aci formulations ratio analysis
TRANSCRIPT
FINANCIAL ANALYSIS OF
ACI FORMULATIONS
LIMITED
COMPANY OVERVIEW
ACI Formulations Limited (ACI FL) is a subsidiary of ACI limited
ACI FL was started its business 1995 as a private limited company.
Located at Gazipur. The principle activities of the company are
manufacturing and marketing of a number of agrochemical and consumer products.
The company became a publicity listed company with Dhaka Stock Exchange and Chittagong Stock Exchange Limited.
RATIO ANALYSIS
LIQUIDITY RATIOS
Liquidity ratios shows a firm’s ability to cover its current liabilities with its current assets.
CURRENT RATIO
Current ratio of ACI Formulations indicates that in the year of 2012 it was 1.5 but in the year of 2013, it decreases to 1.49. Here change of the ratio is -0.67%. It is a very little change. The reason behind this change is the current asset of the company increases 3.91% and current liability increases 4.11%.
2012
2013
1.484
1.486
1.488
1.49
1.492
1.494
1.496
1.498
1.5
1.5
1.49
Current Ratio
Current Ratio
QUICK RATIO
Quick ratio of ACI Formulations indicates that in the year of 2012 it was .87 and year of 2013 it increases to .98. Here change of the ratio is 12.64%. The reason behind this change is the cash increases by 49.36%, Inter-company receivables increases by 125.46%, Advance income tax increases by 97.21%; Advances, deposits, prepayments increases by 5.97%, Other receivables increases by 100%, Trade receivables increases by 23.47%. Here in 2013 inventories decreases by -14.27% and current liabilities increases 4.11%.
20122013
0.80.820.840.860.88
0.90.920.940.960.98
0.870000000000002
0.98
Quick Ratio
Quick Ratio
LIQUIDITY RATIOS
Ratios 2012 2013
Current ratio 1.50 1.49
Quick ratio .87 .98
Here current ratio is almost same in both of the year. But the quick ratio is getting stronger in 2013.So, we can say the overall performance of liquidity ratios are good for the company.
PRESENTER 2 MD. SHOHANUZZAMAN
ACTIVITY RATIOS
Indicates quality of receivable and how successful the firm is in its collections.
TOTAL ASSET TURNOVER
Total asset turnover of ACI Formulations indicates that in the year of 2012 it was .91 and year of 2013 it decreases to .81. Here change of the ratio is 10.99%. The reason behind this change in 2013 revenue decreases by -9.32% and total assets increases by 1.77%.
2012 20130.76
0.78
0.8
0.82
0.84
0.86
0.88
0.9
0.92 0.91
0.81
Total Asset Turnover
Total Asset Turnover
INVENTORY TURNOVER
Inventory turnover of ACI Formulation indicates that in the year of 2012 it was 2.95 and year 2013 it increase to 3.06. Here change of the ratio is 3.73%. The reason behind this change in 2013 COGS decreases by -10.92%. On the other hand, inventory decreases by -14.27%.
20122013
2.882.9
2.922.942.962.98
33.023.043.06
2.95
3.06
Inventory Turnover
Inventory Turnover
AVERAGE COLLECTION PERIOD
Average collection period of ACI Formulations indicates that in year 2012 it was 83 days and year 2013 it decreases to 71 days. Here change of the ratio is 14.20%. The reason behind this change in 2013 annual net credit sales decreases by -0.09% and accounts receivables decreases by -22.29%.
20122013
6466687072747678808284
83
71
Average Collection period (in days)
Average Collection period ( in days)
ACTIVITY RATIOS Ratios 2012 2013
Total Asset Turnover 0.91 0.81
Inventory Turnover 2.95 3.06
Average Collection Period 83 days 71 days
•In 2013 total asset turnover decreases because net sales decreases in 2013.•In 2013 Inventory turnover decreases and average collection period decreases.
So, here total asset turnover performance is not good but the other two ratios performance is good because in 2013 inventories and accounts receivables decreases.
PRESENTER 3MD. RASHIDUL ISLAM
FINANCIAL LEVERAGE RATIOS
Shows the extent to which the firms is financed by debt.
DEBT TO EQUTY
Debt to equity of ACI Formulations indicates that in the year of 2012 it was 66% and year 2013 it increases to 68%. Here change of the ratio is 3.03%. The reason behind this change in 2013 total debt increases by 2.97% an accounts receivables decreases by -22.29%.
20122013
65
65.5
66
66.5
67
67.5
68
66
68
Debt to Equity
Percentage(%)
TIME INTEREST EARNED
Time interest earned of ACI Formulations indicates that in the of year 2012 it was 3.14 and year of 2013 it increases to 3.78%. Here change of the ratio is 20.38%. The reason behind this change in 2013 operating profit decreases by -19.94% and interest expenses decreases by -33.29%.
2012 20130
0.5
1
1.5
2
2.5
3
3.5
4
3.14
3.78Time Inertest Earned
Time interest Earned
FINANCIAL LEVERAGE RATIOS
ratios 2012 2013
Debt to Equity 66% 68%
Time Interest Earned 3.14 3.78
Here, both the ratios are increased in 2013. So, the company’s ability to financed by debt is increasing.
PROFITABILITY RATIOS
Indicates the firm’s profitability after taking account of all expenses and income taxes.
GROSS PROFIT MARGIN
Gross Profit Margin of ACI Formulations indicates that in the year of 2012 it was 24% and year of 2013 it increases to 25%. Here change of the ratio is 4.17%. The reason behind this change in 2013 gross profit decreases by -4.15% and net sales decreases by -9.32%.
20122013
23.4
23.6
23.8
24
24.2
24.4
24.6
24.8
25
24
25
Gross Profit Margin
Percentage(%)
PRESENTER 4ZANNATUL FERDOUS
NET PROFIT MARGIN
Net Profit Margin of ACI Formulations indicates that in the year of 2012 it was 5.81% and year of 2013 it increases to 5.52%. Here change of the ratio is 4.99%. The reason behind this change in 2013 net profit after tax decreases by -13.82% and net sales decreases by -9.32%.
20122013
5.355.4
5.455.5
5.555.6
5.655.7
5.755.8
5.85 5.81
5.52
Net Profit Margin
Percentage(%)
RETURN ON ASSETS
Return on assets of ACI Formulations indicates that in the of year 2012 it was 5.26% and year of 2013 it increases to 4.46%. Here change of the ratio is 15.21%. The reason behind this change in 2013 net profit after tax decreases by -13.82% and total assets increases by 1.77%.
20122013
44.24.44.64.8
55.25.4
5.26
4.46
Return On Assets
Percentage(%)
RETURN ON EQUITY
Return on equity of ACI Formulations indicates that in the year 2012 it was 8.75% and year of 2013 it decreases to 7.47%. Here change of the ratio is 14.63%. The reason behind this change in 2013 net profit after tax decreases by -13.82% and shareholder’s equity increases by 0.98%.
2012 20136.5
7
7.5
8
8.5
9 8.75
7.47
Return On Equity
Percentage(%)
PROFITABILITY RATIOS
Ratios 2012 2013
Gross Profit Margin 24% 25%
Net Profit Margin 5.81% 5.52%
Return on Assets 5.26% 4.46%
Return on Equity 8.75% 7.47%
Here in 2013 gross profit margin increases but the other three ratios net profit after tax decreases. In 2013 the other 3 ratios goes down. So we can say that the over all performance of profitability ratios are not good.
PRICE EARNING RATIO
Return on equity of ACI Formulations indicates that in the year of 2012 it was 47.44% and year of 2013 it increases to 55.05%. Here change of the ratio is 16.04%.The reason behind this change in 2013 earning per share decreases by -13.81%.
2012
2013
42
44
46
48
50
52
54
56
47.44
55.05
Price Earning Ratio
Price Earning Ratio
PRESENTER 5MASHRURA RAHMAN
PRICE EARNINGS RATIOBETWEEN ACI FORMULATIONS AND INDUSTRY
AVERAGE
Here, ACI Formulation PE ratio is 55.05 and Industry average is 24.24. So, Industry average PE ratio is much lower than ACI Formulation.
ACI Formulation
Industry Average
0
10
20
30
40
50
6055.05
24.24
Price Earnings Ratio
Price Earnings Ratio
REQUIRED RATE OF RETURN
REQIRED RATE OF RETURN
Required rate of returnHere,
Ri = required rate of return
Rf = risk free rate, which is 0.11
βi = firm’s beta, which is 0.79
Rm - Rf= market risk premium, which is 0.084
So, Ri = Rf + βi (Rm - Rf)
= 0.11 + 0.79 (.084)= 17.64%
RECOMMENDATION
RECOMMENDATION
If we compare the PE ratio between ACI Formulations and Industry average then we can see that the industry average is 24.24 and ACI Formulation is 55.05. So, The company PE ratio is more higher than the industry average. So, the investor should not buy the stock.
INDEX ANALYSIS FOR INCOME STATEMENT
Particulars Indexed (%)
Total non Current assets 99.07
Total Current Assets 103.90
Total Assets 101.77
Total Equity 100.09
Total current liabilities 104.10
Total equity and liabilities 101.77
INDEX ANALYSIS FOR BALANCE SHEET
Particulars Indexed (%)
Revenue 90.76
Cost of sales 89.07
Gross Profit 96.85
Total Comprehensive Income 86.17
Earnings Per Share(EPS) Basic Earnings per share(par value tk. 10)
86.18
COMMON SIZE ANALYSIS FOR INCOME STATEMENT
Particulars Common size (%)
Total non Current assets 43.03
Total Current Assets 56.97
Total Assets 100
Total Equity 59.67
Total liabilities 40.33
Total equity and liabilities 100
COMMON SIZE ANALYSIS FOR BALANCE SHEET
Particulars Common size (%)
Revenue 100
Cost of sales 75.02
Gross Profit 24.98
Total Comprehensive Income 5.52
Earnings Per Share(EPS) Basic Earnings per share(par value tk. 10)
0.0000001226
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