Business Finance
FIN 201
Section: 02
Term Paper on
Financial Ratio Analysis of Berger Paints Bangladesh Limited
Submitted to
Dr. Javed Bin Kamal
Assistant Professor
Department of Business Administration
Submitted by
Name
Tawhedur Rahman
Sizan
Nishat Tasnim
Md. Jahid Uddin
Ahmed Shoumik
Jannatul Ferdous Mim
Md, Fahmidul Islam
Samit Hasan Khan
Sharika Ashiq
ID
2020-1-13-096
Participation
14.29%
2020-1-10-323
2020-1-10-116
14.29%
14.29%
2019-1-10-186
2019-2-10-053
2020-1-10-409
2019-1-10-243
14.29%
14.29%
14.29%
14.29%
Submission date: 3rd September 2022
Contents
Letter of Transmittal......................................................................................................................... 3
Acknowledgment ............................................................................................................................... 4
Executive Summary .......................................................................................................................... 4
1.
Introduction ............................................................................................................................... 5
2.
Background of the Study .......................................................................................................... 5
3.
Objectives................................................................................................................................... 5
4.
Limitations ................................................................................................................................. 6
5.
Company Overview .................................................................................................................. 6
6.
Liquidity Ratio .......................................................................................................................... 7
Quick Ratio................................................................................................................................ 8
Cash Ratio ................................................................................................................................. 9
7.
Return Ratio ............................................................................................................................ 10
8.
Asset Management (Turnover) Ratios .................................................................................. 11
Total Asset Turnover Ratio.................................................................................................... 11
Fixed Asset Turnover Ratio .................................................................................................. 12
9.
Debt Management Ratio ........................................................................................................ 14
Interest Coverage Ratio ......................................................................................................... 15
10. Tax/Sales Ratio ....................................................................................................................... 15
Degree of operating leverage................................................................................................. 16
Degree of Financial Leverage................................................................................................ 17
11. Price Earnings Ratio .............................................................................................................. 18
Book Value............................................................................................................................... 19
Net income ............................................................................................................................... 19
12. Conclusion ............................................................................................................................... 20
13. References ................................................................................................................................ 21
Page 2 of 21
Letter of Transmittal
August 30, 2022
Javed Bin Kamal
Lecturer,
Department of Business Administration
East West University
A/2, Jahurul Islam Avenue, Aftabnagar, Dhaka-1212
Subject: Financial Ratio Analysis of Berger Paints Bangladesh Limited
Dear Sir,
With due respect, we would like to let you know that we have prepared a report for the
completion of one of the BBA programs courses, FIN201, and are submitting it to you for your
inspection.
The topic of our report is “Financial Ratio Analysis of Berger Paints Bangladesh Limited.”
This report consists of a summary and analysis of the financial ratio of the company “Berger
Paints Bangladesh Limited”. We have collected, studied, and analyzed various reports, articles,
and documents for the preparation of this report.
We would like to thank you for giving us such a topic which has made us learn a lot of new
things, gather new experiences and improve our skills, and also for your support regarding this.
We are ready to answer any of your queries regarding this report.
So, I hope that you would be kind enough to receive our report and inspect it.
Sincerely yours,
Jannatul Ferdous Mim, ID: 2019-1-10-186
Sharika Ashiq, ID: 2019-1-10-243
Md. Fahmidul Islam, ID: 2019-2-10-053
Nishat Tasnim, ID: 2020-1-10-323
Md. Jahid Uddin Ahmed Shoumik, ID: 2020-1-10-116
Tawhedur Rahman Sizan, ID: 2020-1-13-096
Samit Hasan Khan, ID: 2020-1-10-409
Page 3 of 21
Acknowledgment
First of all, we express our gratitude to the Almighty Allah for providing us the effort and
patience needed to complete such a big task and complete our report, “Financial Ratio Analysis
of Berger Paints Bangladesh Limited.”
We would also like to convey our sincere gratitude and appreciation to our distinguished
faculty, Javed Bin Kamal, Lecturer, Department of Business Administration, East West
University. He has taught us many valuable topics which have helped us immensely to prepare
our report. We would also like to thank him for choosing such a topic which has helped us
learn new things and also for his oversight, assistance, and helpful advice without which it
would not be possible to create this report.
Executive Summary
This term paper has been done on Berger Paints Bangladesh Limited. The objective of this
report is to give an analysis and comparison of the financial ratio of the company. The
information given in this study has been collected from sources like the Berger Website along
with secondary sources like articles and reports available on the internet. In preparation for
this, financial topics like asset management, profitability, solvency, etc. have been analyzed.
The financial condition along with the overall condition of Berger Paints Bangladesh Limited
in the industry can be seen in this report. Through reading the report it can be understood that
the company is in a profitable state and is doing very well in the country and is also growing.
Page 4 of 21
Financial Ratio Analysis of Berger Paints Bangladesh Limited
1. Introduction
Currently, businesses all over the world have become competitive. Every company is trying to
become the best and top their rivals. Huge companies are also included in this type of business.
But in this competition, even big companies cannot succeed and as a result, the failure or the
collapse of the whole company occurs.
Various factors play a role in the failure and success of a company. But one of the, if not the
main factor is finance. Due to poor or incorrect financial choices, a company fails. But by
taking steps according to the analysis of the financial sector, a company can succeed. And for
this analysis one of the main tools or methods is “Financial Ratio Analysis”. Through this, the
financial situation of the company can be understood and steps beneficial for the company can
be taken.
Berger was first established in England. After growing there, the company started spreading
internationally. In 1923, it came to the Indian Sub-continent. In 1950 it was established in
Pakistan and later in 1970 it was inaugurated in Bangladesh in Chittagong. In 1980 the name
of the company in Bangladesh was changed to Berger Paints Bangladesh Limited. Berger is a
very successful company and it is a very famous one too. Its success and growth in Bangladesh
have been amazing and now it is almost the first choice of everyone for paint.
This Financial Ratio Analysis will give the readers a broad and proper insight into the company
as well as the industry.
2. Background of the Study
This study has been done as a descriptive and proper study of the financial ratio of Berger
Paints Bangladesh Limited which will give an overview or analysis of the company.
Topics like asset management, liquidity, solvency, and profitability have been analyzed here
to show the current condition of the company and how it is doing in the industry. This study
will impact the reader’s choices regarding the company as it will give them an analysis of it.
3. Objectives
The primary objective of the report is to analyze the financial ratio of Berger Paints Bangladesh
Limited and to give an overview of the company. In this report, the company’s performance in
financial functions like liquidity, asset management, solvency, and profitability can be
assessed. A more accurate representation of the state of operations of the company can be
portrayed and its current performance in the industry can also be analyzed. The current
conditions of the company can be compared with that of previous years. Only the numbers
cannot explain how a company is performing, to show it a financial ratio analysis of the
company should be prepared.
Page 5 of 21
4. Limitations
Although the company was cooperative, we still had to face some limitations in collecting the
information. Since every company has certain policies in giving information and their
confidentiality, some information had to be taken from secondary sources.
Although this report is very descriptive and proper analysis has been done and the objective of
the report has been fulfilled, due to lack of time every information couldn’t be collected and a
very accurate, broad, and the in-depth report couldn’t be created.
5. Company Overview
The foundation of Berger was laid in 1760 by a German citizen named Louis Berger, who
established a dye and pigment manufacturing company in England. When Louis brought his
family into the company, the name was eventually changed to Louis Berger & Sons Limited.
The business saw quick growth and expansion while building a solid reputation for innovation
and entrepreneurship excellence. Louis first succeeded in perfecting the method for creating
Prussian blue, a deep blue dye.
The business expanded quickly thanks to the addition of offices throughout the globe and
mergers and acquisitions with other top manufacturers of paint and coatings. Since
Bangladesh's independence, Berger Paints has been in business. Berger has developed and
transformed over the past few decades, becoming the top paint solution provider in the nation
with a diverse product line that can meet all of your painting requirements. In comparison to
other manufacturers in this sector, Berger has made significant investments in R&D and
technology.
Because of their cutting-edge facilities and stringent quality controls that adhere to
international standards, Berger's products are of a top caliber. Berger has access to practically
all of Bangladesh thanks to the robust distribution network. An unequaled ability to meet paint
needs practically everywhere in Bangladesh is provided by the nationwide dealer network,
which is supported by 8 sales depots strategically positioned in Dhaka, Chittagong, Rajshahi,
Khulna, Bogra, Sylhet, Cumilla, and Mymensingh. Two new BPBL depots were inaugurated
in 2014 in Rangpur and Feni.
Berger Paints has expanded its social obligations beyond business by starting to support the
welfare of autistic children in Bangladesh in 2009. Through the Berger Young Painters Art
Competition (BYPAC), Berger Award for Excellence in Architecture (BAEA), Berger Award
Program for the Students of Architecture of BUET (BASAB), and Scholarship Program for the
Students of Architecture Discipline, Khulna University, Berger Paint Bangladesh Limited have
been supporting the young and creative talents of the nation.
Page 6 of 21
6. Liquidity Ratio
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕
Current Ratio = 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒚
Years
Berger paints
Bangladesh limited
2019
2020
2021
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
2.02275
2.2167
2.22026
CURRENT RATIO
2,25
2,2
2,15
2,1
2,05
2
1,95
1,9
2019
2020
2021
The current ratio is a liquidity ratio that measures how well a company can meet its short-term
or one-year commitments. It tells investors and analysts how a company can maximize the
working capital on its balance sheet to meet its current debt and other liabilities. An increase
in the ratio indicates that the company has high liquidity to pay its current debt. However, there
is a certain limit this ratio should increase. Having too much of this current asset shows that
lower profitability because of its lower return. It is wise to maintain a ratio of 2:1. Here We can
see from the table that throughout 3 years (2019-2021) the current ratio of Berger is way more
than it’s required. In 2021 the highest current ratio showing at that year they could cover the
liabilities faster than the other two years.
Page 7 of 21
Quick Ratio
Quick Ratio =
Years
Berger
paints
Banglade
sh
limited
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕− 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒂𝒊𝒍𝒊𝒕𝒚
2019
2020
2021
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑎𝑖𝑙𝑖𝑡𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑎𝑖𝑙𝑖𝑡𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑎𝑖𝑙𝑖𝑡𝑦
1.499
1.56001
1.361945
Quick Ratio
1,56
1,499
1,361
2019
2020
2021
The quick ratio is an indicator of the company's short-term liquidity position and measures how
well the company can meet its short-term obligations with its most liquid assets. This ratio
measures a company's capacity to cover the current debt with fast assets such as cash,
marketable securities, and accounts receivable. For improved debt coverage, quick assets must
be greater than current liabilities. As expected, Berger has a very healthy amount of quick ratio.
Among these three years, 2020 was the best year for the quick ratio too as it shows that their
quick assets are higher than the other two years to cover the current liabilities considering the
inventories counted.
Page 8 of 21
Cash Ratio
Cash ratio =
Years
Berger
paints
Banglades
h limited
𝐶𝑎𝑠ℎ+𝐶𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
2019
2020
2021
𝐶𝑎𝑠ℎ + 𝐶𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝐶𝑎𝑠ℎ + 𝐶𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝐶𝑎𝑠ℎ + 𝐶𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
0.6352862
0.9683057
0.866735
Cash Ratio
0,968305
0,866735
0,635286
2019
2020
2021
The cash ratio is a measurement of a company's liquidity. It specifically calculates the ratio of
a company's total cash and cash equivalents to its current liabilities. The metric evaluates a
company's ability to repay its short-term debt with cash or near-cash resources, such as easily
marketable securities. in general, a liquidity ratio of 1 or more indicates that the company has
sufficient cash and cash equivalents to fully service all current debt. In general, a ratio above 1
is preferred, Cash ratio under 0.5 is considered risky as the entity has twice as much short-term
debt compared to cash. We can see that in Berger in 2020 and 2021 the cash ratio is closer to
1 but in 2019 the cash ratio is not good.
Page 9 of 21
7. Return Ratio
Return on Assets
The term return on assets (ROA) refers to a financial ratio that indicates how profitable a
company is concerning its total assets. The formula for ROA is-
ROA= Net Income/Total Assets
For 2019- 2848243000/11522185000= 0.247
For 2020- 3056265000/12929511000= 0.236
For 2021- 3535069000/15300038000= 0.231
Return on assets over 5% is generally considered good whereas over 20% is considered
excellent which means that BERGERPBL is in an excellent position as the ratio of ROA is
over 20 percent so it is over the excellent ratio.
Return on Equity
The return on equity ratio essentially measures the rate of return that the owners of common
stock of a company receive on their shareholdings. Return on equity is also a factor in stock
valuation in association with the other financial ratios. The formula for ROE isROE= Net income/Shareholders Equity
Shareholders equity= Total assets – total liabilities
2019: (11522185000 – 2997935000) = 8524250000
2020: (12929511000 – 4221354000) = 8708157000
2021: (15300038000 – 5409272000) = 9890766000
Return on Equity
For 2019- 2848243000/8524250000 = 0.334
For 2020- 3056265000/8708157000 = 0.351
For 2021- 3535069000/9890766000 = 0.357
For return on equity, 15-20% is generally considered good. So we can see from the above
calculation that BERGERPBL Company’s return rate is appraisable as it is already over 20
percent.
Page 10 of 21
8. Asset Management (Turnover) Ratios
Asset Management (Turnover) Rations are a group of metrics that shows how a company
generates revenues by using its assets. Asset Management Ratio also shows how effectively a
company is using its assets to generate revenue. It also shows the efficiency and effectiveness
of the company in using its assets in the best possible way.in generating revenues. They reflect
a company’s ability to translate its assets to sales. The asset management ratio is also known
as the asset turnover ratio and asset return ratio. The asset management ratio is calculated for
different assets. Common rations are included Fixed Asset Turnover, Total Asset Turnover,
Inventory Turnover, Credit Turnover, and Cash Conversion Cycle. Now, the main focus is on
the first two ratios.
Total Asset Turnover Ratio
The total Asset Turnover ratio measures the efficiency of a company by using all of its assets
to generate sales. It provides an overview of all asset management turnover. The higher the
company’s asset turnover ratio, the better and more efficient it is perceived by stakeholders.
𝑺𝒂𝒍𝒆𝒔
Total Asset Turnover = 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
Years
Berger Paints
Bangladesh
Limited
2019
2020
2021
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
17,800,412,000
11,522,185,000
16,219,044,000
12,929,511,000
16,669,802,000
15,300,038,000
= 1.545
= 1.254
= 1.090
Page 11 of 21
Total Asset Turnover
1,545
1,254
1,09
RATIOS
2019
2020
2021
Interpretation: Total Asser Turnover shows the number of sales generated with a company’s
total assets. The higher the ratio, the higher the efficiency of the company.
We can see from the table that throughout 3 years (2019-2021) the total asset turnover ratio of
Berger Paints Bangladesh Limited. In 2019, Berger Paints Bangladesh Limited had its highest
total asset turnover ratio as it reached 1.545 times which means by utilizing all its assets, fixed
and non-fixed, it has generated 1.545 times sales. In the recent year 2020 and 2022, the rate
gradually dropped to 1.254 times and 1.090 times which means the company is heavily
impacted by Covid-19 Coronavirus and it is trying to cover up to get back its old position in
the Paint and Coatings Industry in Bangladesh.
Fixed Asset Turnover Ratio
Fixed Asset Turnover is a ratio that measures the company’s operations using only fixed
assets for sales. This ratio only compares the use of long-term assets to generate sales.
Page 12 of 21
𝑺𝒂𝒍𝒆𝒔
Fixed Asset Turnover = 𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔
Years
Berger Paints
Bangladesh Limited
2019
2020
2021
𝑆𝑎𝑙𝑒𝑠
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
17,800,412,000
4,865,986,000
16,219,044,000
5,207,599,000
16,669,802,000
5,731,838,000
= 3.658
= 3.114
= 2.908
Fixed Asset Turnover
3,658
3,114
2,908
Ratios
2019
2020
2021
3,658
3,114
2,908
Interpretation: Fixed Asset Turnover Ratio provides a view of how much sales the company
has generated by using its fixed assets. Since every company expects more sales, the higher the
ratio, the better it is for the company due to higher productivity.
We can see from the table that throughout 3 years (2019-2021) the fixed asset turnover ratio of
Berger Paints Bangladesh Limited. The company reached its highest fixed asset turnover in
2019 and the rate was 3.658 times. This implies that the company has utilized its fixed assets
Page 13 of 21
in such a way that has induced double the value of the fixed assets in terms of sales revenue.
In 2020 and 2022, the rate gradually dropped to 3.114 times and 2.908 times. Currently, the
company is not doing well as before.
9. Debt Management Ratio
To offer investors a sense of the company's financial status, a company's debt management
ratio is calculated. A company's debt ratio may be too high, which could be a sign of impending
trouble. At the absolute least, a business with a lot of debt would struggle to pay or keep up
dividend payments to investors. A corporation with a debt ratio that is too low may be
underinvesting in its assets and stifling its growth, which could delay or prevent the value
increase of its equity shares.
We know that the formula of Debt management ratio= Total Liabilities/Total Assets
Year
2021
2020
2019
Total Liabilities
4730285000
3483507000
2997935000
Total Assets
15300038000
12929511000
11522185000
In 2021, The debt management ratio was 0.31
In 2020, The debt management ratio was 0.27
In 2019, The debt management Ratio was 0.26
DEBT MANAGEMENT RATIO
Year
Total Liabilities
15300038000
2E+10
1E+10
Total Assets
Debt Management Ratio
12929511000
4730285000
2021
0,309168186
3483507000
2020
0,26942295
11522185000
2997935000
2019
0,260188063
0
1
2
3
1
2021
2
2020
3
2019
Total Liabilities
4730285000
3483507000
2997935000
Total Assets
15300038000
12929511000
11522185000
Debt Management Ratio
0,309168186
0,26942295
0,260188063
Year
Purely from a risk standpoint, debt ratios of 0.4 or less are preferred, whereas a debt ratio of
0.6 or more makes borrowing money more challenging. While a low debt ratio signals a
corporation is more creditworthy, holding too little debt carries danger as well.
Page 14 of 21
Interest Coverage Ratio
The interest Coverage Ratio (ICR) is a financial metric used to determine how well a company
can pay its outstanding debts. Also known as multiple yields, it is used to assess the risk of
investing in a company and how close the company is to default. ICR is calculated from
Earnings and Taxes before Interest Paid, EBIT for short, and interest paid by the company.
The formula of Interest coverage ratio= Earnings before Interest and Tax/ Interest
Expense
Year
EBIT
Interest Expense
2021
2020
2019
3472362000
3092467000
2777694000
36432176
3047999
7342996
Interest Coverage
Ratio
95.31
1014.589
378.278
INTERSET COVERAGE RATIO
Year
EBIT
Interest Expense
3472362000
4E+09
2E+09
2021
Interest Coverage Ratio
3092467000
36432176
95,31031031
2020
2777694000
3047999
1014,589244
2019
7342996
378,2780217
0
1
2
3
Year
1
2021
2
2020
3
2019
EBIT
3472362000
3092467000
2777694000
Interest Expense
Interest Coverage Ratio
36432176
3047999
7342996
95,31031031
1014,589244
378,2780217
A financial indicator called the interest coverage ratio assesses a company's ability to pay off
its debts. Generally, larger ratios indicate a corporation is in a better position to meet its interest
commitments, whereas lower ratios indicate financial instability.
10.Tax/Sales Ratio
2019,
𝑇𝑎𝑥
72,44,26,000
=
= 0.0406~ 4.06%
𝑆𝑎𝑙𝑒𝑠
17,800,412,000
Page 15 of 21
2020,
𝑇𝑎𝑥
8,00,019000
=
= 0.0493~ 4.93%
𝑆𝑎𝑙𝑒𝑠 16,219,044,000
2021,
𝑇𝑎𝑥
𝑆𝑎𝑙𝑒𝑠
=
92,35,74,000
16,669,802,000
= 0.0554~ 5.54%
5
4
3
2019
2
2020
2021
1
0
Tax/Sales
Degree of operating leverage
The DOL ratio helps analysts to determine what will be the impact of any change in sales
earnings of the company.
2019,
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
79,514,95,000
=
= 2.86
𝐸𝐵𝐼𝑇
27,776,94,000
2020,
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
62,406,46,000
=
= 2.01
𝐸𝐵𝐼𝑇
30,924,67,000
2021,
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
66,323,62,000
=
= 1.91
𝐸𝐵𝐼𝑇
34,723.62,000
Page 16 of 21
3,5
3
2,5
2
2019
1,5
2020
2021
1
0,5
0
Degrees of Operating
Leverage
The higher the DOL, the more sensitive a company's earnings before interest and taxes are to
changes in sales, assuming all other variables remain constant. So, Berger’s DOL is improving
from year to year. Their earnings before interest and taxes to change in sales are becoming less
sensitive.
Degree of Financial Leverage
Leverage is the use of debt to undertake investment or project.
2019,
% Change in Earnings Per Share / % Change in EBIT = 1.404
2020,
% Change in Earnings Per Share / % Change in EBIT = 1.485
2021,
% Change in Earnings Per Share / % Change in EBIT = 1.547
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1,6
1,55
1,5
2019
1,45
2020
1,4
2021
1,35
1,3
Degree of Financial
leverage
Berger paints earnings as being more volatile year to year consistently and it was more
volatile in 2021 at 1.547.
11.Price Earnings Ratio
The price-earnings ratio, or P/E ratio, calculates to compare the price of a company's stock to
the earnings the company generates. The formula for the price-to-earnings ratio also referred
to as the P/E Ratio, is the price per share divided by earnings per share. The price-to-earnings
ratio is used as a quick calculation for how a company's stock is perceived by the market to be
worth relative to the company's earnings.
P/E ratio formula: Market price per share / EPS
2019
2020
2021
81.64/44.27
= 1.844
81.64/49.43
= 1.652
81.64/54.96
= 1.485
Interpretation: The market value per share and the earnings per share are compared using a
financial measure called the price-earnings ratio. In other words, it's a monetary indicator that
investors can use to assess how future cash flows from an investment will compare to the
investment's worth. According to many investors, this ratio represents the price the market is
ready to pay for the current cash flows attributable to each firm.
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Book Value
The difference between a corporation's total assets and total liabilities is known as its book
value, and it represents the entire amount of assets that shareholders would get if the firm were
to be liquidated.
Book Value Formula: Asset – Liabilities
2019
2020
11522185000 – 2997935000 12929511000 – 3483507000
= 8524250000
= 3483507000
2021
15300038000 – 4730285000
= 1.0569753*10^10
Market to Book Value Ratio Formula: Market capitalization / BV
2019
2020
2021
81.64 / 8524250000
= 9.6*10^-9
81.64 / 3483507000
= 8.6*10^-9
81.64 / 1.06*10^10
= 7.7*10^-9
Interpretation: The book-to-market ratio should generally be close to 1. Less than 1 suggests
that a business can be acquired for less than its worth in assets. A higher number, perhaps
around 3, would indicate that purchasing a company will be costly. Here, the ratio is less than
1 which suggests that Berger paints business can be acquired.
Net income
Net income is the amount earned by a person or a company after costs, allowances, and taxes
have been subtracted. Net income is the amount of money left over after all business expenses,
such as salaries, wages, the cost of goods or raw materials, and taxes have been paid.
Net income formula: Gross profit – Expense
2019
2020
2021
7951495000 – 5103252000
= 2848243000
6240646000 – 3184381000
= 3056265000
6632362000 – 3097293000
= 3535069000
Interpretation: This ratio can also be represented as a product of the profit margin and the
total asset turnover. Net income is more in the latest the year 2021.
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12.Conclusion
After analysing all the above rations, it states that Financial Statements Analysis is an
important tool in assessing company’s performance. It reveals the strengths and
weaknesses of a firm. It helps the clients to decide in which firm the risk is less or
in which one they should invest so that maximum benefit can be earned. It is known
that investing in any company involves a lot of risk. Based on the data available the trend
of the company can be predicted in near future. On studying the Financial Statements
Analysis of Berger Paints Bangladesh Limited for a period of three years from 2019 to
2021, the study reveals that the financial performance was previously better in 2019 but
in last two years Covid-19 lockdown has impacted the performance of the company.
Although, Berger Paints Bangladesh Limited has been avail to maintain profitability in
these crucial times. Further the company’s performance and efficiency can be
improved by following proper financial steps.
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13. References
1. Berger Paints Bangladesh Limited “Annual Report 2019”
https://www.bergerbd.com/wp-content/uploads/2021/07/BGR_Annual_Report_2019.pdf
2. Berger Paints Bangladesh Limited “Annual Report 2020”
http//www.bergerbd.com/wp-content/uploads/2021/07/Berger_AR_2019-20.pdf
3. Berger Paints Bangladesh Limited “Annual Report 2021”
https://www.bergerbd.com/wp-content/uploads/2021/09/BGR_AR_2020-21.pdf
4. Essentials of Managerial Finance, “Basley & Brigham”
https://drive.google.com/file/d/1h3Jut2WMI7Bnj2bGQT4-hGabyLtjqQbj/view?usp=sharing
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