INTRODUCTION

Financial ratio analysis is one of the best tools of performance evaluation of any company. In order to determine the financial position of the pharmaceutical company its important to evaluate the companys efficiency, its operation and management and how well the company has been able to utilize its assets and earn profit. We used ratio analysis for easily measurement of liquidity position, asset management condition, profitability and market value and debt coverage situation of the pharmaceutical company for performance evaluation. It analysis the company use of its assets and control of its expenses. It determines the greater the coverage of liquid assets to short-term liabilities and it also compute ability to pay pharmaceutical company monthly mortgage payments from the cash generate. It measures pharmaceutical company overall efficiency and performance. It determines of share market condition of pharmaceutical company. It also used to analysis the pharmaceutical company past financial performance and to establish the future trend of financial position. Here, we have chosen BEXIMCO PHARMACITICALS COMPANY LIMITED, a well known pharmaceutical company in Bangladesh. It started its journey but their converted into public limited company in 1991.It is the first position among all national ,multination, private and public of pharmaceutical company of Bangladesh.. They provide world class manufacturing facilities, development capability and standard service. They prepare branded generics' for all diseases from AIDS to cancer and also asthma, diabetes, etc. They export lot of medicine in developed countries (Germany, Switzerland, Italy, and United Kingdom) to earn money. (Square-financial-reports)

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OBJECTIVES:
The purpose of this study is a performance evaluation of two pharmaceutical companies in Bangladesh. We will analysis the financial conditions of BPL.

M ETHODOLOGY:
In preparing this report I mainly accessed the secondary source of information based on articles, online journals, web materials and especially the published annual report of that bank which I have collected from Dhaka Stock Exchange.

LIMITATIONS:
There is some limitation of our report. When we used the main methods of ratio analysis for performance evaluation of pharmaceutical company .We can face different kinds of problem. It was not possible for us to collect primary information neither by questionnaire nor by interview from that particular bank. So had to rely on the web materials or published data. Here we need to choose a ratio that is suitable .This means that data must be correct, otherwise calculate of ratio may be erroneous.

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OVERVIEW

OF THE

BPL:

Bangladesh Export Import Company (BEXIMCO). Beximco Pharmaceuticals Limited is a leading edge pharmaceutical company based in Dhaka, Bangladesh and is acclaimed for its outstanding product quality, world-class manufacturing facilities, product development capabilities and outstanding professional service. Beximco Pharma is the pioneer in pharmaceutical export from Bangladesh and has received National Export Trophy (Gold), the highest national accolade for export, for record three times. Year of Establishment Commercial Production Status : 1976 : 1980 : Public Limited Company

Corporate Mission: Each of their activities must benefit and add value to the common wealth of the society. They firmly believe that, in the final analysis they are accountable to each of the constituents with whom they interact, namely: their employees, business associates, fellow citizens and their shareholders. Corporate Vision: If there is one characteristic that has typified the Beximco approach it is vision to be the best of our nature and human resources. a vision to establish our group and country as a respected and valued regional presence.

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TIME-SERIES ANALYSIS 1. Liquidity ratio

OF

BPL:

Liquidity ratio refers to the ability of a company to interact its assets that is most readily converted into cash. Assets are converted into cash in a short period of time that are concerns to liquidity position. However, the ratio made the relationship between cash and current liability.
The Liquidity ratio we can satisfy on the three ratios, those are: 1.1) Current ratio

1.2) Quick ratio or acid test

LIQUIDITY RATIO:

Types of Ratio
Current Ratio Quick Ratio

2007 1.795 0.892

2008 1.099 0.5 21

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2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2007 2008 Current Ratio Quick Ratio

Analysis: In this analysis, we can view that in 2007 the current ratios were 1.099 times in Beximco
pharmaceutical Ltd. It was decreasing the next year Company. So we understand that the company is not good in terms of its current ratio because their figure also showing that situation. Analysis of this ratio, it is the same position of current ratio. In 2007, the quick ratio was 0.9 times of Beximco pharmaceutical company which decreased quietly as resulted 0.5 times.

2. Turnover ratio:
Turnover ratios are most notable ratio of the financial ratios analysis. It measure how effectively a company uses and controls its assets. It is analysis how a company quickly converted to cash or sale on their resources. It indicates the asset converted or turnover into sales. Finally, we can recognize the company can easily measurement their asset because this ratio made up between assets and sales. Following are discussed seven types of asset management ratios

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2.1) Accounts receivable turnover 2.2) Average collection period 2.3) Inventory turnover 2.4) Accounts Payable turnover 2.5) Fixed asset turnover 2.6) Total asset turnover

TURNOVER

RATIO:

Types of Ratio
Total Asset Turnover Fixed Asset Turnover Accounts Receivable Accounts Payable
Average collection period Inventory turnover

2007 0.300 0.398 7.198 10.468 50 1.322

2008 0.270 0.335 7.958 6.186 45 1.346

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TURNOVER RATIO
60 50 40 30 20 10 0 2007 Year Total asset turnover Fixed Asset Turnover Accounts Payable Average collection Inventory turnover

Analysis:
1. Total asset Turnover From this ratio analysis we acquire that the ratio is continuously increasing from 2007 to 2008 in Beximco.It means that Account receivable is increasing day by day which is very bad position for company because it has make up a lot of cash money, for this reason the company must be invested by other sector., So the higher turnover means that the company is inefficient in managing its Account receivable.

2. Fixed asset Turnover

As a result we can recognize the average collection period had decreased from 2007 to 2008 for BPL. Low ratio stands up the company bad collection period and its also indicating of low cash balance. The main aim of any company should be increasing sale otherwise the company doesnt increasing receivable because it makes up the cash balance.

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3. Inventory Turnover
In this analysis we identify that the continuous improvement of inventory turnover ratio through the years from 2007 to 2008. Here we understand that the cost of goods sold is increasing day by day as well as the turnover is also increasing because the increasing rate of sales is higher than average inventory. Generally it is important that they are holding much more inventory, which has make up the cash balance. It is the best position for the company.

4. Accounts Payable Turnover BPL has gone opposite that ratio is increase compare than previous year. So it is most important for that company because this company has high cash balance. As result we confirm that the Beximco pharmaceutical company is good position.

5. Fixed asset Turnover BPL has rapid declination of fixed assets turnover ratio in 2008 occurred
because sales and net fixed assets the increase of companies .we mention that the balance sheet shows that large amount of investments were made during that year that inflate the money volume of fixed assets, and give an impression of mismanagement.

6. Total asset Turnover

In this Analysis we see that a gradual fall of companys total asset turnover in 2007, it was 0.300 times, declined to 0.270 times in Beximco company. It may be an indicator of companys pricing strategy as company with high profit margins tends to have low asset turnover. It is in fact might be one of the reasons for why the assets turnover was low in the year 2007 to 2008.

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3. Profitability Ratio
Profitability ratios designate a company's overall efficiency and performance. It measures the company how to use of its assets and control of its expenses to generate an acceptable rate of return. It also used to examine how well the company is operating or how well current performance compares to past records.

There are five important profitability ratios that we are going to analyze: 3.1) Net Profit Margin 3.2) Gross Profit Margin 3.3) Return on Asset 3.4) Return on Equity 3.5) Operating profit margin

PROFITABILITY RATIO:

Types of Ratio
Net Profit (%) Operating Profit (%)

2007

2008

9.8% 18.2%

13.5% 24.9% 3.6% 5.2% 50%

Return on Assets Return on Equity

2.9% 4.2%

Gross profit Ratio 45.3%

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Profitability Ratio
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2007 Year 2008 net profit(%) operating Profit(%) ROA ROE Gross Profit

Analysis:
1. Net Profit Margin
In this analysis we see that the net profit margin has increased in 2008 compare than last year in Beximco pharmaceutical company because the net profit and sales are increase from the last year. As a result this company is standard position.

2. Gross Profit Margin

In 2008 sales has increased as well as gross profit margin has also increased for the Beximco Company. To increase gross profit margin they should try to decrease their cost of goods sold. 3. Return on Asset From 2008 years data we see that net income and total asset has continuously increased to 2007 in Beximco Company. For this reason return on total asset ratio has increase in little bite. We think return on asset is best position for Beximco pharmaceutical company.

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4. Return on Equity
The Beximco company is increase that the same in previous year. It state that the measurement for evaluating the efficient use of resources by a company in producing earnings for its shareholders

5. Operating profit margin

In this analysis we find out the operating profit margin has increase in 2007 to 2008 in Beximco pharmaceutical company because those company operating profit and sales has increase step by step from previous year.

4. Debt coverage ratio

Debt Coverage Ratio measures the percentage of the total asset provided by creditor, If any company has realize their debt coverage ratio less than 1 then the company understand their income greater by a property is insufficient to collect their mortgage. So more than is 1 is best for any company The Debt-coverage ratio we can satisfy on the three ratios, those are: Debt ratio. Book value per share.

DEBT

COVERAGE

RATIO:

Types of Ratio
Debt Ratio

2007 30.9%

2008 29.4% 82.9

Book value per share

65.5

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90 80 70 60 50 40 30 20 10 0 Debt Ratio Book Value per share

Analysis:
1. Debt Ratio
In this problem analysis we see that the percentage of ratio has decreased from 2007 to 2008 in the Beximco Company because their asset was increased at a higher rate than from the last year. If any company debt ratio decreases day by day it is a good position for those for the company.

2. Book value per share Ratio

Book value per share is the amount each share would receive. If the company were liquidity on the basis of amount reported on the balance sheet. If any company increases the book value per share so the healthy position. Here we see that the company is increasing .

5. Market value ratios

The final ratios are the market value ratio. It also call share ownership ratio. It referred to the stockholder in analyzing present and future investment in a company. In this ratio the stockholders 44

are interested in the way to certain variables affect the value of their holdings. There are two ratios under this ratio. They are as follows: 1. Earnings per Share (EPS) ratio 2. Market/Book ratio

MARKET VALUE RATIO:

Types of Ratio
EPS Market Ratio

2007 TK 2.8 TK 0.89

2008 TK 4.3 TK2

Market value Ratio

5 4 3 2 1 0 2007 Year 2008 24.90% Market/book

Analysis:
1. Earnings per Share (EPS) Ratio Earnings per share ratio are a small variation of ownership ratio. It gauges by dividing net income into total number of share outstanding .it is most important for deterring of share price. Here 45

analysis shows that earning per share ratio has increased from 2007 to 2008 in the Beximco company because net income had increased at a fewer rate than from the previous.

2. Market/Book Ratio The Market/Book Ratio refer to the company market value per share to its book value per share. It indicates management success in creating value for its stockholders. In this case the market value per ratio is increase by the Beximco pharmaceutical company. It means the goods position of that company.

CONCLUSION

Financial analysis is helpful in assessing the financial position and profitability of a concern. This is done through comparison by ratios for the same concern over a period of years; or for one concern against another; or for one concern against the industry as a whole (called inter firm operation); or for one concern against the predetermined standards. Accounting ratios calculated for a number of years show the trend of the change of position. The trend is upward or downward or static. The ascertainment of trend helps us in making estimates for the future. Thus we can say that there is lots of application of financial analysis in the modern days of business. To assess any business condition financial analysis gives a clear financial picture of any business organization. This helps to evaluate the trend and condition of organization. As it helps to give idea about the financial condition, thus it helps in future financial projection and decision making process of any business house. Eventually one can assess how important is financial analysis in the modern days of business. It gives the exact picture of the financial condition and helps future projection of any organization. It 46

is leading edge Pharmaceuticals Company in Bangladesh. It is gradually expanding its asset base and able to proper utilize assets. We believe that, BPL financial position improved day by day.

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