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A

PROJECT REPORTS
ON
A Comprehensive Study of Financial Strength of
Bata shoes company Ltd.

Report Submitted to
Dr. Abdul Kalam Technical university, Lucknow
In Partial Fulfillment for the award of Degree of
MASTER of BUSINESS ADMINISTERATION
Session: 2015-2017
Submitted to: Submitted by:
DR.SANDEEP KUMAR SAKSHI KANOJIA
(Head of Department) (MBA 3 SAMESTER)
IIMT management collage ROLL NO.1507270068
IIMT MANAGEMENT COLLEGE
Ganga Nagar, Mawana Road, Meerut (UP)

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ACKNOWLEDGEMENT

On completing this project it is my pleasure to that all these who have helped
me during the course of the project.
I acknowledge the support and input provided by the faculty Staff and study of
BATA SHOES COMPANY LIMITED
I am thankful to Mrs. Mani kansal who allowed me to Carry out the study and
use their different official andrtant Documents useful for my project.
I would like to express my sincere thanks to my teacher for their voluble
guidance and suggestion.

(Sakshi kanojia)

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DECLARATON

I hereby declare that this work entitled BATA SHOES COMPANY


LIMITED is my work carried out under guidance of my faculty guide
Mrs. Mani kansal this report neither full Not in past has ever been submitted
for award of any other Degree.

( Sakshi kanojia)

PREFACE

Summer Training in any organization is an attempt to provide students a project


input and exposure to the real world situation in which he has to work in future.
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The conceptual knowledge acquired by management student is best manifest in
the project they undergo as a part of the curriculum BBA.
I have got a chance to undergo practical training in BATA SHOES
COMPANY LIMITED.
The project gives a perfect went to my understanding of the organization
especially of the account department and understanding about the different
policies of the BATA SHOES.

(Sakshi kanojia)

TABLE OF CONTENT
S.No. PARTICULAR PAGE NO.

1. INTRODUCTION OF COMPANY 8-19

2. COMPANY PROFILE 20-24

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3. OBJECTIVE OF COMPANY 25-27

4. RESEARCH METHODALOGY 28-35

5. RATIO ANALYSIS 36-57

6. DATA CALLECTION 58-67

7. DATA INTERPRETATION 68-86

8. FINDING 87-88

9. RECOMMENDATIONS 89-90

10. CONCLUSION 91-93

11. BIBLIGRAPHY 94-95

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INTRODUCTION OF COMPANY
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BATA BANGLADESH is affiliated to the Bata Shoes organization, the worlds
largest footwear manufacturing and marketing organization Bata was started its
operation in BANGLADESH in 1962 incorporation in BANGLADES in 1972.
Currently, BATA BANGLADESH operates manufacturing plant tong And
Dhamrai, BATA BANGLADESH is production around 110,000 Paris of shoes
daily. It has amadern Tannery with the latest technological facilities to process
5millon square feet of leather yearly. The Tannery is quaffed with a high-tech
effluent treatment plant ensuring a pollution free environment for both workers
and locality where we operate. BATA BANGLADESH sells all kind of
footwear which is classified in alignment with market sectors as follows:-

DOMESTIC MARKET:-under the trademarks of ,Bata, power,


weinbrenner, Bubble gummers, narthstar, and marie Claire, Through a
county wide distribution network comprising retail stores, DSPs and
independent dealers.

OVERSEAS MARKET:-under the trade market its own brands to sister


companies and the Middle East.
From 1914 to 1918 the number of Batas employees in creased ten times. The
company opened own stores In Zinc, Prague, Liberec, Vienna and Pilsen,
among other towns.

Its currency devalued by 75% demand for products dropped, production was
cut back and unemployment was at an all time High. The Companys worker
agreed to a temporary 40% reduction in wages, in turn, BATA provided food
clothing and other necessities at half price.
Consumer response to the price drop was dramatic while the mast competitors
were forced to close crisis in demand between 1923 and 1925, Bata was
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expanding as demand for the in expensive shoes grew rapidly. The Bata shoes
company increased production and hired more workers, Batmen and their
families had at their disposal all the necessary everyday life service: - housing
shops, school, hospital etc.
Bata also began to build towns and factories outside of czecho Slovakia
(Poland, Latvia, Romania, Switzerland, France) and to diversify into such
industries as tanning(1915),The energy industry (1917),agriculture (1917),
forest forming (1918), brick manufacturing (1918), wood processing (1919)
Construction industry (1924) Chemical production (1928), insurance (1930),
motor transport (1930)sea transport(1932),Coal mining (1932), and river
transport(1938).
In 1923 the company boasted 112 branches. In 1924 Tomas Bat a displayed his
business acumen by figuring out how much turnover he needed to make with
his annual plan weekly plan and daily plan. Bat a utilized four types of wages
fixed rate, individual order basedrate collective take rate and profit contribution
rate. Form 1926to 1928 the business blossomed as productivity raze 75% and
the number of employees increased by 35 percent.
The entrepreneur created educational organizations such as the Bat a school of
work and introduced the five day work week. By 1931 there were factories in
Germany, England the Netherlands, Poland and in other countries.

At the time of Tomas death the Bata Company employed 16500 people,
maintained 1,645 shops and 25 enterprises.

Czech Pronunciation [toma baca]. His brother Antonio and his sister Anna,
whose family had been cobblers for generation. The Company employed 10

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full-time employees with a fixes work schedules and regular weekly waye, a
rare find in its time

Tomas Antonio and their sister Anna Bata

In the summer of 1895, Tomas fund himself facing financial difficulties and
debts abounded. To overcome these serious setbacks, Tomas decided to sew
shoes from canvas instead of leather. This type of shoes become very popular
and helped the company grow to 50 employees for years later, Bata installed its
first steam-driven machines, beginning a period of repaid modernization. In
1904 Tomas Bata introduced mechanized production Techniques that

Allowed the Bata Shoes Company to become one of the first mass producers of
Shoes in Europe. Its first mass product, the Batovky was a leather and Textile
Shoes for working People that was notable for it simplicity, Style, light weight
and affordable price. Its success helped fuel the Companys growth
And by1912 Bata was employing 600 full-time workers, plus another several
hundred who worked out of their home in neighboring villages.

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The Retail channel sold 9.3 million pairs of shoes and with a turnover of Tk.
4.6
Billion represents a 9% growth against last year. To achieve this outstanding
growth
In spite of global recession, the company took several initiatives like product
Innovation, aggressive marketing programmers, market expansion, human
Resource development, operational efficiency, team work etc.
During the year, the company opened 23 new stores and renovated 16 potential
Stores. The new stores generated additional turnover of Tk. 105 million. More
than
500 new lines were introduced before the biggest festival of Eid-ul-Fitre, which
created a sensation among our valued customers.
In 2012, we embarked on several marketing events to highlight our brand
image and to increase customer
Awareness. Bata Bangladesh introduced many exclusive new lines of shoes the
majority of which were during
Festival periods. These new arrivals were introduced in different Bata brands.
Bata Bangladesh organized the Annual Sales Conference for all

Store and depot managers where the business plan with


Appropriate business targets were highlighted and top achievers
Were rewarded. The program ended with a colorful Fashion show
And cultural event.
We also campaigned during the Bengali New Year. In this campaign
We highlighted our summer collection all over the country.
Shoemaker to the world
Consumer response to the price drop was dramatic. While most competitors
were forced to close because of the crisis in demand between 1923 and 1925,
Bata was expanding as demand for the inexpensive shoes grew rapidly. The
Bata Shoe Company increased production and hired more workers. Zlin
became a veritable factory town, a "Bataville" covering several acres. On the
site were grouped tanneries, a brickyard, a chemical factory, a mechanical
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equipment plant and repair shop, workshops for the production of rubber, a
paper pulp and cardboard factory (for production of packaging), a fabric
factory (for lining for shoes and socks), a shoe-shine factory, a power plant and
a farming activities to cover both food and energy needs... Horizontal and
vertical integration. Workers, "Batmen", and their families had at their disposal
all the necessary everyday life services: housing, shops, schools, hospital, etc.

International growth

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Tomas Bata
In 1932, at the age of 56, Tomas Baa died in a plane crash
during takeoff under bad weather conditions at Zlin Airport.
Control of the company was passed to his half-brother, Jan, and
his son, Thomas John Bata, who would go on to lead the
company for much of the twentieth century guided by their
fathers moral testament: the Bata Shoe company was to be
treated not as a source of private wealth, but as a public trust,
a means of improving living standards within the community
and providing customers with good value for their money.
Promise was made to pursue the entrepreneurial, social and
humanitarian ideals of their father. The Baa company was
apparently the first big enterprise to systematically utilise
aircraft for company purposes, including rapid transport of
lesser personnel on business like delivery of maintenance men
and spares to a location where needed, originating the practice
of business flying.

In popular culture

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The 1968 Czech film All My Compatriots by Vetch Jenny, in
a scene set in 1948 refers to Bata putting small
shoemakers out of business.

In Susan Elderkin's 2000 novel Sunset Over Chocolate


Mountains one of the three narrative voices is Eva, a
worker in a Bata factory in Partiznske, Slovakia.

Emil Ztopek worked in a Bata factory in Zlin.

Bata-ville: We are not afraid of the future is a 2005


documentary produced and directed by the charming
artistic duo Karen Guthrie and Nina Pope that documents a
party of former UK Bata workers on a coach trip to the
headquarters of the company at Zlin.

External links
Media related to Bata Shoes at Wikimedia Commons

Bata Shoes Worldwide

Bata Memories history of Bata community in Essex, UK

"Bata-ville We are not afraid of the


future": somewhere.org.uk/bata-ville / bata-ville.com, Som
ewhere, 2007 United Kingdom "Against the backdrop of
economic

regeneration, former employees of two now closed UK Bata


factories are led on a unique journey through Bata's legacy
and across a changing Europe."

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Bata Industrials

Retrieved from "http://en.wikipedia.org/w/index.php?


title=Bata_Shoes&oldid=652202111"
Categories:

Bata Shoes

Clothing retailers

Companies established in 1894

Shoe companies of Switzerland

Zlin

Hidden categories:

All articles with dead external links

Articles with dead external links from November 2013

Manufacturing
Bata Shoe Company (Bangladesh) Limited operates two manufacturing
facilities
One in Tongi and the other in Dhamrai. With a production capacity of 36
million pairs
Of shoes yearly. In 2013 company produced over 30 million pairs. Currently
company
Continues producing quality & fashionable shoes to respond to customers
demand.

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The company operates two modern manufacturing facilities, one in Tongi and
the other in Dhamrai. Last year, the two manufacturing facilities produced a
total of more than 28 million pairs of shoes.

Bata Housing

Non Retail
Non Retail business played a vital role in the companys total turnover in 2012.
This business channel includes 5
Different divisions namely Dealers Support Program (DSP), Wholesalers,
Rural Sales, Department Stores and
Industrial & Institutions. The company focused on the big volume dealers to
expand our market share. In addition,
Emphasis was given to open new dealers. More than 70 new dealers were
opened last year which contributed around
Tk. 104.5 million turnovers. Currently, the company has more than 1,000 DSPs
and wholesalers running under a sound
Meaningful business policy focused on development of good relationship.
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For retaining market leadership, the company focuses on appropriate shoe
design and product development to meet
The needs of the market. In communications with partners, the company
organized a national Road Show of new products and received excellent

Positive feedback from customers to develop the right products and


services.

Present
After the global economic changes of the 1990s, the company closed a number
of its manufacturing factories in developed countries and focused on expanding
retail business. Bata moved out of Canada in several steps. In 2000, it closed its
Batawa factory. In 2001, it closed its Bata retail stores, retaining its "Athletes
World" retail chain. In 2004, the Bata headquarters were moved to Lausanne,
Switzerland and leadership was transferred to Thomas G. Bata, grandson
of Tom Baa. The Bata headquarters building in Toronto was vacated and
eventually demolished to much controversy. In 2007, the Athletes World chain
was sold, ending Bata retail operations in Canada. As of 2013, Bata maintains
the headquarters for its "Power" brand of footwear in Toronto. The Bata Shoe
Museum, founded by Sonja Bata, and operated by a charitable foundation, is
also located in Toronto.
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Although no longer chairman of the company, the elder Mr. Bata remained
active in its operations and carried business cards listing his title as chief shoe
salesman. In 2008, Thomas John Bata died at Sunnybrook Health Sciences
Centre in Toronto at the age of 93.

Bata estimates that it serves more than 1 million customers per day, employing
over 30,000 people, operates more than 5,000 retail stores, manages 27
production facilities and a retail presence in over 90 countries mostly in Asia,
Europe and Australia. Bata has a strong presence in countries like India where
it has been in existence since 1931. Bata India has five factories and two
tanneries. The Mokameh Ghat tannery in Bihar (1952) is the second largest in
Asia.

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Company profile
TYPE:-Private company
INDUSTRY: Retail and manufacturing
FOUNDED:-Zlin, Austria-Hungary (1894)
FOUNDER:-Tomas Bat a
HEADQUARTER:-Lausanne, Switzerland
AREA SERVED:-Footwear, clothing and fashion accessary
Owner:-Bata family
SLOGAN:-I LOVE MY SHOES
WEBSITE:-www.bata.com
Director:-Shaibal Sinha
Present Position:-Chief financial officer Bata emerging market, Singapore.
Previous Position:-Chief financial officer, Bata India.
Chairman:-Fernando Garcia Restrepo.
Present Position:-Group managing Director, Bata Emerging Markets
(WEST).
Factories:-Tongi Guipure, Dhamrai Dhaka.

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Registered officer:-Bata shoes company (Bangladesh) Limited Tongi
industrial Area Tongi Gazipur.
Legal Advisar:-Sahmed & Associates, Law valley, Malik law Associates.
Company Secretory:-Md Hashim Reza.
Bankers:-Eastern Bank Ltd., Dutch Bangla Bank Ltd., HSBC Ltd.,
Islamic Bank (Bangladesh) Ltd.
Auditors:-Husain Farad &co., Chartered Accountants, House # 15, Road #
12 Block-f Niketon Gulshan-1 Dhaka 1212.
BATA (also known as Bata shoes organization) is a family owned global
footwear and fashion accessary manufacturer and retailer with acting
headquarter located in Lausanne, Switzerland organized into three business
unit. BATA Europe, based in ltaly BATA emerging market (Asia pacific, Africa
and Latin America) based in Singapore, and BATA protective (world wide B2
Boperations) based in the nether land, the organization has a retail presence in
over 70 countries and production.

BATA BRAND
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Bata (Baa in the Czech Republic)
Bata Comfit (comfort shoes)
Ambassador (classic men's shoes)
North Star (urban Shoes)
Weinbrenner (premium outdoor shoes)
Marie Claire (women's shoes)
SunDrops (women's shoes)
Bubblegummers (children's shoes)

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Baby Bubbles (children's shoes)
Safari (desert shoes)
Power (athletic shoes)
Hush Puppies (premium shoes)
Patapata (flip flops)
Toughees (school shoes)
Verlon (school shoes)
Teener (school shoes)
Bata Industrials (work & safety footwear)
SPARX (sport shoes)

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Objective of study
The basic objective is to analyze the business strategy of Bata shoes company
(Bangladesh) Ltd. based on Companys.
Financial report performance of previous year, as well as do accounting
analysis to identify how financial reports are dependent &manipulated by
different accounting policies also evaluating company future performance
with the help of prospective analysis.
To analyze the financial position of the company.
To know the allocation of the funds.
To know the working capital turnover in relationship with sales.
To analyze the ability to quickly convert the account receivable.
To analyze the net profit margin due to production cast is low or high.
To find out the investment in total assets is property or not.
STATISTICAL TECHNIQUE:-we used bar chat and line chart to
interpret the processed data.
NATURE OF DATA:-data had been used during the preparation of this
report is secondary data.
SOURCE OF DATA:-The report was prepared mainly based on the
secondary data was collected from the internet, newspaper and the
company annual reports. The report prepared from the analysis of the raw
data is of the formal type and the information from the secondary data
was used to support the finding the financial analysis.
PERIOD UNDER CONSIDERATION:-data for the last financial years,
starting from 2005 up to 2009, had been taken under consideration while
preparing this report.
NATURE OF ANALYSIS:-we mainly relied on crass sectional study to
compare between the two rival firms.
STANDARD OF COMPARISON:-we relied on crass sectional study as
standard for comparison of the performance of BATA SHOES
COMPANY (BANGLADESH) Ltd.
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RESEARCH METHADALODY

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Research in an investigation for finding the salving of a problem it is the
process of creating something new.
Research in common parlance refers to knowledge. Once can also define
research as a scientific investigation search for pertinent information on a
specific topic. In fact, research is an art of scientific investigation. The
Advanced Learners Dictionary of Current English lays down the
meaning of research as a careful investigation or inquiry especially
through search for new fact in any branch of knowledge.
The marketing research is a process of involves of inters related activities,
which over lap and to rigidly follow a particular sequence.
It consists of the following steps.
Formulating the objective of the study
Designing the method of data collection
Selecting the data
Processing the analyzing the data
Reporting the findings.

RESEARCH PROCESS
Formulating the research problem

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Extensive literature survey

Development of waking hypothesis

Preparing the research design

Determining sample design

Collection of data

Analysis of data

Hypothesis testing

Generalization and interpretations

Preparation of report or thesis

RESEARCH DESIGN
The formidable problem that follows the task of defining the research problem
is the preparation of the design of the research project, popularly known as the
research design. Decisions regarding what, where, when, how much, by what
means concening an inquiry or a research study constitute a research design. A
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research design is the arrangement of condition for collection and analysis of
data in a manner that aims to combine relevance to the research purpose with
economy in procedure. AS such the design includes an outline of what the
researcher will do from writing the hypothesis and its operational implication
to the final analysis of data. More explicitly, the design decision happens to be
in respect of:
What is the study about?
Why is the study being made?
Where will the study be carried out?
What type of data is required?
Where can the required data are found?
What periods of time will the study include?
What will be the sample design?
What techniques of data collection will be used?
How will the data be analyzed?
In what style will the report be prepared?

TYPES OF RESEARCH DESIGNS


1. Research design in case of exploratory research studies
2. Research design in case of descriptive and diagnostic research
studies
3. Research design in case of hypothesis-testing research studies

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DEFINE OF RESEARCH DESIGNS
1. Research design in case of exploratory research
studies:-Exploratory research studies rare also termed as formulative
research studies. The main purpose of such studies is that of formulating a
problem for more precise investigation or of developing the working
hypotheses from an operational point of view. The major emphasis in
such studies is on the discovery of idea and insights. As such the research
design appropriate for such studies must be flexible enough to provide
opportunity for considering different aspect of a problem under study.
Inbuilt flexibility in research design is needed because the research
problem. Broadly defined initially, is transformed into one with more
precise meaning in exploratory studies, which fact may necessitate
changes in the research procedure for gathering relevant data. Generally,
the following three methods in the context of research design for such

3.RESEARCH DESIGN IN CASE OF HYPOTHESIS-


TESTING RESEARCH STUDIES:- Hypothesis-testing research
studies(generally known as experimental studies) are those where the
researcher tests the hypotheses of causal relationships between variables. Such
studies require procedures that will not only reduce bias and increase reliability,
but will permit drawing inferences about causality. Usually experiments meet
this requirement. Hence, when we talk of research design in such studies, we
often mean the design of experiment.

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Today, the experimental designs are being used in the context of agricultural
operations; we still use, though in a technical sense, several terms of agriculture
(such as treatment, yield, plot, block etc.) in experimental designs.

METHODS OF DATA COLLECTION

While deciding about the method of data collection to be used for the study, the
research should keep in mind two types of data viz.., primary and secondary.
The primary data are those which are collected afresh and for the first time, and
thus happen to be original in character.
The Secondary data, on the other hand, are those which have already been
collected by someone else and which have already been passed through the
statistical process.
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1. COLLECTION OF PRIMARY DATA
2. COLLECTION OF SECONDARY DATA

2. COLLECTION OF SECONDARY DATA:-Secondary data


means data that are already available i.e., they refer to the data which have
already been collection and analyzed by someone else. Secondary data may
either be published data or unpublished data Usually published data are
available in:(a) various publications of the central, state aur local government;
(b) various publication of foreign governments or of international bodies and
their subsidiary organizations; (c) technical and trade journals;(d) book,
magazines and newspaper;(e) reports publications of various associations
connected with business and industry, bank, stock exchanges, etc.;(g) Public
record and statistics, historical documents, and other sources of published
information.

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INTRODUCTION OF RATIO
Accounting to MYERS Ration analysis is a study of relationship among
various financial factors in a business
Ration analysis is a technique of analysis the financial statement by
commutating ratios. In other words, ratio analysis is a process of determining
and interpreting relationship between the items of financial statement to
provide a meaningful understanding of the performance and financial position
of an enterprise. Ratio analysis is an accounting tool to present accounting
variables in a simple, concise, intelligible and understandable form.
A ratio is a mathematical relationship between two related items expressed in
quantitative form. When this definition of ration is explained with reference to
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the items shown in financial statement, then it is called accounting ratio.
Hence, an accounts dating ratio is defined as quantitative relationship between
two or more items of the financial statements connected with each other.
This quantities relationship may be expressed in either of the following
(a) IN Proportion. In This form the amounts of the two items are being
expressed in a common denominator, the example of this form of
expression is the relationship between current assets and current liabilities
as 2:1

In rate of Time or Coefficient. In this form, a quotient obtained by


dividing one item by another item is taken a unit of expression. The

Example of this form is sales divided by stock (say it comes 6); thus 6
timses is the ratio between sales stocks. It is important to note that when
ratio is expressed in this form. It is turnover and is written in times.

OBJECTIVE OF RATIO ANALYSIS


The objective of ratio analysis is to judge the earning capacity, financial
soundness and operating efficiency of a business organization. The use of ratios
in accounting and financial management analysis helps the management to
know the profitability, financial position (liquidity and solvency) and operating
efficiency of an enterprise.
Trends in costs, sales, profits and other related facts are revealed by
the past ratios and future events can be forecasted on basis of such
trends.
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Ideal ratios may be constructed and the relationship found
between strategic ratios can be used for achieving the desired co-
ordination.
Ratios may be used as instrument of management control
particularly in the areas of sales and costs.
It helps in investment decisions to make profitable investment.
Ratios may also be used as a measure of efficiency. Since ratios
bring uniformity in financial data, inter-firm comparison in made
possible

ADVANTAGES&USE
OFRATIOANALYSIS
The advantages derived by an enterprise by the use of accounting ratios are:

(1) Useful in analysis of financial statements: Accounting


ratios are useful for understanding the financial position of the
enterprise. Bankers, investors, creditors, etc.., all e ratios.
(2) Useful in simplifying accounting figures: Accounting
ratios simplifies, summarizes and systematizes a long array of
accounting figures to make them understandable. Its main contribution
lies in communicating precisely the inter-relationship which exists
between various elements of financial statement. In the word of
Biramn and Dribin, Financial Ratios are useful because thy
summarise briefly the results of detailed and complicated
computation.
(3) Useful in judging the operationg efficiency of
business: Accounting ratios are essential for understanding the
affairs of an enterprise, specially its operationg efficiency. Accounting
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raticos are also useful for diagnosis of the financial health of an
enterprise. This is done by evaluating liquidity, solvency, and
Profitability .etc. Such an evaluation enables management to assess
financial requirement and the capabilities of various business units.
(4) Useful for forecasting: Ration are helpful in business planning
and forecasting. The trend ratios are analyzed and used as gunide to
future planning. What should be the course of action in the immediate
future is decided, many a times, on the basis of trend ratios, i.e., ratios
calculated for a number of years

(5) Useful in locating the weak spots: Accounting ratios are of


great assistance in locating the weak spots in the business even though the
overall performance may be quite good. Management can then pay attention to
the weakness and take remedial action. For example, if the firm finds that the
increase in distribution expenses is more than proportionate to the result
achieved; these can be examined in detail and depth to remove any wastage
that may be there.

(6) Useful in Inter-firm and Intra-firm comparison: A firm


would like to compare its performance with that of other firms and of
industry in general. The comparison is called inter-firm is to be
comparison. It is called intra-firm comparison.

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LIMITATIONS OF RATO ANALYSIS
Ratio analysis is a very popular and useful tool of analysis of financial
statements but one should be aware of its limitations also. The following are
the limitations of accounting ratios:

False result: Ratios are calculated from the financial


statements; so, the reliability of ratio and its analysis is dependent
upon the correctness of the financial statement. If the figures are
not true and fair, the analysis gives a false picture of the affaires.

Different meanings are put on different terms:


Elements and sub-elements of financial statement are not uniquely
defined. An enterprise may work out ratios on the basis of profit
after and income tax; another enterprise may work out ratios on the
basis of profit after interest but before tax; a third enterprise may
take profile before interest and tax.

Not comparable if different firms follow different


accounting policies: When results of two enterprises are
being compared, it should be kept in mind that the enterprises may
follow different accounting policies. For example, one enterprise
may charge depreciation on the straight line basis and the other on
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Diminishing value. Such differences will adversely affect the
comparison of the financial statements.

Affect of price level changes: change in price level affects


the comparability ratios. But no consideration is given to price
level changes in the accounting variables form which ratios are
computed. This handicaps the utility of accounting ratios.

Ignores qualitative factors: Accounting ratios are, as a


matter of fact, tools of quantitative analysis only. But sometimes it
is quite possible that the qualitative factore may override the
quantitative aspects.

Difficult to evolve a standard ratio: The financial and


economic scenario is dynamic; therefore, it is very difficult to
evolve a standard ratio acceptable for all time.

Window dressing: Ratios may be affected by window


dressing. Manipulation of accounts is a way to conceal vital facts
and present the financial statements better than what it actually is.

Personal bias: personal judgments play an important role in


preparing financial statement and, therefore, the accounting ratios
are also not free from this limitation.

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Establishing true profitability and financial position of a company may be
classified as:

Liquidity Ratios: Current Ratio and Liquidity Ratio.


Solvency Ratios: Debt-Equity, Total Assets to Debt Ratio and
Proprietary Ratio.
Activity Ratios: Inventory Turnover Ratio, Debtor Turnover
Ratio or Receivables Turn-over Ratio, Payables Turnover Ratio,
Working Capital Turnover Ratio, Fixed Assets Turnover Ratio.
Profitability Ratios: Gross Profit Ratio, operating, Net Profit
Ratio, Return on Investment, Earning Per Share, Dividend Per
Share, Price Earning Ratio.

LIQUIDITY RATIOS (SHORT-TERM


SOLVENCY)
Liquidity ratios measure the short-term solvency, i.e., the firms ability to pay
its currency dues. They comprise of current ratio and liquid ratio.

Current ratio or working capital ratio


Current ratio is a relationship of current assets to current liabilities and is
computed to assess the short-term financial position of the enterprise. It means
current ratio is an indicator of the enterprises ability to meet its short-term
obligations. Current assets are the assets that are either in the form of cash
equivalents or can be converted into cash or cash equivalents in a short time
(say, within a years time) and current liabilities are liabilities repayable in the
short time.

Computation: The ratio is calculated as follows:


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Current Ratio = Current Assets/Current liabilities

Objective and significance


The objective of calculating current ratio is to assess the ability of the
enterprise to meet its short-term liabilities promptly. It is used to assess the
short-term solvency of the business enterprise since this ratio assumes that
current assent can be converted into cash to meet current liabilities. As a
normal rule, current assets should be twice the current liabilities.
A low ratio indicates that enterprise may not be able to meet its current
liabilities on time and inadequate working capital. On the other hand a high
ratio indicates funds are not used efficiently and are lying idle. It indicates poor
investment policies of the management. The current ratio, thus, throws a good
light on the short-term financial position and policy of a firm. An enterprise
should have a reasonable current ratio. Although there is no hard and fast rule
yet a current ratio of 2:1 is considered satisfactory.
Current Ratio is calculated at a particular data and not for a particular period.

42
Liquidity ratio or ratio or quick ratio or acid test ratio
Liquidity Ratio is a relationship of liquid assets with current liabilities and is
computed to assess the short-term liquidity of the enterprise in its correct form.
Liquid assets put against the current liabilities given
Computation: This is calculated as follows:
Liquidity Ratio = Liquid assets or quick assts/Current Liabilities
Quick Assets = Current Assets (Stock + Prepaid Expenses)

Objective and significance


The objective of computing liquid ratio is assess the short-term solvency of the
enterprise. A part of the current assets are not readily realizable or convertible
into cash. Therefore, the current ratio does not adequately the ability of the
enterprise to discharge the current liabilities as and when they fall due whereas
while computing the liquid assets, a part of current assets that are not liquid are
eliminated. This ratio is an indicator of short-term debt paying capacity of
enterprise and thus, is a better indicator of liquidity. This ratio is very important
for bank and financial institutions but not for manufacturing concerns.
The comparison of current ratio with liquidity ratio would indicate the degree
of inventory help. A high liquidity ratio compared to current ratio may indicate
under stocking while a low liquidity ratio indicates overstocking.

43
(1) SOLENCY RATIOS (LONG-TERM SOLVENCY)
The term solvency implies ability of an enterprise to meet its long-
term indebtedness and thus, solvency ratios convey an enterprises
ability to meet its long-term obligations. Important solvency ratios are:
Debt-Equity Ratio, Total Assets to Debts Ratio and proprietary Ratio.

Debt-Equity Ratio
The Debt-Equity Ratio is computed to ascertain soundness of the long-
term financial position of the firm. This ratio expresses a relationship
between debt (external equities) and the equity (internal equities). Debt
means long-term loans, i.e., debenture, loans (long-term) form
financial institution. Equity mean shareholder funds, i.e., preference
share capital, equity share capital, reserves less losses and fictitious
assets like preliminary expenses.

Computation: The ratio is ascertained as follows:


Debt-Equity Ratio = Debt (Long-term Loans)/Equity (Shareholders Funds)

The Debt-Equity Ratio indicates the proportion between shareholders


funds and the long-term borrowed funds. A higher ratio indicates a
risky financial position while a lower ratio indicates safer financial
position. A low debt-equity ratio implies the use of more equity than
debt which means a larger safety margin for creditors since owners
equity is considered as a margin of safety by creditors
And vice versa. Debt-equity ratio is acceptable if it is 2:1, which means
debt can be twice the

44
Objective and significance
The objective of debt-equity ratio is to arrive at an idea of the amount
of capital supplied to the enterprise by the proprietors and of asset
cushion or cover available to its creditors on liquidation. This ratio is
sufficient to assess the soundness of long-term financial position. It
also indicates the extent to which the firm depends upon out siders for
its existence. In other words, it portrays the proportion of total funds
acquired by way of loans.

PROPRIETARY RATIO
Proprietary Ratio established the relationship between proprietors
funds and total assets. Proprietors fund means share capital plus
reserves and surplus, both of capital and revenue nature. Loan and
fictitious assets, if any are deducted. This ratio shows the extent to
which the shareholders own the business. The difference between this
ratio and 100 represents the ratio of total liabilities to total assets.

Computation: This ratio is computed as follows:


Proprietary Ratio = Proprietors funds or Shareholders Funds/ Total
Assets (Excluding Fictitious Assets)

Higher the ratio, the better it is for all concerned.

Objective and significance


45
Proprietary ratio highlights the general financial position of the
enterprise. This ratio is of particular importance to the creditors who can
ascertain the proportion of shareholders funds in the total assets
employed in the firm.
A high ratio indicates adequate safety for creditors. But a very high ratio
indicates improper mix of proprietors fund and loan fund, which results
in lower return on investment. It is so because on loan fund, interest is
deductible as an expense and thus, the enterprise does not pay income tax
thereon. As a result, higher return on investment.

ACTIVITY RATIOS
Profit depends on the rate of turnover and the margin. Activity Ratios, also
termed as performance or turnover Ratios, judge how well the facilities at
the disposal of the enterprise are being utilized. In other words, these ratios
measure the effectiveness with which a concern uses resources at its
disposal. The ratios are usually calculated on the basis of sales or cost of
sales. Turnover ratio for each type of assets should be calculated separately.
Higher turnover ratio means, better use of capital or resources, which in
turn, means better profitability ratio. The important activity ratios.

Debtors turnover Ratio or Receivable Turnover Ratio


46
Debtors Turnover Ratio establishes the relationship between net credit sales
and average debtors (or receivables) of the year. Average debtors are
calculated by dividing the sum of debtor in the beginning and at the end by
Computation: This ratio is computed as follows:
Debtors Turnover Ratio = Net Credit Sales/Average Account Receivable
(Debtors+ Bills Receivable)
(The term Account Receivable includes Trade Debtors and Bills
Receivable)
In case details regarding opening and closing receivables and credit sale are
not given, the ratio may be worked out as follows:
Debtors Turnover Ratio = Total Sales/Accounts Receivable

Objectives and significance


This ratio indicates the number of times the receivable are turned over in a
year in relation to sales. It shows how quickly debtors are converted in to
47
cash and thus, indicates the efficiency of the staff entrusted with collection
of amount due for debtors. A high ratio is better since it would indicate that
debts are being are collected more promptly.
A standard ratio should be set up for measuring the efficiency. A ratio lower
than the standard would be indicating inefficiency in collection and more
investment in debtors than required.

Creditor or payable Turnover Ratios


Enterprises from which goods and services are purchased on credit on credit
are known as creditors and the bill accepted in lieu of credit purchases are
called bills payable.
The creditors and bills payable both are reckoned as total payable.
Creditors turnover ratio shows the relationship between net credit purchases
and total payable or average payable, whereas average payment period or
creditors velocity signifies the credit period enjoyed by the enterpricse in
paying creditors velocity signifies the credit period enjoyed by the enterprise
in paying creditors. These are calculated as follows:

(i) Creditors or payables Turnover Ratio= Net Credit purchases/ Total or


Averade payables* (Creditors + Bills Payable)
*Average payable
(opening Creditors + Opening B.P) + (Closing Creditors + opening B.P)/2
(ii) Average Payment period
= Total or Average Payables/Net Creditors Turnover Purchases No.pf
Months/Days in a year
Or
Months (or days) in a year/ Creditor Turnover Ratio
48
Objective and significance
The objective of calculating Creditors Turnover Ratio is to establish the
number of time the creditors are turned over in relation to purchases. A high
turnover ratio or shorter payment period show the availability of less credit
or early payments.
A high ratio also indicates that the enterprise is not availing the full credit
period. This boosts up the credit worthiness of the firm.
Thus, the lower the ratio, the better is the liquidity position of the firm, and
the higher the ratio, the lesser is the liquid position of the firm. For better
analysis, a comparative analysis of different firms in the same industry and
the trend may be used for different years.

Working Capital Turnover Ratio


Working Capital Turnover Ratio establishes the relationship between
working capital and sales. It indicates the number of time a unit invested in
working capital produces sales. This ratio indicates whether the working
capital has been effectively utilized or not. In fact, in the short run, it is the
49
current assets and current assets and current liabilities. Which play a major
role.
Computation: The ratio is computed as follows:
Working Capital Turnover Ratio= Net Sales = Number of Times
Working Capital

Working Capital= Current Assets- Current Liabilities

Objective and significance


The objective of computing the ratio is to ascertain whether or not working
capital has been effectively utilized in marking sale. In other words, it measures
the effective utilization of working capital. It also shows the number of time a
unit investment capital produces sales.
Higher the ratio, the better it is. But, a very ratio may indicate overtrading----
the working capital being inadequate for the scale of operatio
50
Fixed Assets Turnover Ratio
Fixed Assets Turnover Ratio establishes the relationship between fixed n ach
Assets and Net Sales indicating how efficiently they have been used is
achieving the sale. When compared with a previous period or with the
industry standard, it in dictates whether the investment in fixed assets has
judicious or not. This ratio is computed as Follow:

Fixed Assets Turnover Ratio = Net Sales = ..Times.


Net Fixed Assets
(i.e., Fixed Assets Depreciation)

Objective and significance


The objective of calculating Fixed Assets Turnover Ratio is to establish
whether the investment in fixed assets is justified in relation to the sale
achieved. A high ratio indicates efficient utilization of fixed assets. On the
other hand, a low ratio indicates inefficient utilization. An increase in the
ratio indicates that there is improvement in the utilization of fixed assets. If
there is a fall in the ratio, it indicates that fixed assets remained idle and
therefore, the management should investigate and determine the reason for
decline
51
(1) PROFITABILITY RATIOS
In general terms, efficiency in business is measured by profitability.
Profit as compared to the capital employed indicates profitability of the
enterprise. Thus, profitability is of utmost importance for a concern. If
a concern goes on losing money, its financial condition will definitely
be bad sooner or later. Thus, a measure of Profitability is the overall
measure of efficiency. Important Profitability ratios are: Gross Profit
Ratio, Operating Ratio. Net profit Ratio, Return on investment,
Earning per share, dividend per share, and price Earnings Ratio.

Gross Profit Ratio


This ratio established the relationship of gross profit on sale to net sale
of the firm, which is calculated in percentage.

Computation: This ratio is computed by dividing gross profit


By the net sale. It expressed as a percentages. In the form of formula,
the ratio may be expressed as follows:

Gross Profit Ratio = Gross profit/Net Sales100


Net Profit Ratio
Net profit establishes the relationship between net profit
and sale, i.e., it show the percentage of net profit
earned on the sales. Net profit is computed by
deducting all direct cost, i.e., cost of goods sold indirect
cost, i.e., administrative and marketing expenses,
finance charges and making adjustment for non-
operating expense form net sale and adding non-
operating incomes.

52
Computation: This ratio is computed by the
following formula:

Net Profit Ratio = Net Profit/Net Sales100

Sometimes net profit ratio is computed taking either


Profit Before tax (PBT) or Profit after Tax (PAT).
Accordingly, net profit ratios have the following
formulae:

Profit before Tax/Net Sales100


Or
Profit after Tax/Net sale100

Objective and significance:


The Net Profit Ratio is an indicator of overall efficiency of the
business. Higher the net profit ratio betters the business. These ratios
help in deterring the operational efficiency of the business. An increase
in the ratio over the previous period shows improvement in the
operational efficiency.

53
Decline means otherwise. A comparison with the industry standard is
also an indicator of the efficiency of the business.
Sometimes PBT/sale ratio is taken as better indicator of profitability
since tax liability on profit is beyond the control of the enterprise.

54
DATA CALLECTION
Bata Shoe Company Limited
Statement of Financial Position as at 31 December 2012

Note 2012 2011


Taka Taka
Assets
Property, plant and equipment 4 880,326,133 731,871,393
Capital work in progress 5 2,059,472 38,251,715
Investment in subsidiary 6 - 19,970,000
Prepayments of rent 10 132100,000 63835,963
Total non-current assets 1,014,485,605 853,929,071
Inventories 8 1,888,784,523 1,756,397,259
55
Accounts receivable 9 276,562,580 190,610,122
Advances, deposits and prepayments 10 566,731,442 443,022,574
Cash and cash equivalents 11 233,459,170 302,767,543

Total current assets 2,965,537,715 2,692,797,498


Total assets 3,980,023,320 3,546,726,569
Equity
Share capital 12 136,800,000 136,800,000
Reserves and surplus 13 1,717,200,579 1,424,274,906
Total equity attributable to
equity holders of the company 1,854,000,579 1,561,074,906
Liabilities
Deferred liability 14 123,817,664 150,704,000
Deferred tax liability 7 12,300,000 1,500,000

Total non-current liabilities 136,117,664 152,204,000


Creditors for goods 15 353,751,438 409,263,569
Creditors for expenses 16 420,194,568 300,735,251
Creditors for other finance 17 241,388,294 230,638,433
Accrued expenses 18 385,280,477 346,740,381
Provision for tax 19 530,956,889 483,230,866
Unclaimed dividend 34.2 58,333,411 62,839,163

Total current liability 1989,905077 1,833,447663

Total liabilities 2,126,022,741 1,985,651,663


Total equity and liabilities 3,980,023,320 3,546,726,569

Bata Shoe Company Limited Statement of Comprehensive


Income for the year ended 31 December 2012
Notes 2012 2011
Taka Taka

Revenue 20 7,384,505,735 6,647,846,013


Cost of sales 21 (4,718,506,064) (4,286,593,663)
Gross profit 2,665,999,671 2,361,252,350

Exchange gain/(loss) (4,130,083) (2,517,182)


Other income 22 26,776,981 21,210,803
Administration, selling and
distribution expenses 23 (1,683,027,051) (1,529,417,293)

Profit from operating activities 1,005,619,518 850,528,678


Finance income 24 21,335,940 6,071,420
Finance expenses 25 (4,440,402) (21,210,569)

Net finance income/(expenses) 16,895,538 (15,139,149)

56
Profit before contribution to workers'
profit participation fund 1,022,515,056 835,389,529

Contribution to workers'
profit participation fund (51,125,753) (41,769,476)
Profit before income tax 29 971,389,303 793,620,053
Income tax expense:
Current tax 19 288,673,000 204,503,000
Deferred tax 7 10,800,000 8,500,000
299,473,000 213,003,000
Profit for the year 671,916,303 580,617,053

Basic earnings per share


(par value Tk 10) 32 49.12 42.44

Bata Shoe Company Limited


Statement of Financial Position as at 31 December 2013
Notes 2013 2012
Taka Taka
Assets
Property, plant and equipment 4 932,544,605 880,326,133
Capital work in progress 5 - 2,059,472
Prepayments of rent 9.1 113,965,000 132,100,000
Total non-current assets 1,046,509,605 1,014,485,605
Inventories 7 2,167,843,253 1,888,784,523
Accounts receivable 8 435,657,233 276,562,580
Advances, deposits and prepayment 9 702,987,654 566,731,442
Cash and cash equivalents 10 257,439,710 233,459,170
Total current assets 3,563,927,850 2,965,537,715
Total assets 4,610,437,455 3,980,023,320
Total equity attributable to equity
holders of the company
Share capital 11 136,800,000 136,800,000
Reserves and surplus 12 2,119,884,143 1,717,200,579
Total equity 2,256,684,143 1,854,000,57
Liabilities
Deferred liability 13 134,506,744 123,817,664

57
Deferred tax liability 6 14,500,000 12,300,000
Total non-current liabilities 149,006,744 136,117,664
Creditors for goods 14 460,953,222 353,751,438
Creditors for expenses 15 443,624,893 420,194,568
Creditors for other finance 16 273,340,269 241,388,294
Accrued expenses 17 375,921,784 385,280,477
Provision for tax 18 586,559,130 530,956,889
Unclaimed dividend
64,347,270 58,333,411
Total current liabilities 2,204,746,568 1,989,905,077
Total liabilities 2,353,753,312 2,126,022,741
Total equity and liabilities 4,610,437,455 3,980,023,320

Bata Shoe Company Limited


Statement of Profit or Loss and other Comprehensive Income
For the year ended 31 December 2013
Notes 2013 2012

Revenue 19 7,878,975,170 7,384,505,735


Cost of sales 20 (4,857,762,141) (4,718,506,064)
Gross profit 3,021,213,029 2,665,999,671
Exchange gain/(loss) 4,351,351 (4,130,083)
Other income 21 18,424,860 26,776,981
Administration, selling and
Distribution expenses 22 (1,837,320,706) (1,683,027,051)
Profit from operating activities 1,206,668,534 1,005,619,518
Finance income 23 13,361,966 21,335,940
Finance expenses 24 (6,047,801) (4,440,402)
Net finance income/(expenses) 7,314,165 16,895,538
Contribution to workers' profit
Participation fund 25 (60,699,135) (51,125,753)
Profit before income tax 29 1,153,283,564 971,389,303s
Income tax expense:
58
Current tax 18 338,000,000 288,673,000
Deferred tax 6 2,200,000 10,800,000
340,200,000 299,473,000
Profit for the year 813,083,564 671,916,303
Basic earnings per share (par value Tk 10) 32 59.44 49.12

59
Bata Shoe Company Limited
Statement of Financial Position as at 31 December 2014
Notes 2014 2013
Assets

Property, plant and equipment 4 998,104,774 932,544,605


Capital work in progress 5 59,367,881 -
Prepayments of rent 9.1 136,911,904 113, 965,000
Total non-current assets 1,194,384,559 1,046,509,605

Inventories 7 2,159,099,409 2,167,843,253


Accounts receivable 8 455,472,117 435,657,233
Advances, deposits and prepayments 9 798,868,138 702,987,654

Cash and cash equivalents 10 292,396,800 257,439,710

Total current assets 3,705,836,464 3,563,927,850

Total assets 4,900,221,023 4,610,437,455

Total equity attributable to equity holders of the company

Share capital 11 136,800,000 136,800,000


Reserves and surplus 12 2,434,223,893 2,119,884,143

Total equity 2,571,023,893 2,256,684,143

Liabilities

Deferred liability 13 162,343,000 134,506,744

Deferred tax liability 6 750,000 14,500,000

Total non-current liabilities 163,093,000 149,006,744

Creditors for goods 14 526,075,948 460,953,222

Creditors for expenses 15 346,800,443 443,624,893


Creditors for other finance 16 262,185,527 273,340,269 Accrued
expenses 17 382,765,944 375,921,784

Provision for tax 18 579,559,130 586,559,130


Unclaimed dividend 68,717,138 64,347,270

Total current liabilities 2,166,104,130 2,204,746,568


60
Total liabilities 2,329,197,130 2,353,753,312

Total equity and liabilities 4,900,221,023 4,610,437,455

Bata Shoe Company Limited Statement of Profit or Loss and other


Comprehensive Income for the year ended 31 December 2014
Notes 2014 2013

Taka Taka

Revenue 19 8,076,995,037 7,878,975,170


Cost of sales 20 (4,945,486,549) (4,857,762,141)

Gross profit 3,131,508,488 3,021,213,029


Exchange gain/(loss) 6,886,918 4,351,351
Other income 21 20,221,586 18,424,860
Administration, selling and distribution expenses

22 (2,096,017,729) (1,837,320,706)

Profit from operating activities 1,062,599,263 1,206,668,534


Finance income 23 13,846,600 13,361,966
Finance expenses 24 (4,951,020) (6,047,801)

Net finance income 8,895,580 7,314,165


Contribution to workers' profit participation fund

25 (53,574,742) (60,699,135)

Profit before income tax 29 1,017,920,101 1,153,283,564


Income tax expense:

Current tax 18 331,000,000 338,000,000


Deferred tax 6 (13,750,000) 2,200,000

317,250,000 340,200,000

Profit for the year 700,670,101 813,083,564

Basic earnings per share (par value TK 10) 32 51.22 59.44

61
Bata Shoe Company Limited Statement of financial position
For the year ended 31 December 2015
31 December 31 December
In Taka Note 2015 2014

Assets

property, plant and equipment 6 1,049,379,561 1,057,472,655

prepayments of rent 10.1 106,368,047 136,911,904

deferred tax assets 7 1,600,000 -

Non-current assets 1,157,347,608 1,194,384,559

inventories 8 2,266,352,009 2,159,099,409

accounts receivable 9 906,907,928 455,472,117

advances, deposits and prepayments 10 554,607,909 565,394,311

cash and cash equivalents 11 351,378,131 292,396,800

Total current assets 4,079,245,977 3,472,362,637

Total assets 5,236,593,585 4,666,747,196

Equity share capital 12 136,800,000 136,800,000

reserves and surplus 13 2,828,208,424 2,434,223,893

Total equity 2,965,008,424 2,571,023,893

Liabilities

deferred liability 14 177,589,000 162,343,000

deferred tax liabilities 7 - 750,000

Non-current liabilities 177,589,000 163,093,000

creditors for goods 15 430,751,625 526,075,948

62
creditors for expenses 16 467,139,166 346,800,443

creditors for other finance 17 312,235,403 262,185,527

accrued expenses 18 410,874,941 382,765,944

unclaimed dividend 75,879,187 68,717,138

current tax liabilities 19 397,115,839 346,085,303

Total current liabilities 2,093,996,161 1,932,630,303

Total liabilities 2,271,585,161 2,095,723,303

Total equity and liabilities 5,236,593,585 4,666,747,196

63
Bata Shoe Company Limited Statement of Profit or Loss and other Comprehensive
Income for the year ended 31 December2015

In Taka Note 2015 2014


Revenue 20 8,522,801,619 8,076,995,037
cost of sales 21 (5,094,404,901) (4,945,486,549
gross profit 3,428,396,718 3,131,508,488
exchange gain 5,239,590 6,886,918
other income 22 8,259,742 20,221,586
administration, selling and distribution expenses
23 (2,195,830,942) (2,096,017,729)
Operating profit 1,246,065,108 1,062,599,263
finance income 24 28,842,956 13,846,600
finance expense 25 (4,309,610) (4,951,020)
Net finance income 24,533,346 8,895,580
profit before contribution to wppf 1,270,598,454 1,071,494,843
contribution to workers' profit participation fund
26 (63,529,923) (53,574,742)
Profit before tax 30 1,207,068,531 1,017,920,101
income tax expense 31 (375,324,000) (317,250,000)
Profit for the year 831,744,531 700,670,101
other comprehensive income - - Total comprehensive income

60.80 51.22
mmm

64
65
Data Interpretation for 5 year
1. Solvency Ratio:

a. Current Ratio:

Current Ratio = Current Assets /Current Liability

S.N Year Current Assets Current Liability Ratio

1 2011 2,692,797498 1833,447,663 1.468

2 2012 2965537,715 1989,905077 1.490

3 2013 3563,927,850 2,204,746,568 1.616

4 2014 4900,221,023 2,329,197,130 0.2110

5 2015 5,236,593,585 2,271,585,161 2.3052

66
6000000000

5000000000

4000000000

current Assets
3000000000
Current Liability
Ratio
2000000000

1000000000

0
2011 2012 2013 2014 2015

Interpretation
After analysis the Current Ratio of past 5 year of Bata shoes company
(Bangladesh) Ltd. We come to know the fact that companys operating
the above the standard during these 5 year. But the Current Ratio of the
2011 is extremely low among all which show the excess investment in
current assets whereas in the next year 2013 show that they increase
their investment in the assets but they also increase their Current
Liabilities so the position will decrease. Finally in 2013 they increase
the investment from the Current assets whereas Current liabilities also
decrease comparatively.
Analysis of data 2014 current Assets increase comparative 2013.and
current liability also increase.
Data of 2015 company Current Assets and Current liability both the
increase company position is good.

67
Solving:

Fixed Assets Turnover Ratio:


Fixed Assets Turnover Ratio= Cost of Sales/Fixed Assets

S.N Year Cost of sale Fixed Assets Ratio

1 2011 4,286,593,663 7,318,713,93 5.8570

2 2012 4,718,506,064 8,803,261,33 5.3599

3 2013 4,857,762,141 9,325,446,05 5.2091

4 2014 4,945,486,549 998,104,774 4.9548

5 2015 5,094,404,901 1,049,379,561 4.8546

68
6000000000

5000000000

4000000000

cost of sale
3000000000
fixed Assets
Ratio
2000000000

1000000000

0
2011 2012 2013 2014 2015

Interpretations
After analysis the Current Ratio of 5 year of Bata shoes company
(Bangladesh) Ltd. We come to know the fact that company operating
the above the standard during these 5 years. But the fixed Assets
Turnover Ratio of the year 2011 is extremely low.
Where in the next year in 2012 show that they increase their cost. But
they also increase their cost of sale. So the position will increase.
Finally in 2013 they increase the sale from the fixed Assets Turnover
Ratio and cost of sales increase where fixed assets also increase
comparatively high.2014 and 2015 data analysis the cost of sale and
fixed Assets both the good position.
Increase the cost of sale and increase the fixed Assets

Solving:
69
Working Capital:
Working capital= Current Assets - Current Liabilities

S.N Year Current Assets Current Capital


Liabilities
1 2011 2,692,797,498 1,833,447,663 8,593,498,35
2 2012 2,965,537,715 1,989,905,077 9,756,326,38
3 2013 3,563,927,850 2,204,746,568 1,359,181,28
2
4 2014 4900,221,023 2,329,197,130 2,571,023,893

5 2015 5,236,593,585 2,271,585,161 2,965,008,424

70
3500000000

3000000000

2500000000

2000000000

1500000000

1000000000

500000000

0
2011 2012 2013 2014 2015

Interpretations:
71
Analysis is the working capital of5 year of Bata Shoes Company
(Bangladesh) Ltd. We come to know the fact that company operating
the above the standard during these 5 year. But the Current ratio of the
year 2011 is extremely low.
Which shows the excess working capital in current assets is the
increase.
The next year in 2012 show that they current assets increase and
current liabilities is increase in compatibly in 2011.
In 2013 they are Current assets and Current liabilities are increase.
Finally year In2014 and 2015 they are current assets and Current
liabilities are increase.
Working capital is very good.

Solving:
72
Gross Profit Ratio:
Gross Profit Ratio = Gross Profit/ Net Sales 100

S.N Year Gross profit Net Sale Ratio


1 2011 2,361,252,350 4,286,593,663 55.0845
2 2012 2,665,999,671 4,718,506,064 56.5009
3 2013 3,021,213,029 4,857,762141 62.1935
4 2014 3,131,508,488 4,954,86,549 632.006
5 2015 3,428,396,718 5,094,404,901 67.297

73
6000000000

5000000000

4000000000

3000000000 Gross profit


Net Sales
2000000000 Ratio

1000000000

0
2011
2012
2013
2014
2015

Interpretation:
After Analysis the Gross Profit Ratio of 5 year of Bata Shoes Company
(Bangladesh) Ltd.
The Gross Profit Ratio and Net Sale of the 2011 is the extremely low.
The compatibly of the 2011 and 2012 is profit is increase.
The next year profit in 2012 show that they increase the Gross profit
and Net Sale.
So that the position will increase.
74
In 2013 they increase the Gross Profit Ratio and Net sale.
In 2014 and finally year 2015 they are good condition in gross profit
and net Sale.

Solving:
Net Profit Ratio:
Net profit Ratio= Net Profit/ Net Sales 100

S.N Year Net Profit Net Sale Ratio


1 2011 580617053 4286593663 13.5449
2 2012 671916303 4718506064 14.2400
3 2013 813,083,564 485,7762141 16.7378
4 2014 700,670101 4945486549 14.1678
5 2015 5094404901 831744531 612.496

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100%
90%
80%
70%
60%
50% Ratio
40% Net Sale
30% Net Profit
20%
10%
0%
2011
2012
2013
2014
2015

Interpretations
After analysis the Net Profit Ratio of 5 year of Bata Shoes company
(Bangladesh) Ltd.
The Net Profit Ratio of the year 2011 is extremely low.
But the next year 2012 is extremely high. Net profit and Net sale is the increase
of 2012.
So that the company position is very good.
In 2013 is the Net profit and Net sale is increase in comparatively high 2012.
In 2014 and finally year 2015 is both are increase the Net profit and Net sale.

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Solving:

Working Capital Turnover Ratio:

Working Capital Turnover Ratio = Cost of Sale/ Working Capital

S.N Year Cost of Sale Working Capital Ratio


1 2011 4,286,593,663 859,349,835 4.9881
2 2012 4,718,506,064 975,632,638 4.8363
3 2013 4,857,762,141 1,359,181,282 3.5740
4 2014 4,945,486,549 2,571,023,893 1.9235

5 2015 5,094,404,901 2,965,008,424 1.7181

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working capital

2011
2012
2013
2014
2015

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Interpretations
Analysis the Working Capital Turnover Ratio of 5year of the Bata Shoes
Company (Bangladesh) Ltd. We come to know the fact that company operating
the above the standard during 2011 these 5 year. But the working capital
Turnover Ratio is the cost of sale is increase and working capital is increase.
The next year is the 2012 is cost of sale is the increase and working capital is
the increase.
In 2013 working capital Turnover Ratio is the increase.
In 2014 work in capital increase and and cost of sale also increase.
Finally year in 2015 working capital Turnover Ratio is good position and
increases the Ratio in this year.

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Solving:

Proprietary Ratio:
Proprietary Ratio = Shareholders funds/ Total Assets

Or
Capital (PRF+Eq) + Reserve/ Total Assets

S.N Year Shareholder fund Total Assets Ratio

1 2011 1,561,074,906 3,546,726,569 0.4401

2 2012 1,854,000,579 3,980,023,320 0.4658

3 2013 2,256,684,143 4,610,437,455 0.4894

4 2014 2,571,023,893 4,900,221,023 0.5246

5 2015 2,965,008,424 5,236,593,585 0.5662

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Proprietory ratio

2011
2012
2013
2014
2015

Interpretation
81
After analysis the Proprietary Ratio of 5 year of Bata shoes Company
(Bangladesh) Ltd. The calculate Proprietary Ratio of the year 2011 is extremely
low of the comparatively 2012.
The next year 2012 is the shareholder fund and total Assets is the increase.
In2013 they increase Ratio from the Shareholder fund increase where Total
Assets also increase.
In the 2014 increase the proprietary Ratio compare than 2013 ratio.
The finally year 2015 increase the shareholder fund and also increase the total
Assets.
So that the company position is too good.

82
Findings

83
The Company has great ability to meet their short term liability with the
help of Current Assets.
The Company has come fluctuation in all 5 year in Amount and Ratio.
After analyzing the fixed Assets Turnover Ratio. We have found that
Company has maintain the ration ship between sale ands Ratio.
The Working Capital of Company is year by year increase.
The Gross Profit Ratio is good.
The T&A Bat a shoe Company was founded in 1894 in Zlin Moravia
(then Austro-Hungarian Empire today the (Zech Republic) bye Tomas Bat
a.
Form the point of view good position in company.

84
Recommendation

85
After analyzing the finding health of the Bata shoe Company (Bangladesh) Ltd.
Through ratio analysis we reach at the following recommendation for the
management.
The company should maintain this relationship between Current assets
and Current liability because it is the best Position of the company.
The company should efficiently use the total assets to improve the sales

Company must be increasing more working capital Turnover Ratio


through these techniques.
Speeding Collection from the account receivable
Starching the payment of Account
Increase the production cycle time

The Company Should make a control on other expenses so that the


net profit after will be increase.

The Company should be the fixed asset turnover ratio is to be


increase.

The Company may be the Gross Profit Ratio is very good position.

The Company Net Profit Ratio is year by year increase.

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Conclusion
After analysis the financial health of the Bata through ratio analysis, we have
reaches at the following conclusion point.
87
The Company management can efficient convert its debtors in cash
After Analyzing we can say that company is efficient use its inventory in
compare sale.
It provide shelter from the arctic environment proclaims the identity and
homeland of the wearer and seam stress is a creative work of art, and
enable individuals to communicate with the spirits in a manner critical to
their survival in return animal spirits reveal themselves in flickering
glimpses.
I make boots by following the old ways, the animals understand these
ways. The weather is always changing so I make lots of different boots
for cliff
Can identify the sound of your feet for it is through them that life is
moving in my direction
The company efficient uses its working capital to improve sale.
The company is the Proprietary ratio is the increase.
I had Pretty good luck with them, through riding will eat through the one
depends on which ones you get, soft are more comfortable, bet wear
faster.
They were made for guys that drive care and always take there shoes off
before entering a premises and only walk in them on soft surfaces like
grass ride.
Ride a Moto bike and walk on hard suface and neels are runined with 4
weeks.

The power of footwear and clothing is extre odinary from its function as
an incredibly important cultural identifier to its ability to communicate
with the spirit eorld.
And riding a motorbike rainy season absolutely kills them.
The company fixed Assets Turnover Ratio is the improve.
The company position is better than good.

88
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Bibliography
Annual Reports of Bata shoes company Ltd.

Books:

90
Analysis of financial Statements Grewals T.S.
Research Methodology Kothari C.R
Internet

Selected Sites
www.wikipedia.com
www.books.google.co.in

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