Analysis of Financial Statements of Ceme PDF

The University of Dhaka
Term Paper on
Analysis of Financial Statements of Cement

Industry listed at Dhaka Stock Exchange
Submitted To:
Dr. Mohammed Mehadi Masud Mozumder, ACMA
Assistant Professor, EMBA Program,
Accounting Information System Department
Faculty of Business Studies,
University Of Dhaka
Prepared By:
Name ID
Md. Ashikur Rahman Mawon 113 24 003
Md. Mamunur Rashid 113 24 032
Nipon Sarker 113 25 036
Al Amin Redwanur Rahman 113 25 043
Hasin Abrar 113 26 020
Avi Ghosh 113 26 024
Date of Submission: July 31, 2015

LETTER OF TRANSMITTAL
31 July 2015
Dr. Mohammed Mehadi Masud Mozumder, ACMA

Asst. Professor,
EMBA Program, AIS Department,
Faculty of Business Studies,
University of Dhaka.
Subject: Submission of term paper on “Analysis of Financial Statements of Cement

Industry listed at Dhaka Stock Exchange”.
Dear Sir,
As part of the requirement of EMBA from Accounting Information System department

under Faculty of Business of Dhaka University, we are pleased to submit our term paper
on the topic “Analysis of Financial Statements of Cement Industry listed at Dhaka Stock
Exchange”. The report is prepared based on our learning at MBA and information
collected from financial statements of the cement companies listed at Dhaka stock
exchange and other secondary source of data.
The report mainly focused on accounting analysis and financial statements analysis using
various analysis tools like ratio analysis, common size analysis, DuPont analysis, Z score
analysis and cash flow analysis. It was really exciting to work on such a topic. The paper
gave us an opportunity to match our theoretical knowledge with the practical use.
We sincerely hope that you will find the report satisfactory and we shall be most obliged
to clarify and defend our report.
Sincerely,
_________________________________ _______________________________ ________________________________

Md. Ashikur Rahman Mawon Md. Mamunur Rashid Nipon Sarker
_________________________________ _______________________________ ________________________________

Al Amin Redwanur Rahman Hasin Abrar Avi Ghosh
i
Preface
ORIGIN OF THE REPORT
This term paper is prepared to fulfill the requirement for the completion of the Master
of Business Administration (MBA) from Accounting Information System. The term
paper is carried on to provide the students an opportunity to match the theoretical
concepts with the real life situation. I was assigned to prepare the report on the topic
“Analysis of Financial Statements of Cement Industry listed at Dhaka Stock
Exchange” under the supervision and guidance of Dr. Mohammed Mehadi Masud
Mozumder, ACMA, Assistant professor of AIS Department, Faculty of Business Studies,
and University of Dhaka. We were required to analyze and interpret the financial
statements of the cement companies listed at Dhaka stock exchange and conduct
accounting analysis and financial statements analysis using various analysis tools. This
report also includes an overview of the cement industry, strengths, weaknesses,
opportunities, threats and competitive analysis of the cement industry in Bangladesh.
OBJECTIVES OF THE REPORT

Objectives of this report are
To provide an overview of the cement industry in Bangladesh.
To analyse the financial performance of the companies listed at DSE.
To analyse the liquidity position, asset utilization capability & efficiencies.
To identify and suggest a suitable investment opportunity for investors.
SCOPE OF THE REPORT

The report gives a narrative overview of the cement industry in Bangladesh. This report
deals with the analysis of financial statements of the cement companies listed in Dhaka
Stock Exchange.
ii
TYPES AND SOURCES OF INFORMATION
To write the term paper, we have to use our theoretical knowledge with the practice
use. In order to complete our paper, we had to use secondary information. Sources of
secondary information was mainly the Financial Statements of the Cement companies of
listed at Dhaka Stock Exchange. Also it was required to review my theoretical
knowledge and matching the knowledge with practice. Other sources of secondary
information includes text books, websites, newspapers, business magazines and books
and write ups on the topic by of prominent authors.
LIMITATION
While preparing this term paper, we have faced time limitation. For that reason there
might be grammatical and spelling mistakes. Also there may be theories which are for
focused or may not be highlighted properly. If there was more time, the report could be
more organized and more meaningful.
ACKNOWLEDGEMENT
At first we would like to express our gratitude to almighty Allah who has given us the
opportunity to go through the total process of writing a report in this regard.
We like to thank all our friends who have helped us in preparing and planning for this
study. We also like to acknowledge our deepest gratitude to the our course instructor
Dr. Mohammed Mehadi Masud Mozumder, ACMA, Asst. professor of AIS Department,
Faculty of Business Studies, and University of Dhaka, who provided valuable instruction
to us.
iii
Contents
1. Executive Summary.............................................................................................................................. 1
2. Introduction ............................................................................................................................................ 2
3. Industry Overview ................................................................................................................................ 2
4. Accounting Analysis ........................................................................................................................... 10
5. Common Size Analysis of Financial Statements ...................................................................... 13
6. Comparison of Company Performance through Ratio.......................................................... 15
7. Year-wise comparison of Company Performances ................................................................ 41
8. Factor DuPont Analysis .................................................................................................................... 84
9. Cash Flow Analysis: ............................................................................................................................ 86
10. Z-Score Analysis: ................................................................................................................................. 90
11. Findings, Recommendations & Conclusion ............................................................................... 93
12. Bibliography .......................................................................................................................................... 95
1. Executive Summary
Cement Industry in Bangladesh plays a vital role in the development sector of Bangladesh
as well as the home development industry. This suggest that Cement Companies face high
demand in Bangladesh to meet, as well as the need in foreign country. Government gave
permission for establishing cement industries in Bangladesh in FY1995. Currently 123
companies are registered as cement manufacturers in the country and only 7 has been
listed in the stock exchange.
Industry overview has resulted that cement industry being a highly capital intensive
market required huge demand to meet its demand, and mostly the housing developers
owned the companies. And the market is dominant Shah Cement, a local company.
To measure the performance of the listed companies, detail financial statements analysis
has been made for the evaluation and is aligned with BAS and BFRS. Data has been taken
from previous 5 years (2010-2014) and analysis like common sized analysis, ratio
analysis: profitability, liquidity, activity, leverage and market ratios; which helps to
analyze with the industry benchmark. This helps to measure the performance from
company to company at particular year, or a same company with different years.
Cash Flow Analysis has been presented to analyze the movement of cash flows of the
company and whether they are utilizing the money in the proper manner. Cash flow
analysis deals with the timing, sources, amount of cash inflows/outflows of a firm or an
investment. Cash flow analysis can also help an investor in assessing the firm or
investment’s strength to generate in generating cash internally. It will indicate ability to
generate cash to meet its obligations.
Moreover, alternatively, Altman Z-scores is used as analytical tools which Investors can
use in determining whether they should buy or sell a particular stock if they're concerned
about the underlying company's financial strength as well as risks. Other than Lafarge
Surma Cement Ltd. and Heidelberg Cement Ltd., Z-score of all companies have decreased
to gray zone.
All it suggest that for a risk averse investor, Heidelberg cement and Lafarge Shurma
cement is favorable, but can invest Aramit Cement if the investor is risk lover. Higher
required return will indicate the risk premium for bearing the risk of bankruptcy.
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2. Introduction
In the current world, number of people are increasing. World is facing problem in
accommodating all these people. Therefore, there have been a gradual substitution of
traditional building structures or patterns by modern high-rise ones which has pushed
up the use of cement. A faster growth in demand for cement has been observed only since
mid-1980s, especially with implementation of large infrastructure projects, increased
pace of urbanization, construction of apartment buildings and multistoried shopping
complexes in urban areas and a shift in the taste of rural people for modern houses.
3. Industry Overview
Development of cement industry in Bangladesh dates back to the early-fifties but its
growth in real sense started only about a decade. The country has been experiencing an
upsurge in cement consumption for the last five years. Government gave permission for
establishing cement industries in Bangladesh in FY1995. Initially the cement industry
took place without the proper analysis of the demand and supply of cement in the
country. Within the span of the two to three years, industry attained expanded capacity
of the product with stable growth rate of consumption. There were mainly four dominant
players in the cement industry in the year 1998 that produced their own cement to meet
the demand of their customers. These companies were:
 Meghna Cement (owned by Bashundhara group)
 Eastern Cement (currently known as Seven Horse)
 Chatok Cement
 Chittagong Cement (taken over by Heidelberg where the local brand is called
Ruby)
Currently 123 companies are listed as cement manufacturers in the country. Out of these
123 companies, 63 have actual production capacity while about 30 do not have any
production at all. Bangladesh Cement Industry has been observing stable growth in last
three years driven by steady pace of urbanization and construction of large infrastructure
projects. At present, installed capacity of the Bangladesh Cement Industry is about 25 Mn
MT, whereas demand for cement is about 15 Mn MT. And, the total market size is nearly
US$1.74 bn. Average capacity utilization rate is 65%-75% and some of the renowned
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companies are producing at more than 100% capacity utilization level through sub-
contract.
Bangladesh cement industry is known for its seasonality which can be as high as 50%.
Cement demand declines during the monsoons due to a slowdown in construction
activities. On the other hand, though the yearly capacity of the industry is saturated with
overcapacity, market demand gets matched or cross the effective capacity during the first
5 to 6 months of the year.
Table: Industry Demand and Production
Page 3 of 96
Figure: Industry Demand and Production
Industry is oligopoly in nature where top ten players are alone controlling over 85% of
the total industry capacity and have pricing control. Local dominance still prevailed in the
industry as six out of top ten are local cement manufacturers.
Figure: Market shares based on company’s origin

In addition, the cement industry, like most capital-intensive commodity industries, is
cyclical in nature with respect to supply. Given the high gestation period of 24-30 months,
there is a time lag between capacity build-up and cement demand. Cement demand is
closely linked to the growth of the construction sector. Hence, when the construction
sector is strong, demand increases. As a result, the profitability rises, leading to capacity
additions by existing players and the entry of new players. However, since it takes 2 -2.5
Page 4 of 96
years to build a cement plant, it is likely that before completion, demand could decrease
or stagnate, or the capacity additions could exceed demand. This can lead to a fall in
cement prices, and the industry could face a downturn, leading to reducing operating
rates or shutting down capacities.
Figure: Market for Cement Industry
Cement market are mostly dominated by the individual house builders who consists of
60% of the total market. Government and governmental organizations are the second
largest customer group of the cement companies. Government of Bangladesh consumes
almost 30% of the cement produced by the cement companies. Government uses these
cements in infrastructure development projects.
Page 5 of 96
The Product Life Cycle
The product life cycle model can help to analyze the different maturity stages of a product
or an industry. In the diagram above, it can be seen that the cement industry of
Bangladesh is currently in the Growth stage of the product life cycle. According to this
diagram, the facts related to the cement industry of Bangladesh can be related. At present,
the sales of cement are increasing due to an enormous demand for cement in both the
local and foreign markets. Moreover, the competitors in this industry are also increasing
day by day although some smaller companies are shutting down but the bigger
companies are getting bigger and competing with the existing players in the market.
There is also a huge prospect for more growth of these companies and the industry itself
in the near future. Thus, the product of the company (cement produced by PMCL) and
also the whole cement industry in Bangladesh is at the growth stage.
Figure: Cement Industry life cycle
It has been predicted by the analysts of the industry that in the long run; around the year
of 2050, concrete /cement structures are likely to be replaced by steel structures. These
predictions has been made based on a number of confidential information and also by
observing the trends of infrastructural development in other developed and/or
developing countries in the world. However, according to them, this prediction does not
pose much threat to the cement companies of the country as there is still a lot of time left
in hand and whereas these companies have a long way to go.
Page 6 of 96
SWOT Analysis
A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to
evaluate the strengths, weaknesses, opportunities and threats involved in a project or in
a business venture. A SWOT analysis can be carried out for a product, place, industry or
person. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable to achieve
that objective.
This analysis helps to make strategy regarding converting weakness into strengths and
converting threats to opportunities. For the purpose of this project, SWOT analysis has
been conducted on the industry in order to evaluate the strengths, weakness,
opportunities and threats of the industry. SWOT analysis of Bangladesh’s cement
industry is given below:
Strengths Weaknesses
 High selling price of the product and  High price of fuel and power shortage
profitability levels; problem;
 Taxes and restrictions set on imported  Significantly increasing production and
cement; transportation costs;
 Natural hedge from outside competition  Increasing raw material cost;
arising from high transportation costs;  Most of the raw materials are imported
 Capital-intensive industry with long so the supplier of raw materials enjoys
construction periods, creating natural high bargaining power.
barrier to new entrants;
 Government incentive to domestic
cement manufacturers;
 There is no Substitute for Cement. Steel
can be used in construction but in
limited extent due to its high cost.
Page 7 of 96
Opportunities Threats
 Construction boom in both domestic and  Several capacity upgrades are planned,
international markets countries that is raising the possibility of oversupply
expected to continue in the short to situation;
medium term;  Increased competition in local markets;
 Possible entry of multinational  Fragmented regional industry with no
companies, increasing efficiency and economies of scale;
opening new export routes;  Environmental threat;
 Private sector may get interested to  Unstable political situation;
invest in real estate for getting tax  Price Hike/ Maintaining Substantial
advantages of their undeclared funds; Price.
 Lower bargaining power of the end
users.
Page 8 of 96
Competitive Analysis Using Porter’s Five Forces Model
Porter five forces analysis is a framework to analyze the level of competition within an
industry and business strategy development. It draws upon industrial organization
economics to derive five forces that determine the competitive intensity and therefore
attractiveness of an Industry.
Attractiveness in this context refers to the overall industry profitability. An "unattractive"
industry is one in which the combination of these five forces acts to drive down overall
profitability. A very unattractive industry would be one approaching "pure competition",
in which available profits for all firms are driven to normal profit.
New
Entrent Porter five forces analysis considers 5
economic factors. They are:
Suppliers Customer
 Threats of new entrant
Industry
Power Rivalry Power
 Bargaining power of suppliers
 Bargaining power of customers
 Availability of substitute product
Substitute  Rivalry among existing competitors.
Product
Figure: Porter’s Five Forces Model
Analysis of Porter’s Five Forces model on Cement industry is given below:

1. Threats of New Entrants
Low threats of new entrants due to Capital-intensive industry with long construction
periods. However, anyone with huge volume with cash may enter in to the market.
2. Bargaining Powers of the Suppliers:

Moderately high bargaining powers of the suppliers. Our cement industry depends on
imported raw materials. Currently international price of clinker is stable. But any kind
of volatility in its price remained a concern.
Page 9 of 96
3. Bargaining Powers of the Buyers
Individual households and end users have lower bargaining power. However,
corporate customers may exert power over the cement companies.
4. Rivalry among the existing competitors

Industry is oligopoly in nature where top ten players are alone controlling over 85%
of the total industry capacity and have pricing control.
5. Threats of Substitutes
There is no Substitute for Cement. Steel can be used in construction but in limited
extent due to its high cost.
It is important for investors to analyze the financial statements, investor needs to

understand the accounting and the reporting system of the companies.
4. Accounting Analysis
In order to make an analysis of financial statements, the audited financial statements and
the related notes and disclosures of all the listed cement companies of Bangladesh from
the year 2010 to 2014 has been reviewed and analyzed. From the analysis, the following
issues were observed:
 These financial statements have been prepared on accrual basis following going
concern concept under historical cost convention as modified to include the
revaluation of property, plant and equipment, initial recognition of financial
instruments at fair value and the gratuity scheme which was measured based on
actuarial valuation.
 The Company recognizes expenses in profit or loss account by function as per BAS-
1: Presentation of Financial Statements.
 All the companies during the period under analysis were consistently complied
with the applicable international financial reporting standards as adopted in
Bangladesh by The Institute of Chartered Accountants of Bangladesh (ICAB); to
Page 10 of 96
record, prepare and report the financial and significant non-financial price
sensitive information.
 In preparing the financial statements, all the companies complied with the
provisions of the following acts, ordinances and rules-
 The Companies Act 1994

 The Securities and Exchange Rules, 1987
 The Securities & Exchange Ordinance, 1969
 The Income Tax Ordinance, 1984
 The Income Tax Rules, 1984
 The Value Added Tax Act, 1991
 The Value Added Tax Rules, 1991
 The Customs Act, 1969.
 The preparation of financial statements requires management to make judgments,

estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the

estimate is revised if the revision affects only that period or in the period of
revision and future periods if the revision affects both current and future periods.
In particular, information about significant areas of estimation and judgments in

applying accounting policies that have the most significant effect on the amount
recognized in the financial statements are described in case of Inventories,
Provision for doubtful debts, Deferred tax liabilities , Trade and other payables
and Provision for income tax.
 The following BAS and BFRS was applied to record, prepare and report the
financial statements of the companies for the period under analysis:
Page 11 of 96
Sl. No. BAS and BFRS Reference
01 BAS 1 Presentation of Financial Statements
02 BAS 2 Inventories
03 BAS 7 Cash Flow Statements
04 BAS 8 Accounting policies, Changes in Accounting Estimates and
Errors
05 BAS 10 Events after the Balance sheet Date
06 BAS 12 Income Taxes
07 BAS 16 Property, Plant and Equipment
08 BAS 18 Revenue
09 BAS 19 Employee Benefits
10 BAS 21 The effects of Changes in Foreign Exchange Rate
11 BAS 23 Borrowing cost
12 BAS 24 Related Party Disclosures
13 BAS 26 Accounting and Reporting by Retirement Benefits Plans
14 BAS 33 Earnings Per Share
15 BAS 37 Provision, Contingent Liabilities and Contingent assets
16 BAS 38 Intangible Assets
Page 12 of 96
5. Common Size Analysis of Financial Statements
A common-size financial statement is simply one that is created to display line items on
a statement as a percentage of one selected or common figure. Creating common-size
financial statements makes it easier to analyze a company over time and compare it with
peers. Following table shows the common size analysis on the balance sheet of the 2014
Financial Statements of the companies in the cement industries.
Assets Confidence Heidelberg Meghna Premier Crown Lafarge Aramit

Trade Receivables 15% 9% 20% 13% 10% 14% 18%
Inventory 8% 10% 19% 13% 6% 8% 8%
Advance, Deposits &
20% 1% 16% 10% 3% 2% 16%
Prepayments
Cash and Cash Equivalents 1% 43% 4% 1% 29% 9% 1%
Total Current Asset 48% 63% 77% 39% 64% 33% 56%
Total Non-Current Asset 52% 37% 23% 61% 35% 67% 44%
Total Assets 100% 100% 100% 100% 100% 100% 100%
Equity & Liabilities
Trade Payables 3% 6% 3% 3% 1% 11% 13%
Total Current Liabilities 35% 27% 64% 51% 39% 23% 61%
Total long term Liabilities 8% 9% 15% 15% 11% 11% 11%
Total Liabilities 43% 36% 79% 66% 50% 34% 72%
Share Capital 9% 6% 6% 11% 13% 58% 18%
Retained Earnings 14% 52% 9% 12% 9% 6% 4%
Total Equity 57% 64% 21% 34% 50% 66% 28%
The table above shows that Heidelberg and Crown has the lowest trade receivables. All
the companies have inventories of around 10%. However Meghna cement had inventory
which is 19% which is higher than all other companies in the industry. The table above
also shows that Heidelberg, Crown and Lafarge have very minimum level of advances
compared to other companies.
Common size analysis table shows that Heidelberg and crown cement have very high cash
position. This means that they could have strong cash position or they have idle money
left behind. Comparing the information on the table, it appears that Meghna cement has
highest level of gearing level of 79%. Whereas Lafarge has lowest level of gearing of 34%.
Crown cement has debt to equity ratio of 50:50.
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Credit Sales / Revenue 100% 100% 100% 100% 100% 100% 100%
Cost of Sales / Revenue 83% 81% 88% 83% 84% 61% 76%
Gross Profit 17% 19% 12% 17% 16% 39% 24%
Operating Income (EBIT) 12% 12% 9% 15% 12% 33% 19%
Non-Operating Income 0% 0% 0% 2% 1% 0% 0%
Interest Expenses / (income) 1% -4% 5% 5% -1% 3% 17%
Income Before Tax ( EBT) 10% 16% 4% 9% 11% 31% 3%
Tax Expense 4% 5% 1% 2% 3% 6% 0%
Profit After Tax (EAT) 7% 11% 3% 7% 8% 24% 2%
The table above shows that most that companies have cost of goods sold are around 80%
whereas Lafarge has COS of 61% and Aramit has 76%. Therefore they have the highest
rate of gross profit. Meghna has lowest level of operating profit margin on 9% whereas
Lafarge has 33% operating profit margin. Clearly Lafarge has outperforming rest of the
companies. The table also shows that Lafarge has the highest level of profit before tax and
profit after tax in the industry. Whereas Meghna Cement has lowest level of before tax
and after tax profit.
Page 14 of 96
6. Comparison of Company Performance through Ratio
Liquidity Ratios
1. Current Ratio:
Current ratio is mainly used to give an idea of the company's ability to pay back its short-
term liabilities (debt and payables) with its short-term assets (cash, inventory,
receivables). The higher the current ratio, the more capable the company is of paying its
obligations. A ratio under 1 suggests that the company would be unable to pay off its
obligations if they came due at that point. This ratio is similar to the acid-test ratio except
that the acid-test ratio does not include inventory and prepaid as assets that can be
liquidated.
In 2014 the industry average was 1.40 for Cement industry where 03 companies got
higher current ration than industry average. The highest current ratio was 2.33 for
Heidelberg Cement Ltd. followed by 1.66 for M. I. Cement Factory Ltd., 1.42 for Lafarge
Surma Cement Ltd., 1.39 by Confidence Cement Ltd. and 1.20 for Meghna Cement Ltd.
Heidelberg’s Current ratio is 0.93 higher than the industry average. The lowest current
ratio was 0.77 for Premier Cement Ltd. followed by 0.92 for Aramit Cement Ltd. However,
Confidence Cement Ltd. & Lafarge Surma Cement Ltd. are most nearest to the industry
average.
2. Quick Ratio:
Quick Ratio is an indicator of a company’s short-term liquidity. The quick ratio measures
a company’s ability to meet its short-term obligations with its most liquid assets. The
quick ratio measures the dollar amount of liquid assets available for each dollar of current
liabilities.
In 2014 the industry average Quick ratio was 0.97 in Cement industry. The highest ratio
of 1.93 was for Heidelberg Cement Ltd. which is almost double than the industry average.
However, M. I. Cement Factory Ltd. got the 2nd highest Quick ratio of 1.43 followed by 1.01
for Lafarge Surma Cement Ltd., 0.65 for Meghna Cement Ltd. and 0.58 by Confidence
Cement Ltd. The lowest Quick ratio in 2014 was 0.33 by Premier Cement Ltd. followed by
0.53 for Aramit Cement Ltd.
3. Cash Ratio:
Cash ratio measures a company's total cash and cash equivalents to its current liabilities.
The cash ratio is most commonly used as a measure of company liquidity. It can therefore
determine if, and how quickly, the company can repay its short-term debt. A strong cash
ratio is useful to creditors when deciding how much debt, if any, they would be willing to
extend to the asking party. The cash ratio is generally a more conservative look at a
company's ability to cover its liabilities than many other liquidity ratios.
Page 15 of 96
In 2014 the industry average Cash ratio was 0.48 in Cement industry. The highest ratio
of 1.57 was for Heidelberg Cement Ltd. which is almost triple than the industry average.
However, M. I. Cement Factory Ltd. got the 2nd highest Cash ratio of 0.74 followed by 0.41
for Lafarge Surma Cement Ltd., 0.06 for Meghna Cement Ltd. and 0.04 by Confidence
Cement Ltd. The lowest Cash ratio in 2014 was 0.03 by Premier Cement Ltd. followed by
0.01 for Aramit Cement Ltd.
Profitability Ratios
1. Gross Profit Margin:

Gross Profit Margin is a financial metric used to assess a firm's financial health by
revealing the proportion of money left over from revenues after accounting for the cost
of goods sold. Gross profit margin serves as the source for paying additional expenses and
future savings. The gross margin is not an exact estimate of the company's pricing
strategy but it does give a good indication of financial health. Without an adequate gross
margin, a company will be unable to pay its operating and other expenses and build for
the future. In general, a company's gross profit margin should be stable. It should not
fluctuate much from one period to another, unless the industry it is in has been
undergoing drastic changes which will affect the costs of goods sold or pricing policies.
In 2014 the industry average Gross Profit Margin was 16.8% in Cement industry. The
highest ratio of 38.6% was for Lafarge Surma Cement Ltd. which is more than double the
industry average. However, Aramit Cement Ltd. got the 2nd highest Gross Profit Margin of
24.0% followed by 19.2% for Heidelberg Cement Ltd., 19.2% for Premier Cement Ltd. and
16.7% by Confidence Cement Ltd. The lowest Gross Profit Margin in 2014 was 15.8% by
M. I. Cement Factory Ltd. followed by 11.9% for Meghna Cement Ltd.
2. Operating Profit Margin:

Operating Profit Margin is a ratio used to measure a company's pricing strategy and
operating efficiency. Operating margin is a measurement of what proportion of a
company's revenue is left over after paying for variable costs of production such as wages,
raw materials, etc. A healthy operating margin is required for a company to be able to pay
for its fixed costs, such as interest on debt. Operating margin gives analysts an idea of how
much a company makes (before interest and taxes) on each taka of sales.
In 2014 the industry average Operating Profit Margin was 12.3% in Cement industry. The
highest ratio of 32.6% was for Lafarge Surma Cement Ltd. which is almost double the
industry average. However, Aramit Cement Ltd. got the 2nd highest Operating Profit
Margin of 19.5% followed by 14.7% for Premier Cement Ltd., 12.4% for Heidelberg
Cement Ltd. and 11.7% by Confidence Cement Ltd and M.I. Cement Factory Ltd. The
lowest Operating Profit Margin in 2014 was9.1% by Meghna Cement Factory Ltd.
Page 16 of 96
3. Net Profit Margin:
Net Profit Margin is the ratio of net profits to revenues for a company or business segment
- typically expressed as a percentage – that shows how much of each dollar earned by the
company is translated into profits. Net margins will vary from company to company, and
certain ranges can be expected from industry to industry, as similar business constraints
exist in each distinct industry.
In 2014 the industry average Net Profit Margin was 7.9% in Cement industry. The highest
ratio of 24.1% was for Lafarge Surma Cement Ltd. which is almost triple the industry
average. However, Heidelberg Cement Ltd. got the 2nd highest Net Profit Margin of 11.2%
followed by 8.4% for M. I. Cement Factory Ltd., 6.8% for Premier Cement Ltd. and 5.1%
by Confidence Cement Ltd. The lowest Net Profit Margin in 2014 was 2.4% by Aramit
Cement Factory Ltd. followed by 2.7% for Meghna Cement Ltd.
4. Return on Asset:
Return on Asset is an indicator of how profitable a company is relative to its total assets.
ROA gives an idea as to how efficient management is at using its assets to generate
earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is
displayed as a percentage. Sometimes this is referred to as "return on investment". ROA
tells you what earnings were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. This is
why when using ROA as a comparative measure, it is best to compare it against a
company's previous ROA numbers or the ROA of a similar company. The assets of the
company are comprised of both debt and equity. Both of these types of financing are used
to fund the operations of the company. The ROA figure gives investors an idea of how
effectively the company is converting the money it has to invest into net income. The
higher the ROA number, the better, because the company is earning more money on less
investment.
In 2014 the industry average Return on Asset was 6.8% in Cement industry. The highest
ratio of 14.3% was for Lafarge Surma Cement Ltd. which is double than the industry
average. However, Heidelberg Cement Ltd. got the 2nd highest Return on Asset of 11.3%
followed by 6.4% for M. I. Cement Factory Ltd., 5.6% for Premier Cement Ltd. and 3.9%
by Confidence Cement Ltd. The lowest Return on Asset in 2014 was 0.9% by Aramit
Cement Factory Ltd. followed by 2.5% for Meghna Cement Ltd.
5. Return on Equity:
Return on Equity is the amount of net income returned as a percentage of shareholders
equity. Return on equity measures a corporation's profitability by revealing how much
profit a company generates with the money shareholders have invested. The ROE is
useful for comparing the profitability of a company to that of other firms in the same
industry.
Page 17 of 96
In 2014 the industry average Return on Equity was 13.5% in Cement industry. The
highest ratio of 23.0% was for Lafarge Surma Cement Ltd. which is almost double than
the industry average. However, Heidelberg Cement Ltd. got the 2nd highest Return on
Equity of 16.8% followed by 15.6% for Premier Cement Ltd., 12.3% for Meghna Cement
Ltd. and 12.0% by M. I. Cement Factory Ltd. The lowest Return on Equity in 2014 was
3.8% by Aramit Cement Factory Ltd. followed by 6.5% for Confidence Cement Ltd.
6. Return on Capital Employed:

Return on Capital Employed is a financial ratio that measures a company's profitability
and the efficiency with which its capital is employed. “Capital Employed” as shown in the
denominator is the sum of shareholders' equity and debt liabilities; it can be simplified as
(Total Assets – Current Liabilities). Instead of using capital employed at an arbitrary point
in time, analysts and investors often calculate ROCE based on “Average Capital Employed”
which takes the average of opening and closing capital employed for the time period. A
higher ROCE indicates more efficient use of capital. ROCE should be higher than the
company’s capital cost; otherwise it indicates that the company is not employing its
capital effectively and is not generating shareholder value. ROCE is especially useful when
comparing the performance of companies in capital-intensive sectors such as utilities and
telecoms.
In 2014 the industry average Return on Capital Employed was 20.6% in Cement industry.
The highest ratio of 44.2% was for M. I. Cement Factory Ltd. which is more than double
the industry average. However, Lafarge Surma Cement Ltd. got the 2nd highest Return on
Capital Employed of 26.6% followed by 24.6% for Premier Cement Ltd., 21.6% for
Meghna Cement Ltd. and 16.6% by Heidelberg Cement Factory Ltd. The lowest Return on
Capital Employed in 2014 was 9.6% by Aramit Cement Factory Ltd. followed by 10.7%
for Confidence Cement Ltd.
Activity Ratios
1. Asset Turnover Ratio
Asset Turnover ratio shows the amount of sales or revenues generated per dollar of
assets. The Asset Turnover ratio is an indicator of the efficiency with which a company is
deploying its assets. The numerator of the asset turnover ratio formula shows revenues
which is found on a company's income statement and the denominator shows total assets
which is found on a company's balance sheet. Total assets should be averaged over the
period of time that is being evaluated. For example, if a company is using 2009 revenues
in the formula to calculate the asset turnover ratio, then the total assets at the beginning
and end of 2009 should be averaged.
Page 18 of 96
The higher the ratio, the more sales that a company is producing based on its assets. Thus,
a higher ratio would be preferable to a lower one. However, different industries cannot
be compared to one another as the assets required to perform business functions will
vary.
Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.
0.76 1.01 0.92 0.82 0.76 0.59 0.36 0.86
In the above chart of the cement industry in Bangladesh, we found out that Heidelberg
Cement has a better ratio compare to others in the industry, and shows they are using
their assets quite efficiently. However, only 2 companies are above the industry average,
and the rest are performing inefficiently. The most inefficient company to use their assets
is Aramit Cement Company which has a wide deviation from the industry average.
2. Material Turnover Ratio

The inventory turnover formula measures the rate at which inventory is used over a
measurement period. One can use the formula to see if a business has an excessive
inventory investment in comparison to its sales level, which can indicate either
unexpectedly low sales or poor inventory planning. To calculate inventory turnover,
divide the ending inventory figure into the annualized cost of sales. If the ending
inventory figure is not a representative number, then use an average figure instead. The
formula is: Annual cost of goods sold/Inventory

15.65 10.05 16.59 4.84 21.75 5.31 5.68 9.93
Page 19 of 96
The cement industry in Bangladesh has an average of 9.93 times inventory turnover
throughout the year where most of the companies to achieved it. Crown being the highest
inventory turnover shows they keep little amount of inventory on stock and pushes to
sell at their earliest. However 3 companies are below the industry average, and among
them Premier Cement is the lowest in 2014. This shows they took time to convert their
raw materials and need enough space to hold such materials.
3. Days in Storage
A financial measure of a company's performance that gives investors an idea of how long
it takes a company to turn its inventory (including goods that are work in progress, if
applicable) into sales. Generally, the lower (shorter) the DSI the better, but it is important
to note that the average DSI varies from one industry to another.
As with any financial formula, knowing how to compute days in inventory does not imply
the ability to apply deductive reasoning to understand the formula in practice. One issue
to consider with the days in inventory formula is how cost of goods sold and inventory is
calculated. Is one company using LIFO to calculate inventory and another company using
the weighted average method?
The formula is:

23.33 36.34 21.99 75.39 16.78 68.69 64.25 36.76
The cement industry in Bangladesh shows an average of 37 days storage of inventory in

the warehouse, where most of the companies replenish before that time. Only Premier,
Aramit and Lafarge takes time to replenish their stock which shows they might be
incapable to sell their products in time.
Page 20 of 96
4. WIP Turnover Ratio
The work in process turnover formula measures the rate at which work in process
materials is used over a measurement period. One can use the formula to see if a business
has an excessive inventory investment in comparison to its sales level, which can indicate
either unexpectedly low sales or poor inventory planning. To calculate work in process
inventory turnover, divide the ending work in process inventory figure into the
annualized cost of sales. If the ending inventory figure is not a representative number,
then use an average figure instead.

101.68 - 97.09 - 44.52 - 53.92 128.98
This shows the performance of the cement industry in Bangladesh where Confidence and
Megna Cement stack their work-in-process materials very high. They show this as assets
and this includes that most of their materials are converted into semi-finished products.
On the other hand Heidelberg, Premier and Lafarge do not show any work-in-process
material and they try to sell their products and last stage.
5. Days in Factory
This equation is same as days in storage, but just raw materials/ work-in-process
materials are in the factories are included in this calculation.

3.59 - 3.76 - 8.20 - 6.77 2.83
The cement industry shows that only few companies do show their work-in-process
materials and they calculate the ratio along with it. Aramit showing 6.77 time, which is
above the average and they need time to convert their semi-finished to finished goods
more compare to other.
Page 21 of 96
6. Finished Goods Turnover
A ratio showing how many times a company's inventory is sold and replaced over a
period. The days in the period can then be divided by the inventory turnover formula to
calculate the days it takes to sell the inventory on hand or "inventory turnover days."
Although the first calculation is more frequently used, COGS (cost of goods sold) may be
substituted because sales are recorded at market value, while inventories are usually
recorded at cost. Also, average inventory may be used instead of the ending inventory
level to minimize seasonal factors.
This ratio should be compared against industry averages. A low turnover implies poor
sales and, therefore, excess inventory. A high ratio implies either strong sales or
ineffective buying.
High inventory levels are unhealthy because they represent an investment with a rate of
return of zero. It also opens the company up to trouble should prices begin to fall.

- 78.49 6.18 - 61.99 50.80 - 37.07
Only the few companies show their finished goods in the financial statement and hence
we can calculate only for those companies. This show how faster they took time to convert
the finished goods and how quickly they can sell. Heidelberg and Crown cement shows a
promising performance since their turnover is much above the industry average.
7. Days of FG in Inventory
This shows how much time is to sell the finished goods, and this has been used from the
finished goods turnover ratio.
- 4.65 59.02 - 5.89 7.19 - 9.85
Page 22 of 96
Since 4 companies out of 7 shows their finished goods inventory in financial statement,
only those companies ratios could be solved. This shows Lafarge is taking few days to sell
their products and might have a mechanism to push selling. They are at par above their
industry average. The lower the days, the more promising the future.
8. Days in Inventory
The days sales in inventory calculation, also called days inventory outstanding or simply
days in inventory, measures the number of days it will take a company to sell all of its
inventory. In other words, the days sales in inventory ratio shows how many days a
company's current stock of inventory will last.
This is an important to creditors and investors for three main reasons. It measures value,
liquidity, and cash flows. Both investors and creditors want to know how valuable a
company's inventory is. Older, more obsolete inventory is always worth less than current,
fresh inventory. The days sales in inventory shows how fast the company is moving its
inventory. In other words, it shows how fresh the inventory is.
This calculation also shows the liquidity of inventory. Shorter days inventory outstanding
means the company can convert its inventory into cash sooner. In other words, the
inventory is extremely liquid.

26.92 40.99 84.77 75.39 30.87 75.87 71.02 49.43
Page 23 of 96
This shows how much time required to hold the product before selling their products.
The industry average is 49 days, and few companies are operating efficiently in this
mechanism. The lower the days, the better the performance.
9. Receivable Turnover Ratio

An accounting measure used to quantify a firm's effectiveness in extending credit as well
as collecting debts. The receivables turnover ratio is an activity ratio, measuring how
efficiently a firm uses its assets.
Formula:
By maintaining accounts receivable, firms are indirectly extending interest-free loans to

their clients. A high ratio implies either that a company operates on a cash basis or that
its extension of credit and collection of accounts receivable is efficient.
A low ratio implies the company should re-assess its credit policies in order to ensure the
timely collection of imparted credit that is not earning interest for the firm.

4.92 22.07 9.73 11.40 13.67 8.05 1.86 6.75
This shows how quickly they collect the payments from their customer and few of them
could collect within the industry average. However Heidelberg, Premier and Crown are
doing best in their performance as they can repay quicker. Other companies face trouble
and delay with the payments to their supplier.
10. Days Sales outstanding

A measure of the average number of days that a company takes to collect revenue after a
sale has been made. A low DSO number means that it takes a company fewer days to
collect its accounts receivable. A high DSO number shows that a company is selling its
product to customers on credit and taking longer to collect money.
Page 24 of 96
Due to the high importance of cash in running a business, it is in a company's best interest
to collect outstanding receivables as quickly as possible. By quickly turning sales into
cash, a company has the chance to put the cash to use again - ideally, to reinvest and make
more sales. The DSO can be used to determine whether a company is trying to disguise
weak sales, or is generally being ineffective at bringing money in. For most businesses,
DSO is looked at either quarterly or annually.

74.21 16.54 37.52 32.01 26.71 45.34 196.57 54.09
This shows how quickly one get their payment from their customer. The lesser the days,
the better the credit policies for the company. Heidelberg, premier and Crown has better
credit terms with customer. On the other hand, Aramit took long time to get their
payments from the customer, and might have problem with the cash flows.
11. Payable Turnover Ratio

A short-term liquidity measure used to quantify the rate at which a company pays off its
suppliers. Accounts payable turnover ratio is calculated by taking the total purchases
made from suppliers and dividing it by the average accounts payable amount during the
same period.
The measure shows investors how many times per period the company pays its average
payable amount. For example, if the company makes $100 million in purchases from
suppliers in a year and at any given point holds an average accounts payable of $20
million, the accounts payable turnover ratio for the period is 5 ($100 million/$20
million). If the turnover ratio is falling from one period to another, this is a sign that the
company is taking longer to pay off its suppliers than it was before. The opposite is true
when the turnover ratio is increasing, which means that the company is paying of
suppliers at a faster rate.
Page 25 of 96
18.61 13.57 13.15 9.97 48.05 1.16 1.37 15.40
This shows how quickly they can pay off their suppliers. Confidence Heidelberg and
Meghna Cement are quite near to Industry average, but Lafarge and Aramit are far below.
This shows Lafarge and Aramit cannot pay their suppliers on time.
12. Days Payable Outstanding

A company's average payable period. Days payable outstanding tells how long it takes a
company to pay its invoices from trade creditors, such as suppliers. DPO is typically
looked at either quarterly or yearly.
The formula to calculate DPO is written as: ending accounts payable / (cost of
sales/number of days). These numbers are found on the balance sheet and the income
statement.
Companies must strike a delicate balance with DPO. The longer they take to pay their
creditors, the more money the company has on hand, which is good for working capital
and free cash flow. But if the company takes too long to pay its creditors, the creditors
will be unhappy. They may refuse to extend credit in the future, or they may offer less
favorable terms. Also, because some creditors give companies a discount for timely
payments, the company may be paying more than it needs to for its supplies. If cash is
tight, however, the cost of increasing DPO may be less than the cost of foregoing that cash
earlier and having to borrow the shortfall to continue operations.
19.61 26.90 27.75 36.59 7.60 314.70 266.22 23.70
Page 26 of 96
This shows the industry average is 23.70 days to pay the creditors abut Lafarge and
Aramit is taking long time to meet the payments. This is alarming as creditors might now
give them the credit facilities in future and hence they might had to pay off to buy their
raw materials. Other companies are quite closer to industry average which shows
promising future.
Market ratios
Market ratios measure investor response to owning a company's stock and also the cost
of issuing stock. These are concerned with the return on investment for shareholders, and
with the relationship between return and the value of an investment in company’s shares.
1. Market to Book Value Ratio

Market to Book Value is a financial ratio used to compare a company's current market
price to its book value. It is also sometimes known as a P/B ratio. This ratio also gives
some idea of whether an investor is paying too much for what would be left if the
company went bankrupt immediately.
For companies in distress, the book value is usually calculated without the intangible
assets that would have no resale value. In such cases, P/B should also be calculated on a
"diluted" basis, because stock options may well vest on sale of the company or change of
control or firing of management.
The below table shows the Market to Book Value Ratio of different cement companies in
Bangladesh for the year 2014 with the Cement industry average.
1.68 2.77 12.11 1.88 2.25 10.78 2.23 2.69

*the above figures are backed by Excel calculation provided at annexure.
Page 27 of 96
Market to Book Value
14
12
10 12.11
10.78
8
6
4
2
2.77 2.25 2.23 2.69
0 1.68 1.88
Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry
Average
in 2014
FIGURE: MARKET TO BOOK VALUE COMPARATIVES FOR THE YEAR 2014
We know that lower P/B ratio could mean that the stock is undervalued. However, it
could also mean that something is fundamentally wrong with the company. The above
table shows that Confidence Cement Limited has the lowest P/B Ratio (1.68) among the
07 (seven) companies. It is also below than the industry average. However, Confidence
Cement increased its long term asset by 20% which is 33% of the net profit earned in
2013. So this could make a raise in the price of the company and the investor wouldn’t
think that they are paying in a wrong place. On the other hand Meghna Cement Mills
Limited has the highest P/B Ratio (12.11) among the 07 (seven) companies. It is also far
above than the industry average. The financial statement of 2014 shows that the net
income for the year 2014 has decreased around 17% than the previous year and the non-
current assets lost their volume of 10% during 2014. So we can easily predict the P/B
Ratio of 2014 overstated and the investor should reconsider before investing here
considering only the P/B Ratio.
Heidelberg Cement Bangladesh Limited has a good P/B Ratio (2.77) among the 07
(seven) companies. It is also a bit above the industry average (2.69). However Heidelberg
has no growth in the long term assets of the company and its profit has decreased by more
than 5% in 2014. Though the P/B ratio shows a strong position according to the industry
average, the investor should really think before investing about the investment in Long
Term Assets and the growth in net profit figure.
Premier Cement Mills Limited has the second lowest P/B Ratio (1.88) among the 07
(seven) companies. It is also below than the industry average (2.69). Though the P/B
Ratio shows to have a little impact on the value of the company but the financial statement
shows that Premier Cement has invested 11% more on Fixed Assets with almost zero
growth of net income. So the price of the company may not be undervalued rather there
might be something is fundamentally wrong with the company.
Page 28 of 96
M. I. Cement Factory Limited (Crown Cement) has lower P/B Ratio (2.25) than the
industry average. As the investment fixed assets and the net income have not changed in
the year 2014, the P/B Ratio may not be undervalued and it also shows the real picture
of the company.
Lafarge Surma Cement Mills Limited have second highest P/B Ratio (10.78) among the
07 (seven) companies. It is also far above than the industry average. The financial
statement of 2014 shows that the net income for the year 2014 has increased around 3%
than the previous year and the non-current assets lost their volume of 2% during 2014.
So there may be some overstatement in the market price of the company.
For Aramit Cement Limited P/B Ratio is -2.23 which is lower than the industry average.
As the investment fixed assets have increase by 15% with the decrease of around 50% in
net income in the year 2014, the P/B Ratio may not be undervalued and it also shows the
real picture of the company.
2. Dividend Coverage Ratio
Dividend Coverage Ratio is the ratio of company's earnings (net income) over the
dividend paid to shareholders, calculated as net profit or loss attributable to ordinary
shareholders by total ordinary dividend. Dividend Coverage Ratio indicates the capacity
of an organization to pay dividends out of profit attributable to the shareholders. A
dividend cover of 3 implies that a company has sufficient earnings to pay dividends
amounting to 3 times of the present dividend payout during the period.
The below table shows the Dividend Coverage Ratio of different cement companies in

1.93 0.55 2.99 1.61 1.51 4.86 0.45 0.83
Page 29 of 96
Dividend Coverage
6
4.86
5
4
2.99
3
1.93
2 1.61 1.51
0.83
1 0.55 0.45
0
Average
in 2014
FIGURE: COMPARATIVE DIVIDEND COVERAGE RATIO FOR THE YEAR 2014
Dividend Coverage is a measure of the ability of an organization to pay dividends.

Generally, companies would aim to sustain a dividend cover of at least 2 times in order to
avail adequate financing through retained earnings while providing a reasonable cash
return on shareholder's investment. A higher or lower dividend cover may be
appropriate depending on the level of stability in earnings of the organizations.
Dividend cover consistently below 1.5 may suggest that the company might not be able
to maintain the present level of dividends in case of adverse variation in profit in the
future. A high dividend cover may suggest that the company is retaining a higher portion
of its earnings to meet its financing requirements which may result in higher dividend
payouts in the future.
Lafarge Surma Cement Mills Limited has the highest level of Dividend Coverage among
the 07 (seven) companies and also far higher than the industry average. So the company
could dare to pay cash dividend as well as invest in non-current assets for future
protection more than any other company in the industry.
Confidence Cement Limited has a level of Dividend Coverage -1.93 that is double than
the industry average. So the company might not be able to maintain the present level of
dividends in case of adverse variation in profit in the future.
Heidelberg Cement Bangladesh Limited has the second lowest Dividend Coverage
(0.55) among the 07 (seven) companies that is almost half of the industry average. So it
is inappropriate for the company if it wants to finance internally from the retained
earnings and also to declare cash dividend for the stockholders in future.
Page 30 of 96
Meghna Cement Mills Limited has the second highest level of Dividend Coverage (3.99)
among the 07 (seven) companies and also 3.75 times higher than the industry average.
So the company could dare to pay cash dividend as well as finance internally in non-
current assets for future protection more than any other company in the industry.
Premier Cement Mills Limited has Dividend Coverage Ratio of 1.61 which may suggest
that the company might not be able to maintain the present level of dividends in case of
adverse variation in profit in the future. It would have to finance externally for the
investment in non-current assets.
Aramit Cement Limited has the lowest Dividend Coverage (0.45) among the 07 (seven)
companies that is almost half of the industry average. So it is inappropriate for the
company if it wants to finance internally from the retained earnings and also to declare
cash dividend for the stockholders in future.
M. I. Cement Factory Limited (Crown Cement) has Dividend Coverage Ratio of 1.51
which may suggest that the company might not be able to maintain the present level of
dividends in case of adverse variation in profit in the future. It would have to finance
externally for the investment in non-current assets.
3. Dividend Yield
Dividend yield is used to calculate the earnings on investment (shares) considering only
the returns in the form of total dividends declared by the company during the year.
Dividend yield is a way to measure how much cash flow we are getting for each money
invested in an equity. Investors who require a minimum stream of cash flow from their
investment portfolio can secure this cash flow by investing in stocks paying relatively
high, stable dividend yields.
The below table shows the Dividend Yield Ratio of different cement companies in
3% 8% 1% 5% 3% 1% 3% 6%
Dividend Yield
10% 8%
8% 6%
6% 5%
4% 3% 3% 3%
2% 1% 1%
0%
Average
in 2104
Page 31 of 96
However, a lower dividend yield does not imply lower dividends as the price could have
substantially increased. Also, a trend of a declining dividend yield should only warrant
investigation and not an immediate dismissal of the investment.
Heidelberg Cement Bangladesh Limited has the highest Dividend Yield (8%) among the
07 (seven) companies that is more than the industry average of 6%. Though Heidelberg
declared 380% cash dividend per share, it came down to 6% for the effect of the market
price of the share.
Premier Cement Mills Limited has the second highest Dividend Yield Ratio of 5% which
is below industry average of 6%. So the investors may have to reconsider the other ratios
before investing in Premier Cement.
Meghna Cement Mills Limited and Lafarge Surma Cement Mills Limited both have the
lowest Dividend Yield Ratio in the market. So the investors who want direct return on
their investment may not want to invest in these two companies or they should do more
research on that.
Confidence Cement Limited, M. I. Cement Factory Limited (Crown Cement) and Aramit
Cement Limited have same level of Dividend Yield of 3%. So the investor may not want
to invest here if they do not want to get maximum return as cash flows or direct cash
return.
4. Price-Earnings Ratio
Price-Earnings Ratio is a valuation ratio of a company's current share price compared to
its Earning per Share (EPS). In general, a high P/E suggests that investors are expecting
higher earnings growth in the future compared to companies with a lower P/E. Higher
P/E Ratio indicates the investor are anticipating higher growth in the future. However,
the P/E ratio is usually more useful to compare the P/E ratios of one company to other
companies in the same industry. The P/E is sometimes an indicator of how much
investors are willing to pay for every earning.
The below table shows the Price-Earnings Ratio of different cement companies in
20.28 23.92 27.03 12.17 18.94 50.62 76.47 21.80
Page 32 of 96
Price Earning Ratio
90
76.47
80
70
60 50.62
50
40
23.92 27.03
30 20.28 18.94 21.8
20 12.17
10
0
Average
in 2014
FIGURE: PE RATIO COMPARISON FOR THE YEAR 2014
Aramit Cement Limited has the highest Price Earnings Ratio of 76 times among the 07
(seven) companies that is almost 3 times of the industry average. So it is expected that
investors are willing to pay Tk. 76 for the return of each Tk. 1 in case of Aramit Cement.
Lafarge Surma Cement Mills Limited has the second highest level of Price Earnings
Ratio among the 07 (seven) companies and also double than the industry average. So the
investor are nticipating higher growth in the future from the company.
Confidence Cement Limited has a level of Price Earnings Ratio of 20 times that is almost
same as the industry average. So the company might not be able to maintain the present
level of dividends in case of adverse variation in profit in the future.
Heidelberg Cement Bangladesh Limited has a level of Price Earnings Ratio of almost 24
times that is a little above than the industry average. So substantially the investor might
think of growth in near future.
Meghna Cement Mills Limited has a level of Price Earnings Ratio of almost 27 times that
is a little above than the industry average. So substantially the investor might think of
growth in near future.
Premier Cement Mills Limited has the lowest level of Price Earnings Ratio of almost 12
times that is a far below than the industry average. So substantially the investor might
think of getting more return for every investment.
M. I. Cement Factory Limited (Crown Cement) has the second lowest level of Price
Earnings Ratio of almost 12 times among the 7 cement companies that is a far below than
the industry average. So substantially the investor might think of getting more return for
every investment.
Page 33 of 96
Leverage Ratios
A leverage ratio is any one of several financial measurements that look at how much
capital comes in the form of debt (loans), or assesses the ability of a company to meet
financial obligations.
1. Gearing Ratio
It is a general term describing a financial ratio that compares some form of owner's equity
(or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating
the degree to which a firm's activities are funded by owner's funds versus creditor's
funds.
A company with high gearing (high leverage) is more vulnerable to downturns in the
business cycle because the company must continue to service its debt regardless of how
bad sales are. A greater proportion of equity provides a cushion and is seen as a measure
of financial strength.
The below table shows the Gearing Ratio of different cement companies in Bangladesh
for the year 2014 with the Cement industry average.

1.75 1.56 4.84 2.97 2.00 1.51 3.56 2.10
Gearing Ratio
5 4.48
4.5
4 3.56
3.5 2.97
3
2.5 2 2.1
2 1.75
1.56 1.51
1.5
1
0.5
0
Average
in 2014
FIGURE: COMPARISON OF GEARING RATIO FOR 2014.
The more leverage a company has, the riskier that company may be. As with most ratios,
the acceptable level of leverage is determined by comparing ratios of companies in the
same industry.
Page 34 of 96
Meghna Cement Mills Limited has the highest level of Gearing Ratio of almost 4.84 times
and more than double from the industry average. So it reflects that the company can
procure more assets using less volume of equity. It also reflects the credit worthiness of
the company.
Aramit Cement Limited has the second highest Gearing Ratio of 3.56 times among the 07
(seven) companies that is a little below than the industry average. So it is expected that
Aramit bear a good standard of creditworthiness and can procure more assets using
external financing.
Lafarge Surma Cement Mills Limited has the lowest level of Gearing Ratio of 1.51 times
among the 07 (seven) companies and also far below than the industry average. So the
investor might ask questions about the creditworthiness of the company or the company
might want to finance their projects internally.
Confidence Cement Limited has a level of Gearing Ratio of 1.75 times that is below than
the industry average. So investors might consider more ratios to find out the company’s
strategy or financial strengths.
Heidelberg Cement Bangladesh Limited has a second lowest level of Gearing Ratio of
1.56 times that is substantially below than the industry average. So the company might
want to finance their projects internally or there may be some internal problem in the
organization.
Premier Cement Mills Limited has a level of Gearing Ratio of 2.97 times that is a far above
than the industry average. So the company is substantially potential and has the ability to
procure more assets using a little investments from its stockholders.
M. I. Cement Factory Limited (Crown Cement) has a level of Gearing Ratio of almost 2
times among the 7 cement companies that is a little above than the industry average. So
the company is substantially potential for the investors and it poses that it has a capacity
to make a trade-off between the internal financing and the external financing in case of
procuring assets.
2. Long Term Debt to Equity Ratio

In risk analysis, Long Term Debt to Equity Ratio is a way to determine a company's
leverage. This ratio is calculated by taking the company's long-term debt and dividing it
by the total value of its preferred and common stock. The greater a company's leverage,
the higher the ratio. Generally, companies with higher ratios are thought to be more risky
because they have more liabilities and less equity.
Page 35 of 96

0.14 0.13 0.72 0.44 0.23 0.16 0.40 0.24
Long Term Debt to Equity

0.8 0.72
0.6 0.44 0.4
0.4 0.23 0.24
0.14 0.13 0.16
0.2
0
Confidence Hiedelberg Meghna Premier Crown Lafarge Aramit Industry
Average
in 2014
FIGURE: COMPARISON OF LONG TERM DEBT TO EQUITY RATIO FOR 2014.
Meghna Cement Mills Limited has the highest level of Long Term Debt to Equity Ratio of
almost 0.72 times and it is three times of the industry average. So it reflects that the
company has taken high risk in case of financing. It also reflect the strong
creditworthiness of the company but in reality they are less solvent in respect of equity
or they produced less amount of retained earnings to finance their projects.
Premier Cement Mills Limited has the second highest level of Long Term Debt to Equity
Ratio of 0.44 times that is almost double of the industry average. So the company is
substantially potential and has the ability to procure more assets using a little
investments from its stockholders which also brings more risk for the company.
Aramit Cement Limited has a level of Long Term Debt to Equity ratio of 0.40 among the
07 (seven) companies. So it is expected that Aramit bears more risk than the industry
which brings the advantage of producing more assets using external financing.
M. I. Cement Factory Limited (Crown Cement) has a level of Long Term Debt to Equity
Ratio of 0.23 among the 7 cement companies that is almost same as the industry average
of 0.24. So the company is substantially potential for the investors and it poses that it has
a capacity to make a trade-off between the internal financing and the external financing
in case of procuring fixed assets.
Lafarge Surma Cement Mills Limited has a level of Long Term Debt to Equity Ratio of
0.16 among the 07 (seven) companies and it is below than the industry average. So the
investor might have to reconsider before taking decision about its capital structure. It
also indicates that the company is a low risk company and it like to finance internally
rather externally.
Page 36 of 96
Confidence Cement Limited has the second lowest level of Long Term Debt to Equity
Ratio of 0.14 that is far below than the industry average. So investors might think that
the company doesn’t want to increase their risk through externally.
Heidelberg Cement Bangladesh Limited has the lowest level of Long Term Debt to
Equity Ratio of 0.13 among the seven companies that is substantially below than the
industry average. It also reflect that the company has sufficient internal cash flow from
their operation or they have enough in their retained earnings to finance fixed assets.
3. Times Interest Earned Ratio

A metric used to measure a company's ability to meet its debt obligations. It is calculated
by taking a company's earnings before interest and taxes (EBIT) and dividing it by the
total interest payable on bonds and other contractual debt. It is usually quoted as a ratio
and indicates how many times a company can cover its interest charges on a pretax basis.
Failing to meet these obligations could force a company into bankruptcy.
Ensuring interest payments to debt holders and preventing bankruptcy depends mainly
on a company's ability to sustain earnings. However, a high ratio can indicate that a
company has an undesirable lack of debt or is paying down too much debt with earnings
that could be used for other projects. The rationale is that a company would yield greater
returns by investing its earnings into other projects and borrowing at a lower cost of
capital than what it is currently paying to meet its debt obligations.

9.93 (3.01) 1.70 2.93 (14.15) 12.46 1.15 34.47
in 2014
40 34.47
30
20
12.46
9.93
10
1.7 2.93 1.15
0
-10 -3.01
Average
-20 -14.15
in 2014
Page 37 of 96
Lafarge Surma Cement Mills Limited has the highest level of Times Interest Earned
Ratio of 12.46 among the seven companies. It indicates that the company is earning
enough inflows to cover its obligation and they are also able to take more risk. Confidence
Cement Limited has a level of Times Interest Earned Ratio of 9.93 times. So investors
might think that the company does generate enough earnings from its operation ant can
procure more external financing.
Premier Cement Mills Limited has a level of Times Interest Earned Ratio of 2.93 times
that is substantially vulnerable for the company. They are staying on the edge and they
cannot procure more external financing. Meghna Cement Mills Limited and Aramit
Cement Limited has almost the same level of Times Interest Earned Ratio 1.7 and 1.15.
So they have already taken more risk and cannot take any more external financing which
will lead the company to liquidity crisis.
M. I. Cement Factory Limited (Crown Cement) and Heidelberg Cement Bangladesh

Limited has negative level of Times Interest Earned Ratio as both the company do not
pose any fixed obligation at all. So they can procure more risk for their company and take
advantages of leverage.
Business Cycle
1. Operating Cycle
Operating cycle is the number of days a company takes in realizing its inventories in cash.
It equals the time taken in selling inventories plus the time taken in recovering cash from
trade receivables. It is called operating cycle because this process of
producing/purchasing inventories, selling them, recovering cash from customers, using
that cash to purchase/produce inventories and so on is repeated as long as the company
is in operations.
Operating Cycle = Days' Sales of Inventory + Days Sales Outstanding
2011 2012 2013 2014

Confidence Cement 90.44 83.41 58.09 101.13
Heidelberg Cement 84.83 71.21 64.34 57.52
Meghna Cement 99.66 101.55 81.87 122.29
Premier Cement 121.60 126.36 86.09 107.39
MI Cement Ltd. 86.16 88.78 47.85 57.58
Lafarge Surma Cement 152.47 156.33 158.73 121.22
Aramit Cement 150.32 138.48 169.09 267.59
Industry Average 94.24 89.98 89.91 103.53
Page 38 of 96
Operating Cycle
300
250
200
150
100
50
0
2010 2011 2012 2013 2014
Confidence Cement Heidelberg Cement Meghna Cement Premier Cement Ltd.

MI Cement Ltd. Lafarge Surma Cement Aramit Cement Industry Average
FIGURE 1 COMPARATIVE OPERATING CYCLE IN 2014
The table and graph shows that that Lafarge and Aramit cement has very high which is
around 150 days. Whereas Heidelberg cement has the lowest operating cycle which is 86
days. However in 2014, only Heidelberg & M.I. Cement had lowest operating cycle days.
Operating cycle of all other companies increase gradually. As Heidelberg is able to convert
cash from inventories faster than any other competitors, it is performing better than
anyone else.
2. Cash Conversion Cycle

The cash conversion cycle (CCC, or Operating Cycle) is the length of time between a firm's
purchase of inventory and the receipt of cash from accounts receivable. It is the time
required for a business to turn purchases into cash receipts from customers. CCC
represents the number of days a firm's cash remains tied up within the operations of the
business.
A cash flow analysis using CCC also reveals in, an overall manner, how efficiently the
company is managing its working capital. The cash conversion cycle is also referred to
as the cash cycle, asset conversion cycle or net operating cycle.
Cash Conversion Cycle = Days' Sales of Inventory + Days Sales Outstanding – Days Payable
Outstanding
2011 2012 2013 2014

Confidence Cement 83.52 72.57 44.83 81.51
Heidelberg Cement 77.73 62.67 57.08 30.62
Meghna Cement 92.65 92.39 74.38 94.54
Premier Cement Ltd. 116.35 121.12 79.58 70.80
MI Cement Ltd. 79.53 79.69 35.69 49.98
Lafarge Surma Cement 145.95 151.90 154.53 (193.48)
Aramit Cement 143.59 129.22 160.81 1.38
Industry Average 87.55 81.76 81.62 79.83
Page 39 of 96
Cash Conversion Cycle
200
100
0
2010 2011 2012 2013 2014
-100
-200
-300
Confidence Cement Heidelberg Cement Meghna Cement

Premier Cement Ltd. MI Cement Ltd. Lafarge Surma Cement
Aramit Cement Industry Average
FIGURE: COMPARATIVE CASH CONVERSION CYCLE IN 2014
From the table and the graph above shows that cash conversion cycle for companies have
started to decrease gradually. Other than Lafarge Surma Cement, Aramit Cement have
very low cash conversion cycle. That means Aramit cement has taken very low time to
convert inventories into cash.
Page 40 of 96
7. Year-wise comparison of Company Performances
Confidence Cement Ltd.

A. Liquidity Ratios
1. Current Ratio:
While looking at Current Ratio of Confidence Cement Ltd. for last 5 years we can see
highest of 1.52 was performed in 2013 followed by 1.39 in 2014, 1.36 in 2010, 1.30 in
2012 and 1.24 in 2011. In the last year the ratio decreased by 0.13 compared to 2013.
2. Quick ratio:
While looking at Quick Ratio of Confidence Cement Ltd. for last 5 years we can see highest
of 0.71 was in 2013 followed by 0.58 in 2014, 0.45 in 2012, 0.35 in 2011 and 0.31 in 2010.
In the last year the ratio decreased by 0.13 compared to 2013.
3. Cash Ratio:
While looking at Cash Ratio of Confidence Cement Ltd. for last 5 years we can see highest
of 0.38 was in 2012 followed by 0.08 in 2013, 0.07 in 2011 & 2010 and 0.04 in 2014. In
the last year the ratio decreased by 0.04 compared to 2013.
B. Profitability Ratio

Confidence Cement Ltd. got highest Gross Profit Margin of 20.57% in 2013 followed by
17.17% in 2012, 16.68% in 2014, 14.03% in 2011 and 13.77% in 2010. In the last year
its Gross Profit Margin decreased by 3.89 compared to 2013 and 0.49 compared to 2012.

The Company got highest Operating Profit Margin of 16.71% in 2013 followed by 14.23%
in 2012, 11.65% in 2014, 10.91% in 2011 and 10.18% in 2010. In the last year its
Operating Profit Margin decreased by 5.06 compared to 2013 and 2.58 compared to 2012.

Highest Net Profit Margin for the company was 12.43% in 2013 followed by 10.83% in
2011, 5.15% in 2014, 3.08% in 2012 and 0.46% in 2010. In the last year its Net Profit
Margin decreased by 7.28 compared to 2013 and increased by 2.07 compared to 2012.
4. Return on Asset:
The Company got highest Return on Asset of 10.07% in 2013 followed by 6.96% in 2011,
3.91% in 2014 and 2.57% in 2012. In the last year its Return on Asset decreased by 6.16
compared to 2013 which is double and increased by 1.34 compared to 2012.
Page 41 of 96
The Company got highest Return on Equity of 16.11% in 2013 followed by 9.48% in 2011,
6.55% in 2014 and 3.97% in 2012. In the last year its Return on Equity decreased by 9.56
compared to 2013 which is almost double and increased by 2.58 compared to 2012.

Confidence Cement Ltd. has highest Return on Capital Employed of 15.78% in 2013
followed by 13.53% in 2012, 10.70% in 2014 and 7.93% in 2011. In the last year its
Return on Capital Employed decreased by 5.08 compared to 2013 and 2.83 compared to
2012.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.
Asset Turnover Ratio 0.76 0.81 0.84 0.64 0.76
Material Turnover Ratio 15.65 14.41 10.84 7.50 12.10
WIP Turnover Ratio 101.68 166.42 - 90.73 89.70
Finished Goods Turnover - - - - -
Receivable Turnover Ratio 4.92 11.94 7.34 9.67 8.47
Payable Turnover Ratio 18.61 24.90 33.61 25.52 25.66
The turnover ratio shows the number of time they can convert their product to either
semi-finished or finished goods, and sold to the market. The more the number, better
the company’s performance. In this analysis, we found out that ratios has risen over
the year, which shows they are not operating well. Out of the inventory categories,
Confidence cement mostly comprise the semi-finished goods, and it trend shows it
being decreases over the year. Thus performance varies over the year. In 2012, they
Page 42 of 96
didn’t have any WIP which might be a result for stock hold for the next year, where in
2013, WIP increases a lot.
Details 2014 2013 2012 2011 Avg.

Days in Storage 23.33 25.33 33.67 48.69 32.76
Days in Factory 3.59 2.19 - 4.02 2.45
Days of FG in Inventory - - - - -
Days in Inventory 26.92 27.52 33.67 52.72 35.21
Days Sales outstanding 74.21 30.57 49.74 37.73 48.06
Days Payable Outstanding 19.61 13.26 10.84 6.92 12.66
Operating Cycle 101.13 58.09 83.41 90.44 83.27
Cash Conversion Cycle 81.51 44.83 72.57 83.52 70.61
The figure shows the days taken to convert the raw materials to finished goods, and
then sell and collect the cash from market. The trend shows the days to convert the
stock has fallen over times, and the operating cycle improves because of the better
credit facilities over time. Since days storage falls and sales outstanding increases, the
company had a better cash hold over the period, and is liquid enough to take
necessary decisions. Thus the performance improves from 2010 onwards.
D. Market ratios
The below table shows the Market Ratio of Confidence Cement Limited for different
periods
Page 43 of 96
Confidence Cement
Year 2014 2013 2012 2011 2010
Market to Book Value 1.68 1.98 1.84 1.55 3.58
Dividend Coverage Ratio 1.93 3.68 1.87 1.27 1.85
Dividend Yield 2.55% 1.61% 3.19% 3.35% 1.40%
Price Earnings Ratio 20.28 16.85 16.78 23.54 38.71
Following graph summarizes the year wise performance of Confidence cement:
Confidence Cement
50
40
30
20
10
0
2014 2013 2012 2011 2010
Market to Book Value Dividend Coverage Ratio Dividend Yield Price Earnings Ratio
1. Market to Book Value Ratio:

The trend of Confidence Cement Limited shows in different periods Market to Book Value
Ratio falls and recovers a bit. So it would make an investor to rethink about investing into
this share.
2. Dividend Coverage Ratio:

Dividend Coverage Ratio is the ratio of company's earnings (net income) over the
dividend paid to shareholders, calculated as net profit or loss attributable to ordinary
shareholders by total ordinary dividend. Dividend Coverage Ratio indicates the capacity
of an organization to pay dividends out of profit attributable to the shareholders. In case
of Confidence Cement Limited the dividend cover of 3 implies that a company has
sufficient earnings to pay dividends amounting to 3 times of the present dividend payout
during the period though it was not three every year.
3. Dividend Yield:
high, stable dividend yields. However, the dividend yield of Confidence Cement Limited
was between 1.5 and 3.5 which did not imply lower dividends as the price could have
substantially increased.
Page 44 of 96
4. Price-Earnings Ratio:
its Earning per Share (EPS). P/E Ratio of Confidence Cement Limited shows a class
between 16 and 39 which suggests that investors were expecting higher earnings growth
in the past compared to present days.
E. Leverage ratios
A leverage ratio is any one of several financial measurements that look at how much
capital comes in the form of debt (loans), or assesses the ability of a company to meet
financial obligations.
The below table shows the Leverage Ratios of Confidence Cement Limited for different
periods
Confidence Cement Limited
Year 2014 2013 2012 2011 2010
Gearing Ratio 1.75 1.60 1.60 1.48 1.24
Long Term Debt to Equity Ratio 0.14 0.15 0.13 0.12 0.00
Times Interest Earned Ratio 9.93 7.53 5.70 10.11 15.49

20
15
10
5
0
2014 2013 2012 2011 2010
Gearing Ratio Long Term Debt to Equity Times Interest Earned
1. Gearing Ratio
Confidence Cement Limited with high gearing (high leverage) is more vulnerable to
downturns in the business cycle because the company must continue to service its debt
regardless of how bad sales are. A greater proportion of equity provides a cushion and is
seen as a measure of financial strength.

In risk analysis, Long Term Debt to Equity Ratio is a way to determine a company's
leverage. This ratio is calculated by taking the company's long-term debt and dividing it
by the total value of its preferred and common stock. Confidence Cement Limited with
stable LTDE ratio is thought to be less because they have less liabilities and more equity
during last 5 years period.
Page 45 of 96
Confidence Cement Limited a high ratio can indicate that a company has an undesirable
lack of debt or is paying down too much debt with earnings that could be used for other
projects. The rationale is that a company would yield greater returns by investing its
earnings into other projects and borrowing at a lower cost of capital than what it is
currently paying to meet its debt obligations.
F. Business Cycle
1. Operating Cycle:
Confidence Cement experienced a declining operating cycle from 2011 to 2013. The
reason behind was the management getting more efficient in managing its inventory
which reduced the number of days the inventory was held. However, day’s receivable
outstanding fluctuated which increased in 2012, again decreased in 2013 before
increasing again in 2014 significantly. This significant rise in 2014 impacted the overall
operating cycle to rise to 101.13 from 58.09.
Confidence Cement
120
100
80
60
40
20
0
2009 2010 2011 2012 2013 2014 2015
This implies that Confidence Cement is not efficient in collecting its receivables or
managing its credit policy to its customers. Hence, if Confidence Cement can improve its
day’s receivable outstanding it can significantly lower its operating cycle and free its
resources tied up in the current assets.
1. Cash Cycle:
Like the operating cycle, Confidence Cement enjoyed a declining cash conversion cycle
from 2011 to 2013. Because of the significant rise in day’s receivable outstanding in 2014
the cash conversion cycle also increased significantly. If we analyze the other component
of cash conversion cycle which is day’s payable outstanding we see that the figure has
been on the rise.
Page 46 of 96
Confidence Cement
100
80
60
40
20
0
2009 2010 2011 2012 2013 2014 2015
From 6.92 in 2011 day’s payable outstanding has increased to 19.61 in 2014. This implies
that Confidence Cement is in a stronger position to bargain with its suppliers for flexible
credit policy. That is it can get more time to pay its suppliers and use its own money to
manage its other areas.
Page 47 of 96
Heidelberg Cement Ltd.
A. Liquidity Ratio
1. Current Ratio:
While looking at Current Ratio of Heidelberg Cement Ltd. for last 5 years we can see
2. Quick ratio:
While looking at Quick Ratio of Heidelberg Cement Ltd. for last 5 years we can see highest
of 2.44 was in 2013 followed by 2.05 in 2012, 1.93 in 2014, 1.64 in 2010 and 1.54 in 2011.
3. Cash Ratio:
While looking at Cash Ratio of Heidelberg Cement Ltd. for last 5 years we can see highest
of 4.08 was in 2012 followed by 2.08 in 2013, 1.57 in 2014, 1.33 in 2010 & 1.16 in 2011.

Heidelberg Cement Ltd. got highest Gross Profit Margin of 23.71% in 2010 followed by
its Gross Profit Margin decreased by 4.02 compared to 2013 and increased by 0.02
compared to 2012.

in 2013, 14.30% in 2012, 12.44% in 2014 and 9.50% in 2011. In the last year its Operating
Profit Margin decreased by 4.28 compared to 2013 and 1.86 compared to 2012.

Highest Net Profit Margin for the company was 14.80% in 2013 followed by 12.00% in
2010, 11.86% in 2012, 11.23% in 2014 and 8.80% in 2011. In the last year its Net Profit
Margin decreased by 3.57 compared to 2013 and 0.63 compared to 2012.
4. Return on Asset:
compared to 2013 and 3.73 compared to 2012.
Page 48 of 96
The Company got highest Return on Equity of 22.33% in 2012 followed by 21.38% in
2013, 16.83% in 2014 and 14.96% in 2011. In the last year its Return on Equity decreased
by 4.55 compared to 2013 and 5.95 compared to 2012.
Return on Capital Employed: Heidelberg Cement Ltd. has highest Return on Capital
Employed of 22.10% in 2012 followed by 20.04% in 2013, 16.64% in 2014 and 13.72%
in 2011. In the last year its Return on Capital Employed decreased by 3.40 compared to
2013 and 5.46 compared to 2012.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.

WIP Turnover Ratio - - - - -
Finished Goods Turnover 78.49 83.95 130.33 120.46 103.31
Heidelbeg has a constant asset turnover ratio which implies they keep constant the ratio
with sales to assets. Since the ratio is more than 1, it shows they are being efficient
utilizing their assets.
On the other hand, the finished goods turnover has increased, which shows they were
better off to sale their products on time. However, they kept low raw material and WIP
which shows they utilize their materials to finished goods.
Page 49 of 96
Receivable turnover and payable turnover has risen, which shows they were prompt in
the collection and payment of their creditors and suppliers. This is a good sign that they
were managing it smoothly.
Details 2014 2013 2012 2011 Avg.

Days in Storage 36.34 45.94 39.92 48.40 42.65
Days in Factory - - - - -
Days of FG in Inventory 4.65 4.35 2.80 3.03 3.71
Operating Cycle 57.52 64.34 71.21 84.83 69.48
The cash operating cycle gives a clear picture of the performance of Heidelberg Cemenet
over the last few years. They have improved their days in storage, finished goods which
shows less holding cost for them.
They even collect the payment from their customer at quicker rate, and delays the
payment to supplier. Thus cash conversion cycle has fallen and shows they are now able
to hold more liquid cash than before.
D. Market ratios
Following table illustrates the Market Ratio of Heidelberg Cement Bangladesh Limited for
different periods:
Page 50 of 96
Heidelberg Cement Bangladesh Limited
Year 2014 2013 2012 2011 2010
Dividend Yield 7.61% 9.96% 1.89% 1.81% 11.75%
Heidelberg Cement
50
40
30
20
10
0
2014 2013 2012 2011 2010
Market Value to Book Value Dividend Coverage Ratio Dividend Yield Price Earnings Ratio

The trend of Heidelberg Cement Bangladesh Limited shows in different periods Market
to Book Value Ratio falls and recovers a bit. But overall it remained stable which would
give clear information about the quality of investment of an investor.

The dividend cover of Heidelberg Cement Bangladesh Limited was more than 3 in the
prior periods which implies that a company has sufficient earnings to pay dividends
amounting to 3 times of the present dividend payout but in recent years in came down to
0.69 or 0.55 which indicates about increasing finance expenses or other factors or it could
be operational inefficiency.
3. Dividend Yield:
Dividend yield of Heidelberg Cement Bangladesh Limited was between 8 and 10 in recent
years which indicates higher dividends as the price could have substantially decreased.
P/E Ratio of Heidelberg Cement Bangladesh Limited shows a class between 2 and 24
which suggests that investors are expecting lower earnings growth in the present days
compared to past days.
E. Leverage ratios
The below table shows the Leverage Ratio of Heidelberg Cement Bangladesh Limited for
different periods
Page 51 of 96
Year 2014 2013 2012 2011 2010
Gearing Ratio 1.56 1.43 1.46 1.52 1.51
Times Interest Earned Ratio (3.01) (3.56) (4.52) (2.71) (8.21)

4
2
0
-2 2014 2013 2012 2011 2010
-4
-6
-8
-10
Gearing Ratio Long Term Debt to Equity Ratio Times Interest Earned Ratio
1. Gearing Ratio
Heidelberg Cement Bangladesh Limited with stable gearing (leverage) over last 5 years
indicates that a greater proportion of assets is financed by equity and it is seen as a
measure of financial strength as Increased gearing ratios are risky and when a company
is unable to repay its debt, it can lead to bankruptcy.

Heidelberg Cement Bangladesh Limited with stable LTDE ratio is thought to be less
because they have less liabilities and more equity during last 5 year period.

TIE ration is negative for Heidelberg Cement Bangladesh Limited. This indicate that the
company yields greater returns by investing its earnings into other projects and
borrowing at a lower cost of capital than what it is currently paying to meet its debt
obligations.
F. Business Cycle
1. Operating Cycle:
Heidelberg Cement experienced a continuous decline in its operating cycle form the
period 2011 to 2014. The operating cycle in 2011 was 84.83 which decreased to 57.52 in
2014. From the breakdown of its operating cycle we find that its day’s in inventory held
Page 52 of 96
and day’s receivable outstanding had a fluctuating trend through the same period.
However, the overall operating cycle declined.
Heidelberg Cement
100
80
60
40
20
0
2009.5 2010 2010.5 2011 2011.5 2012 2012.5 2013 2013.5 2014 2014.5
It implies that the management is becoming more efficient in reducing the inventory held
and also collecting the receivables from the customers. However, it must focus on both
the variables so that they do not fluctuate rather decline on consistent basis to improve
the overall efficiency.
1. Cash Cycle:
Following the operating cycle, the cash conversion cycle also has a decreasing trend. The
day’s payable outstanding also has a fluctuating trend which decreased in 2013 to 7.26
again increasing in 2014 to 26.90.
Heidelberg Cement
100
50
0
2009 2010 2011 2012 2013 2014 2015
This implies that the management is efficient in the overall perspective, however, the
fluctuating trend in the components of the cash conversion cycle means that the
management needs to work on the individual components to achieve consistency.
Page 53 of 96
Meghna Cement Ltd.
A. Liquidity Ratio
1. Current Ratio:
While looking at Current Ratio of Meghna Cement Ltd. for last 5 years we can see highest
of 1.29 was performed in 2013 followed by 1.25 in 2012, 1.20 in 2014 & 2010 and 1.19
in 2011. In the last year the ratio decreased by 0.09 compared to 2013.
2. Quick ratio:
Looking at Quick Ratio of Meghna Cement Ltd. for last 5 years we can see highest of 0.65
was in 2014 followed by 0.52 in 2012, 0.44 in 2013, 0.37 in 2011 and 0.26 in 2010. In the
last year the ratio increased by 0.21 compared to 2013.
3. Cash Ratio:
While looking at Cash Ratio of Meghna Cement Ltd. for last 5 years we can see highest of
0.41 was in 2012 followed by 0.08 in 2013, 0.06 in 2014, 0.04 in 2011 & 0.03 in 2010. In
the last year the ratio decreased by 0.02 compared to 2013.

Meghna Cement Ltd. got highest Gross Profit Margin of 11.86% in 2014 followed by
10.86% in 2013, 10.55% in 2012, 8.86% in 2011 and 5.69% in 2010. In the last year its
Gross Profit Margin increased by 1.00 compared to 2013 and 1.31 compared to 2012. If
we look the ratio has a continuous increasing trend for last 5 years.

in 2013, 6.33% in 2012, 4.81% in 2011 and 5.69% in 2010. In the last year its Operating
Profit Margin increased by 1.37 compared to 2013 and 2.73 compared to 2012. If we look
thoroughly, the ratio has a continuous increasing trend for last 4 years.

The Company Highest Net Profit Margin for the company was 2.69% in 2014 followed by
2.35% in 2013, 2.14% in 2012, 2.08% in 2010 and 1.09% in 2011. In the last year its Net
Profit Margin increased by 0.34 compared to 2013 and 0.55 compared to 2012.
4. Return on Asset:
compared to 2013 and 0.94 compared to 2012.
Page 54 of 96
2013, 12.33% in 2014 and 9.92% in 2011. In the last year its Return on Equity decreased
by 2.54 compared to 2013 and 7.35 compared to 2012.

Meghna Cement Ltd. has highest Return on Capital Employed of 24.28% in 2012 followed
by 22.24% in 2013, 21.63% in 2014 and 17.35% in 2011. In the last year its Return on
Capital Employed decreased by 0.61 compared to 2013 and 2.65 compared to 2012.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.

WIP Turnover Ratio 97.09 123.78 131.97 129.51 120.59
The asset turnover for Meghna Cement has fallen over time, whci shows they are not
utilizing their assets properly, and might have impact of poor sales.
Matrial/WIP/ Finished goods inventory has fallen over times which shows the
incapability of the company to meet the targets and sell over the market, because of
taking long time to convert the raw materials to finished goods. This will cost them more
to hold the products.
Page 55 of 96
The receivable turnover and payable has decrease which shows they are dealing more
with cash rather than on credit.
Details 2014 2013 2012 2011 Avg.

Days in Storage 21.99 16.76 12.60 10.30 15.41
Days in Factory 3.76 2.95 2.77 2.82 3.07
Operating Cycle 122.29 81.87 101.55 99.66 101.34
The days in storage has increased over time which increase the days in inventory. Thus it
shows they are holding their products for a long time and increase the costs allocated
with it.
Operating Cycle and Cash Conversion Cycle has increased which shows that they take
long time to collect the payments and paying the creditors. Thus they are very dependent
on the customers to pay them back and meet the payments on time. Liquidity crisis is
alarming in this situation.
Page 56 of 96
D. Market ratios
The table below shows the Market Ratio of Meghna Cement Mills Limited for different
periods
Meghna Cement Mills Limited
Year 2014 2013 2012 2011 2010
Dividend Yield 1.24% 1.05% 2.39% 0.64% 0.65%
Meghna Cement
200
150
100
50
0
2014 2013 2012 2011 2010

The trend of Meghna Cement Mills Limited shows in different periods Market to Book
Value Ratio falls and recovers a bit. It dropped first in the year 2011 in stock market crash
but never recovered in full after that incident. So the investor should rethink about
investing into this share considering those situations.

Meghna Cement Mills Limited the dividend cover of more than 3 implies that a company
has sufficient earnings to pay dividends amounting to 3 times of the present dividend
payout during the period though it was not three every year.
3. Dividend Yield:
Investors who require a minimum stream of cash flow from their investment portfolio
can secure this cash flow by investing in stocks paying relatively high, stable dividend
yields. The dividend yield of Meghna Cement Mills Limited was between 0.55 and 2.5
which did not imply lower dividends as the price could have substantially increased.
its Earning per Share (EPS). P/E Ratio of Meghna Cement Mills Limited shows a class
Page 57 of 96
between 16 and 170 which suggests that investors were expecting higher earnings
growth in the past compared to present days.
E. Leverage ratios
The below table shows the Leverage Ratio of Meghna Cement Mills Limited for different
periods
Year 2014 2013 2012 2011 2010
Gearing Ratio 4.84 5.15 5.48 6.08 5.42

8
0
2014 2013 2012 2011 2010
1. Gearing Ratio
Meghna Cement Mills Limited with decreasing gearing ratio (leverage) over last 5 years
indicates that a greater proportion of assets is financed by debt and higher gearing ratios
are risky and when a company is unable to repay its debt, it can lead to bankruptcy.

Meghna Cement Mills Limited has decreasing LTDE ratio which is thought to be paid
every year because they had more liabilities and less equity during last 4 year period.

Meghna Cement Mills Limited has an increasing TIE ratio from the year 2013. Before that
it had decreasing TIE ratio. This indicate that a company is trying to decrease the volume
of debt. And can generate operating income more than its finance cost.
F. Business Cycle
1. Operating Cycle:
Operating cycle for Meghna Cement has fluctuating trend. It increased to 101.55 in 2012
decreased to 81.87 in 2013 before increasing again to 122.29 in 2014. This continuous
Page 58 of 96
fluctuation and the overall increase in the operating cycle is extremely alarming. This
implies that the management is highly inefficient in managing its inventory and also
collecting the receivables from its customers.
Meghna Cement
150
100
50
0
2009 2010 2011 2012 2013 2014 2015
This also implies that the money of Meghna Cement is tied up for a long time in the
inventory and in the pockets of its customers. Hence, it is very important that Meghna
Cement recognize the weaknesses that ruining the operating cycle.
2. Cash Cycle:
The cash conversion cycle of Meghna Cement followed the same trend like that of the
operating cycle. The day’s payable outstanding has been fairly consistent through 2011,
2012 & 2013. However, it increased significantly in 2014 to 27.75 from 7.48 in 2013.
Meghna Cement
100
80
60
40
20
0
2009 2010 2011 2012 2013 2014 2015
This implies that Meghna Cement suddenly achieved high day’s payable outstanding.
While this is a good indicator, however, the company must try to maintain this level or
achieve higher day’s payable outstanding to increase its efficiency.
Page 59 of 96
Premier Cement Ltd.
A. Liquidity Ratio
1. Current Ratio:
While looking at Current Ratio of Premier Cement Ltd. for last 5 years we can see highest
of 1.03 was performed in 2010 followed by 0.98 in 2011, 0.77 in 2014, 0.75 in 2013 and
0.68 in 2012. In the last year the ratio decreased by 0.02 compared to 2013.
2. Quick ratio:
While looking at Quick Ratio of Premier Cement Ltd. for last 5 years we can see highest of
0.48 was in 2010 followed by 0.37 in 2013, 0.36 in 2011, 0.33 in 2014 and 0.25 in 2012.
3. Cash Ratio:
While looking at Cash Ratio of Premier Cement Ltd. for last 5 years we can see highest of
1.32 was in 2012 followed by 0.09 in 2013, 0.07 in 2010, 0.04 in 2011 & 0.03 in 2014. In
the last year the ratio decreased by 0.06 compared to 2013. A random trend was seen for
last 5 years.

Premier Cement Ltd. got highest Gross Profit Margin of 21.67% in 2010 followed by
its Gross Profit Margin decreased by 0.79 compared to 2013 and increased by 4.80
compared to 2012. If we look into the ratio, it has a random trend for last 5 years.

in 2013, 14.99% in 2011, 14.67% in 2014 and 11.26% in 2012. In the last year its
Operating Profit Margin decreased by 2.88 compared to 2013 and increased by 3.41
compared to 2012. If we look into the ratio, it also has a random trend for last 5 years.

Highest Net Profit Margin for the company was 9.52% in 2011 followed by 9.51% in 2010,
7.78% in 2013, 6.75% in 2014 and 4.06% in 2012. In the last year its Net Profit Margin
decreased by 1.03 compared to 2013 and increased by 2.69 compared to 2012.
4. Return on Asset:
5.56% in 2014 and 3.25% in 2012. In the last year it’s Return on Asset decreased by 1.05
compared to 2013 and increased by 2.31 compared to 2012 which reflects a random
trend.
Page 60 of 96
2013, 15.61% in 2014 and 8.10% in 2012. In the last year it’s Return on Equity decreased
by 2.62 compared to 2013 and increased by 7.51 compared to 2012 which reflects a
random trend.

Premier Cement Ltd. has highest Return on Capital Employed of 26.67% in 2013 followed
by 24.62% in 2014, 23.54% in 2011 and 14.26% in 2012. In the last year it’s Return on
Capital Employed decreased by 2.05 compared to 2013 and increased by 10.36 compared
to 2012 and it shows a random trend too.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.

The asset turnover has fallen over the time which shows that asset utilization has fallen
at time. This can be a reason for purchasing unnecessary assets or couldn’t maintain sales
as per the budget.
The material turnover ratio has fallen which implies less raw materials being purchase
during the year due to less sales of the company.
Page 61 of 96
The receivable turnover has increased showing prompt payment from the customers.
The payable turnover has fallen showing delaying payment made to the suppliers.
Details 2014 2013 2012 2011 Avg.

Days in Storage 75.39 56.00 69.61 69.48 67.62
Operating Cycle 107.39 86.09 126.36 121.60 110.36
The days in storage has increased over times which mainly compromises the raw
materials storage.
Operating cycle has fallen over times due to major fall in collection period, though the
storage days has increased. Operating cycle has fallen showing less money being hold
within hand.
Payable days has increased showing delay payment to the suppliers which is a good sign
for the company.
Page 62 of 96
D. Market ratios
The following table shows the Market Ratio of Premier Cement Mills Limited for different
periods
Premier Cement Mills Limited
Year 2014 2013 2012 2011 2010
Dividend Coverage Ratio 1.61 1.18 - - -
Dividend Yield 5.10% 3.64% - - -
Premier Cement
25
20
15
10
0
2014 2013 2012 2011 2010

The trend of Premier Cement Mills Limited shows in 2 years period Market to Book Value
Ratio falls in half. So it would make an investor to rethink about investing into this share
as its share price is not growing with the market.

Premier Cement Mills Limited the dividend cover of around 1.61-1.81 implies that a
company has sufficient earnings to pay dividends but it cannot increase the level of
dividend payment in coming years as it could bring liquidity crisis.
3. Dividend Yield:
However, the dividend yield of Premier Cement Mills Limited was between 3 and 5 which
implied higher dividends as the price was substantially stable.
Page 63 of 96
Table and the graph Premier Cement Mills Limited shows had P/E between 5 and 24
which suggests that investors were expecting lower earnings growth in the past
compared to present days.
E. Leverage ratios
The below table shows the Leverage Ratio of Premier Cement Mills Limited for different
periods
Year 2014 2013 2012 2011 2010
Gearing Ratio 2.97 2.64 2.92 2.02 1.92

8
0
2014 2013 2012 2011 2010
1. Gearing Ratio
Premier Cement Mills Limited with increasing gearing ratio (leverage) over last 5 years
indicates that a greater proportion of assets is financed by debt and higher gearing ratios
are risky and when a company is unable to repay its debt, it can lead to bankruptcy.

Premier Cement Mills Limited has increasing LTDE ratio indicates that they want to take
the advantages of low cost financing to procure greater return.

Premier Cement Mills Limited has a decreasing TIE ratio can indicate that a company is
trying to decrease the volume of debt. The rationale is that a company would yield greater
returns by investing its earnings into other projects using internal financing or retained
earnings.
F. Business Cycle
Page 64 of 96
1. Operating Cycle:
Premier Cement also has fluctuating operating cycle. The operating cycle increased in 2012 to
126.36, decreased in 2013 to 86.09 and again increased in 2014 to 107.39. Both the components
of operating cycle had a business cycle pattern.
Premier Cement Ltd.

150
100
50
0
2009 2010 2011 2012 2013 2014 2015
Although the operating cycle has decreased in 2014 compared to operating cycle in 2011,
but the fluctuating trend is not a good sign. The company must try to achieve a consistent
level of operating cycle and then a downward trend so it becomes efficient over time in
managing its inventory and its receivables.
2. Cash Cycle:
The day’s payable outstanding of Premier Cement has been fairly consistent from 2011
to 2013. However, it experienced a sudden rise in 2014 of 26.59 from 6.52 in 2013. This
lead to decrease in cash conversion cycle in 2014 unlike increase in the operating cycle
in 2014.
Premier Cement Ltd.

150
100
50
0
2009 2010 2011 2012 2013 2014 2015
This sudden rise in day’s payable outstanding has to be looked upon. If the figure is
authentic and justifiable then it would imply that Premier Cement has tighten its payment
policy to its suppliers which is good for the company. Now, the company will have more
resources to invest in other assets.
Page 65 of 96
M. I. Cement Factory Ltd.
A. Liquidity Ratio
1. Current Ratio:
While looking at Current Ratio of M. I. Cement Factory Ltd. for last 5 years we can see
The ratio got a decreasing trend for last 4 years from 2011.
2. Quick ratio:
While looking at Quick Ratio of M. I. Cement Factory Ltd. for last 5 years we can see
highest of 2.84 was in 2011 followed by 2.01 in 2012, 1.97 in 2013, 1.43 in 2014 and 0.83
in 2010. In the last year the ratio decreased by 0.54 compared to 2013. The ratio also got
a decreasing trend for last 4 years from 2011.
3. Cash Ratio:
While looking at Cash Ratio of M. I. Cement Factory Ltd. for last 5 years we can see highest
of 2.09 was in 2011 followed by 1.14 in 2013, 1.12 in 2012, 0.74 in 2014 & 0.07 in 2010.
In the last year the ratio decreased by 0.40 compared to 2013. Cash ratio of the company
shows a mixed or random trend for last 5 years.

M. I. Cement Factory Ltd. got highest Gross Profit Margin of 0.22 in 2010 followed by 0.19
in 2011, 0.16 in 2014 & 2013 and 0.13 in 2012. In the last year its Gross Profit Margin
remains unchanged and increased by 0.03 compared to 2012. This ratio shows a mixed
trend through last 5 years.

The Company got highest Operating Profit Margin of 0.18 in 2010 followed by 0.15 in
2011, 0.12 in 2014 & 2013 and 0.10 in 2012. In the last year its Operating Profit Margin
remains unchanged and increased by 0.02 compared to 2012 that reflects a random trend
for last 5 years.

Highest Net Profit Margin for the company was 0.11 in 2011 & 2010 followed by 0.10 in
2013 & 2012 and 0.08 in 2014. In the last year its Net Profit Margin decreased by 0.02
compared to 2013 and 2012. The ration more or less was constant through last 5 years.
Page 66 of 96
4. Return on Asset:
The Company got highest Return on Asset of 0.09 in 2011 followed by 0.07 in 2013 &
2012 and 0.06 in 2014. In the last year its Return on Asset decreased by 0.01 compared
to 2013. This ratio was decreasing slowly for last 5 years.
The Company got highest Return on Equity of 0.14 in 2011 followed by 0.12 in 2014 &
2013 and 0.11 in 2012. In the last year its Return on Equity remains unchanged compared
to 2013 and increased by 0.01 compared to 2012. This ratio also show flat trend for last
5 years which is a good sign.

M. I. Cement Factory Ltd. has highest Return on Capital Employed of 0.44 in 2014 followed
by 0.31 in 2013, 0.25 in 2012 and 0.16 in 2011. In the last year its Return on Capital
Employed increased by 0.13 compared to 2013 and 0.19 compared to 2012 which reflects
an increasing trend.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.

Page 67 of 96
Asset turnover has fallen over the period showing that asset utilization has not been
utilizied properly.
Material and WIP turnover has increased showing the frequency of material conversion
has improved over times.
Finished goods turnover has fallen showing the finished goods sales has fallen which
might be an issue for poor selling contributions.
Receivable turnover has remain volatile which implies the collection term is remain
volatile.
Payable turnover has risen implying that creditors push the company for early
settlements.
Details 2014 2013 2012 2011 Avg.

Days in Storage 16.78 17.99 18.51 28.06 20.34
Days in Factory 8.20 8.84 19.88 24.53 15.36
Operating Cycle 57.58 47.85 88.78 86.16 70.09
Days in inventory remain unchanged for the period and shows a healthy utilization of the
resources at times.
Page 68 of 96
Days sales and payment remain unchanged for the period implying the credit terms for
the suppliers is still very low. Sales collection has improved showing prompt collection
from the customers.
D. Market ratios
The below table shows the Market Ratio of M. I. Cement Factory Limited (Crown Cement)
for different periods
M. I. Cement Factory Limited (Crown Cement)
Year 2014 2013 2012 2011 2010
Dividend Coverage Ratio 1.51 1.15 1.18 2.15 -
Dividend Yield 3.49% 4.42% 3.22% 0.85% -

60
50
40
30
20
10
0
2014 2013 2012 2011 2010

The trend of M. I. Cement Factory Limited (Crown Cement) shows in different periods
Market to Book Value Ratio was stable as it was not changing after the stock market crash
in 2011. So it would make an investor to rethink about investing into this share to get any
capital gain.

M. I. Cement Factory Limited (Crown Cement) the dividend cover of 1.51 or more implies
that a company has sufficient earnings to pay dividends but it keeps less amount as
retained earnings, so the company might go for external financing in future for capital
assets.
Page 69 of 96
3. Dividend Yield:
high, stable dividend yields. M. I. Cement Factory Limited (Crown Cement) had dividend
yield more than 3.00 which imply higher dividends and it is sustainable for last few years.
So it could grow in future.
P/E Ratio of M. I. Cement Factory Limited (Crown Cement) shows a class between 18 and
54 which suggests that investors are expecting higher earnings growth in the recent years
compared to present days.
E. Leverage ratios
The below table shows the Leverage Ratio of M. I. Cement Factory Limited (Crown
Cement) for different periods

Year 2014 2013 2012 2011 2010
Gearing Ratio 2.00 1.75 1.82 1.39 1.71
Times Interest Earned Ratio (14.15) 11.01 3.23 6.37 (11.78)

20
10
0
2014 2013 2012 2011 2010
-10
-20
1. Gearing Ratio
M. I. Cement Factory Limited (Crown Cement) with increasing gearing ratio (leverage)
over last 5 years indicates that a greater proportion of assets is financed by debt and
higher gearing ratios are risky and when a company is unable to repay its debt, it can lead
to bankruptcy.

M. I. Cement Factory Limited (Crown Cement) has increasing LTDE ratio indicates that
they want to take the advantages of low cost financing to procure greater return.
Page 70 of 96
M. I. Cement Factory Limited (Crown Cement) has mixed level of TIE ratio can indicate
that a company is trying to decrease the volume of debt and in 2014 they had excess of
interest income over financing costs.
F. Business Cycle
1. Operating Cycle:
The operating cycle for MI Cement Ltd. has also been fluctuating. It decreased in 2013
and again increased in 2014. The main factor behind the increase was the increase in
day’s receivable outstanding. On the other hand, day’s in inventory held has been
decreasing.
This implies that although MI MI Cement Ltd.
Cement Ltd. has been efficient in
100
managing the inventory but the
fluctuation in day’s receivable 50
outstanding has been adversely
affecting the overall efficiency. 0
2009 2010 2011 2012 2013 2014 2015
Hence, MI Cement Ltd. must devise
strict yet friendly credit policy to its customers so that not too much money is stuck in
customers pocket for too long.
2. Cash Cycle:
The cash conversion cycle
also has similar trend like
MI Cement Ltd.
that of the operating cycle. 100
80
Although it had an
60
increasing trend of day’s 40
payable outstanding from 20
2011 to 2013, however, it 0
2009 2010 2011 2012 2013 2014 2015
decreased in 2014. This
implies that like other components of cash conversion cycle MI Cement needs to work on
day’s payable outstanding to achieve consistent efficiency in managing its payables. This
would ultimately make MI Cement highly efficient in cash conversion cycle.
Page 71 of 96
Lafarge Surma Cement Ltd.
A. Liquidity Ratio
1. Current Ratio:
While looking at Current Ratio of Lafarge Surma Cement Ltd. for last 5 years we can see
2011 and 0.23 in 2010. In the last year the ratio increased by 0.57 compared to 2013. The
ratio got an increasing trend for last 5 years from 2010.
2. Quick ratio:
While looking at Quick Ratio of Lafarge Surma Cement Ltd. for last 5 years we can see
highest of 1.01 was in 2014 followed by 0.55 in 2013, 0.25 in 2012, 0.19 in 2011 and 0.08
in 2010. In the last year the ratio increased by 0.46 compared to 2013. The ratio also got
an increasing trend for last 5 years.
3. Cash Ratio:
While looking at Cash Ratio of Lafarge Surma Cement Ltd. for last 5 years we can see
highest of 0.47 was in 2012 followed by 0.41 in 2014, 0.20 in 2013, 0.03 in 2011 & 0.02
in 2010. In the last year the ratio increased by 0.21 compared to 2013. Cash ratio of the
company shows a mixed or random trend for last 5 years.

Lafarge Surma Cement Ltd. got highest Gross Profit Margin of 0.42 in 2013 followed by
0.39 in 2014 & 2012, 0.10 in 2010 and 0.09 in 2011. In the last year its Gross Profit Margin
decreased by 0.03 compared to 2013. This ratio shows a mixed trend through last 5 years.

The Company got highest Operating Profit Margin of 0.35 in 2013 followed by 0.33 in
2014, 0.31 in 2012 and 0.03 in 2011. In the last year its Operating Profit Margin decreased
by 0.02 compared to 2013 that reflects a random trend for last 4 years.

Highest Net Profit Margin for the company was 0.24 in 2014 & 2013 followed by 0.18 in
2012. In the last year its Net Profit Margin remains unchanged and increased by 0.06
compared to 2012. The ration more or less was constant through last 2 years and
improving.
4. Return on Asset:
The Company got highest Return on Asset of 0.14 in 2014 & 2013 followed by 0.10 in
2012. In the last year its Return on Asset remains unchanged. This ratio is increasing
slowly for last 3 years.
Page 72 of 96
The Company got highest Return on Equity of 0.27 in 2013 followed by 0.26 in 2012 and
0.23 in 2014. In the last year it’s Return on Equity decreased by 0.04 compared to 2013
and increased by 0.01 compared to 2012. This ratio also show mixed trend for last 3
years.

Lafarge Surma Cement Ltd. has highest Return on Capital Employed of 0.33 in 2012
followed by 0.31 in 2013, 0.27 in 2014 and 0.02 in 2011. In the last year its Return on
Capital Employed decreased by 0.04 compared to 2013 and 0.06 compared to 2012 which
reflects a decreasing trend for last 3 years.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.

The asset utilization has been poor compare to the benchmark as they are not utilizing it
properly. This shows huge investment in assets occurred, not no traceability for sales up
to that ratio.
Page 73 of 96
The finished goods turnover is improving and more times of raw materials are being
converted to finished products,
The receivable turnover is rising which shows more prompt payment is done.
The payable are falling which shows they are taking time to make the payments.
Details 2014 2013 2012 2011 Avg.

Days in Storage 68.69 75.68 60.56 33.82 59.69
Operating Cycle 121.22 158.73 156.33 152.47 147.19
Cash Conversion Cycle (193.48) 154.53 151.90 145.95 64.73
The inventory holding time is higher and it mostly contributes from the raw materials
holding in the warehouse. This high number of days holds the raw material for a long
period of time.
The days to collect the payments has been decreasing which acknowledges the prompt
collection method of the company. This initiates that company take the policy of
collecting the payments at their earliest.
The time of repay the supplier is higher, and it takes a long time to repay them. Thus fund
management shouldn’t be a problem to repay on time. The supplier credit terms seems
too feasible for the company.
Page 74 of 96
D. Market ratios
The below table shows the Market Ratios of Lafarge Surma Cement Mills Limited for
different periods
Lafarge Surma Cement Mills Limited

Year 2014 2013 2012 2011 2010
Dividend Coverage Ratio 2.43 - - - -
Dividend Yield 0.01% - - - -
Price Earnings Ratio 50.62 15.30 20.56 (30.67) (40.56)

60
40
20
0
2014 2013 2012 2011 2010
-20
-40
-60

The trend of Lafarge Surma Cement Mills Limited shows in last 5 year period Market to
Book Value Ratio falls in half and recovered in full. So it would be an opportunity for an
investor to think about investing into this share as its share price is growing with the
market.

Lafarge Surma Cement Mills Limited the dividend cover of 2.43 implies that a company
has sufficient earnings to pay dividends and it can pay more in future as it has kept some
of the money in Retained Earnings.
3. Dividend Yield:
Lafarge Surma Cement Mills Limited 0.01% which implied lower dividends as the price
was substantially stable and the investors requires more dividend in these days.
Page 75 of 96
its Earning per Share (EPS). The trend of P/E Ratio of Lafarge Surma Cement Mills Limited
shows that investors were expecting lower earnings growth in the past compared to
present days. P/E ratio shows investors are willing to pay money even if it incurs loss.
This indicates investors have strong confidence on Lafarge Surma Cement Company.
E. Leverage ratios
The below table shows the Leverage Ratio of Lafarge Surma Cement Mills Limited for
different periods

Year 2014 2013 2012 2011 2010
Gearing Ratio 1.51 1.72 2.21 2.88 6.47
Times Interest Earned Ratio 12.46 5.16 4.02 0.08 (1.55)

15
10
0
2014 2013 2012 2011 2010
-5
1. Gearing Ratio
Lafarge Surma Cement Mills Limited with decreasing gearing ratio (leverage) over last 5
years indicates that a greater proportion of assets is financed by equity and lower gearing
ratios mitigate the risk bankruptcy sacrificing the advantage of taking debt financing.

Lafarge Surma Cement Mills Limited has decreasing LTDE ratio indicates that they want
to mitigate the risk by repaying more fixed obligation and to finance through retained
earnings to procure greater return.

Lafarge Surma Cement Mills Limited has an increasing TIE ratio which indicates that the
company has an undesirable level of debt or is paying too much interest.
Page 76 of 96
F. Business Cycle
1. Operating Cycle:
Lafarge Surma Cement experienced a fairly consistent operating cycle during the period
2011-2013 before it decreased in 2014. Both the day’s in inventory and day’s receivable
outstanding has been the driving force behind the decline.
Lafarge Surma Cement

200
150
100
50
0
2009 2010 2011 2012 2013 2014 2015
Day’s in inventory declined from 86.84 to 75.87 and day’s receivable outstanding
declined from 71.90 to 45.34. This significant improvement deserves appreciation and
also reveals management’s effort to become more efficient.
1. Cash Cycle:
Like the operating cycle, the

cash conversion cycle of Lafarge Surma Cement
Lafarge Surma Cement 200
experienced a steady level 100
during the period 2011-
0
2013. However, in 2014 it
-1002009 2010 2011 2012 2013 2014 2015
faced abnormal day’s
-200
payable outstanding of
-300
314.70! The authenticity and
the justification of this staggering figure has to be checked because this leads to a negative cash
conversion cycle. A negative cash conversion cycle implies that it can use the money of its
suppliers to finance its inventory and receivables.
Page 77 of 96
Aramit Cement Ltd.
A. Liquidity Ratios
1. Current Ratio:
While looking at Current Ratio of Aramit Cement Ltd. for last 5 years we can see highest
of 0.92 was performed in 2014 followed by 0.73 in 2010, 0.69 in 2011, 0.68 in 2012 and
0.67 in 2013. In the last year the ratio increased by 0.25 compared to 2013. The ratio got
a decreasing trend from 2010 to 2013 and then rose up to 0.92.
2. Quick ratio:
While looking at Quick Ratio of Aramit Cement Ltd. for last 5 years we can see highest of
0.53 was in 2014 followed by 0.45 in 2013, 0.42 in 2011, 0.41 in 2012 and 0.34 in 2010.
In the last year the ratio increased by 0.08 compared to 2013. The ratio also got an
increasing trend for last 3 years.
3. Cash Ratio:
While looking through Cash Ratio of Aramit Cement Ltd. for last 5 years we can see
highest of 0.04 was in 2012 followed by 0.03 in 2010 and 0.01 in 2014, 2013 & 2011. In
the last year the ratio remains unchanged compared to 2013. The ratio was more or less
flat for last 5 years.

Aramit Cement Ltd. got highest Gross Profit Margin of 0.24 in 2014 followed by 0.23 in
2010, 0.22 in 2013 and 0.19 in 2012 & 2011. In the last year its Gross Profit Margin
increased by 0.02 compared to 2013. This ratio shows a mixed trend through last 4 years
from 2011.

The Company got highest Operating Profit Margin of 0.19 in 2014 & 2010 followed by
0.17 in 2013, 0.16 in 2012 and 0.15 in 2011. In the last year its Operating Profit Margin
increased by 0.02 compared to 2013. The ratio shows an increasing trend for last 4 years.

Highest Net Profit Margin for the company was 0.09 in 2010 followed by 0.05 in 2011 and
remained unchanged for 2012 & 2013. However in 2014 it has dropped down to 0.02. Its
Net Profit Margin decreased by 0.03 compared to 2013. The ration more or less was
constant through last 4 years and falling.
Page 78 of 96
4. Return on Asset:
The Company got highest Return on Asset of 0.04 in 2012 & 2011 followed by 0.03 in
2013 and 0.01 in last year. In the last year its Return on Asset decreased by 0.02
compared to 2013. This ratio is decreasing slowly for last 5 years.
The Company got highest Return on Equity of 0.32 in 2011 followed by 0.25 in 2012, 0.17
in 2013 and 0.04 in 2014. In the last year its Return on Equity decreased by 0.13
compared to 2013 and 0.21 compared to 2012. This ratio also show decreasing trend for
last 5 years.

Aramit Cement Ltd. has highest Return on Capital Employed of 0.19 in 2012 followed by
0.18 in 2011, 0.15 in 2013 and 0.10 in 2014. In the last year its Return on Capital
Employed decreased by 0.05 compared to 2013 and 0.09 compared to 2012 which
reflects a decreasing trend for last 3 years.
C. Activity Ratios
Details 2014 2013 2012 2011 Avg.

Page 79 of 96
The asset utilization of Aramit Cement is under poor review as they can’t properly use
the resources. Since the sales is low, the return is as usual will be less.
The Inventory turnover is increasing from year to year, which shows they are creating
more holding cost to hold the inventories. Moreover, most of their inventory is in semi-
finished product, which has low value compare to raw materials or finished products.
Payment and collection procedure is falling as they are paying slowly to the stakeholder,
who might refuse to do business in future.
Details 2014 2013 2012 2011 Avg.

Days in Storage 64.25 41.21 36.27 50.70 48.11
Days in Factory 6.77 2.85 3.14 3.55 4.08
Operating Cycle 267.59 169.09 138.48 150.32 181.37
The inventory holding is increasing which is not a good sign for the business to carry
forward. This increases the cost of storage for the company.
The days to collect the customer is way more than higher, but the best part they could
repay the suppliers after they receive the payment from the customers. However, the
huge operation cycle is not a good picture to carry, as the fund is tied for a very long time.
Liquidity crisis might arise since no cash money is being hold for the time being
Page 80 of 96
D. Market ratios
The below table shows the Leverage Ratios of Aramit Cement Limited for different
periods
Aramit Cement Limited
Year 2014 2013 2012 2011 2010
Dividend Coverage Ratio - 2.56 3.03 3.30 5.67
Dividend Yield 0.03% 0.01% 0.02% 0.01% 0.03%

90
80
70
60
50
40
30
20
10
0
2014 2013 2012 2011 2010

The trend of Aramit Cement Limited shows in different periods Market to Book Value
Ratio falls and recovers a bit. It dropped first in the year 2011 in stock market crash but
never recovered in full after that incident. So the investor should rethink about investing
into this share if they want to get capital gain from investing into these shares.

The ratio DCR of Aramit Cement Limited comes out to be greater than 1 every year, it
means that the earnings are sufficient enough to serve shareholders with their dividend.
To evaluate the business or firm’s ability to serve, the ratio should be as higher as
possible. Keeping a cushion for uncertainties, the ratio above 2 can be considered good.
3. Dividend Yield:
Aramit Cement Limited with its dividend yield pays its investors a stable dividend
compared to the fair market value of the stock. This means the investors are getting
compensated for their investments compared with lower dividend yielding stocks.
Page 81 of 96
The price to earnings ratio of Aramit Cement Limited indicates the expected price of a
share based on its earnings. Aramit Cement Limited with a high P/E ratio usually
indicated positive future performance and investors are willing to pay more for this
company's shares.
E. Leverage ratios
The below table shows the Leverage Ratio of Aramit Cement Limited for different periods

Year 2014 2013 2012 2011 2010
Gearing Ratio 3.56 5.78 6.67 7.03 7.43

8
6
4
2
0
2014 2013 2012 2011 2010
1. Gearing Ratio
Aramit Cement Limited with decreasing gearing ratio (leverage) over last 5 years
indicates that a greater proportion of assets is financed by equity and lower gearing ratios
mitigate the risk bankruptcy sacrificing the advantage of taking debt financing.

Aramit Cement Limited has decreasing LTDE ratio indicates that they want to mitigate
the risk by repaying more fixed obligation and to finance through retained earnings to
procure greater return.

Aramit Cement Limited has a decreasing TIE ratio can indicate that a company is trying
to decrease the volume of debt and increasing operating profit margin.
F. Business Cycle
1. Operating Cycle:
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The operating cycle of Aramit Cement
has been on the rise since 2012. It
Aramit Cement
increased to staggering 267.59 in 2014. 200
Aramit Cement
The driving force behind this increase 150 300
100
was the day’s receivable outstanding. 200
50
This implies that Aramit is sufficiently 100
0
efficient in days in inventory held but 2009 0 2010 2011 2012 2013 2014 2015
highly inefficient in day’s receivable 2009 2010 2011 2012 2013 2014 2015
outstanding. That is it has very flexible credit
policy for its customers and the flexibility in stretching every year. The rationale behind
this could be Aramit is trying to grab more market share by offering easy credit policy to
its customer. However, it must try to align itself with the industry average. On the other
hand, a very flexible credit policy also increases the chances for bad debt.
1. Cash Cycle:
The day’s payable outstanding of Aramit Cement
has been faruly constant from 2011 to 2013. Hence, Aramit Cement
the cash conversion cycle has moved as the 200
operating cycle moved. However, the day’s payable 100
outstanding in 2014 has been at staggering 266.22
0
which lowered the cash conversion cycle 2009 2010 2011 2012 2013 2014 2015
significantly. This figure requires verification. If this
the case then Aramit Cement is a very favorable position with its suppliers. The figure of
cash conversion cycle implies that Aramit is very much using the suppliers’ money to fund
its inventories and its receivables.
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8. Factor DuPont Analysis
Comparative 5 Factor DuPont Analysis for the year 2014
Total
Net Revenue/ Return on
EBT/ EBIT/ Assets/
Sl. Company Income/ Total Equity
EBIT Revenue Owners'
EBT Assets (ROE)
Equity
1 Confidence Cement Ltd. 0.50 0.88 0.12 0.72 1.75 6%
2 Heidelberg Cement Ltd. 0.71 1.27 0.12 1.03 1.56 18%
3 Meghna Cement Ltd. 0.69 0.43 0.09 0.95 4.84 12%
4 Premier Cement Ltd. 0.73 0.63 0.15 0.77 2.97 15%
5 M.I. Cement Ltd. 0.76 0.95 0.12 0.70 2.00 12%
6 Lafarge Surma Cement Ltd. 0.79 0.94 0.33 0.58 1.51 21%
7 Aramit Cement Ltd. 0.97 0.13 0.19 0.33 3.56 3%
From the table above we find that Lafarge Surma Cement Ltd. has the highest ROE of 21%. The
ROE of Heidelberg Cement, Premier Cement, Meghna Cement, M.I. Cement, Confidence Cement
and Aramit Cement is 18%, 15%, 12%, 12%, 6% and 3% respectively.
5 Factor DUPont Analysis 2014

6.00
5.00
4.00
3.00
2.00
1.00
0.00
Confidence Heidelberg Meghna Premier Cement M.I. Cement Lafarge Surma Aramit Cement
Cement Ltd. Cement Ltd. Cement Ltd. Ltd. Ltd. Cement Ltd. Ltd.
Net Income/ EBT/ EBIT/ Revenue/ Total Assets/ Return on Equity

EBT EBIT Revenue Total Assets Owners' Equity (ROE)
The success behind Lafarge Surma’s high ROE is the low interes burden of 0.94 represented by
the EBT/EBIT and high operating margin of 33% represented by EBIT/Revenue. Since it has low
tax burden it has also the lowest leverage ratio of 1.51. However, its asset utilization ratio of 0.58
is the second lowest in the industry compare to other companies where the highest ratio is that
Page 84 of 96
of Heidelberg Cement of 1.03. Hence, Lafarge Surma can increase its ROE further by producing
more revenue by utilizing its assets.
The second highest ROE is that of Heidelberg Cement of 18%. Although it has poor operating
margin of only 12% and low leverage ratio of 1.56, the outstanding asset utilization ratio of 1.03
and low interest burden has pushed the ROE to a greater height. Hence if it can increase the
operating margin and leverage itself a bit more it has the possibility to have the highest ROE in
the industry.
Premier Cement has a ROE of 15% which is quite standard. It is fairly leveraged with decent asset
utilization ratio of 0.77 and tax burden of 0.73. The operating margin is also quite satisfactory. If
Premier Cement can focus on all the factors mentioned above it has the potential to outperform
the industry leaders.
Meghna Cement and M.I. Cement has the same ROE of 12%. Meghna is highly leveraged whereas
M.I. Cement is family leveraged. As a matter of fact Meghna has high interest burden and M.I. has
the lowest interest burden. However, Meghna has utilization ratio compare to M.I. Cement which
leads it to have the same ROE.
The ROE of Confidence Cement is only 6%, one of the poorest in the industry. It has the highest
tax burden of 0.50 with poor operating margin and low leverage ratio. This are some of the areas
Confidence should improve in order attract potential investor and also retain existing investors.
Finally, the lowest ROE is that of the Aramit Cement of only 3%. Although it has the lowest tax
burden and satisfactory operating margin, the high leverage that incurs high interest payment
with extremely poor asset utilization ratio of 0.33 only has caused Aramit to perform very badly
in 2014. Aramit must improve all the factors that it is lacking for its future prospect.
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9. Cash Flow Analysis:
Management of an entity prepares the Cash Flow Statement to provide information
regarding receipts and payments of cash. Cash Flow Statement also shows information of
cash in terms of operating activities, investing activities and financing activities. In order
to assess the financial performance in terms of cash, investors need to analyze and
evaluate the cash flow statements.
Cash flow analysis deals with the timing, sources, amount of cash inflows/outflows of a
firm or an investment. It provides answers the questions of 1) where did the case come
from? 2) What was cash used for? 3) What was the changes in the cash balance?
Cash flow analysis can also help an investor in assessing the firm or investment’s strength
to generate in generating cash internally. It will indicate ability to generate cash to meet
its obligations. Analysis of cash flow will show how much company need to invest in
increasing or maintaining its current operation capacity.
Analysis of cash flow will also show how much money is provided by to debt holders and
equity holders. It will provide information regarding how much cash per share was
generated from operation. Finally Cash flow analysis will provide information about the
income disclosed as income and actual amount of cash received by firm or the investment.
In order to evaluate financial performances, operating, investing and financing cash flows
of the players in the Cement industry has been analyzed. Operating cash flows are divided
with weighted average number of shares outstanding to find the operating cash flow per
share generated by each companies. Following table shows year comparison of Operating
Cash Flows per share of different cement companies:
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Operating Cash Flow Per Share
Year-wise Comparative
Company Name 2014 2013 2012 2011 2010 Trend
Aramit Cement (11.80) 4.21 7.34 7.95 (6.65)
Confidence Cement (2.12) 8.39 (1.21) 2.25 6.35
Heidelberg Cement 29.99 40.16 26.53 20.31 20.51
Lafarge Surma Cement Ltd. 2.11 2.97 2.50 (0.11) 0.39
Meghna Cement 6.48 16.84 9.11 (20.05) 13.03
M.I. Cement Factory Limited 0.81 6.31 1.73 (1.09) 8.82
Premier Cement Mills Limited 0.05 0.87 0.35 (0.30) 0.17
From the table above, it can be found that other than Heidelberg no other companies have
consistency in generating sufficient cash from operation. Meghna Cement and Lafarge
Surma Cement were able to generate positive cash flow from operation but cash flow per
share is significantly lower than Heidelberg cement. On the other hand rest 4 companies
were performed very poorly in generating sufficient cash from operations.
Year-wise comparison of cash flow per share of different cement companies shows that
most of the companies were underperforming in the year 2011 in generating cash flow
from operation. The problem with low operating cash flow was being recovered in 2012
and 2013 but again dropped in the year 2014. The table also shows that other than
Heidelberg, Lafarge and Meghna Cement, all other companies are underperforming in
generating sufficient cash from operating activities.
This project was concerned regarding the earnings shown in the Income Statement and
actual cash performance. So a comparison was made in the earnings per share (EPS) of
the companies with the Operating Cash Flows per Share (OCFPS). Following bar chart
shows the comparison of EPS and OCFPS of Cement companies for the year 2014:
Page 87 of 96
Comparison of EPS and OCFPS of the cement companies shows that there lies significant
differences between them. In the year 2014, Heidelberg and Meghna cement more cash
flows from operation per share than the earnings per share have indicated. Heidelberg
reported significantly higher EPS and OCFPS than any other companies in the cement
industries.
Comparative graph above also shows that Aramit Cement have earnings only BDT 0.51
per share whereas it had operating loss of 11.8 per share. Therefore EPS of the Aramit
cement could not show the complete performance of that company.
Although Confidence cement have shown EPS of 5.32 for the year of 2014 but it was
calculated that the company had OCFPS of negative 2.12. This means the company had
operating outflow of 2.12 per share during the year. That means confidence cement has
more investment income and financial gain than the actual gain.
In case of Lafarge, EPS and OCFPS are very close. It had EPS of 2.43 where as its OCFPS
was 2.11. Both the EPS and OCFPS seems very close and balanced. However, remaining 2
cement companies, M.I. Cement and Premier cement, of the cement industry shave shown
high EPS but actual OCFPS was very small and insignificant.
If an investor wants in invest in the cement companies, he should focus on the most recent
financial performances. In that case, investor should invest at Heidelberg cement for the
time being. However, while considering for a long period of time, investor also focuses on
the long term financial performances of an entity. Therefore, EPS and OCFPS was
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compared for the last 5 years to understand the financial strength and its stability.
Following Table shows the year wise comparison of EPS and OCFPS of different
companies of cement industry.
Operating Cash Flow Per Share and Earnings Per Share

2014 2013 2012 2011 2010

Company Name
EPS OCFPS EPS OCFPS EPS OCFPS EPS OCFPS EPS OCFPS
Aramit Cement Ltd. 0.51 (11.80) 2.56 4.21 3.03 7.34 3.00 7.95 5.67 (6.65)
Confidence Cement Ltd. 5.32 (2.12) 7.36 8.39 6.23 (1.21) 4.41 2.25 7.39 6.35
Heidelberg Cement Ltd. 20.88 29.99 26.09 40.16 22.85 26.53 13.27 20.31 17.68 20.51
Lafarge Surma Cement Ltd. 2.43 2.11 2.19 2.97 1.60 2.50 (1.88) (0.11) (1.39) 0.39
Meghna Cement Ltd. 4.48 6.48 5.23 16.84 6.28 9.11 2.96 (20.05) 2.03 13.03
M.I. Cement Factory Ltd. 4.54 0.81 4.58 6.31 4.14 1.73 3.23 (1.09) 4.08 8.82
Premier Cement Mills Ltd. 4.83 0.05 4.73 0.87 1.87 0.35 3.65 (0.30) 4.71 0.17
The comparative table indicates that Lafarge is very much efficient in converting income
into cash. It was able to match it income with the cash receipts. Similarly, Heidelberg was
also able to generate both high EPS and OCFPS. Here the table shows that Heidelberg have
constantly generated operating cash flows than the actual earnings per share.
Premier and Aramit cement are showing positive earnings per share every year.
However, they have generated operating cash flows which are very small and close to
zero (0). This pattern or situation is not good for both the company and its investors. This
situation indicates that company have engaged in investing activities for investment
income rather than generating cash from operation. This situation may lead the
companies to bankruptcy.
Here it should be noted that even if companies had reported negative OCFPS, they have
reported positive earnings per share. This may be through manipulation of financial
statements. However, as cash flow statement is shows performance relating to generating
cash and follows cash basis accounting. Therefore, it is highly unlikely to be manipulated.
From the analysis of cash flow for both short term and long term perspective, it will be
worthwhile for the investors to invest in the stocks of Heidelberg, Meghna and Lafarge
Surma Cement Ltd. If investor is risk averse, they should choose Heidelberg as it has
consistent high income and cash generating capability. But if the investor is risk liver and
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require high premium, they should invest in Confidence cement and premier cement as
they show variable return. And if the investor is average risk taker, they should invest in
Meghna and Lafarge Surma Cement Ltd.
10. Z-Score Analysis:

Now a days, risk in relation to investments have increased significantly due to global
economic crisis and corporate failure. Investors are now worried not only about the
return that investments would make but also the recovery of the actual investments.
Rational investors therefore chooses investment opportunities that are have financial
stability and economic performance consistency. Altman Z-scores is one of such
analytical tools which Investors can use in determining whether they should buy or sell
a particular stock if they're concerned about the underlying company's financial strength.
Altman Z-Score formula was initially developed by Professor Edward Altman to evaluate
the risk of bankruptcy of the U.S. publicly traded companies. Later modified the formula
which can be used to evaluate both public and private companies, both manufacturing
and nonmanufacturing companies and both U.S. and non-U.S. companies.
The Z-score is a linear combination of four or five common business ratios, weighted by
coefficients. The coefficients were estimated by identifying a set of firms which had
declared bankruptcy and then collecting a matched sample of firms which had survived,
with matching by industry and approximate size (assets). Weights in the Z-score formula
varies for manufacturing and non-manufacturing, public and private limited companies.
Z-score formulas are:
1. Manufacturing Public Company:

Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
2. Manufacturing Private Company:
Z-Score = 0.717A + 0.847B + 3.107C + 0.42D + .998E
3. Non-Manufacturing Company:
Z-Score = 6.56A + 3.26B + 6.72C + 1.05D
Where,
A = Working Capital/Total Assets
B = Retained Earnings/Total Assets
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C = Earnings Before Interest & Taxes/Total Assets
D = Book Value of Equity/Total Liabilities (for private companies)
D = Market value of Equity/Total Liabilities (for public companies)
E = Sales/Total Assets
The value calculated using Z-score formula, are interpreted using different rages. For
manufacturing public company, a Z-score of lower than 1.81, indicates that the company
is heading for bankruptcy. Companies with scores above 2.99 are unlikely to enter
bankruptcy. Scores in between 1.81 and 2.99 lie in a gray area.
Whereas for manufacturing private company, a Z-score of lower than 1.23, indicates that
the company is heading for bankruptcy. Companies with scores above 2.9 are unlikely to
enter bankruptcy. Scores in between 1.23 and 2.9 lie in a gray area.
On the other hand a non-manufacturing private company will face risk of bankruptcy if
its Z-score is lower than 1.1. Non-manufacturing companies with scores above 2.6 are
unlikely to enter bankruptcy. Scores in between 1.1 and 2.6 lies in a gray area.
In order to understand the riskiness of bankruptcy and financial stability of the cement
companies listed in the stock market, Z-score formula have been applied on their financial
statements. Because, the companies are listed in the stock market and they are
conducting business of manufacturing cements, applicable Z-Score formula will be Z-
score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E. Year wise analysis of Z-score is given below:
Page 91 of 96
Year-wise Comparative Z-Score
Aramit Cement 1.07 1.26 1.32 1.86 1.58
Confidence Cement 2.69 3.51 3.23 2.92 9.68
Lafarge Surma Cement Ltd. 14.13 4.08 2.87 2.98 0.63
Meghna Cement 2.04 2.38 2.61 2.48 3.68
M.I. Cement Factory Limited 2.76 3.45 3.38 6.02 8.09
Premier Cement Mills Limited 2.35 2.53 3.95 7.30 8.47
Z-score range Position Mark
Z > 2.99 “Safe” Zone

1.81 < Z < 2.99 “Grey” Zone
Z < 1.81 “Distress” Zone
FIGURE: COMPARATIVE Z-SCORE ANALYSIS
In the table above, it shows that in 2010 only 2 companies were in distress zone whereas
rest 5 companies were in safe zone. Here, safe zone indicates the unlikely to bankrupt,
distress zone indicates the likeness of bankruptcy and gray zone indicates the risk in
between. In 2014, only 2 companies were in safe zone.
Year wise comparison of Z-score of cement companies shows that as the years went by,
financial stability of the cement companies decreased. Other than Lafarge Surma Cement
Ltd. and Heidelberg Cement Ltd., Z-score of all companies have decreased to gray zone.
Only Heidelberg cement was able to maintain financial stability and avoid the riskiness
of bankruptcy in these 5 year period. Although Lafarge’s Z-score was in gray zone in 2011
and 2012, it improved greatly in 2013 and 2014. On the other hand, Z-score of Aramit
cement was mostly at distress zone. That means Aramit cement bears a risk on
bankruptcy.
If a rational investor is risk averse, he will invest in Heidelberg cement and Lafarge
Shurma cement even if they provide a lower return compared to others. If the investor is
risk lover, he will invest at Aramit cement but will require a much higher return
compared to other players of the industry. Higher required return will indicate the risk
premium for bearing the risk of bankruptcy.
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11. Findings, Recommendations & Conclusion
A. Findings:
1. Heidelberg Cement, Crown Cement and Lafage cement has strong liquidity
position. In some cases they have their cash position exceeds the industry
average.
2. Lafage cement has the highest level of profit margin compare to other
companies. In terms of Return on Equity, only Heidelger, Lafarge and Premier
cement was able to generate ROE which in over the industry average.
3. Heidelberg cement is very much efficient in utilizing its assets. It has the lowest
level of inventory days (40 days). On the other hand crown cement has the
lowest level of payable days. That means crown cement have to repay for the
purchased material earlier than any other company.
4. Cement industry is highly levered. All companies have used debt in their
capital structure. Among all companies, meghna cement is highest level of
leverage.
5. Market has strong confidence on cement industries. They are eager to buy
shares even in the years of distress.
6. The year 2010 and 2011 had negative effect on all cement companies. Other
than Heidelberg, all other companies performed poorly. Most of the companies
have performed poorly in the year 2014.
7. Other than Heidelberg cement, all other companies have very low operating
cash flow per share. However, Lafarge cement have shown consistency in
generating positive operating cash flow per share.
8. Only Aramit cement has financial distress for long period. Therefore they face
the risk on bankruptcy. Whereas Heidelberg cement have constantly remain
free from risk on bankruptcy.
9. Most of the companies have interest income rather than interest expenses.
That means they have idle cash and lack new investment opportunities.
10. Heidelberg cement has consistency in financial performance.
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B. Recommendations
a) Investors should analyze the financial statements first in order to make

investment decisions.
b) Companies that have excess cash should search for new investment
opportunities.
c) Companies should focus more in efficiency and asset utilizations.
d) A rational investors should invest in Heidelberg cement first than they should
invest in other companies like Lafarge, Meghna and Crown cements.
e) Investment in Aramit cement should require a risk premium.
C. Conclusions
Cement industry is one of the prominent manufacturing industry in Bangladesh.
They are contributing in the infrastructure development of the country. Although
there are lots of cement company exist in Bangladesh, only 7 of them are listed in
the Dhaka Stock Exchange. More of the companies should be listed in the capital
market.
Cement companies have significant contribution to the economy of Bangladesh.

These companies have created lots of employment opportunities. Product of these
companies are fully consumed in Bangladesh. Moreover they are exporting their
product to the outside world. These way they are earning valuable foreign
currency for the country.
When investing in these cement companies, an investor should first analyze the
financial statements. They should understand the accounting environment and
industry practice. After these they should analyze the previous and prospective
performance of the companies.
Page 94 of 96
f) Bibliography
1. Investopedia, www.investopedia.com
2. Wikipedia, www.wikipedia.com
3. Dhaka Stock Exchange, www.dsebd.org
4. Annual Report of Confidence Cement Ltd (year 2010-2014)
5. Annual Report of Heidelberg Cements BD Ltd (year 2010-2014)
6. Annual Report of Meghna Cements MillsLtd (year 2010-2014)
7. Annual Report of Premier Cements Mills Ltd (year 2010-2014)
8. Annual Report of M.I. Cement Factory Ltd (year 2010-2014)
9. Annual Report of Lafarge Surma Cement Ltd (year 2010-2014)
10. Annual Report of Aramit Cement Ltd (year 2010-2014)
Page 95 of 96
APPENDICES
Appendix 1: Extracts from Financial Statements.
Appendix 2: Common Size Analysis of Financial Statements.
Appendix 3: Company-wise calculation of ratios.
Appendix 4: Year-wise calculation of ratios.
Appendix 5: Analysis of Cash Flow Information
Appendix 6: Analysis of Z-Score
Extract FS of Confidence Cement BD Ltd. 2014 2013 2012 2011 2010
Statement Of Financial Position
Assets
Trade Receivables 739,051,832 583,170,584 445,863,355 231,615,420 129,857,842
Inventory -Raw & Packing Material 230,983,935 94,528,373 227,545,184 206,078,004 259,893,837
Inventory - Work-in-Process 26,340,434 33,232,330 - - 42,465,911
Inventory - Finished goods - - - - -
Inventory - Spare Parts 138,979,345 105,651,568 132,710,626 118,743,433 112,134,935
Advance, Deposits & Prepayments (ADP) 1,023,334,440 816,432,961 645,505,620 481,819,699 234,902,909
Cash and Cash Equivalents 68,115,965 108,087,011 43,105,373 59,512,296 40,555,831
Total Current Asset 2,443,434,324 1,954,064,295 1,544,843,374 1,131,359,647 844,932,866
Total Non-Current Asset 2,618,018,666 2,556,245,153 2,539,132,936 2,603,174,639 2,388,406,087
Total Assets 5,061,452,990 4,510,309,448 4,083,976,310 3,734,534,286 3,233,338,953
Trade Payables 167,770,934 96,381,067 76,209,428 65,390,565 63,648,141
Total Current Liabilities 1,758,186,496 1,282,123,029 1,191,946,366 915,339,475 621,256,569
Total long term Liabilities 405,021,448 410,004,465 338,883,003 304,252,144 8,757,173
Total Liabilities 2,163,207,944 1,692,127,494 1,530,829,369 1,219,591,619 630,013,742
Share Capital 449,935,200 449,935,200 449,935,200 374,946,000 326,040,000
Retained Earnings 684,362,720 508,462,182 318,265,040 321,960,841 18,507,582
Total Equity 2,898,245,046 2,818,181,954 2,553,146,941 2,514,942,667 2,603,325,211
Net Debt (Interest bearing loan - Cash) 1,330,289,803 867,567,724 886,786,118 567,994,941 336,066,118
Capital Employed 4,228,534,849 3,685,749,678 3,439,933,059 3,082,937,608 2,939,391,329
Statement of Comprehensive Income

Credit Sales / Revenue 3,634,989,180 3,481,284,388 3,271,923,378 2,240,791,456 1,718,921,397
Material Purchased 2,458,010,856 2,149,010,057 2,379,375,264 1,646,240,944 13,682,873,704
Raw Material Consumed 2,546,665,235 2,320,619,251 2,350,144,213 1,746,426,169 1,326,450,961
Cost of Goods Manufactured/ Production 3,028,576,709 2,765,198,852 2,710,292,215 1,926,360,961 1,482,260,805
Cost of Sales / Revenue 3,028,576,709 2,765,198,852 2,710,292,215 1,926,360,961 1,482,260,805
Gross Profit 606,412,471 716,085,536 561,631,163 314,430,495 236,660,592
Operating Income (EBIT) 423,555,777 581,664,816 465,533,662 244,361,208 174,923,433
Non-Operating Income 11,835,912 14,932 470,069,799 2,555,997,600 147,936,806
Interest Expenses / (income) 42,662,744 77,290,500 81,698,612 24,179,863 11,292,922
Income Before Tax ( EBT) 371,070,094 473,548,788 388,371,187 2,531,817,737 295,988,951
Tax Expense 131,793,787 142,376,340 107,969,973 54,953,503 55,000,000
Profit After Tax (EAT) 239,276,307 331,172,448 280,401,214 2,476,864,234 240,988,951
Total Comprehensive Income 187,197,259 432,638,026 100,642,425 242,619,591 7,934,631
Dividend 123,732,180 89,987,040 149,978,400 130,416,000 130,416,000
Earnings Per Share 5.32 7.36 6.23 4.41 7.39
Dividend Per Share 2.75 2.00 3.33 3.48 4.00
Book Value Per Share 64.41 62.64 56.74 67.07 79.85
Market Value Per Share (On Year End) 107.90 124.00 104.54 103.81 286.07
No. of Common Stock Outstanding 44,993,520 44,993,520 44,993,520 37,494,600 32,604,000
Extract FS of Heidelberg Cement BD Ltd. 2014 2013 2012 2011 2010
Assets In Thousand BDT In Thousand BDT In Thousand BDT In Thousand BDT In Thousand BDT
Trade Receivables 951,847 766,631 849,833 779,174 508,621
Inventory -Raw & Packing Material 705,414 769,272 917,043 780,961 902,441
Inventory - Work-in-Process - - - - -
Inventory - Finished goods 101,218 115,169 67,044 68,026 51,106
Inventory - Spare Parts 219,157 211,313 204,321 272,595 255,915
Advance, Deposits & Prepayments (ADP) 87,460 58,928 77,521 156,572 187,204
Total Current Asset 6,447,873 7,038,471 5,643,683 4,540,425 4,482,314
Total Non-Current Asset 3,724,986 3,683,577 3,537,828 3,470,382 2,700,385
Total Assets 10,172,859 10,722,048 9,181,511 8,010,807 7,182,699
Equity & Liabilities In Thousand BDT In Thousand BDT In Thousand BDT In Thousand BDT In Thousand BDT
Trade Payables 568,132 510,588 581,470 864,364 541,292
Total Current Liabilities 2,769,689 2,414,173 2,137,157 2,118,803 1,879,472
Total long term Liabilities 879,162 816,291 744,329 628,817 546,726
Total Liabilities 3,648,851 3,230,464 2,881,486 2,747,620 2,426,198
Share Capital 565,036 565,036 565,036 565,036 565,036
Total Equity 6,524,002 7,491,584 6,300,025 5,263,197 4,756,501
Net Debt (Interest bearing loan - Cash) 4,164,365 4,864,898 182,293 159,480 17,877
Capital Employed 7,402,634 8,307,600 7,044,354 5,892,014 5,303,227

Credit Sales / Revenue 10,504,500 9,956,635 10,885,154 8,516,206 8,321,771
Material Purchased 7,318,502 6,629,187 7,806,084 6,385,574 5,536,959
Raw Material Consumed 7,406,909 6,699,105 7,763,433 6,347,217 5,503,479
Cost of Goods Manufactured/ Production 8,478,031 7,696,896 8,801,017 7,192,071 6,324,350
Cost of Sales / Revenue 8,491,983 7,648,771 8,801,998 7,175,151 6,348,429
Gross Profit 2,012,517 2,307,864 2,083,156 1,341,055 1,973,342
Operating Income (EBIT) 1,307,027 1,664,803 1,556,574 808,625 1,409,199
Non-Operating Income 171 - 8 670 (313)
Interest Expenses / (income) (434,613) (467,759) (344,528) (298,120) (171,630)
Income Before Tax ( EBT) 1,654,721 2,025,934 1,806,054 1,107,415 15,805,516
Tax Expense 475,166 551,857 514,960 357,754 581,791
Profit After Tax (EAT) 1,179,555 1,474,077 1,291,094 749,661 998,725
Total Comprehensive Income 1,179,555 1,474,077 1,291,094 749,661 998,725
Dividend 2,147,136 2,147,136 282,518 254,266 2,429,654
Book Value Per Share 180.04 189.76 162.49 142.00 1,271.00
Extract FS of Meghna Cement Mills 2014 2013 2012 2011 2010
Assets
Trade Receivables 768,620,751 907,687,973 1,117,420,597 794,337,599 433,094,292
Inventory - Work-in-Process 34,069,104 33,820,125 38,221,779 51,242,558 34,821,254
Inventory - Finished goods 562,454,450 503,274,759 207,762,660 586,795,195 600,224,826
Advance, Deposits & Prepayments (ADP) 641,126,114 1,426,996,905 1,340,617,663 1,200,376,960 1,052,598,449
Total Current Asset 3,034,958,636 3,230,991,441 3,054,920,138 2,886,387,943 2,299,131,462
Total Non-Current Asset 898,075,302 1,005,277,693 1,116,514,072 1,221,277,710 1,305,602,458
Total Assets 3,933,033,938 4,236,269,134 4,171,434,210 4,107,665,653 3,604,733,920
Trade Payables 102,216,258 313,800,064 178,529,312 244,320,726 182,825,462
Total Current Liabilities 2,532,498,043 2,503,653,618 2,446,568,774 2,418,739,807 1,915,455,122
Total long term Liabilities 588,299,046 910,496,360 964,144,765 1,013,312,325 1,023,934,047
Total Liabilities 3,120,797,089 3,414,149,978 3,410,713,539 3,432,052,132 2,939,389,169
Share Capital 225,004,000 225,004,000 225,004,000 225,004,000 225,004,000
Total Equity 812,236,849 822,119,156 760,720,671 675,613,521 665,344,752
Net Debt (Interest bearing loan - Cash) 2,307,702,301 2,240,684,588 2,336,561,900 2,513,398,502 1,983,017,983

Gross Profit 443,459,861 543,905,123 697,470,019 540,431,905 325,121,523
Non-Operating Income 6,720,074 6,247,470 1,386,872 24,558,389 14,364,857
Tax Expense 41,915,610 52,110,748 59,789,410 26,508,356 31,998,893
Profit After Tax (EAT) 100,760,062 117,649,485 141,358,150 66,519,769 5,641,786
Dividend 33,750,600 33,750,600 56,251,000 20,042,339 50,609,575
No. of Common Stock Outstanding 22,500,400.00 22,500,400.00 22,500,400.00 22,500,400.00 22,500,400.00
Extract FS of Premier Cement Mills Ltd. 2014 2013 2012 2011 2010
Assets
Trade Receivables 1,322,212,717 1,058,028,972 666,900,254 489,595,303 344,714,354
Inventory -Raw & Packing Material 1,282,263,619 789,597,607 536,625,624 689,410,200 214,170,799
Advance, Deposits & Prepayments (ADP) 936,140,233 806,594,430 852,351,480 515,640,233 258,748,528
Total Current Asset 3,858,362,266 3,189,362,901 2,202,563,160 1,903,992,198 881,774,118
Total Non-Current Asset 5,945,057,530 5,306,862,572 4,399,501,404 2,223,953,492 997,092,676
Total Assets 9,803,419,796 8,496,225,473 6,602,064,564 4,127,945,690 1,878,866,794
Trade Payables 279,583,089 814,191,402 406,417,185 165,631,749 91,883,842
Total Current Liabilities 5,041,160,783 4,273,975,002 3,217,020,223 1,944,892,014 859,743,356
Total long term Liabilities 1,456,982,360 1,004,276,038 1,126,572,473 135,593,375 38,754,172
Share Capital 1,054,500,000 1,054,500,000 934,500,000 890,000,000 400,000,000
Retained Earnings 1,162,879,482 1,075,086,456 575,120,386 425,718,439 328,813,642
Total Equity 3,305,276,653 3,217,974,434 2,258,471,868 2,047,460,302 980,369,266
Net Debt (Interest bearing loan - Cash) 953,074,415 201,265,438 851,173,373 (84,222,139) (64,140,437)

Gross Profit 1,295,934,121 1,153,591,261 531,307,815 635,654,261 403,578,427
Operating Income (EBIT) 1,106,101,327 1,125,995,184 482,843,286 513,829,837 350,836,984
Non-Operating Income 184,719,720 273,854,481 154,309,045 26,807,040 (931,809)
Tax Expense 185,673,987 261,373,284 148,371,081 98,120,364 105,703,489
Dividend 3,163,500,000 4,218,000,000 - - -
Dividend Per Share 3.00 4.00 - - -
No. of Common Stock Outstanding 1,054,500,000 1,054,500,000 934,500,000.00 890,000,000.00 400,000,000.00
M.I. Cement Factory Limited 2014 2013 2012 2011 2010
Assets
Trade Receivables 1,169,445,807 667,643,514 753,851,554 343,047,480 316,068,872
Inventory - Finished goods 141,101,921 76,068,732 23,966,460 23,130,490 20,323,312
Cash and Cash Equivalents 3,237,987,890 2,855,126,848 2,902,952,909 2,867,368,280 60,178,033
Total Current Asset 7,271,045,790 5,572,352,660 5,759,451,243 4,752,218,577 1,132,768,640
Total Non-Current Asset 4,018,304,669 4,175,044,571 4,135,527,540 2,232,034,924 1,147,167,252
Total Assets 11,347,005,462 9,783,395,912 9,915,183,783 7,004,458,502 2,282,435,892
Trade Payables 107,983,409 136,889,183 148,526,299 110,537,447 359,115,797
Total long term Liabilities 1,278,308,374 1,693,689,300 1,962,968,266 606,787,522 67,110,340
Share Capital 1,485,000,000 1,485,000,000 1,350,000,000 1,000,000,000 700,000,000
Retained Earnings 1,015,341,470 932,436,118 865,624,424 803,370,870 364,500,643
Total Equity 5,675,411,007 5,594,400,355 5,437,959,570 5,028,493,703 1,335,997,883
Net Debt (Interest bearing loan - Cash) 829,597,227 1,404,798,698 1,750,492,262 349,900,758 7,675,062

Gross Profit 1,258,915,200 1,098,522,118 750,616,368 768,256,755 701,546,367
Non-Operating Income 40,979,579 18,503,603 27,829,589 13,727,505 8,925,801
Interest Expenses / (income) (66,211,046) 74,671,363 177,928,220 95,083,407 (48,483,129)
Tax Expense 214,686,316 215,717,945 184,010,368 244,849,608 199,264,755
Dividend 445,500,000 594,000,000 258,124,424 500,000,000 -
Dividend Per Share 3.00 4.00 3.50 1.50 -
No. of Common Stock Outstanding 148,500,000 148,500,000 135,000,000.00 81,342,466.00 66,559,386.00
Extract FS of Lafarge Surma Cement Ltd. 2014 2013 2012 2011 2010
Assets Tk 000s Tk 000s Tk 000s Tk 000s Tk 000s
Trade Receivables 2,877,980 2,231,814 2,153,695 1,612,357 995,053
Inventory -Raw & Packing Material 506,215 478,694 533,267 342,278 277,011
Inventory - Finished goods 143,773 136,405 268,683 505,093 166,898
Inventory - Spare Parts 914,297 978,350 698,570 725,406 760,081
Advance, Deposits & Prepayments (ADP) 327,184 247,014 329,897 339,263 296,747
Cash and Cash Equivalents 1,881,906 1,204,399 154,160 245,432 174,691
Total Current Asset 6,505,784 5,190,219 3,912,006 3,450,421 2,317,596
Total Assets 19,995,999 19,027,323 18,523,368 18,559,381 17,914,804
Trade Payables 2,292,362 2,267,632 1,945,520 1,788,339 1,462,654
Total Current Liabilities 4,568,162 6,100,280 8,443,980 8,108,312 10,185,573
Total Liabilities 6,740,360 7,982,780 10,142,621 12,107,398 15,146,325
Share Capital 11,613,735 11,613,735 11,613,735 11,575,806 5,806,868
Retained Earnings 1,295,008 (944,130) (3,490,257) (5,343,728) (3,156,087)
Total Equity 13,255,639 11,044,543 8,380,747 6,451,983 2,768,479
Net Debt (Interest bearing loan - Cash) 1,872,113 3,849,048 3,633,643 6,423,084 6,556,469
Capital Employed 15,427,837 12,927,043 10,079,388 10,451,069 7,729,231

Credit Sales / Revenue 11,583,029 11,330,374 10,640,061 6,098,478 5,655,374
Gross Profit 4,466,871 4,703,338 4,189,119 560,336 577,739
Operating Income (EBIT) 3,778,223 3,985,707 3,336,088 206,884 (1,115,290)
Non-Operating Income 57,834 2,154 764 496 2,725
Interest Expenses / (income) 303,195 772,054 829,278 2,495,364 719,414
Income Before Tax ( EBT) 3,532,862 3,215,807 2,507,574 (2,287,984) (1,831,979)
Tax Expense 713,064 669,708 654,140 (100,300) (212,144)
Profit After Tax (EAT) 2,819,798 2,546,099 1,853,434 (2,187,684) (1,619,835)
Total Comprehensive Income 2,791,783 2,663,796 1,928,764 (2,123,363) (1,662,403)
Dividend 580,687 - - - -
Earnings Per Share 2.43 2.19 1.60 (1.88) (1.39)
Dividend Per Share 0.50 - - - -
No. of Common Stock Outstanding 1,161,373,500 1,161,373,500 1,161,373,500 1,161,373,500 580,686,750
Extract FS of Heidelberg Cement BD Ltd. 2014 2013 2012 2011 2010
Assets
Trade Receivables 335,897,318 298,503,853 299,142,030 257,463,626 142,407,780
Inventory - Spare Parts 43,831,532 46,889,275 50,427,447 42,292,231 41,850,775
Total Current Asset 1,040,809,655 862,608,806 881,339,136 717,500,149 572,339,972
Total Assets 1,869,616,264 1,586,740,176 1,542,929,078 1,276,680,666 981,625,298
Trade Payables 238,586,706 377,169,863 400,734,102 236,667,939 60,913,205
Share Capital 338,800,000 169,400,000 169,400,000 154,000,000 140,000,000
Retained Earnings 75,296,660 79,328,165 61,886,234 27,573,648 (7,799,582)
Total Equity 524,796,660 274,728,165 231,286,234 181,573,648 132,200,418
Net Debt (Interest bearing loan - Cash) 992,184,031 741,216,880 666,561,832 620,260,358 531,905,366
Capital Employed 1,516,980,691 1,015,945,045 897,848,066 801,834,006 664,105,784

Credit Sales / Revenue 623,698,928 871,405,186 1,102,097,948 978,193,221 917,633,478
Gross Profit 149,462,391 194,924,637 214,589,039 187,975,236 209,195,823
Non-Operating Income - - - 930,000 240,000
Tax Expense 477,276 10,636,421 19,126,683 20,793,600 30,904,822
Dividend - 16,940,000 16,940,000 15,400,000 14,000,000
Dividend Per Share - 1.00 1.00 0.91 1.00
Common Size Analysis 2014
Trade Receivables 15% 9% 20% 13% 10% 14% 18%
Inventory 8% 10% 19% 13% 6% 8% 8%
Advance, Deposits & Prepayments (ADP) 20% 1% 16% 10% 3% 2% 16%
Cash and Cash Equivalents 1% 43% 4% 1% 29% 9% 1%
Total Current Asset 48% 63% 77% 39% 64% 33% 56%
Total Non-Current Asset 52% 37% 23% 61% 35% 67% 44%
Total Assets 100% 100% 100% 100% 100% 100% 100%
Trade Payables 3% 6% 3% 3% 1% 11% 13%
Total Current Liabilities 35% 27% 64% 51% 39% 23% 61%
Total long term Liabilities 8% 9% 15% 15% 11% 11% 11%
Total Liabilities 43% 36% 79% 66% 50% 34% 72%
Share Capital 9% 6% 6% 11% 13% 58% 18%
Retained Earnings 14% 52% 9% 12% 9% 6% 4%
Total Equity 57% 64% 21% 34% 50% 66% 28%
Net Debt (Interest bearing loan - Cash) 26% 41% 59% 10% 7% 9% 53%
Capital Employed 84% 73% 36% 49% 14% 77% 81%

Credit Sales / Revenue 100% 100% 100% 100% 100% 100% 100%
Cost of Sales / Revenue 83% 81% 88% 83% 84% 61% 76%
Gross Profit 17% 19% 12% 17% 16% 39% 24%
Operating Income (EBIT) 12% 12% 9% 15% 12% 33% 19%
Non-Operating Income 0% 0% 0% 2% 1% 0% 0%
Interest Expenses / (income) 1% -4% 5% 5% -1% 3% 17%
Income Before Tax ( EBT) 10% 16% 4% 9% 11% 31% 3%
Tax Expense 4% 5% 1% 2% 3% 6% 0%
Profit After Tax (EAT) 7% 11% 3% 7% 8% 24% 2%
Analysis of Financial Statements through Ratio Analysis
2014
Ratio Category Formula
A. Liquidity Ratios
Current Asset
1. Current Ratio 1.39 2.33 1.20 0.77 1.66 1.42 0.92 1.40
Current Liabilities
Current Asset - Inventory -ADP
2. Quick Ratio 0.58 1.93 0.65 0.33 1.43 1.01 0.53 0.97
Current Liabilities
Cash & Cash Equivalents
3. Cash Ratio 0.04 1.57 0.06 0.03 0.74 0.41 0.01 0.48
Current Liabilities
B. Profitability Ratios
Gross Profit
1. Gross Profit Margin 16.7% 19.2% 11.9% 17.2% 15.8% 38.6% 24.0% 16.8%
Revenue
Operating Profit
2. Operating Profit Margin 11.7% 12.4% 9.1% 14.7% 11.7% 32.6% 19.5% 12.3%
Revenue
Net profit
3. Net Profit Margin 5.1% 11.2% 2.7% 6.8% 8.4% 24.1% 2.4% 7.9%
Revenue
Net profit
4. Return on Asset 3.9% 11.3% 2.5% 5.6% 6.4% 14.3% 0.9% 6.8%
Avg. Total Assets
Net profit
5. Return on Equity 6.5% 16.8% 12.3% 15.6% 12.0% 23.0% 3.8% 13.5%
Avg. Equity
EBIT
6. Return on Capital Employed 10.7% 16.6% 21.6% 24.6% 44.2% 26.6% 9.6% 20.6%
Avg. Capital Empolyed
C. Activity Ratios
Revenue
1. Asset Turnover Ratio 0.76 1.01 0.92 0.82 0.76 0.59 0.36 0.86
Avg. Total Assets
Cost of Raw Material Consumed
2. Material Turnover Ratio 15.65 10.05 16.59 4.84 21.75 5.31 5.68 9.93
Avg. Raw Material
365
3. Days in Storage 23.33 36.34 21.99 75.39 16.78 68.69 64.25 36.76
Material Turnover Ratio
Cost of Goods Manufactured
2. WIP Turnover Ratio 101.68 - 97.09 - 44.52 - 53.92 128.98
Avg. Work in Process
365
3. Days in Factory 3.59 - 3.76 - 8.20 - 6.77 2.83
Inventory Turnover Ratio
Cost of Goods Sold
2. Finished Goods Turnover - 78.49 6.18 - 61.99 50.80 - 37.07
Avg. Finished Goods
365
3. Days of FG in Inventory - 4.65 59.02 - 5.89 7.19 - 9.85
3. Days in Inventory RM Days+ WIP Days + FG Days 26.92 40.99 84.77 75.39 30.87 75.87 71.02 49.43
Net Credit Sales

4. Receivable Turnover Ratio 4.92 22.07 9.73 11.40 13.67 8.05 1.86 6.75
Avg. Trade Receivables
365
6. Days Sales outstanding 74.21 16.54 37.52 32.01 26.71 45.34 196.57 54.09
Receivables Turnover Ratio
Purchase
7. Payable Turnover Ratio 18.61 13.57 13.15 9.97 48.05 1.16 1.37 15.40
Avg. Trade Payables
365
8. Days Payable Outstanding 19.61 26.90 27.75 36.59 7.60 314.70 266.22 23.70
D. Leverage Ratios
Total Asset
1. Gearing Ratio 1.75 1.56 4.84 2.97 2.00 1.51 3.56 2.10
Total Equity
Total Long term Liabilities

2. long-term Debt to Equity Ratio 0.14 0.13 0.72 0.44 0.23 0.16 0.40 0.24
Total Equity
Operating Profit
3. TIE Ratio 9.93 (3.01) 1.70 2.93 (14.15) 12.46 1.15 34.47
Interest Expenses
E. Market Ratios
Market Value Per Share
1. Market to Book Value 1.68 2.77 12.11 1.88 2.25 10.78 2.23 2.69
Book Value Per Share
Earnings Per Share
2. Dividend Coverage Ratio 1.93 0.55 2.99 1.61 1.51 4.86 0.00 0.83
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 3% 8% 1% 5% 3% 0% 0% 6%
4. Price Earnings Ratio 20.28 23.92 27.03 12.17 18.94 50.62 76.47 21.80
Earnings Per Share
F. Operating Cycle Analysis

Days in Inventory
1. Operating Cycle 101.13 57.52 122.29 107.39 57.58 121.22 267.59 103.53
+ Days Sales Outsranding
Operating Cycle
2. Cash Conversion Cycle 81.51 30.62 94.54 70.80 49.98 (193.48) 1.38 79.83
(-) Days Payable Outstanding
Confidence Cement
Ratio Category Formula Trends
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 1.39 1.52 1.30 1.24 1.36
Current Liabilities
2. Quick Ratio 0.58 0.71 0.45 0.35 0.31
Current Liabilities
3. Cash Ratio 0.04 0.08 0.38 0.07 0.07
Current Liabilities
Gross Profit
1. Gross Profit Margin 16.68% 20.57% 17.17% 14.03% 13.77%
Revenue
Operating Profit
2. Operating Profit Margin 11.65% 16.71% 14.23% 10.91% 10.18%
Revenue
Net profit
3. Net Profit Margin 5.15% 12.43% 3.08% 10.83% 0.46%
Revenue
Net profit
4. Return on Asset 3.91% 10.07% 2.57% 6.96%
Avg. Total Assets
Net profit
5. Return on Equity 6.55% 16.11% 3.97% 9.48%
Avg. Equity
EBIT
6. Return on Capital Employed 10.70% 15.78% 13.53% 7.93%
C. Activity Ratios
Revenue
1. Asset Turnover Ratio 0.76 0.81 0.84 0.64
Avg. Total Assets
2. Material Turnover Ratio 15.65 14.41 10.84 7.50
Avg. Raw Material
365
3. Days in Storage 23.33 25.33 33.67 48.69
2. WIP Turnover Ratio 101.68 166.42 0.00 90.73
365
3. Days in Factory 3.59 2.19 0.00 4.02
Cost of Goods Sold
2. Finished Goods Turnover 0.00 0.00 0.00 0.00
Avg. Finished Goods
365
3. Days of FG in Inventory 0.00 0.00 0.00 0.00
3. Days in Inventory RM Days+ WIP Days + FG Days 26.92 27.52 33.67 52.72
Net Credit Sales

4. Receivable Turnover Ratio 4.92 11.94 7.34 9.67
365
6. Days Sales outstanding 74.21 30.57 49.74 37.73
Purchase
7. Payable Turnover Ratio 18.61 24.90 33.61 25.52
Avg. Trade Payables
365
8. Days Payable Outstanding 19.61 13.26 10.84 6.92
D. Leverage Ratios
Total Asset
1. Gearing Ratio 1.75 1.60 1.60 1.48 1.24
Total Equity

2. long-term Debt to Equity Ratio 0.14 0.15 0.13 0.12 0.00
Total Equity
Operating Profit
3. TIE Ratio 9.93 7.53 5.70 10.11 15.49
Interest Expenses
E. Market Ratios
1. Market to Book Value 1.68 1.98 1.84 1.55 3.58
Earnings Per Share
2. Dividend Coverage Ratio 1.93 3.68 1.87 1.27 1.85
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 2.55% 1.61% 3.19% 3.35% 1.40%
4. Price Earnings Ratio 20.28 16.85 16.78 23.54 38.71
Earnings Per Share

Days in Inventory
1. Operating Cycle 101.13 58.09 83.41 90.44
Operating Cycle
2. Cash Conversion Cycle 81.51 44.83 72.57 83.52
Heidelberg Cement
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 2.33 2.92 2.64 2.14 2.38
Current Liabilities
2. Quick Ratio 1.93 2.44 2.05 1.54 1.64
Current Liabilities
3. Cash Ratio 1.57 2.08 4.08 1.16 1.33
Current Liabilities
Gross Profit
Revenue
Operating Profit
Revenue
Net profit
Revenue
Net profit
4. Return on Asset 11.29% 14.81% 15.02% 9.87%
Avg. Total Assets
Net profit
5. Return on Equity 16.83% 21.38% 22.33% 14.96%
Avg. Equity
EBIT
C. Activity Ratios
Revenue
Avg. Total Assets
Avg. Raw Material
365
3. Days in Storage 36.34 45.94 39.92 48.40
2. WIP Turnover Ratio - - - -
365
3. Days in Factory - - - -
Cost of Goods Sold
Avg. Finished Goods
365
Net Credit Sales

365
Purchase
Avg. Trade Payables
365
D. Leverage Ratios
Total Asset
1. Gearing Ratio 1.56 1.43 1.46 1.52 1.51
Total Equity

Total Equity
Operating Profit
3. TIE Ratio (3.01) (3.56) (4.52) (2.71) (8.21)
Interest Expenses
E. Market Ratios
Earnings Per Share
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 7.61% 9.96% 1.89% 1.81% 11.75%
Earnings Per Share

Days in Inventory
1. Operating Cycle 57.52 64.34 71.21 84.83
Operating Cycle
Meghna Cement Ltd
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 1.20 1.29 1.25 1.19 1.20
Current Liabilities
2. Quick Ratio 0.65 0.44 0.52 0.37 0.26
Current Liabilities
3. Cash Ratio 0.06 0.08 0.41 0.04 0.03
Current Liabilities
Gross Profit
Revenue
Operating Profit
Revenue
Net profit
Revenue
Net profit
4. Return on Asset 2.47% 2.80% 3.41% 1.73%
Avg. Total Assets
Net profit
5. Return on Equity 12.33% 14.87% 19.68% 9.92%
Avg. Equity
EBIT
C. Activity Ratios
Revenue
Avg. Total Assets
Avg. Raw Material
365
3. Days in Storage 21.99 16.76 12.60 10.30
365
3. Days in Factory 3.76 2.95 2.77 2.82
Cost of Goods Sold
Avg. Finished Goods
365
Net Credit Sales

365
Purchase
Avg. Trade Payables
365
D. Leverage Ratios
Total Asset
1. Gearing Ratio 4.84 5.15 5.48 6.08 5.42
Total Equity

Total Equity
Operating Profit
3. TIE Ratio 1.70 1.70 1.91 1.47 2.41
Interest Expenses
E. Market Ratios
Earnings Per Share
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 1.24% 1.05% 2.39% 0.64% 0.65%
Earnings Per Share

Days in Inventory
1. Operating Cycle 122.29 81.87 101.55 99.66
Operating Cycle
Premier Cement Ltd.
Ratio Category Formula
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 0.77 0.75 0.68 0.98 1.03
Current Liabilities
2. Quick Ratio 0.33 0.37 0.25 0.36 0.48
Current Liabilities
3. Cash Ratio 0.03 0.09 1.32 0.04 0.07
Current Liabilities
Gross Profit
Revenue
Operating Profit
Revenue
Net profit
Revenue
Net profit
4. Return on Asset 5.56% 6.61% 3.25% 10.87%
Avg. Total Assets
Net profit
5. Return on Equity 15.61% 18.23% 8.10% 21.57%
Avg. Equity
EBIT
C. Activity Ratios
Revenue
Avg. Total Assets
Avg. Raw Material
365
3. Days in Storage 75.39 56.00 69.61 69.48
2. WIP Turnover Ratio - - - -
365
3. Days in Factory - - - -
Cost of Goods Sold
2. Finished Goods Turnover - - - -
Avg. Finished Goods
365
3. Days of FG in Inventory - - - -
Net Credit Sales

365
Purchase
Avg. Trade Payables
365
D. Leverage Ratios
Total Asset
1. Gearing Ratio 2.97 2.64 2.92 2.02 1.92
Total Equity

Total Equity
Operating Profit
3. TIE Ratio 2.93 3.44 3.38 7.55 6.59
Interest Expenses
E. Market Ratios
Earnings Per Share
2. Dividend Coverage Ratio 1.61 1.18 - - -
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 5.10% 3.64% 0.00% 0.00% 0.00%
Earnings Per Share

Days in Inventory
1. Operating Cycle 107.39 86.09 126.36 121.60 -
Operating Cycle
2. Cash Conversion Cycle 70.80 79.58 121.12 116.35 -
MI Cement Ltd. (Crown Cement)
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 1.66 2.23 2.29 3.47 1.29
Current Liabilities
2. Quick Ratio 1.43 1.97 2.01 2.84 0.83
Current Liabilities
3. Cash Ratio 0.74 1.14 1.12 2.09 0.07
Current Liabilities
Gross Profit
1. Gross Profit Margin 0.16 0.16 0.13 0.19 0.22
Revenue
Operating Profit
2. Operating Profit Margin 0.12 0.12 0.10 0.15 0.18
Revenue
Net profit
3. Net Profit Margin 0.08 0.10 0.10 0.11 0.11
Revenue
Net profit
4. Return on Asset 0.06 0.07 0.07 0.09
Avg. Total Assets
Net profit
5. Return on Equity 0.12 0.12 0.11 0.14
Avg. Equity
EBIT
6. Return on Capital Employed 0.44 0.31 0.25 0.16
C. Activity Ratios
Revenue
Avg. Total Assets
Avg. Raw Material
365
3. Days in Storage 16.78 17.99 18.51 28.06
365
3. Days in Factory 8.20 8.84 19.88 24.53
Cost of Goods Sold
Avg. Finished Goods
365
Net Credit Sales

365
Purchase
Avg. Trade Payables
365
D. Leverage Ratios
Total Asset
1. Gearing Ratio 2.00 1.75 1.82 1.39 1.71
Total Equity

Total Equity
Operating Profit
3. TIE Ratio (14.15) 11.01 3.23 6.37 (11.78)
Interest Expenses
E. Market Ratios
Earnings Per Share
2. Dividend Coverage Ratio 1.51 1.15 1.18 2.15 -
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 3.49% 4.42% 3.22% 0.85% 0.00%
Earnings Per Share

Days in Inventory
1. Operating Cycle 57.58 47.85 88.78 86.16
Operating Cycle
Lafarge Shurma Cement
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 1.42 0.85 0.46 0.43 0.23
Current Liabilities
2. Quick Ratio 1.01 0.55 0.25 0.19 0.08
Current Liabilities
3. Cash Ratio 0.41 0.20 0.47 0.03 0.02
Current Liabilities
Gross Profit
Revenue
Operating Profit
2. Operating Profit Margin 0.33 0.35 0.31 0.03 (0.20)
Revenue
Net profit
3. Net Profit Margin 0.24 0.24 0.18 (0.35) (0.29)
Revenue
Net profit
4. Return on Asset 0.14 0.14 0.10 (0.12) -
Avg. Total Assets
Net profit
5. Return on Equity 0.23 0.27 0.26 (0.46) -
Avg. Equity
EBIT
6. Return on Capital Employed 0.27 0.31 0.33 0.02 -
C. Activity Ratios
Revenue
1. Asset Turnover Ratio 0.59 0.60 0.57 0.33 -
Avg. Total Assets
2. Material Turnover Ratio 5.31 4.82 6.03 10.79 -
Avg. Raw Material
365
3. Days in Storage 68.69 75.68 60.56 33.82 -
2. WIP Turnover Ratio - - - - -
365
3. Days in Factory - - - - -
Cost of Goods Sold
2. Finished Goods Turnover 50.80 32.72 16.67 16.48 -
Avg. Finished Goods
365
3. Days of FG in Inventory 7.19 11.16 21.89 22.14 -
3. Days in Inventory RM Days+ WIP Days + FG Days 75.87 86.84 82.45 55.97 -
Net Credit Sales

4. Receivable Turnover Ratio 8.05 5.08 4.94 3.78 -
365
6. Days Sales outstanding 45.34 71.90 73.88 96.50 -
Purchase
7. Payable Turnover Ratio 1.16 1.13 1.52 2.10 -
Avg. Trade Payables
365
8. Days Payable Outstanding 314.70 4.20 4.43 6.52 -
D. Leverage Ratios
Total Asset
1. Gearing Ratio 1.51 1.72 2.21 2.88 6.47
Total Equity

Total Equity
Operating Profit
3. TIE Ratio 12.46 5.16 4.02 0.08 (1.55)
Interest Expenses
E. Market Ratios
Earnings Per Share
2. Dividend Coverage Ratio 4.86 - - - -
Dividend Per Share
Dividend Per Share
3. Dividend Yeild 0.00 - - - -
4. Price Earnings Ratio 50.62 15.30 20.56 (30.67) (40.56)
Earnings Per Share

Days in Inventory
1. Operating Cycle 121.22 158.73 156.33 152.47 -
Operating Cycle
2. Cash Conversion Cycle (193.48) 154.53 151.90 145.95 -
Aramit Cement
2014 2013 2012 2011 2010
A. Lequidity Ratios
Current Asset
1. Current Ratio 0.92 0.67 0.68 0.69 0.73
Current Liabilities
2. Quick Ratio 0.53 0.45 0.41 0.42 0.34
Current Liabilities
3. Cash Ratio 0.01 0.01 0.04 0.01 0.03
Current Liabilities
Gross Profit
Revenue
Operating Profit
2. Operating Profit Margin 0.19 0.17 0.16 0.15 0.19
Revenue
Net profit
3. Net Profit Margin 0.02 0.05 0.05 0.05 0.09
Revenue
Net profit
4. Return on Asset 0.01 0.03 0.04 0.04 -
Avg. Total Assets
Net profit
5. Return on Equity 0.04 0.17 0.25 0.32 -
Avg. Equity
EBIT
6. Return on Capital Employed 0.10 0.15 0.19 0.18 -
C. Activity Ratios
Revenue
1. Asset Turnover Ratio 0.36 0.56 0.78 0.87 -
Avg. Total Assets
2. Material Turnover Ratio 5.68 8.86 10.06 7.20 -
Avg. Raw Material
365
3. Days in Storage 64.25 41.21 36.27 50.70 -
2. WIP Turnover Ratio 53.92 128.20 116.19 102.68 -
365
3. Days in Factory 6.77 2.85 3.14 3.55 -
Cost of Goods Sold
2. Finished Goods Turnover - - - - -
Avg. Finished Goods
365
3. Days of FG in Inventory - - - - -
3. Days in Inventory RM Days+ WIP Days + FG Days 71.02 44.06 39.41 54.25 -
Net Credit Sales

4. Receivable Turnover Ratio 1.86 2.92 3.68 3.80 -
365
6. Days Sales outstanding 196.57 125.03 99.07 96.07 -
Purchase
7. Payable Turnover Ratio 1.37 1.29 2.48 4.47 -
Avg. Trade Payables
365
8. Days Payable Outstanding 266.22 8.28 9.26 6.73 -
D. Leverage Ratios
Total Asset
1. Gearing Ratio 3.56 5.78 6.67 7.03 7.43
Total Equity

Total Equity
Operating Profit
3. TIE Ratio 1.15 1.55 1.69 1.97 2.74
Interest Expenses
E. Market Ratios
Earnings Per Share
2. Dividend Coverage Ratio - 2.56 3.03 3.30 5.67
Dividend Per Share
Dividend Per Share
3. Dividend Yeild - 0.01 0.02 0.01 0.03
Earnings Per Share

Days in Inventory
1. Operating Cycle 267.59 169.09 138.48 150.32 -
Operating Cycle
2. Cash Conversion Cycle 1.38 160.81 129.22 143.59 -
Operating Cash Flow Per Share
Aramit Cement (11.80) 4.21 7.34 7.95 (6.65)
Confidence Cement (2.12) 8.39 (1.21) 2.25 6.35
Lafarge Surma Cement Ltd. 2.11 2.97 2.50 (0.11) 0.39
Meghna Cement 6.48 16.84 9.11 (20.05) 13.03
M.I. Cement Factory Limited 0.81 6.31 1.73 (1.09) 8.82
Premier Cement Mills Limited 0.05 0.87 0.35 (0.30) 0.17

Year-wise Comparative Z-Score
Aramit Cement 1.07 1.26 1.32 1.86 1.58
Confidence Cement 2.69 3.51 3.23 2.92 9.68
Lafarge Surma Cement Ltd. 14.13 4.08 2.87 2.98 0.63
Meghna Cement 2.04 2.38 2.61 2.48 3.68
M.I. Cement Factory Limited 2.76 3.45 3.38 6.02 8.09
Premier Cement Mills Limited 2.35 2.53 3.95 7.30 8.47
Z-score range Position Mark

Z > 2.99 “Safe” Zone
1.81 < Z < 2.99 “Grey” Zone
Z < 1.81 “Distress” Zone
The Z-score Formula
The Z-score formula is built out of the five weighted financial ratios. Weights in the Z-score formula varies for
manufacturing and non-manufacturing, public and private limited companies. Z-score formulas are:
Manufacturing Public Company : Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Manufacturing Private Company : Z-Score = 0.717A + 0.847B + 3.107C + 0.42D + .998E
Non-Manufacturing Company: Z-Score = 6.56A + 3.26B + 6.72C + 1.05D
Where:
A = Working Capital/Total Assets
B = Retained Earnings/Total Assets
C = Earnings Before Interest & Tax/Total Assets
D = Book Value of Equity/Total Liabilities (for public companies: Market value of Equity/Total Liabilities)
E = Sales/Total Assets
Interpretation of Z-score
Manufacturing Public Company :
A Z-score of lower than 1.81, in particular, indicates that the company is heading for bankruptcy. Companies
with scores above 2.99 are unlikely to enter bankruptcy. Scores in between 1.81 and 2.99 lie in a gray area.
Manufacturing Private Company :
Non-Manufacturing Private Company :
Significance of components of Z-score formula:
A. Working Capital/Total Assets (WC/TA)

This ratio is a good test for corporate distress. A firm with negative working capital is likely to experience
problems meeting its short-term obligations because there simply is not enough current assets to cover those
obligations. By contrast, a firm with significantly positive working capital rarely has trouble paying its bills.
(For background reading, see Working Capital Works.)
B. Retained Earnings/Total Assets (RE/TA)

This ratio measures the amount of reinvested earnings or losses, which reflects the extent of the company's
leverage. Companies with low RE/TA are financing capital expenditure through borrowings rather than
through retained earnings. Companies with high RE/TA suggest a history of profitability and the ability to
stand up to a bad year of losses.
C. Earnings Before Interest and Tax/Total Assets (EBIT/TA )

This is a version of return on assets (ROA), an effective way of assessing a firm's ability to squeeze profits
from its assets before factors like interest and tax are deducted.
D. Market Value of Equity/Total Liabilities (ME/TL)

This is a ratio that shows - if a firm were to become insolvent - how much the company's market value would
decline before liabilities exceed assets on the financial statements. This ratio adds a market value dimension
to the model that isn't based on pure fundamentals. In other words, a durable market capitalization can be
interpreted as the market's confidence in the company's solid financial position.
E. Sales/Total Assets (S/TA)

This tells investors how well management Details
handles
in: competition and how efficiently the firm uses assets to
http://www.investopedia.com/articles/fundamental/04/021104.asp#ixzz2N7LQyPzB
generate sales. Failure to grow market share translates into a low or falling S/TA.

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The University of Dhaka

Analysis of Financial Statements of Cement

Date of Submission: July 31, 2015

Dr. Mohammed Mehadi Masud Mozumder, ACMA

Subject: Submission of term paper on “Analysis of Financial Statements of Cement

As part of the requirement of EMBA from Accounting Information System department

_________________________________ _______________________________ ________________________________

_________________________________ _______________________________ ________________________________

OBJECTIVES OF THE REPORT

SCOPE OF THE REPORT

Table: Industry Demand and Production

Figure: Market shares based on company’s origin

Figure: Market for Cement Industry

Figure: Cement Industry life cycle

Figure: Porter’s Five Forces Model

Analysis of Porter’s Five Forces model on Cement industry is given below:

2. Bargaining Powers of the Suppliers:

4. Rivalry among the existing competitors

It is important for investors to analyze the financial statements, investor needs to

 The Companies Act 1994

 The preparation of financial statements requires management to make judgments,

Revisions to accounting estimates are recognized in the period in which the

In particular, information about significant areas of estimation and judgments in

Assets Confidence Heidelberg Meghna Premier Crown Lafarge Aramit

1. Gross Profit Margin:

2. Operating Profit Margin:

6. Return on Capital Employed:

2. Material Turnover Ratio

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

The formula is:

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

The cement industry in Bangladesh shows an average of 37 days storage of inventory in

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

9. Receivable Turnover Ratio

By maintaining accounts receivable, firms are indirectly extending interest-free loans to

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

10. Days Sales outstanding

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

11. Payable Turnover Ratio

12. Days Payable Outstanding

1. Market to Book Value Ratio

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

1.68 2.77 12.11 1.88 2.25 10.78 2.23 2.69

FIGURE: MARKET TO BOOK VALUE COMPARATIVES FOR THE YEAR 2014

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

FIGURE: COMPARATIVE DIVIDEND COVERAGE RATIO FOR THE YEAR 2014

Dividend Coverage is a measure of the ability of an organization to pay dividends.

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

20.28 23.92 27.03 12.17 18.94 50.62 76.47 21.80

FIGURE: PE RATIO COMPARISON FOR THE YEAR 2014

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

FIGURE: COMPARISON OF GEARING RATIO FOR 2014.

2. Long Term Debt to Equity Ratio

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

Long Term Debt to Equity

FIGURE: COMPARISON OF LONG TERM DEBT TO EQUITY RATIO FOR 2014.

3. Times Interest Earned Ratio

Confidence Heidelberg Meghna Premier Crown Lafarge Aramit Industry Avg.

M. I. Cement Factory Limited (Crown Cement) and Heidelberg Cement Bangladesh

2011 2012 2013 2014

_________________ _ __________________

_________________ _ __________________