Project Report
Autumn 2024
Section-01
Course Title- Financial Accounting
Course Code- ACN305
Submitted To
Dr. Rushdi Md. Rezaur Razzaque
Associate Professor Department of Accounting,
School of Business and Entrepreneurship
Independent University, Bangladesh
Submitted by
Sl.No
1.
2.
3.
ID Number
2221404
2220548
2230436
Name
Faika-Mah-Farah Tonami
Akila Amzad
Md. Emran Chowdhury
Date of Submission:17th December 2024
Table of Contents
Letter of Transmittal ..................................................................................................................................... 3
Executive Summary ...................................................................................................................................... 4
Company Background ................................................................................................................................ 5
Anlima Yarn Dyeing Limited ................................................................................................................ 5
Alltex Industries Limited ....................................................................................................................... 5
Requirement 1 ............................................................................................................................................... 6
Requirement 2 ............................................................................................................................................... 6
Requirement 3 ............................................................................................................................................... 9
ANLIMA YARN DYEING LIMITED .................................................................................................. 9
ALLTEX INDUSTRIES LIMITED .................................................................................................... 12
Requirement 4 ............................................................................................................................................. 15
Letter of Transmittal
17th December, 2024
To
Dr. Rushdi M.R Razzaque
Associate Professor Dept. of Accounting
Independent University, Bangladesh
Subject: Submission of the report on analyzing the financial statements for Anlima Yarn Dyeing
Limited and Alltex Industries Limited.
Dear Sir,
With due respect, it is our pleasure and honor that we can submit the report assigned to both under
your guidance and instructions on the topic of Analysis of the financial statement for Anlima Yarn
Dyeing Limited and Alltex Industries Limited annual report for the year ended on June 30, 2022,
& 2023.
While working on this report, we had a unique experience, which we believe will benefit our
learning. We sincerely hope you will consider it in the report's assessment. Thank you very much.
Sincerely Yours,
Faika-Mah-Farah Tonami
Akila Amzad
Md. Emran Chowdhury
Executive Summary
The purpose of this report is to provide a financial analysis of Anlima Yarn Dyeing Limited and
Alltex Industries Limited based on their respective financial statements for the years 2022 and
2023. Analyses are conducted in accordance with four requirements and include financial ratios.
The first requirement involves the composition and segregation of the non-current liabilities of the
companies under study. The second requirement involves the criteria to use revenue recognition.
The third requirement is to calculate seven vital ratios that will assist the investor in making
decision. In the final requirement, investors are required to examine companies from their point of
view. These requirements are comparable between two companies according to the report, which
includes a footnote, references, and an Excel document in which all calculations have been
completed.
Company Background
Anlima Yarn Dyeing Limited
Anlima Yarn Dyeing Limited (AYDL) was founded 1995 as a private limited company. It
established a yarn dyeing plant equipped with cutting-edge European technology. It was listed on
the Dhaka and Chittagong stock exchanges with an IPO in 1997. The company offers excellent
cotton, polyester, and filament yarn dyeing services. It is regarded as one of the best yarn dyeing
companies in the country, catering to the higher value of export market fabrics and garment
requirements. The company can color any yarn for the country's export-oriented knitting and
weaving industry and supply polyester sewing thread to garment factories.
Alltex Industries Limited
Alltex Industry Limited, a sister concern of Bastu Shilip Group, is the country’s pioneer in widerwidth home textile manufacturing and export. It was established in 1986 to meet the domestic
demand, and later on, in 1992, the Factory made its first export shipment to Europe. Since then,
the company has grown gradually into one of Bangladesh's leading home textile exporters and
continues to contribute to the country’s export earnings. Alltex factory is located in Barpa, Ariabo,
Rupgonj, Narayangonj, approximately 25 km from Dhaka, about a drive from the international
airport in Dhaka. The plan has the most modern European printing, dyeing, and fabric processing
machines, with over 300,000 square feet of covered factory space. The factory has a monthly
printing and dyeing production capacity of 3,000,000 meters. It is equipped with the most modern
laboratory to carry out in-line and post-inspection of the goods to ensure that the products
manufactured by Alltex are of the highest quality. The factory also has a biological ETP,
demonstrating its commitment to sustainable and environmentally friendly production.
Requirement 1
What is the composition of the non-current liabilities of the studied companies? Segregate
the non-current liabilities into long-term debts, employee-related liabilities, tax liabilities,
lease-related liabilities, and others. Make a comparative analysis of the two companies under
study.
Particulars
Long term Debts
Employee Liability
Tax Liability
Lease related
Liability
Other Liability
Total non-current
Liability
Anlima Yarn Dyeing Limited
2023
2022
0
0
0
0
26,381,170
28,628,396
0
0
Alltex Industries Limited
2023
2022
432,485,373
0
0
0
36,453,149
36,487,276
0
0
0
26,381,170
0
468,938,522
0
28,628,396
327,481,176
363,968,452
Anlima Yarn Dyeing Limited's tax liability decreased dramatically in 2023 compared to 2022,
when it was pretty high. In 2023, Alltex Industries took a long-term debt, a secured loan, while
Anlima Yarn Dyeing Limited did not take any Debt from the Bank. Alltex Industries Limited's tax
liability decreased in 2023 compared to 2022. Moreover, Alltex Industries Limited took a secured
loan in the year 2022.2. So, it can be observed that Anlima Yarn Dyeing Limited and Alltex
Industries Limited have different patterns in their non-current liabilities.
Excel Sheet: Acn 305 Final Question No.1.xlsx
Requirement 2
What criteria did the studied companies use to recognize revenue?
a. Identify the accounting standard for revenue recognition. Please mention the note number
related to such disclosure in the annual reports.
1. Anlima Yarn Dyeing Limited
Anlima Yarn Dyeing Limited recognizes revenue as per IFRS 15. The specific disclosure is
included in the notes of the financial statements within the annual report. Note number: 2.07
IFRS 15: Revenue from Contracts with Customers, focusing on the five-step approach to
recognizing revenue. The entity recognizes revenue that reflects the transfer of promised goods or
services to customers in exchange for a payment amount it expects to receive.
2. Alltex Industries Limited
Alltex Industries Limited recognizes revenue per IFRS 15: Revenue from Contracts with
Customers. Note number: 3.02
● Five-Step Model: The notes explicitly mention the five-step model of IFRS 15, including
identifying contracts, performance obligations, transaction price allocation, and revenue
recognition upon satisfying performance obligations.
● Control Transfer: Revenue is recognized when the control of goods is transferred to the
customer, consistent with IFRS 15's principle that control (rather than risks and rewards,
which is more aligned with IAS 18) determines when revenue is recognized.
● Fair Value Measurement: Revenue is measured at the fair value of consideration received
or receivable, net of trade discounts and VAT, as prescribed by IFRS 15.
● Specific Revenue Streams: Interest income is recognized accrual, aligning with IAS
39/IFRS 9, which governs financial instruments. When the right to receive payment is
established, dividend income recognition aligns with IAS 18 (the legacy standard for
dividends) or IFRS 9 (the current standard for financial assets).
Alltex Industries Limited appears to follow IFRS 15 for revenue from customer contracts,
supplemented by IFRS 9 or IAS 18 for other income streams like interest and dividends.
b. Compute the percentage of change in revenue for the companies for the year
2022 and 2023.
Particulars
Revenue
Anlima Yarn Dyeing Limited
June 30, 2023
June 30, 2022
162,298,415
155,567,419
Alltex Industries Limited
June 30, 2023
June 30, 2022
400,002,541
770,774,048
Percentage Change in Revenue =
[𝑅𝑒𝑣𝑒𝑛𝑢𝑒(2023)−𝑅𝑒𝑣𝑒𝑛𝑢𝑒(2022)]
𝑅𝑒𝑣𝑒𝑛𝑢𝑒(2022)
× 100
In Anlima Yarn Dyeing Limited, the Percentage Change in Revenue is 4.33%.
The revenue increased by 4.33% from 2022 to 2023, indicating positive business growth and
showing the company is generating more revenue than before. This could result from market
expansion or increased demand for products or services. It might also reflect improvements in
products or services, leading to higher sales or the success of new launches. Part of the growth
could stem from price adjustments or inflation, where higher prices than sales volume contribute
to the increase. External factors like economic recovery, seasonal trends, or new partnerships may
have played a role.
In Alltex Industries Limited, the Percentage Change in Revenue is -48.10%.
The revenue decreased by 48.10% from 2022 to 2023, indicating the company is underperforming.
This is likely due to challenges such as lower sales, market competition, operational inefficiencies,
or loss of market share. Strategic shifts, like restructuring, could also be a factor. This significant
drop suggests the need to reassess strategies and corrective actions to restore performance and
reassure stakeholders about the company’s future.
Requirement 3
Compute the following ratios given below and comment critically. Show computations in a
table.
RATIO ANALYSIS
ANLIMA YARN DYEING LIMITED
Particulars
JUNE 30, 2023
JUNE 30, 2022
Profit After Tax
1,447,080
(3,263,477)
Shares Outstanding
17,867,800
17,867,800
Market Capitalization
200,000,000
200,000,000
Total Assets
423,568,406
383,619,480
Shareholder's Equity
186,241,774
184,794,693
Dividend Paid
2,300,215
12,372,605
Basic Earnings Per Share
(EPS)
0.08
(0.18)
Book Value Per Share
10.42
10.34
Price to Earnings Ratio
139.88
(62.17)
Dividend Payout Ratio
158.96
(379.12)
Return on Assets (ROA)
0.34
(0.85)
Return on Equity (ROE)
0.78
(1.77)
Market Price per Share
11.19
11.19
The financial data for Anlima Yarn Dyeing Limited highlights significant improvements in 2023
compared to 2022, but there are still areas of concern. Below is a critical analysis of the company's
performance based on the given metrics:
1. Basic Earnings Per Share (EPS)
2023: 0.08
2022: -0.18
The company managed to turn its losses into a small profit in 2023. A positive EPS indicates a
recovery, but the low value of 0.08 suggests the company is still operating with thin profit margins.
2. Book Value Per Share (BVPS)
2023: 10.42
2022: 10.34
The slight increase in BVPS reflects stability in the company’s net asset value. However, the
growth is minimal, indicating limited financial health or retained earnings improvements.
3. Price-to-Earnings (P/E) Ratio
2023: 139.88
2022: -62.17
The 2023 P/E ratio of 139.88 is extremely high, signaling that the market price is overvalued
relative to the company's earnings. This could reflect high investor expectations or speculative
trading, as the earnings (EPS) are very low.
The negative P/E in 2022 reflects the company’s net losses, making the ratio meaningless for
valuation purposes.
4. Dividend Payout Ratio
2023: 158.96%
2022: -379.12%
The 2023 dividend payout ratio is alarmingly high at 158.96%, meaning the company paid out
more in dividends than it earned, likely using retained earnings or debt. This is unsustainable in
the long term. In 2022, the negative payout ratio reflects that dividends were paid despite losses,
further depleting resources.
5. Return on Assets (ROA)
2023: 0.34%
2022: -0.85%
The ROA in 2023 shows a slight improvement in how efficiently the company utilizes its assets
to generate profits. However, 0.34% is very low, indicating poor operational efficiency.
6. Return on Equity (ROE)
2023: 0.78%
2022: -1.77%
The improvement in ROE reflects better profitability relative to shareholder equity in 2023.
However, a return of 0.78% remains unimpressive and indicates that shareholders are earning
minimal returns.
7. Market Price Per Share (MPS)
2023 & 2022: 11.19
The market price remained constant despite changes in the company’s financials. This could
indicate that investor confidence in the company has not significantly improved or worsened.
Key Concerns:
● Overvaluation Risk: The high P/E ratio in 2023 suggests that the stock price may be
overvalued, considering the modest improvement in earnings.
● Unsustainable Dividend Policy: The high dividend payout ratio indicates financial strain,
as the company distributes more than it earns.
● Low Efficiency: ROA and ROE are still very low, signaling poor operational and financial
performance.
● Market Sentiment: The unchanged market price suggests limited investor confidence
despite better results.
Anlima Yarn Dyeing Limited's profitability improved in 2023 compared to 2022, but its
performance remained weak. While it has stopped incurring losses, critical issues like
overvaluation, unsustainable dividends, and poor efficiency must be addressed for sustainable
growth. Investors should approach this company cautiously, considering its financial fragility and
lack of meaningful development in key metrics.
ALLTEX INDUSTRIES LIMITED
Particulars
June 30,2023
June 30,2022
Profit After Tax
(148,201,036)
11,051,716
Shares Outstanding
55,968,000
55,968,000
Market Capitalization
1,000,000,000
1,000,000,000
Total Assets
3,847,981,518
3,803,875,134
Shareholder's Equity
307,795,043
489,681,711
Dividend Paid
-
3,568,000
Basic Earnings Per Share
(EPS)
(2.70)
0.20
Book Value Per Share
5.50
8.75
Price to Earnings Ratio
(6.62)
89.35
Dividend Payout Ratio
-
32.28
Return on Assets (ROA)
(3.85)
0.29
Return on Equity (ROE)
(48.15)
2.26
Market Price per Share
17.87
17.87
Based on the financial data, Alltex Industries Limited experienced a significant decline in
performance from 2022 to 2023. Below is a critical analysis of the company's performance metrics:
1. Earnings Per Share (EPS)
2023: -2.70 (loss per share)
2022: 0.20 (profit per share)
The negative EPS in 2023 indicates the company incurred losses, a drastic decline from the modest
profit in 2022. This is a concerning trend, reflecting declining profitability and poor financial
performance.
2. Book Value Per Share (BVPS)
2023: 5.50
2022: 8.75
The decrease in BVPS suggests that shareholder equity has eroded, possibly due to accumulated
losses or asset impairment. A lower BVPS diminishes the company's intrinsic value.
3. Price-to-Earnings Ratio (P/E)
2023: -6.62
2022: 89.35
The negative P/E in 2023 is consistent with the loss reported for the year. The extremely high P/E
in 2022 indicates the market price was overvalued relative to the company's earnings, suggesting
investor expectations were overly optimistic or speculative.
4. Dividend Payout Ratio (DPR)
2023: 0% (no dividends declared)
2022: 32.28%
The absence of dividends in 2023 indicates the company is likely conserving cash due to its poor
financial performance. In 2022, the payout ratio suggests the company distributed a significant
portion of its profits to shareholders, which now appears unsustainable.
5. Return on Assets (ROA)
2023: -3.85%
2022: 0.29%
The negative ROA in 2023 indicates the company is not generating sufficient returns on its assets
and is operating at a loss. The marginally positive ROA in 2022 was already weak, suggesting
inefficient asset utilization.
6. Return on Equity (ROE)
2023: -48.15%
2022: 2.26%
The sharp decline in ROE reflects a significant destruction of shareholder value in 2023. A
negative ROE indicates the company has incurred substantial losses relative to its equity.
7. Market Price Per Share
Both years: 17.87
Despite worsening financial metrics, the share's market price remained unchanged. This could
indicate investor speculation, a lack of market awareness of the company’s deteriorating
fundamentals, or external factors like market sentiment keeping the price stable.
Key Concerns:
● Financial Deterioration: The company’s overall performance declined significantly, as
evidenced by losses, erosion of equity, and poor returns on assets and equity in 2023.
● Sustainability Issues: The inability to pay dividends in 2023 reflects liquidity constraints.
This could signal more profound financial difficulties.
● Market Mismatch: The stable market price per share, despite poor performance, suggests
a potential mispricing or speculative behavior, which may not be sustainable in the long
run.
● Management Concerns: The company appears to be struggling with profitability and
efficiency, requiring a reassessment of its operational and strategic priorities.
Excel Sheet: ACN 305 Final Sheet Question no 3
Requirement 4
Which company would you prefer as an investor? Your decision should be based on the
ratios computed in requirement three and the year-end market price of the shares.
Based on the financial ratios and market prices, as a rational investor, we prefer Anlima Yarn
Dyeing Limited over Alltex Industries Limited for the following reasons:
1. Profitability: Anlima has returned to a positive EPS, whereas Alltex incurs losses.
2. Stability: Anlima's BVPS increased slightly, while Alltex's BVPS declined significantly.
3. Operational Efficiency: Anlima's ROA and ROE, though low, are positive, while Alltex
is sharply negative.
4. Market Price: While both companies' prices are static, Anlima’s modest recovery offers
better value than Alltex's poor fundamentals.
However, caution is advised when investing in Anlima due to its high P/E ratio and unsustainable
dividend payout. It is not a strong performer but is better positioned than Alltex.