Financial Performance and Cost Efficiency in the Textile Industry: A CVP Analysis of Square Textile PLC and Paramount Textile PLC

Authors

  • Mohammad Jafaur Ahamed Professor (Accounting), Open School, Bangladesh Open University, Gazipur-1705, Bangladesh

DOI:

https://doi.org/10.18034/gdeb.v13i1.775

Keywords:

Cost Structure, Cost-Volume-Profit, Contribution Margin, Break-Even-Point, Margin of Safety

Abstract

This comparative analysis utilizes Cost-Volume-Profit (CVP) analysis to examine the cost structures and financial performance of Square Textile PLC and Paramount Textile PLC within the textile industry in Bangladesh. The study is based on secondary data from the company's FY 2022-23 annual report. Researchers found that Paramount Textile PLC demonstrates superior cost efficiency and profitability potential across multiple financial metrics compared to Square Textile PLC. Paramount Textile PLC exhibits a lower variable cost percentage, higher contribution margin ratio, and more efficient management of fixed costs relative to its contribution margin, leading to higher operating profit percentages and lower break-even sales levels. Both companies maintain a high margin of safety percentages. Still, Paramount Textile PLC's slightly higher margin of safety suggests a stronger financial position, potentially due to more efficient cost management or higher profit margins. These findings underscore the significance of cost efficiency and effective financial management in driving long-term profitability and economic resilience in the competitive textile industry. The study suggests that Square Textile PLC should focus on optimizing variable and fixed costs, improving operational efficiency, and reviewing its pricing strategy to enhance profitability and competitiveness in the market. Paramount Textile PLC should continue its focus on maintaining cost control, optimizing product mix, investing in innovation, and further exploring opportunities for market expansion to strengthen its position and profitability in the industry.

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References

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Published

2024-06-30

Issue

Vol. 13 No. 1 (2024): January - June Issue

Section

Articles

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Copyright (c) 2024 Mohammad Jafaur Ahamed

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How to Cite

Ahamed, M. J. (2024). Financial Performance and Cost Efficiency in the Textile Industry: A CVP Analysis of Square Textile PLC and Paramount Textile PLC. Global Disclosure of Economics and Business, 13(1), 31-42. https://doi.org/10.18034/gdeb.v13i1.775
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