Intech.

net

INTECH ONLINE LIMITED (INTECH)

Basic information of Intech Online Limited (INTECH)
Listing Year

2002

Market Category A
Electronic Share Y
Share
Sponsor/Director
Percentage:
Remark

2.55

Authorized Capital in
BDT* (mn)
Paid-up Capital in
BDT* (mn)
Face Value

Govt.0

Institute 9.37Foreign 0

Public
88.08

200.0
159.0

52 Week's Range

22.3 - 46.7

10.0

Market Lot

500

Business Segment

IT Sector

Total no. of Securities 15927944

INTECH ONLINE LIMITED

Balance Sheet
As of (2006-2010)
Balance Sheet(tk.000)
2010
2009

2008

2007

2006

52191081

69922472

87039279

63220354

50450488

Deffered tax asset

deferred exp. ,Net of
amortization

1688120

83524

392186

784371

1176556

1568741

Total fixed asset

Current asset:

53879201

70398182

87823650

64396910

52019229

Inventories
advance,deposit&
prepayments

2299451

2233697

2244755

2448640

2834347

39195802

37055083

32396789

31959614

21002547

Trade & other receivales

70181507

37987218

14586273

28603095

26996642

investment in shares

164730

8182077

503846

Cash & cash equivalents

821360
11266285
0
16654205
1

642055

23030295

22586538

28016918

86100130
15649831
2

72258112
16008176
2

86101733
15049864
3

78850454
13086968
3

Non-current asset:
Property, plant &
equipment

Total current asset

Total assets
Equity:

Common Size Statement(tk.000)

2010 2009 2008 2007 2006
0.313
4
0.010
1
0.000
0
0.323
5

0.446
8
0.000
5
0.002
5
0.449
8

0.543
7
0.000
0
0.004
9
0.548
6

0.420
1
0.000
0
0.007
8
0.427
9

0.385
5
0.000
0
0.012
0
0.397
5

0.013
8
0.235
4
0.421
4
0.001
0
0.004
9
0.676
5
1.000
0

0.014
3
0.236
8
0.242
7
0.052
3
0.004
1
0.550
2
1.000
0

0.014
0
0.202
4
0.091
1
0.000
0
0.143
9
0.451
4
1.000
0

0.016
3
0.212
4
0.190
1
0.003
3
0.150
1
0.572
1
1.000
0

0.021
7
0.160
5
0.206
3
0.000
0
0.214
1
0.602
5
1.000
0

Capital & reserves :

14479949
0

13163590
0

11966900
0

10879000
0

98900000

15115221
15991471
Total Equity
1
Current liabilities & provision:
Liabilities for expense &
purchase
5866292
Advance & deposit from
customer
15000

14370103
14600600
3

21107746
14077674
6

26985960
13577596
0

27213698
12611369
8

5602893

6777750

5165860

4699430

15000

15000

15000

19390

Bank overdraft

44985

3988861

11845718

9371795

24200

Provision for income tax

701063

885555

666548

170028

12965

Total current Liabilities

6627340
16654205
1

10492309
15649831
2

19305016
16008176
2

14722683
15049864
3

4755985
13086968
3

Share Capital
Retained earnings

Total Equity & liabilities

0.869
4
0.090
8
0.960
2

0.841
1
0.091
8
0.933
0

0.747
5
0.131
9
0.879
4

0.722
9
0.179
3
0.902
2

0.755
7
0.207
9
0.963
7

0.035
2
0.000
1
0.000
3
0.004
2
0.039
8
1.000
0

0.035
8
0.000
1
0.025
5
0.005
7
0.067
0
1.000
0

0.042
3
0.000
1
0.074
0
0.004
2
0.120
6
1.000
0

0.034
3
0.000
1
0.062
3
0.001
1
0.097
8
1.000
0

0.035
9
0.000
1
0.000
2
0.000
1
0.036
3
1.000
0

Comments:
Cash Vs Current Liabilities:
INTECH has low cash and bank balances compared to other current assets.
This indicates that firm cash ratio will be lower and that the firm may be
unable to pay current liability by cash and bank balances. However their cash
balances are decreasing from 2006. Over the course of last 5 years, their cash
balance has shown a monstrous 210% decrease. This decrease indicates
management have yet not discovered this weakness in their financial structure and
working to improve.
Current Assets vs. Current Liabilities:
INTECH always maintain higher level of current over its current liabilities. Its current
assets are 38.66% higher than current liabilitiesto provideliquidity whenever need for
payoff arises. From 2006 to 2010, it is observed that Current Assets are on an
average 57.02% and the ST Liabilities are on an average 7.22%, which means
that Short-term asset are adequate to meet Short-term obligations.
Inventories vs. Profitability:
From 2006 to 2010 INTECHhave held almost constant and average inventories of
1.4% compare to its total asset. This indicates a small portion of the firms current
asset is kept idle. This indicates efficient inventory management which helps to
increase firms profitability. That means it has a small proportion of inventory
holding in its ware house. So Firms has well liquidity position and firm can show its
efficiency byconverting inventories into cash very easily.
Current Asset vs. Fixed Asset:
Over the last 5 years, fixed assets of INTECH have been remain the same with
little fluctuation in the middle with declining trend.On the other hand current asset of
INTECH has decline in 2008 and again increases.INTECH have been increasing its
current assets portion; more specifically through the increases in its cash balances
and through Accounts Receivables. In 2010,INTECH had 32% fixed asset 68%
current asset, meaning they are more reliant on liquid assets.
Short-Term Liabilities vs. Long-Term Liabilities:
Over thelast 5 years, Long-term liabilities of INTECH sharply declined, almost by
over 50%. However Short-term liabilities have been kept as at a constant
level of around 50%. We can state after reviewing the following information
that the risk of INTECHgetting bankrupt is less, and it is moving its focus from
Long-term liabilities to equity financing.
Long Term Liability vs. Long Term Asset:
From the above mentioned table we found that INTECH has only equity
financing. It does not have any long term liability. Therefore nit will not be able to
take the tax advantage of paying interest before tax. So it does not have the risk of
bankruptcy due to inability to pay the interest expense.
Debt vs. Equity:
From 2006 to 2010 on an average INTECH has debt less than 10% in its
capital structure. It indicates the firm is more reliant on internal financing thereby

exposed toless risk.

On the other hand the firm has about 90% of its assets financed from internal
sources. In the most recent year, this proportion increased to 2010 the portion of
equity increases to 96%.

INTECH ONLINE LIMITED

Income Statement
As of (2006-2010)

Revenue from
operation
Cost of goods sold
Gross Profit
expenses for
operation
Administrative
Expenses
marketing exp.
Amortization of
deferred exp.

Income
2010
399249
48

Statement(tk.000)
2009
2008
2007
328399 315937 398875
65
24
15
336568
0
138890 324720 6
39924 32701 31269 36521
948
075
004
829
615831 504651 515725 575238
3
6
8
1
401002 388947 411432 374217
1
9
9
9

2006
395568
29
821584
38735
245
743633
9
404596
8

982250

423500

360900

389660

947069

Depreciation
Total admin
&operatingExp.
Profit/(Loss) from
Operation
Add: nonoperatingincome
Profit before
interest and tax

392186
177393
91
292821
61
10642
787
210927
3
12752
060

930053
146812
08
280406
37
10694
608
642786
3
17122
471

232440
12519

392185
169151
21
269397
93
43292
11
264851
2
69777
23
148039
0
54973

392185
181652
57
284416
62
80801
67
245530
3
10535
470

Financial exp.
Profit/(Loss) before

392185
182587
22
280104
02
46906
73
318143
9
78721
12
138233
1
64897

482592
10052

9320
17113

Common Size Statement(tk.000)

2010
2009
2008
2007
2006
1
0
1
0.1542
47
0.1004
39
0.0246
02
0.0098
23
0.4443
18
0.7334
3
0.266
57
0.0528
31
0.319
401
0.0058
22
0.313

1
0.0042
29
0.995
771
0.1536
7
0.1184
37
0.0128
96
0.0119
42
0.5559
91
0.8529
36
0.142
834
0.0968
77
0.239
711
0.0420
93
0.197

1
0.0102
78
0.989
722
0.1632
37
0.1302
26
0.0114
23
0.0124
13
0.5353
95
0.8526
94
0.137
028
0.0838
3
0.220
858
0.0468
57
0.174

1
0.0843
79
0.915
621
0.1442
15
0.0938
18
0.0097
69
0.0098
32
0.4554
12
0.7130
47
0.202
574
0.0615
56
0.264
13
0.0120
99
0.252

1
0.0207
7
0.979
23
0.1879
91
0.1022
82
0.0239
42
0.0235
12
0.3711
42
0.7088
7
0.270
361
0.1624
97
0.432
858
0.0002
36
0.432

Taxation
Income tax Expenses
Profit/(Loss) for the
Year

620
138908
8
13908
708

81

33

878

151

126052
4
52292
57

496520
50007
86

390615
96622
62

12965
11315
106

579
0.0347
9
0.348
371

618

001

031

622

0.0383
84
0.159
235

0.0157
16
0.158
284

0.0097
93
0.242
238

0.0003
28
0.286
047

Comments:
Gross Profit Percentage:
The firm has been steadily improving in managing its direct cost related with
its sales level. On an average the firms cost of goods sold is less than 1% of its
sales each year, as a result a more than95% of its huge revenue is generated as the
firms gross profit.
EBIT vs. Financial Expenses:
The firm has sufficient EBIT to pay interest and generate adequate earnings
for their shareholders. INTECH have been very efficient in managing its interest
expenses, paying only around 1% up to the year 2010.

Ratio Analysis of Intech Online Limited

Activity analysis
Short-term activity ratios
Year
Inventory turnover ratios

2010
0

2009
.06

2008
.1346

2007
1.39

2006
.34

Avg. no. of days

inventory in stock

Undefined

6084

2712

263

1073

Receivable turnover ratio

1.73

1.42

1.37

1.73

1.71

Avg no. of days

receivable outstanding

211

257

267

211

214

Payable turnover ratios

.0117

.0226

.0213

.5300

.4941

Avg. no. of days payable

outstanding

31197

16151

17136

689

739

Analysis:
Activity ratios describe the relationship between the firm's level of operations
(usually defined as sales) and the assets needed to sustain operating activities. The
higher the ratio, the more efficient the firm's operations, as relatively fewer assets
are required to support a given level of operations (sales). Here several key activity
ratios of Intech Online Ltd. are calculated with proper interpretations and
implications in its business operations.
Inventory Turnover Ratio:
The inventory turnover ratio measures the efficiency of the firm's inventory
management. A higher ratio indicates that inventory does not remain idle but rather
turns over rapidly from the time of acquisition to sale.

From the above chart, we can find that although average number of days
INTECHkeeps its inventories in stock is fluctuating, it is always below 1 with the
maximum being 1.39. As this is an IT firm, so it cost of goods sold is too low and
therefore inventory turnover ratio is very low.
Average No of days Inventory in Stock:
Average No. of Days Inventory in Stock says the average number of days inventory
is held in hand until it is sold. Lower value of this ratio indicates that the firm needs
less time to convert its inventory into sales.

From the above table we see that average no of days in stock is too high as
INTHECH main operation does not involve selling goods.

Receivables Turnover Ratio:

The receivables turnover ratios measures the effectiveness of the firm's credit
policies and indicates the level of investment needed in receivables to maintain the
firms sales level. Receivables turnover ratio measures how many times receivables
turn over into cash in a year. Higher the receivables turnover ratio indicates that
receivables are collected quickly from the customer. So, higher the ratio is better.

From the analysis of five year receivable turnover ratio we see that the Receivable
turnover ratio is fluctuating. However this ratio is very low, always remaining above
1.3 times. It indicates firm is not efficient in managing its receivable.
Average No. of Days Receivables Outstanding:
Average no. of day's receivables outstanding measures the average no. of days
required to convert receivables into cash. Lower the ratio indicates that it takes less
no. of days to convert receivables into cash.

Average no. of day's receivables outstanding ratios of the company shows that the
company requires on an average more than 200 days collecting its receivable. From
2006 to 2010 average no of days in receivables is always under 267 days, with that
being only 211 days in 2007 and 2010. It shows that the firm takes very little time
to collect its receivables.
Payable Turnover Ratio:
Payable turnover ratio measures how many times the suppliers are paid in a year.
Lower the ratio is better because then the company pay its creditor less frequently,
and having more liquidity in hand as accruals.

From the above graph we see that payable turnover ratio was highest during 2007
& 2006 but it pays very infrequently to its supplier during 2008, 2009 & 2010. It
indicates INTHECH payment to its suppliers very fluctuating.

Average No. of Days Payable Outstanding:

Average no. of days payable outstanding measures the time needed to pay the
suppliers. Higher the ratio is better because higher the average no. of days payable
outstanding indicates that the company can delay its payment of payables and has
more liquidity in hand.

As average no. of days payable outstanding moves in opposite directions with

payable turnover ratio, this ratio is high for INTHECH 2008 to 2010 but it was very
low during 2006 & 2007. It is always constant at being above 140 days, meaning
the firm is keeping more payables amount in hand for longer period of time.

Long term Activity Ratios

Year

2006

2007

2008

2009

2010

.76

.62

.36

.47

0.74

.30

.26

.20

.21

.24

Fixed Asset Turnover

Ratio
Total Asset Turnover
Ratio

Analysis:
These ratios measure the efficiency of long term capital investment in generating
sales. These ratios indicate the level of utilization of fixed assets to generate certain
level of sales. Trend of this ratios indicates that the how efficient the firm in utilizing
its fixed assets.
Fixed Asset Turnover Ratio:

This ratio measures using the fixed asset how much sales the firm generates.
Higher the ratio is better for the firm, because higher the ratio indicates that the
firm is efficient to utilize the fixed assets in case of generating sales.

From the above graph we can see that INTHECH hasfluctuating trend in this ratio.
Over the years, INTHECH fixed assets are less than 1. In 2010 this ratio was .74.
This indicates that by utilizing Tk 1 worth of fixed asset, INTHECH is generating .74
worth of sales. Over the course of 5 years, INTHECHlow in 2008 and highest in 2006
& 2010 which are .76 & .74 respectively.
Total Assets Turnover Ratio:
This ratio measures by utilizing its total assets how much sales the firm generates.
Higher the ratio is better for the firm, because higher the ratio indicates that the
firm is efficient to utilize the assets in case of generate sales.

From the above graph we can see that the ratio is in constant level of being over .
20. This shows by utilizing Tk 1 asset, the firm is generating Tk .20 worth of sales.
This indicates that the firm is not efficient in managing its total assets to generate
sales.

Liquidity Analysis
Analysis:
Liquidity means the ability of the firm to use its Current Assets to pay its Short Term
obligations. ST lenders and ST creditors are more concern about the liquidity
analysis of a firm, because they want to know that whether a firm has ability to pay
its short term obligation in-time or not.
Cash Cycle:
Cash cycle captures the interrelationship between sales, collections and trade
credit. Cash cycle is the appropriate measures to identify the time period, which is
tied up with the operation of a company. Shorter the cash cycle of a firm is, more
efficient it is in managing its operations and cash. Longer the cycle is, less efficient
and increasing financial cost is indicated. If the cash cycle of a firm is negative, it
indicates the firm is collecting cash even before it has sold its products. The cash
cycle can be calculated as Cash Cycle = No. of days inventory in stock + No. of day
receivables remain outstanding - No. of days payable outstanding

Table: Year wise Cash Cycle of INTECH

Year

2006

2007

2008

2009

2010

Cash Cycle

584

-215

-14157

-9810

undefined

From the above table it is identifiable that INTHECH has a negative cash cycle within
the last 3 years. Although it is fluctuating and decreasing over the years, it is
nevertheless an impressive showing of the firm's credit management.

Table: Year wise Current, Quick and Cash Ratio of INTHECH

Year

2006

2007

2008

2009

2010

Current Ratio

16.58

5.85

4.91

8.21

17.00

Quick Ratio

15.98

5.68

4.75

7.99

16.65

Cash Ratio

5.89

1.57

11.96

.84

0.15

Current Ratio:
Current ratio indicates the firm's ability to pay its short term obligation with its short
term assets. Itis more than 1 for INTHECH indicating they isable to pay off its entire
current liability with its current assets. However it has been fluctuating over the
years. In the last year, INTHECHs current ratio was 17.00, indicating it had Tk17.00
current asset to pay off its Tk 1 current liability. Also this high current ratio also
shows the good liquidity condition of the firm.

Quick Ratio:
Since not all the elements of current asset of a firm cannot be readily converted into
cash, quick ratio eliminates those components which cannot be converted into cash
i.e. prepaid expenses and depreciation. From the above table we can identify that in
2006 the firm has Tk 15.98 quick assets (cash, receivables and marketable
securities) to pay its Tk 1 taka current liability which reduce to 4.75 in 2008 but
thenincrease to 16.65 in 2010. This gives indication that though the firm quick ratio
is fluctuating, it has sufficient cash to pay its current liabilities.
Cash Ratio:
Cash ratio is the most conservative measuring tool of liquidity position of the
company. From the above table we can see that in 2010 the firm had only 0.15 taka
of cash to pay its 1 taka current liability. However, INTHECH have worse this
situation over the years. Over the last 5 years, this ratio was high in 2008 and
lowest in 2010 which are 0.15 & 11.96 respectively. As the cash ratio is decreasing
and INTHECH has very small amount of cash to pay its current liability or short term
obligations, something the management should look into to improve confidence of
both stockholders and creditors in the market.

Long term Debt and Solvency Analysis

The analysis of firm capital structure is necessary to understand long term risk and
return prospect. The following table shows some important ratios that shades some
light into the firm's capital structure.
INTECH is an all equity firm it does not have Long term Debt and Solvency Ratios.

Profitability Analysis of INTECH

Profitability Ratios

2006

2007

2008

2009

2010

Gross Margin

0.98

0.91

0.99

0.99

Operating Margin

0.27

0.20

0.14

0.14

0.27

Margin before interest and tax

0.43

0.26

0.22

0.24

0.32

Pretax Margin

0.43

0.25

0.17

0.20

0.31

Net Profit Margin

0.29

0.24

0.16

0.16

0.35

Return on Asset (ROA)/ Return

.07

.06

.03

.03

.09

.04

.05

on Total Capital (ROTC)

Return on Equity (ROE)

.10

.08

.12

Analysis:
Any Shareholders or Equity Investor mostly concern with the profitability analysis of
the firm, because of following three reasons:
1. To earn profit,
2. To sustain profit, and
3. To increase profit.
The following ratios measure these factors of the firm:
Gross Margin:
This ratio interprets the relationship between Sales and Manufacturing Expenditure
of a firm. Higher Ratio indicates higher profitability of the company. From the above
table we see that gross margin ofINTECH remained more than 90% from 20062010. At that point it was around 0.097, meaning for every Tk 1 of sales, it had
gross margin of Tk 0.097. It indicates INTECH has efficiency to control cost of
goods sold. Over the last 5 years, this ratio is showing persistently stable.
Operating Margin:
Over the last 5 years, this ratio is showing fluctuating result. In 2010, this figure
was 0.27 meaning for every Tk 1 sales; INTECH maintained profit of Tk 0.27
from its core business.
Pretax Margin:
From 2006 to 2010, this ratio decreased by more than 50%. On 2008 and onwards,
this ratio was stable at around 0.17- meaning for every Tk 1 sales the firm had a
pretax earnings of Tk 0.17.
Net Profit Margin:
For INTECH, this ratio is fluctuating for last 5 years. In 2010, this ratio was 0.35;
indicating for every Tk 1 sale, INTECH had a net income of Tk 0.35.
Return on Asset/Return on Total Capital:
This ratio illustrates the overall return earned by the firm to all its investors
(both shareholders and creditors). Higher the ratio is better for investors of the
company, because it indicates the firm is earning more return. As visible from
the following chart, this figure has been continuously decreasing for INTECH
from 2006 to 2009, and reached to 0.09 in 2010. It indicates for every Tk 1
invested in INTECH, investors are racking up a return of Tk 0.09.
Return on Equity:
ROE means the overall return made available to all equity holders of the
company.
INTECH showed a decreasing trend in its ROE over the course of last 3 years. ROE in
2010 showed an increase of 300% from that of 2008. In 2010, this figure was 0.12,
meaning for every Tk 1 invested, equity holders received a return of Tk 0.12.

Operating, Financial Leverage and Total Leverage

Table: OLE, FLE and TLE of INTECH
Year

2006

2007

2008

2009

2010

OLE

2.26

3.47

4.48

4.15

3.13

FLE

1.50

1.09

1.39

1.50

.92

TLE

3.342

3.78

6.25

6.25

2.87

Operating Leverage Effect (OLE):

Operating leverage measure a certain percentage change of operating profit that
occurs due to a certain percentage of change in the sales revenue. Higher OLE
means the firm bears higher risk; because any small percentage change in sales
would result in a larger deviation in the firm's EBIT. From table we see that INTECH
had excessive amount of OLE present throughout last 5 years. However this figure
was 2.26 in 2006 and increases from 2007 to 2010. It indicates, for every 1 %
change in the sales figure, EBIT would change by 2.26% for m2006. Major reason
for any leverage effect to exist is due to the existence of fixed cost in the firms total
cost structure.
Financial Leverage Effect (FLE):
Financial leverage measures certain Percentage changes in net income that occurs
due to a percentage change in operating profit. From table we see that FLE of
INTECH was1.5 in 2006 & 2009 but in others years OLE remain less than 1.50. It
indicates that if in 2010 EBIT changed by Tk 1 then the net income of the firm
would change by Tk 1.50. This leverage effect exists due to the presence of fixed
financial costs in the firm's total cost structure.
Total Leverage Effect (TLE):
The multiplication of OLE and FLE results the TLE. Total leverage measure
Percentage change in net income that occurs due to a percentage change in the
firm's sales revenue.
From the graph we see that previously, INTECH had significantly higher amount of
TLE present in 2008-09. However it has dropped significantly afterwards. In 2010
the firm had a total leverage of 2.87- meaning if sales of INTECH changed
(increase/decrease) by 1 % then net income would have changed by 2.87%.

Earnings per Share

Basic EPS measure earning available to common shareholder. As INTECH has no
preferred stock and convertible securities so no diluted EPS will be present.

Table: Basic EPS of INTECH

Year

2006

2007

2008

2009

2010

Basic EPS

2.06

.42

.81

.96

.40

From the above table we see that Basic EPS of INTECH have constantly decreased at
a souring rate. Only within one year, EPS of the firm decreased about 80%from
2006 to 2010 which showcasing the firm's decreased in profitability.

Analysis of Inventory
INTECH follows FIFO method to evaluate their inventory. In their annual reports, it
disclosed that the inventories were measured at lower of cost and at net realizable
value, cost being determined under FIFO method. Costs it included in its
measurement were expenditures incurred in acquiring the inventories for their
service purposes and other costs incurred in bringing them to their existing location
and condition.