Various analysis like-ratio analysis, vertical analysis, horizontal analysis and DuPont analysis were conducted for an in-depth assessment of the company's performance. Return on equity declined slightly over the years, but the company's EPS rose carefully and paid very consistent dividends to its shareholders.
Introduction
Objectives of the Report
Scope and Boundary
Reporting Data Coverage
Methodology
Company Profile
Nature of the Business
To facilitate power production, UAEL has signed a Power Purchase Agreement (PPA) with BPDB for a term of 15 years, as well as a gas supply agreement with Bakhrabad Gas Distribution Co.
Shareholding structure
Current Tax Liability
Going Concerned
FSA analyzes the UAEL balance sheet, income statement or cash flow to assess past performance, current financial condition or value. This FSA helps determine the company's potential to make a profit or generate cash flow in the future.
Major Financial Statement
Financial Statement Analysis Using Techniques
- Ratio Analysis
- Vertical Analysis
- Horizontal Analysis
- Dupont Analysis
And the higher percentage indicates that the company is efficiently clearing its debts and not missing any payments. When comparing the relative values of different companies, a larger ratio suggests that the company's stock is valuable.
Activity Ratio
- Inventory Turnover
- Days of Inventory on Hand
- Receivables Turnover
- Days of Sales Outstanding
- Payables Turnover
- Number of Days Payable
- Working Capital Turnover
- Fixed Asset Turnover
- Total Asset Turnover
- Current Ratio
- Quick Ratio
- Cash Ratio
- Defensive Interval
In 2021, UAEL receivables decreased, which directly affects the increase in accounts receivable turnover, which is good for the company. In amp; The increase in trade receivables in 2022 reduced the company's accounts receivable turnover ratio, which is not good for the company. Only in 2021 did it increase by 44.64. Again in the next year it fell over time because their cash flow was not good in a position.
This indicates that the company is generating a lower number of sales which reduces the working capital turnover. Therefore we can say that working capital turnover is decreasing from 2.94 to 2.29 over time, this is not a good indicator for UAEL. Here, UAEL fixed asset turnover decreased over time from .34 to .32, It is usually favorable if the ratio is greater than 1.
This is not good for company wealth because their revenue decreases over time, which means the company shows lower efficiency. This indicates that the company's current assets have decreased over time and the forecast has affected the current assets. This is not a good sign for UAEL as UAEL cash and cash equivalents have been declining over time.
And from 2021 to 2022, it increased from 0.49 to 1.72 over time as their cash and receivables increased over the period. That's not a good sign for the company, as UAEL cash and cash equivalents declined over time.
Solvency Ratio
- Debt to Equity
- Debt to Capital
- Debt to Assets
- Financial Leverage
- Interest Coverage
- Debt to EBITDA
- Fixed Charge Coverage
Therefore, the debt-to-capital ratio decreases over time, which is good for the UAEL. That is why UAEL's debt-to-asset ratio has been decreasing over the years, indicating the company's good standing. That's good for the company because the lower the leverage ratio, the easier it is to get a loan.
Their operating profit increases and interest payment decreases over time, which indicates the good position of this company. In the above scenario, UAEL debt to EBITDA declines over time, which is good for the company's valuation. Additionally, because the company is paying off its debt according to the timeline, the company has fully paid off its Int'l loan in 2020.
The FCCR, or Fixed Charge Coverage Ratio, conceptually determines how often UAEL could pay off its annual fixed charges, and when it is a debt covenant, it also determines the company's ability to obtain new debt from lenders or refinance existing debt. Due to the full payment of the international loan, the interest payment decreased, which was reflected in a higher funding ratio for the company. UAEL's five years of consistently higher fixed cost coverage year over year is a very good sign for the company.
Profitability Ratio
- Net Profit Margin
- Gross Profit Margin
- Operating Profit Margin
- Pretax Margin
- Return on Assets
- Operating Return on Assets
- Return on Total Capital
- Return on Equity
The most important reason for that was revenue increase and also the cost of sales decreased over time. In this analysis we can say that the overall impact is good for the company. Operating return on assets (ROA) is a measure of how much operating profit UAEL makes for every dollar invested in total assets.
EBIT, or earnings before interest and tax, is calculated as a percentage of total capital and is known as return on total capital (ROTC). In the above graphical scenario, UAEL's return on total capital increased over time from 0.17 to 0.21. And also, the assets increased during the year, which has a direct impact on the total capital.
An ultimately positive result on the return on total assets is good for the company. A company's profitability and the efficiency with which it earns that income is measured by its return on equity (ROE). But the UAEL return on equity fell, which is not good for the company as it directly affects net income.
Market Ratio
Book Value Per Share
P/E Ratio
Vertical Analysis
Statement of Profit or Loss (Vertical Analysis)
Administrative expenses increased over time due to increases in legal fees, board meeting fees and license and renewal fees. Financial Income: The Group was granted an inter-company loan with interest in 2018, so interest income was higher in 2018. This head includes interest income from any FDR investment, bank account and related party loans .
Borrowing Costs: This is the most important part of the business that mainly indicates the borrowing costs. Increased in 2019 2018 due to a higher exchange rate due to the payment of interest on the loan in USD. Exchange rate loss: According to our analysis, we found exchange rate fluctuations higher in 2018 and the final year 2022.
In 2018, there was interest income against an intercompany loan that incurs a large amount of tax expenses. According to the mentioned financial data, we found that the company's gross and net profits increased from 2018 to 2022 in a stable manner. In the light of the above analysis, we can say that due to the reduction in cost of sales and cost of finance, the company ensures its stable profit regardless.
Statement of Financial Position (Vertical Analysis)
Changes in the ratio are the result of calculated depreciation and total changes in the balance sheet total. Trade and other receivables: Increase significantly during the year due to increase in receivables from BPDB as the sole customer of the company. Generally, the increases happened due to outstanding BPDB amounts and they also decrease when the govt.
Due to an advance premium on the int'l loan, which was fully regulated in 2020 against full repayment of the loan, the relationship was cancelled. Due to the full payment of the international loan in 2020, the cash balance decreased compared to previous years. Due to having more liquid assets and receivables, its impact is higher in the two years 2019 and 2022.
Long-Term Loans: Loans decrease to 59% to 28% over the years from 2018 to 2020 due to regular payment of the outstanding loan and greatly decrease due to the international loan being paid in full in 2020. increases enormously in the years 2019 & 2020 due to the dividend to be paid to shareholder company United Energy Ltd. Due to the entire international loan paid in the year 2020, a significant part of the loans decreases.
Horizontal Analysis
Statement of Profit or Loss (Horizontal Analysis)
The administrative expenses include board meeting fees, legal expenses, fees and renewals, depreciation, etc. Finance Income: In the year 2018, UAEL had an interest bearing intra-group loan which was fully paid in 2019. Due to this, the finance income was higher in 2018 and other year's finance income was less than the comparative year, which shows a huge negative ratio.
This is the most important part of the company, which includes interest on loans and bank fees. Foreign exchange loss: Due to higher exchange rate fluctuation in base year 2018, foreign exchange loss was also higher compared to other years. But in 2022 because the exchange rate fluctuation was so high, the losses incurred during the base year 2018.
But in the years 2020 and 2021, the expenses were reversed due to the final calculation of the tax liability, which is claimed by the tax authority as zero. In this situation, we can see that the revenue has decreased over time, but the net profit has not decreased relative to the ratio, which is a good sign for UAEL.
Statement of Financial Position (Horizontal Analysis)
During these years, no planned maintenance of the Wartsila engines was carried out, because the capacity utilization of the factory also declined over the years. Trade and other receivables: Compared to the base year, there is a sharp increase due to the receivables from BPDB, as UAEL is the only customer. Heavily reduced due to the international loan premium, which was fully adjusted in 2020 based on the full repayment of the loan.
Receivable from Related Party: Significantly reduced with the base year 2018 due to the repayment of the related party loan. Total assets: Total assets increased by 5% in 2019 from the base year 2018 due to an increase in trade receivables and cash balances. But in 2020 it falls by 17% due to a decrease in cash balance and advance, deposits and prepayments; cash balances decreased dramatically due to the early settlement of the entire int'l loan.
Long Term Borrowing: Borrowing decreases over the years due to regular payment of the outstanding loan. But from 2020, it decreases tremendously with the comparison year 2018 due to Int’l Loan being fully paid in 2020. Current Borrowing: Borrowing decreases over the years due to regular payment of the outstanding loan.
Dupont Analysis
On the basis of the company's audit report, we can see that the capacity utilization or the plant factor falls relatively each subsequent year. At this point, to increase the shipment, the company should take action and appeal to their only customer BPDB for the demand. The management of the company should keep its inventory period as short as possible because a longer storage period can lead to goods that move slowly.
According to the trend study of United Ashuganj Energy Ltd. from its profit and loss account, we can see that in the year 2022, the company suffers a huge exchange rate loss due to the unstable state of the foreign exchange market. Thanks to the solvency ratio, the company is in good shape on all indicators that are reflected in the result. In terms of profitability, the company is on track with a net profit margin that has increased over the years, indicating that the company is better at turning revenue into actual profit.
At this stage, to increase the dispatch, the company must take steps to increase the demand for electricity production from BPDB. As per analysis, we can say that due to the decrease in the cost of sales and financing costs the company ensures its sustainable profit despite carrying foreign currency loss and less income than the comparative year. In the balance sheet, total assets and liabilities decreased due to the company paying its total outstanding international loan through early settlement in the year 2020.
