1.

0 :

Introduction

1.1: Origin of the Report

We are student of Bachelor of Business Administration of United International University. Our respectable course instructor Umma Rumana Huq, assigned this report as the partial requirement of the course FIN-4323 Working Capital Management to gather knowledge to our work associated fields. We have assigned to prepare this report on An analysis on Working Capital Management of Singer.

1.2: Objective
The objective of this report are Course requirement Application of theoretical knowledge To test our report writing ability To learn about managing working capital of an organization

1.3: Limitation
The limitation of this report Time was not sufficient. Information was not available. Financial problem. Resource was limited No security was provided by our university Multiple tasks at a time.

2.0 :
2.1: Information Need

METHODOLOGY

As our topic is related with the analysis of a company, we were seeking the related information. We depended on the primary and secondary source to collect information. From this source we collected the information related with our topic.

2.2: Source of Data

For our report, we collected and used the data from two sources: Primary Data Mainly we collect the data from the annual report of the particular company. Secondary Data We use some relevant secondary data from websites.

2.3: Conceptual Framework

We have not used any kind of complicated word in our report. Anybody can simply understand the whole things, just only need careful reading. Moreover, we have not tried to oversimplify to keep a standard and we have maintained judicial attitudes.

3.0 :

Body of the Report

3.1 Chapter-1: Company Profile:

Year of Establishment:
Singer Bangladesh started its journey as a private limited company in 1979. The Company was converted into a public limited company in 1983. Direct subsidiaries of The Singer Bhold B.V. of Netherlands since 2003. Shares of the company are publicly traded in DSE and CSE

Industry Singer Belongs to:

Singer Bangladesh Limited is a Bangladesh based manufacturer and retailer of consumer electronics and household appliances. Sewing machines are Singers core business but the Management realized that this product alone could not substantiate growth for longer periods. This diversification into consumer durables has continued unabated. At different times Singer has introduced Color Televisions, Fans, Washing Machines, Irons, Microwave Ovens, Rice Cookers, Audio Products, Air Conditioners, Motorcycles, Instant Power supply, DVD Players, Room Heaters, Kitchen Appliances, Notebook, Laptop, Desktop Computers, Generators, Blue Ray DVD Players, LCD/LED TV and 3D Television. Singer ventured into the manufacturing and marketing of household and industrial cables in 2006 with the promise to Safety You Can Trust.

Around 300 dealers are located across the country to make Consumer Electronics & Home Appliances of Singer and other brands, Singer Cables and Sewing Machines available to more consumers.

Company Briefing:
The Singer saga began in 1851, when Sir Isaac Merritt Singer with US$ 40 in borrowed capital began to manufacture and sell a machine to automate and assist in the making of clothing. In 1876, Singer became the first multinational industrial company as it began manufacturing sewing machines in Glasgow, Scotland. By 1880 world sales had reached 250,000 units. Additional factories were established in New Jersey, and one of the best-known emblems- the RED S Girl Trademark-was developed. The singer Building at 149 Broadway in New York was opened and became the headquarter of Singer for the next 54 years Singer introduced electronics, home appliances, and other consumer durables especially in the Asia Pacific Rim, Latin America and the Caribbean. Today Singer is a household name throughout the world for a wide range of products for the home. The first operation of Singer began in 1905. Later, in 1920, two shops were set up in Dhaka and Chittagong. After the emergence of Bangladesh on December 16, 1971, the East Pakistan Branch Office was elevated to a country Office and the Sewing Machines were made available from different Singer overseas sources. The number of shops was squeezed to only 23 because of low volume of business. In 1983 the company was listed with Dhaka Stock Exchange (DSE) and offered 20% of its total capitalization in 2001, it was also listed with the Chittagong Stock Exchange (CSE). Although sewing machines are Singers core business but the Management realized that this product alone could not substantiate growth for longer periods. This diversification into consumer durables has continued unabated. At different times Singer has introduced Color Televisions, Fans, Washing Machines, Irons, Microwave Ovens, Rice Cookers, Audio Products, Air Conditioners, Motorcycles, Instant Power supply, DVD Players, Room Heaters, Kitchen Appliances, Notebook, Laptop, Desktop Computers, Generators, Blue Ray DVD Players, LCD/LED TV and 3D Television. Singer ventured into the manufacturing and marketing of household and industrial cables in 2006 with the promise to Safety You Can Trust.

Gradual transformation of Singer Shops into Singer Plus was adapted in 2006 as part of its multibranding strategy. The main focus of this strategy is to make available varied world famous brands under the same product category for providing customers a variety of choice under the same roof. As such Singer Shops now offers world famous brands like Samsung, Haier, Singtech, Whirlpool, Toshiba, Moulinex, Sebec, Tefal, Prestige, PureIt alongside with Singer.

Core Values:

Integrity

We conduct ourselves with honesty and integrity, recognizing that upholding the customer's trust requires the highest standards of moral and ethical conduct. Quality We achieve excellence through the ongoing development of our competencies and continuous quality improvement in all our processes. In particular, we recognize the value and importance of forecasting in reaching quality and timely decisions. Teamwork Everyone's contribution is important. Working together, we place the mission of IC Trends first and align our efforts toward that end. We conduct ourselves in accordance with the principles of consultative and participative decision-making. Communication We communicate information, ideas, decisions, and provide feedback, internally and external to the organization, in a candid, timely, constructive, and clear manner.

Equity We treat our customers and each other with fairness, courtesy, respect and compassion while fostering an atmosphere of mutual trust. Diversity We promote workforce diversity to strengthen and enrich the company. Innovation We apply new concepts, ideas, and creative approaches to improve current operations and to meet the challenges of the future. Quality of Work Life We create and use programs that enhance the quality of the work place to improve our ability to carry out the mission of the organization. Provide Amazing Service We are proud to operate a customer-centric company where the relationship with our customers is our number one priority. We think anything worth doing, is worth doing well. We strive to exceed the expectations of every customer before, during and after the sale. We go above and beyond the average level of service to create customer amazement and strong connections with our customers. Make a Commitment to Improvement Because of our entrepreneurial spirit we never accept or become comfortable with the status quo, but are always thinking of ways to improve. Without change, we cannot continue to provide the amazing service that is the Singer Family trademark. Sharing of ideas and respecting different perspectives is important to maximizing improvement.

Embrace a Strong Work Ethic In Singer Bangladesh people do not have "jobs", they have responsibilities. Personal accountability is expected so that each person contributes his or her very best. Attitude, Character and Enthusiasm (ACE) is our daily reminder to approach each day with integrity in order to produce our finest work. Build a Family Spirit Our honesty and integrity with one another other leads to strong relationships that produce the strongest work. We can use these solid relationships to accomplish so much more than we could otherwise. We encourage consultation, collaboration and participation at all levels of the organization. We are in this together and no matter the situation, we are always respectful to one another. Have Fun at Work We love to celebrate our individual and team accomplishments, both large and small. We have a sense of humor and we know that it's good to laugh at ourselves every once in a while. We are proud of our employee happiness and are always looking for a chance to fully engage in our work and bring out the fun in it.

Products:

Air Conditioner Computer DVD/Blue Ray Player Electric Kettle Fan Freezer Fridge Gas Burner IPS Iron Kitchen Appliances LED/LCD Television Microwave Oven Motor Cycle Rice Cooker Sewing Machine Singer Cables Television Washing Machine Water Heater Water Purifier

Service:

Hire Purchase Extended Warranty After Sales Service Singer Sewing Academy Bill Pay Flexi Load Customer Protection Plan Customer Loyalty Program Call Center Instant Buy

Target market of Singer Bangladesh:

Amplifier Blank Records & Tapes Cables Camera Accessories Car Audio Car Communications Car Reversing Aid Card Readers Cassette Recorder & Player CD Player Chargers Consumer Electronics Stocks Digital Batteries Digital Cameras Digital Voice Recorder DVD, VCD Player Earphone & Headphone Film Cameras Handheld Video Games HDD Players Home Audio & Video Parts & Accessories Home Theatre System Karaoke Player Memory Cards Microphone MP3 & MP4 Accessories MP3 Players

MP4 Players Navigation & GPS Other Auto Electronics Other Consumer Electronics Other Home Audio & Video Equipment Quran Players Radio

Management Philosophy:
To work for the betterment of society

Vision
Their vision is to be the most admired and respected family company in the country

Mission
Their mission is to improve the quality of life of the people by providing comforts and conveniences at affordable prices

Value statement

Consumers: To live up to the expectation of a responsible organization by contributing towards the improvement in the Quality of life of our customers through outstanding product and services

Employees: To respect each other as individuals and encourage cross functional teamwork while providing opportunities for career development.

Shareholders: To provide reasonable return to shareholders while safeguarding their investment.

Suppliers: To develop our suppliers as partners in progress and share our growth with them.

Competitors: To respect our competitors and recognize their contribution to market value.

Community: To conduct our business by conforming to the ethics of our country and share the social responsibility of the less fortunate.

OBJECTIVES

To be the market leader in product range and market segment. To provide consumers with the best services and shopping experience. To provide consumers with products of latest technology. To develop employees to achieve their real potential. To provide our shareholders with steady asset growth and return on investment above our industry norm.

To grow our revenue and profits at a rate above the industry norm.

Singer Bangladesh Goals:

Singer Bangladesh wants to be the best company who serve quality product and service to family of the whole world. The major outcome of strategic road-mapping and strategic planning, after gathering all necessary information, is the setting of goals for the organization based on its vision and mission statement. A goal is a long-range aim for a specific period. It must be specific and realistic. Long-range goals set through strategic planning are translated into activities that will ensure reaching the goal through operational planning.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a companys strategic situation. The technique is based on the assumption that an effective strategy derives from a sound fit between a firms internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firms strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.

Strengths
Robust top line growth Strong market position Diversified business portfolio

Weaknesses
Fluctuating operating and net profits

SWOT
Oportunities
Positive outlook for semiconductors Increasing mobile phone sales Growing rural market

Threats
Increasing raw material prices Intense competition Government regulations

3.2 Chapter-2: Basic Working Capital Management of Singer:

3.2.1

Gross Working Capital:

Cash and short-term assets expected to be converted to cash within a year. Businesses use the calculation of gross working capital to measure cash flow. Gross working capital does not account for current liabilities, but is simply the measure of total cash and cash equivalent on hand. Gross working capital tends not to add much to the business' assets, but helps keep it running on a day-to-day basis. Gross Working Capital= Current Asset + Current Liability Following table shows the gross working capital of Singer in different years:

Particulars
Gross Working Capital

2007
1873806868

2008

2009

2010

2123669777 1388338025 3458768235

Gross Working Capital

Gross Working Capital 3458768235

1873806868

2123669777 1388338025

2007

2008

2009

2010

From the analysis of gross working capital of Singer Bangladesh we can see that the ratio were fluctuating all over the four year. But they able to achieve efficiency on gross working capital as there is a increase in 2011. The reason of this increase is significant increase in current asset.

3.2.2 Net Working Capital:

Cash and short-term assets expected to be converted to cash within a year less short-term liabilities. Businesses use net working capital to measure cash flow and the ability to service debts. A positive net working capital indicates that the firm has money in order to maintain or expand its operations. Net working capital tends not to add much to the business assets, but helps keep it running on a day-to-day basis. Net Working Capital= Current Asset Current Liability Following table shows the Net working capital of Singer in different years: Particulars
Net Working Capital

2007
347522272

2008
68955785

2009

2010

279786197 2480213523

Net Working Capital

Net Working Capital 2480213523

347522272 68955785 2007 2008 279786197 2009 2010

From the analysis of net working capital of Singer Bangladesh we can see that the ratio was fluctuating all over the four year. But they able to achieve efficiency on net working capital as there is a increase in 2011. The reason of this increase is significant increase in current asset & significant decrease in current liability.

3.2.3 Operating Cycle:

Operating cycle is the average time between the acquisition of materials or services and the final cash realization from that acquisition. The time between the purchase of raw material and its sale, and the sale of a product made from the raw material. Most companies desire short operating cycles because it creates cash flow to cover the company's liabilities. A long operating cycle often necessitates borrowing and thereby reduces profitability. Operating Cycle= Inventory Period + Account Receivable Period Following table shows the Operating Cycle of Singer in different years: Particulars
Operating Cycle

2008
745

2009
1150

2010
985

Operating Cycle
1400 1200 1000 800 600 400 200 0 2008 2009 Operating Cycle 2010 745 1150 985

The analysis of operating cycle of Singer Bangladesh shows a long period of cycle which is usually bad for the organizations operation & its profitability. The longer operating cycle

indicate inefficiency & increase borrowing for the firm. The reason of Singer increase operating cycle is gradual increase in inventory period & increase in account receivable period.

3.2.4 Cash Cycle:

In general, the time between cash disbursement and cash collection. In net working capital management, it can be thought of as the operating cycle less the accounts payable payment period. Cash Cycle= Operating Cycle Accounts Payable Period Particulars
Cash Coversion Cycle

2008
339

2009
772

2010
641

Cash Conversion Cycle

900 800 700 600 500 400 300 200 100 0 772 641

339

2008

2009 Cash Conversion Cycle

2010

The analysis

3.3 Chapter-3: Inventory Management:

Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods, and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check. It also involves systems and processes that identify inventory requirements, set targets, provide replenishment techniques, report actual and projected inventory status and handle all functions related to the tracking and management of material. This would include the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances.

3.3.1 Inventory Management Technique: Inventory is defined as the stock of any item or resource used in an organization. An inventory system is the set of policies an controls that monitors levels of inventory and determines (a) what levels should be maintained, (b) when stock should be replenished, and (c) how large orders should be. In its complete scope, inventory can include inputs such as human, financial, energy, equipment, and physical items such as raw materials; outputs such as parts, components, and finished goods; and interim stages of the process, such as partially finished goods or work-in-process (WIP). The choice of which items to include in inventory depends on the organization. Inventory in Singer exist basically in three forms: Raw materials, Work-in-process and Finished goods.

But before starting production or at first acquisition of raw materials the company decides how much to order, select a supplier, negotiating contracts, place the order, receive the order, transportation system/delivery system. As well as Singer perform other important activities like how or where the finished goods will store, distribution process of the finished goods, finished goods transportation mode selection and so on.

Inventory represents goods the company plans to sell its customers. Depending on the nature of the firms operations, inventories can include raw production materials, work in process, finished goods, and/or merchandise inventory. The balance in this account is also affected by accounting decisions. Accounting standards permit various acceptable inventory measurement methods, including lastin-first-out (LIFO), first-in-first-out (FIFO), weighted average, and specific identification. Specific identification has been used most frequently for inventories in which the separate items are distinct and have a high cost, such as fine jewelry, because the benefit to be gained from tracking these individual items is high. For lower-cost items in inventory, the value of such specific tracking is low unless a company is using powerful digital databases that allow detailed inventory tracking to be readily and cheaply accomplished. Even if a company uses sophisticated technology to control inventory, the accounting measures do not have to reflect precise physical flows, as would occur using specific identification. Rather, the LIFO, FIFO, and weighted average methods refer to assumptions that are made about the flow of inventory through the company. Using FIFO, the company assumes that the first goods sold are the oldest and the most recently acquired items remain in inventory on the balance sheet. Using LIFO, the costs of the oldest inventory are maintained on the balance sheet under the assumption that the most recently acquired inventory is sold first. The weighted average method uses average costs over the reporting period to calculate the inventory balance. The effect of accounting choices on the income statement and balance sheet is presented below:

3.2.2 Depreciation Method:

Depreciation deals with adjustments that are made to company profits once a month, or once a year, to account for expenses such as depreciation and amortization. The IRS has a depreciation table that specifies the life span for various types of business equipment. The most common methods used of accounting for depreciation are:

Straight-line depreciation = Cost of asset assets years of life. Double declining balance = Book value of the asset times twice the straight-line rate. Sum of the years digits is a method of calculating depreciation of an asset that assumes higher depreciation charges and greater tax benefits in the early years of an asset's life.

MACRS (Modified Asset Cost Recovery System) is the new accelerated cost recovery system, created after the release of the Tax Reform Act of 1986, which allows for greater accelerated depreciation over longer time periods. Faster acceleration allows individuals to deduct greater amounts during the first few years of an asset's life.

Singers annual report shows that the depreciation charged on reducing balance method consistent with the companys depreciation policy. Full years depreciation is charged on fixed assets in the year of acquisition and no depreciation is charged in the year of disposal. So, Singer used the straight line method of depreciation.

From this information, we analyze the annual report and find that the raw materials in hand are valued at weighted average cost. Finished goods and work in process are valued at lower of cost and net realizable value and include allocation of production overheads that relate to bringing the inventories to their present condition and location. On the other hand, the inventories of Singer lower in the previous year than the newest year. This situation affects on the Income Statement. In the Income Statement, the cost of sales shows lower in the previous year than the recent year and it affects on the Net Income which is increased in the recent year than the previous year. This situation results that, Singer used the FIFO technique. The full abbreviation of FIFO is First In First Out and Singer used this Inventory Management Technique for increasing their profit every year.

3.4 Chapter-4: Credit Management: 3.4.3 Credit Scoring: 3.4.3.1 Capital: Total Amount of Capital:
Particulars
Total Shareholder's Equity & liability

2007
2293322340

2008

2009

2010

2680331508 2189382294 4119072427

Total Shareholder's Equity & Liabilty

Total Shareholder's Equity & Liabilty 4119072427

2680331508 2293322340 2189382294

2007

2008

2009

2010

I.

Ratio Analysis: Liquidity Ratios:

Liquidity ratios are the first ones to come in the picture. These ratios actually show the relationship of a firms cash and other current assets to its current liabilities. Two ratios are discussed under Liquidity ratios. They are: Current ratio Quick/ Acid Test ratio. Net Working Capital

Current Ratio: Current Ratio is an indication of a company's ability to meet short-term debt obligations. The current ratio provides the best single indicator of the extent to which the claims of short term creditors are covered by assets that are expected to be converted. Current assets normally include cash, marketable securities, accounts receivables, and inventories. Current liabilities consist of accounts payable, short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued expenses (principally wages).

If ratio is higher than before, that indicates liquidity also greater. Current Ratio is also known as Working Capital Ratio.

Current Ratio =
Following table shows the Current ratios of Singer in different years: Particulars
Current Ratio

2007
1.23

2008
1.31

2009
2.06

2010
6.02

Current ratio
6.02

2.06 1.23
2007

1.31
2008 2009 2010

Acid test Ratio: Acid Test ratio is the ratio which is calculated by subtracting the inventory from the current assets and dividing by the current liabilities. . It is easily converted into cash at turn to their book values and it also indicates the ability of a company to use its near cash. If ratio is higher than before, that indicates liquidity also greater. But there is a problem with quick ratio, when quick ratio goes up and inventory also increases then it brings bad signal for company. Because there is riskiness for inventory is being obsolete or there will be taken a long time to liquidize the inventory.

Acid Test Ratio =

Following table shows the Quick/ acid test ratios of Singer in different years: Particulars
Quick Ratio

2007
0.52

2008
0.55

2009
0.96

2010
4.27

Quick ratio
4.27

0.96 0.52 2007 0.55 2008 2009 2010

Net Working Capital:

Cash and short-term assets expected to be converted to cash within a year less short-term liabilities. Businesses use net working capital to measure cash flow and the ability to service debts. A positive net working capital indicates that the firm has money in order to maintain or expand its operations. Net working capital tends not to add much to the business assets, but helps keep it running on a day-to-day basis. Net Working Capital= Current Asset Current Liability Following table shows the Net working capital of Singer in different years: Particulars
Net Working Capital

2007
347522272

2008
68955785

2009

2010

279786197 2480213523

Net Working Capital

Net Working Capital 2480213523

347522272 68955785 2007 2008 279786197 2009 2010

From the analysis of net working capital of Singer Bangladesh we can see that the ratio was fluctuating all over the four year. But they able to achieve efficiency on net working capital as there is a increase in 2011. The reason of this increase is significant increase in current asset & significant decrease in current liability.

Overall Liquidity Position:

Liquidity Ratio
Current ratio Quick ratio

4.27

6.02 0.96 0.52 1.23

2007

0.55 1.31
2008

2.06
2009 2010

II.

Debt Ratios:

Debt Management Ratios attempt to measure the firm's use of Financial Leverage and ability to avoid financial distress in the long run. These ratios are also known as Long-Term Solvency Ratios. Debt is called Financial Leverage because the use of debt can improve returns to stockholders in good years and increase their losses in bad years. Debt generally represents a fixed cost of financing to a firm. Thus, if the firm can earn more on assets which are financed with debt than the cost of servicing the debt then these additional earnings will flow through to the stockholders. Moreover, our tax law favors debt as a source of financing since interest expense is tax deductible. With the use of debt also comes the possibility of financial distress and bankruptcy. The amount of debt that a firm can utilize is dictated to a great extent by the characteristics of the firm's industry. Firms which are in industries with volatile sales and cash flows cannot utilize debt to the same extent as firms in industries with stable sales and cash flows. Thus, the optimal mix of debt for a firm involves a tradeoff between the benefits of leverage and possibility of financial distress. Below there is some debt management ratio analysis: Debt to Equity Ratio Debt to Total Asset Ratio Coverage Ratio Average Collection Period Days in Payable Days in Inventory Debt Ratio Debt ratio indicates that what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more debt than assets; meanwhile, a debt ratio of less than 1 indicates that a company has more assets

than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk. It is calculated by adding up the total debt of the company divided by the total assets. Debt to total asset ratio= Total Debt / Total asset Following table shows the Debt ratios of Singer in different years: Particulars
Debt to Total Asset Ratio

2007
5.15

2008
3.28

2009
1.03

2010
0.31

Debt to Equity Ratio The debt to equity ratio indicates how much of a company's financing is provided through debt as compared to equity. This interactive tutorial walks you through the calculations, including where Total Assets and Total Liabilities are on the Balance Sheet. The Debt-Equity Ratio is calculated by dividing Total Debt by Total Owners' Equity. Debt to equity ratio= Total debt / Total equity

Following table shows the Debt to equity ratios of Singer in different years:

Particulars
Debt to Equity Ratio

2007
0.84

2008
0.77

2009
0.51

2010
0.24

Debt to total asset ratio

0.84 0.77 0.51

0.24

2007

2008

2009

2010

Coverage ratio: Coverage ratio= (EBIT + Depreciation and amortization) / Interest

Average Collection Period: The average collection period is refers the average number of days of the company. It maintain the company to collection its credit policy. It has made good relationships between account receivable and outstanding payment. It measures the average number of days customers take to pay their bills to divide by account receivable turnover .The average number of day also indicate the 360 days . Average Collection Period= (Account Receivables 360) / Credit Sales

Following table shows the Average Collection Period of Singer in different years: Particulars
Average Collection Period

2007
55.45

2008
55.45

2009
55.45

2010
55.45

Average collection period

60.00 50.00 40.00 30.00 20.00 10.00 0.00 2007 2008 2009 2010 Average collection period 38.30 55.45 56.56 41.61

Days in payable: Accounts Payable turnover in days is represent that the number of days of a company to pay their liability to their creditor. If any company number of days is more then the company is stretching account payable otherwise the company is not holding their account payable. It evaluates the account payable turnover by exchange into 360 days. Days in payable= (Account Payable 360) / Cost of Goods Sold Following table shows the Days in Payable of Singer in different years: Particulars
Days in Payable

2007
50.62

2008
50.62

2009
50.62

2010
50.62

Days in payables
54.00 52.00 50.00 50.62 48.13 44.87 53.03

Axis Title

48.00 46.00 44.00 42.00 40.00 2007 2008 Days in payables

2009

2010

Days in inventory: Days in inventory= (Inventory 360) / Cost of Goods Sold Particulars
Days in Inventory

2007
141.59

2008
141.59

2009
141.59

2010
141.59

Days in inventory
160.00 140.00 120.00 Axis Title 100.00 80.00 60.00 40.00 20.00 0.00 2007 2008 2009 2010 Days in inventory 81.01 141.59 129.96 100.99

III.

Profitability Ratios:

Profitability is the net result of a number of policies and decisions. Profitability ratios show the combined effects of liquidity, asset management and debt on operating results.

There are six important profitability ratios that we are going to analyze: Gross Profit Margin Net Profit Margin Return on Investment Return on Equity Total Asset Turnover Earning per share Gross Profit Margin Gross margin (also called gross profit margin or gross profit rate) is the difference between revenue and cost before accounting for certain other costs. Generally, it is calculated as the selling price of an item, less the cost of goods sold (production or acquisition costs, essentially).The purpose of margins is to determine the value of incremental sales, and to guide pricing and promotion decision. Margin on sales represents a key factor behind many of the most fundamental business considerations, including budgets and forecasts. All managers should, and generally do, know their approximate business margins. Managers differ widely, however, in the assumptions they use in calculating margins and in the ways they analyze and communicate these important figures. Gross Profit Margin =
Gross Profit Gross Turnover

Following table shows the Gross Profit Margin of Singer in different years: Particulars
Gross Profit Margin

2007
23%

2008
23%

2009
25%

2010
26%

Gross profit margin

26% 26% 25% 25% 24% 24% 23% 23% 22% 22% 25% 26%

Axis Title

23% 23%

2007

2008

2009

2010

Gross profit margin

Net Profit Margin: Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue. The profit margin is mostly used for internal comparison. It is difficult to accurately compare the net profit ratio for different entities. Individual businesses' operating and financing arrangements vary so much that different entities are bound to have different levels of expenditure, so that comparison of one with another can have little meaning. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase profits and result in a net loss, or a negative margin. Profit margin is an indicator of a company's pricing strategies and how well it controls costs.

Following table shows the Net Profit Margin of Singer in different years:

Particulars
Net Profit Margin

2007
3%

2008
4%

2009
9%

2010
45%

Net profit margin

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 45%

Axis Title

9% 3% 2007 4% 2008 2009 2010

Net profit margin

Return on Investment (ROI): A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. Return on investment= Net profit before tax / Shareholders equity Following shows the Return on investment ratio of Singer in different years: Particulars
Return on Investment

2007
37%

2008
35%

2009
44%

2010
72%

Return on Investment (ROI)

80% 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 2007 2008 2009 2010

Return on Equity (ROE): Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total common equity. It is the most important of the Bottom line ratio. By this, we can find out how much the shareholders are going to get for their shares. The equation is: Return on equity= Net income / Total equity Following shows the Return on Equity ratio of Singer in different years: Particulars
Return on Equity

2007
27%

2008
24%

2009
37%

2010
68%

Return on Equity (ROE)

70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 27% 24% 37% 68% 2007 2008 2009 2010

Total Asset Turnover Ratio: The Total Asset Turnover is similar to fixed asset turnover since both measures a company's effectiveness in generating sales revenue from investments back into the company. Total Asset Turnover evaluates the efficiency of managing all of the company's assets. It Indicates amount of sales generated for every taka worth of assets. It is calculated by dividing sales in taka by assets in taka. Total asset turnover= Sales / Total Asset Following table shows the Total asset turnover ratios of Singer in different years: Particulars
Total Asset Turnover Ratio

2007
1.49

2008
1.60

2009
1.95

2010
1.14

Total asset turnover ratio

2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00

Axis Title

1.49

1.60

1.95

2007 2008 1.14 2009 2010

2007

2008

2009

2010

Earnings per share (EPS): Earnings per share (EPS) = Net income available to shareholders / Total number of shares outstanding