Financial Statement Analysis and Valuation of

Padma Oil Company Limited and Jamuna Oil Company Limited

Spring, 2016
Master of Business Administration (MBA)
Department of Finance
Faculty of Business Studies

University of

Dhaka

Report
on
Financial Statement Analysis and Valuation of
Padma Oil Company Limited and Jamuna Oil Company Limited

F-603: Financial Statement Analysis and Valuation

Submitted To:
Name
Mahmood Osman Imam

Designation
Professor

MBA, Ph.D., FCMA

Department of Finance

Submitted By:
Name
Md. Bellal Hossain Raju
Md. Mahfuzur Rahman
A. H. M. Asaduzzaman
Nazmul Kawser Momtazi

MBA Program (Evening)

Department of Finance
Dhaka, Bangladesh
April 20, 2016

Faculty of Business Studies

University of Dhaka

ID No.
27033
27046
27048
27093

Letter of Transmittal
20 April, 2016
Mahmood Osman Imam
Professor,
Department of Finance,
Faculty of Business Studies,
University of Dhaka.
Subject: Submission of Report on Financial Statement Analysis and Valuation of Padma Oil
Company Limited and Jamuna Oil Company Limited.
Dear Sir,
With best respect and honour, we would like to inform you that we have completed our report on
Financial Statement Analysis and Valuation of Padma Oil Company Limited and Jamuna Oil
Company Limited. It is an immense pleasure for us to place the same before you.
We made every endeavour to prepare this report and tried our level best to accumulate relevant and
insightful information. It is a great experience for us to work on this topic. We have tried to make the
report vivid and comprehensive within the scheduled time and limited resources.
We sincerely hope that this report will help you to evaluate us. We will be obliged to clarify any
matter or to provide any further information regarding this report.
Thanking you for your kind supervision.
Sincerely yours,

Md. Bellal Hossain Raju

Md. Mahfuzur Rahman
A. H. M. Asaduzzaman
Nazmul Kawser Momtazi

Acknowledgement
We would like to express our deep gratitude to the almighty Allah for fruitfully preparing this report.

First and foremost, we would like to thank to our course instructor Dr. Mahmood Osman Imam for
the valuable guidance and advice. He inspired us greatly to work in this report. His willingness to
motivate us contributed tremendously to our work. We also would like to thank him for his valuable
time by helping us for this report.
Besides, we would like to thank those who helped us. We are very thankful to them as they gave their
precious time for us. Their cooperation really helps us to analyze and finalize this report.
Finally, an honorable mention goes to our families and friends for their understandings and supports
on us in completing this report. Without helps of the particular that mentioned above, we would face
many difficulties while doing this report.

Executive Summary
Padma Oil Company Limited and Jamuna Oil Company Limited are the pioneers in the fuel industry
of Bangladesh and their success can be traced back over the last century. Their contribution in the fuel
industry and overall economic development of Bangladesh is praiseworthy. After decades of operation
and many transitions it is time to look back into their financial strengths and weaknesses and evaluate
their current performance and future prospects. This report thus provides a deep insight into the
companies financial statements, profitability, growth and earning quality.
In the report, the financial statements of both companies have been reformulated by segregating the
operating activities from the financial activities, then analysis have made on the measure of
profitability by calculating the number of ratios. Their return of common equity as well as the
operating activities has been measured and factors behind the changes have also been expanded and

interpreted. In the process data have been broken down into different levels and each ratio has been
leveled into different forms of disintegration and decomposition to, to make a vivid inference. With
the profitability analysis, earnings have been measured, by decomposing the different components of
income statement into core and other activities and thus the sustainability of the earnings have been
tested.
The analysis concluded, with the companies being turned to cash cow with no further growth prospect
with sharp decline in earnings and profitability. Moreover, it was also found that Jamuna Oil
Company Limited has been managing its earnings highly through financing activities and accrual
accounting. Additionally, both the companies are holding more of net financial assets than net
operating assets, which is contributing towards a higher comprehensive income over the years. The
companies are holding unutilized cash that could have been used for other investment activities and
overseas ventures. It is recommended to pay more in cash dividends to loosen the excess funds to
compensate the shareholders.