Financial Performance Analysis of Grameenphone Ltd. - Report

This report provides a comprehensive financial performance analysis of Grameenphone Ltd., the leading telecommunications service provider in Bangladesh. The analysis covers a five-year period, evaluating key financial ratios such as current ratio, debt-to-equity ratio, net profit margin, return on assets (ROA), return on equity (ROE), and earnings per share (EPS). The report assesses Grameenphone's liquidity, solvency, and profitability, highlighting trends and providing insights into the company's financial health. The analysis includes data from the balance sheet and income statement, offering a detailed overview of Grameenphone's financial performance and providing recommendations for potential investors. The report concludes that while the current ratio is unsatisfactory, other indicators suggest that investing in Grameenphone would not be risky compared to other competitors.

Grameenphone is the leading telecommunications service provider in Bangladesh, with more
than 74 million subscribers and 46.3% subscriber market share (as of January 2019). It is a
joint venture between Telenor and Grameen Telecom Corporation. Telenor, a
telecommunication company from Norway, owns a 55.8% share of Grameenphone, Grameen
Telecom owns 34.2% and the remaining 10% is publicly held.
Grameenphone introduced pre-paid mobile phone service in Bangladesh in September 1999.
Via an EDGE/GPRS/3G/4G enabled network. Grameenphone was the first mobile operator in
Bangladesh to offer internet via EDGE and 3G 4G services to its subscribers. In 2017,
Grameenphone introduced its MyGP app that allowed subscribers, through an embedded
platform called Flexiload, to personalize their own cell phone packages and discounts based
on their personal need for voice minutes, data volumes, text messaging. The MyGP app
allowed customers to monitor their usage in real time. MyGP now encompasses GP apps
such as Bioscope and Shoparu, as well as third party ride sharing apps like Uber and Shohoz.
Grameenphone has been a partner in Bangladesh’s development journey and looks forward to
continued contribution towards the government’s Digital Bangladesh ambitions. With its
modernized network and extensive coverage, the Company is helping to reduce the digital
divide of the country. Distance, mobility or socio-economic factors no longer pose a barrier
to education, business or lifestyle needs. The enhanced access to information is now enabling
start-ups, small-scale businesses and farmers, to innovate and grow.
Financial Performance Analysis of
Grameenphone Ltd.

Current Ratio Analysis
The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those due within one year. It tells investors and analysts how a company can
maximize the current assets on its balance sheet to satisfy its current debt and other payables.
Current Ratio = Current Assets/Current Liabilities
Current Ratio
2019 2018 2017 2016 2015
Current Assets to
Current Liabilities 0.23 0.16 0.26 0.16 0.17
Current ratio of
Grameenphone Limited shows a mix trend. In the year 2017 current ratio was 0.23 it means
that the bank has Tk. 0.23 current assets against Tk 1 current liabilities. From the analysis of
last 05 years we observed that the company do not run with too much liquidity on hand.
Although their current asset position is not quite good, they hold a strong position in the
market.
2019 2018 2017 2016 2015
0
0.05
0.1
0.15
0.2
0.25
0.3
Current Ratio

Debt to Equity Ratio
The debt to equity ratio shows the percentage of company financing that comes from
creditors and investors.
Debt to Equity Ratio = (Total Debt/Total Equity)
Debt to Equity
2019 2018 2017 2016 2015
Debt/Equity 0.62 0.50 0.63 0.87 1.19
The optimal
debt-to- equity
ratio will tend to vary widely by industry, but the general consensus is that it should not be
above a level of 2.0. Here in case of Grameenphone the D/E ratio was decreasing from the
year 2015. But Last year it had a good D/E ratio compared to the one before previous. We
can conclude it by saying the D/E ratio of Grameenphone is satisfactory.
2019 2018 2017 2016 2015
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Debt to Equity Ratio

Net Profit Margin
Profit margin is called net margin. It indicates what percentage of net operating revenue add
to its profit.
Net Profit Margin= (Net Income After Tax/Total Operating Revenue)
Net Profit Margin
2019 2018 2017 2016 2015
NP Margin 24% 25% 20% 19% 18%
From the analysis
above, we see that
the highest profit margin of Grameenphone was 25% in 2018. It means they make Tk. 25
profit from every 100 Tk operating revenue. From above analysis we can say that the net
profit margin of the company is satisfactory.
2019 2018 2017 2016 2015
0%
5%
10%
15%
20%
25%
30%
Net Profit Margin

Return on Asset
It is a profitability ratio. It indicates the amount of profit made by the organization by using
100 Tk total assets.
Return on Assets= (Net Income after tax/Total Assets)
Returns on Assets
2019 2018 2017 2016 2015
ROA 24% 25% 20% 17% 14%
2019 2018 2017 2016 2015
0%
5%
10%
15%
20%
25%
30%
Return on Assets

We see that the return on assets is increasing during the considering period. In the year 2018
it was maximum (25%) and in the year 2015 it was minimum (14%). From our analysis we
can say that the overall return on assets of the company is quite satisfactory.
Return on Equity
Return on equity indicates the profitability of the company. ROE is often used to compare a
company to its competitors and the overall market.
Return on Equity= (Net profit after Tax/Shareholders Equity) *100
Returns on Equity
2019 2018 2017 2016 2015
ROE 92% 98% 84% 72% 64%
We found out the highest ROE of Grameenphone in the year 2018 which was 98%. Although
in 2019 it was decreased by 6% but the overall return of equity over the years were
satisfactory.
2019 2018 2017 2016 2015
0%
20%
40%
60%
80%
100%
120%
Return on Equity

Earnings Per Share
EPS indicate the profitability of an organization. Higher EPS means the company have higher
profit and the company is very lucrative for the investor.
Earnings Per Share (EPS)= Net income/Total number of Shares
Earnings Per Share in BDT
2019 2018 2017 2016 2015
EPS 25.56 24.71 19.36 16.09 14.11
***Based on weighted average number of share of BDT 10 each
2019 2018 2017 2016 2015
0
5
10
15
20
25
30
Earnings Per Share

EPS represents that it is earned on behalf of each ordinary shares. EPS is closely observed by
investors because it is an important indicator of business success. We found that EPS of
Grameenphone was 14.11 Taka in 2015 and it gradually increasing and reached at 25.56 Taka
in 2019. This increasing trends in EPS is good sign for the company.
Recommendation
Based on analysis what I found is,
 The current ratio of the company is unsatisfactory.
 The equity position against of debt is satisfactory.
 The net profit margin of the company is satisfactory.
 Overall return on assets of the company is quite satisfactory.
 The return on equity of Grameenphone is not bad.
 Increasing growth in EPS is found in analysis which is good sign for
Grameenphone.
So, I would say that investing would not be risky compared to other competitors of this field.
So, investors should definitely invest on Grameenphone.

Grameenphone Ltd.
Balance Sheet
Particulars 2019 2018 2017 2016 201
Current Assets 20,999 13,369 20,658 10,941 11,928
Non-Current Assets 127,735 125,345 109,562 119,558 120,522
Total assets 148,734 138,713 130,220 130,500 132,450
Current Liabilities 90,426 82,963 78,274 70,536 69,276
Non-Current Liabilities 19,961 18,914 20,558 28,848 34,199
Total liabilities 110,387 101,877 98,832 99,384 103,476
Shareholders' equity 38,347 36,836 31,388 31,116 28,974
Total liabilities and
shareholders' equity 1,48,734 138,713 130,220 130,500 132,450
Paid Up Capital 13,503 13,503 13,503 13,503 13,503
Face Value Per Share 10 10 10 10 10
Cash Dividend on paid up
capital
130% 280% 205% 175% 140%
EPS 25.56 24.71 19.36 16.09 14.11
Income statement
Particulars 2019 2018 2017 2016
Revenue 143,656,271 132,831,967 128,435,814 114,862,160
Total Operating Expenses (77,004,443) (76,054,985) (78,481,425) (73,296,037)
Total Operating Profit 66,651,828 56,776,982 49,954,389 41,566,123
Total Non-Operating
Income/Expenses (2,752,869) (1,928,928) (2,632,099) (3,387,717)
Profit Before Tax 63,898,959 54,848,054 47,322,290 38,178,406
Provision for loans and assets (29,382,199) (21,485,486) (19,899,642) (15,652,051)
Profit After Tax 34,516,760 33,362,568 27,422,648 22,526,355
Other comprehensive income
Item that will not be reclassified
subsequently to profit or loss
76,596 (210,653) 457,370 21
Total comprehensive income
for the year 34,593,356 33,151,915 27,880,018 22,526,376
Audited EPS 25.56 24.71 20.31 16.68