INTRODUCTION

Agriculture Marketing Company Limited (PRAN) is a well known and leading food company in
Bangladesh. The purpose of this report is to analyze the financial condition of this company.
Financial statement analysis is important to boards, managers, payers, lenders, and others who
make judgments about the financial health of organizations. One widely accepted method of
assessing financial statements is ratio analysis, which uses data from the balance sheet and
income statement to produce values that have easily interpreted financial meaning. Most
companies routinely evaluate their financial condition by calculating various ratios and
comparing the values to those for previous periods, looking for differences that could indicate a
meaningful change in financial condition. Many companies also compare their own ratio values
to those for similar organizations, looking for differences that could indicate weaknesses or
opportunities for improvement.
In this report firstly have we developed different years income statement and balance sheet.
Then based on this financial statements information we have calculated five types of ratios for
different years. Now this report is free for boards, managers, payers, lenders, and others who
make further analysis on Agriculture Marketing Company Limited (PRAN)s financial condition

OBJECTIVE
We were instructed from our finance course lecturer Md. Al-Mamun to submit a financial report
on a public company that has a membership on Dhaka Stock Exchange (DSE).

We choose Agricultural Marketing Company Limited (PRAN) which fulfills all the demand of
our instructor, to make a financial analysis report on it. We had some objectives behind making
the report. These are

To know how to make a financial report.

To gather practical knowledge on analyzing a company financially.

To be experienced on calculating and making analysis on ratio, risk, scenario, DuPont

System, Peer-to-Peer and others.

To arrange an overall financial idea against a company.

We believe that we were successful to fulfill most of our objectives. Thanks Allah to bless on us.

METHODOLOGY
Agriculture Marketing Company Limited (PRAN) is a well known and leading food company in
Bangladesh. So, to make a financial report on this company we have to give our full effort. It is
not an easy job to analyze AMCL (PRAN)s financial performance. We tried our best.
We collect information from website, reference book from Bangladesh, yearly annual report of
AMCL (PRAN) and from other sources.

To collect further information, we have to go to the head office of AMCL (PRAN). We tried to
meet with the head of finance department and head of accounting department. But they were too
busy on their job. Beside this, the head office didnt provide us such information that can help us
making the report.

We have to go to Dhaka Stock Exchange to collect the annual reports of AMCL (PRAN) and
after a lot of straggle we got that.
We take information from the book of Balance Sheet of Joint Stock Companies (2000-2004)
and (2005-2008) published by the Statistics Department of Bangladesh Bank.

We also have collected information from the PRAN GROUP website (www.pranfoods.net).
Besides this we have collected as many information we can collect from outside source.

LIMITATIONS
It would be a book if we start to narrate our problems and struggles. We have to face lots of
problem to complete this report. As the date of submission was too close when we learned a little
about make a financial report. We have to take preparation for our 2nd midterm exam with the
makings of report. We feel lack of latest financial and accounting information when we
constructing the report. We have to base on the old information in maximum time. But anyhow
we tried to attach latest information about AMCL (PRAN).

On the annual report got a lot of problem. The balance sheets were puzzled us. Besides this there
was not sufficient information to make further calculation. AMCL (PRAN)s website is not so
much informatics. They do not attach or upload any kind of information that can help us in
further financial calculation. The head office of AMCL (PRAN) was not supportive. They dont
give us any kind of information & instruction that can help us. We have to face a lot of hazards
on collecting information. But we believe that we have succeeded to make a standard report at
last.

SWOT ANALYSIS

As far we know SWOT analysis is a combination of analysis of a company which includes

Strength, Weakness, Opportunity, and Threat of that company. Lets make SWOT Analysis of
Agricultural Marketing Company Limited (PRAN)

Strengths of Agricultural Marketing Company Limited (PRAN):

As far we know Agricultural Marketing Company Limited (PRAN) is one of the leading food
producing and food exporting company in Bangladesh. PRAN Juice, PRAN Mango Bar,
PRAN Badam Vaja, PRAN Squash are the well known and well consumed product in
Bangladesh produced by them.
Besides this they have produced more than 50 verities of products.
Besides this, Agricultural Marketing Company Limited (PRAN) is also export their products
more than 45 countries. Their product chain is too large.
Though in recent years, their profitability is in downward position, their foods become a brand. If
they take care more about it, they will be a best company.

Weakness of Agricultural Marketing Company Limited (PRAN):

Though Agricultural Marketing Company Limited (PRAN) is a leading food company, it is not a
well profitable company now. In year 2006, the company becomes collapse. All the lines and
bars of the graph of profitability are declining. YEAR 2006 is the year, where company made the
worst performance that they ever do before. As the condition of Bangladesh in year 2006 is not
suitable for doing business, all the businessmen are in vain. So, nothing is to be done by the
company.
Besides this, Agricultural Marketing Company Limited (PRAN) is a too much fluctuating
company. All the activity ratios, liquidity ratios say that in last 5 years the company performance
is jumping. It makes the firm risky for the investors to invest.
AMCL (PRAN) prefer short term loan, but it increase the interest expenditure.

Maximum products of Agricultural Marketing Company Limited (PRAN) are not at that quality
level which customers want. They should try to maintain the quality. A market research is
important to take decision about it.

Opportunities of Agricultural Marketing Company Limited (PRAN):

Agricultural Marketing Company Limited is a concern of PRAN GROUP is famous for their
food products. Besides this, their mission is to make Bangladesh hunger and poverty free, aim is
to producing quality food. They have the opportunity to fulfill their mission.
If AMCL (PRAN) tries to increase their food quality more that the customers want, their sales
will be increased at a surrounded rate.
The efficiency of Agricultural Marketing Company Limited (PRAN) is at a good look. They try
to increase their productivity. Its a good sign of development. And by make time series analysis
of AMCL (PRAN), they are improving.

Threats of Agricultural Marketing Company Limited (PRAN):

There lies a lot of thereat for AMCL (PRAN). The competitors of AMCL (PRAN) are strong
enough to produce quality goods. They produced maintain better quality then AMCL (PRAN).
Square Consumers Products, Akiz Foods Bangladesh Limited, BD Foods Limited, Arku Ltd.
Cocola foods ltd., are becomes threat for the company.
AMCL (PRAN) is not aware of creating a branding image of their products. Their marketing
policy is too old and not suitable with todays world.

HIGHLIGHTS OF PRAN GROUP (2003-08)

Company data

DESCRIPTION
Net sales (credit)
account receivable(average)
Cost of goods sold
Inventory(average)
Total liabilities
stock holders ' equity
Earnings before interest and tax
Interest expense
Gross profit
Net income
Average stock holders ' equity
Preferred dividends
Common stock outstanding
Earnings per share
Market price per share
account receivable
inventory
Current Liabilities
long term debt

Total Liabilities and stock holders

equity
Total asset
Average total asset

Common stock outstanding

Market price per share
Dividends per share
Current Assets
Short term investment

Cash

(Figure in taka)
2003

2004

2005

2006

2007

2008

752,710,227 775,131,774
22,588,655
556,668,499 574,352,080
474,942,235
659,353,090
293,913,711 309,015,238
112,564,325 117,230,905
66,414,159 75,577,947
196,041,728 200,779,694
44,386,931 40,309,163
301,464,475
0
0
800000
800000
55.484
50.386
595
15,220,740 29,956,569
456,605,572 493,278,897
464,013,742 503,199,292
185,979,959 156,153,798
479,893,670 465,169,036

797,683,342
36,229,016
592,870,264
492,443,473
665,569,485
330,037,953
120,088,857
77,553,914
204,813,078
28,947,713
319,526,596
0
800000
36.185
401
42,501,462
491,608,049
499,627,981
165,941,504
495,979,457

867,000,825
44,002,771
667,768,855
285,238,849
652,452,909
337,687,792
111,229,319
80,001,154
199,231,970
28,947,713
333,862,873
0
800,000
36
364
45,504,079
496,023,771

925,498,835
52,608,030
715,867,802
489,684,905
610,269,583
346,718,576
120,446,156
87723138
209,631,033
29,331,413
342,203,184
0
800,000
37
581
59,711,981
483,346,039

985,454,208
51,977,441
761,332,926
483,773,092
561,863,186
361,323,351
129,501,252
90,559,523
224,121,282
35,949,959
354,020,964
0
800,000
45
1,023
44,242,900
484,200,145

499860851

496269678

469374340

152,592,058 113,999,905 92,488,846

490,279,850 460,718,481 453,812,197

479,893,670 465,169,036 495,979,457 490,783,803 460,718,481 453,812,197

472,531,353 480,574,247 493,381,630 475,751,142 457,265,339
100
100
100
100
100
100
595
401
364
581
1,023
24
26
26
26
28
622251899 660584792 673783245 676467480 673260852
76235298
22781135

93291132
33184149

92771180
39484215

100749301
32660159

128644738
16173069

COMPERATIVE INCOME STATEMENT (2003-08)

(Figure in taka)

Particulars
Sales
COGS
Gross profit
Administrative &selling
expense
Contribution to worker's
participation welfare
funds
Profit before interest and
tax

2003

2004

2005

2006

2007

2008

752,710,227 775,131,774 797,683,342 867,000,825 925,498,835 985,454,208

556,668,499 574,352,080 592,870,264 667,768,855 715,867,802 761,332,926
196,041,728 200,779,694 204,813,078 199,231,970 209,631,033 224,121,282
81,048,447 81,356,529 82,485,540 86,359,063 87,462,613 92,570,466
2,428,956

2,192,260

2,238,681

1,643,588

1,722,264

2,049,564

112,564,325 117,230,905 120,088,857 111,229,319 120,446,156 129,501,252

Interest expenses
Net profit before taxation
Income tax
Net profit after taxationtransferred to Statement
of changes in
shareholders equity

66,414,159
46,150,166
1,763,235
44,386,931

75,577,947
41,652,958
1,343,795
40,309,163

77,553,914
42,534,943
1,763,186
28,947,713

80,001,154
31,228,165
2,280,453
28,947,713

87723138
32,723,018
3,391,605
29,331,413

90,559,523
38,941,729
3,355,444
35,949,959

basic earnings per

share(Per value Tk.100)

55.4836638

50.3864538

36.1846413

36

37

45

800000

800000

800000

800,000

800,000

800,000

Number of shares used to

compute EPS

Comparative Balance Sheet Statement (2003-2008)

(Figure in taka)

Particulars

2003

2004

2005

2006

2007

2008

327,236,429 316,812,646 300,381,409 265,240,679

234,925,685

Net Assets:

Property, plant and equipment

344,755,402

nvestments(at cost)

18,680,000

18,880,000

18,210,000

16,480,000

15,280,000

15,000,000

Fixed assets

363,435,402 346,116,429 335,022,646 316,861,409 280,520,679

249,925,685

nventory

456,605,572 493,278,897 491,608,049 496,023,771 483,346,039

484,200,145

Trade Debtors(Account receivable)

15,220,740

29,956,569

42,501,462

45,504,079

59,711,981

44,242,900

Advanced, deposit &

prepayments(short term
nvestment)
Cash & cash equivalents

90,619,101

76,235,298

93,291,132

92,771,180 100,749,301

128,644,738

18,026,597

22,781,135

33,184,149

39,484,215

Current Assets

Current portion of long term loan

Short term loan from

bank(secured)
iabilities for goods

iabilities for expenses

32,660,159

16,173,069

580,472,010 622,251,899 660,584,792 673,783,245 676,467,480

673,260,852

45,625,000

50,102,521

21,709,923

386,748,095 417,645,508 418,762,505 424,111,655 413,406,543

409,262,567

46,533,312

44,209,923

8,276,626

13,609,529

10,816,582

12,891,489

12,723,372

12,666,636

16,246,147

20,263,963

8,413,189

6,304,038

7,339,692

8,618,255

3,443,926

5,210,687

4,471,647

817,653

364,776

109,713

76,119

169,468

15,850

31,244

2,238,681

2,582,715

3,534,006

4,937,086

nterest Payables

iabilities for other finance

41,875,000

1,645,449

Workers profit participation &

welfare fund
ncome tax payable

4,468,825

5,027,030

4,870,216

3,539,686

6,519,324

9,692,931

Unclaimed dividend

1,003,600

1,224,623

2,706,690

1,580,230

1,810,717

2,090,922

Current Liabilities

464,013,742 503,199,292 499,627,981 499,860,851 496,269,678

469,374,340

Net Current Assets

116,458,268 119,052,607 116,458,268 173,922,394 180,197,802

203,886,512

Total Assets

479,893,670 465,169,036 495,979,457 490,783,803 460,718,481

453,812,197

FINANCED BY :

Share Capital(common stock,100tk

per share,800000shares)
hare premium

Reserve &surplus

Proposed dividend

80,000,000

80,000,000

80,000,000

80,000,000

80,000,000

80,000,000

40,000,000

40,000,000

40,000,000

40,000,000

40,000,000

40,000,000

154,713,711 169,815,238 189,237,953 179,012,885 187,127,749

200,314,361

19,200,000

19,200,000

20,800,000

20,800,000

20,800,000

22,400,000

Shareholders Equity

293,913,711 309,015,238 330,037,953 338,191,745 346,718,576

361,323,351

ong term debt

Total Liabilities and stock equity

185,979,959 156,153,798 165,941,504 152,592,058 113,999,905

479,893,670 465,169,036 495,979,457 490,279,850 460,718,481

92,488,846
453,812,197

Comparative Ratio Analysis Statement (2003-2008)

(Figure in taka)

Particulars
Net Sales in Taka
% of Sales
Growth
COG

% of COG
Growth
Gross Profit in
Taka
% of Gross Profit
Growth
Gross Profit to
Sales
Net Profit in
Taka
% of Net Profit
Growth
Net Profit to
Sales

2003

2004

2005

2006

2007

2008

752,710,2
27

775,131,7
74

797,683,3
42

2.98%

2.91%

867,000,8
25
8.69%

925,498,8
35
6.75%

985,454,2
08
6.48%

556,668,4
99

554,372,0
80
-0.41%

592,874,2
92 667,768,8 715,867,8 761,332,9
55
02
26
6.95%
12.63%
7.20%
6.35%

196,041,7
28

200,779,6
94
2.42%

204,813,0
78
2.01%

199,231,9
70
-2.72%

209,631,0
33
5.22%

224,121,2
82
6.91%

26.04%

25.90%

25.68%

22.98%

22.65%

22.74%

44,386,93
1

40,309,16
3
-9.19%

28,947,71
3
-28.19%

28,947,71
3
0.00%

29,331,41
3
1.33%

35,949,95
9
22.56%

5.90%

5.20%

3.63%

3.34%

3.17%

3.65%

Fixed Asset
Current Asset
Current
Liabilities
Share owners
equity
Return on Equity
Fixed Assets
Turnover (
Times)
Current Ratio
Quick Ratio

363,435,4
02
580,472,0
10
464,013,7
42
293,913,7
11
15.10%
2.07

346,116,4
29
622,251,8
99
503,199,2
92
309,015,2
38
13.04%
2.24

335,022,6
46
660,584,7
92
499,627,9
81
330,037,9
53
8.77%
2.38

316,861,4
09
673,783,2
45
499,860,8
51
319,812,8
85
9.05%
2.74

280,520,6
79
676,467,4
80
496,269,6
78
327,927,7
49
8.94%
3.30

249,925,6
85
673,260,8
52
469,374,3
40
342,714,3
61
10.49%
3.94

1.25
1.00

1.24
1.16

1.32
1.21

1.35
1.26

1.36
1.24

1.43
1.34

2004
2.98%
-0.41%
2.42%

2005
2.91%
6.95%
2.01%

2006
8.69%
12.63%
-2.72%

2007
6.75%
7.20%
5.22%

2008
6.48%
6.35%
6.91%

-9.19%
5.20%
13.04%

-28.19%
3.63%
8.77%

0.00%
3.34%
9.05%

1.33%
3.17%
8.94%

22.56%
3.65%
10.49%

Particulars
2003
% of Sales Growth
% of COG Growth
% of Gross Profit
Growth
% of Net Profit Growth
Net Profit to Sales
Return on Equity

5.90%
15.10%

30.00%
20.00%

Value

10.00%
0.00%
-10.00%

2003

2004

2005

2006

2007

2008

-20.00%

% of
Sales
Growth

-30.00%
-40.00%

Particulars

Fixed Assets Turnover (

Times)
Current Ratio
Quick Ratio

2003

2004

2005

2006

2007

2008

2.07

2.24

2.38

2.74

3.30

3.94

1.25
1.00

1.24
1.16

1.32
1.21

1.35
1.26

1.36
1.24

1.43
1.34

4.00
3.50
3.00

Value

2.50

Fixed Assets
Turnover ( Times)

2.00

Current Ratio

1.50
Quick Ratio

1.00
0.50

Quick Ratio
Current Ratio
Fixed Assets Turnover ( Times)

0.00
2003

2004

2005

2006

Year

2007

2008

RATIO ANALYSIS

As the definition of ratio analysis we know that it involves method of calculating and
interpreting financial ratios to analysis and monitor the firms performance. The basic inputs to
ratio analysis are the firms income statement and balance sheet. In this report, financial ratio
analyses are conducted for wishing and evaluating the operating performance of the company
AMCL (PRAN). We analyze the ratio under the following categories:-

A. Liquidity Ratio
Net working capital
Current ratio
Quick ratio

Liquidity Ratio
Net
working
capital
B. Activity Ratio
Account receivable turnover
Average collection period
Inventory turnover
Average age of Inventory
Operating cycle
Total asset turnover

Current
ratio

Quick ratio

Account
Receivable
Turnover
Average
Collection
Period

Total Asset
Turnover

Activity
Ratio
Operating
Cycle

Inventory
Turnover

Average
Age of
Inventory

C. Leverage
Debt ratio
Debt to equity ratio
Times interest earned

Debt to
Equity
Ratio

Debt
Ratio
Times
Interest
Earned

Leverage

D. Profitability
Gross profit margin
Profit margin
Return on total asset
Return on common stock

Profit
Margin
Gross
Profit
Margin

E. Market value
Earnings per share
Price to earnings ratio
Book value per share
Dividends yield
Dividend payout

A. Liquidity Ratio:

Return on
Total
Assest

Profitability

Retun on
Common
Stock

Liquidity is a companys ability to meet its maturing short-term obligation. Liquidity is

essential to conducting business activity, particularly in times of adversely. In fact,
liquidity is a pre-requisite for the survival of the firm. Here we interpret the firms liquidity
with the help of some major ratios.
Calculation of Net working capital of AMCL (PRAN):
Net working capital is equal to current assets less current liabilities. Current assets are those
assets that are expected to be converted into cash or used up within 1 year. Current liabilities are
those liabilities that must be paid within1 year; they are paid out of current assets. Net working
capital policy is a safety cushion to creditors. A large balance is required when the entity has
difficulty borrowing on short notice. The ratio is
Net working capital=Current asset-current liabilities.

Fiscal years

2004

2005

Current Assets

622,251,899

660,584,792 673,783,245 676,467,480

Current Liabilities

503199292

Net working capital

119,052,607

2006

499627981

499860851

2007

2008
673,260,852

496269678

469374340

160,956,811 173,922,394 180,197,802

203,886,512

Net working capital

250,000,000
Dollar

200,000,000
150,000,000
100,000,000

Nrt working capital

50,000,000
0
2004

2005

2006
Year

2007

2008

Comment: In 2004 AMCL (PRAN)s working capital was 119052607tk, in 2008 AMCL
(PRAN)s net working capital is 203886512tk and eventually the amount raises from2004-2008.
The increase in net working capital is a favorable sign.
Calculation of

of AMCL (PRAN):

This ratio, which is subject to seasonal fluctuations, is used to measure the ability of an
enterprise to meet its current liabilities out of current assets. Current Ration is a measure of
margin of safety to creditors. The formula for the calculation of current ratio is

Fiscal years

2004

2005

2006

2007

2008

Current Assets

622,251,89
9

660,584,79
2

673,783,24
5

676,467,48
0

673,260,85
2

Current Liabilities

503199292

499627981

499860851

496269678

469374340

1.24

1.32

1.35

1.36

1.43

Current ratio

Current ratio
Time

1.50
1.40
1.30
1.20

Current ratio

1.10
2004

2005

2006

2007

2008

Year

Comment: In 2004 the current ratio was 1.24 and it started to increase and became 1.43 in 2008.
It is good for the company because a high current ratio is needed when the firm has difficulty
borrowing on short notice.

Calculation of

of AMCL (PRAN):

The acid-test ratio or quick ratio is the ratio between quick current assets and quick
current liabilities. The term quick asset refers to current assets which can be converted
into cash immediately or at a short notice without diminution of value. The current
assets which are excluded are; prepaid expenses and inventory. The exclusion of
inventory is based on the reasoning that is it is not easily and readily convertible into
cash. The ratio is

Fiscal years

2004

Cash

2005

2006

2007

2008

22,781,135

33,184,149

39,484,215

32,660,159

16,173,069

76235298

93291132

92771180

100749301

128644738

Account receivable

29,956,569

42,501,462

45,504,079

59,711,981

44,242,900

Current Liabilities

503199292

499627981

499860851

496269678

469374340

0.26

0.34

0.36

0.39

0.40

Short term investment

Quick ratio

Quick ratio
0.50

Time

0.40
0.30
0.20

Quick ratio

0.10
0.00
2004

2005

2006

2007

2008

Year

Comment: In 2004 the Quick Ratio was .26. It started to increase and became .40 in the year
2008. The increase in Quick Ratio indicates that the company is in a good position.

B. Activity Ratio:
Activity ratio measures the speed with which various accounts are converted into sales
or cash inflows or outflows. Here we measure the firms activity with the help of some
major ratios.
Calculation of Account Receivable turnover of AMCL (PRAN):
Account Receivables ratios consist of the accountants receivable turnover ratio and the average
collection period. The accountants receivable turnover ratio gives the number of times accounts
receivable is collected during the year. It is founded by dividing net credit sales (if not available, then
total sales) by the average accountants receivable. Average accounts receivable is typically found by
adding the beginning and ending accounts receivable and dividing by 2. Although average accountants
receivable may be computed annually, quarterly or monthly, the ratio is most accurate when the shortest
period available is used. In general, the higher the accounts receivable turnover, the better since the
company is collecting quickly from customers and these funds can then be invested. However, an
excessively high ratio may indicate that the companys credit policy is too stringent, with the company
not tapping the potential for profit through sales to customers in higher risk classes. The ratio is

Fiscal years

2004

2005

2006

2007

2008

Net credit sales

775,131,77
4

797,683,34
2

867,000,82
5

925,498,83
5

985,454,20
8

Average account
receivable

22588654.5

36229015.5

44002770.5

52608030

51977440.5

34.32

22.02

19.70

17.59

18.96

Account receivable
turnover

Account Receivable turnover

40.00
Time

30.00
20.00
Account receivable
turnover

10.00
0.00
2004

2005

2006

2007

2008

Year

Comment: From the chart we can see that the Pran group had an Account Receivable turnover
ratio 34.32 in 2004 which gradually started to decrease and it became 18.96 in 2008. It indicates
a serious problem in collecting from customers. The company needs to reevaluate its credit
policy, which may be too lax, or its billing and collection practices or both.

Calculation of Average Collection Period of AMCL (PRAN):

The average collection Period, or average age of accounts receivable, is useful in
evaluating credit and collection policies. It is arrived at by dividing the average daily
sales into accounts receivable balance. The formula of calculation of average Collection
Period is

Fiscal years

2004

Account receivable
turnover

34.3150927 22.0178034 19.70332357 17.59234921 18.9592677

Average collection
period(days)

2005

10.64

2006

16.58

2007

18.52

2008

20.75

19.25

Average collection period

Days

30.00
20.00
10.00

Average collection
period

0.00
2004

2005

2006

2007

2008

Year

Comment: In 2004 the average collection period was 10.64 or 11 days and it became 19.25 or 19
days in 2008. It is a danger for the company because the customer balance may become
uncollectible.

Calculation of Inventory Turnover of AMCL (PRAN):

Inventory turnover commonly measures the activity, or liquidity, of a firms inventory. It
calculated as

Fiscal years

2004

2005

2006

2007

2008

Cost of goods sold

574352080

592870264

667768855

715867802

761332926

Average inventory

474942235

492443473 471492523.2

489684905

483773092

Inventory turnover

1.21

1.46

1.57

1.20

1.42

Inventory turnover
2.00
Time

1.50
1.00
0.50

Inventory turnover

0.00
2004

2005

2006

2007

2008

Year

Comment: Holding excess inventory is not good for any firm as well as holding poor amount of
inventory is also bad. In 2004 the inventory turnover rate was 1.21 it reduced to 1.20 in 2005 and
after that it started to rise. It became 1.57 in 2008. The decline in inventory (in 2005) indicates
the stocking of goods. Having excess inventory means, the funds which could be invested
elsewhere are being tied up in inventory. But gradually inventory turnover has improved, which
is good for the organization.

Calculation of Average age of Inventory of AMCL (PRAN):

The average days required to count the inventory of the company is called average age of
inventory. The ratio is

Fiscal years

2004

Inventory turnover

1.20930934 1.20393567 1.416287263 1.461894771 1.57373971

Average age of Inventory

2005

301.83

2006

303.17

2007

257.72

2008

249.68

231.93

Average age of inventory

400.00
Days

300.00
200.00
Average age of
inventory

100.00
0.00
2004

2005

2006

2007

2008

Year

Comment: In 2004 the average age of inventory was 301.83 days and it was 303.17 in 2005. The
lengthening of the holding period shows a potentially greater risk of obsolescence.

Calculation of Operating Cycle of AMCL (PRAN):

The operating cycle of a business is the number of days it takes to convert inventory and receivables to
cash. Hence, a short operating cycle is desirable.
Operation cycle =

Fiscal years
Average collection
period(days)
Average age of Inventory
Operating cycle

2004

2005

2006

2007

2008

10.636719 16.5774938 18.52479348 20.74765545 19.2517984

301.825172 303.172344 257.716079 249.6759734 231.93162
312.46
319.75
276.24
270.42
251.18

Operating cycle
Days

400.00
200.00
Operating cycle

0.00
2004

2005

2006

2007

2008

Year

Comment: We know the operating cycle of a business is the number of days it takes to convert
inventory and receivables to cash. Hence, a short term operating cycle is desirable. Pran Group
had 312.46 days operating cycle in 2004 and it gradually started to decrease and became 251.18
in 2008. This is an unfavorable trend since an increased amount of money is being tied up in
noncash assets.

Calculation of total asset turnover of AMCL (PRAN):

The total asset turnover is helpful in evaluating a companys ability to use its base
efficiency to generate revenue. The total asset is calculated as follows;

Fiscal years

2004

Net sales

775,131,774 797,683,342 867,000,825 925,498,835 985,454,208

Average total asset

Total asset turnover

2005

2006

2007

2008

472531353

480574247

493381630

475751142

457265339

1.64

1.66

1.76

1.95

2.16

Total assat turnover

Times

3.00
2.00
1.00

Total asset turnover

0.00
2004

2005

2006

2007

2008

Year

C. Leverage Ratio:

Calculation of Debt Ratio of AMCL (PRAN):

Fiscal years
Total liabilities
Total assets
Debt ratio

2004

2005

659353090

2006

2007

665569485

652452909

465,169,036 495,979,457

490,783,803

1.42

1.34

1.33

2008

610269583

561863186

460,718,481 453,812,197
1.32

1.24

Debt ratio
Percentage

1.50
1.40
1.30
1.20

Debt ratio

1.10
2004

2005

2006

2007

2008

Year

Calculation of Debt to equity Ratio of AMCL (PRAN):

Fiscal years

2004

Total liabilities

2005

659353090

Stockholders' equity
Debt/equity ratio

2006

2007

665569485

652452909

309,015,238 330,037,953

337,687,792

2.13

2.02

2008

610269583

561863186

346,718,576 361,323,351

1.93

1.76

Debt to equity ratio

Percentage

2.50
2.00
1.50
1.00
0.50
0.00
Debt to equity ratio

2004

2005

2006

2007

2008

2.13

2.02

1.93

1.76

1.56

Comment: A high degree of debt in the capital structure may make it difficult for the company to
meet interest charges and principal payments at maturity. Also, excessive debt will result in less

1.56

financial flexibility since the company will have greater difficulty obtaining funds during a tight
money market. For Pran group the Debt/Equity ratio was 2.13 in 2004 and it gradually reduced
up to 1.56 in 2008. It is in a desirable position

Calculation of Times Interest Earns of AMCL (PRAN):

Fiscal years

2004

Earnings before interest

and tax

117,230,905 120,088,857

Interest expense

2005

2006

2007

111,229,319

120,446,156 129,501,252

75,577,947

77,553,914

80,001,154

87723138

90,559,523

1.55

1.55

1.39

1.37

1.43

Times interest earned

1.60
1.55
1.50
1.45
Time interest earned

1.40
1.35
1.30
1.25
2004

2005

2008

2006

2007

2008

Comment: Times interest earned ratio is a safety margin indicator in the sense that it shows how
much of a decline in earnings a company can absorb. . For Pran group the Time interest earned
was 1.55 in 2004 and it gradually reduced up to 1.43 in 2008. It is not a desirable position

D. Profitability Ratio

Calculation of Gross profit Margin of AMCL (PRAN):

Fiscal years

2004

Gross profit
Net sales

2005

2006

2007

200,779,694 204,813,078

199,231,970

209,631,033 224,121,282

775,131,774 797,683,342

867,000,825

925,498,835 985,454,208

Gross profit margin

0.26

0.26

0.23

2008

0.23

Gross profit margin

Percentage

0.28
0.26
0.24
0.22

Gross profit margin

0.20
2004

2005

2006
Year

2007

2008

0.23

Comment: Gross profit margin: From the above table and graph we got that the situation is quite
alarming. As the line of net profit margin of AMCL (PRAN), Year 2006, 2004, 2008 there is no
change in the net profit margin and this amount is less than the gross profit in2004.Which is not
good for the organization.

Calculation of Profit Margin of AMCL (PRAN):

Fiscal years

2004

2005

Net income

40,309,163

28,947,713

Net sales

775,131,774 797,683,342

Profit margin

0.05

2006

2007

28,947,713
867,000,825

0.04

2008

29,331,413

35,949,959

925,498,835 985,454,208

0.03

0.03

Percentage

Profit margin
0.06
0.04
0.02

Profit margin

0.00
2004

2005

2006

2007

2008

Year

Comments: For Pran group the Profit margin ratio was 0.05 in 2004 and it fluctuating over the
years and it is 0.04 in 2008. It signifies not a good position.

0.04

Calculation of Return on Total Asset of AMCL (PRAN):

The return on total asset (ROA) indicates the efficiency with which management has
used its available resources to generate income. The formula of calculation of ROA is

Fiscal years

2004

2005

Net income

40,309,163

28,947,713

Average total asset

2006

472531353 480574246.5

Return on total asset

0.09

2007

2008

28,947,713

29,331,413

35,949,959

493381630

475751142

457265339

0.06

0.06

0.08

0.06

Percentage

Return on total asset

0.10

0.00
2004

2005

2006

Return on total asset

2007

Return on total asset

2008

Year

Comment: In 2008 the company was in the upward situation considering the last three years. So
the situation is satisfactory.

Calculation of Return on Common Stock of AMCL (PRAN):

Earnings per share indicate the amount of earnings for each common share held. When
preferred stock is included in the capital structure, net income must be reduced by the
preferred dividends to determine the amount applicable to common stock.

Fiscal years

2004

2005

Net income

40,309,163

28,947,713

Average stock holders '

equity

301464474.5 319526595.5 333862872.5

Return on common stock

0.13

2006

2007

28,947,713

0.09

0.09

2008

29,331,413

35,949,959

342203184 354020963.5
0.09

Percentage

Return on common stock

0.15
0.10
0.05
0.00

Return on common stock

2004 2005
2006 2007

2008

Year

Comment: From the above data table and line chart, we can say that the company has a
fluctuating situation. So the company should try to improve it.

E. Market Value
A group of ratios relates the firms stock price to its earnings (or book value) per share. It also
includes dividend related ratios. They are summarized below
Calculation of Earnings per Share of AMCL (PRAN):

0.10

Earnings per share indicate the amount of earnings for each common share held. When
preferred stock is included in the capital structure, net income must be reduced by the
preferred dividends to determine the amount applicable to common stock.

Fiscal years

2004

2005

Net income

40,309,163

28,947,713

Common stock
outstanding

2006

2007

2008

28,947,713

29,331,413

35,949,959

800000

800000

800000

800,000

800,000

Preferred dividends

Earnings per share

50

36

36

37

45

Earning per share

Dollar

100
50
0
2004 2005
2006 2007
2008

Earning per share

Earning per share

Year

Comments: For Pran group the Earning per share was 50 in 2004 and it fluctuating over the years
and goes up to 45 in 2008. The decline in Earnings per share should be of concern to investors.

Calculation of Price to Earning Per of AMCL (PRAN):

Some ratios evaluate the enterprises relationship with its stockholders. The often quoted
price/earnings ratio is equal to the market price per share of stock divided by the earnings per
share. A high P/E multiple is good because it indicates that the investing public considers the
company in a favorable light. The ratio is

Fiscal years

2004

Market price per share

Earnings per share

2005
595

2006

2008

364

581

1,023

50.3864538 36.1846413 36.18464125

37

45

15.85

22.76

Price to earnings ratio

401

2007

11.81

11.08

10.06

Time

Price to earning ratio

25.00
20.00
15.00
10.00
5.00
0.00

Price to earning ratio

2004

2005

2006

2007

2008

Year

Comments: The ratio was 11.81 in 2004 and it has increased to 22.76 in 2008. So the rise in the
Price to earnings ratio indicates that the stock market has a favorable opinion of the company.

Calculation of Book Value per Share of AMCL (PRAN):

Book value per share is net assets available to common stockholders divided by shares
outstanding, where net assets are stockholders equity minus preferred stock. Comparing book
value per share with market price per share gives another indication of how investors regard the
firm. The ratio is

Fiscal years

2004

2005

Stockholders' equity

309,015,238 330,037,953

Preferred dividends

2006

2007

2008

337,687,792

346,718,576 361,323,351

Common stock
outstanding

800000

800000

800000

800,000

800,000

Book value per share

386.27

412.55

422.11

433.40

451.65

Book value per share

Dollar

500.00
450.00
400.00

Book value per share

350.00
2004

2005

2006

2007

2008

Year

Comments: The book value of the shares has been increasing since 2005, so we can say that the
companys stock is favorably regarded by investors.

Calculation of Dividend Yield of AMCL (PRAN):

Many stockholders are primarily interested in receiving dividends. The two pertinent ratios are
dividend yield and dividend payout. The ratio is given below

Fiscal years

2004

Market price per share

Dividends per share
Dividends yield

2005

2006

2007

2008

595

401

364

581

1,023

24

26

26

26

28

0.04

0.06

0.07

0.04

0.03

Year

Dividends yield
2008
2007
2006
2005
2004

Dividends yield
0.00

0.02

0.04

0.06

0.08

Percentage

Comment: From2004-2006 Dividend Yield was increasing, but after 2006 it is decreasing. So a
decline in these ratios signals a concern to both the stockholders and management.

Calculation of Dividend Payout ratio of AMCL (PRAN):

Fiscal years

2004

Dividends per share

2005
24

Earnings per share

2006

2008

26

26

28

50.3864538 36.1846413 36.18464125

37

45

0.71

0.62

Dividend payout

26

2007

0.48

0.72

0.72

Year

Dividend payout
2008
2007
2006
2005
2004

Dividend payout
0.00

0.20

0.40

0.60

0.80

Percentage

Comments: In 2007 the dividend payout ratio was 0.71 and in 2008 the ratio was 0.62. In 2007
dividend yield ratio was 0.04 and in 2008 the ratio was 0.03. So a decline in these ratios signals a
decline in the value of dividends and it will cause concern to both the stockholders and
management.