Principles of Finance (FIN 2319)

Term Paper

Submitted to:
Ms. Eliza Huq
Assistant Professor
SCHOOL OF BUSINESS AND ECONOMICS (SOBE)

Submitted by:
Section A
Name ID
Md. Shakibur Rahman 111 162 068
Sabbir Hossain 111 161 350
Sumaiya Binte Abdullah 111 151 440
Imtiaze Shafin Rehad 111 181 112
Tasnim Tasfia Srishty 111 153 021
Md. Muhib Ullah 111 161 261
Rukaiya Mostofa Mim 111 163 066

Submission Date: 2nd June

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Term Paper

On

Analyzing three company

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Letter of Transmittal

2nd June, 2020

Ms. Eliza Huq

Assistant Professor

School of Business and Economics (SOBE)

United International University

Subject: Submission of our Term Paper

Dear Ma’am,

It is indeed a great pleasure for us to be able to hand over the result of our hardship of the Term
Paper. This term paper is the result of knowledge which has been acquired from a respective
source. We tried our best for preparing this. We hope that you will find this worth reading and
appreciate our hard work and please excuse the minor error.

We are very thankful to you for giving us such an effective topic to prepare the term paper. All
of us have put our best efforts into preparing it. We hope that it will meet your expectations and
will shed light on the issue.

Thank You

Yours most obedient

(On behalf of the group)

Tasnim Tasfia Srishty

Sec: A
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Acknowledgement

I would like to express my sincere gratitude to our honorable Eliza Huq ma’am for providing us
guidance, comments and suggestions for this term paper and help us to complete it successfully
within the given time. Thank you again for helping us so much available in every time for us in
this pandemic situation.

Finally, thanks to everyone in the group for putting their efforts into completion of the term
paper. We would like to acknowledge all of our well-wishers for helping us throughout the
journey to completing the term paper.
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Contents
INTRODUCTION .......................................................................................................................... 7
BACKGROUND OF THE REPORT ............................................................................................. 8
MOTIVATION OF THE STUDY .................................................................................................. 9
ECONOMY ANALYSIS.............................................................................................................. 11
INDUSTRY ANALYSIS.............................................................................................................. 11
Background of the Pharmaceutical Sector in Bangladesh ........................................................ 11
INDUSTRY ANALYSIS .......................................................................................................... 12
DOMESTIC DEMAND ............................................................................................................ 12
FINANCIAL PERSORMANCE OF THE INDUSTRY ........................................................... 13
Specification o the industry ....................................................................................................... 14
Seasonality ................................................................................................................................ 14
External Economic factor of pharmaceutical industry .............................................................. 15
Size, trend, and maturity of the industry ................................................................................... 15
Companies ................................................................................................................................. 16
COMPANY ANALYSIS OF RENATA PHARMA .................................................................... 17
FINANCIAL STATEMENT ANALYSIS OF RENATA PHARMA .......................................... 19
RATIO ANALYSIS OF RENATA PHARMA ........................................................................ 20
SWOT ANALYSIS ................................................................................................................... 24
FINDING AND RECOMMENDATION ..................................................................................... 26
COMPANY ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED ............................. 27
FINANCIAL STATEMENT ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED ... 28
FINANCIAL INCOME STATEMENT ANALYSIS OF SQUARE PHARMACEUTICALS
LIMITED ...................................................................................................................................... 35
COMMON SIZE ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED.................. 36
FINANCIAL STATEMENT ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED 37
RATIO ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED ................................. 41
FINDING AND RECOMMENDATION ..................................................................................... 50
COMPANY ANALYSIS OF ACI PHARMACEUTICALS LIMITED ...................................... 51
FINANCIAL STATEMENT ANALYSIS OF ACI PHARMACEUTICALS LIMITED ............ 52
RATIO ANALYSIS OF ACI PHARMACEUTICALS LIMITED .......................................... 52
SWOT ANALYSIS ................................................................................................................... 56
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FINDING AND RECOMMENDATION ..................................................................................... 58

CONCLUSION ............................................................................................................................. 59
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INTRODUCTION
Financial Statement Analysis is a method of reviewing and analyzing a company’s accounting
reports (financial statements) in order to gauge its past, present or projected future performance.
This process of reviewing the financial statements allows for better economic decision making.
Publicly listed companies are required by law to file their financial statements with the relevant
authorities. Firms are also obligated to provide their financial statements in the annual report that
they share with their stakeholders. As financial statements are prepared in order to meet
requirements, the second step in the process is to analyze them effectively so that future
profitability and cash flows can be forecasted.

We will examine the impact of the differential application of accounting methods and estimates
on financial statements with particular emphasis on the effect of accounting choices on reported
earning, stockholder equity, cash flow and various measures of corporate performance (including
but not limited to financial ratios). We will also stress the use of cash flows analysis to evaluate
the financial health of an enterprise.

Therefore, the main purpose of financial statement analysis is to utilize information about the
past performance of the company in order to predict how it will fare in the future. Another
important purpose of the analysis of financial statements is to identify potential problem areas
and troubleshoot those.
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BACKGROUND OF THE REPORT

Pharmaceutical Industry is one of the most developed high-tech sectors in Bangladesh. It is

contributing a lot in the economy of the country. After the promulgation of Drug Control
Ordinance 1982, the development of this sector was accelerated. The growth was observed at a
considerable rate in the last two decades. The professional knowledge, thoughts and innovative
ideas of the Bangladeshi pharmacists working in this sector are the key factors for this
development. In Bangladesh there have 252 licensed pharmaceutical companies at present in
total including nationals and multinationals. Presently the national companies account for more
than 75% of the pharmaceutical business in Bangladesh. However, among the top twenty
companies of Bangladesh, six are multinationals. Among them SQUARE, ACI and RENATA
are the oldest company in Bangladesh.

SQUARE today symbolizes a name – a state of mind. But its journey to the growth and
prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one
of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company,
is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985
and is now on its way to becoming a high-performance global player. SQUARE Pharmaceuticals
Limited is the largest pharmaceutical company in Bangladesh and it has been continuously in the
1st position among all national and multinational companies since 1985. It was established in
1958, converted into a public limited company in 1991 and listed with stock exchanges in 1995.
The turnover of Square Pharma was BDT 50.87 Billion (US$ 609.18 million) with about 16.95%
market share having a growth rate of about 10.85% (July 2018– June 2019).

Advanced Chemical Industries (ACI) Limited, being one of the largest conglomerates in
Bangladesh with a multinational heritage operates across the country through its four diversified
strategic business units. ‘ACI Pharmaceuticals’ is dedicated to improve the health of people of
Bangladesh through introduction of innovative and reliable Pharmaceuticals products. ‘ACI
Retail Chain’ is the largest retail chain in the country operating through its 73 SHWAPNO
outlets across the country by touching the lives of over 35,000 households each day. The
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company contributed Taka 3,625 million to the National Exchequer during FY 2017-2018 in the
form of corporate tax, custom duty and value added tax.

Renata Limited (formerly Pfizer Limited) is one of the leading and fastest growing
pharmaceutical and animal health product companies in Bangladesh. The company started its
operations in 1972 as Pfizer (Bangladesh) Limited. In 1993, Pfizer transferred the ownership of
its Bangladesh operations to local shareholders and the name of the company was changed to
Renata Limited. The core businesses of Renata Limited are human pharmaceuticals and animal
health products. In Bangladesh it is the 4th largest pharmaceutical company and the market
leader in animal health products. The Company is listed on the Dhaka Stock Exchange with
market capitalization of approximately Taka 87 billion.

MOTIVATION OF THE STUDY

Pharmaceutical sector is also providing about 97% of the total medicine requirement of the local
market. Leading Pharmaceutical Companies are expanding their business with the aim to expand
export market. Recently few new industries have been established with high tech equipment’s
and professionals which will enhance the strength of this sector.

At present the national and multinational companies are manufacturing about 19,830 brands of
medicines under 1081 generics in different dosage forms. There were, however, 2000 wholesale
drug license holders and about 80,000 retail drug license holders are involved in drug
distribution and dispense in Bangladesh. Anti-infective is the largest therapeutic class of locally
produced medicinal products, distantly followed by antacids and anti-ulcerants. Other significant
therapeutic classes include Non-Steroidal Anti-Inflammatory Drug (NSAID), vitamins,
cardiovascular drug, Central Nervous System (CNS) and respiratory products. A most
remarkable progress the local industry has made in recent time is the phenomenal increase in the
local production of basic chemicals. Presently top pharmaceutical companies in Bangladesh are
also in the process of getting into bulk drug production with collaborative technology,
technology transfers and joint venture basis. At least 21 companies are producing about 41 active
pharmaceutical ingredients (API).
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The large-scale players in the Bangladesh pharmaceutical industry currently include Square
Pharma, Beximco Pharmaceuticals, Nib Chemicals, Ganoshastha Pharmaceutical, Opsonin
Chemicals, ACI Pharmaceuticals, Globe Pharmaceuticals and others. The basic chemicals
include Paracetamol, Ampicillin Trihydrate, Amoxycillin Trihydrate, Cloxacillin, Diclofenac
Sodium, Aluminium Hydroxide Dried Gel, Magnesium Hydroxide dried gel, Dextrose
Monohydrate, Hard Gelatin capsule shell, Chloroquine Phosphate, Propranolol Hydrochloride,
Benzoyl Metronidazole, Ciprofloxacin Hydrochloride, Cephradine, Pyrantel Pamoate, and
others. However, most of these are confined to the last stage of synthesis. To feed the local
industry, more API industries are needed. The recent approval, as was reported in a section of the
media, to a 30-billion-dollar API industrial park in Munshiganj will inject fresh momentum to
the pharmaceutical industry. Bangladesh can save at least 70% of expenditure on raw materials
when the API part goes into production. At present Bangladesh imports 80% of its
pharmaceutical raw materials. A good number of skilled professionals from home and abroad are
expected to join the industry to enrich its human resources pool.

The current Good Manufacturing Practice (GMP) is recognized worldwide for its holistic
approach to ensure the quality of food and pharmaceutical products. With its firsts growing
pharmaceutical export, Bangladesh now exports a wide range of major therapeutic products like
capsules, syrups and tablets. In this regard how we can evolve more and more economically as
well as with a minimal risk which come down to one point of judging current position of the
company how they doing by analyzing their financial data which will help to grow the
pharmaceutical company. Some objective will help motivated the study:

✓ To know the financial condition.

✓ To know the financial position the pharmaceutical section.
✓ To guess its future condition.
✓ To know about its past condition
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ECONOMY ANALYSIS
Pharmaceutical Industry is rising at a very amazing rate and contributing to the national
economy. The Current industry size with prospective global standards & can emerge as major
revenue generating sector of the country. Bangladesh is self-sufficient in meeting local
pharmaceutical product demand and Bangladesh earned $82.11-milion by exporting
pharmaceutical product. This is a great sign of improvement. Bangladesh domestic market of
Pharmaceutical products is increasing over the past few years and currently the market stood at
BDT 142 billion. Bangladeshi pharmaceutical companies provide generic product and able to
charge premium for its products. Top 10 companies hold approximately 70% market share. It is
highly complicated to enter into this industry because of huge investment requirement. Square
Pharmaceutical is the market leader having 21.15% market share followed ACI, Renata. Some
Key findings are-

 Currency fluctuation has significant impact on pharmaceutical industry.

 Cheap labor cost lead to an increase in profit margin for this industry.
 Rate of inflation in Bangladesh is not that much of high.
 Pharmaceutical industry plays a very vital role in Bangladesh’s GDP growth.
 Total pharmaceutical market of Bangladesh, the local companies are enjoying a market
share reaching around 75% whole the MNCs are having a market share of 25%

INDUSTRY ANALYSIS
Background of the Pharmaceutical Sector in Bangladesh
In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors within the
country's economy. After the promulgation of Drug Control Ordinance - 1982, the development
of this sector was accelerated. The professional knowledge, thoughts and innovative ideas of the
pharmaceutical professionals working in this sector are the key factors for these developments.
Due to recent development of this sector it is exporting medicines to global market including
European market. This sector is also providing 97% of the total medicine requirement of the
local market. Leading pharmaceutical companies are expanding their business with the aim to
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expand export market. Recently few new industries have been established with high tech
equipment and professionals which will enhance the strength of this sector.

INDUSTRY ANALYSIS
According to the new research, Pharmaceutical sector in Bangladesh may grow at 15% for the
next five years riding on the expanded domestic market as well as new export frontiers. Two
major ways is expected to change the disease profile in Bangladesh. They are:

1. The rise of non-communicable diseases

2. Gradual move from acute to chronic diseases

The ageing population of our country will increase by 25% by the time of 2036. As Bangladesh
advances into the league of middle-income countries, the income level is comparatively high. So,
the drug purchasing power is likely to rise with the sustained growth.

DOMESTIC DEMAND
Bangladesh currently has around 190 pharmaceutical companies in operation. Among them top
20 companies generate 95% of market revenue. According to export.gov, the top ten
manufacturers by share of market revenue are as follows:

Company % of Share Company % of Share

Square Ltd 19% Reneta 4.9%
Incepta 9.5% Eskayef 4.7%
Beximco 9% ACI 4.3%
Opsonin 5% ACME 4.1%
Drug 3.7% Aristopharma 4%
International

About 95 percent of market share is dominated by local manufacturers dominate the industry
while multinationals hold 5 percent. Bangladesh pharmaceutical industry satisfies 97% of
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domestic demands and the rest 3% of drugs are imports. Imports are restricted for drugs that are
locally manufactured and available. Bangladesh pharmaceutical industry mostly produces
generic drugs, in fact, Bangladesh is now a hub for affordable and high-quality generic
medicines. 30 pharmaceutical companies export to 113 countries. Not only tablets, capsules, and
syrups but also specialized products like HFA inhalers, CFC inhalers, suppositories, nasal sprays,
injectable, IV infusions are exported from this industry. Free from the obligations to implement
patents and data protection for pharmaceutical products until 2033. According to EPB,
Bangladesh exported $37.9 million (about Tk.3.0 billion) worth of drugs in the fiscal year 2015 -
2016 (EPB). In an industrial park, which is situated at Baushia, Gajaria, Munshiganj and will
cost 4.39 billion BDT, 42 Active Pharmaceutical Ingredients manufacturing industrial units will
be set up there. Sales of generic drugs in Bangladesh are estimated to reach BDT 30,300 crore by
2024. Generic drugs
exported from
Bangladesh amounts to
25% of the worldwide
pharmaceutical sales.
Regulatory Authorities

Two organizations, one

government (Directorate
of Drug Administration) and one semi government (Pharmacy Council of Bangladesh), control
pharmacy practice in Bangladesh. The Bangladesh Pharmaceutical Society is affiliated with
international organizations International Pharmaceutical Federation and Commonwealth
Pharmaceutical Association.

FINANCIAL PERSORMANCE OF THE INDUSTRY

Financial performance of an industry depends on the performance of the organizations within the
industries. Pharmaceutical industry is growing in Bangladesh and there are lots of manufacturing
organizations in this industry. Within the limited time, I am unable to take all of the industries as
my data to calculate financial performance of this industry. I have taken five organizations
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except the ACI Pharmaceuticals as sample for this industry and calculate financial performance
of the industries. The companies are Square, Beximco, Incepta, Opsonin and Reneta.

Specification o the industry

Pharmaceuticals industry can broadly classify into two categories, A. Patent B. Generic. Patent
medicine are the product that are innovation by the companies. Who have their own lavatories
and also have own research team for work on own lavatory. These type of product for many
years to enjoy the monopoly market but after the years of business formulation is sold in the
market so that others can go into mass production.in Bangladesh 20% drug using this category
medicine. Generic medicine is the product that are manufacture in mass scale. This are market by
many companies under the different name, where the formulation of this product is almost same.
Category of the product prices are competitive; Bangladesh mainly concentrated this type of
product about 80% drug because as labor cost is one of the lowest in the world. In Bangladesh
this sector is one of the most develop & importance sectors which is contributing in our country
economy. After the Promulgation of drug control Ordinance- 1982 the improvement of this
sector was accelerated. The Professional Knowledge, thought and innovative idea of the
pharmacists working in this sector are the key factors fir this development. 3rd stage is growth,
this stage is requiring large amount of capital because this stage industry goal differentiating a
firm offering from their competitor. 4th stage is maturity, in Bangladesh pharmaceutical industry
stood in maturity stage. This stage curve flatter so growth may be slower. But profit positive in
this stage. 5th stage is decline, final stage of industry life cycle. This stage sales volume
decreasing and many industries will be market out. Firm can’t survive in this stage because firm
face negative profit or another industry or product created which are more favorable related to
their customer, but most renowned industry can survive because they can able to established
good image in their customer mind.

Seasonality
Referring to some character which are increasing demand some specific time or period like
weekly, monthly, quarterly, or yearly, i.e. Eid-ul-fitter increasing demand on Panjabi it’s called
seasonality. Usually Pharmaceutical industry do not impact seasonality because of, it is requiring
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anytime while it’s needed. But some analysts/reporter find that its impact on pharmaceutical
industry Pharmaceutical industry maximum retune end of the year that means at this time
demand will increasing. So any firm should be careful about seasonality because It is increasing
demand for this reason firm will be preferred this period and this time return will be increasing.

External Economic factor of pharmaceutical industry

It is referring to the influencing business from outside. In a firm various external factor can
influencing to achieving objective and goal. This factor can be competitor, legal, political, social,
and technological & government etc. In pharmaceutical industry some economic factor will be
impact, which are effects on development pharmaceutical industry of a like; Interest rate,
inflation, Taxation changes, Exchange rate, Economic growth. etc.

Size, trend, and maturity of the industry

Size, trend the annual sales in 2015-16 fiscal year Pharmaceutical product sale at 160-million
while it was established in 1982 this year was sales only 170- million so Pharmaceutical industry
size increasing year by year. According to IMS Health Care report in 2012 the market size stood
at TK 9390.4 crore and its rose to TK 18755.6 in 2017. Bangladesh Pharmaceutical market size
doubled between 2012 and 2017, so most of the significant growth rate & investment
environment has been deemed highly attractive.

Maturity of the Pharmaceutical industry: All product and service have standing of a certain stage
of product life cycle. This cycle 1st steps develop to product or industry. This stage a creating a
new, unique product offering and develop patent which are beginning of the industry. This stage
firm may be alone or it may small entrepreneurial company. 2nd steps are introduction which is
refer to introduce their industry related their customer for this reason it’s require more
advertising as a result cost will be increasing. This stage firm will use focused strategy. This
stage firm profit usually negative because introduction stage firm require a significant cash
outlay for continue to promote & differentiated of industry but market demand will grow from
introduction stage as the Industry cycle curve experience growth at an increasing rate so new
said to be the industry is entering the growth stage.

Companies
Some companies as-
• Aristo pharma Ltd
• Beacon Pharmaceuticals Ltd.
• Beximco Pharma
• Bristol Pharma Ltd
• Delta Pharma Limited.
• Renata Limited
• Syntho Laboratories Limited
• Square Pharmaceuticals
• Supreme Pharmaceuticals Limited
• Sonear Laboratories Limited
• UniMed & UniHealth
Limited
• Zenith Pharmaceuticals Ltd.
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• Jayson Pharmaceuticals Ltd.
• Incepta Pharmaceuticals
• Monico Pharma Ltd. Bangladesh
• Adco Pharmaceutical & Chemicals
Ltd.
• Advanced Chemical Industries (ACI)
Limited
• The ACME Laboratories Ltd.
• Aexim Pharmaceuticals Ltd
• Amico Laboratories
Pharma • Al-Madina Pharmaceuticals Ltd.
• Albert David (BD) Ltd.
• Aristopharma Ltd
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COMPANY ANALYSIS OF RENATA PHARMA

INTRODUCTION

Renata Limited is one of the top ten pharmaceutical manufacturers in Bangladesh. Renata is
engaged in the manufacture and marketing of human pharmaceutical and animal health products.
The company also manufactures animal therapeutics and nutrition products. Renata currently
employs about 2300 people in its head office in Mirpur, Dhaka, and its two production facilities
in Mirpur, Dhaka, and Rajendrapur, Dhaka. The company began its operations as Pfizer
(Bangladesh) Limited in 1972. For the next two decades, it continued as a subsidiary of Pfizer
Corporation. However, by the late 1990s, the focus of Pfizer had shifted from formulations to
research. Under this transformation, Pfizer divested its interests in many countries, including
Bangladesh. At present, Renata manufactures about 300 generic pharmaceutical products
including hormones, contraceptives, anti-cancer drugs, oral preparations, cephalosporin,
parenteral preparations as well as other conventional drugs. Besides, they also offer about 95
animal therapeutics and nutrition products. Renata is a publicly-traded company on the Dhaka
Stock Exchange. In 2014, the company’s annual turnover was about the US $56 million, with an
annual growth of about 35%. The company also operates four other manufacturing units – the
original Pfizer facility for general products, a UNICEF-approved SFF, a Cephalosporin facility,
and a Penicillin facility. As of the third quarter of 2014, Renata exports its products to the UK,
Afghanistan, Cambodia, Hong Kong, the Philippines, Jordan, Sri Lanka, Vietnam, Myanmar,
Kenya, Belize, Nepal, Malaysia, and Guyana, with registration ongoing in 23 other countries.
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PRODUCT / SERVICE MIX

SL Trade Name Generic Name

1 Alsporin Cephalexin
2 Amoxi IM/IV Amoxicillin Trihydrate
3 Bactipront Co-Trimoxazole
4 Bactamox Amoxicillin Trihydrate
Bactamox
5 IM/IV Amoxicillin Trihydrate
6 Cebuten Ceftibuten Dihydrate
7 Ceftizone IM Ceftriaxone
8 Ceftipime Cefepime HCL
Doxycycline
9 Doxicap Hydrochloride
10 Erythrox Erythromycin Stearate
11 Furocef Cefuroxime Axetil
12 Gatlin Gatifloxacin HCL
13 Iropen IV Imipenem/Cilastatin
Levofloxacin
14 Levoking Hemihydrate
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FINANCIAL STATEMENT ANALYSIS OF RENATA PHARMA

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RATIO ANALYSIS OF RENATA PHARMA

Current Ratio

The ratio that relates current assets to Current Ratio

current liabilities is the current ratio. The 2

current ratio indicates the ability of a 1.5

company to pay its current liabilities from 1

current assets and shows the strength of the 0.5

company’s working capital position. 0

2019 2018 2017 2016 2015
Current ratio of 2:1 is considered to be a
healthy condition for most business organization. The ratio is calculated as follows:

Current Ratio =
Particular 2019 2018 2017 2016 2015
Current Assets / Current Ratio 0.97 0.11 1.86 1.54 0.8

Current Liabilities

Quick Ratio

Inventories typically are the least liquid of a Quick Ratio

firm’s current assets – they are the assets on 1
0.8
which losses are most likely to occur in the event
0.6
of liquidation. Therefore, it is important to 0.4
measure the firm’s ability to pay off short term 0.2
0
obligations without having to rely on the sale of
2019 2018 2017 2016 2015
inventories. This is why quick ratio is used.
Quick ratio of 1:1 is considered to be a healthy condition for most businesses.

Quick ratio= (Current Assets- Inventories)/ Current Liabilities

Particular 2019 2018 2017 2016 2015

Quick Ratio 0.47 0.046 0.79 0.64 0.41
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Cash ratio

The cash ratio is a measurement of a company's

liquidity, specifically the ratio of a company's
total cash and cash equivalents to its current
liabilities. The metric calculates a company's
ability to repay its short-term debt with cash or
near-cash resources, such as easily marketable securities. This information is useful to creditors
when they decide how much money, if any, they would be willing to loan a company.

Particular 2019 2018 2017 2016 2015

Cash Ratio 0.18 0.006 0.29 0.1 0.21

Cash Ratio
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2019 2018 2017 2016 2015

Inventory Turnover Ratio

Inventory Turnover Ratio tells how often

a business's inventory turns over during
the course of the year. Inventories are the
least liquid form of asset and a high
inventory turnover ratio is generally
positive. The ratio is calculated as
follows:

Inventory Turnover ratio= Sales /Average Inventories

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Inventory Conversion Period

The inventory conversion period is the time

required to obtain materials for a product,
manufacture it, and sell it. This period is
essentially the time period during which a
company must invest cash while it converts
materials into a sale. The calculation is:

Inventory / (Cost of sales / 365)

Particular 2019 2018 2017 2016 2015

Inventory Conversion Period 89.02 82.95 87.32 155.98 140.38

Sales/ Total assets turnover

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.

Particular 2019 2018 2017 2016 2015

Sales/Total assets Turnover 0.56 0.51 0.78 0.57 0.52

Total assets turnover= (sales/ total assets)

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Net profit margin

Net profit margin is the percentage of

revenue left after all expenses have been
deducted from sales. The measurement
reveals the amount of profit that a business
can extract from its total sales. The net sales
part of the equation is gross sales minus all
sales deductions, such as sales allowances.

Net profit margin= (Net income/sales)

Operating profit Margin

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 expressed as a percentage of
sales and shows the efficiency of a
company controlling the costs and
expenses associated with business operations.

Operating profit Margin= (operating income/sales)

Particular 2019 2018 2017 2016 2015

Operatng Profit Margin 0.11 0.12 0.08 0.06 0.05
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Return on Total asset

Return on Total asset is the amount of net

income returned as a percentage of
shareholders’ equity. Return on Total asset
measures a corporation's profitability by
revealing how much profit a company
generates with the money shareholders have
invested.

Return on Total asset = (net income/ Total asset)

Particular 2019 2018 2017 2016 2015

Return on total asset 0.00096 0.00089 0.02046 0.01929 0

SWOT ANALYSIS
Strength

• Many Product Line: Renata has around 300 human pharmaceuticals products in the
market.
• Brand Reputation: Renata is one of the market leaders in pharmaceutical industry. It is
the 4th largest pharmaceutical company and the market leader in animal health products.
• Investment Policy: Renata continues to have a very aggressive investment strategy. The
amount is financed through internal cash generation and bank loans. Renata has high
profile board of directors which give them an advantage in taking loans.
• Good Financial Management: After having made several profitable capital investments
over the last decade, they are now in the coveted position of being able to retire debt. In
2014, they retired a corporate bond worth Taka 100 crores. Moreover, in 2015 and 2016
they hope to repay similar amounts. This reduction in debt shall add significantly to our
earnings growth.
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• Technology Advancement: Renata introduced online and sms verification of their most
selling product Maxpro. Every strip has code by which consumer can verify its expiry
date and originality.

Weakness

• Decline in R&D Innovations: Low investments in innovative R&D continue to be a

major weakness of Renata Ltd.
• Poor Marketing Plan: Sales and marketing knowledge is inadequate due to lack of
understanding of international Pharmaceutical marketing/pricing practices and market
environment in various countries. For example- The sales representatives of Renata’s
cannot outperform in comparison to other competitors like Incepta, Square etc.
• Inconsistent in Supplying Product: Sometimes they are not able to produce specific
products efficiently; as a result, they cannot supply those products to retailers timely.

Opportunities

• Potential growth: It has potential growth due to increased market demand for
pharmaceutical drugs.
• Widen Product Range: Product line has extension capacity to expand to meet changing
customer needs.
• Exempted from The Obligations to Implement Patents: Being a least-developed country,
Bangladesh has been exempted from the obligations to implement patents and data
protection for pharmaceutical products until January 2033 by the World Trade
Organization. Major raw material supplying countries such as India and China are not
legally able to produce the patented raw materials due to the WTO restriction.
• Implementation of API industrial park: The production of API will not only ensure self-
sufficiency but will also offer price competitiveness in the global market.

Threats

• Increase Domestic Competition: First level companies like Beximco pharmaceuticals,

Square Pharmaceuticals and Incepta Pharmaceuticals are doing well, and gradually they
are gaining more market shares which is another barrier for Renata Ltd.
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• Increase in Foreign Competition: In the foreign market competitors, India and China are
big challenge.
• Rising Labor Costs: Rapidly increasing costs of skilled manpower such as scientists ot
regulatory compliance personnel / pharmaceutical lawyers/ international business
development personnel are pushing up the cost of innovation.

FINDING AND RECOMMENDATION

▪ Analyzing the liquidity ratios, we can see that the Current ratio is decreasing year by year
as well as the average collection period. Quick test ratio, Average payment period,
inventory turnover & cash conversion cycle is increased. On the other hand, Account
receivable turnover and inventory turnover in days decreased.
▪ Analyzing the financial ratios, we can see that the Debt ratio is increased. On the other
hand, ROA, ROE & time interest periods are decreased by a huge margin.
▪ Analyzing the profitability ratios, we can see that Operating income return ratio, Gross
Profit Margin ratio, Operating profit Margin ratio, Net profit margin ratio, Total assets
turnover ratio, fixed assets Turnover ratio all are decreased from the year 2015 to 2019.
 27

COMPANY ANALYSIS OF SQUARE PHARMACEUTICALS

LIMITED

INTRODUCTION

SQUARE today symbolizes a name – a state of mind. But its journey to the growth and
prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one
of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company,
is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985
and is now on its way to becoming a high-performance global player.

SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and it

has been continuously in the 1st position among all national and multinational companies since
1985. It was established in 1958, converted into a public limited company in 1991 and listed with
stock exchanges in 1995. The turnover of Square Pharma was BDT 50.87 Billion (US$ 609.18
million) with about 16.95% market share having a growth rate of about 10.85% (July 2018– June
2019).
 28

FINANCIAL STATEMENT ANALYSIS OF SQUARE

PHARMACEUTICALS LIMITED
29
30
31
32
33
34
 35

INCOME STATEMENT ANALYSIS OF SQUARE

PHARMACEUTICALS LIMITED

INCOME STATEMENT

2015 2016 2017 2018 2019

Net turnover 26,212,862, 29,058,349, 28,885,939, 39,653,831, 44,033,634
068 851 051 638 ,269
Cost of goods sold (143708720 (15,001,867 (14,824,352 (20,089,819 (22,091,38
99) ,421) ,51) ,913) 4,351)

gross profit 11,841,989, 14,056,482, 14,061,586, 19,564,011, 21,942,249

969 430 536 725 ,918
selling and distribution (3,729,200, (4,300,022, (4,978,783, (5,751,408, (6,603,747,
expense 404) 396) 909) 276) 456)
administrative expense (773,712,80 (840,996,44 (913,309,54 (1,031,567, (1,195,957,
4) 3) 9) 251) 909)
financial expense (34,307,859 (4,872,127) (148,392) (93,599) (95,196)
)
operating expense (4,537,221, (5,145,890, (5,892,241, (6,783,069, (7,799,800,
067) 966) 850) 126) 561)
profit from operations 7,304,768,9 8,910,591,4 8,169,344,6 12,780,942, 14,142,449
02 64 86 599 ,357
pretax income 7,595,901,2 9,943,835,6 10,366,856, 13,847,938, 15,660,887
34 29 810 760 ,890
income tax (185227740 (243357029 (257435929 (335704747 (39401930
2) 6) 7) 8) 51)
income after tax 5,743,623,8 7,510,265,3 7,792,497,5 11,606,191, 12,652,401
32 33 13 201 ,141
 36

gain/loss marketable (183,922,74 (3,169,514) 306,747,89 (404,289,46 (47626041)

security 4) 1 1)
net income 5,559,701,0 7,507,095,8 8,099,245,4 11,201,901, 12,604,775
88 19 04 740 ,100

COMMON SIZE ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED

percentage of income.
Income statement
2015 2016 2017 2018 2019
net turnover 100% 100% 100% 100% 100%
cost of goods sold -55% -52% -51% -51% -50%
gross profit 45% 48.37% 49% 49% 50%
selling and distribution expense -14% -15% -17% -15% -15%
administrative expense -3% -3% 3% -3% -3%
financial expense 0% 0% 0% 0% 0%
operating expense 17% -17.71% -20% -17% -18%
profit from operations 28% 30.66% 28% 32% 32%
pretax income 29% 34.22% 36% 35% 36%
income tax -7% -8% -9% -8% -9%
income after tax 22% 26% 27% 29% 29%
gain/loss marketable security -1% 0% 1% -1% 0%
net income 21% 26% 28% 28% 29%

By analyzing the common size analysis of income statement, we can say that the net income of
square Pharmaceutical was higher in 2019 among the years. And gross profit was also around
50%. Cost of goods sold was higher in 2015. That’s why the net was more less. Overall, 2019
was good for the square pharma
 37

FINANCIAL STATEMENT ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED

Particulars 2015 2016 2017 2018 2019

Assets
noncurrent asset
Property, plant 18,009,200, 18,848,282, 19,323,568, 20,545,437, 20,853,956,
507 139 164 633 270
Deferred tax asset 75,167,249 0
capital work in progress 207,629,86 0
4
investment-long term 251,599,09 555,873,89 588,808,56 940,754,39 655,408,67
7 3 5 1 4
investment-associate 6,036,139,9 6,764,511,3 7,504,636,4 8,454,064,7 9,211,605,8
63 25 20 33 60
investment in marketable 879,249,48 1,071,735,4 1,938,209,0 2,891,208,5 3,013,439,7
security 4 42 78 37 34
current asset
inventories 3,310,086,6 3,694,711,0 3,730,808,2 4,432,935,1 4,596,512,6
68 88 43 18 73
trade debtors 894,543,30 1,335,829,9 2,204,014,9 1,615,544,2 1,561,818,1
3 14 00 48 67
Advance, deposit and 750,169,06 1,131,340,5 1,450,936,7 2,280,668,7 2,312,201,1
prepayment 6 60 35 47 84
short term loan 885,185,42 2,378,929,9 21,386,290 3,131,975,3 2,937,071,0
8 58 63 66
cash and cash Equivalents 3,892,185,6 8,522,555,1 15,768,683, 16,980,412, 27,004,038,
34 31 854 765 946
total asset 35,191,156, 44,303,769, 52,531,052, 61,273,001, 72,146,052,
263 450 249 535 574
 38

Particulars 2015 2016 2017 2018 2019

shareholders’ equity 5,542,991,5 6,235,865,4 6,859,452,0 7,373,910,9 70,146,052,
share capital 20 60 00 00 574
share premium 2,035,465,0 2,035,465,0 2,035,465,0 2,035,465,0 2,035,465,0
00 00 00 00 00
general reserve 105,878,20 105,878,20 105,878,20 105,878,20 105,878,20
0 0 0 0 0
gain on marketable 265,332,81 266,786,57 596,561,71 192,272,25 145,585,28
securities 3 9 3 2 3
retained earning 23,143,634, 31,587,049, 38,577,835, 46,159,482, 55,492,799,
751 056 254 757 165
non-controlling interest -1,669,864 2,098,295 12,674,141 24,901,060
noncurrent liabilities
long term loans-secured 659,147,81 0 0 0 0
8
deferred tax liabilities 891,357,95 1,054,498,2 1,129,233,8 1,231,133,1 1,294,346,8
9 62 46 52 73
current liabilities
short term bank loans 0 2,693,932 0 0 0
long term loan current 257,154,66 0 0 0 0
portion 9
trade creditors 254,773,03 693,982,69 843,937,27 524,676,13 716,988,42
0 8 7 6 8
liabilities for expenses 43,002,246 42,871,218 27,576,542 89,665,092 239,913,33
1
liabilities for other finance 1,994,088,1 1,952,569,6 1,489,930,2 1,586,059,2 2,014,186,7
21 83 33 64 70
total shareholders Liability 35,191,156, 44,303,769, 52,531,052, 61,273,001, 72,146,052,
& Equity 263 450 249 535 574
 39

Percentage of Financial Statement

Noncurrent asset 2015 2016 2017 201 2019

8
property, plant 51.2% 42.5% 36.8% 33.5 28.9
% %
deferred tax asset 0.2% 0.0% 0.0% 0.0% 0.0%
capital work in 0.6% 0.0% 0.0% 0.0% 0.0%
progress
investment-long term 0.7% 1.3% 1.1% 1.5% 0.9%
investment-associate 17.2% 15.3% 14.3% 13.8 12.8
% %
investment in 2.5% 2.4% 3.7% 4.7% 4.2%
marketable
security
0.0% 0.0% 0.0% 0.0% 0.0%
current asset 0.0% 0.0% 0.0% 0.0% 0.0%
inventories 9.4% 8.3% 7.1% 7.2% 6.4%
trade debtors 2.5% 3.0% 4.2% 2.6% 2.2%
advance, deposit and 2.1% 2.6% 2.8% 3.7% 3.2%
prepayment
short term loan 2.5% 5.4% 0.0% 5.1% 4.1%
cash and cash 11.1% 19.2% 30.0% 27.7 37.4
equivalents % %
total asset 100.0% 100.0 100.0% 100.0 100.0
% % %
shareholders’ equity
share capital 15.8% 14.1% 13.1% 12.0 10.9
% %
share premium 5.8% 4.6% 3.9% 3.3% 2.8%
general reserve 0.3% 0.2% 0.2% 0.2% 0.1%
 40

Noncurrent asset 2015 2016 2017 201 2019

8
gain on marketable 0.8% 0.6% 1.1% 0.3% 0.2%
securities
retained earning 65.8% 71.3% 73.4% 75.3 76.9
% %
non-controlling 0.0% 0.0% 0.0% 0.0% 0.0%
interest
0.0% 0.0% 0.0% 0.0% 0.0%
noncurrent liabilities 0.0% 0.0% 0.0% 0.0% 0.0%
long term loans- 1.9% 0.0% 0.0% 0.0% 0.0%
secured
deferred tax liabilities 2.5% 2.4% 2.1% 2.0% 1.8%
0.0% 0.0% 0.0% 0.0% 0.0%
current liabilities 0.0% 0.0% 0.0% 0.0% 0.0%
short term bank loans 0.0% 0.0% 0.0% 0.0% 0.0%
long term loan current 0.7% 0.0% 0.0% 0.0% 0.0%
portion
trade creditors 0.7% 1.6% 1.6% 0.9% 1.0%
liabilities for expenses 0.1% 0.1% 0.1% 0.1% 0.3%
liabilities for other 5.7% 4.4% 2.8% 2.6% 2.8%
finance
total shareholder 100.0% 100.0 100.0% 100.0 100.0
liability % % %
&equivalent

By analyzing the common size analysis of financial statement, we can say that, from 2015
Square pharmaceutical’s property, plants are decreasing from 51.2% to 28,9% On the other way
cash equivalent is increasing. In 2019, liabilities for other finance was the lowest. Long term debt
decreased significantly
 41

RATIO ANALYSIS OF SQUARE PHARMACEUTICALS LIMITED

Profitability Ratios

Profitability ratio is used to calculate the overall profit of the organizations. There are various
ways to measure the profitability ratios, they are-

Mark up:

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
Mark up = X100%
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑 𝑆𝑜𝑙𝑑𝑠

Year Mark up Percentage (%)

2017- 19,564,011,725 97.38%
18
×100%
20,089,819,913
2016- 14,061,586,536 94.85%
17 ×100%
14,824,352,515
2015- 93.70%
×100%
16
2014- 82.40%
×100%
15
 42

From the above Table 1 and Graph 1 it shows that, Square pharmaceutical company has 97.38%
mark up in 2017-18, 94.85% mark up in 2016-17, 93.70% mark up in 2015-16 and 82.40% in
2015-14. The Markup is going on higher position in recent years. So, the firm is gradually
increasing the selling price of its products and reducing the production cost.

Margin or Gross Profit Percentage

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
Margin or Gross Profit Percentage = X100%
𝑁𝑒𝑡 𝑆𝑒𝑙𝑙𝑠

Year Margin Percentage

(%)
2017-18 49.34%
×100%

2016-17 14,061,586,536 48.68%

×100%
28,885,939,051
2015-16 14,056,482,430 48.37%
×100%
29,058,349,851
 43

2014-15 45.18%
×100%

From the above calculation it

indicates that Square Pharmaceutical
company’s Margin increases from
2014-2015 to 2017-188 significantly
from 45.18% to 49.38%. It means that
in 2017-18 for 100 Taka of sales
(100-49.38) or 52.62% of sales goes
for direct production cost and rest
49.34% left over to spend on other business operation and to pay non-production costs. As the
Margin of Square Pharmaceutical Company become higher gradually it indicates that the firm is
doing well in setting on pricing policy and also in controlling production costs.

Net Profit to Sales Ratio

Net Profit Margin is a ratio of profitability which is calculated by dividing the net profit after
taxation by revenues or net profit income. It measures how much an organization is actually
earning from its every taka of revenue.

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
Net profit to sales ratio = X100%
𝑁𝑒𝑡 𝑆𝑒𝑙𝑙𝑠

Year Particulars Percentage

2017-18
×100% 28.25%

2016-17
×100% 28.04%
 44

2015-16
×100% 25.83%

2014-15
×100% 21.21%

Square Pharmaceutical company’s net profit to sales ratio in 2014-15 is 21.21% and in 2017-18
is 28.25%.It means that in 2017-18 for 100 taka of sales (100-28.25) or 71.75% sales goes for
production, operating and others expenses and rest 28.25% remains in the company as retained
earnings, or is available to be distributed to the owners of the company as dividend. As net profit
to sales ratio is increasing significantly so it can be said that its expenses is higher than other
competitor company.

Return on Capital Employed

Return on Total assets often called return on investments. The higher the return on total assets
the higher the firm’s total position.

Return on capital employed =

 45

Year Particulars Percentage (%)

2017-18 11,201,901,740 28.25%

×100%
59,072,601,043
2016-17 8,099,245,404 28.04%
×100%
50,169,608,197
2015-16 25.83%
×100%

2014-15 21.21%
×100%

The ROCE increases

30.00% 28.25
% 28.04%
25.83% from 2014-15 to 2017-
21.21
% 18 by 21.2% to 28.25%.
20.00%
The return on Equity
10.00%
ratio measures how well
0.00%
a company is using

2018 2017 2016 2015

owner’s investments to
generate after tax profits. The higher ratio indicates that owners of the Square Pharmaceutical
Ltd are more amply rewarded than other shareholders in the same industry.

Return on Capital Invested

The return on common equity measures the return earned on common stock holders’ invested in
the firms.
 46

Return on Capital Invested =

Year Particulars Percentage

2017- 19.37%
×100%
18
2016- 8,099,245,404 16.52%
17 ×100%
49,027,700,210
2015- 18.51%
×100%
16
2014- 16.89%
×100%
15

Square Pharmaceutical Company has higher ROCI in 2017-18 and 2015-16 as 19.37% and
18.51%. Its ROCI decreases in year 2016-17 and year 2014-15. As the ROCI gradually
increasing, so it can be said that Square Pharmaceutical Company is utilizing its total investment
effectively to generate net income.
 47

Liquidity Ratios

Liquidity refers to the ability of an organization to meet its short-term financial obligations. An
important liquidity ratio is the current ratio.

Current ratio

Current ratio measures current assets available to satisfy current liabilities. Current ratio is
calculated by current assets divided by current liabilities.

Current ratio

Year Particulars Current Assets: Current Liabilities

2017-18 28441536241

2200400492
2016-17 23175830022

2361444052
2015-16 17063366651

2692117531
2014-15 11041202352

2589868909
 48

Square company Ltd. has gradually increasing its ability to use their current assets to pay short
term liabilites compared with year 2014-15 to 2017-18. In 2014-15 Square Pharmacitical
Company’s current ratio was 4.26 and it increases accoredingly in 2015-16 and 2016-17 at 6.34
and 9.81. Finally, in 2017-18 its current ratio become 12.93. Moreover, the current ratio of
Square Pharmacuital Company is greater than minimum acceptable level of 2:1 which indicates
the greater margin of safety for creditors.

Quick Ratio

Quick ratio =

Year Particulars Current Assets less stock or

inventory: Current Liabilities
2017- 28441536241 − 4432935118 10.91:1
18
2200400492
2016- 23175830022 − 3730808243 8.23:1
17
2361444052
2015- 17063366651 − 3694711088 4.97:1
16
2692117531
2014- 11041202352 − 3661482624 2.85:1
15
2589868909

Square pharmaceutical company has quick ratio of 10.91 in 2017-18 and 8.23, 4.97, 2.85, in year
201617, 2015-16 and in year 2014-15. From the above table-7 it is seen that, Square
 49

Pharmaceutical Ltd. has

greater ability to use their
current assets (excluding
inventory) without relying
heavily on its inventory to
pay short term liabilities
compared to other
companies within the same industry.

Efficiency Ratio

The efficiency ratio is typically used to analyze how well an organization uses its assets and
liabilities internally. An efficiency ratio can calculate the turnover of receivables, the repayment
of liabilities, the quantity and usage of equity, and the general use of inventory and machinery.

Stock turnover

Year Particulars Stock Turnover Ratio

2017-18 20,089,819,913 4.92

4,081,871,681
2016-17 14,824,352,515 3.99

3,712,759,666
2015-16 15,001,867,421 4.08

3,678,096,856
2014-15 14,370,872,099 4.60

3,125,338,377
 50

The stock turnover ratio of Square

Pharmaceutical Ltd. is fluctuating
from year 2014-15 to year 2017-18.
From the above Graph-8 and
Table-8 The Stock turnover ratio of
Square Pharmaceutical Company increased in 2014-15 to 2017-18 respectively from 4.60 times
to 4.92 times. Whereas stock turnover ratio decreased in 2015-16 and 2016-17 at 4.08 and 3.99
times compared to the following years. So SPL Company has more money “tied up” in
inventory. Furthermore, the company is most likely not selling its inventory as quickly as other
competing firm. It must need to improve its inventory management policy.

SWOT ANALYSIS

FINDING AND RECOMMENDATION

To remove some positive side which can be affective for the organization?

If the average collection period decreasing day by day. The sale of the firm may be decreases.

The current ratio is increasing which is a positive side of the firm it means the firm is capable to
face it’s all liabilities.
 51

COMPANY ANALYSIS OF ACI PHARMACEUTICALS

LIMITED

INTRODUCTION

Imperial Chemical Industries, a British multinational established a Branch in the then East
Pakistan which was converted into a company after liberation, named ICI Bangladesh
Manufacturers Limited. In 1992 ICI divested its investment in Bangladesh to the Management,
when its name was changed to Advanced Chemical Industries (ACI) Limited. Advanced
Chemical Industries (ACI) Limited, being one of the largest conglomerates in Bangladesh with a
multinational heritage operates across the country through its four diversified strategic business
units. ‘ACI Pharmaceuticals’ is dedicated to improve the health of people of Bangladesh through
introduction of innovative and reliable Pharmaceuticals products.

‘ACI Consumer Brands’ is adding value to the daily life of consumers through its Toiletries,
Home care, Hygiene, Electrical, Electronics, Mobile, Salt, Flour, Foods, Rice, Tea, Edible Oil,
Paints and International businesses. ‘ACI Agribusinesses’ is the largest integrator in Bangladesh
in Agriculture, Livestock, Fisheries, Farm Mechanization, Infrastructure Development Services
and Motorcycles. ‘ACI Retail Chain’ is the largest retail chain in the country operating through
its 73 SHWAPNO outlets across the country by touching the lives of over 35,000 households
each day. The company contributed Taka 3,625 million to the National Exchequer during FY
2017-2018 in the form of corporate tax, custom duty and value added tax.
 52

FINANCIAL STATEMENT ANALYSIS OF ACI

PHARMACEUTICALS LIMITED

RATIO ANALYSIS OF ACI PHARMACEUTICALS LIMITED

Current Ratio

Here we can see the graphical presentation of current ratio of the company. The industry has
more cash than
its liabilities. It
means the
financial
performance of
the industry
according to
cash ratio is good. In 2017 it was 1.17 which means the industry has .17 times more than its
current liabilities.

Acid Test Ratio

The acid test or quick ratio measures the ability

of a company to use its near cash or quick
assets to retire its current liabilities
immediately. The graph shows that in 2016 the
industry was in good position according to this
ratio.

Receivable Turnover

The receivables turnover ratio is an activity

ratio measuring how efficiently a firm uses its
assets. Receivables turnover ratio can be
 53

calculated by dividing the net value of credit sales during a given period by the average
accounts receivable during the same period. In 2013 the ratio was higher. Average collection
period is referred to as the ratio of days to sales outstanding. It is the average numbers of days it
takes a company to collect its accounts receivable. In 2015 the ratio was higher than other years.

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. The
graph shows that the ratio is stable in
these years.

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. In 2013 the ratio was higher.

Fixed Asset Turnover

Fixed-asset turnover is the ratio of sales to

the value of fixed assets. It indicates how well
the business is using its fixed assets to
generate sales. In 2014 the ratio was better.
 54

Gross Profit Margin

Gross profit margin is a financial metric

used to assess a company's financial
health and business model by revealing
the proportion of money left over from
revenues after accounting for the cost of
goods sold. In 2015 and 2016 the ratio
was same.

Net Profit Margin

Net profit margin is the percentage of

revenue left after all expenses have been
deducted from sales. The measurement
reveals the amount of profit that a
business can extract from its total sales.
According to this ratio in 2017 the
industry position was good.

Return on Assets
Return on Assets Return on assets (ROA) is a financial
10%
ratio that shows the percentage of profit
5% a company earns in relation to its overall
resources. It is commonly defined as net
0%
2013 2014 2015 2016 2017 income divided by total assets. In 2014
Return on Assets 6% 8% 7% 3% 5%
ROA was higher
 55

Return on Equity
Return on equity (ROE) is the amount of net
income returned as a percentage of
shareholders equity. Return on equity
measures a corporation's profitability by
revealing how much profit a company
generates with the money shareholders have
invested. In 2017 the ROE was good for the
industry

Degree of Operating Leverage

The degree of operating

leverage (DOL) is a measure
used to evaluate how a
company's operating income
changes with respect to a
percentage change in its sales.
In 2015 DOL was higher that
means the industry was in more
risk.

DUPONT Analysis

DuPont analysis is a method of

performance measurement that assets are
measured at their gross book value rather
than at net book value to produce a higher
return on equity (ROE). In 2013 it was
higher.
 56

SWOT ANALYSIS
SWOT analysis means to explore a company’s strength, weakness, opportunities and threats. It
helps the organization to remove its faults and improve its performance in comparison to its
competitors. The current position of the company can be defined through SWOT analysis. To
make changes in strategies, SWOT analysis is an important tool for an organization. Through
direct observation and discussion with the ACI officials, I tried to figure out some strength and
weakness as well as some threats and opportunities on various issues. They are-

• Service level
• Efficiency in operation
• Technology
• Efficiency of employees etc.

STRENGTHS

• Top Level Management A very efficient top-level managers operate ACI

Pharmaceuticals Ltd. They are experienced, skilled and expert from
reputed organizations which will help them to contribute towards further
expansion of the organization. So. ACI’s one of the major strengths is
their top-level management.
• Culture of The Organization ACI has set its corporate culture in an
interactive way. Employees work here in a very friendly, informal and
comfortable environment. So, employees can communicate with superiors
without any barrier. This culture motivates the employees to work in the
organization.
• Quality of The Product ACI never compromise with the product quality.
Quality products are offered to customers. So, customers can fulfill their
needs by choosing right product.
• Strong Employee Relationship Employees are considered as one of the
major assets of the organization. The commitment of employees towards
organization is very strong. The strong organizational culture of ACI is the
main reason behind its strength.
 57

WEAKNESS

• Profitability Pharmaceutical industry is highly competitive. When ACI

promote a new product or set up their product price, they are bound to
keep it lower because of competitors. It effects heavily on their profit.
• Expenses For a manufacturing company it is very much important. The
organization always has to focus on expenses. Though the manufacturing
companies try to cut down their cost year by year but ACI is unable to do
so.

OPPORTUNITIES

• Increasing Demand, the demand of ACI product is increasing day by day

and it creates opportunity to introduce new products to the customers.
They can earn more profit by utilizing the opportunity in future.
• New Acquisitions ACI has acquired some companies and a good amount
of profit is coming from those acquiring companies. If they continue the
process of acquisition, they can earn more profit.
• Innovative Products and Services As it has the opportunity of growing
demand of product, ACI can introduce new products and services to
customers.

THREATS

• Product Similarity Though ACI tries to introduce new products to the

customers but the products are very much similar with the competitors. To
earn customer loyalty ACI should introduce new and quality product.
• Increase in Labor Cost As a manufacturing company a very big threat for
ACI is the increasing labor cost. The labor cost of ACI is higher in
comparison with the competitors.
• Increased Competition As the pharmaceutical industry in Bangladesh is a
highly competitive, ACI has to face the threat of increased competition.
 58

FINDING AND RECOMMENDATION

✓ To remove some positive side which can be affective for the organization?
✓ If the average collection period decreasing day by day. The sale of the firm may be
decreases.
✓ The current ratio is increasing which is a positive side of the firm it means the firm is
capable to face it’s all liabilities
 59

CONCLUSION
The financial statement analyses of these companies. The financial statement consists of the
mixture of steps and prices that interrelate and affect each other. No one part of the analysis
should be interpreted in isolation. Short –term liquidity impacts profitability, profitability began
with sale which relates to the liquidity of assets. The efficiency of assets management influences
the cost and Availability of credit which shapes the capital structure. Every aspect of a cost
Availability of a company’s financial statement condition performance and outlook affects the
share price.