Independent University, Bangladesh

Course Title: Introduction to Finance

Course ID: Fin201 Section: 02

Submitted to: Mr. Anwar Zahid

Group Name : The Hakai’s (G5)

Submission Date 25th March 2017

Submitted by:

Name ID

MD.Monirujjaman 1620575

Wasif Al Zahid 1430770

Sied Hossain Shawon 1430287

Shahriar Haque 1410517

Md.Mashur Ul Islam 1530730

Nahiyan Ferdous 1410196

1
 Table of Contents

Contents

Executive Summary:................................................................................................................................ 2

Company Overview: ................................................................................................................................ 3

Calculation of Fu-Wang Ceramic Ratio: .................................................................................................. 4

Fu-Wang Ceramic Limited ..................................................................................................................... 5

Fu-Wang Ceramic Limited ..................................................................................................................... 5

Calculation of Shinepukur Ceramics Limited Ratio: .............................................................................. 11

Shinepukur Ceramics Limited........................................................................................................... 11

Comparison/Analysis ............................................................................................................................ 18

Decision Making .................................................................................................................................... 24

Conclusion & Reference…....…………………………………………………………………………………………………………….26

2
Executive Summary:

We have been taught extensively about the importance about the techniques of financial
statement analysis. As such, this report required us to analyze the financial statement of the

two companies. We focus on the individual situation of the companies in term of various ratio
measurements to evaluate their performance for the year 2012-2013 to 2017. The two
companies are evaluated separately on the basis of 4 dimensions of ratio analysis.

1. Profitability Ratio
2. Assets Utilization Ratio
3. Liquidity Ratio
4. Debt Utilization Ratio

Company Overview:

Fu-Wang Ceramic Industry Limited

Fu-Wang Ceramic Industry Limited, the pioneer ceramic manufacturer in Bangladesh was
established in May 1995 as a joint venture company. Subsequently, in 1998, it was listed in
the Dhaka and Chittagong capital markets. Since then, it has been operating as a public
limited company with an authorized capital of Tk. 1 billion and a paid-up capital of Tk. 930
million.

3
The company is engaged in production of various types of wall and floor tiles. Within a short
period, the business expanded its market share by its unique quality, competitive price,
exclusive designs, and wide variety of sizes and models. Its effective and creative marketing
campaign enabled the company to establish its brand value in the tiles market in Bangladesh

Shinepukur ceramics Limited

Shinepukur Ceramics is a ceramic manufacturing company based in Dhaka, Bangladesh.

Incorporated in 1997, Shinepukur Ceramics went into commercial production at the end of
1999. In 2005, it became a subsidiary of Beximco group when the latter acquired the 100%
share of the company.

In 2011, Shinepukur Ceramics were awarded the national export trophy by the Export
Promotion Bureau for their export performances during 2009-2010. They also won the "Dun
and Bradstreet Corporate Award 2010" in the ceramic category from Dun & Bradstreet
Rating Agency Bangladesh Limited.

Calculation of Fu-Wang Ceramic Ratio:

4
 Fu-Wang Ceramic Limited
PROFIT MARGIN
2012-13 2013-14 2014-15 2015-16 2016-17
NET INCOME 153,645,846 41,088,653 34,368,094 132,240,173 72,629,108
SALES 739,791,034 692,791,034 676,314,432 836,889,015 472,605,400
PROFIT 20.8% 5.9% 5.1% 15.8% 15.4%
MARGIN =
NET
INCOME/NET
SALES

Fu-Wang Ceramic Limited

RETURN ON ASSET
2012-13 2013-14 2014-15 2015-16 2016-17
NET 153,645,845 41,088,653 34,368,094 132,240,173 72,629,108
INCOME
TOTAL
1,419,941,949 1,396,388,266 1,532,673,986 1,573,319,745 1,903,075,167
ASSET
RETURN 10.8% 2.9% 2.2% 0.1% 3.8%
ON
ASSET =
NET
INCOME
/ TOTAL
ASSET

5
 Fu-Wang Ceramic Limited
RETURN ON EQUITY
2012-13 2013-14 2014-15 2015-16 2016-17
NET INCOME 153,645,845 41,088,653 34,368,094 132,240,173 72,629,108
SHAREHOLDER
1,074,347,802 1,115,436,455 1,149,804,549 1,282,044,722 1,354,673,830
EQUITY
RETURN ON 14.3% 3.7% 2.9% 10.3% 5.4%
EQUITY= NET
INCOME /
SHAREHOLDER
EQUITY

Fu-Wang Ceramic Limited

RECIEVABLE TURNOVER
2012-13 2013-14 2014-15 2015-16 2016-17
SALES
739,791,034 692,791,034
676,314,432 836,889,015 472,605,400
RECIEVEABLE 78,877,362 85,165,086 86,560,370 87,876,934 124,857,872
RECIVEABLE 9.8 x 8.1 x 7.8 x 9.5 x 3.8 x
TURN OVER =
SALES/
ACCOUNT
REACEIVEABLE

Fu-Wang Ceramic Limited

AVERAGE COLLECTION PERIOD

6
 2012-13 2013-14 2014-15 2015-16 2016-17
RECEIVABLE 78,877,362 85,165,086 86,560,370 87,876,934 124,857,872
AVERAGE
2,026,825 1,898,058 1,852,916 2,292,847 1,294,809
SALES
AVERAGE 38.9 days 44.9 days 46.7 days 38.3 days 96.4 days
COLLECTION
PERIOD =
ACCOUNT
RECIEVABLE /
AVERAGE
SALES

Fu-Wang Ceramic Limited

Inventory turnover
2012-13 2013-14 2014-15 2015-16 2016-17
SALES 739,791,034 692,791,034 676,314,432 836,889,015 472,605,400
Inventory 266,382,004 315,684,893 426,979,967 487,372,462 645,653,045
Inventory 2.8 x 2.2 x 1.6 x 1.7 x 0.7 x
turnover =
SALES /
INVENTORY

Fu-Wang Ceramic Limited

Fixed Asset Turnover

7
 2012-13 2013-14 2014-15 2015-16 2016-17
SALES 739,791,034 692,791,034 676,314,432 836,889,015 472,605,400
FIXED
879,713,423 888,171,319 900,845,526 855,346,100 972,716,564
ASSET
Fixed 0.84 x 0.78 x 0.75 x 0.98 x 0.49 x
Asset
Turnover
=SALES/
FIXED
ASSET

Fu-Wang Ceramic Limited

Total Asset Turnover
2012-13 2013-14 2014-15 2015-16 2016-17
SALES 739,791,034 692,791,034 676,314,432 836,889,015 472,605,400
TOTAL
1,419,941,94
ASSET 1,532,673,98 1,573,319,74
9 1,396,388,266 1,903,075,167
6 5
Total Asset 0.52 x 0.50 x 0.44 x 0.53 x 0.25 x
Turnover =
SALES/
TOTAL
ASSETS

8
 Fu-Wang Ceramic Limited
Current Ratio
2012-13 2013-14 2014-15 2015-16 2016-17
CURRENT
540,228,526 508,216,947 631,828,460 717,973,645 930,358,603
ASSET
CURRENT
294,430,329 215,387,288 295,939,430 223,211,618 428,105,204
LIABILITY
Current Ratio 1.8 x 2.4 x 2.1 x 3.2 x 2.2 x
= CURRENT
ASSET
/CURRENT
LIABILITY

Fu-Wang Ceramic Limited

Quick Ratio
2012-13 2013-14 2014-15 2015-16 2016-17
CURRENT 273,846,522 192,532,054 204,848,493 230,601,183 284,705,558
ASSET-
Inventory
CURRENT
215,387,288 295,939,430 223,211,618 428,105,204
LIABILITY 294,430,329
Quick Ratio = 0.93 x 0.89 x 0.69 x 1.03 x 0.67 x
CURRENT
ASSET-
CURRENT
INVENTORY
/CURRENT
LIABILITY

9
 Fu-Wang Ceramic Limited
Debt to Total Asset Ratio
2012-13 2013-14 2014-15 2015-16 2016-17
DEBT 24,339,305 26,179,191 26,053,976 31,328,086 30,498,925
TOTAL
ASSET 1,419,941,949 1,396,388,266 1,532,673,986 1,573,319,745 1,903,075,167
Debt to 1.71% 1.87% 1.70% 1.99% 1.60%
Total
Asset
Ratio =
TOTAL
DEBT /
TOTAL
ASSET

Fu-Wang Ceramic Limited

TIME INTREST EARNED
2012-13 2013-14 2014-15 2015-16 2016-17
INCOME 182,235,249 66,964,797 64,080,842 139,226,917 127,779,621
BEFORE
INEREST AND
TAX
INTEREST 7,695,974 17,266,562 23,211,614 20,770,595 23,098,871
TIME 23.7 x 3.9 x 2.76 x 6.8 x 5.5 x
INTREST
EARNED =
INCOME
BEFORE
INEREST AND
TAX /

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INTEREST

Fu-Wang Ceramic Limited

Fixed Charge Coverage
2012-13 2013-14 2014-15 2015-16 2016-17
INCOME
BEFORE
FIXED
CHARGE
FIXED
CHARGE
Fixed Charge X x x X
Coverage =
income
before fixed
charge and
tax / fixed
charge

(No data Found from Annual reports)

Calculation of Shinepukur Ceramics Limited Ratio:

Shinepukur Ceramics Limited

PROFIT MARGIN
2012-13 2013-14 2014-15 2015-16 2016-17
NET
477,671,044 424,214,071 339,390,380 453,345,512 326,025,664
INCOME

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 SALES 1,704,567,23 1,677,657,67 1,411,871,70 2,053,499,93 1,437,866,85
4 4 5 0 8
PROFIT 28% 25% 24% 22% 23%
MARGIN =
NET
INCOME/NE
T SALES

Shinepukur Ceramics Limited

RETURN ON ASSET
2012-13 2013-14 2014-15 2015-16 2016-17
NET
477,671,044 424,214,071 339,390,380 453,345,512 326,025,664
INCOME
TOTAL
6,874,254,239 6,689,447,389 6,683,795,327 6,484,417,108 6,471,085,712
ASSET
RETURN 7% 6% 5% 7% 5%
ON
ASSET =
NET
INCOME
/ TOTAL
ASSET

Shinepukur Ceramics Limited

RETURN ON EQUITY
2012-13 2013-14 2014-15 2015-16 2016-17
NET INCOME 477,671,044 424,214,071 339,390,380 453,345,512 326,025,664

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SHAREHOLDE 4,487,866,58 4,264,594,98 4,254,431,08 4,128,855,54 4,169,049,82
R EQUITY 9 4 2 1 7
RETURN ON 9.98% 9.95% 7.97% 10.08% 7.82%
EQUITY= NET
INCOME /
SHAREHOLDE
R EQUITY

Shinepukur Ceramics Limited

RECIEVABLE TURNOVER
2012-13 2013-14 2014-15 2015-16 2016-17
SALES 1,704,567,2 1,677,657,6 1,411,871,7 2,053,499,9 1,437,866,8
34 74 05 30 58
RECIEVEABLE 674,987,355 157,873,140 100,330,772 94,950,062 165,802,590
RECIVEABLE 2.5 x 10.6 x 14.0 x 21.6 x 8.7 x
TURN OVER =
SALES/
ACCOUNT
REACEIVEAB
LE

Shinepukur Ceramics Limited

AVERAGE COLLECTION PERIOD
2012-13 2013-14 2014-15 2015-16 2016-17
RECIEVEABLE 674,987,355 157,873,140 100,330,772 94,950,062 165,802,590
AVERAGE 4,670,047 4,596,322 3,868,142 5,626,027 3,939,361
SALES
AVERAGE 145 days 34 days 26 days 17 days 42 days

13
COLLECTION
PERIOD =
ACCOUNT
RECIEVABLE /
AVERAGE
SALES

Shinepukur Ceramics Limited

Inventory turnover
2012-13 2013-14 2014-15 2015-16 2016-17
SALES 1,704,567,23 1,677,657,67 1,411,871,70 2,053,499,93 1,437,866,85
4 4 5 0 8
Inventory 912,642,408 671,351,499 643,476,833 612,324,290 633,926,786
Inventory 1.9 x 2.5 x 2,2 x 3.4 x 2.3 x
turnover =
SALES /
INVENTOR
Y

Shinepukur Ceramics Limited

Fixed Asset Turnover
2012-13 2013-14 2014-15 2015-16 2016-17
SALES 1,704,567,234 1,677,657,674 1,411,871,705 2,053,499,930 1,437,866,858
FIXED
5,163,868,663 5,644,821,352 5,595,370,184
ASSET 5,712,745,542 5,550,312,459

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Fixed 0.33 x 0.30 x 0.25x 0.37 x 0.26 x
Asset
Turnover
=SALES/
FIXED
ASSET

Shinepukur Ceramics Limited

Total Asset Turnover
2012-13 2013-14 2014-15 2015-16 2016-17
SALES 1,704,567,234 1,677,657,674 1,411,871,705 2,053,499,930 1,437,866,858
TOTAL
6,874,254,239 6,689,447,389 6,683,795,327 6,471,085,712
ASSET 6,484,417,108
Total 0.25 x 0.25 x 0.21 x 0.32 x 0.22 x
Asset
Turnover
= SALES/
TOTAL
ASSETS

Shinepukur Ceramics Limited

Current Ratio
2012-13 2013-14 2014-15 2015-16 2016-17
CURRENT
1,710,385,576 1,044,626,037 971,049,785 889,046,924 920,773,253
ASSET
CURRENT
1,756,989,717 1,797,834,628 1,503,911,142 1,579,247,473 1,629,879,538
LIABILITY
Current 0.97 x 0.58 x 0.64 x 0.56 x 0.57 x

15
Ratio =
CURRENT
ASSET
/CURRENT
LIABILITY

Shinepukur Ceramics Limited

Quick Ratio
2012-13 2013-14 2014-15 2015-16 2016-17
CURRENT 797,743,168 373,274,538 327,572,952 276,722,634 286,846,467
ASSET-
Inventory
CURRENT
1,756,989,717 1,797,834,628 1,503,911,142 1,579,247,473 1,629,879,538
LIABILITY
Quick Ratio = 0.45 x 0.21 x 0.22 x 0.19 x 0.18 x
CURRENT
ASSET-
CURRENT
INVENTORY
/CURRENT
LIABILITY

Shinepukur Ceramics Limited

Debt to Total Asset Ratio

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 2012-13 2013-14 2014-15 2015-16 2016-17
DEBT 469,825,285 549,161,698 569,603,427 683,862,747 718,236,255
TOTAL
6,874,254,239 6,689,447,389 6,683,795,327 6,484,417,108
ASSET 6,471,085,712
Debt to 6% 8.2 % 8.5 % 10.5 % 11 %
Total Asset
Ratio =
TOTAL
DEBT /
TOTAL
ASSET

Shinepukur Ceramics Limited

TIME INTREST EARNED
2012-13 2013-14 2014-15 2015-16 2016-17
INCOME 363,834,483 281,764,446 231,413,485 280,111,565 223,790,163
BEFORE
INEREST
AND TAX
INTEREST 392,906,851 258,876,706 226,774,443 367,017,513 200,109,152
TIME 0.92 x 1.09 x 1.02 x 0.76 x 1.11x
INTREST
EARNED =
INCOME
BEFOR
INEREST
AND TAX /
INTEREST

17
 Shinepukur Ceramics Limited
Fixed Charge Coverage
2012-13 2013-14 2014-15 2015-16 2016-17
INCOME
BEFORE
FIXED
CHARGE
FIXED
Fixed Charge 2x 3.3x 2.7x 2.6x 4.4x
Coverage =
income before
fixed charge
and tax / fixed
charge

(No Data Found From Annual Reports)

Comparison/Analysis

Profit margin = Here each taka earned by the company is translated into profits. A low profit
margin indicates a low margin of safety. Now we saw that the profit margin of Fu-Wang
ceramic 2012-2013 was 20.8% and Shinepukur was 28% after that in next year Fu-Wang rise
but Fu-Wang was fall down next two year RAK profit margin was 5% then again increase but
Fu-Wang after 2012 year its increase slowly. In both company profit margin fall and rise
rapidly and after 2014 its going up.

28%
25% 24%
22% 23%
21%
16% 15%

6% 5%

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

18
Return on Assets = ROA is an indicator of how profitable company's assets are in generating
profit. We saw that that ROA of Fu-Wang year 2012 rise but next two year its fall but In
RAK ceramics ROA 2012 fall but after 2012 it rise smoothly and at the end of the 2015 both
countries are rise their ROA. After all we want to say that RAKs ROA is more stable than
Fu-Wang.

10.80%
10%

7% 7.00%
6%
5% 5.00%
3%
2.20%
0.10%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Return on Equity = (ROE) is an indicator of company's profitability by measuring how

much profit the company generates with the money invested by common stock owners. Net
income is considered for the full fiscal year after taxes and preferred stock dividends but
before common stock dividends. We saw in ROE is also like ROA graph rise and fall all most
Fu-Wang rise 2012 but RAK fall after that Fu-Wang fall but RAK rise smoothly but at last in
2015 both country is rising up. And we want to say that RAKs ROE is more stable than Fu-
Wang.

20.00%
15.00%
10.00%
5.00%
0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Receivable Turnover = A quick and easy indicator of how a business is tracking in its
collection of credit sales is the accounts receivable turnover ratio. The accounts receivable
turnover ratio is a simple formula an accountant can produce in seconds from the accrual

19
accounts. It’s a good measure of future cash flow expectations from credit sales. Importantly,
changes in A/R turnover ratio can point towards trouble in cash flow, or on the upside, an
improvement in collections. We saw that almost both company Receivable turnovers are
between 8x and 10x just 2011 Fu-Wang is more than 10.

21.6

14

9.8 10.6
9.5 9.5
8.1 7.8

3.8
2.5
Fu-Wang Shinepukur
2012-2013 2013-2014 2014-2015 2016-2016 2016-2017

Average Collection Period = Average Collection Period represents the average number of
days it takes the company to convert receivables into cash. We saw that RAK ceramic
average collection period is more over between 38 days to 46 days but Fu-Wang average
collection 2011 was 25 days after that it’s also take all most 38 to 46 days but last 2015 it
takes 37 days. This graph shows that RAK average collection is higher than Fu-Wang more
time.

145

96.4

44.9 46.7
38.9 34 38.3 37.8
26
17

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Inventory Turnover = Inventory Turnover Ratio is one of the efficiency ratios and measures
the number of times, on average; the inventory is sold and replaced during the fiscal year.
Inventory turnover of RAK is more likely 2.3x to 2.8x but Fu-Wang is between 1.6x to 3.8x

20
so understand that RAK inventory turnover is more stable. Inventory Turnover Ratio
measures company's efficiency in turning its inventory into sales. Its purpose is to measure
the liquidity of the inventory.

3.4

2.8
2.5
2.2 2.2 2.3
1.9
1.6 1.7

0.7

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Fixed Asset Turnover: The fixed assets turnover ratio is used to determine how efficiently a
company or operation is at using its fixed assets to generate sales. We saw that RAK Fixed
asset turnover is higher than Fu-Wang in each year. A low turnover suggests that the fixed
assets are being underutilized or that there are more assets than can be effectively used. Fu-
Wang ceramics fixed asset are less utilized than RAK ceramics.

0.98 0.97
0.84 0.78 0.75
0.49
0.33 0.37
0.3 0.25

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Total Asset Turnover: The formula for the asset turnover ratio evaluates how well a
company is utilizing its assets to produce revenue. We saw that RAK and Fu-Wang both
company utilize their total asset less than 1x they most of the time utilize 0.4x to 0.6x but Fu-

21
Wang less utilize than RAK except 2015. The numerator of the asset turnover ratio formula
shows revenues which is found on a company's income statement and the denominator shows
total assets which is found on a company's balance sheet.

0.52 0.53
0.5
0.44

0.32
0.25 0.25 0.25
0.21 0.22

2012-2013 2013-2014 2014-2015 2015-2016 2015

Fu-Wang Shinepukur

Current Ratio = Current Ratio is a liquidity ratio that measures company's ability to pay its
debt over the next 12 months or its business cycle. For RAK ratio is more stable because they
change just 1.6 to 2.3 within 5 year but Fu-Wang bit smooth change in 2011 to 2014 but 2015
is huge but last we see that Fu-Wang doing better 3.2 time day can pay their liability. Current
ratio is a financial ratio that measures whether or not a company has enough resources to pay
its debt over the next business cycle (usually 12 months) by comparing firm's current assets
to its current liabilities.

3.2 3.2

2.4
2.1 2.2
1.8

0.97
0.58 0.64 0.56

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Quick ratio = Quick Ratio is an indicator of company's short-term liquidity. It measures the
ability to use its quick assets (cash and cash equivalents, marketable securities and accounts

22
receivable) to pay its current liabilities. We saw that RAK has more short time liquidity than
Fu-Wang but in 2015 Fu-Wang indicate up but RAK start down in 2015 they both have same
liquidity. Quick ratio specifies whether the assets that can be quickly converted into cash are
sufficient to cover current liabilities.

1.03 1.03
0.93 0.89
0.69 0.67
0.45
0.21 0.22 0.19

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Debt to Total Asset: Debt to total asset means how much debt a company has instead of his
total asset. We saw that in this graph RAK total Debt is getting higher year by year from
2011 to 2015 but in Fu-Wang debt is getting lower in 2011 to 2014 but now in 2015 its little
higher that past year. We understand that company Fu-Wang is more secure company than
RAK because they have low debt that RAK.

44

8.5 10.5 11
6 8.2
0 0 0 0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fu-Wang Shinepukur

Time Interest Earned = Times interest earned (TIE) ratio shows how many times the annual
interest expenses are covered by the net operating income (income before interest and tax) of
the company. It is a long-term solvency ratio that measures the ability of a company to pay its
interest charges as they become due. It is computed by dividing the income before interest
and tax by interest expenses. For the RAK company has the ability to pay his interest is more

23
over 20 to 130 time in between 2011 to 2015 per year but on the other hand Fu-Wang has low
interest in 2013 to 2015 than theirs Net operating income that’s why its shows too much time
more than 600 time in 2015 . So we can call that Fu-Wang is doing better net operating
income in recent year than their interest payable.

700
600
500
Axis Title

400 Fu-Wang
300
Shinepukur
200
100
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Fixed Charge Coverage = Fixed charge coverage ratio is the ratio that indicates a firm’s
ability to satisfy fixed financing expenses such as interest and leases. This means that the
fixed charges that a firm is obligated to meet are met by the firm. This ratio is calculated by
summing up Earnings before interest and Taxes or EBIT and Fixed charge which is divided
by fixed charge before tax and interest. We see that RAK Fixed charge coverage is low in
2011 is 2.3 and high in 2014 in between its rise but after 2014 it’s fall but one the other hand
Fu-Wang past 2011 was low after that increase again fall in 2013 but in recent past 2015 it’s
again rise more than 4. So we can say that at this moment in 2015 Fu-Wang is doing better.

5
4.4 4.4
4
3.3 3.5
2.7 2.6
2

2012-2013 2013-2014 2014-2015 2015-2017 2016-2017

Fu-Wang Shinepukur

Decision Making

24
 Invest in these companies:

If we want to invest in any of these companies, we would take a look at Profitability ratios.
Based on 5 years of analysis, three of the profitability ratios profit Margin, return on asset,
return on equity, Shine Pukur ceramics ltd has shown higher amount of return than Fu-Wang
ceramics.The average Profit Margin of 12.6% was for Fu-Wang ceramics and 24.4% was for
Shine Pukur ceramics.The average Return on assets for Shine pukur ceramics was 6% and for
Fu-Wang ceramics it was only 3.96%. The difference is enormous.Now if we take a look at
Return on Equity, for Shinepukur ceramics it was 9.16% and for Fu-Wang ceramics it was
7.32%. Again, the difference is slightly high. So it would be profitable if investors choose
Shinepukur ceramics over Fu-Wang ceramics.

Supply raw materials on credit:

If we want to use ratios for calculating profit for creditors, we would use Liquidity ratios.
Liquidity ratios refer a company's ability to meet current Obligations with cash or other assets
that can be quickly converted to cash. Based on 5 years of analysis, two of the liquidity
ratios- Current ratio and Quick Ratio, both Fu-Wang ceramics and Shine Pukur ceramics
shows high difference between them.The average Current Ratio of Fu-Wang ceramics is 2.34
times and Shine Pukur ceramics is 0.66 times. The average Quick Ratio of Fu-Wang ceramics
is 0.84 times and Shine Pukur ceramics is 0.24 times. So the difference between the ratios of
the two companies is very high it would be most safe to choose Fu-Wang ceramics for
supplying raw materials on credit, over Shine Pukur ceramics.

Provide long-term loan as a banker:

We would have to consider the two debt utilization ratios: debt-to-total-asset and times-
interest-earned when thinking for providing long-term loan as a Banker. The Debt-to-total-
assets ratio for Fu-Wang ceramics is 1.77% and for Shine Pukur ceramics is 8.84%.The
higher this ratio, the more leveraged the company is, implying greater financial risk. So
investing in Shine Pukur ceramics will give bankers 7.07% more risk than investing in Fu-
Wang ceramics. The next ratio we would consider is the Times-interest-earned which is

8.53 times for Fu-Wang ceramics and 0.98 times for Shine Pukur ceramics. This difference is
huge. The times interest earned ratio indicates the extent of which earnings are available to

25
Meet interest payments.A higher times interest earned ratio means high earnings are available
to meet Interest payments and that the business is less vulnerable to increases in Interest rates
and being able to meet their existing outstanding loan obligations. So, investing in Fu-Wang
ceramics would be more profitable.

Conclusion
Fu-Wang Ceramic Industry Limited, the pioneer ceramic manufacturer in Bangladesh and
Shinepukur Ceramics is a ceramic manufacturing company based in Dhaka, Bangladesh.
Analysis this two company we have found that Shinepukur ceramics has more Profitability,
Asset Utilization, Liquidity, and Debt Utilization than Fu-Wang ceramics. So if we want
toinvest any of these companies we should choose Shinepukur ceramics because of higher
profitability. If we want to Supply raw materials on credit we should choose Fu-Wang
ceramics because it has higher Liquidity then shinepukur ceramics. Fu-Wang ceramics
Company has the ability to meet current obligations with cash or other assets that can be
quickly converted to cash.

And if we want to provide long term loan as a banker we should choose Fu-Wang ceramics
because it has higher debt utilization ratios than shinepukur ceramics. By analyzing these two
companies we have found that Fu-Wang ceramics is financially better then Shinepukur
ceramics.

Reference:

http://www.dsebd.org/ (Dhaka Stock Exchange)

http://lankabd.com/dse/stock-market/FUWANGCER/fu-wang-ceramic-
limited/financial-statements?companyId=8&stockId=8

http://fuwangceramic.com/images/upload/share/Annual_Report_2015-
2016.pdf

http://fuwangceramic.com/images/upload/share/Annual_Report_2014-
2015.pdf

http://ilslbd.com/research_reports/Equity%20Note%20-%20Fu-
Wang%20Ceramic%20Industry%20Limited.pdf

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www.shinepukur.com/index.php?p=inv_annual

http://lankabd.com/dse/stock-market/SPCERAMICS/shinepukur-ceramics-
limited/financial-statements?companyId=11&stockId=11

Book: Foundation Of Financial Management 13th Ed.

Chapter -3 Financial Analysis & Planning (Page 74-75 all Ratio Formulas )

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