FINANCIAL MANAGEMENT II

RATIO ANALYSIS

BEXIMCO Pharmaceuticals Ltd. (2003-2008)
Submitted to: Ms. Melita Mehjabeen Course Instructor, Financial Management II

Submitted by: Group 11 Sharjil Haque, ZR 45 Nasim Ul Haque, ZR 54 Siffat Sarwar, RQ 56 Rashed Al Ahmed Tarique, ZR 61 Aumee Ahmed RQ 65 BBA 16th Batch Institute of Business Administration University of Dhaka May 06, 2010

Ratio Analysis

Liquidity Ratios: Current Ratio:
Generally a current ratio of 2:1 is acceptable by the firm. While a low ratio indicates that the firm may not be able to pay its obligations on time, a high ratio signifies that it has an excessive amount of current assets meaning the firm is not utilizing its resources properly. In 2007 and 2003, BEXIMCO pharmaceuticals saw low current liabilities, which may have generated from the low liabilities count of the firm.

Quick (Acid-test) Ratio:
A quick ratio of 1:1 is deemed adequate for most funds, as it shows the firm’s ability to pay its obligations without relying on sales. Not different from the current ratio, the quick ratio saw outliers in 2007, due to the high asset count of that year..

Activity Ratios: Accounts Receivable Turnover:
The accounts receivable turnover ratio dramatically improved after 2005, when the companies’ accounts receivable went down significantly.

Average Collection Period:
The average collection period was lowest in 2006 when the accounts receivable turnover was the highest.

Total Sales Turnover:
The total asset turnover is relatively distributed with no distinct outliers.

Inventory Turnover:
The inventory turnover was relatively low in 2003 and 2004 due to the low COGAS.

Fixed Asset Turnover:

The fixed asset turnover had no real outliers, thought the ratio in 2008 was the lowest due to the highest fixed asset count.

Profitability Ratios: Profit Margin:
The profit margin through out the stated time period contained two basic outliers, in years 2007 and 2008. 2008 had the highest ratio of 24.907% and 2007 had the lowest ratio 18.203%. 2007 showed a relatively lower sales margin in comparison to the operating income

Gross Profit Margin:
The gross profit margin showed an outlier in 2003, of 37.919%. This is due to relatively low sales revenue with comparison to cost of goods sold.

Return on Investment:
The ROI of the company showed no real outliers, though the 2003 ratio indicated a relatively low operating income to an also low assets count. 2007 showed a relatively low ROI as well, due to the relatively low operating income to the higher asset count.

Return on Equity:
The 2005 ROE ratio indicated a very high total equity with comparison to the net income, giving it an outlying ratio of 7.17%. 2007 showed a lower outlier, with a relatively greater difference in the net income and total equity.

Times Interest Earned: The times interest earned showed an outlier in 2008, with a ratio of -4.001, due to the high
operating income of taka 998,794,848.

Leverage Ratio Price Earnings Ratio:

The price earning ratio showed outliers in 2005 and 2007. The price earning ratio was highest in 2007 due to the low EPS, where as it was very low in 2005 due to the highest EPS.

Debt-Equity Ratio: The debt equity ratio maintained a high ratio in 2003 and 2004, where it fell
slightly in 2005. From 2006 to 2008, however it maintained a lower average ratio. This is because of the increasing equity of the firm.

Debt-Asset Ratio: The debt asset ratio of the firm showed only one outlier in 2008, where the ratio
fell to 0.295, due to having the highest asset count.

Dividend Payout Ratio: The dividend payout ratio had two very distinct outlier in 2005 and 2004, where
the high dividend per share caused the ratios to become 1.934 and 3.635.

Dividend Yield: The dividend yield saw similar outliers in 2005 and 2004 where the high
dividends caused the ratios to increase to 0.213 and 0.186 respectively.

Retention Ratio:

Retention ratio is the ratio of the firm that’s retrieved in the company. The retention ratio showed two moderate outliers in 2005 and 2004. During 2005 the difference in net income and retained earning was highest, where as it was lowest in 2004.

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