Executive summary

First of all we have done an analysis on two different companies based on same
industry and we made annual report from it. We try to identify how they execute
their company principle and also know about the activities, progress and future
plan of companies. We try to find out the position of these companies. In below we
also talk about the companys overview and how they follow IFRS. The two
companies are BEXIMCO PHARMA and SQUARE PHARMA.

Financial statement analysis

Financial Statement includes the Balance Sheet, Income statement and other
statement which determine the companys performance. Financial ratio analysis is
the calculation and comparison of ratios which are derived from information in
companys financial statements.

Pharmaceutical for the year ended 2014 to 2015.Square Pharmaceuticals Limited

is the largest pharmaceutical company in Bangladesh and it has been
continuously in the 1st position among all national and multinational companies
since 1985. It was established in 1958 and converted into a public limited
company in 1991.
On the other hand Beximco Pharmaceuticals Ltd. belongs to Beximco Group, the
largest private sector business conglomerate in Bangladesh. Beximco
Pharmaceuticals is a leading manufacturer and exporter of pharmaceuticals in the
country. Beximco Pharmaceutical is the only Bangladeshi company listed on the
AIM of London Stock Exchange through issuance of GDRs.
Comparative analysis of Liability and equity
section
IFRS32 presentation of the stated objectives of IAS 32 is to establish principles for
financial instruments as liabilities or equity and for offering financial assets and
liabilities.

Financial liability:

=> To deliver cash or another financial asset to another entity, or =>to exchange
financial assets or financial liabilities with another entity under conditions that are
potentially unfavorable to the entity.

Financial equity: Any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities.

These companies also follow below rules:

IAS 28 Investments in Associates and Joint Ventures (as amended in 2011) outlines how to apply, with certain limited exceptions, the equity method to investments in associates a nd joint ventures. The standard also defines an associate by reference to the concept of "significant influence",
which requires power to participate in financial and operating policy decisions of an investee

IAS 28 Investments in Associates and Joint Ventures (as amended in 2011)

outlines how to apply, with certain limited exceptions, the equity method to
investments in associates and joint ventures. The standard also defines an associate
by reference to the concept of "significant influence", which requires power to
participate in financial and operating policy decisions of an investee.

IAS 33 Earnings per Share sets out how to calculate both basic earnings per share
(EPS) and diluted EPS. The calculation of Basic EPS is based on the weighted
average number of ordinary shares outstanding during the period, whereas diluted
EPS also includes dilutive potential ordinary shares (such as options and
convertible instruments) if they meet certain criteria.
EQUITY: According to IFRS32

IFRS beximco Square

pharma
Share capital according to IFRS every This company They used
company including authorized ordinary authorized
ordinary shares, shares there have also ordinary share
preference shares, non- preference share issued and there was no
voting shares, by the company. They preference share.
participating shares and follow the IFRS rules. They follow the
redeemable shares Classification as equity IAS rules.
depends on the rights
associated with the
shareholders is the
equity owners.

Share premium Share issued as per value Share Premium The The balance in
and recognized share Share Premium shall be share premium
premium separately from utilized in accordance account shall be
share capital with the provisions of utilized in
the Companies Act, accordance with
1994 and as per provisions of the
direction of the Companies Act
Securities and 1994 and as
Exchange Commission directed by the
in this respect. Bangladesh
Securities and
Exchange
Commission in
this respect.
Reserve and Reserve are not Their reserve and Their create
surplus specifically defined in surplus is utilized in the reserve and
IFRS and are frequently company business surplus from
referred to as their business.
components of equity
Fair valuation of Unrealized gains/losses Their investments They follow
surplus and on investments as represent the difference according to
available-for-sale are of market value of the BAS - 28
investment
recognized in equity in a listed companys share Accounting for
fair value reserve. The on the closing date and Investment in
gain/losses taken to the last balance sheet Associates.
equity is adjusted from price
 interest, dividends.
Retain Earnings IFRS says it reflect the entitys They are following IAS They follow
accumulated earnings less 33 for measuring BAS - 33
dividend paid and payable
retained earnings. retained Earnings
Liability:

IFRS beximco Square pharma

According to IFRS 32 This company follows the They also follow IFRS 32 for
instrument is payable on IFRS 32.They shown their showing their current and
liquidation, but the amount is current and non-current non-current amount.
showing separately, entity is liability separately.
obliged to make payment
before liquidation such as
mandatory dividend.
Mandatory redeemable shares

2. Solvency analysis for the companies 2014

Ratio baximco Square pharma

Debt to asset TL/TA 0.278 0.13

ratio

Long term debt LTD/TA 0.053 0.05

to asset ratio

Debt to equity TL/Total stockholder 0.386 0.160

ratio equity

Financial TD/Shareholder equity 0.225 0.066

leverage ratio
2015

Ratio Beximco Square pharma

Debt to asset TL/TA 0.271 0.11
ratio

Long term debt LTD/TA 0.053 0.026

to asset ratio

Debt to equity TL/Total stockholder 0.371 0.131

ratio equity

Financial TD/Shareholder equity 0.213 0.066

leverage ratio

Debt to asset ratio: a debt ratio of.271is often considered to be less risky. This
means that the company has twice as many assets liability.

Ltd to asset ratio: it represents company doing well and less depends on debts for
their business needs.

Debt to equity ratio: too much debt can put a company business risk.

Financial leverage ratio: if it higher than 2 to 1.it indicate financial weakness and it
towards bankruptcy.

3. A) return on total capital: EBIT/Total capital

2014 beximco Square pharma

Return on total 0.573 1.226

capital
2015 beximco Square pharma

Return on total 0.605 1.256

capital

More return on capital is good sign for any company. In this section return on total
capital in 2014 for square pharma 1.226 that is than beximco pharma(0.573) and
also in 2015 square pharma doing well rather than beximco pharma.

b) Return on equity: net income/shareholder equity

2014 Beximco Square pharma

Return on Equity 0.073 0.158

2015 Beximco Square pharma

Return on Equity 0.086 0.166

Higher return on equity is also good for any company. In this section square
pharmas return on equity is higher than beximco pharma.

4.2014

Beximco Square pharma

Basic earnings Profit-dividend 29.51 453.607

per share
Book value per Total common 404.053 2854.558
share stockholders
equity/Num of
common share
Price to earnings Mkt value price per 2.525 0.974
ratio share/EPS

Dividend per Dividends/Num of 10.65 154.312

share shares
Dividend payout Dividends/Net income 0.361 0.340
ratio

2015

Beximco Square pharma

Basic earnings Profit-dividend 37.745 553.479

per share

Book value per Total common 434.153 3317.995

share stockholders
equity/Num of
common share
Price to earnings Mkt value price per 1.976 0.925
ratio share/EPS

Dividend per Dividends/Num of

share shares
Dividend payout Dividends/Net income
ratio

Basic earnings per share is the amount of a companys profit or loss for a reporting
period that is available to the shares of its common stock that are outstanding
during the reporting period. It is a useful measure of performance for companies
with simplified capital structures. In 2014 square pharma given dividends to their
share holder but they dont see any dividend they given in 2015. And beximco
also given dividend lower than square pharma in 2014. We find dividend payout
ratio in 2014 for both companies but they dont exercise in 2015.

APPENDIX

SQUARE PHARMA
Beximco pharma