Independent University, Bangladesh (IUB)

ACN 301 Group Assignment

Submitted to
ACN 301; Sec: 01;
Respected Instructor
Dr. Rushdi Razzaque

Submitted By
Group “The Analyzers”
ID NAME EMAIL

172150 mdjhrizvi@outlook.com
Md. Jahidul Haque
1

173025 mahmudulhasanullash@gmail.com
Md. mahamudul Hasan Ullash
6

172183 MDS6085@gmail.com
Nazim Uddin
2

173013 shariarmahi@gmail.com
Md. Abrar Shariar Haque
0

i
Date of Submission
5th April 2020

ii
 Introduction

The major purpose of the study is to analyze the Income Statement, Balance Sheet and Cash
Flow Statement of Two Selected Companies for the years of 2018 and 2019.

The two selected companies for our analyzing are –

GPH Ispat Limited

IFAD Autos Limited

These organization’s annual reports were being calculated and Income Statement, Cash Flow
Statement and Balance Sheet were being analyzed from those reports.
1. A compliance list of IASs and IFRSs related to the Income statements of
GPH Ispat Ltd. And IFAD Autos Ltd.

GPH Ispat Ltd. IFAD Autos Ltd.

Details 2017-2018 2018-2019 2017-2018 2018-2019

Presentation of Financial Statements BAS 1 IAS 1 BAS 1 IAS 1

Inventories BAS 2 IAS 2 BAS 2 IAS 2

Statement of Cash Flows BAS 7 IAS 7 BAS 7 IAS 7

Accounting Policies, Changes in

BAS 8 IAS 8 BAS 8 IAS 8
Accounting Estimates and Errors

Events after the Reporting Period BAS 10 IAS 10 BAS 10 IAS 10

Income Taxes BAS 12 IAS 12 BAS 12 IAS 12

Property, Plant and Equipment BAS 16 IAS 16 BAS 16 IAS 16

Leases BAS 17 IAS 17 BAS 17 IFRS 16

Employee Benefits BAS 19 IAS 19 BAS 19 IAS 19

The Effects of Changes in Foreign

BAS 21 IAS 21 BAS 21 IAS 21
Exchange Rate

Borrowing Costs BAS 23 IAS 23 BAS 23 IAS 23

Related Party Disclosures BAS 24 IAS 24 BAS 24 IAS 24

Investments in Associates and Joint

IAS 28
Venture

Financial Instruments: Presentation BAS 32 BAS 32 IAS 32

Earnings Per Share BAS 33 IAS 33 BAS 33 IAS 33

Interim Financial Reporting BAS 34 IAS

Impairment of Assets BAS 36 IAS 36 BAS 36 IAS 36

Provisions, Contingent Liabilities and BAS 37 IAS 37 BAS 37 IAS 37

Contingent Assets

Intangible Assets BAS 38 IAS 38

Financial Instruments: Recognition

BAS 39 IFRS 9 BAS 39 IFRS 9
and Measurement

First Time Adoption of International

BFRS 1 IFRS 1
Financial Reporting Standards

Non-current Assets Held for sale and

BFRS 5 IFRS 5
Discontinued Operation

Financial Instruments: Disclosures BFRS 7 IFRS 7 BFRS 7 IFRS 7

Operating Segments BFRS 8 IFRS 8

Disclosure of Interests in Other

IFRS 12
Entities

Fair Value Measurement BFRS 13 IFRS 13 IFRS 13

Revenue from Contract with

IFRS 15 BFRS 15 IFRS 15
Customers

2. Analysis of Inventory Evaluation method of GPH Ispat Ltd. and IFAD

Autos Ltd. for the years 2017-2018 and 2018-2019. With the information of
relevant disclosures in the annual reports.

GPH Ispat Ltd. IFAD Autos Ltd.

Details 2017-2018 2018-2019 2017-2018 2018-2019

Inventory Weighted Weighted FIFO (Fast In FIFO (Fast In

Evaluation average average Fast Out) Fast Out)
Method method. method.
Source GPH Ispat’s GPH Ispat’s IFAD Autos IFAD Autos
annual report annual report Annual Report Annual Report
2017-18. 2018-19. 2017-18. 2018-19.

Page No: 081 100 112 101

Notes: 3.07 3.07 2.17 2.17

Inventory turnover ratio and days sales in inventory ratio for GPH Ispat
Ltd. for the years 2017-2018 and 2018-2019

GPH Ispat Ltd.

Details 2017-2018 2018-2019

Inventory
Turnover
( 8,211,556,579
2,658,690,825 ) ( 11,110,755,161
2,827,422,429 )

Ratio ¿ 3.08857׿ ¿ 3.92964׿

Average
Inventory
( 2,862,785,186+2,454,596,463
2 ) ( 2,792,059,671+ 2,862,785,186
=2,658,690,825
2 )=2,827,422,429
Days sales in
inventory
( 2,862,785,186 ×365
8,211,556,579 ) ( 2,792,059,671× 365
11,110,755,161 )

ratio = 127.24952; ≅ 127 days = 91.72210; ≅ 92days

Sources GPH Ispat’s annual report 2017-18. GPH Ispat’s annual report 2018-19.

Notes: 20, 10; Page No: 73, 74; Notes: 22, 10; Page No: 88, 89

Inventory turnover ratio and days sales in inventory ratio for IFAD Autos
Ltd. for the years 2017-2018 and 2018-2019
 IFAD Autos Ltd.

Details 2017-2018 2018-2019

Inventory
Turnover
( 12,137,895,792
1,287,830,318 ) ( 8,753,053,427
2,236,573,067 )

Ratio ¿ 9.42507 times ¿ 3.91360 times

Average
Inventory
( 1,447,449,917+1,128,210,719
2 ) ( 3,025,696,216+1,447,449,917
=1,287,830,318
2 )=2,236,573,067
Days sales in
inventory
( 1,447,449,917× 365
12,137895,792 )
=43.52643 ( 3,025,696,216 ×365
8,753,053,427 )
=126.17073

ratio ≅ 46 days ≅ 126 days

Sources IFAD Autos Annual Report 2017- IFAD Autos Annual Report 2018-
18. 19.

Page No: 104, 105 93, 94

Notes: 32, 07. 32, 08.

Analysis:

Inventory turnover is a ratio showing how many times a company has sold and replaced
inventory during a given period. In 2017-2018, Inventory turnover of GPH Ispat Ltd. was
3.08857 and IFAD Autos Ltd. was 9.4250. IFAD Autos Ltd. Inventory turnover are higher
than GPH Ispat Ltd. In 2018-2019 GPH Ispat Ltd. Inventory turnover was 3.92964 and IFAD
Autos Ltd was 3.91360. GPS Ispat Ltd. Inventory turnover was higher than IFAD Autos Ltd.

So comparatively in 2017-2018, IFAD Autos Ltd. Inventory Turnover ratios were good. But
in 2018-2019 GPS Ispat Ltd. Inventory Turnover ratios were good.

The financial ratio days' sales in inventory tell you the number of days it took a company to
sell its inventory during a recent year. In 2017-2018, days sales in inventory ratio of GPH
Ispat Ltd. was 127 days and IFAD Autos Ltd. was 46 days. IFAD Autos Ltd. days sales in
inventory ratios was took less time than GPH Ispat Ltd. In 2018-2019 GPH Ispat Ltd. days
sales in Inventory ratios was 92 days and IFAD Autos Ltd was 126 days. GPS Ispat Ltd. days
sales in Inventory ratio was took less time than IFAD Autos Ltd.

So in 2017-2018, IFAD Autos Ltd. days sales in Inventory ratios were good. But in 2018-
2019 GPS Ispat Ltd. days sales in Inventory ratio ratios were good.

3. The Gross Profits, Operating Profits, and Net Income of GPH Ispat Ltd.
And IFAD Autos Ltd. for the years 2017-2018 and 2018-2019 under our
investigation. And the Cash Flow from Operations of these companies for
the years 2017-2018 and 2018-2019.

GPH Ispat Ltd. IFAD Autos Ltd.

Details 2017-2018 2018-2019 2017-2018 2018-2019

Gross Profit 1,602,544,541 2,157,928,766 2,866,738,879 2,264,316,134

Operating Profit 1,276,267,016 1,735,009,540 2,319,035,038 1,715,036,045

Net Income 643,587,425 806,201,728 1,553,911,731 1,137,310,826

Cash Flow from 365,484,140 579,851,459 (2,433,103,127) (2,606,198,600)

Operating Activities (Inflow) (Inflow) (Outflow) (Outflow)

Source: GPH Ispat’s GPH Ispat’s IFAD Autos IFAD Autos

annual report annual report Annual Report Annual Report
2017-18. 2018-19. 2017-18. 2018-19.

Page No: 74, 76 89, 91 105, 107 94, 96

Critical analysis of accrual income and cash income of GPH Ispat Ltd. for
the Years 2017-2018 and 2018-2019

As GPH Ispat’s CFO is positive in both years they are in the safe zone. But there is a
difference between their accrual income and cash income. The reason behind this is the late
cash collection. Most of their sales are credit sales. And majority of those receivables are
collected in the next period.

Critical analysis of accrual income and cash income of IFAD Autos Ltd. for
the Years 2017-2018 and 2018-2019

The IFAD Autos Ltd. Has a high turnover in both of the years. But in both of those years
their CFO has been negative. Which proves the company cannot collect its cash within proper
time. This can jeopardize the company’s image to its creditors. Which can prove to be fatal
for the business in the industry.

4. Computation of current cash debt coverage ratio, cash debt coverage

ratio and free cash flow for GPH Ispat Ltd. for the years 2017-2018 and
2018-2019

GPH Ispat Ltd.

Details 2017-2018 2018-2019

(a) CFO CFO

Average Current Liability Average Current Liability
Current
cash debt 365,484,140 579,851,459
7,229,381,624 8,377,201,464.5
coverage
ratio ¿ 0.05055 ¿0.06921
 Average 8,576,769,445+5,881,993,803 8,205,228,596+8,549,174,333
=7,229,381,624 =8,377,201,464.5
2 2
Current
Liability

(b) Cash CFO CFO

Total Liability Total Liability
debt
coverage 365,484,140 579,851,459
=0.02924 =0.02739
12,497,955,103 21,163,278,088
ratio

Average 17,165,306,993+7,830,603,212 25,157,667,609+ 17,168,888,566

=12,497,955,10 3 =21,163,278,088
2 2
Total
Liability

(c) Free CFO–Purchase of Property, Plant CFO–Purchase of Property, Plant and

cash flow and Equipment–Dividend Equipment–Dividend

365,484,140−900,465,843−935,672,134
579,851,459−900,465,843−1,110,890,384

= -1,470,653,837 = -1,431,504,768

Source: GPH Ispat’s annual report 2017-18. GPH Ispat’s annual report 2018-19.

Note: 4; Page: 76, 73, 86; Note: 04, 33; Page: 91, 88, 107;

Analysis on GPH Ispat Ltd.: As per the table GPH Ispat Ltd. has a positive CFO of
365,484,140 tk in the year 2017-2018. Which can cover around 5% of their current liability
3% of their total liability of that year. In that year they have a negative free cash flow. In the
next year they have a comparatively better CFO of 579,851,459 to the previous year. Which
can cover around 7% of their current liability and 3% of their total liability.
Computation of current cash debt coverage ratio, cash debt coverage ratio
and free cash flow for IFAD Autos Ltd. for the Years 2017-2018 and 2018-
2019

IFAD Autos Ltd.

Details 2017-2018 2018-2019

(a) CFO CFO

Average Current Liability Average Current Liability
Current
cash debt −2,433,103,127
=−0.22576
−2,606,198,600
=−0.20369
10,777,366,851 12,794,859,681
coverage
ratio

Average 12,157,913,573+ 9,396,820,129 13,431,805,788+12,157,913,573

=10,777,366,851 =12,794,859,681
2 2
Current
Liability

(b) Cash CFO CFO

Average Total Liability Average Total Liability
debt
coverage −2,433,103,127
=−0.13321
−2,606,198,600
=−0.12039
18,264,471,437 21,647,614,143
ratio

Average 20,356,362,149+ 16,172,580,725 22,938,866,137+20,356,362,149

=18,264,471,437 =21,647,614,143
2 2
Total
Liability

(c) Free CFO–Purchase of Property, Plant CFO–Purchase of Property, Plant and

cash flow and Equipment–Dividend Equipment–Dividend

As the CFO of this company is As the CFO of this company is

negative there is no free cash flow negative there is no free cash flow.

Source: IFAD Autos Annual Report 2017-18. IFAD Autos Annual Report 2018-19.

Note: 4.00; Page: 107, 104, 118; Note: 4.00; Page: 96, 93, 105;
Analysis of IFAD Autos: As shown in the table IFAD Autos Ltd. had a negative CFO of
-2,433,103,127 tk which cannot cover any current liability or total liability of the company. In
the following year they again have a negative CFO of -2,606,198,600 tk which cannot cover
any kind of debt of the company.