BDCOM ONLINE LIMITED (BDCOM)

Basic information of Intech Online Limited (INTECH)

Market
Category

Electronic Share Y

Basic Information:
Authorized Capital in
BDT* (mn)
Paid-up Capital in
BDT* (mn)
Face Value
Total no. of
Shareholders

25.0 crore
11.20 crore
10.0
2475

Business Segment

IT Sector

Balance Sheet
BDCOM Online
LTD.
Non-current asset:
Goodwill

2010

2009

2008

2007

2006

228000

228000
1177178
35
2070012
5708775
1257246
22

228000
7096342
7
0
2208700
7340012
7

228000
7652177
3
0
1228700
7797847
3

228000
7745800
0
0
1280000
7896600
0

1289272
9
1216495
1
6043276
3165734
6
2164363
8
8440194
0
2101265
62

1547327
4
2424319
1
0
3202755
8
1456541
6
8630943
9
1597095
66

1071147
2
1804373
2
0
2999082
3
1027843
4
6902446
1
1470029
34

1232000
00
2155587
8
1315724

1120000
00
2155587
8
1384807

1000000
00
2155587
8
1582791

Property, plant & equipment

Deffered Revenue Expenditure
Long term security deposit

121571916
4013767
6271547

Total fixed asset

132085230

Current asset:
Inventories

13631338

advance,deposit & prepayments

Advance Income Tax & Vat

15673451
6117312

Bills Receivable

34362074

Cash & cash equivalents

13150630

Total current asset

82934805

Total assets

215020035

9301523
1729706
2
0
2902073
5
8467996
6408731
6
1430533
16

Equity:
Capital & reserves :
Share Capital
Tax Holiday Resurve
Retained earnings

123200000
21555878
17060505

1000000
00
2127121
5
1251369

Total Equity

161816383

Current liabilities & provision:

Accounts payable & other
liabilities
Provision for income tax
Short term loan
Bank Overdraft

28514765
1086153
23602734
0

Total current Liabilities

53203652

Total Equity & liabilities

215020035

Balance
Sheet(BDCO
M)
2010

9
1579131
27

0
1474039
48

4929002
8
426339
2497068
0
5221343
5
2101265
62

1136615
6
552060
0
387402
1230561
8
1597095
66

Common Size
Statement(tk.000)
2009 2008 2007

2006

Non-current asset:
Goodwill
Property, plant &
equipment
Deffered Revenue
Expenditure
Long term security deposit
Total fixed asset
Current asset:
Inventories

0.001
1
0.565
4
0.018
7
0.029
2
0.614
3

0.001
8
0.560
2
0.009
9
0.027
2
0.598
3

0.003
1
0.444
3
0.000
0
0.013
8
0.459
6

0.002
9
0.520
5
0.000
0
0.008
4
0.530
5

0.002
9
0.541
5
0.000
0
0.008
9
0.552
0

0.063 0.061 0.096 0.072 0.065

4
4
9
9
0

8
1373837
96

8
1337849
13

7663930
492346
0
1462862

8679560
634572
0
0

9619138
1470029
34

9314132
1430990
45

advance,deposit &
prepayments
Advance Income Tax & Vat
Bills Receivable
Cash & cash equivalents
Total current asset
Total assets
Equity:
Capital & reserves :
Share Capital
Tax Holiday Resurve
Retained earnings
Total Equity
Current liabilities & provision:
Accounts payable & other
liabilities
Provision for income tax
Short term loan
Bank Overdraft
Total current Liabilities
Total Equity & liabilities

0.072
9
0.028
4
0.159
8
0.061
2
0.385
7
1.000
0

0.057
9
0.028
8
0.150
7
0.103
0
0.401
7
1.000
0

0.151
8
0.000
0
0.200
5
0.091
2
0.540
4
1.000
0

0.122
7
0.000
0
0.204
0
0.069
9
0.469
5
1.000
0

0.120
9
0.000
0
0.202
9
0.059
2
0.448
0
1.000
0

0.573
0
0.100
3
0.079
3
0.752
6

0.586
3
0.102
6
0.062
6
0.751
5

0.701
3
0.135
0
0.086
7
0.923
0

0.680
3
0.146
6
0.107
7
0.934
6

0.698
8
0.148
6
0.087
4
0.934
9

0.132
6
0.005
1
0.109
8
0.000
0
0.247
4
1.000
0

0.234
6
0.002
0
0.011
9
0.000
0
0.248
5
1.000
0

0.071
2
0.003
5
0.000
0
0.002
4
0.077
0
1.000
0

0.052
1
0.003
3
0.000
0
0.010
0
0.065
4
1.000
0

0.060
7
0.004
4
0.000
0
0.000
0
0.065
1
1.000
0

Comments:
Cash Vs Current Liabilities
BDCOM has low cash and bank balances compared to other current assets.
This indicates that firm cash ratio will be lower and that the firm may be
unable to pay current liability by cash and bank balances. However their cash
balances are decreasing from 2006. Over the course of last 5 years, This
decrease indicates management have yet not discovered this weakness in their
financial structure and working to improve.
Current Assets vs. Current Liabilities
BDCOM always maintain higher level of current asset over its current liabilities. Its
current assets are higher than current liabilities to provide liquidity whenever need
for payoff arises.
Inventories vs. Profitability
From 2006 to 2010 BDCOM have held almost constant inventories compare to its
total asset. This indicates a small portion of the firms current asset is kept idle. This
indicates efficient inventory management which helps to increase firms profitability.
That means it has a small proportion of inventory holding in its ware house.
So Firms has well liquidity position and firm can show its efficiency by converting
inventories into cash very easily.
Current Asset vs. Fixed Asset
Over the last 5 years, fixed assets of BDCOM have been remain the same with
little fluctuation in the middle with declining trend. On the other hand current asset
of BDCOM has decline in 2008 and again increases. BDCOM have been increasing its
current assets portion;
Long Term Liability vs. Long Term Asset
From the above mentioned table we found that BDCOM has only equity
financing. It does not have any long term liability. Therefore nit will not be able to
take the tax advantage of paying interest before tax. So it does not have the risk of
bankruptcy due to inability to pay the interest expense.
Debt vs. Equity:
From 2006 to 2010 on an average BDCOM has debt less than 10% in its
capital structure. It indicates the firm is more reliant on internal financing thereby
exposed to less risk.
On the other hand the firm has about 90% of its assets financed from internal
sources. In the most recent year, this proportion increased to 2010 the portion of
equity increases to 96%.

BDCOM ONLINE LIMITED

Income Statement
As of (2006-2010)

Revenue from sales &

service
Operating Expenses
Gross Profit
Administrative & marketing
expense
Amortization of deferred exp.
Depriciation on fixed asset
Total admin & opert Exp.
Profit/(Loss) from Operation
Add: non-operting incom
Profit/(Loss) before Interest
and Tax
Interest
Profit/(Loss) before Tax

2010
114434
649
3616044
9
782742
00
4467673
0
1132817
2002532
0
6583486
7
124393
33
1428448
138677
81
1932525
119352
56

Income Statement
2009
2008
2007
760758 6974712 633537
03
6
82
198275
2195365
83
22993058
8
562482 4675406 414001
20
8
24
368142
2235323
95
27567260
6
619971
0
851000
128635
1344961
71
13203249
0
502978
3665384
37
40770509
6
595038
474627
3
5983559
8
900094
672311
265625
685047
501190
7
6655870
3
517503
638554
165809
633297
484609
4
6017316
4

2006
9768163
8
52895971
4478566
7
18303645
896600
15221895
34422140
1036352
7
887132
1125065
9
0
1125065
9

Income tax Expenses

Profit/(Loss) for the Year
Tax exemted profit from sale
of hardware
Net profit

1086153 426339
108491 590663
03
5
529834 467984
3
8
161474 105864
46
83

552060
5465256
4807030
1027228
6

492346
435374
8
234713
6
670088
4

634572
1061608
7
0
1061608
7

BDCOM ONLINE LIMITED

Common Size Income Statement
Revenue from sales &
service
Operating Expenses
Gross Profit
Administrative &
marketing expense
Amortization of deferred
exp.
Depriciation on fixed asset
Total admin & opert Exp.
Profit/(Loss) from
Operation
Add: non-operting incom
Profit/(Loss) before
Interest and Tax
Interest
Profit/(Loss) before Tax
Income tax Expenses
Profit/(Loss) for the
Year
Tax exemted profit
from sale of hardware

2010

2009

2008

2007

2006

1
0.3159
921
0.6840
079
0.3904
126
0.0098
992
0.1749
935
0.5753
054
0.1087
025
0.01248
27
0.1211
852
0.0168
876
0.1042
976
0.00949
15
0.0948
061
0.0463
002
0.1411
063

1
0.2606
29
0.7393
71
0.4839
16
0.0081
49
0.1690
89
0.6611
54
0.0782
16
0.0118
32
0.0900
48
0.0068
02
0.0832
46
0.0056
04
0.0776
41
0.0615
16
0.1391
57

1
0.3296
63
0.6703
37
0.3952
46

1
0.3465
25
0.6534
75
0.3528
32
0.0134
33
0.2122
94
0.5785
58
0.0749
17
0.0041
93
0.0791
1
0.0026
17
0.0764
93
0.0077
71
0.0687
21
0.0370
48
0.1057
69

1
0.5415
14
0.4584
86
0.1873
81
0.0091
79
0.1558
32
0.3523
91
0.1060
95
0.0090
82
0.1151
77

0
0.1893
02
0.5845
48
0.0857
89
0.0096
39
0.0954
29
0.0091
55
0.0862
73
0.0079
15
0.0783
58
0.0689
21
0.1472
79

0
0.1151
77
0.0064
96
0.1086
8
0
0.1086
8

Net profit
Comments:
Gross Profit Percentage
The firm has been steadily improving in managing its direct cost related with
its sales level. On an average the firms cost of goods sold is less than 3% of its
sales each year, as a result a more than95% of its huge revenue is generated as the
firms gross profit.
EBIT vs. Financial Expenses:
The firm has sufficient EBIT to pay interest and generate adequate earnings
for their shareholders. BDCOM have been very efficient in managing its interest
expenses, paying only around 1% up to the year 2010.

Ratio Analysis of BDCOM Online Limited

Activity analysis
Short-term activity ratios
Year
Inventory turnover ratios
Avg. no. of days
inventory in stock

2010

2009

2008

2007

2006

2.65

1.54

1.49

2.05

5.69

138

237

246

178

64

Receivable turnover ratio

Avg no. of days
receivable outstanding

3.33

2.40

2.18

2.11

3.37

110

152

168

173

108

Payable turnover ratios

Avg. no. of days payable
outstanding

1.29

0.35

2.44

3.05

6.32

282

1043

149

120

58

Analysis:
Activity ratios describe the relationship between the firm's level of operations
(usually defined as sales) and the assets needed to sustain operating activities. The
higher the ratio, the more efficient the firm's operations, as relatively fewer assets
are required to support a given level of operations (sales). Here several key activity
ratios of BDCOM Online Ltd. are calculated with proper interpretations and
implications in its business operations.
Inventory Turnover Ratio:
The inventory turnover ratio measures the efficiency of the firm's inventory
management. A higher ratio indicates that inventory does not remain idle but rather
turns over rapidly from the time of acquisition to sale.

From the above chart, we can find that although average number of days BDCOM
keeps its inventories in stock is fluctuating. As this is an IT firm, so it cost of goods
sold is too low and therefore inventory turnover ratio is very low.
Average No of days Inventory in Stock:
Average No. of Days Inventory in Stock says the average number of days inventory
is held in hand until it is sold. Lower value of this ratio indicates that the firm needs
less time to convert its inventory into sales.

From the above table we see that average no of days in stock is too high as BDCOM
main operation does not involve selling goods.
Receivables Turnover Ratio:
The receivables turnover ratios measures the effectiveness of the firm's credit
policies and indicates the level of investment needed in receivables to maintain the
firms sales level. Receivables turnover ratio measures how many times receivables

turn over into cash in a year. Higher the receivables turnover ratio indicates that
receivables are collected quickly from the customer. So, higher the ratio is better.

From the analysis of five year receivable turnover ratio we see that the Receivable
turnover ratio is fluctuating. However this ratio is very low, always remaining above
2 times. It indicates firm is not efficient in managing its receivable.
Average No. of Days Receivables Outstanding
Average no. of day's receivables outstanding measures the average no. of days
required to convert receivables into cash. Lower the ratio indicates that it takes less
no. of days to convert receivables into cash.

Average no. of day's receivables outstanding ratios of the company shows that the
company requires on an average more than 130 days collecting its receivable. From
2006 to 2010 average no of days in receivables is always under 180 days. It shows
that the firm takes very little time to collect its receivables.
Payable Turnover Ratio:
Payable turnover ratio measures how many times the suppliers are paid in a year.
Lower the ratio is better because then the company pay its creditor less frequently,

and having more liquidity in hand as accruals.

From the above graph we see that payable turnover ratio was highest during 2006
but it pays very infrequently to its supplier during 2008, 2009 & 2010. It indicates
INTHECH payment to its suppliers very fluctuating.
Average No. of Days Payable Outstanding:
Average no. of days payable outstanding measures the time needed to pay the
suppliers. Higher the ratio is better because higher the average no. of days payable
outstanding indicates that the company can delay its payment of payables and has
more liquidity in hand.

As average no. of days payable outstanding moves in opposite directions with

payable turnover ratio, this ratio is high for BDCOM 2009 but it was very low during
2006 & 2007. It is always constant at being above 140 days, meaning the firm is
keeping more payables amount in hand for longer period of time.

Long term Activity Ratios

Year

2010

2009

2008

2007

2006

0.87

0.61

0.95

0.99

1.88

0.53
0.36
0.44
0.52
Table: The Long Term Activity Ratios of BDCOM

0.75

Fixed Asset Turnover

Ratio
Total Asset Turnover
Ratio

Analysis:
These ratios measure the efficiency of long term capital investment in generating
sales. These ratios indicate the level of utilization of fixed assets to generate certain
level of sales. Trend of this ratios indicates that the how efficient the firm in utilizing
its fixed assets.
Fixed Asset Turnover Ratio:
This ratio measures using the fixed asset how much sales the firm generates.
Higher the ratio is better for the firm, because higher the ratio indicates that the
firm is efficient to utilize the fixed assets in case of generating sales.

From the above graph we can see that BDCOM has fluctuating trend in this ratio.
Over the years, BDCOM fixed assets are less than 1. In 2010 this ratio was .87. This
indicates that by utilizing Tk 1 worth of fixed asset, BDCOM is generating .87 worth
of sales. Over the course of 5 years, BDCOM low in 2009 and highest in 2006.
Total Assets Turnover Ratio:
This ratio measures by utilizing its total assets how much sales the firm generates.
Higher the ratio is better for the firm, because higher the ratio indicates that the
firm is efficient to utilize the assets in case of generate sales.

From the above graph we can see that the ratio is in constant level of being over .
35. This shows by utilizing Tk 1 asset, the firm is generating Tk .35 worth of sales.
This indicates that the firm is not efficient in managing its total assets to generate
sales.

Liquidity Analysis
Analysis:
Liquidity means the ability of the firm to use its Current Assets to pay its Short Term
obligations. ST lenders and ST creditors are more concern about the liquidity
analysis of a firm, because they want to know that whether a firm has ability to pay
its short term obligation in-time or not.
Cash Cycle:
Cash cycle captures the interrelationship between sales, collections and trade
credit. Cash cycle is the appropriate measures to identify the time period, which is
tied up with the operation of a company. Shorter the cash cycle of a firm is, more
efficient it is in managing its operations and cash. Longer the cycle is, less efficient
and increasing financial cost is indicated. If the cash cycle of a firm is negative, it
indicates the firm is collecting cash even before it has sold its products. The cash
cycle can be calculated as Cash Cycle = No. of days inventory in stock + No. of day
receivables remain outstanding - No. of days payable outstanding

Table: Year wise Cash Cycle of BDCOM

Year
Cash Cycle

2010

2009

2008

2007

2006

-35

-654

264

231

115

From the above table it is identifiable that BDCOM has a negative cash cycle within
the last 3 years. Although it is fluctuating and decreasing over the years, it is
nevertheless an impressive showing of the firm's credit management.

Table: Year wise Current, Quick and Cash Ratio of BDCOM

Year

2010

2009

2008

2007

2006

Current Ratio

1.56

1.62

7.01

7.18

6.88

Quick Ratio

0.89

1.02

3.79

4.19

4.02

Cash Ratio

0.25

0.41

1.18

1.07

0.91

Current Ratio:
Current ratio indicates the firm's ability to pay its short term obligation with its short
term assets. It is more than 1 for BDCOM indicating they are able to pay off its
entire current liability with its current assets. However it has been fluctuating over

the years. In the last year, BDCOM current ratio was 1.56, indicating it had Tk1.56
current asset to pay off its Tk 1 current liability. Also this high current ratio also
shows the good liquidity condition of the firm.
Quick Ratio:
Since not all the elements of current asset of a firm cannot be readily converted into
cash, quick ratio eliminates those components which cannot be converted into cash
i.e. prepaid expenses and depreciation. From the above table we can identify that in
2010 the firm has Tk .89 quick assets (cash, receivables and marketable securities)
to pay its Tk 1 taka current liability. This gives indication that though the firm quick
ratio is fluctuating, it has no sufficient cash to pay its current liabilities.
Cash Ratio:
Cash ratio is the most conservative measuring tool of liquidity position of the
company. From the above table we can see that in 2010 the firm had only 0.25 taka
of cash to pay its 1 taka current liability. However, BDCOM have worse this situation
over the years. Over the last 5 years, this ratio was high in 2008 and lowest in 2010
which are 1.18 & .25 respectively. As the cash ratio is decreasing and BDCOM has
very small amount of cash to pay its current liability or short term obligations,
something the management should look into to improve confidence of both
stockholders and creditors in the market.

Long term Debt and Solvency Analysis

The analysis of firm capital structure is necessary to understand long term risk and
return prospect. The following table shows some important ratios that shades some
light into the firm's capital structure.
BDCOM Online Ltd. is an all equity firm it does not have Long term Debt and
Solvency Ratios.

Profitability Analysis: BDCOM Online Ltd.

Profitability Ratios
Gross Margin
Operating Margin
Margin before interest and tax
Pretax Margin
Net Profit Margin
Return on Asset (ROA)

2010
0.68
0.11
0.12
0.10
0.14
0.08

200
9
0.74
0.08
0.09
0.08
0.14
0.05

2008
0.67
0.09
0.10
0.09
0.15
0.07

2007
0.65
0.07
0.08
0.08
0.11
0.05

200
6
0.46
0.11
0.12
0.12
0.11
0.08

Return on Equity (ROE)

0.10

0.07

0.07

0.05

0.08

Analysis:
Any Shareholders or Equity Investor mostly concern with the profitability analysis of
the firm, because of following three reasons:
1. To earn profit,
2. To sustain profit, and
3. To increase profit.
4.
The following ratios measure these factors of the firm:
Gross Margin:
This ratio interprets the relationship between Sales and Manufacturing Expenditure
of a firm. Higher Ratio indicates higher profitability of the company.
From 2006- 2010, at that point it was around 0.68, meaning for every Tk 1 of
sales, it had gross margin of Tk 0.68 It indicates BDCOM has efficiency to
control cost of goods sold. Over the last 5 years, this ratio is showing
persistently stable.
Operating Margin
Over the last 5 years, this ratio is showing fluctuating result. In 2010, this figure
was 0.11 meaning for every Tk 1 sales; BDCOM maintained profit of Tk 0.11
from its core business.
Pretax Margin:
From 2006 to 2010, this ratio was stable at around 0.9- meaning for every Tk 1
sales the firm had pretax earnings of Tk 0.09
Net Profit Margin
For BDCOM, this ratio is stable for last 5 years. In 2010, this ratio was 0.14;
indicating for every Tk 1 sale, INTECH had a net income of Tk 0.14
Return on Asset/ Return on Total Capital:
This ratio illustrates the overall return earned by the firm to all its investors
(both shareholders and creditors). Higher the ratio is better for investors of the
company, because it indicates the firm is earning more return.
As visible from the following chart, this figure has been fluctuating for BDCOM
from 2006 to 2010, and reached to 0.08 in 2010. It indicates for every Tk 1
invested in BDCOM, investors are racking up a return of Tk 0.08.
Return on Equity:
ROE means the overall return made available to all equity holders of the
company.
BDCOM showed an increasing trend in its ROE over the course of last 5 years. In
2010, this figure was 0.10, meaning for every Tk 1 invested, equity holders received
a return of Tk 0.10

Operating, Financial Leverage and Total Leverage:

Table: OLE, FLE and TLE of BDCOM

Year

2010

2009

2008

2007

2006

OLE

5.64

8.21

7.02

8.26

3.98

FLE

1.16

1.08

1.11

1.03

1.00

TLE

6.56

8.88

7.77

8.54

3.98

Operating Leverage Effect (OLE):

Operating leverage measure a certain percentage change of operating profit that
occurs due to a certain percentage of change in the sales revenue. Higher OLE
means the firm bears higher risk; because any small percentage change in sales
would result in a larger deviation in the firm's EBIT. From table we see that BDCOM
had excessive amount of OLE present throughout last 5 years. However this figure
was 3.98 in 2006 and increases from 2007 to 2010. It indicates, for every 1 %
change in the sales figure, EBIT would change by 3.98% for m2006. Major reason
for any leverage effect to exist is due to the existence of fixed cost in the firms total
cost structure.
Financial Leverage Effect (FLE):
Financial leverage measures certain Percentage changes in net income that occurs
due to a percentage change in operating profit. From table we see that FLE of
BDCOM was1.6 in 2010 but in others years OLE remain less than 1.50. It indicates
that if in 2010 EBIT changed by Tk 1 then the net income of the firm would change
by Tk 1.50. This leverage effect exists due to the presence of fixed financial costs
in the firm's total cost structure.

Total Leverage Effect (TLE):

The multiplication of OLE and FLE results the TLE. Total leverage measure
Percentage change in net income that occurs due to a percentage change in the
firm's sales revenue.
From the graph we see that previously, BDCOM had significantly higher amount of
TLE present in 2008 & 2007. However it has dropped significantly afterwards. In
2010 the firm had a total leverage of 6.56- meaning if sales of BDCOM changed
(increase/decrease) by 1 % then net income would have changed by 6.56%.

Earnings per Share:

Basic EPS measure earning available to common shareholder. As BDCOM has no
preferred stock and convertible securities so no diluted EPS will be present.

Table: Basic EPS of INTECH

Year

2010

2009

2008

2007

2006

Basic EPS

1.31

0.86

0.92

0.67

1.06

From the above table we see that Basic EPS of BDCOM is fluctuating at a souring
rate.

Analysis of Inventory:
INTECH follows FIFO method to evaluate their inventory. In their annual reports, it
disclosed that the inventories were measured at lower of cost and at net realizable
value, cost being determined under FIFO method. Costs it included in its
measurement were expenditures incurred in acquiring the inventories for their
service purposes and other costs incurred in bringing them to their existing location
and condition.