Page No- 1

Executive Summary

We gladly present you our report titled “Financial Ratio Analysis”. Our report also

refers as an analytical report of accounting. We have made the report on the two listed

company annual report analysis as you had given us to analyse by help of your

suggestions. This report implies the companies’ activity, liquidity, solvency,

profitability, valuation financial ratios that helps to get a proper picture of the

companies. We have selected the company named- RAK Ceramics BD LTD & Berger

Paints Bangladesh Limited. We have discussed all of the ration in the analysis &

findings content. We have described the recommendation as much as possible.

We believe that the knowledge and experience we gathered during the report will

extremely helpful in our future professional and academic life. We will be grateful to

you if you accept the assignment.

Page No- 2

Table of Contents

No. Contents Page No.

1. Introduction

(i) Background of the Report

(ii) Objectives of the Report

(iii) Limitations of the Report

(iv) Methodology

3

4

5

6

2. Organisational Profile

(i) RAK CERAMICS (BD)

Limited

(ii) Berger Paints Bangladesh

Limited

7

8

3. Findings and Analysis 9

4. Recommendation 25

5. Conclusion 26

7. References 27

Page No- 3

Background of the Report

We assign the report to know and analyze the current (2015 & 2015) financial situation

of two companies and discuss how to turn their financial condition into satisfactions.

This report helps us to get new experience for preparing a report. We can get a result

so that we can analyze and solve many problems.

We have used 5 categories financial ratios so that we can easily analyze the whole

financial statement of the previous years annual report of two listed companies. These

categories are-

(1) Activity Ratio- measure how efficiency a company performs day-to-day

tasks

(2) Liquidity Ratio- measure the company’s ability to meet its short term

obligations.

(3) Solvency Ratio- measure a company’s ability to meet long term obligations.

(4) Profitability Ratio- measure the company’s ability to generate profitable

sales from its resources.

(5) Valuation Ratio- measure the quantity of an asset or flow.

We have assigned a recommendation part for this report so that we can discuss

financial positive and negative impact of a company. We also have tried to focus

proper comment/note for each ratio.

Page No- 4

Objectives of the Study

It is very important to set an objective for preparing our report. The main objective of

the report is to analyse the annual reports of two listed company- RAK Ceramics &

Berger Paints BD LTD.

So at first we have to collect the previous annual reports of two companies. We have

tried to solve accurate ratio analyse so that we can achieve our objective. The study

finds out the way haw we can analyze a report and find out the strong & weak sides of

financial situation of a company. So we have analyzed 5 categories ratio analysis

(which includes current ratio, quick ratio, cash ratio, inventory turnover ratio, payable

turnover ratio, fixed asset turnover ratio, debt-to-asset ratio, debt-to-capital ratio P/E,

P/CF etc)

Page No- 5

Limitations of the Study

Time Limitation: Our report submission date was 21 August 2016. We got the

presentation topic two/three weeks back. Unfortunately that was not enough time to

complete this presentation on a high note. If there was more time, we could have done

it much better.

Student Cooperation: Some Students of our class did not cooperate with us at all.

They were afraid that it is very much hard to analyze annual report. So we tried to

solve the ratios without proper helping hand.

Knowledge Gap: We did this kind of report for the very first time and it was obvious

that there will be some knowledge gap.

Absence of Necessary Documents: As it was our first time doing this kind of report

and also we do not know anyone who have done this sort of report before. Therefore

we did not have the proper documents that was needed (except annual report of 2014-

2015).

Page No- 6

Methodology

Sources of Data: We collected data to prepare our repot from 2 types of data:-

(1) Primary Data: Primary data are measurement observed and recorded as part

of an original study. There are two basic methods of obtaining primary data-

Questioning and Observation. We have collected primary data from the

companies (RAK Ceramics BD LTD & Berger Paints Bangladesh Limited)

own websites. The companied have published their 2014 & 2015 annual

repoerts who are thought to have the desired information. So we have get

proper and efficient information from its websites.

(2) Secondary Data: Secondary data is data collected by someone other than

the user. We have collected as a secondary data from lecturer sheet and useful

webinks like Wikipedia, Slideshare (Linkedin) etc.

Page No- 7

Organizational Profile

RAK Ceramics BD LTD

RAK Ceramics (Bangladesh) Limited is the country’s largest and most respected tiles

and sanitary ware brand. The Company was incorporated in Bangladesh on 26

November, 1998 as a private limited company under the Companies Act, 1994 as a

UAE-Bangladesh joint venture project. It has started its commercial production on 12

November 2000. It has converted into public limited company on 10 June 2008 and

listed in the stock exchanges of Bangladesh on 13th June 2010. The Company has

anchored this position on the basis of its market-leading capacities, world-class

manufacturing technologies, high production utilization, optimized cost structures,

vibrant sales and distribution network and robust customer engagement programs.

Page No- 8

Products- Ceramic tiles, sanitary ware, taps and kitchen fittings, tableware, tile

adhesives, interior ancillary products.

Berger Paints Bangladesh LTD

Berger Paints Ltd is the second largest Paint Company in India and a market leader

in Industrial Paint for the past 45 years with a consistent track record of being one of

the fastest growing paint companies, quarter on quarter, for the past few years.

Headquartered at Kolkata it has 10 manufacturing units and over 110 stock points. The

company also has an international presence in 4 countries – Russia, Poland, Nepal and

Bangladesh. With employee strength of over 2,800 and a countrywide distribution

network of 25,000+ dealers, Berger is established in the sector with a varied portfolio

of paints and tailor-made customer services.

Products- Paints, Coatings, Wallpaper, Construction Chemicals and allied products.

Page No- 9

Findings and Analysis

Ratio Analysis- RAK Ceramics

Inventory Turnover Ratio = Cost of Goods Sold

Average Inventory

2015 2014

=2896890000

2239844230 =

3255270000

1835354727

=1.293 =1.773

* The inventory turnover ratio rate of 2014 is greater than 2015.

Receivable Turnover = Revenue

Average Receivables

2015 2014

=5508640000

580719781 =

6329964274

638387373

=9.916 =9.486

* Receivable turnover ratio of two years is almost average and well. The receivable

turnover ratio of 2015 has been improved before the year of 2014.

Page No- 10

Payables Turnover = Purchases

Average Trade Payables

2015 2014

=2896889441

44500470 =

3072036921

2738540

=65.098 =1121.78

*The payables turnover ratio was well times in 2014.

Working Capital Turnover = Revenue

Average Working Capital

2015 2014

=5508640000

289116566 =

6329964274

1545379710

=4.096 =19.053

*Indicates the number of times the working capital is turned over. The rate of the

ration of 2014 is well.

Fixed Asset Turnover = Revenue

Average Net Fixed Asset

2015 2014

=5508640000

2013734249 =

6329964274

2311590599

=2.739 =2.735

*the ratio establishes between fixed asset and sales. The ideal rate for the ratio is 5.

So fixed asset turnover ability is not so high.

Page No- 11

Total Asset Turnover = Revenue

Average Total Asset

2015 2014

=5508640000

9476977741 =

6329964274

10753365565

=0.59 =0.58

*indicates the ability of a company to use its asset. So the ratio rate of the 2 years is

not so high.

Current Ratio = Current Asset

Current Liabilities

2015 2014

=7123130156

3538079861 =

6741661301

4218330929

=1.599:1 =2.013:1

*Ideal ratio is 2:1. So the current ratio of 2014 is greater than the year of 2015.

Quick Ratio = Cash Short-Term Marketable Investments Receivables

Current Liabilities

2015 2014

=1101566520

4218330929 =

1473926142

3538079861

=0.261 =0.417

*Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.

Cash Ratio = Cash Short-Term Marketable Investments

Current Liabilities

Page No- 12

2015 2014

=201898000

4218330929 =

40661640

3538079861

=0.048 =0.011

* Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.

Debt-to-Assets Ratio = Total Debt

Total Assets

2015 2014

=420624802

10753365565 =

420624802

9476977741

=0.039 =0.044

*indicates how many assets of a company are financed by debt. So, the ratio rate of

2014 is good.

Debt-to-Capital Ratio = Total Debt

Total Debt+Total Shareholdrs' Equity

2015 2014

=420624802

3789130912 =

420624802

3789130912

=0.111 =0.111

*Ideal Ratio: Higher the ratio, higher the risk of default. So the ratio of 2015 & 2014

is same and well for the company.

Debt-to-Equity Ratio = Total Debt

Total Shareholdrs' Equity

Page No- 13

2015 2014

=420624802

3368506110 =

420624802

3368506110

=0.124 =0.124

*indicates the extent to which a company relies on external debt. The ratio rate of 2

years is same.

Financial Leverage Ratio = Total Asset

Total Equity

2015 2014

=10753365565

6038597111 =

9476977741

5919429484

=1.780 =1.600

*measure of financial leverage(capital structure) The ratio rate of 2 years is almost

average.

Gross Profit Margin = Gross Profit

Revenue

2015 2014

=1975308452

5508640000 =

2162410962

6329964274

=0.341 =0.358

*A profitability ratio. The ratio rate of 2 years is not so high. So it reflects fewer

efficiency in converting raw materials to income.

Operating Profit Margin = Operating Income

Revenue

Page No- 14

2015 2014

=1070931754

6329964274 =

997857436

5508640000

=0.169 =0.181

*Measures profitability without concern for taxes and interest. The ratio rate of two

years is average.

Net Profit Margin = Net Income

Revenue

2015 2014

=4541554406

6329964274 =

3964568745

5508640000

=0.717 =0.719

* Measures the percentage of each sales. The ratio rate of two years is average.

Operating ROA = Operating Income

Average Total Asset

2015 2014

=1070931754

10753365565 =

997857436

9476977741

=0.084 =0.111

*indicate the levels of operating profits relative to the firm’s total asset. The ration

rate of two years is almost same.

ROA = Net Income

Average Total Asset

Page No- 15

2015 2014

=4541554406

10753365565 =

3964568745

9476977741

=0.422 =0.418

*Indicates ability of a company to earn profit from its asset. The ratio rate of ROA is

good.

ROE = Net Income

Average Total Equity

2015 2014

=4541554406

6038598640 =

3964568745

5919429484

=0.752 =0.669

*indicates the return to the owner on the amount invested in the business. The ROA

rate of two years is good for the company.

P/E = Price Per Share

Earnings Per Share

2015 2014

=639.91

48.65 =

684.43

43.33

=13.153 =15.796

*The P/E rate of two years of the company is good.

P/CF = Price Per Share

Cash Flow Per Share

Page No- 16

2015 2014

=639.91

45.98 =

684.43

39.69

=13.917 =17.244

P/S = Price Per Share

Sales Per Share

2015 2014

=639.91

688.56 =

684.43

727.76

=0.929 =0.940

P/S = Price Per Share

Book Value Per Share

2015 2014

=639.91

124.06 =

694.43

130.66

=5.158 =5.314

Page No- 17

Ratio Analysis- Berger Paints Bangladesh Limited

Inventory Turnover Ratio = Cost of Goods Sold

Average Inventory

2015 2014

=14837714000

1513733000 =

13165473000

1660913000

=9.802 =7.92

* The inventory turnover ratio rate of 2015 is greater than 2014.

Receivable Turnover = Revenue

Average Receivables

2015 2014

=12267996000

939573000 =

10881046000

832711000

=13.056 =7.92

* Receivable turnover ratio of two years is almost average and well. The receivable

turnover ratio of 2015 has been improved before the year of 2014.

Page No- 18

Purchases

Average Trade Payables Payables Turnover =

2015 2014

=5811465000

1779661000 =

5942325000

1461545000

=3.265 =4.065

* The payables turnover ratio was well times in 2014.

Working Capital Turnover = Revenue

Average Working Capital

2015 2014

=12267996000

390590000 =

10881046000

171604000

=31.40 =63.40

* Indicates the number of times the working capital is turned over. The rate of the

ration of 2014 is well.

Fixed Asset Turnover = Revenue

Average Net Fixed Asset

2015 2014

=12267996000

1843340000 =

10881046000

1578664000

=6.655 =6.892

* the ratio establishes between fixed asset and sales. The ideal rate for the ratio is 5.

So fixed asset turnover ratio rate ability is well.

Total Asset Turnover = Revenue

Average Total Asset

Page No- 19

2015 2014

=12267996000

6683525000 =

10881046000

5632593000

=1.83 =1.93

* indicates the ability of a company to use its asset. So the ratio rate of the 2 years is

not so high.

Current Ratio = Current Asset

Current Liabilities

2015 2014

=3951586000

2132948000 =

3541219000

1851418000

=1.852:1 =1.912:1

* Ideal ratio is 2:1. So the current ratio of 2014 is greater than the year of 2015.

Quick Ratio = Cash Short-Term Marketable Investments Receivables

Current Liabilities

2015 2014

=330156000

2132948000 =

293875000

1851418000

=0.155:1 =0.159:1

* Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.

Cash Ratio = Cash Short-Term Marketable Investments

Current Liabilities

Page No- 20

2015 2014

=800000000

2132948000 =

400000000

1851418000

=0.375:1 =0.216:1

* Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.

Debt-to-Assets Ratio = Total Debt

Total Assets

2015 2014

=1426465000

1851418000 =

1747146000

2132948000

=0.819 =0.770

* indicates how many assets of a company are financed by debt. So, the ratio rate of

2015 is good.

Debt-to-Capital Ratio = Total Debt

Total Debt+Total Shareholdrs' Equity

2015 2014

=1426465000

1658354000 =

1747146000

1979035000

=0.882 =0.860

* Ideal Ratio: Higher the ratio, higher the risk of default. So the ratio of 2015 & 2014

is same and well for the company.

Debt-to-Equity Ratio = Total Debt

Total Shareholdrs' Equity

Page No- 21

2015 2014

=1426465000

1758354000 =

1747146000

1859035000

=0.939 =0.8112

* indicates the extent to which a company relies on external debt. The ratio rate of 2

years is same.

Financial Leverage Ratio = Total Asset

Total Equity

2015 2014

=5346874000

3354605000 =

6339060000

4038513000

=1.570 =1.594

* measure of financial leverage(capital structure) The ratio rate of 2 years is almost

average.

Gross Profit Margin = Gross Profit

Revenue

2015 2014

=5255332000

12267996000 =

4295302000

10881046000

=0.428 =0.395

* A profitability ratio. The ratio rate of 2 years is not so high. So it reflects fewer

efficiency in converting raw materials to income.

Operating Profit Margin = Operating Income

Revenue

Page No- 22

2015 2014

=1520953000

10881046000 =

1996401000

12267996000

=0.162 =0.140

* Measures profitability without concern for taxes and interest. The ratio rate of two

years is average.

Net Profit Margin = Net Income

Revenue

2015 2014

=1425955000

12267996000 =

1097609000

10881046000

=0.116 =0.100

* Measures the percentage of each sales. The ratio rate of two years is average.

Operating ROA = Operating Income

Average Total Asset

2015 2014

=4295302000

5346874000 =

1996401000

6339060000

=0.314 =0.284

* indicate the levels of operating profits relative to the firm’s total asset. The ration

rate of two years is almost same.

Page No- 23

ROA = Net Income

Average Total Asset

2015 2014

=1425955000

6339060000 =

1097609000

5346874000

=0.224 =0.205

* Indicates ability of a company to earn profit from its asset. The ratio rate of ROA is

good.

ROE = Net Income

Average Total Equity

2015 2014

=1425955000

4038513000 =

1097609000

3354605000

=0.353 =0.327

* indicates the return to the owner on the amount invested in the business. The ROA

rate of two years is good for the company.

P/E = Price Per Share

Earnings Per Share

2015 2014

=1425

47.33 =

1903.60

61.49

=30.958 =30.107

* The P/E rate of two years of the company is good.

P/CF = Price Per Share

Cash Flow Per Share

Page No- 24

2015 2014

=1425

49.69 =

1903.60

91.98

=20.670 =28.678

P/S = Price Per Share

Sales Per Share

2015 2014

=1425

1472.33 =

1903.60

1934.558

=0.983 =0.968

P/S = Price Per Share

Book Value Per Share

2015 2014

=1425

144.66 =

1903.60

174.16

=10.930 =9.850

Page No- 25

Recommendation

The next step is to find out how to turn them into batter Financial Position. In our

opinion we are recommending these:-

RAK Ceramics:

(1) Inventory turnover & receivable turnover ability should be improved further.

(2) Fixed asset turnover should be developed.

(3) Should try to increase current asset & cash.

(4) Should try to increase revenue as much as possible further.

Berger Paints:

(1) Total asset turnover & receivable turnover ability should be improved further.

(2) Fixed asset turnover should be developed.

(3) Should try to increase current asset, cash & cash investments receivables.

(4) Should try to increase revenue & operating income as much as possible further.

Page No- 26

Conclusion We have already solved the report on the financial analysis regarding analysis and total

description in the two company. As we are in ongoing process to be a business graduate

we will have to face some difficulties regarding this report in our professional life. So

we must have to know the knowledge of management in business to regard running a

business and also many aspects of business. This report will help us to meet up the

problems that we may face in future.

Page No- 27

References

(1) http://rakcerambd.com/

(2) http://rakcerambd.com/investor-annual-reports.php

(3) http://www.bergerbd.com/

(4)http://www.bergerbd.com/corporate_info/reports/Annual

_and_Quarterly_Reports

(5) https://www.wikipedia.org/

(6)http://www.investopedia.com/university/peratio/peratio1

.asp