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					          RATIO ANALYSIS
               OF
  HEIDELBERGCEMENT BANGLADESH LTD
        MEGHNA CEMENT MILLS LTD
               AND
       CONFIDENCE CEMENT MILLS LTD




PREPARED BY



ABDULLAH-AL-MAMUN             082057030
MD.ZUNAYED SADEQUE            081637030
M.SAYED HASAN                  081223030
MAHFUZUR RAHMAN               0930929030
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Company Profile
Heidelberg Cement Bangladesh Limited: is a sister concern of Heidelberg Cement Group.
In Bangladesh, Heidelberg group is one of the largest foreign investors having an investment
of 100 million US$ with more than 260 employees working round the clock to materialize the
mission of this great global company. By satisfying the needs and aspirations of its customers,
employees, shareholders and the wider community, the company is able to maintain its
position of strength as a sustainable cement provider without compromising commitment to
long term stability and environmental responsibility. Heidelberg Cement Bangladesh
Limited meets 13% of the Bangladesh demand for cement from two plants located at Dhaka &
Chittagong. The company with 1.5 million tones annual cement production has become a
major force in the Bangladesh Cement industry over the last eight years.

Confidence Cement Limited (CCL): is the first private sector cement manufacturing
company in Bangladesh established in early 90's with having 4,80,000 M/T annual production
capacity at Chittagong, 16 K.M away from Chittagong port, besides Dhaka Chittagong
highway. CCL is the first ISO-9002 certified cement manufacturing in Bangladesh.




The Meghna cement mills limited (MCML): was the first undertaking Bashundhara group
in the manufacturing sector. This enterprise produces world-class cement and, as a testimony
to this, stands the fact that the concern has been awarded the iso-9001 certification for
sustained quality control effort. The company markets its cement under the registered
trademark of king brand.




                                                                                             2
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RATIO ANALYSIS


Financial ratios can be used to analyze trends and to compare the firm’s financials to those of
other firms. Financial ratios can be classified according to the information they provide. The
following types of ratios frequently are used:
              Liquidity ratios
              Asset management ratios
              Debt management ratios
              Profitability ratios
              Market value ratios



LIQUIDITY RATIOS

CURRENT RATIO

              Current ratio indicates the extent to which current liabilities are covered by those
assets expected to be converted to cash in the near future.



                                                Current asset
                                     CR =
                                              Current liabilities




                                                                                                     3
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 Company’s Name                 2007                   2008                 2009
Heidelberg Cement
                             1.030 times           1.268 times          2.034502679
   Bangladesh Ltd.
   Meghna Cement
                              1.1 times            1.427 times          1.2948 times
         Mills Ltd.

Confidence cement            1.29 times            1.07 times            1.419 times




              2.5

               2
                                                              Heidelberg Cement
                                                              Bangladesh Ltd
              1.5
                                                              Meghna Cement
               1                                              Mills Ltd.
                                                              Confidence cement
              0.5

               0
                      2007        2008          2009


Heidelberg: From 2007 to 2008 there is a slight increase in current ratio for Heidelberg
cement. From 2008 to 2009 it has also increased.

Meghna: Current ratio for this company is also increasing every year. So it is also good for
the company and it is a positive sign for the company.

Confidence: from 2007 to 2008 the current ratio has increased, but in 2009 it has decreased.




                                                                                           4
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QUICK RATIO

This ratio is an indicator of a company's short-term liquidity. The quick ratio measures a
company's ability to meet its short-term obligations with its most liquid assets. The higher the
quick ratio, the better is the position of the company

                                                  (Current asset - Inventory)
                           Quick Ratio =
                                                       Current liability



              Company’s Name                  2008                   2007           2009
              Heidelberg Cement
                                           0.657 times          0.7134 times    1.5163 times
               Bangladesh Ltd.
   Meghna Cement Mills Ltd.                0.9169 times         0.4327 times      1.23times


              Confidence cement             0.88 times            0.77 times    0.00553 times



 1.6
 1.4                                                       Heidelberg
 1.2                                                       Cement
   1                                                       Bangladesh Ltd.
 0.8                                                       Meghna Cement
 0.6                                                       Mills Ltd.
 0.4
 0.2                                                       Confidence
                                                           cement
     0
                 2007        2008          2009




                                                                                              5
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   Heidelberg: From 2007 to 2009, the ratio has been taking ups and downs. In 2008, the
   company’s ratio was lower than 2007 and in 2009,it is higher than 2008; so basically we can
   see that in 2009 the company had more Current Assets than other two years to pay off the
   Current Liabilities. So, in year 2009, the company was in better position than the other two
   years.

      Meghna: From 2007 to 2008, the ratio has been increasing and it followed the same trend
   in 2009; so basically we can see that in 2009 the company had more Current Assets than
   other two years to pay off the Current Liabilities. So, in year 2009, the company was in
   better position than the other two years.




      Confidence: We can see that the quick ratio fo Confidence cement is decreasing from
   2007 to 2008 and followed the same trend in 2009 too.

Asset Management Ratios

There are discussed five types of asset management ratios:
              Inventory turnover ratio
              The days sales outstanding
              Fixed asset turnover ratio
              Total asset turnover ratio


INVENTORY TURNOVER RATIO

The ratio is regarded as a test of efficiency and indicates the rapidity with which the company
is able to move its merchandise.


                                                 Sales
                                     ITR =
                                               Inventory


                                                                                            6
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   Company’s Name                  2007                          2008            2009
 Heidelberg Cement
                               8.303 times                 4.37 times        8.3702 times
    Bangladesh Ltd.
    Meghna Cement
                                 2.97 times                5.378 times        43.6 times
          Mills Ltd.

  Confidence cement              6.42 times                7.72 times        12.510 times




 50
                                                    Heidelberg
 40                                                 Cement
                                                    Bangladesh Ltd
 30
                                                    Meghna Cement
                                                    Mills Ltd.
 20

 10                                                 Confidence
                                                    cement
  0
              2007     2008        2009




Heidelberg: In 2007 the company had a turnover of 8.3 times its inventory. In 2008 the ratio
decreased but in 2009 it increased again.

Meghna: In 2007 the inventory turnover ratio was 2.97 times its inventory. In 2008 the ratio
increased a bit but in 2009 it increased to 43.6.

Confidence: In 2007, the companies ITR was 6.42 times, in 2008 and 2009 it was 7.72 times
and 12.510 times respectively.




                                                                                           7
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Summarize: Comparing the three companies, we can see that the ITR for Meghna cement has
the best position from the other two.The ratio decreased in 2008 a bit, but it was recovered
again in 2009. The company has sold and restocked goods more than the other two
companies. This is the reason for the increase of sales of the company.




TOTAL ASSET TURNOVER RATIO

The ratio is regarded as a test of efficiency and indicates the rapidity with which the company
is able to move its merchandise.


                                                Sales
                              TATO =
                                              Total asset


   Company’s Name                   2007                    2008                    2009
 Heidelberg Cement
                              1.091 times               1.1084 times            1.1951 times
    Bangladesh Ltd.
    Meghna Cement
                              0.983 times               1.120 times             1.4188 times
          Mills Ltd.

  Confidence cement                1 times               1.07 times             0.5221 times




                                                                                            8
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  1.6
  1.4
  1.2
                                                    Heidelberg Cement
     1                                              Bangladesh Ltd
  0.8                                               Meghna Cement Mills
  0.6                                               Ltd.

  0.4                                               Confidence cement

  0.2
     0
                2007        2008        2009

Heidelberg: - The ratio has increased a bit from 20o7 to 2009. So, far the highest total asset
turnover ratio has been in year 2009.

Meghna: - The ratio has been increased from 2007 to 2008 and then again increased at 2009.
It has been highest in the year 2009 .That means Meghan’s total asset turnover ratio has
improved much in 2009 compared to 2007.

Confidence: The ratio has increased a bit in 2008 from 2007, but in 2009 it decreased again.

Summarize: According to the graph, we can see that Meghna cement has maintained a good
TATO from 2007 to 2009 from the other two companies. It means, Meghna has better
position in terms of TATO. The reason is the increase of sales than the other two companies
against total asset.



FIXED ASSET TURNOVER RATIO

                                                    Sales
              Fixed Asset Turnover Ratio =
                                                Fixed asset




                                                                                           9
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   Company’s Name                   2007                     2008                  2009
 Heidelberg Cement
                                 1.9051 times             2.233 times          2.72018 times
    Bangladesh Ltd.
    Meghna Cement
                                 2.256 times              2.79 times           4.1158 times
          Mills Ltd.

  Confidence cement               1.95 times              2.08 times           0.72326 times

  4.5
     4
  3.5
     3                                             Heidelberg Cement
                                                   Bangladesh Ltd.
  2.5
                                                   Meghna Cement Mills
     2                                             Ltd.
  1.5                                              Confidence cement
     1
  0.5
     0
              2007        2008        2009

Heidelberg: In 2007 the company had a fixed asset turnover of 1.905 times which increased
to 2.23 in 2008 and 2.72 in 2009.
Meghna: In 2007 the company had a fixed asset turnover of 2.5 times which increased to
2.79 in 2008 and 4.115 in 2009. The increase shows that the company is doing well and using
its assets efficiently.
Confidence: In 2007 the ratio was 1.95 and it increased a bit to 2.08 in 2008 but deceased to
.72 in 2009.



Summarize: Comparing the company’s fixed asset ratio we can see that Meghna is doing
better as their ratio increases every year, whereas Hiedelberg has a slightly increasing ratio
and Confidence has a downward sloping ratio. This means the productivity of Meghna cement
has reached its maximum using the existing fixed asset.


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DSO ANALYSIS

              It indicates the average length of time the firm must wait after making a sale before it
receives cash.




  Company’s Name                       2007                    2008                       2009
Heidelberg Cement
                                     37 days                  35 days               29.7200 days
   Bangladesh Ltd.
   Meghna Cement
                                     31 days                  34 days               22.2420 days
         Mills Ltd.

 Confidence cement                   39 days                  43 days               52.618 days

              DSO =
                               




              60

              50
                                                                      Heidelberg Cement
              40
                                                                      Bangladesh Ltd

              30                                                      Meghna Cement Mills Ltd

              20                                                      Confidence cement

              10

              0
                      2007            2008           2009




                                                                                                  11
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Heidelberg: It took 35 days for the company to collect the receivables which has decreased
from the previous year and it decreased again in 2009.

Meghna: It took 34 days for the company to collect the receivables which has increased from
the previous year and it decreased again in 2009.

Confidence: it took 43 days for the company to collect the receivables which has increased
from the previous year and it increased again in 2009.

Summarize: comparing the ratios we can see that Meghna is taking less days to collect the
receivables than the other two companies which is good for the company.

DEBT MANAGEMENT RATIOS

Debt management ratios reveal
1) The extent to which the firm is financed with debt and
2) Its likelihood of defaulting on its debt obligations. These ratios include:
 Debt ratio
              Times-Interest-Earned (TIE) ratio
              Debt Ratio


TIE RATIO
              This ratio measures the extent to which operating income can decline before the firm
is unable to meet its annual interest cost. The higher the value the better able the firm is to
fulfill its interest obligation.

                                                  EBIT
                                   TIE =
                                             Interest charge




                                                                                             12
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   Company’s Name                   2007                    2008                          2009
 Heidelberg Cement
                               12.84 times               11.19 times                52.30times
    Bangladesh Ltd.
    Meghna Cement
                                2.79 times               1.31 times                4.26339 times
          Mills Ltd.

  Confidence cement                 4.49                     -0.5                  20.408 times




   60

   50
                                                               Heidelberg Cement
   40
                                                               Bangladesh Ltd.
   30                                                          Meghna Cement Mills Ltd.
   20
                                                               Confidence cement
   10

     0
               2007          2008            2009
  -10

   Heidelberg: from 2007 to 2008, the company’s TIE ratio has decreased to 11.19, but it
increased to 52.3 in 2009.

   Meghna: On the other hand TIE ratio of Meghna is relatively low which is not so good for
that company. If they increase this ratio, it will be good for the company.

   Confidence: For Confidence cement, the TIE ratio decreased in 2008 but increased again in
2009.




                                                                                                 13
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   After analyzing the ratios we can say that Heidelberg is having a good position in terms of
TIE ratio. This is because the company is taking less loan and making a good operating profit.

DEBT RATIO

              Debt ratio measures the proportion of total assets financed by the firm’s creditors. The
higher the ratio the greater the amount of other people’s money being used to generate profit.

                                                 Total debt
                             Debt Ratio =
                                                 Total asset

   Company’s Name                       2007                      2008                     2009
 Heidelberg Cement
                                       44.56 %                  53.65 %                    34%
    Bangladesh Ltd.
    Meghna Cement
                                       48.44 %                  80.29 %                 79.7020%
          Mills Ltd.

  Confidence cement                    37.7%                      46%                     19.58%



  90
  80
  70
  60                                                             Heidelberg Cement
                                                                 Bangladesh Ltd.
  50
                                                                 Meghna Cement Mills
  40                                                             Ltd.
  30                                                             Confidence cement
  20
  10
    0
                 2007           2008           2009

Heidelberg: From 2007 to 2008 the company’s debt ratio is increasing and from 2008 to 2009
the ratio has decreased.

                                                                                                  14
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Meghna: Meghna’s debt is also increasing which is not good for the company. In 2008, it
increased to 80.29% and from that year it maintained a stable position but it is still high,
which is not good for the company. So it is needed to decrease the debt ratio.

Confidence: the company’s ratio increased in 2008 a bit but it dropped down in 2009 again.

Summarize: After analyzing 3 years ratio we can see that Heidelberg and Confidence had
financed more or less half of its assets with debt. But Meghna has very higher debt ratio than
Heidelberg and Confidence in each year. From this ratio Meghna is in risky position.
Therefore, the Meghna may want to take the tax advantage for short term position. Comparing
to Meghna, Heidelberg and Confidence is in good position.

PROFITABILITY RATIO

Profitability is the net result of a number of policies and decisions. Profitability ratios show
the combined effects of liquidity, asset management and debt on operating results. There are
four important profitability ratios that we are going to analyze:
              Return on Asset
              Return on Equity
              Profit Margin on Sales


Return on Assets




ROA

                                   Net income available to common stockholders
                     ROA =
                                                Total Assets




                                                                                           15
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   Company’s Name                   2007                   2008                    2009
 Heidelberg Cement                 12 %                    10 %                  14.1097%
    Bangladesh Ltd.
    Meghna Cement                 3.71 %                  0.793 %                 3.98%
          Mills Ltd.
                                   4.79%                  (2.47%)                6.1665%
  Confidence cement




                16
                14
                12
                                                             Heidelberg Cement
                10
                                                             Bangladesh Ltd.
                 8
                                                             Meghna Cement
                 6
                                                             Mills Ltd.
                 4
                                                             Confidence cement
                 2
                 0
                -2     2007        2008       2009
                -4

        Heidelberg: From the year 2007 to 2008, the ROA has decreased but from year 2008-
        2009 ROA has increased which basically means that in the year of 2009, the company
        had the most net income compared to other two years. Net income has increased
        compared to year 2008 which is good sign for the company.
        Meghna: From the year 2007 to 2008, the ROA has decreased but from year 2008-2009
        ROA has increased which basically means that in the year of 2009, the company had the
        most net income compared to other two years. Net income has increased compared to
        year 2008 which is good sign for the company.
        Confidence: From the year 2007 to 2008, the ROA has decreased but from year 2008-
        2009 ROA has increased which basically means that in the year of 2009, the company




                                                                                          16
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        had the most net income compared to other two years. Net income has increased
        massively compared to year 2008 which is good sign for the company.

        Summarize: In 2007, 2008 and as well as 2009, ROA of Heidelberg is much higher than
        Meghna and Confidence. This high return of assets results from Heidelberg high basic
        earning power and low interest cost resulting from its less use of debt than Meghna and
        Confidence. Basic earning power and interest cause Heidelberg’s net income relatively
        high. It is a good sign for the company.



              ROE

                                 Net income available to common stockholders
                    ROE =
                                                   Common equity




  Company’s Name                    2007                    2008                    2009
 Heidelberg Cement
                                  21.75 %                  17.9 %                21.4193%
    Bangladesh Ltd.
   Meghna Cement
                                   17.2 %                   4%                   19.6089%
          Mills Ltd.

 Confidence cement                 7.69%                   (4.53%)                7.668%




                                                                                             17
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   25

   20

   15                                              Heidelberg Cement
                                                   Bangladesh Ltd.
   10
                                                   Meghna Cement
                                                   Mills Ltd.
     5
                                                   Confidence cement
     0
              2007       2008       2009
    -5

  -10

         Heidelberg: we can see that from 2007 to 2008 the company’s ROE has decreased, but it
         increased again in 2009.
         Meghna: From 2007 to 2008, the company’s ROE has decreased a lot. The ratio is taking
         ups and downs. In 2009, the ratio increased again to 19.9%.

       Confidence: we can see that the ROE of this company was also taking ups and
       downs. The ratio decreased to -4.53% in 2008 and increased again in 2009.

         Summarize: analyzing all the data, we can conclude that Heidelberg is in better position
         in terms of ROE. The money Heidelberg generates from every 1 taka of equity is more
         than both of Meghna and Confidence cement.




PROFIT MARGIN ON SALES

                                      Net income available to common stockholders
Profit Margin on Sales =
                                                          Sales




                                                                                            18
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  Company’s Name                  2007                   2008                         2009
 Heidelberg Cement             11.05 %                   9.3 %                      11.8059%
    Bangladesh Ltd.
   Meghna Cement                3.77 %                  0.71 %                        2.8%
          Mills Ltd.
                                  4.78%                 (2.31%)                     11.8089%
 Confidence cement




  14
  12
  10
                                                                Heidelberg Cement
    8                                                           Bangladesh Ltd.
    6                                                           Meghna Cement Mills
    4                                                           Ltd.
    2                                                           Confidence cement
    0
   -2          2007        2008             2009

   -4

Heidelberg: In 2007 it generates 11.05 taka net profit from every 1 taka of net sales; in 2008
it generates 9.3 taka net profit from every 1 taka of net sales and in 2009 it generates 11.8059
taka net profit from every1 taka. The Profit Margin of year 2009 is the highest; increased from
2007 which showed the company was doing pretty well. But in 2008 it decreased, but in year
2009 it increased a lot which is a good sign for the company.

Meghna: In 2007 it generates 3.77 taka net profit from every 1 taka of net sales; in 2008 it
generates 0.71 taka net profit from every 1 taka of net sales and in 2009 it generates 2.8 taka
net profit from every1 taka. The Profit Margin of year 2007 is the highest; in 2009 it has
increased from 2008 but less than 2007 which showed the company are not doing pretty well.
But in 2008 it decreased, but in year 2009 it increased which is not a good sign for the
company.

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Confidence: : In 2007 it generates 4.78 taka net profit from every 1 taka of net sales; in 2008
it generates (2.31) taka net profit from every 1 taka of net sales and in 2009 it generates
11.8089 taka net profit from every1 taka. The Profit Margin of year 2009 is the highest; in
2009 it has increased from 2007 which showed the company is doing pretty well. But in 2008
it decreased, but in year 2009 it increased which is a good sign for the company.

Summarize: After analyzing the 3 years ratios, we can see that Heidelberg’s Profit margin
ratios are well above from the ratios of Meghna and Confidence cement but in year 2009
Confidence cement is above Heidelberg. Heidelberg’s ratio is high because their costs are
relatively lower than Meghna and Confidence cement. Confidence has also lowered their cost
for that reason their above Heidelberg cement in year 2009.

MARKET VALUE RATIO

 We are going to have a discussion mainly on two types of ratios:
              Price/ Earnings ratio
              Market/ Book ratio

PRICE / EARNING RATIO

                                                     Price per share
                     Price / Earnings Ratio =
                                                     Earning per share




  Company’s Name                         2007                2008                   2009
 Heidelberg Cement
                                      10.954 times       11.562 times         14.25 times
    Bangladesh Ltd.
   Meghna Cement
                                       5.34 times        37.55 times         22.229 times
          Mills Ltd.

 Confidence cement                     13.3 times             N/A            20.379 times



                                                                                            20
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  40
  35
                                            Heidelberg
  30                                        Cement
  25                                        Bangladesh Ltd.
                                            Meghna Cement
  20
                                            Mills Ltd.
  15
  10                                        Confidence
    5                                       cement

    0
              2007   2008    2009


Heidelberg: The price earnings ratio from 2007 to 2009 has been increasing, which shows the
company’s growth prospects are getting better every year. It even shows that the company is
not that much of riskier in the year 2009 compared to the year 2007.

Meghna: The price earnings ratio of this company is taking ups and down.But in the year
2008, the company’s ratio went up which shows that the company’s growth prospects are
getting better. But in the year of 2009, the ratio went down again.

Confidence: The ratio for the company is not good. From 2007 to 2009 the ratio has
decreased much.

Summarize: Though the ratio for Meghna is higher than the other two companies, the
unstable condition of the ratio has made it risky. On the other hand, Hiedelberg has a stable
ratio from the other two companies which will attract the investors easily.




                                                                                        21
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MARKET BOOK VALUE PER RATIO

                                         Market price per share
                     M/B Ratio =
                                            Book value per share


  Company’s Name                     2007                    2008              2009
 Heidelberg Cement
                                   2.38 times             2.074 times       3.061 times
    Bangladesh Ltd.
   Meghna Cement
                                   1.28 times             1.51 times        4.359 times
          Mills Ltd.

 Confidence cement                 1.02 times                N/A            1.56 times




  5

  4
                                                        Heidelberg Cement
  3                                                     Bangladesh Ltd.
                                                        Meghna Cement
  2                                                     Mills Ltd.
                                                        Confidence cement
  1

  0
              2007         2008         2009


Heidelberg: From year 2007 to 2009, the ratio is very stable. From 2007 to 2009 the ratio did
not increased much.

Meghna: From year 2007 to 2008, the ratio was stable. But in the year 2009, the ratio was
higher than the other two years; the investors were willing to pay more for stocks than their
accounting book values. But the ratio has very unstable condition.

Confidence: We can see that the ratio has increased a bit from 2007 in 2009, but still it is
lower than the other two companies.

                                                                                          22
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Summarize: By analyzing 3 years ratio we see that in 2007 Heidelberg paid 2.38 taka for
each 1 taka of book value of each stock and in 2008 and 2009 it paid 2.07 taka and 3.06 taka
for each 1 taka of book value of each stock. Firms expect to earn high returns relative to their
risk, typically have a higher Market to Book Value ratio. We can easily improvise that
Heidelberg is performing well than Meghna and Confidence by improving profit, increasing
their market share as well as offering higher quality products. Its higher Market to Book
Value ratio indicates that the stock of Heidelberg has more attractive outlook than Meghna
and Confidence cement.




Conclusion:-

Considering the overall market valuations for the three companies, Heidelberg Cement
Bangladesh Ltd. seems to be in a better position in market than Meghna Cement Mills Ltd.
and Confidence cement Ltd. Heidelberg Cement Bangladesh Ltd has been yielding high rates
of return during 2007-2009, has been able to create greater expectations from their investors
making them willing to pay more for their shares. For a higher Return On Asset and Return
On Equity, stable P/E ratio and a good Market to Book value ratio, the investors still put more
confidence in Heidelberg Cement Bangladesh Ltd. than in Meghna Cement Mills Ltd and
Confidence cement Ltd. whose market growth rate is relatively lower than Heidelberg Cement
Bangladesh Ltd in most of the aspects. Lastly, the earning per share of Heidelberg Cement
Bangladesh Ltd is higher than the Meghna Cement Mills Ltd. and Confidence cement Ltd. So,
above all it is safer to invest in Heidelberg Cement Bangladesh Ltd.




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Description: Annual report on financial ratios about cement industry.In this report we can see the performance of the cement industry.