Financial statement

analysis and valuation of

Bangladesh Shipping
Corporation

2014

SUBMISSION DATE: 22 JULY, 2014

 Submitted To

Dr. Mahmood Osman Imam

Professor

Department of Finance

University of Dhaka

Submitted By

Md Abdus Salam Sheikh

ID: 17-067

BBA 17th Batch

Section-A

Department of Finance

University of Dhaka.

Date of Submission: 22 July, 2014

2
 Letter of Transmittal
July 20, 2014

Dr. Mahmood Osman Imam

Professor

Department of Finance

University of Dhaka

Subject: Letter regarding Submission of report on financial statement analysis and

valuation of Bangladesh Shipping Corporation.

Dear Sir,

With humble respect i would like to convey your knowledge that I have prepared a report on
financial statement analysis and valuation of Bangladesh Shipping Corporation under your
kind supervision. I have tried my best to prepare the report in consistence with the optimal
standard under your valuable direction.

I would be very grateful if you kindly accept this report .I tried heart and soul to make this report
as a complete one. It would be pleasure for me if this report can serve its purpose.

Respectfully

…………………………………

Md Abdus Salam Sheikh

Roll: 17-067, Section: A

BBA (17th Batch)

Department of Finance

University of Dhaka

3
 Executive Summary

The Bangladesh Shipping Corporation (BSC), a state owned and managed public sector
Corporation, is the largest ship owner in Bangladesh was established on 5th February 1972
under President’s Order No. 10 of 1972 with the objectives of providing efficient, safe, reliable
and economic shipping services to the local exporters, importers and business houses, to develop
Executive summary
sustainable shipping and ancillary infrastructures in a sovereign nation which just became
independent on 16th December 1971 after a nine month long liberation war and thereby reducing
dependence on foreign flag vessels to stop drainage of hard earned foreign exchange from the
national. The authorized capital of the Corporation is Tk.25 cores divided into 25 lakh Shares of
Tk.100 each. As on 30-6-2010 the issued and paid-up capital is Tk" 20 crores. The Government's
share holdings amounts to Tk.17.50 crores 87.50% of the total shares and balance Tk.2.50
crores equivalent to l2.50% is owned by the private shareholder exchequer.
In the report I try to cover common size analysis of Income statements and balance sheet, trend
analysis of income statement and balance sheets, financial highlights of the company, SWOT
analysis, computation of free cash flow, computation of ROCE, computation of RNOA, ROOA,
NBC, OLLEV, FLEV, SPREAD, drivers of profit margin, drivers of assets turnover, and some
explanation. Finally I have included some findings such as the company falls in the category of
Miscellaneous, the company’s operating income was negative, the company’s profit margin has
reduced, the company’s authorized capital was 25 crore, the company has stable operating
environment, the company’s total assets were also reduced except in 2011-2012, the company
has moderate profitability to be adversely affected by foreseeable events and its net income has
reduced. And finally I try to give some recommendations and bibliography.

4
 TABLE OF CONTENT

Sl. No. Topic Page No.

Chapter-01 Introduction 06
1.1 Acknowledgement 07
1.2 Origin of the report 07
1.3 Objective of the report 07
1.4 Methodology 08
1.5 Scope of the report 08
1.6 Limitation of the report 08
Chapter 02 Company overview 09
2.1 Corporate history 10-11
2.2 Capital 11
2.3 Activities of BSC 11-12
2.4 Mission and Vision Statement 12
2.5 Board of directors 12
2.6 Objectives of BSC 12-13
2.7 Linier operation 13
2.8 Training and other program 14
2.9 Financial highlights 15
2.10 Key ratios 16
2.11 SWOT Analysis 16-18
Chapter 03 Financial statements analysis and valuation 19
3.1 Common size and trend analysis 20-23
3.2 FCF computation 24
3.3 Profitability Analysis 25
3.4 Growth Analysis 26
3.5 Red flags and earning quality 26
3.6 Forecasted earnings 27
Chapter 04 Conclusions 28
4.1 Findings 29
4.2 Recommendations 29
4.3 Conclusions 29
4.4 Bibliography 30
4.5 Appendix 30

5
 CHAPTER 01
INTRODUCTION

6
 1.1 Acknowledgement

At the time of preparing this report I would like to express gratitude to Almighty Allah for
special blessing in completing it. Preparing a report is really a great task. A lot of efforts and
study has gone in to make this report a reality. This report is an accumulation of many people’s
endeavor.

I would also like to acknowledge Dr.Mahmood Osman Imam, Professor of department of

finance, for giving me the opportunity to make such report.

1.2 Origin of the report

The importance of gathering practical knowledge during the study life along with the theoretical
knowledge has got same or sometime even more importance. Again practical knowledge is more
necessary for the course “Financial statement analysis and valuation” code F-401. For that I was
told to make a report for our honorable course teacher Dr.Mahmood Osman Imam on Financial
statement analysis and valuation of Bangladesh Shipping Corporation.

1.3 Objective of the report

The primary objective of this report is to fulfill the requirement of “Financial statement analysis
and valuation” (F-401) Department of Finance, University of Dhaka.

The secondary objectives of this report are listed below:

 To know the financial condition of the company.

 To know the Profitability position of this company.
 To know how to calculate FCF.
 To know how to reformulate the financial statements.
 To know how to calculate FCF, ROCE, RNOA, ROOA, & PM etc from
reformulated statements.

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 1.4 Methodology

For preparing this report I have used Reformulated balance sheet, income statement, common
size analysis of balance sheet, and income statements and profitability analysis.

1.5 Scope of the report

This report is outcome of few days’ long effort and individual work. The preparation and
submission of this report are a course requirement of” Financial statement analysis and
valuation’ code F-401, Bachelor of Business Studies, University of Dhaka.

1.6 Limitaion of the report

The main problem faced in preparing this report was the difficulty of selecting the appropriate
data for the report. However, with all these limitations, I have tried my best to prepare this
report. So, users of this report are requested to consider these limitations while reading and
justifying any part of our report.

8
 CHAPTER
02
COMPANY
OVERVIEW

9
 2.1 CORPORATE HISTORY

The Bangladesh Shipping Corporation (BSC), a state owned and managed public sector
Corporation, is the largest ship owner in Bangladesh was established on 5th February 1972
under President’s Order No. 10 of 1972 with the objectives of providing efficient, safe, reliable and
economic shipping services to the local exporters, importers and business houses, to develop
sustainable shipping and ancillary infrastructures in a sovereign nation which just became
independent on 16th December 1971 after a nine month long liberation war and thereby reducing
dependence on foreign flag vessels to stop drainage of hard earned foreign exchange from the
national exchequer.

During the liberation war in 1971, all vessels of Pakistan`s National Shipping Corporation (NSC)
were withdrawn to Pakistan. The newborn nation thus found itself without a maritime fleet of its
own. Having been inspired by the supreme sacrifice made by the freedom fighters and martyrs for
liberating the beloved motherland our people started their journey in 1972 without a ship merely
capitalizing on their firm determination to do something for the newborn nation by dint of their
sincere devotion and earnest efforts under the dynamic able leadership of the then management. In
the early days BSC’s activities were confined to only in providing agency services to the foreign
1. principals. However endeavors for acquiring ships were on concurrently. BSC was able to acquire
two ocean going ships namely, “M.V. Banglar Doot” and “M.V. Banglar Sampad” in a very short
period of time after establishment of the Corporation in 5th February 1972. Of them BSC acquired
“M.V. Banglar Doot” of 12812 DWT on 10th June 1972 as it`s first ship. Due to relentless efforts
for procuring vessels to build up a balanced fleet it was reached up to a peak of 27 vessels in 1982.
BSC was able to acquire a total number of 38 ships till now. But upon expiry of commercial and
economic life so far 25 vessels have been disposed off in different phases. At present BSC has a
mixed fleet of 13 ocean going ships including two tankers engaged in carrying sea borne cargoes in
different international sea routes. Average age of the ships in the fleet is 20 years and total capacity
of all these ships is 1.96 Lac MT.

The Corporation is run by a Board of Directors consisting of Honorable Minister for Shipping as its
Chairman, Secretary, Ministry of Shipping, Joint Secretary, Finance Division, Ministry of Finance,
Managing Director, Executive Director (Finance), Executive Director (Commercial) and Executive
Director (Technical) of BSC as members. The head office of BSC is situated in Chittagong,
Bangladesh with branch offices in Dhaka and Khulna.
The authorized capital of the Corporation is Taka 25 crores divided into 25 lac shares of Taka 100

10
 each. As on 30.06.2005 the issued and paid up capital is Taka 20 Crores. Bangladesh Government is
holding shares in the amount of Taka 17.50 crores i.e. 87.50% of the total shares and balance shares
of Taka 2.50 crores equivalent to 12.50% are owned by various banks, financial institutions
andother private shareholders. To accommodate Government approved equity and facilitate further
issuance of BSC`s shares to collect capital for funding development projects, a proposal for raising
authorized capital from Taka 25 crores to Taka 400 crores and paid-up capital from Taka 20 crores
to Taka 350 crores has been approved by the Government. Accordingly a proposal for amending
concerned sections and/or articles of President’s Order No. 10 of 1972 is under process.

2.2 CAPITAL

The authorized capital of the Corporation is Tk.25 crores divided into 25 lakh Shares of Tk.100
each. As on 30-6-2010 the issued and paid up capital is Tk" 20 crores. The Government's share
holdings amounts to Tk.17.50 crores 87.50o/a of the total shares and balance Tk.2.50 crores
equivalent to l2.50% is owned by the private shareholder. It is relevant to mention here that a
new law titled "Bangladesh Shipping Corporation (Amendment) Act 2006" dated 20-09 2006 has
been published as Gazette Notification as per approval of Government of Bangladesh with a
view to materialize the objective of raising capital base of BSC, floating of new shares in future
and to arrange payment of dividend/profit against Government equity invested in BSC. As a
result of publication of above-noted Gaze Notification, the authorized and paid-up capital of
BSC have increased from 25 cores to 400 crocs and from 20 crocs to 350 crocs respectively. In
the context of capital restructuring of BSC by Government, steps are being undertaken to convert
Tk. 261.26 cores Government equity into shine capita Share issue and to float new shares blur
balance amount of Tk. 62.74 cores in the capital market. On successful implementation of above-
noted steps, the total paid-up capital will rise from Tk. 20 cores to Tk. 350 cores.

2.3 Activities 0f BSC in Marine and grain conveyor Workshop

Apart from all kinds of repair works of BSC vessels, "BSC Marine workshop" also carried out
repair of furniture and fixtures, air conditioners, vehicles and other development works of the

Corporation & repair manufacture of spare parts for Grain Conveyor Workshop Machineries
during this financial year. Besides above-intentioned repairs, this workshop also undertook
various jobs of other organization, specially private owned vessel's load testing of cargo gear
and some specialized repair works. During Financial year 2007-2008 Marine Workshop has

11
carried out necessary repairs of M.V. Banglar Robi. Banglar Maya, Banglar Moni, Banglar
Shiklia, Banglar Urmi, Banglar Mookh, Banglar Doot, Banglar Kakoll,Banglar Kallol, Banglar
Mamata, Banglar Gourab, M. Banglar Shourabli and M.T. Ban glar.

2.4 MISSION AND VISSION STATEMENTS

Mission Statement: “As a national flag carrier be the leading shipping company in the region.”

Vision Statement: “To provide safe and efficient shipping services on international routes and
carry out all forms of activities connected with or ancillary to shipping thereby contributing to
the national development”

2.5 BOARD OF DIRECTORS

As per Ordinance 23 of 1919, the Board of Directors of the Corporation consist of Seven
Members, headed by Honorable Minister in-charge of Shipping as its Chairman, Secretary,
Ministry of Shipping, Joint Secretary, finance division Ministry of Finance, Managing Director
and there other Executive Directors of BSC arc the Members of the Board.

2.6 OBJECTIVES OF BSC

Bangladesh Shipping Corporation was established on 5th February, 1972 under President's
Order No. 10. The objectives for setting up of the Corporation and its assignment and
responsibilities are as follows

1. To provide safe and efficient Shipping services in International sea routes and carry out all
forms of activities connected with or ancillary to Shipping including raking over of the
undertakings, movable or immovable assets or properties of any Corporation engaged in such
activities.

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2. Without prejudice to generality of the for- going provisions, the Corporation shall in
particular have power.

(a) To acquire, charter, hold or dispose of ships or crafts

(b) To promote any Organization, in or out-site Bangladesh for the purpose of engaging in any
activity falling within the function of the Corporation, or to associate with any such
Organization;

(c) To undertake the repairs, overhaul, construction, reconditioning or assembling of ships,

vessels and other vehicles;

(d) To assemble, manufacture, recondition, overhaul and repair machines, parts, accessories and
instruments pertaining to ships, vessels and other vehicles

(e) To establish institutes or make other arrangements for the instruction and training of persons
engaged or likely to be engaged in lottery activities connected with or ancillary to shipping

(f) To acquire, hold or dispose off any property, whether movable or immovable;

(g) To do all other things connected with or ancillary to any of the matters referred to in sub-
clauses 2.2 (a) to 2.2.

2.7 LINIER OPERATION

The following are the Commercial routes of BSC:

1. BANGLADESH/UK.CONTINENT/AFRICA SURVICE

2. BANGLADESH/FAR_EAST/JAPAN SDRVICE

3. BANGLADESH AKIS TANAMEST AS IA GULF SERVICIT

4. CONTAINER AND IEEDER SERVICIJ.

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 2.8 TRAINING AND OTHER ACTIVITIES

Keeping in view of Corporation's requirements every year BSC recruits a reasonable number of
Engineering Cadets. Those cadets are given on the Job Training on board BSC vessels and
phase-Ill Training in BSC Marine Workshop

Masters and Chief Engineers of the Corporation arc also sent on deportation to Marine Academy
and National Maritime institute to impart training in those institutes. Private ship owners can also
crescent their cadets to BSC Marin Workshop for phase III Training.

17" The Directors would like to put on record the valuable patronage, assistance and support
extended to the Corporation by the Ministry of' Shipping. Chittagong Port Authority. Mongla
Port Authority Customs Authority, valued Importers/Exporters, Bankers and Agents all over the
world.

BSC thanks the Auditors for submitting their report in time. The Directors acknowledge with
great appreciation the loyal and dedicated services rendered to BSC by all category of officers
and employees of the Corporation.

Bangladesh Shipping Corporation has been relentlessly trying for balancing and modernizing
the national fleet under replacement and expansion scheme. With this in mind, a fleet planning
study was conducted. A strategic plan was sketched to build up a mixed fleet of 24 vessels with
an aim of acquiring 15 ships (One second hand mother tanker, 8 second hand / new full cellular
container vessels and 6 second hand multipurpose cargo vessels) gradually during the time
scale started from the fiscal year 1996-97 to 2004-2005. Unfortunately due to non-availability
of fund BSC could not procure any ship according to the plan. Nevertheless, in accordance with
present trend of the shipping trade BSC has been trying to acquire container vessels on priority
basis.
Financial assistance/soft terms loan from the donor countries/agencies for acquisition of ships
are not available at present. In consideration of existing stable financial condition BSC has
taken initiative to acquire ships from its own fund during the current fiscal year. A project for
constructing a new full cellular container vessel of about 700-750 TEUs (about 13000 DWT) in
Bangladesh on own funding is now at the final stage. At the same time process for procuring
one 16 years old second hand full cellular container vessel is under way.

14
 2.9 FINANCIAL HIGH LIGHTS

Particular 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Authorised 2,50,000 2,50,000 2,50,000 4,000,000 4,000,000
capital (In
Tk.000)
Net profit (In 4,66,842 (1,02,601) 133,424 18,360 14,641
Tk. 000)
(Loss)
Total Assets 439,46,78 3,149,322 3,814,066 3,457,525 6,541,930
(In Tk. 000)
Total 208,95,08 1,661,898 1,825,490 1,672,630 1,860,305
Liability (In
Tk. 000)
Net worth / 2305170 2,081,424 2,048,576 1,784,895 4,681,624
owner
Equity (In
Tk. 000)
Net 343,48,79 3,120,409 3,042,822 2,825,722 5,759,404
Investment
(In Tk. 000)
Net - (230.07) (61.16) (130.62) (49.10)
Operating
Cash FIow

15
 2.10 KEY RATIOS

particular 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Current 1:0.33 l:0.29 1 : 0.34 1:0.30 1:0.15
Ratio
Quick Ratio 1:0.25 1:0.56 1 : 0.40 1:0.36 1:0.16
Debt Equity 33:67 33 :67 36: 64 39:61 8:92
Ratio
Return on 13.59% (3.297%) 4.38% 0.65% 0.25%
Investment
Earning per Tk 16.25 (5 l.30) 66.71 9.18 1.07
shares (EPS)

2.11 SWOT ANALYSIS

S=Strength

W= Weakness,

O=opportunity,

T= Threats.

Strength and weakness are related to internal environment and opportunities and threats are
related to external environment. The existence in the future depends on its strength, weakness,
opportunities, and threats analysis.

16
 Diagram: SWOT ANALYSIS.

Strengths:

 Potentiality of service.
 Loyalty of employees
 Unity of employees
 Managing employees innovatively
 Strong distribution channel.

Weakness:

 Determination of stock price problem

 Determination of ESOP rate problem.
 Providing same sizes pre-packaged services.

17
Opportunities:

 Focusing specific target market

 Large markets.
 Better location facility to attract customer.
 Providing service internationally.

Threats:

 Threats of substitutes.
 Alternatives are available in some segment.
 High competitive in nature.

18
CHAPTER 03
FINANCIAL
STATEMENTS
ANALYSIS

19
 3.1 Common size and trend analysis
Common size analysis: common size analysis is simply a standardization of the items to
eliminate the effect of size. Line items a expressed per dollar of an attribute that reflects the scale
of operation. However, if that attribute is chosen carefully, and if reformulated statements are
used, the scaling will reveal pertinent features of a firm’s operations.

Common size income statement:

Particular 2007- 2008- 2009- 2010- 2011-

2008 2009 2010 2011 2012
OPERATING INCOME 100% 100% 100% 100% 100%

Freight earning 96.23 95.712 95.577 94.243 89.309

Other operating income 3.79 4.288 4.423 5.757 10.691

OPERATING EXPENSES 88.64 107.25 109.79 95.97 102.79

Operating surplus before admin.exp.& int. 11.36 -7.423 -9.782 4.036 -2.786

interest on loans 0.029 0.019 0 0 0

Administrative expenses 0.759 1.447 2.781 6.92 7.728

Net operating Profit(loss) for the year 10.427 -8.89 -12.563 -3 -10.515

Other income 0.887 4.997 18.342 3.573 11.044

Net income for the year 11.314 3.893 5.778 1 0.529

Interpretation: After computation I have found that the company’s freight earning has
declined and its other operating income has increased gradually. Its operating expenses have also
increased year by year. The company’s operating surplus before administrative expenses and
interest expenses has reduced year by year even it was negative during 2008-2009,2009-2010
and 2011-2012. Its other administrative expenses has increased at an exorbitant rate. Ultimately,
its net income has also reduced.

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 Common size Balance sheet:

Particular 2007- 2008- 2009- 2010- 2011-

2008 2009 2010 2011 2012
TOTAL ASSETS 100% 100% 100% 100% 100%

TOTAL NON-CURRENT ASSETS 33.692 42.844 37.547 38.339 18.708

TOTAL CURRENT ASSETS 65.295 57.156 62.453 61.661 8.129

TOTAL EQUITY 52.934 55.781 52.905 51.623 71.563

TOTAL NON-CURRENT LIABILITIES 25.446 27.711 25.664 30.103 16.475

Total CURREN'T LIABILITIES 21.619 16.774 21.457 48.377 28.437

TOTAL EQUITY & LIABILITIES 100% 100% 100% 100% 100%

Interpretation: From the table we can say that the company’s total non-current assets were
very high in 2008-2009 and very low in 2011-2012. The amounts amounts were almost similar
except in 2011-2012. Total equity has increased in 2011-2012.

21
Trend Analysis: Trend analysis expresses financial statements items as an index relative to a
base year. Trend analysis gives a picture of how financial statement items have changed over
time.

Trend analysis of income statements:

Particular 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
OPERATI
NG 4,126,344,193 2,635,689,526 2,308,989,367 2,666,208,872 2,765,473,429
REVENUE

OPERATI
NG
EXPENSES 3,657,585,974 2,831,355,688 2,534,850,803 2,558,602,803 2,842,529,849

Operating
surplus
before
admin.exp. 468,758,219 -195,666,162 -225,861,436 107,606,069 -77056420
& int.(OI)

Net
Financial
Income 4,084,279 93,065,286 359,288,110 (89,245,949) 91,697,121

Comprehen
sive income
466,842,498 102,600,876 133,423,675 18,360,120 14,640,701

Interpretation: The company’s operating revenues have decreased from the FY of 2007-
2008 to 2009-2010. But after 2009-2010 it is going to increase. The company’s OI and
comprehensive income have also reduced.

22
 Trend analysis of Balance sheet:
PARTICULAR 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
TOTAL OPERATIG 4,439,678,791 3,648,721,877 3,874,076,571 3,457,525,846 6,541,930,200
ASSETS

TOTAL 840,513,854 474,332,641 474,332,641 546,275,410 679,216,848

OPERATING
LIABILITIES

NET OPERATING 3,599,164,937 3,174,389,236 3,218,419,096 2,911,250,436 5,862,713,352

ASSETS(NOA)

TOTAL FINANCIAL 1,248,995,155 1,187,559,329 1214485431 1,126,355,262 1,181,088,593

OBLIGATION

TOTAL FINANCIAL 0 0 0 0 0
ASSETS

NET FINANCIAL 1,248,995,155 1,187,559,329 1214485431 1,126,355,262 1,181,088,593

OBLIGATION(NFO)

TOTAL CSE 2,350,169,782 2,091,423,907 2,049,576,359 1,784,895,174 4681624759

NFO+CSE 3,599,164,937 3,174,389,236 1,214,485,431 2,911,250,436 5,862,713,352

Interpretation: The company’s net operating assets have reduced from the FY of 2007-2008
to 2010-2011. But in 2011-2012 NOA was very high.

23
 3.2 COMPUTATION OF FCF AND ANALYSIS

Particular 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Operating 468,758,219 -195,666,162 -225,861,436 107,606,069 -77,056,420
Income(OI)

LESS: Change - -424,775,701 44,029,860 -30,168,660 2,951,462,916

in NOA

Equal to: FREE - 229,109,539 -269,891,296 137,774,729 -3,028,519,336

CASH
FLOW(FCF)

Interpretation: The company’s free cash flow was negative in 2009-2010 and 2011-2012.
Because the company’s operating income was also negative in that year and at the same time its
changes in NOA were very large amount. For these reasons the company’s free cash flow was
negative in 2009-2010 and 2011-2012.

24
 3. 3 ANALYSIS OF PROFITABILITY

Particular 2008-2009 2009-2010 2010-2011 2011-2012

ROCE -4.94% 6.19% 0.99% 0.45%

RNOA -5.78% -7.07% 3.51% -1.76%

NBC -7.32% -29.92% 7.63% -7.95%

ROOA -4.19% -5.41% 3.59% -1.05%

PM -7.42% -9.78% 4.04% -2.79%

ATO 77.89% 72.29% 86.88% 63.08%

Interpretation: The Company’s ROCE was negative in 2008-2009 because total CSE was
declined in 2008-2009. In 2009-2010 ROCE was very high than other years. After 2009-2010
ROCE again starts to decline. RNOA is also declining from year to year except in 2010-2011.
Net borrowing cost was high in 2010-2011. Ultimately ROCE, RNOA, NBC, ROOA, PM and
ATO all the measures were very high in 2010-2011.

25
 3. 4 ANALYSIS OF GROWTH

Particular 2009-2010 2010-2011 2011-2012

Change in RNOA -1.11% 12.63% -3.63%
-1.11%
Change in ROCE 11.13% -5.20% -0.54%
Change in CSE -41,847,548 -264,681,185 2,896,729,585

Interpretation: The Company has high return on net operating assets in 2010-
2011. But other year it was very lower. The company’s ROCE was high in 2009-
2010 and in other years ROCE was very lower. At the same time the company’s
CSE were decreasing gradually except in 2011-2012.

3. 5 IDENTIFYING RED FLAG AND EARNINGS QUALITY

Potential Red Flag of BSC: There are some red flag of Bangladesh shipping corporation. Such
as:

 Unusual increases in inventory in relation to sales.

 Increases in the gap between net income and cash flow.
 Unexpected large asset write-offs.
 Large fourth-quarter adjustments.
 Qualified audit opinions.
 Related-party transactions.

26
 3.6 Forcasted earning

Particular 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Actual forecasted forecasted forecasted forecasted forecasted
earnings 14,640,701 11,712,561 9,370,049 7,496,039 5,996,831 4,797,465

Growth 20%(declining
rate growth)

Explanation: The earnings of the Bangladesh shipping corporation are declining at a rate of
20% from 2012-2013 to 2016-2017. As the net income of the company are declining trends and
economic condition of the country are not favorable the forecasted earning are decreased year by
year.

27
 CHAPTER
04
CONCLUSION

28
 4.1 FINDINGS

 The company falls in the category of Miscellaneous.

 The company’s operating income was negative.
 The company’s profit margin has reduced.
 The company’s authorized capital was 25 crore.
 The company has stable operating environment.
 The company’s total assets were also reduced except in 2011-2012.
 The company has moderate profitability to be adversely affected by foreseeable events.
 Its net income has reduced.

4.2 RECOMMENDATIONS

The company should develop its operation to increase its net income and ultimately net worth.
The company should try to increase ROCE,RNOA and ROOA and should try to reduce its net
borrowing cost and short term interest rate.

4.3 CONCLUSIONS

The Bangladesh Shipping Corporation (BSC), a state owned and managed public sector
Corporation, is the largest ship owner in Bangladesh was established on 5th February 1972
under President’s Order No. 10 of 1972. The company’s operating surplus before administrative
expenses and interest expenses has reduced year by year even it was negative during 2008-
2009,2009-2010 and 2011-2012. Its other administrative expenses has increased at an exorbitant
rate. Ultimately, its net income has also reduced. The company’s operating revenues have
decreased from the FY of 2007-2008 to 2009-2010. But after 2009-2010 it is going to increase.
The company’s OI and comprehensive income have also reduced. The company’s free cash flow
was negative in 2009-2010 and 2011-2012. Because the company’s operating income was also
negative in that year and at the same time its changes in NOA were very large amount. For these
reasons the company’s free cash flow was negative in 2009-2010 and 2011-2012.

29
 4.4 BIBLIOGRAPHY

5 years (2007-08 to 2011-12) Annual Report of Bangladesh Shipping Corporation

Limited
Financial Statements analysis and valuation –Stephen H. Penman.
Excel output.
Suggested guideline by course teacher.

4.5 Appendix

30