This report is based on the financial performance of information services network (isn) limited by lawjuris

This report is based on the financial performance of Information Services Network (ISN) Limited

Executive Summary The report entitled Information Technology Industry of Bangladesh: Analysis of the Financial Performance of “Information Services Network Limited for 2002-2006” mainly concentrates on the analysis of the annual reports of Information Services Network Limited from several different perspectives. The report includes a brief analysis of the state of the industry derived from comparison with the financial ratios of four other companies. The report consists of the vertical, horizontal and trend analysis of the Profit and Loss accounts as well as the Balance Sheet of Information Services Network Limited for the periods 2002-2006. The horizontal analysis of the Profit and Loss accounts show increase in net revenue, operating profit and net profit after tax for the period 2002-04 and 2005-06. However, the company made an operating loss in 2005 and was able to make only a small profit from other revenue sources. This was the smallest profit ever made and as a result they could not declare any dividend in that year. But they recovered well and in 2006 were able to declare a “good” dividend and retain some of the profits for future use. The vertical analysis shows a similar pattern because net profit as a percentage of net revenue increased in the period 2002-04 and 2005-06. The company in these years had a profit margin of around 20%, which is quite healthy. It further shows that other revenue was almost 20% of total revenue and was becoming an important source for the company. The trend analysis reveals that had a positive trend from 2002-2004 and after a difficult year in 2005, had recovered to almost their former state in 2006. The highest dividend was paid in 2006. The horizontal analysis of the Balance Sheet shows increases in both current and non-current assets and stockholders’ equity earlier, but falls in the year 2005. In 2006 all values increased from the previous year. The company shows a good liquidity as the amount of current assets is several times larger than the amount of current liabilities in all of the years analyzed. This is further seen from the vertical analysis. Stockholders’ equity as a percentage of net assets was in the range of 81%-84% in all years except 2005. The analysis further shows that the company is facing a problem of growing accounts receivables. The management should look into this problem and solve it before these turn into bad debts. The trend analysis shows that

total assets fell in the first four years but rose again in 2006. Total stockholders’ equity rose throughout the five years analyzed.

The ratio and industry analysis of Information Services Network Limited reveals that the financial performance is quite good compared to its competitors; however there is room for improvement if Information Services Network Limited is to become the market leader. Information Services Network Limited has a good liquidity; however the quality of accounts receivables is not as good as other companies. The company’s long term solvency ratios are also better than the industry average, which will definitely encourage future investment. The profitability ratios are where the company lacks behind the market. The low profits in 205 caused a loss in investor confidence and led to a fall in share prices. The company does have a good EPS in all years except 2005, in comparison to other companies the industry average. The market tests show that Information Services Network Limited had reached the industry average in almost all tests in 2006, indicating that they were competing for a position as the dominant player. This trend certainly shows that Information Services Network Limited is doing well and that it will attract new and old investors in years to come. Information Services Network Limited is one of the largest IT companies in Bangladesh. It was able to recover from a difficult position to become a strong competitor. However, if it wants to become the market leader, it would have to improve in certain aspects, including efficiency. The new management has been successful in cutting costs. They have a plan and are well organized. If they continue to be successful then, Information Services Network Limited has very high prospects.

Information Technology Industry of Bangladesh: Analysis of the Financial Performance of “Information Services Network Limited for 2002-2006” Introduction Origin of the report:

This report has been prepared to fulfill the partial requirement for the course Financial Accounting II (A202), for Mr. Md. Abdul Momen, Associate Professor, Institute of Business Administration.

Objectives: The objective of the report was to relate the accounting theories learnt in class to the context of a real world scenario to understand their practical implications . The purpose of the report was to study the financial reports of companies in the information technology industry and develop a valuable insight of the corporate accounting system and its practices. The main requirement was to obtain financial information of a company and then analyze and interpret the information to identify the strengths and weaknesses of the companies individually and with the industry. Scope: This report is based on the financial performance of Information Services Network (ISN) Limited for the years 2002-2006 through comparative income statements, comparative balance sheets and ratio analysis and compared to five other companies’ financial statements briefly. This report shows the vertical, horizontal and trend analysis of the company’s Profit & Loss Account and Balance Sheet for Five years. It also includes an analysis of four types of ratios liquidity ratio, equity or long-term solvency ratio, profitability tests and market tests. Finally there is a comparison of this company’s ratio with the industry average. The areas of concern for management, creditors and investors have been identified in the report. Methodology: The information required to prepare the report was obtained from the Annual Reports of Information Services Network (ISN) Limited which were available from the Dhaka Stock Exchange and from websites. The textbook “Accounting Principles” by Hermanson was used for reference and as a source for the different formulae used and analyzing the financial statements. Comparative Balance Sheet, Income Statement and Cash flow Statement of the company were prepared and used as the source of secondary data.

Limitations: In accomplishing this report, various limitations were faced, many of which were due to the nature of the “service” industry. 

Some conventional financial ratios, e.g. those including inventory, had to be excluded because of the nature of the industry. Net revenue had to be used instead of net sales for certain ratios.



Also the absence of preferred stock, ratios like times preferred dividends earned ratio had to be excluded.



Finally, the five companies that have been chosen may not represent the whole picture of the IT industry of Bangladesh, although it has been assumed to do so. To get a true image of the industry other non-listed companies have to taken into account.

Overview of Information Technology Industry of Bangladesh The Information Technology (IT) sector in Bangladesh has developed in to a form, in this last decade. Ever since Bangladesh was connected to the internet in 1996, this industry has been developing. But the real growth came in 2006 when Bangladesh was connected to the SEAME-WE-4 submarine cable. Connectivity speed increased and costs fell to some extent. It was during this time many companies began taking a real interest to develop and compete against each other in this sector. Currently the players in this industry are providing a range of services including, Software development, Web development, Networking solutions, Satellite Communication, Hardware and accessories sale and more. Recently a lot of companies are trying to setup Wi-Fi technology to make internet speeds faster and more accessible. Some companies are exporting software to countries like Germany, Spain and United States. Although the industry is still in its infant state, a lot of companies have invested in trying to develop the IT sector in Bangladesh and are competing with countries like India and Sri Lanka for international markets. India exports $12.5 billion worth of software every year, with a growth of almost 30%! Unfortunately Bangladesh cannot export even 1% of the amount India does.

The major problem in this industry is the lack of proper infrastructure. Bangladesh has to rely on a slow internet connection. Although now connected to a submarine cable, the costs of bandwidth are very high. It costs a local software firm Tk 62,500 a month for 512 kbps (kilobits per second) dedicated internet connection to Bangladesh Telegraph and Telephone Board (BTTB). But in India, firms pay the amount that is hardly Tk.4,500 for the same connection. High taxes on internet usage have also caused a hindrance in the development of the IT sector. The devaluation of the taka against the dollar every year does not improve the situation as bandwidth has to be brought in terms of dollars. Bangladesh also lacks a skilled labor force. Most computer and networking graduates leave the country in the hope of earning more in foreign countries. Most companies are not able to pay enough salary to these skilled people. Other problems include constant disruption of electricity and not enough support from the government. Bangladesh was supposed to be connected to a new submarine cable in early 2007. But not enough was done by the government to achieve this. Though all these problems exist, some companies have invested a lot of money and effort to setup this potential industry in Bangladesh. They believe that if they can show that this industry can bring a lot of foreign currency and help to develop the country, more people will invest and the industry can truly become a large source of employment and money. At the initial stage the private stakeholders are working with the government to setup a â&#x20AC;&#x153;silicon valleyâ&#x20AC;? in Bangladesh. Plans are also being made to setup a chip manufacturing factory in Bangladesh. This will greatly help in making networking cheaper and reduce the costs of hardware. A Danish IT expert who had visited Softexpo 2005 in Dhaka said: 'Bangladesh is a sleeping giant as far as the software outsourcing is concerned.' This shows how much Bangladesh can earn from developing this industry. The major stakeholders in the market are, Bangladesh Online, Agni Systems, BRAC Net, Information Services Network, and BDCOM. This report looks into the financial information of some of these companies. The first company to invest into IT was Information Services Network limited, who in 1996 started providing internet facilities to private consumers.

Overview of Information Services Network (ISN) Limited Information Services Network (ISN) Limited began its journey in 1995 as a pioneer in providing internet facilities to a growing demand. Bangladesh joined the net on June 6, 1996

through ISN Limited with the first ever 64 kbps VSAT transmitting and receiving data via a Hong Kong Gateway. This was the first private company to provide internet services in Bangladesh. Since then ISN limited has tried to provide the fastest, the most efficient and technologically sound service for its valued clients who are growing in numbers day by day. In the year 1997 and 1998, the company consolidated its operations in all areas especially in Internet and turned its system to achieve high professional standard. The year 1999 exhibited a significant advancement for its joint venture agreement with a foreign partner. In 2001, ISN invested funds to expand its services at Khulna by setting a branch ISP using own VSAT based satellite link, which has eventually provided a unique position for the company to render additional Internet Service coverage to the South Western population of the country. A new voice activated only phone based internet access service was introduced by the company in 2002. In 2003 it acquired its office and operation space, something which very few ISPs have been able to do. As with all businesses there have been some setbacks. In 2005 the company ended the year with the lowest ever profit. Although evasive measures were taken by the company, only partial success was possible. A number of problems including, the leaving of a senior member of the team in charge of software development, the devaluation of the taka with the dollar which meant higher bandwidth costs and the rising costs of energy along with power failures caused low profits and the company as a result was not able to pay any dividend that year. Another reason for not declaring dividend was that, the company wanted to create a fund to update its operations by installing fiber optic cables and become connected to the SEA-ME-WE-4 submarine cable. The company was able to come out of this setback and has not had to look back since then. The company has so far been successful to put together a star team of IT Specialists, Engineers, Customer Support and Marketing team who are serving this pioneer company round the clock to grow as one of the largest and most versatile IT company in the country. The company has also invested in a joint venture with a Sri Lankan company to form Golden Key â&#x20AC;&#x201C; ISN Limited, a company also working to provide quality internet services. ISN limited owns 51% of the share of this company. ISN limited also publishes a monthly IT related magazine called â&#x20AC;&#x153;PC World Bangladeshâ&#x20AC;?. It is published under the license of International Data Group (IDG) USA. PC World Bangladesh contains mostly the same articles as the

Award-winning US version and regional IT news and events. It was first published in June 1996.

ISN limited became a Public Limited company and its shares have been traded in Stock Exchange since 19th May, 2002. Currently 39% of the company is owned by Directors and Sponsors, 11% by the company and 50% by the public. The company has an authorized share capital of Tk. 100 million and has issued shares worth 71.1805 million. Its main sources of revenue come from providing bandwidth for both private and commercial use, web hosting and development and providing domain, software development and sales form PC World Bangladesh. In the future the company has planned to setup offices and a fully equipped installation in Chittagong. It would like to expand its services in Comilla and Sylhet. As soon as Voice over internet protocol (VoIP) is available to the private sector the company wishes to start its services. It is also working on Wi-MAX deployment and intends to provide the service as soon as a true industry standard version of it is available. In the software development sector they are in close contact with a German company. They are very optimistic to receive orders from them very soon. Opening a computer hardware based business wing is also under active consideration of the board. 3. Horizontal Analysis of Comparative Financial Statements of ISN Limited Horizontal analysis helps detect changes in a companyâ&#x20AC;&#x2122;s performance and highlight trend over several accounting years. It makes use of comparative financial statements, as shown below. Comparative financial statements present the same companyâ&#x20AC;&#x2122;s financial statements for two or more successive periods in side-by-side columns. Calculation of absolute currency changes and percentages are then done, and the trend compared by horizontal analysis. Below are the Profit & Loss Account and Balance sheet of ISN Limited for the years 2002-2003

Information Services Network (ISN) Limited Profit and Loss Account For the year ended, 31st December

Particulars

Dec 2002

Dec 2003

Taka

Increase or Decrease* Taka

Taka

Operating Revenue

36,145,210

38,790,710

2,645,500

7.32%

Operating Expenses

(14,962,020)

(20,113,313)

5,151,293

34.43%

21,183,190

18,677,397

2,505,793*

11.83%*

(14,969,271)

(16,250,888)

1,281,617

8.56%

(3,865)

0.00%

Amortization of Pre-operating Expenses

(51,035)

(51,037)

0.00%

Amortization of Share Issue Expenses

Gross Profit

Other Expenses Administrative Expenses (Annexure-1) Amortization of Preliminary Expenses

(303,602)

Total Other Expenses

(15,024,171)

(16,609,392)

1,585,221

10.55%

Operating Profit/Loss

6,159,019

2,068,005

4,091,014*

66.42%*

Other Income

3,740,836

8,380,214

4,639,378

124.02%

Net Profit before Tax for the year

9,899,855

10,448,219

548,364

5.54%

(1,890,199)

(604,750)

1,285,449*

68.01%*

Net Profit after Tax for the year

8,009,656

9,843,469

1,833,813

22.90%

Profit/(Loss) brought forward

3,634,079

1,669,783

1,964,296*

54.05%*

11,643,735

11,513,252

130,483*

1.12%*

Provision for Income Tax for the year

Tax Paid for previous year

(308,522)

11,643,735

11,204,730

439,005*

3.77%*

General Reserve

(1,000,000)

0.00%

Dividend Equalization Fund

(1,000,000)

0.00%

(500,000)

0.00%

(7,473,952)

(7,829,855)

355,903

4.76%

Appropriation:

Inflation And Currency Fluctuation Fund Proposed Dividend Dividend Distribution Tax @ 10% on proposed dividend

(782,986)

(8,612,841)

8,612,841

Balance transferred to Balance Sheet

1,669,783

91,889

1,577,894*

94.50%*

Earning Per Share (Par Value Tk. 10/-)

1.13

1.38

0.25

22.12%

Information Services Network (ISN) Limited Balance Sheet As at 31st December

Particulars

Dec 2002

Dec 2003

Taka

Increase or Decrease* Taka

Percentage

NET ASSETS Non-Current Assets Tangible Fixed Assets, Net of Accumulated Depreciation

34,129,852

39,882,378

5,752,526

16.85%

Preliminary Expenses

11,590

7,725

3,865*

33.35%*

Pre-Operational Revenue Expenses

51,037

0.00%

IPO-Expenses

2,428,820

2,125,218

303,602*

12.50%*

Investment(at cost)

1,132,000

522,000

610,000*

53.89%*

37,753,299

42,537,321

4,784,022

12.67%

14,071,354

16,076,935

2,005,581

14.25%

147,181

307,608

160,427

109.00%

Loans, Advances and Deposits

14,207,123

10,419,056

3,788,067*

26.66%*

Cash and Cash Equivalents

25,978,466

21,072,615

4,905,851*

18.88%*

Total Current Assets

54,404,124

47,876,214

6,527,910*

12.00%*

TOTAL ASSETS

92,157,423

90,413,535

1,743,888*

1.89%*

Accrued Expenses

3,233,171

1,102,022

2,131,149*

65.92%*

Liabilities for Finance

1,787,099

2,841,601

1,054,502

59.01%

Proposed Dividend

7,473,952

7,829,855

355,903

4.76%

Total Non-Current Assets

Current Assets Accounts Receivable Accrued Loan Interest

LIABILITES & STOCKHOLDERS EQUITY Current Liabilities and Provisions

Provision for Income Tax

4,312,918

2,367,668

1,945,250*

45.10%*

16,807,140

14,141,146

2,665,994*

15.86%*

71,180,500

0.00%

Retained Earnings - As per Profit and Loss Account

1,669,783

91,889

1,577,894*

94.50%*

General Reserve

1,000,000

2,000,000

1,000,000

100.00%

Dividend Equalization Fund

1,000,000

2,000,000

1,000,000

100.00%

500,000

1,000,000

500,000

100.00%

Stockholders Equity

75,350,283

76,272,389

922,106

1.22%

TOTAL LIABILITES & STOCKHOLDERS EQUITY

92,157,423

90,413,535

1,743,888*

1.89%*

Total Current Liabilities and Provisions

Financed By Share Capital

Inflation and Currency Fluctuation Fund

Profit & Loss Account: From the profit and loss account the following information could be deduced:



Gross profit rose by almost 12% due to the increase in operating revenue. However operating expenses rose by 34% and thus gross profit was not as high as it could have been.



A rise in operating expenses and other expenses meant that there was a 66% fall in operating profit. But due to a 124% increase in other income meant an income before tax increasing by almost 5.5%.



A reduction in provision for taxes allowed ISN Limited to achieve a net profit after tax of Tk.1,833,813 more than the previous year. This was almost 23% more.



An increase in proposed dividend led to a fall in the amount retained. Un-appropriated profit carried forward for 2003 were 95% less than the previous year.

Balance sheet: From the balance sheet the following information could be deduced: 

Non current assets increased by almost 13%, the main reason being an almost 17% increase in tangible fixed asset.



Although Non-Current assets rose, a large fall in current assets was responsible for the 2% fall in total assets.

ď&#x201A;§

Current assets fell by 12% indicating the company had a lower amount of business. This is further seen from the fall of almost 16% in current liabilities from 2002.

ď&#x201A;§

Un-appropriated earnings carried forward were lower than last year. But the doubling of reserves and funds meant the stockholders equity rose by 1.22%

Overall the company had a stable year. They focused on keeping the shareholders happy and also increasing their reserves and funds so that they were safer from any financial crisis. They were able to achieve their goals although they were not able to do as much business as the previous year. Below are the Profit & Loss Account and Balance sheet of ISN Limited for the years 2003-2004 Information Services Network (ISN) Limited Profit and Loss Account For the year ended, 31st December

Particulars

Dec 2003

Dec 2004

Taka

Increase or Decrease* Taka

Taka

Operating Revenue

38,790,710

40,715,579

1,924,869

4.96%

Operating Expenses

(20,113,313)

(20,485,637)

372,324

1.85%

18,677,397

20,229,942

1,552,545

8.31%

(16,250,888)

(17,057,427)

806,539

4.96%

(3,865)

0.00%

Gross Profit

Other Expenses Administrative Expenses (Annexure-1) Amortization of Preliminary Expenses Amortization of Pre-operating Expenses Amortization of Share Issue Expenses

(51,037)

(303,602)

0.00%

Total Other Expenses

(16,609,392)

(17,364,894)

755,502

4.55%

Operating Profit/Loss

2,068,005

2,865,048

797,043

38.54%

Other Income

8,380,214

8,273,293

106,921*

1.28%*

10,448,219

11,138,341

690,122

6.61%

Provision for Income Tax for the year

(604,750)

(863,365)

258,615

42.76%

Net Profit after Tax for the year

9,843,469

10,274,976

431,507

4.38%

Profit/(Loss) brought forward

1,669,783

91,889

1,577,894*

94.50%*

Net Profit before Tax for the year

Tax Paid for previous year

11,513,252

10,366,865

1,146,387*

9.96%*

(308,522)

(81,885)

226,637*

73.46%*

11,204,730

10,284,980

919,750*

8.21%*

Appropriation: General Reserve

(1,000,000)

Dividend Equalization Fund

(1,000,000)

(500,000)

Inflation And Currency Fluctuation Fund Proposed Dividend

(7,829,855)

(8,541,660)

711,805

9.09%

(782,986)

(854,166)

71,180

9.09%

(8,612,841)

(9,395,826)

782,985

9.09%

Balance transferred to Balance Sheet

91,889

889,154

797,265

867.64%

Earning Per Share (Par Value Tk. 10/-)

1.38

1.44

0.06

4.35%

Dividend Distribution Tax @ 10% on proposed dividend

Information Services Network (ISN) Limited Balance Sheet As at 31st December Particulars

Dec 2003

Dec 2004

Taka

Increase or Decrease* Taka

Percentage

NET ASSETS Non-Current Assets Tangible Fixed Assets, Net of Accumulated Depreciation Preliminary Expenses IPO-Expenses Investment(at cost) Total Non-Current Assets

39,882,378

43,338,794

3,456,416

8.67%

7,725

3,860

3,865*

50.03%*

2,125,218

1,821,616

303,602

14.29%*

522,000

102,000

420,000

80.46%*

42,537,321

45,266,270

2,728,949

6.42%

Current Assets Accounts Receivable

16,076,935

21,057,598

4,980,663

30.98%

307,608

482,474

174,866

56.85%

Loans, Advances and Deposits

10,419,056

8,824,923

1,594,133*

15.30%*

Cash and Cash Equivalents

21,072,615

15,974,391

5,098,224*

24.19%*

Total Current Assets

47,876,214

46,339,386

1,536,828*

3.21%*

TOTAL ASSETS

90,413,535

91,605,656

1,192,121

1.32%

Accrued Expenses

1,102,022

1,263,926

161,904

14.69%

Liabilities for Finance

2,841,601

3,389,582

547,981

19.28%

Proposed Dividend

7,829,855

8,541,660

711,805

9.09%

Provision for Income Tax

2,367,668

1,340,834

1,026,834*

43.37%*

14,141,146

14,536,002

394,856

2.79%

71,180,500

0.00%

91,889

889,154

797,265

867.64%

General Reserve

2,000,000

0.00%

Dividend Equalization Fund

2,000,000

0.00%

Inflation and Currency Fluctuation Fund

1,000,000

0.00%

Stockholders Equity

76,272,389

77,069,654

797,265

1.05%

TOTAL LIABILITES & STOCKHOLDERS EQUITY

90,413,535

91,605,656

1,192,121

1.32%

Accrued Loan Interest

LIABILITES & STOCKHOLDERS EQUITY Current Liabilities and Provisions

Total Current Liabilities and Provisions

Financed By Share Capital Retained Earnings - As per Profit and Loss Account

Profit & Loss Account: From the profit and loss account the following information could be deduced:



The first thing visible is that the company was able to control their operating expenses and thus was able to achieve an 8% rise in gross profit.



Operating profits rose by almost 39%, and with an almost identical amount of other income the company had an almost 7% increase in profit before tax.



Taxes increased this year by 43% and ISN limited had an overall increase of net profit after tax of Tk.431,507 from the previous year, which is a 4.5% rise.



Amount of proposed divided rose by 9% to Tk.8,541,660, which would definitely keep investors happy.



The company was able to carry forward an un-appropriated profit of Tk.889,154 which was 867% more than in 2003.

Balance sheet: From the balance sheet the following information could be deduced: 

Tangible fixed assets rose by almost 9% which caused an increase in total non-current assets by 6.42%.



Current assets fell again this year although accounts receivable had risen by almost 31%. Total assets rose by a mere 1% from the previous year.



Current liabilities rose by almost 3% which led to a fall in the working ratio.



As un-appropriated retained earnings were more this year, total stockholders rose 1%.

For ISN Limited 2004 was a year to advance. However they were not able to do this to the extent they wanted to. They were able to check their operating expenses and were able to increase net profit. Dividends also increased for the year as did the amount of profit carried forward as un-appropriated. But, they were not bale to progress enough in terms of increasing coverage and customer base. An increase in accounts receivables by 30% shows that they were not able to collect these assets for reinvesting. Below are the Profit & Loss Account and Balance sheet of ISN Limited for the years 2004-2005

Information Services Network (ISN) Limited Profit and Loss Account For the year ended, 31st December

Particulars

Dec 2004

Dec 2005

Increase or Decrease*

Taka

Operating Revenue

40,715,579

30,059,608

10,655,971*

26.17%*

Operating Expenses

(20,485,637)

(16,275,034)

4,210,603*

20.55%*

20,229,942

13,784,574

6,445,368*

31.86%*

(17,057,427)

(22,673,725)

5,616,298

32.93%

Amortization of Preliminary Expenses

(3,865)

(3,860)

0.13%*

Amortization of Share Issue Expenses

(303,602)

0.00%

Total Other Expenses

(17,364,894)

(22,981,187)

5,616,293

32.34%

Operating Profit/Loss

2,865,048

(9,196,613)

12,061,661*

420.99%*

Other Income

8,273,293

10,697,094

2,423,801

29.30%

11,138,341

1,500,481

9,637,860*

86.53%*

Gross Profit

Other Expenses Administrative Expenses (Annexure-1)

Net Profit before Tax for the year Provision for Income Tax for the year Net Profit after Tax for the year Profit/(Loss) brought forward

Tax Paid for previous year

(863,365)

10,274,976

1,500,481

8,774,495*

85.40%*

91,889

889,154

797,265

867.64%

10,366,865

2,389,635

7,977,230*

76.95%*

(81,885) 10,284,980

2,389,635

7,895,345*

76.77%*

Appropriation: Proposed Dividend Dividend Distribution Tax @ 10% on proposed dividend

(8,541,660)

(854,166)

(9,395,826)

Balance transferred to Balance Sheet

889,154

2,389,635

1,500,481

168.75%

Earning Per Share (Par Value Tk. 10/-)

1.44

0.21

1.23*

85.42%*

Information Services Network (ISN) Limited Balance Sheet

As at 31st December

Particulars

Dec 2004

Dec 2005

Taka

Increase or Decrease* Taka

Percentage

NET ASSETS Non-Current Assets Tangible Fixed Assets, Net of Accumulated Depreciation

43,338,794

Preliminary Expenses IPO-Expenses Investment(at cost) Total Non-Current Assets

3,860

38,170,435 -

5,168,359* -

11.93%* -

1,821,616

1,518,014

303,602*

16.67%*

102,000

0.00%

45,266,270

39,790,449

5,475,821*

12.10%*

21,057,598

23,541,171

2,483,573

11.79%

482,474

646,009

163,535

33.90%

Current Assets Accounts Receivable Accrued Loan Interest Accrued FDR Interest Loans, Advances and Deposits

128,385

8,824,923

8,101,914

723,009*

8.19%*

Cash and Cash Equivalents

15,974,391

11,269,704

4,704,687*

29.45%*

Total Current Assets

46,339,386

43,687,183

2,652,203*

5.72%*

TOTAL ASSETS

91,605,656

83,477,632

8,128,024*

8.87%*

Accrued Expenses

1,263,926

1,012,614

251,312*

19.88%*

Liabilities for Finance

3,389,582

2,554,049

835,533*

24.65%*

Proposed Dividend

8,541,660

Provision for Income Tax

1,340,834

0.00%

14,536,002

4,907,497

9,628,505*

66.24%*

71,180,500

0.00%

LIABILITES & STOCKHOLDERS EQUITY Current Liabilities and Provisions

Total Current Liabilities and Provisions

Financed By Share Capital

Retained Earnings - As per Profit and Loss Account

889,154

2,389,635

1,500,481

168.75%

General Reserve

2,000,000

0.00%

Dividend Equalization Fund

2,000,000

0.00%

Inflation and Currency Fluctuation Fund

1,000,000

0.00%

Stockholders Equity

77,069,654

78,570,135

1,500,481

1.95%

TOTAL LIABILITES & STOCKHOLDERS EQUITY

91,605,656

83,477,632

8,128,024*

8.87%*

Profit & Loss Account: From the profit and loss account the following information could be deduced: 

Operating revenue and expenses both fell by 26% and 21% respectively during the year and gross profit fell by 32%



A rise in other expenses by 32% led to an even greater operating loss of Tk.9,196,613. A rise in other income by Tk.2,423,801 was able to provide the company a net profit of Tk.1,500,481. This was 85% lower than the previous period.



No dividends were declared and the total amount of Tk.2,389,635 was carried forward as unappropriated.

Balance sheet: From the balance sheet the following information could be deduced: 

After two years of rising, tangible fixed assets fell by almost 12%.



Fall in operating revenue led to a fall in business. Current assets fell by 6% and total assets fell by 9%.



Lack of business led to lower current liabilities which fell by 66%. This provided a very unrealistic working ratio of almost 9:1



Total Stockholders equity rose by Tk.1,500,481 only; the amount carried forward as unappropriated.

For ISN Limited 2005 was a year full of problems. Fall in revenue from their main income source resulted in an operating loss. They were able to curb losses at the last minute but were not totally successful. They were not able to give any dividends which lead to a fall in share prices as investors lost confidence. The company was able to prevent total bankruptcy, because they were able to plan

ahead and establish reserves. These reserves and the un-appropriated profit gave them a base from which to start the following year.

Below are the Profit & Loss Account and Balance sheet of ISN Limited for the years 2005-2006 Information Services Network (ISN) Limited Profit and Loss Account For the year ended, 31st December Particulars

Dec 2005

Dec 2006

Taka

Increase or Decrease* Taka

Taka

Operating Revenue

30,059,608

37,123,825

7,064,217

23.50%

Operating Expenses

(16,275,034)

(18,033,321)

1,758,287

10.80%

13,784,574

19,090,504

5,305,930

38.49%

(22,673,725)

(18,080,964)

4,592,761*

20.26%*

Gross Profit

Other Expenses Administrative Expenses (Annexure-1) Amortization of Preliminary Expenses

(3,860)

Amortization of Share Issue Expenses

(303,602)

0.00%

Total Other Expenses

(22,981,187)

(18,384,566)

4,596,621*

20.00%*

Operating Profit/Loss

(9,196,613)

705,938

9,902,551

107.68%

Other Income

10,697,094

10,345,388

351,706*

3.29%*

1,500,481

11,051,326

9,550,845

636.52%

Net Profit before Tax for the year Provision for Income Tax for the year Net Profit after Tax for the year Profit/(Loss) brought forward

Tax Paid for previous year

(970,778)

1,500,481

10,080,548

8,580,067

571.82%

889,154

2,389,635

1,500,481

168.75%

2,389,635

12,470,183

10,080,548

421.84%

2,389,635

12,470,183

10,080,548

421.84%

Appropriation: Proposed Dividend

Dividend Distribution Tax @ 10% on proposed dividend

(10,677,075) -

Balance transferred to Balance Sheet

2,389,635

1,793,108

-596,527

-24.96%

Earning Per Share (Par Value Tk. 10/-)

0.21

1.42

1.21

576.19%

Information Services Network (ISN) Limited Balance Sheet As at 31st December

Particulars

Dec 2005

Dec 2006

Taka

Increase or Decrease* Taka

Percentage

NET ASSETS Non-Current Assets Tangible Fixed Assets, Net of Accumulated Depreciation

38,170,435

39,853,516

1,683,081

4.41%

1,518,014

1,214,412

303,602*

20.00%*

102,000

122,100

20,100

19.71%

39,790,449

41,190,028

1,399,579

3.52%

23,541,171

31,728,379

8,187,208

34.78%

Accrued Loan Interest

646,009

809,544

163,535

25.31%

Accrued FDR Interest

128,385

IPO-Expenses Investment(at cost) Total Non-Current Assets

Current Assets Accounts Receivable

Loans, Advances and Deposits

8,101,914

10,462,033

2,360,119

29.13%

Cash and Cash Equivalents

11,269,704

11,623,207

353,503

3.14%

Total Current Assets

43,687,183

54,623,163

10,935,980

25.03%

TOTAL ASSETS

83,477,632

95,813,191

12,335,559

14.78%

LIABILITES & STOCKHOLDERS EQUITY Current Liabilities and Provisions Accrued Expenses

1,012,614

2,054,315

1,041,701

102.87%

Liabilities for Finance

2,554,049

2,796,581

242,532

9.50%

Proposed Dividend

10,677,075

Provision for Income Tax

1,340,834

2,311,612

970,778

72.40%

Total Current Liabilities and Provisions

4,907,497

17,839,583

12,932,086

263.52%

71,180,500

0.00%

Retained Earnings - As per Profit and Loss Account

2,389,635

1,793,108

596,527*

24.96%*

General Reserve

2,000,000

0.00%

Dividend Equalization Fund

2,000,000

0.00%

Inflation and Currency Fluctuation Fund

1,000,000

0.00%

Stockholders Equity

78,570,135

77,973,608

596,527*

0.76%*

TOTAL LIABILITES & STOCKHOLDERS EQUITY

83,477,632

95,813,191

12,335,559

14.78%

Financed By Share Capital

Profit & Loss Account: From the profit and loss account the following information could be deduced: 

This year operating revenue rose by 23.5% which resulted in a 38.5% increase in gross profit.



Administrative expenses were cut down by 20%, as was other expenses. The company achieved an operating profit of Tk.9,902,551.



Although other incomes fell ISN Limited achieved a 637% rise in net profits and after tax they had a net profit of Tk.10,080,548.



All reserves were used to improve the company and a proposed dividend of Tk.10,677,075 was declared to bring back confidence in the investors.



A sum of Tk.1,793,108 was carried forward as un-appropriated; this was 25% less than in 2005. The reason was the declaration of a high dividend.

Balance sheet

From the balance sheet the following information could be deduced: 

Non-current assets rose by 4%. Current assets 25% indicating the company was doing much better than the previous year. Total assets rose by almost 15%.



Accounts receivable and cash both rose by 35% and 3% respectively which indicated that the company had an improved liquidity state.



Current liabilities also rose almost 260%. This brought about a healthier working ratio.



Total stockholders’ equity fell by Tk.596,527 since less amount of profit was un-appropriated.

In this period the company was able to move out of the difficulties it was facing the previous year and look forward. The overall financial conditions improved and they were moving back in business. Increase in dividends led to a rise in share prices indicating that investors were again gaining confidence. The company had faced a hurdle and had successfully come out of it to regain its place in the market. 4. Vertical Analysis of Comparative Financial Statements of ISN Limited Vertical analysis of balance sheets discloses each account’s significance relative to total assets or equities. Vertical analysis of income statements is done by comparing the values of the items of an income statement with that of the net revenue. Such comparisons help in assessing the importance of the change in each account, and hence come into use by the investors and the potential investors in the business. The use of common-size statements, as profit and loss accounts and balance sheet, facilitates vertical analysis of a company’s financial statements. Below is the Profit and Loss account of ISN Limited for the years 2002-2006. As ISN Limited is a service provider for this analysis Net Revenue has been taken instead of Net sales to compare other accounts.

Information Services Network (ISN) Limited Profit and Loss Account For the year ended, 31st December

Particulars

Dec 2002

Dec 2003

Dec 2004

Dec 2005

Dec 2006

Revenue Operating Revenue

90.62%

82.23%

83.11%

73.75%

78.21%

Other Income

9.38%

17.77%

16.89%

26.25%

21.79%

Net Revenue

100.00%

Operating Expenses

37.51%

42.64%

41.82%

39.93%

37.99%

Administrative Expenses (Annexure-1)

37.53%

34.45%

34.82%

55.63%

38.09%

Amortization of Preliminary Expenses

0.01%

Amortization of Pre-operating Expenses

0.13%

0.11%

Amortization of Share Issue Expenses

0.64%

0.62%

0.74%

0.64%

Expenses

Total Expenses

75.18%

77.85%

77.26%

96.32%

76.72%

Net Profit before Tax for the year

24.82%

22.15%

22.74%

3.68%

23.28%

4.74%

1.28%

1.76%

20.08%

20.87%

20.97%

3.68%

21.24%

9.11%

3.54%

0.19%

2.18%

5.03%

29.19%

24.41%

21.16%

5.86%

26.27%

0.65%

0.17%

29.19%

23.75%

20.99%

General Reserve

2.51%

2.12%

Dividend Equalization Fund

2.51%

2.12%

Inflation And Currency Fluctuation Fund

1.25%

1.06%

18.74%

16.60%

17.44%

1.66%

1.74%

18.26%

19.18%

0.19%

1.82%

Provision for Income Tax for the year Net Profit after Tax for the year Profit/(Loss) brought forward

Tax Paid for previous year

5.86%

2.05%

26.27%

Appropriation:

Proposed Dividend Dividend Distribution Tax @ 10% on proposed dividend

Balance transferred to Balance Sheet

4.19%

Profit & Loss Account: From the profit and loss accounts of 2002-2006 the following information could be deduced:

5.86%

22.49% 22.49% 3.78%



Operating revenue as a percentage of total revenue has fallen from 2002 onwards, but the reason for this could be the rise of revenue from other sources.



In 2006, operating revenue finally rose to 78% of total revenue. Whereas, 22% of revenue came from other sources. The company began to rely on other sources as well as from operating revenue. This is very crucial in order to have financial security as it was seen in 2005; that earnings from other sources provided necessary finds to keep the company operating.



Operating expenses as a percentage of net revenue had fallen since 2003 onwards. Total expenses rose to almost 97% in 2005 when there was a net operating loss. But the company was able to come back in 2006 and total expenses fell to 77% of net revenue.



Net profit after tax was in the 20%-21% range of net revenue. Except in 2005 when it came to 3.68% of net revenue.



A profit margin of 20% is quite adequate as it provides the funds for dividend as well enough to retain and reinvest to expand the company.



Proposed dividend varied year to year, but increased through the years by itself and also in comparison with net revenue. In 2006 22% of net revenue was declared as dividend.



Balance transferred to balance sheet as un-appropriated profit varied depending on the amount of dividend declared and amount of profit made during the year. During good years it went up to 4%-5%. On others it was as low as 0.2%, which shows that the profits were not enough to cover both dividends and retain profits.

Below is the Balance Sheet of ISN Limited for the years 2002-2006: Information Services Network (ISN) Limited Balance Sheet As at 31st December Particulars

Dec 2002

Dec 2003

Dec 2004

Dec 2005

Dec 2006

37.03%

44.11%

47.31%

45.73%

41.60%

0.01%

0.00%

NET ASSETS Non-Current Assets Tangible Fixed Assets, Net of Accumulated Depreciation Preliminary Expenses

Pre-Operational Revenue Expenses

0.06%

IPO-Expenses

2.64%

2.35%

1.99%

1.82%

1.27%

Investment(at cost)

1.23%

0.58%

0.11%

0.12%

0.13%

40.97%

47.05%

49.41%

47.67%

42.99%

Accounts Receivable

15.27%

17.78%

22.99%

28.20%

33.11%

Accrued Loan Interest

0.16%

0.34%

0.53%

0.77%

0.84%

Accrued FDR Interest

0.15%

Total Non-Current Assets

Current Assets

Loans, Advances and Deposits

15.42%

11.52%

9.63%

9.71%

10.92%

Cash and Cash Equivalents

28.19%

23.31%

17.44%

13.50%

12.13%

Total Current Assets

59.03%

52.95%

50.59%

52.33%

57.01%

100.00%

Accrued Expenses

3.51%

1.22%

1.38%

1.21%

2.14%

Liabilities for Finance

1.94%

3.14%

3.70%

3.06%

2.92%

Proposed Dividend

8.11%

8.66%

9.32%

Provision for Income Tax

4.68%

2.62%

1.46%

1.61%

2.41%

18.24%

15.64%

15.87%

5.88%

18.62%

77.24%

78.73%

77.70%

85.27%

74.29%

Retained Earnings - As per Profit and Loss Account

1.81%

0.10%

0.97%

2.86%

1.87%

General Reserve

1.09%

2.21%

2.18%

2.40%

2.09%

Dividend Equalization Fund

1.09%

2.21%

2.18%

2.40%

2.09%

Inflation and Currency Fluctuation Fund

0.54%

1.11%

1.09%

1.20%

1.04%

81.76%

84.36%

84.13%

94.12%

81.38%

100.00%

TOTAL ASSETS

LIABILITES & STOCKHOLDERS EQUITY Current Liabilities and Provisions

Total Current Liabilities and Provisions

11.14%

Financed By Share Capital

Stockholders Equity TOTAL LIABILITES & STOCKHOLDERS EQUITY

Balance sheet: From the balance sheets the following information could be deduced: 

Tangible fixed assets maintained a stable rate of increase in the years analyzed. The percentage of fixed assets to total assets has been in the range of 40%-47%



Non-current assets represented 41%-49% of total assets. This shows that the company has a good amount of assets not working directly in the operating process. If the company does fall in financial crisis assets would have to be sold in order to repay any debts.



Accounts receivable percentage of total assets rose every year. This could mean two things. One: the company is now doing much more business. Two: more importantly the company is not being able to collect the amount owed to it for services rendered. If the company does not take proper initiative, then these receivables may turn into bad debts.



On the other hand, cash and cash equivalents fell throughout the years. It represented smaller proportion of total assets. This shows that the company is losing its liquidity and its resources are becoming immobile in places.



Current assets varied from 51%-59% of total assets.



Current liabilities represented 15%-18% of total assets. This is a good sign and shows that the company is capable of paying its debts. A low current liability, with a high current asset will also encourage short-term creditors as they will see that the company has a good record of paying back debts and enough assets to do so.



Share capital as a percentage of total assets changed over the years as total assets increased and the capital remained same. Share capital represents about 75%-79% of the total assets.



Total stockholders’ equity represented 80%-85% of total assets. This indicated that the company had enough assets to cover the investments made by the investors.

5. Trend Analysis of Comparative Financial Statements of ISN Limited Trend analysis is used for the comparison of financial information, over time, to a base year. Trend analysis percentages are useful for comparing financial statements over several years, since it allows investors, potential investors and creditors’ to see the changes and trends occurring through the time period. The use of common-size statements, as profit and loss accounts and balance sheet, facilitates trend analysis of a company’s financial statements. The Trend Analysis shown below has been calculated by selecting 2002 as the base year and assigning a weight of 100% to the amounts appearing on that year’s financial statements. The other years’ corresponding values are expressed as a percentage of the base year.

Information Services Network (ISN) Limited Profit and Loss Account For the year ended, 31st December

Particulars

Dec 2002

Dec 2003

Dec 2004

Dec 2005

Dec 2006

Operating Revenue

100%

107%

113%

83%

103%

Operating Expenses

100%

134%

137%

109%

121%

Gross Profit

100%

88%

95%

65%

90%

Administrative Expenses (Annexure-1)

100%

109%

114%

151%

121%

Amortization of Preliminary Expenses

100%

Amortization of Pre-operating Expenses

100%

Amortization of Share Issue Expenses

100%

Total Other Expenses

100%

111%

116%

153%

122%

Operating Profit/Loss

100%

34%

47%

149%

11%

Other Income

100%

224%

221%

286%

277%

Net Profit before Tax for the year

100%

106%

113%

15%

112%

Provision for Income Tax for the year

100%

32%

46%

Net Profit after Tax for the year

100%

123%

128%

19%

126%

Profit/(Loss) brought forward

100%

46%

24%

66%

100%

99%

89%

21%

107%

100%

27%

100%

96%

88%

General Reserve

100%

Dividend Equalization Fund

100%

Inflation And Currency Fluctuation Fund

100%

Proposed Dividend

100%

105%

114%

143%

Dividend Distribution Tax @ 10% on proposed dividend

100%

109%

Other Expenses

Tax Paid for previous year

21%

51%

107%

Appropriation:

100%

109%

53%

143%

Dec 2002

Dec 2003

Dec 2004

Dec 2005

Dec 2006

Tangible Fixed Assets, Net of Accumulated Depreciation

100%

117%

127%

112%

117%

Preliminary Expenses

100%

67%

33%

Pre-Operational Revenue Expenses

100%

IPO-Expenses

100%

88%

75%

63%

50%

Investment(at cost)

100%

46%

11%

Total Non-Current Assets

100%

113%

120%

105%

109%

Accounts Receivable

100%

114%

150%

167%

225%

Accrued Loan Interest

100%

209%

328%

439%

550%

Accrued FDR Interest

100%

Loans, Advances and Deposits

100%

73%

62%

57%

74%

Cash and Cash Equivalents

100%

81%

61%

43%

45%

Total Current Assets

100%

88%

85%

80%

100%

TOTAL ASSETS

100%

98%

99%

91%

104%

Accrued Expenses

100%

34%

39%

31%

64%

Liabilities for Finance

100%

159%

190%

143%

156%

Proposed Dividend

100%

105%

114%

143%

Balance transferred to Balance Sheet

100%

124% 107%

Information Services Network (ISN) Limited Balance Sheet As at 31st December Particulars NET ASSETS Non-Current Assets

Current Assets

LIABILITES & STOCKHOLDERS EQUITY Current Liabilities and Provisions

Provision for Income Tax

100%

55%

31%

54%

Total Current Liabilities and Provisions

100%

84%

86%

29%

106%

Share Capital

100%

Retained Earnings - As per Profit and Loss Account

100%

53%

143%

107%

General Reserve

100%

200%

Dividend Equalization Fund

100%

200%

Inflation and Currency Fluctuation Fund

100%

200%

Stockholders Equity

100%

101%

102%

104%

103%

TOTAL LIABILITES & STOCKHOLDERS EQUITY

100%

98%

99%

91%

104%

Financed By

Profit & Loss Account: From the profit and loss accounts of 2002-2006 the following information could be deduced: 

The highest operating revenue was achieved in 2004. The highest operating expense was also in this year.



The highest gross profit was seen in 2002. Lowest was in 2005. The trend was rising till 2004 and then a big fall in 2005, followed by a recovering year in 2006.



Total other expenses increased from 2002 to 2005, but in 2006 the company was able to cut down costs.



Other income sources doubled 2003 and have remained at high levels since then. The highest was in 2005.



The highest Net profit after tax was in 2004 closely followed by 2006. The lowest 19% was in 2005.



The highest dividend was proposed in 2006. No dividend was paid in 2005.



The highest amount transferred as un-appropriated was in 2005.

Balance sheet: From the balance sheets the following information could be deduced: 

Non-current assets grew steadily till 2005 and then again started growing in 2006.



Accounts receivable have doubled since 2002. In 2006 it reached the highest of 225% of that in 2002.



Cash and cash equivalents have halved since 2002.



Current assets fell in 2003-05, but rose back up in 2006



Total assets were the highest in 2006.



Total Current liabilities fell from 2003-2005, but were the highest in 2006.



Stockholders equity remained almost constant from 2002-2006.

6.1 LIQUIDITY RATIOS Liquidity Ratios are used to indicate a company’s short-term debt-paying ability. Thus, the ratios given below are designed to show investors, creditors, and management the company’s capacity to meet current liabilities. Current Ratio

Current Assets Current Liabilities

Year

2002

2003

2004

2005

2006

Current Assets

54,404,124

47,876,214

46,339,386

43,687,183

54,623,163

Current Liabilities

16,807,140

14,141,146

14,536,002

4,907,497

17,839,583

Current Ratio

3.24:1

3.39:1

3.19:1

8.90:1

3.06:1

A company’s current assets divided by its current liabilities is known as current ratio and tests the short-term debt paying ability of a firm. The ‘current ratio’ indicates the ability of a company to pay its current liabilities from current assets and, thus, shows the strength of the company’s working capital position. The current ratio is significant to both short and long term creditors as it shows how easily a company can pay back creditors. The company’s current ratio has remained between 3-3.5 for all years except for 2005 when the company decided not to pay any dividend and as such had a high cash balance. The reason for this has been mentioned in the introduction. Considering the standard ratio to be 2:1, the company has quite a high current ratio indicating that the company has not used all of its resources efficiently. However this is not going to discourage short-term creditors, as the company has enough funds to pay any such loan. Quick Ratio =

Quick Assets Current Liabilities

Year Quick Assets

2002

2003

2004

2005

2006

40,049,820

37,149,550

37,031,989

34,810,875

43,351,586

Current Liabilities

16,807,140

14,141,146

14,536,002

4,907,497

17,839,583

2.38

2.63

2.55

7.09

2.43

Quick Ratio

The quick or acid test ratio tests a company’s ability to meet short-term obligations without having to rely on inventory. It determines the immediate debt paying ability of a firm. This ratio uses quick assets (cash, marketable securities and net receivables) to compute the ratio. Inventories and prepaid expenses are excluded during the computation of the ratio since they might not be readily convertible into cash. The company’s quick ratio has remained between 2.3-2.7 for all years except for 2005. The ideal ratio is considered to be 1:1. The company has a much higher ratio than this showing that, if necessary, it is capable of paying short term creditors by converting quick assets. The company’s debt-paying ability is sufficient enough to satisfy creditors at any given point in time. Accounts Receivables Turnover =

Net Sales Average net accounts receivable

Year

2002

2003

2004

2005

2006

Net Revenue

39,886,046

47,170,924

49,988,872

40,756,702

47,469,213

Average Receivables

14,071,354

16,076,935

21,057,598

23,541,171

31,728,379

Accounts Receivables Turnover

2.83

2.93

2.33

1.73

1.50

*Since this is a service providing company Net Revenue has been used instead of Net sales

This ratio roughly measures how many times a companyâ&#x20AC;&#x2122;s accounts receivable has been turned into cash during the year and determines the quality of accounts receivable. This ratio is important for the creditors because it provides an indication of how quickly receivables are being collected. The failure to maintain a reasonably high accounts receivable turnover may in some cases even lead to bankruptcy. ISN Limitedâ&#x20AC;&#x2122;s accounts receivable turnover has fallen since 2003 this indicates that the quality of accounts receivable is deteriorating. The management should look into why the accounts receivables are not being collected regularly, so that they do not face any financial problems in the future. Average Collection Period for Accounts Receivable

365 Accounts Receivable Turnover

Year

2002

2003

2004

2005

2006

Number of Days in a year

365

Accounts Receivables Turnover

2.57

2.41

1.93

1.28

1.17

Average Collection Period for Accounts Receivable (Days)

142

151

189

286

312

The “average collection period for accounts receivable” ratio is also known as the “number of days’ sales in accounts receivable”. This ratio tests the quality of accounts receivable by measuring the average number of days it takes to collect an account receivable. Shorter collection periods indicate a higher quality of accounts receivable. The period taken for the collection of Accounts Receivable has increased every year and in 2006 it rose to 312 days. This indicates that an account receivable took almost a year to collect. The quality of accounts receivable is deteriorating with time. The management should look into this matter. Total Assets Turnover =

Net Sales Average Total assets

Year

2002

2003

2004

2005

2006

Net Revenue

39,886,046

47,170,924

49,988,872

40,756,702

47,469,213

Average Total Assets

92,157,423

91,285,479

91,009,596

87,541,644

89,645,412

Total Assets Turnover

0.43

0.52

0.55

0.47

0.53

*Since this is a service providing company Net Revenue has been used instead of Net sales

The total assets turnover ratio shows the relationship between the total monetary volume of sales and the average total assets used in the business. The ratio measures the efficiency with which a company uses its assets to generate sales. The larger the total assets turnover, the larger will be the income on each dollar invested in the assets of the company. The total assets turnover for ISN limited remained between 43 to 55 paisa of sales generated for every taka invested, throughout the five years analysed, and indicates a steady income on assets invested by the company.

6.2 EQUITY/LONG-TERM SOLVENCY RATIO Equity or long-term solvency ratios show the relationship between debt and equity financing in a company. The following ratios are important to both creditors and owners (stockholders) since they are the basic source of finance for the company. Equity Ratio =

Stockholdersâ&#x20AC;&#x2122; equity Total Assets

Year

2002

2003

2004

2005

2006

Stockholders' Equity

75,350,283

76,272,389

77,069,654

78,570,135

77,973,608

Total Assets

92,157,423

90,413,535

91,605,656

83,477,632

95,813,191

Equity Ratio

0.82

0.84

0.94

0.81

The equity ratio indicates the proportion of total assets provided by the stockholders on any given date. From a creditors point of view a high proportion of stockholders’ equity is desirable. A high equity ratio indicates substantial protection for creditors in case a company suffers a loss. However low levels of financial leverage may not be desirable to the stockholders since it reduces earnings per share. ISN Limited’s equity ratio is close to 1 and is quite stable around 0.8:1, thus balancing both stockholder and creditor’ concerns. Equity to Debt Ratio =

Stockholders’ equity Total Debt

Year

2002

2003

2004

2005

2006

Stockholders' Equity

75,350,283

76,272,389

77,069,654

78,570,135

77,973,608

Total Liabilities

16,807,140

14,141,146

14,536,002

4,907,497

17,839,583

Stockholders' equity To Debt Ratio

4.48

5.39

5.30

16.01

4.37

This ratio measures the amount of assets being provided by stockholders for each dollar of assets being provided by creditors. It expresses the relative equities of owners and creditors of a company. ISN limited’s Stockholders’ equity to debt ratio is quite high, indicating the company relies more on financing through the owners than creditors.

6.3 PROFITABILITY TESTS Profitability tests are used to measure a company’s operating success. They indicate the ability of a company to recover costs and expenses and its relative ability to earn income on assets employed. Rate of Return on Operating Assets =

Net operating income Operating Assets

Year

2002

2003

2004

2005

2006

Net Operating Income/ Loss

6,159,019

2,068,005

2,865,048

(9,196,613)

705,938

Operating Assets

88,533,976

87,758,592

89,678,180

81,857,618

94,476,679

Rate of return on operating assets

6.96%

2.36%

3.19%

-11.23%

0.75%

* there was a operating loss in 2005

Rate of return on operating assets shows the relationship of net operating income to operating assets. This ratio measures the profitability of a company on carrying out its primary business functions by excluding both non-operating income and non-operating assets from the calculation. During the five years of analysis, ISN limitedâ&#x20AC;&#x2122;s rate of return on operating assets varied greatly. In 2002 the company had a rate of almost 7%. This fell in 2003 as operating expenses rose. Then it rose again in 2004 only to fall to a negative rate in 2005. The setbacks during that year lead to an operating loss. The company was, however, able to recover and made a profit in 2006. In the future the management should try to keep this rate more stable, as it would gain the trust of both creditors as well as investors. Net Income to Net Sales =

Net Income Net Sales

Year

2002

2003

2004

2005

2006

Net Income (after TAX)

8,009,656

9,843,469

10,274,976

1,500,481

10,080,548

Net Revenue

39,886,046

47,170,924

48,988,872

40,756,702

47,469,213

20.08%

20.87%

20.97%

3.68%

21.24%

Net Income to Net Sales

*Since this is a service providing company Net Revenue has been used instead of Net sales

The return on sales is yet another measure of a company’s profitability. This ratio measures the proportion of monitory sales that remains after the deduction of all expenses. Creditors prefer a high return on sales ratio, since it generally indicates the overall success of the company. Other than the low profits made in 2005, ISN limited shows an increasing Net Income to Net Sales Rate above the 20% mark. Return on Equity (ROE) =

Net income Average stockholders’ equity

Year

2002

2003

2004

2005

2006

Net Income (After Tax)

8,009,656

9,843,469

10,274,976

1,500,481

10,080,548

Average Stockholders’ Equity

75,350,283

75,811,336

76,671,022

77,819,895

78,271,872

10.63%

12.98%

13.40%

1.93%

12.88%

Return on Equity

From the stockholder’s point of view, an important measure of the income producing ability of a company is the relationship of net income to average common stockholder’s equity also called the return on equity (ROE). The stockholders are interested in the return the company earns for its stockholders from all sources as a percentage of the stockholders’ investment. The ratio has increased every year, and the company has been able to recover after 2005.

Earnings per Share (EPS)

= Earnings available to common shareholders No. of shares outstanding

Year

2002

2003

2004

2005

2006

Net Income after Tax

8,009,656

9,843,469

10,274,976

1,500,481

10,080,548

Number of Shares Outstanding

7,118,050

1.13

1.38

1.44

0.21

1.42

Earnings per Share (Taka)

The earning per share is the most widely used measure of a companyâ&#x20AC;&#x2122;s operational success. It is very important to the investors since it indicates how much they can earn on each share. Most companies give emphasis on how high their EPS is since, it usually plays a major role in determining the market price of a share. Calculation of EPS can be seen in almost all accounting reports companies publish. ISN limitedâ&#x20AC;&#x2122;s steady increase in EPS reflects rising profitability which could have a positive effect on market price as well as gain more trust by both potential investors and creditor

6.4 MARKET TESTS

Market Tests help investors and potential investors assess the relative merits of a companyâ&#x20AC;&#x2122;s stock in relation to stocks of other companies. They provide information on how the company is doing and in turn affect the price of the companiesâ&#x20AC;&#x2122; share at the stock exchange.

Earnings Yield on Common Stock

EPS Current Market price per share

Year

2002

2003

2004

2005

2006

Earnings per Share

1.13

1.38

1.44

0.21

1.42

Current Market price per share*

17.2

14.4

28.3

10.7

12.9

Earnings Yield on Common Stock

6.54%

9.60%

5.10%

1.97%

10.98%

*Source: Dhaka Stock Exchange records

Earnings yield on common stock indicates the relationship between EPS and the current market price per share. It is used by investors for comparing stocks of different companies. ISN limited had a rise in earnings every year till 2005 and as a result its share prices rose. But after a fall in profits in 2005 the companiesâ&#x20AC;&#x2122; share prices fell, and in 2006 it was still low, but rising, indicating that investors were slowly regaining trust in the company. Price Earnings Ratio = Current Market Price per share EPS

Year

2002

2003

2004

2005

2006

Current Market price per share

17.2

14.4

28.3

10.7

12.9

Earnings per Share

1.13

1.38

1.44

0.21

1.42

Price Earnings Ratio

15.29

10.41

19.60

50.76

9.11

This ratio helps the investors to judge whether the stock is under-priced or overpriced. A high price earnings ratio means that investors are willing to pay a premium for the company’s stock presumably because is expected to have higher than average future earnings growth. When ISN limited’s’ EPS fell in 2005, its price earnings ratio shot up. But in the following year when investors saw it was overpriced its price fell again and thus the price earnings ratio also came down. Dividend Yield on Common Stock =

Dividend per share

___

Current Market Price per share

Year

2002

2003

2004

2005

2006

Dividend per Year

1.05

1.1

1.2

1.5

Current Market price per share

17.2

14.4

28.3

10.7

12.9

6.10%

7.64%

4.24%

11.63%

Dividend Yield on Common Stock

This ratio shows the rate of return that would be earned by an investor who buys common stock at the current market price and is used by investors for comparison with other stocks on the market. Although the company paid no dividend in 2005, it made up for it by paying a higher percentage in 2006. If the management continue paying a good percentage of dividends every year, investors are likely to remain firm on this company. Payout Ratio on Common stock = Dividend per share EPS

Year

2002

2003

2004

2005

2006

Dividend per Year

1.05

1.1

1.2

1.5

Earnings per Share

1.13

1.38

1.44

0.21

1.42

Payout Ratio on Common Stock

0.93

0.80

0.83

1.06

This ratio shows the proportion of earnings that is paid out as dividends among the shareholders and also indicates the proportion of earnings that are reinvested in the company. Investors who want dividends prefer a large payout ratio while investors who seek market price growth and capital gain prefer a small ratio. People in high tax brackets usually belong to the latter group. The increase in payout ratio will attract investors who seek dividends. ISN limitedâ&#x20AC;&#x2122;s Payout Ratio has improved through the years. Book Value per share

Stockholdersâ&#x20AC;&#x2122; Equity Number of shares outstanding

Year Stockholders' Equity Number of Shares Outstanding Book Value per share

2002

2003

2004

2005

2006

75,350,283

76,272,389

77,069,654

78,570,135

77,973,608

7,118,0 50

7,118,05 0

7,118,0 50

10.83

11.0 4

10.9 5

10.5 9

10.72

This ratio measures the amount that would be distributed to common stockholders if all assets were sold at their balance sheet carrying amounts and if all creditors were paid off. The book value per share has remained almost constant throughout the years and is above 10. This indicates that if the company has to liquidate, share holders will receive more than their initial investment. This reliability will encourage potential investors to invest in this company.

Cash Flow per share of common stock

Operating Cash Flow Number of shares outstanding

Year

2002

2003

2004

2005

2006

Operating Cash flow

(694,943)

8,874,890

10,545,896

3,823,770

7,135,608

Number of Shares Outstanding

7,118,050

(0.10)

1.25

1.48

0.54

1.00

Cash flow per share of common stock

* There was a negative operating cash flow in 2002

The cash flow per share of common stock ratio can be used to judge a companyâ&#x20AC;&#x2122;s ability to pay liabilities and dividends. This ratio is usually used for internal purposes. ISN limited had a negative operating cash flow in 2002, but since then it has maintained a high cash flow per share of common stock. This indicates that ISN limited is well capable of paying back dividends and liabilities.

7. Industry Analysis

This section looks into the ratios of the five companies taken in this report and forms an industry average. The ratios of ISN limited have been compared to the industrial average ratios and an analysis has been made, of how well ISN limited is doing in comparison with the other companies. Current Ratio:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 3.84 2.02 1.90 4.77 3.24 3.15

2003 2.57 2.19 1.17 1.98 3.39 2.26

2004 3.22 2.15 1.50 3.12 3.19 2.64

2005 2.6 3.51 0.74 7.85 8.90 4.72

2006 8.32 1.83 4.55 16.50 3.06 6.85

Company Avg. 4.11 2.34 1.97 6.84 4.35 -

The current ratio has risen in the past five years. Different companies in this industry had different current ratio, but the trend was improving for all. ISN Limited had an almost equal ratio with the average, ranging from 1.05 to 1.12, till 2004. From 2006 industry average rose above.

Quick Ratio:

Agni BOL Daffodil Intech Online Information Services Network Limited Industry Average

2002 3.83 0.89 0.63 3.68

2003 2.46 1.21 0.85 1.32

2004 3.03 0.89 0.65 1.90

2005 2.42 2.94 0.64 5.94

2006 8.06 1.56 0.47 11.50

Company Avg. 3.96 1.50 0.65 4.87

2.38 2.28

2.63 1.69

2.55 1.80

7.09 3.81

2.43 4.80

3.42 -

Quick Ratio also has risen in the past five years reaching 4.8 in 2006. Intech Online has the highest quick ratio, while Daffodil Computers has the lowest. Information Services Network Limited has maintained a ratio higher than the industry average till 2005. In 2006 it fell below the market average, indicating that it had not kept up with the other stake holders in the market. Accounts Receivables Turnover:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 6.03 3.04 5.71 3.55 2.83 4.23

2003 8.27 1.79 5.19 2.89 2.93 4.22

2004 13.87 1.13 5.16 2.44 2.33 4.98

2005 10.51 3.54 4.94 1.99 1.73 4.54

2006 6.12 0.94 4.75 1.48 1.50 2.96

Company Avg. 8.96 2.09 5.15 2.47 2.26 -

The Accounts Receivable Turnover ratio increased till 2004, then fell considerably in 2006. Agni Systems Limited maintained the highest ratio, indicating that they were able to collect most of their accounts receivables throughout the year. Information Services Network Limited had the highest ratio in 2003 of 2.93, which fell to 1.5 by 2006. This means the accounts receivables were collected or turned over only about 1.5 times on an average. Average Collection Period for Accounts Receivable:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 61 120 67 103 142 99

2003 44 204 66 126 151 118

2004 26 323 66 150 189 151

2005 35 103 66 184 286 135

2006 59 487 66 247 312 234

Company Avg. 45 247 66 162 216 -

The industry average has increased in recent years showing that the average collection of debtors takes a longer time. This shows that the quality of the accounts receivable has fallen, because of the increase in collection period. Agni Systems were still able to maintain a good collection period at an average of 45 days in the last 5 years. Intech Online has the highest collection period of over 1 year! Information Services Network Limited has an increasing ratio quite above the industry average.

Total Assets Turnover:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 0.34 0.26 1.44 0.79 0.43 0.65

2003 0.41 0.28 1.15 0.55 0.52 0.58

2004 0.4 0.28 1.03 0.54 0.55 0.56

2005 0.44 0.44 0.90 0.55 0.47 0.56

2006 0.57 0.35 0.76 0.38 0.53 0.52

Company Avg. 0.43 0.32 1.06 0.56 0.50 -

The ratio for Total Assets Turnover has remained almost constant for the industry. The larger the ratio, the larger is the income on each taka invested. Daffodil Computers were able to get the highest returns from their assets invested. Information Services Network Limited had a ratio almost close to the industry average. Equity Ratio:

Agni BOL Daffodil Intech Online Information Services Network Average Limited Industry

2002 0.94 0.58 0.56 0.89 0.82 0.76

2003 0.9 0.58 0.75 0.84 0.84 0.78

2004 0.92 0.82 0.67 0.81 0.84 0.81

2005 0.88 0.83 0.70 0.95 0.94 0.86

2006 0.86 0.66 0.70 0.96 0.81 0.80

Company Avg. 0.90 0.69 0.68 0.89 0.85 -

The equity ratio in the information technology industry has remained somewhat steady ranging from 0.76-0.86. However it shows an increasing trend. The ratios for all the company were basically stable. Information Services Network Limited has kept pace above the industry average. This signifies that the shareholders would be interested to invest more in the company. Agni Systems and Intech Online managed to keep the highest ratio.

Stockholders' equity To Debt Ratio:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 6.39 1.41 1.00 8.00 4.48 4.26

2003 7.67 1.42 2.21 5.36 5.39 4.41

2004 10.79 4.57 1.62 6.80 5.30 5.82

2005 9.3 5.16 1.92 20.13 16.01 10.50

2006 17.11 2.01 1.99 26.52 4.37 10.40

Company Avg. 10.25 2.91 1.75 13.36 7.11 -

The industry average for Equity to debt ratio has steadily increased till 2004. Then in 2005 it doubled. The industry shows high average, which signifies that the stockholderâ&#x20AC;&#x2122;s equity is almost 10 times the amount of total debt. Daffodil Computers were not able to show a high ratio, which could lead to a fall in share prices. Information Services Network Limited had a ratio close to the industry average till 2004 afterward they were not able to keep consistency with the industry.

Rate of Return on Operating Assets:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 9.00% 44.00% 9.44% 29.00% 6.96% 19.68%

2003 10.00% 34.00% 10.41% 25.00% 2.36% 16.35%

2004 12.00% 30.00% 7.25% 32.00% 3.19% 16.89%

2005 11.00% 44.00% 10.13% 28.00% -11.23% 16.38%

2006 7.00% 32.00% 4.13% 27.00% 0.75% 14.18%

Company Avg. 9.80% 36.80% 8.27% 28.20% 0.40% -

The rate of return on operating assets is falling steadily. Although it remained steady from 2003-05 it fell in 2006. In the five years, both Bangladesh Online and Intech Online were most efficient. Intech Online was the more stable one among the two. Information Services Network Limited was far below the industry average and also had a negative value for 2005, where all companies had high positive values.

Net Income to Net Sales:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 15.00% 36.00% 5.20% 33.00% 20.08% 21.86%

2003 29.00% 35.00% 8.30% 25.00% 20.87% 23.63%

2004 29.00% 92.00% 9.75% 31.00% 20.97% 36.54%

2005 29.00% 65.00% 7.63% 28.00% 3.68% 26.66%

2006 25.00% 51.00% 4.72% 28.00% 21.24% 25.99%

Company Avg. 25.40% 55.80% 7.12% 29.00% 17.37% -

The industry averages have increased a lot especially in 2004, and then it fell again. Bangladesh Online Limited achieved a high level of profitability and has values well above the industry average. The overall performance of Agni Systems and Intech online remains consistent with a fall in profitability in 2006 and their position is quite good relative to the industry average. Daffodil Computers performed below the average. Information Services Network Limited had stable values except in 2005, but all its values were well below the industry average.

Return on Equity:

Agni BOL Daffodil Intech Online Information Services Network Limited Industry Average

2002 10.00% 16.00% 13.43% 30.00% 10.63% 16.01%

2003 15.00% 16.00% 12.75% 16.00% 12.98% 14.55%

2004 13.00% 37.00% 15.04% 21.00% 13.40% 19.89%

2005 13.00% 35.00% 10.71% 18.00% 1.93% 15.73%

2006 9.00% 24.00% 5.52% 12.00% 12.88% 12.68%

Company Avg. 12.00% 25.60% 11.49% 19.40% 10.36% -

The industry average has fluctuated a lot in these five years. The return of equity of the companies also fluctuated. Daffodil and Information Services Network Limited were the ones most stable. Information Services Network Limitedâ&#x20AC;&#x2122;s return of equity was below the industry average, but was just able to rise above in 2006. In 2006 the return on equity was 12.68% showing that the stockholders get a return of 0.12 taka on each taka capital invested. International Services Network Limited has a similar amount of return of 0.12 Taka in 2006.

Earnings per Share:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 1.01 2.38 17.06 2.29 1.13 4.77

2003 1.18 2.54 1.79 1.85 1.38 1.75

2004 1.3 5.55 1.91 2.76 1.44 2.59

2005 1.28 7.17 1.39 2.42 0.21 2.49

2006 0.9 5.96 0.69 2.06 1.42 2.21

Company Avg. 1.13 4.72 4.57 2.28 1.12 -

The Industry average was the highest in 2002, probably because of the irregular amounts of EPS by Daffodil computers. This however stabilizes in the following year. In the last three years there is a downward trend. International Services Network Limited, however, had a high EPS during these years. This shows that although EPS for all the companies fell, International Services Network Limited still had a high EPS. This would definitely improve their position against other companies. Earnings Yield on Common Stock:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 10.00% 6.54% 8.27%

2003 8.68% 10.00% 12.00% 9.60% 10.07%

2004 4.05% 6.00% 10.00% 5.10% 6.29%

2005 5.42% 14.00% 10.00% 9.00% 1.97% 8.08%

2006 4.52% 10.00% 5.00% 15.00% 10.98% 9.10%

Company Avg. 5.67% 10.00% 7.50% 11.50% 6.84% -

The earnings yield for the industry has showed positive trends except in 2004. The earnings yield for Bangladesh Online and Intech Online fluctuated throughout the period as did that of most of the companies. International Services Network Limited had two peaks, in 2003 and in 2006. But most of the time it was below the industry average. Price-Earnings Ratio:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 9.36 15.29 12.32

2003 11.53 9.96 8.32 10.41 10.05

2004 24.69 14.63 9.06 19.60 17.00

2005 18.44 7.14 9.57 11.20 50.76 19.42

2006 22.11 9.09 21.74 6.84 9.11 13.78

Company Avg. 19.19 10.04 15.66 8.86 21.03 -

Price Earning Ratio of this industry is rising in also fluctuated showing an unstable sign for the industry. The ratios for all companies rose and fell. Through this period Bangladesh Online were the most stable, even though they had ratio of 14.6 in 2004 and 7.1 in 2005, indicating that the price per taka earned had halved within a year. International Services Network Limited had a ratio above the

industry average, going as high as 50.76 due to the fall in EPS in 2005. But in 2006 this fell to 9.11, probably because investors were uncertain after no dividend was declared in 2005.

Dividend Yield on Common Stock:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 6.00% 6.00% 6.10% 6.03%

2003 7.35% 5.00% 6.00% 7.64% 6.50%

2004 0.60% 5.00% 4.24% 3.28%

2005 4.24% 1.00% 8.00% 7.00% 5.06%

2006 11.63% 11.63%

Company Avg. 5.79% 3.15% 8.00% 6.00% 7.40% -

The dividend yield in the IT industry varied a lot. The reason for this was in inconsistency of the companies of paying dividends. International Services Network Limited, Bangladesh Online Limited and Intech online were the companies that paid dividends in four of the five years. International Services Network Limited was the only company that paid cash dividends in 2006. They also had the highest yield, which would attract investors from other companies.

Payout Ratio on Common Stock:

Agni BOL Daffodil Intech Online ISN Industry Average

2002 0.63 0.06 0.54 0.93 0.54

2003 0.85 0.59 0.61 0.54 0.80 0.68

2004 0.09 0.63 0.61 0.83 0.54

2005 0.78 0.13 0.72 0.48 0.53

2006 1.06 1.06

Company Avg. 0.85 0.36 0.51 0.54 0.90 -

The industry average indicates that companies typically pay half of their earnings as dividends. Companies like Agni Systems and International Services Network Limited have paid good amounts of dividends in comparison to earnings. They have also retained smaller amounts. Most of the companies are trying to pay a larger amount of their earnings as dividends, to encourage investors. Bangladesh Online on the other hand, seems to be paying smaller amounts as dividends, indicating that they want to retain most of the profits, probably for some new investment purposes. 8. Conclusion International Services Network Limited is one of the biggest IT companies in Bangladesh and was the pioneer in this industry. The analysis of annual reports of 2002-2006, indicates that International Services Network Limited performance was unstable in most cases. The company improved in the years 2002-04, even though other companies fell behind in 2004. But 2005 was a very difficult year for the company. The company was unable to pay dividends and made the lowest profit ever. This created doubts in the minds of investors and

as a result share prices fell. The company was able to save themselves from bankruptcy because of the funds they had previously gathered. In 2006 they came back to regain the market. Profitability and efficiency increased considerably in 2006 and although they had not been able to reach the level they were before 2005, they were close to it. In order to regain the trust of investors they declared a high dividend. The management had prepared a plan and it had worked. They were able to regain their place in the market, and invested in improving the quality of services. Liquidity of the company was rising which would encourage creditors and investors who seek dividends. The market tests also indicate that International Services Network Limited will not find it difficult to attract investors; this will improve the overall market price. The comparison with other companies within the industry indicated that International Services Network’s market share is quite stable. International Services Network Limited, which is one of the major players in the industry, is much more efficient with a better market performance, liquidity, profitability and efficiency. However they still have room to improve and have to compete with the high performers, such as Bangladesh Online and Agni Systems. Other smaller competitors also pose threats as they can be more efficient due to their operation size. In order to remain competitive International Services Network Limited must become more organized and efficient and plan for the future. The market tests indicate that International Services Network Limited can still attract new investors. The industry analysis shows that International Services Network Limited had a satisfactory performance until 2004. After the fall in 2005 they were able to recover to a good extent in 2006, which can be seen from the profit & loss account and balance sheet. It seems that the company will regain its former strengths and become the major market player in the next few years. Investing in International Services Network Limited at this period of time would be a good idea because of a number of reasons: 

A net profit after tax margin of about 20%, enough to satisfy both stockholders’ and retain profits for future investment.



Providing higher amounts of dividends compared to the other companies



In most cases the stable player in the industry



The liquidity ratios indicate the company is doing quite well and can pay any form of liabilities with the current assets.



The equity ratios show that the equity is stable over the years and this company relies more on the owners for finance rather than creditors.

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After 2005 the company had an improving profitability as seen from the profitability tests

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The market tests show that Information Services Network Limited had reached the industry average in almost all tests in 2006, indicating that they were competing for a position as the dominant player

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High prospects as can be seen from the analysis of comparative financial statements of 2006.

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New management focused and organized in making the company the market lead

 9. Bibliography Books 1. The annual general reports of International Services Network Limited for 2002-2006 2. Accounting Principles, 5th edition, Hermanson, Edwards & Salmonson , Irwin, Boston. Websites 1. www.dsebd.org 2. www.bangla.net