SUI Northern Gas Financial Analysis
SUI Northern Gas Financial Analysis
SUI Northern Gas Financial Analysis
DATE: 08-12-2023
SUBMITTED BY:
SUBMITTED TO:
TOPIC:
_______________________________________________________
1
Sui Northern Gas Pipelines Limited
Vision:
To be the leading integrated natural gas provider in the region seeking to improve the quality of life
of our customers and achieve maximum benefit for our stakeholders by providing an uninterrupted
and environment friendly energy resource.
Mission:
A commitment to deliver natural gas to all doorsteps in our chosen areas through continuous
expansion of our network, by optimally employing technological, human and organizational
resources, best practices and high ethical standards
Objectives:
SNGPL is committed for:
Core Values:
● COMMITMENT We are committed to our vision, mission and to creating and delivering
stakeholder value.
● COURTESY We are courteous - with our customers, stakeholders, and towards each other
and encourage open communication
● COMPETENCE We are competent and strive to continuously develop and improve our
skills and business practices.
● RESPONSIBILITY We are responsible - as individuals and as teams - for our work and our
actions. We welcome scrutiny, and we hold ourselves accountable.
● INTEGRITY We have integrity - as individuals and as teams - our decisions are
characterized by honesty and fairness.
2
Financial Statements
3
2. Balance Sheet:
4
5
3. Statement of Profit & Loss:
6
5. Statement of change in Equity
Financial Analysis
● Operating Ratio:
2022 :
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
Operating Ratio =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
34,173,728
=
1,076,740,109
= 3.174%
2021:
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
Operating Ratio =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
16,486,408
=
644,504,419
7
= 2.57%
Interpretation:
Year 2021 (2.57%):
● An operating ratio of 2.57% suggests that, for every rupee of revenue generated, the
company incurred operating expenses equivalent to 2.57 paisas.
● A lower operating ratio is generally considered favorable as it indicates efficient cost
management and a higher percentage of revenue available as operating income.
Year 2022 (3.174%):
● The increase in the operating ratio to 3.174% in 2022 indicates a higher proportion of
operating expenses relative to revenue.
● This may suggest increased operating costs or a decrease in revenue efficiency
compared to the previous year.
2022:
Funded Debt = Long term Financing + Current Portion of long term Financing
= (25,450,493 + 124,214) + 6,319,414
= 31894121
𝐹𝑢𝑛𝑑𝑒𝑑 𝐷𝑒𝑏𝑡
Funded Debt to Operating Property =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦
31894121
=
224,937,870
= 14.18%
2021:
Funded Debt = Long term Financing + Current Portion of long term Financing
= (27,455,663 + 179,775) + 9,360,968
= 31894121
𝐹𝑢𝑛𝑑𝑒𝑑 𝐷𝑒𝑏𝑡
Funded Debt to Operating Property =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦
36.996,406
=
214,090,961
= 17.28%
Interpretation:
Year 2021 (17.28%):
● The ratio of 17.28% indicates that, at the end of 2021, the company had funded debt
equivalent to 17.28% of its total operating property.
8
● This suggests a relatively higher level of financial leverage, where a larger portion of
the company's operating property is financed through debt.
Year 2022 (14.18%):
● The decrease in the ratio to 14.18% in 2022 indicates a lower proportion of funded
debt in relation to operating property.
● This may suggest a reduction in financial leverage or a change in the composition of
the company's capital structure, with potentially less reliance on debt
2022:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Net Income to Operating Property =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦
10,366,231
=
224,937,870
= 4.60%
2021:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Net Income to Operating Property =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦
10,985,994
=
214,090,961
= 5.131%
Interpretation:
Year 2021 (5.131%):
● The operating profit margin of 5.131% indicates that, for every rupee of revenue
generated in 2021, the company retained 5.131 paisa as operating profit after
covering operating expenses.
● A higher operating profit margin is generally considered favorable, as it suggests
efficient cost management and a greater percentage of revenue contributing to
operating profit.
Year 2022 (4.60%):
● The decrease in the operating profit margin to 4.60% in 2022 suggests that a lower
percentage of revenue is translating into operating profit.
● This may be due to increased operating expenses, decreased revenue efficiency, or a
combination of both.
9
● Operating Revenue to Operating Property:
2022:
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
Operating Revenue to Operating Property =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦
1,076,740,109
=
224,937,870
= 478.63%
2021:
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
Operating Revenue to Operating Property =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦
644,504,419
=
214,090,961
= 301.04%
Interpretation:
Year 2021 (301.04%):
● The ratio of 301.04% suggests that, in 2021, the company generated operating
revenue equivalent to approximately three times its operating property.
● This may indicate effective utilization of operating assets, resulting in a relatively
high revenue yield from these assets.
Year 2022 (478.63%):
● The increase in the ratio to 478.63% in 2022 indicates a further improvement in the
efficiency of converting operating property into operating revenue.
● The company generated operating revenue equivalent to almost five times its
operating property during the year, signaling enhanced operational efficiency or
potentially increased pricing power.
Additional ratios:
● Current Ratio:
2022:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
1,006,499,388
=
1,028,762,141
= 97.8%
2021:
10
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
665,330,402
=
688,037,096
= 96.7%
Interpretation:
Year 2021 (96.7%):
● A current ratio of 96.7% indicates that, at the end of 2021, the company had current
assets equivalent to 96.7% of its current liabilities.
● This suggests a relatively strong ability to meet short-term obligations using available
short-term assets.
Year 2022 (97.8%):
● The increase in the current ratio to 97.8% in 2022 indicates a further improvement in
the company's liquidity position.
● The company now has current assets equal to 97.8% of its current liabilities,
suggesting an enhanced ability to cover short-term obligations
2022:
Net working capital Ratio = Current Assets - Current Liabilities
= 1, 006, 499, 388 - 1, 028, 762, 141
= -22,262,753 PKR
2021:
Net working capital Ratio = Current Assets - Current Liabilities
= 665, 330, 402 - 688, 037, 096
= -22,706694 PKR
Interpretation:
Year 2021 (-22,706,694 PKR):
● The negative value suggests that, at the end of 2021, the company had more
short-term liabilities than short-term assets.
● This could indicate potential liquidity challenges, as the company may face difficulty
in meeting its immediate obligations with its existing current assets.
Year 2022 (-22,262,753 PKR):
● The slight improvement in the negative working capital ratio to -22,262,753 PKR in
2022 suggests a relatively better position compared to the previous year.
● However, the negative value still indicates that the company has more short-term
liabilities than short-term assets.
11
● Acid-Test Ratio:
2022:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝑆𝑡𝑜𝑐𝑘 𝑖𝑛 𝑇𝑟𝑎𝑑𝑒(𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)
Acid Test Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
1,006,499,388 −12,496,985
=
1,028,762,141
= 0.9662 times
2021:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝑆𝑡𝑜𝑐𝑘 𝑖𝑛 𝑇𝑟𝑎𝑑𝑒(𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)
Acid Test Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
665,330,402 − 4,680,416
=
688,037,096
= 0.9601 times
Interpretation:
Year 2021 (0.9601 times):
● The acid-test ratio of 0.9601 times indicates that for every rupee of current liabilities, the
company has PKR0.9601 in highly liquid assets that can be quickly converted to cash to meet
its short-term obligations.
● A ratio below 1 suggests a potential challenge in meeting all short-term obligations with only
the most liquid assets.
Year 2022 (0.9662 times):
● The increase in the acid-test ratio to 0.9662 times in 2022 suggests a slight improvement in
the company's short-term liquidity position.
● The company now has PKR0.9662 in highly liquid assets for every rupee of current
liabilities, indicating a slightly stronger ability to cover short-term obligations.
● Cash Ratio:
2022:
𝐶𝑎𝑠ℎ & 𝐶𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡𝑠
Cash Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
15,793,568
=
1,028,762,141
= 0.01535 times
2021:
𝐶𝑎𝑠ℎ & 𝐶𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡𝑠
Cash Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
12
10,328,059
=
688,037,096
= 0.015011 times
Interpretation:
Year 2021 (0.015011 times):
● A cash ratio of 0.015011 times means that for every rupee of short-term liabilities,
the company has 0.015011 rupees in cash and cash equivalents.
● This ratio indicates a relatively low level of liquidity, suggesting that the company
may have a limited ability to cover its short-term obligations with readily available
cash.
Year 2022 (0.01535 times):
● The increase in the cash ratio to 0.01535 times in 2022 suggests a slight improvement
in liquidity compared to the previous year.
● While the cash ratio is still relatively low, the company now has 0.01535 rupee in
cash and cash equivalents for every rupee of short-term liabilities.
13
● This may suggest changes in the company's cash generation efficiency, working
capital management, or overall operational performance
● Debt Ratio:
2022:
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
1,228,459,013
=
1,268,107,071
= 96.87%
2021:
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
883,840,382
=
918,060,448
= 96.27%
Interpretation:
Year 2021 (96.27%):
● The Debt Ratio of 96.27% indicates that, at the end of 2021, approximately 96.27%
of the company's total assets were financed by debt.
● This suggests a high level of financial leverage, where a significant portion of the
company's capital structure is composed of debt.
Year 2022 (96.87%):
● The increase in the Debt Ratio to 96.87% in 2022 indicates a slightly higher reliance
on debt to finance the company's assets.
● This suggests that, compared to the previous year, the company's level of financial
leverage has marginally increased.
14
883,840,382
=
34,220,066
= 25.8281 times
Interpretation:
Year 2021 (25.8281 times):
● The Debt to Equity Ratio of 25.8281 times implies that, at the end of 2021, the company had
PKR 25.83 in total debt for every PKR1 of shareholders' equity.
● This suggests a relatively high level of financial leverage, indicating that the company relies
significantly on debt financing to support its operations and growth.
Year 2022 (30.98409 times):
● The increase in the Debt to Equity Ratio to 30.98409 times in 2022 indicates a higher
proportion of debt relative to equity.
● This may suggest that the company has taken on additional debt or experienced a decrease in
equity during the year.
2021:
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒
Interest Coverage Ratio =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
55,878,729
=
40,036,825
= 1.3956 times
Interpretation:
Year 2021 (1.3956 times):
● A ratio of 1.3956 times indicates that the company's operating earnings (EBIT) are
1.3956 times higher than its interest expenses.
● This implies a moderate ability to cover interest payments, but it is generally
considered lower than ideal. A higher ratio is often preferred as it suggests a greater
buffer against financial risk.
Year 2022 (1.27058 times):
● The decrease in the ratio to 1.27058 times in 2022 suggests a slight decline in the
company's ability to cover interest payments compared to the previous year.
● A lower interest coverage ratio may indicate increased financial risk, as the company
is generating less operating income relative to its interest obligations.
15
● Asset Turnover Ratio:
2022:
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
Asset turnover Ratio =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
1,076,740,109
=
1,268,107,071
= 0.849092
2021:
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
Asset Turnover Ratio =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
644,504,419
=
918,060,448
= 0.702028
Interpretation:
Year 2021:
● An asset turnover ratio of 0.702 suggests that, on average, the company generated
PKR0.702 in revenue for every rupee of assets during the year.
● This may indicate that the company's assets were not utilized very efficiently in
generating sales.
Year 2022 :
● The increase in the asset turnover ratio to 0.820 in 2022 indicates improved efficiency
in utilizing assets to generate sales.
● The company generated PKR0.820 in revenue for every rupee of assets during the
year, suggesting a more effective use of its asset base
16
= 8.20%
Interpretation:
Year 2021 (8.20%):
● The gross margin ratio of 8.20% indicates that, for every rupee of revenue generated
in 2021, the company retained PKR0.082003 after covering the direct costs
associated with producing goods or services.
● A higher gross margin ratio is generally favorable, suggesting that the company has a
larger margin to cover operating expenses and generate net profit.
Year 2022 (7.94%):
● The decrease in the gross margin ratio to 7.94% in 2022 suggests that the company
retained a slightly smaller portion of revenue after accounting for the cost of goods
sold
17
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Return on Assets Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
10,366,231
=
1,268,107,071
= 0.008174
2021:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Return on Assets Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
10,985,994
=
918,060,448
= 0.0119665
Interpretation:
Year 2021 (0.0119665):
● The ROA of 0.0119665 indicates that, on average, the company generated
approximately 1.19 paisas of profit for every rupee of assets during 2021.
● A higher ROA is generally considered favorable, as it suggests that the company is
effectively utilizing its assets to generate earnings.
Year 2022 (0.008174):
● The decrease in ROA to 0.008174 in 2022 suggests that the company generated
around 0.82 paisas of profit for every rupee of assets during the year.
● A lower ROA may indicate reduced profitability relative to the company's asset base
compared to the previous year.
18
● A higher ROE generally suggests efficient utilization of equity capital, and it is often
considered a positive indicator of a company's profitability.
Year 2022 (26.145%):
● The decrease in ROE to 26.145%, in 2022 indicates a decline in the company's ability
to generate profits relative to shareholders' equity.
● A lower ROE may suggest challenges in maintaining or improving profitability levels
compared to the previous year.
19
leverage continued to rise with a Debt to EBITDA Ratio of 16.8744, potentially signaling increased
risk. Overall, a comprehensive analysis of these ratios is crucial to assess the company's financial
health and risk management strategies.
20