Executive Summary

The 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 1st position 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.
Introduction
Financial 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 Study
As 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 Problems

In

my

term

paper

entitled Financial

Statement

Analysis

of Beximco

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 Study
The 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 Study
This report titled Financial Statement Analysis of Beximco 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 Review
Many 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

report Financial

Statement

Analysis

of Beximco

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 Study
In 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
ways
Secondary 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 Scenario

In 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 Statement
Enhancing human health and well being by providing contemporary and affordable
medicines and to deliver outstanding results for our shareholders.
Mission Statement
To 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 Square Pharmaceutical 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 Analysis
A 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 determine their 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 compare against those of other companies or against
the companys own historical performance. For example, return on assets is a common
ratio used to determine how efficient a company is at using its 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 Planning
Ratio 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 RATIOS
CURRENT RATIO

Current assets
Current ratio =
Current liabilities

Table-1
Year

Beximco

Square

2011

2.69

1.50

2010

2.46

2.15

2009

2.97

1.45

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 20092011 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 liabilities

Table-2
Year

Beximco

Square

2011

1.833958098

0.959799422

2010

1.674331527

1.05829246

2009

2.237300366

0.653007747

Quick ratio or the acid test measures the companys immediate liquidity without
relying on inventory. Inventories are the least liquid of a firms current assets
Interpretation: 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 liabilities

Table-3
Year

Beximco

Square

2011

1.024178985

0.682087378

2010

0.927470478

0.667404251

2009

1.53284846

0.373595065

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 shortterm 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 RATIOS
NET PROFIT MARGIN RATIO
Net Income
Net Profit Margin Ratio =

Sales

Table-4
Year

Beximco

Square

2011

0.067009182

0.192409084

2010

0.228396595

0.183117951

2009

0.224678997

0.194722296

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 income
Return On Assets =
Total Assets

Table -5

Year

Beximco

Square

2011

0.0520

0.1349

2010

0.0492

0.1522

2009

0.0314

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 RATIOS
EARNING PER SHEAR (EPS)
Net Income
Earnings Per Share=
No. of shares outstanding

Table-6

Year

Beximco

Square

2011

4.76

95.61

2010

4.18

78.84

2009

3.45

71.37

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 share
Price Earnings ratio =
Earnings per share

Table-6
Year

Beximco

Square

2011

19.66

25.35

2010

32.32

33.65

2009

44.51

30.46

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 RATIOS
CURRENT 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 RATIOS
NET 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 RATIOS
EARNING 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 Square

PRICE 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.
Conclusion
To 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.
Recommendations
1. EXPLORING ALTERNATIVE SOURCES OF FUNDS
The 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 DIVERSIFICATION
Pharmaceuticals 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 ACTIVITIES

Pharmaceuticals 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 PRODUCTS
Pharmaceutical company also should concentrate on the promotion activities; that all
levels of client know about their services.
Balance Sheet
For the year ended December 31, 2011, 2010, 2009
Beximco Pharmaceutical Ltd.
Profit and Loss Account
For the year ended December 31, 2011, 2010
Beximco Pharmaceutical Ltd.

Profit and Loss Account

For the year ended December 31, 2010, 2009
Square Pharmaceutical Ltd.
Balance Sheet
For the year ended December 31, 2011, 2010, 2009
Square Pharmaceutical Ltd.
Profit and Loss Account
For the year ended December 31, 2011-12
Square Pharmaceutical Ltd.
Profit and Loss Account
For the year ended December 31, 2009-10
Bibliography
Books:
Fundamental of Investments, Gitman
Principal of Finance, Mohammad Akter Hossain
Fundamental of Investments, C.P. Jonce
Annual Report:

Annual Report of Beximco Pharmaceuticals Ltd, Year of 2009-2011

Annual Report of Square, Year of 2009-2011.
Websites:
www.beximco-pharma.com
www.squarepharma.com.bd
www.bapibd.com
www.google.com
www.dgda.gov.bd