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1. Analysis Of The
Financial
Performance
A Study
On BSRM Steels Limited 1

2. Assignment on Financial Performance:
Prepared for:
Shajedul Alam
Senior Lecturer
Department of Business
Administration
East West University
• Prepared by
Nazmul Mishuk
Id:142051013
Mamun Ahmed
Id:133051012
2
BSRM
The Ultimate Steel

3. Bsrm steels limited
BSRMSteels Limited
3
BSRM
The Ultimate Steel

4. Acknowledgement 4
At the very outset, we would like to express our sincere gratefulness to the Almighty
Allah, the most merciful and beneficiary for empowering us to accomplish the
dissertation within scheduled time.We are highly indebted to our course instructor,
Shajedul Alam. He allowed us to encroach upon his precious time right from the
very beginning of this paper work till the completion. His expert guidance,
affectionate encouragement and critical suggestion provided us necessary insight into
the problem and paved the way for the meaningful ending of this assignment work in
a short duration. Without his constant supervision and valuable advices a suggestion
from time to time, we would not be able to complete the whole thing in a right
manner.We would like to thank all those who contributed through their comments
and suggestions to prepare the term paper in a comprehensive manner.

5. Executive Summary 5
Every corporation has many and varied uses for the standardized records and reports of its financial activities.
Financial performance is the most important thing for a public or private limited company. It is the key tool for
attracting investors towards the company. In this study we have analyzed about the overall financial
performance through ratio analysis of BSRM steels limited. We have finished this work as much efficiently as
we could.In this report we have worked on Statement of Comprehensive Income (income statement or trading
and profit and loss account), owner’s equity statement and Statement of Financial Position (balance sheet) of
BSRM steels limited . The data needed were collected from the annual reports of the BSRM steels over last 3
years, the website of the company and the website of the Dhaka stock exchange. We also took help from the
class lectures and the Financial Accounting text book while preparing the theory part of the assignment and
while taking the decision about the financial performance of the BSRM steels limited.We have go through the
study by analyzing the following things of the company over last three years data:
•Profitability ratio
•Liquidity ratio
•Efficiency ratio
Based on these data we have worked on the financial performance of the BSRM steels limited .
Finally we have some recommendations for the company to do their business well further. In this way, we have
prepared our study in a well manner and as relevant and reliable as possible.

6. INTRODUCTIONINTRODUCTION 6
Financial Management is that activity is concerned with the planning and controlling of the
firm’s financial resources. Though it was a branch of economics till 1890 as a separate or
discipline it is of recent origin. Financial management is concerned with the duties of finance
manager in a business firm. He performs such as budgeting, financial forecasting, cash
management, credit administration, investment analysis and fund procurement. The recent trend
towards globalization of business activity has created new demands and opportunities in
managerial finance. Financial statements are prepared and presented for external users of
accounting information. As these statements are used by investors and financial analysts to
examine the firms performance in order to make investment decisions.

7. Overview of ProjectOverview of Project
7
The topic of this project is Financial Performance Analysis at BSRM steels. Financial
Performance Analysis constitutes approach to judge the effectiveness of the financial
function of the firm. Finance is needed to promote or establish the business, acquires
fixed assets, make investigations, develop product, meeting day to day affairs of the
company, encourage manager to make progress and create value. The project work
during the period of study equips the youngsters with necessary experience and
enhances the learner with adequate to the real field. It enables the learner to meet the
challenges of a business world.

8. 8

9. Overview of BSRM Steels 9
The BSRM began the first re-rolling mills to emerge in the then East Bengal in
1952.Shares of BSRM Steels limited,the flagship company of BSRM group was listed
with the countrys premier bourses DSE ltd and Cse ltd as on 18 january 2009.BSRM
has been recognized as the best brand of Bangladesh in the Steel Category at the Best
Brand Award Bangladesh 2011 & 2013 ceremony, organized by Bangladesh Brand
Forum. BSRM Steels Limited is a high grade steel manufacturing company and only
producer of EMF tested ductile rod in Bangladesh. EMF (Elongation at Maximum
Force) is the parameter of measuring of ductility of steel which has taken the
country’s construction sector to a new era. BSRM is the market leader in the steel
industry. Net sales for 2013 were 601,935 MT with value in Taka 3,622.90 crore.

10. BSRM VisionBSRM Vision 10
We at BSRM group aspire to...
Maintain our leadership position in the steel industry by producing the best quality
steel products, continuously enhancing customer satisfaction and becoming a reliable
business partner of our customers and suppliers. Be an employer of choice, with focus
on nurturing talent and developing future leaders of the organization. Protect the
interest of our shareholders through sustainable growth and value creation. Preserve
the trust of all our stakeholders by adopting ethical business practices. Support the
society through Corporate Social Responsibility initiatives.

11. 11

12. CORPORATE OBJECTIVES 12
Company’s corporate objectives are;
• To procure material of required quality or quantity at most competitive prices for uninterrupted
production and maintenance of plant with least possible tie ups in inventories.
• To develop services and retain customers for the range of products manufactured by the
company and to meet customer needs in terms of new products or services.
• To promote and raise the standard of system and practices of corporate conduct to attain high
levels of accountability.
• To adopt transparency and responsibility in its operation and enhancement of overall long term
value of its shareholders, customers, lenders, and employees.
• To ensure maximum utilization of available human resources.

13. PRODUCTS AND MARKETS 13
SL.NO
Name OF Products Size(mm)
1.
Xtreme500W 8, 10, 12, 14, 16,
20, 22, 25, 28,
29, 32 & 40 mm
2.
Grade – 400
BSRM Steels Limited is a high grade steel manufacturing company and only producer of EMF tested ductile rod in
Bangladesh. EMF (Elongation at Maximum Force) is the parameter of measuring of ductility of steel which has taken the
country’s construction sector to a new era. Products of BSRM Steels are:
BSRM is the market leader in the steel industry. Net sales for 2013 were 601,935 MT with value in Taka 3,622.90 crore.

14. 14

15. DATA ANALYSIS AND INTERPRETATION
15
Ratio Analysis
Ratio Analysis is a powerful tool of Financial Analysis. The relationship between
two accounting figures, expressed mathematically is known as Financial Ratio. A ratio is used
as an index or yardstick for evaluating the financial position and performance o a firm. Ratio
Analysis highlights the liquidity, solvency, profitability, capital gearing etc. The technique
serves as a tool for assessing the current and long term financial soundness of a business. It is
also used to analyze various aspects of operating efficiency and level of profitability. Ratio
was used for the time in 1919 by a German Scholar.
Definition :-
“Ratio is simply a means of highlighting in arithmetical terms of
relationship between figures drawn from financial statements”.

16. 16
Year Current Asset
(Taka)
Current Liabilities
( Taka)
Current Ratio
2011 16,552,520,058 17,763,310,917 0.93
2012 14,931,429,134 16,178,604,488 0.92
2013 15,316,947,598 15,829,546,471 0.97
1.Current Ratio = Current Assets / Current liabilities
INTERPRETATION: -
The current ratio of BSRM steels is
slightly lower the standard ratio of 2:1 in almost
all the years. The highest ratio is 0.97 which were
in the year 2013 and the lowest ratio is 0.92 which
was in the year 2011.
LIQUIDITY RATIOSLIQUIDITY RATIOS

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2.Quick ratio = Quick assets / Current liabilities
YEAR Quick Assets Current Liabiliies Quick Ratio
2011 10099590791 17763310917 0.57
2012 7069225271 16178604488 0.44
2013 9631974052 15829546471 0.61
INTERPRETATION: -
The quick ratio of BSRM steels
shows not satisfactory level because it is less
than the standard level (accepted level) of 1:1.
The ratio had increased in the year 2013 with a
ratio of 0.61 and the lowest ratio was in the
year 2012 with a ratio of 0.44..

18. 18
1.Gross Profit Ratio = Gross Profit * 100 / Sales
YEAR Gross Profit Net Sales Gross Profit Ratio
2011 1,914,574,971 31,234,710,327 6.13%
2012 1,888,439,411 38,253,464,657 4.94%
2013 3,250,148,580 36,229,050,933 8.97%
INTERPRETATION: -
BSRM steels has reasonable gross
margin to cover all operating expenses and
building up of results. From the analysis it is
clear that, Gross Profit Ratio is highest in the
year 2013 with a ratio of 8.97% and lowest in
the year 2012 with a ratio of 4.94%.
The above given graph
shows an up and down trend from 2011 to
2013, but the ratio considerably decreased in
the year 2012.
PROFITABILITY RATIOS

19. 19
2.Net Profit Ratio = Net Profit * 100 / Sales
YEAR Net Profit Sales Net Profit Ratio
2011 839,205,050 31,234,710,327 2.69%
2012 865,331,036 38,253,464,657 2.26%
2013 1,196,113,781 36,229,050,933 3.30%
INTERPRETATION: -
Net Profit is calculated after
deducting non-operating expenses from
operating profit and adding non-operating
income to such profit. Higher the ratio, the
better it is, because it gives efficiency to the
concern. Net Profit is at its highest in the year
2013 with a ratio of 3.30% and lowest in the
year 2012 with a ratio of 2.26%. The above
figure shows an increasing and decreasing
trend from 2011 to 2013, .

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3.Mark up = (Gross Profit X 100)/ Cost of Goods Sold
YEAR Gross Profit Cost Of Goods Sold Mark Up
2011 1,914,574,971 29,320,135,356 6.52%
2012 1,888,439,411 36,365,025,246 5.19%
2013 3,250,148,580 32,978,902,353 9.85%
INTERPRETATION:
Mark up is at its highest in the year 2013 with a
ratio of 9.85% and lowest in the year 2012 with
a ratio of 5.19%. The above figure shows an
increasing and decreasing trend from 2011 to
2013.

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4.Return on capital employed = (Net profit x 100)/Capital employed
YEAR Net Profit Capital Employed Return On Capital
Employed
2011 839,205,050 3,846,786,000 21.82%
2012 865,331,036 6,276,104,000 13.79%
2013 1,196,113,781 7,549,537,000 15.84%
INTERPRETATION:
Return on Capital Employed is at its highest in
the year 2011 with a ratio of 21.82% and
lowest in the year 2012 with a ratio of 13.79%.
The above figure shows an increasing and
decreasing trend from 2011 to 2013,

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5.Return on capital invested = (Net profit x 100)/Owner’s Capital
YEAR Net Profit Owner’s Capital Return On Capital
invested
2011 839,205,050 2,974,081,000 28.22%
2012 865,331,036 5,540,654,000 15.62%
2013 1,196,113,781 6,417,895,000 18.64%
INTERPRETATION: In above the
graph,there is a up and down trend over the
years. In 2011 the company got the highest
return on capital invested and lowest in
2012.Overall better position For BSRM

23. Efficiency Ratio 23
Stock turnover = Cost of goods sold / Average stock
Year Cost of Good sold Average Stock Stock Turnover
2011 29,320,135,356 2554478121 11Times
2012 36,365,025,246 4257367195 8.54 Times
2013 32,978,902,353 5979274403 5.52 Times
INTERPRETATION: One of the most
Important Ratio , the highest stock turnover in
2011 and lowest in 2013,there are downward
trend in stock turnover over the years.

24. 24

25. 25

26. 26
BSRM Steels Limited
Statement of Financial Position
As at 31 December 2012

27. 27
BSRM Steels Limited
Statement of Comprehensive Income For the year
ended 31st
December 2012

28. FINDINGS 28
The current ratio of the firm though not an ideal one (2:1), because the company did not attain
the satisfactory ratio in any year . The current ratio shows a satisfactory position in meeting
short term obligation . Quick ratio is not satisfactory; BSRM can not attain the satisfactory level
of 1:1 almost all the years. quick ratio is very high during the year 2013.In Gross-profit ratio
higher the ratio, the better it is. The company can achieve a high ratio of 8.97% during the year
2013.but we can see that the ratio is increasing in year to year . Net profit ratio explains per Taka
profit generating capacity of sales. The amount of net profit and volume of sales increased year
by year but the ratio shown an upward and downward trend . Return on employed is not
satisfactory,need to increase the equity investment . Stock turnover is satisfactory

29. RECOMMENDATION 29
The company should concentrate on the long-term solvency of the business. Company should
make effective measures to reduce the total deb t.The market condition should be properly
analyzed before procurement of material. Liquid and long term solvency is satisfactory and the
company should try to keep more liquid assets. Low rate of gross profit is due to the increase in
the operating expense. The company should give more focus on general financial strength.The
company should pay more attention towards the gross profit ratio and net profit ratio because
both of these are showing a upward and downward trend.Return on capital Employed ratio is
satisfactory. The company should give more attention to attain a higher ratio that will increase
the profitability. Efficiency ratio shows a mixed trend so the company should take the necessary
steps to meet the higher ratio..

30. CONCLUSION 30
BSRM is an epitome of industrial success in the customer of Bangladesh. From a very modest
beginning the company has reached its present status of glory. As a Bar rolling,Steel making
manufacturing, and processing unit, the company’s ability to sustain a steady and time bound
supply schedule coupled with its constant striving for excellence has given it that extra edge over
all its competitors in the field. The combined effort of the management and workers has ensured
that the company never lost its course. Today the firm is well known for its consistent
performance and the quality of its products and work force. In Bangladesh that is notorious for its
militant trade unionism BSRM has succeeded in maintaining a peaceful industrial climate.
The company’s working capital position shows a positive trend which shows good or satisfactory
existences in current period. But we can see that the amount of sales is increasing at a healthy
rate, but the amount of net profit after depreciation and tax going in a decreasing trend. This is
mainly due to the increase in the cost of goods sold and increase in the manufacturing and labour
cost. We can also see that an increase in the amount of share capital from 68.70 in 2013 to 67.90
in 2012, this will help to make more and more fund flowing towards the fixed assts and other
manufacturing facilities.

31. 31