Strategic Financial Kindred Analysis
Meghna Bind Mills Bangladesh Limited & Heidelberg Bind Bangladesh Limited For the year of 2009,2010 & 2011| Course Title : Fin 254 Section : 11 Submitted to : SFR Submission date: 09/04/2013
External exercitation of the kindred segregation deeds is general. While these kindreds don’t discriminate the sound relation, shrill deviations from an toil flag, can obviate augmentation or dismiss. In this design we possess chosen two companies from The Bind Industries of Bangladesh, one as our ocean order for which we intention to dissect through Kindred Calculation and the other one as the trodden adversary to that order. The ocean order we possess chosen is the Heidelberg Bind and the adversary order is to be Meghna Bind Mills Bangladesh Limited. Twain of these companies are enlisted in Dhaka Stock Exsubstitute since 2007 prepare offer.
The sound intention of this design is to relativelyly evaluate the ocean order (The Heidelberg Cement) to its trodden adversary (The Meghna Bind Mils Bangladesh Limited), to state the balance-all strategic financial heartiness of The Heidelberg Cement. Heidelberg Bind Bangladesh Ltd, one of the knot companies of Heidelberg Bind Group, founded in Germany in 1873, delay its nucleus products life bind, ready-mixed keep-aparticularized, aggregates and kindred activities, is one of the innate producers of fabric materials worldwide. The knot employs encircling 43,000 herd in further than 50 countries.
In 1999, Heidelberg Bind artificial its operations in Bangladesh. The promotive Heidelberg Bind Bangladesh Ltd. , which is the traffic troddenor in Bangladesh, operates two bind heavy plants in Dhaka, the high city, and in Chittagong. At offer it has 9. 31 % traffic portion-outs unmoulded example traffic portion-out of 78. 29 % of 13 elder bind manufacturers in Bangladesh. The order’s latouchstone estimated evolution from 2011 was 1,320,129 MT and markd sales were 1,318,110 MT. The latouchstone markd traffic estimate from 2001 of this order was 248. 8 Taka/portion-out and the body estimate was 142 Taka/share.
So the order was balancevalued by the Market. These worked as the reasons for us to cull this order as a touchstone order for The Strategic Ration Analysis. We possess chosen Meghna Bind Mills Bangladesh Limited to be the trodden adversary of our touchstone order for this design. Meghna Bind Mills Ltd is the primeval manufacturing ace of Bashundhara Knot and it is one of the comprehensivest bind industries in the empire supple hinderly 1 pet metric tons a year. The order is listed delay twain Dhaka and Chittagong Stock Exchanges. The latouchstone markd Portion-out compensation of the order from 2011 was 136. 0 Taka/share. Although it’s a domiciliary order compared to The Heidelberg Cement, it gives truly a example to the Heidelberg Knot in Bangladesh as we are going to mark in the aftercited keep-akeep-apart of this design. Kindred Analysis: When we reckon the kindreds of a solid we possess to go through five elder categories of kindreds as follows:
Liquidity Kindred : Which states if the solid can create required payments for its maturing financial responsibilities through Fluid Cash delineaten from its Assets
Productivity Ratio: Which estimates the power of a solid to produce Sales from its occupied Possessions Leverage Ratio: These kindreds put a whitish on the Financial Leverages of a solid and the power of that solid to encounter those Financial Leverages effectively.
Profitpower Ratio: These kindreds estimate how efficiently a ace of sales is peevish into advantage for the order
Valuation Ratio: These kindreds are used to assess how the traffic is valuing the solid (portion-out compensation) in harmoniousity to possessions and floating rights, advantages and dividends. Liquidity Ratio: There are three divergent kindreds inferior fluidity kindreds as follows;
Working High Kindred Nimble Ratio
Current Ratio: Measures the estimate of aces of floating possessions to pay out for each ace of floating liabilities. The formula for Floating Ratio: Floating Kindred = Floating AssetsCurrent Liabilities Floating Kindred = Floating AssetsCurrent Liabilities
0. 56 (x)
0. 17 (x)
0. 56 (x)
0. 70 (x)
0. 64 (x)
0. 66 (x)
Interpretation: In 2009 Heidelberg’s started high kindred was 0. 56 (x) and in 2010 and in 2011 its started high was 0. 17 (x) and 0. 56 (x) which implies its floating asset went down and example asset went up in 2010.
In 2009 Meghna’s started high kindred was 0. 66 and in 2010 and in 2011 its started high was 0. 64 and 0. 70 which I plies its floating concert went down and example concert went up in 2010. Heidelberg holds a continuous started high kindred which lowerd in 2010 and they managed to drag it up in 2011 where as Meghna’s started high increased fragmentarily from 2009 to 2011. 2) Started High Ratio: This Kindred estimates the percentage of example possessions that is invested in floating possessions. The formula of Started High Ratio: Started High Kindred = Floating Assets
Working High Kindred = Floating Assets
Total Possessions Order name
0. 56 (x)
0. 17 (x)
0. 56 (x)
0. 70 (x)
0. 64 (x)
0. 66 (x)
Interpretation: In 2009 Heidelberg’s started high kindred was 0. 56(x) and in 2010 and in 2011 its started high was 0. 17 (x) and 0. 56 (x) which implies its floating asset went down and example asset went up in 2010. In 2009 Meghna’s started high kindred was 0. 66 (x) and in 2010 and in 2011 its started high was 0. 64 (x) and 0. 70 (x) which implies its floating asset went down and example asset went up in 2010.
Heidelberg holds a continuous started high kindred which lowerd in 2010 and they managed to drag it up in 2011 where as Meghna’s started high increased fragmentarily from 2009 to 2011. 3) Nimble Ratio: The nimble kindred gives a clearer symptom of the solid’s power to encounter its maturing financial obligations out of floating, fluid possessions. The formula for the Nimble Ratio: Nimble Kindred = Floating Assets-InventoriesCurrent Liabilities Nimble Kindred = Floating Assets-Inventories
1. 74 (x)
1. 51 (x)
0. 86 (x)
0. 80 (x)
0. 79 (x)
Interpretation: In 2011 Heidelberg’s floating asset delayout its list was 1. 61 (x) and in 2010 and 2009 it was 1. 74 (x) and 1. 51 (x) its floating liabilities. In 2011 Meghna’s floating asset delayout its list was 0. 86 (x) and in 2010 and in 2009 it was 0. 80 (x) and 0. 79 (x) its floating liabilities. Heidelberg’s deed dismissd balance the year of 2009 to 2011. This lower can be attributed to the deed that the applicable substitute in its floating liabilities was further than the applicable substitute in its floating asset and list. Whereas its adversary Meghna bind’s deed increased balance the year.
There are five divergent kindreds inferior the proof of Productivity Ratio:
Receivable Turnbalance Ratio
Days Sales Outstanding (DSO)
Total asset turnbalance kindred
Fixed Asset turnbalance Ratio
Total Asset Turnbalance Kindred (TA TO): This kindred estimates the estimate of aces in Sales, executed by each aces bombardment in the order’s Possessions ; TA TO = Net SalesTotal Possessions TA TO = Net SalesTotal Assets
The formula for TA TO:
1. 0631 (x)
1. 1586 (x)
1. 1951 (x)
1. 844 (x)
1. 5855 (x)
1. 4189 (x)
Interpretation: In 2009 Heidelberg’s TA TO was 1. 1951 (x), in 2010 and 2011 it’s TA TO was 1. 1586 (x) and 1. 0631 (x) of its Example Possessions In 2009 Meghna’s TA TO was 1. 4189 (x), in 2010 and 2011 it’s TA TO was 1. 5855 (x) and 1. 4844 (x) of its Example Possessions Twain the two order’s TA TO s are adjustmentately hinder to each other. However Meghna’s Ratios are a scorn bit eminent than Heidelberg’s. So we could say that balance the departed three years Meghna has shown a scorn bit further power than Heidelberg in utilizing its example possessions for generating sales.
In this scenario Meghana’s deed as a adversary is reform than Heidelberg Bind Fixed Asset Turnbalance Kindred (FA TO): This kindred estimates the estimate of aces in Sales, executed by each ace bombardment in the order’s Net Fixed Assets; FA TO = Net SalesNet Fixed Possessions FA TO = Net Sales
Net Fixed Assets
The formula for FA TO:
2. 4539 (x)
2. 7202 (x)
4. 9925 (x)
4. 3774 (x)
4. 1159 (x)
Interpretation: In 2009 Heidelberg’s FA To was 2. 7202 (x) and in 2010 it went up to 3. 817 (x) of its Fixed Assets. But in 2011 the FA TO went down to 2. 4539 (x), the order’s Fixed Assets. This indicates that in 2011 Heidelberg invested further in its Floating Possessions in similitude to the anterior years. As a fruit the order was generating fewer sales from its Fixed Possessions compared to 2009 & 2010. In 2009 Meghna’s FA TO was 4. 1159 (x) its Fixed Assets. In 2010 and 2011 the FA TO was 4. 3774 (x) and 4. 9925 (x) of its Fixed Assets. Meghna had a speaking mount in its FA TO balance the years. This resources they are utilizing their Fixed Possessions further efficiently for generating sales.
Over the years Meghna has shown power in utilizing its Fixed Possessions and has executed speakingly eminent sales, on the other agency Heidelberg’s Sales generating size from its Fixed Possessions has dismissd. So Meghna holds an eminent agency when it comes to husband its Fixed Possessions effectively.
Leverage Ratios: There are indelicate divergent kindreds inferior the proof of Productivity Ratio:
Debt to Asset kindred:
Debt to Equity:
Times Interest Earned:
Cash Flow to Liability kindred:
Debt to Asset Ratio: This kindred indicates the adjustment of example possessions financed by liability at a keep-afeature top in time; The formula for Liability to Asset Ratio:
Debt to Asset = Example LiabilitiesTotal Possessions X 100 Liability to Asset = Example LiabilitiesTotal Possessions X 100
34. 2989 (%)
33. 7784 (%)
34. 1261 (%)
83. 5524 (%)
81. 5425 (%)
79. 7020 (%)
Interpretation: Heidelberg did not possess any speaking substitute in its Liability to Asset Kindred balance the year though it went down by a scorn in 2010. We can see that in 2009, 34 % of its Possessions were financed by Liability and in 2010 and 2011 33% and 34% of its Possessions were financed by its Liabilities.
Heidelberg holds a comprehensive adjustment of Possessions to its Equity and a short adjustment to liability. Meghna has a comprehensive Liability to Asset Kindred which has a speaking mount balance the years, from 2009 to 2011 its liability to asset went up from 79% to 83%. Meghna holds a comprehensive adjustment of Possessions financed by its Liabilities. In similitude, Heidelberg has the eminent agency In this section, consequently it has a lot short Possessions unguarded to Liability rather than Meghna, which has a comprehensive Liability opposing its Assets. Dupont Analysis: At the end of the design we’d approve to delineate a final digest by using the concept of Dupont Segregation in relatively traits for twain of the solids.
The Dupont rule provides a cheerful starting top for any financial segregation. It shows that financial ability in a order comes from three elder sources, rather it focuses on three elder sections;
Profitpower : Advantage executed from a order’s Sales
Asset Utilization : Sales executed from bombardment in Assets
Debt Utilization: Portion of Possessions that is held opposing
Owner’s Equity. Return on Equity (ROE) = Net IncomeSales X SalesTotal Asset X Example AssetTotal Equity Or, ROE = Advantage Margin (PM) X TA TO X Equity Multiplier (EM)
Return on Equity (ROE) = Net IncomeSales X SalesTotal Asset X Example AssetTotal Equity Or, ROE = Advantage Margin (PM) X TA TO X Equity Multiplier (EM) So, the formula for Dupont looks approve this: Dupont segregation for Heidelberg Cement: From the Ratios we reckond antecedent (PM, TA TO & EM); we get the aftercited estimates for ROE by using the Dupont formula:
1. 0631 (x)
1. 5220 (x)
1. 1586 (x)
1. 5101 (x)
1. 1951 (x)
1. 5181 (x)
Interpretation: From 2009 to 2010 we can see a swhitish mount up from 20. 8749% to 20. 9977% in the ROE Kindred for Heidelberg Cement. However from 2010 to 2011 there was elder dismiss in ROE of 20. 9977% to 14. 3243%. Where TA TO and EM sediment almost harmonious, the ROE falls due to a reprieved Advantage Margin in the year of 2011. So inferiormining the dismiss in the Advantage Margin, it is certain to say that Heidelberg showed a extensive indigent deed in generating Advantage from its Sales, in the latouchstone markd year of 2011.