Executive SummaryThe report compares the financial statement
between Squire Pharmaceutical and Beximco Pharmaceutical for the
year ended 2009 to 2011.Square Pharmaceuticals 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.On the other hand
Beximco Pharmaceuticals Ltd. belongs to Beximco Group, the largest
private sector business conglomerate in Bangladesh. Beximco
Pharmaceuticals is a leading manufacturer and exporter of
pharmaceuticals in the country. Beximco Pharmaceutical is the only
Bangladeshi company listed on the AIM of London Stock Exchange
through issuance of GDRs.Here this two companies are handle the
pharmaceuticals matter and my topic about my term paper is compare
the financial statement analysis between this companies, thats why
I am analyzing the financial statement of this companys by using
their annual report and the financial statement. In my study I try
to show their financial performance from 2009 to 2011. Besides
that, I also use comparative techniques to compare for financial
statement analysis of Beximco Pharmaceuticals Ltd with Square
Pharmaceuticals Limited.IntroductionFinancial performance
measurement is very important for the institutions because it
indicates the organizations performance. Thats mean how the
organization is running. Besides that it also helps to take the
future decision and action. However, this term paper is prepared on
the basis of Financial Performance of Beximco Pharmaceuticals Ltd.
comparing with Square Pharmaceuticals Ltd. These two
pharmaceuticals company are most prominent in Bangladesh. By This
term paper I can know that how Beximco Pharmaceuticals run their
business from Square Pharmaceuticals. And what are their week
points?Rational of the StudyAs an obligatory requirement of Honors
program under the Department of Finance & Banking I prepare
this term paper to fulfill the requirements of Principals of
Finance course. As a student of business study I gain plenty of
theoretical knowledge. Now its the time to use this theoretical
knowledge practically. But its not a easy task to compare two
institutions financial position. Although by using the theoretical
knowledge we are able to understand the field collecting data from
their website & annual report, which help us to cope up the
situation.Now a days pharmaceuticals company takes a great places
in this country, the functions of such institutions are relatively
new and challenging to compare. Producing drugs is one of the main
concentrations of these firms. After doing this term paper as a
commerce & finance background student I can know the past and
current financial position of Beximco Pharmaceuticals and Square
Pharmaceuticals in the market.Statement of the ProblemsIn my term
paper entitledFinancial Statement Analysis ofBeximco
Pharmaceuticals Ltd. in Comparing with Square Pharmaceuticals
Ltd.,here I am supposed to analyze the financial statements
regarding its problems and prospects, recent year statistics and in
comparing with this companies particularly in terms of its precise
definition, problems, factors, contributions, and inventions.Scope
and limitation of the StudyThe report mainly analyzes the existing
services of Beximco Pharmaceuticals Ltd. and Square Pharmaceuticals
Ltd. The term paper also analyzes the financial performance of the
above two companies over three years and evaluates the performance
of Beximco Pharmaceuticals Ltd. in Comparing with Square
Pharmaceuticals Ltd. There exist some limitations in making the
report. These are stated below: There were some restrictions in
disclosing some information as it was assumed to be confidential.
Therefore I could not include those in my term paper. Some of the
information that I got from secondary sources were not arranged
consistently. As some companies do not update their web site,
therefore it was difficult to get the most recent data.Objectives
of the StudyThis report titled Financial Statement Analysis
ofBeximco Pharmaceuticals Ltd. in Comparing with Square
Pharmaceuticals Ltd., has been prepared as a partial requirement
for the course, Principals of Finance instructed by Mohammad. Akter
Hossain, Department of Finance & Banking, Dhaka Commerce
college.Objectives The report is meant to relate the financial
statement analysis theories learnt in class to the context of a
real world scenario to understand their practical implications. To
introduce the functional departments of Beximco Pharmaceuticals as
well as functions of Square Pharmaceuticals and brief idea about
Pharmaceuticals . Evaluating financial performance of Beximco
Pharmaceuticals in comparing with Square Pharmaceuticals To brings
out the position of this companies in the market.Literature
ReviewMany institutions measure their financial performance
analysis to know their performance comparing with some other
financial institutions which helps to take the future decision and
action. It also helps to show the present situation where they are
standing now and which year was the best performed. Thats why, I
have chosen the topic to prepare the reportFinancial Statement
Analysis ofBeximco Pharmaceuticals Ltd. in Comparing with Square
Pharmaceuticals Ltd.,I have chosen this topic to measure the
performance of Beximco pharmaceuticals during the Three years and I
have used Square pharmaceuticals to compare because both of two
Pharmaceuticals are similar.Ratio analysis is very important factor
for measuring the financial performance measurement. There are
several ratios and grouped in the four sections which are used to
prepare the report and it is studied from the Book (e.g. C.P.
Jonce). One important section of ratios is Profitability or return
and data are availability from the book (b.g. Mohammad Akter
Hossain). There are several ratios are gathered from the websites.
For the ratio analysis, Balance sheet and Income statement of
Beximco pharmaceuticals is very important and data are availability
from the Annual report (e.g. Annual report 2009-2011). And for the
comparing with Square pharmaceuticals, Balance sheet & Income
Statement of them is very important which are collected from Annual
report (e.g. Annual report 2009-2011).Methodology of the StudyIn
order to make the term paper as perfect as possible I here used
data collection procedures which articulate the way that I have
followed in my report. Data Collection Procedures:Data were
collected in a way that is Secondary waysSecondary ways of
collecting data:The secondary data are those which have already
been collected by someone else and which have already been passed
through the statistical process. From my term paper, secondary data
were collected mainly from internet to collect annual reports as
well as financial highlights of the company. Another important
source was the annual reports of the companies.Pharmaceutical
Industries ScenarioIn Bangladesh Pharmaceutical sector is one of
the most developed hi tech sector which is contributing in the
countrys 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 this
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.
Beximco pharmaceutical begin as a product was introduced in the
Pharmaceutical Market of Bangladesh in 1976 with the incorporation
of the Beximco Group and the Square pharmaceutical started their
journey in the Pharmaceutical Market of Bangladesh in 1976 with the
incorporation of the Square Group of companies.An Overview of
Beximco Pharmaceuticals Ltd. Beximco Pharmaceuticals Ltd. belongs
to Beximco Group, the largest private sector business conglomerate
in Bangladesh. Incorporated in the late 70s, Beximco Pharmaceutical
began as a distributor, importing products from global MNCs like
Bayer, Germany and Upjohn Inc., USA and selling them in the local
market, which were later manufactured and distributed under
licensing arrangements. The Company introduced its own branded
generic products in 1983. Since then, the journey continued, and
today, Beximco Pharmaceutical is a leading manufacturer and
exporter of pharmaceuticals in the country, winning National Export
Trophy (Gold) a record four times. Beximco Pharmas manufacturing
facilities have been accredited by major global regulatory bodies,
and it has expanded its geographic footprint across four
continents. Beximco Pharmaceutical is the only Bangladeshi company
listed on the AIM of London Stock Exchange through issuance of
GDRs. Having a broad portfolio of more than 500 products and a
dedicated team of around 2,700 employees, Beximco Pharmaceutical is
committed to providing access to medicines which are affordable and
manufactured in strict compliance with global standards.Vision
StatementEnhancing human health and well being by providing
contemporary and affordable medicines and to deliver outstanding
results for our shareholders.Mission StatementTo be one of the most
trusted, admired and successful pharmaceutical companies in the
region with a focus on strengthening research and development
capabilities, creating partnerships and building presence across
the globe.An Overview of SquarePharmaceutical Ltd.SQUARE today
symbolizes a name a state of mind. But its journey to the growth
and prosperity has been no bed of roses. From the inception in
1958, it has flourished into one of the top line conglomerates in
Bangladesh today. 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.Square
Pharmaceuticals Limited is the largest pharmaceutical company in
Bangladesh and it has been continuously been the market leader
since 1985. It was established in 1958 as a partnership and in
1964, Square was converted into a Private Limited Company. In 1991,
it was listed in the Dhaka Stock Exchange (DSE) and Chittagong
Stock Exchange (CSE) as a Public Limited Company. In 1994, Square
commenced Initial Public Offering (IPO) of Square Pharmaceutical
Limited shares with authorized capital of Tk 1,000 million.Vision
Statement Square Pharmaceutical Ltd.They view business as a means
to the material and social wellbeing of the investors, employees
and the society at large, leading to accretion of wealth through
financial and moral gains as a part of the process of the human
civilization.Mission Statement Square Pharmaceutical Ltd.Their
Mission is to produce and provide quality & innovative
healthcare relief for people maintain stringently ethical standard
in business operation also ensuring benefit to the shareholders,
stakeholders and the society at large.Financial Statement AnalysisA
tool used by individuals to conduct a quantitative analysis of
information in a companys financial statements. Ratios are
calculated from current year numbers and are then compared to
previous years, other companies, the industry, or even the economy
to judge the performance of the company. Ratio analysis is
predominately used by proponents of fundamental analysis.The
process of evaluating businesses, projects, budgets and other
finance-related entities to determinetheir suitability for
investment. Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid, or profitable enough
to be invested in. When looking at a specific company, the
financial analyst will often focus on the income statement, balance
sheet, and cash flow statement. In addition,one key area of
financial analysis involves extrapolating the companys past
performance into an estimate of the companys future performance.On
the other hand, one of the most common ways of analyzing financial
data is to calculate ratios from the data to compareagainst those
ofother companies oragainst the companys own historical
performance.For example, return on assets is a common ratio used to
determine how efficient a company is at usingits assets and as a
measure of profitability. This ratio could be calculated for
several similar companies and compared as part of a larger
analysis.Why Ratio Analysis is so important for Business Strategic
PlanningRatio Analysis is one of the basic tools of financial
analysis. And it is a fact that financial analysis itself plays an
important role in the progress of business strategic planning.
Being the basic tool of the strategic analysis, ratio analysis
plays a vital role and it is not possible to complete the analysis
of a companys strengths, weaknesses, opportunities and threats,
without an analysis of its financial position.This tool is normally
used to conduct a quantitative analysis of information in a
companys financial statements. Ratios are calculated by comparing
the current year figures to previous years, other companies, the
industry, or even the economy to judge the performance of the
company. This is predominately used by proponents of fundamental
analysis. If you dont know how to evaluate the present performance
of a company and its possible future performance, you should learn
how to analyze ratios.Ratio Analysis, being the basic tool of the
strategic analysis, is extremely important for an organization to
carry out its business planning. Some of the key reasons why it
holds so much of importance are This analysis gives users a good
understanding of how well the company utilized its resources in
generating profit and shareholder value. It attempts to measure a
companys ability to pay off its short-term debt obligations. Used
to determine the overall level of financial risk a company and its
shareholders face. It helps to enrich financial health and
performance of a company.Advantage of the Ratio Analysis: Helpful
in analysis of Financial Statements. Helpful in comparative Study.
Helpful in locating the weak spots of the business. Helpful in
Forecasting. Helpful to take future decision and action. Estimate
about the trend of the business. Effective Control. Study of
Financial Soundness.Limitations of Ratio Analysis: Comparison not
possible if different bank adopt different accounting policies.
Ratio analysis becomes less effective due to rate of interest level
changes. Ratio may be misleading in the absence of absolute data.
Lack of proper standards. False accounting data gives false ratio.
Ratios alone are not adequate for proper conclusions.Overall
financial position of the company seems to be satisfactory. I
strongly believe if the above steps are taken the companys
financial performance will be more efficient, employees morale will
be improved and productivity will be increased. They should give
the consideration on their weaknesses and take the actions to
overcome the weaknesses.1. LIQUIDITY RATIOSCURRENT RATIOCurrent
assetsCurrent ratio =Current liabilitiesTable-1
YearBeximcoSquare
20112.691.50
20102.462.15
20092.971.45
Investors are interested in the current ratio because it
indicates the ability of a company to pay its current liabilities
form current assets and, in this way, shows the strength of the
companys working capital position.Interpretation: From the above
chart (Graph-1) we can see that current ratio in 2009-2011 of
Beximco is 2.97, 2.46, 2.69 is continuously going down on the other
hand Square has 1.45 , 2.14 , 1.5 are increasing and decreasing.
This indicates that Beximco has more ability to pay off its current
liabilities than Square.QUICK RATIO(Current Asset Inventory)Quick
ratio =Current liabilitiesTable-2
YearBeximcoSquare
20111.8339580980.959799422
20101.6743315271.05829246
20092.2373003660.653007747
Quick ratio or the acid test measures the companys immediate
liquidity without relying on inventory. Inventories are the least
liquid of a firms current assetsInterpretation: From the above
chart (Table-2) we can see that quick ratio in 2011 of Beximco is
more than Square and same result has seen in 2010 and 2009.this
indicates that Beximco has more efficiencies than Square.CASH
RATIO(Cash + short-term securities)Cash ratio =Current
liabilitiesTable-3
YearBeximcoSquare
20111.0241789850.682087378
20100.9274704780.667404251
20091.532848460.373595065
The cash ratio measures the extent to which a corporation or
other entity can quickly liquidate assets and cover short-term
liabilities, and therefore is of interest to short-term
creditors.Interpretation: From the above chart (Table-3) we can see
that Cash Ratio in 2011of Beximco is more than Square and same
result has seen in 2010 and 2009.this indicates that Beximco has
more cash than Square.PROFITABILITY RATIOSNET PROFIT MARGIN
RATIONet IncomeNet Profit Margin Ratio =SalesTable-4
YearBeximcoSquare
20110.0670091820.192409084
20100.2283965950.183117951
20090.2246789970.194722296
Net profit margin ratio measures the proportion of revenue that
finds its way into profit. This ratio measures how much net profit
remains out of each dollar of sales after all are expenses
covered.Interpretation: From the above chart (Table-4) we can see
that quick ratio in 2011 of Beximco is less than Square but result
has seen in 2010 and 2009 is more than in Beximco .this indicates
that Beximco has more efficiency level than Square.RETURN ON ASSETS
(ROA)Net incomeReturn On Assets =Total AssetsTable -5
YearBeximcoSquare
20110.05200.1349
20100.04920.1522
20090.0314 0.1381
This is one of the most important ratios which investors are
interested in any company. This ratio shows the return on firms all
assets. It measures how well the investments of the company (the
Total Assets) have generated earnings (Net Earnings) back to the
company.Interpretation: From the above chart (table-5) we can see
that Return on Asset ratio in 2011 of Square is more than Beximco
and same result has seen in 2010 and 2009.this indicates that
Square get more return than Beximco.MARKET RATIOSEARNING PER SHEAR
(EPS)Net IncomeEarnings Per Share= No. of shares
outstandingTable-6
YearBeximcoSquare
20114.7695.61
20104.1878.84
20093.4571.37
EPS is the measure used most widely to appraise a companys
operation is earnings per share of common stock. This is one of the
most important factors for prospective investors in the company as
it plays a significant role in determining the market price of the
share and the dividends to be distributed. This ratio also allows
comparing various organizations in the related
industry.Interpretation: From the above chart we can see that
Earning Per Share (EPS) in 2009-2011 is continuously going down
Beximco and Square also. But in all year which indicates that
Beximco has more risk than Square.PRICE EARNING RATIO (PER)Market
Price per sharePrice Earnings ratio =Earnings per shareTable-6
YearBeximcoSquare
201119.6625.35
201032.3233.65
200944.5130.46
Price-earnings ratio helps investors to judge whether the stock
is under priced or overprice. A high price earnings ratio means
that investors are willing to pay a premium for the companys stock
because is expected to have higher than average future earnings
growth. Companies with high P/E ratios are more likely to be
considered risky investments than those with low P/E ratios, since
a high P/E ratio signifies high expectations.Interpretation: From
the above chart we can see that Earning Per Share (EPS) in Beximco
is less than Square in all year which indicates that Beximco has
more risk than Square.FINDINGS:1. LIQUIDITY RATIOSCURRENT
RATIO:Here we can see that current ratio in 2009-2011 of Beximco is
continuously going down on the other hand Square is increasing and
decreasing. This indicates that Beximco has more ability to pay off
its current liabilities than Square.QUICK RATIO:Here we can see
that quick ratio in 2011 of Beximco is more than Square and same
result has seen in 2010 and 2009.this indicates that Beximco has
more efficiencies than Square.CASH RATIO:Here we can see that quick
ratio in 2011 of Beximco is more than Square and same result has
seen in 2010 and 2009.this indicates that Beximco has more
efficiencies than Square.2. PROFITABILITY RATIOSNET PROFIT MARGIN
RATIO:From the above chart (Graph-4) we can see that quick ratio in
2011 of Beximco is less than Square but result has seen in 2010 and
2009 is more than in Beximco .this indicates that Beximco has more
efficiency level than Square.RETURN ON ASSETS (ROA):Here we can see
that Return on Asset ratio in 2011 of Square is more than Beximco
and same result has seen in 2010 and 2009.this indicates that
Square get more return than Beximco.3. MARKET RATIOSEARNING PER
SHEAR (EPS):Here we can see that Earning Per Share (EPS) in
2009-2011 is continuously going down Beximco and Square also. But
in all year which indicates that Beximco has more risk than
SquarePRICE EARNING RATIO (PER):Here we can see that Earning Per
Share (EPS) in Beximco is less than Square in all year which
indicates that Beximco has more risk than Square.ConclusionTo
conclude the report, it is imperative to mention that default
clients have been a major problem for the Pharmaceuticals
Institutions for long and the financial institutions have been
trying to minimize the default problem all along. The Bangladesh
Association of Pharmaceutical Industries (BAPI) has been striving
to assist the pharmaceuticals institutions to get out of the
default problem and formulating policies for that purpose. As a
continuance to this, Bangladesh Association of Pharmaceutical
Industries (BAPI) has been providing directives when and where it
seems to be necessary. In Bangladesh many business organizations
are still facing problems in the functioning of smooth business
operations and moreover they concentrate on making profit more than
their safety as a result of this they sometime get out of safety
caution to absorb the industry sock. Therefore fall in to loss and
sometimes get liquidated. The consequence of this is that Pharmacy
Council of Bangladesh (PCB) do not get their due amount in time
which is a big and foremost risk to the organizations. To overcome
this, a very important factor to which risk weights have to be
raised is the past default behavior of the borrowers.There are
about 256 pharmaceuticals institutions in this small country. So it
is a competitive market for financial sector. To keep in top of the
list Beximco has to provide sufficient activities to level up this
institution. In addition, the reward are modest, the penalties for
bad looking are enormous.In financial statement analysis, Beximco
shows the average performance in total. In a competition market, it
is very hard to compete with one another. Besides that Square is a
very prominent pharmaceutical institutions in our country. Beximco
has a vast assets comparing with Square. But their net income is
not very satisfactory because of their high expense. Moreover,
financial performance of Beximco was good up to 2011. We can see it
from our data analysis. Their net income & assets are
increased. But it is not increased in such way which is increased
in Square.Recommendations1. EXPLORING ALTERNATIVE SOURCES OF
FUNDSThe Pharmaceuticals companies across the world are work for
mankind. But for helping people they need to produce much more and
new product for their production the need more fund. So the need to
exploring alternative sources of funds.2. COMPETITIONS AND PRODUCT
DIVERSIFICATIONPharmaceuticals in Bangladesh are operating in a
highly competitive environment. The competition for them is even
more challenging as they have to compete with other company. Given
the changes in the business environment, the need for product
diversification is very important.3. ENHANCING CAPITAL MARKET
ACTIVITIESPharmaceuticals company around the world carry out a
significant role in the development of the capital market. Strong
institutional support is necessary for a vibrant capital market
which is the core of economic development in any market based
economic system. But their activities in the capital market are
rather limited. Active participation of pharmaceuticals company is
essential to accelerate the capital market activities which can
expedite the economic growth of the country.4. RECOMMENDATIONS TO
OFFER EVEN BETTER SERVICES As their main target is providing
medicine for mankind they should offer people or consumers their
best offer and services in their products and shears or stocks.5.
PROMOTING PRODUCTSPharmaceutical company also should concentrate on
the promotion activities; that all levels of client know about
their services.Balance SheetFor the year ended December 31, 2011,
2010, 2009Beximco Pharmaceutical Ltd.Profit and Loss AccountFor the
year ended December 31, 2011, 2010Beximco Pharmaceutical Ltd.Profit
and Loss AccountFor the year ended December 31, 2010, 2009Square
Pharmaceutical Ltd.Balance SheetFor the year ended December 31,
2011, 2010, 2009Square Pharmaceutical Ltd.Profit and Loss
AccountFor the year ended December 31, 2011-12Square Pharmaceutical
Ltd.Profit and Loss AccountFor the year ended December 31,
2009-10BibliographyBooks:Fundamental of Investments,
GitmanPrincipal ofFinance, Mohammad Akter HossainFundamental of
Investments, C.P. JonceAnnual Report:Annual Report of Beximco
Pharmaceuticals Ltd, Year of 2009-2011Annual Report of Square, Year
of
2009-2011.Websites:www.beximco-pharma.comwww.squarepharma.com.bdwww.bapibd.comwww.google.comwww.dgda.gov.bd