Corporate Financial Analysis: Square Textiles Ltd.

TERM PAPER FIN 639 SEC: 1

Submitted By: Ehsanul Hannan Noor-A-Nazia Md. Sajjad Bin M. Rahman 081 124 060 081 125 060 081 589 060

Submitted To: Dr. Masud Rahman Professor MBA Program, School Of Business April 16, 2011

April 16, 2011

Dr. Masud Rahman Professor MBA Program School of Business North South University RE: Submission of term paper on Corporate Financial Analysis: A Case on Square textiles Ltd. Dear Sir: We do hereby feel privileged to submit our term paper on Corporate Financial Analysis: Square Textiles Ltd., with an intention to have a better understanding of the course Corporate Finance. We greatly value the opportunity you gave us. With Regards Ehsanul Hannan M. Rahman ID: 081 124 560 081 589 060 ID: 081 125 060 ID: Noor-A-Nazia Md. Sajjad Bin

Acknowledgement
At first, we show our gratitude to almighty ALLAH without whose grace, nothing is possible. Our special thanks go to the honorable course instructor of the course, Dr. Masud Rahman, who helped us in every sector to prepare this project paper with his acquired knowledge and vast experience. We are very grateful for his guideline and utmost patience towards us.

Abstract
The objective of this case study is to find out the policy decisions made by Square Textiles Ltd. that influenced share price movement. We were also interested to analyze its investment decisions and the impact on share price. We also tried to forecast the share price by identifying growth opportunity of the firm.

Contents
Chapter 1 1.1 1.2 1.3 1.1.1 Introduction & Methodology.................................1 Square Textiles Ltd. at a glance..........................................1

Introduction...............................................................................1 Objective of the study................................................................1 Methodology..............................................................................2 Financial Analysis techniques..............................................2 Statistical Techniques..........................................................3 Nature and Source of Data..................................................3 Time Period under Consideration......................................3 Standard of comparison......................................................3

1.3.1 1.3.2 1.3.3 1.3.4 1.3.5 1.4

Limitations of the study.............................................................3 Analysis & Interpretation of Financial Data............5 Sources of Discrepancies in the Balance Sheet................6 Analysis of the Cash Flow:...................................................9 Liquidity Ratio...................................................................10 Asset Management Ratio...................................................13 Debt Management Ratio....................................................17 Profitability Ratio...............................................................19 Market Value Ratio............................................................22 Stock Price Movement........................................25

Chapter 2 2.1 2.2 2.3 2.1.1 2.2.1 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 Chapter 3 3.1 3.2 3.3 3.4 3.5

Balance Sheet Analysis..............................................................5 Cash Flow Analysis....................................................................8 Ratio Analysis............................................................................9

Account Closing.......................................................................25 Dividend Declaration...............................................................25 Record Date.............................................................................26 Annual General Meeting..........................................................26 M&A Activities..........................................................................26 Prospective Analysis...........................................28

Chapter 4 4.1

Different Growth Rates............................................................28

4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9

Scenario 1: Growth at Sustainable Growth Rate......................28 Scenario 2: Growth as per Gordon Model................................29 Scenario 3: Growth at GDP growth rate...................................29 Scenario 4: Optimistic..............................................................30 Scenario 5: Pessimistic............................................................30 Choice of Growth Rate.............................................................31 The Plug Variable.....................................................................31 Weighted Average Cost of Capital...........................................31

4.10 Share Price according to Gordon Model...................................32 Chapter 5 5.1 5.2 5.3 Findings and Conclusions....................................33

Financial Performance.............................................................33 Stock Price Movement.............................................................33 Growth Prospect and Future Share Price.................................33 34

Appendix A.1 A.2 A.3

Regression results...................................................................34 Weighted Average Cost of Capital...........................................39 Financial Statements & Performance Data..............................40

A.3 Financial Statements & Performance Data

Chapter 1 Introduction & Methodology

1.1 Introduction
This case study is prepared with an intention to meet partial requirement of the course Corporate Finance and to have a better insight of the subject matter. We have chosen Square textiles Ltd., one of the leading yarn manufacturers of the country for this purpose. We performed an analysis of the company and tried to evaluate its justification with the acquired knowledge from this course. 1.1.1 Square Textiles Ltd. at a glance Square Textiles Ltd. was established as a public limited company in 1994 as a group company in Square Group with a business line of manufacturing and marketing of yarn. The company started its operation on 1997 and was listed at both Dhaka Stock Exchange and Chittagong Stock Exchange in 2004. At the end of 2009 paid-up capital of the company was Tk. 705.84 million with 70,584,053 shares outstanding. The company is very profitable and doing very good in terms of share price also. Dividend payout in both cash and bonus share form has also been very consistent through the last few years. Square Textiles got Oeko-Tex Standard 100 and ISO-9002 certification in 2000. At end of 2009, the production capacity of the company stands at 11,582,899 Kg Ring Yarn and 12,329,688 Kg of O/E yarn.

1.2 Objective of the study

The objective of this Case Study is to: Identify policy decisions that has an impact on share price movement

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Relate consequences of financial activities with the valuation of the firm

1.3 Methodology
A number of methods and techniques which were used towards reaching a conclusion are stated below: 1.3.1 Financial Analysis techniques A balance sheet analysis was performed to identify the sources of discrepancies in balance sheet that causes book value and market value of share to be different. A cash flow analysis was performed to study the cash dealings of the firm and to identify its financial position. We also performed a ratio analysis to evaluate the firms financial strengths or weaknesses. The most prominent Financial Analysis techniques include the following 3 methods: Bench Mark Analysis Time Series (Trend) Analysis Cross Section Analysis Bench mark Analysis This method is literally unusable in Bangladesh as no industry data is widely available regardless of any sector. This led to high dependency on the remaining two methods. Time Series (Trend) Analysis The time series analysis is predominantly known as Trend Analysis, where we try to find a trend of a specific performance of the company. Different ratios are computed over time and comment is made whether any increasing / decreasing trend is found.

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Cross Section Analysis In this type of analysis, Companys financial ratios are compared with other industry ratio averages. This can also be performed by issuing comparison between two companies of similar business. For the sake of the case study, we will perform Time Series analysis on the seven year data that we have and a Cross Section analysis between our company of interest Square Textiles Ltd. and Apex Spinning & Knitting Mills Ltd (ASKML). 1.3.2 Statistical Techniques To relate share price movement with different events or policy decisions e.g. account closing, record date, dividend declaration, AGM etc. we relied on simple regression by populating dummy variable against the event. 1.3.3 Nature and Source of Data The data used in this study is secondary data collected from annual reports and Dhaka Stock Exchange web site and data archive 1.3.4 Time Period under Consideration We collected seven (08) years of data of Square Textiles Ltd., and considered data from 2003 to 2010. For enquiry into share price movement weve used only the data from 2008 2010 since news about different events were only available for this period. For trend analysis, we used data of 2003 2009 since annual report of 2010 is yet to be published. We accept that only seven year data is not good enough to comment on the financial performance of the company, but it can at least give us a glimpse of the recent trend that the company is going through. 1.3.5 Standard of comparison As the industry benchmark was not available to us, we decided to compare the ratios of our company with that of another one. We chose Apex Spinning & Knitting Mills Ltd. for the comparison as this companys performance was the best among the companies whose data were available.

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1.4 Limitations of the study

Like all other case studies, this too has got its limitations. Following are the areas where we had our limitations Unable to conduct direct interview with Square Textiles employees to get a better insight of our findings. Unavailability of information in a Soft Copy which consumed lot of time. No information was available on the overall market share in the yarn industry in Bangladesh. Moreover, the industry averages were not also available which would have been a better option to compare with. Financial year of Square Textiles and ASKML ends in different months which can create inaccuracies in cross-section analysis Due to time constraint, cross section analysis was done only for last year. It would be better if it was compared for last 7 years. Due to unavailability of project data, we could not perform an analysis of investment decisions made by Square Textiles

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Chapter 1 Analysis & Interpretation of Financial Data

1.1 Balance Sheet Analysis
The Balance Sheet shows the financial position of a firm at a specific point in time. The financial statement indicates the investments made by the firm in the form of assets and the means by which the assets were financed that is, whether the funds were raised by borrowing (which is actually the Liabilities part of a Balance Sheet) or by selling ownership shares or common shares or common stocks (which is basically the Equity part of a Balance Sheet). Amounts shown on a balance sheet are generally the historic cost of items and not their current values. Balance sheet can be defined as: Assets = Liabilities + Equity. The assets side of the balance sheet is always equal to the total liabilities and equities. Table 1: Balance sheet of Square Textiles Ltd. based on book value of share Figures in Taka

Balance Sheet
Assets Current Assets Stocks Trade Debtors Short Term Loan Advance, Deposits and Prepayments Cash & Bank Balances Total Current Assets Fixed Assets 942,568,13 4 1,683,329, 048 431,848,64 9 120,651,50 6 46,332,373 3,224,729 ,710 Liabilities and Equities Current Liabilities Short Term Bank Loan Short Term Loan Sundry Creditors Other Current Liabilities Provision for income tax Total Current Liabilities Non-current Liabilities 573,802,358 552,993,073 870,756,515 170,321,074 108,728,783 2,276,601, 803

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Assets at Cost Less Depreciation Investment-Long Term (At Cost) Share Money Deposit Total Fixed Assets

1,378,552, 606 105,000,00 0 800,000,00 0 2,283,552, 606

Deferred Tax Liability Total Liabilities Equities Share capital General Reserve and Surplus Tax Holiday Total Equities

112,276,486 2,388,878, 289

705,804,530 2,413,563,4 97 3,119,404,0 27 5,508,282,3 16

Total Assets

5,508,282, 316

Total Liabilities & Equities

The above table shows the Balance Sheet of Square Textiles Ltd. as presented in their annual report. According to this balance sheet the book value of Square Textiles shares for the day December 31, 2009 should be 44.19 Taka. But in reality we can see that the actual market price on that day was much higher than that, 111.54 Taka.

Figure 1: Comparison between Market Value & Book Value of Square Textiles Shares Having a look at the trend analysis of the market value and book value of Square Textiles Ltd., it was found that the Market value has been much higher than the book value by a huge margin. These values indicate that there exists some sort of discrepancy between these two types of values. Our intention is to identify these discrepancies and thus propose a Balance Sheet based on the Market Value. 1.1.1 Sources of Discrepancies in the Balance Sheet In order to identify the sources of discrepancies we now concentrate on the Balance Sheet for the year 2009, of Square Textiles Ltd. After a thorough analysis of balance sheet items, the following items were identified as factors contributing towards raising discrepancies between the book value and market value: Fixed Assets are Undermined: The financial statements have been prepared under the historical cost convention and fixed assets are stated

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at cost less accumulated depreciation. But, as suggested by the Time Value of Money concept, price changes as time passes. Moreover, the depreciation was charged using the Straight Line method. From this analysis above we reach to a conclusion that the values of fixed assets are undermined. The asset composition shows that a significant 30% of fixed assets are land and building which have been recorded at historical cost. But over the years these assets market price has significantly increased which has not been reflected in the balance sheet. No Intangible Assets section: It was found that the company did not incorporate any Intangible assets in the balance sheet. One of the most important intangible assets is Trademark which was not considered in preparing the balance sheet. Square Textiles Ltd. is in operation in Bangladesh for the last 11 years, since 1997, and has been holding a healthy position for last several years. They have been profitable with a fair performance in share market also. So, this is certainly an evidence of their goodwill which should be valued. The firm recently acquired Mithapur Textiles and also merged with Square Spinning Ltd. These M&A activities have been recorded as cost/share price. But the brand value acquired from these activities has not been recorded. Equity Understated: As we can find from the balance sheet here that equity of Square Textiles Ltd. has been severely understated. The company calculates its equity from the period of 2004 when it was first listed with Dhaka Stock Exchange, but with reference to the Time Value of Money concept the equity has increased a lot over this period of time. Gain from price increase in land and building has not been recognized. Upon identifying the above mentioned discrepancies, we adjusted the balance sheet in terms of the market value of stocks. In order to standardized in terms of market value the following three values were changed in the original balance sheet. The Value of Assets Less Depreciation was changed from taka 1,378,552,606 to Taka 4,132,057,851

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Goodwill was added valued as taka 2,000,000,000. General Reserve and Surplus has been changed from 2,413,563,497 taka to 7,167,104,742 taka. As a result the Total Assets and Total Liabilities & Equities sides balanced at taka 10,261,787,561. Table 2: Balance sheet of Square Textiles Ltd. based on Market value of share

Balance Sheet
Assets Current Assets Stocks Trade Debtors Short Term Loan Advance, Deposits and Prepayments Cash & Bank Balances Total Current Assets Fixed Assets Assets Less Depreciation Investment-Long Term (At Cost) Share Money Deposit Intangible Assets Total Fixed Assets 4,132,057,8 51 105,000,00 0 800,000,00 0 2,000,000,0 00 7,037,057,8 51 942,568,13 4 1,683,329,0 48 431,848,64 9 120,651,50 6 46,332,373 3,224,729, 710 Liabilities and Equities Current Liabilities Short Term Bank 573,802,35 Loan 8 552,993,07 Short Term Loan 3 870,756,51 Sundry Creditors 5 Other Current 170,321,07 Liabilities 4 Provision for income 108,728,78 tax 3 Total Current 2,276,601, Liabilities 803 Non-current Liabilities Deferred Tax Liability Total Liabilities 112,276,48 6 2,388,878, 289

Equities Share capital General Reserve and Surplus Tax Holiday Total Equities 705,804,53 0 7,167,104,7 42 7,872,909,2 72 10,261,787, 561

Total Assets

10,261,787, 561

Total Liabilities & Equities

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1.2 Cash Flow Analysis

The statement of cash flows is designed to show how the firms operations have affected its cash position by examining the investment and financing decisions of the firm. Often time, the information contained in the statement of cash flows answer questions like: Is the firm generative the cash needed to purchase additional fixed assets for growth? Does it have excess cash flows that can be used to repay debt or to invest in new products? Information contained in the Cash Flow Statement is useful both for financial managers and investors. Following is the cash flow analysis of Square Textiles Ltd.:Table 3: Cash Flow Statement for Square Textiles Ltd. for the year 2009 2009 Cash flow from operating activities Receipts: Cash from sales revenue Cash from other income Total cash receipts Payments: Purchase for raw & packing materials Manufacturing & operating expense Finance Cost Income tax Workers profit participation fund Total payment Net Cash Activities Flow From Operating 3,888,585,2 44 259,007 3,888,844,2 51 (2,840,712, 628) (517,209,34 4) (112,410,31 7) (41,934,432 ) (16,355,199 ) (3,528,621, 920) 360,222,33 1 2008 2,763,272,8 86 23,676 2,763,296,5 62 (1,951,063, 214) (482,296,26 9) (114,091,25 4) (77,675,961 ) (13,369,264 ) (2,638,495, 962) 124,800,60 0

Cash flow from investing activities Cash flow from investing activities Purchase of fixed assets Profit from disposal of Fixed Assets Cash Receiver from Merger of SSL Net Cash Flow From Investing

(97,332,491 ) 295,000 (10,000,000 ) (107,037,4

(130,606,40 6) 1,047,111 13,198,790 (116,360,5

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Activities Cash flow from financing activities Short term Bank loan Short term loan from/(to) sister Concern Payment of Dividend Net Cash Activities Flow From Financing

91) (203,726,22 7) 58,058,364 (105,876,07 9) (251,543,9 42) 1,640,898 44,691,475 46,332,373

05) (27,451,291 ) 129,959,939 (98,583,425 ) 3,925,223 12,365,318 32,326,157 44,691,475

Net cash position Opening cash & cash equivalents Closing Cash & Cash Equivalent 1.2.1 Analysis of the Cash Flow:

Net Cash Flow from Operating Activities: The net cash flow from operating activities was much higher than previous year mainly due to increase in sales which shows a good sign for the company. Net Cash Flow from Investment Activities: There is no significant change in net cash flow from investment activities compared to the previous year. Net Cash Flow from Financing Activities: The company has paid off a large amount of short term loan which caused a large amount of cash outflow.. Net cash after 2009 position is weaker than 2008 even after a significant rise in sales. This happened mainly due to paying off a large amount of short term loan.

1.3 Ratio Analysis

The real value of financially statements lies in the fact that they can be used to help predict a firms financial position in the future and to determine expected earnings and dividends. An analysis of the firms ratios generally is the first step in a financial analysis. The ratios are designed to show relationships between financial statement accounts within firms and between firms.

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Sources for these ratios are the company Financial Statements within the industry that contains figures on assets, liabilities, profits, and losses. Industry industry ratios data, are ratios only help meaningful an when compared a with other information. Since individual companies are most often compared with individual understand company's performance relative to that of competitors and are often used to trace performance over time. There are 5 major categories when ratio analysis is considered. These categories are: Liquidity Ratio which gives a picture of a companys short term financial situation or solvency. Asset Management Ratio uses turnover measures to show how efficient a company is in its operations and use of assets. Debt Management Ratio shows the extent that debt is used in a company's capital structure. Profitability Ratio uses margin analysis and show return on sales and capital employed. Market Value Ratio shows companys standing in the capital market. 1.3.1 Liquidity Ratio Liquid asset is an asset that can be converted to cash without significant loss of its original value. This basically indicates the strength of a company in terms of meeting the current obligations or liabilities, e.g. employee salary. Sometimes low liquidity even leads to bankruptcy. Two commonly used Liquidity Ratios are (1) Current Ratio and (2) Acid Test Ratio. Current Ratio Current Ratio is the ratio of current assets to current liabilities, which refers to the short term solvency of the company and calculated as: -

Current Ratio =

Current Assets Current Liabilities

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Table 1: Current Ratio for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Current Ratio ASK ML 2009 1.10

2009 1.35

2008 1.21

Square Textiles Ltd. 2007 2006 2005 1.38 1.12 1.41

2004 1.14

2003 1.01

We can see from the above data that the current ratio for Square Textiles is 1.35, which is below the benchmark standard for any company. But comparing with Apex Spinning & Knitting Mills Ltd., it is higher as Apex Spinning & Knitting Mills Ltd. has a Current Ratio of 0.89.

Figure 2: Current Ratio Trend The trend line of current ratio for Square textiles shows that the company has maintained a somewhat steady current ratio for the last 7 years and also there has been improvement in current ratio from last year. Acid Test Ratio (Quick) Ratio Acid Test Ratio is a better measure than Current Ratio as it deducts inventories from Current assets and thus provides a better idea about the liquidity of the firm. It is calculated as follows:

Acid Test Ratio =

Current Assets Inventorie s Current Liabilities

Table: Acid Test (Quick) Ratio for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Acid Test Ratio ASK ML 2009 0.76

2009 0.96

2008 0.76

Square Textiles Ltd. 2007 2006 2005 0.96 0.73 0.91

2004 0.80

2003 0.75

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Currently Square Textiles is maintaining a quick ratio of 0.96, which is lower than the Benchmark ratio of 1. But comparing with Apex Spinning & Knitting Mills Ltd., it is much higher as Apex Spinning & Knitting Mills Ltd. has a Quick Ratio of 0.075.

Figure 3: Acid Test Ratio Trend As we can see from the graph above, the quick ratio trend is not steady. It may indicate that the company has gone for multiple projects/investments in last few years. The companys quick ratio is pretty much close to the benchmark of 1. Overall Comment on Liquidity The overall liquidity position of the company is not very good but it is getting better. Both the ratios have increased in 2009. Considering the length of operation of Square Textiles the performance is quite good especially in terms of quick ratio as it is pretty close to benchmark. The kind of ups and downs found in the trend analysis is mainly due to the fact that the company has gone for multiple projects/investments in last few years. This eventually is good news for a firm like Square Textiles who has very strong financial support from the group. Also the companys position is much better compared to Apex Spinning & Knitting Mills. 1.3.2 Asset Management Ratio Whether the assets of the company are being used effectively or in other words is able to generate sales, is suggested by the asset management ratio. Inventory Turnover It shows that how many times the inventory of a firm is sold and replaced in a specific period.

Inventory Turnover =

Cost of GoodsSold Inventorie s

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Table: Inventory Turnover for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Invento ry Turnov er Square Textiles Ltd. 2007 2006 2005 ASK ML 2009

2009

2008

2004

2003

3.55

2.04

3.39

4.18

3.79

5.14

5.28

9.56

The inventory turnover for Square Textiles is 3.55 whereas, Apex Spinning & Knitting Mills Ltd. has inventory turnover of 9.56. So, in this regard, Square Textiles is in a much worse position.

Figure 4: Inventory Turnover Trend The trend line does not look very impressive. Inventory turnover is getting lower. This might be due to increasing price of raw materials and also due to price reduction to cope up with the competitive market. However, there is a very sharp rise from 2008 to 2009. This can primarily be attributed to the handsome increase in export sales. Days Sales Outstanding Days Sales Outstanding refers to the average time a company takes to turn the receivables into cash.

Days Sales Outstanding (DSO)=

Net Receivable Annual Sales/360

Table: Days Sales Outstanding for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year DSO ASK ML 2009 54.16

2009 158.2 6

Square Textiles Ltd. 2008 2007 2006 2005 2004 202.0 117.6 114.3 115.5 123.9 6 7 6 2 3

2003 145.8 3

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During the last year Square Textiles had a DSO of 158.26 days whereas, Apex Spinning & Knitting Mills Ltd. has DSO of 54.16 days. So, in this regard, Square Textiles is in a much worse position.

Figure 5: Days Sales Outstanding Trend The trend analysis shows that during the period 2008 Square Textiles had the worst DSO of 202.06. in 2009, it improved a bit. But DSO is still too high. This may be due to the fact that most of Square Textiles dales are export sales which naturally take longer to be collected. Fixed Asset Turnover This ratio refers to how much sales or revenue is generated by employing the fixed assets of the company.

Fixed AssetsTurnover =

Sales Net Fixed Assets

Table: Fixed Asset Turnover of Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Fixed Asset Turnov er ASK ML 2009

2009

2008

Square Textiles Ltd. 2007 2006 2005

2004

2003

1.70

1.29

1.62

1.54

2.00

2.08

1.73

4.63

Square Textiles had Fixed Asset Turnover Ratio of 1. 70, which means their Taka 1 of fixed asset can generate taka 1.70 of sales whereas, Apex Spinning & Knitting Mills Ltd. has Fixed Asset turnover of 4.63. So, in this regard, Square Textiles is in a much worse position. But a further inquiry shows that ASKML is very low on fixed assets, which is an indication of offbalance sheet financing. On the other hand, Square Textiles did not go for leasing option.

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Figure 6: Fixed Asset Turnover Trend The trend analysis shows that Square Textiles Fixed Asset Turnover deteriorated for during 2007 and 2008. But in 2009 it got a little better. Total Asset Turnover Like the fixed asset, this ratio refers to how much sales or revenue is generated by employing the fixed assets of the company.

Total AssetsTurnover =

Sales Total Assets

Table: Total Asset Turnover of Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Total Asset Turnov er ASK ML 2009

2009

2008

Square Textiles Ltd. 2007 2006 2005

2004

2003

0.70

0.53

0.73

0.84

0.92

0.97

0.84

1.93

Square Textiles had Total Asset Turnover Ratio of 0.70, which means their Taka 1 of total asset can generate taka 0.70 of sales whereas, Apex Spinning & Knitting Mills Ltd. has Total Asset turnover of 1.93. This is once again due to the fact that ASKML has opted for off-balance sheet financing

Figure 7: Total Asset Turnover Trend The total asset turnover of Square Textiles was increasing during the period 2003-2004 but then it started to drop and reached a lowest in 2008. It stands at 0.70 in 2009, which shows a turning point in turnover trend.

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Overall Comment on Asset Management Square Textiles is in a worse position than Apex Spinning & Knitting Mills Ltd. in all the Asset Management Ratio, except for DSO. Though high DSO is explainable, but the other ratios are not impressive at all. It seems that the company is not managing its assets very well though there is an indication that the company is getting better in asset management. 1.3.3 Debt Management Ratio Debt Management Ratios judge the debt management performance of a company. If a company goes for too much debt for financing its operations, it might end up in a very hard financial situation. Debt Ratio The Debt Ratio measures the percent of total funds provided by creditors. Debt includes both current liabilities and long-term debt.

Debt Ratio =

Total Debt Total Assets

Table: Debt Ratio for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Debt Ratio ASK ML 2009 53.07 %

2009 43.37 %

Square Textiles Ltd. 2008 2007 2006 2005 2004 48.95 39.70 40.69 38.26 46.82 % % % % %

2003 50.67 %

Square Textiles Ltd. has a much lower debt ratio than Apex Spinning & Knitting Mills Ltd. Last year the debt ratio of Square Textiles Ltd. was 43.37% which is lower than the industry recommended average of 50%. It looks like the company prefers capital financing to debt financing.

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Figure 8: Debt Ratio trend The trend analysis shows that Square Textiles Bangladesh had a high debt ratio at the end of the year 2003. But after that the debt ratio has started to go down dramatically. This is actually a very good sign for the company. The company is managing debt in very efficient way. Times Interest Earned

Times Interest Earned =

EBIT Interest Charges

Table: Times Interest Earned for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year TIE ASK ML 2009 2.06

2009 3.56

2008 3.53

Square Textiles Ltd. 2007 2006 2005 4.88 6.22 6.85

2004 4.26

2003 2.46

Last year Square Textiles Ltd. had Times Interest Earning of 3.56. It means that Square Textiles Ltd. has got Taka 3.56 to pay interest of Taka 1 whereas Apex Spinning & Knitting Mills Ltd. had TIE of 2.06. In this respect Square Textiles Ltd. was in a better position.

Figure 9: Times Interest Earned Trend Square Textiles have maintained a pretty good TIE for the last 7 years. From the trend, it is seen that TIE declined between 2005 and 2008. But last year it improved a bit. Overall comment on Debt Management Debt Ratio of Square Textiles Ltd. is much lower than Apex Spinning & Knitting Mills Ltd. It is less than the benchmark of 50%. This indicates that Square Textiles Ltd. is not a highly levered firm.

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Square Textiles Ltd. had much lower debt ratio last year. Higher profitability might be the reason for what Square Textiles Ltd. did not take more loans. Last year Square Textiles Ltd. had much high TIE, which can also be justified by high profit of the last year. Square Textiles overall debt management performance is very impressive which is very good news for the company. 1.3.4 Profitability Ratio Profitability is the company's ability to generate revenues in excess of the costs incurred in producing those revenues. Profitability Ration is the measure of performance showing how much the firm is earning compared to its sales, assets or equity. Profit Margin on Sales

Profit Margin on Sales =

Net Income Sales

Table: Profit Margin on Sales for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year Profit Margin ASK ML 2009 0.87 %

2009 6.71 %

2008 7.75 %

Square Textiles Ltd. 2007 2006 2005 13.87 % 13.31 % 10.69 %

2004 8.08 %

2003 7.98 %

Last year, Square Textiles had profit margin of 6.71%. It means by utilizing Taka 100 of sales, it can have net income of Taka 6.71. The profit margin of Square Textiles is much better compared to Apex Spinning & Knitting Mills.

Figure 10: Profit Margin on Sales Trend

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The trend analysis shows that Square Textiles profit margin had been increasing till 2007. But for the last 2 years, we see a declining trend. Though sales has increased in last few years, the profit margin has gone down due to decline in price of finished goods and also due to increase in raw material price Return on Asset

Return on Assets =

Net Income Total Assets

Table: Return on Assets for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year ROA 200 9 4.73 % 2008 4.07 % ASK ML 2004 7.83 % 2003 6.71 % 2009 1.68 %

Square Textiles Ltd. 2007 10.12 % 2006 11.18 % 2005 9.88 %

Last year, it had Return on Asset of 4.73%. It means by utilizing Taka 100 of asset, it can have net income of Taka 4.73. ROA of Square Textiles also was much better than Apex Spinning & Knitting Mills.

Figure 11: Return on Assets Trend ROA dropped drastically during 2008. In 2009, it regained a little. This is also due to decreased profitability caused by price increase of raw materials and price cut for finished goods Return on Equity

Return on Equity =

Net Income Available to Common Stockholders Common Equity

Table: Return on Equity for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd.

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Compa ny Year ROE

2009 8.36 %

2008 7.98 %

Square Textiles Ltd. 2007 2006 2005 2004 17.44 19.70 16.88 14.72 % % % %

2003 13.61 %

ASK ML 2009 3.49 %

Last year, it had Return on Equity of 8.36%. It means by utilizing Taka 100 of total equity available to common shareholders, it can have net income of Taka 8.36. ROE of Square Textiles was better than Apex Spinning & Knitting Mills ROE of 3.49%.

Figure 12: Return on Equity trend The ROE trend is quite similar to ROA. Overall comment on profitability Square Textiles has been a profitable company almost since its establishment and during the past few years the Profit Margin ratio has improved a lot. But in last couple of years, profitability has gone down to changing economy. But still the firm has considerable offset compared to its competitor. 1.3.5 Market Value Ratio Market value is the most critical ratio while making any kind of investment decision about the company. Price / Earning Ratio

Price/Earning Ratio =

Market Price per Share EPS

Table: Return on Equity for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year P/E Ratio Square Textiles Ltd. 2007 2006 2005 14.25 8.54 12.61 ASK ML 2009 48.02

2009 30.23

2008 24.90

2004 27.44

2003 10.12

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P/E Ratio of Square Textiles Ltd. in the last year was higher than that of Apex Spinning & Knitting Mills Ltd.

Figure 13: Price / Earning Ratio Trend P/E Ratio of Square Textiles Ltd. climbed up in the last year from 2008. The company has maintained a healthy P/E ratio for the last 7 years. Market Value / Book Value Ratio

Market/Book Value Ratio =

Market Price per Share Book Value per Share

Table: Market / Book Value for Square Textiles Ltd. & Apex Spinning & Knitting Mills Ltd. Compa ny Year M/B Ratio ASK ML 2009 1.67

2009 2.52

2008 2.34

Square Textiles Ltd. 2007 2006 2005 2.49 1.46 1.65

2004 2.84

2003 0.97

M/B Ratio of Square Textiles Ltd. is higher than that of Apex Spinning & Knitting Mills Ltd.

Figure 14: Market Value Book Value Trend M/B trend shows that for Square Textiles Ltd. it was steady for last 3 years after some ups and downs in the earlier years. Overall comment on Market Value Square Textiles P/E ratio of last 7 years suggest that shareholders are willing to spend a much higher price for the companys shares compared to the earnings. This indicates trust on the company. All the previous ratios also suggest that the company is doing quite well for last several years. The companys performance has gained trust among the share

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market investors and as a result the share price is quite high compared to book value which is also reflected in M/B ratio.

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Chapter 2 Stock Price Movement

In this section of the report, we try to relate stock price movement with different events/corporate decisions like AGM, account closing, dividend declaration, M&A etc. by doing a simple regression of share price against a dummy variable populated indicating the event. The value of the dummy variable is taken as 0 for all dates before the event and 1 for all dates after the event. Regression was done with a 95% confidence interval.

2.1 Account Closing

Year 2008 2009 2010 R
2

F 134.805 10.46094 0.239632

Significanc eF 6.73182E14 0.002447 0.627286

Coefficient 13.3031746 -4.07143 0.3

0.78464 0.20730 8 0.00626 7

P-Value of Coefficient 6.73182E14 0.002447 0.627286

There is significant statistical evidence that the share price was positively correlated with account closing in 2008. And we also see a significant negative correlation in 2009. But there is no statistical evidence that the share price was correlated to account closing in 2010.

2.2 Dividend Declaration

Year Dividen d Paid 25% Cash 20% Bonus 18% Cash 20% Bonus R2 F 5.99325 5 17.5885 1 Significan ce F 0.019845 Coefficient 4.672222 P-Value of Coefficient 0.019845

2008

0.1537

2009

0.3002 04

0.000143

-3.59545

0.000143

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2010

16% Cash 15% Bonus

0.5659 58

53.4609 5

6E-09

-10.7548

6E-09

We see significant positive correlation between dividend declaration and share price in 2008. In later years the correlation is more significant and there is an increase in R2 which indicates the correlation becoming higher. If we observe the dividend payout for these years, we find that the company has declared lesser and lesser dividends in the later years and the relation is significantly negative. This suggests that the stockholders definitely did not like the decrease in dividend payout.

2.3 Record Date

Year 2008 2009 2010 R
2

F 16.62913 1196.835 304.1134

Significanc eF 0.000217 5.04E-33 5.17E-20

Coefficient -8.16857 -15.7315 -13.826

P-Value of Coefficient 0.000217 5.04E-33 5.17E-20

0.29892 8 0.96531 8 0.88633 5

The regression results indicate significant negative relation between record date and share price. Decrease in share price after record date is mainly due to that fact that shareholders who likes to get dividends holds the share until record date and sells them afterwards.

2.4 Annual General Meeting

Year 2008 2009 2010 R2 0.15876 4 0.13154 7 0.58195 7 F 7.549105 6.36187 55.68386 Significanc eF 0.00896 0.015537 4.3E-09 Coefficient -5.84909 -3.83354 9.795 P-Value of Coefficient 0.00896 0.015537 4.3E-09

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The regression results indicate significant relation between AGM and share price. However the relation was negative in 2008 and 2009 while we find a significant positive correlation in year 2010. The change in sign of correlation cannot be explained with available data.

2.5 M&A Activities

Apart from the regular annual events, we were interested to observe the effect on share price caused by 2 very big decisions made by Square Textiles in recent years: merger with Square Spinning Ltd. and acquisition of Mithapur Textiles Ltd. Significa nce F 2.6E-05 0.945042 Coefficient -3.91818 -0.0599 P-Value of Coefficient 2.6E-05 0.945042

Decision Merger with Square Spinning Ltd. Acquisition of Mithapur Textiles Ltd.

R2 0.39219 1 0.00012 3

F 23.2291 6 0.00481 4

The Regression analysis shows that the stockholders did not like the merger between Square Textiles and Square Spinning Ltd. On the other hand, they were indifferent about the takeover of Mithapur Textiles.

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Chapter 3 Prospective Analysis

3.1 Different Growth Rates
It is important to identify a practicable growth rate of a firm to be able to forecast its share price in future. Different growth scenarios create different effect on share price. In this study we first consider the following growth scenarios to observe the effect: Scenario 1: Growth at Sustainable Growth Rate Scenario 2: Growth as per Gordon Model Scenario 3: Growth at GDP Growth Rate Scenario 4: Optimistic Growth Rate Scenario 5: Pessimistic Growth Rate

1.1 Scenario 1: Growth at Sustainable Growth Rate

Sustainable Growth Rate, gs = p1-d(1+DE)T-p1-d(1+DE) Where, p = Profit Margin on Sales d = Dividend Payout Ratio D/E = Debt Equity Ratio T =Ratio of total assets to sales In our case, gs = 1.36% Table: 3 yrs Forecast at g = gs Sales Net Income Dividend Addition to Retained Earnings Total Assets 2009 3,882,244, 010 260,634,0 02 218,810,5 64 41,823,43 8 5,508,282, 316 2010 3,935,002, 593 264,175,9 43 221,784,1 37 42,391,80 6 5,583,138, 293 2011 3,988,478, 150 267,766,0 19 224,798,1 20 42,967,89 9 5,659,011, 542 2012 4,042,680, 424 271,404,8 82 227,853,0 62 43,551,82 0 5,735,915, 886

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Total Debt Common Stock Retained Earnings Total Financing External Funds Needed Debt: Equity Ratio Sustainable Growth Rate EPS Price (P/E = 30.227)

2,388,878, 289 705,840,5 30 2,413,563, 497 5,508,282, 316 0 0.77 1.36% 3.69 111.61

2,421,342, 460 705,840,5 30 2,455,955, 303 5,583,138, 293 0 0.77 1.36% 3.74 113.13

2,454,247, 810 705,840,5 30 2,498,923, 202 5,659,011, 542 0 0.77 1.36% 3.79 114.67

2,487,600, 334 705,840,5 30 2,542,475, 022 5,735,915, 886 0 0.77 1.36% 3.85 116.23

1.2 Scenario 2: Growth as per Gordon Model

According to Gordon Model, g=Retention Rate ROE In our case, Retention Rate = 16% ROE = 8.36% So, Growth Rate, g = 1.34% Table: 3 yrs Forecast at g = 1.34% Sales Net Income Dividend Addition to Retained Earnings Total Assets Total Debt Common Stock Retained Earnings Total Financing External Funds Needed Debt: Equity Ratio Sustainable Growth Rate EPS 2009 3,882,244, 010 260,634,0 02 218,810,5 64 41,823,43 8 5,508,282, 316 2,388,878, 289 705,840,5 30 2,413,563, 497 5,508,282, 316 0 0.77 1.36% 3.69 2010 3,934,149, 612 264,118,6 79 221,736,0 62 42,382,61 7 5,581,928, 051 2,420,817, 592 705,840,5 30 2,455,946, 114 5,582,604, 236 -583,858 0.77 1.36% 3.74 2011 3,986,749, 193 267,649,9 45 224,700,6 73 42,949,27 3 5,656,558, 429 2,453,183, 923 705,840,5 30 2,498,895, 387 5,657,919, 840 -1,175,539 0.77 1.36% 3.79 2012 4,040,052, 029 271,228,4 25 227,704,9 21 43,523,50 4 5,732,186, 615 2,485,982, 992 705,840,5 30 2,542,418, 891 5,734,242, 413 -1,775,149 0.76 1.36% 3.84

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Price (P/E = 30.227)

111.61

113.11

114.63

116.16

1.3 Scenario 3: Growth at GDP growth rate

GDP growth rate = 5.8% Table: 3 yrs Forecast at g = 5.8% Sales Net Income Dividend Addition to Retained Earnings Total Assets Total Debt Common Stock Retained Earnings Total Financing External Funds Needed Debt: Equity Ratio Sustainable Growth Rate EPS Price (P/E = 30.227) 0 0.77 1.36% 3.69 111.61 2009 3,882,244, 010 260,634,0 02 218,810,5 64 41,823,43 8 5,508,282, 316 2,388,878, 289 705,840,5 30 2,413,563, 497 5,508,282, 316 2010 4,107,414, 163 275,750,7 74 231,501,5 77 44,249,19 7 5,827,762, 690 2,527,433, 230 705,840,5 30 2,457,812, 694 5,691,086, 454 136,676,2 36 0.84 1.42% 3.91 118.09 2011 4,345,644, 184 291,744,3 19 244,928,6 68 46,815,65 1 6,165,772, 926 2,674,024, 357 705,840,5 30 2,504,628, 345 5,884,493, 232 281,279,6 95 0.92 1.48% 4.13 124.94 2012 4,597,691, 547 308,665,4 90 259,134,5 31 49,530,95 8 6,523,387, 756 2,829,117, 770 705,840,5 30 2,554,159, 303 6,089,117, 603 434,270,1 53 1.00 1.54% 4.37 132.18

1.4 Scenario 4: Optimistic

We assume an optimistic growth rate of 20% Table: 3 yrs Forecast at g = 20% Sales Net Income Dividend Addition to Retained Earnings Total Assets 2009 3,882,244, 010 260,634,0 02 218,810,5 64 41,823,43 8 5,508,282, 2010 4,658,692, 812 312,760,8 02 262,572,6 77 50,188,12 5 6,609,938, 2011 5,590,431, 374 375,312,9 63 315,087,2 13 60,225,75 0 7,931,926, 2012 6,708,517, 649 450,375,5 55 378,104,6 55 72,270,90 0 9,518,311,

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Total Debt Common Stock Retained Earnings Total Financing External Funds Needed Debt: Equity Ratio Sustainable Growth Rate EPS Price (P/E = 30.227)

316 2,388,878, 289 705,840,5 30 2,413,563, 497 5,508,282, 316 0 0.77 1.36% 3.69 111.61

779 2,866,653, 947 705,840,5 30 2,463,751, 622 6,036,246, 099 573,692,6 80 1.09 1.61% 4.43 133.94

535 3,439,984, 736 705,840,5 30 2,523,977, 373 6,669,802, 639 1,262,123, 896 1.46 1.89% 5.32 160.72

842 4,127,981, 683 705,840,5 30 2,596,248, 273 7,430,070, 486 2,088,241, 356 1.88 2.23% 6.38 192.87

1.5 Scenario 5: Pessimistic

We assume a pessimistic growth rate of -10% Table: 3 yrs Forecast at g = -10% Sales Net Income Dividend Addition to Retained Earnings Total Assets Total Debt Common Stock Retained Earnings Total Financing External Funds Needed Debt: Equity Ratio Sustainable Growth Rate EPS Price (P/E = 30.227) 0 0.77 1.36% 3.69 111.61 2009 3,882,244, 010 260,634,0 02 218,810,5 64 41,823,43 8 5,508,282, 316 2,388,878, 289 705,840,5 30 2,413,563, 497 5,508,282, 316 2010 3,494,019, 609 234,570,6 02 196,929,5 08 37,641,09 4 4,957,454, 084 2,149,990, 460 705,840,5 30 2,451,204, 591 5,307,035, 581 349,581,4 97 0.57 1.21% 3.32 100.45 2011 3,144,617, 648 211,113,5 42 177,236,5 57 33,876,98 5 4,461,708, 676 1,934,991, 414 705,840,5 30 2,485,081, 575 5,125,913, 520 664,204,8 44 0.40 1.07% 2.99 90.41 2012 2,830,155, 883 190,002,1 87 159,512,9 01 30,489,28 6 4,015,537, 808 1,741,492, 273 705,840,5 30 2,515,570, 862 4,962,903, 664 947,365,8 56 0.25 0.96% 2.69 81.37

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1.6 Choice of Growth Rate

In the earlier scenarios, we see that high growth rate is not sustainable and it requires a very high D/E ratio which is not desired. In the trend analysis section, we found that the firm maintains a Debt Ratio below 50%. Considering this capital structure policy, it is very less likely that the company will go for debt financing to achieve high growth rates. We also found out that the sustainable growth rate is also quite similar to the growth rate found from Gordon Model. So, it seems that the firm is actually looking to grow at sustainable growth rate. So, we take the sustainable growth rate to predict future stock price of the company.

1.7 The Plug Variable

As the company policy is to keep the debt ratio below a certain level, the company has been changing the dividend payout ratio every year. So, dividend payout is the plug variable here.

1.8 Weighted Average Cost of Capital

From the financial reports, we find that the cost of debt is 15.8% To find out the cost of equity, we take help of CAPM which says that Cost of equity, Rj = Rf + (Rm Rf) Where, Rf = Risk free return = company risk Rm = Average market return We consider risk free rate as 8% which is the average rate of return of bonds. To calculate Rm and , we took monthly closing DSE index and share price of Square Textiles. From regression, = 0.76

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Rm = 50.43% From these values, cost of equity Rj = 40.25% The firm has a debt ratio = 43.37% Weighted Average Cost of Capital = 29.65%

1.9 Share Price according to Gordon Model

According to Gordon Model, share price P = D1/(k-g) = D0(1+g)/(k-g) D0 = 3.1 So, P = 12.42 We see that the stock of Square Textiles is highly overpriced. So, it is highly likely that the share price will go down in future. k = 29.65% g = 1.36%

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Chapter 2 Findings and Conclusions

Square Textiles share price at the end of 2009 BDT 111.54 while its net asset value per share is only BDT 44.19. So, we were interested to find out the reasons behind this difference and also to predict future price movement. Following are the key findings in the study: 2.1.1 Financial Performance Square Textiles is a profitable company It is not utilizing its assets efficiently. ROA is very low. The company is not highly levered The company may have some hidden profit in terms of market value of their fixed assets especially land and buildings 1.1.1 Stock Price Movement Stock price of the company is highly affected by dividend declaration, record date, AGM The stockholders did not like the decrease in dividend in recent years There was a merger with Square Spinning which also did not please the shareholders which resulted in a negative correlation with share price 1.1.1 Growth Prospect and Future Share Price The company seems to maintain a debt equity ratio of below 1 If the firm continues with this policy, it has a very low growth opportunity With current growth opportunity, the shares of this company is highly overpriced and expected to fall in future With the above observations, we come to a conclusion that the prevailing share price of the firm is expected to be decreasing in future. However, we still need to explain why the share price is so high with a high M/B ratio. This can be attributed to the brand value of Square which has created a

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lot of trust among the investors. As a result, investors are ready to invest in the share even with a low return and growth opportunity.

Appendix
A.1 Regression results
A.1.1 Account closing Year 2008

SUMMARY OUTPUT

Year 2009

Regression Statistics Multiple R 0.885 SUMMARY OUTPUT R Square 0.784 Adjusted R Square 0.778 StandardRegression Statistics Error 3.567 Multiple R 0.45 Observations R Square 0.207 Adjusted R Square 0.187 ANOVA Standard Error 4.079 df
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Year 2010

SUMMARY OUTPUT

A.1.2 Dividend Declaration Year 2008

Regression Statistics Multiple R 0.079 R Square 0.00 SUMMARYSquare OUTPUT -0.019 Adjusted R Standard Error 1.937 Regression Statistics Observations

Year 2009

Multiple R 0.392 SUMMARY OUTPUT ANOVA R Square 0.153 df Adjusted R Square 0.128 Regression Regression Statistics Standard Error 5.643 Residual R Multiple 0.5 Observations Total R Square 0.300
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Year 2010

SUMMARY OUTPUT

A.1.3 Record Date Year 2008

Year 2009

Regression Statistics Multiple R 0.75 R Square OUTPUT 0.565 SUMMARY Adjusted R Square 0.555 Standard Error 4.82 Regression Statistics Observations Multiple R 0.546 SUMMARY OUTPUT R Square 0.298 ANOVA R Square Adjusted 0.280 Regression Statisticsd Standard Error 6.411 Regression Multiple R 0.982 Observations Residual R Square 0.965
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Year 2010

SUMMARY OUTPUT

A.1.4 AGM Year 2008

Year 2009

Regression Statistics Multiple R 0.941 R Square OUTPUT 0.886 SUMMARY Adjusted R Square 0.883 Standard Error 2.537 Regression Statistics Observations Multiple R 0.398 SUMMARY OUTPUT R Square 0.158 ANOVA R Square Adjusted 0.137 Regression Statisticsd Standard Error 6.890 Regression Multiple R 0.362 Observations Residual R Square 0.131
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Year 2010

SUMMARY OUTPUT

A.1.5 M&A Activities

Merger with Square Spinning

Acquisition of Mithapur Textiles

Regression Statistics Multiple R 0.762 R Square OUTPUT 0.581 SUMMARY Adjusted R Square 0.571 Standard Error 4.248 Regression Statistics Observations Multiple R 0.626 SUMMARY OUTPUT R Square 0.392 ANOVA R Square Adjusted 0.375 Regression Statisticsd Standard Error 2.474 Regression Multiple R 0.011 Observations Residual R Square 0.000
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A.2 Weighted Average Cost of Capital

A.2.1 Calculation

SUMMARY OUTPUT

A.2.2 Average Market Return Average weekly return = 0.97%

So, average annual return = 0.97*52 = 50.43% A.2.2 Cost of Equity

Ri = .08 + 0.76 (.5043 - .08) = 40.25% A.2.2 WACC

Cost of Debt = 15.8% Debt Ratio = 43.37%

WACC = 0.4337 X 15.8 + (1-0.4337) X 40.25 = 29.65%

Regression Statistics Multiple R 0.555 R Square 0.308 Adjusted R Square 0.301 Standard Error 0.050 Observations ANOVA Regression
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A.3 Financial Statements & Performance Data

2009 3,224,729,710 2,388,878,289 942,568,134 3,348,870,289 1,683,329,048 3,882,244,010 2,283,552,606 5,508,282,316 2,388,878,289 433,507,033 121,730,159 260,634,002 3,119,404,027 111.54 3.69 44.19 70,584,053 218,810,564 3.10 2008 3,437,049,714 2,843,250,860 1,267,785,890 2,589,019,736 1,689,670,282 3,052,235,640 2,370,847,250 5,807,896,964 2,843,250,860 387,282,778 109,701,045 236,529,908 2,964,646,104 117.3 4.71 50.04 58,820,044 223,516,167 3.80 Square Textiles Ltd. 2007 2006 2005 1,909,672,000 1,417,780,000 1,391,410,000 1,382,789,000 1,269,821,000 989,212,000 577,163,363 487,871,798 487,753,824 1,958,696,404 2,041,065,393 1,847,818,461 819,360,445 2,541,543,000 1,573,559,000 3,483,231,000 1,382,789,000 517,149,366 106,026,180 352,447,136 2,020,482,000 127.4 8.94 51.23 39,433,370 177,450,165 4.50 821,199,524 2,620,966,000 1,702,906,000 3,120,686,000 1,269,821,000 481,315,121 77,350,086 348,833,453 1,770,905,000 75.6 8.85 51.65 34,289,887 154,304,492 4.50 756,736,173 2,390,979,000 1,193,767,000 2,585,177,000 989,212,000 465,778,608 67,966,406 255,494,330 1,513,511,000 81.7 6.48 49.66 30,479,900 129,539,575 4.25 2004 1,357,092,000 1,187,839,000 405,449,809 2,083,702,523 834,989,837 2,459,201,000 1,180,203,000 2,537,295,000 1,187,839,000 300,290,342 70,530,935 198,689,678 1,349,457,000 138.3 5.04 48.7 27,709,000 110,836,000 4.00 2003 1,284,065,000 1,267,503,000 329,015,503 1,737,055,759 840,066,283 2,102,670,000 1,217,332,000 2,501,397,000 1,267,503,000 305,414,202 124,160,747 167,893,727 1,233,894,000 43.1 4.26 44.53 25,190,000 100,760,000 4.00 ASKML 481,192,792 436,833,644 150,077,244 1,434,176,589 235,362,912 1,586,094,474 342,491,610 823,684,402 437,134,519 35,344,028 17,176,247 13,814,819 396,170,995 790 16 472 840,000

Current Assets Current Liabilities Inventory COGS Accounts Receivable Sales Fixed Assets Total Assets Total Debt EBIT Interest Expenses Net Income Common Equity Market Price EPS Book Value No. of shares Dividend payout Dividend per share

Source: Annual Reports

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