Report on Apex Food Limited and Fu Wang Food Limited

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 Introduction
Financial analysis is one of the important tasks in corporate world. Every investor wants to
evaluate a company by analyzing the financial statements of that company. There are several
methods to evaluate a company’s performance. Ration analysis is one of the major methods to
evaluate a company’s performance. In this report I have selected two public limited company
one is Apex Food limited and another one is Fu Wang Foods Limited. Apex Foods Limited (AFL)
was incorporated on 21.03.1979 under the Companies Act 1913 (Repealed in 1994). AFL is a
100% export oriented value-added shrimp processing Company. It is the single largest
processor & exporter of frozen seafood in Bangladesh and is one of the most modern seafood
processing plants in Asia, equipped with the latest processing, freezing and storage machinery.
Its high-quality products are well known in the international seafood market and it has built a
blue-chip customer base with a regular order flow. AFL has received numerous commendations
and trophies for product quality and export turnover from the Government of Bangladesh as
well as from abroad. AFL strictly adheres to HACCP (Food Safety System of FDA) based quality
assurance program in its production process. In addition, AFL has 2 Star BAP Certification and
BRC-Global Standard for Food Safety (Issue 6). The products of the Company are exported to
the markets in North America, EU countries, Australia and Russia. [ CITATION Ape \l 1033 ]. Fu-
Wang Foods Ltd is a public ltd company, incorporated with joint stock companies and Firm
Bangladesh also publicly listed with Dhaka Stock Exchange Ltd and Chittagong Stock Exchange
Ltd. Fu Wang Foods Limited commenced its commercial production in August 1997 and
achieved ISO-9002 certification on 04th November 1998. Since inception Fu Wang Foods
Limited introduces different pack food items like BREAD, BISCUIT, CAKE, TOAST, WAFER BAR,
CHOCOLATE, INSTANT NOODLES, DRINKING WATER, CARBONATED DRINKS, ENERGY DRINKS
etc. and were appreciated throughout the globe. [ CITATION FuW \l 1033 ] In this report I will try
to evaluate their performances by using ratio analysis method.

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 Ratio Analysis
Liquidity performance:

Current Ratio
3.00

2.50

2.00

1.50

1.00

0.50

0.00
2019 2020

Liquidity ratio refers to determine the ability to pay off current debt obligations without raising
external capital. In this above graph we can see that current ratio of Apex foods limited and Fu
Wang Food limited have decreased than previous year. We can see that Apex foods current
ratio is lower than Fu Wang foods. In 2020 Apex food’s current ratio was 1.21 and Fu Wang
food’s current ratio was 2.41. We know that average benchmark of current ratio is 2. Here we
can see that current ratio of Apex foods limited is below 2 which indicates that the liquidity
position is not good of this company whereas the current ratio of Fu Wang food limited is 2.41
in 2020 which indicates that the liquidity position of this company is good. So, overall Apex
foods is not good according to current ratio as they have no ability to pay off current obligation
by its current asset but Fu Wang foods is in good position in terms of current ratio as its current
obligation is lower than current asset.

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 2.50
Quick Ratio

2.00

1.50

1.00

0.50

-
2019 2020

Quick ratio refers to how a company immediately pay off its current obligation by its most liquid
asset. In this above graph we can see that quick ratio of Apex foods limited and Fu Wang Food
limited have decreased than previous year. We can see that Apex foods quick ratio is lower
than Fu Wang foods. In 2020 Apex food’s quick ratio was .30 and Fu Wang food’s current ratio
was 1.85. We know that average benchmark of current ratio is 1:1. Here we can see that quick
ratio of Apex foods limited is below 1 which indicates that the liquidity position is not good of
this company whereas the current ratio of Fu Wang food limited is 1.85 in 2020 which indicates
that the liquidity position of this company is good. So, overall Apex foods is not good according
to quick ratio as they have no ability to pay off current obligation by its current asset
immediately as its most liquid asset is very low but Fu Wang foods is in good position in terms
of quick ratio as its current obligation is lower than current asset.

Cash Ratio
0.050
0.045
0.040
0.035
0.030
0.025
0.020
0.015
0.010
0.005
0.000
2019 2020

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Cash ratio refers to how much a company has most liquid asset like cash to immediately pay off
its current obligation by its cash balance. In this above graph we can see that cash ratio of Apex
foods limited and Fu Wang Food limited have decreased than previous year. We can see that
Apex foods cash ratio is lower than Fu Wang foods. In 2020 Apex food’s cash ratio was .002 and
Fu Wang food’s current ratio was .011. We know that average benchmark of current ratio is .5
to 1. Here we can see that quick ratio both of the company is below .5 which indicates that the
cash position is not good of these company. So, overall Apex foods is not good according to
cash ratio as they have no ability to pay off current obligation by its cash immediately as its
most liquid asset is very low but Fu Wang foods is in good position in terms of cash ratio.

Operational Efficiency:

Inventory turnover
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2019 2020

Inventory turnover is a ratio showing how many times a company has sold and replaced
inventory during a given period. In this above graph we can see that inventory turnover of Apex
foods limited is increasing and Fu Wang Food limited have decreased than previous year. We
can see that Apex foods inventory turnover ratio is lower than Fu Wang foods. In 2020 Apex
food’s inventory turnover ratio was 1.07 and Fu Wang food’s inventory turnover ratio was 3.31.
We know that average benchmark of inventory turnover ratio is between 5 to 10. Here we can
see that inventory turnover ratio of Apex foods limited is below 1.07 which indicates that
performance is not good of this company whereas the inventory turnover ratio of Fu Wang
food limited is 3.31 in 2020 which indicates that they are using their inventory effectively than
Apex foods. So, overall Apex foods is not good according to inventory turnover ratio as they are

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not sold and replace their inventory frequently during the period but Fu Wang foods is in good
position in terms of inventory turnover ratio as they sold and replaced inventory 3.31 times
during a given period.

Average collection period

180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
2019 2020

In this above graph we can see that Average collection period of Apex foods limited is
decreasing and Fu Wang Food limited also has decreased than previous year. We can see that
Apex foods Average collection is lower than Fu Wang foods. In 2020 Apex food’s Average
collection period was 17.53 days and Fu Wang food’s Average collection period was 165.37
days. We know that average benchmark of Average collection period is between 30 to 38. Here
we can see that Average collection period of Apex foods limited is 17.53 days which indicates
that performance is good of this company whereas the Average collection period of Fu Wang
food limited is 165 days in 2020 which indicates that they are not collecting money effectively
from their customer. So, overall Apex foods is in good position according to Average collection
period as they need less time to collect money from their customer. Fu Wang foods is not in
good position in terms of Average collection period as they need 165 days to collect receivable
money from their customer which is more than industry average.

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 Asset turnover
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2019 2020

Asset turnover is a ratio showing how effectively companies are using their assets to generate
sales during a given period. In this above graph we can see that asset turnover of Apex foods
limited is increasing and Fu Wang Food limited have decreased than previous year. We can see
that Apex foods asset turnover ratio is higher than Fu Wang foods. In 2020 Apex food’s asset
turnover ratio was 1.71 and Fu Wang food’s asset turnover ratio was .43. We know that there is
no average benchmark of asset turnover ratio. Here we can see that asset turnover ratio of
Apex foods limited is 1.71 which indicates that performance is good of this company whereas
the asset turnover ratio of Fu Wang food limited is .43 in 2020 which indicates that they are not
using their asset effectively than Apex foods. So, overall Apex foods is doing good according to
asset turnover ratio as they are effectively using their assets to generate sales during the period
but Fu Wang foods is not in good position in terms of asset turnover ratio as they are not
effectively using their assets to generate sales during a given period.

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Leverage Ratio:

Debt ratio
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
-
2019 2020

Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are
provided via debt. In this above graph we can see that debt ratio of Apex foods limited is
increasing and Fu Wang Food limited has constant debt ratio year to year. We can see that
Apex foods debt ratio is higher than Fu Wang foods. In 2020 Apex food’s debt ratio was .80 and
Fu Wang food’s debt ratio was .32. We know that average benchmark of debt ratio is between .
40 to .60. Here we can see that debt ratio of Apex foods limited is higher than average
benchmark which indicates that this company is risky whereas the debt ratio of Fu Wang food
limited is .32 in 2020 which indicates that they are not risky like Apex foods. So, overall Apex
foods is not good according to debt ratio as they are financing most of the asset via debt
financing but Fu Wang foods is not in risky position according to debt ratio as they only 32%
assets purchase via debt financing.

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 1.60
1.40 Debt to Equity ratio
1.20
1.00
0.80
0.60
0.40
0.20
-
2019 2020

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders'
equity and debt used to finance a company's assets. In this above graph we can see that debt to
equity ratio of Apex foods limited is decreasing and Fu Wang Food limited has constant debt to
equity ratio year to year. We can see that Apex foods debt to equity ratio is higher than Fu
Wang foods. In 2020 Apex food’s debt to equity ratio was 1.49 and Fu Wang food’s debt ratio
was .45. We know that there is no specific average benchmark of debt to equity ratio. Here we
can see that debt to equity ratio of Apex foods limited is higher than Fu Wang foods which
indicates that this company is risky whereas the debt to equity ratio of Fu Wang food limited is .
45 in 2020 which indicates that they are not risky like Apex foods. So, overall Apex foods is not
good according to debt to equity ratio as they are financing most of the asset via debt financing
and they are less able to pay off obligation immediately as they already have taken huge loan
from creditors but Fu Wang foods is not in risky position according to debt to equity ratio as
they only 45% assets purchase via debt financing.

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Profitability Ratio:

Gross profit margin

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%

Gross margin is a company's net sales revenue minus its cost of goods sold. In this above graph
we can see that gross profit margin both of the companies have decreased than previous year.
In 2020 gross profit of Apex food was almost 9% where Fu Wang foods was almost 23%.
According to gross profit margin Fu Wang food limited as better than Apex food limited as its
gross profit is lower than Fu Wang foods limited. As there is no benchmark of gross profit
margin ratio because its depend on company to company but higher gross profit margin is
preferable to every investor. So, overall if we consider gross profit margin ratio then I will say
that Fu Wang foods limited is better than Apex food. Fu Wang food’s gross profit is very high
that means they are able to pay off their other operating expenses properly. Apex food limited
should increase gross profit margin ratio.

Net profit margin ratio

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2019 2020

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The net profit margin shows how much profit is generated from every $1 in sales, after
accounting for all business expenses involved in earning those revenues. In this above graph we
can see that Net profit margin ratio both of the companies have decreased than previous year.
In 2020 gross profit of Apex food was very low that is below 1 where Fu Wang foods was almost
7.66%. According to net profit margin Fu Wang food limited as better than Apex food limited as
its net profit is lower than Fu Wang foods limited. As there is no benchmark of net profit margin
ratio because its depend on company to company but higher net profit margin is preferable to
every investor. So, overall if we consider net profit margin ratio then I will say that Fu Wang
foods limited is better than Apex food. Fu Wang food’s net profit is very high that means they
are performing good in the industry as its net profit margin ratio is almost 10%. Apex food
limited should increase net profit margin ratio because they are not performing good in the
industry and their net profit margin is very low.

Market Performance:

P/E ratio
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2019 2020

P/E ratio is one of the most important ratios to evaluate a company to invest. P/E ratio refers to
how much money an investor wants to invest to generate $1 revenue. In this above graph we
can see that P/E ratio both of the companies are high. Apex food Limited’s PE ratio has
decreased than previous year on other hand Fu Wang foods limited PE ratio has increased than
previous year. There is no specific PE ratio benchmark in the industry. If we compare these

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company with each other then I will say that Apex food limited is in good position according to
P/E ratio. Overall, we can say that Apex food limited is in good position because its share is very
demandable in the share market as an investor wants to invest almost BDT 64 times more to
generate BDT 1. On the other hand, an investor wants to invest in Fu Wang food 27 times more
to generate BDT 1.

Market to Book value ratio

1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2019 2020

The market to book ratio is a valuation metric used to compare the price of a stock to its book
value. In this above graph we can see that Market to Book ratio both of the companies are
decreasing. There is no specific Market to Book ratio benchmark in the industry. If we compare
these company with each other then I will say that Fu Wang food limited is in good position
according to Market to Book ratio. Finally, we can say that Fu Wang food limited is better than
Apex food limited in terms of Market to book value ratio as its M/B ratio is higher than Apex
food limited and it is higher than 1.

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 ROA
6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
2019 2020

The return on assets (ROA) shows the percentage of how profitable a company's assets are in
generating revenue. In this above graph shows that both of the companies ROA is decreasing
year to year. According to ROA I will say that Fu Wang food is better than Apex food limited as
its ROA is higher than Apex. High ROA indicates that FU Wang food limited is using their asset
efficiently to generate revenue than Apex food limited. Although there is no benchmark of ROA
ratio but it depends on company to company. Overall, we can say that Fu Wang food limited is
in good position in the industry as they use their asset properly.

ROE
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2019 2020

The return on equity is a measure of the profitability of a business in relation to the equity. In
this above graph shows that both of the companies ROE is decreasing year to year. According to

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ROE I will say that Fu Wang food is better than Apex food limited as its ROE is higher than Apex.
High ROE indicates that FU Wang food limited is using their equity capital efficiently to generate
revenue than Apex food limited. Although there is no benchmark of ROE ratio but it depends on
company to company that how they use their equity capital. Overall, we can say that Fu Wang
food limited is in good position in the industry as they use their equity capital properly to
generate revenue.

DuPont Analysis

Apex food limited:

ROE = Net profit margin*Asset turnover*Equity Multiplier

= .49%*1.71*1.86

= 1.56%

According to DuPont analysis we can see that Apex food limited is not generating profit highly
and their performance is not good as its net profit margin is very low. They are using their asset
properly as asset turnover ratio is high. They can increase their efficiency to use asset properly.
Finally, its EM is also very low so they should increase their asset or decrease their equity
capital to increase EM ratio so that ROE can increase. So, to increase their ROE they should
improve their performance by generating more profit.

Fu Wang Food limited:

ROE = Net profit margin*Asset turnover*Equity Multiplier

= 7.66%*.43*1.41

= 4.68%

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According to DuPont analysis we can see that Apex food limited is not generating profit highly
and their performance is not good as its net profit margin is below 10%. They are not using
their asset properly as asset turnover ratio is very low. They can increase their efficiency to use
asset properly. Finally, its EM is also very low so they should increase their asset or decrease
their equity capital to increase EM ratio so that ROE can increase. So, to increase their ROE they
should improve their performance by generating more profit. Secondly, they should improve
their efficiency to use asset properly so that they can increase net profit and increase ROE as
well.

Market performance

Apex food limited is doing well in the market as its PE ratio is very high that indicates that the
demand for this share is very high. In 2021 the share price of this company is 120.10 per share.
Besides its EPS is also good and that is 1.88 per share. Every shareholder generates 1.88 BDT
from a share. Besides, it NAV is also good in the capital market. Finally, I will say that it is doing
good in the market as an investor willing to invest 63 more to generate 1 BDT.

Fu Wang Food limited is doing good like Apex food limited. Fu Wang food Limited’s current
share price is 14.50 BDT. Besides, its EPS is very low that is .50 per share. If we see the PE ratio
then I will say that it’s not good in the industry if we compare with Apex food limited. Its PE
ratio is 29 that means an investor willing to invest 29 times more to generate 1 BDT. Finally, its
NAV is not good in the market.

Finally, if we compare these two companies with each other then I will say that Apex food
limited is doing good performance in the market as its PE ratio is high and EPS is also very high
than Fu Wang food limited.

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 Bibliography
(n.d.). Retrieved from Apex Foods Limited: https://www.apexfoods.com/about-us/company-profile

(n.d.). Retrieved from Fu-Wang Foods Ltd: https://www.fuwangfoodsltd.com/about

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