Chapter: 1

Introduction:

Real estate is the property, land, buildings, air rights above the land and underground rights
below the land. The term real estate means real, or physical, property. “Real” comes from the
Latin root res, or things. Others say it’s from the Latin word rex, meaning “royal,” since kings
used to own all land in their kingdoms. The U.S. Constitution initially restricted voting rights to
only owners of real estate.

Background of the Study:

Under MBA program a student must have to do a project by which students experience
practically. In a project students have to go for huge research and apply their theoretical
knowledge into the project work. This project enables a student for developing their analytical
skills. At the end of the day it reflects what they learned throughout the program change in the
life style of the people. We have prepared the project paper under the supervision of Mr.
Khairul Alom, Sr. Lecturer, Faculty of Business Administration, Southeast University. In this
regard, the project was selected to prepare report on the title fundamental performance
analysis of Real Estate Industry.”

Objectives of the Study:

BROAD:

The main objective of this study was to identify and assess the present financial position of Real
Estate Industry considering its market shares. The study was also attempted to evaluate the
prospects of financial growth market growth of the organization. The study broadly aimed at
analyzing the feasibility of the expansion project of Comparative Performance Analysis between
Real Estate Industry

SPECIFIC:

 To analyze the overall financial position of Real Estate Industry.

 To comparing the Real Estate Industry.

 To assess the quality of the brand from the viewpoint of users.

 To evaluate the current financial position of Real Estate Industry.

 To find out the current financial position of Real Estate Industry.

Scope of the project:

The project covers the topic Comparative Performance Analysis between Real Estate Industries.
To conduct a study on this topic we have gathered valuable information from Company
website, & Dhaka stock exchange website. We have also got some information from web sites
that are related to my topics. We have also collected much information from Security Exchange
Commission library.

➢ These are the leading real estate industries in Bangladesh and

➢ Information is available

Methodology:

Project design:

The nature of the study is evaluative one and it described different ratios of Real Estate Industry
in terms of financial position. This project report typically focused on ratio analysis but there is
some descriptive information too. It focused four Real Estate Industry financial position,
performance, current position etc.

Data sources:

This report is prepared mainly on the extensive use of secondary data available in annual
reports. Based on the data from the annual reports the overall project report is prepared. The
overall conceptual and theoretical framework has been explained as well as the how the data
are analyzed is explained below:

 The primary sources” are absent in this case.

 The secondary Sources “of data and the information are used to prepare this project
work.

Data collection:

 Annual Report of these companies.

 Website

 Various books, articles and compilations journals

Data analysis:

Financial Analysis based on the performance comparison has been done with ratio formulas,
and used to compare the performances of Real estate industries. Ratio analysis is presented in a
standard manner so that the calculations and interpretations might clear to all. The decision
criterion is based on the comparison of each Real Estate performance with the Industry
Average. The industry average is calculated on the basis of the average of average of the banks
that are collected as sample for the comparison of performance between four real estate
industries.

Limitation of the study:

Shortage of time period:

Time constraint would be the major limiting factor for the study. We had to complete this
report writing within a shorter period of time. So the time constraint of the study hindering the
course of vast area and time for preparing a report within the mentioned period is really
difficult.

Lack of sufficient well informed websites:

There are some lacks of information in financial statement (balance sheet and income
statement). We have to face many difficulties to collect this information.

• Organization has not provided all information needed to conduct study.

• Lack of experience partially.

• In many cases, updated information were not be available.

• In some cases, respondents did not provide needed information.

 Chapter 02

Company Profile

Rongdhanu Group

Rongdhanu Group is one of the largest corporations of Bangladesh. The Rongdhanu Group has
started its journey in 2008 as a real estate company. The aim of this company is to make a
significant contribution to the country development and self- sufficiency. Now the company
operates through these sections: Real Estate, Agro & Beverage, Mehedi Mart, Mehedi Food
Court, and CNG. It has extended its business quite rapidly than another group of companies.

Rongdhanu Housing & Real State is the Flag Ship of RONGDHANU Group. Today RONGDHANU
Group is providing to the rise of GDP of Bangladesh by strengthening the economy of the
country. Vision of Chairman and sincerity, devotion and hard work of all employees performed
a miracle. Capitalizing the vision of Chairman and qualified management team, 12 companies
today are operating successfully under the brand name of RONGDHANU. RONGDHANU has very
strong economic support and expertise which helps to exist the vision and achieve mission
successfully. RONGDHANU has one of the best qualified workforces in Bangladesh. Our aim is to
create a centre of excellence by hiring the best talents available and provide them continuous
advance training. We train and develop our people to adjust with the business demand in
national and international arenas.
Objectives of the Company

The main objective of the study is to find out the consumer attitudes towards Rongdhanu
Holdings Ltd Especially the objectives of the study are as follows:

► To reach the goals of organization in individual aspects & the company as a whole.

► Efficiency of the work force by employing their skills & abilities.

► Providing employees with proper standards of job satisfaction.

► Providing the organization with well trained & well motivated employees.

► Communicate the policies to all employees of Human Resource Management issue.

► The objective is to have a clear knowledge of planning, organization, leading & Controlling.

Organizational Structure

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 CHAPTER: 3 Ratio analyses

Liquidity Ratio:

Liquidity ratios are used to determine a company’s ability to meet its short-term debt
obligations. Investors often take a close look at liquidity ratios when performing fundamental
analysis on a firm. Since a company that is consistently having trouble meeting its short-term
debt is at a higher risk of bankruptcy, liquidity ratios are a good measure of whether a company
will be able to comfortably continue as a going concern.

A class of financial metrics that is used to determine the company's ability to pay off its
shortterms debts obligations. Generally, the higher the value of the ratio, the larger the margin
of safety that the company possesses to cover short-term debts.

Liquidity ratio, expresses a company's ability to repay short-term creditors out of its total cash.
The liquidity ratio is the result of dividing the total cash by short-term borrowings. It shows the
number of times short-term liabilities are covered by cash. If the value is greater than 1.00, it
means fully covered. The liquidity ratios are:

Current ratio:

The current ratio is the first of financial ratios that we will examine. As stated earlier, liquidity

TABLE: CURRENT RATIO OF Rongdhanu Real Estate Industry

CURRENT RATIO

Rongdhanu

2010 0.755

2011 2.685

2012 1.664

2013 1.834

2014 0.688

2015 2.13
 2016 3.21

2017 2.17

2018 2.37

2019 1.84

TABLE: CURRENT RATIO OF Rongdhanu Real Estate Industry

FORMULA: CURRENT RATIO = CURRENT ASSET / CURRENT LIABILITIES

Ratios measure a company’s ability to pay off its short-term debt using assets that can be easily
liquidated. In this case, the current ratio measures a company’s current assets against its
current liabilities. Generally, higher numbers are better, implying that the firm has a higher
amount of current assets when compared to current liabilities and should easily be able to pay
off its short-term debt.

If current liabilities are rising more rapidly than current asset, the current ratio will fall which
could spell trouble. Because the current ratio provides the best single indicator of the extent to
which the claims of short term creators are covered by assets that are expected to be
converted to cash fairly quickly. The lower ratio shows the liquidity position weak and the
higher ratio indicates the liquidity is strong.
Rongdhanu Group:

For 1 taka worth of current liabilities of Rongdhanu Group has 2010 to 2019 accordingly 0.755,
2.685, 1.664, 1.834, 0.688, 2.13, 3.21, 2.17,2.37 and 1.84 taka worth of current assets. This
ratio has increased from 2015 to 2017 then fall in 2018 and again fall down to 2019 and the
highest level in2016. The lower ratio value indicates the liquidity position weak and the higher
ratio indicates the liquidity is strong

Quick ratio:

The quick ratio, also known as the acid-test ratio, is a liquidity ratio that is more refined and
more stringent than the current ratio. Instead of using current assets in the numerator, the
quick ratio uses a figure that focuses on the most liquid assets. The main asset left out is
inventory, which can be hard to liquidate at market value in a timely fashion. The quick ratio is
more conservative than the current ratio and focuses on cash, short-term investments and
accounts receivable. Inventory typically is the least liquid of a firm’s current asset, so they are
the asset on which losses are most likely to occur in the event of a quick liquidation. Therefore
a measure of the firm’s ability to pay off short term obligations without relying on the sale of
inventories is important.

TABLE: QUICK RATIO OF Rongdhanu,

QUICK RATIO

RONGDHANU
GROUP

2010 0.282

2011 1.669

2012 0.893

2013 0.930

2014 0.251

2015 0.691

2016 1.033

2017 0.665
 2018 0.932

2019 0.443

FORMULA: QUICK RATIO =(CURRENT ASSETS – INVENTORIES)/ CURRENT LIABILITIES

Rongdhanu Group:

The ratio value from 2010 to 2019 is accordingly 0.282, 1.669, 0.893,930, 0.251, 0.691, 1.033,
0.665, 0.932 and 0.443. The ratio value indicates there is a high variability. In 2014 the ratio
value is lowest that is 0.251 and in 2011 the ratio value is highest that is 1.669

The graph shows from 2014 and 2019 variability is low and from 2011 to 2016 variability is high.

revenue both in current period and in future period. Asset management ratios are:

Inventory turnover ratio:

The inventory turnover ratio is one of the most important financial ratios. Of all the asset
management ratios, it gives the business owner some of the most important financial
information.

The inventory turnover ratio measures the efficiency of the business in managing and selling its
inventory. This ratio gauges the liquidity of the firm's inventory. It also helps the business
owner determine how they can increase their sales through inventory control.

Generally, a high inventory ratio means that the company is efficiently managing and selling its
inventory. The faster the inventory sells the fewer funds the company has tied up. Companies
have to be careful if they have a high inventory turnover as they are subject to stock outs.

If a company has a low inventory turnover ratio, then there is a risk they are holding obsolete
inventory which is difficult to sell. This may eat in to a company's profit. However, the company
may be holding a lot of inventory for legitimate reasons. They may be preparing for a holiday
season in the case of the retail industry or preparing for a strike, among other reasons

TABLE: INVENTORY TURNOVER RATIO OF RONGDHANU,

 INVENTORY TURNOVER RATIO

RONGDHANU

2010 1.656

2011 2.132

2012 2.765

2013 2.090

2014 1.342

2015 1.20

2016 1.219

2017 0.943

2018 0.492

2019 0.419

FORMULA: INVENTORY TURNOVER RATIO = COGS / INVENTORIES

Rongdhanu Group:

The ratio value from 2010 to 2019 is accordingly 1.656, 2.132, 2.765, 2.090, 1.342,1.20, 1.219,
0.943, 0.492 and .419. The ratio value indicates there is a high variability. In 2019 the ratio
value is lowest that is .419 and in 2012 the ratio value is highest that is 2.765.

Rongdhanu Group:
The ratio value from 2010 to 2019 is accordingly 1.656, 2.132, 2.765, 2.090, 1.342,1.20, 1.219,
0.943, 0.492 and .419. The ratio value indicates there is a high variability. In 2019 the ratio
value is lowest that is .419 and in 2012 the ratio value is highest that is 2.765.

Fixed asset turnover ratio:

The fixed asset turnover ratio measures the company's effectiveness in generating sales from its
investments in plant, property, and equipment. It is especially important for a manufacturing
firm that uses a lot of plant and equipment in its operations to calculate this ratio. The
denominator in the equation should be net of accumulated depreciation.

If the fixed asset turnover ratio is low as compared to the industry or past years of data for the
firm, it means that sales are low or the investment in plant and equipment is too high. This may
not be a serious problem if the company has just made an investment in fixed asset to
modernize, for example.

If the fixed asset turnover ratio is too high, then the business firm is likely operating over
capacity and needs to either increase its asset base (plant, property, equipment) to support its
sales or reduce its capacity.

TABLE: FIXED ASSET TURNOVER RATIO OF RONGDHANU GROUP

FIXED ASSET TURNOVER RATIO

RONGDHANU
GROUP

2010 0.559

2011 0.745

2012 0.679

2013 1.959
 2014 0.516

2015 0.750

2016 0.978

2017 0.485

2018 0.521

2019 0.441

FORMULA: FIXED ASSET TURNOVER RATIO = SALES / NET FIXED ASSETS

Total asset turnover ratio:

The total asset turnover ratio measures the ability of a company to use its assets to efficiently
generate sales. This ratio considers all assets, current and fixed. Those assets include fixed
assets, like plant and equipment, as well as inventory, accounts receivable, as well as any other
current assets. The lower the total asset turnover ratio (the lower the Times), as compared to
historical data for the firm and industry data, the more sluggish the firm's sales. This may
indicate a problem with one or more of the asset categories composing total assets - inventory,
receivables, or fixed assets. The small business owner should analyze the various asset classes
to determine in which current or fixed asset the problem lies. The problem could be in more
than one area of current or fixed assets

TABLE: TOTAL ASSET TURNOVER RATIO OF RONGDHANU GROUP,

TOTAL ASSET TURNOVER RATIO

RONGDHANU
GROUP

2010 0.360

2011 0.386
2012 0.463

2013 0.808

2014 0.344

2015 0.441

2016 0.531

2017 0.248

2018 0.267

2019 0.237

FORMULA: TOTAL ASSET TURNOVER RATIO = SALES / TOTAL ASSETS

FIGURE: TOTAL ASSET TURNOVER RATIO OF RONGDHANU GROUP

Rongdhanu Group:

The ratio value from 2010 to 2019 is accordingly 0.36, 0.38, 0.46, 0.80, 0.34, 0.44, 0.53, 0.24,
0.26 and 0.23. The ratio value from 2010 to 2019 indicates there is a low variability. In 2017 the
ratio value is lowest that is 0.24 and in 2013 the ratio value is highest that is 0.80..

Debt Management Ratio:

A ratio of a company's debt to its total financing. The debt management ratio measures how
much of a company's operations personal savings come from debt instead of other forms of
financing, such as stock o. The debt management ratio is one measure among many of a
company's risk and likelihood of default. The debt management ratio measures the firm's ability
to repay long-term debt by indicating the percentage of a company's asset that is provided via
debt.
A measure of the extent to which a firm uses borrowed funds to finance its operations. Owners
and creditors are interested in debt management ratios because the ratios indicate the
riskiness of the firm's position. Debt management ratios are:

Debt to total asset ratio:

The debt to total assets ratio is an indicator of financial leverage. It tells you the percentage of
total assets that were financed by creditors, liabilities, debt. Debt ratios measure the firm's
ability to repay long-term debt. It is a financial ratio that indicates the percentage of a
company's assets that are provided via debt. It is the ratio of total debt (the sum of current
liabilities and long-term liabilities) and total assets (the sum of current assets, fixed assets, and
other assets such as 'goodwill').

The higher the ratio, the greater risk will be associated with the firm's operation. In addition,
high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will lower
the firm's financial flexibility. Like all financial ratios, a company's debt ratio should be
compared with their industry average or other competing firms.

If the ratio is less than 0.5, most of the company's assets are financed through equity. If the
ratio is greater than 0.5, most of the company's assets are financed through debt. Companies
with high debt/asset ratios are said to be "highly leveraged," not highly liquid as stated above. A
company with a high debt ratio (highly leveraged) could be in danger if creditors start to
demand repayment of debt.

TABLE: DEBT TO TOTAL ASSET RATIO OF RONGDHANU GROUP

DEBT TO TOTAL ASSET RATIO

RONGDHANU
GROUP

2010 0.471
 2011 0.179

2012 0.223

2013 0.375

2014 0.483

2015 0.249

2016 0.185

2017 0.288

2018 0.328

2019 0.393

FORMULA: DEBT TO TOTAL ASSET RATIO = TOTAL LIABILITIES / TOTAL ASSETS

Time interest earned ratio:

The time interest earned (TIE) ratio measures the extent to which a firms earnings before
interest and ax (EBIT) also called net operating income, can decline before these earning are
unable to cover annual interest cost. Failure to meet this obligation can bring legal action by the
firm’s creditor

TABLE: TIME INTEREST EARNED RATIO OF RONGDHANU GROUP,

TIME INTEREST EARNED RATIO

 RONGDHANU
GROUP

2010 3.63

2011 3.64

2012 4.52

2013 8.07

2014 3.63

2015 1.94

2016 8.18

2017 4.19

2018 4.14

2019 2.02

FORMULA:TIME INTEREST EARNED RATIO = EBIT OR NET OPERATING INCOME / INTEREST

CHARGES OR FINANCE COST

Rongdhanu Group:

The ratio value from 2010 to 2019 is accordingly 3.63, 3.64, 4.52, 8.07, 3.63, 1.94, 8.18, 4.19.
4.14 and 2.02. The ratio value from 2010 to 2019 indicates there is a high variability over the
year. In 2019 the ratio value is 2.02 which is the lowest and in 2016 the ratio value is highest
that is 8.18.

Net profit margin ratio:

The profit margin is one of the most used profitability ratios. The profit margin refers to the
amount of profit that a company earns through sales. The profit margin ratio is broadly the
ratio of profit to total sales times one hundred percent. The higher the profit margin, the more
profit a company earns on each sale. The profit margin is mostly used for internal comparison.
It is difficult to accurately compare the net profit ratio for different entities. A low profit margin
indicates a low margin of safety and a higher risk that a decline in sales will erase profits and
result in a net loss or a negative margin.

TABLE: NET PROFIT MARGIN RATIO OF RONGDHANU GROUP,

 NET PROFIT MARGIN RATIO

RONGDHANU
GROUP

2010 0.077

2011 0.157

2012 0.180

2013 0.073

2014 0.008

2015 0.050

2016 0.158

2017 0.153

2018 0.146

2019 0.135

FORMULA: NET PROFIT ARGIN RATIO = NET PROFIT / SALES

Rongdhanu Group:

The ratio value from 2010 to 2019 is accordingly 7.7%, 15.7%, 18%, 7.3 %, 0.8%,5%, 15.8%,
15.3%, 14.6%, and 13.5%. From 2010 to 2019 the ratio value indicates the percentages of profit
that Rongdhanu Group earns through sales. It measure lower risk and high margin of safety. In
2014 profit margin ratio 0.8% indicates a low margin of safety and a higher risk that a decline in
sales will erase profits and result in a net loss or a negative margin.

The graph shows from 2010 to 2019 they earn profit and in 2014 earn fewer profit margins.

Return of total asset (ROA) ratio:

The Return on Assets ratio is an important profitability ratio because it measures the efficiency
with which the company is managing its investment in assets and using them to generate profit.
It measures the amount of profit earned relative to the firm's level of investment in total assets.
It is also a measure of how much the company relies on assets to generate profit. The return on
assets ratio is related to the asset management category of financial ratios.

The higher the percentage is better, because that means the company is doing a good job using
its assets to generate sales.

TABLE: RETURN ON TOTAL ASSET (ROA) OF RONGDHANU GROUP,

RETURN ON TOTAL ASSET(ROA)

RONGDHANU
GROUP

2010 0.027

2011 0.060

2012 0.083

2013 0.059

2014 0.002

2015 0.224

2016 0.084

2017 0.038

2018 0.039

2019 0.032

FORMULA: RETURN ON TOTAL ASSET (ROA) = NET PROFIT AFTER TAX OR NET INCOME /
TOTAL ASSETS

Rongdhanu Group:

The ratio value from 2010 to 2019 is accordingly 2.7%, 6%, 8.3%, 5.9%,0.2%, 22.4%, 8.4%, 3.8%,
3.9% and 3.2%. From 2009 to 2019 the ratio value indicates the percentage of taka is earned on
every 100 taka assets The highest ratio value is 22.4% in 2015 that indicate highest return on
asset.
 The graph shows from 2010 to 2019 Rongdhanu Group earn % of taka is earned on every 100
taka assets. It also measure high safety and lower risk.

Return on equity (ROE) ratio:

The Return on Equity ratio is perhaps the most important of all the financial ratios to investors
in the company. It measures the return on the money the investors have put into the company.
This is the ratio potential investors look at when deciding whether or not to invest in the
company.

The return on equity (ROE) measures profitability related to ownership. It measures a firm's
efficiency at generating profits from every unit of the shareholders' equity.. The higher the
percentage is better, with some exceptions, as it shows that the company is doing a good job
using the investors' money. ROEs between 15 percent and 20 percent are generally considered
good. The ROE is equal to the net income divided by the shareholders’ equity.

TABLE: RETURN ON EQUITY (ROE) OF RONGDHANU GROUP,

RTURN ON EQUITY (ROE)

YEAR RONGDHANU
GROUP

2010 0.0528

2011 0.074

2012 0.107

2013 0.051

2014 0.005

2015 0.029

2016 0.103

2017 0.053

2018 0.058

2019 0.053

FORMULA: RTURN ON EQUITY (ROE) = NET INCOME / TOTAL SHAREHOLDERS

EQUITY.

Rongdhanu Holdings Ltd.:

The ratio value from 2010 to 2019 is accordingly 5.28%, 7.4%, 10.7%, 5.1%, 0.5%, 0.5%, 2.9%,
10.3%, 5.3%,5.8% and 5.3%. From 2010 to 2019 the ratio value indicates the percentage of
taka is earned on every100 taka equity. The highest ratio value is 10.7% in 2012 that indicate
highest return on equity.

The graph shows from 2010 to 2019 Rongdhanu Group earn % of taka is earned on every 100
taka invested by the owners. . It also measure high safety and lower risk.

Earnings per share (EPS):

Earnings per share (EPS) are the dollar / Tk value of earnings per each outstanding share of a
company's common stock.

Earnings per share are generally considered to be the single most important variable in
determining a share's price. It is also a major component used to calculate the price-to-earnings
valuation ratio.

TABLE: EARNING PER SHARE (EPS) OF RONGDHANU GROUP

Earnings per share(EPS)

RONGDHANU
GROUP

2010 0.85

2011 7.71

2012 0.97

2013 1.57

2014 2.48

2015 12.23

2016 12.53

2017 12.03
 2018 11.61

2019 11.15

Rongdhanu Group:

Rongdhanu Group earned 2010 to 2019 accordingly 0.85, 7.71, 0.97, 7.1.57, 2.48, 12.23, 12.53,
12.03, 11.61, and 11.15 taka per share.