Introduction

This report contains information about the financial condition of two publicly listed companies
for the last four years via analyzing ratios. Those companies are Monno Ceramics Ltd. and Fu-
Wang Ceramics Industry Ltd. These two companies are based in ceramics industry. The duration
of time taken to analyze their financial condition are from the year 2013-14 to 2016-17. Ratios
which have included in this report are liquidity, activity, debt, profitability and market ratios.
Under the liquidity ratio, there are current ratio and quick ratio. Under the Activity Ratio, there
are inventory turnover ratio, average age of inventory, average collection period, total asset
turnover and average collection period. Under Debt Ratio, there includes Debt Ratio, Debt to
Equity Ratios and Times Interest Earned Ratio. Other sub ratios under variable ratios are
Profitability Ratio - Gross Profit Margin, Operating Profit Margin, Net Profit Margin (NPM),
Earnings per Share, Return on Asset and Return on Equity. And finally Market Ratio - Price
Earning (P/E) Ratio, Book value per share. These ratios have been represented graphically as
well as interpreted and then have been compared with each other. After comparing their financial
condition of these two companies, we have come up some recommendations that these two
companies can prefer to enhance their sustainability.
Executive Summery

Monno Ceramics:

Monno Ceramics, a major concern of Monno Group since 1984, is one of the largest tableware
manufacturer in Bangladesh which is also considered as one of the pioneering industry in
Bangladesh. The company started its journey by producing porcelain tableware. Its crystal clear
product quality has been directly reflected by the continuous market demand from local and
international consumers.

Monno uses recycled pulp while packaging their products, disposing of waste factory product in
accordance with Federal and European standards. The company provides employment to both
skilled and unskilled local artisans, crafts men and women. It’s a company where there is no
Child Labor. At the same time, there is no option of discrimination between genders. In short, the
company strictly maintains an equal opportunity policy. The authority of the company itself
emphasizes highly on creating opportunity for female employees. There is a full-time doctor at
the in-house Medical Center.

Also, the company has an in-house testing and quality control laboratory which is operated by
the highly qualified and skilled technicians where 36 types of tests take place in the Quality
Control Laboratory to ensure the safety, acid and detergent resistance for microwave and
dishwasher through some tests. Also, the company conducts the whiteness color measurement
and Strength (hardness) tests; Chipping tests etc. on their product.

Fu-Wang Ceramics:

Fu-Wang Ceramic Industry Limited, a part of Fu-Wang group which is highly known for its food
and beverage items, has incorporated in Bangladesh on 31 may 1995 as a Joint Venture
International Company. Since its inception, it has been established and maintained best products
with superior quality and has combined both of them into the high standards of customer service.

Fu-Wang group produces a comprehensive range of ceramic tiles, designed in luxurious and
elegant design.
 Debt Ratio
Monno Ceramics
2017-2016 2016-2015 2015-2014 2014-2013
Ltd.
Total Liabilities 951228943 948832371 790616493 280951811
Total Asset 3208032073 3214882621 3068425352 1396388266
Debt Ratio .297 0.295 0.258 0.201

FU WANG
2017-2016 2016-2015 2015-2014 2014-2013
Ceramics Ltd.
Total Liabilities 548401337 291275023 382869437 280951811
Total Asset 1903075167 1573319745 1532673986 1396388266
Debt Ratio 0.288 0.185 0.250 0.201

Interpretations: The debt ratio of a company shows that how much of

the company’s assets are financed with debt. The lower the ratio is, the
better it is. Because it indicates that lower amount of company’s assets
are financed with debt.

Debt Ratio ' MONNO CERAMICS'

0.3 0.3
0.26

0.2

2017- 2016 2016-2015 2015-2014 2014-2013

Debt Ratio

Here, according to Monno Ceramics Ltd.’s debt ratio, we can see that its
ratio is decreasing over a period of time. As in the year 2017 the ratio
was 0.297 and then again in 2016 it decreased to 0.295 an decreasing to
2015 and 2014 to 0.258 and 0.201 respectively.
 Debt Ratio of 'FU WANG CERAMICS'

0.29

0.25

0.2
0.19

2017-2016 2016-2015 2015-2014 2014-2013

Debt Ratio of 'FU WANG CERAMICS'

Here, according to FU Wang Ceramics.’s debt ratio, we can see that its ratio is
increasing and decreasing as well. At 2017 the ratio has been 0.288 and then in the
next years it felt to 0.185 and then in the coming years of 2015 it increased again
by 0.25 and felt again in 2014 by 0.201 so the debt ratio fluctuated. So the
company is having a good response in the recent years.

Chart Title

0.3 0.3
0.29
0.26
0.25

0.2
0.19

2017-2016 2016-2015 2015-2014 2014-2013

Monno Fu Wang
Debt to Equity ratio
Monno Ceramics
2017-2016 2016-2015 2015-2014 2014-2013
Ltd.
Total Liabilities 951228943 948832371 790616493 280951811
Common Stock
2,256,803,129 2,266,050,250 2,277,808,859 2,277,808,859
Equity
Debt-to-Equity
0.421 0.419 0.347 0.123
Ratio

FU-WANG
2017-2016 2016-2015 2015-2014 2014-2013
Ceramics Ltd.
Total Liabilities 548401337 291275023 382869437 280951811
Common Stock
1,354,673,830 1,282,044,722 1,149,804,549 1,115,436,455
Equity
Debt-to-Equity
0.405 0.227 0.332 0.252
Ratio
Interpretation:The debt-equity ratio is another leverage ratio that compares a
company's total liabilities to its total shareholders' equity. This is a measurement of
the percentage of the company’s balance sheet that is financed by suppliers,
lenders, creditors, and obligors versus what the shareholders have committed. In
general, a high debt-to-equity ratio indicates that a company may not be able to
generate enough cash to satisfy its debt obligations. However, low debt-to-equity
ratios may also indicate that a company is not taking advantage of the increased
profits that financial leverage may bring.
 Debt Equity Ratio Monno Ceramics
0.42 0.42

0.35

0.12

2017-2016 2016-2015 2015-2014 2014-2013

Debt Equity Ratio

Through time series analysis, we can see that Monno Ceramic’s debt ratio is
increased from 12% to 34% from year 2013 to 2014. In 2015 it increased by 41%
and it increased slightly by 42% in 2016-2017. We can see the change is kind of
stable. From 2015 to 2017 change is very close to constant. In 2016 the change is
also a little bit not that much. So we can say from year 2015 to 2017 Monno was
using its debt near to a stable amount to finance on its assets related to amount of
shareholders’ equity. In 2017, to finance on its assets, Monno increased its level of
debt a little bit linked to stockholders’ equity.

Debt Equity Ratio of FU WANG

0.41

0.33

0.25
0.23

2017-2016 2016-2015 2015-2014 2014-2013

Debt Equity Ratio

Interpretation:In the time series analysis, we can deduce that the debt equity ratio
has fluctuated over the years as in 2017 it was 40% and the previous year 2016 it
stabled to 22% and in 2014 the equity remained 25%. Hence we can state that debt
is increasing from year to year linked to amount of shareholders’ equity.

Chart Title
0.41

0.33
0.23

0.42 0.42
0.25
0.35

0.12

2017-2016 2016-2015 2015-2014 2014-2013

Monno Fu Wang

Times Interest Earned Ratio

Monno Ceramics
2017-2016 2016-2015 2015-2014 2014-2013
Ltd.
EBIT 84538009 64607706 69319304 69319304
Interest 78779847 59574930 54788399 54788399
Times Interest
1.07 1.08 1.27 1.26
Earned Ratio

FU WANG
2017-2016 2016-2015 2015-2014 2014-2013
Ceramics Ltd.
EBIT 127779621 139226917 64080842 66964797
Interest 23098871 20770595 23211614 17266562
Times Interest
5.53 6.70 2.76 3.88
Earned Ratio
Interpretation: The times interest earned ratio measures the firm’s ability to make contractual
interest payments. The higher the ratio is, the better it is. Because higher ratio indicates that the
firm is able to pay off all its interest expenses easily.

Times Interest Earned MONNO CERAMICS

1.27
1.26

1.08
1.07

2017-2016 2016-2015 2015-2014 2014-2013

Times Interest Earned

Interpretation: According to Monno Ceramics Ltd the ratio is decreasing on the

upcoming years as for 2017 it came down to 1.07 which was earlier a good ratio as
2016 is 1.08% as it fell from 2015 which was 1.27 and the 2014 was a slight lower
having 1.26%.The company is not doing well compare to its previous ratio.

Times Earned Ratio FU WANG CERAMICS

6.7

5.53

3.88

2.76

2017-2016 2016-2015 2015-2014 2014-2013

Times Earned Ratio

According to FU WANG ceramics the ratio fluctuated over a period of time as it
was 3.88 in 2014 and it decreased rapidly to 2.76 in 2015 and then the
improvement came causing the company for having 6.7 of the ratio and the
upcoming 2017 it fell a little to 5.53. so we can deduce a average performance.

Chart Title

6.7

5.53

3.88

2.76

1.07 1.08 1.27 1.26

2017-2016 2016-2015 2015-2014 2014-2013

Monno FU WANG

Activity Ratio
Inventory Turnover

Monno Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Cost of Goods 700,209,653 667,546,472 546,208,372 546,208,372
Sold
Inventory 354,041,573 348,365,177 347,164,704 347,164,704
Inventory turnover 1.98 1.92 1.57 1.63
 Inventory turnover

2.05
1.92
1.85

1.57

2016 2015 2014 2013

According to MonnoCeramicsLtd, the inventory turnover is fluctuating over the years sometimes
it is increasing and sometimes it decreasing. In 2013 the turnover was 1.63 and it decreased in
2014 to 1.57 which is good. But again, it kept increasing and in 2015 the turnover leads to 1.92
and again it increased to 1.98 in 2016, it is comparatively not good than past years.

Fu Wang
2016-2017 2015-2016 2014-2015 2013-2014
Ceramics Ltd
Cost of Goods 286,182,155 594,204,332 513,941,489 528,582,867
Sold
Inventory 654,653,045 487,372,462 426,979,967 315,684,893
Inventory turnover 0.44 1.22 1.20 1.67

Interpretation:The inventory turnover ratio is an efficiency ratio that shows how effectively
inventory is managed by comparing the cost of goods sold with average inventory for a period.
This measures how many times average inventory is "turned" or sold during a period. In other
words, it measures how many times a company sold its total average inventory dollar amount
during the year.
 Inventory turnover

2.05
1.92
1.85

1.57

2016 2015 2014 2013

Here Fu Wang less time comparatively it’s past years. In 2013 the turnover was 1.54 and in 2015
and 2016 the turnover was same that is 1.29. And it is less than the past years. So, the company
is doing well.

Average Collection Period (in days)

Monno Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Account
116,081,721 174,351,319 146,096,915 146,096,915
Receivable
Average Sales Per
2354774.915 2243988.921 1897062 1897062
Day
Average Collection
49.29 77.69 77.01 77.01
Period

Fu Wang
2016-2017 2015-2016 2014-2015 2013-2014
Ceramics Ltd
Account
124,857,872 87,876,934 86,560,370 85,165,086
Receivable
Average Sales Per
1294809.315 2292846.616 1852916.252 1898057.627
Day
Average Collection
96.42 38.32 46.71 44.86
Period
Interpretation: Average collection period means the average amount of time needed to collect
accounts receivable. The less Average collection period, the better it is. Because the lower time it
is, the company can collect its account receivable in less time.

Total Asset Turnover

Monno Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Sales 859,492,844 819,055,956 692,427,630 692,427,630
Total Asset 3,208,032,073 3,214,882,621 3,068,425,352 3,068,425,352
Total Asset
0.27 0.25 0.23 0.23
Turnover

Fu Wang Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Sales 472,605,400 836,889,015 676,314,432 692,791,034

Total Asset 1,903,075,167 1,573,319,745 1,532,673,986 1,396,388,266

Total Asset
0.25 0.53 0.44 0.50
Turnover

Interpretation: The total asset turnover indicates the efficiency with which the firm uses its
assets to generate sales. A TOTAL ASSET TURNOVER, the better it is because a TOTAL
ASSET TURNOVER means company uses its assets more efficiently to generate sales.

Average Age Inventory

Monno Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Inventory turnover 1.98 1.92 1.57 1.63
Days in Year 365 365 365 365
Average Age
184.34 190.10 232.48 223.92
Inventory
Fu Wang
2016-2017 2015-2016 2014-2015 2013-2014
Ceramics Ltd
Inventory turnover 0.44 1.22 1.20 1.67
Days in Year 365 365 365 365
Average Age
829.54 299.18 304.16 218.56
Inventory

Interpretation: The average age of inventory is a critical figure in industries with rapid sales
and product cycles, such as technology. A high average age of inventory can indicate that a firm
is not properly managing its inventory or that it has inventory that is difficult to sell.

Average Payment Period

Monno Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Total Payables 88,225,487 67,638,682 120,402,375 145,021,457

Net Purchase 467,282,530 432,134,277 382,345,860 427,051,701

Average Payment
52.83 85.89 114.94 64.05
Period

Fu Wang
2016-2017 2015-2016 2014-2015 2013-2014
Ceramics Ltd
Total Payables 30,498,925 31,328,086 26,053,976 26,179,191

Net Purchase 2,276,438,476 2,027,822,609 2,150,425,845 2,151,102,281

Average Payment
94.51 115.31 60.27 47.28
Period

Interpretation: Average payment period means the average period taken by the company in
making payments to its creditors. It is computed by dividing the number of working days in a
year by creditor’s turnover ratio. The lower the ratio the better for the company.

Fixed Asset Turnover

Monno Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Sales 859,492,844 819,055,956 692,427,630 692,427,630
Non-current assets 2,355,196,220 2,326,942,874 2,274,486,284 2,274,486,284
Fixed Asset 0.36 0.35 0.30 0.30
Turnover

Fu Wang Ceramics
2016-2017 2015-2016 2014-2015 2013-2014
Ltd
Sales 472,605,400 836,889,015 676,314,432 692,791,034
Non-current assets 972,716,564 855,346,100 900,845,526 888,171,319
Fixed Asset
0.49 0.98 0.75 0.78
Turnover

Interpretation: The fixed asset turnover ratio is an efficiency ratio that measures a company’s
return on their investment in property, plant, and equipment by comparing net sales with fixed
assets. In other words, it calculates how efficiently a company is a producing sale with its
machines and equipment. A high turnover indicates that assets are being utilized efficiently and a
lot of sales are generated using a few assets.

Profitability Ratio
Gross Profit margin

Monno Ceramic 2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Ltd
Gross Profit 159,283,191 151,509,484 146,219,258 146,219,258
Sales 859,492,844 819,055,956 692,427,630 692,437,630
Gross Profit 18.53% 18.50% 21.12% 21.12%
margin

Fu Wang 2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Ceramic Ltd
Gross Profit 186,423,245 242,684,683 162,372,943 164,208,167
Sales 472,605,400 836,889,015 676,314,432 692,791,034
Gross Profit 39.45% 28.00% 24.01% 23.70%
margin

Interpretation: The gross profit margin measures the percentage of each sales dollar remaining
after the firm has paid for its goods. The higher the gross profit margin is the better it is. Higher
gross profit margin means the firm is able to make a higher profit from sales.
 Gross progit margine Monno
21.50%

21.00%

20.50%

20.00%

19.50% Gross progit margine Monno

19.00%

18.50%

18.00%

17.50%

17.00%
2016-2017 2015-2016 2014-2015 2013-2014

From the table, we can see that, in the case of Monno Ceramics Ltd. Company, its gross profit
margin has a fluctuating rate. Though its gross profit margin has constant in 2014-2015 from
21.12% to 21.12% then its rate falls to 18.50% in 2015-2016 and then again it raises to 18.53%
in 2016-2017 which is not that much of a difference.

Gross progit margine FU Wang

45.00%

40.00%

35.00%

30.00%

25.00% Gross progit margine FU Wang

20.00%

15.00%

10.00%

5.00%

0.00%
2016-2017 2015-2016 2014-2015 2013-2014

On the other hand, according to Fu Wang Ceramics Ltd. Company’s gross profit margin we can
see that it has gradually increasing rate. In 2013-2014 the rate was 23.70% then it increased to
24.01 %in 2014 -2015 then it increased 28% in 2015-2016 and finally in 2016-2017 the rate was
39.45%
 Chart Title

39.45%

28.00%
24.01% 23.70%
21.12%
18.53% 18.50%

2016-2017 2015-2016 2014-2015 2013-2014

Monno Fu Wang

Accordingly, the ratios, we can easily predict that in the case of making higher profit Fu Wang
Ceramics Ltd. is doing better than Monno Ceramics Ltd. because of its higher gross profit
margin.

Operating Profit Margin

Monno Ceramic 2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd
Operating profit 84,538,009 64,607,706 69,319,304 69,319,304
Sales 859,492,844 819,055,956 692,427,630 692,437,630
Operating profit 9.84% 7.89% 10.01% 10.01%
margin

Fu Wang Ceramic 2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd
Operating profit 127,779,621 139,226,917 64,080842 66,964,797
Sales 472,605,400 836,889,015 676,314,432 692,791,034
Operating profit 27.04% 16.64% 9.48% 9.67%
margin
Interpretation: The operating profit margin measures the percentage of each sales dollar
remaining after all costs and expenses other than interest, taxes and preferred stock dividends are
deducted. Operating profit margin will tell whether the firm’s operational side is efficient or not.
So, an increasing rate of operating profit margin is good as it indicates that the company is
becoming operationally more efficient that means the cost of producing a particular unit of
product has gone down as well.

Operating Profit margin Monno

12.00%

10.00%

8.00%
Operating Profit margin Monno
6.00%

4.00%

2.00%

0.00%
2016-2017 2015-2016 2014-2015 2013-2014

If we look at Monno Ceramics Ltd. Company’s operating profit margin we can see the
decreasing rate until 2015 -2016 and the rate has increased in 2016 -2017 from 9.84%to 7.89%.
But the company is not doing well compared to its previous ratio.

Operating Profit margin FuWang

30.00%

25.00%

20.00%
Operating Profit margin FuWang
15.00%

10.00%

5.00%

0.00%
2016-2017 2015-2016 2014-2015 2013-2014
On the contrary, in the case of Fu Wang Ceramics Ltd. Company, we can see that it has also
fluctuating rate in 2013-2014 to 2014-2015 it decreased from 9.67% to 9.48% and after that it
increased in 2015-2016 and rate was 16.64% and 2016-2017 rate was 27.04%. So we can say
that now company is doing well than previous ratio.

Chart Title
27.04%

16.64%

9.84% 10.01%
9.48% 10.01%
9.67%
7.89%

2016-2017 2015-2016 2014-2015 2013-2014

Monno Fu Wang

So according to ratio analysis, we can easily say that Fu Wang Ceramics Ltd. is doing better than
Monno Ceramics Ltd. because of its higher increasing rate of operating profit margin.

Net Profit Margin

Monno Ceramic 2016-2017 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd Year
Earnings available 2,716,889 2,181,483 2,544,389 2,544,389
for common stock
holder
Sales 859,492,844 819,055,956 692,427,630 692,437,630
Net Profit Margin 0.32% 0.27% 0.37% 0.37%

Fu Wang Ceramic 2016-2017 2015-2016 Year 2014-2015 Year 2013-2014 Year

Ltd Year
Earnings available 72,629,108 132,240,173 34,368,094 41,088,653
for common stock
holder
Sales 472,605,400 836,889,015 676,314,432 692,791,034
Net Profit Margin 15.37% 15.80% 5.08% 5.93%

Interpretation:The net profit margin measures the percentage of each sales dollar remaining
after all costs and expenses, including interest, taxes and preferred stock dividends have been
deducted. The higher the net profit margin is the better it is. Because higher net profit margin
means the firms can distribute more money to their shareholders.

Net Profit Margin Monno

28% 24% 2016-2017

2015-2016
2014-2015
2013-2014

20%
28%

According to Monno Ceramics Ltd. Company’s net profit margin, we can see that in 2013-2014
it had a net profit margin of 0.37%. In 2014-2015 its rate constant to 0.37%. Then it decreased in
2015-2016 in 0.27% and 2016-2017 it has little bit increased which indicates the company is not
doing well.

Net Profit Margin Fuwang

14%
2016-2017
36% 2015-2016
12% 2014-2015
2013-2014

37%
On the other hand, if we look at Fu Wang Ceramics Ltd. Company’s net profit margin, we can
see fluctuating rate in 2013-2014 it was 5.93% than decrease rate 5,08% in 2014-2015 . Than it
increased 15.80% in 2015-2016 and 2016-2017 it was 15.37% . So, we can say that the
company is doing well.

Chart Title

15.37% 15.80%

5.93%
5.08%

0.32% 0.27% 0.37% 0.37%

2016-2017 2015-2016 2014-2015 2013-2014

Monno Fu Wang

But if we look at the ratios we can easily predict that Fu Wang Ceramics Ltd. is doing better than
Monno Ceramics Ltd. because according to Fu Wang Ceramics Ltd.’s net profit margin is better
than Monno Ceramics Ltd.’s net profit margin.

Earnings Per Share(EPS)

Monno Ceramic 2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd
Earnings available 2,716,889 2,181,483 2,544,389 2,544,389
for common stock
holder
Number of share 21,698,990 24,238,700 23,130,809 23,130,809
of common stock
outstanding
Earnings per 0.11 0.09 0.11 0.11
share

Fu Wang Ceramic 2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd
Earnings available 72,629,108 132,240,173 34,368,094 41,088,653
for common stock
holder
Number of share 112,619,086 102,380,988 93,073,626 84,612,388
of common stock
outstanding
Earnings per 0.64 1.29 0.37 0.49
share

Interpretation:Earnings per share, also called net income per share, is a market prospect ratio
that measures the amount of net income earned per share of stock outstanding. In other words,
this is the amount of money each share of stock would receive if all of the profits were
distributed to the outstanding shares at the end of the year.

Earnings per share Monno

0.12

0.1

0.08
Earnings per share Monno
0.06

0.04

0.02

0
2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year

Here, in the case of Monno Ceramics Ltd.’s EPS, we can see that it has a stable posion 0.11 in
2013-2014, 2014-2015 and 2016-2017. In 2015-2016 it decrease to 0.09. The position of EPS is
not good.
 Earnings per share Fu Wang
1.4

1.2

0.8 Earnings per share Fu Wang

0.6

0.4

0.2

0
2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year

In the case of Fu Wang Ceramics Ltd.’s EPS, we can see that it has also decrease in 2013-2014
to 2014-2015 from 0.49 to 0.37.Than it increased 1.29 in 2015-2016 and 0.64 in 2016-2017 But
compared to its previous EPS the company is also doing better.

If we look at the ratios, we can easily predict that Fu Wang Ceramics Ltd. is doing better than
Monno Ceramics Ltd. because of its higher EPS.

Return on total Assets(ROA)

Monno Ceramic 2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd
Earnings available 2,716,889 2,181,483 2,544,389 2,544,389
for common stock
holder
Total assets 3,208,032073 3,214,882,621 3,068,425,352 3,068,425,352
ROA 0.08% 0.07% 0.08% 0.08%

Fu Wang Ceramic 2016-2017 Year 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd
Earnings available 72,629,108 132,240,173 34,368,094 41,088,653
for common stock
holder
Total assets 1,903,075,167 1,573,319,745 1,532,673,986 1,396,388,266
ROA 3.82% 8.48% 2.24% 2.94%

Interpretation: The return on assets measures the overall effectiveness of management in

generating profits with its available assets. The higher the firm’s return on total asset is, the
better it is. Because higher ROA means the company’s assets are more efficient and it indicates
that the company’s assets are able to generate a higher profit to its shareholders.

Return On Asset Monno

2016-2017
2015-2016
2014-2015
2013-2014

Here, in the case of Monno Ceramics Ltd.’s ROA, we can see that it has a stable posion 0.08% in
2013-2014, 2014-2015 and 2016-2017. In 2015-2016 it decrease to 0.07. The position of ROA is
not good.
 Return On Asset Fu Wang

2016-2017
2015-2016
2014-2015
2013-2014

In the case of Fu Wang Ceramics Ltd.’s ROA, we can see that it has also decrease in 2013-2014
to 2014-2015 from 2.94% to 2.24%.Than it increased 8.48% in 2015-2016 and 3.82%in 2016-
2017 But compared to its previous ROA the company is also doing better.

If we look at the ratios, we can easily predict that Fu Wang Ceramics Ltd. is doing better than
Monno Ceramics Ltd. because of its higher ROA.

Return on Equity(ROE)
Monno Ceramic 2016-2017 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd Year
Earnings available 2,716,889 2,181,483 2,544,389 2,544,389
for common stock
holder
Common stock 2,256,803,129 2,266,050,250 2,277,808,859 2,277,808,859
equity
ROE 0.12% 0.09% 0.11% 0.11%
Fu Wang Ceramic 2016-2017 2015-2016 Year 2014-2015 Year 2013-2014 Year
Ltd Year
Earnings available 72,629,108 132,240,173 34,368,094 41,088,653
for common stock
holder
Common stock 1,354,673,830 1,282,044,722 1,149,804,549 1,115,436,455
equity
ROE 5.36% 10.31% 2.99% 3.68%

Interpretation:The return on equity measures the return earned on the common stockholders’
investment in the firm. The higher the ROE is the higher the return will be. And because of
higher return company’s shareholders’ wealth will also be maximized.

Return On Equity Monno

2016-2017
2015-2016
2014-2015
2013-2014

According to Monno Ceramic Ltd.’s ROE, it has a decreasing rate till 2015-2016. In 2015-2016
its ROE falls from 0.11%.to 0.09 Then it increased a little bit that is 0.12% in 2016-2017. That
means the company is not doing well compared to its previous ratios.
 Return On Equity Fu WANG

2016-2017
2015-2016
2014-2015
2013-2014

On the other hand, in the case of Fu Wang Ceramics Ltd., we can observe fluctuating rate of
ROE. The rate is decrease in 2014-2015 from 3.68 to 2.99% than increase 10.31% in 2015-2016
and decrease 5.36% in 2016-2017 . But still the company has a higher ROE and it is doing better.

Market Ratio
Price/Earnings ratio

Monno Ceramic 2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Ltd
Market price per 94.83 94.70 95.11 95.19
share of common
stock
Earnings per 0.11 0.09 0.11 0.11
share
Price earnings 882.09 1052.22 864.64 865.36
ratio

Fu Wang 2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Ceramic Ltd
Market price per 12.52 12.35 12.48 12.35
share of common
stock
Earnings per 0.64 1.29 0.37 0.49
share
Price earnings 19.56 9.57 33.72 25.20
ratio

Interpretation: The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a
market prospect ratio that calculates the market value of a stock relative to its earnings by
comparing the market price per share by the earnings per share.

Price earning ratio monno

1200

1000

800
Price earning ratio monno
600

400

200

0
2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Monno ceramic Ltd price earnings ratio have a fracturing position. It was 865.36 in 2013-2014.
Then increase 33.72 in 2014-2015 than decrease 9.57in 2015-2016 and increase 19.56 in 2016-
2017.

Price earnings ratio fuwang

40

35

30

25
Price earnings ratio fuwang
20

15

10

0
2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year
Fuwang ceramic Ltd price earnings ratio have a fracturing position. It was 25.20 in 2013-2014.
Then decrease 864.64 in 2014-2015 than increased 1052.22 in 2015-2016 and decrease 882.09
in 2016-2017.

Fuwang Ltd. And Monno Ceramic Industries Ltd. are very similar companies operating in the
same sector, and in the same industry. But as we can see that the price earnings ratio for Fuwang
ceramic is way to lower than Monno Ceramic. So investors will be more interested in investing
their money on Fuwang Ceramic stocks than Monno Ceramic since Fuwang is way more
lucrative than Monno Ceramic.

Market/Book ratio
Monno Ceramic 2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year
Ltd
Market price per 94.83 94.70 95.11 95.19
share of common
stock
Book value per 94.32 94.70 95.19 95.19
share of common
stock
Market /Book 1.005 1 0.999 1
ratio

Fu Wang Ceramic 2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Ltd
Market price per 12.52 12.35 12.48 12.35
share of common
stock
Book value per 12.03 12.52 12.35 13.18
share of common
stock
Market /Book 1.04 0.99 1.01 0.94
ratio
Interpretation: Book value per share of common stock represents the amount of safety each share
of the common stock of the company holds. In other words, it measures how much of the value
of net assets each share of common stock hold in any company. Since the more the value is, the
safer a common stock is. That is why as an investor we always look for the companies which
have a greater book value. Book value of common stock is calculated by the owner of the
company to measure the risk and safety after all the debts are paid accordingly.

The market/book value (M/B) ratio provides an assessment of how investors view the firm’s
performance. Firms expected to earn high returns relative to their risk typically sell at higher
M/B multiples.

1.01

1.01

1 Market /Book ratio Monno

1

1
2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year

Monno ceramic Ltd price earnings ratio have a fracturing position. It was 1 in 2013-2014. Then
decrease 0.999 in 2014-2015 than increase 1 in 2015-2016 and increase 1.005 in 2016-2017.

Market /Book ratio fuwang

1.06

1.04

1.02

0.98 Market /Book ratio fuwang

0.96

0.94

0.92

0.9

0.88
2016-2017 Year 2015-2016 Year 2014-2015Year 2013-2014Year
Fuwang ceramic Ltd price earnings ratio have a fracturing position. It was 0.94 in 2013-2014.
Then increase 1.01 in 2014-2015 than decrease 0.99 in 2015-2016 and increase 1.04 in 2016-
2017.

What we can see from the chart is Monno Ceramic’s Book Value per share ratio has gradually
goes down and again goes up and price of fuwang ceramic is up and again up. Monno and
fuwang book value is almost look like same. So investors will more interested to invest money in
fuwang ceramic than monno ceramic.

Recommendation
As for the liquidity ratios, FU WANG Ceramic has shown pretty impressive results over the
years than Monno Ceramic. From the debt management ratios, we can notice a rising efficiency
of the FU WANG Ceramic compared to Monno Ceramic. In asset management ratios, the
inventory turnover, average age of inventory and average payment period of Monno Ceramic are
attractive than FU WANG Ceramic. On the contrary, average collection period of FU WANG is
much better than Monno. A Looking into the profitability ratios, we can see a steady decrease in
the GP, OP and NP margins of Monno Ceramic whereas FU WANG Ceramic’s situation is much
better. FU WANG Ceramic’s GP margin is closer to stable. Its OP margin fell greatly in 2015
but in 2016 it came back to position by increasing in a significant amount. Net profit margin of
FU WANG fell a little bit in 2016 compared to year 2015. But overall profitability scenario of
FU WANG Ceramic is much better than Monno Ceramic. The market ratios of the FU WANG
Ceramic are astounding which reflects the company’s goodwill in the market compared to
Monno Ceramic. Taking everything into consideration, it can be concluded that an individual
should give more priority in FU WANG Ceramic rather than Monno Ceramic.