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American Finance & Banking Review 

Vol. 1, No. 1; 2017 

Published by Centre for Research on Islamic Banking & Finance and Business 

 

1 
 

 

An Empirical Research on Fu-Wang Foods Ltd: Industry, 

Strategy, Accounting, Ratio, Valuation and Proforma Analysis  
 

K. M. Anwarul Islam1 

 

1 Department of Business Administration, The Millennium University, Dhaka, Bangladesh 

Correspondence: C/O K. M. Kamal Uddin, Deputy Registrar, Registrar’s office, Room No-201(K),Dhaka 

University, Dhaka-1000, Tel: +8801768343171, E-mail:ai419bankingdu@gmail.com 

 

Received: June 21, 2017       Accepted: July 15, 2017     Online Published: July 22, 2017 

 

Abstract 

In this study an attempt was made to prepare the research on Fu-Wang Foods Ltd. We have also analyzed the 

strategies, accounting policies and ratios. Historical and Proforma income statements, balance sheet and cash 

flow statement have been made. We have also determined, loosely speaking, the intrinsic value of stocks of 

firm. The company is in food processing industry. The position of Fu-Wang is good in this industry. Its long 

term profitability and sustainability is also secured. The accounting policies and estimates of Fu-Wang as well 

as the food industry are flexible enough. Management enjoys moderate discretionary powers. Analysis of the 

various ratios over the five years reveals that many of them are satisfactory and some are not. By doing the 

valuation of the company with some assumption we found the intrinsic value of the firm is approximately 36 tk. 

Sensitivity of stock price by changing the discount rate and sales growth rate has also been examined. By 

projecting the historical accounting figures we have also prepared Proforma income statements, balance sheets 

and cash flow statements and found that the future of Fu-Wang Foods ltd. is rather satisfactory, given some 

assumptions. 

 

Keywords: Fu-Wang Foods Ltd, Industry, Strategy, Accounting, Ratio, Valuation, Proforma Analysis. 

 

1. Introduction 

Prior research examines the influence of investor sentiment on corporate decisions such as capital investments, 

dividend payments, stock splits, and corporate name changes.However, as Baker, Ruback, and Wurgler [2007] 

observe, there is limited evidence on the association between investor sentiment and managers’ disclosure 

decisions. We address this issue by examining the relation between investor sentiment and the discretionary 

disclosure of ―pro forma‖ (adjusted) earnings measures. 

Specifically, we examine the influence of investor sentiment on managers’ decisions to (1) disclose adjusted 

earnings metric within the quarterly earnings press release; (2) exclude higher levels of recurring and 

nonrecurring items in calculating the pro forma earnings figure; and (3) emphasize the pro forma metric by 

placing it more prominently within the earnings press release. We further investigate whether the relation 

between investor sentiment and pro forma earnings disclosure reflects managers attempt to inform or mislead 

investors, or whether it reflects managers’ own sentiment-driven beliefs. 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

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While investor sentiment may influence various forms of corporate disclosure, we focus on proforma earnings 

disclosure for three reasons. First, in a recent survey of financial executives, Graham, Harvey, and Rajgopal 

[2005] find that managers view pro forma earnings to be one of the most important performance metrics 

disclosed to investors. Second, while prior research finds that investors perceive manager-adjusted pro forma 

earnings to be more informative than GAAP earnings (see, e.g.,Bhattacharya et al. [2003]; Lougee and 

Marquardt [2004]; Bowen, Davis, and Matsumoto [2005]),several studies suggest that some managers use pro 

forma earnings disclosures aggressively and that investors may be misled by overly optimistic pro forma 

measures (e.g., Doyle, Lundholm, and Soliman [2003]; Frankel, McVay, and Soliman [2010]; Brown, 

Christensen, and Elliott 2011). This evidence is particularly salient since prior research suggests that 

less-sophisticated investors—who are most affected by sentiment (Kumar and Lee [2006], Baker and Wurgler 

[2007])—rely heavily on pro forma earnings information and are arguably the most at risk of being misled 

(Fredrickson and Miller [2004]; Elliott [2006]; Bhattacharya et al. [2007]). Third, anecdotal evidence suggests 

that pro forma reporting trends closely track recent stock market bubbles (Bradshaw and Sloan [2002]; Dyck 

and Zingales[2003]; Bhattacharya et al. [2004]) and that investor sentiment may have influenced the disclosure 

of pro forma earnings measures during bubble periods (Henry [2001]; D’Avolio, Gildor, and Shleifer [2002]). 

Taken together, thesearguments suggest that pro forma earnings disclosure provides a unique setting for 

exploring the relation between investor sentiment and managers’ disclosure decisions. 

2. Literature Review  

We examine the influence of investor sentiment on managers’ discretionary disclosure of ―proforma‖ (adjusted) 

earnings metrics in earnings press releases. We find that managers’ propensity to disclose an adjusted earnings 

metric increases with the level of investor sentiment and, in particular, the propensity to disclose an adjusted 

number that exceeds the GAAP earnings figure. Further, ouranalyses suggest that as investor sentiment 

increases, managers (1) exclude higher levels of both recurring and nonrecurring expenses in calculating the pro 

forma earnings number and (2) emphasize the pro forma figure by placing it more prominently within the 

earnings press release. Additional analyses indicate that the association between investor sentiment and 

managers’ pro forma disclosure decisions at least partly reflects opportunistic motives. Finally, we find that 

managers’ own sentiment-driven expectations also play a role in their pro forma disclosure decisions. (Brown, 

N. C., Christensen, T. E., Elliott, W. B., & Mergenthaler, R. D.,2012). 

Drawing on recent research on accounting-based valuation, this paper ventures to produce a structural approach 

to financial statement analysis for equity valuation. The structure not only identifies relevant ratios, but also 

provides a way of organizing the analysis task.The result is a fundamental analysis that is very much grounded 

in the financial statements; indeed, fundamental analysis is cast as a matter of appropriate financial statement 

analysis.The structural approach contrasts to the purely empirical approach in Ou and Penman (1989). That 

paper identified ratios that predicted earnings changes in the data; no thought was given to the identification. 

The approach also contrasts to that in Lev and Thiagarajan (1993) who defer to ―expert judgment‖ and identify 

ratios that analysts actually use in practice. 

2. Data Analysis  

2.1 Industry Analysis of Fu-Wang Foods Limited                 

1.1 The industry my selected company belongs to: Food Processing Industry 

1.2 Potential profitability of the Industry: 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

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1.2.1 Maintaining the quality of the product and keeping the processing of food hygienic are two most critical 

factors for the profitability of the industry. 

Two factors that are also very important and related for the profitability of the industry are: 

 Threat of new entrants  

 Intra-industry rivalry 

On the basis of Porter’s five factor model, the followings can be considered: 

 Threat of new entrants is highest since: 

 Capital requirements are low in foods industry. 

 Customers’ switching costs are low 

 Government does not  provide subsidy  or regulate prices/entry 

 Low BEP in foods industry 

 Bargaining power of  buyers is not highest as: 

 Buyers can not in-source backward 

 Buyers don’t know the production costs well 

 Foods industries are concentrated 

 Bargaining power of suppliers is not highest because:  

 Suppliers can not forward integrate 

 Suppliers’ products are not highly differentiated 

 Intra-industry rivalry is fiercest as: 

 Large number of competitors in the industry 

 Industry is growing 

 Buyers have low switching costs 

 1.3 The industry is capable of retaining the profit it makes because of the following factors: 

 Threat of new competitors entering the industry 

 Rivalry among current competitors in the industry         

 1.4 Other reasons 

 Food is one of the essential products 

 Industry is  in growing state 

 Bargaining power of  buyers and suppliers are not that much dominant 

2.2 Strategy Analysis of Fu-Wang Foods Limited:Generic strategy pursued by Fu-Wang Foods Limited is 

“Differentiation 

We think the company can survive and prosper given its strategy because of the following factors: 

 Higher demand at given price 

 Less price - sensitive demand 

 More varieties of product 

 More value added service 

 Quality product  

2.2.1 What kind of competition is observed - profit enhancing or profit destroying? 

Fu-Wang Foods Limited belongs to Food Processing Industry. This industry has too many competitors like 

Bangas Foods Ltd., BD Foods Ltd., Apex Foods Ltd., Bengal Foods Ltd., etc. Before we reach to any conclusion 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

4 
 

whether the competition is profit enhancing or profit destroying, the followings can be discussed- 

Competition can be done in two sectors -price segment or non-price segment. Price competition means changing 

price of products to attract more customers while non-price competition refers to sales promotions, 

advertisement, free samples etc. 

In general, price competition erodes profit by compelling the firm to receive fewer prices per unit of product 

unless the industry is in a growing phase. While the industry is stagnant in terms of life cycle, price competition 

will erode industry profit. 

Non-price competition has both negative and positive impacts. Impact can be negative because fixed cost is up 

due to installing new and efficient machineries to provide value added services. Impact can be positive as 

marginal cost and unit cost of value added services and core product are supposed to be decreasing due to 

efficient machineries. Moreover, differentiating the product gives the firm the opportunity to make the products 

dissimilar to those of others, hence making it increasingly difficult to enter the industry.  

Our firm believes in product differentiation. So do others in the industry because they are not indulging in price 

competition. 

Lastly, it can be that said I observe the competition is profit enhancing and not profit destroying. 

2.3 Accounting Analysis 

2.3.1 Identifying Key Accounting Policies 

Fu Wang is a manufacturer of processed foods. So, inventory valuation is very critical for it. So is its bad debts 

provision policy. The key accounting policies can be identified as below: 

2.3.1.1 Inventory Valuation: Inventories include raw material, finished goods and packing materials. They are 

stated at lower of the lower of cost and net realizable value on consistent basis.  Net realizable value is 

based on estimated selling price less any further costs expected to be incurred for completion and 

disposal. 

2.3.1.2 Bad debts Provision: There is no substantial amount of bad debts in the firm and it has no bad debt 

provision whatsoever. 

2.3.1.3 Depreciation Allowances: Depreciation is mainly charged on a straight in a basis with a range of 2.5% 

to 20%. 

2.3.1.4 Tax Holiday Reserve: The Company is enjoying tax holiday from August 1997 to July 2002 and is 

recording Tax holiday reserve for future. 

2.3.1.5 Employee Benefit Obligations: The Company did not introduce any employees’ benefit plan at first 

but at latter years. 

2.3.1.6 Revenue Recognition: The revenue during the year represents revenue from the sale of foods items 

which are recognized when deliveries are made, against the dale order received. 

2.3.2 Assessing Accounting Flexibility   

The firm belongs to the foods processing industry. Apparently no severe restriction of any accounting treatment 

is imposed on such firms. Managers of the firm are given the flexibility and power to reflect the true condition 

of the firm. The firm can, at its discretion, charge bad debt provisions at the true level as well as use any type of 

depreciation method it likes at a consistent basis. Though the firm has been enjoying tax holiday, it was 

deducting tax holiday reserve for future purpose. All these reflect considerable accounting flexibility. 

 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

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2.3.3 Evaluating Accounting Strategy  

The accounting strategy followed by it can be comparable with the norm of the foods processing industry (Apex 

foods ltd, Bangas ltd, Pran ltd etc.). 

The possibility of having strong incentives to manipulate the profit figure or to do window dressing can’t be 

rejected just because the management owns about 40% of the stocks and the quality of the information 

disclosure is not up to the mark. 

The firm did not change any of its accounting policies these years. For example, depreciation method is straight 

line over the time. The only substantial change is that the firm has been enjoying tax holiday from August 1997 

to July 2002 and is recording Tax holiday reserve for future. Now the firm is charging provision for income tax 

instead. 

The firm does not structure any significant business transactions so far. It did not alter the lease rental method or 

did not have any acquisition of other companies. 

2.3.4 Evaluating the Quality of Disclosure 

The disclosure of information is not that much satisfactory in some cases. It did not specify whether it uses 

LIFO, FIFO or Weighted Average method for inventory valuation. There is also no trace about bad debt 

allowance for such a manufacturing firm. There is no long term debt either but short-term debt with interest is 

termed as notes payable.  

On the other hand, in many places it reveals justifiable information. It tried to let the stakeholders know their 

significant accounting policies.  It showed all the individual debtors with the amount owed by them.The 

depreciation schedule of various fixed assets along with rate are given. The extent, to which preliminary 

expenses and share issue expenses have been capitalized and are written off, provides much clarity. 

The mode and extent of contingent liabilities have been elaborated and the accounting ratios have been given. 

Unlike many other firms, it provides us with the composition of the shareholders.  

2.3.5 Identifying Potential Red Flags 

2.3.5.1 About Audit Reports or Auditors:The audit reports of the firm are consistent and are unqualified. But    

the matter of regret is that the auditor of 2015-16 and the auditor for the rest of the years are not the 

same. The change of the auditor is not backed by information. 

2.3.5.2 Related Party Transactions: Fu Wang ceramic ltd is an associate undertaking of Fu Wang Foods ltd. 

During the year of 2015-16 it paid 441000 tk as factory rent to Fu Wang Ceramic ltd for use of its land. 

Afterwards nothing significant is mentioned. 

2.3.5.3 Unusual Increases in AR in Relation to Sales Increase: The diagram shows that AR increased 

disproportionately in the second accounting year, which may be a result less strict credit policy and 

negligence in AR collection. 

 

 

2.3.5.4 Unusual Increases in Inventory in Relation to Sales Increase: From the diagram below we can say 

that inventory increased disproportionately in the second accounting year, which may be a result of 

fewer sales. 

0.10 0.17 0.10 0.14 0.13 

0.24 0.43 0.22 0.21 0.24 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

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2.3.5.5 An Increasing Gap between Reported Income and OCF: The reported income as a percent of OCF 

is showing a constant proportion over time. 

0.79 0.79 0.87 0.84 0.80 

 

2.3.5.6 An Increasing Gap between Reported Income and Tax Income: As data is not available, whether 

such a thing is occurring or not can’t be verified. 

2.4 Ratio Analysis 

2.4.1 Current Ratio: Current ratio is diminishing over time which may be considered as bad. CR decreases 

because of the expansion of current liabilities. Among the current liabilities, notes payable (Bank loan) is 

comparatively increasing to meet up the increased demand. Moreover, increase of CL is more than that of CA 

over time.    

2.4.2 Quick Ratio: Quick ratio is showing a decreasing trend over time and it is very ominous. QR diminishes 

principally due to the increase of inventory and current liabilities. Increase in inventory might have 

happened due to frail sales strategy or weak demand. 

2.4.3 Inventory Turnover Days (ITD): It is relatively low in second year due to lowered CGS. However, ITD is 

relatively satisfactory for Fu Wang. Increase of ITD is looked as inefficiency as goods are taking longer 

time to be finished. Launching new machineries and training labors may lower ITD. However, the 

decrease of ITD is not a result of JIT inventory management. 

2.4.4 Average Collection Period: It is remaining stagnant over time because sales are increasing and A/R is 

almost increasing at the same rate. This may be good but credit policy must be reviewed according to 

the business scenario. 

2.4.5 Fixed Asset Turnover: FSA of the firm is not quite satisfactory. Alarmingly, it is fluctuating over time and 

then shows an increasing pattern. This indicator shows operating leverage of the firm, which is, of 

course, not satisfactory for this firm. 

2.4.6 Total Asset Turnover: TAT is also very low. It is slightly decreasing due to wearing out of assets, 

suggesting manufacturing inefficiency and then has a U-turn. 

2.4.7 Debt Ratio: It is slightly increasing over time due to increase in current liabilities and expansion of 

business. Though optimum debt level varies among firms, the firm has already almost 35% short-term 

loans on average and other current liabilities, indicating financial risk. 

2.4.8 Time Interest Earned Ratio: This ratio showed a good situation for the first three years but due to profit 

reduction this ratio is showing an alarm-bell for the last years. 

2.4.9 Long Term Debt Ratio (Ltd): The value is zero as no long term debt has been utilized.  

2.4.10 Gross Profit Margin: Here no significant trend is shown. It increases a bit, perhaps, because of 

utilization of high operating leverage. 

2.4.11 Operating Profit Margin: It is also relatively constant over time due to no substantial change in 

operating expenses. 

2.4.12 Net Profit Margin: Net Profit is vulnerable and slightly decreasing over time due to short-term interest 

amount (we termed short term bank loans as notes payable).To meet up the increased demand Fu-Wang 

Foods Limited has taken loan from bank which increases the notes payable over time, so does the 

interest. That is why net profit margin is declining. 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

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2.4.13 ROA: ROA is satisfactory but vulnerable. It is vulnerable over time due to the vulnerability of profit. 

2.4.14 ROE: ROE is also quite good but decrease for some years due to increased CGS and unidentified 

admin and selling expense. It is vulnerable due to the fluctuation of profit. 

2.4.15 EPS: EPS is following an upward trend with deviation. Earnings of around 2 plus taka out of face 

value or market value of 10 to 14 taka is not bad at all. It is vulnerable due to the vulnerability of net 

profit. 

2.4.16 P/E Ratio: This is not unsatisfactory. But again it is fluctuating over time due to the vulnerability of 

price and earnings. 

2.4.17 Sensitivity of ROE: ROE is more sensitive to total assets turnover and less sensitive to profit margin 

and financial leverage. From the sensitivity analysis it is seen that total assets turnover has greater 

standard deviation and the other two indicators have lesser standard deviation. 

2.5 Valuation: Discounted Cash Flow Analysis 

The valuation of a company can be done with various methods and various accounting figures. We have used 

discounted free cash flow valuation model. According to the model, the value of a company can be estimated as: 

        V= PV of all FCF 

         = PV of limited time initial growth FCF + PV of adjusted growth FCF thereafter. 

There are some assumptions in the valuation model and the statement from which the FCFs are derived 

resembles income statement but is not accurately an income statement. 

 The assumptions are: 

 Secondary growth rate is 0.5%. The reason is that the firm is a manufacturer of essential goods and the 

growth of demand of this sector is not too much. 

 No assets disposal will occur. 

 Depreciation rate for the extension is 10%. The depreciation for the extended periods is calculated in a 

simplified way. The depreciation of this year is equal to depreciation of the previous year plus capital 

expenditure time’s depreciation rate. 

 Interest expenses are negligible for our firm and the short-term notes payable interest amount is not 

considered for the valuation model. 

 Capital expenditures are assumed to be 35000000 Tk for each year for the extended periods as the firm 

is trying to expand itself. 

 Sales growth rate is calculated as the average of the first four changes of historical sales figure. 

 Other accounting figures are also projected to the extended periods by expressing themselves as 

percentage of sales and then smoothing. 

 FCF is defined as unlevered net income plus depreciation plus capital expenditures and changes of 

NWC. 

 Cost of equity (part of discount rate) is calculated with the help of SML model. The calculations are 

done in latter parts. 

The model is bisected and the first part is just projection of historical accounting figures and the second part is 

just the normalized value of the last projected values. 

The SML model comes up with the individual rate of return for a certain security, which can then be used as 

discount rate. The market rate of return (DSE 20) is approximately 26% and B of Fu Wang is 0.48. The T-Bill 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

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rate of return is 7.85%. So the cost of equity is 16.56%. This rate can be approximated as cost of capital because 

the cost of debt (which is almost 10%) has little impact on the total capital invested. But due to rising inflation, 

this WACC might tend to overestimate the value of the firm. So, the appropriate discount rate must be more than 

16.56% and should be in the range between 22% and 25% as inflation is almost 8 to 9%. We took WACC as 

23.5%, to be conservative. 

The projected figures for 2017-18 to 2021-22 are discounted at 23.5% and the 2021-22 figures is further 

projected at 0.5% growth rate and discounted to get the value of 711,685,097 tk. From this value cash balance 

and short term interest debt are deducted to get the equity value. Equity value is then divided by shares 

outstanding (18000000) which yields 36.34 tk. 

Along with the valuation model, there are sensitivity analysis and scenario analysis. The sensitivity analysis 

allows altering two variables to see what the change of dependent variable is - in this case the stock price. Also 

the scenario analysis allows changing more than two variables and see what the change of stock price is. 

From the sensitivity analysis, we can see the change of stock price due to changes of discount rate and sales 

growth. For example, when discount rate is 19% and sales growth rate is 16% then stock price is 58.56tk. 

Similarly, scenario analysis shows the change of stock price for various values of discount rate, sales growth rate 

as well as tax rate. For each of the three scenario’s (base, better, worse) respective values, the stock prices are 

about 36.34 tk, 153.07tk, and 20.14tk respectively. 

 

 Discount Rate .235 .235 0.15 0.26 

 Sale Growth .21 .21 .25 .12 

 Terminal Growth .005 .005 .030 .001 

 Intrinsic Value 36.34 36.84 153.07 20.14 

From our estimation can we necessarily infer that the stock price is in the vicinity of 36.34 tk? The answer is: 

we don’t know it exactly. However, the result tries to represent the intrinsic value of the firm. There are so many 

assumptions (WACC rate, sales growth rate, and depreciation rate), so many unknown factors (management 

decisions about future capital expenditure and capital restructuring) and so much systematic risks (economic 

recession, inflation, natural calamities etc), that the resulted number is nothing but a ballpark number. 

Is the stock underpriced? Not necessarily. One may raise his eyebrow when it comes to his notice that our 

intrinsic value is in the range of forty taka per stock. Two factors, we think, contributed this. They are: sales 

growth rate and discount rate. Firstly, sales growth is very vulnerable year to year and is probably overestimated. 

We used the AM of the sales growth rate for future approximation because GM is biased of negative values (two 

of the four rates are negative). Another GM formula could be used: 

GM= [{(.7)*(2.07)*(1.11)*(.94)}^(1/4)]-1=.11 

Funnily, this GM formula tends to neutralize the negative values. So, our initial guts proved right that growth 

rate is a bit overestimated. 

Another reason for discrepancy is inflation. Bangladesh is experiencing inflationary problem for some years and 

the rate is 6 to 8% for almost all the years. Certainly, the firm will look forward to increasing the sales price 

which is reflected on future revenues but the fly in the ointment is that cashflows are not adjusted to inflation 

properly or partially.  

Hence, we think the stock price of the firm hovers around the initial two- digit figures. 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

9 
 

2.6 Proforma Analysis 

For preparing the Proforma statement of Fu-Wang Foods Ltd. we have prepared the following statements: 

 Income Statements 

 Balance Sheets 

 Cash flow Statements 

2.6.1 Method 

From the past 5 years historical data (income statement, balance sheet and cash flow statement) we have 

projected another 5 years prospective statements.  

First of all, we prepared common size income statement which is expressed against total sales and common size 

balance sheet which is expressed against both in terms of sales and total assets. From the common size 

statements we have identified the rate of change and ratios of needed accounting estimates and then smoothing 

the estimates we have projected those for the future five years. 

Assumptions 

 Sales growth rate will be approximately 21%. 

 CGS is assumed to be 78% of sales. 

 Inventories growth rate will be approximately 20%. 

 Cash and cash equivalent growth rate will be approximately -2%. 

 Accrued expense growth rate will be approximately 27%. 

 Sundry creditors’ growth rate will be approximately -25%. 

 SGA expense will increase by 10.55%. 

 Loans, advances and deposits growth rate will be approximately 21%. 

 The company will issue additional 0.2 million shares in 2008-09 and as a result share issue expense 

will increase. Share issue expense will be amortized substantially. 

 Payout ratio will change to 12.5% in the year 2016-17  

 Credits, Short Term Bank Loans-Secured growth rate will be approximately 5%. 

 Sundry debtors growth rate will be approximately -47% per year. 

The proforma statements yield the following results:  

Net incomes after tax for the forecasted 5 years are: 

 

2017-18 2018-19 2019-20 2020-21 2021-22 

48,198,118 59,892,306 72,469,690 87,688,325 106,102,874 

 

Total assets or total liabilities for the forecasted 5 years are: 

2017-18 2018-19 2019-20 2020-21 2021-22 

448,815,638 356,444,592 305,124,327 286,219,721 289,260,386 

 

Changes in cash for the forecasted 5 years are: 

2017-18 2018-19 2019-20 2020-21 2021-22 

(403,614) (394,577) (385,742) (377,106) (368,662) 



An Empirical Research on Fu-Wang Foods Ltd: Industry, Strategy, Accounting, Ratio, Valuation and 

Proforma Analysis 

 

 K. M. Anwarul Islam 

 

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The position of Fu-Wang is expected to be good in this industry. Its long term profitability and sustainability is 

also secured. 

 

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Proforma Analysis 

 

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