University of Dhaka

Assignment:
Comparison of Financial Statement Analysis of SQUARE Pharmaceuticals Ltd. and
BEXIMCO Pharmaceuticals Ltd.
Course-314
Financial Management
Tourism and Hospitality Management
Section: A
Submission Date: 2nd May, 2023

Submitted to:
Dr. Saud Ahmed
Assistant Professor
Department of Tourism and Hospitality Management
Faculty of Business Studies
University of Dhaka

Submitted by:
Sl. No Name Id
1. Aysha Akter 001
2. Arman Aziz 007
3. Jannatul Ferdoush 033
4. Sumaya Akter 101
5. Chumky Chowdhury 104
6. Tabassum Ahmed Tazry 136
7. Israt Jahan Eva 141
Abstract

This financial analysis report compares two leading pharmaceutical companies in Bangladesh,
Square Pharmaceuticals Ltd., and Beximco Pharmaceuticals Ltd. The analysis is based on
the two companies financial statements for the 2021-2022 Fiscal Year. The report focuses on
evaluating the financial performance of the two companies by analyzing key financial ratios
and indicators such as profitability ratios, liquidity ratios, solvency ratios, and efficiency ratios.
The report also compares the companies' financial position and their ability to generate profits,
manage debts, and maintain sufficient liquidity. The analysis reveals that both companies have
a stable financial position, with Square Pharmaceuticals Ltd. showing a better profitability
margin and liquidity position than Beximco Pharmaceuticals Ltd. However, Beximco
Pharmaceuticals Ltd. has a better debt management strategy and higher efficiency in utilizing
its assets. Overall, the report provides insights into the financial performance of the two
companies and helps investors and stakeholders make informed decisions about their
investment portfolios
 1

Contents
Abstract ...................................................................................................................................... 3
Introduction ................................................................................................................................ 2
Financial Statement of Square Pharmaceuticals Ltd. ................................................................ 3
Financial Statement of Beximco Pharmaceuticals Ltd. ............................................................. 5
Liquidity Ratio ........................................................................................................................... 7
Current Ratio :........................................................................................................................ 7
Acid Test Ratio: ..................................................................................................................... 7
Cash Ratio .............................................................................................................................. 8
Leverage Ratio ........................................................................................................................... 9
Debt to Assets Ratio............................................................................................................... 9
Debt-to-equity ratio .............................................................................................................. 10
The long-term Debt to total capitalization ........................................................................... 10
Activity Ratio ........................................................................................................................... 11
Inventory Turnover Ratio .................................................................................................... 11
Accounts Receivable Turnover Ratio .................................................................................. 12
Fixed Asset Turnover Ratio ................................................................................................. 12
Accounts Payable Turnover Ratio ....................................................................................... 13
Total Asset Turnover Ratio .................................................................................................. 13
Profitability Ratio..................................................................................................................... 14
DuPont Analysis ...................................................................................................................... 16
Cash Conversion Cycle (CCC) ................................................................................................ 17
Financial Comparison at a Glance: .......................................................................................... 19
Conclusion ............................................................................................................................... 20

FINANCIAL STATEMENT ANALYSIS

 2

Introduction
The pharmaceutical industry has experienced significant growth in recent years, driven by
increasing demand for innovative drugs, rising healthcare spending, and a growing aging
population. As key players in this industry, Square Pharmaceuticals Ltd. and Beximco
Pharmaceuticals Ltd. have been at the forefront of developing and manufacturing life-saving
drugs that have revolutionized healthcare.
SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and
it has been continuously in the 1st position among all national and multinational companies
since 1985. It was established in 1958, converted into a public limited company in 1991 and
listed with stock exchanges in 1995.
Beximco Pharmaceuticals Limited is a leading manufacturer and exporter of medicines in
Bangladesh. Incorporated in 1976, the Company started its operation by importing products
from Bayer, Germany and Upjohn, USA and selling them in the local market. In 1980, Beximco
Pharma began manufacturing of these products under licensing arrangement and the company
launched its own formulation brands in 1983. From that humble beginning, Beximco Pharma
has grown from strength to strength. Today, it has emerged as a global generic pharma
company in the region. The Company’s manufacturing facilities have been accredited by the
leading global regulatory authorities, and medicines manufactured by the Company are now
being exported to more than 50 countries including the highly regulated markets of USA,
Europe, Canada and Australia. Beximco has won the National Export (Gold) trophy for 5 times.
It remains the only Company in the country to win the highly prestigious SCRIP Award as the
“Best Pharma Company in an Emerging Market” and also won CPhI Pharma Awards 2020 for
“Innovation in Response to COVID-19.” It also has the unique distinction as the only
Bangladeshi Company listed on the AIM of London Stock Exchange.

FINANCIAL STATEMENT ANALYSIS

 3

Financial Statement of Square Pharmaceuticals Ltd.

Square Pharmaceuticals Ltd.
Comprehensive Income Statement
As at June 30, 2022
Sales Revenue 57,597,941,359
Less: Cost of Goods Sold 27,958,026,980
Gross Profits 29,639,914,379
Less: Operating Expenses:
Selling & Distribution Expense 10,439,270,466
Finance Cost 29,757
Administrative Expense 1,402,254,167
Total Operating Expenses (11,841,554,390)
Other Operating Income 584,184,496
Operating Profits 18,382,544,485

Add: Non-Operating Income 3,441,678,744

Less: Workiers' P.P. Fund & Welfare Fund (1,051,227,994)

Net Profits Before Taxes 20,772,995,235
Less: Taxes (4,607,069,271)
Profit After Taxes 16,165,925,964
ADD: Profit From Associate Undertakings 2,010,807,588
Net Profits After Tax 18,176,733,552

FINANCIAL STATEMENT ANALYSIS

 4

Square Pharmaceuticals Ltd.

Consolidated Statement of Financial Position
As at June 30, 2022
Current Assets:
Cash 48,962,498,336
Accounts Receivable $3,395,080,462
Advances, Deposits, and Prepayments $1,776,037,947
Inventories $8,214,111,144
Total Current Assets 62,347,727,889
Gross Fixed Assets (at cost):
Property, Plant, and Equipment 27,182,672,428
Investment in Associates 11,105,181,456
Investment in Marketable Securities $4,346,770,865
Other $5,006,376,080
Total Fixed Assets 47,641,000,829

Total Assets 109,988,728,718

Current Liabilities:
Accounts Payable 636,003,309
Other Payables 1,603,882,464
Accruals 180,802,107
Proposed Dividend 129,636,029
Income Tax Payable 911,504,873
Loans and Borrowings 200,000,000
Total Current Liabilities 3,661,828,782
L / T Debt 2,873,450,552
Total Liabilities 6,535,279,334
Share Capital 8,864,510,100
Share Premium 2,035,465,000
General Reserve 105,878,200
Fair Value Reserve 830,615,740
Translation Reserve 8,998,071
Retained Earnings 91,607,512,639
Shareholders' Equity 103,452,979,750
Non Controlling Interests 469,632
Total Stockholders' Equity 103,453,449,382
Total Liabs. & Stockhldrs' Equity 109,988,728,716

FINANCIAL STATEMENT ANALYSIS

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Financial Statement of Beximco Pharmaceuticals Ltd.

Beximco Pharmaceuticals Ltd.
Comprehensive Income Statement
As at June 30, 2022
Sales Revenue 34,669,172,052
Less: Cost of Goods Sold (18,854,919,733)
Gross Profits 15,814,252,319
Less: Operating Expenses:
Selling & Distribution Expense 7,749,560,335

Administrative Expense 1,163,406,037

Total Operating Expenses (8,912,966,372)

Operating Profits 6,901,285,947

Less: Finance Cost (1,001,835,523)
Add: Non-Operating Income 1,146,717,162
Less: Workiers' P.P. Fund & Welfare Fund (359,222,585)
Net Profits Before Taxes 6,686,945,001
Less: Taxes (1,688,316,804)
Profit After Taxes 4,998,628,197

FINANCIAL STATEMENT ANALYSIS

 6

Beximco Pharmaceuticals Ltd.

Consolidated Statement of Financial Position
As at June 30, 2022
Current Assets:
Inventories $10,405,295,079
Spares & Supplies $718,797,256
Accounts Receivable $3,142,817,194
Loans, Advances, and Deposits $2,787,039,904
Advance Income Tax $196,635,028
Cash and Cash Equivalents $1,168,673,821
Total Current Assets $18,419,258,282
Gross Fixed Assets (at cost):
Property, Plant, and Equipment $41,760,330,727
Right of use Assets $618,891,376
Intangible Assets $4,562,988,045
Deferred Tax Asset $88,640,228
Goodwill $674,570,185
Other Investment $23,356,899
Total Gross Fixed Assets $47,728,777,460

Total Assets $66,148,035,742

Current Liabilities:
Short Term Borrowings $6,850,550,319
Long-Term Borrowings-Current Maturity $2,065,962,471
Creditors and Other payables $2,465,039,217
Accrued Expenses $1,166,881,586
Dividend Payable $88,049,428
Income Tax Payable $99,449,055
Total Current Liabilities $12,735,932,076
L / T Debt $8,776,099,208
Total Liabilities $21,512,031,284

Share Capital $4,461,120,890

Share premium $5,269,474,690
Excess of Issue Price over Face Value of GDRs $1,689,636,958
Capital Reserve on Merger $294,950,950
Revaluation Surplus $1,116,896,688
Unrealized Gain $20,531,723
Retained Earnings $27,747,885,918
Shareholders' Equity $40,600,497,817
Non Controlling Interests $4,035,506,641
Total Stockholders' Equity $44,636,004,458
Total Liabs. & Stockhldrs' Equity $66,148,035,742

FINANCIAL STATEMENT ANALYSIS

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Liquidity Ratio
Liquidity Ratios are used to measure a firm's ability to meet short-term obligations with short-
term or current resources available to meet these obligations. The liquidity ratio mainly consists
of two ratios- Current Ratio & Acid Test Ratio. From these ratios, much insight can be obtained
into the present cash solvency of the firm & firm's ability to remain solvent in the event of
adversity.

Current Ratio :
One of the most general & frequently used ratios is the current ratio. The highest the current
ratio is, the greater the ability of the firm to pay Its bills.
The formula of the current ratio is,
Current Assets
Current ratio =
Current Liabilities
From the balance sheet of Square Pharmaceuticals, we found Its current assets =
62,347,727,888 & current liabilities = 3,661,828,783.
So, using the formula, we got its current ratio to be 17.026: 1.
At the same time, from Beximco Pharma's Balance Sheet, we found Its current assets =
18,419,258,282 & It's current liabilities = 12,735,932,076.
After using the formula, Beximco Pharmaceuticals’ current ratio = 1.45: 1.

According to RMASS, the median range of the Current Ratio = 2:1. That means every company
should have at least 2 assets against 1 liability. Based on the median range, the Square
Pharmaceuticals is in a very good position than the Beximco Pharmaceuticals. Square
Pharmaceuticals have 17 assets against its 1 liability whereas Beximco Pharmaceuticals have
only 1.45 assets against its 1 liability which is below the median range.
It is clear that Square Pharmaceuticals have more ability to pay Its bills but Beximco
Pharmaceuticals may face difficulties in terms of paying regular necessities.

Acid Test Ratio:

The acid test ratio, also known as the quick ratio, is a financial metric used to measure a
company's short-term liquidity. It indicates a company's ability to pay off its current liabilities
quickly with its most liquid assets, such as cash, marketable securities, and accounts receivable,
without relying on inventory or prepaid expenses.

The formula for the acid test ratio is:

(Current Assets − Inventory − Prepaid Expenses)

Acid Test Ratio = Current Liabilitie

A higher acid test ratio indicates that a company has a stronger liquidity position, as it suggests
that the company can quickly and easily cover its short-term obligations. A ratio of 1 or higher

FINANCIAL STATEMENT ANALYSIS

 8

is generally considered healthy, although the ideal ratio can vary depending on the industry and
the company's specific circumstances.
Using this formula, the Acid Test ratio of Square Pharmaceuticals Ltd. and Beximco
Pharmaceuticals Ltd. is respectively 14.30:1 and 0.98:1.
This clearly shows that Square Pharmaceuticals Ltd. has a stronger liquidity position than
Beximco Pharmaceuticals Ltd. which means that Square Pharmaceuticals Ltd. can quickly and
easily cover its short-term liabilities. On the other hand, the liquidity of Beximco
Pharmaceuticals Ltd. is below the median range of the acid test ratio which refers that Beximco
has unhealthy liquidity.

Cash Ratio
The cash ratio is a financial ratio that measures a company's ability to pay off its current
liabilities with its cash and cash equivalents. It is calculated by dividing a company's cash and
cash equivalents by its current liabilities.

The cash ratio provides insight into a company's liquidity and its ability to meet its short-term
obligations. A higher cash ratio indicates that a company is better positioned to meet its short-
term obligations without needing to rely on external financing.

The formula for Cash Ratio is,

𝐶𝑎𝑠ℎ+𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠
Cash ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Using this formula, the cash ratio of both companies is respectively 13.86:1 and 1.17:1 which
means both Square Pharmaceuticals Ltd. and Beximco Pharmaceuticals Ltd. have the ability
to cover short-term liabilities with cash and equivalents but Square Pharmaceuticals Ltd. has
the most ability.

Liquidity Ratio
18.00 17.03
16.00 14.30 13.86
14.00
12.00
10.00
8.00
6.00
4.00
1.45 0.98 1.17
2.00
0.00
Current Ratio Quick Ratio Cash Ratio
Square Pharmaceuticals Ltd. Beximco Pharmaceuticals Ltd.

FINANCIAL STATEMENT ANALYSIS

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Leverage Ratio
A leverage ratio is a financial ratio that measures the level of a company's debt in relation to
its assets or equity. It is used to evaluate a company's ability to meet its financial obligations
and to assess its financial risk.

Debt to Assets Ratio

Leverage Ratio
Total-debt-to-total-
60.00% 52.98%
assets is a leverage ratio
50.00%
that defines how much 40.00%
32.52%
debt a company owns 30.00%
compared to its assets. 20.00% 17.77%
Using this metric, 10.00% 2.70%
5.94% 6.32%
analysts can compare 0.00%
one company's leverage Long term Debt to Total Debt to total asset Ratio Debt to equity Ratio
with that of other Capitalization Ratio

companies in the same Square Pharmaceuticals Ltd. Beximco Pharmaceuticals Ltd.

industry. This
information can reflect how financially stable a company is. The higher the ratio, the higher
the degree of leverage (DoL) and, consequently, the higher the risk of investing in that
company.A debt ratio greater than 1.0 (100%) tells you that a company has more debt than
assets. Meanwhile, a debt ratio of less than 100% indicates that a company has more assets
than debt. Used in conjunction with other measures of financial health, the debt ratio can help
investors determine a company's risk level.
The formula of the Debt-to-Asset Ratio is, SQUARE BEXIMCO
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 Total Debt $6535279335 $21512031284
Debt-to-Asset Ratio = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 Total Assets $109988728717 $66148035742

The calculation of Debt to Assets Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
6535279335 21512031284
109988728717 66148035742
=0.0594 = 0.32
= 5.94% = 32.52%

SQUARE Pharmaceuticals Limited 5.94% of the firm assets are financed with Debt and the
rest of 94.04% of the financing comes from shareholder equity. BEXIMCO Pharmaceuticals
Limited 32.52% of the firm assets are financed with Debt and the rest of 67.48 percent of the
financing comes from shareholder equity. The Debt to equality ratio is higher for BEXIMCO
Pharmaceuticals Limited than SQUARE Pharmaceuticals Limited.

FINANCIAL STATEMENT ANALYSIS

 10

Debt-to-equity ratio
The debt-to-equity ratio (D/E ratio) shows how much debt a company has compared to its
assets. It is found by dividing a company's total debt by total shareholder equity. A higher D/E
ratio means the company may have a harder time covering its liabilities. The debt-to-equity
ratio is often used by banks and other lenders to determine how much debt a business may
have. In addition, D/E is often used as one of the key metrics investors look at before deciding
to write a check. Debt-to-equity (D/E) ratio compares a company’s total liabilities with its
shareholder equity and can be used to assess the extent of its reliance on debt.
The formula of the Debt-to-Equity Ratio is, SQUARE BEXIMCO
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 Total Debt $6535279335 $21512031284
Debt-to-Equity Ratio = 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 Total Equity $103452979750 $40600497817

The calculation of Debt to Equity Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
6535279335 21512031284
103452979750 40600497817
=0.0632 = 0.5298
= 6.32% = 52.98%

SQUARE Pharmaceuticals Limited Debt to equity ratio is 6.32% and BEXIMCO

Pharmaceuticals Limited Debt to equity ratio is 52.98%.In BEXIMCO Pharmaceuticals
Limited debt to equity ratio too much higher than SQUARE Pharmaceuticals Limited..

The long-term Debt to total capitalization

The long-term debt-to-capitalization ratio, a variation of the traditional debt-to-equity (D/E)
ratio, shows the financial leverage of a firm. It is calculated by dividing long-term debt by total
available capital (long-term debt, preferred stock, and common stock).Long term Debt to total
capitalization ratio defines how much financial leverage a firm has and whether its main source
of funding comes from debts. This ratio indicates SQUIRE Pharmaceuticals Limited 2.70% of
the company capital structure consists of long-term Debt.
The formula of the long-term Debt to
total capitalization ratio is, SQUARE BEXIMCO
L/T Liabilities $2873450552 $8776099208
long-term Debt to total capitalization
𝐿𝑜𝑛𝑔−𝑡𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 Total $106326430302 $49376597025
Ratio = Capitalisation
𝑇𝑜𝑡𝑎𝑙 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑠𝑎𝑡𝑖𝑜𝑛

The calculation of long-term Debt to total capitalization Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
2873450552 8776099208
106326430302 49376597025
=0.0270 = 0.1777

FINANCIAL STATEMENT ANALYSIS

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= 2.7% = 17.77%

In BEXIMCO Pharmaceuticals Limited 17.77% of the company capital structure consists of

long-term Debt.

Long-term debt can be beneficial if a company anticipates strong growth and ample profits
permitting on-time debt repayments. Lenders collect only their due interest and do not
participate in profit sharing among equity holders, making debt financing sometimes a
preferred funding source. On the other hand, long-term debt can impose great financial strain
on struggling companies and possibly lead to insolvency..

Activity Ratio
Activity ratios, also known as efficiency ratios, are financial ratios that measure how efficiently
a company is using its assets to generate sales or revenue. They help evaluate a company's
operational efficiency and productivity.

Some common activity ratios include:

Inventory Turnover Ratio

This ratio measures how many times a company sells and replaces its inventory during a period.
It is calculated by dividing the cost of goods sold by the average inventory for the period. A
higher inventory turnover ratio indicates that a company is selling its inventory quickly, which
is a positive sign.
The formula of the Inventory Turnover
ratio is, SQUARE BEXIMCO
Cost of Goods $27958026980 $18854919733
Inventory Turnover Ratio = Sold
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 Average $8214111144 $10405295079
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 Inventory

The calculation of the Inventory Turnover Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
27958026980 18854919733
8214111144 10405295079

=3.44 times = 6.77%

In the case of SQUARE and BEXIMCO Pharmaceuticals Ltd. the inventory turnover ratio is
3.44 and 6.77 times. This shows that BEXIMCO Pharmaceuticals Ltd. is selling its inventory
quicker than SQUARE Pharmaceuticals Ltd.

FINANCIAL STATEMENT ANALYSIS

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Accounts Receivable Turnover Ratio

This ratio measures how quickly a SQUARE BEXIMCO
company collects payments from its Sales Revenue $57597941359 $34669172052
customers. It is calculated by dividing the Average A/R $3395080462 $3142817194
total credit sales by the average accounts
receivable for the period. A higher
accounts receivable turnover ratio indicates that a company is collecting payments from its
customers quickly, which is a positive sign.
The formula of the Accounts Receivable Turnover ratio is,
𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
Account Receivable Turnover Ratio =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑

The calculation of the Account Receivable Turnover Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
57597941359 34669172052
3395080462 3142817194

=16.97 times = 11.03 times

The accounts receivable turnover ratio of SQUARE Pharmaceuticals Ltd. is 16.97 times and
BEXIMCO Pharmaceuticals Ltd. is 11.03 times. This indicates that SQUARE Pharmaceuticals
Ltd. is collecting payment from its customers quickly in comparison to BEXIMCO
Pharmaceuticals Ltd.

Fixed Asset Turnover Ratio

This ratio measures how efficiently a company is using its fixed assets, such as property, plant,
and equipment, to generate sales. It is calculated by dividing the total revenue by the average
fixed assets for the period. A higher fixed asset turnover ratio indicates that a company is using
its fixed assets efficiently, which is a positive sign.

The formula of the Fixed Asset Turnover SQUARE BEXIMCO

ratio is, Sales Revenue $57597941359 $34669172052
Fixed Asset Turnover Ratio = Net Fixed Asset $47641000829 $47728777460
𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑁𝑒𝑡 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡

The calculation of the Account Receivable Turnover Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
57597941359 34669172052
47641000829 47728777460

FINANCIAL STATEMENT ANALYSIS

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=1.21 times = 0.73 times

The fixed assets turnover ratio of SQUARE Pharmaceuticals Ltd. is 1.21 times and BEXIMCO
Pharmaceuticals Ltd. is 0.73 times. This indicates that SQUARE Pharmaceuticals Ltd. is using
its fixed asset efficiently in comparison to BEXIMCO Pharmaceuticals Ltd.

Accounts Payable Turnover Ratio

This ratio measures how quickly a
SQUARE BEXIMCO
company pays its suppliers and vendors.
Cost of Goods $27958026980 $18854919733
It is calculated by dividing the total Sold
purchases by the average accounts Average A/P $636003309 $2465039217
payable for the period. A higher accounts
payable turnover ratio indicates that a
company is paying its suppliers and vendors quickly, which can improve its relationship with
them and potentially lead to better terms.
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
Account Payable Turnover Ratio = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑃𝑎𝑦𝑎𝑏𝑙𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑

The calculation of the Account Payable Turnover Ratio is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
27958026980 18854919733
636003309 2465039217

=43.96 times = 7.65 times

The accounts payable ratio of SQUARE Pharmaceuticals Ltd. is 43.96 times and BEXIMCO
Pharmaceuticals Ltd. is 7.65 times. This indicates that SQUARE Pharmaceuticals Ltd. is
paying its suppliers and vendors quickly in comparison to BEXIMCO Pharmaceuticals Ltd.

Total Asset Turnover Ratio

This ratio measures how efficiently a company is using all its assets to generate sales. It is
calculated by dividing the total revenue by the average total assets for the period. A higher total
asset turnover ratio indicates that a company is generating more revenue per dollar of assets,
which is a positive sign.
𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 SQUARE BEXIMCO
Total Asset Turnover Ratio = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 Sales Revenue $57597941359 $34669172052
Total Assets $109988728718 $66148035742

The calculation of the Total Asset Turnover Ratio is given below:

FINANCIAL STATEMENT ANALYSIS

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SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd

57597941359 34669172052
109988728718 66148035742

=0.52 times = 0.52 times

The total asset turnover ratio of SQUARE Pharmaceuticals Ltd. and BEXIMCO
Pharmaceuticals Ltd. is 0.52 times. This indicates that both the companies are using all its
assets to generate sales at same ratio.

Activity Ratio
50.00
43.96
45.00

40.00

35.00

30.00

25.00
21.22
20.00 16.97

15.00
11.03
10.00 7.46 7.65
6.77
5.00 3.40
1.21 0.73 0.52 0.52
0.00
Inventory Average Collection Fixed Asset Total Asset Receivable Payable Turnover
Turnover Period Turnover Turnover Turnover

Square Pharmaceuticals Ltd. Beximco Pharmaceuticals Ltd.

Profitability Ratio
Profitability ratios are financial metrics used to evaluate a company's ability to generate profit
from its operations. These ratios help investors and analysts assess a company's financial health
and performance by measuring its profitability in relation to its revenues, assets, and equity.

Gross profit margin: This ratio SQUARE BEXIMCO

measures the profitability of a company's Gross Profit $29639914379 $15814252319
products or services by comparing the Net sales $57597941359 $34669172052

FINANCIAL STATEMENT ANALYSIS

 15

gross profit (revenue minus cost of goods sold) to the total revenue.
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
Gross profit margin = 𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠

The calculation of the Gross Profit Margin is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
29639914379 15814252319
57597941359 34669172052

=51.46 % = 45.61%

The Square pharmaceuticals' gross profit margin is 51.46% and the Beximco pharmaceuticals'
gross profit margin is 45.61%.Those ratio tells us the profit of the firm relative to sales,after
deduct the cost of producing the goods.

According to RMASS, the median gross profit margin is 23.8%.Based on the median range
both of the company has good position but comparing within two companies we can see Square
pharmaceutical's gross profit margin is more than Beximco pharmaceutical.It indicating that
the Square pharmaceutical is more effective at producing and selling products above cost than
Beximco pharmaceutical.
Operating profit margin: This ratio measures the profitability of a company's operations by
comparing the operating profit (revenue minus operating expenses) to the total revenue. The
Operating profit margin of SQUARE Pharmaceuticals Ltd. and BEXIMCO Pharmaceuticals
Ltd. is 31.92% and 19.91% respectively. SQUARE Pharmaceuticals Ltd. higher operating
profit margin.

Net profit margin: This ratio measures

SQUARE BEXIMCO
the overall profitability of a company by
Net Profit $18176739552 $4998628197
comparing the net profit (revenue minus $57597941359 $34669172052
Net sales
all expenses, including taxes and interest)
to the total revenue.
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
Net profit margin = 𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠

The calculation of the Net Profit Margin is given below:

SQUARE Pharmaceuticals Ltd. BEXIMCO Pharmaceuticals Ltd
18176739552 4998628197
57597941359 34669172052

= 31.56 % = 14.42%

FINANCIAL STATEMENT ANALYSIS

 16

It tells us a firm's net income per dollar of sales.For Square pharmaceutical and Beximco
pharmaceutical
respectively roughly Profitability Ratio
32 cents and 14 cents 60.00%
51.46%
out of every sales
50.00% 45.61%
dollar constitutes
after-tax profits. 40.00%
31.92% 31.56%
30.00%
Both of Square and 19.91%
20.00% 14.42%
Beximco
pharmaceutical's net 10.00%
profit margin is above
0.00%
the median net profit Gross Profit Margin Operating Profit Margin Net Profit Margin
margin 4.7%. But
comparing within two Square Pharmaceuticals Ltd. Beximco Pharmaceuticals Ltd.

companies, square
has a better position than Beximco, which indicates that square pharmaceutical has a higher
relative level of "sales profitability" than Beximco Pharmaceutical.

DuPont Analysis
The DuPont analysis is a method used to decompose a company's return on equity (ROE) into
its constituent parts in order to better understand the factors driving the company's profitability.
The formula for DuPont analysis is:

ROE = Net Profit Margin x Asset Turnover x Equity Multiplier

Where:

Net Profit Margin = Net Income / Total Revenue

Asset Turnover = Total Revenue / Average Total Assets
Equity Multiplier = Average Total Assets / Average Total Equity
By breaking down ROE into these three components, DuPont analysis allows investors and
analysts to identify where a company's strengths and weaknesses lie. For example, if a company
has a high ROE, but a low net profit margin, this suggests that the company may be highly
leveraged or have low operating costs. Conversely, if a company has a low ROE, but a high
net profit margin, this suggests that the company may have inefficient asset utilization or be
generating low revenue.

DuPont analysis for SQUARE Pharmaceuticals Ltd.

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

ROE = × ×
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦

FINANCIAL STATEMENT ANALYSIS

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16165925964 57597941359 109988728718

= × ×
57597941359 109988728718 103453449382

= 0.2807 ×0.52367×1.0632
= 15.63%

DuPont analysis for BEXIMCO Pharmaceuticals Ltd.

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

ROE = × ×
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦

4998628197 34669172052 66148035742

= × ×
34669172052 66148035742 44636004458

= 0.1442 ×0.5241×1.482
= 11.2%

Using the DuPont analysis, the ROE of SQUARE Pharmaceuticals Ltd. and BEXIMCO
Pharmaceuticals Ltd. is 15.63% and 11.2% respectively. This indicates that SQUARE
Pharmaceuticals Ltd. better profitablity.

Cash Conversion Cycle (CCC)

The cash conversion cycle (CCC) is a metric expressing how many days it takes a company to
convert the cash, it spends on inventory bank into cash by selling its product. The shorter a
company’s CCC, the less time it has money ties up in accounts receivable and inventory.
The formula of CCC is,
CCC = Receivable days + Inventory processing days – Payable payment period

For SQUARE Pharmaceuticals Ltd.

CCC = (365/Receivable Turnover) + (365/Inventory Turnover)-(365/Payable

Turnover)
= (365/16.97) + (365/3.40) – (365/43.96)
= 21.51 + 107.35 – 8.30

FINANCIAL STATEMENT ANALYSIS

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= 120.56 days

For BEXIMCO Pharmaceuticals Ltd.

CCC = (365/Receivable Turnover) + (365/Inventory Turnover)-(365/Payable

Turnover)
= (365/ 11.03) + (365/ 6.77) – (365/ 7.65)
= 33.09 + 53.91 – 47.71
= 39.29 days

This result indicates that BEXIMCO Pharmaceuticals Ltd. takes less to convert the inventories
into cash.

FINANCIAL STATEMENT ANALYSIS

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Financial Comparison at a Glance:

Square Beximco
Pharmaceuticals Pharmaceuticals Better
Ltd. Ltd.
Liquidity Ratio:
Current Ratio 17.03:1 1.45:1 SQUARE
Quick Ratio 14.30 : 1 0.98 : 1 SQUARE
Cash Ratio 13.86 : 1 1.17 : 1 SQUARE

Leverage Ratio:

Long-term Debt to Total Capitalization Ratio 2.70% 17.77% SQUARE

Debt to total asset Ratio 5.94% 32.52% SQUARE

Debt to equity Ratio 6.32% 52.98% SQUARE

Activity Ratio:
Inventory Turnover 3.40 times 6.77 times BEXIMCO
Average Collection Period 21.22 times 7.46 times BEXIMCO
Fixed Asset Turnover 1.21 times 0.73 times SQUARE
Total Asset Turnover 0.52 times 0.52 times SAME
Receivable Turnover 16.97 times 11.03 times SQUARE
Payable Turnover 43.96 times 7.65 times SQUARE
Profitability Ratio:
Gross Profit Margin 51.46% 45.61% SQUARE
Operating Profit Margin 31.92% 19.91% SQUARE
Net Profit Margin 28.07% 14.42% SQUARE
DUPONT ANALYSIS
Net Profit AT/Sales 28.07% 14.42%
Sales/Total Assets 52.37% 52.41%
ROA 14.70% 7.56% SQUARE
Net Profit AT/Total Assets 14.70% 7.56%
Total Assets/Stockhldrs. Equity 106.32% 148.19%
ROE 15.63% 11.20% SQUARE
Cash Conversion Cycle
Receivable Turnover in days 21.51 33.09

Inventory Turnover in days 107.24 53.95

BEXIMCO
Payable Turnover in days 8.30 47.72
Cash Conversion Cycle 120.45 39.32

FINANCIAL STATEMENT ANALYSIS

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Conclusion
The financial analysis indicates that Square Pharmaceuticals Ltd. is in a better financial
position compared to Beximco Pharmaceuticals Ltd. Square Pharmaceuticals has a stronger
liquidity position, with higher current, quick, and cash ratios, a lower level of leverage, with
significantly lower debt-to-total-capitalization, debt-to-total-asset, and debt-to-equity ratios,
and higher profitability ratios, with higher gross, operating, and net profit margins.
Additionally, Square Pharmaceuticals has a higher return on assets and equity. While financial
analysis is only one aspect of evaluating a company's performance, this comparison suggests
that Square Pharmaceuticals is performing better than Beximco Pharmaceuticals in key
financial areas.

FINANCIAL STATEMENT ANALYSIS