ACI Formulations Limited Ratio

Analysis.
Submitted to
Tamanna Islam Shaon

Lecturer
Department of Finance
Bangladesh University of Business and Technology(BUBT)

Submitted by
Group-Invincible
Program- BBA
24 th Intake
Department of Business studies
Bangladesh University of Business and Technology

Date of Submission : 11th May,2013

Group Members of
Invincible
NAME

ID NO.

Rubel Khan

10112101403

Md.Imran Khan

10112101374

Sabnam Tumpa

10112101389

Sultana Ferdush

10112101393

Ayesha Siddika

10112101395

Md. Noor-Al-Faiyaz

10111101166 (23th)

Letter of Transmittal

15 May 2013
Ms. Reshma Nowreen
Lecturer of Finance
Bangladesh University of Business and Technology

Subject: Submission a report on ACI formulations Limited ratio analysis.

Madam,
It is a great experience to do the assignment on ACI formulation Limited ratio analysis that
you assigned to us for the course of Managerial Finance, Course code-FIN-302 For this
assignment We are identify inception the Company stands on the idea of fairness, honesty and
general concern to its employee.

Finally, We want to thank you for giving us the opportunity to work on this report.

Sincerely,
On behalf of Group Butterfly.

Acknowledgement
First we would like to thank the Almighty Allah, Alhamdulillah with his blessings; we are
completed this Assignment like to thank my parents, without whom this effort would have been

worth nothing. Their love, support and patience have taught me about sacrifice, discipline and
compromise. Who has given us the opportunity to study at BUBT and later on doing an
assignment about The brand resonance model which is the most important part of our market
economy. Our first acknowledgement and grateful thanks to Md. Abu Saleh Vice Chancellor of
BUBT for showing us the different areas and for helping with adequate information.

We are greatly appreciated and inspired by Ms. Reshma Nowreen, Lecturer in Finance,
Bangladesh University of Business & Technology for providing such a grand opportunity to
work in this Assignment, which has played a vital role in developing our experience in practical
work field.

Finally, we would like to thank all others whose strong supports make us able to complete this
report.

Executive Summary
ACI Formulations Limited Fundamental Company Report provides a complete overview of the
companys affairs. All available data is presented in a comprehensive and easily accessed format.

The report includes financial and SWOT information, industry analysis, opinions, estimates, plus
annual and quarterly forecasts made by stock market experts. The report also enables direct
comparison to be made between ACI Formulations Limited and its competitors. This provides
our Clients with a clear understanding of ACI Formulations Limited position in the
Pharmaceuticals and Biotechnology Industry.

Table of contents:
SL.No.

Topic

Page no.

1.

Part 1
Introduction
1-4

PART-2
Overview of ACI Formulation Ltd

Analysis: Ratio Analysis

3.1. Liquidity Ratios
3.2.Activity Ratios
3.2.Activity Ratios
3.3.Debt Ratios
3.4.Profitability Ratios

Findings and Conclusion

Chapter-1

Introduction:
ACI formulation Limited (ACI FL) is a subsidiary of ACI limited, located at Gazipur in the out
skirt of Dhaka. ACI FL manufactures majority of the products of ACI Strategic Business Limited
except for the Pharmaceutical Division. The factory is equipped with the state of the art facilities
for product formulations and process innovation. These include modern computerized equipment
like HPLC and GLC.The principal activities of the Company are manufacturing and marketing
of a number of agrochemical and consumer products. All the consumer products were sold to
Advanced Chemical Industries Limited, which acted as the sales and marketing agent of the
Company.
The entire agro chemical products (Crop Care) are however, directly marketed by the Company
without using Advanced Chemical Industries Limited as selling and marketing agent with effect
from1 January 2009.

1.1. About ACI Formulations Limited:

ACI Formulations Limited manufactures and markets agrochemical and consumer products
primarily in Bangladesh. Its products include crop protection chemicals, such as insecticides,
herbicides, and fungicides in granular, powder, and liquid forms; mosquito pesticides in the
forms of aerosols, vaporizers, and coils; and house hold chemicals comprising toilet cleaners and
hand wash. The company was incorporated in 1995 and is based in Dhaka, Bangladesh. ACI
Formulations Limited operates as a subsidiary of Advanced Chemical Industries Limited.

1.2.Objective:
ACI Formulations Limited always try to manufactures new quality product and capture market.
The Company has registered several new compounds which have been necessary to complete
our range of insecticides, pesticides and fungicides to cover all types of pests. A complete range
will enable us to buy competitively and service all types of customer.
Considering the nature of the products we deal in and the potential hazard to the workers, the
Company regularly conducts safety training sessions and regular medical checkup of the factory
workers. The factory has conducted training on safe handling in pesticide plant, fire fighting,
materials handling, role of good housekeeping in accident prevention, usage of personal
protective equipment (PPE), productivity improvement and good manufacturing practices. The
marketing team has conducted training on product stewardship through overseas trainer.

We have extensive Research & Development (R & D) activities to try new compounds and study
their suitability in different environments and locations within Bangladesh. The Company is
testing 6 new compounds under the Herbicide portfolio, 7 new compounds under Fungicide
portfolio, 4 new compounds under Rice Liquid Insecticide portfolio and 3 new compounds under
Solid Insecticide portfolio. In addition we are conducting trial production of a variety of
vegetable seeds and we hope to enter the vegetable seed market in a big way. One success story
of our R & D is introduction of a variety of Cauliflower which grows in summer.

1.3.Methodology:
1.3.1.Data tools for Analysis
Microsoft Word
Excel
Time Series Analysis of 3 years(2009-2011)
1.3.2.Data Source
Secondary Source
Annual Report
Website
Chapter-2
Company profile:

ACI Formulations Limited (the "Company") is a company domiciled in Bangladesh. It was

incorporated as a private limited company on 29 October 1995. The address of the Company's
registered office is 245 Tejgaon Industrial Area, Dhaka-1208. The Company went into
commercial operations on 1 July 1998. The Company was converted from private limited to
public limited company on 4 May 2005 and listed with both Dhaka Stock Exchange Limited
(DSE) and Chittagong Stock Exchange Limited (CSE) on 30 October 2008. Advanced Chemical
Industries Limited incorporated in Bangladesh is the immediate as well as ultimate parent of the
Company.

2.1:Products & Services:

2.1.1.Principal Products or Services of the company
The company currently has three units; each of the produces different types of products which
are as follows:
a)Unit-1: Insecticides, Herbicides, Fungicides & other related products
b)Unit-2: Mosquito Coil

c)Unit-3: Aerosol & Air freshener

Aside from these, the Company also provides services to ACI Ltd. By manufacturing Vanish
Toilet Cleaner for ACI Ltd. Under the contract manufacturing agreement(Marketing &
Distribution agreement) with ACI Limited.The companys products have distinct superiority due
to high standard of quality control measures through use of quality control laboratory equipped
with HPLC & GLC to check the quality as well as product development activities.

2.1.2.Market for the Products or Services of the

Company
The Company has two major lines of business-One is Agro-chemicals which are crop protection
products & has direct relationship with increasing & protecting crops of millions of farmers.
Secondly, Public Health products like mosquito repellant(Coil, Aerosol) & other health &
hygienic products like Air freshener & House cleaning.
Chapter-3

Analysis: Ratio Analysis

3.1. Liquidity Ratios

3.1.1. Current Ratio:
The current ratio measures a company's ability to pay short-term debts and
other current liabilities (financial obligations lasting less than one year) by
comparing current assets to current liabilities. The ratio illustrates a
company's ability to remain solvent.
Year-2009
= Current Assets Current Liability
= 1570927452 1017640911
= 1.54
Interpretation:
ACI Formulations Ltd has 1.54 current assets against its current liabilities of 1.

Year-2010
= 1506602235 928908574
= 1.62
Interpretation:
ACI Formulations Ltd has 1.62 current assets against its current liabilities of 1.
Year-2011
= 1646052000 1126116535
= 1.46

Interpretation:
ACI Formulations Ltd has 1.46 current assets against its current liabilities of 1.
Year
ACI Formulation

2009
1.54

2010
1.62

2011
1.46

ACI Formulation
1
0.95
0.9
0.85
0.8
0.75
2009

ACI Fommulation

2010

2011

3.1.2. Quick Ratio:

The quick ratio is a measure of how well a company can meet its short-term financial liabilities.
Also known as the acid-test ratio
Year-2009
= (Current Assets Inventory) Current Liability

= (1570927452 602249737) 1017640911

= 0.95
Interpretation:
ACI Formulations Ltd has 0.95 quick assets against its current liabilities of 1.

Year-2010
= (1506602235 699819589) 928908574
= 0.87
ACI Formulations Ltd has 0.87 quick assets against its current liabilities of 1.

Year-2011
= (1646052000 704746537) 1126116535
= 0.84
Interpretation:
ACI Formulations Ltd has 0.84 quick assets against its current liabilities of 1.
Year
ACI Formulation

2009

2010

2011

0.95

0.87

0.84

ACI Formulation
1
0.95

ACI Fommulation

0.9
0.85
0.8
0.75
2009

3.2.Activity Ratios
3.2.1. Inventory Turnover:

2010

2011

Inventory Turnover showing how many times a company's inventory is sold

and replaced over a period. The days in the period can then be divided by
the inventory turnover formula to calculate the days it takes to sell the
inventory on hand or "inventory turnover days."
Year-2009
= Inventory (cost of goods sold 365)
= 602249737 (1591474136 365)
=138 Days
Interpretation:
This Companys inventories turn into sales after each 138 days in a year which is lower than the
previous two years.
Year-2010
= 699819589 (146626207 365)
=174 Days
Interpretation:
This Companys inventories turn into sales after each 174 days in a year which is lower than the
previous two years.
Year-2011
=704746537 (1871798982 365)
=137 Days
Interpretation:
This Companys inventories turn into sales after each 137 days in a year which is lower than the
previous two years.
Year

2009

2010

2011

ACI Formulation

138 Days

174 Days

137 Days

ACI Formulation
60000
50000
40000
30000
20000
10000
0
2009

ACI Fommulation

2010

2011

3.2.2. Average Collection Period:

Average Collection Period is measure of a firm's control on extending credit
to buyers. It is the total receivables divided by the sales or turnover per day.
See ratio analysis.
Year-2009
=A/R (Sales 365)
=758191914 (2079944243 365)
=133 Days
Interpretation:
ACI Formulations Limited is able to collect its credit sales in cash after each 133 days in a year
which is faster than the previous two years.
Year-2010
=577768167 (1924403783 365)
=110 Days
Interpretation:
ACI Formulations Limited is able to collect its credit sales in cash after each 110 days in a year
which is faster than the previous two years.
Year-2011

=546036962 (2443657886 365)

=82 Days
Interpretation:
ACI Formulations Limited is able to collect its credit sales in cash after each 82 days in a year
which is faster than the previous two years.
Year
ACI Formulation

2009

2010

2011

133 Days

110 Days

82
Days

ACI Formulation
60000
50000
40000
30000
20000
10000
0
2009

ACI Fommulation

2010

2011

3.2.3. Accounts Payable Conversion Period:

Accounts payable turnover ratio is an accounting liquidity metric that
evaluates how fast a company pays off its creditors (suppliers). The ratio
shows how many times in a given period (typically 1 year) a company pays
its average accounts payable. An accounts payable turnover ratio measures
the number of times a company pays its suppliers during a specific
accounting period.
Year-2009
=A/P (Purchase 365)
=165467769 (280113192 365)
=216 Days

Interpretation:
Company paid Account payable after 216 days left.
Year-2010
=142329589 (54200229 365)
=958 Days
Interpretation:
Company paid Account payable after 958 days left.

Year-2011
=210931715 (1492407 365)
=51585 Days
Interpretation:
Company paid Account payable after 51585 days left.
Year
ACI Formulation

2009

2010

2011

216 Days

958 Days

51585
Days

ACI Formulation
60000
50000
40000

ACI Fommulation

30000
20000
10000
0
2009

3.2.4. Total Asset Turnover:

2010

2011

The total asset turnover ratio measures the ability of a company to use its
assets to efficiently generate sales. This ratio considers all assets, current
and fixed. Those assets include fixed assets, like plant and equipment, as
well as inventory, accounts receivable, as well as any other current assets.
Year-2009
=Sales Total Assets
=2079944243 2085956109
=1.00times

Interpretation:
ACI Formulations Limited generates 1.00 taka of sales against its 1.00 taka of
assets.

Year-2010
=1924403783 2641333401
=0.73 times
Interpretation:
ACI Formulations Limited generates 0.73 taka of sales against its 1.00 taka of assets.
Year-2011
= 2443657886 2858855430
= 0.85 times
Interpretation:
ACI Formulations Limited generates 0.85 taka of sales against its 1.00 taka of assets.
Year
ACI Formulation

2009

2010

2011

1.00times

0.73 times

0.85
times

ACI Formulation
10
8
ACI Fommulation

6
4
2
0
2009

2010

2011

3.3.Debt Ratios
3.3.1. Debt Ratio:
It is a measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity. It indicates what proportion of debt the company is using to
finance its assets against equity. It can be calculated as followsYear-2009
= (Total liabilities Total assets) 100
= (1143420835 2085956109) 100
= 54.82%
Interpretation:
ACI Formulations Ltd finances 54.82% of its total assets from its creditors.
Year-2010
= (987107540 2641333401) 100
=37.37%
Interpretation:

ACI Formulations Ltd finances 37.37% of its total assets from its creditors.
Year-2011
= (1160843329 2858855403) 100
=40.61%
Interpretation:
ACI Formulations Ltd finances 40.61% of its total assets from its creditors.

Year
ACI Formulation

2009

2010

2011

54.82%

37.37%

40.61%

ACI Formulation
10
8
ACI Fommulation

6
4
2
0
2009

2010

2011

3.3.2. Times Interest Earned Ratio:

The interest coverage ratio is used to determine how easily a company can pay interest expenses
on outstanding debt. The ratio is calculated by dividing a company's earnings before interest and
taxes (EBIT) by the company's interest expenses for the same period. EBIT is also referred to as
operating incomes, which are revenues minus operating expenses. Interest expense refers to the
amount of interest the company pays on its debt. Both EBIT and interest expense can be found
on a company's income statement.
Year-2009
=EBIT Interest

=291258632 74114019
=3.93
Interpretation:
The company earns 3.93 times EBIT of its interest which is higher than the previous year
Year-2010
=187658063 65548912
=2.86
Interpretation:
The company earns 2.86 times EBIT of its interest

Year-2011
=269118687 71477257
=3.77
Interpretation:
The company earns 3.77 times EBIT of its interest which is higher than the previous year &
lower than the year of 2009.
Year
ACI Formulation

2009

2010

2011

3.93

2.86

3.77

ACI Formulation
9
8
7
6
5
4
3
2
1
0
2009

ACI Fommulation

2010

2011

3.4.Profitability Ratios
3.4.1. Gross Profit Margin (GPM):
Gross profit margin measures company's manufacturing and distribution
efficiency during the production process. It is a measurement of how much
from each dollar of a company's revenue is available to cover overhead,
other expenses and profits.

Year-2009
= (Gross Profit Sales) 100
= (488470107 2079944243) 100
=23.48%
Interpretation:
Per taka of sales of this company earns a 23.48% of GPM.
Year-2010
= (Gross Profit Sales) 100
= (458141712 1924403783) 100
=23.81%
Interpretation:
Per taka of sales of this company earns a 23.81% of GPM.

Year-2011
=(571858904 2443657886) 00
=23.40%
Interpretation:
Per taka of sales of this company earns a 23.40% of GPM.
Year
ACI Formulation

2009

2010

2011

23.48%

23.81%

23.40%

ACI Formulation
10
8
ACI Fommulation

6
4
2
0
2009

2010

2011

3.4.2. Operating Profit Margin (OPM):

Operating margin shows the profitability of sales resulting from regular
business. Operating income results from ordinary business operations and
excludes other revenue or losses, extraordinary items, interest on long term
liabilities and income taxes.
Year-2009
= (Gross Profit sales) 100
= (291258632 2079944243) 100
=14%
Interpretation:

Each taka of sales earns an operating profit margin of 14%.

Year-2010
= (187658063 1924403783) 100
=9.75%
Interpretation:
Each taka of sales earns an operating profit margin of 9.75%.
Year-2011
= (269118687 2443657886) 100
=11.01%
Interpretation:
Each taka of sales earns an operating profit margin of 11.01%.
Year
ACI Formulation

2009

2010

2011

14%

9.75%

11.01%

ACI Formulation
9
8
7
6
5
4
3
2
1
0
2009

ACI Fommulation

2010

2011

3.4.3. Net Profit Margin (NPM):

NET PROFIT MARGIN (NPM after Tax) measures profitability as a percentage
of revenues after consideration of all revenue and expense, including interest
expenses, non-operating items, and income taxes. For a business to be
viable in the long term profits must be generated; making the net profit

margin ratio one of the key performance indicators for any business. It is
important to analyze the ratio over time.
Year-2009
= (Net Profit Sales) 100
=(159145096 2079944243) 100
=7.65%
Interpretation:
Each taka of sales earns a NPM of 6%.
Year-2010
=(Net Profit Sales) 100
=(91605336 1924403783) 100
=4.76%
Interpretation:
Each taka of sales earns a NPM of 4.76%.
Year-2011
=(146847207 2443657886) 100
=6%
Interpretation:
Each taka of sales earns a NPM of 6%.
Year
ACI Formulation

2009

2010

2011

7.65%

4.76%

6%

ACI Formulation
10
8
ACI Fommulation

6
4
2
0
2009

2010

2011

3.4.4. Earnings per Share (EPS):

Earnings per share represents the net profit earned on behalf of each share
of outstanding common stock. Earnings per share does not represent the
amount of money distributed to shareholders. The payment of such money is
called dividends.
Year-2009
=EACS No. of common shareholder
=159145096 30000000
=5.30
Interpretation:
Each common share earns a profit/ EACS of $5.30
Year-2010
=91605336 30000000
=3.05
Interpretation:
Each common share earns a profit/ EACS of $3.05.

Year-2011

=146847207 30000000
=4.89
Interpretation:
Each common share earns a profit/ EACS of $4.89.
Year
ACI Formulation

2009

2010

2011

5.30

3.05

4.89

ACI Formulation
9
8
7
6
5
4
3
2
1
0
2009

ACI Fommulation

2010

2011

3.4.5. Return on Assets (ROA):

Return on Assets (ROA) measures how profitable a company is relative to its
total assets. In turn, it measures how efficiently a company uses its assets.
Generally, ROA should be used to compare companies in the same industry.
Everything else being equal, a higher ROA is better, as it means that a
company is more efficient about using its assets.
Year-2009
= (EACS Total Assets) 100
= (159145096 2085956109) 100
= 7.63%
Interpretation:

Each taka of total assets employed, generates earnings of 7.63% taka to the common shareholder.
Year-2010
= (91605336 2641333401) 100
= 3.47%
Interpretation:
Each taka of total assets employed, generates earnings of 3.47% taka to the common shareholder.
Year-2011
= (146847207 2858855430) 100
= 5.14%
Interpretation:
Each taka of total assets employed, generates earnings of 5.14% taka to the common shareholder.

Year
ACI Formulation

2009

2010

2011

7.63%

3.47%

5.14%

ACI Formulation
10
8
ACI Fommulation

6
4
2
0
2009

2010

3.4.6. Return on Equity (ROE):

2011

It measures the amount of net income returned as a percentage of shareholders equity. Return on
equity measures a corporations by revealing how much profit a company generates with the
money shareholders have invested.
Year-2009
= (EACS Total Equity) 100
= (159145096 942535274) 100
= 16.88%
Interpretation:
The ROE measures how much return is earned on the common stockholders investment in the
company.
This companys shareholders earned a 16.88% return on their investment.
Year-2010
= (91605336 1581930425) 100
=5.79%
Interpretation:
The ROE measures how much return is earned on the common stockholders investment in the
company.
This companys shareholders earned a 5.79% return on their investment.
Year-2011
= (146847207 1638777632) 100
=8.96%
Interpretation:
The ROE measures how much return is earned on the common stockholders investment in the
company.
This companys shareholders earned an 8.96% return on their investment.
Year
ACI Formulation

2009

2010

2011

16.88%

5.79%

8.96%

ACI Formulation
9
8
7
6

ACI Fommulation

5
4
3
2
1
0
2009

2010

2011

Chapter-4

Conclusion:

ACI Formulations Limited (the "Company") is a company domiciled in Bangladesh. The

Company was converted from private limited to public limited company on 4 May 2005 and
listed with both Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited
(CSE) on 30 October 2008. All available data is presented in a comprehensive and easily
accessed format. The report includes financial and SWOT information, industry analysis,
opinions, estimates, plus annual and quarterly forecasts made by stock market experts