Bidirectional effect on a spectral image sensor for in-field crop reflectance assessment

Table of Content

INTRODUCTION..............................2

Financial Analysis of Apex TanneryLimited 3

BALANCE SHEET..................................3PROFIT AND LOSS ACCOUNT........................4LEVERAGE.......................................6CAPITAL STRUCTURE..............................9RATIO ANALYSIS................................12

LIQUIDITY RATIO:...............................12DEBT RATIO:...................................16PROFITABILITY RATIO:............................18MARKET MEASURE:................................22

CONCLUSION..................................24REFERENCE...................................25

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IntroductionApex Tannery has been setting industry standard in Bangladeshleather export industry in science 1976, equipped with thestate of the art Italian modern machinery and maintaining highquality strictness. Through the years, it`s production hasbeen progressively entailing constant expansion of buildingand machinery. Annual production exceeds 23 million squaremeters and company sales turnover amounts to over 30 millions,thus creating an exemplary model for corporate development inthe tannery sector. This growth is a result of precisestrategic decisions and constant improvements in the serviceof its customers. Which has led to presence in the globalarena playing an attractive role in the major leather marketsof the world.

A leading manufacturer and exporter of finished and crustleather from Bangladesh to major products manufacturers inChina, Japan and Italy. The company has annual export revenuesof USD 30 million in 2010-2011, comprising almost 15% of thetotal export earning from leather of Bangladesh. Apex Tannerypioneered the export of value added crust and finished leatherfrom Bangladesh and accessed capital markets for growth.

Gallerie Apex is the local manufacturing and retail wing ofApex Tannery Limited (ATL). While ATL has predominantly earnedboth critical and commercial fame through export of highquality leather in the international arena, Gallerie Apex hassought to adeptly make use of that expertise to provide highquality, fashionable footwear to the Bangladeshi consumers.

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With over 143 own retail outlets and 275 authorized resellers,Gallerie Apex ensures nationwide coverage of its diverse rangeof footwear for its consumers. Gallerie Apex carries a hugeselection of shoes and sandals, ensuring that each of theirvalued customers finds the footwear that is just right forthem.

Financial Analysis of Apex Tannery Limited

APEX TANNERY LIMITEDBALANCE SHEET

AS AT December 31, 2012

Year Ended Year Ended31-Dec-10 31-Dec-09

Taka TakaFixed Assets 418,371,710 537,109,886Current AssetsInventories 2,239,199,9 1,343,434,4

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79 30Trade debtors 881,553,360 709,941,378Advances, deposits and prepayments

1,032,526,768 827,374,934

Investments 8,240,059 4,574,002Cash & bank balances 97,151,909 64,697,015

4,258,672,075

2,950,021,759

Less: Current Liabilities

Working capital loan1,850,501,4

741,417,382,7

39

Sundry creditors1,912,941,0

151,198,149,5

14Provision for income-tax 142,535,228 97,132,208Proposed cash dividend 45,000,000 39,375,000

3,950,977,717

2,752,039,461

Net Current Assets 307,694,358 197,982,298Net Assets 726,066,068 735,092,184

Financed by:Shareholders' Equity:Share Capital 112,500,000 112,500,000Share premium 68,804,919 68,804,919Dividend equalization fund 33,750,000 33,750,000Retained earnings 511,011,149 520,037,265Total Shareholders' Equity 726,066,068 735,092,184

APEX TANNERY LIMITEDPROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2010

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Year Ended Year Ended31-Dec-10 31-Dec-09

Taka Taka

Sales6,961,115,

6085,834,073,

431Less: VAT 29,598,986 13,203,884

6,931,516,622

5,820,869,547

Cost of Sales

Cost of goods sold5,804,093,

2794,883,463,

949Fieght and forwarding 35,378,905 29,826,050

5,839,472,184

4,913,289,999

Gross Profit1,092,044,

438907,579,54

8Fixed Operating Expense

Marketing & administration521,156,82

5307,866,15

9

Bank interest and charges276,620,94

6333,520,76

2Director's remuneration 6,945,000 5,490,000Legal & audit fee 595,000 1,212,500

805,317,771

648,089,421

Operating Income286,726,66

7259,490,12

7Other Income 584,504 509,037

Profit before WPPF287,311,17

1259,999,16

4Provision for contribution to WPPF 13,681,484 12,380,913

Profit before Tax273,629,68

7247,618,25

1Provision for tax (export sales) 30,486,582 29,594,128Provision for tax (local sales) 14,916,438 6,491,872

Net Profit after Tax228,226,66

7211,532,25

1Appropriations

Prior years’ retained earning 520,037,26

5347,880,01

4

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Arif Hossain

103-11-1635

Prior years’ adjustment

-192,252,78

3 0

Cash dividend-

45,000,000-

39,375,000282,784,48

2308,505,01

4

Retained Earnings511,011,14

9520,037,26

5Earnings Per Share (per value Tk. 100/-) 202.87 188.03

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LEVERAGEAPEX TANNERY LIMITED

CALCULATION OF PROFIT & EPS

ParticularsYear-2010

Year-2009

Sales6,931,516

,6225,820,869

,547

Less: Variable Cost5,839,472

,1844,913,289

,999

Total Contribution1,092,044

,438907,579,5

48

Less: Fixed Cost542,378,3

09326,949,5

72

Earnings before Interest and Tax549,666,1

29580,629,9

76

Less: Interest276,620,9

46333,520,7

62Add: Other Income 584,504 509,037

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Earnings before Tax273,629,6

87247,618,2

51Less: Provision for tax (export sales)

30,486,582

29,594,128

Less: Provision for tax (local sales)

14,916,438 6,491,872

Earnings after Tax228,226,6

67211,532,2

51Earnings Per Share (EPS) on 1,125,000 shares 202.87 188.03

Measurement of Degree of LeverageParticulars Year-2010 Year-2009

Degree of Operating Leverage 1.99 Times 1.56 TimesDegree of Financial Leverage 2.01 Times 2.34 TimesDegree of Total Leverage 3.99 Times 3.67 Times

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i. Effect of Operating Leverage: Since the degree offinancial leverage is 1.99 times in 2010 and 1.56 timesin 2009, 20% increase in sales resulted 1.99 times x 20percent = 39.73 percent increase in EBIT in 2010 and 1.56times x 20 percent =31.26 percent increase in EBIT in2009.

ii. Effect of Financial Leverage: Since the degree offinancial leverage is 2.01 times in 2010 and 2.34 timesin 2009, 39.73% increase in EBIT resulted 2.01 times x39.73 percent = 79.86% increase in EPS in 2010 and 31.26%increase in EBIT resulted 2.34 times x 31.26 percent =73.15% increase in EPS in 2009.

iii. Effect of Total Leverage: Since the degree of totalleverage is 3.99 Times in 2010 and 3.67 Times in 2009,20% increase in sales resulted 3.99 times x 20 percent =79.86 percent increase in EPS in 2010 and 20% increase insales resulted 3.67 times x 20 percent = 73.15 percent inEPS in 2009.

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Mustafa Ahmad

101-11-1322

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CAPITAL STRUCTURE

Shareholders' Equity: Year-2010 Year-2009

Share Capital112,500,0

00112,500,00

0

Share premium 68,804,91

9 68,804,919

Dividend equalization fund33,750,00

0 33,750,000

Retained earnings511,011,1

49520,037,26

5

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SHARE CAPITAL Year-2010 Year-2009Authorized Capital 500,000,000 500,000,0005,000,000 shares @ Tk. 100 each

Issued, Subscribed & Fully paid-up Capital 112,500,000 112,500,0001,125,000 shares @ Tk. 100 each

Composition of shareholding:As on 28Feb. 2011

As on 15Mar. 2010

Sponsors 9.09% 9.09%Corporation of Bangladesh 8.42% 3.35%Public 56.83% 19.34%Local Financial Institutions 25.66% 68.22%

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Kazi Forhaduzzaman

101-11-1341

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RATIO ANALYSIS

LIQUIDITY RATIO:

Ratio Year-2010 Year-2009Current Ratio 1.08 1.07Quick Ratio 0.51 0.58

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Comment:

The current ratio is mainly used to give an idea of thecompany's ability to pay back its short-term liabilities withits short-term assets. The higher the current ratio, the morecapable the company is of paying its obligations. A currentratio of assets to liabilities of 2:1 is usually considered tobe acceptable.

The Acid-test or quick ratio measures the ability of a companyto use its near cash or quick assets to retire its currentliabilities immediately. Quick assets include those currentassets that presumably can be quickly converted to cash atclose to their book values. Generally, the acid test ratioshould be 1:1 or higher. A company with a Quick Ratio of lessthan 1 can’t currently pay back its current liabilities.

Apex Tannery Limited is experiencing liquidity problems. Thecurrent ratio of 1.08 in 2010 and 1.07 in 2009 is very poor.The quick ratio of 0.51 in 2010 and 0.58 suggests that shortterm great problems with short-term finance may beexperienced. They can’t pay back their current liabilitiesthrough their assets. It’s a bad sign for a company.

Ratio Year-2010 Year-2009Account Receivable Turnover 7.86 Times 8.20 TimesInventory Turnover 2.59 Times 3.64 Times

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http://en.wikipedia.org/wiki/Book_value

http://en.wikipedia.org/wiki/Current_asset

http://en.wikipedia.org/wiki/Current_asset

http://en.wikipedia.org/wiki/Current_liability

http://en.wikipedia.org/wiki/Current_liability

Comment:

Accounts receivable Turnover ratio indicates how many timesthe accounts receivable have been collected during anaccounting period. It can be used to determine if a company ishaving difficulties collecting sales made on credit. Thehigher the turnover, the faster the business is collecting itsreceivables. Accounts receivable turnover is a good indicationof the average time needed to convert receivables into cash.During 2009, the company’s receivable turnover was 8.20 timesand during 2009 it has decreased in 7.86 times. So, thecompany needs more time to collect from recievables. Thatmakes a bad impact on liquidity of a company.

The Inventory turnover is a measure of the number of timesinventory is sold or used in a time period such as a year.Inventory turnover of 8 times is accepted as considerable.During 2009, the inventory turnover of Apex Tannery limitedwas 3.64 times so they needed 100 days to sell inventory andconvert them into cash or recievables. But in 2010, thingshave changed. Their inventory turnover have decreased into2.59 times where they will need 141 days to convert inventoryinto cash or recievables. It has happened because-

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http://www.money-zine.com/Definitions/Investing-Dictionary/Cash/

http://www.wikicfo.com/Wiki/Accounts%20Receivable.ashx

The inventory level has risen faster than the increase incost of goods sold.

Inefficient management of inventory.

Ratio Year-2010 Year-2009Average Payment Period 230.11 Days 184.92 Days

Comment:

Average Payment Period ratio is used to measure the rate atwhich the company is able to pay its creditors. As much lowerthe average payment period, the company’s liquidity will behigher.

Average payment period (in days) have increased from 184.92days to 230.11 days during 2010. there will be a real problemfor paying others creditors. It will hamper the goodwill of

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Md. Rakibul Hasan

103-11-1652

this firm. Many suppliers may stop supplying on credit infuture.

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Debt Ratio:

Ratio Year-2010 Year-2009Debt Ratio 72.49% 61.98%

Comment:

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Debt ratio is a measure of a company's total debt to its totalassets. If debt ratio is less than one means that a companyhas more assets than debt, while a ratio of more than onemeans the opposite. The debt ratio can help investorsdetermine a company's level of risk.

Apex Tannery Limited got increased percentage of debt ratio in2010 from 2009. They have achieved greater risk of beingunable to meet their debt payments. They have to give up debtratio percentage in order to decrease the debt equity. Theyshould match their debt ratio percentage within 33% to 50%which is acceptable for all company. Other way, creditors maystart to demand repayment of debt.

Ratio Year-2010 Year-2009Times Interest Earned Ratio 1.99 Times 1.74 Times

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http://financial-dictionary.thefreedictionary.com/Assets

http://financial-dictionary.thefreedictionary.com/Debt

Comment: Times interest earned is the ratio of earnings beforeinterest and tax of a business to its interest expense duringa period. It is a solvency ratio measuring the long termviability of a business to pay off its debts. If this ratio isat or below 1.5 times then the company remains unsafe.

In both 2010 and 2009, the company’s times interest earnedratio was good enough. They have greater ability to pay offtheir interest and debts. In 2010, their times interest earnedratio has increased in 1.99 times from 1.74 times. It proves agreat sight for this company to repay their interest overtheir profit.

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Profitability Ratio:

Ratio Year-2010Year-2009

Gross Profit Margin 15.75% 15.59%Net Profit Margin 3.28% 3.63%

Comment: The gross profit margin ratio expresses the grossprofit as a proportion of sales. A Gross Profit Margin atleast 20% or higher is acceptable for a business firm. ApexTannery Limited has its gross profit margin below itsstandard. But if we look at the difference between year 2010and 2009 then we can see the gross profit margin percentage isalmost stable. Gross profit margins tend to remain stable overtime. Significant irregularities or sudden variations might bea potential sign of financial fraud, accountingirregularities, or problems in the business. They should takeprecautionary step for that.

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http://www.qfinance.com/dictionary/gross-profit-margin

Muhammed Ahsan Ullah Khondoker

103-11-1642

Net profit margin indicates how well the company convertssales into profits after all expenses are subtracted out. Thestandard net profit margin is at least 5% or higher where ApexTannery Company limited brought 3.63% in 2009 and 3.28% in2010. The net profit margin has fallen down during the year of2010. A decline in the ratio over time may indicate a marginsqueeze suggesting that productivity improvements may need tobe initiated. In some cases, the costs of such improvementsmay lead to a further drop in the ratio or even losses beforeincreased profitability is achieved.

.

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Ratio Year-2010 Year-2009Return on Asset 4.88% 6.07%Return on Equity 31.43% 28.78%

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Comment:

The return on assets percentage shows how profitable acompany's assets are in generating revenue. The higher theratio is, the greater the return on assets. During 2009, thecompany had 6.07% rate of return on assets but in 2010 year,the rate fall down at a significant rate (at 4.88). But thereturn on assets rate is accepted for this company. However,they have to balance against such factors as risk,sustainability and reinvestment in the business throughdevelopment costs.

The amount of net income returned as a percentage ofshareholders equity. Return on equity measures a corporation'sprofitability by revealing how much profit a companygenerates with the money shareholders have invested. In bothyears, Apex Tannery limited has performed good return on theirshareholder’s equity. It is a very positive sight for thiscompany. In general finical analysts consider 15% to 35% rangefor effective return on equity. It seems that commonstockholder’s money is being employed effectively. It alsoindicates how well a company's management is deploying theshareholders' capital.

Ratio Year-2010Year-2009

Earnings Per Share TK. 202.87 TK. 188.03

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Comment:

The portion of a company's profit allocated to eachoutstanding share of common stock. Earnings per share serve asan indicator of a company's profitability. In both years 2010and 2009, Apex Tannery Limited had issued 1,125,000 shares. In2009 earnings per share was Tk. 188.03 and in 2010 it hasincreased into Tk. 202.87. This positive trend of EPS in orderto make sure that the company is finding more ways to makemore money. This is a positive sight for this company.

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Market Measure:

RatioYear-2010

Year-2009

Price Earnings Ratio 20.27 13.74

Comment: Price Earnings Ratio of a stock is a measure of theprice paid for a share relative to the annual net income orprofit earned by the firm per share. Apex Tannery Limited hasa high Price Earnings which suggests that investors areexpecting higher earnings growth in the future compared tocompanies with a lower Price Earnings.

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http://en.wikipedia.org/wiki/Profit_(accounting)

http://en.wikipedia.org/wiki/Net_income

http://en.wikipedia.org/wiki/Share_(finance)

http://en.wikipedia.org/wiki/Stock

RatioYear-2010

Year-2009

Dividend Payout Ratio 19.72% 18.61%

Comment: Dividend payout ratio is the fraction of net income afirm pays to its stockholders in dividends. As a growingcompany the dividend payout ratio of Apex Tannery limited isacceptable. Because an excessively high payout ratio suggeststhat the company might be paying out more than it cancomfortably afford. Not only does this leave just a smallpercentage of profits to plow back into the business, but italso leaves the firm highly susceptible to a decline in futuredividend payments.

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http://www.investinganswers.com/financial-dictionary/ratio-analysis/payout-ratio-1081

Conclusion

Apex Tannery Limited who started their business in 1976 andnow becomes successful leather footwear trader and supplier inBangladesh. They have a very strong culture which reflectstheir mission, vision, achievement and core values. Inaddition, the employees’ of Apex Tannery Limited are verymotivated because the firm provided various benefits such asbonus, personal reward, motivational and professional trainingprograms.

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Reference

Annual Report 2010 of Apex Tannery Limited

www.apextannery.com

www.wikipedia.com

http://www.investopedia.com

http://www.financeformulas.net

Reference Books: Financial Management by Professor M. Shahjahan Mina

Reference Books: Principles of Managerial Finance by Lawrence J. Gitman

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http://www.financeformulas.net/

http://www.investopedia.com/

http://www.wikipedia.com/

Intermediate Accounting by Donald E. Keiso, Jerry J. Weygandt, Terry D. Warfield

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Bidirectional effect on a spectral image sensor for in-field crop reflectance assessment

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