Executive Summary

Square Pharmaceutical Limited Bangladesh is one of the leading pharmaceuticals in Bangladesh. Its journey to the growth and prosperity 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. In this report, we have tried to focus on the financial performance of the company during the fiscal year of 2006-2010. We have used financial ratios to determine its performance in short term and long term period. The firm had a strong financial backbone as it uses less debt for investment, uses its asset efficiently for producing goods. Sales had increases on regular basis over past the years. In one word based on our analysis this firm can be an example in certain financial segment for other company. Though, the firm pays fewer cash dividends than past fiscal years, which might be disliked by investors. But it must be added that the company had been increasing its the number of outstanding share regularly and also provide bonus share to its shareholder. The companys fiscal year is based on April to March. And regularly hold annual general meeting and publishes financial report both annually, half yearly and quarterly.

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Company Profile Square Pharmaceuticals Limited Bangladesh 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 in 1958 and converted into a public limited company in 1991. The sales turnover of Square Pharmaceuticals Limited (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%.
Vision - We 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 -Our 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.

Objective- Our objectives are to conduct transparent business operation based on market mechanism within the legal & social frame work with aims to attain the mission reflected by our vision.

Subsidiary Company: Square Cephalosporin Ltd. Square Biotechs Ltd. Square Multi fabrics Ltd

Associate Company: Square Textiles Ltd. Square Knit Fabrics Ltd. Square Fashions Ltd. Square Hospitals Ltd.

Top Management: Board of Directors As per provisions of the Article of Association, Board of Directors holds periodic meetings to resolve issue of policies and strategies, recording minutes/decisions for implementation by the Executive Management. Executive Management The Executive Management is headed by the Managing Director, the Chief Executive Officer (CEO) who has been delegated necessary and adequate authority by the Board of Directors. The Executive Management operates through further delegations of authority at every echelon of the line management. The Executive Management is responsible for preparation of segment plans/sub-segment plans forever profit centers with budgetary targets for every items of goods & services and are held accountable for deficiencies with appreciation for exceptional performance. These operations are carried out by the Executive Management through series of committees, sub-committees, ad-hock committees, standing committees assisting the line management.

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Financial Statement Analysis of Square Pharmaceuticals Ltd.

SHORT TERM LIQUIDITY RATIO ANALYSIS

Current Ratio is one of the most widely used tests of financial strength, and is calculated by dividing Current Assets by Current Liabilities. This ratio is used to determine if your business is likely to be able to pay its bills. Obviously, a minimum acceptable ratio would be 1:1; otherwise your company would not be expected to pay its bills on time. A ratio of 2:1 is much more acceptable, and the higher, the better. Also known as "liquidity ratio", "cash asset ratio" and "cash ratio". The Current Ratio formula is:

(Figures in Thousands) Year Current Asset Current Liabilities Current Ratio

2.5 2.05 2 1.58 1.5 1 0.5 0 2013 2012 2011 2010 2009 1.59 1.5 1.45 Current Ratio

2013 5,996,698 3,792,438 1.58

2012 6,745,980 4,252,935 1.59

2011 7,022,214 4,668,189 1.50

2010 4,774,311 2,216,744 2.05

2009 3,843,513 2,640,869 1.45

Source: Annual report of SPL from year 2009-2013

Analysis Result: From the trend it can be concluded that Squares current assets are increasing and current liabilities are decreasing. So, its liquidity position is relatively stronger compare to others. On
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average the current ratio of Square Pharmaceuticals Limited Bangladesh was 1.63 during fiscal year (FY) 2000-2013. According to current ratio, it must be assumed that Square Pharmaceuticals Limited Bangladesh was successful to meet its short term obligations very well for the past fiscal years and will maintain a successful healthy financial performance in coming years. .But only in 2009-2010 the current ratio was 2.05 which were acceptable if the square pharmaceutical company maintain that ratio it may good for further investment. Quick Ratio is sometimes called the acid test ratio because it concentrates on only the more liquid assets of your business. It is calculated by dividing the sum of Cash and Receivables by Current Liabilities. It excludes inventories or any other current asset that might have questionable liquidity. Depending on your history for collecting receivables, a satisfactory ratio is 1:1.

(Figures in Thousands) Year Current Asset Current Liabilities Inventory Quick Ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 2013 2012 2011 2010 2009 0.92 0.95 0.96 1.15 0.66 Quick Ratio

2013 5,996,698 3,792,438 2,503,683 0.92

2012 6,745,980 4,252,935 2,687,818 0.95

2011 7,022,214 4,668,189 2,541,688 0.96

2010 4,774,311 2,216,744 2,207,078 1.15

2009 3,843,513 2,640,869 2,098,755 0.66

Source: Annual report of SPL from year 2009-2013

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Analysis Result: We calculate quick ratio to see the real picture of liquid asset. Quick ratio is always less than current ratio. Quick ratio is more stringent than current ratio. In 2010-11ratio was 0.96 that means the company has not more liquidate money, because it was less 1.
Square Pharmaceuticals Limited Bangladesh had an average of 0.92 for the fiscal year 20132009.0.91 is an unhealthy figure for a firm. Alongside, the higher the figure, the better opportunity for the firm to eliminate its current liabilities without relying on its inventory. By analyzing the current asset and inventory of this pharmaceuticals firm, on average the total inventory is 44.40% of its current assets between FY 2013 and 2009 and this refers that the firms current asset consists a large portion of inventories. Therefore the firm will need to increase the figures of other accounts, under its current asset and reduce the dependency on inventories to meet short term obligations. In addition, Current assets without the inventories portion decreased by 4.54% between the fiscal year of 2013 and 2009 and the inventories of Square pharmaceuticals Limited Bangladesh has increased by 64.41% at the same time. The firm had the worst quick ratio figure in 2009 but eventually it has increased in 2010 due to a decline in its short-term bank loans.

Net Working Capital to Total Assets Ratio: Net Working Capital to Total Assets ratio is defined as the net current assets (or net working capital) Formula: Net Working Capital to Total Assets = (Net Working Capital / Total Assets) * 100% (Note: Net Working Capital = Current Assets - Current Liabilities) Year Current Asset Current Liabilities Net working Capital Total Assets Net Working Capital to Total Assets 2013 5,996,698 3,792,438 2,204,260 23,447,646 0.09 2012 6,745,980 4,252,935 2,493,045 21,453,785 0.11 2011 7,022,214 4,668,189 2,354,025 19,444,410 0.12 (Figures in Thousands) 2010 2009 4,774,311 2,216,744 2,557,567 15,029,500 0.17 3,843,513 2,640,869 1,202,644 13,251,243 0.09 of a corporation expressed as a percentage of its total assets.

Source: Annual report of SPL from year 2009-2013

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Analysis Result: Net Working Capital to Total Assets ratio shows a firm ability of short-term liquidity. A positive Net Working Capital shows that the firm have meet the short term obligations and more likely to have a flat operation in future. As stated before, this firms current asset had increased by 18.42% between the fiscal year of2013-2009 but at the same time the current liabilities had decreased by 1.95 %.Due to this difference between current asset and current liabilities the firm was able to have a positive Net Working Capital. In addition, Square Pharmaceuticals Limited Bangladesh Total Asset had increased by 61.63% between the FY 2013 and 2009 and Net Working Capital had increasedby44.42% in the same period. The firm faced its highest Net Working Capital to Total Assets ratio figure in FY 2010. Cash Ratio: Cash ratio is a companys ratio of cash and cash equivalents to its total current liabilities. This formula is most often used to gauge a business liquidity. Potential investors or creditors frequently look to cash ratio when determining a companys capacity to repay debts including how much it could feasibly repay, and how much time it would need to do so. (Figures in Thousands) Year Cash Current Liabilities Cash Ratio
0.3 0.25 0.2 0.15 0.1 0.05 0 2013 2012 2011 2010 2009 0.13 0.07 0.12 0.11 Cash Ratio 0.24

2013 93,240,787 3,792,438 0.24

2012 58,692,026 4,252,935 0.13

2011 37,030,175 4,668,189 0.07

2010 25,872,769 2,216,744 0.12

2009 29,345,774 2,640,869 0.11

Source: Annual report of SPL from year 2009-2013

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Analysis Result: The Cash ratio is an indicator of a companys liquidity that further refines both the current ratio and the quick ratio by measuring the amount of cash. Cash cover the current liabilities. In 200910 cash ratio was commendable but in2010-11 it is slightly below.
Cash ratio reflects firms ability to pay its current liabilities, using its most liquidate asset such as Cash and cash equivalents only. By evaluating the current asset and cash and cash equivalents of this, on average the cash and cash equivalents was 5.87% of its current assets between FY 2013 and 2009 and this refers that the firms inventories consist a large portion in its current asset. For the betterment of the firm, it should try to increase its cash and cash equivalents. This would help to establish a good foundation to attract investors since many investors take cash ratio under deliberation for investing in a firm. The firm experienced its worst cash ratio figure in2011 and by 2013 it had comparatively reached to a better state of cash ratio.

LONG TERM LIQUIDITY RATIO ANALYSIS

Debt equity Ratio: A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets. (Figures in Thousands)

(Figures in Thousands) Year Total Debt Total Equity Debt to equity Ratio 2013 313,421,158 2012 508,778,060 2011 655,645,734 2010 1032,633,160 2009 44,975,608 10,044,685 0.04

18844,746,184 16266,884,255 13817,708,999 11721,331,851 0.17 0.03 0.04 0.08

Source: Annual report of SPL from year 2009-2013

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Debt to equity Ratio

0.08 0.04 0.17

0.04 2013 2012

0.03 2011 2010 2009

Equity multiplier is a financial leverage ratio which is calculated by dividing total assets by the shareholders equity. It tells about assets in dollar per dollar of equity. The higher the ratio the lower the financial leverage and the lower the ratio the higher the financial leverage. Formula: Total Assets Equity Multiplier = Total Equity Year 2013 2012 2011 2010 23,447,646 21,453,785 19,444,410 15,029,500 Total Asset Total 18844,746,184 16266,884,255 13817,708,999 11721,331,851 Equity Equity 1.25 1.32 1.40 1.28 Multiplier 2009 13,251,243 10,044,685 1.31

Equity Multiplier
1.45 1.4 1.35 1.3 1.25 1.2 1.15 2013 2012 2011 2010 2009 1.25 1.32 1.28 Equity Multiplier 1.31 1.4

Analysis Result:
On average the equity multiplier of Square Pharmaceuticals Limited Bangladesh was 1.40daringly 2013-2009. Since we have portrayed before that the companys equity had increased by staggering 80.48% and total Asset had increased by 61.63% between the FY 2013 and 2009, the company do not rely on debt for its investment. The equity multiplier shows a firms assets per 1 unit of equity.
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ASSET MANAGEMENT (TURNOVER) RATIO ANALYSIS

Inventory turnover is the ratio of cost of goods sold by a business to its average inventory during a given accounting period. It is an activity ratio measuring the number of times per period; a business sells and replaces its entire batch of inventory again. Formula Inventory turnover ratio is calculated using the following formula: Cost of Goods Sold Inventory Turnover = Average Inventory (Figures in Thousands) Year COGS Inventory Inventory Turnover
4 3.5 3 2.5 2 1.5 1 0.5 0 2013 2012 2011 2010 2009 0.4 Inventory Turnover

2013 1022344 2,503,683 0.40

2012 9167253 2,687,818 3.41

2011 7703661 2,541,688 3.03

2010 6561288 2,207,078 2.97

2009 5672565 2,098,755 2.70

Source: Annual report of SPL from year 2009-2013

3.41 3.03 2.97 2.7

Analysis Result: Square Pharmaceuticals Limited Bangladesh had an average cost of goods sold value of 4,976,753,344 BDT during FY 2006-2010. Inventory turnover represents firms cost of goods sold per inventory. The cost of goods sold had increased for the company by 86.11% between 2006 and 2010 and the ending inventory had increased by 64.42% in the same period. On average the cost of goods sold had increased at a rate of 16.83% annually during FY 20062010period.
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