About Me

Name: Md. Hossain Kabir Chowdhury

Id. No.: B060042
Batch: 6th
Program: MBA for BBA Graduates
Institute of Business Administration, University of Rajshahi
 An Internship Report
On

Financial Performance Analysis of Jamuna Fertilizer

Company Ltd. (An enterprise of BCIC)
Scope of the report

 An overview of Jamuna Fertilizer Company Ltd (JFCL).

 To know the function of different division of JFCL
 Evaluation of financial performance of JFCL through trend analysis of financial ratios of
JFCL
Objective of the report

 To identify the activities of finance and account divisions of JFCL.

 To analyze the financial performance of JFCL of different years.
 To Understand the Annual Report of JFCL.
 To Understand the Financial Condition of JFCL.
 To Understand the Profitability ratios of JFCL.
 To Understand the Liquidity ratios of JFCL.
Financial Performance Analysis
 Liquidity- its ability to remain positive cash
flow, while satisfying immediate obligations.
 Profitability- its ability to earn income and
sustain growth in both the short-term and
long-term. A company’s degree of profitability
is usually based on the income statement,
which reports on the company’s results of
operations.
Ratio Analysis

 Liquidity ratios measure the adequacy of  Profitability ratios measure the efficiency of
current and liquid assets and help evaluate the management in the employment of business
ability of the business to pay its short-term resources to earn profits. These ratios indicate
debts. the success or failure of a business enterprise
 for a particular period of time.
Turnover or Activity Ratios measure the
efficiency of a firm or company in generating
revenues by converting its production into
cash or sales.
Liquidity Ratios

 1. Current Ratio: evaluate the short-term Current ratio

solvency position of a business. Short term
7.92
obligations are those liabilities that are 7.57

payable within a short period of time, usually

one year. 5.32 5.13 5.06

Current Ratio= Current assets/ Current

liabilities

2010 2011 2012 2013 2014

Liquidity Ratios

 Quick Ratio: The quick ratio is a much more Quick Ratio

exacting measure than current ratio. This ratio
shows a firm’s ability to meet current 6.01

liabilities with its most liquid assets. 5.47

4.37 4.22
3.63
Quick Ratio= (Current
asset-Inventory)/Current Liabilities

2010 2011 2012 2013 2014

Turnover Ratios

 Inventory Turnover: A ratio showing how Inventory Turnover Ratio

many times a company’s inventory is sold and 1.85
replaced over a period. The inventory turnover 1.74

ratio is a common measure of firm’s

operational efficiency in the management of 1.35 1.31

its assets

0.720000000000001

Inventory Turnover= Cost of Goods

Sold/Inventory

2010 2011 2012 2013 2014

Turnover Ratios

 Total Asset Turnover: Indicates the Total Asset Turnover Ratio

efficiency with which the firm uses its assets 0.37
to generate sales. The higher this ratio, the
firm is more efficiency in using its assets.
0.24
0.21
Total Asset Turnover= Sales/Total Assets 0.18

0.09

2010 2011 2012 2013 2014

Debt Ratio

 The debt ratio measures the proportion of total Debt ratio

assets financed by the firm’s creditors. So it 91.49%
89.75%
has to keep low. These ratios are very 86.55%

important for stockholders and creditors. 74.66%

69.33%

Debt Ratio= Total Liabilities/Total Assets

2010 2011 2012 2013 2014

Profitability Ratios

 Gross profit ratio: - is a profitability ratio Gross Profit Margin

that shows the relationship between gross
60.00%
profit and total sales revenue. It is a popular
tool to evaluate the operational performance 40.00%

of the business. 20.00%

0.00%
2010 2011 2012 2013 2014 Dabt ratio
Axis Title
-20.00%
Gross Profit Margin= (Sales-COGS)/Sales
-40.00%

-60.00%

-80.00%
Axis Title
Profitability Ratios

 Operating Profit Margin: It measures the Operating Profit Margin

percentage of each sales remaining after all 32.42% 33.00%
costs and expenses other than investment, 23.06%

taxes, and preferred stock dividends are 10.77%

deducted: the “pure profit” earned on each 2010 2011 2012 2013 2014
sales.

Operating Profit Margin= Operating

Profits/Sales
-88.90%
Profitability Ratios

 Net Profit Margin: It measures the Net Profit Margin

percentage of each sales remaining after all
26.10%
costs and expenses, including interest, taxes, 21.52% 24.26%

and preferred stock dividends have been 7.75%

deducted. 2010 2011 2012 2013 2014

Net Profit Margin = Net Profits/Sales

-78.10%
Return on Total Assets

The return on total assets (ROA), often called the Return on Total Assets
return on investment (ROI), measures the overall
effectiveness of management in generating profits 9.36%

with its available assets. The higher the firm

6.15%
returns on total assets, the better. The return on
total assets calculated as follows: 3.86%

1.69%

2010 2011 2012 2013 2014

Return on Total Assets = Net Income/Total
Assets

-6.53%
Return on Common Equity

 The return on common equity (ROE), Return on Common Equity

measures the return earned on the common
stockholder’s investment in the firm.
28.39%
Generally, the higher the higher this return,
the better off are the owners. Return on 19.29%
common equity is calculated as follows: 12.43%

4.08%

Return on Common Equity = Net 2010 2011 2012 2013 2014

income/Common Stock Equity

-17.41%
Findings

 JFCL’s current ratio is higher in 2010 and 2011 and lower in 2013 and 2014. The company’s
current ratio of different years has indicated that it has sufficient current assets to repay
current liabilities but quick ratio of different years has indicated that its’ cash and cash
equivalents are not satisfactory against current liabilities.
 JFCL’s quick ratio is also very high. That mean they can easily handle their creditors.
 JFCL’s inventory turnover is very bad in all year comparing with standard time
 (7 times). That means they hold more inventory than their standard requirement. In 2014 it
was only 1.31 times.
 JFCL’s inventory turnover is very bad in all year comparing with standard time (7 times).
That means they hold more inventory than their standard requirement. In 2014 it was only
1.31 times.
Findings

 JFCL’s total asset turnover decreased in 2010, 2011 & 2012 but in 2013 and 2014 it is
rising. This increasing trend in recent two years is good sign for the company. The
company utilized their assets properly to generate profit.
 JFCL’s debt ratio is too high in last 5 years which mean JFCL is in high leverage. So, their
financial risk is high.
 All profitability ratios of the company show huge losses in 2011 due to government gas
cutout policy. Otherwise, the operating profit margin and net profit margin of the
company are quite good in recent years. But the gross profit margin slightly decreased in
2014.
Recommendations

 JFCL’s current ratio and quick ratio are very high comparing to standard ratio. For
reducing this ratio they should try to increase their investment instead of keeping higher
liquidity in the company.
 JFCL’s inventory turnover is very low over the five years. For increasing inventory
turnover they should go for sales force distribution.
 Total asset turnover of the company very good position in recent years. Management
should try to maintain this performance.
 JFCL’s debt ratio is very high. That means they are highly Leverage Company.
Management should try to reduce their debt as soon as possible.
Recommendations

 JFCL’s current year’s gross profit margin decrease. The year 2011 loss happened due to
government gas cutout policy. For government gas cutout policy production hamper in
2011.So, they should reduce their cost of goods sold. Other profitability ratios show
increasing profit. Management should hold this position.
 Improvement of productivity through work-study and training of front line supervisors.
 Contribution analysis for each of the product lines to optimize profit in light of demand
factors.
 Effects to bring selling prices in line with costs having regard to competition and other
market factors.
Conclusions