OBJECTIVES OF THE STUDY

1. To analyze how layout effects on productivity in respect to a garments factory.

2. To develop the best method of work and motion ergonomics.
3. To find out the possible solutions of maximum utilization of floor space.
4. To help the business organizations by identifying their problems, analyzing the
informations and providing the possible solution.
5. To find out and minimize the wasting time during a product making.
6. To balance the line for best utilization of man, material and machine.
7. To improve per day production.
8. To maximize the production.
9. Above all, to identify the barriers of production and its remedies.
10. To get knowledge about financial performance of Fashion Power Bangladesh Ltd
11. To measure the operational effectiveness in terms of financial management
12. To make comparison between the theoretical and practical knowledge
Scope of the Report

Every study or expedition must operate on a specific scope and a scope discloses the working
periphery of a specific investigation. The scope of our report is confined to Fashion Power
Bangladesh Ltd. It is not comparable with others one.
Methodology of the Report

Firstly, we have collected the annual report of Fashion Power Bangladesh Ltd. Then different
reference materials of the organization such as books, newspaper & journals are studied. At the same
time, an informal discussion was held with some of the employees working under Finance
Department of the organization. Then the collected data was thoroughly processed, analyzed,
summarized, organized, and finally revised.
Limitations of the Report

Hardly any report overcomes all the limitations getting complete accuracy. Ours one is also not
exceptional. The limitations of the report are:

Financial procedure is quite confidential and the executives were a bit conservative in
disclosing the entire procedure
There was lack of reference materials
Vast scope of the study and descriptive nature of the report topic
There was lack of experience
 Table of Content

Part Contents Page

Introduction of proper accounting practice
Recording Procedures

Fashion Power Analysis

INTRODUCTION

The basic limitation of the traditional financial statement, comprising the balance sheet and the profit and
loss account is that do not provide all the information related to the financial operations of a firm.
Nevertheless, that provides some extremely useful information to the extent that the balance sheet mirrors
the financial position on a particular date in terms of the structure of assets, liabilities, and owners equity,
and so on and the profit and loss accounts shows the results of operations during a certain period of time
in terms of the revenues obtained the cost incurred during the year. Thus, the financial statements provide
a summarized view of the financial position and operations of a firm. Therefore, we have analyzed the
accompanying financial statement of Fashion Power Bangladesh Ltd. consisting of a balance sheet, a
profit and loss account as well as the notes to the financial statements for the year from January 1 to
December 31, 2015 & from January 1 to December 31, 2014.
Importance of proper accounting practice

An accounting practice is intended to enforce a firms accounting guidelines and policies. It

exists as the daily recording of financial data that is important to the evaluation and monitoring
of the firms economic activities. Accounting practice refers to the normal, practical application
of accounting and/or auditing policies that occurs within a business.

Well-maintained and balanced accounting records are one of the vital parts of a business whether
it is large or small, a start-up, or a long-standing business. When things are financially unstable,
good accounting records can provide answers as to what changes to make or what to do away
with in order to keep business growing and prospering. In order to keep good business
accounting records, we need to have a good accounting program and the knowledge to keep it
well-organized and up-to-date. Everyday accounting and financial information will need to be
processed and reviewed in order to achieve goals and to be able to predict future finances.
Knowing where money is spent and how it is possible to reduce costs are some of the most
important topics in starting and making business grow. A companys accounts records held on an
accounts ledger, give a detailed description about profits and losses in a cash spreadsheet format.
Auditors can study these financial statements and determine the accuracy and integrity of the
business. An accounting statement also distinguishes the success ratio of present business from
past progress using accounts formats that are recognized by other companies and bodies.

Bank may want to see balance sheets and profit and loss statements before giving a loan. Every
business owner must realize that proper and accurate bookkeeping is one of the most important
parts of the business. Many believe that starting a business is the way to get ahead. However,
without proper accounting records business is much less likely to survive. Above all else, it is
important to make sure that records are an accurate reflection of business and that they are
maintained on a regular basis. Keeping records regularly up-to-date is much easier than trying to
remember weeks or months later the details of transactions.

Observation

Accounting practice of Garments Sector

Throughout my internship period, I found that Garments Sector keep its daily transaction record
by maintaining four books. Those books are cash book, bank book, clients ledger book, general
ledger book.

Cash book

In the cash book, the organization maintains their daily cash transactions. Any types of cash
received like from client, withdrew from owns bank account, service charge and loan from bank,
other organization or director. Afterwards, daily cash expenses are also recorded. It is
worthwhile to mention that every transaction is record from the journal voucher. Journal voucher
refers to a voucher which functions as a journal book. It keeps transaction with date and
explanation.

Bank book

Bank book is kept to record all transaction regarding bank. Organization is maintaining two
types of bank account in the same bank. One of them is current account and other is SND.
Current account is to maintain small amount and frequent transaction whereas SND account is
maintained for big amount transaction. Bank book play a vital role in bank reconciliation. Most
of the time clients deposit in companys bank account. Often bank charge for online transaction
or letter of credit purpose. In this circumstance bank book and bank statement from bank are the
primary sources of data for bank reconciliation.

Clients ledger book

Clients ledger book is maintained to keep the record of clients transaction history. If goods are
sold on account to the clients, that recorded with the bill number. Clients ledger book shows the
number of clients, total due outstanding as well as a particular clients total due, last date of
payment, total advance sales and so on.

General ledger book

General ledger book has huge number of accounts head. Most of those are expense of the
organization. Usually conveyance, office maintenance, rent, bill, legal fees, entertainment
advertisement, salary, tax account recorded in this ledger book. In addition, there is also sales
account which is the control ledger, under this ledger cash sale and on account sales are
maintained. Furthermore, purchase account is also a control ledger under which local purchase
and Import purchase recorded by the organization.

Customized software

There is customized software in the organization to maintain their account. Though, I hardly
found anyone to work with this software. The software is limited use only, to illustrate, it cannot
record general ledger books account head but it is useful for maintaining cash book only. As a
result the software lost its importance. In contrast, I felt myself there are lack of professional
person to operate this software otherwise the limitation of the software might be outweigh
compared to the advantage of using this software.

Cheque register book

Garments Sector Ltd maintain Cheque register book which has very significant role. This book
record the information regarding cheque received from clients. In this register book it is found
the date of cheque received, client name, bank name and cheque number, amount of taka,
drawing date,

expired date. In addition, this book can inform account management department regarding total
number of cheque, total amount in taka, number of cash cheque, expired cheque as well as
invalid cheque.

Monthly report

Monthly report shows the expenses and received money from any sources. Monthly report made
on the basis of cash book, bank book and general ledger book. Monthly report is essential in the
end of every months financial meeting.

Financial statement

Financial statements reflect the collection, tabulation, and the final summarization of the
accounting date. Four statements are involved:

Balance sheet
Income statement
Statement of cash flows and
Statement of retained earnings

Balance sheet shows the financial condition of the company at the end of the period whereas
income statement measures the results of operation during the period. Then, the statement of
cash follows reports the cash provided and used by operating, investigating and financial
activities during the period. Finally, the statement of retained earnings reconciles the balance of
the retained earnings account from the beginning to the end.

Analysis

Predicament

The accounting cycle is well followed in Garments Sector. According to my perception, there are
some difficulties, to some extent, Garments Sector dose not prepare trial balance. Trial balance is
a list of all open accounts in the ledger and their balances. A trial balance should be taken
immediately after all adjustment have been posted is called adjusted trial balance. As a result,
preparing financial statement and auditing takes long time and it is a laborious work in Garments
Sector. If Garments Sector prepares trial balance, adjusted trial balance, after closing trial
balance then the total work time could be shorter and inexpensive.
As like as other traditional organization, Garments Sector keeps transaction records in cash basis.
Cash basis accounting is easier to maintain as well as easier to understand whereas cash basis
accounting has a lot of limitations. By cash basis accounting, it is difficult to find out net income
in a certain period of time, because, the determination of income on the cash basis rests upon the
collection of revenue and the payment of expense. Furthermore, under the cash basis, the
revenue recognition and the matching principle are overlooked. In nutshell, cash basis financial
statements are not in obedience with generally accepted accounting principles.

Recommendations

Working at Garments Sector, was a great experience for me. I have learnt many things
throughout my internship period. From my little knowledge what I have some recommendations
as follows: Garments Sector have a very few employee at account management department
whereas the work pressure is high. So the department could increase their workforce and share
the work together. Secondly, to increase the rate of work efficiency they need faster computer
with user friendly operating system. There is customized accounting software in the organization
which is not beneficial. The company should update or add more features in that software and
appoint a professional operator so that it might save time, money, labor and execute an impact
for the long run.
Short History of Ready-Made Clothing:

Before the American Civil War, ready-made (also called ready-to-wear) apparel existed but its
variety was limited. Mainly coats and jackets (known as outerwear) and undergarments were
purchased using predetermined sizes. Most clothing was made by tailors or by individuals or
their family members at home.

The Civil War was a pivotal event in the historical development of mens ready-made clothing.
At the outset of the Civil War, most uniforms were custom-made in workers homes under
government contract. As the war continued, however, manufacturers started to build factories
that could quickly and efficiently meet the growing demands of the military. Mass production of
uniforms necessitated the development of standard sizes. Measurements taken of the soldiers
revealed that certain sets of measurements tended to recur with predictable regularity. After the
war, these military measurements were used to create the first commercial sizing scales for men.

The mass production of womens clothing developed more slowly. Womens outfits generally
continued to be custom-made well into the 1920s. In that decade, factors such as the
development of industrial production techniques, the rise of the advertising industry, the growth
of an urban professional class, and the development of national markets accessed through chain
stores and mail order catalogues, contributed to the success of the womens ready-made apparel
industry. Ready-made articles of clothing were portrayed as modern and fashionable during a
time when the new consumer industries were rapidly redefining the way Americans viewed
mass-manufactured goods. Instead of seeing the purchase of mass-produced clothing as entailing
a loss of individuality, American women began to accept the pieces of ready-made merchandise
as convenient, affordable, and up-to-date fashion items that could be replaced easily as styles
changed.

However, the new ready-made clothing often fit poorly. Each manufacturer created its own
unique and sometimes arbitrary sizing system based on inaccurate body data or no body data at
all. Garments of widely different dimensions were frequently labeled the same size by different
manufacturers. This situation resulted in additional costs for alterations and large volumes of
returned merchandise. This, in turn, increased costs for the consumer of ready-to-wear clothing.

RMG in Bangladesh:

The tremendous success of readymade garment exports from Bangladesh over the last two
decades has surpassed the most optimistic expectations. Today the apparel export sector is a
multi-billion-dollar manufacturing and export industry in the country. The overall impact of the
readymade garment exports is certainly one of the most significant social and economic
developments in contemporary Bangladesh. With over one and a half million women workers
employed in semi-skilled and skilled jobs producing clothing for exports, the development of the
apparel export industry has had far-reaching implications for the society and economy of
Bangladesh. The economy of Bangladesh is largely dependent on agriculture. However, in recent
years, the Ready Made Garments (RMG) sector has emerged as the biggest earner of foreign
currency. The RMG sector has experienced an exponential growth since the 1980s. The sector
contributes significantly to the GDP. It also provides employment to around 2 million
Bangladeshis. An overwhelming number of workers in this sector are women. This has affected
the social status of many women coming from low income families.

The Bangladesh Garment Industry for Bangladesh, the readymade garment export industry has
been the proverbial goose that lays the golden eggs for over fifteen years now. The sector now
dominates the modern economy in export earnings, secondary impact and employment
generated. The events in 1998 serve to highlight the vulnerability of this industry to both internal
and external shocks on the demand and supply side. Given the dominance of the sector in the
overall modern economy of Bangladesh, this vulnerability should be a matter of some concern to
the policymakers in Bangladesh. Although in gross terms the sectors contributions to the
countrys export earnings is more than 80% percent, in net terms the share would be much less
partially because the backward linkages in textile have been slow to develop. The dependence on
a single sector, no matter how resilient or sturdy that sector is, is a matter of policy concern. We
believe the policymakers in Bangladesh should work to reduce this dependence by moving
quickly to develop the other export industries using the lessons learned from the success of
apparel exports. Support for the apparel sector should not be reduced. In fact, another way to
reduce the vulnerability is to diversify the product and the market mix. It is heartening to observe
that the knit products are rapidly gaining share in overall garment exports as these products are
sold in quota-free markets and reflect the strength of Bangladeshi producers in the fully
competitive global apparel markets. Preliminary data and informal evidence indicate that this
sector seems to have weathered the devastating floods relatively well. The industry is one
hundred percent export-oriented and therefore insulated from domestic demand shocks; however,
it remains vulnerable to domestic supply shocks and the smooth functioning of the banking,
transportation and other forward and backward linkage sectors of the economy. The Dhaka-
Chittagong road remains the main transportation link connecting the production units, mostly
situated in and around Dhaka and the port in Chittagong, where the raw material and the finished
products are shipped in and out. Despite increased dependence on air transportation, trucks
remain the main vehicles for transporting raw materials and finished products for Bangladesh
garment exports. The floods disrupted the normal flow of traffic on this road. Eventually, this
road link was completely severed for several days when large sections of the road went under
water for a few weeks during the latter phase of the floods. This delinking of the road connection
between Dhaka and the port in Chittagong was as serious a threat as one can imagine for the
garment exporters. The industry responded by calling upon the Bangladesh navy to help with
trawlers and renting a plane from Thai Air that was used to directly fly garment consignments
from the Dhaka airport to the Chittagong airport several times a day.
Major Product Export from Bangladesh: (Value in Million
US$ )
Year Product Export %
RMG 12347.77 79.33
Frozen Food 454.53 2.92
Tea 12.29 0.08
Raw Jute 148.17 0.95
Chemical Products 421.58 2.71
201415
Jute Goods 373.18 2.40
Leather 177.32 1.14
Agriculture Products 122.3 0.79
Others 1508.06 9.69
COMPARATIVE
Total 15565.19 100.00
STATEMENT ON
EXPORT OF RMG AND TOTAL EXPORT OF BANGLADESH

Trade Information
TOTAL EXPORT OF
EXPORT OF RMG % OF RMGS TO
YEAR BANGLADESH
(IN MILLION US$) TOTAL EXPORT
(IN MILLION US$)
1983-84 31.57 811.00 3.89
1984-85 116.2 934.43 12.44
1985-86 131.48 819.21 16.05
1986-87 298.67 1076.61 27.74
1987-88 433.92 1231.2 35.24
1988-89 471.09 1291.56 36.47
1989-90 624.16 1923.70 32.45
1990-91 866.82 1717.55 50.47
1991-92 1182.57 1993.90 59.31
1992-93 1445.02 2382.89 60.64
1993-94 1555.79 2533.90 61.40
1994-95 2228.35 3472.56 64.17
1995-96 2547.13 3882.42 65.61
1996-97 3001.25 4418.28 67.93
1997-98 3781.94 5161.20 73.28
1998-99 4019.98 5312.86 75.67
1999-00 4349.41 5752.20 75.61
2000-01 4859.83 6467.30 75.14
2001-02 4583.75 5986.09 76.57
2002-03 4912.09 6548.44 75.01
2003-04 5686.09 7602.99 74.79
 2004-05 6417.67 8654.52 74.15
2005-06 7900.80 10526.16 75.06
2006-07 9211.23 12177.86 75.64
2007-08 10699.80 14110.80 75.83
2008-09 12347.77 15565.19 79.33
2009-10 12496.72 16204.65 77.12
2010-11 (July-Sep) 3971.52 5029.05 78.97

Growth of the industry and Employment

Year Number of Garment Factories Employment in Million Workers

1983-84 134 0.040
1984-85 384 0.115
1985-86 594 0.198
1986-87 629 0.283
1987-88 685 0.306
1988-89 725 0.317
1989-90 759 0.335
1990-91 834 0.402
1991-92 1163 0.582
1992-93 1537 0.804
1993-94 1839 0.827
1994-95 2182 1.200
1995-96 2353 1.290
1996-97 2503 1.300
1997-98 2726 1.500
1998-99 2963 1.500
1999-2000 3200 1.600
2000-2001 3480 1.800
2001-2002 3618 1.800
2002-2003 3760 2.000
2003-2004 3957 2.000
2004-2005 4107 2.000
2005-2006 4220 2.200
2006-2007 4490 2.400
2007-2008 4743 2.800
2008-2009 4925 3.500
2009-2010 5063 3.600
2010-2011 5150

Contribution of the RMG Industry

RMG business started in the late 70s as a negligible non-traditional sector with a narrow export
base and by the year 1983 it emerged as a promising export earning sector; presently it
contributes around 75 percent of the total export earnings. Over the past one and half decade,
RMG export earnings have increased by more than 8 times with an exceptional growth rate of
16.5 percent per annum. In FY06, earnings reached about 8 billion USD, which was only less
than a billion USD in FY91. Excepting FY02, the industry registered significant positive growth
throughout this period.

In terms of GDP, RMGs contribution is highly remarkable; it reaches 13 percent of GDP which
was only about 3 percent in FY91. This is a clear indication of the industrys contribution to the
overall economy. It also plays a pivotal role to promote the development of other key sectors of
the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway
container services, etc.

A 1999 study found the industry supporting approximately USD 2.0 billion worth of economic
activities (Bhattacharya and Rahman), when the value of exports stood at a little over USD 4.0
billion.

One of the key advantages of the RMG industry is its cheap labor force, which provides a
competitive edge over its competitors. The sector has created jobs for about two million people
of which 70 percent are women who mostly come from rural areas. The sector opened up
employment opportunities for many more individuals through direct and indirect economic
activities, which eventually helps the countrys social development, woman empowerment and
poverty alleviation.

Exporting Condition of Garments Industry

The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh
economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal
growth during the last 20 years. By taking advantage of an insulated market under the provision
of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign
exchange earnings, exports, industrialization and contribution to GDP within a short span of
time. The industry plays a key role in employment generation and in the provision of income to
the poor. Nearly two million workers are directly and more than ten million inhabitants are
indirectly associated with the industry. Over the past twenty years, the number of manufacturing
units has grown from 180 to over 3600. The sector has also played a significant role in the socio-
economic development of the country. The Agreement on Textile and Clothing (ATC)
introduced in 1994, aimed at bringing textiles and clothing within the domain of WTO rules by
abolishing all quotas by the end of 2004. It provides an adjustment period of 10 years, so that
countries affected by the MFA could take the necessary steps to adjust to the new trading
environment. Liberalization of trade following the Uruguay Round agreement presents
opportunities as well as challenges for a developing country like Bangladesh in RMG sector. In
the Post-Uruguay Round period, traditional instruments of trade policy such as tariffs, quotas,
and subsidies will become less feasible and less relevant. In a liberalized trade regime,
competition among textiles and clothing exporting countries is likely to become intense. The
objective of this paper is to identify the prospects of RMG industry after the MFA phase out by
analyzing the current scenario along with different policy measures and the available options in
order to be more competitive in the new regime. The export made by Garments Industries of
Bangladesh is improving year after year except some of the year. Strike, layout, shutdown of
company, political problem, economic problem, inflation etc. are the prime cause of decreasing
export in this important sector. But above it, Readymade Garments Industries is the leading
sector in export sector.

Chapter:02 Background

Factors of higher production:

Increase Investment Effectiveness Upgrade to produce next generation with minimal

layout and material logistics while increasing production capacity from ramp to full
production.
Increase Equipment Utilization while reducing processing delays from queuing.
Maximize productivity.
Increase Factory Output all plants will release work at an average rate that is strictly
less than the average capacity. Therefore, the bottleneck area becomes the capacity limit
and as that bottleneck moves around the factory with the re-entrant flow, the capacity is
limited by the continuance of the natural bottleneck.
Increase Worker Productivity and Safety Workers safety is considered and also
considered the minimum required area to do the works.
Decrease Time to Volume Production
Decrease Equipment Installation and Start-up Time and Cost
Decrease Inventory
Decrease Material handling Time
Safety and Ergonomics
Problems Regarding With RMG

The garment industry of Bangladesh has been the key export division and a main source of
foreign exchange for the last 25 years.

National labor laws do not apply in the EPZs, leaving BEPZA in full control over work
conditions, wages and benefits.
Garment factories in Bangladesh provide employment to 40 percent of industrial workers.
But without the proper laws the worker are demanding their various wants and as a result
conflict is began with the industry.
Low working salary is another vital fact which makes the labor conflict. Worker made
strike, layout to capture their demand. Some time bonus and the overtime salary are the
important cause of crisis. Insufficient government policy about this sector is a great
problem in Garments Company.

There are some other problems which are associated with this sector.

That are- lack of marketing tactic.

Absence of easily on-hand middle management.
A small number of manufacturing methods.
Lack of training organizations for industrial workers, supervisors and managers.
Autocratic approach of nearly all the investors.
Fewer process units for textiles and garments.
Sluggish backward or forward blending procedure.
Incompetent ports, entry/exit complicated and loading/unloading takes much time.
Time- consuming custom clearance etc.

Several authors have analyzed aspects of the garment industry in Bangladesh. Of the various
aspects of the industry, the problems and the working conditions of female workers have
received the greatest attention. There are several studies including the Bangladesh Institute of
Development Studies (BIDS) study by Salma Chowdhury and ProtimaMazumdar (1991) and the
Bangladesh UnnayanParisad (1990) study on this topic. Both of these studies use accepted
survey and research methodology to analyze a wealth of data on the social and economic
background, problems and prospects of female workers in the RMG sector. Professor Muzaffar
Ahmad looks at the industrial organization of the sector and discusses robustness and long-term
viability of apparel manufacturing in Bangladesh. Wiigton (2000) provides a good overview of
this industry, especially the developments in the early years. One of the few studies on the
Bangladesh apparel industry to be published in a reputed journal in the U.S. is that of Yung
Whee Rhee (2003) who presents what he calls a catalyst model of development. The
Bangladesh Planning Commission under the Trade and Industrial Policy (TIP) project also
commissioned several studies on the industry. Hossain and Brar (2004) consider some labor-
related issues in the garment industry. Quddus (2006) presents a profile of the apparel sector in
Bangladesh and discusses some other aspects of the industry. Quddus (2006) presents results
from a survey of apparel entrepreneurs and evaluates the performance of entrepreneurs and their
contribution to the success of this industry. Islam and Quddus (2006) present an overall analysis
of the industry to evaluate its potential as a catalyst for the development of the rest of the
Bangladesh economy.

Safety Problems

Safety need for the worker is mandatory to maintain in all the organization. But without the
facility of this necessary product a lot of accident is occur incurred every year in most of the
company. Some important cause of the accident are given below-

Routes are blocked by storage materials

Machine layout is often staggered
Lack of signage for escape route
No provision for emergency lighting
Doors, opening along escape routes, are not fire resistant.
Doors are not self-closing and often do not open along the direction of escape.
Adequate doors as well as adequate staircases are not provided to aid quick exit
Fire exit or emergency staircase lacks proper maintenance
Lack of proper exit route to reach the place of safety

Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the

Open air

Fire in a Bangladesh factory is likely to spread quickly because the principle of

Compartmentalization is practiced

Lack of awareness among the workers and the owners

External and Internal Barriers of Higher Production

1. Economical problems:Economical problem is a major issue for growing a garments industry.

If any garments owners have no good fund, he doesnt build up his industry. As for example, at
any time garments business may fall due to various reasons. Such as

(a) Shipment date may fail

(b) Suddenly need lot of money to buy some important parts that parts need for your better
production.
 (c) To build up a new project this is helpful for the business.

At this purpose an owner need money to save his business. So every owner need to know money
saving formula which is very helpful for themselves to recover that type of problem.

Banking problem is another big problem in our country. If the bank doesnt give the loan in
minor interest, an owner not able to establish the industrial project. There are various kinds
economical problem. Such as:

i. Community problems
ii. Political problems
iii. Transportation problems
iv. Drudge problems

(i) Community problems:

Man is a social being. One cannot live with the help of others. To work everybody as a team is
important concern to increase the garment production. Lack of this type of attitudes creates a lot
of problems. Such as:

The workers cannot be helpful with each other.

The workers always look after others fault.
They cannot work properly.
Lead time may increase.
The workers make quarrel with others.
Factory environment and production may fall.

Factory management should be very careful about the problems. The problems can be minimized
only by improving the better relationships between the workers.

(ii) Political problems:

Political problem is very important for garment business. It creates very bad effects in garments
production. The author has discussed only three major obstacles related to the political problems.
Such as:

Hartal : Each buyer gives an order and a target date to the vendor. Due to Hartal the
production process, inter factory transportation and shipment process may hamper.
Sometimes garments (End products) are exported by air to meet the buyers date. In this case
the owner has to spend extra cost.
To remove this problem Hartal should be stopped.
Strike: Strike is one type of Hartal created by the workers. Workers are illiterate and so they are
paid low wages by the owners. Sometimes workers are influenced by their leader and stop
working to notify their owners about wages. In some cases the strike comes out a large volume
that the workers act destructive works against the factory management and take place along the
high way to create strike. As a result the productions go down.
To reduce this problem, the management should keep sound relationship with worker leaders
and should meet their demands time to time.
Internal politics : Internal politics mean the politics is created in garment factory among the
workers and upper level stuffs. The workers perform their own duty under the supervision of
their upper level stuffs. In some cases, the stuffs make bad behaviors to the workers. At that
moment, the workers mentality falls down and production also decreases.
The management should convey cooperative attitude to the workers so that they can work
liberally and get chance to make correct their own faults.

(iii) Transportation problem:Transportation is a vital factor in apparel production.

Transportation is of two types:

Internal transportation: The garment related accessories are transferred from one floor to
another floor during production. Some important points should be considered to formulate
internal transportation very efficiently.Such as:
At least four stairs for one floor are needed.
At least two lifts are required for one floor. One is used for heavy weight transportation and
other is used for personnel.

Smooth transportation system gives better production to the company.

External transportation: Transportation outside the factory premise is external transportation.
Transportation system in our country is not very fine. Problems related to external
transportation are as follows:
Traffic jam is occurred most of the entire road in the city. Enormous time is required to
transport the garment products from one place to another. The company has to pay extra
time, money, manpower and even has to fail the targeted lead time.
To remove this problem, we must develop our overall traffic system. At least 1 or 2 minutes
are required to pass the vehicle of every sight.
Sometimes vehicle are stop running to product transport at any reason in the middle point of
the road, at this purpose need time to repair it. As a result production may fall.

(iv) Drudge Problem:

The garment industry is far the countrys most important manufacturer earning around huge
money annually and accounting about two thirds of all exports. About 80 percent of the garment
workers are women. Despite the phenomenal success of the RMG sector the working condition
and wages of workers in the industry are cause for serious concern.

The problems in the industry pre-date the riots which took place just over a few times ago and
which were attended by deaths, injuries, and destruction of property. Over the years, hazardous
working conditions have resulted in the deaths of many workers through factory fires and
collapse. The spectrum factory building collapse of April 2005 killed 64-70 people, injured over
70 (mentioning) and left hundred jobless. In February 2006 a fire destroyed the f our-story KTS
Textile industries in Bangladeshs port city of Chittagong again killing scores of mostly young
and female workers. Workers, who are mostly young women, also face an acutely difficult
working environment:

Wages are low

Hours are long
Forced labor is practiced
Child labor exists
Freedom is curtailed
Whether it be locked doors or right of association
There are a multitude of other practices which go against international labor standards and
codes of conduct.

Bangladesh Faces the Challenge of Globalization:

Bangladesh faces the challenge of achieving accelerated economic growth and alleviating the
massive poverty that afflicts nearly two-fifths of its 135 million people. To meet this challenge,
market-oriented liberalizing policy reforms were initiated in the mid-1980s and were pursued
much more vigorously in the 1990s. These reforms were particularly aimed at moving towards
an open economic regime and integrating with the global economy.

During the 1990s, notable progress was made in economic performance. Along with maintaining
economic stabilization with a significantly reduced and declining dependence on foreign aid, the
economy appeared to begin a transition from stabilization to growth. The average annual growth
in per capita income had steadily accelerated from about 1.6 per cent per annum in the first half
of the 1980s to 3.6 percent by the latter half of the 1990s. This improved performance owed
itself both to a slowdown in population growth and a sustained increase in the rate of GDP
growth, which averaged 5.2 percent annually during the second half of the 1990s. During this
time, progress in the human development indicators was even more impressive. Bangladesh was
in fact among the top performing countries in the 1990s, when measured by its improvement in
the Human Development Index (HDI) as estimated by the United Nations Development Project
(UNDP). In terms of the increase in the value of HDI between 1990 and 2001, Bangladesh is
surpassed only by China and Cape Verde.

While most low-income countries depend largely on the export of primary commodities,
Bangladesh has made the transition from being primarily a jute-exporting country to a garment-
exporting one. This transition has been dictated by the countrys resource endowment,
characterized by extreme land scarcity and a very high population density, making economic
growth dependent on the export of labor-intensive manufactures.

In the wake of the 2001 global recession, Bangladeshs reliance on foreign countries as a market
for exports and as a source of remittances has become obvious. If Bangladesh is to become less
vulnerable to the economic fortunes of others, it will need to strengthen its domestic economy,
creating jobs and markets at home. A strong domestic sector and an improved overall investment
environment will provide a more stable source of income like what the garment industry has
provided so far and will rekindle and sustain Bangladeshs economic growth.

Prospects of the RMG Industry:

Despite many difficulties faced by the RMG industry over the past years, it continued to show its
robust performance and competitive strength. The resilience and bold trend in this MFA phase-
out period partly reflects the imposition of safeguard quotas by US and similar restrictions by
EU administration on China up to 2008, which has been the largest supplier of textiles and
apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and
product diversification, cheap labor, increased backward integration, high level of investment,
and government support are among the key factors that helped the country to continue the
momentum in export earnings in the apparel sector. Some of these elements are reviewed below.

Market Diversification:

Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh
was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The
industry was successful in exploring the opportunities in markets away from EU and US. In
FY07, a successful turnaround was observed in exports to third countries, which having a
negative growth in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall
export growth in the RMG sector. It is anticipated that the trend of market diversification will
continue and this will help to maintain the growth momentum of export earnings. At the same
time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty
free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin
(ROO) criteria, the relative stagnation in exports to EU requires further analysis.
Product Diversification:

The growth pattern of RMG exports can be categorized into two distinct phases. During the
initial phase it was the woven category, which contributed the most. Second phase is the
emergence of knitwear products that powered the recent double digit (year-on-year) growth
starting in FY04. In the globalized economy and ever-changing fashion world, product
diversification is the key to continuous business success. Starting with a few items, the
entrepreneurs of the RMG sector have also been able to diversify the product base ranging from
ordinary shirts, T-shirts, trousers, shorts, pajamas, ladies and childrens wear to sophisticated
high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is
clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs
can catch on to this trend the brighter be the RMG future.

Backward Integration:

RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a
catalyst for further industrialization in the country. However, this vital industry still depends
heavily on imported fabrics. After the liberalization of the quota regime some of the major textile
suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG
exports.

If Bangladesh wants to enjoy increased market access created by the global open market
economy it has no alternative but to produce textile items competitively at home through the
establishment of backward linkage with the RMG industry. To some extent the industry has
foreseen the need and has embarked on its own capacity building.

Flow of Investment :

It is plausible that domestic entrepreneurs alone may not be able to develop the textile industry
by establishing modern mills with adequate capacity to meet the growing RMG demand. It is
important to have significant flow of investment both in terms of finance and technology. Figure
3 indicates that the investment outlook in this sector is encouraging, although the uncertainties
before the MFA phase-out period caused a sluggish investment scenario. In part the momentum
in the post-MFA phase-out period is indicative of the efforts underway towards capacity building
through backward integration. This is evident in the pace of lending to the RMG sector and in the
rising import share of RMG related machinery. However further progress would be necessary to
improve and sustain competitiveness on a global scale.

Policy Regime of Government:

Government of Bangladesh has played an active role in designing policy support to the RMG
sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit
guarantee scheme, tax holiday and related facilities. At present government operates a cash
compensation scheme through which domestic suppliers to export-oriented RMG units receive a
cash payment equivalent to 5 percent of the net FOB value of exported garments. At the same
time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level
for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a
positive impact on the RMG sector.

Infrastructural Impediments:

The existence of sound infrastructural facilities is a prerequisite for economic development. In

Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong
backward linkage in order to reduce the lead time. However, other factors constraining
competitiveness of Bangladeshs RMG exports included the absence of adequate physical
infrastructure and utilities.

Labor Productivity:

The productive efficiency of labor is more important determinant for gaining comparative
advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly
women with little education and training. The employment of an uneven number of unskilled
labors by the garment factories results in low productivity and comparatively more expensive
apparels. Bangladesh labor productivity is known to be lower when it compared with of Sri
Lanka, South Korea and Hong Kong. Bangladesh must look for ways to improve the productivity
of its labor force if it wants to compete regionally if not globally. Because of cheap labor if our
country makes the labor productivity in the apex position, then we think the future of this sector
is highly optimistic.

Research and Training:

The country has no dedicated research institute related to the apparel sector. RMG is highly
fashion oriented and constant market research is necessary to become successful in the business.
BGMEA has already established an institute which offers bachelors degree in fashion designing
and BKMEA is planning on setting up a research and training institute. These and related
initiatives need encouragement possibly intermediated by donor-assisted technology and
knowledge transfer. A facilitating public sector role can be very relevant here.

Supportive Government Policy:

In contrast to the public sector-led import-substituting industrialization strategy pursued during
the first few years after independence, the industrialization philosophy of the government
changed rather dramatically from the late 1970s when the emphasis was on export-oriented
growth to be spearheaded by the private sector. Towards this end, various policy reforms were
implemented in the 1980s and 1990s. Some of these reformed policies contributed considerably
to the growth of the RMG industry in Bangladesh.

During the 1980s, a number of incentives were introduced to encourage export activities. Some
of them were new like the Bonded Warehouse Facility (BWF), while others like the Export
Performance License (XPL) Scheme

37 were already in operation and were improved upon. Also, rebates were given on import duties
and indirect taxes, there were tax reductions on export income, and export financing was
arranged. Under the XPL scheme, exporters of non-traditional products received import licenses
for specific products over and above their normal percentage allotment based on the f.o.b. value
of their exports. Under the Duty Drawback System, exporters of manufactured goods were
entitled to get refund of duties and taxes paid on imported inputs used in export production, and
also all excise duties paid on exported finished goods. For certain fast-moving items such as
RMG, a notional system of duty payments was adopted in 1982-83. Under this system, exporters
were exempted from paying duties and taxes on imports used in export production at the time of
importation, but were required to keep records of raw and 21packaging materials imported. The
duties and taxes payable on the imports were kept in a suspense account. Liabilities to pay the
amounts in suspense were removed on proof of exports.

The discussion in this section clearly points to the positive contribution made by policy reforms
to the growth of the RMG industry in Bangladesh. In particular, two policies the SBW facility
and the back-to-back L/C system- led to significant reduction in cost of producing garments and
enhanced competitiveness of Bangladeshs garments exports. It also allowed garment
manufacturers to earn more profit which, when necessary, could be used to overcome difficulties
arising from weak governance. Furthermore, poor governance, reflected in the leakage of duty-
free imported fabrics in the domestic market, paradoxically enough also helped the garment
manufacturers to earn extra profit and thereby enabled them to absorb the high cost of doing
businesses a fall out of bad governance.

Recommendation:

Bangladesh economy at present is more globally integrated than at any time in the past. The
MFA phase-out will lead to more efficient global realignments of the Garments and Clothing
industry. The phase out was expected to have negative impact on the economy of Bangladesh.
Recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports
grew significantly both in FY06 and (especially) in FY07. Due to a number of steps taken by the
industry, Bangladesh still remains competitive in RMG exports even in this post phase-out
period.

Our Garments Industries can improve their position in the world map by reducing the overall
problems. Such as management labor conflict, proper management policy, efficiency of the
manager, maintainable time schedule for the product, proper strategic plan etc.

Government also have some responsibility to improve the situation by providing- proper policy
to protect the garments industries, solve the license problem, quickly loading facility in the port,
providing proper environment for the work, keep the industry free from all kind of political
problem and the biasness. Credit must be provided when the industry fall in need.

To be an upper position holder in the world Garments Sector there is no way except follow the
above recommendations. We hope by maintaining proper management and policy strategies our
country will take the apex position in future

CHAPTERE:02(THEORITICAL PART)

2.1 Financial Statement Analysis

The analysis of financial statement is a process of evaluating the relationship between

components parts of financial statements to obtain a better understanding of the firms position
and performance. In brief, financial analysis is the process of selection, relation, and evaluation.

2.2 Ratio Analysis

Ratio analysis is widely used tool of financial analysis. It can be used to compare the risk and return
relationship of firms of different sizes. It is defined as the systematic use of ratio to interpret the financial
statements so that the strength and weaknesses of a firm as well as its historical performance and current
financial condition can be determined.
2.3Types of Ratios

Ratios can be classified into six broad groups: (a) short-term liquidity ratio, (b) capital structure and long
term solvency ratio, (c) profitability or operating performance ratio, (d) assets utilization ratio (e)
integrated analysis of ratio, (f) growth ratio.

2.4 Liquidity Ratio

The importance of adequate liquidity in the sense of the ability of a firm to meet current/short-term
obligations when they beco0me due for payment can hardly be overstressed.

The liquidity ratio measures the ability of a firm to meet its short-term obligations and reflect the short-
term financial strength/solvency of a firm.

2.5 Capital Structure and Long-term Solvency Ratio

The second category of financial ratios is capital structure ratios. The long-term lenders/creditors would
judge the soundness of a firm on the basis of the long-term financial strength measured in terms of its
ability to pay the interest regularly as well as repay the installment of the principal on due date on in one
lump sum at the time of maturity.
2.6 Profitability or Operating Performance Ratio

Apart from the creditors, both short-term and long-term, also interested in the financial
soundness of a firm are owners and management or the company itself. The management of the
firm is naturally eager to measure its operating efficiency. Similarly, the owners invest their
funds in the expectation of reasonable returns. The opera6ting efficiency of a firm and its ability
to ensure adequate returns to its shareholders/owners depend ultimately on the profits earned by
it. The profitability of a firm can be measured by its profitability ratios.

2.7 Assets Utilization Ratio

Activity ratios are concerned with measuring the efficiency in asset management. These ratios
are also called efficiency ratios or asset utilization ratio. The efficiency with which the assets are
used would be reflected in the speed and rapidity with which assets are converted into sales. The
greater is the rate of turnover or conversion, the more efficient is utilization of assets, other thing
being equal.

2.8 Integrated Analysis of Ratio

The ratios discussed so far measure a firms liquidity, solvency, efficiency of operations and profitability
independent of one another. However, there exists inter relationships among this ratios. This aspect is
brought out by integrated analysis of ratios.

2.9 Growth Ratio

These ratios measure the rate of which a firm should grow. Growth in sales needs additional
investment to support incremental sales both in terms of current assets (such as inventory and
debtors) and productive capacity/long-term assets (such as plant and machinery). The rate at
which a firm can grow depends on many factors. Included among these are, investment in assets
required for a given growth rate, net profit margin, retention ratio, and willingness and ability to
raise finance from the financial market.
CHAPTER:03(ORGANIZATIONAL PROFILE)

3.1Historical Background

Fashion Power Bangladesh Ltd. (the company) is the branch Beximco Textile Division(BTD)
came into existence in 1984 by incorporating as a public limited Company under the companys
law of Bangladesh. The company is the first project in private sector of Bangladesh that was
participated both by way of equity and debt by the Asian Development Bank (ADB), the CDC
Group Plc. of UK and Industrial Promotion and Development Company (IPDC) of Bangladesh
Ltd. The company commenced commercial production in 1990 and offered shares to public in
1992 that are listed both in Dhaka Stock Exchange (DSE), and Chittagong Stock Exchange
(CSE) of Bangladesh.

3.2 Location

BTDs corporate office is in Dhaka addressed at BET Tower, Road No. 2 Dhanmondi. Both of
its Head Office & Factory are located at its own industrial park known as Beximco Industrial
Park, Kashimpur,Gazipur. Besides this, it has other trading offices in UK, USA, Hong Kong,
Singapore, and Pakistan.

3.3 Business Activities

Fashion Power Bangladesh Ltd. a unit of Beximco Textile Division, the countrys largest body of
managing the vertically integrated production facilities from yarn to garment has a unique combination of
technical and generalist talents as their resource above all.

The Company operates in a single Industry segment. It owns textile spinning mills that produce yarn of
different counts, and sells the produced yarn to weaving and knitting mills of the country including the
mills of BEXIMCO Group, eventually that are, by and large, consumed by the export oriented garments
industries of Bangladesh.
3.4 Compliance and Social Commitment

Being the largest company and the largest employer of the country, Fashion Power Bangladesh
Ltd. always performs the social responsibilities and maintains the conformity of compliance
issues at each and every level of production and management which starts from the recruitment
of worker where the relevant clauses of the law and ILO conventions are properly followed and
ends up with the shipping of the finished goods through Customs-trade Partnership Against
Terrorism. Considering the social responsibilities of the company the innovation of new
products, services and ideas for which the company is earning a huge reputation and stepping
towards the globalization in terms of products, markets, efficient etc. should be counted at first.
Fashion Power Bangladesh Ltd.is the company, which is always being in the front row of market
penetration through their innovations and product development, which further brings the benefit
for the whole industry of the country through increasing the flow of orders for the country.

Source: Fashion Power Bangladesh Ltd, Annual Report, 2015

CHAPTER:04(STATEMENTS AND NECESSARY
INFORMATION)

4.1 Two Years Statistics

Results of Operations 2015 2014

Revenue 2,945,921 2,930,421

Gross Profit 518,717 512,836

Operating Profit (EBIT) 478,441 456,855

Net Profit before Tax (EBT) 189,273 103,494

Net Profit after Tax (EAT) 154,997 78,427

Basic Earning Per Share 3.19 1.69

Cash Dividend Per Share 0.50 1.00

Stock Dividend in % 25 5

Cash Flow from Operating Activities (144,457) (22,484)

Figures in Thousand Taka
Financial Position 2015 2014

Total Assets 5,587,241 5,144,576

Fixed Assets-Gross 4,061,812 3,886,559

Fixed Assets-Net 1,880,976 1,965,201

Financial Assets 2,326,217 2,029,095

Reserve and Surplus 1,255,774 1,174,908

Gross Working Capital 3,696,006 3,169,116

Net Working Capital 2,085,452 1,168,297

Authorized Capital 1,000,000 1,000,000

Share holders Equity 1,979,759 1,875,728

Paid-up Capital 486,486 463,320

Long-term Debt 2,109,002 1,533,399

Figures in Thousands Taka

Key Financial Ratios 2015 2014

Current Ratio 2.29 1.58

Debt Equity Ratio 1.00 0.67

Return on Investment 2.78% 1.52%

Net Assets Value Per Share 81.53 67.85

Payout Ratio 15.67% 59.17%

Market Value of Share (at DSE) 39.50 14.79

Market Value of Share (at CSE) 40.40 14.88

Price Earnings Ratio (Based on DSE Price) (Times) 12.38 8.75

Price Earnings Ratio (Based on CSE Price) (Times) 12.66 8.80

Figures in Thousand Taka

Others 2015 2014
Number of Shares 48,648,600 46,332,000

Number of Shareholders 5,905 5,209

Production (40s Equivalent) in Lbs 27,583 27,560

Capacity Utilization 96.98% 96.90%

Figures in Thousand Taka

4.2 Balance Sheet (At 31 December 2015)

Assets 2015 2014

Property, Plant and Equipment-Carrying Value 1,880,975,594 1,965,201,481

Long Term Security Deposits 10,258,913 10,258,913

Total Long Term Assets 1,891,234,507 1,975,460,394

Inventories 1,086,199,389 929,254,346

Trade Debtors 2,310,097,005 2,015,332,017

Advances, Deposits, and Prepayments 293,849,164 221,024,822

Cash and Cash Equivalents 5,860,911 3,504,516

Total Current Assets 3,696,006,469 3,169,115,701

Total Assets Tk. 5,587,240,976 5,144,576,095

Equity and Liabilities 2015 2014

Issued Share Capital
486,486,000 463,320,000
Share Premium
237,500,000 237,500,000
Tax Holiday Reserves
498,943,797 498,943,797
Retained Earnings
756,829,504 675,964,200
Shareholders Equity
1,979,759,301 1,875,727,997
Long Term Loans-Net of Current Maturity (Secured)
1,981,927,502 1,253,028,603
Security Deposit from Distributor
15,000,000 15,000,000
Long Term Liabilities
1,996,927,502 1,268,028,603
Short Term Loans
366,138,892 429,838,256
Overdraft-Rupali Bank Ltd. 930,501,880 1,074,007,052

Long Term Loans-Current Maturity (Secured) 127,073,942 280,369,741

Accrued Expenses 107,130,640 114,998,158

Other Creditors 79,708,819 101,606,315

Current Liabilities 1,610,554,173 2,000,819,495

Total Shareholders Equity and Liabilities Tk. 5,587,240,976 5,144,576,095

4.3 Profit And Loss Account (For The Year Ended 31 December 2015)

Particulars 2015 2014

Gross Profit 518,717,137 512,835,925

Operating Expenses
(40,275,865) (55,980,614)
Profit From Operations
478,441,272 456,855,311
Finance Cost
(279,704,648) (348,186,599)
Profit before Contribution to Workers Participation
198,736,624 108,668,712
Contribution to workers Participation
(9,463,649) (5,174,701)
Net Profit Before Tax
Income Tax Expenses 189,272,975 103,494,011

Net Profit (after tax) (34,276,471) (25,067,116)

Net Sales 154,996,504 78,426,895

Cost of Goods Sold 2,829,607,839 2,851,150,817

Administrative Expenses 2,427,204,305 2,417,585,266 4.4

Oth
Distribution Costs (Selling) 34,715,399 46,149,400
ers
5,560,466 9,831,214 Inf
or
mation

The basis of preparation of Financial Statement is the Historical Cost Convention.

The basis of presentation and disclosures of information are based on relevant and applicable
requirements of the:

Companies Act. 1994;

Securities and Exchange Rules 1987;

Listing Regulation of Dhaka and Chittagong Stock exchange; and

Bangladesh Accounting Standards (BASs) adopted by the Institute of Chartered

Accountants of Bangladesh (ICAB) based on International Financial Reporting
Standards.
The Financial Statements are presented in Bangladeshi currency (Taka).

Figures in brackets indicate deductions.

Sales are recorded at the time of delivery of products along with issue of invoice.

All property, plant and equipment are initially recorded over their expected useful life.

Land is held on a free hold basis and is not depreciated considering the unlimited life.

Depreciation is computed using the straight-line method. The annual depreciation rates applicable
to the principal categories are:

Factory building and other co0nstruction..5%

Plant & Machinery.7%

 Factory Equipment10%

Furniture, Office Equipment & Motor Vehicles...20%

Assets leased under agreements qualifying as operating lease.

Inventories are carried at the lower of cost and net realizable value. Cost is determined on
weighted average cost basis.

Cash and Equivalents comprise cash in hand and at bank.

Income Tax has provided by applying reduced tax rate of 15% applicable for textile Industries.

The company provides a variety of post employment benefit plans to eligible employees
comprising recognized contributory provident fund and group insurance scheme.

Basic earning represents net profit for the year attributable to ordinary shareholders.

Source: Fashion Power Bangladesh Ltd, Annual Report, 2015

CHAPTER:05(ANALYSIS AND COMMENTS)

5.1 Ratio Analysis

5.1.1. Short Term Liquidity Ratios

CurrentAssets
Current Ratio =
CurrentLiabilities

3696006469
Year 2015: = 2.29
1610554173

3169115701
Year 2014: = 1.58
2000819495

CurrentAssets Inventory
Acid Test Ratio =
CurrentLiabilities Overdraft

3696006469 1086199389
Year 2015: = 3.84
1610554173 930501880

3169115701 929254346
Year 2014: = 2.42
2000819495 1074007052

CostOfGoodsSold
Inventory Turnover Ratio = Clo sin gInventory
 2427204305
Year 2015: =2.23
1086119389

2417585266
Year 2014: = 2.60
129254346

Working Capital = Current Assets Current Liabilities

Year 2015: 3696006469-1610554173 = 2085452296

Year 2014: 3169115701-2000819495 = 1168296206

5.1.2 Capital Structure and Long-Term Solvency Ratios

CurrentLiabilities LongTermLiabilities
Total debt to total capital =
EquityCapital TotalLiabilities

1610554173 1996927502
Year 2015: = 0.645
1979759301 3607481675

2000819495 1268028603
Year2014 = = 0.635
1875727997 3268848098
 LongTermLiabilities
Long term debt to equity capital =
EquityCapital

1996927502
Year 2015: = 1.0087
1979759301

1268028603
Year 2014: = 0.68
1875727997

IncomeBeforeInterest & Tax( EBIT )

Times Interest Earned =
Interest

478441272
Year 2015: = 1.71
279704648

456855311
Year 2014: = 1.31
348186599

LongTermLiabilities
Debt to equity ratio =
EquityCapital LongTermLiabilities

1996927502
Year 2015: = 0.50
1979759301 1996927502

1268028603
Year 2014: = 0.40
187727997 1268028603
5.1.3 Profitability or Operating Efficiency Ratios

Operating Pr ofit ( EBIT )

Return on Assets (ROA) =
TotalAssets

478441272
Year 2015: 100 = 8.56 %
5587240976

465855311
Year 2014: 100 = 8.88
5144576095

Net Pr ofit
Return on Equity (ROE) = 100
CommonShareHoldersEq uity

154996504
Year 2015: 100 = 31.86 %
486486000

78426895
Year 2014: 100 = 16.93 %
463320000

Gross Pr ofit ( M arg in )

Gross Profit Ratio = 100
Sales

518717137
Year 2015: 100 = 18.33 %
2829607839
 512835925
Year 2014: 100 = 17.99 %
2851150817

Operating Pr ofit ( EBIT )

Operating Profit to Sales = 100
Sales

478441272
Year 2015: 100 = 16.90 %
2829607839

456855311
Year 2014: 100 = 16.02 %
2851150817

IncomeBeforeTax( EBT )
Pre-Tax Income to Sales = 100
Sales

189272975
Year 2015: 100 = 6.69 %
2829607839

103494011
Year 2014: 100 = 3.62 %
2851150817

Net Pr ofit
Net Profit to Sales = 100
Sales

154996504
Year 2015: 100 = 5.48 %
2829607839
 78426895
Year 2014: 100 = 2.75 %
2851150817

NetIncome
Earning Per Share =
NumberofSharesOuts tan ding

154996504
Year 2015: = 3.19
48648600

78426895
Year 2014: = 1.61
48648600

Market Pr icePerShare
Price Earning Ratio =
EarningPerShare

Dhaka Stock Exchange (DSE)

39.50
Year 2015: = 12.38
3.19

14.79
Year 2014: = 9.18
1.61

Chittagong Stock Exchange (CSE)

40.40
Year 2015: = 12.66
3.19
 14.88
Year 2014: = 9.24
1.61

EarningPerShare
Earning Yield =
Market Pr icePerShare

Dhaka Stock Exchange (DSE)

3.19
Year 2015: = 0.08
39.50

1.61
Year 2014: = 0.10
14.79

Chittagong Stock Exchange (CSE)

3.19
Year 2015: = 0.07
40.40

1.61
Year 2014: = 0.10
14.88

DividendPerShare
Dividend Yield =
AverageMarket Pr icePerShare
2
 0.50
Year 2015: = 0.012
39.50 40.40
2

1
Year 2014: = 0.07
14.79 14.88
2

DividendPerShare
Dividend Pay out Ratio =
EarningPerShare

0.50
Year 2015: = 0.16
3.19

1
Year 2014: = 0.62
1.61

5.1.4 Assets Utilization Ratios

Sales
Sales to Cash & Cash equivalent =
Cash & CashEquivalents

2829607839
Year 2015: = 482.79
5860911

2851150817
Year 2014: = 813.56
3504516
 Sales
Sales to Inventories =
Inventory

2829607839
Year 2015: = 2.60
1086199389

2851150817
Year 2014: = 3.06
929254346

Sales
Sales to Working Capital =
WorkingCapital

2829607839
Year 2015: = 1.36
2085452296

2851150817
Year 2014: = 2.44
1168296206

Sales
Sales to Fixed Assets =
FixedAssets

2829607839
Year 2015: = 0.24
1891234507

2851150817
Year 2014: = 1.44
1975460394
 Sales
Sales to Total Assets =
TotalAssets

2829607839
Year 2015: = 0.50
5587240976

2851150817
Year 2014: = 0.55
5144576095

CostOfGoodsSold
Total Assets Turnover =
TotalAssets

2427204305
Year 2015: = 0.43
5587240976

2417585266
Year 2014: = 0.47
5144576095

CostOfGoodsSold
Fixed Assets Turnover =
FixedAssets
 2427204305
Year 2015: = 1.28
1891234507

2417585266
Year 2014: = 1.22
1975460394

CostOfGoodsSold
Capital Turnover =
CapitalEmployed

2427204305
Year 2015: = 0.61
3976686803

2417585266
Year 2014: = 0.77
3143756600

CostOfGoodsSold
Current Assets Turnover =
CurrentAssets
 2427204305
Year 2015: = 0.67
3696006469

2417585266
Year 2014: = 0.76
3169115701

CostOfGoodsSold
Working Capital Turnover =
WorkingCapital

2427204305
Year 2015: = 1.16
2085452296

2417585266
Year 2014: = 2.07
1168296206

5.1.5 Integrated Analysis of Ratios

EarningAfterTax Sales EarningAfterTax

Earning Power = =
Sales TotalAssets TotalAssets

154996504
Year 2015: = 0.03
5587240976

78426895
Year 2014: = 0.02
5144576095
 EAT EBT EBIT Sales Assets EAT
Return on Equity = =
EBT EBIT Sales Assets Equity Equity

154996504
Year 2015: = 0.0783 = 7.83%
1979759301

78426895
Year 2014: = 0.0418 = 4.18%
1875727997

5.1.6 Growth Ratios

ROA b
Internal Growth Rate =
1 ( ROA b)

8.56% 0.84
Year 2015: = 7.65%
1 (8.56% 0.84)

8.88% 0.38
Year 2014: = 3.42%
1 (8.88% 0.38)

ROE b
Sustainable Growth Rate =
1 ( ROE b)

31.86% 0.84
Year 2015: = 37%
1 (31.86% 0.84)

16.93% 0.38
Year 2014: = 7%
1 (16.93% 0.38)
5.2 Comments

5.2.1 Short Term Liquidity Analysis

The liquidity ratios indicate that considerable deterioration has occurred in the liquidity of the company.
In year 2015 the current ratio was 2.29 and the acid test ratio 3.84. Both ratios were much higher than the
standard requirement of 2 and 1. Thus, the Fashion Power Bangladesh Ltd.s liquidity to meet short-term
liabilities was adequate in year 2015. But it is important to note that a very high ratio of current assets,
and quick assts to current liabilities indicate the Fashion Power Bangladesh Ltd. practices slack
management. It is also indicate that, this firm may not be making full use of its current borrowing
capacity.

5.2.2 Solvency Analysis

The solvency position of the Fashion Power Bangladesh Ltd. is sound for two reasons: First, it has a
satisfactory level of interest coverage ratio during the year 2015 and 2014, being in the range of 1.71 to
1.31. The Fashion Power Bangladesh Limited not likely to commit default in payment of interest to its
lenders as even though its operating profits (EBIT) increase by 0.44 it steel would have enough margins
to meet its interest obligations. Secondly, its debt equity ratio over the years has shown a substantial
increase from 0.40 in 2014 to 0.50 by 2015. Likewise, there has been a substantial decrease in total debt
to equity ratio, that is 0.50 in 2015 compared to 0.40 in 2014.

5.2.3 Profitability Analysis

The profit margin (gross, operating, net) of the Fashion Power Bangladesh Limited over the year has
increased markedly. For instance, gross profit margin increased 18.33 percent to 18.99 percent. Likewise,
operating profit margin have increased from 16.02 percent to 16.90 percent and net profit margins form
2.75 percent to 5.48 percent during previous year 2014. The increasing profit margins have a favorable
effect on the various rates of return. The rates of return on capital employed increased from 16.93 percent
to 31.86 percent by 2015. The corresponding figures were 8.88 percent and 8.56 percent in 2014 and 2015
in respect of rate of return on total assets. The increase in the overall profitability of Fashion Power
Bangladesh Limited is due to substantial decrease in cost of goods manufactured reflected in the sharp
down in cost of goods sold. Its non-operating or other earnings have been the main contributory factor to
its positive profitability.

5.2.4 Assets Utilizations Analysis:

The assets utilizations are used would be reflected in the speed and rapidity with which assets are
converted into sales. The greater is the rate of turnover or conversion, the more efficient is utilization of
assets, other thing being equal. The Fashion Power Bangladesh Limiteds assets utilization capacity is
moderately good. They use their assets in more efficiently.

5.2.5 Growth Analysis:

Growth ratios measure the rate at which the firm should grow. The IGR 7.65 percent is the reasonable rate
at which the firm Fashion Power Bangladesh Limited can grow (in sales/asset) without external financing
at any kind. The IRG 7.65 percent is greater in comparison with 3.42 percent 2014. The SGR 37.00
percent indicates the maximum rate at which the firm can raise by using retained earnings as well as
additional external debt but without increasing its financial leverage.
CHAPTER:05 (CONCLUSION)

Financial analysis is used to determine the firms financial image so as to identify its current strength and
weakness and to suggest action the firm might purpose to take advantage of strength and correct any
weakness. Financial statement is not only important for firms manager but also for external stakeholder.
Internally financial manager use the analysis for rectification of error to maximize the firms value.
Externally creditor and investor evaluate the firms attractiveness and future growth as an investment. The
reliability and significance attached to ratios will largely hinge upon the quality of data on which they are
based. They are as good or as bad as the data itself. Nevertheless, they are the important tools of financial
analysis.

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