Finance Report

Prepared For
Hasanat Karim
Introduction to Financial Management
Fin254, Spring2010
Section: 12
Prepared By
A.K.M. Shafiqur Rahman
0910393030
Badhan Shaha
0910612030
Sohan Haidear
071814030
 Acknowledgement
Any work such as this must owe credit to a multiple of people. This is our humble effort
to present gratitude in submitting this report which we have truly drawn upon own
experience as students of BBA. First and foremost, we are indebted to Hasanat Karim,
our course instructor, for his generous guidance throughout our work. His unstinting
support, faith in us, and inspiration for this project, was a tower of strength in putting the
pieces together and an unfailing source of cheer and encouragement. We would also like
to thank our class mates for being helpful and cooperative.
 Introduction
In our finance report of analyzing Earning per Share (EPS) and Price Earning (PE) ratio
we have chosen two prominent business sectors from Bangladesh. These are: The
banking sector and the pharmaceutical sector. We have chosen five banks from the
banking sector and five pharmaceutical companies. The list of these companies is:

Bank:
 Eastern Bank Limited
 National Bank Limited
 Mercantile Bank Limited
 South East Bank Limited
 Prime Bank Limited
Pharmaceutical:
Square Pharmaceutical Ltd.
Beximco Pharmaceutical Ltd.
The IBN SINA Pharmaceutical Ltd.
ACI Limited
Orion Infusion Ltd.

In Our report we have tried to see the performance of these companies by calculating
EPS and PE Ratio.
 1. Method of Calculation

Earnings per Ratio (EPS): EPS is one of the criteria for measuring the performance of a company. If
EPS increases, the possibility of a higher dividend paid by the company increases. EPS is used as a tool-
indicator of a firm's performance. It measures performance from the perspective of investors and
potential investors. Additionally, it shows the amount of earnings available to each ordinary shareholder,
so that it indicates the potential return on individual investments. EPS is calculated in the following way:

Net Income
Earnings Per Share=
Shares Outstanding

Price Earnings (PE) Ratio : PE multiples measures how much investors are willing to pay per dollar
of current earnings, higher PE ratios means that the firm has positive prospects of future growth. PE
ratio is calculated in the following way:

Price per share

PE ratio=
Earnings per Share

2. Data Collection

All the data required for the calculation of EPS and PE ratios of the above mentioned companies are
collected from their latest Annual Reports which we have collected from Dhaka Stock Exchange. We
tried to provide the most relevant and possible data within our possible limit. The all figures we have
used is taken from the Auditors’ Report to the shareholders.
 3. EPS Calculation (Banking Sector)

1. Eastern Bank Ltd:

Outstanding Shares: 24,852,093

Net Profit : Tk 1,454,541,675
Price per Share : Tk 100
Tk 1,454,541,675
Earnings Per Share=
24,852,093

= Tk 58.53

Tk 100
PE Ratio=
Tk 58.53
¿ 1.71׿

2. National Bank Ltd:

Outstanding Shares: 28,464,363

Net Profit : Tk 2,070,470,464
Price per Share : Tk 100
Tk 2,070,470,464
Earnings Per Share=
28,464,363

= Tk 72.74

Tk 100
PE Ratio=
Tk 72.74
¿ 1.37׿

3. Mercantile Bank Ltd:

 Outstanding Shares: 21,584,134
Net Profit : Tk 807,516,869
Price per Share : Tk 100
Tk 807,516,869
Earnings Per Share=
21,584,134

= Tk 37.41

Tk 100
PE Ratio=
Tk 37.41
¿ 2.67׿

4. South East Bank Ltd:

Outstanding Shares: 34,226,373

Net Profit : Tk 1,870,185,240
Price per Share : Tk 100
Tk 1,870,185,240
Earnings Per Share=
34,226,373

= Tk 54.56

Tk 100
PE Ratio=
Tk 54.56
¿ 1.83׿
 5. Prime Bank Ltd:

Outstanding Shares: 35,546,875

Net Profit : Tk 2,823,473,302
Price Per Share : Tk 100
Tk 2,823,473,302
Earnings Per Share=
35,546,875

= Tk 79.43

Tk 100
PE Ratio=
Tk 79.43
¿ 1.26׿

Banking Industry Average

58.53+72.74+37.41+54.64 +79.43
Average EPS=
5
¿ Tk 60.53

1.72+1.37+2.67 +1.83+1.26
Average PE Ratio =
5

¿ 1.77׿
 4. Financial Analysis (Banking Sector)
Bank Price per Shares Net Profit EPS PE Ratio
Share Outstanding
Eastern Bank Tk 100 24,852,093 Tk 1,454,541,675 Tk 58.53 1.71׿
Ltd
National Tk 100 28,464,363 Tk 2,070,470,464 Tk 72.74 1.37׿
Bank Ltd
Mercantile Tk 100 21,584,134 Tk 807,516,869 Tk 37.41 2.67׿
Bank Ltd
South East Tk 100 34,226,373 Tk 1,870,185,240 Tk 54.56 1.83׿
Bank Ltd
Prime Bank Tk 100 35,546,875 Tk 2,823,473,302 Tk 79.43 1.26׿
Ltd

EPS Analysis
 The above data shows that Prime Bank Ltd. has the highest EPS.
 Prime Bank Ltd. has the highest shares outstanding but due to its high net profit amount it has
the highest EPS than the other banks. Mercantile Bank Ltd. has lowest net profit and share
outstanding than the other banks thus it has the lowest EPS.
 National Bank Ltd. has the second highest as it has the second highest net profit and a low
share outstanding.
 Eastern Bank Ltd. and South East Bank Ltd. has moderate EPS among the banks selected as
they have low net profit than Prime Bank Ltd. and National Bank Ltd. and they have a high
net profit than Mercantile Bank Ltd.

As Prime Bank Ltd. has the highest EPS it has the best performance among all the banks selected
and provides the highest return on individual investment to its each ordinary shareholder. The bank
with the second best performance and return on investment to each shareholder is National Bank
Ltd. which is followed by Eastern Bank Ltd. , South East Bank Ltd. and Mercantile Bank Ltd.

Thus Prime Bank Ltd., National Bank Ltd. will be the most attractive investment opportunities for
investors and the least attractive opportunity will be Mercantile Bank Ltd.

PE Ratio Analysis
 Mercantile Bank Ltd. has a high PE ratio as it has the lowest EPS.
 Prime Bank Ltd. has a low PE ratio as it has the highest EPS.

Among all the banks Mercantile Bank Ltd. has the highest positive prospect of future growth due to its
high PE ratio. It is followed by South East Bank Ltd., Eastern Bank Ltd., National Bank Ltd. and
Prime Bank Ltd.
 Contents

SL. NO

1. Method of Calculation

2. Data Collection

3. EPS Calculation (Banking Sector)

4. Financial Analysis (Banking Sector)

5. EPS Calculation (Pharmaceutical Sector)

6. Financial Analysis (Pharmaceutical Sector)

7. Banking Industry Vs Pharmaceutical Industry

 5. EPS Calculation (Pharmaceutical Sector)

1. Square Pharmaceutical Ltd :

Outstanding Shares: 12,072,240

Net Profit : Tk 1,890,052,929
Price per Share : Tk 100
Tk 1,890,052,929
Earnings Per Share=
12,072,240

= Tk 156.56

Tk 100
PE Ratio=
Tk 156.56
¿ 0.639׿

2. Beximco Pharmaceutical Ltd:

Outstanding Shares: 125,957,747

Net Profit : Tk 545,341,273
Price per Share : Tk 10
Tk 545,341,273
Earnings Per Share=
125,957,747

= Tk 4.33

Tk 10
PE Ratio=
Tk 4.33
¿ 2.31׿
 3. The IBN SINA Pharmaceutical Ltd:

Outstanding Shares: 900,000

Net Profit : Tk 43,285,209
Price per Share : Tk 100
Tk 43,285,209
Earnings Per Share=
900,000

= Tk 48.09

Tk 100
PE Ratio=
Tk 48.09
¿ 2.08׿

4. ACI Limited:

Outstanding Shares: 16,170,000

Net Profit : Tk 1,075,666,883
Price per Share : Tk 10
Tk 1,075,666,883
Earnings Per Share=
16,170,000

= Tk 66.52

Tk 10
PE Ratio=
Tk 66.52
¿ 0.15׿

5. Orion Infusion Ltd:

 Outstanding Shares: 2,035,976
Net Profit : Tk 26,204,926
Price per Share : Tk 100
Tk 26,204,926
Earnings Per Share=
2,035,976

= Tk 12.87

Tk 100
PE Ratio=
Tk 12.87
¿ 7.77׿

Pharmaceutical Industry Average

156.56+ 4.33+48.09+66.52+12.87
Average EPS=
5
¿ Tk 57.67

0.639+ 2.31+ 2.08+ 0.15+7.77

Average PE Ratio =
5

¿ 2.59׿
 6. Financial Analysis (Pharmaceutical Sector)
Company Price per Share Shares Net Profit EPS PE Ratio
Outstanding
Square Tk 100 12,072,240 Tk 1,890,052,929 Tk 156.56 0.639׿
Pharmaceutical
Ltd
Beximco Tk 10 125,957,747 Tk 125,957,747 Tk 4.33 2.31׿
Pharmaceutical
Ltd
The IBN SINA Tk 100 900,000 Tk 43,285,209 Tk 48.09 2.08׿
Pharmaceutical
Ltd
ACI Limited Tk 10 16,170,000 Tk 1,075,666,883 Tk 66.52 0.15׿

Orion Infusion Tk 100 2,035,976 Tk 26,204,926 Tk 12.87 7.77׿

Ltd

EPS Analysis
 The above data shows that Square Pharmaceutical Ltd. has the highest EPS.
 Square Pharmaceutical Ltd. has the high shares outstanding but as it has the highest net profit
amount as aresult it has the highest EPS than the other companies. Beximco Pharmaceutical
Ltd. has high net profit but still has the lowest EPS because it has the highest shares outstanding.
 ACI Limited has the second highest EPS as it has the second highest net profit.
 The IBN SINA Pharmaceutical Ltd. has moderate EPS among the companies selected as it has
a low net profit but is has the lowest shares outstanding.
 Orion Infusion Ltd. has 2nd lowest EPS. It has a net profit lower than Beximco
Pharmaceutical Ltd. but still has a high EPS than Beximco Pharmaceutical Ltd. because it
has low shares outstanding than Beximco Pharmaceutical Ltd.

As Square Pharmaceutical Ltd. has the highest EPS it has the best performance among all the
companies selected and provides the highest return on individual investment to its each ordinary
shareholder. The company with the second best performance and return on investment to each
shareholder is ACI Limited which is followed by The IBN SINA Pharmaceutical Ltd., Orion
Infusion Ltd. and Beximco Pharmaceutical Ltd.

Thus Square Pharmaceutical Ltd., ACI Limited will be the most attractive investment
opportunities for investors.
PE Ratio Analysis
 Orion Infusion Ltd. has a highest PE ratio.
 ACI Limited has a low PE ratio than Square Pharmaceutical Ltd. as it has a low EPS and
share price than Square Pharmaceutical Ltd.

Among all the companies Orion Infusion Ltd. has the highest positive prospect of future growth
due to its high PE ratio.

7. Banking Industry Vs Pharmaceutical Industry

Industry Average EPS Average PE Ratio

Banking Tk 60.53 1.77 Times
Pharmaceutical Tk 57.67 2.59 Times

The above data shows us that banking industry has a fairly high industry average EPS than
pharmaceutical industry. It means the banking industry is performing fairly better than the
pharmaceutical industry and it generates more revenue than the pharmaceutical industry. The amount of
earnings available to each ordinary shareholder in the banking industry is slightly higher than in the
pharmaceutical industry.

PE Ratio of the pharmaceutical industry is higher than that of the banking industry thus pharmaceutical
industry has more positive growth prospect in the future than banking industry.

In conclusion we can say that both these industries are important for Bangladeshi economy among them
pharmaceutical industry promises more future growth than the banking industry.