Term Paper On

Performance Evaluation of Square Textile Ltd. & Apex Spinning and Knitting Mills Ltd.

Prepared For

MD. Humayun Kabir

Lecturer

Department of Business Administration

East West University

Course Code: FIN201 (Business Finance)

Section: 07

Prepared By

NAME ID Signature
1. Morium Akter Ruma 2016-3-10-021
2. Nasrin Akter 2016-3-10-020
3. Seyeda Shahanaz 2016-3-10-002
4. Asif Razzak Khan 2016-3-10-026
5. Rahila Khatun Sinthi 216-1-10-321
6. Adiya Mirdha 2016-1-10-138

submission Date: April 07, 2019

1
April 07, 2019
To
Md. Humayun Kabir
Lecturer
Department of Business Administration
East West University
Jahurul Islam City, Aftabnagar
Dhaka-1212

Subject: Submission of term paper for completion of course.

Dear Sir,
It is our pleasure to submit this Term paper based on “Performance Evaluation of Square
Textile Ltd. & Apex Spinning and Knitting Mills Ltd.” which was assigned to us as a
requirement of the Business Finance course. We have tried our best to make this term paper and
we are happy to submit you for better consideration. It was a great experience for us and it gives
us knowledge about Performance Evaluation of Square Textile Ltd. & Apex Spinning and
Knitting Mills Ltd.
Thank you for your guidance and valuable supervision to complete this report.

Sincerely yours

NAME ID
1. Morium Akter Ruma 2016-3-10-021
2. Nasrin Akter 2016-3-10-020
3. Seyeda Shahanaz 2016-3-10-002
4. Asif Razzak Khan 2016-3-10-026
5. Rahila Khatun Sinthi 216-1-10-321
6. Adiya Mirdha 2016-1-10-138

2
Acknowledgement

We are very pleased to accomplish the assign task given by our honorable course instructor MD.
Humayun Kabir on the subject of “Performance Evaluation of Square Textile Ltd. & Apex
Spinning and Knitting Mills Ltd.”. At first our profound gratification goes to MD. Humayun
Kabir Sir, the honorable course instructor of Business Finance for his supervision to complete
the term paper successfully. By providing us the opportunity of preparing this term paper, he has
made us able to relate the academic knowledge of Business Finance with practical scenario. Not
only this, he has also contributed much in this term paper by giving us proper guideline. We are
also acknowledging to all of those who sites from which we have taken necessary helps. Our
gratitude also goes to some senior students for their guidance in various stages of completing the
term paper and our dear friends and classmates for their ingenious advices and supports.

Finally, we are pleased to complete the term paper on the given subject properly and
authentically.

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Executive Summary

According to the requirements of BBA program, we chose to prepare Performance Evaluation

of Square Textile Ltd. & Apex Spinning and Knitting Mills Ltd. The report is based on
Performance Evaluation of Square Textile Ltd. & Apex Spinning and Knitting Mills Ltd.
Anyone can easily understand the Performance Evaluation of Square Textile Ltd. & Apex
Spinning and Knitting Mills Ltd from 2013 to 2017 from here. We focused our study on few
things in particular. This term paper contains the objectives of the study, limitations of the study,
company overview findings of the study and analysis of performance evaluation of two
manufacturing companies. In order to do our term paper we had to take some formations from
internet. We have calculated liquidity, asset management, debt management, profitability, market
value etc. we have collected data from the annual report and the website of square Textiles
Limited. For analysis purpose, we have used the concept of various financial concepts and
theories.

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Contents
Acknowledgement..................................................................................................................................3
Executive Summary.................................................................................................................................4
Objectives of the Study...........................................................................................................................6
Limitations of the study..........................................................................................................................6
Introduction................................................................................................................................................7
Company Overview:................................................................................................................................7
Ratio Analysis..............................................................................................................................................8
Apex Spinning and Knitting Mills Ltd......................................................................................................8
Quick Ratio..........................................................................................................................................8
Total Assets Turnover.........................................................................................................................9
Inventory Turnover...........................................................................................................................10
Net Profit Margin..............................................................................................................................11
Daily Sales Outstanding....................................................................................................................12
Return on Assets...............................................................................................................................13
Fixed Assets Turnover.......................................................................................................................14
Ratio of Square Textile Ltd........................................................................................................................15
Current ratio......................................................................................................................................15
Acid test............................................................................................................................................16
Inventory Turnover...........................................................................................................................17
Daily Sales Outstanding....................................................................................................................18
Fixed Assets Turn over......................................................................................................................19
Total Assets Turnover.......................................................................................................................20
Debt to Total Assets..........................................................................................................................21
Total Interest Earned........................................................................................................................22
Net Profit Margin..............................................................................................................................23
Return On Assets...............................................................................................................................24
Return on equity...............................................................................................................................25
Recommendation.....................................................................................................................................26
Conclusion.................................................................................................................................................27
Bibliography...............................................................................................................................................28

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Objectives of the Study

Our main objective is to learn about the Performance Evaluation of Square Textile Ltd. & Apex
Spinning and Knitting Mills Ltd.

The present study has been designed to achieve the following objectives:

1. To understand the Square Textile Ltd. & Apex Spinning and Knitting Mills Ltd as
manufacturing companies.
2. To assess how Square Textile Ltd. & Apex Spinning and Knitting Mills Ltd. manages its
financial tools with rules and regulations.
3. To find out barriers or bottlenecks in collecting the overall financial analysis and
maintaining process.
4. To recommend on those problems.

Limitations of the study

The following limitations are apparent in this report:

1. Time constraints were one of the most important factors that imposed restrictions on
conducting the study extensively.
2. Scarcity of Secondary Data
3. Limitation of Scope was another important point that was faced during execution of the
study.
4. Privacy or reluctance to disclose confidential data was another important problem.
5. Cost constraints.

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Introduction

Company Overview:

Square Textiles Limited is one of the ventures of SQUARE. The first unit of Square Textiles
Limited was established in 1997. It is a public limited company incorporated with registrar Joint
Stock Companies and firms under Companies Act 1913. The shares of the company are listed in
the Dhaka Stock Exchange Limited (DSE) and Chittagong Stock exchange Limited (CSE). The
Company got ISO-9002 certificate in 2000. It manufactured 100% cotton yam. Its target market
is the export oriented readymade garment industry. It owns two units of spinning mills and its
activities and operations are related with manufacturing and marketing of Yam. In this report,
we have tried to analyze the performance of the Company based on different financial
techniques. We have analyzed different components of the financial statements.

Apex Spinning & Knitting Mills Ltd (ASKML) was incorporated on 25/11/1990 under the
Companies Act 1913(repealed in 1994). ASKML is a fully vertical setup to manufacture high
quality Knit-garments for children, ladies, and men’s using in-house fabrics. ASKML is equipped
to produce a wide range of all-over printed fabrics such as reactive, disperse, acid and pigments
using a variety of designs provided by the buyer and/or from ASKML’s design department. The
fabric can be circular knit or wrap knit, 100% cotton, polyester, nylon or various blends, with or
without elastic, yarn dyed or solid dyed, all from in-house source. The 52 sewing lines are
equipped to produce garments starting from the basic. Infant’s items to ladies/men’s hooded
sport jackets based on our customer’s designs. The total production capacity of the ASKML is
2500000 pieces per month as shown below with sufficient flexibility to allow 25-40% additional
capacity of any one of the items.

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 Ratio Analysis

Apex Spinning and Knitting Mills Ltd.

Quick Ratio
Year Quick Ratio
2017-1018 0.91
2016-2017 0.91
2015-2016 0.96
2014-2015 0.92
2013-2014 0.89

Quick Rati o
0.96

0.92
0.91 0.91
0.89

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Interpretation
Quick Ratio: In fiscal year 2013-2014 the quick ratio of the company was 0.89, in
2014-2015 it increases to 0.92, in 2015-2016 it’s again increases to 0.96, in 2016-
2017 it decreases to 0.91, in 2017-2018 it was same 0.91. The higher the quick ratio,
the better. Here Apex knitting company’s firstly increases after then it decreases
which indicates that nor they are less capable or nor they are more capable.

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Total Assets Turnover
Year Total Assets Turnover
2017-1018 0.25
2016-2017 2.42
2015-2016 2.32
2014-2015 0.43
2013-2014 0.29

Total Assets Turnover

2.42
2.32

0.43
0.25 0.29

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Total Asset Turnover: From the graph we can see that firstly it was increases, in
fiscal year 2015-2016 and 2016-2017 it was highest, again in fiscal year 2017-2018
it decreases more rapidly. Higher turnover ratio means the company is using it’s
asset more efficiently, as fiscal year 2017-2018 it was lower so we can say that
company’s current total asset turnover ratio was bad.

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Inventory Turnover

Year Inventory Turnover

2017-1018 18.52

2016-2017 16.47

2015-2016 17.53

2014-2015 14.41

2013-2014 11.69

Inventory Turnover
18.52 17.53
16.47
14.41
11.69

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Inventory Turnover: From the graph we can see that overall company’s inventory
turnover increases, only in fiscal year 2016-2017 it decreases. Low inventory
turnover indicate weak sales and possibly excess inventory, also known as over
stocking. As Apex inventory turnover high, it is better for apex.

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Net Profit Margin
Year Net Profit Margin
2017-1018 0.0936
2016-2017 0.0086
2015-2016 0.13
2014-2015 0.0319
2013-2014 0.0836

Net Profi t Margin

0.13

0.09
0.08

0.03

0.01
2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Net Profit Margin: In fiscal year 2013-2014 the ratio was .083, in fiscal year 2014-2015 it
decreases to .0319, in fiscal year 2015-2016 it increases to .13, in fiscal year 2016-2017 it
decreases to .0083, in fiscal year 2017-2018 it again increases to .093. A high net profit margin
means a company keeps a large proportion of its revenue as profit, so it is better to have a high
net profit margin. from the over view of five years we can say net profit margin ration of apex
knitting company is in medium level, not good or not bad.

Daily Sales Outstanding DSO

Year

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2017-1018 58.74
2016-2017 43.31
2015-2016 46.55
2014-2015 71.87
2013-2014 48.23

DSO

71.87

58.74

46.55 48.23
43.31

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Daily Sales Outstanding: In fiscal 2013-2014 DSO was 48.23, in fiscal year 2014-
2015 it increases to 71.87, in 2015-2016 it decreases to 46.55, in fiscal year 2016-
2017 it decreases to 43.31, in fiscal year 2017-2018 it increases to 58.74. A low DSO
means it takes a company fewer days to collect its accounts receivable. So from the
overview of five years we can say that apex knitting company’s DSO ratio is in
medium level not good or not bad.

Return on Assets Year ROA

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2017-1018 0.0232
2016-2017 0.0209
2015-2016 0.3033
2014-2015 0.0139
2013-2014 0.0248

ROA
0.35

0.3

0.25

0.2

0.15 0.3

0.1

0.05
0.02 0.02 0.01 0.02
0
2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Return on total assets: From the graph we can see that 2013-2014, 2014-2015,
2016-2017, 2017-2018 return on total asset was lower only in 2015-2016 it was
some higher. We know that the higher the ROA the better because the company is
earning more money on less investment. So from the over view of five years we can
say that apex knitting company return on total asset is not good.

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Fixed Assets Turnover
Year Fixed Assets Turnover
2017-1018 1.01
2016-2017 9.68
2015-2016 13.02
2014-2015 1.98
2013-2014 1.14

Fixed Assets Turnover

13.02

9.68

1.98
1.01 1.14
2 0 1 7 -1 0 1 8 2 0 1 6 -2 0 1 7 2 0 1 5 -2 0 1 6 2 0 1 4 -2 0 1 5 2 0 1 3 -2 0 1 4

Fixed asset turnover: From the graph we can see that their fixed asset turnover

lower in first two fiscal years, then in second two fiscal years it was higher then again

it was lower in last year. Increasing the ratio may indicate that the business is lower-

invested in plant, equipment or other fixed asset. So fixed asset turnover higher is

good. Currently apex inventory turnover less which is not good for apex.

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Ratio of Square Textile Ltd

Current ratioYear Current Ratio

2017-2018 1.8
2016-2017 1.9
2015-2016 2.96
2014-2015 2.7
2013-2014 2.51

Current Ratio
2.96
2.7
2.51

1.8 1.9

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Current ratio:
In fiscal year 2013-2014 the current ratio of the company was 2.5, in 2014-2015 and 2015-2016
it increasing value 2.7 and 2.8, then in 2016-2017 and 2017-2018 it decreasing value 1.9 and
1.8. The higher the current ratio the more capable of the company which means the company
able to pay off their short term liabilities with cash. Square current is lower that means they are
less capable to pay off their short time liabilities with cash.

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Acid test
Year Acid Test
2017-1018 1.42
2016-2017 1.17
2015-2016 1.98
2014-2015 1.76
2013-2014 1.49

Acid Test

1.98
1.76
1.42 1.49
1.17

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Acid test:

The higher the quick ratio the better. Here Square company’s ratio is 2013-2014 to 2015-2016 is
increases then 2016-2017 is decreases 1.17 then again it is increases 1.42 which indicates that
they are more capable from the previous year.

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Inventory Turnover
Year Inventory Turnover
2017-1018 3.99
2016-2017 3.3
2015-2016 4.07
2014-2015 3.62
2013-2014 3.8

Inventory Turnover
3.99 4.07
3.8
3.62
3.3

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Inventory Turnover

In fiscal year 2013-2014 the Inventory Turnover of the company was 3.8, In 2014-2015 it
decreases 3.6, again 2015-2016 it increases 4.1, in 2016-2017 it again decreases and 2017-2018
it increases 4.0. Low inventory turnover indicates the weak sales and possibly excess inventory,
also known as over stocking. As Square inventory turnover high from the previous year so, it is
good for Square.

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Daily Sales Outstanding
Year DSO

2017-1018 97

2016-2017 96.42

2015-2016 71.77

2014-2015 100.66

2013-2014 111.03

DSO
111.03
97 100.66
96.42

71.77

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

DSO
In the graph we see that in first three years it is rapidly decreases but in 2016-2017 and 2017-
2018 it is increases. The lower the day’s sales outstanding is good for the company. Here we see
Square company DSO is higher so, this is not good for the company.

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Fixed Assets Turn over
Year Fixed Assets Turn over
2017-1018 1.61
2016-2017 1.28
2015-2016 2
2014-2015 2.49
2013-2014 2.6

Fixed Assets Turn over

2.6
2.49

2
1.61
1.28

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Fixed Assets Turn over

From the graph we can see that their fixed asset turnover lower in first three fiscal years, then
last 2017-2018 year it was higher 1.61. Increasing ratio may indicate that the business is lower
investment in plant, equipment or other fixed assets. So, fixed assets turnover higher is good.
Currently Square fixed assets turnover is high from previous year which is good for Square.

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Total Assets Turnover
Year Total Assets Turnover
2017-1018 0.81
2016-2017 0.67
2015-2016 0.88
2014-2015 0.94
2013-2014 0.94

Total Assets Turnover

0.94 0.94
0.88
0.81
0.67

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Total Assets Turnover

From the graph we can see 2013-2014 and 2014-2015 is same then in 2015-2016 and 2016-
2017 is rapidly decreasing then 2017-2018 is increase 0.81. Higher turnover ratio means the
company is using its asset more efficiently, as fiscal year 2017-2018 it higher from previous year
so we can say that company total assets turnover is good.

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Debt to Total Assets
Year Debt to Total Assets
2017-1018 1.23%
2016-2017 1%
2015-2016 99%
2014-2015 25%
2013-2014 96.22%

Debt to Total Assets

99% 96%

25%

1% 1%
2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Debt to Total Assets

In company 2013-2014 debt to total assets is 96.22%, in 2014-2015 is 25% and decrease. Again
2015-2016 is 99% debt to total assets and increase.in 2016-2017 is 1% and again decrease .
2017-2018 is debt to total assets is increase is 1.23%. lower debt to total asset is better.

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Total Interest Earned
Year Total Interest Earned
2017-1018 21
2016-2017 21
2015-2016 20.99
2014-2015 20.99
2013-2014 21

Total Interest Earned

21 21 21

20.99 20.99

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Total Interest Earned

In company 2013-2014 total interest earned is 21 times. In 2014-2015 is 20.99 times and
decrease. In 2015-2016 is 20.99 times. in 2016-2017 is total interest earned is 21 times and
increase and 2017-2018 is 21 times and same value is increase. A higher times interest earned
ratio is favorable and the company presents that less of risk.

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Net Profit Margin
Year Net Profit Margin
2017-1018 4.86
2016-2017 5.03
2015-2016 8.98
2014-2015 9.6
2013-2014 10.38

Net Profit Margin

10.38
9.6
8.98

4.86 5.03

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Net Profit Margin

In company 2013-2014 is net profit margin is 10.38 %. 2014-2015 is 9.6 % and decrease. in
2015-2016 is 8.98 % and also decrease. In 2016-2017 is 5.03 %, 2017-2018 is 4.86% decrease.
High net profit margin is favorable company is able to control is costs.

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Return On Assets
Year ROA
2017-1018 0.0395
2016-2017 0.03
2015-2016 0.07921
2014-2015 0.091
2013-2014 0.1178

ROA

0.12

0.09
0.08

0.04
0.03

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Return On Assets
In company 2013-2014 ROA is 0.1178 % ,2014-2015 is 0.091 %& decrease .2015-2016 is
0.07921% is decreases. 2016-2017 is 0.03 % also decrease .2017-2018 is .0395 % again
increases. A higher ROA is better because the company is earning more money on less
investment.

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Return on equity
Year ROE
2017-1018 5.46
2016-2017 4.6
2015-2016 10.09
2014-2015 12.15
2013-2014 14.65

ROE
14.65

12.15
10.09

5.46
4.6

2017-1018 2016-2017 2015-2016 2014-2015 2013-2014

Return on equity
In 2013-2014 the company return on equity was 14.65 and decreases rapidly. In 2015-2016 it
was decline by 10.09 and 2016-2017 it highly decreases by 4.6. After the year it increases by
5.46.

Recommendation

25
Conclusion

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Bibliography

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Apex Textile Complex. (2019, april 4). Retrieved from Apex Spinning & Knitting Mills Limited:
https://www.apexknitting.com/apex-textile-complex.php#

Apex Textile Complex. (2019, April 4). Retrieved from Apex Spinning & Knitting Mills Limited:
https://www.apexknitting.com/FinancialReports.php

Squre. (2019, april 6). Retrieved from Squre Textile Ltd: https://textile.squaregroup.com/sqtextile.html

Squre Textile. (n.d.).

Squre Textile. (2019, April 5). Retrieved from Squre Textile Ltd:
https://textile.squaregroup.com/tex_financialStat.html

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