FIN254.

3
Faculty:TanvirNabiKhan

By
JollyAhmed
ID:051541030

SubmissionDate:27.04.11

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Introduction:
Advanced Chemical Industries (ACI) Limited is one of the leading and largest local
conglomerates in Bangladesh. ACI consists of different business groups namely:
Pharmaceuticals, Consumer brands, Agro-Business. ACI is the first company in Bangladesh to
earn both the ISO9001 certification of Quality Management System in 1995 and the ISO14001
Certification for Environment Management System in 2000. ACI is a public limited company
listed in DSE and CSE. Beside this, the company has a large list of international associates and
partner with trade and business agreement. Today ACI is one of the fastest growing companies in
Bangladesh. ACI follows International Standards on Quality Management System to ensure
consistent quality of products and services to achieve customer satisfaction. ACI also meets all
national regulatory requirements relating to its current businesses.

Objectives:
Have to analyze the performance of a listed manufacturing company (listed at DSE). The main
objective to analyze the performance in terms of
Liquidity
Leverage
Activity
Profitability
Market position
The analysis will indicate whether the performance of ACI is improving or deteriorating and it
will also reveal the reasons for that.



ACIPharmaceuticals

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Findings and analysis:
Liquidity Ratio
Current ratio:
This ratio indicates the extent to which current liabilities are covered by those assets expected to
be converted to cash in the near future. Current assets normally include cash, marketable
securities, accounts receivables, and inventories. Current liabilities consist of accounts payable,
short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued
expenses (principally wages).
Current Ratio =
Current Ratio
Year 2007 2008 2009
Current Assets 3,228,200,000 5,926,100,000 7,636,100,000
Current Liabilities 3,481,900,000 5,971,600,000 7,162,200,000
Current Ratio 0.93 0.99 1.07


From the analysis, we can see that in 2007 the current ratio were 0.93 times. A minimal increase
to 0.99 is seen in 2008 and it went up at 1.07 times in 2009. A current ratio 1.0 would be

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considered acceptable for a public utility. Generally the higher the current ratio, the more liquid
the firm is considered to be.
Quick ratio:
This ratio indicates the firms liquidity position as well. It actually refers to the extent to which
current liabilities are covered by those assets except inventories.
Quick Ratio =
Quick Ratio
Year 2007 2008 2009
Current Assets 3,228,200,000 5,926,100,000 7,636,100,000
Inventory 1,583,000,000 3,144,300,000 2,773,700,000
Current Liabilities 3,481,900,000 5,971,600,000 7,162,200,000
Quick Ratio 0.47 0.47 0.68



Here, in 2007 ratio was 0.47 and in 2008 remained constant to 0.47 times and in 2009 it reached
the higher level of 0.68 during the three years.
Analysis of this ratio speaks in a same language as current ratio. Standing at this point, we can
make an assumption that may be their profit margin was not high that they can make some

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investments paying off the liabilities that could result in an increase in assets and decrease in
liabilities to make the liquidity position far better. This assumption can only be proved as we go
on analyzing their financial statement and calculate the profitability ratios.
ASSET MANAGEMENT RATIO
Inventory turnover ratio:
The ratio is regarded as a test of efficiency and indicates the rapidity with which the company is
able to move its merchandise.
Inventory Turnover =
Inventory Turnover
Year 2007 2008 2009
Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000
Inventories 1,583,000,000 3,144,300,000 2,773,700,000
Inventory Turnover 3.64 3.29 4.43



Analysis shows that at 2007 ratio was 3.64 times but at 2008 it declines to 3.29 times and at 2009
it went up to 4.43 times.

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Declining inventory turnover commonly indicates that the company is not being able to flush its
inventory very well as it was doing in the previous years. A low turnover rate may point to
overstocking, obsolescence, or deficiencies in the product line or marketing effort. High
inventory levels are unhealthy because they represent an investment with a zero rate of return in
addition to the increased cost associated with maintaining those inventories.
Day sales outstanding (DSO):
The Days Sales Outstanding ratio shows both the average time it takes to turn the receivables
into cash and the age, in terms of days, of a company's accounts receivable. This ratio is of
particular importance to credit and collection associates.
Days Sales Outstanding (DSO) =
Days Sales Outstanding (DSO)
Year 2007 2008 2009
Trade Debtors 1,079,100,000 1,971,400,000 2,725,100,000
Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000
Days Sales Outstanding (DSO) 68.42 69.58 80.87

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Analysis shows that in 2007 DSO were 68.42 days and it gradually went up. In 2008 it was
69.58 days and in 2009 it was the highest 80.87.
DSO is meaningful only in relation to the firms credit terms. DSO 80.87 days indicates a poorly
managed credit or collection department or both.
Fixed asset turnover:
The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales revenue from
investments in Net Property, Plant, and Equipment back into the company evaluates only the
investments.
Fixed Assets Turnover =

Fixed Asset Turnover
Year 2007 2008 2009
Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000
Non-Current Assets 2,517,400,000 3,240,500,000 3,754,500,000
Fixed Asset Turnover 2.29 3.19 3.28

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The analysis shows that the fixed asset turnover ratio was as high as 3.28 times among three
years. However in 2007 it was 2.29 times and it gradually went up to 3.28 in 2009.
Fixed asset turnover ratio gradually increased because the company keeps pace with the increase
of companys fixed assets.

Total asset turnover:
The Total Asset Turnover is similar to fixed asset turnover since both measures a company's
effectiveness in generating sales revenue from investments back into the company. Total Asset
Turnover evaluates the efficiency of managing all of the company's assets.
Total Asset Turnover =
Total Asset Turnover
Year 2007 2008 2009
Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000
Total Assets 5,912,400,000 9,409,300,000 11,693,200,000
Total Assets turnover 0.97 1.10 1.05

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The analysis shows that 1.05 times were the highest among the three years. In 2007 it was 0.97
times and in 2008 it was 1 times and in 2009 it was 1.05 times. 1.05 means that the company
turns over its assets 1.05 times per year.

DEBT MANAGEMENT RATIO
Debt ratio:
The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of
funds provided by the creditors.
Debt Ratio =
Debt Ratio
Year 2007 2008 2009
Total Debt 4,117,500,000 6,597,300,000 8,350,000,000
Total Assets 5,912,400,000 9,409,300,000 11,693,200,000
Debt Ratio 70 70 71



The analysis shows that during the years the ratios are almost same. In 2007 and 2008 it was
70% and in 2009 it goes up to 71%. The values indicate that the company has financed 70% of

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its assets debt. The higher this ratio, the greater the firms degree of indebtedness and the more
financial leverage it has.

Times interest earned (TIE):
This ratio measures the extent to which operating income can decline before the firm is unable to
meet its annual interest cost.
Times-interest earned ratio =
Times-interest earned ratio
Year 2007 2008 2009
Net Profit Before Tax 586,800,000 899,700,000 718,800,000
Financial Expenses 220,500,000 485,400,000 517,400,000
Times-interest earned ratio 2.66 1.85 1.39



We can see from this ratio analysis that, this company has covered their interest expenses 2.66
times in 2007, 1.85 times in 2008 and 1.26 times in 2009. Ratios went down gradually. So it
indicates that they issued a little number of long-term loans and does have good liquidity
position, their EBIT became low thus making TIE a little low as well.

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PROFITABILITY RATIO
Profit margin on sales:
Net Profit Margin gives us the net profit that the business is earning per dollar of sales.
Profit margin on sales =
Profit Margin on Sales
Year 2007 2008 2009
Net Profit After Tax 340,300,000 917,900,000 594,500,000
Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000
Profit Margin on Sales 5.91 8.88 4.83



According to the analysis, profit margin on sales is 5.91% in 2007, then increased to 8.88% in
2008, and then again decreased to 4.83% in 2009. It implies that the company generates a little
less than 6 paisa, 9 paisa, and 5 paisa in profit for every taka in sales in the year 2007, 2008, and
2009 respectively.

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Basic earning power (BEP):

This ratio indicates the ability of the firms assets to generate operating income.
Basic earning power (BEP) =
Basic Earning Power (BEP)
Year 2007 2008 2009
Net Profit Before Tax 586,800,000 899,700,000 718,800,000
Total Assets 5,912,400,000 9,409,300,000 11,693,200,000
Basic Earning Power (BEP) 0.10 0.10 0.06


According to the analysis Basic Earning Power is constant to 0.10 in 2007 and 2008 and
decreased to 0.06 in 2009. This implies that the ability of the companys assets to generate
operating income has decreased in 2009.

Return on assets (ROA):
Return of total asset measures the amount of Net Income earned by utilizing each dollar of Total
assets.

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Return on Total Asset (ROA) =

Return on Total Asset (ROA)
Year 2007 2008 2009
Net Profit After Tax 340,300,000 917,900,000 594,500,000
Total Assets 5,912,400,000 9,409,300,000 11,693,200,000
Return on Total Asset (ROA) 0.06 0.10 0.05




The analysis shows that ROA was 0.06 in 2007, and then it goes up to 0.10 in 2008 and then
decreases to 0.05 in 2009. The higher the firms return on total assets, better the profitability.
ROA 0.06, 0.10 and 0.05 indicates that the company earned 6, 10, and 5 paisa respectively on
each taka of asset investment.

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Return on common equity (ROE):

Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total
common equity. It is the most important of the Bottom line ratio. By this, we can find out how
much the shareholders are going to get for their shares.
Return on Equity (ROE) =
Return on Common Equity (ROE)
Year 2007 2008 2009
Net Profit After Tax 340,300,000 917,900,000 594,500,000
Shareholders' Equity: 1,706,300,000 2,504,000,000 2,942,000,000
Return on Common Equity (ROE) 0.20 0.37 0.20


According to the analysis, the return on equity increases from 0.20 in 2007 to 0.37 in 2008, and
then decreased to 0.20 in 2009. Generally the higher the return is, the better off is the owners,
this implies that the ROE was better in 2008 than in 2007 and 2009.

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MARKET RATIO
Price/earnings (P/E):
The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a
share relative to the income or profit earned by the firm per share.
Price/Earnings (P/E) =
Price/Earnings (P/E)
Year 2007 2008 2009
Price per Share 181.7 521.3 446.9
Earnings Per Share (EPS) 21.14 56.77 50.85
Price/Earnings (P/E) 8.60 9.18 8.79



According to the analysis, the Price/Earnings Ratio increases from 8.60 in 2007 to 9.18 in 2008,
and then decreased to 8.79 in 2009. This implies that the company shares have or carry a PE
multiple of 8.60, 9.18, and 8.79 in 2007, 2008, and 2009 respectively.

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Market/book (M/B):
The market-to-book ratio compares the market value of the firms investment to
their cost.
Market-to-book Ratio (M/B) =
Market-to-book (M/B)
Year 2007 2008 2009
Market Price per Share 181.7 521.3 446.9
Book Value per Share 92.77 144.92 175.36
Market-to-book (M/B) 1.96 3.60 2.55

According to the analysis, the Market-to-book Ratio increases from 1.96 in 2007 to 3.60 in 2008,
and then decreased to 2.55 in 2009.

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Appendix
(FinancialData)

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INTRODUCTION:s
SQUARE today symbolizes a name a state of mind. But its journey to the growth and
prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one
of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company,
is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985
and is now on its way to becoming a high performance global player.
SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and it
has been continuously in the 1
st
position among all national and multinational companies since
1985. It was established in 1958 and converted into a public limited company in 1991. The sales
turnover of SPL was more than Taka 11.46 Billion (US$ 163.71 million) with about 16.43%
market share (April 2009 March 2010) having a growth rate of about 16.72%.
OBJECTIVES:
Have to analyze the performance of a listed manufacturing company (listed at DSE). The main
objective to analyze the performance in terms of
Liquidity
Leverage
Activity
Profitability
Market position
The analysis will indicate whether the performance of SQUARE Pharmaceuticals
Limited is improving or deteriorating and it will also reveal the reasons for that.


SQUAREPharmaceuticals

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FINDINGS AND ANALYSIS:

Liquidity Ratio

Current ratio:
This ratio indicates the extent to which current liabilities are covered by those assets expected to
be converted to cash in the near future. Current assets normally include cash, marketable
securities, accounts receivables, and inventories. Current liabilities consist of accounts payable,
short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued
expenses (principally wages).
Current Ratio =
Current Ratio
Year 2007 2008 2009
Current Assets 4,411,836,436 3,843,512,855 4,774,311,194
Current Liabilities 3,500,845,103 2,640,868,554 2,216,744,401
Current Ratio 1.26 times 1.46 times 2.15 times

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From the analysis, we can see that in 2007 the current ratio were 1.26 times. A minimal increase
is seen in 2008 and it went up to 1.46 times and it went up at 2.15 times in 2009. A current ratio
1.0 would be considered acceptable for a public utility. Generally the higher the current ratio, the
more liquid the firm is considered to be. In this respect, this company is doing quite well in this
industry.

Quick ratio:
This ratio indicates the firms liquidity position as well. It actually refers to the extent to which
current liabilities are covered by those assets except inventories.
Quick Ratio =
Quick Ratio
Year 2007 2008 2009
Current Assets 4,411,836,436 3,843,512,855 4,774,311,194
Inventories 2,026,736,322 2,098,755,231 2,207,078,082
Current Liabilities 3,500,845,103 2,640,868,554 2,216,744,401
Current Ratio 0.68 0.66 1.16

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Here, in 2007 ratio was 0.68 and in 2008 it went down to 0.66 times and in 2009 it went down to
0.16.
Analysis of this ratio speaks in a same language as current ratio. Standing at this point, we can
make an assumption that may be their profit margin was not high that they can make some
investments paying off the liabilities that could result in an increase in assets and decrease in
liabilities to make the liquidity position far better. This assumption can only be proved as we go
on analyzing their financial statement and calculate the profitability ratios.

ASSET MANAGEMENT RATIO

Inventory Turnover Ratio:
The Inventory turnover ratio is regarded as a test of efficiency and indicates the rapidity with
which the company is able to move its merchandise.
Inventory Turnover =
Inventory Turnover
Year 2007 2008 2009
Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757
Inventories 2,026,736,322 2,098,755,231 2,207,078,082
Inventory Turnover 4.72 5.42 6.02

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According to the analysis, Inventory turnover is increasing year to year. As, the inventory
turnover is 4.72, 5.42, and 6.02 in the year 2007, 2008, 2009 respectively.
It implies that Square Pharmaceuticals Ltd sold off or turned over their entire inventory 4.72
times, 5.42 times, and 6.02 times in 2007, 2008, and 2009 respectively. Thus it can be said
that they are managing their inventory efficiently as the higher the ratio the more efficiently
the inventory is managed, and their efficiency in managing inventory is increasing with time.

Day sales outstanding (DSO):
The Days Sales Outstanding ratio shows both the average time it takes to turn the
receivables into cash and the age, in terms of days, of a company's accounts
receivable. This ratio is of particular importance to credit and collection associates.

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Days Sales Outstanding (DSO) =

According to the analysis, DOS is 13.75 days, 15.34 days, and 13.97 in the year 2007, 2008, and
2009 respectively.
DSO is meaningful only in relation to the firms credit terms. DOS was lower in 2007, then
increased to 15.34 days in 2008 and then again decreased to 13.97 days in 2009. DOS of 13.97
days in 2009 indicates a fairly managed credit or collection department or both. Analysis implies
that they are improving in management of DOS.


Days Sales Outstanding (DSO)
Year 2007 2008 2009
Trade Debtors 360,245,646 477,562,002 508,249,174
Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757
Days Sales Outstanding (DSO) 13.75 15.34 13.97

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Fixed Asset Turnover Ratio

The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales
revenue from investments in Net Property, Plant, and Equipment back into the
company evaluates only the investments.
Fixed Assets Turnover =
Fixed Asset Turnover
Year 2007 2008 2009
Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757
Non-Current Assets 8,291,290,984 9,407,730,001 10,255,189,084
Fixed Asset Turnover 1.15 1.21 1.29


The analysis shows that the fixed asset turnover is gradually increasing from the year 2007 to
2009. As the fixed asset turnover is 1.15 times, 1.21 times, and 1.29 times in 2007, 2008, and
2009 respectively.
The company is keeping pace with the increase of companys fixed assets, thus a gradual
increase in fixed asset turnover.

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Total asset turnover:
The Total Asset Turnover is similar to fixed asset turnover since both measures a
company's effectiveness in generating sales revenue from investments back into the
company. Total Asset Turnover evaluates the efficiency of managing all of the
company's assets.
Total Asset Turnover =
Total Asset Turnover
Year 2007 2008 2009
Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757
Total Assets 12,703,127,420 13,251,242,856 15,029,500,278
Total Assets turnover 0.75 0.86 0.88



The analysis shows that the total asset turnover is slightly increasing from the year 2007 to 2009.
As the total asset turnover is 0.75 times, 0.86 times, and 0.88 times in 2007, 2008, and 2009
respectively. Generally the higher the firms total asset turnover, the more efficiently its assets
have been used. Thus it implies that the company is making its use of assets efficient.

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DEBT MANAGEMENT RATIO

Debt Ratio:
The ratio of total debt to total assets, generally called the debt ratio, measures the
percentage of funds provided by the creditors.
Debt Ratio =
Debt Ratio
Year 2007 2008 2009
Non-Current Liabilities 785,241,612 660,976,668 1,258,376,052
Current Liabilities 3,500,845,103 2,640,868,554 2,216,744,401
Total Debt 4,286,086,715 3,301,845,222 3,475,120,453
Total Assets 12,703,127,420 13,251,242,856 15,029,500,278
Debt Ratio 0.34 0.25 0.23



According to the analysis, in the year 2009, Square Pharmaceuticals Ltd has BDT 0.23 for every
BDT 1 in assets, which implies that the company has financed 23% of its assets debt. Debt Ratio
has been decreasing from the year 2007 to 2009, as it was 0.34, 0.25, and 0.23 in the year 2007,
2008, and 2009 respectively.

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Times interest earned (TIE):
This ratio measures the extent to which operating income can decline before the
firm is unable to meet its annual interest cost.
Times-interest earned ratio =
Times-interest earned ratio
Year 2007 2008 2009
NET PROFIT BEFORE TAX 1,868,634,190 2,511,259,218 2,825,069,243
Financial Expenses 351,868,423 397,135,963 308,861,107
Times-interest earned ratio 5.31 6.32 9.15



We can see from this ratio analysis that, this company has covered their interest expenses 5.31
times in 2007, 6.32 times in 2008 and 9.15 times in 2009. Ratios increased gradually. So it
indicates that they are increasing the issue of long-term loans and does not have good liquidity
position, their EBIT became higher thus making TIE a little high as well. It implies that the
interest bill is covered 5.31 times, 6.32 times, and 9.15 times in the year 2007, 2008, and 2009
respectively.

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PROFITABILITY RATIO

Profit Margin on Sales:
Net Profit Margin gives us the net profit that the business is earning per dollar of
sales.
Profit margin on sales =
Profit Margin on Sales
Year 2007 2008 2009
NET PROFIT AFTER TAX 1,381,863,093 1,890,052,929 2,087,871,791
GROSS TURNOVER 9,565,715,902 11,366,597,928 13,279,141,757
Profit Margin on Sales 14.45 16.63 15.72



According to the analysis, profit margin on sales is 14.45% in 2007, then increased to 16.63% in
2008, and then again decreased to 15.72% in 2009. It implies that the company generates a little
less than 15 paisa, 17 paisa, and 16 paisa in profit for every taka in sales.

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Basic Earning Power:
This ratio indicates the ability of the firms assets to generate operating income.
Basic earning power (BEP) =
Basic Earning Power (BEP)
Year 2007 2008 2009
NET PROFIT BEFORE TAX 1,868,634,190 2,511,259,218 2,825,069,243
TOTAL ASSETS 12,703,127,420 13,251,242,856 15,029,500,278
Basic Earning Power (BEP) 0.15 0.19 0.19



According to the analysis Basic Earning Power has increased from 0.15 in 2007 to 0.19 in 2008
and remained constant in 2009. This implies that the ability of the companys assets to generate
operating income has increased in 2008 but remained stable in 2009.

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Return on Total Asset (ROA):

Return of total asset measures the amount of Net Income earned by utilizing each
dollar of Total assets.
Return on Total Asset (ROA) =
Return on Total Asset (ROA)
Year 2007 2008 2009
Net Profit After Tax 1,381,863,093 1,890,052,929 2,087,871,791
Total Assets 12,703,127,420 13,251,242,856 15,029,500,278
Return on Total Asset (ROA) 0.11 0.14 0.14



The analysis shows that ROA was 0.11 in 2007, then it goes up to 0.14 in 2008 and remains
constant to 0.14 in 2009. The higher the firms return on total assets, better the profitability.
ROA 0.11 and 0.14 indicates that the company earned 11 and 14 paisa respectively on each taka
of asset investment.

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Return on Common Equity (ROE):

Return on Equity measures the amount of Net Income earned by utilizing each
dollar of Total common equity. It is the most important of the Bottom line ratio.
By this, we can find out how much the shareholders are going to get for their
shares.
Return on Equity (ROE) =
Return on Common Equity (ROE)
Year 2007 2008 2009
Net Profit After Tax 1,381,863,093 1,890,052,929 2,087,871,791
Shareholders' Equity: 8,417,040,705 9,949,397,634 11,554,379,825
Return on Common Equity (ROE) 0.16 0.19 0.18


According to the analysis, the return on equity increases from 0.16 in 2007 to 0.19 in 2008, and
then decreased to 0.18 in 2009. Generally the higher the return is, the better off is the owners,
this implies that the ROE was better in 2008 than in 2007 and 2009.

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MARKET RATIO

Price/Earnings (P/E):
The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the
price paid for a share relative to the income or profit earned by the firm per share.
Price/Earnings (P/E) =
Price/Earnings (P/E)
Year 2007 2008 2009
Price per Share 4110.25 2935.5 3581
Earnings Per Share (EPS) 154.53 125.25 138.36
Price/Earnings (P/E) 26.60 23.44 25.88


According to the analysis, the Price/Earnings Ratio decreases from 26.60 in 2007 to 23.44 in
2008, and then increased to 25.88 in 2009. This implies that the company shares have or carry
a PE multiple of 26.60, 23.44, and 25.88 in 2007, 2008, and 2009 respectively.

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Market-to-book Ratio (M/B):

The market-to-book ratio compares the market value of the firms investment to
their cost.
Market-to-book Ratio (M/B) =
Market-to-book Ratio (M/B)
Year 2007 2008 2009
Market Price per Share 4110.25 2935.5 3581
Book Value per Share 941.25 824.16 765.68
Market-to-book ratio (M/B) 4.37 3.56 4.68



According to the analysis, the Market-to-book Ratio decreases from 4.37 in 2007 to 3.56 in
2008, and then increased to 4.68 in 2009.

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Appendix
(FinancialData)

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Introduction:

IBN SINA Pharmaceuticals was established in 22
nd
December 1983. The company started
commercial production in 1986. The company was converted into a public limited company in
1989. The companys subscription opened on 15
th
J uly 1989, subscription closed on 14
th

September 1989 and was listed in Dhaka Stock Exchange on 17
th
J uly 1990.
The IBN SINA Pharmaceuticals Industry Ltd. has always been devoted to the quality of its
product as well as the management system. Their mission A public limited company working
for the nation as a whole with pertinacious incitement and firm determination to ensure the
quality and ethical standing attributing the sustainable growth and development to serve the
mankind. Their vision IBN SINAs vision is to become a premier specialty pharmaceutical
company, with a balanced focus in complementary therapeutic areas. Our primary responsibility
lies toward people of Bangladesh & ultimate responsibility towards humanity at large.
Objectives:
Have to analyze the performance of a listed manufacturing company (listed at DSE). The main
objective to analyze the performance in terms of
Liquidity
Leverage
Activity
Profitability
Market position

The analysis will indicate whether the performance of ACI is improving or deteriorating and it
will also reveal the reasons for that.

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Findings and analysis:

Current ratio:
This ratio indicates the extent to which current liabilities are covered by those assets expected to
be converted to cash in the near future. Current assets normally include cash, marketable
securities, accounts receivables, and inventories. Current liabilities consist of accounts payable,
short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued
expenses (principally wages).

Current Ratio
Year 2007 2008 2009
Current Assets 149,908,877 220,130,579 225,056,867
Current Liabilities 191,629,863 264,653,403 308,437,653
Current Ratio 0.78 0.83 0.73



From the analysis, we can see that in 2007 the current ratio were 0.78 times. A minimal increase
is seen in 2008 and it went up to 0.05 times and it went down at 1.73 times in 2009. A current
ratio 1.0 would be considered acceptable for a public utility. Generally the higher the current
ratio, the more liquid the firm is considered to be.

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Quick ratio:
This ratio indicates the firms liquidity position as well. It actually refers to the extent to which
current liabilities are covered by those assets except inventories.

Quick ratio
Year 2,007 2,008 2009
Current Assets-Inventories 91,435,547 220,130,579 225,056,867
Current Liabilities 191,629,863 204,617,931 246,205,952
Quick Ratio 0.29 0.24 0.7



Here, in 2007 ratio was 0.47 and in 2008 it went down to 0.46 times and in 2009 it reached the
higher level of 0.67 during the three years.
Analysis of this ratio speaks in a same language as current ratio. Standing at this point, we can
make an assumption that may be their profit margin was not high that they can make some
investments paying off the liabilities that could result in an increase in assets and decrease in
liabilities to make the liquidity position far better. This assumption can only be proved as we go
on analyzing their financial statement and calculate the profitability ratios.

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Inventory turnover ratio:

The ratio is regarded as a test of efficiency and indicates the rapidity with which the company is
able to move its merchandise.

Inventory Turnover
Year 2007 2008 2009
Sales 791,683,415 1,052,308,721 1,277,868,846
Inventories 58,473,330 60,035,472 62,231,701
Inventory Turnover 13.54 17.53 20.53







.
Analysis shows that at 2007 ratio was 13.54 times but at 2008 it raises to 17.53 times and at 2009
it went up to 20.53 times.
Increasing inventory turnover commonly indicates that the company is being able to flush its
inventory very well as it was doing in the previous years. A low turnover rate may point to
overstocking, obsolescence, or deficiencies in the product line or marketing effort. High
inventory levels are unhealthy because they represent an investment with a zero rate of return in
addition to the increased cost associated with maintaining those inventories

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The Days Sales Outstanding ratio shows both the average time it takes to turn the receivables
into cash and the age, in terms of days, of a company's accounts receivable. This ratio is of
particular importance to credit and collection associates.
Day sales outstanding (DSO):
The Days Sales Outstanding ratio shows both the average time it takes to turn the receivables
into cash and the age, in terms of days, of a company's accounts receivable. This ratio is of
particular importance to credit and collection associates.

Analysis shows that in 2007 DSO were 29.82 days and it gradually went up. In 2008 it was 75.68
days and in 2009 it was the highest 90.10
DSO is meaningful only in relation to the firms credit terms. DSO 90.10 days indicates a poorly
managed credit or collection department or both.
Day's Sales Outstanding (DSO)
Year 2007 2008 2009
Receivables 177,188 597,737 864,243
Annuals sales/365 2,168,996 2,883,038 3,501,011
Day's Sales Outstanding (DSO) 29.82 75.68 90.10

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Fixed asset turnover:

The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales revenue from
investments in Net Property, Plant, and Equipment back into the company evaluates only the
investments.

Fixed Asset Turnover
Year 2007 2008 2009
Sales 791,683,415 1,052,308,721 1,277,868,846
Net fixed assets 248,082,620 293,523,518 379,036,527
Fixed Asset Turnover 3.19 3.59 3.37

The analysis shows that the fixed asset turnover ratio was as high as 3.59 times among three
years. However in 2007 it was 3.19 times and it gradually went up to 3.37 in 2009.
Fixed asset turnover ratio gradually increased because the company keeps pace with the increase
of companys fixed assets.

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Total asset turnover:

The Total Asset Turnover is similar to fixed asset turnover since both measures a company's
effectiveness in generating sales revenue from investments back into the company. Total Asset
Turnover evaluates the efficiency of managing all of the company's assets.

Total Asset Turnover
Year 2007 2008 2009
Sales 791,683,415 1,052,308,721 1,277,868,846
Total Assets 397,991,497 513,654,097 604,093,394
Total Assets turnover 1.99 2.05 2.12

The analysis shows that 2.12 times were the highest among the three years. In 2007 it was 1.99
times and in 2008 it was2.05 times and in 2009 it was 2.12 times. 2.12 mean that the company
turns over its assets 2.12 times per year. Generally the higher the firms total asset turnover, the
more efficiently its assets have been used.

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Debt ratio:
The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of
funds provided by the creditors.

Debt Management
Year 2007 2008 2009
Total debt 231,900,136 324,977,527 388,683,160
Total Assets 397,991,497 513,654,097 604,093,394
Total debt to Total assets 0.58 0.63 0.64

The analysis shows that during the years the ratios are almost same. In 2007 it was 0.58% and
2008 it was 0.63% and in 2009 it goes up to0.64%. The values indicate that the company has
financed 64% of its assets debt. The higher this ratio, the greater the firms degree of indebtedness
and the more financial leverage it has.

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Times interest earned (TIE):

This ratio measures the extent to which operating income can decline before the firm is unable to
meet its annual interest cost.

Debt Management Ratio
Year 2007 2008 2009
EBIT 32,078,039 52,725,149 55,540,025
Interest Charges 2,267,457 4,750,860 5,098,143
Times Interest Earned ratio 14.14714325 11.09802204 10.89416774



We can see from this ratio analysis that, this company has covered their interest expenses 14.14
times in 2007, 11.09 times in 2008 and 10.89 times in 2009. Ratios went down from 2008 to
3009. So it indicates that they issued a little number of long-term loans and does have good
liquidity position, their EBIT became low thus making TIE a little low as well.

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Profit margin on sales:

Net Profit Margin gives us the net profit that the business is earning per dollar of sales.
Profit margin on sales
Year 2007 2008 2009
Net income available to stockholder 26,111,294 43,285,209 49,233,664
Sales 791,683,415 1,052,308,721 1,277,868,846
Profit margin on sales 0.03 0.04 0.04

Therefore, the Net Profit Margin was 3% in 2007, increase to 4% in 2008 and 2009.
The main reason that the profit margin raises is low cost. Low cost, in turn, generally occurs due
to efficient operations. Profit margin also increases because in 2009 IBN SINA Pharmaceuticals
do not used a lot of long-term debt.

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Basic earning power (BEP):

Year 2007 2008 2009
EBIT 32,078,039 52,725,149 55,540,025
Total assets 397,991,497 513,654,097 604,093,394
Basic earning power 0.08 0.10 0.09

Return on assets (ROA):

Return of total asset measures the amount of Net Income earned by utilizing each dollar of Total
assets.
Year 2007 2008 2009
Net income 26,111,294 43,285,209 49,233,664
Total assets 397,991,497 513,654,097 604,093,394
Return on total assets 0.07 0.08 0.08

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The analysis shows that in 2007 ROA was 7% and in 2008 & 2009 it goes up to 8% the higher
the firms return on total assets, the better. ROA 8% indicates that the company earned 8 paisa
on each taka of asset investment.

Return on common equity (ROE):

Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total
common equity. It is the most important of the Bottom line ratio. By this, we can find out how
much the shareholders are going to get for their shares

Year 2007 2008 2009
Net income 26,111,294 43,285,209 49,233,664
Common equity 90,000,000 90,000,000 90,000,000
Return on common equity 0.29 0.48 0.55

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Here, in 2007 ROE was 29%. In 2008 it went up to 48% and in 2009 it went up to 55%.
Generally the higher this return, the better off is the owners.

Price/earnings (P/E):
The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a
share relative to the income or profit earned by the firm per share

Profitability
Year 2007 2008 2009
Price per share 785 995 1,552
Earnings per share 31 48 55
Price /Earning 25.22 20.70 28.38

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Market/book (M/B):
The ratio of book value to market value of stocks.
Profitability
Year 2007 2008 2009
Market price per share 787 996 1,553
Book value per share 185 210 239
Market /Book 4.26 4.75 6.49


According to the analysis, the Market-to-book Ratio increases from 4.26 in 2007 to 4.75 in 2008,
and then increased to 6.49 in 2009.

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Appendix
(FinancialData)

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INDUSTRY ANALYSIS
OBJECTIVES:
Have to analyze the performance of 4 listed manufacturing company Square Pharmaceuticals,
Beximco Pharmaceuticals, ACI Pharmaceuticals and Ibn Sina Pharmaceuticals (listed at DSE).
The main objective to analyze the performance in terms of
Liquidity
Leverage
Activity
Profitability
Market position

LIQUIDITY RATIO:

Current Ratio:
Current Ratio =






Table: Current Ratio

Quick Ratio:
Quick Ratio =
LIQUIDITY RATIO
CURRENTRATIO
Years
2007 2008 2009
Companies
Square 1.26 1.46 2.15
ACI
0.93 0.99 1.07
Ibn Sina 0.78 0.83 0.73

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LIQUIDITY RATIO
QUICKRATIO
Years
2007 2008 2009
Companies
Square 0.68 0.66 1.16
ACI 0.47 0.47 0.68
Ibn Sina 0.29 0.24 0.7

Table: Quick Ratio

ASSET MANAGEMENT RATIO:

Inventory turnover ratio:

Inventory Turnover =

ASSET MANAGEMENT RATIO
INVENTORYTURNOVERRATIO
Years
2007 2008 2009
Companies
Square 4.72 5.42 6.02
ACI 3.64 3.29 4.43
Ibn Sina 13.54 17.53 20.53

Table: Inventory Turnover Ratio

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Day sales Outstanding (DSO):

Days Sales Outstanding (DSO) =







Table: Day Sales Outstanding
Fixed Asset Turnover Ratio:

Fixed Assets Turnover =






Table: Fixed Asset Turnover Ratio


ASSET MANAGEMENT RATIO
DAYSALESOUTSTANDING(DSO)
Years
2007 2008 2009
Companies
Square
13.75 15.34 13.97
ACI
68.42 69.58 80.87
Ibn Sina 29.82 75.68 90.1
ASSET MANAGEMENT RATIO
FIXEDASSETTURNOVERRATIO
Years
2007 2008 2009
Companies
Square 1.15 1.21 1.29
ACI 2.29 3.19 3.28
Ibn Sina 3.19 3.59 3.37

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Total asset turnover:

Total Asset Turnover =





Table: Total Asset Turnover

DEBT MANAGEMENT RATIO
Debt Ratio:
Debt Ratio =





Table: Debt Ratio
Times interest earned (TIE):

Times-interest earned ratio =

ASSET MANAGEMENT RATIO
TOTALASSETTURNOVERRATIO
Years
2007 2008 2009
Companies
Square
0.75 0.86 0.88
ACI
0.97 1.1 1.05
Ibn Sina 1.99 2.05 2.12
DEBT MANAGEMENT RATIO
DEBTRATIO
Years
2007 2008 2009
Companies
Square 34% 25% 23%
ACI
70% 70% 71%
Ibn Sina 58% 63% 64%

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DEBT MANAGEMENT RATIO

TIMEINTERESTEARNEDRATIO
Years
2007 2008 2009
Companies
Square 5.31 6.32 9.15
ACI 2.66 1.85 1.39
Ibn Sina
14.15 11.1 10.89
Table: Time-interest Earned Ratio

PROFITABILITY RATIO
Profit Margin on Sales:
Profit margin on sales =
PROFITABILITY RATIO
PROFITMARGINONSALES
Years
2007 2008 2009
Companies
Square
14.45 16.63 15.72
ACI
5.91 8.88 4.83
Ibn Sina
0.03 0.04 0.04
Table: Profit Margin on Sales
Basic Earning Power:
Basic earning power (BEP) =





Table: Basic Earning Power (BEP)
PROFITABILITY RATIO
BASICEARNINGPOWER(BEP)
Years
2007 2008 2009
Companies
Square 0.15 0.19 0.19
ACI
0.1 0.1 0.06
Ibn Sina
0.08 0.1 0.09

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Return on Total Asset (ROA):

Return on Total Asset (ROA) =

PROFITABILITY RATIO
RETURNONASSET(ROA)
Years
2007 2008 2009
Companies
Square
0.11 0.14 0.14
ACI
0.06 0.1 0.05
Ibn Sina 0.07 0.08 0.08
Table: Return on Asset
Return on Common Equity (ROE):

Return on Equity (ROE) =

PROFITABILITY RATIO
RETURNONEQUITY(ROE)
Years
2007 2008 2009
Companies
Square
0.16 0.19 0.18
ACI
0.2 0.37 0.2
Ibn Sina 0.29 0.48 0.55
Table: Return on Equity (ROE)

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MARKET RATIO
Price/Earnings (P/E):

Price/Earnings (P/E) =
MARKET RATIO
PRICE/EARNINGS(P/E)
Years
2007 2008 2009
Companies
Square 26.6 23.44 25.88
ACI 8.6 9.18 8.79
Ibn Sina 25.22 20.7 28.38
Table: Price/Earning (P/E)
Market-to-book Ratio (M/B):
Market-to-book Ratio (M/B) =
MARKET RATIO
MARKET/BOOKVALUE(M/B)
Years
2007 2008 2009
Companies
Square 4.37 3.56 4.68
ACI 1.96 3.6 2.55
Ibn Sina 4.26 4.75 6.49
Table: Market/Book Value (M/B)

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CONCLUSION:
In Bangladesh Pharmaceutical sector is one of the most developed hi tech sector
which is contributing in the country's economy. After the promulgation of Drug
Control Ordinance - 1982, the development of this sector was accelerated. The
professional knowledge, thoughts and innovative ideas of the pharmacists working
in this sector are the key factors for these developments. Due to recent
development of this sector we are exporting medicines to global market including
European market. This sector is also providing 95% of the total medicine
requirement of the local market. Leading Pharmaceutical Companies are
expanding their business with the aim to expand export market. Recently few new
industries have been established with hi tech equipments and professionals which
will enhance the strength of this sector.