Report on

Financial Statement Analysis of Singer

Bangladesh

Prepared for
Prof. M Masud Rahman
Master of Professional Finance (MPF)
Department of Finance
University of Dhaka

Prepared by
Name
Ahmadul Kabir
Md. Nurul Hoque
Mostafa Kamal Salim
Students of 1st Batch

ID NO
01-15-043
01-15-044
01-15-041

MPF Program
Department of Finance
University of Dhaka

Date of Submission: December 11, 2015

December 11, 2015

Professor M Masud Rahman
MPF Program
Department of Finance
University of Dhaka
Subject: Letter of Transmittal
Dear Sir
As per your instruction we have prepared the report titled Financial
Analysis of
Singer Bangladesh. This report provided us with an opportunity to
overview of engineering sector in Bangladesh alone with analyzing financial
health of a reputed company Singer Bangladesh.

We

have

tried

our

best

to

compile

the

related

information

as

comprehensively as possible and if you need any further information, we will

be obliged to assist you.

Sincerely yours,
Md. Nurul Hoque
On behalf of the group

Executive Summary
Singer Bangladesh Limited was listed with the Dhaka Stock Exchange in
1983 and Chittagong Stock Exchange in 2001. At present 75% of its shares
are held by the sponsors/ directors, 7.46% by institutional investors and rest
17.54% by the general public. In 2014, almost 69.4% of its revenue came from
white goods (large electrical goods used domestically), which includes air
conditioner (10% of total revenue) and 23.4% from brown goods (relatively light
electronic consumer durables), which includes television (21.5% of total revenue
contribution). Besides these, around 5.0% contribution came from sale of sewing
machine, 0.4% from furniture and 1.9% from other consumer durables.

Singer Bangladesh has increased the investment in capital assets from

20.58% to 21.66% last year. Long term investment has been increased from .
26% to .36%. Moreover, issues of new share capital from 11.59% to 14.48%
along with these factors indicates that Singer Bangladesh has is trying to
expand its capacity and new opportunities. Inventories in the last year
increased at huge amount from 29.60% to 35.93%. Again, trade debtors has
decreased but advances, deposits and pre-payments has increased which
ultimately led to drastic cash shrinkage from 19.4% in 2011 to 3.60% in
2014. Payment of dividends also affected the cash balance roughly. Singer
Bangladesh has no long term loan from 2011 to 2014. But it has huge
amount of short term loan which has to be repaid after one year interval and
created huge interest burden for the company. This has given the company a
good debt to equity /assets ratio too.
Finally, the valuation ratios of Singer Bangladesh are quite good as compared
to last years. P/B ratio and P/E ratio has increased by 72% and 6%
respectively from the last year.

Table of Contents
Chapter One: Introduction.......................................................................................... 5
1.1 Industry Overview................................................................................................ 5
1.2 Overview of the Company.................................................................................... 6
1.3. Company Highlights............................................................................................ 7
1.4 Objective of the study.......................................................................................... 9
1.5 Collection of data................................................................................................. 9
1.6 Limitation of the study......................................................................................... 9
Chapter 2: Literature Review.................................................................................... 10
2.1 Financial statements.......................................................................................... 10
2.2 Financial Analysis............................................................................................... 11
2.3 Types of financial statement analysis.................................................................11
2.3.1 Balance sheet Analysis................................................................................. 11
2.3.2 Cash flow analysis........................................................................................ 12
2.3.3 Ratio analysis............................................................................................... 12
Chapter Three: Financial Analysis of Singer Bangladesh..........................................14
3.1 Ratio Analysis..................................................................................................... 14
3.1.1. Liquidity Ratio............................................................................................. 14
3.1.2. Operating Efficiency ratio............................................................................15
3.1.3. Profitability Ratio......................................................................................... 16
3.1.4. Leverage and Coverage Ratio.....................................................................18
3.1.5. Valuation ratio............................................................................................. 19
3.2. Cash Flow Analysis............................................................................................ 21
3.3. Balance Sheet Analysis..................................................................................... 22
4.0 Conclusions........................................................................................................ 22

Chapter One: Introduction

1.1 Industry Overview
Bangladesh is the best placed in the region for electrical, electronic home
appliances industry due to cheap labor and favorable trade status with the
EU. Thus the potential for backward and forward linkage industry is growing
very fast. Presently, about 50%-60% of this demand is met by import from
countries like China, India, Hong Kong, Thailand, Korea, Indonesia etc. This
offers a tremendous opportunity for further investment.
Among the major products of consumer electronic and home appliance
produced and supplied by Singer Bangladesh, Refrigerator and Television
generate most of the revenue. Currently, the annual demand of refrigerators
in Bangladesh is around 1.1 million units but the production capacity of all
companies is around 2.3 million units. Here Bangladesh is self-sufficient is
producing refrigerators.
According to Bangladesh Refrigerator Manufacturers Association (BRMA), in
FY 2013-14 a total of 10 lakh 77 thousand refrigerators were sold, which is
32.9% higher than the previous fiscal year. Among them, the percentage of
domestic made refrigerators was 77.73 (8.37 lakh) while the sales of
imported refrigerators was only 22.27 % (2.8 lakh).
The prominent local brands which are manufacturing Refrigerator are Walton,
Marcel, Eco Plus, Jamuna, RFL, MyOne and Minister. Among them, the annual
production capacity of Walton Hi-Tech Industries is 14 lakh units, Jamuna
Electronics 3 lakh, Butterfly Manufacturing Company Ltd (Eco Plus) 2 lakh,
RFL Electronics 3 lakh while MyOne and Ministers capacity are 1 lakh.

The demand of consumer electronics and home appliance mainly depends on

income level and purchasing power of consumer which shows increasing
trend in our country.

1.2 Overview of the Company

Singer Bangladesh Limited is operating in this region (now Bangladesh) since
1905. In 1983, the firm had established itself as public limited company and
got listed in DSE. It has been a direct subsidiary of the Singer Bhold BV, the
Netherlands since 2003. 75% of total share are held by Singer Bhold BV, The
Netherlands and rests are held by local shareholders.
Up to 1985, the Company produced only sewing machine. Nowadays, the
Company is in the business of manufacturing of household consumer durable
products including color televisions, air conditioners, sewing machines,
furniture and some other allied products. Beside these, it is also carrying out
marketing of consumer electronic, home appliance, refrigerator & freezer, air
conditioners, computer and instant power supply and other allied products.
In 2014, almost 69.4% of its revenue came from white goods (large electrical
goods used domestically), which includes air conditioner (10% of total
revenue) and 23.4% from brown goods (relatively light electronic consumer
durables), which includes television (21.5% of total revenue contribution).
Besides these, around 5.0% contribution came from sale of sewing machine,
0.4% from furniture and 1.9% from other consumer durables.
Along with the above mentioned businesses, the company offers a wide
range of financial services and easy payment plans through its own and
other banks credit card.
Singer Bangladesh has over 375 outlets and more than 372 dealers in the
country. It has positioned itself as the multi branded company in marketing
and distribution of consumer durables sector. Some of familiar product
brands are Singer, Samsung, Huawei, Beko, Haier, Symphony, Siemens,
Toshiba and Dell etc.

Singer Bangladesh Limited was listed with the Dhaka Stock Exchange in
1983 and Chittagong Stock Exchange in 2001. At present 75% of its shares
are held by the sponsors/ directors, 7.46% by institutional investors and rest
17.54% by the general public.

1.3. Company Highlights

Company Fundamentals
Market Cap (BDT 12,831.0
mn)
Market weight
0.49%
#
of
Shares 76.7
Outstanding

(BDT

mn)
2012
2013
Free-float
(Public 25.0%
2014
+Inst.)
Financial
Paid-up Information
Capital (BDT
766.9mn)
Sales
6,70
6,60 7,261. 6,60
(BDT mn)
3.4 Average
5.1
816.6 9.6
3 Months
PAT
490.
382. 362.3 385.
Turnover (BDT mn)
2
3 Months4Return
3.7% 6
Assets
4,48 (BDT)
4,23 3,821.
Current Price
170.3 4,22
52-week
price 140-260.5
9.2
6.2
2
6.4
LT
Debt(BDT)
2.0
3.0
4.0
5.0
range
Equity
2,53
2,63
Sector Forward
P/E 1,527.
26.6 1,38
Div.

9.6
% 125/

2.8
100/

(C/B)
25
25
Margin
Gross
27.0% 27.0
Profit
Operat

%
11.4% 8.9%

2
195/2
5

25.3% 26.
8.3%

ing
Profit
Pretax
Profit
Net

8.3
n/a

2%
8.4
%

10.0% 8.0%
7.3%

5.8%

6.9%

8.2

5.0%

%
5.8

Profit
Sales

22.7% -

9.9%

1.5%
Gross

29.1% -

Profit
Operat
ing
Profit
Net

9.0
3.0%

1.3%
51.5% -

Profit

%
5.7

2.4%

23.1
%
22.7% -

%
-

%
7.7

-5.2%

22.1

%
6.4
%

%
Profitability
ROA
12.0
ROE

0%
20.7

0%
Leverage
Debt
0.11
Ratio
Debt-

0.19

8.76% 8.99

9.58

14.78

%
%
17.42 26.4

5%

0.01

0.06

0.1

0.01

0.14

6
0.4

Equity

Ratio
Interes

11.8

11.78

14.6

8.5

-/-

37.6

39.7

37.

Covera
ge
Ratio
Valuation
Price/E 29.3
arning
s*
Price/B
V*
Restat

3
5.7
6.4

5.5
5.0

9.4

10.

4.7

4
5.0

ed EPS
(BDT)
NAVPS

33.1

34.3

19.9

(BDT)

18.
1

1.4 Objective of the study

To
To
To
To

know & interpret the financial statements of Singer Bangladesh

identify the strength & weakness of Singer Bangladesh
find out the probable growth rate of Singer Bangladesh
compare the current share price of Singer Bangladesh is justified

1.5 Collection of data

The data is collected from the Annual report of 2011, 2012, 2013 and 2014.
The price data is collected from www.dsebd.com.

1.6 Limitation of the study

There have also some limitations of the study. These are as followsI. Time constraint of preparing report within a small time frame was a big
challenge.
II. Finding Peer Company for analysis is a massive problem of diversified
business of Singer Bangladesh. The selection of Atlas Bangladesh is not
fully justified. It matches in only sector of business but selection of peer was
based on the commencement year of business & both are large business
corporation of Bangladesh from the Engineering sector.
III. The study does not contain Balance sheet analysis.

Chapter 2: Literature Review

2.1 Financial statements
Financial statements are the principal means through which financial
information is communicated to those outside an enterprise. These
statements provide the firms history quantified in money terms. The
financial statements most frequently provided are (1) the balance -sheet,
(2) the income statement, (3) the statement of cash flow, and (4)
the statement of owners or stockholders equity. In addition, note
disclosures are an integral part of each financial statement.
Financial statements represent a brief picture of financial activities of a
company. Financial statements are Presentation of financial data including
Balance Sheet, Income Statement, and statement of cash flow or any
supporting statement that is intended to communicate an entity's financial
position at a point in time and its results of operations for a period then
ended.

2.2 Financial Analysis

Financial analysis refers to an assessment of the viability, stability and
profitability of a business, sub-business or project. It is performed by
professionals who prepare reports using ratios that make use of information
taken from financial statements and other reports.
Fundamental analysis is really a logical and systematic approach to
estimating the future dividends and share price. It is based on the basic
premise that share price is determined by a number of fundamental factors
relating to the economy, industry and company. Hence, the economy

fundamentals, industry fundamentals and company fundamentals have to be

considered while analyzing a security for investment purpose. Fundamental
analysis is a detailed analysis of the fundamental factors affecting the
performance of companies.
Fundamentals and thereby assess the intrinsic value of the share. The
investor can then compare the intrinsic value of the share with the prevailing
market price to arrive at an investment decision. If the market price of the
share is lower than its intrinsic value, the investor would decide to buy the
share as it is underpriced. The price of such a share is expected to move up
in future to match with its intrinsic value.

2.3 Types of financial statement analysis

There are three key methods for analyzing financial statements.
Balance sheet analysis
Cash flow analysis
Ratio analysis

2.3.1 Balance sheet Analysis

The balance sheet, also known as the statement of financial condition, offers
a snapshot of a company's health. It tells you how much a company has in its
assets, and how much it its liabilities. The difference between what it owns
and what it owes is its equity, also commonly called "net assets" or
"shareholders equity".
The balance sheet tells investors a lot about a company's fundamentals: how
much debt the company has, how much it needs to collect from customers
(and how fast it does so), how much cash and equivalents it possesses and
what kinds of funds the company has generated over time.

2.3.2 Cash flow analysis

A cash flow statement is one of the most important financial statements for a
project or business. The statement can be as simple as a one page analysis
or may involve several schedules that feed information into a central
statement.

2.3.3 Ratio analysis

The second method for analyzing financial statements is the use of many
kinds of ratios. You use ratios to calculate the relative size of one number in
relation to another. There are several general categories of ratios, each
designed to examine a different aspect of a company's performance. The
general groups of ratios are:

1. Liquidity ratios
This is the most fundamentally important set of ratios, because they
measure the ability of a company to remain in business. Click the following
links for a thorough review of each ratio.
Current ratio. Measures the amount of liquidity available to pay for
current liabilities.
Quick ratio. The same as the current ratio, but does not include
inventory.
Cash ratio. Measures the amount of time required to convert assets
into cash.
2. Solvency ratios
These ratios reveal the extent to which a company is relying upon debt to
fund its operations, and its ability to pay back the debt. Click the following
links for a thorough review of each ratio.
Debt to equity ratio. Shows the extent to which management is
willing to fund operations with debt, rather than equity.
Debt service coverage ratio. Reveals the ability of a company to
pay its debt obligations.
Fixed charge coverage. Shows the ability of a company to pay for its
fixed costs.
3. Activity/Efficiency ratios

These ratios are a strong indicator of the quality of management, since they
reveal how well management is utilizing company resources. Click the
following links for a thorough review of each ratio.
Accounts payable turnover ratio. Measures the speed with which a
company pays its suppliers.
Accounts receivable turnover ratio. Measures a company's ability
to collect accounts receivable.
Fixed asset turnover ratio. Measures a company's ability to
generate sales from a certain base of fixed assets.
Inventory turnover ratio. Measures the amount of inventory needed
to support a given level
4. Profitability ratios
These ratios measure how well a company performs in generating a profit.
Click the following links for a thorough review of each ratio.
Gross profit ratio. Shows revenues minus the cost of goods sold, as a
proportion of sales.
Net profit ratio. Calculates the amount of profit after taxes and all
expenses have been deducted from net sales.
Return on equity. Shows company profit as a percentage of equity.
Return on net assets. Shows company profits as a percentage of
fixed assets and working capital.
Return on operating assets. Shows company profit as percentage of
assets utilized.

Chapter Three: Financial Analysis of Singer Bangladesh

3.1 Ratio Analysis
3.1.1. Liquidity Ratio
Particulars

Year

Year

Year

Year

2012
2.99

2013

2014

Current Ratio

2011
3.75

4.
50

Quick Ratio

2.02

1.16

59
2.

82
Cash Ratio

0.88

2.

0.09

1.
22

1.
16

0.
14

Chart Title
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0

Year 2011

Year 2012
Current Ratio

Year 2013

Quick Ratio

Year 2014

Cash Ratio

Comments: Liquidity ratio shows the ability of a firm to meet its current
liability. The liquidity position of Singer Bangladesh is lower as compared to
last year. Current ratio and quick ratio have decreased by 42% and 56%
respectively. Cash ratio has drastically decreased by 87% compared to last
year. Inventories and trade debtors have decreased & trade creditors
increased over the last year. The cash holding decreased drastically over the
last year.

3.1.2. Operating Efficiency ratio

Particulars

Year

Year

Year

2011

2012

2013

Inventory Turnover Ratio

4.55
Receivable
Ratio
A/C Payable

8.51

7.82

1.40
Collection

6.96
1.64

5.23

6.

7.95

7.

6.95

1.

1.80

52.

45.27

88

Turnover
6.37

3.
81

Turnover

Ratio
Total Asset Turnover
Average

3.72

Year 2014

25
51

Period (Days)
42.29
Inventory
Conversion

46.01

79.15

96.76

Period(Days)
Operating Cycle (Days)

29
94.

1
21.43

44
1

42.77

146.

51.75

64.94

91.02

(Days)

114.09

73

Payables Payment Period

56.49
(Days)
Cash Conversion Cycle

68.82

49.

51.80

97.

62.29

69
04

Chart Title
9
8
7
6
5
4
3
2
1
0

Year 2011

Year 2012

Year 2013

Year 2014

Inventory Turnover Ratio

Receivable Turnover Ratio

A/C Payable Turnover Ratio

Total Asset Turnover

Comments:

Activity

ratio

shows

the

reflection

of

performance

of

management. The management efficiency of Singer Bangladesh is much

better as compared to last year. Inventory turnover, receivable turnover and
asset turnover has increased by 37%, 16%, 19% respectively. On the other
hand, Accounts payable turnover decreased by 4% by the last year.

3.1.3. Profitability Ratio

Particulars
Gross
(GPM)

Profit

Year
2011
Margin 25.66%

Year

Year 2013

Year 2014

2012
26.99%

27.03%

25.33%

Operating Profit Margin 9.21%

11.37%

8.88%

8.27%

(OPM)
Net Profit Margin (NPM)
7.32%
Return on Total Assets 10.25%

7.32%
12.00%

5.79%
8.76%

4.99%
8.99%

(ROA)
Return on Equity (ROE)

20.70%

14.78%

17.42%

14.97%

Chart Title
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Year 2011

Year 2012

Gross Profit Margin (GPM)

Year 2013

Year 2014

Operating Profit Margin (OPM)

Net Profit Margin (NPM)

Comments: Profitability ratios based on sales ratio shows the ability of a

firm of earning profit from sales revenue. Profit margin of Singer Bangladesh
is almost stable over the last four years. Gross profit, operating profit and
net profit margin decreased 6%, 6% and respectively. But net profit margin
decreased 13% compared to last year and 30% compared that of 2011 which
is very much concerning.

Chart Title
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Year 2011

Year 2012

Return on Total Assets (ROA)

Year 2013

Year 2014

Return on Equity (ROE)

Comments: Profitability ratios based on asset ratio shows the ability of a

firm to earn profit over its assets. The profitability on assets of Singer
Bangladesh has improved as compared to last year. The ROE & ROA have
changed by 18% & 3% respectively.

3.1.4. Leverage and Coverage Ratio

Particulars

Year

2011
Total Debt to Equity
0.01
Debt to Total Assets
0.01
Times Interest Earned -(TIE)

Year
2012
0.19
0.11
11.78

Year 2013

Year
2014

0.01
0.01
14.61

0.14
0.06
8.48

Chart Title

Times Interest Earned (TIE) --

0.2
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0

16
14
12
10
8
6
4
2
0

Times
Interest
Earned (TIE)
--

Total Debt to Equity

Debt to Total Assets

Comments: Solvency ratio shows the ability of a firm to meet its long term
liability. The solvency position of Singer Bangladesh is very impressive as it
has no long term debt. The variation in debt to equity ratio and debt to total
asset ratio from 2011 to 2014 is because of the acquisition of huge short
term loan in one year and repayment in the later year. The interest payment
is increased as compared to last year which affects the interest coverage
ratio.

3.1.5. Valuation ratio

Particulars

Year

Year

Year

Year

2011

2012

2013

2014

5.40

4.67

4.51

7.77

P/B (price to book) Ratio

Book Value Per Share

28.67

33.11

4.33

9.91

5.21

6.39

4.98

4.72

EPS
P/E Ratio

3
29.71

24.21

1.06

3
2.77

Chart Title
40
35
30
25
20
15
10
5
0

Year 2011

Year 2012

Year 2013

Year 2014

P/B (price to book) Ratio

Book Value Per Share

EPS

P/E Ratio

Comments: Valuation ratio shows the basic earning power & fundamental
value of the share. The valuation ratios of Singer Bangladesh are quite good
as compared to last years. P/B ratio and P/E ratio has increased by 72% and
6% respectively from the last year. EPS and book value per share have
decreased by 5% and 42% respectively.

3.2. Cash Flow Analysis

Comments: The net change in 2015 cash flow is negative. This indicates
that during the year the firm has more cash outflow than inflow. The cash
position of the firm has deteriorated compared to the last year. Huge
inventories of BDT 168,122,914 piled up in 2014 that consumed cash as well
as the accounting profit. Again, huge amount of advance deposits and prepayment consumed the cash as well. Acquisition of property, plant and
equipment valuing BDT 119,317,266 has affected the cash balance. Besides,

dividend payment of BDT 1,599, 901,878 also decreased the cash balance as
well.

3.3. Balance Sheet Analysis: Common Size Analysis based

on Total Assets
STATEMENT OF FINANCIAL POSITION
ASSETS:
2011
2012
2013
Non-Current Assets:
17.89 19.62 20.84
%
%
%
Property, Plant and Equipment17.85
19.55
20.58
Carrying Value
%
%
%
Investment - Long Term (at Cost)
0.04% 0.07% 0.26%
Security Deposits
0.00% 0.00% 0.00%
Current Assets:
Inventories
Trade Debtors
Advances, Deposits and
Prepayments
Inter-Company Receivables
Short Term Investment
Cash and Cash Equivalents
TOTAL ASSETS

SHAREHOLDERS' EQUITY AND

LIABILITIES:
Shareholders' Equity:
Share Capital
General Reserve
Retained Earnings

2014
22.09
%
21.66
%
0.36%
0.07%

82.11
%
37.83
%
20.12
%
4.76%

80.38
%
49.26
%
21.67
%
7.15%

79.16
%
29.60
%
22.33
%
6.24%

68.11
%
35.93
%
20.79
%
7.79%

0.00%
0.00%

0.00%
0.18%

0.00%
0.00%

19.40
%
100.0
0%

2.12%

0.50%
16.52
%
3.96%

100.0
0%

100.0
0%

90.20
%

59.74
%
10.67
%
7.55%
41.53
%

56.57
%
8.75%

62.15
%
11.59
%
9.66%
40.90
%

36.05
%
14.48
%
9.33%
12.23
%

9.49%
38.33
%

3.60%

Non-Current Liabilities:

18.33
%
0.00%
0.62%

16.55
%
0.00%
0.45%

20.26
%
0.00%
0.02%

27.88
%
0.00%
0.00%

21.92
%
0.74%

17.59
%
0.60%

26.27
%
5.16%

Provision for Income Tax

20.22
%
0.96%

26.88
%
11.01
%
14.76
%
1.11%

15.76
%
1.23%

21.07
%
0.04%

TOTAL SHAREHOLDERS' EQUITY

AND LIABILITIES

100.0
0%

100.0
0%

100.0
0%

90.20
%

Long Term Loans - Secured

Deferred Tax Liability
Current Liabilities:
Short Term Bank Loans
Trade Creditors

Comments: Singer Bangladesh has increased the investment in capital

assets from 20.58% to 21.66% last year. Long term investment has been
increased from .26% to .36%. Moreover, issues of new share capital from
11.59% to 14.48% along with these factors indicates that Singer Bangladesh
has is trying to expand its capacity and new opportunities.
Inventories in the last year increased at huge amount from 29.60% to
35.93%. Again, trade debtors has decreased but advances, deposits and prepayments has increased which ultimately led to drastic cash shrinkage from
19.4% in 2011 to 3.60% in 2014. Payment of dividends also affected the cash
balance roughly.
Singer Bangladesh has no long term loan from 2011 to 2014. But it has huge
amount of short term loan which has to be repaid after one year interval and
created huge interest burden for the company. This has given the company a
good debt to equity /assets ratio too. `

4.0 Conclusions
Singer Bangladesh Limited runs its operation in a competitive industry where
local assembling firms lead the market. Revenue from white Goods segment

has increased by 9% in 2014 due to increase in the refrigerator and washing

machine sales. Revenue from brown goods grew by 23% during the year due
to increase in sale of panel televisions. During the year the companys smart
Phones sales increase by 417% with the introduction of Symphony. Last year
the firm has declared 160% interim cash dividend in September; however
this year no dividend declaration has come so far.