Critical analysis on the use of financial statements in

assessing the performance of Beximco Pharmaceuticals Limited

Course Code: - FIN201

Course Title: - Business Finance

Section: - 3

Submitted To:
Leo Vashkor Dewri
Senior Lecturer
Department of Business Administration
East West University

Submitted By:-
Group F
Department of Business Administration
Name ID
Foysal Mahmud Niloy 2019-1-10-065
Abdullah Al Mahmood 2019-1-10-209
Setara Aktar Setu 2019-1-10-309

Date of Submission: 24th May, 2021

i
 Index

Contents

1. Introduction ............................................................................................................................................. 3
2. Strategies and Forward Planning .......................................................................................................... 8
3. Ratio Analysis .......................................................................................................................................... 9
4. Cash Flow .............................................................................................................................................. 18
6. Operating cost structure....................................................................................................................... 22
7. Conclusion ............................................................................................................................................. 24
References .................................................................................................................................................. 25

List of Tables and Graphs

List of Tables

Table 1.1: Revenue Growth in 2016 to 2020……………………………………………………… 3

Table 1.2: Net profit Earning in 2016 to 2020……………………………………………………. 4
Table 1.3: Profitability Ratios during 2016-2020………………………………………………… 4
Table 1.4: Financial Ratios in 2016-2020…………………………………………………………. 6
Table 3.1: Ratio Analysis between from 2016 to 2020…………………………………………… 9
Table 3.2: Competitor Analysis for the year 2020……………………………………………….. 15

Table 3.3: Share or Equity Evaluation 2019 & 2020…………………………………………….. 17

Table 4.1: Cash Flow statement of Fiscal year 2020………………………………………........... 18
Table 5.1: Growth in the Number of Employees from 2016 to 2020……………………………. 20

Table 5.2: Region wise Export for 2019-2020…………………………………………………….. 20

Table 6.1: Operating Cost Structure……………………………………………………………… 22

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List of Graphs

Graph 1.1 Graphical Representation of Revenue Growth from 2016-2020…………………………… 3

Graph 1.2 Graphical Representation of Net Profit from 2016-2020…………………………………... 4
Graph 1.3 Graphical representation of ROCE from 2016 to 2020…………………………………….. 5
Graph 1.4 Graphical representation of ROE from 2016 to 2020……………………………………… 5
Graph 1.5 Graphical representation of ROA from 2016 to 2020……………………………………… 6
Graph 1.6 Graphical Representation of Gearing Ratio during 2016 to 2020………………………….. 7
Graph 1.7 Graphical Representation of Interest Coverage Ratio during 2016 to 2020………………... 7
Graph 5.1 Number of Employees from 2016 to 2020………………………………………………..... 20
Graph 5.2 Region wise Export from 2019 to 2020…………………………………………………..... 20

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1. Introduction
Beximco Pharmaceuticals Limited is a company that has solidified its place as one of the biggest
pharmaceutical company in Bangladesh and are now spreading their products, services and
influence all over the world. Their products range from producing medicine for a variety of
diseases and health problems, skin care products to producing safety equipment for medical
purposes like masks, gloves and PPE’s.

They have recently made a big mark in exports by exporting Medicine, PPE’s and Masks to more
than 40 countries around the world in this recent Global Pandemic, Covid-19. Their top-quality
products, contribution to the countries ever-growing Economy and Social activities have made
them a house-hold name in our country. Their shares are also highly lucrative as a result of people’s
faith in their practices and business. They have constantly generated cash flows to grow their
company and have kept one of the largest market shares in the pharmaceutical’s sector of this
country. The analysis below showcases their significant growth throughout the years:

Table 2.1: Revenue Growth in 2016 to 2020

Year of 2020-2019 2019-2018 2018-2017 2017-2016 2016-2015
Operation
Revenue 25,611,947,655 22,816,629,795 17,716,716,855 15,508,776,972 20,034,502,592
(Taka-
millions)
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020)

Revenue Collection from 2016-2020

30,000,000,000
Revenue (Taka)

25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
0
2016 2017 2018 2019 2020
Revenue (Taka) 20,034,502,592 15,508,776,972 17,716,716,855 22,816,629,795 25,611,947,655

Years
Graph 2.1 Graphical Representation of Revenue Growth from 2016-2020

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Beximco Pharmaceuticals Ltd stumbled a bit in 2017 in terms of revenue. Almost a 22.59% drop
in revenue is seen in 2017. Nevertheless, they quickly regained their past revenue and has been in
path of constant growth from 2018-2020. Their revenue has increased by 5.57 Billion Taka in the
past 5 years.

Table 1.2: Net profit Earning in 2016 to 2020

Year of 2020-2019 2019-2018 2018-2017 2017-2016 2016-2015
Operation
Net Profit 3,544,483,101 3,040,402,954 2,532,654,301 2,226,785,124 2,948,053,854
(Taka)
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020)

Net Profit Calculation after tax & interest from 2016-2020

4,000,000,000
Net Profit (Taka)

3,500,000,000
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
2016 2017 2018 2019 2020
Net Profit (Taka) 2,948,053,854 2,226,785,124 2,532,654,301 3,040,402,954 3,544,483,101

Years
Graph 1.2 Graphical Representation of Net Profit from 2016-2020

Their profits grew almost by 596.43 Million Taka (20.23%) over the last five-year period. It’s a
quite significant growth keeping in mind that their profit shrunk quite a bit in 2017. They have
since recovered from that slump and progressed forward.

Table 1.3: Profitability Ratios during 2016-2020

Year of Operation 2020- 2019- 2018- 2017- 2016-

2019 2018 2017 2016 2015
Return on Capital Employed 14.5% 13.9% 11.6% 11.2% 15.8%
(ROCE)
Return on Equity 10.8% 10.2% 9.3% 8.9% 12.8%
Return on Assets 7.1% 6.2% 5.8% 6.5% 9.5%

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Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020) and some calculations done on
basis with the formulas for each ratio.

ROCE during 2016 to 2020

18.00%
15.80%
16.00% 14.50%
13.90%
14.00% 11.60%
11.20%
12.00%
Percentage

10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2016 2017 2018 2019 2020

Years
Graph 1.3 Graphical representation of ROCE from 2016 to 2020

ROE during 2016 to 2020

18.00%
16.00%
14.00% 12.80%

12.00% 10.80%
Percentage

8.90% 9.30% 10.20%

10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2016 2017 2018 2019 2020

Years

Graph 1.4 Graphical representation of ROE from 2016 to 2020

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 ROA during 2016 to 2020
18.00%
16.00%
14.00%
12.00%
Percentage

9.50%
10.00%
6.50% 7.10%
8.00%
5.80% 6.20%
6.00%
4.00%
2.00%
0.00%
2016 2017 2018 2019 2020

Years

Graph 1.5 Graphical representation of ROA from 2016 to 2020

Beximco Pharmaceuticals has seen a sharp dip in terms of their ROCE in 2017. Yet, they have
gradually increased the ratio in the past couple years from 2018 to 2020 and are almost reaching
the levels they were in during 2015. Return on Equity has seen relative decline in past years, but
have begun to slowly gain momentum again from 2019 to 2020. Return on Assets have seen
moderate increase in 2019 to 2020 after a hitting a slump in 2018 and 2017, yet they have still
been unable to achieve the rate that was in 2016, which showcases how sluggish their growth has
been.

Table 1.4: Financial Ratios in 2016-2020

Year of Operation 2020-2019 2019-2018 2018-2017 2017-2016 2016-2015

Gearing Ratio 15.4% 18.1% 21.2% 18.3% 18.1%

Interest Coverage Ratio 5.53 4.91 7.54 6.19 4.33
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020) and some calculations done on
basis with the formulas for each ratio.

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 Gearing Ratio during 2016 to 2020
30.00%
25.00% 21.20%
18.10% 18.30% 18.10%
20.00%
Percentage

15.40%
15.00%
10.00%
5.00%
0.00%
2016 2017 2018 2019 2020

Years
Graph 1.6 Graphical Representation of Gearing Ratio during 2016 to 2020

Interest Coverage Ratio during 2016 to 2020

10.00
7.54
8.00
6.19
4.91
Percentage

5.53
6.00
4.33
4.00

2.00

0.00
2016 2017 2018 2019 2020

Years

Graph 1.7 Graphical Representation of Interest Coverage Ratio during 2016 to 2020

Gearing ratio has been in a rather tumultuous position as the company’s financial position took a
dip in 2017 and 2018. Nevertheless, it quickly recovered and the increase in Shareholder’s equity
has helped Beximco Pharmaceutical’s position improve impressively during the last 2 years.
Meanwhile, Interest Coverage ratio had been in a tremendous position from 2016 to 2018, but saw
a downfall in 2019 as finance and interest cost rose up because the company was acquiring more
external financing. Nevertheless, it rose again in 2020. The ratios are quite healthy but are
fluctuating in a relatively risky way.

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2. Strategies and Forward Planning
Strategy:

• The Company continuously explores and expands its product portfolio to ensure access to
newer, better treatment options at affordable cost. The expanding portfolio, including high
value, differentiated, and difficult-to-copy products, will continue to drive strong growth
for the Company. The Company also focuses on strengthening API portfolio and its
pipeline includes a number of patented, high value products. (bpl-annual-report-2019-
2020, page 16)
• While Beximco Pharmaceutical’s current revenue predominantly comes from the domestic
market, Beximco have a strategic focus on export with an ambition to achieve export-led
growth in the longer term. (bpl-annual-report-2019-2020, Page 23)
• The management is quite aware of the risk and the Company’s sourcing, procurement and
pricing strategies properly accommodates the issues to minimize any adverse impact.
Beximco Pharma buys its raw materials from multiple sources, both local and international,
at competitive prices. The Company is not reliant on any single supplier for its materials
and thus, reduces the individual supplier’s influence on procurement prices. (bpl-annual-
report-2019-2020, page67)
• During the critical and uncertain times, amid serious supply chain disruptions and
prolonged lockdowns, Beximco Pharmaceuticals Limited has responded effectively to
ensure uninterrupted supply of medicines throughout the country. (bpl-annual-report-2019-
2020, page 62)

Forward planning:

• With the pandemic trajectory still remains unpredictable, Beximco Pharmaceuticals is

trying their best to respond to the challenges arising from the economic and social
disruptions while adjusting their short and long-term operating strategies in light of the
experience gathered from the crisis. (bpl-annual-report-2019-2020, page 63)
• Recently Beximco Pharmaceuticals have signed Distribution Agreement with the Serum
Institute of India Pvt. Ltd. (Serum), the world’s largest vaccine producer to become its

Page | 8
 exclusive distributor for supplying Oxford/AstraZeneca vaccine AZD1222 and Novavax
vaccine NVXCoV2373 in Bangladesh. (bpl-annual-report-2019-2020, page 64)
• Beximco Pharmaceuticals also signed a distribution agreement with Mylan (Viatris) for
certain biosimilar products in Bangladesh. Their key focus would remain on launching a
range of biosimilar products which have good potential in the market. Beximco
Pharmaceuticals have already launched Ogivri (Trastuzumab), a breast cancer drug which
is biosimilar to blockbuster drug Herceptin from Roche. Beximco Pharmaceuticals is
expecting to launch additional biosimilar products progressively. (bpl-annual-report-2019-
2020, page 64)
• Beximco Pharmaceuticals is doing their best to respond to the disruption caused by
COVID-19 and taking all measures to ensure continuity of their business. (bpl-annual-
report-2019-2020, page 64)

Evaluation: Beximco Pharmaceuticals is gradually heading toward their vision of being one of
the most trusted, admired and successful pharmaceutical companies in the region with a focus on
strengthening research and development capabilities, creating partnerships and building presence
across the globe. Covid-19 has been a blessing in disguise for the company in terms of growing
their operations and spreading their influence overseas and attaining more market share of the
Pharmaceutical industry in Bangladesh.

3. Ratio Analysis
Table 3.1: Ratio Analysis between from 2016 to 2020
Particulars Formulas 2020 Workin 2019 Worki 2018 Workin 2017 Working 2016 Working
g ng g Calculati Calculati
Calculat Calcul Calculat on on
ion ation ion
Profitability Ratios
Return on Profit 14.5% 5609494 13.9% 506617 11.6% 4026167 11.2% 34482060 15.8% 44582533
Capital before 114/ 3567/ 984/ 72/ 03/
Employed interest (596332 (29864 (273518 (2507242 (2305941
and tax / 7323 323837 36792+7 5900+560 2409+510
(Equity +596332 +66039 3688638 5667422) 6928058)
+Long 7323) 36369) 60) = 0.112 = 0.158
Term = 0.145 = 0.139 = 0.116
Liabilities)
Return on Net 10.8% 3544483 10.2% 304040 9.3% 2532654 8.9% 22267851 12.8% 29480538
Equity income/ 101/ 2954/ 301/273 24/25072 54/23059
Average 3279744 298643 5183679 425900 = 412409 =
shareholde 9613 23837 2= 0.089 0.128
rs’ equity =0.108 = 0.093
0.102

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 Return on Net 7.1% 3544483 6.2% 304040 5.8% 2532654 6.5% 22267851 9.5% 29480538
Assets income/ 101/501 2954/4 301/437 24/34084 54/31148
Average 1874194 921409 3888641 132870 = 907975 =
total assets 0= 2360 = 2= 0.065 0.095
0.071 0.062 0.058
Net Profit Net 13.9% 3544483 13.3% 304040 14.3% 2532654 14.4% 22267851 14.7% 29480538
Margin income/ 101/ 2954/ 301/ 24/ 54/
(After Tax Total 2561194 228166 1771671 15508776 20034502
& Interest) operating 7655 29795 6855 972 592
revenue = 0.139 =0.133 =0.143 =0.144 =0.147
Gross Profit Gross 46.46% 1189910 46.56% 106203 46.8% 8285979 46.3% 71848816 46.1% 92341852
Margin profit / 0146/ 43025/ 424/177 23/15508 34/20034
(Before Tax Total 2561194 228166 1671685 776972 = 502592 =
& Interest) Operating 7655 = 29795 5= 0.463 0.461
Revenue 0.4646 = 0.465 0.468
Operating Net 21.9% 5609494 22.2% 506617 22.7% 4026167 22.2% 34482060 22.3% 44582533
Profit Operating 114/256 3567/2 984/177 72/15508 03/20034
Margin profit / 1194765 281662 1671685 776972 = 502592 =
(Before Tax Total 5= 9795 5= 0.222 0.223
& Interest) Operating 0.219 =0.222 0.227
Revenue
Short-term Solvency / Liquidity Ratios
Current Total 1.148:1 1304907 1.040:1 132641 1.257: 1134419 2.681: 91308161 2.859: 85280078
Ratio current 8919/ 61542/ 1 9700/90 1 69/34060 1 10/29825
assets/ 1135796 127458 1818576 39548 67508
Total 5004 32154 0 = 2.681 = 2.859
current = 1.148 = 1.040 = 1.257
liabilities
Quick Ratio (Current 0.625:1 (13,049, 0.576:1 (13264 0.697: (11,344, 1.663: (9130816 1.93:1 "(8528007
Assets- 078,919- 161542 1 199,700- 1 169- 810-
Inventory/ 5944769 - 5058847 34680890 27703316
Total 057)/ 592403 681)/ 61)/ 75)/29825
current 1135796 1678)/ 9018185 34060395 67508
liabilities 5004 127458 760 48 = 1.93"
= 0.625 32154 = 0.697 = 1.663
= 0.576
Cash Ratio Cash / 5.6% 6350165 4.8% 610494 4.4% 3937359 8.1% 27502802 7.4% 22112122
Current 19/1135 299/12 46/9018 5/340603 9/298256
Liabilities 7965004 745832 185760 9548 7508
= 0.056 154 = 0.044 = 0.081 = 0.074
= 0.048
Net Net 3.4% (13,049, 1.1% (13264 5.3% (11,344, 16.8% (9130816 17.8% (8528007
Working working 078,919- 161542 199,700- 169- 810-
Capital to capital / 1135796 - 9018185 34060395 29825675
Total Assets Total 5004)/50 127458 760)/437 48)/34084 08)/31148
Assets 1187419 32154)/ 3888641 132870 907975
40 492140 2 = 0.168 = 0.178
= 0.034 92360 = 0.053
= 0.011
Activity Ratios
Inventory Cost of 2.307 1371284 2.059 121962 1.864 9430737 2.400 83238983 3.900 10800317
Turnover goods sold/ 7509/59 86770/ 431/505 49/34680 358/2770
Average 4476905 592403 8847681 89061 331675
inventory 7 1678 = 1.864 = 2.400 = 3.900
= 2.307 = 2.059
Days in Days in 158.21 365/2.30 177.27 365/2.0 195.81 365/1.86 152.08 365/2.400 93.59 365/3.900
Inventory period Days 7=158.2 Days 59=177 Days 4=195.8 Days = 152.083 Days = 93.590
(i.e.,365)/ 14 Days .271 15 Days Days Days
Inventory Days
turnover
Receivable’s Total 7.748 2561194 6.842 228166 6.416 1771671 7.156 15508776 11.921 20034502
Turnover operating 7655/33 29795/ 6855/27 972/2167 592/1680
revenues/ 0545143 333495 6150939 339867 606796
Average 4 8905 3 = 7.156 = 11.921
receivables = 7.748 = 6.842 = 6.416

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 Average Days in 47.11 365/7.74 53.35 365/6.8 56.89 365/6.41 51.01 365/7.156 30.62 "365/11.9
Collection period Days 8=47.10 Days 42=53. Days 6=56.89 Days = 51.008 Days 21=30.61
Period (i.e.,365)/ 8 Days 347 3 Days Days 8 Days
Receivable Days
’s turnover
Payable Total 7.051 1031456 9.628 105120 8.569 8498246 8.445 66194653 12.103 54926753
Turnover Purchases/ 8079/14 83496/ 076/991 13/78383 14/453,82
Accounts 6280620 109180 712907 8444 8,612
Payable 0 =7.051 9722 = 8.569 = 8.445 = 12.103
=9.628
Average Days in 51.77 365/7.05 37.91 365/9.6 42.60 365/8.56 43.22 365/8.445 30.16 365/12.10
Payment period Days 1= Days 28 = Days 9= Days = 43.221 Days 3=
Period (i.e.,365)/ 51.766 37.91 42.595 Days 30.158
Payable Days Days Days Days
turnover
Total Asset Total 0.511 2561194 0.464 228166 0.405 1771671 0.455 15508776 0.643 20034502
Turnover Operating 7655/50 29795/ 6855/43 972/3408 592/3114
Revenues/ 1187419 492140 7388864 4132870 8907975
Average 40 92360 12 = 0.455 = 0.643
Total = 0.511 = 0.464 = 0.405
Assets
Financial Leverage Ratios
Gearing (Long- 15.4% 5963327 18.1% 660393 21.2% 7368863 18.3% 56056674 18.1% 51069280
Ratio term 323/ 6369/ 860/ 22/ 58/
liabilities) / (596332 (66039 (736886 (5605667 (5106928
(Long- 7323+ 3636+ 3860+27 422+2507 058+2305
term 3279744 298643 3518367 2425900) 9412409)
liabilities + 9613) = 23837) 92) = = 0.183 = 0.181
Equity) 0.154 = 0.181 0.212
Interest Earnings 5.53 5609494 4.91 506617 7.45 4026167 6.19 34482060 4.33 44582533
Coverage before 114/ 3567/ 984/540 72/55700 03/10301
Ratio interest 1013804 102976 283443 3162 = 82401 =
and taxes 085 = 2542 = 7.452 6.191 4.328
(EBIT)/ 5.533 = 4.912
Interest
expense
Cash (Depreciat 6.53 (560949 5.75 (50661 8.94 (402616 7.55 (3448206 5.42 (4458253
Coverage ion + 4114+10 73567+ 7984+80 072+7559 303+1124
Ratio EBIT)/ 1083063 856353 1715192 61160)/55 208315)/1
Interest 0)/10138 879)/10 )/540283 7003162 03018240
04085 = 297625 443 = = 7.548 1 = 5.420
6.530 42 = 8.936
5.751
Debt Ratio Total debt/ 3.3% 1651590 5.3% 259560 9.2% 4017425 7.7% 26359070 7.6% 23660065
Total 390/501 7792/4 267/437 25/34084 99/31148
assets 1874194 921409 3888641 132870 = 907975 =
0= 2360 = 2= 0.077 0.076
0.033 0.053 0.092
Long Term Long term 5.0% 1651590 8.7% 259560 14.7% 4017425 10.5% 26359070 10.3% 23660065
debt to Debt/ 390/327 7792/2 267/273 25/25072 99/23059
equity ratio Total 9744961 986432 5183679 425900 = 412409 =
Equity 3= 3837 = 2= 0.105 0.103
0.050 0.087 0.147
Equity Total 1.528 5011874 1.648 492140 1.599 4373888 1.359 34084132 1.351 31148907
Multiplier assets/ 1940/32 92360/ 6412/27 870/2507 975/2305
Total 7974496 298643 3518367 2425900 9412409
equity 13 23837 92 = = 1.359 = 1.351
=1.528 = 1.648 1.599
Market Value Ratios
EPS (Net 8.67 7.48 6.24 5.49 7.27
income-
dividends
on
preferred
stock)/

Page | 11
 Average
outstandin
g shares
Price- Market 7.98 69.20/8. 11.16 83.50/7 15.02 93.90/6. 20.58 113.00/5. 17.47 83.50/7.2
Earnings price per 67 = .48 24 49 7
ratio share/ 7.98 =11.16 = 15.02 = 20.58 = 17.47
current
annual
earnings
per share
Market to Market 6.92 69.20/10 8.35 83.50/1 9.39 93.90/10 11.30 113.00/10 8.35 83.50/10
Book ratio price per = 6.92 0= = 9.39 = 11.30 = 8.35
share/ 8.35
Book value
per share
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020) and all calculations done on
basis with the formulas for each ratio according to the formulas given in the chapter Financial
Statements, Taxes and Cash Flows.

Profitability ratio analysis:

The Return on Equity and Return on Asset was quite significant in the year of 2016, but took a
huge hit when it went down by 3.9% and 3.5% respectively. Fortunately, Beximco
Pharmaceutical’s have picked up the pace in the recent years and seems no sign in stopping due to
the influx of medicine sales as a result of the Covid-19 pandemic. The ROE and ROA have gone
down 2% and 2.8% respectively from 2016 to 2020. Return on Capital Employed faced similar
challenges, but is reaching their 2016 level of ratio faster than ROA and ROE. ROCE went down
1.3% from 2016 to 2020. Nevertheless, we expect it getting to the optimum level faster than
expected.

On the other hand, Net Profit Margin has seen a very sluggish decrease over the last few years.
Although, it has seen improvement by a small margin as a result of increased sales and revenue as
a result of the ensuing pandemic. Over the last 5 years, the Net Profit Margin has seen a decrease
of 0.8%, but the prediction and the global scenario indicates it raising further in the next year.
However, Gross Profit Margin and Operational Profit Margin has seen small fractional to no
changes at all. This indicates that over the last 5 years (2016-2020), Beximco Pharmaceuticals has
done nothing to decrease or change their Operating or Operational cost of production. Hence, the
Gross Profit and Operational Profit Margin has seen almost no significant change over the years
and stayed consistent. Operational Profit went down by only 0.4%.

Page | 12
Short-term Solvency / Liquidity Ratio Analysis:

Beximco Pharmaceuticals has maintained a fairly good Current Ratio and has significant liquid
assets to cover the Current Liabilities, although it has decreased drastically last several years.
Which indicates that Current Liability has increased at a larger rate than Current Assets as the
years went on and shows the company getting more external financing. Nevertheless, their Current
Ratio rose 0.108 in 2020 from 2019. Overall, Current Ratio has decreased by a massive 1.711 in
the last 5 years, which is cause for concern.

Quick Ratio on the other hand has gone down immensely in the last couple years as a result of
influx in the amount of inventory and increased amount of Current Liability. It went from 1.93 in
2016 to only 0.625 in 2020. Meaning Beximco Pharmaceuticals should look into clearing their
inventories quicker to increase their liquidity, ensuring the company doesn’t fail to pay off their
Current Debt. We can also see that Cash Ratio is at a very miniscule state as well, although it rose
to 8.1% in 2017, it’s seen a decline ever since. Nevertheless, it increased from 4.8% in 2019 to
5.6% in 2020. They should really look into holding more cash to pay off their day to day operating
costs and paying bills, and thus should sell out their inventory and collect receivables as soon as
possible

Net working Capital to Total Assets has seen major decline over the years by going from 17.8%
to only 3.4% in 2021. This indicates that Beximco Pharmaceuticals assets are not being efficiently
utilized and thus disrupting production levels. They really need to focus on incurring less debt and
properly utilizing their assets to increase the ratio.

Activity Ratio Analysis:

As we take a look at Beximco Pharmaceuticals Days in Inventory, it’s quite apparent that their
inventory has significantly increased over the years. It takes them an extra 64.62 days to clear their
inventories in the span of 2016 to 2020, which is a cause of concern for their liquidity. Meanwhile,
their Average Collection Period has seen a smooth increase in the 5-year timeline. It went from
30.62 to 53.35 days from 2016 to 2019. But they saw a slight decline in 2020 as the period went
down to 47.11 days. Beximco Pharmaceutical should look into decreasing the Average Collection
Period to better manage their current asset and strengthen their liquidity.

Page | 13
On the other hand, Average Payment Period has also seen an increase, which can be good for the
company as a means of better managing their Cash Conversion Cycle and Current Asset
management. Average Payment Period has increased from 30.16 days to 51.77 days from 2016 to
2020. We can also see from the Total Asset Turnover that Assets have not been properly utilized
throughout the year as the ratio has decreased by 25.83% over the last 5 years.

Financial Leverage Ratio Analysis:

Gearing ratio has seen some ups and downs over the last couple years. Nonetheless, it has been in
a downward slope for the last 2 years as it went 18.1% to 15.4% and has seen an overall decrease
from 2016 when it was 18.1%, which is good news for Beximco Pharmaceuticals.

In terms of Interest and Cash Coverage ratios, they have both struggled to keep a steady rate, as
they increased in the middle years, but are increasing in the last two years as more sales and
revenue has given them a slight boost. Their Interest Coverage Ratio increased by 1.2 times and
Cash Coverage Ratio has increased by 1.1 times.

We also see the Equity Multiplier has risen by a big margin compared to 2016, Which is not ideal
for Beximco Pharmaceutical’s. Equity Multiplier has risen by 13.10% to 1.528 in 2020 from 1.351
in 2016.

Market Value Ratio:

Earnings Per Share has seen an incline as a result of increased profit over the past few years, after
it went down in 2017. EPS has increased by 1.40 Taka from 2016 to 2020, which indicates the
company is doing well in terms of generating revenue and giving higher returns to it’s
Shareholders.

Price-Earnings ratio has seen a steep decline in the 5-year timeline, that means it’s great news for
the shareholder. A low Price-Earnings ratio indicates that the company may currently be
undervalued or that the company is doing exceptionally well compared to previous years. P/E ratio
has decreased by 9.49 in the last 5 years. Market to Book ratio has increased and decreased in the
last 5 years as Share Prices have fluctuated over the years. Although it went to 11.30 in 2017, it
stands in 6.92 in 2020, which indicates its steep decline.

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Table 3.2: Competitor Analysis for the year 2020

Particulars Company
BXPHARMA SQURPHARMA
Profitability Ratios
Return on Capital Employed 14.5% 18.7%
Return on Assets 7.1% 15.6%
Return on Equity 10.8% 16.5%
Net Profit Margin 13.9% 27.8%
Gross Profit Margin 46.46% 50.88%
Operating Profit Margin 21.9% 32.1%
Liquidity Ratios
Current Ratio 1.148:1 14.618
Quick Ratio 0.625:1 12.863
Cash Ratio 5.6% 10046%
Net working capital to Total Assets 3.4% 54.0%
Activity Ratios
Inventory Turnover 2.31 3.96
Days in Inventory 158.21 Days 92.12 Days
Receivable’s Turnover 7.75 30.18
Average Collection Period 47.11 Days 12.10 Days
Payable Turnover 7.05 30.75
Average Payment Period 51.77 Days 11.87 Days
Total Asset Turnover 0.511 0.561
Financial Leverage Ratios
Gearing Ratio 15.4% 1.6%
Interest Coverage Ratio 5.53 137552.79
Cash Coverage Ratio 6.53 155949.71
Debt Ratio 3.3% 0.67%
Long-term debt to Equity ratio 5.0% -
Equity Multiplier 1.528 1.058

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 Market Value Ratio
EPS 8.67 15.82
Price-Earnings Ratio 7.98 11.24
Market to Book Ratio 6.92 17.78
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020) and all calculations done on basis with the
formulas for each ratio according to the formulas given in the chapter Financial Statements, Taxes and Cash
Flows.

As we start comparing the Financial Positions of Beximco Pharmaceuticals Limited and Square
Pharmaceuticals Limited for the year 2020, it is almost surprising to see that Square
Pharmaceuticals have outperformed Beximco Pharmaceuticals in almost every category and ratio.

The most astonishing thing that is noticeable is the amount of Debt and Liabilities Square
Pharmaceuticals Hold, which is absolutely small. Their Debt Ratio is a miniscule 0.67%, as well
as having no Long-Term Debt (Just 1 Non-Current Liability of Differed Tax).

As a result, Square Pharmaceuticals Current Ratio (BXPHARMA: 1.148, SQURPHARMA:

14.618), Quick Ratio (BXPHARMA: 0.625, SQURPHARMA: 12.863) and Cash Ratio
(BXPHARMA: 5.6%, SQURPHARMA: 10046%) is miles above what Beximco Pharmaceuticals
have.

Square Pharmaceuticals outshine Beximco Pharmaceuticals in Profitability ratios as well. Their

ROA is more than double the number of Beximco Pharma. Square Pharma also holds a lead of
5.7% and 4.2% respectively in ROE and ROCE over Beximco Pharma. Square Pharma also has a
higher Net, Gross and Operating Profit margin than Beximco Pharma, where they have a 13.9%
(Net Profit), 4.42% (Gross Profit) and 10.2% (Operating Profit) advantage over Beximco Pharma.
Which also indicates that Square Pharma better utilizes their Assets and minimizes their operating
costs as well.

Overall, Square Pharmaceuticals Days in Inventory, Average Collection Period and Average
Payment Period also specifies that they have a better and more efficient Cash Conversion Cycle
and Current Asset Management than Beximco Pharmaceuticals. Their Days in Inventory is 92.12
days compared to 158.21 days of Beximco Pharma, as well as collecting their receivables faster
than Beximco Pharma (BXPHARMA: 47.11 days, SQURPHARMA: 12.10 days) and repay the
suppliers at a quick pace as well (BXPHARMA: 47.11 days, SQURPHARMA: 11.87 days).

Page | 16
Though it seems better to pay off your suppliers quickly, nevertheless paying them before
collecting receivables might create liquidity problem, which Square Pharma should be careful
about.

Comparing Gearing Ratio, Square Pharma again comes out on top by having only 1.6% compared
to Beximco Pharma having 15.4%. By having an insignificant amount in debt, Square Pharma has
some of the most robust Interest and Cash Coverage ratio, miles above what Beximco Pharma Has.
Their Interest and Cash Coverage ratio is 137552.79 and 155949.71 respectively. Compared to
Beximco Pharma’s 5.53 and 6.53 respectively. They also have a smaller Equity multiplier than
Beximco Pharmaceutical’s as well, which is good for Square Pharma (SQ: 1.058 to BX: 1.528).

Square Pharma also has a larger Earnings per Share as their Profit margin is larger than Beximco
Pharmaceuticals as well. Square Pharma having a 82.67% larger Earnings per Share than Beximco
Pharmaceuticals clearly states that they are a strong firm who gives high return to their
shareholders. Nevertheless, Square Pharma has a larger Price Earnings ratio than Beximco Pharma,
which may indicate that investors may require higher returns from Square Pharma in the future.
Square Pharma also has a Market to Book ratio that is 10.86 times better than Beximco
Pharmaceuticals.

Table 3.3: Share or Equity Evaluation 2019 & 2020

Item Year Market Price of Share Earnings Per P/E Dividend
Share multiple Per Share (Taka)
2020 69.20 8.67 7.98 1.36
2019 83.50 7.48 11.16 1.50
2018 93.90 6.24 15.02 1.25
2017 113.00 5.49 20.58 1.25
2016 83.5 7.27 17.47 0.98
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020) and Investing.com

Beximco Pharmaceuticals Share prices have been on a downward trend since 2017 and has
decreased by almost 61.24%, which is a significant drop. This can be attributed to the stock market
being unstable and fluctuating constantly in the previous couple years. Nevertheless, Beximco
Pharmaceuticals EPS has grown exponentially after suffering a downfall in 2017. The EPS grew
by 19.26% in the span of 5-years. A low Price-Earnings ratio indicates that the company may
currently be undervalued or that the company is doing exceptionally well compared to previous
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years. P/E ratio has decreased by 9.49 in the last 5 years. Lastly, Beximco Pharmaceutical’s
Dividend per Share has gradually increased over the years as well, from 0.98 Taka in 2016 to 1.36
Taka in 2020.

4. Cash Flow
Table 4.1: Cash Flow statement of Fiscal year 2020

Particulars Balance (Amount in Taka)

Cash Flow from Operating Activities:
Receipt from Customers & Others 25,934,454,695
Less: Payments to Suppliers & Employees (18,467,458,543)
Cash Generated from Operations 7,466,996,152

Interest Paid (1,012,519,091)

Interest Received 20,409,291
Income Tax Paid (932,399,131)
Total (1,924,508,931)
Net Cash Generated from Operating Activities 5,542,487,221

Cash Flow from Investing Activities:

Acquisition of Plant, Property & Equipment (2,243,555,782)
Intangible Asset (31,745,002)
Disposal of Property, Plant & Equipment 3,646,251
Acquisition & Disposal of Subsidiaries -
Dividend Received 1,427,930
Decrease in Short Term Investment 323,364,536
Net Cash Used in Investing Activities (1,946,862,067)

Cash Flow from Financing Activities:

Net Increase/Decrease in Long Term Borrowing (1,000,373,112)
Net Increase/Decrease in Short Term Borrowing (1,970,741,462)
Share Capital -
Dividend Paid (601,957,017)
Net Cash Used in/ from financing Activities (3,573,071,591)
Increase in Cash & Equivalent 22,553,563
Cash & Equivalent at Beginning of Year 610,494,299
Effect of Exchange Rate Changes on Cash & Equivalent 1,968,657

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 Cash & Equivalent at End of Year 635,016,519

Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020)

Beximco Pharmaceuticals have more Cash Taka coming in than going out in Operating activities.
Almost 71.21% of the Cash Outflow here is payments to the Suppliers and Employees. They’ll be
left with 5,542,487,221 at the end after deducting the operational costs.

Beximco Pharmaceuticals also spent a substantial amount in acquiring new Plant, Property and
Equipment (-2,243,555,782). They have also sold off/Disposed off some of the older Plant,
Property and Equipment. We can also see that they have got back/re-acquired some of their Short-
term investments, which brings in cash for the company.

In terms of Financing Activities, it is clearly seen that in 2020 Beximco Pharmaceuticals have
spent substantial amount of its cash money in paying off their Debt, both long term and short term.
Cash Outflow from the company revolving Long term and Short-term Debt is 2,971,114,574 Taka,
which is huge amount. Also, Cash is carried out of the company at the end of the year for fulfilling
the Dividend Decision taken by Beximco Pharmaceuticals Limited.

The Beginning balance of Cash Flow & Equivalents was 610,494,299 and the increase in Cash
and Equivalents in the end of 2020 has been 22,553,563, which is a very small margin.
Nevertheless, the balance ends in a positive Cash Flow at the end of the year and is a crucial step
in Beximco Pharmaceuticals in staying on path with the goal of growing their company.

5. Non-Financial Performance Indicator

Growth or reduction of business: A significant change is seen over the years on the progress of
Beximco pharmaceutical Ltd. Beximco pharma is constantly building upon its portfolio. Company
has created strong differentiation by offering a range of high-tech, specialized products which are
difficult to imitate. They have also been one of the Top-employers in this country with providing
more and more jobs every year, which indicates their growth as a Company as well. They have
also branched out to almost all continents of the world to 50+ countries, especially in North
America. The growth in the number of employees and Region wise export has been showcased
below:

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Table 5.1: Growth in the Number of Employees from 2016 to 2020

Year of Operation 2020 2019 2018 2017 2016

Number of Employees 4,737 4,523 4,256 3,833 3,515
Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020)

Number of Employees from 2016 to 2020

5000
Number of Employees

4737
4000 4523
4256
3000 3833
3515
2000

1000

0
2016 2017 2018 2019 2020

Years
Graph 5.1 Number of Employees from 2016 to 2020

Table 5.2: Region wise Export for 2019-2020

Region Australia Africa North America South Asia Rest of the World
Percentage 5% 17% 47% 14% 17%
Source: Beximco Pharmaceuticals Limited Annual Report (2019-2020)

Region wise Export

50%
Percentages

40%
30%
20%
10%
0%
North Rest of the
Australia Africa South Asia
America World
Percentages 5% 17% 47% 14% 17%

Regions
Graph 5.2 Region wise Export from 2019 to 2020

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Employee Benefits: The company ensure their employees benefits plan as well as their
contribution plan. Eligible permanent employees are given several benefits as ensuring a secure
work place. Some of the facilities that they provided their employees are discussed below:

• Defined contribution plan (provident fund): The company introduced provident fund
scheme to the employees. The eligible employees can take these benefits according to the
terms and condition of the provident fund constitution. The employees contribute 10% of
their basic salary.
• Defined Benefit Plan (Gratuity): This unfunded benefit is given to the permanent
employees. A monetary amount is paid to the employee at the end of retirement or
termination. This benefit is given to the employees as a token of appreciation for the service
that they have provided for the company.
• Contribution to Workers’ Profit Participation and Welfare Funds (WPPF):
According to the provisions of the Bangladesh Labor (amendment) Act 2013, employees
are paid 5% of the net profit before tax.
• Short-term employee benefits: Short term employment benefit includes salaries, bonuses,
leave encashment, etc.
• Insurance Scheme: All employees are under the insurance scheme.

CSR initiatives: Beximco pharma focuses on corporate social responsibility from the ideology of
providing sustainable value to the society. The company strongly believe they can only be
successful if they create value not just for the company but also for the society, we live in. Beximco
pharma invests in CSR activity in believe to gain sustainable and growth by improving health and
wellbeing for the people. For 2019-2020 the company budgeted 79,166,624 Tk for CSR expense.
Which is 64,822,035 Tk more than previous year.

COVID-19 Contributions: Beximco Pharmaceutical’s have been on the Frontline of fighting

Covid-19 with their medicine and services since day one. Here are some of their notable activities:

 Donated PPE Worth Taka 15 Crore to Protect the Healthcare Professionals

 Provided Remdesivir Injection Free of Cost to All Govt. Designated COVID-19
Hospitals

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  collaboration for Development of Isolation Canopy for Protecting Frontline Health
Workers
 BPL Employees Donated One-day Salary for Victims of COVID-19
 Regular Supply of Personal Protective Equipment (PPE) to Frontline Healthcare
Professionals
 Telemedicine Initiatives for Doctors During the Pandemic
 Nationwide Campaign for Mask Awareness

Environment, Health and Safety (EHS): Beximco Pharmaceuticals have constantly monitoring
its Carbon footprint and Environmental Impacts to air quality, sound level, water treatment etc.
They have an active Solid Waste Control, Liquid Waste Control and Conduction in all their
facilities. They also try their level best to control the gaseous emission that happens from their
factories to decrease the negative impact on the environment. As well as having a system for
controlling Noise, Odor and Vibration apart from other things surrounding their facilities.

Supporting Research, Innovation and Development: Beximco Pharmaceuticals Sponsored

ICDDR, B’s Clinical Trial of Ivermectin for the Treatment of COVID-19. They have been
Supporting Other Clinical Trials on COVID-19 treatments as well and made breakthroughs in
developing, manufacturing and distributing more medicine in the country at an efficient cost to
both the company and the consumers. (bpl-annual-report-2019-2020, page 50-54)

6. Operating cost structure

Table 6.1: Operating Cost Structure

Operating Cost Amount (BDT)

Work in Process (Opening) 455,530,899
Materials Consumed 10,054,371,739
Factory Overhead 3,623,979,789
Total Manufacturing Cost 14,133,882,427
Work in Process (Closing) (294,258,178)
Cost of Goods Manufactured 13,839,624,249
Finished Goods (Opening) 1,255,181,983
Finished Goods Available 15,094,806,232
Cost of Physician Sample transferred to Sample Stock (253,230,551)
Finished Goods Closing (1,128,728,172)

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 Cost of Goods Sold 13,712,847,509

Administrative Expenses 792,951,709

Selling, Marketing & Distribution Expenses 5,496,654,323

Total Operating Cost of 2020 20,002,453,541

Source: Beximco Pharmaceuticals Limited Annual Report (2016-2020)

 Beximco Pharmaceuticals Cost of goods sold represents the direct costs of producing the
goods sold by a company. This amount includes the cost of the materials and labor directly
used to create the good. It also includes the cost Factory overhead, and also factors in
Products that are still work in progress and finished goods that are left out after selling.
 Administrative expenses of Beximco Pharmaceuticals are constructed with the expenses
their organization incurred that are not directly tied to a specific function such as
manufacturing, production, or sales. These expenses are related to the organization as a
whole. Some of the expenses included in this section are Rent, Salary and Allowance,
Repairs and Maintenance, Registration and Renewals, Entertainment, Electricity-Gas-
Water Bills, Security Expenses etc.
 Selling, Distribution and Marketing expenses represents the cost incurred in promoting
sales and retaining customers. Selling cost includes wages, commissions and various out
of pocket expenses. Marketing cost includes the promotion of newly introduced products.
For example, providing doctors and physicians different kinds of sample medicine. All
these kinds of cost are categorized as indirect expenses. They also include costs such as
Market research and New Products, Training and Conference, Field Operation,
Advertising, CSR expenses, Pharmacovigilance etc. These are crucial expenses that helps
the company branch out to new markets and products and grow their business as a result.

Suggestions: Beximco Pharmaceuticals can reduce their cost by reducing the administrative
expenses without affecting their efficiency. To reduce administrative expenses, they can make a

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cut in travel costs, they can rent different equipment instead of buying them and they should be
more efficient about expenses on utility.

7. Conclusion
Beximco Pharmaceutical continues its legacy of being one of the Best pharmaceuticals in
Bangladesh, for its consumers & shareholders. The overall landscape of Beximco Pharmaceuticals
Limited have been showing a sign of positive growth in the last couple years. They have faced
some challenges in the year of 2017, but quickly rose back to prominence with their incredible
Business Practices. Moreover, the ensuing global pandemic that is Covid-19, has been a blessing
in disguise for the large pharmaceutical company. They have already exported crucial medicine to
more than 40+ countries around the world, as well as helping out as much as they can in
Bangladesh as well.

The increased number in sales as a result of Covid-19 has seen their Profit margin’s and Return on
Assets & Equity’s grow substantially. Nevertheless, they still need to enhance and find an effective
strategy in managing their Current Assets and decrease their Cash Conversion Cycle as well. They
need to urge their sales staff to sell and clear their inventory quicker as it has seen growing at a
sluggish pace. As well as collecting their receivables as soon as possible to avoid any liquidity
crisis as they have a higher Average Collection period than some of the other countries in the
industry. Their Interest and Cash Coverage is substantial enough, but needs to grow in the long
run. As well as taking in more debt might decrease their Net Working Capital even further and
create liquidity problem in the future, hence they should be aware of this. If Beximco
Pharmaceutical’s Limited can capitalize the opportunity brought in by Covid-19 and the increase
demand in medicine, their growth in the industry will grow exponentially in the upcoming years
to come.

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References

 Beximco Pharmaceuticals, 2016. Beximco Pharmaceuticals Annual Report 2015-2016,

Dhaka: Beximco Pharmaceuticals.
 Beximco Pharmaceuticals, 2017. Beximco Pharmaceuticals Annual Report 2016-2017,
Dhaka: Beximco Pharmaceuticals.
 Beximco Pharmaceuticals, 2018. Beximco Pharmaceuticals Annual Report 2017-2018,
Dhaka: Beximco Pharmaceuticals.
 Beximco Pharmaceuticals, 2019. Beximco Pharmaceuticals Annual Report 2018-2019,
Dhaka: Beximco Pharmaceuticals.
 Beximco Pharmaceuticals, 2020. Beximco Pharmaceuticals Annual Report 2019-2020,
Dhaka: Beximco Pharmaceuticals.
 Investing.com, 2021. Investing.com. [Online]
Available at: https://www.investing.com/equities/beximco-pharmaceuticals-ltd-dividends
[Accessed 24 May 2021].
 Square Pharmaceuticals Limited, 2020. Square Pharmaceuticals Annual Report 2019-
2020, Dhaka: Square Pharmaceuticals Limited.

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