Ratio Analysis of Squre Textile Ltd.

Topics: Financial ratios, Generally Accepted Accounting Principles, Financial ratio Pages: 21 (5092 words) Published: January 31, 2013
Chapter 01

1. Introduction

1.1 About Square Textiles Limited

Square Textiles Limited. has Started its journey by establishing the first unit in 1997. One year later the second unit was established. Square Textile is a subsidiary company of Square Group .The Company was incorporated as a public limited company in the year of 1994. The operation was started in 1997.It was enlisted in Dhaka Stock Exchange & Chittagong Stock Exchange in 2002. Within a very short time of span the company achieved some significance success. Square Textile receives Oeko-Tex standard 100 and ISO-9002 certificates in the year 2000. Authorized capital of the company is tk. 1000 million. It’s paid- up capital is tk. 251.90 million. 1,223 employees are working in this organization. Mr. Samson H. Chowdhury is the chairmen of Square Textiles Limited. Other board of directors is Mr. Tapan Chowdhury, Mrs. Anita Chowdhury, Dr. Kazi Harunar Rashid, Mr. Samuel H. Chowdhury, Mr. Anjan Chowdhury, Mr. Charles C.R. Patra, Mrs. Ratna Patra, Mr. Kazi Iqbal Harun, and Mr. M. Sekandar Ali as in Managing Director, Director and Independent Director. The business lines of Square Textiles Limited are manufacturing and marketing of yarn. The factory is located in Saradaganj, Kashimpur, Gazipur, Bangladesh. Its office is located at Uttara in Dhaka. Its main objective is to strive hard to optimize profit through conduction of transparent business operations within the legal and social framework with malice to none and justice for all.

1.2 Rationale of the study

This term paper is on different financial analysis of Square Textiles Limited. here, different financial analysis is conducted to find out the actual position of the company in the current market situation. In this term paper, ratio analysis cost of money and stock valuation is conducted to find the right decision. Ratio Analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. It is predominately used by proponents of fundamental analysis. The limitations of financial ratios for analytical purposes must be considered. Such as a ratio is static in nature and does not reveal future flows, a ratio does not reveal the amount of its components, a ratio does not reveal the quality of its components, a ratio is based on historical cost not taking into account inflation. Then, cost of money means an imputed cost determined by applying a cost-of-money rate to facilities capital employed in contract performance, Although technically not a recovery of interest, cost of money is intended to compensate a contractor for the capital cost of employing certain facilities in the performance of contracts. At last, The process of calculating the fair market value of a stock by using a predetermined formulas that factors in various economic indicators. Here, also some limitation should consider. Such as, inflation is unpredictable and risk premium can’t measure effectively all the time which can be appear as a problem of determining cost of money. Also, we consider some tools to calculate price of stock, it could be a limitation for determining value of stock.

1.3 Objective of the study

➢ To understand different terms of the finance.
➢ To find out the actual position of the company in the market. ➢ To fulfill the course objective.
➢ To find out intrinsic value of particular company’s stock and make comparison with the current market value of the stock.

1.4 Methodology

For preparing our report we have used both primary sources and secondary sources. We were able to collect our information by these sources.

Primary Sources:

➢ Discussion with our course teacher
➢ Scott...
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