Square Pharmaceuticals Ratio & Analysis

Introduction to Financial Management

Group Project
Faculty- Tariqul Hoque (TRQ)
Section- 7

NO. Name ID
01 MD. Masksudul Haque Rafi 1510221030
02 Niloy Neogi 1612631030
03 Huang Jingru 1713063630
04 Shajjah Rifat Hossain 1712928630

1
December-14-2018
Lecturer,
School of Business
North South University
Bashundhara Residential Area, Dhaka-1213

Subject: Submission of fin-254 group project.

Dear Sir,

With due respect, we are student of your FIN254; sec: 8 According to your instruction, we have
prepared Ratio Analysis report. This report will give you an idea, “SQUARE Pharmaceuticals”
Ltd in SQUARE Group. We successful completion of my have given utmost dedication and
concentration to the report. We are thankful for your guidelines and instructions. We have found
immense pleasure doing this project. You have given us the chance to explore our potentiality
and seek knowledge by doing this project. . It would be impossible to begin any
acknowledgement without appreciating Almighty. We want to specially thank you honorable
course Instructor, Tariqul hoque (TRQ) for your patient guidance and immense support. You are
a remarkable mentor with excellent teaching skills and finely designed course outline which
answered most of our problems. We have tried our best to prepare the project as per your
requirement within the due date. We hope that you will like our project and forgive our
limitations. I tried to put my best effort for the preparation of this Report. Yet if any
shortcomings or flaws arise, it will be my pleasure to answer any clarification and suggestion
regarding this report. We were assigned to prepare we have prepared Ratio Analysis report. This
report will give you an idea, “SQUARE Pharmaceuticals” Ltd in SQUARE Group. We tried our
level best to include all the key concepts, relevant information and explanations of the ratio and
analysis
We are submitting the report with the hope that it will fill up your satisfaction. We found the
process of compiling the report both interesting and challenging. We hope that we covered all
that was required .We will be glad and delighted if you make any kind of criticism about this
project and would like to know your thoughts and views regarding the report.
Sincerely,

Niloy Neogi-1612631030

MD. Masksudul Haque Rafi-1510221030

Huang Jingru -1713063630

Shajjah Rifat Hossain-1712928630

2
 Table of Content

No Title Page
1 Letter of acknowledgement 2

2 Acknowledgement 4

3 Executive summary 4
4 Background of SQUARE Pharmaceuticals 4-6
5 Mission and Vision of square pharmaceuticals 6
6 Objects 6

7 Financial report of square pharmaceutical (2015-2016) (2016-2017) 7-9

8 Square pharmaceutical ratio-(2015-2016) (2016-2017) 10-12

9 Square Pharmaceuticals Graph & Ratio analysis 13-29

10 Liquidity ratio Analysis 13-14

11 Activity ratio analysis 15-19

12 Debt Ratio 20-21

13 Profitability Ratios 22-27

14 28-29
Market Ratio
15 30
Conclusion:

3
Acknowledgement: At the very outset, I am thankful to almighty Allah for
giving me strength, courage and ability to accomplish the report in a scheduled time in spite of
various complications. My most sincere thanks, dedicated to our honorable faculty Tariqul
Hoque (TRQ) for his support, encouragement in the preparations of this report. We have tried
our level best to prepare this report according to the given structure. We hope we have done an
adequate job considering our level of experience, expertise and we hope that we have been able
to portray the picture of what we have experienced during doing the ratio analysis.

Executive summary: Square Pharmaceuticals Company Report provides a

complete overview of the company’s affairs. All available data is presented in a comprehensive
and easily accessed format. The report contains the company’s profile and information about the
company’s vision, mission principal activities, objectives, locations and organization structure.
The report also includes financial information, latest development analysis, opinions, social
responsibilities, product scheme and current achievement. This report is prepared to make a study
on “An overview of the SQUARE Pharmaceuticals Limited of Bangladesh.

Background of SQUARE Pharmaceuticals: Square

symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no
bed of roses. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership
position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to
becoming a high performance global player. “Square Pharmaceutical Ltd.” is the largest
pharmaceutical company in Bangladesh and it has been continuously in the 1st position of
Bangladesh.

4
It was established in 1958 and converted into a public limited company in 1991. The sales
turnover of SPL was more than Taka 11.46 Billion (US$ 163.71 million) with about 16.43%
market share (April 2010– March 2011) having a growth rate of about 16.72%. “Square
Pharmaceuticals Limited” has extended her range of services towards the highway of global
market. It pioneered exports of medicines from Bangladesh in 1987 and has been exporting
antibiotics and other pharmaceutical products. This extension in business and services has
manifested the credibility of Square Pharmaceuticals Limited. Square now has one of the largest
and competent sales force and large distribution network of its own, operated from 18 different
locations throughout the country. A most dynamic skilled and dedicated marketing team
comprising of pharmacists and doctors are at the core of the marketing operation. UARE
Pharmaceuticals Limited has extended its range of services towards the highway of global
market. It pioneered exports of medicines from Bangladesh in 1987 and has been exporting
antibiotics and other pharmaceutical products. Present export market covers 36 countries. This
extension in business and services has manifested the credibility of Square Pharmaceuticals
Limited. These highly skilled professionals play a crucial role in providing the necessary
strategic guideline for the promotion of its product. Objectives of “Square Pharmaceuticals
Limited” are to conduct transparent business operation based on market mechanism within the
legal & social frame work with aims to attain the mission reflected by their vision. Our objectives
are to conduct transparent business operation based on market mechanism within the legal &
social framework with aims to attain the mission reflected by our vision.

Mission and Vision of square pharmaceuticals:

Mission: Mission of the square pharmaceuticals: is to produce and provide quality & innovative
healthcare relief for people, maintain stringently ethical standard in business operation also ensuring benefit to
the shareholders, stakeholders and the society at large.

Vision: Vision of the square pharmaceuticals view business as a means to the material and
social wellbeing of the investors, employees and the society at large, leading to accretion of wealth
through financial and moral gains as a part of the process of the human civilization.

5
Objects: Square pharmaceuticals objectives is to conduct transparent business operation based
on market mechanism within the legal and social frame work with aims to attain the mission reflected by
our vision

Financial report of square pharmaceutical:

Income Statement 2015-2016 2016-2017

Inventory Turnover 20,202,005,922 23,268,413,217
Cost of goods sold 11,308,857,708 12,960,738,683
Gross profit 8,893,148,214 10,307,674,534
Operating expenses 3,694,443,818 4,162,889,868
Selling and distribution expenses 2,955,935,819 3,431,938,716
Administrative expenses 738,507,999 730,951,152
Profit from operations 5,198,704,396 6,144,784,666
Other income 377,846,808 245,133,874
Financial expenses 357,151,743 177,131,396
Net profit before WPPF 5,219,399,461 6,212,787,144
Allocation for WPPF 246,729,864 300,438,842
Net profit before tax 4,972,669,597 5,912,348,302
Provision for income tax 1,237,851,545 1,518,801,391
Provision for deferred income tax 96,820,479 142,966,048
Profit/(loss) brought forward -- --
Net profit after tax 3,637,997,573 4,250,580,863
Profit/(loss) from associate undertakings -- --
Profit for the year -- --
Earnings Per Share 8.74 10.26
EBIT 5,576,551,204 6,389,918,540

6
balance sheet 2015-2016 2016-2017

Non Current Assets 20,605,309,448 23,546,701,250

Property, Plant and Equipment 9,908,013,592 13,933,689,469
Capital work in progress 4,907,039,756 3,256,802,171
Investment in Subsidiary 157,694,430 5,364,154,708
Investment in long term assets 4,914,958,933 147,694,430
Other Investment 686,985,768 844,360,472
Pre Operating and Preliminary Expense 30,616,969 --
Deferred Tax assets -- --

Other Assets -- --
Current Assets: 6,946,361,767 7,499,373,281
Inventories 3,091,263,712 2,737,085,779
Trade Debtors & Other Receivables 812,741,029 766,634,978
Advance, Deposits and Prepayments 952,411,276 671,749,541
Short term loan/Investment 1,108,757,914 1,161,185,776
Cash and Cash equivalents 981,187,836 2,162,717,207
Total Assets 27,551,671,215 31,046,074,531
BS63033 -- 1
Shareholders' Equity 22,593,944,897 26,748,951,732
Share Capital 3,707,686,640 4,819,992,630
Share Premium 2,035,465,000 2,035,465,000
General Reserve 105,878,200 105,878,200
Tax Holiday Reserve 406,231,702 406,231,702
Other Reserve and surplus 313,532,224 449,255,557
Retained Earnings 16,017,431,580 18,922,758,840
Non Controlling Interest 7,719,551 9,369,803
Non Current Liabilities 1,682,318,885 1,902,585,673
Long term loans secured 1,106,327,183 1,183,627,923
Deferred tax liability 575,991,702 718,957,750
Current Liabilities 3,275,407,433 2,394,537,126
Creditors for goods 7,034,724 217,855,755
Short term borrowing 1,302,048,378 131,104,817
Accrued Expense -- 20,518,598
Liabilities for other finance 1,425,902,995 1,563,624,134
Long term borrowings Current maturity 540,421,336 461,433,822
Others Liabilities -- --
Book Value Per Share 60.94 55.5
Total Liabilities & Shareholders Equity 27,551,671,215 31,046,074,531

7
Cash flow 2015-2016 2016-2017

Cash Flow From Operating Activities 1

Cash Received 23,357,453,209 27,073,653,067
Cash received from customers 23,297,552,825 27,027,953,588
Cash received from other income 59,900,384 45,699,479
Others -- --
Cash payment 18,057,816,999 --
Payment to suppliers, employees and
others 7,955,128,138 9,484,660,368
Payment of VAT 3,158,193,334 3,677,274,340
Income tax paid 1,050,658,124 1,439,747,461
Interest Paid -- 177,131,396
Interest Received 357,151,743 --
Purchase of Raw and Packing Materials -- --
Manufacturing and Operating Expense 5,297,511,145 5,622,808,076
Workers profit Participation Fund 225,797,488 255,891,487
Financing cost -- --
Other receipts 13,377,027 --
Other payments -- --
Net Cash Generated from Operating
Activities 5,299,636,210 6,416,139,939
Purchase of Property, Plant & Equipment -1,786,775,567 -2,234,360,509
(Acquisition)/ Disposal of Other
Investments 125,009,718 90,969,701
Pre Operating Cost -30,067,031 --
Investment in Intangible Assets -- -52,427,862
Investment in Marketable Securities 4,247,563 -21,651,371
Loan to sister concern 608,515,408 --
Investment Income Received -- 6,598,771
Capital Work in Progress -3,632,649,184 -1,363,637,040
Increase/(Decrease) in short term loans/
Investments -- 160,000,000
Other Cash flows 308,500,000 --
Interest received 176,943,100 151,443,710
Dividend Received 96,904,124 128,006,027
Net Cash Flow from Investing Activities -4,129,371,869 -3,135,058,573

8
Net increase/Decrease in Long Term
Borrowing 1,178,037,703 575,554,227
Net increase/Decrease in Term Borrowing -517,208,727 -577,241,001
Net increase/Decrease in Short Term
Borrowing -935,447,578 -1,170,943,561
Dividend paid- Ordinary Share -- --
Dividends Paid - Preference Shares -662,086,900 -926,921,660
Net Cash Flow Financing Activities -936,705,502 -2,099,551,995
Increase (decrease) in Cash 233,558,839 1,181,529,371
Cash at the beginning of the period 747,628,997 981,187,836
Cash at the end of the period 981,187,836 2,162,717,207

Square pharmaceutical ratio:

1.Liquidity Ratio- 2015-2016 2016-2017

a.Current Ratio:
Current assets 6946361767 7499373281
Current Liabilities 3275407433 2737085779
Current Ratio: 2.120762656 2.739911675

b.Quick Ratio:
Current assets 6946361767 7499373281
Inventory 3091263712 2573708579
Current liabilities 3275407433 31046074531
quick ratio 1.176982752 0.806569424

2.Activity Ratio
C.Inventory Turnover:
COGS 11308857708 12960738683
Inventory 3091263712 2737085779
Inventory Turnover: 3.658328361 4.735232919

d.Average age of inventory

days in a year 365 365
inventory turnover 3.658328361 4.735232919

9
average age of inventory 99.77234518 77.08174154

e.Average collection period :

Accounts Receivables 812747029 766634978
Average sales per day 55347961 63749077
Average collection period 14.68431744 12.02582083

f.Average payment Period:

Accounts payable 1425902995 1563624134
Average purchase per day 30983171.8 35508873.1
Average payment period 46.02185355 44.03474392

G.Total Assets Turnover:

Sales 20202005922 23268413217
Total Assets 27551671215 31046074531
Total assetsTurnover 0.733240672 0.749480041

3.Leverage and Solvency Ratio

H.Debt Ratio:
Total Liabilities 1582318885 1902585673
Total Assets 27551671215 31046074531
Debt Ratio 5.743095846 6.128264851

I. Times Interest Earned Ratio

EBIT 5576551204 6389918540
Interest Expence 157131935 177131396
times interest earned 35.48961071 36.07445481

4.Profiability ratio
J.Gross profit margin ratio
Gross profit 9093148214 10307674534
Sales 20202005922 23268413217
Gross profit margin 45.01111548 44.2990007

K.Net Profit Margin ratio

Net Profit 4972669597 5912348302
Sales 20202005922 23268413217
Net profit margin 24.6147319 25.40933173

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L.Operating profit Margin
Operating profit 5072669597 5912348302
Sales 20202005922 23684132217
operating profit margin 25.10973225 24.96333092

M.Return on total assets

Earning available for common stock 3637997573 4250580863
Total Assets 27551671215 31046074531
Return on total assets 13.20427187 13.69120228

N. Return on Equity
Earning available for common stock
holders 3637997573 4250580863
common stock Equity 21931857997 25822030072
ROE 16.58773084 16.46106387

O. Earnings per share

Earning available for common stock
holder 3637997573 4250580863
Number of shares outstanding 41624686189 436109596.5
Earning per share 8.74 10.26

Q.Market/Book ratio
Common Stock Equity 21931857997 25822030072
number of shares outstanding 4162486189 436109596.5
Book value per share 60.9456217 55.526594

11
Square Pharmaceuticals Graph &
Ratio analysis:

1>Liquidity ratio Analysis: Liquidity ratio refers to the ability of a firm to

meet its short term financial obligations when as they fall due two frequently used liquidity ratios are
current ratio and quick! Ratio. We can observe a two year financial report by analyzing two ratio.

A. Current ratio: The current ratio is a liquidity ratio that measures whether or not a firm
has enough resources to meet its short-term obligations. It compares a firm's current assets to its
current liabilities, and is expressed as follows: The current ratio is an indication of a firm's
liquidity From the above table and information it is found that current ratio of the Square
Pharmaceuticals are well enough to cover the debt by its assets.

current ratio
3 2.73

2.5
2.12
2

1.5

0.5

2015-2016 2016-2017

Interpretation: In 2016-2017 the total current ratio was 2.73 and the year 2015-2016
current ratio was 2.12. For the year 2015-2016 1$ liabilities the company has 2.12 current assets.

12
And 2016-2017 year 1$ liabilities the company has 2.73 current assets. For the two year, 2016-
2017 current ratio was higher. So 2016-2017 current ratio was better.

B. Quick ratio: The quick ratio, also known as the acid-test ratio is a type of liquidity
ratio which measures the ability of a company to use its near cash or quick assets to extinguish or
retire its current liabilities immediately this indicates that company might fall in problem in
problem to pay its current debt in the emergency situation. As a result debtor may want to
increase their cost (interest rate) for this company which will make the company difficult to
manage working capital. Quick assets include those current assets that presumably can be
quickly converted to cash at close to their book values. It is the ratio between quickly available
or liquid assets and current liabilities.

quick ratio
1.4
1.17
1.2

1
0.84
0.8

0.6

0.4

0.2

2015-2016 2016-2017

Interpretation: In 2016-2017 the total quick ratio was 0.84 and the year 2015-2016 quick
ratio was 1.17. For the year 2015-2016 1$ liabilities the company has 1.17 liquid assets. And
2016-2017 year 1$ liabilities the company has 0.84 liquid assets. For the two year, 2015-2016
quick ratio was higher. So 2015-2016 quick ratio was better.

13
2>Activity ratio analysis: An activity ratio is a metric which
determines the ability of a company to convert its sheet accounts into revenue. Activity ratios are
critical in evaluating a company's fundamentals because, in addition to expressing how well a
company generates revenue, activity ratios also indicate how well the company is being
managed. The company’s use of assets and process of running the operations are efficient or not,
the activity ratio analysis is applied. Also referred as operation ratio analysis, or turnover ratio
analysis, it includes calculating a set of indicators that allow making conclusions on how
effectively the firm uses its inventories, accounts receivable and fixed assets.

C. inventory turnover: The inventory turnover ratio is an efficiency ratio that shows
how effectively inventory is managed by comparing cost of goods sold with average inventory
for a period. In other words, it measures how many times a company sold its total
average inventory dollar amount during the year. Inventory turnover ratio is also inconsistent. So
it means that company management is not able to manage its inventory efficiently all the time.

inventory trunover
5 4.73523
4.5
4 3.6583
3.5
3
2.5
2
1.5
1
0.5
0

2015-2016 2016-2017

Interpretation: In 2016-2017 the total inventory turnover was 4.73 and the year 2015-
2016 inventory turnover was 3.65. For the year 2016-2017 the company can sell inventory 4.73
times. And the year 2015-2016 the company can sell the inventory 3.65 times. For the two years
2016-2017 total inventory turnover was higher. So 2016-2017 total inventory turnover was
better.

14
D. Average age of inventory: The average age of inventory is the average number of days
it takes for a firm to sell off inventory. It is a metric that analysts use to determine the efficiency of sales.
The average number of days it takes for a firm to sell a product it is currently holding as inventory to cons
umers. Theformula to calculate the average age of inventory is C/G x 365, where C is the average cost of i
nventory at its presentlevel and G is the cost of goods sold, multiplied by the number of days in a year.

average age of inventory

120

99.77
100

77.08
80

60

40

20

0
Category 1

2015-2016 2016-2017

Interpretation: In 2016-2017 the total average age of inventory was77.08 and the year
2015-2016 inventory turnover was 99.77. For the two years 2016-2017 total average age of
inventory was lower. So 2016-2017 total inventory turnover was better.

15
E. Average age of collection period: The average collection period is the amount
of time it takes for a business to receive payments owed in terms of accounts receivable. The
average collection period is calculated by dividing the average balance of accounts receivable by
total net credit sales for the period and multiplying the quotient by the number of days in the
period. The average collection period can be calculated as follows: 365 days in a year divided by
the accounts receivable turnover ratio. Assuming that a company has an accounts receivable
turnover ratio of 10 times per year, the average collection period is 36.5 days

collection period
16 14.68
14
12.02
12
10
8
6
4
2
0
Category 1
2015-2016 2016-2017

Interpretation: In 2016-2017 the total average collection period was 12.02 and the year
2015-2016 total average collection period was 14.68. For the two years 2015-2016 the company
can collect accounts receivable 14.68 days. And the year 2016-2017 the company can collect
accounts receivable 12.02 days. For the two years 2016-2017 average collection period is lower.
So the year 2016-2017 average collection period was better.

16
f. Average payment Period: The average payment period (APP) is defined as the
number of days a company takes to pay off credit purchases. It is calculated as accounts payable
/ (total annual purchases / 360). As the average payment period means the average period taken
by the company in making payments to its creditors. It is computed by dividing the number of
working days in a year by creditor’s turnover ratio. Since the average payment period does not
affect working capital, APP typically has little or no effect on the valuation of a company or on a
merger or acquisition. Recent economic trends have to the average APP increasing because of
the typical trickle-down effect of payments. Payment period increases, cash should increase as
well, but working capital remains the same.

payment period
46.5 46.02
46
45.5
45
44.5 44.03
44
43.5
43
Category 1

2015-2016 2016-2017

Interpretation: In 2016-2017 the total average payment period was 44.03 and the year
2015-2016 total average payment period was 46.02. For the two years 2015-2016 the company
can pay accounts payable 46.02 days. And the year 2016-2017 the company can pay the
accounts payable 44.03 days. For the two years 2016-2017 average payment period is lower.
And 2015-2016 average payment period is higher. So the average payment period was same
times higher better and sometimes lower better.

17
G. Total Assets Turnover: The asset turnover ratio is an efficiency ratio that measures
a company's ability to generate sales from its assets by comparing net sales with average total
assets. The asset turnover ratio measures the value of a company's sales or revenues relative to
the value of its assets. The asset turnover ratio, also known as the total asset turnover ratio,
measures the efficiency with which a company uses its assets to generate sales. The asset
turnover ratio formula is equal to net sales divided by the total or average assets of a company. A
company with a high asset turnover ratio operates more efficiently compared to competitors with
lower ratios. The asset turnover ratio can be used as an indicator of the efficiency with which a
company is using its assets to generate revenue.

total assets trunover

0.75
0.7449
0.745

0.74

0.735 0.733

0.73

0.725
Category 1

2015-2016 2016-2017

Interpretation: In 2016-2017 the total assets turnover was and the year 2015-2016 total
assets turnover was 0.733. For the year 2015-2016 1$ total assets the company can generate
0.733 of sells. And 2016-2017 year 1$ total assets the company can generate 0.7449 of sells. For
the two years 2016-2017 total assets turnover was higher. So 2016-2017 total assets turnover was
better.

18
3>H. Debt Ratio: The debt ratio is a financial ratio that measures the extent of
a company's leverage. The debt ratio is defined as the ratio of total debt to total assets, expressed
as a decimal or percentage. Debt ratio is a solvency ratio that measures a firm’s total liabilities as
a percentage of its total assets. In a sense, the debt ratio shows a company’s ability to pay off its
liabilities with its assets. In other words, this shows how many assets the company must sell in
order to pay off all of its liabilities. This ratio measures the financial leverage of a company.
Companies with higher levels of liabilities compared with assets are considered highly leveraged
and more risky for lenders. This helps investors and creditors analysis the overall debt burden on
the company as well as the firm’s ability to pay off the debt in future, uncertain economic times
it can be interpreted as the proportion of a company's assets that are financed by debt.

6.2 debt ratio

6.12
6.1

5.9

5.8 5.74
5.7

5.6

5.5
2015-2016 2016-2017

Interpretation: In 2016-2017 the debt ratio was 6.12 and the year 2015-2016 total debt
ratio was 5.74. For the year 2102-2016 5.74% of the company assets are cover by debt. And for
the year 2016-2017 6.12% of the company assets are covered by debt. For the two years debt
ratio 2015-2016 is lower. So 2015-2016 is the better of two debt ratio.

19
I. Times Interest Earned Ratio: The times interest earned ratio, sometimes called
the interest coverage ratio, is a coverage ratio that measures the proportionate amount of income
that can be used to cover interest expenses in the future. In some respects the times interest ratio
is considered a solvency ratio because it measures a firm’s ability to make interest and debt
service payments. Since these interest payments are usually made on a long-term basis, they are
often treated as an ongoing, fixed expense. As with most fixed expenses, if the company can’t
make the payments, it could go bankrupt and cease to exist. Thus, this ratio could be considered
a solvency ratio.

time interest earned ratio

36.2
36.07
36.1
36
35.9
35.8
35.7
35.6
35.48
35.5
35.4
35.3
35.2
35.1

2015-2016 2016-2017

Interpretation: In 2016-2017 the times interest earned ratio was 36.07 and the year 2015-
2016 total times interest earned ratio was 35.48. For the years 2015-2016 the company can pay
its contractual interest payment within 35.48 times. And 2016-2017 the company can pay its
contractual interest payment within 36.07 times. . For the two years times interest earned ratio
2016-2017 is higher. So 2016-2017 is the better of two times interest earned ratio.

20
4>Profitability Ratios: Profitability ratios are a class of financial
metrics that are used to assess a business's ability to generate earnings relative to its associated
expenses. Profitability ratios compare income statement accounts and categories to show a
company’s ability to generate profits from its operations. Profitability ratios focus on a
company’s return on investment in inventory and other assets. These ratios basically show how
well companies can achieve profits from their operations. For most of these ratios, having a
higher value relative to a competitor's ratio or relative to the same ratio from a previous period
indicates that the company is doing well.

J. Gross profit margin ratio: Gross profit margin is calculated by subtracting cost of
goods sold (COGS) from total revenue and dividing that number by total revenue. The top
number in the equation, known as gross profit or gross margin, is the total revenue minus the
direct costs of producing that good or service. Gross profit margin is a key measure of
profitability by which investors and analysts compare similar companies and companies to their
overall industry. The metric is an indication of the financial success and viability of a particular
product or service. The higher the percentage, the more the company retains on each dollar
of sales to service its other costs and oblige.

gross profit margin

45.2
45.01
45

44.8

44.6

44.4 44.29
44.2

44

43.8

2015-2016 2016-2017

Interpretation: In 2016-2017 gross profit margin ratio was 44.29 and the year 2015-2016
total gross profit margin ratio was 45.01. For the two years 2015-2016 the company has 45.01
profit after paying cost of goods sold. For next year 2016-2017 the company has 44.29 profit
after paying cost of goods sold. . For the two years gross profit margin 2015-2016 is higher. So
2015-2016 is the better of two gross profit margin ratio.

21
K. Net Profit Margin ratio: Net profit margin, or net margin, is equal to net income
or profits divided by total revenue, and represents how much profit each dollar of sales
generates. Net profit margin is the ratio of net profits or net income to revenues for a company,
business segment or product. Net profit margin is typically expressed as a percentage but can
also be represented in decimal form. The net profit margin illustrates how much of each dollar
collected by a company as revenue translates into profit. The term "net profits" is equivalent to
"net income" on the income statement, and one can use the terms interchangeably. Most
commonly, investors will refer to net profit margin as the "net margin" and describe it as "net
income" divided by total sales instead of using the term "net profits.

net profit margin ratio

25.6
25.4
25.4

25.2

25

24.8
24.61
24.6

24.4

24.2

2015-2016 2016-2017

Interpretation: In 2016-2017 net profit margin ratio was 25.4 and the year 2015-2016
total net profit margin ratio was 24.61. . For the two years 2015-2016 the company has24.61
profit after paying all its expenses include interest tax and preference stock dividend. For next
year 2016-2017 the company has 25.4 profit after paying all its expenses include interest tax and
preference stock dividend. . For the two years net profit margin 2016-2017 is higher. So 2016-
2017 is the better of two net profit margin ratio.

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L. Operating profit Margin: Operating margin is a measure of profitability. It
indicates how much of each dollar of revenues is left over after both costs of goods sold
and operating expenses are considered. The operating profit margin ratio indicates how much
profit a company makes after paying for variable costs of production such as wages,
raw materials, etc. It is also expressed as a percentage of sales and then shows the efficiency of
a company controlling the costs and expenses associated with business operations. Furthermore,
it is the return achieved from standard operations and does not include unique or one
time transactions.

operating profit margin

25.15
25.1
25.1

25.05

25
24.96
24.95

24.9

24.85

2015-2016 2016-2017

Interpretation: In 2016-2017 operating profit margin ratio was 24.96 and the year 2015-
2016 total net profit margin ratio was 25.1. For the two years 2015-2016 the company has 25.1
profit after paying all its expenses exclude interest tax and preference stock dividend. For next
year 2016-2017 the company has 24.96 profit after paying all its expenses exclude interest tax
and preference stock dividend. . For the two years’ operating profit margin 2015-2016 is higher.
So 2015-2016 is the better of two operating profit margin ratio.

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M. Return on total assets: The return on total assets (ROTA) is a ratio that measures
a company's earnings before interest and taxes (EBIT) relative to its total net assets. The ratio is
considered to be an indicator of how effectively a company is using its assets to generate
earnings before contractual obligations must be paid. The return on assets ratio formula is
calculated by dividing net income by average total assets. This ratio can also be represented as a
product of the profit margin and the total asset turnover.

Return on tatal assets

13.8
13.69
13.7
13.6
13.5
13.4
13.3
13.2
13.2
13.1
13
12.9

2015-2016 2016-2017

Interpretation: In 2016-2017 return on total assets ratio was 13.96 and the year 2015-
2016 return on total assets ratio was 13.2. For the two years 2015-2016 the company has 13.2
return on total assets means for 1$ investment in the company assets earnings will be 13.2. And
2016-2016 the company has 13.69 return on total assets means for 1$ investment in the
company’s assets earning will be 13.69. For the two years’ return on total assets 2016-2017 is
higher. So 2016-2017 is the better of two return on total assets.

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N. Return on Equity: Return on equity (ROE) is a measure of financial performance
calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal
to a company’s assets minus its debt, ROE could be thought of as the return on net assets. ROE
is expressed as a percentage and can be calculated for any company if net income and equity are
both positive numbers. Net income is calculated before dividends paid to common shareholders
and after dividends to preferred shareholders and interest to lenders.

return on equity
16.6 16.58

16.55

16.5
16.46
16.45

16.4

2015-2016 2016-2017

Interpretation: In 2016-2017 return on equity ratio was 16.46 and the year 2015-2016
return on equity ratio was 16.58. For the two years 2015-2016 the company has 13.2 return on
equity means for 1$ investment in the company equity the earnings will be 16.58. And 2016-
2017 the company has return on equity means for 1$ investment in the company’s equity the
earning will be 16.46. For the two years’ return on total equity 2015-2016 is higher. So 2015-
2016 is the better of two return on equity.

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O. Earnings per share ratio: Earnings per share ratio (EPS ratio) is computed by the
following formula: The numerator is the net income available for common stockholders' (net
income less preferred dividend) and the denominator is the average number of shares of
common stock outstanding during the year. It does not include preferred shares.

earning per share

10.5 10.26

10

9.5

9 8.74

8.5

7.5

2015-2016 2016-2017

Interpretation: In 2016-2017 earning per share ratio was 10.26 and the year 2015-2016
earnings per share ratio was 8.74. For the two company 2015-2016 earnings per share 8.74
means for the investment 1$ of the company. For the two company 2016-2017 earnings per
share 10.26 means for the investment 1$ of the company the earnings. For the two years’
earnings per share 2016-2017 is higher. So 2016-2017 is the better of two earnings per share
ratio.

5> Market Ratio: The book-to-market ratio is used to find the value of a
company by comparing the book value of a firm to its market value. Book value is calculated by
looking at the firm's historical cost, or accounting value. Market value is determined in the

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stock market through its market capitalization. Market value ratios are used to evaluate the
current share price of a publicly-held company's stock. These ratios are employed by current and
potential investors to determine whether a company's shares are over-priced or underpriced.

P. Price earnings ratio: The price-earnings ratio (P/E ratio) is the ratio for valuing a
company that measures its current share price relative to its per-share earnings. The price-
earnings ratio is also sometimes known as the price multiple or the earnings multiple. The price-
to-earnings ratio (P/E) is a valuation method used to compare a company’s current share price to
its per-share earnings.

price earnings ratio

5
4.5 4.3

4
3.5
3
2.4
2.5
2
1.5
1
0.5
0
1

Series1 Series2

Interpretation: In 2016-2017 price earnings ratio was 2.4 and the year 2015-2016 price
earnings ratio was 4.3. For the two years 2015-2016 the investor are willing paying 4.3 times
higher is the earnings of the company. . For the two years 2016-2017 the investor are willing
paying 2.4 times higher is the earnings of the company. For the two years’ price earnings ratio
2015-2016 is higher. So 2015-2016 is the better of two price earnings ratio.

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Q. Market ratio: The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a
company's current market price to its book value. ... In the first way, the company's market capitalization
can be divided by the company's total book value from its balance sheet. The price-to-book ratio, or
P/B ratio, is a financial ratio used to compare a company's current market price to its book value. ... In the
first way, the company's market capitalization can be divided by the company's total book value from its
balance sheet.

market RATIO
6

4.81
5

4 3.51

2015-2016 2016-2017

Interpretation: In 2016-2017 market ratio was 4.81 and the year 2015-2016 market ratio
was 3.51. The years 2015-2016 the market value of the share 4.81 higher on the book value per
share. The years 2016-2017 the market value of the share 3.51 higher on the book value per
share. For the two years’ market ratio 2016-2017 is higher. So 2016-2017 is the better of two
market ratio.

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Conclusion: Square Pharmaceutical Ltd is the leading business industry in
Bangladesh .We can summarize that for the last five years, even though Square
Pharmaceuticals Ltd. could not perform up to mark according to our analysis, but
still holding the better position in the industry. The firm gained the trust of the
investors. SQUARE today, symbolize a name a state of mine from the inception in
1958 it has today burgeoned into one of the top line conglomerates in Bangladesh
Square pharmaceutical limited, the pharmaceutical giant in the country, is a trusted
name in the industry of manufacturing quality medicines for more than four
decade. Square Pharmaceutical limited, the flagship company of SQUARE Group,
is holding the strong leadership position the pharmaceutical company of
Bangladesh since 1985 and it has been continuously in the position among all
national and multinational companies since 1985. Square Pharmaceutical limited,
is now on its way to becoming a high performance global payer, Income Statement
of Square Pharmaceutical Balance Sheet of Square Pharmaceutical Therefore we
can come to the conclusion that Square Pharmaceutical Ltd is a better company to
invest on.

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