Oct 26, 2014
Group - IV
• Ishtiaque Ahmed 08102060
• Mashrur Rahman 08102075
• Jobaer Ahmed 08102096
• Imtiaz Ahmed Chowdhury 08102106
SME: Leather Products
Ray-house of leather is a leather products manufacturing & supplying company. It’s new in the leather products industry. It’s located at 4/1; Sher-E-Bangla road, Hazaribag, Dhaka-1209. It started its journey in 2006, and then it had only a factory which was used to sell processed leather. In 2010, it registered as a company and started a showroom which is also used as their office. In this showroom they keep various samples of finished leather products. Their initial investment was BDT 500000 tk. Now their investment is BDT 2000000 tk.
Background
Ray-House of Leather
Ownership StructureIt’s a partnership business. There are four partners. They are:
• Ms. Rahima Alam• Miss Srity• Md. Salim• Md. Mehedi Hasan
Each partner has equal investment and shares profit and loss equally.
Description of the Business
Ray-House of Leather is mainly manufacturer of leather products. The company sells various types of leather products like
Leather jacket Hand bag Ladies bag Belt Wallet etc. They sell their products in local market. Specially in Rifles Square, Bashundhara City, Eastern Plaza etc. They take orders from retailers and delivers in given time. They also sell their products from their showroom.
The initial investment was BDT 500000 tk. The full amount of investment was their own investment and they didn’t take any loan. Now the company owns investment of BDT 2000000 tk.
Competition
Financing Structure
This industry is very much competitive. A huge amount of competition exists in this sector. They have lots of competitors around this arena. For this reason small companies like Ray needs to provide quality on demand.
Strengths & Weakness of the Company
Strengths• The company is located in a suitable place from where they can acquire raw materials.• Labor is also available in the factory area.• Provides quality products on demand.
Weaknesses•The main weakness if the company is strong competition. There are lots of competitors in this sector.•The company lacks of sufficient investments to export its products into international market.
Ray-House of leatherCash Flow Statement
For the monthly Ended Decevmber31, 2009
Details Amount(Tk) Amount(Tk)
Cash inflow from
Sales 1622500
Total Cash inflow 1622500
Cash outflow from
Selling expense
Rent(office) 6000
Rent(factory) 30000
Maintenance 16750
Total selling expense 52750
Admin expense
Labor 48000
Manager 25000
Chemist 50000
Total Admin expense 123000
Total Cash outflow 175750
Total Cash in hand 1446750
Ray-House of LeatherIncome Statement
For the monthly Ended December31, 2009Details Amount(Tk) Amount(Tk)
Sales 1622500Less: Cost Of Goods Sold 1342500
Gross Margin 280000Less: Selling & Admin Expense
Selling Expense
Rent(office) 6000 Rent(factory) 30000
Maintenance Cost(monthly) 16750Total Selling Expense 52750
Admin Expense
Labor(8*6000) 48000
Manager(1*25000) 25000 Chemist(1*50000) 50000
Total Admin Expense 123000
Total Selling & Admin Expense 175750
Net Operating Income 104250Less: Interest Expense 0
Net Income Before Tax 104250Less: Income Tax 0
Net Income 104250
Ray-House of LeatherBalance Sheet
For the monthly Ended Decevmber31, 2009Details Amount(Tk) Amount(Tk)
Assets
Current Assets
Cash 1446750
A/C receivable 400000
Inventory 100000
Total Current Assets 1946750
Property & Equipment
Machineries 225000
Equipment 50000
Total Property & Equipment 275000
Total Assets 2221750
Liabilities & Owner Equity
Liabilities
A/C payable 320000
Notes payable 110000
Interest payable 153000
Total Liabilities 583000
Owners Equity
Capital 1534500
Add: Net profit 104250
Total Owner Equity 1638750
Total Liabilities & Owner Equity 2221750
Credit AnalysisRay-house of leather is now manufacturing and supplying their finished products into local market. The owners of the company want to export their products into international market. For this, they need loan to expand their business. They need a loan of Tk. 1000000. They need this amount of loan for three (3) years at 12% monthly interest rate. To decide whether we will give them loan or not is based on the following calculation.
So, we have decided to give them loan of Tk. 1000000 with three (3) years payback period. They have to take this loan at 12% interest. They will give installment of Tk. 31112 per month.
Monthly income / Monthly installment ≥ 1.5Tk. 104250 / Tk. 31112 = 3.36
Hridoy leather store is a leather products wholesaler and retailer. It was established in 1995 and doing business in the leather products industry from last 15 years. It’s located at 121/B; Sher-E-Bangla road, Hazaribag, Dhaka-1209. They have only one outlet where they sell various types of finished leather products. Their initial investment was BDT 100000 tk. Now their investment is BDT 1000000 tk.
Background
Hridoy Leather Store
Mr. Md. Abdul Rahim is the owner of the store. He is the only person who invested while starting the business.
Ownership Structure
Description of the BusinessRay-House of Leather is mainly manufacturer of leather products. The company sells various types of leather products like
•Leather jacket•Sandel•Hand bag•Ladies bag•Belt•Wallet etc.
They sell their products in local market. Specially in Aarong, Rifles Square, Bashundhara City, Eastern Plaza etc. They take orders from retailers and delivers in given time. They also sell their products from their showroom.
This industry is very much competitive. A huge amount of competition exists in this sector. They have lots of competitors around this arena. For this reason stores like Hridoy leather store needs to provide quality on demand.
Competition
Financing Structure
The initial investment was BDT 100000 tk. The full amount of investment was own investment by the owner and he didn’t take any loan. Now he owns investment of BDT 1000000 tk.
Strengths & Weakness of the Company
Strengths• The store is located in a suitable place where finished leather products are available from factories.• Transportation is also available in the area.• Provides quality products on demand.
Weaknesses•The main weakness is strong competition. There are lots of competitors in this business.•The store lacks of sufficient investments to export its products into international market.
Hridoy Leather StoreCash Flow Statement
For the monthly Ended Decevmber31, 2009Details Amount(Tk) Amount(Tk)
Cash inflow from
Sales 1005000
Total Cash inflow 1005000
Cash outflow from
Selling expense
Rent 10000
Maintenance 3000
Total selling expense 13000
Admin expense
Labor 40000
Manager 20000
Total Admin expense 60000
Total Cash outflow 73000
Total Cash in hand 932000
Hridoy Leather StoreIncome Statement
For the monthly Ended December31, 2009
Details Amount(Tk) Amount(Tk)
Sales 1005000
Less: Cost Of Goods Sold 850250
Gross Margin 154750
Less: Selling & Admin Expense
Selling Expense
Rent 10000
Maintenance Cost(monthly) 3000
Total Selling Expense 13000
Admin Expense
Labor(4*10000) 40000
Manager(1*20000) 20000
Total Admin Expense 60000
Total Selling & Admin Expense 73000
Net Operating Income 81750
Less: Interest Expense 0
Net Income Before Tax 81750
Less: Income Tax 0
Net Income 81750
Hridoy Leather StoreBalance Sheet
For the monthly Ended Decevmber31, 2009
Details Amount(Tk) Amount(Tk)Assets Current Assets Cash 932000 A/C receivable 300000 Inventory 220438Total Current Assets 1452438Property & Equipment Machineries 50000 Furniture 40000Total Property & Equipment 90000Total Assets 1542438
Liabilities & Owner Equity Liabilities A/C payable 200000 Notes payable 100000 Interest payable 40688Total Liabilities 340688 Owners Equity Capital 1120000 Add: Net profit 81750Total Owner Equity 1201750Total Liabilities & Owner Equity 1542438
Ray-house of leather is now manufacturing and supplying their finished products into local market. The owners of the company want to export their products into international market. For this, they need loan to expand their business. They need a loan of Tk. 1000000. They need this amount of loan for three (3) years at 12% monthly interest rate. To decide whether we will give them loan or not is based on the following calculation
So, we have decided to give them loan of Tk. 1000000 with three (3) years payback period. They have to take this loan at 12% interest. They will give installment of Tk. 31112 per month.
Credit Analysis
Monthly income / Monthly installment ≥ 1.5Tk. 104250 / Tk. 31112 = 3.36