SINGER BANGLADESH LIMITED

The Company & Its Significance Accounting Policies The Company

Singer Bangladesh Limited was incorporated as a Private limited Company on 4 September, 1979 under the Companies Act 1913. It was converted into a public limited company in 1983 when it offered its shares to the public with the requisite permission from the Government. It has been direct subsidiary of The Singer Bhold BV, The Netherlands since 2003. The Shares of the Company are publicly traded in Dhaka Stock Exchange and Chittagong Stock Exchange. The address of the registered office is 39 Dilkusha Commercial Area, Dhaka-1000, Bangladesh.

Basis of accounting
The financial statements have been drawn up, in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Security and Exchange Rules 1987 and other applicable laws and regulations.

COMMON SIZE STATEMENT ANALYSIS

Table 1: BALANCE SHEET OF THREE YEARS OF SINGER BANGLADESH LIMITED

Comparative Balance Sheet Items Current Assets: Inventories Debtors Advances, Deposits and prepayments Income tax- refund receivable Cash and bank balance Total Current Assets Fixed Assets: Property, Plant & Equipment Investments Total Fixed Assets Total Assets Current Liabilities: Short Term Borrowings Creditors and accruals Total Current Liabilities Non-current liabilities
Term loan Deferred tax liabilities Retirement benefit obligations Due to Singer Bhold B.V.-BD MGT.

2007 1075153713 526332938 108935833 31647678 104496604 1846566766 354309440 92446134 446755574 2293322340 384352894 1141931702 1526284596 78111889 49531072 266407142 394050103 1920334699 166212000 47854406 158921235 372987641 2293322340

Amounts in Taka 2008 1234109868 672657280 126038944 22921795 75511477 2131239364 483496291 345126582 828622873 2959862237 440198828 1188838551 1629037379 127214306 4909081 46108821 266605573 444837781 2073875160 224386200 141688010 519912867 885987077 2959862237

2009 740366128 453377365 124979073 259467 69615459 1388597492 472463387 328580882 801044269 2189641761 439807282 234444603 674251885 80202477 6282361 41094369 306980203 434559410 1108811295 224386200 141688010 714756256 1080830466 2189641761

Total Non-current liabilities Total Liabilities Sources of funds: Share Capital Reserves Retained Earnings Shareholder's fund Total Liabilities & Equities

Table 2: COMMON SIZE BALANCE SHEET OF SINGER BANGLADESH LIMITED

Comparative Balance Sheet Items Current Assets: Inventories Debtors Advances, Deposits and prepayments Income tax- refund receivable Cash and bank balance Total Current Assets Fixed Assets: Property, Plant & Equipment Investments Total Fixed Assets Total Assets Current Liabilities: Short Term Borrowings Creditors and accruals Total Current Liabilities Non-current liabilities
Term loan Deferred tax liabilities Retirement benefit obligations Due to Singer Bhold B.V.-BD MGT.

2007

Common size (%) 2008 41.69 22.72 4.26 .78 2.55 72 16.34 11.66 28 100 14.87 40.17 55.04 4.30 .17 1.56 9 15.03 70.07 7.58 4.79 17.56 29.93 100

2009 33.81 20.72 5.71 .01 3.18 63.42 21.58 15 36.58 100 20.08 10.71 30.79 3.66 .29 1.88 14.02 19.85 50.64 10.25 6.47 32.64 49.36 100

46.88 22.94 4.75 1.38 4.55 80.52 15.45 4.03 19.48 100 16.76 49.80 66.56 3.41 2.16 11.61 17.18 83.74 7.25 2.09 6.92 16.26 100

Total Non-current liabilities Total Liabilities Sources of funds: Share Capital Reserves Retained Earnings Shareholder's fund Total Liabilities & Equities

INTERPRETATION
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Looking at the common size balance sheet we immediately see that: Cash position of the company has decreased from 2007 to 2008; it indicates the companys decrease reserve of cash to increase its liabilities both current and future. But cash position increased next year 2009. Singer Bangladesh Limited has the highest ratio (49.36%) in year 2009 of equity to total assets. It has higher accounts receivable in 2007 & 2008 and lower accounts receivable in 2009. Companys accounts receivable has been decreasing, it indicates in future there will be less cash flow firm is able to generate. Company has the lowest ratio of accounts payable in 2009 and highest ratio in 2007. Short term debts are higher in year 2009 than other years. Long term debts are higher in year 2008 than other years. So the company is more risk full than other years. Company has investment in 2009 is higher than other years.

Table 3: THREE YEARS INCOME STATEMENT OF SINGER BANGLADESH LIMITED

Comparative Income Statements 4

Amount in Taka

Items Turnover Sales Earned carrying charges Total Turnover Cost of goods sold Gross Profit Operating expenses Operating Profit Interest expenses Non-operating income Profit for the year Contribution to Workers Profit Participation Fund (WPPF) Profit before taxes Provisions for taxes Net profit after tax

2007 3417095964 139312364 3556408328 (2735493220) 820915108 (565293823) 255621285 (142221743) 33150432 146549974 (7327499) 139222475 (37402547) 101819928

2008 4281291373 154834692 4436126065 (3418695710) 1017430355 (659950253) 357480102 (156308887) 52996658 254167873 (11361849) 242806024 (62798852) 180007172

2009 4261076215 130184466 4391260681 (3289986387) 1101274294 (686981460) 414292834 (125988258) 213813297 502117855 (22278286) 479839569 (83048600) 396790969

Table 4: COMMON SIZE INCOME STATEMENT OF SINGER BANGLADESH LIMITED

Comparative Income Statements Items 5 2007

Amount in Taka 2008 2009

Turnover
Sales Earned carrying charges Total Turnover Cost of goods sold Gross Profit Operating expenses Operating Profit Interest expenses Non-operating income Profit for the year Contribution to Workers Profit Participation Fund (WPPF) Profit before taxes Provisions for taxes Net profit after tax 96.08 3.92 100 (76.92) 23.08 (15.90) 7.19 (4) .93 4.12 (.21) 3.91 (1.05) 2.86 96.51 3.49 100 (77.06) 22.93 (14.88) 8.06 (3.52) 1.19 5.73 (.26) 5.47 (1.42) 4.05 97.04 2.96 100 (74.92) 25.08 (15.64) 9.44 (2.87) 4.87 11.44 (.51) 10.93 (1.89) 9.04

INTERPRETATION

Turning to the income statement we find that: 6

1. Singer Bangladesh limited has the lower ratio of Costs of Goods Sold to sale in

2009(74.92%). In this year the company is more efficient to manage direct cost.

2. Singer Bangladesh limited has lowest ratio of operating expenses in

2008 (14.88%).

3. Singer Bangladesh limited has the highest operating profit in 2009 (9.44%)

RATIO ANALYSIS
Table 5: RATIO ANALYSIS OF SINGER BANGLADESH LIMITED

RATIO ANALYSIS Inventory Turnover Average no. of days inventory in stock Receivables Turnover Average no. of days receivable outstanding Payables Turnover Average no. of days payable outstanding Fixed Asset Turnover Total Asset Turnover Current Ratio Quick Ratio Cash Ratio Debt to Total Capital Debt to Equity Time Interest Earned CFO to Debt Gross Margin Operating Margin Margin Before Interest & Tax Profit Margin Return on Asset (ROA) Return on Equity (ROE) Debt to total Assets Times Interest Earned

2007 2.99 122.07 7.53 49.66 3.17 115 7.82 1.67 1.21 .41 .07 7.34 430.15 1.98 .09 .24 .07 .08 .03 .04 .29 .70 1.98

2008 3.44 106.25 7.14 51.12 2.41 151 6.71 1.94 1.31 .46 .05 5.87 198.78 2.55 .06 .24 .08 .09 .04 .06 .29 .44 2.55

2009 5.03 72.56 7.57 48.23 1.58 231.04 5.23 1.65 2.06 .78 .10 1.40 70.38 4.81 .22 .26 .10 .14 .09 .18 .40 .14 4.81

1. ACTIVITY ANALYSIS Short Term Activity Ratio:

Inventory Turnover =

Costs of Goods Sold Average Inventory

2007 2.99

2008 3.44

2009 5.03

Interpretation: It measures the firms ability to convert its inventory into sale. The ratio is highest in 2009 which is 5.03 times. This shows that there are fewer inventories in 2009 than other years. This suggests that this company was holding less stocks of inventory in 2009 comparing to other years.

Average no. of days inventory in stock =

365 Inventory Turnover

2007 122

2008 106

2009 73

Interpretation: It measures on an average after how many days inventories are kept, just to sell. The low ratio is good because it indicates inventory produce and sold quickly. In 2009 the company has the lowest ratio of 73 days.
Receivables Turnover = Sales Average Trade Receivable

2007 7.53

2008 7.14

2009 7.57

Interpretation: It measures how many times in a year a firm collect its account receivable on an average. In fact it indicates collection efficiency of the firm. The higher ratio is good. The higher the ratio, the many times receivable turnover in a year. In 2009 the company has highest ratio of 7.57 times.
Average no. of days receivable outstanding = 365 Receivable Turnover

2007 49.66

2008 51.12 9

2009 48.23

Interpretation: It measures within how many days amount of credit sale is collected from clients. The lower the ratio is good. In 2009 the average number of days receivable outstanding is low. It indicates that it require less time to collect account receivable.

Payables Turnover =

Purchases Average Accounts Payable

2007 3.17

2008 2.41

2009 1.58

Interpretation: In 2009, the payable turnover is lower. It is better than other years, because it makes the payment delayed.

Average no. of days payable outstanding =

365 Payable Turnover

2007 115

2008 151

2009 231

Interpretation: In 2009, the average number of days payable outstanding ratio is higher. It indicates long times are required to pay the liability.

Long Term Activity Ratio:

Sales Average Fixed Assets

Fixed Asset Turnover =

2007

2008 10

2009

7.82

6.71

5.23

Interpretation: The higher ratio is good. It means the company has better efficiency in operations. Here the higher ratio in 2007 representing that the company used fixed assets more efficiently in 2007 than other years. This mainly occurs for the huge amount of sale in 2007 than other years.

Total Asset Turnover =

Sales Average Total Assets

2007 1.67

2008 1.94

2009 1.65

Interpretation: It measures the firms ability to use its assets for productive way. The higher ratio is good. It means the company has better efficiency in operations. The companys ratio shows that the company generating better volume of business in 2008 (1.94 times) than other years. This occurs for large amount of sales in 2008 than other years.

2. LIQUIDITY ANALYSIS
Current Ratio = Current Assets Current Liabilities

2007 1.21

2008 1.31

2009 2.06

Interpretation: Current ratio measures firms ability to pay current liabilities from 11

current assets. The higher current ratio is good. Among the three years, in 2009 the current ratio is highest (2.06 times), it indicates better liquidity position to meet up current obligations.

Quick Ratio =

Cash + Accounts Receivable Currnet Libilities

2007 .41

2008 .46

2009 .78

Interpretation: Quick ratio measures firms ability to pay current liabilities from quick assets (QA). Quick ratio is a more conservative measure of liquidity. The quick ratio of the company is better in 2009 (0.78 times) than that of other years.
Cash Ratio = Cash Current Liabilities

2007 .07

2008 .05

2009 .10

Interpretation: Among the three years the cash ratio is higher in 2009 which is 0.10 times. In 2009 the company has the higher ability to meet the current obligations. The cash ratio is the most conservative measure of cash resources.

3. LONG TERM DEBT & SOLVENCY ANALYSIS

Debt to Total Capital = Total Debt Total Capital

2007 7.34

2008 5.87

2009 1.40

Interpretation: It measures the lenders contribution part into the assets. The percentage of 2009 is smaller than other years. Creditors prefer low debt ratio, because the lower the ratio, the greater the cushion against creditors losses in the event of liquidation. 12

Debt to Equity =

Total Debt Total Equity

2007 430.15

2008 198.78

2009 70.38

Interpretation: It measures the proportion of lenders contribution and owners contribution to the business. Among the three years, in 2007 the company has the lower ratio which is 70.38 times. The lower ratio is better, because shareholder bear for every Tk. 1, lower amount of liability, less obligation, less risky.

CFO to Debt =

Cash from Operations (CFO) Total Debt

2007 .09

2008 .06

2009 .22

Interpretation: Among the three years, in 2008 the ratio is lower and higher in 2009. The higher the ratio is good. In 2009 the company has more ability to meet debt and capital expenditure. 4. PROFITABILITY ANALYSIS Return on Sales:
Gross Margin = Gross Profit Sales

2007 .24

2008 .24

2009 .26

Interpretation: It measure gross profit portion in sale. It may be calculated is fraction or percentage. The higher ratio is better. In 2009 the company has highest gross margin of 26% on sales.

13

Operating Margin =

Operating Income Sales

2007 .07

2008 .08

2009 .10

Interpretation: The operating margin provides information about a firms profitability from the operations of its core business. The higher the ratio is good. We found that in 2009 the company has highest ratio of .10. The ratio indicates the margin of the company from central operations.

Margin Before Interest & Tax =

EBIT Sales

2007 .08

2008 .09

2009 .14

Interpretation: The ratio is higher in 2009 which is 0.14. The higher ratio indicates the higher efficiency before interests and taxes.

Profit Margin =

Net Income Sales

2007 .03

2008 .04

2009 .09

Interpretation: The ratios are higher in 2009 (.09). The higher ratio indicates higher efficiency before taxes are paid.

Return on Investment:

14

Return on Asset (ROA) =

Net Income Total Assets

2007 .04

2008 .06

2009 .18

Interpretation: The ratios are higher in 2009 than other years. The higher ratio is good. It indicates higher efficiency of the company in terms of asset. It also indicates higher return available to all capital providers.

Return on Equity (ROE) =

Net Income Average Stockholder' s Equity

2007 29%

2008 29%

2009 40%

Interpretation: It measures the % of earning that a company can earn on its equity. The ratios are higher in the year 2009 and lower in the years2007 & 2008. The higher ratio indicates the higher return available to the equity holders only.

Leverage:
Debt to Total Assets = Total Debt Total Assets

2007 .70

2008 .44

2009 .14

Interpretation: Debt to Total Assets measures the amount of total debt ratio to total assets. The lower ratio is in the year 2009 and higher ratio is in the year 2007. It means 15

the condition of the company is so well in the year 2009 than 2007.

Time Interest Earned =

EBIT Interest Expense

2007 1.98

2008 2.55

2009 4.81

Interpretation: It measures the firms ability to pay its interest expense from it earning. Among the three years the company has highest ratio in 2009(4.81 times). The higher ratio means higher the ability of the company to pay interest expense.

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