Introduction

The presented report is aimed to present understanding and interpretation of different

financial ratios in the context of judging the financial performance of an organization. The
financial ratio revealed on the basis of different financial records and figures for a particular
organization, indicates the existing status of the company. In addition to this, there are a
number of different types of financial ratios for a company which are aimed to show different
aspects of financial performance of the organization namely profitability, Efficiency, and
financial stability of the organization for a long term. From the perspective of an investor or a
shareholder, it is quite crucial to have proper information regarding existing financial ratio of
the company before making worthy investment within an organization .

In context to this, the paper shade some intensive lights over thorough interpretation of
different ratios of Singer Bangladesh Limited. The primary objective of the paper is to reflect
financial performance of the organizations for last five financial years (i.e. 2010 to 2014) on
the basis of the interpretation and review of financial ratio of both the organizations.

OBJECTIVE OF THE STUDY

To know about a companys past present and future position.

To understand and compare a companys internal position to make
necessary aid.

Limitation of the Study

Analysis based on company (SBL) annual report (2010-2014).

We cant get the current Annual Report of SBL (2015).

Sources

SBL Annual Report 2010,2011,2012,2013,2014..

Dhaka Stock Exchange.
SBL Main Office.
Company Profile

Company Name:
SINGER BANGLADESH LIMITED (SBL)

Corporate History.
# Year of Establishment of/ Incorporation 1979
# Commencement of Leasing Business 1987
# Establishment of Branch in the main port city,
Chittagong 1991
# Listed on the Dhaka Stock Exchange 1993

Vision
To be the most admired and respected family company in the country.

Mission
Our mission is to improve the quality of life of people by providing comforts and
conveniences at affordable prices.
Analysis of financial performance
LIQUIDITY RATIO

Current assets
1. Current Ratio:
Current liabilities

Year 2010 2011 2012 2013 2014

Current Asset 3,458,768, 3,021,928, 3,608,570, 3,353,351, 2,885,407,6
235 484 973 215 15
Current 574,225,96 806,773,41 1,206,866, 745,237,89 1,112,835,0
Liabilities 0 9 027 6 57
Current Ratio 6.02 3.75 2.99 4.50 2.59

Interpretation

The Current ration measures then ability firms to meet its short-term
obligations. Generally the ratio should be 1 or greater than 1. In context of
SBL, we see the ratio was 6.02 in 2010 and then in 2011 it fall to 3.75. The
ratio decrease by about 37.7%. It is a huge change. The reason behind is that
the current asset decrease by 12.63% from 2010 to 2011. On the other hand, current
liability increases by 40% from 2010 to 2011. In 2012, again the ratio falls down to 2.99. But
in 2013, the ratio again increases to 4.5. The reason is the decrease current liability by
38.25%. In 2014, we see the lowest current ratio is 2.59 in 5 years. In 2014, we see current
asset decrease by 13.95% and on the other hand, current liability increase by 49.26% which
was huge increase.

Recommendation
SBL should concentrate on decreasing current liabilities.
 Current assets-Inventory-advances
2. Quick ratio =
Current liabilities

Year 2010 2011 2012 2013 2014

Current Asset 3,458,768, 3,021,928, 3,608,570, 3,353,351, 2,885,407,
235 484 973 215 615
Inventories 1,009,211, 1,392,109, 2,211,400, 1,254,086, 1,522,208,
317 377 270 045 959
Advances & 157,878,21 175,350,79 320,990,26 264,538,56 329,926,40
Prepayment 5 2 4 0 8
Quick Asset 2,291,678, 1,454,468, 1,076,180, 1,834,726, 1,033,272,
703 315 439 610 248
Current 574,225,96 806,773,41 1,206,866, 745,237,89 1,112,835,
Liabilities 0 9 027 6 057
Quick Ratio 3.99 1.80 0.89 2.46 0.93

Interpretation

Quick ratio for an organization also shows more liquidly of the organization without
considering inventory of the company. In context of value of quick ratio, we see the highest
ratio in 2010 which was 3.99 and the lowest ratio ratio .89 in 2012. The reason is that we see
in the above table, inventories increase by 119% and advances increase by 103.3% from 2010
to 2012. But in 2013 again the ratio increase from 0.89 to 2.46 and again fall to 0.93 in 2014.
So among the 5 years, 2012 and 2014 was not good for quick ratio. The company face huge
liquidity problem in the two year.

Recommendation
SBL should concentrate on proper inventory management so that they can get quick cash and
ultimately they can improve quick ratio.

SOLVENCY RATIO

Total Debt
3. Debt-Equity Ratio =
Total Equity

Debt to Equity
ratio
Year 2010 2011 2012 2013 2014
Total Debt 3,281,569 27,185,528 494,195,65 25,547,124 218,425,52
5 0
Total Equity 3,140,517, 2,198,742, 2,539,588, 2,632,795, 1,527,152,
715 427 795 742 540
Debt to Equity 0.10% 1.24% 19.46% 0.97% 14.30%
ratio

Interpretation

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. In the above graph, we see the highest
slop is 19.46% which is in 2012 and the lowest slope is 0.10% which is in 2010. It indicates
that in 2010 the company had little debt compare to equity but in 2012 it had huge debt
financing in the company. So its impact we see in 2012s profit. In 2013, the ratio decrease
to .97%. The reason behind is that about 95% debt financing decrease from 2012 to 2013. In
2014, again debt financing increase by 7 multiple. Thats why in 2014 again the ratio
increased.

Recommendation

Company should maintain reasonable debt financing and should increase equity capital.

Total Equity
4. Equity Ratio =
Total Assets

Equity
ratio
Year 2010 2011 2012 2013 2014
Total 3,140,517, 2,198,742, 2,539,588, 2,632,795, 1,527,152,
Equity 715 427 795 742 540
Total 4,119,072, 3,680,265, 4,493,198, 4,236,217, 3,821,156,
Assets 427 079 755 590 134
Equity 76.24% 59.74% 56.52% 62.15% 39.97%
ratio

Interpretation
The Equity ratio indicates how much equity a company is using to finance its assets relative
to the amount of value represented in total assets. The highest equity used in 2010 about
76.24% and the lowest equity in 2014 about 39.97%.In 2011 and 2012, the ratio decrease and
again 2013, it increased to 62.15%. In 2014, it was 39.97%, the reason is that we see , equity
decreased by 51.62% but total assets decreased by only 7.31%.

Recommendation

The overall equity ratio is pretty good for the company except 2014. So the company should
increase equity financing.

Total Debt
5. Debt Ratio =
Total Assets

Debt ratio
Year 2010 2011 2012 2013 2014
Total Debt 3,281,569 27,185,528 494,195,65 25,547,124 218,425,52
5 0
Total Assets 4,119,072, 3,680,265, 4,493,198, 4,236,217, 3,821,156,
427 079 755 590 134
Debt to Equity 0.08% 0.74% 11% 0.63% 5.72%
ratio
Interpretation

The debt ratio measures the proportion of total assets financed by the firms
creditors. In context of SBL, in 2010 the debt ratio was 0.08% which was the
lowest among the years. Then 2011, the ratio slightly increase. But
dramatically, in 2012 the ratio increased to 11% which was 93.27% more than
2011.Then in, 2013 it decrease to .60. and second highest ratio in 2014 is
5.72%.

Recommendation

Company must decrease the ratio by decreasing total liabilities or increasing

total asset in better position.

EFFICIENCY/ACTIVITIES RATIO

Credit sales
6. Receivables turnover =
Average Receivables

Account Receivable
Turnover
Year 2010 2011 2012 2013 2014
Net Sale 4,693,875, 5,308,963, 6,512,329, 6,424,319, 7,138,267,
115 530 283 576 722
Beginning 453,377,36 542,510,11 740,479,17 972,843,69 945,872,53
AR 5 1 6 5 1
Ending AR 542,510,11 740,479,17 972,843,69 945,872,53 880,603,71
1 6 5 1 4
Average 497943738 641494643 856661435 959358113 913238122
AR .5 .5 .5
AR 9.43 8.28 7.60 6.70 7.82
turnover
Interpretation

The receivables turnover indicates the number of times on the average that
receivables turnover each year. In another word, the accounts receivable
turnover ratio measures how many times a business can collect its average
accounts receivable during the year. So higher ratio would be more favorable.
In context of SBL, we see the companys receivable turnover in 2010 is 9.43
that means it collect money after every 39 days. We see in 2013 the turnover
was 6.70 which means it collect receivable after every 55 days. So it is
comparative unfavorable that 2010. After 2010, the turnover respectively
decreased in 2011 and 2012. But in 2014 the turnover then increased from 6.7
to 7.82 which is favorable.

Recommendation
Company must increase the ratio by decreasing total liabilities or increasing
total asset for achieving better position.
Sales
7. Total asset turnover: =
Total assets

Asset
Turnover
Year 2010 2011 2012 2013 2014
Net Sale 4,693,875, 5,308,963, 6,512,329, 6,424,319, 7,138,267,
115 530 283 576 722
Total Asset 4,119,072, 3,680,265, 4,489,242, 4,236,217, 3,821,156,
427 079 680 590 134
Asset 1.14 1.44 1.45 1.52 1.87
Turnover
Interpretation

The total Asset turnover ratio measures how effectively the firm uses its total
assets to help generate sales. If the present total assets turnover ratio is higher
than previous it would be better for the companys present performance. In
context of SBL, we see, TAT was 1.14 in 2010 and then it gradually increased
from 2011 to 2014. In 2014, the turnover was 1.87 which was the highest
among them. So 2014 is favorable comparing among others years.

Recommendation

By the analysis we can say that, company must increase their sales. And it
should utilize its unproductive asset more considerably.

Cost of goods sold

8. Inventory turnover =
Average Inventory
Inventory
Turnover
Year 2010 2011 2012 2013 2014
Cost of goods 3,597,485, 4,060,019, 4,893,862, 4,819,605, 5,422,091,
sold 580 636 710 734 405
Beginning 740,366,12 1,009,211, 1,392,109, 2,211,400, 1,254,086,
Inventory 8 317 377 270 045
Ending 1,009,211, 1,392,109, 2,211,400, 125408604 152220895
Inventory 317 377 270 5 9
Average 874788723 120066034 180175482 173274315 138814750
Inventory 7 4 8 2
Inventory 4.11 3.38 2.72 2.78 3.91
Turnover

Interpretation

Turnover of inventory shows the frequency of having inventory in the stock. High inventory
turnover shows that company is turning its inventory quite frequently, which is an indication
of high sales of the company. In context of inventory turnover ratio, the existing position is
not satisfactory because it increased by slightly. In 2010, it had the turnover 4.11 but then
next three years it decrease consequently which indicates the companys improper
management of inventory. This ratio is still slightly low in comparison to the industry.

Recommendation

The company should manage inventory properly and efficiently. Thats why it should
concentrate on inventory management systems.
Gross Margin
9. Gross margin ratio =
Sales

Gross Margin
Ratio
Year 2010 2011 2012 2013 2014
Gross Margin 1,101,274, 1,401,215, 1,809,502, 1,785,470, 1,839,667,
294 003 674 518 465
Sales 4,693,875, 5,308,963, 6,512,329, 6,424,319, 7,138,267,
115 530 283 576 722
Gross Margin 23.46% 26.39% 27.79% 27.79% 25.77%
Ratio

Interpretation

Gross profit margin ratio demonstrates the level of gross profits earned by the company over
a certain period of time. This ratio indicates the profitability of the organization after paying
cost of goods sold. The Gross profit margin should be high as it provides a leverage to the
organization for achieving adequate amount of net profits after deducting heavy tax and high
cost of capital.

In context of SBL, the gross margin profit ratio has shown a positive growth from 2010 to
2012. In 2013, the ratio constant. But in 2014, the gross margin ratio dramatically fall down
2.02%. This is showing that during the period, the operating expenses of the organization, in
terms of high cost of raw material, high labor cost and a bad product mix of the organization,
have been enhanced.

Recommendation
 So the company should concentrate on reducing operating expense properly in order to get a
positive gross margin ratio.
Net Profit
10. Net Profit Ratio =
Sales

Net Profit
Ratio
Year 2010 2011 2012 2013 2014
Net Profit 396,790,96 399,596,74 650,962,59 382,129,13 362,343,30
9 2 1 9 3
Sales 4,693,875, 5,308,963, 6,512,329, 6,424,319, 7,138,267,
115 530 283 576 722
Net Profit 8.45% 7.53% 10.00% 5.95% 5.08%
Ratio

Interpretation

Net profit margin ratio demonstrates final profits of the firm in the form of percentage
of its total sales. It is the most crucial ratio which indicates the ultimate profitability of the
organization after paying all the liabilities. High profitability ratios are required for attaining
positive position within the market.

In case of SBL, we see net profit margin in 8.45% and it decreased to 7.53% which was
negative growth for the company. The reason behind is that the sales and office expense was
more in 2011 than that of 2010. In 2012, the ratio was good which 2.47% more than that of
2012. After then the ratio gradually is decreasing in 2013 and in 2014. Because the sales and
office expenses is more in 2013 and 2014.
Recommendation

The company should concentrate on sales expenses and office expenses and on sales.

Net Income
11. ROA =
Total Assets

Return on asset(ROA)
Year 2010 2011 2012 2013 2014
Net Profit 396,790,96 399,596,74 650,962,59 382,129,13 362,343,30
9 2 1 9 3
Asset 4,119,072, 3,680,265, 4,489,242, 4,236,217, 3,821,156,
427 079 680 590 134
Return on 9.63% 10.86% 14.50% 9.02% 9.48%
asset(ROA)

Interpretation

Return on Asset ratio indicts the profitability of the company against the total asset owned by
the company. The ratio shows the performance of existing assets of the company in terms of
profits.

In context of SBL, we see in 2010 the ROA is 9.63% and then in 2011 increase slightly to
10.86%. In 2012, the ROA rate increased by 33.52% which was 14.50%. The reason behind
this is that the net income increased by 62.9% though, assets increased by 21.9%. In 2013 it
falls to 9.02% and then again it increased slightly in 2014 which is not satisfactory.
Recommendation

The position of the firm is very bad according to this ratio so it should need to
increase its Net income as soon as possible to improve or increase the
company situation

Net Income
12. Return on Equity =
Total stockholders equity

Return on
Equity
Year 2010 2011 2012 2013 2014
Net Profit 396,790,96 399,596,74 650,962,59 382,129,13 362,343,30
9 2 1 9 3
Equity 3,140,517, 2,198,742, 2,539,588, 2,632,795, 1,527,152,
715 427 795 742 540
Return on 12.63% 18.17% 25.63% 14.51% 23.73%
Equity

Interpretation

Return on equity ratio indicates profits and returns earned by the organization for equity
employed by owners of the organization. The ratio shows a clearer picture regarding financial
performance of the organization from the perspectives of equity share holders of the
organization.
In context of SBL, the ROE has positive growth from 2010 to 2012 respectively 12.63%,
18/017%, and 25.63%. After then, in 2013 it huge fall down to 14.51%. The reason behind
this is that the net income decreased by 41.30%. then in 2014 the ROE again increased from
14.51% to 23.73% which indicates the companys existing position is favourable.

Recommendation

Company should increase its Net Income against of Stockholders equity to

improve the situation of this company.

SENSIVITY ANALYSIS

SINGER
BANGLADESH
LTD.

Year Net Sales Total assets Equity

income
2010 396,790,9 4,693,875,115 4,119,072,427 3,140,517,715
69
2011 399,596,7 5,308,963,530 3,680,265,079 2,198,742,427
42
2012 490,373,4 6,512,329,283 4,489,242,680 2,539,588,795
58
2013 382,129,1 6,424,319,576 4,236,217,590 2,632,795,742
39
2014 362,343,3 7,138,267,722 3,821,156,134 1,527,152,540
03

Year Net profit margin Total Asset turnover Leverage ratio

2010 8.45 87.75 131.16
2011 7.53 69.32 167.38
2012 7.53 68.93 176.77
2013 5.95 65.94 160.90
2014 5.08 53.53 250.21
Year Net Total ROA Leverage ROE % change
profit Asset ratio in ROE
margin turnover
2010 8.45 87.75 7.41 131.16 9.73
2011 7.53 87.75 6.61 131.16 8.67 -10.89
2012 7.53 87.75 6.61 131.16 8.67 0.00
2013 5.95 87.75 5.22 131.16 6.85 -20.98
2014 5.08 87.75 4.46 131.16 5.85 -14.62

Year Net profit Total ROA Leverage TOTAL

ROE -46.49
%
margin Asset ratio AVERAGE -11.62
chang
turnover DESPARTIO 8.80
e in
N ROE
201 8.45 87.75 7.41 131.16 9.73
0
201 8.45 87.75 7.41 167.38 12.41 27.62
1
201
Year 8.45Net profit87.75
Total 7.41
ROA 176.77 ROE
Leverag 13.11 5.61
% change
2 margin Asset e ratio in ROE
201 8.45 87.75
turnover 7.41 160.90 11.93 -8.98
32010 8.45 87.75 7.41 131.16 9.73
201
2011 8.458.45 87.75
69.32 7.41
5.86 250.21 7.68
131.16 18.55 55.51
-21.00
42012 8.45 68.93 5.82 131.16 7.64 -0.56
2013 8.45 65.94 5.57 131.16 7.31 -4.34
2014 8.45 53.53 4.52 131.16 5.93 TOTAL -18.8279.75
AVERAGE 19.94
TOTALDESPARTIO 28.08
-44.72
N
AVERAGE -11.18
DESPARTION 10.24