American International University-Bangladesh (AIUB)

FINAL DRAFT INTERN!I" RE"#RT #N

$The Im%lementation o& Acco'nting "rinci%les in the
Financial "ractices o& Ale( LTD)
An Internship Report Presented to the Faculty of Business
Administration in Partial Fulfillment of the Requirements for the
Degree of Bachelor of Business Administration
'%ervised By*
+r, Danilo -, +orgia
Lecturer
Faculty, School of Business
American International University-Bangladesh (AIUB)
'.mitted By/
+d, 0'.air !ossain
ID 1 23-23455-6
First ma7or* +anagement In&ormation ystem (+I)
econd ma7or* Acco'nting 8 Finance
Date o& '.mission* 9:;69;922<

FINAL DRAFT INTERN!I" RE"#RT #N
$The Im%lementation o& Acco'nting "rinci%les in the
Financial "ractices o& Ale( LTD)
2th Decem!er, 2""#$
%r$ R$ &areque %oudud F'%A,
Director, (ffice of Placement ) Alumni *(PA+,
American International ,ni-ersity.Bangladesh
'.7ect* '.mission o& Internshi% Re%ort,
Dear Sir,
I am highly delighted to su!mit my internship report on, $The Im%lementation o&
Acco'nting "rinci%les in the Financial "ractices o& Ale( LTD/ to you$ I ha-e got the
opportunity to 0or1 in Ale2 ltd$ for my internship program 0hich is an essential part of my
academic program$ It is a great achie-ement to 0or1 under your acti-e super-ision, care and
guidance$
&he 0hole report is !ased on my academic 1no0ledge from BBA course and also the
e2perience acquired during internship session in that company$ I ha-e tried my le-el !est to
incorporate all the information that I ha-e collected during the internship program in Ale2
ltd$, properly and efficiently$ If any mista1e is found, please try to see it in the eye of
forgi-eness$
Finally, I 0ould li1e to than1 you for your -alua!le guidance and supporting thought in
preparing this report$ I 0ill gratefully and enthusiastically respond to any clarification 0hen
required$ I firmly !elie-e and hope that you 0ill !e 1ind enough to appro-e this report$
Sincerely yours,
%d$ 3u!air 4ossain
ID5"6."6788.9
Department of %anagement Information System *%IS+ and Accounting ) Finance
American International ,ni-ersity Bangladesh
A=>N#?LED-E+ENT
&he internship report is prepared to fulfill the partial requirement of the BBA program$
Regarding the outcome of this report, I 0ould li1e to e2press my sincere gratitude, profound
than1fulness and inde!tedness to my honora!le teachers and the officials Ale2 Ltd$ First of
all I 0ould li1e to e2press my sincere gratitude and than1s to Lecturer Faculty of Business
School, and American International ,ni-ersity. Bangladesh for his endless support, guidance
and important suggestions$ I am also inde!ted to %r$ %u1ul Sar1er, senior merchandiser and
%r$ Rashed Ahmed, merchandiser and Syed Imran 4asan, Accounts %anager of Ale2 ltd$, for
their support and encouragement in preparing this report$
i
E(ec'tive 'mmery
&his report :The im%lementation o& acco'nting %rinci%les in the &inancial %ractices o&
Ale( Ltd,@ is prepared to fulfill the requirement of ;Internship< course of Business
Administration Program of American International ,ni-ersity, Bangladesh *AI,B+$ &he
main aim of this report is to find out the financial policies of :Ale2 Ltd$/ And compare them
0ith the standard accounting principles$ Standard accounting principles are those standards
0hich are used to ensure clarity, uniformity, consistency and accounta!ility of accounting
information$ &he pro!lem 0ill !e that, in real life, financial information are not arranged in
such an order to measure the e2tent ho0 far these principles are !eing really follo0ed$ But
standards are necessary !ecause they pro-ide organi=ations something to achie-e for$
&oday Ale2 Ltd$ sym!oli=es a name . a state of mind$ But its >ourney to the gro0th and
prosperity has !een no !ed of roses$ Ale2 Ltd$ the flagship company is holding the strong
leadership position in the garments industry in Bangladesh since 9##?$ At 2""7 Ale2 started
manufacturing garments product through its o0n factory$ Production capacity of this
garments 9""""$ Se-eral accounting concepts and their application in the company ha-e !een
discussed$ For e2ample@ the American ;AAAP< principles$
Aenerally Accepted Accounting Principles *AAAP+ is the standard frame0or1 of guidelines
for financial accounting, 0hich includes the standards, con-entions, and rules accountants
follo0 in recording and summari=ing transactions, and in the preparation of financial
statements$ &he primary purpose of AAAP is to pro-ide information that is rele-ant to the
decision made !y financial statement users$
ii
Be 1no0 decision ma1ing is central to the management of an enterprise$ &he manager of a
profit ma1ing !usiness has to decide on the manner of implementation of the o!>ecti-es of
the !usiness, at least one of 0hich may 0ell relate to allocating resources so as to ma2imi=e
profit$ &o ensure the decisions ta1en 0ill !e the most !eneficial one for the company.0hich
0ill minimi=e costs and ma2imi=e profits.managers ta1e help of cost accounting concepts
li1e manufacturing costs, fi2ed costs, and opportunity costs and sun1 costs$ 'ost accounting
is the !ranch of accounting 0hich speciali=es in the analysis of possi!le costs and profits of
the a-aila!le options and indicates the !est ones$
&his report testifies that good accounting practice is not a mere lu2ury rather than an
enhancement to the performance of the company$
iii
"artic'lars "age
A'CD(BLEDAE%ED& i
E2ecuti-e Summary ii-iii
"art 6* "ro&ile o& Ale( Ltd, 6-3
9$9 'ompany profile 9
9$2 Bac1ground of the company 9
9$7 Business Details 4
9$8 Achie-ement 4
9$6 'orporate 'ulture 4
9$? Cey Function of ALEF L&D 5
9$ Gision 5
9$H %ission 5
9$# Aoal 3
9$9" %anagement style 3
9$99 Products of the company 3
"art 9* "ro7ect #vervieA B-9<
=ha%ter 6 * Introd'ction o& the %ro7ect :-64
2$9$9 Introduction C
2$9$2 Significance <
2$9$7 Rationale of the Study <
2$9$8 (!>ecti-es of the Report 62
2$9$8$9 Broad (!>ecti-e 62
2$9$8$2 Specific (!>ecti-es 62
2$9$6 Scope of the Report 62
2$9$? %ethodology 66
2$9$?$9 Research Design 66
2$9$?$2 Sources of Data, Data collection procedure 66
o 2$9$?$2$9 Primary Sources 66
Table of
Table of
Contents
Contents
o 2$9$?$2$2 Secondary Sources 66
2$9$ Statement of the Pro!lem 69
2$9$H Limitation of the Report 69
2$9$# Ale2 Philosophy 64
2$9$9" Gisionary Recommendation 64
=!A"TER 9* To%ic Analysis - The Im%lementation o&
Acco'nting "rinci%les in the Financial "ractices o& Ale( LTD 65-94
2$2$9 &opic analysis and discussion 63
2$2$2 Ratio analysis 63-94
2$2$2$9 Return on assets 63
2$2$2$2 'o-erage ratio 6B
2$2$2$7 Return on shareholdersI equity 6:
2$2$2$8 In-entory turno-er 6C
2$2$2$6 Days of sales in in-entory 6<
2$2$2$? 'urrent ratio 92
2$2$2$ In-entory to net 0or1ing capital 96
2$2$2$H De!t.to.asset ratio 99
2$2$2$# De!t.to.equity ratio 94
=ha%ter 4* Findings 95-93
7$" Findings 93
=ha%ter 5* 'ggestions 9B-9:
8$" Suggestions 9:
=ha%ter 3* =oncl'sion 9C-9<
6$" 'onclusion 9<
"art 4* Bi.liogra%hy and A%%endi( 42-46
Bi!liography 46
Appendi2 46
Internet Sources 46
9
6,6 =om%any %ro&ile
Dame @ Ale2 Ltd$
Jear of Esta!lishment @ 9##?
&ype of Business @ 'ompany *Pri-ate limited+
Share 'apital in BD& @ 6?"""""
Business Segment @ E2ported oriented s0eater and local clothing<s
%ar1et 'ategory @ A
Address @ 4ouse Do.2"6, Road Do.2, Baridhara D(S4, 92"?
'ontact Phone @ HH8#H99, Fa2.HH8""H
6,9 BacDgro'nd o& the com%any
&he Ale2 Ltd$ has founded !y at the month of August of 9##? as a fastening products
company$ Since then it has crossed along path esta!lishing fi-e garments organi=ations in the
country$ ALEF L&D 0as esta!lished in
th
Do-em!er as the local !ranch of the ALEF group$
&he factory in DEPK *Dha1a E2port Processing Kone+ started production in Fe!ruary 2""7
through its o0n factory$ At 2""? started manufacture garments in their second unit and at
2"" they started 7 su! units at different location$ Recently they 0ill launch an automated
!ric1 field in %ymenshing$
2
6,4 B'siness Details
Ale( Ltd, At Glance
Dame of the company Ale2 Ltd$
Date of incorporation Fe!ruary 9", 9##
'ommencement of operation 3uly 9, 9##
Authori=ed 'apital &1$ 98"""""" *initial+
Industry Aarments industry of Bangladesh
Dature of !usiness E2ported oriented
&arget customers Foreign customer
&otal manpo0er 2"""
'hairman %r$ Serge 'urot
%anaging Director %d$ %osharof 4ossain
6,5 Achievement
Ale2 achie-e IS( certificate at 2""8$ &hey started 2 ne0 factories at different location$ Also
they 0ill introduce local !rand under the name %yth$ Ale2 e2ecuti-e al0ays moti-ated to
gi-e good product to the customer$
6,3 =or%orate ='lt're
Ale2 Ltd$ is much disciplined company 0ith a distincti-e corporate culture$ 4ere people
!elie-e in shared understanding, shared meaning and shared sense ma1ing$ People can see
and understand e-ents, acti-ities, o!>ects and situation in a distincti-e 0ay$ &hey mould their
manners and etiquette, character indi-idually to suit the purpose of the organi=ation and the
needs of the customers 0ho are of paramount importance to the company$ &he people of the
company see themsel-es as a tight 1nit family that !elie-es in 0or1ing together for gro0th$
&he corporate culture 0e !elong has not !een imposedL it has rather !een achie-ed through
our corporate conduct$
7
6,B >ey F'nction o& ALEE LTD
Li1e any other Aarments industry of Bangladesh, the 1ey function of Ale2 Ltd$ is to
manufacture cloths li1e S0eater for !oth men and ladies, Shirt, &.shirt, Pant etc$ and sell
them into the mar1et$
6,: Fision
Ale2 Ltd is dedicated to superior quality products, price fairly, honestly and !ac1ed 0ith
unparallel support and ser-ice$ Ale2 'ustomer Ser-ice Ltd is an e2perienced, agile team 0ith
person for deli-ering superior quality of products and customer ser-ice$ Being the customer
dri-er the company is constantly stri-ing to pro-ide the highest quality ser-ices to its
customer$ &he company and e-ery mem!er of the Ale2 'ustomer Ser-ice Ltd family stri-e to
uphold this principle$
Achie-ing and maintaining superior products
Esta!lishing local !rand under the name %yth
6,C +ission
Ale2 Ltd has chec1ed out the follo0ing o!>ecti-es in order to ensure achie-ement of its
goals@
Achie-ing !usiness e2cellence through quality !y understanding, accepting, meeting
and e2ceeding customer e2pectation
Follo0ing international standards on quality management system to ensure consistent
quality of products ser-ices to achie-e customer satisfaction
&a1ing quality as the prime consideration in all its !usiness decisions
Follo0ing documented procedures to ensure compliance 0ith quality and ser-ices
8
6,< -oal
I$ &o !ecome the leading profita!le organi=ation
II$ &o pro-ide highest le-el of satisfaction to customer
III$ &o enhance the -alue of shareholders in-estments and optimi=e return on their
in-estment
6,62 +anagement style
Ale2 Ltd$ has a fle2i!le and cooperati-e management style$ %anager setup the colla!orati-e
goal in a process and su!ordinate, the e2tent to 0hich goals are accomplished is a ma>or
factor in e-aluating and re0ording the su!ordinate<s performance$ Also their decision ma1ing
system depends on participation$
6,66 "rod'cts o& the com%any
%en s0eater Pant
Ladies s0eater Denim
'ap &ops
Scarf &.shirt
Pun>a!i Poly shirt
Shirt
6
?
'4AP&ER.9
ID&R(D,'&I(D (F &4E PR(3E'&

9,6,6 Introd'ction
&his report has !een drafted as a mandatory pre.requirement of the internship report of the
Bachelor of the Business Administration *BBA+ programmed under American International
,ni-ersity Bangladesh *AI,B+$ &he report suggests an outline of the internship report
entitled . M&he Implementation of Accounting Principles in the Financial Practices of Ale2
Ltd$/ and as1s for the counsel of the respected super-isor$
Ale2 today sym!oli=es a name . a state of mind$ But its >ourney to the gro0th and prosperity
has !een no !ed of roses$ From the inception in 9##?, it has today !urgeoned into one of the
top line garments in Bangladesh$ Ale2 Ltd$ the flagship company is holding the strong
leadership position in the garments industry in Bangladesh since 2""2$ At 2""7 Ale2 started
manufacturing garments product through its o0n factory 0ith production capacity ?"""
pieces per day$ At 2""? Ale2 Ltd started manufacture garments in their second unit$ Its
capa!ility is H""" pieces per day$ In 2"" they started 7 su! units at different location$ And
recently they 0ill launch an automated !ric1 field in %ymenshing$
&herefore, in my report I ha-e tried to descri!e the 0ay of accounting practice of Ale2 Ltd$
As an intern I ha-e the opportunity to 0or1 for this company during the internship program$ I
am placed at the accounts department under the accounts manager$ I am getting e-ery
a-aila!le opportunity to o!ser-e the o-erall process of accounting practices in the company$
Also I am getting the scope to interact 0ith customers and re-eal their e2pectations$
H
9,6,9 igni&icance
Cno0ledge and learning only !e perfect 0hen it has associate 0ith theory and practice and
practical application ma1es perfect the theoretical 1no0ledge$ As our educational system
predominantly te2t !ased, inclusion of practical orientation program, as an academic
component is as e2ception to the norm$ &his Internship Report is an important partial
requirement for 8.year BBA graduation program$ As the partiesL educational institution and
the organi=ation su!stantially !enefit from such a program means a :0in.0in situation/$
&hat<s 0hy practical orientation is a positi-e de-elopment in professional area$ Recogni=ing
the importance of practical e2perience, Department of Finance Studies of AI,B has
introduced a three months practical e2posure as a part of the curriculum of Bachelor of
Business Administration *BBA+ program$ In such state of affairs the present aiming at
analy=ing the e2perience of practical orientation related to an appraisal of Ale2 Ltd$
9,6,4 Rationale o& the t'dy
&he purpose of this study is associated 0ith the internship program$ &he principal o!>ecti-e
of the internship program is to gather practical 1no0ledge and to e2perience the corporate
0or1ing en-ironment$ &he close contact to the professionals, 0ho are leading and ma1ing
tactical and strategic decisions to enhance the gro0th of a !usiness institution, help the
graduating students to understand the applied forms of all the lessons taught in their
academic courses$ In this regard the report 0ill !e a formal statement of the 1no0ledge and
e2perience accumulated from internship program$ Bith the set guidelines and proposal
dictated !y the AI,B authority and 0ith the 1ind ad-ice of the internship super-isor, this
report.0riter 0ill try to consolidate his understandings a!out Implementation of Accounting
Principles in !usiness Being a BBA student 0ith a ma>or in ;Accounting ) Finance< and also
!eing attached 0ith the ;Accounts and Payment Department< of the firm, a report on the
a!o-e mentioned topic is the natural choice for the report 0riter$
#
9,6,5 #.7ectives o& the Re%ort
&he o!>ecti-es of this report can !e categori=ed in t0o classes@
9,6,5,6 Broad #.7ective* &o present a relati-e study !et0een standard
accounting principles and that of the company$
9,6,5,9 %eci&ic #.7ectives*
a+ &o gi-e an o-er-ie0 of the company
!+ &o introduce the -arious products launched !y Ale2 Ltd$
c+ &o pro-ide an outline of the accounting standards
d+ &o analysis the financial performance analysis
e+ &o compare !et0een company procedures and the standards
9,6,3 co%e o& the Re%ort
&he scope of this report 0ill !e limited to the o-erall description of the company.
organi=ational structure, management policies and financial performance analysis$ &he report
0ill mainly focus on 0hat standards Ale2 Ltd$ is maintaining in recording and reporting its
financial performances$
9"
9,6,B +ethodology
In this study, e2ploratory research 0as underta1en to gain insights company procedures and
practices$ &hen the gathered data 0as analy=ed and compared 0ith the accepted practices
according to the standard accounting principles$ Both the primary as 0ell as the secondary
form of information 0as used to prepare the report$ &he details of these sources are
highlighted !elo0@
9,6,B,6 Research Design
As an $E(%loratory Research), this report 0ill !riefly re-eal the o-erall acti-ity of Ale(
Ltd, and also analy=es the $The Im%lementation o& Acco'nting "rinci%les in the
Financial "ractices o& Ale( LTD)$ In this report data ha-e !een collected from !oth primary
and secondary sources$
9,6,B,9 o'rces o& DataG Data collection %roced're
&his study is !ased on secondary data that a-aila!le from the -arious di-isions and
departments of ALEF L&D$ In addition to these, other necessary information ha-e !een
collected from the daily ne0s papers, rele-ant >ournals, annual reports of Ale2 Ltd$,
Bangladesh !an1, %inistry of Finance ) Planning and pu!lications of other rele-ant
institutions ha-e also !een ta1en into consideration$
9,6,B,9,6 "rimary o'rces*
i$ (ral inter-ie0 0ith -arious officers of the company$
ii$ Accounting records. -ouchers, >ournal, ledgers etcL !oth in electronic and
paper
iii$ 'ompany manuals
9,6,B,9,9 econdary o'rces*
i$ Garious accounting related !oo1s and periodicals$
ii$ Bangladesh Accounting Standard guide$
iii$ Be!site information$
99
9,6,: tatement o& the "ro.lem
&he report 0ill !e entitled as $The Im%lementation o& Acco'nting "rinci%les in the
Financial "ractices o& Ale( Ltd,) 3ust as the title suggests, the report 0ill ela!orate on the
interrelation !et0een standard accounting principles and the accounting policies follo0ed in
the Ale2 Ltd$ In our academic courses, 0e ha-e !een taught accountants should follo0
;Aenerally Accepted Accounting Principles *AAAP+< to ensure clarity, uniformity,
consistency and accounta!ility$ &he report 0riter 0ill try to find out ho0 these principles can
!e applied in real life$ &he pro!lem 0ill !e that, in real life, financial information are not
arranged in such an order to measure the e2tent ho0 far these principles are !eing really
follo0ed$ Also, there are se-eral standards 0hich are popular to different sectors$
;International Accounting Standards<, fashioned !y the ;International Accounting Standard
Board *IASB+<, are gaining popularity day !y day$ &he differences !et0een these standards
ma1e it difficult to formali=e an impression a!out the financial practices of a particular
company$
9,6,C Limitation o& the Re%ort
I$ &ime frame for the research is limited$ &he adoption to the organi=ation ta1es a lot of
time$
II$ Large.scale research 0as not possi!le due to constraints and restrictions posed !y the
organi=ation$
III$ &he report 0as 0ritten from an indi-idual<s perception$ So, all the findings might not
!e o!>ecti-e$
IG$ Aetting Rele-ant papers and documents ha-e !een e2tremely difficult$
G$ &o protect the organi=ational confidentiality, some parts of the report 0ill !e edited$
GI$ &he management seems to get 0o1s out of the intern rather than helping in the
academic pursuit$
92
9,6,< Ale( "hiloso%hy
An enterprise is an important mem!er of society, and as such, it must coe2ist 0ith other
elements of society$ Its -alue 0ill !e recogni=ed !y the !enefits it shares 0ith society$ Serge
'urot, the founder of Ale2, carefully considered this need for mutual prosperity as he planned
his !usiness endea-ors$ 4e determined that contri!utions to society could !est !e achie-ed !y
the continual creation of -alue through inno-ati-e ideas and in-entions$ &he resulting
!usiness e2pansion 0ould !ring prosperity to consumers and trading partners, thus !enefiting
all society$
For e2ample, if a more efficient machine can !e de-eloped, producti-ity 0ill !e enhancedL
or, if the material loss rate can !e reduced, lo0er cost in the final product 0ill !e attained
0hile ma1ing the !est use of limited resources$
Also, Serge 'urot felt strongly that the fruits of these inno-ati-e ideas must not !e retained
!y any indi-idual$ Instead, they should !e distri!uted 0idely to society, there!y circulating
the !enefit$ In this 0ay, one can prosper 0hile ma1ing a contri!ution to the enrichment of all
human1ind$ Be retain this concept as the ongoing !usiness philosophy of Ale2$
9,6,62 Fisionary Recommendation
Ale2 needs to rectify and de-elop some acti-ities in !usiness system@
9$ ,se modern technology
2$ Insufficient fund pro!lem should !e reduced
7$ Proper utili=ation of dis!ursement
97
'4AP&ER.2
&(PI' ADALJSIS . &he Implementation of
Accounting Principles in the Financial Practices of
Ale2 L&D
98
9,9,6 To%ic analysis and disc'ssion
&he internship report entitled . M&he Implementation of Accounting Principles in the
Financial Practices of Ale2 Ltd$M Bill discuss a!out financial performance applies in the Ale2
Ltd$ For this, the report 0riter 0ill incite se-eral financial reports and their application in the
company$
9,9,9 Ratio analysis
9,9,9,6 Ret'rn on assets
&his ratio measures a companyIs earnings !efore interest and ta2es *EBI&+ against its total
net assets$ &he ratio is considered an indicator of ho0 effecti-ely a company is using its
assets to generate earnings !efore contractual o!ligations must !e paid$
=alc'lation* net income ; total assets
H6:49932C;6942B:325
Ret'rn on assets* 2,65
&here are se-eral factors to consider !efore dra0ing conclusions from this ratio such as
seasonal -aria!ility in sales and 0hether assets are !ought or leased$
Left -ertical line sho0s that return on total asset ratio$ And hori=ontal line sho0s the year$
96
Jears 2""# 2""H 2"" 2""?
Ratio "$98 "$97 "$99 "$92
9,9,9,9 =overage ratio
A ratio used to determine ho0 easily a company can pay interest on outstanding de!t$ &he
interest co-erage ratio is calculated !y di-iding a companyIs earnings !efore interest and
ta2es *EBI&+ of one period !y the companyIs interest e2penses of the same period$
=alc'lation* %ro&it .e&ore interest and ta(es ; ann'al interest and .anD charges
H6<93926<;693:<:55
=overage ratio* 6,34
&his result may !e considered positi-e or negati-e, depending on the industry standard for
companies of similar si=e and acti-ity$ Long.term in-estors see1 assurance that the !usiness
in 0hich they are in-esting can sufficiently co-er its interest requirements !y a comforta!le
margin$ &herefore, a larger -alue for the 'o-erage Ratio is preferred as it indicates a limited
ris1 to term lenders$ A lo0er -alue may indicate that the de!t load is too high for profita!ility
and that the !usiness may not !e a!le to meet all of its o!ligations$
Left -ertical line sho0s that co-erage ratio$ And hori=ontal line sho0s the year$ A lo0er
-alue may indicate that the de!t load is too high for profita!ility and that the !usiness may
not !e a!le to meet all of its o!ligations$
9?
Jears 2""# 2""H 2"" 2""?
Ratio 9$67 2$26 9$ 9$?#
9,9,9,4 Ret'rn on shareholdersI eJ'ity
&he amount of net income returned as a percentage of shareholders equity$ Return on equity
measures a corporationIs profita!ility !y re-ealing ho0 much profit a company generates
0ith the money shareholders ha-e in-ested$
=alc'lation* net income ; shareholdersI eJ'ity
H 6:49932C ;6626296B5
Ret'rn on shareholdersI eJ'ity* 2,63
Indicates the dollar amount of after.ta2 and after.interest profit generated for each 9 of
equity$ &his result can positi-e or negati-e, depending on the industry standard for companies
of similar si=e and acti-ity$
&his result can positi-e or negati-e, depending on the industry standard for companies of
similar si=e and acti-ity$ Left -ertical line sho0s that return on shareholdersI equity ratio$ And
hori=ontal line sho0s the year$
9
9,9,9,5 Inventory t'rnover
Jears 2""# 2""H 2"" 2""?
Ratio "$96 "$9? "$98 "$96
A ratio sho0ing ho0 many times a companyIs in-entory is sold and replaced o-er a period$
=alc'lation* sales ; inventory
H9:B23C92<;4C226<96
Inventory t'rnover* :,9B
A high turno-er rate is an indication of good in-entory management as the appropriate
amount of in-entory is !eing purchased to meet demand$ 4igh turno-ers are also a good
indicator that the !usiness is less li1ely to suffer pro!lems carrying in-entories of products
that may !ecome o!solete *such as fashion items+, are seasonal *such as sno0 sho-els+, or
that deteriorate *such as groceries+$ It is important to note that this ratio -aries according to
the type of !usiness$ For perisha!le goods, the turno-er rate should !e highL for dura!le
goods, it can !e lo0er$ A ma>or -ariance from industry standards may indicate an in-entory
surplus resulting from a poor purchasing or mar1eting policy$
Left -ertical line sho0s that in-entory turno-er and hori=ontal line sho0s the year$ 4igh
turno-ers are also a good indicator that the !usiness is less li1ely to suffer pro!lems carrying
in-entories$
9H
9,9,9,3 Days o& sales in inventory
Jears 2""# 2""H 2"" 2""?
Ratio $2? 8$8 ?$97 ?$#2
A financial measure of a companyIs performance, gi-es in-estors an idea of ho0 long it ta1es
a company to turn its in-entory *including goods that are 0or1 in progress, if applica!le+ into
sales$ Aenerally, lo0er *shorter+ the DSI the !etter, !ut it is important to note that the a-erage
DSI -aries from one industry to another$
=alc'lation* (days in the %eriod K average inventory) ; cost o& goods sold
H (692K<3225C2);929C45969
Days o& sales in inventory* 3,B9
&his tells you the appro2imate num!er of days that can !e handled 0ith e2isting in-entory$
&his result may !e considered positi-e or negati-e, depending on the industry standard for
companies of similar si=e and acti-ity$ It is important to note that this ratio -aries depending
on the type of !usiness$ For perisha!le goods, the -alue should !e lo0L for dura!le goods, it
can !e higher$
Be 1no0 this company is garments that are 0hy their ratio is higher$ For perisha!le goods,
the -alue should !e lo0L for dura!le goods, it can !e higher$
9#
9,9,9,B ='rrent ratio
Jears 2""# 2""H 2"" 2""?
Ratio 6$?2 #$H8 ?$8? $"8
A liquidity ratio is a measurement tool that measures a companyIs a!ility to pay short.term
o!ligations$
=alc'lation* c'rrent assets ; c'rrent lia.ilities
H<94B<B49;:B59392B
='rrent ratio* 6,96
A 'urrent Ratio of 9$" or greater is considered accepta!le for most !usinesses$ %ost analysts
agree that other factors need to !e considered !efore dra0ing conclusions from the 'urrent
Ratio such as ho0 quic1ly current assets can !e con-erted into cash, and the credit terms
e2tended !y suppliers and to customers$ A high ratio *greater than 2$"+ indicates e2cessi-e
current assets in the form of in-entory, and underemployed capital$ A lo0 ratio *less than 9$"+
indicates difficulty to meet short.term financial o!ligations, and the ina!ility to ta1e
ad-antage of opportunities requiring quic1 cash$
A high ratio *greater than 2$"+ indicates e2cessi-e current assets in the form of in-entory, and
underemployed capital$ Left -ertical line sho0s that current ratio and hori=ontal line sho0s
the year$
2"
9,9,9,: Inventory to net AorDing ca%ital
Jears 2""# 2""H 2"" 2""?
Ratio 9$29 9$H7 9$7H 9$?6
In-entory to net 0or1ing capital is a percentage measure of a firmIs capa!ility to finance its
in-entories from its a-aila!le cash$ Dum!ers that lo0er than 9"" are prefera!le as they
indicate high liquidity$ Dum!ers that higher than 9"", suggest that the in-entories are too
large in relation to the firmIs financial strength$
=alc'lation* inventory ; (c'rrent assets - c'rrent lia.ilities)
H4C226<96; (<94B<B49-:B59392B)
Inventory to net AorDing ca%ital* 9,4C
Indicates 0hat percentage of Det Bor1ing 'apital is in in-entory$ &his result may !e
considered positi-e or negati-e, depending on the industry standard for companies of similar
si=e and acti-ity$ A negati-e -alue is a sign that the company may ha-e difficulties meeting
short term financial o!ligations$
A negati-e -alue is a sign that the company may ha-e difficulties meeting short term
financial o!ligations$ Left -ertical line sho0s that in-entory to net 0or1ing capital and
hori=ontal line sho0s the year$
29
9,9,9,C De.t-to-asset ratio
Jears 2""# 2""H 2"" 2""?
Ratio 2$7H 9$92 9$HH 9$8
De!t.to.asset ratio is a percentage measure of a firmIs capa!ility to finance its in-entories
from its a-aila!le cash$ Dum!ers that lo0er than 9"" are prefera!le as they indicate high
liquidity$ Dum!ers that higher than 9"" suggest that the in-entories are too large in relation
to the firmIs financial strength$
=alc'lation* lia.ilities ; assets
H C<4<235B;69B299362
De.t-to-asset ratio* 2,:6
&his result may !e considered positi-e or negati-e, depending on the industry standard for
companies of similar si=e and acti-ity$ For creditors, a lo0er De!t.to.Asset Ratio is preferred
as it means shareholders ha-e contri!uted a large portion of the funds to the !usiness, and
thus creditors are more li1ely to !e paid$
For creditors, a lo0er De!t.to.Asset Ratio is preferred as it means shareholders ha-e
contri!uted a large portion of the funds to the !usiness, and thus creditors are more li1ely to
!e paid$ &his company creditors paid more fund to the !usiness$
22
9,9,9,< De.t-to-eJ'ity ratio
Jears 2""# 2""H 2"" 2""?
Ratio "$9 "$66 "$?8 "$?9
De!t.to.equity ratio is a measure of a companyIs financial le-erage$ De!tNequity ratio is equal
to long.term de!t di-ided !y common shareholdersI equity$ &ypically the data from the prior
fiscal year is used in the calculation$ In-esting in a company 0ith a higher de!tNequity ratio
may !e ris1ier, especially in times of rising interest rates, due to the additional interest that
has to !e paid out for the de!t$
=alc'lation* total lia.ilities ; shareholdersI eJ'ity
HC<4<235B;6626296B5
De.t-to-eJ'ity ratio* 2,C6
&he De!t.to.Equity proportions are decided !y management and thus there is no MidealM ratio
-alue$ &he reliance on creditor financing needs to !e analy=ed in light of other factors such
as@ the historical trend of this ratio for the !usiness, industry standards for companies of
similar si=e and acti-ity, and 0hether the company is in the start.up or esta!lished phase$
&erm lenders prefer a lo0er de!t.to.equity ratio as it indicates a lo0er reliance on creditors
and therefore a greater capacity for the !usiness to repay its creditors$
Left -ertical line sho0s that in-entory to net 0or1ing capital and hori=ontal line sho0s the
year$ &erm lenders prefer a lo0er de!t.to.equity ratio as it indicates a lo0er reliance on
creditors and therefore a greater capacity for the !usiness to repay its creditors$
27
Jears 2""# 2""H 2"" 2""?
Ratio "$H9 "$6 "$# "$?
'4AP&ER.7
FIDDIDAS
28
4,2 Findings
9+ &he company uses a com!ination of manual and computeri=ed financial
information system to record, collect, analy=e and report financial information$
2+ Financial performance is good and intended to achie-e more$ As a result,
performance of the company increases and 0ith it company<s !rand image also get
!righten$
7+ A higher ratio result than industry standards usually indicate an efficient use of
assets$
8+ &hough managers and e2ecuti-e officers 1no0 a great deal a!out the financial
concepts used, many of the super-isory employees do not understand their
importance$ &his sometimes results, not to paying enough attention to the details
creating misunderstanding$
6+ A high turno-er rate is an indication of good in-entory management as the
appropriate amount of in-entory is !eing purchased to meet demand$
?+ %ost of the orders come from foreign country$
26
'4AP&ER.8
S,AAES&I(DS
2?
5,2 'ggestions
9+ Dot only managers and officials, !ut the super-isors and senior 0or1ers should
ha-e an idea a!out importance of the financial reporting$ So, some sort of !asic
training financial on should !e arranged for them$
2+ &o discourage 0or1ers from deli!erately not collecting their dues in time, a minor
charge should !e cut from their dues after a fi2ed num!ers of days$ &his 0ill
psychologically moti-ate 0or1ers to gather their 0ages in time and relie-e the
pressure on the pay.roll accounting !ecause company should not face liquidity
pro!lem$
7+ &here must !e a clear allocation of responsi!ilities authority and accounta!ility$
8+ &he company should ta1e the initiati-e to de-elop an effecti-e research and
de-elopment center to get inno-ati-e ideas to capture the competiti-e mar1et$
6+ &he company has the pro-ision of internship program !ut there is no organi=ed
structure for the internship program$ &he company can properly utili=e the internees
at minimum cost$
?+ &he company should go for ad-ertising a!out their company and the up coming
!rand$ So that the customer 1no0s 0hat types of products and designs they are
pro-iding$
2
'4AP&ER.6
'(D'L,SI(D
2H
3,2 =oncl'sion
&he shift from a rural, agrarian economy to an ur!an, industrial economy is integral to the
process of economic de-elopment$ Although policyma1ers in the least de-eloped countries
*LD's+ ha-e, at -arious times, attempted to ma1e agriculture the primary engine of
economic gro0th and employment generation, this approach has not 0or1ed$ 4istorical
e-ents of the germens sector in the country during the year under re-ie0 ha-e had different
degrees of impacts not only on the life of indi-iduals !ut also on the operational conditions of
corporate !odies$
&he scenario, though appears apprehensi-e, is e2pected to change for !etter from the
e2pected ensuing e-ents in the country and a!road 0hich might ease crude crisis in the
international mar1et ha-ing positi-e impact on our ADP 0ith resultant contri!ution to
effecti-e gro0th in -arious industrial including germens sector$ &herefore, Ale2 ltd should
get neither disillusioned nor disappointed, !ut loo1 for !etter days ahead$
Ale2 Ltd$ has !uilt its organi=ational accounting procedures around standard accounting
principles$ &his results into the !etter financial performance of the company$ &he
management needs to ha-e accurate financial information$ Accounting procedures !ased
standard accounting principles ensure that the management gets it on time$ Ale2 current
situation of the company after ratio analysis is !ad$ &hey should concentrate of increasing the
sales$ Ale2 Ltd$ should gi-e full attention to increase the sales to sustain the mar1et$
&his e2ample ser-es as a reminder that good financial practice is not a mere lu2ury rather
than an enhancement to the performance of the company$
2#
7"
Bi.liogra%hy
9$ 3erry 3$ Beygandt, Donald E$ Cieso, Paul D$ Cimmel*2""? )$Acco'nting
"rinci%les)G :
th
Edition
2$ 3erry 3$ Beygandt, Donald E$ Cieso, Paul D$ Cimmel*2""+ $Intermediate
Acco'nting)G 66
th
Edition
7$ Saifur Rahman Chan *2""?+ :Saifur<s Business Digest/, First Edition$
8$ Annual report of Ale2 Ltd$ O2""
6$ Se-eral Boo1lets from Ale2 Ltd$
?$ Se-eral De0sletter s from Ale2 Ltd$
$ Different types of !rochures of Ale2 Ltd$
H$ Articles of Ale2 Ltd$
A%%endi(
ALEE LTD, 2""# Balance Sheet
ALEE LTD, 2""# Profit and Loss Account
ALEE LTD, 2""# 'hanges in Equity
ALEE LTD, 2""# 'ash Flo0 Statement
ALEE LTD, 2""H Balance Sheet
ALEE LTD, 2""H Profit and Loss Account
ALEE LTD, 2""H 'hanges in Equity
ALEE LTD, 2""H 'ash Flo0 Statement
Internet o'rces
000$google$com
000$0i1ipedia$com
000$fortune$com
000$!angladesh.!an1$org
79