case study square textiles

8/6/2019 Case Study Square Textiles

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Corporate Financial Analysis:

Square Textiles Ltd.

TERM PAPER

FIN 639

SEC: 1

Submitted By:

Ehsanul Hannan 081 124 060

Noor-A-Nazia 081 125 060

Md Sajjad Bin M Rahman 081 589 060


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Md Sajjad Bin M Rahman 081 589 060


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April 16, 2011

Dr. Masud Rahman

Professor

MBA Program

School of Business

North South University

RE: Submission of term paper on Corporate Financial Analysis: A Case

on Square textiles Ltd.

Dear Sir:

We do hereby feel privileged to submit our term paper on Corporate

Financial Analysis: Square Textiles Ltd., with an intention to have a

better understanding of the course Corporate Finance.

We greatly value the opportunity you gave us.


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Acknowledgement

At first, we show our gratitude to almighty ALLAH without whose grace,

nothing is possible. Our special thanks go to the honorable course

instructor of the course, Dr. Masud Rahman, who helped us in every

sector to prepare this project paper with his acquired knowledge and

vast experience. We are very grateful for his guideline and utmost

patience towards us.


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Abstract

The objective of this case study is to find out the policy decisions made

by Square Textiles Ltd. that influenced share price movement. We were

also interested to analyze its investment decisions and the impact on

share price. We also tried to forecast the share price by identifying

growth opportunity of the firm.


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Contents

Chapter 1 Introduction & Methodology.................................1

1.1 Introduction...............................................................................1

1.1.1 Square Textiles Ltd. at a glance..........................................1

1.2 Objective of the study................................................................1

1.3 Methodology..............................................................................2

1.3.1 Financial Analysis techniques..............................................2

1.3.2 Statistical Techniques..........................................................3

1.3.3 Nature and Source of Data..................................................3

1.3.4 Time Period under Consideration......................................3

1.3.5 Standard of comparison......................................................3

1.4 Limitations of the study.............................................................3

Chapter 2 Analysis & Interpretation of Financial Data............5

2.1 Balance Sheet Analysis..............................................................5


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4.2 Scenario 1: Growth at Sustainable Growth Rate......................28

4.3 Scenario 2: Growth as per Gordon Model................................29

4.4 Scenario 3: Growth at GDP growth rate...................................29

4.5 Scenario 4: Optimistic..............................................................30

4.6 Scenario 5: Pessimistic............................................................30

4.7 Choice of Growth Rate.............................................................31

4.8 The Plug Variable.....................................................................31

4.9 Weighted Average Cost of Capital...........................................31

4.10 Share Price according to Gordon Model...................................32

Chapter 5 Findings and Conclusions....................................33

5.1 Financial Performance.............................................................33

5.2 Stock Price Movement.............................................................33

5.3 Growth Prospect and Future Share Price.................................33

Appendix 34

A.1 Regression results...................................................................34

A.2 Weighted Average Cost of Capital...........................................39

A.3 Financial Statements & Performance Data..............................40

A 3 Fi i l St t t & P f D t


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Chapter 1

Introduction & Methodology

1.1 Introduction

This case study is prepared with an intention to meet partial requirement

of the course Corporate Finance and to have a better insight of the

subject matter. We have chosen Square textiles Ltd., one of the leading

yarn manufacturers of the country for this purpose. We performed an

analysis of the company and tried to evaluate its justification with the

acquired knowledge from this course.

1.1.1 Square Textiles Ltd. at a glance

Square Textiles Ltd. was established as a public limited company in 1994

as a group company in Square Group with a business line of

f t i d k ti f Th t t d it ti


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Relate consequences of financial activities with the valuation of the firm

1.3 Methodology

A number of methods and techniques which were used towards reaching a

conclusion are stated below: -

1.3.1 Financial Analysis techniques

A balance sheet analysis was performed to identify the sources of

discrepancies in balance sheet that causes book value and market value

of share to be different.

A cash flow analysis was performed to study the cash dealings of the firm

and to identify its financial position.

We also performed a ratio analysis to evaluate the firms financial

strengths or weaknesses. The most prominent Financial Analysis

techniques include the following 3 methods: -

B h M k A l i


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Cross Section Analysis

In this type of analysis, Companys financial ratios are compared with

other industry ratio averages. This can also be performed by issuing

comparison between two companies of similar business.

For the sake of the case study, we will perform Time Series analysis on the

seven year data that we have and a Cross Section analysis between our

company of interest Square Textiles Ltd. and Apex Spinning & Knitting

Mills Ltd (ASKML).

1.3.2 Statistical Techniques

To relate share price movement with different events or policy decisions

e.g. account closing, record date, dividend declaration, AGM etc. we relied

on simple regression by populating dummy variable against the event.

1.3.3 Nature and Source of Data

The data used in this study is secondary data collected from annual

t d Dh k St k E h b it d d t hi


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1.4 Limitations of the study

Like all other case studies, this too has got its limitations. Following are

the areas where we had our limitations

Unable to conduct direct interview with Square Textiles employees

to get a better insight of our findings.

Unavailability of information in a Soft Copy which consumed lot of

time.

No information was available on the overall market share in the

yarn industry in Bangladesh. Moreover, the industry averages were

not also available which would have been a better option to

compare with.

Financial year of Square Textiles and ASKML ends in different

months which can create inaccuracies in cross-section analysis

Due to time constraint, cross section analysis was done only for last

It ld b b tt if it d f l t 7


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Chapter 1Analysis & Interpretation of

Financial Data

1.1 Balance Sheet Analysis

The Balance Sheet shows the financial position of a firm at a specific point

in time. The financial statement indicates the investments made by the

firm in the form of assets and the means by which the assets were

financed that is, whether the funds were raised by borrowing (which is

actually the Liabilities part of a Balance Sheet) or by selling ownership

shares or common shares or common stocks (which is basically the Equity

part of a Balance Sheet). Amounts shown on a balance sheet are generally

the historic cost of items and not their current values. Balance sheet can

b d fi d A t Li biliti E it Th t id f th


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Assets at Cost LessDepreciation

1,378,552,606

Deferred Tax Liability 112,276,486

Investment-Long Term(At Cost) 105,000,000 Total Liabilities 2,388,878,289

Share Money Deposit800,000,00

0Equities

Total Fixed Assets2,283,552,

606Share capital 705,804,530

General Reserve andSurplus

2,413,563,497

Tax Holiday -

Total Equities 3,119,404,027

Total Assets 5,508,282,316

Total Liabilities &Equities

5,508,282,316

The above table shows the Balance Sheet of Square Textiles Ltd. as

presented in their annual report. According to this balance sheet the book

value of Square Textiles shares for the day December 31, 2009 should be

44.19 Taka. But in reality we can see that the actual market price on that

day was much higher than that, 111.54 Taka.

Fi 1 C i b t M k t V l & B k V l f S


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at cost less accumulated depreciation. But, as suggested by the Time

Value of Money concept, price changes as time passes. Moreover, the

depreciation was charged using the Straight Line method. From this

analysis above we reach to a conclusion that the values of fixed assets are

undermined. The asset composition shows that a significant 30% of fixed

assets are land and building which have been recorded at historical cost.

But over the years these assets market price has significantly increased

which has not been reflected in the balance sheet.

No Int angible A ssets section : It was found that the company did not

incorporate any Intangible assets in the balance sheet. One of the most

important intangible assets is Trademark which was not considered in

preparing the balance sheet. Square Textiles Ltd. is in operation in

Bangladesh for the last 11 years, since 1997, and has been holding a

healthy position for last several years. They have been profitable with a

fair performance in share market also. So, this is certainly an evidence of

their goodwill which should be valued. The firm recently acquired Mithapur

Textiles and also merged with Square Spinning Ltd. These M&A activities

h b d d t/ h i B t th b d l i d


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Goodwill was added valued as taka 2,000,000,000.

General Reserve and Surplus has been changed from 2,413,563,497

taka to 7,167,104,742 taka.

As a result the Total Assets and Total Liabilities & Equities sides balanced

at taka 10,261,787,561.

Table 2: Balance sheet of Square Textiles Ltd. based on Market value of

share

Balance SheetAssets Liabilities and EquitiesCurrent Assets Current Liabilities

Stocks942,568,13

4

Short Term Bank

Loan

573,802,35

8Trade Debtors

1,683,329,048

Short Term Loan552,993,07

3

Short Term Loan431,848,64

9Sundry Creditors

870,756,515

Advance, Deposits andPrepayments

120,651,506

Other CurrentLiabilities

170,321,074

Cash & Bank Balances 46,332,373Provision for incometax

108,728,783

T t l C t A t 3 224 729 T t l C t 2 276 601


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1.2 Cash Flow Analysis

The statement of cash flows is designed to show how the firms operations

have affected its cash position by examining the investment and financing

decisions of the firm. Often time, the information contained in the

statement of cash flows answer questions like: Is the firm generative the

cash needed to purchase additional fixed assets for growth? Does it have

excess cash flows that can be used to repay debt or to invest in new

products? Information contained in the Cash Flow Statement is useful both

for financial managers and investors. Following is the cash flow analysis of

Square Textiles Ltd.:-

Table 3: Cash Flow Statement for Square Textiles Ltd. for the year 2009

2009 2008Cash flow from operating activitiesReceipts:Cash from sales revenue 3,888,585,2

442,763,272,8

86Cash from other income 259,007 23,676

Total cash receipts 3,888,844,2

51

2,763,296,5

62


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Activities 91) 05)

Cash flow from financing activitiesShort term Bank loan (203,726,22

7)(27,451,291

)Short term loan from/(to) sister Concern 58,058,364 129,959,939Payment of Dividend (105,876,07

9)(98,583,425

)Net Cash Flow From FinancingActivities

(251,543,942)

3,925,223

Net cash position 1,640,898 12,365,318Opening cash & cash equivalents 44,691,475 32,326,157

Closing Cash & Cash Equivalent 46,332,373 44,691,475

1.2.1 Analysis of the Cash Flow:

Net Cash Flow from Operating Activities: The net cash flow from

operating activities was much higher than previous year mainly due to

increase in sales which shows a good sign for the company.

Net Cash Flow from Investment Activities: There is no significant

change in net cash flow from investment activities compared to the


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Sources for these ratios are the company Financial Statements within the

industry that contains figures on assets, liabilities, profits, and losses.

Industry ratios are only meaningful when compared with other

information. Since individual companies are most often compared with

industry data, ratios help an individual understand a company's

performance relative to that of competitors and are often used to trace

performance over time.

There are 5 major categories when ratio analysis is considered. These

categories are:

Liquidity Ratio which gives a picture of a companys short term financial

situation or solvency.

Asset Management Ratio uses turnover measures to show how efficient

a company is in its operations and use of assets.

Debt Management Ratio shows the extent that debt is used in a

company's capital structure.


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Table 1: Current Ratio for Square Textiles Ltd. & Apex Spinning & Knitting

Mills Ltd.

Company Square Textiles Ltd.

ASKML

Year 2009 2008 2007 2006 2005 2004 2003 2009

CurrentRatio 1.35 1.21 1.38 1.12 1.41 1.14 1.01 1.10

We can see from the above data that the current ratio for Square Textiles

is 1.35, which is below the benchmark standard for any company. But

comparing with Apex Spinning & Knitting Mills Ltd., it is higher as Apex

Spinning & Knitting Mills Ltd. has a Current Ratio of 0.89.

Figure 2: Current Ratio Trend

The trend line of current ratio for Square textiles shows that the company

has maintained a somewhat steady current ratio for the last 7 years and

l h h b i i i f l


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Currently Square Textiles is maintaining a quick ratio of 0.96, which is

lower than the Benchmark ratio of 1. But comparing with Apex Spinning &

Knitting Mills Ltd., it is much higher as Apex Spinning & Knitting Mills Ltd.

has a Quick Ratio of 0.075.

Figure 3: Acid Test Ratio Trend

As we can see from the graph above, the quick ratio trend is not steady. It

may indicate that the company has gone for multiple projects/investments

in last few years. The companys quick ratio is pretty much close to the

benchmark of 1.

Overall Comment on Liquidity

The overall liquidity position of the company is not very good but it is

getting better. Both the ratios have increased in 2009. Considering the

length of operation of Square Textiles the performance is quite good

especially in terms of quick ratio as it is pretty close to benchmark. The


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Table: Inventory Turnover for Square Textiles Ltd. & Apex Spinning &

Knitting Mills Ltd.


ASKML

Year 2009 2008 2007 2006 2005 2004 2003 2009Inventory

Turnover 3.55 2.04 3.39 4.18 3.79 5.14 5.28 9.56

The inventory turnover for Square Textiles is 3.55 whereas, Apex Spinning

& Knitting Mills Ltd. has inventory turnover of 9.56. So, in this regard,

Square Textiles is in a much worse position.

Figure 4: Inventory Turnover Trend

The trend line does not look very impressive. Inventory turnover is getting

lower. This might be due to increasing price of raw materials and also due

to price reduction to cope up with the competitive market. However, there

is a very sharp rise from 2008 to 2009. This can primarily be attributed to


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During the last year Square Textiles had a DSO of 158.26 days whereas,

Apex Spinning & Knitting Mills Ltd. has DSO of 54.16 days. So, in this

regard, Square Textiles is in a much worse position.

Figure 5: Days Sales Outstanding Trend

The trend analysis shows that during the period 2008 Square Textiles hadthe worst DSO of 202.06. in 2009, it improved a bit. But DSO is still too

high. This may be due to the fact that most of Square Textiles dales are

export sales which naturally take longer to be collected.

Fixed Asset Turnover

This ratio refers to how much sales or revenue is generated by employing

the fixed assets of the company.

AssetsFixedNet

SalesTurnoverAssetsFixed =


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Figure 6: Fixed Asset Turnover Trend

The trend analysis shows that Square Textiles Fixed Asset Turnover

deteriorated for during 2007 and 2008. But in 2009 it got a little better.

Total Asset Turnover

Like the fixed asset, this ratio refers to how much sales or revenue is

generated by employing the fixed assets of the company.

AssetsTotal

SalesTurnoverAssetsTotal =

Table: Total Asset Turnover of Square Textiles Ltd. & Apex Spinning &

Knitting Mills Ltd.


ASKML

Year 2009 2008 2007 2006 2005 2004 2003 2009

l


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Overall Comment on Asset Management

Square Textiles is in a worse position than Apex Spinning & Knitting Mills

Ltd. in all the Asset Management Ratio, except for DSO. Though high DSO

is explainable, but the other ratios are not impressive at all.

It seems that the company is not managing its assets very well though

there is an indication that the company is getting better in asset

management.

1.3.3 Debt Management Ratio

Debt Management Ratios judge the debt management performance of a

company. If a company goes for too much debt for financing its

operations, it might end up in a very hard financial situation.

Debt Ratio

The Debt Ratio measures the percent of total funds provided by creditors.

Debt includes both current liabilities and long-term debt.


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Figure 8: Debt Ratio trend

The trend analysis shows that Square Textiles Bangladesh had a high debt

ratio at the end of the year 2003. But after that the debt ratio has started

to go down dramatically. This is actually a very good sign for the company.

The company is managing debt in very efficient way.

Times Interest Earned

EBITTimes Interest Earned =

Interest Charges

Table: Times Interest Earned for Square Textiles Ltd. & Apex Spinning &

Knitting Mills Ltd.


ASKML

Year 2009 2008 2007 2006 2005 2004 2003 2009

TIE 3.56 3.53 4.88 6.22 6.85 4.26 2.46 2.06


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Square Textiles Ltd. had much lower debt ratio last year. Higher

profitability might be the reason for what Square Textiles Ltd. did not take

more loans.

Last year Square Textiles Ltd. had much high TIE, which can also be

justified by high profit of the last year.

Square Textiles overall debt management performance is very impressive

which is very good news for the company.

1.3.4 Profitability Ratio

Profitability is the company's ability to generate revenues in excess of the

costs incurred in producing those revenues. Profitability Ration is the

measure of performance showing how much the firm is earning compared

to its sales, assets or equity.

Profit Margin on Sales

Net Income


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The trend analysis shows that Square Textiles profit margin had been

increasing till 2007. But for the last 2 years, we see a declining trend.

Though sales has increased in last few years, the profit margin has gone

down due to decline in price of finished goods and also due to increase in

raw material price

Return on Asset

Net IncomeReturnon Assets=

Total Assets

Table: Return on Assets for Square Textiles Ltd. & Apex Spinning &

Knitting Mills Ltd.


ASKML

Year2009 2008 2007 2006 2005 2004 2003 2009

ROA4.73%

4.07%

10.12%

11.18%

9.88%

7.83%

6.71%

1.68%


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ASKML

Year 2009 2008 2007 2006 2005 2004 2003 2009

ROE8.36%

7.98%

17.44%

19.70%

16.88%

14.72%

13.61%

3.49%

Last year, it had Return on Equity of 8.36%. It means by utilizing Taka 100

of total equity available to common shareholders, it can have net income

of Taka 8.36. ROE of Square Textiles was better than Apex Spinning &

Knitting Mills ROE of 3.49%.

Figure 12: Return on Equity trend

The ROE trend is quite similar to ROA.

Overall comment on profitability

Square Textiles has been a profitable company almost since its

establishment and during the past few years the Profit Margin ratio has


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P/E Ratio of Square Textiles Ltd. in the last year was higher than that of

Apex Spinning & Knitting Mills Ltd.

Figure 13: Price / Earning Ratio Trend

P/E Ratio of Square Textiles Ltd. climbed up in the last year from 2008.

The company has maintained a healthy P/E ratio for the last 7 years.

Market Value / Book Value Ratio

Market Price per ShareMarket/BookValue Ratio=

BookValue per Share

Table: Market / Book Value for Square Textiles Ltd. & Apex Spinning &

Knitting Mills Ltd.


ASKML

Year


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market investors and as a result the share price is quite high compared to

book value which is also reflected in M/B ratio.


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Chapter 2

Stock Price Movement

In this section of the report, we try to relate stock price movement with

different events/corporate decisions like AGM, account closing, dividend

declaration, M&A etc. by doing a simple regression of share price against a

dummy variable populated indicating the event. The value of the dummy

variable is taken as 0 for all dates before the event and 1 for all dates

after the event. Regression was done with a 95% confidence interval.

2.1 Account Closing

Year R2 FSignificanc

e FCo-

efficient

P-Valueof Co-

efficient2008 0.78464 134.805 6.73182E-

14

13.3031746 6.73182E-

14


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2010

16%Cash

15%Bonus

0.5659

58

53.4609

5

6E-09 -10.7548 6E-09

We see significant positive correlation between dividend declaration and

share price in 2008. In later years the correlation is more significant and

there is an increase in R2 which indicates the correlation becoming higher.

If we observe the dividend payout for these years, we find that thecompany has declared lesser and lesser dividends in the later years and

the relation is significantly negative. This suggests that the stockholders

definitely did not like the decrease in dividend payout.

2.3 Record Date

Year R2 FSignificanc

e FCo-

efficient

P-Valueof Co-

efficient

20080.29892

816.62913 0.000217 -8.16857 0.000217

20090.96531

1196.835 5.04E-33 -15.7315 5.04E-33


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The regression results indicate significant relation between AGM and share

price. However the relation was negative in 2008 and 2009 while we find a

significant positive correlation in year 2010. The change in sign of

correlation cannot be explained with available data.

2.5 M&A Activities

Apart from the regular annual events, we were interested to observe the

effect on share price caused by 2 very big decisions made by Square

Textiles in recent years: merger with Square Spinning Ltd. and acquisition

of Mithapur Textiles Ltd.

Decision R2 FSignifica

nce F

Co-

efficient

P-Valueof Co-

efficientMerger with

Square SpinningLtd.

0.39219

1

23.2291

62.6E-05 -3.91818 2.6E-05

Acquisition ofMithapur Textiles

Ltd.

0.000123

0.004814

0.945042 -0.0599 0.945042


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Chapter 3

Prospective Analysis

3.1 Different Growth Rates

It is important to identify a practicable growth rate of a firm to be able to

forecast its share price in future. Different growth scenarios create

different effect on share price. In this study we first consider the following

growth scenarios to observe the effect:

Scenario 1: Growth at Sustainable Growth Rate

Scenario 2: Growth as per Gordon Model

Scenario 3: Growth at GDP Growth Rate

Scenario 4: Optimistic Growth Rate

Scenario 5: Pessimistic Growth Rate


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Total Debt 2,388,878,289

2,421,342,460

2,454,247,810

2,487,600,334

Common Stock 705,840,530 705,840,530 705,840,530 705,840,530Retained Earnings 2,413,563,

4972,455,955,

3032,498,923,

2022,542,475,

022Total Financing 5,508,282,

3165,583,138,

2935,659,011,

5425,735,915,

886External Funds Needed 0 0 0 0Debt: Equity Ratio 0.77 0.77 0.77 0.77

Sustainable GrowthRate 1.36% 1.36% 1.36% 1.36%

EPS 3.69 3.74 3.79 3.85Price (P/E = 30.227) 111.61 113.13 114.67 116.23

1.2 Scenario 2: Growth as per Gordon Model

According to Gordon Model, g=Retention Rate ROE

In our case, Retention Rate = 16%

ROE = 8.36%


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Price (P/E = 30.227) 111.61 113.11 114.63 116.16

1.3 Scenario 3: Growth at GDP growth rate

GDP growth rate = 5.8%

Table: 3 yrs Forecast at g = 5.8%

2009 2010 2011 2012

Sales 3,882,244,010

4,107,414,163

4,345,644,184

4,597,691,547

Net Income 260,634,002

275,750,774

291,744,319

308,665,490

Dividend 218,810,564

231,501,577

244,928,668

259,134,531

Addition to RetainedEarnings

41,823,438

44,249,197

46,815,651

49,530,958

Total Assets 5,508,282,316

5,827,762,690

6,165,772,926

6,523,387,756

Total Debt 2,388,878,289

2,527,433,230

2,674,024,357

2,829,117,770

Common Stock 705,840,530

705,840,530

705,840,530

705,840,530

Retained Earnings 2,413,563,497

2,457,812,694

2,504,628,345

2,554,159,303


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316 779 535 842Total Debt 2,388,878,

289

2,866,653,

947

3,439,984,

736

4,127,981,

683Common Stock 705,840,530

705,840,530

705,840,530

705,840,530

Retained Earnings 2,413,563,497

2,463,751,622

2,523,977,373

2,596,248,273

Total Financing 5,508,282,316

6,036,246,099

6,669,802,639

7,430,070,486

External Funds Needed

0

573,692,6

80

1,262,123,

896

2,088,241,

356Debt: Equity Ratio 0.77 1.09 1.46 1.88Sustainable GrowthRate 1.36% 1.61% 1.89% 2.23%EPS 3.69 4.43 5.32 6.38Price (P/E = 30.227) 111.61 133.94 160.72 192.87

1.5 Scenario 5: Pessimistic

We assume a pessimistic growth rate of -10%

Table: 3 yrs Forecast at g = -10%

2009 2010 2011 2012Sales 3,882,244, 3,494,019, 3,144,617, 2,830,155,


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1.6 Choice of Growth Rate

In the earlier scenarios, we see that high growth rate is not sustainable

and it requires a very high D/E ratio which is not desired. In the trend

analysis section, we found that the firm maintains a Debt Ratio below

50%. Considering this capital structure policy, it is very less likely that the

company will go for debt financing to achieve high growth rates.

We also found out that the sustainable growth rate is also quite similar to

the growth rate found from Gordon Model. So, it seems that the firm is

actually looking to grow at sustainable growth rate. So, we take the

sustainable growth rate to predict future stock price of the company.

1.7 The Plug Variable

As the company policy is to keep the debt ratio below a certain level, the

company has been changing the dividend payout ratio every year. So,

dividend payout is the plug variable here.


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Rm= 50.43%

From these values, cost of equity Rj = 40.25%

The firm has a debt ratio = 43.37%

Weighted Average Cost of Capital = 29.65%

1.9 Share Price according to Gordon Model

According to Gordon Model, share price

P = D1/(k-g) = D0(1+g)/(k-g)

D0 = 3.1 k = 29.65% g = 1.36%

So, P = 12.42

We see that the stock of Square Textiles is highly overpriced. So, it is

highly likely that the share price will go down in future.


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Chapter 2Findings and Conclusions

Square Textiles share price at the end of 2009 BDT 111.54 while its netasset value per share is only BDT 44.19. So, we were interested to find out

the reasons behind this difference and also to predict future price

movement. Following are the key findings in the study:

2.1.1 Financial Performance

Square Textiles is a profitable company

It is not utilizing its assets efficiently. ROA is very low.

The company is not highly levered

The company may have some hidden profit in terms of market value

of their fixed assets especially land and buildings


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lot of trust among the investors. As a result, investors are ready to invest

in the share even with a low return and growth opportunity.

Appendix

A.1 Regression results

A.1.1 Account closing

Year 2008

SUMMARY OUTPUT


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Year 20 10

SUMMARY OUTPUT

Re ression Stati

Multiple R 0.07

R Square 0.0

Adjusted R Square -0.01

A.1.2 Dividend Declaration

Year 2008

SUMMARY OUTPUT


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Year 2010

SUMMARY OUTPUT

Re ression Sta

Multiple R 0.7R Square 0.56

A.1.3 Record Date

Year 2008

SUMMARY OUTPUT


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Year 20 10

SUMMARY OUTPUT

Re ression Sta


A.1.4 AGM

Year 2008

SUMMARY OUTPUT


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Year 20 10

SUMMARY OUTPUT

Re ression Sta


A.1.5 M&A Activities

Merger with Square Spinning

SUMMARY OUTPUT


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A.2 Weighted Average Cost of Capital

A.2.1 Calculation

SUMMARY OUTPUT

Re ression Sta

Multiple R 0.55

R Square 0.30

A.2.2 Average Market Return

Average weekly return = 0.97%

So, average annual return = 0.97*52 = 50.43%


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A.3 Financial Statements & Performance Data

Square Textiles Ltd.

ASKML2009 2008 2007 2006 2005 2004 2003Current Assets 3,224,729,710 3,437,049,714 1,909,672,000 1,417,780,000 1,391,410,000 1,357,092,000 1,284,065,000 481,192,792

Current Liabilities 2,388,878,289 2,843,250,860 1,382,789,000 1,269,821,000 989,212,000 1,187,839,000 1,267,503,000 436,833,644

Inventory 942,568,134 1,267,785,890 577,163,363 487,871,798 487,753,824 405,449,809 329,015,503 150,077,244

COGS 3,348,870,289 2,589,019,736 1,958,696,404 2,041,065,393 1,847,818,461 2,083,702,523 1,737,055,759 1,434,176,589

AccountsReceivable

1,683,329,048 1,689,670,282 819,360,445 821,199,524 756,736,173 834,989,837 840,066,283 235,362,912

Sales 3,882,244,010 3,052,235,640 2,541,543,000 2,620,966,000 2,390,979,000 2,459,201,000 2,102,670,000 1,586,094,474

Fixed Assets 2,283,552,606 2,370,847,250 1,573,559,000 1,702,906,000 1,193,767,000 1,180,203,000 1,217,332,000 342,491,610

Total Assets 5,508,282,316 5,807,896,964 3,483,231,000 3,120,686,000 2,585,177,000 2,537,295,000 2,501,397,000 823,684,402

Total Debt 2,388,878,289 2,843,250,860 1,382,789,000 1,269,821,000 989,212,000 1,187,839,000 1,267,503,000 437,134,519

EBIT 433,507,033 387,282,778 517,149,366 481,315,121 465,778,608 300,290,342 305,414,202 35,344,028

Interest Expenses 121,730,159 109,701,045 106,026,180 77,350,086 67,966,406 70,530,935 124,160,747 17,176,247

Net Income 260,634,002 236,529,908 352,447,136 348,833,453 255,494,330 198,689,678 167,893,727 13,814,819

Common Equity 3,119,404,027 2,964,646,104 2,020,482,000 1,770,905,000 1,513,511,000 1,349,457,000 1,233,894,000 396,170,995

Market Price 111.54 117.3 127.4 75.6 81.7 138.3 43.1 790

EPS 3.69 4.71 8.94 8.85 6.48 5.04 4.26 16

Book Value 44.19 50.04 51.23 51.65 49.66 48.7 44.53 472

No. of shares 70,584,053 58,820,044 39,433,370 34,289,887 30,479,900 27,709,000 25,190,000 840,000

Dividend payout 218,810,564 223,516,167 177,450,165 154,304,492 129,539,575 110,836,000 100,760,000

Dividend per share 3.10 3.80 4.50 4.50 4.25 4.00 4.00

Source: Annual Reports

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case study square textiles

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