2017-2018 2018-2019 2019-2020

Gross 15.03% 8.7% 13.80%

Profit
Margin

Net 7.5% 2.2% 5.4%

Profit
margin
Return 4.50% 1.43% 2.96%
on Asset

Return 7.12% 2.25% 4.37%

on Equity

Interpretation

Gross Profit Margin: In the year 2019-2020, Matin Spinning Mills Limited made a gross profit of Tk.
13.80, for every Tk. 100 revenue and in the year 2018-2019 it made a gross profit of Tk. 8.7 for every Tk.
100 revenue and in 2017-2018 it made a gross profit of Tk. 15.03 for each Tk. 100

Net Profit Margin: For every Tk. 100 of revenue, Matin Spinning Mills Limited was generating Tk. 5.4, in
the year 2019-2020 then in the year 2018-2019 it was generating Tk.2.2, for every Tk. 100 of revenue
and in the year of 2017-2018 it generated Tk. 7.5 for Tk.100. Hence, they faced a loss.

Return on Asset: In 2019-2020, MSML has made a net profit of Tk. 2.96, for every Tk. 100 of total assets.
In 2018-2019, it made a net profit of Tk.1.43, for every Tk. 100 assets and back in 2017-2018 it made a
net profit of Tk.4.50 on every asset of Tk. 100

Return on Equity: In the year of 2019-2020, for every Tk. 100 of common stock equity, the net income
available to common stockholders is Tk.4.37 previously in the year of 2018-2019, the net profit was Tk.
2.25, for every Tk. 100 of common stock and in 2017-2018 it was Tk.7.12 for every Tk.100.

Calculation

Gross Profit
Gross Profit Margin¿ x 100
Sales

539604
2019−2020= x 100
3904153
13.80%
In the year 2017-2018, Metro Spinning Limited made a gross profit of 15.12%, while in 2018-2019, the
gross profit decreased to 14.14% and then in 2019-2020, the company’s gross profit increased to
16.42%. Similarly, in the year of 2017-2018 the gross profit margin of Matin Spinning mills was 15.03%.
Later in 2018-2019 the gross profit decreased to 8.7% and later on 2019-2020 it increased to 13.80%
again.

In addition to, in 2017-2018, the net profit margin of Metro Spinning Limited was around 0.64% but in
2018-2019 it increased to 1.43% and again in 2019-2020 it decreased to 0.70%. But for Matin Spinning
limited, their net profit margin of the year 2017-2018 was 7.5% and in 2018-2019 it decreased to 2.2%.
Lastly in 2019-2020 it increased back to 5.4%. It shows that the company has managed to increase their
net profit margin and sales ratio.

The return on assets ratio for Metro Spinning limited for 2017-2018 was 0.27% which increased to 0.68%
on 2018-2019 which again fell to 0.26% in 2019-2020. Their assets have decreased along with their net
profit. For Matin Spinning Limited, their return on assets ratio was 4.50% in 2017-2018 and then
decreased to 1.43% on 20198-2019 but it has raised to 2.96% in 2019-2020 which means their profit or
assets have increased compared to the previous year. So both the companies had a downgrade along
within the years.

Lastly for profitability ratio of Metro Spinning limited, their return on equity was 0.93% in 2017-2018
which also increased in 2018-2019 to 2.095% and finally it was around 7.69% in 2019-2020. Their net
income and total common stock equity both were improved in the year 2019-2020. For Matin Spinning
limited, in 2017-2018 was 7.12 which decreased to 2.25% in 2018-2019 finally increased on 2019-2020
to 4.37%. So, they have managed to increase their ratio of net income and total common stock equity.

In 2017-2018, the average collection period for Metro spinning limited is 202.2 days which changed to
177.74 days in 2018-2019 and finally in 2019-2020 it was 255.72 days. The same ratio for Matin Spinning
limited in 2017-2018 was 97.232 days then in 2018-2019 it was 90.50 days but in 2019-2020 it was 84.67
days. So here we can clearly see that Metro Spinning limited took much longer to collect their payment
than Matin Spinning limited which is not a good sign. Their accounts receivable and annual sales both
were less which can be the main factor. The average payment period for Metro spinning limited in 2017-
2018 and 2018-2029 was 14.57 and 5.68 days respectively which changed to 9.17 days in 2019-2020.
Whereas for Matin spinning limited it was 20.842 days in 2017-2018 and 13 days in 2018-2019 which
later changed to 16.5 days in 2019-2020 . Which means, Metro spinning took less time than Matin
spinning to clear their account payables. Lastly the total asset turnover ratio for Metro Spinning limited
in 2017-2018 was 0.422 times the in 2018-2019 and 2019-2020 was 0.473 and .365 times respectively
whereas for Matin Spinning it was 0.603 times in 2017-2018 and later in 2018-2019 and 2019-2020 it
was 0.658 times and 0.55 times respectively. Because of the reduced sales and total assets both total
asset turnovers were less than the previous year for both Metro and Matin spinning limited.
In liquidity ratio, the current ratio of Metro spinning limited in 2017-2018 was 1.234 times later in 2018-
2019 it was 1.325 times and in 2019-2020 it was 1.323. On the other hand, the current ratio of Matin
Spinning in 2017-2018 and in 2018-2019 was 1.305 and 1.287 times respectively which in 2019-2020
changed to 1.222 times. So we can conclude that Metro Spinning is in a good position as they have more
assets than more liabilities and have a balanced liquidity for both the years even though their assets
have decreased a little bit in 2019-2020.

However, Matin spinning has more liabilities than assets. The quick ratio for Metro spinning limited in
2017-2018 was 0.71 times and 0.66 times in 2018-2019 whereas it was 0.69 times in 2019-2020. On the
other hand, for Matin Spinning, 2017-2018 was 0.808 and 2018-2019 it was 0.998 and in 2019-2020 it
was 0.839. Therefore Matin Spinning had few changes, and it has a better quick ratio than Metro
spinning for both the years which means it is more financially stable.

In debt ratio, the debt equity ratio of Metro Spinning in 2017-2018 was 3.488 and in 2018-2019 it was
3.261 later in 2019-2020 it became 6.351. But for Matin Spinning in 2017-2018 and 2018-2019 it was
0.701 and 0.571 and it decreased to 0.477 in 2019-2020. Therefore, Metro Spinning had lessened among
both ratios of these two years which is good for them as it shows that the company hasn’t relied on
borrowing finance and investors would find it risk free to invest on it more. Whereas we can see for
Matin Spinning there was differences between the equity ratios of 2017-2018 to 2019-2020.

The interest coverage ratio for Metro Spinning in 2017-2018 was 3.29 times and 0.48 times in 2018-2019
then in 2019-2020 it became 2.55 times whereas for Matin Spinning it was at first 5.259 times in 2017-
2018 then decreased to 2.288 times and again increased in 2019-2020 to 4.032 times respectively. So
Matin spinning had a higher interest coverage ratio than Metro spinning for the year 2019-2020.

.
 375345
2018−2019= x 100 = 8.7%
4324532
608972
2017−2018= x 100 =15.0%
4050914

Net Profit
Net Profit Margin ¿ x 100
Sales

210211
2019−2020= x 100
3904153
= 5.4%

94348
2018−2019= x 100
4324532
= 2.2%

302605
2017−2018= x 100
4050914
= 7.5%
 2017-2018 2018-2019 2019-2020

Average 67.50 days 90.50 days 84.67 days

Collection
Period
Average
Payment
Period

Average
Age of
Inventory
Total
Asset
Turnover

Accounts Receivable
Average Collection Period =
Average sales per day
905,681,247
2019−2020=
(390153460 ÷ 365)
= 84.67 days

1072215675
2018−2019=
( 4324531522÷ 365)
= 90.50 days

749144849
2017−2018=
(4050914298 ÷365)
= 67.50 days

Average Age of Inventory: 365/Inventory Turnover

2019-2020 = 365/(3364549/628474613.5)
 2017-2018 2018-2019 2019-2020

Asset Ratio 1.16 1.31 1.29

Quick Ratio 0.997 0.807 1.004

Interpretation

Current ratio: In 2019-2020, for every Tk. 1 of current liabilities MSML has Tk. 1.29 of current assets and
in 2018-2019, for every Tk. 1 of current liabilities, it has Tk. 1.31 of current assets. And in 2017-2018 it
has Tk.1.16 of current assets.

Quick ratio: In the year of 2019-2020, MSML has Tk.1.004 of quick assets for every Tk 1 of current
liabilities. In 2018-2019, Tk. 0.807 of quick assets for every Tk. 1 and In 2017-2018 Tk.0.997 of quick
assets for every Tk 1 of current liabilities.

Current Asset
Asset Ratio=
Current Liabilities

2333585245
2019−2020= = 1.29
1813727266
2481514870
2018−2019=
1899263857
= 1.31

2618585385
2017−2018=
2262387340
= 1.16

(Current Asset−Inventories)
Quick Ratio¿
Current Liabilities
 2017-2018 2018-2019 2019-2020

Debt Equity 3.488 3.261 6.351

Ratio
Interest 3.29 0.48 2.55
Coverage Ratio

(2333585245−524128640)
2019−2020=
1813727266
¿ 0.997
(2481514870−947835529)
2018−2019=
1899263857
¿ 0.807
(2618585385−346387853)
2017−2018=
2262387340
¿ 1.004

Interpretation

Debt Equity Ratio: In 2019-2020, MSML had a debt of Tk. 6.351 for every Tk. 1 of common stock equity
in 2018-2019, it had a debt of Tk. 3.261 and in 2017-2018 for every Tk.1 of common stock equity it had
Tk.3.488.

Interest coverage Ratio: In 2019-2020, the earnings before interest and tax of MSML was 2.55 times for
every Tk. 1.00 of interest payment. In 2018-2019, for every Tk 1 of interest payment, it was 0.48 times
and in 2017-2018, it was 3.29
 Total Liabilities
Debt Equity Ratio=
Shareholder ' s Equity
1813727266
2019−2020= = 3.488
519857979
1899263857
2018−2019= = 3.261
582251013
2262387340
2017−2018= = 6.351
356198045
Operating profit before interest
Interest Coverage Ratio=
Financial expenses
223329
2019−2020=
87751 ¿ = 2.55
¿
48055
2018−2019= = 0.48
99388
288380
2017−2018= = 3.29
87709

2017-2018 2018-2019 2019-2020

Profit 7.5% 2.2% 5.4%

Margin

Asset
Turnover

Financial
Leverage

ROE

2017-2018 2018-2019 2019-2020

Price/Earnings 4.63 10.31 3.22
ratio
 Earnings per
share

Market Price per share of common stock

Price/ Earningsratio=
Earnings per share

10
2018−2019= = 10.31
0.97
10
2019−2020= = 4.63
2.16
10
2017−2018= = 3.22
3.10

Net profit after tax

Earnings per share¿
Number of common stock
253427
2019-2020¿ = 2.60
97490
121898
2018−2019= = 1.25
97490
355748
2017−2018= = 3.65
97490

Price/Earnings ratio: In 2018, the investors were paying Tk. 3.22 for Tk. 1 earnings while in 2019,
investors were paying Tk. 10.31 and in 2020, they were paying Tk. 4.63.

Earnings per Share: In 2018, the investors were earning Tk. 3.65 per share while in 2019, Tk. 1.25 and in
2020, Tk. 2.60.

From the above table we can see the changes in profitability, efficiency and financial leverage
for Matin Spinning Mills Limited. Return on equity (ROE) decreased to 2.274% in 2019 from
7.15% in 2018 before climbing up to 4.387% in 2020. 
  Profitability: The profit margin of the company initially decreased from 7.5% in 2018 to
2.2% in 2019 before increasing to 5.4% in 2020. As a result, ROE followed a similar
pattern of trend. 
 Efficiency: The asset turnover ratio followed a similar pattern where it increased from
0.603 in 2018 to 0.603 in 2019 before falling to 0.55 in 2020.  
 Financial Leverage: Financial leverage has however experienced a continuous downfall
from 1.581 in 2018, to 1.571 in 2019 and lastly, to 1.477 in 2020. 
In the term paper, we compared the two Spinning Mills of Bangladesh, Metro Spinning Mills
and Matin Spinning Mills Limited. We went through the profitability, asset management,
liquidity, debt management, DuPont analysis as well as trend analysis and benchmark for both
the companies thoroughly. After analyzing both the companies and being familiar with their
performances and the asset management and liquidity ratio including debt management. In 2020
the profitability of Metro Spinning Mills decreased from 1.43% to 0.70%. We can suggest to
increase in net profit. The efficiency of the company also indicates that it is losing its efficiency
which means the company is failing to generate sales. The financial leverage also decreased from
2.1% to 0.77% from which we get to know that it is decreasing its use of total debt. The ROE of
the company is also less which is not beneficial for the company
We recommend the Metro Mills to increase the profitability figures. Also, maximize their profit
or increase it by regulating the expenses. By reducing overall expenses, doing changes in
investments and giving importance on expanding in market with new ideas and goals to reach
maximum customers they can increase profitability ratio and control expenses. In the year 2019,
the gross profit decreased from 15.12% which was in 2018 to 14.14% then it increased to
16.42% in 2020. The Return on Asset first increased from 0.27% to 0.68% in the year 2019 then
again in 2020 it decreased to 0.26%. Nonetheless, the return on equity has been increased over
the years for which we can figure that the Mill has effectiveness to convert assets into profits and
its ability to generate return for its common stockholders respectively.
The gross profit margin in Matin Spinning Mills was higher in comparison to Metro Spinning Mills. It
represents that MSML is better equipped in generating revenues. Therefore, we suggest Metro Spinning
Mills to be more efficient. The Return of Assets of Metro Spinning Mills is less than the MSML. From
which we get that the company has been less efficient in converting the money that it has invested to
net income.

Altogether we can see that generally MSML performance is better in every profitability sector like Profit
Margin, ROE, average collection period and also average age of inventory. Despite the competition and
losses they found their ways and strategies to overcome the losses and stood loyal for its customers.