Analysis Of The

Financial
Performance
A Study
On BSRM Steels Limited

Prepared for:
Shajedul Alam

Prepared by

Senior Lecturer
Department of Business
Administration

Nazmul Mishuk
Id:142051013
Mamun Ahmed
Id:133051012

East West University

Assignment on

Financial Performance:

2
BSRM
The Ultimate Steel

BSRM Steels Limited

Bsrm steels limited

BSRM

The Ultimate Steel

At the very outset, we would like to express our sincere gratefulness to the Almighty
Allah, the most merciful and beneficiary for empowering us to accomplish the
dissertation within scheduled time.We are highly indebted to our course instructor,
Shajedul Alam. He allowed us to encroach upon his precious time right from the
very beginning of this paper work till the completion. His expert guidance,
affectionate encouragement and critical suggestion provided us necessary insight into
the problem and paved the way for the meaningful ending of this assignment work in
a short duration. Without his constant supervision and valuable advices a suggestion
from time to time, we would not be able to complete the whole thing in a right
manner.We would like to thank all those who contributed through their comments and
suggestions to prepare the term paper in a comprehensive manner.

Acknowledgement

Every corporation has many and varied uses for the standardized records and reports of its financial activities.
Financial performance is the most important thing for a public or private limited company. It is the key tool for
attracting investors towards the company. In this study we have analyzed about the overall financial
performance through ratio analysis of BSRM steels limited. We have finished this work as much efficiently as
we could.In this report we have worked on Statement of Comprehensive Income (income statement or trading
and profit and loss account), owners equity statement and Statement of Financial Position (balance sheet) of
BSRM steels limited . The data needed were collected from the annual reports of the BSRM steels over last 3
years, the website of the company and the website of the Dhaka stock exchange. We also took help from the
class lectures and the Financial Accounting text book while preparing the theory part of the assignment and
while taking the decision about the financial performance of the BSRM steels limited.We have go through the
study by analyzing the following things of the company over last three years data:
Profitability ratio
Liquidity ratio
Efficiency ratio
Based on these data we have worked on the financial performance of the BSRM steels limited .
Finally we have some recommendations for the company to do their business well further. In this way, we have
prepared our study in a well manner and as relevant and reliable as possible.

Executive Summary

Financial Management is that activity is concerned with the planning and controlling of the
firms financial resources. Though it was a branch of economics till 1890 as a separate or
discipline it is of recent origin. Financial management is concerned with the duties of finance
manager in a business firm. He performs such as budgeting, financial forecasting, cash
management, credit administration, investment analysis and fund procurement. The recent trend
towards globalization of business activity has created new demands and opportunities in
managerial finance. Financial statements are prepared and presented for external users of
accounting information. As these statements are used by investors and financial analysts to
examine the firms performance in order to make investment decisions.

INTRODUCTION

The topic of this project is Financial Performance Analysis at BSRM steels. Financial
Performance Analysis constitutes approach to judge the effectiveness of the financial
function of the firm. Finance is needed to promote or establish the business, acquires
fixed assets, make investigations, develop product, meeting day to day affairs of the
company, encourage manager to make progress and create value. The project work
during the period of study equips the youngsters with necessary experience and
enhances the learner with adequate to the real field. It enables the learner to meet the
challenges of a business world.

Overview of Project

The BSRM began the first re-rolling mills to emerge in the then East Bengal in
1952.Shares of BSRM Steels limited,the flagship company of BSRM group was listed
with the countrys premier bourses DSE ltd and Cse ltd as on 18 january 2009.BSRM
has been recognized as the best brand of Bangladesh in the Steel Category at the Best
Brand Award Bangladesh 2011 & 2013 ceremony, organized by Bangladesh Brand
Forum. BSRM Steels Limited is a high grade steel manufacturing company and only
producer of EMF tested ductile rod in Bangladesh. EMF (Elongation at Maximum
Force) is the parameter of measuring of ductility of steel which has taken the countrys
construction sector to a new era. BSRM is the market leader in the steel industry. Net
sales for 2013 were 601,935 MT with value in Taka 3,622.90 crore.

Overview of BSRM Steels

We at BSRM group aspire to...

Maintain our leadership position in the steel industry by producing the best quality
steel products, continuously enhancing customer satisfaction and becoming a reliable
business partner of our customers and suppliers. Be an employer of choice, with focus
on nurturing talent and developing future leaders of the organization. Protect the
interest of our shareholders through sustainable growth and value creation. Preserve
the trust of all our stakeholders by adopting ethical business practices. Support the
society through Corporate Social Responsibility initiatives.

BSRM Vision

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11

CORPORATE OBJECTIVES

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BSRM Steels Limited is a high grade steel manufacturing company and only producer of EMF tested ductile rod in
Bangladesh. EMF (Elongation at Maximum Force) is the parameter of measuring of ductility of steel which has taken the
countrys construction sector to a new era. Products of BSRM Steels are:

SL.NO

1.

2.

Name OF Products

Size(mm)

Xtreme500W

8, 10, 12, 14, 16,

20, 22, 25, 28,
29, 32 & 40 mm

Grade 400

BSRM is the market leader in the steel industry. Net sales for 2013 were 601,935 MT with value in Taka 3,622.90 crore.

PRODUCTS AND MARKETS

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Ratio Analysis
Ratio Analysis is a powerful tool of Financial Analysis. The relationship between
two accounting figures, expressed mathematically is known as Financial Ratio. A ratio is used
as an index or yardstick for evaluating the financial position and performance o a firm. Ratio
Analysis highlights the liquidity, solvency, profitability, capital gearing etc. The technique
serves as a tool for assessing the current and long term financial soundness of a business. It is
also used to analyze various aspects of operating efficiency and level of profitability. Ratio
was used for the time in 1919 by a German Scholar.
Definition :Ratio is simply a means of highlighting in arithmetical terms of
relationship between figures drawn from financial statements.

DATA ANALYSIS AND INTERPRETATION

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1.Current Ratio = Current Assets / Current liabilities

Year

Current Asset
(Taka)

Current Liabilities
( Taka)

Current Ratio

2011

16,552,520,058

17,763,310,917

0.93

2012

14,931,429,134

16,178,604,488

0.92

2013

15,316,947,598

15,829,546,471

0.97

INTERPRETATION: The current ratio of BSRM steels is

slightly lower the standard ratio of 2:1 in almost
all the years. The highest ratio is 0.97 which were
in the year 2013 and the lowest ratio is 0.92 which
was in the year 2011.

LIQUIDITY RATIOS

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2.Quick ratio = Quick assets / Current liabilities

YEAR

Quick Assets

Current Liabiliies

Quick Ratio

2011

10099590791

17763310917

0.57

2012

7069225271

16178604488

0.44

2013

9631974052

15829546471

0.61

INTERPRETATION: The quick ratio of BSRM steels

shows not satisfactory level because it is less
than the standard level (accepted level) of 1:1.
The ratio had increased in the year 2013 with a
ratio of 0.61 and the lowest ratio was in the
year 2012 with a ratio of 0.44..

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1.Gross Profit Ratio = Gross Profit * 100 / Sales

YEAR

Gross Profit

Net Sales

Gross Profit Ratio

2011

1,914,574,971

31,234,710,327

6.13%

2012

1,888,439,411

38,253,464,657

4.94%

2013

3,250,148,580

36,229,050,933

8.97%

INTERPRETATION: BSRM steels 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 8.97% and lowest in
the year 2012 with a ratio of 4.94%.
The above given graph
shows an up and down trend from 2011 to
2013, but the ratio considerably decreased in
the year 2012.

PROFITABILITY RATIOS

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2.Net Profit Ratio =

Net Profit * 100 / Sales

YEAR

Net Profit

Sales

Net Profit Ratio

2011

839,205,050

31,234,710,327

2.69%

2012

865,331,036

38,253,464,657

2.26%

2013

1,196,113,781

36,229,050,933

3.30%

INTERPRETATION: Net Profit is calculated after

deducting non-operating expenses from
operating profit and adding non-operating
income to such profit. Higher the ratio, the
better it is, because it gives efficiency to the
concern. Net Profit is at its highest in the year
2013 with a ratio of 3.30% and lowest in the
year 2012 with a ratio of 2.26%. The above
figure shows an increasing and decreasing
trend from 2011 to 2013, .

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3.Mark up = (Gross Profit X 100)/ Cost of Goods Sold

YEAR

Gross Profit

Cost Of Goods Sold

Mark Up

2011

1,914,574,971

29,320,135,356

6.52%

2012

1,888,439,411

36,365,025,246

5.19%

2013

3,250,148,580

32,978,902,353

9.85%

INTERPRETATION:
Mark up is at its highest in the year 2013 with a
ratio of 9.85% and lowest in the year 2012 with
a ratio of 5.19%. The above figure shows an
increasing and decreasing trend from 2011 to
2013.

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4.Return on capital employed = (Net profit x 100)/Capital employed

YEAR

Net Profit

Capital Employed

Return On Capital
Employed

2011

839,205,050

3,846,786,000

21.82%

2012

865,331,036

6,276,104,000

13.79%

2013

1,196,113,781

7,549,537,000

15.84%

INTERPRETATION:
Return on Capital Employed is at its highest in
the year 2011 with a ratio of 21.82% and
lowest in the year 2012 with a ratio of 13.79%.
The above figure shows an increasing and
decreasing trend from 2011 to 2013,

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5.Return on capital invested = (Net profit x 100)/Owners Capital

YEAR

Net Profit

Owners Capital

Return On Capital
invested

2011

839,205,050

2,974,081,000

28.22%

2012

865,331,036

5,540,654,000

15.62%

2013

1,196,113,781

6,417,895,000

18.64%

INTERPRETATION: In above the

graph,there is a up and down trend over the
years. In 2011 the company got the highest
return on capital invested and lowest in
2012.Overall better position For BSRM

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Stock turnover = Cost of goods sold / Average stock

Year

Cost of Good sold

Average Stock

Stock Turnover

2011

29,320,135,356

2554478121

11Times

2012

36,365,025,246

4257367195

8.54 Times

2013

32,978,902,353

5979274403

5.52 Times

INTERPRETATION: One of the most

Important Ratio , the highest stock turnover in
2011 and lowest in 2013,there are downward
trend in stock turnover over the years.

Efficiency Ratio

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BSRM Steels Limited

Statement of Financial Position
As at 31 December 2012

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BSRM Steels Limited

Statement of Comprehensive Income For the year
ended 31st December 2012

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The current ratio of the firm though not an ideal one (2:1), because the company did not attain
the satisfactory ratio in any year . The current ratio shows a satisfactory position in meeting
short term obligation . Quick ratio is not satisfactory; BSRM can not attain the satisfactory level
of 1:1 almost all the years. quick ratio is very high during the year 2013.In Gross-profit ratio
higher the ratio, the better it is. The company can achieve a high ratio of 8.97% during the year
2013.but we can see that the ratio is increasing in year to year . Net profit ratio explains per Taka
profit generating capacity of sales. The amount of net profit and volume of sales increased year
by year but the ratio shown an upward and downward trend . Return on employed is not
satisfactory,need to increase the equity investment . Stock turnover is satisfactory

FINDINGS

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The company should concentrate on the long-term solvency of the business. Company should
make effective measures to reduce the total deb t.The market condition should be properly
analyzed before procurement of material. Liquid and long term solvency is satisfactory and the
company should try to keep more liquid assets. Low rate of gross profit is due to the increase in
the operating expense. The company should give more focus on general financial strength.The
company should pay more attention towards the gross profit ratio and net profit ratio because
both of these are showing a upward and downward trend.Return on capital Employed ratio is
satisfactory. The company should give more attention to attain a higher ratio that will increase
the profitability. Efficiency ratio shows a mixed trend so the company should take the necessary
steps to meet the higher ratio..

RECOMMENDATION

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BSRM is an epitome of industrial success in the customer of Bangladesh. From a very modest
beginning the company has reached its present status of glory. As a Bar rolling,Steel making
manufacturing, and processing unit, the companys ability to sustain a steady and time bound
supply schedule coupled with its constant striving for excellence has given it that extra edge over
all its competitors in the field. The combined effort of the management and workers has ensured
that the company never lost its course. Today the firm is well known for its consistent
performance and the quality of its products and work force. In Bangladesh that is notorious for its
militant trade unionism BSRM has succeeded in maintaining a peaceful industrial climate.
The companys working capital position shows a positive trend which shows good or satisfactory
existences in current period. But we can see that the amount of sales is increasing at a healthy
rate, but the amount of net profit after depreciation and tax going in a decreasing trend. This is
mainly due to the increase in the cost of goods sold and increase in the manufacturing and labour
cost. We can also see that an increase in the amount of share capital from 68.70 in 2013 to 67.90
in 2012, this will help to make more and more fund flowing towards the fixed assts and other
manufacturing facilities.

CONCLUSION

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