Welcome to our Presentation On Cross sectional analysis Welcome to our Presentation On Cross sectional analysis Bextex Ltd and Prime Textile Ltd.

Company overview of Beximco Textile. Vision Use “Innovation” & “Speed” as prime drivers, rather than cotton & cheap labor. Mission BEXTEX Ltd. is a full service vendor with strong vertically integrated production facilities as well as creative & analytical capabilities which clearly set us apart from most other South Asian vendors.

Cross sectional analysis Between Prime textile & Bextex Ltd. Cross sectional analysis Between Prime textile & Bextex Ltd.

Liquidity Ratio

Current Ratio Current ratio for bextex in 2009 = Current assets/Current liabilities = / = 0.91:1 Current ratio for prime in 2009 = Current assets/Current liabilities = / = 1.063:1

Quick Ratio Quick ratio for bextex in 2009 = (Current asset-inv)/Current liability = ( )/ = 0.57:1 Quick ratio for prime in 2009 = (Current asset-inv)/Current liability = ( )/ = 0.487:1

Activity Ratio

Inventory Turnover Inventory turnover ratio for Bextex in 2009 = cost of goods sold / inventory = / = 1.13 times Inventory turnover ratio for prime in 2009 = cost of goods sold / inventory = / = 2.46 times

Average collection period Average collection period for bextex in 2009 = AR /Average sales per day = / ( /365 days) = / = 289 days Average collection period for prime in 2009 = AR /Average sales per day = / ( /365 days) = 79days

Total Asset turnover Total Asset turnover for bextex in 2009 = sales / total asset = / = 0.25 times Total Asset turnover for prime in 2009 = sales / total asset = / = times

Debt Ratio

The debt ratio for bextex in 2009 Debt ratio = total liabilities/ total assets = ( / )*100 = 56.2% The debt ratio for prime in 2009 Debt ratio = total liabilities/ total assets = ( / )*100 = 82% Debt ratio

Debt to Equity Ratio The capital structure of prime in 2009 D/E ratio = total liabilities/ total equity = ( / ) = 1.28:1 The capital structure of bextex in 2009 D/E ratio = total liabilities/ total equity = ( / ) = 4.69:1 Bextex 56% 44% debt capital equity capital Prime Textile 82% 18% debt capital equity capital

Time Interest Earned Ratio Time Interest Earned Ratio of prime in 2009 = EBIT / Interest = / = times Time Interest Earned Ratio of bextex in 2009 = EBIT / Interest = / = 0.53

Profitability Ratio

Gross profit margin Gross profit margin of prime in 2009 = (sales – cogs) / sales = Gross profit/sales = / = 11.8% Gross profit margin of bextex in 2009 = (sales – cogs) / sales = / = 35%

Operating profit margin Operating profits margin of prime in 2009 Operating profit margin= operating profit / sales = / = 5.51% Operating profits margin of bextex in 2009 Operating profit margin= operating profit / sales = / = 14.54%

Net profit margin The net profit margin of prime in 2009 Net profit margin = EACS / Sales = / = 4.5% The net profit margin of bextex in 2009 Net profit margin = EACS / Sales = ( ) / = (0.13)

Earnings Per Share EPS of Prime Textile in 2009 EPS = EACS/ no. of common stock = taka EPS of bextex in 2009 EPS = EACS/ no. of common stock = (3.23) taka

Return on Equity ROE of Prime Textile in 2009 ROE = EACS / Common stock equity = / = 6.19% ROE of Bextex in 2009 ROE = EACS / Common stock equity = ( ) / = (19%)

Return on Total Assets (ROA) ROA of Prime Textile in 2009 ROA = EACS / Total asset = / = 2.71% ROA of bextex in 2009 ROA = EACS / Total asset = ( ) / = (0.03)

Findings  The debt capital of Prime Textile possesses higher risk.  The higher interest payment also affects the return on total assets of Bextex.  Earnings per share of Bextex (3.23) is less than the Prime Textile because their net profit hugely decline from operating profit because of higher interest payment.

Recommendations  The Prime Textile should increase their debt capital slightly more than 50% in order to reduce the chance of hostile takeover from another company.  The debt capital of Bextex should be slightly declined to reduce the financial distress cost.  The debt capital should be declined to reduce the interest payment that adversely affect in profitability ratio of Bextex.

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