Understanding Debt to Capitalization Ratio: Calculating Total Capitalization

5.4 Debt to Capitalization Ratio

• Debt to capitalization ratio is equal to total long term debts divided by total capitalization.
• Total capitalization= Total long term debts + Shareholder’s Equity
• Debt to Capitalization Ratio= Long Term Debts/ Long Term Debts + Shareholder’sEquity

Interpretation

It can be defined as how much adequate our benefits are in recovering the aggregate ratio. The ratio of the organization has stayed stable relatively throughout the most recent three years as indicated plainly by the above counts. It is a satisfactory circumstance for the organization.

Long Term Debt to Total Asset Ratio

• Debt ratio is equal to total liabilities divided by total assets.
• Long Term Debt to Total Asset Ratio = Total Long Term Debts/ Total Assets

Interpretation

It can be defined as how much adequate our benefits are in recovering the aggregate ratio. The ratio of the organization has stayed stable relatively in the course of the most recent three years as shown clearly by the above figuring. The ratio demonstrates that the administration is proficiently utilizing the advantages.

It is an adequate circumstance for theorganization.

Times Interest Earned (Coverage Ratio)

It briefs that how many times the firm has earned the interest or how many times the firm has user its earnings before interest and taxes to cover the interest expense.

Times Interest Earned = Profit before Interest and Taxes/ Interestexpense

Interpretation

The interest earning ratio is an imperative from the loan specialist perspective. It demonstrates the occasion’s interest is secured by the benefit accessible to pay interest charges. It is a record of the money related quality of the undertaking.

A high ratio guarantees the moneylender a standard and intermittent premium pay.

Interpretation

It shows that organizations must deal with its aggregate resources productively and ought to create most extreme deals through their proper usage. As the ratio, increments there are more income created per rupee of aggregate interest in resource. The firm capacity to create an extensive volume of offers on a little aggregate resource based is an imperative piece of the company’s general execution as far as benefits. It is steady however beneath the business normal so it’s anything but a decent sign for the organization.

Interpretation

Gross profit margin or gross profit ratio is the ratio of gross profit to net sales expressed as percentage. It is very good in the industry and favorable for the firm.

Interpretation

This used to shows the general benefit and subsequently it valuable to the proprietors. Higher ratio is better for the association. It demonstrates the association’s capacity to transform every rupee of offer into benefit. Because of VSS the organization endured misfortunes in 2007 and 2008; however this misfortune was transitory, so the organization should proceed with its task ordinarily.

Market Ratios

Earnings per share

• This ratio shows that how much amount per share does a common stock holder attains.
• Earnings per share = Earnings Available for Common Stock Holders
• No. Of Common Stock Shares

Interpretation

This graph shows the value of common stock. In 2014 EPS is 0.8 in every next year increase.

Dividend per Share

It is the amount calculated by dividing amount of dividend by number of sharesoutstanding. Dividend perShare= Dividendpaid

No. of Shares outstanding

Interpretation

This ratio shows the amount of dividend paid over each share. As we can see that the amount of dividend on shares is above the industry average so it is an acceptable situation.

Dividend payout ratio

Dividend payout ratio Dividend payout ratio =

This ratio shows how earning support to payment. Good companies have a higher payout ratio. The ratio tells poor position of the company.

CHAPTER 6:

COMPETITIVE ANALYSIS OF THE COMPANY

SWOT Analysis

 STRENGTH:

• Biggest and old telecommunication company
• Internationally subscriber
• High optic fiber
• Up-to-date technology
• Human resource skilled persons
• IT investment
• Strong value exchange services
• High Profit
• Motivated managers
• Innovate policy
• Government Support
• Minimum Staff
• Excellent market reputation
• International recognized

WEAKNESS:

• Appraisal problem
• Promotion criteria
• Quality of service
• Lacking employee training center
• Staff communication
• Proper evolution
• proper information
• Lack of customer employee focus
• social responsibilities

OPPORTUNITY

• Handset local manufacturing
• Telecommunication industry growth
• Privatization
• New product introduces
• Attach GOVT

THREAT

• Competitors
• Depression of economy
• Internet USB offers
• Internet service
• Bad debt of privatization
• Migration of cellular network
• Quality professionals

DEFINITION OF FINANCE

Chapter 6: WEEKLY REPORT

The field of finance is broad &dynamic. It directly affects the lives of every person and every organization.

“Finance means an art of managing money and is deals with the process institutions, market, instrument involved transfer of money between business and government.

FINANCE DEPARTMENT

NAME /DESIGNATION OF THE SUPERVISOR (IN THE DEPARTMENT)

Senior manager: Muhammad Naveed Assistant manager: Abdul NasirZaman

Finance department is the most important branch of Pakistan Telecommunication Limited. This office is charge the financial plan of each division. Checks, request draft and other installment and so forth recorded in thisoffice.

Finance manager works under General Manager. His range of administration contains three fund officers. Significant capacity of this division, clearly, is to organize assets for organization and furthermore dispense reserves.

These are some activities which I performed in PTCL during my internship.

• Pre audit of bills
• Checking the bills and supporting documents recoding of bills in incoming invoice register. Working on SAP
• Parking of bills on SAP posting of bills on SAP Payment of bills onSAP
• Preparation of bank reconciliation certificate

Pre-Audit.

I learned during my internship that how to conduct the pre-audit procedure personally conduct the pre-audit procedure for cashpayment.

I checked the following items for pre-audit Checked the total amount of invoices

Rate of tax Cross checking

Checking the Bills and Supporting Documents

Before parking the bills, I checked all the supporting documents which are necessary to attach with bills and these documents are

• a. Purchase requisition.
• b. Purchase order.
• c. Goods receive note/SAN.
• d. Email approved copies.
• e. Stock registers copies.

Recording of Bills in Incoming Invoice Registers

I entered the bills in incoming invoice register that is on excel sheet. The information required which I filled was

• Vendor name
• Bill number
• Nature of work
• Division/unit
• Date of receiving
• Amount
• Payment date
• Month
• Employee number
• Status
• Region

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SAP Software

SAP is utilized in PTCL for recording of all kind of invoices, materials, investment and furthermore for Human Capital Management. Fundamental reason for SAP is to incorporate data of all organization divisions. PTCL is working effectively by SAP and refresh their records.

Modules of SAP:

Modules are the basic leadership of the ventures by the upper level administration. This module tells the representatives that for the specific task which capacities they ought to perform, where to perform, extensions, regions, trade, sub activities, and this is the entire arrangement and projection.

Following are the modules of the SAP:

• Financial accounting modules (FICO)
• Human capital management modules (HCM)
• Material management module (MM)
• Investment management modules (IM)

Steps of invoice making in SAP:

Codes are assigned to perform the procedures and the PO based and Non PO based invoice have different nature and different codes as well. There are four steps of invoice making in the SAP software which are as under:

• Parking of invoice
• Posting of invoice
• Payment of invoice
• Printing of cheque

Parking of invoice on SAP

Modules are the basic leadership of the tasks by the upper level administration. This module tells the workers that for the specific task which capacities they ought to perform, where to perform, expansions, zones, trade, sub activities, and this is the entire arrangement and projection.

PO Based invoice

In SAP module MIR 07 is used to record the PO base invoices. We enter the

• Date
• Reference Number
• Narration
• Amounts

WR-4

Print for PO based invoice

Mir04 is used for printing of PO based invoice in SAP

Non PO based invoice

In this we record Non PO base invoices in SAP code of FV60.

Adjustments of invoice

I did adjustments of invoices in SAP adjustments of advances that company gives to their vendors. When these advances become mature we add them in expenses. In SAP FV50 is used.

Payment

I have done the process of payment. The code that I entered on the SAP was F-53 through the user I.D of manager. The required information to fill that form was

• Date
• Amount
• Bank account
• Description
• Vendor code

Four steps are involved in the process of giving an order in PTCL:

• Purchase Requisition
• Purchase order
• Goods received note
• Invoice generated

Purchase requisition:

In buy demand they choose the idea of the request that what sort of request the particular division is providing for their senior. They safeguard the need of the pertinent buy demand in the division. The measure of the request is chosen in the buy order and who will makeit.

WR-5

Purchase order:

At the point when the check of the buy demand is made and affirmed than the request is passed to the acquirement office in the head office which is arranged in the Islamabad and after the endorsement of them the buy arrange is made.

Goods received notes:

This note is SAP produced note and in this note the particular office or boss guarantees to the acquirement division that the merchandise are gotten. Also, those products are as per their request.

Invoice generation:

It is the last advance of this procedure in which the receipt is produced against the products which are obtained. What’s more, through the SAP programming these sections made for the installment of receipt.

There are two types of invoices:

• PO based invoice
• Non-PO based invoice

Retention money:

Maintenance cash is the sum that the PTCL not to paid to their seller and deduct from their full installment for a half year as per the agreement. Furthermore, this cash is refundable following a half year’s fulfillment. The motivation behind the maintenance of cash is to ensure that the administrations are as per the agreement statements.

WR-6

Cashimpress:

Cash impress is the cash that the company gives to their employees for the daily little expenses to meet. The maximum range of cash impress is 2000rupees.

Cheque signing authority:

• For headquarter if there is any cheque to draw then the DDO and the director accounts will sign the cheque for 1 million rupees.
• If the cheque is up to 1 million to 10 million rupees than it will take two signs of DDO and the general manager finance
• If the cheque is up to 10 million and above than the cheque will contain two signs of DDO and the Executive vice president.
• If the zone cheque contains 1 million rupees than the DDO and the one senior manager will sign the cheque.
• If the regional cheque is of 1 million to 10 million rupees than the DDO and general manager will sign the cheque.
• If the cheque amount is up to the 10 million and above than the DDO and EVP will sign the cheque.

Accounting Cycle:

PTCL is working under the accounting cycle which is also a standard procedure in the SAP and as they are working on SAP so following are the procedure:

• Journal
• Ledger
• Trial balance
• Balance sheet
• Income statement

Cash flow statement.

CHAPTER 7: CONCLUSION

INTERNSHIP PREPARATION AT THE DEPARTMENT OF BUSINESS

EDUCATION

• One subject is studied called organizational behavior
• By giving presentation we got practical experience
• By reviewing the website of the company I got information about it
• Orientation class of internship is very important for student’s guidance

MAJOR RESPONSIBILITY UNDERTAKEN DURING INTERNSHIP

Amid my entry level position I worked in FINANCE division. In back division I broke down monetary position of organization, deals, benefit, liabilities and resources of the organization. Facilitate in Finance division I worked did pre review, deal with SAP and the most vital I banked Reconciliation declaration (BRC)

SKILLS AND QUALIFICATIONS ACQUIRED

• Working with efficiency
• Professionalism
• Self-Confidence
• Supervision
• Teamworking
• Adaptability
• Strong work ethics
• Working on SAP
• Excellent Command on MS Excel andWord
• Communication Skills