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188.8.131.52 Fixed Asset TurnoverFixed Asset Turnover Ratio calculates the value of revenue achieved per dollar of investment.The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-assetinvestments - specifically property, plant and equipment (PP&E) - net of depreciation. A higherratio indicates better asset management and utilization and vice versa.Fixed Asset Turnover = [Revenue/Net Fixed Asset]Fixed Asset TurnoverYEAR201020112012Revenue5,555,178,105.006,408,962,823.005,614,359,565.00Net fixed asset977,358,392.001,721,436,551.001,904,407,294.00Fixed Asset Turnover568.39%372.30%294.81%The fixed asset turnover was 568.39% in 2010. Then it continuously decreased drastically to372.30% in 2011 and 294.81% in 2012. The ratio started falling from 2011, and this trendcontinued till 2012.An unprecedented increase in fixed assets was responsible for this trend. While revenue onlyincreased by 15.37% from 2010 to 2011 and, fixed assets increased by 76.13% for the sameperiod and the same thing continues for 2012. A possible reason for the increasing value of fixedassets was raising inflation. Inflation rates rose from 5.43% in 2009 to 10.7% in 2011. ThisFida Hossain09204035Page 55
Financial Performance Analysis of Dhaka Bank Limitedmeant that the new assets bought and recorded from 2010-11 were recorded at a higher value,increasing the amount of fixed assets exponentially.184.108.40.206 Net Asset TurnoverThe net asset turnover ratio measures the ability of management to use the net assets of thebusiness to generate sales revenue. A well-managed business will be making the assets work hardfor the business by minimizing idle time for machines and equipment. Too high a ratio maysuggest over-trading, that is too much sales revenue with too little investment. Too high a ratiomay suggest under-trading and the inefficient management of resources.RevenueNet Asset Turnover =Net AssetNet Asset TurnoverYEAR201020112012Revenue5,555,178,105.006,408,962,823.005,614,359,565.00Net asset90,140,874,134.00105,037,213,825.00133,616,109,915.00Net Asset Turnover6.16%6.10%4.20%Net asset turnover was 6.16% in 2010. From 2011 onwards, it had been falling at different rates.It fell to 6.10% in 2011 and 4.20% in 2012. It fell in 2011 due to a greater percentage increase innet assets compared to revenue. In 2012 the ratio fell drastically because of significant increasein net assets as well as slight decrease in revenue.The downward trend of net asset turnover, which started from 2011 and continued till 2012, canbe explained by the increasing of net assets, the rate of which is substantially greater than the rateof growth in revenue. Rapidly growing fixed assets increased net assets, thus bringing down netasset turnover.Fida Hossain09204035Page 56
Financial Performance Analysis of Dhaka Bank Limited5.4.16 Return on AssetROA is an indicator of a company’s profitability. ROA is calculated by dividing a company’s netincome in a fiscal year by its total assets. It is known as a profitability or productivity ratio,because it provides information about the management's performance in using the assets of thesmall business to generate income. ROA can be used as a valuable tool to measure progressagainst predetermined internal goals, a certain competitor, or the overall industry. ROA is also