IBA, Dhaka University

MBA Program February-June: 2007 Financial Management

THE PROJECT

Project Outline
What is this project? This project provides an opportunity to get some hands-on experience applying financial management theory and models to real firms. How is the project structured? - This is a group project. However, inter group discussion and idea sharing is very much encouraged. The group size should not exceed five. - Each group has been assigned five companies listed at Dhaka Stock Exchange (DSE) to analyze. - Each group will be responsible for doing the entire analysis for the company that it has been assigned. - The project contains some questions arranged in different sections. Use your group effort to find the answer to the questions. How to prepare the project? - Answer to the questions straightforward. Include the supporting calculations and documents in the Appendix section. In the main text, give proper reference to the related appendix. What type of information is required? - You just need five years annual report and some web-searching. How to submit the project? - The project should be submitted on the due date announced.

- Submit the project part and the supporting documents in hard copy. Submit the annual report separately. How will the project be graded? - This is a grading project. There will be penalty if the student fails to defend the project. - Each student will be graded individually. After submission of the project, each group will present their findings in the class.

THE PROJECT Part: 1

I. Corporate Goal 1. What is the corporate goal of your firm? Do you think the goal of the firm is welldefined? If the goal of the firm is not stated anywhere in the annual report then what do you think the goal of this firm should be? 2. What is your comment regarding the corporate social responsibility (CSR) of the firm? Is anything stated about the CSR in the annual report? II. Valuation 3. What is the book value of the firm? 4. What is the market value of the firm? 5. What is the last five years dividend pattern of the firm? What is the dividend growth pattern? Considering the average growth rate, and assuming the future dividend will grow at this average rate, find out the value of the common stock (assume cost of equity as 14%). 6. Compute average dividend of last five years. Assuming the dividends in future will remain same as the average dividend, and there will be no growth of dividend, compute the value of common stock (assume cost of equity as 14%).

III. Financial Statements, and Analysis 7. What are the financial statements the firm had included in the annual report? 8. Do you think the annual report of the firm is standardized? Why do you think so? 9. Analyze the firms financial condition of the recent year and compare with those of the previous year using the ratios like (a) liquidity, (b) activity, (c) debt, (d) profitability, and (e) market. 10. Prepare a Du Pont Analysis for the firm. If you want to increase the ROE what may be your course of actions? Suggest specific actions.

IV. Operating and Financial Leverage

11. Using your judgment, make a list of variable costs, and fixed costs of the company. 12. Compute the operating break-even point (in revenue) of the company. How much is the margin of safety ratio in the most recent year? Is this higher from that of the last year? 13. Compute degree of operating leverage (DOL) of the company. 14. Compute degree of financial leverage (DFL) of the company. 15. Compute degree of total leverage (DTL) of the company. Part:11(Main Part)

1. 2.
3. 4. 5. 6.

Cost of Capital, EPS and Capital Structure Relationship Find out overall cost of capital of last five years of each of the companies and make intra company comparison (trend of 5 years) and inter company comparison (last year) Find out EPS of last five years of each of the companies make intra company comparison (trend of 5 years) and inter company comparison (last year) Find out financial leverage (Debt Ratio -% or fraction of debt in terms of total asset) make intra company comparison (trend of 5 years) and inter company comparison (last year) Test and conclude whether there is any relation between Cost of Capital and EPS Test and conclude whether there is any relation between Cost of Capital and Capital Structure Test and conclude whether there is any relation between Capital Structure and EPS

THE PROJECT Part: 1

I. Corporate Goal 16. What is the corporate goal of your firm? Do you think the goal of the firm is welldefined? If the goal of the firm is not stated anywhere in the annual report then what do you think the goal of this firm should be? 17. What is your comment regarding the corporate social responsibility (CSR) of the firm? Is anything stated about the CSR in the annual report? II. Valuation 18. What is the book value of the firm? 19. What is the market value of the firm? 20. What is the last five years dividend pattern of the firm? What is the dividend growth pattern? Considering the average growth rate, and assuming the future dividend will grow at this average rate, find out the value of the common stock (assume cost of equity as 14%). 21. Compute average dividend of last five years. Assuming the dividends in future will remain same as the average dividend, and there will be no growth of dividend, compute the value of common stock (assume cost of equity as 14%). III. Financial Statements Analysis 22. What are the financial statements the firm had included in the annual report? 23. Do you think the annual report of the firm is standardized? Why do you think so? 24. Analyze the firms financial condition of the recent year and compare with those of the previous year using the ratios like (a) liquidity, (b) activity, (c) debt, (d) profitability, and (e) market. 25. Prepare a Du Pont Analysis for the firm. If you want to increase the ROE what may be your course of actions? Suggest specific actions.

IV. Operating and Financial Leverage

26. Using your judgment, make a list of variable costs, and fixed costs of the company. 27. Compute the operating break-even point (in revenue) of the company. How much is the margin of safety ratio in the most recent year? Is this higher from that of the last year? 28. Compute degree of operating leverage (DOL) of the company. 29. Compute degree of financial leverage (DFL) of the company. 30. Compute degree of total leverage (DTL) of the company. Part: 11(Main Part) Cost of Capital, EPS and Capital Structure Relationship

7. Find out overall cost of capital of last five years of each of the companies and make intra company comparison (trend of 5 years) and inter company comparison (last year) 8. Find out EPS of last five years of each of the companies make intra company comparison (trend of 5 years) and inter company comparison (last year) 9. Find out financial leverage (Debt Ratio -% or fraction of debt in terms of total asset) make intra company comparison (trend of 5 years) and inter company comparison (last year) 10. Test and conclude whether there is any relation between Cost of Capital and EPS 11. Test and conclude whether there is any relation between Cost of Capital and Capital Structure 12. Test and conclude whether there is any relation between Capital Structure and EPS

Industry wise List (Manufacturing Companies) Cement ARAMITCEM (Aramit Cement ) CONFIDCEM (Confidence Cement ) HEIDELBCEM (Heidelberg Cement Bd. ) LAFSURCEML (LAFARGE SURMA CEMENT LTD. ) MEGHNACEM (Meghna Cement ) MODERNCEM (Modern Cement ) NILOYCEM (Niloy Cement ) PADMACEM (Padma Cement ) Engineering AFTABAUTO (Aftab Automobiles ) ANWARGALV (Anwar Galvanizing ) ATLASBANG (Atlas Bangladesh ) AZIZPIPES (Aziz Pipes ) BDAUTOCA (BD.Autocars ) BDLAMPS (Bangladesh Lamps ) BDTHAI (Bd.Thai Aluminium ) BEMCO (BEMCO ) ECABLES (Eastern Cables ) GOLDENSON (Golden Son Ltd. ) KAY&QUE (Kay and Que ) METALEXCR (Metalex Corporation ) MONNOJTX (Monno Jutex ) MONNOSTAF (Monno Jute Stafflers ) NPOLYMAR (National Polymer ) NTLTUBES (National Tubes ) OLYMPIC (Olympic Industries ) QSMDRYCELL (Quasem Drycells ) RANFOUNDRY (Rangpur Foundry ) RENWICKJA (Renwick Jajneswar ) SALAMCRST (S. Alam Cold Rolled Steels Ltd. ) SINGERBD (Singer Bangladesh ) WONDERTOYS (Wonderland Toys )

Fuel and Power

BDWELDING (Bd. Welding Electrodes ) BOC (BOC Bangladesh ) DESCO (Dhaka Electric Supply Company Ltd. ) EASTRNLUB (Eastern Lubricants ) PADMAOIL (Padma Oil Co. ) POWERGRID (Power Grid Company of Bangladesh Ltd. ) SUMITPOWER (Summit Power Limited )

IT
AGNISYSL (Agni Sytems Ltd. ) BDCOM (BDCOM Online Ltd. )

BDONLINE (Bangladesh Online ) DAFODILCOM (Daffodil Computers Ltd. ) INTECH (In Tech Online Ltd. ) ISNLTD (Information Services Network ) RASPITDATA (Raspit Data Management Printing and Paper AZADIPRIN (Azadi Printers ) HAKKANIPUL (Hakkani Pulp & Paper ) MAQENTER (Maq Enterprises ) MAQPAPER (Maq Paper ) MONOSPOOL (B.Monospool Paper ) PADMAPRINT (Padma Printers ) PAPERPROC (Paper Processing ) SONALIPAPR (Sonali Paper ) Pharma ACI (ACI Limited. ) ALAMINCHEM (Al-Amin Chemicals ) AMBEEPHA (Ambee Pharma ) BANGLAPRO (Bangla Process ) BCIL (BCIL ) BXPHARMA (Beximco Pharma ) BXSYNTH (Beximco Synthetics ) GLAXOSMITH (Glaxo SmithKline ) IBNSINA (The Ibn Sina ) IMAMBUTTON (Imam Button ) KEYACOSMET (Keya Cosmetics ) KEYADETERG (Keya Detergent ) KOHINOOR (Kohinoor Chemicals ) LIBRAINFU (Libra Infusions Limited ) ORIONINFU (Orion Infusion ) PERFUMCHM (Perfume Chemicals ) PETROSYNTH (Petro Synthetic ) PHARMACO (Pharmaco International ) PHARMAID (Pharma Aids ) RAHMANCHEM (Rahman Chemicals ) RECKITTBEN (Reckitt Benckiser(Bd.)Ltd. ) RENATA (Renata Ltd. ) SQURPHARMA (Square Pharmaceuticals Ltd. ) TBL (Therapeutics ) WATACHEM (Wata Chemicals )

Tannery and Leather

APEXADELFT (Apex Adelchi Footwear Ltd. ) APEXTANRY (Apex Tannery ) BATASHOE (Bata Shoe ) EXCELSHOE (Excelsiorshoes )

LEGACYFOOT (Legacy Footwear ) LEXCO (Lexco ) PHENIXLETH (Phoenix Leather ) SAMATALETH (Samata Leather

Textile
AL-HAJTEX (Al-Haj Textile ) ALLTEX (Alltex Ind. Ltd. ) ANLIMAYARN (Anlima Yarn ) APEXSPINN (Apex Spinning. ) APEXWEAV (Apex Weaving ) ARBEETEX (Arbee Textile ) ASHRAFTEX (Ashraf Textile ) BDDYE (BD.Dyeing ) BDZIPPER (BD. Zipper Ind. ) BEXTEX (BEXTEX Ltd. ) CHICTEX (Chic Tex Ltd. ) CMCKAMAL (CMC Kamal ) DANDYDYE (Dandy Dyeing ) DELTASPINN (Delta Spinners Ltd. ) DSHGARME (Desh Garmants ) DULAMIACOT (Dulamia Cotton ) DYNAMICTEX (Dynamic Textile ) EAGLESTAR (Eagle Star Textile ) GMGIND (GMG Ind. Corp. ) HRTEX (H.R.Textile ) METROSPIN (Metro Spinning ) MHOSSAIN (M. Hossain Garments ) MITATEX (Mita Textile ) MITHUNKNIT (Mithun Knitting ) MODERNDYE (Modern Dyeing ) MONNOFABR (Monno Fabrics ) PRIMETEX (Prime Textile ) QSMSILK (Quasem Silk ) QSMTEX (Quasem Textile ) RAHIMTEXT (Rahim Textile ) SAFKOSPINN (Safko Spinnings ) SAIHAMTEX (Saiham Textile ) SAJIBKNIT (Sajib Knitwear ) SONARGAON (Sonargaon Textiles ) SQUARETEXT (Square Textile ) SREEPURTEX (Sreepur Textile ) STYLECRAFT (Stylecraft Limited ) TALLUSPIN (Tallu Spinning ) TAMIJTEX (Tamijuddin Textile )

Food

ALPHATOBA (Alpha Tobacco ) AMAMSEAFD (Amam Sea Food ) AMCL(PRAN) (AMCL (Pran) ) APEXFOODS (Apex Foods ) BANGAS (Bangas ) BATBC (BATBC ) BDPLANT (Bangladesh Plantation ) BEACHHATCH (Beach Hatchery Ltd. ) BENGALBISC (Bengal Biscuits ) BIONICFOOD (Bionic Sea Food ) BLTC (BLTC ) BXFISHERY (Beximco Fisheries ) CTGVEG (Chittagong Vegetable ) DHAKAFISH (Dhaka Fisheries ) ELCAMELIA (EL Camellia ) FINEFOODS (Fine Foods Limited ) FUWANGFOOD (Fu Wang Food ) GACHIHATA (Gachihata Aquaculture ) GBJVFOOD (German Bangla Foods ) GEMINISEA (Gemini Sea Food ) GULFOODS (Gulf Foods ) HILLPLANT (Hill Plantation ) MEGCONMILK (Meghna Condensed Milk ) MEGHNAPET (Meghna Pet Industries ) MEGHNASHRM (Meghna Shrimp ) MODERNIND (Modern Industries ) MONAFOOD (Mona Food ) NTC (National Tea ) RAHIMAFOOD (Rahima Food ) RANGAFOOD (Rangamati Food ) RASPIT (Raspit Inc.(BD.) ) SHYAMPSUG (Shaympur Sugar ) TRIPTI (Tripti Industries ) TULIPDAIRY (Tulip Dairy & Food ) YOUSUFLOUR (Yousuf Flour ) ZEALBANGLA (Zeal Bangla Sugar )

Ceramic
BENGALFINE (Bengal Fine Ceramic ) FUWANGCER (Fu-Wang Ceramic ) MONNOCERA (Monno Ceramic ) STANCERAM (Standard Ceramic )

Misc
ARAMIT (Aramit ) BDLUGGAGE (Bangladesh Luggage ) BERGERPBL (Berger Paints Bangladesh Ltd. )

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BEXIMCO (BEXIMCO ) BSC (BSC ) ENGINEER (The Engineers ) GQBALLPEN (GQ Ball Pen ) HIMADRI (Himadri ) MIRACLEIND (Miracle Ind. ) ROSEHEAVEN (Rose Heaven Ball ) SAVAREFR (Savar Refractories ) SINOBANGLA (Sinobangla Industries ) USMANIAGL (Usmania Glass )

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