Zain Company Income Statment Analysis

Published: 2021-06-29 07:00:09
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Those ratios show how carefully Zain manage it controls and monitor its expenses and how well their earnings, which is the primary source of cash to repay a loan in most cases, are likely to be protected and grow.

Expense control measures 2010 2009 2008 Trend Effect
Cost of goods sold/net sales 57.3% 70.8% 96.7% Decrease Positive

Administrative expense/net sales 6 12.5 51.4 Decrease Positive

Depreciation expense/net sales 25.1 46.4 86 Decrease Positive

interest expense on borrowed fund /net sales 2.37 3.44 44.6 Decrease Positive

Salaries / net sales .92 1.4 9.7 Decrease Positive

Ratios Calculations


2008
Cost of goods sold/net sales = 488,737/ 505,196 = 96.7%
Administrative expense/net sales = 260,082 / 505,196 = 51.4%
Depreciation expense/net sales = 1,021,382 / 505,196 = 86%
interest expense on borrowed fund /net sales = 225,532 / 505,196 = 44.6%
Salaries / net sales = 49,421 / 505,196 = 9.7%


2009
Cost of goods sold/net sales = 2,127,026 / 3,004,052 = 70.8%
Administrative expense/net sales = 375,898 / 3,004,052 = 12.5%
Depreciation expense/net sales = 1,394,310 / 3,004,052 = 46.4%
interest expense on borrowed fund /net sales = 633,742 / 3,004,052 = 3.44%
Salaries / net sales = 41,762 / 3,004,052 =1.4%

2010
Cost of goods sold/net sales = 3,403,922/ 5,934,370 = 57.3%
Administrative expense/net sales = 351,143 / 5,934,370 = 6%
Depreciation expense/net sales = 1,494,220 / 5,934,370 = 25.1%
interest expense on borrowed fund /net sales = 1,195,511 / 5,934,370 = 2.37%
Salaries / net sales = 54,648 / 5,934,370 =.92%


An indicator of the quality of the of a business firm's management is how carefully it controls its expenses and how well its earnings. The above table shows the ratios that indicate the firm's expenses control:
Zain expenses ratio (selling, administrative, depreciation and other expenses) relative to net sale are declining over the three years. Hence, the loan officer may say that the company are controlling their expenses well which caused its revenue to increased as well.




2. Operating Efficiency: Measure of Zain's Performance Effectiveness
The following ratios measure Zain's performance effectiveness in two dimensions:
How effectively assets are being utilized to generate sales and cash flow for Zain
How efficiently sales are converted into cash.

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