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Chapter: 4

Findings and Analysis

Financial Statement for the year of 2012, 2013 and 2014


Balance Sheet
Particulars
Assets:
Non-Current Assets:

2012

2013

2014

3604364

3349773

3418084

Property, Plant & Equipment

99
7778823

11
7981923

93
7541017

Current Assets

02
5344627

32
5496598

24
5155602

Inventories

67
5951683

58
5810468

13
7496234

Accounts Receivable

1
1460451

4
1660527

8
1476978

Advance, Deposits & Prepayments

34
3785757

72
2437501

41
1588132

Cash & Cash Equivalents

0
1916201

8
1931361

2
1850011

103

975

941

4269658

4571032

4870662

Shareholders equity:

32
8000000

64
8000000

42
8000000

Share Capital

0
4000000

0
4000000

0
4000000

Share Premium

0
3069658

0
3371032

0
1606857

Reserve & Surplus

32
1130250

64
8552500

2
4270750

Long Term Loans-Secured


Deferred Tax liability

00
2791211

0
2514185

0
2489701

Total Assets:
SHAREHOLDERS EQUITY AND LIABILITES:

9
5704158

7
5655367

2
5412394

Current Liabilities:

50
4335094

87
4075904

63
4173712

Short Term Bank Loans

29
3767500

04
4276250

52
4270750

Long Term loans- Current Portions


Liabilities for Goods

0
3386997

0
1753704

0
1752991
1260833

Liabilities for Expenses

8092634
2684833

9874064
2779490

8
2603816

Liabilities for Other Finance


TOTAL SHAREHOLDERS EQUITYS

2
1916201

6
1931361

5
1850011

103

975

941

AND LIABILITIES

Financial Statement for the year of 2012, 2013 and 2014


Income Statement
2012
1479083

2013
1554446

2014
1727217

Sales

463
1151350

836
1208797

669
1353202

Cost of Goods Sold

648
3277328

483
3456493

996
3740146

Gross Profit

15
2576360

53
2750279

73
2997359

Expenses:

14
1220980

74
2364427

93
2678422

Administrative & Selling Expenses

82
4621805

4
5000608

9
8040206

Marketing Expenses

8
5354735

9
5670948

5
6940504

Selling & Distribution Expenses

0
1355379

6
1446681

5
1231446

Financial Expenses

32
7009680

25
7062137

54
7427868

1
445290

9
584920

0
36912

Welfare Funds

3504840
6703725

3560315
6764598

3535322
7070644

Profit Before Taxation

1
1481964

4
1281608

6
1528232

Provision for Income Tax

4
1577584

5
1691384

0
1552716

Current Tax
Deferred Tax

1
956197
5221760

3
4097758
5482990

5
244845
5542412

Operating Profit
Other Income
Contribution to Worker's Participation &

Profit After Taxation

Liquidity Performance
Liquidity refers to the ease with which it can pay its bills. The liquidity of a firm
measures its ability to satisfy its short-term obligations. The three basic measures of
liquidity are as follows:
Particulars
Current Assets
Current liabilities
Inventories

2012(Tk.)
2013(Tk)
2014(Tk)
777882302
798192332
754101724
570415850
565536787
541239463
534462767
549659858
515560213
Years

Ratios
Current ratio

Ratios
Current ratio = Current assets /
Current liabilities

Quick ratio

Quick ratio = (Current assets


Inventories) / Current liabilities

Working

2014

2013

2012

798192332/5

754101724/54

65536787

1239463

=1.41

=1.39

777882302-

798192332-

754101724-

534462767/5704158

549659858/5

515560213/54

50

65536787

1239463

=.426
777882302-

=.43
798192332-

=.44
754101724-

570415850/5704158

565536787/5

541239463/54

65536787

1239463

=.41

=.39

777882302/570415850
=1.36

50

capital ratio =

=.36

Efficiency Ratio:
Particulars

2014(Tk.)

2013(Tk)

2012(Tk)

Net Sales

19,052,162

Inventories
Inventory
Turnover ratio:
Sales/average
inventory

25,778,947

17,523,278

534462767

549659858

515560213

.03

.04

.03

Debt Management:
Particulars
Debt
Equity
Total assets

2014(Tk.)
2013(Tk)
2012(Tk)
433509429 407590404
417371252
80000000
80000000
80000000
193136197
1916201103

Total liabilities

5
193136197

1916201103
Year
Ratios
Debt ratio
Equity Ratio

Total debt / Total asset


Net Income/Shareholders equity

Profitability Performance

1850011941
1850011941
2014
.22

2013
.21

2012
.22

.23

.32

.21

Types of Profitability Ratios


Common profitability ratios used in analyzing a company's performance include gross
return on assets (ROA) , return on equity (ROE), return on sales (ROS) and return on
investment (ROI).
Particular

2014( Tk)

2013( Tk)

2012( Tk)

Gross profit

12,749,388

14,521,265

11,473,690

Net Sales

19,052,162

25,778,947

17,523,278

Net profit

1,363,856

1,292,987

1,300,018

Current Assets

3,156,206

5,496,894

3,160,823

Fixed Asset
Total Assets

360436499
191620110

334977311

341808493

1931361975

1850011941

570415850

565536787

541239463

80000000

80000000

80000000

Current Liabilities
Equity

Ratios
Return on Assets - ROA

Formula
2014
Return on Assets = Net Income /
.09
Assets * 100
Return on Equity = Net Income /

Return on Shareholders Equity-ROE=

Net Profit Margin


Gross Profit Margin

2013

2012

1.3

.09

23.8

32.2

21.9

.07

.05

.07

21.6%

22.2%

22.1%

Shareholder Investment * 100

Net Profit/Total Revenue

Sales-Cogs/Sales

Return or Profitability:
Return on Assets (ROA): The Return on Assets ratio is
calculated from Appendix A-1 to A-2. The highest value of the
ratio is 4.58% in year 2015 and lowest is 3.88% in year 2014. So,
the performance of 2015 is so good than 2014.
Return on Equity (ROE): The Return on Equity ratio is
calculated from Appendix A-1 to A-2.The highest value of the
ratio is 12.23% in year 2015 and lowest is 11.33% in year 2014.
The performance of PRAN was good in last year.
Net Profit Margin: The Net Profit Margin ratio is calculated from
Appendix A-1 to A-2. It shows the net profitability of two years. In
there, PRAN shows the best performance in year 2015. The
highest value of the ratio is 3.53% in year 2015 and the worst
value of PRAN was 3.45% in year 2014.
Gross Profit Margin: The Gross profit margin ratio is calculated
from Appendix A-1 to A-2. It shows the net profitability of two
years. In there, PRAN shows the best performance in year 2015.
The highest value of the ratio is 22.16% in year 2015 and the
worst value of PRAN was 21.80% in year 2014.
Liquidity:
Current Ratio: Current ratio is calculated from Appendix A-1 to
A-2.PRAN is in the best position in year 2015 and the value is
1.36%. But the performance of year 2014 was poor than year
2015.
Debt Management:

Debt Ratio: Debt ratio is calculated from Appendix A-1 to A-2. It


shows PRAN has the more dependency in year 2015 which value
is 60.03% and the value of year 2014 was 63.31%
Asset Turnover Ratio:
Asset Turnover ratio is calculated from Appendix A-1 to A-2.PRAN
is in the best position in year 2015 and the value is 1.30 times.
The value of year 2014 was 1.12 times which is poor than year
2015.
Equity Ratio:
Equity ratio is calculated from Appendix A-1 to A-2.PRAN is in the
best position in year 2015 and the value is 65.27%. The value of
year 2014 was 56.86% which is poor than year 2015.
Inventory Turnover Ratio:
Inventory Turnover ratio is calculated from Appendix A-1 to A2.PRAN is in the best position in year 2015 and the value is 2.77
times. The value of year 2014 was 2.55 times which is poor than
year 2015.

The Actual Z-Score Formula *


Z = 1.2T1 + 1.4T2 + 3.3T3+0.6T4+0.999T5
Where
X1 = Working Capital /Total Assets
X2 = Retained Earnings / Total Assets
X3 = NPBT /Total Assets
X4 = Total Equity /Total Liabilities
X5 = Sales /Total Assets
Z = Overall index

For the year ended 2014

X1 = Working Capital
/Total Assets

3,156,206/570415850=.0

X2 = Retained
Earnings / Total Assets

363,856/1916201103=.0

05

001

X3 = NPBT /Total Assets

X4 = Total Equity /Total


Liabilities

67037251/1916201103
=.03
80000000/1916201103
=.04
1727217669/19162011

X5 = Sales /Total Assets

03=.90

Z = 1.2T1 + 1.4T2 + 3.3T3+0.6T4+0.999T5


= 1.2x.005+1.4x.0001+3.3x.03+.6x.04+.999x.90
=1.02
So Pran-food is in financial distress.
For the year ended 2013
X1 = Working Capital
/Total Assets

5,496,894/565536787=.009

X2 = Retained
Earnings / Total Assets

1292987/1931361975=.0

X3 = NPBT /Total Assets

67645984/1931361975

X4 = Total Equity /Total


Liabilities
X5 = Sales /Total Assets

0006

=.035
80000000/1931361975
=.041
1554446836/19313619
75=.80

Horizontal Analysis:
Horizontal Analysis is a technique of studying several
financial statements (Balance Sheet & Income Statement)
over a series of years. In this analysis the trend percentages
are calculated for each item by taking the figure of that
item for the base year taken as 100. Generally, the first

year is taken as a base year. This analysis is done to see the


upward or downward trend of the financial statements
throughout five different years.

Horizontal Analysis of Income Statement:


The Horizontal Analysis of income statement shows the
analysis on the different periods of the income statement
assuming one year as base. The trend of increasing or
decreasing in the items of income statement is analyzed.

Income Statement
Horizontal Analysis

Sales
Cost of Goods Sold

For the Year of 2013


& 2014
Amount
Percent

For the Year of 2012 & 2013


Amount
Percent
(15544468361479083463)/14790
83463
17277083
5.10%
3
(12087974834.99% 14440551
1151350648)/11513
3
50648

11.11%
11.95%

(345649353327732815)/327732
815
Gross Profit
Expenses:
Administrative & Selling
Expenses
Marketing Expenses
Selling & Distribution
Expenses

17391960
-98453808
3788031

13.28%
60.78%

Other Income
Contribution to Worker's
Participation & Welfare
Funds
Profit Before Taxation

139630

31.36%

-548008

55475
608733

-24993
3060462

-0.70%
4.52%

Provision for Income Tax


Current Tax

-2003559
1138002

1.58%
0.91%
13.52%
7.21%
328.55
%
5.00%

2466235
-1386678

19.24%
-8.20%
94.02%
1.08%

9130193
524578

Deferred Tax
Profit After Taxation

3141561
2612293

5.91% 12695559
6.74% 21523471
0.75%
3657301

8.21%
8.98%

22.39%
14.88%
5.18%
93.69%

Financial Expenses
Operating Profit

3162136

5.47% 28365320
6.75% 24708019
80.64%
3139955
8.20% 30395976

-3852913
594226

Interpretation:

The absolute value of net sales is in increasing trend.


While comparing the value to 2012, the net sales figure
is increasing rapidly throughout the four years up to
2013. At 2014 the actual value of net sales is low in

compare to 2013 so the absolute change in value during


2014 compared to 2012 is less than rest of the years.
The total income is increasing parallel with the net
sales. While the expenditure is increasing rapidly above
the net sales due to increase in the material
consumption and operating expenses. This results low in
the pace of increasing operating profit.
The financial expenses, exceptional items, current tax
and deferred tax are affecting the growth of the
company. The company is in loss due to the heavy
increase in the amount of exceptional items and
financial expenses. This shows that the company
accrues unusual charges in the ordinary course of its
business.
The increase in the amount of financial expenses
indicates the company possess large amount of debt
than its equity.
The deferred tax is increasing after 2013 which adds up
the net profit value as shown in the worksheet. It is an
asset to the company.
Despite of the heavy loss seen through the trend of
three years, the loss is minimized from the balanced
transferred from previous years.

Horizontal Analysis of Balance Sheet:


The different periods of balance sheet is compared with
base year in order to know the fluctuation of the items
based on one year.
For the year of 2012
& 2013
Amount
Percent

For the year of 2013 &


2014
Amount
Percent

Assets:
Non-Curren Assets:
Property, Plant & Equipment

25459188

-7.06%

Current Assets

20310030

2.61%

Inventories
Accounts Receivable
Advance, Deposits &
Prepayments

15197091
-1412147

2.84%
-2.37%

20007638
13482552

13.70%

Cash & Cash Equivalents


Total Assets:
SHAREHOLDERS EQUITY AND
LIABILITES:
Shareholders equity:
Share Capital
Share Premium

15160872

Reserve & Surplus

30137432
27500000
-2770262

Long Term Loans-Secured


Deferred Tax liability
Current Liabilities:
Short Term Bank Loans
Long Term loans- Current
Portions

30137432
0
0

-4879063
25919025
5087500

6831182
44090608
34099645
16857664
18354931

-35.61%

2.04%
-5.52%
-6.20%
29.01%
-11.05%

-8493696
0.79% 81350034

-34.85%

7.06% 29962978
0.00%
0
0.00%
0
32103469
9.82%
2
-24.33% 42817500
-9.92%
-244845
-0.86% 24297324

6.55%
0.00%
0.00%

-4.21%

-95.23%
-50.06%
-0.97%
-4.30%

-5.98%

9780848

2.40%

13.50%

-55000

-0.13%

Liabilities for Goods


Liabilities for Expenses
Liabilities for Other Finance
TOTAL SHAREHOLDERS
EQUITYS AND LIABILITIES

-1633293
1781430
946574
15160872

-48.22%
22.01%
3.53%

-713
2734274
-1756741
0.79% 81350034

Interpretation:

The Horizontal Analysis of the company reveals that the


absolute change in fixed assets is negative during 20122013 & 2013-2014 due to the decrease in the large
value of fixed assets which shows investment in fixed
assets is down from the year 2012.
The percentage of total debt is negative during the year
2013-2014 due to decrease in the value of secured and
unsecured loan. This shows that the outsider fund is less
in the year 2014 in compare to 2012. The company is
financing largely through its shareholders fund.
The share capital of the company is in increasing trend.
This shows that the company is issuing its share.
The reserve & surplus fund of the company depends on
the profit it makes in the previous year. Here the reserve
is in decreasing trend up to negative and after 2012 it
remains constant. This means the company has utilized
reserves and surplus for the payment of dividends to
shareholders either in cash or by way of bonus.
The percentage of outsiders fund is more than that of
the of shareholders fund which means the company
uses long term debt to purchase fixed assets.
The percentage change in current assets is more than
percentage change in current liabilities which show
current assets is more than current liabilities during all
five years. This further confirms that the company has
used long-term finances even for the current assets
resulting into an improvement in the liquidity position
of the company.

-0.04%
27.69%
-6.32%
-4.21%

The working capital is insufficient to finance investment


of the company due to the exceed of current liabilities
over current assets.

Vertical Balance Sheet:


A statement where balance Sheet items are expressed in
the ratio of each asset to total assets and the ratio of each
liability is expressed in the ratio of total liabilities in called
Vertical Balance Sheet.
Percent
For the year of 2012

Percent
For the year of
2013

Percent
For the year of 2014

Assets:
Non-Current Assets:

Property, Plant &


Equipment
Current Assets
Inventories
Accounts Receivable
Advance, Deposits &
Prepayments
Cash & Cash Equivalents
Total Assets:

360436499/1916201
103
=18.81%
40.60%
27.89%
3.11%

334977311/193136 341808493/1850011941
1975
=17.34%
=18.48%
41.33%
=40.76%
28.46%
27.87%
3.01%
4.05%

7.62%
1.98%
100.00%

8.60%
1.26%
100.00%

426965832/1916201
103
=22.28%
4.17%
2.09%
16.02%

457103264/193136
1975
23.67%
4.14%
2.07%
17.45%

5.90%
1.46%

4.43%
1.30%

7.98%
0.86%
100.00%

SHAREHOLDERS EQUITY
AND LIABILITES:

Shareholders equity:
Share Capital
Share Premium
Reserve & Surplus
Long Term LoansSecured
Deferred Tax liability

487066242/1850011941
=26.33%
4.32%
2.16%
0.87%
2.31%
1.35%

Current Liabilities:
Short Term Bank Loans
Long Term loans- Current
Portions
Liabilities for Goods
Liabilities for Expenses
Liabilities for Other
Finance
TOTAL
SHAREHOLDERS
EQUITYS AND
LIABILITIES

29.77%
22.62%

29.28%
21.10%

29.26
22.56

1.97%
0.18%
0.42%

2.21%
0.09%
0.51%

2.31
0.09
0.68

1.40%

1.44%

1.41

100.00%

100.00%

100.00

Interpretation:

An analysis of pattern of financing of PRAN Group


throughout five years shows that the companys
shareholders fund has Net worth in terms of its total
fund as 21.52% (2012), 27.64% (2013) & 30.69% (2014)
while Outsiders fund has total debt in terms of its total
fund as
78.48% (2012), 72.36% (2013) & 69.31% (2014). This
shows that the company depends more on its outsiders
funds account than Shareholders fund.

The company has sufficient working capital. The


percentage of current liabilities is less than percentage
of current assets in all five years.

A close look at the balance sheet shows that


investments in fixed assets have been from working
capital in the company. The fixed assets account for
44.69%, 59.76%,
& 55.52%,
of the total assets
respectively from 2012 to 2014. The percentage of fixed
assets varies in accordance with the change in current
assets and current liabilities throughout the years.

The investment in the company seems to be in


increasing due to high level of working capital in the
company.
SWOT ANALYSIS ON PRAN-Food

In Bangladesh PRAN-Food is one of the most successful company as


well as organization. This group is trying to achieve a good position in
local and global market. So, they have to analyze the SWOT matrix.
SWOT analysis is a planning tool used to analyze an organizations
STRENGTH, WEAKNESS, and OPPORTUNITIES & THREATS. Strength and
weakness are organizations internal factor. Opportunities and threats
are organizations external factor. Now the SWOT analysis of PRAN-RFL
is given below:
1. INTERNAL STRENGTH:
- Risk pooling factor.
- Large company and organization.
- Experiences.
- Superior source of finance.
- Better control over sources and raw material.
- Financial support
- Vast distribution network.
- Good reputation.
2. INTERNAL WEAKNESS:
- Unequal promotions strategy.
- Lack of first movers advantages.
- Lack of good control
- A lot of distance and a huge amount of transport cost.
- Internal promotion.
- Internal media planning.

- Unpreserved item

- Limited product range.


3. EXTERNAL OPPORTUNITIES;
- Demand in global market.
- Large demand in local market.
- Domestic natural resources.
- Cheap labor.
- Ethnocentrism
- Government incentives.
- Cash incentives.
- Vat.
4. EXTERNAL THREATS;
- Huge competition.
- Competition in market price.
- Lack of benefits.
- Strict health and technical standard.
- Changing choice of customers.
- Foreign competitor.
- Weak distribution.
- changing market.

Chapter: 5
Recommendations and Conclusions

RECOMMENDATION

1. Effective planning and financial management are the keys to running a


financially successful small service organization. Ratio analysis is critical for helping to
understand financial statements, for identifying trends over time and for measuring the
overall financial state of the organization.
2. According to my objectives of the report we can conclude that the
performance of the group is satisfactory level. So its service must be increased.
3. The methodology of the study should be developed and data should be collect
in relevant and proper way so that the informations are not be violated.
4. Cash and liquidity ratios help determine whether you can afford to invest in
capital assets or long-term business growth. A current and working capital ratio both are
useful for assessing whether your business has enough liquidity to pay for daily operating
and short-term debt expenses. For instance, a current ratio compares current assets to
current liabilities. A ratio of 3 to1 indicates your business is sufficiently liquid.

Conclusion

Effective planning and financial management are the keys to running a financially successful
small business. Ratio analysis is critical for helping you understand financial statements, for
identifying trends over time and for measuring the overall financial state of your business. In
addition, lenders and potential investors often rely on ratio analysis when making lending and
investing decisions. Balance sheet common size ratios are important for making comparisons of
assets and liabilities. These financial ratios focus on calculating each asset on the balance sheet
as a percentage of total assets and each liability as a percentage of total liabilities plus owners
equity. Calculating and comparing common size ratios for corresponding reporting periods in two
consecutive years helps you identify trends such as decreasing cash and increasing accounts
receivable balances. Financial planning goals might then include strengthening your accounts
receivable collection policy and tightening credit-granting guidelines.

Bibliography:
.Ahmed Dr. Zulfiquar; A text book of Bangladesh Labor Act, 2006,
1st edition, Shams Publications.

Sen Arun Kumar & Mitra Jitendra Kumar; Commercial Law and
Industrial Law, 26th edition, The world press private limited,
Kolkata.

Bagrial Ashok K.; Company Law, 10th edition, Vikas Publishing


house private limited.
www.pranrflgroup.com
www.Google.com
http://www.pranfoods.net/employee_care.php
Management by Stephen P. Robbins
EWU library.