current Portion of Non-Current Liabilities_: Rs 357,011
The company has a relatively low amount of current portion of non-current
liabilities, indicating a moderate level of debt.

_Assets_

1. _Stock-in-Trade_: Rs 22,866,173
The company has a significant amount of inventory, indicating a high level
of investment in stock.
2. _Trade Debts_: Rs 978,728
The company has a moderate amount of trade debts, indicating a moderate
level of credit extended to customers.
3. _Advances, Prepayments_: Rs 15,398,259
The company has a significant amount of advances and prepayments,
indicating a high level of investment in these areas.

_Other_

1. _Deferred Grant_: Rs 787,677

The company has a moderate amount of deferred grant, indicating a
moderate level of government support.
2. _Gratuity_: Rs 250,977
The company has a relatively low amount of gratuity, indicating a moderate
level of employee benefits.
3. _Deferred Taxation_: Rs 521,177
The company has a moderate amount of deferred taxation, indicating a
moderate level of tax liabilities.

Horizontal Analysis:
1 Issued, subscribed and paid up capital 1,428,000
2 Reserves 14,956,000

3 Unappropriated profit 1,812,163

4 Long-term finances - secured 2,739,121

5 Deferred grant 787,677

6 Gratuity 250,977

7 Deferred taxation

521,177

8 Deferred revenue 18,197

9 Current portion of non-current 357,011

liabilities

10 Short term borrowings - secured -

11 Accrued mark-up 37,293

12 Trade, dividend and other payables 45,590

13 Long term trade debts 27,216

14 Long term loans and advances 254,558

15 Long term deposits 4,042

16 Stock-in-trade 22,866173

17 Trade debts 978,728

18 Advances, prepayment 15,398,259

19 Short term investments 6,795,538

20 Profit after taxation 2,509,906

comments on horizontal Analysis:

Equity and Reserves

1. Issued, Subscribed, and Paid-up Capital: Rs 1,428,000

The company's paid-up capital is relatively low, indicating a moderate level of equity.

2. Reserves: Rs 14,956,000

The company has a significant amount of reserves, indicating a strong financial position.

3. Unappropriated Profit : Rs 1,812,163

The company has a moderate amount of unappropriated profit, indicating a relatively stable financial
position.

Liabilities

1. Long-term Finances - Secured: Rs 2,739,121

The company has a moderate amount of long-term debt, indicating a moderate level of leverage.

2. Short-term Borrowings - Secured - Accrued Mark-up: Rs 37,293

The company has a relatively low amount of short-term borrowings, indicating a moderate level of debt.

3. Trade, Dividend, and Other Payables: Rs 45,590

The company has a significant amount of trade payables, indicating a high level of credit extended to
suppliers.

Assets

1. Stock-in-Trade: Rs 22,866,173

The company has a significant amount of inventory, indicating a high level of investment in stock.

2. Trade Debts: Rs 978,728

The company has a moderate amount of trade debts, indicating a moderate level of credit extended to
customers.

3. Advances, Prepayments: Rs 15,398,259

The company has a significant amount of advances and prepayments, indicating a high level of
investment in these areas.

Profitability

1. Profit After Taxation: Rs 2,509,906

The company has a moderate amount of profit after taxation, indicating a relatively stable financial
position.

Investments

1. Short-term Investments: Rs 6,795,538

The company has a significant amount of short-term investments, indicating a high level of liquidity.

Short term creditors point of view comments:

comments from the point of view of short-term creditors of Honda Atlas Cars (Pakistan) Limited for the
year 2022:

Liquidity Concerns

1. "We are concerned about the company's ability to meet its short-term obligations, given its current
ratio of 1.23 in 2022."

2. "The company's quick ratio of 1.2 in 2022 is also a concern, as it indicates that the company may have
to rely on inventory to meet its short-term obligations."

Creditworthiness
1. "We are monitoring the company's creditworthiness closely, given its high debt-to-equity ratio of 1.56
in 2022."

2. "The company's interest coverage ratio of 3.9 in 2022 is also a concern, as it indicates that the
company may face some challenges in meeting its interest obligations."

Repayment Capacity

1. "We are concerned about the company's ability to repay its short-term debts, given its relatively low
cash and cash equivalents balance of Rs 2,311 million in 2022."

2. "The company's inventory turnover ratio of 4.8 in 2022 is also a concern, as it indicates that the
company may face some challenges in selling its inventory and generating cash to repay its debts."

Risk Assessment

1. "Based on our analysis, we believe that lending to Honda Atlas Cars (Pakistan) Limited carries a
moderate to high level of risk in 2022."

2. "We will continue to monitor the company's financial performance and adjust our lending terms
accordingly."

Long term creditors point of view:

comments from the point of view of long-term creditors of Honda Atlas Cars (Pakistan) Limited for the
year 2022:

Solvency Concerns

1. "We are concerned about the company's high debt-to-equity ratio of 1.56 in 2022, which indicates a
high level of indebtedness."
2. "The company's interest coverage ratio of 3.9 in 2022 is also a concern, as it indicates that the
company may face some challenges in meeting its interest obligations."

Creditworthiness

1. "We are monitoring the company's creditworthiness closely, given its high level of indebtedness and
relatively low interest coverage ratio."

2. "The company's ability to generate cash flows from its operations is critical to meeting its long-term
debt obligations."

Repayment Capacity

1. "We are concerned about the company's ability to repay its long-term debts, given its relatively low
cash and cash equivalents balance of Rs 2,311 million in 2022."

2. "The company's ability to generate cash flows from its operations and maintain a healthy liquidity
position is critical to meeting its long-term debt obligations."

Risk Assessment

1. "Based on our analysis, we believe that lending to Honda Atlas Cars (Pakistan) Limited carries a
moderate to high level of risk in 2022."

2. "We will continue to monitor the company's financial performance and adjust our lending terms
accordingly."

Investors Point of view comments:

From an investor's perspective, Honda Atlas Cars (Pakistan) Limited's performance in 2022.

- Revenue Growth:
The company's revenue increased significantly, driven by growing demand for its vehicles in the
Pakistani market.

- Profitability:

Honda Atlas Cars' profitability was impacted by fluctuating raw material costs, exchange rate volatility,
and intense competition in the market. However, the company still managed to post a net profit of Rs
2.51 billion in 2022.

- Dividend Payout:

The company declared a dividend of 70% for the year 2022, which is a positive sign for investors seeking
regular income.

- Market Performance:

Honda Atlas Cars' stock price performed well in 2022, with a significant increase in value, making it an
attractive investment opportunity for investors.

Overall, Honda Atlas Cars' performance in 2022 was marked by revenue growth, profitability, and a
strong dividend payout. However, investors should also consider the company's debt levels, interest
coverage ratio, and the overall economic conditions in Pakistan before making any investment decisions.

As a finance manager, comments on Atlas Honda Cars:

Strengths:

1. Strong Market Position: Atlas Honda Cars dominates the Pakistani automotive market, with a
significant market share.

2. Financial Performance: The company has consistently reported profits, indicating a stable financial
position.

3. Efficient Operations: Atlas Honda Cars has optimized its production processes, resulting in efficient
cost management.

4. Robust Distribution Network: The company's extensive dealership network ensures timely delivery of
products.

5. Investment in Research and Development: Atlas Honda Cars invests in R&D, enhancing product
quality and innovation.
Weaknesses:

1. Dependence on Import: The company relies heavily on imported components, exposing it to currency
fluctuations and supply chain risks.

2. High Debt Levels: Atlas Honda Cars' debt-to-equity ratio is relatively high, increasing financial
vulnerability.

3. Intense Competition: The Pakistani automotive market is highly competitive, posing challenges to
market share maintenance.

4. Regulatory Risks: Changes in government policies or regulations can impact the company's
operations.

5. Economic Uncertainty: Economic instability in Pakistan can affect consumer demand and sales.

Opportunities:

1. *Growing Demand*: Pakistan's growing population and increasing middle class drive demand for
automobiles.

2. *Government Incentives*: The government offers incentives for local manufacturing, encouraging
investment in the sector.

3. *Expansion into New Markets*: Atlas Honda Cars can explore export opportunities to neighboring
countries.

4. *Technological Upgrades*: Investing in automation and digitalization can enhance efficiency and
competitiveness.

5. *Strategic Partnerships*: Collaborations with suppliers and distributors can improve supply chain
management.

Recommendations:

1. *Diversify Suppliers*: Reduce dependence on imported components by localizing supply chains.

2. *Debt Restructuring*: Optimize debt structure to reduce interest costs.

3. *Invest in Digitalization*: Enhance operational efficiency through automation and digitalization.

4. *Market Expansion*: Explore new markets, including exports to neighboring countries.

5. *Risk Management*: Develop strategies to mitigate regulatory, economic, and supply chain risks.
By addressing these strengths, weaknesses, opportunities, and threats, Atlas Honda Cars can maintain
its market leadership and achieve sustainable growth.