This report examines the financial performances of DESCO on the basis of analyzing and calculating their five major types of ratios; Liquidity Ratio, Asset Management Ratio, Debt Management Ratio, Profitability Ratio and Stock Market Ratio. The paper also includes the calculations and evaluation of Du Pont Equation. The company current ratio, quick ratio, inventory turnover ratio and total asset turnover ratio etc. appears as better than the previous years. However, the average collection period and average payment period has become unsatisfactory which may lead to financial crisis as the company’s only service offering is electricity supply which is offered almost in all cases on credit. Fall in fixed asset turnover ratio signifies that the company should utilize its fixed asset more. In this paper, slight fall in ROA and ROE is observed. While the former urges more efficient utilization of assets, the latter calls for an increase in return to the shareholders. The substantial fall in EPS shows that the company is falling behind in providing return to consumers which is not a very good sign. The company should try to return more to its shareholders.
In a nutshell it can be said that in the recent years the company has been somewhat efficient in utilizing, managing and maintaining resources but isn’t giving back enough to the shareholders which gives out a very grave signal.
Dhaka Electric Supply Co. Ltd. (DESCO) was created as a distribution company in November 1996 under the Companies Act 1994 as a Public Limited Company with an Authorized Capital of Tk.5.00 billion. However, the operational activities of DESCO at the field level commenced on September 24, 1998 with the taking over of the electric distribution system of Mirpur area (comprising Kallayanpur, Kafrul, Pallabi Sales & Distribution Division) from the erstwhile