Term Paper

On
“Financial Statement analysis of APEX foods ltd.”

Submitted To
Mr. Tasnim Uddin Chowdhury
Assistant Professor
Finance Discipline
Department of Business Studies
Premier University, Chattogram

Submitted by
Samina Sultana
Id: 1503210108451
Sec: Finance ‘B’
Batch: 32nd
Finance Discipline

Date of submission: 15th July, 2020

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Letter of Transmittal
15th July, 2020

Mr. Tasnim Uddin Chowdhury

Assistant Professor

Finance Discipline

Subject: Submission of A report focused on “Financial Statement analysis of

APEX foods ltd.”

Respected Sir,

This is my great pleasure to have the opportunity to submit the report on the “Financial
Statement Analysis of APEX foods ltd.” as part of our studies.

The report is prepared based on visiting company, published reports, websites and other related
documents and the documents collected from library. Through my best sincerity I have tried to
uptake all the related issues in the report within several limitations. We sincerely hope and
believe that these findings will be able to meet the requirements of yours.

Therefore I would like to place this report to your kind judgment and valuable suggestion.

Thanking You,

Sincerely yours

Name: Samina Sultana

Sec: Finance’ B’

ID: 1503210108451

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ACKNOWLEDGMENT

All thanks and praises goes to the Almighty, the most gracious, the most merciful, who gave the
courage and patience to carry out this extensive, complex and creative work. It is very difficult to
express my feelings that helped me in completion of this term paper. But I think there is no other
word except thanks, which can complement my sentiments.

With great pleasure, I would like to express my gratitude and deepest regards to my honorable
teacher and supervisor of my term paper Tasnim Uddin Chowdhury, Assistant Professor,
Department of Finance, Faculty of Business studies, Premier University, Chattogram for his
guidance, constant and spontaneous support and constructive suggestion. Without his help this
report could not have been possible.

I am also grateful to the officials of companies whose support helps me to complete the term
paper. Finally, I would like to thank my entire course teacher of Finance Department for their
proper guidance and care to complete the term paper.

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 III

EXECUTIVE SUMMARY

Apex Foods Limited is a leading manufacturer and exporter of producing and exporting shrimp
from Bangladesh to major food retailers in European and American countries. AFL pioneered the
export of frozen fish products in the food sector of Bangladesh. AFL has acquired eight different
types of national and international certificates. Among these certificates, major are ISO 9001-
2008, BAP Certificate 2011 and Bangladesh BRC Certificate. The report emphasizes with the
analysis of the Food industry, company in focus, SWOT analysis, Horizontal Analysis, Vertical
Analysis and finance related issues are discussed in detail along with their results and
possibilities. Along with the report contains observation and recommendations About Apex
Foods Limited. The overall performance of AFL shows a satisfactory position although they
have been suffering last few years. It is gradually expanding its asset base and able to proper
utilize assets. No business stays at the top if it doesn’t maintain its performance. Thus it is very
important to fulfill the demand of the consumers through competitive advantage. Since their
policy is very well-formed we can hope that the growth of the company’s will increase and this
company will bring success for our country in the food industry in future.
In the first part of the report, Background of the company, different objectives and scope of study
are discussed. Here I have also discussed about the methodology, that by how I have collected
necessary data, about limitations of the report that what problems I have faced during preparing
this report.

In the second part, Theoretical aspect including definition of Financial statement, major
components of financial statements analysis, Balance sheet, Income statement, Retained earnings
statement, Cash flow statement, Financial Statement analysis, Importance of financial statement
analysis, Limitations of financial statement, Tools of analysis, Horizontal analysis, Vertical
analysis, Ratio analysis, Uses of ratio analysis, Limitations of the ratio analysis.

In part three, I have focused on the practical aspects including the horizontal and vertical analysis
of income statement and balance sheet and analysis of various ratios and interpretation of the
ratio below and also give SWOT analysis of APEX foods limited.

At last the report is concluded by discussing some problems and prospects and also utilizing the
strength & opportunity by overcoming weaknesses & threats it can be taken to a better position.

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 IV
Table of content
SL No. Contents Page Number
Chapter-01: Introductory Aspect 7-9

1.1 Background 8
1.2 Objective and Scope OF The Study 8
1.3 Methodology OF The Study 8-9
1.4 Limitation OF The Study 9
Chapter-02: Theoretical Aspect 10-23

2.1 Financial Statement 11

2.2 Importance of Financial statement 12-13
2.3 Users of financial statement 13-15
2.4 Financial statement analysis 15-16
2.5 Technique OF Financial Statement Analysis: 16-22
2.5.1.Vertical Analysis 16
• Advantages 16
• Limitations 16
2.5.2.Horizontal Analysis 16-17
• Advantages 17
• Limitations 17
2.5.3.Ratio Analysis 17-22
• Types 18
• Formula and Interpretation 18-21
• Advantages 21-22
• Limitations 22-23

Chapter -03: Practical Aspect 24-36

3.1 Background of APEX FOODS Limited 25-27

• Company profile 26
• Company determination 26
• Quality policy 26
• Their products 25-26
• Their logo 26
3.2 Financial Statement Position of APEX FOODS Limited 27-36
• Ratio Analysis and interpretation 27-30
• Horizontal analysis and interpretation 31-33
• Vertical analysis and interpretation 33-35

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3.3 SWOT Analysis 35-36
Chapter-04: Conclusionary Aspects 37-38

4.1 Recommendation 38
4.2 Conclusion 38
Chapter-05: Ending Matters 39-44

5.1 References 40-41

5.2 Bibliography 41
Appendix 41-44

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 CHAPTER- 01
INTRODUCTORY
ASPECT

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1.1 Introduction:

Financial statements (or financial reports) are formal records of the financial activities and
position of a business, person, or other entity. The financial statements of a company record
important financial data on every aspect of a business’s activities. As such they can be evaluated
on the basis of past, current, and projected performance. Financial statement is the medium by
which company discloses information concerning its financial performances.

Financial statement analysis is the process of reviewing and analyzing a company's financial
statements to make better economic decisions to earn income in future. These statements include
the income statement, balance sheet, statement of cash flows, notes to accounts and a statement
of changes in equity (if applicable). Financial statement analysis is a method or process
involving specific techniques for evaluating risks, performance, financial health, and future
prospects of an organization.

Here I select APEX foods Limited to evaluate the financial performance using various ratios,
horizontal and vertical analysis.

1.2 Objective and scope of the study

The objectives of this study are-

• To learn the application of different tools and techniques used to analyze in the financial
statement.
• To learn how to calculate and interpret different financial ratios to analyze the financial
statements of a firm.
• To analyze the financial performance of Apex foods limited.
• To analyze the financial condition of Apex foods limited.
• To identify the financial strengths and weakness of the firm being analyzed.
• To recommend the firm so that it can improve its financial performance in upcoming
future.

1.3 Methodology of the study:

The population sampled for the study was limited to the APEX foods ltd. Where I was assigned
to perform the study.

Data collection: In order to conduct the report, I have collected necessary information from this
source

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Secondary sources of information:

 Annual report of the Company.

 Various documents of the company.

 Website of the company.

 Different books of Finance & Accounting.

 Other related online sources.

1.4 Limitations of the study:

The study has been conducted subject to certain limitations. Time constraint is one of the major
limitations. Term paper program is a kid of procedural program. There are involved various
factors such as time/cost/information etc. so I have to face some problems to working this study.
Mainly I have faced few problem these so much important of my study. I could not manage
sufficient information related to the company like existing market share, industries demands,
sales volume of competitors, accurate financial statement, cash in flow statement etc.

Lack of available previous research materials due to insufficient knowledge about this research
fields through above limitations are exist. I have tried my best to overcome these limitations in
this study.

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 CHAPTER- 02
THEROTICAL
ASPECT

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2.1 Financial Statement:

The basis of financial planning, analysis and decision making is the financial information.
Financial information is needed to predict, compare and evaluate the firm’s earning ability. It is
also required to aid in economic decision making and investment and financial decision making.
The financial information of an enterprise is contained in the financial statements or accounting
reports.

The financial statements of a company record important financial data on every aspect of a
business’s activities. As such they can be evaluated on the basis of past, current, and projected
performance. Financial statement is the medium by which company discloses information
concerning its financial performances.

Relevant financial information is presented in a structured manner and in a form which is easy to
understand. They typically include four basic financial statements accompanied by a
management discussion and analysis.

The four main types of financial statements are:

 Balance sheet

 Income Statement

 Cash flow statement

 Statement of changes in equity

1. Balance sheet

Statement of Financial Position, also known as the Balance Sheet, presents the financial position
of an entity at a given date. It is comprised of the following three elements:

 Assets: Something a business owns or controls (e.g. cash, inventory, plant and machinery, etc)
 Liabilities: Something a business owes to someone (e.g. creditors, bank loans, etc)
 Equity: What the business owes to its owners. This represents the amount of capital that remains
in the business after its assets are used to pay off its outstanding liabilities. Equity therefore
represents the difference between the assets and liabilities.

2. Income Statement

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Income Statement, also known as the Profit and Loss Statement, reports the company's financial
performance in terms of net profit or loss over a specified period. Income Statement is composed
of the following two elements:

 Income: What the business has earned over a period (e.g. sales revenue, dividend income, etc)
 Expense: The cost incurred by the business over a period (e.g. salaries and wages, depreciation,
rental charges, etc)

Net profit or loss is arrived by deducting expenses from income.

3. Cash Flow Statement

Cash Flow Statement, presents the movement in cash and bank balances over a period. The
movement in cash flows is classified into the following segments:

 Operating Activities: Represents the cash flow from primary activities of a business.
 Investing Activities: Represents cash flow from the purchase and sale of assets other than
inventories (e.g. purchase of a factory plant)
 Financing Activities: Represents cash flow generated or spent on raising and repaying share
capital and debt together with the payments of interest and dividends.

4. Statement of Changes in Equity

Statement of Changes in Equity, also known as the Statement of Retained Earnings, details the
movement in owners' equity over a period. The movement in owners' equity is derived from the
following components:

 Net Profit or loss during the period as reported in the income statement
 Share capital issued or repaid during the period
 Dividend payments
 Gains or losses recognized directly in equity (e.g. revaluation surpluses)
 Effects of a change in accounting policy or correction of accounting error

2.2 Importance OF Financial Statement:

Financial statement analysis is an extremely useful tool in understanding the financial
performance of any company. It allows one to determine a business’s current position with
regards to its commercial strengths and weaknesses. It also gives an understanding of the key
drivers of the business through multiple factors. This can include strategic, economic aspects as
well as accounting and financial; all of which can tell strikingly different stories.

 Financial Transparency:
Even the smallest numbers in a balance sheet can have a huge impact on the business.
Assets never have the same value that they did when they were first purchased. A

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 percentage has to be deducted from their value for depreciation. A company might
report a certain number as revenue earned. Like profit before tax, profit after tax,
Depreciation and all important numbers that tell shareholders and management a lot.
 Evaluate Tax Liability:
Corporate tax rates are quite high. When companies make a lot of profit, the taxes
they have to pay are equally high. The owners often get astonished at how little they
have left once they have paid taxes to the government.
 Mitigate Errors:
Accurate financial statements are also essential to catch costly mistakes or internal
wrongdoing early on in the process. If any illegal activity is taking place, there is no
better way to catch it than through discrepancies in the numbers. If any error has
made, reconciliation activities find out them.
 Build Trust:
More than anything else, accurate financial statements induce trust in the company.
Investors need a sign that a company is doing well and they can put their hard earned
money in its business. It is a very well if the balance sheet shows a profit. But there
have been times when the balance sheet of many companies showed a profit, only to
be found later that they were actually hiding losses. Government has made accounting
and compliance rules more stringent, so that companies do not feel tempted to
misreport their financial numbers.
 Improved Payment Cycle:
In order to optimize the Accounts Payable and Accounts Receivable cycles , accuracy
of financial statements plays a key role other outgoing payments include salaries and
daily wages that need to be paid ( payroll),dividend need to be given to the
shareholders, inventory needs to be managed, and creditors need to be paid.

 Betters Decision Making , Planning and Forecasting :

Analyzing financial statements is crucial when decisions are to be made. A finance
manager would look at the value of the assets that he currently holds and decide if
he can afford to purchase more. When the value of assets is severely depreciated,
questions would arise if they need to be sold off.

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2.3 Users OF Financial Statements:

There are many users of the financial statements produced by an organization. The following list
identifies the more common users and the reasons why they need this information:

 Company management: The management team needs to understand the profitability,

liquidity, and cash flows of the organization every month, so that it can make operational
and financing decisions about the business.
 Competitors: Entities competing against a business will attempt to gain access to its
financial statements, in order to evaluate its financial condition. The knowledge they gain
could alter their competitive strategies.
 Customers: When a customer is considering which supplier to select for a major contract,
it wants to review their financial statements first, in order to judge the financial ability of
a supplier to remain in business long enough to provide the goods or services mandated
in the contract.
 Employees: A company may elect to provide its financial statements to employees, along
with a detailed explanation of what the documents contain. This can be used to increase
the level of employee involvement in and understanding of the business.
 Governments: A government in whose jurisdiction a company is located will request
financial statements in order to determine whether the business paid the appropriate
amount of taxes.
 Investment analysts: Outside analysts want to see financial statements in order to decide
whether they should recommend the company's securities to their clients.
 Investors: Investors will likely require financial statements to be provided, since they are
the owners of the business and want to understand the performance of their investment.
 Lenders: An entity loaning money to an organization will require financial statements in
order to estimate the ability of the borrower to pay back all loaned funds and related
interest charges.
 Rating agencies: A credit rating agency will need to review the financial statements in
order to give a credit rating to the company as a whole or to its securities.

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  Suppliers: Suppliers will require financial statements in order to decide whether it is safe
to extend credit to a company.
 Unions: A union needs the financial statements in order to evaluate the ability of a
business to pay compensation and benefits to the union members that it represents.

Financial Statements provide useful information to a wide range of users-

 Investors: People who have purchased stock or shares in a company need financial
information to analyze the way the company is performing.
 Management: The management is interested in the financial position and performance of
the enterprise as a whole and of its various divisions. It helps them in preparing budgets
and assessing the performance of various departmental heads.
 Suppliers and trade creditors: The suppliers and other creditors are interested to know
about the solvency of the business, the ability of the company to meet the debts as when
they fall due.
 Tax authorities: Tax authorities are interested in financial statements for determining the
tax liability.
 Customers: Customers need to know about the ability of the company to service its
clients in the future. They need to know about the company stability of the operations if
the customer is dependent wholly on the company for its supplies.
 Stock exchange: The stock exchange members take interest in financial statements for
the purpose of analysis because they provide useful financial information about
companies.
 Financial analysts: Analysts demand accounting information because it is essential for
their jobs. Analysts rely on information about the economy, individual industries and
particular companies when providing these services.
 Researchers: They are interested in financial statements in undertaking research work in
business affairs and practices.
 General Public: Anyone in the general public, like students, analysts and researchers
may be interested in using company financial statements. They may wish to evaluate the
effects of the firm on the environment or the economy or even the local community.
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2.4 Financial statement analysis

Financial statement analysis is the process of analyzing a company's financial statements for
decision-making purposes. External stakeholders use it to understand the overall health of an
organization as well as to evaluate financial performance and business value. Internal
constituents use it as a monitoring tool for managing the finances.

It is used by a variety of stakeholders, such as credit and equity investors, the government, the
public, and decision-makers within the organization. These stakeholders have different interests
and apply a variety of different techniques to meet their needs. For example, equity investors are
interested in the long-term earnings power of the organization and perhaps the sustainability and
growth of dividend payments. Creditors want to ensure the interest and principal is paid on the
organizations debt securities (e.g. bonds) when due.

Common methods of financial statement analysis include

1. Horizontal Analysis or Trend Analysis or Comparative Analysis.

2. Vertical Analysis or Common Size Analysis.
3. Ratio Analysis.

Historical information combined with a series of assumptions and adjustments to the financial
information may be used to project future performance. The Chartered Financial Analyst
designation is available for professional financial analysts.

2.4.1 Vertical/Common size technique:

A common size financial statement displays all items as percentages of a common base figure
rather than as absolute numerical figures. This type of financial statement allows for easy
analysis between companies or between time periods for the same company. The values on the
common size statement are expressed as ratios or percentages of a statement component, such as
revenue or income.

While most firms don't report their statements in common size format, it is beneficial for analysts
to compute it to compare two or more companies of differing size or different sectors of the
economy. Formatting financial statements, in this way, reduces bias that can occur and allows for
the analysis of a company over various time periods, revealing, for example, what percentage of
sales is the cost of goods sold, and how that value has changed over time. Common size financial
statements commonly include the income statement, balance sheet, and cash flow statement.

 Advantages:

• Comparison a number of years will clearly indicate the changing proportion of the
various components of assets, liabilities, costs, net sales and profits.

• Comparison of two or more enterprises in the same industry or that of an enterprise with
the industry as a whole wills assets corporate evaluation and ranking.

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  Limitation:

• Vertical analysis statement does not recognize the change in price level inflationary
effect. So, it supplies misleading information’s since it is based on historical cost.

• If consistency in the accounting principle, concepts, and conventions is not maintained

then Vertical analysis statement becomes useless.

• Effect of window dressing in financial statements cannot be ignored and Vertical analysis
statements fail to supply the real positions of sales, assets, liabilities etc. due to the evil
effects of window dressing appearing in the financial statements.

• Vertical analysis statement fails to recognize the qualitative elements, e.g. quality of
works, customer relations etc. while measuring the performance of a firm although the
same should not be ignored.

• Liquidity and Solvency Position cannot be measured by Vertical analysis statement. It

considers the percentage of increase or decrease in various components of sales, assets,
liabilities etc. In other words it does not help to ascertain the current ratio, liquid ratio,
debt equity capital ratio, capital gearing ratio etc.

2.4.2 Horizontal/Trend analysis:

Trend analysis is a financial statement analysis technique that shows changes in the amounts of
corresponding financial statement items over a period of time. It is a useful tool to evaluate the
trend situations.

The statements for two or more periods are used in horizontal analysis. The earliest period is
usually used as the base period and the items on the statements for all later periods are compared
with items on the statements of the base period. The changes are generally shown both in dollars
and percentage.

 Advantages:

• To Make The Data Simpler and Understandable: When data for a number of years are
put side by side in a comparative from it becomes easier to understand them and the
conclusions regarding the profitability and financial position of the concern can be drawn
very easily.
• To Indicate the Trend: This helps in indicating the trend of change by putting the
figures of production, sales, expenses, profit etc. for number of years side by side.

• To Indicate the Strong Points and Weak Points of the Concern: It may also indicate
the strong points and weak points of the firm. Management can then investigate and find
out the reason

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 • To Help in Forecasting: Comparative study of the changes in the key figure over a
period the management in forecasting the profitability and financial soundness of the
business.

 Limitations:

• Selection of Base Year: It is not so easy to select the base year. Usually, a normal year is
taken as the base year. But it is very difficult to select such a base year for the propose of
ascertaining the horizontal. Otherwise, comparison or horizontal analysis will be of no
value.
• Consistency: It is also very difficult to follow a consistent accounting principle and
policy particularly when the horizontal of business accounting are constantly changing.
• Useless of Inflationary Situation: Analysis of horizontal percentage is useless at the
time of price-level change (i.e. in inflation). Horizontal of data which are taken for
comparison will present a misleading result.

2.4.3 Financial ratio analysis

Financial ratios are useful indicators of a firm's performance and financial situation. Financial
ratios can be used to analyze trends and to compare the firm's financials to those of other firms.
Ratio analysis is the calculation and comparison of ratios which are derived from the information
in a company's financial statements. Financial ratios are usually expressed as a percent or as
times per period. Ratio analysis is a widely used tool of financial analysis. It is defined as the
systematic use of ratio to interpret the financial statements so that the strength and weaknesses of
a firm as well as its historical performance and current financial condition can be determined.
The term ratio refers to the numerical or quantitative relationship between two variables. With
the help of ratio analysis conclusion can be drawn regarding several aspects such as financial
health, profitability and operational efficiency of the undertaking. Ratio points out the operating
efficiency of the firm i.e. whether the management has utilized the firm’s assets correctly, to
increase the investor’s wealth. It ensures a fair return to its owners and secures optimum
utilization of firm’s assets. Ratio analysis helps in inter-firm comparison by providing necessary
data.

Types:

 Liquidity Ratios: Ratios that show, the relationship of a firm’s cash and other current
assets to its current liabilities is called liquidity ratio. A class of financial metrics that is
used to determine a company's ability to pay off its short-terms debts obligations is
liquidity ratio. Generally, higher the value of the ratio, larger the margin of safety, that
the company may cover its short-term debts.[ CITATION Inv \l 1033 ]

 Turnover/Activity Ratios: Turnover /Activity Ratios show how quickly certain assets
(receivables, inventory) can be converted into cash. Turnover ratios evaluate how well a
company uses its assets and liabilities to generate sales and maximize profits. Key
turnover ratios are the asset turnover ratio, inventory turnover, and days' sales in
inventory.

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  Profitability Ratios: Profitability ratios measure the income or operating success of a
company for a given period of time. Both creditors and investors are interested in
evaluating earning power-profitability. Analysts frequently use profitability as the
ultimate test of managements operating effectiveness. Profit margin, return on assets,
return on equity, return on capital employed, and gross margin ratio are examples of
profitability ratios.

 Solvency Ratios: Solvency ratios measure the ability of a company to survive over a
long period of time. Long term creditors and stockholders are particularly interested in
company’s ability to pay interest as it comes due and to repay the face value of debt at
maturity. Solvency ratios include debt-equity ratio, debt-assets ratio, and interest
coverage ratio.

 Market Ratios: Market ratios relate the firm’s market value, as measured by its current
share price to certain accounting values. These ratios give insight into how well investors
in the marketplace feel the firm are doing in the terms of risk and return. Two popular
market ratios are price earnings ratio that focus on earning and another is market book
value ratio that considers book value.

Formula and Interpretation:

 Liquidity Ratios:

 Current Ratio: The current ratios a liquidity ratio that measure a company ability
to pay short term and long term obligation. The current ratio is one of the best
known measures of financial strength. It’s the ratio of current assets to current
liabilities. It shows a firm ability to cover its current liabilities with its current
assets. The current ratio is also known as working capital ratio. Generally
acceptable current ratio is 2 to 1.[ CITATION Inv1 \l 1033 ]

Current Assets
Current Ratio =
Current Liability

 Quick ratio: The quick ratio is a measure of how well a company can meet its
short-term financial liabilities. It’s also known as the acid test ratio. [ CITATION
Inv2 \l 1033 ]

Current Assets−Stock−Prepaid Expenses

Quick Ratio =
Current Liabilities−Bank Overdraft

 Turnover Ratios:

 Accounts Receivable Turnover: Accounts receivable turnover is the number of

times per year that a business collects its average accounts receivable. The ratio is
intended to evaluate the ability of a company to efficiently issue credit to its

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 customers and collect funds from them in a timely manner. Generally acceptable
account receivable turnover is 8 times.[ CITATION Acc \l 1033 ]

Net Credit Sales

Account Receivable Turnover =
Average Net Receivables

 Inventory Turnover: Inventory turnover measures the number of times, on

average, the inventory is sold during the period. Its purpose is to measure the
liquidity of the inventory.

Cost Of Goods Sold

Inventory Turnover =
Average Inventory

 Total Assets Turnover: The total asset turnover indicates the efficiency with the
firms uses its overall assets to generate sales. Total asset turnover is calculated as
follows-

Total Sales
Total Assets Turnover =
Total Assets

 Profitability Ratios:

 Profit Margin: Profit margin is the percentage of revenue remaining after all
operating expenses, interest, taxes and preferred stock dividends (but not common
stock dividends) have been deducted from a company's total revenue.

NetIncome
Profit Margin = × 100(%)
Net sales

 Gross Margin: Gross profit margin is a profitability ratio that measures how
much revenue from sales is left over after paying cost of goods sold (COGS).The
gross margin ratio is calculated as follows-

Gross Profit
Gross Margin = ×100(%)
Net Sales

 Operating Profit Margin: Operating margin examines the relationship between

sales and management-controlled costs. Increasing operating margin is generally
seen as a good sign, but investors should simply be looking for strong, consistent
operating margins. The operating profit margin is calculated as follows-

Operating Profits
Operating Profit Margin = ×100(%)
Sales

 Return on Assets (ROA): ROA measures overall profitability of assets i.e. how
profitably assets are used to generate net income. A low ratio in comparison with
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 industry average indicates an inefficient use of business assets. The Return on
Assets Ratio is calculated as follows-

Net profit after tax

Return on Assets = ×100(%)
Total Assets

 Return on Equity: The amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by
enlightening how much profit a company generates with the money shareholders
have invested.

Net income− preferred dividend

Return on Equity = ×100(%)
Average common stockholders equity

 Earnings per Share (EPS): Earning per share measures earnings of the
shareholders on each share of common stock. The portion of a company’s profit
allocated to each outstanding share of common stock. It tells an investor how
much of the company’s profit belongs to each share of stock.[ CITATION Inv4 \l
1033 ]

Net income
Earnings per share =
Number of common stock outstanding

 Payout Ratio: The payout ratio measures the percentage of earnings distributed
in the form of cash dividend. Companies that have high growth rates generally
have low payout ratios because they reinvest most of their net income into the
business.

Cashdividends
Payout Ratio = ×100(%)
Net income

 Solvency Ratios:

 Debt to total asset ratio: This ratio measures the percentage of total assets that
creditors provides. The higher the ratio the greater the risk that the company may
unable to meet its maturing obligations. This is the measure of financial strength.

Total debt
Debt Ratio= ×100(%)
Total Assets

 Debt to equity ratio: Debt Equity Ratio compares a company's total liabilities to
its total shareholders' equity. This is a measurement of how much suppliers,
lenders, creditors and obligors have committed to the company versus what the
shareholders have committed.[ CITATION Inv3 \l 1033 ]

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 Total Debt
Debt to equity ratio = ×100(%)
Total Equity

 Times interest earned or Interest coverage ratio:The interest coverage ratio,

sometimes called the interest coverage ratio, is a coverage ratio that measures the
proportionate amount of income that can be used to cover interest expenses in the
future. It measures a firm’s ability to make interest and debt service payments.
[ CITATION Mya \l 1033 ]

Earningsbefore interest ∧tax( EBIT )

Times interest earned =
Interest charges

 Market Ratios:

 Price Earnings Ratio: Price earnings reflect a company's share price to its per-share
earnings. The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company
that measures its current share price relative to its per-share earnings.

Market price per share

Price earnings ratio = (times).
EPS

 Market / Book (M/B) Ratio: The market /book ratio provides an assessment of
how investors view the firm’s performance.

Market price per share of common stock

Market/Book (M/B) ratio
Book value per share of common stock

Advantage of Ratio Analysis: Ratio analysis is an important tool for analyzing the
company’s financial performance. When employed correctly ratio analysis throws the light
on many problems of the firm and also highlights some positives. Ratios are essentially
whistleblowers; they draw the management’s attention towards issues needing attention. The
following are the important advantages of the ratios.

 Ratios are useful for understanding the financial position of the company.
Different users such as investors, managements, bankers and creditors use the
ratio to analyze the financial situation of the company for their decision making
purpose.

 Accounting ratios are important for judging the company’s efficiency in terms of
its operations and management. It helps judge how well the company has been
able to utilize its assets and earn profits.

 Ratio can also be used in locating weakness of the company’s operations even
though its overall performance may be quite good. Management can then pay
attention to the weakness and take remedial measures to overcome them.

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  Although accounting ratios are used to analyze the company’s past financial
performance, they can also be used to establish future trends of its financial
performance. As a result, it helps formulate the company’s future plans.

 It is essential for a company to know how well it is performing over the years and
as compared to the other firms of the similar nature. Besides, it is also important
to know how well its different divisions are performing among themselves in
different years. Ratio analysis facilitates such comparison.

 Ratio analysis simplifies complex accounting statements and financial data into
simple ratios of operating efficiency, financial efficiency, solvency, long term
positions etc.

Limitation of Ratio Analysis: Ratio analysis can be used to compare information taken
from the financial statements to gain a general understanding of the results, financial
position, and cash flows of a business. This analysis is a useful tool, especially for an
outside such as credit analyst, lender or stock analyst. These people need to create a
picture of the financial results and position of a business just from its financial
statements. However, there are a number of limitations of ratio analysis to be aware of.

 The firm can make some year-end changes to their financial statements, to
improve their ratios. Then the ratios end up being nothing but window dressing.

 Ratios ignore the price level changes due to inflation. Many ratios are calculated
using historical costs, and they overlook the changes in price level between the
periods. The does not reflect the correct financial situation.

 Accounting ratios completely ignore the qualitative aspects of the firm. The only
take into consideration the monetary aspects.

 There are no standard definitions of the ratios. So firms may be using different
formulas for the ratios. One such example is current ratio, where some firms take
into consideration all current liabilities but others ignore bank overdrafts from
current liabilities while calculating current ratio.

 Finally, accounting ratios do not resolve any financial problems of the company.
They are a means to the end, not the actual solution.

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 CHAPTER- 03
PRACTICAL
ASPECT
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3.1 APEX Foods Limited:

As a custom food manufacturer, Apex Food specializes in the development and production of a
wide variety of food products, including dips, dressings, soups, pastas, sauces,
gravies,marinades, bastings, salsas, spice blends, seasonings, salads and processed vegetables
and cooked items, to name a few.Our core competencies include research, recipe and product
development, ingredient sourcing, custom-packaging and merchandising expertise in serving our
grocery, food service,chain restaurant, wholesale-club, convenience store and institutional
clients. As a multi-faceted manufacturer of food product, Apex Food supplies fresh, fresh-frozen
and frozen foods, in a multitude of rigid and flexible packaging, as refrigerated and shelf-
stable,according to client needs. Flexible, service-driven, with a proven record of performance,
we blend our experience and industry knowledge with professional expertise and advanced
technology, to deliver successful food solutions for the clients we serve.

3.1.1 Company Background

Apex Foods Co., Ltd. is the subsidiary of Apex Group Co., Ltd. established in 1994. And under
great effort of all staffs , Apex Foods Co., Ltd. was granted with GMP. We are determine to
deliver the best standard of production by choosing good quality of raw materials and
manufacturing all products in high hygienic rooms.

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Furthermore, we have quality control in every process and provide training program for
employee’s hygienics in order to correspond to GMP system. As the result, our products have
delivered top standard quality and met customers’ expectations.

3.1.2 Company Determination

We have done market researches before designing and developing each item by professional
team. Meanwhile, we are also importing goods from oversea. Our goal is to have the best
selection for accomplishing the customers’ satisfaction.

3.1.3 Quality Policy

“Pursuiting on the Quality Acknowledgement of the Problem Improvement and Development

For Customer Satisfication

3.1.4 Their products:

Major product manufactured by APEX Foods Ltd.

 Spicy Garlic Shrimp

 Shrimp Appetizer

 Jumbo Shrimp Parmesan

 Butterfly Shrimp and Pasta

 Chili Garlic Roasted Shrimp etc

 General Products

Apex Foods is the manufacturer and distributor of yoghurt wafers, corn snacks, candies, and etc.
We also manufacture “candy toys” type, which most of products are licensees of famous
characters around the world.

 Licensed Products

They have been working with well-known Japanese and other licensors such as

– Disney (Micky Mouse, Winnie The Pooh, Lilo & Stich, Ben Ten, and Toy story)

 Imported Product

In addition, they are trying to expand our market by importing many products around the world
such as Chocolate and Biscuit (Japan) Sanrio and Disney (Hong Kong), Mints (Canada), Biscuit
(France), Pastilles (Australia), and etc.

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3.1.5 Logo of the company:

3.2 Financial Statement Analysis

3.2.1 Ratio Analysis

Financial ratios are very powerful tools to perform some quick analysis of financial statements.
There are four main categories of ratios: liquidity ratios, profitability ratios, activity ratios and
leverage ratios. These are typically analyzed over time and across competitors in an industry.

Particulars 2019 2018 2017 2016 2015

Liquidity Ratios:
Current ratio 1.35 1.29 1.27 1.35 1.31
Quick ratio 0.39 0.45 0.46 0.60 0.49
Turnover Ratios:
Account receivable turnover(times) 68.19 76.54 65.41 80.91 109.57
Inventory turnover(times) 1.80 2.03 1.72 2.18 3.00
Total Asset turnover(times) 0.99 1.11 0.95 1.18 1.59
Profitability Ratios:

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 Profit margin 0.69% 0.54% 0.54% -0.65% 3.08%
Gross margin 11.51% 10.91% 11.92% 9.43% 7.98%
Return on assets ( ROA) 0.70% 0.55% 0.51% -0.86% 4.77%
Return on equity(ROE) 1.67% 1.32% 1.36% -2.14% 13.63%
Solvency Ratios:
Debt to total asset ratio 0.10% 0.13% 0.00% 1.46% 2.95%
Debt to equity ratio 0.24% 0.30% 0.00% 3.63% 8.43%
Market Ratios:
Price earnings (PE) ratio(times) 4.83 5.53 6.39 -4.31 0.67

 Current ratio analysis for the year 2015-2019

Interpretation: The current ratio for the year 2015, 2016, 2017, 2018 & 2019 are 1.31, 1.35,
1.27, 1.29 & 1.35 respectively, compared to standard ratio 2:1 this ratio is lower in the year
2015-2019. Which shows low short term liquidity efficiency. As we know the higher the ratio,
the more capable the company is of paying its obligations. A ratio under current ratio suggests
that the company would be unable to pay off its obligations if they came due at that point. The
company position is not good.

 Quick ratio analysis for year 2015-2019

Interpretation: As we know that the higher the quick ratio, the better the position of the company.
It is a reflection of the liquidity of a business. It measures the firm's capacity to pay off current
obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as
a complementary ratio to the current ratio.

In this table we have seen that in 2016 company’s liquid ratio was high & in 2019 company’s
liquid ratio was low. We have also noticed that this ratio decrease in 2017 & 2018. Since 2016
company’s liquid ratio was high that means the firm was liquid and had the ability to meet its
current or liquid liabilities in time. On the other hand 2019 company’s liquid ratio was low that
means the firm's liquidity position was not good.

 Accounts receivable turnover ratio analysis for year 2015-2019

Interpretation: We know that accounts receivable turnover ratio indicates the number of times the
debtors are turned over a year. The higher the value of debtor’s turnover the more efficient is the
management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio
implies inefficient management of debtors or less liquid debtors. In this table we have seen that
their receivables turnover was high in 2015. The turnover of 109.57 times was better than other
years. Since in 2015 the value of debtor’s turnover was higher than other years that mean they
were more efficient to convert receivables into cash. From 2016 to 2019 the turnover ratio
decline slightly. That means they were inefficient in the collection of receivables as we have seen
above.

 Inventory turnover ratio analysis for year 2015-2019

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Interpretation: We know that every firm has to maintain a certain level of inventory of finished
goods so as to be able to meet the requirements of the business. But the level of inventory should
neither be too high nor too low. A too high inventory means higher carrying costs and higher risk
of stocks becoming obsolete whereas too low inventory may mean the loss of business
opportunities. It is very essential to keep sufficient stock in business. Inventory turnover ratio
measures the velocity of conversion of stock into sales. Usually a high inventory turnover/stock
velocity indicates efficient management of inventory because more frequently the stocks are
sold; the lesser amount of money is required to finance the inventory. A low inventory turnover
ratio indicates an inefficient management of inventory. In the table we have seen that their
inventory turnover improved in 2015 but it again decline in the year 2016 to 2019. Since
inventory turnover ratio in 2015 was higher than other years that mean they were more efficient
in the management of inventory. They were more capable to convert the stock into sales.

 Total asset turnover ratio analysis for year 2015-2019

Interpretation: Asset turnover measures a firm's efficiency at using its assets in generating sales
or revenue. The higher the number is better. It also indicates pricing strategy: companies with
low profit margins tend to have high asset turnover, while those with high profit margins have
low asset turnover. Here we can see that the ratio was high in the year 2015. But after the period
it again decline and the lowest ratio was in the year 2017. It means inefficient utilization or
obsolescence of fixed assets, which may be caused by excess capacity or interruptions in the
supply of raw materials.

 Profit margin ratio analysis for the year 2015-2019

Interpretation: The profit margin ratio provides clues to the company's pricing, cost structure
and production efficiency. The higher the profit margin the better off the business, the profit
margin is an extremely useful measure of how the business is performing over time. A low profit
margin ratio indicates that low amount of earnings, low profits is generated from revenues. A
low profit margin ratio indicates that the business is unable to control its production costs. In the
table we have seen that their profit margin was high in 2015. That means their net profit was
high in the year, they took better pricing strategy, emphasized production efficiency and well
controlled cost structure. Their lowest ratio was in the year 2016. Overall their business was not
performing better as the time progress.

 Return on asset ratio analysis for the year 2015-2019

Interpretation: We know that ROA is an indicator of how profitable a company is relative to its
total assets. It gives an idea as to how efficient management is at using its assets to generate
earnings. It gives investors an idea of how effectively the company is converting the money it
has to invest into net income. The higher the ROA number, the better, because the company is
earning more money on less investment. In the table we can see that, Return on assets decreased
in 2016 but after that period it again increase in the year 2017 to 2019. Their high ROA was in
the year 2015. They should more attentive to utilized their assets to generate earnings with
efficiently.

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 Return on equity ratio analysis for the year 2015-2019

Interpretation: We know that ROE reveals how much profit a company earned in comparison
to the total amount of shareholder equity found on the balance sheet. It measures how much the
shareholders earned for their investment in the company. A business that has a high return on
equity is more likely to be one that is capable of generating cash internally. The higher the ratio
percentage, the more efficient management is in utilizing its equity base and the better return is
to investors. So this ratio is more meaningful to the equity shareholders who are interested to
know profits earned by the company and those profits which can be made available to pay
dividends to them. In this table we have seen that their ROE much high in 2015. Since the value
of ROE in 2015 was better compared to other years which refers company was capable of
generating cash internally, surplus funds invested to improve business operations without the
owners of the business (stockholders), they utilized their equity base with efficiently & provided
better return to the investors. As the time progress their ROE declined which was not a good sign
for the company.

 Debt to total asset ratio analysis for the year 2015-2019

Interpretation: We know that the higher the ratio, the greater risk will be associated with the
firm's operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a
firm which in turn will lower the firm's financial flexibility. If the ratio is less than 0.5, most of
the company's assets are financed through equity. If the ratio is greater than 0.5, most of the
company's assets are financed through debt. Companies with high debt/asset ratios are said to be
"highly leveraged" not highly liquid. A company with a high debt ratio (highly leveraged) could
be in danger if creditors start to demand repayment of debt. In the table we have seen that debt to
asset ratio in 2015 & 2016 were higher than 0.50. And in the year 2017-2019 were less than 0.5.
That means the firm is not highly leveraged and most of the assets financed through equity in
this period.

 Price earnings ratio analysis for the year 2015-2019

Interpretation: The P/E ratio was 0.67 times in 2015 and it decreased hugely in the year 2016.
But it increased further high in the following year 2017. However, in 2018 & 2019 it again
declined which is an alarming signal for the potential investors.

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3.2.2 Horizontal Analysis:

APEX Foods Limited

Income Statement

Increase/ Increase/ Increase/ Increase/

Particulars (Decrease) (Decrease) (Decrease) (Decrease)
During During During During
2019 2018 2017 2016
Revenue (37.67%) (30.15%) (40.30%) (26.16%)
Financial cost (24.03%) (15.71%) (4.75%) (4.79%)
Profit before tax (68.98%) (72.60%) (78.16%) (92.51%)

Interpretation:

APEX Foods limited revenue is (26.16%), (40.30%), (30.15%) & (37.67%) respectively from the
year 2016, 2017, 2018 and 2019. The percentage of net sales is in decreasing trend. While
comparing the percentage to 2015, the net sales percentage is decreasing rapidly throughout the
four years up to 2019. At 2016 the percentage change of net sales is very low in compare to other
financial years.

APEX Foods ltd. financial cost is (4.79%), (4.75%), (15.71%) & (24.03% respectively from
2016, 2017, 2018 and 2019. The decrease in the percentage of financial cost indicates the
company posse’s large amount of equity than its debt amount.
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APEX Foods limited profit before tax is drecreased (92.51%), (78.16%), (72.60%) & (68.98%)
compare the year 2015 from the year 2016, 2017, 2018 and 2019. After subtracting all the taxes
the profit for the year or profit after tax is (86.08%), (87.85%), (89.49%) and (115.59%) from
2016, 2017, 2018 and 2019.

On the basis of overall income statement analysis we can see that APEX Foods limited position
is not good from previous year to present years. It is a bad sign for APEX foods limited.

APEX Foods Limited

Balance Sheet

Increase/ Increase/ Increase/ Increase/

Particulars (Decrease) (Decrease) (Decrease (Decrease)
During During ) During
2019 2018 During 2016
2017
Current assets (13.34%) (6.60%) (5.26%) (17.84%)
Inventories (1.95%) (2.92%) (3.03%) (27.42%)
Total equity 13.87% 25.88% 5.44% (0.50%)
Current liability (15.77%) (5.19%) (2.43%) (20.06%)

Interpretation:

The horizontal balance sheet shows that a number of significant changes have occurred in APEX
Foods limited financial structure from 2016 to 2019.

From the horizontal analysis of the balance sheet it can be seen that total current assets is
decreased than the year 2015 are (17.84%), (5.26%), (6.60%) and (13.34%) respectively from
the year 2016,2017,2018 & 2019. APEX Foods limited total current assets are gradually
decrease.

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APEX Foods limited inventory has decreased substantially from 2016 to 2019 than the year
2015. In 2016 apex foods limited inventory is decline (27.42%). Considering large amount of
inventory is not profitable for the company. Because company holding cost and opportunity cost
are increased. On the other hand lower amount of inventory are not bear the holding and
opportunity cost.

Total Equity is (0.50%), 5.44%, 25.88% & 13.87% respectively from 2016, 2017, 2018 and
2019. In 2016 total equity position is lower when comparing the other years. It is a bad sign for
the company.

APEX Foods limited total current liability is decreased than the year 2015 are (20.06%),
(2.43%), (5.19%) & (15.77%) respectively from 2016 to 2019. In 2016 total current liability is
decreased hugely 20.06% than the comparing year 2015. When company current liabilities are
low that times company total liability is decreased and company faces low financial risk.

3.2.3 Vertical Analysis:

APEX Foods Limited

Income statement

Percentage Percentag Percentage Percentage Percentage

Particulars Change e change change change change
During During During During During
2019 2018 2017 2016 2015
Revenue 100% 100% 100% 100% 100%
Cost of goods sold 88.49% 89.09% 88.08% 90.57% 92.02%
Gross profit 11.51% 10.91% 11.92% 9.43% 7.98%
Administrative expenses 5.90% 5.58% 5.75% 5.68% 6.23%
Profit after tax 0.69% 0.54% 0.54% (0.65%) 3.08%

Interpretation:

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The conversion of the income statement total sales revenue takes the value of 100 percent and all
other items on the income statement are expressed as a fraction of total sales revenue. In 2019
cost of sales was 88.49% of total revenue. All items percentage is calculated the same way for
every year or period.
Cost of goods sold is respectively 92.02%, 90.57%, 88.08%, 89.09% & 88.49% from the year
2015-2019. COGS fluctuate during the year. If COGS increased gross profit and net profit will
decreased.
Here the gross profit is 7.98%, 9.43%, 11.92%, 10.91% & 11.51 respectively from the year 2015,
2016, 2017, 2018 and 2019.The gross profit is relatively high in 2017 it is a good sign for the
company. On the other hand in 2018 gross profit is decline from 2017 and also again increase in
2019. It is bad sign for the company. Investor are not eager invest their fund in this company.
The administrative expenses are 6.23%, 5.68%, 5,75%, 5,58% & 5.90% repectively for the year
2015-2019. In 2015 the highest percentage 6.23% and the lowest percentage in the year 2018.
When administrative expenses are decline that times company profit before interest and tax is
increased. Lower administrative expense is a good sign for the company.
After subtracting all the taxes the profit after tax is decline with the time. The profit after tax are
3.08%, (0.65%), 0.54%, 0.54% and 0.69% of net revenue from 2015 to 2019. So APEX Foods
limited financial performance scenery is not good from previous year to present year.
If firm can’t reduce its cost it will generate less profit in future. Dependency on debt holder will
also increase. So firm should decrease its overall cost.

APEX Foods Limited

Balance Sheet
Percentage Percentag Percentage Percentage Percentage
Particulars Change e change change change change
During During During During During
2019 2018 2017 2016 2015
Property 5.29% 5.51% 6.43% 8.50% 8.71%
Cash 0.50% 0.40% 0.35% 0.70% 17.88%
Current liabilities 55.32% 55.95% 61.30% 57.14% 62.07%
Total equity 42.14% 41.85% 37.32% 40.07% 34.97%

Interpretation:

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Another technique used to analyze balance sheet information is to convert the statement to a
common-size vertical analysis format. This method require only one period of financial data.

The common-size statement shows that the property, plant and equipment account in year 2019
is 8.71% of total assets, which was calculated by divided the property, plant and equipment by
total asset. Following this method converting a balance sheet or a subset of assets, liabilities or
ownership equity conversion procedure is the same of every period.

Cash and bank balance is 17.88%,0.70%, 0.35%, 0.40% & 0.50% respectively from 2015, 2016,
2017, 2018 and 2019. The percentage of cash and bank balance is in decline trend. When
company cash and bank balance are decline that times company faces liquidity crisis. APEX
Foods faces many problem for operate their business activities.

APEX Foods limited total current liability balance is 62.07%, 57.14%, 61.30%, 55.95% &
55.32% respectively from the year 2015, 2016,2017, 2018 and 2019. Total current liability
balance are gradually decreased. It is a good sign for APEX Foods limited. When company
current liabilities are high that times total liability are increased and company faces high much
financial risk.

APEX Foods limited total equity is 34.97%, 40,07%, 37.32%, 41.85% & 42.14% respectively
from the year 2015, 2016, 2017, 2018 and 2019. In 2019 company total equity is 42.14% it is
the highest percentage from the other years. When company total equity is increased that times
company total liabilities are respectively decline. On the other hand, when total equity is decline
that times total liabilities are increased and pay high much interest. It is a bad sign for the
company.

3.3 SWOT analysis of APEX Foods

Strength:

 Promoters increasing shareholding

 Company with low debt

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  Strong cash generating ability from business

 Book value per share improving for last two year

 Company with zero promoters pledge

 FII/ FPI or institutions increasing their shareholding

Weakness:
 Companies with growing costs for long term projects

 Negative breakdown first support

 Degrowth in revenue and profit

 Decline in net profit

 Declining net cash flow

 Weak performer

 Major fall in TTM net profit

Opportunity:
 Stocks in the buy zone based on days traded at current PE and P/BV
 Expert stock screener
 Stock with low PE
 Rising delivery percentage compared to previous day

Threats:
 Stocks with expensive valuations.

 Degrowth in revenue, profits and operating profit margin

 Increasing trend in non-core income

 Declining profitability

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37 | P a g e
 CHAPTER- 04
CONCLUSIONARY
ASPECT

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4.1 Recommendations:
 Apex foods may develop its brand and increase its capacity: Many people of
Bangladesh do not know about the company yet. They should promote and develop their
brand more and more so that more people can know more about them. At the same time
they should increase their capacity too.
 It may emphasis in research and development (R&D): The company should increase
their investment in research and development sector. So that they can easily find out their
strength and weakness. It may help the company to enrich their desired goals.
 It may enrich its branch so that the customer: People like it when they have
everything at their fingertips. If the company increase the number of their branches then
the people will easily get their desired products from their desired location. It may
increase the number of their customers.
 It may need more attention to inventory management: The higher the inventory, the
higher the inventory management cost. The company should maintain proper inventory
so that they can meet the needs of their customers and without paying too much cost of
inventory.
 Apex food ltd may more specify its target customer: When a company is able to
determine their target customers, they will have more success. By identifying their target
customers they can easily find out their needs and wants and they can easily solve their
customer’s problems quickly.

4.2 Conclusion:
Going through the research on APEX foods limited we have finally come to some points that this
company has lot of opportunities to become a successful and profitable company in the business
market of Bangladesh very particularly in the sector of food. Ratio analysis shows that apex food
company has a huge turnover which is very much positive for this company. This company
needs to work on publicity to explore its product to the customer. Overall this is to remark that
this company has a chance to grab the food market of Bangladesh. In compare to that the total
security market and industry in particular, food sector has a different position in the market. To
be precise in the time of the recession the food sector remained unchanged in the security
market. The security condition for APEX FOODS LTD. is also holds promising return compared
to the security market. It is highly noticeable that the stock of APEX FOODS LTD has higher
return with lower risk.

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 CHAPTER- 05
Ending
Matters

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5.1 References:

AAII. (n.d.). Retrieved from http://www,aaii.com/authors/joe-lan.

Accounting ForManagement.Org. (n.d.). Retrieved from

www.accountingformanagement.org/horizontal-analysis-of-financial-statements.

Accountingtools. (n.d.). Retrieved from http://www.accounting tools.com/accounts-

receivable-turnover.

Brigham, S. B. Essentials of Manegerial Finance. In B. Brigham. Mike Roche.

Business Dictionary . (n.d.). Retrieved from http:\\www.business

dictionary.com\defination\ratio-analysis.

Corporatefinance. (n.d.). Retrieved from

http://corporatefinanceinstitue.com/resouces/knowledge/accounting/retainedearnings-
guide/.

F.Brigham, S. B. Essentials of Managerial Finance. In B. Bessely, Essestials of

Managerial Finance (p. 81). Harcout College Publishers.

Investinganswers. (n.d.). Retrieved from http://www.investinganswers.com/financial-

dictionary/ratio-analysis/quick ratio.

Investopdia. (n.d.). Retrieved from www.investopedia.com/terms/b/balancesheet.asp.

Investopedia. (n.d.). Retrieved from http://www.investopedia.com/terms/l/liquidity

ratio.asp.

Investopedia. (n.d.). Retrieved from http://www.investopedia.com/terms/c/current

ratio.asp.

Investopedia. (n.d.). Retrieved from Http://www.investopedia.com/terms/e/eps.asp.

Investopedia. (n.d.). Retrieved from http://www.investopedia.com/university/ratio/debt

ratio.3asp.

Myaccounting course. (n.d.). Retrieved from http://www.my accounting

course.com/financial ratio/times-interest-earned ratio.

Premiercement. (n.d.). Retrieved from http:/www.premiercement.com.

Researchgate. (n.d.). Retrieved from http://www.researchgate.net/profile.Debashis-

Sur/amp.

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 Wikipedia. (n.d.). Retrieved from http://en.wikipedia.org/wiki/Financial-statement-
annalysis.

5.2 Bibliography:

 Wild, John J. Financial Statement Analysis, McGraw-Hill Irwin, Tenth Edition.

 Brigham, Besley, Essentials of Managerial Finance, Dryden publication, Twelfth Edition.
 Annual report of APEX Foods ltd.
 WWW. Business Dictionary. Com
 WWW. APEXFoods.Com

Appendix:

Particulars 2016 2017 2018 2019

Non current assets 7.29% 16.58% 56.80% 28.86%
Property, plant and equipment -15.30% -27.05% -33.42% -42.59%
Investments 27.22% 52.16% 133.33% 88.82%
Security deposits 0.00% 0.00% 0.00% 0.00%
Current assets -17.84% -5.26% -6.60% -13.34%
Inventories -27.42% -3.03% -2.92% -1.95%
Trade receivables 0.00% 0.00% 0.00% 0.00%
Advance, Deposits & Prepayments -81.03% -71.52% -67.27% -65.66%
Other receivables 54.96% 91.52% 117.96% 45.57%
Short term investments 0.00% 0.00% 0.00% 0.000%
Cash and Cash equivalents -96.58% -98.07% -97.67% -97.38%
Total Assets -13.17% -1.20% 5.18% -5.50%

   
Shareholders' Equity -0.50% 5.44% 25.88% 13.87%
Share capital 0.00% 0.00% 0.00% 0.00%
Share premium 0.00% 0.00% 0.00% 0.00%
Reserve & Srplus -14.66% -15.76% -16.24% -18.18%
Fair Valuation Surplus of Investments 22.99% 53.23% 151.63% 97.67%
Non-current Liabilities -18.31% -53.94% -21.95% -18.96%
Deferred Tax Liabilities 10195.27% 12060.36% 19314.91% 20448.45%
Long term loan -57.14% -100.00% -95.46% -96.78%
Current Liabilities -20.06% -2.43% -5.19% -15.77%

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 Working capital loan (Secured) -10.25% -3.20% -3.96% -6.29%
Long term loan-current maturity 0.00% -25.00% -98.02% -97.76%
Short term loan 25.17% 83.27% 176.17% 32.27%
Trade payables -55.18% 68.87% 4.55% -48.86%
Other payables -17.26% 59.41% -7.15% 15.35%
Current tax liabilities -85.31% -71.51% -69.00% -67.14%
Other liabilities 18.85% 42.35% 70.97% 113.29%
Total Liabilities -13.17% -1.20% 5.18% -5.50%

Horizontal Analysis

Particulars 2015 2016 2017 2018 2019

Net Revenue -26.16% -40.30% -30.15% -37.76%

Cost of sales -27.32% -42.86% -32.37% -40.15%
Gross profit   -12.80% -10.85% -4.51% -10.28%

Operating Expenses   -22.27% -29.95% -29.31% -34.73%

Administrative & selling Overhead -32.65% -44.92% -37.38% -41.08%
Financial expenses -4.79% -4.75% -15.71% -24.03%
Operating profit   -61.14% -108.35% -131.08% -135.04%
Other income -83.37% -86.95% -89.62% -88.27%
Contribution to WPP & WF -92.51% -78.16% -72.60% -70.53%
Profit before Distribution of WPP & WF   -92.51% -78.16% -72.60% -69.06%
Profit before Tax & reserves   -92.51% -78.16% -72.60% -68.98%
Current tax -48.48% -148.41% -39.66% -45.09%
Deffered tax(expenses)/income 1271.32% 258.71% 19.36% 2776.82%
Income Tax expenses -42.25% -146.49% -39.38% -31.76%
Profit after tax   -115.59% -89.49% -87.85% -86.08%

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 Vertical Analysis

Particulars 2015 2016 2017 2018 2019

Non current assets 18.58% 22.96% 21.92% 27.70% 25.33%
Property, plant and equipment 8.71% 8.50% 6.43% 5.51% 5.29%
Investments 9.87% 14.46% 15.20% 21.90% 19.72%
Security deposits 0.00% 0.00% 0.29% 0.29% 0.32%
Current assets 81.42% 77.04% 78.08% 72.30% 74.67%
Inventories 50.95% 42.59% 50.01% 47.03% 52.86%
Trade receivables 0.00% 2.50% 3.55% 1.31% 0.00%
Advance, Deposits & Prepayments 7.86% 1.72% 2.27% 2.45% 2.86%
Other receivables 4.72% 8.43% 9.16% 9.79% 7.28%
Short term investments 0.00% 21.11% 12.75% 11.33% 11.18%
Cash and Cash equivalents 17.88% 0.70% 0.35% 0.40% 0.50%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

   
Shareholders' Equity 34.97% 40.07% 37.32% 41.85% 42.14%
Share capital 3.20% 3.69% 3.24% 3.05% 3.39%
Share premium 11.75% 13.53% 11.89% 11.17% 12.43%
Reserve & Srplus 12.69% 12.48% 10.82% 10.11% 10.99%
Fair Valuation Surplus of Investments 7.33% 10.38% 11.37% 17.53% 15.33%
Non-current Liabilities 2.96% 2.79% 1.38% 2.20% 2.54%
Deferred Tax Liabilities 0.01% 1.33% 1.38% 2.07% 2.44%
Long term loan 2.95% 1.46% 0.00% 0.13% 0.10%
Current Liabilities 62.07% 57.14% 61.30% 55.95% 55.32%
Working capital loan (Secured) 44.62% 46.12% 43.72% 40.74% 44.25%
Long term loan-current maturity 1.69% 1.94% 1.28% 0.03% 0.04%
Short term loan 2.96% 4.26% 5.48% 7.76% 4.14%
Trade payables 3.48% 1.79% 5.94% 3.46% 1.88%
Other payables 1.39% 1.32% 2.24% 1.22% 1.69%
Current tax liabilities 7.64% 1.29% 2.20% 2.25% 2.66%
Other liabilities 0.29% 0.40% 0.42% 0.48% 0.66%
Total Liabilities 100.00% 100.00% 100.00% 100.00% 100.00%

Vertical Analysis

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 Particulars 2015 2016 2017 2018 2019

Net Revenue 100.00% 100.00% 100.00% 100.00 100.00%

%
Cost of sales 92.02% 90.57% 88.08% 89.09% 88.49%
Gross profit 7.98% 9.43% 11.92% 10.91% 11.51%

Operating Expenses 9.93% 10.45% 11.65% 10.05% 10.41%

Administrative & selling Overhead 6.23% 5.68% 5.75% 5.58% 5.90%
Financial expenses 3.70% 4.77% 5.90% 4.46% 4.51%
Operating profit -1.95% -1.02% 0.27% 0.87% 1.10%
Other income 6.68% 1.50% 1.46% 0.99% 1.26%
Contribution to WPP & WF 0.24% 0.02% 0.09% 0.09% 0.11%
Profit before Distribution of WPP & WF 4.74% 0.48% 1.73% 1.86% 2.35%
Profit before Tax & reserves 4.50% 0.46% 1.65% 1.77% 2.24%
Current tax 1.41% 0.98% -1.14% 1.22% 1.24%
Deffered tax(expenses)/income 0.01% 0.12% 0.04% 0.01% 0.31%
Income Tax expenses 1.42% 1.11% -1.10% 1.23% 1.55%
Profit after tax 3.08% -0.65% 0.54% 0.54% 0.69%

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