Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Assignment #01
FIN 440
Sec 03
Prepa
red For
Mirza M. Ferdous (MzF)
Lecturer,
North South University.
Prepared By
Name
ID
1320775030
Sanzida Rahman
1220027030
Nowshin Haque
1310200630
Shahriar Islam
1220087030
Ittahadul Muslimeen
1220088030
1221175030
Date: 05.07.2015
ASSETS:
Non-Current Assets:
Property, Plant and Equipment-Carrying
Value
Capital Work-in-Progress
Investment - Long Term (at Cost)
Investment in Marketable Securities
(Fair Value
Total Non-Current Assets
Current Assets:
Inventories
Trade Debtors
Advances, Deposits and Prepayments
Short Term Loan
Cash and Cash Equivalents
Total Current Assets
TOTAL ASSETS
SHAREHOLDERS EUQUITY &
LIABILITIES
Shareholders' Equity:
Share Capital
Share Premium
General Reserve
Gain on Marketable Securities
(Unrealized)
Retained Earnings
Percentage(%)
of Sales- BDT
Partial proforma
calculationBDT (2015)
11,156,871,302
3,232,773,494
3,661,121,331
730,700,453
18,781,466,580
2,345,389,488
757,757,419
530,659,925
2,047,985,968
2,086,275,498
7,768,068,298
26,549,534,878
4,819,992,630
2,035,465,000
105,878,200
417,680,687
14,898,500,111
18,781,466,580
11.22%
3.62
2.54
9.79
9.98
2,931,736,860
947,196,773.8
663,324,906.3
2,559,982,460
2,607,844,373
9,710,085,373
28,491,551,953
22,277,516,628
22,277,516,628
136,440,907
718,957,750
855,398,657
855,398,657
114,638,033
167,574,698
1,717,013,624
20,463,398
1,396,929,840
3,416,619,593
26,549,534,878
8.2111434
0.0978605
2,146,267,030
25,579,247.5
26,983,904,134
2014- BDT
GROSS TURNOVER
Less: Value Added Tax
NET TURNOVER
COST OF GOODS SOLD
GROSS PROFIT
Operating Expenses:
Selling and Distribution Expenses
Administrative Expenses
Financial Expenses
Total Operating Expenses
PROFIT FROM OPERATIONS
Other Income
PROFIT BEFORE WPPF
Allocation for WPPF
PROFIT BEFORE TAX
Provision for Income Tax
Provision for Deferred Income Tax
PROFIT AFTER TAX FOR THE YEAR
24,193,356,807
3,282,582,981
20,910,773,826
(11,727,992,671
)
9,182,781,155
(3,281,533,895)
(723,250,031)
(169,180,826)
(4,173,964,752)
5,008,816,403
770,866,425
5,779,682,828
(275,222,992)
5,504,459,836
1,329,682,520
142,966,048
4,031,811,268
Percentage(%)
of Sales- BDT
Partial proforma
calculationBDT (2015)
100%
56.09
26,138,467,283
(14,659,990,839
)
15.69
3.46
0.81
(4,101,917,369)
(904,062,538.8)
(211,476,032.5)
3.69
(963,583,031.3)
1.32
(344,028,740)
24.16
2.59
1,662,103,150
178,707,560
119,735,202
2.97
149,669,002.5
4,151,546,470
19.85
5,189,433,088
3. CASH RATIO
2.273612
1.587147
CASH /CL
0.610626
13.2267
4
1) Current ratio
Interpretation:
Square Company has $2.273612 in current assets for every $1 in current liabilities,
which measures their ability to meet up their current liabilities.
Compare:
If the current ratio is higher than industry average, the company has more current
assets than the other companies to meet up their current liabilities. If the current ratio
is lower than industry average, the company has fewer current assets than the other
companies to meet up their current liabilities.
Decision:
If the current ratio is lower than industry average, Square should stop borrowing
short term funds.
If the current ratio is higher than industry average, Square should increase their short
term debts.
2) Quick ratio
Interpretation:
Square Company current assets except inventory are 1.587147 times higher than
their current liabilities.
Compare:
If Quick ratio is higher than industry average, the company has more liquid assets to
cover its short term debts than other companies. If Quick ratio is lower than industry
average, the company has less liquid assets to cover its short term debts than other
companies.
Decision:
If Quick ratio is lower than industry average, Square should stop borrowing short
term funds as they dont have much liquid assets.
If Quick ratio is higher than industry average, Square should increase their short
term debts as they have much liquid assets than the others.
3) Cash ratio
Interpretation:
Square company has $0.610626 of liquid assets (Cash) to cover short term debts,
for every 1$ in current liabilities.
Compare:
If cash ratio is higher than industry average, the company has more liquid assets to
cover its short term debts than other companies. If cash ratio is lower than industry
average, the company has less liquid assets to cover its short term debts than other
companies.
Decision:
If Cash ratio is lower than industry average, Square should increase cash on hand.
If Cash ratio is higher than industry average, Square can invest their cash into
marketable securities.
4) Average collection period/DSO:
DSO 250 days means it took 250 days to collect money on its credit sales.
Compare:
If DSO is lower than industry average which means the company takes less time to
collect money on credit sales than other firms. If DSO is higher than industry average
which means the company takes more time to collect money on credit sales than
other firms.
Decision:
If DSO is lower than industry average, the company can increase their accounts
receivable means they can sell more on credit.
If DSO is higher than industry average, the company can decrease their accounts
receivable means they can sell less on credit..
ACTIVITY RATIOS
Sales /
Inventory
Sales / Avg
Total Asset
Current Asset /
Total Asset
Fixed Asset /
Total Asset
Sales /
Receivables
Sales / Avg
Fixed Asset
8.91569
4
0.78761
4
0.29258
8
0.70741
2
27.5956
1.11337
3
5) Inventory turnover
Inventory turnover 8.915694 times means, Square replenishes its inventory
8.915694 times during a year.
Compare:
If inventory turnover is higher than industry average, the company can convert its
inventory to sales more quickly than others. If inventory turnover is lower than
industry average, the company has excess inventory than others.
Decision:
If inventory turnover is lower than industry average, Square should decrease their
inventory.
If inventory turnover is higher than industry average, Square should increase their
inventory.
Decision:
If Current asset intensity ratio is lower than industry average, Square can acquire
more current assets only if the current ratio is greater than industry average. If
current ratio is lower than industry average then we cant acquire more assets.
8) Capital intensity ratio:
Interpretation:
CIR is 0.707412 means 70.74% of total assets are fixed assets.
Compare:
If Capital intensity ratio>industry average, the company has more fixed assets than
the other companies. If CIR < industry average, the company has less fixed assets
than the others.
Decision:
If CIR < industry average, the company can acquire more fixed assets due to over
utilization of assets.
If CIR> industry average, the company cant acquire more fixed assets due to lower
utilization of assets.
9) Receivable Turnover Ratio
Interpretation:
Receivable turnover ratio, 27.59 means, the company collects its receivables about
27.59 times during a year.
Compare:
If receivable turnover ratio is higher than industry average, the company is more
efficient in collecting receivables than other firms. If its lower than industry average,
the company is less efficient in collecting receivables than other firms.
Decision:
If the ratio is higher than industry average which means Square has been collecting
its receivables frequently throughout the year. If the ratio is lower than industry
average, Square need to be faster in collecting its receivables.
Decision:
If fixed asset turnover is lower than industry average, Square is under utilizing their
fixed assets.
If fixed asset turnover is higher than industry average; Square is over utilizing their
fixed assets.
DEBT RATIOS
11. Debt Ratio
12. Debt Equity Ratio
Total Debt /
Total Asset
Total Liability /
Total Equity
0.16090
7
0.19176
4
Compare:
If debt ratio is higher than industry average, the company has more debt than other
companies. If debt ratio is lower than industry average, the company has less debt
than other companies.
Decision:
If debt ratio is lower than industry average, Square can borrow money. To do so, they
should have higher interest cost capacity and Fixed payment coverage ratio (Being
able to pay interest, lease payment, principal payment, tax, preferred stock) than
industry average.
If debt ratio is higher than industry average, Square cant more borrow money. So
they can decrease their short term debts.
Interpretation:
0.191764 of total equity is financed by total debt.
Compare:
If debt-equity ratio is higher than industry average, the company has more debt than
other companies. If debt ratio is lower than industry average, the company has less
debt than other companies.
Decision:
If debt-equity ratio < industry average, it indicates less risk to investors and creditors
to borrow short term debts.
if debt-equity ratio > industry average, it indicates high risk to investors and creditors
since debt can be a far more expensive form of financing than equity financing which
requires regular interest payments. So they shouldnt borrow money.
PROFITABILITY RATIOS
13. Profit Margin
14. Return on Asset
15. Return On Equity
Net Income /
Sales
Net Income /
Total Asset
Net Income /
Total Equity
0.19281
0.15186
0.18098
1
Decision:
If profit margin< industry average, a company can increase net income through
reducing expenses. If profit margin > industry average, it indicates how well a
company manages its expenses relative to its net sales.
Decision:
If ROA is lower than industry average, then the company can increase net income
through reducing expenses.
If ROA is higher than industry average, square need to check total assets turnover
ratio to determine whether company is underutilizing or over utilizing their assets. If
Total asset turnover is higher than industry average, Square is over utilizing their
assets. If Total asset turnover is lower than industry average, Square is under
utilizing their assets.