Company
Overview Profile
Sreepur Textile Mills Limited was incorporated in Bangladesh as a
Public Company with Limited Liability, on 20th December 1898 and
Commenced Commercial Operation on 1st July 1995. The Company issued
public portion of Shares in 1996 and its shares are listed both Stock Exchanges
in Bangladesh.
The company owns and operates a modern textile factory, which
produces cotton yarns. The current major issues of the company is it was totally closed
since 2006.
Registered
Office:
The address of the registered office of the Company is Jatiya
Scout Bhaban, 9th Floor, 70/1, Purana Paltan Line, Kakrail,
Dhaka-1000 and the manufacturing plant is located at Sreepur of Gazipur.
The ratios analysis is the most powerful tool of financial statement analysis. Ratios simply mean one number expressed in terms of another. A ratio is a statistical yardstick by means of which relationship between two or various figures can be compared or measured. Ratios can be found out by dividing one number by another number. Ratios show how one n Profitability Ratios:
Profitability
ratio: It measure the results of business operations or overall performance and
effectiveness of the firm. Some of the most popular profitability ratios are as
under:
- Gross profit ratio
- Net profit ratio
- Return on shareholders’ investment or net worth
- Return on equity capital
- Return on capital employed (ROCE) Ratio
- Dividend yield ratio
- Dividend payout ratio
- Earnings Per Share (EPS) Ratio
Liquidity Ratios:
Liquidity
ratios measure the short term solvency of financial position of a firm. These
ratios are calculated to comment upon the short term paying capacity of a
concern or the firm's ability to meet its current obligations. Following are
the most important liquidity ratios.
- Current ratio
- Liquid / Acid test / Quick ratio
Activity Ratios:
Activity
ratios are calculated to measure the efficiency with which the resources of a
firm have been employed. These ratios are also called turnover ratios because
they indicate the speed with which assets are being turned over into sales.
Following are the most important activity ratios:
- Debtors / Receivables turnover ratio
- Average collection period
- Creditors / Payable turnover ratio
- Working capital turnover ratio
- Fixed assets turnover ratio
- Over and under trading
Long Term Solvency or Leverage Ratios:
Long
term solvency or leverage ratios convey a firm's ability to meet the
interest costs and payment schedules of its long term obligations. Following
are some of the most important long term solvency or leverage ratios.
- Debt-to-equity ratio
- Proprietary or Equity ratio
- Ratio of fixed assets to shareholders funds
- Ratio of current assets to shareholders funds
- Interest coverage ratio
- Capital gearing ratio
- Over and under capitalization
Ratio Analysis
Current
Ratio
Formula: Current Ration = Current Assets/Current
Liabilities
2010
|
2009
|
2008
|
2007
|
2006
|
|
Current Assets
|
33,512,228.00
|
40,582,608.00
|
52,576,984.00
|
57,254,680.00
|
56,698,749.00
|
Current Liability
|
234,684,338.00
|
231,511,002.00
|
24,760,760.00
|
247,878,947.00
|
245,665,247.00
|
CA/CL
|
0.14
|
0.18
|
2.12
|
0.23
|
0.23
|
Current Ratio
|
0.14 : 1
|
0.18 : 1
|
2.12 : 1
|
0.23 : 1
|
0.23 : 1
|
Interpretation:
Current
ratio measures short-term debt paying capability. In the graph we see that in
every year the current ration is decreasing. And also the value is not
satisfactory. 2:1 is standard value. So we can be said that the company is not
so solvent to pay off the debts.
Acid
Test Ratio
Formula: Current Ration = (Current Assets-Inventories)/Current
Liabilities
2010
|
2009
|
2008
|
2007
|
2006
|
|
Current Assets
|
33,512,228.00
|
40,582,608.00
|
52,576,984.00
|
57,254,680.00
|
56,698,749.00
|
Inventory
|
27,434,224.00
|
34,292,780.00
|
45,865,975.00
|
51,197,575.00
|
51,197,575.00
|
CA-Inventory
|
6,078,004.00
|
6,289,828.00
|
6,711,009.00
|
6,057,105.00
|
5,501,174.00
|
Current Liability
|
234,684,338.00
|
231,511,002.00
|
24,760,760.00
|
247,878,947.00
|
245,665,247.00
|
Acid Test Ratio
|
0.03 :1
|
0.03 :1
|
0.27 :1
|
0.02 :1
|
0.02 :1
|
Interpretation: Acid Test Ratio
means the immediate conversion of liquid assets to cash. Its standard value is
1:1. So we can say that the acid test
ratio of Sreepur Textile Mills Ltd. is not satisfactory. It is very poor.
Assets
Turnover Ratio
Formula: Asset Turnover Ratio = Sales/Total Assets
2010
|
2009
|
2008
|
2007
|
2006
|
|
Sales
|
-
|
-
|
-
|
-
|
14,512,560.00
|
Total asset
|
177,558,702.00
|
208,031,564.00
|
226,920,144.00
|
249,369,523.00
|
271,931,728.00
|
Assets Turnover Ratio
|
-
|
-
|
-
|
-
|
0.05
|
Interpretation: Asset turnover
ratio measures turnover of all the firm`s asset. In 2006 the turnover ratio was
0.05 times. But after 2006 it is Nil till 2010 due to the closing of factory
and no sales of the company.
Debt
Ratio
Formula: Debt Ratio = Debt/Total Assets
2010
|
2009
|
2008
|
2007
|
2006
|
|
Total Debt
|
55,273,100.00
|
55,749,000.00
|
57,680,507.00
|
58,847,507.00
|
61,888,883.00
|
Total Asset
|
177,558,702.00
|
208,031,564.00
|
226,920,144.00
|
249,369,523.00
|
271,931,728.00
|
Total debt/Total asset
|
0.31
|
0.27
|
0.25
|
0.24
|
0.23
|
Debt Ratio
|
31%
|
27%
|
25%
|
24%
|
23%
|
Interpretation: It measures the
percentage of total assets provided by creditors. In the graph we see that the
debt ratio of 2006 is 23%. But after 2006 the ratios were increased in 2007 to
2010 gradually.
Profit
Margin on Sales
Formula: PMS = Net Income/Sales
2010
|
2009
|
2008
|
2007
|
2006
|
|
Net Income
|
(71,264,482.00)
|
(77,359,813.00)
|
(22,449,379.00)
|
(22,562,205.00)
|
(36,014,943.00)
|
Sales
|
-
|
-
|
-
|
-
|
14,512,560.00
|
Net income/Sales
|
-
|
-
|
-
|
-
|
(2.48)
|
PMS Ratio
|
-
|
-
|
-
|
-
|
-248%
|
Interpretation: PMS measures net
income generated by each taka of sales. In 2006 the profit margin on sales was
-248%, and in from 2007 to 2010 it is Nil. Company has no turnover because
their factory is closed.
Return
on Assets
Formula: ROA= Net Income/Total Assets
2010
|
2009
|
2008
|
2007
|
2006
|
|
Net Income
|
(71,264,482.00)
|
(77,359,813.00)
|
(22,449,379.00)
|
(22,562,205.00)
|
(36,014,943.00)
|
Total Asset
|
177,558,702.00
|
208,031,564.00
|
226,920,144.00
|
249,369,523.00
|
271,931,728.00
|
Net income/TA
|
(0.40)
|
(0.37)
|
(0.10)
|
(0.09)
|
(0.13)
|
ROA Ratio
|
-40%
|
-37%
|
-10%
|
-9%
|
-13%
|
Interpretation: It measures
overall profitability of assets. In the graph of ROA we see that the ratio is
always in negative figure form 2006 to 2010.
Return
on Equity
Formula: ROE = Net Income/Total Assets
2010
|
2009
|
2008
|
2007
|
2006
|
|
Net Income
|
(71,264,482.00)
|
(77,359,813.00)
|
(22,449,379.00)
|
(22,562,205.00)
|
(36,014,943.00)
|
Common equity
|
140,000,000.00
|
140,000,000.00
|
140,000,000.00
|
140,000,000.00
|
140,000,000.00
|
Net income/Common equity
|
(0.51)
|
(0.55)
|
(0.16)
|
(0.16)
|
(0.26)
|
ROE Ratio
|
-51%
|
-55%
|
-16%
|
-16%
|
-26%
|
Interpretation: ROE
measures profitability of owner`s investment. In 2006 ROE was -26%. In 2007 it
was -16%. In 2008 it was -16%, The next year ROE was -55% that means it is
gradually decreasing.
EPS
Formula: EPS = Net income available to common stock
holders/ Number of common shares
2010
|
2009
|
2008
|
2007
|
2006
|
|
Net Income
|
(71,264,482.00)
|
(77,359,813.00)
|
(22,449,379.00)
|
(22,562,205.00)
|
(36,014,943.00)
|
Common Shares
|
1,400,000.00
|
1,400,000.00
|
1,400,000.00
|
1,400,000.00
|
1,400,000.00
|
N.I/Common share
|
(50.90)
|
(55.26)
|
(16.04)
|
(16.12)
|
(25.72)
|
EPS
|
Tk. (50.90)
|
Tk. (55.26)
|
Tk. (16.04)
|
Tk. (16.12)
|
Tk. (25.72)
|
Interpretation: EPS measures net income
earned on each share of common stock. In the graph we can see that earning per
share of Sreepur Textile Mills Ltd. From
2006 to 2010 it was decreased gradually. In 2010 the amount was Tk. (50.90).
Conclusion
Finally
we can say that, overall financial condition of Sreepur Textile Mills Ltd. is
very poor. They closed their production since 2006 and they have no turnover by
operation after 2006.
They
are in huge loss and didn’t declare any dividends to the shareholder’s from
last 5 years.
In
this situation they should start production and generate revenue immediately. Otherwise
they will lose their sustained.
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