Financial

Statement Analysis
of
 Financial Statement Analysis
Of
Bata Shoe Company (Bangladesh) Limited.
BUS635 Section 04

Submitted To
Dr. H. M. Mosarof Hossain
Professor
Department of Finance
University of Dhaka

Submitted By
Shakawat Khanam
ID: 191 5263 660
Md. Arefin Ferdous
ID: 192 5323 660
Afra Nawar
ID: 191 5320 660
Kaniz Fatema
ID: 172 5066 660

Date of Submission: Monday, December 23, 2019

 Letter of Transmittal
23rd December 2019

Dr. H. M. Mosarof Hossain

Course Instructor
School of Business and Economics
North South University

Subject: Regarding submission of term paper on Financial Statement Analysis of Bata Shoe
Company (Bangladesh) Limited.

Dear Sir,

We want to thank you for giving us such an opportunity to submit the term paper on “Financial
Statement Analysis of Bata Shoe Company Bangladesh Limited” for the course Managerial
Finance (BUS635), which had been a great experience for us to work with such a real-life issue.
We tried utmost to make and let it look like a professional one. Any shortcomings are expected
to have a kind view of our encouragement. Thank you for your sincere & honest try to let us make
easy and get familiar with the terms and facts of this analysis to help us make the paper a
successful one.

Our efforts will be valued; if this report serves the purpose of what it’s been assigned.

Thank You.

Sincerely,

Name Id Signature
Shakawat Khanam 191 5263 660
Md. Arefin Ferdous 192 5323 660
Afra Nawar 191 5320 660
Kaniz Fatema 172 5066 660

Financial Statement Analysis of

 Acknowledgment
The whole report was based on the ‘Financial Statement Analysis of Bata Shoe Company
Bangladesh Limited’ in the light of the course Managerial Finance (BUS635), results from
considerable intellectual and moral support given by our honorable course teacher, Professor Dr.
H. M. Mosarof Hossain, Professor Department of Finance University of Dhaka. Over the last
three months, he has been our guide from whom we got the inspiration and guidance to learn
“Managerial Finance”. We strongly believe works like this one will surely help us to develop &
make us better adapted as well as capable to cope with the issues & practical exposures in this field
as well as to the whole of the Legislative tools that are being extensively exploited in today’s
world. Also, we would like to remember the almighty Allah for blessing us with the strength,
ability, and patience to do this task. Finally, we want to thanks all our team members and each
other, share personal expertise, struggled with difficulties, passed away many awaked nights to
design the report and to collect the information.

Financial Statement Analysis of

 Executive Summary
The report titled “Financial Statement Analysis of Bata” is divided into five parts and provide a
spotlight on the financial health and performance of Bata Shoe Company (Bangladesh) Limited,
one of the leading shoe manufacturing company in Bangladesh which was founded by Tomas Bata,
a Czech businessman back on 1894. The report has started with the background information
focusing on the objectives behind the repot, what methodology has been used, what are the areas
on which the report covers and what the limitations were faced during preparing the report. It also
has an introduction about Bata Shoe Company Limited describing when they started their business
and when they started operating in Bangladesh, what is their mission and what visions they have.
In the techniques of financial analysis part, the report tried to make a short review of the concept
of financial statement analysis, what are the techniques available for doing financial statement
analysis and defining what is ration analysis. The report is based on twenty-two ratio analysis of
Bata Shoe Company (Bangladesh) Limited’s annual report from the year 2014 till the year 2018
and the reader will get the idea about the current ratio, quick ratio, inventory turnover rate, account
receivable turnover rate, what are the average collection periods, what gross and operating profit
margin has been maintained by Bata, what is their efficient ratio has been maintained by the Bata
from the year 2014 to the year 2018. Part four contains the recommendations based on the findings
from the ratio analysis and concluded at the end. The references based on which the organizational
profile is prepared can be found in the bibliography part and the Microsoft Excel Spreadsheet, a
five-year income statement & balance sheet of Bata Shoe Company (Bangladesh) Limited can be
found in the appendix part. A table of content can be found at the beginning of the report.

Financial Statement Analysis of

Contents
Topics Name Page No.

CHAPTER: 01- INTRODUCTION 7-9

1.1 Background of the Report 8

1.2 Objectives of the Report 8

1.3 Methodology of the Report 8

1.4 Scopes of the Report 9

1.5 Limitations 9

CHAPTER: 02- ORGANIZATIONAL PROFILE 10-12

2.1 The Bata Shoe Company 11

2.1 Missions 12

2.1 Vision 12

CHAPTER: 03- TECHNIQUES OF FINANCIAL 13-14

STATEMENT ANALYSIS
3.1 Financial Statement Analysis 14

3.2 Techniques of Financial Statement Analysis 14

3.3 Ratio Analysis 14

CHAPTER: 04- RATIO ANALYSIS OF 15-37

4.1 Current Ratio 16

4.2 Quick Ratio 17

4.3 Inventory Turnover 18
4.4 Account Receivable Turnover 19
4.5 Average Collection Period 20
4.6 Gross Profit Margin 21

4.7 Operating Profit Margin 22

4.8 Net Profit Margin 23

4.9 Efficiency Ratio 24

4.10 Return On Assets 25

Financial Statement Analysis of

 Contents
Topics Name Page No.
4.11 Return On Equity 26
4.12 Total Assets Turnover 27
4.13 Fixed Assets Turnover 28
4.14 Debt Ratio 29
4.15 Debt Equity Ratio 30
4.16 Earnings per Share 31
4.17 Dividend per Share 32
4.18 Dividend Payout Ratio 33
4.19 Retention Ratio 34

4.20 Market Value To Book Value 35

4.21 Price Earnings Ratio/ Earnings Multiples 36

4.22 Dividend Yield 37

CHAPTER: 05- RECOMMENDATIONS & 38-39

CONCLUSION
5.1 Recommendations 39

5.2 Conclusion 39

BIBLIOGRAPHY 40-41
APPENDIX 42-46

Financial Statement Analysis of

 CHAPTER- 01
INTRODUCTION

Financial Statement Analysis of

 1.1 Background of the Report
This term paper has been prepared as a part of the Managerial Finance course of North South
University. The Term Paper titled, “Financial Statement Analysis of Bata Shoe Company
(Bangladesh) Limited” is being assigned by our course instructor. We have collected all the
required information from the annual report of Bata Shoe Company (Bangladesh) Limited for
the year 2018, 2017, 2016, 2015 & 2014. We have tried our best to combine and relate the
information with the concept of the report, but due to time limitation and restricted access to
information there still remains some limitations.

1. 2 Objectives of the Report

The main objective of this report is to analyze the financial statements of Bata within the time
period of 2014 to 2018.

Others:

To identify the future growth and current position of Bata

To provide recommendations to improve Bata’s performance

1. 3 Methodology of the Report

Four sources are highly used to collect the data for calculating the ratios:

 Annual Report of Bata

 Internet
 Lecture Sheets and Slides
 Text Book

Financial Statement Analysis of

8
 1. 4 Scopes of the Report
This report is being conducted to know the attitude toward the companies finance and financial
conditions from different point of view. But, Bata is a Multinational Company and a big
organization. So, it is unattainable to work on the whole financial condition from the beginning
of this organization at a time. But still, we have chosen from 2014 to 2018 annual reports to do
this analysis.

1. 5 Limitations
 Difficult to ensure the accuracy of the entire Term Paper.
 It was hard to identify the exact reason of the variations.
 The time frame for this Term Paper was restricted to a single semester. If it was
allowed more time, surely the analysis will be more accurate and viable

Financial Statement Analysis of

9
 CHAPTER- 02
ORGANIZATIONAL
PROFILE

Financial Statement Analysis of

 2.1 The Bata Shoe Company
The Bata Shoe Organization was founded in 1894 by Czech businessman Tomas Bata in the
city of Zlin, what was then Czechoslovakia. It is now the world’s largest manufacturer and
marketer of footwear operating across the globe. Bata Shoe Company is one of the largest
companies not only in Bangladesh but also in many other countries.

Bata Shoes is a large, family owned shoe company based in Bermuda but currently it has
headquarters in Lausanne, Switzerland, and operates 4 business units worldwide – Bata Europe,
Bata Emerging Markets, Bata Branded Business and Bata North America. In 1985 Bata Shoe
listed in Dhaka Stock Exchange. Today the Bata Shoe Organization is a sprawling geo-centric
company encompassing operations in more than 70 countries around the world. It serves over
1 million customers per day, employs more than 30,000 people, operates more than 5,000
international retail outlets, manages retail presence in over 70 countries and runs 27 production
facilities across 20 countries.

In Bangladesh, Bata started its operation in 1962. Currently Bata Shoe Company (Bangladesh)
Limited operates two manufacturing facilities – one in Tongi and the other in Dhamrai with a
production capacity of 160,000 pairs of shoes daily. The annual shoe sales currently stand about
30 million pairs. Bata has a network of 261 retail outlets located strategically in different parts
of the country. These retail outlets are an integral part of our brand marketing. Bata Bangladesh
has an exclusive store at Bashundhara City Mall which is now the World’s Largest Bata Store.
This extensive retail network is supplemented by an equally extensive network of depots and
dealers. Bata has 13 Wholesale depots covering Bangladesh. Under these depots 471 RWD
(Registered Wholesale Dealers) and 690 DSP (Dealer Support Program) stores are operating.

For over 13 decades, Bata has been on the leading edge of footwear design. Today,
professionals in Bata’s Shoe Innovation Centers around the world continue the tradition of
innovation as they dedicate themselves to discovering new shoe materials, developing modern
shoe technologies, and creating fresh footwear that marries style with comfort. Since its
inception, Bata Shoe Company (Bangladesh) Ltd. has strived towards one goal – customer
satisfaction. With the vision of building a worldwide family of satisfied customers and
dedicated workers the legacy of Tomas Bata continues strong and unabated to this day – the
tradition is safe.

Financial Statement Analysis of

11
 2. 2 Missions
 To make great shoes accessible to everyone

2. 3 Vision
 To help people look and feel well.

 To be the customer's destination of choice.

 To attract and retain the best people.
 To remain the most respected Footwear Company.

Financial Statement Analysis of

12
 CHAPTER- 03
TECHNIQUES OF
FINANCIAL
STATEMENT
ANALYSIS

Financial Statement Analysis of

 3.1 Financial Statement Analysis
Financial Statement Analysis is defined as the process of identifying financial strengths and
weaknesses of the firm by properly establishing relationship between the items of the balance
sheet and the profit and loss account.

The process of reviewing and evaluating a company’s financial statements (such as the balance
sheet or profit and loss statement), thereby gaining an understanding of the financial health of
the company and enabling more effective decision making.

3.2 Techniques of Financial Statement

Analysis
 Ratio Analysis

 Trend percentage analysis

 Vertical analysis

 Horizontal analysis

 Statement in changes in financial position (Cash flow statement and funds flow
statement)

This report is based on Ratio Analysis. So, only Ratio Analysis is described broadly in this
term paper.

3. 3 Ratio Analysis
Single most important technique of financial analysis in which, quantities are converted into
ratios for meaningful comparisons, with past ratios and ratios of other firms in the same or
different industries. Ratio analysis determines trends and exposes strengths or weaknesses of a
firm.

Financial Statement Analysis of

 CHAPTER- 04
RATIO
ANALYSIS
OF

Financial Statement Analysis of

 4.1 Current Ratio
Year Current Ratio (Times)
2014 1.710830247

2015 1.948067553

2016 1.980227748

2017 2.01288865

2018 2.014189264

Current Ratio (Times)

2.05
2
1.95
1.9
1.85
1.8
1.75
1.7
1.65
1.6
1.55
2014 2015 2016 2017 2018

Current Ratio (Times)

Current ratio is used for evaluating a company’s liquidity and short term debt paying ability.
The table presents the liquidity position of BATA Company from 2014 to 2018. The current
ratio of BATA Company from 2014 to 2018 are 1.71, 1.95, 1.98, 2.013 and 2.014 respectively.
The liquidity ratios are the above standard which indicate that BATA Company has adequate
current asset to meet the current liabilities. The current ratio of this company is really good.

Financial Statement Analysis of

16
 4.2 Quick Ratio
Year Quick Ratio

2014 0.650857515

2015 0.814961342

2016 0.90543573

2017 0.910082667

2018 0.957499073

QUICK RATIO
Quick Ratio

1.2

0.8

0.6

0.4

0.2

0
2014 2015 2016 2017 2018

Quick ratio is used for evaluating a company’s liquidity and short term debt paying ability. The
table presents the liquidity position of BATA Company from 2014 to 2018. The quick ratio of
BATA Company from 2014 to 2018 are 0.65, 0.81, 0.905, o.91and 0.96 respectively. The
liquidity ratios are the below standard in 2014 but in 2015 year to 2019 year it is seen that the
quick ratios are close to the standard which indicate that BATA company has adequate current
asset to meet the current liabilities. The quick ratio of this company is really good.

Financial Statement Analysis of

17
 4.3 Inventory Turnover
Year Inventory Turnover (Times)
2014 2.290532121
2015 2.247843619
2016 1.787632518
2017 1.445323251
2018 1.405823494

Inventory Turnover
(COGS/Avg. Inventory)

2.5

1.5

0.5

0
2014 2015 2016 2017 2018

Inventory Turnover (COGS/Avg. Inventory)

Managing the right number of inventory is very crucial for a company. A higher inventory
turnover ratio means the company is efficient in turning its ideal inventories to sales revenue.
The table presents the activity information 0f BATA Company from 2014 to 2018.The
inventory turnover of BATA Company from 2014 to 2018 are 2.29, 2.25, 1.79, 1.45 and 1.41
respectively. The average inventory turnover ratio is not good for this company as it was
decreased from year to year. The ratios indicate that the management performance of BATA
Company was not good.

Financial Statement Analysis of

18
 4.4 Account Receivable Turnover
Year Account Receivable Turnover
2014 17.73323709
2015 9.397648158
2016 8.630812889
2017 7.265440602
2018 4.724722993

Account Receivable Turnover (Credit Sales/ Avg.

Account Receivables)
20
18
16
14
12
10
8
6
4
2
0
2014 2015 2016 2017 2018

Account Receivable Turnover (Credit Sales/ Avg. Account Receivables)

Managing the right amount of account receivable is very crucial for a company. A higher
account receivable turnover ratio means the company is efficient. The table presents the activity
information 0f BATA Company from 2014 to 2018.The inventory turnover of BATA Company
from 2014 to 2018 are 17.73, 9.4, 8.63, 1.45 and 7.27 respectively. The average account
receivable ratio was not good for this company as it was decreased from year to year. The ratios
indicate that the management performance of BATA Company was not satisfactory.

Financial Statement Analysis of

19
 4.5 Average Collection Period
Year Average Collection Period (Days)
2014 20.58
2015 38.84
2016 42.29
2017 50.21
2018 77.33

AVERAGE COLLECTION PERIOD (DAYS)

2018

2017

2016

2015

2014

0 10 20 30 40 50 60 70 80 90

Average Collection Period (Days)

Managing the right amount of average collection is very crucial for a company. A higher
Average collection period ratio means the company is efficient. The table presents the activity
information 0f BATA Company from 2014 to 2018.The average collection period of BATA
Company from 2014 to 2018 are 20.58, 38.84, 42.29, 50.21 and 77.33 respectively. The
average inventory turnover ratio is not good for this company as it was increased from year to
year. The ratios indicate that the management performance of BATA Company was not
satisfactory.

Financial Statement Analysis of

20
 4.6 Gross Profit Margin
Year Gross Profit Margin (%)

2014 38.77%

2015 40.23%

2016 43.45%

2017 44.76%

2018 44.18%

GROSS PROFIT MARGIN (%)

Gross Profit Margin (%) [Gross Profit/ Net Sales]

46.00%
45.00%
44.00%
43.00%
42.00%
41.00%
40.00%
39.00%
38.00%
37.00%
36.00%
35.00%
2014 2015 2016 2017 2018

The gross profit margin is a measure that shows the percentage of gross profit in comparison
to sales. The table represents the profitability of BATA Company from 2014 to 2018. The gross
profit margin of this company from 2014 to 2018 are 38.77%, 40.23%, 43.45%, 44.76% and
44.18% respectively. As the gross profit of this company is increased year to year which
indicates the profitability of BATA Company is highly significant and has the adequate income
to survive in the market. So it is said that the profitability of BATA Company in 2018 is less
significant as it was less in compare to previous year 2017.

Financial Statement Analysis of

21
 4.7 Operating Profit Margin
Year Operating Profit Margin (%)

2014 13.16%

2015 14.62%

2016 16.77%

2017 18.32%

2018 15.37%

OPERATING PROFIT MARGIN (%)

Operating Profit Margin (%)

20.00%

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2014 2015 2016 2017 2018

The Operating profit margin is a measure that shows the percentage of operating profit in
comparison to sales. The table represents the profitability of BATA Company from 2014 to
2018. The Operating profit margin of this company from 2014 to 2018 are 13.16%, 14.62%,
16.77%, 18.32% and 15.37% respectively. As the operating profit of this company is increased
year to year which indicates the profitability of BATA Company is significant and has the
adequate income to survive in the competition. So it is said that the profitability of BATA
Company in 2018 is less in significant in compare to 2017 and 2016.

Financial Statement Analysis of

22
 4.8 Net Profit Margin
Year Net Profit Margin (%)

2014 8.67%

2015 9.76%

2016 11.87%

2017 12.67%

2018 10.44%

NET PROFIT MARGIN (%)

Net Profit Margin (%)

14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2014 2015 2016 2017 2018

The Net profit margin is a measure that shows the percentage of net profit in comparison to
sales. The table represents the profitability of BATA Company from 2014 to 2018. The
Operating profit margin of this company from 2014 to 2017 are 8.67%, 9.76%, 11.87% and
12.67% respectively. As the operating profit of this company is increased year to year from
2014 to 2017 which indicates the profitability of BATA Company is significant. But in 2018
year net profit of BATA Company was 10.44% which indicate in 2018 the profitability was
not satisfactory as it is decreased from 12.67% to 10.44%. So it is said that the profitability of
BATA Company was significant from 2014 to 2017 but in 2018 the profitability was not
satisfactory so at 2018 the company was less efficient in transforming sales into actual net
profit.

Financial Statement Analysis of

23
 4.9 Efficiency Ratio
Year Efficiency Ratio (%)

2014 25.95%

2015 25.76%

2016 26.72%

2017 26.30%

2018 28.73%

Efficiency Ratio (%)

Efficiency Ratio (%)

28.73%

26.72%
26.30%
25.95%
25.76%

2014 2015 2016 2017 2018

The efficiency ratio is a measure that shows the percentage of operating expese in comparison
to net sales. The table represents the efficiency of BATA Company from 2014 to 2018. The
efficiency of this company from 2014 to 2017 are 25.95%, 25.76%, 26.72% and 26.30%
respectively. As the operating expense of this company is increased fluctuate from 2014 to
2017 which indicates the efficiency of BATA Company is satisfactory. But in 2018 year
efficiency ratio of BATA Company was 28.73% which indicate in 2018 the efficiency was not
satisfactory as it is increased from 26.30% to 28.73%. So it is said that the efficiency of BATA
Company was satisfactory from 2014 to 2017 but in 2018 the efficiency was not satisfactory
so at 2018 the company was less efficient.

Financial Statement Analysis of

24
 4.10 Return on Assets
Year Return On Assets (%)

2014 14.30%

2015 15.88%

2016 15.91%

2017 14.78%

2018 11.30%

RETURN ON ASSETS (%)

Return On Assets (%)

18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2014 2015 2016 2017 2018

The Return on asset is a measure that shows the percentage of net income in comparison to
total assets. The table represents the profitability of BATA Company from 2014 to 2018. The
Return on asset of this company from 2014 to 2016 are 14.30%, 15.88% and 15.91%
respectively. As the Return on asset of this company is increased year to year from 2014 to
2016 which indicates the profitability of BATA Company is significant. But in 2017 and 2018
year return on asset of BATA Company was 14.78% and 11.30% which indicate in 2017 and
2018 the profitability was not satisfactory as it is decreased from 2017 to 2018 . So it is said
that the profitability of BATA Company was significant from 2014 to 2016 but in 2017 and
2018 the profitability was not satisfactory so at 2017 and 2018 the company was less efficient.
It should be noted that the in 2018 the performance was so poor in comparison to previous
years.

Financial Statement Analysis of

25
 4.11 Return on Equity
Year Return On Equity (%)
2014 27.25%
2015 28.05%
2016 29.33%
2017 27.12%
2018 20.94%

RETURN ON EQUITY (%)

Return On Equity (%)

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2014 2015 2016 2017 2018

The Return on equity is a measure that shows the percentage of net income in comparison to
total equity. The table represents the profitability of BATA Company from 2014 to 2018. The
Return on asset of this company from 2014 to 2016 are 27.25%, 28.05% and 29.33%
respectively. As the Return on equity of this company is increased year to year from 2014 to
2016 which indicates the profitability of BATA Company is significant. But in 2017 and 2018
year return on equity of BATA Company was 27.12% and 20.94% which indicate in 2017 and
2018 the profitability was not satisfactory as it is decreased from 2017 to 2018 . So it is said
that the profitability of BATA Company was significant from 2014 to 2016 but in 2017 and
2018 the profitability was not satisfactory so at 2017 and 2018 the company was less efficient.
It should be noted the in 2018 the performance was so poor in compare to the previous years.

Financial Statement Analysis of

26
 4.12 Total Assets Turnover
Year Total Assets Turnover (Times)
2014 1.65
2015 1.63
2016 1.34
2017 1.17
2018 1.08

Total Assets Turnover

1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2014 2015 2016 2017 2018

Total Assets Turnover (Times)

The asset turnover ratio measures the value of a company's sales or revenues relative to the
value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with
which a company is using its assets to generate revenue. The higher the asset turnover ratio,
the more efficient a company. Conversely, if a company has a low asset turnover ratio, it
indicates it is not efficiently using its assets to generate sales. Managing the right number of
inventory is very crucial for a company. A higher inventory turnover ratio means the company
is efficient in turning its ideal inventories to sales revenue. The table presents the activity
information 0f BATA Company from 2014 to 2018.The Total turnover of BATA Company
from 2014 to 2018 are 1.65, 1.63, 1.34, 1.17 and 1.08 respectively. The average total asset
turnover ratio is not good for this company as it was decreased from year to year. The ratios
indicate that the management performance of BATA Company was not good.

Financial Statement Analysis of

27
 4.13 Fixed Assets Turnover
Year Fixed Assets Turnover (Times)
2014 6.76
2015 7.36
2016 7.48
2017 7.43
2018 7.44

Fixed Assets Turnover (Times)

7.6

7.4

7.2

6.8

6.6

6.4
2014 2015 2016 2017 2018

Fixed Assets Turnover (Times)

The fixed asset turnover ratio (FAT) is, in general, used by analysts to measure operating
performance. This efficiency ratio compares net sales (income statement) to fixed assets
(balance sheet) and measures a company's ability to generate net sales from its fixed-asset
investments, namely property, plant, and equipment (PP&E).A higher turnover ratio is
indicative of greater efficiency in managing fixed-asset investments.

The table presents the activity information of BATA Company from 2014 to 2018.The Total
fixed asset turnover of BATA Company from 2014 to 2018 are 6.76, 7.36, 7.48, 7.43 and 7.44
respectively. The average fixed asset turnover ratio was good for this company from 2014 to
2017 as it was increased from year to year. But it was decreased from 2017 to 2018 .The ratios
indicate that the management performance of BATA Company was in average.

Financial Statement Analysis of

28
 4.14 Debt Ratio
Years Debt Ratio (%)
2014 47.53%
2015 43.38%
2016 41.46%
2017 45.50%
2018 46.02%

DEBT RATIO (%)

Debt Ratio (%)

48.00%
47.00%
46.00%
45.00%
44.00%
43.00%
42.00%
41.00%
40.00%
39.00%
38.00%
2014 2015 2016 2017 2018

The debt ratio is a financial ratio that measures the extent of a company’s leverage. The debt
ratio is defined as the ratio of total debt to total assets, expressed as a decimal or percentage.
The table indicates the financial ability of BATA Company to meet the long term obligation,
the solvency ratio from 2014 to 2018 are 47.53%, 43.38%, 41.46%, 45.50% and 46.02%
respectively. It should be indicate that the debt ratio from 2014 to 2018 more than 40% which
indicate the more financial risk and the ratios are fluctuated. It is also seen that the debt ratio
was in good position in 2016 as it was in increased rate from 2017 to 2018. So it is said that
the solvency of BATA Company was in average.

Financial Statement Analysis of

29
 4.15 Debt Equity Ratio
Years Debt Equity Ratio
2014 0.905941456
2015 0.766131099
2016 0.842840659
2017 0.83488403
2018 0.8526548

DEBT EQUITY RATIO

Debt Equity Ratio

0.9500

0.9000

0.8500

0.8000

0.7500

0.7000

0.6500
2014 2015 2016 2017 2018

The ratio is used to evaluate a company's financial leverage. The D/E ratio is an important
metric used in corporate finance. It is a measure of the degree to which a company is financing
its operations through debt versus wholly owned fund. The trend shows that debt equity ratio
was fluctuate from 2014 to 2018. So it is said that the performance was in average.

Financial Statement Analysis of

30
 4.16 Earnings per Share (EPS)
Years Earnings Per Share (EPS)
2014 51.21857463
2015 60.80003882
2016 76.24400629
2017 83.75810534
2018 72.69574276

Earnings Per Share (EPS)

90

80

70

60

50

40

30

20

10

0
2014 2015 2016 2017 2018

Earnings Per Share (EPS)

Earnings per share (EPS) are the portion of a company's profit allocated to each share of
common stock. Earnings per share serve as an indicator of a company's profitability.

The earnings per share from 2014 to 2017 was 51.22, 60.8, 76.24 and 83.76 respectively which
indicates the profitability of BATA Company was highly significant. But in 2018 the EPS was
decreased from 83.76 to 72.7 which indicates the profitability was less in 2018.

Financial Statement Analysis of

31
 4.17 Dividend per Share
Years Dividend Per Share
2014 27.6805652
2015 31.47645841
2016 32.63756769
2017 33.16796711
2018 13.9752125

Dividend Per Share

90

80

70

60

50

40

30

20

10

0
2014 2015 2016 2017 2018

Dividend Per Share

Dividend per share (DPS) is the sum of declared dividends issued by a company for every
ordinary share outstanding. The figure is calculated by dividing the total dividends paid out by
a business, including interim dividends, over a period of time by the number of outstanding
ordinary shares issued.

The dividend per share from 2014 to 2017 was 27.68, 31.48 and 32.64 respectively which
indicates the profitability of BATA Company was highly significant from 2014 to 2016. But
in 2017 and 2018 the DPS was decreased to 33.17 and 13.98 which indicates the profitability
was less in 2017 and the profitability was poor in 2018.

Financial Statement Analysis of

32
 4.18 Dividend Payout Ratio
Years Dividend Payout Ratio
(%)
2014 54.04%
2015 51.78%
2016 42.81%
2017 39.60%
2018 19.23%

Dividend Payout Ratio (%)

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2014 2015 2016 2017 2018

Dividend Payout Ratio (%)

The dividend payout ratio measures the percentage of net income that is distributed to
shareholders in the form of dividends during the year. In other words, this ratio shows the
portion of profits the company decides to keep funding operations and the portion of profits
that is given to its shareholders.

From the diagram and the table we can see that the DPR was in a decreased rate from 2014 to
2018 which indicates the performance of BATA Company was not good.

Financial Statement Analysis of

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 4.19 Retention Ratio
Years Retention Ratio (%)

2014 45.96%

2015 48.22%

2016 57.19%

2017 60.40%

2018 80.77%

RETENTION RATIO (%)

Retention Ratio (%)

90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2014 2015 2016 2017 2018

The retention ratio (also known as the net income retention ratio) is the ratio of the company’s
retained income to its net income. The retention ratio measures the percentage of a company’s
profits that are reinvested into the company in some way rather than being paid out to investors
as dividends. A high retention ratio may not always be indicative of financial health. Businesses
tend to prioritize business development and investments in research and development (R&D),
which can be a reason why they are more likely to retain their earnings rather than distribute
them as dividends.

The retention ratio indicates the increasing rate which may not be indicative of better financial
health.

Financial Statement Analysis of

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 4.20 Market Value to Book Value
Years Market Value To Book Value (in times)
2014 6.236564861
2015 6.079634585
2016 4.392645588
2017 3.794443365
2018 3.216271499

Market Value To Book Value (in times)

7

0
2014 2015 2016 2017 2018

Market Value To Book Value (in times)

This measurement is used by investors to evaluate the price of a company's common stock. For
instance, if the market value per share is lower than the book value per share, then the stock
price may be undervalued. The market value ratios are the financial metrics which are used to
evaluate the stocks of publicly traded companies. These ratios are mainly used by investors to
check whether the share’s prices are valued correctly in the market or they are trading at a
higher price or lower.

The market value ratio was gradually decreased from 2014 to 2018 (6.24, 6.08, 4.4, 3.8, 3.22)
which indicates the less market value of share and that was poor performance of BATA
Company.

Financial Statement Analysis of

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 4.21 Price Earnings Ratio/ Earnings
Multiples
Years Price Earnings Ratio/ Earnings Multiples

2014 22.33112066

2015 21.67269737

2016 14.97901364

2017 13.98997135

2018 15.35710355

Price Earnings Ratio

25

20

15

10

0
2014 2015 2016 2017 2018

Price Earnings Ratio/ Earnings Multiples

An equity multiplier measures a company's financial leverage by using a ratio of the company's
total assets to its stockholders' equity (also known as shareholders' equity). Generally, a lower
equity multiplier indicates a company has lower financial leverage. It is better to have a low
equity multiplier, because that means a company needs to use less debt to finance its assets.
The price earnings ratio of BATA company from 2014 to 2018 are 22.33, 21.67, 14.98, 13.99
and 15.36 respectively the is the market performance was good from 2014 to 2017 and in 2018
the market performance was not good as it was increased from 13.99 to 15.36.

Financial Statement Analysis of

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 4.22 Dividend Yield
Years Dividend Yield (%)
2014 2.36%
2015 2.39%
2016 2.86%
2017 2.83%
2018 1.25%

Dividend Yield (%)

3.50%

3.00%
2.86% 2.83%
2.50%
2.36% 2.39%
2.00%

1.50%
1.25%
1.00%

0.50%

0.00%
2014 2015 2016 2017 2018

Dividend Yield (%)

The dividend yield is a financial ratio that measures the amount of cash dividends distributed
to common shareholders relative to the market value per share. Dividend paying stocks are
very stable. It is pivotal to observe, that one should keep a track only of those shares which are
constantly offering dividends to its shareholders. If a stock offers a high dividend in the first
year and subsequently the yield is low or inconsistent then such stocks should not be considered
under the ambit of high dividend yielding.

From the diagram and table we can see that the dividend yield from 2014 to 2018 are 2.36%,
2.39%, 2.86%, 2.83% and 1.25% respectively which indicates the dividend yield was fluctuate.
So it is said that the performance of BATA Company was good from 2014 to 2917 but in 2018
the performance was poor as the dividend yield rate was very low.

Financial Statement Analysis of

37
 CHAPTER- 05
RECOMMENDATIONS
&
CONCLUSION

Financial Statement Analysis of

 Recommendations
From the ratio analysis we came up with some recommendation for the company
 BATA Shoe Company should increase its gross profit margin.
 The company also needs to increase its operating profit and net profit.
 The company needs to improve its sales performance.
 The company needs to increase its inventory turnover, account receivable turnover and
average collection period as the management performance of BATA Company is very
poor.
 The company also need to increase its return on asset and return on equity

Conclusion
BATA Shoe Company as one of the largest manufacturers of safety shoes, BATA plays a major
role in safeguarding the health of the world’s workers. From the heavy duty work boots to
elegant and sporty footwear, BATA industrial has a wide range of shoes which take place a
wide number of market shares. By considering its strength side and correcting the lacking
behind its operating activity and profitability the company’s growth can be higher in future.

Financial Statement Analysis of

39
 BIBLIOGRAPHY

Financial Statement Analysis of

 Bibliography
batabd. (2019). About Us. [online] Available at: https://www.batabd.com/pages/about-us [Accessed
22 Dec. 2019].

batabd. (n.d.). Financial Info. [online] Available at: https://www.batabd.com/pages/financial-

info [Accessed 22 Dec. 2019].
KENTON, W. (2019). Financial Statement Analysis. [Blog] Investopedia. Available at:
https://www.investopedia.com/terms/f/financial-statement-analysis.asp [Accessed 22
Dec. 2019].
CFA Institute. (n.d.). Introduction to Financial Statement Analysis. [online] Available at:
https://www.cfainstitute.org/en/membership/professional-development/refresher-
readings/2020/introduction-financial-statement-analysis [Accessed 22 Dec. 2019].
Bragg, S. and Bragg, S. (2019). Financial statement analysis — AccountingTools. [online]
AccountingTools. Available at:
https://www.accountingtools.com/articles/2017/5/14/financial-statement-analysis
[Accessed 22 Dec. 2019].
Smallbusiness.chron.com. (n.d.). Financial Statement Analysis Tools. [online] Available at:
https://smallbusiness.chron.com/financial-statement-analysis-tools-3776.html
[Accessed 22 Dec. 2019].

Financial Statement Analysis of

41
 APPENDIX

Financial Statement Analysis of

Financial Statement Analysis of 43
Financial Statement Analysis of
44
 BALANCE SHEET
Bata Shoe Company (Bangladesh) Limited.
Particulars
2018 2017 2016 2015 2014
Property, Plant & Equipment 9,521,394,148.00 9,040,558,355.00 8,784,553,317.00 8,522,801,619.00 8,076,995,037.00
Prepayments of rent 5,315,095,446.00 4,993,863,236.00 4,967,238,013.00 5,094,404,901.00 4,945,486,549.00
Deferred tax assets 4,206,298,702.00 4,046,695,119.00 3,817,315,304.00 3,428,396,718.00 3,131,508,488.00
Total Non-Current Assets - 4,065,700.00 - - -
Inventories 1169413.00 - 1500181.00 5239590.00 6886918.00
Accounts Receivable & Others 2,735,055,362.00 2,377,416,735.00 2,347,516,714.00 2,195,830,942.00 2,096,017,729.00
Advances, Deposits &
Prepayments 9,109,236.00 8,721,343.00 - - -

Cash & Cash Equivalents - - 1,789,826.00 8,259,742.00 20,221,586.00

Total Current Assets 1,463,303,517.00 1,656,491,341.00 1,471,298,771.00 1,237,805,366.00 1,062,599,263.00
Total Assets 24,910,073.00 20,637,808.00 27,863,144.00 28,842,956.00 13,846,600.00
Share Capital 8,360,421.00 5,256,222.00 3,486,472.00 4,309,610.00 4,951,020.00
Reserve surplus 1,479,853,169.00 1,671,872,927.00 1,497,465,269.00 1,270,598,454.00 1,071,494,843.00
Total Shareholders' Equity 73,992,658.00 83,593,646.00 74,873,263.00 63,529,923.00 53,574 742
Deferred Tax liabilities 1,405,860,511.00 1,588,279,281.00 1,422,592,006.00 1,207,068,531.00 1,017,920,101.00
Total Non-Current Liabilities 411,382,750.00 442,468,400.00 379,574,000.00 375,324,000.00 317,250,000.00
Creditor for Goods 994,477,761.00 1,145,810,881.00 1,043,018,006.00 831,744,531.00 700,670,101.00

Financial Statement Analysis of

45
 INCOME STATEMENT
Bata Shoe Company (Bangladesh) Limited.

Particulars 2018 2017 2016 2015 2014

Revenue 9,521,394,148.00 9,040,558,355.00 8,784,553,317.00 8,522,801,619.00 8,076,995,037.00
Cost of Goods Sold 5,315,095,446.00 4,993,863,236.00 4,967,238,013.00 5,094,404,901.00 4,945,486,549.00
Gross Profit 4,206,298,702.00 4,046,695,119.00 3,817,315,304.00 3,428,396,718.00 3,131,508,488.00
Foreign Exchange Loss - 4,065,700.00 - - -
Foreign Exchange gain 1169413.00 - 1500181.00 5239590.00 6886918.00
Administration and
2,735,055,362.00 2,377,416,735.00 2,347,516,714.00 2,195,830,942.00 2,096,017,729.00
operating expenses
Other expenses 9,109,236.00 8,721,343.00 - - -
Other Income - - 1,789,826.00 8,259,742.00 20,221,586.00
Profit from Operations 1,463,303,517.00 1,656,491,341.00 1,471,298,771.00 1,237,805,366.00 1,062,599,263.00
Finance income 24,910,073.00 20,637,808.00 27,863,144.00 28,842,956.00 13,846,600.00
Finance Cost 8,360,421.00 5,256,222.00 3,486,472.00 4,309,610.00 4,951,020.00
Profit before WPPF &
1,479,853,169.00 1,671,872,927.00 1,497,465,269.00 1,270,598,454.00 1,071,494,843.00
Tax
Contribution to WPPF 73,992,658.00 83,593,646.00 74,873,263.00 63,529,923.00 53,574 742
Profit before Tax 1,405,860,511.00 1,588,279,281.00 1,422,592,006.00 1,207,068,531.00 1,017,920,101.00
Provision for Tax 411,382,750.00 442,468,400.00 379,574,000.00 375,324,000.00 317,250,000.00
Net Profit after Tax 994,477,761.00 1,145,810,881.00 1,043,018,006.00 831,744,531.00 700,670,101.00

Financial Statement Analysis of

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