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LIQUIDITY RATIOS
1. Current Ratio = Current Assets / Current liabilities
Year
Current Asset
(Taka)
Current Liabilities
( Taka)
Current Ratio
2012
7670184337
7203368404
1.06
2013
10424961127
10547219843
0.99
2014
10163738657
9329750460
1.09
Interpretation:
The short-term financial solvency of BSRM Limited is optimistic in 2012 and 2014, because the
current ratio was at acceptable limit. This indicates that the firm may have a hard time paying
their current liabilities in short period. The current ratio of BSRM Limited is slightly lower than
standard ratio of 2:1 in 2013. It means that the firm is unable to cover its all short term obligation
within business cycle.
2. Quick ratio = Quick assets / Current liabilities
YEAR
Quick Assets
Current Liabiliies
Quick Ratio
2012
1010191767
7203368404
0.14
2013
660773332
10547219843
0.06
2014
705822554
9329750460
0.08
Interpretation:
The quick ratio of BSRM Limited shows not satisfactory level because it is less than the standard level
(accepted level) of 1:1. The ratio was 0.14 in 2012 and it decreased in 2013 by 8% . In 2014 it improved
by 2%. We can see that the quick ratio is not adequate and not desirable. It indicates that firm has large
portion of current assets that cant be convertible into cash very easily.
3. Receivables Turnover = Net Credit sales / Average Net Receivables
YEAR
Average Net
Receivables
Receivables Turnover
2012
14043421488
643028738
21.8
2013
8602415008
587738788
14.6
2014
8049886582
541330358
14.9
Interpretation:
From the above calculation we can see that, the level of receivable turnover gradually decrease in year by
year. The highest level of Receivables turnover was 21.8 times in 2012 which indicates its extension of
credit and collection of accounts receivable are efficient. In 2013 the level of receivables turnover reduced
significantly that the firm should re-assess its credit policies in order to ensure the timely collection of
credit sales that is not earning interest for the firm.
Average Inventory
Inventory Turnover
2012
13345900813
4954613555
2.69
2013
8102322738
5327992976
1.52
2014
7862344633
4707093435
1.67
Interpretation:
The Inventory turnover ratio of BSRM Limited is 2.69, 1.52 and 1.67times for the year 2012 to
2014 respectively. Which is good for the firm. Because it does mean they prefer to storage their
products for limit times. So the activity or liquidity is satisfactory. And inventory turnover of
Nestle has the large investment in inventories relative to the amount needed to service sales.
3.2.3.2 PROFITABILITY RATIOS
1. Gross Profit Ratio = Gross Profit * 100 / Sales
YEAR
Gross Profit
Net Sales
2012
697520675
14043421488
4.97%
2013
500092270
8602415008
5.81%
2014
187541949
8049886582
2.33%
Interpretation: The above calculation shows a downward trend from 2012 to 2014, but the ratio considerably
decreased in the year 2014.BSRM limited has reasonable gross margin to cover all operating
expenses and building up of results. From the analysis it is clear that, Gross Profit Ratio is
highest in the year 2013 with a ratio of 5.81% and lowest in the year 2014 with a ratio of 2.33%.
Gross profit margin fluctuation is not stable which may affect firms pricing policies.
2. Net Profit Ratio =
YEAR
Net Profit
Sales
2012
453924187
14043421488
3.23%
2013
943818621
8602415008
10.97%
2014
116033236
8049886582
1.44%
Interpretation:
The above figure shows an increasing and decreasing trend from 2012 to 2014. Net Profit is at its
highest in the year 2013 with a ratio of 10.97% and lowest in the year 2014 with a ratio of
1.44%. It means In 2013 BSRM translate its sales into actual profit more effectively than 2012.
In 2014, BSRM limited converted revenue into actual profit was less effective for the share
holders.
3. Asset turnover Ratio = Net Sales / Average Assets
YEAR
Net Sales
Average Assets
2012
14043421488
15847575196
0.89
2013
8602415008
19069799705
0.45
2014
8049886582
22032636072
0.37
Interpretation
We can see that the assets turnover decreased gradually from year 2012 to 2014. Asset turnover
ratio represents how many sales are generated from each Taka of company assets. Asset
consumption against sale was highest in 2012 with a ratio of 0.89, and lowest in 2014 with a
ratio of 0.37. That indicates BSRM limiteds start up in not very efficient with its use of assets.
4. Return on Asset = (Net Income x 100)/ Average Asset
YEAR
Net Income
Average asset
Return On Asset
2012
453924187
15847575196
3%
2013
943818621
19069799705
5%
2014
116033236
22032636072
1%
Interpretation
From the year 2012 to 2014 BSRM limited ROA percentage were .03, .05 and .01 respectively
which was not constant. That implies BSRM limited invested their asset moderately in 2012. In
2013, BSRM uses their assets more efficiently than previous year. Thus the lower return in 2014
suggests BSRM asset management should revised the policies and procedure to avoid
unfavorable profitability of the company.
Net Income
Average Common
Stockholders Equity
Return On Equity
2012
453924187
2894942982
6.03%
2013
943818621
3709007184
11.41%
2014
116033236
4214450637
1.35%
Interpretation
The above figure shows an increasing and decreasing trend from 2012 to 2014. The earnings
ability of BSRM Ltd. Or the common stockholders was good condition in 2012 and 2013 but
gradually decrease in 2014. Overall ROE ratios and performance of the company was poor
showing a decreasing trend which may not satisfactory for the investors to invest in BSRM since
they want high return. The major cause of this reduction may be due to the increase in
shareholders equity compare to the net income.
6. EPS = Net income / Weighted Average Common Stockholders Equity
YEAR
Net Income
Weighted Average
Common Stockholders
Equity
2012
453924187
155851038
2.91
2013
943818621
155851038
5.06
2014
116033236
341775000
0.74
Interpretation
BSRM Ltd has got a deprived EPS during 2012, but in 2013 it is improved a lot and achieved a
positive EPS, which is much satisfying. In 2014 the earning per share of BSRM has decreased
significantly compare to previous year which is not good sign at all for shareholders of BSRM
because shareholders expect better EPS from an organization. Otherwise they would not
interested to invest anymore.
7. Price Earnings Ratio: Market price per share of stock / EPS
YEAR
EPS
2012
68
0.74
91.89
2013
68.70
6.06
11.34
2014
87.70
2.92
30.03
Interpretation
From 2012 to 2014 P/E ratios of BSRM was 91.89, 11.34 and 30.03 respectively. BSRM had
high P/E ratio in 2012 compare to any other year which means they might have considered risky
investments for the investors. There is major decrease in P/E ratio in 2013 as there is increase in
EPS.
Total Liability
Total asset
2012
9314060947
16840346087
0.55
2013
13025390130
21299253323
0.61
2014
14201731663
22766018821
0.62
Interpretation
The debt-equity ratio of BSRM Ltd is preferable, though its debt is slightly increased during
2012 to 2014. the debt-equity ratio of 0.62 in 2009 implies that, BSRM has Tk.1 of owners
capital to pay the liability of Tk.0.62, which really indicates a better condition in this regard.
2. Time Interest Earned Ratio= Earnings before interest & tax / Interest expenses.
Year
EBIT
Interest Expense
Time Interest
Earned Ratio
2012
(272704903)
122823391
(2.22)
2013
43982718
140618261
(1.71)
2014
(554245912)
405599797
(1.37)
Interpretation:
It shows how many times the company can pay its interest with its income of one year, higher
the ratio will be more favorable for the organization. From the above calculation we can see that
BSRM ability to pay interest out of earnings is not satisfactory.