Financial Statement Analysis (1)

Abstract:

The report at hand manifests an in-depth analysis of the financial statements of

Marico Bangladesh Limited. Marico Bangladesh Limited is a company that caters

to the fast moving consumer goods (FMCG) segment of the market of Bangladesh.

The company produces products such as hair oil, edible oil and soaps. The purpose

of this report was to scrutinize the financial statements of the company and justify

whether profitability is sufficient enough to determine the performance of a

company. This report comprises of a literature review which projects the

perceptions of different authors about the different ratios used to analyse the

financial statements followed by the analysis of the financial statements using

financial ratios and ends with a brief conclusion and recommendation.

i

Table of Contents

Page

1.0 Introduction 1

1.1Background of the company 1

1.2 Rationale of the study 2

2.0 Literature Review 3

2.1 Financial Statement (Ratio) Analysis 3

2.1.1 Liquidity Ratio 4

2.1.2 Asset Management Ratio 5

2.1.3 Debt Management Ratio 7

2.1.4 Profitability Ratio 8

2.1.5 Market Value Ratio 9

3.0 Data Analysis 10

3.1 Financial Statement (Ratio) Analysis of Marico Bangladesh Limited 10

3.1.1 Liquidity Ratios 10

3.1.2 Asset Management Ratios 13

3.1.3 Debt-Management Ratio 16

3.1.4 Profitability Ratios 17

3.1.5 Market Value Ratios 22

4.0 Conclusion 23

5.0 Recommendation 24

6.0 List of References 25

7.0 Bibliography 26

ii

Appendix 27

List of Figures:

Pages

Fig.1 Types of Financial Ratios 3

Fig.2 Current Ratio Comparison 10

Fig.3 Quick ratio Comparison 12

Fig.4 Inventory Turnover Ratio Comparison 13

Fig.5 Fixed Asset Turnover Comparison 14

Fig.6 Total Asset Turnover Comparison 15

Fig.7 Debt Ratio Comparison 16

Fig.8 Gross Margin Ratio Comparison 17

Fig.9 Net Margin Ratio Comparison 19

Fig.10 Return on Equity Comparison 20

Fig.11 Return on Asset Comparison 21

Fig.12 Perception of Different Users of Financial Statements 23

iii

1.0 Introduction

The main goal of all business organisation is profit maximization, however in order to pursue

this goal the organisations need capital which can be raised through debt or equity. The financial

institutions are benefited from providing loans and similarly shareholders are benefited through

shares. In order to decide whether to invest in an organisation or not financial statements are very

useful and to get a transparent and in-depth view of an organisations financial position financial

ratio analysis is a very useful tool. Besley and Brigham (2008) suggested that financial statement

analysis may be used to help predict the firm’s financial position in the future and to determine

expected earnings and dividends. Bull (2007) further stated that financial ratio analysis help

managers to analyse control and improve an organisations operations. Credit analysts can use it

to determine the ability of an organisation to pay its debts and security analysts can use it to

analyse an organisations ability to pay interests on its bonds.

1.1 Background of the company

Marico Bangladesh Limited (MBL) is the subsidiary of Marico Limited, India (Marico). MBL’s

Products in Pure Coconut oil, Edible Oil, Hair care and Skin Care reach out to more than

500,000 outlets in Bangladesh. MBL touches the lives of 1 out of every 3 Bangladeshi through

its portfolio of brands such as Parachute, Saffola, Hair Code, Aromatic, Camelia and Beliphool

to name a few, most of which enjoy leadership positions (No. 1 in coconut oil segment), with

significant market shares in respective categories. MBL was incorporated in the year 1999 and

holds a leadership position in the fast moving consumer goods (FMCG) space in Bangladesh.

MBL recorded a turnover of Tk. 5,358 Million (USD 73.4 Million) in 12 months ended on 30th

September, 2010 and Tk. 2,846 Million (USD 39 Million) in 6 months ended on 31st March,

2011 (Maricobd.com, 2012).

1

1.2 Rationale of the study

Marico Bangladesh Limited (MBL) has recorder high turnover in both 2010 and 2011, although

it started its operations in 1999 and was in enlisted in Dhaka stock exchange and Chittagong

stock exchange in 2009. The main objective of this study is to determine the financial position of

this organisation. Bangladesh Brand forum had judged ‘Parachute coconut oil’ the best brand in

Bangladesh in 2011 (The Daily Star, 2012). The main rationale of this study is to determine all

aspects of this organisation in terms of efficiency, debt management, liquidity and profitability

and to understand whether high turnover is sufficient enough to project a strong financial

position of an organisation. High turnover is always a positive sign but financial ratios can also

help to ascertain possible areas of improvement.

2

2.0 Literature Review

2.1 Financial Statement (Ratio) Analysis

According to Gibson (2010) investors and other external users of financial information will often

need to measure the performance and financial health of an organization. This is done in order to

evaluate the success of the business, determine any weaknesses of the business, compare current

and past performance, and compare current performance with industry standards. Financially

stable organizations are desirable, because a financially stable business is one that successfully

ensures its ability to generate income for investors and retain or increase value.

Fig.1) Types of Financial Ratios

There are many different methods that can be used alone or together to help investors assess the

financial stability of an organization. One of the most common methods is financial ratio

analysis. The basic ratios include five categories: profitability ratios, liquidity ratios, debt ratios,

asset management ratios and market- value ratios (Siddiqui, 2006).

Ratio analysis involves the methods of calculating and interpreting financial ratio in order to

access the firm’s performance and status. The basic inputs to ratio analysis are the firm’s income

statement and balance sheet for the periods to be examined (Peterson and Fabozzi, 2012).

3

2.1.1 Liquidity Ratio:

Brigham and Houston (2009) stated that liquidity ratios measure the organizations ability to meet

short-term obligations. These include the current ratio and the quick ratio. This analysis that

provides a quick, easy method to measure of liquidity by relating the amount of cash and other

current assets to the firm’s current obligations. These include the current ratio and the quick

ratio.

Current Ratio:

According to Megginson and Smart (2008) the current ratio is calculated by taking the total

amount of current assets and dividing it by the total amount of current liabilities. This ratio

indicates the extent to which current liabilities are covered by those assets expected to be

converted to cash in the near future. Current assets normally include cash, marketable securities,

accounts receivables, and inventories. Current liabilities consist of accounts payable, short-term

notes payable, current maturities of long-term debt, accrued taxes, and other accrued expenses

(principally wages). The formula used to calculate this ratio is:

Current Ratio = Current Assets ÷ Current Liabilities

Current ratio shows a firm’s ability to cover its current liabilities with its current assets. In

Pharmacy a current ratio of at least 2 is considered necessary to ensure that the firm has

sufficient liquid resource to meet its short term needs if sales should suddenly drop or expenses

increases.

4

Quick Ratio:

The quick ratio is calculated by taking the total amount of current assets and deducting the

inventory and dividing it by the total amount of current liabilities. This ratio indicates the firm’s

liquidity position as well. It actually refers to the extent to which current liabilities are covered

by those assets except inventories. The formula used to calculate this ratio is:

Quick Ratio = (Current Assets – Inventory) ÷ Current Liabilities

Quick ratio provides a better indication of the firm’s relative liquidity by eliminating inventory,

the least liquid of all current Assets (Baker and Powell, 2009).

2.1.2 Asset Management Ratio:

Measures how effectively the firm is managing its assets. These ratios are designed to answer the

following question whether the total amount of each type of asset as reported on the balance

sheet seem reasonable, too high, or too low on view of current and projected sales level (Lasher,

2010).

Below are discussed four types of asset management ratio:

1. Inventory Turnover Ratio

2. The Days sales Outstanding

3. Fixed Asset Turnover Ratio

4. Total Asset Turnover Ratio

5

Inventory Turnover Ratio (IT):

The inventory turnover ratio is calculated by taking the total cost of goods sold and dividing it by

total inventory. The ratio is regarded as a test of efficiency and indicates the rapidity with which

the company is able to move its merchandise. The formula used to calculate this ratio is:

Inventory Turnover = Cost of Goods Sold ÷ Inventory

Inventory Turnover indicates the effectiveness of the inventory management practices of the firm

(Bagad, 2008).

Day sales outstanding (DSO):

Lee (2006) stated that the average collection period ratio is calculated by taking the total

accounts receivable and dividing it by the average credit sales per day, which is the annual credit

sales divided by 365. The Days Sales Outstanding ratio shows both the average time it takes to

turn the receivables into cash and the age, in terms of days, of a company's accounts receivable.

The formula used to calculate this ratio is:

Day sales Outstanding = (Accounts Receivable ÷ Average Daily Sales) x 365

This ratio is of particular importance to credit and collection associates. Receivable turnover

indicates the quality of receivable and how successful the firm is in its collections.

Fixed Asset Turnover Ratio ( FAT):

The total asset turnover ratio is calculated by taking total sales and dividing it by fixed assets.

The fixed asset turnover ratio measures the effectiveness in generating net sales revenue from

investments in net property, plant, and equipment back into the company. The formula used to

calculate this ratio is:

Fixed Asser Turnover = Sales ÷ Net Fixed Assets

It evaluates only the investments. Receivable Turnover indicates the quality of receivable and

how successful the firm is in its collections (Mayo, 2007).

6

Total Assets Turnover Ratio( TAT):

The Total Assets Turnover is similar to fixed asset turnover since both measures a company's

effectiveness in generating sales revenue from investments back into the company. Total asset

turnover evaluates the efficiency of managing all of the company's assets. The formula used to

calculate this ratio is:

Total Asset Turnover = Sales ÷ Total Assets

Total asset turnover indicates how well a company has used its fixed and current assets to

generate sales (Gibson, 2010).

2.1.3 Debt Management Ratio:

According to Baker and Powel (2009) debt management ratios reveal -

1) The extent to which the firm is financed with debt and

2) The likelihood of defaulting on its debt obligations. These ratios include:

Debt Ratio:

Debt to Total Asset shows the percentage of the firms’ assets that are supported by debt

financing. The formula used to calculate this ratio is:

Debt Ratio = Total Liabilities ÷ Total Assets

The debt ratio generally called the debt to total asset ratio, measures the percentage of funds

provided by the creditors (Bagad, 2008).

7

2.1.4 Profitability Ratios:

According to Brigham and Daves (2009) profitability is the net result of a number of policies and

decisions. These ratios provide information about the way the firm is operating. Profitability

ratios show the combined effects of liquidity, asset management and debt on operating results.

There are four important profitability ratios that we are going to analyze:

1. Net Profit Margin

2. Gross profit Margin

3. Return on Asset.

4. Return on Equity

Net Profit Margin on sales gives us the net profit that the business is earning per dollar of sales.


Net Profit Margin = Net Profit ÷ Sales

Gross Profit Margin on sales gives us the gross profit that the business is earning per dollar of

sales. The formula used to calculate this ratio is:

Gross Profit Margin = Gross Profit ÷ Sales

Return on Equity (ROE):

Return on Equity measures the amount of net income earned by utilizing each dollar of total

common equity. It is the most important of the “Bottom line” ratio. This can compute the amount

which the shareholders are going to get for their shares. The formula used to calculate this ratio

is:

Return on Equity = Net income available to common stockholders ÷ Common Equity

ROE measures the return on the owners’ investment in the firm (Megginson and Smart, 2008).

8

Return on Total Assets (ROA):

Return of total asset measures the amount of net income earned by utilizing each dollar of total

assets. The formula used to calculate this ratio is:

Return on Total Assets = Net Income ÷ Total Assets

ROA means Return on Assets which reflects how well a manager has used all available funds to

generate profits including both equity & debt (Besley and Brigham, 2008).

2.1.5 Market Value Ratio:

Mayo (2007) stated that these ratios relate the firm’s stock price to its earnings and book value

per share. They give management an indication of what investors think of the company’s future

prospects based on its past performance.

Price/ Earnings (P/E):

Price earnings ratio shows how much the investors are willing to pay per dollar of reported

profits. To compute the P/E ratio, we need to know the firm’s earnings per share (EPS) (Baker

and Powel, 2009)


Price/Earning ratio = Market price per share ÷ Earnings per share

9

3.0 Data Analysis

3.1Financial Statement (Ratio) Analysis of Marico Bangladesh Limited1:

3.1.1 Liquidity Ratios

Current Ratio:

Marico

2010 [2.25]

Marico

2011 [2.03]

Marico

2012 [2.39]

Industry A

verage

[2.01]

1.82

2.22.4

Current Ratio (Times)

Current Ratio (Times)

Fig.2) Current Ratio Comparison

In general if current ratio is greater than its industry average then it is good for the company.

Current ratio shows a firm’s ability to cover its current liabilities with its current assets. From the

analysis, we can see that in 2012 the current ratio is 2.39 times of the Marico Bangladesh Ltd

whereas the Industry average is 2.01 times. It indicates that company current ratio is in a stronger

position and the company has sufficient cash liquidity to meet its short-term liquidity. This

shows that Marico Bangladesh’s current assets are rising faster than current liabilities. A higher

current ratio is preferable.

1 The ratios used for this analysis has been partially derived from the Statement of Comprehensive Income and Statement of Financial Position of Marico Bangladesh Limited for the year 2012 and 2011(Appendix A). The data of the past years have also been acquired from the same report (Appendix B). The industry average used in the analysis has been collected from (www.bloomberg.com). The calculations of the year 2012 are presented in Appendix C.

10

http://www.bloomberg.com/

Exhibit 1.1A (Source: Marico Bangladesh Annual Report 2012)

Exhibit 1.1B (Source: Marico Bangladesh Annual Report 2012)

Exhibit 1.1C (Source: Marico Bangladesh Annual Report 2012)

Further analysis of the financial statement indicates that Marico Bangladesh decreased its current

assets such as fixed deposits and investments (Exhibit 1.1A) reduced its short terms finances

(Exhibit 1.1B) in proper proportion, thus reducing current liabilities for which their performance

of 2012 is better than 2011. They also have a surplus of financial assets over financial liabilities

(Exhibit 1.1C)

11

Quick Ratio:

Marico

2010 [2.02]

Marico

2011 [1.48]

Marico

2012 [1.26]

Industry A

verage

[0.9]

0

0.5

1

1.5

2

2.5

Quick Ratio (Times)

Quick Ratio (Times)

Fig.3) Quick Ratio Comparison

In general, higher quick ratio is preferable than lower ratio. From the data above, the industry’s

average quick ratio is 0.9 times whereas the Marico’s quick ratio is 1.26 times.

Exhibit 1.2 (Source: Marico Bangladesh Annual Report 2012)

The comparison between the years 2011 and 2012 reveals that their quick ratio has substantially

decreased during the year. An in-depth analysis into the financial statement shows that inventory

has increased substantially (Exhibit 1.2) and in contrast to the current ratio, there is an overall

reduction in the quick ratio. So it indicates that if the quick ratio is lower that means the

industry’s profit margin was not so high that they can make some investments paying off the

liabilities that could result in an increase in assets and decrease in liabilities to make the liquidity

position far better.

12

3.1.2 Asset Management Ratios

Inventory Turnover Ratio:

Marico 2010 [7.65]

Marico 2011 [5.77]

Marico 2012 [3.07]

Industry Average

[3.5]

02468

Inventory Turnover Ratio (Times)

Inventory Turnover Ratio (Times)

Fig.4) Inventory Turnover Comparison

In general higher turnover ratio is better than lower. Inventory Turnover indicates the

effectiveness of the inventory management practices of the firm.

Exhibit 1.3(Source: Marico Bangladesh Annual Report 2012)

From the analysis, it has clearly shows that Marico has relatively lower inventory turnover ratio

than industry. It indicates that the inventory level is higher that may point to overstocking or

deficiencies in the product line or marketing effort. High inventory levels are unhealthy because

they represent an investment with a zero rate of return in addition to the increased cost associated

with maintaining those inventories. It also opens the company up to trouble should prices begin

to fall. The comparison with the past years projects a significant reduction in this ratio. However

further analysis shows that they have increased levels of inventory (Exhibit 1.2) with increased

cost of sales (Exhibit 1.3) which in turn decreases the overall ratio. An assumption can be

suggested, that increase prices in the commodities of Bangladesh especially raw materials may

be the cause of this increase.

13

Day Sales Outstanding:

The financial statements indicate that Marico Bangladesh Limited have no debtors for which this

ratio does not apply to them.

Fixed Asset Turnover:

Marico 2011 [22] Marico 2012

[14] Industry Average

[12]

0

5

10

15

20

25

Fixed Asset Turnover

Fixed Asset Turnover

Fig.5) Fixed Asset Turnover Comparison

The fixed asset turnover ratio indicates how efficiently the fixed assets are used to generate sales.

In contrast to the performance of the previous year it can be seen that the fixed asset turnover

ratio of Marico Bangladesh Limited has reduced.

Exhibit 1.4(Source: Marico Bangladesh Annual Report 2012)

A deeper analysis of the financial statements shows that the company has purchased many fixed

assets in 2012 (Exhibit 1.4) and there also has been substantial addition during the year. In

contrast to the industry average the figures seem appropriate but it must increase its revenue to

increase this ratio.

14

Total Asset Turnover:

Marico

2010 [1.71]

Marico

2011 [1.47]

Marico

2012 [1.37]

Industry A

verage

[1.3]

00.20.40.60.8

11.21.41.61.8

Total Asset Turnover

Total Asset Turnover

Fig.6) Total Asset Turnover Comparison

The total asset turnover ratio shows how efficiently the total assets of a company are used to

generate sales. The data above shows that the total asset turnover of Marico Bangladesh is above

the industry average. However a further insight at the financial reports and the other ratios

clearly indicates that the increase of the new fixed assets (Exhibit 1.4) has increased this ratio,

which shows that their total assets have not been efficient enough to generate enough sales.

15

3.1.3 Debt-Management Ratio

Debt Ratio:

Marico 2011 [0.46]Marico 2012 [0.38]

Industry Average [0.45]

00.05

0.10.15

0.20.25

0.30.35

0.40.45

0.5

Debt Ratio

Debt Ratio

Fig.7) Debt Ratio Comparison

The debt ratio of Marico Bangladesh is 0.38, which suggests that 38 percent of their total assets

are their total liabilities. In contrast to their previous year’s ratio of 0.46, this is a very positive

sign for the company. Their ratio is also better than the industry average which is also good for

the overall image of the company as this attribute increases the shareholder’s confidence.

16

3.1.4 Profitability Ratios

Gross Margin Ratio:

Marico

2010 [29.89]

Marico

2011 [28]

Marico

2012 [24.83]

Industry A

verag

e [22.3]

05

1015202530

Gross Margin Ratio (%)

Gross Margin Ratio (%)

Fig.8) Gross Margin Ratio Comparison

The ratio above indicates the percentage of gross margin to sales. It is evident that the gross

margin ratio of Marico Bangladesh Limited has reasonably decreased over the years. This ratio

may be better than the industry average but with comparison between the years it is a bad

indication. The company has increased its revenue over the years but unfortunately it has not

been able to cope up with the costs (Exhibit 1.3) for which this ratio has been decreasing.


17


Exhibit 1.5C (Source: Marico Bangladesh Annual Report 2012)

Further analysis reveals that that the revenue has decreased in comparison to the previous year

and the cost of sales has increased (Exhibit 1.3 and 1.5A). In order to get a transparent view, a

deeper analysis reveals that in their product segments there has been substantial reduction in their

soap and edible oil division (Exhibit 1.5B), though there has been an increase in some of their

segments. Their cost of sales has increased mainly due to salary and wages, loading charges and

factory rent (Exhibit 1.5C).

18

Net Margin Ratio:

Marico

2010 [12.60]

Marico

2011 [12.58]

Marico

2012 [8.37]

Industry A

verage

[8.31]

048

12

Net Margin Ratio (%)

Net Margin Ratio (%)

Fig.9) Net Margin Ratio Comparison

The net margin ratio of Marico Bangladesh has drastically reduced and it comparatively lower

than the industry average. In contrast to the gross margin ratio, this usually comprises of further

non-manufacturing expenses such as distribution and administration expense.



This ratio has decreased mainly due to the increase in distribution expenses such as business

promotion expenses and market research expenses which was not a part of Marico Bangladesh

during the previous year (Exhibit 1.6A and 1.6B).

19

Return on Equity (ROE):

Marico 2011 [31.2] Marico 2012 [20.6]

Industry Average [16.56]

0

5

10

15

20

25

30

35

Return on Equity (%)

Return on Equity (%)

Fig.10) Return on Equity Comparison

In general return on equity is the rate of return on the share holder equity. Higher return on

Equity is better than lower and vice versa. From the analysis, it shows that Marico’s has higher

return on equity than industry. However in contrast to the previous year the ROE has drastically

decreased and the possible cause of this occurrence is the lower net income of 2012.

20

Return on Asset (ROA):

Marico

2010 [21.52]

Marico

2011 [18.45]

Marico

2012 [12.15]

Industry A

verage

[7.61]

0

5

10

15

20

25

Return on Asset (%)

Return on Asset (%)

Fig.11) Return on Asset Comparison

In general return on asset shows the overall investment earned by the firm. Higher return on asset

is better for the company than lower.

From the analysis, we can assume that Marico is in a good position because it is significantly

higher than industry. It indicates that the company’s assets are being utilized at a fair efficiency.

Higher return on asset shows that company lower than average use of debt and lower return on

asset shows results from the company’s higher-than-average use of debt. In contrast to the

previous years the ratio is relatively lower which is caused by the increase in assets which

increases the non-current assets in turn decreasing the overall ratio with the decreased net income

acting as a catalyst.

21

3.1.5 Market Value Ratios

Price/Earning Ratio:

Exhibit 1.7 (Source: Marico Bangladesh Annual Report 2012)

The Price/Earning ratio generally denotes the amount investors are willing to pay per dollar of

reported profits. The P/E ratio of Marico Bangladesh is BDT 22.6, which is good. Although the

earnings per share have decreased in contrast to the previous year (Exhibit 1.7), based on the

other ratios it can be assumed that the ratios will improve over the next years.

22

4.0 Conclusion

The data analysis reveals some valuable findings pertinent to the financial statements of Marico

Bangladesh Limited. It can be observed that overall the ratios may have declined to some extent

but they can surely be improved. The liquidity ratios have decreased in general but the current

ratio has improved due to decrease in current assets. The efficiency ratios have decreased as well

due to the increase in fixed assets and the profitability ratios has declined overall due to

increased expenditures in the plant and distribution expenses. Hence is can be stated that high

turnover does not generally indicate a good financial position.

Users Perception Basis of Judgment

Investors Good EPS, Price/Earning Ratio

Credit Analysts Good Current Ratio, Debt Ratio

Managers Improvement Required Profitability Ratios

Fig.12) Perception of Different Users of Financial Statements

An analysis from different view points shows that from the view of an investor the performance

is good based on the Earnings per share (EPS), from the view point of the credit analysts, the

performance is also reasonable based on their current ratio, but from the view point of a

manager, there are some areas for improvement. Although this company has won praises and

received awards and recorded high turnovers, it can be said that only high turnover does not

signify that a company is performing well. There is always scope for improvement.

23

5.0 Recommendation

Marico Bangladesh Limited must control costs and increase their efficiency. The distribution

expenses must be decreased and some of their product lines must be scrutinized for

improvement. They should spend more efficiently in their marketing in order to increase their

customer base. They should focus more on the products which have a declining market. Their

products compete in a highly competitive market and hence a slight loss of market share can

cause massive damages to their financial statements. In order to cope up in the FMCG segment

of the market Marico must spend more on their marketing and promotion activities.

24

6.0 List of References

Books:

Bagad, V.S. (2008) Management and Finance. Technical Publications. Baker, H.K. and Powell, G. (2009) Understanding Financial Management: A Practical Guide. John

Wiley and Sons. Besley, S. and Brigham, E.F. (2008) Essentials of Managerial Finance. 14th Edition. Thompson

Higher Education. Brigham, E.F. and Daves, P.R. (2009) Intermediate Financial Management. 10 th Edition. Cengage

Learning. Brigham, E.F. and Houston, J.F. (2009) Fundamentals of Financial Management. 12 th Edition.

Cengage Learning. Bull, R. (2007) Financial Ratios: How to use financial ratios to maximize value and success for

your business. Elsevier. Gibson, C.H. (2010) Financial Reporting and Analysis: Using Financial Accounting Information.

12th Edition. Cengage Learning. Lasher, W.R. (2010) Practical Financial Management. 6th Edition. Cengage Learning. Lee, C.F. (2006) Encyclopedia of Finance. Springer. Mayo, H.B. (2007) Investments: An Introduction. 9th Edition. Cengage Learning. Megginson, W.L. and Smart, S.B. (2008) Introduction to Corporate Finance. 2nd Edition. Cengage

Learning. Peterson, P.P. and Fabozzi, F.J. (2012) Analysis of Financial Statements. 2nd Edition. John Wiley

and Sons. Siddiqui, S.A. (2006) Managerial Economics and Financial Analysis. New Age International.

Websites:

(2012) 28 top brands win accolades, The Daily Star, 15 July 2012, [URL: http://www.bangladeshnews24.com/thedailystar/2012/07/15/28-top-brands-win-accolades-7186.htm] (accessed: 20 November 2012)

(2012) Industry Comparison of Marico Bangladesh Limited, [URL: http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=MBL:BD] (accessed: 2nd November 2012)

25

http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=MBL:BD

http://www.bangladeshnews24.com/thedailystar/2012/07/15/28-top-brands-win-accolades-7186.htm


7.0 Bibliography

Books:

Bagad, V.S. (2008) Management and Finance. Technical Publications. Baker, H.K. and Powell, G. (2009) Understanding Financial Management: A Practical Guide. John

Wiley and Sons. Besley, S. and Brigham, E.F. (2008) Essentials of Managerial Finance. 14th Edition. Thompson

Higher Education. Brigham, E.F. and Daves, P.R. (2009) Intermediate Financial Management. 10 th Edition. Cengage

Learning. Brigham, E.F. and Houston, J.F. (2009) Fundamentals of Financial Management. 12 th Edition.

Cengage Learning. Bull, R. (2007) Financial Ratios: How to use financial ratios to maximize value and success for

your business. Elsevier. Gibson, C.H. (2010) Financial Reporting and Analysis: Using Financial Accounting Information.

12th Edition. Cengage Learning. Lasher, W.R. (2010) Practical Financial Management. 6th Edition. Cengage Learning. Lee, C.F. (2006) Encyclopedia of Finance. Springer. Mayo, H.B. (2007) Investments: An Introduction. 9th Edition. Cengage Learning. Megginson, W.L. and Smart, S.B. (2008) Introduction to Corporate Finance. 2nd Edition. Cengage

Learning. Peterson, P.P. and Fabozzi, F.J. (2012) Analysis of Financial Statements. 2nd Edition. John Wiley

and Sons. Siddiqui, S.A. (2006) Managerial Economics and Financial Analysis. New Age International.

Websites:

(2012) 28 top brands win accolades, The Daily Star, 15 July 2012, [URL: http://www.bangladeshnews24.com/thedailystar/2012/07/15/28-top-brands-win-accolades-7186.htm] (accessed: 20 November 2012)

(2012) Industry Comparison of Marico Bangladesh Limited, [URL: http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=MBL:BD] (accessed: 2nd November 2012)

26

http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=MBL:BD



Appendix

Appendix -A

(Source: Marico Bangladesh Annual Report 2012)

27


28

Appendix –B


29

Appendix - C

Calculations:

Current Ratio = 3,772,368,3191,580,629,566

= 2.39 Times

Quick Ratio = 3,772,368,319−1,777,938,918

1,580,629,566

= 1.26 Times

Inventory Turnover = 4,357,734,4621,777,938,918

= 3.07 Times

Fixed Asset Turnover2012 = 6,036,260,121430,263,163

= 14

Fixed Asset Turnover2011 = 6,124,079,239278,328,750

= 22

Total Asset Turnover2012 = 6,036,260,1214,202,631,482

= 1.44

30

Total Asset Turnover2011 = 6,124,079,2394,613,066,124

= 1.33

Debt Ratio2012 = 1,599,437,2664,202,631,482

= 0.38

Debt Ratio2011 = 2,150,468,7954,613,066,124

= 0.46

Gross Margin Ratio = 1,498,505,6596,036,260,121

= 0.2483 or 24.83%

Net Margin Ratio = 535,619,787

6,036,260,121

= 0.087 or 8.87%

Return on Asset = 535,619,787

4,202,631,482

= 0.1215 or 12.15%

Return on Equity2012 = 535,619,787

2,603,194,216

= 0.2057 or 20.6%

31

Return on Equity2011 = 770,628,693

2,462,597,329

= 0.312 or 31.2%

Price/Earning Ratio = 384.30

17

= 22.6

32

Documents

Financial Statement Analysis (1)