Impact of Working Capital Management

on the Profitability of
Cement Industry in Bangladesh

GROUP SIX
Ulfat Murshed Tamanna 16221003
Rifat Ibna Lokman 16221007
Ridwanul Azim 16221017
Nusrat Jahan Mimi 16221061
OVERVIEW: CEMENT INDUSTRY
WCM
 CEMENT INDUSTRY OVERVIEW

Currently 32
factories are in
95% of the cement First cement plant operation, all local
were imported. was set up. demand is met by
local cement
production.

1990 1997 2016

 MARKET SHARE

CONFIDENCE CEMENT
AKIJ CEMENT3%
5% SHAH CEMENT
18%
FRESH CEMENT
8%
• TOP 10 Companies
hold 81% of the
CROWN CEMENT
9%
current market share
LAFARGEHOLCIM
as of 2016.
15%
• Of this 10, 8 are local
PREMEIR CEMENT
9% and 2 are
multinational.
HEIDELBERG CEMENT BD BASHUNDHARA
10% 12%

SEVEN-RINGS CEMENT
11%
 MATRKET SEGMENT

55% 45%

• INDIVIDUAL HOMEMAKER
25%
• COMEMRCIAL REAL ESTATE
30%

PRIVATE SECTOR PUBLIC SECTOR

 CAPITAL MARKET
Only seven (7) cement industries are listed in the stock market in
Bangladesh (Dhaka Stock Exchange, 2018)Whose are the sample of current
study.

Name of sample cement industries Abbreviation Incorporation Year Enlistment Year

Aramit Cement Ltd. ACL 1995 1998

Confidence Cement Ltd. CCL 1994 1995

1998(start operation in
Heidelberg Cement Ltd. HCL 1989(listed in DSC)
Bangladesh)

LafargeHolcim Bangladesh Limited  LCL 1997 2013

Meghna Cement Mills Ltd. MCL 1992 1995

Micement Cement Ltd. MICL 1994 2011
Premier Cement Mills Ltd. PCL 2001 2013
TREND ANALYSIS
WCM
WORKING PROFITABILITY
CAPITAL RATIOS RATIO For Trend Analysis we calculated different working capital
• Quick Ratio • Return On ratios and tried to find out the relationship with
• Inventory Investment profitability of them.
Turnover Ratio (ROI)
• Debtors
Turnover Ratio
• Creditors
Turnover Ratio
• Cash
Conversion
Cycle (CCC)
PROFITABILITY RATIO
WCM
 PROFITABILITY RATIO

Ratios ACL CCL HCL LCL MCL MICL PCL Mean Years

3.41 11.04 18.89 15.38 3.69 9.01 8.95 10.05 2013

0.86 5.33 13.26 12.70 3.53 5.84 5.09 6.66 2014

Return on
Investment 1.01 6.61 19.40 13.60 2.99 7.10 4.28 7.86 2015
(%)
1.76 7.66 17.18 13.89 3.40 7.31 6.10 Mean

Industry
8.19 8.19 8.19 8.19 8.19 8.19 8.19 Average
WC RATIOS
WCM
 QUICK RATIO

Ratios ACL CCL HCL LCL MCL MICL PCL Mean Years

0.59 1.16 2.46 0.59 1.01 2.06 0.56 1.20 2013

0.78 0.55 1.96 1.08 0.90 1.51 0.51 1.04 2014

Quick Ratio 1.07 0.87 1.65 1.60 0.85 1.32 0.59 1.14 2015

0.81 0.86 2.02 1.09 0.92 1.63 0.55 Mean

Industry
1.13 1.13 1.13 1.13 1.13 1.13 1.13
Average
 RELATION WITH ROI

Quick Ratio ROI

Quick Ratio ROI
1.25 12
1.2 10.05
1.2 10
1.14 7.86
1.15 8
percentage

Percentage
6.65
1.1 6

1.05 1.04 4

1 2

0.95 0
2013 2014 2015 2013 2014 2015
year
Year
 INVENTORY TURNOVER RATIO

Ratios ACL CCL HCL LCL MCL MICL PCL Mean Years

7.43 7.64 7.04 4.07 6.37 13.13 6.67 7.48 2013

3.18 9.20 8.28 4.51 4.36 10.74 4.87 6.45 2014

Inventory
Turnover 5.08 12.10 8.08 4.71 9.37 9.49 5.26 7.73 2015
Ratio
5.23 9.65 7.80 4.43 6.70 11.12 5.60 Mean

Industry
7.22 7.22 7.22 7.22 7.22 7.22 7.22
Average
 RELATION WITH ROI

Inventory Turnover ROI

Inventory Turnover Ratio ROI
8 12
7.73
10.05
7.48 10
7.5
7.86
8
percentage

percentage
7 6.65
6
6.5 6.45
4
6 2

5.5 0
2013 2014 2015 2013 2014 2015
year Year
 DEBTORS TURNOVER RATIO

Ratios ACL CCL HCL LCL MCL MICL PCL Mean Years

2.92 4.92 11.24 15.00 5.52 10.23 6.06 7.98 2013

1.85 4.77 11.75 13.92 4.86 6.83 5.70 7.10 2014

Debtors
Turnover 1.68 7.25 10.23 12.37 8.55 7.07 5.82 7.57 2015
Ratio
2.15 5.65 11.07 13.76 6.31 8.04 5.86 Mean

Industry
7.55 7.55 7.55 7.55 7.55 7.55 7.55 Average
 RELATION WITH ROI

Debtors Turnover ROI

Debtors Turnover Ratio ROI
8.2 12
7.98 10.05
8
10
7.8 7.86
7.57 8
7.6
percentage

percentage
6.65
7.4 6
7.2 7.1 4
7
2
6.8
6.6 0
2013 2014 2015 2013 2014 2015
year Year
 CREDITORS TURNOVER RATIO

Ratios ACL CCL HCL LCL MCL MICL PCL Mean Years

1.59 18.05 3.60 3.15 14.22 41.51 6.46 12.65 2013

1.78 14.35 3.50 3.12 32.24 62.34 22.33 19.95 2014

Creditors
Turnover 4.21 24.68 2.90 2.95 33.55 54.32 19.61 20.31 2015
Ratio
2.53 19.03 3.33 3.07 26.67 52.72 16.13 Mean

Industry
17.64 17.64 17.64 17.64 17.64 17.64 17.64 Average
 RELATION WITH ROI

Creditors Turnover ROI

Creditors Turnover Ratio ROI
25 12
19.95 20.31 10.05
20 10
7.86
8
percentage

percentage
15 6.65
12.65
6
10
4
5 2

0 0
2013 2014 2015 2013 2014 2015
year Year
 CASH CONVERSION CYCLE RATIO

Ratios ACL CCL HCL LCL MCL MICL PCL Mean Years

-55 102 -18 -2 97 55 58 33.86 2013

107 91 -26 -10 148 81 123 73.43 2014

Cash
Conversion 202 66 -46 -17 71 83 113 67.43 2015
Cycle
84.67 86.33 -30 -9.67 105.33 73 98 Mean

Industry
58.24 58.24 58.24 58.24 58.24 58.24 58.24
Average
 RELATION WITH ROI

Cash Conversion Cycle ROI

Cash Conversion Cycle ROI
80 73.43 12
70 67.43 10.05
10
60 7.86
8
50
percentage

percentage
6.65
40
33.86 6
30
4
20
2
10
0 0
2013 2014 2015 2013 2014 2015
year Year
DESCRIPTIVE ANALYSIS
WCM
 DESCRIPTIVE ANALYSIS
Descriptive statistics are brief descriptive coefficients that
summarize a given data set.
Variables Minimum Maximum Mean Median SD
Quick 0.55 2.02 1.13 0.92 0.516296
Inventory Turnover 4.43 11.12 7.22 6.70 2.452559
Debtors Turnover 2.15 13.76 7.55 6.31 3.837497
Creditors Turnover 2.53 52.72 17.64 16.13 18.08191
CCC -30 105.33 58.24 84.67 54.62271
ROI 0.86 13.26 6.66 5.33 4.625738

Measure of Central Tendency Measure of Variability

• Mean • Standard Deviation

• Median • Minimum and Maximum Variables.
• Mode
 DESCRIPTIVE ANALYSIS
Variables Minimum Maximum Mean Median SD
Quick 0.55 2.02 1.13 0.92 0.516296
Inventory Turnover 4.43 11.12 7.22 6.70 2.452559
Debtors Turnover 2.15 13.76 7.55 6.31 3.837497
Creditors Turnover 2.53 52.72 17.64 16.13 18.08191
CCC -30 105.33 58.24 84.67 54.62271
ROI 0.86 13.26 6.66 5.33 4.625738

getting the credit amount in an

The mean of debtors turnover is 7.55
average of (365/7.55) or 48 days

paying back to their debtors within

The mean of creditors turnover is 17.64
(365/17.64) or 21 days in an average.
REGRESSION ANALYSIS
WCM
 REGRESSION ANALYSIS

DEPENDENT INDEPENDENT

Quick Ratio
Return on Investment (ROI)
Inventory Turnover Ratio

Debtors Turnover Ratio

Creditors Turnover Ratio

Cash Conversion Cycle

REGRESSION ANALYSIS
 REGRESSION ANALYSIS

FORMULA

 
 REGRESSION ANALYSIS

INVENTORY TURNOVER
2
DEBTORS TURNOVER 1
CREDITORS TURNOVER 3

P VALUE R ELATIONSHIP
CORRELATION ANALYSIS
WCM
 CORRELATION ANALYSIS

Quick Ratio

Inventory Turnover Ratio +1

Debtors Turnover Ratio POSITIVELY CORRELATED
VARIABLES
Creditors Turnover Ratio

Cash Conversion Cycle

-1
NEGATIVELY CORRELATED
ROI
 CORRELATION ANALYSIS

POSITIVE NEGATIVE POSITIVE NEGATIVE NEGATIVE

VERY VERY
MODERATE
STRONG STRONG
CONCLUSION
 CONCLUSION

TREND REGRESSION CORRELATION

ANALYSIS ANALYSIS ANALYSIS

POSITIVELY CORRELATED POSITIVELY CORRELATED POSITIVELY CORRELATED

• Quick Ratio • Inventory Turnover Ratio • Quick Ratio
• Inventory Turnover Ratio • Debtors Turnover Ratio • Debtors Turnover Ratio
• Debtors Turnover Ratio

NEGATIVELY CORRELATED NEGATIVELY CORRELATED NEGATIVELY CORRELATED

• Creditors Turnover Ratio • Creditors Turnover Ratio • Creditors Turnover Ratio

• Cash Conversion Cycle • Cash Conversion Cycle
• Inventory Turnover
THANK YOU