Application of Transmittal December20, 2010 Mr.

Oli Ahad Thakur Assistant Professor School of Business, Eastern University, Dhanmondi, Dhaka. Subject: Letter of transmittal. Dear Sir, Please find enclosed with this letter the report of “Padma Oil Ltd” and “Jamuna Oil Ltd” that you wanted as partial requirement for the course of “Corporate Finance, FIN- 465”. The name of my project is “Ratio Analysis." I collected all the relevant information from the annual report 2005-2009, I go through from “Padma Oil Ltd” and “Jamuna Oil Ltd”.” I thing that is the report contains the information that you need to get an idea about the “Ratio Analysis”. If you need any clarification or any further information I would be happy to provide it to you. Yours sincerely, Md. Mamunur Rashid.


Oli Ahad Thakur. 2 . Eastern University. I am going to get help to many people in the context of preparing this report and some of the persons have been very helpful and cooperative with information and suggestions. Course Instructor School of Business.Acknowledgements At first our thanks go to Mr. So by this way I could finish the report properly and on time. In this regard I would like to thank Bangladesh Bank for providing information and I have worked hard to prepare this report. Bangladesh For handing us this report which we found to be a rather interesting topic to work on.

2 Objective of the Report The main objective of this report is to Ratio analysis and trend analysis.5.1 Origin of the Report Corporate Finance is one of the courses that we are doing in this semester.3 Scope of the report Bangladeshis Business man is more conscious about their business. Oli Ahad Thakur our course teacher has assigned us to do a report. So it is the most practical. some materials and questionnaire of the Annual report.5. After that I learn about financial situation of Jamuna oil ltd and Padma Oil ltd.2 Secondary Sources Secondary information is collected from the internet site of Stock Exchange and profile.4 Limitation of the report This study depends on the information. 3 . The topic of the report was decided by our teacher. 1. By this given information we analyze ratio. Beside that.1.1 Primary Sources Primary data is collected by writing or solving the questions. 1. And the data is collected from annual report of Padma oil ltd and Jamuna oil ltd.5 Sources of data Information could be collected by the following ways: 1. this report would also give us a power to watch the over all organization by see their annual report. There were other limitations as well:  Time constraints  Confidential topics could not be collected  We are depending only annual report. Mr. 1. 1. 1. records.

Originally the name of company was Pakistan National Oils Limited which was formed in the year 1964. After our long cherished independence the company was renamed to Bangladesh National Oils Limited by an Ordinance of 1972. 4 . BANGLADESH GUPTAKHAL. CHITTAGONG. PATENGA.577 949 Company Profile of Jamuna Oil Company Jamuna Oil Company Limited (JOCL) is a petroleum marketing company serving the nation for the last four decades. STORAGE AND MARKETING OF PETROLEUM PRODUCTS.LUBRICANTS & GREASES.Company Profile of Padma Oil Company CORPORATE HEADQUATERS: RESIDENT OFFICE: MAIN INSTALLATION: YEAR OF INCORPORATION: BUSINESS LINE: LISTING STATUS: STOCK EXCHANGE: AUTHORIZED CAPITAL: PAID UP CAPITAL: NUMBER OF SHARES: NUMBER OF SHAREHOLDERS: NUMBER OF EMPLOYEES: PADMA BHABAN. BANGLADESH 27 APRIL 1965 PROCURING. STRAND ROAD CHITTGONG – 4000.BANGLADESH 6 PARIBAGH. 1975 under the companies act.94.000 5. In the year of 1973 Bangladesh National Oils Limited was renamed to Jamuna Oil Company Limited and registered as a Private Limited Company on 12th May.00. DHAKA. 1913 (amended 1994). CHITTAGONG STOCK EXCHANGE 100 MILLION TAKA 294 MILLION TAKA 2.BITUMEN PUBLIC LIMITED COMPANY DHAKA STOCK EXCHANGE.

In the ratio analysis it is possible to defined the company ratio with a standard one. As per decision taken by Government & BPC.It has been functioning as a subsidiary of Bangladesh Petroleum Corporation (BPC) since 1977. the company was converted into a Public Limited Company on 25th June. Ratio analysis provides only a single snapshot. Ratio analysis: Ratio analysis is the starting point in developing the information desired by the analyst. Ratio analysis can be classified as follows: A) Liquidity ratio B) Asset management turnover ratio C)Debt Management Ratio D) Profitability ratio 5 . 2007. the analysis being for one given point or period in time.

Jamuna oil is more able to meet its short term 6 . Current Ratio indicates the ability of a company to achieve its short-term obligations.08 1. On the other hand Padma oil current ratio is decreasing from 2005 to 2007.1 1. Current ratios are extent to which the assets that are expected to cash cover the claims of short-term creditors. Comparatively the Padma oil and Jamuna oil’s current ratio shows that the position of Jamuna oil is better then Padma oil.081484593 1.137304074 1.12 1.14 1.04 1.036946 2009 1. Here there current asset is increasing mainly their stock trade increase largely and Jamuna oil reduces their current liability then previous year by reducing their income tax and credit loan.052286463 1. Current Ratio = Current Assets / Current Liabilities 2005 Jamuna Oil Padma oil 1.16 1. where short-term obligations indicate those obligations that are due within a year or within the operating cycle.98 0. 1.024618 2008 1.035946 industry 1. These ratios establish relation between cash and other current asset and current liabilities.131180762 1. In 2007 the ratio is lowest then other year cause current liability is comparatively higher then current asset.061239499 1.06 1.96 2005 2006 2007 2008 2009 industry Padma oil Jamuna Oil 2006 1.029819 2007 1.10 Based on this 2 company the graph shows that Jamuna oil is increasing its current ratio every year and in 2008 and 2009 it increase largely cause current asset is increase then its current liability.A) Liquidity ratio Liquidity ratio measures the ability of the firm to meet its obligations. but it increase in 2008 and 2009.02 1 0.052626 1.

Here industry average is 1.70 0. It is essential for a company to realize its ability to pay the short-term obligation.4 0.obligation.8 0.829059 2008 0. Quick ratio is most important measure of liquidity than the current ratio. From 2005 to 2009 their quick ratio is around industry average.Inventory) / Current Liabilities 2005 Jamuna Oil Padma oil 1 0. It shows that Jamuna oil has unused liquidate current asset that they don’t manage. It may be sell inventory to meet short term debt.2 0.49 0. 2.89995 2009 0.5 0. So their ability to payoff short term obligations without relaying on inventory is important. Because inventories which are the least liquid of the current assets from the ratio.792497 Industry . But Jamuna oil is below industry average. On the other hand Jamuna oil should manage their unused resources. Recommendation: Here Padma oil is in danger position. But here shown that in padma oil is better in their position. without knowing on the sales of inventory because they are the assets on which losses are mostly in the event of liquidation.84 Inventory are typically the lest liquide of a firms current asset.7 0.6 0.32 0.846587 0.9 0. but Padma oil above in 2008and 2009.3 0.1 0 2005 2006 2007 2008 2009 Industry Jamuna Oil Padma oil 2006 0.60 0. Quick ratio = (Current assets .1. 7 . If they stay in this situation they may loss their supplier and creditors.875784 2007 0.64 0. Inventory the major part of their current asset which less liquide. So their ability to pay short term obligation is in very bad situation.

18641 Industry 2.21740391 0. But both of this company’s inventory turnover ratios are below industry average.201320621 0.5 2 1. Inventory turnover = Cost of goods sold / inventory average 2005 Jamuna oil Padma Oil 3 2.11533144 0. their interest expenses will be too high and profit will be reduce. 1. On the other hand if the asset is too low profitable sales may be lost. So having the proper level of each type of asset is important.150333 Comparing this two company Padma oil is in better position than jamuna oil.095142645 0. but Jamuna oil should manage their current asset. Its ratio indicates how many periods it is needed to twist inventory of sales on a standard. If the company have too many assets.129162 2008 0. This suggests that till now they holding 8 .82 0. B) Asset management turnover ratio Asset management ratios measure how effectively the firm is managing its assets.234145 2007 0.Recommendation: Here Padma oil will manage their current asset and current liability and inventory like previous year. In 2006 and 2008 padma oil properly manages their inventory then other year.5 1 0. they also increase their other current asset rather than inventory. It may be they use JIT( just in time) method for managing their inventory.129294211 0. Padma oil Ltd utilizes their inventory properly.231406 2009 0. Inventory turnover ratio The liquidity of the company’s register can be considered by this ratio.5 0 2005 2006 2007 2008 2009 Indus try Jam una oil P adm a O il 2006 0.

280758 9 .661825 1. 2. But here industry average is high cause in fuel and power sector mainly include Desco.too much inventory.618835 1. Fixed assets turn over ratio Fixed asset turn over ratio measures how effectively the firm uses its plant and equipment. Fixed assets turn over ratio= sales/ Net fixed asset 2005 Jamuna oil Padma Oil 3. Excess inventory is may be unproductive.96 2.61 1.492187 1.32 1.89 1.5 3 2. which are produce and supply electricity and there inventory is too low.5 1 0. and it represents low or zero rate of return. power grid etc.5 0 2005 2006 2007 2008 2009 Industry Jamuna oil Padma Oil 2006 2007 2008 2009 Industry 3 0.19 2.5 2 1. Recommendation: Both of this two company should manage their inventory.478415 1.

1 4 60. In 2009 Jamuna oil’s ratio reduce cause their sales decrease largely. But both of this two company stay below industry average. Total asset turn over ratio: Total asset turn over ratio measures the turnover or utilization of all the firms’ assets. If Jamuna oil don’t sell Previous fuel they should invest their unused fixed asset in other sector. Recommendation: Here Padma oil is comparatively better position then Jamuna oil. 3.Here Padma oil and Jamuna oil manage their plant and equipment properly Till 2008. So Jamuna Oil Company should proper use their fixed asset.22754 0 63. If we compare with and old firm and a new firm so their ratio must be vary from company to company.8 2008 7. Cause in this year they don’t import and sale any LDO (Light diesel oil) and they sell less FO( Fuel Oil).43646 2006 2007 6. There is a problem exists that is all asset except cash and accounts receivable reflect the historical cost of the asset and inflation.25766 2009 5.29242 7. But in 2009 their Fixed asset turnover ratio reduce then previous year.20 53.98 59. Total asset turn over ratio= Sales/ Total asset 2005 Jamuna Oil Padma oil 6.59 69.80873 Industry 45 80 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 Industry Jamuna Oil Padma oil 10 .

114513279 0. Recommendation: Here Jamuna oil should increase their current asset and utilize their Total asset properly.1590312 0. It include both current liability and longterm debt. Padma oil has higher current asset then their fixed asset.942772 2006 0.961707 2008 0. C) Debt Management Ratio A firm uses debt financing or financial leverage. Here Padma oil Use their asset properly.11194456 0.raising funds through debt. This graph shows that Jamuna oil mainly uses their fixed asset and their current asset is lower than Padma oil.115595922 0. firm earn more on investment and pay interest and it is in favorable leverage.952684 2009 0.935046 Industry .95048 2007 0. Debt ratio: Debt ratio measures the percentage of total funds provided by creditors.45 11 . has important implication such as.152010247 0.Here comparatively Padma oil is used their Total asset then Jamuna oil. Debt ratio= total liability/total assets 2005 Jamuna Oil Padma oil 0. creditors look to the equity.

9995226 28.00653256 24.4 0.8 0.909689561 16. Jamuna oil should increase more financial leverage by increasing debt. On the other hand Padma oil debt ratio is too high means they use more debt for their operational activity. Comparing with industry average Jamuna oil is lower than industry average and Padma oil is lower than industry average.6635858 46.38013 2006 26.2 0 2005 2006 2007 2008 2009 Industry Jamuna Oil Padma oil Here Jamuna oil debt ratio is around 11% in 2005-2007. Profit Margin: This ratio measures income per Taka of sales.1. It says that Investing in Padma oil is risk and investing in Jamuna oil is less profitable.6 0.16931 Industry 55 12 .62093 2007 46.1767 2008 61. 1. but in 2008and 2009 they increase their general reserve which increase their debt ratio from 11% to 15%. D) Profitability Ratio Profitability ratios go on to show the combined effect of liquidity. It is risky for the organization. Recommendation: Here Padma oil should reduce this higher debt for reducing risky position.30470301 20.52961 2009 77.2 1 0. asset management and debt on operating results. In this situation Padma oil fall in difficulty to borrow additional funds without raising more equity capita. Profit Margin = Net Income/ Sales 2005 Jamuna Oil Padma oil 0.

Recommendation: Jamuna oil is perfect in their situation but they should reduce their Loan and debt.84557384 21.41107 44.838937 24.6163531 34.47344494 19.94412 2009 33. It says that both of those company done better than previous year. but their ratio is comparatively high.90966 2008 43. Basic Earning power ratio: This ratio shows the raw earning power of the firms assets. As an investor point of view Jamuna oil is in batter position than Padma oil. Here Jamuna oil use more debt then Padma oil. On the other hand Padma oil will manage their operational and other production cost.20349 Industry 45 13 . It occurs high interest cost. 2. Here it may happened that Jamuna oil reduce their operating cost. Basic Earning power ratio= EBIT/ Total Asset 2005 2006 2007 Jamuna Oil Padma oil 0.90 80 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 Industry Jamuna Oil Padma oil In Jamuna Oil Company Ltd. But comparatively Profit earning ratio of Jamuna oil is better than Padma oil. before the influence of taxes and leverage. Here Jamuna oil also take higher return by using financial leverage. Padma oil can not reduce their costing as much they want. And Padma oil Ltd Profit Margin has increased every year. Here Comparing with industry average Jamuna oil is in better position.96993 34.77 13.

00 0. It shows that their earning power of their asset is utilize properly.65808 Industry 5 14 .56518 2006 2.06 0.95 0.706898 2007 3.50 45 40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 Indus try Jam una O il P adm a oil Here Jamuna oil BEP is too low in 2005 because they pay 59251279tk Interest to BPC. Comparing with industry Jamuna oil is in good position in 2007 and 2008 but in 2009 they fall down cause of dividend income. Return on total asset: This ratio measures the return on total assets after interest and taxes.13 0. Padma oil’s earning power is increasing slightly every year. In 2008 Jamuna oil kept 10524000 taka for dividend income but in 2009 they don’t have any dividend income. In 2006 and 2007 their earning power is good. Return on total asset= Net Income/ Total asset 2005 Jamuna Oil Padma oil 0. 3.04 1.861641 2009 4. In 2008 they keep more Participation & Welfare Funds so their Earning power is reduce slightly. Recommendation: Jamuna oil should reduce dividend income and Padma oil should increase their use of financial leverage.587292 2008 4. Padma oil’s Earning power of their asset is poor than industry.

037187289 35.71929825 53. Generally P/E ratios are higher for firms with high growth prospects but P/E are lower for riskier firms. Comparing with Industry Jamuna oil is in good position but Padma oil should utilize their asset management. average use of debt which cause its interest payment to be high and low profit margin on sales. Recommendation: Although Jamuna oil get financial leverage facility from loan but they should look at the interest payment. In 2009 they pay high tax paid and there is no dividend income so it reduce the ratio than previous year.6 5 4 3 2 1 0 2005 2006 2007 2008 2009 Industry Jamuna Oil Padma oil Here Jamuna oil paid high interest to BPC in 2005 so their Net income was reduced and return on total asset was too low. Price Earning: It shows that how many times earnings investors are willing to pay for the stock.1267606 17. 4.4095 2009 22. In 2007 they pay high tax. So they reduce cost to increase profit. In Padma oil their performance is average from 2005to 2009 excluding 2007. If it is compared between Jamuna oil and Padma oil its is shown that Padma oil utilization of total assets is too low. In 2006. 2005 Jamuna Oil Padma oil 87.54404 2007 4. 2008 they manage their costing and increase their net income.62535 2008 21. Price Earning= Market price per share/Earning per share.89391 2006 5. 2007.1030043 21.294681203 25.68439 Industry 56 15 . Here Padma oil should not utilize their total asset properly and there is low profit margin on sales.

So it goes in danger situation. Otherwise they loose investors.71 for taka 1 of Jamuna oils earning. Padma oil should increase their current ratio other wise they loose their suppliers.71 shows that investors are paying 87. But comparing with industry both of this company consist lower P/E ratio which said that both of this are in riskier situation. But Jamuna oil should manage their unused resources. 16 . It occurs that this year their EPS is too low. In 2008 and 2009 their P/E ratio is better than previous year because their share price is relatively high. So both organizations can increase their market price per share by giving dividend. Most of the ratio is favorable in Jamuna oil. Conclusion: Based of all ratio it is said that Jamuna oil is in profitable situation. It is less risky but invest in Padma oil is less profitable. Recommendation: Jamuna oil doesn’t pay any dividend till now. In 2006. 2007 it is too low because Their EPS is around their market price per share. On the other hand Padma oils EPS is increasing every year but their market price is not increase in that way.100 90 80 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 Industry Jamuna Oil Padma oil Here in Jamuna oil P/E ratio 87. But this organization is in risky for using more debt. On the other hand Padma oil uses less debt in their organization.

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