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INDUSTRY COMPANY
LOCAL COMPANY MJL Bangladesh limited
INDUSTRY BENCHMARK UNITED POWER GENERATION &
DISTRIBUTION COMPANY LTD
U.S COMPANY BritBurn Energy Partner LP
IFRS COMPANY Abenture Resources corp
Submitted To,
Ms. Nabila Nisha(Nbn)
Lecturer, Department of Accounting & Finance School of
Business.
North South University
Submitted By,
NAME ID
Jubaiar Ahmed Bhuiyan 1411178630
Jahid Howlader 1411233030
Sagar Dash 1420305030
H.M Masrur Rahman 1420956030
MD. Linkon Hassan 1421082030
Letter of Transmittal:
Date:
Ms. Nabila Nisha (Nbn)
Lecturer, Department of Accounting & Finance School of Business
North South University.
Dear Mam,
Furthermore, if you have any query about this project please feel
free to ask any of our group
members.
Sincerely Yours-
0|Page
BRIEF OVERVIEW OF THE FOUR COMPANIES
In the post war era of late 1970s, when individual ownership economy
revived in our country, the setting up of Export Processing Zones (EPZ)s was a
pragmatic venture intended to attract capital investment, employment
generation and rapid industrialization. Bangladesh Export Processing Zones
Authority (BEPZA) was formed with the following objectives: Achieving
economic objectives on behalf of the Government of Bangladesh.
Integrating Bangladesh into the global supply chain Attracting export-
oriented investments in the zone. In 2007, Malancha Holdings Ltd (Later
renamed as United Power Generation & Distribution Co. Ltd) was born out of
the necessity for ensuring uninterrupted, quality power supply to the
industries housed within the Export Processing Zones (EPZ) of Bangladesh. The
company in its first phase built a Natural Gas fired 41 MW power plant in
Dhaka EPZ, Savar, Dhaka and another Natural Gas fired 44 MW power plant
in Chittagong EPZ at South Halishahar, Chittagong.
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BreitBurn Energy Partner LP
Abenteuer is a Canadian oil & gas company that is listed for trading on
the TSX Venture exchange under the symbol ABU. The Company is
engaged in the exploration for, and the acquisition, development and
production of, conventional and unconventional hydrocarbon projects.
Abenteuerss corporate strategies have been engineered to leverage its
experience, expertise and technology to focus on high impact
development opportunities in the international marketplace. Abenteuer
Resources Corp. acquires, explores for, develops, and produces
petroleum reserves in Western Canada. It has working interests in six wells
located in southeastern Saskatchewan. The company is headquartered in
Vancouver, Canada.
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APENDIX A: EVENT EXHIBIT (ILLUSTRATION)
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APPENDIX B: ESTIMATES EXHIBIT (ILLUSTRATION)
Post-employment Post-employment
benefits and benefits
compensation
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Common Indicators of the Company Estimation
Each company on same industry follows their own kind of rules and
regulations according to their country Accounting principles and
standards. In this case we see all the four companies follow same
estimates to find out income taxes and also estimate useful life of
determining depreciation for assets. Although, some various estimations
are there. Both BFRS and Industry benchmark follow BAS 8 to make
judgments, estimates and assumptions. On the other hand united power
generation & Distribution Company limited is consider net realizable value
is based on estimated selling price, Restoration cost incurred at the end of
the operating life of BreitBurn Energy Partners L.P., Abenteuer Resources
Corp Consider impairment by comparing the carrying values to their
recoverable amounts and lastly Mjl Bangladesh limited record allowance
of doubtful debt accounts based on estimation.
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APPENDIX C: COMPARISON EXHIBIT (ILLUSTRATION)
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Comparison Between BFRS & U.S. GAAP
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Comparison Between BFRS & IFRS
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Comparison Between Local Company & Industry
Benchmark
Accounting Policy Local Company Industry comment
Benchmark
Inventory Evaluation Average cost FIFO Although both
companies are in
the same industry,
but they follow
different inventory
evaluation method.
Not Acceptable
because of
following different
method.
Property plant & Straight Line Method Straight Line Method Here both
Equipment companies follow
similar depreciation
method. Hence the
method is same so
that is acceptable.
Revenue Sales Basis Method Accrual Basis For revenue
Recognition recognition both
companies follow
different standard.
Local company
recognizes revenue
on the basis of sales
basis method but
industry benchmark
company follow
accrual basis
method. So that is
not acceptable.
Goodwill N/A Impairment We cannot
compare because
not enough
information are
available.
Cash flow Indirect Method Indirect Method Both companies
presentation consider indirect
method & same
accounting
standard for cash
flow presentation.
Therefore
Acceptable.
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APPENDIX D: RATIO ANALYSIS TABLE 1 (ILLUSTRATION)
Ratios MJL Bangladesh MJL Bangladesh BreitBurn BreitBurn
limited limited Energy Energy Partner
(2012) (2013) Partner LP LP (2013)
(2012)
Liquidity
Current ratio 1.82 1.20 0.99 0.64
Quick ratio 1.31 0.86 -1.70 -1.49
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Interpretations of Appendix D
Liquidity Ratio: A firms liquidity ratio shows how quickly firm can convert its current
assets to meet the short term liabilities.
2012
In 2012, MJL Bangladesh ltds current ratio is 1.82 on the other hand Breitburn Energy
Partners LPs current ratio is 0.98 .Compared to this, MJL companys current ratio is in
good position which indicates the company has ability to repay its short term debt
better than MJL ltd. In terms of quick ratio we can see MJL (1.30) is in higher position
than Breitburn Energy (-1.70). Which means Breitburn energy have excess money to
repay short term liabilities and they have some idle money too. Cash Debt Coverage
ratio shows us how much debt can be recovered through cash flows from operation.
In that year Breitburn energy cash debt coverage ratio is 1.67 which is better than the
MJL LTD (0.26).
2013
In 2013, same condition remains as before in quick ratio. MJL ltd maintains its better
position in current ratio (1.20) than Breitburn energy LP (0.64). So MJL Bangladesh
maintain its good position and also liquidity solvency over Breitburn energy LP. In quick
ratio Breitburn(-1.49) is lower position than MJL Bangladesh ltd (0.86).
In cash dept coverage ratio Breitburn (1.42) still in good position than MJL Bangladesh
ltd (0.23).
Activity Ratio : Accounting ratios that measure a firm's ability to convert different
accounts Within its balance sheets into cash or sales. Activity ratios are used to
measure the relative efficiency of a firm based on its use of its assets, leverage or other
such balance sheet items. These ratios are important in determining whether a
company's management is doing a good enough job of generating revenues, cash,
etc. from its resources.
2012
Here, MJL Bangladesh ltd has a much higher receivables turnover (125.78) rate than
Breitburn energy has (103.23).also in inventory turnover MJL (3.27) is higher than the
Breitburn energy (2.79). Also Breitburn asset turnover ratio is lower than the MJL
Bangladesh ltd.
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2013
Here, MJL Bangladesh ltd has a much higher receivables turnover(110.25) rate
then Breitburn energy(99.77).Inventory turnover is also higher of MJL Bangladesh ltd
(3.82) then Breitburn energy (2.85). MJL Bangladesh ltd (.59) asset turnover rate is also
higher then Breitburn energy (0.15). So MJL is better than Breitburn in activity ratio field.
2012
In 2012 Breitburn energys profitability ratios condition are very bad for its net loss. All
ratios are showing negative sign. The profit margin and return on asset ratio of
Breitburn energy is (-0.96) and (-0.12) whereas, MJL Bangladesh ltds ratios are (0.09)
and (0.06).the earning per share ratio of MJL Bangladesh (2.73) is better than Breitburn
energy (-0.56).The price earnings ratio of MJL Bangladesh (29.19) is so much higher
than Breitburn energy (-3.19). Due to no preferred dividends in Breitburn energy, there
is no compare in payout ratio.
2013
Same senerio exists in 2013 too. MJL Bangladesh has high Profit Margin on Sales (0.10)
then Breitburn (-0.69).Price earnings ratio of MJL (24.79) is so much higher than
Breitburn (-4.72) as like before. MJL (3.03) gives away higher EPS then Breitburn
Bangladesh (-0.43). same scenario in payout ratio which is no compare for no
preferred dividends in Breitburn.
Overall we can see that MJL Bangladesh performs better than Breitburn energy in
terms of Profitability levels.
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Coverage Ratio : coverage ratio that measures the proportionate amount of income
that can be used to cover interest expenses in the future.
2012
Debt to Total assets tells us how much debt has been undertaken by a company as
against their assets. Here, Breitburn ratio has high debt ratio of .46 then MJL
Bangladesh of .36. Breitburn (4.51) time interest earn ratio is higher than MJL
Bangladesh (2.78). But in free cash flow MJL is so much better than Breitburn.
2013
In 2013, we see the same scenarios. Debt to total asset of Breitburn (0.53) is higher than
the MJL Bangladesh ltd (0.39). Breitburn energys (0.12) cash debt coverage ratio is
lower than MJL Bangladesh ltd (0.20). In 2013, Free cash flow of Breitburn (-1,180,000,000)
company is negative but MJL (389,206,451) is better.
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APPENDIX E: RATIO ANALYSIS TABLE 2 (ILLUSTRATION)
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Interpretations of Appendix E
Liquidity Ratio:
2012
In 2012, MJL Bangladesh Ltd.s current ratio (1.82), quick ratio (1.31) and current
cash debt coverage ratio (0.26) all three ratios are less than the Abenture
resources corp. The current ratio and quick ratio of Abenture Resources
Corporation is very good position compare to MJL Bangladesh ltd. Its almost
the 10 times higher than the MJL Bangladesh ltd. So MJL is in a very risky position
in their liquidity situation.
2013
In 2013, MJL Bangladesh goes down slightly in their liquidity situation. The
Abenture corp. goes almost 50% in their current (9.54) and quick ratio (9.54). But
still they are in a very good position in their liquidity sectors. In that year Abenture
corp.s liquidity situation is better than the MJL Bangladesh limited.
Activity Ratio :
2012
The MJL Bangladesh ltd has much higher receivables turnover (110.25) than
Abenture resources corp. (82.23). Unable to compare inventory turnover due to
no inventory of Abenture resource corp and asset turnover of MJL ltd. (0.62) is
higher than Abenture resources corp. (0.19).
2013
The same things remain in 2013 with higher receivables turnover of MJL
Bangladesh ltd. (125.78) than Abenture resources corp. (88.43). The same thing
in 2013, due to no inventory of Abenture resource corp., there is no compare in
inventory turnover. In asset turnover ratio, MJL (.59) is better than the Abenture
corp. (.24). On the purpose of receivables turnover, MJL Bangladesh is in better
position.
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Profitability ratio :
2012
In profitability ratio Abenture resources corp. is in very serious condition for their
net loss. For that their earning per share, profit margin and price earnings ratios
are affected very badly. They show negative sign in their profile. In that case
MJL Bangladesh limited is in good position in profitability sector. All the ratio in
profitability is better than Abenture resources corp. Due to no dividends of
Abenture corp., there is no comparisons in payout ratio.
2013
The same things remain in 2013 for the Abenture resources corp. They cannot
recover them from the loss situation. But MJL company do well in profitability
sector than previous year accept for price earnings ratio. Due to no dividends
for Abenture corp. there are no comparisons in payout ratio.
Coverage Ratio :
2012
The higher the debt ratio, the greater the firms degree of indebtedness and the
more financial leverage it has MJL Bangladesh has higher debt ratio(0.36).
Time interest earned ratio is very poor in case of Abenture resource corp(-39) but
has fair amount in MJL Bangladesh ltd(2.78). MJL Bangladesh ltd.s free cash
flow (555,690,853) is very good whereas Abenture resources is very bad in free
cash flow which shows negative value(-$110,270).
2013
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APPENDIX F: RATIO ANALYSIS TABLE 3
(ILLUSTRATION)
Ratios MJL MJL UNITED UNITED
POWER POWER
Bangladesh Bangladesh GENERATION GENERATION
limited limited & &
(2012) (2013) DISTRIBUTION DISTRIBUTION
COMPANY COMPANY
LTD LTD
(2012) (2013)
Liquidity
Current ratio 1.82 1.20 6.47 2.41
Quick ratio 1.31 0.86 6.16 2.13
Current Cash 0.26 0.23 2.79 2.24
Debt Coverage
Ratio
Activity
Receivable 110.25 125.78 61.54 65.88
turnover
Inventory 3.27 3.82 10.52 7.07
turnover
Asset Turn over 0.62 0.59 0.26 0.15
Profitability
Profit margin on 0.09 0.10 1.00 1.00
sales
Rate of Return 0.06 0.06 0.26 0.15
on Assets
Rate of Return 0.27 0.30 10.21 5.98
on Common
Stock
Equity
Earnings per 2.73 3.03 2.33 3.00
Share
Price-earnings 29.19 24.79 7.15 12.04
Ratio
Payout Ratio 0.47 0.82 0.49 0.56
Coverage
Debt to Total 0.36 0.39 0.33 0.40
Assets
Times Interest 2.78 3.76 6.49 4.95
earned ratio
Cash Debt 0.21 0.21 0.66 0.44
Coverage Ratio
Book Value per 10.00 10.00 10.00 10.00
Share
Free Cash Flow 555690853.00 389206451.00 695301265.00 1057067483.00
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Interpretations of Appendix F
Liquidity Ratio:
2012
In 2012, MJL Bangladesh ltd company current ratio is (1.82). It seems company is
in a very vulnerable situation since their current ratio is lower than Compare to
UPGD Company (6.47). In that year UPGD company quick ratio is 1.3 which is
higher than the MJL Bangladesh (6.16).
Also in that year UPGD company current Cash Debt Coverage is 2.79 which is
higher than the MJL Bangladesh (0.26).
2013
In 2013 the local company and the benchmark company going down their
liquidity situation. But still the UPGD situation is better than local company. In that
year UPGD company quick ratio is 2.13 which is higher than the MJL Bangladesh
(0.86).Also in that year UPGD Company current Cash Debt Coverage is 2.24
which is higher than the MJL Bangladesh (0.23).
Activity Ratio :
2012
In 2012 the activity position is better than the benchmark company. Their
accounts receivable turnover is better than the MJL Company (110.25). But MJL
Bangladesh Ltd inventories turnover is 3.27 which is lower than the UPGD
Company (10.52).
2013
Here, MJL go down in their accounts receivable turnover (125.78) and asset
turnover position (.59) but better than the UPGD Company (65.88) and (0.15).
On the other hand the inventory turnover of MJL (7.07) is lower than the UPGD
(3.81).
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Profitability ratio :
2012
In 2012 the profit margin ration of UPGD (1) is higher than the MJL (0.09)
Company. Also MJL had the lower return on asset than the UPDG. So UPDG is in
good position. But in price earning situation is MJL (29.19) is 4 times higher than
the UPDG (7.15).
EPS(Earnig per share ) in MJL(2.73) company is slightly better than UPGD(2.33).
2013
Same things happened in 2013 for both company accept for the return on
asset. In that year UPDGs return on asset ratio (5.98) is greater than the MJL
(0.38). This year the price earnings ratio of MJL (24.79) Company is more than 2
times higher than the UPDG (12.04). EPS (Earning per share) in MJL (3.03) and
UPGD (3.00) which is better than previous year and haven`t as much differences
between there.
Coverage Ratio :
2012
Debt to Total assets tells us how much debt has been undertaken by a
company as against their assets. The higher the debt ratio, the greater the firms
degree of indebtedness and the more financial leverage it has. The two
companys debt ratio almost same it is in between 32% to 36%.
It means the two companies have financed close to half of its assets with debt.
As well as the two companies Time interest earned ratio is not good but in this
case Local Company is in bad position than benchmark company .on the other
hand cash debt coverage ratio is better for Benchmark Company. They have
more cash provided by operating activities than local company.
2013
In 2013 the companies coverage ratios did significantly changed, which is same
for both of the company (39%). So as a whole benchmark companies coverage
ratio is better but both companies should focused in coverage capability.
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Reference
http://www.marketwatch.com/investing/stock/abetf/financials#
http://www.breitburn.com/
http://www.abuoil.com/
http://www.united.com.bd/
http://www.mobilbd.com/
http://www.companyspotlight.com/