Background of Square Pharmaceuticals Ltd. In the Bangladeshi pharmaceutical industry we have focused on Square Pharmaceuticals in our report.

Square pharmaceuticals ltd. maintains a vast array of partnerships with virtually every major company chain and most independent properties both domestically and internationally. The company was founded in 1958 by Samson H. Chowdhury along with three of his friends as a private firm. It went public in 1991 and is currently listed on the Dhaka Stock Exchange. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and it has been continuously in the 1st position among all national and multinational companies since 1985. Square Pharmaceuticals Ltd. is now on its way to becoming a high performance global player. Pharmaceuticals Limited is an organization with equal emphasis on Leadership, Technology, Quality and Passion. Square Pharmaceuticals Ltd. is the leading branded generic pharmaceutical manufacturer in Bangladesh producing quality essential and other ethical drugs and medicines. It was established in1958 and has been continuously in the 1st position among all national and multinational companies since 1985. And now SQUARE Pharmaceuticals is set on becoming a high performance global player in the field. 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 in 1958and converted into a public limited company in 1991. The sales turnover of SPL was more than Taka 7.5 Billion (US$ 107.91 million) with about 16.92% market share (April 2006 March 2007) having a growth rate of about 23.17%. 7 Corporate History:

Organogram: The Board has approved an Organogram with modern features ensuringclear lines of delegation of authority and reporting for accountability for effectivedecision making evaluation of performance on merit for both rewarding anddisciplinary action. The Organogram of Square Pharmaceuticals Ltd. is as follows :

Computation of Financial Ratios: We divided the financial ratios into five the major categories that will help usunderstand the important economic characteristics of SQUAREPHARMACEUTICALS LTD. We focus on describing the various ratios andcomputing them using the financial data of that company. The five categories are: 1. Common size statement 2. Internal liquidity (solvency) 3. Operating performance a) Operating efficiency b) Operating profitability 4. Risk Analysis a. Business risk b. Financial risk 1. Common size statement: Common size statements normalize balance sheet and income statement items to allow easier comparison of different size firms. A common size balance sheet accounts as a percentage of total assets. A common size income statement expresses all income statement items as a percentage of sales. Common size ratios are useful to quickly compare two different size firms and to examine trends over time within a single firm. Common size statements also give an analyst insight into the structure of a firms financial statement that is, the proportion of assets that are liquid, the proportion of liabilities that are short-term obligations, or the percentage of sales consumed by production costs. 2 0

For SQUARE PHARMACEUTICALS LTD, the common size statement shows

2. Evaluating Internal Liquidity: Internal liquidity (solvency) ratios indicate the ability of the firm to meet future short-term financial obligation. They compare near- term financial obligation, such as accounts payable or notes payable, to current assets or cash flows that will be available to meet these obligations.

Current ratio: Clearly the best-known liquidity measure is the current assets, which examines the relationship between current assets and current liability as follows: Current ratio = Current Asset / Current Liabilities Year Calculations CR 2009 2010 3843513/2640869 1.45 2008 2009 4411836/3500845 1.26 2007 2008 368251/2555566 1.44 Company Analysis Square Pharmaceuticals Ltd. 2 1 Current ratio: Clearly the best-known liquidity measure is the current assets, which examines the relationship between current assets and current liability as follows : Interpretation: These current ratios experienced a decline of 2007-08 and consistent with the 2008-09 and 200607. As always it is important to compare these values with similar figures for the firms industry and the aggregate market. If the ratios differ from the industry results, it is necessary to determine what might explain it. Quick ratio: Some observers believe that current asset not gauges the ability of the firm tomeet current obligation because inventories and some other assets included incurrent assets might not be very liquid. As an alternative, they prefer the quick ratio, which relates current liabilities to only relatively liquid current assets as follows: Quick Ratio = {Cash and Cash Equivalents +Marketable Securities +Account Receivables}/Current Liabilities Years 2009 2010 2008 2009 2007 2008 Calculations 791,269,742/2,640,868,554 585,791,340/3,500,845,103 482,969,816/2,555,566,286 Quick Ratio 0.30 0.17 0.19

Interpretation: These quick ratios for square pharmaceuticals Ltd. were small, but were fairly constant except 2008-2009. This indicates that now the company has an ability to meet up the quick debt and liquid cash in hand. Cash ratio: The most conservative liquidity ratio is the cash ratio, which relates the firms cash and short term marketable securities to its current liabilities as follows: Cash Ratio = (Cash + Marketable Securities)/Current Liabilities Years Calculations Cash Ratio 2009 2010 313,707,740/2,640,868,554 0.12 2008 2009 225,545,694/3,500,845,103 0.06 2007 2008 160,105,179/2,555,566,286 0.06 Interpretation: The cash ratios of 2008-09 was better than the previous two years but quite low and it would be cause for concern except that such cash ratios are typical for a fast-growing firm with larger inventories being financed by accounts payable to its suppliers. In addition, The Company has strong lines of credit available on short notice at various banks. Still, as an investor, it would to conform how the company can justify such a low ratio and how it is able to accomplish this. Receivables Turnover: In addition to examining total liquid assets relative to near-term liabilities, it is useful to analyze the quality (liquidity) of the accounts receivables. One way to do this is to calculate how often the companys turnover, which implies an average collection period. The faster these accounts are paid, the sooner the company gets the funds that can be used to pay off its own current liabilities. Receivables turnover is computed as follows: Receivable Turnover = Net Annual Sales/Average Receivables We compute the average receivables figure form the beginning receivablesfigure plus the ending value divided by two. For 2009-20010 = 11,366,597,928/ {(477,562,002+360,245,646)/2} = 11,366,597,928/418,903,824 = 27.13 times For 2008-2009 = 9,565,715,902/ {(360,245,646+322,864,637)/2} = 9,565,715,902/ 341,5551,41.5 = 28.00 times For 2007-2008 = 8,711,034,758/ {(322,864,637+288,732,137)/2} = 8,711,034,758/305,798,387 = 28.47 times

Given these annual receivables turnover figures, an average collection period is as follows: Average Receivable Collection Period = 365/AverageReceivable Turnover For 2008-2009 = 365/27.13 = 13.45 days For 2007-2008 = 365/28.00 = 13.04 days For 2006-2007 = 365/28.47 = 12.82 days Total Asset Turnover: The total assets turnover ratios indicate the effectiveness of the firms use of its total assets base (net assets equal gross assets minus depreciation on fixed assets). It is compute as follows: Total Asset Turnover = Net Sales/Average Total Assets For 2008-2009 = 9,820,796,568/ {(13,251,242,856+2,703,127,420)/2}= 9,820,796,568/7,977,185,135 = 1.23 times For 2007-2008 = 8,257,843,739/ {(12,703,127,420+10,486,940,004)/2}= 8,257,843,739/11,595,033,710 = 0.71 times For 2006-2007 = 7,500,811,349/ {(10,486,940,004+9,298,987,312)/2}= 7,500,811,349/9,892,963,656 = 0.75 times Interpretation: Square Pharmaceuticals Ltd. has experienced a quite good total assets turnover in 2008-09 which is 1.23 times compared to other two fiscal years. So we can say that the effectiveness the firms uses the total assets increase (1.23-0.71) =0.52 times than the previous fiscal year.