Executive Summary:

The following is an analysis paper of financial statement of company “Meghna cement Ltd”
and “MI Cement Ltd”. This entire analysis paper includes the financial statement analysis by
comparing different ratios of the both company. By calculating the industrial average and
considering it as the standard of comparison, we have compared the financial performance of
both of the company.

Financial analysis determines a company's health and stability. The data gives us an intuitive
understanding of how the company conducts business. Stockholders can find out how
management employs resources and whether they use them properly. Governments and
regulatory authorities use financial statements to determine the legality of a company's fiscal
decisions and whether the firm is following correct accounting procedures. Finally,
government agencies, such as the Internal Revenue Service, use financial statement analysis to
decide the correct taxation for the company. Ratio analysis is the calculation and comparison of
ratios which are derived from the information in a company’s financial statements.

The companies we have chosen are both cement making company in Bangladesh. Meghna
Cement is listed with both Dhaka and Chittagong Stock Exchanges, the two bourses of the
country since 1995 and 1996 respectively. The company markets its product under the
registered trade mark "King Brand Cement". Meghna Cement is known as one of the top cement
brands in Bangladesh. MI Cement company has been listed in Dhaka Stock Exchange and
Chittagong Stock Exchange in 2011. Its high growth agenda have been highly appreciated by
the shareholders and have won investors trust.

To compare the financial performance of both of the company we had to analyze both
company’s annual reports of last 4 (four) years, which are 2017, 2016 ,2015, 2014. And after
comparing with the Industrial average, which we considered as the standard we have found that
MI Cement performs better than Meghna cement in many ratios. Which means the growth of MI
Cement is higher than Meghna Cement.

Page 1 of 21
About Bangladesh Cement Industry
Bangladesh cement industry is the 40th largest market in the world. Currently capacity of the
industry is about 20 million tons (MT). Top 13 players are alone controlling over 78% of the
total industry capacity. However, the balance capacity still remains quite fragmented. Per capita
consumption remains poor when compared with the world average; only 99 kg (FY 2011) while
our neighboring countries, India and Pakistan, have per capita consumption of 135 kg and 130 kg
respectively. Many countries cannot produce enough cement to meet their internal demand, and
they depend on imports. However, Bangladesh is self-sufficient in fulfilling local demand for
cement. Even so, the installed production capacity is higher than local demand.
In Bangladesh, there are around 55 cement manufacturing companies, most of which are in
operations either on a large or small scale. A total of 34, including multinational cement
manufacturers, are in commercial production.
The installed production capacity of the 34 cement factories is 1.85 crore tons a year, according
to Bangladesh Cement Manufacturers Association (BCMA) data.
There are many cement Manufacturers in Bangladesh like Shah, Premier, Lafarge, Holcim, Scan.
At present among other manufacturer Crown cement operating their operations effectively and
efficiently and meeting customers’ demands with a view to acceleration socio-economic
development of the country. Day by day new competitors appears with better ideas and products
as well as services.

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MEGHNA CEMENT COMPANY OVERVIEW
Meghna Cement Mills Ltd is the first manufacturing unit of Bashundhara Group and it is one of
the largest cement industries in the country producing nearly 1 million metric tons a year. The
Meghna Cement Mills Ltd is an International Standard Organization (ISO 9001: 2008) certified
company having accreditation of manufacturing products for both domestic and international
markets. The company is listed with both Dhaka and Chittagong Stock Exchanges, the two
bourses of the country since 1995 and 1996 respectively. The company markets its product under
the registered trade mark "King Brand Cement". MCML is known as one of the top cement
brands in Bangladesh. Their associated companies adhere to the same demanding standards as
they provide construction materials such as Ready-Mix Concrete, Block, Pipe, and other pre-
stressed concrete units to the Government, Builders, and Manufacturers. The firm enjoy a good
history as well as a sustaining reputation in Bangladesh.

GOALS
• Continually set the latest standards of modern technology in cement industry to satisfy
the needs of customers through innovative products and services.
• Contribute to the national economy and the infrastructure development of the country.
• Secure the strongest competitive position in cement market places through making
quality product and operational excellence.
• Be partner with the best suppliers, delivering increased value for both the company and
our customers.
• Be recognized as a respected & attractive cement company & an employer of first choice.
• Provide extensive career opportunities through competitive pay & benefits, training &
development & a congenial working environment.
• Empower meghna cement employees at every level and integrate them fully into our
network.
• Continually demonstrate our commitment to sustainable environmental performance and
play a pro-active role in Corporate Social Responsibility (CSR) within our sphere of influence.
• Achieve long-term financial performance.
• Create secured investment opportunity within the country.
• Enhance versatility, & diversification through the penetration of new market segments.
• Improve administrative & organization structures to review all business lines regularly &
develop the best practice in the industry.
• Earn foreign currency through export cement

Page 3 of 21
MI CEMENT COMPANY OVERVIEW
M. I. Cement Factory Ltd. is a public limited company and one of the leading manufacturers of
cement in Bangladesh. On December 31, 1994 it started its journey with the commitment for
providing high quality cement to the country. Its brand “Crown Cement” has own renown both at
home and abroad.
Initially the plant was installed with a capacity of producing 600tpd (ton per day) of Portland
cement. With the passing of time the demand of Crown Cement increased day by day. Therefore,
the sponsors expanded the project thrice. By dint of quality Crown Cement soon gained
acceptability both at home and abroad which raised the necessity for expanding the plant from
initial 600tpd (ton per day), 800tpd 2nd unit in 2002, 1400tpd 3rd unit in 2006 and 3000tpd 4th
unit in 2011 thereby raising the total production capacity to 5800tpd.
The company has been listed in Dhaka Stock Exchange and Chittagong Stock Exchange in 2011.
Its high growth agenda have been highly appreciated by the shareholders and have won investors
trust. Its backward and forward integration endeavors have given new dimensions to its growth
platform.

GOALS
Continually set the latest standards of modern technology in our industry to satisfy the needs of
customers through innovative products and services.
• Contribute to the national economy and the infrastructure development of the country.
• Secure the strongest competitive position in our relevant market places through making
quality product and operational excellence.
• Be partner with the best suppliers, delivering increased value for both the company and
our customers.
• Be recognized as a respected & attractive company & an employer of first choice.
• Provide extensive career opportunities through competitive pay & benefits, training &
development & a congenial working environment.
• Earn foreign currency through export.

Page 4 of 21
 Meghna Cement Ratio Analysis
Ratio Name Formula 2017 2016 2015 2014
Current ratio Current asset/ 1.05 1.0655 1.290510563
Current
Liability 1.198405126
Quick ratio Current asset- 0.95 0.852 0.121593572
Inventory /
current
liability 0.056339446
Inventory turn Cost of good 8.35 9.373
over sold/
Inventory 0.776065501 0.587056323
Days sales [Accounts 96 42.1051
Outstanding receivable/net
sales] * 360 65 74
Fixed asset Net 4.72 7.2877 4.163218058
turnover sales/Total
fixed asset 4.980678307
Total asset Net 1.06 1.6425
turnover sales/Total
asset 1.181927928 0.950635915
Debt to asset [Total 82.35 82.57
ratio Debt/Total
asset] * 100 0.805933209 0.793483387
Time interest Earnings 1.3339 1.3372
earned ratio before interest
and
tax/Interest 1.482612258 1.697124121
Net profit [Net 0.133 1.366
margin profit/Net
sales] * 100 2.34971664 2.694923952
Return on [Net 1.39 2.245
asset profit/Total
asset] * 100 2.777195718 2.561891496
Return on [Net 7.92 12.8852
equity profit/Net
sales] * 100 14.31051498 0.124052562
Price/Earnings Price per 35.50 19.032
ratio share/Earning
per share 6.986615679 8.058035714
Market value Market value 10.33 8.66
per
share/Book
value per
share 2.921182266 3.198891967
Page 5 of 21
 MI Cement Ratio Analysis
Ratio Name Formula 2017 2016 2015 2014
Current ratio Current asset/ 1.21092 1.28086
Current
Liability 1.655035811 1.451089609
Quick ratio Current asset- 1.09383 1.1621
Inventory /
current
liability 1.512425995 1.315939249
Inventory turn Cost of goods 7.98622 9.22106038
over sold/
Inventory 10.74453481 9.485130079
Days sales [Accounts 61.4268 42.5322
Outstanding receivable/net
sales] * 360 55.26962746 109.1036279
Fixed asset Net 1.2450 1.6645
turnover sales/Total
fixed asset 1.960432206 1.918744861
Total asset Net 0.52679 0.6367
turnover sales/Total
asset 0.704207171 0.685163695
Debt to asset [Total 60.3905 52.5070
ratio Debt/Total
asset] * 100 0.499831826 0.512562226
Time interest Earnings 2.2220 5.0268
earned ratio before
interest and
tax/Interest 14.15329894 7.484759041
Net profit [Net 70.035 8.2542
margin profit/Net
sales] * 100 8.439740041 7.851307763
Return on [Net 3.6891 5.2561
asset profit/Total
asset] * 100 5.943325455 5.379431038
Return on [Net 9.3138 11.0671
equity profit/Net
sales] * 100 11.8826542 11.03613903
Price/Earnings Price per 4.45 5.01
ratio share/Earning
per share 9.416012264 10.06080911
Market value Market value 10.16 10.16
per
share/Book
value per
share 2.686551544 2.489315484
Page 6 of 21
 Industrial Average

Ratio Name 2017 2016 2015 2014

Current ratio
1.13046 1.17318 1.472773187 1.324747368
Quick ratio
1.021915 1.00705 0.817009784 0.686139348
Inventory turn
over
8.16811 9.29703019 5.760300156 5.036093201
Days sales
Outstanding
78.7134 42.31865 60.13481373 91.55181395
Fixed asset
turnover
2.9825 4.4761 3.470555257 3.04098146
Total asset
turnover
0.793395 1.1396 0.94306755 0.817899805
Debt to asset ratio
71.37025 67.5385 0.652882518 0.653022807
Time interest
earned ratio
1.75 3.182 7.817955599 4.590941581
Net profit margin
35.084 4.8101 5.394728341 5.273115858
Return on asset
2.53955 3.75055 4.360260587 3.970661267
Return on equity
8.6169 11.97615 13.09658459 5.580095796
Price/Earnings
ratio
19.975 12.021 8.201313972 9.059422412
Market value 10.245 9.41 23.19271886 19.52940376
Page 7 of 21
 Comparison Among Analysis
Year 2017 2016 2015 2014

Company name Meghna MI Meghna MI Meghna MI Meghna MI

cement Cement cement Cement cement Cement cement Cement

Current ratio
Lower Higher Lower Higher Lower Higher Lower Higher
Quick ratio
Lower Higher Lower Higher Lower Higher Lower Higher
Inventory turn over
Higher Lower higher lower Lower Higher Lower Higher
Days sales
Outstanding
Higher Lower Lower Higher Higher Lower Lower Higher
Fixed asset
turnover Higher Lower Higher Lower Higher Lower Higher Lower
Total asset turnover
Higher Lower Higher Lower Higher Lower Higher Lower
Debt to asset ratio
Higher Lower Higher Lower Higher Lower Higher Lower
Time interest
earned ratio
average average Higher Lower Lower Higher Lower Higher
Net profit margin
Lower Higher Lower Higher Lower Higher Lower Higher
Return on asset
Lower Higher Lower Higher Lower Higher Lower Higher
Return on equity
Lower Higher Higher Lower Higher Lower Lower Higher
Price/Earnings ratio
Higher Lower Higher Lower Lower Higher Lower Higher
Market value
Higher Lower Lower Higher Lower Higher Lower Higher
Page 8 of 21
CURRENT RATIO
The current ratio is a liquidity ratio that measures the extent to which a business has current
assets to pay its current liabilities.

Current Ratio
Year 2017 2016 2015 2014
Meghna 1.05 1.0655 1.290510563 1.198405126
Cement
MI Cement 1.21092 1.28086 1.655035811 1.451089609
Industrial 1.13046 1.17318 1.472773187 1.324747368
Average

Current Ratio
1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

In 2017 current ratio of Meghna Cement was 1.05 times, that means Meghna Cement had 1.05-
taka current assets to pay its 1-taka current liabilities. From 2014 to 2017 we can see a
consistency of current ratio.
In 2017 the current ratio of MI Cement was 1.2 times, which means MI Cement had 1.2-taka
current asset to pay its 1-taka liability. We can see the performance of paying the liability of MI
Cement is getting lower.

Page 9 of 21
QUICK RATIO
The quick ratio is a financial ratio used to gauge a company's liquidity. The quick ratio is also
known as acid test ratio. Quick ratio measures the extent to which a business has current assets to
pay its current liabilities excluding inventories.

Quick Ration
Year 2017 2016 2015 2014
Meghna 0.95 0.852 0.121593572 0.056339446
Cement
MI Cement 1.09383 1.1621 1.512425995 1.315939249
Industrial
Average 1.021915 1.00705 0.817009784 0.686139348

Quick Ratio
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

In 2017 The quick Ratio of Meghna Cement was 0.95 times, which indicates the firm had .95
taka to pay its liability of 1 taka. Which is a poor performance. From the year 2014 to 2017 we
can see the firm is under performing than the industrial average.

Page 10 of 21
In 2017 the quick ratio of MI Cement was 1.09 times, which means the firm had the ability to
pay 1.09 taka for 1-taka liability. Through 2014 to 2017 the firm was performing quite good
as per as the industrial average.

Inventory Turnover
Inventory Turnover ratio shows how effectively the company is managing its inventory

Inventory Turn over

Year 2017 2016 2015 2014
Meghna 8.35 9.373 8.77606550 6.587056323
Cement
MI Cement 7.98622 9.22106038 10.74453481 5.485130079
Industrial
Average 8.16811 9.29703019 5.760300156 5.036093201

Inventory Turnover
12

10

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

Page 11 of 21
In 2017, the inventory turnover ratio of Meghna cement was 8.35 times, which means the
inventory of the company turns into sales 8.35 times.
On the other hand, MI cement had the capability to turn its inventory into sales 7.9 times in 2017
We can see both the firms doing good as per the industrial average, but Meghna cement is at
the top position.

Days Sales Outstanding

Days sales outstanding shows how many days the firms required to get its credit sales.

Days Sales outstanding

Year 2017 2016 2015 2014
Meghna 96 42 65 74
Cement
MI Cement 61.4268 42.5322 55.26962746 109.1036279
Industrial
Average 78.7134 42.31865 60.13481373 91.55181395

Days Sales Outstanding

120

100

80

60

40

20

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

Page 12 of 21
Meghna Cement required 96 days to get the money from its receivable in the year 2017. In
2016 the firm was more efficient at this aspect.
Meghna cement required only 61 days to get its money form the receivable in the year 2017.
If we see the industrial average, we can say MI cement performed better than Meghna Cement
in this aspect.

Fixed Asset Turnover

How efficiently the fixed asset of a firm is turning into sales.

Fixed Asset Turnover

Year 2017 2016 2015 2014
Meghna 4.72 7.2877 4.980678307 4.163218058
Cement
MI Cement 1.2450 1.6645 1.960432206 1.918744861
Industrial
Average 2.9825 4.4761 3.470555257 3.04098146

Fixed Asset Turnover

8

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average Column1

Page 13 of 21
In 2017 Meghna cement had the capability to turn its fixed assets into sales 4.72 times.
On the other hand, MI cement had the ability to turn its fixed asset in to sales only 1.24 times.
Which is a poor performance.
If we consider the industrial average we can say Meghna cement is performing very good
than MI cement.

Total Asset Turnover

Total asset turnover shows how efficiently the total asset of a firm are turning into sales.
Total Asset Turnover
Year 2017 2016 2015 2014
Meghna 1.06 1.6425 1.181927928 0.950635915
Cement
MI Cement 0.52679 0.6367 0.704207171 0.685163695
Industrial
Average 0.793395 1.1396 0.94306755 0.817899805

Total Asset Turnover

1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

Page 14 of 21
In 2017 Meghna Cement had the capability to turn its total asset in sales 1.06
times. Where Mi cement could only turn its total assets into sales 0.52 times
By considering the industrial average we can say Meghna Cement is performing way more
batter than Mi Cement.

Debt to Asset ratio:

Debt to asset ratio shows how efficiently a company managing its debt.
Debt to Asset ratio
Year 2017 2016 2015 2014

Meghna 82.35 82.57

80.5933209 79.3483387
Cement

MI Cement 60.3905 52.5070

49.9831826 51.2562226
Industrial
Average 71.37025 67.5385 65.2882518 65.3022807

Debt to Asset ratio

90

80

70

60

50

40

30

20

10

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

Page 15 of 21
In 2017, Meghna Cement had 82.35% debt of its asset.
Where Meghna Cement had only 60.39 debt of its asset.
As we can see in the Industrial average, MI Cement had the debt to asset ratio below the industrial
average, so we can say that MI Cement is performing way better than Meghna Cement.

Time Interest Earned Ratio:

It shows how many times a company can provide their interest by using their earning
before interest and tax.

Time Interest Earned Ratio

Year 2017 2016 2015 2014
Meghna 1.3339 1.3372 1.482612258 1.697124121
Cement
MI Cement 2.2220 5.0268 1.415329894 7.484759041
Industrial
Average 1.75 3.182 7.817955599 4.590941581

Time Interest Earned Ratio

8

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

Page 16 of 21
In 2017, Meghna Cement could pay its interest 1.3 times more by using its earning before
interest and tax
On the other hand, Mi Cement could pay its interest 2.2 times more by using its earnings
before interest and tax.
So, we can easily say MI Cement is performing batter than Meghna Cement in time interest
eared ratio.

Net Profit Margin:

It calculates the profit earned for every 1-taka sales.
Net Profit Margin
Year 2017 2016 2015 2014
Meghna 1.33 1.366 2.34971664 2.694923952
Cement
MI Cement 7.035 8.2542 8.439740041 7.851307763
Industrial
Average 4.18 4.8101 5.394728341 5.273115858

Net Profit Margin

9

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

In 2017 Meghna Cement had earned 1.33 taka for every 100 Taka sale.
At the same year MI Cement earned 7.03 taka for every 100 Taka sale.
In this aspect MI Cement is performing way more better than Meghna Cement.

Page 17 of 21
Returned on Asset:
It indicates the income generated from every 1-taka asset.
Return on Asset
Year 2017 2016 2015 2014
Meghna 1.39 2.245 2.777195718 2.561891496
Cement
MI Cement 3.6891 5.2561 5.943325455 5.379431038
Industrial
Average 2.53955 3.75055 4.360260587 3.970661267

Return on Asset
7

0
2017 2016 2015 2014

Meghna Cement MI Cement Industrial Average

In 2017, Meghna Cement generated only 1.39-taka income for every 100-taka asset.
Where, MI Cement generated 3.68-taka income for every 100-taka asset.
Here MI Cement is performing better than Meghna cement as tier ratio is higher than Meghna
Cement.

Page 18 of 21
Return on Equity:
It shows the income generated from every 1-taka equity.

Return on equity
Year 2017 2016 2015 2014
Meghna 7.92 12.8852 14.31051498 12.4052562
Cement
MI Cement 9.3138 11.0671 11.8826542 11.03613903
Industrial
Average 8.6169 11.97615 13.09658459 5.580095796

Return on Equity
16
14
12
10
8
6
4
2
0
2017 2016 2015 2014

Meghna Cement MI Cement Industrial Average

For every 100-taka equity Meghna Cement generated 7.92-taka income in the year of 2017.
Where as MI Cement generated 9.31-taka income for every 100-taka equity
So, we can say that MI Cement is performing better than Meghna Cement as their ratio is
higher than Meghna Cement.

Page 19 of 21
Price/Earnings ratio:
The price that the investors are willing to pay for every 1-taka earnings are shown by the
price/earnings ratio.
Price/Earnings Ratio
Year 2017 2016 2015 2014
Meghna 5.50 9.03 6.98 8.05
Cement
MI Cement 4.45 5.01 9.41 10.06
Industrial
Average 4.97 7.02 8.20 9.05

Chart Title
12

10

0
2017 2016 2015 2014

Meghna Cement MI Cement Industry Average

In 2017, investors were willing to pay 35.50 taka for every share is the earning per share is 1
taka.
And for MI Cement investors were willing to pay only 4.45 taka for every share for every 1-taka
earnings.
As the industrial average, Meghna Cement is performing better than MI Cement.

Page 20 of 21
Conclusion:
MI Cement Limited is a highly profitable company. Day by day it is becoming profitable. They
are increasingly expanding business operations. They are able to manage finance by taking long
term or short term borrowing from financial institutions without any financial difficulties.
Ratios analysis gives a quick condition of financial position in several key areas. And ratio
analysis of MI Cement Limited gives very good results as it shows company is actively
efficiently performing and has liquid cash to counter financial. The analysis indicates that the
firm is successful at maintaining its constant growth, growth of profit margin, earning per share
(EPS), and maintaining cash flow.

On the other hand, Meghna Cement Ltd. does not look bright in business as per as the calculated
Industrial average. No doubt that, MI Cement Limited surpasses Meghna Cement Ltd.

Meghna Cement is just doing the average performance in days sales outstanding. But in
inventory turn over ratio the company is doing good in last 2017 and 2016. For investors its not
performing attractively in debt to asset ratio. It’s net profit margin is lower consistently. But for
last 2017 and 2016 the price earning ratio is performing well. So, we can say the overall
performance of Meghna Cement is volatile in comparison to MI Cement.

Recommendation:
It’s important for MI Cement to continue its consistent growth to perform more better in the long
run. For Meghna Cement to recover from the downsizing of growth rate, they need to develop
new strategic improvements.

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