UNITED INTERNATIONAL UNIVERSITY

ASSIGNMENT

PRESENTED TO
ASSIGNMENT
M.M.BASET OLI MISHKAT
COURSE TITLE: PRINCIPLES OF FINANCE
LECTURER
SECTION: C
COURSE TITLE: INTRODUCTION TO BUSINESS
COURSE CODE: BUS 101
PRESENTED
SECTION: TO
04

ELIZA HUQ
ASSISTANT PROFESSORPRESENTED
OF BUSINESSBY
& ECONOMICS, UIU.
MOHAMMAD ALI
ID:
PRESENTED BY:
SL NO. NAME ID NO.
1. SABRINA RAHMAN 111-181-002
2. JANNAT AFROSE DATE OF SUBMISSION: MARCH 7, 2018 111-171-258
3. MOHAMMAD ALI 111-181-110
4. SAYAM SHARFUDDIN 111-181-143

DATE OF SUBMISSION: 17THDECEMBER, 2019.

 Introduction
ACI Chemical Industry Limited

Introduction
Imperial Chemical Industries, a British multinational established a Branch in the then East
Pakistan which was converted into a company after liberation, named ICI Bangladesh
Manufacturers Limited. In 1992 ICI divested its investment in Bangladesh to the Management,
when its name was changed to Advanced Chemical Industries (ACI) Limited.  This Company
also obtained listing with Dhaka Stock Exchange on 28 December, 1976 and its first trading of
shares took place on 9 March, 1994. Later on 5 May, 1992, ICI plc divested 70% of its
shareholding to local management. Subsequently the company was registered in the name of
Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange was made on
22 October 1995.

Advanced Chemical Industries (ACI) Limited is one of the leading conglomerates in

Bangladesh, with a multinational heritage. The company has diversified into four major Strategic
Business Units.

Mission
ACI’s mission is to enrich the quality of life of people through responsible application of
knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-
class products, innovative processes and empowered employees to provide the highest level of
satisfaction to its customers.

Vision
To realize the mission ACI will:

 Endeavor to attain a position of leadership in each category of its businesses.

 Attain a high level of productivity in all its operations through effective and efficient use
of resources, adoption of appropriate technology and alignment with our core
competencies.
 Develop its employees by encouraging empowerment and rewarding innovation.
 Promote an environment for learning and personal growth of its employees.
 Provide products and services of high and consistent quality, ensuring value for money to
its customers.
 Encourage and assist in the qualitative improvement of the services of its suppliers and
distributors.
 Establish harmonious relationship with the community and promote greater
environmental responsibility within its sphere of influence mission and vision off the
company

Board of Directors
I) Mr. M. Anis Uddin Dowla
Chairman

II) Mr. Golam Mainuddin

Director
 III) Mrs. Najma Dowla
Director

IV) Mr. Waliur Rahman Bhuiyan OBE

Director

V) Mr. Kamran Tanvirur Rahman

Independent Director

VI) Ms. Shusmita Anis

Director

VII) Mr. Adil Husain

Independent Director

VIII) Mr. Abdul-Muyeed Chowdhury

Director

IX) Dr. Arif Dowla

Managing Director

SWAT ANALYSIS:
Strengths:
 Maintain its growth above the market growth
 First company to obtain Quality Management
Certification
 High quality products
 Wide range of products and services
 Strong management

Weakness:
 Reliance on imports
  Future low profit margin
 Higher cost in establishing new products

Opportunities:
 Growing demand
 High potentiality in both domestic and
 international market
 Power of supplier and buyers to bargain is
 low
 Opportunity for new products and service

Threats:
 Number of competitors on similar sectors are increasing
 Change in world economy may affect the export sector
 Financial ratio analysis of ACI chemical industry
limited

Liquidity: The liquidity ratio measures the ability of a company to pay off its short term debt
obligations. These ratios measure the ability of a company to pay off its short-term liabilities
when they fall due. Under liquidity ratio we will evaluate current ratio and quick ratio.

Current ratio:

Years Current ratios Industry average Comment

2016 0.912919353 0.86 Good
2017 0.871238456 0.86 Good
2018 0.867499975 0.86 Marginal
2019 0.800448908 0.86 Low

Current Ratio
0.94
0.91
0.92
0.9
0.88 0.87 0.87
0.86
0.84
0.82
0.8
0.8
0.78
0.76
0.74
1 2 3 4

Explanation:

An indication of a company’s ability to meet its short-term debt obligations. The higher the ratio,
the more liquid the company is. Current ratio is calculated by dividing the firm’s current asset
and current liabilities. From 2016 to 2017 ACI had a current ratio that was above industry
average but from 2018 to 2019 the current ratio is decreasing which indicates that ACI wasn’t
much capable of paying its obligations in last two years that means the company wasn’t able to
decrease the amount of current liabilities

Quick ratio:

Years Quick ratios Industry average Comments

2016 0.533000663
2017 0.515594804
2018 0.531336162
2019 0.498533437

Quick or Acid test ratio

0.54
0.53 0.53
0.53

0.52
0.52
0.51

0.5 0.5

0.49

0.48
1 2 3 4

Explanation:
It is a liquidity ratio that measures the ability of a company to pay its current liabilities when
they come due with only quick assets. Quick assets are current assets that can be converted to
cash within 90 days or in the short-term. Cash, cash equivalents, short-term investments or
marketable securities, and current accounts receivable are considered quick assets. The quick
ratio is calculated by subtracting the inventory from current assets the dividing it by current
liabilities. In 2016 the quick ratio of ACI was good and the company liquidity and financial
health was good. However, in 2017 it decreased that means the company is now struggling to
pay the debts or the liquidity of the company is also not that good. In 2018 it rose again and the
financial health of the company again stared to grow better but in 2019 it again fell below the
company average.

Asset management: The asset management ratio shows how effectively the firm is
managing its assets.

Inventory turnover ratio:

Years Ratios Industry average Comments

2016 4.014797202
2017 3.181114318
2018 3.413810072
2019 3.305738948

Inventory Turnover
4.5
4.01
4

3.5 3.41
3.18 3.31
3

2.5

1.5

0.5

0
1 2 3 4

Explanation:
It is the number of times a company sells and replaces its stock of goods during a period.
Inventory turnover provides insight as to how the company manages costs and how effective
their sales efforts have been. Inventory turnover is calculated by dividing cost of goods sold by
inventory. In the year 2016 ACI had an inventory turnover ratio of 4.014797202 which is above
the company average and its good for the company because the more the turnover the more the
demand for the product is there in the market and the products are also selling fast. However, in
2017 to 2019 it was below the company average and this means their demands are decreasing
and the products are also not selling up to the company average.

Day’s sales outstanding:

Years Ratios Industry average Comments

2016 47.98003011
2017 71.41289174
2018 77.44937283
2019 82.02623295

Days Sales Outstanding (DSO)

90

80 82.03
77.45
70 71.41

60

50
47.98
40

30

20

10

0
1 2 3 4

Explanation:
The DSO (day’s sales outstanding) measures the average length of time the firm must wait after
making a credit sales before receiving cash-that is the average collection period. In 2016 ACI
took a very short time than the industry average was to recollect the money from the customers
which is very good for the company. But from 2017 to 2019 DSO has decreased as accounts
receivables didn’t increased much in comparing to the average per day sales the DSO also
decreased in these years drastically. I the credit policy doesn’t change for the company in
upcoming years and the trend in DSO rising goes on it would be the case for ACI’S loss. The
company should improve the time it takes to collect accounts receivable.

Fixed assets turnover:

Years Ratios Industry average Comments

2016 3.100514094
2017 2.256705097
2018 2.243681636
2019 2.269190838

Fixed Assets Turnover

3.5
3.1
3

2.5
2.24
2.26 2.27
2

1.5

0.5

0
1 2 3 4

Explanation:
The fixed asset turnover ratio measures how effectively the firm uses its plant and equipment to
help generate sales.it is calculated by dividing the sales by the net fixed assets. In 2016 the
company’s fixed asset turnover was poor than industry average. That means the inventory was
increased but the sale didn’t increase in comparing to the inventory that year. But from 2017 to
2019 the fixed asset turnover ratio was almost equal to industry average. ACI seems to have not
too many neither too few assets in relatively.
Total assets turnover:

Years Ratios Industry average Comments

2016 1.365031566
2017 1.014860738
2018 1.012221075
2019 9.900609163

Total Assets Turnover

12

9.9
10

2
1.37 1.01 1.01

0
1 2 3 4

Explanation:
The total assets turnover ratio measures the turnover of all the firm’s assets. ACI has somewhat
lower ratio from 2016-2018 than the industry average indicating that the firm wasn’t generating
sufficient volume given its investment in total assets. But in 2019 the ratio has increased visibly.
Our examination on ACI’S asset management shows that its fixed asset turnover ratio is very
close to industry average and in recent year its total asset turnover has also increased. But its
DSO is below average indicating that the firm might have problems with receivables
management. Examining the debt management ratio will help us to determine whether this
assessment actually is the case.

Debt management: Debt management refers to an unofficial agreement with unsecured

creditors for repayment of debts over a specific time period, generally extending the amount of
time over which the debt will be paid back. Under debt management, the creditors.

Debt to total assets:

Years Ratios Industry average Comments

2016 72.70% 78.8% Good
2017 77.35% 78.8% Good
2018 80.12% 78.8% Poor
2019 85.10% 78.8% Poor

Debt to Total Assets

9 8.51
8

2
0.73
1 0.77 0.8

0
1 2 3 4

Explanation:
The lower debt ratio is the greater cushion against creditor’s losses in the event of liquidation.
ACI company debt ratio were lower in 2016 and 2017 that’s why they had borrowed additional
funds without first raising more equity capital through a stock issue. Creditors could lent money.
The higher the debt ratio the lower cushion against creditors losses in the event of liquidation.
ACI company higher debt ratio indicates that too much debt often leads to financial difficulty
which eventually caused bankruptcy to the company.

Times interest earned:

Years Ratios Industry average Comments

2016 23.77262834 11.36x High
2017 11.76722898 11.36x High
2018 8.458053297 11.36x Low
2019 1.464672471 11.36x Low

Time Interest Earned

25
23.77

20

15
11.77
10 8.46

5
1.46
0
1 2 3 4

Explanation:
In 2016 and 2017 ACI Company is covering its interest charge by a high margin of safety. As a
result ACI didn’t face any difficulties if it attempt to borrow additional fund.

In 2018 and 2019 the borrowings of ACI Company were higher than the previous years. As the
company interest charge is higher and the earnings goes lower so it couldn’t meet the industry
average in both the years.
Profitability: Profitability ratios are a class of financial metrics that are used to assess a
business's ability to generate earnings relative to its revenue, operating costs, balance sheet
assets, and shareholders' equity over time, using data from a specific point in time.

Net profit margin:

Years Ratios Industry average Comments

2016 6.31% 2.65% Good
2017 2.17% 2.65% Average
2018 .73% 2.65% Poor
2019 -1.42% 2.65% Poor

Net Profit Margin

0.07
0.06
0.06

0.05

0.04

0.03
0.02
0.02

0.01 0.01

0
1 2 3 4
-0.01 -0.01
-0.02

Explanation:
In 2016 and 2017 ACI Company’s net profit margin is higher than the industry average. It
indicates that its sales are higher or might equals to cost than is lower or equal to sales.

ACI Company’s net profit margin is lower than the industry average in 2018 and 2019. It
indicates that it sells might be too low to cover the expense due to high cost. Low net profit
margin is relatively high interest attributable to the firms higher than average use of debts. The
net profit of the company gradually decreases and even incurred loss in 2019.
Return on total asset:

Years Ratios Industry average Comments

2016 8.61% 11.55% Poor
2017 2.21% 11.55% Poor
2018 .74% 11.55% Poor
2019 -14.05% 11.55% Poor

Return on Total Assets

0.15

0.09
0.1

0.05
0.02
0.01
0
1 2 3 4
-0.05

-0.1

-0.15 -0.14

-0.2

Explanation:
ACI Company’s ROA ratio is well below the industry average. This low return results from the
company’s higher than average use debts. As the company’s total asset increases but the net
profit of the company gradually decreases and even incurred loss in 2019. As a result couldn’t
match the industry average. As a result it decreases the ability of an organization to efficiently
produce sales, and is typically used by third parties to evaluate the operations of a business.
Return on equity:

Years Ratios Industry average Comments

2016 31.5% 8.9% Good
2017 9.73% 8.9% Good
2018 3.72% 8.9% Poor
2019 -9.4% 8.9% Poor

Retun on Equity
0.35
0.32
0.3
0.25
0.2
0.15
0.1
0.1
0.05 0.04

0
1 2 3 4
-0.05
-0.09
-0.1
-0.15

Explanation:
ACI Company’s return on equity in 2016 and 2017 is higher than industry average so which
means is good in liquidity position and also it is good in asset management. The Company’s net
profit has decreased gradually from 2016 to 2018. Besides they incurred loss in 2019. On the
other hand the share equity hasn’t changed of the company. Which in turn has decreased the
company’s return on equity. In 2019 the company’s return on equity was lower due to their poor
liquidity position and asset management.
Market value
Price / earnings:

Years Ratios Industry Average Comments

2016 9.461127108 7.82 High
2017 11.76470588 7.82 High
2018 22.83317801 7.82 High
2019 -12.77740417 7.82 Low

Price/ Earnings
25 22.83
20

15 11.76
9.46
10

0
1 2 3 4
-5

-10 -12.78
-15

Explanation:
Earning per ratio are higher for firms with growth prospect and lower for risker firms. But ACI
Company earning per share from 2016 to 2018 is higher than industry average which means the
company was less risker than the competitors. This has happened due to gradually increase their
market price per share and decreasing their earnings per share. In 2019 the earning per ratio is
lower which means the company is in more risky than its competitors and also having poor
growth prospective. In 2019 their market price per share decreased and earnings per share has
also.
ACI COMPANY (Financial Information )
Particular 2019 2018 2017 2016
Current Asset 35,950,983,753 30,431, 773, 384 25, 847,175,402 20,189,582,323
Current Liabiliti es 44,913,527,164 35,079, 855, 052 29, 667,165,427 22,115,406,199
Inventory 13,560,088,685 11,792, 577, 831 10, 550,939,071 8,402,056,153
Total Liabilities 54,268,135,307 44,425, 321, 102 36, 330,959,519 26,223,667,575
Total Assets 6,377,758,601 55,445, 714, 849 46, 970,018,468 36,069,556,176
Shareholder's Eq uity 9,509,373,294 11,020, 393, 747 10, 639,058,948 9,845,888,601

LINK:
Net Profi t -895,981,068 410,550,142 1, 035,948,452 3,106,689,881
Net Sales 63,143,695,243 56,123, 321, 108 47, 668,027,608 49,236,082,736
EBIT 214,193,358 1,421, 662, 593 2, 188,986,591 4,762,466,273
Interest Expens e 146,239,765 168,083,901 186,023, 965 200,334,023
Cost Of Goo ds So ld 44,826,113,310 40,257, 620, 969 33, 563,743,344 33,732,551,532
Market Price p er Share 190 245 260 230
Earnings Per Share -15 11 22 24
Account Receivable 14,387,331,820 12,074, 211, 170 9, 455,865,820 6,562,079,811
Net Fixed Asses t 27,826,524,847 25,013, 941, 464 21, 122,843,066 15,879,973,853
Conclusion:
ACI Limited is one of the leading conglomerates in Bangladesh, with a multinational heritage. In
BD ACI Limited has been doing corporate business and soundly maintaining social
responsibilities. The agenda of this company earning profit, creating job opportunity, though
trade and commerce. Achievement of ACI Limited is beyond description. Maintaining
Government rules and regulations ACI Limited always try to contribute on national G.D.P and
G.N.P. not only local business but also internationally. ACI follows most of the compensation
practices and policy. They always try to contribute to employee satisfaction and given to
employees all types of compensation benefits. ACI Limited, as the leading industries in
Bangladesh, always tries to deal with the satisfaction level of both employee and customer. ACI
Limited believes that, only creating a positive relationship between employee and customer, ACI
Limited can reach to its ultimate goal.

Reference:
 https://www.aci-bd.com/assets/files/financial/annual-report/aci-
limited-annual-report-2016-2017.pdf
 https://www.aci-bd.com/assets/files/financial/annual-report/aci-
limited-annual-report-2017-2018.pdf
 http://www.aci-bd.com/assets/files/financial/1st-quarter/1st-
quarter-un-audited-accounts_aci-l_2018-19.pdf