Fin 254 Snt Project Ratio Analysis

ASSIGNMENT

ON

FINANCIAL RATIO ANALYSIS

Prepared For:

Shanila Taneem (SnT)

FIN 254

SECTION 9

Prepared By:

Introduction:

Padma Cement Limited

Padma Cement Limited was incorporated as a private limited company in 1998 under Companies Act 1994. Subsequently the company was converted into public limited company with an authorized capital of Tk. 300 million divided into 30 million ordinary shares of Tk.10 each with a view to float its share to the public for an amount of Tk. 138 million. Present paid-up capital of the Company is Tk. 138 million. After the completion of the IPO the total paid up capital will be Tk. 276 million.The Padma Cement Limited (PCL) is one of the latest Portland Cement Manufacturer in Bangladesh. The company is located at Baghabari ghat, Shajadpur, Sirajgonj, on a land measuring 6.11 acres which has a good communication facility.

Lafarge Surma Limited

Lafarge Surma Cement Limited was incorporated on 11 November 1997 as a private limited company in Bangladesh under the Companies Act 1994. The Company has subsequently been converted into a public limited company on 20 January 2003 and went for Initial Public Offering of shares in November 2003 which was fully subscribed and issued. The shares have been listed and are being traded in Dhaka and Chittagong Stock Exchanges. Presently the Company has two subsidiaries in India. The main objectives of the subsidiaries are to support the holding company. The subsidiaries are Lum Mawshun Minerals Private Limited and Lafarge Umiam Mining Private Limited.

Modern Cement Limited

Modern Cement Limited has started their mission in cement industry on01 october 2000 as a public limited company in Bangladesh under the Companies Act 1994. They are one of the leading cement company in Bangladesh. Their manufacturing plant is situated in gazaria of Munshiganj district.On the payroll of the company,there werw 18 officers,57 staff and wokers.

Current Ratio: Current Assets/Current Liabilities

2007

Padma 57443734/160551025 0.358 xModern 49579758/117211996 0.423xLafarge 1478984/5547407 0.267x

Industry Average (0.358+0.423+0.267)/3 0.349x

Interpretation:

Industry Average in 2007 is 0.349. Comparing to industry average padma and modern’s current ratio are standing over average rate. Lafarge is in below average industry rate. Lafarge is doing bad.

2008

Padma 36257201/114784626 0.316xModern 58272544/133762450 0.436xLafarge 2444556/7063824 0.346x


Interpretation:

Industry Average in 2008 is .366 which is greater than 2007. Comparing to 2007 padmas current ratio falls down. Moderns and Lafarg’s ratio rises up. Lafarge and Padma current ratio is in below industry average.

2009



Interpretation:

Industry average in 2009 is 0.328 which is less than previous years. Comparing to 2008 all the companies current ratio falls down. Lafarge and Padmas current ratio are in below industry average.

Current Ratio

2007 2008 2009Padma 0.36 0.32 0.29Modern 0.42 0.44 0.42Lafarge 0.27 0.35 0.27Industry Average 0.35 0.37 0.33

Padma Modern Lafarge Industry Average

0.000.050.100.150.200.250.300.350.400.450.50

200720082009

Inventory Turnover: Sales/Inventories

2007



Interpretation:

Industry average in 2007 is 3.3. Padma and Modern’s inventory turnover is in below industry average. Lafarge has 4.05 industry average, they are doing well in the market.

2008


Industry Average (3.90+4.67+6.17)/3 4.91

Interpretation:

Compare to 2007 in 2008 industry average rises in 3.3 to 4.91 and except Lafarge, Padma and moderns inventory turnover is in below industry average, they are not doing well.

2009



Interpretation:

In 2009 Industry average is 4.34. padma has 1.91 which is very poor in this sector. Lafarge and modern’s have inventory turnover is greater than industry average.

Inventory Turnover



0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

200720082009

Days Sales Outstanding (DSO): Receivable/(Annual Sales/365)

2007

Padma 4601678/(95823187/365) 17.5 DaysModern 32080688/(22290416/365) 25.5 DaysLafarge 56455/(2399876/365) 8.6 Days

Industry Average (17.5+25.5+8.6)/3 17.2 Days

Interpretation:

Industry average in 2007 is 17.2. Where padma and modern is above industry average but Lafarge is in below industry average.

2008



Interpretation:

DSO’s 2008 industry average is 24.15 days. Modern and Lafarge is in above industry average but Padma is in below industry average.

2009



Interpretation:

Industry average in 2009 is 16.67. Modern and Lafarge is in above industry average where as Padma is in below industry average which is very poor in DSO.

Days Sales Outstanding (DSO):



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-0.3

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0

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0.6

200720082009

Fixed Asset Turnover Ratio: Sales/Net Fixed Asset

2007



Interpretation:

Industry average in 2007’s Fixed Asset Turnover Ratio is .0233. Modern and Lafarge has 0.116 and 0.153 respectively. Padma is in a good condition in the industry.

2008



Interpretation:

In 2008 fixed asset has industry average of 0.313. Padma and Lafarge are in a good condition where as Mordern is in far below from industry average.

2009



Interpretation:

In 2009 fixed asset turnover has industry average of 0.217. Here Lafarge is far away from modern and padma. And Lafarge is in very high position from industry average.

Fixed Asset Turnover Ratio:



-0.4

-0.3

-0.2

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200720082009

Total Asset Turnover: Sales/Total Asset

2007

Padma 95823187/(222546157+57443734) 0.341xModern 22359190/256255991 0.0873xLafarge 2399876/17195107 0.140x


Interpretation:

Industry Average in 2007 is 0.189. Padma’s turnover is above industry average and the other two companies are below industry average. In asset turnover padma is in the best position the other two will need time to recover.

2008



Interpretation:

In this year only modern’s turnover is above industry average. Padma and moderns turnover ratio are below industry average.

Total asset turnover

2009



Interpretation:

In 2009 lafarge’s turnover ratio is above industry average this company’s ratio has rises to 0.440. padma and modern’s ratio is below industry average.

Total Asset Turnover:



-0.4

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0.6

200720082009

Debt Ratio: Total Debt/Total Assets

2007

Padma 71395316/279989891 25.5%Modern 113359336/256255991 44.2%Lafarge 8993721/17195107 52.0%

Industry Average (0.255+0.442+0.520)/3 40.6%

Interpretation:

In 2007 among all of them Padma is doing well cause it has the lowest percentage in debt ratio. Lafarge and modern has higher debt ratio than industry average.

2008



Interpretation:

In 2008 padmas debt ratio is higher than industry average now it is in risky position. Modern and Lafarge have lower debt ratio.

2009



Interpretation:

Modern is in very good position where Lafarge and padmas debt ratio are above industry average.

Debt Ratio:

2007 2008 2009Padma 25.5 56.71 60.1Modern 44.2 49.9 7.4Lafarge 52 47.2 47Industry Average 40.6 51.27 38.17


-0.4

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200720082009

Times Interest Earned (TIE): EBIT/Interest Expense

2007

Padma (6097923)/24733336 (0.247)xModern (11747721)/11333606 (1.037)xLafarge (95971)/1103467 (0.087)x

Industry Average [(0.247)+(1.037)+(0.087)]/3 (0.457)x

Interpretation:

In 2007 lafarge and padmas TIE ratio is lower than industry average it is in risky position. Only modern has greater TIE ratio than industry average.

2008

Padma (4035439)/35605118 (0.11)xModern (16521223)/14388277 (1.15)xLafarge 2062507/1104464 1.87x

Industry Average [(0.11)+(1.15)+1.87]/3 0.203x

Interpretation:

In this year Lafarge TIE ratio is in good position. Lafarge and Modern’s Tie ratio is above industry average they are in risk.

2009

Padma (3507847)/257243123 (0.02)xModern (20419924)/8218207 (2.49)xLafarge 1939962/906794 2.14x

Industry Average [(0.02)+(2.49)+2.14]/3 (0.123x)

Interpretation:

In this year likely 2007 and 2008 lafarge is doing good. There ratio is rising day by day. Other companies are worst.

Times Interest Earned (TIE):



-0.4

-0.3

-0.2

-0.1

0

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200720082009

Profit Margin on Sales: Net Income/Sales

2007

Padma (43171682)/95823187 (45.2) %Modern (34179005)/22359190 (152.9) %Lafarge (855383)/2399876 (35.6) %

Industry Average [(45.2)+(152.9)+(35.6)]/3 (77.9)%

Interpretation:

Padma and Lafarge is in good position. Modern has poor profit margin ratio than industry average.

2008

Padma 39694607/92675230 0.431%Modern (55285480)/20814311 (2.66) %Lafarge 635195/6211938 0.102%

Industry Average [0.102+(2.66)+0.431]/3 (0.709)%

Interpretation:

Modern is in a bad position Lafarge and Padma has profit margin ratio above than industry average.

2009

Padma (40234944)/51301186 (0.784) %Modern (75705404)/10622883 (0.741) %Lafarge 582925/7543725 0.08%

Industry Average [(0.784)+(0.741)+0.08]/3 (0.482)%

Interpretation:

In 2009 padma falls down in profit margin ratio as well as modern. Only Lafarge is doing well in profit margin ratio.

Profit Margin on Sales:

2007 2008 2009Padma -45.2 0.431 -0.784Modern -152.9 -2.66 -0.741Lafarge -35.6 0.102 0.08Industry Average -77.9 -70.90% -0.482


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200720082009

Return On Total Assets (ROA): Net Income/Total Assets

2007

Padma (43171682)/279989899 (15) %Modern (34179005)/22359190 (15.3) %Lafarge (855383)/17195107 (4.00) %


Interpretation:

Lafarge has greater ratio than industry average of ROA. Padma and Modern are doing poor.

2008


Industry Average [(15.2)+ (22.0)+ 3.6]/3 (11.2)%

Interpretation:

In 2008 again Lafarge has done well Padma and Modern has ROA ratio below industry average.

2009


Industry Average [(1.77)+(13.9)+3.4]/3 (4.09)%

Interpretation:

Padma and Lafarge doing well only modern has Roa ratio less than industry average.

Return On Total Assets (ROA):

2007 2008 2009Padma -15 -11.2 -1.77Modern -15.3 -2.66 -13.9Lafarge -4 0.102 3.4Industry Average

-11.43%

-7090.00

%

-409.00

%


-0.4

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200720082009

Return On Common Equity (ROE): Net Income/Common Equity

2007

Padma (431716822)/55518750 (78.0) %Modern (75705404)/97517596 (76.0) %Lafarge (855383)/3534891 (24.0) %


Interpretation:

Padma and modern is poor compare to the industry average where as Lafarge quiet ok in industry average.

2008

Padma (39694607)/158241435 (25.1) %Modern (55285480)/117937520 (46.9) %Lafarge 635195/4170086 15.2 %

Industry Average [(0.251) +(0.469) +0.152]/3 (29.1) %

Interpretation:

Lafarge doing well, padma is ok only modern has ROE ratio is very less than industry average.

2009

Padma (40234944)/227037849 (17.7) %Modern (75705404)/97517596 (78.0) %Lafarge 582925/4753011 12.3 %

Industry Average [(0.177) +(0.78) +0.123]/3 (27.8) %

Interpretation:

Lafarge has greater ratio than industry average of ROE. Padma and Modern are doing poor.

Return On Common Equity (ROE):

2007 2008 2009Padma -78 -25.1 -27.8Modern -76 -46.9 12.3Lafarge -24 15.2 -78Industry Average

-5930.00

% -29.1 -17.7


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200720082009

Price/Earnings (P/E): Price Per Share/ Earnings Per Share

2007

Padma 10/1.44 6.94 xModern 10/.730 13.7 xLafarge 100/(14.73) (6.79) x

Industry Average [6.94+13.7+(6.79)]/3 4.61 x

Interpretation:

Lafarge is in lower position than industry average, where as padma and modern are higher in P/E.

2008

Padma 10/1.44 6.94 xModern 10/(0.954) (10.48) xLafarge 100/10.94 9.14 x

Industry Average [6.94+(10.48)+ 9.14]/3 1.87 x

Interpretation:

In 2008 Modern is in a poor condition and the other two companies are in a healthy position.

2009

Padma 10/1.46 6.85 xModern 10/1.179 8.48 xLafarge 100/10.04 9.96 x

Industry Average (6.85+8.48+9.96)/3 8.43 x

Interpretation:

In 2009 padma falls down in P/E Lafarge and Modern are doing well in P/E.

Price/Earnings (P/E):

2007 2008 2009Padma 6.94 6.94 x 8.43Modern 13.7 -10.48 9.96Lafarge -6.79 9.14 8.48Industry Average 4.61 1.87 6.85


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200720082009

Book Value Per Share (BVPS): Common Equity/Common Shares Outstanding

2007

Padma 55518750/276000000 0.20 Tk.Modern 139043995/173223000 0.80 TkLafarge 3534891/5806868 0.61 Tk.

Industry Average (0.20+0.80+0.61)/3 0.54 Tk

Interpretation:

Padma is lower than the industry average but Modern and Lafarge are doing well.

2008

Padma 15824143/276000000 0.057 Tk.Modern 117937520/173223000 0.681 Tk.Lafarge 4170086/5806868 0.72 Tk.


Interpretation:

In 2008 Padma decreased more than 2007 but other two are in a good position.

2009

Padma 22703784/276000000 0.08 Tk.Modern 97517596/173223000 0.56 Tk.Lafarge 4753011/5806868 0.82 Tk.


Interpretation:

In 2009 Padma is in previous position that means below industry average , where as Modern and Lafarge are doing well.

Book Value Per Share (BVPS):



-0.4

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200720082009

Cash Flow Per Share (CFPS): (Net Income + Depreciation + Amortization)/Common Shares Outstanding

2008

Delta Life Insurance [(34179005+14121907)/173223000 0.116 Tk.Pragati Life Insurance (855383+24377+10893)/5806868 0.470 Tk.

Interpretation:

2009

Delta Life Insurance [(39694607)+341006]/276000000 0.146 Tk.Pragati Life Insurance (635195+27943+9232)/5806868 0.116 Tk.

Interpretation:

2010

Delta Life Insurance [(40234944)+260203]/276000000 0.145 Tk.Pragati Life Insurance [(75705404)+14820120]/173223000 0.352 Tk.

Interpretation:

Conclusion

After looking at a glance in this sector of Cement Industry where we have analysis on Padma Cement Limited, Lafarge Surma Limited and Modern Cement Limited we came to a conclusion that this is a very potential grown up industry where few company are doing well and the other companies are trying to develop and make profit in the coming future. Basically most of the companies are concentrating on expansion but very few companies like Lafarge Surma are taking profit.

Fin 254 Snt Project Ratio Analysis

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