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Ratio Analysis of BEXIMCO Pharmaceuticals Ltd For Year 2007-08
Course Code: FBK-313 Course Title: Financial Management-2
Md. Hassan Uddin, Lecturer, Department of Finance and Banking, Faculty of Business Administration and Management Patuakhali Science and Technology University
Arafat Hossain Roll No. : Reg. No. : Session: BBA Program Faculty of Business Administration and Management
PATUAKHALI SCIENCE AND TECHNOLOGY UNIVERSITY
Date of Submission :
Results and Analysis
1. Liquidity ratio 1.1. Current ratio 1.2. Quick ratio or acid test 2. Asset management ratio 2.1 .Accounts receivable turnover 2.2. Average collection period 2.3. Inventory turnover ratio 2.4. Accounts Payable turnover 2.5. Accounts Payable turnover in days 2.6. Fixed asset turnover ratio 2.7. Total asset turnover ratio 3. Profitability Ratio 3.1. Net Profit Margin 3.2. Gross Profit Margin ratio 3.3. Return on asset ratio 3.4. Return on Equity 3.5. Operating profit margin ratio 4. Debt coverage ratio 4.1. Debt ratio 4.2. Time interest earned ratio 4.3. Book value per share ratio 5. Market value ratios 5.1. Earnings per Share (EPS) ratio 5.2. Market/Book ratio
development capability and standard service. They provide world class manufacturing facilities. They export lot of medicine in developed countries (Germany. Liquidity ratio Current Ratio: Current Ratio = Current assets /Current liabilities Quick Ratio: Quick Ratio= (Current Assets-Inventories)/Current Liabilities Cash Ratio: Cash Ratio = Cash / Current Liabilities --------------------. share holder equity and liability. and United Kingdom) to earn money. diabetes. (Square-financialreports) Formula for ratio analysis We used different types of formula for calculation of different kinds of ratio. There are several formulas revealing each of the five aspects of performance evaluation and financial condition and short discuss about as follow as.(4) Average collection period: Average collection period = 360 days / Accounts receivable turnover -----------------. its operation and management and how well the company has been able to utilize its assets and earn profit. Switzerland. They prepare „branded generics' for all diseases from AIDS to cancer and also asthma.(2) ---------------------.(3) Asset management ratios Accounts receivable turnover: Accounts receivable turnover = Sales / Accounts receivable -------------------.(5) Inventory Turnover Ratio Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory -------------------. So formula is the most important thing for our thesis without formula we can’t calculation the ratio analysis and we don’t measurement of performance evaluation of pharmaceutical company. Financial ratio analysis is one of the best tools of performance evaluation of any company. Beximco pharmaceutical company ltd is one of the largest leading companies in Bangladesh.(1) ---------------------. etc.(6) . revenue and expenses. In order to determine the financial position of the pharmaceutical company and to make a judgment of how well the pharmaceutical company efficiency. Italy.Background Performance evaluation of a company is usually related to how well a company can use it assets.
(16) -------------.(17) Book value per share Book value per share = Common stockholders equity / Outstanding shares -----------.(15) Debt coverage ratio Debt Ratio Debt Ratio =Total liabilities / Total assets Time interest earned Time interest earned = EBIT / Interest charged --------------.(18) Market value ratios Earning per share ratio Earning per share ratio = Net income /weighted average number of share outstanding (19) Market/Book ratio Market/Book ratio= Market price per share/Book value per share ------.Accounts Payable turnover Accounts Payable turnover = Sales / Accounts Payable ------------------.(10) ---------------------.(12) ---------------------.(20) .(14) Operating Profit Margin Operating Profit Margin = Operating profits / Sales --------------.(13) Return on common stock equity Return on common stock equity = Net income / Common stockholders equity ------.(11) ---------------------.(7) Accounts Payable turnover in days Accounts Payable turnover in days = 360 / Accounts Payable turnover --------------Fixed asset turnover Fixed ass Total asset turnover Total asset turnover = Sales / Total asset Profitability Ratio Net Profit margin Net Profit margin = Net profit after tax/sales Net Profit margin ratio Gross Profit margin ratio= Gross profit/sales Return on Total Assets Return on Total Assets = Net profits after taxes / total assets (8) ---------------.
032.654 --------------------.861. It was decreasing the next year.602.627.775. the ratio made the relationship between cash and current liability. However. deposits and repayment. investment in marketable securities in short term loan.936 Analysis: In this analysis.267 = 1.099 2. Current Ratio = Current assets /Current liabilities Table: 4.795 1. Current asset includes inventory.RESULTS AND ANALYSIS 1. trade debtors.1 Current ratio Year 2008 2007 Beximco Pharmaceuticals Ltd (Ratio) 2.458 ----------------------2.= 1. we can view that in 2007 the current ratios were 1. Generally current ratio are acceptable of shot term creditors for any company. .1. Liquidity ratio Liquidity ratio refers to the ability of a company to interact its assets that is most readily converted into cash.099 times in Beximco pharmaceutical Ltd. The formula is shown as below. The Liquidity ratio we can satisfy on the three ratios. long term loans-current portion. advances. those are: 1) Current ratio 2) Quick ratio or acid test 3) Cash Ratio 1. and current liabilities are comprised short term banks loan.891. trade creditors liabilities for other finance etc.972.923. Assets are converted into cash in a short period of time that are concerns to liquidity position. cash and cash equivalents.1 Current ratio The current ratio is calculated by dividing current assets by current liabilities.
In 2007. It is easily converted into cash at turn to their book values and it also indicates the ability of a company to use its near cash.216 2.602.1.inventories)/Current liabilities Table: Quick ratio Beximco Pharmaceuticals Ltd (Ratio) 1.5 21 1.623.2. it is the same position of current ratio.Quick ratio or acid test Quick ratio or acid test ratio is estimating the current assets minus inventories then divide by current liabilities. .9 times of Beximco pharmaceutical company which decreased quietly as resulted 0.453.5 times.032. The formula of quick ratio or acid test ratio are as follow as.561 = 0.356.627. the quick 1.972.267 = 0. Quick ratio = (Current asset.936 ratio was 0.892 Analysis: Analysis of this ratio.603.
Finally. Asset management ratio Asset management ratios are most notable ratio of the financial ratios analysis. It is analysis how a company quickly converted to cash or sale on their resources.198 499. It measure how effectively a company uses and controls its assets.597.958 503.= 7.010.2. if any company aggressive collection money so it has low receivable and also high ratio. for this reason the company must be invested by other sector. So the higher turnover means that the company is inefficient in managing its Account receivable .024.. Accounts receivable turnover = Sales / Accounts receivable Table: Accounts receivable turnover ratio Year 2008 2007 Beximco Pharmaceuticals Ltd (Ratio) 4. .1.680. It is also called Turnover ratio because it indicates the asset converted or turnover into sales. Instead of.167. It means that Account receivable is increasing day by day which is very bad position for company because it has make up a lot of cash money. Following are discussed seven types of asset management ratios: 1) Accounts receivable turnover 2) Average collection period 3) Inventory turnover 4) Accounts Payable turnover 5) Accounts Payable turnover in days 6) Fixed asset turnover 7) Total asset turnover 2. This ratio measure the number of times are collected during the period.916.059 ------------------3. Accounts receivable turnover The Accounts receivable turnover is comparison of the size of the company sales and uncollected bills from customers.401 ------------------. we can recognize the company can easily measurement their asset because this ratio made up between assets and sales. If any company is difficult to collect money so it has large account receivable and also indicates the low ratio. Account receivable turnover ratio formula is.812 = 7.792 Analysis: From this ratio analysis we acquire that the ratio is continuously increasing from 2007 to 2008 in Beximco Pharmaceutical Company.
871.322 Analysis.720.346 1.2. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Table: Inventory Turnover Ratio Year 2008 2007 Beximco Pharmaceuticals Ltd (Ratio) 2. It measures the average number of days customers take to pay their bills to divide by account receivable turnover .509.958 times 360 days ---------------. A low ratio stands up the company bad collection period and it’s also indicating of low cash balance.2.The average number of day also indicate the 360 days .487. the measurement of average inventory is. at first we are add to years inventory after that we divide in to two .720.Average collection period The average collection period is refers the average number of days of the company.198 times 2007 to 2008 for Beximco pharmaceutical companies.967.975 / 1.= 45 2007 7. Inventory turnover ratio The inventory turnover ratio measures the number of times on average the inventory was sold during the period. . 2.181 / 1. The ratio is calculate the cost of goods sold by divide into average inventory.002. Average collection period = 360 days / Accounts receivable turnover Table: Average collection period Year 2008 Beximco Pharmaceuticals Ltd(Days) 360 days ---------------. It is the best position for the company.Inventory turnover ratio is also known as inventory turns ratio and stock turnover ratio. It maintain the company to collection its credit policy.168 = 1.487.168 = 1. The equation of average collection period is following as.3.= 50 Analysis: As a result we can recognize the average collection period had decreased from 7 . It has made good relationships between account receivable and outstanding payment.
The account payable turnover ratio equation are as follow as. If any company number of days is more then the company is stretching account payable otherwise the company is not holding their account payable. .597.024. the square company also increases but not more then so those company changed their creditor policy and tried to pay the payable as possible as to increase current liability.It betoken that the account payable is standard position .4. It evaluates the account payable turnover by exchange into 360 days.167.468 343.48.010. Accounts Payable turnover = Sales / Accounts Payable Table: Accounts Payable turnover ratio Year 2008 Beximco Pharmaceuticals Ltd (Ratio) 4.2. Accounts Payable turnover in days = 360 days / Accounts Payable turnover Table: Accounts Payable turnover in days Year 2008 2007 Beximco Pharmaceuticals Ltd (Days) 360 days / 60 6 times 360 days / 36 10 time Analysis: From this analysis we can express that the Beximco pharmaceutical company has increase double of this ratio from 2007 to 2008.165.Accounts Payable turnover The accounts payable turnover ratio is compute by account payable to sale.498 2007 Analysis: As result we confirm that the Beximco pharmaceutical company is good condition compare than square pharmaceutical company. 2. It measures the tendency of a company credit policy whether extend account payable or not.Accounts Payable turnover in days Accounts Payable turnover in days is represent that the number of days of a company to pay their liability to their creditor.186 6.841 3.812 / 10.5.059 / 6.Conversely.604.
482 Analysis: Beximco Company has rapid declination of fixed assets turnover ratio in 2008 occurred because sales and net fixed assets the increase of company 2. it was 0.It determine the effectiveness in generating net sales revenue from investments in net property.787 2007 3.819.300 11.643.335 = 11.167.812 / 0. investment –long term.398 = 9.2. Total asset turnover ratio The total asset turnover ratio measures the ability of a company to use its assets to generate sales.It considers all assets including property .010.059 / 0. advances.270 times in Beximco company.597.plant and equipment. and equipment back into the company evaluates only the investments.029.957.665.059 / 0. In these criteria a high ratio means the company is achieving more profit.7.773. The formula is following as: Total asset turnover = Sales / Total asset Table: Total asset turnover ratio Year 2008 Beximco Pharmaceuticals Ltd (Ratio) 4.953.Fixed asset turnover ratio Fixed asset turnover ratio is the sales to the value of fixed assets of the company. investment in market securities.418. plant. Fixed asset turnover = Sales / Net fixed asset Table: Fixed asset turnover ratio Year 2008 Beximco Pharmaceuticals Ltd (Ratio) 4.010. deposit and prepayment. declined to 0.441 2007 3. cash and cash equivalents etc.167. capital working in process. short term loan.024. trade debtors.940 Analysis: In this Analysis we see that a gradual fall of company’s total asset turnover in 2007. inventories. .812 / 0.6.300 times..597.024.270 14.
010.5% 4. Net Profit margin = Net profit after tax/sales*100 Table: Net Profit Margin ratio Year 2008 Beximco Pharmaceuticals Ltd (Ratio on percentage) 545.024. Operating profit margin 3.878 / 9.812 Analysis: In this analysis we see that the net profit margin has increased in 2008 compare than last year in Beximco pharmaceutical company because the net profit and sales are increase from the last year.273 / 13. Profitability Ratio Profitability ratios designate a company's overall efficiency and performance. .067.1.167. Return on Asset 4.341. There are five important profitability ratios that we are going to analyze: 1.3.The higher net profit margins are the better for any pharmaceutical company. It measures the company how to use of its assets and control of its expenses to generate an acceptable rate of return. It argues that how much of sales are changeover after al expense .059 2007 353. Return on Equity 5. Net Profit Margin 2.8% 3. Net Profit Margin The net profit margin is determined of net profit after tax to net sales. Gross Profit Margin 3.597. It also used to examine how well the company is operating or how well current performance compares to past records of both pharmaceutical companies.
It determines the gross profit to divide by net sales.Gross Profit Margin ratio Gross margin express of the company efficiency of raw material and labor during the working process .597. So it is most important for performance evaluation of pharmaceutical company.878 -----------------.= 50% 4.= 45. .3.167.059 2007 1.3% 3.007.295.629. It finds out the ability of the company to utilize their assets and also measure of efficiency of the company in generating profits.3. The gross profit margin ratio formula as following as Gross profit margin ratio= Gross profit/sales*100 Table : Gross Profit Margin ratio Year 2008 Beximco Pharmaceuticals Ltd ( Ratio on percentage ) 2.010.812 Analysis: The gross profit margin has slightly decreased in 2008compare with 2007 in square company. It can be assigned to single products or an entire company.837 ----------------.024.If any company higher gross profit margin then the company more efficiency to controls their raw material and labors.2.Return on asset ratio The Return on Assets ratio can be directly computed by dividing net income by average total asset. 3.514.
Return on common stock equity = Net income / Common stockholders‟ equity*100 Table:Return on common stock equity ratio Year Beximco Pharmaceuticals Ltd (Ratio on percentage) 545.145 2007 353. return on net worth.953.4.Return on Total Assets = Net profits after taxes / total assets*100 Table: Return on Total Assets Year 2008 Beximco Pharmaceuticals Ltd (Ratio on percentage ) 545. It demonstrate how a company to generate earnings growth for using investment fund. 3.273 -------------------. Return on ordinary shareholders' fund. For this reason return on total asset ratio has increase in little bite.067.6% 14.Return on Equity Return on Equity is compute by dividing net income less preferred dividend by average company stockholder equity.341.418.939.273/ 3. It has some alternative name such Return on average common equity.250.819.067.= 4.878 ---------------------.=5.450.441 2007 353.341.665.2 % 8.940 Analysis: From 2008 years data we see that net income and total asset has continuously increased to 2007 in Beximco Company.202.647 2008 .9% 11.2% 10.878/2.
.010. A high operating profit margin is preferred.778.2% 3.147 -----------------.848 -----------------.794.597.059 2007 654.Analysis: Beximco company is increase that the same in previous year. It state that the measurement for evaluating the efficient use of resources by a company in producing earnings for its shareholders. 3.167.024.= 24.Operating profit margin ratio The operating profit margin ratio recognize of the percentage of sales to exchange into all cost and expenses after remaining sales.812 2008 Analysis: In this analysis we find out the operating profit margin has increase in 2007 to 2008 in beximco pharmaceutical company because those company operating profit and sales has increase step by step from previous year . Operating profit margin is calculated as follows: Operating Profit Margin = Operating profits / Sales Table: Operating profit Margin Year Beximco Pharmaceuticals Ltd (Ratio) 998.= 18.9% 4.5.
4% 14.479.819. company.9% 11.940 Analysis: In this problem analysis we see that the percentage of ratio has decreased from 2007 to 2008 in the beximco company because their asset was increased at a higher rate than from the last year. Book value per share. 2. If any company has realize their debt coverage ratio less than 1 then the company understand their income greater by a property is insufficient to collect their mortgage.441 2007 3.369.953. Debt coverage ratio Debt Coverage Ratio measures the percentage of the total asset provided by creditor. those are: 1.463.1. The ratio is calculated as follows: Debt Ratio =Total liabilities / Total assets*100 Table: Debt ratio Year Beximco Pharmaceuticals Ltd 2008 (Percentage on Ratio) 4.293 --------------------.= 30. 3.296 --------------------. So more than is 1 is best for any company. It is the most important financial ratio for performance evaluation of any pharmaceutical Company. The Debt-coverage ratio we can satisfy on the three ratios.=29.702. Time interest earned. 4.665.418. Debt ratio. Debt ratio Debt Ratio is laid out the percentage of a company total asset the change into total debt. .4.
010 -------------------.667 --------------------.151.664 Analysis: In this dissuasion we realize that the higher ratio of time interest earned.= 4.810.= 1.4.2. .7% 223. It has corroborated that the company able to pay its annual cost because this ratio denote the annual interest charged for any company.Time interest earned ratio The time interest earned ratio indicates the company‟s ability to meet interest payment as they come due.677.541 2007 399.121. It is reckon by dividing their earnings before interest tax by the interest charged.9% 143. it indicated the Company has higher ability to pay the interest from their opportunity income. Time interest earned = Earnings before interest tax / Interest charged Table:Time interest earned ratio Year Beximco Pharmaceuticals Ltd (Ratio on percentage ) 2008 714.
=TK 65. Earnings per Share (EPS) ratio 2. Market value ratios The final ratios are the market value ratio. It also call share ownership ratio.Book value per share ratio Book value per share is the amount each share would receive.250.5 125. In order to the stockholder is able to analyze the likely future market value of the stock market.3. 5. Market/Book ratio .9 125.647 -------------------.145 -------------------. There are two ratios under this ratio. Book value per share = Common stockholders’ equity / Outstanding shares Table:Book value per share ratio Year Beximco Pharmaceuticals Ltd (Ratio) 10.4.957.939.747 2008 Analysis: So we mention that here Beximco company is better position in share market.=TK82. It referred to the stockholder in analyzing present and future investment in a company. In this ratio the stockholders are interested in the way to certain variables affect the value of their holdings.747 2007 8. If the company were liquidity on the basis of amount reported on the balance sheet.957. They are as follows: 1.202.450.
5.=TK 4. .3 125.= TK 2.747 Analysis: Analysis shows that earning per share ratio has increased from 2007 to 2008 in the beximco company because net income had increased at a fewer rate than from the previous and the square company so much improvement from the last year. Earnings per share ratio: Net income /weighted average number of share outstanding Table: Earnings per share ratio Year 2008 Beximco Pharmaceuticals Ltd ( Amount ) 543. It gauges by dividing net income into total number of share outstanding .Earnings per Share (EPS) ratio Earnings per share ratio are a small variation of ownership ratio.341.957.067.747 2007 353.it is most important for deterring of share price.8 125.273 ------------------.957.1.878 -----------------.
Market/Book ratio: Market price per share/Book value per share Table: Market/Book ratios Year Beximco Pharmaceuticals Ltd (Amount) 2008 TK167 ---------. It indicates management success in creating value for its stockholders.89 TK 66 Analysis: In this case the market value per ratio is increase by the beximco pharmaceutical company.2.5.= TK 0.Market/Book ratio The Market/Book Ratio refer to the company market value per share to its book value per share.= TK2 TK 83 2007 TK59 ---------. .
and each of them is guided by the same moral and social responsibilities the company values most.6. skilled manpower and proven formulation capabilities. among many others. Brazil.Conclusion Beximco Pharmaceuticals Ltd (BPL) is a leading manufacturer of pharmaceutical formulations and Active Pharmaceutical Ingredients (APIs) in Bangladesh. The company is the largest exporter of pharmaceuticals in the country and its state-of-the-art manufacturing facilities are certified by global regulatory bodies of Australia. Ensuring access to quality medicines is the powerful aspiration that motivates more than 3000 employees of the organization. among others. anti asthma inhalers etc. The company is consistently building upon its portfolio and currently producing more than 400 products in different dosage forms covering broader therapeutic categories which include antibiotics. antireretrovirals. With decades of contract manufacturing experience with global MNCs. Gulf nations. the company has been building a visible and growing presence across the continents offering high. ant diabetics. . antihypertensive.
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