Nafis Islam Id- 111092189 Sec B FSA Project Report Part-1

7/31/2019 Nafis Islam Id- 111092189 Sec B FSA Project Report Part-1

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Square Pharmaceuticals

SQUARE Cent re, 48, M ohakh ali C/ A,

Dhaka - 1212, Bangladesh

+88-02-8859007 , +88-02-8833047

+88-02-8834941, +88-02-8828768, +88-

02-8828609

7 / 1 5 / 2 0 1 2

Nafis Islam

Interp retat ion of Square Pharm aceuticals m anufactur ing

ra t io and comp are it w i th t he Industry average o f p eer

group ( Beximco Pharm aceuticals, Reneta pharm aceuticals,

Khohinor Chemicals).

M anufactur ing Ratios:

Quick Rat ioCurr ent Rat io

Current Liabi l i t ies To Net W or t h

Current Liabi l i t y To Inventory

Total Liabi l i t ies to N et W or th

Fixed asset To n et W or th

Inventory Turnover

Asset to Sales

Sales to Net W ork ing Capita l

Account Payable to Sales

Square

Pharmaceuticals

Id: 1110921 89

Sec: B

Subm i t ted t o

Subor na Barua


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Conten ts: Man ufactur ing Rat io

Quick r atio:...................................................3

Cur ren t Ratio :................................................4

Cur rent Liabil i t ies To Net W ort h ...................5

Cur rent Liabil i t y To Invent ory .......................6

Total Liabil i t ies to N et W ort h........................7

Fixed asset To n et W ort h ..............................8

Invent ory Turno ver .......................................9

Asset t o Sales ..............................................1 0

Sales to N et W or king Capit al ......................11

Account Payable to Sales............................12

Ret urn on Sales (Profit M argin) ..................13

Retu rn O n Asset (ROA)................................14

Ret urn On Net W ort h (ROE)........................15

Daliy Sales Out stand ing (Collectio n Period) 16


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Quick r atio:

Quick ratio, define as acid test ratio,

reveals a company's ability to meet short-

term operating needs by using its liquid

assets. It considers a more reliable

indicator of a companys short-term

financial strength.

Time series analysis of Square Pharmaceuticals

2007 2008 2009 2010 2011

-

32.39%

-

10.78% 80.73% 18.51%

-

29.25%

Square Pharma current liability increase

and proportion of quick asset can offset

less amount of current liability in 2007.

In 2008 Current liability increase more

than 2007 so quick ratio rate decrease and

change in percentage negative 10.78%. in

2009, 859 Million current liability

decrease so quick asset now offset more

current liability and increase more than

80%. In 2010, current liability decreaseslightly and cash decrease some amount

but account receivable increase. In 2011,

current liability increase in 2,451 Million

so quick asset can off less portion of

current liability so decrease ration at

negative 29.25%.

Distance of quick ratio with industryaverage quick ratio is that:

2006 2007 2008 2009 2010 2011

(0.09) (0.14) (0.07) (0.24) (0.27) (0.14)

Square Pharma quick ratio is close to

good situation in 2006 & 2008 including

moderate rate was in 2007 & 2011 but

was worst in 2009 & 2010.

Deviation with industry average:

2006 2007 2008 2009 2010 2011

-25 .06% -44.43% -31 .42% -44.81% -44 .06% -37.16%

In 2006, Reneta and beximco Pharma

quick ratio was 0.40 and 0.43. Their

quick asset can more offset their current

liability. In 2009, deviation is most within

2006-12. Beximco pharma quick ratio

was .75 in 2009 so they can offset almost

three fourth of the current liability with

quick asset. In previous year square have

0.24 quick ratio where beximco pharma

quick ratio was .57 so we can easily

understand the deviation of square

pharma quick ratio with industry average

in 2011.


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Cur ren t Liab ilities To Net

Worth

Indicates reliance on the equity for

payment of debt. It is one of the measures

of the solvency of a firm and, as a rule of

thumb, should not exceed 60 percent;

higher percentages mean significant

pressure on future flows. The smaller the

net worth and the larger the liabilities, the

greater the risk.


2007 2008 2009 2010 2011

-

1.31% 19.35% -36.18% -28.75% 78.64%

If the current liability to net worth ratio

less previous year mean company are in

better position than previous year. From

2006 to 07 current liabilities increase not

more than value of the shareholder equity

increases. So we get negative percentage

of ratio. In 2008, current liability increase

so ratio high. In 2009, significant of share

issue by square so ratio gets low and was

in best position from 2007 to 2011. At

present, their current liability increase

significantly so ratio get high and are in

worst position to cover current liability

by shareholders equity.

Distance from Industry Average:

2006 2007 2008 2009 2010 2011

(1.62) (1.72) (1.97) (2.38) (2.62) (2.90)

Square Pharma have very high rate of

equity for payment of debt. Situations are

becoming good increasing at a increasing

rate.

Deviation from Industry Average

2006 2007 2008 2009 2010 2011

-82 .09% -83.16% -82.57% -89.97% -93.26% -89.57%

In 2006 square have o.35 ratio where

Khohinor chemicals had 10.29 so

deviation from square to industry averagewas high. In 2007, square had 0.35 ratio

where beximco pharma was 0.20 ratio but

khohinor had11.25 ration here we found

deviation from square to industry

average. In2011, Square ratio was 0.34,

though Beximco ratio was 0.20 but

khohinor ratio was 18.68 so here we

found a big deviation between square to

industry average ratio of current liability

to net worth ratio.


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Cur re nt Liability To

Inventory

How much a firm relies on fund fromdisposal of unsold inventory to meet debt.

Time series analysis of Square

Pharmaceuticals

2007 2008 2009 2010 2011

-

1.73% 4.37% -27.15% -20.18% 82.86%

1st

three years inventory and current

liability increase and current liability are

more than inventory. In 2009, current

liability decrease and approximate equal

position to offset each other. In2010,

inventory increase and current liability

decrease and ratio get smaller. In 2011,

Inventory increase but current liability

increase more than 2,451 million so ratio

get bigger create worst situation from

company to offset current liability byinventory.


20 06 2 007 2008 20 09 2 010 2011

0.34 0.44 0.14 (0.10) (0.33) 0 .35

Higher the deviation, lower the capability

of meeting debt by selling inventory.Square pharma fully capable of repaying

current debt by selling inventory in 2009

& 2010.

Deviat ion fr om Industry Average

2006 2007 2008 2009 2010 2011

25.35% 35.86% 8.55% -7.50% -24.54% 23.26%

In 2006, Beximco ratio was 1.44 andrenata ratio was 1.03 but square ratio was

1.68 so oviously square ratio was more

than 25% higher than industry average. In

2007, Square rato was 1.65 though

Beximco ratio was1.44 and Renata ratio

was 1.08 so Square ratio increase by

more than 35%. In 2009. Square ratio was

1.26 where Beximco And Raneta ratio are

1.35 and 1.31. So industry average are

above than the square pharma. They

maintain this good ratio two years but in

2011, Square ratio above than the

industry average .


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Total Liab ilities to Net

Worth

Compare the company indebtedness tothe venture of capital investment. A

measure of the extent that the net worth

of the Square can offset the liabilities.

The lower rate has more capability to

offset shareholder equity by total

liabilities.


2007 2008 2009 2010 2011-

4.96% 18.41%

-

34.83%

-

10.66% 37.35%

In 2007, Total liability increase by 256

million and net worth is increasing by

931 million so ratio get smaller than

previous year and company financial

condition become good. In 2008, current

liability increase by 1,132 million and net

worth increase by 1,083 million so ratio

get larger and company condition become

in this sector in this year. In 2009, total

liability decrease by 984 million and net

worth increase by 1,532 million so ratio

get lower and company condition become

good. In 2011, total liability increase by

2,151 million and net worth increase by

2,096 million so ratio get bigger and

more than 35% increase in result than last

year


2006 2007 2008 2009 2010 2

(2.52) (2.62) (2.74) (3.47) (3.65) (3.

Square have lower total liabilities to net

worth ratio than its industry average so

we can say creditor can satisfy for

investing in low risk company.

De v ia t i o n f r o m In d u s t r y A ve ra g e

2 0 0 6 2 0 0 7 2 0 08 2 0 09 2 0 1 0 2 0 1

-84 .7 8% -85 .8 9% -8 4 .3 5 % -9 1 .2 7 % -92 .4 9% -9 0.

In 2006, Square ratio was 0.45 where

Beximco and Renata ratio were 0.50 and

0.81 but khohinor chemicals ratio was15.83 so they create a large deviation

from square to industry average by more

than 78%. In 2008, Square ratio was 0.51

where Beximco and Renata ratio were

0.42 and 0.90 but Khohinor ratio was

17.74 so huge deviation belong to square

and industry average. In 2011, Square

ratio was 0.41 but Beximco did better

0.34 and Renata ratio was 0.94 yet

Khohinor can increase their equity value

and ratio is the biggest than ever which is

24.89%. So khohinor is in serious trouble

with equity But square have no defect in

total liability to net worth ratio over all

its a strength for square pharmaceuticals.


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Fixed asset To ne t Wor th

Portion of net worth consist of fixed

asset. A measure of the extent of anSquare's investment in non-liquid and

often over valued fixed assets. A ratio of

.75 or higher is usually undesirable as it

indicates possible over-investment and

causes a large annual depreciation charge

that will be deducted from the income

statement.


2007 2008 2009 2010 2011

35.57% 0.88% 1.38% -2.45% 5.18%

In 2007, fixed asset increase by 1,257

million and net worth increase by 931

million so square ratio increases by more

than 35%. In 2009, fixed asset increase

by 811millions and net worth increase by

1,532 millions so square ratio increases

by 1.38% than previous year. In 2010fixed increase by 731 million and net

worth increase by 1,771 million but

square ratio decrease by more than 2%.


2006 2007 2008 2009 2010 2

(1.39) (1.23) (1.21) (1.32) (1.25) (1

Square pharma fixed asset to net worthratio good than industry average in 2006-

2011.

Deviat ion f rom Indust ry Average

2006 2007 2008 2009 2010 2011

-79.65% -71.79% -71 .28% -72.82% -72.24% -70.62%

In 2006, Square ratio was .36 where

Beximco ratio was 1.07 and Renata ratio

was .70 and Khohinor ratio was 6.09 so

large deviation occur between square to

industry average. In 2008 Square ratio

was .49% where Beximco, Reneta&

khohinor chemicals ratio were 1.14, .61,

5.66 so deviation happened by 71% more.


Beximco, Renata & Khohinor ratio were

.95, .86, 6.13 deviation occurred more

than 72%. In 2011 Square ratio was .51where Beximco, Reneta& khohinor

chemicals ratio were .93, .96, 5.97 so

deviation happened by more than 70%.


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Inven tor y Tur nover

A ratio showing how many times a

company's inventory is sold and replaced

over a period.


Pharmaceuticals

2007 2008 2009 2010 2011

6.87% -16.33% 14.75% 11.09% 1.86%

In 2007, sale increase by 1,625 million

and inventory increase by 201 million So

inventory turnover ratio increase by more

than 6%. In 2009, sales increase by 1,800million and inventory increase by 72

million so inventory turnover ratio

increase by more than 14 %. In 2011,

sales increase by 2,297 million and

inventory increase by 334 million so

inventory turnover ratio increase by more

than 1%


20 0 6 2 00 7 2 0 08 2 0 0 9 20 1 0 2 01 1

2 .80 2 .61 1 .88 2 .38 2 .73 2 .63

Square inventory turnover ratio is bad in

all year compare to industry average

should be reduced its inventory turnover

ratio.

Deviat ion from Industry Average

2006 2007 2008 2009 2010 2011113.07% 85.99% 66.25% 78.46% 83.06% 75.04%

In 2006, Square inventory turnover is 5

times where Beximco, Renata, Khohinor

inventory turnover is 2.11, 3.02 and 2.78

times so deviation between square and

industry average were more than 113%.

In 2008, Square inventory turnover is

4.72 where Beximco, Renata, Khohinorinventory turnover are 2.66, 3.22, 2.75 so

deviation is more than 66%. In 2011,

Square inventory turnover is 6.13 where

Beximco, Renata, Khohinor turnover are

3.44, 4.11, 2.57 so deviation is more than

75%.


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Asset to Sales

Reflects the total amount of investment in

asset to generate this sale. Lower the rate

of ratio, higher capability to generate

sale.


Pharmaceuticals

2007 2008 2009 2010 2011

-8.27% 10.31% -12.21% -1.84% 9.08%

In 2007, Square total asset increase by

1,187 and sales increase by 1,625 millionbut ratio get lower than previous by more

than 8%. In 2009, Square total assets

Increase by 518million and sale increase

by 1800 million but ratio get lower than

previous year by more than 12%. In 2011,

Square total asset increase by 4,247

million and sales increase by 2,297

million but the ratio get higher than

previous year by more than 9%.


2006 2007 2008 2009 2010 2011

(0.88) (1.00) (1.14) (1.50) (1.11) (0.83)

Square pharma asset to sales ratio is

lower than its industry average means its

asset generate sales capability is too high.

D e v i a t i o n f r o m I n d u s t r y A v e r a ge

2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1

-4 0 .0 4 % -4 5 .43 % -4 6 .1 2 % -5 6 .3 4% -4 9 .2 7% -4 0 .0 3 %


Beximco, Renata, Khohinor ratio were

3.22, .92, .87 so deviation occur by 40%.


Beximco, Renata, Khohinor ratio were3.7, 1.02, .75 so deviation occur by 46%.



2.92, 1.18, 0.77 so deviation occur more

than 40%.


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Sales to Net Wor king

Capital

Reflects the efficiency to use it short term

asset and liability to generate profit. The

higher the ratio, the higher the efficiency.


Pharmaceuticals

2007 2008 2009 2010 2011

93.19% 35.84%

-

9.99%

-

39.86% 16.42%

In 2007, Square sales increase by 1,625

million and net working capital decrease

by 643 million but ratio increase by more

than 93% than previous year. In 2009,

Sales increase by 1800 million and net

working capital increase by 291 million

but ratio decreased by more than 9%. In

2011, Sales increase by 2,297 million andnet working capital increase by 17

million so ratio more than 16% increase

than previous year.


2006 2007 2008 2009 2010 201

4.86 8.09 1.36 7.60 (12.56) (13.22

Square pharma sales to net working

capital more or less good until 2009.

Huge problem face in 2010 and 2011.

The problem is increasing so square

pharma is in trouble with in this problem.

Dev ia t ion f rom Indus t ry Average

2006 2007 2008 2009 2010 2011

-563.48% -2251.06% 14.87% 410.43% -68.84% -66.64%

In 2006, Square ratio was 4 where


4.46, 6.02, -32.65 so deviation happened

more than 563%. In 2008, Square ratio

was 10.50 where Beximco, Renata,

Khohinor ratio wee 15.43, 16.04, -26.12

so deviation happened more than 14%. In

2011, Square ratio was 6.62 where


1.75, -7.07, 134.38 so deviation occurred

by more than 66%.


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Account Payable to Sales

Measure the extent to which supplier

money generate sale. The higher the rate

of ratio, reflect higher efficiency to

account payable on sale.


2007 2008 2009 2010 2011

-

37.91% 51.70% 3.55% 171.98% 58.39%

In 2007, Account payable decrease by 18million and sales increase by 1625

million so more than 37% increase than

previous year. In 2009, account payable

increase by 23million and sales increase

by 1800 million. So 3.5% increase than

previous year. In 2011, account payable

increase by 338 million and account

payable increase by 2,297 million so 58%

increase than previous year.


2006 2007 2008 2009 2010 2011

(33.31) (32.21) (34.80) (37.74) (27.66) (12.79)

Square pharma use less amount of

account payable to generate sale than its

industry average.

Deviat ion f rom Indust ry Average

2006 2007 2008 2009 2010 2011

-89.06% -92.69% -90.03% -90.44% -71.83% -42.68%

In 2007 Square ratio was 2.54 where


27.58, 546, 114.76 so deviation occurred

by 92%. In 2009 Square ratio was 3.99

where Beximco, Renata, Khohinor ratiowere 30.73, 2.61, 153.68 so deviation

occurred by 90%. In 2011, Square ratio


Khohinor ratio were 24.23, 2.81, 100.98

so deviation happened by 42%.


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Retur n on Sales (Pr ofit

Margin)

Reflects profit earn in each sale. The

higher the ratio, higher the profit earn on

sale.


Pharmaceuticals

2007 2008 2009 2010 2011

-9.08% -3.44% 15.11% -5.44% 3.39%

In 2007, net profit after tax increase by

137 million and sales increase by 1625million so more than 9% increase than

previous year. In 2009, net profit after tax

increase by 508 million and sales increase

by 1800 million to 15% increase ratio

than previous year. In 2011, net profit

after tax increase by 444million and sales

increase by 2297 million to 3.39%

increase than previous year.


2006 2007 2008 2009 2010 2011

0.06 0.05 0.02 0.05 0.01 0.03

Square pharma have good profit on sale

than its peer group companies.

Deviat ion from Indu stry Average

2006 2007 2008 2009 2010 2011

5.51% 5.46% 2.48% 4.64% 1.50% 2.64%



.10, .13, .01 so deviation occurred by

5,51%. In 2011 Square ratio was .16

where Beximco, Renata, Khohinor ratiowere .15, .17, .02 so deviation increased

by 2,64%


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Retur n On Asset (ROA)

Key indicator to judge the profitability of

a firm. Operating profit with assetavailable to earn return. The higher the

ratio means higher return on asset.


Pharmaceuticals

2007 2008 2009 2010 2011

-

0.88% -12.47% 31.12%

-

3.67%

-

5.22%

In 2007, Net profit after increase by 137

million and total asset increase by 1187

millions so ratio decrease by .88% than

previous year. In 2009, Ne profit after tax

increase by 508 million and total asset

increase by 528 millions so 31% increase

than previous year. In 2011, net profit

after tax increase by 444 million and total

asset increase by 4247 million so ratio

decrease by more than 5%.


2006 2007 2008 2009 2010 2011

0.06 0.06 0.04 0.07 0.06 0.06

Square have very good ROA ratio than its

peer group companies.

Deviation fr om Industry Average

2006 2007 2008 2009 2010 2

95.10% 93.09% 67.60% 109.94% 72.23%



.03, .16, .02 so deviation occur by more

than 93%. In 2009, Square ratio was .14

where Beximco, Renata, Khohinor ratio

were .03, .16, .03 so deviation occurred

by more than 109%. In 2011, Square ratio

was .13 where Beximco, Renata,

Khohinor ratio were .05, .14, .03 so

deviation occur by 74%.


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Retur n On Net Wor th (ROE)

Ability to generate profit on share holder

invested money. The higher ratio, the

higher efficiency of generating return on

equity.


Pharmaceuticals

2007 2008 2009 2010 2011

-2.41% -7.62% 15.71% -6.23% 2.88%

In 2007, Net profit after tax increase by137 million and equity increase by 931

milion so ratio decrease by morethan 2%

than previous year. In2009, Net profit

after tax increase by 508 million and

equity increase by 1532 million so ratio

increase by 15% more than previous year.

In 2011, Net profit after tax increase by

444 million and equity increase by 2096

million so more than 2% increase than

previous year.


2006 2007 2008 2009 2010 2011

0.03 0.03 (0.03) (0.03) (0.04) (0.05)

Square have good condition on ROE but

becoming worst condition at present.

Dev i at i on f r o m I ndus t r y Average

200 6 20 07 200 8 2009 2 010 2 011

21.1 3% 20.0 0% -13 .91% -11.7 8% -19 .19% -21.77%



.04, .26, .31 so deviation occur by 20%.



.06, .27, .67 deviation decrease by more

than 11%. In 2011, Square ratio was .18


were .07, .27, .75 so deviation decrease

by 21%.


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Daliy Sales Outstan din g

(Collection Per iod)

The average collection period is the

number of days, on average, that it takes

a company to collect its credit accounts or

its accounts receivables. In other words,

this financial ratio is the average number

of days required to convert receivables

into cash.

Time series analysis of SquarePharmaceuticals

2007 2008 2009 2010 2011

-9.04% 1.61% 11.56% -8.90% 29.56%

In 2007, Account receivable increase by

34 million and sales increase by 1625

millions so ratio decrease 9% than

previous year. In 2009, Account

receivable increase by 117 million and

sales increase by 1800 millions so

11.56% increase than previous year. In

2011, Account receivable increase by 264

million and sales increase by 2,297

million so 29.56% increase than previous

year.


2006 2007 2008 2009 2010 201(19.87) (22.98) (23.72) (23.09) (22.03) (17.5

Square pharma DSO is very high. Its

means it require more time to collect

money from buyer. They have to reduced

this problem in short time.

Dev ia t ion f rom Indus t ry Average20 06 2 0 07 20 0 8 20 0 9 2 01 0 20 1 1

-5 7.1 9 % -6 2 .9 4% -6 3 .3 1% -6 0 .09 % -6 1.20 % -4 9.26

In 2007, Square DSO was 13.53 where


50.70, 28.05, 1.55 so deviation decrease

by 57%. In 2009, Square DSO was 15.34


were 52.04, 32.18, 1.45 so deviation

decrease by 60%. In 2011, Square DSO


Khohinor ratio were 45.25, 35.84, 1.18 so

deviation decrease by more than 49%.

Nafis Islam Id- 111092189 Sec B FSA Project Report Part-1

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