Financial Statement Analysis of Grameenphone for 2012-2016 1

Introduction

The telecommunication industry of Bangladesh as a whole possesses great potential and has
seen growth in mobile penetration that has exceeded all expectations with over 141.679 million
subscribers as of October, 2017 (source: btrc.gov.bd). Now we have five telecom companies
in our country. Their local names are: Grameenphone, Banglalink, Robi, Airtel, Teletalk. The
mother company of these companies is the world’s famous big organization.

Although we have five telecom companies, our report is only based on the fastest growing
telecommunication company Grameenphone Ltd. It is the largest mobile phone operator in
Bangladesh whose parent company’s name is Telenor, and its home country is Norway.
Launched in 1997, Grameenphone is the market leader in telecommunication service in terms
of revenue, coverage and subscriber base with more than 64.441 million subscribers (as of
October, 2017) and 3000 full and temporary employees.

The shareholding structure comprises of mainly two sponsor Shareholders namely Telenor
Mobile Communications AS (55.80%) and Grameen Telecom (34.20%). The rest 10.00%
shareholding includes General public & other Institutions. The main objective of
Grameenphone Ltd. is to build up an available data communication service network all over
the world through voice call, sms, internet, and other value-added services, which is an
important part for the success of today's business. For this reason, Grameenphone Ltd. utilizes
some sort of modern business techniques. By providing cell-phone service Grameenphone earn
lots of profit. Year to year changes their financial performance is increasing. As of December
2016, the company’s network covered more than 99% of Bangladesh’s population with 2G
services and more than 90% population with high speed 3G network (Grameenphone.com).
 Financial Statement Analysis of Grameenphone for 2012-2016 2

Methodology

This term paper is a reflection of the five-year financial data analysis of the telecommuication
company Grameenphone. All telecommunication companies are now facing tremendous
competition from each other as the industry have become more than saturated with different
changes & dynamics in technology and innovation. As a part of this analysis we had to collect
data and information from the Grameenphone annual report. In order to prepare this report, we
also collected information from different online sources.

The Related sources of information are given below:

Annual reports of the Grameenphone.
Website of the Grameenphone.
Different publications of the Grameenphone.

Objectives of the Report

General objectives:
The main purpose of preparing this term paper is as a part course activity in BUS635,
Managerial Finance course. Besides this the main general objective is to gain practical
experiences in research and flourishing our knowledge, analytical views the academic
knowledge and real life.

Specific objective:
To know about the financial condition Of Grameenphone.
To get idea about the dynamics, changes, opportunities of telecom industry in
Bangladesh.
To find out how efficiently the present strategies are working.

Limitations
The only limitation of this term paper is that we did not have the industry average. Hence, we
could not show the comparison with other companies or the industry as a whole.
 Financial Statement Analysis of Grameenphone for 2012-2016 3

Ratio & Trend Analysis

(A) Liquidity Ratio

Liquidity ratio measures the ability of a company to meet its short-term debt.
Grameenphone’s current asset is decreasing compared to past years, which is the prime cause
of its unfavorable liquidity position.

Current Ratio: Current assets/ Current liabilities

2012 2013 2014 2015 2016
Current assets 14,005,310 16,993,243 14,864,935 11,927,812 10,941,241
Current liabilities 63,059,777 78,579,997 61,402,136 67,625,177 68,079,334
0.22 0.22 0.24 0.18 0.16

Current ratio
0.3

0.25
0.24
0.22 0.22
0.2
0.18
0.16
0.15

0.1

0.05

0
2012 2013 2014 2015 2016

In 2016, Grameenphone’s current asset is 0.16 times of the current liability. Compared to past
data, in 2016, proportionate change in assets is less than the proportionate change in current
liability. That’s the reason behind the fall in current ratio over the years. The downward trend
in current asset is mostly due to reduction in the amount of debtors over the years.
 Financial Statement Analysis of Grameenphone for 2012-2016 4

Quick Ratio: (Current assets – inventories – prepayments)/ Current liabilities

2012 2013 2014 2015 2016

Current assets 14,005,310 16,993,243 14,864,935 11,927,812 10,941,241

Inventory 416,896 560,034 387,475 435,340 565,404

Prepayments 2,340,210 4,527,326 3,723,709 1,751,887 2,282,773
Current liabilities 63,059,777 78,579,997 61,402,136 67,625,177 68,079,334
Quick Ratio 0.18 0.15 0.18 0.14 0.12

Quick ratio
0.2
0.18 0.18 0.18
0.16
0.15
0.14 0.14
0.12 0.12
0.1
0.08
0.06
0.04
0.02
0
2012 2013 2014 2015 2016

In 2016 the company’s current asset excluding inventory and prepayments is only 0.12 time of
the current liability. In 2016, current assets excluding inventories and prepayments has
decreased, whereas current liability has also slightly increased compared to the 2015, both of
the resulted in a sharp decline in quick ratio.
 Financial Statement Analysis of Grameenphone for 2012-2016 5

(B) Asset Management Ratio

Asset Management Ratios attempt to measure the firm's success in managing its assets to
generate sales. Grameenphone’s sales growth is mainly the reason for its favorable asset
management ratios.

Day sales outstanding: Accounts receivable/ (Sales/360)

2012 2013 2014 2015 2016
Accounts Receivable 9,879,471 11,809,676 9,717,558 7,339,372 7,463,977
Sales 91,920,446 96,624,227 102,663,372 104,754,372 114,862,160
Days sales outstanding 38.69 44 34.08 25.22 23.39

Days sales outstanding

50
45 44
40
38.69
35 34.08
30
25 25.22
23.39
20
15
10
5
0
2012 2013 2014 2015 2016

In 2016, it took Grameenphone an average of 24 days to collect the accounts receivable from
its customers. DSO has gotten better constantly compared to the last five years. Hence, it can
be concluded that the company is following an efficient credit collection process, so there is an
upward trend.

Total asset turnover: Sales/ Total Assets

2012 2013 2014 2015 2016
Total asset 117,665,353 135,220,644 130,672,825 132,449,567 130,499,511
Sales 91,920,446 96,624,227 102,663,372 104,754,372 114,862,160
Total asset turnover 0.78 0.71 0.79 0.79 0.88
 Financial Statement Analysis of Grameenphone for 2012-2016 6

Total asset turnover

1
0.9 0.88
0.8 0.78 0.79 0.79
0.7 0.71
0.6
0.5
0.4
0.3
0.2
0.1
0
2012 2013 2014 2015 2016

In 2016, for every Tk.1 of asset the company generated Tk.0.88 of sales. The ratio has increased
compared to the past years. The relative increase in sales is more than the relative change in
assets in the ratio increased. The ratio shows that Grameenphone is utilizing its assets properly
to generate sales.

Fixed asset turnover ratio:

2012 2013 2014 2015 2016
Sales 91,920,446 96,624,227 102,663,372 104,754,372 114,862,160
Fixed assets 103,660,043 118,227,401 115,807,890 120,521,755 119,558,270
Fixed asset turnover 0.89 0.82 0.89 0.87 0.96

Fixed asset turnover

1

0.95

0.9

0.85

0.8

0.75
2012 2013 2014 2015 2016
 Financial Statement Analysis of Grameenphone for 2012-2016 7

In 2016, for every Tk.1 of fixed asset the company generated Tk.0.96 of sales. This ratio is at
a all time high compared to the last five years. The proportionate change in sales is more than
the proportionate change in fixed asset, hence the ratio increased. The company is utilizing its
fixed assets properly to generate sales, so the fixed asset turnover is upward trending.

(C) Debt Management Ratio

Total Debt Ratio: Total liabilities ÷ Total Assets

Year 2012 2013 2014 2015 2016

Total 82,207 104,080 99,308 101,824 96,927
Liabilities
Total Asset 117,665 135,221 130,673 132,450 130,500

Total Debt 69.86% 76.97% 75.99% 76.87% 74.27%

Ratio

Debt Ratio
78.00%

76.00%

74.00%

72.00%

70.00%

68.00%

66.00%
2012 2013 2014 2015 2016

Here, we can see that Grameenphone’s total assets has increased from the year 2012 and the
usual is around 130 million until 2016. Besides, the debt ratio has also increased since 2012
and we know the higher the debt ratio, the more leveraged the company is, implying greater
financial risk. If we compare the last five years, Grameenphone was more leveraged in 2013
with a debt ratio of 76.97%.
 Financial Statement Analysis of Grameenphone for 2012-2016 8

Total Debt Equity Ratio: Total liabilities ÷ Shareholders equity

Year 2012 2013 2014 2015 2016

Total 82,207 104,080 99,308 101,824 96,927
Liabilities
Shareholders' 35,458 31,141 31,365 30,625 33,572
equity

Total Debt to 2.88 3.32 3.17 3.34 2.32

Equity

Debt Equity Ratio

4
3.5
3
2.5
2
1.5
1
0.5
0
2012 2013 2014 2015 2016

We can see a rising slope of debt financing of Grameenphone since year 2012 but in 2016, it
manages to come down. We know that lower ratio for debt to equity is better because lower
debt has better ability of cash pay. But we also know that debt ratio is good for a company to
a certain point. Debt to equity ratio examines the firm’s capital structure and indirectly its
ability to meet current debt obligations. Aggressive leveraging practices are often associated
with high levels of risk. This may result in volatile earnings as a result of the additional interest
expense. If a lot of debt is used to finance increased operations (high debt to equity), the
company could potentially generate more earnings than it would have without this outside
financing. If this were to increase earnings by a greater amount than the debt cost (interest),
then the shareholders benefit as more earnings are being spread among the same number of
shareholders. However, if the cost of this debt financing ends up outweighing the returns that
the company generates on the debt through investment and business activities, stakeholders’
share values may take a hit. If the cost of debt becomes too much for the company to handle,
it can even lead to bankruptcy, which would leave shareholders with nothing.
 Financial Statement Analysis of Grameenphone for 2012-2016 9

(D) Profitability Ratio

A group of ratios showing the effect of liquidity, asset management and debt management on
operating results.

Net Profit Margin Ratio: Net income/Net sales (figure in millions)

Year 2012 2013 2014 2015 2016

Net income 17,505 14,702 19,803 19,706 22,526

Net sales 91,920 96,624 102,663 104,754 114,862

Net Profit 19% 15.22% 19.29% 18.81% 19.61%
Margin

Net Profit Margin

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2012 2013 2014 2015 2016
percentage 19.00% 15.22% 19% 18.81% 19.61%

Here we have similar return of profit margin in all the years except in 2013. In 2013 we can
see that it was 15.22% which is good but lowest among these five years, it means that they are
turning more profit earned as revenue. A company’s individual numbers (like revenue or
expenditure) rarely indicate much about the company’s profitability, and looking at the
earnings of a company often doesn’t tell the entire story. Increased earnings are good but an
increase does not mean that the profit margin of a company is improving. Higher of this ratio
indicates the better situation of the company because it represents how much out of every dollar
of sales a company actually keeps in earning.
 Financial Statement Analysis of Grameenphone for 2012-2016 10

Operating Profit Margin Ratio: Operating profit/Net sales

Year 2012 2013 2014 2015 2016

Operating 33,675 33,199 36,896 36,963 41,566

Profit
Net sales 91,920 96,624 102,663 104,754 114,862

Operating 36.63% 34.36% 36% 35.29% 36.19%

Profit Margin

Operating Profit Margin Ratio

37.00%
36.50%
36.63%
36.00%
36.19%
35.50% 36%

35.00% 35.29%
34.50%
34.00% 34.36%
33.50%
33.00%
2012 2013 2014 2015 2016

We can see operating margin ratio was 36.19% in 2016, which is higher than last three years,
and like it was before back in 2012. This is a good sign for Grameenphone because operating
margin is a measurement of what proportion of company’s revenue is left over after paying for
variable costs of production. So, a healthy or higher operating margin is required for a company
to be able to pay for its fixed costs, such as interest on debt.

Return on Asset: Net income/Total asset

Year 2012 2013 2014 2015 2016

Net income 17,505 14,702 19,803 19,706 22,526

Total asset 117,665 135,221 130,673 132,449 130,499

ROA 14.88% 10.87% 15.15% 14.88% 17.26%

 Financial Statement Analysis of Grameenphone for 2012-2016 11

ROA
20.00%
18.00% 17.26%
16.00% 14.88% 15% 14.88%
14.00%
12.00% 10.87%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2012 2013 2014 2015 2016

ROA tells us what earnings were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. Here in
Grameenphone we can see that it has a very good ROA against its asset. We know that
Grameenphone has a huge amount of asset. So if they have a return of 14%-17% on average it
is a huge factor of achievement. Because they are making a good return against the asset they
have invested. The ROA figure gives investors an idea of how effectively the company is
converting the assets into net income. The higher the ROA number, the better, because the
company is earning more money on less investment. The return on asset is very stable here in
Grameenphone and there’s a reason behind it. Telecom Company’s asset’s do not fluctuate or
vary from year to year. As for income it does not heavily fluctuate, so we have here a very
stable ROA in Grameenphone.

Return on Equity: Net income/Total shareholder equity

Year 2012 2013 2014 2015 2016

Net income 17,505 14,702 19,803 19,706 22,526

Shareholder’s 35,458 31,141 31,365 30,625 33,572

Equity

ROE 49.37% 47.21% 63.14% 64.35% 67%

 Financial Statement Analysis of Grameenphone for 2012-2016 12

ROE
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2012 2013 2014 2015 2016
percentage 49.37% 47.21% 63% 64.35% 67.00%

Return on equity reveals how much profit company is generating with the money shareholders
have invested. Here we see that, in 2016 it was 67%, in 2015 it was 64.35%, and in 2014 it was
63%. From 2014 to 2016 the return on equity slope is getting higher and it is standing highest
at 67% in 2016. Higher return (%) is better because from shareholders perspective it is the most
considerable things for shareholder to identify how the company is doing. It was comparatively
lower back in 2012 & 2013 but since then it is giving much better return and this is a very good
message to the shareholders and investors. They will be highly encouraged and motivated to
invest in Grameenphone’s stock and buy its share because of its high return on equity.

Subscriber Growth

Year 2012 2013 2014 2015 2016

Subscriber 36.5 45.30 47.6 51.55 58.00
(millions)

Subscriber growth
70
60
50
40
30
20
10
0
2012 2013 2014 2015 2016
millions 36.5 45.3 47.6 51.55 58
 Financial Statement Analysis of Grameenphone for 2012-2016 13

We can see in this chart that the subscriber number is booming from year to year. It was 36.5
million back in 2012 comparative to more than 58 million in 2017. Grameenphone have the
largest share of subscriber in telecom sector in Bangladesh. They have 45.48% of markets
subscriber in their hand. This number is huge and this is what keeps their business running very
smoothly. They are the leader of telecom sector in our country.

Operating Expense Ratio: Operating expense/Net sales

Year 2012 2013 2014 2015 2016

Operating 58,245 63,425 65,767 67,790 73,296
expense
Net sales 91,920 96,624 102,663 104,754 114,862
Operating 63.36% 65.64% 64% 64.71% 63.81%
expense ratio

Operating Expense Ratio

66.00%

65.50%

65.00%

64.50%

64.00%

63.50%

63.00%

62.50%

62.00%
2012 2013 2014 2015 2016
percentage 63.36% 65.64% 64% 64.71% 63.81%

For every Tk.100 worth of sales the company incurred a Tk.63.36 worth of expense. The
trend compared to past data has low variance. However, compared to 2015, the relative
increase in operating expense is more than the relative increase in sales, hence the ratio fell.
 Financial Statement Analysis of Grameenphone for 2012-2016 14

(E) Market Value Ratio

A set of ratios that relate the firm’s stock price to its earnings and book value per share.

(i) Price/earnings ratio:

Grameen Phone
Ratio Analysis : Market Value Ratio

Years 2012 2013 2014 2015 2016

Share price 174.8 200.9 361.9 252.7 284.1

Earnings per share (EPS) 12.96 10.89 14.67 14.59 16.68

Price/earnings ratio 13.49 18.45 24.67 17.32 17.03

Price/earnings ratio
30.00

25.00 24.67

20.00
18.45
17.32 17.03
15.00
13.49

10.00

5.00

0.00
2012 2013 2014 2015 2016

The price-earnings ratio (P/E ratio) is the ratio that measures a company’s current share price
relativity in respect to its per-share earnings. The above data table and line chart show that
GP’s share price relative to its earnings rose gradually from year 2012 to 2014 at the highest
point at 24.67 times of the previous years. And next year it dropped and slightly held position
at point around 17 times.
 Financial Statement Analysis of Grameenphone for 2012-2016 15

(ii) Market value/book value ratio:

Grameen Phone

Ratio Analysis : Market Value Ratio

Years 2012 2013 2014 2015 2016

Share price 174.8 200.9 361.9 252.7 284.1

Book value per share 26.26 23.06 23.23 22.68 24.86

Market value/book value ratio 6.66 8.71 15.58 11.14 11.43

Market value/book value ratio

18.00

16.00
15.58
14.00

12.00
11.14 11.43
10.00
8.71
8.00
6.66
6.00

4.00

2.00

0.00
2012 2013 2014 2015 2016

The book-to-market ratio is a ratio used to find the value of a company by comparing the book
value of a firm to its market value. GP’s market value is 15.58 times higher than the book value
of its share price. It’s a good indicator of the value of share price. Though it dropped in the
next years to 11.43 times in 2016.
 Financial Statement Analysis of Grameenphone for 2012-2016 16

(iii) Earning per share (EPS):

Grameen Phone

Ratio Analysis : Market Value Ratio

Years 2012 2013 2014 2015 2016

Net income 17504769 14701574 19803283 19706891 22526355

No. of shares outstanding 1350300 1350300 1350300 1350300 1350300

EPS 12.96 10.89 14.67 14.59 16.68

EPS
18.00
16.68
16.00
14.67 14.59
14.00
12.96
12.00
10.89
10.00

8.00

6.00

4.00

2.00

0.00
2012 2013 2014 2015 2016

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding
share of common stock. It serves as an indicator of a company's profitability. From the above
data of Grameen phone it is seen that its earnings per share is in increasing trend though it falls
in 2013. GP per share earnings is 16.68 in 2016. The graph shows that GP’s profitability is
growing and as well as the company is.
 Financial Statement Analysis of Grameenphone for 2012-2016 17

(iv) Dividend per share (DPS):

Grameen Phone
Ratio Analysis : Market Value Ratio
Years 2012 2013 2014 2015 2016
Total Dividend 18904200 18904200 21604800 18904200 23630250
No. of shares outstanding 1350300 1350300 1350300 1350300 1350300
DPS 14.00 14.00 16.00 14.00 17.50

DPS
20.00

18.00
17.50
16.00 16.00

14.00 14.00 14.00 14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00
2012 2013 2014 2015 2016

DPS tells about the company's past financial health and its current financial stability. From the
above data and graph we find that GP’s dividend per share was increasing from 2012 – 2014
but falls in 2015 though it rises again in 2016. It can be inferred that before 2015 GP was
growing well but faced a shock in 2015 and thereafter it overcome it. And its current level is
financially sound.
 Financial Statement Analysis of Grameenphone for 2012-2016 18

(v) Dividend yield:

Grameen Phone
Ratio Analysis : Market Value Ratio
Years 2012 2013 2014 2015 2016
DPS 14.00 14.00 16.00 14.00 17.50
Share price 174.8 200.9 361.9 252.7 284.1
Div. Yield 8.01% 6.97% 4.42% 5.54% 6.16%

Div Yield
9.00%

8.00% 8.01%

7.00% 6.97%

6.00% 6.16%
5.54%
5.00%
4.42%
4.00%

3.00%

2.00%

1.00%

0.00%
2012 2013 2014 2015 2016

This ratio indicates how much a company pays out in dividends each year relative to
its share price. Here Grameen phone’s Dividend yield is 8.01% in 2012 which means the
company’s payout of dividend is 8.01 taka per share. This rate dropped during the following
years at the lowest point 4.42%. Then it started to rise during the following years. It means
the company is recovered from its bad performance and doing well at present.
 Financial Statement Analysis of Grameenphone for 2012-2016 19

(vi) Book value/share:

Grameen Phone
Ratio Analysis : Market Value Ratio
Years 2012 2013 2014 2015 2016
Total stockholders' equity 35458008 31140570 31364502 30625258 33572284
No. of shares outstanding 1350300 1350300 1350300 1350300 1350300
Book value per share 26.26 23.06 23.23 22.68 24.86

Book value per share

27.00

26.26
26.00

25.00 24.86

24.00

23.23
23.00 23.06
22.68

22.00

21.00

20.00
2012 2013 2014 2015 2016

Grameenphone’s book value is very sensitive to its share price and it falls greatly during the
year 2012 – 2013 and then slighty rise and abruptly rise in 2016 to 24.86 times. It means in
2016 GP’s book value is 24.86 times of its per share value. And it indicates the growth of the
company.
 Financial Statement Analysis of Grameenphone for 2012-2016 20

Common Size (Vertical) Analysis

The financial statement analysis in which the total asset figure, total liability and equity
figure and revenues are considered as hundred percentage and the percentage of all other
individual item is determined with respect to that hundred percentage is called common-size
or vertical statement analysis.

Common-size analysis converts each line of financial statement data to an easily comparable
amount measured as a percent. In other words, a common size financial statement displays all
items as percentages of a common base figure. As such, Income statement items are stated as
a percent of net sales and balance sheet items are stated as a percent of total assets or total
liabilities and shareholders' equity.

A common size balance sheet is a balance sheet that displays both the numeric value and
relative percentage for total assets, total liabilities and equity accounts. A common size
balance sheet allows for the relative level of each asset, liability and equity account to be
quickly analyzed.

Similarly, Common size income statement is an income statement in which each account is
expressed as a percentage of the value of sales. This type of financial statement can be used
to allow for easy analysis between companies or between time periods of a company.

Given below are the common size analysis of Grameenphone Ltd. for the period of 2012 to
2016. While the first table displays the common sized balance sheet, the second table depicts
the common ize income statement of Grameenphone for the five years period of 2012 to
2016.
 Financial Statement Analysis of Grameenphone for 2012-2016 21

Common Size Balance Sheet of GP (2012-2016)

2012 2013 2014 2015 2016

Assets (% of Total Asset OR Total Equity & Liability)
Non-Current Assets
Property, plant and equipment, net 59.138 51.710 53.804 56.025 58.841
Intangible assets, net 28.959 35.301 34.264 30.990 29.259
Investment in associate - 0.422 0.532 0.537 -
Other non-current assets - - 0.024 3.444 3.515
Total non-current assets 88.097 87.433 88.624 90.994 91.616
Current Assets
Inventories 0.354 0.414 0.297 0.329 0.433
Trade and other receivables 8.396 8.734 7.437 5.541 5.720
Short-term investment 0.122 0.058 - - -
Cash and cash equivalents 3.030 3.361 3.643 3.136 2.231
Total current assets 11.903 12.567 11.376 9.006 8.384

Total Assets 100.000 100.000 100.000 100.000 100.000

Equity and Liabilities
Equity attributable to owners of the company
Share capital 11.476 9.986 10.333 10.195 10.347
Share premium 6.663 5.798 6.000 5.919 6.008
Capital reserve 0.012 0.011 0.011 0.011 0.011
Deposit from shareholders 0.002 0.001 0.001 0.001 0.001
General reserve 1.818 - - - -
Retained earnings 10.163 7.233 7.656 6.996 9.358
Total Equity 30.135 23.029 24.002 23.122 25.726
Non-current liabilities
Finance lease obligation 4.266 3.928 4.039 3.931 3.903
Loans and borrowings - 8.627 18.369 14.318 10.388
Deferred tax liabilities 7.883 5.784 6.117 5.973 6.311
Employee benefits - - - 1.091 1.023
Other non-current liabilities 4.124 0.520 0.483 0.508 0.480
Total non-current liabilities 16.273 18.858 29.008 25.820 22.106
Current liabilities
Trade and other payables 30.293 29.854 15.903 17.044 19.435
Provisions - - 10.946 10.629 10.938
Loans and borrowings 6.965 5.694 3.174 7.532 6.207
Current tax payable 15.210 17.352 15.022 14.938 14.515
Other current liabilities 1.124 5.212 1.944 0.914 1.072
Total current liabilities 53.592 58.112 46.989 51.057 52.168

Total equity and liabilities 100.000 100.000 100.000 100.000 100.000

If we analyze common sized balance sheets, it’s clear that over the 5 years period,
approximately 87-90% of GP’s assets are comprised of fixed asesets, while the rest 10-13%
are comprised of current assets. On the other hand, of total equity and liability over the period
of 5 years, approximately 23-30% are comprised of equity, 16-22% are comprised of long
term liabilities and around 51-60% are comprised of current liabilities.
 Financial Statement Analysis of Grameenphone for 2012-2016 22

Common Size Income Statement of GP (2012-2016)

2012 2013 2014 2015 2016

(% of Net Sales OR Revenue)
Revenue 100.00 100.00 100.00 100.00 100.00
Operating expenses
Cost of material and traffic charges 6.64 8.03 9.34 10.21 9.28
Salaries and personnel cost 7.66 7.31 6.29 6.08 7.21
Operation and maintenance 3.86 5.20 4.94 4.22 3.27
Sales, marketing and commissions 14.53 14.95 12.86 12.33 10.88
Revenue sharing, spectrum charges and licence fees 8.24 8.50 7.87 7.88 7.75
Other operating (expenses)/income, net 5.92 5.78 5.56 5.85 7.14
Depreciation and amortisation 16.51 15.87 17.20 18.14 18.28
Total Operating expenses 63.36 65.64 64.06 64.71 63.81

Operating Profit 36.64 34.36 35.94 35.29 36.19

Share of profit of associate - 0.03 0.12 0.01 0.19

Gain on sale of shares in GPIT - 1.06 - - -
Impairment loss on investment in associate - - - - 0.42
Finance (expense)/income, net 3.60 2.69 2.25 1.85 2.26
Foreign exchange gain/(loss) 0.19 1.23 0.14 0.11 0.07
3.79 0.36 1.99 1.95 2.95

Profit before tax 32.85 34.00 33.95 33.34 33.24

Income tax expense 13.80 18.78 14.66 14.52 13.63

Profit after tax 19.04 15.22 19.29 18.81 19.61

Other comprehensive income (loss)

Item that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit plan - - - 1.38 0.000030
Related taxes - - - 0.55 0.000012
0.83 0.000018
Total comprehensive income for the year 19.04 15.22 19.29 17.99 19.61

Over the 5 year period of 2012-1016, Grameenphone’s Operating Expenses account for
around 63-65% of its Net Sales or Revenue, thus operating profit account for around 34-36%
of the revenue generated over the period respectively. On the other hand, while income tax
expenses account for 13-18% of GP’s revenue over the years, the profit or comprehensive
income for the 5 year period account for approximately 15-19% of the revenue stream for
respective years.
 Financial Statement Analysis of Grameenphone for 2012-2016 23

Conclusion

The ratio and trend analysis of grameenphone depict the complete financial standing of the
giant company of the country – Bangladesh. By analysing various ratio we have found out the
weakness and strength of the company and by doing trend analysis we have got the growing
trend of it. According to the short-term and long-term solvency ratio analysis, company’s
overall activities are satisfactory with some drawbacks. Currently the company is facing
declining trend in liquidity that indicates lower performance in short-run fund management.
On the other its long-term ratios are showing very strong position of the company. The
declining trend of financial leverage of the company implies that the company has been
reducing its external fund dependency and increasing its internal fund as well as the
shareholders value of the shares. The company has been able to keep an optimal capital
structure with rational capital mix. This consequesntly proves the grameenphone’s internal
strength. Moreover, the company’s assest management ratio and profitability ratio also show
a upward leaning which indicates its greater operating activities. Grameenphone’s ROA and
ROE ratio are higher in 2016 (ROA 17.26% and ROE 67%) than that of in past 5 years. So,
the company’s both the Assets and equities are earing at very higher rate. It also reveals the
company’s faster expansion. In addition to this analysis – market value ratios also show
important information about grameenphone’s present market positioning in
telecommunication industry in Bangladesh. Though the company’s P/E ratio, market-to-book
ratio and dividend yield ratio has dropped in recent year but its EPS and DPS have risen to
the highest point of all time. It denotes strong market positioning of the company –
Grameenphone.

According to the trend analysis, grameenphone’s financial position shows declining trend in
total assets and increasing trend in total liabilities and thus overall position has been declined
in comparison to last four years. On the other hand its equity has been risen very high which
is a positive indication for the company.

Thus, from the above analysis it can be inferred that grameenphone is the fastest mounting
company in the telecommunication industry in Bangladesh. Its overall financial postion is
very optimistic and attractive to the investors.
 Financial Statement Analysis of Grameenphone for 2012-2016 24

References
http://www.btrc.gov.bd/content/mobile-phone-subscribers-bangladesh-october-2017

https://www.grameenphone.com/about/investor-relations/5yr-business-performance

https://www.grameenphone.com/about/our-story