Introduction to Financial Management (FIN254)

Annual Report

PREPARED FOR PREPARED BY

FACULTY NAME: SHEIKH NAME ID
MOHAMMAD RABBY
FACULTY INITIAL: RBy Anindita Touhid 1811339630
SECTION: 08 Nazia Parveen 1811492630
SEMESTER: SUMMER 2019 Tasneem Nayela 1811147030
DATE OF SUBMISSION: Annisa Islam Nidhi 1811702030
08th of JULY 2019
Jenifer Jahan Protiva 1812142630

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 ACKNOWLEDGEMENT

All praise to almighty Allah, who has bestowed his kindness upon us by
giving us the chance, time and strength to carry out and finish our term paper for this
course. We are really grateful because we managed to complete our Principles of
Managerial Financial term paper within the given time by our faculty Mr. Sheikh
Mohammad Rabby. This term paper cannot be completed without the effort and co-
operation from our group members. We also want to thank our sir for the guidance
and encouragement in finishing this term paper and also for teaching us in this course.
Lastly, we would like to express our gratitude to our friends and respondents for the
support and patience.

Anindita Touhid Annisa Islam Nidhi

Nazia Parveen Jenifer Jahan Protiva

Tasneem Nayela

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 INTRODUCTION: BACKGROUND OF THE COMPANY

Crown Cement Group is one of the leading manufacturer and supplier of

cement, ready mix concrete and other building materials in Bangladesh. M. I. Cement
Factory Ltd. is the parent company of Crown Cement Group. The Company was
founded on 31st December 1994 in Dhaka. National Export Trophy for the fiscal years
2008-09, 2009-10 and 2013-14 for its extraordinary contribution to the country’s
economy through foreign currency earnings was awarded to Crown Cement Group. In
the history of Bangladesh, it is the only company that was able to win this award 3
times.

At the beginning their plant only had the producing capacity of 600tpd
Portland Cement. The demand for their product increased with the passing years thus
leading them to increasing the production capacity to 800tpd in the year 2002 and
then to 5,200tpd to take the total production capacity to 11,000tpd i.e. 3.3 million
metric tons per annum.

Crown Cement Group started exporting their products in the year 2003. The
major export markets of Crown Cement are the northeastern states of India including
Tripura, Meghalaya and eastern and western region of Assam. It has also acquired
four handy max size ocean going ships to facilitate transportation of raw materials
from abroad in order to achieve new growth platforms and to expand the company’s
boundaries for export.

Crown Cement Group is our preferred company and Premium Cement is our
benchmark company for this report. Further into the report we will show the Time
Series Analysis of our preferred company throughout their annual years from July
2013 to June 2018. Cross Sectional Analysis of both the company’s recent annual

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year will also be shown. For the purpose of this paper we have thoroughly reviewed
both the company’s annual reports and have done our calculations and analysis.

TIME SERIES ANALYSIS: RATIO ANALYSIS

LIQUIDITY RATIO

CROWN CEMENT PREMIER

CEMENT
RATIOS 2013- 2014- 2015- 2016- 2017- 2017-18
14 15 16 17 18
CURRENT 1.66 1.45 1.28 1.21 1.15 0.78 times
RATIO times times times times times
QUICK 1.51 1.32 1.16 1.09 1.043 0.72 times
RATIO times times times times times

1. CURRENT RATIO

INTERPRETATION: From the liquidity-ratio analysis table we can see that in

2013-14, Crown Cement Ltd. had current assets 1.66 times higher than their

liabilities. Later the current ratio gradually decreased each year with the values of

1.45(2014-15), 1.28(2015-16), 1.21(2016-17) and 1.15(2017-18), even though the

values are close enough, the difference between current ratio of 2013-14 and 2017-18

is big.

In 2017-18, Premier Cement Mills Ltd. had current assets 0.78 times higher than their

liabilities.

2. QUICK RATIO

INTERPRETATION: In 2013-14, the company’s (Crown Cement Ltd.) current

assets excluding inventories were 1.51 times higher that their liabilities. Similar to the

current ratio, the quick ratio also kept on decreasing each year with the values of

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1.32(2014-15), 1.16(2015-16), 1.09(2016-17) and 1.043(2017-18). Quick ratio

analysis of the company shows similar impediment.

In 20117-18, Premier Cement Mills Ltd. had current assets excluding inventories 0.72

times higher than their liabilities.

 ACTIVITY RATIO

CROWN CEMENT PREMIER

CEMENT
RATIOS 2013- 2014- 2015- 2016- 2017- 2017-18
14 15 16 17 18
INVENTORY 10.74 9.49 9.22 7.99 10.37 12.29 times
TURNOVER times times times times times
AVERAGE 34 days 38.46 39.59 45.68 35.198 29.70 days
AGE OF days days days days
INVENTORY
AVERAGE 56.04 54.04 46.16 69.66 77.49 87.33 days
COLLECTIO days days days days days
N PERIOD
AVERAGE 13.86 16.39 31.41 23.406 14.89 28.40 days
PAYMENT days days days days days
PERIOD
TOTAL 0.70 0.685 0.64 0.53 0.64 1.71 times
ASSETS times times times times times
TURNOVER

3. INVENTORY TURNOVER

INTERPRETATION: In 2013-14, Crown Cement Ltd. has sold and restocked their

inventories 10.74 times. With the decreasing showcase, inventory turnover of the

company was 9.49 in 2014-15 and 9.22 in 2015-16, which were close enough.

Nevertheless, in 2016-17, the value decreased a lot to 7.99. Again, in 2017-18, the

value of inventory turnover increased a lot to 10.37.

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 In 2017-18, Premier Cement Ltd, has sold and restocked their inventories 12.29

times.

4. AVERAGE AGE OF INVENTORY

INTERPRETATION: In 2013-14, Crown Cement Ltd. took 34 days on average to

sell its’ inventory. However, it kept on increasing every year with the value of

38.46(2014-15), 39.59(2015-16) which were close enough and 45.68(2016-17).

Again, in 2017-18, the value decreased a lot to 35.198 days.

In 2017-18, Premier Cement Ltd. took 29.70 days on average to sell their inventory.

5. AVERAGE COLLECTION PERIOD

INTERPRETATION: In 2013-14, Crown Cement Ltd. took 56.04 days on average

to collect all its’ accounts receivables. The value decreased a bit the next year to 54.04

days (2014-15). However, in 2015-16, the company took a lot less days to collect

their accounts receivable, which was 46.16 days on average. Again, in 2016-17, the

value increased a lot to 69.66 days and in 2017-18, it was 77.49 days on average,

which is lot more than the one in 2013-14.

In 2017-18, Premier Cement Mills Ltd. took 87.33 days on average to collect all its’

accounts receivables.

6. AVERAGE PAYMENT PERIOD

INTERPRETATION: In 2013-14, Crown Cement Ltd. took 13.86 days on average

to pay their suppliers. In 2014-15, the value increased a bit to 16.39 days on average

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but in 2015-16, the value increased a lot to 31.41 days on average. However, the value

stared to decrease a lot to 23.406 days on average (2016-17) and 14, 89 days on

average (2017-18).

In 2017-18, Premier Cement Mills Ltd. took 28.40 days on average to pay their

suppliers.

7. TOTAL ASSETS TURNOVER

INTERPRETATION: In 2013-14, Crown Cement Ltd. has generated BDT 70 worth

of sales revenue for every BDT 100 worth of assets. The values of 2014-15, 2015-16,

2016-17, and 2017-18 are close to each other. The values are 0.685, 0.64, 0.53 and

0.64. The highest total assets turnover was in 2013-14, which was 0.70, and the least

was 0.53 in 2016-17.

In 2017-18, Premier Cement has generated BDT 171 worth of sales revenue for each

BDT 100 worth of assets.

 DEBT RATIO

CROWN CEMENT PREMIER

CEMENT
RATIOS 2013-14 2014-15 2015-16 2016-17 2017-18 2017-18
DEBT 49.98% 51.26% 52.51% 60.39% 63.86% 66.34%
RATIO
TIMES 2.47 2.53 2.62 2.54 1.38 2.85 times
INTEREST times times times times times
EARNED
RATIO

8. DEBT RATIO

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INTERPRETATION: In 2013-14, 49.98% assets of Crown Cement Ltd. were

financed by its’ liabilities. The value of the ratio kept on increasing every year and the

values are 51.26% (2014-15), 52.51% (2015-16), 60.39% (2016-17) and 63.86%

(2017-18). According to the analysis, the company is more and more depended on its’

liabilities by every time-period.

In 2017-18, 66.34% assets of Premier Cement Mills Ltd. were financed by its’

liabilities.

9. TIMES INTEREST EARNED RATIO

INTERPRETATION: In 2013-14, Crown Cement Ltd. had the ability to pay 2.47

times extra interest than the current one. This times interest earned ratio of the

company kept on increasing until 2015-16 with the values of 2.53(2014-15) and

2.62(2015-16). In 2016-17, the value decreased to 2.54, which was close to the

previous year’s values. However, in 2017-18 the value drastically decreased to 1.38.

In 2017-18, Premier Cement Mills Ltd. has the ability to pay 2.85 times extra interest

than the current one.

 PROFITABILITY RATIO

CROWN CEMENT PREMIER

CEMENT

RATIOS 2013-14 2014-15 2015-16 2016-17 2017-18 2017-18

GROSS 15.75% 17.11% 18.4% 17.06% 13.08% 14.72%

PROFIT
MARGIN

OPERATIN 11.78% 11.91% 13.27% 11.76% 7.97% 9.67%

G PROFIT

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 MARGIN

NET 8.44 % 7.85% 8.25% 7% 2.5% 4.08%

PROFIT
MARGIN

EARNINGS BDT BDT BDT BDT BDT BDT 3.89

PER SHARE 4.54 4.37 5.01 4.45 2.13

RETURN ON 5.94% 5.38% 5.26% 3.7% 1.6% 3.05%

ASSETS

RETURN ON 11.88% 11.04% 11.07% 6.1% 4.43% 9.59%

EQUITY

10. GROSS PROFIT MARGIN

INTERPRETATION: In 2013-14, for BDT 100 worth of sales Crown Cement Ltd.

has a gross profit of BDT 15.75. The gross profit margin kept on increasing until

2015-16 and then again started decreasing. The values are respectively 17.11% (2014-

15), 18.4% (2015-16), 17.06% (2016-17) and 13.08% (2017-18). All the values are

close enough to each other, which mean the gross profit did not change much.

In 2017-18, for BDT 100 worth of sales Premier Cement Mills Ltd. has a gross profit

of BDT 14.72.

11. OPERATING PROFIT

INTERPRETATION: In 2013-14, for BDT 100 worth of sales, Crown Cement Ltd.

had an operating profit of BDT 11.78. The operating profit kept on increasing until

20115-16 and then started decreasing. The values are respectively 11.91% (2014-15),

13.27% (2015-16) and 11.76% (2016-17). In 2017-18, the value of operating profit

dropped a lot which was 7.97%.

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In 2017-18, for BDT 100 worth of sales, Premier Cement Ltd. had an operating profit

of BDT 9.67.

12. NET PROFIT MARGIN

INTERPRETATION: In 2013-14, for every BDT 100 worth of sales, Crown

Cement Ltd. had generated BDT 8.44 profit, which is available to the common stock

holders. The values of net profit margin every year kept on fluctuating. The values are

respectively 7.85% (2014-15), 8.25% (2015-16) and 7% (2016-17). In 2017-18, the

net profit margin dropped drastically, which is 2.5%. That means the common stock

holders had the least amount available for them last year.

In 2017-18, for every BDT 100 worth of sales, Crown Cement Ltd. had generated

BDT 4.08 profit, which is available to the common stock holders.

13. EARNINGS PER SHARE

INTERPRETATION: In 2013-14, Crown Cement Ltd. had BDT 4.54 worth of

earnings available for each share of common stock. The value of Earnings Per Share

(EPS) kept on fluctuating till 2016-17. The values are respectively BDT 4.37(2014-

15), BDT 5.01(2015-16), and BDT 4.45(2016-17). In 2017-18, the value decreased

drastically to BDT 2.13.

In 2017-18, Premier Cement Ltd. had BDT 3.89 worth of earnings available for each

share of common stock.

 MARKET RATIOS

CROWN CEMENT PREMIER

CEMENT
RATIOS 2013- 2014- 2015- 2016- 2017- 20917-18

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 14 15 16 17 18
PRICE EARNINGS 18.94 17.39 14.95 20.96 38.16 18.48 times
(P/E) RATIO times times times times times
MARKET/BOOK(M/B) 2.25 1.92 1.68 1.95 1.69 1.80 times
RATIO times times times times times

14. PRICE EARNINGS RATIO

INTERPRETATION: In 2013-14, Crown Cement Ltd. shareholders are willing to

pay BDT 18.94 for each BDT of earnings. The P/E ratios for 2014-15, 2015-16 and

2016-17 are close enough with the value of 17.39, 14.95 and 20.96. However, in

2017-18, the P/E earnings ratio was 38.16, which was a lot more than the previous

years.

In 2017-18, Premier Cement Mills Ltd. shareholders are willing to pay BDT 18.48 for

each BDT earnings.

15. MARKET/BOOK RATIO

INTERPRETATION: In 2013-14, the market value per share of Crown Cement Ltd.

was 2.25 times higher than the book value per share. The market/book value also

fluctuated with every year. The values were respectively 1.92(2014-15), 1.68(2015-

16), 1.95(2016-17), 1.69(2017-18).

In 2017-18, the market value per share of Premier Cement Mills Ltd. was 1.80 times

higher than the book value per share.

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 CROSS SECTIONAL ANALYSIS

CURRENT RATIO: During the period 2017-2018, the current ratio of Crown
Cement is 0.37 times higher than Premier Cement. This shows that Crown Cement
has higher liquidity ratio and has higher ability to pay off its current liabilities using
its current assets.

QUICK RATIO: The quick ratio of Crown Cement is 0.323 times higher than
Premier Cement. This means that Crown Cement is holding lower inventories
compared to Premier Cement.

INVENTORY TURNOVER: The inventory turnover of Premier Cement is

1.92 times higher than Crown Cement. This means, Premier has sold and restocked its
good more number of times compared to Crown Cement.

AVERAGE AGE OF INVENTORY: The average age of inventory turnover is

approximately 6 days higher in Crown Cement compared to Premier Cement. It
means, Crown takes approximately 6days longer to sell is average inventory.

AVERAGE COLLECTION PERIOD: The average collection period of

Crown Cement is approximately 10days lower than that of Premier Cement. The
average payment period of Crown is 14days lower compared to Premier Cement.
Crown takes comparatively lower time to collect its accounts receivable and pay the
accounts payable faster than Premier. However, both the companies take longer time
to collect its accounts receivable compared to pay their credits, which is detrimental
for their business.

TOTAL ASSET TURNOVER: The total asset turnover of Crown Cement is

1.07 times lower than Premier Cement. This means, for every 100 BDT of sales,
Crown generated 107 BDT lower sales revenue compared to premier.

DEBT RATIO: The debt ratio of Crown Cement is 2.48% lower than that of
Premier Cement. This signifies that slightly larger portion of Premier’s asset is
financed by its liabilities compared to Crown Cement.

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 TIMES INTEREST EARNED RATIO: Crown Cement’s times interest Earned
ratio is 1.47 times lower than that of Premier Cement. Crown has lower operating
profit compared to its interest expense in comparison to Premier Cement.

GROSS PROFIT MARGIN: The gross profit of Crown Cement is 1.64%

lower compared to Premier Cement. This means Premier is making 1.64 BDT higher
gross profit in comparison to Crown.

OPERATING PROFIT MARGIN: The operating profit of Crown Cements

is1.7% lower than Premier Cement. This means Premier is making 1.7 BDT higher
operating profit in comparison to Crown.

NET PROFIT MARGIN: The net profit of Crown Cement 1.58% lower than
Premier Cement. This means Premier is making 1.58 BDT higher net profit in
comparison to Crown.

EARNINGS PER SHARE: The earnings per share of Crown Cement is 1.76
times lower compared to Premier Cement. Crown had 1.76 times lower worth of
earnings available for each share of common stock outstanding.

RETURN ON ASSET: The return on asset of Crown Cement is 1.45% lower

than Premier Cement. It signifies that Premier has earned 1.45 BDT more for every
100BDT of total asset than Crown Cement.

RETURN ON EQUITY: The return on equity of Crown Cement is 5.16%

lower than Premier Cement. It means that Premier has earned 5.16 BDT more for
every 100 BDT of Common Stocks than Crown Cement.

PRICE EARNINGS RATIO: In 2017-2018, the price earnings ratio of Crown

Cement was 19.68 times higher than Premier Cement. This means, investors were
paying approximately 20BDT more for each Taka of earnings Crown Cement made.

MARKET/BOOK RATIO: In 2017-18, the market to book ratio of Crown

Cement was 0.11 times less than Premier Cement. This means Premier’s market value
per share is 0.11 times higher than book value per share, in comparison to Crown.

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 REFERENCES
1. https://www.dsebd.org/
2. https://www.crowncement.com/investor-relations/financial-statements/annual-
report/
3. http://www.premiercement.com/upload/investor/1552885809549.pdf

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