Square Textiles Limited

Term Project

Course: ACT 330Date: 12th April, 2009

Prepared For:

Riyashad Ahmed

Prepared By:

NAME ID SEC

Fahmida Khanam 031-309-020 06

Maria Tabassum 051-391-030 06

Tasmia Alam 061-261-030 07

Md. Nazmul Islam 062-672-020 06

Date: April 12, 2009.

To

Riyashad Ahmed

School of Business

North South University

Dear Sir,

We are submitting the term project as a partial requirement of the course, Intermediate

Accounting. We have tried to come up with a vivid picture of the Square Textiles Ltd.

We have given our best effort in reaching this far. We do hope that our effort will not go

in vain.

We would thank you for your help and guidance for the completion of the project.

Thank you.

Sincerely yours,

NAME ID SEC

Fahmida Khanam 031-309-020 06

Maria Tabassum 051-391-030 06

Tasmia Alam 061-261-030 07

Md. Nazmul Islam 062-672-020 06

LETTER OF TRANSMITTAL

We would like to take this opportunity to thank our faculty Mr. Riyashad Ahmed for

providing us with the necessary help and guideline through out the whole duration of the

term project. His unquestioned dedication towards helping us was a big motivating factor

for our work. His technical instruction helps us to search out useful information from

internet and compiled the project properly. Now we would like to show our gratitude

towards him.

We are as a group member everybody working together to make our term project. That’s

why thanks every one for co-operation

ACKNOWLEDGEMENT

Particulars Page No.

Depreciation Practice in Bangladesh1-4

Inventory Valuation Practice in Bangladesh

5-7

The Report on Square Textiles Ltd.

Briefly Introduction 8

Recent news articles8-9

A. Background 9-11

B. Income Statement 11-12

C. Statement of Retained Earnings 13

D. Balance Sheet: 14-16

G. Notes to the Statements16

Conclusion16

Table of Contents

In the first part of our term project, we have analyzed the depreciation practice and the

inventory valuation practice in Bangladesh. Very few studies are found on deprecation

method of our country. One of recent studies have done based on 100 listed companies in

Chittagong Stock exchange (CSE) and found that among 100 companies, most of the

companies use reducing method and the second common method is straight-line method.

Other 15% of the companies follow combination of both methods. It is actually done for

reducing income tax. In Bangladesh, most of companies use LIFO inventory method,

because it generates low tax.

In second part of the project, we have analyzed Square Textiles Ltd financial statement.

In this part, we have tried to come out the best observations which are related to the

questions that is give by our faculty. We have found that the inventories are valued at the

lower cost and net realized value. They are using straight- line depreciation method.

Overall, the performance is pretty good.

Abstract

Introduction: Annual charge of depreciation is regarded as an important accounting

practice in every business organization. It affects net income, assets value, income tax

and so on. Methods of calculating depreciation play a vital role in this regard.

Depreciation is a term used in accounting, economics and finance to spread the cost of an

asset over the span of several years. In simple words we can say that depreciation is the

reduction in the value of an asset due to usage, passage of time, wear and tear,

technological outdating or obsolescence, depletion, inadequacy, rot, rust, decay or other

such factors. There are different methods of providing for depreciation. Choosing a

particular method suited to the entity is a matter of discretion left with the management of

the entity. Different methods may be applied for different classes of assets of a certain

organization. For example machinery may be depreciated on straight-line method while

building may be depreciated on reducing balance method. However once a method of

depreciation is chosen for a certain class of assets, it is to be applied consistently year

after year until new method is required by a statute or necessary for compliance to any

accounting standard. In Bangladesh, most of companies (listed in the stock market)

follow BAS-16 and BAS-38 for recording depreciation. In this analysis, first of all, we

have built the concepts of depreciation and method of Deprecation and in later part, we

have analysis one of studies on depreciation practice in Bangladesh which is published by

Prof. Dr. Syed Md. Ather, FCMA, Farid Ahammad Sobhani and Abdul Hamid

Chowdhury in The Cost and Management, January-February, 2008

Literature View: In accounting, depreciation is a term used to describe any

method of attributing the historical or purchase cost of an asset across its useful life,

roughly corresponding to normal wear and tear. It is of most use when dealing with assets

of a short, fixed service life, and which is an example of applying the matching principle

per generally accepted accounting principles. Depreciation in accounting is often

mistakenly seen as a basis for recognizing impairment of an asset, but unexpected

changes in value, where seen as significant enough to account for, are handled through

write-downs or similar techniques which adjust the book value of the asset to reflect its

ACT 330

“Depreciation Practice in Bangladesh”1

current value. Therefore, it is important to recognize that depreciation, when used as a

technical accounting term, is the allocation of the historical cost of an asset across time

periods when the asset is employed to generate revenues. The use of depreciation affects

the financial statements and in some countries affects the taxes of companies and

individuals. The recording of depreciation will cause an expense to be recognized,

thereby lowering stated profits on the income statement, while the net value of the asset

(the portion of the historical cost of the asset that remains to provide future value to the

company) will decline on the balance sheet. Depreciation reported for accounting and tax

purposes may differ substantially. Depreciation and its related concept, amortization

(generally, the depreciation of intangible assets), are non-cash expenses. Neither

depreciation nor amortization will directly affect the cash flow of a company, as both are

accounting representations of expenses attributable to a given period.

Recording depreciation: Historical cost minus all depreciation expenses recognized

on the asset since purchase is called the book value. Depreciation is not taken out of these

assets directly. It is instead recorded in a contra asset account: an asset account with a

normal credit balance, typically called "accumulated depreciation". Balancing an asset

account with its corresponding accumulated depreciation account will result in the net

book value. Salvage value is the estimated value of the asset at the end of its useful life.

In this way, total depreciation for an asset will never exceed the estimated total cash

outlay (depreciable basis) for the asset. The exception to this is in many price-regulated

industries (public utilities) where salvage is estimated net of the cost of physically

removing the asset from service. (Decommissioning a nuclear power plant is a nontrivial

expense.)

Depreciation Method: A variety of depreciation methods can be used to allocate the

depreciable amount of an asset on a systematic basis over its useful life. These methods

include the straight-line method, the diminishing balance method and the units of

production method. According to BAS-16, the entity selects the method that most

closely reflects the expected pattern of consumption of the future economic benefits

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“Depreciation Practice in Bangladesh”

2

embodied in the asset. That method is applied consistently from period to period unless

there is a change in the expected pattern consumption of those future economic benefits.

Findings and Analysis: There are many researches conducted in the field of

depreciation. Most of the articles are concerned with the concerns of western countries. A

few studies are found available from Bangladesh perspectives on conceptual issues of

depreciation, and on the methods of depreciation. One of the studies was conducted

among 100 companies out of 211 listed companies of Chittagong Stock Exchange. The

companies were selected on random sampling method and the concerned officials of the

selected companies were asked different questions in the light of the research objectives

regarding adoption of accounting policies, British or American recording system,

computerized accounting system, software in accounts, depreciation methods in

calculating deprecation, IAS / BAS and disclosure of depreciation policies in the annual

reports. It is found from the survey that most of the listed companies of CSE follow

British accounting system (75% cases). The accounting system of all the companies is

reported to be computerized and followed accounting software in recording transactions,

analysis and preparation of statements. A good number of companies have developed

their own software (38% cases). The commonly used software by different companies is

Accord 3.5, Dream APS, MFG Pro, Exact ERP, J.D Edwards, iSLALA etc. The

accounting software packages are also reported to be used in calculation of depreciation

by the respective companies. It is revealed by the survey that all the companies follow

Depreciation Method Used in Bangladesh

64%

21%

15%

Reducing BalanceMethod

Straight Line Method

Both of the methods

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3

Main reasons behind the usage of the reducing balance and straight-line methods among

various methods of depreciation are reported to be:

a. Ease of calculation (100% cases)

b. Mostly used from a long time (85% cases)

c. Supported by International Accounting Standards (65% cases)

The following rates of depreciation are charged on the depreciable assets by the listed

companies, which are equally applicable to straight-line and reducing balance method:

a. Plant and Machinery (10% to 15%) 95% cases

b. Office equipment (10% to 20% 100% cases

c. Furniture and fixtures (10% to 15%) 90% cases

d. Transportation & vehicles (10% to 20%) 100% cases

e. Other assets (10% to 20%) 70% cases

Regarding following of IAS / BAS - 16 or IAS / BAS - 8 as to deprecation methods and

its proper disclosure in the annual reports, it is found that 75% of the listed companies

complied with them.

Conclusion: It is revealed from the study that reducing balance method is mostly

used in the CSE listed companies in Bangladesh. The reason lies on past record. But it is

also evident from the study that the trend of following deprecation is towards straight-line

method. Greene, Edward D., (1963) found a change of shifting from reducing balance

method to straight-line depreciation in the industrialized economy of the USA.

McFarland (1990) stated in his study that most of the US firms use straight-line

depreciation; some use accelerated depreciation. Now it is obvious that the straight-line

method of depreciation is widely used in the developing countries like the USA, Canada

and the UK (Tandon, B. N. et al, 1997). It is also expected that the starlight-line method

would be widely accepted by the listed companies in Bangladesh in near future.

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4

Inventory is the total amount of goods and materials contained in a store or factory at any

given time. Store or factory owners need to know the precise number of items on their

shelves and storage areas in order to place orders or control losses. Factory managers

need to know how many units of their products are available for customer orders.

Restaurants need to order more food based on their current supplies and menu needs. All

of these businesses rely on an inventory count to provide answers.

The word 'inventory' can refer to both the total amount of goods and the act of counting

them. Many companies take an inventory of their supplies on a regular basis in order to

avoid running out of popular items. Others take an inventory to insure the number of

items ordered matches the actual number of items counted physically. Shortages or

overages after an inventory can indicate a problem with theft (called 'shrinkage' in retail

circles) or inaccurate accounting practices.

Retail businesses which take frequent inventories may use a 'par' system based on the

results. The inventory itself may reveal 10 apples, 12 oranges and 8 bananas on the

produce shelf, for example. The preferred number of each item is listed on a 'par sheet', a

master list of all the items in the restaurant. If the par sheet calls for 20 apples, 15 oranges

and 10 bananas, then the manager knows to place an order for 10 apples, 3 oranges and 2

bananas to reach the par number. This same principle holds true for any other retail

business with a number of different product lines.

Companies also take an inventory every quarter in order to generate numbers for

financial reports and tax records. Ideally, most companies want to have just enough

inventories to meet current orders. Having too many products languishing in a warehouse

can make a company look less appealing to investors and potential customers. Quite often

a company will offer significant discounts if the inventory numbers are high and sales are

low. This is commonly seen in new car dealerships as the manufacturers release the next

year's models before the current vehicles on the lot have been sold. Furniture companies

ACT 330

”Inventory Valuation Practice in Bangladesh”

5

may also offer 'inventory reduction sales' in order to clear out their showrooms for newer

merchandise.

.First –In, First-Out

FIFO accounting is a common method for recording the value of inventory. It is

appropriate where there are many different batches of similar products. The method

presumes that the next item to be shipped will be the oldest of that type in the warehouse.

In practice, this usually reflects the underlying commercial substance of the transaction,

since many companies rotate their inventory (especially of perishable goods). This is still

not in contrast to LIFO because FIFO and LIFO are cost flow assumptions not product

flow assumptions.

In an economy of rising prices (during inflation), it is common for beginning companies

to use FIFO for reporting the value of merchandise to bolster their balance sheet. As the

older and cheaper goods are sold, the newer and more expensive goods remain as assets

on the company's books. Having the higher valued inventory and the lower cost of goods

sold on the company's financial statements may increase the chances of getting a loan.

However, as it prospers the company may switch to LIFO to reduce the amount of taxes

it pays to the government.

Last –In, Last-Out

In LIFO accounting, a historical method of recording the value of inventory, firm records

the last units purchased as the first units sold. LIFO accounting is in contrast to the

method FIFO accounting covered below.

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”Inventory Valuation Practice in Bangladesh”

6

Since prices generally rise over time because of inflation, this method records the sale of

the most expensive inventory first and thereby decreases profit and reduces taxes.

However, this method rarely reflects the physical flow of indistinguishable items.

LIFO valuation is permitted in the belief that an ongoing business does not realize an

economic profit solely from inflation. When prices are increasing, they must replace

inventory currently being sold with higher priced goods. LIFO better matches current

cost against current revenue. It also defers paying taxes on phantom income arising solely

from inflation. LIFO is attractive to business in that it delays a major detrimental effect of

inflation, namely higher taxes. However, in a very long run, both methods converge

Average Cost: 

This method is quite straightforward; it takes the weighted average of all units available

for sale during the accounting period and then uses that average cost to determine the

value of COGS and ending inventory.

Findings and Analysis:

In Bangladesh for instance, its Companies Act of 1994 has made provision for audit of

cost accounts by Cost and Management Accountants for the companies engaged in

production, distribution, marketing, transportation, processing, manufacturing, milling,

and extraction and mining activities. Weight average method is more widely use in

Bangladesh. In Bangladesh, 64.49% use weight average method. Using LIFO accounting

for inventory, a company generally reports lower net income and lower book value due to

the effects of inflation. In Bangladesh most of the companies use LIFO inventory method

because it’s generating low tax due to LIFO potential to skew inventory value; UK

GAAP and IAS have effectively banned LIFO inventory accounting.

In Bangladesh, now most of the factory and store use LIFO inventory method ,but using

LIFO inventory method have some disadvantage such as , it reduced

earning ,understanding inventory , poor buying habits caused by involuntary liquidations

.Which inventory method a company will use its depend on companies policy

ACT 330

”Inventory Valuation Practice in Bangladesh”7

Brief introduction:

Square textile is a top quality product at the least cost reaching and the lowest rungs

of the economic class of people in the country. This is an A category share. Last year

they give a good dividend than other company. They value their social obligations

and they owe their shareholders and strive for protection of their capital as well as

ensure highest return and growth of their assets. Their growth rate is always in better

position. The best compensation is to all the employees who constitute the back bone

of the management and operational strength of the company. So all this reason we

selected square textile limited.

Recent news articles:

1. Understanding: Square textile limited declared their cash dividend at the

rate of 25 percent and stock dividend (bonus share) at the rate of 20

percent for its shareholders. So their per share dividend 2.5 taka and their

face value per share is 10. bonus share is 20 for 100 normal share

2. Opinion: In our view companies financial position is good and their

overall financial condition is satisfactory.

3. Views:

The gross profit, net profit (before tax) and net profit (after tax) for the

year 2007 were taka 582.85 million, taka 411.12 million and taka

352.44 million respectively. And for the year 2006 the gross profit was

579.90 million, before tax was 403.97million and after tax was 348.83

million. So 2007 is in better position.

Net income rises to 1.04 percent during year 2007. The shareholders

equity increased by 14.09 percent while total assets increased by 11.62

ACT 330

“The Report on Square Textiles Limited”

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“The Report on Square Textiles Limited”

8

percent during the year under review over year 2007. So 2007 is in

better position.

The company contributed substantially to the foreign exchange reserve

of the country through its marketing operation during year 2007. This

amounted to taka 920.65 million.

For the year ended in year 2007 the EPS is 8.94 taka and in year 2006

EPS is 8.85 taka. So in year 2007 the EPS is quite better.

4. Recommendation: The gross profit margin of the company has an

increasing trend. It indicates that the manufacturing and selling unit of the

company is doing work effectively and efficiently. The increase may be

because of the manufacturing cost was low as the market of raw materials

remained stable throughout the year. EPS indicates the firm is quite

attractive and investors.

A. Background:

1. Company incorporated:

Square first ventured into the textile sector with the establishment of the

first unit of the Square Textile Ltd. in 1997. A year later the establishment

of the second unit followed. It has listed in Dhaka and Chittagong Stock

Exchange in year 2002.

Primary location: 48, Mohakhali C/A, Dhaka-1212, Bangladesh.

Phone: (880) -2 - 8827729-38 (10 lines)

Fax: (880) - 2 - 8828609, 8828768

E-mail: square@bangla.net

Factor: The Company’s factories are located at Saradaganj, Kashimpur

and Gazipur.

ACT 330

“The Report on Square Textiles Limited”9

2. The Nature of its business: The activities and operations of Square

Textile Ltd. are related with manufacturing and marketing of yarns. It

produces 100% Cotton Ring Spun Yarn for Hosiery. The Company owns

two spinning mills and a twisting mill for support their business. The

target market export oriented readymade garments industry.

Primary products: The products are listed in the following was:

Unit 1: Combed and Carded yarn from a count range of Ne. 10 to Ne. 80.

Unit 2: Combed Ring Yarn from a count range of Ne. 20 to Ne. 40.

3. Primary focus of the company:

Vision: their conception of business germinated from their vision which

sees it as a means to well being of the investors, stakeholders, employees

and members of the society at large by creating new wealth in the form of

goods and services that go to satisfy the wants of all of them without

disturbing and damaging the socio-ecological-economic balance of the

Mother Earth and the process of human civilization leading to peaceful co-

existence of all the living beings.

Mission: their mission is the pole star of their vision for maximization of

production of quality life saving products and services strictly on ethical

and moral standards at minimum cost to the society ensuring optimum

benefits to the consumers, the shareholders and other stakeholders.

Objective: to strive hard to optimize profit through conduction of

transparent business operations within the legal and social framework with

malice to none and justice for all in respective of gender disparity, creed or

religion or region.

To create productivity

ACT 330

“The Report on Square Textiles Limited”

10

To create more jobs with minimum investments

To be competitive in the internal as well as external market

To maximize export earning with minimum imported in-puts

To reduce the income gap between top and bottom categories of

employees

To promote corporate social responsibilities (CSR) amongst all

B. Income Statement

Income Statement is a financial statement that measures a company's financial

performance over a specific accounting period. Financial performance is assessed by

giving a summary of how the business incurs its revenues and expenses through both

operating and non-operating activities. It also shows the net profit or loss incurred over a

specific accounting period, typically over a fiscal quarter or year. Income statement is the

measures the success of enterprise operations for a given period of time.

1. This is not a consolidated statement. It is prepared only for Square Textile Ltd. No

subsidiaries or other branch of the company’s information is included in here.

2. This is a Multiple-step Income statement .Because

Single-Step Income Statement: In reporting revenues, gains, expenses and losses, a

format known as the single step income statement. In this statement just two groupings

exists revenues and expenses. The expression “single step” is derived from the single

subtraction necessary to arrive at net income. The format is shown as follow:

Revenues

Gains

Total Revenue

Expenses

Losses

Total Expenses

Net Income

ACT 330

“The Report on Square Textiles Limited”

11

Multiple-step Income Statement: This income statement recognizes a separation of

operating transactions from no operating transactions and matches costs and expenses

with related revenues. For example – “other revenues and gains” and “other expenses and

losses” these other categories include interest revenue and expenses, gains or losses from

sales of such items as investments and plant assets, and dividend received. The format is

also shown as follow:

Revenue

Cost of Goods Sold

Gross Profit

Gains

Losses

Other Expenses

Net Income

3. In the year 2007, there were no extraordinary items. However, in the year 2006,

there was fire explosion loss at Tk 14,663,944.

4. Profit Margin for 2006 and 2007 are shown the following table:

Year 2007 2006

Net Income 352,447,136 348,833,453

Sales 2,541,542,767 2,620,965,931

Profit Margin 13.87% 13.31%

5. For the year 2007, Square Textiles Limited earning per share was 8.94 taka

6. Tax rate for year 2007 and year2006 is shown in the following table:

Year 2007 2006

Provision for income tax 58,676,050 55,131,582

Net Income before tax 411,123,186 403,965,035

Tax Rate 14.27% 13.65%

ACT 330

“The Report on Square Textiles Limited”12

C. Statement of Retained Earnings:

Retained earnings refer to the portion of net income which is retained by the corporation

rather than distributed to its owners as dividends. Similarly, if the corporation makes a

loss, then that loss is retained and called variously retained losses, accumulated losses or

accumulated deficit. Retained earnings and losses are cumulative from year to year with

losses offsetting earnings.

Retained earnings are reported in the shareholders' equity section of the balance sheet.

Companies with net accumulated losses may refer to negative shareholders' equity as a

shareholders' deficit. A complete report of the retained earnings or retained losses is

presented in the Statement of retained earnings or Statement of retained losses.

1. Transferred form income statement

For the current year (2007) Square Textiles Ltd transferred Tk352, 447,136 from the

income statement

For the Prior year (2006) Square Textiles Ltd transferred Tk 348,833,453 from the

income statement

2. Total Retained Earnings reported in the Balance Sheet

For the current year (2007) total retained earnings reported was Tk 2,020,482,461.For the

current year (2006) total retained earnings reported was Tk 1,770,904,986.

ACT 330

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13

D. Balance Sheet:

1. Fixed asset, also known as property, plant, and equipment (PP&E), is a term

used in accountancy for assets and property which cannot easily be converted into

cash. Fixed Assets are items of property, plant and equipment engaged by a

business entity in the generation and expansion of revenue. According to

International Accounting Standard (IAS) 16, Fixed Assets are assets whose future

economic benefit is probable to flow into the entity, whose cost can be measured

reliably. Depreciation is simply put to be the expense generated by the use of an

asset. It is the wear and tear of an asset or diminution in the historical value owing

to usage. Further to this; it is the cost of the asset less any salvage value over its

estimated useful life. It is an expense because it is matched against the revenue

generated through the use of the same asset. Net book value of an asset is

basically the difference between the historical cost of that asset and it associated

depreciation. From the foregoing, it is apparent that in order to report a true and

fair position of the financial jurisprudence of an entity it is relatable to record and

report the value of fixed assets at its net book value.

The Net Book Value of the total fixed assets is viewed in the following table.

Year 2007 2006

Fixed Assets 1,573,559,049 1,702,906,421

Less: Accumulated. Deprecation (495,000,000) (585,948,697)

Net Book value of Fixed Assets 1,078,559,049 1,116,957,724

2. The company has issued total 39,433,370 classes of common stock in year 2007

which is worth of Tk 394,333,700. The Stock Par Value is Tk. 10.00. The

company can issued number of stock up to 60,566,630.

3. The company has unpaid taxes at the end of both year 2007 and year 2006 which

is stated in balance sheet as provision for income tax. Theses are Tk. 113,862,118

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“The Report on Square Textiles Limited”

14

and Tk. 55,186,068 respectively. These figures are different compare with provision

of income tax in income statement as it represents income tax on net income for the

period from Jan 1, 2007 to Dec 31, 2007. Unlike income statement, balance sheet

always shows last day of period, not whole year’s transaction. Provision income tax

of the company is calculated in the following way:

Year 2007 2006

Opening Balance 55,186,068 54,577,377Income Tax expenses for FY- 2005

- (54,522,892)

Current Year Provision 58,676,050 55,131,583Provision for Income Tax 113,862,118 55,186,068

4. There is no lease obligation for the company.

5. The company has Workers Profit Participation and Welfare Funds (W.P.P &

W.F.P) regulate as provision of Labour Law-2006 and it is payable to workers

which worth of Tk. 42,998,784 and Tk.26,752,901 in year 2007 and year 2006

respectively.

6. They have invested only in stocks and they noted it as investment-Long Term.

This represents investments in Shares of Square Yarns Lid, a subsidiary company

of Square Textiles Ltd. The company has 950,000 shares of Tk. 100 each.

7. They do not have any long-term debt but they have short-tern debts. it is shown in

the following table:

Item Banker Year 2007 Year 2006

Overdraft HSB & SCB Tk. 37,743,415 Tk. 45,251,318

Local Purchase Offer Bank Al-Falah 150,000,000 150,000,000

Revolving Loan SCB 200,000,000 200,000,000

Clean Import Loan HSBC 150,000,000 -

Total Short-term Loan Tk. 537,743,415 Tk. 395,251,318

ACT 330

“The Report on Square Textiles Limited”

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“The Report on Square Textiles Limited”

15

More over the company is financed by shares (in where Public is 31.24%, Sponsor is

53.94%, Institute 4.49 and Foreign 10.33%) and the short-term Loan. In addition, no

major refinancing is found in the statement.

G. Notes to the Statements:

1. Full disclosure principle makes notes of financial statement necessary to amplify

or explain the items present in the main body of the statements. I f the information

in the main body of the financial statements gives an incomplete picture of the

performance and position of the enterprises, additional information that is needed

to complete the picture should be included in the notes.

2. The subject of the first note of Square Textile Ltd is Establishment and Operation.

3. The inventories are stated as Stocks. The stocks consist of stock of raw material

and stock of spares.

4. The company is used the straight-line deprecation methods.

5. Any other footnotes that are unusual/ distinctive to this company are not found.

Conclusion:

At the end of the project, we conclude that the financial statements of Square Textile Ltd.

are prepared in accordance with BAS, give a true and fair view of the state of the

company’s affairs. They provide sufficient information which represents the status of the

company. There are no usual foot notes found in here. According to BAS (Bangladesh

Accounting Standards) and BFRS (Bangladesh Financial Reporting Standards, company

must disclosure every information and concepts so that reader can easily understand their

performance. The financial statement is organized very well and so it helps us to

understand their current and previous performance.

16

Square Textile Ltd2007 2006

Net Income 352,447,136

348,833,453

Sales 2,541,542,767

2,620,965,931

Profit Margin 13.87% 13.31%

2007 2006

Provision for income tax 58,676,050

55,131,582

Net Income before tax 411,123,186

403,965,035

Tax Rate 14.27% 13.65%

NBV of Fixed Assets

2007 2006

Fixed Assets 1,573,559,049 1,702,906,421

Accumulated Deprecation 495,000,000 585,948,697Net Book value of Fixed Assets 1,078,559,049 1,116,957,724

No of Authorized Stock 100,000,000

No. Issued Stock 39,433,370

Difference 60,566,630

References

Appendix

Ather, Dr, Syed Mohammed, Sobhani, F. Ahammed & Chowdhury, A. Hamid. (JAN- Feb 2008). Depreciation Methods of the Listed Companies in Bangladesh. The cost and Management, 11 – 15.

(2006). Bangladesh Accounting Standard (BAS) and Bangladesh Financial Reporting Standards (BEFRS) Framework, published by The institute of Chartered Accountants of Bangladesh

Kieso, Donald E., Weygandt, Jerry J. & Warfield, Terry D. (2004-2005). Intermediate Accounting. 11th Edition. John Wiley & Sons, Inc.

Tandon, B. N. et al (1997), Depreciation, A Handbook of Practical Auditing, published by S. Chand & Company Ltd., Ram Nagar, New Delhi-110 055, pp. 179-201.

Weygandt, Jerry J., Kieso, Donald E. & Kimmel, P.D. (2003-2004). Accounting Principles, 6th Edition. John Wiley & Sons, Inc.

Deprecation (2009 Mar 29), from http://wapedia.mobi/en/Depreciation

Income Statement (2009 Mar 30), from

http://www.investopedia.com/terms/incomestatement.asp

Company News (2009 Mar 24), from http://www.dsebd.org/news Archive-Square

Textile.htm

Company name: square textile (2009 Mar 24), from http://www.dsebd.org \Company

Information_Sqaure Textile.htm

Square textiles (2009 April 5), from http://www.square-bd.com/square textile