Financial Analysis and Control

CB-603
Term Paper
On
British American Tobacco Bangladesh
Submitted to:
Abdullah Al Mahmud, PhD
Director
Department of Business Administration
Faculty of Business Studies
University of Dhaka

Submitted by:
Nandita Saha
ID: 51943011
Department of Business Administration
Faculty of Business Studies
University of Dhaka

Submission Date: 24 September, 2021

 British American Tobacco Bangladesh

Statement of Profit or Loss

(For Five Years)

Particulars 2016 2017 2018 2019 2020

Gross revenue 165,633,760 204,139,715 233,118,187 269,854,574 281,080,652
Supplementary duty and VAT 121,879,985 152,175,972 178,478,420 213,033,244 220,790,025
Net revenue from contracts with customers 43,753,775 51963743 54639767 56821330 60290627
Cost of sales 23,890,895 27,180,742 27,096,297 29,972,780 30,792,689
Gross profit 19,862,880 24783001 27543470 26848550 29497938
Operating expenses 5,936,146 6,980,580 6,723,690 8,081,557 7,274,351
Operating profit 13926734 17802421 20819780 18766993 22223587
Net finance income/(expenses) 36,468 185,291 473,916 471,367 75,003
Non-operating income/(expenses) 26,708 24,469 -14,996 24,296 51,628
Profit before contribution to WPPF 13,863,558 17641599 20,330,868 18319922 22200212
Contribution to WPPF 693,178 882,080 1,016,543 915,996 1,110,013
Profit before tax 13170380 16759519 19,314,325 17403926 21090199
Income tax expense 0 0 0 0 0
Current tax 5,622,651 8,121,466 8,985,069 7,028,523 9,204,416
Deferred tax 34,733 808,197 317,221 1,129,055 998,948
Profit for the year 7,582,462 7829856 10012035 9246348 10886835
 Statement of Financial Position

(For Five Years)

Particulars 2016 2017 2018 2019 2020

Assets
Property, plant and equipment 15,411,873 20,915,160 26,483,587 29,531,965 29,571,253
Right of use assets (ROU) 0 0 0 1,672,223 1,440,480
Non-current assets 15,411,873 20,915,160 26,483,587 31,204,188 31,011,733
Inventories 13,979,180 17,469,089 19,429,201 16,537,884 23,780,680
Trade and other receivables 1,062,450 2,315,457 4,174,125 2,609,916 141,439
Advances, deposits and prepayments 3,329,480 4,736,633 4,822,711 3,684,485 3,940,328
Cash and cash equivalents 1,564,600 978,169 1,633,605 5,393,764 5,873,085
Current assets 19,935,710 25,499,348 30,059,642 28,226,049 33,735,532
Total assets 35,347,583 46,414,508 56,543,229 59,430,237 64,747,265
Equity
Share capital 600,000 600,000 600,000 1,800,000 1,800,000
Capital reserve 64,896 64,896 64,896 64,896 64,896
Retained earnings 18,217,686 22,447,542 28,863,958 33,928,559 32,134,819
Total equity attributable to owners of the Company 18,882,582 23,112,438 29,528,854 35,793,455 33,999,715
Liabilities
Net defined benefit plans 800,663 869,114 978,538 951,616 61,442
Deferred tax liabilities 2,027,373 2,835,570 3,112,979 4,258,548 5,184,594
Lease liabilities 0 0 0 1,412,243 1,312,345
Non-current liabilities 2,828,036 3,704,684 4,091,517 6,622,407 6,558,381
Bank overdrafts 289,572 3,057,910 799,880 0 0
Short term bank loans 1,500,000 0 4,380,000 0 0
Trade and other payables 8,218,406 10,101,621 11,757,219 12,237,053 17,798,121
Unclaimed dividend
Lease liabilities 0 0 0 390,698 310,914
Current tax liabilities 2,499,269 5,364,697 5,918,997 4,022,936 5,384,973
Provisions 1,129,718 1,073,158 66,762 363,690 619,996
Current liabilities 13,636,965 19,597,386 22,922,858 17,014,377 24,114,004
Total liabilities 16,465,001 23,302,070 27,014,375 23,636,784 30,672,385
Total equity and liabilities 35,347,583 46,414,508 56,543,229 59,430,239 64,672,100

Common Size Income Statement

Particulars 2016 2017 2018 2019 2020
Gross revenue 379% 393% 427% 475% 466%
Supplementary duty and VAT 278.6% 292.9% 326.6% 374.9% 366.2%
Net revenue from contracts with customers 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 55% 52% 49.6% 53% 51%
Gross profit 45% 48% 50.4% 47.3% 48.9%
Operating expenses 14% 13% 12.3% 12.3% 12.1%
Operating profit 32% 34% 38.1% 38.1% 36.9%
Net finance income/(expenses) 0% 0% 0.9% 0.9% 0.1%
Non-operating income/(expenses) 0% 0% 0.0% 0.0% 0.1%
Profit before contribution to WPPF 32% 34% 37.2% 37.2% 36.8%
Contribution to WPPF 2% 2% 1.9% 1.9% 1.8%
Profit before tax 30% 32% 35.3% 35.3% 35.0%
Income tax expense 0% 0% 0.0% 0.0% 0.0%
Current tax 13% 16% 16.4% 16.4% 15.3%
Deferred tax 0% 2% 0.6% 0.6% 1.7%
Profit for the year 17% 15% 18.3% 18.3% 18.1%
 Common Size Balance Sheet

Particulars 2016 2017 2018 2019 2020

Assets
Property, plant and equipment 43.60% 45.06% 0.468378 0.496918 0.456718
Right of use assets (ROU) 0.00% 0.00% 0 0.028138 0.022248
Non-current assets 43.60% 45.06% 0.468378 0.525056 0.478966
Inventories 39.55% 37.64% 0.343617 0.278274 0.367285
Trade and other receivables 3.01% 4.99% 0.073822 0.043916 0.002184
Advances, deposits and prepayments 9.42% 10.21% 0.085292 0.061997 0.060857
Cash and cash equivalents 4.43% 2.11% 0.028891 0.090758 0.090708
Current assets 56.40% 54.94% 0.531622 0.474944 0.521034
Total assets 100.00% 100.00% 100% 100% 100%
Equity
Share capital 3.64% 2.57% 2.2% 7.6% 5.9%
Capital reserve 0.39% 0.28% 0.2% 0.3% 0.2%
Retained earnings 110.64% 96.33% 106.8% 143.5% 104.8%
Total equity attributable to owners of the Company 114.68% 99.19% 109.3% 151.4% 110.8%
Liabilities 0.00% 0.00% 0.0% 0.0% 0.0%
Net defined benefit plans 4.86% 3.73% 3.6% 4.0% 0.2%
Deferred tax liabilities 12.31% 12.17% 11.5% 18.0% 16.9%
Lease liabilities 0.00% 0.00% 0.0% 6.0% 4.3%
Non-current liabilities 17.18% 15.90% 15.1% 28.0% 21.4%
Bank overdrafts 1.76% 13.12% 3.0% 0.0% 0.0%
Short term bank loans 9.11% 0.00% 16.2% 0.0% 0.0%
Trade and other payables 49.91% 43.35% 43.5% 51.8% 58.0%
Unclaimed dividend 0.00% 0.00% 0.0% 0.0% 0.0%
Lease liabilities 0.00% 0.00% 0.0% 1.7% 1.0%
Current tax liabilities 15.18% 23.02% 21.9% 17.0% 17.6%
Provisions 6.86% 4.61% 0.2% 1.5% 2.0%
Current liabilities 82.82% 84.10% 84.9% 72.0% 78.6%
Total liabilities 100.00% 100.00% 100.0% 100.0% 100.0%
Total equity and liabilities 214.68% 199.19% 209.3% 251.4% 210.8%
Ratio Analysis:

Liquidity of Short-term assets:

Ratios 2016 2017 2018 2019 2020

Inventory turnover 1.71 1.73 1.60 1.78 1.69
Working Capital 6298745.00 5901962.00 7136784.00 11211672.00 9621528.00
Current ratio 1.46 1.30 1.31 1.66 1.40
Quick Ratio 0.44 0.41 0.46 0.69 0.41
Cash ratio 0.11 0.05 0.07 0.32 0.24
Sales to Working Capital 6.95 8.52 8.48 7.07 7.12

Comment: Overall liquidity of short-term assets has been reduced in the last two years
specifically. In compared to the years of 2016, 2017, 2018 the liquidity of short term assets has
been lessened due to high inventory stock, less re-use of working capital. As a result their ability
to convert quickly their short term assets to cash also reduced.

Long term debt-paying Ability

Ratios 2016 2017 2018 2019 2020

Debt ratio 46.6% 50.2% 47.8% 39.8% 47.4%
Debt/Equity ratio 87.2% 100.8% 91.5% 66.0% 90.2%
Debt to tangiable net worth ratio 87.20% 100.82% 91.48% 66.04% 90.21%

Comment: The overall debt position has been increasing from the year 2019,in 2020 the
leverage on the company’s total capital has been increased highly. Though the leverage position
in the company’s capital was quite low in the years 2016 to 2019 but suddenly they started to
increase the leverage against their total asset, net worth and equity. Which also help them to pay
less tax.
Profitability:

Ratios 2016 2017 2018 2019 2020

Net profit margin 17.3% 15.1% 18.3% 16.3% 18.1%
Total asset turnover 1.24 1.27 1.19 1.15 1.15
ROA 21.5% 19.2% 21.7% 18.7% 20.7%
Operating Income Margin 31.83% 34.26% 38.10% 33.03% 36.86%
Sales to fixed asset 2.84 2.86 2.37 2.46 2.47
ROI 0.35 0.29 0.30 0.22 0.27
Gross Profit Margin 0.45 0.48 0.50 0.47 0.49
Return on Equity 0.40 0.37 0.42 0.34 0.39

Comments: From the profitability perspective,BATBC has been performing very

good .Starting from the Net profit Margin, ROA Operating income margin,ROI, ROE, Gross
profit margin all has been increased in the last year. All the parameters are also in an uptrend,
seems to be increased in the following years also. The only reason is the increase of sales
revenue. Their sales revenue has been increasing highly, but the increasing rate of revenue is
higher than the increasing rate of their cost of goods sold and other operating expenses and assets
and equity.So overall profitability situation is very satisfactory.