Performance Analysis of Manufacturing Companies in Pakistan

The objective of this paper is to examine the performance of fourteen manufacturing companies in Pakistan using financial accounting ratios. Data was collected from OSIRIS database sorted by total assets. The variables that will be used are: total assets; expenses; sales; profit before tax; and return on assets. Each variable will be compared and analysed during the 5 year-period, 2006-2010. ENGRO being the largest company by total assets over 3 years (2006, 2007 and 2008) had more expenses, low sales, low profit before tax and return on assets compared to the other thirteen companies. FCC being the second largest company by assets showed high sales, profit before tax and return on asset in 5 years (2006-2010). On the other hand, NRL being the fourth largest company showed the highest sales in five years, lowest expenditures in 2010 as compared to other thirteen listed companies but it has decreasing profit before tax and return on asset over the years; lowest profit before tax in 2010. The financial position of other listed companies is mixed. Correlation analysis showed that total assets, sales and profit before tax are positively related indicating economies of scale; large firms are able to take advantage of their size. Finally, this study concluded that higher expenses were the results of either the Expense Preference Behaviour Theory or slow growth rate of investment.