Analysis of Credit-Strength of Cement Industry in Bangladesh

Document Type: Research Paper


1 Department of Accounting, Bangladesh University of Business and Technology, Dhaka, Bangladesh

2 Department of Business Administration, Mawlana Bhashani Science and Technology University, Bangladesh


In this study it has been initiated to find out the credit strength and financial performance of cement industries in Bangladesh through investigating the financial report for the period from 2007 to 2011. Financial ratios are employed to measure the Liquidity (Working capital to Total Assets), Profitability (Retained Earnings to Total Assets), Efficiency (Earnings before Interest and Taxes to Total Assets), Volatility (Market Value of Equity to Book Value of Total Liabilities) and Total Asset Turnover analysis (Sales to Total Assets). For analyzing, the credit strength of the cement industry in Bangladesh, a renowned model of predicting credit strength named “Altman Z Score Model” has been used. The collected data are also analyzed by using statistical tool. The study has found that the cement companies in Bangladesh are mostly on financial Distress Position because the sample industry held about 48% over the last 5 years where about 32% of the companies are in the Grey Zone and only 20% of the companies are in Safe Position. So, the credit strength of cement industry in Bangladesh is far behind of its landmark.  


Altman, E. I. (1968). Financial Ratios, Discriminate Analysis and the Prediction of Corporate Bankruptcy. The Journal of Finance. 23 (4), 589-609
Boyce, J. (1986). Kinked Exponential Models for Growth Rate Estimation. Oxford Bulletin of Economics and Statistics, Department of Economics,University of Oxford. 48 (4), 385-391
Canagavally, R. (2000). An Evaluation of Mergers and Acquisitions, Dissertation (Unpublished), Pondicherry University, Pondicherry, India.
Chakraborty, I. (2010). Capital Structure in an Emerging Stock Market: The Case of India. Research in International Business and Finance. 24 (3), 295-314
Chakravarty, S. M. (1989). Indian Cement Industry from Control to Decontrol, Bombay: Wadhera Publications.
Chakravarty, S. M (1993). Growth Prospects for Cement Industry in India, New Delhi: Aashish Publications.
Chandra, P. (1995). The Investment Game, New Delhi:Mc Graw Hill Publishing Co. Ltd.
Chandrakumarmangalam, S. and Govindasamy, P. (2010). Leverage” – An Analysis and its Impact on Profitability with Reference to Selected Cement Companies in India. European Journal of Economics, Finance and Administrative Sciences. 27, 53-66
Das, K. B. (1987). Cement Industry of India, New Delhi: Ashish Publishing House, 8/81.
Gadhok, K. D. (2000). 85 Years of Cement Industry (1914-1999) New Delhi: National Council for Cement and Building Materials (NCB).
Gaganis, C., Liadaki, A., Doumpos, M. and Zopounidis, C. (2009). Estimating and Analyzing the Efficiency and Productivity of Bank Branches: Evidence from Greece. Managerial Finance. 35 (2), 202-218
Giokas, D. I. (2008). Assessing the Efficiency in Operations of a Large Greek Bank Branch Network Adopting Different Economic Behaviors. Economic Modeling. 25 (3), 559-574
Goel, V. K. and Nair N. K. (1978). Productivity Trends in Cement Industry in India, New Delhi: National Productivity Council..
Gokarn, S. and Vaidya, R. (1993). Deregulation and Industrial Performance, The Indian Cement Industry. Economic and Political Weekly. 28 (8/9), 33-41
Hajihassani, V. (2012). A Comparison of Financial Performance in Cement Sector in Iran. Inventi Impact Microfinance and Banking. 2012 (4), 1-8
Hirway, I. and Shah, A. (2006). Industrial Growth and Linkages: A Study of Cement Industry in Coastal, Saurashtra, Gujarat, Centre for Development Alternatives Working Paper, Ahamadabad, India.
Hye, D. M. A. and Rahman, M. A. (1997). Performance of Selected Private Sector General Insurance Companies in Bangladesh, Chittagong University Studies (Commerce). 13, 137-160
Jahur, M. S. and Parveen, J. A. (1996). An Analysis of Financial Performance of Public Enterprises-A Case Study of Chittagong Steel Mills Ltd, Chittagong University Studies (Commerce). 12, 173-184
Jahur, M. S. and Uddin, M. M. (1995). ). Measurement of Operational Performance through Ratio Analysis – A Case Study of Usmania Glass Sheet Factory Ltd. Chittagong, Chittagong University Studies (Commerce). 11, 245-255
Kaura, M. N and Balasubramaniam, C. S. (1979). Inter Firm Comparison of Financial Performance of Cement Companies of India: A Cause and Effect Approach. ASCI Journal of Management. 9 (1), 50-67
Kulaksizoglu, T. (2007). Measuring the Effectiveness of Competition Policy: Evidence from the Turkish Cement Industry, MPRA Paper No. 357. , 1-47
Manandhar, R. and Tang, J. C. S. (2002). The Evaluation of Bank Branch Performance Using Data Envelopment Analysis a Framework. Journal of High Technology Management Research. 13 (1), 1-17
Mathuva, D. M. (2009). The Influence of Working Capital Management Components on Corporate Profitability: A Survey on Kenyan Listed Firms. Research Journal of Business Management. 4 (1), 1-11
Mazhar, A. and Nasir, M. (2010). Determinants of Capital Structure Decisions: Case of Pakistani Government Owned and Private Firms. International Review of Business Research. 6 (1), 40-46
Mistry, D. S. (2011). Determinants of Profitability of Indian Cement Industry. ASIA Pacific Journal of Research in Business Management. 2 (3)
Muslumov, A. (2005). The Financial and Operating Performance of Privatized Companies in the Turkish Cement Industry. METU Studies in Development,. 32 (1), 59-101
Ohlson, J. A. (1980). Financial Ratios and the Probabilistic Prediction of Bankruptcy. Journal of Accounting Research. 18 (1), 109-131
Pandey, I. M. (1979). Financial Management, New Delhi: Vikas Publishing House Pvt. Ltd. , 109-116
Portela, M. C. A. S. and Thanassoulis, E. (2007). Comparative Efficiency Analysis of Portuguese Bank Branches. European Journal of Operational Research. 177 (2), 1275-1288
Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: Free Press.
Prahalad, C. K. and Hamel, G. (1990). Core Competence of the Corporation. Harvard Business Review. 68 (3), 79-81
Salauddin, A. (2001). Profitability of Pharmaceutical Companies of Bangladesh. The Chitagong University Journal of Commerce. 16, 54-64
Samluther, C. T. (2007). Liquidity, Profitability and Risk Analysis. The Management Accountant, The Institute of Cost and Works Accountants of India. 42 (10)
Shah, H. and Telser, H. (2006). India’s Booming Cement Industry. The Journal of Refractory Innovations, RHI Bulletin, RHI Technology, Leoben, Austria..
Sheikh, Md., Hannan, A., Miah, S. and Abdus, M. (1979). Financial Position and Performance Analysis of Bangladesh Shilpa Bank. Islamic University Studies (Part C). 1 (2), 207-255
Surjit, K. (2002). A Study of Corporate Takeovers in India, Ph. D Dissertation, University of Delhi, New Delhi.