FIN440 Term Project
INSTRUCTOR: Riyashad Ahmed (RyA)
This report is all about the financial analysis of “Bangladesh Lamps Ltd” which belongs to the industry of “Engineering”. In order to construct this report five years of data have been collected of BD lamps. Using those data vertical and horizontal balance sheet and income statement have been constructed. After that two years of forecasted balance sheet and income statement have been created. The growth rate of sales ‘g’ has been derived using two methods. Following these the ratio analysis on BD lamps has been done. For this purpose five more companies of this industry have been chosen. They are: Aziz Pipes, Singer, Monno Jute, BSRM and BD Thai. Then the industry averages of all 19 ratios have been calculated along with 2 DU Ponts. Then the values of 19 ratios have been calculated using those time series and cross sectional analysis have been constructed.
Afterwards, five years of return and standard deviation have been calculated for BD Lamps and for the market DSE. Then the risks per return (CV) for both BD lamps and market DSE have been calculated along with the analysis. Following these a risk free rate has been considered from the Bangladesh Bank Website and the beta has been calculated for the company. Using this required rate of return Ke has been derived using CAPM. Once this was done The Weighted Average Cost of Capital (WACC) and also the capital structure of BD Lamps have been constructed. The analysis of the situation has also been stated. The company’s intrinsic share price has been calculated based on the dividend discount model. The dividend growth rate has been calculated using three methods.
Then the probable dividend policy has been stated along with the three views. After doing all the analysis a final conclusion has been derived.
Bangladesh Lamps Limited (BLL) is the pre-eminent manufacturer of electric light bulbs in the country. The company has an exclusive licensing agreement with PHILIPS Electronics N.V. Holland, under which it manufacturers PHILIPS lighting products. BLL was incorporated in 1960 as a subsidiary of PHILIPS, Holland. In March 1993, PHILIPS sold its entire shares to TRANSCOM. The primary purpose of BLL is to produce and serve Philips GLS lamps (Classictone, Softtone and Anti-Insect types) & Transtec CFL and GLS lamps (Clear & Lustre types) around the country which are marketed and sold under the governance of Transcom Electronics Ltd (TEL) as lightening distribution and sales projects. Due to the necessity of cost effective electricity the TFL tech bulbs are populated and distributed more and more everyday around the country, BLL became one of the leading TFL bulb production houses. BLL was incorporated in 1960 as a subsidiary of PHILIPS, Holland. In March 1993, PHILIPS sold its entire shares to TRANSCOM. BLL has already established Florescent Tube Light (FTL) production plant with contemporary high-tech machineries and going to start fully fledged FTL manufacturing in middle of May 2011.Currently about 400 skilled workers are there who are directly involved with Transtec lighting and Philips GLS production process. The address of the head office of the company is Sadar Road, Mohakhali, Dhaka-1206
Answer to the Question 2(a)
In the vertical balance sheet all items of the balance sheet are divided by Total assets and expressed as percentage. Bangladesh Lamps Ltd....