Fu wang company's ability to take credit was evaluated and necessary recommendation has been provided. 1) Porters Five Forces 2) Ratio Analysis 3) SWOT Analysis 4) Industry Analysis 5) Risk Analysis

1. CREDIT RISK GRADING
Fu-Wang Foods ltd.

2. We are..
Name ID
Jaheda Alam 111 131 260
Nacher Ahammed 111 122 266
Ismail Hossen 111 131 394
Atiqur Rahman 111 131 497

3. Company Overview
• Since our beginning, always we have been trying to maintain
the best standard quality of our products.We produce a
comprehensive range of Foods
• We constantly innovate by frequently introducing new foods
and beverage creations
Mission
Our mission continuously innovates to increase customer
satisfaction by offering high quality taste and standard
products.

4. Company Profile
Company Name : Fu-Wang Foods Limited
Date of Incorporation: : 17 February 1997.
Listed in Dhaka Stock Exchange : July 2000.
Listed in Chittagong Stock Exchange : July 2000.
Commercial Production : August 1997.
ISO Certification : ISO-9002 Certified on 04 November 1998
Business line : Food & Beverage Processing Industry
Authorized Capital : Tk. 1,000 Million
Paid-up Capital : Tk. 724.13 Million
Number of Employees : 1620

5. Product Line

6. Forces Ranking
Threat of New Entrants Low
Competitive Rivalry High
Threat of Substitute Products Low
Bargaining Power of Suppliers Low to medium
Bargaining Power of Buyers Low to medium
Low to medium
Competitive
rivalry (High)
Threat of new
entry (Low )
BuyerPower
(Lowtomedium)
Threat of
substitution (Low)
SupplierPower
(Lowtomedium)
Porter’s Five forces

7. Strength
1) Foods are healthy and nutritious
2) Brand strength
3) Effective stride in new markets
4) Strong existing distribution channels
5) Firm continuously upgrades its
machine and technology.
Weakness
1) Shortfall in utilization in production
capacity
2) Increased in administrative cost
Opportunities
1) New product introductions
2) Brand is attractive to global partners
Threats
1) Tremendous price hike of raw
materials, wages and transport cost for
countrywide political unrest
2) Highly competitive marketplace
3) Energy cost may raise
4) Interest rate may rise
SWOT
Analysis

8. Credit Risk Grading analysis
• Financial Risk
• Business/ Industry risk
• Management Risk
• Security Risk
• Relationship Risk

9. Leverage: Debt to equity ratio
• 0.352
2011-2012
• 0.376
2012-2013
• 0.406
2013-2014
Average • 0.378 Good (score: 13)
The lower the
better
0.352
0.376
0.406
0.32
0.33
0.34
0.35
0.36
0.37
0.38
0.39
0.4
0.41
0.42
(Year) (Year) (Year)
2011-2012 2012-2013 2013-2014
RangeofRatio
Leverage

10. Liquidity: Current ratio
2011-2012
• 1.825
2012-2013
• 2.052
2013-2014
• 2.473
Average • 2.117
Good (score: 13)
The higher the
better
1.825
2.052
2.473
0.000
0.500
1.000
1.500
2.000
2.500
3.000
(Year) (Year) (Year)
2011-2012 2012-2013 2013-2014
RangeofRatio
Liqudity

11. Profitability
• 15.04%
2011-2012
• 13.72%
2012-2013
• 13.21%
2013-2014
Average • 13.99%
Good (score: 12)
The higher the
better
15.04%
13.72%
13.21%
12.00%
12.50%
13.00%
13.50%
14.00%
14.50%
15.00%
15.50%
(Year) (Year) (Year)
2011-2012 2012-2013 2013-2014
Percentage
Profitability

12. 2011-2012
• 22.139
2012-2013
• 8.887
2013-2014
• 8.190
Coverage: Interest coverage ratio
Average • 13.07
Good (score: 5)
The higher the
better
22.139
8.887
8.190
0.000
5.000
10.000
15.000
20.000
25.000
(Year) (Year) (Year)
2011-2012 2012-2013 2013-2014
Coverage

13. Factors Situation Score
Size of business 79.44 crores 5
Age of business 18 years 3
Business outlook Stable 2
Industry growth 7.7% 2
Market competition Highly competitive 0
Entry / Exit Average 1
Total Business Industry Risk 13
Business Industry Risk

14. Factors Situation Score
Experience 5-10 years 3
second line secession Ready 4
Teamwork Very good 2
Total Management Risk 9
Management Risk

15. Security Risk
Factors Situation Score
Security coverage Registered Hypothecation 3
Collatral Coverage
Registered Mortgage on pourashava/ semi urban
area property 3
Support
personal guarantee with net worth or strong
corporate 2
Total Security Risk 8

16. Relationship Risk
Factors Situation Score
Account Conduct More than 3 years 5
Utilization of Limit 93.43% 2
Compliance of covenants Full compliance 2
Personal Deposit Personal accounts 1
Total Relationship Risk 10

17. Decision
Total Score: 83
Acceptable
*Grant Credit
*Recommendations applied (next slide)

18. Recommendations
• They should hold 15% cash among total current assets.
• The company should try to increase its utilization of
production capacity at least greater than 97%.