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Financial Analysis of Usmania

Glass Sheet Factory Limited


Financial Analysis of Usmania
Glass Sheet Factory Limited
Presenters
Faisal Mahmud Roll # 01
Tanvir B. Anwar Roll # 02
Monwar Hussain Roll # 55
Ahmed Minhazul Arefin Roll # 59
Md. Parvez Hossain Roll # 64
Contents

• Current Financial Standings


• Leverage Ratios
• Liquidity Ratios
• Efficiency Ratios
• Profitability Ratios
• Market-value Ratios
• Dupont Analysis
• EFR
• Take-Aways
Current Financial Standings
• Started production in 1960.
• Located in Kalurghat Industrial Area, Chittagong.
• 51% share is held by Government.
• Produces Glass Sheet.
• Financial statement prepared by Hawlader Yunus &
Co.
• Estimated Net Worth: Around 665 million taka last
financial year.
• Market price of stock 1622 taka.
• Dividend paid last year 30,625,000 taka.
Leverage Ratios

• Debt Ratio
• Debt Ratio (Including Short Term)
• Debt-Equity Ratio
• Times-Interest Earned
Debt Ratio

Debt Ratio= (Long-term debt + value of leases) / (Long-term debt + value of


leases + equity)

Year Long-term debt Long-term debt Debt Ratio


+ value of + value of
leases leases + equity
665,536,580.0
2004-2005 306,242,353.0
300,773,240.0 0
638,807,487.0 0.46
2003-2004 0
0 0 0.47
298,913,820.0 619,330,695.0
2002-2003 0 0 0.48
Debt Ratio (including short term)

Debt ratio (including short term debt) = (Long-term debt + value of leases
+ short-term debt) / (Long-term debt + value of leases + short-term debt
+ equity)

Year Long-term debt Long-term debt Ratio


+ value of + value of
leases + short-leases + short-
term debt term debt +
equity
358,553,034.0 717,847,261.0
2004-2005 0 707,268,573.0
369,234,326.0 0 0.50
2003-2004 0
350,054,654.0 0
670,471,529.0 0.52
2002-2003 0 0 0.52
Debt-Equity Ratio

Debt-equity ratio = (Long-term debt + value of leases) / Equity

Year Long-term Equity Debt-equity


debt + value ratio
of leases
306,242,353.0 359,294,227.0
2004-2005 0
300,773,240.0 0
338,034,247.0 0.85
2003-2004 0
298,913,820.0 0
320,416,875.0 0.89
2002-2003 0 0 0.93
Times-Interest Earned Ratio

Times-interest earned = (EBIT + depreciation) / Interest

Year EBIT + Interest Times-


depreciation interest-
earned Ratio
2004-2005 79,183,823.00 4,926,120.00 16.07
2003-2004 92,931,328.00 6,944,370.00 13.38
2002-2003 83,544,366.00 7,811,369.00 10.70
Liquidity Ratios

• Net Working Capital to Total Assets


• Current Ratio
• Quick Ratio
• Cash Ratio
• Interval Measure
Net Working Capital to Total Assets

Net working capital to total assets = Current assets-current liabilities /


Total assets

Year Current assets- Total assets Net working


current capital to total
liabilities 717,847,261.0 assets
2004-2005 293,628,650.00 0 0.41
707,268,573.0
2003-2004 279,377,556.00 0 0.40
670,471,529.0
2002-2003 241,590,241.00 0 0.36
Current Ratio

Current ratio = Current assets / Current liabilities

Year Current assets Current Current ratio


liabilities
2004-2005 345,939,331.00 52,310,681.00 6.61
2003-2004 347,838,642.00 68,461,086.00 5.08
2002-2003 292,731,075.00 51,140,834.00 5.72
Quick Ratio

Quick ratio = (Cash + short-term securities + receivables) / Current


liabilities

Year Cash + short- Current Quick ratio


term securities liabilities
+ receivables
2004-2005 287,020,270.00 52,310,681.00 5.49
2003-2004 258,768,940.00 68,461,086.00 3.78
2002-2003 204,038,390.00 51,140,834.00 3.99
Cash Ratio

Cash ratio = (Cash + short-term securities) / Current liabilities

Cash + short-
Year term Current Cash ratio
securities
281,526,783.0 liabilities
2004-2005 0 52,310,681.00 5.38
241,139,594.0
2003-2004 0 68,461,086.00 3.52
203,715,708.0
2002-2003 0 51,140,834.00 3.98
Interval Measure Ratio

Interval measure = (Cash + short-term securities + receivables) / (Costs


from operations/365)

Cash + short-
Year term Costs from Interval
securities + operations/36 measure
receivables
287,020,270.0 5
2004-2005 0 425,842.20 674.01
258,768,940.0
2003-2004 0 440,605.38 587.30
204,038,390.0
2002-2003 0 433,066.99 471.15
Efficiency Ratios

• Sales to Asset Ratio


• Sales to Net Working Capital
• Days in Inventory
• Inventory Turnover
• Average Collection Period
• Receivables Turnover
Sales to Assets Ratio

Sales to assets ratio = Sales / Average total assets

Year Sales Avg. total Sales to


196,572,581.0 assets
712,557,917.0 assets ratio
2004-2005 0 0 0.28
223,725,790.0 688,870,051.0
2003-2004 0 0 0.32
217,077,653.0 670,471,529.0
2002-2003 0 0 0.32
Sales to Net Working Capital

Sales to net working capital = Sales / Average net working capital

Year Sales Avg. net Sales to net


working working
196,572,581.0 capital
286,503,103.0 capital
2004-2005 0 0 0.69
223,725,790.0 260,483,898.5
2003-2004 0 0 0.86
217,077,653.0 241,590,241.0
2002-2003 0 0 0.90
Days in Inventory

Days in inventory = Average inventory / (Cost of goods sold/365)

Year Avg. COGS/365 Days in


inventory inventory
2004-2005 62,367,381.50 393,211.05 158.61
2003-2004 74,457,702.00 406,337.04 183.24
2002-2003 73,378,900.00 425,728.38 172.36
Inventory Turnover

Inventory turnover = Cost of goods sold / Average inventory

Year COGS Avg. Inventory


143,522,035.0 inventory turnover
2004-2005 0 62,367,381.50 2.30
148,313,019.0
2003-2004 0 74,457,702.00 1.99
155,390,860.0
2002-2003 0 73,378,900.00 2.12
Average Collection Period

Average collection period (days)= Average receivables / (Sales/365)

Year Avg. Sales/365 Average


receivables collection
period
2004-2005 95,029.50 538,555.02 0.18
2003-2004 101,239.00 612,947.37 0.17
2002-2003 107,205.00 594,733.30 0.18
Receivables Turnover

Receivables turnover = Sales / Average receivables

Year Sales Avg. Receivables


196,572,581.0 receivables turnover
2004-2005 0
223,725,790.0 95,029.50 2,068.54
2003-2004 0
217,077,653.0 101,239.00 2,209.88
2002-2003 0 107,205.00 2,024.88
Profitability Ratios

• Net Profit Margin Ratio


• Return on Assets Ratio
• Return on Equity Ratio
• Payout Ratio
Net Profit Margin Ratio

Net profit margin ratio = Net Profit Before Tax / Net Sales

Year EBIT-tax Sales Net profit


margin
2004-2005 50,800,230.00 196,572,581.0 0.26
2003-2004 71,051,000.00 0
223,725,790.0 0.32
2002-2003 64,174,738.00 0
217,077,653.0 0.30
0
Return on Assets Ratio

Return on Assets = Net Profit Before Tax / Total Assets

Year EBIT-tax Average total Return on


assets asset
(ROA)
2004-2005 50,800,230.00 712,557,917.0 0.07
2003-2004 71,051,000.00 0
688,870,051.0 0.10
2002-2003 64,174,738.00 0
670,471,529.0 0.10
0
Return on Equity Ratio

Return on equity = Net Income / Shareholders’ equity

Year Earnings Average Return on


available for equity equity (ROE)
common
stockholders 348,664,237.0
2004-2005 45,368,043.00 0
329,225,561.0 0.13
2003-2004 64,086,333.00 0
320,416,875.0 0.19
2002-2003 56,363,369.00 0 0.18
Payout Ratio

Payout ratio = Dividends Per Share / EPS

Year Dividend per Earnings per Payout ratio


share share
2004-2005 70.00 104.82 0.67
2003-2004 50.00 183.10 0.27
2002-2003 60.00 161.04 0.37
Market-value Ratio

• Price-earnings Ratio
• Dividend Yield
• Market to Book Ratio
Price-earnings Ratio

Price-earnings ratio = Stock price / Earnings per share

Year Stock price Earnings per Price-


share earnings
2004-2005 1,622.00 104.82 ratio
15.47
2003-2004 1,355.00 183.10 7.40
2002-2003 782.00 161.04 4.86
Dividend Yield

Dividend yield = Dividend per share / Stock price

Year Dividend per Stock price Dividend


share yield
2004-2005 70.00 1,622.00 0.04
2003-2004 50.00 1,355.00 0.04
2002-2003 60.00 782.00 0.08
Market to Book Ratio

Market to book ratio = Stock price / Book value per share

Year Stock price Book value Market to


per share book ratio
2004-2005 1,622.00 633.17 2.56
2003-2004 1,355.00 536.98 2.52
2002-2003 782.00 543.52 1.44
Dupont System

ROA = (EBIT – tax) / assets = sales/assets * (EBIT-tax)/sales

Year Sales/assets (EBIT-tax)/sales ROA


2004- 0.27 0.26 0.07
2005
2003- 0.32 0.32 0.10
2004
2002- 0.32 0.30 0.10
2003
Dupont System

ROA

0.12
0.1 0.1
0.1
0.08 0.07
0.06
0.04
0.02
0
2002-2003 2003-2004 2004-2005
Dupont System

ROE = (EBIT – tax – interest) / equity = assets/equity * sales/assets * (EBIT-


tax)/sales * (EBIT-tax-interest)/(EBIT-tax)

Year assets sales (EBIT-tax) (EBIT-tax- ROE


/equit /asse /sales interest)/
y ts (EBIT-tax)
2004- 2.00 0.27 0.26 0.90 0.13
2005
2003- 2.09 0.32 0.32 0.90 0.19
2004
2002- 2.09 0.32 0.30 0.88 0.18
2003
Dupont System

ROE

0.2 0.19
0.18

0.15 0.13

0.1

0.05

0
2002-2003 2003-2004 2004-2005
External fund requirement

EFR = [(A / S) * Δ Sales] - [(L / S) * Δ Sales] - (Forecasted Sales * Net profit


margin * Retention Rate)

External A/S change in L/S Forecasted Net Retention


fund sales sales (3 yrs profit Rate
requirment avg.) margin
-41,299,422. 0.32 15,886,093. 0.10 215,275,453.5 0.23 0.89
33 67 0
Take-Aways
• Usmania Glass Factory is the only public enlisted
glass sheet company, 51% share of which is held by
government.
• Leverage Ratios: debt is still more than 50% of the
total capital Employed, but it is declining every
year.
• Last year it has earned 16 times more than interest
paid.
• Liquidity Ratios: the company has high liquidity,
e.g. 6 to 1 current ratio and almost 6 to 1 quick
ratio.
Take-Aways (continued)
• They hold enough liquid assets to meet the
expenses for almost two years.
• Efficiency Ratios: Increasing investment in assets
but lesser cash generated by it due to decreasing
sales.
• Inventory management is good.
• Profitability has fluctuated a bit in last three years.
• The dividend payout ratio is on increase.
• Market Value Ratios: High investors’ confidence of
the growth prospect reflected in the high share
price despite not so high dividend.
Thank You
Contents

• Current Financial Standings


• Leverage Ratios
• Liquidity Ratios
• Efficiency Ratios
• Profitability Ratios
• Market-value Ratios
• Dupont Analysis
• EFR
• Take-Aways