Financial Statement Analysis

Financial Management BUS-302 Assignment on Financial Statement Analysis Of Beximco Pharmaceutical Limited

Submitted To

Md. Mohibul Islam School of Business Submitted By

Name
1.Sania Afrin 2.Saad Ehsan 3.Mohammad Samiul Alam 4.Sujan Kumar Saha 5.Ankur Banik

ID NO
113011097 113011085 113011090 113011083 113011193

Date of submission: 26-12-2013

University of Liberal Arts Bangladesh

Letter of Transmittal
January 11, 2012 Md. Mohibul Islam School of Business University of Liberal Arts Bangladesh Subject: For the Acceptance of the Term Paper Sir, With due respect and humble submission, I am the students of BBA department and submitting our term paper on Financial statement analysis of Beximco Pharmaceutical Limited. It gives me immense pleasure to inform you that we have completed our term paper under your kind hearted direct supervision. In preparing this term paper, we have tried our level best and worked with most sincerity and make it as well structured as possible. We hope that this will help us for our future. Thank you. Sincerely yours, Mohammad Samiul Alam (113011090) On Behalf of group members Name 1. Sania Afrin 2. Saad Ehsan 4. Sujan Kumar Saha 5. Ankur Banik ID NO 113011097 113011085 113011083 113011193

Table of content
SL. NO. 1 2 3 4 5 6 7 8 Content Executive summary Back ground of the report Findings Recommendation Conclusion Appendix Statement of Financial Position Statement of comprehensive income Page Number 6 6 7-17 17 18 19-24 25 26

Executive Summary:
BEXIMCO PHARMACEUTICALS LTD belongs to Beximco group, the largest private sector industrial corporation in Bangladesh. Beximco Pharma is one of the leading Pharmaceuticals Company in Bangladesh. The company is producing world class of Medicine, following the requirement of the World Health Organization (WHO) in order to improve the health happiness and the .quantity of life. We placed greatest emphasis on maintaining the highest standard of the Corporate Governance. On the basis of Financial Statement we can describes how the principles of the good Governance is applied in Beximco Pharmaceuticals Ltd. The Beximco Pharmaceuticals Ltd.committed to efforts our health care needs of the country, about 27 new products have been added to the existing products during this year. As a result Triocim, Prosan, Recox, Atova, and lot of medicine are already achieving themselves in a good position in the world Market within a short period of time. But Beximco Pharmaceuticals Ltd. Companys superstar product NAPA continued to retain the number of one position since 1990s. Beximco Pharma produces pharmaceutical formulations and active pharmaceutical ingredients, having a current portfolio of more than 400 products and a dedicated team of more than 2,500 employees. In its long journey over three decades, the simple principle on which it was founded remains the same: producing high-quality generics and providing better access to medicines at a much affordable cost. The company continues to adhere to the global standards and takes initiatives to remain more competitive in order to maintain its strong track record.

Back ground of the report:

The objectives of the term paper are to analyze the financial statement of the beximco pharma ltd. Here I analysis the Liquidity, Activity, Debt, Profitability Ratio of both year. These ratios will help to understand the present condition of the company. This is also help to investors and creditors to understand the companys recent situation.

Findings
Current ratio analysis

Current Ratio
3.5 3 2.5 2 2009 1.5 1 0.5 0 2009 2010 2010 2.98 2.46

In the table we see that in 2009 the ratio is only 2.98:1 and in the 2010 decreases to 2.46:1. We can say that company has Tk. 2.46 asset against Tk. 1 liability to pay the debt in 2010. Here we can see that in 2010 the current assets decreases and current liabilities are increasing than the 2009. Thats why current ratio decreases in 2010. This ratio gives us a gross idea of liquidity position of the company. However the company has enough assets to pay the liability in 2010, which is sufficient. The company has enough short-term debt paying ability.

 Quick ratio analysis

Quick Ratio
2.5 2 1.5 2009 1 0.5 0 2009 2010 2010 2.23 1.67

From the calculation we can see that the quick ratio has decreased over the year. This has happened because inventory has increased by Tk. 260,856,160 and we know that inventory is deducted from current asset while calculating quick ratio.

Inventory Turnover analysis :

Inventory turnover
1.85 1.8 1.75 1.7 1.65 1.6 1.55 1.5 1.45 2009 2010 1.59 2009 2010 1.79

Inventory turnover measures the number of times on average the inventory is sold during the period, and BPL has a 1.59 turnover during 2009 but in 2009 it increases to 1.79 times. The Inventory turnover is increasing then the previous year. Here, we can understand that, in 2009
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the company sells the inventory after every 230 days. About 230 days the inventory is unsold in warehouse. This is not a good situation. In 2010 the company sells the inventory after every 204 days. This situation was good than 2009. Avarage collection period analysis

Avarage Collection period

53 52 51 50 49 48 47 46 45 44 43 2009 2010 46 2009 2010 52

From the graph and calculation we find that the company is in good position in 2010 compared to year2009 to collect its receivables at first as possible. It suggests that in 2010 company collect it receivables faster than 2009. In2010 it seems that company extends its daily credit sales and it is clearly found the time period to collect receivables is less than the year 2009.As a result the company avails more cash.

 Average payment period analysis :

Avarage Payment Period

35 30.31 30 25 20 15 10 5 0 2009 2010 23.97

2009 2010

From the graph and calculation we find that the company takes less time to pay its trade creditors (accounts payable). It signifies that in 2010 company has cash and that cash is used to pay off debt but in 2009 company utilizes its cash more in different sectors rather than paying off its creditors. Fixed assets turnover analysis

Fixed Asset Turnover

0.42 0.41 0.4 0.39 2009 0.38 0.37 0.36 0.35 2009 2010 0.375 2010 0.409

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From the graph and calculation we find that the company is utilizing its fixed assets (property, plant and equipment) more effectively in 2010than in 2009 for generating sales revenue. Total assets turnover analysis

Total Asset Turnover

0.35 0.3 0.3 0.25 0.2 2009 0.15 0.1 0.05 0 2009 2010 2010 0.24

From the graph and calculation we find that the company is utilizing its total assets more effectively in2010 than in 2009 for generating sales revenue. It is a significant improvement for the company for asset utilization. Debt Ratio analysis :

Debt Ratio
50 40 30 20 10 0 2009 2010 25.25 45.27

2009 2010

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From the graph and calculation we find that the company has less debt in 2010than in 2009. It is a very positive factor for a company. The company is less dependent on leverage in 2010 and more dependent on leverage in 2009. The company has better equity position and less risk in 2010 and more risk in 2009 compared to the year 2009. Debt Equity Ratio analysis:

Debt Equity Ratio

25 20.52 20 14 2009 10 2010

15

0 2009 2010

According to debt equity ratio the higher the ratio the more the business is exposed to interest rate fluctuations and will have to pay back interest and loans before being able to re-invest carrying. We can see according to the graph the ratio has fallen by 6.34% which is considered good for the company.

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 Time interest Earned ratio analysis :

Time interest Earned

4 3.5 3 2.5 2.5 2 1.5 1 0.5 0 2009 2010 2009 2010 3.49

From the graph and calculation we find that the company has paid less interest to its shareholders in 2010 because it suffers from more debt expenses relative to the year2009.So that in 2010 shareholders did not get enough interest because the company was burdened by debt expenses.

Gross profit margin ratio analysis Gross Profit Margin

49 48.5 48 47.5 47 46.5 46 2009 2010 47.28 2009 2010 48.88

From the graph and calculation we find that the company has used raw materials, labor and manufacturing-related fixed assets to generate profits more effectively in 2010 than in 2009.
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 Operating Profit Margin ratio analysis :

Operating Profit Margin

30 25.2 25 20.56 20 15 10 5 0 2009 2010 2009 2010

The Operating Profit Margin gives us the amount of net profit that the business is carrying per taka of sales. The operating profit margin was 20.56% in 2009 and which increased to 25.2% by 2010. The main reason that the OPM increased is low cost. Lower cost in turn generally occurs due to efficient operation thus the net income went up in 2010. Net Profit margin analysis :

Net Profit margin

18 16 14 12 10 8 6 4 2 0 2009 2010 2009 2010 12.83 16.2

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From the graph and calculation we find that the company has earned significant profit in 2010 than in2009.It clearly identifies that the company has a good earning capacity and it is increasing year after year. Return on total asset

Return on total asset

6 5 4 3.14 3 2 1 0 2009 2010 2009 2010 4.92

From the graph and calculation we find that the company has used its assets very effectively for generating revenue in 2010than in 2009. Return on Total Equity analysis:

Return On Total Equity

6.8 6.6 6.4 6.2 6 5.8 5.6 5.4 5.2 2009 2010 5.73 2009 2010 6.58

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From the graph and calculation we find that the shareholders have earned more in 2010 than in 2009 by investing in the company. The company is utilizing its equity more effectively in 2010 and brings more return to the investors Earnings per Share analysis:

Earnings Per Share

6 5 4 3 2 1 0 2009 2010 3.5 2009 2010 5.17

By analyzing the graph it is clear that in 2010 ordinary shareholders earned more per share than in 2009. So 2010 was a good year for ordinary shareholders point of view. So company performed well in paying dividend to ordinary shareholders in 2010 relative to2009. It signifies that company is improving day by day in case of shareholders wealth maximization plan Price Earnings Ratio analysis :

Price earnings ratio

50 45 40 35 30 25 20 15 10 5 0 2009 2010 26.13 2009 2010 44.51

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Price Earnings ratio is an important investment ratio, which shows the degree that investors are willing to pay per takeoff reported profit. We find that in 2010 the price earnings ratio is comparatively low than 2009, that means in 2010 the company had earned low profit and so that ordinary shareholders did not earn enough. It also depicts that in 2010 the company was not financially solvent than in2009.

Recommendation:
Beximco Pharmaceuticals LTD is the largest pharmaceuticals company in our country. All the company faces lots of problem. The companys all the things are very good. I found all the ratios. The companys all the ratios are very good, Except the Receivables turnover, Return on assets, Quick ration and Debt to total assets. The company must take care of all the findings. If the problems are not properly handle or take care the company may faced big problem. The companys shareholders are not interested to invest in this company. The market share of the company will decrease. So the company first increases the quick ratio. The company must have to current assets to pay the current liabilities. Then Increase the receivables turnover. Assets turnover must be increased because if the assets not enough turnover the company may face the cash problem. After that the company must increase the debt to total assets. If the company does not change this ratio the company faces the percentage of total assets provided by creditors. If all the problems are properly handle the company may increase the marketability and as well as the shareholders may also be increased.

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Conclusion
Beximco Pharmaceuticals LTD is a well-established and leading Pharmaceuticals firm of the country. The financial data show a growing trend of the company. The net profits after tax (NPAT) indicate the companys excellent performance in operation, turnover, management and competitive business statically. As the inventors expectation is to earn more money over their investment, Beximco Pharmaceuticals LTD is playing an important role to set the investors on it. Finally If all the problems are properly handle the company may increase the marketability and as well as the shareholders may also be increased.

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Appendix Ratio Calculation

Liquidity Ratios: Net working capital (NWC) 2010 Current assets Current Liability = 6,191,667,831-2,513,157,232 = 3,678,510,599 2009 Current assets Current Liability = 6,916,737,893- 2,321,451,642 = 4,595,286,251 Current Ratio = Current Assets / Current Liabilities 6,191,667,831/ 2,513,157,232 [Year-2010] 6,916,737,893/ 2,321,451,642 [year-2009] Ratio Current ratio Quick ratio= = = =1.67 2010 2.46:1 2009 2.98:1 [Year-2010]

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Quick ratio= = =

[Year-2009]

Activity measure Inventory turnover = Cost of goods sold / Average Inventory 3,317,640,254/ 1,853,381,364 [Year-2010] 2,566,206,626/ 1,614,120,689 [Year-2009] Ratio Inventory turnover 2010 1.79 times 2009 1.59 times [year 2010]

Average collection period = = = = 45.55 =46 days Average collection period = = = = 51.32 =52 days

[year 2009]

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Average payment period = = = = 23.97 days

[Year-2010]

Average payment period = =

[Year-2009]

=
= 30.31 days Fixed assets turnover = Sales / Net fixed assets = 6,490,847,353 / 15,840,731,678= 0.409 [year -2010] = 4,868,254,915 / 12,975,195,529 = 0.375 [year 2009] Ratio Fixed assets turnover 2010 0.409 2009 0.375

Total assets turnover = Sales / Total assets = 6,490,847,353 / 21,372,399,509= 0.30 [year 2010] = 4,868,254,915 / 19,891,933,422= 0.24 [Year 2009] Ratio Total assets turnover 2010 0.30 2009 0.24

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Debt Measures Debt ratio = Total liabilities / Total assets 5398313058/ 21,372,399,509 [year 2010] 9006226808 / 19,891,933,422 [Year 2009] Ratio Debt ratio 2010 25.25% 2009 45.27%

Debt equity ratio = = =

[year 2010]

= 14.0% Debt equity ratio = = = =20.52% Ratio Debt equity ratio 2010 14.0% 2009 20.52%

[year 2009]

Time interest earned = Earnings before interest and taxes / Interest charged = 1,361,532,326/ 508,432,384= 2.68 times [year-2010] = 867,467,427/ 248,370,850= 3.49 times [year-2009] Ratio Times interest earned 2010 2.68 times 2009 3.49 times

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 Profitability Measure: Gross profit margin = Gross profit / sales 3,173,207,099 / 6,490,847,353- 48.88% [year 2010] 2,302,048,289 / 4,868,254,915- 47.28% [year 2009]

Ratio Gross profit margin

2010 48.88%

2009 47.28%

Operating Profit margin = Operating profit (EBIT) / Sales = 1,635,780,192 / 6,490,847,353= 25.20% [year 2010] = 1,001,282,411 / 4,868,254,915= 20.56% [year- 2009] Ratio Operating profit margin 2010 25.20% 2009 20.56%

Net profit margin = Net profit after tax / sales = 1,051,648,808 / 6,490,847,353= 16.20% [year 2010] = 624,740,307 / 4,868,254,915= 12.83% [year- 2009] Ratio Net profit margin 2010 16.20% 2009 12.83%

Return on total asset = Net profit after tax / Total Assets =1,051,648,808 / 21,372,399,509= 4.92% [year-2010] =624,740,307 / 19,891,933,422= 3.14% [year-2009] Ratio Return on asset 2010 4.92% 2009 3.14%

Return on equity = Net profit after tax / shareholders equity =1,051,648,808 / 15,974,086,451= 5.73% [year-2010] =624,740,307 / 10,885,706,614= 6.58% [year-2009]
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Ratio Return on equity

2010 6.58%

2009 5.73%

Earnings per share = Net income / No of shares of common stock outstanding = 1,051,648,808 / 203,420,202= 5.17 taka = 624,740,307 / 178,515,362 = 3.50 taka Ratio Earnings per share 2010 5.17 2009 3.50

Price earnings ratio = Market price of per share of common stock / Earning per share
= 135.1/ 5.17= 56.13 times [year-2010] = 155.8/ 3.50= 44.51 times [year-2009] Ratio Price earnings ratio 2010 26.13 times 2009 44.51 times

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BEXIMCO PHARMACEUTICALS LIMITED

Statement of Financial Position

As at 31 December 2010
Amount in Taka

ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Investment in Shares Current Assets Inventories Spares & Supplies Accounts Receivable Loans, Advances and Deposits Short Term Investment Cash and Cash Equivalents TOTAL ASSETS EQUITY AND LIABILITIES Shareholders' Equity Issued Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Retained Earnings Non-Current Liabilities Long Term Borrowings-Net off Current Maturity (Secured) Fully Convertible, 5% Dividend, Preference Share Liability for Gratuity & WPPF Deferred Tax Liability Current Liabilities and Provisions Short Term Borrowings Long Term Borrowings-Current Maturity Creditors and Other Payables Accrued Expenses Dividend Payable Income Tax Payable TOTAL EQUITY AND LIABILITIES The Notes are integral part of the Financial Statements.

Notes 4 (a) 3.3 & 5 6 7 8 9

10 11 12

2010 15,180,731,678 15,123,306,298 51,126,854 6,298,526 6,191,667,831 1,983,809,444 276,520,188 821,356,439 779,129,620 859,403,704 1,471,448,436 21,372,399,509 15,974,086,451 2,098,065,090 5,269,474,690 1,689,636,958 294,950,950 1,534,645,820 5,087,312,943 2,885,155,826 1,902,150,733 335,885,792 647,119,301 2,513,157,232 1,639,961,052 348,860,443 432,315,660 90,512,178 1,507,899 21,372,399,509

2009 12,975,195,529 12,966,587,178 5,726,525 2,881,826 6,916,737,893 1,722,953,284 242,034,855 694,111,730 699,204,450 2,500,000,000 1,058,433,574 19,891,933,422 10,885,706,614 1,511,492,960 1,489,750,000 1,689,636,958 294,950,950 1,617,361,714 4,282,514,032 6,684,775,166 1,924,933,065 4,100,000,000 307,425,614 352,416,487 2,321,451,642 1,451,326,354 308,820,056 409,898,122 79,094,905 1,727,724 70,584,481 19,891,933,422

13 14 15 4(b)

16 17 18 19 20 21 22 23

25

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