Introduction:

The financial statement analysis shows the position of a company. The main element of
measure the financial strength is ratio analysis and DuPont analysis. There are two types of
ratio analysis one is time series and cross sectional analysis. In this report I have discussed
both ratio analysis. These ratio analyses are five types of ratio such as liquidity ratio,
profitability ratio, efficiency ratio, debt ratio and market value ratio. Liquidity ratio tell us the
company liquidity position against their liability, profitability ratio measure the company
profitability, efficiency ratio tell us how efficient company are. Debt management or risk ratio
measure the risk the greater the debt ratio the higher the risk and last market value ratio
measure the company actual marker value through TIE and P/E ratio.

Company Background
Generation Next Textile Ltd:

Generation Next Fashions Limited (GNFL) was incorporated in Bangladesh under the
Companies Act 1994 on August 19, 2004 with an authorized capital of BDT 500.0 million and
paid up capital of BDT 47.2 million to carry out business of spinning, weaving and
manufacturing of various types of ready-made garments of international standard and design.
At present the paid up capital of the company is BDT 871.65 million and authorized capital is
BDT 2,000.0 million.
GNFL is a 100% export oriented textile and apparel company operating in Bangladesh. It
started commercial operation in July 30, 2006. The Company manufactures composite knit
garments and various types of ready-made garments such as T- Polo Shirt, T-Shirt, Men Polo
Shirt Short Sleeve, Ladies Polo Shirt Short Sleeve, Basic T-Shirt and Printed T-Shirt, Womens
or Girls Trouser, Ladies Pant, Ladies Jacket, Mens 2PK Woven Short Trial, Basic T-Shirt and
Static T-Shirt, Ladies Night Wear Set, Military Jogger, Women Flannel Pyjama, Basic Drive +
Fusion Tee, Ladies Tank Top etc., and exports to the North American and European markets
(Auditors Certificate in this regard is included in the Additional Disclosure part of the
prospectus). The company has the following major production departments: Knitting, Dyeing,
Finishing and Garments.The core business of Generation Next Fashions Limited is to carry out
business in spinning, knitting, weaving, manufacturing of textile and various types of readymade garments of international standard and design. The products line includes jersey, pique,
fleece, rib, interlock, pointelle, French terry, semi-jacquered, etc which are knit garments and
T- Polo Shirt, T-Shirt, Men Polo Shirt Short Sleeve, Ladies Polo Shirt Short Sleeve, Basic T-Shirt
and Printed T-Shirt, Womens or Girls Trouser, Ladies Pant, Ladies Jacket, Mens 2PK Woven
Short Trial, Basic T-Shirt and Static T-Shirt, Ladies Night Wear Set, Military Jogger, Women
Flannel Pyjama, Basic Drive + Fusion Tee, Ladies Tank Top.
1

Ratio analysis table:

Ratio analysis

2008

2009

2010

2011

2012

Liquidity Ratio
current ratio

1.54

1.29

1.12

1.06

1.06

Return on equity(ROE)

8.00%

8.00%

9.00%

9.00%

11.00%

Return on Asset(ROA)

3.00%

3.00%

4.00%

5.00%

7.00%

Profitability Ratio

Net profit margin

8.00%

7.00%

7.00%

13.00%

17.00%

26.00%

20.00%

21.00%

22.00%

33.00%

Account receivable turnover

2.77

3.67

3.46

3.46

3.27

Days sales outstanding(DSO)

130

98

104

104

110

Inventory turnover

2.84

3.18

3.17

2.45

2.1

Gross profit margin

Inventory processing period

Account payable turnover

127

113

114

147

171

30.07

126.94

97.37

49.56

59.86

Average payment period

12

Fixed asset turnover

0.46

0.68

0.75

0.61

0.62

Total asset turnover

0.34

0.49

0.49

0.42

0.42

65.20%

57.60%

52.86%

39.87%

35.98%

187.00%

205.00%

156.00%

66.00%

56.00%

49

55

80

32

43

Risk Ratio
Debt ratio
Debt to equity ratio
Market Value Ratio
P/E ratio

Ratio Analysis:
Current Ratio:

If we see the chart from

Current ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0

2008 GEN text starts

form

1.54
1.29

1.54.Then

its

gradually decreases from

1.12

1.06

1.06

1.54 to 1.29, 1.12, 1.06

and 1.06 from 2008,
2009, 2010, 2011 and
2012.

2008

2009

2010

2011

2012

Overall Liquidity position of GEN Text is not good which is below standard and risky for a
company.

ROE:
GEN Text ROE starts

ROE ratio

from

12.00%

11.00%

10.00%
8.00%

8.00%

9.00%

8.00%

then

it

gradually increased to
8.00%,

9.00%

8.00%
9.00%,

9.00%

and 11.00% in 2008,

6.00%

2009, 2010, and 2012.

4.00%
2.00%

That

0.00%

company is doing well

2008

2009

2010

2011

2012

means

the

here.

ROA:
GEN Text ROA starts

ROA ratio

from 3.00% in 2008 the

8.00%
7.00%

7.00%

6.00%
5.00%
3.00%

4.00%
3.00%

3.00%

1.00%
2008

2009

2010

it

gradually

7.00% in 2010 & 2012.

2.00%
0.00%

Then

increased to 5.00% and

5.00%

4.00%

ratio was same in 2009.

2011

2012

Overall ROA of Gen Text

is gradually increasing
which is good for the
company.

Net Profit Margin:

The Net profit margin of

Net profit margin ratio

18.00%

Generation Next Textile

17.00%

16.00%
14.00%

decreased to 7% in 2009

13.00%

12.00%

and 2010 but in 2011 it

10.00%
8.00%

8.00%

7.00%

6.00%

increased sharply to13%

7.00%

and also increases in

4.00%

2012 to 17%.

2.00%
0.00%

was 8% in 2008 and it

2008

2009

2010

2011

2012

The reason behind this fluctuating amount of net profit margin may be the inconsistent
amount of net income followed by inconsistent amount of sales. Overall net profit margin
Generation Next Textile is good.

Gross Profit Margin:

The gross profit margin

Gross profit margin ratio

35.00%

of
33.00%

30.00%

20.00%

Next

Textile was 26% in 2008

and it decreased to 20%

26.00%

25.00%

Generation

20.00%

21.00%

in 2009. In 2010 and

22.00%

2011 it increased slowly

15.00%

to 21% and 22% but in

10.00%
5.00%

2012 it increases sharply

0.00%

to 33%.
2008

2009

2010

2011

2012

The reason behind high gross profit margin in 2012 may be high gross profit followed by high
sales revenue.
4

Account receivable turnover:

Account receivable

Account receivable trunover ratio

4
3
2.5

3.46

3.46

3.27

Next

Textile was 2.77 in

2008

2.77

which

increase sharply in

2
1.5

2009 to 3.67.

1
0.5
0

of

Generation

3.67

3.5

turnover

It
2008

2009

2010

2011

decreases

to

3.46 in 2010 and

2012

remains same in
2011 and again decrease to 3.27. Overall the efficiency of Generation Next Textile is good.

Days sales outstanding (DSO):

In 2008 the DSO of

DSO ratio
140
120

Generation
Textile

130

100

98

104

104

110

was

Next
130

days that decreases

80

sharply to 98 days in

60

2009.

40

gradually increases

20

to 110 days in 2012.

2008

2009

2010

2011

Then

it

2012

Overall the efficiency of Generation Next Textile is good as Generation Next Textile collects
their account receivable earlier.

Inventory Turnover:
In 2008, 2009, 2010,

Inventory turnover ratio

3.5
3

3.18

2.84

2.5

2011 and 2012 the IT

ratio of generation next

3.17

textiles

2.45

2.1

2
1.5

2.84

times, 3.18 times, 3.17

times, 2.45 times, and

2.10 times. The overall

0.5
0

were

IT is fluctuating.
2008

2009

2010

2011

2012

The reason maybe amount of cost of goods sold is fluctuating.

Inventory Processing Period:

In 2008, 2009 the IPP

Inventory processing period

180

171

160
140
120

ratio of generation next

147
127

100

113

textiles was 127 days,

113

days.

Again

it

increased to 114 days,

114

80

147 days and 171 days

60

in 2010, 2011 and 2012.

40
20
0

2008

2009

2010

2011

2012

We see that IPP was increased year after year which is not good for a company. It takes too
much time to process inventory from raw material.

Accounts Payable Turnover:

In 2008, 2009, 2010,

Account payble trunvoer

2011 and 2012 the

140.00

APT

126.94

120.00
100.00

20.00
0.00

49.56

59.86

30.07

2008

next

textiles were 30.07,

80.00

40.00

of

generation

97.37

60.00

ratio

126.94,

97.37,

49.56 and 59.86.

Overall the account

2009

2010

2011

2012

payable

turnover

ratio

was

fluctuating. Although it is fluctuating the ratio was too high for a company that indicated the
company efficiency is not good at all.

Average Payment Period:

In 2008 the IPP ratio

Average payment period

of generation next

14
12

textiles
12

12

days. In 2009, 2010

10

& 2011 it decreased

6
4

2
0

was

to 3 days then if
again increased to 4
days and 7 days and
in 2012 it again

2008

2009

2010

2011

2012

decreased

to

days.
Overall the company average payment period is not good which is questionable for a
company.

Fixed Asset Turnover:

In

Fixed asset turnover ratio

0.80
0.70

of generation next
0.62

0.61

0.60
0.50

0.75

0.30

times.

It

decreased to 0.61

0.20

times and 0.62

0.10
0.00

textiles were 0.46

times, 0.68 times,

0.46

0.40

2009,

2010 the FAT ratio

0.75

0.68

2008,

time in 2011 and

2008

2009

2010

2011

2012

2012.

The ratio was not good at all which questionable is for company. The reason for low fixed
asset turnover maybe the high fixed assets.

Total Asset Turnover:

In

Total Asset Turnover

2009,

2010 the TAT ratio

0.60

of generation next

0.50

0.49

0.49
0.42

0.40
0.30

2008,

0.42

0.34

textiles was 0.34

times, 0.49 times,
0.49 times. Again

0.20

it decreased to

0.10

0.42 times, and

0.00

0.42 times in2010

and 2012.

The overall position is fluctuating. The company must try a lot for increased its total asset
turnover.

Debt Ratio:
In 2008 the debt

Debt ratio
70.00%

ratio of Generation
Next textiles was

65.20%

60.00%

57.60%

50.00%

65.20%.

52.86%

40.00%

39.87%

30.00%

And

it

gradually decreased
35.98%

to

57.60%,

then

20.00%

52.86%,

10.00%

decreased to 42.25%

0.00%

2008

2009

2010

2011

2012

again

it

and 35.98% in 2009,

2010,

2011

and

2012. Overall position of debt ratio of Gen Text was good and it below the average.

Debt to Equity Ratio:

250.00%
200.00%

Debt to equity ratio

187.00%

205.00%
156.00%

150.00%
100.00%

66.00%

50.00%
0.00%

2008

2009

2010

2011

56.00%

2012

In 2008, 2009, 2010, 2011 and 2012 the debt to equity ratio of generation next textiles were
187%, 205%, 156%, 66% and 56%. The overall position is fluctuating. But it has tremendous
improve in 2012.

P/E ratio:

P/E ratio
35.00
30.53

30.00
25.00
20.00

15.31

15.00

17.77

10.00
5.00
0.00

4.53

3.74

2008

2009

2010

2011

2012

Gen text P/E ratio starts from 4.53 then 3.74. In 2010 it sharply increases to 30.53. It again
falls in 2011 to 15.31 times. In 2012 the ratio was increased and it almost same as Square text
which was 17.77 time. Overall Gen text ratio was fluctuating.

Conclusion:

At the end of the report it can be said that the ratios of Generation Next textile is good. Overall
financial position of Generation Next textile is strong in the market. They have higher
efficiency from their competitors in the market. Their net income is also in good position. We
see in the quick ratio analysis they have strong amount of current asset to meet up their
current liabilities which is very much essential for day to day operating. If we look the ROE we
see that they 11.10% ROE in 2012 which is indicated that they are enough efficient. Their
account receivable turnover and inventory turnover also in good position. If we measure the
risk of the company we need to measure debt ratio. It we look the debt ratio we will see that
in 2012 the debt ratio was below the industry average which indicated that company is in
good position. The growth opportunity of the company is also good.

10

Generation Next Text Income statement

2008

2009

2010

2011

Sales Revenue

601118585

1014538165

1289543519

1,393,627,887

1679542170

Cost of Goods Sold

443409375

807425529

1021092324

1,082,489,912

1128014588

Gross Profit

157709210

207112636

268451195

311,137,975

551527582

49791947

79651392

98747472

95,186,547

84380206

Operating Profit

107917263

127461244

169703723

215,951,428

467147376

Financial Expenses

123378056

164891128

169149917

153,988,754

214,177,648

Other Income

71356802

115397056

112505521

156,542,529

72,294,857

Net Profit Before Tax and

WPWFs

55896009

77967172

113059327

218,505,203

325,264,585

15,488,790

Net Profit /(Loss) before

tax

55896009

77967172

113059327

218,505,203

309,775,795

Provision for Income tax

4818732

8491050

19269786

36,093,138

27,644,980

Net Profit (Loss) after Tax

51077277

69476122

93789541

182,412,065

282,130,815

Fully Diluted Earnings per

Share (EPS)

11

14.72

2.62

Particulars

Administrative Expenses

Less: Workers
Participation/Welfare Funds

2012

11

Balance sheet ( Gen Next TEXT )

NON-CURRENT
ASSETS
Property, Plant &
Equipment
Capital Works-inProgress

2008

2009

2010

2011

2012

1,313,598,258

1,484,787,328

1,717,956,510

2,267,152,562

2,697,669,438

1,134,603,222

1,196,135,081

1,289,999,471

1,432,890,110

1,746,304,786

178,853,446

288,510,657

427,957,039

579,537,452

951,364,652

254,725,000

Investments
Pliminary
Expresses

141,590

141,590

Current Assets

461,236,228

580,122,981

896,098,045

1,014,789,671

1,293,849,778

Inventories

225,590,251

281,807,010

362,034,597

520,641,340

554,719,980

Account
Receivable

214,145,294

273,141,610

367,141,772

398,571,089

504,355,503

4,980,629

15,993,796

89,938,221

81,423,358

191,550,025

16,520,054

9,180,565

76,983,455

14,153,884

43,224,270

299,476,917

448,341,818

798,540,477

953,478,661

1,215,099,553

14,748,321

6,360,858

10,487,094

21,843,850

18,843,850

Accrued Expenses

10,489,675

25,442,758

41,403,343

77,786,796

120,360,599

Bank Overdraft

31,199,495

31,275,906

30,913,010

31,207,424

46,438,284

69,618,714

219,748,335

428,399,941

566,176,664

866,864,309

173,420,712

165,513,961

143,095,210

137,891,927

70,068,920

Loans, Advances,
Deposits & prepayments
Cash & Cash
Equivalents
Current Liabilities
& provisions
Accounts & other
payables

Short Term Bank

Credits
Deferred L/C
Liabilities
Share Money
Refundable
Current Maturity
of long term loans
Net Current Assets
Net Assets

32,523,591
-

144,241,879

118,572,000

60,000,000

161,759,311

131,781,163

97,557,568

61,311,010

78,750,225

1,475,357,569

1,616,568,491

1,815,514,077

2,328,463,572

2,776,419,663

12

Shareholders
Equity

617,704,457

675,592,273

1,019,381,814

1,973,443,879

2,555,469,491

Share capital

47,200,000

47,200,000

350,000,000

871,650,000

1,405,980,000

Share premium

250,000,000

250,000,000

Proposed Bonus
share

52,800,000

506,889,888

495,301,582

506,889,888

506,889,888

506,889,888

63,614,569

80,290,691

162,491,926

344,903,991

392,599,603

200,000,000

212,950,000

long term loan

857,653,112

740,976,218

583,182,263

355,019,693

long term bank

loan

607,024,213

690,347,319

583,182,263

355,019,693

other loans

250,628,899

50,628,899

1,475,357,569

1,616,568,491

1,815,514,077

2,328,463,572

revaluation surplus
retained earnings
share money
deposit

Liabilities &
shareholders
equity

220,950,172

2,776,419,663

13