Time Series Analysis of Bata

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North South University

Ratio Analysis: Time series analysis of “Bata”

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Submitted To:

FJ Mohaimen

Lecturer,

Department of Accounting and Finance

School of Business and Economics

North South University

Submitted By:

Course Name: Introduction to Financial Management

Course Code: FIN 254

Section: 01

Executive Summary

Bata Shoe is regarded as one of the best footwear companies in Bangladesh. This multinational company started their operations in Bangladesh in 1962 by opening their branch office and launched as fully fledged company in 1972.  Recently we have analyzed the financial statements of year 2013, 2014 and 2015 of Bata Company. We have collected the data which are available in their company’s website. Then we have computed the ratios such as Liquidity ratio, Activity ratio, Debt Ratio, profitability ratio, Market Ratio. After computing these ratios we have performed time series analysis on these ratios.  From this analysis we have observed whether the company is in an improving position or not for last 3 years and have given our opinion elaborately in recommendation part.

1. Liquidity Ratios:  Liquidity ratios measure a company's ability to pay debt liabilities and its margin of safety through the calculation of metrics including the current ratio, quick ratio. It is used to measure a company's ability to pay its short-term debts.

Current Ratio:[pic 3]

Current ratio shows the extent to which current liabilities are covered by current assets.

From the graph it can be seen that the current ratio increased from 2013-2015

Current ratio was stable in 2013-2015. It means that the company was able to pay its current liabilities. After 2013 current assets increased steadily which means the company is capable enough to pay of its current liabilities. But the ratio of the value is too low.

Quick ratio:

The quick ratio shows the firm’s ability to meet current liabilities. It follows the same trend as current ratio and increased over the following years.

Just like the current ratio; the company had a stable quick ratio in 2013 to 2015 and that’s why quick ration increased to a stable position.

1. Activity Ratios: Activity ratios measure a firm's capacity to convert different accounts within its balance sheets into cash or sales. It helps us in determining whether a company's management is doing a good job of generating revenues and cash from its resources or not.

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Avg. Collection Period:

Average collection period in the approximate amount of time that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients. We can see from the charts Avg. collection period is slightly increasing over the year 2013 to 2014 and has increased immensely at the year 2015.

Inventory Turnover:

Inventory turnover is how many times inventory is sold and replaced. From 2013-2014 it has slightly decreased and increased a bit in 2015.

Avg. Age of Inventory:

The average number of days it takes for a firm to sell to consumers a product it is currently holding as inventory. From the charts we can see that it has been increasing from 2013 to 2014 and then slightly decreased again in 2015.

Total Asset Turnover:

It measures how efficiently a company uses its assets to generate sales. It has risen to 2013-2014. But in 2015 it has dropped from 1.73 to 1.63.

Avg. Payment Period:

Average payment period means the average period taken by the company in making payments to its creditors. It was 32.01 in 2013and increased rapidly in 2014 which was 64.42 but it has been decreased slightly to 63.01 in 2015.