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3.2.3.1.

LIQUIDITY RATIOS
1. Current Ratio = Current Assets / Current liabilities
Year

Current Asset
(Taka)

Current Liabilities
( Taka)

Current Ratio

2012

7670184337

7203368404

1.06

2013

10424961127

10547219843

0.99

2014

10163738657

9329750460

1.09

Interpretation:

The short-term financial solvency of BSRM Limited is optimistic in 2012 and 2014, because the
current ratio was at acceptable limit. This indicates that the firm may have a hard time paying
their current liabilities in short period. The current ratio of BSRM Limited is slightly lower than
standard ratio of 2:1 in 2013. It means that the firm is unable to cover its all short term obligation
within business cycle.
2. Quick ratio = Quick assets / Current liabilities
YEAR

Quick Assets

Current Liabiliies

Quick Ratio

2012

1010191767

7203368404

0.14

2013

660773332

10547219843

0.06

2014

705822554

9329750460

0.08

Interpretation:
The quick ratio of BSRM Limited shows not satisfactory level because it is less than the standard level
(accepted level) of 1:1. The ratio was 0.14 in 2012 and it decreased in 2013 by 8% . In 2014 it improved
by 2%. We can see that the quick ratio is not adequate and not desirable. It indicates that firm has large
portion of current assets that cant be convertible into cash very easily.
3. Receivables Turnover = Net Credit sales / Average Net Receivables
YEAR

Net Credit sales

Average Net
Receivables

Receivables Turnover

2012

14043421488

643028738

21.8

2013

8602415008

587738788

14.6

2014

8049886582

541330358

14.9

Interpretation:
From the above calculation we can see that, the level of receivable turnover gradually decrease in year by
year. The highest level of Receivables turnover was 21.8 times in 2012 which indicates its extension of
credit and collection of accounts receivable are efficient. In 2013 the level of receivables turnover reduced
significantly that the firm should re-assess its credit policies in order to ensure the timely collection of
credit sales that is not earning interest for the firm.

4. Inventory Turnover = Cost of goods sold / Average Inventory


YEAR

Cost of good sold

Average Inventory

Inventory Turnover

2012

13345900813

4954613555

2.69

2013

8102322738

5327992976

1.52

2014

7862344633

4707093435

1.67

Interpretation:
The Inventory turnover ratio of BSRM Limited is 2.69, 1.52 and 1.67times for the year 2012 to
2014 respectively. Which is good for the firm. Because it does mean they prefer to storage their
products for limit times. So the activity or liquidity is satisfactory. And inventory turnover of
Nestle has the large investment in inventories relative to the amount needed to service sales.
3.2.3.2 PROFITABILITY RATIOS
1. Gross Profit Ratio = Gross Profit * 100 / Sales
YEAR

Gross Profit

Net Sales

Gross Profit Ratio

2012

697520675

14043421488

4.97%

2013

500092270

8602415008

5.81%

2014

187541949

8049886582

2.33%

Interpretation: The above calculation shows a downward trend from 2012 to 2014, but the ratio considerably
decreased in the year 2014.BSRM limited has reasonable gross margin to cover all operating
expenses and building up of results. From the analysis it is clear that, Gross Profit Ratio is
highest in the year 2013 with a ratio of 5.81% and lowest in the year 2014 with a ratio of 2.33%.
Gross profit margin fluctuation is not stable which may affect firms pricing policies.
2. Net Profit Ratio =

Net Profit * 100 / Sales

YEAR

Net Profit

Sales

Net Profit Ratio

2012

453924187

14043421488

3.23%

2013

943818621

8602415008

10.97%

2014

116033236

8049886582

1.44%

Interpretation:
The above figure shows an increasing and decreasing trend from 2012 to 2014. Net Profit is at its
highest in the year 2013 with a ratio of 10.97% and lowest in the year 2014 with a ratio of
1.44%. It means In 2013 BSRM translate its sales into actual profit more effectively than 2012.
In 2014, BSRM limited converted revenue into actual profit was less effective for the share
holders.
3. Asset turnover Ratio = Net Sales / Average Assets
YEAR

Net Sales

Average Assets

Net Profit Ratio

2012

14043421488

15847575196

0.89

2013

8602415008

19069799705

0.45

2014

8049886582

22032636072

0.37

Interpretation
We can see that the assets turnover decreased gradually from year 2012 to 2014. Asset turnover
ratio represents how many sales are generated from each Taka of company assets. Asset
consumption against sale was highest in 2012 with a ratio of 0.89, and lowest in 2014 with a
ratio of 0.37. That indicates BSRM limiteds start up in not very efficient with its use of assets.
4. Return on Asset = (Net Income x 100)/ Average Asset
YEAR

Net Income

Average asset

Return On Asset

2012

453924187

15847575196

3%

2013

943818621

19069799705

5%

2014

116033236

22032636072

1%

Interpretation
From the year 2012 to 2014 BSRM limited ROA percentage were .03, .05 and .01 respectively
which was not constant. That implies BSRM limited invested their asset moderately in 2012. In
2013, BSRM uses their assets more efficiently than previous year. Thus the lower return in 2014
suggests BSRM asset management should revised the policies and procedure to avoid
unfavorable profitability of the company.

5. Return on Equity = Net income*100 / Average Common Stockholders Equity


YEAR

Net Income

Average Common
Stockholders Equity

Return On Equity

2012

453924187

2894942982

6.03%

2013

943818621

3709007184

11.41%

2014

116033236

4214450637

1.35%

Interpretation
The above figure shows an increasing and decreasing trend from 2012 to 2014. The earnings
ability of BSRM Ltd. Or the common stockholders was good condition in 2012 and 2013 but
gradually decrease in 2014. Overall ROE ratios and performance of the company was poor
showing a decreasing trend which may not satisfactory for the investors to invest in BSRM since

they want high return. The major cause of this reduction may be due to the increase in
shareholders equity compare to the net income.
6. EPS = Net income / Weighted Average Common Stockholders Equity
YEAR

Net Income

Weighted Average
Common Stockholders
Equity

Earnings Per Share

2012

453924187

155851038

2.91

2013

943818621

155851038

5.06

2014

116033236

341775000

0.74

Interpretation
BSRM Ltd has got a deprived EPS during 2012, but in 2013 it is improved a lot and achieved a
positive EPS, which is much satisfying. In 2014 the earning per share of BSRM has decreased
significantly compare to previous year which is not good sign at all for shareholders of BSRM
because shareholders expect better EPS from an organization. Otherwise they would not
interested to invest anymore.
7. Price Earnings Ratio: Market price per share of stock / EPS
YEAR

Market price per


Share

EPS

Price earning Ratio

2012

68

0.74

91.89

2013

68.70

6.06

11.34

2014

87.70

2.92

30.03

Interpretation
From 2012 to 2014 P/E ratios of BSRM was 91.89, 11.34 and 30.03 respectively. BSRM had
high P/E ratio in 2012 compare to any other year which means they might have considered risky
investments for the investors. There is major decrease in P/E ratio in 2013 as there is increase in
EPS.

3.2.3.3 SOLVENCY RATIOS

1. Debt to Total Asset Ratio = Total liability / Total Asset


Year

Total Liability

Total asset

Debt to total Asset Ratio

2012

9314060947

16840346087

0.55

2013

13025390130

21299253323

0.61

2014

14201731663

22766018821

0.62

Interpretation
The debt-equity ratio of BSRM Ltd is preferable, though its debt is slightly increased during
2012 to 2014. the debt-equity ratio of 0.62 in 2009 implies that, BSRM has Tk.1 of owners
capital to pay the liability of Tk.0.62, which really indicates a better condition in this regard.

2. Time Interest Earned Ratio= Earnings before interest & tax / Interest expenses.

Year

EBIT

Interest Expense

Time Interest
Earned Ratio

2012

(272704903)

122823391

(2.22)

2013

43982718

140618261

(1.71)

2014

(554245912)

405599797

(1.37)

Interpretation:
It shows how many times the company can pay its interest with its income of one year, higher
the ratio will be more favorable for the organization. From the above calculation we can see that
BSRM ability to pay interest out of earnings is not satisfactory.