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Table of Contents

CHAPTER: 01......................................................................................................................... 2

1.1 Introduction: .................................................................................................................. 2

1.2 Objectives ...................................................................................................................... 2

1.3 Methodology.................................................................................................................. 2

1.3.1 Data Source ................................................................................................................ 2

1.3.2 Time Frame ................................................................................................................ 3

1.3.3 Scope of Report .......................................................................................................... 3

CHAPTER 2............................................................................................................................ 4

2.1 Analysis of Economic.................................................................................................... 4

2.2 Industry Analysis:.......................................................................................................... 4

2.2.1 Porter’s Five Forces Model: ....................................................................................... 4

CHAPTER 3............................................................................................................................ 7

3.1 Ratio Analysis of the Company:.................................................................................... 7

A. Liquidity Ratio:............................................................................................................... 7

B. Efficiency & Activity Ratio: ........................................................................................... 8

C. Leverage Ratio: ............................................................................................................. 10

D. Profitability Ratio: ........................................................................................................ 11

3.2 DuPont 3 factor............................................................................................................ 12

3.3 DuPont 5 factor............................................................................................................ 12

3.4 Common Size Analysis ............................................................................................... 13

3.5 Sensitivity Analysis ..................................................................................................... 14

CHAPTER 4.......................................................................................................................... 15

4.1 Conclusion ................................................................................................................... 15

References: ........................................................................................................................ 15

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CHAPTER: 01

1.1 Introduction:

Knowledge and learning become perfect when it is associated with theory and practice.

Theoretical knowledge gets its perfection with practical application. As our education

system predominantly text based, by studying real situation. Students can train and

prepare themselves for the job market. In today’s world practical work is highly needed

to gain idea, knowledge and experience from all over the world. Financial statement helps

a manager to take a better decision.

1.2 Objectives

AMCL and its brand name “Pran” have twin objective “Achieving social values with

sustainable pecuniary advantage for all our stakeholders”

Specific objective of this report:

To fulfill the practical of BBA Program.

To gain knowledge about ratio analysis.

To observe the components that affect the ratio analysis.

To prepare myself as eligible worker to enter into a competitive job market.

To calculate financial statement of the company.

To know the tactic to develop a ratio analysis.

1.3 Methodology

I have collect information from secondary sources. The secondary sources of information

include the firm’s annual report of the previous five years (2011-12-2015-16) & company

profile also Dhaka Stock Exchange. I have also collect information from the internet &

newspaper. Analysis of the financial performance of Agricultural Marketing Company

Ltd. of PRAN group has been evaluated from the data with the different financial ratios.

1.3.1 Data Source

To complete this report I take all information from the secondary source. Basically I take

all information from:

Dhaka Stock Exchange.

Company Web site.

Annual Report.

LinkedIn

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1.3.2 Time Frame

I took all information from company annual report (2011-2012—2015-2016)

1.3.3 Scope of Report

To complete this report I have done this following activities, this are:

Financial position & statement of comprehensive income.

Financial ratio.

DuPont analysis (3&5 Factor)

Common size analysis.

Free cash flow.

DDM method.

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CHAPTER 2

2.1 Analysis of Economic

The market-based economy of Bangladesh is the 46th largest in the world in nominal terms,

and 33rd largest by purchasing power parity.

Economic development remains hampered by the fragile rule of law. 9orruption and

marginal enforcement of property rights have driven people and enterprises out of the formal

sector. The government’s inability to provide basic public goods further limits opportunit ies

for business development and job growth.

GDP- $ 226 billion (nominal 2017)

$ 686 billion (PPP 2017)

GDP Growth Rate- 7.28%

GDP per capita $ 1,602

Inflation 6.7% (2016)

2.2 Industry Analysis:

After independence the food habit of Bangladeshi people has been changed a lot. Besides

traditional foods consumer of Bangladesh like to take western food also after 1980s. As a

result of global marketing this was not too hard for the consumers. Different foreign food

companies were established in Bangladesh. Beverage industry one of them. By year 2000

more than 12 beverage company operating business in Bangladesh and most of them are

foreign companies.

By industry analysis all shareholders and stakeholders can see the current performance of the

company.

2.2.1 Porter’s Five Forces Model:

The profit potential of each of the industries in which the firm is competing is important

because profitability of various industry differs systematically and predictably over time. The

average profitability of an industry is highly influenced by “5 forces”

1. Rivalry Among Existing Firm:

The average level of profitability is primarily influenced by the nature of rivalry among

existing firm in the industry. The competitor of the industry are fighting intensity to grab their

market share.

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Industry Growth Rate: Industry is growing rapidly as the consumers both in rural and urban

areas are becoming habituated more and more gradually on processed food than homemade

food items.

Balance of Competition: The number of firms in the industry is large. As there is no unique

dominate firms or several equal sized players to dominate the market, price competition is

severe.

Degree of Differentiation and Switching Cost: Products are almost identical and switching

cost of consumers is insignificant.

The Ratio of Fixed to Variable costs: The ratio of Fixed to Variable costs in this industry is

very high. So firms have an incentive to reduce prices to utilize installed capacity.

2. Threat of New Enters

As the industry is growing rapidly, there is possibility of moderate threat of potential new

entry of new companies though there is hardly any scope for earning abnormal profit because

there are a lot of firms in the industry and these firms are competing among themselves.

Again, though there is no significant legal barrier but due to high fixed cost, it has created a

high entry barrier for the potential new entrance.

3. Threats of Substitute Products

Relevant substitutes are not necessarily those that have the same form as the existing products

but those that perform the same function. The threats of substitutes depend on the relative

price and performance of competing product and services and on customers’ willingness to

substitute. Threat of substitute product in this industry is very low.

4. Bargain power of Buyers

Bargaining power of buyers is very high. Because the products are almost identical and

switching cost for the buyers are very low.

5. Bargain power of Supplier

Bargaining power of suppliers is very low as there are a lot of suppliers in the market.

On the basis of the analysis of the Five Forces we can say that the industry is currently

profitable though there are extreme rivalry among the firms in the industry, severe bargaining

power of the buyers and threat of new entries. Despite these factors, the industry has been

able to place itself in a profitable position because Industry is growing rapidly as the

consumers both in rural and urban areas are becoming habituated more and more gradually

on processed food than homemade food items.

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High Low

Low

High High Barriers

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CHAPTER 3

3.1 Ratio Analysis of the Company:

A. Liquidity Ratio: Liquidity ratios measure a company's ability to pay debt obligations and

its margin of safety through the calculation of metrics including the current ratio, quick ratio

and operating cash flow ratio. Current liabilities are analyzed in relation to liquid assets to

evaluate the coverage of short-term debts in an emergency.

LIQUIDITY RATIO

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Current Ratio

1.35 1.41 1.39 1.57 1.31

Quick Ratio 0.42 0.44 0.44 0.58 0.49 Cash Ratio 0.07 0.04 0.03 0.06 0.03

Interpretation:

Current Ratio: Evaluate the ability of company pay short term obligation using current asset.

Higher rate is better because firm ability to pay its bills. In 2014-2015 current ratio is

favorable to pay the obligation.

Quick Ratio: Measure the ability of company pay short term obligation using liquid types of

current assets. Higher is better for the company. In 2014-2015 is better for the company.

Cash Ratio: Measure the ability of company pay current liabilities using cash and marketable

securities. Higher is better because of current liability paid with cash and cash equivalents.

2011-2012 is better for company.

1.35 1.41 1.391.57

1.31

0.42 0.44 0.44 0.58 0.49

0.07 0.04 0.03 0.06 0.030

1

2

LIQUIDITY RATIO

Current ratio Quick ratio cash ratio

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B. Efficiency & Activity Ratio: Activity ratios are financial analysis tools used to gauge the

ability of a business to convert various asset, liability and capital accounts into cash or sales.

The faster a business is able to convert its assets into cash or sales, the more efficient it runs.

Activity ratios become more meaningful when compared to industry-average activity ratios.

Interpretation:

Account Receivable Turnover: Measure efficiency of extending credit and collecting same.

Higher is batter for efficient ratio and collection process. In 2012-2013 is better for company.

Average Collection Period: Represent average number of day it takes a company collect

receivable. Lower is better for average collection period. In 2012-2013 is suitable company.

It represent number of day.

ACTIVITY RATIO

2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015-

2016

A/R Turnover 24.9 26.8 23.0 22.7 17.7

Average Collection Period 14.49 13.46 15.62 15.87 20.36

Inventory Turnover 2.15 2.20 2.62 2.79 2.96

Inventory Processing

Period

167.1 163.7 137.2 129.0 121.7

A/P Turnover 339.93 389.28 357.58 144.80 339.91

Payable Payment Period 1.06 0.92 1.01 2.49 1.06

Operating Cycle 181.60 177.15 152.78 144.86 142.10

Cash Conversion Period 180.54 176.23 151.77 142.38 141.05

Total Asset Turnover 1.27 1.37 1.58 1.25 1.43

Current Asset Turnover 1.90 1.95 2.29 2.23 2.29

Fixed Asset Turnover 3.80 4.64 5.05 2.87 3.84

Equity Turnover 3.46 3.40 3.55 3.65 3.84

0.0

100.0

200.0

300.0

400.0

500.0

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

ACTIVITY RATIO

A/r Turnover Average collection period Inventory Turnover

Inventory processing period A/P Turnover Payable payment period

operating cycle cash conversion period Total asset turnover

current asset turnover fixed asset turnover equity turnover

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Inventory Turnover: Represent number of times inventory sold and replaced. A high ratio

indicate company is efficient in managing inventories. It represent number of times. In 2015-

2016 is favorable for the company.

Inventory Processing Period: Represent number of days inventory sit in warehouse.

Represent the number of day. The shorter is better for company. In 2015-2016 is good for

company.

Account Payable Turnover: Represent the number of time, company pay its account

payable during period. A low ratio is better because delay payment the money can be used

for more production process. 2014-2015 is better for company.

Payable Payment Period: It measure average number of day spent before paying obligat ions

to supplier. High is better for company. 2014-2015 is better for company.

Operating Cycle: A shorter operating cycle means company generate sales and collect cash

faster. 2015-2016 is better for company.

Cash Conversion Cycle: It represent how fast a company converts cash into more cash. The

number of Day Company pays for purchases sell them and collects the due. Shorter is better

for company. So 2015-2016 is suitable for company.

Total Asset Turnover: Measures efficiency of a company in generating sales using its asset.

Higher is better for company so 2013-2014 is favorable for company.

Current Asset Turnover: Measures firm’s ability of generating sales through its current

assets. Higher return is better for company so 2013-2014, 2015-2016 is favorable.

Fixed Asset Turnover: Higher return is better, using fixed asset to generate revenue. High

ratio indicate company spent less money in fixed asset. 2013-2014 is favorable for company.

Equity Turnover: Measure proportion of company’s sales to its stockholder’s equity. Higher

return is better for company. 2015-2016 is better for company.

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C. Leverage Ratio: A leverage ratio is any one of several financial measurements that look

at how much capital comes in the form of debt (loans), or assesses the ability of a company

to meet its financial obligations. The leverage ratio is important given that companies rely on

a mixture of equity and debt to finance their operations, and knowing the amount of debt held

by a company is useful in evaluating whether it can pay its debts off as they come due.

LEVERAGE RATIO

2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015-

2016

Debt Ratio 0.2 0.6 0.56 0.67 0.31

Debt Equity Ratio 0.17 0.07 0.04 0.12 0.05

Time Interest Earned 0.49 0.47 0.57 0.61 0.57

Fixed Cost Coverage

Ratio

0.49 0.47 0.57 0.61 0.57

Interpretation:

Debt Ratio: It indicate financial stability of a company. Higher return is better because

company get some tax benefit. In 2014-2015 is better for the company.

Debt Equity Ratio: represent the structure of the company. Company will able to serve its

loans properly. So in this case higher is better. In 2011-2012 is suitable for the company.

Time Interest Earned: Measure the number of times expense is converted to income. How

company cover its interest payments on pretax basis. Higher is better for company. 2014-

2015 is good for company.

Fixed Cost Coverage Ratio: Firms ability to satisfy fixed charge such as interest expense

and lease expanse. Higher is better for company. So 2014-2015 is better for company.

0.2

0.6 0.560.67

0.31

0.170.07 0.04

0.120.05

0.49 0.470.57 0.61 0.57

0.49 0.470.57 0.61 0.57

0

0.2

0.4

0.6

0.8

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

LEVERAGE RATIO

debt ratio Debt equity ratio Time interest earned Fixed cost coverage ratio

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D. Profitability Ratio: Profitability ratios are a class of financial metrics that are used to

assess a business's ability to generate earnings compared to its expenses and other relevant

costs incurred during a specific period of time. For most of these ratios, having a higher value

relative to a competitor's ratio or relative to the same ratio from a previous period indicates

that the company is doing well.

PROFITABILITY RATIO 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Gross Profit Margin 22% 22% 22% 21% 19%

Operating Profit Margin 14% 14% 11% 10% 9%

Net Profit Margin 4% 4% 3% 3% 3%

Return On Asset 6% 6% 6% 5% 5%

Return On Equity 12% 12% 11% 11% 10%

Interpretation:

Gross Profit Margin: How much gross profit is generate from sales? Higher rate is better

because firm produce good and service low cost with high sales. 2011-2012, 2012-2013,

2013-2014 is favorable for the company.

Operating Profit Margin: it refers to how much profit company makes after paying variable

cost. Higher margin reflect company is more efficient cost management or more profitabil ity

business. 2011-2012, 2012-2013 is suitable for company.

Net Profit Margin: It measure percentages of income derived from sales. Higher is better

because the more effectively company is control the cost. 2011-2012, 2012-2013 is favorable

for company.

Return On Asset: Measure return on investment. ROA used in evaluating management

efficiency using asset to generate income. Higher rate is better. Also lower return indicate

company has more asset but can’t invest properly. 2011-2012, 2012-2013, 2013-2014 is

favorable for the company.

22% 22% 22% 21% 19%

14% 14%11% 10% 9%

4% 4% 3% 3% 3%6% 6% 6%

5% 5%

12% 12% 11% 11% 10%

0%

5%

10%

15%

20%

25%

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

PROFITABILITY RATIO

gross pfofit margin operating profit margin net profit margin

return on asset return on equity

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Return On Equity: measure the percentage of income for every amount of owner’s equity.

Higher is better because it indicate how company use its investment to generate profit. 2011-

2012, 2012-2013 is suitable for company.

3.2 DuPont 3 Factor

DuPont Analysis 3 Factor

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

ROE 12% 12% 11% 11% 10%

Interpretations: 2011-2013 is the strong point of company. Others are the weak point of this

company and company must focus the weak point and improve it.

3.3 DuPont 5 Factor

DuPont Analysis 5 Factor

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

ROE 12% 12% 11% 11% 10%

Interpretation: We can see here also 2011-2013 is strong point and 2013-2016 is

competitively weak than other years.

12% 12% 11% 11% 10%

0%

5%

10%

15%

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

ROE

12% 12% 11% 11% 10%

0%

5%

10%

15%

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

ROE

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3.4 Common Size Analysis

Particular 2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015-

2016

Revenue 100% 100% 100% 100% 100%

Costs of Sales 78% 78% 78% 79% 81%

Gross Profit 22% 22% 22% 21% 19%

Distribution expenses 0% 4% 4% 4% 4%

Administrative expenses 8% 2% 2% 2% 2%

Depreciation 0% 0% 0% 0% 0%

Marketing and

Advertising Expenses

0% 3% 5% 5% 4%

Operating Profit/ (loss) 14% 14% 11% 10% 9%

Employee benefits

expenses

0% 0% 0% 0% 0%

Finance Expenses 9% 9% 7% 6% 6%

Other revenues and

profits

0% 0% 0% 0% 0%

Other expenses 0% 0% 0% 0% 0%

Profit / (loss) Before Tax 5% 4% 4% 4% 3%

Income Tax Expense 1% 1% 1% 1% 1%

Profit / (loss) for the

Period

4% 4% 3% 3% 3%

Earnings Per Share 0% 0% 0% 0% 0%

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3.5 Sensitivity Analysis

Base Case of AMCL

Particular NAM TAT EM ROE

2011-2012 0.04 1.27 2.73 0.14

2012-2013 0.04 1.37 2.48 0.14

2013-2014 0.03 1.58 2.25 0.11

2014-2015 0.03 1.25 2.91 0.11

2016-2016 0.03 1.43 2.68 0.11

Sensitivity of NPM with ROE

Particular NPM TAT EM ROE Changes

2011-2012 0.04 1.27 2.73 0.14 0

2012-2013 0.04 1.27 2.73 0.14 0

2013-2014 0.03 1.27 2.73 0.10 0.28

2014-2015 0.03 1.27 2.73 0.10 0

2016-2016 0.03 1.27 2.73 0.10 0

Average 7%

Sensitivity of TAT with ROE

Particular NPM TAT EM ROE Changes

2011-2012 0.04 1.27 2.73 0.14 0

2012-2013 0.04 1.37 2.73 0.15 0.08

2013-2014 0.04 1.58 2.73 0.17 0.15

2014-2015 0.04 1.25 2.73 0.14 -0.21

2016-2016 0.04 1.43 2.73 0.16 0.14

Average 4%

Sensitivity of EM with ROE

Particular NAM TAT EM ROE Changes

2011-2012 0.04 1.27 2.73 0.14 0

2012-2013 0.04 1.27 2.48 0.13 -0.09

2013-2014 0.04 1.27 2.25 0.11 -0.09

2014-2015 0.04 1.27 2.91 0.15 0.29

2016-2016 0.04 1.27 2.68 0.14 -0.08

Average 3%

Interpretations: Company much use the NPM also the amount of NPM is competitively

better than others.

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CHAPTER 4

4.1 Conclusion

Manufacturing industry reflect the whole economy of a country because of its linkage with

all other sector. It plays a vital role in developing countries like Bangladesh which is now

transforming from agriculture based economy to industry based economy. Being the largest

manufacturing company it must operate at its best with utmost efficiency to contribute in the

economic development of the country. Presence of sound corporate governance and its proper

practices is the key requirement for efficient and stable business. Country like Bangladesh

where prudential regulations and supervision is inadequate to provide a safety net for the

stakeholders of the business, special attention on corporate governance is required on a

priority basis. Various initiatives have been taken by BSEC to improve the CG practices. Still

business has considerable scope to include stringent financial requirements as well as

corporate governance factors. Each factors identified in this study should be examined

carefully in order to improving corporate governance practices among the company for

strengthening the manufacturing sector.

References:

http://www.dsebd.org/displayCompany.php?name=AMCL(PRAN)

http://www.amclpran.com/

https://www.linkedin.com/company/27064544/