Financial Ratios on Aftab Auto

Chapter-01: Introduction and Methodology

1: Introduction

The most significant reason of doing a financial analysis is to satisfy current or prospect investors or stock holders. So they understand the position of the company in the market and achieve full satisfaction and invest on the company. However our purpose for this project is to analyze financial statements and show the significant change in company’s performance over the last 5 years period. Generally financial analysis of financial statements involves generating different sort of ratios such as liquidity ratios, asset management ratios, debt management ratios, profitability ratios, and market value ratios. As we mentioned earlier, figuring out the company’s position is one of the most important purpose of doing financial analysis. Therefore, maneuvering these entire ratios will certainly give us a scenario of the company’s current position in the market. By comparing with the industry average, these ratios can indicate whether the company is doing better or bad in the market. So it is very important for financial managers to analyze financial statements before making any financial decision for the company, because only this way they will figure out the intrinsic difference of their market value of shares with the book value per share. Eventually they will be able to find out the change between book value and market value of share, and rectify if necessary. In order to predict free cash flow, future earnings, and dividends, analyzing financial statements is very important, especially from the investor’s point of view. That is how investor’s usually forecast the future return and gets inspiration or trust to invest on the company.

The main company that we are performing financial analysis is on Aftab Motors LTD. Since our major focus is to compare two companies’ financial performances over time, so we have selected Atlas Bangladesh LTD as the rival company of Aftab Motors LTD. According to the...