Financial Statements Analysis_Dhaka Stock Exchange

BUS 505TERM PAPER

“Financial Statements Analysis” Total 34 companies of Cement, Ceramic and Engineering Industries

SUBMITTED

TO BY

Syed Abdullah Al Mamun . Ph.D., ACMA

Assistant Professor

School of Business

Shubhagata Chakraborty (ID: 123-0193-060)

M.Saniul Haque (ID: 123-0195-060)

Jamil M. Ameen (ID: 123-0194-060)

Section: 01

North South University

2

Syed Abdullah Al Mamun, Ph.D., ACMA Assistant Professor

School Of Business

North South University (NSU)

Dear Sir,

We have the pleasure in submitting our report on “Financial Statements Analysis” –

total 34 companies of Cement, Ceramic and Engineering Industries”, which has

been assigned to us earlier as a group term paper.

The main purpose of the term paper is to begin to integrate the many concepts we have

studied and to give an opportunity to apply our learning in a real-world setting. We have

tried our level best to conclusive while preparing the report and our intention was never

directed to undermine any concerned.

We would like to express our special gratitude to you, as you have helped us with your

continuous support and guidance.

With Sincerest Thanks.

Shubhagata Chakraborty (ID: 123-0193-060)

Jamil M. Ameen (ID: 123-0194-060)

M.Saniul Haque (ID: 123-0195-060)

3

Financial statement analysis is a process of reviewing and evaluating a company's financial

performance, where ratio analysis is one of the tools to analyze financial statements. Here,

objective of the report is to analyze the performance of 34 companies (2 years) belonging to

three different industries; Cement, Ceramic and Engineering. Data analysis was performed on

three broad phases; (1) Ratio analysis (2) Industry wise ranking under major heads (based on

every ratio and average) (3) Correlation among major heads. Considering one (1) being the

best, companies have been ranked based on every ratio for two years separately. Afterward

average ranking score was calculated and taken to evaluate their performance.

Overall performance of Cement industry is quite stable. Among all 6 companies of the

industry, Heidelberg Cement BD performed consistently well in both the years. This is even

one of the best performing companies among all 34 companies. On the other hand, being a

very large company in Bangladesh Lafarge Surma Cement did really bad, it took last and

second last position in two consecutive years.

In case of ceramic industry, RAK Ceramics always had a consistent praise worthy

performance and so considering the overall ratios, the average ranking was 1.48 in 2010. No

other company of this industry or among all there industries were even close to this figure in

the stated year. Apart from RAK, performance of other companies in the industry is quite

identical; almost all of them scored around 3 in both the years.

Considering all the 23 companies of the engineering industry, Navana CNG was first with the

best performance ranking value of 6.43 and 6.07 in the years 2010 and 2011 respectively.

Moreover, Singer Bangladesh and Atlas Bangladesh also performed well in both the years

and scored close to Navana CNG. However, some companies like GPH Ispat Ltd , Kay &

Que, Renwick Jajneswar& Co , and S. Alam Cold Rolled Steels LTD consistently performed

bad in both the years.

During correlation calculation among four ratio heads (Like correlation between Liquidity

ratio and Profitability ratio), both the years we identified positive correlation at 1%

significance level. Considering this, it can be said that all 34 companies had identical

performance in all the departments according to financial ratios calculation.

Executive Summary

4

Table of Contents

Page No.

1. Introduction 05

2. Literature Review 07

3. Methodology 09

4. Data Analysis 13

4.1 Industry Wise Ranking 13

4.1.1 Liquidity Ratio 14

4.1.2 Solvency Ratio 17

4.1.3 Profitability Ratio 20

4.1.4 Capital Market Performance Ratio 23

4.1.5 Overall Ranking Score 26

4.2 Correlation 29

4.2.1 Correlation_2010 30

4.2.1 Correlation_2011 34

5. Conclusion 38

6. Reference 39

7. Appendix 40

5

Financial Statements are useful because they provide information that allows investors

and creditors to make better decisions. However, because of selective reporting of

economic events as well as non-comparable accounting methods and estimates, financial

statements are only an approximation of reality. In addition, because of the tendency to

delay accounting recognition, financial statements also tend to lag reality.

A primary objective of financial analysis is to determine comparable risk and return of

companies and their securities. Financial statements include the

Income Statement

Owner’s Equity Statement

Balance Sheet

Cash Flow Statement

Notes

The financial statements are interrelated and should be used and analyzed together.

According to Drake (2010), financial statement analysis is the selection, evaluation, and

interpretation of financial data, along with other pertinent information, to assist in

investment and financial decision-making. Moreover, it is also the process of identifying

financial strengths and weaknesses of the firm by properly establishing relationship

between the items of the balance sheet and the profit and loss account.

One of the tools in financial statement analysis is financial ratio analysis. As financial

statements are usually lengthy, it will be more efficient and strategic to just pick up the

figures that matter and plug them in pre-defined formulas developed through time by

finance and accounting scholars. Methods of financial statement analysis may be divided

into two general categories, internal analysis and comparative or external analysis.

1. Introduction

6

Internal analysis uses figures from the financial statements of any one date or period to

gain an understanding of the customer. Comparative analysis may be used to determine

trends when two or more successive sets of figures are reviewed, or may be used to

evaluate a given company's financial statement against industry standards.

This report has been prepared to analyze the financial performance from 2010-2011 of all

the companies of the three industries, such as: Cement, Ceramics and Engineering. It is

required to do the ratio analysis of the companies. This analysis will help to find the trend

of performance of the assigned companies. This ratio analysis will reveal whether the

company is safe for investment or not. It will also reveal enable the existing and potential

investors to take their investment decision more efficiently.

Objective

The objective of this report is to analyze the performance of the 34 companies belonging

to three different industries. After doing the ratio analysis, trend analysis and comparison

will be done among other companies in both the years. We will be analyzing whether the

performance of the companies is improving or deteriorating and will be revealing the

necessary reasons for each scenario. We will also be analyzing the overall performance in

terms of the existing and potential investor’s viewpoint.

7

Financial ratios are widely used to develop insights into the financial performance of the

companies’ for both the external and internal users. The firm involves many interested

parties like, the owners, management, personnel, customers, suppliers, competitors,

regulatory agencies, and academics, each having their views in applying financial

statement analysis in their evaluations. Investors use financial ratios to forecast the future

success of companies as well as their current position in the market.

Financial ratios can also give mixed signals about a company’s financial health, and can

vary significantly among companies, industries, and over time. Other factors should also

be considered such as a company’s products, management, competitors, and vision for

the future. (Fieldsend, Longford and McLeay, 1987)

In trend analysis, ratios are compared over time, typically years. Year-to-year

comparisons can highlight trends and point up the need for action. Trend analysis works

best with three to five years of ratios. The second type of ratio analysis, cross-sectional

analysis, compares the ratios of two or more companies in similar lines of business. One

of the most popular forms of cross-section analysis compares companies’ ratios to

industry averages. These averages are developed by statistical services and trade

associations and are updated annually. (Ezzamel, Mar-Molinero and Beecher, 1987)

Time-series analysis is applied when a financial analysts evaluates performance over

time. Comparison of current to past performance, using ratio analysis, allows the firm to

determine whether it is progressing as planned. Using multiyear comparisons can see

developing trends, and knowledge of these trends should assist the firm in planning future

operations. As in cross-sectional analysis, any significant year-to-year changes can be

evaluated to access whether they are symptomatic of a major problem.

Cross-sectional analysis involves the comparison of different firms’ financial ratios at the

same point in time. The typical business is interested in how well it has performed in

relation to other firms in the industry. Frequently, a firm will compare its ratio values to

those of a key competitor or group of competitors that it wishes to follow. (Judy Ward,

1995)

2. Literature Review

8

Once the important ratios have been selected and calculated, it will still need some way

of judging whether they are high /low or good/bad. A good starting point is to compare

them with the equivalent figures for the same company in earlier years which is known as

benchmarking. In Cross-sectional analysis, firm’s ratio values are compared to those of a

key competitor or a group of competitors, primarily to isolate areas of opportunity for

improvement.

Financial statement analysis applies analytical tools and techniques to general-purpose

financial statements and relates data to derive estimates and inference useful in business

decisions. It is a screening tool in selecting investment or merger candidates, and is a

forecasting tool of future financial conditions and consequences. It is a diagnostic tool in

assessing financing, investing, and operating activities, and is an evaluation tool for

managerial and other business decisions. Financial statement analysis reduces our

reliance on hunches, guesses, and intuition, and in turn it diminishes our uncertainty in

decision-making. It does not lessen the need for expert judgment but rather establishes an

effective and systematic basis for making business decisions. (Bernstein and Wild, 1990)

In this regard, researches have been undertaken on the significance of financial statement

for investors to make decision and the importance of utilizing it in the stock market. Van

(2002) indicated that investors in a company’s common stock are concerned with present

and expected future earnings and the stability of these earnings about a trend with the

earnings of other companies.

In the stock market, the operating status is the pivotal factor for the stock value. It could

be reflected by the financial statement. Therefore, analyzing and researching the account

elements from the financial statement are very crucial. If the advanced analyses could be

done for these items, there will be more awareness of the financial and operating status of

those stock companies. Certainly it will be helpful for stockholders making decisions to

buy the target stocks. Besides, compared with the technical indices, these indices are

much more reliable, nonvolatile and valid (Han and Chen, 2007).

9

In order to prepare this report, we have fully depended on the secondary data. Annual

reports of the companies were collected from DSE library and company’s websites.

Among selected 35 sample companies, one company’s (Premier Cement Mills LTD)

financial reports was not available in the market (new company, no audited financial

reports published yet). Afterward we analyzed data on three broad phases; (1) Ratio

Analysis (2) Industry Wise Ranking under major heads (Based on every ratio and

average) (3) Correlation among major heads.

Sample Size: 34 Companies

Period: 2 years (2010, 2011)

Industry: 3 Industries

Cement Industry ( 6 Companies)

Ceramic Industry (5 Companies)

Engineering Industry (23 Companies)

Data Source: Financial Statements

Data Collection: DSE Library, Company website

Analysis: Three Broad Phases

Ratio Analysis (23 Ratios)

Industry Wise Average Ranking Under Major Heads and Overall (Based on

every ratio and average)

Correlation among major heads.

Software used in analysis:

M.S Excel

SPSS

3. Methodology

10

Performance indicators:

1. Ratio Analysis:

Performance indicators of ratio analysis depend on characteristics of each ratio. In some

ratios, higher value is considered as “Good Performance” wherein other ratios lower

value indicates good performance (Example: Debt Ratio). The formulas for calculating

the ratios are given below:

Liquidity Ratios

1. Current Ratio = Current Assets/Current Liabilities

2. Quick (acid test) Ratio = (Cash + Short Term Investment + Accounts

Receivable)/ Current Liabilities

3. Cash Ratio = (Cash + Marketable Securities)/Current Liabilities

4. Operating Cash flow Ratio = Cash flow from operations/ Current Liabilities

5. Inventory Turnover Ratio = COGS/Inventory

6. Average selling period = 360 days/ITR

7. Receivable Turnover Ratio = Credit Sales/ Accounts Receivable

8. Average Collection Period = 360 days/ RTR

9. Accounts Payable Turnover = Purchase/ Accounts Payable

10. Average Payment Period = 360/APT

Solvency Ratios:

11. Debt Ratio = Total Liabilities/ Total Assets

12. Debt Equity Ratio = Debt/ Shareholder’s Equity

13. Interest Coverage Ratio (Earnings basis) = EBIT/Interest Expense

14. Interest Coverage Ratio (Cash basis) = (Cash Flow from operation + Interest

expense + Tax paid)/ Interest expense

15. Fixed-Payment Coverage Ratio = (EBIT + Lease Payment)/Interest + Lease

Payment

11

Profitability Ratios:

16. Gross Profit Margin = (Sales-COGS)/Sales

17. ROE = Net Income after tax/Total Equity Capital

18. ROA = Net Income after tax/ Total Assets

19. Asset Turnover = Sales/Total Assets

20. Earnings per share = Net Income After Tax/No. of Ordinary Shares

Capital Market Performance Ratios

21. P/E Ratio = Market price per share/EPS

22. TQ = (Debt + Market Capitalization)/Total Assets

23. Market to Book value = Total Market capitalization/(Total Assets – Intangible

Assets

Detail of the ratios is attached in appendix i

2. Ranking

During ranking calculation, we considered performance indicator factor of each ration.

Considering one (1) as the best performer, in some ratios company with highest value

was ranked No.1, where in case of other ratios if lower value indicates good performance

we ranked company with lowest value as No. 1.

Ranking Scale:

Lower the ranking score higher is the performance; one being the best.

1 2 3 4 5

Best Performer

12

Industry Wise Ranking Ranges:

Cement Industry: Ranked between 1- 6

Ceramic Industry: Ranked between 1-5

Engineering Industry: Ranked between 1-23

Steps:

1. Ranked the companies based on every ratio for two years separately

2. Calculated industry wise average raking score for all the companies for the two

year separately.

3. Finally performance of the companies were analyzed based on their average

ranking score under following four heads;

Liquidity Ratio

Solvency Ratio

Profitability Ratio

Capital Market Performance Ratio

3. Correlation:

Finally in order to show relation between major ratio heads, we calculated correlation

between the score of following heads

Liquidity ratio and profitability ratio,

Liquidity ratio and market performance ratio,

Solvency ratio and profitability ratio,

Solvency ratio and market performance ratio.

Finally, on basis of the analysis we come out some conclusion.

13

Data Analysis & Findindgs

Industry wise average ranking score analysis

"Correlation" between major heads

In order to present vast data in a systematic manner this section has been divided into two

main parts; 1) Industry wise average ranking score analysis (2) Correlation between

major heads.

4.1 Industry Wise Average Ranking:

This section is going to present industry wise average ranking score of each company.

Selected 34 companies are mainly categorized under 3 industries; Cement (6), Ceramic

(5), Engineering (23).Companies of each industry has been ranked based on their

performance against every ratio. For example; 6 Cement companies have been ranked

between 1- 6 against each ratio; similarly other two industries. Here, we are going to

evaluate performance of each company based on their average ranking score under

following four heads;

Liquidity Ratio

Solvency Ratio

Profitability Ratio

Capital Market Performance Ratio

4. Data Analysis and Findings

14

4.1.1 Liquidity ratio

Cement Industry

Considering the liquidity position of Cement Industry, Heidelberg cement is in the best

position among six companies in both the years. Average ranking score of the company

was 2 in 2010 and 2.6 in 2011. On the other hand, Aramit Cement and Meghna Cement

respectively took last positions in 2010 and 2011.

Performance of Confidence Cement seemed bit stable, both the year it scored 3.4. At the

same time, Aramit Cement and M.I Cement Factory LTD. performed well in 2011

compared to 2010. Aramit Cement especially performed well in Inventory Turnover

ratio and Payable turnover ratio.

From the above graph we can interpret that except Aramit Cement and M.I. Cement, all

the companies liquidity ratio performance improved in 2011 in comparison to 2010. Out

of all, Heidelberg Cement maintained a sound financial position from the others. So it

means this company has the greater ability to use its near cash or quick assets to

extinguish or retire its current liabilities immediately.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

Aramit Cement ConfidenceCement

HeidelbergCement BD

Lafarge SurmaCement

MeghnaCement

M.I CementFactory Ltd.

Y-2010

Y-2011

Worst

Best

15

Ceramic Industry

From the above graph, we can see that the performance of RAK Ceramics with liquidity

ratio average ranking score of 1.6 and is the best among all the other ceramic companies

in 2010. Shinepukur Ceramics and Fu-Wang Ceramic together achieved the least score of

3.9 in the same year.

In 2011, Fu-Wang Ceramic had the best liquidity ratio average ranking of 2.00 and

Standard Ceramics had the least score.

Looking at the overall graph, majority of the companies had a negative rise from 2010 to

2011. Monno Ceramic and RAK Ceramic were the only two companies with high

positive rise.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Fu-wang Ceramic Menno Ceramic Rak Ceramics ShinepukurCeramics LTD

Standard Ceramic

Y-2010

Y-2011

Worst

Best

16

Engineering

From the above graph, in 2010, Navana CNG Ltd. held the best position with Liquidity

ratio score of 6.90. However, Atlas Bangladesh and Olympic Industries had scores of 7.6

and 7.5 respectively.

In 2011, Navana CNG Ltd. was still in the top position with the best and improved

liquidity ratio of 6.10. Majority of the companies had the ratio above the score 10 and

GHP Ispat Ltd. had the maximum score of 17.30.

By analyzing the overall graph, we can see that GPH Ispat Ltd. had the highest value of

17.30 in 2011 among all the 23 companies in this industry. Interestingly, a mixture of

increase and decrease in the values were seen among the companies between the two

years. But in between all the business hurdles, Navana CNG did manage to maintain their

liquidity ratio performance very satisfactory indeed.

1.00

3.00

5.00

7.00

9.00

11.00

13.00

15.00

17.00

19.00

21.00

23.00Y-2010

Y-2011

Worst

Best

17

4.1.2 Solvency Ratio

Cement Industry

In 2010, Heidelberg Cement BD had the least solvency ratio ranking of 1.60, which

proves that this company is in the best position to fulfill its long term obligations.

Interestingly, Aramit and Meghna Cement both had the same score of solvency ratio of

4.8.

In 2011, Heidelberg Cement BD continued with the best and improved score of 1.4. This

clearly portrays the size of the company’s net income after tax is very handsome.

However, Meghna Cement could not improve compared to its last year and had the score

of 5.40.

Considering overall performance of all 6 companies of two years together, it’s quite clear

that performance in terms of solvency Heidelberg, Confidence, and M.I Cement has

identical behavior. Similarly, other three companies also have identical behavior but in

them of performance they are not near to 1st group.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00


HeidelbergCement BD

Lafarge SurmaCement

MeghnaCement


Y-2010

Y-2011

Worst

Best

18

Ceramic Industry

Monno Ceramic had the worst solvency ratio of 4.8 in 2010, which shows the company

was not stable enough to meet the long term obligations of its debtors. In this case, RAK

Ceramics again had the best score of 1.00. So we can conclude that the financial

condition of RAK ceramics was the best amongst all the other companies in the industry.

In 2011, RAK again had the best score of 1.60 and Monno ceramic (although improved

a little) but still was in the last position with a score of 4.60.

Considering two years together, Rak Ceramic has strongest position among five

companies. On the other hand, Monno Ceramic is holding the last position in two

consecutive years. Fu-wang Ceramic improved most among 5 companies in 2011; it

came down to 2.2 from previous 3.

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00


Standard Ceramic

Y-2010

Y-2011

Worst

Best

19

Engineering

In 2010, Singer Bangladesh had the best performance score of 4.40 out of 23 engineering

companies. It is to be mentioned that GHP Ispat Ltd. and Kay & Que both had the worst

performance score of 21 at a time.

In 2011, Golden Son LTD. showed the best performance with a score of 4.20. Atlas

Bangladesh is in second position among all the other companies with performance score

of 4.60.

A few companies consistently performed well in both the years; like Aftab Auto, Atlas

Bangladesh, Singer Bangladesh. On the other hand, Anwar Galvanizing improved

significantly in 2011; came down to 5.2 from 14.4.

1.00

3.00

5.00

7.00

9.00

11.00

13.00

15.00

17.00

19.00

21.00

23.00Y-2010

Y-2011

Worst

Best

20

4.1.3 Profitability Ratio

Cement Industry

Heidelberg Cement BD had the best profitability ratio performance with an average

ranking of 2.4 out of the 6 total cement companies in 2010. M.I. Cement Ltd. was also

very close with ranking of 2.80. That means these two companies had the ability to

generate earnings as compared to its expenses and other relevant costs incurred during

2010.

In 2011, Heidelberg Cement BD again had the best performance with an average ranking

of 2.20. Interestingly Aramit cement came in second with ranking of 3.00 instead of M.I.

Cement Ltd.

In terms of profitability performance, industry is quite stable, no major position change

within the industry. Three out of 6 companies hold exactly same position in both the

years.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00


HeidelbergCement BD

Lafarge SurmaCement

MeghnaCement


Y-2010

Y-2011

Worst

Best

21

Ceramic Industry

Out of the 5 companies, RAK ceramics had the best profitability ratio performance with

an average ranking of 2.00 in 2010. Others companies like Fu-Wang Ceramic,

Shinepukur Ceramics Ltd. and Standard Ceramic were also very neck to neck with the

ranking of 3.00, 3.20 and 3.20 respectively.

In 2011, the scenario was almost the same with RAK Ceramic still on the top with the

2.00 ranking point. The financial performance of Monno Ceramic was also good with the

ranking of 2.40. Unfortunately Shinepukur Ceramics Ltd. fell at the bottom compared to

the last year.

Despite several big position changes in terms of profitability performance, Rak Ceramics

hold its position strongly in both the years. Monno Ceramic also improved lot in 2011

came down to 2.40 from 3.60.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00


Standard Ceramic

Y-2010

Y-2011

Worst

Best

22

Engineering

Olympic Industries and Singer Bangladesh combinely ranked first with equal score of

3.60 in 2010. Among the 23 engineering companies, Anwar Galvanizing and Aziz Pipes

became last in position with ranking score of 19.80.

In 2011, Olympic Industries solely had the best ranking score of 3.00. Because of this

consistency, it proves that this company had the ability to generate earnings as compared

to its expenses and other relevant costs incurred during in both 2010 and 2011. However,

National Tube which had the ranking score of 9.20 in 2010 had the worst ranking score

of 21.40 in 2011.

Considering two years together, Olympic Industries just out of competition, no other

companies is near to their position. Moreover, Navana CNG and Singer Bangladesh were

also so stable in both the years.

1.00

3.00

5.00

7.00

9.00

11.00

13.00

15.00

17.00

19.00

21.00

23.00

Y-2010

Y-2011

Worst

Best

23

4.1.4 Capital Market Performance Ratio

Cement Industry

In 2010, Heidelberg Cement and Meghna Cement combinely had the ranking score of

2.00 and M.I. Cement factory had the far end ranking score of 5.67

In 2011, Heidelberg Cement again ranked first with 2.00 and Aramit cement climbed to

the second position with ranking value of 2.67. It is noticed that all the companies

ranking value were close to each other and much variation was not seen in 2011.

In term of capital market performance, fluctuation was usually high. Confidence Cement

and Meghna Cement lost their strong position in 2011 whereas M.I Cement and Lafarge

improved significantly in 2011.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00


HeidelbergCement BD

Lafarge SurmaCement

MeghnaCement


Y-2010

Y-2011

Worst

Best

24

Ceramic Industry

In 2010, RAK Ceramics again topped the chart crossing all the other companies of the

industry with ranking value of 1.00. So the capital market performance ratio is very good

in this company. Shinepukur Ceramics Ltd. also had a good ranking value of 2.00.

In 2011, although RAK Ceramics held the first position among the 5 companies but its

average ranking value rose up to 1.67. Shinepukur Ceramics Ltd. maintained a good

ranking value of 2.00. Monno Ceramic capital market performance in this case is

unsatisfactory with average ranking value of 4.67.

Considering performance of both the year, we can industry is quite stable in term of

capital market performance, no major position change in two years. Almost all of the

companies hold their own position; especially Shinepukur Ceramics scored same (2) in

both the years.

0.00

1.00

2.00

3.00

4.00

5.00

6.00


Standard Ceramic

Y-2010

Y-2011

Worst

Best

25

Engineering

In 2010, Rongpur Foundry had the best value of 3.33 and Deshbandhu Polymar Ltd. had

the worst value of 23.00. A lot of variations were observed among the 23 companies in

2010.

In 2011, Monno Jute Stafflers, surprised the market with the best average value of 1.67.

This company was far behind with average value of 12.33 in 2010. So a huge

improvement was seen. On the other hand, National polymer and National tube

combinely scored the least with value of 20.67.

In terms of Capital market performance, company wise score fluctuated at significant

level. Some companies lost their strong position 2011, whereas some companies

drastically improved; like Monno Jute Stafflers came down to 1.67 from 12.33.

1.00

3.00

5.00

7.00

9.00

11.00

13.00

15.00

17.00

19.00

21.00

23.00Y-2010

Y-2011

Worst

Best

26

4.1.5 Overall Ranking Score

Cement Industry

After analyzing all the ratios (liquidity ratio, solvency ratio, Profitability ratio and capital

market performance ratio), the overall ranking score of Heidelberg Cement BD has the

best value of 2.00 among all the 6 cement companies in 2010.This is even one of the best

performing companies among all 34 companies. Lafarge Surma Cement, although a very

big company in Bangladesh, had the worst value of 4.45. However, in 2011, Meghna

Cement had the worst value of 4.39 and Heidelberg Cement BD again topped all the

companies in 2011 with a value of 2.16.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00


HeidelbergCement BD

Lafarge SurmaCement

MeghnaCement


Y-2010

Y-2011

Worst

Best

27

Ceramic Industry

In case of ceramic industry, RAK Ceramics always had a consistent praise worthy

performance and so considering the overall ratios, the average ranking was 1.48 in 2010.

No other company of this industry was not even close to this figure in the stated year. In

2011, Fu-Wang Ceramic dethroned RAK Ceramics and took the lead with a value of

2.31. It should be mentioned that, Shinepukur Ceramics LTD and Monno Ceramics both

had almost similar increase of value in both the years. Apart from RAK, performance of

other companies in the industry is quite identical; almost all of them scored around 3 in

both the years.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00


Standard Ceramic

Y-2010

Y-2011

Worst

Best

28

Engineering

Considering all the 23 companies of the engineering industry, Navana CNG was first

with the best performance ranking value of 6.43 and 6.07 in the years 2010 and 2011

respectively. Moreover, Singer Bangladesh and Atlas Bangladesh also performed well in

both the years and scored close to Navana CNG. Other companies had a rise and fall in its

value like Anwar Galvanizing had 15.65 in 2010 and 10.80 in 2011. Another key

information is- Deshbandhu Polymer LTD., Golden Son LTD., Kay & Que, Monno Jute

Stafflers and National Polymer; these 5 companies out of 23 companies in the industry

had achieved improved value in 2011 compared to 2010. However, some companies like

GPH Ispat Ltd, Kay &Que, Renwick Jajneswar & Co, and S. Alam Cold Rolled Steels LTD

consistently performed bad in both the years.

1.00

3.00

5.00

7.00

9.00

11.00

13.00

15.00

17.00

19.00

21.00

23.00Y-2010

Y-2011

Worst

Best

29

4.2Correlation

In order to show relation between major ratio heads, we calculated correlation between

the score of following heads for two years separately.

Liquidity ratio and profitability ratio,

Liquidity ratio and market performance ratio,

Solvency ratio and profitability ratio,

Solvency ratio and market performance ratio.

We calculated correlation between major ratio heads in both industries wise and overall.

Correlation

2010

Cement Industy Ceramic Industry

Engineering Industry

Overall

2011

Cement Industry Ceramic Industry

Engineering Industry

Overall

30

4.2.1 Correlation_ 2010

Cement Industry:

Liquidity Ratio Solvency

Ratio

Profitability

Ratio

Capital Market

Performance

Ratio

Liquidity Ratio

Pearson Correlation 1 .772 .297 .105

Sig. (2-tailed) .072 .568 .843

N 6 6 6 6

Solvency Ratio

Pearson Correlation .772 1 .474 .300

Sig. (2-tailed) .072 .342 .563

N 6 6 6 6

Profitability Ratio

Pearson Correlation .297 .474 1 .225

Sig. (2-tailed) .568 .342 .668

N 6 6 6 6

Capital Market

Performance Ratio

Pearson Correlation .105 .300 .225 1

Sig. (2-tailed) .843 .563 .668

N 6 6 6 6

The correlation between Liquidity ratio and Profitability ratio = 0.297

The correlation between Liquidity ratio and Market performance ratio =0.105

The correlation between Solvency ratio and Profitability ratio = 0.474

The correlation between Solvency ratio and Market performance ratio = 0.300

From the above table, we can see that all the ratios (Liquidity ratio, Solvency ratio,

Profitability ratio and Capital Market Performance ratio) positively correlated with each

other’s. Among them, we can also see that there is a moderate correlation between

Liquidity ratio & Solvency ratio. Moreover, there is insignificant correlation among the

variables.

31

Ceramic Industry:

Liquidity

Ratio

Solvency

Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio

Pearson Correlation 1 .291 .498 .369

Sig. (2-tailed) .635 .393 .541

N 5 5 5 5

Solvency Ratio

Pearson Correlation .291 1 .964** .672

Sig. (2-tailed) .635 .008 .214

N 5 5 5 5

Profitability Ratio

Pearson Correlation .498 .964** 1 .701

Sig. (2-tailed) .393 .008 .187

N 5 5 5 5

Capital Market

Performance Ratio


Sig. (2-tailed) .541 .214 .187

N 5 5 5 5

**. Correlation is significant at the 0.01 level (2-tailed).

1. The correlation between Liquidity ratio and Profitability ratio = 0.498

2. The correlation between Liquidity ratio and Market performance ratio = 0.369

3. The correlation between Solvency ratio and Profitability ratio = 0.964**

4. The correlation between Solvency ratio and Market performance ratio = 0.672

From the above table, we can see that all the ratios calculated for Ceramics industry

positively correlated with each other and among them Liquidity ratio & Solvency ratio

have the lower correlation between them. Here, we find that there is a strong correlation

between Solvency ratio and Profitability ratio which is also highly significant at 1%

significance level. Moreover, companies performed better in both Solvency ratio and

Profitability ratio sides simultaneously. At the same time, we can also see that Solvency

ratio and Profitability ratio are moderately correlated with Capital Market Performance

ratio but they are not statistically significant.

32

Engineering Industry:

Liquidity

Ratio

Solvency

Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio

Pearson Correlation 1 .467* .715

** .170

Sig. (2-tailed) .025 .000 .437

N 23 23 23 23

Solvency Ratio

Pearson Correlation .467* 1 .261 .326

Sig. (2-tailed) .025 .230 .129

N 23 23 23 23

Profitability Ratio

Pearson Correlation .715** .261 1 .129

Sig. (2-tailed) .000 .230 .558

N 23 23 23 23

Capital Market

Performance Ratio


Sig. (2-tailed) .437 .129 .558

N 23 23 23 23

*. Correlation is significant at the 0.05 level (2-tailed).


1. The correlation between Liquidity ratio and Profitability ratio = 0.715**


3. The correlation between Solvency ratio and Profitability ratio = 0.261


Here, we can see that all the ratios are positively correlated with each other and among

those Liquidity ratio and Profitability ratio are less positively correlated with Capital

Market Performance ratio. Moreover, Solvency ratio and Profitability ratio both are

strongly positive correlated with Liquidity ratio which is also highly significant both at

1% and 5% significance level. Engineering sector companies robustly performed side by

side in these three segments.

33

Overall Correlation of 3 Industries:

Liquidity

Ratio

Solvency

Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio

Pearson Correlation 1 .774** .880

** .619

**

Sig. (2-tailed) .000 .000 .000

N 34 34 34 34

Solvency Ratio

Pearson Correlation .774** 1 .650

** .621

**

Sig. (2-tailed) .000 .000 .000

N 34 34 34 34

Profitability Ratio

Pearson Correlation .880** .650

** 1 .540

**

Sig. (2-tailed) .000 .000 .001

N 34 34 34 34

Capital Market

Performance Ratio


** .540

** 1

Sig. (2-tailed) .000 .000 .001

N 34 34 34 34


1. The correlation between Liquidity ratio and Profitability ratio= 0.880**

2. The correlation between Liquidity ratio and Market performance ratio = 0.619**


4. The correlation between Solvency ratio and Market performance ratio = 0.621**

During correlation calculation among the ratios, we identified positive correlation among

companies and all are highly significant at 1% significance level. So, we can say that in

2010, all 34 companies had similar performance in all the departments according to

financial ratios calculation.

We figure out two points from the above tables. Firstly, 34 companies identically

performed within their respective industry’s performance which is somewhat significant

and somewhat not. However, when we compute overall correlation among these

companies, they were not only identically performed but also their positive correlations

were also highly statistically significant. Secondly, Cement industry is the only industry

among the three, whose identical performance is statistically insignificant.

34

4.2.2 Correlation_ 2011

Cement Industry:

Liquidity

Ratio

Solvency

Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio Pearson Correlation 1 .892* .244 .397

Sig. (2-tailed) .017 .641 .436

N 6 6 6 6

Solvency Ratio Pearson Correlation .892* 1 .362 .263

Sig. (2-tailed) .017 .481 .615

N 6 6 6 6

Profitability Ratio Pearson Correlation .244 .362 1 .481

Sig. (2-tailed) .641 .481 .334

N 6 6 6 6

Capital Market

Performance Ratio


Sig. (2-tailed) .436 .615 .334

N 6 6 6 6

*. Correlation is significant at the 0.05 level (2-tailed).





From the above table, we can see that all the ratios (Liquidity ratio, Solvency ratio,

Profitability ratio and Capital Market Performance ratio) positively correlated with each

other’s. Here, we find that there is a strong correlation between Liquidity ratio and

Solvency ratio which is also strongly significant at 5% significance level. Moreover,

Ceramic companies hold strong position in both Solvency ratio and Profitability ratio

simultaneously. Among them, there are moderate correlation between Liquidity ratio &

Profitability ratio and between Solvency ratio & Capital Market Performance ratio.

35

Ceramic Industry:

Liquidity

Ratio

Solvency

Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio

Pearson Correlation 1 .317 .197 -.278

Sig. (2-tailed) .603 .751 .651

N 5 5 5 5

Solvency Ratio

Pearson Correlation .317 1 .333 .609

Sig. (2-tailed) .603 .584 .276

N 5 5 5 5

Profitability Ratio

Pearson Correlation .197 .333 1 -.045

Sig. (2-tailed) .751 .584 .943

N 5 5 5 5

Capital Market

Performance Ratio

Pearson Correlation -.278 .609 -.045 1

Sig. (2-tailed) .651 .276 .943

N 5 5 5 5


2. The correlation between Liquidity ratio and Market performance ratio = -0.278



From the above table, we can see that all the variables positively correlated with each

other’s, except Liquidity ratio and Profitability ratio. Both of these ratios are negative

correlated with Capital Market Performance ratio. Here, we can say that they inversely

performed within the industry. Moreover, we can see that there is a moderate correlation

among the other ratios. Therefore, Ceramics companies performed somewhat in a

different way in 2011 which is unconventional.

36

Engineering Industry:

Liquidity

Ratio

Solvency

Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio Pearson Correlation 1 .583** .380 .366

Sig. (2-tailed) .004 .086

N 23 23 23 23

Solvency Ratio Pearson Correlation .583** 1 .264 .219

Sig. (2-tailed) .004 .224 .314

N 23 23 23 23

Profitability Ratio Pearson Correlation .380 .264 1 .153

Sig. (2-tailed) .073 .224 .485

N 23 23 23 23

Capital Market

Performance Ratio


Sig. (2-tailed) .086 .314 .485

N 23 23 23 23






Here, we can see that all the ratios are positively correlated with each other and among

those Profitability ratio and Capital Market Performance ratio has relatively weak

positive correlated. Moreover, we can also see that Liquidity ratio and Solvency ratio

both are strongly positive correlated and is also highly significant at 1% significance

level. Companies of engineering sector robustly performed side by side in these two

segments.

37

Overall 3 Industries:

Liquidity

Ratio Solvency Ratio

Profitability

Ratio

Capital Market

Performance Ratio

Liquidity Ratio

Pearson Correlation 1 .813** .760

** .688

**

Sig. (2-tailed) .000 .000 .000

N 34 34 34 34

Solvency Ratio

Pearson Correlation .813** 1 .639

** .566

**

Sig. (2-tailed) .000 .000 .000

N 34 34 34 34

Profitability Ratio


** 1 .545

**

Sig. (2-tailed) .000 .000 .001

N 34 34 34 34

Capital Market

Performance Ratio


** .545

** 1

Sig. (2-tailed) .000 .000 .001

N 34 34 34 34


1. The correlation between Liquidity ratio and Profitability ratio = 0.760**

2. The correlation between Liquidity ratio and Market performance ratio = 0.688**


4. The correlation between Solvency ratio and Market performance ratio = 0.566**

During correlation calculation among the ratios, we identified positive correlation among

all the companies and all are highly significant at 1% significance level. So, we can say

that in 2011, all 34 companies had similar performance in all the departments according

to financial ratios calculation.

We also figure out two points from the above tables. Firstly, 34 companies identically

performed within their respective industry’s performance which is somewhat significant

and somewhat not. However, when we compute overall correlation among these

companies, they were not only identically performed but also their positive correlations

were also highly statistically significant. Secondly, Ceramic industry is the only industry

among the three whose identical performance is not only statistically insignificant; but

also their Liquidity ratio and Profitability ratio were negative correlated with Capital

Market Performance ratio. So, their performance was not normal compared to others.

38

From the above analysis we can say that Cement industry is more stable than the other

two. Within the Cement industry, Heidelberg Cement BD performed consistently well in

both the years. This is even one of the best performing companies among all 34

companies.

Now, if we look industry wise analysis, we can get a clear picture about the listed

companies. In the Cement industry, we found that apart from Heidelberg Cement, M.I.

Cement maintained an average position in both the years which is significant from the

others. In case of Ceramic industry, we also found that R.A.K Ceramics had admirable

performance in the observation years. Moreover, within the observed years, Fu-Wang

ceramic improved their financial performance among the others.

Engineering industry consists of 23 companies and is the vast one among the three

industries. If we look to that industry, we can see that Navana CNG was first with the

best performance ranking value of 6.43 and 6.07 in the respective years. In addition to,

there are other companies performed well but not as significant as Navana CNG and they

are- Singer Bangladesh, Atlas Bangladesh, Deshbandhu Polymer LTD., Golden Son

LTD., Kay & Que, Monno Jute Stafflers and National Polymer.

Beside, ratios calculation we tried to figure out what’s the correlation among the ratios

that help to perform these companies better. During correlation calculation among four

ratio heads (Like correlation between Liquidity ratio and Profitability ratio), we identified

some of the positive correlation highly significant at both 1% and 5% significance level.

Considering this, it can be said that all 34 companies had identical performance in all the

departments according to financial ratios calculation.

5. Conclusion

39

REFERENCE

Bernstein and Wild, (1990) “Financial Statement Analysis”. Pg.3-4.

Chang, L.S., Most, K.S.,(1997) “An international comparison of investor uses of financial

statements in International Journal of Accounting”, 17(1), pg. 43-60.

Ezzamel, Mar-Molinero, and Beecher, (1987)“The distributional properties of financial

ratios.”Journal of Business Finance and Accounting.Pg 14/4, 463-481.

Fieldsend, Longford and McLeay, (1987) “Sector and size effects in ratio analysis: indirect

tests of ratio proportionality.”Accounting and Business Research. Pg. 17/66, 133-140.

Judy Ward, November, (1995) “Measuring performance-Too Big”. The Wall Street Journal.

Norman, A. S.,(2011) “ Financial analysis as a consideration for stock exchange investment

decisions in Tanzania in Journal of Accounting and Taxation”, 3(4), pg. 60-69.

Van, H., (2002) “Financial Management Policy”. (12th ed.). Pearson Ed. Inc.: New Delhi,

India.

40

(Cash + Short Term Investment + Accounts

Receivable)/ Current Liabilities

Appendix-1: Financial Ratios and its interpretation

Liquidity Ratios

1. Current Ratio = Current Assets/Current Liabilities

The ratio is mainly used to give an idea of the company's ability to pay back its

short-term liabilities (debt and payables) with its short-term assets (cash,

inventory, receivables). The higher the current ratio, the more capable the

company is of paying its obligations.

2. Quick (acid test) Ratio =

The Acid-test or quick ratio or liquid ratio measures the ability of a company to

use its near cash or quick assets to extinguish or retire its current liabilities

immediately. The quick ratio is more conservative than the current ratio, because

it excludes inventory from current assets. Inventory is excluded because some

companies have difficulty turning their inventory into cash.

3. Cash Ratio = (Cash + Marketable Securities)/Current Liabilities

Cash ratio is the ratio of cash and cash equivalents of a company to its current-

liabilities. It is an extreme liquidity ratio since only cash and cash equivalents are

compared with the current liabilities. It measures the ability of a business to repay

its current liabilities by only using its cash and cash equivalents and nothing else.

4. Operating Cash flow Ratio = Cash flow from operations/ Current Liabilities

A measure of how well current liabilities are covered by the cash flow generated

from a company's operations. The operating cash flow ratio can gauge a

company's liquidity in the short term. Using cash flow as opposed to income is

sometimes a better indication of liquidity simply because, as we know, cash is

how bills are normally paid off.

Appendices

41

5. Inventory Turnover Ratio = COGS/Inventory

A ratio showing how many times a company's inventory is sold and replaced over

a period. The days in the period can then be divided by the inventory turnover

formula to calculate the days it takes to sell the inventory on hand or "inventory

turnover days."

6. Average selling period = 360 days/ITR

The approximate amount of time that it takes for a business to receive payments

owed (in terms of receivables), from its customers and clients.

7. Receivable Turnover Ratio = Credit Sales/ Accounts Receivable

Receivable Turnover Ratio is one of the accounting activity ratios, a financial

ratio. This ratio measures the number of times, on average; receivables (e.g.

Accounts Receivable) are collected during the period. A popular variant of the

receivables turnover ratio is to convert it into an Average Collection Period in

terms of days. Remember that the Receivable turnover ratio is figured as

"turnover times" and the Average collection period is in "days".

8. Average Collection Period = 360 days/ RTR

Average Collection Period represents the average number of days it takes the

company to convert receivables into cash. Average collection period measures the

average number of days that accounts receivable are outstanding. This activity

ratio should be the same or lower than the company's credit terms. As a rule,

outstanding receivables should not exceed credit terms by more than 10-15 days.

9. Accounts Payable Turnover = Purchase/ Accounts Payable

Accounts payable turnover ratio is an accounting liquidity metric that evaluates

how fast a company pays off its creditors (suppliers). The ratio shows how many

times in a given period (typically 1 year) a company pays its average accounts

payable. An accounts payable turnover ratio measures the number of times a

company pays its suppliers during a specific accounting period.

http://en.wikipedia.org/w/index.php?title=Accounting_activity&action=edit&redlink=1

http://en.wikipedia.org/wiki/Financial_ratio


http://en.wikipedia.org/wiki/Accounts_Receivable

42

10. Average Payment Period = 360/APT

Average payment period (APP) is one of the activity ratios which measure the

relationship between accounts payable and average purchases per day. Activity

ratios help businesses to measure how efficiently various accounts are converted

into sales or cash. Other activity ratios include average collection period, total

asset turnover and inventory turnover analysis.

Solvency Ratios:

11. Debt Ratio = Total Liabilities/ Total Assets

Debt Ratio is a financial ratio that indicates the percentage of a company's assets

that are provided via debt. This ratio also indicates what proportion of debt a

company has relative to its assets. The measure gives an idea to the leverage of

the company along with the potential risks the company faces in terms of its debt-

load.

12. Debt Equity Ratio = Debt/ Shareholder’s Equity

A measure of a company's financial leverage that calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and debt

the company is using to finance its assets.

13. Interest Coverage Ratio (Earnings basis) = EBIT/Interest Expense

The interest coverage ratio (ICR) is a measure of a company's ability to meet

its interest payments. Interest coverage ratio is equal to earnings before

interest and taxes (EBIT) for a time period, often one year, divided by interest

expenses for the same time period. The interest coverage ratio is a measure of

the number of times a company could make the interest payments on its debt

with its EBIT. It determines how easily a company can pay interest expenses

on outstanding debt.


http://en.wikipedia.org/wiki/Assets

http://en.wikipedia.org/wiki/Debt

http://www.readyratios.com/reference/profitability/ebit_earnings_before_interest_and_taxes.html


43

(Cash Flow from operation + Interest

expense + Tax paid)/ Interest expense

(EBIT + Lease Payment)/Interest + Lease

Payment

14. Interest Coverage Ratio (Cash basis) =

This ratio indicates the company’s ability to use its cash flow to satisfy its

fixed financing obligations. Finally, there is the fixed-charge coverage ratio,

which compares EBIT with fixed charges:

15. Fixed-Payment Coverage Ratio =

Fixed charge coverage ratio is the ratio that indicates a firm’s ability to satisfy

fixed financing expenses such as interest and leases. This means that the fixed

charges that a firm is obligated to meet are met by the firm. This ratio is

calculated by summing up Earnings before interest and Taxes or EBIT and

Fixed charge which is divided by fixed charge before tax and interest.

Profitability Ratios:

16. Gross Profit Margin = (Sales-COGS)/Sales

A financial metric used to assess a firm's financial health by revealing the

proportion of money left over from revenues after accounting for the cost of

goods sold. Gross profit margin serves as the source for paying additional

expenses and future savings.

17. ROE = Net Income after tax/Total Equity Capital

Return on equity or return on capital is the ratio of net income of a business

during a year to its stockholders' equity during that year. It is a measure of

profitability of stockholders' investments. It shows net income as percentage of

shareholder equity.

18. ROA = Net Income after tax/ Total Assets

This ratio indicates how profitable a company is relative to its total assets. The

return on assets (ROA) ratio illustrates how well management is employing the

http://www.qfinance.com/dictionary/cash-flow

http://www.qfinance.com/dictionary/fixed-charge

http://www.qfinance.com/dictionary/fixed-charge


http://www.investopedia.com/terms/r/returnonassets.asp

44

company's total assets to make a profit. The higher the return, the more efficient

management is in utilizing its asset base. The ROA ratio is calculated by

comparing net income to average total assets, and is expressed as a percentage.

19. Asset Turnover = Sales/Total Assets

The amount of sales generated for every dollar's worth of assets. Asset turnover

measures a firm's efficiency at using its assets in generating sales or revenue - the

higher the number the better. It also indicates pricing strategy: companies with

low profit margins tend to have high asset turnover, while those with high profit

margins have low asset turnover.

20. Earnings per share = Net Income After Tax/No. of Ordinary Shares

Earnings per share (EPS) are the portion of the company’s distributable profit

which is allocated to each outstanding equity share (common share). Earnings

per share are a very good indicator of the profitability of any organization,

and it is one of the most widely used measures of profitability.

The earnings per share is a useful measure of profitability, and when

compared with EPS of other similar companies, it gives a view of the

comparative earning power of the companies. EPS when calculated over a

number of years indicates whether the earning power of the company has

improved or deteriorated. Investors usually look for companies with steadily

increasing earnings per share.

Capital Market Performance Ratios

21. P/E Ratio = Market price per share/EPS

A valuation ratio of a company's current share price compared to its per-share

earnings. In general, a high P/E suggests that investors are expecting higher

earnings growth in the future compared to companies with a lower P/E. However,

the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to

compare the P/E ratios of one company to other companies in the same industry.

45

Total Market capitalization / (Total Assets –

Intangible Assets)

22. TQ = (Debt + Market Capitalization)/Total Assets

This ratio is of a company's market value to its total asset value. When Tobin's Q

ratio is less than one, it means that the market value of the company is less than

the total asset value, indicating that it is undervalued. Likewise, when it is more

than one, it indicates that the market value is higher than the total asset value and

that the company might be overvalued. Tobin's Q ratio is also called simply a Q

ratio.

23. Market to Book value =

This ratio is the ratio of the current share price to the book value per share. It

measures how much a company worth at present, in comparison with the amount

of capital invested by current and past shareholders into it.

http://financial-dictionary.thefreedictionary.com/Market+Value

http://financial-dictionary.thefreedictionary.com/Undervalued

http://financial-dictionary.thefreedictionary.com/Overvalued

http://www.advfn.com/p.php?pid=qkquote

46

Appendix-2: Ratio Liquidity Ratio

Current

Ratio

Quick (acid

Test) Ratio

Cash

Ratio

Operating

Cash Flow

Ratio

Inventory

Turnover

Ratio (ITR)

Average

Sel l ing

Period

Receivable

Turnover

Ratio (RTR)

Average

Col lection

Period

Accounts

Payabel

Turnover (APT)

Average

Payment

Period

2010 0.728 0.211 0.030 -0.109 4.151 86.724 6.444 55.868 5.634 63.897

2011 0.690 0.260 0.012 0.129 6.450 55.812 3.799 94.753 2.445 147.253

2010 1.415 0.285 0.068 0.346 12.558 28.667 11.414 31.539 60.980 5.904

2011 1.236 0.318 0.065 0.092 17.108 21.043 8.317 43.284 25.804 13.951

2010 2.379 1.637 1.325 0.615 5.249 68.585 14.121 25.494 4.114 87.505

2011 2.143 1.540 1.162 0.542 6.398 56.272 10.629 33.871 3.644 98.792

2010 0.228 0.030 0.017 1.000 0.880 409.027 42.467 8.477 0.618 582.567

2011 0.426 0.099 0.033 1.000 0.945 380.782 11.431 31.492 1.070 336.489

2010 1.200 0.259 0.033 0.153 1.974 182.376 13.196 27.281 7.978 45.124

2011 1.193 0.367 0.039 -0.187 2.413 149.185 7.676 46.900 8.078 44.563

2010 1.288 0.428 0.068 0.668 6.879 52.335 9.895 36.384 6.428 56.007

2011 3.471 2.345 2.094 -0.064 5.537 65.013 11.725 30.703 31.564 11.405

2010 0.756 0.118 0.013 0.103 1.656 217.368 10.010 35.966 12.032 29.921

2011 2.686 1.181 0.975 0.394 2.132 168.843 14.813 24.303 15.536 23.171

2010 0.961 0.197 0.061 -0.024 1.960 183.658 10.831 33.237 7.426 48.476

2011 0.949 0.180 0.058 0.134 1.893 190.129 10.516 34.235 3.783 95.168

2010 2.061 0.976 0.774 0.398 1.684 213.799 10.324 34.869 5.338 67.446

2011 2.149 0.963 0.656 0.170 1.625 221.606 6.807 52.885 5.251 68.556

2010 1.117 0.350 0.024 0.088 1.500 240.027 4.035 89.213 7.536 47.768

2011 0.981 0.372 0.015 0.265 1.400 257.209 3.234 111.313 4.436 81.156

2010 0.890 0.149 0.007 0.168 1.506 239.058 8.725 41.262 4.181 86.106

2011 0.904 0.215 0.058 0.191 2.226 161.735 10.631 33.865 4.547 79.179

2010 3.294 1.445 0.788 0.167 2.127 169.233 3.746 96.109 3.519 102.300

2011 2.845 1.346 0.509 0.080 1.961 183.609 2.346 153.421 3.384 106.375

2010 1.070 0.129 0.086 0.110 0.366 983.914 8.523 42.240 5.802 62.053

2011 1.267 0.134 0.058 0.764 2.195 164.039 27.616 13.036 3.456 104.173

2010 2.078 0.676 0.561 0.280 8.568 42.019 58.075 6.199 19.910 18.081

2011 2.253 0.526 0.502 0.180 8.259 43.590 320.682 1.123 30.447 11.824

2010 0.582 0.258 0.011 0.100 2.832 127.127 3.523 102.194 5.615 64.114

2011 0.577 0.218 0.009 0.028 2.497 144.151 3.848 93.556 4.511 79.810

2010 0.557 0.077 0.036 0.205 5.097 70.629 21.937 16.411 7.702 46.743

2011 0.598 0.085 0.036 0.273 5.451 66.046 19.462 18.498 5.274 68.255

2010 1.787 1.213 0.485 0.231 3.704 97.199 2.638 136.466 70.787 5.086

2011 1.584 0.933 0.255 -0.109 2.697 133.504 2.343 153.655 74.123 4.857

2010 1.890 0.865 0.400 0.317 0.518 694.502 1.127 319.570 2.954 121.864

2011 1.821 0.612 0.055 0.200 0.626 575.408 0.985 365.622 2.649 135.908

2010 0.885 0.109 0.018 0.100 4.569 78.786 23.442 15.357 207.747 1.733

2011 0.937 0.215 0.031 -0.310 4.012 89.736 9.070 39.692 176.197 2.043

2010 2.859 1.653 1.362 0.370 2.010 179.134 8.424 42.735 9.722 37.028

2011 1.707 0.723 0.696 0.228 1.393 258.355 23.086 15.594 1.697 212.181

2010 2.592 0.790 0.452 0.350 2.431 148.115 4.535 79.387 1131.399 0.318

2011 1.912 0.731 0.012 -0.549 4.047 88.952 2.549 141.236 4254.553 0.085

2010 6.788 5.503 4.478 -0.762 1.073 335.562 1.682 213.998 4.119 87.395

2011 4.574 3.158 2.023 0.153 1.467 245.329 2.206 163.175 3.792 94.946

2010 1.225 0.291 0.031 0.112 3.272 110.034 10.800 33.332 73.291 4.912

2011 0.566 0.209 0.025 -0.212 1.913 188.144 7.973 45.154 85.506 4.210

2010 1.816 0.472 0.030 -0.268 1.599 225.165 4.429 81.290 1.069 336.655

2011 1.866 0.408 0.018 0.435 1.283 280.539 4.116 87.465 1.331 270.375

2010 1.836 0.947 0.062 -0.587 5.878 61.242 4.766 75.540 7.013 51.330

2011 1.648 0.754 0.083 0.182 6.440 55.904 4.453 80.847 9.150 39.344

2010 3.375 1.242 1.163 2.039 2.250 159.992 89.511 4.022 6.520 55.216

2011 3.793 1.814 1.722 1.503 2.254 159.694 64.325 5.597 3.930 91.597

2010 1.330 0.277 0.097 0.164 2.197 163.838 11.732 30.685 1.635 220.141

2011 1.257 0.330 0.088 0.162 2.267 158.774 7.465 48.224 1.587 226.828

2010 2.291 0.465 0.148 0.018 1.584 227.236 4.463 80.665 0.978 368.242

2011 1.926 0.182 0.020 0.215 0.893 403.233 4.552 79.085 0.831 433.349

2010 1.225 0.556 0.535 0.484 7.179 50.149 181.474 1.984 7.708 46.706

2011 1.248 0.639 0.611 0.395 8.331 43.213 160.759 2.239 9.642 37.337

2010 1.026 0.093 0.025 0.156 3.429 104.983 37.203 9.677 2.699 133.390

2011 1.121 0.111 0.042 0.137 3.644 98.781 40.666 8.853 3.263 110.315

2010 1.486 0.155 0.135 0.178 2.289 157.252 160.730 2.240 190.083 1.894

2011 1.537 0.099 0.087 0.122 2.220 162.174 284.098 1.267 105.319 3.418

2010 1.390 0.110 0.052 -0.063 0.691 521.227 6.543 55.024 4.451 80.878

2011 1.220 0.061 0.022 -0.046 0.374 962.264 7.984 45.088 2.181 165.078

2010 1.302 0.252 0.221 0.039 0.338 1066.064 15.514 23.205 3.159 113.976

2011 1.082 0.230 0.121 0.191 0.620 580.717 5.727 62.857 6.912 52.087

2010 6.023 3.991 3.046 0.054 3.565 100.992 8.901 40.444 7.295 49.347

2011 3.746 1.803 0.885 0.070 2.916 123.438 7.375 48.812 5.970 60.299

Companies Industry Year

Quasem Drycel ls

Rangpur Foundry

Renwick Ja jneswar & Co

S. Alam Cold Rol led Steels LTD

Singer Bangladesh

Kay and Que

Monno Jute Stafflers

Navana CNG Limited

National Polymer

National Tube

Olympic Industries

BD. Thai Almunium

BSRM Steels Limited

Deshbandhu Polymer LTD

Estern Cables

Golden Son LTD

GPH Ispat Ltd

Aftab Auto

Anwar Galvanizing

Atlas Bangladesh

Aziz Pipes

BD. Autocars

Bangladesh Lamps

Fu-wang Ceramic

Menno Ceramic

Rak Ceramics

Shinepukur Ceramics LTD

Standard Ceramic

Cement

Industry

Aramit Cement

Liquidity Ratios

Ceramic

Industry

Engineering

Confidence Cement

Heidelberg Cement BD

Lafarge Surma Cement

Meghna Cement

M.I Cement Factory Ltd.

47

Debt Ratio

Debt

Equity

Ratio

Interest

Coverage Ratio

(Earnings Bas is )

Interest

Coverage

Ratio (Cash

Bas is )

Fixed-

Payment

Coverage

Ratio

2010 0.865 0.478 2.737 0.141 2.737

2011 0.858 0.300 1.973 3.113 1.973

2010 0.195 0.012 13.232 11.842 13.232

2011 0.327 0.121 23.420 13.344 23.420

2010 0.338 0.114 826.766 910.486 826.766

2011 0.343 0.119 762.633 1036.394 762.633

2010 0.845 1.792 -3.416 14.714 -3.416

2011 0.652 0.620 -2.714 7.149 -2.714

2010 0.815 1.539 0.462 3.295 0.462

2011 0.836 1.500 0.448 -1.149 0.448

2010 0.415 0.050 11.960 17.223 11.960

2011 0.282 0.121 8.365 2.694 8.365

2010 0.471 2.891 2.564 3.392 2.564

2011 0.180 2.219 11.349 12.558 11.349

2010 0.705 0.340 1.053 0.861 1.053

2011 0.692 0.182 1.501 2.324 1.501

2010 0.275 0.002 9.241 11.860 9.241

2011 0.289 0.006 16.631 12.262 16.631

2010 0.467 0.340 2.221 1.725 2.221

2011 0.371 0.223 1.701 2.577 1.701

2010 0.587 0.030 2.096 6.343 2.096

2011 0.547 0.002 2.895 7.872 2.895

2010 0.233 0.008 15.932 5.556 15.932

2011 0.280 0.006 16.291 4.946 16.291

2010 0.511 0.000 1.046 2.855 1.046

2011 0.369 0.000 11.164 48.713 11.164

2010 0.513 0.078 561.063 448.434 561.063

2011 0.474 0.070 243.709 146.936 243.709

2010 1.409 -0.851 38.662 339.876 38.662

2011 1.438 -0.758 22.600 86.021 22.600

2010 0.819 0.784 1.409 3.242 1.409

2011 0.794 0.710 1.411 3.782 1.411

2010 0.265 0.072 3.881 4.340 3.881

2011 0.402 0.151 2.623 0.277 2.623

2010 0.314 0.054 4.040 9.290 4.040

2011 0.345 0.061 1.222 2.511 1.222

2010 0.847 1.008 2.528 2.477 2.528

2011 0.864 0.648 2.358 -5.926 2.358

2010 0.337 0.127 3.229 5.208 3.229

2011 0.432 0.045 6.042 10.153 6.042

2010 0.455 0.180 8.595 47.999 8.595

2011 0.574 0.185 5.137 -15.464 5.137

2010 0.101 0.002 21.905 -22.695 21.905

2011 0.144 0.005 25.090 8.287 25.090

2010 0.744 1.074 0.510 1.592 0.558

2011 0.847 1.406 0.721 -0.644 0.763

2010 0.809 2.487 1.323 -1.110 1.279

2011 0.811 2.430 1.461 6.051 1.264

2010 0.490 0.047 3.164 -6.288 3.164

2011 0.563 0.046 2.814 6.004 2.814

2010 0.257 0.136 14.158 17.668 4.637

2011 0.215 0.075 18.367 20.641 5.767

2010 0.550 0.220 1.578 2.299 1.578

2011 0.606 0.151 1.754 2.790 1.754

2010 0.487 0.157 26.515 10.420 26.515

2011 0.560 0.155 -2.064 12.609 -2.064

2010 0.555 0.198 7.912 11.158 4.300

2011 0.543 0.193 7.779 9.395 6.584

2010 0.426 0.019 2.689 3.222 2.689

2011 0.190 0.002 2.671 2.897 2.671

2010 0.527 0.000 1.621 1.874 1.621

2011 0.526 0.000 1.649 1.616 1.649

2010 0.686 0.514 8.718 -8.056 8.718

2011 0.733 0.527 11.799 -4.558 11.799

2010 0.777 0.738 1.972 2.009 1.972

2011 0.762 0.218 2.342 4.559 2.342

2010 0.238 0.129 363.574 52.888 363.574

2011 0.403 0.307 52.940 19.113 52.940


Quasem Drycel ls

Rangpur Foundry



Singer Bangladesh

Solvency Ratios

Kay and Que


Navana CNG Limited

National Polymer

National Tube

Olympic Industries

BD. Thai Almunium

BSRM Steels Limited


Estern Cables

Golden Son LTD

GPH Ispat Ltd

Aftab Auto

Anwar Galvanizing

Atlas Bangladesh

Aziz Pipes

BD. Autocars

Bangladesh Lamps

Fu-wang Ceramic

Menno Ceramic

Rak Ceramics


Standard Ceramic

Cement

Industry

Aramit Cement

Ceramic

Industry

Engineering

Confidence Cement



Meghna Cement


Solvency Ratios

48

Gross

Profi t

Margin

Return on

Equity

(ROE)

Return on

Assets

(ROA)

Assets

Turnover

Earnings

Per Share

(EPS)

P/E Ratio TQMarket to book

va lue

2010 0.228 0.600 0.081 0.935 5.670 23.192 1.939 1.875

2011 0.192 0.280 0.040 0.766 3.300 32.182 1.323 1.280

2010 -2.028 0.092 0.074 0.532 7.390 28.214 2.110 2.103

2011 -1.480 0.079 0.053 0.600 5.290 19.244 1.103 1.021

2010 0.237 0.158 0.104 1.159 13.267 20.424 2.916 2.842

2011 0.157 0.190 0.125 1.063 17.675 18.945 1.852 1.773

2010 0.822 -0.585 -0.090 0.316 -1.872 -15.342 1.663 1.487

2011 0.756 -0.339 -0.118 0.329 -2.459 -10.813 1.490 1.370

2010 0.741 0.069 0.013 1.585 2.030 163.350 2.352 2.068

2011 0.684 0.098 0.016 1.484 2.960 40.608 0.904 0.658

2010 0.224 0.249 0.146 1.370 4.080 0.000 0.029 0.000

2011 0.191 0.087 0.062 0.574 5.360 17.487 1.175 1.088

2010 0.251 0.053 0.028 0.493 3.860 12.241 1.871 0.342

2011 0.290 0.074 0.061 0.548 10.740 4.036 2.066 0.246

2010 0.209 0.014 0.004 0.883 2.840 32.063 0.237 0.133

2011 0.215 0.097 0.030 0.816 18.640 3.146 0.150 0.094

2010 0.375 0.119 0.086 0.569 2.540 48.228 4.156 4.217

2011 0.412 0.138 0.098 0.593 2.990 20.575 2.020 2.046

2010 0.342 0.093 0.049 0.376 2.280 36.316 1.975 1.794

2011 0.344 0.038 0.024 0.266 1.520 22.658 0.675 0.535

2010 0.195 0.031 0.013 0.712 4.880 9.775 0.139 0.127

2011 0.200 0.039 0.017 0.914 6.210 5.746 0.101 0.100

2010 0.227 0.216 0.166 0.558 12.175 25.021 4.155 4.149

2011 0.289 0.225 0.162 0.541 16.151 7.028 1.145 1.140

2010 0.230 0.002 0.001 0.187 0.133 350.385 0.295 0.295

2011 0.110 0.065 0.041 0.778 5.222 5.211 0.213 0.213

2010 0.088 0.373 0.181 3.167 21.580 13.091 2.414 2.376

2011 0.080 0.319 0.168 3.267 16.770 14.103 2.402 2.365

2010 0.111 -0.019 0.008 0.924 0.720 81.708 0.975 0.626

2011 0.077 0.024 -0.011 0.889 -0.990 -28.384 0.632 0.300

2010 0.218 0.093 0.017 0.610 5.643 9.216 0.297 0.155

2011 0.212 0.083 0.017 0.624 0.521 100.780 1.798 1.652

2010 0.235 0.055 0.040 0.408 8.567 23.197 0.992 0.939

2011 0.223 0.057 0.034 0.495 6.540 23.211 0.885 0.796

2010 0.414 0.040 0.027 0.145 24.539 3.815 0.141 0.105

2011 0.361 0.010 0.007 0.167 0.440 128.250 0.907 0.867

2010 0.101 0.467 0.072 1.473 3.299 49.604 3.685 3.530

2011 0.081 0.298 0.041 1.295 3.003 37.114 1.580 1.492

2010 0.130 0.084 0.055 0.621 2.100 0.000 0.084 0.000

2011 0.148 0.102 0.058 0.251 1.520 22.605 1.336 1.310

2010 0.142 0.030 0.016 0.546 6.818 10.396 0.268 0.169

2011 0.143 0.102 0.043 0.908 24.710 2.270 0.177 0.098

2010 0.355 0.061 0.055 0.171 1.648 55.091 3.036 3.034

2011 0.335 0.127 0.109 0.351 3.863 15.415 1.683 1.679

2010 0.126 0.175 0.045 1.314 2.205 0.000 0.275 0.000

2011 0.175 0.299 0.046 0.923 3.658 0.000 0.215 0.000

2010 0.225 0.042 0.008 0.652 4.530 9.492 0.553 0.077

2011 0.236 0.048 0.009 0.562 0.510 80.000 1.181 0.721

2010 0.170 0.099 0.051 1.967 39.094 8.583 0.459 0.435

2011 0.164 0.066 0.029 1.624 2.683 92.425 2.692 2.672

2010 0.440 0.317 0.235 1.107 6.676 22.829 5.478 5.377

2011 0.434 0.254 0.200 0.924 6.907 10.061 2.069 2.011

2010 0.191 0.056 0.025 0.951 24.268 2.783 0.170 0.071

2011 0.179 0.058 0.023 0.988 25.559 2.116 0.108 0.049

2010 0.233 0.114 0.057 0.577 35.700 1.892 0.186 0.107

2011 0.113 -0.025 -0.012 0.360 -7.150 -7.565 0.161 0.088

2010 0.284 0.363 0.140 1.805 54.891 2.246 0.392 0.315

2011 0.250 0.345 0.138 2.100 73.567 1.123 0.233 0.155

2010 0.188 0.079 0.045 1.054 2.095 55.215 2.509 2.498

2011 0.190 0.027 0.022 0.530 2.046 27.161 0.592 0.590

2010 0.197 0.128 0.061 1.672 2.226 60.090 3.649 3.649

2011 0.197 0.145 0.069 1.817 2.598 27.923 1.923 1.923

2010 0.413 0.090 0.028 0.198 54.120 1.924 0.216 0.054

2011 0.568 0.091 0.024 0.182 54.960 1.769 0.184 0.043

2010 0.284 0.100 0.022 0.292 20.747 3.545 0.244 0.079

2011 0.226 0.158 0.038 0.443 27.462 2.220 0.136 0.084

2010 0.255 0.677 0.516 1.172 54.167 6.051 2.997 2.899

2011 0.257 0.182 0.109 1.484 10.176 20.118 2.369 2.185

Profitability Ratios Capital Market Performance Ratios


Quasem Drycel l s

Rangpur Foundry



Singer Bangladesh

Kay and Que


Navana CNG Limited

National Polymer

National Tube

Olympic Industries

BD. Thai Almunium

BSRM Steels Limited


Estern Cables

Golden Son LTD

GPH Ispat Ltd

Aftab Auto

Anwar Galvanizing

Atlas Bangladesh

Aziz Pipes

BD. Autocars

Bangladesh Lamps

Fu-wang Ceramic

Menno Ceramic

Rak Ceramics


Standard Ceramic

Cement

Industry

Aramit Cement

Ceramic

Industry

Engineering

Confidence Cement



Meghna Cement


Profitability and Capital market Performance Ratios

49

Appendix-3: Average Ranking Score

Y-2010 Y-2011 Y-2010 Y-2011 Y-2010 Y-2011 Y-2010 Y-2011 Y-2010 Y-2011

Aramit Cement 4.70 3.90 4.80 4.40 3.00 3.00 3.67 2.67 4.21 3.67

Confidence Cement 3.40 3.40 2.00 2.20 4.20 4.20 2.33 4.33 3.14 3.42

Heidelberg Cement BD 2.00 2.60 1.60 1.40 2.40 2.20 2.00 2.00 2.00 2.16

Lafarge Surma Cement 3.50 3.60 5.20 4.80 5.00 5.00 5.33 3.33 4.45 4.17

Meghna Cement 4.30 4.50 4.80 5.40 3.60 3.20 2.00 4.33 3.90 4.39

M.I Cement Factory Ltd. 3.10 3.00 2.60 2.80 2.80 3.40 5.67 4.33 3.21 3.20

Premier Cement Mills LTD

Fu-wang Ceramic 3.90 2.00 3.00 2.20 3.00 2.80 3.33 2.67 3.42 2.31

Menno Ceramic 2.30 3.10 4.80 4.60 3.60 2.40 3.67 4.67 3.33 3.47

Rak Ceramics 1.60 3.40 1.00 1.60 2.00 2.00 1.00 1.67 1.48 2.46

Shinepukur Ceramics LTD 3.90 3.70 3.00 3.80 3.20 4.20 2.00 2.00 3.31 3.64

Standard Ceramic 3.30 2.80 3.20 2.80 3.20 3.60 5.00 4.00 3.45 3.12

Aftab Auto 10.50 11.60 5.60 6.60 9.40 7.20 3.67 11.67 8.33 9.44

Anwar Galvanizing 15.70 10.60 14.40 5.20 19.80 14.00 9.67 16.33 15.65 10.80

Atlas Bangladesh 7.60 7.60 5.20 4.60 7.60 6.60 8.67 5.33 7.17 6.42

Aziz Pipes 15.70 15.80 6.40 6.80 19.80 19.80 7.33 17.33 13.53 14.82

BD. Autocars 12.40 11.40 18.60 18.60 14.40 15.20 14.00 5.00 14.48 13.20

Bangladesh Lamps 12.50 14.30 9.80 13.40 13.80 13.80 8.67 11.00 11.73 13.60

BD. Thai Almunium 13.00 14.10 8.80 14.60 13.40 18.00 18.33 8.00 12.74 14.41

BSRM Steels Limited 14.50 14.90 18.00 18.80 10.20 11.40 4.33 7.00 13.14 14.08

Deshbandhu Polymer LTD 10.60 8.60 10.80 8.40 14.80 15.00 23.00 9.00 12.22 10.08

Estern Cables 12.80 15.30 9.00 15.00 17.60 11.00 14.00 18.00 13.17 14.55

Golden Son LTD 12.40 11.40 7.60 4.20 14.60 10.20 5.00 8.00 10.95 9.07

GPH Ispat Ltd 14.20 17.30 21.00 21.40 12.80 9.80 16.00 17.00 15.63 16.44

Kay and Que 13.80 12.00 21.00 18.40 15.80 16.20 14.00 9.00 15.95 14.10

Monno Jute Stafflers 11.70 10.90 13.40 11.40 9.00 13.00 12.33 1.67 11.54 10.43

Navana CNG Limited 6.90 6.10 7.60 6.60 5.80 5.00 3.67 7.00 6.43 6.07

National Polymer 10.70 10.20 17.20 15.60 13.20 11.80 19.67 20.67 13.81 13.02

National Tube 12.30 12.30 7.80 15.80 9.20 21.40 19.00 20.67 11.32 16.17

Olympic Industries 7.50 7.60 11.60 10.60 3.60 3.00 14.67 17.67 8.37 8.39

Quasem Drycells 10.90 10.50 11.40 9.40 14.40 16.80 6.00 12.00 11.26 11.87

Rangpur Foundry 12.30 13.20 14.00 13.40 10.00 9.40 3.33 5.33 11.13 11.46

Renwick Jajneswar & Co 15.70 15.40 14.40 14.00 10.80 10.80 20.00 20.00 14.77 14.55

S. Alam Cold Rolled Steels LTD 13.60 15.30 17.80 16.00 12.40 10.20 17.67 19.67 14.76 14.79

Singer Bangladesh 8.70 9.60 4.40 7.00 3.60 6.40 9.00 5.33 6.57 7.77

Average Ranking

Cement Industry

Ceramic Industry

Overall Ranking Score

Engineering

Liquidity Ratio Solvency Ratio Profitability

Ratio

Capital Market

Performance RatioCompanies Industry

Documents

Financial Statements Analysis_Dhaka Stock Exchange