Information Services Network Ltd.

(ISN)

Information Services Network Ltd. (ISN)

Basic information of Information Services Network Ltd. (ISN)

Listing Year:

2002

Market
Category:

Electronic
Share:

Authorized Capital in
500
BDT mn
Paid-up
Capital
in
99
BDT* (mn)
Face Value

10.0

Total no. of ordinary

9904756
securities
Business Segment

IT Sector

Information Services Network LIMITED

Balance Sheet
As of (2006-2010)
Balance Sheet(tk.000)
2010

2009

2008

2007

2006

1002399
60
9749590
8

9885281
5
9820158
2

414143
18
404932
83

378786
22
368423
12

303606

607208

910810

411900
28
398535
16
121441
2

2744052

347627

313827

125500

122100

909828
36
6695545
7

674737
91
5090347
4

64336
350
456848
28

56350
312
387950
67

54623
163
317283
79

Accrued loan interest

809544

809544

809544

809544

809544

Accrued FDR interest

Loan, advances and
deposits

1794113
4

1165400
9

Cash & cash equivalents

5276701

4106764

102181
82
762379
6

Current liabilities &

provision:

317001
66

110493
12

12977
248

Accrued expenses

3100810

2529278

168679
7

Liabilities for other

finance

4098859

3425034

906668
5
767901
6
18089
650
125974
5
294420

104620
00
116232
07
17839
583
205431
5
279658

201
0

Common Size
Statement(tk.000)
200
200
200
9
8
7

200
6

Net assets
Non-current assets
Tangible fixed assets,net
of accumulated dep.
Ipo expenses
Investment(at cost)
Current assets:
A/c receivables

299926
8

0.62
87
0.61
15
0.00
00
0.01
72
0.57
07
0.42
00
0.00
51

0.63
69
0.63
27
0.00
20
0.00
22
0.43
47
0.32
80
0.00
52

0.44
66
0.43
67
0.00
65
0.00
34
0.69
39
0.49
27
0.00
87

0.49
78
0.48
42
0.01
20
0.00
16
0.74
06
0.50
99
0.01
06

0.52
83
0.51
11
0.01
56
0.00
16
0.70
05
0.40
69
0.01
04

0.11
25
0.03
31

0.07
51
0.02
65

0.11
02
0.08
22

0.19
88

0.07
12

0.14
00

0.01
94

0.01
63

0.01
82

0.02
57

0.02
21

0.03
23

0.11
92
0.10
09
0.23
77
0.01
66
0.03

0.13
42
0.14
91
0.22
88
0.02
63
0.03

Bank loan

1861426
4

Proposed dividend

409287
9

Provision for income tax

5886233

5095000

419830
4

Net current asset:

592826
70

564244
79

51359
102

106770
75
320862
5
38260
662

Deferred tax liabilities

91111

64011

51080

Net assets:

159431
519

155213
283

Retained earnings-as per

profit and loss a/c

1594315
19
9004333
2
1784460
4

1552132
83
8185757
5
1652950
5

General reserve

2000000

2000000

1000000

1000000

1000000

1000000

4754358
3
159431
519

5282620
3
155213
283

87

59

0.11
68

106770
75

0.04
41

231161
2

0.03
69

0.03
28

0.04
53

36783
580

0.37
18

0.36
35

0.55
39

-49632

0.00
06

0.00
04

0.00
06

92722
340

76089
652

77973
608

1.00
00

1.00
00

927223
40
818575
75
686476
5
200000
0
100000
0
100000
0

760896
52
711805
00
200000
0
100000
0
100000
0

779736
08
711805
00
179310
8
200000
0
200000
0
100000
0

92722
340

76089
652

77973
608

1.00
00
0.56
48
0.11
19
0.01
25
0.00
63
0.00
63
0.29
82
1.00
00

1.00
00
0.52
74
0.10
65
0.01
29
0.00
64
0.00
64
0.34
03
1.00
00

0.14
03
0.04
22
0.50
28

0.13
69
0.02
96
0.47
17

Non-current liabilities:

1.00
00

0.00
07
1.00
00

1.00
00

1.00
00
0.88
28
0.07
40
0.02
16
0.01
08
0.01
08

1.00
00
0.93
55
0.01
19
0.02
63
0.01
31
0.01
31

1.00
00
0.91
29
0.02
30
0.02
56
0.02
56
0.01
28

1.00
00

1.00
00

1.00
00

Financed by
Shareholder's equity:
Share capital

Dividend equalization
fund
Inflation and currency
fluctuation fund
Capital reserve
Total equity and
liabilities

909152

Information Services Network LIMITED

Income Statement
As of (2006-2010)

expenses for
operation
Administrative
Expenses

Income Statement(tk.000)
2009
2008
2007
2006
328399 315937 398875 395568
65
24
15
29
336568
0
138890 324720
821584
6
39924 32701 31269 36521 38735
948
075
004
829
245
615831 504651 515725 575238 743633
3
6
8
1
9
401002 388947 411432 374217 404596
1
9
9
9
8

marketing exp.

982250

423500

360900

389660

947069

Amortization of
deferred exp.

392186

392185

392185

392185

930053

Total admin
&operatingExp.
Profit/(Loss) from
Operation
Add: non-operating
income
Profit before
interest and tax

177393
91
292821
61
10642
787
210927
3
12752
060

146812
08
280406
37
10694
608
642786
3
17122
471

232440

482592

9320

Profit/(Loss) before
Taxation
Income tax Expenses

12519
620
-

169151
21
269397
93
43292
11
264851
2
69777
23
148039
0
54973
33
496520

181652
57
284416
62
80801
67
245530
3
10535
470

Financial exp.

182587
22
280104
02
46906
73
318143
9
78721
12
138233
1
64897
81
126052

10052
878
390615

17113
151
12965

Revenue from
operation
Cost of goods sold
Gross Profit

Depreciation

2010
399249
48

Common Size Statement(tk.000)

2010
2009
2008
2007
2006
1
0
1
0.1542
47
0.1004
39
0.0246
02
0.0098
23
0.4443
18
0.7334
3
0.266
57
0.0528
31
0.319
401
0.0058
22
0.313
579
-

0.0042
29
0.995
771
0.1536
7
0.1184
37
0.0128
96
0.0119
42
0.5559
91
0.8529
36
0.142
834
0.0968
77
0.239
711
0.0420
93
0.197
618
0.0383

0.0102
78
0.989
722
0.1632
37
0.1302
26
0.0114
23
0.0124
13
0.5353
95
0.8526
94
0.137
028
0.0838
3
0.220
858
0.0468
57
0.174
001
0.0157

0.0843
79
0.915
621
0.1442
15
0.0938
18
0.0097
69
0.0098
32
0.4554
12
0.7130
47
0.202
574
0.0615
56
0.264
13
0.0120
99
0.252
031
0.0097

0.0207
7
0.979
23
0.1879
91
0.1022
82
0.0239
42
0.0235
12
0.3711
42
0.7088
7
0.270
361
0.1624
97
0.432
858
0.0002
36
0.432
622
0.0003

Profit/(Loss) for the

Year

138908
8
13908
708

4
52292
57

50007
86

96622
62

11315
106

0.0347
9
0.348
371

84

16

93

28

0.159
235

0.158
284

0.242
238

0.286
047

Ratio Analysis of Information Services Network Limited (ISN)

Activity analysis
Short-term activity ratios:
Year

2010

2009

2008

2007

2006

Inventory
turnover Undefined
ratios
Average no. of days Undefined
inventory in stock

Undefined

Undefined

Undefined

Undefined

Undefined

Undefined

Undefine
d
Undefine
d

Receivable
turnover
ratio
Average no. of days
receivable
outstanding
Payable
turnover
ratios
Average no. of days
payable outstanding

0.83

0.973

0.977

1.112

1.345

440

375

374

328

271

Not
Available
Not
Available

Not
Available
Not
Available

Not
Available
Not
Available

Not
Available
Not
Available

Not
Available
Not
Available

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 Information Services Network 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.
But as it is an internet service providing company there is no such inventory Exists
for this company which has physical existence. Thats why Inventory turnover ratio
and Average no. of days inventory in stock is undefined.
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.

Analysis:
From the analysis of five year receivable turnover ratio we see that the Receivable
turnover ratio is fluctuating. However this ratio is decreasing as the year passes
which is not good. 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.

Analysis:
As we can see that in this case as the time passes the number of days increases for
this ratio which is not at all beneficial for the company. It shows that the company
takes longer peroid 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.
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.
Analysis:
As there is no existence of accounts payable in the annual reports of the company
thats why payable turnover ratio and average no. of days payable outstanding,
these two ratios are not available.

Long term Activity Ratios

Year
Fixed Asset Turnover

2010
0.50

2009

2008

2007

0.48

1.02

1.06

0.283

0.390

0.414

2006
0.93

Ratio
Total Asset Turnover
Ratio

0.256

0.387

Table: The Long Term Activity Ratios of ISN.

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.

Analysis:
From the above graph we can see that ISN has fluctuating trend in this ratio. In
2006 the ratio was .93 and in 2010 it was 0.50.So we can say that the ratio for ISN
was very fluctuating over the last five years.
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.

Analysis:
From the above graph we can see that the ratio is decreasing as the time passes
this ratio decreases which is not good for the company.

Liquidity Analysis
Analysis:
Liquidity means the ability of the firm to use its Current Assets to pay its Short Term
obligations. Short lenders and 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.
Operating and 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: Yearly Operating and Cash Cycle of ISN
Year

2010

2009

2008

2007

2006

Operating Cycle

440

375

374

328

271

Cash Cycle

440

375

374

328

271

From the above table it is identifiable that ISN sells its product on cash.
Table: Year wise Current, Quick and Cash Ratio of ISN.
Year

2010

2009

2008

2007

2006

Current Ratio

3.52

11.33

7.33

3.79

3.52

Quick Ratio

2.80

9.24

6.07

3.12

2.79

Cash Ratio

0.20

0.69

0.87

0.52

0.75

Current Ratio:
Current ratio indicates the firm's ability to pay its short term obligation with its short
term assets. However it has been fluctuating over the years. In the year 2009 the
ratio was highest and in the
year 2006 it was lowest.
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 inventory. We can easily understand from the above table

that This ratio also fluctuates for the company.

Cash Ratio:
Cash ratio is the most conservative measuring tool of liquidity position of the
company. This ratio also fluctuates for the company but the values are nearer to
each other. But in the tear 2010 the ratio declines.

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.

Table: Long term Debt and Solvency Ratios

Particulars
Debt to total
capital
Debt to equity
Times Interest
Earned S(TIE)
Capital
expenditure
ratio
CFO to debt

2010

2009

2008

2007
-1259745

2006

3100810

2529278

1686797

3100810
Undefine
d

2529278

1686797

-1259745

-2054315

Undefined

Undefined

Undefined

Undefined

Not
Available

Not
Available

Not
Available

Not
Available

Not
Available

4098860

3425039

2999273

-2144210

-2796584

-2054315

Analysis:
As there is no interest expense for the firm thats why TIE ratio is not available and
there was no capital expenditure mentioned for that capital expenditure ratio also
not available.

Profitability Analysis
Profitability Ratios

2010

2009

2008

2007

2006

Gross Margin

0.50

0.44

0.51

0.46

0.51

Operating Margin

0.21

0.22

0.27

0.25

0.30

Margin before interest and taxes

tax
Pretax Margin

0.21

0.22

0.27

0.25

0.30

0.21

0.22

0.27

0.25

0.30

Profit Margin

0.19

0.21

0.24

0.23

0.27

Return on Asset (ROA)/ Return

0.06

0.12

0.12

on Total Capital (ROTC)

0.07

0.12

Return on Equity (ROE)

0.06

0.08

0.12

0.11

0.13

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.
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. This ratio is not
varies in a greater extent foe ISN.
Operating Margin:
This ratio is decreasing for the company.
Pretax Margin:
Also decreases as the year passes.
Net Profit Margin:
For ISN, this ratio is fluctuating but decreasing.
Return on Asset or 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.
But for ISN this ratio is going down as the year passes.
Return on Equity:
ROE means the overall return made available to all equity holders of the
company. So higher the ratio better. But again the ratio declines for the
company in the recent years.

Operating, Financial Leverage and Total Leverage

Table: OLE, FLE and TLE of ISN
Year

2010

2009

2008

2007

2006

OLE

2.35

1.97

1.92

1.84

1.72

FLE

1.08

1.09

1.09

1.10

1.09

TLE

2.55

2.16

2.11

2.03

1.90

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. As we can see for the above
table that the risk is increasing day by day.
Financial Leverage Effect (FLE):
Financial leverage measures certain Percentage changes in net income that occurs
due to a percentage change in operating profit. This ratio is not that much
fluctuating for the company.
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, ISN had significantly higher amount of TLE
present the fixed leverage is more for the company. This ratio increases for the
company.

Basic EPS
Basic EPS measure earning available to common shareholder. As ISN has no
preferred stock and convertible securities so no diluted EPS will be present.
Table: Basic EPS of ISN
Year

2010

2009

2008

2007

2006

Basic EPS

1.05

1.18

1.22

1.23

1.42

Analysis:
From the above table we see that Basic EPS of ISN have fluctuates but not in a
greater extent.

Analysis of Inventory of the company

ISN follows weighted average method to evaluate their inventory.