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Comment and findings of Renata Limited (Part 6)
http://www.reportbd.com/articles/1193/1/Comment-and-findings-of-Renata-Limited-Part-6/Page1.html
Abu Zafour
NAME : Abu Zafour Fathers Name : M. Fazlur Rahman Mothers Name : Mrs. Kohinur Begum Date of Birth : 1st January, 1988 Nationality : Bangladeshi by birth Birth Place : Bauphal, Patuakhali Marital Status : Single Religion : Islam (Sunni) Weight : 60 Kg. Height : 5’ 4” Health : Fit  
By Abu Zafour
Published on 7 April 2012
 
Overall comment and findings of Renata Limited. Analysis of the financial statement of Renata Ltd.

Overall comment and findings of Renata Limited
Overall Comment about Renata Limited

For analysis the financial conditions of Renata Limited we can segregate the financial statements (ratios) of Renata Limited into four different parts - liquidity ratios, asset management ratios, debt management ratios, and profitability ratios. These ratios can be used to evaluate the overall condition of any company.  Here we providing the overall comments about Renata Limited based on the liquidity ratios, asset management ratios, debt management ratios, and profitability ratios.
 
In case of liquidity ratios, their current ratio is decreased than the previous year but it is higher than the industry average. Side by side their quick ratio is decreased than the previous year and the industry average. So we can say that for current ratio their have some little idle money. But in case of quick ratio at the present rate it is not possible for the company to pay its bills as they come due. In case of asset management their inventory turnover in days is higher than the previous year and industry average. This suggests that inventory stocks of Renata Limited are higher than they need to be. Side by side DSO is in better position in comparison with previous year. 
 
In case of debt management, Renata Limited’s debt to asset ratio is higher than the previous year but lower than the industry average. So they have the opportunity to increase their debt up to 10% to expand their business. Their debt to equity ratio is higher than the previous year and they have to maintain the standard. In case of profitability position of this company – return on assets is increased than the previous year and industry average. Return on equity is decrease than the previous year but both are higher than the industry average. Net profit margin is increase than the previous year and industry average.  So we can say that, overall the company’s profitability position is good in spite of their net profit margin slightly lower than the industry average.
 
At last we conclude that, their financial condition is not bad and need to keep the wheel of prosperity for future.

FINDINGS

From the analysis of the financial statement of Renata Ltd. we have found the followings:

Renata Ltd. prepared consolidated financial statement in accordance to the Bangladesh Accounting Standards 27.

The company manufactures and sales various pharmaceutical, animal healths, animal nutritional, oral saline, hormone products and other medical product in the local and foreign market.

Their Financial statement has been prepared in accordance with applicable International Accounting Standards as adopted by the ICAB and where relevant with presentational requirements of the law.

Financial statement has been prepared under the historical cost convention as modified to include revaluations of certain property, plant and equipment.

The company has adequate resource to continue in operations for faceable future. For this reason they continue to adopt going concern basis in preparing the accounts.

Non–derivative financial instrument comprised accounts and other receivables, cash and cash equivalents, loans and borrowings, and other payables are shown at transactions cost.

The cost of the day-to-day servicing of property, plant and equipment are recognized in the profit and loss account as incurred.

Gains and losses on disposal or retirement of assets are credited or charged to the results operations.

The company has applied for tax holiday on unit-4 (potent product facility) for a period of 4 years from September 2006 to August 2010; the approval is yet to be received.
 
Provisions are made where an obligation exists for future liabilities in respect of the past event and where the amount of the obligations can be reliably measure.

Revenue from sell of goods is measured at fair value of the considerations received or receivable, net of return and allowances tread accounts and volume rebates

All fixed assets are recorded at cost less accumulated depreciation.
     
Renata Ltd. has followed the straight-line method in terms of charging depreciation on all fixed assets.

Renata Limited net profits in 2006 are decreased by TK58880748 from the previous year 2005.    

In 2006 The Total Assets of Renata Ltd. is increased by TK 501,955,759 (39.38%) against the base year.

In 2006 The Total liability of Renata Ltd. is increased by TK 293,760,167 (58.70%) against the base year.

The change in equity is increased by TK 208,195,592 (26.89%) against the base year.
 
The current ratio of Renata Ltd. in 2005 is 1.75 times and in 2006 is 1.49 times, which is lower than the previous year 2005

The Acid-Test Ratio of Renata Ltd. in 2005 is 0.74 times and in 2006 is 0.52 times, which is less than the previous year.

The average selling time of inventories in 2005 is 168 days and in 2006 is 188 days.

The firm’s ability to collect its credit sales is occurred in 36 days in 2005 and in 2006 is 34 days which is lower than the previous year 2005.

Return on Assets ratio of Renata Ltd. in 2005 is 15.11% and in 2006 is 15.87%, which is grater than the previous year 2005.

Total assets turnover ratio of Renata Ltd. in 2005 is 1.26 times and in 2006 is 1.26 times, which is similar with the previous year 2005.

Debt to total equity ratio of Renata Ltd. in 2005 is 64.64% and in 2006 is 80.85%, which is grater than the previous year 2005

Return on common shareholders’ equity of Renata Ltd. in 2005 is 24.88% and in 2006 is 24.65%, which is less than the previous year 2005.

Net profit margin of Renata Ltd. in 2005 is 11.97% and in 2006 is 12.56%, which is grater than the previous year 2005.

The Earning per Share of Renata Ltd. in 2005 is 239.71 and in 2006 is 301.41 which is grater than the previous year

Price-earnings ratio of Renata Ltd. in 2005 is 12.52 times and in 2006 is 10.28 times, which is less than the previous year 2005.

Dividend yield ratio of Renata Ltd. in 2005 is 1.94% and in 2006 is 2.26%, which is greater than the previous year 2005.

Time interest earned ratio of Renata Ltd. in 2005 is 13.77 times and in 2006 is 10.17 times, which is less than the previous year 2005.

Dividend payout ratio of Renata Ltd. in 2005 is 24.33% and in 2006 is 23.22%, which is less than the previous year 2005.