Term paper on

Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL)

Date of Submission: December 22, 2009

SUBMITTED TO

Mr. Asaduzzaman ArmanLecturer

Department of AccountingSchool of BusinessUITS, Chittagong

SUBMITTED BY

A. F. M. NAHID PARVEZID: 09535013

Batch 32 (RMBA)Member of Group 3

Course TitleFinancial Accounting

Course code: 505

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Group Members

Group No: 3

Name ID

Kazi Ahsanul Hoque 09535029

Riton Nondi 09535036

Shakil Mahmud morshed 09535021

A.F.M. Nahid Parvez 09535013

Md. Mazharul Islam 09535028

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Letter of Transmittal

Date: 22nd December, 2009

Mr. Asaduzzaman ArmanLecturerDepartment of AccountingSchool of BusinessUniversity of Information Technology & ScienceChittagong. Subject: Submission of Term Paper on Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL).

Dear Sir,

Here we are submitting our Term Paper on “Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL)” prescribed by you in your course “Financial Accounting”. For this Purpose, we have gone through internet, company annual report, articles and class lecture sheets for the relevant information of the assigned topic.

Please call me for any further information at your convenient time and place.

Yours truly,

Group: 03Semester-IMasters of Business AdministrationUniversity of Information Technology & Science

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Acknowledgement

At first we desire to express our deepest sense of gratitude of almighty Allah.

With profound regard we gratefully acknowledge our respected course teacher Mr. Asaduzzaman Arman Lecturer, School of Business Studies for his generous help and day to day suggestion preparing the term paper.

We like to give thanks especially to our rest of teacher, friends, class mate and many individuals for their enthusiastic encouragements and helps during the preparation of this Term Paper by sharing ideas regarding this subject and for their assistance in typing and proof reading this manuscript.

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Table of Contents

1. Introduction

► 1.01 Executive Summary ...............................………...……....…………... 06

► 1.02 Objective of the Study ……....….…………….............................…. 07

2. Description

► 2.01 Company Profile (Meghna Cement Mills Ltd.) ……........…......09-10

► 2.02 Profit & Loss ....................................................................................... 11

► 2.03 Balance Sheet ……...…………… …. ............................................... 12

► 2.04 Ratio Analysis …........................................................................... 13-14

► 2.05 Company Profile (Confidence Cement Ltd.) …………................ 15

► 2.06 Profit & Loss ….………………............................................................. 16

► 2.07 Balance Sheet ……...……................................................................. 17

► 2.08 Ratio Analysis ……........................................................................ 18-19

3.01 Summary ………………………………………............................................… 20

4.01 References ………………………………….............................................….. 20

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Chapter – 2

Chapter–1 Page

Chapter – 3

Executive Summary

This report is an assigned job as a partial fulfillment of course requirement by honorable Course teacher Mr. Asaduzzaman Arman Lecturer, School of Business, University of Information Technology & Science, Chittagong . It is the optimum aggregated outcome of 5 pupils’ about “Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL)”. The goal of this report is to explore the Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL).

Cement is a basic material for building and civil engineering construction. Output from the cement industry is directly related to the state of the construction business in general and therefore tracks the overall economic situation closely. After mining, grinding and homogenization of raw materials, the first step in cement manufacture is calcinations of calcium carbonate followed by burning the resulting calcium oxide together with silica, alumina and ferrous oxide at high temperatures to form clinker. The clinker is then ground or milled together with gypsum and other constituents to produce cement.

Bangladesh is an attractive market for cement factories, owing to its large and concentrated population, low penetration of cement factory. This paper presents the status and prospects of the Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL).

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Objective of the Study

As a business expectative in future, we should have to gather experience beside our survey. We should not concern our lesson only in classroom but to implement it in practical life that will help us in our future life. A clear objective help in preparation of well decorated report in which other take the right type of decision .So, we identifying objectives is very much important. Our purpose of preparing the report is:

To know the Ratio Analysis of Meghna Cement Mills Ltd. (MCML) & Confidence Cement Ltd. (CCL). Infrastructure in Bangladesh.

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INTRODUCTION

Cement sector is the largest increase sector in Bangladesh. There are 70+ cement factories in Bangladesh and daily production capacity is 16.687 Million MT (as of August 02, 2006). It is increasing day-by-by.

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COMPANY PROFILE

MEGHNA CEMENT MILLS LTD. (MCML)

COMPANY BRIEF

The Meghna Cement Mills Limited (MCML) was the first undertaking Bashundhara Group in the manufacturing sector. This enterprise produces world-class cement and as testimony to this, stands the fact that the concern has been awarded the ISO-9001 certification for sustained quality control effort. The company markets its cement under the registered trademark of “King Brand”.

CORPORATE DIRECTORY

BOARD OF DIRECTORS

Mr. Ahmed Akbar Sobhan Managing DirectorMrs. Afroza Begum DirectorMr. Sadat Sobhan DirectorMr. Shafiat Sobhan DirectorMr. Sayem Sobhan DirectorMr. Mahaboob Morshed Hassan DirectorMr. Md. Minhaz Zia Nominated by SABINCOMr. Md. Habibur Rahman Nominated by ICBLt. Col. (Rtd.) Manish Dewan Independent Director

COMPANY SECRETARYMr. Md. Khalequzzaman

BANKERSJanata Bank

Janata Bhaban Corporate Branch110, Motijheel C/A, Dhaka.

IFIC Bank Ltd.Dhanmondi Branch Ltd.

Social Investment Bank Ltd.Principle Branch

Dilkusha C/A, Dhaka.

AUDITORSM/S Syful Shamsul Alam & Co.

15, Dilkusha C/A (6th Floor)Dhaka-1000.

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YEAR OF INCORPORATIONMarch 1992

YEAR OF COMMERCIAL PRODUCTIONJanuary 1996

YEAR OF LISTINGDhaka Stock Exchange : 1995Chittagong Stock Exchange : 1996

BUSINESS LINESCement Manufacturing

AUTHORIZED CAPITALTk. 400,000,000.00PAID-UP CAPITAL

Tk. 225,004,000.00

CORPORATE OFFICEBashudhara City

13/Ka/1, Panthapath, Dhaka.

FACTORYMongla Port I/A, Mongla, Bagerhat.

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MEGHNA CEMENT MILLS LTD. (MCML)PROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2007.

PARTICULARS 2007 (TK) 2006 (TK)

Sales – Net 2,824,358,689 3,367,396,868Less : Cost of Goods Sold 2,480,693,391 3,075,067,567

Gross Profit 343,665,298 292,329,301

Less: Other Expenses : 65,286,718 55,719,095 Administrative Overhead 47,083,157 34,705,020 Selling and Distribution Overhead 18,203,561 21,014,075

Trading Profit 178,378,580 236,610,206Less : Financial Expenses 99,849,906 120,127,996Operating Profit Before Other Income 178,528,674 116,482,210Add : Non Operating Income 1,033,855 663,917Total Profit 179,562,529 117,146,127Deferred Expenses Write-Off (4,700,129) (4,700,129)Profit/Loss on Sale of Fixed Assets 155,606 ------Profit during the year before W.P.P.F. 175,018,006 112,445,998Provision for W.P.P.F. (8,334,191) (6,082,369)Net Profit before Income Tax 166,683,815 106,363,629Provision for Income Tax (18,502,792) (1,266,922)Current Tax (16,885,532) (1,266,922)Deferred Tax (Current Year) (1,617,260)Net Profit after Income Tax (148,181,023) 105,096,707Tax Holiday Reserve (41,657,922) (48,658,954)Profit after Tax Holiday Reserve 106,523,101 56,437,753Earning Per Share (Basic) 65.86 46.71

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MEGHNA CEMENT MILLS LTD. (MCML)BALANCE SHEET

AS AT 31ST DECEMBER, 2007.

PARTICULARS 2007 (TK) 2006 (TK)

ASSETS:NON CURRENT ASSETS: 1,307,816,629 1,378,737,392 Fixed Assets at Cost Less Acc. Dep. 1,252,093,379 1,318,304,013 Deferred Revenue Expenditure 55,733,250 60,433,379

Current Assets: 1,564,372,223 1,001,283,610Stores and Spares 65,207,744 63,302,067Stock-in-Trade 884,801,364 490,771,594Trade Debtors 240,164,354 255,117,098Adv, Deposits & Prepayments 290,731,537 104,737,236Cash and Bank Balances 83,467,224 87,355,615

Total Assets 2,872,188,852 2,380,021,002

EQUITY & LIABILITIES:Shareholders Fund 619,228,958 527,298,935Share Capital 225,004,000 225,004,000General & Loan Redemption Reserve 166,000,000 166,000,000Tax Holiday Reserve 170,825,416 185,418,494Retained Earnings 57,399,542 (49,123,559)Non-Current Liabilities 833,152,269 787,868,674Long Term Loan 619,319,928 582,261,549Gratuity Payable 18,553,846 11,945,890Deferred Tax Liability 195,278,495 193,661,235

Current Liabilities 1,419,807,625 1,064,853,393Cash Credit Account 616,684,231 604,881,809Loan Against Trust Receipt 490,432,655 276,415,369Payable for Sundry Express 32,272,466 17,268,943Payable for Goods Supplied 91,098,968 92,905,664Payable for Other Finance 90754714 55,671,032Advance Received against Sales 98,564,591 17,710,576

Total Equity & Liabilities 2,872,188,852 2,380,021,002

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MEGHNA CEMENT MILLS LTD. (MCML)RATIO ANALYSIS FOR THE YEAR 31ST DECEMBER, 2007.

1. Current Ratio =

=

= 1.1 : 1.

2. Quick Ratio =

=

= 0.85 : 1.

3. Gross Profit Ratio =

=

= 12.16%.

4. Net Profit Ratio =

=

= 5.90%.

5. Inventory Turnover Ratio =

=

=

= 43.35 times

6. Debt to Asset Ratio =

=

=

= 0.79 : 1.

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7. Return on Capital Employed =

=

= 13.45%.

8. Return on Asset =

=

= 5.91%.

COMPANY PROFILE

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CONFIDENCE CEMENT LIMITED (CCL)

COMPANY BRIEF

Confidence Cement Limited (CCL) is the first private sector cement manufacturing company in Bangladesh established in early 90’s with having 4,80,000 MT annual production capacity at Chittagong 16 K.M. away from Chittagong port, beside Dhaka Chittagong highway. CCL is the first ISO-9002 certified cement in Bangladesh.

CORPORATE DIRECTORY

BOARD OF DIRECTORS

Engr. Rezaul Karim Chairman & Managing DirectorMr. Rupam Kishore Barua DirectorMr. Shah Md. Hasan DirectorMrs. Runu Anwar DirectorMr. Imran Karim DirectorMr. Abdul Gaffar Dubash Independent Director

COMPANY SECRETARYMr. Newaz Md. Iqbal Yousuf

BANKERSAB Bank Limited

Prime Bank LimitedStandard Chartered Bank

IFIC Bank LimitedMercantile Bank Limited

United Commercial Bank Limited

AUDITORSRahman Mostafa Alam & Co.

Chartered Accountants

REGISTERED OFFICEIsphani Bulding (3rd Floor)

Sk. Mujib Road, Agrabad C/A,Chittagong.

LIASON OFFICEIspahani Building (6th Floor)14-15 Motijheel C/A, Dhaka.

FACTORYMadambibirhat, Bhatiary,

Sitakuda, Chittagong.

CONFIDENCE CEMENT LIMITED (CCL)PROFIT & LOSS ACCOUNT

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FOR THE YEAR ENDED DECEMBER 31, 2007.

PARTICULARS 2007 (TK) 2006 (TK)

Sales – Net 1,102,415,705 950,502,498Less : Cost of Goods Sold 972,743,302 844,444,070Gross Profit 129,672,403 106,058,428Less: Expenses : Administrative 25,165,031 21,341,906 Selling and Distribution 8,873,003 7,723,865

34,038,034 29,065,771

Trading Profit 95,634,369 76,992,657Less : Financial Charges 19,968,848 17,559,894Operating Profit Before Other Income 75,665,521 59,432,763Add : Other Income 7,057,856 6,179,916Operating Profit before income tax and W.P.P.F. 82,723,377 65,612,679Less: Contribution to worker’s profit participation fund (@ 5%)

3,939,208 3,280,634

Net Profit before Tax 78,784,169 62,332,045Less: Provision for Income Tax Current Year Deferred Tax

23,600,0002,500,000

18,700,0002,500,000

26,100,000 21,200,000Net Profit after Tax 52,684,169 41,132,045Inappropriate profit brought forward 1,509,510 1,377,465Profit Available for appropriation 54,193,679 42,509,510AppropriationLess: Proposed Dividend 28,500,000 28,500,000Transferred to dividend equalization fund 20,000,000 12,500,000

48,500,000 41,000,000

Inappropriate profit for the year transferred to statement changes in shareholder’s equity 5,693,679 1,509,510

Earning Per Share 27.73 21.65

CONFIDENCE CEMENT LIMITED (CCL)BALANCE SHEET

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AS AT 31ST DECEMBER, 2007.

PARTICULARS 2007 (TK) 2006 (TK)

SOURCE OF FUNDSShareholder’s FundShare Capital 190,000,000 190,000,000Share Premium 220,192,749 220,192,749Reserves 240,862,754 220,862,754Proposed Dividend 285,500,000 18,500,000Profit & Loss Account 5,693,679 1,509,510

685,249,182 661,065,013

Long term Loan-Secured 1,040,702 10,501,799686,289,884 671,566,812

APPLICATION OF FUNDSFixed AssetsOperating Fixed Assets at cost 854,102,988 845,234,939Less: Depreciation 332,006,031 298,273,434Net Operating Fixed Assets 522,096,957 546,961,505Investment at cost 41,325,000 31,325,000Pre-production expenses-Unit 2 1,462,733 2,047,826Total 564,884,690 580,334,331Current Assets:Stores and Spares 67,723,218 64,283,578Stock of raw and packing materials 171,733,169 104,771,563Book Debts 117,827,687 140,737,743Adv, Deposits & Prepayments 133,963,331 69,277,082Other Receivables 13,282,969 4,238,262Cash and Cash Equivalents 30,777,487 41,629,728Total 535,307,861 424,937,956Current Liabilities and Provisions:Creditors and accruals 97,073,198 61,807,398Secured short term loans 258,329,469 238,698,077Current portion of long term loans 12,000,000 12,000,000Provision for taxation 46,500,000 21,200,000Total 413,902,667 333,705,475

NET CURRENT ASSETS 121,405,194 91,232,481CAPITAL EMPLOYED 686,289,884 671,566,812

CONFIDENCE CEMENT LIMITED (CCL)RATIO ANALYSIS FOR THE YEAR 31ST DECEMBER, 2007.

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1. Current Ratio =

=

= 1.29 : 1.

2. Quick Ratio =

=

= 0.71 : 1.

3. Gross Profit Ratio =

=

= 11.76%.

4. Net Profit Ratio =

=

= 7.14%.

5. Dividend Payout Ratio=

=

= 52.58%.

6. Dividend per Share =

=

= 15 per share.

7. Debt to Asset Ratio =

18

=

=

= 0.37 : 1.

8. Return on Capital Employed =

=

= 11.47%.

9. Return on Asset =

=

= 7.16%.

SUMMARIZE:

Cement is the latest edition in the list of export commodities in Bangladesh. Our country started exporting cement from January, 2003. In this context local investors look the inutility for setting up cement factories and starts producing cement in 1992. The production in 8 private factories stood 34 lakh ton in 1997. So, far, about 100 factories got Govt. approval of

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which 56 factories are production with a production capacity of 1.30 crore MT against about domestic demand of 60 lakh tons in a year.

REFERENCES

[1] Meghna Cement Mills Company Ltd. official website.[2] Confidence Cement Ltd. official website.[3] Class lecture sheet of Ratio Analysis.[4] Anual Report from Chittagong Stock Exchange.[5] Basic Accounting by Monjur Morshed.[6] www.cementbd.blogspot.com

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