Financial Analysis of Honda Atlas Company

Shahzad Khan f^/F

Muhammad Shafqat

A project report submitted to the Department of Accounting & Finance, Faculty of

Management Sciences, International Islamic University Islamabad in partial fulfillment of
the requirements for the degree of
MASTER OF BUSINESS ADMINISTRATION
(FINANCE)

'S.
h

Submitted To
Mr.SYED NAIF AMJAD

Department of Accounting & Finance

Faculty of Management Sciences
International Islamic University Islamabad
January 2012
J^f\ Imic

%T
‘^^£0 /
Copyright© 2011 by Mr. Shahzad Khan (4301) and Mr. Muhammad Shafqat (4339)
All nghts of these documents are reserved. No part of this project report can be
reproduced in any form or any means such as photocopy or electronic media etc. without
prior approval of authors.
 Supervisor’s Certificate

This is certified that Mr. Shahzad Khan (4301) and Mr. Muhammad Shafqat (4339) of
MBA-22 have completed their project report entitled “Financial Analysis of Honda Atlas
Company” under my supervision. I have checked this report and found it bqp^
authors.

Assistant Professor

Dr. Zaheer Abbas

Head, Department of Accounting & Finance
Faculty of Management Sciences
International Islamic University Islamabad
 DEDICATION

I would like to offer this effort to my honorable parents who have been a great source of
inspirations throughout my life and provided a lot of moral support to me and enabled me to
become what I am today. My sister and uncle also supported and encouraged me. I would like to
dedicate this project to my honorable teacher Mr. Prof, NAIF AMJAD. Who gave me precious
knowledge.
 ACKNOWLEDGEMENT

All thanks to Almighty Allah, the benevolent and compassionate who blessed us with the power,
capabilities and courage for the successful completion o f our project. We are very grateful to our
honorable supervisor Mr. Prof. NAIF AMJAD for facilitating us in our project and for sharing
his knowledge and experiences with us which will be in our future as well. We are thankful to
our teachers, parents and friends who help us in our studies and in other productive activities and
due to their help and prayers we have completed our project in this study.

Muhammad Shafqat
Shahzad Khan
EXECUTIVE SUMMARY:
Atlas Honda Limited Company Jeads in the list o f five competitors in automobile industry in
Pakistan having the characteristic o f excellence rule over the industry. The commercial vision
and principles of the Atlas Honda Company have great influence in addition to take them to the
horizon. Atlas assembly line is in the shape o f article which is excitedly devoted its life to obey
the means of its business. However, environmental laws and also develop ways to do their
business with extreme honesty and importance. At Atlas Honda Limited Company, it becomes a
thought that “progress can only be achievable by providing equal opportunity and high attitude to
every position”.

They have been doing it for decades, and they are happy about their business culture. Human
Resource has very important role to gather the member staff needs in the organization branch.
Atlas Honda Limited Company has developed capable of producing 1600 units per day, and the
firm’s quality principles and its auction system is well organize to sell all o f them. They have a
5s trader system to satisfy the client to the best level.
TABLE OF CONTENTS

Chapter No 01: Introduction

Company Introduction......................................................................................................................... 08

Problems................................................................................................................................................09

Chapter No 02: EXECUTIVE SUMMARY.......................................................................................... 03

INTRODUCTION................................................................................................................................10
ORGANIZATIONAL GOALS & ACHIEVEMENTS.................................................10
STRATEGIC GOALS...................................................................................................... 10
Employees......................................................................................................................... 11
CODE OF ETHICS..............................................................................................................................11
INDUSTRY REVIEW........................................................................................................................ 12
BACK GROUND................................................................................................................................ 13

Chapter No 03; RESEARCH METHODLOGY............................................................................... 14

Departments.......................................................................................................................................... 14
Ratio Analysis....................................................................................................................................... 14

Chapter No 04: Honda Atlas Cars Pakistan.......................................................................................15

Vision Statement..........................................................................................................................16

Chapter No 05: Corporate Profiles.....................................................................................................16

HONDA CAR’S Innovation Point of View................................................................................17
HONDA CAR'S Safety Point of View.......................................................................................17
HONDA CAR’S Motor Sports Point of View........................................................................... 18
Environmental Policy................................................................................................................... 19
Market Share of Honda....................................................................................................................... 20

Chapter No 06: Financial Results of Honda Atlas Cars Pakistan.................................................... 20

Financial Highlights............................................................................................................................. 21
 Balance Sheet.................................................................................................................................22
Recent Financial Results............................................................................................................... 26
Honda's Performance.....................................................................................................................26
Honda's Profitability......................................................................................................................27
Honda's Debt Management Ratio.................................................................................................30
Asset Management Ratio..............................................................................................................30
Probability Ratio............................................................................................................................ 31

B ibliography.............................................................................................................................................36
List of Table:

Table #1
Financial Highlights........................................................................................................................ 21
Table # 2
Balance Sheet........................... .......................................................................................................22
Table # 3
Liquidity Ratios................................................................................................................................28
Table # 4
Asset Management Ratio.................................................................................................................30
Table # 5
Debt Management R atio................................................................................................................. 30
Table # 6
Probability Ratio................................................................................................................................31
Table #7
Common-size Analysis..................................................................................................................... 32
Table #8
Balance Sheet.................................................. ................................................................................. 32
Table # 9
Index Analysis.................................................................................................................................. 38
List of Figures:

Figure # 1
Stock Turnover Graph............................................................................... .......................................25
Figure # 2
Liquidity Ratios Graph..................................................................................................................29
INTRODUCTION;

Financial analysis refers to an accounting analysis, stability and profitability of a business, sub­
business or a project.

Jt is performed by professionals who prepare reports using ratios that make use of information
taken from financial statements and other reports. These reports are usually presented to top
management as one of their bases in making business decisions.

• Continue or discontinue its main operation or part of its business

• Make or purchase certain materials in the manufacture o f its product
• Acquire or rent/lease certain machineries and equipments in the production o f its goods
• Issue stocks or negotiate for a bank loan to increase its working capital
• Make decisions regarding investing or lending capital
• Other decisions that allow management to make an informed selection on various
alternatives in the conduct of its business.

Now we are taking financial analysis of Honda Atlas Company doing business in Pakistan very
well. We are going to take different financial reports of Honda Atlas Company o f different years
that how company is operating in Pakistan.
Hypothesis:
Honda Atlas Company has impact upon Pakistanis economy
Honda Atlas Company effects auto sector o f Pakistan

Problems Statement:
Following are the different problems statement faced by Honda Atlas Company.
Problem #1: The utilities needed to run the business in this country like gas, power and others
exclusive its supply is irregular in Pakistan.

Problem # 2: To run the business here in this country company needs land but land is very much
expensive in this country.

Problem # 3: Every organization requires skilled workforce to manage all the activities of
business but in Pakistan Company is lagging behind in this way.

Problem # 4: The parts which imported in Pakistan are affecting the local industry and local
industry is facing much competition to compete in foreign parts.
Company’s Managerial objective & Achievement:

Atlas Honda Limited has the ambition o f market leader in the automobile manufacturing as an
international center of manufacturing and export.

Their assignment is to develop a gainful and productive corporation with full market
management, increase exports and examine to give a good-looking return to shareholders,
workers incentive base on their working skills and presentation, to endorse a system of scientists
and engineers in the manufacturing growth of approval, and defense o f the environment-friendly
products.

Strategic Goals:
Our consumers are the motive and the basis of our business. It is our combined plan by means of
our dealer to make sure that our clients take joy in the highest level o f happiness, and satisfaction
after using of Honda Cars.

Excellence:
To make sure with the intention of our goods and services get together to formulates principles
o f excellence.
To be the manufacturing head in automobile part manufacturing.

Shareholders:
To ensure strength and value of business and thus safeguarding shareholders interest by
maximizing profit by paying regular dividends and adding value to the company business.
Workers:
The company is working to improve each employee’s capabilities and bring up-to-date
development in workers training and skills which encourage real impression of the human beings
in achievement of objective. Employees are compensated with their performance which they
have showed in their work.

Milestone of the Company:

The company is busy in the development o f sale o f autos and their spare parts. As in the
beginning the corporation has good information about industry business to increase inside
operation as of a little corporation to the most important car producer of Pakistan.

CODE OF ETHICS:
Atlas Honda Limited Company admires the wellbeing of all individuals who contain a
relationship with corporation. AHL is dedicated to respect the taws and system of Pakistan.
Atlas Honda Limited Company provides trust and mutual respect with whom they are working to
create a favorable atmosphere that feels good for company’s performance and reputation
worldwide.

Atlas Honda Limited Company is providing an equal opportunity to those who are looking for
jobs around Pakistan and then promote those employees who have enough skills and experience
necessary for employment to perform their specific job. Atlas Honda Limited is dedicated to
secure operational situation and working conditions in their company. They do not force to
utilize the child labor. Atlas Honda Limited Company being a brand of products and services that
provide value in terms of price and quality remain committed for a long period of time.

Atlas Honda Limited Company operates in accordance to the principles o f corporate governance
that is due to their team work and their working culture.
Atlas Honda Limited Company is a vendor, committed to establish mutual relationships with
customers and business dealers. It works in society and committed to be accountable to citizens
and business community o f Pakistan.

Atlas Honda Limited Company is committed to bring continuous improvement in its

management style and impact on environment, which increase understanding o f environmental
issues to promote environmental protection campaign.
Atlas Honda Limited Company is here to innovate and organize customer needs and wants. The
company meets the concern o f customers plus civilization. Their mechanism is depending upon
solid research, based to apply high standards o f quality and believe that the company has fair
competition in market

Atlas Honda Limited Company is hoping to draw attention o f their employees towards the board
assisted through the Audit group o f the panel of director and senior management.

Analysis of Business:
(History, present and future Analysis);
The company has been recognized to hold up the goals of additional financial system in Pakistan
and works mutually to improve regulatory decision-making, which provides an input to policy
making, management framework, innovation and competition to provide technical assistance and
to increase public-private partnerships in industry. Pakistan Development Corporation is doing a
good job and following a mix growth speed of 58% in past five years, private research institutes,
universities, cooperative funding initiatives related to the competitiveness o f business. The
benefit of motorcar manufacturing in Pakistan “report entitled Policy Analysis” describes the
reason behind the fastest growing industry in the past five years, the problem faced in making
main parts and original equipments toward the end user to identify the manufacturer of the parts
and influence the development solution.
BACKGROUND;
Since 1959, Honda has been one of the world's largest motorcycle manufacturer, as well as the
world's largest manufacturer o f internal combustion engines measured by volume, producing
more than 14 million internal combustion engines each year. Honda surpassed Nissan in 2001 to
become the second-largest Japanese automobile manufacturer. As of August 2008, Honda
surpassed Chrysler as the fourth largest automobile manufacturer in the United States. Honda is
the sixth largest automobile manufacturer in the world.
The industry has experienced phenomenal growth in the past two years continuously, having
prediction o f 40 million units within China to produce 17 million unit o f production worldwide
within 2005. Industry for the year ended June 2006, produces over 75 million units, and due to
increase in global demand and it has also been felt in Pakistan.
Honda was one of the first Japanese automobile manufacturers in the world to introduce a
dedicated luxury brand, Acura, in 1986. Apart from their core automobile,and motorcycle
businesses, Honda is also manufacturing garden equipment, marine engines, personal watercraft
and power generators, amongst others. Since 1986, Honda has been involved with artificial
intelligence/robotics research and released their ASIMO robot in 2000. They have also taken part
into aerospace with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-
420 HondaJet, they have scheduled to be launch it in 2012. Honda spends about 5% of its
revenues into Research and Development.
METHODOLOGY OF STUDY:
Following are the different steps of methodology of study:
Step 1: Direction setting by means of the CEO and CSF to improved understanding materials of
working.
Step 2: Primary information collection and assessment, list of text reviews focus.
Step 3: Secondary information collection typically connected to focus on the problems faced by
the OEMs, part and section manufacturers. This concerned conduct survey o f OEMs and dealer
as healthy as they have discussions with manufacturing expert and official o f the land bank.
Step 4: Examination of the Primary and Secondary data.

Ratio Analysis:
Honda Company has the position of world’s main auto producer too, even the main worldwide
maker of steam engines per year. Honda and Nissan in 2001 are better from other competitors for
the next main Japanese auto manufacturers. While in August 2008, Honda put behind the
Chrysler Company which is the 4th main automobile manufacturer o f the U.S. Honda company
also has the title of second main automaker worldwide.
In 1986, Honda’s luxury brand the ACURA has also been launched was the first Japanese luxury
car released. From its core business and self-auto, Honda also produces garden tools, especially
for maritime engines, individual watercraft plus commercial generator, and manufacturing.

As in 1986, Honda has great concerned with Research / Robotics plus Artificial Intelligence,
such as their first robot ASIMO produced in 2000; they as well entered in the aircraft industry,
by initiating the project o f Honda Aero Engines in 2004, Honda HA-420 plane is programmed to
be launched in 2011, Honda has the great R & D department, which spends about 5 percent of its
sales.
Honda Atlas Cars Pakistan:
Honda Atlas Cars Pakistan Limited is joint venture between Japanese company and Atlas Group
of Pakistan. The corporation has been signed in August 1993 and was incorporated into joint
venture in November 1992. The Opening Ceremony took place on April 17, 1993 in an evidence
occasion of 11 months, the mechanical structure plus assembly line is being placed.

The primary automobile left the assembly row on May 26, and here are the officials of this Joint
venture, the Pakistani president Ahmad Khan Lehar. Kawamoto, president of Japan Honda
Motor Co., was present here to polish a project. Company in Karachi, Lahore, and Islamabad
was scheduled to share.
It was took place on July 14, 1994, car reservations centers in Karachi, Lahore, and started by six
dealers in Islamabad. As flirther, the dealer system was extended, and the corporation is currently
having 16 (sales, repair, spare part) centers.

The company is committed to provide superior service to its customers at any time, with adding
to its normal repair center to its clients. The corporation wants to facilitate regular customer
service by setting up a campaign office. This is obvious by increasing volume of sales, and by
giving customers confidence in their car machines,

Honda Atlas Cars is now to attain client approval, which is not achievable without a constant
persuasion. Honda Atlas Cars (Pakistan) is dedicated to meet client prospect, and now it has
eight models of cars, Honda Civic city is in large range with a variety o f colors and other
features offers good value against customer’s money.
Vision of the Company:
The Company has a vision, “to focus on "satisfaction" o f customers, relations and shareholders”.
By a good courage and flexibility, it has devoted to supply newest age group cars by means of
superior technology, better petroleum capability at attractive price.

Business profile of the Company:

Atlas Honda Motor Company has "respect for individuals”. This has three basic rules of work,
usually spoken as the purchase of joy, joy to create and sell. "Respect for Individual" reflects the
commitment that it admires the ability of every person and their advance characteristics.

Because they are equally associate in safe direction to perform their most challenging works at
assembly line and at their office work too.

Through this experience, the persons need to share a sense o f joy. They represent their faith and
aspirations to all people who are working directly or indirectly.
They have following basic rules, for which Honda creates a new value and customer satisfaction
by providing quality products at reasonable prices around Pakistan.

The company has been grown to become one of the leading car and motorcycle Manufacturers
Company in Pakistan. Pakistani system of subsidiary and associated companies are accounted
under 507 * to the fairness of techniques of Honda.
This is developing, manufacturing, and having specialty in sports cars and has a steam’s engines
plus scooters to earn a good reputation for the Company by having variety of products ranging
from customers to whole Pakistan.
Honda CAR’S Innovation Point of View:
Honda Company does not leave the mission of its founder “Echo Soichiro Honda”; it is in
everyone's mind and spirit who are working with Honda. They explore new initiatives having
mission to remain at the top position in front o f the innovations.
Organization dedicates to improve mobility as they have always target of leading-edge
technology. Their commitment and competitive spirit of their dedication advanced leadership
and environmental security "for everyone". It is looking towards a positive future not only the
needs of people, but also to develop technologies.

Honda CAR’S Safety Point of View:

They are not only conscious for price and size o f the vehicle that meets your needs rather they
believe into justify the high level of safety. Thanks to technology and innovation, we are
developing an increased level of protection for all passengers and drivers o f Honda. At the same
time, we are committed in order to improve active security meant for occupant of extra vehicle
and pedestrians also. Honda has proven manufacturing management into long-term growth plus
purpose of superior security skill. Security research is going on at Honda R & D activities in
Japan and the United States.

Honda's safety technology and concepts "safe” all have played a significant position in the
growth of Honda’s future development. 11 Safety for Everyonel 1 is compatibility and increased
improvement of the safety of pedestrians and other vehicles regardless o f price or size. The
vehicle attempts to provide a high level o f protection per capita for Honda vehicles for all a
comprehensive approach to safety.
Honda CAR'S speed Sports tip of vision:
Additional or fewer 50 times, Honda has been running witli the most excellent educational
opportunities for engineers plus designers.

According to Soichiro Honda, the stress of different people course, they are forced to find the
stress and fast solutions and respond accurately to the new problems never encountered before.

Honda says that the race is always stressed in the race to teach teamwork is integrated into the
corporate culture o f Honda. No one can bring success in the race because this is the result of the
group. With its survival in both four motorcycles, Honda was the top-level racing - won. FI
Grand Prix motorcycle from the Isle of Man TT (four repetitions in the constructors’
championship won 60 races from 1988 to 91) T model Honda was successful in the alleys around
the world.

Honda CAR^S Environmental Consciousness:

Honda will have to capture the mass market model to a significant impact on ftiel economy and
clean air at all times. For this purpose we imagine the car o f the future, while leveraging the
power of thought to develop philosophy and to strive to improve existing technologies.
Environmental Policy:
As a responsible member of society, Honda Atlas Limited Cars (Pakistan) as an important issue
considers the conservation of global environment. Environmental principles of our firm based on
the following principles with our work environment.
❖ To distinguish the impact of products and services
❖ Wastes and protection of environmental resources in the range of technically feasible
situation to prepare the objectives and targets for the prevention of the reduction
❖ Commitment to preserve the global environment (guaranteed)
❖ Control o f enforcement o f legal requirements and other
❖ Raise awareness o f environmental issues and continuous improvement in environmental
performance and evaluation
❖ Insurance of environmental management system, its adequacy to ensure effectiveness.
❖ It puts necessary to please the public and other stakeholders to inform our presentation of
the environment.

Honda CAR’s -As Automobile Industry:

Existing economic downturn is part of the world economy in general and the automotive industry
in particular. However, Honda Motor Company is one of the few car lines below 162 billion yen,
an optimistic end by March 2009.
Automotive, financial reversal and auto loan depends on the availability o f reliable industry-
friendly policies and favorable conditions for development. Recently, with these factors,
production o f cars have been increased to four times in 2002, 39 167 in 2007 to 164,340 units.

In adding toward the mass production, the car manufacturing have to stand for the challenge of
non-constructive to the budgetary impact of increasing sale duty by 1% federal excise tax of
additional 5% if the vehicle taxable share. In addition cash margin o f 35% was also imposed
upon import but it has been later reversed.
Following the impact of inflation and exchange rates, the prices of all vehicles have increased
over the years but the demand for locally produced vehicles is thin. However, unlike previous
years a decline in sale was recorded. It was also seen in the above categories with categories of
lOOOcc 13QQcc and was 50.5% compared with the corresponding previous year. Monthly 32.3%
was measured in decline respectively in December 03 categories lOOOcc loss - 43.7 percent in
the quarter was Q9. Production o f motorcycles fell by 19.1% LCV. Production o f tractors of 0.7
percent for the same period last year improved slightly while buses and trucks were down 25.6%.

Market Share of Honda:

Honda Atlas Cars Pakistan has a promote split o f 11% in 2009 from Pak Suzuki (52%
marketplace share) and Indus Motors (marketplace share: 35%), two cars most important
producer in Pakistan. Pak Suzuki's marketplace split fell from 52% inside 2009 against 62%
within 2008. Decrease in marketplace split Dewan Motors also 5% in 2008 to only 2% in 2009,
resting on the additional.

Indus Motors and Honda Atlas have been taking a bit more in conditions o f marketplace divide.
Marketplace split o f Indus Motors 26% consolidated from 08 to 35% in Atlas Honda's market
share increased starting 7% in FY08 to 11% in FY09. Sale of General Motors, Pak Suzuki fell
56% and 75% in that order, Indus Motors and Honda chart also record inferior sales by 29% and
28% while Honda Atlas has been having third position inside the container of automobile sale
and bike section of Honda Atlas Limited conducted a marketplace allocate o f about 72.5% inside
FY09.

Financial Results of Honda Atlas Cars Pakistan:

Annual sale designed for compensation Rs. 14715.5 49.6 billion last year was Rs. 141 and
endorsement fixed cost be Rs.329.8 million dollars next to Rs.348.8 million yen a year earlier.
Other income regarding to swap losses primarily by other workloads by comparing towards Rs
4.9 million yen previous time with rising attention tax on store deposit improved million people
Rs.311.0 and Rs.23.6 millions last year to improve as against Rs.64.3 million yen (JPY millions
of Rs.231) for the radiation field machinery and plant from the old Honda City model (back
Rs.80). Throughout the time, the corporation has the option to borrow from financial institutions
for business working assets expenditures and the strength of the new capital city. The financial
cost per year for the last one hundred million yen Rs.233.7 Rs.222.8 it got. As a result, recorded
a pretax loss of $ Rs.622.3. The company has business operations to reduce costs and focus on
cost-effective measures to improve sales.

Table # 1
Financial Highlights
M ar 2010 M ar 2009 M ar 2008 M ar 2007

Sales 14150 14715 17055 25639

Gross Profit 177 627 173 1168
Opera ting(Loss) (400) 297 (189) 898
/Profit
(Loss) /Before (622) 64 (482) 1134
Tax
(Loss)/After Tax (402) 75 (265) 705
Dividend 294
Amount

These are the values which we have taken on the month o f March o f 4 different years, which are
ranging from March 2007 to March 2010.
Table # 2
Balance Sheet
Share capital 1428 1428 714 420

Reserves 1400 1802 1727 2285

Shareholder's 2828 3230 2441 2705
Equity
Capital 2209 188 2521 1833
Expenditure
Fixed Asset at 7783 5979 5832 3535
cost
Fixed assets at 5406 4010 4341 2359
Net
Noncurrent 1500 500 1958 672
Liabilities
Total Assets 9942 6817 8305 9174
Working Capital (1685) (652) (225) 476
Capital 4328 3730 4399 3377
Employed
Gross Profit 1.2 4.3 1.0 4.6
Margin%
Operating P/L (2.8) 2.0 (1.1) 3.5
Margin%
P/L before tax% (4.4) 0.4 (2.8) 4.4
P/L after Tax% (2.8) 0.5 (1.6) 2.8
Liquidity
Current Ratio % 0.7 0.8 1.1

Quick Ratio% 0.2 0.2 0.2 0.4

Long term Debt 0.5 0.32 0.8 0.2
 To Equity%
Total Liabilities 3.5 2.1 3.4 3.4
to Equity%
Activity
Total Asset 1.4 2.2 2.1 2.S
Turnover%
Fixed Assets 2.6 3.7 3.9 10.9
Tumover%
Stock 6.1 6.5 49 6.7
Turnover%
Interest (1.3) 1.3 (0.6) 25.5
Cover(BT)%
Interest (0.8) 1.3 0.1 16.2
Cover(AT)%
No Of days stock 59.6 55.9 74.3 54.7
Earning
Return on (10.0) 1.8 (6.8) 26.2
Capital
Employed%
Return on (20.5) 2.2 (1S.7) 48.2
Equity (BT)
Return on Equity (13.3) 2.6 (10.3) 30.0
(AT)
UE P,S(BT) (44) 0.5 (3.8) 27.0
t/E .P.S(A T ) (2.8) 0.6 (2.1) 16.8
Price Earnings (4.4) 79.3 27.8 6.7
Ratio (AT)
Dividend per 7.0
ordinary share - - -

Dividend payout - - 41.7

 Ratio
Breakup Value 20 23 34 64
Per Share
MKT Value Per 12 44 58 112
Share
Contribution to 6452 495S 6213 S4S1
National
Exchequer
Unite Produced 127S0 15080 18240 31476
Units Sold 12502 15604 18709 30719
Manpower 955 946 1034 1198
 stock Turnover%

This is the graph of Stock turnover which tells about the stock turnover condition of Honda Atlas
Company. These values are taken by the four different years, such as the horizontal figure 1
denoted year 2007, figure 2 denotes year 2008, figure 3 denotes 2009, and last figure 4 denotes
year 2010 respectively.
Financial Analysis - Business Recorder’s Point OF View:
The company recorded a 28% drop in sale of the previous year, it has been reaching sales of
Honda Atlas cars and opposed to 27% was recorded in sales o f optimistic growth.

FINANCIAL RESULTS:
The global financial system was to recover from depression therefore Pakistan's economy began
to show expansion of GDP in fiscal year 2009-10 and due to healthy growth performance of
manufacturing and services sectors, it has been improved to 2.50 percent from 4.1 percent a year
ago. Inflation was 12% in the fiscal year finished in June 2010 was almost half. Great industrial
area of cement and fertilizer, it has been improved by 5% owing to increased manufacture of
automobiles.
Agricultural growth remains below the target by 2%. The service sector continues to grow in the
manufacturing industry and it rose to 4.6%. ^
One initiative of growth in the automotive industry ended in June 2010 - 11 Years, 2009 -
recorded a healthy growth of 49.6 percent in FY 10 in the same fiscal year. It increased
consumption by helping to strengthen lending o f Commercial economic conditions and
consumer demand for better. It was made possible by the bank's re-entry despite the increasing
cost.

Honda’s Performance:
The increase in power costs (34%), the price o f gas (13%), domestic gas prices (25%),
international steel prices have risen (77%), and this money has come under pressure. During the
year, the company was having Rs.756 million dollars and it was to absorb the cost savings
foreign exchange loss o f Rs.56 million yen o f foreign debt and deferred financing costs Rs.455
million dollars.
Honda Company has also the sales of Honda City, and witnesses can be 27% in order to 5:908
units sold cars in 4985 and the entire 8212 sales grew by 26% (Honda City, Honda Civic) and
6482 (2011) production: 7852 sales - 6P755 sale o f their production (production in 2010
exceeded.
Honda^s Profit:
Honda has posted net sales of Rs.l5bn by comparing to 354bn in year 2010 and Rs.141490
billion for fiscal year 2009. These dynamic sales were supported by strong demand for both
traditional products. Net sales, total losses (PKR239: 545 m), 236 percent decrease in year 2010,
while sales increased 15% and result shows that it was over 12%.

Financing costs for the year 2009 HCAR level (which was doubled from 2011), Honda Atlas has
increased its short-term loans taken by the company and loss after tax 201100000 PKR from
fiscal RS 8522m is compared with the loss of external costs PKR401833000000 for Year 2009.

Tax was replaced by lower costs of internal operations, and due to decrease in inflation and
uncertainty in exchange rates, the domestic price falls.

Honda Liquidity:

In contrast, 82 per cent more debt is taken as compared last 10 years before the current debt, a
company's existing assets increased up-to 61%. Due to increase in current liabilities, current ratio
has been pushed down the company's liquidity position and it further falls down.

However, the nonstop decline in liquidity, now share is reduce to 10% o f the assets, and are
qualified for the 1% increase in progress liability be intense a button.
Financial Analysis-Firms Officiars point of view:

Liquidity Ratios:
2008 2009 2010
Current Ratio 0.94 0.80 0.70

Quick Ratio 0.23 0.24 0.15

 Liquidity Ratios Graph;

These horizontal values (1, 2, and 3) refer to year 2008, year 2009 and year 2010 respectively. It
presents that relative quantity have a smaller amount than, as compared to last three years, which
shows its present kccountability has been superior to its attendance while its progress possessions
inflated by 61 %, within fiscal year 2010, but its attendance legal responsibility seeing that
healthy boost by means o f capital which is 82%.
Asset Management Ratio;
2008 2009 2010
Inventory Tumover(Days) 58.50 43.33 78.73
Total Asset turnover 2.05 2.16 1.42

The advance income relation has been reduced, with presentation. So as the possessions are not
to be outgoing and second-hand professionally, because it has to talk about ability which have a
great deal superior than auction? i

Table # 5
Debt Management Ratio:
2008 2009 2010

Debt/Equity (Times) 2.40 1.11 2.52

Times Interest -0.58 1.27 -1.79

Earned (Times)
Table # 6
Probability Ratio:

2008 2009 2010

Net Profit Margin -1.55 0.51 -2.84

Return on Asset -3 19 l.IO -4.04

Return on Equity -10.84 2.32 -1421

Earnings per Share -3.71 0.55 -2.81

It is because the business has inside defeat consequently, each and every product relation is
different. In point of view that this kind of business has permanent change concerned, which
knows how we get the direction of healthier manufacturer to complete on a big weighing
machines, other than,in the direction of small authority.
Common-size Analysis:
Income statem ents 2007 2008 2009 2010
Total Revenues 100 100 100 100
C.G.S 95.446 99.414 95.736 98.753
General & Admin Exp. 0.585 1.260 0.946 0.938
Selling & Distr. 0.525 0.864 1.425 1.343
Operating Profit(EBIT) 3.444 (1.533) 2.020 (2.324)

Financial Charges 0 181 1.791 1.588 1.574

Net income before tax 4.422 (2.824) 0.432 (4.398)

Net income (AT) 2.751 (1.551) 1.510 (2.840)
5.375

Table # 8
Balance Sheet
2007 2008 2009 2010

Shares & Spares 2.504 0.606 1.279 1.354

Stock in Trade 45.44 32.57 23.658 25.991

Total Current Assets 68.342 44 325 35.729 39.365
Total non-current 31.658 55.S75 64.271 60.644
Asset

Total non C. Liabilities 7.326 23.580 7.355 14B79

Total Liabilities 70.513 70.612 52.621 77.954

Paid up Capital 7.783 8.597 20 948 15.935

Total Equity 29.487 29.388 47.379 22.046

 2006 2007 2008 2009 2010

Total Revenues 100 66.521 57.396 55.189 61.837

C.G.S 100 69.286 57.570 57.100 65.766

General & Admin Exp. 100 143.377 92.851 93.242 90.828

Sale. & Dist. Exp. 100 109.483 155.873 141.310 92.862

Operating Profit{EBIT} 100 (29.694) 33.661 (45 239) (60.338)

Financial Charges 100 659.011 504.036 480.561 981.810

Net Income (BT) 100 (42.485 (50.611) (54.890) 87.146

Net Income (AT) 100 ' (37.508) 10.635 (56.974) 120.829

Balance Sheet:

Shares & Spares 100 169.209 279.463 342.824 408.152

Stock in Trade 100 64,881 38.682 70.856 55.867

Cash & Bank Bal. 100 60.967 64.301 5.681 22.751

Total C. Assets 100 58.712 38.845 62.676 56.250

Total non C. Assets 100 73.747 150.850 207.011 187.114

Total Assets 100 90.526 74.303 108.369 97.678

Total C. Liabilities 100 67.382 53.253 96.848 97.504

Total Non C. Liabilities 100 291.378 74.394 223.183 198.385

Total Liabilities 100 90.654 55.450 109.973 107.985

Paid up Capital 100 100.00 200.00 200.00 200.00

Total Equity 100 90.221 119.387 104.533 73.031

CONCLUSION:
The continuances of present policy, the present comnnerce environment, and in addition to the
IMF increased external aid, could be improved. Foreign exchange reserves should reduce, and
they must continue to accumulate behind the steady growth of imports and remittances.
Positive indicators, namely inflation and interest rates, exchange rates and decrease in the
performance of a stable agriculture, to view the presentation claimed that the economy as a
whole, stable and fast. International markets have a positive effect on the economy becomes
down. The automotive industry is determined that the care for o f all industry. While it blooms by
leading to the growth of auxiliary industry and others. Our administration, 5% (CEF), car
registration unwanted goods such as increased federal withholding tax o f 1% to 5% consumption
tax and the other that requires long-term speculation. Auto industry is taking harmful actions in
previous budgets, such as taxes, they must confirm stable and consistent policies to support the
goals of the unit, 500:000.
 BIBLIOGRAPHY:

www.google.com/ atlas Honda company/ financial report 2007

www.google.com/ atlas Honda company/ financial report 2008
www.google.com/ atlas Honda company/ financial report 2009
www.google.com/ atlas Honda company/ financial report 2010
www.secp.com.pk/ atlas Honda company/registration
W W W . statebankof Pakistan/atlas Honda company
www.googlexom/wikipedia/introduction of Honda Atlas Company.
www.google.com/dewan motors Pakistan
www.suzukimotorsPakistan.com
❖ Abernathy, M.A. Lillis, A.M. Brownell, P. and Carter, P (2001) Product diversity and
costing design; field study evidence. Management Accounfing Research.
❖ Barbate, M.B. Collini, P. and Quagli, (1996) Management accounting in Italy, in
Bhimani, A. (end) Management Accounting: European Perspectives, Oxford. Oxford
University Press.