Financial Report Analysis of Berger Paints Bangladesh Limited (BPBL)

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Assignment: Financial Report Analysis
Submitted To:
Syeda Shaharbanu Shahbazi
Senior Lecturer
FIN301.
Submitted By:
Ashfaqur Rahman Shemanto- 13104117
Md. Hasan-Al-Yakut-13104113
Navid Abdullah Gofran- 13104045
Date: 27.10.2014

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BERGER PAINTS BANGLADESH LIMITED
FINANCIAL RERPORT ANALYSIS

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Letter of Transmittal
27 October, 2014
To
Ms. Syeda Shaherbanu Shahbazi Ahmed
Senior Lecturer
BRAC Business School
BRAC University
Subject: Submission of financial report analysis on BPBL.
Dear Madam,
With high reverence we want to state that we have finished our report on Berger Paints
Bangladesh Limited about their financial performance of the past two years. The report
helped us to gain knowledge on how BPBL is doing financially in Bangladeshi market
and highlight some vital points about their growth. We got the opportunity to do research
on many available sources on BPBL’s financial policies and on their annual reports. This
report is valuable and a necessity to complete our course FIN301.
In this report, all the team members contributed with the best they could do. We faced
some challenges in working as a team but due to everyone's collective efforts we
overcame them and tried to produce this report for you. It was a great opportunity given
to us to experience the vibe of the financial world, and we will like to take this platform
to thank you. To end, we would like you to kindly accept our report and to acknowledge
our devotion and efforts.
Thanking you in anticipation.
Ashfaqur Rahman Shemanto MD. Hasan-Al-Yakut Navid Abdullah Gofran

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Table of Contents
1. Executive Summary……………………………………………………………………3
2. Company Profile………………………………………………………………….……5
3. Financial Performance Analysis of Berger Paints Bangladesh Ltd…............................7
4. Current Ratio……………………………………………………………………….......8
Table 2
Chart 1
5. Quick Ratio……………………………………………………………………………10
Table 3
Chart 2
6. Debt to Equity Ratio…………………………………………………………………..11
Table 4
Chart 3
7. Debt to Asset Ratio……………………………………………………………………12
Table 5
Chart 4
8. Inventory Turnover Ratio……………………………………………………………..14
Table 6
Chart 5
9. Account receivable Turnover Ratio…………………………………………………..15
Table 7
Chart 6
10. Accounts Payable Turnover Ratio…………………………………………………..17
Table 8
Chart 7
11. Net profit Ratio……………………………………………………………………...19
Table 9
Chart 8
12. Return on Asset…………………………………………………………………..…20
Table 10
Chart 9
13. Return on Equity…………………………………………………………………….22
Table 11
Chart 10
14. Share Market analysis of BPBL…………………………………………………….23
15. Earning Per-Share…………………………………………………………………...24
Table 12
Chart 13
16. Price Earning Ratio…………………………………………………………………..26
Table 13
Chart 14
17. Dividend Payout Ratio……………………………………………………………….27
Table 14
Chart 15
18. Findings from the Analysis…………………………………………………………..29
19. Reference……………………………………………………………………………..31

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Executive Summary
Berger Paints Bangladesh limited is one of the leading paints company in our country. At
the time of foundation the company name was Jenson & Nicholson. Their corporate
head-office is situated in Uttara, Dhaka. BPBL is taking strides in fulfilling their vision to
be the most preferred brand in the industry ensuring consumer delight. Their mission is to
increase the turnover by 100 percent in every five years which seems very much
challenging and encouraging. Being a responsible corporate citizen, BPBL has been
contributing to several social causes to bring positive changes in the society.
Berger in Bangladesh has successfully been able to position themselves at the minds of
their targeted customers. They accelerated in bringing innovation in products for the
users to enable them a service of great quality and showing that they are very cautious
about customer’s demand and always tries to fulfill their requirements.
We had the opportunity to work with the Financial Reports of Berger Paints Bangladesh
Limited and prepare a financial analysis report. The report has been started with the basic
overview of BPBL then the discussion has moved to the main topic of “Financial
Performance Analysis of Berger Paints Bangladesh Limited.” The first section under this
topic contains five years financial data analysis of BPBL. After that the fundamental
ratios and market ratios are analyzed from year 2012 to 2013. Findings are the outcomes
of the analysis which includes both positive and negative factors. Later on,
recommendations have been provided to improve the areas where it is needed.

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Objective of the Report
• Main Objective
To evaluate the financial performance of Berger Paints Bangladesh Limited based on
treasury management procedures.
• Specific Objectives
To understand the financial performance of BPBL on different areas such as
liquidity,
Profitability,
To assess the company’s effectiveness and weakness in these segments.
Methodology
Both primary and secondary data used to develop the report. These data were collected
from various sources annual reports, prospectus, websites, journals, articles, previous
reports and observing organizational procedures.
Scope of the study
The scope of this study is to find out the efficiency and loopholes of BPBL based on their
financial data.
Limitations of the study
It was a great opportunity for us to work the on financial performance of Berger Paints
Bangladesh Limited. However, every company has their own policy regarding disclosing
information and so in terms of collecting the information there were some limitations we
faced:
Large scale investigation was not possible due to time constraints.
Only sources from the internet were used.
Relevant data and documents collection were difficult due to the organization
confidentiality.

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Company Profile
Berger’s inception was laid out in 1760 by a German national named Louis Berger, who
started dye and pigment making business in England. Louis involved his family into the
business and eventually changed the status of the company to Louis Berger & Sons
Limited. The company grew and expanded rapidly with a strong reputation for excellence
in innovation and entrepreneurship. In the initial years, Louis successfully refined the
process of manufacturing Prussian blue, a deep blue dye.
The company grew rapidly, by establishing branches all over the world and through
mergers and acquisitions with other leading paint and coating manufacturing companies.
Berger Paints started painting in Bangladesh since independence. Over the past few
decades, Berger has evolved and transformed itself in becoming the leading paint
solution provider in the country with a diversified product range that caters to all your
painting needs. Berger has heavily invested in technology and Research & Development
(R&D) compared to any other manufacturer in this market.
The superior quality of Berger's products has been possible because of their advanced
plants and strict quality controls that match international standards. With the strong
distribution network, Berger has reached almost every corner of Bangladesh. Nationwide
Dealer Network, supported by 8 Sales Depots strategically located at Dhaka, Chittagong,
Rajshahi, Khulna, Bogra, Sylhet, Comilla and Mymensingh have an unmatched
capability to answer to paint needs at almost anywhere in Bangladesh. In 2014 BPBL
opened two new depots in Rangpur and Feni.
Apart from business, Berger Paints has added another dimension to the social
responsibilities by contributing to the well-being of the autistic children in Bangladesh
from2009. Berger Paints Bangladesh Limited has been promoting the young and creative
talents of the country through Berger Young Painters‟ Art Competition (BYPAC), Berger
Award for Excellence in Architecture (BAEA), Berger Award Program for the Students

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of Architecture of BUET (BASAB), Scholarship Program for the students of Architecture
Discipline, Khulna University. (Berger Paints Bangladesh Limited, 2014)
Vision
“To be the most preferred brand in the industry ensuring consumer delight”
Mission
“We shall increase our turnover by 100 percent in every five years. We shall remain
socially committed ethical company”
Corporate Objective
“Our aim is to add value to life, to outperform the peers in terms of longevity, customer
service, revenue growth, earnings and cash generation. We will be the employer of choice
for all existing and future employees”
Strategy
“Our strategy is to build long-term partnerships with the customers/consumers. With their
support, we aim to maximize the potential of our business- through a combination of
enhanced quality of product, service, creative marketing, competitive pricing and cost
efficiency”
Board of directors
The list of Board of Directors of the company is given below:
Chairman Mr. Gerald K. Adams (Chairman since 2004)
Managing Director Ms. Rupali Chowdhury (Managing Director since 2008)
Directors • Mr. K. R. Das (Director since 1992)
• Mr. Anil Bhalla (Director since 1994)
• Mr. Subir Bose (Director since 1995)
• Mr. Jean Claude Loutreuil (Director since 1998)
• Mr. Abdul Khalek (Director since 2004)
Company Secretary Mr. Abdul Khalek

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Financial Performance Analysis of
Berger Paints Bangladesh Limited
BPBL’s 2009 to 2013 Financial Data Taka in “000”
Particulars 2013 2012 2011 2010 2009
Turnover 8,796,778 7,611,213 6,321,274 5,483,619 4,595,904
Gross Profit 3,317,127 2,524,361 2,129,242 2,087,964 1,881,063
Profit Before Tax 1,228,511 1,022,343 894,799 905,555 779,772
Profit After Tax 860,939 752,790 721,163 704,636 579,681
Shareholder’s Equity 2,767,153 2,323,615 1,988,226 1,684,464 1,327,662
Total Assets 4,282,362 3,568,101 3,424,689 3,055,465 2,428,256
Total Current Assets 2,826,670 2,291,222 2,264,647 2,011,724 1,592,419
Total Current
Liabilities
1,382,275 1,146,112 1,333,642 1,271,816 1,014,828
Growth Rate of TO 15.6% 20.4% 15.3% 19.3% 18.4%
Growth Rate PAT 14.36% 4.38% 2.35% 21.55% 44.68%
Growth Rate of SE 19.08% 16.87% 18.03% 26.87% 45.84%
Table 1: Last Five Years Financial Data of BPBL

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The table above indicates that changes occurred gradually during last five years in
Turnover, Profit before and after tax, Shareholders equity, Current assets and liabilities of
BPBL. Turnover has an increasing trend but the percentage fluctuates from 2009 to 2013
and in 2013 the percentage decreased by 4.8%. BPBL‟s mission is to increase turnover
by 100% in every five year where the actual results are very far from that. (Annual
Report, 2009-2013)
Fundamental Ratio Analysis of BPBL
• Short-Term Solvency or Liquidity Ratios
The key concern of the liquidity ratios is the firm’s ability to meet the short-term
financial obligation without undue pressure. These ratios emphasize on the current assets
and current liabilities to quickly convert the assets to cash.
However, we will be focusing mainly on the financial data of BPBL of
2012 to 2013 in terms of our financial analysis.
Current Ratio
The current ratio compares a company’s liquid assets with short-term liabilities. That
means the ability of the company to pay the short term liabilities with the current assets
such as accounts receivables, cash etc. The higher the current ratio, the more liquid the
company is. The ideal current ratio is 2:1.
Current Ratio = (Current Assets / Current Liabilities) times
BPBL’s 2012 to 2013 Current Ratio Taka in “000”
Particulars 2013 2012
Current Assets 2,826,670 2,291,222
Current Liabilities 1,382,275 1,146,112
Current Ratios 2.04 2.00
Table 2: Current Ratio

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Chart 1: Current Ratio
Interpretation
BPBL’s current ratio was 2.00 times in 2012. Liquid assets increased 2012 but short term
liabilities went down in 2012 from 2011 may be because of reduction in accounts
payables and short term debts. Current ratio increased in 2013 by 2% in comparison to
2012, as it stood at 2.04:1. The current liabilities has increased from the previous year but
as the current assets experienced a greater increase as against the current liabilities, the
impact on the current ratio was not that negative. Since the current ratio remained above
1 throughout the five years, it can be assumed that BPBL did not face any problems
meeting their short term liabilities. And it was in 2012 that BPBL reached the ideal
current ratio of 2:1, which is regarded as desirable for a healthy business.
1.8
1.9
2
2.1
2.2
2.3
2.4
2012 2013
Current Ratio

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Quick Ratio
A reliable test of liquidity is the quick ratio test that excludes inventory from current
asset. It considered the ability to use its quick assets to pay its current liabilities. This
approach can be acceptable since inventory of many companies cannot be quickly
converted into cash. The ideal quick ratio is 1:1.
Quick Ratio = ((Current Assets-Inventory) / Current Liabilities) times
BPBL’s 2012 to 2013 Quick Ratio
Current Asset 2,823,670 2,291,222
Inventory 1,308,485 1,190,049
Current Liabilities 1,382,275 1,146,112
Quick Ratio 1,098 0.961
Table 3: Quick Ratio
Chart 2: Quick Ratio
0.85
0.9
0.95
1
1.05
1.1
2012 2013

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Interpretation
The ratio was 0.961:1 in 2012 and it improved in 2013 by14.26%.In 2012and 2013
BPBL had enough cash and bank balance in comparison to 2011 and 2010.
However, in 2009 and 2012 BPBL‟s quick ratio were almost close to the ideal
quick ratio1:1, which indicates BPBL was not highly dependent to pay their
liabilities on inventory and they were efficient to manage their cash. On the other
hand, in2013 the ratio increased from the ideal one that happened because the
company may kept huge amount of cash on hand or had a problem in inventory
management or account receivable management.
• Long-Term Solvency or Financial Leverage Ratios
Long-term solvency ratio caroused to assess the firm’s long-term ability to meet the
long term debt obligations such as interest payments on debt, the final principal
payment on debt, and fixed obligations like lease payments.
Debt to Equity Ratio
The debt to equity ratio compares company's totalliabilitiest other total
shareholders' equity. This is same amusement to fhowmuchsuppliers, lender sand
credit or shave committed to the company against the shareholders have committed.
The standard debt to equity ratios is 1:1. The lower the ratio, lower the debt and
higher the equity of shareholders.
Debt to Equity Ratio = (Total Debt / Total Shareholders’ Equity) times
BPBL’s 2012 to 2013 debt to Equity Ratio Taka in “000”
Total 1,515,209 1,244,486
Total Shareholder’s
Equity
2,767,153 2,323,615
Debt to Equity Ratio 0.55 0.54
Table 4: Debt to Equity Ratio

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Chart 3: Debt to Equity Ratio
Interpretation
The table shows that the debt to equity ratio of BPBL had adecreasingtrend from
year 2012 to 2013 which are respectively 0.54 and 0.55 times. Both the debt ands
shareholder’s equity went up in these years but there were great erimprovement in
shareholder’s equity compare to debt. That means BPBL had been efficient in
financing its growth with its obligations .In 2013 the ratio was 0.55 which increased
by 1.2% than the previous year since BPBLborrowing cost increased in 2013 from
2012.Though 1:1 debt to equity ratio is preferable, BPBL‟sdebt to equity ratio is
decreasing their capacity of debt financings being increased. Nevertheless, it can be
assumed the most of BPBL‟s debts consist of credit or sandaccrualsso BPBL‟s
borrowing cost is insignificant as a consequence BPBL is in good position.
Debt to Asset Ratio
Debt to asset ratio shows the proportion of the assets that are financed with short
term and long term debt rather than equity and the ideal ratio in percentage is 0.4 to
0.5 times. Long term debt can be deferred tax liabilities and short term debts are
trade and other payables, bank overdraft, provision for royalty etc. Lower the ratio,
lower the amount of debt and most of the financing are being covered by equity.
Debt to Asset Ratio = (Total Debt / Total Asset) times
0.534
0.536
0.538
0.54
0.542
0.544
0.546
0.548
0.55
2012
2013

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BPBL‟s 2012 to 2013 Debt to Asset Ratio Taka in “000”
Total Debt 1,515,209 1,244,486
Total Asset 4,282,362 3,568,101
Total Debt to Asset
Ratio
0.35 0.35
Table 5: Debt to Asset Ratio
Chart 4: Debt to Asset Ratio
Interpretation
Like every other company BPBL’s debt to asset ratio includes both long-term and short-
term debt. It also contains the company’s tangible assets and intangible assets. Property &
plants, inventories etc. are tangible assets and software, trademarks etc.are the intangible
assets of BPBL. The debt to asset ratio of BPBL fluctuated over the last five years. From
2010 to 2012 the ratios were respectively 0.41, 0.42 and 0.35 times which has a
fluctuating trend due to continuous improvement in assets value and irregularity in debt
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
2012 2013

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value. The debt to asset ratio remained constant from 2012 to 2013. However, the debt to
asset ratio is close to the standard ratio.
• Asset Management or Turnover Ratios
The turn over ratios describe how effectively a firm uses assets to generate sales
revenue. High asset turn over ratios is desirable since they mean that the company
is utilizing their assets strongly to produce sales. The higher the asset turnover
ratios, the more revenues the company can generate from the assets. On the other
hand, low asset turnover ratios mean assets of the company is not properly utilized.
InventoryTurnoverRatio
Inventory turnover ratio measures how many times a company's inventory is sold
and replaced over a period. This ratio evaluates the liquidity of the firm's inventory.
It also helps to determine how sales can be increased through inventory control.
The standard inventory turnover ratio is 4:1. Generally, a low turnover ratio
involves poor sales therefore end up with excess inventory. On the contrary, a high
turnover ratio implies company is very strong in selling inventory or in effective
buying.
Inventory Turnover Ratio = (Sales / Inventory) times
BPBL’s 2012 to 2013InventoryTurnover Ratio Taka in “000”
Sales 8,796,778 7,611,213
Inventory 1,308,485 1,190,049
Inventory Turnover
Ratio
6.7 6.4
Table 6: Inventory Turnover Ratio

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Chart 5: Inventory Turnover Ratio
Interpretation
Furthermore, the turnover ratio was to 6.4 and 6.7 times in 2012 and 2013 due to effective
sales of the inventory they bought. Over the last five years the inventory turnover ratios
were fluctuating from the standard ratio.
Accounts Receivable Turnover Ratio
Accounts receivable ratio is an activity ratio that measures how many times a firm
can turn account receivable into cash during a period .It measures how many times
a company can collect average account receivable during a year . Inefficient
company’s collection period is 30 days .The lower the amount of un collected cash
,the higher this ratio will be and if a company has more of the proceeds a waiting
receipt ,the lower the ratio will be.
Accounts Receivable Turnover Ratio = (Sales /Average Accounts Receivables) days
6.25
6.3
6.35
6.4
6.45
6.5
6.55
6.6
6.65
6.7
2012 2013

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BPBL‟s 2012 to 2013 Accounts Receivable Turnover Ratio Taka in “000”
Sales 8,796,778 7,611,213
Average Accounts
Receivables
579,395 486,007
Accounts Receivable
Turnover Ratio
24 23
Table7: Accounts Receivable Turnover Ratio
Chart 6: Accounts Receivable Turnover Ratio
Interpretation
BPBLs account receivable turn over has changing trend year to year .In 2009
BPBLs account receivable ratio was 17 days that means it was very efficient in
collecting outstanding sales and reinvested the sale proceeds .Collection period
increased during 2010 to 2013 and the ratio sari respectively 21,24,23 and24 days.
It might be happened because of the change in cash collection process that leads to
22.4
22.6
22.8
23
23.2
23.4
23.6
23.8
24
2012 2013

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an increase in average accounts receivables every year .Yet, the collection period is
below the standard ratio which is a positive factor for the company.
Accounts Payable Turnover Ratio
Accounts payable turnover ratio measure the speed of any company to pay it
suppliers .The ideal accounts payable ratio is between 45 to 65 days .On the
contrary ,if the turnover ratio drops from one period to the next, this indicates that
the company is paying its suppliers more slowly which can badly affect the
company’s financial position.
Accounts Payable Turnover Ratio = (Purchases / Average Accounts Payable) days
BPBL‟s 2012 to 2013 Accounts Payable Turnover Ratio Taka in “000”
Purchases 5,479,651 5,086,582
Average Accounts
Payable
1,001,498 848,473
Accounts Payable
Turnover
67 61
Table 8: Accounts Payable Turnover Ratio

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Chart 7: Accounts Payable Turnover Ratio
Interpretation
The ratio improved in 2011 and 2012 which were respectively 66 and 61days.That
may indicates,BPBLwere paying their suppliers timely and they were taking days
in 2013 maybe because of delay in payments. The turnover ratio went up in the
previous year that can weaken the company’s negotiation power width even do
resin terms of credit terms and discounts in the future.
• Profitability Ratios
Profitability ratios evaluate a firm’s overall efficiency and performance.
Profitability ratios are of two types, one is margin and another is return. A higher
value Is desirable than a lower on bandit indicates company is making profit from
their operations.
Net Profit Margin
The net profit margin ratio directly indicates what percentage of sales is made up of
net income. This ratio also evaluates how well a company manages the
58
59
60
61
62
63
64
65
66
67
2012 2013

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expenditures relative to the net sales. The standard ratio is 10% to 20%. Companies
can achieve higher ratios either by producing more incomes while keeping
expenditures constant or keep revenues constant and low erexpenditures.
Net Profit Ratio = (Net Profit / Sales)
BPBL‟s 2012 to 2013 Net profit Margin Taka in “000”
Net Income 860,939 752,790
Sales 8,796,778 7,611,213
Net Profit Margin 9.79% 9.89%
Table 9: Net Profit Margin Ratio
Chart 8: Net Profit Margin
Interpretation
The net profit margin of BPBL was 9%, 13%, 13%, 9.89% and 9.79% from 2009 to
9.65%
9.70%
9.75%
9.80%
9.85%
9.90%
9.95%
10.00%
2012 2013

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2013 respectively. It rose by 4% in 2010 compare to 2009 may be because they
minimize their expenses and generated more revenues. Yet, the ratio decreased in
2012 and 2013. The reason of this fact either might be high selling and
administrating expenses, high tax rates and other operating expenses or low income
from operations. BPBL should concentrate on how to increase net profit margin in
near future.
Return on Asset(ROA)
The return on assets ratio measures the net income produced by total assets during a
period. In Other words, ROA measures how efficiently a company can manage their
assets to generate incomes during a period.
Return on Asset = (Net Income / Total Asset)
BPBL‟s 2012 to 2013 ROA Taka in “000”
Net Income 860,939 752,790
Total Asset 4,282,362 3,568,101
Return on Asset 20.10% 21.10%
Table 10: ROA

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Chart 9: ROA
Interpretation
From year 2012 to 2013 BPBL‟s ROA percentage were 21.10% and 20.10%
respectively which remained almost constant. That implies BPBL earned Tk.0.211
and0.201 for each to .assets from 2012 to 2013 .Berger is an asset-in sensitive
company and needs expensive plants and machineries to generate revenues. Thus
the high return on assets in 2009 suggests BPBL was more care alto investing assets
and use their assets efficiently. BPBL‟s asset management should be revised the
policies and procedures to avoid unfavorable situation in upcoming days otherwise
it can affect the profitability of the company.
Return on Equity (ROE)
The ROE ratio suggest show profitable accompany is in comparison to the net
income with the shareholders 'equity. In otherworld, ROE measures the ability of a
firm to generate profits from the shareholder’s investment in the company .The
higher the ratio is ,them or eefficientthe company is in utilizing the equity and the
better return they can provide to the investors.
Return on Equity = (Net Income /Total Shareholders’ Equity)
19.60%
19.80%
20.00%
20.20%
20.40%
20.60%
20.80%
21.00%
21.20%
2012 2013

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BPBL‟s 2012 to 2013 ROE Taka in “000”
Net Income 860,939 752,790
Total Shareholder’s
Equity
2,767,153 2,323,615
Return on Equity 31.11% 32.40%
Table 11: ROE
Chart 10: ROE
Interpretation
BPBL‟s ROE indicates that from 2012 to 2013 the ratios were 32.40% and 31.11%
respectively. The ROE ratios showing a decreasing trend which may not satisfactory for
the investors to invest in BPBL since they want high return. As a result they will
reconsider to invest in BPBL even they might choose another company. The major cause
of this reduction may be due to the increase in shareholder’s equity compare to the net
income.
30.40%
30.60%
30.80%
31.00%
31.20%
31.40%
31.60%
31.80%
32.00%
32.20%
32.40%
2012 2013

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Share Market Analysis of BPBL
Chart 11: Composition of Shareholders
In December 2005 Berger Paints Bangladesh Limited issued 5% shares to the public and
listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). The
Company converted the face value of the share from Taka 100 to Taka 10 each vide a
special resolution passed on 21 June 2005. The Company issued 1,159,500 ordinary
shares of Tk. 10 each through initial public offer (IPO) vide the consent letter of
Securities and Exchange Commission ref SEC/CI/IPO-71/2005/168 dated 10 October
2005. They earned an amount of Tk. 127,545,000 as premium at the time of first IPO.
There are 40,000,000 authorized shares and 23,188,940 issued share till the year 2013.
The market category of the BPBL‟s share is A. Shareholders are consisting of both
foreign and Bangladeshi. The shareholding composition shows 95% shares are hold by
Group means J & N investment (Asia) limited, financial and other institutions holds 4.1%
and General public holds 0.9%. (Annual Report 2013)
Trend analysis of stock price
The graph shows that the closing price ofBPBL fluctuated from year 2009 to 2013.Price
of the shares in 2009 were 624.9 and it improved to Tk. 854.44 in 2010. However, the
closing price fell down to Tk. 550 ant. 530.77 in year 2011 and 2012respectively may be
due to share market crash in 2011. In 2013 the price went up than any other year and it
was Tk. 876.9. The share price rose abruptly in the last year as a result they earned a huge
95%
4% 1%
Composition of Shareholders
Groups
Institutions
G. Public

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profit from the shares. The last closing price while writing this report was Tk. 1,152.4
that is very high price. If BPBL can retain this increasing trend the investor will buy more
shares to sell them in secondary market at a higher rate. (Dhaka stock exchange, 2011)
Chart 12: Closing Price Trend
Earnings per Share (EPS)
Earnings per share (EPS) are the values of earning from each outstanding common shares
of a company. Generally, EPS is calculated on a per share basis. The higher the ratio,
higher will be the earning from the common shares.
Earnings per Share = (Net Income / Number of Shares Outstanding)
624.9
854.44
550.0 530.77
876.9
0
100
200
300
400
500
600
700
800
900
1000
2009 2010 2011 2012 2013
Closing Price Trend

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BPBL’s 2012 to 2013 EPS Ratio Taka in “000”
Particulars
2013 2012
Net Income 860,939,000 752,790,000
Share Outstanding 23,188,940 23,188,940
EPS 37.13 32.46
EPS Growth Rate 14.39% 4.38%
Table 12: Earning per share (EPS)
Chart 13: Earnings per share
Interpretation
Over the last five years EPS has an increasing trend. EPS of BPBL gradually improved
year to year. Per share income was Tk. 32.46 in 2012 and in 2013 it increased by almost
Tk. 5 leading to an EPS of Tk. 37.13 which indicates positive result for BPBL‟s
shareholders. This increase occurred only due to rise in net income since the common
shares of the company stood constant throughout the past five years.
30
31
32
33
34
35
36
37
38
2012 2013
EPS

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Price-Earnings Ratio
Price-earnings ratio measures whether market is willing to pay for the company’s
earnings. In addition, it shows whether the share price of a company is fairly valued,
undervalued or overvalued. The higher the P/E ratio is, the more the market is interested
to pay for the company’s earnings. Companies with high P/E ratio takes more risk than
those with low P/E ratios because a high P/E ratio signifies high return.
Price Earnings Ratio = (Price per Share / EPS)
BPBL’s 2012 to 2013 Price Earnings Ratio
Price Per Share 876.90 530.77
EPS 37.13 32.46
Price-Earnings Ratio 23.62 16.35
Table 13: Price Earnings Ratio
Chart 14: Price per Earnings
0
5
10
15
20
25
2012 2013
P/E Ratio

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Interpretation
From 2012 to 2013 P/E ratios of BPBL was 16.35 and 23.62 respectively. BPBL had high
P/E ratio in 2010 compare to any other year which means they might have considered
risky investments for the investors. In 2013 the P/E ratio went up and the reasons might
be some investor considered a high P/E as an overpriced stock and it can be assumed that
the market has high hopes for this stock’s future and has bid up the price.
Dividend Payout Ratio
The dividend payout ratio is the amount of dividends paid to the company’s stockholders
relative to the amount of EPS. The amount remaining after paying the dividend is called
retained earnings and held by the company for future growth.
Dividend Payout Ratio = (Yearly Dividend per Share / EPS)
BPBL’s 2012 to 2013 Dividend Payout Ratio
Yearly Dividend per Share 22 18
EPS 37.13 32.46
Dividend Payout Ratio 59.25% 55.45%
Table 14: Dividend Payout Ratio

30
Chart 15: Dividend Payout Ratio
Interpretation
The dividend payout ratio of BPBL was 60% in 2009. That means they were paying a
huge amount of dividend in spite of experiencing only four years in the share market.
Although in 2010 it reduced a bit due to change in dividend percentage and EPS but
changes in EPS was greater. Moreover, it was enough to satisfy the investors as they
were getting high yield from dividend and they could have capital gain since prices of the
shares increased in 2010. However, the dividend payout ratio continued to fall in 2011
and 2012 and the percentages were respectively 57.88% and 55.45%. This incident
occurred because yearly dividend per share was constant but EPS increased in these two
years. Three years after the continuous decline the ratio again went up in 2013 due to
increase in dividend per share and EPS.
53.00%
54.00%
55.00%
56.00%
57.00%
58.00%
59.00%
60.00%
2012 2013
Dividend Payout Ratio

31
Findings from the Analysis
On 1st May 2014 BPBL was honored with the ICMAB Best Corporate Award 2013 for
outstanding achievements in financial and management excellence. In addition, Berger
was awarded the top position in the Multinational Companies Category in the ICMAB
Award based on the market strength, leverage, profitability, liquidity, funding flexibility
and other qualitative factors. The main reason for highlighting about this award is
because it has an important relationship with my findings. (BPBL News and Events,
2014)
The key ratios which affect a company’s liquidity and profitability are current ratio, quick
ratio, debt to equity ratio, ROA and inventory turnover ratio. However, other ratios are
also important since they also measure company’s performance. Based on the financial
performance analysis, both positive and negative findings can be observed. Although
BPBL is the market leader anode of the oldest players in the paint industry in
Bangladesh, but some flaws of the company cane observed which may have gone
unnoticed because of their enormous success.
Liquidity: BPBL is experiencing increasing growth in terms of liquidity since they have
more current assets than before. Moreover, the current ratio reached the ideal ratio of 2:1
in2012. As a result it can be assumed that the company will acquire more assets in the
next few years to keep their liquidity in a better position. BPBL owns almost 55% market
shares in Bangladesh, which means they had been investing in many plants and
machineries to remain competitive in the market. This has been possible only as they
have enough liquid assets to convert into cash quickly. However, in 2009 and 2012, even
though they were managing their cash on hand properly, they might have produced a
huge number of inventories in 2010and 2011 due to which the company was unable to
pay their current liabilities properly with their current assets such as cash and cash
equivalents, and accounts receivable etc. as a result their liabilities went up. Marketable
securities are another source of current assets. BPBL’sshare price is increasing rapidly
that indicates they can sell shares quickly via public offerings to pull up funds if the

32
company faces such crisis. The company is not efficient enough in managing their
accounts receivable. The customers are mostly institutional and corporate and they
purchase the products on credit since they purchase in bulk. They generally give this
opportunity to the old vendors whom they know and who have good reputation.
Sometimes they also give the chance to the small companies but some companies do not
pay on time or ever and as a consequence bad debt increases.
Profitability: Almost every year BPBL earns a huge profit but it may not be sufficient as
the business is growing day by day. With the expansion of the business they had
established lot of plants in different places of the country. The company has invested TK.
31,233,000for plants and machineries in 2013. PBT and PAT are increasing but the
growth rates are not adequate. Net profit margin has a fluctuating trend may be because
of high selling and administrating expenses, high tax rates and other operating expenses
or low incomes from operations. On the other hand, ROA and ROE is decreasing year to
year that implies net income produced from assets and equity is not sufficient in retaining
the company growth.
EPS and prices of the shares of BPBL are increasing that means they can win a good
reputation with their investors. Yet, this situation might have been created due to other
causes. BPBL usually do not keep any price limit of the shares for that reason they can
repurchase their own securities at a low price and sell them at a higher price after a while
and the trade of shares remains closer to that higher price. BPBL is paying a huge amount
of tax to the government every year, that is why the after tax profit is giving low results.
Nevertheless, BPBL is trying to manage their operations effectively and efficiently by
satisfying the shareholder’s as well as the customer’s needs.

33
Reference
• Annual Report (2012-2013). Berger Paints Bangladesh Limited
• Dhaka Stock Exchange (DSE). Retrieved 24 October, 2014; from
http://www.dsebd.org/displayCompany.php?name=BERGERPBL
• BPBL News and Events. (2014). Retrieved 25 October, 2014, from Berger Paints
Bangladesh Limited:
http://www.bergerbd.com/news_blog/newsdetails/94
• Berger Paints Bangladesh Limited. (2014). Berger Trusted Worldwide. Retrieved
October 24, 2014, from Berger Trusted Worldwide:
http://www.bergerbd.com/

Financial Report Analysis of Berger Paints Bangladesh Limited (BPBL)

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