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TERM PAPER

ON

“FINANCIAL STATEMENT ANALYSIS OF


ORION PHARMACEUTICALS LTD.”

SUBMITTED TO:
MS. NILUFAR SULTANA
Assistant Professor
Department of Finance
Faculty Of Business Administration
Premier University, Chittagong

SUBMITTED BY:
Joy Barua
BBA (Finance A)
Batch : 26th
ID: 12-026-101-05853
Faculty Of Business Administration
Premier University, Chittagong

SUBMISSION DATE:
August, 16, 2017

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PART – 1
LETTER OF TRANSMITTAL

16th, August, 2017


To
Mrs. Nilufar Sultana
Assistant Professor
Department of Finance
Premier University, Chittagong

Subject: Submission of term paper on Financial statements analysis of ORION


PHARMACEUTICALS LTD.

With respect to mam,


This is my pleasure to present my term paper. This parer is an outcome of the analysis that I
have made for ORION PHARMACEUTICALS LTD. I have tried my best to prepare this report
with providing all of my effort and to cover all aspects regarding the matter.
Consequently, I am transmitting this report to your very concern. Hopefully, you will notice the
paper informative approach as a consequence of my hard work. In case of any future
clarification or elaboration regarding this parer I would welcome the opportunity to consult with
you to explore how my findings could best meet your needs.

Sincerely yours,
Joy Barua
BBA (Finance A)
ID: 12-026-101-05853
Premier University, Chittagong.

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ACKNOWLEDGEMENT

At the very begging of my writing I would like to give my thanks to God who helps me in every
stage of my life and specially to Business faculties of Premier University who gave the
oppertunity to understand things whcich was unknown to me with the help of many intellectual

teachers and with their supports.


Secondly, this is also high time for me to convey my deepest gratitude and sincere submission to
God for giving me the strength and brave for the accomplishment of preparing the term paper.

Then, I feel honor to lay my sincerest gratitude to my honorable supervisor, Mrs. Nilufar Sultana
Assistant Professor of premier university who helps me, encourages me and guides me by giving
valuable suggestions and guideline throughout the period of my BBA course, without her support
it was not possible to prepare this term paper. I also very glad to get the chance to do
INTERNATIONAL FINANCIAL MANAGEMENT and FINANCIAL STATEMENT
ANALYSIS course under her authority and supervision.

Finally, I am fortunate for the aid and encouragement I have received from all of my teachers
and staffs and friends of Premier University.

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EXECUTIVE SUMMARY

Orion pharmaceuticals is one of the Bangladeshi top pharmaceutical company. Orion Pharma a
member of Orion Group was founded as a pharmaceutical manufacturing company in 1965. With
the mission to serve the ailing humanity around the globe orion pharma started its operation
nearly four decades ago, and after a great run of success the company today has proliferated out
into one of the leading pharmaceutical companies in Bangladesh. It has already established itself
to the doctor's community, other health care professionals, chemists and patients as a provider of
quality medicines and health care services through 50 brands and 51 presentations of various
formulations.

In this term paper report i am going to analyse the financial statements of Orion Pharmaceuticals
Ltd. for the year 2012, 2013, 2014. It is impotant because through the financial statement
analysis we can the analyse the strengths and weaknesses of a firm. Mainly i focused on the
firms previous annual report as a source of secondery data.

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TABLE OF CONTENTS
Serial Number Topic Name Page Number
PART – 1
Tittle Page 1
Letter of Transmittal 2
Acknowledgement 3
Executive Summary 4
Table of Content 5
PART – 2
Chapter- One Introductory Aspects 6
1.1 Background of The Study 7
1.2 Rational The Study 7
1.3 Scope of the Study 7
1.4 Objectives of the Study 7
1.5 Methodology of the Study 8
1.5.1 Types of research 8
1.5.2 Data Sources 8
1.6 Limitations of the study 9
Chapter- Two Theoritical Aspects 10
2.1 Theoritical Background 10
2.2 Major Financial Statements 10-12
2.3 Users of financial statements 12
2.4 Importance Of Financial Statement Analysis 13-14
2.5 Limitations Of Financial Statement Analysis 14
2.6 Tools of Analysis 15-18
Chapter- Three Practical Aspects 19
3.1 Company Background 19-20
3.2 Horizontal or trend statement analysis 21-25
3.2.1 Vertical or common size analysis 26-30
3.3 RATIO ANALYSIS 31
3.3.1 Liquidity Ratios 31-32
3.3.2 Turnover Ratios 33-35
3.3.3 Profitability Ratios 36-38
3.3.4 Solvency Ratios 39-42
3.3.5 Working capital or cash flow Ratios 43-46
3.3.6 Capital Structure Ratios 47-48
3.3.7 Cash position Ratios 49-50
3.3.8 Z-Score Analysis 51-52
3.4 SWOT Analysis 53
Chapter- Four Conclusionary Aspects 54
4.1 Recommendation 54
4.2 Conclusion 55
Chapter- Five Ending Matters 56

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PART – 2
CHAPTER – 1

1.1 Background of the study

Introduction

Orion Pharma Ltd. is one of the premier pharmaceutical companies of Bangladesh which has
been contributing to improving the human health care of the country by providing quality
branded-generic pharmaceuticals. Orion Pharma Ltd., always believe in 'Quality never ends' and
refuse to settle for anything until it exceeds the existing standard. For this, Orion Pharma Ltd.
has been superseding the market growth consistently by wide margin in last few years. The
company has been awarded with the ISO-9001: 2000 Certificate in January 2003 for serving its
valued customers with products of excellent quality. Having four decades of vast experience
imbibed with technical and professional expertise, now Orion Pharma Ltd.
The pharmaceutical industry in Bangladesh is one of the most developed technology sectors
within Bangladesh. Manufacturers produce insulin, hormones, and cancer drugs. This sector
provides 97% of the total medicinal requirement of the local market. The industry also exports
medicines to global markets, including Europe. Pharmaceutical companies are expanding their
business with the aim to expand the export market.
In this term paper I have analyzed the financial health of the Orion Pharmaceuticals Ltd. by
observing the previous three years data and by using the Horizontal analysis, Vertical analysis
and Ratio analysis. Financial statement analysis (or financial analysis) is the process of
reviewing and analyzing a company's financial statements to make better economic decisions.
These statements include the income statement, balance sheet, statement of cash flows, and a
statement of changes in equity. Financial statement analysis is a method or process involving
specific techniques for evaluating risks, performance, financial health, and future prospects of an
organization.

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1.2 Rational Of The Study:

This term paper will be prepared as a part of the Bachelor of Business Administration program
under the Dept. of Finance in the Faculty of Business Studies, Premier University, Chittagong.
The reason for doing this study is to analyze and better understand the financial health of Orion
Pharmaceuticals Ltd. This term paper on “Financial Performance Analysis of Orion
Pharmaceuticals Ltd” was assigned by academic supervisor Mrs. Nilufar Sultana, Assistant
Professor of Dept of Finance, Faculty of Business Studies, Premier University, Chittagong.

1.3 Scope Of The Study:

 The study can be use for educational purpose


 Data used in this term paper can also be used to measure other financial tools
 The understanding of this can used in real life situation
 This study will help financial analysts in order to diagnoses of a firm financial
performance

1.4 Objective Of The Study:

 Broad objective

To assess and find out the financial conditions of the firm to analysis how much the company is
capable of doing business properly in future.

 Specific objective

o To give a brief overview of Orion Pharmaceuticals Limited.


o To analyze the trends of major income statement items.
o To determine the measure of financial performance.
o To give a clear picture about the financial performance of Orion Pharmaceuticals
Limited in last three years.

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1.5 Types Of Methodology

1.5.1 Types Of Research:

Broadly there are two types of research

(i) Qualitative Research


(ii) Quantitative Research

This term paper is based on Quantitative research.

Quantitative Research is used to quantify the problem by way of generating numerical data or
data that can be transformed into useable statistics. It is used to quantify attitudes, opinions,
behaviors, and other defined variables – and generalize results from a larger sample population.
Quantitative Research uses measurable data to formulate facts and uncover patterns in research.
Quantitative data collection methods are much more structured than Qualitative data collection
methods. Quantitative data collection methods include various forms of surveys – online surveys,
paper surveys, mobile surveys and kiosk surveys, face-to-face interviews, telephone interviews,
longitudinal studies, website interceptors, online polls, and systematic observations.

1.5.2 Data Sources: For smooth and accurate study everyone have to follow some rules &
regulation. In this term paper i have used only secondary data.

Secondary sources

i. Annual reports of Orion Pharmaceuticals Limited.


ii. Files & Folders
iii. Daily diary (containing my activities of practical orientation in Orion Pharmaceuticals
Limited) maintained by me
iv. Various publications on Orion Pharmaceuticals Limited.
v. Websites

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1.6 Limitations of the study:

 There were some restrictions to have access to the information confidential by concern
authority.
 Time and cost constraints also other limitations regarding this analysis.
 Lack of experience of the researcher.
 Analysis was based mainly on financial statements.

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CHAPTER – 2
2.1 Theoretical Background

Financial Statement

Financial statements for businesses usually include income statements, balance sheets,
statements of retained earnings and cash flows. It is standard practice for businesses to present
financial statements that adhere to generally accepted accounting principles (GAAP) to maintain
continuity of information and presentation across international borders. Financial statements are
often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax,
financing or investing purposes.

2.2 Major Financial Statements


Major Financial Statements includes-
(i) Income Statements
(ii) Balance Sheets
(iii) Statements Of Retained Earnings
(iv) Cash Flow Statement

(i) Income statement


An income statement is a financial statement that reports a company's financial performance over
a specific accounting period. Financial performance is assessed by giving a summary of how the
business incurs its revenues and expenses through both operating and non-operating activities. It
also shows the net profit or loss incurred over a specific accounting period.
The items of income statement are listed bellow-

Items Formula
Sales
Cost Of Goods Sold
Gross margin Sales - Cost Of Goods
Operating income/profit Gross Margin - Expenses Not Allocated To Goods

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Sold
Total income Operating + Other Income
EBIT (earnings before income taxes) Total Income - Dividends, Interest
Net profit Total Income After Dividends, Interest, Taxes
Net income Net Profit - Extraordinary Items

(ii) Balance sheet

A balance sheet is a financial statement that summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time. These three balance sheet segments give
investors an idea as to what the company owns and owes, as well as the amount invested by
shareholders.

The balance sheet adheres to the following formula:

Assets = Liabilities + Shareholders' Equity

(iii) Statements Of Retained Earnings

A statement of retained earnings is a financial statement outlining the changes in retained


earnings for a specified period. The statement is prepared in accordance with generally
accepted accounting principles (GAAP). It reconciles the beginning and ending retained
earnings for the period, using information such as net income from the other financial
statements.
This statement of retained earnings can appear as a separate statement or as an inclusion on
either a balance sheet or an income statement. Also, the statement of retained earnings can be
known as a statement of owner's equity, an equity statement or a statement of shareholders'
equity.

(iv) Cash Flow Statement


Cash flow is the net amount of cash and cash-equivalents moving into and out of a business.
Positive cash flow indicates that a company's liquid assets are increasing, enabling it to settle
debts, reinvest in its business, return money to shareholders, pay expenses and provide a

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buffer against future financial challenges. Negative cash flow indicates that a company's
liquid assets are decreasing. Net cash flow is distinguished from net income, which includes
accounts receivable and other items for which payment has not actually been received. Cash
flow is used to assess the quality of a company's income, that is, how liquid it is, which can
indicate whether the company is positioned to remain solvent.

2.3 Users of financial statements:

 Company management. The management team needs to understand the profitability,


liquidity, and cash flows of the organization every month, so that it can make operational
and financing decisions about the business.
 Competitors. Entities competing against a business will attempt to gain access to its
financial statements, in order to evaluate its financial condition. The knowledge they gain
could alter their competitive strategies.
 Customers. When a customer is considering which supplier to select for a major contract,
it wants to review their financial statements first, in order to judge the financial ability of
a supplier to remain in business long enough to provide the goods or services mandated
in the contract.
 Employees. A company may elect to provide its financial statements to employees, along
with a detailed explanation of what the documents contain. This can be used to increase
the level of employee involvement in and understanding of the business.
 Governments. A government in whose jurisdiction a company is located will request
financial statements in order to determine whether the business paid the appropriate
amount of taxes

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2.4 Financial statement analysis

Financial statement analysis is the process of reviewing and evaluating a company's financial
statements (such as the balance sheet or profit and loss statement), thereby gaining an
understanding of the financial health of the company and enabling more effective decision
making. Financial statements record financial data; however, this information must be evaluated
through financial statement analysis to become more useful to investors, shareholders, managers
and other interested parties.

2.5 Importance Of Financial Statement Analysis

1.Holding of shares
Shareholders are the owners of the company. Time and again, they may have to take decisions
whether they have to continue with the holdings of the company's share or sell them out. The
financial statement analysis is important as it provides meaningful information to the
shareholders in taking such decisions.

2. Decesion and Plan


The management of the company is responsible for taking decisions and formulating plans and
policies for the future. They, therefore, always need to evaluate its performance and effectiveness
of their action to realise the company's goal in the past. For that purpose, financial statement
analysis is important to the company's management.

3. Extension Of Credit
The creditors are the providers of loan capital to the company.Therefore they may have to take
decisions as to whether they have to extend their loans to the company and demand for higher
interest rates. The financial statement analysis provides important information to them for their
purpose.

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4.Investment Decision
The prospective investors are those who have surplus capital to invest in some profitable
opportunities. Therefore, they often have to decide whether to invest their capital in the
company's share. The financial statement analysis is important to them because they can obtain
useful information for their investment decision making purpose.

2.6 Limitations Of Financial Statement Analysis

1. Mislead the user


The accuracy of financial information largely depends on how accurately financial statements are
prepared. If their preparation is wrong, the information obtained from their analysis will also be
wrong which may mislead the user in making decisions.

2. Not useful for planning


Since financial statements are prepared by using historical financial data, therefore, the
information derived from such statements may not be effective in corporate planning, if the
previous situation does not prevail.

3. Qualitative aspects
Then financial statement analysis provides only quantitative information about the company's
financial affairs. However, it fails to provide qualitative information such as management labor
relation, customer's satisfaction, management's skills and so on which are also equally important
for decision making.

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2.7 Tools of Analysis

Broadly there are three Tools for financial analysis

(i) Horizontal Analysis Or Trend Statement Analysis


(ii) Vertical Analysis Or Common Size Analysis
(iii) Ratio Analysis
(iv) Z-Score Analysis

2.7.1 Horizontal Analysis Or Trend Analysis:

A horizontal analysis, or trend analysis, is a procedure in fundamental analysis in which an


analyst compares ratios or line items in a company's financial statements over a certain period of
time. Its purpose is to determine the increase or decrease that has taken place.

 Procedure :
Horizontal analysis looks at the trend of financial statements over multiple periods, using
a specified base period. Horizontal analysis typically shows the changes from the base
period in dollar and percentage. The percentage change is calculated by first dividing the
dollar change between the comparison year and the base year by the item value in the
base year, then multiplying the quotient by 100%.

2.7.2 Vertical or Common Size Analysis :

Vertical analysis is a method of financial statement analysis in which each entry for each of
the three major categories of accounts, or assets, liabilities and equities, in a balance sheet is
represented as a proportion of the total account. Vertical analysis is also used across other
financial statements as a percentage measure.

 Procedure :
Vertical analysis reports each line item of a financial statement as a representation of the
percentage of the statement's main focus. For an income statement, each line item can be
representative of gross sales. On the balance sheet, each line item can be representative of

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total assets. In a cash flow statement, each line item can be expressed as a percentage of
the firm’s total cash and cash equivalents.

2.7.3 Ratio Analysis :


Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are
categorized as Liquidity Ratios, Turnover Ratios, Profitability Ratios, Solvency
Ratios, Working capital or cash flow Ratios, Capital Structure Ratios and Cash
Position Ratios.

1. Liquidity Ratios : the term liquidity is defined as the ability of a company to meet its
financial obligations as they come due. The liquidity ratio, then, is a computation that is
used to measure a company's ability to pay its short-term debts.
Formula
Current ratio = Current asset / Current liabilities
Quick ratio = (cash + marketable securities + accounts receivables) / current
liabilities

2. Turnover Ratios : Asset turnover ratio is the ratio of the value of a company's sales or
revenues generated relative to the value of its assets. The Asset Turnover ratio can often be
used as an indicator of the efficiency with which a company is deploying its assets in
generating revenue.
Formula
Receivable turnover = Sales / Average net Receivable
Inventory turnover = Cost of goods sold / Average Inventory
Total asset turnover = Total Sales / Total asset

3. Profitability Ratios : Profitability ratio measures the income or operating success of


company for given period of time.
Formula

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Profit margin = (Net income / Net sales) * 100%
Return on equity = (Net income / Avg. Shareholders equity) * 100%
Return on asset = (Net income / Avg. total asset) * 100%

4. Solvency Ratios: Solvency ratio measures the ability of a long period of time. Long term
creditors and stockholders are particularly interested in company’s ability to pay interest as it
comes due and to repay the face value of debt at maturity.
Formula
Debt to total asset ratio = (Total Debt / Total asset) * 100%
Debt to equity ratio = (Total Debt / Total equity) * 100%
Times interest earned = Operating income / Annual interest payments
Cash coverage ratio = Cash flow from operation / Annual interest payments

5. Working capital or cash flow Ratios : Working capital or cash flow ratio measures the cash
generation ability of a firm.
Formula
Working capital from operations / Sales
Working capital from operations / Total asset
Cash flow from operations / Sales
Cash flow from operations / Total asset

6. Capital Structure Ratios : Capital structure ratios provide insight to the extent to which non-
equity capital is used to finance the asset of the firm.
Formula
Long term liability / Shareholders equity
(Current liability + Long term liability) / Shareholders equity

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7. Cash position Ratios : Cash and marketable securities from an important reservoir that the
firm can use to meet its operating expenditures and other cash obligations when and as they
fall due.
Formula
Cash + marketable securities / Current liabilities
Cash + marketable securities / Sales
Cash + marketable securities / Total asset

2.7.4 Z-Score Analysis :

The Altman Z-score is the output of a credit-strength test that gauges a publicly traded
manufacturing company's likelihood of bankruptcy. The Altman Z-score is based on five
financial ratios that can be calculated from data found on a company's annual 10K report. It
uses profitability, leverage, liquidity, solvency and activity to predict whether a company has
a high degree of probability of being insolvent.
Formula
Z = 1.2 T1 + 1.4 T2 +3.3 T3 + 0.6 T4 + 1.0 T5

Where,
T1 = Working Capital / Total asset
T2 = Retained earnings / Total asset
T3 = Earnings before interest and taxes / Total asset
T4 = Market value of equity / Book value of total liability
T5 = Sales / Total asset
Zones of Discrimination :
When,
Z > 2.99 it is “Safe” Zone.
1.81 < Z < 2.99 it is “Grey” Zone.
Z < 1.81 it is “Distress” Zone.

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CHAPTER - 3

3.1 Company Background :

Orion Group is one of the largest Bangladeshi industrial conglomerates. The industries under
this conglomerate include textiles, chemicals, pharmaceuticals, infrastructure development,
agribusiness, hospitality, textiles, aviation etc. Orion was established by Obaidul Karim, the
chairman of the group. It built the Mayor Hanif flyover in Dhaka

Orion Pharma Ltd. is one of the 27 sister concerns of ORION Group. Orion Pharma Ltd. is
contributing significantly in healthcare solution of Bangladesh with more than 120 brands, 225
dosage forms with 37 different therapeutic categories including lifesaving anticancer medicines,
lyophilized injectable and other chronic care and primary care medicines. We are prescribed by
physician with trust and confidence.

Before January 2011 Orion Pharmacy was called Orion laboratories. In 2013 Orion Pharma
went public by floating its shares in the Dhaka Stock Exchange. It had submitted its IPO
prospectus in 2011 to regulators. From 2016 Orion started to offer 20 medical scholarship as
part of its corporate social responsibility. In February 2017 it borrowed 34 million dollar from
the German BHF-Bank to finance expansion.

Globalization!! The term in which Orion Pharma Ltd.is now concerning about. The landscape of
global pharmaceutical market is changing continuously with the rapid pace of innovation in
terms of pharmaceutical technology, regulatory requirements and treatment options. Keeping in
mind with the advancement of technological excellence in Pharma and Healthcare, Orion
Pharma Ltd. has already started its construction of new plant which will be one of the latest and
finest facilities for pharmaceutical finished products in south-east Asia. The facilities will be
created in accordance with the Current 'Good Manufacturing Practices' standards of International
Regulatory Authorities like USFDA, UKMHRA, Australian TGA etc.

This new facility will be the biggest in the pharmaceutical sector of Bangladesh in terms of
investment, covered area, number of varieties of dosage forms to be produced as well as superb

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in terms of pharmaceutical technology, waste management, monitoring system and eco-
friendliness.

Orion Pharma Ltd. steps forward in overseas business with peak precedence. With a view to
providing healthcare facilities globally, as of now, Orion is having its overseas marketing
network in Afghanistan, Armenia, Bhutan, Cambodia, Jamaica, Lesotho, Myanmar, Nepal,
Philippines, Srilanka. Orion is also in the process of receiving regulatory approvals and
exploring business opportunities in many countries including Sudan, Kenya, Barbados and many
more countries of different continent.

Mission
Orion Phrma’s cherished dream is to be one of the key contributors in world pharmaceutical
market with commitment in innovation, research and quality management and thus want to be a
new global benchmark.

Vision
Orion Phrma’s vision is to be regarded as a world-class pharmaceutical company in the field of
generic finished products. Our philosophy is that 'Quality never ends'. As a result Orion Pharma
Ltd. experiences a drastic growth in the past few years. Orion Pharma Ltd. is WHO approved
GMP certified and awarded with the ISO-9001: 2000 Certificate in January 2003.

Core Values
Orion Pharma’s core values define who they are; they guide us to take decisions and help realize
our individual and corporate aspirations.

Facilities
Orion Pharma manufacturing facilities are spread across a 20-acre (81,000 m2) site located in
Dhaka, Bangladesh. The facilities consist of a number of purpose-built plants, including a new
Oral Solid Dosage (OSD) plant. The site includes manufacturing facilities as well as a research
laboratory and a number of warehouses. The plant and machinery of the facilities were designed,
produced and installed by partners from Germany, Switzerland, Sweden, Italy and the United
Kingdom, amongst others.

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INCOME STATEMENT OF ORION PHARMA ARE GIVEN BELLOW

2012 2013 2014


Net Sales Revenue 1,709,410,912 1,641,097,213 1,652,879,840
Cost of Goods Sold 719,367,805 715,228,931 727,738,606
Gross Profit 990,043,107 925,868,282 925,141,234
Operating Expenses 613,074,297 592,358,896 589,298,616
Administrative Expenses 141,291,414 161,893,043 171,316,393

Selling, Marketing and Distribution Expenses


471,782,883 430,465,852 417,982,223
Profit from Operations/ EBIT
376,968,810 333,509,386 335,842,618
Finance Cost 99,088,271 97,727,037 80,277,693

Interest and other income


308,063,824 177,171,854 192,924,759

Net Profit from Operations


585,944,363 412,954,204 448,489,684

Contribution to WPPF & Welfare Funds


27,902,113 19,664,486 21,356,652
Net Profit Before Tax
558,042,250 393,289,718 427,133,032
Income Tax Expenses 215,493,261 92,176,681 96,981,434
Current Tax 216,420,684 96,608,705 96,768,539
Deferred Tax Income / (Expense)
927,423 4,432,024 212,895
Share of profit from associates
13,725,165 73,240,082 85,153,401
Profit after Tax for the Year 356,274,154 374,353,120 415,304,999
Other Comprehensive Income -
75,995,840 101,790,051 11,666,146

Total Comprehensive Income for the Year


280,278,314 476,143,171 426,971,144

Earnings Per Share (EPS) 1.81 2.13 1.77

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HORIZONTAL OR TREND STATEMENT ANALYSIS

Considering the Income statement of the firm for three years trend statement analysis of Orion
Pharma are shown bellow.

2012 2013 2014


PARTICULARS
(in %) (in %) (in %)
Net Sales Revenue 100 96.00 96.69
Cost of Goods Sold 100 99.42 101.16
Gross Profit 100 93.52 93.44
Operating Expenses 100 96.62 96.12
Administrative Expenses 100 114.58 121.25
Selling, Marketing and Distribution +Expenses 100 91.24 88.60
Profit from Operations 100 88.47 89.09
Other Income 100 98.63 81.02
Finance Cost 100 57.51 62.62
Profit Before Contribution to WPPF & Welfare Funds 100 70.48 76.54
Contribution to WPPF & Welfare Funds 100 70.48 76.54
Profit Before Tax 100 70.48 76.54
Income Tax Expenses 100 42.77 45.00

Current Tax 44.64 44.71


Deferred Tax Income / (Expense) 100 477.89 22.96
Profit after Tax for the Year 100 533.62 620.42

Other Comprehensive Income - 100 105.07 116.57


Total Comprehensive Income for the Year 100 133.94 15.35
100 169.88 152.34
Earnings Per Share (EPS) 100 117.68 97.79

Analysis
The horizontal analysis of Orion’s income statement is showing the growth rate change throughout the
three years period of time. Here, all the values are seen to have increased in a positive rate except some
values in other income, finance costs, income tax expenses etc. Expenses which have a decreasing growth
rate is a good sign for the company as it indicates that they have succeeded to decrease their expenses
throughout the period. The basic performance indicator in an income statement like- net sales shows that
the highest increase was in 2014 and lowest in 2013. However, it is always having a negative increase
which says their sales decreased day by day. The increase rate of COGS also increased to some extents
and finally the net income is seen to be increasing in 2013 and again decreased in 201

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BALANCESHEET OF ORION PHARMA ARE GIVEN BELLOW

2012 2013 2014


ASSETS
Non-Current Assets 10,684,237,408 11,777,639,942 9,818,864,152
Property, Plant and Equipment- Carrying Value 3,543,518,324 4,295,619,911 4,441,330,084
Construction work in progress 171,369,479 892,580,581 1,210,675,987
Investment in Subsidiaries 1,366,600,000 173,600,000 1,175,600,000
Investment in associates 2,706,584,589 27,757,522,493 2,832,891,794
Other Investment 2,896,198,016 2,686,316,957 158,366,287
Current Assets
2,648,797,708 2,836,921,684 5,978,969,049
Inventories 308,758,049 301,314,591 298,358,884
Accounts Receivable 1,479,894,064 1,290,368,671 4,493,486,523
Advances and Deposits & Prepayments 448,499,925 218,843,049 237,379,978
Fixed deposits with banks 372,105,896 573,432,549 570,819,289
Cash and Cash Equivalents 39,539,774 452,962,824 378,924,375
TOTAL ASSETS
13,333,035,116 14,614,561,626 15,797,833,200
EQUITY AND LIABILITIES
Shareholders’ Equity 11,020,010,998 13,227,525,217 13,207,296,361
Issued Share Capital 1,550,000,000 2,340,000,000 2,340,000,000
Share Premium 6,547,500,000 8,016,892,026 8,016,892,026
Reserves 1,759,515,204 1,698,087,396 1,591,391,417
Retained Earnings 1,162,995,794 1,172,545,795 1,259,012,918
Non-Current Liabilities 69,501,116 105,041,497 327,195,939
Long term loan - 236,974,571
Employee benefits provision 54,694,893 18,931,086 16,802,277
Deferred Tax Liability 14,806,223 86,110,412 73,419,091
Current Liabilities 2,243,523,002 1,281,994,912 2,263,340,900
Short Term Borrowings (Secured) 645,094,624 529,466,134 1,406,630,738
Creditors and Other Payables 868,206,522 167,253,209 387,170,304
Accrued Expenses 730,221,856 583,275,569 469,539,858

TOTAL EQUITY AND LIABILITIES 13,333,035,116 14,614,561,626 15,797,833,200

Page | 23
Considering the Balance sheet of the firm for three years horizontal or trend statement analysis
of Orion Pharma are shown bellow.

2012 2013 2014


(in %) (in %) (in %)
ASSETS
Non-Current Assets 100 110.23 91.90
Property, Plant and Equipment- Carrying Value 100 121.22 125.34
Construction work in progress 100 520.85 706.47
Investment in Subsidiaries 100 12.70 86.02
Investment in associates 100 1025.56 104.67
Other Investment 100 92.75 5.47
Current Assets 100 107.10 225.72
Inventories 100 97.59 96.63
Accounts Receivable 100 87.19 303.64
Advances and Deposits & Prepayments 100 48.79 52.93
Fixed deposits with banks 100 154.10 153.40
Cash and Cash Equivalents 100 1145.59 958.34

TOTAL ASSETS 100 109.61 118.49


EQUITY AND LIABILITIES
Shareholders’ Equity 100 120.03 119.85
Issued Share Capital 100 150.97 150.97
Share Premium 100 122.44 122.44
Reserves 100 96.51 90.44
Retained Earnings 100 100.82 108.26
Non-Current Liabilities 100 151.14 470.78
Long term loan 100 - -
Employee benefit provision 100 34.61 30.72
Deferred Tax Liability 100 581.58 495.87
Current Liabilities 100 57.14 100.88
Short Term Borrowings (Secured) 100 82.08 218.05
Creditors and Other Payables 100 19.26 44.59
Accrued Expenses 100 79.88 64.30

TOTAL EQUITY AND LIABILITIES 100 109.61 118.49

Page | 24
Analysis
The amount here shows the growth percentage which says by what percentage an item had
an increased or decreased. Some items had no change in their values, such as, issued share
capital and share premium so it indicates that item remained unchanged. Some core
performance indicators of balance sheet like- non-current asset shows, it had the highest
percentage of increase in 2013, but again decreased in 2014, current assets are seen to be
increasing in every year in 2014 it was highest, shareholders’ equity had a positive change
over the three years, Current liabilities are also seen to be increasing trend which is not
good the company should gradually try to decrease their liability amount.

Page | 25
BALANCESHEET OF ORION PHARMA ARE GIVEN BELLOW

2012 2013 2014


ASSETS
Non-Current Assets 10,684,237,408 11,777,639,942 9,818,864,152
Property, Plant and Equipment- Carrying Value 3,543,518,324 4,295,619,911 4,441,330,084
Construction work in progress 171,369,479 892,580,581 1,210,675,987
Investment in Subsidiaries 1,366,600,000 173,600,000 1,175,600,000
Investment in associates 2,706,584,589 27,757,522,493 2,832,891,794
Other Investment 2,896,198,016 2,686,316,957 158,366,287
Current Assets
2,648,797,708 2,836,921,684 5,978,969,049
Inventories 308,758,049 301,314,591 298,358,884
Accounts Receivable 1,479,894,064 1,290,368,671 4,493,486,523
Advances and Deposits & Prepayments 448,499,925 218,843,049 237,379,978
Fixed deposits with banks 372,105,896 573,432,549 570,819,289
Cash and Cash Equivalents 39,539,774 452,962,824 378,924,375
TOTAL ASSETS
13,333,035,116 14,614,561,626 15,797,833,200
EQUITY AND LIABILITIES
Shareholders’ Equity 11,020,010,998 13,227,525,217 13,207,296,361
Issued Share Capital 1,550,000,000 2,340,000,000 2,340,000,000
Share Premium 6,547,500,000 8,016,892,026 8,016,892,026
Reserves 1,759,515,204 1,698,087,396 1,591,391,417
Retained Earnings 1,162,995,794 1,172,545,795 1,259,012,918
Non-Current Liabilities 69,501,116 105,041,497 327,195,939
Long term loan - 236,974,571
Employee benifit provision 54,694,893 18,931,086 16,802,277
Deferred Tax Liability 14,806,223 86,110,412 73,419,091
Current Liabilities 2,243,523,002 1,281,994,912 2,263,340,900
Short Term Borrowings (Secured) 645,094,624 529,466,134 1,406,630,738
Creditors and Other Payables 868,206,522 167,253,209 387,170,304
Accrued Expenses 730,221,856 583,275,569 469,539,858

TOTAL EQUITY AND LIABILITIES 13,333,035,116 14,614,561,626 15,797,833,200

Page | 26
VERTICAL OR COMMON SIZE ANALYSIS

Considering the Balancesheet of the firm for three years vertical analysis of Orion Pharma are
shown bellow.

2012 2013 2014


(in %) (in %) (in %)
ASSETS
Non-Current Assets 80.13 80.59 62.15
Property, Plant and Equipment- Carrying Value 26.58 29.39 28.11
Construction work in progress 1.29 6.11 7.66
Investment in Subsidiaries 10.25 1.19 7.44
Investment in associates 20.30 189.93 17.93
Other Investment 21.72 18.38 1.00
Current Assets 19.87 19.41 37.85
Inventories 2.32 2.06 1.89
Accounts Receivable 11.10 8.83 28.44
Advances and Deposits & Prepayments 3.36 1.50 1.50
Fixed deposits with banks 2.79 3.92 3.61
Cash and Cash Equivalents 0.30 3.10 2.40

TOTAL ASSETS 100 100 100


EQUITY AND LIABILITIES
Shareholders’ Equity 82.65 90.51 83.60
Issued Share Capital 11.63 16.01 14.81
Share Premium 49.11 54.86 50.75
Reserves 13.20 11.62 10.07
Retained Earnings 8.72 8.02 7.97
Non-Current Liabilities 0.52 0.72 2.07
Long term loan 0.00 - 1.50
Employee benifit provision 0.41 0.13 0.11
Deferred Tax Liability 0.11 0.59 0.46
Current Liabilities 16.83 8.77 14.33
Short Term Borrowings (Secured) 4.84 3.62 8.90
Creditors and Other Payables 6.51 1.14 2.45
Accrued Expenses 5.48 3.99 2.97

TOTAL EQUITY AND LIABILITIES 100 100 100

Page | 27
Analysis
The vertical analysis Orion’s Balance sheet shows all the components as a percentage of total
assets or total liabilities and equity amount. The chart shows that, the basic performance indicators
of the balance sheet like- non-current assets are seen to be highest (80.59%) in 2013 and the lowest
(62.15%) in 2014. Here, all the non-current assets of different years have been shown as a
percentage of total assets. So, Orion Pharma had the highest rate of non-current assets of all assets
in 2013 and the lowest rate in 2014. From current assets, we can see that, the highest percentage
(37.85%) was in 2014 and lowest (19.41%) was in 2013. From shareholders’ equity, we can see
that the highest rate was in 2013 (90.51%) and lowest 82.65%) in 2012.

Page | 28
INCOME STATEMENT OF ORION PHARMA ARE GIVEN BELLOW

2012 2013 2014


Net Sales Revenue 1,709,410,912 1,641,097,213 1,652,879,840
Cost of Goods Sold 719,367,805 715,228,931 727,738,606
Gross Profit 990,043,107 925,868,282 925,141,234
Operating Expenses 613,074,297 592,358,896 589,298,616
Administrative Expenses 141,291,414 161,893,043 171,316,393

Selling, Marketing and Distribution Expenses


471,782,883 430,465,852 417,982,223
Profit from Operations/ EBIT
376,968,810 333,509,386 335,842,618
Finance Cost 99,088,271 97,727,037 80,277,693

Interest and other income


308,063,824 177,171,854 192,924,759

Net Profit from Operations


585,944,363 412,954,204 448,489,684

Contribution to WPPF & Welfare Funds


27,902,113 19,664,486 21,356,652
Net Profit Before Tax
558,042,250 393,289,718 427,133,032
Income Tax Expenses 215,493,261 92,176,681 96,981,434
Current Tax 216,420,684 96,608,705 96,768,539
Deferred Tax Income / (Expense)
927,423 4,432,024 212,895
Share of profit from associates
13,725,165 73,240,082 85,153,401
Profit after Tax for the Year 356,274,154 374,353,120 415,304,999
Other Comprehensive Income -
75,995,840 101,790,051 11,666,146

Total Comprehensive Income for the Year


280,278,314 476,143,171 426,971,144

Earnings Per Share (EPS) 1.81 2.13 1.77

Page | 29
Considering the Income Statement of the firm for three years vertical analysis of Orion Pharma
are shown bellow.

2012 2013 2014


PARTICULARS
(in %) (in %) (in %)
Net Sales Revenue 100 100 100
Cost of Goods Sold 42.08 43.58 44.03
Gross Profit 57.92 56.42 55.97
Operating Expenses 35.86 36.10 35.65
Administrative Expenses 8.27 9.86 10.36
Selling, Marketing and Distribution +Expenses 27.60 26.23 25.29
Profit from Operations 22.05 20.32 20.32
Other Income 5.80 5.95 4.86
Finance Cost 18.02 10.80 11.67
Profit Before Contribution to WPPF & Welfare Funds 34.28 25.16 27.13
Contribution to WPPF & Welfare Funds 1.63 1.20 1.29
Profit Before Tax 32.65 23.97 25.84
Income Tax Expenses 12.61 5.62 5.87

Current Tax 12.66 5.89 5.85


Deferred Tax Income / (Expense) 0.05 0.27 0.01
Profit after Tax for the Year 0.80 4.46 5.15

Other Comprehensive Income - 20.84 22.81 25.13


Total Comprehensive Income for the Year 4.45 6.20 0.71
16.40 29.01 25.83
Earnings Per Share (EPS) 0.00 0.00 0.00

Analysis
The chart shows the vertical analysis of Orion pharma where all the components of the income statement
has been calculated as a percentage of net sales or net revenues. The basic performance indicators like-
Cost of goods sold shows that it was the lowest in 2012 which is 42.08% and highest in 44.03% in 2014,
the gross profit was highest in 2012 and lowest in 2014. By excluding all the expenses, interests and
taxes, the final performance indicator total comprehensive income shows that, it was highest in 2013
which is 6.20%. The lowest rate can be seen in 2013 which is 0.71% which indicates that the company’s
shareholders income has reduced in a great number, which the company must take into account and try to
increase their shareholders income in order to maximize the firm’s value .

Page | 30
3.3 RATIO ANALYSIS

3.3.1 Liquidity Ratios

CURRENT RATIO = CURRENT ASSET / CURRETNT LIABILITIES

2012 2013 2014

Current Asset 2,648,797,708 2,836,921,684 5,978,969,049


Current Liabilities
2,243,523,002 1,281,994,912 2,263,340,900
Current ratio 1.18 2.21 2.64

Current ratio

2014

2013

2012

0 0.5 1 1.5 2 2.5 3

Analysis

By seeing the trend, we can clearly see that Orion Pharma is in a healthy situation, we know the
standard is to maintain a ratio of 2:1 as it is maintaining a current ratio way over “1”. The highest
rate was in 2014 and the lowest rate in 2012, from starting the current ratio began to increase
because of their decrease in current liabilities.

Page | 31
QUICK RATIO = (CASH + MARKETABLE SECURITIES + ACCOUNTS
RECEIVABLES) / CURRENT LIABILITIES

2012 2013 2014

Cash
39,539,774 452,962,824 378,924,375
Accounts Receivable
1,479,894,064 1,290,368,671 4,493,486,523
Current Liabilities
2,243,523,002 1,281,994,912 2,263,340,900
Quick ratio 0.68 1.36 2.15

Quick ratio

2014

2013

2012

0 0.5 1 1.5 2 2.5

Analysis

In case of quick ratio, Orion Pharma is in a good situation, as they have a ratio above “1”. like
current ratio, the quick ratio also reached to its peak in 2014 due to gradual decrease in their
current liabilities, and it is a positive sign for the company.

3.3.2 Turnover Ratios


Page | 32
RECEIVABLE TURNOVER = SALES / AVERAGE NET RECEIVABLE

2012 2013 2014

Sales
1,709,410,912 1,641,097,213 1,652,879,840
Accounts Receivable
1,479,894,064 1,290,368,671 4,493,486,523
Receivable turnover 1.16 1.27 0.37

Receivable turnover
1.5

0.5

0
2012
2013
2014

Analysis
In case of Receivable turnover, Orion Pharma is maintaining a moderate ratio. Organization’s
inventory turnover reached to its highest level 2012 and gradually started decreasing, which is a
negative sign.

Page | 33
INVENTORY TURNOVER = COST OF GOODS SOLD / AVERAGE
INVENTORY

2012 2013 2014


Cost of goods sold 719,367,805 715,228,931 727,738,606
Inventory
308,758,049 301,314,591 298,358,884
Inventory turnover 2.33 2.37 2.44

Inventory turnover
2.46
2.44
2.42
2.4
2.38
2.36
2.34
2.32
2.3
2.28
2.26
2012 2013 2014

Analysis
In case of inventory turnover, Orion Pharma is maintaining a good ratio. Organization’s
inventory turnover reached to its highest level 2014 and its was gradually increasing from 2012
till 2014, which is a positive sign. We can say that their sales is very impressive at the moment to
reduce its inventory level.

Page | 34
TOTAL ASSET TURNOVER = TOTAL SALES / TOTAL ASSET

2012 2013 2014

Sales 1,709,410,912 1,641,097,213 1,652,879,840


Total assets 13,333,035,116 14,614,561,626 15,797,833,200
Total asset turnover 0.13 0.11 0.10

Total asset turnover


0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2012 2013 2014

Analysis
We can see from the trend that Orion Pharma is maintaining a poor asset turnover ratio as the
ratios are less than “1”. The ratio is decreasing gradually, it was highest in 2012 and it is lowest
in 2014. It indicates that the firm’s ability of producing sales from its total asset is reducing every
year which is alarming for the firm, management should take initiatives to increase their sales.

Page | 35
3.3.3 Profitability Ratios

PROFIT MARGIN = (NET INCOME / NET SALES) * 100%

2012 2013 2014

Net income 280,278,314 476,143,171 426,971,144


Sales 1,709,410,912 1,641,097,213 1,652,879,840
Profit margin 16.40% 29.01% 25.83%

Profit margin

2014

2013

2012

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Analysis
Orion Pharma has maintained a pretty good net profit margin in the last three) years and it is
increasing gradually. The ratio reached to its highest in the year 2013 though it was declining in
the beginning due to increase in cost.

Page | 36
RETURN ON EQUITY (ROE) = (NET INCOME / AVG. SHAREHOLDERS
EQUITY) * 100%

2012 2013 2014

Net income
280,278,314 476,143,171 426,971,144
Shareholders equity
11,020,010,998 13,227,525,217 13,207,296,361
Return on equity 2.54% 3.60% 3.23%

Return on equity

2014

2013

2012

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00%

Analysis
Orion Pharma is generating a high profit in every dollar of equity capital. The ratio reached to its
highest in the year 2013 and the lowest ROE is in 2012, which is a positive sign for the firm,
though it was declining in the begining due to increase in cost,. However, from 2014 it started
decreasing again which is not a good sign for the management. They need to be concerned about
improving their return on equity

Page | 37
RETURN ON ASSET = (NET INCOME / AVG. TOTAL ASSET) * 100%

2012 2013 2014

Net income 280,278,314 476,143,171 426,971,144


Total assets 13,333,035,116 14,614,561,626 15,797,833,200
Return on asset 2.10% 3.26% 2.70%

Return on asset
100%
80%
60%
40%
20%
0%
2012
2013
2014

Analysis
The return on assets for Orion Pharma has been decent in the last three years but not
overwhelming. The rate reached its peak in 2013 and has a constant growth which can be
appreciated by the management. Which means they are generating a moderate amount of return
from their investments in assets, again in 2014 the return on asset has reduced which
management should think about to increase.

Page | 38
3.3.4 Solvency Ratios

DEBT TO TOTAL ASSET RATIO = TOTAL DEBT / TOTAL ASSET

2012 2013 2014

Total Debt 2,313,024,118 1,387,036,409 2,590,536,839

Total assets 13,333,035,116 14,614,561,626 15,797,833,200


Debt to total asset
0.17 0.09 0.16
ratio

Debt to total asset ratio


0.2
0.15
0.1
0.05
0
2012
2013
2014

Analysis
We can see from the trend that Orion Pharma is maintaining an impressive debt to assets ratio, which
is pretty less than “1”. The ratio was highest in 2012, which was reduced is the later years. It
signifies that, the company has more assets than debt.

Page | 39
DEBT TO EQUITY RATIO = TOTAL DEBT / TOTAL EQUITY

2012 2013 2014

Total Debt 2,313,024,118 1,387,036,409 2,590,536,839

Total Equity
11,020,010,998 13,227,525,217 13,207,296,361
Debt to equity ratio 0.21 0.10 0.20

Debt to equity ratio


0.3

0.2

0.1

0
2012 Debt to equity ratio
2013
2014

Analysis
The ratio shows that, Orion Pharma is maintaining a good debt to equity ratio, which is far less
than “1”. It shows that on 2012 it went to the highest but afterwards, it gradually declined in
recent years. It signifies that the shareholder’s contribution is increasing in comparison to debts.
.

Page | 40
TIMES INTEREST EARNED = OPERATING INCOME / ANNUAL INTEREST
PAYMENTS

2012 2013 2014

Operating income 376,968,810 333,509,386 335,842,618


Annual interest
payments 99,088,271 97,727,037 80,277,693
Times interest
3.80 times 3.41 times 4.18 times
earned

Times interest earned


5
4
3
2
1
0
2012
2013
2014

Analysis
The ratio shows that, Orion Pharma is maintaining a good Times interest earned ratio, which is
far more than “1”. It shows that it has the ability to pay the debts from profit earned on 2015 it
went to the highest.

Page | 41
CASH COVERAGE RATIO = CASH FLOW FROM OPEARTION / ANNUAL
INTEREST PAYMENTS

2012 2013 2014


Cash flow from
348,136,156 473,206,313 624,273,447
operation
Annual interest
payments 99,088,271 97,727,037 80,277,693
Cash coverage ratio 3.51 4.84 7.78

Cash coverage ratio


9
8
7
6
5
4
3
2
1
0
2012 2013 2014

Analysis
The ratio shows that, Orion Pharma is maintaining a good Cash coverage ratio, which is far
more than “1”,it is increasing every year on 2013 it went to the highest which is good sign for the
company. It shows that the extent to which interest is covered by cash flow.

Page | 42
3.3.5 Working capital or cash flow Ratios

WORKING CAPITAL TO SALES = WORKING CAPITAL FROM


OPERATIONS / SALES

2012 2013 2014


Working capital from
405,274,706 1,554,926,772 3,715,628,149
operations
Sales 1,709,410,912 1,641,097,213 1,652,879,840
Working capital to
0.24 0.95 2.25
Sales

Working capital to Sales


2.5

1.5

0.5

0
2012 2013 2014

Analysis
The higher the ratio, the larger the working capital generated by the firm in its operations, the
ratio shows that a increase in working capital from its Sales it is a good sign for the
management, in 2012 it was the lowest but gradually it started increasing in 2014 it was the
highest.

Page | 43
WORKING CAPITAL TO TOTAL ASSET RATIO = WORKING CAPITAL
FROM OPERATIONS / TOTAL ASSET

2012 2013 2014


Working capital from
405,274,706 1,554,926,772 3,715,628,149
operations
Total assets 13,333,035,116 14,614,561,626 15,797,833,200
Working capital to
0.030 0.106 0.235
total asset

Working capital to total asset


0.25

0.2

0.15

0.1

0.05

0
2012 2013 2014

Analysis
The ratio shows that, Orion Pharma has a increasing working capital on its total asset, the
higher the ratio, the larger the working capital generated by the firm in its asset, it reached its
peak in 2014, which is the highest among the three years which is a good sign for the
management.

Page | 44
CASH FLOW TO SALES = CASH FLOW FROM OPERATIONS / SALES

2012 2013 2014


Cash flow from
348,136,156 473,206,313 624,273,447
operation
Sales 1,709,410,912 1,641,097,213 1,652,879,840
Cash flow to Sales 0.20 0.29 0.38

Cash flow to Sales


0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2012 2013 2014

Analysis
The ratio shows that, Orion Pharma is maintaining a good consistent Cash flow from its total
Sales, the higher the ratio, the larger the cash flow generated by the firm from its Sales, it
reached its peak in 2014, which is the highest among the three years.

Page | 45
CASH FLOW TO TOTAL ASSET = CASH FLOW FROM OPERATIONS / TOTAL
ASSET

2012 2013 2014


Cash flow from
348,136,156 473,206,313 624,273,447
operation
Total assets
13,333,035,116 14,614,561,626 15,797,833,200
Cash flow to Total
0.026 0.032 0.040
asset

Cash flow to Total asset


0.045
0.04
0.035
0.03
0.025
0.02
0.015
0.01
0.005
0
2012 2013 2014

Analysis
The ratio shows that, Orion Pharma is maintaining a good consistent Cash flow from its total
asset, the higher the ratio, the larger the cash generated by the firm from its total asset, it
reached its peak in 2014, which is the highest among the three years.

Page | 46
3.3.6 Capital Structure Ratios

LONG TERM LIABILITY / SHAREHOLDERS EQUITY

2012 2013 2014

Long term liability


69,501,116 105,041,497 327,195,939
Shareholders equity
11,020,010,998 13,227,525,217 13,207,296,361
0.0063 0.0079 0.0248

Long term liability / Shareholders equity


0.03

0.025

0.02

0.015

0.01

0.005

0
2012 2013 2014

Analysis
The ratio shows that, Orion Pharma has long term debt in their capital structure, the higher
the ratio the higher the assets financed by non-shareholder parties, the ratios are increasing
every year, which is not a good sing for the firm, it means the portion of their debt is
increasing every year and less shareholders are financing through shareholders equity. It
reached its peak in 2014. The firm should try to avoid increase in long term debt to reduce its
cost of debt in capital structure.

Page | 47
(CURRENT LIABILITY + LONG TERM LIABILITY) / SHAREHOLDERS EQUITY

2012 2013 2014

Total liability 2,313,024,118 1,387,036,409 2,590,536,839

Shareholders equity
11,020,010,998 13,227,525,217 13,207,296,361
0.21 0.10 0.20

0.25

0.2

0.15

0.1

0.05

0
2012 2013 2014

Analysis
The ratio shows that, Orion Pharma has a debt and equity mix in their capital structure, the
higher the ratio, the larger the fund borrowed by the firm from non-shareholder parties, it
reached its peak in 2012, which is suggest that the firm had highest debt in 2012 among the
three years and then started decreasing in 2013 which is positive sing for the firm, it means
more shareholders were involved in that year, and in the following year it again increased
which not good for the firm.

Page | 48
3.3.7 Cash position Ratios

CASH + MARKETABLE SECURITIES / CURRENT LIABILITIES

2012 2013 2014


Cash 39,539,774 452,962,824 378,924,375
Current Liabilities 2,243,523,002 1,281,994,912 2,263,340,900
0.02 0.35 0.17

2014

2013

2012

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4


/

CASH + MARKETABLE SECURITIES / SALES

2012 2013 2014


Cash 39,539,774 452,962,824 378,924,375
Sales 1,709,410,912 1,641,097,213 1,652,879,840
0.02 0.28 0.23

2014

2013

2012

0 0.05 0.1 0.15 0.2 0.25 0.3

Page | 49
CASH + MARKETABLE SECURITIES / TOTAL ASSET

2012 2013 2014

Cash
39,539,774 452,962,824 378,924,375

Total assets
13,333,035,116 14,614,561,626 15,797,833,200
0.0030 0.0310 0.0240

2014

2013

2012

0 0.005 0.01 0.015 0.02 0.025 0.03 0.035

Analysis
The ratio shows that, in all three cash position, Orion Pharma had highest cash resources in
2013 compare to other years and gradually it decreases due to increase in financial
obligations. this is a concern for the management they should take initials to increase their
cash position.

Page | 50
3.3.8 Z-Score Analysis
Z = 1.2 T1 + 1.4 T2 +3.3 T3 + 0.6 T4 + 1.0 T5

Where, Here,
T1 = Working Capital / Total asset Market value of equity = No. of shares
T2 = Retained earnings / Total asset outstanding X price per share
T3 = Earnings before interest and taxes / Total
asset
T4 = Market value of equity / Book value of total
liability
T5 = Sales / Total asset

Following table shows the calculation of Z-Score

2012 2013 2014


Working Capital 405,274,706 1,554,926,772 3,715,628,149

Retained earnings
1,162,995,794 1,172,545,795 1,259,012,918
Earnings before
interest and taxes 376,968,810 333,509,386 335,842,618
Market value of
75,950,000,000 114,660,000,000 114,660,000,000
equity
Book value of total
2,313,024,118 1,387,036,409 2,590,536,839
liability
Sales
1,709,410,912 1,641,097,213 1,652,879,840
Total assets 13,333,035,116 14,614,561,626 15,797,833,200
No. of shares
outstanding 1,550,000,000 2,340,000,000 2,340,000,000
Price per share 49 49 49

Z-Score 20.08 50.03 27.13

Page | 51
Graphical representation of Z-Score

60

50.03
50

40

30 27.13

20.08
20

10

0
2012 2013 2014

Analysis

The above Z-Score calculation shows that the Orion Pharma is way above the “Safe” zone
that is Z > 2.99 in every year, because the Z-Score is way above the 1.81 that represents the
firm is financially sound and healthy, it was highest in 2013 and lowest in 2012.

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3.3 SWOT Analysis
Strengths:
 shareholders equity of the firm increased which represents the higher EPS and increased
wealth of the firm
 In compare to sales firms finance cost reduced
 Firm has a higher current ratio, it means Orion pharma has enough liquid asset to meet its
short term needs.
 Z-score tells that firm has a very good financial condition.
 Net income increased
 Firms working capital is increasing every year which represents their strong cash cycle.

Weakness:
 In few years the current ratio was more than 2 it refers the firm has idle liquid asset which is
not good for Orion Phama
 Receivable turnover reduced over time which refers more bad debt added to the firms
account.
 firms cash position reduced which not good for Orion pharma.

Opportunity:
 A higher ROE will attart more investors to the firm thus orion pharma can maximize their
wealth and firms value
 Orion pharma has lower debt to asset ratio, the firm has opportunity to utilize this asset
properly
 A higher time interest earned allows a firm to acquire more debt financing into their capital
structure, it will provide the opportunity to increase its wealth

Threats:
 lower asset turnover ratio is a threat to the Orion pharma
 Decreased profitability margin decreases potential investors into the firms shares.
 Long term liability is compare to shareholders equity it is potential threat to the firm.

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CHAPTER – 4
3.4 Recommendation
After sufficient analysis for making this term paper, I can clearly say that Orion Pharma is one of
the top and exporter of finished formulations and active pharmaceutical ingredients (APIs) of
this industry. It is the largest private sector industrial conglomerate in Bangladesh. They have
significant strengths which makes them more enormous as a business but like any other
companies, the do possess certain weaknesses. As pharmaceuticals industry is one of the most
flourishing industry of our country, it creates significant opportunities for the companies like
Orion Pharma but also creates massive threats in terms of product differentiation and
competition.
From the above financial analysis it is clear the Orion Pharma need to improve their cash
position and must reduce the increasing liability. They also should not keep idle fund which may
increase their cost, they should utilize their opportunities and make sure proper use of them.
Orion pharma should increase their asset turnover and also should increase profit margin to
attract more investors to the firm.

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3.5 Conclusion
Orion Pharmaceuticals Limited is a leading edge pharmaceutical company and is a member of
the Orion Group, one of the largest private sector industrial conglomerate in Bangladesh. orion
Pharma is also the largest exporter of pharmaceuticals from Bangladesh, spreading its presence
in many developing and developed countries across the globe. It has successfully made its
footmark in the global market. Orion Pharma is committed to be a participant in health care and
to help change millions of lives for the better health through providing effective and high quality
medicines and related health care services to the people who need them. The core business of the
company is manufacturing, marketing and distribution of generic human pharmaceuticals
products. The company believe in scientific excellence and invest in research and development
to provide innovative, differentiated medicines that address the unmet medical needs. Orion
Pharma is committed to economic, social and environmental sustainability and extend the
expectation to its suppliers. It embraces a diverse workforce in a unique corporate culture. It has
developed a very competent sales team, which promotes the specialties throughout the country.
The company has a clear vision to become a leading research based dosage form manufacturing
company with global presence within a short period of time.

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CHAPTER - 5
3.6 References and Bibliography

(Foster, 1986)

(Annual Report. Dhaka: Orion Pharmaceuticals Ltd., 2012, 2013, 2014)

(information of Orion Pharma, 2016)

(Ltd., April 13, 2015)

Bibliography
 Annual Report. Dhaka: Orion Pharmaceuticals Ltd. (2012, 2013, 2014).
 Foster, G. (1986). Financial Statement Analysis. United State: Prentice Hall International.
 information of Orion Pharma. (2016). Retrieved from http://en.wikipedia.org/wiki/
 Investopedia. (2015, March 29). Financial Ratio Tutorial. Retrieved from Investopedia.
 Ltd., D. S. (April 13, 2015). DSE Data Archive.
 Return on Common Stockholder's Equity. (2015, March 26). Retrieved from Accounting for
Management: http://www.accountingformanagement.org/return-on-common-stockholders-
equity-ratio/
 Solvency Ratio. (2015, March 29). Retrieved from Investopedia.

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APPENDIX

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