welcome to our presentation on cross sectional analysis welcome to our presentation on cross...

Welcome to our PresentationOn

Cross sectional analysis

Bextex Ltd and Prime Textile Ltd.

Company overview of Beximco Textile.

VisionUse “Innovation” & “Speed” as prime drivers, rather than cotton & cheap labor.

Mission

BEXTEX Ltd. is a full service vendor with strong vertically integrated

production facilities as well as creative & analytical capabilities which

clearly set us apart from most other South Asian vendors.

Cross sectional analysisBetween

Prime textile & Bextex Ltd.

Liquidity Ratio

Current Ratio

Current ratio for bextex in 2009

= Current assets/Current liabilities= 7230982538/7906937639= 0.91:1

Current ratio for prime in 2009 = Current assets/Current liabilities= 1044816449/982894151

= 1.063:1

0.8

0.85

0.9

0.95

1

1.05

1.1

Current ratio

Prime

Bextex

Quick Ratio

Quick ratio for bextex in 2009

= (Current asset-inv)/Current liability= (7230982538-2733063864)/7906937639

= 0.57:1

Quick ratio for prime in 2009

= (Current asset-inv)/Current liability= (1044816449-565487208)/982894151= 0.487:1

0.44

0.46

0.48

0.5

0.52

0.54

0.56

0.58

Quick Patio

Prime

Bextex

Activity Ratio

Inventory Turnover

Inventory turnover ratio for Bextex in 2009= cost of goods sold / inventory= 3090184887/2733063864= 1.13 times

Inventory turnover ratio for prime in 2009

= cost of goods sold / inventory= 1391832663/565487208= 2.46 times

0

0.5

1

1.5

2

2.5

3

Inventory turnover ratio

Prime

Bextex

Average collection period

Average collection period for bextex in 2009= AR /Average sales per day= 3765912622 / (4760237289/365 days)= 3765912622/13041746= 289 days

Average collection period for prime in 2009

= AR /Average sales per day= 337442913/ (1578386314/365 days)

= 79days

0

50

100

150

200

250

300

350

Average collection period

Prime

Bextex

Total Asset turnover

Total Asset turnover for bextex in 2009

= sales / total asset= 4760237189 / 19086298350= 0.25 times

Total Asset turnover for prime in 2009

= sales / total asset= 1578386314/2624139237= 0.601 times

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Total asset turnover

Prime

Bextex

Debt Ratio

The debt ratio for bextex in 2009

Debt ratio = total liabilities/ total assets= (1475056051/2624139237)*100= 56.2%

The debt ratio for prime in 2009

Debt ratio = total liabilities/ total assets= (15733786518 / 19086298354)*100= 82%

Debt ratio

Bextex

56%

44% Debt Capital

Equity Capital

Prime Textile

82%

18%

Debt Capital

Equity Capital

Debt to Equity Ratio

The capital structure of prime in 2009 D/E ratio = total liabilities/ total equity= (15733786518 / 1149083186)= 1.28:1

The capital structure of bextex in 2009 D/E ratio = total liabilities/ total equity= (15733786518 / 3352511840)= 4.69:1

Bextex

56%

44%debt capital

equity capital

Prime Textile

82%

18%

debt capital

equity capital

Time Interest Earned Ratio

Time Interest Earned Ratio of prime in 2009 = EBIT / Interest= 86918644 /37493611= 2.318 times

Time Interest Earned Ratio of bextex in 2009 = EBIT / Interest= 692000803/ 1300656669= 0.53

0

0.5

1

1.5

2

2.5

Time interest earn ratio

Prime

Bextex

Profitability Ratio

Gross profit marginGross profit margin

Gross profit margin of prime in 2009 = (sales – cogs) / sales= Gross profit/sales =186553651 /1578386314= 11.8%

Gross profit margin of bextex in 2009

= (sales – cogs) / sales= 1670052302 / 4760237189= 35%

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%

Gross profit margin

Prime

Bextex

Operating profit marginOperating profit margin

Operating profits margin of prime in 2009 Operating profit margin= operating profit / sales= 86918644/1578386314= 5.51%

Operating profits margin of bextex in 2009 Operating profit margin= operating profit / sales= 692000803/ 4760237189= 14.54%

Net profit marginNet profit margin

The net profit margin of prime in 2009 Net profit margin = EACS / Sales= 71090507 / 1578386314= 4.5%

The net profit margin of bextex in 2009

Net profit margin = EACS / Sales= (608655866) / 4760237189= (0.13)

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Net profit margin

Prime

Bextex

Earnings Per ShareEarnings Per Share

EPS of Prime Textile in 2009 EPS = EACS/ no. of common stock= 21.89 taka

EPS of bextex in 2009 EPS = EACS/ no. of common stock= (3.23) taka

Prime

Bextex-5

0

5

10

15

20

25

EPS

Prime

Bextex

Return on EquityReturn on Equity

ROE of Prime Textile in 2009 ROE = EACS / Common stock equity= 71090507 / 1147201594= 6.19%

ROE of Bextex in 2009 ROE = EACS / Common stock equity= (608655866) / 3352511836= (19%)

ROE

6.19%

-19%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

1Prime tex

Bex tex

Return on Total Assets (ROA)

ROA of Prime Textile in 2009 ROA = EACS / Total asset= 71090507 / 2624139237= 2.71%

ROA of bextex in 2009 ROA = EACS / Total asset= (608655866) / 19086298354= (0.03)

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Return on assetPrime

Bextex

Findings

The debt capital of Prime Textile possesses higher risk.

The higher interest payment also affects the return on total assets

of Bextex.

Earnings per share of Bextex (3.23) is less than the Prime Textile

21.89 because their net profit hugely decline from operating profit

because of higher interest payment.

Recommendations

The Prime Textile should increase their debt capital slightly more than

50% in order to reduce the chance of hostile takeover from another

company.

The debt capital of Bextex should be slightly declined to reduce the

financial distress cost.

The debt capital should be declined to reduce the interest payment

that adversely affect in profitability ratio of Bextex.

Thank You All