Term Paper
Performance Analysis: Olympic Industries Ltd. & Quasem
Drycells Ltd.
Prepared For: M. Morshed (MdM)
Prepared By:
Shahriar Rabbani
ID: 1110615030
Section 3
Date of Submission: 13th August 2012
1
Executive Summary
This report aims at finding the overall financial performance of Olympic Industries Ltd. over a
period of time (2009-2011) and compare it with its competitor Quasem Drycells Ltd. over the
same period of time. The report seeks the basic financial position based on time series analysis
and cross sectional analysis by means of the tool-ratios. Finally the report will move towards
saying whether the financial position of Olympic Industries Ltd. is better, worse or in an
invariable position when compared to Quasem Drycells Ltd. and will provide recommendations
if required.
Table of Contents
Executive Summary.....................................................................................2
1.Introduction................................................................................................4
2.Objectives..................................................................................................5
3.Methodology..............................................................................................5
4.Limitations.................................................................................................6
5.Literature Review......................................................................................7
6. Findings..................................................................................................18
7.Analysis...................................................................................................19
8.Recommendations:.................................................................................28
9.Conclusion:..............................................................................................29
10.References:...........................................................................................30
11.Appendix................................................................................................31
11.1.Appendix A: Liquidity Ratios............................................................31
11.2.Appendix B: Profitability Ratios........................................................32
11.3.Appendix C: Leverage Ratios..........................................................35
11.4.Appendix D: Activity Ratios..............................................................37
11.5.Appendix E: Market Ratios..............................................................40
11.6.Appendix F: Dupont Formulae.........................................................41
1.Introduction
Olympic Industries Ltd
Olympic Industries Limited, is one of the longest running and most reputed manufacturing-based
companies in Bangladesh, with a heritage of over 50 years and group profile including interests
in Pharmaceuticals, Power, and Information Technology, among other FMCG. Starting with steel
production dating back to 1950, Olympic has steadily diversified over the years into various
consumer goods including biscuits, confectioneries, batteries, and ball pens, with over 40 brands
and 53 SKUs. The company has gotten to where it is today by staying true to its core beliefs, in
providing high quality, innovative products which its consumers can rely on.
Olympic Industries Limited is currently the market leader in the biscuit market and second in
position in the battery market in Bangladesh. It has been able to stride forward due to its
continuous vision for growth, its modern manufacturing facilities, and its extensive sales and
distribution network, and it has always yielded this influence to give back to the community.
Olympic Industries Limited is a public listed company and is trading on the Dhaka Stock
Exchange and Chittagong Stock Exchange. The company has an authorized share capital of
2500000 Ordinary Shares of Tk. 100 each.
2.Objectives
The primary objective is to fulfill the requirement of the course Principles of Managerial
Finance. In order to achieve this objective, it would be necessary to interpret financial
statements of both Olympic Industries Ltd. and Quasem Drycells Ltd. for the period 2009-2011.
After interpreting, it would be necessary to analyze the performance of Olympic and Quasem
and find problem areas that Olympic is facing when compared to Quasem and put forward
necessary recommendations to Olympic to improve its financial performance.
3.Methodology
Annual reports of Olympic Industries and Quasem Drycells for the years 2009-2011 were used in
the form of secondary printed sources to calculate ratios in this report. The ratios were analyzed
using time series analysis and cross sectional analysis. The types of ratios used are: Liquidity,
Leverage, Profitability, Activity and Market Ratios. DuPont system of analysis was also used in
this report.
4.Limitations
Throughout doing the report I faced some problems
The real world annual reports are bigger than the ones we find in books. So it is time
consuming to understand and interpret them.
Collecting the annual reports of Olympic and Quasem was difficult as Dhaka Stock
Market didnt have the annual reports for all the years. They had to be collected from
other sources which took precious time.
It was required to analyze the performance of two companies for three years for this term
paper. It was a very time consuming task.
5.Literature Review
1. Liquidity Ratios: Liquidity ratios attempt to measure a company's ability to pay off its
short-term debt obligations. This is done by comparing a company's most liquid assets
(or, those that can be easily converted to cash), its short-term liabilities. In general, the
greater the coverage of liquid assets to short-term liabilities the better as it is a clear
signal that a company can pay its debts that are coming due in the near future and still
fund its ongoing operations. On the other hand, a company with a low coverage rate
should raise a red flag for investors as it may be a sign that the company will have
difficulty meeting running its operations, as well as meeting its obligations.
A. Current Ratio:
The current ratio is a popular financial ratio used to test a company's liquidity (also
referred to as its current or working capital position) by deriving the proportion of
current assets available to cover current liabilities. The concept behind this ratio is to
ascertain whether a company's short-term assets (cash, cash equivalents, marketable
securities, receivables and inventory) are readily available to pay off its short-term
liabilities (notes payable, current portion of term debt, payables, accrued expenses
and taxes). In theory, the higher the current ratio, the better.
Note: If the company Current ratio is 1 that is good, even 2 is also good , if the
company current ratio is 50 it is not good, cause there is idle money and less than 1
also not good. But super mall current ratio always less than 1. When the liquidity goes
up profit goes down
Formula
Current Ratio :
Current assets
Current liabilities
B. Quick Ratio:
The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity
indicator that further refines the current ratio by measuring the amount of the
most liquid current assets there are to cover current liabilities. The quick ratio is more
conservative than the current ratio because it excludes inventory and other current
assets, which are more difficult to turn into cash. Therefore, a higher ratio means a
more liquid current position.
Formula
Quick ratio=
CAEnding Inventory
CL
Note: A ratio 1.0 or greater is occasionally recommended, but as with the current
ratio, what value is acceptable depends largely on the industry. If you have too much
inventory it is not good. If a stock increase then your liquidity going down and also
profitability going down.
2. Leverage Ratios: These ratios give users a general idea of the company's overall debt
load as well as its mix of equity and debt. Debt ratios can be used to determine the overall
level of financial risk a company and its shareholders face. In general, the greater the
amount of debt held by a company the greater the financial risk of bankruptcy.
A. Debt Ratio:
The debt ratio compares a company's total debt to its total assets, which is used to
gain a general idea as to the amount of leverage being used by a company. A low
percentage means that the company is less dependent on leverage, i.e., money
borrowed from and/or owed to others. The lower the percentage, the less leverage a
company is using and the stronger its equity position. In general, the higher the ratio,
the more risk that company is considered to have taken on.
Formula
Debt ratio=
Total Liabilities
Total Asset
loan100
Stockholders Equity
EBIT
Interest
good understanding of how well the company utilized its resources in generating profit
and shareholder value.
A. Gross Profit Margin:
The gross profit margin measure the percentage of each sales currency remaining
after the firm has paid for its cost of goods sold. The higher the gross profit margin
the better.
Formula
Gross profit
100
Revenue
Operating profit
100
Revenue
Net profit
100
Revenue
EPS=
This ratio indicates how profitable a company is relative to its total assets. The return
on assets (ROA) ratio illustrates how well management is employing the company's
total assets to make a profit. The higher the return, the more efficient management is
in utilizing its asset base. The ROA ratio is calculated by comparing Earnings
Available For CS Holders to Total Assets, and is expressed as a percentage.
Formula
ROA=
11
This ratio indicates how profitable a company is by comparing its Earnings Available
For CS Holders to its Stock holders Equity. The return on equity ratio (ROE)
measures how much the shareholders earned for their investment in the company. The
higher the ratio percentage, the more efficient management is in utilizing its equity
base and the better return is to investors.
Formula
ROE=
ROCE=
EBIT
100
FA+(CACL)
4. Activity Ratios: These ratios look at how well a company turns its assets into revenue as
well as how efficiently a company converts its sales into cash. Basically, these ratios look
at how efficiently and effectively a company is using its resources to generate sales and
increase shareholder value. In general, the better these ratios are, the better it is for
shareholders.
A. Inventory Turn Over:
It commonly measures the activity, or liquidity, of a firms inventory. It is calculated
comparing Cost Of Goods Sold to average inventory. The higher the better.
12
Formula
Inventory
Turn
COGS
Av . Inventory
Av . Inventory
365
COGS
Accounts Recievables
Av . Sales Per Day
Accounts Payables
Av . Purchases Per Day
13
The total asset turnover indicates the efficiency with which the firm uses its assets to
generate revenue. TA turnover is calculated by comparing Revenue to Total Assets
Formula
Revenue
Total assets
This ratio is a rough measure of the productivity of a company's net fixed assets
with respect to generating revenue. For most companies, their investment in fixed
assets represents the single largest component of their total assets. This annual
turnover ratio is designed to reflect a company's efficiency in managing these
significant assets. Simply put, the higher the yearly turnover rate, the better.
Formula
Net
FA Turnover Ratio=
Revenue
Asset
5. Market Ratios: market Ratios relate the firms market value, as measured by its current
share price, to certain accounting values. These ratios give insight into how well investors
in the marketplace feel firm is doing in terms of risk and return.
A. Price/Earnings (P/E) Ratio:
14
The price/earnings ratio (P/E) is the best known of the investment valuation
indicators. The P/E ratio has its imperfections, and commonly used to assess the
owners appraisal of share value. The P/E ratio measures the amount that investors
are willing to pay for each taka of firms earnings. The higher the P/E ratio, the
greater the investors confidence to invest. P/E Ratio is calculated by comparing
market price per share of common stock to earning per share (EPS).
Formula
P/ E Ratio =
The M/B ratio provides an assessment of how investors view the firms
performance. It relates the market value of the firms shares to their book value.
M/B Ratio is calculated by comparing market price per share of common stock to
book value per share of common stock. Firm always try to sell share at a higher
M/B ratio.
Formula
M /B Ratio=
Where
15
16
6. Findings
Ratios
Liquidity
Ratios
Ratio
Current Ratio
Quick Ratio
Debt Ratio
Leverage
Ratios
Profitabilit
y Ratios
Times interest
Earned Ratio
Debt/Equity
Ratio
Net Profit
Margin
Operating
Profit Margin
Gross profit
Margin
ROA
ROCE
ROE
EPS
Inventory
Turn Over
Average age
of inventory
Average
collection
period
Average
Payment
Period
Companies
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Year 2009
1.10
1.05
0.70
0.50
64.4%
41.2%
5.06 times
0.93 times
9.72%
3.52%
6.1%
2.89%
10.6%
3.44%
24.7%
17.7%
12.9%
3.29%
44.2%
10.2%
36.3%
5.60%
Year 2010
1.22
1.03
0.85
0.42
61.4%
42.5%
8.00 times
1.59 times
11.9%
1.66%
7.8%
4.3%
12.4%
5.52%
28.4%
18.75%
14.0%
4.54%
43.0%
13.9%
36.3%
7.90%
77.1
Year 2011
1.24
1.12
0.84
0.49
59.8%
18.97%
7.83 times
1.67 times
17.8%
0.08%
6.6%
4.09%
10.1%
5.77%
25.0%
18.97%
13.8%
2.17%
39.7%
5.38%
34.5%
2.68%
70.4
Quasem Drycells
52 Tk/Share
Tk.
1.56/share
Tk/Share
Tk 2.23
Tk/Share
Tk.
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
8.4 times
4.58 times
44 days
85 days
6 days
12 days
/share
8.0 times
3.73 times
46 days
106 days
2 days
9 days
2.05/share
9.8 times
3.14 times
37 days
100 days
2 days
9 days
Olympic Industries
Quasem Drycells
31 days
40 days
38 days
51 days
33 days
44 days
17
Activity
Ratios
Market
Ratios
TA Turnover
Ratio
FA Turnover
Ratio
P/E Ratio
M/B Ratio
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
Olympic Industries
Quasem Drycells
2.10 times
1.13 times
4.62 times
3.14 times
12.1
43.6
4.41
0.82
1.80 times
1.06 times
4.40 times
2.57 times
23.6
47.3
8.56
3.72
2.10 times
0.53 times
5.02 times
0.97 times
25.8
96.6
8.91
2.59
7.Analysis
Liquidity Ratios:
Current Ratio (Time Series Analysis): Throughout the 3 years in Olympic Industries
Limited the Current Ratio shows an increasing trend. From 2009 to 2010 there was a rise
in Current Ratio by 0.12 and from 2010 to 2011 by 0.02. So more or less current ratio is
stable throughout the three years and it is good for the company.
Quick Ratio (Time Series Analysis): From 2009 to 2010 there was a slight rise in quick
ratio by 0.15 but in 2011 quick ratio drops by by 0.1. So the company should work on
raising the quick ratio because if the drop continues company might face liquid shortage
in near future.
Quick Ratio (Cross Sectional Analysis): In case of Quasem Drycells Limited we can
see there a decrease in Quick Ratio from 2009 to 2010 and again an increase from 2010
18
to 2011. From this, we can conclude that Quasem Drycells is doing a better job of
learning from their mistakes and improving their Quick Ratio whereas Olympic
Industries needs to take steps to improve theirs.
Leverage Ratios:
Debt Ratio (Time Series Analysis): From 2009 to 2010 there was a decrease in Debt Ratio
which was a very good sign for Olympic Industries. From 2010 to 2011 the Debt Ratio
decreases even further. In 2009 64.4% of total assets were financed by debt, where as after 2
years in 2011 it has dropped to 59.8%. So overall scenario of the company is improving over
the three years and it is good sign for the company.
Debt Ratio (Cross Sectional Analysis): In Quasem Drycells Limited Debt Ratio has
increased slightly from 2009 to 2010 but from 2010 to 2011 it decreases by a substantial
percentage. This shows that Quasem Drycells is doing a much better job when it comes to
Debt Ratio when compared to Olympic Industries Ltd.
Times Interest Earned Ratio (Time Series Analysis): There is a rise in Times Interest
Earned Ratio from 2009 to 2010 but it decreases again slightly in 2011. This indicates
Olympic Industries Limited is getting more capable of making its interest payments but it is
failing to hold on to that position over the years. However, in 2011 Olympic Industries have
covered their interest expense 7.83 times which is better than 5.06 times in 2009.
Times Interest Earned Ratio (Cross Sectional Analysis): For Quasem Drycells there is a
rising trend in Times Interest Earned Ratio from 2009 to 2011. Therefore in this case,
Quasem is doing better than Olympic although Olympic is covering their interest expense
more times.
19
Debt / Equity Ratio (Time Series Analysis): From 2009 to 2011, there is an increasing
trend in Debt / Equity Ratio which was a very bad sign for Olympic Industries Limited. In
2011, 17.8% of total asset was financed by debt and equity compared to 9.72% in 2009. As at
the end of 2011 Debt / Equity Ratio is very high, the companys performance is deteriorating
which is a bad sign for the company.
Debt / Equity Ratio (Cross Sectional Analysis): For Quasem, the Debt/Equity Ratio shows
a decreasing trend form 2009 to 2011. But in case of Olympic Industries Limited Debt/Equity
Ratio has increased a lot. Therefore in this case, Quasem Drycells is doing a far better job
than Olympic Industries Limited.
Profitability Ratios:
Net Profit Margin (Time Series Analysis): From 2009 to 2010 Olympic Industries Limited
made its Net profit Margin higher by a slight percentage but it decreased again in 2011. This
shows that Olympic is not doing a good job of maintaining a stable Net Profit Margin.
Net Profit Margin (Cross Sectional Analysis): Quasem Drycells Limited has increased its
Net Profit Margin by a large percentage from 2009 to 2010. However in 2011 the Net profit
margin decreased a little but that is negligible. On the other hand in Olympic Industries
Limited Net Profit Margin increased by a small percentage from 2009 to 2010 and decreases
again in 2011 coming back to almost the same margin of 2009. Therefore in this case
performance of Quasem Drycells Limited is better than Olympic Industries Limited.
Operating Profit Margin (Time Series Analysis): Operating Profit Margin increases from
2009 to 2010 but decreases to almost the same percentage as 2009 in 2011. In 2011, Olympic
Industries Limited made operating profit 10.10 taka for every 100 taka sale which is worse
20
than 12.4 taka for every 100 taka in 2010. This shows poor performance.
Operating Profit Margin (Cross Sectional Analysis): Throughout the 3 years Quasem
Drycells Limiteds Operating Profit Margin shows an increasing trend. Although the margin
throughout the three years is lesser than Olympics operating profit margin of three years, the
increasing trend is good as it shows Quasem has potential. It has increased by a very little
amount from 2009 to 2010 and again increased a little bit in 2011. On the other hand
Olympic Industries Limiteds Operating Profit Mragin has an increased by a good percentage
from 2009 to 2010 but decreases again in 2011. Therefore, Quasem Drycells Limited is doing
better.
Gross Profit Margin (Time Series Analysis): There is also an increasing trend in Gross
Profit Margin in the first 2 years, however in the third year the margin decreases again
similar to the Net and Operating Profit margins . In 2011 Olympic Industries Limited made
gross profit of 25 taka for every 100 taka sales which is a little worse than 28.4 taka for every
100 taka sales in 2009. However, it is better than 24.7 taka for every 100 taka sales in 2009.
As the Gross Profit Margin is fluctuating over the three years, the performance of the
company is a bit unstable when it comes to gross profit margin.
Gross Profit Margin (Cross Sectional Analysis): Throughout the 3 years Quasem Drycells
Limited has an increasing trend in Gross Profit Margin, which is good for the company.
Although Olympic has higher gross profit margin throughout the three years, their margin is
fluctuating. On the other hand, Gross Profit Margin has an increasing trend throughout the 3
years for Quasem Drycells, which means Quasem Drycells Limiteds performance is better
than Olympic Industries Limited as far as Gross Profit Margin is concerned.
ROA (Time Series Analysis): From 2009 to 2010 Return on Asset has increased and is
pretty much stable in 2011. In 2011 Olympic Industries Limited for every 100 taka worth of
total asset generated 13.80 taka net profit which is almost close 2010. So, the company is
generating a stable return on asset in the last two years. The company may want to take some
21
ROCE (Time Series Analysis): Throughout the three years(2009-2011), the return on capital
employed for Olympic Industries Ltd shows a decreasing trend. In 2011 Olympic Industries
Limited generated 39.7 taka for every 100 taka capital employed compared to 43 taka for
every 100 taka in 2010 and 44.2 taka for every 100 taka in 2009. As the ROCE is decreasing
with every passing year, the company is performing less efficiently.
ROCE (Cross Sectional Analysis): In Quasem Drycells Limited ROCE increases from 2009
to 2010 but decreases substantially in 2011. The percentages are also very small when
compared to Olympic Industries. Therefore, it can be said that although Olympic Industries
shows a decreasing trend in ROCE, it is in a better position than Quasem which shows a little
improvement but deteriorates again.
ROE (Time Series Analysis): There is a stable trend in ROE from 2009 to 2010 but it
decreases a little in 2011. In 2011 the shareholders of Olympic Industries Limited earned
34.50 taka for every 100 taka investment in the company. ROE in 2011 is somewhat less than
the ROE in 2010 and 2009. So company needs to improve its ROE a little bit.
ROE (Cross Sectional Analysis): ROE increases a little from 2009 to 2010 but decreases
substantially in 2011 for Quasem Drycells. For both the two companies ROE is in a
decreasing trend throughout the 3 years. Therefore both the companies need to improve its
22
ROE, which will be good for both the company. However, Quasem is very doing poor in the
third year.
EPS (Time Series Analysis): From 2009 to 2010 EPS has increased but in 2011 EPS again
decreased but by a very infinitesimal amount. Olympic Industries may wish to work on that.
In 2011 shareholders of Olympic have earned 70.4 taka for every share holding which is 0.07
taka less than 2010.
EPS (Cross Sectional Analysis): From 2009 to 2011 EPS of Quasem Drycells Limited is
acting in a similar manar to EPS of Olympic. Therefore, both the company have a pretty
much stable EPS. However, Olympic EPS is much greater than Quasem.
Activity Ratios:
Inventory Turnover (Time Series Analysis): There is a decreasing trend in Inventory
Turnover for the first 2 years, however it increases substantially in 2011 which is a good
sign for the comany. In 2011 Olympic Industries Limited has sold out and restock its
inventory 9.80 times which is 1.80 times greater than 2010. So performance is improving.
23
Average collection period (Time Series Analysis): From 2009 to 2010 Average
Collection period has decreased and remained stable in 2011. In 2011 on an average it
took Olympic Industries Limited 2 days to make collection from the customers, which is
4 days less from 2009. So performance was good in debt collection.
24
increased its Average Payment Period from 2009 to 2010, which is a good sign. But it
again decreased the collection period in 2011. When compared to Olympic Industries
Limited it is very high. So, Quasem Drycells Limited is in a better position than Olympic
Industries Limited in this case as they are keeping cash with them longer than Olympic.
Quasems liquidity position is better.
TA Turnover Ratio (Time Series Analysis): From 2009 to 2010 TA Turnover has
decreased and it increases again in 2011. In 2011 Olympic Industries Limiteds TA
Turnover Ratio was different from 2010s which was 1.8 times but similar to 2.1 times in
2011. Therefore, the company is maintaining a pretty stable TA turnover Ratio.
TA Turnover Ratio (Cross Sectional Analysis): For Quasem Drycells Ltd, TA Turnover
has decreased from 2009 to 2011. Therefore, Quasem needs to work more efficiently on
TA Turnover. Olympic here is in a better position.
FA Turnover Ratio (Time Series Analysis): From 2009 to 2010 FA Turnover has also
decreased and it increases again in 2011. In 2011 Olympic Industries Limiteds FA
Turnover Ratio was 5.02 times which is better than 4.40 times in 2010. So company is
working efficiently on FA Turnover.
FA Turnover Ratio (Cross Sectional Analysis): For Quasem Drycells FA Turnover has
decreased from 2009 to 2011. But Olympic Industries FA turnover has decreased by a
smaller amount than Quasem Drycells Limited in the first 2 years. So in this case
Olympic Industries Limited is in a better position than Quasem Drycells Limited.
Market Ratios:
25
P/E Ratio (Time Series Analysis): P/E Ratio has significantly increased from 2009 to 2011.
It indicates EPS is decreasing and we can notice this in EPS change. The higher the P/E
Ratio, the lower the EPS and it means that investors are paying more to earn one taka. In
2011 the shareholders of Olympic Industries Limited were willing to pay 25.80 taka for every
taka of reported earnings. As there is a significant increase in 2011, so it can be said that this
company is doing poor in managing P/E in recent year. However, a higher P/E ratio indicates
a good perception of the company in the market.
P/E Ratio (Cross Sectional Analysis): In Quasem Drycells Limited P/E Ratio has also
increased from 2009 to 2011. It means that investors are paying more to earn one taka, which
is not good for the investors. However, a high P/E Ratio indicates that the company has a
very good perception in the market and has potential to do good in the future. When
compared to Olympic, Quasem constantly has a higher P/E Ratio which makes Quasems
stock more costly. However, Quasem has potential.
M/B Ratio (Time Series Analysis): M/B Ratio of Olympic Industries Limited has increased
by a huge number from 2009 to 2011. In 2011 Olympic Industries market value per share
was 8.91 times more than book value per share. As the M/B Ratio has increased, performance
has improved over the three years.
M/B Ratio (Cross Sectional Analysis): In Quasem Drycells Limited M/B ratio has
increased a lot from 2009 to 2010 but decreased a little in 2011. In 2011 Quasem Drycells
Limited market value per share was 2.59 times more than book value per share which is less
than Olympic Industries Limited. Therefore, Olympic Industries Ltds performance is better.
26
8.Recommendations:
Olympic needs to improve its profitability. It needs to maintain either a stable Net, Operating
and Gross profit Margin or take some initiatives to increase them. Although the margins are very
high, if they continue to decrease over the coming years than the profitability of the company
would be affected. Olympic may also want to maintain a stable EPS.
Olympic can improve its liquidity position by increasing the Average Payment Period and
decreasing the Average Collection Period so that it does not have a shortage of cash to pay its
dues.
Olympic Industries Limited is such a large company that a few unsatisfactory ratio results may
seem negligible. However, if olympic is to continue to being successful financially, it must take
some strong steps to better itself to gain a competitive edge over all its competitors.
9.Conclusion:
After doing a thorough analysis on the performance of Olympic Industries Limited, I found
the overall financial scenario of the company over a period of time. I understand how the
company has operated in the recent years. With the help of cross sectional analysis I easily
compared the performance of Olympic Industries Limited with Quasem Drycells Limited. In
most of the cases Olympic Industries Limited is performing better than Quasem Drycells
Limited. In some cases the competitor Quasem Drycells Limited is doing better. But overall
Olympic Industries Limited is in a better position in the market than its competitor Quasem
Drycells Ltd as it is a much bigger company.
27
10.References:
1. Gitman, J(2009). Principles of Managerial Finance. 12th Edition. Pearson International
Edition.
2. Investopedia. (n.d). Retrieved July 2012, from www.investopedia.com
3. Dhaka Stock Exchange. (n.d). Retrieved August 2012, from www.dsebd.org
4. Olympic Industries Ltd. (n.d). Retrieved from www.olympicbd.com
5. Quasem Drycells Ltd. (n.d). Retrieved from www.quasemdrycells.com
28
11.Appendix
11.1.Appendix A: Liquidity Ratios
Current Ratio:
1. Current Ratio = Current Assets/Current Liabilities
Current Assets
Current
Company
Olympic Industries
Quasem Drycells
Olympic Industries
2009
541403007
350532568
490101413
2010
797331808
376550056
651071767
2011
1076067327
457861411
862244637
29
Liabilities
Current Ratio
Quasem Drycells
Olympic Industries
Quasem Drycells
331562467
1.10
1.05
366864899
1.22
1.03
408510059
1.24
1.12
Quick Ratio:
2. Acid-Test Ratio (Quick Ratio) = (Current Assets-Ending Inventories)/Current
Liabilities
Company
Current Assets
Olympic Industries
2009
2010
541403007
797331808
2011
1076067327
Quasem Drycells
350532568
376550056
457861411
Ending
Olympic Industries
197078067
245123706
349721212
Inventories
Quasem Drycells
185830294
221552994
256192433
651071767
862244637
Quasem Drycells
331562467
366864899
408510059
Acid-Test Ratio
Olympic Industries
0.70
0.85
0.84
(Quick Ratio)
Quasem Drycells
0.50
0.42
0.49
Net Profit
Sales
Net Profit Margin
2010
2011
Olympic Industries
2009
128805888
191170188
256212992
Quasem Drycells
28005087
40215241
47132022
Olympic Industries
2099562491
2457753100
3885101824
Quasem Drycells
969204292
935094525
1152265740
Olympic Industries
6.1%
7.8%
6.6%
Quasem Drycells
2.89%
4.3%
4.09%
30
Operating Profit
Sales
Operating Profit
Margin
Company
2009
2010
2011
Olympic Industries
223942114
305234167
392222519
Quasem Drycells
33319662
51661673
66467217
Olympic Industries
2099562491
2457753100
3885101824
Quasem Drycells
969204292
935094525
1152265740
Olympic Industries
10.6%
12.4%
10.1%
Quasem Drycells
3.44%
5.52%
5.77%
Gross profit
Sales
Gross Profit Margin
Company
2009
2010
2011
Olympic Industries
519134198
698105020
971639077
Quasem Drycells
171814068
175361149
218591175
Olympic Industries
2099562491
2457753100
3885101824
Quasem Drycells
969204292
935094525
1152265740
Olympic Industries
24.7%
28.4%
25.0%
Quasem Drycells
17.7%
18.75%
18.97%
ROA:
31
Company
2009
2010
2011
Olympic Industries
128805888
191170188
256212992
Quasem Drycells
28005087
40215241
47132022
Olympic Industries
996283282
1361913744
1850322260
Quasem Drycells
850897245
12.9%
885904358
2173267379
14.0%
13.8%
Olympic Industries
Quasem Drycells
3.29%
4.54%
2.17%
ROCE:
5. ROCE = EBIT * 100 / (FA + CA CL)
EBIT
(FA + CA CL)
ROCE
Company
2009
2010
2011
Olympic Industries
223942114
305234167
392222519
Quasem Drycells
33319662
51661673
66467217
Olympic Industries
506181869
710841977
988077623
Quasem Drycells
Olympic Industries
327231454
44.2%
372967501
43.0%
1234734011
39.7%
Quasem Drycells
10.2%
13.9%
5.38%
ROE:
32
Company
2009
2010
2011
Olympic Industries
128805888
191170188
256212992
Quasem Drycells
28005087
40215241
47132022
Olympic Industries
354371670
526193378
743408956
Quasem Drycells
499920955
509194782
1760890305
Olympic Industries
36.3%
36.3%
34.5%
Quasem Drycells
5.60%
7.90%
2.68%
EPS:
7. EPS = Earnings Available for Common Stock Holders / Number of Common Stock
Outstanding
Company
Olympic Industries
2009
128805888
2010
191170188
2011
256212992
Quasem Drycells
28005087
40215241
47132022
Olympic Industries
2478278
2478278
3639186
Quasem Drycells
18000000
18000000
77.1
23040000
70.4
Olympic Industries
52 Tk/Share
Tk/Share
Tk
Tk/Share
Tk.
2.23 /share
2.05/share
Tk.
Earnings Per Share
Quasem Drycells
1.56/share
Total Liability
Total Assets
Debt to Total Assets Ratio
Company
2009
2010
2011
Olympic Industries
641911612
835720366
1106913304
Quasem Drycells
350976290
376709576
412377074
Olympic Industries
996283282
1361913744
1850322260
Quasem Drycells
850897245
885904358
2173267379
Olympic Industries
64.4%
61.4%
59.8%
Quasem Drycells
41.2%
42.5%
18.97%
2009
Olympic Industries
223942114
Interest Expense
Quasem Drycells
Olympic Industries
33319662
51661673
66467217
44266202
38148952
50104075
Quasem Drycells
35660810
32570755
39752203
Olympic Industries
5.06 times
8.00 times
7.83 times
Quasem Drycells
0.93 times
1.59 times
1.67 times
Interest Expense
Times Interest Earned
2010
305234167
2011
392222519
Debt/Equity Ratio:
3. Debt/Equity Ratio = Long-term loan * 100 / Stockholders equity
Company
2009
2010
2011
Olympic Industries
34469803
62686050
132135699
Long-term loan
Quasem Drycells
Stockholders equity Olympic Industries
17622997
354371670
8377075
526193378
1374669
743408956
34
Quasem Drycells
499920955
509194782
1760890305
Olympic Industries
9.72%
11.9%
17.8%
Quasem Drycells
3.52%
1.66%
Debt/Equity Ratio
0.08%
COGS
Average Inventories
Inventory Turnover
Company
2009
2010
2011
Olympic Industries
1580428293
1759648080
2913462747
Quasem Drycells
797390224
759733376
933674565
Olympic Industries
188201991
221100886.5
297422459
Quasem Drycells
174411889.5
203691644
238872713
Olympic Industries
8.4 times
8.0 times
9.8 times
Quasem Drycells
4.58 times
3.73 times
3.14 times
365
Inventory turnover
Company
2009
2010
2011
Olympic Industries
365
365
365
Quasem Drycells
365
365
365
Olympic Industries
8.4 times
8.0 times
9.8 times
35
Average Age Of
Inventory
Quasem Drycells
4.29 times
3.43 times
3.64 times
Olympic Industries
44 days
46 days
37 days
Quasem Drycells
85 days
106 days
100 days
Accounts Receivables
Company
2009
2010
2011
Olympic Industries
35110821
13543286
24167168
Quasem Drycells
31272784
24161564
28334623
Quasem Drycells
969204292
935094525
1152265740
Olympic Industries
6 days
2 days
2 days
Quasem Drycells
12 days
9 days
9 days
Accounts Payables
Company
2009
2010
2011
Olympic Industries
135499592
190215522
274749064
Quasem Drycells
48986430
49430550
54599246
36
Purchases
Average Payment Period
Olympic Industries
1598180445
1807693719 3018060253
Quasem Drycells
Olympic Industries
448566445
31 days
352350088
38 days
455929139
33 days
Quasem Drycells
40 days
51 days
44 days
TA Turnover Ratio:
5. TA Turnover Ratio = Sales / TA
Sales
TA
TA Turnover Ratio
Company
2009
2010
2011
Olympic Industries
2099562491
2457753100
3885101824
Quasem Drycells
969204292
935094525
1152265740
Olympic Industries
996283282
1361913744
1850322260
Quasem Drycells
850897245
885904358
2173267379
Olympic Industries
2.10 times
1.80 times
2.10 times
Quasem Drycells
1.13 times
1.06 times
0.53 times
FA Turnover Ratio:
6. FA Turnover Ratio = Sales / Net FA
Sales
Net FA
FA Turnover Ratio
Company
2009
2010
2011
Olympic Industries
2099562491
2457753100
3885101824
Quasem Drycells
969204292
935094525
1152265740
Olympic Industries
454880275
564581936
774254933
Quasem Drycells
308261353
363282344
1185382659
Olympic Industries
4.62 times
4.40 times
5.02 times
Quasem Drycells
3.14 times
2.57 times
0.97 times
37
Company
Olympic Industries
2009
631.65
2010
1816
2011
1818
Quasem Drycells
Tk/Share
68
Tk/share
105.50
Tk/Share
198
common stock
Tk/Share
52
Olympic Industries
Tk/Share
Tk.
EPS
P/E Ratio
M/B Ratio:
Quasem Drycells
Olympic Industries
Quasem Drycells
1.56/share
12.1
43.6
Tk/Share
77.1
Tk/Share
70.4
Tk/Share
Tk 2.23
Tk/Share
Tk.
/share
2.05/share
23.6
47.3
25.8
96.6
Market / Book Ratio = Market price per share of common stock / Book value per share
Company
2009
631.65
2010
1816
2011
1818
Olympic Industries
Tk/Share
Tk/share
105.50
Tk/Share
198
Quasem Drycells
68 Tk/Share
Tk/Share
212
Tk/Share
204
Olympic Industries
143 Tk/Share
83.3
Tk/Share
28.3
Tk/Share
76.4
Quasem Drycells
Olympic Industries
Quasem Drycells
Tk/Share
4.41
0.82
Tk/Share
8.56
3.72
Tk/Share
8.91
2.59
38
Company
2009
2010
2011
Olympic Industries
6.1%
7.8%
6.6%
Quasem Drycells
2.89%
4.3%
4.09%
Olympic Industries
2.10 times
1.80 times
2.10 times
Quasem Drycells
Olympic Industries
1.13 times
12.81%
Quasem Drycells
3.26%
1.06 times
14.04%
4.6%
0.53 times
13.86%
2.17%
Total Assets
Stock holders Equity
FLM
ROA
ROE
Company
2009
2010
2011
Olympic Industries
996283282
1361913744
1850322260
Quasem Drycells
850897245
885904358
2173267379
Olympic Industries
354371670
526193378
743408956
Quasem Drycells
499920955
509194782
1760890305
Olympic Industries
2.81
2.60
2.50
Quasem Drycells
Olympic Industries
1.70
12.81%
1.73
14.04%
1.23
13.86%
Quasem Drycells
3.26%
4.6%
2.17%
Olympic Industries
36.0%
36.5%
34.7%
Quasem Drycells
5.54%
7.95%
2.67%
39