Shanto-Mariam University of Creative Technology

Shanto-Mariam University of Creative Technology
Internship Report on
Financial Management System of Shanto-Mariam Foundation
An Internship Report Presented to the Faculty of Management &

General Studies as Partial Fulfillment of the Requirement for the
Degree of Masters of Business Administration (MBA)
Submitted To:
Department of Business Administration
Supervised By:
Farhana Yesmin Liza
Assistant Professor
Submitted By:
Abu Bakkor Siddik
ID: 192-503-036
Batch: 29th, Major in Finance
MBA
Date of Submission: 27th March 2021
Shanto_Mariam Foundation Page 1

Letter of Transmittal
Date:
Head of the Department
Subject: Internship report on Financial Management System of Shanto-Mariam
Foundation.
Dear Sir,
This is my great pleasure to submit the Internship report of my three months long Internship
program in the Shanto-Mariam Foundation in the department of Finance. The title of the
report is “Financial Management System of Shanto-Mariam Foundation.This report has
been prepared to fulfill the requirement of my internship program at my assigned
organization in Shanto-Mariam Foundation. I have put my best effort to make this report a
successful one. It has been joyful & enlightening experience for me to work in the
organization & prepare this report. However this has been obviously a great source of
learning for me to conduct similar types of studies in the future.
I would like to express my sincere gratitude to you for your kind guidance & suggestions in
preparing the report. It would be my immense pleasure if you find this report useful &
informative to have an apparent perspective on the issue. I shall be happy to provide any
further explanation regarding this report if required & please do not hesitate to call me if you
have any query on this report or any other relevant matters.
Sincerely,
Abu Bakkor Siddik

ID: 192503036
Major in Finance (MBA) SMUCT

Letter of Endorsement
The Internship report entitled an analysis of “Financial Management System of Shanto-

Mariam Foundation” has been submitted to the supervisor/Head, in partial fulfillment of the
requirements for the degree Masters of Business Administration (MBA), Major in Finance on
Maarch 27th 2021 by Abu Bakkor Siddik ID: 192-503-036. The report has been accepted
and may be presented to the Internship Defense Committee for evaluation.
Farhana Yesmin Liza

Assistant Professor

Acknowledgement
At first, I am grateful to Almighty Allah for giving me strength and opportunity and sound
mind to complete the internship report. I would like to express my gratitude to all the people
who were involved both directly and indirectly in the preparation of this report.
First I especially thank Farhana Yesmin Liza, Assistant Professor, Shanto-Mariam University
of Creative Technology & my internship supervisor for providing me guidelines, help in
assisting my report. She was constantly supporting me with her inspiring personality
I want to thank all the officials of Shanto-Mariam Foundation who were involved to prepare
my internship report. I would especially show my gratitude to Md. Robiul Islam (Executive
Director of SMF) for giving me huge time and sharing his thoughts and insights regarding
their financial planning and system, project activities and strategies. I would like to thank him
for giving me the required information to commence this report and for providing the
permission to conduct the study.
I would also like to express my gratitude to all my colleagues especially the Finance and
Administration team of SMF for helping me to create this report. I am thankful to Mr. Nahid
Hossain, Finance manager of SMF and Mr. Rakib-ul- Hasan, Assistant finance officer of
SMF for their immense support.
And, lastly I would like to thank all the respondents of my survey at desk of the Branch. Out
of their busy schedule they made time for me and provided me with useful information. I
thank all of them for their cooperation.

Executive Summary
SMF (Shanto-Mariam Foundation) enables them to become contributing productive members

of society and helps them to lead their lives with dignity and self respect. The main objective
of this study is to explore the financial management system of Shanto-Mariam Foundation.
For accomplishing the study, data were collected both from primary and secondary sources.
A number of discussions were made in order to understand different financial issues and
activities.
Shanto-Mariam Foundation gives priority in maintaining excellent financial management

system after incorporation. SMF believes good practice in financial management can help
financial manager and project coordinator to be effective and efficient stewards of the
resources to achieve objectives and fulfill commitments to stakeholders. Officers at every
level in Finance department have a role to play in handling the financial activities and risks,
answer to donors and beneficiaries and deliver results to the stakeholders.
Financial planning in SMF involves building both longer term funding strategies and shorter
term budgets and forecasts. Once plans are set, SMF draws up its budgets and cash flow
forecast to help the implementation of plans. SMF maintains separate bank account for its
projects and open the bank account in any scheduled bank in the project area by taking
resolution of the Executive committee. Bank reconciliation statement is prepared by a
Finance officer in every month to reconcile the bank balances.
All fixed assets are recorded in fixed assets register. The fixed assets are physically verified
at the end of each year and results are reconciled with fixed assets register. Different types of
internal risks are managed by using a series of controls, checks and balances. Internal
controls are also very important in protecting all those who handle the financial affairs of the
SMF as they remove any suspicion of and temptation to dishonesty.
This study finds that there are no internal auditors in SMF and the internal audit is not
conducted on a regular basis. Study also finds a communication gap between the project
employees and personnel of finance department of SMF which induces the conflict in
obtaining and using the funds.
So SMF should introduce efficient internal audit mechanism in order to examine the financial
operations and should generate more funds for expanding and smooth continuation of their
projects.

Table of Content
S.N PART PARTICULAR PAGE NO.

01 Cover page
02 Letter of Transmittal 01
03 Letter of Endorsement 02
04 Acknowledgement 03
05 Executive Summary 04
06 Table of Content 05
06-07
07 Chapter-01 Introduction
1.1 Origin of the Study
1.2Scope of the study 08
1.3 Objectives of the Study 09-10
1.4 Methodology of the Study
1.5 Sources of Data
1.6 Limitations of the study
08 Chapter-02 Corporate Review of Shanto-Mariam

Foundation 11
2.1Background of Shanto-Mariam 12-13
Foundation 13-13
2.2 Major Goals & Objectives of SMF 13-18
2.3 Service Offered by SMF
09 Chapter-03 Financial Performance Analysis 19

3.1 Financial Performance Analysis 20
3.2 Balance sheet 20
3.3 Income Statement 20
3.4 Ratio Analysis 20
3.5 Significance of using ratios
3.6 Types of ratio comparisons
A. Analyzing Liquidity
B. Analyzing Activity 21-27
C. Analyzing Debt:
D. Analyzing Profitability 27
3.7 Trend Analysis
10 Chapter-04 Financial Statement Analysis of

Shanto-Mariam Foundation
I. Authorized Capital and Paid up 28
capital
II. Current Ratio: 29-30
II. Current Ratio:

Analyzing Activity Ratio 30-31
I. Fixed Asset Turnover
II. Total Asset Turnover
Analyzing Debt Ratio: 32-33

I. Debt Ratio
II. Debt-Equity Ratio:
Analyzing Profitability Ratio:

I. Gross Profit Margin:
II. Operating Profit Margin
III. Net Profit Margin 33-36
IV. Return On Investment
V. Return on Asset/Capital Employed
(ROCE):
VI. Return On Equity
VII. Earnings per Share
11 Chapter-05 Major Findings, Recommendations & 37

Conclusion 38
39
40
12 References 41

Chapter -01
Introduction

1.1 Origin of the Study
Internship program helps to gain the practical knowledge by implementing the theoretical
aspects and make a student competitive in the corporate world. Even this program is also
helpful for the post graduate students who are employed in different organization. This
program helps to learn different functions of the department or project.
1.2Scope of the study

This study provides those scopes of knowing are the following:
 History and performance of Shanto-Mariam Foundation (SMF).
 Literature review.
 Total concept of the Foundation.
1.3 Objectives of the Study

The broad objective of this study is to explore the financial statement analysis of
Shanto-Mariam Foundation.
The specific objectives of this study are

 To explore the financial planning and budgeting of SMF;
 To explore the financial and non-financial asset management procedure of SMF;
 To identify the auditing practice of SMF;
 To explore the procedure of preparing and using various financial documents and
reports.
1.4 Methodology of the Study

As a finance officer of SMF, researcher is involved with various financial activities. In order
to complete this study all the information has been collected from both primary and
secondary sources. In this research, qualitative techniques are used to find and analyze the
information.
1.5 Sources of Data

The primary sources of information are:
 Direct observation tool had been used to explore the procedure of preparing and using
various financial documents and reports;
 Unstructured interview had been conducted with executive director of SMF to explore
the financial planning of SMF.
 Focused Group Discussion will be organized with seniors and colleagues of finance
department to explore the financial and non-financial asset management procedure
and auditing practices of SMF.
 Personal observation – Observing the procedure of processing activities followed by
each department.
 Daily diary.
 Practical work exposures on different areas of the Foundation.

The Secondary sources of Information are:
 Official files and records will be used to explore the use of various financial
documents and reports;
 Annual audit report had been used to identify the auditing practices;
 Different publications of SMF had been used to explore the asset management
procedure of SMF.
 Monthly statement of SMF.
 Selected books.
 Other manual information.
 Websites
1.6 Limitations of the study

 Many financial aspects are not included in Finance manual or any other manual. So it
was very difficult to find out that how SMF deals with those financial issues.
Available published data was very limited.
 Executive director handles most of the issues. It was difficult to sit for an extensive
interview with him due to his time constraint.
 Company has their own limitations to disclose some of their confidential information.
 As a finance officer, it was difficult to cover all the financial issues within three
months.

Chapter -02
Corporate Review of Shanto-Mariam Foundation

2.1Background of Shanto-Mariam Foundation
It was in 1968. Md. lmamul Kabir Shanto was a student of class VIII. This area was plunged
into the ideology of Marxicism, Leninism. As a teenager going through the autobiography of
Che Guevara he got himself associated with leftist student movement. Later, in 1971 when
Shanto was in his teens he took active part in the freedom fight of Bangladesh at the age of
only 17 years.
Mr. Shanto believes that the economic, socio-culture and even major political problems could
be mostly resolved through the implementation of the programs performed by the foundation.
Mr. Shanto established Shanto-Mariam Centers in each and every corner of the country to
expand job oriented, creative and cultural education.
In order to make the dream true at first Mr. Shanto established the Shanto-Mariam Academy
of Creative Technology and Bangladesh Institute of Art, Design and Technology (Present
name Shanto-Mariam Institute of Creative Technology). To fulfill his dream then Mr. Shanto
made a giant step to establish Shanto-Mariam University of Creative Technology- the first
design university of this region. This university is considered to have unique curriculum that
is, both campus as well as Distance education to make it a perfect educational institution
fulfilling the need of the country and its people.
As a model to the nation Mr. Shanto has started Education in exchange of work. Through this
program he has been arranging employment for the helpless and distressed meritorious
students under different organizations established by him and thus he has been showing a
dimension to all.
Mr. Shanto has not completed his activities merely by running a University. He has integrated
education to meet the need of the prevailing world market and has given an international
status through the creation of a Creative Destination. This organization is propagating the
creative works and products of the students far & wide in order to make it known to the world
market. Simultaneously, by utilizing our natural resources the arrangements has been made to
sell them to the world market. In addition, he has very recently established Shanto-Mariam
Centre for Creative Media. Primarily through the Media Centre a national daily "The Daily
Ajker Prattasha" is under publication and the process of broadcasting a community radio
“Banglar Kontho" is also progressing. Over and above, in order to integrate the students with
creative works the Production House has also started functioning.
The gallant freedom fighter Mr. Shanto is confident that the greatest achievement is the
independence of the country while the freedom fighters who were committed to sacrifice
their lives are the greatest children of the nation. So he wants that the freedom struggle
should be documented to the present generation. As an example to do so he has established
the foundation namely the "Shahid Mukti Jodhya Smrity Foundation" commemorating the
death of the Co-fighters who fought for the liberation of the country and sacrificed their lives.
Meanwhile the welfare activities of Shanto-Mariam Foundation as well as the educative
programs pointing towards appropriate line of action has been acclaimed widely by different

classes of people from high & low and from within & outside the country, Those who visited
the university have spoken very high of that Among those who visited the university were
Ministers, Secretaries, Ambassadors and Educationists at various levels.
This Foundation also celebrates the national and religious programs with due solemnity and
religious fervor, Shanto-Mariam Foundation, in addition to its normal activities extends
services to people in distress and affected by natural calamities, The foundation has
constructed 10 houses for permanent living of those whose houses have been devastated by
the cyclone 'Sidar' at Shoronkhola Shanto-Mariam Foundation is determined to elevate the
level of job-oriented, creative & cultural education of the country to international standard. In
order to implement these objectives the foundation has accomplished agreements for co-
operation and exchange with various institutions & universities, Among them are Edexcel
International, UK for job-oriented education, Niederrhein University of Applied Sciences,
Germany for Textile & Design Education and Pearl Academy of Fashion, India for Design
Education, Very recently, the foundation has started Confucius class room for teaching
Chinese Language and expansion of education & culture through a cultural exchange
agreement with China Radio International (CRI).
Shanto-Mariam Foundation has received wide acclamation from the people of this country as
a centre for job-orientation, creative & cultural education, Shanto-Mariam Foundation is
determined to create enlightened people & to make the nation happy & prosperous through
creative and job-oriented education, in addition to creative system of education so that the
country can be proud of its education system in the world & they believe that the country will
stand erect with it a head high in the global community of nations & brighten its flag with the
green & red colour.
2.2 Major Goals & Objectives of SMF

Major goals and objectives of SMF are:
a) Provide skills development training to persons with disabilities and underprivileged to
facilitate employment;
b) Provide support including technical support to persons with disabilities and
disadvantaged people;
c) Provide mobility aids for persons with disabilities;
d) Ensure sound networking with Government, non-government organizations, persons
with disabilities, industry, the media in the areas of education, communication,
training, barrier free environment and employment;
e) Advocate appropriate policies and legislation for employment of persons with
disabilities with policy and decision makers;
f) Make the people aware on the causes of disability and its prevention;
g) Establish the rights of the persons with disabilities and disadvantaged people in the
society through enabling them to be self-earners by providing technical knowledge
and expertise to take up different activities for economic and social improvement;
h) Promote avenues for marketing of products produced by disabled people;

i) Conduct research on disability issues;
j) Take active part in the social uplifting of the marginalized people and the disaster
victims in distributing relief goods and medical assistance through mobile clinic.
2.3 Service Offered by SMF

After the incorporation, SMF has provided different services. At present SMF is offering
following services:

It is with great pleaser, we welcome you to Shanto-Mariam University of Creative
Technology (SMUCT), distinguished for offering quality education relevant to the ever
increasing demands of our knowledge based society. Our's is a specialized institution, unique
of its kind in the country. We have a learned faculty of teachers dedicated to inspire &
educate students to explore and develop their full potential talent in their respective field of
our academic interest. We are sure, like yours.
The aim of SMUCT

The aim of the Shanto-Mariam University of Creative Technology (SMUCT) is to produce
versatile and resourceful practitioners with Design, scientific, technological, cultural and
social knowledge to equip them for the 21st Century, in an educational environment which
fosters innovation, enterprise and commitment for excellence.
Mission statement of SMUCT
To make the University a CENTRE OF EXCELLENCE and of International standard, to

groom up the young generation in developing their intelligence quotient [IQ] to match the
challenging demand of the job-market with scope for further learning through DISTANCE
EDUCATION to enable them become productive, generating collective and tangible Benet
for self as well as for the community without any discrimination of race, ethnic group, region,
cast or cultural background. This University is also committed to giving due respect to the
intellectual and creative potential and dignity of all sat-, students and fellow human beings to
integrate them for a common mission of productive education and culture.
Strategy of SMUCT
The mission will be accomplished by the provision of imparting quality education to the
youth of Bangladesh so that they may be able to meet and overcome the challenges of the
future. The University will arrange seminars, workshops, training facilities for the purpose
and in consultation with the commerce, industry and other creative sectors in order that the
students become more competitive, functionally elective and recognized globally. The
University will also support and sponsor research in all areas to promote social progress,
awareness and thus ensuring economic development. The basic focus of imparting quality
and meaningful education of International standard to the young generation of our society
will be primarily aimed at infusing the culture of quality improvement and maximization of

productivity in their areas of expertise. Total devotion to productive work should be
considered as their motto of higher education
Shanto-Mariam Academy of Creative Technology

Shanto-Mariam Academy of Creative Technology (SMACT) has been established in order to
spread up-to-date design, cultural and technical education throughout the Country under the
guidance of Shanto-Mariam University of Creative Technology. Diploma, Certificate and
short courses are open to all - from a child of 5 years and above. The subjects are as follows:
a) Music (Rabindra, Nazrul Classical, Folk)
b) Dance (Bhorot Nattyam, Kathak Folk-dance, Monipuri)
c) Correct Pronunciation
d) Instrumental Music (Tabla, Guitar, Violin)
e) Recitation
f) Acting
g) News-reading
The Academy also introduces Vocational SSC in Automotive, Garment Design & Pattern
Cutting and Interior with Auto CAD under Bangladesh Technical Education Board (BTEB).
The Academy has started SSC and HSC programme under the Bangladesh Open University
for underprivileged students who are working in Rural Area. Under the programme
"Education for All" of Shanto-Mariam Foundation, Shanto-Mariam Academy of Creative
Technology is expanding all the above courses to cater for the needs of the common people
of the country. In addition a skills training programme for human resource development in
the rural areas will be introduced soon all over the country.
Shanto-Mariam Institute of Creative Technology

Shanto-Mariam Institute of Creative Technology (SMICT), is an institution of Shanto-
Mariam University of Creative Technology. It is the only Centre in Bangladesh to o-er
BTEC/Edexcel International, UK National Diploma (ND) and Higher National Diplomas
(HND) where students can get an International Diploma in Bangladesh at local cost.
This Institute was set up to specialize in art and design subjects with emphasis on supplying
skilled designers, knowledgeable in industrial technology and management, as well as design
subjects necessary for the indigenous manufacturing industries in Bangladesh, as well as the
rest of Asia.
The National Diploma is the equivalent of "A" levels and the Higher National Diploma the
first 2 years of a UK undergraduate programme. They have been developed in conjunction
with industry and professional bodies to ensure they have the added value of preparing
students for the world of work as well as higher education. The teaching method is to
encourage students to learn through experience in a way that is commonly referred to as
students –centered learning. These diplomas consist of 16/18 units and 2 years duration.

Study Areas available in Bangladesh:
 National Diploma (ND)
 Apparel Merchandising
 Fashion & Clothing
 Interior Design (3D Design)
 Graphic Design
 Fine Art
 Information Technology
Higher National Diploma (HND)

 Apparel Merchandising
 Fashion & Clothing
 Interior Design (3D Design)
 Graphic Design
 Fine Art
 Multi-media
 Information Technology
After completion of any of the above courses, a student has the opportunity to seek admission
around 150 universities in UK, USA and Australia which have agreements with Edexcel to
accept ND and HND qualifications including SMUCT.
Daily Ajker Prattasha

Shanto-Mariam Foundation is publishing a daily newspaper 'The Daily Ajker Prattasha" as
one of its socially beneficial activities. The main aim of this news paper is to fulfill the
expectations of common people by highlighting their problems and potentials. If all of us
carry out our responsibilities properly then we believe our expectations will be realized. A
new daily "Ajker Prattasha" has came into being with new commitments. We believe it will
be able to strike a new dimension in the newspaper world. This newspaper will promote
readers' freedom to choose and competition for healthy journalism. The content and form of
this newspaper will speak for its own appeal and luster.
Sundarban Courier Service (Pvt.) Ltd

Sundarban Courier Service (Pvt.) Ltd. the First and fastest courier is Pioneer in the field of
courier service in the Private sector in this part of the soil of Bangladesh, since 1983. Mr.
lmamul Kabir Shanto is the founder Chairman of the company, played the leading role in
promoting and legalizing courier service in Bangladesh. He is also founder president of the
Courier Service Association of Bangladesh. At present, courier service has become an
essential element in everyday needs of businesses and consumers. It was not easy to promote
this service of carrying information and products to the people; however Sundarban Courier
Service has popularized this service despite many hurdles and adversities.
Our Mission and Vision: Our goal is to expand Trade and Commerce within the country
Linking communications support, Extending fastest service in time and creating employment

opportunities for unemployed youths which will help in the social and economic development
of the country.
Sundarban Courier Service aims to create employment opportunities for the educated and
uneducated unemployed youth of the country, develop skilled working force through human
resource development contribute to socio-economic development.
Activities:
Sundarban Courier Service provides services in the following area.
General service Value declared service International Service

Express service Parcel Service Remittance Service
Super Express Service To-Pay Service Mobile Banking Service
Non-Docs Service Condition Booking Service E-Truffle Service (for Police)
Customer Service:
Sundarban Courier Service is committed to provide secured service at the fastest time to the
customer at all nook and corner of the country, We have almost 6000 and above skilled
working forces and operation being done day and night by a group of skilled and efficient
man power. We have our own 200 and above Transport/Cargo Covered Van daily moving
with Documents/Parcels to different routes of the country having Industrial and commercial
connectivity to meet our customer immediate requirements. We have our own 62 offices at
District and Divisional Headquarters and above 500 agency offices at Thanas/ Upazilla level.
Corporate Social Responsibility

A large part of the profits earned in Sundarban Courier Service is used to run the activities of
the Shanto-Mariam Foundation. Shanto-Mariam Foundation carries out many activities as
part of the corporate social responsibilities of Sundarban Courier Service. For example:
 Promoting cultural, creative & design education for this nation.
 Providing material support to the distressed people in times of natural calamities
 Vote for the Sundarban campaign for electing Sundarban as one of seven natural
wonders of the world
 Work for Education programme
 Social development related programme
 Promotion of native culture
 Product development and marketing programme for the promotion of indigenous
crafts, arts,
Creative Mannequins
Mannequins play a special role in presenting fashion garments to customers and making them
look attractive. They encourage customers to buy a garment and help them to make a choice.
Dress forms are much required in garments companies and fashion Institutes. It is especially
needed in teaching fashion design courses in universities and fashion institutes. So far these
materials were imported from abroad. For the first time in Bangladesh, Shanto-Mariam

Foundation has taken the initiative to manufacture creative mannequin and dress forms and
supplied its products to many institutes and organizations (e.g. BIFT, NIFT, Team Source,
APR, Panes, Trust Sweater, Tapestry). Apart from that many show rooms and boutique
houses were supplied with mannequins. This will turn into profitable industrial venture when
the market will grow to all these organizations and six thousand garments industries in
Bangladesh. Many employment opportunities will be created. To us each mannequin is a
sculpture. There is no alternative to this in marketing fashion garments. We hope that our
small effort will expand further in the future.
Sundarban Express Transportation System ltd (SETS).

Sundarban Express Transportation System (SETS) Ltd. is another transport oriented company
of Sundarban Group of Companies, To support our up growing export oriented Garments
Sector and others SETS has started its journey from 1998, Around 200 cargos and covered
vans are engaged for the business, SETS carries good by Airplane, shipping agencies and
transport service besides providing thousands of employment opportunities. Recently SETS
has started its venture in Malaysia with a separate registration.
Our Mission and Vision:

Our goal is to expand Trade and Commerce within the country Linking communications
support, Extending fastest service in time and creating employment opportunities for
unemployed youths which will help in the social and economic development of the country.
Sundarban Express Transportation System (SETS) Ltd. aims to create employment
opportunities for the educated and uneducated unemployed youth of the country, develop
skilled working force through human resource development, and contribute to socio-
economic development.
Activities:
Sundarban Express Transportation System (SETS) Ltd. provides services in the following
area.
General service Value declared service International Service
Express service Parcel Service Remittance Service
Super Express Service To-Pay Service Mobile Banking Service
Non-Docs Service Condition Booking Service E-Truffle Service (for Police)

Chapter-03
Financial Performance Analysis

3.1 Financial Performance Analysis
Financial Performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. This term is also used as a general measure
of a firm's overall financial health over a given period of time, and can be used to compare
similar firms across the same industry or to compare industries or sectors in aggregation.
Financial performance analysis refers to an assessment of the viability, stability and
profitability of a business, sub-business or project. It is performed by professionals who
prepare reports using ratios that make use of information taken from financial statements and
other reports. These reports are usually presented to top management as one of their bases in
making business decisions. Based on these reports, management may:
Financial performance analysis is a vital to get a financial overview about a company. It

generally consists of the interpretation of balance sheet and income statement. Ratio analysis
and trend analysis can be done by using these two statements. These analyses are the major
tools for analyzing the company’s financial performance. An Analyst can compare a present
condition with the past for the company to determine whether there is an improvement or
deterioration or no change.
3.2 Balance sheet

In financial accounting, a balance sheet or statement of financial position is a summary of the
financial balances of a sole proprietorship, a business partnership or a company. Assets,
liabilities and ownership equity are listed as of a specific date, such as the end of its financial
year. A balance sheet is often described as a "snapshot of a company's financial condition".
Of the four basic financial statements, the balance sheet is the only statement which applies to
a single point in time of a business' calendar year. A standard company balance sheet has
three parts: assets, liabilities and ownership equity.
3.3 Income Statement

Income statement also referred as profit and loss statement (P&L), earnings statement,
operating statement or statement of operations is a company's financial statement that
indicates how the revenue is transformed into the net income. It displays the revenues
recognized for a specific period, and the cost and expenses charged against these revenues,
including write-offs (e.g., depreciation and amortization of various assets) and taxes. The
purpose of the income statement is to show managers and investors whether the company
made or lost money during the period being reported.
3.4 Ratio Analysis

A tool used by individuals to conduct a quantitative analysis of information in a company’s
financial statements. Ratios are calculated from current year numbers and are then compared
to previous years, other companies, the Industry, or even the economy to judge the
performance of the company. The basic inputs to ratio analysis are the firm’s income
statement and balance sheet for the periods to be examined. Ratio analysis is predominately
used by proponents of fundamental analysis.

In finance, a financial ratio or accounting ratio is a ratio of two selected numerical values
taken from an enterprise’s financial statements. There are many standard ratios used to try to
evaluate the overall financial condition of a corporation or other organization. Financial ratios
may be used by managers within a firm, by current and potential shareholders (owners) of a
firm, and by a firm’s creditors. Security analysts use financial ratios to compare the strengths
and weaknesses in various companies. If shares in a company are traded in a financial
market, the market price of the shares is used in certain financial ratios.
In short, ratio analysis is essentially concerned with the calculation of relationships which,
after proper identification and interpretation may provide information about the operations
and state of affairs of a business enterprise. The analysis is used to provide indicators of past
performance in terms of critical success factors of a business. This assistance in decision-
making reduces reliance on guesswork and intuition and establishes a basis for sound
judgment.
3.5 Significance of using ratios

The significance of a ratio can only truly be appreciated when:
a. It is compared with other ratios in the same set of financial statements.
b. It is compared with the same ratio in previous financial statements (trend analysis).
c. It is compared with a standard of performance (industry average).Such a standard may
be either the ratio which represents the typical performance of the trade or industry, or
the ratio which represents the target set by management as desirable for the business.
3.6 Types of ratio comparisons

Three types of ratio comparisons can be made:
1. Cross-sectional Analysis: Cross-sectional analysis involves the comparison of
different firms’ financial ratios at the same point in time. The typical business is
interested in how well it has performed in relation to its competitors.
2. Time- series Analysis: Time-series analysis is applied when a financial analyst
evaluates performance over time. Comparison of current to past performance utilizing
ratio analysis allows the firm to determine whether it is progressing as planned.
3. Combined Analysis: The most informative approach to ratio analysis is one that
combines cross-sectional and time-series analyses.
Some Words of Caution

1. A single ratio does not generally provide sufficient information from which to judge
the overall performance of the firm. 2. Be sure that the dates of the financial
statements being compared are the same.
2. It is preferable to use audited financial statements for ratio analysis.
3. Be certain that the data being compared have been developed in the same way.
Groups of Financial Ratios
Financial ratios can be divided into four basic groups or categories:
a. Liquidity ratios

b. Activity ratios
c. Debt ratios and
d. Profitability ratios
1. Liquidity measures the ability to maintain positive cash flow, while satisfying immediate
obligations. Activity ratio measures the speed with which accounts are converted into sale
or cash.
2. Activity ratios are therefore used to assess how active various assets are in the business
3. Debt ratio measures the amount of other people’s money used in generating profit.
4. Profitability measures the ability to earn income and sustain growth in both 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.
A. Analyzing Liquidity
a. Liquidity refers to the ability of a firm to meet its short-term financial obligations
when and as they come due. It also refers to the solvency of the firm’s overall
financial position
b. The main concern of liquidity ratio is to measure the ability of the firms to meet their
short-term maturing obligations. Failure to do this will result in the total failure of the
business, as it would be forced into liquidation.
The three basic measures of liquidity are-

1. Net Working Capital: A measure of liquidity calculated by subtracting total current
assets by current liabilities. Current assets normally include cash, marketable
securities, accounts receivable and inventories. Current liabilities consist of accounts
payable, short term notes payable, short-term loans, current maturities of long term
debt, accrued income taxes and other accrued expenses (wages).
Net Working Capital=Total Current Assets-Total Current Liabilities
2. Current Ratio: The Current ratio expresses the relationship between the firm’s current
assets and its current liabilities. A measure of liquidity calculated by dividing the
firm’s current assets by current liabilities.
Current Ratio=Current assets/Current liabilities
3. Quick Ratio: Quick ratio measures assets that are quickly converted into cash and
they are compared with current liabilities. This ratio realizes that some of current
assets are not easily convertible to cash like- inventories. The quick ratio, also
referred to as acid test ratio, examines the ability of the business to cover its short-
term obligations from its “quick” assets only. The quick ratio is calculated as follows:
Quick (Acid-test) Ratio= (Current assets-Inventory)/Current liabilities
B. Analyzing Activity:
If a business does not use its assets effectively, investors in the business would rather take
their money and place it somewhere else. In order for the assets to be used effectively, the

business needs a high turnover. Unless the business continues to generate high turnover,
assets will be idle as it is impossible to buy and sell fixed assets continuously as turnover
changes. Activity ratios are therefore used to assess how active various assets are in the
business. Activity ratios are discussed next:-
1. Inventory Turnover: Ratio measures the stock in relation to turnover in order to
determine how often the stock turns over the business. It indicates the efficiency of the
firm in selling its product. It is calculated by dividing the cost of goods sold by the
average inventory.
Inventory Turnover = Cost of Goods Sold for the Year / Average Inventory
Inventory Turnover shows efficiently the company is managing its production, ware-housing,
and distribution of product, considering its volume of sales. Higher ratios over six or seven
times per year- are generally thought to be better, although extremely high inventory turnover
may indicate a narrow selection and possible lost sales. A low inventory turnover rate, on t he
other hand, means that the company is paying to keep a large inventory, and may be
overstocking or carrying obsolete items.
2. Average Collection Period: The average collection period measures the quality of
debtors since it indicates the speed of their collection.
a. The shorter the average collection period, the better the quality of debtors, as a short
collection period implies the prompt payment by debtors.
b. The average collection period should be compared against the firm’s credit terms and
policy to judge its credit and collection efficiency.
c. An excessively long collection period implies a very liberal and inefficient credit and
collection performance.
d. The delay in collection of cash impairs the firm’s liquidity. On the other hand, too low
a collection period is not necessarily favorable, rather it may indicate a very restrictive
credit and collection policy which may curtail sales and hence adversely affect profit.
Average Collection Period=A/C receivable/ (Annual Sales/360)
3. Average Payment Period: The average payment period is calculated in the same manner
as the collection period.
Average Payment Period=A/C payable/(Annual purchases/360)
4. Fixed Asset Turnover: The fixed assets turnover ratio measures the efficiency with
which the firm has been using its fixed assets to generate sales. It is calculated by
dividing the firm’s sales by its net fixed assets as follows:
a. Generally, high fixed assets turnovers are preferred since they indicate a better
efficiency in fixed assets utilization.
b. The ratios indicate the degree to which the activities of a firm are supported by
creditors’ funds as opposed to owners.
c. The relationship of owner’s equity to borrowed funds in an important indicator of
financial strength.

d. The debt requires fixed interest payments and repayment of the loan and legal action
can be taken if any amounts due are not paid at the appointed time. A relatively high
proportion of funds contributed by the owners indicate a cushion (Surplus) which
shields creditors against possible losses from default in payment.
Note: The greater the proportion of equity funds, the greater the degree of financial
strength. Financial leverage will be to the advantage of the ordinary shareholders as
long as the rate of earnings on capital employed is greater than the rate payable on
borrowed funds. The following ratios can be used to identify the financial strength and
risk of business.
Fixed Asset Turnover=Sales/Net Fixed Asset
5. Total Asset Turnover: Total asset turnover is the relationship between sales and assets.
a. The firm should manage its assets efficiently to maximize sales.
b. The total asset turnover indicates the efficiency with which the firm uses all its
assets to generate sales.
c. It is calculated by dividing the firm’s sales by its total assets.
d. Generally, the higher the firm’s total asset turnover, t he more efficiently its assets
have been utilized.
Total Asset Turnover=Sales/Total Asset
C. Analyzing Debt:
The debt position of the firm indicates the amount of other people’s money being used in
attempting to generate profits. In general, the more debt a firm uses in relation to its total
assets, the greater its financial leverage, a term used to describe the magnification of risk and
return introduced through the use of fixed-cost financing such as debt and preferred stock.
There are two general types of debt measures of the degree of indebtedness and measures of
the ability to service debts.
The degree of indebtedness:

The degree of indebtedness measures the amount of debt against other significant balance-
sheet amounts. Two most commonly used measures are the debt ratio and the debt-equity
ratio.
1. Debt Ratio: This is the measure of financial strength that reflects the proportion of
capital which has been funded by debt, including preference shares. A debt ratio greater
than 1.0 means the company has negative net worth, and is technically bankrupt. This
ratio is calculated as follows:
Debt Ratio=Total liabilities/Total assets
With higher debt ratio (low equity ratio), a very small cushion has developed thus not giving
creditors the security they require. The company would therefore find it relatively difficult to
raise additional financial support from external sources if it wished to take that route. The
higher the debt ratio the more difficult it becomes for the firm to raise debt.

2. Debt-equity Ratio: This ratio indicates the extent to which debt is covered by
shareholders funds. It reflects the relative position of the equity holders and the lenders
and indicates the company’s policy on the mix of capital funds. The debt to equity ratio is
calculated as follows:
Debt-equity Ratio =Long –term debt/stockholder’s equity
The Ability to Service Debts: This is the second type of debt measure, refers to the ability of
a firm to meet the contractual payments required on scheduled basis over the life of a debt.
The firm’s ability to meet certain fixed charges is measured using coverage ratios.
3. Time Interest Earned Ratio: This ratio measure the extent to which earnings can decline
without causing financial losses to the firm and creating an inability to meet the interest
cost.
a. The times interest earned shows how many limes the business can pay its interest bills
from profit earned.
b. Present and prospective loan creditors such as bondholders, are vitally interested to
know how adequate the interest payments on their loans are covered by the earnings
available for such payments.
c. Owners, managers and directors are also interested in the ability of the business to
service the fixed interest charges on outstanding debt.
Time Interest Earned Ratio=EBIT/Interest
D. Analyzing Profitability:
Profitability is the ability of a business to earn profit over a period of time. Although the
profit figure is the starting point for any calculation of cash flow as already pointed out
profitable companies can still fail for lack of cash. Without profit, there is no cash and
therefore profitability must be seen as a critical success factors.
a. A company should earn profits to survive and grow over a long period of lime.
b. Profits are essential, but it would he wrong to assume that every action initiated by
management of company should be aimed at maximizing profits, irrespective of social
consequences.
The ratios examined previously have tendered to measure management efficiency and risk.
Profitability is a result of a larger number of policies and decisions, 'the profitability ratios
show combined effects of liquidity, asset management (activity) and debt management
(gearing) on operating results. The overall measure of success of a business is the
profitability which results from the effective use of its resources.)
1. Gross Profit Margin:

a. Normally the gross profit has to rise proportionately with sales.
b. It can also be useful to compare the gross profit margin across similar businesses
although there will often be good reasons for any disparity The ratio is calculated as
follows:

Gross Profit Margin = (Sales-COGS)/Sales=Gross Profit/Sales
2. Operating Profit Margin: The operating profit margin represents what are often called
the pure profits earned on each sales dollar. A higher operating profit margin is preferred.
The operating profit margin is calculated as follows:
Operating Profit Margin=Operating Profit/Sales
3. Net Profit Margin: This is a widely used measure of performance and is comparable
across companies in similar industries. The fact that a business works on a very low
margin need not cause alarm because there are some sectors in the industry that work on a
basis of high turnover and low margins, for examples supermarkets and motorcar dealers.
What is more important in any trend is the margin and whether it compares well with
similar businesses. The net profit margin is calculated as follows:
Net Profit Margin=Net Profit after Tax/Sales
4. Return on Investment (ROI): Income is earned by using the assets of a business

productively. The more efficient the production, the more profitable the business. The
rate of return on total assets indicates the degree of efficiency with which management
has used the assets of the enterprise during an accounting period. This is an important
ratio for all readers of financial statements. Income is earned by using the assets of a
business productively. The more efficient the production, the more profitable the
business. The rate of return on total assets indicates the degree of efficiency with which
management has used the assets of the enterprise during an accounting period. This is an
important ratio for all readers of financial statements. The return on investment is
Return on Investment=Net Profit after Tax/Total Assets
5. Return on Equity (ROE): This ratio shows the profit attributable to the amount invested
by the owners of the business. It also shows potential investors into the business what
they might hope to receive as a return. The stockholders' equity includes share capital,
share premium, distributable and non-distributable reserves. The ratio is calculated as
follows:
Return on Equity=Net Profit after Tax/stockholder's equity
6. Earnings per share (EPS): Whatever income remains in the business after all prior
claims, other than owners claims (i.e. ordinary dividends) have been paid. will belong to
the ordinary shareholders who can then make a decision as to how much of this income
they wish to remove from the business in the form of a dividend, and how much they
wish to retain in the business, "the shareholders are particularly interested in knowing
how much has been earned during the financial year on each of the shares held by them,
for this reason, an earnings per share figure must be calculated. Clearly then, the earning
per share calculation will be:
Earnings available for common stockholders/Number of Shares of common stock
outstanding

7. Price/earnings Ratio: P/E ratio is a useful indicator of what premium or discount
investors are prepared to pay or receive for the investment. The higher the price in
relation to earnings, the higher the P/E ratio which indicates the higher the premium an
investor is prepared lo pay for the share. This occurs because the investor is extremely
confident of the potential growth and earnings of the share. High P/E generally reflects
lower risk and/ or higher growth prospects for earning. The price-earnings ratio is
Price/Earnings Ratio=Market price per share of common stock/EPS
3.7 Trend Analysis

It is important to analyze trends in ratios as well as their absolute levels. Trend analysis gives
clues as whether a firm’s financial condition is likely to improve or to deteriorate. For trend
analysis, a base year is selected and the amounts appearing on the base years’ financial
statements are assigned a weight of 100%.Comparisons are then made to the base year by
expressing the other years’ amount as a percentage of the base years’ amounts .Trend
analysis are useful for comparing financial statements over several years as they disclose the
changes occurring through time so that the management can clearly see the result they need.

Chapter-4
Financial Statement Analysis of Shanto-Mariam

Foundation

I. Authorized Capital and Paid up capital:
Year Authorized capital paid Up Capital Reserve and Surplus
2012 200 51 123.04
2013 200 100 282.49
2014 500 300 327.16
2015 500 363 555
2016 500 436 747
2017 600 510 820
2018 610 548 853
Source: Annual Report (2012-2018) of Shanto-Mariam Foundation.
Interpretation: The authorized capital, Paid up Capital and Reserve & surplus is sufficiently
increase per year that is a positive sign for Shanto-Mariam Foundation. From 2012 to 2018 it
increase approximately six times and it can be increase more by proper increasing paid up
capital.
II. Current Ratio:

It is a measure of liquidity calculated by dividing the firm's current assets by its current
liabilities. The higher the current ratio, the better the liquidity position of the firm. It indicates
the short term financial solvency of the firm. This ratio also indicates the extent to which
current liabilities are covered by those assets expected to be converted to cash in the near
future.
Current Ratio= Current assets/Current liabilities
Year Current Assets Current Liabilities Current Ratio
2012 440 206 2.14
2013 575 76 7.57
2014 466 196 2.38
2015 650 192 3.39
2016 892 235 3.80
2017 1120 275 4.10
2018 1345 315 4.27
Interpretation: The short-term financial solvency of Shanto-Mariam Foundation is better

position in last five years, because the current ratio was acceptable limit. In 2013 and 2016
the current ratio was optimistic, which was better than other company. In 2013 the CR is 3.6
times from 2012.But in 2014 it was little poor. The company can increase its current assets
and reduce its current liabilities for more CR.

III. Net Working Capital:
The difference between the company's current assets and its current liabilities can be positive
or negative. When the current assets exceed the current liabilities, the firm has positive net
working capital. When current assets are less than current liabilities, the firm has negative
networking capital. An enterprise should have sufficient networking capital in order to be
able to meet the claims of the creditors and the day-to-day needs of business. The greater is
the amount of networking capital, the greater is the liquidity of the firm. Inadequate working
capital is the first sign of financial problems for a firm.
Net Working Capital=Total Current Assets-Total Current Liabilities
Year Current Assets Current Liabilities Net working
Capital
2012 440 206 234
2013 575 76 499
2014 466 196 270
2015 650 192 458
2016 892 235 657
2017 1045 315 730
2018 1286 411 875
Interpretation: We know that acceptable of net working capital (NWC) is 1:1. The net
working capital (NWC) of Shanto-Mariam Foundation is extremely satisfactory over all the
last five years from 2012 to 2018, because it showed a positive networking capital which
indicates a huge liquidity of the company. However Shanto-Mariam Foundation has achieved
a record of positive networking capital in 2018. Shanto-Mariam Foundation can increase its
more current assets by enhancing the accounts receivable, reduce its current liabilities and by
reducing its bank overdraft and short term loan.
Analyzing Activity Ratio:
I. Fixed Asset Turnover:

The fixed asset turnover ratio measures the effectiveness is generating net sales revenue from
investments in net property, plant and equipment back into the company evaluates only the
investments.
Fixed Asset Turnover=Sales/Net Fixed Asset
Year Sales Net Fixed Assets Fixed Asset Turnover
2012 727 186 3.90
2013 984 287 3.42

2014 1236 587 2.10
2015 1368 548 2.50
2016 1392 576 2.42
2017 1486 611 2.43
2018 1497 515 2.91
Interpretation: The acceptable of fixed asset turnover ratio for large organization is
generally four times but it varies industry to industry. The fixed asset ratio of Shanto-Mariam
Foundation is 3.90 was in 2012, 3.42 in 2013 and 2.10 in 2014. That means, the fixed assets
of Shanto-Mariam Foundation is inefficiently used to generate sales in 2014. But it is had an
increasing–decreasing trend. So it should utilize its fixed assets more efficiently to accelerate
sales.
II. Total Asset Turnover:
The total turnover is similar to fixed asset turnover since both measures a company's
effectiveness in generating sales revenue from investments back into the company. Total
asset turnover evaluates the efficiency of managing all of the company's assets.
Total Asset Turnover=Sales/Total Asset

Year Sales Total Assets Total Asset Turnover
2012 727 627 1.16
2013 984 879 1.12
2014 1236 1094 1.12
2015 1368 1235 1.10
2016 1392 1506 0.92
2017 1486 1100 1.36
2018 1588 1450 1.96
Source: Annual Report (2012-2018) of Shanto-Mariam Foundation
Interpretation: The acceptable of total asset turnover for large organization is two times.
The total asset turnover ratio of Shanto-Mariam Foundation indicates that total assets are not
efficiently used to generate sales throughout the period from 2012 to 2018, as they are below
the acceptable ratio. This ratio was 1.16 in 2012, 1.12 in 2013 and 1.12 in 2014. So the ratio
showed a decreasing trend. Company’s management should be more efficient in utilizing the
company’s total assets to generate sales.

Analyzing Debt Ratio:
I. Debt Ratio:
The Debt ratio measures, the proportion of total assets provides by the firm’s creditors. This
ratio indicates the amount of other peoples’ money being used to generate profits. The higher
the ratio, the greater the firm’s degree of indebtedness and the more financial leverage it has.
Debt Ratio=Total liabilities/Total assets
Year Total Liabilities Total Assets Debt Ratio
2012 452 627 0.72
2013 496 879 0.56
2014 467 1094 0.42
2015 317 1235 0.25
2016 323 1506 0.21
2017 376 1670 0.25
2018 411 1755 0.23
Interpretation: The debt ratio of Shanto-Mariam Foundation indicates greater indebtedness

and high degree of financial leverage, to generate profits during 2012 to 2018. In 2012 it was
72%, in 2013 65% and in 2014 42% and decrease it in 2015 & 2018. As its financial leverage
is high, it holds lower financial risks. Shanto-Mariam Foundation can achieve optimum
capital structure by reducing debt capital as well as by increasing equity capital to finance its
total assets.
II. Debt-Equity Ratio:

The debt-equity ratio indicates the relationship between the long term funds provided by the
creditors and these by the firm’s owners. A high ratio shows a large share of financing by the
creditors of the firm; a low ratio implies a smaller claim of creditors. The debt-equity ratio
indicates the margin of safety to the creditors.
Debt-equity Ratio =Long -term debt/stockholder’s equity
Year Long-term Debt Stockholders’ Equity Debt-equity Ratio
2012 452.50 174.04 260%
2013 497.23 382.49 130%
2014 464.09 627.16 74%
2015 321.3 918 35%
2016 319.41 1183 27%
2017 345.80 1197 29%
2018 396.4 1205 328%

Interpretation: The debt-equity ratio of Shanto-Mariam Foundation is highly pleasing, as its
debt is substantially decreasing during 2012 to 2018.for example- the debt-equity ratio of
0.74 in 2014 implies that, Shanto-Mariam Foundation has Tk.1 of owner’s capital to pay the
liability of Tk.0.74, which really indicates a better condition in this regard.
Analyzing Profitability Ratio:

I. Gross Profit Margin:
The gross profit margin measures the percentage of each sales dollar remaining after the firm
has paid for its goods. The higher the gross profit margin is the better. A high ratio of gross
profits to sales is a sign of good management of cost of goods sold.
Gross Profit Margin = (Sales-COGS)/Sales=Gross Profit/Sales X 100
Year Gross Profit Sales Gross Profit Margin
2012 228 727 40.94%
2013 407 984 41.32%
2014 477 1236 38.58%
2015 601 1368 43.93%
2016 605 1392 43.44%
2017 617 1422 43.38%
2018 675 1507 44.79%
Interpretation: We know that the acceptable limit of gross profit margin is 20% to 30% and
Shanto-Mariam Foundation achieved the acceptable limit and it’s better than the other
companies. The cost of goods sold is efficiently managed by Shanto-Mariam Foundation as it
produced a satisfactory gross profit margin ratio. That means, it success to achieve adequate
coverage for operating expenses and better return to the owners of the business. The company
can increase its more sales and manage its cost of goods sold more efficiently.
II. Operating Profit Margin:

The operating profit margin measures the percentage of each sales dollar remaining after all
costs and expenses other than interest, taxes are deducted. This profit is called pure profit
because they measure only the profits earned on operations. A high operating profit margin is
preferred.

Operating Profit Margin=Operating Profit/Sales X 100
Year Operating Profit Sales Operating Profit Margin
2012 113 727 15.43%
2012 209 984 21.18%
2014 245 1236 19.80%
2015 401 368 29.31%
2016 403 392 28.98%
2017 412 401 102.27%
2018 438 412 106.31%
Interpretation: We know that the acceptable of operating profit margin is 20%.The

operating profit margin ratio indicates the cost price effectiveness of the operation. Here
Shanto-Mariam Foundation is the better condition regarding the operating efficiency last the
four years but it was poor in 2012 as it has produced the sufficient operating profit margin
0.22 in 2013, 0.20 in 2014, 0.30 in 2015 and 0.29 in 2018. The company should enhance its
sales by managing the operating cost efficiently.
III. Net Profit Margin

The net profit margin measures the percentage of each sales dollar remaining after all costs
and expenses, including interest and taxes have been deducted. The higher the firms net profit
margin, the better.
Net Profit Margin=Net Profit after Tax/Sales X 100
Year Net Profit after Taxes Sales Net Profit Margin
2012 112 727 15.43%
2013 208 987 21.18%
2014 245 1236 19.80%
2015 291 1368 21.27%
2016 301 1392 21.62%
2017 315 1401 22.48%
2018 326 1445 22.57%
Interpretation: We know that the acceptable limit of net profit margin is 5% to 10%.
Shanto-Mariam Foundation was highly efficient in sales performance during that period and
success to achieve the cost-effectiveness of operations as it has better net profit margin. Net
profit margin was positive than acceptable in 2012 to 2018, but except it was little poor 0.15

in 2009. Shanto-Mariam Foundation can increase its management’s ability to operate the
business by enhancing sales with the cost effectiveness of the operation.
IV. Return On Investment:

The return on total assets (ROA) often called the return on investment (ROI) measures the
overall effectiveness of management in generating profit with its available assets. The higher
the firm’s return on total assets is better.
Return on Investment=Net Profit after Tax/Total Assets X 100

Year Net Profit after Taxes Total Assets Return on Investment
2012 112 440 25.45%
2013 208 575 36.17%
2014 245 466 52.57%
2015 291 650 44.76%
2016 301 892 33.74%
2017 327 911 35.89%
2018 389 1012 38.43%
Interpretation: Shanto-Mariam Foundation Has achieved a scanty and highly satisfying

return on investment in 20127 to 2018 which indicates the effective management in
generating profits with its available assets during this period and its ROI was better in 2013 to
2014 and increasing sign is positive for Shanto-Mariam Foundation. The company can
increase more its efficiency by utilizing the firm’s assets to generate adequate profitability.
V. Return on Asset/Capital Employed (ROCE):

In the ROCE the profits are related to the total capital employed. The term Capital employed
refers to long-term funds supplied by the creditors and owners of the firm. The amount of
Capital employed is equal to non-current liabilities+ owner’s equity. This ratio provides
sufficient insight into how efficiently the long-term funds of the owners and creditors are
being used. The higher the ratio, the more efficient is the use of capital employed to generate
profit.
ROCE= Net profit after taxes/ Total capital employed X100
Year Net Profit after Taxes Total Capital Return on Capital
2012 112 627 17.90%
2013 208 879 23.72%
2014 245 1094 22.36%
2015 291 1235 23.56%
2016 301 1506 19.98%
2017 410 1690 24.26%

2018 427 1701 25.10%
Interpretation: Shanto-Mariam Foundation achieved satisfying return on asset from 2012 to

2018 which indicates the effective management in generating profits with its total asset
during 2012 to 2018 and its ROA was better and increasing during from 2013 to 2018 which
expose a positive sign of this company. The company can increase more its efficiency by
utilizing the firm’s capital to generate adequate profitability.
VII. Earnings per Share:

EPS represents the number of dollars earned during the period on behalf of each outstanding
share of common stock- not the amount of earnings actually distributed to shareholders. That
means EPS measures the profit available to the equity shareholders on a per share basis that is
the amount that they can get on every share held.
EPS= Earnings available for common stockholders/Number of Shares of common stock

Outstanding
Year Earnings available for Number of Shares of
2012 112000000 20000000 5.60

2013 208000000 20000000 10.40
2014 244661587 36300000 6.74
2015 290789036 36300000 8.01
2016 230000000 22000000 10.45
2017 270000000 24500000 11.02
Interpretation: Shanto-Mariam Foundation has got a deprived EPS during 2007, but in 2013
it is improved a lot and achieved a positive EPS, which much satisfying and increasing in
2013. The EPS was 5.60 in 2012, 10.40 in 2013 and 6.74 in 2014, .8.01 in 2015 and 11.02 in
2018. The company should increase its net profit after taxes available only for common
shareholders which can improve the EPS. In this regard the firm should achieve the favorable
effect of financial leverage.

Chapter-05
Major Findings, Recommendations & Conclusion

5.0 Findings
Now, I would like to share some of the loops that I encountered with during my workings as
a junior auditor. I also would like to establish some recommendations regarding those
disadvantages. I personally discussed with some of collogues and my supervisor about the
loops that I have found and most of them agrees with my observations. The findings and
recommendations are given below: firstly I discuss findings and recommendations about
Audit procedures wise & second discuss about financial statement analysis wise.
 The net working capital (NWC) of Shanto-Mariam Foundation is satisfactory position all
the last seven years from 2012 to 2018, because it showed a positive networking capital
which indicates a huge liquidity reserve of the company.
 The short-term financial solvency of Shanto-Mariam Foundation is strong.
 The capital turnover ratio of Shanto-Mariam Foundation indicates that total capital was
not efficiently managed and utilized throughout the period from 2012 to 2018.
 The average collection period is shorter which may discourage the credit sales.
 The fixed assets of Shanto-Mariam Foundation are efficiently used to generate sales.
 The total asset turnover ratio of Shanto-Mariam Foundation indicates that, total assets are
efficiently used to generate sales throughout the period from 2012 to 2018, as they are
acceptable limit.
 The debt ratio of Shanto-Mariam Foundation indicates a little indebtedness and lower
degree of financial risk, to generate profits during 2012 to 2018.
 Shanto-Mariam Foundation has adequate earnings to pay its interest charges.
 The cost of goods sold is righty managed by Shanto-Mariam Foundation as it produced a

sufficient gross profit margin ratio.
 Shanto-Mariam Foundation is in the better condition regarding the operating efficiency
during the last five years as it has produced the acceptable operating profit margin.
 Shanto-Mariam Foundation was highly efficient in sales performance during that period
and success to achieve the cost-effectiveness of operations as it has very good net profit
margin.
 Shanto-Mariam Foundation has achieved an enough return on investment, which
indicates the effective management in generating profits with its available assets.
 Shanto-Mariam Foundation achieved a highly satisfying return on capital employed
which indicates the effective management in generating profits with its total capital
employed during 2012-2018.

6.0 Recommendations
 Shanto-Mariam Foundation can increase its current assets more by enhancing the
accounts receivable and can decrease its current liabilities by reducing its bank
overdraft and short term loan.
 The company can try to increase its quick assets like-cash, accounts receivable and
marketable securities.
 It also can reduce inventory to improve its inventory turnover ratio.
 Company’s management should be more efficient in utilizing the company’s capital
to generate sales.
 Shanto-Mariam Foundation is supposed to offer attractive credit policy to its
customers by extending credit period from 60 days to 90 days.
 The company should try to utilize its fixed assets more efficiently to accelerate sales.
 The company’s management should be more efficient in utilizing the company’s total
assets to generate sales.
 It should aim to achieve optimum capital structure by reducing debt capital as well as
by increasing equity capital to finance its total assets.
 The company ought to enhance its earnings by accelerating its sales as well as by
minimizing its operating costs in order to get adequate earnings.
 Shanto-Mariam Foundation should make an effort to increase its sales and manage its
cost of goods sold efficiently.
 The company can enhance its sales by managing the operating cost efficiently.
 It should amplify its management’s ability to operate the business by enhancing sales
with the cost price effectiveness of the operation.
 The company should try hard to intensify its efficiency in utilizing the firm’s assets to
generate adequate profitability.
 The company should increase its efficiency in utilizing the firm’s capital to generate
adequate profitability.
 It is supposed to achieve the best use of equity capital to enhance the earning per
share (EPS) and stockholders’ return.
 Shanto-Mariam Foundation should increase its net profit after taxes available only for
common shareholders which can improve the EPS. In this regard the firm should
achieve the favorable effect of financial leverage.

7.0 Conclusion
In Bangladesh, it has been a common scenario that the poor people are depriving in every
sector even if they work so hard for livelihood. Some non-profit organizations try to improve
their lives through preparing several projects but yet the numbers are still low comparing to
the population. Financial management system of Shanto-Mariam Foundation fulfils the basic
financial and accounting requirements to ensure better degree of financial control,
transparency and accountability in the day to day operations of Shanto-Mariam Foundation.
In this report, I tried to the best of my knowledge to present the audit procedures followed by
Shanto-Mariam Foundation. In conducting their audit works. Mainly, Shanto-Mariam
Foundation follows the audit procedures set by ICAB in most cases except for area that
requires professional judgment. From my working experiences in Shanto-Mariam Foundation
it has been found that in some respects Shanto-Mariam Foundation does not strictly follow
the standard of audit procedures. From the formation of Shanto-Mariam Foundation
contributes to a great extent in ensuring the transparency in the presentation of financial
statements of various entities. Proper adoption of standard audit procedures will lead Shanto-
Mariam Foundation.

References
1. Shanto-Mariam Foundation, Annual Audit Report 2012-2018

2. Shanto-Mariam Foundation, Financial Manual.
3. Shanto-Mariam Foundation, HR Manual.
4. Shanto-Mariam Foundation, Access to rights of the persons with disabilities.
5. Retrieved from.

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Shanto-Mariam University of Creative Technology

An Internship Report Presented to the Faculty of Management &

Date of Submission: 27th March 2021

Shanto_Mariam Foundation Page 1

Abu Bakkor Siddik

Shanto_Mariam Foundation Page 2

The Internship report entitled an analysis of “Financial Management System of Shanto-

Farhana Yesmin Liza

Shanto_Mariam Foundation Page 3

Shanto_Mariam Foundation Page 4

SMF (Shanto-Mariam Foundation) enables them to become contributing productive members

Shanto-Mariam Foundation gives priority in maintaining excellent financial management

Shanto_Mariam Foundation Page 5

S.N PART PARTICULAR PAGE NO.

08 Chapter-02 Corporate Review of Shanto-Mariam

09 Chapter-03 Financial Performance Analysis 19

10 Chapter-04 Financial Statement Analysis of

Shanto_Mariam Foundation Page 6

Analyzing Debt Ratio: 32-33

Analyzing Profitability Ratio:

11 Chapter-05 Major Findings, Recommendations & 37

Shanto_Mariam Foundation Page 7

Shanto_Mariam Foundation Page 8

1.2Scope of the study

1.3 Objectives of the Study

The specific objectives of this study are

1.4 Methodology of the Study

1.5 Sources of Data

Shanto_Mariam Foundation Page 9

1.6 Limitations of the study

Shanto_Mariam Foundation Page 10

Corporate Review of Shanto-Mariam Foundation

Shanto_Mariam Foundation Page 11

Shanto_Mariam Foundation Page 12

2.2 Major Goals & Objectives of SMF

Shanto_Mariam Foundation Page 13

2.3 Service Offered by SMF

Shanto-Mariam University of Creative Technology

The aim of SMUCT

To make the University a CENTRE OF EXCELLENCE and of International standard, to

Shanto_Mariam Foundation Page 14

Shanto-Mariam Academy of Creative Technology

Shanto-Mariam Institute of Creative Technology

Shanto_Mariam Foundation Page 15

Higher National Diploma (HND)

Daily Ajker Prattasha

Sundarban Courier Service (Pvt.) Ltd

Shanto_Mariam Foundation Page 16

General service Value declared service International Service

Corporate Social Responsibility

Shanto_Mariam Foundation Page 17

Sundarban Express Transportation System ltd (SETS).

Our Mission and Vision:

Shanto_Mariam Foundation Page 18

Financial Performance Analysis

Shanto_Mariam Foundation Page 19

Financial performance analysis is a vital to get a financial overview about a company. It

3.2 Balance sheet

3.3 Income Statement

3.4 Ratio Analysis

Shanto_Mariam Foundation Page 20

3.5 Significance of using ratios