Ratio analysis of selected firms in cement industry

Abstract

This study is about financial statements analysis of the selected firms in the textile industry of Pakistan. As the industry was incurring losses in past but now some of the firm made recovery and they are making profits. However some firms are still incurring losses. This study is conducted to conclude the reasons behind their failure.Therefore three firms from cement industry had been selected and their financial statements were analyzed.l I This research is based on secondary source of data and consists of annual reports, articles, ; web sites, and books.Data is taken from different places in raw form. Annual accounts i.e . balance sheets and income statements of there firms are to for analysis. The researcher conducted ratio analysis of these firms and study the reports on performance of the cement industry. Based on the research it is concluded that these firms are incurring losses due to the fact that their cost of production is too high. Their cost of sales is very high, and some times it even exceeds .their sales. This is due to the fact that industry faces a situation where sales price are fixed by mutual consensus . Their . cost of production is high because these firms used traditional manufacturing process. Also they are using fuel as energy which cost them expensive. Along with production cost these firms have high administrative• and selling cost which in turn put them into loss. Also these firms are using huge amount of debt for financing, .therefore cost of capital. also increases their expenses.