North South University

Submitted By:
Name ID
Md. Rabiul Hasan Rahat 1811972030
Moshiur Rahman Anindo 1811713630
Md. Abdullah Al Mazed 1811668630
Bipro Debnath 1821571630
Kazi Kamrul Hassan 1721580030
Shumsun Nahar Kajol 1813208630

Course name and code: FIN254

Section: 13
Submitted to:
Ms. Tanjina Shahjahan
Lecturer
Date of Submission: 11/03/2020
 Letter of Submission

11th March,2020

Tanjina Shahjahan (TSJ)

Lecturer,

School of Business & Economics

North South University

Bashundhara Residential Area, Dhaka-1213

Subject: Submission of FIN 254 group project.

Dear Ma'am, We have completed our project report for FIN 254 course. You have given us
the chance to explore our potentiality and seek knowledge by doing this project. We have
tried our best to prepare the project as per your requirement within the due date. We hope that
you will like our project and forgive our limitations. We were assigned to prepare a project
report on financial and ratio analysis of Premier cement and Crown cement. We tried our
level best to include all the key concepts, relevant information and explanations of the
financial ratios of both companies.

We are submitting the report with the hope that it will fill up your satisfaction. We will be
glad and delighted if you make any kind of criticism about this project and would like to
know your thoughts and views regarding the report.

Sincerely,

Md. Rabiul Hasan Rahat

Moshiur Rahman Anindo

Md. Abdullah Al Mazed

Bipro Debnath

Kazi Kamrul Hassan

Shumsun Nahar Kajol

 Executive summary
This is the final report for the' Financial Management Integration course' containing the ratio
study of two firms Crown Cement and Premier Cement of Bangladesh. The assessment
includes a time series analysis and cross-sectional analysis and a detailed comparison with
the ratios of each ratio. For both businesses, the time series study was performed over four
years. Finally, the cross-sectional study compared the success of both firms in that ratio.
Based on 5 different criteria, businesses were evaluated. Liquidity, operation, solvency,
competitiveness and the role of the market. We gave a decision on each of the respective
parts after evaluating and comparing eighteen analytical methods. Finally, the conclusion
portion provided a more concise conclusion.
Table of Contents
Introduction ............................................................................................................................................ 1
Background ............................................................................................................................................. 1
Premier Cement .................................................................................................................................. 1
Crown Cement .................................................................................................................................... 1
Liquidity Ratio ......................................................................................................................................... 1
Current Ratio ....................................................................................................................................... 1
Quick Ratios ........................................................................................................................................ 2
Activity Ratios ......................................................................................................................................... 3
Inventory Turnover ............................................................................................................................. 3
Total Asset Turnover ........................................................................................................................... 4
Solvency Ratio ......................................................................................................................................... 5
Debt Ratios .......................................................................................................................................... 5
Profitability Ratios................................................................................................................................... 6
Gross Profit Margin ............................................................................................................................. 6
Net Profit Margin ................................................................................................................................ 7
Return on Assets ................................................................................................................................. 8
Return on Equity ................................................................................................................................. 9
Earnings per Share ............................................................................................................................ 10
Market Ratios ........................................................................................................................................ 11
Price Earnings Ratio .......................................................................................................................... 11
Conclusion ............................................................................................................................................. 12
Reference .............................................................................................................................................. 12
Appendix ............................................................................................................................................... 13
Introduction
This study on Crown and Premier Cement compiles all the ratios for those two cement
manufacturing companies for the period July 2014 to June 2018. The ratios presented in this
report deal mainly with productivity, liquidity, solvency, quality and market ratios and
represent the company's success over the course of this time period. Both time series and
cross-sectional analyses were performed to assess both these companies ' financial condition
in relation to each other and their preceding figures. The ratios were then carefully compared
to one another to see the trends in the ratios behavior. Such ratios which were determined and
are present in this report's appendix. Furthermore, after a detailed review of the ratios, both
organizations have given a conclusion and recommendation about investment feasibility,
respectively.

Background

Premier Cement
Premier Cement Started in 2001 as a small private enterprise. Earlier in 2010, it was listed
under the business act 1994 as a Public limited company with an authorized capital of 5000
million. Originally, the production capacity of premier cement was 0.6 million metric tons
per year, but it signed an agreement with FL Smith Denmark in April 2017 to raise its output
by 5 million tons per annum. Its first and foremost goal is to manufacture standard European
commodity using the best raw material combined with state-of - the-art technology. This
comprises three core products: Portland Cement (PC), Portland Composite Cement (PCC),
and Portland Pozzalana Cement (PPC).

Crown Cement
Crown Cement began its venture in 1994. It initially had the capacity to manufacture Portland
cement 600 Ton a day. Gradually the capacity to produce more cement increased. It was
listed in 2011 on the Dhaka Stock Exchange and in the Chittagong Stock Exchange. Today, it
is one of Bangladesh's top Cement manufacturers.

Liquidity Ratio

Current Ratio
Current ratio = Current assets /Current liabilities
From 2014 to 2018, crown cement's average current ratio indicates that it has enough funds to
cover its obligations, as its current ratio is above 1. But in each year its current ratio is
steadily decreasing which is not a good sign. For Premier cement the current ratio in 2014,
2015, 2017 and 2018 is below 1. It means the company is not in good health. Crown Cement
is doing very well, relative to Premier Cement, according to the graph we see above, and is in
pg. 1
a much better position than Premier Cement as it has a higher ratio in all years from 2014 –
2018. Crown cement is in stable condition as its present ratio is greater than 1. Premier
cement doesn't do well as its current ratio is less than or equal to 1. The two cement firms are
declining through the year as a result of which they will end up with a smaller net income to
pay off the existing liabilities.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 1.015114347 1.050561071 0.9383784511 0.7780437751

Crown 1.451089609 1.280863644 1.210921009 1.5003546

Quick Ratios
Quick ratio = (Current asset- Inventories)/Current liabilities
Crown cement is not in good position, according to the fast calculation, as they relied heavily
on storage and less available current assets to offset short-term debt. But Premier cement is in
a very strong position in terms of operation, as they focused more on swift assets to pay their
short-term debt than fewer current assets.
Premier cement is in a better position between these two firms than crown cement, since it
has a higher liquid reserve to offset short-term debt.

According to the table Premier cement has much better and higher ratios relative to Prime
cement. Crown cement is in very bad shape and fails where Premier cement is in good
condition but both the percentage of the sector is declining over the years which is not good.
Prime cement fast ratio is both rising and declining but below 1 and crown cement reaches 1.
Yet Premier cement is in a better position between these two firms than Crown cement, as it
has a higher liquid reserve to offset short-term debt.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 0.4725377118 0.5611773056 0.5154355567 0.3982845482

pg. 2
Crown 1.247104788 1.053471332 1.008714327 0.9751928897

Activity Ratios
Inventory Turnover
Inventory Turnover= COGS/Inventory
Premier Cement's product turnover increases steadily every year. In 2014 it was 4.87, which
ended up 17.30 in 2018 year.
Crown cement had a much better rate in 2014, 2015 and 2016 but deteriorated slowly in 2017
and 2018. It was 5.76 in 2014, ultimately 4.56 in 2018. The ratio in 2017 & 2018 slowly
dropped to 4.86 & 4.56 respectively. According to the graph, the inventory turnover ratio of
Premier cement was very low in 2014 and the ratio of Crown cement was very low, but over
the years the Crown cement ratio has been slowly increased and the prime cement ratio has
gone up bit by bit, and by 2018 the prime cement was higher than Crown cement. In general
we can assume that the Production Turnover of Premier Cement was higher than that of
Crown Cement.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 7.201622608 10.18247288 10.31945998 20.2954827

Crown 11.44249862 11.3007955 9.62892347 11.92952596

pg. 3
Total Asset Turnover
Total asset turnover=Sale/Total asset
The higher the turnover in total assets the greater. If the TATO of an organization is growing
it means the productivity of the reserves. This means use is made of the entire wealth.

In the case of Crown cement TATO slowly declines over the years. In 2014 TATO was.76
and it slowly declined to.69 in 2015 and.64 in 2016, but it increased to.53 in 2017 and in
2018 it became.68. As here a TATO is deteriorating and reserves are not being adequately
used.

In the case of Premier cement TATO gradually increased. TATO in 2014 was.77 and.80 in
2015 and.86 in 2016 but it dropped to.83 in 2017 and.75 in 2018. As here a TATO is growing
so that fair use is made of the assets.

A high Total Asset Turnover means a higher revenue ratio compared to the Total asset.
Premier Cement had an increasing share but it began to decline in 2016, while the percentage
of Crown Cement was declining but it began to increase in 2017.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 1.650889785 0.9431636481 0.8941536224 0.7462035114

Crown 0.6851636952 0.636779048 0.5267919359 0.6370786035

pg. 4
Solvency Ratio

Debt Ratios
Debt ratio=total liabilities/total assets
For Premier cement, the debt ratio had been rising slowly and increasing as its debt ratio rose
to 68.24 in 2018, which means that its debt reserves have increased slightly.

For Crown cement, the percentage dropped from 2014 to 2015 in all years which is not a
good risk indicator. It then slowly began to rise until 2018.

According to the table, in contrast with the two firms, crown cement is in a better position as
its debt ratio in all years from 2014 to 2018 is much lower than premier cement. Maintaining
a debt ratio of less than 50% is very necessary.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 0.6217949205 0.5693661967 0.6071017534 0.6824143364

Crown 0.5125622263 0.5250702781 0.603905474 0.638612853

pg. 5
Profitability Ratios

Gross Profit Margin

Gross Profit Margin= (Sale-COGS)/Sale
In terms of gross profit margin Crown cement is not in a good position. The gross profit
margin grows from 2014 to 2016 it rose in 2016 but slowly declines again in 2017.

From 2014 to 2015 Gross profit margin for premier cement is smaller but increases to 21.24
in 2016. In 2017 and 2018 it slowly dropped which is not a good sign for Premier cement.

Premier is higher in 2014 and crown is smaller but the reverse occurred in 2018. The gross
profit margin for crown cement is higher than first cement, but it varies in a balanced way in
all years from 2014 to 2017, which is a good sign for premium cement.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 0.15422295 0.216840189 0.164081416 0.147161648

Crown 0.171182291 0.1840344 0.17060047 0.130852743

pg. 6
Net Profit Margin
Net Profit Margin=Net Income after Tax / Sales
Here we can see that the Net Profit Margin for Crown Cement decreased from 2014-2015.
Crown cement faced a bit of Net Profit Margin in 2016 but it slowly deteriorated again in
2017 and 2018.

It also shrank from 2014 to 2015 in the case of Premier Cement. Premier cement also saw a
high Net Profit Margin in 2016, which was 12.45, but was down again in 2017 and 2018.

From the map we can see clearly Crown Cements Net Profit Margin is higher than Premier
Cement's.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 0.112120626 0.146639748 0.094557532 0.096719675

Crown 0.119148666 0.132660011 0.117563363 0.079724899

pg. 7
Return on Assets
ROA = Net Income after Tax / Total Asset
In Crown Cement's case, the ROA decreased slightly from 2014 to 2016. Even though they
improved in ROA in 2017, it decreased again to 1.60 in 2018.

On the other hand, in 2015 and 2014, Premier cements ROA was less, it rose more in 2016
and while they have slowly faced low ROA in 2017 and 2018.

Premier cements ROA was higher in 2014 than the Crown cement, it rose more in 2016 and
although they also faced weak ROA in 2017 it is still better than the Crown cement in 2018.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 0.04496776123 0.09359908033 0.04730377944 0.030461192

Crown 0.05379431039 0.05256128936 0.03689171367 0.0160096467

pg. 8
Return on Equity
ROE = Net Income after Tax / Stockholders Equity
Premier Cement's ROE is plummeting. This was 16.13 percent in 2014 and 11.19 percent in
2018. Although it increased slightly in 2016, the line only deteriorated overall compared to
2015. ROE also dropped in the Crown Cement scenario. In 2014, it was 16.13 per cent. It fell
11.04 per cent in 2015. It increased slightly again in 2016 to 11.06 per cent. And in 2017 it
fell again to 9.31 per cent and in 2018 to 4.43 per cent.

We can see that Premier Cements ROE is in a better position here than Crown cement.
Although both firms faced that ROE from 2014 to 2015 ROE of Premier cement was much
higher. Although the ROE of Crown Cement rose in 2017, it was still below Premier
Cement's.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 0.1188978247 0.2173519116 0.1203970235 0.09591488372

Crown 0.1103613903 0.1106717203 0.09313866072 0.04430054259

pg. 9
Earnings per Share
Earing per share= EACS/number of Stock

Crown Cement has an almost steady year-over-year EPS ratio here. For 2016 the EPS were
three years higher than the rest. Very similar are the remaining 3-year percentages which are
4.54, 4.37 & 5.01.

In contrast, in 2014, 2015 & 2017, Premier Cement had smaller ratios. Surprisingly 2016 has
a strong ration for EPS compared to other 3 years.

The higher the EPS, the better for the company. For all four years, Premier Cements ' EPS
has been stronger than the Crown Cement's. Therefore Premier Cement won more than
Crown Cement.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 3.548735619 7.910919118 4.655912100521 3.890480607
57

Crown 4.369366963 5.011769865 4.451711091 2.125338505

pg. 10
Market Ratios
Price Earnings Ratio
Price Earnings Ratio=Market Price per Share of Common Stock/ Earnings
per Share
In Crown Cement's case, the PEO ratio gradually decreased from 2014 to 2016. In 2014 it
was 16.55, in 2015 it was 15.45 & in 2016 it was 13.87. The lower is the higher. Yet, it rose
to 20.12 in 2017.

In the case of Premier Cement, the PEO ratio in 2014 & 2015 was stable. It declined in 2016
& rose again in a higher ratio of 12.89 in 2017.

In general, the investors expect the lower P/E ratio. The P/E of Premier Cements was smaller
than that of Crown Cements for three of the four years. Premier Cement therefore had
stronger P / E than Crown Cement.

Company 2014-2015 2015-2016 2016-2017 2017-2018

Premier 16.51292356 11.33875832 19.41617411 19.92041802292
93

Crown 17.34805079 14.9448203 20.95823338 38.15862735

pg. 11
Conclusion
Crown Cement and Premier Cement are both a strong and developed business in the cement
industry in our country. By providing employment and market value, they all add a great deal
to our country's economy. Both the companies are also popular in the financial sector. We
found out from all the estimates made how these two firms varied in their financial sector.
Under liquidity ratio we find that Premier Cement is much more effective in its control of
working capital than Crown Cement with higher current and rapid ratios. Premier Cement
also demonstrated productivity in their sales, deductions and fees for the operation ratios.
Premier Cement has demonstrated higher leverage rates than Crown Cement, suggesting they
have more debt-related funds. Profitability ratios showed that Premier Cement has been much
more effective than Crown Cement in earning returns from its cash, equity and market
conditions. They are very close in rivalry, but insensitive in their ratios. But in addition we
can see that in efficiency the Premier Cement Group is the stronger than the Crown Cement
Company.

Reference
 https://www.amarstock.com/stock/PREMIERCEM
 https://www.amarstock.com/stock/MICEMENT
 https://lankabd.com/Home/PriceFile?dateinp=
 https://lankabd.com/Company/OverviewV2?symbol=PREMIERCEM
 https://lankabd.com/Company/OverviewV2?symbol=MICEMENT
 https://crowncement.com/financial-statements/
 http://www.premiercement.com/page/investors-premier.html

pg. 12
Appendix
Crown 2014-2015

pg. 13
pg. 14
Crown 2015-2016

pg. 15
pg. 16
Crown 2016-2017

pg. 17
pg. 18
Crown 2017-2018

pg. 19
pg. 20
Premier 2014-2015

pg. 21
pg. 22
Premier 2015-2016

pg. 23
pg. 24
Premier 2016-2017

pg. 25
pg. 26
Premier 2017-2018

pg. 27
pg. 28