This report is aimed at finding the relationship between the net income and the current asset, current liability, working capital, debt ratio, current ratio, quick ratio, taking cement companies of Bangladesh into consideration. It overviews some theoretical literature on these financial factors and presents the regression outputs and their interpretation. The findings of the study are: 1. Position of the various financial performances of these companies. 2. The regression output has components: o Regression statistics table o Correlation table o Model summery o ANOVA table o Regression coefficients table o Excluded Variables table. 3. And their interpretation. Quantitative data is taken from company’s annual reports, business research companies’ archives and financial websites. The findings from the study can either have a positive or negative impact on financial performance.  

1.
2012
JAHANGIRNAGAR
UNIVERSITY
Khairuzzaman Mamun
A REPORT ON CEMENT
COMPANIES IN BANGLADESH

2. A Report
On
Cement Companies in Bangladesh
Prepared for Prepared by
1. Khairuzzaman Mamun
ID No :20113137
Md. Tarikul Islam Contact no : 01761808592
Assistant Professor, Email : knpmmamun@gmail.com
Chireman, 2. Md. Keramat Ali
Department of Finance & Banking ID No: 20113207
Jahangirnagar University 3. Md. Mojibur Rahman
Savar, Daka-1342 ID No: 20113238
4. Narayan Chandra Sarker
ID No: 20113180
5. Kazi Hossain Ansary
ID No: 20113149
Submission Date: December 22,2012

3. December 21, 2012
Md. Tarikul Islam
Chairman
Department of Finance & Banking
Jahangirnagar University,
Savar,Dhaka.
Dear Md. Tarikul Islam
Here is the report that you asked us to conduct on November 10, 2012 on A Report
Study On Cement Companies in Bangladesh
This study focused on different types of discussion and result about the Historical
Performance of Cement Companies in Bangladesh. We will be pleased if you have
any further query for this you can call us at your convenient time and place.
Sincerely yours,
1. Khairuzzaman Mamun
ID No :20113137
Contact no : 01761808592
Email : knpmmamun@gmail.com
2. Md. Keramat Ali
ID No: 20113207
3. Md. Mojibur Rahman
ID No: 20113238
4. Narayan Chandra Sarker
ID No: 20113180
5. Kazi Hossain Ansary
ID No: 20113149

4. ABSTRACT
This report is aimed at finding the relationship between the net income and the
current asset, current liability, working capital, debt ratio, current ratio, quick ratio,
taking cement companies of Bangladesh into consideration. It overviews some
theoretical literature on these financial factors and presents the regression outputs
and their interpretation.
The findings of the study are:
1. Position of the various financial performances of these companies.
2. The regression output has components:
o Regression statistics table
o Correlation table
o Model summery
o ANOVA table
o Regression coefficients table
o Excluded Variables table.
3. And their interpretation.
Quantitative data is taken from company’s annual reports, business research
companies’ archives and financial websites. The findings from the study can either
have a positive or negative impact on financial performance.

5. Sequence of contents
Introduction
o Current asset
o Current liabilities
o Working capital
o Debt Ratio
o Quick ratio
o Current ratio
o Net income
Analysis and Interpretation
regression output
o Regression statistics table
o Correlation table
o Model summery
o ANOVA table
o Regression coefficients table
o Excluded Variables table.
Recommendations & suggestions
Conclusions
References

6. Introduction
This study focuses on current asset, current liability, working capital debt ratio,
quick ratio and current ratio. The study also focuses on their impact on net income
of the cement factories in Bangladesh.
A current asset current asset is an asset which can either be converted to cash or
used to pay current liabilities within 12 months. Typical current assets include
cash, cash equivalents, short-term investments, accounts receivable, inventory and
the portion of prepaid liabilities which will be paid within a year.
On a balance sheet, assets will typically be classified into current assets and long-
term assets.
Current liabilities are often understood as all liabilities of the business that are to
be settled in cash within the fiscal year or the operating cycle of a given firm,
whichever period is longer. A more complete definition is that current liabilities
are obligations that will be settled by current assets or by the creation of new
current liabilities. Accounts payable are due within 30 days, and are paid within 30
days, but do often run past 30 days or 60 days in some situations. The laws
regarding late payment and claims for unpaid accounts payable is related to the
issue of accounts payable. An operating cycle for a firm is the average time that is
required to go from cash to cash in producing revenues.
Working capital (abbreviated WC) is a financial metric which represents
operating liquidity available to a business, organization or other entity, including
governmental entity. Along with fixed assets such as plant and equipment, working
capital is considered a part of operating capital. Net working capital is calculated
as current assets minus current liabilities.
WC = Current Assets – Current Liabilities
It is a derivation of working capital that is commonly used in valuation techniques
such as DCFs (Discounted cash flows). If current assets are less than current
liabilities, an entity has a working capital deficiency, also called a working
capital deficit.
A company can be endowed with assets and profitability but short of liquidity if its
assets cannot readily be converted into cash. Positive working capital is required to
ensure that a firm is able to continue its operations and that it has sufficient funds

7. to satisfy both maturing short-term debt and upcoming operational expenses. The
management of working capital involves managing inventories, accounts
receivable and payable, and cash.
Debt Ratio is a financial ratio that indicates the percentage of a company's assets
that are provided via debt. It is the ratio of total debt (the sum of current liabilities
and long-term liabilities) and total assets (the sum of current assets, fixed assets,
and other assets such as 'goodwill').
or alternatively:
The Acid-test or quick ratio or liquid ratio measures the ability of a company to
use its near cash or quick assets to extinguish or retire its current liabilities
immediately. Quick assets include those current assets that presumably can be
quickly converted to cash at close to their book values. A company with a Quick
Ratio of less than 1 cannot currently pay back its current liabilities.
Note that Inventory is excluded from the sum of assets in the Quick Ratio, but
included in the Current Ratio. Ratios are tests of viability for business entities but
do not give a complete picture of the business' health. If a business has large
amounts in Accounts Receivable which are due for payment after a long period
(say 120 days), and essential business expenses and Accounts Payable due for
immediate payment, the Quick Ratio may look healthy when the business is
actually about to run out of cash. In contrast, if the business has negotiated fast
payment or cash from customers, and long terms from suppliers, it may have a
very low Quick Ratio and yet be very healthy.
Notice that very often Acid test refers instead of Quick ratio to Cash ratio:

8. The current ratio is a financial ratio that measures whether or not a firm has
enough resources to pay its debts over the next 12 months. It compares a firm's
current assets to its current liabilities. The current ratio is calculated by dividing
total current assets by total current liabilities. It is frequently used as an indicator of
a company's liquidity, its ability to meet short-term obligations.
It is expressed as follows:
The current ratio is an indication of a firm's market liquidity and ability to meet
creditor's demands. Acceptable current ratios vary from industry to industry and
are generally between 1.5 and 3 for healthy businesses. If a company's current ratio
is in this range, then it generally indicates good short-term financial strength. If
current liabilities exceed current assets (the current ratio is below 1), then the
company may have problems meeting its short-term obligations. If the current ratio
is too high, then the company may not be efficiently using its current assets or its
short-term financing facilities. This may also indicate problems in working capital
management.
Net income also referred to as the bottom line, net profit, or net earnings is an
entity's income minus expenses for an accounting period. It is computed as the
residual of all revenues and gains over all expenses and losses for the period, and
has also been defined as the net increase in stockholder's equity that results from a
company's operations. In the context of the presentation of financial statements, the
IFRS Foundation defines net income as synonymous with profit and loss.

9. Analysis and Interpretation
For analyzing and interpretation we have selected four cement company’s data.
The companies are HEIDEBERG CEMENT, ARMIT CEMENT, CONFIDENCE
CEMENT, MEGNA CEMENT. Then we have run regression by SPSS taking
NETINCOME as dependent variable and CA, CL, WC, DR, QT, CR as
independent variable.
WC = WORKING CAPITAL CA = CURRENT ASSET
DR = DEFT RATIO CL = CURRENT LIABITY
QT = QUICK TEST
CR = CURRENT
RATIO
YEAR CA CL WC DR QT CR NET INCOME
HEIDEBERG
CEMENT
1995 291776135 232312702 59463433 0.42 0.63 1.26 49063770
1996 283936620 280331281 3605339 0.35 0.45 1.01 87222766
1997 487728422 466639344 21089078 0.23 1.02 1.43 90162723
1998 656544310 483855466 172688844 0.186 1.09 1.36 137490404
1999 662942602 500088523 162854079 0.166 1.11 1.33 190134844
2000 1090451 590807 499644 0.307 1.8 2.12 203966
2001 1049119 496514 552605 0.368 2.09 2.5 209023
2002 814110 402845 411265 0 2.06 2.3 46570
2003 958958 1659205 -700247 0 2.1 2.12 55373
ARMIT CEMENT
1999 69982997 133915884 -63932887 0.489 0.2 0.52 12584566
2000 95485808 113300823 -17815015 0.391 0.16 0.84 63728613
2001 106532929 1168944862 -1062411933 0.374 0.22 0.63 22605647
2002 92676487 193194810 -100518323 0.336 0.25 0.48 45325802
2003 82506088 170931414 -88425326 0.292 0.17 0.48 -56047924
2004 58364763 158144182 -99779419 0.292 0.17 0.37 -63145695
2005 118037786 274693852 -156656066 0.186 0.18 0.43 -26640998
2006 150168808 343833723 -193664915 0.121 0.17 0.44 6971807
CONFIDENCE
CEMENT
1996 140230667 147230786 -7000119 0.411 0.21 0.95 5596310
1997 374423669 70780203 303643466 0.167 4.02 5.29 18563667
1998 170259858 86527911 83731947 0.297 1.03 1.97 70458069
MEGNA CEMENT
1996 205110279 251268787 -46158508 0.566 0.811 0.811 22792205
1997 342103994 335576756 6527238 0.583 0.979 1.019 32144414

10. 1998 452766064 437159410 15606654 0.576 0.958 1.036 31311683
1999 393683728 364468510 29215218 0.703 1.012 1.08 49641627
2000 744257833 670755663 73502170 0.644 0.988 1.11 110573729
2001 1018622921 990863219 27759702 0.597 0.965 1.028 132743297
2002 1253123650 1229932887 23190763 0.577 0.884 1.019 51939193
2003 1003252653 952991742 50260911 0.597 1.035 1.053 26021799
2004 952008134 943392659 8615475 0.559 0.987 1.009 34311762
2005 1180027914 1188086536 -8058622 0.517 0.941 0.993 75106875
2006 1001283610 1064853393 -63569783 0.452 0.881 0.94 56437753
The regression output has components:
• Regression statistics table
• Correlation table
• Model summery
• ANOVA table
• Regression coefficients table
• Excluded Variables table.
INTERPRET REGRESSION STATISTICS TABLE
Descriptive Statistics
Mean Std. Deviation N
NETINCOME 41213343.2258 54399845.30082 31
CA 399733915.0645 390685882.39495 31
CL 427652409.6452 394522244.70347 31
WC -27918494.5806 214100614.82741 31
DR .3792 .18861 31
QR .9539 .80888 31
CR 1.2557 .93617 31
This table presents mean and deviation of dependent variable net income and
independent variables CA, CL, WC, DR, QR, CR.
Correlations
NETINCOME CA CL WC DR QR CR
Pearson NETINCOME
Correlation 1.000 .545 .381 .292 .165 .040 .022
CA .545 1.000 .851 .256 .507 .046 -.080
CL .381 .851 1.000 -.289 .501 -.197 -.311
WC .292 .256 -.289 1.000 .001 .447 .426

11. DR .165 .507 .501 .001 1.000 -.270 -.345
QR .040 .046 -.197 .447 -.270 1.000 .952
CR .022 -.080 -.311 .426 -.345 .952 1.000
Sig. (1-tailed) NETINCOME
. .001 .017 .055 .187 .414 .452
CA .001 . .000 .082 .002 .403 .334
CL .017 .000 . .057 .002 .143 .045
WC .055 .082 .057 . .498 .006 .008
DR .187 .002 .002 .498 . .071 .029
QR .414 .403 .143 .006 .071 . .000
CR .452 .334 .045 .008 .029 .000 .
N NETINCOME
31 31 31 31 31 31 31
CA 31 31 31 31 31 31 31
CL 31 31 31 31 31 31 31
WC 31 31 31 31 31 31 31
DR 31 31 31 31 31 31 31
QR 31 31 31 31 31 31 31
CR 31 31 31 31 31 31 31
This table presents the correlation and significance between the variables net
income, CA, CL, WC, DR, QR, CR by matrix representation.
Model Summary
This is the following output of greatest interest is R Square.
Explanation
Multiple R .605(a) R = square root of R2
R Square .366 R2
Adjusted R Square .239 Adjusted R2 used if more than one x variable
This is the sample estimate of the standard deviation of the
Standard Error 47452486.75859
error u
Observations 31 Number of observations used in the regression (n)
The above gives the overall goodness-of-fit measures:
R2 = 0.366
Correlation between y and y-hat is 0.366 (when squared gives 0.366).
Adjusted R2 = R2 - (1-R2 )*(k-1)/(n-k) =0.239
R2 = 0.366 means that 36.6% of the variation of NETINCOME can be explained by the
regressors CA, WC, DR, QR, and CR.

12. INTERPRET ANOVA TABLE
An ANOVA table is given. This is often skipped.
df SS MS F Significance F
Regression 5 32486832573223480 6497366514644690 2.885 0.034(a)
Residual 25 56293462489355600 2251738499574224
Total 30 88780295062579000
The ANOVA (analysis of variance) table splits the sum of squares into its components.
Total sums of squares
= Residual (or error) sum of squares + Regression (or explained) sum of squares.
The column labeled F gives the overall F-test of H0: βi = 0 versus Ha: at least one of βi does not
equal zero. F = 2.885
The column labeled significance F has the associated P-value. Since 0.034 < 0.05, we reject H0
at significance level 0.05.
INTERPRET REGRESSION COEFFICIENTS TABLE
The regression output of most interest is the following table of coefficients and associated
output:
Coefficient St. error t Stat P-value Lower 95% Upper 95%
Intercept 22270965.80 29952516.092 0.744 0.464 -39417395.839 83959327.447
CA 0.090 0.029 3.142 0.004 0.031 0.149
WC 0.044 0.047 0.938 0.357 -0.053 0.142
DR -40844164.44 56981244.240 -0.717 0.480 -158199233.740 76510904.852
QR -42245774.55 38256908.829 -1.104 0.280 -121037353.198 36545804.088
CR 31910230.87 33546570.740 0.951 0.351 -37180224.878 101000686.625
a Dependent Variable: NETINCOME.
Let βj denote the population coefficient of the jth regressor (intercept, CA, WC, DR, QR and
CR). Then
• Column "Coefficient" gives the least squares estimates of βj.
• Column "Standard error" gives the standard errors (i.e.the estimated standard deviation)
of the least squares estimates bj of βj.
• Column "t Stat" gives the computed t-statistic for H0: βj = 0 against Ha: βj ≠ 0.

13. This is the coefficient divided by the standard error. It is compared to a t with (n-k)
degrees of freedom.
• Column "P-value" gives the p-value for test of H0: βj = 0 against Ha: βj ≠ 0..
This equals the Pr{|t| > t-Stat}where t is a t-distributed random variable with n-k degrees
of freedom and t-Stat is the computed value of the t-statistic given in the previous
column.
Note that this p-value is for a two-sided test. For a one-sided test divide this p-value by 2
(also checking the sign of the t-Stat).
• Columns "Lower 95%" and "Upper 95%" values define a 95% confidence interval for βj.
A simple summary of the above output is that the fitted line is
NETINCOME = 22270965.80 + 0.090 CA + .044 WC - 40844164.44 DR - 42245774.55 QR + 31910230.87 CR
CONFIDENCE INTERVALS FOR SLOPE COEFFICIENTS
95% confidence interval for slope coefficient CA is from output (0.031, 0 .149).
95% confidence interval for slope coefficient WC is from output (-0.053, 0.142).
95% confidence interval for slope coefficient DR is from output (-158199233.740, 76510904.852).
95% confidence interval for slope coefficient QR is from output (-121037353.198, 36545804.088).
95% confidence interval for slope coefficient CR is from output (-37180224.878, 101000686.625).
Excluded Variables(b)
Partial
Model Beta In t Sig. Correlation Collinearity Statistics
Tolerance
1 CL .(a) . . . .000
a Predictors in the Model: (Constant), CR, CA, WC, DR, QR
b Dependent Variable: NETINCOME

14. Recommendations & suggestions
Since R2 = 0.366. It means that 36.6% of the variation of NETINCOME can be
explained by the regressors CA, WC, DR, QR, and CR. So, it should take into
consideration.
Again since, fitted line is
NETINCOME = 22270965.80 + 0.090 CA + .044 WC - 40844164.44 DR -
42245774.55 QR + 31910230.87 CR.
So, we are recommending that current asset, working capital and current ratio
should be increased and debt ratio, quick ratio should be decreased to increase net
income in cement companies in Bangladesh.
We know,
And also coefficient of quick ratio is negative so inventories per unit liabilities
must be increased for increasing the value of net income of cement factories in
Bangladesh.
Conclusions
Based on this study it can be said that if cement companies in Bangladesh follow
the suggestion of this study then they will be more benefited and more successful
in their business.
References
Book Name:
Principles of Financial Management
Satish M. Inamdar
Sixth Edition, 2009
Search engine: www.google.com
Wikipedia
Company’s Annual Report: Dhaka Stock Exchange