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AN ENQUIRY INTO THE SHARE PRICE MOVEMENT: A

CASE OF MONNO CERAMIC INDUSTRIES LIMITED

MONNO

Term Paper
FIN 637
Section 1
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1. INTRODUCTION
The capital market of Bangladesh has a significant contribution to economic growth,
employment creation and poverty alleviation in our country. The success achieved so far by
Bangladesh Stock Exchange Market is the result of active cooperation and support of many
parties’ like- Government, Bangladesh Bank, issuers, investors and market intermediaries.
Currently approximate 350 companies are enlisted in Bangladesh Stock Exchange
Commission. The share prices of various companies usually fluctuate from time to time.
Various internal and external factors are the reasons behind this fluctuation. The most
important factors which influences the share prices are- goodwill and reputation of the
company, financial condition of the company, future growth of the company, amount of
dividends the company pays each year to its shareholders, industry growth, economic and
political stability of the country etc. Among all these factors, financial condition of the
company is the most important factor which influences the stock price of the company. In
this report we will analyze the financial condition of Monno Ceramic Industries Ltd. which is
the top most company in ceramic industry of Bangladesh.

1.1 A Brief History of Monno Ceramic Industries Limited

Monno Ceramic Industries started its journey in Bangladesh on 1981 as a public limited
company under the Companies Act 1913. The company went for public issues of share in
1985 and its shares are listed in Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange
Ltd. since 1983 and 1985 respectively. Till to date the company has 1,350,000 shares and
8071 shareholders.
Monno Ceramic Industries Ltd. is the largest ceramic company in Bangladesh and holds the top
position in ceramic industry. It began its journey by producing porcelain dinnerware and
eventually expanded onto the manufacture of Bone China. The product quality has been
immaculate from the very beginning which has been directly reflected by the continuous
market demand from local and international consumers. Monno Ceramic’s state of the art
technology and creative designs gives it a competitive edge and establishes it as a strong
competitor in the porcelain manufacturing world. In order to create top of the range
merchandise, Monno Ceramic possesses the most advanced machinery for porcelain
production in the country. State of the art technology like isostatic press and Dip Glaze are
there to increase efficiency and product quality. After meeting the need of local market
successfully, Monno Ceramic is exporting to global market like- USA, Canada, Australia,
France, UK, Sweden, New Zealand, Germany, Italy and many other countries. This is also a
success indicator of the company.
The sales turnover of Monno is Taka 968,613,719 and net income is Taka 5,556,571 for the
year 2008. They have also declared 10% dividend for the shareholders. They always strive
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for protection of their capital as well as to ensure highest return and growth of their assets.
They also try to increase their wealth to maximize the benefit of their shareholder. O

According to Monno their vision, mission, objectives, corporate focus and Financial
Management policy are-

Vision:
The company sees business as a means to the well being of the shareholders and all other
stakeholders, society as well as the national interest as a whole.

Mission:
The mission of the company is to provide world class quality product to our valid customers,
strictly maintain ethical standard, in business operation.

Objectives of the Company:

The company’s objectives are to conduct transparent business operation within the legal
and social framework with aims to attain the mission with a quantitative/qualities target in a
business operation.

Corporate Focus:
Monno Ceramic Industries Ltd’s vision, there mission and objectives are to emphasis on the
continuous development in making value addition to there products for producing the higher
end products, to keep well prepared for competitive world market.

Financial Management policy:

All financial policies like investment policy, dividend policy and financing policy is to
maximize the value of the organization.
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2. OBJECTIVE OF THE STUDY
Monno is one of the strong companies enlisted in the stock market. To get an idea about the
share price of the company it is needed to analyze the financial situation of the company. It
is also needed to find out if there is any hidden discrepancy in the financial statements of
the company to get a clear scenario regarding the market price of their share. So the major
objectives of this report are-
• To find out the difference between book value and market value of the share price
and to identify the possible reasons behind this difference.
• To find out if there is any specific hidden discrepancy in the existing financial
statements of the company.
• To eliminate the discrepancy by preparing a new financial statement for the
company.
• To get an idea about the financial condition of the company in last six years (2002-
2008).
• To get an idea about the cash dealings of the company over these years.
• To compare the firm’s financial status with one of its rival firm through ratio analysis
with the justification of balancing between the market price and book value of the
shares.
• To get an idea about the movement of stock price that can be related to capital
structure decision, investment decision, and other rumors related to the firm, which
has been done by regression analysis.
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3. METHODOLOGY
The research was initiated through the gathering of information. Secondary data was
collected in the form of balance sheet and income statement from annual report of 2002-
2008. This report evaluates each company’s financial performance and compares their
position against each other. A subjective analysis was also undertaken in order to justify the
stock market price.

3.1 Nature and Source of Data:

Secondary data have been used to conduct this study. The main sources of information are
annual reports of Monno Ceramic Industries Ltd. and Bengal Fine Ceramic Ltd., collected
from Dhaka Stock Exchange Commission and websites of Monno Ceramic Industries Ltd and
Bengal Fine Ceramic Ltd.

3.2 Period of Data:

The period of this project is consecutive five years starting from July, 2002 to June 2008
as the financial year of Monno Ceramic Industries Ltd starts at the month of June. Analyzing
the six years period’s data will help to get the positive/negative trend of the share price and
to come up to a more justified conclusion.

3.3 Nature of Analysis:

As industry data is not widely available for Bangladesh Ceramics Industry, we had to rely on
mainly the two other financial analysis techniques.

1. Trend (Time Series) Analysis

2. Cross-Sectional Analysis

3.3.1 Trend Analysis

In Trend Analysis or Time Series Analysis, company ratios are compared over time, typically
years. Year-to-year comparisons can highlight trends and point up the need for action.
Trend analysis works best with five years of ratios. For this report we have gathered the
data on Monno Ceramic for last seven years.
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4. LIMITATION OF THE STUDY
During conducting this report, there were some constraints and limitations.

 One of the major limitations is limited access to annual reports of the respective
companies. Since the most recent report of 2009 was not available, the comparison
was done upto year 2008.
 Another limitation was to collect the industry averages data as this type of
information is not readily available in our stock market. Therefore, the analysis has
compared the data of Monno Ceramic Industries Ltd with only one of the four rival
firms of the ceramic industry - Bengal Fine Ceramic Ltd.
 The value estimation of tangible fixed assets like land, building, machinery etc as
well as intangible fixed asset like- goodwill, reputation etc of the company was also a
constraint for this report. It was difficult to get the accurate market price of all the
fixed assets especially goodwill, reputation etc. which is subjective and can’t be
measured in monetary value.
 Time constraint was also a limitation. Due to time constraint it wasn’t possible for us
to calculate the actual price of all fixed assets.
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5. TRENDS IN MARKET VALUE & BOOK VALUE OF MONNO CERAMIC
INDUSTRIES
If we look at the trend analysis of book value and market value of the Monno shares,
it shows that the market value is always fluctuating with its book value. So, there
must be some reason why this discrepancy happens between book value and market
value.

Table 1: The Market price and Book Value per Share for the years 2002-2008
Years Market Price per Share Book Value per Share
2008 346.75 224.95
2007 212.00 230.84
2006 175.75 250.51
2005 254.00 259.26
2004 271.00 270.27
2003 301.25 269.74
2002 249.00 271.18

Book Value Vs. Market Value

370

350
346.75
330

310
301.25
290

271.18 269.74 271.00

270.27 270
259.26
254.00
249.00 250.51 250

230.84 230
224.95
212.00 210

190
175.75 170

150
2002 2003 2004 2005 2006 2007 2008

Market Price per Share Book Value per Share

Figure 1: Comparison between Book Value and Market Value of Monno Ceramic Indutries Ltd.
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6. BALANCE SHEET ANALYSIS
Balance Sheet is an itemized statement that lists the total assets and the total
liabilities of a given business to portray its net worth at a given moment of time. The
amounts shown on a balance sheet are generally the historic cost of items and not
their current values. Balance sheet can be defined as,

Assets = Liabilities + Equity

The assets side of the balance sheet is always equal to the total liabilities and
equities. It indicates the investment made by the firm in the form of assets and the
means by which the assets were financed – that is, whether the funds were raised by
the borrowing (liability) or by selling ownership shares (equity).

Table 2: Balance sheet for Monno Ceramic (2008) based on Book Value

Balance Sheet
Asset Liabilities and Equity
Taka '000 Taka '000
Current Asset Current Liabilities
Inventories 296,501.81 Cash Credits 267,512.07
Trade & Other recievable 79,753.78 Long Term Loans 33,545.68
Advance, Deposits & pre payments 112,639.34 Trade & Others Payable 164,165.03
Cash & Cash Equivalents 17,240.44 Accrued Expenses 14,595.34
506,135 Unclaimed Dividends 5,834.79
Provision For Income Tax 10,241.25
Non Current Asset Liabilities for other finance 45,385.89
Property,Plant & Equipment 368,719.87 541,280
Investment 84,500.00
453,220 Non-Current Liabilities
Long Term Borrowings 103,085.85
Deffered Liabilities 11,302.01
114,388

Share Holders Equity

Issued & Paid-up share Capital 135,000.00
Revenue, Reserve & Surplus 155,187.34
Proposed Dividends 13,500.00
303,687

Total Assets 959,355 Total Liabilities & Share Holders Equity 959,355
* Source: Annual Report 2008 of Monno Ceramic Indutries Ltd.

The above table shows the balance sheet as it was presented in the annual report
2008 of Monno Ceramic Industries Ltd. According to this balance sheet the book
value of MCI shares for the day June 30, 2008 should be 224.95 Taka. But in reality
we can see that the actual market price on that day was much higher than that,
346.75 Taka.
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We are going to try and identify the reasons of this discrepancy. For this analysis we O
are going to concentrate on the Balance Sheet from the last year (2008). After a
thorough analysis of the of the annual report of the year 2008 we were able to
identify the following factors which might have caused the discrepancy between the
book value and the market value.

• The financial statements have been prepared under the historical cost concept
and fixed assets are stated at cost or revaluation less accumulated
depreciation. According to time value of money concept, price changes all the
time. Though there are some assets which were revalued at the middle of
their life cycle but they didn’t consider market price or even depreciation was
charged on a straight line basis. From this analysis we can come to a
conclusion that fixed assets were under priced.

• The balance sheet does not incorporate any intangible assets, like goodwill.
Monno Ceramic Industries Ltd. is the largest ceramic company in Bangladesh
and holds the top position in ceramic industry. It is a testament of their
goodwill that the company is having constant grow in its sales.

• The equity of the company has been severely understated. The company
calculates its equity from 1981 when Monno was first listed with the Dhaka
Stock Exchange. But according to the time value of money theory the value of
money has increased a lot over this last 28 years.
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Table 3: Balance sheet for Monno Ceramic (2008) based on Book Value N
Balance Sheet O
Asset Liabilities and Equity
Taka '000 Taka '000
Current Asset Current Liabilities
Inventories 296,501.81 Cash Credits 267,512.07
Trade & Other recievable 79,753.78 Long Term Loans 33,545.68
Advance, Deposits & pre payments 112,639.34 Trade & Others Payable 164,165.03
Cash & Cash Equivalents 17,240.44 Accrued Expenses 14,595.34
506,135 Unclaimed Dividends 5,834.79
Provision For Income Tax 10,241.25
Non Current Asset Liabilities for other finance 45,385.89
Property,Plant & Equipment 368,719.87 541,280
Property,Plant & Equipment 523,145.03
Goodwill 10,000.00 Non-Current Liabilities
Investment 84,500.00 Long Term Borrowings 103,085.85
617,645 Deffered Liabilities 11,302.01
114,388

Share Holders Equity

Issued & Paid-up share Capital 135,000.00
Revenue, Reserve & Surplus 155,187.34
Revenue, Reserve & Surplus 319,612.50
Proposed Dividends 13,500.00
468,113

Total Assets 1,123,780 Total Liabilities & Share Holders Equity 1,123,780

After identifying these above listed discrepancies we have tried to adjust the balance
sheet to match the market value of stocks. In doing so we have changed three
figures in the original balance sheet:

• Property, plant and equipment have been changed from 303,720,000 Taka
to 523,145,000 Taka.

• We added an intangible asset as Goodwill, 10,000,000 Taka.

• We have also changed the Capital and reserves attributable to the Company’s
equity holders from 155,187,000 Taka to 319,613,000 Taka.

• The total balance after all these adjustment became 1,123,780,000 Taka in
place of the original balance of 959,355,000 Taka.
6. CASH FLOW ANALYSIS
Cash flows are the cash receipts and the cash disbursements of the company that is
the inflows and outflows of cash. It is an analysis over a period of time revealing the
availability, or lack, of cash. More simply put the difference between cash in
(income) vs. cash out (expenses). Since money does not flow in and out at an equal
rate, in most businesses, an analysis of cash flow is important, especially of
businesses that are cyclical in nature, or subject to external forces.

Cash and Cash Equivalent at end of year

60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
-
2002 2003 2004 2005 2006 2007 2008
Cash and Cash Equivalent at end of year

Figure 2: Cash & Cash Equivalent at the end of the year 2002-2008

By doing the Cash flow we have found that MONNO is going through sufficient cash
problem. The problem caused because of low volume of sales both in international
market and in domestic market. Another reason is the interest payment of long term
debt used for development and expanding of factory. To overcome the problem
Monno has to take rigorous selling campaign. Otherwise it may lead to bank rapt.
But as MONNO is a very old and established company who is still now coping up with
new technology and equipment has managed the situation and has turned back to
positive growth.
Inventories:

Inventories

400,000,000
350,000,000
300,000,000
250,000,000
200,000,000 Inventories
150,000,000
100,000,000
50,000,000
-
2001 2002 2003 2004 2005 2006 2007 2008

Figure 3: Inventory at the end of the year 2002-2008

The inventory of MONNO is gradually increasing from 2001. Non-stop growing of

inventories reflects the fact that sales of MONNO are not satisfactory. As a result
inventory is piling up which will increase cost associated with maintenance of
inventory.

Long Term Debt

Non-Current Liabilities

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

-
2001 2002 2003 2004 2005 2006 2007 2008
Non-Current Liabilities

Figure 4: Long-term Debt at the end of the year 2002-2008

Long term debt of Monno shows irregular tendency. This is showing the long term
investment that MONNO has taken for its development through the years for whicht
they have to pay interest.

Net working Capital

Net Working Capital

100,000
Thousands

80,000
60,000
40,000
20,000
-
(20,000) 2001 2002 2003 2004 2005 2006 2007 2008
(40,000)
(60,000)
Net Working Capital

Figure 5: Net Working Capital at the end of the year 2002-2008

Monno is going through cash problems through years and this is very much clear
from the graph. The reason behind cash flow is primarily low volume of sales for
aftershock of 9/11. The export of goods started falling. Additionally MONNO also
have taken long term development project to improve its product quality and
efficiency. So a large amount of cash had to be paid as interest expenses. Moreover
in middle of all these MONNO also suffered from loss of equipment and plant as there
were incident of fire in the factory. As a result the production process was stopped
for few months and also some inventory and raw material were lost for fire.

Net Cash Provided by Operating Activities

This section shows how much cash came into the company and how much went out
during the normal course of business. MONNO is facing problem in generating cash
from operating activities. This is for the down fall in sales. But in recent years Monno
is gaining again from bad times.
 Cash Flows from Operating Activities
120,000

Thousands
100,000
80,000
60,000
40,000
20,000
-
(20,000) 2002 2003 2004 2005 2006 2007 2008
(40,000)
(60,000)
(80,000)
Cash Flows from Operating Activities

Figure 6: Trend of Cash Flow from Operating Activities

Net fixed investment

This section shows how much cash came into the company and how much went out
during the normal course of business.

Cash Flows from Investing Activities

180000000
160000000
140000000
120000000
100000000
80000000
60000000
40000000
20000000
0
2002 2003 2004 2005 2006 2007 2008
Cash Flows from Investing Activities
Figure 7: Trend of Cash Flow from Investment Activities

Net investment in the years of MONNO in the analysis shows that in 2003 and
2007 was of most amounts. And the investment was for the development of the
product and quality.
7. RATIO ANALYSIS
To evaluate a firm’s financial condition and performance, the financial analyst usually
performs various analyses among which ratio analysis is one of the most important
and commonly used methods. In this study various ratio analyses will be done to
understand the financial condition of the company and to compare this condition with
its rival firm to get a clear picture. The analysis of financial ratios involves two types
of comparison,
• First, the analyst can compare a present ratio with past and expected future
ratios for the same company. The current ratio (the ratio of current assets to
current liabilities) for the present year could be compared with the current
ratio for the previous year-end. When financial ratios are arrayed over a
period of years, the analyst can study the composition of change and
determine whether there has been an improvement or deterioration in the
firm’s financial condition and performance over time.
• The second method of comparison involves comparing the ratios of one with
those of similar firms or with industry averages at the same point in time.
Such a comparison gives insight into the relative financial condition and
performance of the firm. It also helps us identify any significant deviations
from any applicable industry average (or standard).

7.1. Liquidity Ratios

• Short term solvency or liquidity measures the firm’s ability to pay its bills and
current liabilities on time.
• It indicates the ease with which non-cash assets can be converted to cash,
and also the ratio of non-cash assets to current liabilities.

7.1.1 Current Ratio :

Current ratio=Current Asset/ Liability
Current ratio refers the extent to which current liabilities is covered by the current
assets. It shows the short term solvency position of the firm.
 Liquidity
1.6 Ratio

1.4
Monno
1.2 Ceramic
Industries
1 Ltd.
Bengal
Fine
0.8
Ceramics
Limited
0.6
0.4
0.2
0
2001 2002 2003 2004 2005 2006 2007 2008
year

Figure 8: Trend of Current Liquidity Ratio from 2001-2008

The ratio analysis of the liquidity ratio shows fluctuation through years, it is gradually
decreasing. For last two years the ratio is below 1.00. Which means that Monno is
having hard time managing short term cost that is current liability is higher than
current assets. So, meeting operating expenses will be tough for Monno. The
condition would be better understood by calculating other current ratio.

In Cross-section analysis with Bengal Fine Ceramics Limited it is visible that they are
also facing same problem. Compared to them Monno is in better position.

7.1.2 Quick Ratio:

Quick Ratio=(Current Asset-Inventory)/ Current Liability

Quick ratio expresses a company’s ability to repay its current liabilities out of its
most liquid assets.

Quick ratio for Monno shows that ratio is below 1.00 for years. So, current liabilities
are greater from Current Asset without inventory from 2001 through 2008. And ratio
shows fluctuation and also decreasing. So Monno is facing liquidity problem. The
reason behind the problem is inventory. Inventories are not converting quickly that
is the reason for cash or liquidity problem is arising. If the situation continues for
long Monno will face difficulty paying short term debt and long term debt.

0.7 QUICK rATIO

0.6
Monno
0.5
Ceramic
Industries
0.4 Ltd.
Bengal Fine
Ceramics
0.3
Limited

0.2

0.1

0
2001 2002 2003 2004 2005 2006 2007 2008 YEARS

Figure 9: Trend of Quick Ratio from 2001-2008

Cross section analysis with Bengal shows for few years their ratio was increasing
when Monno’s were decreasing. But for recent years both company’s ratio is falling.
In most recent years ratio shows sign of improve. That means recently Monno is
recovering from the situation but slowly.
7.2 Asset Management Ratios

Asset Management ratios measure how efficiently the firm utilizes its assets and
inventory.

7.2.1 Inventory Turnover Ratio:

Inventory Turnover Ratio= Cost of Gold Sold/Inventory

It shows how many times a company’s inventory is sold and repaid over a period.

Inventory Turn over Ratio

3.5

3
Monno
Ceramic
2.5 Industries
Ltd.
2
Bengal
1.5 Fine
Ceramics
Limited
1

0.5

0
2001 2002 2003 2004 2005 2006 2007 2008

Figure 10: Trend of Inventory turnover from 2001-2008

The inventory turnover ratio shows a rough approximation each item of inventory is
sold out and restocked or turned over. In our case of Monno the highest 3.1 times a
year. This is very poor ratio for any firm. And this is the reason for the liquidity
problem that Monno is facing. The reason may be for less demand of goods in abroad
that is the decrease in sales. Monno must take quick steps to work out this. Then
pressure for liquidity will be lower and short tem loan and long term loan payment
will be trouble-free.

Inventory turnover ratio of Monno is not satisfactory at all, more over it has
fluctuating trend, and this is going to hamper performance of monno.
7.2.2 Days Sales Outstanding :
Days Sales Outstanding =Account receivables/ (Sales/360)

120
Days Sales Outstanding(DSO)

100 Monno
Ceramic
Industries
80 Ltd.
Monno
60 Ceramic
Industries
Ltd.
40

20

0
2001 2002 2003 2004 2005 2006 2007 2008 Years

Figure 11: Days Sales Outstanding (DSO) from 2001-2008

On an Average Monno takes 43 days to collect credit sales. Though the trends is
irregular but in recent years in 2007 and 2008 the days are falling, which is a good
sign. As a result cash collection is improving in recent years. Compared to Bengal,
Monno is in a far better position. On average DSO for Bengal is more than 80 days.
Both inventory turnover ratio and DSO together shows that Monno’s sales collection
period is well enough from other firms but sell of inventory is slow. They have that
stated reason for this situation is shock of 9/11. After 9/11 volume of export to world
market slowed down and so in domestic market. That’s why they faced such problem
but now they are overcoming the problem.

7.2.3 Fixed Asset Turnover:

Fixed Asset Turnover=Sales /Total Fixed Asset

The Fixed Asset Turnover Ratio measures how effectively the firm uses its plant and
equipment to help generate sales.
 3
Fixed Assets Turnover

2.5 Monno
Ceramic
Industries
2 Ltd.
Bengal
Fine
1.5 Ceramics
Limited

0.5

0
2001 2002 2003 2004 2005 2006 2007 2008

Figure 12: Fixed Asset Turnover from 2001-2008

The trend of ratio shows that till 2006 it was fluctuating but from 2007 it is gradually
rising. When using fixed asset turnover ratio to compare the performance with other
firm historical cost and inflation should be in mind as most balance sheet accounts
are stated in terms of historical cost and inflation might cause the value of money
assets that were purchased in past may be seriously understated. From 2001 to
2008 total fixed asset of Monno was around 4 billion taka to 5.5 billion taka. So, at
that point of time inflation has reached to double digit in Bangladesh and prices of
land building material, equipment and machineries have reached to a higher pick.
So, total fixed asset of Monno has been understated in the balance sheet that is why
fixed asset turnover ratio of monno should be less than what we have now. On an
average Monno is in better position.

7.2.4 Total Asset Turnover:

Total Asset Turnover= Sales/ Total Asset

It measures how effectively a business is using its assets to generate sales. It is

most useful for capital intensive industry like manufacturing companies like MONNO
and Bengal.
 Total Asset Turnover
2008
Bengal
2007 Fine
Ceramics
2006 Limited

Monno
2005 Ceramic
Industries
2004 Ltd.

2003
2002
2001
Year

0 0.5 1 1.5 2
value of ratio

Figure 13: Total Asset Turnover from 2001-2008

This Ratio shows turnover of all of the firm assets. The trend is changing over years
but at recent years it is gaining, meaning generating higher volume of business given
its investment in total asset. The trend shows that Monno is getting out of bad times
gradually. But to become more efficient Monno should increase its sales. Rigorous
selling policy should be taken to improve sales and to improve the turnover.
7.3 Debt Management Ratio:

7.3.1 Debt Ratio:

Debt Ratio= Total Asset/ Total Debt

In debt financing, money has been collected through notes, bonds, borrowing
directly from financial institutions. Some advantages of higher debt are.
(a) It helps to start or expand a business
(b) Tax advantages can be gained. One of the major disadvantages is sufficient
cash flow is needed to repay the debt. So the borrowers are on pressure.

Debt Ratio
0.8

0.7
Monno
Value of Ratio

Ceramic
0.6 Industrie
s Ltd.
0.5
Bengal
Fine
0.4 Ceramic
s Limited
0.3

0.2

0.1

0
2001 2003 2005 2007
Year

Figure 14: Debt Ratio from 2001-2008

The Debt ratio measures the percentage of firm’s assets financed by the creditors.
From 2001 to 2004 the debt ratio was smaller compared to the following years. And
debt ratio was around 20%. But after 2004 the ratio increased to over 60%, which
means that Monno has taken Long term debt and so 60% of total asset of Monno are
financed by debt from other institutions. The debt was taken to improve the
technology and efficiency of the company. And the development project is being
implemented through years. And for that an amount interest expense will have to be
beard by the company.

7.3.2 Times Interest Earning Ratio (TIE):

TIE (Times Interest Earned Ratio)= EBIT/Interest

3 Times Interest Earned Ratio

Monno
2.5 Ceramic
Industrie
2 s Ltd.
1.5 Bengal
1 Fine
ratio

Ceramic
0.5 s Limited
0
-0.5 2001 2002 2003 2004 2005 2006 2007 2008
-1
-1.5 Year

Figure 15: Times Interest Earned Ratio from 2001-2008

The TIE ratio measures the extent to which a firm’s earnings before interest and
taxes (EBIT), also called net operating income, can decline before these earnings are
unable to cover annual interest costs. As interest is paid with pretax dollars, the
firm’s ability to pay current interest is not affected by taxes. Monno’s interest is
covered on average 1.2 times which is very poor and again refers to the fact that
Monno is suffering from sales and cash management. For low sales earning is going
down. The other firm also shows very poor performance in the TIE ratio. In 2007 TIE
became negative, which indicates Bengal suffered from huge loss in 2007.
7.4 Profitability Ratios:

Profitability ratio shows the combined effects of liquidity management, asset

management and debt management on operating result.

7.4.1 Net Profit Margin On Sales:

Net Profit Margin on Sales= Net Income/ Sales

Profitability ratios show the effect of liquidity, debt management, and asset
management on operating results. It measures how much the firm is earning
compared to its sales and how the assets and equity are being utilized to generate
sales.

Net Profit Margin On Sales

0.06
0.04 Monno
Ceramic
0.02 Industries
Ltd.
0
Ratio

Bengal
-0.02 Fine
01

02

03

04

05

06

07

08

Ceramics
20

20

20

20

20

20

20

20

-0.04 Limited

-0.06
-0.08
-0.1 Year

Figure 16: Net Profit Margin on Sales from 2001-2008

This ratio gives profit per dollar sale or profit per taka sale in our case. In case of
Monno, profit per taka is very poor through years and in last year (2007) they did
not profit at all. The ratio is negative, since Monno incurred a loss in 2007. Bengal
Ceramic’s position is even worse than Monno, which is a very unsatisfactory
performance by the industry. But the recent year ratio shows positive value. So,
Monno is turning back from loss and gaining profit.
7.4.2 Return on Assets(ROA):
Return on Asset=Net Income/Asset
It gives idea about the overall return on investment earned by the firm, it is the after
tax earnings generated by total asset.

ROA
0.06 Monno
Ceramic
0.04 Industries
values of Ratio

0.02 Ltd.
0
Bengal
-0.02
01

02

03

04

05

06

07

08
Fine
20

20

20

20

20

20

20

20
-0.04 Ceramics
Limited
-0.06
-0.08
-0.1
-0.12
-0.14 Year

Figure 17: Return on Asset from 2001-2008

The trend shows that MONNO’s ratio was stable initially but from 2003 it is gradually
decreasing and in 2007 it turned in to negative. But it increased to positive amount
at 2008. But still is need to be increased to sustain in long run.

7.4.3 Return on Equity (ROE):

It measures the rate of return earned on common stockholders’ equity. Higher the
ROE, better the profitability and financial position of the firm.

The ratio was decreasing from 2002 to 2004. But then eventually became negative in
2007. But again in 2008 it gained positive value. As net income went down ROE also
went down. In 2007 Net Income was negative, so the ratio also became negative.
Compared to Bengal ceramics Monno is in a superior position. In 2006 ROE became
almost -0.2 because of negative income.
 0.15 ROE

0.1 Monno
Ceramic
Industries
0.05 Ltd.

0 Bengal
Ratio

Fine
1

8
0

0
Ceramics
0

0
-0.05
2

2
Limited

-0.1

-0.15

-0.2

-0.25 Years

Figure 18: Return on Equity from 2001-2008

7.4.4 P/E Ratio:

P/E = Market Price/ Earnings Per Share

P/E ratio shows the taka amount investors will pay for 1 taka of current earnings.
The most significant indicator of ratio analysis shows how the investors in the stock
market perceive the company.

100 P/E Ratio Monno

80 Ceramic
60 Industries
Ltd.
40
20
Bengal
0
Ratio

Fine
-20 2001 2002 2003 2004 2005 2006 2007 2008 Ceramics
Limited
-40
-60
-80
-100
-120 Year

Figure 19: P/E Ratio from 2001-2008

Monno’s PIE gradually increased from 2002 to 2004 and the fall to negative in 2007.
Again in 2008 it increased to a higher value of all time. The negative value in 2007
appeared in ratio because of negative income of 2007.

Others thing held constant, P/E ratios are higher for firms with high growth prospects
and lower for riskier firms. As Monno’s ratio is higher than Bengal, so Monno is less
risky than Bengal.

7.4.5 M/B value:

M/B Value = Market Price/(Equity/Share)

This gives another indication of how investors regard company. M/B value shows
feature of Monno Ceramic, this proves the goodwill of Monno Ceramic. In spite of the
continuing down fall of income and loss in 2007 M/B shows the fluctuating but
increasing trend. There were fluctuations in the trend from 2002 to 2007. But from
2006 it increased to a very high level in 2008.

M/BValue
1800

1600 Monno
Ceramic
1400 Industries
Ltd.
1200
1000
Ratio

Bengal
Fine
800 Ceramics
Limited
600

400
200

0
1

8
2

-200
0

0
0

0
0

0
2

Year

Figure 20: M/B Ratio from 2001-2008

8. SUMMERY FROM RATIO ANALYSIS:
• Liquidity Ratios shows that Monno is facing harsh liquidity problem after
9/11. Current ratio is on average 1.1 and quick ratio is 0.4 which is to poor
for any company. For this situation Monno must have taken some short term
loan to solve short run liquidity problem. In turns this could be dangerous
leading the risk of being bankrupt.

• Asset Management Ratios demonstrate the low turn of inventory problem

which has arisen for the low volume of sale. It is showing that cash collection
period is good but as sale has gone down inventory is increasing. According to
Monno they have taken various steps to increase sale. They are selling goods
with discounted price to increase sale. Total asset turn over and current asset
turnover is also supporting that huge amount of current asset of Monno is
making situation worse.

• Debt Management Ratio illustrate that Monno is just in the limit line of
paying debt. The debt ratio shows huge amount of debt compared to asset
and TIE shows that the payment ability is not in good condition. Monno has
taken development project to improve technology and quality of product for
few years. And simultaneously the sale has gone down. To overcome the
situation Monno must increase volume of sale or have to let go some of its
assets.

• Profitability Ratios gives the idea about the income condition of Monno. The
trend is showing gradually decreasing income level. At some time it becomes
negative. And this can be seen in ratios too. But still the market value of
shares has not gone down at the rate if income. P/E ratio shows that in spite
of low earning price was high but it became negative in 2007 as income was
negative but M/B shows the image of the company has not been that much
affected for the low trend if income generation.
9. SECURITY (MONNO CERAMIC IND. LTD.) AND MARKET (DSE
GENERAL INDEX) RETURN-RISK
The return on any stock traded in a financial market is composed of two parts. First,
the normal, or expected, return from the stock is the part of the return that investors
predict or expected. This return depends on the information investors have about the
stock, and it is based on the market’s understanding today of the important factors
that will influence the stock in the coming year.

The second part of the return on the stock is the uncertain, or risky, part. This is the
portion that comes from unexpected information revealed during the year. To
determine the risk and return of Monno Ceramic Industries Ltd. and market
(DSEGEN) the time data series were gathered and calculated the historical monthly
returns of 72 months (6years) using data from July, 2002 till June, 2008. Firstly,
daily stock price of Monno Ceramics Ind. Ltd. and DSE General Index (DGEN) were
obtained. Along with that the risk free rate is considered as 5% as of the
approximate rate of Bangladesh Treasury Bill for 364 days. Monthly returns were
calculated using the closing price of the first trading day of the month using the
following formula.
Stock Price of 1st day of Current Month – Stock Price of 1st day of Previous Month
Stock Price of 1st day of Previous Month

Market Return Statistics Monno Ceramics Return Statistics

Mean 0.020711645 Mean 0.009525677

Median 0.010610738 Median (0.004489636)
Standard Deviation 0.064720518 Standard Deviation 0.104313497
Sample Variance 0.004188745 Sample Variance 0.010881306
Kurtosis 1.248709366 Kurtosis 5.981580775
Skew ness (0.129903229) Skew ness 1.614106406
Minimum (0.198714344) Minimum (0.224770642)
Maximum 0.173874329 Maximum 0.475490196
Sum 1.491238452 Sum 0.685848747
Count 72 Count 72
Largest(1) 0.173874329 Largest(1) 0.475490196
Smallest(1) -0.198714344 Smallest(1) -0.224770642
Confidence Level (95.0%) 0.000478289 Confidence Level(95.0%) 0.000770883
Table 4: Return-Risk of Monno Ceramic and DSE General Market Index
The expected monthly return of Monno Ceramic Ltd. is 0.95% (11.43% of yearly
expected return) and standard deviation is 10.43%, while the market (DSEGEN)
expected monthly return (estimated through time series analysis) is 2.07% (24.85%
of yearly expected return) and standard deviation is 6.47%. According to the
principle of risk-return trade-off, potential return rises with an increase in risk. Low
levels of uncertainty (low risk) are associated with low potential returns, whereas
high levels of uncertainty (high risk) are associated with high potential returns. But
here we can see that Monno Ceramic Ind. Ltd. has a higher level of risk as measured
by standard deviation, compare to its level of return. Hence, it can be said that
Monno Ceramic Ind. Ltd. has higher risk compared to the average risk or market
risk.

However, the covariance of the security and market is 0.00233, which is positive, so
the security tends to move in the same direction as the market. If we divide the
covariance with the product of two standard deviations we find the correlation, which
in this case is 0.2146. This tells us that the security of Monno Ceramic has a fairly
strong tendency to move with the overall market, but the tendency is not perfect. By
multiplying Correlation, of Monno Security and Market, with ratio of standard
deviation of Monno ceramic and market the systematic risk, beta (β) is calculated,
here beta is 0.5576.

Capital market line

CML is a line used in the capital asset pricing model to illustrate the rates of return
for efficient portfolios depending on the risk-free rate of return and the level of risk
(standard deviation) for a particular portfolio. The CML is derived by drawing a
tangent line from the intercept point on the efficient frontier to the point where the
expected return equals the risk-free rate of return. When the market portfolio is
combined with the risk-free asset, the result is the Capital Market Line. All points
along the CML have superior risk-return profiles to any portfolio on the efficient
frontier. Just the special case of the market portfolio with zero cash weighting is on
the efficient frontier. Additions of cash or leverage with the risk-free asset in
combination with the market portfolio are on the Capital Market Line. All of these
portfolios represent the highest possible Sharpe ratio. One can prove that the CML is
the optimal CAL and that its equation is
Securities market line

The relationship between systematic risk and expected return in financial market, is
usually called the security market line (SML). The SML essentially graphs the results
from the capital asset pricing model (CAPM) formula. The x-axis represents the
systematic risk (beta), and the y-axis represents the expected return. The market
risk premium is determined from the slope of the SML. The relationship between β
and required return is plotted on the securities market line (SML) which shows
expected return as a function of β. The intercept is the nominal risk-free rate
available for the market, while the slope is E(Rm − Rf). The securities market line can
be regarded as representing a single-factor model of the asset price, where beta is
exposure to changes in value of the Market. The equation of the SML is thus:

Here, we already calculated market return of DSEGEN is 24.85%, beta (β) 0.5576,
risk free return 5%, therefore the security expected return is 16.07%.

Expected
Return

24.85%,

5%

Beta
0.557 1.0

Figure 21: Security Market Line (SML)

The reward to return ratio for Monno Ceramic is (16.07%-5%)/ 0.5576 = 19.85%, in
other words Monno has a risk premium of 19.85% per unit of systematic risk.
10. REGRESSION ANALYSIS
Market Excess Return was estimated by deducting risk-free rate from the estimated
monthly expected return of DSE general index and company excess return was
obtained by subtracting the risk-free rate from the monthly expected returns of
Monno Ceramic Ind. Ltd. for 6 years. Risk-free rate of 5% is assumed to be constant
for whole period for keeping the analysis simple. Then, a regression analysis was
performed using market excess return as independent (explanatory) variable and
company excess return as dependent variable that is to be explained by regression.

This upward-sloping regression line on the diagram above is drawn to minimize the
sum of all the squared deviations around it and this line called security characteristic
line best fits the data in the scatter diagram. SCL of Monno Ceramic has very high
positive intercept. The slope coefficient of Monno Ceramic security has positive beta,
i.e. it moves on average in the same direction as the market (DSEGEN). The small
beta suggests that this security carries less systematic risk.

R square (R²) represents the strength of the regression equation, i.e. how much of
the total deviation in the dependent variable (Monno Ceramics Ind. Ltd. excess
return) can be explained by the independent variable (market excess return). The
 regression output displays that R² is about 10%, which indicates that about 10% of
the total variation in Monno Ceramics excess return can be explained by the
regression line.

Since Significance of F=0.006728555 which is less than the cut-off value of 0.05,
then it can be concluded that the F value of 7.80 is significant which indicates a good
fit of the regression equation and we are confident about the regression equation.

The intercept value of the regression equation is -0.00714 which is negative.

However, the p-value of the t-statistic is 0.52 which is greater than the cut-off value
of 0.05 which suggests that the low value of t-stat (-0.64) is not significant. Thus
this negative intercept is not statistically significant. According to theory, the
intercept is expected to be of zero value, but the negative value of intercept from
this regression output being insignificant does not contradict theory, i.e. there is no
evidence to reject theory.

SUMMARY OUTPUT
Regression Statistics
Multiple R 0.316653839
R Square 0.100269654
Adjusted R Square 0.087416363
Standard Error 0.091808953

Observations 72

ANOVA
df SS MS F Significance F
Regression 1 0.065754467 0.065754467 7.801088173 0.006728555
Residual 70 0.590021873 0.008428884

Total 71 0.65577634

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
0.01502677
Intercept -0.007140565 0.011114585 -0.642450024 0.522679685 -0.029307905 5 -0.029307905 0.015026775
0.81424443
X Variable 1 0.475034802 0.17007788 2.793042816 0.006728555 0.13582517 3 0.13582517 0.814244433

Table - Regression between Market Excess Return and Security Excess Return

Slope (coefficient of independent variable) of the regression equation is 0.475

which also represents the beta coefficient or beta risk. The p-value of the t-statistic
is 0.006 which is less than 0.05 which suggests that the t-statistic (2.793) is
significant and thus the slope of 0.475 is valid. This positive value of beta falls within
the range of beta 0. 3 – 2.5 as expected and it can be concluded that the beta of
0.475 is significant.

Beta is a measure of a stock's volatility in relation to the market. By definition, the

market has a beta of 1.0, and individual stocks are ranked according to how much
they deviate from the market. A stock that swings more than the market over time
has a beta above 1.0. If a stock moves less than the market, the stock's beta is less
than 1.0. High-beta stocks are supposed to be riskier but provide a potential for
higher returns; low-beta stocks pose less risk but also lower returns. Thus, Monno
Ceramics is a lower risk stock as ß=0.475 which is less than the average risk or
market ß of 1. Therefore, Monno Ceramics is only about a little more than half as
volatile as the DSE general index. Hence, it can be stated that if market risk
premium (DSEGEN excess return) increases by 1%, Monno Ceramics Ind. Ltd.
excess return will increase by 0.475%.
Stock price movement can be related to various company specific decisions and
issues such as dividend decision, investment decision, capital structure decision;
stock price may also change due to change in macroeconomic variables or factors
affecting all the firms operating in a nation’s economy such as change in political
government, inflation, GDP growth, natural calamities, etc.

Regression analysis is performed in this section to explain stock price movement with
the use of dummy variables. Firstly, one factor or issue is selected such as issuance
of large amount of long-term debt on a specific date of a year. Then the daily stock
price of one month before that date is taken and one month after that date is taken
which is the dependent variable. Then the independent variable is created with “0”
for all the days before the selected date and “1” for all the days after the specific
date. Then after running the simple regression, the slope coefficient of the
independent variable is examined and the significance of the t-statistic is
investigated.
 11. CHANGE IN GOVERNMENT (CARE TAKER GOVERNMENT)
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.366236
R Square 0.134129
Adjusted R
Square 0.107070
Standard 11.81488
Error 6
Observations 34

ANOVA
df SS MS F Significan
ce F
691.9535 691.9535 4.95698 0.033149
Regression 1 3 3 81 8
4466.928 139.5915
Residual 32 82 3
5158.882
Total 33 35

Coefficien Standard t Stat P-value Lower Upper Lower Upper

ts Error 95% 95% 95.0% 95.0%
1.053E- 174.3897 186.42 174.389 186.42
Intercept 180.4063 2.95372 61.07761 34 2 278 72 278
0.03314 17.307 17.307
X Variable 1 9.0382 4.05950 2.22643 98 0.76926 13 0.76926 13

The effect of 1/11 and change in government, stock price of Monno Ceramics Ind.
Ltd. is examined through simple dummy regression analysis. The new caretaker
government came into power on 11th January 2007 and the uncertainty in the
nation’s political situation was a common macroeconomic factor affecting all
companies in the stock exchanges of Bangladesh. The regression output displays the
t-statistic is 2.23 which has p-value less than 0.05, thus it implies that t-stat is
statistically significant. In other words, the results provide statistical evidence that
that the factor ‘change in government’ is relevant and has substantial effect on stock
price of Monno Ceramic’s security. The slope coefficient of 9.03 is positive which
provides empirical evidence that investors reacted positively to the change in
government. Investors believed in the advantages of change in government after a
long period of political unrest, strikes and violence in the country.
 12. EFFECT OF NATURAL CALAMITIES (CYCLONE SIDR)

SUMMARY OUTPUT

Regression Statistics
0.76575
Multiple R 5
0.58638
R Square 1
Adjusted R 0.57577
Square 6
Standard
Error 10.7268
Observation
s 41

ANOVA
df SS MS F Significanc
eF
6361.894 6361.89 5.44545E-
Regression 1 22 42 55.2899 09
4487.508 115.064
Residual 39 22 3
10849.40
Total 40 244

Coeffici Standard t Stat P-value Lower 95% Upper Lower Upper

ents Error 95% 95.0% 95.0%
237.605 4.88824E- 242.58 232.627 242.58
Intercept 3 2.4609 96.5523 48 232.6276 29 6 29
- -
- 5.44545E- 18.185 - 18.185
X Variable 1 24.9803 3.3595 -7.4357 09 -31.7755 0 31.7755 0

The unprecedented flood and cyclone Sidr incurred on 17th November 2007, which
caused massive loss of lives, ruined properties and left a great deal of economic re-
construction for both the private and public sectors. This macroeconomic factor effect
on all companies was examined to find any relation to stock price movement. The
regression output displays the t-statistic is -7.43 which has p-value is not less than
0.05, thus it implies that t-stat is statistically insignificant. In other words, the
results provide no statistical evidence that that the cyclone factor is irrelevant to
movement in stock price of Monno Ceramic. The slope coefficient of -24.98 is
negative which provides no empirical evidence that investors reacted positively to
the natural calamities.
 13. NEWS OF INVESTMENT DECISION
SUMMARY
OUTPUT

Regression Statistics
Multiple R 0.7820
R Square 0.6115
Adjusted R Square 0.6034
Standard Error 26.57872
Observations 50

ANOVA
Df SS MS F Significance F
Regression 1 53389.630 53389.6306 75.57686 2.01267E-11
Residual 48 33908.557 706.4283
Total 49 87298.188

Coefficie Standard t Stat P-value Lower 95% Upper Lower Upper

nts Error 95% 95.0% 95.0%
Intercept 235.18 5.42536 43.34829 3.77173E-40 224.2715864 246.088 224.271 246.088
X Variable 1 65.406 7.52362 8.69350 2.01267E-11 50.27929053 80.533 50.279 80.5338

Monno Ceramic Industries Ltd. informed to public and investors about finalizing the
development project of BMRE programme for Unit-2 on 30th June 2002 and this
internal company related factor was investigated through dummy regression. BMRE
project comprised of establishing new world class machinery from Germany and
Japan. The total cost of the proposed BMRE has been estimated at Tk. 161.713
million. The regression output disclose a t-statistic of 8.69 with positive which
indicates that t-stat is statistically significant. P- value of t stat is less than 0.05, so
co-efficient of the slope is statistically significant at 5% level. This provides evidence
that huge investment in different projects is relevant for stock price movement of
Monno Ceramic.
 14 CAPITAL STRUCTURE DECISION (DEBT FINANCING)

SUMMARY OUTPUT

Regression Statistics
0.3177237
Multiple R 41
0.1009483
R Square 76
Adjusted R 0.0795423
Square 85
12.972384
Standard Error 58
Observations 44

ANOVA
df SS MS F Significa
nce F
793.603594 793.6035 4.7158935 0.035582
Regression 1 1 941 7 392
7067.87599 168.2827
Residual 42 5 618
7861.47958
Total 43 9

Coefficient Standard t Stat P-value Lower Upper Lower Upper

s Error 95% 95% 95.0% 95.0%
274.98315 2.97606912 92.39810 3.75298E- 280.98 268.97 280.989
Intercept 79 9 836 50 268.9772 91 72 1
- - -
8.5739578 3.94820186 2.171610 0.0355823 - 16.541
X Variable 1 95 1 824 92 -16.5418 0.6062 8 -0.6062

Monno Ceramic Industries Ltd. took a long-term bank loan of BDT 134.42 million
from Sonali Bank for 10 years with 34 quarterly installments on 1st March 2003. The
term loan was taken for implementation of the BMRE program for development of
Unit-2 of the company. This internal company related factor was studied and the
regression output disclose a t-statistic of -2.17 with negative which indicates that t-
stat is statistically insignificant which provides no statistical evidence that capital
structure decision is relevant and affects stock price movement. The negative slope
coefficient -8.57 provides no empirical evidence that investors believe in the
advantages of debt financing.
 15. NEWS OF FINALIZATION OF BMRE PROGRAMME

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.792429
R Square 0.6279437
Adjusted R
Square 0.6184038
Standard Error 29.691678
Observations 41

ANOVA
df SS MS F Significance
F
Regression 1 58029.1474 58029.15 65.822854 6.6905E-10
Residual 39 34382.2337 881.5957
Total 40 92411.3811

Coefficient Standard t Stat P-value Lower 95% Upper Lower Upper

s Error 95% 95.0% 95.0%
Intercept 296.90789 6.81173 43.58769 1.0624E-34 283.13 310.69 283.13 310.69
X Variable 1 75.444378 9.29904 8.113128 6.6905E-10 56.64 94.25 56.64 94.25

Monno Ceramic Industries Ltd. has launched the BMRE project in 2003 to reduce the
production cost and will keep competitive in the international market. However, in
March 2008, they have successfully completed the project. The regression output
disclose a t-statistic of 8.11 with less than 0.05 p value, which indicates that t-stat is
statistically significant. This provides evidence that the successful launch of BMRE
project is relevant for stock price movement of Monno Ceramic.
16. FINDINGS FROM REGRESSION

All these positive indicators represent sources of good news for the company which
provides justification for the increasing trend in stock price of Monno Ceramic
Industries Ltd. in Dhaka Stock Exchange.

 Monno Ceramic has a moderate expected return and abit high standard
deviation compared to that of the market (DSE general index). the covariance
of the security and market is 0.00233, which is positive, so the security tends
to move in the same direction as the market.
 The security of Monno Ceramic has a fairly strong tendency to move with the
overall market, but the tendency is not perfect, it has a positive correlation
with market. Monno Ceramics has a lower risk stock as ß=0.475, which is less
than the average risk or market ß of 1. Therefore, Monno’s stock is less than
half as volatile as the DSE general index. Hence, it can be stated that if
market risk premium (DSE excess return) increases by 1%, Monno Ceramic’s
excess return will increase by 0.475%.
 Simple regression of dummy variables reveals that the stock price of Monno
Ceramic Industries Ltd. changes with different variables. Change in
government and takeover of care taker government in 2007 is relevant to
stock price movement and investors reacted positively to this factor.
Similarly, findings prove that investors react positively in new investment and
that the capital structure decision is irrelevant to stock price.
17. FINDINGS AND CONCLUSION

We undertook this study to review the movement of share price depending on the
company internal as well as the macro-economic factors. In doing so these are the
things we were able to identify.

• The balance sheet of the company understates fixed asset value and equity
value, as they do not incorporate time value of money theory.

• The company financial statement does not take into consideration their
goodwill in the financial market.

• Unfortunately the company, Monno Ceramic Industries Ltd. suffered a loss

during the last year which greatly affected its cash flow.

• We chose Bengal Fine Ceramic Ltd. as out standard of comparison while

performing cross-sectional analysis of financial ratios. We found that Monno
Ceramic is doing mostly better than Bengal Fine Ceramics..

• The security of Monno Ceramic has a fairly strong tendency to move with the
overall market, but the tendency is not perfect, it has a positive correlation
with market.

• Monno Ceramics has a lower risk stock as ß=0.475, which is less than the
average risk or market ß of 1. Though, the company has a high company
specific or unsystematic risk.