This document compares the working capital management of two food companies in Bangladesh, Fu-Wang Foods and Rahima Food Corporation. It finds that: - Fu-Wang Foods is financed solely by domestic investors, while Rahima Food receives foreign direct investment, receiving over 1 billion taka in FDI over the period analyzed. - The companies differ in their aggressive investment policies, with Fu-Wang showing more fluctuation and Rahima a more balanced approach. Fu-Wang also has higher profitability from assets compared to Rahima. - Both companies' stocks are valued over their asset replacement costs for most years analyzed, suggesting their stocks are overvalued.

2.  Mahamuda Jahan Chowdhury BBA 03912538
 Kazi Fahmida BBA 03912534
 Shamima Rahman Shanta BBA 03912729

3. On the WORKING CAPITAL
MANAGEMENT BEHAVIOR OF THE
FOOD INDUSTRY OF
BANGLADESH

4. Selection of Industry
FDI Received Amount
Summery of Ratio
Why there are Differences Among Ratios
Finding from Perspective of Working
Capital Management
4

5. Food Industry
 Total 15 listed food companies operating in
Bangladesh

6.  FU-WANG FOODS
LTD
 Financed by domestic
investors
 RAHIMA FOOD
CORPORATION LTD
 FDI received

8.  Year of incorporation: 1997
 Listed in Dhaka Stock Exchange Ltd.: July 2000
 Listed in Chittagong Stock Exchange Ltd.: July 2000
 Commercial Production: August 1997
 ISO Certification: ISO-9002 Certified on 04 November 1998
 Business Line: Food Processing Industry

9. Authorized Capital Paid-UP Capital No. Of Shares
TK. 1000 Million TK. 445.28 Million 44528000 shares of TK
10/- each

11.  Business line : producing and packing best
quality refined edible oil and vegetable ghee.
 Year of incorporation:
1990
 Conversion into Public: 1996
 Initial Public Offering of shares: 1997
 Enlistment with DSE & CSE:
1997

12. Authorized capital Paid up Capital: No. of shares
Taka 250.00 Million Taka 200.002 Million 2,000,020 shares,
Taka 100/- each

13. FDI Received Amount(in TK) 102810102
FDI in % 5.14%

14.  Aggressive Investment Policy (AIP) results in minimal level of
investment in current assets versus fixed assets. In contrast, a
conservative investment policy places a greater proportion of
capital in liquid assets with the opportunity cost of less
profitability. If the level of current assets increases in
proportion to the total assets of the firm, the management is
said to be more conservative in managing the current assets of
the firm.
 AIP=Total Currant Liabilities/Total Asset

15.  Fu-Wang is using a
more fluctuating AIP
policy because it
increasing one year
than decreasing other
year because of their
fluctuation in fixed
asset and current asset
holding
 Compare to Fu-Wang
Rahima Food is having
a symmetrical AIP
policy due to their a
balanced current &
fixed asset holding
 Both the companies
differ in terms of AIP

18.  Return on Asset calculate how much profitability is
receiving from investing fixed asset
 ROA=Net Earning After Tax/Book Value of Asset

19.  Fu-Wang is having a
symmetrical ROA than
that of Rahima Food
due to fluctuations in
profitability of Rahima
Food
 Fu-Wang is having
more cost efficiency
than Rahima Food

20.  Tobin’s q compares the value of a company given by financial
markets with the value of a company’s assets. A low q (between
0 and 1) means that the cost to replace a firm’s assets is greater
than the value of its stock. This implies that the stock is
undervalued. Conversely. A high q (greater than 1) implies that
a firm’s stock is more expensive than the replacement cost of its
assets. Which implies that the stock is overvalued.
 TOBIN’S Q=MARKET VALUE OF FIRM/BOOKVLUE
OF ASSET

21.  Both Fu-Wang
and Rahima Food
are having a
asymmetrical
Tobin’s Q because
of their share
price fluctuations
and stock is more
expensive than
the replacement
cost of its assets
which implies
stock is
overvalued as it is
more than1in most
of the years
 Rahima food is

22.  Fu-Wang ‘s
Sale is
symmetrical as
it is increasing
from 2007 to
2011 & Rahima
Food’s Sale is
asymmetrical
because of
asymmetrical
Price
fluctuations of
their RM

23.  Both the
companies have
asymmetrical
growth on sale
because of
sudden change
in price hike of
their RM and
fuel and
international
price
fluctuations

24.  From 2007 to
2010 both Fu-
Wang ‘s
financial
leverage was
higher but they
try to reduce it
in 2011
 Rahima Food
‘s financial
leverage is
increasing
means using
more debt
financing than
equity financing

26.  Rahima Food is receiving FDI every year but Fu-
Wang Food does not
 Rahima Food operating with a more fluctuating
Raw Materials industry

28. FU-WANG Food RAHIMA Food

29.  Both the companies’ stock is more expensive than
the replacement cost of its assets which implies
stock is overvalued as it is more than1in most of
the years

30. 30