Mushfeka 8|nte kama|

ko|| 07
RATl0
AtAlYSlS
8aLlo analysls ls a wldely used Lool of flnanclal
analysls whlch lnLerpreL Lhe llnanclal SLaLemenLs
1he sysLemaLlc use of 8aLlo can deLermlne Lhe
sLrengLhs and weakness as well as Lhe hlsLorlcal and
currenL flnanclal condlLlon of a flrm
Mean|ng kat|ona|e
ssumlng neL proflLs of 23000 and sales of 100000
ln Lerm of 8aLlo nalysls 1he relaLlon cab be expressed
as
1 ercenLages ( neL proflL ls 23 of sales)
2 lracLlon ( neL proflL ls x of sales)
3 roporLlon of numbers ( 1he relaLlonshlp beLween
neL proflL sales ls 14)
Mean|ng kat|ona|e
1hese alLernaLlve meLhods of expresslng lLems
whlch are relaLed Lo each oLher are for purpose of
flnanclal analysls refer Lo as 8aLlo nalysls
lL should be noLed LhaL compuLlng of raLlo does noL
add any lnformaLlon
1he raLlonale of raLlo analysls lles ln Lhe facL LhaL lL
makes relaLed lnformaLlon comparable
Mean|ng kat|ona|e
8aLlo can be dlvlded lnLo four board groups Such as
1 LlquldlLy 8aLlo
2 CaplLal SLrucLure/ Leverage 8aLlos
3 roflLablllLy 8aLlo
4 cLlvlLy 8aLlo
@es of kat|o
Ikram AI Mubashshir
RoII:163
|qu|d|t kat|os
LlquldlLy raLlo ls Lhe ablllLy of a flrm Lo saLlsfy shorL
Lerm obllgaLlons as Lhey become due
1he raLlos whlch lndlcaLe Lhe llquldlLy of a flrm are
1 neL worklng caplLal
2 CurrenL raLlos
3cld LesL/ qulck raLlos
41urnover raLlos
3Super qulck raLlos
6uefenslvelnLerval raLlos
7Cash flow
-et Work|ng Ca|ta|
neL worklng caplLal ls a measure of llquldlLy
calculaLed by subLracLlng currenL llablllLy
from currenL asseLs
Iormu|a
nWC CurrenL sseLs CurrenL LlablllLles
Wh -et Work|ng Ca|ta| |s
not a rat|o?
1o become a raLlo a resulL musL be produced by
dlvldlng Lwo dlfferenL elemenLs 8uL ln nWC
resulLs come by subLracLlng currenL llablllLles
from currenL assenLs So nWC cannoL be
consldered as raLlo
Current kat|os
1he currenL raLlo ls a measure of llquldlLy
calculaLed dlvldlng Lhe currenL asseLs by Lhe
currenL llablllLles
Iormu|a
CurrenL raLloCurrenL asseLs /currenL llablllLles
$amina Chowdhury
RoII:83
n|d test]u|nk test kat|o
1he acld LesL ls Lhe raLlo beLween qulck currenL asseL and
currenL llablllLles and ls calculaLed by dlvldlng by qulck asseL
by currenL llablllLy
1he qulck asseL refers Lo Lhe currenL asseLs whlch can be
converLed lnLo cash lmmedlaLely or aL a shorL noLlce wlLhouL
dlmlnuLlon of value lncluded ln Lhese caLegorles of currenL
asseLs are
1 Cash and bank balance
2 ShorL Lerm markeLable securlLles
3 uebLors and recelvables
xample
lf a company has qulck asseLs amounLs Lo 30000 and a
qulck llablllLy amounLs Lo 13000 Lhen Lhe acld LesL raLlo of
Lhe company wlll be
@urnover kat|o
1here are Lhree relevanL Lurnover raLlo and Lhey are
1 lnvenLory Lurnover raLlo
2 uebLor Lurnover raLlo
3 CredlLor Lurnover raLlo
$umit Kuri
RoII: 85
everage kat|o
raLlo LhaL measures flnanclal sLrengLh
8y lLs ablllLy Lo pay Lhe lnLeresL and
lnsLallmenL
everage kat|o
n Lhe basls of lLs varlaLlons lL can be
classlfled lnLo Lhree caLegorles
uebLqulLy 8aLlo
uebLsseL 8aLlo
qulLysseL 8aLlo
ebtLqu|t kat|o
1he raLlo reflecLs Lhe relaLlve clalms of
credlLors and shareholders agalnsL Lhe
asseLs of Lhe flrm
1he approach Lo express or calculaLe
Lhe u ls
D/E ratio =
ebtsset kat|o
lL shows Lhe effecL of Lhe use of Lhe flxed
lnLeresL of funds on Lhe earnlngs avallable Lo
Lhe equlLy holders
we can wrlLe down Lhe approach
1oLal asseL raLlo
Lqu|tsset kat|o
1he raLlo lndlcaLes Lhe proporLlon of LoLal asseL
flnanced by Lhe owners
qulLysseL 8aLlo
0 can rit0 don th0 approach:
$adaba $aber
RoII: 121
9rof|tab|||t kat|os
1hese raLlos are used Lo measure Lhe proflLablllLy of a flrm
1hey are deslgned Lo provlde answers abouL
dequan of a f|rm's rof|t
kate of return of a f|rm
kate of rof|t for var|ous segments of the f|rm
Larn|ngs er share
mount a|d as d|v|dends
kate of return to the equ|tho|ders
9rof|tab|||t kat|os nontd
9rof|tab|||t kat|os
(on the bas|s of
Sa|es)
9rof|tab|||t
Marg|n
Lxense kat|os
Gross 9rof|t
Marg|n
-et 9rof|t
Marg|n
9rof|tab|||t kat|os nontd
8as|s of determ|nat|on
roflLablllLy raLlos can be deLermlned on Lhe basls of
1 Sales 2 lnvesLmenL
9rof|tab|||t kat|o ke|ated to Sa|es
1 roflL margln 2 xpenses raLlos
9rof|tab|||t kat|os Iormu|a
9rof|t marg|n
1he proflL margln measures Lhe relaLlonshlp beLween proflL and
sales
a) Gross rof|t marg|n
Cross proflL margln Cross proflL/sales*100
b) -et rof|t marg|n
Cerat|ng rof|t rat|o arnlngs before lnLeresL and Laxes /neL sales
9retax rof|t rat|o arnlngs before Laxes /neL sales
-et rof|t rat|o arnlngs afLer lnLeresL and Laxes /neL sales
Lxam|e
lrom Lhe followlng lnformaLlon of a flrm (?) we wlll
deLermlne (1) gross proflL margln and (2)neL proflL margln
Sales 1k 200000
CosL of goods sold 100000
Lher operaLlng expenses 30000
So|ut|on
Cross proflL margln 1k 100000/1k 200000 30 per cenL
neL proflL margln 1k 30000/1k 200000 23 per cenL
Md. $amsuI Arifin
RoII: 43
kC (keturn on ssets)
caLegory of 8l (8eLurn on lnvesLmenLs)
proflLablllLy raLlo
Measured ln Lerms of Lhe relaLlonshlp beLween neL
proflLs and asseLs
lso called proflLLoasseL raLlo
kC (nontd)
neL proflLs may be deflned as
sseLs may be deflned as
neL proflLs afLer Laxes
neL proflLs afLer Laxes
|us lnLeresL
neL proflLs afLer Laxes
|us lnLeresL
m|nus Lax savlngs
1oLal asseLs 1oLal asseLs llxed asseLs llxed asseLs
1anglble asseLs 1anglble asseLs
Comutat|on of kC
L@ + (Interest @ax advantage on
|nterest ) or fter tax |nterest nost
kC
verage tota| assets]@ang|b|e
assets]I|xed assets
kCCL (keturn on Ca|ta|
Lm|oed)
Second Lype of 8l
noLher proflLablllLy raLlo
roflLs are relaLed Lo Lhe LoLal caplLal employed
Comutat|on of na|ta|
em|oed
PnoncurrenL llablllLles (longLerm llablllLles)
|us owner's equllLy
PneL worklng caplLal |us flxed asseLs
PLongLerm funds m|nus lnvesLmenLs made
ouLslde Lhe flrm
Comutat|on of kCCL
8l1
100
verage LoLal caplLal employed
neL proflL afLer Laxes+lnLeresL
1ax advanLage on lnLeresL
100
verage LoLal caplLal employed
neL proflL afLer Laxes+lnLeresL
1ax advanLage on lnLeresL
100
verage LoLal caplLal employed
verage lnLanglble asseLs
1
2
3
L9S (Larn|ngs 9er Share)
|m|tat|ons
uoes noL recognlse Lhe effecL of
lncrease ln equlLy caplLal as a
resulL of reLenLlon of earnlngs
uoes noL reveal how much ls
pald Lo Lhe owners as dlvldend
Wldely used raLlo
Measures Lhe proflL avallable Lo shareholders on a per share
basls
Comutat|on of L9S
neL proflL avallable Lo equlLy
holders
S
number of ordlnary shares
ouLsLandlng
$aIma Ahmed $eetu
RoII: 77
nt|v|t kat|o
cLlvlLy raLlo ls concerned wlLh measurlng Lhe
efflclency ln asseL managemenL
1hls raLlo ls also called fflclency 8aLlo or
sseL 8aLlo
cLlvlLy raLlo measures Lhe speed wlLh whlch
varlous asseLs are converLed lnLo sales or cash
nt|v|t kat|o nont
1here are varlous Lypes of acLlvlLy raLlo
dependlng on varlous Lypes of asseLs llke
lnvenLory Lurnover raLlo
uebLor Lurnover
sseL Lurnover
Larn|ng 9ower
arnlng power ls Lhe overall proflLablllLy of a
flrm
lL compuLed by Lhe proflL margln and asseLs
Lurnover
arnlng ower neL proflL margln sseLs
Lurnover
Kabir Ahmed Khan
RoII: 87
Radia Chowdhury
RoII: 133
!74-02
Stock Tornover 6
Cupitul Tornover Rutio z
ixed ussets tornover rutio q
Gross proIit zo%
ebt collection period z
Creditors Puyment Period ;
Gross proIit 6o,ooo
closing stock excess oI
opening stock
,ooo
Prepare a balance sheet.
$4:943
Measar|ag Bast af Baas Sal
Gross proIIL ruLIo 100
20 100
$uIes=oo,ooo
osL oI goods soId=$uIes- Gross proIIL
=oo,ooo-6o,ooo
=zqo,ooo
Measar|ag Stac| Amaaat
;eruge $Lock=
Sal|ag twa eaat|aa
s|maltaaeaasl
IosIng $Lock + OpenIng $Lock=8o,ooo
IosIng $Lock - OpenIng $Lock= ,ooo
5ubtroctinq equotion 2 from equotion l
z OpenIng $Lock= ;,ooo
OpenIng $Lock= ;,oo
IosIng $Lock= qz,oo
Measar|ag Bap|tal
Measar|ag ||te Asset
Mohammad Nur BiIIah
RoII: 81
D0-t coll0ction p0riod = 2months
D0-tor turnov0r ratio
Or, D0-tor turnov0r ratio
.ssumiu saies to be credit saies aud debtors
turuoer ratio is based ou eareud |iures, ve
uae.
D0-tors = =50,000
D0-t coll0ction p0riod = 2months
D0-tor turnov0r ratio
Or, D0-tor turnov0r ratio
.ssumiu saies to be credit saies aud debtors
turuoer ratio is based ou eareud |iures, ve
uae.
D0-tors = =50,000
ssuming all purchas0s to -0 cr0dit purchas0s, th0 amount
of purchas0s is d0t0rmin0d as follos:
Cost of goods sold= Op0rating stock +Purchas0closing
stock
240000=37500+Purchas0s42,500
24000+4250037500=Purchas0s
245,000=Purchas0s
.ssumiu creditors turuoer ratio is based ou tue eareud
|iure, tue amouut o| creditors is as |oiiovs.
Cr0ditors turnov0r ratio=
3
49000 CredlLors
ssuming all purchas0s to -0 cr0dit purchas0s, th0 amount
of purchas0s is d0t0rmin0d as follos:
Cost of goods sold= Op0rating stock +Purchas0closing
stock
240000=37500+Purchas0s42,500
24000+4250037500=Purchas0s
245,000=Purchas0s
.ssumiu creditors turuoer ratio is based ou tue eareud
|iure, tue amouut o| creditors is as |oiiovs.
Cr0ditors turnov0r ratio=
3
49000 CredlLors
BALANCE 8HEET BALANCE 8HEET
|ab|||t|es ssets
CaplLal120000
CredlLors49000
Closlng SLock 42300
uebLors30000
llxed sseLs60000
Cash (8alanclng llgure)16300
000 000
&mmay Hani Abir
RoII: 105
9rob|em2
Us|ng the fo||ow|ng |nformat|on nom|ete the ba|anne sheet
g|ven be|ow
1oLal debL Lo neL worLh 03 Lo 1
1urnover of LoLal asseLs (based on year end sales flgures)2
Cross proflL 30 per cenL
verage collecLlon perlod (based on 360dayyear) 40days
lnvenLory Lurnover (based on cosL of goods sold and yearend
lnvenLory) 3Llmes
cld LesL raLlo 0731
$4:943
ebt turnover
uebL Lo neL worLh raLlo
03
8s 2300001oLal debL (noLes and accounLs payable)
ssets turnover nont
SubsLlLuLlng Lhe value of 'noLes and accounLs payable' on Lhe
llablllLles slde we have 8s 730000 as Lhe LoLal sum of llablllLy and
so Lhe asseLs wlll be 8s 730000
1oLal asseLs Lurnover
2
8s 1300000 Sales
Gross rof|t rat|o
Cross proflL raLlo x 100
30 x 100
8s 430000 Cross proflL
nnount rene|vab|e turnover rat|o
ssumlng all sales Lo be credlL sales Lhe flgure of accounLs
recelvable would be deLermlned as follows
ccounLs recelvable Lurnover raLlo 9
e
ccounL recelvable Lurnover raLlo
9
verage debLors 8s 166667
$ayeem Jahangir
RoII: 75
Inventor turnover rat|o
lnvenLory Lurnover raLlo
3
8s 330000 Closlng lnvenLory
n|d test rat|o
cldLesL raLlo
073
8s 187300 Llquld asseLs
8s 187300 Cash + ccounLs recelvable
8s 187300 8s 166667 8s 20883 Cash
ssets
Cash 20833
ccounLs recelvable 166667
lnvenLory 330000
lanL and equlpmenL 212300
1oLal 730000
ssets
Cash 20833
ccounLs recelvable 166667
lnvenLory 330000
lanL and equlpmenL 212300
1oLal 730000
|ab|||t|es
noLes and ccounLs payable 230000
Common sLock 200000
8eLalned earnlngs 300000
1oLal 730000
|ab|||t|es
noLes and ccounLs payable 230000
Common sLock 200000
8eLalned earnlngs 300000
1oLal 730000