Overview of the company: The company has established (Initially as a Partnership) in 1958, and it has incorporated as a Private Limited

Company in 1964. Today it has one of the most sophisticated vertically integrated set-ups in the country. The company has Technical Collaboration Agreement with Janssen Pharmaceuticals of Belgium (a subsidiary of Johnson and Johnson International Ltd. and Technical Collaboration Agreement with F. Hoffman-La Roche and Co. Ltd. It has converted into Public Limited Company in 1991. It has listed in Stock Exchange Listings 1995. The company owns and operates modern pharmaceuticals factories and produces and sells pharmaceuticals drugs and medicines. The company has a separate division to operate a modern Basic Chemical Factory and produces and sells Basic Chemical Products. The company has also a Pesticide Division producing and sells Pesticide Products. The companys business lines are Manufacturing and Marketing of Pharmaceutical Finished Products, Basic Chemicals, AgroVet Products and Pesticide Products. The company has authorized Capital of Tk. 5,000 million and Paid-up Capital of Tk. 1,207.22 million. The companys Gross Turnover of tk. 11,366,598 thousands in 2008-09 financial years. The objectives of Square pharmaceuticals ltd. are to conduct transparent business operation based on market mechanism within the legal and social frame work with aims to attain the mission reflected by our vision. The company is making entry into foreign markets and making efforts in registering its products in USA/EU countries for which it has already set up modern state-of-art production facilities at Kaliakoir, Gazipur. Square is the only local pharmaceutical entity from Bangladesh, which is on the verge of entering the regulatory markets of UK and the European Union. The company has already secured permission for marketing its products in UK/EU countries. Corporate operational result: Particulars Turnover (Gross) Value Added Tax Turnover (Net) Gross Profit Net Profit after Tax Net Assets Value (NAV) Total Assets Total Bank Borrowings Total Current Assets Total Current Liabilities Current Ratio No. of Share Outstanding 2009-10 13,279,14 2 1,816,563 11,462,57 8 4,901,290 2,087,872 11,554,38 0 15,029,50 0 2,231,167 4,774,311 2,216,744 2.15 15,090,30 0 2008-09 11,366,59 8 1,545,801 9,820,797 4,148,231 1,890,053 2007-08 9,565,716 1,307,872 8,257,844 3,401,782 1,381,863

9,949,398 8,417,041 13,251,24 3 12,703,127 2,279,694 3,569,280 3,843,513 4,411,836 2,640,869 3,500,845 1.46 1.26 12,072,24 0 8,942,400

Dividend per Share (Cash) Dividend per Share (Stock) Net Assets Value/ Share (NAV) Earnings per Share (SPL) EPS at Original Capital at IPO Quoted Price per Share - DSE Price Earning Ratio-DSE Number of Shareholders Message from the Chairman

35 30% 766 138.36 1,043.94 3,581 25.88 40,797

40 25% 659 125.25 945.03 2,935 23.43 47,258

40 35% 558 91.57 690.93 4,110 44.88 31,688

According to the Directors the Company has been steadily growing in turnover, profit, net worth and market capitalization over the years. Nevertheless it held the peak position. The Company is looking for spreading its wings in the virgin markets of the world. There are no significant doubts upon the company's ability to continue as a going concern. The company believes Investors investments should bring their rewards in income and capital appreciation. The company is committed to show a stable policy of distribution (cash outlay) of the accretional wealth (profits) between the current and the future generation of shareholders. Operating Highlights of last year During the year (2009-2010) the company invested an amount of Tk. 39,709,590 in improving its Laboratory. The capital expenditures of Tk. 1,405,321,605 during 2009-10 were almost at the level of 2008-09. The major part of investments was made from internal generation of funds. The production plants at Pabna and Kaliakoir had continued to improve their operational efficiency both qualitatively and quantitatively by upgrading technological process, research and training. The company is continuously pressing hard for expanding its export sales. During the year under review, the exports amounted to Tk. 364.54 million as against Tk. 336.34 million in previous year. The overall capacity utilization of the plant operation continued to improve during the year. The operating financial results of the Company for the year 2009-2010 as compared to previous year are summarized hereunder: Particular Gross Turnover Net Turnover Gross Profit Net Profit (AT) Earnings Per (EPS) 2009-10 (Taka) 2008-09 (Taka) % Increase 13,279,141,75 7 11,462,578,41 0 4,901,289,925 2,087,871,791 Share 138.36 11,336,597,92 8 9,820,796,568 4,148,230,595 1,890,052,929 125.25 17.14% 16.72% 18.15% 10.47%

In the line of proposed appropriation of profit, the Board of Directors proposes and recommends for declaration of Cash Dividend at the rate of Tk. 35 per share for the year 2009-2010. The

Board also recommended for declaration of Bonus Shares (Stock Dividend) @ 30%. This will need issuance of 4,527,090 Ordinary Shares of Tk. 100 each with appropriation of Tk. 452,709,000 out of Retained Earnings (free reserves) to Capital Account.

Conclusion Square Pharmaceuticals Limited (SPL) has been honored for being the most successful entrepreneur at Bankers Forum Award 2005. The award has been given in recognition to the companys ethical and socially-responsible business practices and smooth operations with their bankers. SPL has never been a bank defaulter over their forty-eight years of business. The growth of the company is reflected in making more and more peoples life better and better everyday thus contributing to the development of the nation. The company has already forged ahead to evaluating its potential prospects for the final selection of partners who would best serve its long-term interest in this highly lucrative market.

Current Ratio: The Current Ratio is one of the best known measures of financial strength. The quick ratio is a more conservative standard. If the quick ratio is greater than one, there would seem to be no danger that the firm would not be able to meet its current obligations. It is figured as shown below:
Current Ratio = Current Ratio = Current Assets Current Liabilities

4774311194 = 2.15 2216744401

The Current Ratio for Square Pharmaceuticals Ltd. Bangladesh is 1.550596 times, which means the firm is secured to pay its current obligations to the creditors by its available current resources. Quick Ratio: The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of liquidity. It is figured as shown below:
Quic Ratio = Cash + Short term investment + Receivables Current liabilities

Quic Ratio =

508249174 + 221269226 + 258727695 = 0.45 2216744401

The Quick Ratio for Square Pharmaceuticals Ltd. Bangladesh is 0.8170648. If the quick ratio is greater than one, there would seem to be no danger that the firm would not be able to meet its current obligation. But in this case SQUARE PHARMACEUTICALS LTD. BANGLADESH has a lower quick ratio because of lack of liquid cash in hand. As the concern firm is an MFI its current cash holdings is considered as adequate for the operations. So such a quick ratio is not dangerous to Square Pharmaceuticals Ltd. Bangladesh. If the quick ratio is less than one, but the current ratio is considerably above one, the status of the firm is more complex. Working Capital: Working Capital is more a measure of cash flow than a ratio. The result of this calculation must be a positive number. It is calculated as shown below: Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = (4774311194- 2216744401) = 2, 557, 566, 79

In this case the working capital of Square Pharmaceuticals Ltd. Bangladesh is BDT 23,623,140,122. This means the excess amount of current asset over its current liabilities is BDT 23,623,140,122. Net Working Capital Ratio: By dividing Square Pharmaceuticals Ltd. Bangladeshs working capital by it total asset of BDT 82,800,702,331 we will get the Net Working Capital Ratio. The Net Working Capital Ratio of Square Pharmaceuticals Ltd. Bangladesh is 0.285301 or 28.53%

Net working capital ratio =

Net working capital Total Asset 255756679 = 0.17 15029500278

Net working capital ratio =

Return on Asset: The return on assets ratio provides a standard for evaluating how efficiently financial management employs the average investment in the firm's assets, whether the investment came from investors or creditors. It is calculated as follows:
Return on Assets (ROA) = Net Income Average Total Assets

Return on Assets (ROA) =

2087871791 = 0.015 15029500278 + 15029500278 2

The return on asset for Square Pharmaceuticals Ltd. Bangladesh is 0.017194 or 1.7%. The firm has experienced an increase in its total asset, which results a healthy ROA. This ratio is implying that the firm is able to generate 1.7% of profit by employing 1 unit of its asset. Return on Equity: One of the most important profitability metrics is return on equity (or ROE for short). Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet.
Return on Equity (ROE) = Return on Equity (ROE) = Net Income Average Stockholders' Equity

2087871791 = 0.19 11554379825 + 9949397634 2

The return on equity for Square Pharmaceuticals Ltd. Bangladesh is 0.212102 or 21.21% which is implying that the company is generating 21.21% of profit for per unit of investment by the shareholders. Profit Margin:
Profit Margin = Net Income Sales 2087871791 = 0.16 13279141757

Profit Margin =

Earnings per Share - EPS:

Earnings Per Share (EPS) = Net Income Number of Common Shares Outstanding 2087871791 = 138.36 15090300

Earnings Per Share (EPS) =

Debt to Total Assets Ratio: The debt to assets ratio indicates the extent to which assets are encumbered with debt. It is calculated as follows:
Debt - to - Total Assets Ratio = Non Current Liabilities + Deffered Tax Total Assets

Debt - to - Total Assets Ratio =

1032633110 + 225742942 = .08 15029500278

The debt to total asset ratio for Square Pharmaceuticals Ltd. Bangladesh is 0.922265 or 92.2%. This ratio is implying that the creditors have contributed about 92% of its total asset. This ratio indicates the companys degree of leverage- and by this way the ratio calculated here is indicating that the Square Pharmaceuticals Ltd. Bangladesh is a highly levered firm. Receivable Turnover - The receivable turnover ratio for Square Pharmaceuticals Ltd. Bangladesh is 1.249334 times, which is indicating a poor liquidity position of Square Pharmaceuticals Ltd. Bangladesh.
Receivable Turnover =
ReceivableTurnover =

Net Sales Average Receivable

11462578410 = 23.26 508249174 + 477562002 2

Average Collection Period - The average collection period (in days) for Square Pharmaceuticals Ltd. Bangladesh is calculated as follows and it is 292.156
Average Collection Period = Average Collection Period = 365 Receivable Turnover 365 = 15.695 23.26

The Debt to Equity Ratio: Debt to Equity Ratio is also referred to as Debt Ratio, Financial Leverage Ratio or Leverage Ratio. The debt to equity (debt or financial leverage) ratio indicates the extent to which the business relies on debt financing. This ratio is calculated dividing the total long-term liabilities by the firms total shareholders equity.
Debt to Equity Ratio = Total Long - term Liabilities Total Stockholders' Equity

Debt - to - Equity =

1032633110 + 225742942 = .11 11554379825

The debt to equity ratio for Square Pharmaceuticals Ltd. Bangladesh is abnormally large. This is because the company is almost entirely financed through debt, which is consisted by Borrowings from banks and other institutions, Deposits and other funds, other liabilities among which deposit and other liabilities is huge but in comparison with this the capital fund is very negligible. The operation of Square Pharmaceuticals Ltd. Bangladesh is mainly managed through its deposits account. The Interest Coverage Ratio: Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honor its debt payments. In case of Square Pharmaceuticals Ltd. Bangladesh we have calculated TIE as EBIT divided by the total interest expense. Times Interest Earned or Interest Coverage is used to measure a company's ability to meet its debt obligations through available earnings.
Interest Coverage Ratio = Income Before Interest and Income Tax Expenses Interest Expense 2689618986 + 585564826 = 10.60 308861107

Interest Coverage Ratio =

The TIE for Square Pharmaceuticals Ltd. Bangladesh is 1.398828558 times which is indicating that the company is generating sufficient earnings to meats is debt obligation. This means that Square Pharmaceuticals Ltd. Bangladesh is able to meet its interest payments 10.60 times over. The Price Earnings:
Price Earnings (PE) Ratio = Market Price of Common Stock Per Share Earnings Per Share 4411.7 = 26.66 165.48

Price Earnings (PE) Ratio =

Market-to-Book Ratio:
Market to Book Ratio = Market Price of Common Stock Per Share Book Value of Equity Per Common Share 4411.7 = 5.76 765.68

Market to Book Ratio =

Book Value of Equity per Common Share = Book Value of Equity for Common Stock / Number of Common Shares The Dividend Yield:
Dividend Yield = Annual Dividends Per Common Share Market Price of Common Stock Per Share 35 = 0.008 4411.7

Dividend Yield =

Book Value of Equity per Common Share = Book Value of Equity for Common Stock / Number of Common Shares Dividend Payout Ratio:
Dividend Payout Ratio = Cash Dividends Net Income Cash Dividends per Share Net Income per Share 35 = 0.21 138.36

Dividend Payout Ratio =

Dividend Payout Ratio =