Welcome to our Presentation On Capital structure and profitability analysis Welcome to our Presentation On Capital structure and profitability analysis

Bextex Ltd and Prime Textile Ltd. Capital Structure and Profitability Analysis Between Textile Industry Continued

Company overview of PRIME TEXTILE Ltd. Vision Their vision is to create added value to the common wealth and to benefit the society. Mission To realize the vision their mission is to play a leading role in export oriented textile sector.

Company overview of Beximco Textile. Vision  Use “Innovation” & “Speed” as prime drivers, rather than cotton & cheap labour. 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.

Capital Structure Analysis Capital Structure Capital structure is the combination of amount of debt financed by its debt holders and amount of capital financed by its equity.

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

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

Profitability Ratio

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)

Capital Structure and Profitability Analysis Between Bank Industry One Bank Limited & Standard Bank Limited One Bank Limited & Standard Bank Limited

Company overview of One Bank Ltd. ONE Bank Limited was incorporated in May, 1999 With the Registrar of Joint Stock Companies under the Companies Act. 1994, as a commercial bank in the private sector. Vision Statement To establish ONE Bank Limited as a Role Model in the Banking Sector of Bangladesh. Mission Statement  To constantly seek to better serve our Customers.  To review all business lines regularly and develop the Best Practices in the industry.

Company overview of Standard Bank Ltd. Standard Bank Limited (SBL) was incorporated as a Public Limited Company on May 11, 1999 under the Companies Act Vision Statement The bank would serve as partner and advisor of the clientele to trade, commerce and industry Mission Statement Their mission is to be utmost trustworthy stakeholder, careful, committed for equitable and sustainable growth based on diversified deployment of fund/resources.

Capital Structure Analysis

Debt ratio The debt ratio for One Bank in 2009 Debt ratio = Total liabilities/ total assets = (42,094,603,913/ 45,163,169,144)100 = 93.20% The debt ratio for Standard Bank in 2009 Debt ratio = Total liabilities/ total assets = (44,771,786,339/ 49,002,321,693)100 = 91.36% Debt ratio 90.00% 90.50% 91.00% 91.50% 92.00% 92.50% 93.00% 93.50% One Bank Standard Bank

Debt to Equity Ratio The capital structure of One Bank in 2009 D/E ratio = Total liabilities/ total equity = (42,094,603,913 / 3,068,565,231) = 13.71:1 The capital structure of Standard Bank in 2009 D/E ratio = Total liabilities/ total equity = (44,771,786,339/ 4,230,535,354) = 10.58:1

Profitability Ratio

Net profit margin Net profit margin of One Bank in 2009 Net profit margin = EACS / Sales = (726,700,936 / 2,628,880,112)*100 = 27.64% Net profit margin of Standard Bank in 2009 Net profit margin = EACS / Sales = (773,061,015/ 2,191,807,587)*100 = 35.27%

Earnings Per Share EPS of One Bank in 2009 EPS = EACS/ no. of common stock = 726,700,936/ =46.62 EPS of Standard Bank in 2009 EPS = EACS/ no. of common stock = 773,061,015/ =29.2 EPS One Bank Standard Bank

Return on Equity ROE of One Bank in 2009 ROE = EACS / Common stock equity = (726,700,936 / 3,068,565,231)*100 = 23.68% ROE of Standard Bank in 2009 ROE = EACS / Common stock equity = (773,061,015/ 4,230,535,354)*100 = 18.27% ROE 23.68% 18.27% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% One Bank Standard Bank

Return on Total Assets (ROA) ROA of One Bank in 2009 ROA = EACS / Total asset = (726,700,936 / 45,163,169,144)*100 = 1.60% ROA of Standard Bank in 2009 ROA = EACS / Total asset = (773,061,015/ 49,002,321,693)*100 = 1.57% ROA 1.60% 1.57% 1.56% 1.57% 1.58% 1.59% 1.60% 1.61% One Bank Standard Bank

Findings and Recommendations Textile industry

Findings  The debt capital of Prime Textile possesses higher risk.  The higher interest payment also affects the return on total assets of Bextex.  An 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.

Bank Industry

Findings  One Bank has used a huge amount debt capital (93.2%) in capital structure. So the company is in greater risk than Standard Bank.  Both the companies have huge liabilities and this is normal in case of bank industries. Because total liabilities include the deposits of their customer.  From huge deposited amount and profitable investment One Bank is able to produce higher EPS than Standard Bank.  The equity capital of One Bank has earned higher profit than the Standard Bank because of higher amount of debt use in capital structure than the Standard Bank.

Recommendations  One bank should restructure their capital structure in order to reduce financial distress cost by reducing their debt amount.  Efficient cost management system should be implemented for the both company.  Net profit margin decline sharply because of huge amount of interest payment in both company but more in One Bank so debt capital should be reduced.

Industry Comparison

 In the Bank industry, both the Bank has a large portion of debt in their capital structure.  But in the Textile industry, both the company has higher equity capital than debt capital comparing with the Bank industry.  In the Bank industry, both the Bank represents higher EPS than Textile industry.  ROE is higher in Bank industry than Textile industry.  But in terms of ROA, Textile industry posses higher return than Bank industry.  In the Bank industry, both the Bank has a large portion of debt in their capital structure.  But in the Textile industry, both the company has higher equity capital than debt capital comparing with the Bank industry.  In the Bank industry, both the Bank represents higher EPS than Textile industry.  ROE is higher in Bank industry than Textile industry.  But in terms of ROA, Textile industry posses higher return than Bank industry.

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