Financial Analysis of SQUARE

PHARACEUTICALS

Group
Report

Corporate Finance (FIN 440)

Section 9

Prepared for
Tashfeen Hussain
Prepared By
Rashadat Anowar Chowdhury
0930101020
Taufiq Ul Islam
0920436030

Letter of Transmittal

10 August 2011
Tashfeen Hussain
School of Business
North South University
Dear Sir,
We are delighted to present the Report on Analysis of Financial Summary
of Square Pharmaceutical Limited Bangladesh Fiscal Yearly 2006-2010.
The report includes the financial ratios, annual report, capital structure of
the company during fiscal year 2006-2010.
Your instructions have been strictly followed by us to build up a vivid
picture of the companys financial performance and profile for past 5 (five)
fiscal year.

Yours Sincerely
Rashadat Anowar Chowdhury
0930101020

Taufiq Ul Islam
0920436030

II

Content
Executive Summary
Company Profile

4
5

Financial Ratio Analysis

Short Term Liquidity Ratio Analysis
Long Term Liquidity Ratio Analysis
Asset Management (Turnover) Ratio Analysis
Profitability Ratio Analysis
Market Value Ratio Analysis
Dividend Ratio Analysis
Free Cash Flow Ratio Analysis
Cost of Capital Analysis
Capital Structure Analysis

7
8
11
13
17
18
21
23
24
25

Appendix
Financial Ratio Table FY2006-2010
Balance Sheet and Income Statement FY2006-2010
List of Equations
Table of Data Used for Calculating Beta
of Square Pharmaceuticals Limited Bangladesh

Appendix 1
Appendix 2
Appendix 3
Appendix 4

III

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.

Company Profile
Square Pharmaceuticals Limited Bangladesh is the largest pharmaceutical
st
company in Bangladesh and it has been continuously in the 1 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 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 Multifabrics 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/subsegment plans for every 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.

SHORT TERM LIQUIDITY RA TIO ANA LYSIS

Current Ratio
On average the current ratio of Square Pharmaceuticals Limited Bangladesh
was 1.62 during fiscal year (FY) 2006-2010. 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.
The current asset of the firm had increased by 18.42% between the fiscal
year of 2006 and 2010 but at the same time the current liabilities had
decreased by 1.95 %.
While analyzing a firms current assets, firms inventories had played an
important role to discover firm actual position to meet short-term obligation.
The inventories of Square pharmaceuticals Limited Bangladesh had
positiv ely changed by 13.75% annually on average throughout the
fiscal year of 2006 2010. Having a huge amount of inventory is not good
for a firm. There is a chance of having outdated or slow moving product in
the inventory. As a pharmaceu ticals firm this is quite a concern becau se
the y produ ce drugs which are used b y humans and an outd ated p roduct
might cause some o ne illness or d eath. Therefore, increase in inventory is a
good sign for a pharmaceuticals company as far as their inventory do not
have obsolete products.
Firms cash and cash equivalents had decreased by 18.13%, short
term loan [current asset] had decreased by 35.65 %, Trade
debtors had increased by 76.03% between the fiscal year 2006 and
2010.
The decrease in cu rrent liabilities b y 1.95% is a positive sign to ward s
the growth o f the company and its abilit y to meet the short term
obligations.
In addition, in our depth analysis of the firms current asset and liabilities
figure we have found that in 2007 current asset of the firm reduced by 8.66
% and current liabilities increased by
13.04%. This was caused by an increase in Short-term Bank Loans
and Other Financial Liabilities. Besides in last five years the worst
current ratio figure was in 2008 FY. In 2008 FY the short-term bank loans was
54.84% more than 2006 FY. This increase made firm more vulnerable to
meet its short term obligations than its previous fiscal years. In contrary, the
firm made significant improvement to reduce its short-term bank loans
in FY 2009 and 2010. In
2009 and 2010 FY the short-term bank loan reduced by 42.53 % and 72.41 % from FY
2008.
Short-Term Bank Loans are the major portion of current liabilities for firm
financial figures. Other current liabilities accounts such as Trade
Creditors, Long Term Loan (current portion) and other
liabilities expense has increased throughout the fiscal years 2006-2010

of
Square Pharmaceuticals Limited Bangladesh.
Current
Ratio1

2006

2007

2008

2009

2010

1.78

1.44

1.26

1.46

2.15

Table of Current Ratio for Fiscal Year 2006-2010

Quick Ratio (Acid Test)

Square Pharmaceuticals Limited Bangladesh had an average of 0.91 for the fiscal year
20062010.
0.91 is a 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
2006 and 2010 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 2006 and 2010 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.
Quick
Ratio2

2006
1.19

2007
0.84

2008
0.68

2009
0.66

2010
1.16

Table of Quick Ratio for Fiscal Year 2006-2010

Net Working Capital to Total Assets

On average Square Pharmaceuticals Limited Bangladesh had Net working capital worth of
1,513,815,265.40 BDT between FY 2006 to 2010. 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
of
2006-2010 but at the same time the current liabilities had decreased by 1.95
%.Due to this diference 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 2006 and 2010 and Net Working Capital had increased by
44.42% in the same period.
The firm faced its worst Net Working Capital to Total Assets ratio figure in
FY 2008 because the firm had lowest Net Working Capital in terms of last 5
(five) fiscal year caused by an
increase in short-term bank loans.
NWC to Total
Assets3

2006

2007

2008

2009

2010

0.19

0.11

0.07

0.09

0.17

Table of NWC to Total Assets f or Fiscal Year 2006-2010

Interval M easure
Interval measure exhibits a firms ability to maintain its daily business
expense by using its current assets just. In other word this ratio is expressed
in terms of days and shows that the firm can cover its daily operating
expense by relying on its current asset only and run its business for specific
number of days.
In case of Square Pharmaceuticals Limited Bangladesh, the average interval measure is
260.26
days during the fiscal years 2006-2010.
The daily operating expense and current asset of this pharmaceutical firm on average was
16,555,423.74 BDT and 4,148,771,230 BDT respectively. On average the
daily operating expense of this firm had changed by 17.59 % annually on
average between FY 2006 and 2010. The current asset of the firm had
increased by 18.42% between the fiscal year of 2006 and 2010 but the daily
operating expense had increased at a staggering rate of 90.92% at the
same time. Therefore, the interval measure of Square Pharmaceuticals
Limited Bangladesh had dropped by
132.62 days in FY 2010 from 2006, which was approximately 37.97% less than 2006.
Interval measure provides a strong view of firms ability to run its operation
even it faces any financial disaster. In present, Square Pharmaceuticals
Limited Bangladesh is not performing as well as performing in FY 2006
according to interval measure. Therefore, it would advisable for this firm to
minimize its operating cost and increase its short term asset for the
betterment of the
firm.
Interval
Measure4

2006

2007

2008

2009

2010

349.23

260.83

268.30

206.31

216.61

Table of Interval Measure ( in days) for Fiscal Year 2006-2010

Cash Ratio
Square Pharmaceuticals Limited Bangladesh had a cash ratio of 0.10 on
average during the fiscal years 2006-2010. 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 2006 and 2010 and this refers that the firms inventories consist
a large portion in its current asset. In terms of other account, the portion of
cash and cash equivalents in current asset was very undersized and we
must add that firms cash and cash equivalents had decreased by
18.13% between 2006 and 2010 FY.
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 in
2007 and by 2010 it had comparatively reached to a better state of cash ratio.
Cash Ratio5

10

2006
0.14

2007
0.05

2008
0.06

2009
0.11

Table of Cash Ratio f or Fiscal Year 2006-2010

2010
0.12

LONG TERM LIQUIDITY RATIO ANALYSIS

Total Debt Ratio
During the fiscal years 2006-2010, on average Square Pharmaceuticals
Limited Bangladesh had a debt ratio of 0.29 and total debt was worth of
3,422,741,464 BDT. The Total Debt Ratio expresses the fraction of its total
debt relative to its total assets.
In addition, the total debt of the firm had increased by 19.96% between
fiscal 2006 and 2010. This was caused by significant increased in short term
bank loans, loan term secured loans and trade credits. Besides throughout
the FY 2006-2010, total assets of the firm had yearly changed at 12.91% on
average but total debt of the firm had changed yearly at 22.69% on
average.
In contrary, the company had more debt in FY 2008, 47.95% more than FY 2006. And in
2008
FY the short-term bank loans was 54.84% more than 2006 FY. But the debt had decreased
by
22.96% and 18.92% in FY 2009 and FY 2010 respectively comparing to FY
2008. The firms debt ratio had decreased in past 5 (five) fiscal year and in
near future it is expected to have a sound financial performance based on
the current situation of its debt ratio.
The company had worst debt ratio in 2008 FY though it gradually
recovers itself and established a strong financial foundation to
overcome its debt.
2006

Total Debt
6
Ratio

0.31

2007

0.30

2008

2009

0.3
0.2
4
Table of Total Debt Ratio for Fiscal Year 205
06-2010

2010

0.2
3

Debt Equity Ratio

Debt equity ratio refers to a firms investment dependency on its debt and
equity. If a firms debt equity ratio is 1 then it shows that the firm relies
more on debt for investment rather than its own equity. Square
Pharmaceuticals Limited Bangladesh had a strong financial backbone since
its debt equity ratio is far below 1 and we can say that they do not rely a
lot on debt for their investment.
The companys equity had increased by staggering 80.48% between FY
2006 and 2010 though the total debt of the firm had increased by 19.96%
at the same time.
Debt equity ratio also shows that a firms riskiness. In case of Square
Pharmaceuticals, it is quite unlikely to be risky since it had debt equity ratio
of 0.40 on average during the FY 20062010. Investors would be happy to invest in such firm having a good debt equity ratio.
Though this firm experienced worst debt equity condition in FY 2008, it

progressively had reduced the ratio in its following FY. As we have

observed before in 2008 FY, the short term
bank loans was at peak in last 5 (five) FY. It caused the ratio to increase from 2007 FY.
DebtEquity
7
Ratio

2006

0.45

2007

2008

2009

0.43

0.51

0.33

Table of Debt Equity Ratio for Fiscal Year 2006-2010

11

2010

0.30

Equity Multiplier
On average the equity multiplier of Square Pharmaceuticals Limited
Bangladesh was 1.40 during
FY 2006-2010. 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 2006 and 2010, the company do not rely on debt for
its investment.
The equity multiplier shows a firms assets per 1 unit of equity. In case of
Square pharmaceuticals the ratio is relatively fine and this firm observed
its worst equity multiplier
condition in FY 2008.
2006

2007

2008

2009

1.45
1.43
1.5
1.3
Equity
8
3 2010
Fiscal Year 2006Multiplier Table of Equity Multip lier Ratio for 1

2010

1.3
0

Times Interest Earne d

Square Pharmaceuticals Limited Bangladesh had a time interest earned ratio
of 9.19 on average during FY 2006-2010. This ratio stats a firms ability to
meet interest obligations by using its earnings before income tax or
EBIT.
In this fiscal period, square pharmaceuticals EBIT had increased by 87.20%
and interest payment had been increased by 54.72%. During this period of
time average EBIT of each year was approximately 2,483,706,253 BDT
and interest expense was 286,914,843 BDT. So the figures clearly shows
that this firm had a better financial performance according to its time
interest earned ratio for last 5(five) FY.
Though in 2008 FY , firms times earned ratio drops to 6.58, which was
minimum of last 5 (five) FY. In this specific fiscal year the interest expense
of the firm had increased by 48.56% compared to its preceding fiscal year.
Besides, in 2008 FY the EBIT was 13.10% more than its preceding fiscal
year. The huge difference between the increased percentiles of each
account causes the firm to have a low TIE ratio. But in following years the
firm had improved on its
interest obligation and in FY 2010 it had an excellent TIE ratio.
Times
Interest
10
Earned

2006

12.51

2007

2008

2009

8.64

6.58

7.64

Table of Times Interest Earned Ratio for Fiscal Year 2006-2010

2010

10.60

12

L o n g Te r m D e bt
Long term debt ratio is concerned with firms long term debt. Long term
debt do not changes frequently alike short term debt. Square
Pharmaceuticals Limited Bangladesh had an average long term debt worth
of 635,978,867 BDT for FY 2006-2010. In addition, Companys equity had
increased at a rate of 15.92% annually at the same time. On average long
term debt ratio during this fiscal period was 0.07
Square pharmaceuticals had lowest long term debt ratio in 2009 FY but
it had recovered in following year making the long term debt ratio better
than before.
Long Term
Debt
9
ratio

2006

0.09

2007

0.06

2008

0.07

2009

2010

0.04

0.08

Table of Long Term Debt R atio for Fiscal Year 2006-2010

Cash Coverage
Square Pharmaceuticals Limited Bangladesh had cash coverage of 11.17 on average
during FY
2006-2010. Cash coverage ratio represents a firms ability to meet its
interest expense by the cash generated from its operation. We have
stated before that in this fiscal period, square pharmaceuticals EBIT had
increased by 87.20% and interest payment had been increased by
54.72%. During this period of time average EBIT of each year was approximately
2,483,706,253 BDT and interest expense was 286,914,843 BDT. But in
calculating cash coverage, we must add the depreciation expense because
it is a non cash expense. The firm had worst cash coverage during FY 2008
because in this fiscal year interest expense of the firm had increased by
48.56% compared to its preceding fiscal year though the EBIT increased at
a rate
of 13.10% at the same time.
Cash
Coverage
12
Ratio

2006

2007

14.63

10.84

2008

8.13

2009

2010

9.28

12.96

Table of Cash Coverage Ratio for Fiscal Year 2006-2010

A SSET MANAGEMENT (TURNOVER) RATIO ANA LYSIS

Inventory Turnove r and Days Sales in Inventor y
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 FY 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 20062010
period.

13

The average inventory turnover was 2.69 throughout FY 2006-2010. If we

take a closer look at the table of inventory turnover ratio, in FY 2008 it was
lowest among last 5 (five) FY and in following fiscal years the scenario had
improved and in FY 2010 the firm have highest
inventory turnover for past 5 (five) fiscal year.
Invent
ory
13
Turnover

2006
2.63

2007
2.76

2008
2.40

2009

2010

2.70

2.97

Table of Inventory Turnover Ratio for Fiscal Year 2006-2010

Days sales in inventory (average days sales in inventory) ratios show the
efficiency of a firm. It represents firms ability to use inventory efficiently.
Square Pharmaceuticals Limited Bangladesh had an average days sales in
inventory of 136.24 days during FY 2006-2010. The firm days sales in
inventory had reduced by 13.20% between FY 2006 and 2010. As a
result the firm had become eficient in using its inventory.
The worst days sales in inventory was recorded in 2008 FY and it was
caused by a low inventory turnover of 2.40
Days
Sales in
14
Inventory

2006

2007

2008

2009

2010

138.98

132.05

152.34

135.04

122.78

Tab le o f DSI Ratio for Fiscal Yea r 2006-20 10

Receivables Turnover and Days Sales in R eceivable s

Receivables turnover ratios illustrates how many times per period the
company collects its average collectable amount. Square Pharmaceuticals
Limited Bangladesh had an average account receivables worth of
391,530,719.20 BDT and it had increased by 76.03% between FY
2006 and 2010. Between FY 2006 and 2010, on average this firm had earned revenue of
8,626,387,092 BDT and had increased by 88.22%. So, we can say that
the company is doing well in case of receivables turnover.
The average receivables turnover was 22.07 throughout FY 2006-2010. In
FY 2009 it was lowest among last 5 (five) FY and in following fiscal years
the situation had improved though
the company had performed well in FY 2007 and 2008 comparing to recent years.
Receivab
les
15
Turnover

2006
21.09

2007

2008

2009

2010

23.23

22.92

20.56

22.55

Table of Receivables Turnover Ratio for Fiscal Year 2006-2010

Days sales in receivables (Average Collection Period) ratio show how long
the firm takes to collect its trade debt. Square Pharmaceuticals Limited
Bangladesh had an average days sales in inventory of 16.57 days during FY

2006-2010. The firm days sales in receivables had reduced by 6.48%

throughout FY 2006 and 2010. As a result the firm takes less time to collect it
receivables than preceding years.

14

The worst days sales in inventory was recorded in 2008 FY and it was
caused by a low inventory turnover of 2.40
Days
sales in
receivables16

2006

2007

2008

2009

2010

17.31

15.71

15.92

17.75

16.18

Table of DSR Ratio for Fiscal Year 2006-2010

Payables Turnover and Days Sales in Payables

Payables turnover refers how many times per period the company pays its
average payable amount. The bigger the turnover, the better its reputation
becomes to its supplier and creditors. Square Pharmaceuticals Limited
Bangladesh had an average account payables worth of
151,976,756.20 BDT and it had increased by 397.18% between FY 2006 and 2010.
The average receivables turnover was 45.05 throughout FY 2006-2010.
In FY 2007, it was highest among last 5 (five) FY and in following fiscal
years the situation had worsen. In FY
2010, the worst payables turnover was recorded for companys past 5 (five) fiscal year.
Payabl
es
17
Turnover

2006
44.41

2007

2008

2009

2010

70.43

48.10

45.66

16.62

Table of Payables Turnover Ratio for Fiscal Year 2006-2010

Days sales in payables (Average Payment Period) ratio show how long the firm
takes to pay its trade credit. Square Pharmaceuticals Limited Bangladesh had an
average days sales in payables of 10.19 days during FY 2006-2010. The firm days
sales in inventory had increased by 167.14% throughout FY
2006 and 2010. As a result the firm takes more time to pay its payables than preceding years.
The worst days sales in inventory was recorded in 2010 FY and it was caused
by a low payables turnover of 16.62

Days
Sales in
Payables18

2006
8.22

2007
5.18

2008
7.59

2009
7.99

Table of DSP Ratio f or Fiscal Year 2006-2010

2010
21.96

15

Net Working Capital Turnover

Net working capital turnover shows how much the firm is earning from
investing in its working capital. The bigger the turnover, the better it is for
the company. Square Pharmaceuticals Limited Bangladesh had an average
net working capital worth of 1,513,815,265.40 BDT and it had increased
by 44.42% between FY 2006 and 2010.
During FY 2006-2010, the average net working capital turnover was 6.36;
In FY 2008, it was highest among last 5 (five) FY and in following fiscal
years the situation had worsen. In FY
2010, the worst net working capital turnover was recorded for companys past 5 (five) fiscal
year. In FY 2010, net working capital was112.66% and the sales was only
16.72 % more than FY 2009. So, the huge difference between the increased
accounts caused the net working capital turnover to fall.

NWC
19
Turnover

2006
3.44

2007
2008
2009
2010
6.6
9.0
8.17
4.4
Table of NWC Tu
6 rnover Rati6o for Fiscal Year 2006-2010
8

Fixed Asset Turnover

Fixed asset turnover shows how much the firm is earning from investing in
its fixed assets. The bigger the turnover, the better the firm gains from fixed
assets investment. Square Pharmaceuticals Limited Bangladesh had average
fixed assets worth of 4,084,733,699 BDT and it had increased by
147.64% between FY 2006 and 2010.
During FY 2006-2010, the average fixed asset turnover was 2.17; In FY
2006, it was highest among last 5 (five) FY and in following fiscal years the
situation had worsen. In FY 2009, the worst fixed asset turnover was
recorded for companys past 5 (five) fiscal year. In FY 2010,
though the situation had improved.
Fixed
Asset
20
Turnover

2006

2007

2008

2009

2010

2.68

2.12

2.02

2.00

2.04

Table of Fixed Asset Turnover Ratio for Fiscal Year 2006-2010

Total Asset Turnover

Square Pharmaceuticals Limited Bangladesh had total asset turnover of 0.70
on average during FY 2006-2010. Total asset turnover represents a firms
return from its investment in asset. Square pharmaceuticals total asset had
increased by 61.63% and average total asset was approximately
12,153,959,574 BDT. The firm had worst asset turnover during FY 2006
and
2008. But in succeeding the asset turnover had raised to a healthy level.
Total Asset

2006

Turnover

21

0.65

2007

0.72

2008

0.65

2009

0.74

2010

0.76

Table of Total Asset Turnover Ratio f or Fiscal Year 2006-2010

16

PROFITABILITY RA TIO ANA LYSIS

Profit Margin
Profit margin ratio represents the figure of a firms earnings of net profits
against its net sales. Every firm have desire to have a big profit margin.
Though if a firms profit margin is low, it does not mean that the firm is
losing money with every sale occurs in its favor. Square Pharmaceuticals
Limited Bangladesh had net sales of 8,626,387,092 BDT on average and
it
had increased by 88.22% between FY 2006 and 2010. During the same fiscal
period, on average the net income after tax was 1,565,779,054 BDT and
had increased by 79.08%
In case of Square Pharmaceuticals, its profit margin had been stable during
FY 2006-2010.The average profit margin was 0.18; In FY 2006, it was
highest among last 5 (five) FY. Moreover, in following 2 (two) fiscal years the
ratio had slightly fall. In FY 2007 and 2008 the net profit had increased by
11.78% and 6.03% respectively, compared to their earlier year. Though,
net profit of FY 2009 had increased by 36.78% but in subsequent year its
growth had dropped to
10.47%.
However, net sales during FY 2007 and 2008 had increased by 23.17% and 10.09%
respectively, compared to their preceding year and net sales of FY 2009 had increased by
18.93% but in subsequent year its growth had dropped to 16.72%. So as
we can observe that growth of net sales and net profit of FY 2008, 2009
and 2010 were less than their respective
preceding year, causing the profit margin ratio to fall.
2006

Profit
22
Margin

2007

2008

2009

2010

0.1
0.1
0.1
0.19
0.1
T9
able of Profit7Margin Ratio
7 for Fiscal Year 2006-20108

Return on Assets
Return on assets ratio or ROA represents firms net profits against its total
assets. Like profit margin, if the number of ratio is big than it shows that
the firm is earning well against the investment on firms assets.
For Square Pharmaceuticals Limited Bangladesh, the return on assets ratio
on average was 0.13 during FY 2006-2010. In addition, the ratio did not
fluctuate a lot during this period. So we can come to a conclusion that the
firm did not face any serious financial issue to maintain the balance between
its net income and total asset. However, in FY 2008, the ROA was lowest
among last 5 (five) FY. It was caused by a low growth (6.03%) of net profit
compared to its preceding year. At the same time, total asset increased by
21.13%. So the huge gap of growth between total asset and net profit
caused ROA in 2008 to fall. Nevertheless, the company bounces back and
had better ROA in FY 2009 than FY 2008. Since the growth of net profit
(36.78%) was greater than the growth of total asset (4.31%) in FY 2009. In

FY 2010 the ratio

was indifferent with FY 2009 though the growth of net profit (10.47%) was
less than the growth of total assets (16.72%). But the growth of net profit in
FY 2009 was too huge which makes up
the missing growth of FY 2010 and helped ROA to stay constant.

Table of Return on Assets R atio for Fiscal Year 2006-2010

17

2006

Return on
23
Assets

0.13

2007

2008

0.1
2

0.1
1

2009

0.14

2010

0.1
4

Return on Equity
Return on equity ratio or ROE represents firms net profits against its
total equity. The diference between ROA and ROE is that ROE shows the
diference between net profit and total equity of a firm.
For Square Pharmaceuticals Limited Bangladesh, the return on equity ratio
on average was 0.18 during FY 2006-2010. Alike ROA, the ratio did not
fluctuate a lot during this period. So we can approach to a conclusion that
the firm did not feature any serious financial issue to maintain the balance
among its net income and total equity. However, in FY 2008, the ROE was
lowest among last 5 (five) FY. It was caused by a low growth (6.03%) of net
profit compared to its preceding year. At the same time, total equity
increased by 14.78%. So the gap of growth between total asset and net
profit caused ROE in 2008 to fall. Nevertheless, the company bounces back
and had better ROE in FY 2009 than FY 2008. Since the growth of net profit
(36.78%) was twice than the growth of total equity (18.21%) in FY 2009.
Because growth of
net profit (10.47%) and total equity were (16.13%) less than its preceding year, in FY
2010 the
ratio was a bit low than FY 2009
2006

2007

2008

2009

0.18
0.1
0.1
0.19
Return on
24
Table of Return on E qu8ity Ratio for6Fiscal Year 2006-2010
Equity

2010

0.1
8

MA RKET VALUE RATIO ANALYSIS

Ear nings per Share
Square Pharmaceuticals Limited Bangladesh had earnings per share of
180.55 BDT on average during FY 2006-2010. Earnings per share represent
a firms profits from its each outstanding share. The company had
outstanding shares of 9,406,908 on average and had increased by
203.75% during FY 2006-2010. At the same time net profit of the company was
1,565,779,054
BDT on average and had increased by 79.08%
In FY 2006, EPS was highest among last 5 (five) FY. Moreover, EPS after FY
2006 begun to fall, reached the minimum at FY 2010. Though, a descending
EPS does not mean that the firm had performed badly during that fiscal
period. In contrary, net profit and outstanding number of share had changed
annually at a rate of 16.26% and 32.50% on average respectively during
FY
2006-2010.
Therefore, EPS of this company were falling after FY 2006 because the
annual growth rate of outstanding share was greater than the annual
growth rate of net profit.

Earnings
per
25
Share

18

2006

2007

2008

2009

2010

234.67

218.61

154.53

156.56

138.36

Table of Earnings per Share ratio for Fiscal Year 2006-2010

PE Ratio
Square Pharmaceuticals Limited Bangladesh had PE ratio of 18.42 on average during FY
20062010. PE ratio represents how much an investor is paying for one taka of
current earning. A higher PE ratio shows that the firm has prospect for good
return in future and a lower PE ratio refers opposite. Historical report on
square pharmaceuticals shows that the firms price of share fluctuated during
FY 2006-2010 a lot. In FY 2008 and 2009, the price per share was 4,110 BDT
and 2,935 BDT respectively. So the price per share of FY 2009 was 28.59%
less than its preceding year and it was 22.01% greater in FY 2010 than FY
2009.
In FY 2006, EPS was highest among last 5 (five) FY. Moreover, EPS after FY
2006 begun to fall, hit the minimum point at FY 2010 as stated in previous
segment of ratio analysis. The EPS was recorded lowest in FY 2010, among
last 5 (five) FY. The EPS of FY 2008 was 29.31% less than its preceding year.
However the following fiscal year had an increase of 1.31% in EPS and FY
2010 had a decrease of EPS by -11.62% compared to FY 2009. Therefore,
the inconsistent growth of EPS and PPS causes an inconsistent PE ratio
throughout the FY 2006-2010. And based on current PE ratio, investors are
expecting a great prospect of the company since 25.88
is a good figure as a PE ratio.
PE Ratio

26

2006

9.70

2007

2008

2009

2010

11.19

26.60

18.75

25.88

Table of PE Ratio for Fiscal Year 2006-2010

Sales pe r Share
Square Pharmaceuticals Limited Bangladesh had sales per share of 996.11
BDT on average during FY 2006-2010. Sales per share represent a firms
net revenue from its each outstanding share. The company had outstanding
shares of 9,406,908 on average and had increased by
203.75% during FY 2006-2010. At the same time net sales of the company had increased
by
8,626,387,092 BDT on average and had increased by 88.22%.
In FY 2007, SPS was highest among last 5 (five) FY. Moreover, SPS after FY
2007 begun to fall, reached the minimum at FY 2010. Though, a descending
SPS does not mean that the firm had performed badly during that fiscal
period. In contrary, net sales and outstanding number of share had changed
annually at a rate of 17.23% and 32.50% on average respectively during
FY
2006-2010.
Therefore, SPS of this company were falling after FY 2007 because the
annual growth rate of outstanding share was greater than the annual
growth rate of net sales.
2006

2007

2008

2009

2010

Sales per
27
Share

19

1225.8
1258.1
923.45
813.50
759.60
3Table of Sale9p er share Ratio for Fiscal Year 2006-2010

Price- Sales Ratio

Square Pharmaceuticals Limited Bangladesh had price-sales ratio of 3.31 on average
during FY
2006-2010. The smaller this ratio (less than 1.0) is usually thought to be a
better investment since the investor is paying less for each unit of sales.
Historical report on square pharmaceuticals shows that the firms price of
share fluctuated during FY 2006-2010 a lot. In FY 2008 and 2009, the price
per share was 4,110 BDT and 2,935 BDT respectively. The price per share
of FY 2009 was 28.59% less than its preceding year and it was 22.01%
greater in FY
2010 than FY 2009.
In FY 2006, SPS was highest among last 5 (five) FY. Moreover, SPS after FY
2007 begun to fall, reached the minimum at FY 2010 as stated in previous
segment of ratio analysis. The SPS of FY 2008 was 26.60% less than its
preceding year. However, SPS of FY 2009 and 2010 had decreased by
11.62% and 6.63% compared to their respective previous year. Therefore,
the company had been doing bad cause the investors were paying more for
each unit of sales as the
price-sales ratio had increased after FY 2007.
2006

Price- Sales
28
ratio

2007

2008

2009

2010

1.86

1.9
4.4
3.61
4.7
Table of Price-S4ales R atio for
5 Fiscal Year 2006-2010 1

Book Value per Share

Square Pharmaceuticals Limited Bangladesh had Book value per share of
1009.96 BDT on average during FY 2006-2010. This ratio states a firms
value of equity per outstanding share. The company had outstanding
shares of 9,406,908 on average and had increased by 203.75% during
FY 2006-2010. At the same time total equity of the company was
8,731,218,110 BDT on average and had increased by 80.48%
In FY 2006, BPS was highest among last 5 (five) FY. Moreover, BPS after FY
2006 begun to fall, reached the minimum at FY 2010. Though, a descending
BPS does not mean that the firm had performed badly during that fiscal
period. In contrary, total equity and outstanding number of share had
changed annually at a rate of 15.92% and 32.50% on average respectively
during FY 2006-2010.
Therefore, BPS of this company was falling after FY 2006 because the annual growth rate of
outstanding share was greater than the annual growth rate of total equity.
Book Value
per
29
Share

2006

2007

1288.65 1230.08

2008

2009

2010

941.25

824.16

765.68

Table of Book V alue p er Share Ratio for Fiscal Year 2006-2010

20

Market to Book Ratio

Square Pharmaceuticals Limited Bangladesh had market to book ratio of 3.27
on average during FY 2006-2010. This ratio states comparison between firms
market value and its cost of investment. A higher market to book ratio shows
that firms market values is greater than its book value and negative ratio
shows that firms market value is less than its book value. In FY
2008 and 2009, the price per share was 4,110 BDT and 2,935 BDT
respectively. The price per share of FY 2009 was 28.59% less than its
preceding year and it was 22.01% greater in FY
2010 than FY 2009.
In FY 2006, BPS was highest among last 5 (five) FY. Moreover, BPS after FY
2006 begun to fall alike EPS and reached at FY 2010 it was minimum of last 5
FY. In FY 2008 and 2009, the BPS was 23.48% and 12.44% correspondingly
less than their respective previous year. As a result the book value per share
dropped to 12.44% in FY 2009 and 7.09% in FY 2010 compared to their
respective previous year. But, the market to book ratio increased to a better
figure and
clearly states that the companys market value had increased.
Market to
book
30
Ratio

2006

1.77

2007

1.99

2008

2009

4.37

3.56

2010

4.68

Table of Market to Book Ratio for Fiscal Year 2006-2010

DIVIDEN D RA TIO ANALYSIS

Dividend pe r Share
Square Pharmaceuticals Limited Bangladesh had dividend per share of
44.88 BDT on average during FY 2006-2010. This ratio states the amount of
dividend a firm pays on each outstanding share. The average total dividend
of the company was 368,781,120 BDT and had increased by
45.17% throughout FY 2006-2010. In FY 2008 the total dividend of
share of the company had decreased by 20%. In FY 2009 and 2010, total
dividend had increased by 20% and 35% respectively.
The company had outstanding shares of 9,406,908 on average and had
increased by 203.75% during FY 2006-2010. . In FY 2008 and 2009 the
outstanding number of share of the company had increased by 50% and
35%, followed by a 25% increase in FY 2010 compared to their respective
previous year.
In FY 2008 and 2009 the dividend per share of the company dropped by
46.67% and 11.11%, compared to their respective previous year. But it
increased by 8% in FY2010, offered a better dividend per share to it
investor than FY 2009. DPS depends on firms outstanding number of shares
and total dividend allotted for the shareholders. If a firms DPS is falling it
does not mean that the firm is ofering fewer dividends than before. It might
reflect that the firms dividend growth is less than the growth of its
outstanding number of shares. In case of square pharmaceuticals, the

growth rate of share outstanding was greater than the growth of total cash
dividend. And this caused the DPS to fall.
Dividend
per
31
Share

2006

2007

2008

2009

2010

66.96

62.50

33.33

29.63

32.00

Table of Dividend per S hare Ratio for Fiscal Year 2006-2010

21

Payout Ratio
Square Pharmaceuticals Limited Bangladesh had payout ratio of 0.24 on average during FY
2006-2010. This ratio states how well the earning supports the dividend
payment of the firm. A higher payout ratio refers that the firm have a strong
backbone for its dividend and a lower payout ratio refers opposite. In FY
2008 and 2009 DPS were 33.33 BDT and 29.63 BDT. In FY
2009, it had dropped by 11.10% and in FY 2010 it had increased by 8%.
However, net sales during FY 2007 and 2008 had increased by 23.17% and 10.09%
respectively, compared to their preceding year and net sales of FY 2009 had increased by
18.93% but in subsequent year its growth had dropped to 16.72%. Due to
the diference situation of such growth and fall of both ratio, payout ratio
fluctuated and in recent fiscal year.
2006

Payout
32
Ratio

2007

2008

2009

0.29

0.2
0.2
0.19
2 l Year 2006-2010
Table of Payout9Ratio for Fisca

2010

0.2
3

Retention Ratio
Square Pharmaceuticals Limited Bangladesh had payout ratio of 0.76 on average during FY
2006-2010. This ratio shows the proportion of net income, which is not paid
as dividend. In other word we could say that this ratio reflects a companys
proportion retained earnings of net income. The higher retention ratio refers
that the firm have greater retained earnings than cash dividend and lower
retention ratio refers opposite. In FY 2008 and 2009 retained earnings were
97,418,224 BDT and 153,140,253 BDT. In FY 2009, its growth was 29.27%
and in FY 2010 it had increased by 4.52%
However, net sales during FY 2007 and 2008 had increased by 23.17% and 10.09%
respectively, compared to their preceding year and net sales of FY 2009 had increased by
18.93% but in subsequent year its growth had dropped to 16.72%. The
company had better figure in retention ratio for past 5 (five) fiscal years.
Due to the difference between the growth
of retained earnings and net profit, the retention ratio was slightly diferent in each fiscal
year
2006

Retention
33
Ratio

0.71

2007

2008

2009

0.7
0.78
0.81
Table of Retent1
ion R atio f or Fiscal Year 2006-2010

2010

0.77

22

Free Cash Flow Ratio Analysis

Free Ca sh Flow per Sha re
Square Pharmaceuticals Limited Bangladesh had FCF per share of 195.15 BDT on
average during FY 2006-2010. This ratio shows a measure of a company's financial
flexibility that is determined by dividing free cash flow by the total number of
shares outstanding. This measure serves as a proxy for measuring changes in
earnings per share. The free cash flow per share can be used to give a preliminary
prediction concerning future share prices. When a firm's share price is low and free
cash flow is on the rise, the odds are good that earnings and share value will soon be
on the up, because a high cash flow per share value means that earnings per share
should potentially be high as well. In FY 2008 and 2009 FCF were 2,032,183,105
BDT
1, 962,412,823 BDT. In FY 2009 and 2010, its reduction were 3.56% and 66.29%
However, The Company had outstanding shares of 9,406,908 on average and had increased by
203.75% during FY 2006-2010. . In FY 2009 and 2010 the outstanding number of
share of the company had increased by 35% and 25% compared to their
respective previous year. Therefore, the reduction of FCF and growth of share
outstanding caused the FCF per share to decrease in FY 2009
and 2010.

FCF per
34
Share

2006

2007

2008

2009

2010

250.32

257.44

227.25

162.56

78.20

Table of FC F per Share R atio f or Fiscal Year 2006-2010

Price to FCF Ratio

Square Pharmaceuticals Limited Bangladesh had price to FCF ratio of 20.11 on average during FY
2006-2010.This ratio refers a company's market price to its level of annual free
cash flow. The bigger the ratio, the more valuable the company becomes in terms
of its market values. Historical report on square pharmaceuticals shows that the
firms price of share fluctuated during FY 2006-2010 a lot. In FY 2008 and 2009,
the price per share was 4,110 BDT and 2,935 BDT respectively. The price per
share of FY 2009 was 28.59% less than its preceding year and it was 22.01%
greater in FY 2010 than FY 2009.
In FY 2007, price to FCF ratio was highest among last 5 (five) FY. Moreover, SPS
after FY 2007 begun to fall, reached the minimum at FY 2010 as stated in
previous segment of ratio analysis. The FCF per share of FY 2008 was 13.28%
less than its preceding year. In addition, FCF per share of FY
2009 and 2010 had decreased by 39.79% and 107.88% compared to their
respective previous year. As we can see, due to a huge gap between the growth of
price per share and reduction of FCF per share, price to FCF ratio began to
increase which states that the company faced a tough time to balance its
FCF per share with price per share.

2006

2007

2008

2009

2010

9.09
9.5
18.09
18.06
45.79
Price to FCF
35
Table of Price to FCF R1atio Ratio for Fiscal Year 2006-2010
Ratio

23

Capital Structure
FY

2006
2007
2008
2009
2010
100% Equity
Financed*
50% Debt
and
50% Equity
Financed*

Weight
of

Weight
of

Deb
17.12%
15.75%
14.02%
4.39%
4.80%
-

Equit
82.88%
84.25%
85.98%
95.61%
95.20%
100%

50
%

Cost of
Debt

50
%

Cost of

WACC

Equity

7.21%
7.21%
7.21%
7.21%
7.21%
-

13.21%
13.21%
13.21%
13.21%
13.21%
13.21%

11.90%
12.00%
12.12%
12.87%
12.84%
13.21%

7.21%

13.21%

9.31%

* Fiscal year 2010

Value of Unlevered Firm

Square pharmaceuticals EBIT had increased by 87.20% during FY 20062010 and average EBIT of each year was approximately 2,483,706,253
BDT. In FY 2010 EBIT was highest among last 5 (five) FY about
3,275,183,812 BDT. During this year the tax rate was 24.85% and
unlevered cost of capital was 12.84%. As a result, square
pharmaceuticals value of unlevered was 19,169,008,059 BDT

Value of Le vered Firm

Square pharmaceuticals value of unlevered was 19,169,008,059 BDT in
FY 2010. The amount of total debt 2,231,167,169 BDT and the tax rate
was 24.85%. So the firms value as a levered firm was 19,723,453,100
BDT in FY 2010.

Present Value of Tax S hield

Square pharmaceuticals Limited Bangladesh had a cost of debt of 7.21%
in FY 2010. The amount of total debt 2,231,167,169 BDT and the tax
rate was 24.85%. Present value of Tax Shield was 554,445,041 BDT

Graph of Capital Structure in FY 2010

, , ,

In 2010 the value of the farm was 46,521,197,669 BDT, which was 4.80% debt financed
and
95.20% equity financed. The value of the firm will be higher if they borrow
more because of the tax shield but it also increases the cost of bankruptcy.
After borrowing, from a certain level the value of the firm will decline. The
chances of bankruptcy of the firm increases as soon it borrows more. So

the optimal capital structure is at that point on which firms value is higher
and WACC is lower.

Ratio / Fiscal Year

Short Term Debt
Ratio
Current
Ratio
Quick Ratio
Cash Ratio
Interval Measure
Net Working Capital to Total
AssetsLong Term Debt Ratio
Total Debt Ratio
Debt-Equity Ratio
Equity Multiplier
Long Term Debt Ratio
Times Interest Earned
Cash Coverage Ratio
Turnover Ratio
Inventory Turnover
Days Sales in Inventory
Receivables Turnover
Average Collection Period
Payables Turnover
Average Payment Period
NWC Turnover
Fixed Assets Turnover
Total Assets Turnover
Proftability Ratio
Profit Margin
Return on Assets
Return on Equity
Market Value Ratio
Earnings Per Share
PE Ratio
Sale Per Share
Price- Sales ratio
Book Value Per Share
Market to Book Ratio
Dividend Ratio
Earnings Per Share
Divide Per Share
Payout Ratio
Retention Ratio
Free Cash Flow Ratio
Free Cash Flow per Share
Price to Free Cash Flow Ratio

2006

2007

2008

2009

2010

1.78
1.19
0.14
349.23
0.19

1.44
0.84
0.05
260.83
0.11

1.26
0.68
0.06
268.30
0.07

1.46
0.66
0.11
206.3
1
0.09

2.15
1.16
0.12
216.6
1
0.17

0.31
0.45
1.45
0.09
12.51
14.63

0.30
0.43
1.43
0.06
8.64
10.84

0.34
0.51
1.51
0.07
6.58
8.13

0.25
0.33
1.33
0.04
7.64
9.28

0.23
0.30
1.30
0.08
10.60
12.96

2.63
138.98
21.09
17.31
44.41
8.22
3.44
2.68
0.65

2.76
132.05
23.23
15.71
70.43
5.18
6.66
2.12
0.72

2.40
152.34
22.92
15.92
48.10
7.59
9.06
2.02
0.65

2.70
135.0
4
20.56
17.75
45.66
7.99
8.17
2.00
0.74

2.97
122.7
8
22.55
16.18
16.62
21.96
4.48
2.04
0.76

0.19
0.13
0.18

0.17
0.12
0.18

0.17
0.11
0.16

0.19
0.14
0.19

0.18
0.14
0.18

234.67
9.70
1225.8
3
1.86

218.61
11.19
1258.1
9
1.94

156.5 138.3
6
6
18.75
25.88
813.5 759.6
0
0
3.61
4.71

1288.6
5
1.77

154.53
26.60
923.45
4.45
1230.0 941.25
8
1.99
4.37

234.67
66.96
0.29
0.71

218.61
62.50
0.29
0.71

156.5 138.3
6
6
29.63
32.00
0.19
0.23
0.81
0.77

250.32
9.09

257.44 227.25 162.5 78.20

9.51
18.09 6
18.06 45.79

154.53
33.33
0.22
0.78

824.1 765.6
6
8
3.56
4.68

Balance Sheet of Square Pharmaceuticals Limited Bangl adesh for Fiscal Year 2006 - 2010
ASSET
Non-Current Assets:
S:
Property, Plant and
EquipmentCarrying
Value
Capital Work-in-Progress
Investment - Long Term (at
Current Assets:
Inventories
Trade Debtors (Accounts
Receivables)
Advances,
Deposits and
Investment in Marketable
Securities
(at
Cost)
Short
Term Loan
Cash and Cash Equivalents
TOTAL ASSETS

SHAREHOLDERS'
EQUITY AND
LIABILITIES:
Shareholders'
Equity:
Share Capital
Share Premium
Shares Outstanding
General Reserve
Tax Holiday Reserve
Retained Earnings
Non-Current Liabilities:
Long Term Loans Secured
Deferred Tax Liability
Current Liabilities:
Short Term Bank Loans
Long Term Loans - Current
Portion
Trade Creditors (Accounts
Liabilities for Expenses
Liabilities for Other Finance
TOTAL SHAREHOLDERS'
EQUITY AND LIABILITIES

200
6
5,267,302,35
7
2,273,761,16
1
1,077,707,83
2
1,915,833,36
4,031,684,95
1,342,364,47
288,732,137
166,492,706
20,250,000

200
7
6,804,429,29
2
3,531,003,50
9
481,239,419
2,792,186,36
3,682,510,71
1,544,191,79
322,864,637
236,455,395
20,250,000

200
8
8,291,290,98
4
4,088,432,17
1
591,114,649
3,611,744,16
4,411,836,43
2,026,736,32
360,245,646
288,806,440
20,250,000

200
9
9,407,730,00
1
4,899,679,83
2
N/A
4,508,050,16
3,843,512,85
2,098,755,23
477,562,002
260,330,162
20,250,000

201
0
10,255,189,0
84
5,630,791,82
2
634,347,093
3,990,050,16
4,774,311,19
2,207,078,08
508,249,174
358,250,076
221,269,226

1,897,124,65
316,720,982
9,298,987,31
2

1,418,893,70
139,855,179
1048694000
4

1,510,502,33
205,295,694
12,703,127,4
20

693,157,720
293,457,740
13,251,242,8
56

1,220,736,94
258,727,695
15,029,500,2
78

6,402,014,77
496,800,000
2,035,465,00
0
4,968,000
105,878,200
947,678,690
2,816,192,88
2
636,217,059
602,349,621
33,867,438
2,260,755,48
1,471,158,18
7
261,416,941
79,390,166
49,771,374
399,018,813
9,298,987,31
2

7,333,257,61
596,160,000
2,035,465,00
0
5,961,600
105,878,200
1,101,935,23
7
3,493,819,17
5
598,116,106
492,569,379
105,546,727
2,555,566,28
1,818,777,87
8
225,176,449
60,601,743
24,565,248
426,444,968
1048694000
4

8,417,040,70
894,240,000
2,035,465,00
0
8,942,400
105,878,200
1,101,935,23
7
4,279,522,26
8
785,241,612
602,584,615
182,656,997
3,500,845,10
2,669,693,18
4
297,002,646
100,953,258
32,290,235
400,905,780
12,703,127,4
20

9,949,397,63
1,207,224,00
2,035,465,00
0
12,072,240
105,878,200
1,101,935,23
7
5,498,895,19
7
660,976,668
449,757,608
211,219,060
2,640,868,55
1,534,345,78
2
295,590,601
124,222,699
69,573,702
617,135,770
13,251,242,8
56

11,554,379,8
1,509,030,00
2,035,465,00
0
15,090,300
105,878,200
1,101,935,23
7
6,802,071,38
8
1,258,376,05
2
1,032,633,11
225,742,942
2,216,744,40
736,443,848
462,090,211
394,715,915
56,463,570
567,030,857
15,029,500,2
78

Income Statement of Square Pharmaceuticals Li mited Bangladesh for Fiscal Year 2006 2010
Net Turnover
Costs of Goods Sold
Gross Profit
Operating Expenses:
Selling and Distribution
Administrative Expenses
Profit from operation
Other Income
Earnings Before Interest
Financial Expenses
NET Profit Before WPPF
Allocation for WPPF
NET Profit Before Tax
Provision for Income Tax
Provision for Deferred
Income Tax
Net
After Income Tax
CashProfit
Dividend
Retained Earnings
Earnings Per Share (EPS)
Shares Outstanding

2006
6,089,905,39
(3,525,402,66
9)
2,564,502,72
(984,298,192
(798,131,173
(186,167,019
)
1,580,204,53
5
169,353,845
1,749,558,38
(139,863,636
1,609,694,74
(76,652,130)
1,533,042,61
(333,310,560
(33,867,438)

2007
7,500,811,34
4,268,447,66
2
3,232,363,68
(1,406,611,44
(1,000,132,91
(406,478,534
)
1,825,752,23
9
220,144,368
2,045,896,60
(236,845,084
1,809,051,52
(86,145,311)
1,722,906,21
(347,984,083
(71,679,289)

2008
8,257,843,73
(4,856,061,93
3)
3,401,781,80
(1,692,475,98
(1,220,979,26
(471,496,720
)
1,709,305,81
8
604,628,504
2,313,934,32
(351,868,423
1,962,065,89
(93,431,709)
1,868,634,19
(409,660,827
(77,110,270)

2009
9,820,796,56
(5,672,565,97
3)
4,148,230,59
(1,779,793,36
(1,319,362,31
(460,431,051
)
2,368,437,22
7
665,520,915
3,033,958,14
(397,135,963
2,636,822,17
(125,562,961
2,511,259,21
(592,644,226
(28,562,063)

2010
11,462,578,4
(6,561,288,48
5)
4,901,289,92
(2,211,670,93
(1,687,210,44
(524,460,492
)
2,689,618,98
6
585,564,826
3,275,183,81
(308,861,107
2,966,322,70
(141,253,462
2,825,069,24
(688,499,602
(48,697,850)

1,165,864,61
332,640,000
833,224,616
234.67
4,968,000

1,303,242,84
372,600,000
930,642,840
218.61
5,961,600

1,381,863,09
298,080,000
1,083,783,09
154.53
8,942,400

1,890,052,92
357,696,000
1,532,356,92
156.56
12,072,240

2,087,871,79
482,889,600
1,604,982,19
138.36
15,090,300

1
2
3
4
5
6
7
8
9
10
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Current Ratio
Quick Ratio (Acid Test)
Net Working to Total
Assets
Interval Measure
Cash Ratio
Total Debt Ratio
Debt Equity Ratio
Equity Multiplier
Long Term Debt Ratio
Times Interest Measure
Cash Coverage Ratio
Inventory Turnover
Days to Sales Inventory
Receivables Turnover
Days to Sales
Receivables
Payables Turnover
Days to Sale Payables
Net Working Capital
Turnover
Fixed Assets Turnover
Total Assets Turnover
Profit Margin
Return on Assets
Return on Equity
Earnings Per Share
PE Ratio
Sales Per Share
Price-Sales Ratio
Book Value Per Share
Market to Book Ratio
Dividend Ratio
Payout Ratio
Retention Ratio
FCF Per Share
Price to FCF Share
Required Return on
Equity

Weighted Average Cost of

Capital

Current Assets/ Current Liabilities

(Current Assets-Inventory)/ Current Liabilities
(Current Assets-Current Liabilities)/ Current Assets
Current Assets/ Average Daily Operating Expense
Cash and Cash Equivalent/ Current Assets
(Total Assets- Total Equity)/ Total Assets
(Total Assets- Total Equity )/ Total Equity
Total Assets/ Total Equity or [1+ Debt Equity Ratio]
Long Term Debt/ (Long Term Debt+ Total Equity)
EBIT/ Interest Expense
(EBIT+ Depreciation)/Interest Expense
Cost of Goods Sold/ Inventory
365/ Inventory Turnover
Net Sales/ Receivables
365/Receivables Turnover
Cost of Goods Sold/ Payables
365/Payables Turnover
Net Sales/ (Current Assets-Current Liabilities)
Net Sales/ Fixed Assets
Net Sales/ Total Assets
Net Income/ Net Sales
Net Income/ Total Assets
Net Income/ Total Equity
Net Income/ Shares Outstanding
(Price Per Share)/ (Earning Per Share)
Net Sales/ Shares Outstanding
Price Per Share/ Sales Per Share
Total Equity/ Shares Outstanding
Market Value Per Share/ Book Value Per Share
Cash Dividend/ Shares Outstanding
Dividend Per Share/ Earnings Per Share
1-Payout Ratio
Free Cash Flow/ Shares Outstanding
Price Per Share/ FCF Per Share
Risk Free Rate + Market Risk Premium
(1
)
(Total Equity/Total Value)
+ (Total Debt/ Total Value)

Table of Data used for calculating Beta of Square Pharmaceuticals Limited Bangladesh
Date

Stock Weekly Price

(Close)

Index Weekly Price

(Close)

Excess Stock
Returns

14-07-11
07-07-11
30-06-11
23-06-11
16-06-11
09-06-11
02-06-11
26-05-11
19-05-11
11-05-11
04-05-11
26-04-11
19-04-11
11-04-11
04-04-11
28-03-11
21-03-11
13-03-11
06-03-11
27-02-11
15-02-11
08-02-11
01-02-11
25-01-11
16-01-11
09-01-11
02-01-11
26-12-10
19-12-10
09-12-10
02-12-10
25-11-10
15-11-10
08-11-10
01-11-10
25-10-10
18-10-10
10-10-10
03-10-10
26-09-10
19-09-10
08-09-10
30-08-10
23-08-10
16-08-10
08-08-10
01-08-10
22-07-10
15-07-10
08-07-10
30-06-10
23-06-10
16-06-10
09-06-10
02-06-10
25-05-10
18-05-10
11-05-10

3,648.00
3,545.00
3,542.25
3,461.25
3,315.25
3,350.25
3,334.00
3,273.75
3,340.00
3,264.75
3,342.25
3,251.25
3,333.25
3,300.25
3,264.75
3,233.75
3,302.25
3,155.00
3,033.00
2,972.50
3,107.00
3,373.00
3,417.25
3,311.00
3,514.25
3,176.25
3,559.75
3,503.00
3,465.00
3,677.50
3,762.25
3,842.50
3,848.25
3,641.00
3,692.25
3,771.25
3,621.75
3,629.50
3,536.50
3,543.50
3,079.00
3,033.50
3,108.50
3,040.19
3,067.50
2,971.35
2,909.62
2,903.46
2,843.85
2,947.69
2,986.73
3,113.85
3,198.85
2,939.62
2,978.08
2,956.54
2,812.88
2,864.23

6,578.28
6,311.80
6,117.23
5,847.26
5,776.18
6,001.90
5,762.71
5,397.62
5,718.07
5,482.87
5,973.09
5,806.31
6,250.00
6,262.69
6,535.88
6,243.53
6,528.21
6,179.53
5,536.91
5,463.35
5,926.35
6,822.85
7,280.98
6,821.08
7,434.59
7,135.02
8,304.59
8,096.14
7,654.41
8,580.20
8,838.10
8,721.09
8,443.35
7,974.05
7,947.80
7,740.48
7,493.60
7,292.54
7,223.49
6,958.69
6,844.98
6,807.24
6,620.33
6,741.38
6,622.52
6,601.77
6,436.77
6,404.97
6,309.44
6,432.50
6,153.68
6,187.50
6,249.91
6,194.84
6,140.21
5,988.94
5,876.55
5,728.23

2.91%
0.08%
2.34%
4.40%
-1.04%
0.49%
1.84%
-1.98%
2.30%
-2.32%
2.80%
-2.46%
1.00%
1.09%
0.96%
-2.07%
4.67%
4.02%
2.04%
-4.33%
-7.89%
-1.29%
3.21%
-5.78%
10.64%
-10.77%
1.62%
1.10%
-5.78%
-2.25%
-2.09%
-0.15%
5.69%
-1.39%
-2.09%
4.13%
-0.21%
2.63%
-0.20%
15.09%
1.50%
-2.41%
2.25%
-0.89%
3.24%
2.12%
0.21%
2.10%
-3.52%
-1.31%
-4.08%
-2.66%
8.82%
-1.29%
0.73%
5.11%
-1.79%
3.42%

Excess
Market
Returns
4.22%
3.18%
4.62%
1.23%
-3.76%
4.15%
6.76%
-5.60%
4.29%
-8.21%
2.87%
-7.10%
-0.20%
-4.18%
4.68%
-4.36%
5.64%
11.61%
1.35%
-7.81%
-13.14%
-6.29%
6.74%
-8.25%
4.20%
-14.08%
2.57%
5.77%
-10.79%
-2.92%
1.34%
3.29%
5.89%
0.33%
2.68%
3.29%
2.76%
0.96%
3.81%
1.66%
0.55%
2.82%
-1.80%
1.79%
0.31%
2.56%
0.50%
1.51%
-1.91%
4.53%
-0.55%
-1.00%
0.89%
0.89%
2.53%
1.91%
2.59%
3.50%

04-05-10
27-04-10
20-04-10
12-04-10
05-04-10
29-03-10
22-03-10
14-03-10
07-03-10
28-02-10
18-02-10
11-02-10
04-02-10
28-01-10
21-01-10
14-01-10
07-01-10
30-12-09
22-12-09
14-12-09
07-12-09
26-11-09
19-11-09
12-11-09
05-11-09
29-10-09
22-10-09
15-10-09
08-10-09
01-10-09
16-09-09
09-09-09
02-09-09
26-08-09
19-08-09
11-08-09
04-08-09
28-07-09
21-07-09
14-07-09
08-07-09
02-07-09
24-06-09
17-06-09

2,769.62
2,703.08
2,725.00
2,706.54
2,673.27
2,721.92
2,723.08
2,670.77
2,707.50
2,731.35
2,773.46
2,810.58
2,768.08
2,737.50
2,462.69
2,362.31
2,321.35
2,177.50
2,158.65
2,196.35
2,204.62
2,258.65
2,140.96
2,090.38
2,052.88
2,044.81
2,062.69
2,060.77
2,108.65
2,073.85
1,924.04
1,888.27
1,889.62
1,902.50
1,943.46
1,999.62
2,451.35
2,427.31
2,430.77
2,451.92
2,442.50
2,870.38
2,881.54
2,573.27

5,534.65
5,644.19
5,608.90
5,527.81
5,573.37
5,524.11
5,562.38
5,375.07
5,602.59
5,560.56
5,760.95
5,635.73
5,434.04
5,390.48
5,095.21
4,838.06
4,722.10
4,535.53
4,408.96
4,452.20
4,339.68
4,380.95
4,144.75
3,382.87
3,413.53
3,364.26
3,317.93
3,284.50
3,259.04
3,123.24
3,044.11
2,931.86
2,974.49
3,001.60
3,034.79
2,996.49
2,926.66
2,861.69
2,828.07
2,917.07
2,959.52
3,069.71
2,882.13
2,780.86

2.46%
-0.80%
0.68%
1.24%
-1.79%
-0.04%
1.96%
-1.36%
-0.87%
-1.52%
-1.32%
1.54%
1.12%
11.16%
4.25%
1.76%
6.61%
0.87%
-1.72%
-0.38%
-2.39%
5.50%
2.42%
1.83%
0.39%
-0.87%
0.09%
-2.27%
1.68%
7.79%
1.89%
-0.07%
-0.68%
-2.11%
-2.81%
-18.43%
0.99%
-0.14%
-0.86%
0.39%
-14.91%
-0.39%
11.98%
0.44%

-1.94%
0.63%
1.47%
-0.82%
0.89%
-0.69%
3.48%
-4.06%
0.76%
-3.48%
2.22%
3.71%
0.81%
5.80%
5.32%
2.46%
4.11%
2.87%
-0.97%
2.59%
-0.94%
5.70%
22.52%
-0.90%
1.46%
1.40%
1.02%
0.78%
4.35%
2.60%
3.83%
-1.43%
-0.90%
-1.09%
1.28%
2.39%
2.27%
1.19%
-3.05%
-1.43%
-3.59%
6.51%
3.64%
1.37%

Beta Coeficient of Square Pharmaceuticals Limited Bangladesh, = 0.4706

Covariance = 10.037
Average %
Market
Return
Rate,
21.3305
Risk Free
Rate,
%
=6 =
CAPM= + ( - )
= 6 % + (0.4706)(21.3305 % - 6 %)
= 13.21 %
Cost of Equity =
13.21 % Cost of
Debt

= 7.21 %

Referenc
e
1.
2.
3.
4.

www.squarepharma.com.bd
www.wikipedia.com
www.investopedia.com
Fundamentals of Corporate Finance by Ross,
Westerfield, Jordan. 9th edition