Download - ACT330, Final
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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“Depreciation Practice in Bangladesh”
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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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“Depreciation Practice in Bangladesh”
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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
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”Inventory Valuation Practice in Bangladesh”
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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”
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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”
ACT 330
“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: [email protected]
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
“The Report on Square Textiles Limited”
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
ACT 330
“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