partha original.doc

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Praise to Almighty the creator and sustainer who have given usstrength and opportunity to complete present topic. In fact, I left nostone unturned to make the report stander, I helpful and useful. It isindeed a great pleasure and honor on my part to have the opportunityto submit this report.

First of all I would like to thank our dean, Faculty of Business studies

along with other faculty members of the Business Administration who

has arranged this practical orientation in bank. In this connection I

would also like to thank ------was my supervisor.

1

Acknowledgement


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Chapter: 1

Introduction

2


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1.1: INTRODUCTION

The main aim of a performance review is to provide an understanding of the

usiness! and! together with an ana"#sis of the re"evant information! provide an

interpretation of the resu"ts. The most effective performance review is provided

from a a"anced view of each of the activities of the organi$ation! which

necessari"# invo"ves the c"ose cooperation of each ro"e : mar%eting& research and

deve"opment& design& engineering& manufacturing& sa"es& "ogistics& finance& human

resources management 'Davies ( )oc$%o! 2**+!p.1,-.

The stages of performance review are shown in the fo""owing figure.1.

(10)Conclusions

(9)Investment

(8)

Management offinancial risk

(7)Financial

(6) Liquiit!

(") #ro$t%

(&)'fficienc!

()rofita*ilit!

(+) Consieration

of ma,orfeatures

(1) -./anal!sis

erformancerevie$

/


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0igure1: The stages of performance review

ource: Davies and )oc$%o '2**+

0inance a"wa#s eing disregarded in financia" decision ma%ing since it invo"ves

investment and financing in shortterm period. 0urther a"so act as a restrain in

financia" performance! since it does not contriute to return on e3uit#. 4 we""

designed and imp"emented financia" management is e5pected to contriute

positive"# to the creation of a firm6s va"ue. Di"emma in financia" management is to

achieve desired trade off etween "i3uidit#! so"venc# and profitai"it#.

7anagement of wor%ing capita" in terms of "i3uidit# and profitai"it# management

in essentia" for sound financia" recita" as it have a direct effect on the profitai"it#

of the compan#. In this thesis I want to %now aout the financia" performance of

the compan#.

1.2 objectives of the study

I have prepared the report for some definite purposes. Those purposes are photographed

eneath as!

To find out the )usiness po"icies of R.7.Inter"ings.

To eva"uate the performance of R.7.Inter"ings.

To %now the performance education techni3ues and procedures.

To %now the authorities invo"ve in performance eva"uation.

To e5amine the shortterm so"venc#8"i3uidit# position of R.7.

Inter"inings..

To e5amine the "ongterm so"venc# of R.7. Inter"inings..

To e5amine the efficienc#8asset79T ratio of R.7. Inter"inings...

To e5amine the profitai"it# of R.7. Inter"inings...

,


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To e5amine the mar%et va"ue position of R.7. Inter"inings..

To e5amine the a"anced score card! Ris% measurement of R.7.

Inter"inings..

To find out pro"em and recommendation in performance eva"uation of

R.7. Inter"inings..

.

1.3 Methodology of the study

In order to meet each oective! data was co""ected from oth primar# and secondar#

resources.

Primary Data

;rimar# data for the report was co""ected from main"# two sources:

< The correspondence fi"es.

< Interviews with the emp"o#ees

Secondary Data

The secondar# data sources were:

< =arious reports

< wesites

< 7onth"# usiness reviews

< 9uide"ines pu"ished # C>;?

1.4 Limitations of the study

@ac% of information due to the po"ic# of the compan# of %eeping a"" the

information confidentia"!

Inade3uate %now"edge on contemporar# terms of the compan#6s usiness

representatives.

Insufficient time due to the congested corporate schedu"e and e5am schedu"e!

@ac% of %now"edge aout the rea" "ife usiness!

+


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Insufficient pu"ished information and re"uctance aout providing those # the

compan#.

Chapter: 2

;ractica" 4spects

A


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ABOUT THE Company

R. M. Interlinings Ltd., with its sophistically designed plant at ChitagongExport Procesing Zone, is happy to introduce itself as the rst o!enand "on#o!en Interlining $anufacturer in %angladesh. ithcontinuous de!elop$ent, R. M. Interlinings Ltd. has &eco$e theleading $anufacturer of interlinings in %angladesh. 'ur products ha!ealready gained huge $ar(et share. )he genesis of the *(now#how+ is&ac(ed &y ER% )extile Manage$ent -$& of -er$any and "angtongy$o, a /ino#0apan 1oint !enture co$pany, to produce world#classinterlining, certied &y 'e(o#)ex /tandard 23. )o uphold this standard,in spite of other $achines, R. M. Interlinings Ltd. has installed the

world4s &est &rand new Coating $achinery fro$ C5I)EC, and other&ac( process $achinery fro$ %R6C7"ER#-er$any 8 5L9.E"RI7/E", with a &lend rst#rate raw $aterials and co$petence of:ualied professionalis$ co$pliance with I/' ;32. /ince theinception of R. M. in 2;?, we ai$ to increase and sustain our corporate!alue through growth and inno!ation. e proced in accordance withthe aproach of sustaina&le de!elop$ent. "ot only pro!iding our high:uality products and pleasant ser!ice to our clients &ut also focusing

B


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on inno!ation, en!iron$ental protection. e are $aintaining the a&o!ereality and achie!ing the desired le!els of success in e!ery passingyear and gi!ing ceaseless e@orts to o@er a wide range of new productswith latest in!entions, de!eloped through poling of the s(ills of &othforeign and local specialists.

MISION

To ensure the 3uic%est de"iver# of high 3ua"it# inter"inings through smooth productionwith an effective supp"# chain management and according"# meting the demands of

fashion techno"og#6 and ensuring the est of customer satisfaction.

VISION

To ecome a tota" specia"ist in inter"inings a" over the product range maintaining thehighest standards of production! %eeping an e#e to the e5isting and changing fashion

mar%ets6 and ensure the individua" customi$ed so"ution through product research!

deve"opment and innovations.

Slogan

OUR 04EION E>@T>R

F


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ACREDITATION

;roduct tandard Oe%oTe5 tandard 1* since 2**1.

7anagement tandard

IO -*1:2*F ince 2**2

0actor# @ocation:

;"ot /A! ector ,! Chitagong >5port ;rocesing ?one! Chitagong! )ang"adesh.

Maor Mile!tone o" t#e Company$

1--A Incorporated1--B Insta"ation of ;owder Coating @ine

1--F )egining of Commercia" ;roduction

1--- Insta"ation of tentering @ine2*** Insta"ation of ;aste Coating @ine

2**1 tandardi$ation of product acording to Oe%oTe5 tandard 1* 'C"as/

2**2 4doption of 7anagement proces to IO -*1:2**

2**/ Integration of 7anagement proces with IO -*1:2**

-


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2**, 4utomation of 7anagement proces introduced

2**+ tandardi$ation of product acording to Oe%oTe5 tandard 1* 'C"as2

2**A Up gradation of integrated management proces with IO -*1:2**2**- Up gradation of integrated management proces with IO -*1:2*F

BOARD O% DIRECTORS

7rs. Ro%e#a 4%hter

Chairperson

>mai": rmint"Grmid.com

7d. 7o$haru" Eo3 7ansor

7anaging Director

>mai": mdGrmi"d.com

Di&i!ion! O" t#e Company$

HUMAN RESOURCE MANA'EMENT

R. 7. Inter"inings @td is supported # a group of e5perienced professiona"s and sector

wise s%i""ed wor%ers. The tota" numers of active wor%force in R7I@ are 2B2 where its

Dha%a office has /2 emp"o#ees and its factor# has 2,* emp"o#ees. R7I@ runs three shiftsper da# and the "ength of each shift is eight hours. R7I@ provides a comp"etive sa"ar#

with two festiva" onuses! two incentive onuses! rea%fast! Tiffin! "unch! evening snac%s

1*
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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and diner to its emp"o#ees. R7I@ a"so provides "eave encashment and provident fund

a"ong with app"ica"e gratuities.

Prod(ct! o" t#e Company

PRODUCT LINE

Hoven inter"inings0usi"e ( Non0usi"e

Non woven inter"inings0usi"e ( Non0usi"enit Inter"inings

Eair Inter"inings

USING AREA

uites ( )"a$ershirts

;ants@adies Hear

)aies HearCaps

Eats

hoes)ags

Jac%ets

ports Hear

PRODUCTION TECHNO)O'*

Mac#inery

0inishing ;rocess machines from )RUCN>R! 9erman#. Coating machines from

C4=IT>C! wit$er"and and HOUKI EU4@I! China .D#eing 7achine from =4@D

E>NRI>N! Denmar% and other Chinese )rands.

+no,-#o,

>R)4 Te5ti"e 7anagement 9mE! 9erman#. N4NTON9 E7O! a inoJapan Joint=enture Compan#.

RA. MATERIA)S

%a/ric!

11


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China! Taiwan! ;a%istan! ?imawe and )ang"adesh

C#emical!

)40 9erman#! EUNT74N wit$er"and! T4N4T>K India! C(TChina.

Coating ;owder

4ifor9erman#! CE4>TI wit$er"and! ;o"ene Thai"and! uedaChina

PRODUCTION CAPACIT*

Hoven Capacit#

1. Hoven 0usi"e Inter"inings: /+** ards8Da#

2. Hoven Non0usi"e Inter"inings: ,** ards8Da#

Non-.o&en Capacity

1. 0usi"e Inter"inings ';aste Dot eries: ,** ards8Da#

2. 0usi"e Inter"inings 'Dou"e Dot eries: B** ards8Da#

/. 0usi"e Inter"inings 'cater eries: /** ards8Da#,. Non0usi"e Inter"inings: +** ards8Da#

COMPETENC*

Research ( Deve"opment

0u""# e3uipped "aorator# conducts tests according to >uropean ( Internationa" norms.

Our R(D team and engineers are cha""enged # the fast pace of techno"ogica" changes

and advances in areas of composite materia"s engineering! Chemistr#! ;roductiontechno"ogies and mu"titude of macro engineering tas%s! to enhance our product "ine ( to

deve"op user friend"# materia"s.

Tec#nical Ser&ice

n$#me

Hashing etc.


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Hithin B da#s after receipt of Irrevoca"e @etter of Credit or 0oreign Currenc# Che3ue

a"ong with re"ated import documents.

De"iver# outside )ang"adesh

Hithin /* da#s after receipt of Irrevoca"e @etter of Credit 'at sight or advance T

Te"egraphic Transfer pa#ment.

0UA)IT* CONTRO)

PRODUCT 0UA)IT*$

R.7. Inter"inings are suected to the most rigorous process of 3ua"it# contro" and are

ased on continuous production "ine testing and product 3ua"it# procedures which inc"ude

adhesion! e"ongation and #ie"d strength tests as we"" as adverse treatment and shrin%agetests. >ach individua" product "ine goes through a series of high end 3ua"it# contro"

chec%s and are precise to the ver# "ast detai".

%INANCIA) STREN'TH

4 review of the compan#Ls po"icies in re"ation to financia" strength "i%e the ai"it# to

generate cash! service det! financia" average targets! generate sufficient return to ena"econtinuous aces to fund mar%et! interna" "i3uidit#! operating efficienc#! operating

profitai"it#! and "everage position of the compan# etc. has een done # CR4)

'Credit Rating 4genc# of )ang"adesh @td and achieved a consistent score 44/which denotes strong capacit# to met financia" commitments! udged to e of

high 3ua"it#! suect o "ow credit ris%.

.OR+ ENVIRONMENT

TEAM .OR+

Ten Departments inc"uding: #stems& )usiness Deve"opment& >ngineering& upp"#Chain& Euman Resource& Research and Deve"opment& ;roduction& 0inance& ;roduct

Mua"it#& tation Operation wor% as a team to produce 3ua"it# output.

SA%ET* MEASURES

1/


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He"" e3uipped 0ire fighting instruments! Trained Rescue Team! Hide tairs. 4rrangement

of ire dri"" for ma%ing the emp"o#ees aware.

%AST AID

To give initia" treatment to the wound8sic% emp"o#ees fast aid e3uipments are reserved.

Chapter: /

Theoretica" 4spects:

1,


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;erformance eva"uation techni3ues and procedures

Prelude: genera""# there are some techni3ues! which are used in eva"uating

financia" performance of a firm. )asica""# this stud# is going to tr# the eva"uationof the financia" performance of >)@ through ratio. o in this chapter! we wi""

discuss the various financia" ratio! those are used in eva"uating the performance.

These financia" ratios are traditiona""# grouped into fo""owing categories

1. hort term so"venc# ratio

2. @ong term so"venc# ratio

/. >fficienc# management ratio

,. ;rofitai"it# ratio

+. 7ar%et va"ue ratio

Now! ever# categor# is discussed rief"#:

3.1 short term solvency ratios: short term so"venc# ratios as a group are

intended to provide information aout a firm6s "i3uidit#. The primar# concern is

the firm6s ai"it# to pa# its i""s over the short run without undue stress.

Conse3uent"# these ratios focus on current asset and "iai"ities. 0or ovious

reasons! "i3uidit# ratios are particu"ar"# interesting to short term creditors.

4. current ratio: one of the est %nown and most wide"# used ratios is the current

ratio. The ratio is defined as

Current ratio current asset8current "iai"it#

1+


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). 3uic% or acid test ratio: inventor# is often the "east "i3uid current asset. It6s

a"so the one for which the oo% va"ues are "east re"ia"e as measures of mar%et

va"ue. )ecause the 3ua"it# of the inventor# isn6t considered. ome of the inventor#

ma# "ater turn out to e damaged.

Muic% ratio: current asset inventor#8current "iai"it#

C. cash ratio: a ver# short term creditor might e interested in the cash ratio. The

formu"a is

Cash ratio cash 8current "iai"it#

D. net wor%ing capita" to tota" asset ratio: net wor%ing capita" is fre3uent"#

viewed as the amount of short term "i3uidit# a firm has.

Net wor%ing capita" to tota" asset ratio net wor%ing capita" 8tota" asset

>. interva" measure ratio current asset 8average dai"# operating cost

4verage dai"# operating cost is measured # tota" cost e5c"uding depreciation and

interest! divided # /A+da#s.

3.2 long term solvency: "ong term so"venc# ratios are intended to address the

firm6s "ong run ai"it# to meet its o"igation. He consider three common"# used

measure and some variations.

4. tota" det ratio: tota" det ratio ta%es into account a"" dets of a"" maturities to

a"" creditors. The formu"a is:

Tota" det ratio tota" asset tota" e3uit# 8tota" asset

Dete3uit# ratio tota" det8tota" e3uit#

). "ong term det ratio: fre3uent"#! financia" ana"#sis are more concerned with

the firm6s "ong term det than its short term det. )ecause the short term wi""

constant"# e changing. 0or these reasons the "ong term det ratio is often

ca"cu"ated as:

@ong term det ratio "ong term det 8"ong term detPtota" e3uit#

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C. time interest earned:another common measure of "ong term so"venc# is the

time interest earned ratio. The formu"a is:

Time interest earned >)IT 8interest

D. cash coverage ratio: a pro"em with 'tie ratio is that it is ased on '>)IT.This is not rea""# a measure of cash avai"a"e to pa# interest. The reason is that

deprecation! a non cash e5pense has een deducted out. )ecause interest is most

definite"# a cash outf"ow. One wa# to define the cash coverage ratio is

Cash coverage ratio >)ITPdepreciation 8interest

3.3 Asset management measures: these are intended to descrie is how

efficient"# a firm uses its assets to generate sa"es.

a. Inventor# turnover cost of goods so"d 8inventor#

). receiva"e turnover: our inventor# measures give some indication of how fast

we can se"" product. He now "oo% at how fast we co""ect on those sa"es. The

formu"a is:

Receiva"e turnover sa"es 8account receiva"e

c. 4sset turnover ratio: there are two formu"as for fi5ed asset and tota" asset.

Tota" asset turnover sa"es 8tota" assets

D. operating efficienc# ratio: the efficienc# ratio gives us a measure of how

effective"# a an% is operating. It is the cost re3uired to generate each do""ar of

revenue. 4n increase means the compan# is "osing a "arge percentage of its income

to e5pense. If it is getting "ower. It is good for the an% and its shareho"der6s. The

e3uation is

Operating efficienc# ratio operating e5pense 8 tota" revenue

>. emp"o#ee productivit# ratio: the ratio measures the "eve" of income that each

emp"o#ee generates. It he"ps to determine the efficienc# of a an% in terms of

emp"o#ees. The e3uation is

>mp"o#ee productivit# ratio operating profit 8no of emp"o#ee

1B


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3.4 Profitability ratio:

4. return on e3uit#: RO> measures an%s profitai"it# # revea"ing how much

profit a an% generates with the shareho"ders investment. The formu"a is

RO> net income 8tota" e3uit#It measures the return on the mone# the investors have put into the compan#. This

is the ratio potentia" investors ma# "oo% at when deciding whether or not to invest

in the compan#.

). return on asset: RO4 measures the efficienc# with which the compan# is

managing its investment in asset and uti"i$ing them to generate profit. The higher

the percentage is etter! ecause that means the compan# is doing a good o using

its assets to generate sa"es .the formu"a is

RO4 net income 8tota" asset

C.Net interest margin: is a measurement of the difference etween the interest

incomes generated # an%s and the amount of interest paid out to their "enders .it

e5amines how successfu""# a firm6s investment decision is compared to its det

situations. 4 negative va"ue denotes that the firm did not ma%e an optima"

decision. )ecause interest e5penses were greater than the amount of returns

generated # investment. The e3uation is

NI7 interest income from "oan interest e5pense on deposit 8tota" asset

d. Net non interest margin: it is e5pressed as a percentage of how much non

interest revenue the an% are earning minus the non interest e5pense

NNI7 non interest revenue non interest e5penses8tota" asset

e. Net operating margin: a measure of how profitai"it# the an% is operating.

The ratio te""s how we"" a compan# converts revenue from core operation into

actua" profit.

NO7 tota" operating revenue tota" operating e5penses 8tota" asset

0. earning per share: the portion of a compan#6s profit a""ocated to each

outstanding share of common stoc%. >; serve as an indicator of compan#

1F


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profitai"it#. It te""s an investor how much of the compan#6s profit e"ongs to each

share of stoc%.

>; net income after ta5es 8no of share outstanding

a. Net profit margin: it te""s investors the percentage of mone# acompan# actua""# earns per do""ar of sa"es. The higher the net profit margin is

the more effective the compan# is at converting revenue into actua" profit.

N;7 net income 8sa"es

. Ta5 management ratio: it ref"ects the use of securit# gains or "oss to

minimi$e ta5 e5posure. It indicates what portion of operating income

generates net income after ta5.

c. . >5pense contro" efficienc#: it indicates the portion of revenue after

the operating e5pense is deducted .its a measure of operating efficienc# and

e5pense contro".

d. 4sset uti"i$ation ratio: it measures the rate at which a usiness is a"e

to turn assets into sa"es. 4nd hence cash. The higher the ratio the more

effective"# assets are used to generate revenue.

'4U tota" operating revenue 8tota" assets

e. >3uit# mu"tip"ier: the ratio shows a an% tota" asset per do""ar of

stoc%ho"ders e3uit#. 4 higher e3uit# mu"tip"ier indicates higher financia"

"everage .which means the an% is re"#ing more on det to finance its assets.

>7 tota" asset8tota" e3uit# capita"

3.! Mar"et value ratio:

4. price earning ratio: it is a measure of the price paid for a share re"ative to the

4nnua" profit earned # the firm per share. It gives us an indication of the

confidence that investors have in the future prosperit# of the usiness.

1-


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;8> price per share8earning per share

). mar%et oo% ratio: it measures how much a an% is worth at present in

comparison with the amount of capita" invested # current and past stoc%ho"ders

into it. If the a"ance sheet assets per share are much "arger than the shareprice! this is ta%en to e a u# signa".

7ar%et oo% ratio mar%et va"ue per share8oo% va"ue per share

4"" of these are the ratios! which is used in eva"uating the performance.

2*


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o"venc# Ratios:

1. Net Hor%ing Capita" Current 4ssetsCurrent @iai"ities

,AF,//22,//*2/B*-A,1

1AA*A22A*2

Comments: Net Hor%ing Capita" is used to measure the firm6s overa""

"i3uidit#. o! the overa"" "i3uidit# of the an% is T%. 1AA*A22A*2.

2. Current RatioCurrent Ratio s@iai"itieCurrent

4ssetsurrentC

/*2/B*-A,1

,AF,//22,/

1.++:1 1.++:1

CommentsComments::He %now the higher the current ratio! the greater the

7argin *f afet#. 4"though there is no hard and fast ru"e! conventiona""#! a

current ratio of 2:1 is considered satisfactor#. )ut! the current ratio of the

an% is 1.++:1& therefore! it ma# e interpreted to e insufficient"# "i3uid.

3. Quick ratio =s@iai"itieCurrent

Inventor#4ssetsurrentC

/*2/B*-A,1

*,AF,//22,/

1.++:1

Comments: Eere the minimum re"ationship etween "i3uid assets and

current "iai"ities shou"d idea""# e 1:1. Otherwise! the compan# might fai"

21


22/36

to meet its current o"igations. Eere the 3uic% ratio is 1.++:1 and it is

recommended. The 3uic% ratio provides a etter measure of overa"" "i3uidit#

on"# when the firm6s inventor# cannot e easi"# converted into cash. Eere!

inventor# is "i3uid. o! the current ratio is a preferred measure of overa""

"i3uidit# of this an%.

>fficienc# Ratios:

1. 0i5ed 4ssets Turnover 4ssets0i5edNet

a"es

+F-+1A+A

2-BF+2F2-

+.*+ Times

Comments: The fi5ed asset turnover measures the efficienc# with

which the an% has een using its fi5ed assets to generate sa"es. Eere! the

an% has used its fi5ed assets +.*+ times in a #ear to generate sa"es.

2. Tota" 4ssets Turnover 4ssetsTota"

a"es

,B,/2F/F--

2-BF+2F2-

*.*A Times

Comments: 9enera""#! the higher a firm6s tota" asset turnover! the

more efficient"# its assets have een used. This means the an% turns over its

assets *.*A times a #ear. Eere the an% cou"d not use its assets efficient"#

ecause it cou"d not touch the standard norm '+ to A times.

/. Detors Co""ection ;eriod /A+

a"esCreditTota"

Detors

/A+/A*F-*A+F

2F-/BF22+A

2-2B Da#s

22


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Comments: The average co""ection period is meaningfu" on"# in

re"ation to the firm6s credit terms. Eere! "oans and advances co""ection period

of the an% is 2-2B da#s on the asis of their income.

,. Creditor ;a#ment ;eriod /A+;urchaseCreditTota"Creditors

/A++1-F1,F1

1/*2/1B*-A,

2122B- Da#s

Comments: The average pa#ment period is meaningfu" on"# in

re"ation to the average credit terms e5tended to the firm. Eere! creditors

pa#ment period of the an% is 2122B- da#s on the asis of their purchases.

;rofitai"it# Ratios:

1. 9ross ;rofit 7argin 1**a"es

;rofits9ross

1**2-BF+2F2-

2,+FB1/,F

F2.++ Q

Comments: 4 high gross profit margin ratio is a sign of good

management. >ver# firm shou"d tr# to increase its gross profit as much as

possi"e. He can see that the an% has a higher gross profit margin. It is a

ver# good sign of usiness.

2. Operating ;rofit 7argin 1**a"es

;rofitsOperating

1**2-BF+2F2-2,+FB1/,F

F2.++ Q

2/


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Comments: Operating profits are ;ureS ecause the# measure on"#

the profits earned on operations and ignore interest and ta5es. 4 high

operating profit is preferred. The operating profit of this an% is etter. o! it

is recommended.

/. Net ;rofit 7argin 1**a"es

Ta5es4fter;rofitsNet

1**2-BF+2F2-

11F,B2**2

/-.BF Q

Comments: The net profit margin is a common"# cited measure of the

firm6s success with respect to earnings on sa"es. Net profit enchmar% is

1*Q 1+Q re3uired. /-.BF Q return on sa"es is considered as a satisfactor#

"eve".

,. Return on Tota" 4ssets 1**4ssetsTota"


1**,B,/2F/F--

11F,B2**2

2.+* Q

Comments: RO4 measures the overa"" effectiveness of management

in generating profits with its avai"a"e assets. The higher the percentage! the

higher the effectiveness of the firm. )ut! here 2.+*Q is re"ative"# satisfactor#

"eve".

+. Return on >3uit# 1**>3uit#rsLtoc%ho"de


1**

1/,*-+F,1F

11F,B2**/

F.F/ Q

Comments: Eere RO> is F.F/Q. 9enera""#! the higher this returns! the

etter off are the owners.

2,


25/36

A. >; gOutstandintoc%CommonofharesofNumer

rtoc%ho"deCommon0oravai"a"e>arnings

*

Comments: There is no earning per share ecause it is un"isted foreignan% in )ang"adesh.

Other Ratios:

1. Det Ratios 4ssetsTota"

s@iai"itieTota"

,B,/2F/F--

/,*2/2+,F1

*.B2:1

Comments: The higher this ratio! the greater the amount of other

peop"e6s mone# eing used to generate profits. The va"ue indicates that the

an% has financed B2 Q of its assets with det and the va"ue a"so indicates

that the an% has the degree of indetedness and financia" "everage.

2. DetTo>3uit# Ratio >3uit#srLtoc%ho"de

DetTerm@ong

1/,*-+F,1F

2-1,1-1F,

*.22:1

Comments: The an% is not in a good position from the view of detto e3uit# ratio. Eere the "enders6 investment is 22 Q of the owners6

investment.o! maorit# financing is eing done # the shareho"ders6 fund.

/. Times Interest >arned Ratio Interest

Ta5es4ndInterest)efore>arnings

A+A-+A+

2,+FB1/,F

/B.,/:1

2+


26/36

Comments: The higher its va"ue! the etter a"e the firm is to fu"fi"" its

interest o"igations. Eere the times interest earned ratio for this an% seems

accepta"e ecause a va"ue of at "east /.* and prefera"# c"oser to +.* is often

uggested. Thus it has a good margin of safet#.

,. 0i5ed;a#ment coverage Ratio

T.UV181Dividend.toc%;referred"W';rincipa;a#ments@easeInterest

;a#ments@ease>)IT

+++

+

A+A-+A+

2,+FB1/,F

/B.,/:1

Comments: The fi5ed pa#ment coverage ratio measures ris%. The

"ower the ratio! the greater the ris% to oth "enders and owners& the greater

the ratio! the "ower the ris%. 4 va"ue of 2.* or more is often suggested. Eere

the fi5ed pa#ment coverage is ver# high. o it can "ower the ris% to oth

"enders and owners.

+. @ong Term Det To Net Horth Net Horth

DetTerm@ong

1/,*-+F,1F

2-1,1-1F,

*.22:1

Comments: The an% is not in a good position from the view of"ongterm det to net worth ratio. Eere the "enders6 investment is 22 Q of the

owners6 investment. o! maorit# financing is eing done # theshareho"ders6 fund.

2A


27/36

;roprietar# Ratio 4ssetsTota"

0unds;roprietor

,B,/2F/F--

1/,*-+F,1F

*.2F:1

Comments: Eere the proprietar# ratio is *.2F:1 that means ever# asset

of T%. 1 the proprietor fund is *.2F. The proprietar# ratio is not accepta"e

ecause it cou"d not touch the standard norm

'/:+. )ut there is no hard and fast ru"e conventiona""#.

;roprietor 0und To Tota" @iai"ities s@iai"itieTota"

0unds;roprietor

/,*2/2+,F1

1/,*-+F,1F

*./-:1

Comments: Eere the proprietor fund to tota" "iai"ities is *./-:1 that

means ever# "iai"it# of T%. 1 the proprietor fund is *./-. This ratio is not

accepta"e ecause it cou"d not touch the standard norm

'/:1. )ut there is no hard and fast ru"e conventiona""#.

2B


28/36

R4TIO 4N4@I 0OR TE> >4R 2*12

o"venc# Ratios:

1. Net Hor%ing Capita" Current 4ssetsCurrent @iai"ities

A-FBA+*2+B+2/AB1A-*-

1B+*-///,F

Comments: Net Hor%ing Capita" is used to measure the firm6s overa""

"i3uidit#. o! the overa"" "i3uidit# of the an% is T%. 1B+*-///,F.

2. Current RatioCurrent Ratio s@iai"itieCurrent

4ssetsurrentC

+2/AB1A-*-

A-FBA+*2+B

1.//:1 1.//:1

CommentsComments::He %now the higher the current ratio! the greater the

7argin *f afet#. 4"though there is no hard and fast ru"e! conventiona""#! acurrent ratio of 2:1 is considered satisfactor#. )ut! the current ratio of the

an% is 1.//:1& therefore! it ma# e interpreted to e insufficient"# "i3uid.

3. Quick ratio =s@iai"itieCurrent

Inventor#4ssetsurrentC

+2/AB1A-*-

*A-FBA+*2+B

1.//:1

Comments: Eere the minimum re"ationship etween "i3uid assets and

current "iai"ities shou"d idea""# e 1:1. Otherwise! the compan# might fai"

to meet its current o"igations. Eere the 3uic% ratio is 1.//:1 and it is

2F


29/36

recommended. The 3uic% ratio provides a etter measure of overa"" "i3uidit#

on"# when the firm6s inventor# cannot e easi"# converted into cash. Eere!

inventor# is "i3uid. o! the current ratio is a preferred measure of overa""

"i3uidit# of this an%.

>fficienc# Ratios:

1. 0i5ed 4ssets Turnover 4ssets0i5edNet

a"es

1*/BFBA-/

,*AA,2-A-

/.-2 Times

Comments: The fi5ed asset turnover measures the efficienc# with

which the an% has een using its fi5ed assets to generate sa"es. Eere! the

an% has used its fi5ed assets /.-2 times in a #ear to generate sa"es.

2. Tota" 4ssets Turnover 4ssetsTota"

a"es

B*-1,/B-+*

,*AA,2-A-

*.*A Times

Comments: 9enera""#! the higher a firm6s tota" asset turnover! the

more efficient"# its assets have een used. This means the an% turns over its

assets *.*A times a #ear. Eere the an% cou"d not use its assets efficient"#

ecause it cou"d not touch the standard norm '+ to A times.

/. Detors Co""ection ;eriod /A+a"esCreditTota"

Detors

/A++-B/+,/A2

,*2ABAAA*1

2,A1 Da#s

2-


30/36

Comments: The average co""ection period is meaningfu" on"# in

re"ation to the firm6s credit terms. Eere! "oans and advances co""ection period

of the an% is 2,A1 da#s on the asis of their income.

,. Creditor ;a#ment ;eriod /A+;urchaseCreditTota"Creditors

/A+1*A*A+2F1

+2/AB1A-*-

1F*21 Da#s

Comments: The average pa#ment period is meaningfu" on"# in

re"ation to the average credit terms e5tended to the firm. Eere! creditors

pa#ment period of the an% is 1F*21 da#s on the asis of their purchases.

;rofitai"it# Ratios:

1. 9ross ;rofit 7argin 1**a"es

;rofits9ross

1**,*AA,2-A-

/**+BBAFF

B/.-2 Q

Comments: 4 high gross profit margin ratio is a sign of good

management. >ver# firm shou"d tr# to increase its gross profit as much as

possi"e. He can see that the an% has a higher gross profit margin. It is a

ver# good sign of usiness.

2. Operating ;rofit 7argin 1**a"es

;rofitsOperating

1**,*AA,2-A-/**+BBAFF

B/.-2 Q

Comments: Operating profits are ;ureS ecause the# measure on"#

the profits earned on operations and ignore interest and ta5es. 4 high

/*


31/36

operating profit is preferred. The operating profit of this an% is etter. o! it

is recommended.

/. Net ;rofit 7argin 1**a"es


1**,*AA,2-A-

1,BF+A2,A

/A./A Q

Comments: The net profit margin is a common"# cited measure of the firm6s

success with respect to earnings on sa"es. Net profit enchmar% is 1*Q 1+Q

re3uired. /A./A Q return on sa"es is considered as a satisfactor# "eve".

,. Return on Tota" 4ssets 1**4ssetsTota"


1**B*-1,/B-+*

1,BF+A2,A

2.*F Q

Comments: RO4 measures the overa"" effectiveness of management

in generating profits with its avai"a"e assets. The higher the percentage! thehigher the effectiveness of the firm. )ut! here 2.*FQ is re"ative"# satisfactor#

"eve".

+. Return on >3uit# 1**>3uit#rsLtoc%ho"de


1**1+*+,-11,+

1,BF+A2,A

-.F2 Q

Comments: Eere RO> is -.F2Q. 9enera""#! the higher these returns!

the etter off are the owners.

A. >; gOutstandintoc%CommonofharesofNumer

rtoc%ho"deCommon0oravai"a"e>arnings

/1


32/36

*

Comments: There is no earning per share ecause it is un"isted foreign

an% in )ang"adesh.

Other Ratios:

1. Det Ratios 4ssetsTota"

s@iai"itieTota"

B*-1,/B-+*

++F+-,AF*+

*.B-:1

Comments: The higher this ratio! the greater the amount of other

peop"e6s mone# eing used to generate profits. The va"ue indicates that the

an% has financed B- Q of its assets with det and the va"ue a"so indicates

that the an% has the degree of indetedness and financia" "everage.

2. DetTo>3uit# Ratio >3uit#srLtoc%ho"de

DetTerm@ong

1+*+,-11,+/,-22-F-A

*.2/:1

Comments: The an% is not in a good position from the view of detto e3uit# ratio. Eere the "enders6 investment is 2/ Q of the owners6

investment.o! maorit# financing is eing done # the shareho"ders6 fund.

/. Times Interest >arned Ratio InterestTa5es4ndInterest)efore>arnings

1A2F1F2,

/**+BBAFF

1F.,A:1

/2


33/36

Comments: The higher its va"ue! the etter a"e the firm is to fu"fi"" its

interest o"igations. Eere the times interest earned ratio for this an% seems

accepta"e ecause a va"ue of at "east /.* and prefera"# c"oser to +.* is often

uggested. Thus it has a good margin of safet#.

,. 0i5ed;a#ment coverage Ratio

T.UV181Dividend.toc%;referred"W';rincipa;a#ments@easeInterest

;a#ments@ease>)IT

+++

+

1A2F1F2,

/**+BBAFF

1F.,A:1

Comments: The fi5ed pa#ment coverage ratio measures ris%. The

"ower the ratio! the greater the ris% to oth "enders and owners& the greater

the ratio! the "ower the ris%. 4 va"ue of 2.* or more is often suggested. Eere

the fi5ed pa#ment coverage is ver# high. o it can "ower the ris% to oth

"enders and owners.

+. @ong Term Det To Net Horth Net Horth

DetTerm@ong

1+*+,-11,+/,-22-F-A

*.2/:1

Comments: The an% is not in a good position from the view of"ongterm det to net worth ratio. Eere the "enders6 investment is 2/ Q of the

owners6 investment. o! maorit# financing is eing done # theshareho"ders6 fund.

//


34/36

;roprietar# Ratio 4ssetsTota"

0unds;roprietor

B*-1,/B-+*

1+*+,-11,+

*.21:1

Comments: Eere the proprietar# ratio is *.21:1 that means ever# asset

of T%. 1 the proprietor fund is *.21. )ut there is no hard and fast ru"e

conventiona""#. The proprietar# ratio is not accepta"e ecause it cou"d not

touch the standard norm '/:+.

;roprietor 0und To Tota" @iai"ities s@iai"itieTota"

0unds;roprietor

++F+-,AF*+

1+*+,-11,+

*.2B:1

Comments: Eere the proprietor fund to tota" "iai"ities is *.2B:1 that

means ever# "iai"it# of T%. 1 the proprietor fund is *.2B. )ut there is no

hard and fast ru"e conventiona""#. This ratio is not accepta"e ecause it

cou"d not touch the standard norm '/:1.

/,


35/36

!.1 #ecommendation

To so"ve the aove pro"ems authorit# a"read# has ta%en some initiative which wi"" he"p

them to mitigate there pro"ems. 7# recommendation regarding aove pro"ems are:

;rovide a wor%shop to R7 for CIR and CI) report.

Credit visit wi"" on"# do when fu"" app"ication wi"" come to the department.

C"ient visit wi"" e done # 7anager.

!.2 $onclusion

The importance of sustaining and improving performance is increasing da# # da#

particu"ar"# in an environment which is characteri$ed # rapid"# f"ourishing techno"og#

and its growing app"ication to an%ing and non an%ing financia" institution tremendous

competition! product deve"opment! shift in mar%eting strateg#! deregu"ation (

g"oa"i$ation on the one hand! and esca"ation in the numer of an% fai"ures accompanied

/+


36/36

# mergers and mega mergers on the contrar#. In order to %eep areast with the prevai"ing

mar%et scenario it is necessar# to deve"op a comprehensive performance eva"uation

s#stem.

;erformance >va"uation #stem means a mechanism for improving the "i%e"ihood of the

organi$ation successfu""# imp"ementing its strateg#. It is a process to have the goa" of

strateg# imp"ementation. In this process senior management se"ects a series of measures

that est represent the organi$ation6s strateg#.

The current report aimed at critica""# e5amining the ;erformance of a private financia"

institution. The main oective of this report was to eva"uate the financia" ana"#sis of the

compan#. a"ong with how efficient"# are providing services to its customer. 0rom

0inancia" 4na"#sis it has een seen that the performance of the compan# finance "td is

rea""# satisfactor#.

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