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1.0 Introduction

In our country agricultural marketing companies are doing very well in business. So many competitors

are in this sector. Lots of new companies entered this market. From all of them, we choose Pran

Agricultural marketing Co. ltd. for our report. We have collected the financial statements and analyzed

them in order to know the company’s position in the Agricultural marketing industry.

1.1 Objectives

To integrate the financial concepts by applying financial-statement analysis of agricultural marketing company.

To acquire practical knowledge about the difficulties and limitations of the techniques applied

To perform a ratio analysis to judge the economic environment and profitability of the company and compare the ratios with one year to another year.

1.3 Scope

The study will provide the scopes of knowing the following:

a) The total concept of analyzing financial statement.

b) Recent performance level of the PRAN Agricultural marketing Co. Ltd. and Apex Foods Ltd. in food industries.

1.4 Limitations

We are very happy because we made our report within some limitations and have overcome it almost. To

prepare this report we faced some barriers. When we prepared this report all necessary data was not

available. For this reason, we assumed some of the data to complete the report at some degree. On the

other hand, when we went to collect the financial statements but we were unable to find our needed

statement-books from the company, we had to collect it from other source. Finally, one limitation was our

shortage of knowledge which was reduced to make this report a better one.

1.5 Source of Data

We collected the annual report and take financial statements of Pran Agricultural marketing Co. ltd and

Apex Foods Ltd as a secondary data basis.

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1.6 Methodology

As a rule, we had to follow a particular method for collecting data to complete the report accurately. At first we made common size Income Statement and Balance Sheet on a excel sheet. Then we analyzed the

Income Statement and the Balance Sheet data, using the common sizing and indexing method. Finally, we have computed ratios of four years and analyzed based on the data availability in the financial statement.

2.0 Brief History of the Company

‘PRAN’ started its operation in 1981 as a processors fruit and vegetable in Bangladesh. Over the years, the company has not only grown in stature but also contributed significantly to the overall socio-economic development of the country.

“PRAN” is currently one of the most admired food & beverages brand among the millions of people of Bangladesh and other 77 countries of the world where PRAN Products are regularly being exported.

All the PRAN products are produced as per international standards maintaining highest level of quality at every stages of its production process. PRAN takes a comprehensive approach to all kinds of agro processed food products, considering all of the ways their lives can be enriched through ensuring hygienic and quality food products.With HACCP compliance to ensure best quality products reach to the consumers, PRAN places great importance on hygienic manufacturing processes. This encompasses everything from choosing quality materials to the use of storage facilities and careful monitoring of products using electronic sorting. Skilled and experienced personnel select finished products which are then examined in a laboratory to verify their quality and to check for residual substances both before and after the production process.Furthermore, company’s computer systems offer continuous monitoring of all manufacturing process to ensure the highest levels of quality.

2.1 Mission Statement

Poverty and hunger are curses our aim: to generate employment and earn dignity and self-respect

for our compatriots through profitable enterprises.

2.2 Key Product:

PRAN is currently producing more than 200 food products under 10 different categories i.e. Juices, Drinks, Mineral Water, Bakery, Carbonated beverages, Snacks, Culinary, Confectionery, Biscuits & Dairy. The company has adopted ISO 9001 as a guiding principle of its management system. The company is complaint to HACCP & certified with HALAL which ensures only the best quality products are reaches to the consumers table across the Globe.

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3.0 Findings and Financial Statement Analysis

Ratio analysis of Agricultural Marketing Co.Ltd (PRAN).

Ratio analysis of Agricultural Marketing Co.Ltd (PRAN). (2008-2011)

Items 2011 2010 2009 2008

Profitability Ratio        

Gross Profit Margin 21.80% 22.30% 22.40% 22.70%

Return on Asset 3.88% 3.99% 4.00% 3.89%

Return on Equity 11.33% 11.47% 11.10% 10.48%

Operating Profit Margin 4.20% 4.45% 4.31% 3.95%

Net Profit Margin 3.46% 3.62% 3.61% 3.65%

         

Asset Utilization Ratio        

Inventory Turnover 2.55 2.31 2.12 1.88

Total Asset Turnover 1.12 1.1 1.11 1.07

Fixed Asset Turnover 3.16 2.85 3.36 3.94

average inventory turnover 143 158 172 194

Liquidity Ratio        

Current Ratio 1.28 1.34 1.4 1.43

Quick Ratio 1.28 1.34 1.4 1.43

cash flow from oparation ratio 0.28 0.3 0.44 0.33

Debt Utilization Ratio        

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Debt Ratio 65.77% 65.40% 63.91% 65.33%

Debt-Equity Ratio 1.92 1.87 1.77 1.69

         

Market Value Ratios        

       

Book value Per Share 501.66TK 475.10TK 449.95TK 428.39TK

Earning Per Share 56.86Tk 54.49Tk 49.96Tk 44.94Tk

Dividend Per Share 29.14TK 28.59TK 27.03TK 25.65TK

Dividend Payout Ratio 51.25% 52.47% 54.10% 57.07%

Retaintion ratio 48.75% 47.53% 45.90% 42.93%

According to our report, our main objective is to compute ratios of Agricultural marketing

co.ltd (Pran) and compare the ratios in different years. Also we want to find out whether the

company is stable or not. From the financial statements, we can find out our requirements. In

below we give our finding and analysis in basis of company’s financial statements.

3.1 Profitability Ratios:

Profitability is the net result of a number of policies and decisions. It shows the combined effects

of liquidity management, asset management and debt management of operating results.

Gross profit margin

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Gross profit margin gives the profit per dollar of sales and is calculated by dividing the net

profit by the sales. The more percentage of this ratio indicating the company is more able to

make profit. From the calculation of gross profit margin in last four years we can find that in

2011 the gross profit margin is 21.80% and in 2008 is 22.70%. It shows a downward trend. But

2011 the Agricultural marketing co.ltd (Pran) has earned more profit. This ratio shows the

efficiency of the company to manage its business operations to earn profits and its ability to pay

for its fixed costs, like interest and other operating expenses. So, in 2011 the Agricultural

marketing co.ltd (Pran) has earned more profit.

Return on Asset:

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Return on Asset is an indicator of how profitable a company is relative to it is total assets. The

higher the ROA shows better the company is earning money by doing less investment. This is an

important ratio for companies deciding whether or not to initiate a new project. The basis of this

ratio is that if a company is going to start a project they expect to earn a return on it, ROA is the

return they would receive. Simply put, if ROA is above the rate that the company borrows at

then the project should be accepted, if not then it is rejected.

ROA of Agricultural marketing co.ltd (pran) is increasing trends which are a good sign for the

company; in 2009 the ROA of (pran) is 4.00% that indicating the profitability of the company.

Return on Equity:

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Return on equity is calculated by dividing the net income available to common stockholders by

the common equity. The more return on equity means the company is able to pay off more

dividend to it is share holders. The higher the ratio percentage, the more efficient management is

in utilizing its equity base and the better return is to investors. The ROE of Pran is very high in

2010 (11.47%) compare to previous years. So the shareholders got better return on their

investment.

Operating Profit Margin:

Operating profit margin:. For Pran operating profit margin has been increased from 2008 to

2010 gradually and in 2010 the highest operating profit margin was 4.45%. That represents that

Pran generated attractive income from the operation of business.

By comparing earnings before interest and taxes (EBIT) to sales, operating profit margins show

how successful a company's management has been at generating income from the operation of

the business.

Net Profit Margin

Net Profit Margin: Companies with high net profit margins have a bigger cushion to protect

themselves during the hard times. Companies with low profit margins can get wiped out in a

downturn. And companies with profit margins reflecting a competitive advantage is able to

improve their market share during the hard times - leaving them even better positioned when

things improve again.

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In 2008 the net profit margin of Pran is 3.65%. It is good for the company. Though it was

decreased from 2009 to 2011 by 3.61 and 3.46 compare to 2008 .

3.2 Asset Management Ratio:

It measures how effectively the firm is managing it is assets. This ratio may explain why one

firm can turn over it is asset more rapidly than another.

Inventory turnover: A low turnover implies poor sales and therefore excess inventory. A high

ratio implies either strong sales or ineffective buying. High inventory levels are unhealthy

because they represent an investment with a rate of return of zero. It also opens the company up

to trouble should prices begin to fall.

Note: Ratios data has been taken from the common size balance sheet and Income statement shown at appendix page.18-19

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Inventory Turnover measures the number of times, on average the inventory is sold during the

period. It is calculated by dividing the cost of goods sold by the inventory. In 2011 the inventory

turnover ratio of Pran was higher and year 2008 is lower than other four years.

Total Asset Turnover: Total asset turnover measures a firm's efficiency at using its assets in

generating sales or revenue - the higher the number the better. It also indicates pricing strategy of

companies with low profit margins tend to have high asset turnover, while those with high profit

margins have low asset turnover.

Total asset turnover: From 2008 to 2009 significantly increase the total asset turnover. but

decrease in 2010. In year 2011 pran has its highest total asset turnover.

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Fixed asset turnover:

The fixed asset turnover ratio measures how efficiently the firm uses its plant and equipment to

help generate sales. It is calculated by dividing the sales by the net fixed asset.

From the above graph we can see that in 2008 Agrecultureal markating co.ltd (pran) fixed asset

turnover ratio was increasing 2008 and in 2009 to2010 it shows a decreasing trand but in 2011 it

again increase . Pran is using fixed assets so efficiently as the other members of its industry.

Average inventory turnover: It shows how many day need a company utilize or how many

days after company repurchase its inventory.

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In average inventory turnover year 2008 to 2011signifecantly decrease.It means the performance

of manufacturing of the company Pran increase day by day .

3.3 Liquidity Ratio

A ratio analysis that provides a quick easy to use measure of liquidity by relating the amount of

cash and other current assets to the firm’s current obligations.

Current Ratio: Current ratio is an index of the firm’s financial stability. It is also an index of

technical solvency and an index of the strength of working capital

Quick Ratio: Quick ratio helps to know the exact current ratio of a particular company after

deducting inventory from it is current asset. It means the company's ability to meet day-to-day

operating expenses and satisfy short term obligation.

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Here current ratio and quick ratio are same. Because all the current asset are quick asset.

Agricultural marketing co.ltd (pran) current ratio increased in 2008 by 1.43 and But significantly

decrease in 2009 to 2011 .

3.4 Debt management ratio:Debt to total asset ratio:

The debt ratio measures the percentage of the firm’s asset financed by creditors. It is calculated

by dividing the total liabilities by the total assets. A debt ratio of greater than 1 indicates that a

company has more debt than assets; meanwhile, a debt ratio of less than 1 indicates that a

company has more assets than debt. Used in conjunction with other measures of financial health,

the debt ratio can help investors determine a company's level of risk.

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The debt ratio of Pran is 65.77% in 2011, which means that is creditors have supplied slightly

more than half of the firm’s total financing.

Debt to Equity ratio

A high debt/equity ratio generally means that a company has been aggressive in financing its

growth with debt. This can result in volatile earnings as a result of the additional interest

expense.

In 2011, the debt to equity ratio of pran was 1.92 times.

3.5 Market Value Ratios:

Market value ratios relate the firm’s stock price to it is earnings and book value per share. This

ratio gives management an indication of what investors think of the company’s future prospects

based on it is past performance.

Book Value Per Share

Common stockholders' equity determined on a per-share basis. Book value per share is

calculated by subtracting liabilities and the par value of any outstanding preferred stock from

assets and dividing the remainder by the number of outstanding shares of stock. It is also called

book value. Book value is most useful when evaluating firms with liquid assets (banks, financial

institutions) or hard assets. In general though, a company that is a viable and growing business

will be worth more than its book value due to its ability to generate earnings and growth.

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Pran’s Book Value increase gradually which is good for the company.

Earning Per Share: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability.

The earning per share of pran 56.86. That means company got earn 56.86Tk per share in year

2011.

Dividend Per Share

Dividend per share (DPS): In last four years the company gained highest DPS in 2011 Taka

29.14. That means the growth was sustained. Dividends are a form of profit distribution to the

shareholder. Having a growing dividend per share can be a sign that the company's management

believes that the growth can be sustained.

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Dividend Payout Ratio: The payout ratio provides an idea of how well earnings support the

dividend payments. More mature companies tend to have a higher payout ratio.

In 2011 the company gained lowest dividend payout ratio was 51.25%. That means in 2011 the

earning of company was slightly less or company rise its retention ratio. The highest payout ratio

in year 2008 was 57.07%.

4.0 Conclusion:

Agricultural marketing company ltd. PRAN is a well-established and leading company of the

country. The four years financial data and ratio analysis show a growing trend of the company.

The net profit after tax indicates the company’s excellent performance in operation, turnover,

management and competitive business statically. Finally, it is to be clear that our analysis about

Agricultural marketing co. Ltd (PRAN) shows that the company is performing well comparing to

the industry and as the investors’ expectation is to earn more money over their investment,

AMCL(PRAN). is playing an important role to set the investors on it.

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5.0 References

1. http://www.dsebd.org/

2. Gerald I. White; Ashwinpaul C. Sondhi; Dov Fried; The Analysis and Use of Financial

Statement; Edition Third; Wiley

3. Scott Besley, Eugene F. Brigham, Essential of Managerial Finance; Edition, Thomson

Higher Education, 2010-2011.

4. Agricultural marketing co. Ltd (pran), (2008-2011) Annual Reports.

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6.0 Appendix

Common Size Balance Sheet Of Square Textile Mills Limited For the Year Ended 2008-2011

Items Year 2011 Year 2010 Year 2009 Year 2008Equity      Share Capital 80000000 80000000 80000000 80000000Share premium 40000000 40000000 40000000 40000000General Reserve and Surplus

256531039 236083391 216766920 200314360

Proposed dividend 24800000 24000000 23200000 22400000Share Holders Equity

401331039 380083391 359966920 342714360

Liabilities Long-term liabilities

150700000 192232710 138987205 92488846

Current Liabilities

591768483 516471746 476423347 469374341

Deffered Tax liability

28868316 26895333 22213416 18608990

Total liabilities 771336799 711393989 637623968 580472177Total liabilities & Owners equity

1172667838 1091477380 997590888 923186537

 Assets Current AssetsStocks/Inventory 514774187 491757780 481449835 484200145Trade Debtors/ A/C Receivables

55696134 41282366 37284380 44242900

Advance deposit 151106219 131231172 108758482 128644738Cash & cash equ: 35265609 28979762 40968825 16173069Total Current Asset

756842149 693251080 668461522 673260852

Fixed Assets 415825688 422432100 329129366 249925685Total Asset 1172667838 1091477380 997590888 923186537

Common Size balance Sheet of PRAN Agricultural

Marketing Co. Ltd.

Common Size Income Statement of PRAN Agricultural Co. Ltd.

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Income Statement for the year ended 2008-2011

Items Year 2011 Year 2010 Year 2009 Year 2008

     

Sales Revenue 1316345576 1205155338 1106659846 985454208

Cost of Goods Sold (1029503278) (935681509) (858841641) (761332926)

Gross Profit 286842298 269473829 247818205 224121282

Operating & Finance Expenses

(228782236) (213977930) (197525920) (183129989)

Operating Profit 58060062 55495899 50292285 40991293

Other income 201706 916500 --- ---

Worker welfare fund (2903003) (2820620) (2514614) (2049565)

EBIT 55358819 53591779 47777671 38941728

Income Tax (9868642) (9998055) (7807868) (2991770)EAT/ Net Income 45490177 43593724 39969803 35949958

Ratio analysis of PRAN Agricultural Marketing Co. Ltd. for

the year ended

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2008 – 2011

Ratio analysis of Agricultural marketing co.ltd (pran). (2007-2011)

Items 2011 2010 2009 2008

Profitability Ratio        

Gross Profit Margin 21.80% 22.30% 22.40% 22.70%

Return on Asset 3.88% 3.99% 4.00% 3.89%

Return on Equity 11.33% 11.47% 11.10% 10.48%

Operating Profit Margin 4.20% 4.45% 4.31% 3.95%

Net Profit Margin 3.46% 3.62% 3.61% 3.65%

         

Asset Utilization Ratio        

Account Receivable Turnover

       

DSO        

Inventory Turnover 2.55 2.31 2.12 1.88

Total Asset Turnover 1.12 1.1 1.11 1.07

Fixed Asset Turnover 3.16 2.85 3.36 3.94

average inventory turnover 143 158 172 194

Liquidity Ratio        

Current Ratio 1.28 1.34 1.4 1.43

Quick Ratio 1.28 1.34 1.4 1.43

cash flow from oparation ratio 0.28 0.3 0.44 0.33

Debt Utilization Ratio        

Debt Ratio 65.77% 65.40% 63.91% 65.33%

Debt-Equity Ratio 1.92 1.87 1.77 1.69

         

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Market Value Ratios        

       

Book value Per Share 501.66TK 475.10TK 449.95TK 428.39TK

Earning Per Share 56.86Tk 54.49Tk 49.96Tk 44.94Tk

Dividend Per Share 29.14TK 28.59TK 27.03TK 25.65TK

Dividend Payout Ratio 51.25% 52.47% 54.10% 57.07%

Retaintion ratio 48.75% 47.53% 45.90% 42.93%