Fin 254Report Final(1)

7/27/2019 Fin 254Report Final(1)

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FIN 254.3

Faculty: Tanvir Nabi Khan

ByJollyAhmed

ID:051541030

Submission Date: 27.04.11


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Findings and analysis:

Liquidity Ratio Current ratio:

This ratio indicates the extent to which current liabilities are covered by those assets expected to

be converted to cash in the near future. Current assets normally include cash, marketable

securities, accounts receivables, and inventories. Current liabilities consist of accounts payable,

short-term notes payable, current maturities of long-term debt, accrued taxes, and other accruedexpenses (principally wages).

Current Ratio =

Current Ratio

Year 2007 2008 2009

Current Assets 3,228,200,000 5,926,100,000 7,636,100,000

Current Liabilities 3,481,900,000 5,971,600,000 7,162,200,000

Current Ratio 0.93 0.99 1.07

From the analysis, we can see that in 2007 the current ratio were 0.93 times. A minimal increase

to 0.99 is seen in 2008 and it went up at 1.07 times in 2009. A current ratio 1.0 would be


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considered acceptable for a public utility. Generally the higher the current ratio, the more liquid

the firm is considered to be.

Quick ratio:This ratio indicates the firms liquidity position as well. It actually refers to the extent to which

current liabilities are covered by those assets except inventories.

Quick Ratio =

Quick RatioYear 2007 2008 2009

Current Assets 3,228,200,000 5,926,100,000 7,636,100,000

Inventory 1,583,000,000 3,144,300,000 2,773,700,000


Quick Ratio 0.47 0.47 0.68

Here, in 2007 ratio was 0.47 and in 2008 remained constant to 0.47 times and in 2009 it reached

the higher level of 0.68 during the three years.

Analysis of this ratio speaks in a same language as current ratio. Standing at this point, we can

make an assumption that may be their profit margin was not high that they can make some


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investments paying off the liabilities that could result in an increase in assets and decrease in

liabilities to make the liquidity position far better. This assumption can only be proved as we go

on analyzing their financial statement and calculate the profitability ratios.

ASSET MANAGEMENT RATIO Inventory turnover ratio:

The ratio is regarded as a test of efficiency and indicates the rapidity with which the company is

able to move its merchandise.

Inventory Turnover =

Inventory Turnover

Year 2007 2008 2009

Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000

Inventories 1,583,000,000 3,144,300,000 2,773,700,000

Inventory Turnover 3.64 3.29 4.43

Analysis shows that at 2007 ratio was 3.64 times but at 2008 it declines to 3.29 times and at 2009

it went up to 4.43 times.


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Declining inventory turnover commonly indicates that the company is not being able to flush its

inventory very well as it was doing in the previous years. A low turnover rate may point to

overstocking, obsolescence, or deficiencies in the product line or marketing effort. High

inventory levels are unhealthy because they represent an investment with a zero rate of return in

addition to the increased cost associated with maintaining those inventories.

Day sales outstanding (DSO):

The Days Sales Outstanding ratio shows both the average time it takes to turn the receivables

into cash and the age, in terms of days, of a company's accounts receivable. This ratio is of

particular importance to credit and collection associates.

Days Sales Outstanding (DSO) =

Days Sales Outstanding (DSO)

Year 2007 2008 2009

Trade Debtors 1,079,100,000 1,971,400,000 2,725,100,000

Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000

Days Sales Outstanding (DSO) 68.42 69.58 80.87


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Analysis shows that in 2007 DSO were 68.42 days and it gradually went up. In 2008 it was

69.58 days and in 2009 it was the highest 80.87.

DSO is meaningful only in relation to the firms credit terms. DSO 80.87 days indicates a poorly

managed credit or collection department or both.

Fixed asset turnover:The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales revenue from

investments in Net Property, Plant, and Equipment back into the company evaluates only the

investments.

Fixed Assets Turnover =

Fixed Asset Turnover

Year 2007 2008 2009

Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000

Non-Current Assets 2,517,400,000 3,240,500,000 3,754,500,000Fixed Asset Turnover 2.29 3.19 3.28


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The analysis shows that the fixed asset turnover ratio was as high as 3.28 times among three

years. However in 2007 it was 2.29 times and it gradually went up to 3.28 in 2009.

Fixed asset turnover ratio gradually increased because the company keeps pace with the increase

of companys fixed assets.

Total asset turnover:The Total Asset Turnover is similar to fixed asset turnover since both measures a company's

effectiveness in generating sales revenue from investments back into the company. Total Asset

Turnover evaluates the efficiency of managing all of the company's assets.

Total Asset Turnover =

Total Asset Turnover

Year 2007 2008 2009

Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000

Total Assets 5,912,400,000 9,409,300,000 11,693,200,000

Total Assets turnover 0.97 1.10 1.05


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The analysis shows that 1.05 times were the highest among the three years. In 2007 it was 0.97

times and in 2008 it was 1 times and in 2009 it was 1.05 times. 1.05 means that the company

turns over its assets 1.05 times per year.

DEBT MANAGEMENT RATIO Debt ratio:

The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of

funds provided by the creditors.

Debt Ratio =

Debt Ratio

Year 2007 2008 2009

Total Debt 4,117,500,000 6,597,300,000 8,350,000,000

Total Assets 5,912,400,000 9,409,300,000 11,693,200,000

Debt Ratio 70 70 71

The analysis shows that during the years the ratios are almost same. In 2007 and 2008 it was

70% and in 2009 it goes up to 71%. The values indicate that the company has financed 70% of


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its assets debt. The higher this ratio, the greater the firms degree of indebtedness and the more

financial leverage it has.

Times interest earned (TIE):This ratio measures the extent to which operating income can decline before the firm is unable to

meet its annual interest cost.

Times-interest earned ratio =

Times-interest earned ratio

Year 2007 2008 2009

Net Profit Before Tax 586,800,000 899,700,000 718,800,000

Financial Expenses 220,500,000 485,400,000 517,400,000

Times-interest earned ratio 2.66 1.85 1.39

We can see from this ratio analysis that, this company has covered their interest expenses 2.66

times in 2007, 1.85 times in 2008 and 1.26 times in 2009. Ratios went down gradually. So it

indicates that they issued a little number of long-term loans and does have good liquidity

position, their EBIT became low thus making TIE a little low as well.


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PROFITABILITY RATIO Profit margin on sales:

Net Profit Margin gives us the net profit that the business is earning per dollar of sales.

Profit margin on sales =

Profit Margin on Sales

Year 2007 2008 2009

Net Profit After Tax 340,300,000 917,900,000 594,500,000Gross Turnover 5,756,800,000 10,341,400,000 12,299,700,000

Profit Margin on Sales 5.91 8.88 4.83

According to the analysis, profit margin on sales is 5.91% in 2007, then increased to 8.88% in

2008, and then again decreased to 4.83% in 2009. It implies that the company generates a little

less than 6 paisa, 9 paisa, and 5 paisa in profit for every taka in sales in the year 2007, 2008, and

2009 respectively.


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Basic earning power (BEP):This ratio indicates the ability of the firms assets to generate operating income.

Basic earning power (BEP) =

Basic Earning Power (BEP)

Year 2007 2008 2009

Net Profit Before Tax 586,800,000 899,700,000 718,800,000

Total Assets 5,912,400,000 9,409,300,000 11,693,200,000

Basic Earning Power (BEP) 0.10 0.10 0.06

According to the analysis Basic Earning Power is constant to 0.10 in 2007 and 2008 and

decreased to 0.06 in 2009. This implies that the ability of the companys assets to generate

operating income has decreased in 2009.

Return on assets (ROA):Return of total asset measures the amount of Net Income earned by utilizing each dollar of Total

assets.


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Return on Total Asset (ROA) =

Return on Total Asset (ROA)

Year 2007 2008 2009

Net Profit After Tax 340,300,000 917,900,000 594,500,000

Total Assets 5,912,400,000 9,409,300,000 11,693,200,000

Return on Total Asset (ROA) 0.06 0.10 0.05

The analysis shows that ROA was 0.06 in 2007, and then it goes up to 0.10 in 2008 and then

decreases to 0.05 in 2009. The higher the firms return on total assets, better the profitability.

ROA 0.06, 0.10 and 0.05 indicates that the company earned 6, 10, and 5 paisa respectively on

each taka of asset investment.


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Return on common equity (ROE):Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total

common equity. It is the most important of the Bottom line ratio. By this, we can find out how

much the shareholders are going to get for their shares.

Return on Equity (ROE) =

Return on Common Equity (ROE)

Year 2007 2008 2009

Net Profit After Tax 340,300,000 917,900,000 594,500,000

Shareholders' Equity: 1,706,300,000 2,504,000,000 2,942,000,000

Return on Common Equity (ROE) 0.20 0.37 0.20

According to the analysis, the return on equity increases from 0.20 in 2007 to 0.37 in 2008, and

then decreased to 0.20 in 2009. Generally the higher the return is, the better off is the owners,

this implies that the ROE was better in 2008 than in 2007 and 2009.


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MARKET RATIO Price/earnings (P/E):

The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a

share relative to the income or profit earned by the firm per share.

Price/Earnings (P/E) =

Price/Earnings (P/E)

Year 2007 2008 2009

Price per Share 181.7 521.3 446.9

Earnings Per Share (EPS) 21.14 56.77 50.85

Price/Earnings (P/E) 8.60 9.18 8.79

According to the analysis, the Price/Earnings Ratio increases from 8.60 in 2007 to 9.18 in 2008,

and then decreased to 8.79 in 2009. This implies that the company shares have or carry a PE

multiple of 8.60, 9.18, and 8.79 in 2007, 2008, and 2009 respectively.


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Market/book (M/B):The market-to-book ratio compares the market value of the firms investment to

their cost.

Market-to-book Ratio (M/B) =

Market-to-book (M/B)

Year 2007 2008 2009

Market Price per Share 181.7 521.3 446.9Book Value per Share 92.77 144.92 175.36

Market-to-book (M/B) 1.96 3.60 2.55

According to the analysis, the Market-to-book Ratio increases from 1.96 in 2007 to 3.60 in 2008,

and then decreased to 2.55 in 2009.


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Appendix(FinancialData)


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INTRODUCTION:s

SQUAREtoday symbolizes a name a state of mind. But its journey to the growth andprosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one

of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company,

is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985

and is now on its way to becoming a high performance global player.

SQUAREPharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and it

has been continuously in the 1stposition among all national and multinational companies since

1985. It was established in 1958 and converted into a public limited company in 1991. The sales

turnover of SPL was more than Taka 11.46 Billion (US$ 163.71 million) with about 16.43%

market share (April 2009 March 2010) having a growth rate of about 16.72%.

OBJECTIVES:

Have to analyze the performance of a listed manufacturing company (listed at DSE). The main

objective to analyze the performance in terms of

Liquidity Leverage Activity Profitability Market position

The analysis will indicate whether the performance of SQUARE Pharmaceuticals

Limited is improving or deteriorating and it will also reveal the reasons for that.

SQUAREPharmaceuticals


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FINDINGS AND ANALYSIS:

Liquidity Ratio Current ratio:




short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued

expenses (principally wages).

Current Ratio =

Current Ratio

Year 2007 2008 2009

Current Assets 4,411,836,436 3,843,512,855 4,774,311,194


Current Ratio 1.26 times 1.46 times 2.15 times


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is seen in 2008 and it went up to 1.46 times and it went up at 2.15 times in 2009. A current ratio

1.0 would be considered acceptable for a public utility. Generally the higher the current ratio, the

more liquid the firm is considered to be. In this respect, this company is doing quite well in this

industry.

Quick ratio:This ratio indicates the firms liquidity position as well. It actually refers to the extent to which

current liabilities are covered by those assets except inventories.

Quick Ratio =

Quick Ratio

Year 2007 2008 2009

Current Assets 4,411,836,436 3,843,512,855 4,774,311,194

Inventories 2,026,736,322 2,098,755,231 2,207,078,082




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Here, in 2007 ratio was 0.68 and in 2008 it went down to 0.66 times and in 2009 it went down to

0.16.






ASSET MANAGEMENT RATIO

Inventory Turnover Ratio:The Inventory turnover ratio is regarded as a test of efficiency and indicates the rapidity with

which the company is able to move its merchandise.


Inventory Turnover

Year 2007 2008 2009

Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757

Inventories 2,026,736,322 2,098,755,231 2,207,078,082



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According to the analysis, Inventory turnover is increasing year to year. As, the inventory

turnover is 4.72, 5.42, and 6.02 in the year 2007, 2008, 2009 respectively.

It implies that Square Pharmaceuticals Ltd sold off or turned over their entire inventory 4.72

times, 5.42 times, and 6.02 times in 2007, 2008, and 2009 respectively. Thus it can be said

that they are managing their inventory efficiently as the higher the ratio the more efficiently

the inventory is managed, and their efficiency in managing inventory is increasing with time.

Day sales outstanding (DSO):The Days Sales Outstanding ratio shows both the average time it takes to turn the

receivables into cash and the age, in terms of days, of a company's accounts

receivable. This ratio is of particular importance to credit and collection associates.


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According to the analysis, DOS is 13.75 days, 15.34 days, and 13.97 in the year 2007, 2008, and

2009 respectively.

DSO is meaningful only in relation to the firms credit terms. DOS was lower in 2007, then

increased to 15.34 days in 2008 and then again decreased to 13.97 days in 2009. DOS of 13.97

days in 2009 indicates a fairly managed credit or collection department or both. Analysis implies

that they are improving in management of DOS.

Days Sales Outstanding (DSO)

Year 2007 2008 2009

Trade Debtors 360,245,646 477,562,002 508,249,174

Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757

Days Sales Outstanding (DSO) 13.75 15.34 13.97


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Fixed Asset Turnover RatioThe Fixed Asset Turnover ratio measures the effectiveness in generating Net Salesrevenue from investments in Net Property, Plant, and Equipment back into the

company evaluates only the investments.



Year 2007 2008 2009

Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757

Non-Current Assets 8,291,290,984 9,407,730,001 10,255,189,084

Fixed Asset Turnover 1.15 1.21 1.29

The analysis shows that the fixed asset turnover is gradually increasing from the year 2007 to

2009. As the fixed asset turnover is 1.15 times, 1.21 times, and 1.29 times in 2007, 2008, and

2009 respectively.

The company is keeping pace with the increase of companys fixed assets, thus a gradual

increase in fixed asset turnover.


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Total asset turnover:The Total Asset Turnover is similar to fixed asset turnover since both measures a

company's effectiveness in generating sales revenue from investments back into the

company. Total Asset Turnover evaluates the efficiency of managing all of the

company's assets.

Total Asset Turnover =


Year 2007 2008 2009

Gross Turnover 9,565,715,902 11,366,597,928 13,279,141,757

Total Assets 12,703,127,420 13,251,242,856 15,029,500,278


The analysis shows that the total asset turnover is slightly increasing from the year 2007 to 2009.

As the total asset turnover is 0.75 times, 0.86 times, and 0.88 times in 2007, 2008, and 2009

respectively. Generally the higher the firms total asset turnover, the more efficiently its assets

have been used. Thus it implies that the company is making its use of assets efficient.


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DEBT MANAGEMENT RATIO Debt Ratio:

The ratio of total debt to total assets, generally called the debt ratio, measures the

percentage of funds provided by the creditors.

Debt Ratio =

Debt Ratio

Year 2007 2008 2009

Non-Current Liabilities 785,241,612 660,976,668 1,258,376,052


Total Debt 4,286,086,715 3,301,845,222 3,475,120,453

Total Assets 12,703,127,420 13,251,242,856 15,029,500,278

Debt Ratio 0.34 0.25 0.23

According to the analysis, in the year 2009, Square Pharmaceuticals Ltd has BDT 0.23 for every

BDT 1 in assets, which implies that the company has financed 23% of its assets debt. Debt Ratio

has been decreasing from the year 2007 to 2009, as it was 0.34, 0.25, and 0.23 in the year 2007,

2008, and 2009 respectively.


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Times interest earned (TIE):

This ratio measures the extent to which operating income can decline before the

firm is unable to meet its annual interest cost.


Times-interest earned ratio

Year 2007 2008 2009

NET PROFIT BEFORE TAX 1,868,634,190 2,511,259,218 2,825,069,243

Financial Expenses 351,868,423 397,135,963 308,861,107

Times-interest earned ratio 5.31 6.32 9.15


times in 2007, 6.32 times in 2008 and 9.15 times in 2009. Ratios increased gradually. So it

indicates that they are increasing the issue of long-term loans and does not have good liquidity

position, their EBIT became higher thus making TIE a little high as well. It implies that the

interest bill is covered 5.31 times, 6.32 times, and 9.15 times in the year 2007, 2008, and 2009

respectively.


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PROFITABILITY RATIO

Profit Margin on Sales:Net Profit Margin gives us the net profit that the business is earning per dollar of

sales.


Profit Margin on Sales

Year 2007 2008 2009

NET PROFIT AFTER TAX 1,381,863,093 1,890,052,929 2,087,871,791

GROSS TURNOVER 9,565,715,902 11,366,597,928 13,279,141,757

Profit Margin on Sales 14.45 16.63 15.72

According to the analysis, profit margin on sales is 14.45% in 2007, then increased to 16.63% in

2008, and then again decreased to 15.72% in 2009. It implies that the company generates a little

less than 15 paisa, 17 paisa, and 16 paisa in profit for every taka in sales.


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Basic Earning Power:This ratio indicates the ability of the firms assets to generate operating income.

Basic earning power (BEP) =

Basic Earning Power (BEP)

Year 2007 2008 2009

NET PROFIT BEFORE TAX 1,868,634,190 2,511,259,218 2,825,069,243

TOTAL ASSETS 12,703,127,420 13,251,242,856 15,029,500,278

Basic Earning Power (BEP) 0.15 0.19 0.19

According to the analysis Basic Earning Power has increased from 0.15 in 2007 to 0.19 in 2008

and remained constant in 2009. This implies that the ability of the companys assets to generate

operating income has increased in 2008 but remained stable in 2009.


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Return on Total Asset (ROA):Return of total asset measures the amount of Net Income earned by utilizing eachdollar of Total assets.


Return on Total Asset (ROA)

Year 2007 2008 2009

Net Profit After Tax 1,381,863,093 1,890,052,929 2,087,871,791

Total Assets 12,703,127,420 13,251,242,856 15,029,500,278

Return on Total Asset (ROA) 0.11 0.14 0.14

The analysis shows that ROA was 0.11 in 2007, then it goes up to 0.14 in 2008 and remains

constant to 0.14 in 2009. The higher the firms return on total assets, better the profitability.

ROA 0.11 and 0.14 indicates that the company earned 11 and 14 paisa respectively on each taka

of asset investment.


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Return on Common Equity (ROE):Return on Equity measures the amount of Net Income earned by utilizing each

dollar of Total common equity. It is the most important of the Bottom line ratio.

By this, we can find out how much the shareholders are going to get for their

shares.


Return on Common Equity (ROE)

Year 2007 2008 2009

Net Profit After Tax 1,381,863,093 1,890,052,929 2,087,871,791

Shareholders' Equity: 8,417,040,705 9,949,397,634 11,554,379,825

Return on Common Equity (ROE) 0.16 0.19 0.18

According to the analysis, the return on equity increases from 0.16 in 2007 to 0.19 in 2008, and

then decreased to 0.18 in 2009. Generally the higher the return is, the better off is the owners,

this implies that the ROE was better in 2008 than in 2007 and 2009.


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MARKET RATIO Price/Earnings (P/E):

The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the

price paid for a share relative to the income or profit earned by the firm per share.


Price/Earnings (P/E)

Year 2007 2008 2009

Price per Share 4110.25 2935.5 3581

Earnings Per Share (EPS) 154.53 125.25 138.36

Price/Earnings (P/E) 26.60 23.44 25.88

According to the analysis, the Price/Earnings Ratio decreases from 26.60 in 2007 to 23.44 in

2008, and then increased to 25.88 in 2009. This implies that the company shares have or carry

a PE multiple of 26.60, 23.44, and 25.88 in 2007, 2008, and 2009 respectively.


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Market-to-book Ratio (M/B):The market-to-book ratio compares the market value of the firms investment to

their cost.

Market-to-book Ratio (M/B) =

Market-to-book Ratio (M/B)

Year 2007 2008 2009

Market Price per Share 4110.25 2935.5 3581Book Value per Share 941.25 824.16 765.68

Market-to-book ratio (M/B) 4.37 3.56 4.68

According to the analysis, the Market-to-book Ratio decreases from 4.37 in 2007 to 3.56 in

2008, and then increased to 4.68 in 2009.


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Appendix(FinancialData)


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Introduction:

IBN SINA Pharmaceuticals was established in 22nd

December 1983. The company started

commercial production in 1986. The company was converted into a public limited company in

1989. The companys subscription opened on 15th

July 1989, subscription closed on 14th

September 1989 and was listed in Dhaka Stock Exchange on 17th

July 1990.

The IBN SINA Pharmaceuticals Industry Ltd. has always been devoted to the quality of its

product as well as the management system. Their mission A public limited company working

for the nation as a whole with pertinacious incitement and firm determination to ensure thequality and ethical standing attributing the sustainable growth and development to serve the

mankind. Their vision IBN SINAs vision is to become a premier specialty pharmaceutical

company, with a balanced focus in complementary therapeutic areas. Our primary responsibility

lies toward people of Bangladesh & ultimate responsibility towards humanity at large.

Objectives:

Have to analyze the performance of a listed manufacturing company (listed at DSE). The main

objective to analyze the performance in terms of


The analysis will indicate whether the performance of ACI is improving or deteriorating and it

will also reveal the reasons for that.


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Findings and analysis:

Current ratio:




short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued

expenses (principally wages).

Current Ratio

Year 2007 2008 2009

Current Assets 149,908,877 220,130,579 225,056,867

Current Liabilities 191,629,863 264,653,403 308,437,653



is seen in 2008 and it went up to 0.05 times and it went down at 1.73 times in 2009. A current

ratio 1.0 would be considered acceptable for a public utility. Generally the higher the current

ratio, the more liquid the firm is considered to be.


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Quick ratio:

This ratio indicates the firms liquidity position as well. It actually refers to the extent to whichcurrent liabilities are covered by those assets except inventories.

Quick ratio

Year 2,007 2,008 2009

Current Assets-Inventories 91,435,547 220,130,579 225,056,867

Current Liabilities 191,629,863 204,617,931 246,205,952

Quick Ratio 0.29 0.24 0.7

Here, in 2007 ratio was 0.47 and in 2008 it went down to 0.46 times and in 2009 it reached the

higher level of 0.67 during the three years.







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Inventory turnover ratio:

The ratio is regarded as a test of efficiency and indicates the rapidity with which the company isable to move its merchandise.

Inventory TurnoverYear 2007 2008 2009

Sales 791,683,415 1,052,308,721 1,277,868,846

Inventories 58,473,330 60,035,472 62,231,701


.

Analysis shows that at 2007 ratio was 13.54 times but at 2008 it raises to 17.53 times and at 2009

it went up to 20.53 times.

Increasing inventory turnover commonly indicates that the company is being able to flush its

inventory very well as it was doing in the previous years. A low turnover rate may point to

overstocking, obsolescence, or deficiencies in the product line or marketing effort. High

inventory levels are unhealthy because they represent an investment with a zero rate of return in

addition to the increased cost associated with maintaining those inventories


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Day sales outstanding (DSO):




Analysis shows that in 2007 DSO were 29.82 days and it gradually went up. In 2008 it was 75.68

days and in 2009 it was the highest 90.10

DSO is meaningful only in relation to the firms credit terms. DSO 90.10 days indicates a poorly

managed credit or collection department or both.

Day's Sales Outstanding (DSO)

Year 2007 2008 2009

Receivables 177,188 597,737 864,243

Annuals sales/365 2,168,996 2,883,038 3,501,011

Day's Sales Outstanding (DSO) 29.82 75.68 90.10


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Fixed asset turnover:

The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales revenue frominvestments in Net Property, Plant, and Equipment back into the company evaluates only the

investments.


Year 2007 2008 2009

Sales 791,683,415 1,052,308,721 1,277,868,846

Net fixed assets 248,082,620 293,523,518 379,036,527

Fixed Asset Turnover 3.19 3.59 3.37

The analysis shows that the fixed asset turnover ratio was as high as 3.59 times among three

years. However in 2007 it was 3.19 times and it gradually went up to 3.37 in 2009.

Fixed asset turnover ratio gradually increased because the company keeps pace with the increase

of companys fixed assets.


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Total asset turnover:

The Total Asset Turnover is similar to fixed asset turnover since both measures a company'seffectiveness in generating sales revenue from investments back into the company. Total Asset

Turnover evaluates the efficiency of managing all of the company's assets.


Year 2007 2008 2009

Sales 791,683,415 1,052,308,721 1,277,868,846

Total Assets 397,991,497 513,654,097 604,093,394


The analysis shows that 2.12 times were the highest among the three years. In 2007 it was 1.99

times and in 2008 it was2.05 times and in 2009 it was 2.12 times. 2.12 mean that the company

turns over its assets 2.12 times per year. Generally the higher the firms total asset turnover, the

more efficiently its assets have been used.


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Debt ratio:

The ratio of total debt to total assets, generally called the debt ratio, measures the percentage offunds provided by the creditors.

Debt Management

Year 2007 2008 2009

Total debt 231,900,136 324,977,527 388,683,160

Total Assets 397,991,497 513,654,097 604,093,394

Total debt to Total assets 0.58 0.63 0.64

The analysis shows that during the years the ratios are almost same. In 2007 it was 0.58% and

2008 it was 0.63% and in 2009 it goes up to0.64%. The values indicate that the company has

financed 64% of its assets debt. The higher this ratio, the greater the firms degree of indebtedness

and the more financial leverage it has.


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This ratio measures the extent to which operating income can decline before the firm is unable to

meet its annual interest cost.

Debt Management Ratio

Year 2007 2008 2009

EBIT 32,078,039 52,725,149 55,540,025

Interest Charges 2,267,457 4,750,860 5,098,143Times Interest Earned ratio 14.14714325 11.09802204 10.89416774


times in 2007, 11.09 times in 2008 and 10.89 times in 2009. Ratios went down from 2008 to

3009. So it indicates that they issued a little number of long-term loans and does have good

liquidity position, their EBIT became low thus making TIE a little low as well.


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Profit margin on sales:

Net Profit Margin gives us the net profit that the business is earning per dollar of sales.

Profit margin on sales

Year 2007 2008 2009

Net income available to stockholder 26,111,294 43,285,209 49,233,664

Sales 791,683,415 1,052,308,721 1,277,868,846

Profit margin on sales 0.03 0.04 0.04

Therefore, the Net Profit Margin was 3% in 2007, increase to 4% in 2008 and 2009.

The main reason that the profit margin raises is low cost. Low cost, in turn, generally occurs due

to efficient operations. Profit margin also increases because in 2009 IBN SINA Pharmaceuticals

do not used a lot of long-term debt.


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Basic earning power (BEP):

Year 2007 2008 2009

EBIT 32,078,039 52,725,149 55,540,025

Total assets 397,991,497 513,654,097 604,093,394

Basic earning power 0.08 0.10 0.09

Return on assets (ROA):

Return of total asset measures the amount of Net Income earned by utilizing each dollar of Total

assets.

Year 2007 2008 2009

Net income 26,111,294 43,285,209 49,233,664

Total assets 397,991,497 513,654,097 604,093,394Return on total assets 0.07 0.08 0.08


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The analysis shows that in 2007 ROA was 7% and in 2008 & 2009 it goes up to 8% the higher

the firms return on total assets, the better. ROA 8% indicates that the company earned 8 paisa

on each taka of asset investment.

Return on common equity (ROE):

Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total

common equity. It is the most important of the Bottom line ratio. By this, we can find out how

much the shareholders are going to get for their shares

Year 2007 2008 2009

Net income 26,111,294 43,285,209 49,233,664

Common equity 90,000,000 90,000,000 90,000,000

Return on common equity 0.29 0.48 0.55


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Here, in 2007 ROE was 29%. In 2008 it went up to 48% and in 2009 it went up to 55%.Generally the higher this return, the better off is the owners.

Price/earnings (P/E):The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a

share relative to the income or profit earned by the firm per share

Profitability

Year 2007 2008 2009

Price per share 785 995 1,552

Earnings per share 31 48 55

Price /Earning 25.22 20.70 28.38


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Market/book (M/B):

The ratio of book value to market value of stocks.

Profitability

Year 2007 2008 2009

Market price per share 787 996 1,553

Book value per share 185 210 239

Market /Book 4.26 4.75 6.49

According to the analysis, the Market-to-book Ratio increases from 4.26 in 2007 to 4.75 in 2008,

and then increased to 6.49 in 2009.


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INDUSTRY ANALYSIS

OBJECTIVES:

Have to analyze the performance of 4 listed manufacturing company Square Pharmaceuticals,

Beximco Pharmaceuticals, ACI Pharmaceuticals and Ibn Sina Pharmaceuticals (listed at DSE).

The main objective to analyze the performance in terms of


LIQUIDITY RATIO: Current Ratio:

Current Ratio =

Table: Current Ratio

Quick Ratio:Quick Ratio =

LIQUIDITY RATIO

CURRENTRATIOYears

2007 2008 2009

Companies

Square 1.26 1.46 2.15

ACI 0.93 0.99 1.07

Ibn Sina 0.78 0.83 0.73


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LIQUIDITY RATIO

QUICKRATIOYears

2007 2008 2009

Companies

Square 0.68 0.66 1.16

ACI 0.47 0.47 0.68

Ibn Sina 0.29 0.24 0.7

Table: Quick Ratio

ASSET MANAGEMENT RATIO: Inventory turnover ratio:



INVENTORYTURNOVERRATIOYears

2007 2008 2009

Companies

Square 4.72 5.42 6.02

ACI 3.64 3.29 4.43

Ibn Sina 13.54 17.53 20.53

Table: Inventory Turnover Ratio


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Day sales Outstanding (DSO):


Table: Day Sales Outstanding

Fixed Asset Turnover Ratio:


Table: Fixed Asset Turnover Ratio


DAYSALESOUTSTANDING(DSO)Years

2007 2008 2009

CompaniesSquare 13.75 15.34 13.97ACI 68.42 69.58 80.87

Ibn Sina 29.82 75.68 90.1


FIXEDASSETTURNOVERRATIOYears

2007 2008 2009

Companies

Square 1.15 1.21 1.29

ACI 2.29 3.19 3.28

Ibn Sina 3.19 3.59 3.37


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Total asset turnover:Total Asset Turnover =

Table: Total Asset Turnover

DEBT MANAGEMENT RATIODebt Ratio:

Debt Ratio =

Table: Debt Ratio




TOTALASSETTURNOVERRATIOYears

2007 2008 2009

Companies

Square 0.75 0.86 0.88

ACI 0.97 1.1 1.05

Ibn Sina 1.99 2.05 2.12

DEBT MANAGEMENT RATIO

DEBTRATIOYears

2007 2008 2009

Companies

Square 34% 25% 23%

ACI 70% 70% 71%

Ibn Sina 58% 63% 64%


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DEBT MANAGEMENT RATIO

TIMEINTERESTEARNEDRATIOYears

2007 2008 2009

Companies

Square 5.31 6.32 9.15

ACI 2.66 1.85 1.39

Ibn Sina 14.15 11.1 10.89Table: Time-interest Earned Ratio

PROFITABILITY RATIO Profit Margin on Sales:


PROFITABILITY RATIO

PROFITMARGINONSALESYears

2007 2008 2009

Companies

Square 14.45 16.63 15.72

ACI 5.91 8.88 4.83

Ibn Sina 0.03 0.04 0.04Table: Profit Margin on Sales

Basic Earning Power:Basic earning power (BEP) =

Table: Basic Earning Power (BEP)

PROFITABILITY RATIO

BASICEARNING

POWER

(BEP)

Years

2007 2008 2009

Companies

Square 0.15 0.19 0.19

ACI 0.1 0.1 0.06

Ibn Sina 0.08 0.1 0.09


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Return on Total Asset (ROA):


PROFITABILITY RATIO

RETURNONASSET(ROA)Years

2007 2008 2009

Companies

Square 0.11 0.14 0.14

ACI 0.06

0.1

0.05

Ibn Sina 0.07 0.08 0.08

Table: Return on Asset

Return on Common Equity (ROE):


PROFITABILITY RATIO

RETURNONEQUITY(ROE)Years

2007 2008 2009

Companies

Square 0.16 0.19 0.18

ACI 0.2 0.37 0.2Ibn Sina 0.29 0.48 0.55

Table: Return on Equity (ROE)


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MARKET RATIO Price/Earnings (P/E):


MARKET RATIO

PRICE/EARNINGS(P/E)Years

2007 2008 2009

Companies

Square 26.6 23.44 25.88

ACI 8.6 9.18 8.79

Ibn Sina 25.22 20.7 28.38

Table: Price/Earning (P/E)

Market-to-book Ratio (M/B):Market-to-book Ratio (M/B) =

MARKET RATIO

MARKET/BOOKVALUE(M/B) Years2007 2008 2009

Companies

Square 4.37 3.56 4.68

ACI 1.96 3.6 2.55

Ibn Sina 4.26 4.75 6.49

Table: Market/Book Value (M/B)


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CONCLUSION:

In Bangladesh Pharmaceutical sector is one of the most developed hi tech sector

which is contributing in the country's economy. After the promulgation of Drug

Control Ordinance - 1982, the development of this sector was accelerated. The

professional knowledge, thoughts and innovative ideas of the pharmacists working

in this sector are the key factors for these developments. Due to recent

development of this sector we are exporting medicines to global market including

European market. This sector is also providing 95% of the total medicine

requirement of the local market. Leading Pharmaceutical Companies are

expanding their business with the aim to expand export market. Recently few new

industries have been established with hi tech equipments and professionals which

will enhance the strength of this sector.

Fin 254Report Final(1)

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