Current Ratios The Current Ratio measures a firm's ability to pay their current obligations.

The greater extent to which current assets exceed current liabilities, the easier a company can meet its short-term obligations. Current Ratio = Current Asset /Current Liabilities Beximco: The current ratio for the company was 1.144075173 in 1999 and increased to 1.572102701 which means that the company is more liquid than ACI. ACIs liquidity ratios fluctuate from 0.81 to 1. Beximco is at a better shape because it has less liability compared to its current assets (e.g. cash, accounts receivables etc). Lower liquidity could put a company in financial difficulty like meeting its short term demands/ obligations. However, a significantly higher ratio may suggest that the company is not efficiently using its funds.

Acid Test or Quick Ratio The Acid Test Ratio or Quick Ratio is very similar to the Current Ratio except for the fact that it excludes inventory. For this reason, it's also a more conservative ratio. Acid test = (Current Assets - Inventory) / Current Liabilities Inventory is excluded in this ratio because, in many industries, inventory cannot be quickly converted to cash. Here, it is witnessed that Beximco has lower ratio than ACI from 2000 to 2002. It is understood that Beximco had a large inventories in its current assets which generated a larger current ratio. This could put them in financial difficulty because a large sum of cash might be stuck in inventory and unless they are able to get rid of it soon. But the company can pay off its current liabilities without liquidating its inventory by collecting its account receivables. As for ACI, they seem to have managed their assets well.

Cash Ratio This ratio shows whether there is enough cash to pay off a companys current liabilities. If the ratio is more than one only then can a company can pay off its current liabilities by using only its cash.

Cash Ratio = Cash / Current Liabilities Cash ratio for Beximco has been decreasing overall, which is not really a good indication; ACI has a better cash ratio which is also consistent compared to the figures obtained from Beximco.

Net Working Capital (NWC) to Total Assets This is a measure of liquidity as well. The higher the ratio, the more liquidity and financial flexibility a company possesses. NWC to Total Assets = NWC / Total Assets Beximco has an increasing Net Working Capital to Total Assets ratio unlike ACI, whose ratio is not only decreasing, but lately is negative. This might show some risk for ACI while paying back its liabilities.

Inventory Turnover This widely used ratio tells how fast the inventory is moving. It is an indicator of the liquidity of inventory, since it tells the rapidity with which the inventory is turned over into receivables through sales. Inventory Turnover = Sales Inventory

Beximco had a consistent turnover ratio than ACI, which had two good years in the middle. The higher the ratio for Beximco means more efficient inventory management of the firm, but too high a ratio could indicate a level of inventory that is too low with resulting frequent stock outs and the potential of losing customers. It could also indicate inadequate production levels to meet customer demand. ACI could have been also holding too much inventory in 2000 and 2003.

Days Sales in Inventory This shows us the number of days needed for one complete inventory cycle. Days Sales in Inventory = 365 days / Inventory Turnover Beximco has more consistent days sales in inventory, whereas ACI has more significantly fluctuating days sales in inventory, giving Beximco the advantage of more secure sales.

Receivables Turnover The Accounts Receivable Turnover measures the number of times Accounts Receivable was collected during the year. This is also a measure of how well the company collects sales on credit from its customers, just as Average Collection Period measures this in days. Accounts Receivable Turnover = Turnover Net Sales / Accounts Receivable A high or increasing Accounts Receivable Turnover is usually a positive sign - showing the company is successfully executing its credit policies and quickly turning its Accounts Receivables into cash. Beximco has a larger ratio compared to ACI and hence Beximcos current standing is better. Decreasing ratio for ACI means that company is either too strict with its credit policies or loosing out on potential customers.

Days Sales in Receivables: This ratio measures the length of time the firm must wait after making a sale before it receives cash. Days Sales in Receivables = Receivables / Avg. sales per day ACIs ratio is more than the double of Beximcos. On a average Beximco takes 48 days to collect on its receivables, whereas ACI takes more than 181 days to collect. This only means the debtors are not paying in time. This can cause ACI a lot of problems as the cash is stuck and cannot invest in further productive assets. If this trend continues ACI might have to change its credit policy.

NWC Turnover This tells us how much sales we get more each dollar of net working capital we have. NWC Turnover = Sales / Net Working Capital Beximco has a steady but declining NWC Turnover. ACI has a very unstable and fluctuating NWC Turnover. This again provides Beximco with the advantageous side of being more reliable and secure.

Fixed Asset Turnover: Fixed Asset Turnover =Net Sales / Net Property, Plant and Equipment It is a very important ratio for financial analysis. ACI has much higher ratio than Beximco which measure its effectiveness in generating sales revenue from investments back into the company. Thus ACI is more effective in its investment in fixed asset. But it is also evident that Beximco has higher Fixed Assets than ACI and large investments take time to yield higher sales.

Total Asset Turnover Total Asset turnover = Net Sales / total assets The Total Asset Turnover is similar to Fixed Asset Turnover, which both measures a company's effectiveness in generating sales revenue from investments back into the company. Total Asset Turnover evaluates the efficiency of managing all of the company's assets. Once again ACI has higher ratio than Beximco, which suggests that the equipments are more efficient than Beximcos. Beximco is thus not generating the sufficient volume of business given its total assets. Therefore, they could either increase their sales, dispose some of the old equipments or should do both.

Basic Earnings Power (B.E.P.) The figure we get from this ratio tells us how much money the company makes through operations by utilizing its assets. This is also a signal of management efficiency. B.E.P. = EBIT (Earnings before Interest and Taxes) / Total Assets Beximcos B.E.P. is decreasing over time from 0.1 to 0.05 in the last few years. ACI dropped its B.E.P. at the beginning but again shot up in 2003 to 3.53. ACI would definitely be attracting more investors and satisfying more creditors through this figure.

Total Debt Ratio

It is used to measure the percentage of funds measured by creditors. Total Debt Ratio = Total Debt / Total Assets. Beximco has a highly consistent debt ratio, but ACI fluctuates its debt ratio a lot from negative values to positive values. This is good for Beximco over ACI as a negative debt ratio means ACI is not taking enough debt to carry its operations.

Debt-Equity Ratio It shows how much a company is financed by debt compared to its stockholders money. Debt-Equity Ratio = (Total Assets Total Equity) / Total Equity Beximco keeps on raising this ratio every year but ACI keeps gaining and losing this ratio.

Equity Multiplier It tells that for each dollar of assets invested, how much investment is received from equity. Equity Multiplier = Total Assets / Total Equity Beximco has a consistent and gradually increasing equity multiplier which means it is using more finance from its equity to gain assets. ACI has a fluctuating nature for this ratio, giving Beximco the upper hand.

Time Interest Earned (T.I.E.) This informs us how many times the companys EBIT than its Interest expense is. T.I.E. = EBIT / Interest Beximco is consistent, but its ratio is going down; ACI is also consistent, but going down faster on this ratio.

Net Profit Margin (Return on Sales) This ratio indicates the relative efficiency of the firm after taking into account all expenses and income taxes, but not extraordinary charges. It is a widely reported figure. Profit Margin = Net Profit (after taxes) Net Sales X 100

Beximco has a higher rate because it has higher debt margin compared to ACI. Higher debt means higher interest charges causing a low net income. Efficiency in financing strategies is analyzed here and it seems that ACI has an ahead of Beximco.

Return on Assets (R.O.A.) This ratio indicates how efficiently the assets are being used. However, numerous problems with this ratio have developed in actual use including motivating managers to look to the short-term rather than investing for the long-term. Return on Assets = ROA = Net Earnings Total Assets x 100

Since it measures the earning power of assets, many argue that it is the best overall measurement of efficiency. Once again we see that ACIs ratio is much higher than Beximcos therefore ACI is managing its assets better. Low ROA can be caused by higher interest rates that Beximco had from its high debts and thus causing a lower NI which resulted in a lower ROA.

Return on Equity (R.O.E.) This ratio is calculated by dividing the net profit after taxes (net earnings) by the net worth (stockholders' equity). This shows the earning power on shareholders' book investment and is often used to compare two or more firms in the same industry. Return on Equity = ROE = Net Earnings Owners Equity x 100

As this ratio indicates how much a company is making on the money that was invested in the firm and hints to investors how efficiently ones operations are and how well the firm is being managed it is very important. Basic accounting sense says that stockholders invest to get something in return and the company who can return more is performing better than the others. Hence ACI is performing better as the companies ROE ratio is higher than Beximcos.

Du Pont Analysis The Du Pont Analysis examines the return on equity which is dependent on operating efficiency (as measured by profit margin), asset use efficiency (as measured by total asset turnover) and financial leverage (as measured by the equity multiplier).

Return on Equity = Profit Margin Total Asset Turnover Equity Multiplier Due to a decreasing net profit margin and a decreasing total asset turnover, even though equity multiplier seems to be steadily growing, Beximcos R.O.E. is decreasing too over the recent years. A relatively stable net profit margin and a rapid boost in total asset turnover for ACI should have lead to a higher R.O.E., but a very unstable equity multiplier for ACI has brought down the equity multiplier to a steadily growing R.O.E., which is way higher than that of Beximcos decreasing R.O.E. Price-earnings ratio Price-earnings ratio gives us information on the price of share we can gain for every dollar we earn on our share. Price-earnings ratio = Market Price (value) of Shares / Earnings per Share Beximcos market price of shares has been coming down, whereas ACIs market price of shares is going up. However, with decreasing E.P.S. for Beximco, price-earnings ratio has been gradually increasing. Standing with a much lower E.P.S., ACI with its higher price per share has a price-earnings ratio which is way higher than Beximcos, which is good for ACI.

Market-to-book ratio This ratio frankly tells us how much our share value has gone up in the market. Market-to-book ratio = Market Price (value) per Share / Book Value per Share Beximco has a decreasing price per share over the years, whereas ACI has been increasing on its market price of shares. Although, the book value of shares for both the companies remained the same all throughout the years. As a market-to-book ratio has been soaring high for ACI and the other way for Beximco.

Price-to-Cash Flow ratio The price-to-cash flow ratio describes how many times the price has gone up compared to cash flow earned by each share.

Price-to-Cash Flow ratio = Price per Share / Cash Flow per Share Beximco has been having a lower cash flow per share recently with a lower price per share compared to that of ACI, which though has a comparatively lower cash per share than Beximco, but has a higher price per share. As a result of this, Beximcos price to cash flow ratio has increased, but is still nowhere near that of ACI which is a lot more than Beximcos figures.

Net Working Capital (NWC) NWC is the difference between current assets of a company and its current liabilities. This value is the excess amount of assets a company will retain after paying off all its current liabilities. Net Working Capital = Current Assets Current Liabilities Lately, Beximco has cut down on its net working capital, but still has enough to invest in other places after paying up its current liabilities. On the other hand, ACI already had a negative net working capital since 2000 which though went positive in 2002 but then again drastically fell down to a negative point in 2004, which does not seem good as it is always favorable to have a positive figure.

Average Tax Rate Every company has to pay its taxes according to the level of income it makes. Therefore, the tax rate and the average tax rate are significant in analyzing profitability of a company. Average Tax Rate = Tax / Earnings before Tax 100% Beximco is being taxed more, but ACI pays a lot more taxes than Beximco does.

Operating Cash Flow

Operating Cash Flow explains the amount of income (before paying interest and taxes) and non-cash expenses (such as depreciation) less the amount of taxes which the company pays. This is the cash generated from a firms normal business activities. Operating Cash Flow = EBIT + non-cash expenses income tax From our findings, we see that Beximco had a secure cash flow over the period, fluctuating slightly. ACI also has a steady cash flow, but unfortunately, their amount of operating cash flow is far below the level of operating cash flow of Beximco.

Cash Flow from Assets Cash flow from assets is equal to operating cash flow less net capital spending less change net working capital. This is the amount that goes to creditors and stockholders. Cash Flow from Assets = OPCF Capital Spending - NWC Beximco had a good start around 2000 with a high cash flow from assets, which again went drastically down a bad indication. ACI on the other side is well off with a reasonable positive cash flow from assets, which though went down recently has shot up.

Cash flow to Creditors Cash flow to creditors is the amount of interest paid back to creditors after taking more loans. Cash Flow to creditors = Interest Paid Net borrowing Beximco is in a more favorable position here as they have positive cash flow to creditors more than ACI does. However, in 2003, they both have a negative cash flow to creditors of around the same amount which is a bad indication as it means they are both taking more loans than paying bad its creditors. This might result in creditors to stop giving more loans.

Cash Flow to Stockholders

This is the difference between dividends given and new equity raised to acquire more assets or pay back liabilities. Cash Flow to Stockholders = Dividends Paid Net new equity raised Cash flow to stockholders was better for Beximco in the last few years, until 2003 when Beximco issued more stocks to gain more capital. Till then, it had a steady return for its stockholders. We must admit that ACI is in a better shape here as even though it did not increase its capital through issuing more shares, it has been increasing the amount of dividends it pays to its stockholders, which might in fact increase more investors.

Market Value Added This is a very important sign of how well a company is performing. Market Value added is the market price of total shares less the book value of equity of a company. It indicates whether shareholders are maximizing their wealth or not. Market Value Added = Market Price per Shares Number of shares Equity Over the years, Beximcos Market Value addition has been going down. In 2003 it a negative value addition of negative 2633558269, whereas as far as ACI is concerned, it has a value addition of 1074029135. This means that ACI has been satisfying its shareholders by far compared to Beximco.