Ratio Analysis of Bata shoe company financial statement

1. Ratio Analysis of Bata shoe company

3. INTRODUCTION
Bata Shoe Company is one of the largest companies not
only in Bangladesh but also in many other countries.
Bata Shoes is a large, family owned shoe
company based in Bermuda but currently
headquartered in
Lausanne, Switzerland , and operates 4 business units
worldwide – Bata Europe, Bata Emerging Markets,
Bata Branded Business and Bata North America. It has a
retail presence in over 50 countries and production
facilities in 26 countries. In its history the company has
sold more than 14 billion pairs of shoes.

4. Vission
• To make great shoes accessible to everyone .

5. Mission
• To help people look and feel good
• To be the customer’s destination of choice
• To attract and retain the best people
• To remain the most respected Footwear
Company

6. Current Ratio: The current ratio is a liquidity and efficiency ratio that
measures a firm's ability to pay off its short-term liabilities with
its current assets.
From the ratio we can see that in 2011 the maximum ratio is 1.47. so it is
the best among three year. And gradually 1.35 and 1.22.
Liquidity Ratio
Ratio 2011 2012 2013
Current Ratio 1.47 1.35 1.22
Quick Ratio 0.51 0.54 0.63
Cash Ratio 0.17 0.12 0.12

7. Quick Ratio: Quick Ratio is an indicator of company's
short-term liquidity. It measures the ability to use its
quick assets to pay its current liabilities. In 2011 the ratio
is lower than 1:1 that means in this year the current
liabilities or short term loans are high. Gradually in 2012
and 2013 the ratio is increasing.
Cash Ratio: Cash Ratio calculator measures the ability to
use its cash and cash equivalents to pay its current
liabilities, an indicator of company's short-term liquidity.
A cash ratio of 0.5:1 or higher is preferred. In the three
year the ratio is below average that means the company
is less unable to pay its current liabilities.

8. Efficiency or activity ratio
2011 2012 2013
Accounts receivable turnover 2.1 3.1 4.8
Average collection period 171.1 117.9 74.9
Inventory turnover 2.4 2.5 2.0
Inventory processing period 147.5 144.1 2.2
Accounts payable turnover 10.5 12.1 9.3
payables payment period 34.4 29.7 38.7
Total asset turnover 1.9 1.9 1.7
current asset turnover 0.99 1.05 7.53
fixed asset turnover 7.8 7.3 69.1
equity turnover 4.3 4.0 3.5

9. Accounts receivable turnover: Receivables Turnover Ratio is
one of the efficiency ratios and measures the number of times
receivables are collected, on average, during the fiscal year.
Bata Company’s accounts receivable turnover ratio is
increasing gradually. In year 2011 the ratio was 2.1 next year
3.1 then it reached to 4.8.
Average Collection Period: represents the average number of
days it takes the company to convert receivables into cash. Its
collection period is not in good position. In 2011 the day was
171 then 117 next year it was 74.9 days. It was decreasing
that means acceptable.
Inventory Turnover Ratio: is one of the efficiency ratios and
measures the number of times, on average, the inventory is
sold and replaced during the fiscal year. Low inventory
turnover ratio is a signal of inefficiency. Bata Company’s ratio
is high in every year that means it is not in good position. But
in 2013 the ratio was less than others two years.

10. • Accounts payable turnover: A short-term liquidity measure used to
quantify the rate at which a company pays off its suppliers. Accounts
payable turnover ratio is calculated by taking the total purchases made
from suppliers and dividing it by the average accounts payable amount
during the same period. During three year the ratio was not fixed. It
was 10.5 then 12.5 and in 2013 it was 9.3.
•
Payable payments period: examines the relationship between credit
purchases and payments for them. Accounts payable payment period
measures the average number of days it takes an entity to pay its
suppliers.in year 2011 the day was 34.4 days next year 29.7 next year
was 38.7 days.
• Current asset turnover ratio: The asset turnover ratio is an efficiency
ratio that measures a company's ability to generate sales from its
assets by comparing net sales with average total assets. In 2011 and
2013 the ratio is 1.9 which is favorable than 2013, because the ratio of
2013 is 1.7.

11. Current assets turnover: it shows the relationship
between net sells and current assets. In 2011 and 2012
the ratio is not favorable but the higher one 7.5 which is
in 2013 is favorable.
Fixed asset turnover: Is an activity ratio that measures
how successfully a company utilizing its fixed assets in
generating revenue. In 2011 and 2012 the ratio is under
control but in the following year the ratio is not stable.
Equity turnover: is a ratio use to measure a company’s
financial leverage, calculated by dividing a company’s
total liabilities by its stockholders equity. In general
higher equity ratio are typically favorable for companies.
All three years are stable.

12. Debt ratio: it is a solvency ratio that a firms total
liabilities as a percentage of its total assets. A lower
debt ratio usually implies a more stable business. Here
.50 is reasonable ratio. It is not exactly appropriate but
in all three years ratios are around .50 which is good.
Solvency of leverage ratio
2011 2012 2013
Debt ratio 0.56 0.53 0.51

13. Gross profit margin: is a profitability ratio that calculates the
percentage of sales that exceed the cost of goods sold. 2013 is
more favorable than other two years.
Profitability ratio
2011 2012 2013
Gross profit margin 0.36 0.36 0.38
operating profit margin 0.13 0.14 0.15
net profit margin 0.09 0.09 0.10
return on total asset 0.16 0.17 0.18
return on equity 4.24 4.91 5.94

14. Operating profit margin: it is known as the
operating margin ratio. It is a profitability ratio that
measures what percentage of total revenues is
made up by operating income. Here the
comparison happens between same level
companies.
Net profit Margin: the net profit margin is the
percentage of revenue remaining after all operating
expense, interest, taxes and preferred stock
dividend.

15. Return on total assets: the return on assets ratio
often called the return on total assets. It is a
profitability ratio that measures the net income
produce by total assets during a period by
comparing net income to the average total assets.
In 2013 the ratio .18 which better than other two
years.
Return on Equity: it is a profitability ratio that
measures the ability of a firm to generate profits
from its shareholders investments in the company.
In 2013 the ratio 5.94 which better than other two
years.