Table of Contents

Abstract.................................................................................................................................................2
Objective................................................................................................................................................2
Methodology..........................................................................................................................................2
Sample Composition.......................................................................................................................2
Data Sources....................................................................................................................................2
Study Period.....................................................................................................................................3
Analysis and Findings.............................................................................................................................4
Olympic Foods Limited.......................................................................................................................4
1. Shareholders’ Equity...............................................................................................................4
2. Retained Earnings...................................................................................................................5
3. Authorized Share Capital.........................................................................................................6
4. Issued Share Capital................................................................................................................7
5. Cash Dividend.........................................................................................................................8
.......................................................................................................................................................8
6. Earnings per Share..................................................................................................................9
7. Total Current Liabilities.........................................................................................................10
8. Long Term Liabilities.............................................................................................................11
9. Interest Expense...................................................................................................................12
National Tea Company Limited.........................................................................................................13
1. Shareholder’s Equity.............................................................................................................13
2. Retained Earnings.................................................................................................................14
3. Authorized Share Capital.......................................................................................................15
4. Issued Share Capital..............................................................................................................16
5. Earnings per Share (EPS).......................................................................................................17
6. Cash Dividend.......................................................................................................................18
7. Total Current Liabilities.........................................................................................................19
8. Non-Current Liabilities..........................................................................................................20
9. Interest Expense...................................................................................................................21
Conclusion............................................................................................................................................21

1|Page
Abstract
The goal of this term paper is to analyze the financial excellence of two leading companies in the
food and allied industry- Olympic Industries Limited and National Tea Company Limited.
Olympic Industries Limited is the largest manufacturer, distributor and marketer of biscuits in
Bangladesh. What gave Olympic the reputation it has in the market is the quality they maintain
in their food production. National Tea Company Limited on the contrary is a public limited
company where government holds a good percentage of shares of the company. This report
wishes to portray the performance of the two companies from 2014 to 2016 in terms of its equity
and its liabilities. Possible reasons and the trends in their financing and ability to meet their
obligations are interpreted and presented in the paper.

Objective
 Analyze the financial excellence in terms of equity and liabilities
 Trends and pattern of changes in equity and liabilities between the companies
 Interpreting and reasoning the changes.

Methodology
Basically, this study is descriptive, analytical and empirical in nature and executed using the
published financial statements of two of the leading companies in the food and allied industries
of Bangladesh.

Sample Composition
This study focuses on the domestic activities of the companies. These 2 companies are assigned
to us by our faculty from number of companies in the food and allied industries of Bangladesh.
These selected companies are:

1. Olympic Foods Limited

2. National Tea Company Limited

2|Page
Data Sources
This study is purely based on secondary data. The financial data of selected companies have been
collected from the financial statements of the respected companies. The financial statements
have been collected from the Official Websites of the given banks i.e. and www.natcobd.com
and www.olympicbd.com

Study Period
A five year period (2014-2016) has been selected for evaluating the financial performance of
selected companies.

3|Page
Analysis and Findings
Olympic Foods Limited
1. Shareholders’ Equity

Total Equity-Olympic
5000000000.00
4531272360.00
4500000000.00
4000000000.00
3500000000.00 3381654099.00

3000000000.00
2522397546.00
2500000000.00
2000000000.00
1500000000.00
1000000000.00
500000000.00
0.00
2014 2015 2016

Graph No. 1: Total Equity – Olympic Foods Limited

Interpretation for total equity:

Over the period of the study, the total equity of Olympic showed an increasing trend. From 2014
to 2015, there was a huge increase in the total equity of Olympic. The total equity of Olympic
kept increasing at a very high rate, becoming almost double of its initial amount in 2016. The
overall increase for Olympic may have been because of:

 The issuance of higher number of shares

 The net income of the company may have been high
 This increases the retained earnings
 Retained earnings is a component of the equity section

4|Page
 2. Retained Earnings

Retained Earnings-Olympic
3000000000.00
2627092490.00
2500000000.00

2000000000.00 1794837539.00

1500000000.00 1346977866.00

1000000000.00

500000000.00

0.00
2014 2015 2016

Graph No. 2: Retained Earnings – Olympic

Interpretation for Retained Earnings:

The retained earnings showed an upward trend over the period of study. From 2014 to 2015 the
retained earnings of Olympic increased very rapidly. The retained earnings of Olympic kept
increasing till 2016, at an even higher rate this time. The retained earnings of Olympic increased
because:

 The income from operations increased

 Dividends were paid at a liberal rate

5|Page
 3. Authorized Share Capital

Authorized Share Capital-Olympic

2500000000.00

2000000000.00 2000000000.00 2000000000.00

2000000000.00

1500000000.00

1000000000.00

500000000.00

0.00
2014 2015 2016

Graph no. 3: Authorized Share Capital

Interpretation for Authorized Share Capital:

The Authorized Share capital remained constant throughout the period of study at a very high
amount of 2000000000 shares. This is because additional shares were not issued in the period
and the company does not aim to expand operations. The company did not have a plan to
increasing the number of shareholders other than retaining the existing ones.

The company issues only ordinary shares and no preference shares. The numbers of shares that
are authorized to the company are 200,000,000 at Tk.10 which makes the authorized share
capital to be Tk. 2000,000,000.

6|Page
 4. Issued Share Capital

Issued Share Capital-Olympic

2000000000.00 1904179870.00
1800000000.00 1707749760.00
1600000000.00
1400000000.00 1296352880.00
1200000000.00
1000000000.00
800000000.00
600000000.00
400000000.00
200000000.00
0.00
2014 2015 2016

Graph No. 4: Issued Share Capital – Olympic

Interpretation for Issued Share Capital:

The issued share capital for Olympic Foods Limited shows an increasing trend in the periods we
have analyzed. The amount of issued share capital kept on increasing at an almost constant rate.
It can be reasoned with many events. The company was at a constant need of money and was
financed with debt capital even more each year compared to previous years. This may be because
the company was expanding its operation and needed more cash flow in the business.

7|Page
 5. Cash Dividend

Cash Dividend-Olympic
500000000.00
449641243.00
450000000.00
400000000.00
350000000.00
300000000.00
250000000.00 221637244.00
200000000.00
150000000.00
100000000.00 72031154.00
50000000.00
0.00
2014 2015 2016

Graph No. 5: Cash Dividend- Olympic

Interpretation for Cash Dividend:

Olympic Foods Limited declared and paid only cash dividends in the period that we have
analyzed. This graph of cash dividend payment shows an increasing trend from 2014 to 2016.
The increases from 2014 to 2015 and from 2015 to 2016 were very large. It is evident from the
graph that the business had an increasing but smooth dividend payment policy. Paying higher
dividend to the shareholders portrays a good image for the business and Olympic has managed to
keep a clean and attractive image in the market. This will work as an incentive for the
stakeholders.

The company’s only dividend payment method is through cash. It does not go for any sort of
stock or property dividend payment policy.

8|Page
 6. Earnings per Share

Earnings Per Share-Olympic

9.00 8.54
8.00 7.39
6.90
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
2014 2015 2016

Graph No. 6: Earnings per Share- Olympic

Interpretation

The Earnings per Share (EPS) shows a fluctuating pattern in the graphs that was made using the
information of the years we have analyzed. The EPS has decreased from 2014 to 2015 by a small
rate. This decrease is due to the decrease in both profitability and liquidity conditions of the
organizations. The organization did not have enough cash in this period. This is a signal that the
company did not have a good earning and is in trouble. This usually affects the share price of the
shares in the share market. However, from 2015 to 2016 EPS has increased at a slightly higher
rate than the decrease. This indicates not only the company was profitable in this period but also
had a good liquidity condition. It had more cash to distribute to its shareholders. This shows the
company had an increased earning and this has increased the share price.

9|Page
 7. Total Current Liabilities

Total Current Liabiliti es-Olympic

3500000000.00

3000000000.00 2859716979.00

2500000000.00
1977232044.00 1988098981.00
2000000000.00

1500000000.00

1000000000.00

500000000.00

0.00
2014 2015 2016

Graph No.7: Total Current Liabilities- Olympic

Interpretation for Total Current Liabilities:

The value of total current liabilities increased very insignificantly from 2014 to 2015. But then it
jumped quite a bit in 2016.The small increase from 1977232044 in 2014 to 1988098981 could
have been caused by slight increase in accounts payable caused by small purchases. One of the
reasons for such a big leap from 1988098981 in 2015 to 2859716979 in 2016 could mean that
the company purchased a large number of inventories which increased their accounts payable
significantly. The purchase of large quantity of inventory could mean that the company was
trying to increase production to increase sales.

10 | P a g e
 8. Long Term Liabilities

Non-Current Liabiliti es-Olympic

500000000.00
444933166.00
450000000.00
400000000.00
350000000.00
300000000.00
245819608.00
250000000.00
200000000.00
150000000.00 136749676.00

100000000.00
50000000.00
0.00
2014 2015 2016

Graph No. 8: Non-Current Liabilities- Olympics

Interpretations for Non-Current Liabilities:

In our analysis only long term loans are considered as non-current liabilities. Other long term
liabilities like lease finance and deferred taxes have been ignored as per the requirement of the
report.

The value of total non-current liabilities decreased almost by half from 2014 to 2015 and then
continued to decrease at the same rate from 2015 to 2016. The drastic decrease means that the
company was able to pay off substantial amounts of their long term debts. This could also
indicate that the company’s cash-flow-to-debt ratio was relatively high.

11 | P a g e
 9. Interest Expense

Interest Expense-Olympic
140,000,000 131139171.00

120,000,000

100,000,000
87611822.00
82518098.00
80,000,000

60,000,000

40,000,000

20,000,000

0
2014 2015 2016

Graph No.9: Interest Expense- Olympic

Interpretation for interest expense:

The interest expense of the company increased a large amount from 2014 to 2015 but then
decreased from 2015 to 2016. The increase indicates the company incurred debt that carried a
higher interest rate due to increase in debt financing. It could also mean they had high cash-flow
and high liquidity which could mean they paid more interest. On the other hand, the sudden
decrease from 131139171 in 2015 to 87611822 in 2016 may have been caused due to the
repayments of loans.

12 | P a g e
National Tea Company Limited
1. Shareholder’s Equity

Total Equity-NTC
960000000.00 946600911.00
940000000.00
920000000.00
901500219.00
900000000.00
880000000.00
860000000.00
840000000.00 832939544.00
820000000.00
800000000.00
780000000.00
760000000.00
2014 2015 2016

Graph No. 10: Total Equity –NTC

Interpretation for total equity:

The total equity for NTC fluctuates over the period of study. It increases drastically from 2014 to
2015 and from 2015 to 2016, it shows a slower decrease. The total equity increases initially
because of the:

 Issuance of higher number of shares

 High net income which increases retained earnings
 The company held the cash and paid a less amount of dividend for the period

Later, it decreases because:

 Retained earnings decreased because of low net income

 Dividends in arrears were paid

13 | P a g e
 2. Retained Earnings

Retained Earnings-NTC
140000000.00
127486731.00
120000000.00
98203560.00
100000000.00

80000000.00

60000000.00

40000000.00
27825364.00
20000000.00

0.00
2014 2015 2016

Graph No. 11: Retained Earnings- NTC

Interpretation for Retained Earnings:

In 2014 the Retained earnings were very low and it increased significantly in 2015. This may
have been because of higher income from operations and low dividend payments. However, the
retained earnings decreased again but at a slower rate in 2016. This may have been because of
payment of cash dividends. Treasury stocks may have been sold at a price below their cost.

14 | P a g e
 3. Authorized Share Capital

Authorized Share Capital-NTC

300000000.00

250000000.00 250000000.00 250000000.00

250000000.00

200000000.00

150000000.00

100000000.00

50000000.00

0.00
2014 2015 2016

Graph No. 12: Authorized Share Capital -NTC

Interpretation for Authorized Share Capital:

The Authorized Share capital remained constant throughout the period of study at a very high
amount of 250000000 shares. This is because additional shares were not issued in the period and
the company does not aim to expand operations.

The company issues only ordinary shares and no preference shares. The numbers of ordinary
shares that are authorized to the company are 25,000,000 at Tk.10 each which makes the
authorized share capital to be Tk. 250,000,000.

15 | P a g e
 4. Issued Share Capital

Issued Share Capital-NTC

70000000.00 66000000.00 66000000.00 66000000.00

60000000.00

50000000.00

40000000.00

30000000.00

20000000.00

10000000.00

0.00
2014 2015 2016

Graph No.13: Issued Share Capital- NTC

Interpretation for Issued Share Capital:

The issued share was constant for the periods through which we have analyzed the company. The
issued shares of the company stayed constant at Tk. 66000000. This indicates that the company
was determined to not increase the number of shareholders and retain the existing shareholders.
As a good percentage of shares are owned by the government of NTC, this is a pretty normal
scenario and trend in the issued share capital. They harnessed the shareholders they had and went
for no expansion at all by the help of extra debt capital paid by new shareholders.

16 | P a g e
 5. Earnings per Share (EPS)

Earnings Per Share-NTC

25.00

20.07
20.00

15.00
12.01

10.00
6.38
5.00

0.00
2014 2015 2016

Graph No.14: Earnings per Share- NTC

Interpretation for Earnings per Share

The earnings per share of NTC showed an increasing trend. From 2014 to 2015, the EPS ratio
has approximately doubled followed by another large increase from 2015 to 2016. These
increasing ratios indicate not only the company was profitable but also had enough liquid cash to
distribute among its shareholders. The company gained good amount of earnings in the analyzed
period. This increasing pattern in EPS has a positive impact in the price of the shares in the
market. This leads to an increase in share price which is even more profitable for the business in
the future.

17 | P a g e
 6. Cash Dividend

Cash Dividend-NTC
25000000.00

20000000.00 19500272.00

15000000.00 13521612.00
12522977.00

10000000.00

5000000.00

0.00
2014 2015 2016

Graph No.15: Cash Dividend- NTC

Interpretation for Cash Dividend:

The graph shows a fluctuating pattern of the payment of dividends. This indicates that the
company does not have a smoothing dividend policy rather a fluctuating one. The payment of
dividend decreased from 2014 to 2015. This is because the company has held the cash for other
business operations or was not able to gain profit as they anticipated they would. Therefore
dividends were not paid at a lesser rate in this period. However, it has increased from 2015 to
2016 but only a bit. This is in comparison to 2015, it made more profit in 2016.

The company’s only dividend payment method is through cash. It does not go for any sort of
stock or property dividend payment policy.

18 | P a g e
 7. Total Current Liabilities

Total Current Liabiliti es-NTC

700000000.00 656524021.00

600000000.00
512431834.00 494905954.00
500000000.00

400000000.00

300000000.00

200000000.00

100000000.00

0.00
2014 2015 2016

Graph No.16: Total Current Liabilities -NTC

Interpretations for Total Current Liabilities:

The trend shows that the amount of total current liabilities decreases from 512431834 in 2014 to
494905954 in 2015. This decrease could mean that the company had a higher amount of cash-
flow which allowed it to pay off its accounts payables. The trend also indicates a jump from
494905954 in 2015 to 656524021 in 2016 which means that the company might have made
purchase of inventory which caused accounts payable to increase.

19 | P a g e
 8. Non-Current Liabilities

Total Non-Current Liabiliti es-NTC

175000000.00 173066270.00 173066270.00

170000000.00

165000000.00

160000000.00
156468369.00
155000000.00

150000000.00

145000000.00
2014 2015 2016

Graph No.17: Non-Current Liabilities -NTC

Interpretations for Non-current Liabilities:

In our analysis only long term loans are considered as non-current liabilities. Other long term
liabilities like lease finance and deferred taxes have been ignored as per the requirement of the
report.

The trend shows that the non-current liabilities increase drastically from 156468369 in 2014 to
173066270 in 2015. This could indicate that the company was thinking about expanding their
business so they took a large quantity of a long term loan for purchase of machineries, equipment
or land. From 2015 to 2016, the amount remained the same which indicates the company did not
take any further steps for expansion nor did it take any steps to pay off the long term loan during
that year.

20 | P a g e
 9. Interest Expense

Interest Expense-NTC
40500000.00
40000000.00 39872270.00

39500000.00
39135421.00
39000000.00
38500000.00
38000000.00
37428265.00
37500000.00
37000000.00
36500000.00
36000000.00
2014 2015 2016

Graph No.18: Interest Expense -NTC

Interpretation for Interest Expense:

The increase from 39135421 in 2014 to 39872270 in 2015 could indicate that the company
focuses more on debt financing and borrowed more money for running operations. The drastic
decrease from 39872270 in 2015 to 37428265 in 2016 could indicate that the company was able
to pay off most of their loans which caused the interest expense to decrease.

Conclusion

21 | P a g e