Business Finance Report - Brac Bank, Prime Bank and Dhaka Bank

afaf balalafiadopadnvaodfadfaa1. Introduction:

1.1. Origin of the report:

This report is prepared with the respect to the course of Business Finance (FIN201). We are assigned to prepare a term paper by our honorable course instructor Ms. Sarahat Salma Chowdhury. Our task is to choose three commercial banks which are Brac Bank, Prime Bank and Dhaka Bank; and three trading organizations in fabrics industry of Islampur, Dhaka and to collect information about bank loans and trade credit from those wholesale/retail businesses. We also need to find the Effective Annual Rate of these banks and business organizations and compare the EAR between the bank loans and trade credit.

1.2 Objective of the Report:

This report has been prepared considering a number of objectives. The objectives are:

* To apply our knowledge that we have gathered from Business Finance course into the report

* To provide the overview of three banks and the business organizaions.

* To measure the Effective Annual Rate of those three bank loans and trade credit of the business organizations

* To compare the Effective Annual Rate of bank loan and trade credit and give recommendation.

1.3 Scope:

The term paper is made on the basis of the information about bank loans, trade credit and the Effective Annual Rate. This is focused on calculating and comparing the EAR and shows the findings about the bank loans and trade credit.

1.4. Methodology:

Data collection method: Both primary and secondary data is used to complete the study. We used face to face communication and other secondary sources to make this report properly.

1.4.1 Primary sources:

Primary sources are the individual business owners whom we talked face to face to get information about trade credit and their products. We have used convenient sampling to collect the information. We also have interviewed some employees to get the actual information.

1.4.2 Secondary Sources:

Secondary information was collected from books and the official web sites of Brac Bank, Prime Bank and Dhaka Bank. Statistical techniques were used to analyze the collected data.

1.5 Limitations:

This report is not free from limitations. Moreover the topic is so much vast, so we faced some problems while preparing this report. The limitations acquainted with this report are as the following.

* Collecting previous information was little bit tough.

* All the information may not be 100% accurate

* All people whom we interviewed may not say about the actual fact.

* Technical Problems

* Time shortage

* Websites are not up to date enriched.

2. Report Preview:

This report is based on the information that we got from interviewed in Fabrics enterprises, also the information that have been collected from internet and books. The report shows the calculation of EAR of the loans that are available and the trade credit which are generally occurred in monthly business.

Background of the Banks:

Brac bank

BRAC Bank is the youngest private commercial bank in Bangladesh. It received the license from Bangladesh Bank in 2001. The bank is partially owned by BRAC, the largest non-government organization in the world, International Finance Corporation, the private sector arm of The World Bank Group and Shore Cap International.

Though BRAC Bank was formed with the aim to serve the millions of small and medium enterprises (SMEs) in the country, Having pioneered the concept of SME financing in Bangladesh, it is the fourth largest SME bank globally. The company also provides services within corporate and institutional banking, retail banking, as well as probashi banking, which specifically caters to non-resident Bangladeshis abroad. Other areas include customized treasury and foreign exchange solutions, and custody services. It ranks amongst the top banks nationally that processes remittances from abroad.

Company Profile: BRAC BANK

Basic Information

Company Name : Brac Bank

Business Type : Banking and Financing

Product/service : Short term loans, account service deposit schemes etc

Address :

Number of employees : 1354

Year Established : 1956

Company Websites : www.kohinoor-bd.com

Ownership Type : Public Limited Company

Business Chairman : Mohammad Obaidul Karim

Stock Market Information

Listed in Dhaka Stock Exchange : 2007

Market category : A

Authorized Capital : 4800 Million

Paid up Capital : 3212 Million

Earning Per Share (2010) : 68.17

Dividend (2010) : 20%

Corporate vision:

Building profitable and socially responsible financial institution focused on Market and Business with Growth potential, thereby assisting BRAC and stakeholders to build a just, enlightened, healthy democratic and poverty free Bangladesh".

Corporate Mission:

* Sustained growth in Small & Medium Enterprise sector

* Continuous