Financial Performance Analysis:

ROA
Return on Assets (ROA) is an indicator of how well a company utilizes its assets, by determining how
profitable a company is relative to its total assets. ROA is best used when comparing similar companies
or comparing a company to its previous performance. We had calculated the return on asset of the
both company which is similar to each other.

  2019 2018 2017

Paramount Textile Limited 3.78 3.98% 4.19%
%
Simtext Industries Limited 6.75 7.45% 9.03%
%

Interpretation:
In 2019, every 100-taka worth of total assets of Paramount Textile Limited generated taka 3.78 of net
profit. From 2017 to 2019, their return on asset has gradually decreased. On the other hand,
Simtext Industries Limited have received taka 6.75 for every 100-taka return on total asset.
From 2017 to 2019, Simtext Industries Limited’s return on equity has gradually decreased but
carrying a double amount able than Paramount textile. If we compare the both then we can can
see Paramount is holding quite stable from last 3 years. But, Simtext had drastically loose it
from 9 to 6.
Paramount’s position is much better than the Simtext in that stability context. Therefore, the
performance of return on asset of Paramount Textile Limited is satisfactory but not meeting the
expectation as well.
 ROA (Bar Chart)
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2019 2018 2017

Poaramount Textile Limited Simtext Industries Limited

ROA(LIne Graph)
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Poaramount Textile Limited Simtext Industries Limited

ROE
Return on equity (ROE) measures how effectively management is using a company’s assets to
create profits. Whether an ROE is considered satisfactory will depend on what is normal for the
industry or company peers. We had calculated the return on equity of the both company which is
similar to each other.

  2019 2018 2017

Paramount Textile Limited 10.35% 9.11% 8.59%
 
Simtext Industries Limited 9.08% 9.92% 12.06%
 

Interpretation:
In 2019, the common shareholders of Paramount Textile Limited have earned taka 10.35 for
every 100-taka investment into the company. From 2017 to 2019, Paramount’s return on equity
has gradually increased. On the other hand, Simtext Industries Limited have earned taka 9.08
for every 100-taka investment into the company. From 2017 to 2019, Simtext Industries
Limited’s return on equity has gradually decreased whereas Paramount textile is steadily
increasing its return on equity from the last 3 years. If we compare the both then we can see
Paramount is doing great on their return on shareholders’ equity. But, Simtext had drastically
loose it from 12 to 9.
Paramount’s position is much better than the Simtext. Therefore, the performance of return on
equity of Paramount Textile Limited is satisfactory and telling a broaden future in the upcoming
economy. Simtext Limited’s performance on this regard is not satisfactory they need to work on
financial analysis to get a direction towards a good economy.

ROE (Bar Chart)

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2019 2018 2017

Poaramount Textile Limited Simtext Industries Limited

 ROE (LIne Graph)
25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2019 2018 2017

Poaramount Textile Limited Simtext Industries Limited

Equity Multiplier
The equity multiplier is a financial leverage ratio that measures the portion of the company's assets that
are financed by stockholder's equity. It is calculated by dividing a company's total asset value by total
shareholders' equity. We had calculated last 3 years of equity multiplier of the two similar company.

  2019 2018 2017

Paramount Textile Limited 2.74 2.29 2.05
Simtext Industries Limited 1.13 1.33 1.33

Interpretation:
A higher asset to equity ratio shows that the current shareholders own fewer assets than the current
creditors. A lower multiplier is considered more favorable because such companies are less dependent
on debt financing and do not need to use additional cash flows to service debts like highly leveraged
firms do. First of all, the Paramount textile is holding the ratio of 2.75 which more than the past years.
They are gradually increasing on this regard and using more of their debt financing that generates more
risk. Whereas Simtext limited is holding 1.13 which is not only lower than paramount but also less than
past years. So Simtext is using less of their shareholders equity than Paramount. They have less risk than
Paramount.
 Equity Multiplier (Bar Chart)
3.00

2.50

2.00 Equity Multiplier (Line Graph)

4.50
1.50
4.00
1.00
3.50
3.00
0.50
2.50
0.00
2.00 2019 2018 2017
1.50
Poaramount Textile Limited Simtext Industries Limited
1.00
0.50
0.00

Poaramount Textile Limited Simtext Industries Limited