North South UniversityGROUP PROJECT ON

COURSE: FIN 254COURSE INSTRUCTOR: RYASECTIONGROUP MEMBERSMOSTAKIM KABIR0910735530

REZOANUL AHSAN NAFIS0910407030

SAMIHA TASNIM RAHMAN1010341030

AZHARUL ISLAM0930269030

SHEHAL UDDIN AHMED0910669030

EXECUTIVE SUMMERYThis project is about the analysis of financial statements by finding out some important ratios and interprets those for the each recent five year to get a more comprehensible financial status. These important ratios are as follows LIQUIDITY RATIO, ASSET MANAGEMENT RATIO, DEBT MANAGEMENT RATIO, PROFITABILITY RATIO, and MARKET VALUE RATIO. We also analyze the DU PONT EQUATION and EXTENDED DU PONT EQUATION which helps to analyze more accurately about the company. At the end of the report we also recommended about the company.INTRODUCTION: British American Tobacco Bangladesh Company Ltd. is one of the first multinational companies. Now British American Tobacco Bangladesh is one of the largest multinational companies in Bangladesh. 100 years ago as Imperial Tobacco, the Company set up its first sales depot at Armanitola in Dhaka. Then it became Bangladesh Tobacco Company Limited in 1972 immediately after Bangladeshs independence. In 1998, the Company changed its name and identity to British American Tobacco Bangladesh Company Ltd. Its primary product are Benson & Hedges, John Player Gold Leaf, Pall Mall, Capstan, Star and Scissors, Pilot , Bristol.Akij Biri Factory ltd., ABUL KHAIR & TOBACCO COMPANY, ALPHA TOBACCO MANUFACTURING CO. LTD., DHAKA TOBACCO INDUSTRIES are the main competitor of BAT BC.BAT BC has fierce competition with Akij Biri Ltd. and Dhaka Tobacco Ltd.

RATIO ANALYSIS:There are five major types of ratio analysis. These are as follows-1. LIQUIDITY RATIO2. ASSET MANAGEMENT RATIO3. DEBT MANAGEMENT RATIO4. PROFITABILITY RATIO5. MARKET VALUE RATIOBAT BCs five years ratio analysis has given below.1. LIQUIDITY RATIOa. Current ratio:LIQUIDITY RATIOCurrent ratio

Formula

20050.74

20060.91

20071.08

20081.35

20091.31

Interpretation:I. In the year 2009, BAT BCs current assets were 1.31 times of their current liabilities.II. From last year to this year the CURRENT RATIO has fall down because the relative change of current liabilities is more than that of current assets. LIQUIDITY RATIOQuick test

Formula

20050.22

20060.51

20070.52

20080.79

20090.74

b. Quick test:

Interpretation:I. In the year 2009, BAT BCs current assets excluding inventories were .74 times of their current liabilities.II. From last year to this year the QUICK RATIO has fall down because the relative change of current liabilities is more than that of current assets excluding inventories. 2. ASSET MANAGEMENT RATIOa. Inventory turnover ratio:ASSET MANAGEMENT RATIOInventory turnover ratio

Formula

200515.94

200616.62

200716.87

200816.70

200915.39

Interpretation:I. In the year 2009, BAT BC has sold out and restocked its inventories 15.39 times.II. From last year to this year the INVENTORY TURNOVER RATIO has fall down because the relative change of inventories is more than that of sales.

b. Total asset turnover ratio:ASSET MANAGEMENT RATIOTotal asset turnover ratio

Formula

20054.25

20063.92

20074.71

20084.55

20094.58

Interpretation:I. In the year 2009, BAT BCs every 1 Tk. worth of total assets generated 4.58 Tk. worth of sales.II. From last year to this year the TOTAL ASSET TURNOVER RATIO has risen down because the relative change of sales is more than that of total asset. c. Fixed asset turnover ratio:ASSET MANAGEMENT RATIOFixed asset turnover ratio

Formula

20056.83

20068.52

200710.24

200813.11

200914.46

Interpretation:I. In the year 2009, BAT BCs every 1 Tk. worth of fixed assets generated 14.46 Tk. worth of sales.II. From last year to this year the FIXED ASSET TURNOVER RATIO has risen because the relative change of fixed assets is more than that of sales. d. Days sales outstanding:ASSET MANAGEMENT RATIODays sales outstanding

Formula

20055

20066

20073

20087*

20094

*in 2008 we used 366 days because it was a leap year. Interpretation:I. On an average, it took 4 days to collect BAT BCs Accounts receivables in 2009.II. From last year to this year DSO has fall down because sales has risen and Accounts receivable has fall down.

e. Average payment period:ASSET MANAGEMENT RATIOAverage payment period

Formula

2005184

2006178

2007144

2008158

2009140

*in 2008 we used 366 days because it was a leap year.

Interpretation:I. On an average, it took 140 days to pay back BAT BCs Accounts payables in 2009.II. From last year to this year the Average payment period has fallen because the relative change of purchase is more than that of Accounts payable. 3. DEBT MANAGEMENT RATIO:a. Debt to Asset ratio:DEBT MANAGEMENT RATIODebt to Asset ratio (%)

Formula

200563.34

200669.49

200759.14

200854.61

200957.05

Interpretation:I. In 2009, 57.05% of Total Asset of this company financed by Debt.b. Total Debt to Total equity ratio:DEBT MANAGEMENT RATIOTotal Debt to Total equity ratio (%)

Formula

200563.34

200669.49

200759.14

200854.61

200957.05

Interpretation:I. In 2009, this companys capital structure consists of 57.05% Debt and 42.95% is Equity.c. Times-Interest- Earned Ratio:DEBT MANAGEMENT RATIOTimes-Interest- Earned Ratio

Formula

20054.39

20065.059

200728.57

200828.50

200981.99

Interpretation:I. In 2009, this company has covered its Interest Expense almost 82 times.II. From last year to this year the companys TIE ratio has significantly increased because the EBIT has risen and the Interest Expense has fall down.4. PROFITABILITY RATIOa. Gross Profit Margin:PROFITABILITY RATIOGross Profit Margin (%)

Formula

2005

20068.45

20079.36

200811.08

200911.1

Interpretation:I. In 2009, for every 100 Tk. company has earned 11.1 Tk. as Gross profit.II. From last year to this year the companys Gross Profit Margin has slightly increased because the relative increase of gross profit is more than that of Sales.b. Net Profit Margin (NPM):

PROFITABILITY RATIONet Profit Margin (%)

Formula

20050.79

20061.03

20072.11

20083.68

20093.76

Interpretation:I. In 2009, for every 100 Tk. company has earned 3.76 Tk. as Net profit.II. From last year to this year the companys Net Profit Margin has slightly increased because the relative increase of Net profit is more than that of Sales.c. Return on Asset(ROA):PROFITABILITY RATIOd. Return on Asset (%)

Formula

20053.36

20064.05

20079.94

200816.71

200917.21

Interpretation:I. In 2009, on every 100 Tk. worth of Total Asset company has made 17.21Tk. worth of Net profit.II. From last year to this year the companys ROA has increased because the relative increase of Net profit is more than that of Total Asset.d. Return on Equity(ROE): PROFITABILITY RATIOe. Return on Equity (%)

Formula

20059.16

200613.27

200724.32

200836.81

200940.07

Interpretation:I. In 2009, on every 100 Tk. worth of Total Equity company has made 40.07Tk. worth of Net profit.II. From last year to this year the companys ROE has increased because the relative increase of Net profit is more than that of Total Equity.

5. STOCK MARKET RATIOa. Earnings per share (EPS):STOCK MARKET RATIOEarnings per share

Formula

20050.39

20060.60

20071.33

20082.78

20093.45

Interpretation:I. In 2009, on every share shareholder has earned 3.45Tk. for holding every share.II. From last year to this year the companys EPS has increased because Net Income has increased.b. Dividend Per Share:STOCK MARKET RATIODividend per share

Formula

20050.83

20060.3

20070.3

20080.7

20092.4

Interpretation:I. In 2009, on every share shareholder has earned 2.4Tk. as Dividend for holding every share.II. From last year to this year the companys Dividend per share has increased because Dividend paid has increased.

c. Market/Book Ratio:STOCK MARKET RATIOStock PriceBook value/ShareMarket/Book Ratio

Formula

200570.34.2416.59

200684.14.5418.52

2007148.65.4727.14

2008201.67.5626.68

2009409.48.6047.59

Interpretation:I. In 2009, on every share shareholder was willing to pay 47.59 times for each share than companys Book Values.II. From last year to this year the companys Market/Book Ratio has increased because Market price/share has increased relatively more than that of Book Value.d. Price to Earnings Ratio (P/E Ratio)

STOCK MARKET RATIOStock PriceP/E Ratio

Formula

200570.3181.12

200684.1139.55

2007148.6111.59

2008201.672.48

2009409.4118.75

Interpretation:I. In 2009, shareholder was willing to pay 118.75Tk. for every Taka of reported Earnings.II. From last year to this year the companys P/E Ratio has increased because Market price/share has increased relatively more than that of EPS.DU PONT Equation:The DU PONT Equation is mentioned belowROA= Net Profit Margin Total Asset Turnover Ratio

=> ROANet Profit Margin(%)Total Asset Turnover Ratio

Formula100100

20053.360.794.25

20064.051.033.92

20079.942.114.71

200816.713.684.55

200917.213.764.58

Interpretation:I. From last year to this year the companys ROA has increased because Net Profit Margin and Total Asset Turnover Ratio has increased.II. From last year to this year the companys ROA has slightly increased because the relative increase of Net profit is more than that of Sales and the TOTAL ASSET TURNOVER RATIO has risen because the relative change of sales is more than that of total asset.Extended DU PONT Equation:The Extended DU PONT Equation is mentioned belowROE= Net Profit Margin Total Asset Turnover Ratio Equity multiplier

=> ROENet Profit Margin(%)Total Asset Turnover RatioEquity multiplier

Formula100100

20059.160.794.252.73

200613.271.033.923.28

200724.322.114.712.45

200836.813.684.552.20

200940.073.764.582.33

Interpretation:I. From last year to this year the companys ROE has increased because Net Profit Margin and Total Asset Turnover Ratio has increased.II. From last year to this year the companys ROE has increased because the relative increase of Net profit is more than that of Sales and the TOTAL ASSET TURNOVER RATIO has risen because the relative change of sales is more than that of total asset and Total equity has also increased so Equity multiplier has increased also.

Conclusion: BAT BCs LIQUIDITY RATIO is increasing every year which is favorable. BAT BCs overall ASSET MANAGEMENT RATIO is in a good position which is satisfactory because almost all ratios are increasing. BAT BCs DEBT MANAGEMENT RATIO is in favorable position because the debt ratio is decreasing. BAT BCs PROFITABILITY RATIO is increasing every year which is promising. Now BAT BCs overall STOCK MARKET VALUE RATIO is in a satisfactory position because almost all ratios are increasing. So we recommend investors to invest on this company.