CORPORATE FINANCE

Presentation

Prepared for

Md. Iftekharul Islam BhuiyaLecturerDepartment of Business AdministrationWORLD UNIVERSITY OF BANGLADESH

Submitted By:

Rubel AhmedWUB01/13/42/2536

Sheikh SadiaWUB01/13/42/2539

Sujan Chandra korWUB01/13/42/2551

S.M.Saifur RahmanWUB01/13/42/2552

Bidhan Biswas ShawanWUB01/13/42/2563

Topic name

Financial Statements(Ratio) Analysis

Current Ratio = Current Assets / Current LiabilitiesYear 2010 2011 2012 2013 2014

LFL 23.76 33.83 38.75 37.48 34.79

2010 2011 2012 2013 201405

1015202530354045

Current Ratio

Current Ratio

Over the years, current Ratio of Legacy Footwear Limited poor excess. It indicates that corporation can’t use properly current asset. The corporation needs to decrease current assets.

Quick Ratio= (Current Assets - Inventories)/ Current Liabilities

Year 2010 2011 2012 2013 2014

LFL 14.27 19.72 23.53 22.44 21.85

2010 2011 2012 2013 201405

10152025

Quick Ratio

Quick Ratio

Quick Ratio of Legacy Footwear Limited bad position because it was above the standard of current ratio which is 1: 1 or 1 time.. The corporation should try to decrease its current assets over the year

Inventory Turnover Ratio =Sales/Inventories

Year 2010 2011 2012 2013 2014

LFL 1.73 1.66 1.56 1.32 1.5

2010 2011 2012 2013 20140

0.51

1.52

Inventory Turnover Ratio

Inventory Turnover Ratio

Inventory turnover ratio of Legacy Footwear Limited improved. This organization should increase its sales and decrease its unused inventories.

Days Sales Outstanding = Account Receivable/Average Sales Per Day

Year 2010 2011 2012 2013 2014

Days Sales Outstanding 249.49 253.67 308.68 349.81 350.73

2010 2011 2012 2013 20140

50100150200250300350400

Days Sales Outstanding

Days Sales Outstanding

Days Sales Outstanding of Legacy Footwear Limited demoted. It indicates that organization should collect its account receivable on times over the period.

Fixed Assets Turnover = Sales /Fixed AssetsYear 2010 2011 2012 2013 2014

LFL 0.59 0.83 0.77 0.81 0.83

2010 2011 2012 2013 20140

0.20.40.60.8

1Fixed Assets Turnover Ratio

Fixed Assets Turnover Ratio

Fixed Assets Turnover of Legacy Footwear Limited increased over the period. This corporation should increase its rate and utilize its net fixed assets.

Total Assets Turnover = Sales/Total Assets

Year 2010 2011 2012 2013 2014

LFL 0.31 0.37 0.34 0.32 0.31

2010 2011 2012 2013 20140.280.3

0.320.340.360.38

Total Assets Turnover Ratio

Total Assets Turnover Ratio

Total Assets Turnover Ratio of Legacy Footwear Limited has been showing a falling trend from (2010). This corporation should increase its rate and utilize its total assets.

Debt Ratio = Total Liabilities /Total Assets

Year 2010 2011 2012 2013 2014

LFL 45.79% 48.90% 50.33% 51.82% 43.70%

2010 2011 2012 2013 201438.00%40.00%42.00%44.00%46.00%48.00%50.00%52.00%54.00%

Debt Ratio

Debt Ratio

Debt Ratio of Legacy Footwear Limited decreased. Organization should try to increase its assets and decrease its liabilities to improve its debt ratio.

Net Profit Margin = Net Profit /Sales

Year 2010 2011 2012 2013 2014

LFL 9.19% 8.94% 4.94% 5.07% 4.73%

2010 2011 2012 2013 20140.00%2.00%4.00%6.00%8.00%

10.00%Net Profit Margin

Net Profit Margin

Net Profit Margin of Legacy Footwear Limited improved. Organization should try to increase its sales and decrease expenses.

Return on Total Assets = Net Income /Total Assets

Year 2010 2011 2012 2013 2014

LFL 2.88% 3.33% 1.66% 1.61% 1.49%

2010 2011 2012 2013 20140.00%1.00%2.00%3.00%4.00%

Return on Total Assets

Return on Total Assets

Return on Total Assets of Legacy Footwear Limited has been descending trend from 2010. Organization needs to utilize its assets properly.

Return on Common Equity = Net Income/Common Equity

Year 2010 2011 2012 2013 2014

LFL 5.82% 7.30% 3.65% 3.56% 2.81%

2010 2011 2012 2013 20140.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%

Return on Common Equity

Return on Common Equity

Return on Common Equity of Legacy Footwear Limited falling trend. Organization should try to increase its sales and decrease expenses.

Price/Earnings Ratio = Price Per Share / Earnings Per ShareYear 2010 2011 2012 2013 2104

LFL 52.62 32.6 33.49 69.35 49.64

2010 2011 2012 2013 21040

1020304050607080

Price Earning

Price Earning

Price/Earnings Ratio of Legacy Footwear Limited was the highest in 2013. It was decrease in 2014. It indicates that investor’s confidence with LFL’s share decreased over the year.

Market/Book Ratio = Market Price Per Share /Book Value Per Share

Year 2010 2011 2012 2013 2014

LFL 3.06 2.38 1.22 2.47 1.4

2010 2011 2012 2013 20140

0.51

1.52

2.53

3.5Market Book

Market Book

Market/Book Ratio of Legacy Footwear Limited improved. Management of the organization needs to take steps to improve corporation share price in the capital market .

Legacy Footwear Limited Performance of LFL is

satisfactory in terms of-

Fixed assets, Debt ratio, Net profit margin,Return on total asset (ROA), Return on common equity,Market/Book ratio.

Performance of LFL is dissatisfactory in terms of-

Current ratio, Quick ratio,Inventory turnover ratio,Day’s sales outstanding,Total assets, Price/Earning ratio