Ratio Analysis

1. Executive Summary

We were given to do the project on Beximco Limited. In the beginning of the report we have

prepared all the common size statements for 2007-2011 from the information given in the annual

reports of the company. Beximco Limited’s financial position has been analyzed calculating

Liquidity Ratio, Assets Management Ratio, Debt Management Ratio, Profitability Ratio and

Stock Market Ratio and has interpreted those ratios. We use various ratio analysis and financial

calculations learnt in Finance 440 to understand Beximco’s current financial position and future

growth compared. This is done by comparing Beximco’s financial position to companies such as

Aramit Limited., Berger Paints, GQ Ball Pen, and Bangladesh Shipping Corporation (BSC), all

of which belong to the miscellaneous industry. We also have constructed a representative

industry average of the Miscellaneous Sector of Dhaka Stock Exchange for cross-sectional

analysis of Beximco Limited. The report also contains the graphical representation of those

ratios. We also have calculated the ROA and ROE using the Du-Pont and Extended Du-Pont

equation respectively. Then we have analyzed the risk, return, and the WACC of Beximco

Limited. In addition, we have analyzed the market returns for the period, of the company and

represent them in the tables and added necessary explanation. The optimum capital structure is

calculated. Intrinsic share price have been also calculated. At the end of the report there is a brief

discussion about the dividend policy of the company

One limitation to our project was that Beximco’s financial calendar is from January 1st to

December 31st. Three of the four companies that we worked with had the same financial years,

except for BSC. The financial year for BSC begins in July and ends in June.

9

Introduction

Beximco Limited is the largest conglomerate in Bangladesh, with interests in textile,

pharmaceuticals, real estate, trading, information and communication technologies, ceramics and

construction. It is also the parent company of GMG Airlines and Independent TV. Beximco also

has stakes on Unique Hotels and Resorts which on The Westin Hotel in Bangladesh.

What began as a commodities trading company, by brothers Ahmed Sohail Fasiur Rahman and

Ahmed Salman Fazlur Rahman in 1970, has now evolved into a diversified group of industries

that contributes nearly 75% of Bangladesh’ GDP. Beximco’s products are sold domestically and

internationally. It is the largest employer in the private sector of Bangladesh, employing 48000

people.

The Group consists of four publicly traded and seventeen privately held companies. The publicly

traded companies – Bangladesh Export Import Company Limited, Beximco Pharmaceuticals

Limited, Shinepukur Ceramics Limited and Beximco Synthetics Limited – have a combined

market capitalization of approximately $550.96 million. The Group had total revenues of $834

million in the year ended December 31, 2010. The Group’s global clients include some of the

world’s best known brands including BT, BASF, Chevron, Calvin Klein, H&M, JC Penney,

Macys, Zara, UNICEF, Royal Doulton and Villeroy & Boch.

Beximco’s Corporate Social Responsibility (CSR) includes:

Proyash: A specialized institute that works for the holistic development of children with

special educational needs through different programs. Works of this program involve

Include early childhood development programs (ECD), special schooling, therapeutic

interventions, medical and neuro-developmental assessment, leisure time and co-

curricular activities, training for the teachers, parents and integrated services.

Through contributions to Gono Shahajjo Songstha, Beximco facilitates education of the

underprivileged. It also provides help by supplying drugs and garments during natural

disasters. The Fazlur Rahman Foundation established the FRF Diagnostic Centre that

10

provides free health screening for Beximco Pharmaceuticals and Beximco Antibiotics

Industries employees.

Beximco was also the sponsor of the Bangladesh National Cricket team for the ICC

Cricket World Cup in 2011.

Through these activities, Beximco generates a goodwill that further strengthens its image and

consequently adds to its future growth.

b) Forecasted Income Statement and Balance Sheet:

To forecast the two years income statement and balance sheet we used sales percentage method.

First we calculate the sales growth rate by using the method cumulative historical compounded

growth rate (g). After get the growth rate we forecast the sales for next two years. Then the other

amounts were calculated according to changes in sales. The items those do not vary with the

sales or was constant in the previous years remain the same as the previous years.

All the necessary calculations have shown in the appendix part.

FORCASTED INCOME STATEMENT FOR 2012 & 2013

2012 2013Revenue(turnover) from net Sales 62901881746 134855344274.27Cost of Goods Sold -34860222863 -74736831796.80Gross Operating Profit 97762104609 209592176071.08Operating Expenses -3107352958 -6661854007Administrative expenses -2924937501 -6270773509Selling and Distribution Expenses -163544892.5 -350623895.1Exchange loss -18870564.52 -40456603.28Operating Profit 94654751651 202930322063.93Financial Expenses -3219854322 -3219854322Net Profit Before Cont. to WPWF 91434897328.70 199710467741.93Contribution to Workers' Profit/Welfare Fund -855465591.7 -1834032682Net Profit Before Income tax 90579431736.96 197876435059.80Income tax Expenses -7626788152 -16087354170Net Profit after Tax 82952643584.70 181789080889.44Non-Controlling (minority) Interest in Income -181157419.4 -388383391.5Net Profit after Non-Controlling(minority) Interest 82771486165.28 181400697497.93

11

Other Comprehensive IncomeRevaluation Surplus on Property, Plant & Equipments 16297877560 34941019701Fair Value Gain on Investment in Shares 182415457.1 391080498.4Total Comprehensive Income after minority interest 99251779182.61 216732797697.78

EPS

8.79 6.

69

FORECASTED BALANCE SHEET for 2012 & 2013

2012 2013Non-current Assets 63844671351.63 136876590910.77property, plant and equipment 56884253318.07 121954150688.61Investment in Shares 5180683914.75 11106868245Differed Assets 26256011.00 56290261.97Long-term Loan 817891743 817891743Current Assets 97202510007.29 208392461204.63Inventories 12407103345.79 26599588863.04Trade and Other Receivables 47811862586.33 102503852198.83Advances, Deposits and Pre-Payments 36427824948.18 78097613906.41Cash and Cash Equivalents 555719126.99 1191406236.36Total Assets 161047181358.92 345269052115.40Equity and LiabilitiesShareholder's Equity 136442785704.34 334955247772.85Issued Share Capital 3535208570 3535208570Reserves 23625786188 23625786188Retained Earnings 109298840454.34 307879768233.85

Non-controlling (minority) Interest in subsidiaries

1350281988 1350281988

Long-term Loans-Net of Current Maturity 5220136740 5220136740Differed tax liability 9965449 9965449Current Liabilities 52436464939 112418537183.19short term loan from bank and others 15820058051 33916622456long term loan-current portion 7342041958 15740603754Trade and Other Payables 26988064686 57859711881Income tax payable 1066421122 1066421122Total Equity and Liabilities 161047181358.92 345269052115.40

12

3a) Ratio Analysis

Time series and cross sectional analysis

1) Liquidity Ratios:

  2007 2008 2009 2010 2011

Current Ratio 1.29 times 1.95 times 2.38 times 2.18 times a. times

Quick Ratio 0.68 times 0.94 times 1.67 times 1.76 times 1.62 tim

es

Working Capital 426445560 281976842

2

669053702

8

122726594

11

208806591

11

Cash conversion

cycle

410 Days 709 days 1024 days 146 days 215 days

Beximco Ratios

Industry Average Calculation (2011)

 Ratios Aramit

Limited

Berger

Paints

GQ

Ball Pen

BSC Beximco

Limited

Industry

average

13

Current ratio 1.82 times 1.70 times 1.70 times 3.37 times 1.85 times 2..09 times

Quick ratio 1.33 times 0.69 times 1.18 times 2.78 times 1.62 times 1.52 times

Working Capital 273890158 931005 195047953 150014412

5

122726594

11

6382581360

I. Current ratio:

Formula = Current Assets/Current Liabilities

Interpretation:

In 2011 Beximco's current ratio was 1.85.That means Beximco's current assets were 1.85 times

of their current liabilities. Performance declined compared to the previous performance as well

as the industry average 2.09. Relative change in current liabilities was more than the relative

change in assets. It is a bad sign in company’s performance as current liabilities were more than

its current assets in 2011.

II. Quick ratio:

Formula = (Current Assets-Inventory)/ Current Liabilities

14

Interpretation:

In 2011 Beximco's Quick ratio was 1.62. That means Beximco’s current assets (excluding

inventory) were 1.62 times of their current liabilities. Performance decline compared to the

previous performance as well as the industry average 1.52. From 2007 to 2009 the quick ratio of

Beximco went high but then till 2011 the ratio declined little in amount. Relative change in

current liabilities was more than relative change in assets (excluding inventory). Declining

performance in this ratio is bad for the company. This shows Beximco may not have enough

current asset excluding inventories to fulfill the liabilities.

III. Working capital:

Formula = Current Assets + Current Liabilities

15

Interpretation:

In 2011 Beximco's working capital was 20880659111. This is way more than previous year.

Its working capital is much more than industry average 6382581360 Taka. That means the

company is having enough money to operate its business which has a good effect on

Beximco. As we can see the trend from the graph it is going upward.

IV. Cash conversion cycle:

Formula = Days in Inventory+ Days sales outstanding – Average Payment Period

Interpretation:

In 2011 it takes on an average 215 days to convert invested capital to cash. From 2007 to 2009

the ratio was extremely high then the trend fluctuated.

16

2. Asset Management Ratio:

Beximco Ratios

2007 2008 2009 2010 2011

Inventory Turnover 1.29 times 0.45 times 0.39 times 2.43 times 2.81 times

Days In Inventory 283 days 811 days 925 days 150 days 130 days

Total Asset Turnover 0.44 times 0.31 times 0.31 times 0.62 times 0.39 times

Fixed Asset Turnover 0.83 times 0.83 times 0.96 times 2.30 times 0.99 times

Days Sales Outstanding 129 days 100 days 101 days 225 days 277 days

Average Payment Period 2 days 2 days 2 days 229 days 192 days

Aramit

Limited

Berger

Paints

GQ

Ball Pen BSE

Beximco

Limited

Industry

Average

Inventory Turnover 2.74 times 3.09 times 1.35 times 6.38 times 2.81 times 3.3 times

Days in inventory 133 days 118 days 270 days 58 days 130 days 142 days

Total Asset turnover 0.69 times 1.85 times 0.23 times 0.73 times 0.39 times 0.78 times

17

Fixed Asset turnover 2.37 times 5.4 times 0.47 times 1.80 times 0.99 times 2.20 times

Days sales outstanding 1 day 28 days 26 days 31 days 277 days 73 days

Average Payment

Period 217 days 9 days 3 days 31 days 192 days 91 days

Industry Average Calculation (2011)

I. Inventory Turnover:

Formula=Cost of goods sold/ inventory

Interpretation:

In 2011, the company has sold out & restocked their inventory 2.81 times. It did well compare

to last few years. But still it is unfavorable because it is below industry average. The relative

change in COGS is higher than the relative change in inventories over last few years.

II. Days in Inventory:

Formula=365 days/inventory turnover ratio

18

Interpretation:

On an average the inventory stay in their company 130 days before it gets sold out. In 2011

number of days went down compared to last 4 years which is a good sign. Beximco is below

company average which means days in Beximco is doing good. The lower it is the better. So for

2011 days in inventory is in a good shape.

III. Total Asset Turnover:

Formula: sales/total assets

Interpretation:

In 2011, Every 1 taka worth of total assets generated 0.39 taka worth of sales. Performance is

bad. The pattern is not stable at all. Industry average is 0.78 taka so it is lower than that. So it is

unsatisfactory. The relative change in total assets is more than relative change in sales.

19

IV. Fixed Asset Turnover:

Formula= Sales/ Fixed assets

Interpretation:

In 2011, Every 1 taka worth of fixed assets generates 1 taka worth of sales. Performance has

declined and it is way lower than the industry average. So it is not satisfactory at all. The relative

change in fixed assets is higher than the relative change in sales amount.

V. Days Sales Outstanding:

Formula=Accounts receivable/ (sales/365)

Interpretation:

20

In 2011, it takes on average 277 days to collect account receivables from debtors. It has

increased than previous years and it was above than industry average. So they should worry.

Compared to industry average it is very high. So it is not good at all.

VI. Average Payment Period:

Formula: Accounts payable/ (cost of goods sold/365)

Interpretation:

In 2011, on an average company took 192 days to pay to suppliers.

Beximco is not in favorable situation because DSO is 277 days and APP is 192 days. APP is less

than DSO. So they should do something to maximize DSO.

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3. Profitability Ratios:

Beximco Ratio

Profitability Ratio 2007 2008 2009 2010 2011

Gross Profit Margin 33.53% 51.72% 74.51% 43.55% 44.58%

Operating Profit Margin 40.97% 46.53% 70.86% 42.21% 39.63%

Net Profit Margin 10.78% 37.36% 61.18% 36.13% 50.91%

Return on Asset 4.71% 11.46% 19.19% 22.43% 19.88%

Operating Return on Asset 11.89% 14.27% 22.22% 26.21% 15.48%

Return on Equity 11.52% 17.18% 33.92% 38.43% 33.88%

Industry Average Calculation (2011)

  Aramit

Limited

Berger

Paints

BSC GQ Ball

pen

Beximco

Limited

Industry

Average

22

Gross Profit

Margin

22.80% 34.08% 4.60% 20.25% 44.58% 25.26%

Operating Profit

Margin

20.30% 14.31% -1.83% 21.74% 39.63% 18.83%

Net Profit Margin 14.61% 11.41% 0.73% 24.48% 50.91% 20.43%

Return on Asset 10.02% 34.48% 0.53% 5.67% 19.88% 14.12%

Operating Return

on Asset

10.05% 42.70% -1.33% 5.04% 15.48% 14.39%

Return on Equity 17.00% 36.27% 1.03% 8.15% 33.88% 19.27%

I. Gross Profit Margin:

Formula: (Gross Profit/ Sales)*100

Interpretation:

In 2011, for every $100 worth of sales Beximco operates $44.58 worth of gross profit. It has

improved from last year, and is at a favorable position compared to the industry average.

Performance had fluctuated but increased from 2007. Even though gross profit and total sales

increase, relative change in gross profit was higher than relative increase in sales. Gross profit

margin in current year is comparatively lower than historical years which are an effect of

generating lower gross profit.

23

II. Operating Profit Margin:

Formula: (Operating profit/Sales)*100

Interpretation:

In 2011for every $100 sales Beximco made $39.63 worth of operating profits. Performance

fluctuated but declined in general. Performance declined from 2010, but is very favorable

compared to industry average. This is because relative increase in operating profit was less than

relative increase in sales.

Net Profit Margin:

Formula: (Net profit/ Sales)*100

Interpretation:

24

In 2011 for every $100 sales there is $50.91 worth of net profit. Performance increased from last

year, and is also favorable compared to the industry average. This is because relative increase in

net profit is higher than relative increase in sales. The net profit margin fluctuated from 2007,

but increased in general.

Return on Asset:

Formula: (Net profit/Total asset)*100

Interpretation:

In 2011, every $100 worth of asset generated a Net Profit of $19.88. Performance declined from

2010, but is favorable compared to the industry average. This is because relative increase in total

assets was more than relative increase in net profit. Beximco’s return on asset has shown an

upward growing trend from 2007

Operating Return on Asset:

Formula: (EBIT/Total Asset)*100%

25

Interpretation:

In 2011, every $100 worth in assets generated an operating profit worth $15.48. Performance has

declined from last year but is favorable compared to the industry average. This is because the

relative increase in operating profit was less than relative increase in total assets. The operating

profit had a growing trend till 2010 but declined in 2011.

Return on Equity:

Formula: (Net profit/Total equity)*100

Interpretation:

In 2011, the shareholders received a return of $33.88 for every $100 invested in the company.

Performance has declined compared to last year but is very favorable compared to industry

average. The return on equity had a growing trend till 2010 but declined in 2011. This is the

main indicator of stock market. As the return on equity is on favor the stockholders will still be a

part of the company.

26

4. Debt Management Ratio:

Beximco’s Ratios

2007 2008 2009 2010 2011

Debt-Asset

ratio 38% 37% 37% 343% 40%

Time Interest

Ratio 2.08 8.75 11.52 12.65 1.46

Industry Average Calculation

Aramit

Limited

Berger

Paints

GQ Ball

pen

BSC Beximco Industry

average

Debt-Asset ratio41% 42% 30% 48% 40% 40%

Time Interest Ratio1472.10 22.20 3.17 -0.25 1.46 299.74

I. Debt to Asset:

27

Formula = Total debt/ total asset

Interpretation:

In 2011 the company has 40% debt to asset ratio. This ratio means the company has used 40% of

total assets were purchased by using debt. It also means the company’s total structure consists of

40% debt and 60% owner’s equity

II. Times Interest Earned

Formula = EBIT/Interest

Interpretation:

28

In 2011, Beximco’s EBIT was 1.46 times higher than interest. During 2007 to 2011 the time-

interest ratio has fluctuated a lot. Performance has declined on this ratio regarding the last year’s

performances. The ratio is also very lower than industry average. The interest expense has

increased relatively higher than relative change in EBIT

5. Stock Market Ratio:

Beximco’s Ratios

2007 2008 2009 2010 2011

Earnings Per Share 0.51 1.91 3.46 1.94 2.5

M/B Ratio 8.4 16.58 30.35 28.90 9.11

Price Earning Ratio 73.33 96.54 89.39 160.567 45.2

 Aramit Limited

Berger Paints

GQ Ball Pen BSCBeximco Limited

Industry Average

Earnings Per Share

Tk. 1.43 /share

Tk. 3.11 /share

Tk. 0.99 /share

Tk. 0.92 /share

Tk. 2.5 /share

Tk.1.79/share

M/B Ratio 33.04 times 62.86 times 13.91times 62.16 times 9.11 times 36.23 times

Price Earning Ratio

19.44

176.85

171.31

604.03 45.2

203.37

Industry Average Calculation

I. Earnings per share:

29

Formula = Net income (available to common stock)/ Total no. of Common Stock

Outstanding

Interpretation:

In 2011 the shareholders earned Tk. 2.50 per share. Performance has improved from last year and overall performance is also very favorable compared to the industry average. This is because the relative increase in net income is very higher.

II. Market to Book value:

Formula = Market value/share / (Book value/share)

30

Interpretation:

In 2011, the market value per share was 9.11 times higher than the book value. Performance has

declined very much compared to 2010. Overall performance is very unfavorable compared to the

industry average. This is because, the market price of the share decreased and the book value/

share increased. As the market price is declining, this can create unfavorable situations for the

company.

III. Price Earnings Ratio:

Formula = Market price/share/EPS

Interpretation:

In 2011, the shareholders of this company were willing to pay Tk.45.2 for every one taka of

reported earnings. It is the key for a company’s judgment. Beximco’s price earnings ratio is very

31

low than the industry average which is not a good sign for the company’s performance. The

shareholders will not have any confidence to invest or reinvest in this company.

3b) DuPont Analysis

DuPont Analysis is an approach to evaluate a firm’s profitability and return on equity.

DuPont Analysis:

Net Profit Margin Total Asset Turnover Ratio

Return on Assets

2007 10.78% 0.44 times 4.71%

2008 37.36% 0.31 times 11.46%

2009 61.18% 0.31 times 19.19%

2010 36.13% 0.62 times 22.43%

2011 50.91% 0.39 times 19.88%

Return on Asset: Net Profit Margin x Total Asset Turnover

Net Income/ Total Asset = Net Income/ Sales x Sales/Total Asset

The ROA in 2011 decreases, due to the decrease in Total Asset Turnover. The net profit margin increased

in 2011. This shows that Sales decrease relative to the increase in total asset. It could be either that the

32

demand in the market seems to decrease and the sales are getting affected. The total asset is increasing

allot, we can see that loan also increases so maybe the company purchased asset using the loan.

Extended DuPont Analysis:

Net Profit Margin Total Asset Turnover Ratio

Equity Multiplier Return on Euity

2007 10.78% 0.44 times 2.46 11.52%

2008 37.36% 0.31 times 1.52 17.18%

2009 61.18% 0.31 times 1.77 33.92%

2010 36.13% 0.62 times 1.71 38.43%

2011 50.91% 0.39 times 1.70 33.88%

Return on Equity: Net Profit Margin*Total Asset Turnover*Equity Multiplier

Net Income/ Total Common Equity= Net Income/Sales*Sales/Total Asset* Total Asset/Total Equity

The ROE decreased in 2011 after a increase in 2010. This is also due to the decrease in the total asset

turnover, the net profit margin is increasing and the equity multiplier has no significant change.This also

due to the decreasing sales in comparison with the increasing asset.

5 c) Insights on the Ratios:

Beximco is one of the leading countries in the country there sales profits assets equity and

liabilities have really high value. While calculating the ratio we saw there was an sudden

unrealistic humongous growth in Beximco’s statements. So there is always a sudden change in

the trend of the ratios. The liquidity ratios are near and better than the industry average but in

comparison to their past performances there is a declined in the liquidity of the company. The

asset management ratios are in bad position compared to the industry average. It is better in 2011

but the company is not using its all assets properly to generate profits. The profitability ratios are

much better than the industry average. ROA and ROE is better than the industry average

showing the company is doing well in this sector. We can see in the trend that the most ratios

have a declining trend from 2010 which is a bad sign. The debt-management ratio is exactly the

33

industry average. The company had huge loans in 2010 which they have paid back in 2011 so the

debt management ratio is favorable. The stock-market ratio is not so satisfactory. The

shareholders are earning less than the industry average from the company. And other ratios are

also below the industry average and that shows that the shareholders have lack of confidence on

the company. If the company does not take necessary steps to handle this situation then they may

have to face some bad consequences.

4. Risk Analysis

To calculate the risk of Beximco Limited, we have collected last five years daily trading

information from DSE. Then we have taken the beginning and the ending market price of the

shares of each month of last five years. Using this information we have calculated total 60

monthly returns from 2008 to 2011. Then we have calculated the standard deviation and analyze

risk.

Beximco Limited’s Returns for all month from 2007 to 2011:

Months  2007 2008 2009 2010 2011

January 1.13% 1.93% 12.56% 1.28% -5.69%

February -17.28% 2.49% -9.50% 11.56% -20.30%

March 3.15% 6.48% 9.98% 0.16% 17.42%

April -6.90% -6.47% 25.52% 8.67% -4.81%

May -2.94% 9.87% -14.40% -22.13% -40.67%

June 16.79% 72.71% 29.70% -9.23% 3.39%

July 3.15% 69.02% -4.23% 1.91% 17.11%

34

August -7.19% -21.67% -10.10% 8.07% -15.26%

September -3.77% 94.05% -3.99% -5.69% -4.36%

October 61.11% -1.15% 15.21% 2.90% -24.28%

November 3.45% -41.12% -9.23% -1.20% 5.17%

December -4.10% 36.73% 3.72% -3.89% -7.78%

STANDARD DEVIATION = 23.77%

So the risk of Beximco Limited’s stock is 23.77%. The standard deviation is a statistical measure

of variability of a set of observations. The smaller the standard deviation, the tighter will be the

probability distribution and there will be lower riskiness of stock. Here if a person invests in the

stock of Beximco limited 100 times, the risk of not getting the expected return 23.77 times.

5. Market Return

Market return measures the total return of a market on a whole. We have calculated the monthly

return of the market by using the DSE index in the same way we have calculated the monthly

return of Beximco Limited.

DSE Market Returns for all month from 2007 to 2011:

Month/Year 2007 2008 2009 2010 2011

JANUARY 14.02% -3.38% -5.63% 17.48% -9.88%

FEBRUARY -1.92% 1.42% -3.41% 2.01% -33.47%

MARCH -1.85% 3.44% -6.83% 0.27% 13.40%

APRIL 0.34% 1.56% 4.55% 0.92% -6.14%

MAY 13.69% 2.13% 1.30% 8.46% -3.89%

JUNE 7.09% -6.46% 15.91% 0.12% 7.91%

JULY 8.84% -8.85% -5.06% 2.02% 4.91%

AUGUST 2.55% 3.76% 0.01% 3.44% -2.44%

SEPTEMBER 1.26% 5.18% 4.53% 4.77% -16.19%

35

OCTOBER 8.52% -8.42% 7.72% 10.16% -13.97%

NOVEMBER 4.75% -6.70% 29.15% 8.23% 4.61%

DECEMBER 4.81% 11.06% 2.52% -4.96% 0.40%

The average of these 60 monthly returns of the market is the Market Return (RM ) Market Return

Market Return per month = 1.85%

Market Return Annually (RM) = 1.85 x12

RM = 22.2%

5a) Beta Calculation:

Using the table in given in the appendix we have calculated the Beta. To find out the beta we

used the regression method. Our X axis input was the return of the monthly stock market and Y

axis was the monthly return of Beximco Limited for five years from 2007 to 2011. After running

the regression method we have calculated the beta which is

β = 0.497

Regression analysis method results are shown below:

SUMMARY OUTPUT

Regression StatisticsMultiple R 0.178671R Square 0.031923Adjusted R Square 0.015232Standard Error 0.235932Observations 60

ANOVA

36

  Df SS MS FSignificance

FRegression 1 0.106463 0.106463 1.912606 0.171975Residual 58 3.228504 0.055664

Total 59 3.334967      

 Coefficient

sStandard

Error t Stat P-value Lower 95%Upper 95%

Lower 95.0%

Upper 95.0%

Intercept 0.028649 0.031176 0.918936 0.361935 -0.03376 0.091054-

0.03376 0.091054

X Variable 1 0.497004 0.359374 1.38297 0.171975 -0.22236 1.21637-

0.22236 1.21637

We have cross checked the beta by using a scatter plot diagram which is given below:

37

Using both the methods Beximco Limited’s beta is 0.497.

Beta measures market risk, which is the extent to which the returns n a given stock move with

the stock market. The beta for market is 1.0. The Beta for Beximco Limited is 0.497%. It means

1% change in the market return will lead a 0..497% change in the Beximco’s return.

Risk Free Rate of Return:

38

According to us, the safest investment in Bangladesh is the investment on 364 days Treasury bill

of Bangladesh Bank. The rate of return of that kind of bill is on an average 10.995%. We can

assume that the Bangladesh government will be able to pay the interest in all circumstances and

in this short period of time there is a very low possibility of changing the interest rate. So we

consider the risk free rate of return.

Risk Free Rate (Rf) = 10.995%

Required Rate of Return:

To calculate the required rate of return yearly (ke) we have to used the Capital Asset Pricing

Model. We need the market return (Rm), risk free rate of return (Rf) and the beta. We have

calculated the Km, Kb and β, so we can use the CAPM equation.

The formula is:

CAPM, Ke = Rf + (Rm - Rf ) x β

= 10.995 + (22.2 – 10.995) X 0.497

= 16.56%

So the investor’s yearly Required Rate of Return is 16.56%.

5b) Cost of Financing:

39

Cost of Financing is the price a company has to pay to obtain loan capital. We know that its

formula is:

Cost of Financing = Interest Rate x (1- Tax Rate)

And the Interest rate is simply obtained by dividing the Interest expense by EBIT (Earning

before Interest and Taxes). By doing so, we will get the before tax interest rate and cost of

financing of debt. And if we want to calculate the after tax interest rate and cost of financing of

debt, we just need to multiply the before tax interest rate and cost of financing of debt with (1-

Tax Rate)

If we refer to the Financial Report (Balance Sheet and Income Statement) for the year 2011

Interest Rate = (2959557424/8644756339) x100

= 11.10%

Tax Rate = (674985413/8007975587) x 100

= 8.43%

Cost of Financing = Interest Rate x (1- Tax Rate)

= 0.111(1-0.0843)

= 10.16%

5 c) Weighted Average Cost of Capital (WACC)

40

Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which

each category of capital is proportionately weighted. All capital sources - common stock,

preferred stock, bonds, retained earnings, and any other long-term debt - are included in a

WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return

on equity increases. An increase in WACC notes a decrease in valuation and a higher risk.

Cost of Equity:

The cost of equity is the Required Rate of Return (Ke ). The Required Rate of Return (Ke ) was

calculated using the Capital Asset Pricing Model (CAPM).

Therefore, Cost of Equity( Ke) = 16.56%

Market Value of Equity:

No. of common shares outstanding = 353520857

Market price per share = Tk. 113

Total market value of common equity = 353520857 X 113

= Tk. 39947856840

Retained earning = Tk. 16918967359

Total Equity = Common Stock Equity + Retained Earnings

= Tk. 39947856840 + Tk. 16918967359

= Tk.56866824190

Total Debt = Tk. 8644756339

Weight of Debt =

= 13.20%

Weight of Capital =

= 86.80 %

WACC = Wd × Kd (1- Tax Rate)+ We x Ke

= 13.20 x 10.16% + 86.80 % x 16.56%

41

= 15.72%

6. Optimum Capital Structure

In finance, capital structure refers to the way a corporation finances its assets through

some combination of equity, debt, or hybrid securities. It is the perfect mix of debt and

equity that maximizes the share price.

Formula:

V*=EBIT (1- Tax)/WACC

Here,

EBIT-8,644,756,339

Tax- 8.43%

Weight of DebtCost of Debt

Weight of Equity

Cost of Equity

WACCV*

13.20% 10.16% 86.80% 16.56% 15.72% 50371636250

25% 10.16% 75% 16.56% 14.96% 52914461100

35% 10.16% 65% 16.56% 14.32% 55279353210

50% 10.16% 50% 16.56% 13.36% 59251522310

55% 10.16% 45% 16.56% 13.04% 60705547390

From this table, we can see there are 5 combinations of debt and equity including the actual

combination of Beximco Limited for the year 2011. Optimum Capital Structure means the

highest value generated from a mix of debt and equity. From all combinations most preferable

one is 55% debt and 45% equity because it gives the highest value among all. So the Optimum

Capital Structure is 55% debt and 45% equity.

42

7. Intrinsic Share Price

The intrinsic share price is the actual value of a share. The intrinsic value includes variables such

as, brand name, trademarks, and copyrights etc, which are often difficult to calculate and

sometimes not reflect in the market value of a share. Intrinsic share price reflects the price;

investors are willing to pay for buying the stock. If this value is more than the market value of a

share it means the company’s shares are under-valued. And in the opposite case, if the intrinsic

share price is less then the market share price the company’s shares are over-valued. That

implies, to calculate the intrinsic share price based on dividend discount model we need to find

out the required rate of return, growth rate and last paid dividend

.

Dividend per share:

For the year 2011, D0 = Tk.10/share

For the year 2012, D1 = D0 (1+g) = Tk.11.0033/share

For the year 2013, D2 = D1 (1+g) = Tk.12.11/share

For the year 2014, D3 = D2 (1+g) = Tk.12.59/share

Terminal value, TV2 = D3/ (Ke-g) = Tk.100.64

100.33% 100.33%

2011 2012 2013 2014

P0 , DO D1 D2, TV2 D3

Intrinsic value, Po = D1/ (1+i) + D2/ (1+i )2 + TV2/ (1+i)2

= Tk. 92.42

43

4.5%

The constant growth rate was assumed to be 4.5%, which is below the required rate of return

(16.56%). The intrinsic stock price of Beximco Limited in 2011 was Tk. 92.42. Whereas, the

market value Beximco Limited’s Stock was Tk.113 in the year 2010. So, the intrinsic share price

is lower than the market price. So the stock price is over-valued. The investors are interested to

invest in this particular company for their huge reputation or for the dividend policy. This is a

good sign that people are attracted to the company but on the other hand because of the high

share price is there is a chance of sudden market fall also they investor to make profit might sell

the stocks.

44

8. Dividend Policy

There are three views:

1st view: One of the most argued by Modigliani and Miller. It states that the dividend is the ‘‘passive

residual’’. People only care about the return (Capital gain yield+ dividend gain yield). So, no matter what

happens to the dividend as long as the overall return is good the buyer will buy the share

2nd view: “high dividend increases the share price”. People tend to value the dividend, because it

has more’ guaranteed income’. For that higher dividend attracts more buyers. As a result the share price

very much depends on the dividend.

3rd view: “Low dividend increases the share price”. People always try to maximize income

(after tax income). Though the tax rate on the dividend is very high buyers expect to have lower

dividend so that the overall return is higher.

Dividend payment plans

Constant dollar payout ratio: In this policy the percentage of earnings paid out in dividends is

held constant. Although, the dividend-to-earnings ratio is stable, the dollar amount of the

dividend naturally fluctuates from year to year as profits vary. Example:$0.5/share, $1.0 share

Stable dollar dividend per share payout: This dividend maintains relatively stable dollar dividend

overtime. An increase in the dollar usually does not occur until management is convinced that

the higher level can be maintained in the future. Management also will not reduce the dollar

dividend until the evidence clearly indicates that a continuation of the present dividend cannot

be supported. Example: 10% cash,15% cash(on face value)

Small regular dividend plus year end extra dividend payout: A corporation following this policy

pays a small regular dollar dividend plus a year end extra dividend in prosperous years. The

extra dividend is declared toward the end of the fiscal year, when the company’s profits for the

period can be estimated. If company has a very good profit year it (the company) follows this

policy. Example: $1, $1.5, $2.0

45

Dividend Policy of Beximco:

Beximco’s dividend policy is highly based on stock dividend. Beximco gives up to 25% of bonus

stock dividend per share in 2011. So, we can say that Beximco follows the 2nd view by giving the

stockholders a ‘certain return’. For every 100 shares Beximco gives 25 new shares. Even though

the market value of the share does not increase as the stock dividend is given but it ensures the

stock price not to decrease as the number of shares increase.

46

Notes:

1. We could not calculate g using the formula g = retention* ROE .Because our retention was

coming out to be more than 200%. Then Sir you gave us the permission to not to calculate using

this method.

47

APPENDIX

48

2.c) FORCASTED INCOME STATEMENT AND BALANCE SHEET

g calculation for sales :

net income:

2007 2008 2009 2010 2011

1721730460 2803557113 5327783716 18980964619 27438488152

g1 = (2803557113- 1721730460)/ 1721730460

= 62%

g2 = (5327783716-2803557113)/ 2803557113

= 90%

g3 = (18980964619-5327783716)/ 5327783716

= 256%

g4 = (27438488152-18980964619)/ 18980964619

=54.57%

Avg. growth rate, g= (62%+ 90%+256%+54.57%)/4

=115.64%

2) FV= PV(1+g)n

27438488152= 1721730460 (1+g) 4

g= 99.80%

so, g= (115.64+99.80)/2

= 114.39%

49

Dividend calculation:

2007:

No. Of common stock outstanding = no. of stock outstanding in 2007 + no. of stock outstanding in 2007* dividend stock percentage

= 36204297 (1.15) = 41634941.55

Stock Dividend = no. Of stock outstanding in 2007* FV

= 41634941.55*10

= 416349415.5

2008:

Cash dividend = FV* Cash percentage* no. Of shares outstanding in 2007

= 10* 10%* 41634941.55

= 41634941.55

No. Of stocks outstanding = 41634941.55(1.50)

= 62452412.33

Stock dividend = 62452412.33*10 = 624524123.3

Total dividend = 41634941.55 + 624524123.3= 666159064.9

2009:

No of stocks outstanding = 62452412.33(1.60) = 99923859.73

Stock dividend= 99923859.73*10 = 999238597.3

2010:

No. Of stocks outstanding = 99923859.73(1.5) = 149885789.6

Stock dividend = 149885789.6 * 10 = 1498857896

2011:

No. Of stocks outstanding = 149885789.6(1.25) = 187357237

Stock dividend = 187357237 *10 = 1873572370

50

g calculation for dividend forecasting:

1) dividend:

g = (666159064.90-41634941.50)/ 41634941.50 = 1500%

g = (999238597.30 -666159064.90)/ 666159064.90 = 49.99%

g = (1498857896.00-999238597.30)/ 999238597.30 = 50%

g = (1873572370.00-1498857896.00)/ 1498857896.00 = 25%

avg. g = (49.99+50+25)/3= 41.66%

[note: as the dividend return of 2008 was very high we are excluding the return taking it as a exception]

2) FV =PV (1+g) n

1873572370.00 = 41634941.50 (1+g )4

g = 159.002%

3) Sustainable growth rate :

Note: g is not possible to be counted as retention ratio was not possible to be counted from the annual reports of Bangladesh Export and Import company.

so, g= (41.66+ 159.002)/2 = 100.33%

Dividend:

2012: 1873572370 (1+1.033) = 3753327529

2013: 3753327529(1+1.033) = 7519041039

Retained earnings calculation:

RE= beginning retained earnings+ net income- dividends

2012: 16918967359 + 96133200624.34 – 3753327529 =109298840454.34

2013: 109298840454.34+206099968818.52-7519041039 = 307879768233.85

51

2007 2008 2009 2010 201141634941.50 666159064.90 999238597.30 1498857896.00 1873572370.00

EPS calculation:

EPS = net income/ no. Of stocks outstanding

2012: 96133200624.34/ (109298840454.34/10) = 8.79

2013: 206099968818.52/ (307879768233.85/10) = 6.69

[ note: as the Face value of stocks remains same from 2007 we are assuming it will be constant]

FORECASTED INCOME STATEMENT:

2012 2013

Revenue(turnover) from net Sales

29339932714(1+1.1439) 62901881746(1+1.1439)

Cost of Goods Sold 16260877280/29339932714 *100= 55.42%

62901881746* 55.42%

34860222863/62901881746*100= 55.42%

134855344274.27* 55.42%

Gross Operating Profit62901881746-34860222863

134855344274.27-74736831796.80

Operating Expenses

6270773509+350623895.1+40456603.28

Administrative expenses 1365536627/29339932714 *100= 4.65%

62901881746* 4.65%

2924937501/62901881746*100=4.65%

134855344274.27* 4.65%

Selling and Distribution Expenses

75169915/29339932714 *100= 0.25%

62901881746* 0.25%

163544892.5/62901881746*100= 0.25%

134855344274.27* 0.25%

Exchange loss 10120204/29339932714*100= 0.03%

18870564.52/62901881746*100= 0.03%

52

2924937501+163544892.5+18870564.52

62901881746* 0.03% 134855344274.27* 0.03%

Operating Profit 97762104609-3107352958

209592176071.08-6661854007

Financial Expenses -3219854322 -3219854322

Net Profit Before Cont. to WPWF

94654751651-3219854322

202930322063.93-3219854322

Contribution to Workers' Profit/Welfare Fund

400398779/29339932714*100= 1.36%

62901881746* 1.36%

855465591.7/62901881746*100= 1.36%

134855344274.27* 1.36%

Net Profit Before Income tax

87754415223-855465591.7 199710467741.93-1834032682

Income tax Expenses

674985413/8007975587 *100=8.43%

88609880815* 8.43%

16087354170/197876435059.80

*100

=8.13%197876435059.80* 8.13%

Net Profit after Tax 88609880815-7203983310

Non-Controlling (minority) Interest in Income

84384072/29339932714*100= 0.03%

62901881746* 0.03%

181157419.4/62901881746*100= 0.03%

134855344274.27* 0.03%

Net Profit after Non-Controlling(minority) Interest

7248606102/29339932714*100= 0.29%

62901881746* 0.29%

79652907607.00/62901881746*100= 0.29%

134855344274.27* 0.29%

Other Comprehensive IncomeRevaluation Surplus on Property,Plant & Equipments

7601395496/29339932714*100

= 25.91%

62901881746* 25.91%

16297877560/ 62901881746*100= 25.91%

134855344274.27* 25.91%

Fair Value Gain on Investment in Shares

86202955/29339932714*100=0.29%

182415457.1/62901881746*100= 0.29%

53

197876435059.80-16087354170

62901881746* 0.29% 134855344274.27* 0.29%

Total Comprehensive Income after minority interest

79652907607.00+16297877560+

182415457.1

181400697497.93+ 34941019701

+391080498.4

EPS 8.79 6.69

FORECASTED BALANCE SHEET:

2012 2013

Non-current Assets 56884253318.07+5180683914.75+26256011.00+817891743

121954150688.61+11106868245+56290261.97+81789174

property,plant and equipment 26533072120/29339932714 *100= 90.43%

62901881746* 90.43%

56884253318.07/ 62901881746*100= 90.43%

134855344274.27* 90.43%

Investment in Shares 2416476475/29339932714 *100= 8.24%

62901881746* 8.24%

5180683914.75/ 62901881746*100= 8.24%

134855344274.27* 8.24%

Deffered Assets 12246845/29339932714 *100= 0.041%

62901881746* 0.041%

26256011.00/ 62901881746*100= 0.041%

134855344274.27* 0.041%

Long-term Loan 817891743 817891743

Current Assets 26599588863.04+102503852198.83+78097613906.41+1191406236.36

97202510007.29

Inventories 5787165141/29339932714 *100= 19.72%

12407103345.79/ 62901881746*100=19.72%

54

62901881746* 19.72% 134855344274.27*19.72%

Trade and Other Receivables 22301349217/29339932714 *100= 76.01%

62901881746* 76.01%

47811862586.33/ 62901881746*100= 76.01%

134855344274.27* 76.01%

Advances, Deposits and Pre-Payments

16991382503/29339932714 *100= 57.91%

62901881746* 57.91%

36427824948.18/ 62901881746*100= 57.91%

134855344274.27* 57.91%

Cash and Cash Equivalents 259209444/29339932714 *100= 0.88%

62901881746* 0.88%

555719126.99/ 62901881746*100= 0.88%

134855344274.27* 0.88%

Total Assets 63844671351.63+97202510007.29 136876590910.77+208392461204.63

Equity and Liabilities

Shareholder's Equity 136459835212.34 335040762991.85

Issued Share Capital 3535208570 3535208570

Reserves 23625786188 23625786188

Retained Earnings 109298840454.34 307879768233.85

non-controlling (minority) Interest in subsidaries

1350281988 1350281988

Long-term Loans-Net of Current Maturity

5220136740 5220136740

Deffered tax liability 9965449 9965449

Current Liabilities15820058051+7342041958+

26988064686+228630024345.58

33916622456+15740603754+57859711881+490159909194.49

short term loan from bank and others

7379102594/29339932714 *100= 25.15%

62901881746* 25.15%

15820058051// 62901881746*100= 25.91%

134855344274.27* 25.91%

long term loan-current portion 3424619599/29339932714 7342041958// 62901881746*100=

55

*100= 11.67%

62901881746* 11.67%

25.91%

134855344274.27* 25.91%

Trade and Other Payables 12588303879/29339932714 *100= 42.91%

62901881746* 42.91%

26988064686/ 62901881746*100= 25.91%

134855344274.27* 25.91%

Income tax payable 1066421122/29339932714 *100= 3.63%

62901881746* 3.63%

228630024345.58// 62901881746*100= 25.91%

134855344274.27* 25.91%

Total Equity and Liabilities 75118793488/29339932714 *100= 256.03%

62901881746* 256.03%

161047181358.92/62901881746*100= 25.91%

134855344274.27* 25.91%

56

Liquidity Ratio

Ratio Formula Aramit Berger GQ ball pen BSCCurrent ratio

Current assets/current liabilities(In times)

606243015/332352857

2264647/1333642

482070603/287022650

2131947699/631803574

Quick ratio (Current assets-inventories)/current liability(in times)

(606243015-164804751)/ 332352857

(2264647-1346988)/ 1333642

(482070603-144132670)/ 287022650

(2131947699-375469202)/ 631803574

Working capital Current

assets- current liabilities(In taka)

606243015-332352857

2264647-1333642

482070603-287022650

2131947699-631803574

Ratios Formulas 2007 2008 2009 2010 2011

Current ratio

Current assets/current liabilities(In times)

1879968303/

1453522743

5,787,165,141/2967396

719

11,526,373,536/483583

6508

22659992465/1038733

3054

45339106305/2445844

7194

Quick ratio/acid

(Current assets-inventories)/current liability(in times)

(1879968303-

888067732)/

1453522743

(5787165141-

2999233427)/

2967396719

(11526373536-

3440843696)/

4835836508

(22659992465-

4406964821)/

10387333054

(45339106305-

5787165141)/

24458447194

Working capital

Current assets- current liabilities

(In taka)

1879968303-

1453522743

5787165141-

2967396719

11526373536-

4835836508

22659992465-

10387333054

45339106305-

24458447194

57

Asset Management Ratio

Ratios Formulas

Aramit Limited

BergerPaints

GQ Ball Pen

BSE BeximcoLimited

IndustryAverage

Asset Management Ratio:

Taka in’000

Take in 000

Take in 000

Take in 000

Take in 000

Taka in’000

Inventory turn-over ratio

Cost of goods sold/ inventory

452,092,313/164,804,751

4,167,039/1,346,988

194,204,731/144,132,670

2,397,015,344/375,469,202

16,260,877,280/5,787,165,141

(2.74+1.35+6.38+3.09+2.81)/5

Day's in inventory

365 days/inventory turnover ratio

365/2.74 365/3.09 365/1.35 365/6.38 365/2.81 (133+270+58+118+130)/5

Total asset turn-over ratio

sales/total assets

585,578,070/853,383,860

6,321,274/3,424,689

218,718,933/944,139,436

2,512,712,635/3,457,525,846

29,339,932,714/75,118,793,488

(0.69+0.23+0.73+1.85+0.39)/5

Fixed asset ratio

Sales/ Fixed assets

585,578,070/247,140,845

6,321,274/1,160,042

218,718,933/462,068,833

2,512,712,635/1,325,578,147

29,339,932,714/29,779,687,183

(2.37+0.47+1.80+5.40+0.99)/5

Day's sales outstanding

Accounts receivable/ (sales/365)

1,093,150/(585,578,070/365)

472,468/(6,321,274/365)

15,802,674/(218,718,933/365)

211,776,609/(2,512,712,635/365)

22,301,349,217/(29,339,932,714/365)

(1+26+31+28+2770/5

Average payment period

Accounts payable/ (cost of goods sold/365)

268,538,750/(452,092,313/365)

103,651/(4,167,039/365)

1,276,651/(194,204,731/365)

203,299,808/(2,397,015,344/365)

8,557,615,555/(16,260,877,280/365)

(217+3+31+9+192)/5

58

Profitability Ratio:

Ratios Formulas 2007 2008 2009 2010 2011

Profitability Ratio:

Taka in’000

Taka in’000

Taka in’000

Taka in’000

Taka in’000

Gross profit margin

(Gross Profit/ Sales)*100

577,232,186/1,721,730,460

1,450,086,555/2,803,557,113

3,969,528,188 / 5,327,783,716

8,265,442,729 / 18,980,964,619

13,079,055,434/29,339,932,714

Operating profit margin

(Operating profit/Sales)*100

468,916,544/1,721,730,460

1,304,479,655/ 2,803,557,113

3,775,143,243/ 5,327,783,716

8,012,370,476/18,980,964,619

11,628,228,688/29,339,932,714

Net profit margin

(Net profit/ Sales)*100

185,635,978/ 1,721,730,460

1,047,357,452/ 2,803,557,113

3,259,800,617/5,327,783,716

6,857,572,257/ 18,980,964,619

14,936,204,553 /29,339,932,714

ROA (Net profit/Total asset)*100

185,635,978 / 3,953,800,668 -10,000,312

1,047,357,452/ 10,657,285,210 -1,518,536,258

3,259,800,617 / 16,987,753,707

6,857,572,257 / 30,569,775,387

14,936,204,553 /75,118,793,488

ROE (Net profit/Total equity)*100

185,635,978/ 1,611,487,848

1,047,357,452/ 6,097,109,699

3,259,800,617/ 9,608,872,506

6,857,572,257/17,843,954,106

14,936,204,553/44,079,962,117

Operating Return on Asset

(EBIT/Total Asset)*100%

468,916,544/ 3,953,800,668-10,000,312

1,304,479,655/ 10,657,285,210-1,518,536,258

3,775,143,243/ 16,987,753,707

8,012,370,476/ 30,569,775,387

11,628,228,688/ 75,118,793,488

59

Debt Management Ratios

ratio 2007 2008 2009 2010 2011

Debt-Asset ratio

(Total debt/ total asset)%

1020335581+11029742+2967396719/10657285210

1410929880+12654931+4835836508/16987753707

4835836508+1410929880+12654931/16987753707

103887333054+1078512573+13892058/30569777387

(5220136740+9965449+24458447194/75118793488)

Time Interest Ratio

EBIT/Interest

468916544/225242845

1304479455/149073846

3775143243/327699387

8012730476/633592074

(4242975262/2913249384)

Ratio Beximco Aramit GQ Ball pen

Berger BSC Industry average

Debt-Asset ratio

(Total debt/ total asset)%

(5220136740+9965449+24458447194/75118793488)

(27857086+322352857)/853383860

287022650/462068833+482070603

(1333642+102821/1160042+2264647)

1672630672/3457525846

0.39+0.41+0.3+0.42+.48/5%

Time Interest Ratio

EBIT/ Interest

(4242975262/2913249384)

85773648/58266

(7139340+3290794)/3290794

925697+43661/43661

-45890168/184501386

1.46+1472.10+3.17+22.10-.25+299.74/5

Market Ratios:

60

Ratios Aramit Limited

Berger Paints

GQ Ball Pen BSC BexImco Limited

Market RatiosEarnings per Share

85540569/60000000

53523980/53913600

53523980/53913600

18360120/ 7332990174/3535208570

Market/ Book Ratio

277.2/8.39 550/8.75 169.6/12.19 554.5/8.92 113/12.4

Price Earning Ratio 277.2/14.26

550/3.11 169.6/0.99 554.5/.918 113/2.5

Ratios Formulas 2007 2008 2009 2010 2011

Market RatiosEarnings per Share

Net Profit / Total Number of Shares Outstanding

185635983/362042970

1089862333/548849410

3345988483/942372510

6984195971/1654795800

7332990174/3535208570

Market/ Book Ratio

Market Price/ Book Value per Share

37.4/4.45 184.4/11.12 309.3/10.19 311.5/10.78 113/12.4

Price Earning Ratio

Market Price/Earnings Per Share

37.4/0.51184.4/1.91 309.3/3.46 311.5/1.94 113/2.5

2007 2008 2009 2010 2011

January (35.80-35.40)/35.40*100

(36.9-36.2)/36.2*100

(206.1-183.1)/ 183.1*100

(324- 319.9)/319.9*100

(301.50-319.70)/319.70*100

61

February (29.20-35.30)/35.30*100

(37-36.10)/36.10*100

(183.8-203.1)/ 203.1*100

(376.4-337.5) /337.5*100

(234.40-294.10)/294.10*100

March (29.50-28.60)/28.60*100

(39.4-36.90)/36.90*100

(203.8-185.3)/ 185.3*100

(380.1-379.5) /379.5*100

(299.30-254.90)/254.90*100

April (27-29)/29*100

(39-41.70)/41.70*100

(260.2-207.3)/ 207.3*100

(414.4-381.6) /381.6*100

(283.10-297.40)/297.40*100

May (26.40-27.20)/27.20*100

(43.40-39.50)/39.50*100

(237.8-277.8)/ 277.8*100

(323.7-417.5) /417.5*100

(159.90-266.80)/266.80*100

June (30.60-26.20)/26.20*100

(84.80-49.10)/49.10*100

(315.3-243.1)/ 243.1*100

(398.8-329.2) /329.2*100

(159.90-154.80)/154.80*100

July (32.70-31.70)/31.70*100

(139.1-82.3)/82.3*100

(305.5-319)/ 319*100

(304.5-298.8) /298.8*100

(195.10-166.60)/166.60*100

August (27.10-29.20)/29.20*100

(108.8-138.9)/138.9*100

(274-304.8)/ 304.8*100

(336-310.9)/310.9*100

(156.60-184.80)/184.80*100

September (25.50-26.50)/26.50*100

(215.2-110.9)/110.9*100

(274.4-285.8)/ 285.8*100

(315.2-334.2) /334.2*100

(153.50-160.50)/160.50*100

October (40.60-25.20)/25.20*100

(231.50-234.20)/234.20*100

(316.7-274.9)/ 274.9*100

(323-313.9)/313.9*100

(116.00-153.20)/153.20*100

November (42-40.60)/40.60*100

(128.5-218.2)/218.2*100

(297.9-328.2)/ 328.2*100

(322.1-324.8)/324.8*100

(124.10-118.00)/118.00*100

December(37.40-39)/39*100

(185.4-135.6)/135.60*100

(309.3-298.2)/ 298.2*100

(311.5-324.1) /324.1*100

(113.00-122.40)/122.40*100

5. Beximco Return (2007-2011)

Market Return(2007-2012)

Month 2007 2008 2009 2010 2011

62

January {(1805.12-1583.08)/1583.08}*100

{(2907.17-3008.91)/3008.91}*100

 (2,649.49-2,807.61)/2,807.61)*100

((5367.11-4568.4)/4568.4)*100

((8302.59-7484.23)/7484.23)*100

February{(1791.54-1826.58)/1826.58}*100

{( 2931.38-2890.25)/2890.25}*100

 ((2,570.96-2,661.6)/2,661.69 )*100

((5560.56-5451.15)/5451.15)*100

((7820.28-5203.08)/5203.08)*100

March {(1760.88-1794.02)/1794.02}*100 {(3016.49-

2916.20)/2916.20}*100

 ((2,446.92-2,626.27)/2,626.27 )*100

((5582.33-5567.4)/5567.4)*100

((6352.1-5601.6)/5601.6)*100

April {(1743.33-1737.36)/1737.36}*100 {(3072.85-

3025.57)/3025.57}*100

 ((2,554.36-2,443.2)/2,443.25)*100

((5654.88-5594.32)/5594.32)*100

((6050.85-6447.01)/6447.01)*100

May {(2003.58-1762.36)/1762.36}*100

{(3167.99-3101.94)/3101.94}*100

 ((2,572.18-2,539.17)/2,539.17)*100

((6107.81-5631.3)/5631.3)*100

((5991.38-5758.26)/5758.26)*100

June {(2149.32-2007.05)/2007.05}*100

{(3000.50-3207.89)/3207.89}*100

 ((3,010.26-2,597)/2,597)*100

((6153.68-6152.39)/6152.39)*100

((6117.23-5668.68)/5668.68)*100

July {(2384.18-2190.46)/2190.46}*100 {(2761.05-

3029.24)/3029.24}*100

 ((2,914.53-3,069.71)/3,069.71 )*100

((6342.76-6217.08)/6217.08)*100

((6459.62-6157.52)/6157.52)*100

August {(2455.09-2394.11)/2394.11}*100 {(2791.21-

2689.94/2689.94}*100

 ((2,941.28-2,941.02)/2,941.02)*100

((6657.97-6436.77)/6436.77)*100

((6212-6367.6)/6367.6)*100

September {(2548.49-2516.72)

{(2966.82-2820.79)

((3,083.89-2,950.12)/

((7097.38-6774.87)/

((5910.74-6193.08)/

63

/2516.72}*100/2820.79}*100

2,950.12 )*100

6774.87)*100 6193.08)*100

October {(2850.81-2627.02)/2627.02}*100

{(2748.60-3001.37)/3001.37}*100

 ((3,364.26-3,123.24)/3,123.24)*100

((7957.12-7223.49)/7223.49)*100

((5036.5-5901.94)/5901.94)*100

November {(2971.11-2836.32)/2836.32}*100

{(2468.92-2684.69)/2684.69}*100

 ((4,380.95-3,392.02)/ 3,392.02)*100

((8602.44-7947.8)/7947.8)*100

((5268.55-5205.17)/5205.17)*100

December {(3017.21-2878.74)/2878.74}*100 {(2795.34-

2517.05/2517.05}*100

 ((4,535.53-4,424.02)/4,424.02 )*100

((8290.41-8723.18)/8723.18)*100

((5257.61-5236.76)/5236.76)*100

For Beta Calculation:

Market Return y axis

Beximco Returnx axis

14.02% 1.13%-1.92% -17.28%-1.85% 3.15%0.34% -6.90%13.69% -2.94%7.09% 16.79%8.84% 3.15%2.55% -7.19%1.26% -3.77%8.52% 61.11%4.75% 3.45%4.81% -4.10%-3.38% 1.93%1.42% 2.49%3.44% 6.48%

64

1.56% -6.47%2.13% 9.87%-6.46% 72.71%-8.85% 69.02%3.76% -21.67%5.18% 94.05%-8.42% -1.15%-8.03% -41.12%11.06% 36.73%-5.63% 12.56%-3.41% -9.50%-6.83% 9.98%4.55% 25.52%1.30% -14.40%15.91% 29.70%-5.06% -4.23%0.01% -10.10%4.53% -3.99%7.72% 15.21%29.15% -9.23%2.52% 3.72%17.48% 1.28%2.01% 11.56%0.27% 0.16%1.08% 8.67%8.46% -22.13%0.02% -9.23%2.02% 1.91%3.44% 8.07%4.77% -5.69%10.16% 2.90%8.24% -1.20%-4.96% -3.89%-9.88% -5.69%-28.53% -20.30%13.40% 17.42%-6.14% -4.81%-3.89% -40.67%7.91% 3.39%4.91% 17.11%-2.44% -15.26%

65

-4.57% -4.36%-14.66% -24.28%1.22% 5.17%0.40% -7.78%

6. Optimum Capital Structure Calculation:

Weight of Debt Weight of equity V*=EBIT(1-Tax)/WACC

13.20% 86.80% 7,916,003,380/0.1572

25% 75% 7,916,003,380/0.1496

35% 65% 7,916,003,380/0.1432

50% 50% 7,916,003,380/0.1336

55% 45% 7,916,003,380/0.1304

7. Intrinsic Value calculation:

D0 = total dividend/ no. Of shares outstanding

= 1873572370/ 187357237 = 10 tk/ share

D1 = D0 (1+g) = 10 (1+ 1.0033)

D2 = D1 (1+g) = 11.0033(1+ 1.0033)

D3 = D2 (1+g) = 12.1 (1+ 1.0033)

66

Terminal value, TV2 = D3/ Ke -g = 12.59 (0.1656 – 0.0405)

Intrinsic value, Po = D1/ (1+i) + D2/ (1+i )2 + TV2/ (1+i)2

= 11.0033/ 1.1656 + 12.11/(1.1656)2+ 100.64/ (1.1656)2

67