Group

Assignment
BUS 104
Introduction to Finance
Section: 01

Company Trend Analysis

of
5 Years Annual Report

“BEXIMCO”
(Bangladesh Export Import Company Ltd.)

Prepared By: Prepared For:

Md. Sajidul Islam Saikat: 193011090 Jenifar Soheli
Naimor Rahman Durjoy: 193011124 Senior Lecturer
Jannatul Ferdous: 201011133 ULAB School of Business
Showmik Modak: 201011211
Raisa Azad: 201011230

Date of Submission: 11/04/23

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Table of
Contents

Cover Page 01

IN
TR Table of Contents 02
O
D
Introduction 03
U
CT
IO Analysis 03
N:
Bang Conclusion 06
lades
hi
Expo
rt
Impo
Appendix 07
rt C
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Introduction:
Bangladesh Export Import Company Limited is the top most private company within the
BEXIMO Group and operates across multiple industry vertices. Two brothers, Ahmed Sohail
Fasihur Rahman and Salman Fazlur Rahman, created BEXIMCO in the 1970s. Since its
beginning, the Group has transformed from being primarily a commodities trading company to a
prominent, diverse firm with a presence in industry sectors that make up to 75% of Bangladesh's
GDP. The company's motto is "Taking Bangladesh to the World." Below is discussed
BEXIMCO’s trend analysis from 2018-2022 by measuring the Liquidity, Asset Management,
Debt Management, Profitability & Market Value Ratios.

ANALYSIS:
Liquidity Ratios:

Liquidity Ratios are used to analyze weather a company has sufficient cash or equivalent current
assets that enables it to pay amounts of its debts when they are due without raising external
capital. The quick ratio and the current ratio are the two most common liquidity ratios. The
Current Ratio compares the current assets of a company to its current liabilities and it determines
a business capability to pay off its current liabilities that are payable within one year. The higher
the current ratio, the stronger a company’s liquidity position is. A quick ratio also helps to asses
the ability of a company to pay its short-term financial obligation with its most liquid assets and
therefore excludes inventories from its current assets. This ratio is also called the acid-test ratio.
Similar to the current ratio, if a company has a higher quick ratio, its financial position is
perceived to be healthy. This is because in this case, the company's most liquid assets would be
higher compared to its current liabilities. If a company’s both current and quick ratio is equal to 1
or higher its financial condition seems to be better. But if it is less than 1 then the current
liabilities exceeds the assets which represents bad financial health.

In 2018 the current ratio for BEXIMCO is the highest which is 5.5 times compared to the year
2020. The highest number indicates that the firm has sufficient cash and assets in 2018 to pay of
their short term debt compared to the year 2020 as the number is the lowest in this year which is
1.41 times. The quick/ acid test ratio is 5.38 times in 2022, 1.25 times in 2020 which is the
lowest. The quick ratio decreased from 5.38 in 2018 to 1.52 times in 2022 which tells that the
company’s liquidity has become weaker as its liquid assets are lesser to finance its current
liabilities and impending debts during emergencies or crisis.
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Asset Management Ratios:

Asset management ratios provide insight into how an organization may be using its assets to
generate revenue through various groups of metrics. This ratio analysis highlights the ability to
convert or manipulate its assets for sales. Moreover, these ratios help the stakeholders evaluate
the effectiveness and efficiency of asset management. Few commonly used asset management
ratios that are frequently used by the companies include inventory turnover ratio, days sales
outstanding, total asset turnover ratio, fixed asset turnover ratio, net working capital turnover
ratio, receivables turnover ratio, payable turnover ratio. A higher asset management ratio is
always preferable. This illustrates how well business assets were used to incorporate the funds. If
the ratio is greater than 1, it means that the firm is more productive since the proportion of
revenues generated exceeds the total amount of assets in use. The company will be in a better
position to compete with businesses in the same sector if the ratio is higher. If the asset
management ratio is less than 1, either the assets are not being deployed efficiently to generate
sales or the organization has deployed its assets excessively. The ratio reveals that the company's
proportion of assets is significantly higher than its proportion of revenues. As was said
previously, the lower the ratio, the worse off the company's efficiency would be in comparison to
its rivals in the same sector.

The inventory turnover ratio measures how frequently a business replaces its inventory in
relation to its cost of sales. In general, a larger ratio is preferable. Low inventory turnover ratios
might indicate poor sales or excessive inventories. On the other side, a high inventory turnover
ratio reflects excellent sales. In the case of BEXIMCO, it has the highest inventory turnover ratio
in 2018 which is 8.26 times indicating strong sales compared to the year 2020 when Covid
spread and affected the financial stability of the whole world. But the ratio started to recover as it
increased from 2.02 to 3.68 times in 2022.

Days sales outstanding (DSO) is an accounting metric that determines how long it typically takes
for a company to get paid for products and services purchased on credit. A high DSO number
indicates that a business is suffering payment delays, which may cause a cash flow problem. On
the other hand, a low DSO shows that the business is receiving payments faster. Therefore that
cash can be wisely invested in the company. As BEXIMCO’s DSO is the lowest in 2022 which
is 122 days, it was possible for the company to collect payments faster compared to previous
years.

The fixed asset turnover ratio demonstrates the effectiveness of a company's current fixed assets
in driving sales. A greater ratio suggests that the management is making better use of its fixed
assets. BEXIMCO has the lowest fixed asset turnover ratio of 0.29 times in 2020 indicating that
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the company is underperforming in sales and might have a relatively high amount of investment
in fixed assets. A declining ratio may also suggest that the company is over-investing in its fixed
assets.

The total asset turnover ratio is a type of efficiency ratio that measures the sales of an
organization relative to the value of its asset base. The ratio is generally used by the 3rd parties
to assess how successfully an organization generates sales. An organization with a high total
asset turnover ratio is likely to be able to run with fewer assets than a less competent rival, and so
needs less debt and equity for operating. The shareholders thus get a relatively higher return. In
the case of BEXIMCO, the total asset turnover ratio in 2020 is the lowest, and therefore the
shareholders would receive lesser return compared to other years and the company appears to be
very weak for effectively utilizing its assets to produce revenue.

Debt Management Ratios:

A debt ratio is a tool that helps determine the number of assets a company bought using debt.
The ratio helps investors know the risk they will be taking if they invest in an entity having
higher debt used for capital building. The ratio also lets them assess how fruitfully a company
uses its debt to build and expand its business.

Debt to total assets ratio: Here, in 2018 the ratio was 48.584 %. On the other hand, it was highest
in 2022 which is 54.294 %. During the year 2020, it was 51.528 % and in 2021 it was 49.412%.

Time Interest Earned Ratio: We can see that, in 2022 the ratio was at its peak, it was 2.30 times.
But in 2020, it was the lowest, the ratio is 0.15. Because of the pandemic situation, it was
affected.

Profitability Ratios:

Profitability ratios check a company's capability to earn salary from its profits or operations,
steadiness sheet assets, or shareholders' equity. They point out how efficiently an enterprise
generates income and fees for shareholders. Profitability ratios embody margin ratios and return
ratios. Higher ratios are generally more positive than lower ratios, indicating success at changing
earnings to profit. These ratios are used to figure out a company's current performance in contrast
to its past performance, the overall performance of one-of-a-kind agencies in its industry, or the
enterprise average.

Net profit margin: In 2020, the net profit margin was the lowest which is 2.25% , and in 2022
the net profit margin was the highest which is 17.10 %. Moreover, it was 5.25% in the year, 2018
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and 5.96% in 2019 which are quite similar. So we can say that the year 2022 was the most
successful year among all 5 years according to the net profit margin.

Return on Investment (ROA): In 2020, the ROA was the lowest among all the years because of
the pandemic situation, the number is 0.36 %. But in 2022 it boosted to 7.18 % which was the
highest among all the years. It indicates the profitability ratio of BEXIMCO and they are doing
great!

Return on Equity (ROE): In line with the previous two ratios, ROE in 2020 was at its lowest,
which is 0.73 %. And in 2022, it was 15.70 %, which indicates a significant improvement. Thus,
BEXIMCO is now quite successful in terms of its profitability ratios as they are highest in 2022.

Market Value Ratios:

Market value ratios are used to evaluate the current share price of a publicly-held company’s
stock. These ratios are employed by current and potential investors to determine whether a
company’s shares are over-priced or underpriced. One of the most common market value ratios
is the EPS which is known as Earning per Share.

Earnings per share is calculated as the reported earnings of the business, divided by the total
number of shares outstanding (there are several variations on this calculation). This measurement
does not reflect the market price of a company’s shares in any way but can be used by investors
to derive the price they think the shares are worth.

The EPS for BEXIMCO was 0.42 in 2018, and it reached its highest at 14.32 in 2022. A higher
EPS indicates that a firm is more likely to have extra profit to distribute among its shareholders
as dividends. Basically, a High EPS is more profitable. BEXIMCO, therefore, seems to be more
successful in the case of EPS in 2022 than it was in the previous four years.

CONCLUSION:
After looking at the liquidity, asset management, debt management, profitability, and market
value ratios of “BEXIMCO”, it is clear that, prior to the arrival of Covid, specifically in 2018
and 2019, the ratios were quite stable and allowed the company to have a sound financial status.
Unfortunately, the company's financial stability took a significant hit in the year 2020. But still,
during the next years, the company began to gradually recover.
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APPENDIX:

Calculations & Graphs:

Liquidity Ratios-

Current Ratio Quick Ratio

6.00 6.00
5.00 5.00
4.00 4.00
3.00 3.00
2.00 2.00
1.00 1.00
- -
2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2023
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Asset Management Ratios-

Inventory Turnover Ratio

10
9
8
7
6
5
4
3
2
1
0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5

Days Sales Outstanding

900
800
700
600
500
400
300
200
100
0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5
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Fixed Asset Turnover Ratio

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5

Total Asset Turnover Ratio

0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5
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Debt Management Ratios-

Debt-to-total Assets Ratio

55

54

53

52

51

50

49

48
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5

Time Interest Earned Ratio

2.5

1.5

0.5

0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5
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Profitability Ratios-

Net Profit Margin

20
18
16
14
12
10
8
6
4
2
0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5

ROA
8

0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5
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ROE
18
16
14
12
10
8
6
4
2
0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5

Market Value Ratios-

EPS
16

14

12

10

0
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5