Executive 

Summary 

Square Pharmaceutical Limited Bangladesh is one of the leading pharmaceuticals in Bangladesh.

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. In this
report, we have tried to focus on the financial performance of the company during the fiscal year of
2006-2010. We have used financial ratios to determine its performance in short term and long term
period. The firm had a strong financial backbone as it uses less debt for investment, uses its asset
efficiently for producing goods. Sales had increases on regular basis over past the years. In one word
based on our analysis this firm can be an example in certain financial segment for other company.
Though, the firm pays fewer cash dividends than past fiscal years, which might be disliked by
investors. But it must be added that the company had been increasing it’s the number of outstanding
share regularly and also provide bonus share to its shareholder. The company’s fiscal year is based
on April to March. And regularly hold annual general meeting and publishes financial report both
annually, half yearly and quarterly.
Company Profile 

Square Pharmaceuticals Limited Bangladesh is the largest pharmaceuticalcompany in Bangladesh

and it has been continuously in the 1

st

position among allnational and multinational companies since 1985. It was established in 1958
andconverted into a public limited company in 1991. The sales turnover of SPL wasmore than Taka
11.46 Billion (US$ 163.71 million) with about 16.43% marketshare (April 2009– March 2010) having a
growth rate of about 16.72%.

Vision

They 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.

Mission

Their Mission 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.

Objectives

Their objectives are to conduct transparent business operation based on market mechanism within
the legal & social frame work with aims to attain the mission reflected by our vision.

Corporate Focus

Their vision, our mission and our objectives are to emphasize on the quality of product, process and
services leading to growth of the company imbibed with good governance practices.

Subsidiary Company

                                                                                             Square Spinnings Ltd.

                                                                                             Square Cephalosporins Ltd.

                                                                                             Square Biotechs Ltd.

                                                                                             Square Multi Fabrics Ltd.

Associate Company

                                                                                             Square Textiles Ltd.

                                                                                             Square Knit Fabrics Ltd.

                                                                                             Square Fashions Ltd.

                                                                                             Square Hospitals Ltd.

Top Management: Board of Directors 

 
As per provisions of the Article of Association, Board of Directors holds periodicmeetings to resolve
issue of policies and strategies, recording minutes/decisions forimplementation by the Executive
Management.

Executive Management 

The Executive Management is headed by the Managing Director, the Chief Executive Officer (CEO)
who has been delegated necessary and adequate authority by the Board of Directors. The Executive
Management operates through further delegations of authority at every echelon of the line
management. The Executive Management is responsible for preparation of segment plans/sub-
segment plans for every profit centres with budgetary targets for every items of goods & services and
are held accountable for deficiencies with appreciation for exceptional performance. These operations
are carried out by the Executive Management through series of committees, sub-committees, ad-hock
committees, standing committees assisting the line management.

ORT TERM LIQUIDITY RATIO ANALYSIS 

Current Ratio 
On average the current ratio of Square Pharmaceuticals Limited Bangladesh was 1.62 duringfiscal
year (FY) 2006-2010. According to current ratio, it must be assumed that SquarePharmaceuticals
Limited Bangladesh was successful to meet its short term obligations very wellfor the past fiscal years
and will maintain a successful healthy financial performance in comingyears.The current asset of the
firm had increased by 18.42% between the fiscal year of 2006 and 2010 but at the same time the
current liabilities had decreased by 1.95 %.While analyzing a firm’s current assets, firm’s inventories
had played an important role todiscover firm actual position to meet short-term obligation. The
inventories of Square pharmaceuticals Limited Bangladesh had positively changed by 13.75%
annually on average throughout the fiscal year of 2006 – 2010. Having a huge amount of inventory is
not good for affirm. There is a chance of having outdated or slow moving product in the inventory.
As a pharmaceuticals firm this is quite a concern because they produce drugs which are used by
humans and an outdated product might cause some one illness or death. Therefore, increase in
inventory is a good sign for a pharmaceuticals company as far as their inventory do not have obsolete
products.Firm’s

cash and cash equivalents

had decreased by

18.13%,

short term loan [currentasset]

had decreased by

35.65 %,

Trade debtors

had increased by
76.03%

between the fiscalyear 2006 and 2010.The decrease in current liabilities by

1.95%

is a positive sign towards the growth of thecompany and its ability to meet the short term
obligations.In addition, in our depth analysis of the firm’s current asset and liabilities figure we have
foundthat in 2007 current asset of the firm reduced by

8.66 %

and current liabilities increased by

13.04%.

This was caused by an increase in

Short-term Bank Loans

and

Other FinancialLiabilities

. Besides in last five years the worst current ratio figure was in 2008 FY. In 2008 FYthe short-term
bank loans was

54.84%

more than 2006 FY. This increase made firm morevulnerable to meet its short term obligations than
its previous fiscal years. In contrary, the firmmade significant improvement to reduce its

short-term bank loans

in FY 2009 and 2010. In2009 and 2010 FY the short-term bank loan reduced by

42.53 %

and

72.41 %

from FY 2008.Short-Term Bank Loans are the major portion of current liabilities for firm financial
figures.Other current liabilities accounts such as

Trade Creditors

Long Term Loan (current portion)

and

other liabilities expense

has increased throughout the fiscal years 2006-2010 of Square Pharmaceuticals Limited Bangladesh

2012-13 2013-14 2014-15 2015-16 2016-17

Current Ratio 2.12 3.13 3.82 6.34 9.81

 
 Current Ratio Anlysis
12

10

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

QUICK RATIO ANALYSIS

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Quick Ratio 0.98 1.83 2.36 4.90 8.09

Quick Ratio Analysis

9

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Quick Ratio
Cash Ratio 
Square Pharmaceuticals Limited Bangladesh had a cash ratio of 

0.10

on average during thefiscal years 2006-2010. Cash ratio reflects firms ability to pay its current
liabilities, using itsmost liquidate asset such as Cash and cash equivalents only.By evaluating the
current asset and cash and cash equivalents of this, on average the cash andcash equivalents was

5.87%

of its current assets between FY 2006 and 2010 and this refers thatthe firm’s inventories consist a
large portion in its current asset. In terms of other account, the portion of cash and cash equivalents in
current asset was very undersized and we must add thatfirm’s

cash and cash equivalents

had decreased by

18.13%

 between 2006 and 2010 FY.For the betterment of the firm, it should try to increase its cash and cash
equivalents. This wouldhelp to establish a good foundation to attract investors since many investors
take cash ratiounder deliberation for investing in a firm. The firm experienced its worst cash
ratio figure in2007 and by 2010 it had comparatively reached to a better state of cash ratio

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Cash Ratio 0.31 0.92 1.54 3.17 6.68

Cash Ratio Analysis

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0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
LONG TERM LIQUIDITY RATIO ANALYSIS 
 

Total Debt Ratio 

During the fiscal years 2006-2010, on average Square Pharmaceuticals Limited Bangladesh hada
debt ratio of 

0.29

and total debt was worth of 

3,422,741,464

BDT. The Total Debt Ratioexpresses the fraction of its total debt relative to its total assets.In addition,
the total debt of the firm had increased by

19.96%

between fiscal 2006 and 2010.This was caused by significant increased in short term bank loans, loan
term secured loans andtrade credits. Besides throughout the FY 2006-2010, total assets of the firm
had yearly changedat

12.91%

on average but total debt of the firm had changed yearly at

22.69%

on average.In contrary, the company had more debt in FY 2008,

47.95%

more than FY 2006. And in 2008FY the short-term bank loans was

54.84%

more than 2006 FY. But the debt had decreased by

22.96%

and

18.92%

in FY 2009 and FY 2010 respectively comparing to FY 2008. The firm’sdebt ratio had decreased in
past 5 (five) fiscal year and in near future it is expected to have asound financial performance based
on the current situation of its debt ratio.The company had worst debt ratio in 2008 FY though it
gradually recovers itself and established a strong financial foundation to overcome its debt.

Total Debt Ratio = (Total Assets – Total Equity) / Total Assets

 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Total Assets 27,552 31,046 35,191 44,304 52,531

Total Equity 22,188 26,343 31,092 40,233 48,188

Total Debt 0.21 0.15 0.12 0.09 0.08

Ratio

Total Debt Ratio Analysis

0.25

0.2

0.15

0.1

0.05

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Total Debt Ratio

Debt Equity Ratio 

Debt equity ratio refers to a firm’s investment dependency on its debt and equity. If a firm’sdebt equity
ratio is 1 then it shows that the firm relies more on debt for investment rather thanits own equity.
Square Pharmaceuticals Limited Bangladesh had a strong financial backbonesince its debt equity
ratio is far below

and we can say that they do not rely a lot on debt for their investment.The company’s equity had
increased by staggering

80.48%

between FY 2006 and 2010 thoughthe total debt of the firm had increased by

19.96%

at the same time.Debt equity ratio also shows that a firm’s riskiness. In case of Square
Pharmaceuticals, it isquite unlikely to be risky since it had debt equity ratio of 

0.40
on average during the FY 2006-2010. Investors would be happy to invest in such firm having a good
debt equity ratio.Though this firm experienced worst debt equity condition in FY 2008, it progressively
hadreduced the ratio in its following FY. As we have observed before in 2008 FY, the short term bank
loans was at peak in last 5 (five) FY. It caused the ratio to increase from 2007 FY

PROFITABILITY RATIO ANALYSIS 
Profit Margin 
Profit margin ratio represents the figure of a firm’s earnings of net profits against its net sales.Every
firm have desire to have a big profit margin. Though if a firm’s profit margin is low, itdoes not mean
that the firm is losing money with every sale occurs in its favor. SquarePharmaceuticals Limited
Bangladesh had net sales of 

8,626,387,092

BDT on average and ithad increased by

88.22%

 between FY 2006 and 2010. During the same fiscal period, on averagethe net income after tax was

1,565,779,054

BDT and had increased by

79.08%

 In case of Square Pharmaceuticals, it’s profit margin had been stable during FY 2006-
2010.Theaverage profit margin was

0.18

; In FY 2006, it was highest among last 5 (five) FY. Moreover,in following 2 (two) fiscal years the ratio
had slightly fall. In FY 2007 and 2008 the net profithad increased by

11.78%

and

6.03%

respectively, compared to their earlier year. Though, net profit of FY 2009 had increased by

36.78%

but in subsequent year its growth had dropped to

10.47%

.However, net sales during FY 2007 and 2008 had increased by

23.17%

and

10.09%

 respectively, compared to their preceding year and net sales of FY 2009 had increased by

18.93%

but in subsequent year its growth had dropped to

16.72%.

So as we can observe thatgrowth of net sales and net profit of FY 2008, 2009 and 2010 were less
than their respective preceding year, causing the profit margin ratio to fall.

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Net Income 4,212 4,945 5,984 9,199 10,637

Net Sales 19,829 22,807 26,233 32,554 35,838

Profit Margin 21.24% 21.6% 22.8% 28% 29.68%

Profit Margin Analysis

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Profit Margin

Return on Assets (ROA)
Return on assets ratio or ROA represents firm’s net profits against its total assets. Like profitmargin, if
the number of ratio is big than it shows that the firm is earning well against theinvestment on firm’s
assets.For Square Pharmaceuticals Limited Bangladesh, the return on assets ratio on average was

0.13

 during FY 2006-2010. In addition, the ratio did not fluctuate a lot during this period. So we cancome
to a conclusion that the firm did not face any serious financial issue to maintain the balance between
its net income and total asset. However, in FY 2008, the ROA was lowestamong last 5 (five) FY. It
was caused by a low growth

(6.03%)

of net profit compared to its preceding year. At the same time, total asset increased by
21.13%.

So the huge gap of growth between total asset and net profit caused ROA in 2008 to fall.
Nevertheless, the company bounces back and had better ROA in FY 2009 than FY 2008. Since the
growth of net profit(

36.78%)

was greater than the growth of total asset (

4.31%

) in FY 2009. In FY 2010 the ratiowas indifferent with FY 2009 though the growth of net profit

(10.47%)

was less than the growthof total assets

(16.72%)

. But the growth of net profit in FY 2009 was too huge which makes upthe missing growth of FY 2010
and helped ROA to stay constant

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Net Income 4,212 4,945 5,984 9,199 10,637

Total Asset 27,552 31,046 35,191 44,304 52,531

ROA 0.15% 0.16% 0.17% 0.21% 0.20%

Return on Assets Analysis

0.25%

0.20%

0.15%

0.10%

0.05%

0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

ROA
 

18

Return on Equity (ROE)
Return on equity ratio or ROE represents firm’s net profits against its total equity. Thedifference
between ROA and ROE is that ROE shows the difference between net profit andtotal equity of a
firm.For Square Pharmaceuticals Limited Bangladesh, the return on equity ratio on average was

0.18

 during FY 2006-2010. Alike ROA, the ratio did not fluctuate a lot during this period. So we
canapproach to a conclusion that the firm did not feature any serious financial issue to maintain
the balance among its net income and total equity. However, in FY 2008, the ROE was lowestamong
last 5 (five) FY. It was caused by a low growth

(6.03%)

of net profit compared to its preceding year. At the same time, total equity increased by

14.78%

. So the gap of growth between total asset and net profit caused ROE in 2008 to fall. Nevertheless,
the company bounces back and had better ROE in FY 2009 than FY 2008. Since the growth of net
profit(

36.78%)

was twice than the growth of total equity (

18.21%

) in FY 2009. Because growth of net profit

(10.47%)

and total equity were

(16.13%) l

ess than its preceding year,

in FY 2010 theratio was a bit lo

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Net Income 4,212 4,945 5,984 9,199 10,637

Total Equity 22,188 26,343 31,092 40,233 48,188

ROE 18.98% 18.7% 19% 22.86% 22.07%

 ROE Analysis
25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

ROE

EBIT

2012-13 2013-14 2014-15 2015-16 2016-17

EBIT

NOPAT
2012-13 2013-14 2014-15 2015-16 2016-17
NOPAT

NIM

2012-13 2013-14 2014-15 2015-16 2016-17

NIM

EPS
 2012-13 2013-14 2014-15 2015-16 2016-17
EPS 5.71 6.71 8.12 11.34 14.43

EPS Analysis
16

14

12

10

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2012-2013 2013-2014 2014-2015 2015-2016 2016-2017