Financial Statement Analysis of Rahimafrooz Batteries Limited (Part 2) - Assignment Point
Financial Statement Analysis of Rahimafrooz Batteries Limited (Part 2)
Subject: Finance | Topics:

Findings and Analysis:

4. By itself ratio analysis is of little value; the user must have something to which it can be compared, such as a past value for the same company, a comparison with other companies in the same industry, or industry averages. Ratios should be used as ‘‘warning lights’’ to indicate potential problems arising in a company. They indicate the symptom, not necessarily the disease, and need to be used in conjunction with other information to enable the analyst to come up with a firm conclusion about the company.

Chapter # 4

Findings and Analysis

Items to be discussed:

  • Part 1:INCOME STATEMENT
    • Horizontal Analysis
    • Vertical Analysis
    • Part 2: BALANCE SHEET
      • Horizontal Analysis
      • Vertical Analysis
      • Part 3:STAEMENT OF CASH FLOW
        • Horizontal Analysis
        • Vertical Analysis
        • Part 4: RATIO ANALYSIS
          • Competitive position
          • Trend Analysis
          • Part 5: Strength Weakness(SO) Analysis

Income Statement analysis:

Horizontal Analysis:

Rahimafrooz Batteries Limited:

Particulars

Rahimafrooz Batteries Ltd. 2010

Rahimafrooz Batteries Ltd. 2009

increase/    decrease

% increase/    Decrease

Sales Revenue

2,605,227,370

2,970,760,616

-365,533,246

-12.30%

Cost of goods sold:-

2,104,277,839

2,366,476,437

-262,198,598

-11.08%

Gross profit

500,949,531

604,284,179

-103,334,648

-17.10%

Less: Operating Expenses:
Administrative Expenses

298,264,314

292,664,865

5,599,449

1.91%

Marketing and Selling Expenses

57,566,380

78,441,091

-20,874,711

-26.61%

Operating Profit

145,118,837

233,178,223

-88,059,386

-37.76%

Less: Financial Expenses

51,881,470

72,655,887

-20,774,417

-28.59%

Add: Non-Operating Income

27,002,246

2,262,296

24,739,950

1093.58%

Net profit before contribution to WPPF and WF

120,239,613

162,784,632

-42,545,019

-26.14%

Less: Contribution to WPPF and WF

5,725,696

7,751,649

-2,025,953

-26.14%

Net profit before tax

114,513,917

155,032,983

-40,519,066

-26.14%

less: Provision for current tax

52,557,752

54,860,712

-2,302,960

-4.20%

Less: Provision for deferred tax

42,791,417

42,791,417

Net Profit After tax

19,164,748

100,172,271

-81,007,523

-80.87%

 Interpretation:

      The comparative income statement given above shows that there has been an decrease in net sales of 12.30%. The cost of goods sold has decreased by 11.08%. This has resulted in decrease  of gross profit by 17.10%.

      Administrative expenses  have increased by 1.91% and marketing and selling expenses have decreased by 26.61% and financial expenses have decreased by 28.59%,nonoperating income has increased by 1093.58% and contribution to WPPF and WF has decreased by 26.14% .The decrease  in gross profit is insufficient to cover the operating expenses. There is also an decrease in net profit after tax of Tk.( 81,007,523) i.e. 80.87%.

      It is concluded from the above analysis that there is not good  progress in the performance of the company and the overall profitability of the company is not satisfactory.

Quasem Drycell Limited

Particulars

Quasem Drycell Ltd. 2010

Quasem Drycell Ltd. 2009

increase/     decrease

% increase/    Decrease

Sales Revenue

935,094,525

969,204,292

-34,109,767

-3.519%

Cost of goods sold:-

759,733,376

797,390,224

-37,656,848

-4.723%

Gross profit

175,361,149

171,814,068

3,547,081

2.064%

Less: Operating Expenses:
Administrative Expenses

51,162,699

54,202,402

-3,039,703

-5.608%

Marketing and Selling Expenses

39,966,022

48,631,194

-8,665,172

-17.818%

Operating Profit

84,232,428

68,980,472

15,251,956

22.111%

Less: Financial Expenses

32,570,755

35,660,810

-3,090,055

-8.665%

Add: Non-Operating Income

6,112,973

3,489,878

2,623,095

75.163%

Net profit before contribution to WPPF and WF

57,774,646

36,809,540

20,965,106

56.956%

Less: Contribution to WPPF and WF

2,751,174

1,752,835

998,339

56.956%

Net profit before tax

55,023,472

35,056,705

19,966,767

56.956%

less: Provision for current tax

15,131,455

9,640,594

5,490,861

56.956%

Less: Provision for deferred tax

323,224

344,611

-21,387

-6.206%

Net Profit After tax

40,215,241

25,760,722

14,454,519

56.111%

 Interpretation:

      The comparative income statement given above shows that there has been an decrease in net sales of 3.519%. The cost of goods sold has decreased by 4.723%. This has resulted in slightly increase of gross profit by 2.064%.

      Administrative expenses  have decreased by 5.608% and marketing and selling expenses have decreased by 17.818% and financial expenses have decreased by 8.665%,nonoperating income has increased by 75.163% and contribution to WPPF and WF has decreased by 56.956% .The increase  in gross profit is sufficient to cover the operating expenses. There is also an increase in net profit after tax of Tk14,454,519 i.e. 56.111%.

      It is concluded from the above analysis that there is high  progress in the performance of the company and the overall profitability of the company is highly satisfactory.

Olympic Batteries Limited

Particulars

Olympic Industries Ltd 2010

Olympic Industries Ltd 2009

increase/     decrease

% increase/    Decrease

Sales Revenue

245,775,310

209,956,249

35,819,061

17.060%

Cost of goods sold:-

175,964,808

158,042,829

17,921,979

11.340%

Gross profit

69,810,502

51,913,420

17,897,082

34.475%

Less: Operating Expenses:
Administrative Expenses

8,526,204

6,895,257

1,630,947

23.653%

Marketing and Selling Expenses

30,760,881

22,623,950

8,136,931

35.966%

Operating Profit

30,523,417

22,394,213

8,129,204

36.300%

Less: Financial Expenses

3,814,895

4,576,212

-761,317

-16.636%

Add: Non-Operating Income

978,196

748,356

229,840

30.713%

Net profit before contribution to WPPF and WF

27,686,718

18,566,357

9,120,361

49.123%

Less: Contribution to WPPF and WF

1,318,415

884,112

434,303

49.123%

Net profit before tax

26,368,303

17,682,245

8,686,058

49.123%

less: Provision for current tax

6,741,009

4,174,399

2,566,610

61.485%

Less: Provision for deferred tax

510,274

627,256

-116,982

-18.650%

Net Profit After tax

19,117,020

12,880,590

6,236,430

48.417%

 Interpretation:

      The comparative income statement given above shows that there has been an increase  in net sales of 17.060%. The cost of goods sold has increased by 11.340%. This has resulted in high increase of gross profit by 34.475%.

      Administrative expenses  have increased  by 23.653% and marketing and selling expenses have increased by 35.966% and financial expenses have decreased by 16.636%, nonoperating income has increased by 30.713% and contribution to WPPF and WF has increased  by 49.123%.The increase  in gross profit is sufficient to cover the operating expenses. There is also an increase in net profit after tax of Tk6,236,430 .i.e. 48.417%

      It is concluded from the above analysis that there is high progress in the performance of the company and the overall profitability of the company is satisfactory.

Navana Batteries Limited

Particulars

Navana Batteries Ltd. 2010

Navana Batteries Ltd. 2009

increase/     decrease

% increase/    Decrease

Sales Revenue

498,689,132

281,989,408

216,699,724

76.847%

Cost of goods sold:-

355,322,803

208,516,987

146,805,816

70.405%

Gross profit

143,366,329

73,472,421

69,893,908

95.129%

Less: Operating Expenses:
Administrative Expenses

8,887,858

6,274,588

2,613,270

41.648%

Marketing and Selling Expenses

32,554,197

27,311,577

5,242,620

19.196%

Operating Profit

101,924,274

39,886,256

62,038,018

155.537%

Less: Financial Expenses

15,381,235

10,173,290

5,207,945

51.192%

Add: Non-Operating Income
Net profit before contribution to WPPF and WF

86,543,039

29,712,966

56,830,073

191.264%

Less: Contribution to WPPF and WF

4,121,097

1,414,903

2,706,194

191.264%

Net profit before tax

82,421,942

28,298,063

54,123,879

191.264%

less: Provision for current tax

26,037,250

7,781,967

18,255,283

234.584%

Less: Provision for deferred tax
Net Profit After tax

56,384,692

20,516,096

35,868,596

174.831%

 Interpretation:

      The comparative income statement given above shows that there has been an increase  in net sales of 76.847%. The cost of goods sold has increased by 70.405%. This has resulted in high increase of gross profit by 95.129%.

      Administrative expenses  have increased  by 41.648% and marketing and selling expenses have increased by 19.196% and financial expenses have decreased by 51.192%, nonoperating income has not incurred in the both years and contribution to WPPF and WF has increased  by 191.264%.The increase  in gross profit is sufficient to cover the operating expenses. There is also an increase in net profit after tax of Tk 35,868,596.i.e. 174.831%

      It is concluded from the above analysis that there is very high progress in the performance of the company and the overall profitability of the company is highly satisfactory.

Overall Analysis:

Overall Analysis

Therefore,Rahimafrooz has both lowest gowth rate of -12.3% and at the same lowest level of sales declined tk.-365,533,246.On the other hand,Navana battery limited has highest growth rate of 76.84% at tk.216,699,724.

 1.     Operating Expenses(excluding Contribution to WPPF and WF):

Operating ExpensesIncrease decrease  growth rate4   N et profit after tax:

  1. Rahimafrooz Batteries Limited needs to emphasize on  the efficient use of resources to get maximum profit in the next year.Vertical Analysis:

    Rahimafrooz Batteries Limited and Quasem Drycell Limied

    Particulars

    Rahimafrooz Batteries Ltd. 2010

    Percent (%) On the basis of Sales

    Quasem Drycell Ltd. 2010

    Percent (%) On the basis of Sales

    Sales Revenue

    2,605,227,370

    100.000%

    935,094,525

    100.000%

    Cost of goods sold:-

    2,104,277,839

    80.771%

    759,733,376

    81.247%

    Gross profit

    500,949,531

    19.229%

    175,361,149

    18.753%

    Less: Operating Expenses:
    Administrative Expenses

    298,264,314

    11.449%

    51,162,699

    5.471%

    Marketing and Selling Expenses

    57,566,380

    2.210%

    39,966,022

    4.274%

    Operating Profit

    145,118,837

    5.570%

    84,232,428

    9.008%

    Less: Financial Expenses

    51,881,470

    1.991%

    32,570,755

    3.483%

    Add: Non-Operating Income

    27,002,246

    1.036%

    6,112,973

    0.654%

    Net profit before contribution to WPPF and WF

    120,239,613

    4.615%

    57,774,646

    6.178%

    Less: Contribution to WPPF and WF

    5,725,696

    0.220%

    2,751,174

    0.294%

    Net profit before tax

    114,513,917

    4.396%

    55,023,472

    5.884%

    less: Provision for current tax

    -52,557,752

    -2.017%

    -15,131,455

    -1.618%

    Less: Provision for deferred tax

    -42,791,417

    -1.643%

    323,224

    0.035%

    Net Profit After tax

    19,164,748

    0.736%

    40,215,241

    4.301%

    Interpretation

    Sales and Gross Profit:

    The sale and gross profit are high in absolute figures in Rahimafrooz as compared to quasem drycell Limited and the percentage of gross profit to sales has is relatively high (19.229%) compared to the Quasem Drycell limited(18.753%).

    The cost of sales

    The cost of sales as a percentage of sales (80.771%) in Rahimafrooz Batteires Limited  is relatively low compared  to Quasem Drycell Limited (81.247).On the other hand, Rahimafrooz  has brought the profitability 19.229% compared to Quasem has 18.753%.

    Operating Expenses(Administrative ,Marketing &Selling,Finance expenses) and Contribution to WPPF and WF wtih considering Nonoperating Income:

    Rahimafrooz has Operating expenses and Contribution to WPPF and WF as a percentage of sales (15.869%) ,On the other hand Quasem has operating expenses and Contribution to WPPF and WF as a percentage of sales (13.523%).Gross profit as a high percentage of sales(19.229%) but it is insufficient to recover operating expenses and Contribution to WPPF and WF .That’s why,Net profit before tax is 4.396% of sales on the other hand quasem has net profit before tax is 5.884%.

    Net profit:

    Net profit have decreased both in absolute figures and as a percentage in Rahimafrooz (19,164,748 i,e, 0.736%) as compared to Quasem (40,215,241,i,e, 4.301%).

    Rahimafrooz Batteries Limited and Olympic Inustries Limited (Battery Unit)

    Particulars

    Rahimafrooz Batteries Ltd. 2010

    Percent (%) On the basis of Sales

    Olympic Industries Ltd 2010

    Percent (%) On the basis of Sales

    Sales Revenue

    2,605,227,370

    100.000%

    245,775,310

    100.000%

    Cost of goods sold:

    2,104,277,839

    80.771%

    175,964,808

    71.596%

    Gross profit

    500,949,531

    19.229%

    69,810,502

    28.404%

    Less: Operating Expenses:
    Administrative Expenses

    298,264,314

    11.449%

    8,526,204

    3.469%

    Marketing and Selling Expenses

    57,566,380

    2.210%

    30,760,881

    12.516%

    Operating Profit

    145,118,837

    5.570%

    30,523,417

    12.419%

    Less: Financial Expenses

    51,881,470

    1.991%

    3,814,895

    1.552%

    Add: Non-Operating Income

    27,002,246

    1.036%

    978,196

    0.398%

    Net profit before contribution to WPPF and WF

    120,239,613

    4.615%

    27,686,718

    11.265%

    Less: Contribution to WPPF and WF

    5,725,696

    0.220%

    1,318,415

    0.536%

    Net profit before tax

    114,513,917

    4.396%

    26,368,303

    10.729%

    less: Provision for current tax

    -52,557,752

    -2.017%

    -6,741,009

    -2.743%

    Less: Provision for deferred tax

    -42,791,417

    -1.643%

    -510,274

    -0.208%

    Net Profit After tax

    19,164,748

    0.736%

    19,117,020

    7.778%

     Interpretation

    Sales and Gross Profit:

    The sale and gross profit are high in absolute figures in Rahimafrooz as compared to Olympic Industries  Limited. But the percentage of gross profit to sales has is relatively low (19.229%) compared to the Olympic Industries  limited (28.404%)

    The cost of sales

    The cost of sales as a percentage of sales (80.771%) in Rahimafrooz Batteires Limited  is relatively high compared  to Olympic Industries (71.596%).On the other hand, Rahimafrooz  has brought poor rate of  profitability 19.229% compared to Quasem has 28.404%.

    Operating Expenses(Administrative ,Marketing &Selling,Finance expenses) and Contribution to WPPF and WF wtih considering Nonoperating Income:

    Rahimafrooz has Operating expenses and Contribution to WPPF and WF as a percentage of sales (15.869%) ,On the other hand Olympic has operating expenses and Contribution to WPPF and WF as a percentage of sales (18.073%).Gross profit as a high percentage of sales(19.229%) but it is insufficient to recover operating expenses and Contribution to WPPF and WF .That’s why,Net profit before tax is 4.396% of sales on the other hand Olympic has net profit before tax is 10.729%.

    Net profit: Net profit has increased  in absolute figures in Rahimafrooz (Tk.19,164,748) compared to OlympicTk.19,117,020.On the other hand net profit as  percentage of sales ( 0.736%)   is very poor compared to Olympic (7.778%)

    Rahimafrooz Batteries Limited and Navana Batteries Limited

    Particulars

    Rahimafrooz Batteries Ltd. 2010

    Percent (%) On the basis of Sales

    Navana Batteries Ltd. 2010

    Percent (%) On the basis of Sales

    Sales Revenue

    2,605,227,370

    100.000%

    498,689,132

    100.000%

    Cost of goods sold:

    2,104,277,839

    80.771%

    355,322,803

    71.251%

    Gross profit

    500,949,531

    19.229%

    143,366,329

    28.749%

    Less: Operating Expenses:
    Administrative Expenses

    298,264,314

    11.449%

    8,887,858

    1.782%

    Marketing and Selling Expenses

    57,566,380

    2.210%

    32,554,197

    6.528%

    Operating Profit

    145,118,837

    5.570%

    101,924,274

    20.438%

    Less: Financial Expenses

    51,881,470

    1.991%

    15,381,235

    3.084%

    Add: Non-Operating Income

    27,002,246

    1.036%

    0.000%

    Net profit before contribution to WPPF and WF

    120,239,613

    4.615%

    86,543,039

    17.354%

    Less: Contribution to WPPF and WF

    5,725,696

    0.220%

    4,121,097

    0.826%

    Net profit before tax

    114,513,917

    4.396%

    82,421,942

    16.528%

    less: Provision for current tax

    -52,557,752

    -2.017%

    -26,037,250

    -5.221%

    Less: Provision for deferred tax

    -42,791,417

    -1.643%

    0.000%

    Net Profit After tax

    19,164,748

    0.736%

    56,384,692

    11.307%

    Interpretation:      Sales and Gross Profit:

    The sale and gross profit are high in absolute figures in Rahimafrooz as compared to Navana Batteries Limited. But the percentage of gross profit to sales has is relatively low (19.229%) compared to the Navana Batteries limited (28.404%)

    The cost of sales

    The cost of sales as a percentage of sales (80.771%) in Rahimafrooz Batteires Limited  is relatively high compared  to Navana Batteries (71.596%).On the other hand, Rahimafrooz  has brought poor rate of  profitability 19.229% compared to Navana Batteries has 28.404%.

    Operating Expenses(Administrative ,Marketing &Selling,Finance expenses) and Contribution to WPPF and WF wtih considering Nonoperating Income:

    Rahimafrooz has Operating expenses and Contribution to WPPF and WF as a percentage of sales (15.869%) ,On the other hand Navana Batteries has operating expenses as a percentage of sales (12.221%).Gross profit as a low percentage of sales(19.229%) so it is insufficient to recover operating expenses and Contribution to WPPF and WF .That’s why,Net profit before tax is 4.396% of sales on the other hand Navana Batteries has net profit before tax is 11.307%.

    Net profit:

    Net profit has increased  in absolute figures in Rahimafrooz (Tk.19,164,748) compared to Navana Batteries Tk.19,117,020.On the other hand net profit as  percentage of sales ( 0.736%)   is very poor compared to Navana Batteries (7.778%)

    Overall Analysis 1

    Statement Of financial PositionHorizontal Analysis:

    Rahimafrooz Batteries Ltd.

    ASSETS

    Rahimafrooz Batteries Ltd.                2010

    Rahimafrooz Batteries Ltd.                2009

    Increase/     decrease

    Percentage of Growth

    Non-Current Assets
    Property, plant and Equipment

    413,465,817

    476,548,379

    -63,082,562

    -13.237%

    Capital Work in progress
    Intangible Assets:
    Goodwill

    28,808,059

    32,008,954

    -3,200,895

    -10.000%

    Trademark and Brand Names

    7,875,000

    8,750,000

    -875,000

    -10.000%

    Priliminary expenses

    Total

    450,148,876

    517,307,333

    -67,158,457

    -12.982%

    Investments:

    206,655,806

    100,010,000

    106,645,806

    106.635%

    Current assets:
    Inventories

    470,966,115

    362,108,817

    108,857,298

    30.062%

    Receivables

    146,238,314

    171,200,161

    -24,961,847

    -14.581%

    Advances, deposits and prepayments

    325,989,928

    304,572,437

    21,417,491

    7.032%

    Inter-company current account-receivable

    237,090,676

    97,248,950

    139,841,726

    143.798%

    cash and cash equivalent

    10,355,735

    9,289,860

    1,065,875

    11.474%

    Income tax deducted at source

    Total

    1,190,640,768

    944,420,225

    246,220,543

    26.071%

    Total assts

    1,847,445,450

    1,561,737,558

    285,707,892

    18.294%

    EQUITY AND LIABILITIES
    Equity:
    Capital and reserves
    Share Capital

    111,390,900

    111,390,900

    revalutaiton reserve

    63,396,995

    63,396,995

    Share premium
    Reserve account

    1,670,500

    1,670,500

    Redemption reserve account

    132,898,500

    132,898,500

    Retained earnings

    282,238,948

    296,491,469

    -14,252,521

    -4.807%

    Total

    591,595,843

    605,848,364

    -14,252,521

    -2.352%

    Liabilties:
    Non-current Liabilities:
    long term  Loan

    28,126,648

    30,524,373

    -2,397,725

    -7.855%

    liability for gratuity

    39,241,035

    33,387,310

    5,853,725

    17.533%

    Provision for deferred tax

    42,791,417

    0

    42,791,417

    lease finance-long term
    Other deffered liabilities
    Total

    110,159,100

    63,911,683

    46,247,417

    72.361%

    Current Liabilites:
    Bank Overdraft

    27,764,361

    62,560,734

    -34,796,373

    -55.620%

    short term loan

    537,836,968

    404,566,437

    133,270,531

    32.942%

    Accounts Payable

    163,145,791

    18,983,999

    144,161,792

    759.386%

    Accrued expenses and other payable

    183,056,698

    201,739,320

    -18,682,622

    -9.261%

    long term  Loan-short term maturity

    29,101,856

    51,899,941

    -22,798,085

    -43.927%

    Provision for taxation

    204,784,832

    152,227,080

    52,557,752

    34.526%

    Unearned revenue

    Total

    1,145,690,506

    891,977,511

    253,712,995

    28.444%

    Total Liabilities

    1,255,849,606

    955,889,194

    299,960,412

    31.380%

    Total assts

    1,847,445,449

    1,561,737,558

    285,707,891

    18.294%

     Interpretation:

    The comparative balance sheet of the company reveals that during 2010 there has been an decrease  in fixed assets of Tk. 3,200,895 i.e. -10%. Noncurrent Liabilities to outsiders have relatively increased by Tk. 46,247,417and equity share capital has decreased byTk.14,252,521. This fact indicates that the policy of the company is to sale fixed assets  to meet up the long-term sources of finance.Besides,

    The current assets have increased by Tk. 246,220,543 i.e. 26.071% and cash has increased by 1,065,875 ,i,e,. The current liabilities have increased only by253,712,995  i.e. 28.444% .This further confirms that the company has used  long-term finances even for the current assets resulting into an  not so much  improvement in the liquidity position of the company. No working capital.

    Noncurrent liabilities increased by . 46,247,417 (72.361%), Current Liabilities increased by Tk. 253,712,995 (28.444%),fixed assets decreased by  67,158,457 (12.982%),Investment is increased by Tk.  106,645,806 (106.635%).So, Company uses  the long term and short term sources of financing  in taking investment.      Total assets is increased by 285,707,892 (18.294% ) where equity portion is decreased by -14,252,521 (-2.352%) and total liabilities is increased by 299,960,412 (31.380%).So, the company is dependent on outside claim too much.

    The overall financial position of the company is not satisfactory.

    Quasem Drycell Ltd.

    ASSETSQuasem                Drycell Ltd.                                     2010Quasem                Drycell Ltd.                                     2009Increase/     decreasePercentage of Growth
    Non-Current Assets
    property,plant and Equipment363,282,344308,261,35355,020,99117.849%
    Capital Work in progress126,307,883187,154,436-60,846,553-32.511%
    Intangible Assets:
    Goodwill
    Trademark and Brand Names

    3,764,075

    3,948,888

    -184,813

    -4.680%

    Priliminary expenses

    Total

    493,354,302

    499,364,677

    -6,010,375

    -1.204%

    Investments:

    16,000,000

    1,000,000

    15,000,000

    1500.000%

    Current assets:
    Inventories

    221,552,994

    185,830,294

    35,722,700

    19.223%

    Receivables

    24,161,564

    31,272,784

    -7,111,220

    -22.739%

    Advances,deposits and prepayments

    89,039,555

    99,778,054

    -10,738,499

    -10.762%

    Inter-company current account-receivable

    32,613,585

    26,749,309

    5,864,276

    21.923%

    cash and cash equivalent

    9,182,358

    6,902,127

    2,280,231

    33.037%

    Income tax deducted at source

    Total

    376,550,056

    350,532,568

    26,017,488

    7.422%

    Total assts

    885,904,358

    850,897,245

    35,007,113

    4.114%

    EQUITY AND LIABILITIES
    Equity:
    Capital and reserves
    Share Capital

    192,000,000

    192000000

    revalutaiton reserve

    55,728,358

    57869772

    -2,141,414

    -3.700%

    Share premium

    198,000,000

    198000000

    Reserve account
    Redemption reserve account
    Retained earnings

    63,466,424

    52051183

    11,415,241

    21.931%

    Total

    509,194,782

    499920955

    9,273,827

    1.855%

    Liabilties:
    Non-current Liabilities:
    long term  Loan

    8,377,075

    17622997

    -9,245,922

    -52.465%

    liability for gratuity
    Provision for deferred tax
    lease finance-long term
    Other deffered liabilities

    1,467,602

    1790826

    -323,224

    -18.049%

    Total

    9844677

    19413823

    -9,569,146

    -49.290%

    Current Liabilites:
    Bank Overdraft
    short term loan

    275,085,801

    255358944

    19,726,857

    7.725%

    Accounts Payable

    5,535,542

    15,671,790

    -10,136,248

    -64.678%

    Accrued expenses and other payable

    43,895,008

    3,331,4640

    10,580,368

    31.759%

    long term  Loan-short term maturity
    Provision for taxation

    42,348,548

    27,217,093

    15,131,455

    55.595%

    Unearned revenue

    Total

    366,864,899

    331,562,467

    35,302,432

    10.647%

    Total Liabilities

    376,709,576

    350,976,290

    25,733,286

    7.332%

    Total assts

    885,904,358

    850,897,245

    35,007,113

    4.114%

    Interpretation:

    The comparative balance sheet of the company reveals that during 2010 there has been an decrease  in fixed assets of Tk. -6,010,375 i.e. -1.204%, Noncurrent Liabilities to outsiders have relatively decreased by Tk 9,569,146,i,e,( -49.290%)and equity share capital has increased byTk. 9,273,827,i,e,(1.855%). This fact indicates that the policy of the company is to sale fixed assets  to meet up the long-term sources of finance and also increases the equity capital of the company.

    The current assets have increased by Tk. 26,017,488,i.e. 7.422% and cash has increased by 2,280,231,i,e, 33.037%. The current liabilities have increased only by 35,302,432,i.e. 10.647%.This further confirms that the company has used  long-term finances even for the current assets resulting into an  not so much  improvement in the liquidity position of the company.No working capital.

    Noncurrent liabilities decreased by . -9,569,146 (-49.290%), Current Liabilities increased by Tk. 35,302,432 (10.647%),fixed assets decreased by  6,010,375 (-1.204%),Investment is increased by Tk.  15,000,000 (1500.000%).So, Company uses  the long term and short term sources of financing  in taking investment.      Total assets is increased by 35,007,113 (4.114%) where equity portion is increased by 9,273,827 (1.855%) and total liabilities is increased by 25,733,286 (7.332%).So, the company is dependent on outside claim too much.

    The overall financial position of the company is not satisfactory

    Olympic Industries Ltd.

    ASSETS

    Olympic Industries Ltd.  2010

    Olympic Industries Ltd.                   2009

    Increase/     decrease

    Percentage of Growth

    Non-Current Assets
    property,plant and Equipment

    56,458,194

    45,488,028

    10,970,166

    24.117%

    Capital Work in progress
    Intangible Assets:
    Goodwill
    Trademark and Brand Names
    Priliminary expenses

    Total

    56,458,194

    45,488,028

    10,970,166

    24.117%

    Investments:
    Current assets:
    Inventories

    24,512,371

    19,707,807

    4,804,564

    24.379%

    Receivables

    1,354,329

    3,511,082

    -2,156,753

    -61.427%

    Advances,deposits and prepayments

    19,009,701

    14,828,369

    4,181,332

    28.198%

    Inter-company current account-receivable
    cash and cash equivalent

    34,856,781

    16,093,043

    18,763,738

    116.595%

    Income tax deducted at source

    Total

    79,733,182

    54,140,301

    25,592,881

    47.271%

    Total assts

    136,191,376

    99,628,329

    36,563,047

    36.699%

    EQUITY AND LIABILITIES
    Equity:
    Capital and reserves
    Share Capital

    23,218,170

    19,348,480

    3,869,690

    20.000%

    revalutaiton reserve
    Share premium

    5,692,915

    9,562,605

    -3,869,690

    -40.467%

    Reserve account
    Redemption reserve account
    Retained earnings

    23,708,253

    6,526,082

    17,182,171

    263.285%

    Total

    52,619,338

    35,437,167

    17,182,171

    48.486%

    Liabilties:
    Non-current Liabilities:
    long term  Loan

    6,268,605

    3,446,980

    2,821,625

    81.858%

    liability for gratuity
    Provision for deferred tax
    lease finance-long term

    4,175,990

    5,721,943

    -1,545,953

    -27.018%

    Other deffered liabilities

    8,020,266

    6,012,097

    2,008,169

    33.402%

    Total

    18,464,861

    15,181,020

    3,283,841

    21.631%

    Current Liabilites:
    Bank Overdraft
    short term loan

    13,936,600

    10,787,422

    3,149,178

    29.193%

    Accounts Payable

    19,021,551

    13,549,959

    5,471,592

    40.381%

    Accrued expenses and other payable

    7,372,234

    8,678,324

    -1,306,090

    -15.050%

    long term  Loan-short term maturity

    3,201,826

    2,340,657

    861,169

    36.792%

    Provision for taxation

    14,592,533

    7,851,524

    6,741,009

    85.856%

    Unearned revenue

    6,982,433

    5,802,256

    1,180,177

    20.340%

    Total

    65,107,177

    49,010,142

    16,097,035

    32.844%

    Total Liabilities

    83,572,038

    64,191,162

    19,380,876

    30.192%

    Total assts

    136,191,376

    99,628,329

    36,563,047

    36.699%

    Interpretation:

    The comparative balance sheet of the company reveals that during 2010 there has been an increase  in fixed assets of Tk. 10,970,166 ,i.e. 24.117%.Noncurrent Liabilities to outsiders have relatively increased by Tk 3,283,841,i,e,( 21.631%)and equity share capital has increased byTk. 17,182,171,i,e,( 48.486%). This fact indicates that the policy of the compan is to purchase  fixed assets  from the long-term equity and debt sources of finance No investment is made.

    The current assets have increased by Tk. 25,592,881,i.e. 47.271% and cash has increased by 18,763,738,i,e, 116.595%. The current liabilities have increased only by 16,097,035,i.e. 32.844%.This further confirms that the company has used  long-term finances even for the current assets resulting into much  improvement in the liquidity position of the company.

    Total assets is increased by 36,563,047 (36.699%) where equity portion is increased by 17,182,171 (48.486%) and total liabilities is increased by 19,380,876 (30.192%).So, the company is dependent on outside claim slightly.

    The overall financial position of the company is satisfactory

    Navana Batteries Limited

    ASSETS

    Navana              Batteries Ltd.               2010

    Navana              Batteries Ltd.               2009

    Increase/     decrease

    Percentage of Growth

    Non-Current Assets
    property,plant and Equipment

    127,650,378

    113,654,664

    13,995,714

    12.314%

    Capital Work in progress

    214,369,352

    0

    214,369,352

    Intangible Assets:
    Goodwill
    Trademark and Brand Names

    238,925

    48,360

    190,565

    394.055%

    Priliminary expenses

    Total

    342,258,655

    113,703,024

    228,555,631

    201.011%

    Investments:
    Current assets:
    Inventories

    111,150,844

    75,759,811

    35,391,033

    46.715%

    Receivables

    58,582,418

    70,208,463

    -11,626,045

    -16.559%

    Advances,deposits and prepayments

    31,766,320

    17,493,038

    14,273,282

    81.594%

    Inter-company current account-receivable
    cash and cash equivalent

    27,426,959

    7,348,118

    20,078,841

    273.251%

    Income tax deducted at source

    16,452,311

    7,879,424

    8,572,887

    108.801%

    Total

    245,378,852

    178,688,854

    66,689,998

    37.322%

    Total assts

    587,637,507

    292,391,878

    295,245,629

    100.976%

    EQUITY AND LIABILITIES
    Equity:
    Capital and reserves
    Share Capital

    183,702,690

    183,702,690

    Revalutaiton reserve
    Share premium
    Reserve account
    Redemption reserve account
    Retained earnings

    56,384,692

    56,384,692

    Total

    240,087,382

    183,702,690

    56,384,692

    30.693%

    Liabilties:
    Non-current Liabilities:
    long term  Loan
    liability for gratuity
    Provision for deferred tax
    lease finance-long term
    Other deffered liabilities
    Total
    Current Liabilites:
    Bank Overdraft
    short term loan

    77,981,071

    66,062,121

    11,918,950

    18.042%

    Accounts Payable

    181,173,288

    0

    181,173,288

    Accrued expenses and other payable

    88,395,767

    42,627,067

    45,768,700

    107.370%

    long term  Loan-short term maturity
    Provision for taxation
    Unearned revenue

    Total

    347,550,126

    108,689,188

    238,860,938

    219.765%

    Total Liabilities

    347,550,126

    108,689,188

    238,860,938

    219.765%

    Total assts

    587,637,508

    292,391,878

    295,245,630

    100.976%

    Interpretation:

    The comparative balance sheet of the company reveals that during 2010 there has been an increase  in fixed assets of Tk 10,970,166,i.e. 24.117%.Noncurrent Liabilities to outsiders have relatively increased by Tk 3,283,841,i,e,( 21.631%)and equity share capital has increased byTk. 17,182,171,i,e,( 48.486%). This fact indicates that the policy of the company is to purchase fixed assets  from  the long-term equity and debt sources of finance .No investment is made.

    The current assets have increased by Tk. 25,592,881,i.e,47.271% and cash has increased by 18,763,738,i,e, 116.595%. The current liabilities have increased only by 16,097,035,i.e. 32.844%.This further confirms that the company has used  long-term finances even for the current assets resulting into much improvement in the liquidity position of the company

    Total assets is increased by 36,563,047 (36.699%) where equity portion is increased by 17,182,171 (48.486%) and total liabilities is increased by 19,380,876 (30.192%)So, the company is going to dependent on itself.

    The overall financial position of the company is satisfactory

Overall Analysis:

Overall Analysis 22

      Rahimafrooz Batteries limited  has reduced fixed assets Tk.-67,158,457 and negative growth rate  is -12.98%. Company has sold the fixed assets and laid out their money in investments Tk.106,645,806 (106.64%) from noncurrent liabilities increased 72.36% Tk.253,712,995.

 Quasem Drycell limited  has reduced fixed assets Tk. -6,010,375 respectively and negative growth rate  is  -1.20%  .Both company has sold the fixed assets and laid out their money in investments Tk.15,000,000(1500%) from equity funds increased by 9,273,827 (1.86%).They made equity injection.(lowering the debt-equity ratio).

      Olympic Industries Limited has no investment, they purchasing fixed assets by 10,970,166  with the growth rate of 24.12% from equity increase by 48.49% and noncurrent liability also increased by 21.63% and current liability is 32.84%.It has the highest increased working capital Tk.9,495,846.

      Navana Batteries Limited have no investment, they purchasing fixed assets by 228,555,631 201.01% from increased current liabilities is 238860938 (219.765%).It is suffering lowest working capital tk.-172,170,940.

Vertical Analysis:

Rahimafrooz Batteries Limited and Quasem Drycell Limited

Particulars

Rahimafrooz Batteries Ltd.                2010

Percent (%of Total Assets)

Quasem                Drycell Ltd.                                     2010

Percent (%of Total Assets)

Non-Current Assets
property,plant and Equipment

413,465,817

22.380%

363,282,344

41.007%

Capital Work in progress

126,307,883

14.258%

Intangible Assets:
Goodwill

28,808,059

1.559%

Trademark and Brand Names

7,875,000

0.426%

3,764,075

0.425%

Priliminary expenses

Total

450,148,876

24.366%

493,354,302

55.689%

Investments:

206,655,806

11.186%

16,000,000

1.806%

Current assets:
Inventories

470,966,115

25.493%

221,552,994

25.009%

Receivables

146,238,314

7.916%

24,161,564

2.727%

Advances,deposits and prepayments

325,989,928

17.645%

89,039,555

10.051%

Inter-company current account-receivable

237,090,676

12.833%

32,613,585

3.681%

cash and cash equivalent

10,355,735

0.561%

9,182,358

1.036%

Income tax deducted at source

Total

1,190,640,768

64.448%

376,550,056

42.505%

Total assts

1,847,445,450

100.000%

885,904,358

100.000%

EQUITY AND LIABILITIES
Equity:
Capital and reserves
Share Capital

111,390,900

6.029%

192000000

21.673%

revalutaiton reserve

63,396,995

3.432%

55728358

6.291%

Share premium

198000000

22.350%

Reserve account

1,670,500

0.090%

Redemption reserve account

132,898,500

7.194%

Retained earnings

282,238,948

15.277%

63466424

7.164%

Total

591,595,843

32.022%

509194782

57.477%

Liabilities:
Non-current Liabilities:
long term  Loan

28,126,648

1.522%

8377075

0.946%

liability for gratuity

39,241,035

2.124%

Provision for deferred tax

42,791,417

2.316%

lease finance-long term
Other deffered liabilities

1467602

0.166%

Total

110,159,100

5.963%

9844677

1.111%

Current Liabilites:
Bank Overdraft

27,764,361

1.50285%

short term loan

537,836,968

29.112%

275085801

31.051%

Accounts Payable

163,145,791

8.831%

5535542

0.625%

Accrued expenses and other payable

183,056,698

9.909%

43895008

4.955%

long term  Loan-short term maturity

29,101,856

1.575%

Provision for taxation

204,784,832

11.085%

42348548

4.780%

Unearned revenue

Total

1,145,690,506

62.015%

366864899

41.411%

Total Liabilities

1,255,849,606

67.978%

376,709,576

42.523%

Total assets

1,847,445,449

100.000%

885,904,358

100.000%

 Interpretation:

(i) An analysis of pattern of financing of both the companies shows that Quasem Drycell Ltd is more traditionally financed as compared to Rahimafrooz Batteries  Ltd. The former company has depended more on its own funds as is shown by balance sheet. Out of total investment, 57.477% of the funds are proprietory funds and outsiders funds account only for 42.523%. In Rahimafrooz Batteries  Ltd proprietors’ fund are 32.022% while the share of outsiders funds is 67.978%which shows that this company has depended more upon outsiders funds.

(ii) Both the companies are enjoying sufficiency of working capital. The percentage of current liabilities is more than the percentage of current assets in both the companies.

(iii) A close look at the balance sheet shows that investments in fixed assets have been from working capital in both the companies. In Rahimafrooz Batteries Limited fixed assets account for 24.366% of total assets.But it uses the funds of working capital in investment projects(11.186%).While in Quasem Drycell limited fixed assets account for 55.689%,this company purchases more fixed assets from working capital.

(iv) Thus, both the companies has moderate level of  working capital .So, immediate steps should be taken to issue more capital or raise long term loans to improve working capital position.

Rahimafrooz Batteries and Olympic Industries Limited

Particulars

Rahimafrooz Batteries Ltd.                2010

Percent (%of Total Assets)

Olympic Industries Ltd.  2010

Percent (%of Total Assets)

Non-Current Assets
Property,plant and Equipment

413,465,817

22.380%

56,458,194

41.455%

Capital Work in progress
Intangible Assets:
Goodwill

28,808,059

1.559%

Trademark and Brand Names

7,875,000

0.426%

Preliminary expenses

Total

450,148,876

24.366%

56,458,194

41.455%

Investments:

206,655,806

11.186%

Current assets:
Inventories

470,966,115

25.493%

24,512,371

17.998%

Receivables

146,238,314

7.916%

1,354,329

0.994%

Advances, deposits and prepayments

325,989,928

17.645%

19,009,701

13.958%

Inter-company current

account-receivable

237,090,676

12.833%

  cash and cash equivalent

10,355,735

0.561%

34,856,781

25.594%

Income tax deducted at source

Total

1,190,640,768

64.448%

79,733,182

58.545%

Total assts

1,847,445,450

100.000%

136,191,376

100.000%

EQUITY AND LIABILITIES    Equity:    Capital and reserves    Share Capital

111,390,900

6.029%

23,218,170

17.048%

Revaluation reserve

63,396,995

3.432%

  Share premium

5,692,915

4.180%

Reserve account

1,670,500

0.090%

  Redemption reserve account

132,898,500

7.194%

  Retained earnings

282,238,948

15.277%

23,708,253

17.408%

Total

591,595,843

32.022%

52,619,338

38.636%

Liabilties:    Non-current Liabilities:    long term  Loan

28,126,648

1.522%

6,268,605

4.603%

liability for gratuity

39,241,035

2.124%

  Provision for deferred tax

42,791,417

2.316%

  lease finance-long term

4,175,990

3.066%

Other deffered liabilities

8,020,266

5.889%

Total

110,159,100

5.963%

18,464,861

13.558%

Current Liabilites:    Bank Overdraft

27,764,361

1.50285%

  short term loan

537,836,968

29.112%

13,936,600

10.233%

Accounts Payable

163,145,791

8.831%

19,021,551

13.967%

Accrued expenses and other payable

183,056,698

9.909%

7,372,234

5.413%

long term  Loan-short term maturity

29,101,856

1.575%

3,201,826

2.351%

Provision for taxation

204,784,832

11.085%

14,592,533

10.715%

Unearned revenue

6,982,433

5.127%

Total

1,145,690,506

62.015%

65,107,177

47.806%

Total Liabilities

1,255,849,606

67.978%

83,572,038

61.364%

Total assts

1,847,445,449

100.000%

136,191,376

100.000%

 

 Interpretation:

(i) An analysis of pattern of financing of both the companies shows that Olympic Industries  Ltd is more traditionally financed as compared to Rahimafrooz Batteries  Ltd. The former company has depended more on its own funds as is shown by balance sheet. Out of total investment, 38.636%of the funds are proprietory funds and outsiders funds account only for 61.364%. In Rahimafrooz Batteries  Ltd proprietors’ fund are 32.022% while the share of outsiders funds is 67.978% which shows that this company has depended more upon outsiders funds.

(ii) Both the companies are enjoying for the sufficiency of working capital. The percentage of current liabilities is more than the percentage of current assets in both the companies.But, Olympic has high percentage of working capital of the total assets(10.739%) where Rahimafrooz Batteries Limited has 2.433% of the total assets.

(iii) A close look at the balance sheet shows that investments in fixed assets have been from working capital in both the companies. In Rahimafrooz Batteries Limited fixed assets account for 24.366% of total assets. But it uses the funds of working capital in investment projects(11.186%).While in Olympic Industries limited fixed assets account for 41.455%,this company purchases more fixed assets from working capital.

(iv) Thus, both the companies has moderate level of  working capital .But,Rahimafrooz has high dependency on outside claim than internal funds.So, immediate steps should be taken to issue more capital or raise long term loans to improve working capital position.

Rahimafrooz Batteries Limited and Navana Batteries Limited

Particulars

Rahimafrooz Batteries Ltd.                2010

Percent (%of Total Assets)

Navana              Batteries Ltd.               2010

Percent (%of Total Assets)

Non-Current Assets
Property, plant and Equipment

413,465,817

22.380%

127,650,378

21.723%

Capital Work in progress

214,369,352

36.480%

Intangible Assets:
Goodwill

28,808,059

1.559%

Trademark and Brand Names

7,875,000

0.426%

238,925

0.041%

Priliminary expenses

Total

450,148,876

24.366%

342,258,655

58.243%

Investments:

206,655,806

11.186%

Current assets:
Inventories

470,966,115

25.493%

111,150,844

18.915%

Receivables

146,238,314

7.916%

58,582,418

9.969%

Advances,deposits and prepayments

325,989,928

17.645%

31,766,320

5.406%

Inter-company current account-receivable

237,090,676

12.833%

cash and cash equivalent

10,355,735

0.561%

27,426,959

4.667%

Income tax deducted at source

16,452,311

2.800%

Total

1,190,640,768

64.448%

245,378,852

41.757%

Total assts

1,847,445,450

100.000%

587,637,507

100.000%

EQUITY AND LIABILITIES
Equity:
Capital and reserves
Share Capital

111,390,900

6.029%

183,702,690

31.261%

revalutaiton reserve

63,396,995

3.432%

Share premium
Reserve account

1,670,500

0.090%

Redemption reserve account

132,898,500

7.194%

Retained earnings

282,238,948

15.277%

56,384,692

9.595%

Total

591,595,843

32.022%

240,087,382

40.856%

Liabilties:
Non-current Liabilities:
long term  Loan

28,126,648

1.522%

liability for gratuity

39,241,035

2.124%

Provision for deferred tax

42,791,417

2.316%

Lease finance-long term
Other deferred liabilities
Total

110,159,100

5.963%

Current Liabilities:
Bank Overdraft

27,764,361

1.50285%

Short term loan

537,836,968

29.112%

77,981,071

13.270%

Accounts Payable

163,145,791

8.831%

181,173,288

30.831%

Accrued expenses and other payable

183,056,698

9.909%

88,395,767

15.043%

Long term  Loan-short term maturity

29,101,856

1.575%

Provision for taxation

204,784,832

11.085%

Unearned revenue

Total

1,145,690,506

62.015%

347,550,126

59.144%

Total Liabilities

1,255,849,606

67.978%

347,550,126

59.144%

Total assts

1,847,445,449

100.000%

587,637,508

100.000%

 Interpretation

(i) An analysis of pattern of financing of both the companies shows that Navana Batteries Ltd is more traditionally financed as compared to Rahimafrooz Batteries  Ltd. The former company has depended more on its own funds as is shown by balance sheet. Out of total investment, 40.856% of the funds are proprietory funds and outsiders funds account only for 59.144%.In Rahimafrooz Batteries  Ltd proprietors’ fund are 32.022% while the share of outsiders funds is 67.978% which shows that this company has depended more upon outsiders funds.

 (ii) Rahimafrooz Batteries Limited is enjoying for the sufficiency of working capital. The percentage of current liabilities is more than the percentage of current assets in both the companies.But, Navana Batteries Limited has negative  percentage of working capital of the total assets (-17.387%) where Rahimafrooz Batteries Limited has 2.433% of the total assets.

 (iii) In Rahimafrooz Batteries Limited fixed assets account for 24.366% of total assets. But it uses the funds of working capital in investmentprojects(11.186%).While in Navana Batteries limited fixed assets account for 58.243% this company purchases more fixed assets from equity financing (240,087,382,i,e,40.856%).

(iv) Thus, Rahimafrooz Batteries Limited has moderate level of  working capital But Navana Batteries Limited has negative working capital.On the other hand,Rahimafrooz has high dependency on outside claim than internal funds. So, immediate steps should be taken to issue more capital or raise long term loans to improve working capital position.

Overall Analysis:

Here, we see that Rahimafrooz has highly dependent on external debt equity holding only 32.02% of the total capital structure where Quasem holding the highest dependency on the funds.

Rahimafrooz has focused highly in investment and on the other hand Olympic and Navana has also focused highly on investing  fixed assets.

 Statement of Cash Flow:

Horizontal Analysis:

Rahimafrooz Batteries Limited

Particulars

Rahimafrooz Batteries Ltd. 2010

Rahimafrooz Batteries Ltd. 2009

Increase/

Decrease

% of Growth

INFLOWS
Cash Inflows from Operating Activities:
Cash receipt from customers and other income

2631894036

3025863289

-393969253

-13.020%

Total

2631894036

3025863289

-393969253

-13.020%

Cash inflows from Investing Activities:
sale proceeds from property,plant and equipment

580150

672999

-92849

-13.796%

Income from Interest on FDR

14672562

1134247

13538315

1193.595%

Total

15252712

1807246

13445466

743.975%

Cash inflow from financing activities:
Short-term Loan

98474158

98474158

nil

Lease finance
Intercompany

129781126

-129781126

-100.000%

Liability for otheres finance

Total

98474158

129781126

-31306968

-24.123%

TOTAL INFLOWS

2,745,620,906

3,157,451,661

-411830755

-13.043%

OUTFLOWS:
Outflows from Operating Activities:
Payment for cost and expenses

2297037902

2714715212

-417677310

-15.386%

income tax paid

50128223

60546700

-10418477

-17.207%

Interest expenses

50363565

64933954

-14570389

-22.439%

Total

2397529690

2840195866

-442666176

-15.586%

Outflows from Investing Activities:
Purchase of Property,plant and equipment

46479355

73615556

-27136201

-36.862%

Property,plant and equipment in transit

1299097

526921

772176

146.545%

Investment in share money deposit

106645806

100010000

6635806

6.635%

Total

154424258

174152477

-19728219

-11.328%

Cash Outflows from finnancing activities:
Long-term Loan

19342085

64385474

-45043389

-69.959%

Lease finance
Liability for otheres finance
Short-term Loan

44782254

-44782254

-100.000%

Intercompany

139841729

139841729

Repayment of Secured Loan and Interest
Dividend paid

33417270

44556360

-11139090

-25.000%

Total

192601084

153724088

38876996

25.290%

TOTAL OUTFLOWS

2744555032

3168072431

-423517399

-13.368%

Net cash flow from operating/financing and investing activities

1,065,874

-10,620,770

11686644

-110.036%

Opening Balance

9289860

19910630

-10620770

-53.342%

Closing Balance

10355734

9,289,860

1065874

11.474%

Overall Analysis:

 

 Rahimafrooz Batteries Limited has decreased its cash inflows from operating activities and cash outflows from operating activities both are decreased. Cash inflow from investing is increased because Rahimafrooz Batteries Limited has invested it in share money market and on the same as the cash inflow from financing activities decreased and cash outflow from financing activities increased.

Vertical Analysis:

Particulars

Rahimafrooz Batteries Ltd. 2010

Percentage (%)

Quasem Drycell  Batteries Ltd. 2010

Percentage (%)

INFLOWS
Cash Inflows from Operating Activities:
Cash receipt from customers and other income

2631894036

95.858%

1,032,429,436

97.432%

Receipt from other income

3,272,418

0.309%

Total

2631894036

95.858%

1,035,701,854

97.741%

Cash inflows from Investing Activities:
sale proceeds from property,plant and equipment

580150

0.021%

4,210,000

0.397%

Income from Interest on FDR

14672562

0.534%

Total

15252712

0.556%

4,210,000

0.397%

Cash flow from finnancing activities:

0.000%

Short-term Loan

98474158

3.587%

19,726,857

1.862%

Lease finance
Intercompany
Liability for otheres finance
Total

98474158

3.587%

19,726,857

1.862%

TOTAL INFLOWS

2,745,620,906

100.000%

1,059,638,711

100.000%

OUTFLOWS:
Outflows from Operating Activities:
Payment for cost and expenses

2297037902

83.694%

847,848,618

80.186%

income tax paid

50128223

1.826%

5,864,276

0.555%

Interest expenses

50363565

1.835%

32,570,755

3.080%

Vat Paid

91,853,571

8.687%

Total

2397529690

87.356%

978,137,220

92.508%

Outflows from Investing Activities:
Purchase of Property,plant and equipment

46479355

1.694%

21,803,997

2.062%

Property,plant and equipment in transit

1299097

0.047%

Investment in share money deposit

106645806

3.886%

15,000,000

1.419%

Payment for priliminary expenses
Capital Work in progress
Total

154424258

5.627%

36,803,997

3.481%

Cash Outflows from finnancing activities:
Long-term Loan

19342085

0.705%

Lease finance
Liability for otheres finance
Short-term Loan
Intercompany

139841729

5.095%

Repayment of Secured Loan and Interest

9,245,922

0.874%

Dividend paid

33417270

1.218%

33,171,341

3.137%

Total

192601084

7.018%

42,417,263

4.012%

TOTAL OUTFLOWS

2744555032

100.000%

1,057,358,480

100.000%

Net cash flow from operating/financing and investing activities

1,065,874

2,280,231

Opening Balance

9289860

6,902,127

Closing Balance

10355734

9,182,358

 Olympic and Navana Batteries Limited

Particulars

Olympic  Batteries Ltd. 2010

Percentage (%)

Navana Batteries Ltd. 2010

Percentage (%)

INFLOWS
Cash flow from operating Activities:
Cash receipt from customers and other income249,112,42797.169%510,315,17772.549%
Receipt from other income
Total

249,112,427

97.169%

510,315,177

72.549%

Cash flow from Investing activities:
Income from Interest on FDR

763,801

0.298%

Total

763,801

0.298%

Cash flow from financing activities:
Short-term Loan

5,973,649

2.330%

11,918,950

1.694%

Lease finance
Intercompany

139841729

181,173,288

25.757%

Liability for otheres finance

521,481

0.203%

Total

6,495,130

2.533%

193,092,238

27.451%

TOTAL INFLOWS

256,371,358

100.000%

703,407,415

100.000%

OUTFLOWS:
Cash flow from operating Activities:
Payment for cost and expenses

208,635,932

87.807%

420,451,440

61.530%

income tax paid

5,159,377

2.171%

8,572,887

1.255%

Interest expenses

3,817,742

1.607%

15,381,235

2.251%

Vat Paid
Total

217,613,051

91.585%

444,405,562

65.035%

Cash flow from Investing activities:
Purchase of Property,plant and equipment

17,477,407

7.356%

24,363,095

3.565%

Capital Work in progress

214,369,352

31.371%

Total

17,477,407

7.356%

238,923,012

34.965%

Cash flow from financing activities:
Long-term Loan
Lease finance

684,784

0.288%

Liability for otheres finance
Short-term Loan
Intercompany
Dividend paid

1,832,379

0.771%

Total

2,517,163

1.059%

TOTAL OUTFLOWS

237,607,621

100.000%

683,328,574

100.000%

Net cash flow from operating/financing and investing activities

18,763,737

20,078,841

Opening Balance

16,093,043

7,348,118

Closing Balance

34,856,780

27,426,959

 

 

 

 

111Items to be discussed:

Ratio Analysis:

Liquidity Ratios: Short-Term Solvency

  1. The short term paying ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash. Trade-off between liquidity (risk) and profitability:Higher ratio : lower current liabilities, less costly than long-term financing (lower risk)Higher ratio :larger current assets, less profitable than fixed assets (lower return
  2. Current Ratio:The current ratio is a commonly used measure of short-run solvency, the ability of a firm to meet its debt requirements as they come due. Current liabilities are used as the denominator of the ratio because they are considered to represent the most urgent debts, requiring retirement within one year or one operating cycle. The available cash resources to satisfy these obligations must come primarily from cash or the conversion to cash of other current assets.

    Ratio

    Method of Computation

    Industry average

     

Current Ratio:

Current Assets

Current Liabilities

(1.03923421+1.026399+1.224645

+ 0.70602435)/4

= 0.99908

 

Comparison of Four companies:

Ratio

Rahimafrooz Batteries Ltd

Quasem

Drycell Ltd

Olympic Industries Ltd.

Navana Batteries Ltd.

 

Current Ratio:

1,190,640,768

376,550,056

79,733,182

245,378,852

1,145,690,506

= 1.03923

366,864,899

= 1.02639

65,107,177

= 1.22464

347,550,126

= 0.70602

 

Comment:

Current ratio for Rahimafrooz Batteries Limited indicates that at year-end 2010 current assets covered current liabilities 1.03923 times  compared to Quasem Drycell Limited (1.02639 times), Olympic Industries Limited(1.22464 times) and Navana Batteries Limited (0.70602 times). For each taka the firm owes (short-term liabilities), the firm has Tk. 1.03923 in its asset.It is also more compared to the industry average 0.99908.So, the company is highly liquid.

Accounts receivable and inventory may not be truly liquid. A firm could have a relatively high current ratio but not be able to meet demands for cash because the accounts receivable are of inferior quality or the inventory is salable only at discounted prices. It is necessary to use other measures of liquidity, including cash flow from operations and other financial ratios that rate the liquidity of specific assets, to supplement the current ratio.

  • 2.      Acid test ratio:The quick or acid-test ratio is a more rigorous test of short-run solvency than the current ratio because the numerator eliminates inventory, prepaid expenses considered the least liquid current asset and the most likely source of losses. Like the current ratio and other ratios, there are alternative ways to calculate the quick ratio. Some analysts eliminate prepaid expenses and supplies (if carried as a separate item) from the numerator.

    Ratio

    Method of Computation

    Industry average

    Acid test ratio:

    Current Assets-Inventory-Prepaid expenses

    Current liabilities – Bank Overdraft

     

    (0.35215+0.179786+0.556176

 

+0.294811)/4

= 0.345732847

Comparison of Four companies:

Name of the companies

Calculation

Calculation

Result

Rahimafrooz

Batteries Ltd

1,190,640,768-470966115-325989928

1145690506-27764361

393,684,725

1,117,926,145

= 0.3521562

Quasem Drycell Ltd

376,550,056-221,552,994-89,039,555

366,864,899

65957507

366,864,899

= 0.1797869

Olympic Industries Ltd.

79733182-24512371-19009701

65,107,177

36211110

65,107,177

= 0.5561769

Navana Batteries Ltd.

245,378,852-111,150,844-31,766,320

347,550,126

36211110

347,550,126

= 0.2948112

 

 Comment:

The quick ratio for Rahimafrooz Batteries Limited indicates 0.35215 times compared to Quasem Drycell Ltd. holds 0.17978 times,Navana Batteries Limited holds 0.294811 times .But Olympic Industries Limited has 0.55617 times greater than Rahimafrooz Batteries Limited. Rahimafrooz Batteries Limited  has also more times compared to the industry average 0. 34573 times .So, the company is highly liquid.

 3. Net Working Capital Ratio:

Ratio

Method of Computation

Industry average

Net Working Capital Ratio

Current Assets – Current Liabilities

Total Assets

(0.02433+0.010932-0.1073930

-0.024331)/4

= -0.0078028

Comparison of Four companies:

Name of the companies

Calculation

Calculation

Result

Rahimafrooz

Batteries Ltd

1190640768-1145690506

1,847,445,449

44,950,262

1,847,445,449

 

= 0.0243310

 

Quasem Drycell Ltd

376550056-366864899

885904358

9,685,157

885904358

= 0.0109325

Olympic Industries Ltd.

79733182-65107177

136,191,376

14626005

136,191,376

= -0.1073930

Navana Batteries Ltd.

1190640768-1145690506

1,847,445,449

44,950,262

1,847,445,449

= -0.0243310

 

Comment:

Rahimafrooz Batteries Limited has the highest net working capital ratio (0.0243310 times) compared to Quasem Drycell Limited (0.0109325 times), Olympic Industries Limited (-0.1073930) and Navana Batteries Limited (-0.0243310).The company also has more Net Working Capital Ratio times compared to the industry average -0.0078028. So, having enough working capital with respect to total assets, the company’s performance and the liquidity position is good.

3.      Cash Flow Liquidity Ratio:

For measuring short-term solvency is the cash flow liquidity ratio which considers cash flow from operating activities (from the statement of cash flows).The cash flow liquidity ratio uses in the numerator, as an approximation of cash resources, cash and marketable securities, which are truly liquid current assets, and cash flow from operating activities, which represents the amount of cash generated from the firm’s operations, such as the ability to sell inventory and collect the cash.

Ratio

Method of Computation

Industry average

Cash Flow Liquidity Ratio

Cash and Cash Equivalents+CFO[1]

Current Liabilities

(0.009038+0.025029+0.535375

+0.07891)/4

= 0.1620897

Comparison of Four companies:

Ratio

Rahimafrooz Batteries Ltd.

Quasem Drycell Ltd.

Olympic Industries Ltd.

Navana Batteries Ltd.

Cash Ratio:

10355735+234364346

1,145,690,506

= 0.213600514

9182358+57564634

366864899

= 0.181938889

34856781+31499376

65,107,177

= 1.019183446

27426959+65909615

347,550,126

= 0.268555719

Rahimafrooz Batteries limited

Some are parts:

Financial Statement Analysis of Rahimafrooz Batteries Limited (Part 1)

Financial Statement Analysis of Rahimafrooz Batteries Limited (Part 2)

Financial Statement Analysis of Rahimafrooz Batteries Limited (Part 3)

 

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