Fin 440 Project

1
Olympic, RD food, AMCL, APEX, Fu Wang
10th September, 2018
To,
Lecturer, Department of Accounting & Finance,
School of Business and Economics,
North South University
Subject: Submission of FIN 340 report.
Dear Sir,
It gives us immense pleasure to inform you that we have successfully completed our group project
by doing 5 company’s introduction, credit policy, time series analysis of 3 years of liquidity
measures & solvency measures, overall summary, calculate NPV as per the requirement of the
FIN-340 course design. This project was really helpful and interesting to do and we have learned
a lot from the experience.
We sincerely hope that our report will be able to reach your expectations with what it has to offer
in terms of quality and content.
Sincerely yours,
2
TABLE OF CONTENT:
Company SERIAL TOPIC PAGE NO

NO
Olympic
PART A 1 Company Introduction 04
2 Credit Policy 05
3 Source Of Short-Term Working Capital Financing 05
4 Investment In Marketable Security 06
PART B 1&2 Liquidity and Solvency measurement 07-14
3 Overall Analysis 14
PART C 1 NPV Calculation And Analysis 15-16
2 Cash Discount 16
RD Food
2 Credit Policy 17
3 Overall Analysis 25-26
2 Cash Discount 27
AMCL
2 Credit Policy 29

3
3 Overall Analysis 37-38
2 Cash Discount 39
APEX
2 Credit Policy 40
PART C 1 NPV Calculation And Analysis 50
2 Cash Discount 51
FU WANG
2 Credit Policy 52
2 Cash Discount 60
Comparison of 5 companies 61
Conclusion 62
4
Olympic Industries Limited

Part A:
Brief Introduction of the Company:
Olympic Industries Limited was founded in June 1979 as Bengal Carbide Limited, a battery
manufacturer. In 1996 the company’s name changed to Olympic Industries Limited. The company
listed DSE at 1984 and registered CSE at 1996. As they gained the trust of their consumers and
witnessed changes in the battery industry, they decided to diversify into products that could be a
part of our consumers’ daily lives. They saw significant opportunities in the biscuit and
confectionery industries and imported their first lines in 1996. Today, they are the largest
manufacturer of biscuits in Bangladesh and biscuits, and confectionery products represent 95%+
of their annual revenue, Olympic Industries is the largest manufacturer, distributor, and marketer
of biscuits in Bangladesh. Olympic is the market leader in the organized and industrialized biscuit
market having around 30% market share. They have seven biscuit production lines, three
confectionery lines, and a bakery line. Olympic was the first biscuit manufacturer in Bangladesh
to be ISO 22000 certified. They got an ISO certificate in 2014. They got NBR Award for highest
VAT in production in 2012 & 2015. Olympic Industries regularly invest for the enhancement of
its capacity and product innovation. Last year the company received CIP status in the large-scale
industrial category and Commencement of ninth biscuit & cookie line production. In the previous
two years, it invested BDT 970 million for purchases of fixed assets. (OLYMPIC, n.d.)
5
CREDIT POLICY:
Sales on credit: The distribution mainly depends upon the retailers for selling Olympic's. So, the
wholesaler has to face some of the demand of the retailers. Most of the retailers want to buy
Olympics’ Product on credit.
Olympic has no specific credit policy at present. Sound credit policy should be an integral part of
the company’s business plan. Here are some suggestions of credit policy for Olympics
Cash in Advance - When a Buyer must pay the Seller full amount in cash before a shipment is
made. This can eliminate credit risk or the risk of non-payment since payment is received before
the transfer of ownership of the goods. Sometimes the buyer pays a certain amount in advance
with buyer’s document,
Cash on Delivery- payment must be paid upon delivery.
Also, they can offer extended credit to their customers, and this can boost sale.
Credit term
40 3/30, n/40
60 2.5/45, n/60
If we look at the credit policy we can see that if any customer has the credit days for 40 days and
customer can clear its debt within 30 days then the customer will get 3% discount and nothing will
be counted for 40 days payment of its respective invoice. Similarly, 2.5% will be rebated for 45
days payment in case of 60 credit day’s limit. This type of credit policy can have a positive effect
on credit realization and booster cash inflow to Olympics and ensures working capital
management. If challenges can be faced technically by maintaining continuous support to sales
teams and customers, then the credit management practice can be more useful to the overall
improvement of the company.
Sources of short-term working capital financing:

It is very crucial to the company while deciding how they are going to finance their short-term
working capital. Meaning, will they use trade payables, short-term loans or utilize other specified
sources of fund. However, through preparing the Olympics’ performance in its working capital
management, we got to know they use the supplier’s funds (Trade payables) and short-term loans
to finance their short-term working capital.
6
Chart Title
900,000,000 846,439,265
800,000,000
700,000,000 653,271,734
587,102,902
600,000,000 544,984,323
500,000,000
400,000,000
300,000,000 214,166,383
200,000,000 138,262,703
100,000,000
-
2015 2016 2017
Trade & other payables Short term loans
As we can see the chart illustrates, the company is heavily relied on the suppliers’ financing than
on the short-term loans to finance its short-term working capital in 2015 & 2016. One motive
behind this strategy might be that, as trade payables are interest-free sources of the fund (unlike
the short-term loans). But in 2017 the company took a huge amount of short-term loan which
impacts on the company’s short-term capital financing because short term loans required interest.
We can say that the company is doing critically in managing its short-term funding. Thus company
interest expense increases.
Investment in marketable securities:

Throughout the report, we have tried to identify a company’s investment in marketable securities,
but it does not exist on their balance sheet nor in their websites. However, the concept of
company’s investment in marketable securities arises because, as the business grow faster and as
the cash in hand (company’s profit) increases, it sounds uneconomical if the company still stick to
holding that significant amount of cash on its balance sheet. The rationale behind this, this idle
cash incurs opportunity cost while remaining as not invested in anywhere. So, why shouldn’t the
company use this cash to invest in securities (those have the maturity of less than a year) in the
market and extract the essence of additional benefit from those securities? However, while
calculating a company’s cash ratio, we found that they hold very low minimal (0.05 to 0.10) on
their balance sheet in proportion to the total assets. However, it depends on the company’s need
of less cash and situations of the securities markets, which ultimately involves a kind of cost-
benefit analysis (while deciding to switch to something for the first time).
7
SHARE DISTRIBUTION PERCENTAGE:

(As on Jul 31, 2018)
Director: Govt: Institute Foreign: Public

27.77 0 13.45 43.58 15.20
EPS
Last EPS: Quarter: Annul EPS: P/E:

2.32 Q3(2018) 8.22 33.89
Part B:
LIQUIDITY AND SOLVENCY MEASUREMENT:
Current ratio
Current Ratio
2500
2015 2016 2017
2000
1500
1000
500
1.94 1.99 1.98
0
1 2 3
Analysis:
The current ratio measures a firm’s ability to pay off its short-term liabilities. That is, based on this
ratio, we can say whether the company can meet its short-term obligations or not. So, to be solvent,
the company needs to have liquid assets which worth not less than its current liabilities.
Here, the chart shows that Olympic industry are consistently managing its short term-assets and
liabilities which is illustrated in the above ratio where current liabilities do not exceed current
assets. And that is a good sign for the company. In 3 years period the company’s best performance
in such a measure was in 2016 (1.99), and the least was in 2015 (1.94).
8
Quick ratio
3000
2015
2016
2000 2017
1000
1.59
0 1.78
1.72
1
2
3
Analysis:
Quick ratio (or Acid test ratio) measures how much of current assets company holds against its
current liabilities ignoring its inventories. While looking at the illustrations, we can say that the
company has a progressive trend in quick ratio. In 2015, it held 1.59 Taka worth of current assets
against each taka of its current liabilities which was the least. And it is 1.72 in 2017. . In 3 years
period the company’s quick ratio was highest in 2016(1.78).
Inventory turnover
2500 2015 2016 2017
2000
1500
1000
500 9.08 12.51 8.46
0
1 2 3
Inventory turnover
Analysis:
In 2015, the inventory turnover ratio was 9.08, and after that, in 2016 the ratio increased and
became 12.51, which indicates that the Olympic industry is turning over its inventory more times
than before. It implies either strong sales or significant discounts. In 2017 the inventory turnover
ratio falls down and the ratio becomes 8.46.
9
Asset turnover
Total asset turnover
2500
2015 2016 2017
2000
1500
1000
500
1.56 1.44 1.24
0
1 2 3
Analysis:
In 2015, the Olympics’ Total Asset Turnover ratio was 1.56 for every BDT in assets, Olympic
generated BDT 1.56. But in 2016 the ratio decreases to 1.44 and 2017 again it further decreases
and reached to 1.24 which is not a good sign.
Account payable turnover

2500
2015 2016 2017
2000
1500
1000 Account payable turnover

500
9.7 12.39 13.8
0
1 2 3
Analysis:
In 2015, the company had an account payable turnover ratio of 9.7, which rise to 12.39 in 2016
and the ratio increases again and it becomes 13.8. This is a sign that the company is taking longer
to pay off its suppliers than it was in previous time periods.
10
ACCOUNT RECIEVABLE
100
83.64
80 69.11
64.37
60
40
20
0
2015 2016 2017
Account receivable turnover Column1 Column2
Analysis:
In 2015, Olympic Industry had A/R turnover ratio of 83.64 which means Olympic Industry collects
its receivables 83.64 times on average 2015 year. After that, the ratio decreased next years and
again increase in 2017. It may also indicate that the company’s collection of accounts receivable
is not efficient and that the company does not have a high proportion of quality customers that pay
off their debts quickly.
3000 2015 2016 2017
2000 40.19 29.17 27.2

DIH
1000
0
1 2 3
DIH
Analysis:
Day’s inventory held or DIH measures how many days’ inventories are kept idle in the warehouse.
Now, if we look at the chart, we see Olympic performance is getting better. It had a DIH of about
40.19 days in 2015. However, it concentrated its inventory management to reduce this duration
over the next years which is also reflected in the later year’s performance.
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DSO
2017.5 2017 6
5.67
2017 5.28 5
2016.5 4.36 2016 4
2016
3
2015.5 2015
2015 2
2014.5 1
2014 0
1 2 3
2015 2016 2017
DSO 4.36 5.67 5.28
DSO
Analysis:
Day’s sales outstanding measures how many days a firm waits to collect its credit sales. Meaning,
this measure tells the company’s receivables management that how many days on average their
credit sales remain uncollected. However, the chart above illustrates Olympics’ performance is
worsening. Company’s receivable management was not effective enough as their DSO fluctuate
over the three years period.
DP0
DP0
3 2017
26.44
2 2016
29.46
1 2015
1990 37.62
2000 2010 2020
2030
2040
2050
2060
Analysis:
DPO (Days payable outstanding) measures the duration that a company takes to make payments
to its suppliers. Now, if we look at the chart, we see Olympic industry performance in this aspect
is quite varied. Above illustration depicts that, the company is doing pretty good regarding
lengthening its payment duration. In 2015 DPO was 37.62 which decreased to 29.46 in 2016 and
again decreased to 26.44 in 2017.
12
3000 2015 2016 2017

2000
1000 6.93 5.38 6.04

0
1 2 3
CCP
Analysis:
CCP (Cash conversion period) is calculated as the difference between OC (DIH + DSO) and DPO.
It is the period that starts from the day company’s payment to its suppliers get disbursed until the
day company receivables get credited. And this is the time the company has to stay with “NO
CASH”! So, the shorter company’s CCP is, better off the company.
Now if we look into the chart (and also the schedule), we can analyze that, the company is doing
well in shortening its cash conversion period. It is effectively reducing its CCP! In 3years period
its best performance was in 2016 (nearly 5days) and poorest performance in 2015(almost 7days).
CCE
2500
2015 2016 2017
2000
1500
1000
500
0.12 0.15 0.14
0
1 2 3
CCE
Analysis:
Cash conversion efficiency (CCE) is such a measure of liquidity that measures how much of the
company’s sales is converting into operating cash flow (OCF).
Now if we look at the schedule and the graph, we can analyze that, Olympia’s performance in
Cash conversion efficiency measure is a bit consistent (within a variation of 0.12 to 0.15). That is,
in 2015 the conversion of sales into operating cash flow was the least (which tells us, 0.12 taka of
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OCF was generated from each 1 taka of sales in that year). Whereas in 2016 and 2017, CCE was
.15 and .14 respectively.
Cash Ratio
Cash Ratio
2500
2015 2016 2017
2000
1500
1000
500
0.08 0.05 0.03
0
1 2 3
Analysis:
The cash ratio is calculated as the stock of cash held on balance sheet scaled by total assets. That
is, it measures the portion of the company’s assets that is kept as free cash (some idle capital, or
those that can instantly be converted into money).
However, let’s have a look at the company’s cash ratio figures. The chart here shows that the
company is entirely consistent in holding cash as a proportion of its total assets. In 2015, it used
to carry 0.08 Taka of each 1 Taka worth of assets as cash. But, it successfully reduces this
proportion to 0.03 in 2017.
Cash Burn rate

Cash Burn rate
2050
2040 26.31
19.15
2030 12
2020
2015 2016 2017
2010
2000
1 2 3
Analysis:
Cash burn rate (CBR) is a measure of liquidity that measures how many days a company can cover
up its average expenses with the cash in hand. While giving attention to above chart and schedule
14
we analyzed, the company was able to cover up its ongoing expenditures with cash in hand and
continue its business for 26 days in 2015 however; this quickly fell to 19 to 12 days for the next
two years.
OVERALL ANALYSIS:
There is an upward movement of current ratio on 2017 from 2015 and Olympic has become more
efficient in paying its obligations. Quick Ratio is much lower than current ratio but the ratio
increased so much over the 3years period; it means that current assets are highly dependent on
inventory. In 2017, Olympic inventory turns over 8.46 times; this is lower than before. Total asset
turnover ratio decreases in the last 2 years. From accounts payable ratio, it shows that company is
taking longer time to pay off its suppliers than it was in previous times. This increases the value to
the company. Account receivable ratio fluctuates over the time, which is an alarming sign.
Company’s DIH decreases over the period, it’s good for the company. Company’s DSO is very
steady that may suggest that the company is too strict about its credit policy, which could alienate
customers and thus hurt sales as well. DPO is lower in 2017. Decreases the value indicates less
efficiency of cash management, so it’s a bad sign. There is a downward movement of the number
of days needed for the operating cycle. It means that the company is working efficiently than
before! Cash burn rate decreased in 2017 that means the firm has less money on hand to operate
day to day expense with cash in hand. Olympic food operating cash flow is getting increased over
the period. It indicates that company is able to generate sufficient positive cash flow to maintain
and grow its operations. .Olympic has low cash ratio. Low cash ratios may indicate that the
company is efficient in the utilization of cash or not maximizing the potential benefit of low-cost
loans.
15
Part C:
Net Present Value of the company:
After we are done with calculating ratios, the DIH, DSO, DPO figures revealed (in excel
calculation) and considering WACC to be 10% company’s NPV has been calculated:
NPV (DAILY)
NPV (Daily)
12000000 9987201.96 10197179.23

10000000
7161894.19
8000000
6000000
4000000
2000000
0
2015 2016 2017
NPV (PERPETUITY)
NPV (Perpetuity)
36453287165 37219704194
26140913783
2015 2016 2017
Year 2015 2016 2017
NPV (Daily) 7161894.19 9987201.96 10197179.23
NPV (Perpetuity) 26140913782.89 36453287165.18 37219704194.60

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Interpretation:
The left chart in the illustration shows the daily net present value of the company based on the
relevant information of DIH, DSO, DPO, Sales, COGS, and WACC (demonstrated in excel
calculation). And it is evident that it has a progressive trend (positive upward trend) that defines,
company’s NPV is increasing from year to year on a daily basis. And if we can recall the summary
of “CCP-chart” illustrated above, we can easily understand that this incremental NPV resulted
from the shortening of CCP (as a reduction in CCP directly adds value to the company).
The chart right to it is the NPV of the permanent effect on the company. Like as to the daily effect
of NPV its lasting effect on the company also has the increasing upward trend. And this makes
sense because, as there is no downfall in NPV’s daily impact throughout the years (2015 to 2017),
so definitely the permanent implications will have such a trend. So, it’s straightforward.
Cash discount policy:

Though we have gone through the company’s financial statements and the company’s official
website, no information regarding the cash discount is disclosed. However, since it is a food
manufacturing company, offering cash discount sounds rational and also economical. Rational in
that sense, because of providing a cash discount, the early paying customers (those who usually
pay within first few days of credit period) will wisely take advantage of cash discount by
purchasing in bulk (make more massive purchases than before). So, the company’s sales rise faster
than before. And offering discount is economical in that sense, the early the company gets its due
from the customers, the more present value of that money is, and better off is the company. So, in
both cases offering a cash discount is adding value to the company. Hence, it is suggested that the
Olympic industry adopt a cash discount offering policy provided that it genuinely adds value to
the company. Though different optimization model suggests different cash discount percentage,
however, the most widely used computerized model supports the rationale behind offering a 2%
to 3% cash discount.
17
Rangpur Dairy & Foods Ltd
Brief Introduction of the Company

Rangpur Dairy & Food Products Limited produces, markets, and sells dairy products in
Bangladesh. Its products include fresh milk, flavored mango, chocolate, banana, and strawberry
milk, ghee, candy products, and butter. Rangpur Dairy & Food Products Limited was incorporated
in 2004 and is headquartered in Dhaka, Bangladesh. It is a growing dairy company in Bangladesh.
It is a growing company of Bangladesh. It’s competitors are Pran, Aarong, Dano etc. The group is
trying to penetrate the outside market of Bangladesh and in order to do that this company is trying
to get central banks permission. Rangpur Dairy & Food Products Limited has been engaged in the
manufacture & marketing of food products. At present it is one of the leading dairy food industry
in Bangladesh. The company has been manufacture & supplying a wide range of UHT process
Milk and others food products in Bangladesh since 2007. Mr. M. A. Kabir is the founder Managing
Director of the company. During the year 2016-2017 the company achieved a total net turnover of
taka 532,430,924 as against previous year was taka 494,433,871. During the year 2016-2017 Net
profit (after tax) was taka 35,375,743 as against last year was taka 29,999,327. Dairy Food industry
is a rapidly growing sector in Bangladesh, employing a significant portion of the labor force in the
country. Agriculture has always served a virtual role in Bangladesh economy in terms of GDP
contribution, employment generation, rural development and food security and RD Food is trying
their best to gain economical rise for the country.
Credit policy:
From the annual report of the company we have found that RD Food execute some credit policy
and they are given below:
Sale on credit: The retailers want to buy RD food products on credit. As it is dairy products so
there are many risks involved in sales on credit. Retailer does not want to take risk. So, most of
the retailers buy on credit.
Consignment terms: It is an arrangement whereby a retailer obtains an inventory items without

any obligation. That is, if the item is sold than payment is due and if the item is not sold than
retailer simply return the products. Big retailers, Meena Bazar, Agora, Shawpno sale RD Food
products under consignment terms.
Cash in Advance: The buyers pay the total amount or certain amount of the payment in advance.
Sometimes the buyer pays the certain amount like 30%-40% in advance with buyer’s document.
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Main Source of Short-term working capital financing

Short term financing is most often needed than long term loan financing by the companies.. Most
of the short term loans have a maturity of one year or less. They must be repaid to the lender within
one year. Most short-term loans are often repaid much more quickly than that, often within 90-120
days. Term loans with short maturities can help you meet an immediate need for financing without
requiring you to make a long-term term commitment. RD Foods lights their needs of short term
financing through short-term bank loan from Meghna bank.
It has short term loans of about 75,936,301 taka in 2016 and 62,260,772 taka in 2017. On the other
hand through preparing the RD Food’s performance in its working capital management, we got to
know they use the supplier’s funds (Trade payables) and other payables which is about 7585575
taka in 2016-2017 financial report.
Investment in marketable securities:

Throughout the report, we have tried to identify a company’s investment in marketable securities,
but it does not exist on their balance sheet nor in their websites. However, the concept of
company’s investment in marketable securities arises because, as the business grow faster and as
the cash in hand increases.
Share Holding Percentage Sponsor/Director: Govt: Institute: Foreign: Public:

[as on July 31, 2018 ] 27.14 0.00 19.28 0.00 53.58
EPS:
Last EPS Quarter Annual EPS P/E
.28 Q3 (2018) .50 33.72
(Info Source: https://www.dsebd.org/displayCompany.php?name=RDFOOD)

19
LIQUIDITY AND SOLVENCY MEASUREMENT
The tools that investors use to make decision of the investment are liquidity ratios and solvency
ratios. Generally a company's ability to convert its assets to cash is measured by liquidity ratios.
About the solvency ratios it can be said that a company's ability to meet its financial obligations
can be measured by it. Liquidity ratios focus more on a company's short-term debt obligations and
current assets and solvency ratios include financial obligations in both the long and short term.
Overall analysis of liquidity and solvency measurement of RD Food that we have found is given
below:
Current ratio:
Current ratio
5 4.612795227
4.109461436
3.734081154
4
3
2
1
0
2014-2015 2015-2016 2016-2017
Current ratio under 1 indicates that a company’s liabilities are greater than its assets and suggests
that the company in question would be unable to pay off its obligations if they came due at that
point. While a current ratio below 1 shows that the company is not in good financial health. Here,
the chart shows that, current ratio in 2014-2015 is 4.61 which is good indicator but later falls to
4.10 in 2015-2016 and in 2016-2017 it falls to 3.73. Though Current ratio is greater than 1 but over
the period it’s decreasing constantly. But they are still capable of paying its obligations.
Quick ratio:
Quick ratio
3.383959042
3.047325965 2.779956928
2014-2015 2015-2016 2016-2017

20
Quick ratio measures how much of current assets company holds against its current liabilities
ignoring its inventories. From the chart we can say that the company’s quick ratio over the period
is decreasing. In 2014-2015, it held 3.38 Taka worth of current assets against each taka of its
current liabilities and it falls to 3.05 in 2015-2016 and again falls to2.78 in 2016-2017. Although
have enough liquid assets to pay their current liabilities. But they should be treated with caution
as quick ratio decreases constantly.
Inventory turnover ratio:
Inventory Turnover
4.4 4.346202777
4.3
4.2 4.163664563
4.12989119
4.1
4
2014-2015 2015-2016 2016-2017
In 2014-2015, the inventory turnover ratio was 4.16 and after that, the ratio increasing and becomes
4.35, which indicates that they are doing well in turning over inventory than before. In 2016-2017
the ratio decreases to 4.12. Which indicates that RD Food is turning over its inventory less times
than before.
Total asset turnover:
Total Assest Turnover
0.474080946 0.454751325
0.46495429
2014-2015 2015-2016 2016-2017
In 2014-2015, RD Food’s Total Asset Turnover ratio was .45. For one BDT in assets, RD Food
generated BDT .45 in sales. The higher the asset turnover ratio, the better the company is
performing. In 2015-2016 it becomes .46 which is good for the company. In 2016-2017 it also
increases to .47 and which is a good sign.
21
Account receivable turnover:
Account Receivable Turnover

5.45 5.404824478
5.4
5.35
5.297612943
5.3
5.235507378
5.25
5.2
5.15
2014-2015 2015-2016 2016-2017
From the chart we can see that company’s Account receivable turnover is 5.24 in 2014-2015 and
it increases to 5.30. The ratio again increases to 5.40 in 2016-2017. Which indicates that
company’s collection of account receivables is efficient and the company have a high proportion
of quality customers that pay off their debts quickly.
Account payables turnover:
157.0482786
125.5661497
55.6591619
2014-2015 2015-2016 2016-2017
From the above graph we can see that Account payable turnover ratio is fluctuate constantly over
the period and which is a bad sign for the company. In 2016-2017 the company decreases a lot and
becomes 55.70. This is a sign that the company is taking shorter to pay off its suppliers than it was
in previous time periods.
22
Days sales outstanding:
Days sales outstanding (DSO)

70 69.71626122
69 68.8989558
68 67.5322578
67
66
2014-2015 2015-2016 2016-2017
From the above graph we can see that in 2014-2015 RD Food’s DSO was 69.72 and in 2015-2016
it decreases to 68.90 in 2016-2017, again decreases and becomes 67.53 in 2016-2017. A low DSO
value means that it takes a company fewer days to collect its accounts receivable. A very low DSO
ratio may suggest that the company is too strict with regard to its credit policy, which could
separate customers and thus hurt sales as well. So the company is taking less days to collect its
account receivables.
Days payable outstanding:
Days payables outstanding (DPO)

8
6.557770321
6
4 2.906834373
2.32412608
2
0
2014-2015 2015-2016 2016-2017
In 2014-2015 RD Food’s DPO' was 2.91 which means it took 2.91 days to pay its invoices from
trade creditors, such as suppliers. In 2015-2016 DPO was decreased to 2.32 and in 2016-2017 DPO
increase tp 6.56. So we can see that RD Foods DPO has been increasing over the years. A high
DPO value. A higher value indicates most efficiency of cash management.
Days inventory held:

23
Days inventory held (DIH)
88.38005246
90 87.66316174
88
86 83.98135539
84
82
80
2014-2015 2015-2016 2016-2017
In 2014-2015, RD Food had a DIH of 87.66. That means inventory held in the balance sheet for
87.66 days. After that, in 2015-2016 it decreased to 83.98 and in 2016-2017 the day’s inventory
held increases and it becomes 88.38. This means it takes 88.38 days to sell its average balance of
inventory.
Cash conversion period:
CASH CONVERSION PERIOD (CCP)

156
154.4725886
154
152 150.5561851
150 149.3545399
148
146
2014-2015 2015-2016 2016-2017
CCP is calculated as the difference between OC (DIH plus DSO) and DPO. It is the period that
starts from the day company’s payment to its suppliers get disbursed until the day company
receivables get credited. From the chart we can see that company is doing well in shortening its
CCP. Over the period the ratio falls down.
Cash conversion efficiency:

24
Cash conversion efficiency (CCE)

0.946 0.944411208
0.944
0.942 0.940709398
0.939369575
0.94
0.938
0.936
2014-2015 2015-2016 2016-2017
Cash conversion efficiency (CCE) is such a measure of liquidity that measures how much of the
company’s sales is converting into operating cash flow (OCF). In 2014-2015 CCE is .939. After
that in 2015-2016 the efficiency increases to .941 and later in 2016-2017 the efficiency slightly
increases to .944.
Cash burn rate:
30 Cash burn rate (CBR)
20
26.63363821
10
12.9128649 11.32113106
0
2014-2015 2015-2016 2016-2017
From the above chart, in 2014-2015 RD Food had 12.91 of Cash burn rate. It means that at 12.91
RD Food uses up its cash reserves or cash balance. In 2015-2016 it decreased, and 2016-2017 it
increases to 26.63 and increasing cash burn rate means that there are cash reserve in their future
years.
Cash ratio:
Cash ratio
0.03 0.027431656
0.025
0.02
0.015 0.012863176 0.011688448
0.01
0.005
0
2014-2015 2015-2016 2016-2017
25
The cash ratio is the ratio of a company's total cash and cash equivalents to its current liabilities.
The metric calculates a company's ability to repay its short-term debt. In 2014-2015 RD Foods had
a cash ratio of .01286. A cash ratio lower than 1 does indicate a company is having financial
difficulty. In 2015-2016 it decreases to .01169 and in 2016-2017 it increases to 0.02743. Though
cash ratio increases over the year but it’s not enough for the company as it’s lower than 1 and
which indicates company is having financial difficulty. RD Food is inefficient in the utilization of
cash.
Net working capital:
1. NET WORKING CAPITAL (NWC)

300,000,000
290,000,000 292,949,687
280,000,000
270,000,000
269,931,231
260,000,000 264,551,768
250,000,000
2014-2015 2015-2016 2016-2017
From the above chart, net working capital positive it means that RD Food has enough current
assets to meet its current liabilities. In 2014-2015 NWC was 264551768 and over the period it
increases.
Overall analysis:
From the analysis we have found that RD Foods current ratio is decreasing over the period, though
it is greater than 1 but they have to manage it efficiently. The quick ratio is lower than the current
ratio and it means that current assets are highly dependent on inventory. Their inventory turnover
decreases in 2016-2017 which means company sale falls in that year, the total asset turnover
increases over the period. Company’s collection of account receivables is efficient enough but
need more efficiency in management if the company want to benefit in the future. Their account
payables turnover decreases over the period which is bad for the company. This is a sign that the
26
company is taking shorter to pay off its suppliers than it was in previous time periods. Their DPO
has been increasing over the years. A high DPO indicates most efficiency of cash management.
Their DSO is decreased over the period. A low DSO value means that it takes a company less days
to collect its accounts receivables. For the cash ratio we have found that RD Food is inefficient in
the utilization of cash or they are not maximizing the potential benefit of low cost loans. The Net
Working Capital is positive over the three years, which means that they has enough assets to meet
their current liabilities. The NWC of recent years increased and it’s a good sign for the company.
For the cash burn ratio we have found that CBR has increased which means that there are cash
reserve for their future.
Net present value of RD Foods:
NPV(daily)
97483731.37
82881984.5
82532335.48
2014-2015 2015-2016 2016-2017
RD FOOD has an increasing net present value of its investments.Net present value is one of the
most used measures for evaluating an investment. An investment with higher net present value is
considered as more profitable than an investment with lower net present value. Its NPV (daily)
increased to BDT 97483731.37 at 2017 from 2015’s NPV (DAILY) BDT 82881984.5.
27
NPV (perpetuity)
400000000000.00
355815619504.
350000000000.00 60
302519243415. 301243024506.
300000000000.00
52 85
250000000000.00
2014-2015 2015-2016 2016-2017
NPV (perpetuity)
RD FOOD has increasing perpetuity of NPV. That would leave a positive impact on the investors.
From BDT 302519243415.52 RD FOOD made NPV (perpetuity) BDT 355815619504.60 from
2015 to 2017. That means RD FOOD is maximizing the value of its shareholder's wealth.
Cash Discount Policy:
RD Foods doesn't offer any cash discount. I would not suggest them not to offer cash discount.
The reason is that cash is more risky. RD Foods has a fluctuation in DSO over the years which
indicates that offering cash discount might hamper the business performance. But their sale is
decreasing in recent years so offering a cash discount can be an active tool to attract the new
customers. Their cash ratio is low. Overall their condition in the market is not good enough
compare to other companies. So it will be a bad for the company to give cash discount.
28
Company: PRAN AMCL-Agriculture Marketing Company Limited
Brief Introduction of the Company:
PRAN AMCL- Agriculture Marketing Company Limited is one the prominent food processing
company of Bangladesh, establishing themselves in 1981. Mr. Ahsan Khan Chowdhury is the
current chairman of this company. Meeting the domestic demand of the customers, the company
is efficiently exporting in different countries. The company has been exploring exports in different
countries of America, Africa and Asia. Processing and marketing of agro products i.e. fruit juice,
mango bar, puffed rice, sugar etc. are their principle job of the company. The company also process
and market non-agro products, i.e. mineral water, tea, soft drinks etc. Production capacity of this
company is 67110000 packets of juice and drinks, 18820000 bottles of water, 16650000 pcs of
soft drinks, 11580000 pcs of rice, mango bar, tea and others, and 70000000 pkt. Of juice and
drinks, rice and others.
Pran, a leading food processor, has tripled its export earnings in the last four years to more than
$144 million (Tk 1,126 core) now. (Source: The Daily Star Bangladesh. 11 August, 2015) On the
month of June, AMCL’s fiscal year ends.
29
CREDIT POLICY:
AMCL currently has no remarkable credit policy. There are some suggestions of credit policy for
AMCL that they can follow to enhance their selling:
Sales on credit: Most retailers want to buy PRAN (AMCL)’S food and beverage pack on credit.
There are many risks involved in sales on credit of PRAN juice pack. Retailer does not want to
take risk. So, most of the retailers buy on credit.
Cash in Advance: - Before receiving the goods, the buyers pay the total amount or certain amount
of the consignment in advance. This method has zero administration cost, and also zero chance of
bad debt. Sometimes, the buyer pays the certain amount like 30%-40% in advance with buyer’s
document.
LC: - The export is done through Letter of Credit.
Full Party Payment: - The buyer fully pays the amount after receiving the goods. Generally this
types of transaction is done with long term buyers.
MAIN SOURCE OF SHORT-TERM WORKING CAPITAL FINANCING:

PRAN (AMCL) meets their short term financing needs through short-term bank loan from six
branches of 3 popular banks. AMCL (PRAN) prefer short-term loan. It has short-term bank loan
of 433,509,429, 407,590,404, 417,371,252, and 364,277,185 for the last 4 years. It has a large
portion of accounts payable amount. 37,225,894 & 65,981,395 & 58,071,987 for 2014, 2015, 2016.
Short-term bank loan and accounts payable are the main source of short-term working capital
financing.
INVESTMENT IN THE MARKETABLE SECURITIES:

(As on Jul 31, 2018)
AMCL has INVESTMENT in STOCK as Marketable securities. Info source: Stock Bangladesh
SHARE DRISTRIBUTION:
Director: Public: Govt. Institute Foreign:

40.15% 45.37% 0% 14.48% 0%
30
EPS:

2.20 Q3 (2018) 6.87 31.53
PART B:
LIQUIDITY AND SOLVENCY MEASUREMENT:
Liquidity ratios and solvency ratios are tools that investors use to make investment decisions.
Liquidity ratios measure a company's ability to convert its assets to cash. On the other hand,
solvency ratios measure a company's ability to meet its financial obligations. Solvency ratios
include financial obligations in both the long and short term, whereas liquidity ratios focus more
on a company's short-term debt obligations and current assets.
Liquidity Ratios:
Liquidity ratios indicate a company's ability to pay off its short-term debt obligations and convert
its assets to cash. It is important that a company has the ability to convert its short-term assets into
cash so it can meet its short-term debt obligations. The current ratio measures a company's ability
to meet its short-term debt obligations. It is calculated by dividing its current assets by its current
liabilities. Generally, a higher current ratio indicates that the company is capable of paying off all
of its short-term debt obligations. Current ratio is preferred if the value is more than “1”.
Solvency Ratios:
In contrast to liquidity ratios, solvency ratios measure a company's ability to meet its total financial
obligations. The solvency ratio is calculated by dividing a company's net income and depreciation
by its short-term and long-term liabilities. This indicates whether a company's net income is able
to cover its total liabilities. Generally, a company with a higher solvency ratio is considered to be
a more favorable investment.
31
CURRENT RATIO
1.60
1.50 1.57
1.40
1.30 1.36 CURRENT RATIO
1.31
1.20
1.10
2014-2015 2015-2016 2016-2017
The current ratio had been in a good position in the last 3 years, as all the values are greater than
1. In 2015, current ratio was 1.57, which was a good indicator that indicated that on that year
AMCL was more capable of paying its obligations, as it has a larger proportion of asset value
relative to the value of its liabilities. However, unfortunately, there is a downward movement on
the following year and the ratio decreases by 1.31. The firm became more profitable in the year
2017, compared to the year 2016 with ratio 1.36.
0.70
0.60
0.50
0.40
0.30 QUICK RATIO
0.20
0.10
0.00
2014-2015 2015-2016 2016-2017
AMCL has acid-test/quick ratio of less than one for over the3 years that means they do not have
enough liquid assets to pay their current liabilities. AMCL should be treated with caution. The
ratio was 0.58 in 2015, and dropped to 0.49 in 2016, and again increased to 0.61 in 2017.
32
inventory turnover ratio

4.00
3.00 3.51
2.79 2.96
2.00
inventory turnover ratio
1.00
0.00
2014-2015 2015-2016 2016-2017
In 2015, the inventory turnover ratio was 2.79 and after that, the ratio kept increasing and becomes
2.96, which indicates that AMCL is turning over its inventory more times than before. It implies
either strong sales and/or large discounts. In 2017, AMCL’s inventory turnover increases at the
highest rate of 3.51 times.
Total Asset Turnover ratio

2.00
1.50
1.63
1.43
1.00 1.25
Total Asset Turnover ratio
0.50
0.00
2014-2015 2015-2016 2016-2017
In 2015, AMCL’s Total Asset Turnover ratio was 1.25. For every dollar in assets, AMCL
generated BDT 1.25 in sales. The higher the asset turnover ratio, the better the company is
performing, since higher ratios imply that the company is generating more revenue per dollar of
assets. In 2016, the ratio further increased to 1.43 which was a good sign, indicating a better
performance in 2017 with 1.63 turnover ratio.
33

40.00
30.00
29.02 29.95
20.00 22.68
account payable turnover
10.00
0.00
2014-2015 2015-2016 2016-2017
In 2015, AMCL had an account payable turnover ratio of 22.68, which increased to 29.02 which
indicates a good sign. This is a sign that the company is reducing the time to pay off its suppliers
than it was in previous time periods. In 2017, the ratio increases again and it becomes 29.95. That
means investors 29.95 times per period the company pays its average payable amount.
A/R turnover ratio

25.00 22.69
20.00 17.69 16.93
15.00
10.00
5.00 A/R turnover ratio
0.00
2014-2015 2015-2016 2016-2017
In 2015, AMCL had A/R turnover ratio of 23.04 which means AMCL collects its receivables 23.04
times on average 2015. After that the ratio kept decreasing for the following next 2 years. It may
also indicate that the company’s collection of accounts receivable is not efficient, and that the
company does not have a high proportion of quality customers that pay off their debts quickly.
34
DSO
0.070 0.062
0.060
0.048 0.046
0.050
0.040
0.030 DSO
0.020
0.010
0.000
2014-2015 2015-2016 2016-2017
In 2015, AMCL had the DAYS SALES OUTSTANDING (DSO) of 0.06. It means that, it took on
average 0.06 days collect payment after a sale has been made. In 2016, it decreases to 0.05 and
stays constant in 2017 as well. A low DSO value means that it takes a company fewer days to
collect its accounts receivable. A very low DSO ratio may suggest that the company is too strict
with regard to its credit policy, which could alienate customers and thus hurt sales as well.
DPO
20
15
16.09251186
10 12.57685878 12.18829217
DPO
5
0
2014-2015 2015-2016 2016-2017
IN 2015, Days Payable Outstanding - DPO' was 16.09. That means it took 16.09 days for the
AMCL Company to pay its invoices from trade creditors, such as suppliers. There is a declination
and constant over the next 2 years. In 2016 it goes down to 12.57. It then declined further to 12.18.
35
DIH
150
100
130.789089
50 123.440099
0
103.871890
2014-2015
2015-2016
2016-2017
DIH
In 2015, AMCL had a DIH of 130.79 days. That means inventory held in the balance sheet for
130.79 days. After that, in 2016 and 2017 the day’s inventory held kept falling and in 2017 it
becomes 103.871890.Which means it takes 103.871890 days to sell its average balance of
inventory. 103.871890 days it takes AMCL to turn its inventory (including goods that are a work
in progress, if applicable) into sales. Generally, a lower (or shorter) DIH is preferred
OPERATING CYCLE
operating cycle
140.00 130.85
123.49
120.00 103.92
100.00
80.00
60.00
40.00
20.00
0.00
2014-2015 2015-2016 2016-2017
In 2015, AMCL needed 130.85 days to cover its operating cycle.it means that AMCL had a
required of 130.85 days for a manufacturer's cash to be converted into products plus the time it
takes for those products to be sold and turned back into cash. After that, there is a decreasing
movement of the amount of days needed for operating cycle. It means that AMCL is working more
efficiently than before!
36
Cash burn rate

10
7.175707463
3.8733701 3.359445
5 Cash burn rate
0
2014-2015 2015-2016 2016-2017
Cash burn rate
In 2015, AMCL had 3.87 of Cash burn rate. It means that at 3.87 AMCL uses up its cash reserves
or cash balance. In 2016 the rate increased to 7.17, and after that, the rate decreased again to 3.36.
If a company’s Cash burn rate is growing for a quite long time, then it will only have to survive
on borrowed finance.
Operating cash flow
2016-2017 145611797.4
2015-2016 143285116.3
2014-2015 144158557.1
142000000 143000000 144000000 145000000 146000000
Operating cash flow
In 2014 AMCL had Operating cash flow of 148659770.5 it means on that year BDT 148659770.5
amount of cash generated by a company's normal business operations. But following 2 years the
amount decreased, and in 2016, the amount reached BDT 143285116.3.
It indicates that the company is not able to generate sufficient positive cash flow to maintain and
grow its operations or it may require external financing for capital expansion.
37
cash conversion efficiency

0.1
0.08
0.06
0.04 0.076415662 0.068506539 0.061172804
0.02
0
2014-2015 2015-2016 2016-2017
cash conversion efficiency
In 2015 the cash conversion efficiency of AMCL was 0.076415662, but after that, the efficiency
value kept continue decreasing and in 2016 & 2017. It indicates a deteriorating condition of
AMCL’S effective working capital management.
cash ratio
cash ratio
0.025
0.02 0.022705132
0.015
0.01
0.010547386 0.01211363
0.005
0
2014-2015 2015-2016 2016-2017
The cash ratio is the ratio of a company's total cash and cash equivalents to the current liabilities.
The metric calculates a company's ability to repay its short-term debt. In 2015 AMCL had a cash
ratio of 0.010547386. A cash ratio lower than 1 does indicate a company is having financial
difficulty. In 2016 AMCL had a lower cash ratio of 0.029419865 but increased from the previous
year. In 2017 the cash ratio again decreased to 0.01211363. An insignificant cash ratio may be an
indicator of a company's strategy to have low cash reserves.
OVERALL ANALYSIS:
There is an upward movement in 2017 from 2016 and the current ratio increases by 0.05, but the
ratio decreased from 2015. It drops to 0.21. AMCL is not any more efficiently capable of paying
its obligations. Quick Ratio is much lower than the current ratio; it means that current assets are
highly dependent on inventory. In 2017, AMCL’s inventory turns over 3.51 times; this is greater
than before. Total asset turnover ratio increases over the last 2 years. From accounts payable ratio,
38
it shows that the company is taking longer to pay off its suppliers than it was in previous times.
This adds value to the company. Account receivable ratio decreases over the time, which is an
alarming sign. AMCL’s DSO is decreasing, and very low DSO ratio may suggest that the company
is too strict about its credit policy, which could alienate customers and thus hurt sales as well. DPO
is lower in 2017. Since a higher value indicates the most efficiency of cash management, so falling
off the DPO is a bad sign indeed. Generally, a smaller DIH is preferred, and AMCL has a
decreasing DIH. There is a decreasing movement of the number of days needed for the operating
cycle. It means that AMCL is working more efficiently than before! CASH BURN RATE
increased in 2016 that means the firm has more money on hand to run day to day expense with
cash in hand, again in 2017 the ratio decreased. AMCL’S operating cash flow is getting fluctuate
over the years. It indicates that the company is not able to generate sufficient positive cash flow to
maintain and grow its operations, or it may require external financing for capital expansion. AMCL
has so many changed in cash ratio. In 2016 the ratio was high. High cash ratios may indicate that
AMCL is inefficient in the utilization of cash or not maximizing the potential benefit of low-cost
loans. In 2017 again falls down the ratio.
PART C:
NET PRESENT VALUE OF AMCL:
NPV(daily)
383519175.9
343555009.9
331237062
2014-2015 2015-2016 2016-2017
NPV(daily)
AMCL has an increasing net present value of its investments.Net present value is one of the most
used measures for evaluating an investment. An investment with higher net present value is
considered as more profitable than an investment with lower net present value. Its NPV (daily)
increased to BDT 383519175.9 at 2017 from 2015’s NPV (DAILY) BDT 331237062.
39
NPV(perpetuty)
NPV(perpetuty)
$1,500,000,000,000.00 $1,399,844,992,15
7.67
$1,400,000,000,000.00
$1,253,975,786,02
$1,300,000,000,000.00 $1,209,015,276,14 5.82
3.34
$1,200,000,000,000.00
$1,100,000,000,000.00
2014-2015 2015-2016 2016-2017
AMCL has increasing perpetuity of NPV. That would leave a positive impact on the investors.
From BDT 1,209,015,276,143.34, AMCL made NPV (perpetuity) BDT $1,399,844,992,157.67
from 2015 to 2017. That means AMCL is maximizing the value of its shareholder's wealth.
CASH DISCOUNT POLICY:

AMCL gives cash discount if any distributor can fulfill some criteria. There are some sales ranges
for getting discount. A distributor is given an order of 1000 to 3000 units of sale per day.
Sometimes AMCL goes for temporary cash discount to boost sales. AMCL displays different food
and beverage items at the Dhaka International Trade Fair offering huge discounts and gifts to
promote their brands and products. Pran offers special price packages much lower than their
regular prices. AMCL offered 32 packages on food and beverage items and giving cash discount
between Tk 4 and Tk 118 on the purchase of items worth Tk 40 to 500 at the Dhaka International
Trade Fair in 2016.
40
APEX FOODS LTD

Introduction:
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.
Credit policy
The distribution mainly depends upon the retailers for selling Apex Foods. So, the wholesaler has
to face some of the demand of the retailers. Most of the retailers want to buy food and beverage
pack on credit. There are many risks involved in sales on credit of Apex. Retailer does not want to
take risk. So, most of the retailers buy on credit. Apex food has no remarkable credit policy at
present. The buyers pay the total amount or certain amount of the consignment in advance.
Sometimes the buyer pays the certain amount like 20%-40% in advance with buyer’s document.
Main source of short-term working capital financing
Working capital is truly the lifeline for any company. Most short-term financing options are tied
directly to immediate sales; they are relatively easy to qualify for as long as the business has a
positive cash flow or outstanding invoices to use as collateral. Short-term loans are rarely secured
with a larger asset. Businesses most often need short-term loans instead of long-term debt
financing. Most term loans, classified as short-term, usually have a maturity of one year or less.
They must be repaid to the lender within one year. Most short-term loans are often repaid much
41
more quickly than that, often within 90-120 days. Term loans with short maturities can help you
meet an immediate need for financing without requiring you to make a long-term term
commitment.
Short-term bank loan and accounts payable are the main source of short-term working capital
financing of Apex Food LTD.
Apex Food LTD prefer short-term loan. They meets their short term financing needs through short-
term bank loan from Dhaka Bank and Agrani Bank Limited, Agrabad Corporate Branch,
Chittagong, Foreign Exchange Branch. It has short-term bank loan of Taka 96,450,532,
65,871,088, and 52,627,377 for the last 3 years. It has a large portion of accounts payable amount
61,893,746, 48,168,918 and143, 878,387.00
Investment in the marketable securities
Apex Food LTD has INVESTMENT in STOCK as Marketable securities.
Share Distribution
Director Public Government Institution Foreign
38.96 49.85 0.00 11.19 0.00
Basic info & Capital details
Authorized Capital 150.00 (mn)

Paid up Capital 57.02 (mn)
No of outstanding securities 5702400
Face value 10.00
Market Capitalization 985.945 (mn)
Last AGM held Dec 21, 2017
EPS
1.39 Q4 1.56 111.9
42
Liquidity and solvency measurement:

CURRENT RATIO
Current Ratio
1.36
1.34 1.35
1.32
1.30 1.31
1.28
1.26 1.27
1.24
1.22
2014-2015 2015-2016 2016-2017
Apex Food LTD 1.31 1.35 1.27
A ratio under 1 indicates that a company’s liabilities are greater than its assets and suggests that
the company in question would be unable to pay off its obligations if they came due at that point.
While a current ratio below 1 shows that the company is not in good financial health. From the
graph we can clearly see that current ratio is fluctuating, which is not a good indicator. But still
Apex Foods is capable of paying its obligations.
QUICK RATIO
Quick ratio
0.70
2015-2016, 0.60
0.60
2014-2015, 0.49
0.50 2016-2017, 0.46
0.40
0.30
0.20
0.10
0.00
2014-2015 2015-2016 2016-2017
Apex has Quick ratio of less than 1 for over the 3 years that means they do not have enough liquid
assets to pay their current liabilities. Apex should be treated with caution. Although the ratio
43
increased to 0.49 in 2015-2016 from 2014-2015 0.60, but again dropped at 0.46.Quick Ratio is
much lower than current ratio; it means that current assets are highly dependent on inventory.
Inventory turnover ratio
Inventory turnover Ratio

4.00
2.95
3.00 2.35
1.88
2.00
1.00
0.00
2014-2015 2015-2016 2016-2017
From the above, in 2014-2015, the inventory turnover ratio was 2.95 and after that, the ratio
decreasing and becomes 2.35, which indicates that Apex is turning over its inventory less times
than before. Sales was decreasing. In 2016-2017, Apex’s inventory again decreasing. This indicate
company sale fall in next two years.
Total Asset Turnover
Total Assets Turnover

2.000 1.585
1.500 1.222
0.994
1.000
0.500
0.000
2014-2015 2015-2016 2016-2017
Total Assets Turnover 1.585 1.222 0.994
44
In 2014-2015, Apex’s Total Asset Turnover ratio was 1.58. For every dollar in assets, Apex
assets. But in 2015-2016 and 2016-2017 the ratio decreases which was not a good sign.
Account Receivables Turnover
Account Receivables Turnover

60.000 2014-2015,
48.281
50.000
40.000
30.000
2015-2016, 2016-2017,
20.000 16.063 14.205
10.000
0.000
2014-2015 2015-2016 2016-2017
From the above, in 2014-2015, Apex had A/R turnover ratio of 48.29 which means Apex collects
its receivables 48.5 times on average 2014-2015 year. After that the ratio kept decreasing for the
following next 2 years. It may also indicate that the company’s collection of accounts receivable
is not efficient, and that the company does not have a high proportion of quality customers that
pay off their debts quickly.
45
Account Payable Turnover

45.00 40.17
40.00
33.44
35.00
30.00
25.00
20.00 15.07
15.00
10.00
5.00
0.00
2014-2015 2015-2016 2016-2017
From the above chart show that in 2014-2015, Apex had an account payable turnover ratio of
40.17. After that the ratio kept decreasing for the following next 2 years. Which indicates a bad
sign. This is a sign that the company is taking longer to pay off its suppliers than it was in previous
time periods.
DAYS SALES OUTSTANDING (DSO)
Days Sales Outstanding (DSO)

35.00
30.34
30.00
25.69
25.00
20.00
15.00 11.15
10.00
5.00
0.00
2014-2015 2015-2016 2016-2017
From the above, in 2014-2015 Apex had DSO is 11.15, 2016-2017 DSO in 30.35 days and 2016-
2017 DSO in 25.69 days. Apex Foods DSO has been increasing over the years. A high DSO value
means that it takes a company more days to collect its accounts receivable.
46
Days Payable Outstanding
Days of payable (DPO)

30.00
24.22
25.00
20.00
15.00
8.92 9.55
10.00
5.00
0.00
2014-2015 2015-2016 2016-2017
Days of payable (DPO) 8.92 9.55 24.22
In 2014-2015 Apex 'Days Payable Outstanding - DPO' was 8.92. That means it took 8.92 days
Apex Company to pay its invoices from trade creditors, such as suppliers. After that the DPO
increasing for the following next 2 years. Apex Foods DPO has been increasing over the years. A
high DPO value. A higher value indicates most efficiency of cash management.
Inventory Holding Days (DIH)
Inventory Holding Days (DIH)

250.00
193.93
200.00
150.00 130.72 130.53
100.00
50.00
0.00
2014-2015 2015-2016 2016-2017
In 2014-2015, Apex Foods had a DIH of 130.72 days. That means inventory held in the balance
sheet for 130.72 days. After that, in 2015-2016 slightly increased and in 2016-2017 the day’s
inventory held again increased and it becomes 193.93. This means it takes 193.93 days to sell its
average balance of inventory.
47
Operating cycle
OPERATING CYCLE
250.00
219.62
200.00
160.87
141.87
150.00
100.00
50.00
0.00
2014-2015 2015-2016 2016-2017
In 2014-2015, Apex Foods needed 141.87 days to cover its operating cycle. It means that
Apex Foods had a required of 141.87 days for a manufacturer's cash to be converted into
products plus the time it takes for those products to be sold and turned back into cash. After
that increased in 2015-2016 and 2016-2017. That means operating is not efficient Apex
Food LTD.
Cash Burn Rate
Cash Burn Rate

50.00 45.89
40.00
30.00
20.00
10.00 2.16 1.55
0.00
2014-2015 2015-2016 2016-2017
From the above chart, in 2014-2015, Apex had 45.89 of Cash burn rate. It mean that at 45.89 Apex
uses up its cash reserves or cash balance and decreased cash burn rate following that means no
cash reserve in Apex’s years.
48
Cash conversion efficiency
Cash Conversion Efficiency (CCE)

0.944 0.943
0.943 0.943
0.942
0.941
0.940
0.939 0.938
0.938
0.937
0.936
0.935
0.934
2014-2015 2015-2016 2016-2017
Cash Conversion Efficiency
0.938 0.943 0.943
(CCE)
In 2014-2015 the cash conversion efficiency of Apex Foods was 0.938 and after that the efficiency
value increased in 2015-2016 and 2016-2017 same value in previous year.
Cash Ratio
cash ratio
0.40
0.29
0.30
0.21
0.20
0.10
0.01
0.00
2014-2015 2015-2016 2016-2017
The metric calculates a company's ability to repay its short-term debt. In 2014-2015 Apex Foods
had a cash ratio of 0.29. A cash ratio lower than 1 does indicate a company is having financial
difficulty. In 2015-2016 the cash ratio decreases to 0.01.A low cash ratio may be an indicator of a
company's strategy to have low cash reserves. But in 2016-2017 cash ratio again increased to 0.21.
49
High cash ratios may indicate that Apex Foods is inefficient in the utilization of cash or not
maximizing the potential benefit of low-cost loans.
Net working capital
Net working Capital
$344,476,434.00
$350,000,000.00
$307,597,448.00
$295,060,494.00
$300,000,000.00
$250,000,000.00
2014-2015 2015-2016 2016-2017
From the above chart, net working capital positive it means that the Apex Food has enough current
assets to meet its current liabilities but net working capital decreasing 2015-2016 and 2016-2017.
This is not good sign for the company.
Overall analysis:
From the analysis, we can found that current ratio is fluctuating, which is not a good indicator. But
still Apex Foods is capable of paying its obligations because all 3 years current ratio exceed 1.
Apex’s Quick Ratio is much lower than current ratio; it means that current assets are highly
dependent on inventory. Apex’s inventory turnover decreasing last two years. This indicate
company sale fall in last two years. Asset turnover ratio decreases in 2015-2016 and 2016-2017
which was not a good sign for the company. The company’s collection of accounts receivable is
not efficient, and that the company does not have a high proportion of quality customers that pay
off their debts quickly. From accounts payable ratio, Apex Foods DPO has been increasing over
the years. A high DPO value. A higher value indicates most efficiency of cash management. Apex
Foods DSO has been increasing over the years. A high DSO value means that it takes a company
more days to collect its accounts receivable. From cash ratio indicate that Apex Foods is inefficient
in the utilization of cash or not maximizing the potential benefit of low-cost loans. Apex Food net
working capital was positive in 3 years that means Apex Food has enough current assets to meet
50
its current liabilities but net working capital decreasing following year so it’s not a good sign for
company. For cash burn rate ratio is very low that means no cash reserve in Apex’s years.
Net present value analysis:
Net Present Value (Daily)

$336,555.98
$340,000.00
$330,000.00
$320,000.00
$307,151.74
$310,000.00 $302,873.26
$300,000.00
$290,000.00
$280,000.00
2014-2015 2015-2016 2016-2017
Net present value is maximum used measures for analyzing an investment. An investment with
higher net present value is considered as more profitable than investment with lower net present
value. Apex Food has fluctuating net present value of its investments. In 2014-2015 NPV daily
was 336555.98 but 2015-2016 NPV daily was lower value. In 2016-2017 NPV increasing that is
a good indicate for the company.
Net Present Value (Perpetuity)

$1,250,000,000.00
$1,200,000,000.00 2014-2015,
$1,228,429,331.36
$1,150,000,000.00
$1,100,000,000.00
2016-2017,
2015-2016,
$1,050,000,000.00 $1,121,103,859.06
$1,105,487,405.93
$1,000,000,000.00
2014-2015 2015-2016 2016-2017
51
Apex Food has fluctuating perpetuity of NPV. That would not be a positive impact to the investors.
In 2016-2017 NPV perpetuity increasing in previous financial years 2015-2016. That means Apex
is maximizing the value of its shareholders wealth.

Apex Foods doesn't offer any cash discount. I would not suggest Apex Foods to offer cash
discount. The reason is cash is more risky. Apex Foods has high DSO over the years which
indicates that offering cash discount might hamper the business performance. But Apex’s sell
decreasing in recent years so offering a cash discount can be an effective marketing tool to attract
new customers who have cash or who prefer to use cash. Apex’s cash ratio is low that why offering
cash discount and cash you take in is the cash you keep.
52
FU WANG FOOD LTD.

Brief Introduction of the Company
Fu Wang Foods Ltd., a public listed company with joint stock of exchange of Bangladesh. 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.
Fu-Wang Foods Limited is a concern of Fu-Wang Group Bangladesh. Fu-Wang’s manufacturing

enterprises producing a comprehensive range of foods, beverage and ceramic tiles with high
quality & standard. Presently Fu-Wang Foods have more than 200 products options, 350 dealers,
more than dozens of chain shops, eight numbers of branches & residential offices all over
Bangladesh. 24hr supervision of foreign technician for producing quality, imported Taiwan, Italian
machinery, good quality raw materials confirming its customer satisfaction.
Fu Wang Foods growth is visible in its revenue growth. Its revenue has grown to Tk. 169 Million
from Tk. 130 Million and its Net Profit grew three fold to Tk. 31 Million from Tk. 10 Million.
Company has wide distribution network for its products. It has its Head Office in Dhaka and the
Factory is located at Gazipur. It also has 12 Branch offices across Bangladesh to support the sales.
Company’s success lies in its strong network of 350 Dealers, 12 chain Shops, to promote and sell
food portfolio of 200 different products.
Credit Policy:
The distribution mainly depends upon the retailers for selling Fu Wang Foods. So, the wholesaler
has to face some of the demand of the retailers. Most of the retailers want to buy food and beverage
pack on credit. There are many risks involved in sales on credit of Fu Wang cake items. Retailer
does not want to take risk. So, most of the retailers buy on credit. Fu Wang food has no remarkable
credit policy at present. The buyers pay the total amount or certain amount of the consignment in
advance. Sometimes the buyer pays the certain amount like 20%-40% in advance with buyer’s
document.
53
MAIN SOURCE OF SHORT-TERM WORKING CAPITAL FINANCING

Fu Wang Foods ltd. meets their short term financing needs through short-term bank loan from
eight branches of 4 popular banks. It prefer short-term loan. It has short-term bank loan of
32413924, 59878788, and 100344571 for the last 3 years. It has a large portion of accounts payable
amount. 40758892,42519493 and 36860247 for 2015,2016, 2017.Short-term bank loan and
accounts payable are the main source of short-term working capital financing of Fu Wang Food
ltd.
INVESTMENT IN THE MARKETABLE SECURITIES

Fu Wang has INVESTMENT in STOCK as Marketable securities. Info source: Stock Bangladesh
SHARE DRISTRIBUTION
Director: Public: Govt: Inst: Foreign:

6.42% 86.39% 0% 7.18% 0.01%
LIQUIDITY AND SOLVENCY MEASUREMENT
Current Ratio
2.6
2.5
2.4
2.3
2.2
2.1
2015 2016 2017
Series 1 2.4 2.26 2.52
Series 1
A ratio under 1 indicates that a company’s liabilities are greater than its assets and suggests that
the company in question would be unable to pay off its obligations if they came due at that point.
While a current ratio below 1 shows that the company is not in good financial health
54
In 2015, current ratio was 2.4 and the next year it decreased to 2.26, which was a bad indicator
that indicated that on that year Fu Wang Foods Ltd. was inefficient of paying its obligations, as it
has a lower proportion of asset value relative to the value of its liabilities, and in 2017 the ratio
increased to 2.52 which is more efficient for company.
Quick Ratio
2.1
2
1.9
1.8
1.7
1.6
2015 2016 2017
Series 1 1.86 1.77 2
Series 1
Fu Wang Foods Quick ratio of more than one for over the3 years that means they do have enough
liquid assets to pay their current liabilities. Quick Ratio is much lower than current ratio; it means
that current assets are highly dependent on inventory.
4
Inventory Turnover Ratio
3
0
2015 2016 2017
Series 1 3.29 2.98 2.11
Series 1
In 2015, the inventory turnover ratio was 3.29 and after that, the ratio decrease to 2.98 which
indicates that Fu Wang Foods is turning over its inventory less times than before. Then in 2016 its
turnover ratio decreased to 2.11 which means it is turning over its inventory less time than last
year.
55
Total Asset Turnover Ratio

1.2
1
0.8
0.6
0.4
0.2
0
2015 2016 2017
Series 1 0.61 0.54 1.08
Series 1
In 2015, Fu Wang Total Asset Turnover ratio was 0.61. For every dollar in assets, Fu Wang foods
assets. But in 2016 the ratio decreases to 0.54 which was not a good sign, but after that, in 2017
again it increases and reached to 1.08.

3
2
1
0
2015 2016 2017
Series 1 2.23 2.03 1.44
Series 1
In 2015, AMCL had an account payable turnover ratio of 2.23, which declined to 2.03 which
indicates a bad sign. This is a sign that the company is taking longer to pay off its suppliers than it
was in previous time periods.
Account Receivable Turnover

4
3
2
1
0
2015 2016 2017
Series 1 3.43 2.65 1.78
Series 1
56
In 2015, Fu Wang Foods had A/R turnover ratio of 3.43 which means it collects its receivables
3.48 times on average 2015 year. After that the ratio increasing for the following years. It may also
indicate that the company’s collection of accounts receivable in 2016 and 2017 ratio decreased
gradually which is very bad indicator for the company.
DSO
0.02
0.01
0
2015 2016 9-Jul
Series 1 0.01 0.01 0
Series 1
In 2015 to 2016 Fu Wang Foods lt had the same of DAYS SALES OUTSTANDING (DSO) THAT
IS 0.01. It mean that, it took on average 0.01 days collect payment after a sale has been made. This
ratio indicates that the companies DSO is very steady.
DPO
400
200
0
2015 2016 2017
Series 1 163.536 180.237 252.77
Series 1
IN 2015 Fu Wang Food’s Days Payable Outstanding - DPO' was 163.536 . That means it took
163.536 days Fu Wang Foods Company to pay its invoices from trade creditors, such as suppliers.
This increased over the next 2 years and reaches to 252.77. Since a higher value indicates most
efficiency of cash management, so falling of the DPO is a good sign indeed.
DIH
200
100
0
2015 2016 2017
Series 1 110.84 122.68 173.31
Series 1
In 2015, Fu-wang had a DIH of 110.84 days. That means inventory held in the balance sheet for
110.84 days. After that, in 2016 and 2017 the days inventory held kept rising and in 2017 it
57
becomes173.31. Which means it takes 173.31 days to sell its average balance of inventory.
Generally, a lower (or shorter) DIH is preferred so it’s not a good scenario.
200
Operating cycle
100
0
2015 2016 2017
Series 1 110.85 Series122.69
1 173.31
In 2015, Fu Wang Food needed 110.85 days to cover its operating cycle.it means that the company
had a required of 110.85 days for a manufacturer's cash to be converted into products plus the time
it takes for those products to be sold and turned back into cash. After that, there is an increasing
movement of the amount of days needed for operating cycle. It means that Fu Wang Food is
working less efficiently than before.
Cash Burn Rate

30
20
10
0
2015 2016 2017
Series 1 19.13 17.49 6.98
Series 1
In 2015, Fu Wang had 19.13 of Cash burn rate. It means that at 19.13 the company uses up its cash
reserves or cash balance. In 2016 the rate decrease and after that the rate decreased to 6.98. Fu
Wang Food operate for 6.98 days with cash in hand. If a company’s Cash burn rate is increasing
from a quite long time then it will only have to survive on borrowed finance.
Operating Cash Flow

150000000
100000000
50000000
0
2015 2016 2017
Series 1 127937557.6 101176805.8 76749097.3
Series 1
58
In 2015 Fu Wang Food had Operating cash flow of 127937557.6 it means on that year BDT
127937557.6 amount of cash generated by a company's normal business operations. But the
amount decreased in 2016 but in 2017 it has decreased again, the amount reached 76749097.3. It
indicates that company is not able to generate sufficient positive cash flow to maintain and grow
its operations, or it may require external financing for capital expansion.
Cash Conversion Efficiency

0.16
0.15
0.14
0.13
0.12
0.11
2015 2016 2017
Series 1 0.156049605 0.131893582 0.130795344
Series 1
In 2015 the cash conversion efficiency of Fu Wang was 0.156049605 and after that the efficiency
value kept decreasing and in 2016 it reached at 0.131893582. it indicates a bad condition of Fu
Wang working capital management.
Cash Ratio
0.03
0.02
0.01
0
2015 2016 2017
Series 1 0.02261714 0.0188631 0.01
Series 1
The metric calculates a company's ability to repay its short-term debt. In 2015 Fu Wang had a cash
ratio of 0.0226171. A cash ratio lower than 1 does indicate a company is having financial
difficulty.in 2015 AMCL had a lower cash ratio of 0.02261714. A low cash ratio may be an
indicator of a company's strategy to have low cash reserves. In 2016 the cash ratio decreases to
0.0188631. Low cash ratios may indicate that company is efficient in the utilization of cash or not
59
OVERALL ANALYSIS:
There is an upward movement on 2016 and Fu Wang has become more efficient of paying its
obligations. Quick Ratio is much lower than current ratio; it means that current assets are highly
dependent on inventory. In 2016, Fu Wang inventory turns over 2.98 times, this is lower than
before. Total asset turnover ratio fluctuates over the last 3 years. From accounts payable ratio, it
shows that company is taking shorter time to pay off its suppliers than it was in previous times.
This loses value to the company. Account receivable ratio decreases over the time, which is an
alarming sign. Company’s DSO is very steady that may suggest that the company is too strict with
regard to its credit policy, which could alienate customers and thus hurt sales as well. DPO is
higher in 2016.Since a higher value indicates most efficiency of cash management, so it’s a good
sign indeed. Generally, a lower (or shorter) DIH is preferred but Fu Wang is having a increasing
DIH. There is a increasing movement of the amount of days needed for operating cycle. It means
that the company is working less efficiently than before! CASH BURN RATE decreased in 2016
that means firm has less money on hand to operate day to day expense with cash in hand. Fu Wang
Food operating cash flow is getting increased over the years. It indicates that company is able to
generate sufficient positive cash flow to maintain and grow its operations. .Fu Wang has low cash
ratio. Low cash ratios may indicate that the company is efficient in the utilization of cash or not
NET PRESENT VALUE OF Fu Wang:
NPV (daily)
500000000
0
2015 2016 2017
Series 1 240853355 205037767.8 167981742.7
Series 1
Fu Wang has a decreasing net present value of its investments.Net present value is one of most
used measures for evaluating an investment. An investment with higher net present value is
considered as more profitable than investment with lower net present value. Its NPV (daily)
decreased from 240853355 to at 2015 from 2017’s NPV (DAILY) 167981743
.
60
NPV(perpetuity)
1E+12
5E+11
0
2015 2016 2017
Series 1
Fu Wang has decreasing perpetuity of NPV. From 879114745592.72 the company made NPV
(perpetuity) 61333360906.87 from 2015 to 2017.
FU-WANG Foods doesn't offer any cash discount. I would not suggest them not to offer cash
discount. The reason is that cash is more risky. FU-WANG Foods has a low in DSO over the years
which indicates that offering cash discount might hamper the business performance. But their sale
is decreasing in recent years so offering a cash discount can be an active tool to attract the new
customers. Their cash ratio is also low. Overall their condition in the market is not good enough
compare to other companies. So it will be a bad for the company to give cash discount.
61
Comparison:
Olympic company’s current ratio is not well enough and quick ratio is not good enough and also
as they are taking longer times for the supplies to pay and which is good. The Cash Burn Ratio
decreased over the period which indicates that Olympic company has less money in hand to operate
day to day expense. For the companies accounts payable, they are taking longer time which is
good. Accounts receivables are fluctuating over time which is bad. Overall their performance is
getting better over the period. Their liquidity management is not effective.
On the other hand RD Food’s liquidity is not good enough compared to other companies. They
have decreasing Current ratio and decreasing quick ratio. For the cash ratio we have found that RD
Food is inefficient in utilizing their cash. They are a new company compared to other companies
so they need more time to get over the market and competitive with other companies.
PRAN AMCL- Agriculture Marketing Company Limited’s Current ratio is upward and increasing.
The company’s inventory turnover increases over the period and their total assets turnover also
increases. They takes more time to pay accounts payables and accounts receivable turnover is also
good rather than other companies. Though their performance is good enough but have some
problems in solvency management. AMCL has an increasing net present value of its investments.
An investment with higher net present values considered as more profitable than an investment
with lower net presentvalue. Its NPV (daily) increased to BDT 383519175.9 at 2017 from 2015’s
NPV (DAILY) BDT 331237062. Their operating cycle increases effectively.
Apex Current ratio and quick ratio is not doing well. Account receivable turnover is not efficient
and they don’t have quality customer to pay their debt. Their Cash ratio is bad and they are
inefficient in utilizing cash which means no cash reserve in Apex’s future year and they may face
liquidity problem.
Fu Wang’s liquidity management is good enough after Pran AMCL. Their operating cycle
increases. But their Cash burn rate decreases which is bad.
So after analyzing we have found that PRAN AMCL- Agriculture Marketing Company Limited is
better in financial position also in managing their liquidity effectively and they also have a big
amount of NPV value rather than other bank.
62
Conclusion:
Concluding the report, it could be seen that all the leading companies of the food industry of
Bangladesh are efficient in certain ratios, as well as they need to be more efficient in other ratios.
There are fluctuations among all the companies of the last 3 years, and thus they should be more
efficient in managing those ratios in the upcoming years. Also, the companies should try to
improve their cash discount policies and have to have a note on their Net Present Values before
thinking to go for a new project.
Thus, after analyzing the five prominent food industry companies of Bangladesh, we think that the
companies are quite stable in the market but can improve their performance more in the upcoming
years.

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1

Olympic, RD food, AMCL, APEX, Fu Wang

10th September, 2018

Lecturer, Department of Accounting & Finance,

School of Business and Economics,

North South University

Subject: Submission of FIN 340 report.

Company SERIAL TOPIC PAGE NO

PART A 1 Company Introduction 04

3 Source Of Short-Term Working Capital Financing 05

4 Investment In Marketable Security 06

PART B 1&2 Liquidity and Solvency measurement 07-14

PART C 1 NPV Calculation And Analysis 15-16

PART A 1 Company Introduction 17

3 Source Of Short-Term Working Capital Financing 18

4 Investment In Marketable Security 18

PART B 1&2 Liquidity and Solvency measurement 19-25

3 Overall Analysis 25-26

PART C 1 NPV Calculation And Analysis 26-27

PART A 1 Company Introduction 28

3 Source Of Short-Term Working Capital Financing 29

4 Investment In Marketable Security 29

PART B 1&2 Liquidity and Solvency measurement 30-37

3 Overall Analysis 37-38

PART C 1 NPV Calculation And Analysis 38-39

PART A 1 Company Introduction 40

3 Source Of Short-Term Working Capital Financing 40

4 Investment In Marketable Security 41

PART B 1&2 Liquidity and Solvency measurement 42-49

PART C 1 NPV Calculation And Analysis 50

PART A 1 Company Introduction 52

3 Source Of Short-Term Working Capital Financing 53

4 Investment In Marketable Security 53

PART B 1&2 Liquidity and Solvency measurement 53-58

PART C 1 NPV Calculation And Analysis 59-60

Olympic Industries Limited

Sources of short-term working capital financing:

Trade & other payables Short term loans

Investment in marketable securities:

SHARE DISTRIBUTION PERCENTAGE:

Director: Govt: Institute Foreign: Public

Last EPS: Quarter: Annul EPS: P/E:

Account payable turnover

1000 Account payable turnover

Account receivable turnover Column1 Column2

3000 2015 2016 2017

2000 40.19 29.17 27.2

3000 2015 2016 2017

1000 6.93 5.38 6.04

Cash Burn rate

12000000 9987201.96 10197179.23

2015 2016 2017

Year 2015 2016 2017

NPV (Daily) 7161894.19 9987201.96 10197179.23

NPV (Perpetuity) 26140913782.89 36453287165.18 37219704194.60

Cash discount policy:

Rangpur Dairy & Foods Ltd

Brief Introduction of the Company

Consignment terms: It is an arrangement whereby a retailer obtains an inventory items without

Main Source of Short-term working capital financing

Investment in marketable securities:

Share Holding Percentage Sponsor/Director: Govt: Institute: Foreign: Public:

Last EPS Quarter Annual EPS P/E