FIN 254 (SEC- 3)

Financial Ratio Analysis of

Titas Gas Transmission & Distribution Company Limited (TGTDCL) &
Dhaka Electric Supply Company Limited (DESCO)

Submitted to-
MD Abdul Wasi (MAW)
Lecturer, Department of Accounting & Finance
North South University

Date: 13-12-2017

1
 Submitted by:

Group- 3

Name ID

Deepan Biswas 1530081630

Samudra Roy 1530503630

Shamima Hosain Leema 1531346030

Kaniz Nithila Chamak 1530208030

Mahade Hasan Nobel 1510608030

2
 Letter of Transmittal
13 December, 2017

MD Abdul Wasi
Lecturer
Department of Accounting & Finance
North South University

Subject: Submission of the report on Financial Analysis

Dear Sir,

It is great pleasure for us to present you the report ‘The Financial Ratio Analysis of Titas Gas
Transmission & Distribution Company Limited (TGTDCL) & Dhaka Electric Supply Company
Limited (DESCO)’ which was assigned to us by you as a term project of the course Fin 254.

The project was challenging with practical appliance of the financial ratios which helped us to
understand the topics in more depth. To complete the report we had to research a lot and it also
helped us analyzing the ratio more confidently. The project materials and guidelines have been
strictly followed and we have tried our best to summarize the most relevant contents in the
report.

We are grateful to you for your guidance and helpfulness in every step of making this report. We
hope that the report will be satisfactory with its usefulness and our hard work will be recognized.

Sincerely,
Deepan Biswas
Samudra Roy
Shamima Hosain Leema
Kaniz Nithila Chamak
Mahade Hassan Nobel

3
 Acknowledgement

This report would not have been done without the support of our honorable course instructor MD
Abdul Wasi. We are very grateful to have him as our instructor and his continuous support made
this course as flexible as possible. We are really thankful to him that we got to work on such a
detailed financial report which will not only help our educational purpose, but also will provide
us with experience. We are also thankful to our friends and fellow group members for their
friendliness and co-operation.

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 Table of Contents

Topic Page

Introduction 6

Executive Summary 7

Ratio Analysis: 8
Liquidity Ratio

Activity Ratio 10

Debt Ratio 15

Profitability Ratio 17

Recommendation 25

Conclusion 26

References 27

Appendix 28

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 Introduction
This report is based on the financial ratio analysis of two DSE listed companies. One company is

Titas Gas Transmission & Dist. Co. Ltd and the other company is Dhaka Electric Supply
Company Ltd. This report emphasizes on the liquidity, activity, debt and financial strength of the
company by showing and comparing different ratio analysis. A brief explanation is given on time
series analysis and cross sectional analysis highlighting the strengths and weaknesses of the
companies.

Titas Gas Transmission & Dist. Co. Ltd

The Titas Gas Transmission and Distribution Company (Titas Gas) is the largest natural gas
distributor in Bangladesh, with an 80% market share. The discovery of huge gas field in 1962
near Titas River in Bhramanbaria established a new era of natural gas utilization in Bangladesh.
It was established on November 20, 1964 and started its commercial operation in April 28, 1968.
Titas Gas is playing a significant role to strengthen the socio-economic condition of a developing
country like Bangladesh, even pioneering in saving foreign currency by ensuring expected use of
natural gas. The main objective of the company is to supply efficiently to customers under
different categories and thus reducing dependence on foreign fuel power.

Dhaka Electric Supply Company Limited

Commonly known as DESCO is a public listed company which distributes electricity in
Bangladesh especially in the city Dhaka. It was created on November 1996 under the company
act 1994 as public limited company. The company is now under the power division of the
Bangladesh Ministry of Power, Energy and Mineral Resources. The vision of DESCO is to be an
enabler of economic development and social progress by providing safe, reliable and sustainable
electricity.

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7
 Executive Summary

In this report, we have analyzed the financial ratios of Titas Gas Transmission & Distribution
Company Limited (TGTDCL) & Dhaka Electric Supply Company Limited (DESCO) for the
years 2013 to 2016. To have a general comparison of financial ability between the two
companies we did some ratio analysis. We have found different pictures of the companies after
doing the ratios.

For Titas, we saw that financial ability is much stronger than DESCO except some areas. Titas is
clearly stronger in terms of Profit margin analyses. They are efficiently using assets to generate
sales and revenue. But their current liabilities have pushed them behind in Liquidity Ratios.
Also, their debt is much higher proportion to the assets. Also their ROA and EPS is much higher
than DESCO. In terms of shareholder’s wealth they utilized it wisely. Titas need to control their
debts more efficiently and be strict to collect their payments in time. In general, Titas has higher
ratios in Inventory Turnover, Asset Turnover, Average age of Inventory, Debt Ratios, Profit
Margin ratios and Profitability ratios (except P/E Ratio & M/B Ratio)

On the other hand, for DESCO, the liquidity ratios are higher than of Titas. They have
maintained to keep balance in their current assets and current liabilities more efficiently. In
Average Collection Period, the number of days they need to collect their money from customers
is quite impressive comparing to the days took for Titas. In terms of P/E ratio and M/B ratio,
Desco is doing great job as their stocks are overvalued and also investors will be expecting future
growth of their shares. Though for EBIT, DESCO is faced loss during last four years. In general,
DESCO is stronger in terms of Liquidity ratios, Average Collection Period, P/E ratio & M/B
ratio.

Though both the companies are trying their best to achieve their goals, in general, Titas is doing
greater in terms of financial performance than DESCO. But it is still possible for DESCO to
catch up to Titas, as they have advantages in liability management and share price cost.

We tried our best to analyze the results with actual information by our wide and deep research.
We hope the readers will understand how the financial ratios analyses are done and how
important it is for a firm. We believe it will enhance the knowledge of the reader and also will
make things more clear.

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 Analysis of Financial Ratios
Liquidity Ratios

Current Ratio is a liquidity ratio which measures a company’s ability to pay off its short term and
long term obligations.
Time Series Analysis:

Titas- From 2013, we can see that the current ratio of Titas is 1.46. which means that current
assets of Titas is 1.46 times higher than current liabilities. It kept decreasing in the following
years. In 2016, it reached the lowest point of the last 4 years which is 1.21.

DESCO- In 2013, the current ratio of DESCO was 2.73 which tells us that the current asset is
2.73 times higher than the current liabilities. The ratio decreased in 2014 and even more
decreased in 2015. Though the ratio increased in last year, it is still lower than the current ratio of
2013. The company is doing well as long as the current ratio is higher than 1.

Cross-sectional Analysis: From the above data, we can see that though both of the
companies are keeping their ratio higher than 1, but DESCO is doing well than Titas in terms of
current ratio. It means DESCO is better at paying obligations than Titas. But DESCO has to be
careful because higher current ratio means it could end up with excessive cash on hand.

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 Quick Ratio

2016

2015

2014

2013

0 0.5 1 1.5 2 2.5 3

DESCO Titas

Quick ratio means how much liquid assets a firm holds to fulfill their short term obligations.

Time Series Analysis:

Titas: In 2013, Titas is maintaining a quick ratio of 1.38 which is current asset excluding
inventory and 1.38 times higher than their current liabilities. In 2016, it decreased to 1.18 which
means inventories have been increased and Titas is producing more than their sales.

DESCO: From 2013 to 2016 the quick ratio of DESCO kept decreasing. It decreased from 2.43
to 1.76 in 2016 which indicates the increase of inventories. DESCO needs to control their
inventories more effectively.

Cross Sectional Analysis: From the chart, we can see that DESCO is maintaining a higher
quick ratio than Titas. Though decrease of both quick ratios indicates both companies are not
controlling their inventories effectively. Specially, Titas should concentrate on its inventories to
utilize it more properly to get better quick ratios.

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 Activity Ratios

70
60 Inventory Turnover
50
40
30
20
10
0
2013 2014 2015 2016

Inventory Turnover means the number of times a company sold its inventories and replace over a
period of time.

Time Series Analysis:

Titas: For Titas, in 2013, the inventory turnover is 33.4 and it gradually kept increasing
throughout the following years except 2014 which was 35.94 from previous year’s 45.18. In
2016, the ratio became 62.94 which indicates that the company is selling their inventory 62.94
times compared to their inventories placement which means high sales.

DESCO: For DESCO, in 2013 the inventory turnover is 8.09 and it increased to 10.78 in 2014.
Later in 2015-2016 it kept decreasing and at the end the ratio was 3.93. If this keeps up, DESCO
will lose their profit because of excessive inventories.

Cross-sectional Analysis: Titas has much higher inventory turnover than Apex. It tells that
DESCO’s efficiency in production and inventory management is much lower than Titas. On the
other hand, Titas is doing great job in keeping inventory turnover high and should continue to do
so.

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 Avg. Age of Inventory
100
90
80
70
60
50
40
30
20
10
0
2013 2014 2015 2016

Average Age of Inventory means the average number of days a firm takes to sell of their
inventory.

Time Series Analysis

Titas: From the chart we can see, in 2013, Titas needed an average of 10.93 days sell off their
inventories. It decreased in 2014 and again increased in 2015. In last year, the number of days
became 5.8 to be the lowest rate of the last 4 years. Titas is now finishing selling off their
inventories more quickly.

DESCO: As for DESCO, the average number of days to sell off their inventories in 2013 was
41.39. In 2016, it increased highest than ever to an average of 92.77 days which is almost double
of the days of 2013. DESCO is not being able to sell off their inventories quickly and efficiently
and it will hamper the company in the long run.

Cross Section Analysis: As we can see Titas is doing amazingly better than DESCO in
selling of their inventories early. Where in the last year, DESCO needed almost 92.77 days to
finish selling up their goods where for Titas it took only 5.8 days. DESCO should concentrate on
inventory turnover more carefully to reduce the average age of inventory.

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 Total Asset Turnover
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2013 2014 2015 2016

Total Asset Turnover is the value of sales of a company comparing to the total asset which
means how efficiently a company using their assets to generate revenue.

Time Series Analysis

Titas: From the above data, we can see that Titas generated .93 tk. in sales for every for every 1
tk. worth of asset and also it is highest among the last 4 years. Though it decreased in the
following years but it again increased as in 2016, it became .92. By looking at the ratio, we can
tell the generating value is lesser than the value of its assets. And it is not a good sign.

DESCO: For DESCO, it generated 0.66 tk. in sales for every 1 tk. worth total asset .Though the
amount increased over the years but it is still very low which is .71 tk. worth of sales for every 1
tk. of asset in 2016 comparing to the asset value of DESCO which means they are not utilizing
asset usage effectively.

Cross-sectional Analysis: Though both the companies are not doing well comparing to the
industry standards, but Titas is almost close to generate same amount of sales to assets. And
DESCO needs to increase their sales ratio comparing to their assets to increase their efficiency.

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 Average Collection Period
120

100

80

60

40

20

0
2013 2014 2015 2016

Average Collection Period means the amount of time a company takes to collect their payments
of account receivables.

Time Series Analysis-

Titas- Titas took an average of 106.24 days to collect their receivable from their customers in
2013. It kept increasing till 2015 when it became almost 113 days. But in 2016, the collectible
days became much lesser than before to an average of 103.38 days.

DESCO- DESCO did an amazing job in average collecting periods. From 2013 to 2016, the
average collection period kept decreasing. The average days reduced from 53.4 days of 2013 to
42.12 days of 2016. DESCO are collecting their payments very efficiently.

Cross-sectional Analysis: Average collection period of DESCO is much better than Titas
here. Titas is taking more than double of DESCO’s collection period. Titas is not doing well in
collecting their payments comparing to DESCO.

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 Average Payment Period
120

100

80

60

40

20

0
2013 2014 2015 2016

Average payment means the average amount of time a company takes to make payments to its
creditors.

Time-series analysis:

Titas- In 2013, Titas took an average of 100.44 days to pay back their accounts payable. And it
kept increasing till 2015. But in the recent event of 2016, their payable days reduced to 97.7
which means they are now paying their accounts payable faster than previous years and it is not a
good sign as the early payment could have been utilized somewhere else.

DESCO- It took DESCO 79.2 days to pay back the accounts payable. The average days
remained almost same till 2015 on around 79 days. In 2016, the days decreased to an average of
76.93 days. This can create problem for DESCO for paying earlier.

Cross-sectional Analysis- Here we can see that DESCO pays their accounts payable faster
than Titas. Titas is doing great job by keeping accounts payable for more days and can make
revenue. Although the days should not exceed the current payable days or it will create problems
between them and their suppliers. In this sense DESCO doing great job but they should be
careful not to pay too early or they will lose the opportunity cost.

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 Debt Ratios

Debt Ratio

2016

2015

2014

2013

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%

Debt Ratio indicates how much debt a company has comparing to its total assets..

Time Series Analysis:

Titas: In 2013, 43.07% of Titas’s total assets were financed by their total debt. The debt ratio
started decreasing till 2015 and then suddenly goes up in 2016 to 50.13% which indicates the
company has to use its more of its ongoing cash flow to the payment of the debts.

DESCO: In 2013, the debt ratio of DESCO was 68.2% which is huge comparing to its assets. It
remained almost same throughout the years while it was 66.45% in 2015 and 67.08% in 2016.
The company is too much dependable on debt which can cause excessive cases like bankruptcy
in future.

Cross Sectional Analysis: Titas had a greater debt ratio than DESCO as the lower the debt
ratio, the better. Though both of the companies are not in good position in terms of debt ratio, but
Titas is in comparatively better position. Although excessive low debt is bad sign as well because
they are using less leverage which could be used as an way to earn profits.

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 Times Interest Earned
200

150

100

50

0
2013 2014 2015 2016

-50

Times Interest ratio indicates how many times a company can pay its interest expenses without
profit and tax.

Times Series Analysis:

Titas: If we look at the chart, we can see in 2103, Titas could cover its interest 121.91 times
without profit and tax and it increased rapidly in the next two years including 170.52 times
which is highest during these 4 years. Though the ratio fell down dramatically to 89.91 which
indicates that either interest increasing or earnings have been increased.

DESCO: For DESCO, the TIE is -1.51 in 2013 because the company faced loss instead of
EBIT. It continued till 2014 and in 2015 because of profit the TIE became positive. But again in
2016, it was in minus series which is -.17. It indicates DESCO can pay interest with its earnings
as there is only loss instead of profit.

Cross-sectional Analysis: Titas is greater than DESCO in terms of TIE by big margin. They
have more income comparing their interests which created higher TIE. On the other hand,
DESCO has to control their interest and increase their earnings to survive in the long run.

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 Profitability Ratios

Gross Profit Margin

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2013 2014 2015 2016

Gross Profit Margin measures after paying COGS how much of revenues are left over.

Time Series Analysis:

Titas- From the above graph, Titas generated 15.72 tk. gross profit from every 100 tk. of sale in
2013. In 2014 it increased to 16.99 tk. but the rate fall down in 2015 and 2016. In 2016, the rate
has gone down to 7.13 tk. of every 100 tk. sale. It means COGS has increased more comparing to
revenue.

DESCO- It generated 2.68 tk. gross profit in 2013, it started to increase till 2015. In 2016, the
gross profit of DESCO fell down to 5.96 tk. which is not a good sign for the company as we
know the higher gross profit, the better.

Cross-sectional Analysis: Though gross profit of both companies started to decline, but
Titas has higher gross profit than DESCO. Gross profit does not necessary mean improvement of
the overall performance of the company. It indicates that a higher gross profit leads a company to
a higher net income eventually. Also it indicates cost of goods sold to be lower.

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 Operating Profit Margin
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2013 2014 2015 2016
-2.00%

-4.00%

Operating Profit describes how much operating efficiency a company has. It indicates how much
revenue a company making after paying variable costs such raw materials, wages etc. The higher
the company has operating margin, the better the company stands.

Time-series analysis:

Titas- As we can see, Titas generated 11.06 tk operating profit ( before interest and taxes) per
100 tk. of sales. Though it increased in 2014 but in next two years it reduced dramatically which
finally led to 3.71 tk. operating profit. The company is doing very poor job in controlling
operating expenses.

DESCO- For DESCO, rather than operating profit it became loss. In 2013 it was -2.23 tk. per
100 tk. of sales that means cost are now higher than gross profit. Though it increased to 3.51 tk.
operating profit, but it again led to loss of 0.19 tk. They need to reduce their costs and
expenditure immediately.

Cross-sectional analysis- Though the operating profit margin for both companies is
declining drastically but the profit for Titas Gas is much higher than DESCO as Titas still in the
operating from zone unlike DESCO. It is safe to say Titas is doing greater job than DESCO in
operating efficiency management but both companies need to handle their operating expenses
much more carefully and efficiently, specially for DESCO to gain profit.

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 Net Profit Margin
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2013 2014 2015 2016

Net profit margin is the profit earned by deducting all expenses, taxes and interests from sales.

Time Series Analysis:

Titas: In 2013, Titas generated 12.16 tk. of net profit from 100 tk of sales. In 2014 it increased
but gain decreased in 2015. In 2016 the net profit became 6.41 tk which is comparatively very
low comparing to their previous net profits. It means the operating expenses, COGS and tax are
now higher than previous years.

DESCO: In year 2013, DESCO earned net profit of 3.62 tk. from 100tk of sales. After
decreasing in 2014, it again increased in 2015 to tk. 5.85 of net profit. In 2016, DESCO
generated the lowest profit of the last 4 years which was 1.40 tk. of every 100 tk. sales. It means
the company is efficient at converting the sales into actual profit.

Cross-sectional Analysis: From the chart, Titas is generating higher net profit than DESCO.
Titas is more successful in making profit on each tk. of sales. The cost control of DESCO is not
good comparing to DESCO where Titas is very effective in cost control and generating profit.
Also it indicates that Titas is better than DESCO in terms of pricing.

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 Earning Per Share
12

10

0
2013 2014 2015 2016

Earnings Per Share (EPS) is the company’s profit which is allocated for common stockholders.

Time Series Analysis:

Titas: in 2013, Titas allocated tk. 9.2 per share for each outstanding shares of common stock.
EPS increased in 2014 but from 2015 to 2016, it deceased to 7.37 tk. in 2016. It also means the
share price of Titas has gone down during the period, also the net income has decreased.

DESCO: For DESCO, in 2013, EPS was tk 2.13 per share for their common stockholders. EPS
decreased to tk. 1.77 in 2014. In 2016 EPS fell down to tk 1.12 per share which is the lowest EPS
for the last 4 years.

Cross-sectional Analysis: The higher EPS of price show that Titas is better than DESCO in
this regard. Because of lesser share price DESCO will not be able to attract new shareholders if
the EPS keeps going down. On the other hand, Titas is capable of paying dividends to
shareholders more than DESCO. The EPS of DESCO will also be lower than the share price of
the company, eventually people will lose interest of the shares eventually if it is not being taken
care by DESCO.

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 Return On Asset
12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2013 2014 2015 2016

ROA is a financial ratio that shows percentage of a profit of a company comparing to the
overall resources.

Time Series Analysis:

Titas: For 2013, Titas earned tk. 11.32 tk. profit from every 100 tk. worth of assets. In 2015, the
ratio decreased and in 2016 it got more decreased to a new number which is 5.87 tk. It is also the
lowest ROA for Titas for their last 4 years.

DESCO: In 2013, DESCO made tk. 2.38 profit from every 100tk worth for assets. Though it
2015, the ROA increased but it again decreased in 2016 with an 1 tk of profit per value of assets.
It is the lowest value for the company in terms of last 4 years.

Cross-sectional Analysis: Titas has higher ROA in all the years. DESCO is using more of
its assets to generate revenue and the ratio got lower and it is also not good for the company. On

22
the other hand, though the ROA of Titas is getting decreased but it is still higher than DESCO
which shows their operation management skill for utilizing their assets.

Return on Equity

2016

2015

2014

2013

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Return on Equity reveals how much profit a company can generate by using shareholder’s
wealth.

Time Series Analysis

Titas: In the time series, Titas has profit of 19.88 tk. of profit from very 100 tk. of shareholder’s
equity (SE). In 2015, it fell down to 15.39% which is not a good sign. In 2016, it reached the
lowest point of 11.77% which means the profit has gone down to 11.77 tk. from shareholder’s
equity

DESCO: In 2013, DESCO has 7.47 tk. of profit worth every 100 tk. of SE. In 2015, the ratio has
gone up to 12.64 which was a good sign. But in 2016, the ROE has gone down to 3.03% which
means only 3.03 tk. profit from shareholder’s equity.

Cross-sectional Analysis: As we can see that Titas generated higher return on equity than
DESCO in every years. It means Titas is earning more profit by using their stockholder’s wealth.

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For, DESCO the ratio is very low which is not a good sign as the higher ROE is, the better.
Shareholders will lose interest in investing if the rate keeps going down.

Price Earning Ratio

50
45
40
35
30
25
20
15
10
5
0
2013 2014 2015 2016

P/E Ratio indicates to earn per dollar of earnings how much has to be invested.

Times Series Analysis:

Titas: in 2013, the stockholders are willing to pay 9.09 tk. for each of tk. 1 of reported earnings.
In 2014, it was decreased to 7.41 tk. In 2016, again it was decreased. It means that market price
is 6.24 times bigger than earnings, so compared to that, it is an expensive share.

DESCO: For DESCO, the amount in 2013 is 31.73 tk. for each of tk. 1 of reported earnings.
Though it decreased drastically in the upcoming years, but in 2016 it gained the highest value by
being 43.93 times bigger market price than earnings. It is a good sign for the companies sit helps
to the company to be more expensive share.

Cross-sectional Analysis: For P/E ratio, DESCO is doing very much good job. Investors
will be expecting more growth in the future. Because of MPS almost being same in last year, the
higher EPS is the reason for Titas to get low P/E ratio. If EPS and Net Income are positive, P/E
ratio will not have much effect.

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 M/B Ratio
2.5

1.5

0.5

0
2013 2014 2015 2016

Book-to-market ratio measures the value of the company by comparing market value and book
value.

Time Series Analysis:

Titas: In 2013, the M/B ratio for Titas was 1.807359. It kept decreasing till 2016. In 2016, the
ratio was 0.73431 which means the investors pays much lower for each share compared to the
book value. As the ratio is less than 1, stock is undervalued.

DESCO- For 2013, the M/B ratio for DESCO was 2.371469. After slight jump from 2014 to
2015, the ratio became 1.954183. Again in 2016, the the ratio got decreased to 1.331156 but it is
still greater than 1 which means market price is still higher than the book value.

Cross-sectional Analysis: We always want our stock to be overvalued. From the graph we
can clearly deduct that DESCO is keeping constant overvalued M/B ratio than Titas. For Titas,
the market price got down drastically in 2016 which is the reason for the company’s M/B ratio
which is less than 1. Titas needs to increase their MPS to make their share more attractable.

25
 Recommendation

By analyzing through the financial ratios, there are many sections where both company has the
option to do well. We can see from the ratios there are certainly I some areas the companies are
lacking, which means they have weaknesses in those areas.

So for Titas, they are lagging behind in liquidity ratios than DESCO which mean they are
controlling their current debt effectively comparing to their current assets. Titas is doing great
job in inventory turnover and average age of inventory. In total asset turnover, Titas has to do
show more effective performance as the amount of sales per total asset is still very low. Also, in
terms of collecting money from customers Titas is way behind. Their average collection period is
much higher than DESCO. They have to more strict in case of accounts receivable period. Also
for M/B ratio, their ratio is getting undervalued in recent years. They have to look over how to
increase their market price per share.

On the other hand, DESCO is behind in many ratios than Titas. Inventory Turnover of DESCO is
very lower than Titas. DESCO needs to manage their asset management and inventory more
efficiently. Also they need to be less dependable in their debt as their debt ratio is very much
higher than Titas. Also in terms of Times Interest Earned ratio, DESCO is in minus figure which
means they have no EBIT, instead they are having loss. Same reason goes for Operating Profit
margin as their figure is negative because of their loss in EBIT. DESCO needs to consider how
to lessen their interest more carefully. DESCO is also struggling to convert their sales into profit.
Also in EPS, they are very much behind and because of low EPS dividend will be low which is
not good for shareholders. In terms of P/E Ratio, DESCO is doing great job by keeping the share
expensive than Titas.

Also both companies need to increase their Gross Profit margin as eventually higher Gross Profit
will be turned to Higher Net Income which is not happening in their cases.

If we consider the two companies, we can clearly see Titas is doing much better in overall ratios
than DESCO. Though Titas still has some weaknesses in certain areas, but it is very low
compared to DESCO. On the other hand, DESCO needs to improve in most of the areas, also
they are facing loss in terms of EBIT, so they have to be very careful in planning their financial
decisions.

26
 Conclusion

Just by looking at figures it is impossible to judge which company is financially stronger or

which company has weaknesses. That when Financial Ratio Analysis comes. It serves as a
benchmark or indicates the company’s different financial transactions. An analyst is needed for
the job whose job is to identify how the company is performing or in which other company the
company should invest. Also, industry average is a very important tool which can be served as
the benchmark of the market to compare how one’s company is performing. Though sometimes,
these ratios won’t give the full picture as there may be other factors that can undermine these
ratios. So as we see, ratios will not be always 100% right in terms of these financial decisions.
The analyst should have a good command and knowledge over the interpretation or usage of the
ratios.

As in this report, we have performed different kind of ratio analysis on the two top companies of
our country Titas Gas Transmission & Distribution Company Limited (TGTDCL) & Dhaka
Electric Supply Company Limited (DESCO) to have a general financial comparison between
them. As we saw that, Titas is performing way better than DESCO by analyzing the ratios. So we
can see that how much important is to know these financial ratios for a company.

27
 References

1. Hayes, A. (n.d.). Ratio Analysis: Using Financial Ratios. Retrieved from

https://www.investopedia.com/university/ratio-analysis/using-ratios.asp

2. Dhaka Electric Supply Company Limited. (n.d.) Retrieved December 13, 2017, from
https://en.wikipedia.org/wiki/Dhaka_Electric_Supply_Company_Limited

3. Dhaka Electric Supply Co limited. (n.d). Annual Report [Report] . Retrieved from
https://www.desco.org.bd/index.php?page=annual-reports

4. Titas Gas Transmission & Distribution Company Limited. (n.d). Annual Report
[Report] .Retrieved from https://www.titasgas.org.bd/Pages/annual-report/46/
https://www.titasgas.org.bd/Pages/annual-report/46/

5. Gitman, L. J., & Zuttewr, C. J. (2015) Principles of Managerial Finance. Edinburgh Gate,
Essex: Pearson Limited.

28
 Appendix

DESCO

29
30
31
TITAS

32
33
34
35
36