PAGE

\*
MER
GEFO
North South University RMA
T2
School of Business and Economics

“Group Project”

Olympic Food

Fin254, Section 20

Submitted To:

Mr. Rushdy Md. Bakth (RMB)

Lecturer, Department of Accounting & Finance

School of Business and Economics, North South University

Submitted By: Team A

Mahmudul Hasan Robin 1911074630

Umar Faruq Efti 1913014630

Abu Taher Masud 1921321630

Md. Adib Tahsin 1931164030

Date of Submission: July 17, 2021

1
 PAGE
\*
MER
Table of Contents GEFO
RMA
T2
Introduction 3
Company Overview 3
Ratio Analysis 4
Liquidity Ratios 4
1. Current ratio 4
2. Acid test/Quick ratio 5
Activity Ratios 6
3. Inventory turnover 6
4. Average collection period 8
5. Average payment period 9
6. Total asset turnover 10
Debt ratios 11
7. Debt ratio 11
8. Times interest earned ratio 12
9. Fixed -Payment coverage Ratio (EPCR) 13
Profitability Ratios 14
10. Gross Profit Margin 14
11. Operating profit margin 15
12. Net Profit Margin 16
13. Earnings per share 17
14. Return on total assets (ROA) 18
15. Return on Equity (ROE) 19
Market Ratios 20
16. Price Earnings (P/E) Ratio 20
17. Market/book (M/B) ratio 21
Recommendation 22
Conclusion 23
Appendix 24

2
 PAGE
\*
MER
Introduction GEFO
RMA
This report presents the information obtained through ratio analysis on the liquidity, debt,
T2
profitability, and market activities of Olympic Food Limited for the accounting period from
2015-2016 to 2018-2019. This is done by getting the company's financial statements from the
official website and calculating the ratios using Microsoft Excel. Changing trends and explain
how the data affects the company's management, operation, and shareholders are the main
focus of this report. It will briefly discuss why the company's finances may have fluctuated in
these four years and recommend how their ratios could improve shortly. The report will also
include whether we would like to invest in Olympic Foods Limited shares based on our
collected statistics.
Company Overview

The inception of Olympic industries started in the year of 1979 where it branded itself as a
battery manufacturer under the name, Bengal Carbide Limited. Over the years as it developed
a strong foothold in the battery manufacturing industry, the company decided to diversify its
resources in other industries such as stationery, bakery and even confectionery sector
[Com1]. The decision to delve into the confectionery and biscuits manufacturing industry in
1996, was no doubt the conglomerate’s best course of action because currently this business
unit alone accounts for over ninety-five percent of its total revenue. Olympic Industry’s
biscuits manufacturing unit’s mission of being the most competitive leader in the local
market is clearly reflected in its huge market share where the majority of the consumer base
prefer it over other local brands due to its high-quality food products [Oly17]. The prominent
public limited company has its corporate office in Motijheel, Bangladesh and its factories in
areas including: Keodhala, Bondar, Narayangan and Sonargaon.

3
 PAGE
\*
MER
Ratio Analysis GEFO
RMA
Liquidity Ratios
T2
1. Current ratio

Current ratio = Current assets/Current liabilities

Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods
1.99 1.98 1.90 2.22
times times times times

Current Rati o
2.30

2.20

2.10

2.00

1.90

1.80

1.70
2015-2016 2016-2017 2017-2018 2018-2019

From the above graph, we can see that the current ratio has a decreasing trend until 2018-
2019. The figures show that, from 2015-2016 to 2017-2018, the current ratio decline by .09
times. But after 2018 the current ratio increases from 1.90 times to 2.22 times. Before 2018-
2019, the current ratio declined, which meant the company was not able to balance their
current liabilities. From 2015-2016, the company’s current liability increased but the current
assets are not increased and for that reason the current ratio falls, but after successful
improving the management and effectively using the company’s assets. Olympic Food
manage it current ration back on the track. Before 2019, the decline in current ratio indicates
the poor management within the organization. Thus, in comparison with the food and
beverages industry Olympic seems to be doing well.

4
 PAGE
\*
MER
2. Acid test/Quick ratio GEFO
RMA
Quick ratio = (Current assets - Inventory)/Current liabilities
T2
 Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods
1.78 1.72 1.57 1.82
times times times times

Quick Rati o
1.85
1.80
1.75
1.70
1.65
1.60
1.55
1.50
1.45
2015-2016 2016-2017 2017-2018 2018-2019

The above graph represents the quick ratio of Olympic Food. In 2019, the quick ratio of
Olympic Food was 1.78 times which is higher than any of the year. And 2018, the quick ratio
of Olympic Food is 1.57 which was lower than any of the year. By analyzing the data of
quick ratio, there is a fluctuating trend shown within Olympic Food. It decreased rapidly from
2016 year to 2017 year then quickly increased during 2019 year. But Olympic Food always
maintains its quick ratio above 1 time which indicates that the company is in a stable position
to pay its short-term liabilities. The quick ratio fell in 2018 because of an increase in
inventory. In contrast, for the other years, the value had exceeded the benchmark with a
highest difference of 0.25 in 2019, which could be interpreted as the firm having a lot of idle
assets lying around that could have been invested elsewhere to earn a higher rate of return.

5
 PAGE
\*
MER
Activity Ratios GEFO
RMA
3. Inventory turnover
T2
Inventory turnover = Cost of goods sold/Inventory
 Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods
12.51 8.46 6.66 7.33
times times times times

Inventory turnover
14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00
2015-2016 2016-2017 2017-2018 2018-2019

The above graph represents the inventory turnover of Olympic Food. The data shows that the
inventory turnover rapidly decreased in the 2016 to 2018 time period. Then the number
increases again in 2019. Increasing turnover ratio indicated that the company is replenishing
cash quickly. In 2016, the number was higher than any other year. The lowest data recorded
in 2018. Higher the times indicates; the company has a strong sales record. In short, we can
say that the Olympic Food has less risk.

6
 PAGE
\*
MER
Average Age of Inventory = 365/Inventory turnover GEFO
 Olympic 2015-2016 2016-2017 2017-2018 2018-2019 RMA
Foods  T2
29.17 43.16 54.78 49.79
days days days days

Average Age of Inventory

60.00

50.00

40.00

30.00

20.00

10.00

0.00
2015-2016 2016-2017 2017-2018 2018-2019

Average age of inventory refers to the average number of days to sell its inventory. In the
above graph, we can see an increasing trend in the average age of inventory. The data shows
that Olympic Food performed well in terms of selling its inventory faster in 2016, the average
age of inventory is 29.17 days. But in 2017 and 2018, the number rapidly increased 43.16
days and 54.78 days. It indicates that they are struggling to sell their inventory. But in 2019,
they successfully manage to reduce the days. Overall, it seems that their management tries to
solve their issues.

7
 PAGE
\*
MER
4. Average collection period GEFO
RMA
Average collection period = Accounts receivable/ (Annual sales/365)
T2
Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods
5.67 5.28 5.04 5.61
days days days days

Average collecti on period

5.80

5.60

5.40

5.20

5.00

4.80

4.60
2015-2016 2016-2017 2017-2018 2018-2019

On the above graph, we can see a decreasing trend of average collection period for Olympic
Food. The lower days is a good indicator that the company collects the money faster. The
lowest days recorded in 2018 which is 5.04 days. 2016 to 2018, the collecting period
decreases but 2019 it goes up. The poor management of collecting money is the reason for
the high collecting period in 2019. Overall, Olympic Food perfumes well in collecting their
money.

8
 PAGE
\*
MER
5. Average payment period GEFO
RMA
Average payment period = Accounts payable/ (Annual purchase/365)
T2
Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods 
34.23 30.20 22.90 22.39
days days days days

Average payment period

40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2015-2016 2016-2017 2017-2018 2018-2019

The above graph represents the average payment period time of Olympic Food. We can see a
decreasing trend of the average payment period of the Olympics. The lower rate is beneficial
for the company. In 2016, the high average payment has been recorded which is 34.34 days
and the lower average payment has been recorded in 2019 which is 22.39 days. It indicates
that the company is improving their payment and making it faster to their supplier. Overall, It
seems that Olympic Food is very concerned about paying their bills.

9
 PAGE
\*
MER
6. Total asset turnover GEFO
RMA
Total asset turnover = sales/Total asset
T2
Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods  
1.44 1.24 1.20 1.25
times times times times

Total asset turnover

1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2015-2016 2016-2017 2017-2018 2018-2019

The above graph represents the total asset turnover of Olympic Food. Total asset turnover has
a decreasing trend. From the chart we can see that In Olympic industries, the total asset
turnover was quite high (1.44) in 2015-16. After that the ratio gradually decreased in 2016-17
to 2017-18. But the increasing trend in recent years portrays the company as beneficial to
present and prospective stockholders in 2018-19. Olympic Food having a 1.20 - 1.25 would
mean they are earning high profits. Total Assets Turnover helps the companies to understand
whether they are utilizing their assets efficiently or not. Lower asset turnover indicates that
the company was not using its assets efficiently and more likely management problems.

10
 PAGE
\*
MER
Debt ratios GEFO
RMA
7. Debt ratio
T2
Debt ratio = Total liabilities/Total asset
Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods  
40.70% 40.65% 41.72% 34.14%
       

Debt rati o
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2015-2016 2016-2017 2017-2018 2018-2019

Debt Ratio of a company indicates the amount of liability a company has against its assets.
The lower the amount of liability a company has the better it will be for a firm. From the
chart we can see that in 2015-16 to 2017-18 had increased slowly. After that in 2018-19
rapidly decreased. Hence, as the debt was decreasing, their financial risk was gradually
decreasing too. In short, we can state that Olympic Industries Limited is financially at risk.
But the company is trying to improve their debt ratio. Overall, it seems that Olympic Foods is
working on reducing their debt ratio which is a very good indicator.

11
 PAGE
\*
MER
8. Times interest earned ratio GEFO
RMA
Times interest earned ratio = EBIT/interest
T2

Olympic 2015-2016 2016-2017 2017-2018 2018-2019

Foods  
24.16 18.92 18.53 13.44
times times times times

Times interest earned ratio

30.00

25.00

20.00

15.00

10.00

5.00

0.00
2015-2016 2016-2017 2017-2018 2018-2019

In Olympic Industries, the Times Interest Earned Ratios were 24.16 Times in 2015-16. After
the next two years TIE had slightly decreased. But in 2018-19 it fell drastically from 18.53 to
13.44. We know that the Times Interest Earned ratio determines how many times a
company's income before interest and taxes can cover its interest expenses (EBIT). As a
consequence, it indicates whether the company in question can meet its debt obligations and
thus enhance its solvency. The graph above clearly shows that Olympic Industries has a low
coverage ratio, which indicates that the company will have difficulty paying its debts. It also
indicates that the company is on the verge of bankruptcy and poor financial health, which will
discourage any potential investors, whether shareholders or creditors, from investing in the
company.

12
 PAGE
\*
MER
9. Fixed -Payment coverage Ratio (EPCR) GEFO
RMA
Fixed-Payment coverage Ratio (EPCR) = (Earnings Before interest and taxes + Lease
T2
payments)/ (Interest + Lease payments) + {(Principal Payments + Preferred stock
dividend) * [1/ (1-T)]}

 Olympic 2015-2016 2016-2017 2017-2018 2018-2019

Foods 
18.46 14.39 13.81 10.01
times times times times

Fixed -Payment coverage Ratio(EPCR)

20.00
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2015-2016 2016-2017 2017-2018 2018-2019

From the chart, we can see that In the Olympic industries, from 2015-16 to 2016-17 Fixed-
payment coverage Ratio was decreased from 18.46 to 14.39 Times. After that in 2017-18 to
2018-19 years interest ratio had rapidly decreased which was from 13.81 to 10.01 Times. It
indicates the company is not financially healthy, and risky. Olympic industries that might not
be payment lenders. From the chart we can see that In Olympic industries, the first two years
Fixed- payment coverage Ratio was slightly increased. After that, the third- and fourth-years
interest ratio had increased rapidly which indicates a more financially healthy, and less risky,
company or situation.

13
 PAGE
\*
MER
Profitability Ratios GEFO
10. Gross Profit Margin RMA
T2
Gross Profit margin = (Sales-Cost of goods sold)/Sales
= (Gross Profit/ Sales) * 100
Olympic 2015-2016 2016-2017 2017-2018 2018-2019
Foods
33.66% 33.37% 32.65% 33.12%
       

Gross Profi t margin

33.80%
33.60%
33.40%
33.20%
33.00%
32.80%
32.60%
32.40%
32.20%
32.00%
2015-2016 2016-2017 2017-2018 2018-2019

After analyzing the data, we can say that there is a fluctuating trend in the graph. We can see
that Olympic Food did well in the first two years, with a reasonably consistent profit margin.
As we know, the higher the number is, the better the profit will be. However, due to a rapid
change in sales and cost of goods, the ratio dropped in 2017-18 by 32.65%; after that, they
climbed again in 2018-2019. The drop in 2017-18 from 33.66 percent to 32.65 percent was
concerning, but the ratio of 33.12 percent in 2018-19 suggests that Olympic Foods could earn
a good profit on their sales.

14
 PAGE
\*
MER
11. Operating profit margin GEFO
RMA
Operating profit margin = Operating profits/sales.
T2

 Olympic 2015-2016 2016-2017 2017-2018 2018-2019

Foods 
19.30% 19.07% 18.52% 18.27%
       

Operati ng profi t margin

19.40%
19.20%
19.00%
18.80%
18.60%
18.40%
18.20%
18.00%
17.80%
17.60%
2015-2016 2016-2017 2017-2018 2018-2019

The operating margin ratio of the years shows that the percentage has been steadily
decreasing over time. The finding suggests that the company's costs have risen over time
concerning its gross profit. By analyzing the data of operating profit margin, there is a
decreasing trend. The operational gain was steadily reduced. In 2015-2016 the percentage
was 19.30%, but the number decreased through its upcoming years. And finally, stand at
18.27% in 2018-2019. This indicates that Olympic food is inconsistent and inefficient in its
use of resources. The higher the percentage is, the better the performance is, so it can be
easily stated that Olympic Food needs to increase its operating profit margin.

15
 PAGE
\*
MER
12. Net Profit Margin GEFO
RMA
Net Profit Margin = Earnings available for common stockholders/Sales
T2

Olympic 2015-2016 2016-2017 2017-2018 2018-2019

Foods  
14.83% 14.55% 13.85% 13.63%
       

Net Profi t Margin

15.00%
14.80%
14.60%
14.40%
14.20%
14.00%
13.80%
13.60%
13.40%
13.20%
13.00%
2015-2016 2016-2017 2017-2018 2018-2019

The net profit margin follows the same pattern as the operating profit margin, as it is
similarly influenced by gross profit exceeding sales. As we can see that the net profit margin
for Olympic Foods has decreased through the years that means there is a decreasing trend
here. The data on net profit margin indicates the fact that the management carried out their
operations in an ineffective manner throughout the year. Thus, the higher the net profit
margin, the greater the profitability and the success of the business. From a value of 14.83%
in 2015-2016 to 13.63% in 2018-2019, the company is facing losses per year.

16
 PAGE
\*
MER
13. Earnings per share GEFO
RMA
Earnings per Share = Earnings available for common stockholders/ Number of shares
T2
of common stock outstanding

Olympic 2015-2016 2016-2017 2017-2018 2018-2019

Foods  
8.54 8.22 8.96 9.36
       

Earnings per share

9.60
9.40
9.20
9.00
8.80
8.60
8.40
8.20
8.00
7.80
7.60
2015-2016 2016-2017 2017-2018 2018-2019

The Earnings per share (EPS) of a firm indicates how much money is made for each
outstanding share of common stock. In 2015-2016, the earnings per share of Olympic Foods
was 8.54 taka which implies that the firm generated earnings of 8.54 taka for each share
outstanding in the market, and the following year it was decreased to 8.22 taka. In the last
two years, 2017-2018 and 2018-2019, it was increased to 8.96 and 9.36 taka. After analyzing
the data, it can be said that after 2016-2018 there is an increasing trend. The trend for the
ratio is higher the better, so after 2016-2017 Olympic Food is doing good with an increasing
number.

17
 PAGE
\*
MER
14. Return on total assets (ROA) GEFO
RMA
Return on total assets (ROA) = Earnings available for common stockholders/Total
T2
assets

Olympic 2015-2016 2016-2017 2017-2018 2018-2019

Foods   21.28% 18.02% 16.56% 17.08%
       

zxs8u

Return on total assets(ROA)

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2015-2016 2016-2017 2017-2018 2018-2019

After analyzing the data, we can say that there is a decreasing trend in the graph. ROA
always show a lower value, and according to Olympic Foods' ROA, they are doing well in
2016 and the rate was 21.28%, but fell sharply in 2017 and 2018 decreasing again 18.02% to
16.56% from 2019 again it increases 17.08%, along with all other profit ratios. It also
represents a fluctuating trend. ROA means how a company utilizes their assets. Therefore, the
ratio shows that Olympic Food could not utilize their assets.

18
 PAGE
\*
MER
15. Return on Equity (ROE) GEFO
RMA
Return on Equity (ROE) = Earnings available for common stockholders/Common stock
T2
equity

Olympic Foods 2015-2016 2016-2017 2017-2018 2018-2019

85.37% 82.19% 89.58% 93.62%

Return on Equity(ROE)
96.00%
94.00%
92.00%
90.00%
88.00%
86.00%
84.00%
82.00%
80.00%
78.00%
76.00%
2015-2016 2016-2017 2017-2018 2018-2019

This ratio shows how much money as a percentage of the investment has been returned to
Olympic Foods shareholders in four years. The chart shows that it tended to fluctuate. The
highest that shareholders achieved was a return of 85.37% on their investment in 2016, but
their investment fell to 82.19% in 2017, and from 2018 to 2019, this percentage increased day
by day from 89.58% to 93.32%.
Summarizing all the profit margins, we understand that after 2016, the management company
for Olympic Foods has struggled to stabilize its activities successfully; They do not reduce
production costs and expenses; They think about quality. This is why shareholders have
gained confidence in the company, so the share price has risen over the years.

19
 PAGE
\*
MER
Market Ratios GEFO
RMA
16. Price Earnings (P/E) Ratio
T2
Price Earnings (P/E) Ratio = Market’s price per share of common stock/Earnings per
share

Olympic Foods  2015-2016 2016-2017 2017-2018 2018-2019

1.17 3.65 4.48 4.90

Times Times Times Times

Price Earnings(P/E)Rati o
6.00

5.00

4.00

3.00

2.00

1.00

0.00
2015-2016 2016-2017 2017-2018 2018-2019

After analyzing the data, we can say that there is an increasing trend in the graph. The price-
to-earnings ratio shows the amount the investor is willing to pay for the company's EPS. As
we can see here, there were 2016 EPS ratios in the year, like 2018 and 2019, and P / E was
higher. But in 2017 the earning per share decreased but they handled it very well. It shows
how much confidence shareholders had in the company's performance. It helps the investor to
invest in a company. We can see that the P/E ratio increases day by day.

20
 PAGE
\*
MER
17. Market/book (M/B) ratio GEFO
RMA
Market/book (M/B) ratio = Market’s price per share of common stock/Book value per
T2
share of common stock
Olympic Foods  2015-2016 2016-2017 2017-2018 2018-2019

1 3 4.01 4.59
Times Times Times Times

Market/book(M/B)ratio
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2015-2016 2016-2017 2017-2018 2018-2019

The company's book market value shows an increasing trend. In 2016 and 2017, it grew
rapidly from 1 time to 3 times. From 2018 to 2019 it also shows an increasing rate from 4.01
times to 4.59 times. This is a good sign for the company because it means that shareholders
pay more each year for the price of the Olympic food book for every penny.

21
 PAGE
\*
MER
Recommendation GEFO
RMA
Considering the liquidity ratios of Olympic Food, their efficiency in managing current assets
T2
and liabilities is very clear from our analysis. They are in a stable position when it comes to
their current liabilities. Also, they have a good average collection and payment period in their
activity ratio. Since they are having a lower asset turnover, indicating that the company was
not using its assets efficiently and more likely management problems. After analyzing their
debt ratios, we find that Olympic Industries Limited is having high debt in their businesses.
But the company is trying to improve their debt ratio. Also, we figured out that it has a low
coverage ratio, which indicates that the company will have difficulty paying its debts. It also
indicates that the company is on the verge of bankruptcy and poor financial health, which will
discourage any potential investors from investing. From the profitability ratios, we can see
that both operating and net profit margin are gradually declining. Although they are providing
a good eps but considering the long future they are now struggling to make a higher profit
margin. Their return on assets isn’t in a good situation but they are having a higher return on
equity. Also, their price earnings ratio and market to book ratio are increasing in a good
number.

22
 PAGE
\*
MER
Conclusion GEFO
RMA
The Market Ratio of Olympic Food shows a high expectation that the stockholder and
T2
Olympic food fulfill their expectations and help them get a promising future and highest
growth rate. That’s why they can invest in the company stock because they pay more
earnings per share.
In the end, we can see their profitability ratio, and we can ensure that their company
management is well decorated and they make more profit. That’s why it would be perfect for
investing in Olympic food.

23
 PAGE
\*
MER
Appendix GEFO
RMA
http://olympicbd.com/wp-content/uploads/2016/06/Annual-Report-2016.pdf
T2
http://olympicbd.com/wp-content/uploads/2017/11/Annual-Report-2017-Final-Online-
ver..pdf

http://olympicbd.com/wp-content/uploads/2017/11/Annual-Report-2017-2018.pdf

http://olympicbd.com/wp-content/uploads/2019/12/Annual-Report-2018-2019.pdf

24