IUBAT - International University of Business Agriculture and Technology

Assignment 03

Submitted by:

Abu Naeem Mahmud Tuhin

ID: 18102152

Course Name: Financial Statement Analysis

Course Code: ACC 404

Section: A

Program: BBA

Submitted to:

Reefat Arefin Khan

Faculty

College of Business Administration (CBA)

Date of submission: 22/03/2021

 Bata Shoe Company (Bangladesh) Limited

Dhamrai Tongi

About Bata Shoe

The Bata Shoe Organization was founded in 1894 by Czech businessman Tomas Bata in the
city of Zlin.

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.

Vision

 To make great shoes accessible to everyone

Mission

 To help people look and feel good.

 To be the customer's destination of choice.
 To attract and retain the best people.
 To remain the most respected Footwear Company.
2018
2019
Net profit margin ratio: Net Profit Margin (also known as “Profit Margin” or “Net Profit Margin
Ratio”) is a financial ratio used to calculate the percentage of profit a company produces from its
total revenue. It measures the amount of net profit a company obtains per dollar of revenue gained.
The net profit margin is equal to net profit (also known as net income) divided by total revenue,
expressed as a percentage.

Formula: Net Profit Margin = (Net Profit/Net Sales) x 100

2018 2019

Net Profit Margin= Net Profit Margin=

(995,729,511/9,521,394,148)*100
554,541,459/8,573,497,561*100
=10.46%
=6.47%
 12

10

6
10.46
4
6.47
2

0
2018 2019

Figure: Net Profit Margin Ratio

Comment: In the year 2018 Net Profit Margin was 10.46% which is better that 2019 where the
Net Profit Margin was 6.47%. The higher the net profit margin is better for the company. In 2019
their net sales was lower than 2018 and may be other expenses was high in 2019 for that net profit
was low. So Bata Shoe Company should decrease the operational and non-operational expenses to
get higher profit margin in 2020.

ROCE ratio: Return on capital employed (ROCE) is a financial ratio that can be used in assessing
a company's profitability and capital efficiency. In other words, this ratio can help to understand
how well a company is generating profits from its capital as it is put to use.

Formula: EBIT / (Total asset – Total liabilities)

2018 2019

ROCE ratio=1,405,860,511/ ROCE ratio=792,275,459/(9,089,215,031-

2,650,101,609)
(8,797,271,705-3,732,078,883)
=0.12
=0.28
 0.3

0.25

0.2

0.15 0.28
0.1

0.05 0.12

0
2018 2019

Figure:ROCE Ratio

Comment: In the year 2018 ROCE ratio was .28 which is better that 2019. In the year 2019 the
ROCE ratio was 0.12. A company's profitability is higher is better for the investors and for the
company also. The company should decrease the liabilities and increase asset, sales to get higher
profitability and capital efficiency in 2020.

The Debtors Turnover Ratio: The Debtors Turnover Ratio also called as Receivables Turnover
Ratio shows how quickly the credit sales are converted into the cash. This ratio measures the
efficiency of a firm in managing and collecting the credit issued to the customers.

Formula: Net Credit sales / Average Accounts Receivable

2018 2019

The Debtors Turnover= The Debtors Turnover=

9,521,394,148/( 2,015,228,017+ 8,573,497,561/( 1,295,320,602 +2,015,228,017/2)

1,244,323,483/2)
=8,573,497,561/1655274310
= 9,521,394,148/1629775750
 =5.84 =5.17

5.8

5.6

5.4
5.84
5.2

5 5.17
4.8
2018 2019

Figure:Debtors Turnover Ratio

Comment: Receivables Turnover Ratio is one of the efficiency ratios and measures the number
of times receivables are collected, on average, during the fiscal year. Bata Company’s accounts
receivable turnover ratio is decreasing gradually. In year 2018 the ratio was 5.84 next year it
reached to 5.17. We can interpret the ratio to mean that Company Bata collected its receivables
5.84 times on average in 2018. In other words, the company converted its receivables to cash 5.84
times that year which was better than 2019.

Operating Expenses Ratio: Operating expenses ratio shows operating expenses as a percentage
of sales. Operating expenses relate to the operations of a business entity. In other words, operating
expenses include all administration and distribution expenses but do not include financial expenses
and taxes.

Formula:
 2018 2019

Operating expenses ratio= Operating expenses ratio=

197,641,178/8,573,497,561*100
28,006,421/9,521,394,148*100
=2.30%
=.29%

2.5

1.5
2.3
1

0.5
0.29
0
2018 2019
Figure: Operating Expenses
Ratio

Comment: We can say the ratio to mean that Company Bata had .29% operating expenses ratio
in 2018 and 2.3% operating expenses ratio was in 2019. Higher the operating expenses ratio
result is bad for a company. The less operating expenses will help an organization to get more
net income. So, Bata Shoe Company should decrease their operational expenses.

Fixed Asset Turnover Ratio: The fixed asset turnover ratio is an efficiency ratio calculated by
dividing a company's net sales by its net property, plant, and equipment (property, plant, and
equipment - depreciation). It measures how well a company generates sales from its property,
plant, and equipment. From an investment standpoint, this ratio helps investors approximate their
return on investment (ROI), especially in the equipment-laden manufacturing industry. For
creditors, this ratio helps to assess how well new machinery can generate revenue to repay loans.

Formula: Net Sales / Average Fixed Assets

2018 2019

Fixed Asset Turnover= Fixed Asset Turnover

9,521,394,148/(1,280,158,488+1,217,030,42 =8,573,497,561/(2,875,253,828+1,280,158,48
8/2) 8/2)

=9,521,394,148/1248594458 =8,573,497,561/2077706158

=7.62 =4.13
 9

4
7.62
3

2 4.13

0
2018 2019
Figure:Fixed Asset Turnover
Ratio

Comment: Bata Shoe Company has annual gross sales of 9,521,394,148 tk in the year 2018. Its
average net fixed assets’ balance was 1248594458 tk. The average net fixed asset figure is
calculated by adding the beginning and ending balances, then dividing that number by 2. Based
on the given figures, the fixed asset turnover ratio for the year 2018 is 7.62, meaning that for every
1 tk invested in fixed assets, a return of almost 8 tk is earned. In the year 2019 ‘Fixed Asset
Turnover’ was 4.13 tk which was 2 times worse than 2018. So Bata Shoe Company should increase
the sales and decrease average fixed asset.