FIN254 Project FAQs!

Following are some answers to questions asked by students doing the FIN254 project. Hope you would find them helpful. If you still have new questions that are not answered here, please do email me with your question.

Q1: On the Dividend Archive document, there is a column for dividend percentage and one for bonus-right premium, which shows the bonus-right ratio. I do not know if the ratio reflects the bonus percentage or the Right percentage. How should I figure it out? Also, once I obtain the percentage, how should I calculate the "Right Premium (tk)"?

Ans: You can confirm stock dividend (also called bonus) and right share announcements from the DSE News Reader. For Right share, if it is issued at par, then there is no premium. Premium is the amount of money paid in addition to the face value. For example, if Right is issued at 25 taka for a 10 taka face value share, then premium is 15 taka.

Q2: One of my stocks is xxxxxxx, and while trying to find the record dates of 2010 and 2011, I found that there are actually multiple record dates. Each year, there is one which is relatively close to the AGM date while the others are related to the EGM date. Sir, I am confused about which one to consider for the data and analysis, but I think I should take the one closer to the AGM date. Am I correct??

Ans: You are correct. For any particular period, there could be multiple Extraordinary General Meetings (EGMs), but only one Annual General Meeting (AGM). You should use record dates for the AGMs only.

Q3: I did everything right, but in the analysis worksheet, in Table 4, some cells are like… #DIV/0! What should I do?

Ans: Sometimes if dates are put by copying and pasting, excel may not be able to consider those data as DATE data type. You need to make sure when you input the date data, they are properly recognized by excel. In the template, by default (the format I gave you) it should be like “2-May-09” instead of 02.05.09. You should also be aware of US system date, where months are mentioned first and then dates. So, 02.05.09 may mean February 5^th instead of May 2^nd.

Q4: I did not find any right share for my company, so what should I do with that part?

Ans: If right share is not announced that's fine. Leave the right share related cells blank.

Q5: After putting the close price, the adjusted price is not updated. What should i do now?

Ans: Try saving your document, it would update. If not then probably the function may have been corrupted. You may copy/paste the function in the update cells, or restart your work using the template again.

Q6: What is the spot date and pre-spot date, which date i should take for this part please let me know with an example?

Ans: Spot period is a duration of several days and it is mentioned in a news announced just before the record date of a stock. Following is an example of spot related news:

“Trading of the shares of the Company will be allowed only in the Spot Market and Block/Odd lot transactions will also be settled as per Spot settlement cycle with cum benefit from 27.02.2012 to 29.02.2012. Trading of the shares of the Company will remain suspended on record date i.e., 01.03.2012.”

According to above news, 27, 28, and 29 of February are spot trading dates. Pre-spot date would be 26^th (if there is no trading data for it, may be that was a holiday, so you should go back in time to look for a trading day). Follow my guideline (point 6 on page 3 of my project instruction document file) for the dates.

Q7: There are several EPS for different sub-periods within one year for all the stocks. On the other hand, there is also an EPS stated for the previous year. My question is which one should I consider?

Ans: You should use EPS for the yearly period which is generally mentioned within the dividend announcement. Please disregard, quarterly EPS and Half-yearly EPS.

Q8: How do I handle fiscal years?

Ans: If a company follows ‘July to June’ period instead of ‘Jan to Dec’ calendar year, then consider fiscal year instead of calendar year. For example, you may consider “Jul'08 to Jun-09” as year 2009.

Q9: I could not find EPS of my stock. What should I do?

Ans: EPS is usually announced within the Dividend Declaration News. If not then within 1 or 2 weeks of dividend declaration companies announce their EPS based on audited financial statements.

There is one exception, however. You would not find any EPS for Life Insurance Companies. They report life reserve fund instead of EPS. Please don’t worry about EPS for Life Insurance Companies and leave the EPS cells blank.

Q10: The news reader says "proposed bonus share @ 12% for the year 2010". However, the dividend archive file shows 12% under 2011. It would be really helpful if you could explain which one to use? I have the same question for EPS. Which EPS value will i consider for which year?

Ans: Dividends are announced based on earnings of previous period. Dividends announced in 2011 are in fact based on earnings of 2010 accounting period. If you notice, in the template I used the years 2009, 2010, 2011 for "Dividend Announce Periods". So, they are not the financial periods.

So, for this project you should consider three dividend announcement periods (i.e. 2009, 2010, and 2011). That means we are considering financial periods of 2008, 2009, and 2010 as dividends are announced in the following periods.

Q11: I am not getting all data of a stock in the daily trade information file. What should I do sir?

Ans: Most of the times, full name of a company has been used instead of trading code or short name. For example, instead of AMCL (Pran), data for the stock have been recorded under the full name of “AGRICULTURAL MARKETING COMPANY LIMITED”.

In some cases, companies change their names. In such cases, trading information may be under two names. For example, First Lease Int'l Ltd changed its name into First Lease Finance & Investment Ltd. So, trading data are available under both these names.

In some cases, DSE may make a spelling mistake. For example, some trading data have been recorded as Megha Life Insurance instead of Meghna Life Insurance.

Q12: I am not sure of the term 1B:5 of B/R column. Will you please explain it sir?

Ans: 1B:5 means 1 bonus share against 5 shares which is equivalent to 20% bonus share. Similarly 1B:2 would mean 50% bonus share.

Q13: I have a problem with interim dividends. Please tell me how to handle that information.

Ans: You probably noticed some multi-national companies (MNCs) offering interim dividends or multiple dividends in the same period. In such cases you would most commonly see cash dividend declarations. In these types of cases you may use the last div declaration date as dividend declaration date for all dividends.

Q14: Where do we get face value of a stock?

Ans: You will find face value of a stock as of now in the company profile information that you are required to copy from DSE website for each of the assigned stocks in the first worksheet of the excel file. As of 30^th November of last year SEC made it mandatory for all listed companies of DSE to change their face value to Tk. 10. As far as I know, all companies did it except for two: Bangladesh Shipping Corporation (BSC) and Janata Insurance (JANATAINS).

You may check face value changing information in the News Reader software by doing local search for a stock. If you don’t see any face value related news, then you may safely assume that stock to have Tk. 10 face value for last three years. Otherwise, you would have definite time period of face value change from the announced news.

If face value was changed before dividend declaration of a period, then you use the changed face value. Otherwise, you use previous face value for that period and earlier periods if applicable.

Q15: Sir, if 1B:5 is 20% bonus issue. Then how do we calculate the bonus % for 1B:7 and 1B:14? The percentages are in decimals; however when the value is filled in the dividend cell it is automatically converted to a whole number, for e.g. it changes from 14.28% to 14%. Is this correct?

Ans: You are correct. 1B:7 and 1B:14 are equivalent to 14.29% and 7.14%. Don't bother about the auto-rounding. Formula will take decimals into consideration.

Q16: I want to know that what is the meaning of "10%B, 1R:5". Should i consider it as stock dividend... how could i input 1R:5.....i want to know clearly what should dividend should considered as cash dividend and stock dividend?

Ans: If you notice there are two columns for dividend information, one is "Dividend %" which is for cash dividend, and another is B/R which is for stock dividend and right. R is for right declaration. 10%B, 1R:5 means 10% stock dividend and 20% right. You would consider the 10% for stock dividend and 20% for right.

Q17: What do "1B:4,1R:2", "5%(1B:20)" and "35%B,1R:2" mean? I know what individually 1B:4 means and what 30%B means, but i don't know what the "R" term means and how to interpret them together.

Ans: They mean the same thing together. For example, "1B:4,1R:2" means 1 bonus share against 4 shares (or 25% bonus share) and 1 right share for 2 shares (or 50% right share). When the companies announce this type of declaration, they also announce different record dates for bonus and right shares to be effective. To learn more you may browse through the news section of DSE website.

Q18: Though I have office 2007, I am not being able to open the Xl files.

Ans: I don't know why you are having problem with the project files. Make sure you have MS Excel 2007 installed in your computer. You may also try downloading the files again. If you still face the problem get the files from the resource drive.

Q19: If a news has both regular and diluted earnings, which one should we use?

Ans: You should use the diluted one.

Q20: What should be the treatment for news of un-audited quarterly reports of net profit and eps declarations? Does that need to be recorded?

Ans: You would only consider annual (preferably audited) earnings (EPS). So, please ignore quarterly/half-yearly earnings for this project.

Q21: May I know what is meant by diluted EPS? Do we enter it as it is? I have entered the restated dividend instead of the previous one. Is that right?

Ans: Simply put, Diluted EPS is calculated after accounting for post-dividend (after all convertible securities have been exercised) number of outstanding shares. For example, for a company with Tk. 50 lac after tax net income and 1 lac shares, EPS would be 50/1 or Tk. 50 per share. If they declare 50% stock dividend, their number of shares would increase to 1.5 lac, so diluted/restated EPS would be 50/1.5 or Tk. 33.33. For more technically appropriate definition please visit http://www.investopedia.com/terms/d/dilutedeps.asp link.

When comparing current period's EPS with previous period's EPS, please use the diluted/restated EPS for the previous period. However, you don't need to change it in the previous period comparison.

For example, when you are comparing 2010 EPS with 2009 EPS, use the diluted/restated EPS for 2009. But don't use diluted/restated one for 2009 when comparing 2009 EPS with 2008 EPS.

Q22: What should I do if there is no dividend announced?

Ans: Input '0' (zero) in the dividend cell and fill up other cells, for example, news date, record date, AGM date etc, as required.

Q23: Sir, I didn’t understand this news “Khaleque Knitting & Garments Inds. (Pvt.) Ltd., one of the Corportate Sponsors of the company, has reported its intention to sell 15,00,000 shares out of its total holdings of 39,60,000 shares of the company at prevailing market price through Stock Exchange within next 30 working days.”

Ans: Apparently Khaleque Knitting is a name of a sponsor (corporate sponsor because it is a company, not a person) that contributed to the paid up capital of the company you are working on. Out of its total holdings (all the shares it owns) of 39.6 lac shares, it wants to sell 15 lac shares. As per regulation, before buying/selling shares a director/sponsor director must notify the regulator and the public of its intention.

Q24: Is the following news for right share declaration? If it is not then how will I understand which specific news is indicating the declaration of right shares?

“Following the change of the denomination of shares and market lot with effect from 25.07.07 (record date), the new face value of the share of the Bank will be Tk. 100.00 instead of Tk. 1000.00, market lot will be 50 shares instead of 5 shares and the new adjusted closing price of shares will be Tk. 382.50 per share.”

Ans: No, this is not a right share declaration. This is a news of face value change or share split. The company has changed the denomination of it’s share’s face value from 1000 taka to 100 taka. After the mentioned record date, shareholders having 5 shares (with 1000 taka face value) would own 50 shares (with 100 taka face value). Usually share split news is considered a positive one.

For right share news, the company would specifically mention they are issuing right shares. For example, look at EBL news on “02/04/2008” (initial recommendation) “18/11/2008” (approval news from SEC) for a 50% right share declaration at par. For another example, look at BRACBANK news on “29/01/2008” where they recommended both stock and right (20% right with 400 taka premium) in a single news.

Q25: Some cells show ######. What to do?

Ans: Just increase the width of the column!

Q26: sir your dividend archive is not giving us not the full information ...as in for Eastern insurance in 2010 they issued right share that is 1:1 . . . but dividend archive is not giving this information so what resource should i trust please recommend.

Ans: Dividend archive is for Dividend records, not for all announcements! Sometimes companies announce right shares along with dividend announcement which may be present in the dividend archive. But if a company issues right shares at a different time in a year, that may not be reflected in the dividend archive. But you can get everything from the news reader, that's your primary source. You may look at dividend archive to confirm your dividend information.

Q27: Sir, i tried again again but unfortunately the adjusted price is not updated. After the record date the AGM price, post AGM price, post record date price these are not updated.What should i do now?

Ans: I am not quiet sure what you really mean! You need to enter the price manually into the cells yourself in the data worksheet. You don't need to worry about the analysis worksheet unless there is a mistake. If you are talking about adjusted price of the analysis worksheet table 3, then don't worry about adj. price after record date. Adjustments were done for prices prior to record date.

Q28: I am unable to open XLSX File (.xlsx) files in my computer. Sir can u please give me any solution for this? 

Ans: You need excel 2007 or higher version to be able to open xlsx file.