CHAPTER - ONE

INTRODUCTION

1.1 Introductory Background

Financial performance measurement is very important for the institutions because it indicates
the organization’s performance. That’s mean how the organization is running. Besides that it
also helps to take the future decision and action. However, this term paper is prepared on the
basis of Financial Performance of Grameenphone Ltd.

Grameenphone is the leading telecommunications operator of Bangladesh is a part of Telenor

Group Which has presence in 13 markets across Europe and Asia. Launched in 1997,
Grameenphone is the market leader in telecommunication service providing industry in
Bangladesh with more than 65 million subscribers (as of January, 2018).

Different Tools are used by individuals to conduct a quantitative analysis of information in a

company’s financial statements. Ratios are calculated from current year numbers and are then
compared to previous years, other companies, the industry, or even the economy to judge the
performance of the company. Ratio analysis is predominately used by proponents of
fundamental analysis.

The process of evaluating businesses, projects, budgets and other finance-related entities to
determine their suitability for investment; Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When
looking at a specific company, the financial analyst will often focus on the income statement,
balance sheet, and cash flow statement.

In addition, one key area of financial analysis involves extrapolating the company’s past
performance into an estimate of the company’s future performance.

1.2 Background of the Study

As an obligatory requirement of MBA program under the Department of Accounting I
prepare this term paper to fulfill the requirements of Principles of Accounting course. As a
student of business study I gain plenty of theoretical knowledge. Now it’s the time to use this
theoretical knowledge practically.

But it’s not an easy task to compare two institutions financial position. Although by using the
theoretical knowledge we are able to understand the field collecting data from their website &
annual report, which help us to cope up the situation. Now a day’s telecommunication sector
takes great places in this country, the functions of such institutions are relatively new and
challenging to compare. After doing this term paper as a commerce background student I can
know the past and current financial position of Grameenphone Ltd in the market.

1.3 Statement of the Problem:

Finance is the heart of any organization. For keeping an organization running on its feet it’s
very necessary that it has a solid financial background. Grameenphone is the largest telecom
company in our country. The telecom industry is still growing rapidly and Grameen Phone is
its top player. These telecom companies add a huge amount of value in our economy. To
understand their business and measure their performance financial analysis is a must. By
analyzing financial terms we will have the knowledge how much a company like Grameen
Phone is adding value in our economy and how well this company is doing in current
economic situation. We can also find out the solution to their problems and key success
factors of this company. From this study we can also suggest the other company to how to
perform better by following the success factor of this company.

The major objective of a business firm is to increase the wealth of its shareholders. Financials
of a firm is the mirror of the ultimate performance of a firm besides its brand preference and
some other indices. Even the other indices are used to assure the profitability in both short
and long term. The study dealt with the financial indices to indentify the strength, weakness
and opportunity for the company and tried to recommend some improvement scope from the
theoretical perspective. This study aims to see the performance of Grameenphone for 2018 in
various indices.
1.4 Objectives of the Study
The basic objective of any financial statement is to fulfill information needs of the intended
users. However, there are different kinds of financial statements for different purposes.
Broadly we can divide the objectives in two different types:
1. General Objective of the Study
2. Special Objective of the Study

General Objective of the Study are prepared for general users keeping general needs in
mind and thus may not provide all such information that users may want. It might be as
follows:
 The report is meant to relate the financial performance analysis theories learnt in
class to the context of a real world scenario to understand their practical
implications.
 To introduce the functional departments of Grameenphone Ltd and brief idea
about Grameenphone.
 Evaluating financial performance of Grameenphone in comparing with other
company to bring out the position of these companies in the market.
 This analysis gives users a good understanding of how well the company utilized
its resources in generating profit and shareholder value.
 It attempts to measure a company’s ability to pay off its short-term debt
obligations.
 Used to determine the overall level of financial risk a company and its
shareholders face.
 It helps to enrich financial health and performance of a company.

Special Objective of the Study, however, are prepared keeping the information needs of
certain users and may provide such additional information which general purpose financial
statements may not contain. Usually special purpose financial statements focus a particular
area and provide information in that regard. Special purpose financial statements may be or
may not be prepared under the same accounting framework which is used to prepare general
purpose financial statements.
 CHAPTER - TWO
CONCEPTUAL ISSUE

2.1 Overview of Grameenphone Ltd

Grameenphone the leading telecommunications operator of Bangladesh is part of Telenor
Group Which has presence in 13 markets across Europe and Asia. Launched in 1997,
Grameenphone is the market leader in telecommunication service providing industry in
Bangladesh with more than 65 million subscribers (as of January, 2018).

The idea of providing universal mobile phone access throughout Bangladesh, including its
rural areas, was originally conceived by Iqbal Quadir, who is currently the founder and
director of the Legatum Center for Development and Entrepreneurship at MIT. He was
inspired by the Grameen Bank microcredit model and envisioned a business model where a
cell phone can serve as a source of income. After leaving his job as an investment banker in
the United States, Quadir traveled back to Bangladesh, after meeting and successfully raising
money from New York based investor and philanthropist Joshua Mailman, and worked for
three years gaining support from various organizations including Nobel Peace Prize laureate
Muhammad Yunus of Grameen Bank and the Norwegian telephone company, Telenor. He
was finally successful in forming a consortium with Telenor and Grameen Bank to establish
Grameenphone. Quadir remained a shareholder of Grameenphone until 2004.

Grameenphone received a license for cellular phone operation in Bangladesh from the
Ministry of Posts and Telecommunications on November 28, 1996. Grameenphone started
operations on March 26, 1997, the Independence Day in Bangladesh. Grameenphone
originally offered a mobile-to-mobile connectivity (widely known as GP-GP connection),
which created a lot of enthusiasm among the users. It became the first operator to reach the
million subscriber milestone as well as ten million subscriber milestones in Bangladesh.
Grameenphone is now one of the leading telecommunication service providers in Bangladesh
with more than 65.866 million subscribers as of January 2018.

In November 28, 1996 Grameenphone was offered a cellular license in Bangladesh by the
Ministry of Posts and Telecommunications with a view to covering the whole country with a
good quality network. And with a great surprise after almost 10 years of its operation,
GrameenPhone has over 10 million subscribers. Presently, there are about 147 million
telephone users in the country, of which, a little over one million are fixed-phone users and
the rest mobile phone subscribers. Starting its operations on March 26, 1997, the
Independence Day of Bangladesh, Grameen Phone has come a long way. It is a joint venture
enterprise between Telenor (55.8%), the largest telecommunications service provider in
Norway with mobile phone operations in 12 other countries, and Grameen Telecom
Corporation (34.2% ), a non-profit sister concern of the internationally acclaimed micro-
credit pioneer Grameen Bank.

The other 10% shares belong to 10%to general retail and institutional investors. Over the
years, Grameen Phone has always been a pioneer in introducing new products and services in
the local market. GP was the first company to introduce GSM technology in Bangladesh
when it launched its services in March 1997.The technological know-how and managerial
expertise of Telenor has been instrumental in setting up such an international standard mobile
phone operation in Bangladesh.

The total number of Mobile Phone subscriptions has reached 147.000 million at the end
of January, 2018
The Mobile Phone subscribers are shown below:
OPERATOR SUBSCRIBER (IN MILLIONS)
Grameen Phone Ltd. (GP) 65.866
Robi Axiata Limited (Robi) 44.225
Banglalink Digital Communications Limited 32.356
Teletalk Bangladesh Ltd. (Teletalk) 4.553
Total 147.000
* Subscribers in Million

Literature Review
Many institutions measure their financial performance analysis to know their performance
comparing with some other financial institutions which helps to take the future decision and
action. It also helps to show the present situation where they are standing now and which year
was the best performed. That’s why, I have chosen the topic to prepare the report “Financial
Performance & Share price movement of a listed company (Grameen Phone Ltd).” I
have chosen this topic to measure the performance of Grameen Phone Ltd during last few
years. The art of transforming data from financial statements into information that is useful
for informed decision making is financial analysis. Financial analysis involves the use of
various financial statements. These statements do several things. First the balance sheet
summarizes the assets, liabilities and owners’ equity of a business at a moment in time
usually the end of a year or a quarter. Next the income statement summarizes the revenue and
expenses of the firm over a particular period of time, again usually a year or a quarter.

Every item reported in a financial statement has significance. We know a company had a
certain amount of cash on the balance sheet but we do not know whether the amount
represents an increase over prior year or whether it is adequate in relation to the company’s
need for cash. To obtain such information, we need to compare the amount of cash with other
financial statements data.

Comparison can be made on a number of different bases:

1. Intercompany Basis: This basis compares an item or financial relationship within a
company in the current year with the same item or relationship in one or more prior years.
2. Industry Averages: This basis compares an item or financial relationship of a company
with industry averages published by financial ratings organizations.
3. Intercompany Basis: This basis compares an item or financial relationship of one
company with the same item or relationship in one or more competing companies.
Analysts make these comparisons on the basis of the published financial statements of the
individual companies.

Ratio Analysis expresses the relationship among selected items of financial statement data.
Ratio analysis is very important factor for measuring the financial performance measurement.
There are several ratios and grouped in the four sections which are used to prepare the report
and it is studied from the Book (e.g. C.P. Jonce). One important section of ratios is
Profitability or return and data are availability from the book (b.g Mohammad Akter
Hossain).

There are several ratios are gathered from the websites. For the ratio analysis, Balance sheet
and Income statement of Grameen Phone Ltd is very important and data are availability from
the Annual report (e.g. Annual report 2014-2017).
 CHAPTER - THREE
DATABASE
3.1 Scope of the Study
The report mainly analyzes the existing services of Grameen Phone Ltd. The term paper also
analyzes the Financial performance & share price movement of the companies over the years
and evaluates the performance Grameen Phone Ltd. There were some restrictions in
disclosing some information as it was assumed to be confidential. Therefore I could not
include those in my term paper. Some of the information that I got from secondary sources
were not arranged consistently. As some companies do not update their web site, therefore it
was difficult to get the most recent data.

3.2 Methods of Collecting Data

Methods of collecting data mean the methods by which way the data have been collected.
Primary data are collected through face to face conversation basis and secondary data are
collected from different articles and annual report of Grameen Phone Ltd.

Primary Sources of Data are collected by:

 Interviewing the Finance and Accounts Manager of Grameen Phone Ltd.

 Interviewing some executives under Finance Department.
 Informal conversation with other colleagues.

Secondary Sources of Data are collected from:

 Annual Report of Grameen Phone Ltd from 2014-2017.

 Manuals and Articles collected from Finance Department of Grameen Phone Ltd.
 Relevant articles and journals available in the web site of Grameen Phone Ltd.

3.3 Limitations of the Study

The main limitations of the study are as follows:
 Lack of adequate knowledge about financial position of any organization.
 Sufficient records, publications, facts and figures are not available. These constraints
narrowed the scope of the real analysis.
 For the reason of confidentiality, some useful information cannot be expressed in this
report.
 Lack of available information about financial analysis of the company.
 Unavailability of sufficient written documents as required making a comprehensive
study.
 In many cases up to date information are not published.
 Because of the unwillingness of the busy key persons, necessary data collection
became hard.
 Lack of experiences has acted as constraints in the way of meticulous exploration on
the topic.
 Lack of available time to prepare such a large report.
 CHAPTER - FOUR
FINDINGS & ANALYSIS

Ownership Structure of GP:

The shareholders of Grameenphone Ltd. contribute their unique, in-depth experience in both
Telecommunications and development. It is a joint venture enterprise between Telenor
(55.8%), the largest telecommunications service provider in Norway with mobile phone
operations in 12 other countries, and Grameen Telecom Corporation (34.2% ), a non-profit
sister concern of the internationally acclaimed micro-credit pioneer Grameen Bank. The other
10% shares belong to general retail and institutional investors. The technological know-how
and managerial expertise of Telenor has been instrumental in setting up such an international
standard mobile phone operation in Bangladesh.

Being one of the pioneers in developing the GSM service in Europe, Telenor has also helped
to transfer this knowledge to the local employees over the years. The international
shareholder brings technological and business management expertise while the local
shareholder provides a presence throughout Bangladesh and a deep understanding of its
economy. Both are dedicated to Bangladesh and its struggle for economic progress and have
a deep commitment to Grameenphone and its mission to provide affordable telephony to the
entire population of Bangladesh.

4G
Bangladeshi mobile operators Grameen Phone, Robi Axiata and Banglalink have rolled 4G
services in the capital and other major cities, shortly after receiving 4G concessions from the
government. The Daily Star writes that the trio are currently offering faster speeds under their
existing 3G subscription plans. Robi Axiata rolled out its 4G service in all 64 district
headquarters, with managing director Mahtab Uddin Ahmed saying: ‘Before noon, about
35,000 customers of Robi were using the 4G service.’ The operator currently has around
1,500 LTE towers across Bangladesh, and the number is expected to reach 2,500 by the end
of the month. For its part, GrameenPhone launched its LTE network in Dampara, Khulshi
and Nasirabad in Chittagong, while it expects to expand coverage to Baridhara and Gulshan
(Dhaka) shortly. Banglalink, meanwhile, has rolled out 4G services in Chittagong and
Khulna.

Basic Types of Analysis Review done in This Report:

Financial analysis is the use of financial statements to analyze a company’s financial
position and performance and to assess future financial performance. It consists of three
broad areas; those are profitability analysis, risk analysis and analysis of sources and uses of
funds.

Profitability analysis is the evaluation of a company’s return on investment. It focuses on a

company’s sources and levels of profits and involves identifying and measuring the impact of
various profitability drivers. It also includes evaluation of the two major sources of
profitability margins (the portion of sales not offset by costs) and turnover (capital
utilization). Profitability analysis also focuses on reasons for changes in profitability and the
sustainability of earnings.

Risk analysis is the evaluation of a company’s ability to meet its commitments. Risk analysis
involves assessing the solvency and liquidity of a company along with its earnings variability.
Since risk is of foremost concern to creditors, risk analysis is often discussed in the context of
credit analysis. Still, risk analysis is important to equity analysis, both to evaluate the
reliability and sustainability of company performance and to estimate a company’s cost of
capital.

Analysis of sources and uses of funds it the evaluation of how a company is obtaining and
deploying its funds. This analysis provides insights into a company’s future financing
implications

Ratios working on here:

1. Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and
long-term obligations. To gauge this ability, the current ratio considers the total assets of a
company (both liquid and illiquid) relative to that company’s total liabilities. The current
ratio is called “current” because, unlike some other liquidity ratios, it incorporates all current
assets and liabilities. The current ratio is also known as the working capital ratio

2. Quick Ratio:
Quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a
company’s ability to meet its short-term obligations with its most liquid assets. For this
reason, the ratio excludes inventories from current assets. The quick ratio measures the dollar
amount of liquid assets available for each dollar of current liabilities. A quick ratio of 1.5
means that a company has $1.50 of liquid assets available to cover each $1 of current
liabilities. The higher the quick ratio, the better the company's liquidity position. Also known
as the “acid-test ratio" or "quick assets ratio."

3. Total Debt Equity Ratio:

A debt ratio used to measure a company's financial leverage, calculated by dividing a
company’s total liabilities by its stockholders' equity. The D/E ratio indicates how much debt
a company is using to finance its assets relative to the amount of value represented in
shareholders’ equity. The result may often be expressed as a number or as a percentage.
Given that the debt/equity ratio measures a company’s debt relative to the total value of its
stock, it is most often used to gauge the extent to which a company is taking on debts as a
means of leveraging (attempting to increase its value by using borrowed money to fund
various projects). A high debt/equity ratio generally means that a company has been
aggressive in financing its growth with debt.

4. Fixed asset turnover ratio:

The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-
asset investments - specifically property, plant and equipment (PP&E) - net of depreciation.
A higher fixed-asset turnover ratio shows that the company has been more effective in using
the investment in fixed assets to generate revenues.

5. Return on assets:
Return on asset is an indicator of how profitable a company is relative to its total assets. ROA
gives an idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as "return on investment".
6. Return on common equity:
The amount of net income returned as a percentage of shareholders equity. Return on equity
measures a corporation's profitability by revealing how much profit a company generates
with the money shareholders have invested. The ROE is useful for comparing the profitability
of a company to that of other firms in the same industry.

7. Gross Profit Margin:

Gross profit margin is a financial metric used to assess a firm's financial health by revealing
the proportion of money left over from revenues after accounting for the cost of goods sold.
Gross profit margin serves as the source for paying additional expenses and future savings.

8. Operating Profit Margin Ratio:

Operating margin is a measurement of what proportion of a company's revenue is left over
after paying for variable costs of production such as wages, raw materials, etc. It can be
calculated by dividing a company’s operating income (also known as "operating profit")
during a given period by its net sales during the same period. “Operating income” here refers
to the profit that a company retains after removing operating expenses (such as cost of goods
sold and wages) and depreciation. “Net sales” here refers to the total value of sales minus the
value of returned goods, allowances for damaged and missing goods, and discount sales.

9. Net profit Margin ratio:

Profit margin is part of a category of profitability ratios calculated as net income divided by
revenue, or net profits divided by sales. Net income or net profit may be determined by
subtracting all of a company’s expenses, including operating costs, material costs (including
raw materials) and tax costs, from its total revenue. Profit margins are expressed as a
percentage and, in effect, measure how much out of every dollar of sales a company actually
keeps in earnings. A 20% profit margin, then, means the company has a net income of $0.20
for each dollar of total revenue earned.

10. Total Asset turnover:

This ratio’s value is the company’s sales or revenues generated relative to the value of its
assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with
which a company is deploying its assets in generating revenue. The Asset Turnover ratio is a
key component of DuPont analysis.
11. Long term debt to total asset ratio:
Long term debt to total asset is a measurement representing the percentage of a corporation's
assets that are financed with loans and financial obligations lasting more than one year. The
ratio provides a general measure of the financial position of a company, including its ability
to meet financial requirements for outstanding loans. A year-over-year decrease in this metric
would suggest the company is progressively becoming less dependent on debt to grow their
business.

12. Long term debt to equity:

The ratio is calculated by taking the company's long-term debt and dividing it by the book
value of common equity. The greater a company's leverage, the higher the ratio. Generally,
companies with higher ratios are thought to be more risky. A high ratio usually indicates a
higher degree of business risk because the company must meet principal and interest on its
obligations. Potential creditors are reluctant to give financing to a company with a high debt
position. However, the magnitude of debt depends on the type of business. For example, a
bank may have a high debt ratio but its assets are generally liquid. A utility can afford a
higher ratio than a manufacturer because its earnings are more stable.

Analysis of the Financial Data

Current Ratio: Current asset ÷ Current liabilities (figure in millions)
Year 2017 2016 2015 2014
Current assets 14,363 10,941 14,865 16,993
Current liabilities 73,132 68,079 61,402 8,580
Current Ratio

The current ratio is mainly used to give an idea of the company's ability to pay back its
liabilities. Here we see that, in 2014 it was 0.24, in 2013 it was 0.22, in 2012 it was 0.22, in
2011 it was 0.60 and in 2010 it was 0.69 and back in 2009 it was .57. From 2011 to 2014 it is
in a decreased slope. Higher ratio is better because for every one dollar of current liability
they will have more dollars worth asset. So we can see that Grameen Phone was always kept
an average current ratio. It is pretty much average and same in 2014 as it was back in 2005.
This ratio did not improve. It is very necessary to improve the ratio because this low ratio
means Grameen Phone have a low ratio of payback for its liabilities. This is not a very good
message to the lenders and stockholders.

Quick ratio = (current assets – inventories) / current liabilities

The quick ratio is more conservative than the current ratio because it excludes inventories
from current assets. The ratio derives its name presumably from the fact that assets such as
cash and marketable securities are quick sources of cash. Inventories generally take time to
be converted into cash, and if they have to be sold quickly, the company may have to accept a
lower price than book value of these inventories. As a result, they are justifiably excluded
from assets that are ready sources of immediate cash.

Year 2017 2016 2015 2014

Current assets 14,363 10,941 14,865 16,993
Inventories 496 565 387 560
Current liabilities 73,132 68,079 61,402 78,580
Quick ratio

Just like the current ratio the quick ratio is also in an average situation. It is now in a position
where it was ten years back. Quick ratio did not improve in recent years. We can see an
upward slope of ratio from 2007 to 2010 and then we have a downward slope from 2011 to
2014. Higher quick ratio is not very good for a company.

High quick ratio means they have more unused cash or cash equivalent asset in hand to
payback debt, which is good but from the companies perspective it is just unused money
which they could have invested in market and make more profit. So from here we can come
to a conclusion that the ratio we are seeing here for Grameen Phone is very good. They are
elegantly handling the liabilities and cash on hand.

Total Debt Equity Ratio: Total liabilities ÷ Shareholders equity

Year 2017 2016 2015 2014
Total liabilities 97,318 96,927 99,308 10,480
Shareholders' 28,690 33,572 31,365 31,141
equity
 Total Debt to
Equity

We can see an upward slope of debt financing of Grameen phone since the beginning of
2005. This is not very good scenario because we know that lower ratio for debt to equity is
better because lower debt has better ability of cash pay. But we also know that debt ratio is
good for a company to a certain point. Grameenphone is using heavy debt to finance their
operation. Thus they are generating high revenue, but it is also bring back the high risk
problem. Higher risk = higher return. So debt financing is going well for Grameen phone
because they are generating heavy revenue every year. Debt to equity ratio examines the
firm’s capital structure and indirectly its ability to meet current debt obligations.

Aggressive leveraging practices are often associated with high levels of risk. This may result
in volatile earnings as a result of the additional interest expense. If a lot of debt is used to
finance increased operations (high debt to equity), the company could potentially generate
more earnings than it would have without this outside financing. If this were to increase
earnings by a greater amount than the debt cost (interest), then the shareholders benefit as
more earnings are being spread among the same amount of shareholders.

However, if the cost of this debt financing ends up outweighing the returns that the company
generates on the debt through investment and business activities, stakeholders’ share values
may take a hit. If the cost of debt becomes too much for the company to handle, it can even
lead to bankruptcy, which would leave shareholders with nothing.

Return on Assets: Net income ÷ Total asset

Year 2017 2016 2015 2014
Net Income 21,448 17,148 19,803 17,505
Total Assets 1,26,008 1,30,500 1,30,673 1,35,221
Return On Assets (%) .17 .13 .14 .12

ROA tells us what earnings were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. Here in
Grameen phone we can see that it has a very good ROA against its asset. We know that
Grameen phone has a huge amount of asset. So if they have a return of 12%-17% on average
it is a huge factor of achievement. Because they are making a good return against the asset
they have invested.

From 2014 we can see they have upward slope on return on asset. The assets of the company
are comprised of both debt and equity. Both of these types of financing are used to fund the
operations of the company. The ROA figure gives investors an idea of how effectively the
company is converting the money it has to invest into net income. The higher the ROA
number, the better, because the company is earning more money on less investment. This
ratio is a healthy sign for Grameen phone, because their net income is in a very fine position
against its asset. The return on asset is very stable here on Grameen phone and there’s a
reason behind it.

They are Telecom Company and their asset’s do not fluctuate or vary from year to year. As
for income it does not heavily fluctuate, so we have here a very stable ROA n Grameen
phone.

Return on Equity: Net income ÷ Shareholder equity

Year 2017 2016 2015 2014
Net Income 21,448 17,148 19,803 17,505
Shareholders' equity 28,690 33,572 31,365 31,141
Return on Equity (%) .75 .52 .61 .54

Return on equity reveals how much profit company is generating with the money
shareholders have invested. Here we see that, in 2017 it was 75%, in 2016 it was 52%, and in
2015 it was 61%. From 2014 to 2017 the return on equity slope is getting higher and it is
standing highest at 75% in 2017. Higher return (%) is better because from shareholders
perspective it is the most considerable things for share holder to identify how the company is
doing. So we see that ROE is getting higher and higher in Grameen phone. It was
comparatively lower back in 2014- 2016 but since then it is giving much better return and this
is a very good message to the shareholders and investors. They will be highly encouraged and
motivated to invest in Grameen phone’s stock and buy its share because of its high return on
equity.
Total asset turnover ratio: Revenues / Total Assets
Year 2017 2016 2015 2014
Revenue 1,28,400 1,08,000 1,02,663 96,624
Total assets 1,26,008 1,30,500 1,30,673 1,35,221
Total asset turnover 1.01 .83 .78 .71
ratio

Generally, the higher the asset turnover ratio, the better the company is performing, since
higher ratios imply that the company is generating more revenue per dollar of assets. Here we
have a very good scenario of total asset turnover ratio of Grameen phone. It is very stable
since 2014 and it’s staying on its top pick in 2017. The asset of Grameen phone is growing on
an average every year and it’s making huge revenue because of it. This is a very good sign
for any industry.

Yet, this ratio can vary widely from one industry to the next. As such, considering the asset
turnover ratios of an energy company and a telecommunications company will not make for
an accurate comparison. Comparisons are only meaningful when they are made for different
companies within the same sector.

Long term debt to total assets ratio: long term debt / total asset
Year 2017 2016 2015 2014
Long-term liabilities 24,186 28,847 27,906 25,500
Total assets 1,26,008 1,30,500 1,30,673 1,35,221
Ratio .19 .21 .20 .18

Here we can see that Grameenphone is not reducing the dependency in debt in long term. It’s
still the same dependent as it was before back in 2014. But as we know this is a telecom
company and so having dependent on this much of debt is completely ok. The good thing is
that this ratio shows very stable curve, it means that the company is never too much relying
on debt but it stabilized it and it’s going on good for them. Back in 2014-2016 they have
reduced the amount of dependency on debt but they are back again in 2014 with 19% of debt
dependency.
Long term debt to equity: Long term liabilities / Shareholders equity
Year 2017 2016 2015 2014
Long-term liabilities 24,186 28,847 27,906 25,500
Shareholders' equity 28,690 33,572 31,365 31,141
Long-term Debt to .85 .84 .87 .80
equity

Here the ratio indicates if the company is getting dependent on debt against its equity. A
higher debt-equity ratio however is not always a bad thing. This is because debt is a cheaper
source of finance compared to equity because of tax savings. This ratio varies from business
types and within industry. As Grameenphone is a telecom company this financing is not bad
and it is sometimes good for company like this.

Here we can see the dependency is at its highest pick in 2017. Grameenphone always had a
good number of debts using against its shareholders equity. This is also good when the
industry is on run and the economy is good this kind of finance helps the organization to gain
handful amount of profit.

Net Profit Margin Ratio: Net income/ Net sales (Revenue)

Year 2017 2016 2015 2014
Net Income 21,448 17,148 19,803 17,505
Revenue 1,28,400 1,08,000 1,02,663 96,624
Net Profit Margin .16 .15 .18 .17

Here we have better return of profit margin in recent years in Grameen phone. This means
that they are turning more profit earned as revenue. Back in 2017 we can see that it was only
16% which was moderate from that perspective, and it was lowest in 2016.

A company’s individual numbers (like revenue or expenditures) rarely indicate much about
the company’s profitability, and looking at the earnings of a company often doesn't tell the
entire story. Increased earnings are good, but an increase does not mean that the profit margin
of a company is improving. In the year of 2016 net profit margin was 15% which is the
highest; it was also good in 2017 which is 16%. Higher of this ratio indicates better situation
of the company because it represents how much out of every dollar of sales a company
actually keeps in earnings.

Subscriber Growth
Year 2017 2016 2015 2014 2013
Subscriber 62.00 51.00 47.60 45.30 36.50
(Million)

We can see in this chart that the subscriber number is booming from year to year. It was only
5.5 million back in 2005 comparative to more than 55 million in 2017. Grameenphone have
the largest share of subscriber in telecom sector in Bangladesh. They have 41% of markets
subscriber in their hand. This number is huge and this is what keeps their business running
very smoothly. They are the leader of telecom sector in our country.

Share Price Movement of Grameen Phone Ltd

A share price is the price of a single share of a number of saleable stocks of a company,
derivative or other financial asset. In layman's terms, the stock price is the highest amount
someone is willing to pay for the stock, or the lowest amount that it can be bought for.

Share prices change because of supply and demand. If more people want to buy a stock
(demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to
sell a stock than buy it, there would be greater supply than demand, and the price would fall.

The market is the vast array of investors and traders who buy and sell the stock, pushing the
price up or down. The ultimate goal of buying shares is to make money by buying stocks in
companies you expect to do well, those whose perceived value (in the form of the share
price) will rise.

Market Information of GP Figure in BDT

Last Trading Price 462 Closing Price 462

Last Update 4.00PM Days Range 460.50-464.70

Change 0.4 Days Value(mn) 66.743
0.09% 52 weeks moving Range 319.20-513.10
Opening Price 462.20 Day’s Volume (Nos) 144,369
Adjusted Opening Price 461.60 Days Trade (Nos) 774
Yesterday Closing Price 461.60 Market Capitalization 623,298.490

Basic Information

Authorized Capital (mn) 40,000.00 Debut Trading

Date
Paid-up Capital (mn) 13,503.00
Type of Instrument Equity
Face/par Value 10.0
Market Lot 1
Total No. of Outstanding
1,350,300,022
Securities Sector Telecommunication

For the Dividend Dividend per Per value of Dividend Date of AGM/EGM
Year Rate Share (in Share (in Type
BDT) BDT)
2017 100% 10.00 10.00 Cash Recommended in
(Final) Board Meeting, 29-
Jan-18

2017 105% 10.50 10.00 Cash Board Meeting, 12-Jul-

(Interim) 17

2016 90% 9.0 10.00 Cash Approved in 20th

(Final) AGM on 20 April 2017

2016 85% 8.50 10.00 Cash Board Meeting, 17-Jul-

(Interim) 16
2015 60% 6.00 10.00 Cash Approved in 19th
(Final) AGM on 19 April 2016
2015 80% 8.00 10.00 Cash Board Meeting, 14-Jul-
(Interim) 15
2014 65% 6.50 10.00 Cash Approved in 18th
(Final) AGM on 21 April 2015
Stock Statistics of GP
Market Capitalization (BDT) 623,298,490,155.20
Shareholders’ Equity (BDT) 33,572,284,000
Book Value Per Share (BDT) 24.86
Last Audited P/B Ratio (x) 0
Forward P/E 22.75
EPS (BDT) 16.68
Audited P/E (x) 27.7
Trading Currency Bangladeshi Taka
Market Category A
Market Lot 1
CFI Code ESVUFR
Credit Rating AAA
Last Dividend Declaration Date Jan 30, 2018
AGM Date Apr 19, 2018

SWOT Analysis of GP
Strengths:
 Largest Subscriber base in Bangladesh
 Shareholders with strong operation capabilities
 Well-recognized brand name and reputation
 Strong distribution channels and customer service
 Leadership in product development and non-voice services
 Experienced management team
 Nation-wide coverage
 Good Human Resource and Infrastructure Installation all over the country through
Bangladesh Railway and Grameen Bank.
 First mover advantage
 Loyal Customer Base
 High Ethical Standard.
 Financial Soundness.
Weakness:
 Comparatively higher call rates
 Dependency on prepaid products
 Lack of value added services within SIM
 Excessive GP-BTCL calls rates
 Limited FnF (Friends and Family Numbers)
 Too much inside out thinking in the company.
 Different departments not working together.
 Inadequate interconnection with BTTB.
 Sometimes a tendency to be arrogant
 No long-term Distribution/Channel strategy.
 High employee turnover.

Opportunities:
 Focus on additional requirement.
 Economic growth of Bangladesh.
 Improved technological improvement and network coverage
 Focus on CR program
 Increased socialization
 Demand for new & innovative products.
 Provide online banking facilities through mobile phone
 Increase the brand value through IPO (Initial public Offering)
 New and better interconnection agreement
 Huge need for telecom services
 Declining prices for handsets
 Growth in other operator will give more connection.

Threats:
 Aggressive marketing from other operators
 Increased marketing/operating costs
 Threat of Potential new entrants
 Possibility of Merger among competitors
  After converting in to PLC more information has to be disclosed
 Increased bargaining power of the consumers
 Price war.
 Switching power of customer increased
 More rigid government regulations.
 Change of government might lead to competitors having more clout
 Sabotage of installation.
 Non-co-operation of government and fixed PSTN (Public Service Telephone
Network).

Findings and discussion:

The purpose of the study was to find out the financial performance of Grameenphone. I’ve
done the calculation of ratios in the report. From the calculation I’ve found some important
points about the strategy they are practicing in Grameenphone.

First they are not keeping money or equivalent asset on hand, they are constantly using it and
re investing it to the market to make more profit.

Secondly they use a lots of debt financing. From the debt equity ratio we can see that from
2005 its debt equity ratio is raising and it is still increasing. From here they are making a lot
of profit.

Thirdly they are taking certain risk to finance their operation like keeping low liquid asset
and debt financing. But from here they are gaining most of their profits.

Fourthly all of their turnovers are very good. So they have a secure background to do
business for a long time and from here they are getting the courage to go for risk financing.

Fifthly their profit margin ratio is better than ever, so they are making huge profit besides
making revenue. This is also making them stronger to grow as a company.

They have a perfect background of finance so there is very less to suggest about it. I think
little more disclosure in the balance sheet and annual report would be much more helpful.
Conclusion:
Grameenphone Ltd. is one of the leading multinational telecom companies in Bangladesh. I
had the opportunity to work for this company during my internship program. This internship
program has helped me to explore new horizons of business environment. This report has
provided insights on the financial activities within the limited scope. The financial functions
are so vast and complex that one report is not enough to write everything about it. However,
the fullest measure was taken to make this report fruitful and informative.

Although this small analysis of financial ratios shows an outstanding image of the
organization; The Company has many places to develop because the demand is still thriving
for good service. It has got highly skilled people and they know better than anyone how to
fulfill the demand of the people and take the organization to a new level. I believe this
company will keep on growing whatever the situation is.

Finally, I would say that this internship at Grameenphone Ltd. has made my practical
knowledge of Business Administration better and made my MBA education more complete
and applied.

Recommendation
During my internship period I have had a lot of experience in my organization. How they
works, their work pressure, banks rules & regulation, services for the client. But the
organization has more scope to improve their system for keep them in ranking first in the
competitive sector. So, I give some suggestion to the organization:
 Improve/ upgrade their office software for providing proper/ faster service.
 Ftp network speed upgrade for clearing or other purpose.
 They can come up with more products for their client.
 Employed more talented people for providing better service.
 Providing more equipment in the branch for faster, superior services.
 Arrange more different seminar regarding on how to improve work skill and do better
in the future.

BOOK REFERENCE
To make this report I used lots of study related books, websites and annual reports. The books
are:
 Corporate Finance (Ross/ Westerfield/ Jaffe), Financial Statement Analysis (John
Wild/ Lwopolada/ Subramanyam).
 International Financial Management (Jeff Madura).
 Capital Investment & Financial Decisions (Neil Seitz / Mitch Ellison). Ahmed, M.B.
 Berger, A.N. and Humphrey, D.B; Efficiency of financial institutions: international
survey and directions for future research.

Web sites are:

 www.grameenphone.com
 www.dscbd.org
 www.wikipedia.org
 Grameen Phone’s annual report from 2014-2017.