Professional Documents
Culture Documents
Fin 245
Prepared by
Prepared for
Ms. Tamanna khan
Faculty member
Faculty of business administration
Eastern university
Dhaka
September 30,2007
To
Ms. Tamanna Khan
Faculty Member
Faculty of Business Administration,
Eastern University
madam,
Here the Report you asked to do. I did the report on ratio analysis of padma textile
mills ltd. I took help from the company’s annual report. I also took balance sheet,
income statement, and cash flow statement from annual report of padma textile mills ltd
and some other information from Internet.
Thank you for assigned me this report & I request you to accept this.
Sincerely
I have collected data from the annual report of the company and
some definition from net. At first I put the data in excel sheet and
took the data to the table for each individual ratio. I make the chart
by using Ms. excel then analyze the data according to the chart then I
interpreted my decision several point of view.
Executive summary
Chapter page no
Chapter 1…………………………………………………………………….1
1.1 Introduction………………………………………………………………………………1
1.1.1purpose of the report…………………………………………………………………1
1.1.2scope…………………………………………………………………………………...1
1.1.3 Limitation………………………………………………………………………………2
1.1.4 Source and methods of collecting information……………………………………..2
1.1.5 About the company…………………………………………………………………...2
Chapter 2……………………………………………………………………….3
2.1Analysis ……………………………………………………………………………………3
2.1.1common sizing…………………………………………………………………………3
2.1.2 Indexing……………………………………………………………………………….6
2.1.3 Ratio analysis…………………………………………………………………………9.
2.1.3.1 Liquidity ratio…………………………………………………………………….9
2.1.3.1.1 Current ratio………………………………………………………………..9
2.1.3.1.2 Acid test ratio……………………………………………………………..10.
2.1.3.2 Leverage ratio………………………………………………………………….10
2.1.3.2.1 Debt to equity……………………………………………………………..10
2.1.3.2.2 Debt to total asset………………………………………………………...11
2.1.3.3 Coverage ratio …………………………………………………………………12
2.1.3.3.1 Interest coverage…………………………………………………………12
2.1.3.4 Activity ratio …………………………………………………………………...12
2.1.3.4.1 Receivable turnover……………………………………………………………..............12
2.1.3.4.2 Receivable turnover in days (RTD)…………………………………………………….13
2.1.3.4.3 Inventory turnover (IT)…………………………………………………………………..14
2.1.3.4.4 Inventory turnover in days………………………………………………………………15
2.1.3.4.5 Total assets turnover (Capital)…………………………………………………………15
2.1.3.5 Profitability ratio……………………………………………………………….16
2.1.3.5.1 Net profit Margin………………………………………………………………………...16
2.1.3.5.2 Return on investment (ROI)…………………………………………………………...17
2.1.3.5.3 Return on Equity (ROE)………………………………………………………………...17
Chapter 3……………………………………………………………………18
3.1 Conclusion……………………………………………………………18
Bibliography
Appendix
Chapter 1
1.1 Introduction
1.1.2 Scope
In this report I analyzed different types of ratio to
find the financial condition of padma textile mills ltd. I also try to find
out the position of padma textile mills ltd in the market
1.1.3 Limitation
I prepared this report only based on the
annual report of padma textile mills ltd. So was not possible for me to
analyze the financial data properly. That’s the reason why some
analysis can’t give the appropriate result. But I should try my best to
find out the real condition of the textile mills.
1.1.4 Source and methods of collecting information
I
prepared the report only based on secondary data. Because here we
analyze the financial data.
Chapter 2
2.1Analysis
2.1.1common sizing
Income statement
common sizing
200 200 200 200 200
1 2 3 4 5
100 100 100 100 100
Revenue % % % % %
80 81 82 82
Cost of revenue % % % % 81%
20 19 18 18
Gross profit % % % % 19%
operating expence 2% 2% 2% 1% 2%
Administrative
expence 2% 2% 2% 1% 2%
Distribution
(selling)cost 0% 0% 0% 0% 0%
Profit from 18 17 16 16
operation % % % % 18%
Contribution to
workers
participation/welfar
e funds 1% 0% 0% 0% 0%
11 11 10
Finance cost % % % 9% 11%
Net profit before
tax 7% 6% 5% 6% 6%
Income tax expence 2% 1% 1% 1% 1%
Net profit(after
tax)for the year
transferred to
statement of
changes in equity 5% 5% 4% 5% 5%
Earning per share
(per value tk. 10/)
(adjusting EPS of
2001,2002.2003,20
04,2005) 0% 0% 0% 0% 0%
Number shere used
to computes EPS 1% 2% 2% 2% 2%
2.1.2 Indexing
Balance sheet
indexing
200 200 200 200
1 2002 3 4 5
Asset
Current asset
100 255 167 239
Cash & Cash equivalence % 45% % % %
100 129 114 139 110
Trade debtors % % % % %
100 111 117 100
Inventories % 92% % % %
Advance,Deposits,Prepay 100 100 133 105
ments % 86% % % %
100 111 112 132 107
TOTALCurrent asset % % % % %
Fixed asset
Property,Plant & 100 101 883
Euipment % % 96% 96% %
100 108 105 105 101
Cost % % % % %
100 118 116 114 112
Accumulate Depriciation % % % % %
Long term security 100 101 108 100 100
deposits % % % % %
100 101
Total non current asset % % 96% 96% 88%
100 107 105 118 101
Total Asset % % % % %
Liabilities
Current Liabilities
Short term loans from 100 105 106 103
bank (Secure) % % % 86% %
Long term loans- current 100 110 101 147
Maturity(Secured) % % % 45% %
100 137 103 104
Accured expense % % % 93% %
100 149
Other creditors % % 84% 78% 85%
Total Current Liabilities 100 109 104 80% 106
% % % %
Non-current liabilites
Long term loans-Net of 100 104 112 198
current Maturity % % % % 96%
Securities Deposists 100 1000 100 100 100
from distributors % % % % %
Total Non-current 100 105 112 197
liabilites % % % % 96%
100 108 107 126 100
TOTAL LIABILITIES % % % % %
SHAREHOLDERS EQUITY
100 1000 110 105 125
Issued share capital % % % % %
100 100 100 100 100
Share premium % % % % %
100 107 100 100 100
Tax holiday resurve % % % % %
100 102 112
Retained Earnings % 67% % % 97%
Accumulated profit-As
per the statement of 100 111 102
changes in equity % % % 0%
100 105 103 106 105
TOTALShareholder Equity % % % % %
TOTAL SHAREHOLDERS 100 107 105 118 101
EQUITY&LIABILITIES % % % % %
Income statement
indexing
200 200 200 200 200
1 2 3 4 5
100 101 103 101
Revenue % % % % 87%
100 103 105 100
Cost of revenue % % % % 85%
100 96 93 101
Gross profit % % % % 96%
100 99 101 72 124
operating expense % % % % %
Administrative 100 103 103 75 129
expense % % % % %
Distribution 100 86 92 57
(selling)cost % % % % 93%
Profit from 100 95 92 105
operation % % % % 94%
Contribution to
workers
participation/welfar 100 33 69 183
e funds % % % % 83%
100 100 100 92 102
Finance cost % % % % %
Net profit before 100 95 81 127
tax % % % % 83%
100 64 87 137
Income tax expense % % % % 96%
Net profit(after
tax)for the year
transferred to
statement of 100 105 80 125
changes in equity % % % % 80%
Earning per share 100 61 64 151 80%
(per value tk. 10/) % % % %
(adjusting EPS of
2001,2002.2003,20
04,2005)
Number share used 100 110 100 131 100
to computes EPS % % % % %
0.00
Of the industry is 1.94. It shows 2000 2001 2002 2003 2004 2005 2006
year
The healthy improvement of the
Padma textile ltd. The liquidity of
Padma textile mills increased. From the chart we can see that, In
2001, 02, &03 it was increased slightly but in 2004 it increased
dramatically. It may be happened because current asset or liabilities.
From indexing we can see that in current asset Cash & Cash
equivalence, advanced, deposit, prepayment increased but creditors’
Acid Test (dquick)
expense in current liabilities decreased. That why the liquidity
Acid Test (dquick)
.
100
0.00
2000 2001 2002 2003 2004 2005 2006
2.1.3.1.2 Acid test ratio year
Debt to equity
2.1.3.2.1 Debt to equity;
.
400
ratios
65%
In 2001 62% of the firm’s asset 60%
2000 2001 2002 2003 2004 2005 2006
Interest coverage
Interest coverage
.
200
Of padma decreased 0.00
2000 2001 2002 2003 2004 2005 2006
From 4.43 to 3.22 in year
Receivable turnover
3.00
.
ratios
200
.
100
0.00
2000 2001 2002 2003 2004 2005 2006
year
600.00
400.00
RTD
200.00
0.00
2000 2001 2002 2003 2004 2005 2006
year
3.00
.
ratios
200
.
100
0.00
2000 2001 2002 2003 2004 2005 2006
year
300.00
200.00
RTD
100.00
0.00
2000 2001 2002 2003 2004 2005 2006
year
The inventory
turnover tells us how many days on average before inventory is
turned into account receivables through sales. In 2001 padma need
131.24 days which means that padma has slower turning its
inventory. It also shows us that the clients of padma are not so good.
It also indicates that there may be some lackings on the management
of the industry. That why the time of turnover increased every year,
and it reached to191.24 in 2005.from the graph we can see that from
2001 to 2005 it fluctuates little and last it rose to 197.25.
2.1.3.4.5 Total assets turnover (Capital)
0.80
0.60
Total assets
ratios
0.40
turnover (Capital)
0.20
0.00
2000 2001 2002 2003 2004 2005 2006
ye ar
From the graph we
analyze that the capital of padma has decreased from .62 to .42 in
between 2001 to2005. The average total asset turnover is .53. It tells
us that the padma textile generates less sales revenue per dollar of
asset investment than does on average. Padma is less efficient in
total asset turnover. From our previous analysis of receivables and
inventory activity, we suspect that excessive investment in
receivables and inventories may be responsible for this problem. If
padma could generates the same sales revenue with fewer dollar
invest in receivables and inventories than the total asset turnover
would improved.
10%
ratios
5%
0%
2000 2001 2002 2003 2004 2005 2006
year
2%
0%
2.1.3.5.2 Return
2001
on2002investment
2000 2003
year
2004
(ROI)
2005 2006
Here the return of investment or
earning power is decreased in 2001 it was 3% and in 2005 it is 2%. It
may happen because of low total asset turnover.
10%
ratios
5%
0%
2000 2001 2002 2003 2004 2005 2006
year
Chapter 3
3.1 Conclusion
The overall condition of the padma textile mills was
not so good. Though the current and quick ratio of the company is
improved condition but the debt ratio is high, that means the financial
risk of the company is high. If the company want develops the
condition then they must improve their management system, look
carefully to their receivables, and total asset. Otherwise the company
will face a great problem
Bibliography