Here in this term paper we try to analyze the financial statement of assigned company, which is Aramit Cement Limited (ACL). At first we gathered information from the firm’s financial statement. We collected the data from year 2004 to 2008. However within this five year period we calculated the profitability analysis, liquidity analysis, activity ratio, debt management ratio and market book ratio. We also calculated the ratio analysis of Confidence Cement Limited (CCL); we tried to compare between ACL and CCL. From our analysis we can say that the liquidity position, capital structure, profitability position and EPS (earning Per Share) of the Confidence Cement Limited is much better than the Aramit Cement Limited. From the perspective of some activity ratio analysis Aramit Cement Limited is much better than Confidence Cement Limited. From the common size balance sheet and income statement we can have a more insight about what is going on in the firms operations. We also create the balance sheet based on the market value gathered from the secondary sources. From this we tried to find the amount by which the firm is whether ACL is over-valuated or under-valuated. However we also calculated cash flow statement to have a better insight. And found that ACL’s share is highly over-valuated. And from the cash flow we see the poor performance in terms of operating cash flow generation, which indicate poor working capital management.
1. Chapter One: Introduction and Methodology
Aramit Cement Limited is our selected company for analysis, which is a cement company. According to our term paper requirement we tried to find out the financial position of the company by comparing it with another cement company, which is Confidence cement Limited. At first we find out the book value of Aramit Cement Limited.
Book Value of Aramit Cement Limited (ACL)
From the book value we can see that Aramit Cement Limited has a very much fluctuating book value which is not a good signal for the investors. But still there is less effect on the market price, because if we see the market price of the share then we can easily see the disparity between the book value and the market price.
Market Value of Aramit Cement Limited (ACL)
(Collected from the Financial Report)
|Date |30 Dec,2004 |28 Dec,2005 |28 Dec,2006 |30 Dec,2007 |30 Dec,2008 | |Quoted Price Per Share |Tk. 65.00 |Tk. 40.00 |Tk. 73.25 |Tk. 150.74 |Tk. 177.5 |
This is a bad sign for the investors because the investors might confused from the market price but it is a good sign for Aramit Cement Limited because there assets are over-valuated.
1. Origin of the Report:
Mr. M. Masud Rahman, Professor, Dhaka University, has assigned this report to us, as this report is a requirement of the course “Rationalization of Stock Price through Financial Analysis”. This term paper has been assigned to us it is due on 10thApril 2010.
2. Objectives of the Report:
The broad objective of the report is to build a strong familiarity about the financial statements and ratio analysis to measure the financial status and performance of the company in terms of profitability, liquidity, Solvency and Efficiency. By preparing this report we are trying to acquaintance of the overall financial statements and ratio analysis. Moreover the shallow objective of the report is to acquire knowledge about the insights of interpreting the ratios and statements. Preparing this report such kind of topic is extremely beneficial for us as the students of finance. Another objective of the report is to measure the performance by comparing the ratio analysis with other firm in the same industry. This identifies any loop wholes that needed attention to...