Company Ratio Analysis Report

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Report on
Company Ratio Analysis

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Company Ratio Analysis
Course Tittle
Advanced Financial Accounting
Course Code
ACN 405
Submitted To:
Mohammad Rakiv
Assistant Professor
Faculty of Business Administration
University of Asia Pacific
Submitted By:
Name ID
Mehadi Hasan 16102057
Sabbir Hossain Buihyaa 16102056
Md Sazzad Alam 14202046
Md Abul Khayesh 15102049
Date of Submission: Feb 15,2020

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Feb 15, 2020
Mohammad Rakiv
Assistant Professor
Department of Business Administration
University of Asia Pacific
Subject: A report on ratio analysis of four company in textile industry.
Sir,
With due respect, it is indeed a great pleasure for us to be able to hand over the result of our
hardship of the report on ratio analysis of four company in textile industry.
We feel immense pleasure in presenting to your good self, the report as part of our course
requirement. We found this report to be truly challenging in many aspects, indeed very interesting
in relation to the various interpretational and engrossing exercises.
We have tried our level best to complete the report with respect to desired requirements. However,
if any explanation is required, we would be honored to oblige. Kindly accept this humble effort of
bringing forward our research and finding on the subject matter.
Sincerely Yours,
………………………….
Mehadi Hasan (16102057)
…………………………….
Subbir Hossain Buihya (16102058)
…………………………………
Md. Sazzad Alam (14202046 )
……………………………
Md Abul Khayesh (15102049)

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Acknowledgement
First of all, we express our great gratitude and love to the ALMIGHTY ALLAH, for enabling us
to complete this report successfully.
The success and final outcome of this report required a lot of guidance and assistance from many
people and we are extremely privileged to have got this all along the completion of our report. All
that we had done is only due to such supervision and assistance and we would not forget to thank
them.
 Respect and thanks to Mohammad Rakiv sir our (Course instructor, Department of Business
Administration, University of Asia Pacific) for providing us an opportunity to do the report work
in Department of Business Administration, University of Asia Pacific and giving us all support
and guidance, which made to complete the report duly. We are extremely thankful to him for
providing such a nice support and guidance, although he had busy schedule managing the corporate
affairs.

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Abstract
We selected four companies (Square Textile ltd., Desh Germents Ltd, Esquire knit and Rahim
Textile Ltd.) from Textile industry to analyze their Liquidity, Activity, Profitability, Solvency, and
Market Performance Ratios. So that anyone can get financial information of these companies at a
glance.

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List of Figures:
SL. No. Figures
1 Figure- 1
2 Figure- 2
3 Figure- 3
4 Figure- 4
5 Figure- 5
6 Figure- 6
7 Figure- 7
8 Figure- 8
9 Figure- 9
10 Figure- 10
11 Figure- 11
12 Figure- 12
13 Figure- 13
14 Figure- 14
15 Figure- 15

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Table of Contents
Page No
Title Fly i
Title page ii
Latter of Transmittal iii
Acknowledgement iv
Abstract v
List of Figure vi
1.0 Introduction 1
1.1 Background of the report 1
1.2 Scope of the report 1
1.3 Objective of the report 2
1.4 Limitation 2
2.Company Overview 2
2.1 Square Textile Limited 2
2.2 Desh Germents Limited 2
2.3 Esquire Knit Composite Limited 3
2.4Rahim Textile Limited 3
3.0 Methodology 4
3.1 Data Collection 4
3.2 Sample Selection 4
4.0 Ratio Analysis 4

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4.1 Liquidity Ratios 4
4.1.1Current Ratio 4-5
4.1.2 Quick Ratio 6
4.1.3 Working Capital Productivity 7-8
4.2. Activity Ratios 9
4.2.1 Inventory Turnover Ratio 9
4.2.2 Account Receivable Turnover Ratio 10-11
4.2.3 Total Asset Turnover Ratio 12
4.3 Profitability Ratios 13
4.3.1 Net Margin Ratio 13
4.3.2 Return on Asset 14-15
4.3.3 Return on Equity Ratio 16
4.4 Solvency Ratios 17
4.4.1 Debt Ratio 17
4.4.2 Debt to Equity Ratio 18-19
4.4.3 Time Interest Earned Ratio 20
4.5 Market Performance Ratios 21
4.5.1 Earnings per Share 21-22
4.5.2 Price Earnings Ratio 23
4.5.3 Dividend Yield Ratio 24
5.Findings 25
6. Recommendations 25
7.Conclusion 26

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1. Introduction
The ratio analysis is the most powerful tool of financial analysis. Several ratios calculated from
the accounting data can be grouped into various classes according to financial activity or function
to be evaluated. The indicate quotient of two mathematical expressions and as the relationship
between two or more things. It evaluates the financial position and performance of the Company.
As started in the beginning many diverse groups of people are interested in analyzing financial
information to indicate the operating and financial efficiency and growth of Company. These
people use ratios to determine those financial characteristics of firm in which they interested with
the help of ratios one can determine. The overall operating efficiency and performance of
company. The information contained in these statements is used by management, creditors,
investors and others to form judgment about the operating performance and financial position of
Company. Uses of financial statement can get further insight about financial strength and weakness
of the firm if they properly analyze information reported in these statements.
1.1 Background of the report
This is report which we prepared to fulfill the requirement of the course Advance financial
accounting. This following report has been assigned to us by course our honorable course
instructor Mohammad Rakiv. We have worked with four Textile company statement of
comprehensive income financial position and change in equity where we had the opportunity to
learn new things about four major Textile company in Bangladesh financial performance. This
report reflects about in depth understanding about the various market evaluation in ratio analysis
of this company and the Textile industry on the whole.
1.2 Scope of the Report
The scope of the study is limited to collecting financial data published in the annual reports of the
company every year. The analysis is done to suggest the possible solutions. The study is carried
out for 4 years (2015– 2018).Using the ratio analysis, Company past, present and future
performance can be analyzed. The Company should generate enough profits not only to meet the
expectations of owner, but also to expansion activities

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1.3 Objective of the report
1. To provide an overview of the Textile industry in Bangladesh
2. To analyze Liquidity Ratio, Activity Ratios, Profitability Ratios Solvency Ratios, Market
Performance Ratios
4. To compare the 4 years performance of the four Company.
5. To give suggestion and recommendation based on the study.
1.4 Limitation of the report
While preparing this report, we have faced time limitation. For that reason there might be
grammatical and spelling mistakes. Also there may be section which are for focused or may not
be highlighted properly. If there was more time, the report could be more organized and more
meaningfully
2. Company Overview
2.1 Square Textile Ltd
In 1997, Square entered the textile sector with its manufacturing facilities of cotton yarn.
Combining modern technology with skilled manpower under Square's unique inspiring,
atmosphere, and this new Square venture soon rose to the top of the local textile industry. Today
it has one of the most sophisticated vertically integrated set-ups. Square first ventured into the
textile sector with the establishment of the first unit of the Square Textile Ltd. in 1997. A year later
the establishment of the second unit followed.
2.2 Desh Germent Ltd
Our core business, Desh Garments, was founded in 1977 by Mr M. Noorul Quader. His trailblazing
efforts established our company as a leader of 100% export-oriented RMG (ready-made garments)
production in Bangladesh. Mr Quader spearheaded both the bonded warehouse and back-to-back
letter of credit systems – now standard protocol of Bangladesh’s garments making trade. Desh
Garments was established as a joint venture with Daewoo of South Korea. We were the first
export-oriented RMG production house in Bangladesh – the largest, most modern garments maker
on the subcontinent. We introduced modern techniques of apparel making technology to

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Bangladesh. In fact, we laid the foundation for Bangladesh’s export-oriented RMG industry – in
terms of technology and human resources.
In 1978 we sent 130 of our employees and management to Daewoo’s innovative South Korea
factory. There, staff learned about garments making practices and technology over six months of
intensive training. These then-cutting-edge techniques were embraced and refined at our factory
in Bangladesh. Desh Garments grew to become Bangladesh’s first public limited company in the
garments production sector, despite bureaucratic and foreign exchange hurdles. We won the
President's National Award. And the Grand Prix for Commercial Quality 1988 in Europe, for the
highest export earnings for two consecutive years, with annual exports of 5 million pieces. Desh
Garments was also Bangladesh's highest American and Canadian quota holder for several years.
We’re an A-listed company, actively traded on the Dhaka Stock Exchange. We’ve earned an
impeccable reputation in the industry for our consensus-based management approach and early
adoption of a decentralized corporate management structure.
2.3 Esquire Knit Composite Limited
Esquire Knit Composite Limited was established in 2001. Having the industrial knowledge over
16 years from its sister concern companies namely, Esquire Dyeing Industries, Esquire Knitwear
Ltd and Synthia Multi Fiber Ltd, Esquire Knit Composite Limited has focused on its business and
successfully established the name as a world-class Garment Manufacturer under one roof having
a composite facility of Yarn dyeing, Knitting, Fabric dyeing, and finishing; printing, embroidery,
garments dyeing & washing up to Garments making.
2.4 Rahim Textile limited
Rahim textile ltd began its commercial operations in 1987 by providing a range of dyeing, printing
and finishing services for both woven and knit fabrics. In 1988, it became a publicly listed
company on the Dhaka stock exchange, the first amongst the new Asia group entities. Ever since,
it has developed a track record for delivering premium quality dyeing and printing services for a
plethora of internationally-renowned fashion and home-textile brands such as, c&a, h&m, Zara,
Matalan, index, Tesco, k-mart, m&s, Charles voegele, decathlon, kik, nkd, and Avon. Furthermore,
the company’s strict internal policies aim to conform to the highest compliance standards at both
the national and international levels.

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3. Methodology of the study
3.1 Data Collection
To Collecting data for our report primarily we use the annual reports of four company. Financial
year 2015 to 2018. We collect all information company website and other data collect Dhaka stock
exchange. All data are use this report secondary source.
3.2 Sample selection:
This report we are select sample of data all four company Statement of 6 Financial Position
statement of profit or loss and other comprehensive income statement of change in equity And
note of financial statement. Also Dhaka Stock Exchange Company market information
4. Ratio Analysis
4.1 Liquidity Ratios
It is essential for a firm to be able to meet its obligations as they become due. Liquidity Ratios help
in establishing a relationship between cast and other current assets to current obligations to provide
a quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity and
also that it does not have excess liquidity. A very high degree of liquidity is also bad, idle assets
earn nothing. The firm's funds will be unnecessarily tied up in current assets. Therefore it is
necessary to strike a proper balance between high liquidity. Liquidity ratios are given below
4.1.1 Current Ratio
The current ratio is a measure of the firm's short term solvency. It indicated the availability of
current assets in taka for every one taka of current liability. A current ratio of 2:1 is considered
satisfactory. The higher the current ratio, the greater the margin of safety the larger the amount of
current assets in relation to current liabilities, the more the firm's ability to meet its obligations. It
is a cured -and-quick measure of the firm's liquidity
Current ratio is calculated by dividing current assets and current liabilities
Current Ratio = Current Assets ÷ Current Liabilities

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Company Name 2015 2016 2017 2018
Square Textile Ltd 2.83 2.96 2.04 1.48
Desh Garmants Ltd 0.76 0.80 0.98 1.12
Esquire Knit
Composite Ltd
1.45 1.46 1.47 1.66
Rahim Textile
Mills Ltd
0.54 0.58 0.88 1.03
Figure 1 Current ratio
Square Textile Ltd. current ratio was 2.83:1 in 2015 than they control it and make it 2.96:1 in
2016 than it decreases 2.04:1 in 2017beacuse there current asset is decrease and then it again
decreased to 1.48:1 in 2018 because current liability is decrease . It is a good sign that the company
has more current asset than current liability but they should target the standard. Desh Garments
Ltd current ratio was 0.76:1 in 2015 than they cannot control it and make it 0.80:1 in 2016 it is
decreased 0.98:1 in 2017 and then it again increased to 1.2:1 in 2018. It is a bad sign that the
company has more current liability than current asset but they should target the standard Esquire
Knit Composite Limited’ current ratio was 1.45:1 in 2015 than they control it and make it 1.46:1
in 2016 than it 1.47:1 in 2017 and then it again jumps up 1.66:1 in 2018. It is a good sign that the
company has more current asset than current liability but they should target the standard
2.83 2.96
2.04
1.48
0.76 0.80
0.98
1.12
1.45 1.46 1.47
1.66
0.54 0.58
0.88
1.03
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2015 2016 2017 2018
Current Ratio
Square Textile Ltd Desh Garmants Ltd Esquire Knit Composite Ltd Rahim Textile Mills Ltd

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Rahim Textile Ltd. It show that, there was a sharp upward decline from 2015 to 2018 which
means the abilities the abilities to pay liabilities has been decreased by years from 0.45 to 1.03 .
4.2 Quick Ratio
Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An
asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of
value. An asset is liquid if it can be converted into cash immediately or reasonably soon without a
loss of value. Cash is the most liquid asset, other assets that are considered to be relatively liquid
asset and included in quick assets are debtors and bills receivables and marketable securities
temporary quoted investments. Inventories are converted to be liquid. Inventories normally require
some time for realizing into cash; their value also has a tendency to fluctuate. The quick ratio is
found out by dividing quick assets by current liabilities.
Quick Ratio= (Current assets – Inventories) ÷ Current Liabilities
Company Name 2015 2016 2017 2018
Esquire Knit Composite
Ltd
0.54 0.53 0.58 0.55
Rahim Textile Mills Ltd 0.39 0.44 0.65 0.45
Figure 2 Quick Ratio
2.11
1.98
1.29
0.93
0.48 0.51
0.69
0.550.54 0.53 0.58 0.55
0.39 0.44
0.65
0.45
0.00
0.50
1.00
1.50
2.00
2.50
2015 2016 2017 2018
Quick Ratio

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Square Textile’ quick ratio was 2.11:1 in the year 2015 then it decreased at 1.98:1 in 2016 because
of their current assets was in positive amount then it was decrease at 1.29:1 in 2017 because the
negative amount became positive and again decreased at 0.93:1 in 2018. It also a good sign that
the company has ability to meet its short-term obligations with its most liquid assets. But they
should target the standard. Desh Garments Ltd quick ratio was 0.48:1 in the year 2015 then it
decreased at 0.51:1 in 2016 because of their current assets was is lower than current liability
amount then it was increased at 0.69:1 in 2017 because they became increased at 0.55:1 in 2018.
It also a good sign that the company has ability to meet its short-term obligations with its most
liquid assets. But they should target the standard. Esquire Knit Composite Limited’ quick ratio
was decreased 0.54:1 in the year 2015 because of their current assets was in negative amount then
it decreased at 0.53:1 in 2016 than it was again decreased 0.58:1 in 2017 and 0.55:1 in 2018
because of their current assets was again in negative amount. It also a good sign that the company
has ability to meet its short-term obligations with its most liquid assets. But they should target the
standard. Rahim Textile Ltd. It show that, there was a sharp 2015 year increases 0.39 and 2018
year high increases 0.45. This decline was upward
4.3 Working Capital Productivity
The working capital productivity measurement compares sales to working capital. The intent is to
measure whether a business has invested in a sufficient amount of working capital to support its
sales. From a financing perspective, management wants to maintain low working capital levels in
order to keep from having to raise more cash to operate the business. This can be achieved by such
techniques as issuing less credit to customers, implementing just-in-time systems to avoid
investing in inventory, and lengthening payment terms to suppliers.
To derive working capital productivity, divide annual sales by the total amount of working capital.
The formula is

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Working capital productivity = Annual Net sales ÷ Total working capital
Company Name 2015 2016 2017 2018
Ltd
1.07 1.04 0.97 0.98
Figure 3 Working Capital productivity
Esquire Knit Composite Limited working capital productivity was 1.07:1 and 1.04:1 in 2015 and
2016 that shows the company was in the standard but after that it gradually decreased and became
0.97:1 in 2017 and 0.98:1 in 2018. So according the standard it shows that poor management of
the company's receivables and inventory Square Textile’ working capital productivity was 0.51:1
In 2015 that shows the company was not in the standard because their net sales are inecrease and
2017 ratio 1.47 their net sale is increase but after that it gradually decreased and became 4.67:1 in
2018 that was good standard. So according the standard it shows that poor management of the
company's receivables and inventory.vIn 2015 Desh garments ltd’ working capital productivity
was 8.8:1 In 2015 that shows the company was cannot follow the standard but after that it gradually
decreased and became 3.9:1 in 2017. In 2018 they improve and the amount was 20.9.1So according
the standard it shows that they follow the standard level day by day.
0.51 1.47 2.93 4.67
8.8
11.7
3.9
20.9
1.07 1.04 0.97 0.98
3.94 4.08
9.37
35.78
0.00
10.00
20.00
30.00
40.00
2015 2016 2017 2018
Working Capital Productivity

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Rahim Textile Ltd. It show that, there was a sharp downward decline 2015 to 2018. Working
Capital Productivity ratio was 3.94, 4.08 9.37 and 35.78
4.2 Activity Ratios
Turnover ratios also referred to as activity ratios or asset management ratios, measure how
efficiently the assets are employed by a firm. These ratios are based on the relationship between
the level of activity, represented by sales or cost of goods sold and levels of various assets. The
improvement turnover ratios are inventory turnover, average collection period, receivable turn
over, fixed assets turnover and total assets turnover.
4.2.1 Inventory Turnover Ratio
Inventory turnover is an efficiency/activity ratio which estimates the number of times per period a
business sells and replaces its entire batch of inventories. It is the ratio of cost of goods sold by a
business during an accounting period to the average inventories of the business during the period
(usually a year).
Inventory turnover ratio is calculated using the following formula:
Inventory turnover = Cost of Goods Sold ÷ Average Inventories
Company Name 2015 2016 2017 2018
Ltd
2.01 1.95 8.71 9.88

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Figure 4 Inventory Turnover
Esquire Knit Composite Limited inventory turnover was 2.01 times in 2015 that was around
standard then it decreased at 1.95 times in 2016 but the company was able to achieve the standard
and the result was 8.71 times in 2017 and 9.88 times in2018. Square textile inventory turnover was
2.37 times in 2015 that was around standard then it decreased at 4.2 times in 2016 but the company
was able to achieve the standard and the result was 8.7times in 2017 and 9.9times in2018.Desh
garments ltd’ inventory turnover was 4.7 times in 2015 that was around standard then it decreased
at 4.2 times in 2016 but the company was can not able to achieve the standard and the result was
8.7 times in 2017 and 9.9 times in2018.Beacuse the cost of good gold is higher then average
inventory .Rahim Textile Ltd. It show that , was a sharp increases ratio 8.63 in 2015 year , and
high increases 2016 year was 10.59 and 2017 year was decreases 5.95 ,again decreases 2018 year
was 2.32.
4.2.2 Account Receivable Turnover Ratio
Accounts receivable turnover (or simply receivables turnover) is the ratio of net credit sales of a
business to its average accounts receivable during a given period, usually a year. It is an activity
or efficiency ratio which estimates the number of times a business collects its average accounts
receivable balance during a period.
Accounts receivable turnover is calculated using the following formula:
2.37
1.72
8.71
9.88
4.7
4.2
8.7
9.9
2.01 1.95
8.71
9.88
8.63
10.59
5.95
2.32
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2015 2016 2017 2018
Inventory Turnover

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Account Receivables Turnover= Net Credit Sales ÷ Average Accounts Receivable
Company Name 2015 2016 2017 2018
Ltd
8.00 7.66 5.95 6.29
Figure 5 Account Receivable Turnover
Esquire Knit Composite Limited’ accounts receivable turnover was 8.00 times in 2015 than it
decreased at 7.66 times in 2016 and it was again decreased at 5.95 times in 2017 and in 2018 it
was increased with result 6.29 times. It is also a good sign that the company has ability to collects
its average accounts receivable in a timely manner. Square Textile accounts receivable turnover
was 1.40 times in 2015 than it increased at 3.34 times in 2016 and it was increased in 4.48 2017
and 2018 with result in 3.84. It is also a good sign that the company has ability to collects its
average accounts receivable in a timely manner. Desh garments ltd’ accounts receivable turnover
was 13.5 times in 2015 than it decreased at 11.4 times in 2016 and it was decreased in 2017 amount
was 10.6 and 2018 with result times and 13.9 times. It is also a bad sign that the company has
ability to collects its average accounts receivable in a timely manner.
1.40
3.34
4.48 3.84
13.5
11.4
10.6
13.9
8.00 7.66
5.95 6.29
12.42
7.99
4.71
3.37
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2015 2016 2017 2018
Account Receivable Turnover

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4.2.3 Total Asset Turnover Ratio
Asset turnover ratio is the ratio of a company's sales to its assets. It is an efficiency ratio which
tells how successfully the company is using its assets to generate revenue. The most popular asset
turnover ratio is the total assets turnover ratio which equals net sales divided by average total asset
Total assets turnover ratio is calculated using the following formula:
Total Assets Turnover Ratio= Net Sales/ Average Total Assets
2015 2016 2017 2018
Ltd
0.67 0.67 0.63 0.65
Figure 6 Total Asset Turnover
0.21
0.57
0.82 0.86
1.85
1.62 1.55
1.74
0.67 0.67 0.63 0.65
0.90
3.26
1.08
0.73
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2015 2016 2017 2018
Total Asset Turnover

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Esquire Knit Composite Limited’ total asset turnover in 2015 and in 2016 was same 0.67 times
and then it gradually decreased 0.63 times in 2017 and 0.65 times in 2018. It is a bad sign of the
company that the results of ratio are decreasing every year.Square Textile total asset turnover in
2015 was 0.21 times and then it gradually increased and resulted 0.86 times in 2018. It is a good
sign of the company that the results of ratio are decreasing every year.Desh garments ltd’ total
asset turnover in 2015 was 1.85 times and then it gradually decreased and resulted 1.74 times in
2018. It is a bad sign of the company that the results of ratio are decreasing every year
4.3 Profitability Ratios
Profitability ratio is a measure of profitability, which is a way to measure a company's
performance. Profitability is simply the capacity to make a profit, and a profit is what is left over
from income earned after you have deducted all costs and expenses related to earning the income.
The formulas you are about to learn can be used to judge a company's performance and to compare
its performance against other similarly-situated companies.
4.3.1Net Margin Ratio
The net profit margin is equal to how much net income or profit is generated as a percentage of
revenue. Net profit margin is the ratio of net profits to revenues for a company or business segment.
Net profit margin is typically expressed as a percentage but can also be represented in decimal
form. The net profit margin illustrates how much of each dollar in revenue collected by a company
translates into profit.
Net Margin Ratio is calculated using the following formula:
Net Margin Ratio= (Net Income after tax/Net sales)*100
Company Name 2015 2016 2017 2018
Esquire Knit Composite Ltd 5.71 6.77 7.12 7.84

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Figure 7 Net margin ratio
Esquire Knit Composite Limited’ net margin ratio was good. It was 6% in the year 2015 and it
was gradually increased 7% in 2016 and 2017. And it was again increased in 2018 that was resulted
8%. It shows that the company doing well. Square Textile’ net margin ratio was good. It was 2.5
in the year 2015 and it increased 9.6 in 2016 and it gradually decrease with 4.35 in 2018. It shows
that the company doing well. Desh garments ltd’ net margin ratio was good. It was 1.91in the year
2015 and gradually increased and ended with 5.23 in 2018. It shows that the company doing well.
Rahim Textile Ltd.2015-year profit margin ratio increased 3.94. Than 2016 year was high
increased 6.87, than profit was decreased 6.27 and again 2018 year was decreased profit 5.10.
4.3.2 Return on Asset
Return on assets (ROA) is profitability ratio which measures how effectively a business has used
its assets to generate profit. It is calculated by dividing net income for the period by the average
total assets. ROA measures cents earned by a business per dollars of its total assets. A high return
on assets (ROA) is generally better than a low ratio. Similarly, an improving ROA is considered a
good sign.
Return on assets (ROA) is most commonly calculated by dividing net income by average total
assets
2.50
9.60
4.40 4.35
1.91
6.36
9.17
5.23
5.71
6.77 7.12
7.84
3.94
6.87
6.27
5.10
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2015 2016 2017 2018
Net Margin Ratio

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Return on Assets (ROA) = Annual Net Income/Average Total Assets
2015 2016 2017 2018
Ltd
3.83 4.47 4.45 4.63
Figure 8 return on asset
Esquire Knit Composite Limited’ return on asset started with 3.83 in 2015, 2016 and 2017. Then
next year increased at 4.63 in 2018. It shows the company’s profit are highly relative to its total
assets.Square Textile’ return on asset started with 2.5 in 2015 then fall at 9.6 in 2016 then next 2
year are same at 4.4 and the again increased at 4.35 in 2018. It shows the company’s profit are
highly relative to its total assets.Desh garments ltd’ return on asset started with 3.53 in 2015 then
increase at 11.32 in 2016 then next year increased at 14.18 and the again decreased at 9.11 in 2018.
It shows the company’s profit are highly relative to its total assets.
Rahim Textile Ltd. It show that ,there was a sharp 2015 year low increased 3.53 ,next year 2015
was high increased 22.41 , 2016 year was decreased 6.76,and 2018 year was again low decrease
2.50
9.60
4.40
4.35
3.53
11.32
14.18
9.11
3.83
4.47
4.45
4.63
3.53
22.41
6.76
3.75
2015 2016 2017 2018
RETURN ON ASSET

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4.3.3 Return on Equity Ratio
Return on equity (also called return on shareholders’ equity) is the ratio of net income of a business
during a year to its average shareholders' equity during that year. It is a measure of profitability of
shareholders' investments. It shows net income as a percentage of shareholder equity.
The formula to calculate return on equity is:
Return on Equity = (net income after tax-preferred dividend)/Average common shareholder equity
2015 2016 2017 2018
Square Textile ltd 2.1 6.9 3.8 4.1
Ltd
6.2 7.1 7.1 7.2
Figure 9 Return on equity
Esquire Knit Composite Limited’ return on equity was 6.2% in 2015 than it was gradually
increased at 7.1% in 2016, 7.1% in 2017, and 7.2% in 2018. The results show profitability of
shareholders' investments is good. Square textile return on equity was 205% in 2015 than it
increased at 693% in 2016 than it decreased at 376% in 2017 and 413% in 2018. The results show
profitability of shareholders' investments is good.
2.1
6.9
3.8 4.1
14.3
40.0
31.8
18.0
6.2 7.1 7.1 7.2
12.7
20.4
17.5 17.0
0.0
10.0
20.0
30.0
40.0
50.0
2015 2016 2017 2018
Return on Equity
Square Textile ltd Desh Garmants Ltd Esquire Knit Composite Ltd Rahim Textile Mills Ltd

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Desh garments ltd’ return on equity was 14.3% in 2015 than it was gradually increase 18% in
2018. The results show profitability of shareholders' investments is good. Rahim Textile Ltd. It
show that , was a sharp 2015 year 12.73% increases , 2016 year increases 20.37% and 2018 year
in decreases 17%.
4.4 Solvency Ratios
The solvency ratio is a key metric used to measure an enterprise’s ability to meet its debt
obligations and is used often by prospective business lenders. The solvency ratio indicates whether
a company’s cash flow is sufficient to meet its short-and long-term liabilities. The lower a
company's solvency ratio, the greater the probability that it will default on its debt obligations.
4.4.1 Debt Ratio
Debt ratio (also known as debt-to-assets ratio) is a ratio which measures debt level of a business
as a percentage of its total assets. It is calculated by dividing total debt of a business by its total
assets. Debt ratio finds out the percentage of total assets that are financed by debt and helps in
assessing whether it is sustainable or not. If the percentage is too high, it might indicate that it is
too difficult for the business to pay off its debts and continue operations.
Debt ratio is calculated using the following formula:
Debt Ratio= Total Debt/ Total Assets
2015 2016 2017 2018
Ltd
0.37 0.37 0.37 0.35

26
Figure 10 debt ratio
Esquire Knit Composite Limited debt ratio was good over the period. It was started with 0.37 in
2015 then next two year it was same 0.37 And then it was decreased and ended with 0.35 in 2018.
It shows the company cann’t control their debt in good manner. Square Textile debt ratio was good
over the period. It started with 0.98 in 2015 then decreased slightly in 2016 that was 0.21 then
gradually increased and ended with 0.35 in 2018. It shows the company can control their debt in
good manner.Desh garments ltd’ debt ratio was good over the period. It started with 0.87 in 2015
then decreased slightly in 2016 that was 0.75 then gradually decreased and ended with 0.67 in
2018. It shows the company can control their debt in good manner. Rahim Textile Ltd. It shows
that, there was a sharp 2015 year increased 0.69 , 2016 decreased and 2017 to 2018 upward sloping
was 0.75 and 0.80.
4.4.2 Debt to Equity Ratio
Debt-to-Equity ratio is the ratio of total liabilities of a business to its shareholders' equity. It is a
leverage ratio and it measures the degree to which the assets of the business are financed by the
debts and the shareholders' equity of a business.
Debt-to-equity ratio is calculated using the following formula:
Debt-to-Equity Ratio= Total Liabilities/Total Common Shareholders' Equity
0.98
0.21
0.28
0.35
0.87
0.75
0.61
0.67
0.37
0.37
0.37
0.35
0.69
0.64
0.75
0.80
2015 2016 2017 2018
DEBT RATIO

27
Company name 2015 2016 2017 2018
Ltd
0.59 0.58 0.59 0.54
Figure 11 Debt to equity ratio
Esquire Knit Composite Limited’ debt to equity ratio was good as well the ratio started with 0.59
in 2015 than it slightly decreased at 0.58 in 2016 and then increased at 0.59 in 2017 then again
decreased at 0.58 in 2018. The results of ratio prove that the company has good financial
leverage.Square textile’ debt to equity ratio was good as well the ratio started with 1.29 in 2015
then it slightly decreased at 0.27 0.31 in 2016 and then gradually increased till at 0.55 in 2018.
The results of ratio prove that the company has good financial leverage. Desh garments ltd’ debt
to equity ratio was good as well the ratio started with 6.60 in 2015 then the company gradually
decrease and then increased 1.99 2018 . The results of ratio prove that the company has good
financial leverage Rahim Textile Ltd. It show that, there was a sharp 2015 low increased and 2018
was a high increased because Common Shareholders Equity was not increased 2015 year.
1.29
0.27
0.38
0.55
6.60
2.98
1.58
1.99
0.59
0.58
0.59
0.54
5.14
7.04
6.94
7.20
2015 2016 2017 2018
DEBT TO EQUITY RATIO

28
4.4.3Time Interest Earned Ratio
Times interest earned ratio is an indicator of a company’s ability to pay off its interest expense
with available earnings. It calculates how many times a company’s operating income (earnings
before interest and taxes) can settle the company’s interest expense. A higher times interest earned
ratio indicates that the company’s interest expense is low relative to its earnings before interest
and taxes (EBIT) which indicates better long-term financial strength.
Time interest earned ratio is calculated by dividing earnings before interest and tax (EBIT) for a
period with interest expense for the period as follows:
Times Interest Earned=EBIT/Interest Expense
2015 2016 2017 2018
Ltd
1.88 2.69 3.5 3.1
Figure 12 Interest Earned Ratio
21.14
30.54
6.62
2.80
1.24
5.43
11.42
2.981.88 2.69 3.5 3.13.3
5.0
3.1
4.5
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2015 2016 2017 2018
Interest Earned Ratio

29
Esquire Knit Composite Limited’ the times interest earned ratio started with -1.88 times in 2015
then it was decreased at -2.69 times and then also decreased -3.50 times in 2017. Then the next
year it was increased and ended with -3.10 times in 2018 It shows the company cann’t cover many
times its interest charges with its pretax earnings.Square Textile’ the times interest earned ratio
started with 21.14 times in 2015 then next year had a increased at 30.54 times but then decreased
gradually and ended with 2.80 times in 2018. It shows the company cannot in cover many times
its interest charges with its pretax earnings..Desh garments ltd’ the times interest earned ratio
started with 1.24 times in 2015 then next year had a decreased at 30.54times but then decreased
gradually and ended with 2.98 times in 2018. It shows the company can cover many times its
interest charges with its pretax earnings.Rahim Textile Ltd. It show that, there was a sharp 2015
to 2016 from increases 3.3 to 5.04. And 2016 was decreased 3.1 than again increased 4.55
4.5 Market Performance Ratio
Market value ratios are used to evaluate the current share price of a publicly-held company's stock.
These ratios are employed by current and potential investors to determine whether a company's
shares are over-priced or underpriced Book value per share
4.5.1 Earnings per Share
Earnings per share (EPS) is a profitability indicator which shows dollars of net income earned by
a company in a particular period per share of its common stock (also called ordinary shares).
Earnings per share is calculated by dividing net income for a period attributable to common stock
owners by the weighted average number of common shares outstanding during the period.
EPS is calculated using the following formula: Earnings per Share (EPS) = (Net Income –
Preferred dividends)/ Number of Common Shares Outstanding
Company Name 2015 2016 2017 2018
Ltd
6.04 4.95 3.12 3.44

30
Figure 13 EPS
Esquire Knit Composite Limited’ EPS was stared at taka 6.04 in 2015 than it was continuously
decreased at 4.95 and 3.12 in 2016 and in 2017 and then it was some increased at taka 3.44 in
2018. It shows the company’s EPS is good and it is increasing every year.Square Textile’ EPS was
stared at taka 1.37 in 2015 and gradually increased and ended at taka 2.43 in 2018. It shows the
company’s EPS is good and it is increasing every year.Desh garments ltd’ EPS was stared at taka
2.07 in 2015 and gradually increased and ended at taka 4.63 in 2018. It shows the company’s EPS
is good and it is increasing every year.Rahim Textile Ltd. It show that, there was a sharp 2015 year
increases 0.12, 2016 year high in 0.18 ,2017 year in decreased 0.16, after again decreased 2018
year 0.15.
1.37
4.14
2.3 2.43
2.07
6.46
5.7
4.63
6.04
4.95
3.12
3.44
6.79
6.37 6.61
5.9
0
1
2
3
4
5
6
7
8
2015 2016 2017 2018
EPS

31
4.5.2 Price Earnings Ratio
Price/Earnings or P/E ratio is the ratio of a company's share price to its earnings per share. It tells
whether the share price of a company is fairly valued, undervalued or overvalued.
P/E Ratio= Current Share Price/ Earnings per Share
Company Name 2015 2016 2017 2018
Square Textile ltd 10.09 29.44 20.85 20.95
Ltd
Figure 14 PE ratio
Square Textile’ P/E ratio was 10.09 in 2015 than it jumped up at 29.44 in 2016 and it down 20.85
in 2017 than it was 20.95 in 2018.Desh garments ltd’ P/E ratio was 29.52 in 2015 then gradually
increased and ended at 55.34 in 2018
10.09
29.44
20.85 20.95
29.52
33.89
53.33 55.34
34.18
26.74
53.48
56.09
0
10
20
30
40
50
60
2015 2016 2017 2018
Price Earnings Ratio
Square Textile ltd Desh Garmants Ltd Esquire Knit Composite Ltd Rahim Textile Mills Ltd

32
4.5.3 Dividend Yield Ratio
Dividend yield ratio is the ratio of dividend per share to the current market price per share. It
represents the component of total return that has resulted from dividend payments. The holding
period return that a company's common stockholders earn on their investment in the company's
equity has two components: dividend yield and capital gains yield.
Formula:
Dividend Yield= (Dividend per share/Market price of Common Shares)*100
Company Name 2015 2016 2017 2018
Desh Garmants Ltd 0.14
Ltd
3.36
Rahim Textile Mills Ltd 0.42 0.55 0.5
Figure 15 Dividend Yield Ratio
3.53
2.95
3.94
4.38
0.14
3.36
0.42 0.55 0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2015 2016 2017 2018
Dividend Yield Ratio

33
Square Textile’ dividend yield ratio was 3.53 in 2015 than it 2.95 2016 and it increase in 3.94 2017
then it increases 4.38 in 2018. Desh garments ltd’ dividend yield ratio was 0.38% in 2015 then it
became 0 in 2016 then it was gradually increased and ended with 1.23% in 2018.
5. Findings
• There are positive relationship exists among assets, sales and net income.
• There must be clear allocation of responsibilities, authority and accountability.
• The company should introduce more promotional activities.
• The company should take initiative to develop an effective research and development
center to get innovative ideas to capture the competitive market.
6. Recommendation
The overall performance of four company shows a satisfactory position although they are suffering
last four years. It is not easy to recommend some suggestion to enhance the performance level of
the organization. We should observed some shortcoming regarding operational and other aspects.
On the basis of my observation we would like to present the following recommendations:
• Increase their equity capital in their capital structure, because debt capital is already
higher.
• Though qualified employee in Finance and Accounting department, but the
organization should recruit some new employee to run this department smoothly.
• Effects to bring selling prices in line with costs having regard to competition and other
market factors.
• They should minimize their financing expenses to make higher net profit.
• They should maximize the average collection period and average payable period.
• They should be careful about the market price of share, because the price of share would
decrease in future.

34
7. Conclusion
After analyzing the 4 years financial data of 4 company we came to the conclusion that report is
one of the leading manufacturing textile company of Bangladesh with a variety of product which
have an export quality and it is a self-solvent company with a strong position in the manufacturing
sector. Almost all of the ratios of 4 company’s show that they are solvent enough and they have
the efficiency. However there liquidity ratio and turnover ratios needed to be improved as early as
possible so that the company can reduce their liabilities. In the last we would like to add that the
company financial management practice needed to be improved and they need to take some
effective solution so that can hold their reputation as a business icon in the manufacturing sector.

35
References:
Dhaka Stock Exchange
https://textile.squaregroup.com/sqtextile.html
https://www.deshgroup.com/desh-garments-ltd.html
http://esquireknit.com/
http://www.rahimtextile.com/

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