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Project Report

On
ASSESSMENT OF FINANCIAL HEALTH: A COMPARATIVE STUDY OF TWO
SELECTED PHARMACEUTICAL FIRMS OF BANGLADESH

ASSESSMENT OF FINANCIAL HEALTH: A COMPARATIVE


STUDY OF TWO SELECTED PHARMACEUTICAL FIRMS
OF BANGLADESH
A PROJECT REPORT

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF


THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

SUBMITTED TO
UNIVERSITY OF LIBERAL ARTS BANGLADESH

SUBMITTED BY
Name:
ID:
Program:
Major:

Zubaer Hasan
083011008
BBA
Accounting

SUPERVISED BY
DR.MILAN KUMAR BHATTACHARJEE
(Professor, USB)

14th December 2013

UNIVERSITY OF LIBERAL ARTS BANGLADESH


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December 14, 2013


Dr. Milan Kumar Bhattacharjee
Professor
School of Business
University Of Liberal Arts Bangladesh
Subject: Submission of the Report.

Honorable Sir
It is our great pleasure to submit the report titled ASSESSMENT OF FINANCIAL HEALTH:
A COMPARATIVE STUDY OF TWO SELECTED PHARMACEUTICAL FIRMS OF
BANGLADESH to you. I have prepared this report by analyzing the annual reports of those
companies and also visit and talk with those pharmaceutical company employees.
To make this report up to the standard I tried my best to fulfill the requirements by implementing
the knowledge I have gather from faculties.
Thank you very much for providing me this type of opportunity and giving me the necessary
guidance and direction needed for preparing the report. I have tried my level best to make this
report informative enough. Besides this, there may be some shortcomings. I would be grateful if
you consider those from excusable point.

Sincerely yours
Zubaer Hasan
ID: 083011008

BBA
Concentration on Accounting
USB

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ACKNOWLEDGEMENT

I am grateful to almighty Allah for keeping me physically, mentally well to prepare this project
report, and thanked my parents for pray to him for my better performance.
I would like to place on record my deep sense of gratitude to Prof. Dr.Milan
KumarBhattacharjee, Dept. of ULAB SCHOOL OF BUSINESS for his stimulating guidance,
continuous encouragement, and supervision throughout the course of present work.
I express my sincere gratitude to A. F. Wazir Ahmad, Associate Prof. Dept. of ULAB SCHOOL
OF BUSINESS, Bangladesh for his generous guidance, help, and useful suggestions.
I also wish to extend my thanks to Shajedul Alam, Senior Lecturer for his constructive
suggestions to improve the quality of this project work.
I am extremely thankful to all my friends in ULAB who spread their helping hand and make easy
my task.

Zubaer Hasan (083011008)

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Executive Summary

Bangladesh is poor country with so tropical diseases and leads to have a high supply of
pharmaceutical goods in a lower cost. In this country, pharmaceutical industry has made
substantial growth with modern and improved infrastructure.
The separation of management from ownership in modern business calls for the use of from of
relationship between the managers and the owners and other interested parties. Stability and
success of any business largely depends on its ability to generate sufficient cash. As part of
transmission a result of companies process managements use financial statement as important
vehicle through which financial information is, furnish to stakeholder. Two big pharmaceuticals
company like- Square and Beximco are in the same report means the tough work is in process. In
the way of making the report, some similarity and differences are found in their business
strategy. The ratio analysis is such a way to find out the lacking of those companies. This report
will also provide the company background and activity. SWOT analysis will scan the disease and
the strength of a company. According to analytical report like this, a investor may take decision
to invest or not to invest.
In this report, I have tried to do my level best to get as much information as possible to enrich the
report while working at financial statements. It was a heavy weight experience to work in the
pharmaceutical section and it has enriched my knowledge.
However, after all this as a human being, I believe not everyone is past imitation. There might
have problems regarding lack and limitation in some aspects and minor mistake such as grammar
burden or typing mistakes or lack of information. Please apologies me for the mistake and clarify
these of my further information on those matters.

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--Contents--

Elements
Chapter 01: Inroduction
1.01 Rational of the Study
1.02 Objectives of the Study
1.03 Methodology of the Study
1.04 Scope of the Study
1.05 Limitations of the Study
Chapter 02: Theoretical Aspects
2.01 Concepts of Ratio
2.02 Objectives of Ratio
2.03Solvency Test
2.04 Profitability Test
2.05 Operating Efficiency Test
2.06Advantages of Ratio
2.07Limitations of Ratio
2.08Efficiency Ratio
2.09Profitability Ratio
2.10Liquidity Ratio
2.11Other Related Issues
Chapter 03: Practical Issues
3.01Square Pharmaceuticals Ltd. Bangladesh
3.02 Analysis of Findings
3.03SWOT Analysis of Square Pharmaceuticals Ltd
3.04Beximco Pharmaceuticals Ltd. Bangladesh
3.05Analysis of Findings
3.06SWOT Analysis of Beximco Pharmaceuticals Ltd
Chapter 04: Concluding Notes
4.01Summary of the Report
4.02 Recommendations
4.03Conclusion
4.04 References

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PLAGIARISM DECLARATION

1. I know that plagiarism means taking and using the ideas, writings, works or inventions of
another as if they were ones own. I know that plagiarism not only includes verbatim
copying, but also the extensive use of another persons ideas without proper
acknowledgement (which includes the proper use of quotation marks). I know that
plagiarism covers this sort of use of material found in textual sources and from the
Internet.
2. I acknowledge and understand that plagiarism is wrong.
3. I understand that my research must be accurately referenced.
4. This assignment is my own work, or my groups own unique group assignment. I
acknowledge that copying someone elses assignment, or part of it, is wrong, and that
submitting identical work to others constitutes a form of plagiarism.
5. I have not allowed, nor will I in the future allow, anyone to copy my work with the
intention of passing it off as their own work.

Name __________________________________________________ (BLOCK LETTERS)


ULAB ID #____________________
Signature _____________________________

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Date ___________________

Chapter: 01
Introduction

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Chapter: 01(Introduction)

1.01: Rational of the Study


Now a day the pharmaceutical companies are in a hard-hitting competition. The services of those
firm are very much important as well as their products ensures the satisfactory level of
consumers higher. As a student of business administration, we have to know how they deal with
those problems they face in the practical field. Pharmaceutical companies are playing a vital role
for economic sector in our country. They also contribute some social responsibility. As a part of
BBA program in the University Of Liberal Arts Of Bangladesh, I was assign to write a report on
Assessment of Financial Health: A comparative Study of two selected pharmaceutical firms of
Bangladesh. This Study mainly enclosed the analysis of assessment of financial health of Square
pharmaceuticals Ltd. and Beximco Pharma. Know about financial health comparatively. The
changes of between those two firms and allocating the problems involved in the process of
assessing financial health.

1.02: Objectives of the Study


The main objective of this study is to assess the financial health of pharmaceutical companies.
To achieve this main objective, I have covered the following specific goals

To get an idea about two pharmaceutical company practically.


Toget an overview of financial position of those companies.
To test the profitability of those selected companies.
To examine the solvency position of those two companies.
To evaluate the operational efficiency of those pharmaceutical companies.
To discuss the better financial health of those pharmaceutical companies.
To detect the Problems faced in accessing the financial health.
To make some recommendations to overcome from the problem occurred.

1.03: Methodology of the Study


Method is an important part to get some information and especially for this kind of reports,
method is much more essential. As the report is about the comparative analysis of two
pharmaceutical companies, it does have combination of some methods to gather information.
Library work method
Interview method
Observation method
Desk study method

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I have used secondary data, those are given below File study
Annual report of the companies
Browsing internet for the information
Progress report of Firms
Statements of firms
Statements of affairs
Study of some previous Research papers

1.04: Scope of the Study


At present, pharmaceutical service is one of the most important roles to play. As companies likeSquare pharmaceuticals and Beximco pharma always try to satisfy their customers with their
innovative servicing ideas. The comparative analysis of two companies will prefer me to select
five years financial positions and evaluate assessment company financial activities. Evaluation of
ratio analysis will play a supportive role to find out the liquidity coverage strength and so on.
Operating ratio, profitability ratio, solvency ratio will differentiate to company from each other.

1.05: Limitation of the Study


As the study is on those companies which are very big and busy with their schedule. When I was
making the report, I faced some limitation of the study. That are It is difficult to collect all the required information in such a short period.
Not all the information is available to annual report.
Large-scale research was not possible due to access limitation.
Relevant data and document collection were difficult due to organization confidentially.
Data were not found in systematic way.
Every organization has their own secrecy that is not revealed to others.
Lack of chance to communicate with the bank authorities because of excessive workload.
For my limited practical knowledge and experience, this study may not cover all areas and may
have unintentional errors and omissions.

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Chapter: 02
Theoretical Aspects

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Chapter: 02(Theoretical Aspects)

2.01: Meaning of Ratio


A ratio expresses the mathematical relationship between one quantity and another.
Ratio analysis expresses the relationship among selected financial statement data.
The relationship is expressed in terms of a percentage, a rate, or a simple
proportion. To illustrate; recently IBM corporation had current assets of
$35,119million. The relationship is determined by dividing current assets by
current liabilities. Ratio are highly important profits tools in financial analysis the
help financial analysis implement plans that improve profitability, operating and
solvency financial structure. It also repots the past performances can be used as a
weapon of predictive results and provide lead indications of potential problem
areas. Ratio analysis is be used to compare a companys financial status over a
period. Comparative results will help a company to find out the error and shows
the area where the medicine can be used.

2.02: Objectives of the Ratio


To show a firms relative strengths and weaknesses
It includes comparisons for a useful interpretation of financial statements
Finding solutions to unfavorable financial statements and to help take
corrective measures
It also determines the financial condition and financial performance of a firm
allows an analyst to determine the ability of the firm to meet its obligations
the overall operating efficiency and performance of the firm
the efficiency with which the firm is utilizing its assets in generating sales
can help give a quick indication of how a company is doing in certain key
areas

2.03: Solvency Test

Ability to survive over a long period of time


Long-term creditors and stockholders information provider

The measure is usually calculated as follows:

Solvency ratio

After Tax Net Profit + depreciation


Long Term Liabilities + Short Term Liabilities

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2.04: Profitability Test

The income or operating success of a company for a given period of time


Shows the ability to obtain debt and equity financing
Affects the liquidity position and the ability to grow
Shows the investor the earning power

Some ratios are--

Return on equity (ROE)


Effective rate of return
DuPont formula
Operating Expense Ratio

2.05: Operating Efficiency Test

Short-term debt paying ability


Creditors and suppliers are interested in this ratio

Some ratios are---Total Asset Turnover


Fixed-Asset Turnover
Equity Turnover

2.06: Advantages of Ratio


Ratio analysis is an important and age-old technique of financial analysis. The
following are some of the advantages of ratio analysis:
a) It simplifies the comprehension of financial statements. Ratios tell the whole
story of changes in the financial condition of the business
b) It provides data for inter-firm comparison. Ratios highlight the factors
associated with successful and unsuccessful firm.
c) It helps in planning and forecasting. Ratios can assist management, in its basic
functions of forecasting. Planning, co-ordination, control and
communications.
d) Ratios analysis also makes possible comparison of the performance of
different divisions of the firm. The ratios are helpful in deciding about their
efficiency.
e) a. It helps in investment decisions in the case of investors and lending
decisions in the case of firms
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2.07: Limitations of Ratio


i.
ii.
iii.
iv.
v.
vi.

A single ratio rarely tells enough to make a sound judgment


Financial statements used in ratio analysis must be from similar points in
time.
The financial data used to compute ratios must be developed in the same
manner
Inflation can distort comparisons
Wrong interpretation
Lack of adequate standards

2.08: Efficiency Ratio

Total Asset Turnover


This ratio measures a company's ability to generate sales given its investment in
total assets. A ratio of 3 will mean that for every dollar invested in total assets, the
company will generate 3 dollars in revenues. Capital-intensive businesses will
have a lower total asset turnover than non-capital-intensive businesses.
Total Asset Turnover=

Net sales

Average Total Assets

Fixed-Asset Turnover
This ratio is similar to total asset turnover; the difference is that only fixed assets
are taken into account.
Fixed-Asset Turnover =

Net sales

Average Net Fixed Assets

Equity Turnover
This ratio measures a company's ability to generate sales given its investment in
total equity (common shareholders and preferred stockholders). A ratio of 3 will
mean that for every dollar invested in total equity, the company will generate 3
dollars in revenues.
Equity Turnover =

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Net sales
Average Total Equity

2.09: Profitability Ratio

Revenue Per Employee


Revenue per employee measures the amount of sales generated by one employee.
This is a measure of performance of human resources of a company. It is an
indicator of productivity of companys personnel. It also indicates how efficiently
a company is utilizing its human resources.
The formula for calculation of revenue per employee is given below--Revenue Per Employee = Sales Revenue / Number of Employees

Profit Ratio
Profit analysis is a form of cost accounting used for elementary instruction and
short run decisions. A profit analysis widens the use of info provided by
breakeven analysis. An important part of profit analysis is the point where total
revenues and total costs are equal. At this breakeven point, the company does not
experience any income or any loss.
The key components involved in profit analysis include:
1. Selling price per unit
2. Level or volume of activity
3. Total fixed costs
4. Per unit variable cost
5. Sales mix
The main method adopted to carry out profit analysis is the profit volume ratio,
which is calculated by dividing the shareholders contribution by the sales and then
multiplying it by 100 as follows:
Profit Volume Ratio = (Shareholders Contribution / Sales) * 100

Return on Retained Earnings (RORE)


The return on retained earnings (RORE) is a calculation to reveal the extent to
which the previous year profits were re-invested. The return on retained earnings
is expressed as a percentage ratio. A higher return on retained earnings indicates
that a company would be better off reinvesting the business. On the contrary, a
lower return on retained earnings indicates that paying out dividends might prove
to be in the companys best interests.

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Return on Sales (ROS)


Return on sales is a ratio widely used to evaluate an entity's operating
performance. It is also known as "operating profit margin" or "operating margin".
ROS indicates how much profit an entity makes after paying for variable costs of
production such as wages, raw materials, etc. (but before interest and tax). It is the
return achieved from standard operations and does not include unique or one off
transactions. ROS is usually expressed as a percentage of sales.
Calculations of ROS commonly use operating profit before deducting interest and
tax (EBIT); using income after-tax is less common.
Return on Sales (Operating Margin)= EBIT / Revenue

Return on Investment (ROI)


Return on investment is performance measure used to evaluate the efficiency of
investment. It compares the magnitude and timing of gains from investment
directly to the magnitude and timing of investment costs. It is one of most
commonly used approaches for evaluating the financial consequences of business
investments, decisions, or actions.
To calculate return on investment, the benefits (or returns) of an investment are
divided by the costs of the investment. The result can be expressed as a
percentage or a ratio.
Return on Investment (ROI) = (Gains from Investment Cost of
Investment) / Cost of Investment

Gross Profit Margin (Gross Margin)


Gross profit margin is the ratio of gross profit (gross sales less cost of sales) to
sales revenue. It is the percentage by which gross profits exceed production costs.
Gross margins reveal how much a company earns taking into consideration the
costs that it incurs for producing its products or services. Gross margin is a good
indication of how profitable a company is at the most fundamental level, how
efficiently a company uses its resources, materials, and labor. It is usually
expressed as a percentage, and indicates the profitability of a business before
overhead costs; it is a measure of how well a company controls its costs.
Gross margin is calculated as gross profit divided by total sales (revenue).
Gross Profit Margin = Gross Profit / Revenue

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Operating Ratio
Operating ratio shows the operational profit and vice versa. An operating ratio
raining between 75% and 80% is generally considered as standard for
manufacturing concerns.
The formula is ---[Operating Ratio= (COGS + Operating Expenses)/Net Sales]* 100

Net Profit Margin


Net profit margin (or profit margin, net margin, return on revenue) is a ratio of
profitability calculated as after-tax net income (net profits) divided by sales
(revenue). Net profit margin is displayed as a percentage. It shows the amount of
each sales dollar left over after all expenses have been paid.
Formula is--Net Profit Margin = Profit (after tax) / Revenue

Effective Rate of Return


The effective rate of return is the rate of interest on an investment annually when
compounding occurs more than once.
It is calculated through the following formula:
Effective Rate of Return = (1 + i/ n) n-1

Return on Equity (ROE)


Return on Equity (ROE) is the amount of net income returned as a percentage of
shareholders equity. It reveals how much profit a company earned in comparison
to the total amount of shareholder equity found on the balance sheet.
Return on equity is calculated by taking a years worth of earnings and dividing
them by the average shareholder equity for that year, and is expressed as a
percentage:
ROE = Net Income after Tax / Shareholder's Equity

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Expense Ratio
It is the ratio of net profit to shareholders investments. It is the relationship
between net profit (after interest and tax) and shareholders find.
The formula is--Expense Ratio= (Particular Expense/Net Sales)*100

Price Earnings Ratio


Price earnings ratio helps the investor in the deciding whether to buy or not to buy the
shares of particular company at a particular market price.
The formula is--Price Earnings Ratio= Market Price per Equity Share/ Earnings per Share

2.10: Liquidity Ratio

Current Ratio
This ratio is general and quick measure of liquidity of a firm. It represents margin
of safety or cushion available to the creditors. It is an index of the firms financial
stability. It is also an index of technical solvency and an index of the strength of
working capital.
The formula is--Current Asset / Current Liabilities

Liquidity Ratio
This ratio is very useful in measuring the liquidity position of the firm. It measures the
firms capacity to pay off current obligations immediately and is more rigorous test of
liquidity than the current ratio.
The formula is--Liquid Ratio= Liquid Assets / Current Liabilities

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Inventory Turnover
The Inventory turnover is a measure of the number of times inventory is sold or
used in a time period such as a year. The equation for inventory turnover equals
the Cost of goods sold divided by the average inventory. Inventory turnover is
also known as inventory turns, stock turns, stock turns, turns, and stock turnover.
The formula is--Inventory Turnover=

Cost of Goods Sold


Average Inventory

Fixed-Asset Turnover
Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the
value of fixed assets (on the balance sheet). It indicates how well the business is
using its fixed assets to generate sales. The higher the ratio, the better, because a
high ratio indicates the business has less money tied up in fixed assets for each
unit of currency of sales revenue. A declining ratio may indicate that the business
is over-invested in plant, equipment, or other fixed assets.
The formula is
Fixed Asset Turnover=
Net Sales
Average Net Fixed Asset

2.11: Other Related Issues


Financial statement analysis can produce meaningful insights about a companys
financial information and its prospects for the feature. However the forecaster
must be aware of certain important consideration about financial statements and
the of these analytical tools for example the dollar amounts for many types of
assets and other financial statement items are usually based on historical costs and
do not reflect replacement costs or inflationary adjustments. Furthermore,
financial statements contain estimates of numerous items, such as warranty
expense and uncollectible customer balances. The meaningfulness of the rates and
percentage depends on how well the financial statements amounts shows the
companys situation. Making important comparisons is also hampered when a
company or its company or its competitors have widely diversified operation
The tools of financial statements analysis ratio and percentage calculations are
relatively easy to apply. Understanding the content the financial statements, on
the other hand is not easy task. Evaluating a companys financial status,
performance, and prospect using analytical tools requires skillful application of
the analysts finding.

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Chapter: 03
Practical Issues

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Chapter: 03(Practical Issues)


3.01: Square Pharmaceuticals Ltd. Bangladesh
Vision:
They view business as a means to the material and social well-being of the
investors, employees and the society at large leading a to accretion of wealth
through financial and moral gains as part of the process of the human civilization.
Mission:
Their assignment is to produce and provide quality and innovative health care
relief for people, maintain stringently ethical standard in business operation also
ensuring benefit to the shareholders.
Objectives:
Their intention is to conduct transparent business operation based on market
mechanism within the legal and social framework with aims to accomplish 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.
Background:
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 competitor.
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 1958 and converted into a
public limited company in 1991. The sales turnover of SPL was more than Taka 5
Billion (US$ 90 million) with about 15% market share (April 2003 March 2004)
having a growth rate of about 16.The company was founded in 1958 by Samson
Chowdhury along with three of his friends as a private firm. It went public in
1994.
Looking Beyond the Organization:
Square pharmaceutical limited has extended its range of services towards the
highway of global market. She Pioneered exports of medicines from Bangladesh
in 1987 and has been exporting antibiotics and other pharmaceutical product. The
extension in business and services has manifested the creditability of square
pharmaceutical Limited.
Function of Organization:
Ensure strict compliance with GMP Standards and local regulatory norms is every
phase of sourcing procuring quality assurance and delivery of medicines. Square
is committed to undertake appropriate review, evaluation and performance
measurement of processes business activities and quality of Management system
for continual resources and company growth.

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Formulation of Corporate Strategy Techniques:


As leading firms in the country square pharmaceutical develop its corporate
formulation that is consistent with its accepts are:
1) Corporate level strategy
a) Growth of directional strategy
b) Portfolio strategy
2) Comparative strategy
3) Functional strategy
a) Executive Management
b) Management Committee
c) Environment of SHR Planning
4) Recruitment, Selection and Retention
a) Internal \Source
b) External Source
c) Employee Referrals
Strategy choices usually made training development and may other strategy.
Square Pharmaceuticals Ltd Organization Structure
Information technology (IT) Development
Medical services Department
1. Product management
2. Sales Department
3. Medical services Department
4. Market research and planning cell
1/a) Introduction of new products into the market
b) Manage the existing portfolio to achieve the marketing objectives.
2/a) Pay regular visit to the doctors.
b) Show the benefits to new existing products with the help of promotional tools.
c) Monitor the competitors activities.
d) Market rearranges.
3/a) Ensure smooth distribution of products to all over the country.
b) Collection of payments from the customers.
c) Maintenance of vehicles and depts.
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International Market Department

Exploration of new markets all over the world.


Opening exporting business in the different countries.

Market Research and Planning Cell

Performing marketing survey on the Bangladesh pharmaceutical market


Performing different market research work on different issues.

Quality Management and Audit

To monitor the activities to ensure compliance with defied quality policy at every
stage of business.
Development process and instruction for continuous development of operations to
increase productivity.

Planning and Inventory Cell (PPIC)

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Prepare the mouthy production schedule of different products.


Maintain the inventory status of different raw materials and packing materials.

3.02: Analysis of Findings:


In this section an attempt has been made to analyze the findings of Square Pharmaceuticals
Ltd.

Table-1
Profitability Ratio

Name of Ratio

Formula

Year
2008

2009

Average

2010 2011

2012

Gross profit ratio

Gross profit/net
sales*100

41.3

0.01

42.8

42.9

4.28

9.436

Net profit ratio

Net profit/net
sales*100

16.8

19.2

18.2

18.8

18.0

18.2

Operating ratio

Cost of goods sold +


operating expenses/net
sales*100
Particular/net
sales*100

760.9 107.2

79.2

79.6

79.3

221.24

20.4

18.12

21.9

22.3

5.8

17.704

318.1

41.3

37.1

32.8

0.3

85.92

Operating
expenses ratio
Dividend payout
ratio

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Dividend perequity
share/earnings per
share

Table-2
Solvency Ratio

Name of Ratio

Formula

Year

Average

2008

2009

2010

2011

2012

After tax net profit +


deprecation / long-term
liabilities + short-term
liabilities
Current asset / current
liabilities

0.5

0.3

0.06

4.5

2.44

1.64

1.2

1.4

2.0

1.5

1.5

1.6

0.16

0.29

0.34

0.24

0.32

0.27

Current debt to
inventory ratio

Cash +accounts
receivable / current
liabilities
Current liabilities /
inventory

1.8

1.2

1.0

1.9

15.9

4.36

Current liabilities
of net worth ratio

Current liabilities / net


worth

0.67

3.93

0.26

4.52

3.09

2.494

Solvency ratio

Current ratio
Quick ratio

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Table-3
Operational Ratio
Name of Ratio

Operating ratio

Inventory
turnover ratio
Average debt
collection ratio
Account
receivable
turnover ratio
Account payable
turnover ratio
Fixed asset
turnover ratio

Formula

Year
2008

2009

2010

2011

2012

Cost of goods sold +


operating expense / net
sales * 100
Cost of goods sold /
average inventory

79.3

23.9

79.2

79.5

79.3

68.24

2.3

2.8

2.9

3.0

34.1

45.1

Trade debtors *
number of working
days / net credit sales
Net credit sales /
average account
receivable
Net credit purchase /
average accounts
payable
Net sales / net fixed
asset

1284.7 1383.9 463.5 379.1

3323.9

6,835.1

0.28

0.26

0.77

0.94

1.08

3.33

48.1

45.7

16.7

10.5

10.4

26.28

2.02

2.0

2.04

1.9

1.8

2.352

From the above calculations its seen that:

Their profitability position is good.


Solvency position is not good.
Operational efficiency is also not good enough.

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Average

3.03: SWOT Analysis of Square Pharmaceuticals Ltd.


A SWOT analysis identifies and assesses the strengths, weaknesses, opportunities, and threats an
organization faces. SWOT analysis of the SPL illustrates to upper management what the
company is excelling in, what improvements need to be made, where growth is possible, and
what defensive measures need to be taken to protect shareholder or company value.
Strength:
A strong supply chain helps Square Pharmaceuticals Ltd obtain the right resources
from suppliers and delivery the right product to customers in a timely manner to their
product.
SPL has skilled scientists/technicians/management personnel at affordable cost leading
to low cost of innovation/ manufacturing/capex costs/expenditure to run cGMP(current
Good Manufacturing Practice) compliance facilities and high quality documentation
and process understanding.
The healthy domestic market with rising per capita expenditure is another significant
strength enabling achievement of economies of scale. SPL also has a strong marketing
and distribution network.
It has Company Strength & product strength, Company strengths effects positively on
the product and products strength effects positively on the Company.
Square has highly skilled sales forces and very efficient and wide distribution channels.
Square ranked & held the First position in Pharmaceuticals Industry since 1985, which
means it is in the top for last 28 years.
Being in the top for this long time resulted in a very positive impression for all their
products in the minds of the doctors & patients already, it occupies a good position in
their minds.
The number of sales force of the company, their capability, Training, and selling skills
are in better condition and position than other company.
Square follows very transparent marketing activities; there is no misleading or fraud
that is why it enjoys a good reputation in the market.
Client satisfaction.
Continuous innovation and investment on core categorizing and new business
initiatives.
Constant focus on effective and innovative ways of communication.
Qualified employees
Reliable stranded employees.
Weakness:
Square has introduced the Omeprazole Injection late in the market.
Omeprazole Injection has introduced already by Incepta and popular before Square.
Square has lost the opportunity to be the first introducer and cannot enjoy the benefits
of it.

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Low investments in innovative R&D continue to be a major weakness of Square


Pharmaceutical Ltd.
Strong linkages between industry and academia which are essential for growth of the
industry is lacking in SPL
Rapidly increasing costs of skilled manpower such as scientists, regulatory
compliance personnel, pharmaceutical lawyers, and international business development
personnel is pushing up the cost of innovation.
Sales and marketing knowledge is inadequate due to lack of understanding
of international Pharmaceutical marketing, pricing practices and market environment in
various countries.
Insufficient manufacturing practices.
Opportunities:
In the market, the number of Antiulcer patients is increasing, when the number of
patients increases the possibility of a good return from the required drug increases.
On that viewpoint, we are seeing a good opportunity for our Omeprazole Injection since
the market is growing.
Unbelievable export potential.
Drug delivery system management.
Income is increasing day by day.
Clinical trials and research.
Due to the cost advantage in contract manufacturing and Research multi-national
companies, find it forceful to shift their production bases to countries offering such cost
advantage.
Marketing alliances for MNC products in domestic and international market is another
promising opportunity.
There is a possibility of greater returns from other countries of the world by exporting.
Threats:

Some other companies are planning or in process to introduce Omeprazole Injection in


the market.
When they will introduce, they will through a competition in the market as well. Square
needs to consider the competition in planning of their marketing strategies to counter to
this threat and fight back.
R&D efforts of Bangladeshi pharmaceutical companies are hampered by lack of
enabling regulatory requirement.
Lowering of tariff protection has increased competition in domestic markets resulting in
erosion of profitability.
Mergers and acquisitions by other companies may completely change condition of the
market.
Small number of discoveries.
Competition from MNCs.
Transformation of process patent to product patent (TRIPS).
Outdated Sales and marketing methods.
Limited knowledge and experience base.
Pricing and reimbursement level could restrict use.
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3.04: Beximco Pharmaceuticals Ltd. Bangladesh


Philosophy:
They firmly believe that in the final analysis we are accountable to each of the
constituents with whom we interact; namely, our customers, our employees, our
suppliers, our shareholders, and fellow citizens.
Vision:
The vision of BEXIMCO reflects in the Chairman subsequent statement (Groups Annual
Report 2000).
If there is one characteristic that has typified the BEXIMCO approach it is Vision to be
the best of our nature and human resources. A vision to establish our group and country
as a respected and valued regional presence.
Mission:
Each of their activities must benefit and add value to the common wealth of the society.
They confidently believe that, in the final analysis they are accountable to each of the
constituents with whom they interact; namely; their employee, customer, business
associates, fellow citizens and their shareholders.
Objectives:
Their objectives are to conduct transparent business operation based on market within the
framework to attain the mission according to the vision.
Beximco Pharmaceuticals Company Ltd:
Beximco is the largest business firm of private sector in Bangladesh. Apart from the
national government, Beximco employs highest number of people in the country. Over
the years since started it could gain a position to symbolize effective management, fund
generation, and diversification of exploring business opportunities. Today it is one of the
most known names in the countrys business field. Beximco practices an appropriate
combination to give authority and responsibility that works to motivate employees and
yield better performance for the company as a whole. Recruiting the efficient and
potential people, planning to develop human resources, exploring business opportunity,
and information management have strengthened the effectiveness and image of the group.
Beximco Pharmaceuticals Ltd. is one of the four companies strategically included in the
Beximco Chemical Division. BPL attained turnover of Tk. 2.453 billion during 2000.
It all began in 1980 when BPLs first product made under license of Bayer AG, Germany
rolled out of a small manufacturing plant in Tongi, Dhaka. Products made under license
of Upjohn Incorporated, USA followed. After its initial years of struggle, it broke ground
with the launching of its own products in 1983. Today, BPL holds almost 15% share in
the domestic market.

29 | P a g e

Technology:

It stands in its quality controls system and up to date manufacturing facilities.

It has established manufacturing facilities conforming to GMP and WHO


standards.

During all stages of manufacturing operation from receiving raw material to the
release of the finished product the requirement of GMP are strictly adopted.

Innovation:

Research and development department were established in order to innovate new


product, improving production process, product quality.

This R & D teams is also continuously monitoring market feedback of various


product to find ways of betterment.

In 2005, Beximco Pharmaceuticals Ltd adds 49 new products lunched across a range of
beneficial classes with its existing brands.
Nation Wide Distribution Strength:

BPL has a distribution unit I & I services Ltd.

It maintained a large distribution network and covers over 25000 retail pharmacies
every month all over the country.

a highly sophisticated computerized order processing system, sufficient logistic


facilities like vehicles, depots and also professional sales people are also there in

order to keep pace with increasing market demand.


New People Experienced Work:
BPLs committed team of professionals form various disciplines are included in
favorable environment to achieve companies objective.
They strongly believe in the companys philosophy of serving the nation and
contributing to the society.
It has over 1,981 young, energetic, professionals ensures the timely promotion and
smooth running of the product to every parts of the country.
The following major departments manage the activities of BPL:
1) Central Product Management Department
2) Planning Department
3) Purchase Department
4) Sales Department
5) Sales Education and Training Department
6) Medical Services Department
7) Business Research and Development Department
30 | P a g e

8)
9)
10)
11)
12)

Market Research and Statistical Cell Department (MRC).


International Marketing
Fine Chemicals Department
MIS Department
Finance and Accounts Department

Market Research and Statistical Cell Department (MRC):


Market Research saves the time, resource, wastage of energy and money.
It helps to know about the condition of existing product, helps to set the further steps,
helps to achieve the objectives and target of the company.
It helps to know the condition of the competitors, market share and market growth
rate etc.
Market Research can keep the record of each and every product and also some other
factors like which product is earning more value for the company and which product
is not.
It also helps to identify that product which one needs a large promotion to increase
its sales in volume.
Marketing Research Department not only keeps the products record but also keeps
the doctors record.
In BPL, MRC Department was established in 1987 with one Sr. product officer and five
Market Research Representatives under Central Product Management (CPM)
Department. MRC Department divided the whole country into 20 zones to make the
research work effectively and accurately. MRC Department has a research team which
controlled by the MRC department which includes senior officer, MR officer, Assistant
MR officer and MR supervisor ( office), and the manager of MRC department is
responsible for the whole activities of Department. In this department there are 32
employees working together.

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3.05: Analysis of Findings:


In this section an attempt has been made to analyze the findings of Beximco Pharmaceuticals
Ltd.

Table-1
Profitability Ratio

Name of Ratio

Formula

Year
2008

2009

2010

Average
2011

2012

Gross profit ratio

Gross profit/net
sales*100

50.05 47.28

44.82 45.28

47.25

37.49

Net profit ratio

13.59 12.83

39.94 26.11

14.2

21.33

Operating ratio

Net profit/net
sales*100
Cost of goods sold +
operating expenses/net
sales*100

75.09 79.43

58.12 70.17

76.23

71.81

Operating
expenses ratio

Particular/net
sales*100

25.14 26.71

2.95

15.46

23.48

18.75

Dividend payout
ratio

Dividend per equity


share/earnings per
share

31.81 40.36

37.25 35.74

30.32

35.06

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Table-2
Solvency Ratio

Name of Ratio

Formula

Year

Average

2008

2009

2010

2011

2012

After tax net profit +


deprecation / long-term
liabilities + short-term
liabilities
Current asset / current
liabilities

0.8

0.6

0.1

3.9

2.55

1.59

1.09

0.29

2.39

1.91

2.67

1.67

0.22

0.75

1.31

1.00

0.55

0.766

Current debt to
inventory ratio

Cash + accounts
receivable / current
liabilities
Current liabilities /
inventory

1.72

1.34

2.49

4.68

1.25

2.296

Current liabilities
of net worth ratio

Current liabilities / net


worth

0.61

4.07

1.74

6.33

1.83

2.916

Solvency ratio

Current ratio
Quick ratio

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Table-3
Operational Ratio

Name of
Ratio
Operating
ratio

Inventory
turnover ratio
Average debt
collection
ratio
Account
receivable
turnover ratio
Account
payable
turnover ratio
Fixed asset
turnover ratio

Formula

Cost of goods sold


+ operating
expense / net sales
* 100
Cost of goods sold
/ average
inventory
Trade debtors *
number of
working days / net
credit sales
Net credit sales /
average account
receivable
Net credit
purchase / average
accounts payable
Net sales / net
fixed asset

Year

Average

2008

2009

2010

2011

2012

75.09

28.48

58.12

70.17

76.22

61.616

1.33

1.48

2.66

3.06

2.01

2.108

2,282.42 1256.87 760.43 1372.33 4,351.87 2004.784

0.78

0.62

0.66

0.84

1.09

0.798

50.1

48.43

32.71

29.44

19.12

35.96

3.36

0.37

5.51

0.12

0.57

1.986

From the above calculations it s seen that:

Their profitability position is good.


Solvency position is not good but slowly growing well.
Operational efficiency is also not good enough but gradually upgrading.

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3.06: SWOT Analysis of Beximco Pharmaceuticals Ltd.


Upon study of the organization Beximco Pharmaceuticals Ltd, some of the findings are as
follows:
Strengths:
BPL currently manufactures about 452 products with different dosage forms under
different brand names. Many of its products enjoy the position of brands leaders in
the market.
Sales of the formulation products increased by 2.55% and export by 6.65%.
Beximco Pharma has successfully captured the local pharmaceutical market and
enjoys a commending share of 9% of the entire market.
Beximco Pharma believes that the use of different type of information system.
It is using different type of technology for move their company to carrying
innovation forward.
BPL has secured market position in the market by following cost leadership
strategies as well as aggressive promotional activities. The companys strong support
to the medical community has gained its brand locality form the doctor.
Weakness:
BPL has a narrower product line and number of products than its standard competitor
in the market.
The company produces so many product variations for that reason some time feels
confuse what to suggest BPL product.
BPLs distribution network is not working as good as its competitor in the urban area.
Opsonin , Acme is doing well in this area than BPL.
Warehouse management system is not well, so always they face storage problem.
Opportunities:
The next stage growth is expecting to come from backward integration to
manufacturing processes that are difficult to duplicate products and exports.
The WTO agreement extended in 2016 instead of 2005 for the LDC only in
pharmaceutical company.
The company starts to produce kind of injectable comparing. The injectable market
is a large one so they can easily competes their rival companies.
Entered into nine new international markets in Asia, Middle East, Pacific Islands,
Africa and Central America. Registered 107 new products in different overseas
markets.
In Bangladesh, pharmaceutical companies are considered as growing company.
Therefore, there are many opportunities in this field.

35 | P a g e

Cost of producing product cost low their close competitor it will help them to charge
low price of the product it given huge market opportunities in Middle East and North
Africa nation.
Beximco Pharma has some project to build facility to manufacture Small Volume
Parenterals (SVP), Ophthalmic and Nebulizer Solutions progressed as scheduled.

Threats:
In most case, the product cost of Beximco Pharma is higher than that of other
companies because of high cost of maintaining quality products, high distribution
cost etc. In the context of Bangladesh economic structure, BPL is in fear of losing
market in the rural areas.
In Bangladesh the copyright act is not applied by the government appropriately
which creates constantly threats for the company as its competitors easily copy its
products.
Because of political instability and poor infrastructure facilities BPL faces problems
in Local marketing.
BPL also facing treats forms its Indian counterparts as they are offering their
products at lower price than it is.
After 2015, they face lot of challenge for TRIPS purpose.
Overall sales declined by 2.84%.

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Chapter: 04
Concluding Notes

37 | P a g e

Chapter: 04(Concluding Notes)


4.01: Summary of the Report
As my project topic is ASSESSMENT OF FINANCIAL HEALTH: A COMPARATIVE
STUDY OF TWO SELECTED PHARMACEUTICAL FIRMS OF BANGLADESH ,
I have tried to find out the situation of financial market position and strength of pharmaceuticals
market of Bangladesh. For that, I have selected two big competitors who are specialist in
pharmaceutical field.
By this study I have learned about the importance of ratio analysis, the Meaning of ratio, Types
of ratio like- Test of Profitability, Test of Solvency, Test of Operation Efficiency.
To cover the lacking in financial report, analysis of different ratio to measure the financial
movement and survivable against the obligation. Analyzed ratios are given below:
Profitability Ratio Gross profit ratio
Net profit ratio
Operating ratio
Operating expense ratio
Dividend payout ratio
Solvency Ratio Solvency ratio
Current ratio
Quick ratio
Current debt to Inventory ratio
Current liabilities of net worth ratio
Operational Ratio Operating ratio
Inventory turnover ratio
Average debt collection ratio
Account receivable turnover ratio
Account payable turnover ratio
Fixed asset turnover ratio
By using all those ratios, the financial situation (2008-20012) of these two companies served. As
we cannot compare their financial status with each other, so I showed their analysis
independently.
First, the average position of Square Pharmaceuticals Ltd is well. On the other hand, few ratio
performances are not fully to meet the companys satisfaction. At last, I want to say company
should raise their awareness to overcome the weedy financial situation, in the condition if that
weak situation constant that time company may would be fall in risk scenario.
38 | P a g e

According to the ratio analysis of Beximco Pharmaceuticals Ltd the average position is also in
a very good flow and few individual ratio shows that the it also have some lacking to meet the
companys will. I have some advice for them that is not to go in a comfort zone which will help
them to rise their head in this competitive market.

4.02: Recommendations:
Need to be innovative and updated to compete the competitor.
The possible causes of fall of return on asset, return on equity ratio are rising in the
cost of production, administration, finance cost.
The companies may reduce their operating and non-operating expenses in order to
increase the profitability of the company.
They should organize seminar, campaign and do some promotional activities to
provide proper knowledge and used about medicine.
Evaluation for the good performance of the employees by introducing award and
incentives.
They should try to perform some social responsibility like providing free doctors and
medicine facility to any rural areas for particular period of time.
Comfort zone forbidden.
Need to transparence about political stable activities and forecast the international money
market.
Develop a workforce plan designed to support the organizations strategic goals.
Need to significant coordination attached to the role of top management.

39 | P a g e

4.03: Conclusion:
Square pharmaceutical company always provides good and best quality vaccines. People
satisfied to square product because square always make new vaccines. A strong supply chin
helps the right resources from supplies and delivery the right product to in a timely manner their
product palmary. A strong brand name is major of square pharmaceutical Ltd. Thos gives square,
the ability to charge higher prices for their products because consumers place additional value in
the brand. They provide quality research and represent the new innovative product.
On the other hand, Beximco pharma gives continuous innovation and investment on core
categorizing and new business initiatives. Qualified employees because make customer
satisfaction. Quality assurance stability superior technology allows Beximco pharmaceuticals Ltd
better meet the needs of their customers in ways the competitors can goal. Present market
position proves that Beximco pharmas strength is unique their market planning is perfect with
the change of the time. They know how to cope with the rapidly changing market need and know
how to use the opportunity.
From the total analysis, we can summarize that Square Pharmaceuticals Ltd. has been
doing pretty good throughout the years. It is true that last year their return did decline but
it is still pretty much satisfactory. Therefore, we can conclude that Square
Pharmaceuticals Ltd. is a good enough company to invest on. The Beximco
Pharmaceuticals Ltd. financial analysis indicates that it has been also doing pretty good
throughout the years but not as well as the Square Pharmaceuticals Ltd.

40 | P a g e

4.04: References
Annual Report (2008-2012)
Wikipedia
Definition of Golden Ratio- Art History Glossary
www.theenglishdictionary.org/definition/ratio

DILUTION RATIOMEANING- C0lumbia analysis Services


business-finance.blurtit.com
education.blurtit.com
education.blurtit.com
www.investopedia.com
www.readyratios.com
edupedia.educarnival.com
managerial accounting by Garrison, Noreen, Brewer
Intermediate Accounting by Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
www.wikiwealth.com/swot-analysis:square-pharmaceuticals-ltd
www.scribd.com/doc/A-Report-on-Square-Pharmaceuticals-Ltd
www.assignmentpoint.com/science/pharmacy/financial-statement-analysis-of-squarepharmaceuticals-ltd.html
www.assignmentpoint.com/business/finance/comparative-analysis-of-financialstatements-of-square-pharmaceuticals-ltd-and-renata-pharmaceuticals-ltd.html
www.assignmentpoint.com/science/pharmacy/thesis-paper-on-financial-statementanalysis-of-beximcon-pharma.html
www.slideshare.net/ronibhowmik/profitability-analysis-of-beximco-pharmaceutical-slimited
www.squarepharma.com/corporate-social-responsibility.php
www.beximcopharma.com
www.financialexpress-bd.com
Career.squarepharma.com.bd
www.reportbd.com/beximcopharma
www.evi.com/history_of_square_pharamceuticls_Ltd_bangladesh
www.evi.com/history_of_beximco_pharamceuticls_Ltd_bangladesh
www.loanforbiz.com/Business_Ratio.html

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