Professional Documents
Culture Documents
2008
%
2009
%
2010
%
2011
%
46.0
0
34.6
7
31.6
9
39.7
6
27.9
2
3.58
11.0
8
11.4
1
54.0
0
100
27.2
2
8.56
12.7
5
16.8
0
65.3
3
100
29.7
6
4.28
17.6
2
16.6
4
68.3
1
100
32.6
6
3.65
13.8
8
10.0
5
60.2
4
100
4.99
37.4
2
0.54
42.9
5
4.49
41.7
1
0.49
46.6
8
31.95
0.40
1.54
4.07
0.11
5.72
ASSETS
Non-current asset
Property plant and equipment
Current asset
Inventories
Trade and other receivables
Advance,deposit and prepayments
Cash and cash equlvalents
Total current asset
TOTAL ASSETS
Share capital
Revenue reserve
Capital reserve
Total equity
Non-current liabilities
Deferred liability (gratuity)
Deferred tax liability
Obligation under finance lease
Total non-current liabilities
Current liabilities
Creditors and accruals
Provision for corporate tax
Total current liabilities
2.71
6.24
0.19
9.14
1.87
4.27
0.19
6.33
1.84
3.01
0.21
5.06
1.89
3.87
0.26
6.02
36.5
9
13.4
1
50.0
0
100.
00
100
32.7
9
15.4
9
48.2
8
100.
00
100
32.5
4
19.4
5
51.9
9
100.
00
100
31.7
2
15.5
8
47.3
0
100.
00
100
32.74
32.72
5.64
23.79
5.10
67.26
100
3.65
36.00
32.13
26.15
58.28
100.00
100
31Dec,
2007
37869293
100
Gross turnover
Supplementary duty &
vat
68.48776923
Net turnover
31.51223077
Cost Sales
22.15194775
Gross profit
9.360283013
Operating expenses
5.922151755
Operating profit
3.438131258
Interest expenses
0.120342886
3.317788373
Current tax
Deferred tax
1.10749361
0.100482467
31Dec,
2008
31Dec,
200
9
31Dec,
201
0
45414187
100
69.10572
02
30.89427
98
19.81618
872
11.07809
108
6.034563
605
5.043527
477
5507465
1
100
68.08606
2
31.91393
8
20.81509
3
11.09884
5
5.817928
8
5.280915
9
6598650
3 75357351
100
100
68.25708 69.12197
4
59
31.74291 30.87802
6
41
20.42189 17.85563
3
69
11.32102 13.02238
3
72
4.767079 6.011847
4
47
6.553943 7.010539
3
69
0.024467 0.146882
1
82
0.167815
401
5.211342
878
0.260566
153
4.950776
725
0.058489
7
5.339405
6
0.266970
4
5.072435
2
6.529476
2
0.326474
3
6.203001
8
6.863656
87
0.343183
51
6.520473
36
1.440637
922
0.164435
1.435484
4
0.118980
1.603226
3
0.237384
9
2.935314
17
0.200498
02
31Dec,
2011
1.207976077
4
1.276202
522
2.109812296
13.32
3
1.316504
1.840611
3
3.135812
19
3.674574
203
3.755931
2
4.362390
6
3.384661
17
27.81
34.48
47.98
42.91
31Dec,200
7
Property plant and
equipment
Current asset
Inventories
Trade and other
receivables
Advance,deposit and
prepayments
Cash and cash
equlvalents
Total current asset
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Revenue reserve
Capital reserve
Total equity
Non-current liabilities
Deferred liability (gratuity)
Deferred tax liability
Obligation under finance
lease
Total non-current
liabilities
Current liabilities
Creditors and accruals
Provision for corporate
tax
Total current liabilities
Total equity and liabilities
31Dec,08
31Dec,1
31Dec,09 0
31Dec,11
100.00%
93.64%
103.00%
143.74%
145.39%
100.00%
121.12%
159.36%
194.51%
239.34%
100.00%
296.72%
178.59%
169.41%
321.73%
100.00%
142.91%
237.77%
208.25%
438.56%
100.00%
100.00%
100.00%
182.90%
189.10%
139.72%
217.95%
237.93%
168.13%
146.44%
233.39%
187.01%
91.25%
320.06%
229.70%
100.00%
100.00%
100.00%
100.00%
100.00%
147.67%
100.00%
138.02%
100.00%
171.66%
100.00%
157.15%
100.00%
212.83%
100.00%
189.99%
100.00%
200.25%
100.00%
179.96%
100.00%
100.00%
85.63%
85.11%
101.61%
72.05%
115.71%
103.28%
115.56%
133.40%
100.00%
122.85%
164.13%
227.55%
116.55%
100.00%
86.05%
82.74%
109.56%
127.75%
100.00%
111.32%
132.96%
144.15%
179.35%
100.00%
100.00%
100.00%
143.51%
119.96%
124.24%
216.83%
155.45%
149.50%
193.16%
157.30%
166.29%
398.28%
238.08%
204.25%
145.43%
174.25%
198.99%
173.66%
200.84%
Net turnover
147.29%
2010-11
136.66%
14.20%
175.52%
Average
160.64%
18.80%
194.99%
100.00%
141.93%
172.45%
Method 2: Historical Compounded Annual Growth Rate
Operating expenses
100.00%
122.20%
142.87%
210.75%
]
140.26%
276.85%
Operating profit
223.38%
18.77%
332.16%
405.76%
Interest expenses
4557300.00%
Average Sales Growth Rate
18.79%
Net finance income
7621200.00% 3221300.00%
35.43%
242.88%
Cost Sales
Energy Sales
100.00%
2007-08
19.92%
100.00%
2008-09
100.00%
21.27%
119.92%
117.57%
2009-10
107.28%
19.80%
Gross profit
Sales
100.00%
175.92%
160.40%
202.01%
2366689.00
2940659.00
4308573.0
0
5172270.0
0
118334.00
147033.00
215429.00
258614.00
1256423.00
178.95%
222.35%
325.78%
391.08%
Current tax
100.00%
156.00%
188.50%
252.24%
527.41%
Deferred tax
38052.00
-74677.00
-65528.00
156642.00
151090.00
Total Tax
profit after tax transferred to
revenues reserve
100.00%
126.70%
158.50%
265.50%
516.57%
100.00%
208.87%
258.90%
360.29%
319.23%
1332.00%
2781.00%
3448.00%
4798.00%
4291.00%
2006-07
36.41%
2007-08
25.78%
2008-09
25.95%
2009-10
26.67%
2010-11
48.10%
32.58%
31 December, 2012
Taka
31 December, 2013
Taka
5376634
5376634
6382625.901
7581921.307
1100995.612
1307872.687
4641228.647
5513315.51
994739.1447
1181650.63
18496223.3
20961394.13
600000
6232203.312
64896
6897099.312
600000
7403234.314
64896
8068130.314
669079
669079
17876
939044
17876
939044
6267097.874
5101871.321
11368969.2
19205112.51
7444685.565
6060512.943
13505198.51
22512372.82
2011-12
Taka
61464418.2
28052579.05
15877531.3
12175047.75
2012-13
Taka
73013582.38
33323658.71
18735486.93
14588171.78
Operating profit
Interest(Income/expense)
Net finance income
Worker's profit
participation fund
profit before tax
Tax:
Current tax
Deferred tax
Total Tax
profit after tax transferred
to revenues reserve
6829212.333
-110687
8280085.983
-110687
6718525.333
8169398.983
305164.52
360094.1336
2089472.953
2544271.52
4323887.86
5265033.33
3. Ratio Analysis
Ratio analysis quantifies many aspects of a business and is an integral part of financial
statement analysis. Ratio analysis is categorized according to the financial aspect of the business
which the ratio measures. Liquidity ratios measure the availability of cash to pay debt. Asset
management ratios measure how quickly a company converts non-cash assets to cash
assets. Debt management ratios measure the company's ability to repay long-term
debt. Profitability ratios measure the firm's use of its assets and control of its expenses to
generate an acceptable rate of return. Stock market ratios measure investor response to owning a
company's stock and also the cost of issuing stock.
Ratio analysis is mostly used to compare between companies, industries, different time
periods for one company and a single company with the industry average.
Ratios generally hold no meaning unless they are benchmarked against something else,
like past performance or another company. Thus, the ratios of firms in different industries, which
face different risks, capital requirements, and competition, are usually hard to compare.
The Five major categories of ratios are:
Liquidity Ratio
a. Ratio of British American Tobacco (BAT-BC), Gemini Sea Food and Apex Foods and
Industry Average
Ratio Name
Gemini Sea
Food
Apex Foods
BAT-BC
Industry
Average
Current
Ratio
1.05
1.13
1.15
1.1
Quick Ratio
1.150
1.41
0.59
1.20
Working
Capital
121,6234
1435326
1473710
1375090
Inventory
Turn Over
Ratio
7.70
6.42
2.5
5.54
Total Asset
Turn Over
Ratio
0.0013
0.0009
0.00079
0.001
Fixed Asset
Turn Over
Ratio
3.13
4.10
4.32
3.85
Average
Collection
Period
11.61
10.47
14.54
12.2
Average
Payment
Period
99.18
94.51
116.5
103.4
Cash
Conversion
Cycle
32.92
30.68
44.04
35.88
Debt Ratio
0.34
0.73
.64
0.57
Time Interest
Earning
68.06
68.91
47.73
61.57
Gross Profit
Margin
28.18
26.86
42.1
32.66
Operating
Profit
42.74
23.49
22.70
17.52
Net Profit
Margin
21.39
14.78
10.96
8.43
Return On
Asset
17.12
19.24
15.53
17.69
Operating
Return On
Asset
24.23
22.97
32.17
25.87
Return On
Equity
35.26
41.67
43.15
40.03
Earnings Per
Share
36.32
24.07
42.50
35.20
Market To
Book Value
Ratio
3.90
4.27
6.36
4.72
P/E Ratio
30.61
31.51
14.60
24.6
Du-Pont
(ROA)
15.12
12.24
15.53
14.69
Extended
Du-Pont
(ROE)
36.06
41.67
43.15
40.5
Liquidity Ratio
a. Current Ratio :
The current ratio is a popular financial ratio used to test a company's liquidity (also referred to as
its current or working capital position) by deriving the proportion of current assets available to
cover current liabilities.
*
a)
LIQUIDITY RATIO
2006-07
2007-08
2008-09
2009-10
2010-11
CURRENT RATIO
0.86 Times
1.35 Times
1.32 Times
1.27 Times
1.15 Times
Interpretation:
In the year 2010-11, the companys current asset is 1.15 times higher than the current
liabilities.
Industry
Average
1.10
Times
From time series analysis we can see that the ratio is decreasing from 2006-07 (0.86 times) to
2007-08 (1.35) and decreasing until 2010-11 (1.15 times).
Cross-Sectional Analysis
Performance is good, and companys current ratio is above the industry average. It is good for
the company.
b. Quick Ratio:
The quick ratio is used to test a company's liquidity (also referred to as its current or working
capital position) by deriving the proportion of current assets available to cover current liabilities.
*
LIQUIDITY RATIO
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
QUICK RATIO
0.3 Times
0.79 Times
0.74 Times
0.58 Times
0.59 Times
1.20Times
b)
Interpretation:
In the year 2010-11, the companys current asset excluding inventory is .59 times higher
than the current liabilities.
From time series analysis we can see that the ratio is increasing from 2006-07 (0.3 times) to
2007-08 (0.79), and it decreases to .59 times until the year 2010-11.
Cross-Sectional Analysis
Performance is not good, because companys current ratio is below the industry average. It is bad
for the company.
c. Working Capital
The working capital ratio is used to calculate exactly what amount of capital is working in
market. It is derived by deducting current liabilities from current assets.
c)
LIQUIDITY
RATIO
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
WORKING
CAPITAL
-569241
1703269
1961263
1730467
1473710
1375090
Interpretation:
The companys current assets are higher than the current liabilities by tk. 14,73710
Cross-Sectional Analysis
The companys current assets are increasing than current liabilities proportionately. So
working capital is in such a good position.
a)
Asset
Managemen
t Ratio
2006-07
2007-08
2008-09
2009-10
2010-11
Inventory
turnover ratio
3.74
3.31
3.2
3.1
2.5
Industry
Average
5.54
Interpretation:
In the year 2010-11, the company has Sold out & Restocked its
inventory 2.5 times.
Cross-Sectional Analysis
It is below industry average. Performance is bad, but industry average is too high. Some
company under this industry have more inventory turnover ratio, that affect the industry average
and show the higher industry average.
TOTAL ASSET
TURNOVER RATIO
2006-07
2007-08
2008-09
2009-10
2010-11
0.00076
times
0.00079
times
0.00075
times
0.0008 times
0.0008 times
Interpretation:
Industry
Average
0.001
times
From the time series analysis, companys ratio is fluctuating significantly from 07 to 2010 then
remain constant in year 2010 & 2011
Cross-Sectional Analysis
c)
Interpretation:
2006-07
2007-08
2008-09
2009-10
2010-11
3.23 times
4.05 times
4.61 times
3.94 times
4.32 times
Industry
Average
3.85
times
From the time series analysis we can conclude that there was an eventual
increase, from 2006-07 (3.23) to 2008-09 (4.61), than it decreases to 4.32 in
2010-11.
Cross-Sectional Analysis
Proportional increase in fixed asset is significant less than proportional increase in sales.
d)
2006-07
2007-08
2008-09
2009-10
2010-11
8.81 days
22.24 days
10.68 days
8.51 days
14.54 days
Interpretation:
Industry
Average
12.20
days
From the time series analysis it is significantly increase from 2006-07 to 2007-08 (8.81 to 22.24),
than it is decrease significantly to 2010-11 (14.54).
Cross-Sectional Analysis
It is bad for the company, because they need more time to collect account receivable compare to
industry average.
e)
2006-07
2007-08
2008-09
2009-10
2010-11
46.92 days
62.77 days
74.44 days
56.42 days
116.5 days
Industry
Average
103.4
days
From the time series analysis the days of paying off creditors have
increased significantly from 2006-07 (46.92 days) to 2010-11 (116.5).
Cross-Sectional Analysis
It is good for the company, because they have more time to pay a payable compare to industry
average.
f)
2006-07
2007-08
2008-09
2009-10
2010-11
59.48 days
69.74 days
50.34 days
69.83 days
44.04 days
Industry
Average
35.88
days
From time series analysis, it is fluctuate year to year from 2006-07 to 2010-11.
Cross-Sectional Analysis
It took more days to complete a cash cycle, compare to its industry average.
Interpretation:
a)
Debt Ratio
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
67%
55%
57%
53%
64%
57%
In the year 2010-11, the companys 64% of total assets were financed
by debt.
From the time series analysis, in the past five years the percentage has been
quite stable, varying from 67% to 53%.
Cross-Sectional Analysis
It is above industry average. So this companys asset financed by debt is more than the industry
average.
b)
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
28.57 times
30 times
90.3 times
67.87 times
47.73 times
61.57
times
Interpretation:
from time series analysis it increase significantly 2007-08 to 2008-09 (30 to 90.3) than it
decrease again 2010-11 to 47.73.
Cross-Sectional Analysis
It is below than industry average. But industry average is also too high because some companys
times interest earning is too high that effect the industry average.
In 2010-11 it is decreases because its proportional increase in EBIT is less than its
proportional increase in interest expense.
Profitability Ratio
a. Gross Profit Margin
The gross profit margin is used to analyze how efficiently a company is using its raw materials,
labor and manufacturing-related fixed assets to generate profits. A higher margin percentage is a
favorable profit indicator.
*
a)
Profitability Ratio
2006-07
2007-08
2008-09
2009-10
2010-11
29.70%
35.86%
34.78%
35.66%
42.17%
Industry
Average
32.66%
times
Interpretation:
In the year 2010-11, the company has earned TK 42.17 worth of gross
profit, from every TK 100 worth of Sales.
From the time series analysis, we can say that, in the past five years, the Gross profit margin has
been fairly stable, varying from (21.13% to 22.75.59%).
Cross-Sectional Analysis
b)
Profitability Ratio
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
Operating profit
margin
10.91%
16.33%
16.55%
20.65%
22.70%
17.52%
Interpretation:
From the time series analysis, we can say that, in the past five years, the Operating profit margin
has been fairly increased from (10.91% to 22.70%).
Cross-Sectional Analysis
Increase of operating profit kept going up proportionately more than the revenues. That
resulted in the ratio going high.
c)
Profitability Ratio
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
6.70%
11.90%
11.77%
13.74%
10.96%
8.43%
Interpretation:
In the year 2010-11, the company has earned TK 10.96 worth of net
profit, from every TK 100 worth of Sales.
From time series analysis we see that in 2006-07 net profit is 6.70% than it increase to 13.74% in
2009-10, than it again decrease to 10.96% in 2010-11.
Cross-Sectional Analysis
Their operating profit in increase compare to last year, and their net profit is also
increase. So they pay less interest or tax or both that increase their net profit.
d. Return on Assets:
The Return on Total Assets, also called return on investment measures the overall effectiveness
of management in generating profits with its available assets. The higher the firms return on
total assets, the better it is considered.
*
d)
Profitability Ratio
2006-07
2007-08
2008-09
2009-10
Return on asset
11.18%
16.70%
17.20%
21.53%
2010-11
15.53%
Industry
Average
17.69%
Interpretation:
In the year 2010-11, every TK. 100 worth of assets are generating TK. 15.53 of net
income.
From the time series analysis, it can be inferred that the company did quite
well comparatively in 2006-07 to 2009-10, having Return on Assets within
the range of (11.18%-21.53%),but then in last year it falls down to 15.53.
Cross-Sectional Analysis
In 2010-11 its net income decrease but on the other hand its total assets increase, so it
goes down from 2009-10 to 2010-11.
e)
Profitability Ratio
2006-07
Operating Return on
asset
18.21%
2007-08
22.93%
2008-09
24.20%
2009-10
32.35%
2010-11
Industry
Average
32.17%
25.87%
Interpretation:
In the year 2010-11, every TK. 100 worth of assets are generating TK. 32.17 of operating
profit.
From the time series analysis, it can be inferred that the company did quite well
comparatively in the past five years.
Cross-Sectional Analysis
It is above than industry average. Company performance is good, so they need to keep it.
In 2010-11 proportional increase in total asset is less than proportional increase in EBIT.
f. Return on equity:
The return on common equity measures the return earned on the common stockholders
investment in the firm. Generally, the higher the return, the better it is for the owners.
*
f)
Profitability Ratio
2006-07
2007-08
Return on equity
24.32%
36.81%
2008-09
2009-10
40.10%
46.13%
2010-11
Industry
Average
43.15%
40.03%
Interpretation:
In the year 2010-11, shareholders of this company had earnings of TK. 43.15 for every
TK. 100 investment.
From the time series, it is increase from 2006-07 to 2009-10 (46.13%) than it again little bit
decrease up to 2010-11 (43.15%).
Cross-Sectional Analysis
Decrease in net income and little increase in equity decrease the ratio in 2010-11.
a)
2006-07
13.32Tk
2007-08
27.81Tk
2008-09
2009-10
2010-11
Industry
Average
34.48Tk
47.98Tk
42.50Tk
35.20Tk
Interpretation:
From time series analysis we see that 2006-07 to 2009-10 EPS increase, than it decreases in next
one year.
Cross-Sectional Analysis
Number of share holder increase, and net income decrease, thus why is go down compare
to last year.
b)
2006-07
Market to book
value ratio
1.43 times
2007-08
2008-09
2009-10
2010-11
2.67 times
8.9 times
6.89 times
6.36 times
Industry
Average
4.72
times
Interpretation:
In the year 2010-11 the companys each shares market price is 6.36 times higher than the
market book value.
From the time series analysis we see that it is going up significantly, than going down in last two
year and it is not in a stable situation.
Cross-Sectional Analysis
c)
2006-07
P/E ratio
11.16
2007-08
7.25
2008-09
2009-10
2010-11
Industry
Average
11.87
14.93
14.60
24.60
Interpretation:
In the year 2010-11, the companys shareholders were willing to pay $14.60 for every $1
of reported earnings.
For year to year comparison we see that it decrease from 2006-07 to 2008-09 (11.16 to 7.25),
than it increase to 14.6 in 2010-11.
Cross-Sectional Analysis
In 2010-11 proportional decrease in market value of share price is more than proportional
decrease in earnings per share.
Du-Pont Analysis:
a. Return on asset
Du-Pont Analysis
a)
Return on asset
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
11.18%
16.71%
17.21%
21.53%
15.53%
14.69%
Interpretation:
In the year 2010-11, every TK. 100 worth of assets are generating TK. 15.53 of net
income.
From the time series analysis, it can be inferred that the company did quite
well comparatively in the past five years, having Return on Assets within the
range of (11.18%-15.53%)
Cross-Sectional Analysis
In 2010-11 its net income decrease but on the other hand its total assets increase, so it
goes down from 2009-10 to 2010-11.
a)
Extended Du-Pont
Analysis
2006-07
2007-08
2008-09
2009-10
2010-11
Industry
Average
Return on equity
24.32%
36.81%
40.07%
46.13%
43.15%
40.50%
Interpretation:
In the year 2010-11, shareholders of this company had earnings of TK. 43.15 for every
TK. 100 investment.
From the time series, it is increase from 2006-07 to 2009-10 (46.13%) than it is little bit
down to 2010-11 (43.15%).
Cross-Sectional Analysis
Decrease in net income and little increase in equity decrease the ratio in 2010-11.
d. RECCOMENDATION:
After analyzing the major ratios, it can be concluded that the British American Tobacco (BATBC) condition is good, compared to how well they were doing in the previous years. The
companys availability of cash to pay debt has increase compared to the past
five years, but however it is in stable condition. The Companys ability to
quickly convert non-cash assets to cash assets have also increases. The
company's ability to repay long-term debt is comparatively in a better shape.
With a positive credit rating, the company will be benefited by the advantage
of acquiring loans and purchasing raw materials on credit. . The Company
uses its assets and controls its expenses to generate an acceptable rate of
return. In this case, the company was doing better than previous; maintain
better standards of using assets and controlling expenses to generate better
rates of return. Their cash conversion cycle is too long, it is approximately 160 days to
complete this cycle. They need to reduce this time for better profit. Their interest expense is low,
for this they cant save more tax, but if it increase they have a problem in future to pay the loan
and interest, which will affects on their net income. Their profitability margin is good and return
on asset and equity is average compare to industry average. Earnings per share of the share
holder is decreasing compare to last year, because their net income decrease little and number of
share increase because of stock dividend for last year. They are doing well and the market value
of the share increases compare to last year. I think it is good for this company; because the
performance of share market is bad and maximum companys share price go down through they
are doing well.
BATBC
BANGLADESH
Date
Closing
Price
Monthly
Return %
General
index
2006
29-06-2006
99.20
1339.525
Monthly
Return %
July
August
September
October
November
December
BATBC
BANGLADESH
7/2/2006
69.70
7/31/2006
68.50
8/1/2006
69.60
8/31/2006
69.00
9/3/2006
70.10
9/28/2006
66.90
10/1/2006
10/31/200
6
68.10
11/1/2006
11/30/200
6
70.30
12/3/2006
12/28/200
6
72.80
Date
70.30
73.00
84.10
1,341.25
-1.721664275
.
1,426.65
-0.862068966
.
11.24522
1,587.08
1,588.24
(1.61877)
-4.564907275
.
1562.53
1,551.88
3.230543319
.
(0.6592)
1,541.65
1,533.20
3.840682788
.
(0.385476)
1,527.29
1,544.17
15.52197802
Monthly
Return %
Closing
Price
4.8879
1,406.81
4.2313
1610.67
General
index
Monthly
Return %
2007
January
February
March
April
04-01-2007
1589.41
82.00
31-01-2007
84.60
05-02-2007
84.00
28-02-2007
83.90
01-03-2007
83.60
29-03-2007
81.80
02-04-2007
81.60
30-04-2007
74
3.170731707
.
1805.12
14.02578
1,883.62
-0.119047619
.
(1.91833)
1,791.54
1,794.02
-2.153110048
.
(1.8472)
1,760.88
1,737.36
-9.31372549
.
0.3436
1,743.33
May
June
July
August
September
October
November
December
03-05-2007
1,762.36
74.60
31-05-2007
72.80
03-06-2007
75.20
28-06-2007
75.20
02-07-2007
73.70
31-07-2007
92.80
01-08-2007
94.00
29-08-2007
108.50
03-09-2007
112.90
30-09-2007
111.00
01-10-2007
112.00
31-10-2007
119.70
01-11-2007
120.00
29-11-2007
154.70
02-12-2007
148.60
30-12-2007
149.70
-2.412868633
.
13.68732
2,003.58
2,007.05
0
.
7.08670
2,149.32
2,190.46
25.91587517
.
8.84380
2,384.18
2,394.11
15.42553191
.
2.54708
2,455.09
2,540.97
-1.682905226
.
2548.49
1.262357
2,627.02
6.875
.
8.51577
2,850.81
2,836.32
28.91666667
.
4.7522840
2,971.11
2,878.74
4.81009
BATBC
BANGLADESH
Date
0.740242261
Monthly
Return %
Closing
Price
3,017.21
General
index
Monthly
Return %
2008
January
01/01/ 2008
144.80
31/01/ 2008
132.60
3,008.91
-8.425414365
(3.3812)
2,907.17
February
March
April
May
June
July
August
September
October
November
December
03/02/ 2008
2,890.25
130.40
28/02/ 2008
132.20
02/03/ 2008
129.20
1.380368098
1.4230
2,931.38
2,916.20
8.513931889
3.4440
31/03/ 2008
140.20
3,016.49
01/04/ 2008
142.70
30/04/ 2008
161.90
04/05/ 2008
157.10
29/05/ 2008
161.50
01/06/ 2008
168.10
30/06/ 2008
141.90
02/07/ 2008
144.00
31/07/ 2008
233.60
03/08/ 2008
217.40
28/08/ 2008
144.80
01/09/ 2008
132.60
25/09/ 2008
130.40
05/10/ 2008
132.20
30/10/ 2008
129.20
02/11/ 2008
140.20
30/11/ 2008
142.70
01/12/ 2008
161.90
2,517.05
30/12/ 2008
157.10
15.59633028 2,795.34
3,025.57
13.45480028
1.56268
3,072.85
3,101.94
2.800763845
2.1343
3,167.99
3,207.89
-15.58596074
(6.46499)
3,000.50
3,029.24
62.22222222
(8.53376)
2,761.05
2,689.94
-1.471941122
2.80749
2,765.46
2,820.79
7.321509777
5.17690
2,966.82
3,001.37
-13.88053287
(8.421820)
2,748.60
2,684.69
-11.89133778
(8.03704)
2,468.92
11.0519
2009
January
01-01-2009
207.30
2,807.61
(5.63183)
2.363724071
February
29-01-2009
212.20
01-02-2009
216.80
2,649.49
2,661.69
(3.4109)
1.660516605
March
26-02-2009
220.40
01-03-2009
225.40
2,570.96
2,626.27
(6.8291)
-5.412599823
April
31-03-2009
213.20
01-04-2009
213.80
2,446.92
2,443.25
4.5576
16.93171188
May
30-04-2009
250
03-05-2009
243.50
2,554.36
2,539.17
1.30
-19.71252567
June
31-05-2009
195.50
01-06-2009
195.90
2,572.18
2,597.00
15.91297
14.03777437
July
30-06-2009
223.40
02-07-2009
229.40
3,010.26
3,069.71
(5.0620)
16.30340017
August
30-07-2009
266.80
02-08-2009
272.10
2,914.53
2,941.02
0.00884
1.543550165
September
31-08-2009
276.30
01-09-2009
277.70
2,941.28
2,950.12
4.53439
4.645300684
October
30-09-2009
290.60
01-10-2009
309.50
3,083.89
3,123.24
7.73955
5.977382876
November
29-10-2009
328.00
01-11-2009
345.80
3,364.26
3,392.02
29.15460
0.838635049
December
26-11-2009
01-12-2009
348.70
354.40
4,380.95
15.51918736
4,424.02
2.520558
30-12-2009
BATBC
BANGLADESH
Date
409.40
4,535.53
Monthly Return
%
Closing Price
General index
Monthly
Return %
2010
January
February
03-01-2010
432.10
31-01-2010
486.40
01-02-2010
487.60
4,568.40
17.483
12.56653552
5,367.10
5,451.15
2.00070
6.931911403
March
28-02-2010
521.40
01-03-2010
520.60
5,560.56
5,567.40
(0.1311204)
-6.319631195
April
28-03-2010
487.70
01-04-2010
488.30
5,560.10
5,594.32
1.08252
-4.280155642
May
29-04-2010
467.40
02-05-2010
462.90
5,654.88
5,631.30
8.46180
11.40635126
June
31-05-2010
515.70
01-06-2010
522.60
6,107.81
6,152.39
0.0099
0.650593188
July
30-06-2010
526.00
04-07-2010
527.70
6,153.68
6,217.08
2.021527
26.47337502
August
29-07-2010
667.40
01-08-2010
656.50
6,342.76
6,436.77
3.436506
3.442498096
September
31-08-2010
679.10
02-09-2010
684.30
6,657.97
6,774.87
4.760386
1.914365045
October
30-09-2010
697.40
03-10-2010
707.70
7,097.38
7,223.49
10.16174
6.189063162
November
31-10-2010
751.50
01-11-2010
746.30
7,957.12
7,947.80
8.24674
0.924561168
December
30-11-2010
01-12-2010
753.20
756.10
8,602.44
-5.23740246
8,723.18
(4.96114)
30-12-2010
BATBC
BANGLADESH
Date
716.50
8,290.41
Monthly Return
%
Closing Price
General index
Monthly
Return %
2011
January
February
March
April
May
June
July
August
September
October
November
December
02/01/
2011
31/01/
2011
01/02/
2011
28/02/
2011
01/03/
2011
31/03/
2011
03/04/
2011
28/04/
2011
02/05/
2011
31/05/
2011
01/06/
2011
30/06/
2011
02/01/
2011
31/01/
2011
01/02/
2011
28/02/
2011
01/03/
2011
31/03/
2011
03/04/
2011
28/04/
2011
02/05/
2011
31/05/
2011
01/06/
2011
706.10
4,568.40
17.483
-0.963036397
699.30
5,367.10
692.10
5,451.15
2.00070
-20.54616385
549.90
5,560.56
591.10
5,567.40
(0.1311204)
12.9588902
667.70
5,560.10
658.50
5,594.32
1.08252
-10.44798785
589.70
5,654.88
595.00
5,631.30
8.46180
5.56302521
628.10
6,107.81
628.30
6,152.39
0.0099
630.90
0.413815057
706.10
6,153.68
6,217.08
2.021527
-0.963036397
699.30
6,342.76
692.10
6,436.77
3.436506
-20.54616385
549.90
6,657.97
591.10
6,774.87
4.760386
12.9588902
667.70
7,097.38
658.50
7,223.49
10.16174
-10.44798785
589.70
7,957.12
595.00
7,947.80
8.24674
5.56302521
628.10
628.30
8,602.44
0.413815057
8,723.18
(4.96114)
30/06/
2011
630.90
8,290.41
3.469682%
(Annual Return)
3.469682% * 12
Standard Deviation
11.37875%
C.V.
3.2795
= 41.636184%
Where,
Rate of Return =
Standard Deviation =
100
2.536899 * 12
Standard Deviation
7.085807%
= 30.36%
C.V.
2.7931
SUMMARY
OUTPUT
Regression Statistics
Multiple R 0.248993
R Square
0.061997
Adjusted
R Square
0.045825
Standard
Error
0.11115
Observatio
ns
60
ANOVA
df
SS
MS
0.0473
6
0.0123
54
F
3.8335
18
Regressio
n
Residual
58
Total
59
0.04736
0.71654
7
0.76390
8
Coefficie
nts
Standar
d Error
t Stat
Pvalue
0.024553
0.01525
6
1.6094
11
0.1129
56
0.399845
0.20421
8
1.9579
37
0.0550
54
Intercept
X Variable
1
RESIDUAL OUTPUT
Observati
on
1
2
3
Predicted
Y
Residua
ls
0.018216 0.06642
-0.0041 -0.0866
0.03553
0.008363
7
Significa
nce F
0.055054
Lower
95%
Upper
95%
-0.00599
0.0550
91
-0.00894
0.8086
31
Lower
95.0%
0.0059
9
0.0089
4
Upper
95.0%
0.0550
91
0.8086
31
-0.00714
0.024589
0.021524
0.044097
0.069517
0.018081
10
0.021917
11
0.023012
12
0.041472
13
0.080635
14
0.016883
15
0.017167
16
0.025927
17
0.079281
18
0.052886
19
0.059915
20
0.034738
21
22
0.029601
0.058615
23
0.043555
24
25
0.043786
0.011034
26
0.030243
27
0.038304
0.05056
0.00871
1
0.01077
6
0.05510
3
0.04078
3
0.10058
0.03842
0.02308
8
0.02527
0.04453
0.11478
3
0.07687
0.04599
0.08743
0.02404
0.23229
8
0.03088
5
0.13829
5
-0.0181
0.33144
5
0.06158
5
-0.1588
0.06355
0.09395
28
0.030801
29
0.033067
30
-0.0013
31
32
-0.00957
0.039606
33
0.045253
34
-0.00912
35
-0.00758
36
37
0.068761
0.002035
38
0.010922
39
-0.00275
40
0.042737
41
42
0.029751
0.08818
43
0.00434
44
0.024588
45
0.042684
46
0.055477
47
0.141126
48
0.034631
49
0.094458
50
0.032578
51
52
0.035276
0.028882
0.01486
1
0.08120
7
0.18293
0.38753
8
-0.1064
0.00273
3
0.12128
0.10332
0.05086
8
-0.0218
0.04022
5
0.07778
0.11119
0.00296
1
0.09455
0.15576
9
0.03773
2
0.01861
3
0.00836
0.18305
0.12575
9
0.03651
8
0.00502
0.14686
0.01939
53
0.058387
54
0.024593
55
0.032636
56
0.038294
57
0.043587
58
0.065162
59
0.057487
60
0.004716
3
0.06137
5
0.01643
7
0.16093
7
0.09437
0.02497
8
0.05083
0.08689
0.13456
BATBC BANGLADESH
Average Return %
Monthly
Yearly
Standard Deviation
General index
3.469682%
2.5368%
41.636184%
30.36%
11.37875%
7.085807%
3.2795
2.7931
.399
CV
SLOPE ()
By analyzing the above data, we can say that the beta of the company is 0.399. We know that the
market beta is always 1. So the beta of the company is less than 1 which is less risky than the
market. In spite of that BATBCs standard deviation and C.V. both are higher than Market so
total risk of BATBC is higher.
CAPM
= Rf + (Rm-Rf)
= 11+(30.442-11).399
=18.76%
Where,
Rf
= 11%
Rm
= 30.442%
= .399
Here, 11% t-bill which was a 91 days T-bill and was announced in 18 3 12 was used as the
risk free rate.
37.1850%
37.1850%
10% constant
growth
Year
2010
Dividend
35
Outcomes:
40.429
2011
48.014
2012
2013
65.87
72.457 (taka)
46.703
586.457
TV2012=827.135
673.59
For constant growth rate after 2012 we need a rate less than the Ke rate of 18.76%. So
we assumed the constant growth rate after 2012 to be 10%.
Year
2010
FcF
643777
2011
2012
655784
681282
2013
749410.2(taka
Outcomes: 552192.66
483043.83
6065618.838
TV2012=8554910.959
=Kd
= .1727%
= KCS =17.848%
= KRE =17.848%
Weight of debt
=Wd
= WCS = 6.154%
= 28.78%
WACC
= WL*KL*(1-Tax rate)+WB*KB(1Taxrate)+WPS*KPS+WCS*KCS+WRE*KRE
= .2878*.001727(1- .24021)+0+0+ (.06154*.17848)+(.65066*.17848)
=0.0003776+0.1098+0.1169
= 22.707%
=Kd
= .1727%
= KCS =17.848%
= KRE =17.848%
Weight of debt
=Wd
= WCS = 80.056%
= 6.117%
= WL*KL*(1-Tax rate)+WB*KB(1-Taxrate)+WPS*KPS+WCS*KCS+WRE*KRE
= [.06117*.001727(1- .24021)]+0+0+[ .80056 * .17848] +[ .13827 * .17848]
=16.76%
=
= 3022349.391
WACC
= WL*KL*(1-Tax rate) +WB*KB (1Taxrate) +(WPS*KPS+(WCS*KCS+WRE*KRE )
= .50*.001727(1- .24021) +0+0+ .50*.17848
= 8.9896%
=
= 7634209.267
WACC
= WL*KL*(1-Tax rate) +WB*KB (1Taxrate) + (WPS*KPS+ (WCS*KCS+WRE*KRE)
= .60*.001727(1- .24021) +0+0+ .40*.17848
= 7.2178%
=
= 9508227.94
WACC
= WL*KL*(1-Tax rate) +WB*KB (1Taxrate) + (WPS*KPS+ (WCS*KCS+WRE*KRE)
= .20*.001727(1- .24021) +0+0+ .80*.17848
= 14.3046%
=
= 4797651.1638
WACC
= WL*KL*(1-Tax rate) +WB*KB (1Taxrate) + (WPS*KPS+ (WCS*KCS+WRE*KRE)
= .25*.001727(1- .24021) +0+0+ .75*.17848
= 13.418%
Value of the firm
=
=
= 5114658.49
The second option that consists of 60% Debt & 40% Equity has the perfect combination of
Capital Structure for the company and it also has the highest value for the firm of 9508227.94.
By following this capital structure the company can increase its share price. To do so the
company will have to keep the greater portion of the capital structure as loan.
The reason for which we will increase the loan is if we increase the loan the weighted average
cost of capital will decline. .
Dividend Policy
BATBC Bangladesh limited believes that High dividend Payment Increases the
share price
Justification:
In 2010 the company paid dividend of $35. If we observe the historical trend of the
company it can be easily said that the company is following the second view of
dividend policy.
People are always concern about their certain income. In the view of people
dividend is a certain income whereas they are uncertain about the income from the
capital gain. The reason behind their that belief is dividends can be predictable
compared to capital gain as management can control dividend but it cannot dictate
the price of stock.
dividend income implies a higher required rate for discounting a dollar of capital
gains than for discounting a dollar of dividend. So higher dividend means higher
share price for the company in the eye of people
Keeping this in mind BATBC Bangladesh Limited gives maximum return to their
shareholders as the form of dividend. This policy is also known as bird in the
hand dividend theory.
Appendix
1. General Reserve: (2011)
Opening balance:
1,836,607,000
6,097,442,822
Payment of dividends
(4, 976,38,000)
7,436,411,822
7,436,411,822
841,527,416
(497,638,000)
7780301238
EBT (1 - T)
2006
2007
350155(1 - T) = 263651
2008
457740 (1 - T) = 359342
2009
772611 (1 - T) = 609870
2010
903256 (1 - T) = 668068
24.021 %