Financial Performance analysis of Navana CNG Limited ( A concern of Navana Group)

Welcome to the Presentation

Bangladesh University of Business & Technology (BUBT)

TOPIC: ANALYZING FINANCIAL PERFORMANCE OF NAVANA CNG

LTD.

PREPARED BYMohammad Imam Hossain

ID No: 10112301005Intake: 11th Program: EMBADepartment of Finance Bangladesh University of Business & Technology (BUBT)

Company ProfileNAVANA CNG Limited a sister concern of NAVANA GROUP was formed in 2004, and has quickly emerged itself as the leading CNG service provider of Bangladesh. Its years of experience are the standard setter of CNG industry.NAVANA CNG Limited is the sole distributor of world famous CNG and LPG conversion kit manufacturer LANDIRENZO s.p.a. Italy. NAVANA CNG Limited solely represents the renowned manufacturer of CNG Refueling Station Technology Safe s.r.l.At present NAVANA CNG Limited is running 8 numbers of CNG conversion workshop and 20 numbers of CNG refueling stations located as major cities. So far, Navana CNG Limited has sold more than 211 numbers of refueling stations all over Bangladesh, which is more than 60% market share in the industry. NAVANA CNG Limited is an unlisted company. All unlisted companies are required to complete certain procedures to get listing at Dhaka Stock Exchange (DSE).

Objectives of the Report1. General ObjectivesThe main key objective of the report is to partial fulfillment of MBA Program.

2. Specific ObjectivesThere are some specific objectives also. This areTo Analyze Financial Performance of NAVANA CNG Limited.To analyze the financial statement of NAVANA CNG Limited.To calculate the different financial ratios. To understand the implications in analyzing and interpreting the financial ratios.To identify the findings and raise possible recommendations for NAVANA CNG Ltd.

Analyzing the Financial performance of NAVANA CNG LIMITED by calculating different financial ratios Liquidity Ratios:1. Authorized Capital and Paid

up Capital2. Current ratio3. Net Working Capital Activity Turnover4. Fixed Asset Turnover5. Total Asset Turnover Debt Ratios6. Debt -total assets ratio7. Debt-Equity Ratio

Profitability Ratios

1. Gross Profit Margin2. Operating Profit

Margin3. Net Profit Margin4. Return on Investment5. ROA (Return on

Asset)6. ROE (Return on

Equity)7. ROA (Return on

Asset)8. EPS (Earning Per

Share)

Authorized Capital and Paid up Capital Year Authorized capital Paid Up Capital Reserve and Surplus

2007 200 51 123.04

2008 200 100 282.49

2009 500 300 327.16

2010 500 363 555

2011 500 436 747

Current Ratio

NAVANA CNG LTD.

Year Current Assets Current Liabilities Current Ratio

2007 440 206 2.14

2008 575 76 7.57

2009 466 196 2.38

2010 650 192 3.39

2011 892 235 3.80

Current Ratio

Graphical Presentation:

Net Working capital

Net Working Capital=Total Current Assets-Total Current Liabilities

NAVANA CNG LTD.

Year Current Assets Current Liabilities Net working Capital

2007 440 206 234

2008 575 76 499

2009 466 196 270

2010 650 192 458

2011 892 235 657

Net Working capital

Graphical Presentation

Fixed Asset Turnover

Fixed Asset Turnover=Sales/Net Fixed Asset

NAVANA CNG LTD.

Year Sales Net Fixed Assets Fixed Asset Turnover

2007 727 186 3.90

2008 984 287 3.42

2009 1236 587 2.10

2010 1368 548 2.50

2011 1392 576 2.42

Fixed Asset Turnover


Total Asset Turnover

NAVANA CNG LTD.

Year Sales Total Assets Total Asset Turnover

2007 727 627 1.16

2008 984 879 1.12

2009 1236 1094 1.12

2010 1368 1235 1.10

2011 1392 1506 0.92

Total Asset Turnover=Sales/Total Asset

Total Asset Turnover


Debt-Total Asset Ratio

Debt Ratio=Total liabilities/Total assets

NAVANA CNG LTD.

Year Total Liabilities Total Assets Debt Ratio

2007 452 627 0.72

2008 496 879 0.56

2009 467 1094 0.42

2010 317 1235 0.25

2011 323 1506 0.21

Debt-Total Asset Ratio


Debt-Equity Ratio

Debt-equity Ratio =Long -term debt/stockholder’s equity

NAVANA CNG LTD.

Year Long-term Debt Stockholders’ Equity Debt-equity Ratio

2007 452.50 174.04 260%

2008 497.23 382.49 130%

2009 464.09 627.16 74%

2010 321.3 918 35%

2011 319.41 1183 27%

Debt-Equity Ratio


Gross Profit Margin

Gross Profit Margin = (Sales-COGS)/Sales=Gross Profit/Sales X 100

NAVANA CNG LTD.

Year Gross Profit Sales Gross Profit Margin

2007 228 727 40.94%

2008 407 984 41.32%

2009 477 1236 38.58%

2010 601 1368 43.93%

2011 605 1392 43.44%

Gross Profit Margin


Operating Profit Margin

Operating Profit Margin=Operating Profit/Sales X 100

NAVANA CNG LTD.

Year Operating Profit Sales Operating Profit Margin

2007 113 727 15.43%

2008 209 984 21.18%

2009 245 1236 19.80%

2010 401 1368 29.31%

2011 403 1392 28.98%

Operating Profit Margin


Net Profit Margin

Net Profit Margin=Net Profit after Tax/Sales X 100

NAVANA CNG LTD.

Year Net Profit After Taxes Sales Net Profit Margin

2007 112 727 15.43%

2008 208 987 21.18%

2009 245 1236 19.80%

2010 291 1368 21.27%

2011 301 1392 21.62%

Net Profit Margin


Return on Investment

NAVANA CNG LTD.

Year Net Profit After Taxes Total Assets Return on Investment

2007 112 440 25.45%

2008 208 575 36.17%

2009 245 466 52.57%

2010 291 650 44.76%

2011 301 892 33.74%

Return on Investment=Net Profit after Tax/Total Assets X 100

Return on Investment


Return on Capital Employed

ROCE= Net profit after taxes/ Total capital employed X100

NAVANA CNG LTD.

Year Net Profit After Taxes Total Capital Employed Return on Capital employed

2007 112 627 17.90%

2008 208 879 23.72%

2009 245 1094 22.36%

2010 291 1235 23.56%

2011 301 1506 19.98%

Return on Capital Employed


Return on Equity

Return on Equity=Net Profit after Tax/stockholder's equity X 100

NAVANA CNG LTD.

Year Net Profit After Taxes Stockholders’ Equity Return on Equity

2007 112 174.04 64.42%

2008 208 382.49 54.50%

2009 245 627.16 39.01%

2010 291 918 31.70%

2011 301 1183 25.44%

Return on Equity


Earning Per Share

EPS= Earnings available for common stockholders/Number of Shares of common stock outstanding

NAVANA CNG LTD.

Year

Earnings available for

common stockholders

Number of Shares of common

stock outstanding Earning Per Share

2007 112000000 20000000 5.60

2008 208000000 20000000 10.40

2009 244661587 36300000 6.74

2010 290789036 36300000 8.01

2011 300882758 43560000 6.91

Earning Per Share


•Liquidity Ratios: •Net Working capital: The NWC of Navana CNG is highly satisfactory level of 2007 to 2011.•Current Ratios: The CR is positively increasing.•Activity Turnover •Fixed Asset Turnover: Navana CNG FAT is increasing decreasing trend it should be increase.•Total Asset Turnover: Total asset are not efficiently used to generate sales, so company should efficient to utilizing the company total assets.•Debt Ratios•Debt Ratio: It s shows greater indebtedness and high degree financial leverage to generate profit.•Debt-Equity Ratio: This indicates better condition. •Profitability Ratios•Gross Profit Margin: The cost of goods sold is efficiently manage by Navana CNG•Operating Profit Margin: The cost price effectiveness of the operation is positively increasing trends.•Net Profit Margin: Success to achieve the cost effectiveness of operations and has positive trends.•Return on Investment: It has increasing and decreasing trends so it should be done to positive by utilizing the company assets.• Return on Equity: Moderate level of ROE achieved from last five years. •Return on Capital Employed: The ROCE is better and has increasing trends.•Earnings per Share: They got very pessimistic EPS from Last years.

Interpretation

Ratio Analysis:Liquidity Ratios:

The net working capital (NWC) of NAVANA CNG is satisfactory position all the last five years from 2007 to 2011, because it showed a positive networking capital which indicates a huge liquidity reserve of the company.The short-term financial solvency of NAVANA CNG is strong.

Activity Ratios:

The capital turnover ratio of NAVANA CNG indicates that total capital was not efficiently managed and utilized throughout the period from 2007 to 2011.

The average collection period is shorter which may discourage the credit sales.

The fixed assets of NAVANA CNG are efficiently used to generate sales.

The total asset turnover ratio of NAVANA CNG indicates that, total assets are efficiently used to generate sales throughout the period from 2007 to 2011, as they are acceptable limit.

Findings

Debt Ratios:The debt ratio of NAVANA CNG indicates a little indebtedness and lower degree of financial risk, to generate profits during 2007 to 2011.NAVANA CNG has adequate earnings to pay its interest charges.

Profitability Ratios:

NAVANA CNG is in the better condition regarding the operating efficiency during the last five years as it has produced the acceptable operating profit margin.

NAVANA CNG has achieved an enough return on investment, which indicates the effective management in generating profits with its available assets.

NAVANA CNG achieved a highly satisfying return on capital employed which indicates the effective management in generating profits with its total capital employed during 2007-2011.

NAVANA CNG has got very optimistic Earning per Share (EPS) during 2007 to 2011.

Findings (Continued)

NAVANA CNG LTD is a sister concern of Navana Group is a trend better in the CNG Industry. The company is always trying for better environment friendly energy solution. Keeping that in mind the company is expanding its operation in the Welding rod and uPVC industry sector which the largest means for great achievement all over the country. This is a demand of time, being successful in this project will open a new window to save foreign currency. Getting listed DSE will bring this company closer to the mass people and clearer of its operation.

Conclusion

NAVANA CNG Limited can take the following recommendations into consideration:NAVANA CNG Limited can increase its current assets more by enhancing the accounts receivable and can decrease its current liabilities by reducing its bank overdraft and short term loan. The company can try to increase its quick assets like-cash, accounts receivable and marketable securities.It also can reduce inventory to improve its inventory turnover ratio.Company’s management should be more efficient in utilizing the company’s capital to generate sales.NAVANA CNG Limited is supposed to offer attractive credit policy to its customers by extending credit period from 60 days to 90 days.The company should try to utilize its fixed assets more efficiently to accelerate sales.The company’s management should be more efficient in utilizing the company’s total assets to generate sales. It should aim to achieve optimum capital structure by reducing debt capital as well as by increasing equity capital to finance its total assets.The company ought to enhance its earnings by accelerating its sales as well as by minimizing its operating costs in order to get adequate earnings.

Recommendation

Books:1. Lawrence J. Gitman “Principal of Managerial Finance”, 11th Edition (April 2004) Pearson edition Website: www.navanacng.comwww.navana.comAnnual Report: 1. Navana CNG Ltd., 20072. Navana CNG Ltd., 20093. Navana CNG Ltd., 2011

Bibliography

http://www.navanacng.com/

http://www.navana.com/

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