Analysis of Credit-Strength of Cement Industry in Bangladesh

Abstract

In this study it has been initiated to find out the credit strength and financial performance of cement industries in Bangladesh through investigating the financial report for the period from 2007 to 2011. Financial ratios are employed to measure the Liquidity (Working capital to Total Assets), Profitability (Retained Earnings to Total Assets), Efficiency (Earnings before Interest and Taxes to Total Assets), Volatility (Market Value of Equity to Book Value of Total Liabilities) and Total Asset Turnover analysis (Sales to Total Assets). For analyzing, the credit strength of the cement industry in Bangladesh, a renowned model of predicting credit strength named “Altman Z Score Model" has been used. The collected data are also analyzed by using statistical tool. The study has found that the cement companies in Bangladesh are mostly on financial Distress Position because the sample industry held about 48% over the last 5 years where about 32% of the companies are in the Grey Zone and only 20% of the companies are in Safe Position. So, the credit strength of cement industry in Bangladesh is far behind of its landmark.