aci formulations ratio analysis

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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