Report

On

Financial Statement Analysis

“Bashundhara Paper Mills Limited”

 1. Letter of Transmittal

18th May, 2023

Farzana Nasreen

Assistant Professor

Department of Finance

Jagannath University, Dhaka.

Subject: Submission of report on “Analysis of Financial Statements of Bashundhara Paper

Mills Ltd.”

Madam,

With due respect and honor, we would like to inform you that we are the students of Group-11 of
your course, Financial Accounting (FIN-2105), have completed our report on “Analysis of
Financial Statements of Bashundhara Paper Mills Ltd.”. We have tried our level best to
follow your guidelines in every aspect of planning of this report and accumulate relevant and
insightful information. It is a great experience for us to work on this topic. We have tried to make
the report vivid and comprehensive within the scheduled time and limited resources.

We sincerely hope that this report will help you to evaluate us. We will be obliged to clarify any
matter or to provide any further information regarding this report.

Thanking you for your kind supervision.

Sincerely yours,

On behalf of the students of group-11

Department of Finance

Jagannath University, Dhaka.

 “Financial Statement Analysis: Bashundhara Paper Mills Ltd.”

Prepared for:
Farzana Nasreen
Lecturer
Department of Finance
Jagannath University, Dhaka-1100

Prepared by:
Members of Group-09

Name ID
Shakirul Islam B200203015
Md. Asib Hossain B200203035
Mohon
Akidul Islam B200203046
Ashikur Rahman B200203047
Gourango Sarker B200203063

15th Batch, 2nd Year, 1st Semester

Course Title: Financial Accounting
Course Code: FIN-2105
Department of Finance
Jagannath University, Dhaka-1100

Submission Date: 18th May, 2023

 Table of Contents
1. Letter of Transmittal.................................................................................................................2

2. Glossary and Acronyms...........................................................................................................6

2.1. Glossary:...............................................................................................................................6

2.2. Acronyms:.............................................................................................................................6

3. Acknowledgement....................................................................................................................7

4. Executive Summary.................................................................................................................8

5. Introduction..............................................................................................................................9

6. Objective................................................................................................................................10

7. Methodology..........................................................................................................................11

7.1. Sources of information:...................................................................................................11

7.2. Compile and Process.......................................................................................................11

8. Company Profile.....................................................................................................................12

8.1. History and Background of BASHUNDHARA GROUP...............................................12

8.1.1. History..........................................................................................................................12

8.1.2. Background..................................................................................................................12

8.2. Corporate History and Overview of Bashundhara Paper Mills Ltd....................................13

8.2.1. Corporate History.........................................................................................................14

8.2.2. Overview......................................................................................................................14

8.3. Founder and Board of Directors..........................................................................................16

9. Financial Statement Analysis.................................................................................................17

9.1. Horizontal Analysis.............................................................................................................17

9.1.1. Horizontal Analysis of Balance Sheet..........................................................................18

9.1.2. Horizontal Analysis of Income Statement....................................................................20

9.2. Vertical Analysis.................................................................................................................21

 9.2.1. Vertical Analysis of Balance Sheet..............................................................................22

9.2.1. Vertical Analysis of Income Statement........................................................................25

9.3. Ratio Analysis.....................................................................................................................26

9.3.1. Liquidity Ratio.............................................................................................................26

9.3.2. Efficiency/Activity Ratio.............................................................................................28

9.3.3. Solvency Ratio.................................................................................................................30

9.3.4. Profitability Ratio.........................................................................................................32

10. Conclusion..........................................................................................................................35

11. Findings (Strength and Weakness).....................................................................................36

11.1. Strength.............................................................................................................................36

11.2. Weakness..........................................................................................................................36

12. Recommendation................................................................................................................36
 2. Glossary and Acronyms

2.1. Glossary:

i. Ratio- A ratio is a relationship between two numbers indicating how many times the first

number contains the second.

ii. Intracompany- Occurring within a company.

2.2. Acronyms:

i. BPML- Bashundhara Paper Mills Limited.

ii. CoGS- Cost of Goods Sold.

iii. BGC- Bashundhara Group of Companies.

 3. Acknowledgement

First, we would like to express our deep gratitude to the creator, the almighty Allah. We also

express our gratitude to Him for giving us an opportunity to complete the report.

Then, we would like to express our indebtedness and deep sense of gratitude to our honorable

course instructor, Farzana Nasreen, Lecturer, Department of Finance, Jagannath University,

whose scholastic supervision, kind and sympathetic guidance, warm advice and encouragement

have enabled us to materialize this report successfully.

Finally, we thank all the persons who have directly or indirectly contributed in preparing this

report.
 4. Executive Summary

This report provides an overview of strengths and weaknesses of “Bashundhara Paper Mills

Ltd.” based on some analysis and calculations. The publicly available data is presented in a

comprehensive and easily accessible format. The report also contains the company’s profile. The

report also includes financial information, ratio analysis, DuPont analysis, opinions, current

financial position, horizontal and vertical analysis, latest strengths or weakness and steps should

be taken for the company. This report provides relevant news, achievements, corporate history,

background. The report also enables direct comparison to be made between “Bashundhara Paper

Mills Ltd.” and its competitors.

 5. Introduction

Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a

company's financial statements to make better economic decisions. Analyzing financial

statements involves evaluating three characteristics: a company’s liquidity, profitability, and

solvency. A short-term creditor, such as a bank, is primarily interested in liquidity—the ability of

the borrower to pay obligations when they come due. The liquidity of the borrower is extremely

important in evaluating the safety of a loan. A long-term creditor, such as a bondholder, looks to

profitability and solvency measures that indicate the company’s ability to survive over a long

period of time. Long-term creditors consider such measures as the amount of debt in the

company’s capital structure and its ability to meet interest payments. Similarly, stockholders

look at the profitability and solvency of the company. They want to assess the likelihood of

dividends and the growth potential of the stock.

Every corporation do financial statement analysis to understand its current financial position and

make decisions regarding financial issues. There are many DSE listed company in Bangladesh.

Bashundhara Paper Mills Limited is one of them. In this report, we tried to present analysis and

interpretation of 5 fiscal years financial statements of such leading DSE listed company.
 6. Objective

Every organization especially business organization prepare financial statement and analyze

them by using tools such as: horizontal analysis, vertical analysis and ratio analysis to get clear

idea about the performance of the organization. At the same time organizations also keep track

with the help of this tool. From this report, users will get the following ideas about the

performance of “Bashundhara Paper Mills Ltd.”.

i. Short-term ability of “Bashundhara Paper Mills Ltd” to pay maturing obligations

ii. The ability of its using assets to generate income

iii. The ability to survive over a long period of time

iv. It’s income and operating success during all the five years

v. Users will be able to compare the performance during five years

vi. One can observe the changes of the performance.

vii. Getting some ideas regarding the above-mentioned things, user can make a move if

needed
 7. Methodology

This report has been prepared on the basis secondary information.

7.1. Sources of information:

 Various contents on financial statement analysis in websites (especially

http://investopedia.com)

 Bashundhara Paper Mills Limited. ( http://www.bashundharapapermills.com/ )

 Annual Report 2021-22, 2020-21, 2019-20, 2018-19, 2017-18, 2016-17 of

Bashundhara Paper Mills Limited.

 Accounting Principles by Weygandt, Kimmel and Kieso, Twelfth Edition.

7.2. Compile and Process

We have limited bookish knowledge about Financial Statement analysis. We collect financial

statements of Bashundhara Paper Mills Limited. We inputted the data of financial statements of

Bashundhara Paper Mills Limited in Excel Sheets. Using formulas of different ratios, we have

converted the inputs (financial statements’ data) into outputs (ratios). Then we compared the

ratios using Intracompany basis of comparison and interpreted and made comments regarding the

ratios using our bookish knowledge. Thus, we have tried our level best to make the information

understandable to all.
 8. Company Profile

8.1. History and Background of BASHUNDHARA GROUP

8.1.1. History
 1987 - East West Property Development (Pvt) Limited.

 1992 – Established Meghna Cement Mills Limited.

 1993 – Established Bashundhara Paper Mills Limited.

 1997 – Bashundhara LP Gas Limited.

 1998 – Bashundhara City Development Limited.

 2000 – Bashundhara Industrial Complex Limited.

 2002 – Bashundhara Steel and Engineering Limited.

 2003 – Bashundhara Technologies Limited

8.1.2. Background
Bashundhara Group (Ahmed Akbar Sobhan, is the founder and chairman of Bashundhara
Group.) began in 1987 as real estate venture. After its first successful project, Bashundhara
invested in new fields, including manufacturing, industry and trading. More enterprises were
established in the early 1990s; these included cement, paper, pulp, tissue paper and steel
production, as well as LP Gas bottling and distribution.

Today, BGC is stronger than ever, building on its past successes and venturing in to newer
markets marking their presence. Backed by its unblemished reputation and decades of
experience, it is committed to serving you with passion, integrity and transparency.
8.2. Corporate History and Overview of Bashundhara Paper Mills Ltd.
Bashundhara Group now operates over 50 concerns. Some of them are:

 East West Property Development (Pvt) Limited.

 Established Meghna Cement Mills Limited.

 Established Bashundhara Paper Mills Limited.

 Bashundhara LP Gas Limited.

 Bashundhara City Development Limited.

 Bashundhara Industrial Complex Limited.

 Bashundhara Steel and Engineering Limited.

 Bashundhara Technologies Limited.

 Bashundhara Logistics Limited.

 Bashundhara Foundation.

 BCC/International Convention by Bashundhara.

 Bashundhara Oil and Gas Company Limited.

 Bashundhara Shipping Limited

 East West Media Group Limited.

 Bashundhara Food and Beverage Industries Limited.

 BDCL/Bashundhara Infrastructure Development Limited.

 Bashundhara Ad-Din Medical College and Hospital.

 Bashundhara Technical Institute.

 Sundarban Industrial Complex Limited.

 Bashundhara Multi Paper Industries Limited.

  Bashundhara Airways Limited.

 Bashundhara Multi Food Products Limited (Edible Oil).

 Bashundhara Industrial Economic Zones.

 Baba Rafi.

 Bashundhara Special Children Foundation.

8.2.1. Corporate History

 Date of incorporation: September 28,1993

 Year of Commencement of Business: March 1,1997

 Date of IPO: 30 April, 2018

 Date of listing with DSE and CSE: June, 2018

 Authorized Capital(million): TK. 5000.

 Paid up capital(million): TK. 1737.91.

 Number of total Employees: 3,670

 List of products: Newsprint Rolls, White Writing and Printing Paper, Duplex Paper, Kraft
Paper, Art Card, Art Paper and allied products.

 Main Export Market(countries): India, Nepal, Bhutan, the UK, Malaysia, Singapore, South
Korea and several countries.

8.2.2. Overview
Bashundhara Paper Mills Limited incorporated as a private limited company in the year 1993
and subsequently it was converted into a public limited company, now a publicly listed company.
After starting its commercial operation as an import-substitute local paper manufacturing
company another two companies of the Bashundhara Group of same nature namely
“Bashundhara Newsprint & Duplex Board Industries Limited” (Former Shahjalal News Print
Industries Ltd.) and “Bashundhara Tissue Industries Limited” (Former Freyschmidt Tissue
Limited) amalgamated with BPML on October 10, 2009. After the amalgamation of all three
companies caring out its business as a single legal entity and operated three separate units as
“Unit 1”, “Unit-2” and “Unit-3” for the administrative purpose. The three industrial units, are
separate in their location and product diversity. All are equipped with industry-best state-of the-
art facilities and are regularly going through meticulously opted refurbishment processes to cope
up achieving “scale of economies” and “resource conservation” esp. in energy (power
consumption) and water usage per unit output. These significant alterations have been easily
accomplished backed by dependable partnerships with World’s top technology providers e.g.,
Valmet, Andritz, ABB, Siemens, Voith, Caterpillar, Gapcon, Cleaverbrooks, Thermex, Sigma
Engineering, Recard, Parker, Eurotherm, OK Machineries, Adpep, Taisan, Omet, ZWC etc. The
company has been relentless over more than two decades to offer its diversified products ranging
from different types of Paper, Tissue & Hygiene portfolio, thereby it has rightly been entrusted
from customer’s fraternity of home and abroad. At present, Bashundhara Paper is the trusted
source of volume Paper-needs of both Government level and, while keep general consumers pace
of exporting to over 50 different global destinations. Noteworthy, it has been successful to
become the only Company in Bangladesh having the certification of ISO 9001:2015 and
FSCCoC at the same time, certainly due to its thrust on environment is visible in various eco-
friendly initiatives at the Plant sites by adopting modern technology and process innovations. On
the other hand, quality of products in line with the market demand and by an efficient
management the company introduced itself as the change leader in this industry.

8.2.2.1. Achievements
Bashundhara Paper Mills Limited-

 (The International Standardizing Organization (ISO) certified as one of the standard

paper products of the time.) In 2015 got The ISO Certification.

 (The Forest Stewardship Council (FSC) certified BPML with the praiseworthy Chain of
Custody certification.) In 2015 got the FSC-COC Mix Certification.

 In 2017 won the Paper Exhibition Award.

 In 2018 received The Super Brand Award.

 In 2019 achieved Best Brand Award.

  In 2020 earned Super Brand Award.

8.3. Founder and Board of Directors

Name: Ahmed Akbar Sobhan

Chairman

Mr. Ahmed Akbar Sobhan is one of the Sponsor Director and Chairman of this Company. He
graduated in Business Studies from the University of Dhaka. He founded Bashundhara Group
back in the 80s, which is now a leading industrial group of Bangladesh. Bashundhara Group (BG)
now consisting of more than seven dozen of companies comprising of moderate to heavy
industrial and business units. His leadership, commitment and vision placed this group in a
formidable position and now BG emerged as one of the biggest industrial and commercial
conglomerates in Bangladesh.

Name: Md. Imrul Hassan

Director

Mr. Imrul Hassan is a director of Bashundhara Paper Mills Limited. He was born in Comilla on
July 22, 1968 in a recognized Muslim family. He completed his Post Graduation from University
of Dhaka. Mr. Hassan visited different countries around the world as such India, Singapore,
Thailand, Qatar, KSA. A successful business personality and holding a fabulous track of
experience, he is also a sport loving personality. He is very known person for his moral social
work and activity. Mr. Hassan is keenly interested in development of sports and socio-cultural
activities and a successful businessman indeed.
 9. Financial Statement Analysis

Various tools are used to evaluate the significance of financial statement data. Three commonly
used tools are as follows.

 Horizontal analysis evaluates a series of financial statement data over a period of time.

 Vertical analysis evaluated financial statement data by expressing each item in a financial
statement as a percentage of a base amount.

 Ratio analysis expresses the relationship among selected items of financial statement data.

9.1. Horizontal Analysis

Horizontal analysis, also called trend analysis, is a technique for evaluating a series of financial
statement data over a period of time. Its purpose is to determine the increase or decrease that has
taken place. This change may be expressed as either an amount or a percentage.

Formula for horizontal analysis of changes since base period is-

Current year amount−Base year amount

Change Since Base Period=
Base year amount
9.1.1. Horizontal Analysis of Balance Sheet

 Percen Percen Percen Percen

Particulars 2022 2021 2020 2019 2018
t t  t  t 
Cash & Short-Term - -
644 15.83% 556 6.31% 523 1682 1907
Investments 68.91% 11.80%
- -
Cash Only 644 15.83% 556 6.31% 523 607 1907
13.84% 68.17%
Total Accounts - -
1016 32.29% 768 1406 3694 48.29% 2491
Receivable 45.38% 61.94%
Accounts Receivables, - -
722 10.23% 655 1163 2690 22.61% 2194
Net 43.68% 56.77%
Accounts Receivables, - -
722 10.23% 655 1163 2690 22.61% 2194
Gross 43.68% 56.77%
160.18 - - 236.91
Other Receivables 294 113 243 1004 298
% 53.50% 75.80% %
Inventories 8391 3.41% 8114 7.61% 7540 -5.09% 7944 9.36% 7264
-
Finished Goods 1216 9.06% 1115 -7.47% 1205 1404 38.74% 1012
14.17%
Work in Progress 1474 1.31% 1455 23.10% 1182 -5.44% 1250 61.29% 775
-
Raw Materials 4272 7.12% 3988 4.78% 3806 4274 1.26% 4221
10.95%
Progress Payments & -
1430 -8.16% 1557 15.76% 1345 32.25% 1017 1256
Other 19.03%
- - -
Other Current Assets 709 797 -8.91% 875 1136 1489
11.04% 22.98% 23.71%
- -
Prepaid Expenses 410 -8.69% 449 508 2.21% 497 571
11.61% 12.96%
Miscellaneous - - -
299 348 -5.18% 367 639 918
Current Assets 14.08% 42.57% 30.39%
1076 1023 1034 - 1445 1315
Total Current Assets 5.13% -1.04% 9.91%
0 5 3 28.45% 6 2
Net Property, Plant & 2367 1808 1677 1529 1147
30.88% 7.81% 9.67% 33.36%
Equipment 3 8 7 8 1
Property, Plant & 3120 2475 2248 2009 1534
26.07% 10.09% 11.89% 30.96%
Equipment - Gross 7 4 6 7 6
Buildings 5949 10.56% 5381 16.15% 4633 25.83% 3682 73.11% 2127
178.23
Land & Improvements 7462 2682 0.00% 2682 0.75% 2662 2.70% 2592
%
Machinery & 1591 1461 1266 1064
8.91% 15.41% 18.93% 48.40% 7176
Equipment 9 7 5 9
Construction in 632 - 865 - 1328 - 2009 - 2493
 Progress 26.94% 34.86% 33.90% 19.41%
Leased Property - - - - - - 121 0.00% 121
Transportation
640 4.07% 615 5.85% 581 3.38% 562 21.38% 463
Equipment
Other Property, Plant
590 4.06% 567 1.98% 556 34.95% 412 9.57% 376
& Equipment
Accumulated
7534 13.02% 6666 16.76% 5709 18.96% 4799 23.85% 3875
Depreciation
Buildings 849 16.94% 726 17.86% 616 19.15% 517 18.58% 436
Machinery &
5960 12.62% 5292 16.80% 4531 20.47% 3761 23.80% 3038
Equipment
Leases - - - - - - 65 35.42% 48
Leased Property - - - - - - 65 35.42% 48
Transportation
439 11.14% 395 14.83% 344 27.41% 270 33.00% 203
Equipment
Other Property, Plant
286 13.49% 252 16.13% 217 16.67% 186 23.18% 151
& Equipment
Total Investments and
265 0.00% 265 0.00% 265 0.00% 265 0.00% 265
Advances
Other Long-Term
265 0.00% 265 0.00% 265 0.00% 265 0.00% 265
Investments
Intangible Assets 156 3.31% 151 -5.03% 159 -4.79% 167 -4.02% 174
Net Other Intangibles 156 3.31% 151 -5.03% 159 -4.79% 167 -4.02% 174
3485 2873 2754 3018 2506
Total Assets 21.28% 4.34% -8.75% 20.45%
4 9 4 6 2
- - -
Assets - Total - 0.212 390.32 0.043 0.204
149.60 0.087 142.79 - -
Growth 8 % 4 5
% 5 %
Liabilities &
-  -  - -  - - -  - - 
Shareholders' Equity
ST Debt & Current - 1022
5991 25.02% 4792 -6.06% 5101 9825 -3.86%
Portion LT Debt 48.08% 0
- -
Short Term Debt 3994 51.57% 2635 3127 8084 -9.94% 8976
15.73% 61.32%
Current Portion of
1997 -7.42% 2157 9.27% 1974 13.38% 1741 39.95% 1244
Long-Term Debt
- - 112.44
Accounts Payable 519 9.96% 472 726 1417 667
34.99% 48.76% %
- - -
Income Tax Payable 123 173 317 19.62% 265 431
28.90% 45.43% 38.52%
Other Current -
681 -5.94% 724 960 -4.57% 1006 50.60% 668
Liabilities 24.58%
- -
Dividends Payable 3 4 302 - - - -
25.00% 98.68%
Accrued Payroll 246 4.24% 236 -0.84% 238 41.67% 168 13.51% 148
Miscellaneous 431 - 485 15.48% 420 - 838 61.15% 520
 Current Liabilities 11.13% 49.88%
Total Current - - 1251 1198
7314 18.71% 6161 7104 4.41%
Liabilities 13.27% 43.23% 3 5
1337 1328 1152 120.63
Long-Term Debt 0.71% 15.25% 36.59% 8437 3824
5 1 4 %
Long-Term Debt excl. 1337 1307 1118 135.30
2.30% 16.93% 34.84% 8292 3524
Capitalized Leases 5 4 1 %
1337 1307 1118 135.30
Non-Convertible Debt 2.30% 16.93% 34.84% 8292 3524
5 4 1 %
Capitalized Lease -
- - - - - - 144 301
Obligations 52.16%
Deferred Taxes 1094 -7.60% 1184 -0.42% 1189 10.40% 1077 12.54% 957
Deferred Taxes -
1094 -7.60% 1184 -0.42% 1189 10.40% 1077 12.54% 957
Credit
Other Liabilities - - - - - - 680 -8.85% 746
Other Liabilities (excl.
- - - - - - 680 -8.85% 746
Deferred Income)
2178 2062 1981 - 2270 1751
Total Liabilities 5.61% 4.09% 29.65%
4 7 7 12.72% 6 3
Common Equity 1307
61.12% 8112 4.98% 7727 3.30% 7480 -0.93% 7550
(Total) 0
Common Stock
1738 0.00% 1738 0.00% 1738 0.00% 1738 0.00% 1738
Par/Carry Value
Additional Paid-In
Capital/Capital 1740 0.00% 1740 0.00% 1740 0.00% 1740 0.00% 1740
Surplus
Retained Earnings 2894 12.08% 2582 18.60% 2177 13.98% 1910 -2.50% 1959
226.30
Revaluation Reserves 6699 2053 -0.96% 2073 -0.96% 2093 -0.95% 2113
%
Total Shareholders' 1307
61.12% 8112 4.98% 7727 3.30% 7480 -0.93% 7550
Equity 0
1307
Total Equity 61.12% 8112 4.98% 7727 3.30% 7480 -0.93% 7550
0
Liabilities & 3485 2873 2754 3018 2506
21.28% 4.34% -8.75% 20.45%
Shareholders' Equity 4 9 4 6 2

9.1.2. Horizontal Analysis of Income Statement

Particulars 2022 Percent 2021 Percent 2020 Percent 2019 Percent 2018
Sales/Revenue 11238 21.06% 9283 8.65% 8544 -22.60% 11039 2.01% 10821
Cost of Goods Sold
9074 22.00% 7438 10.23% 6748 -25.18% 9019 0.49% 8975
(COGS) incl. D&A
COGS excluding D&A 8187 26.81% 6456 12.12% 5758 -28.79% 8086 -0.80% 8151
Depreciation & 887 -9.67% 982 -0.81% 990 6.00% 934 13.35% 824
 Amortization Expense
Depreciation 880 -9.65% 974 -0.81% 982 6.05% 926 13.48% 816
Amortization of
7 -12.50% 8 0.00% 8 0.00% 8 0.00% 8
Intangibles
Gross Income 2164 17.29% 1845 2.67% 1797 -11.04% 2020 9.43% 1846
SG&A Expense 489 -2.00% 499 4.39% 478 -14.34% 558 16.01% 481
Other SG&A 489 -2.00% 499 4.39% 478 -14.34% 558 16.01% 481
EBIT 1675 24.44% 1346 0 - 0 1462 7.11% 1365
Unusual Expense - 0 - 0 5 -16.67% 6 -89.29% 56
Non-Operating
145 150.00% 58 1.75% 57 14.00% 50 -3.85% 52
Income/Expense
Non-Operating Interest
1 0.00% 1 -50.00% 2 -97.37% 76 2433.33% 3
Income
Interest Expense 1153 15.30% 1000 8.34% 923 -16.39% 1104 26.90% 870
Gross Interest Expense 1153 15.30% 1000 8.34% 923 -16.39% 1104 26.90% 870
Pretax Income 668 65.35% 404 -10.02% 449 -5.87% 477 -3.44% 494
-
Income Tax 160 -7 -104.27% 164 -11.83% 186 -193.00% -200
2385.71%
Income Tax - Current -
133 -2 -103.92% 51 -22.73% 66 -66.83% 199
Domestic 6750.00%
Income Tax - Deferred
27 -640.00% -5 -104.46% 112 -5.88% 119 -129.82% -399
Domestic
Consolidated Net
508 23.60% 411 43.71% 286 -2.05% 292 -57.93% 694
Income
Net Income 508 23.60% 411 43.71% 286 -2.05% 292 -57.93% 694

9.2. Vertical Analysis

Vertical analysis, also called common-size analysis, is a technique that expresses each financial
statement item as a percentage of a base amount. On a balance sheet, we might say that current
assets are 22% of total assets—total assets being the base amount. Or on an income statement,
we might say that selling expenses are 16% of net sales—net sales being the base amount.

Formula for vertical analysis of changes since base period is-

Particular Item
Vertical Analysis=
Base Item
9.2.1. Vertical Analysis of Balance Sheet

Particulars 2022 Percen 2021 Percen 2020 Percen 2019 Percen 2018 Percen
t t t t t
Cash & Short- 644 1.85% 556 1.93% 523 1.90% 1682 5.57% 1907 7.61%
Term
Investments
Cash Only 644 1.85% 556 1.93% 523 1.90% 607 2.01% 1907 7.61%
Total 1016 2.92% 768 2.67% 1406 5.10% 3694 12.24 2491 9.94%
Accounts %
Receivable
Accounts 722 2.07% 655 2.28% 1163 4.22% 2690 8.91% 2194 8.75%
Receivables,
Net
Accounts 722 2.07% 655 2.28% 1163 4.22% 2690 8.91% 2194 8.75%
Receivables,
 Gross
Other 294 0.84% 113 0.39% 243 0.88% 1004 3.33% 298 1.19%
Receivables
Inventories 8391 24.07 8114 28.23 7540 27.37 7944 26.32 7264 28.98
% % % % %
Finished 1216 3.49% 1115 3.88% 1205 4.37% 1404 4.65% 1012 4.04%
Goods
Work in 1474 4.23% 1455 5.06% 1182 4.29% 1250 4.14% 775 3.09%
Progress
Raw Materials 4272 12.26 3988 13.88 3806 13.82 4274 14.16 4221 16.84
% % % % %
Progress 1430 4.10% 1557 5.42% 1345 4.88% 1017 3.37% 1256 5.01%
Payments &
Other
Other Current 709 2.03% 797 2.77% 875 3.18% 1136 3.76% 1489 5.94%
Assets
Prepaid 410 1.18% 449 1.56% 508 1.84% 497 1.65% 571 2.28%
Expenses
Miscellaneous 299 0.86% 348 1.21% 367 1.33% 639 2.12% 918 3.66%
Current
Assets
Total Current 1076 30.87 1023 35.61 1034 37.55 1445 47.89 1315 52.48
Assets 0 % 5 % 3 % 6 % 2 %
Net Property, 2367 67.92 1808 62.94 1677 60.91 1529 50.68 1147 45.77
Plant & 3 % 8 % 7 % 8 % 1 %
Equipment
Property, 3120 89.54 2475 86.13 2248 81.64 2009 66.58 1534 61.23
Plant & 7 % 4 % 6 % 7 % 6 %
Equipment -
Gross
Buildings 5949 17.07 5381 18.72 4633 16.82 3682 12.20 2127 8.49%
% % % %
Land & 7462 21.41 2682 9.33% 2682 9.74% 2662 8.82% 2592 10.34
Improvement % %
s
Machinery & 1591 45.67 1461 50.86 1266 45.98 1064 35.28 7176 28.63
Equipment 9 % 7 % 5 % 9 % %
Construction 632 1.81% 865 3.01% 1328 4.82% 2009 6.66% 2493 9.95%
in Progress
Leased - - - - - - 121 0.40% 121 0.48%
Property
Transportatio 640 1.84% 615 2.14% 581 2.11% 562 1.86% 463 1.85%
n Equipment
Other 590 1.69% 567 1.97% 556 2.02% 412 1.36% 376 1.50%
Property,
Plant &
Equipment
Accumulated 7534 21.62 6666 23.19 5709 20.73 4799 15.90 3875 15.46
Depreciation % % % % %
Buildings 849 2.44% 726 2.53% 616 2.24% 517 1.71% 436 1.74%
Machinery & 5960 17.10 5292 18.41 4531 16.45 3761 12.46 3038 12.12
Equipment % % % % %
Leases - - - - - - 65 0.22% 48 0.19%
Leased - - - - - - 65 0.22% 48 0.19%
Property
Transportatio 439 1.26% 395 1.37% 344 1.25% 270 0.89% 203 0.81%
n Equipment
Other 286 0.82% 252 0.88% 217 0.79% 186 0.62% 151 0.60%
Property,
Plant &
Equipment
Total 265 0.76% 265 0.92% 265 0.96% 265 0.88% 265 1.06%
Investments
and Advances
Other Long- 265 0.76% 265 0.92% 265 0.96% 265 0.88% 265 1.06%
Term
Investments
Intangible 156 0.45% 151 0.53% 159 0.58% 167 0.55% 174 0.69%
Assets
Net Other 156 0.45% 151 0.53% 159 0.58% 167 0.55% 174 0.69%
Intangibles
Total Assets 3485 100.00 2873 100.00 2754 100.00 3018 100.00 2506 100.00
4 % 9 % 4 % 6 % 2 %
Assets - Total 0.212 0.00% 0.043 0.00% - 0.00% 0.204 0.00% - -
- Growth 8 4 0.087 5
5
Liabilities &   0.00%   0.00%   0.00%   0.00%   0.00%
Shareholders'
Equity
ST Debt & 5991 17.19 4792 16.67 5101 18.52 9825 32.55 1022 40.78
Current % % % % 0 %
Portion LT
Debt
Short Term 3994 11.46 2635 9.17% 3127 11.35 8084 26.78 8976 35.82
Debt % % % %
Current 1997 5.73% 2157 7.51% 1974 7.17% 1741 5.77% 1244 4.96%
Portion of
Long-Term
Debt
Accounts 519 1.49% 472 1.64% 726 2.64% 1417 4.69% 667 2.66%
Payable
Income Tax 123 0.35% 173 0.60% 317 1.15% 265 0.88% 431 1.72%
Payable
Other Current 681 1.95% 724 2.52% 960 3.49% 1006 3.33% 668 2.67%
 Liabilities
Dividends 3 0.01% 4 0.01% 302 1.10% - - - -
Payable
Accrued 246 0.71% 236 0.82% 238 0.86% 168 0.56% 148 0.59%
Payroll
Miscellaneous 431 1.24% 485 1.69% 420 1.52% 838 2.78% 520 2.07%
Current
Liabilities
Total Current 7314 20.98 6161 21.44 7104 25.79 1251 41.45 1198 47.82
Liabilities % % % 3 % 5 %
Long-Term 1337 38.37 1328 46.21 1152 41.84 8437 27.95 3824 15.26
Debt 5 % 1 % 4 % % %
Long-Term 1337 38.37 1307 45.49 1118 40.59 8292 27.47 3524 14.06
Debt excl. 5 % 4 % 1 % % %
Capitalized
Leases
Non- 1337 38.37 1307 45.49 1118 40.59 8292 27.47 3524 14.06
Convertible 5 % 4 % 1 % % %
Debt
Capitalized - - - - - - 144 0.48% 301 1.20%
Lease
Obligations
Deferred 1094 3.14% 1184 4.12% 1189 4.32% 1077 3.57% 957 3.82%
Taxes
Deferred 1094 3.14% 1184 4.12% 1189 4.32% 1077 3.57% 957 3.82%
Taxes - Credit
Other - - - - - - 680 2.25% 746 2.98%
Liabilities
Other - - - - - - 680 2.25% 746 2.98%
Liabilities
(excl.
Deferred
Income)
Total 2178 62.50 2062 71.77 1981 71.95 2270 75.22 1751 69.88
Liabilities 4 % 7 % 7 % 6 % 3 %
Common 1307 37.50 8112 28.23 7727 28.05 7480 24.78 7550 30.13
Equity (Total) 0 % % % % %
Common 1738 4.99% 1738 6.05% 1738 6.31% 1738 5.76% 1738 6.93%
Stock
Par/Carry
Value
Additional 1740 4.99% 1740 6.05% 1740 6.32% 1740 5.76% 1740 6.94%
Paid-In
Capital/Capita
l Surplus
Retained 2894 8.30% 2582 8.98% 2177 7.90% 1910 6.33% 1959 7.82%
Earnings
 Revaluation 6699 19.22 2053 7.14% 2073 7.53% 2093 6.93% 2113 8.43%
Reserves %
Total 1307 37.50 8112 28.23 7727 28.05 7480 24.78 7550 30.13
Shareholders' 0 % % % % %
Equity
Total Equity 1307 37.50 8112 28.23 7727 28.05 7480 24.78 7550 30.13
0 % % % % %
Liabilities & 3485 100.00 2873 100.00 2754 100.00 3018 100.00 2506 100.00
Shareholders' 4 % 9 % 4 % 6 % 2 %
Equity

9.2.1. Vertical Analysis of Income Statement

Percen Percen Percen Percen Percen

Particulars 2022 2021 2020 2019 2018
t t t t t
1123 100.00 100.00 100.00 1103 100.00 1082 100.00
Sales/Revenue 9283 8544
8 % % % 9 % 1 %
Cost of Goods Sold 80.74 80.12 78.98 81.70 82.94
9074 7438 6748 9019 8975
(COGS) incl. D&A % % % % %
72.85 69.55 67.39 73.25 75.33
COGS excluding D&A 8187 6456 5758 8086 8151
% % % % %
Depreciation & 10.58 11.59
887 7.89% 982 990 934 8.46% 824 7.61%
Amortization Expense % %
10.49 11.49
Depreciation 880 7.83% 974 982 926 8.39% 816 7.54%
% %
Amortization of
7 0.06% 8 0.09% 8 0.09% 8 0.07% 8 0.07%
Intangibles
19.26 19.88 21.03 18.30 17.06
Gross Income 2164 1845 1797 2020 1846
% % % % %
SG&A Expense 489 4.35% 499 5.38% 478 5.59% 558 5.05% 481 4.45%
Other SG&A 489 4.35% 499 5.38% 478 5.59% 558 5.05% 481 4.45%
14.90 14.50 13.24 12.61
EBIT 1675 1346 - 0.00% 1462 1365
% % % %
Unusual Expense - 0.00% - 0.00% 5 0.06% 6 0.05% 56 0.52%
Non-Operating
145 1.29% 58 0.62% 57 0.67% 50 0.45% 52 0.48%
Income/Expense
Non-Operating Interest
1 0.01% 1 0.01% 2 0.02% 76 0.69% 3 0.03%
Income
10.26 10.77 10.80 10.00
Interest Expense 1153 1000 923 1104 870 8.04%
% % % %
10.26 10.77 10.80 10.00
Gross Interest Expense 1153 1000 923 1104 870 8.04%
% % % %
Pretax Income 668 5.94% 404 4.35% 449 5.26% 477 4.32% 494 4.57%
Income Tax 160 1.42% -7 -0.08% 164 1.92% 186 1.68% -200 -1.85%
Income Tax - Current 133 1.18% -2 -0.02% 51 0.60% 66 0.60% 199 1.84%
Domestic
Income Tax - Deferred
27 0.24% -5 -0.05% 112 1.31% 119 1.08% -399 -3.69%
Domestic
Consolidated Net
508 4.52% 411 4.43% 286 3.35% 292 2.65% 694 6.41%
Income
Net Income 508 4.52% 411 4.43% 286 3.35% 292 2.65% 694 6.41%
9.3. Ratio Analysis
Ratio analysis expresses the relationship among selected items of financial statement data. A
ratio expresses the mathematical relationship between one a rate or a simple proportion.

9.3.1. Liquidity Ratio

Liquidity ratios measure the short-term ability of the company to pay its maturing obligations
and to meet unexpected needs for cash. Short term creditors such as bankers and suppliers are
particularly interested in assessing liquidity. The ratios we can use to determine the company’s
short-term debt-paying ability are the- (i) current ratio, (ii) quick ratio, (iii) cash ratio.

9.3.1.1. Current Ratio

The current ratio is a widely used measure for evaluating a company’s liquidity and short-term
debt-paying ability.

The current ratios of Bashundhara Paper Mills Limited-

Current Assets
Current Ratio=
Current Liabilities

2022 2021 2020 2019 2018

1.47:1 1.66:1 1.52:1 1.16:1 1.10:1

Comment: The amount of current asset of BPML is higher than that of current liabilities of
BPML in year 2018 to 2022. The gap between current assets and liability was decreasing
gradually from year 2018 to 2021. Comparing to standard value (2:1), it can be said that the
BPML doesn’t have enough current assets to meet its current liabilities.

9.3.1.2. Quick Ratio

The quick (acid-test) ratio is a measure of a company’s immediate short-term liquidity. It is an
important complement to the current ratio.
The quick ratios of Bashundhara Paper Mills Limited-

Current Assets−Inventory
Acid Test Ratio=
Current Liabilities

2022 2021 2020 2019 2018

0.34:1 0.38:1 0.47:1 0.53:1 0.51:1

Comment: BPML has a huge amount of inventory, in its current assets, which is increasing with
the increment of current assets. If the inventory can’t be converted into cash at a reasonable price
within convenient time, the BPML will face liquidity crisis for a while. Comparing to the
standard value (1:1), BPML doesn’t have enough quick assets to meet its current liabilities.

9.3.1.3. Cash Ratio

The cash ratio is a measure of a company's ability to repay its short-term debt with readily-
liquidated cash resources.

The cash ratios of Bashundhara Paper Mills Limited-

Cash+ Short−Term Investment

Cash Ratio=
Current Liabilities

2022 2021 2020 2019 2018

0.06:1 0.07:1 0.04:1 0.11:1 0.13:1

Comment: BPML holds a tiny amount of cash and there is no short-term investment of its total
current assets. If its current assets can’t be converted into cash quickly within convenient time,
the company will face liquidity crisis. Company should either increase the amount of cash and
short-term investments or decrease the that of current assets.
9.3.2. Efficiency/Activity Ratio
The efficiency ratio is typically used to analyze how well a company uses its assets and liabilities
internally. An efficiency ratio can calculate the turnover of receivables, the turnover of
inventory, the turnover of total assets, and the turnover of fixed assets. This ratio can also be
used to track and analyze the performance of commercial and investment banks.

9.3.2.1. Inventory Turnover

Inventory turnover is a ratio showing how many times a company has sold and replaced
inventory during a given period.

The inventory turnover ratios of Bashundhara Paper Mills Limited-

Cost Of Good Sold

Inventory Turnover=
Average Inventory

2022 2021 2020 2019 2018

1.11 Times 0.96 Times 0.87 Times 1.20 Times 1.33 Times

Comment: Comparing to the standard value (8 times), the inventory turnover is not satisfactory
for the year 2018 to 2022. BPML should take proper steps to be efficient in inventory turnover in
order to make the company more profitable.

9.3.2.2. Accounts Receivable Turnover

The accounts receivable turnover ratio is an accounting measure used to quantify a company's
effectiveness in collecting its receivables or money owed by clients. The ratio shows how well a
company uses and manages the credit it extends to customers and how quickly that short-term
debt is collected or is paid.

The accounts receivable turnover ratios of Bashundhara Paper Mills Limited-

 Revenue , net
Accounts Receivable Turnover=
Average Accounts Receivable

2022 2021 2020 2019 2018

12.62 Times 8.55 Times 3.35 Times 3.57 Times 4.90 Times

Comment: In 2019 and 2020 the number of accounts receivable is typically low as its compare to
standard value. But The number of accounts receivable turnover is 12.62 times in Current year
which is much better than the standard value (4 to 6 times).

9.3.2.3. Total Assets Turnover

The total asset turnover ratio measures the efficiency of a company's assets to generate revenue
or sales.

The total asset turnover ratios of Bashundhara Paper Mills Limited-

Revenue ,net
Total Assets Turnover=
Average Total Assets

2022 2021 2020 2019 2018

0.35 Times 0.33 Times 0.29 Times 0.40 Times 0.47 Times

Comment: Comparing to the standard value (2 times), the position of BPML in utilizing its assets
to generate sales is not in satisfactory level. But it interpreting hope that in future year BPML
will have the reached at the standard value as the total asset turnover rate is increasing year by
year.

9.3.2.4. Fixed Assets Turnover

The fixed assets turnover ratio indicates how well the business is using its fixed assets to
generate revenue or sales.

The fixed assets turnover ratios of Bashundhara Paper Mills Limited-

 Revenue ,net
¿ AssetsTurnover= Assets ¿
Average Net ¿

2022 2021 2020 2019 2018

0.53 Times 0.52 Times 0.52 Times 0.80 Times 0.98 Times

Comment: The ratio of fixed assets turnover is not stable in the recent years. Comparing the
result of 2022 to the other years, it can be said that BPML needs to be concerned in stable
utilizing its fixed assets to generate sales.

9.3.3. Solvency Ratio

Solvency ratios measure the ability of a company to survive over a long period of time. Long-
term creditors and stockholders are particularly interested in a company’s ability to pay interest
as it comes due and to repay the face value of debt at maturity. Debt to assets, debt to capital,
debt to equity, financial leverage are the ratios that provide information about debt-paying
ability.

9.3.3.1. Debt to Assets Ratio

The debt to assets ratio measures the percentage of the total assets that creditors provide.

The debt to assets ratios of Bashundhara Paper Mills Limited-

Total Debt
Debt ¿ Assets Ratio=
Total Assets

2022 2021 2020 2019 2018

62.50% 71.77% 72.43% 75.00% 70.00%
Comment: Comparing to the standard value (25%), it can be said that BPML has a huge amount
of total debt in compare with its total assets. It can be seen that the company is taking steps to
decrease it total debt, in compare with its total assets, which is a positive sign for the company.

9.3.3.2. Debt to Capital Ratio

The debt to capital ratio is a liquidity ratio that calculates a company's use of financial leverage
by comparing its total obligations to total capital.

The debt to capital ratios of Bashundhara Paper Mills Limited-

Total Debt
Debt ¿ Capital Ratio= '
Total Debt +Total Shareholde r s Equity

2022 2021 2020 2019 2018

62.50% 71.77% 72.43% 75.00% 70.00%
Comment: From the balance sheet of BPML, it is seen that the company has a huge amount of
current liability that results in huge amount of debt in its capital structure. It is a sign of hope that
the company is reducing the contribution of debt in its capital structure which will be nearly the
standard value (50%) in the next year. Company should be conscious regarding balancing the
contribution of debt in capital structure.

9.3.3.3. Debt to Equity Ratio

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of
shareholders' equity and debt used to finance a company's assets.

The debt-to-equity ratios of Bashundhara Paper Mills Limited-

Total Debt
Debt ¿ Equity Ratio=
Average Shareholde r ' s Equity

2022 2021 2020 2019 2018

203.25% 260.45% 267.05% 302.14% 208.63%
Comment: Comparing with the standard value (100%) and reviewing the result of D/E ratio of
DGL, it can be comment that the company has created a huge amount of debt to the
shareholders. The management should take proper steps in order to optimize the D/E ratio
reducing the amount of debt in proportion with shareholders’ equity.

9.3.3.4. Financial Leverage (Equity Multiplier)

Financial Leverage (Equity Multiplier) is a leverage ratio that measures the portion of company's
assets that are financed by shareholder equity.

The financial leverage ratios of Bashundhara Paper Mills Limited-

Total Average Assets

Equity Multiplier=
Total Average Shareholde r ' s Equity

2022 2021 2020 2019 2018

2.97× 3.55× 3.83× 3.68× 3.68×

Comment: It is better to have a low equity multiplier, because that means a company needs to
use less debt to finance its assets. Seeing the company’s past records, like Debt-capital and D/E
ratio, it can be said that the company is reducing the amount of 31 contribution of debt in its
capital structure. As a result, the company is having a lower equity multiplier than the previous
years

9.3.4. Profitability Ratio

Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings relative to its revenue, balance sheet assets, and shareholders' equity over time,
using data from a specific point in time.

9.3.4.1. Gross Profit Margin Ratio

The gross profit margin ratio is a profitability ratio that compares the gross margin of a company
to its revenue. It shows how much profit a company makes after paying off its Cost of Goods
Sold (COGS) or operating expenses.
The gross profit margin ratios of Bashundhara Paper Mills Limited-

Gross Profit
Gross Profit Margin Ratio=
Revenue , net

2022 2021 2020 2019 2018

20.02% 20.71% 21.97% 19.01% 17.75%

Comment: The Gross profit margin of BPML doesn’t seem good in compare with the standard
value (20%-30%) in 2018 and 2019 year. But the later year 2020, 2021, and 2022 the company
has achieved the standard value of Gross profit margin. So, the company has a greater position
now.

9.3.4.2. Operating Profit Margin Ratio

The operating profit margin ratio measures how much profit a company makes on a dollar of
sales, after paying for variable costs of production, such as wages and raw materials, but before
paying interest or tax.

The operating profit margin ratios of Bashundhara Paper Mills Limited-

Operating Profit
Operating Profit Margin Ratio=
Revenue , net

2022 2021 2020 2019 2018

6.26% 4.58% 5.54% 4.56% 4.81%
Comment: BPML is not efficient enough to minimize its distribution and administrative cost that
results in lower operating profit margin. Comparing to the standard value (10%-20%), it is not in
satisfactory level for every year.

9.3.4.3. Net Profit Margin Ratio

The net profit margin ratio illustrates how much of each dollar in revenue collected by a
company translates into profit.
The net profit margin ratios of Bashundhara Paper Mills Limited-

Net Profit
Net Profit Margin Ratio=
Revenue , net

2022 2021 2020 2019 2018

4.52% 4.43% 3.35% 2.64% 6.41%

Comment: Comparing to the standard value (5%-10%), the result of net profit margin of BPML
doesn’t seem good except for the year 2018.

9.3.4.4. Pre-tax Profit Margin Ratio

The pre-tax profit margin ratio measures how many cents of profit the business has generated for
each dollar of sale before deducting taxes.
The pre-tax profit margin ratios of Bashundhara Paper Mills Limited-

Pre−Tax Profit
Pre−Tax Profit Margin Ratio=
Revenue ,net

2022 2021 2020 2019 2018

5.94% 4.35% 5.26% 4.32% 4.57%
Comment: 5.94% of the profit DGL has generated for each taka of sale before deducting taxes in
2022. The rate is not stable

9.3.4.5. Return on Assets (ROA)

Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.

The return on assets of Bashundhara Paper Mills Limited-

Net Profit
Return On Assets=
Average Total Assets

2022 2021 2020 2019 2018

Comment: BPML is utilizing its total assets to generate net income at 1.60% which is less than
the rate of 2018. Management should focus to increase it for the advancement of wealth
maximization

9.3.4.6. Return on Equity (ROE)

Return on Equity measures profitability from the common stockholders’ viewpoint. This ratio
shows how many dollars of net income the company earned for each dollar invested by the
owners.

The return on equity of Bashundhara Paper Mills Limited-

Net Profit
Return On Equity=
Average Total Equity

2022 2021 2020 2019 2018

4.74% 5.19% 3.76% 3.88% 11.15%

Comment: As BPML has a huge amount of debt contributed to form the capital structure,
shareholders’ wealth is supposed to be maximized. The return on equity is greater than the return
of assets which indicate the sign of wealth maximization. ROE of 2022 is less than 2021 and
2018. Company should take proper steps at least not to minimize its return of equity to have the
confidence of the shareholders.

10. Conclusion

“Bashundhara Paper Mills Limited” prepares financial statements every year and apply
analytical tools to analyze the condition. Applying tools like ratio analysis, the company found
out its performance like liquidity, efficiency, solvency, profitability. Through ratios, the
organization has found out its strength and weakness. Beside this, analysis also exposes its
different strategy taken in different time. This analysis also helps the organization to make
decisions and adopt any new strategy or any change if it is required.

11. Findings (Strength and Weakness)

11.1. Strength
Profitability Ratio: Bashundhara Paper Mills Limited has a quite good scores of profitability
ratio in compare with standard values.

11.2. Weakness
 Liquidity Ratio: Bashundhara Paper Mills Limited’s Liquidity ratio results in weak than
the standard results. Company may face liquidity crisis in case of meeting its current
obligations.

 Efficiency Ratio: BPML has lower asset turnover and inventory turnover ratio than the
standard value.

 Solvency Ratio: The measurements of Solvency Ratios of BPML are not seem good as it
is highly debt using firm.

12. Recommendation

 Bashundhara Paper Mills Limited should-

 Follow up all of its activities in order to ensure that the profitability ratio is not
decreasing.

 Hold more cash equivalent assets (especially short-term investment) in current assets to
reduce the possibility of having liquidity crisis.

 Take proper steps to be efficient in utilizing its assets to generate more sales, in collecting
receivables, in converting the inventory into CoGS.

 Balance between the contribution of equity and debt not have financial risks.