Executive Summary

We gladly present you our report titled “Financial Ratio Analysis”. Our report also
refers as an analytical report of accounting. We have made the report on the two listed
company annual report analysis as you had given us to analyse by help of your
suggestions. This report implies the companies’ activity, liquidity, solvency,
profitability, valuation financial ratios that helps to get a proper picture of the
companies. We have selected the company named- RAK Ceramics BD LTD & Berger
Paints Bangladesh Limited. We have discussed all of the ration in the analysis &
findings content. We have described the recommendation as much as possible.

We believe that the knowledge and experience we gathered during the report will
extremely helpful in our future professional and academic life. We will be grateful to
you if you accept the assignment.

Page No- 1
 Table of Contents

No. Contents Page No.

1. Introduction
(i) Background of the Report 3
(ii) Objectives of the Report 4
(iii) Limitations of the Report 5
(iv) Methodology 6

2. Organisational Profile

(i) RAK CERAMICS (BD) 7

Limited

(ii) Berger Paints Bangladesh 8

Limited

3. Findings and Analysis 9

4. Recommendation 25
5. Conclusion 26
7. References 27
Page No- 2
 Background of the Report

We assign the report to know and analyze the current (2015 & 2015) financial situation
of two companies and discuss how to turn their financial condition into satisfactions.
This report helps us to get new experience for preparing a report. We can get a result
so that we can analyze and solve many problems.

We have used 5 categories financial ratios so that we can easily analyze the whole
financial statement of the previous years annual report of two listed companies. These
categories are-

(1) Activity Ratio- measure how efficiency a company performs day-to-day

tasks
(2) Liquidity Ratio- measure the company’s ability to meet its short term
obligations.
(3) Solvency Ratio- measure a company’s ability to meet long term obligations.
(4) Profitability Ratio- measure the company’s ability to generate profitable
sales from its resources.
(5) Valuation Ratio- measure the quantity of an asset or flow.

We have assigned a recommendation part for this report so that we can discuss
financial positive and negative impact of a company. We also have tried to focus
proper comment/note for each ratio.

Page No- 3
 Objectives of the Study

It is very important to set an objective for preparing our report. The main objective of
the report is to analyse the annual reports of two listed company- RAK Ceramics &
Berger Paints BD LTD.

So at first we have to collect the previous annual reports of two companies. We have
tried to solve accurate ratio analyse so that we can achieve our objective. The study
finds out the way haw we can analyze a report and find out the strong & weak sides of
financial situation of a company. So we have analyzed 5 categories ratio analysis
(which includes current ratio, quick ratio, cash ratio, inventory turnover ratio, payable
turnover ratio, fixed asset turnover ratio, debt-to-asset ratio, debt-to-capital ratio P/E,
P/CF etc)

Page No- 4
 Limitations of the Study

Time Limitation: Our report submission date was 21 August 2016. We got the
presentation topic two/three weeks back. Unfortunately that was not enough time to
complete this presentation on a high note. If there was more time, we could have done
it much better.
Student Cooperation: Some Students of our class did not cooperate with us at all.
They were afraid that it is very much hard to analyze annual report. So we tried to
solve the ratios without proper helping hand.
Knowledge Gap: We did this kind of report for the very first time and it was obvious
that there will be some knowledge gap.
Absence of Necessary Documents: As it was our first time doing this kind of report
and also we do not know anyone who have done this sort of report before. Therefore
we did not have the proper documents that was needed (except annual report of 2014-
2015).

Page No- 5
 Methodology

Sources of Data: We collected data to prepare our repot from 2 types of data:-

(1) Primary Data: Primary data are measurement observed and recorded as part
of an original study. There are two basic methods of obtaining primary data-
Questioning and Observation. We have collected primary data from the
companies (RAK Ceramics BD LTD & Berger Paints Bangladesh Limited)
own websites. The companied have published their 2014 & 2015 annual
repoerts who are thought to have the desired information. So we have get
proper and efficient information from its websites.
(2) Secondary Data: Secondary data is data collected by someone other than
the user. We have collected as a secondary data from lecturer sheet and useful
webinks like Wikipedia, Slideshare (Linkedin) etc.

Page No- 6
 Organizational Profile

RAK Ceramics BD LTD

RAK Ceramics (Bangladesh) Limited is the country’s largest and most respected tiles
and sanitary ware brand. The Company was incorporated in Bangladesh on 26
November, 1998 as a private limited company under the Companies Act, 1994 as a
UAE-Bangladesh joint venture project. It has started its commercial production on 12
November 2000. It has converted into public limited company on 10 June 2008 and
listed in the stock exchanges of Bangladesh on 13th June 2010. The Company has
anchored this position on the basis of its market-leading capacities, world-class
manufacturing technologies, high production utilization, optimized cost structures,
vibrant sales and distribution network and robust customer engagement programs.

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Products- Ceramic tiles, sanitary ware, taps and kitchen fittings, tableware, tile
adhesives, interior ancillary products.

Berger Paints Bangladesh LTD

Berger Paints Ltd is the second largest Paint Company in India and a market leader
in Industrial Paint for the past 45 years with a consistent track record of being one of
the fastest growing paint companies, quarter on quarter, for the past few years.
Headquartered at Kolkata it has 10 manufacturing units and over 110 stock points. The
company also has an international presence in 4 countries – Russia, Poland, Nepal and
Bangladesh. With employee strength of over 2,800 and a countrywide distribution
network of 25,000+ dealers, Berger is established in the sector with a varied portfolio
of paints and tailor-made customer services.

Products- Paints, Coatings, Wallpaper, Construction Chemicals and allied products.

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 Findings and Analysis
Ratio Analysis- RAK Ceramics

Cost of Goods Sold

Inventory Turnover Ratio =
Average Inventory

2015 2014

2896890000 3255270000
= =
2239844230 1835354727

=1.293 =1.773

* The inventory turnover ratio rate of 2014 is greater than 2015.

Revenue
Receivable Turnover =
Average Receivables

2015 2014

6329964274 5508640000
= =
638387373 580719781

=9.916 =9.486

* Receivable turnover ratio of two years is almost average and well. The receivable
turnover ratio of 2015 has been improved before the year of 2014.

Page No- 9
 Purchases
Payables Turnover =
Average Trade Payables

2015 2014

2896889441 3072036921
= =
44500470 2738540

=65.098 =1121.78

*The payables turnover ratio was well times in 2014.

Revenue
Working Capital Turnover =
Average Working Capital

2015 2014

6329964274 5508640000
= =
1545379710 289116566

=4.096 =19.053

*Indicates the number of times the working capital is turned over. The rate of the
ration of 2014 is well.
Revenue
Fixed Asset Turnover =
Average Net Fixed Asset

2015 2014

6329964274 5508640000
= =
2311590599 2013734249

=2.739 =2.735

*the ratio establishes between fixed asset and sales. The ideal rate for the ratio is 5.
So fixed asset turnover ability is not so high.

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 Revenue
Total Asset Turnover =
Average Total Asset

2015 2014

6329964274 5508640000
= =
10753365565 9476977741

=0.59 =0.58

*indicates the ability of a company to use its asset. So the ratio rate of the 2 years is
not so high.

Current Asset
Current Ratio =
Current Liabilities

2015 2014

6741661301 7123130156
= =
4218330929 3538079861

=1.599:1 =2.013:1

*Ideal ratio is 2:1. So the current ratio of 2014 is greater than the year of 2015.
Cash Short-Term Marketable Investments Receivables
Quick Ratio =
Current Liabilities

2015 2014

1101566520 1473926142
= =
4218330929 3538079861

=0.261 =0.417

*Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.
Cash Short-Term Marketable Investments
Cash Ratio =
Current Liabilities
Page No- 11
 2015 2014

201898000 40661640
= =
4218330929 3538079861

=0.048 =0.011

* Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.
Total Debt
Debt-to-Assets Ratio =
Total Assets

2015 2014

420624802 420624802
= =
10753365565 9476977741

=0.039 =0.044

*indicates how many assets of a company are financed by debt. So, the ratio rate of
2014 is good.
Total Debt
Debt-to-Capital Ratio =
Total Debt+Total Shareholdrs' Equity

2015 2014

420624802 420624802
= =
3789130912 3789130912

=0.111 =0.111

*Ideal Ratio: Higher the ratio, higher the risk of default. So the ratio of 2015 & 2014
is same and well for the company.
Total Debt
Debt-to-Equity Ratio =
Total Shareholdrs' Equity

Page No- 12
 2015 2014

420624802 420624802
= =
3368506110 3368506110

=0.124 =0.124

*indicates the extent to which a company relies on external debt. The ratio rate of 2
years is same.
Total Asset
Financial Leverage Ratio =
Total Equity

2015 2014

10753365565 9476977741
= =
6038597111 5919429484

=1.780 =1.600

*measure of financial leverage(capital structure) The ratio rate of 2 years is almost

average.
Gross Profit
Gross Profit Margin =
Revenue

2015 2014

2162410962 1975308452
= =
6329964274 5508640000

=0.341 =0.358

*A profitability ratio. The ratio rate of 2 years is not so high. So it reflects fewer
efficiency in converting raw materials to income.
Operating Income
Operating Profit Margin =
Revenue

Page No- 13
 2015 2014

1070931754 997857436
= =
6329964274 5508640000

=0.169 =0.181

*Measures profitability without concern for taxes and interest. The ratio rate of two
years is average.
Net Income
Net Profit Margin =
Revenue

2015 2014

4541554406 3964568745
= =
6329964274 5508640000

=0.717 =0.719

* Measures the percentage of each sales. The ratio rate of two years is average.
Operating Income
Operating ROA =
Average Total Asset

2015 2014

1070931754 997857436
= =
10753365565 9476977741

=0.084 =0.111

*indicate the levels of operating profits relative to the firm’s total asset. The ration
rate of two years is almost same.
Net Income
ROA =
Average Total Asset

Page No- 14
 2015 2014

4541554406 3964568745
= =
10753365565 9476977741

=0.422 =0.418

*Indicates ability of a company to earn profit from its asset. The ratio rate of ROA is
good.
Net Income
ROE =
Average Total Equity

2015 2014

4541554406 3964568745
= =
6038598640 5919429484

=0.752 =0.669

*indicates the return to the owner on the amount invested in the business. The ROA
rate of two years is good for the company.
Price Per Share
P/E =
Earnings Per Share

2015 2014

639.91 684.43
= =
48.65 43.33

=13.153 =15.796

*The P/E rate of two years of the company is good.

Price Per Share
P/CF =
Cash Flow Per Share

Page No- 15
 2015 2014

639.91 684.43
= =
45.98 39.69

=13.917 =17.244

Price Per Share

P/S =
Sales Per Share

2015 2014

639.91 684.43
= =
688.56 727.76

=0.929 =0.940

Price Per Share

P/S =
Book Value Per Share

2015 2014

639.91 694.43
= =
124.06 130.66

=5.158 =5.314

Page No- 16
 Ratio Analysis- Berger Paints Bangladesh Limited

Cost of Goods Sold

Inventory Turnover Ratio =
Average Inventory

2015 2014

14837714000 13165473000
= =
1513733000 1660913000

=9.802 =7.92

* The inventory turnover ratio rate of 2015 is greater than 2014.

Revenue
Receivable Turnover =
Average Receivables

2015 2014

12267996000 10881046000
= =
939573000 832711000

=13.056 =7.92

* Receivable turnover ratio of two years is almost average and well. The receivable
turnover ratio of 2015 has been improved before the year of 2014.

Page No- 17
 Purchases
Payables Turnover =
Average Trade Payables

2015 2014

5811465000 5942325000
= =
1779661000 1461545000

=3.265 =4.065

* The payables turnover ratio was well times in 2014.

Revenue
Working Capital Turnover =
Average Working Capital

2015 2014

12267996000 10881046000
= =
390590000 171604000

=31.40 =63.40

* Indicates the number of times the working capital is turned over. The rate of the
ration of 2014 is well.
Revenue
Fixed Asset Turnover =
Average Net Fixed Asset

2015 2014

12267996000 10881046000
= =
1843340000 1578664000

=6.655 =6.892

* the ratio establishes between fixed asset and sales. The ideal rate for the ratio is 5.
So fixed asset turnover ratio rate ability is well.
Revenue
Total Asset Turnover =
Average Total Asset
Page No- 18
 2015 2014

12267996000 10881046000
= =
6683525000 5632593000

=1.83 =1.93

* indicates the ability of a company to use its asset. So the ratio rate of the 2 years is
not so high.

Current Asset
Current Ratio =
Current Liabilities

2015 2014

3951586000 3541219000
= =
2132948000 1851418000

=1.852:1 =1.912:1

* Ideal ratio is 2:1. So the current ratio of 2014 is greater than the year of 2015.
Cash Short-Term Marketable Investments Receivables
Quick Ratio =
Current Liabilities

2015 2014

330156000 293875000
= =
2132948000 1851418000

=0.155:1 =0.159:1

* Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.
Cash Short-Term Marketable Investments
Cash Ratio =
Current Liabilities

Page No- 19
 2015 2014

800000000 400000000
= =
2132948000 1851418000

=0.375:1 =0.216:1

* Ideal ratio is 1:1. So the quick ratio rate of two years is not so well.
Total Debt
Debt-to-Assets Ratio =
Total Assets

2015 2014

1747146000 1426465000
= =
2132948000 1851418000

=0.819 =0.770

* indicates how many assets of a company are financed by debt. So, the ratio rate of
2015 is good.
Total Debt
Debt-to-Capital Ratio =
Total Debt+Total Shareholdrs' Equity

2015 2014

1747146000 1426465000
= =
1979035000 1658354000

=0.882 =0.860

* Ideal Ratio: Higher the ratio, higher the risk of default. So the ratio of 2015 & 2014
is same and well for the company.
Total Debt
Debt-to-Equity Ratio =
Total Shareholdrs' Equity

Page No- 20
 2015 2014

1747146000 1426465000
= =
1859035000 1758354000

=0.939 =0.8112

* indicates the extent to which a company relies on external debt. The ratio rate of 2
years is same.
Total Asset
Financial Leverage Ratio =
Total Equity

2015 2014

6339060000 5346874000
= =
4038513000 3354605000

=1.570 =1.594

* measure of financial leverage(capital structure) The ratio rate of 2 years is almost

average.
Gross Profit
Gross Profit Margin =
Revenue

2015 2014

5255332000 4295302000
= =
12267996000 10881046000

=0.428 =0.395

* A profitability ratio. The ratio rate of 2 years is not so high. So it reflects fewer
efficiency in converting raw materials to income.
Operating Income
Operating Profit Margin =
Revenue

Page No- 21
 2015 2014

1996401000 1520953000
= =
12267996000 10881046000

=0.162 =0.140

* Measures profitability without concern for taxes and interest. The ratio rate of two
years is average.
Net Income
Net Profit Margin =
Revenue

2015 2014

1425955000 1097609000
= =
12267996000 10881046000

=0.116 =0.100

* Measures the percentage of each sales. The ratio rate of two years is average.
Operating Income
Operating ROA =
Average Total Asset

2015 2014

1996401000 4295302000
= =
6339060000 5346874000

=0.314 =0.284

* indicate the levels of operating profits relative to the firm’s total asset. The ration
rate of two years is almost same.

Page No- 22
 Net Income
ROA =
Average Total Asset

2015 2014

1425955000 1097609000
= =
6339060000 5346874000

=0.224 =0.205

* Indicates ability of a company to earn profit from its asset. The ratio rate of ROA is
good.
Net Income
ROE =
Average Total Equity

2015 2014

1425955000 1097609000
= =
4038513000 3354605000

=0.353 =0.327

* indicates the return to the owner on the amount invested in the business. The ROA
rate of two years is good for the company.
Price Per Share
P/E =
Earnings Per Share

2015 2014

1903.60 1425
= =
61.49 47.33

=30.958 =30.107

* The P/E rate of two years of the company is good.

Price Per Share
P/CF =
Cash Flow Per Share
Page No- 23
 2015 2014

1903.60 1425
= =
91.98 49.69

=20.670 =28.678

Price Per Share

P/S =
Sales Per Share

2015 2014

1903.60 1425
= =
1934.558 1472.33

=0.983 =0.968

Price Per Share

P/S =
Book Value Per Share

2015 2014

1903.60 1425
= =
174.16 144.66

=10.930 =9.850

Page No- 24
 Recommendation

The next step is to find out how to turn them into batter Financial Position. In our
opinion we are recommending these:-

RAK Ceramics:

(1) Inventory turnover & receivable turnover ability should be improved further.
(2) Fixed asset turnover should be developed.
(3) Should try to increase current asset & cash.
(4) Should try to increase revenue as much as possible further.

Berger Paints:

(1) Total asset turnover & receivable turnover ability should be improved further.
(2) Fixed asset turnover should be developed.
(3) Should try to increase current asset, cash & cash investments receivables.
(4) Should try to increase revenue & operating income as much as possible further.

Page No- 25
 Conclusion
We have already solved the report on the financial analysis regarding analysis and total
description in the two company. As we are in ongoing process to be a business graduate
we will have to face some difficulties regarding this report in our professional life. So
we must have to know the knowledge of management in business to regard running a
business and also many aspects of business. This report will help us to meet up the
problems that we may face in future.

Page No- 26
 References

(1) http://rakcerambd.com/
(2) http://rakcerambd.com/investor-annual-reports.php
(3) http://www.bergerbd.com/
(4)http://www.bergerbd.com/corporate_info/reports/Annual
_and_Quarterly_Reports
(5) https://www.wikipedia.org/
(6)http://www.investopedia.com/university/peratio/peratio1
.asp

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