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NORTH SOUTH UNIVERSITYIntroduction to Financial ManagementFIN254.Companies:Beximco PharmaceuticalsVsSquare PharmaceuticalsSubmitted to:Nazmun Nahar (NNh)Department of Accounting and Finance,North South UniversityName ID Naimur Rahman 1721484030 Asif Ahmed Ayon 1712987630 Teertha Talukder 1521793030S...

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NORTH SOUTH UNIVERSITY

Introduction to Financial Management FIN254. Companies: Beximco Pharmaceuticals Vs Square Pharmaceuticals Submitted to: Nazmun Nahar (NNh) Department of Accounting and Finance, North South University

Name Naimur Rahman Asif Ahmed Ayon Teertha Talukder

ID 1721484030 1712987630 1521793030

Submission Date: 17-01-2021

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Letter of Transmittal January 17, 2021 Nazmun Nahar School of Business & Economics North South University Subject: Submission of Fin254 Report about “Ratio Analysis”

Dear Ma’am, We are very happy to present this assignment to you as part of our course requirement. The task was completed by the information we gained from the "Introduction to Financial Management" course. We try to show sixteen ratios of Square Pharma and Beximco Pharma. In the end, we analyze the whole report and recommend some important things what both companies should follow. Thank you for your cordial and honest efforts to create us acquainted with the terms and conditions of "Ratio Analysis" that help us deliver a good document. Our actions will be appreciated if this study will serve as a basis for what it is meant for, and our assistance will be available for any inquiry. Sincerely Yours, Naimur Rahman Asif Ahmed Ayon Teertha Talukder

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Table of Contents CURRENT RATIO..........................................................................................................................4 QUICK RATIO................................................................................................................................5 INVENTORY TURNOVER............................................................................................................6 AVERAGE COLLECTION PERIOD.............................................................................................7 AVERAGE PAYMENT PERIOD....................................................................................................8 TOTAL ASSETS TURNOVER.......................................................................................................9 DEBT RATIO................................................................................................................................10 TIME INTEREST EARNED RATIO............................................................................................11 GROSS PROFIT MARGIN...........................................................................................................12 OPERATING PROFIT MARGIN.................................................................................................13 EARNING PER SHARE...............................................................................................................14 NET PROFIT MARGIN................................................................................................................15 RETURN OF ASSETS (ROA)......................................................................................................16 RETURN OF EQUITY (ROE)......................................................................................................17 PRICE/EARNINGS RATIO..........................................................................................................18 MARKET/BOOK RATIO.............................................................................................................19 RECOMMENDATION:................................................................................................................20 REFERENCES..............................................................................................................................21 APPENDIX....................................................................................................................................22

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Ratio Analysis of Beximco Pharmaceuticals Limited Vs Square Pharmaceuticals Limited:

CURRENT RATIO Current Ratio 2018 1.34 4.91

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 1.08 12.93

Current Ratio 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2018 Beximco Pharmaceuticals Limited

2019 Square Pharmaceuticals Limited

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The current ratio of Beximco Pharmaceuticals has decreased from 1.34 to 1.08 from 2018 to 2019. It indicates that the business failed to pay their short-term obligations.

SQUARE PHARMACEUTICALS LIMITED: The current ratio of Square Pharmaceuticals has increased from 4.91 to 12.93 from 2018 to 2019. It indicates that the ability to pay their short-term obligation is high.

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CROSS-SECTIONAL ANALYSIS: Square pharmaceuticals have a higher current ratio than Beximco pharmaceuticals. It indicates that Square Pharmaceuticals Limited is in a financially stronger position in terms of its current ratio, but has a high amount of stock in hand, which is the field in question for the firm.

QUICK RATIO Quick Ratio Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2018 0.76 4.25

2019 0.61 11.38

Quick Ratio 12.00

TIME SERIES ANALYSIS:

10.00 8.00 6.00 4.00

BEXIMCO PHARMACEUTICALS LIMITED:

2.00

The Quick ratio of Beximco Pharmaceuticals has 2019 decreased from 0.76 to 0.61 Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited from 2018 to 2019. It indicates that it is a positive movement of the business because the company's ample assets, instantly convertible to cash, are rising to pay its obligations. 0.00 2018

SQUARE PHARMACEUTICALS LIMITED: The Quick ratio of Square Pharmaceuticals has increased from 4.25 to 11.38 from 2018 to 2019. It indicates that Square Pharma has more liquid assets in the business.

CROSS-SECTIONAL ANALYSIS: Square Pharma has a higher quick ratio than Beximco pharma. That means Square Pharma is more financially solvent than Beximco Pharma. Compare to Beximco Pharma, Square pharma has more liquid assets in their business.

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INVENTORY TURNOVER Inventory Turnover 2018 1.98 4.28

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 2.04 4.29

Inventory Turnover 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2018

2019 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The inventory turnover of Beximco Pharmaceuticals has increased from 1.98 to 2.04 from 2018 to 2019. It indicates that the inventory is selling more frequently.

SQUARE PHARMACEUTICALS LIMITED: The inventory turnover of Square Pharmaceuticals has increased from 4.28 to 4.29 from 2018 to 2019. It also indicates that the inventory is selling more frequently.

CROSS-SECTIONAL ANALYSIS:

The inventory turnover of Square Pharma is higher than the inventory turnover of Beximco Pharma. So Square pharma is selling their inventories more frequently than Beximco pharma. According to Inventory Turnover, Square Pharma is better in their business. 6|Page

AVERAGE COLLECTION PERIOD Average Collection Period 2018 57.48 16.76

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 57.38 12.78

Average Collection Period 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2018 Beximco Pharmaceuticals Limited

2019 Square Pharmaceuticals Limited

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The average collection period of Beximco Pharmaceuticals has increased from 57.38 to 57.48 from 2018 to 2019. It indicates that they collect their cash more quickly from the debtors.

SQUARE PHARMACEUTICALS LIMITED: The average collection period of Square Pharmaceuticals has increased from 16.76 to 12.78 from 2018 to 2019. It indicates that they collect cash from their debtors slowly.

CROSS-SECTIONAL ANALYSIS: The average collection period of Beximco Pharma is higher than the average collection period of Square pharma. According to the Average collection period, Square pharma is stronger than Beximco pharma because square pharma can collect their Account receivable money more easily compare to Beximco pharma. 7|Page

AVERAGE PAYMENT PERIOD Average Payment Period Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2018 73.50 178.23

2019 67.92 18.99

Average Payment Period 200.00 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 2018 Beximco Pharmaceuticals Limited

2019 Square Pharmaceuticals Limited

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The average payment period of Beximco Pharmaceuticals has decreased from 73.50 to 67.92 from 2018 to 2019. It indicates that they pay their payable money frequently.

SQUARE PHARMACEUTICALS LIMITED: The average payment period of Square Pharmaceuticals has decreased from 178.23 to 18.99 from 2018 to 2019. It indicates that they also pay their payable money frequently.

CROSS-SECTIONAL ANALYSIS: Square pharma has a lower average payment period than Beximco pharma. Square pharma can easily pay their payable money to the creditors compare to Beximco pharma. According to the 8|Page

average payment period, Square pharma is financially strong and they have a good relationship with the creditors.

TOTAL ASSETS TURNOVER Total Assets Turnover 2018 0.41 0.65

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 0.44 0.69

Total Assets Turnover 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2018

2019 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The total assets turnover of Beximco Pharmaceuticals has increased from 0.41 to 0.44 from 2018 to 2019. It indicates that Beximco pharma utilizes their asset for generating profit.

SQUARE PHARMACEUTICALS LIMITED:

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The total assets turnover of Square Pharmaceuticals has increased from 0.65 to 0.69 from 2018 to 2019. It indicates that Square pharma also utilizes their asset for generating profit.

CROSS-SECTIONAL ANALYSIS:

Square pharma has a higher total assets turnover than Beximco pharma. So Square pharma can efficiently utilize its assets to generate revenue compare to Beximco Pharma. So higher the total assets turnover, the better movement for the firm.

DEBT RATIO Debt Ratio 2018 0.36 0.13

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 0.38 0.07

Debt Ratio 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The debt ratio of Beximco Pharmaceuticals has increased from 0.36 to 0.38 from 2018 to 2019. It indicates that they depend on debt for increasing their assets.

SQUARE PHARMACEUTICALS LIMITED: 10 | P a g e

The debt ratio of Square Pharmaceuticals has decreased from 0.13 to 0.07 from 2018 to 2019. It indicates that they don’t depend on the debt for increasing their assets.

CROSS-SECTIONAL ANALYSIS: Square Pharma has a lower debt ratio than Beximco pharma. So Square pharma is running their business smoothly and they don’t depend on loans compare to Beximco pharma.

TIME INTEREST EARNED RATIO Times Interest Earned Ratio 2018 6.57 11.56

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 4.17 10.42

Times Interest Earned Ratio 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: Times interest earned ratio of Beximco Pharmaceuticals has decreased from 11.56 to 10.42 from 2018 to 2019. It indicates that the business cannot produce adequate revenue to pay for its net interest cost.

SQUARE PHARMACEUTICALS LIMITED:

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Times interest earned ratio of Square Pharmaceuticals has decreased from 6.57 to 4.17 from 2018 to 2019. It indicates that the business also cannot produce adequate revenue to pay for its net interest cost.

CROSS-SECTIONAL ANALYSIS: Square Pharma has higher times interest earned ratio than Beximco pharma. The performance of Square pharma is better in terms of times interest earned ratio. Because they raise more money to pay for their net interest income than Beximco Pharma.

GROSS PROFIT MARGIN Gross Profit Margin 2018 46.75% 41.67%

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 46.28% 42.55%

Gross Profit Margin 48.00% 47.00% 46.00% 45.00% 44.00% 43.00% 42.00% 41.00% 40.00% 39.00% Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED:

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The gross profit margin of Beximco Pharmaceuticals has decreased from 46.75% to 46.28% from 2018 to 2019 which is not good for the company.

SQUARE PHARMACEUTICALS LIMITED: The gross profit margin of Square Pharmaceuticals has increased from 41.67% to 42.55% from 2018 to 2019 which is good for the company.

CROSS-SECTIONAL ANALYSIS: Beximco pharma has a higher gross profit margin than square pharma. In terms of gross profit margin, Beximco pharma is doing well.

OPERATING PROFIT MARGIN operating profit margin 2018 0.19 0.33

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 0.18 0.33

operating profit margin 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

TIME SERIES ANALYSIS:

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2019

BEXIMCO PHARMACEUTICALS LIMITED: The operating profit margin of Beximco Pharmaceuticals has decreased from 0.19 to 0.18 from 2018 to 2019. It indicates that Beximco pharma is making less profit from the sales.

SQUARE PHARMACEUTICALS LIMITED: The operating profit margin of Square Pharma has remained the same which is 0.33 from 2018 to 2019. The company is doing well.

CROSS-SECTIONAL ANALYSIS: Square pharma has a higher operating profit margin than Beximco pharma. After paying variable manufacturing costs such as wages and raw materials, Square pharma can make a profit on revenue compare to Beximco pharma.

EARNING PER SHARE Earnings Per Share 2018 6.31 10.42

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 7.46 13.39

Earning Per Share 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

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2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: Earnings per share of Beximco pharma has increased from 10.42 to 13.39 from 2018 to 2019. The company also is doing well in terms of earning per share.

SQUARE PHARMACEUTICALS LIMITED: Earnings per share of Square pharma has increased from 6.31 to 7.46 from 2018 to 2019. The company is doing well in terms of earning per share.

CROSS-SECTIONAL ANALYSIS: Square pharma has higher earnings per share than Beximco pharma. So square pharma is doing good than Beximco pharma in terms of earning per share.

NET PROFIT MARGIN Net Profit Margin 2018 0.36% 22.74%

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

2019 0.38% 23.63%

Net Profit Margin 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

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2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The net profit margin of Beximco Pharmaceuticals has increased from 0.36% to 0.38% from 2018 to 2019. It indicates that after paying all the expenses, Beximco pharma generates profit.

SQUARE PHARMACEUTICALS LIMITED: The net profit margin of Square Pharmaceuticals has increased from 22.74% to 23.63% from 2018 to 2019. It indicates that after paying all the expenses, Square pharma generates more profit.

CROSS-SECTIONAL ANALYSIS: Square pharma has a higher net profit margin than Beximco pharma. So Square pharma is doing well in terms of net profit margin compare to Beximco pharma.

RETURN OF ASSETS (ROA) Return of Assets (ROA) Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

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2018 6.07% 15.41%

2019 6.33% 16.24%

Return of Assets (ROA) 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: Return of assets of Beximco Pharmaceuticals has increased from 6.07% to 6.33% from 2018 to 2019. It indicates that Beximco pharma can get more return on their investment and generating profit from these.

SQUARE PHARMACEUTICALS LIMITED: Return of assets of Square Pharmaceuticals has increased from 15.41% to 16.24% from 2018 to 2019. It indicates that Square pharma is performing better in terms of ROA.

CROSS-SECTIONAL ANALYSIS: Square pharma has a higher ROA than Beximco pharma. Square pharma is doing well in terms of ROA compare to Beximco pharma. So Square pharma is generating more profit than Beximco pharma. The higher the ROA means the higher the better position of the company.

RETURN OF EQUITY (ROE) Return of Equity (ROE) 2018 17 | P a g e

2019

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

9.44% 17.61%

10.21% 17.37%

Return of Equity (ROE) 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: Return of equity of Beximco Pharmaceuticals has increased from 9.44% to 10.21% from 2018 to 2019. It indicates that the capacity of the company to earn profit from the invested cash of the shareholder has increased. SQUARE PHARMACEUTICALS LIMITED: Return of equity of Square Pharmaceuticals has decreased from 17.61% to 17.37% from 2018 to 2019. It indicates that the capacity of the company to earn profit from the invested cash of the shareholder has decreased.

CROSS-SECTIONAL ANALYSIS: According to Return of equity, Square pharma is doing better than Beximco pharma because the higher the ROE means the better position of the company though it is in a decreasing trend.

PRICE/EARNINGS RATIO Price/Earnings Ratio 2018 18 | P a g e

2019

Beximco Pharmaceuticals Limited Square Pharmaceuticals Limited

12.59 5.68

13.23 5.76

Price/Earning Ratio 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Beximco Pharmaceuticals Limited

Square Pharmaceuticals Limited 2018

2019

TIME SERIES ANALYSIS:

BEXIMCO PHARMACEUTICALS LIMITED: The price/earnings ratio of Beximco Pharmaceuticals has increased from 12.59 to 13.23 from 2018 to 2019. It indicates that Beximco pharma earns more profit.

SQUARE PHARMACEUTICALS LIMITED: The price/earnings ratio of Square Pharmaceuticals has increased from...