Financial Performance Analysis

Program: BBA
Course Title: Corporate Finance
Course Code: FIN 401
Section: 1
 Table of Content Page Number

Introduction of the Analysis 1

Introduction of Beximco & Square Pharmaceuticals 2-4

Literature Review 5

Methodology 6
1. Design
2. Approach
3. Limitations

Analysis

1. Liquidity Ratio 7-8

2. Activity Ratio 8-12

3. Financial leverage ratio 13-15

4.Profitability Ratio 16-22

5.Market Ratio 22-23

Financial Analysis of Beximco & Square 24

Pharmaceuticals
Conclusion/ Recommendation 25

Bibliography 26

Appendix 27-30
Chapter 1 Introduction

Chapter 1.1 Introduction of the Analysis

Ratio analysis is a quantitative method used to evaluate various aspects of a
company’s financial performance. It involves calculating and interpreting
financial statements primarily the balance sheet, income statement, and cash
flow statement.

Purpose of Ratio analysis

The primary goal of ratio analysis is to gain insight into a company’s

 Profitability- how effectively it generates income.

 Liquidity- its ability to meet short term obligation
 Solvency-its long term financial stability and ability to pay debts.
 Efficiency- how well it uses its assets.
 Market Valuation-how the market values the firm in terms of its stock price.

Two types of analysis are seen in the company

1. Time Series Analysis: When a company compare or analysis to its own

performances of previous year to current year is known as time series analysis.

2. Cross Sectional Analysis: When a company analysis its own performance to

other company’s performance.

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Chapter 1.2 Introduction of Beximco & Square Pharmaceuticals

BEXCIMCO PHAEMACEUTICALS

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.
In 2018, Beximco Pharma acquired a majority stake in Nuvista Pharma
(formerly Organon Bangladesh), a leading hormone and steroid manufacturer in
the country.
In 2021, the Company acquired a majority stake (54.6%) in Sanofi Bangladesh
Limited, a subsidiary of global pharmaceutical giant Sanofi Group. Sanofi
Bangladesh Limited is renamed Synovia Pharma PLC. On April 01, 2022.
The Company currently employs more than 4,700 employees including
pharmacists, doctors, engineers, chemists, microbiologists, accountants, business
graduates and other white collar professionals.

Mission:

 Commitment to enhancing human health and well-being

 Provision of affordable, high-quality medicines
 Continuous improvement to address unmet medical needs
 Delivering outstanding results for shareholders

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Vision:

 Trusted and admired pharmaceutical company

 Success in the regional market
 Strong focus on research and development
 Building strategic partnerships
 Expanding global presence

Core Values:

 Commitment to quality
 Customer Satisfaction
 People Focus
 Accountability
 Corporate Social Responsibility

SQUARE PHARMACEUTICAL

SQUARE today symbolizes a name – a state of mind. But 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.
SQUARE Pharmaceuticals PLC. 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.
The turnover of Square Pharma was BDT 50.87 Billion (US$ 609.18 million)
with about 16.95% market share having a growth rate of about 10.85% (July
2018– June 2019).
SQUARE Pharmaceuticals PLC has extended its range of services towards the
highway of global market. It pioneered exports of medicines from Bangladesh in
1987 and has been exporting antibiotics and other pharmaceutical products.

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Present export market covers 42 countries. This extension in business and
services has manifested the credibility of Square Pharmaceuticals PLC.
Mission:

 Provide quality healthcare solutions.

 Uphold ethical standards in business operations.
 Ensure value for shareholders and stakeholders.
 Contribute to the well-being of society.

Vision:

 Business should create value for investors, employees, and society.

 Profit should be pursued sustainably with ethical practices.
 Businesses have a moral responsibility to contribute positively to society.
 Wealth should be distributed to benefit all, reducing inequality.
 Business should support human civilization and societal progress.

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Chapter 2: Literature Review

Financial ratio analysis serves as a vital instrument in evaluating a company’s

financial health, operational efficiency, and long-term viability. It is widely used by
analysts, investors, and corporate managers to interpret financial statements in a
structured and comparative manner. The core objective of ratio analysis is to
provide insights into key performance areas such as liquidity, efficiency, solvency,
profitability, and market valuation.
Ratio analysis is not merely a tool for examining financial statements, but a
strategic means to understand the drivers of value creation within a firm. It
facilitates benchmarking over time and against competitors, thereby enabling
stakeholders to make informed decisions.
The literature categorizes financial ratios into five major groups:
1. Liquidity Ratios: These ratios, such as the current ratio and quick ratio,
assess a firm's ability to meet its short-term obligations using its most liquid
assets.
2. Activity Ratios: Also known as efficiency ratios, these measure how
effectively a company utilizes its assets. Examples include inventory
turnover and asset turnover ratios.
3. Solvency Ratios: These evaluate a company’s long-term financial stability
and its capacity to meet long-term obligations. The debt-to-equity and
interest coverage ratios are most used in this category.
4. Profitability Ratios: These ratios assess a company's ability to generate
earnings relative to sales, assets, or equity, and include return on equity
(ROE), return on assets (ROA), and net profit margin.
5. Market Value Ratios: These ratios are relevant for publicly traded
companies and provide insights into how the market perceives a firm’s
prospects. Price-to-earnings (P/E) ratio and earnings per share (EPS) are
frequently analyzed in this context.
While ratio analysis provides valuable insights, it is not without limitations.
Differences in accounting policies, inflation effects, seasonal variations, and non-
financial factors can all influence ratio outcomes and should be carefully
considered during interpretation.
In the context of the pharmaceutical industry in Bangladesh, ratio analysis plays a
significant role in benchmarking performance, especially given the sector’s rapid
growth, increasing global integration, and the rise in competition. Comparing
companies such as Beximco Pharmaceuticals Ltd. and Square Pharmaceuticals Ltd

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Chapter 3: Methodology
Methodology

Chapter 3.1: Design

Initially, we focused on formulating a clear and concise title for the report. Data
was gathered from the online websites of both Beximco and Square to compile the
report.

Chapter 3.2: Approach

Since the report includes both descriptive content and numerical analysis, we
adopted a mixed approach, incorporating both qualitative and quantitative
methods.

Chapter 3.3: Limitations

The study faced several limitations, which are outlined below:

 Limited availability of information

 Restricted access to certain data
 Insufficient time
 Reliability concerns regarding the accessible information

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Chapter 4: Analysis

I. Liquidity Ratio:
Liquidity RA: Measure of the Ability of a company to pay off its short-term
liabilities.

1. Current Ratio:
Current Ratio = Current Assets ÷ Current Liabilities
Beximco = (17960129908 ÷ 8112258001) = 2.21
Square = (69735986410 ÷ 5589045579) = 12.48

Current Ratio
13

11

From the above data and figure, we can see that in 2024, Beximco's current ratio is
2.21. which means they are more liquid in comparison to Square, whose ratio is
12.48.

2. Quick Ratio:

Quick Ratio = Current Asset – Inventories ÷ Liabilities

Beximco = 17906129908 - 10325321828 ÷ 8112258001=0.93

Square = 69735986410 – 10732803469 ÷ 5589045579 = 10.55

7
 Quick Ratio

11

This data indicates that Beximco Pharmaceuticals could struggle to pay its debt,
whereas Square Pharmaceuticals can comfortably pay its short-term debt.

II. Activity Ratio

The Activity Ratio segment refers to a group of financial ratios that measure
how efficiently a company uses its assets to generate revenue. These ratios
evaluate the effectiveness of asset management and operational performance.

This segment includes four ratios.

1. Inventory Turnover
2. Receivable Turnover
3. Payable Turnover
4. Total Asset Turnover

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1. Inventory Turnover
This ratio shows a company how many times it restocks its inventory and also
indicate how much better manage of inventory.

Inventory Turnover = Cost of Goods Sold ÷ Inventory

Beximco = 20646152225 ÷ 10325321828 = 1.99

Inventory days = 365/1.99 = 183 Days

Square = 32526763732 ÷ 10732803469 = 3.03

Inventory days = 365/3.03 = 120 Days

200

180

160

140

120

100

80

60

40

20

0
Inventory Turnover

Beximco Square

Here inventory turnover of Beximco is 183 days, and Square is 120 days.
Inventory turnover means how many times the inventory is sold in a year. In this

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 analysis, the inventory turnover of Beximco is 183 days, and Square is 120 days.
So Beximco’s inventory turnover is better than Square.

2. Receivable Turnover
This ratio is also called Average Collection Period (ACP). The ratio indicates
the average time the company has to wait after making credit sales before
receiving cash.

Receivable Turnover = Sales ÷ Accounts Receivable

Beximco = 36899028814 ÷ 3598962271 = 10.25

Receivable days = 365/10.25 = 36 Days

Square = 59794584816 ÷ 4754218234 = 12.58

Receivable days = 365/12.58 = 29 Days

40

35

30

25

20

15

10

0
Receivable Turnover

Beximco Square

10
Receivable turnover means how many times get to receive money from the
accounts receivable. Beximco receives money from the accounts receivable 36
days, whereas Square collects money 29 days. Here, Square’s performance is
better than Beximco's.

3. Payable Turnover

The payables turnover is a financial metric that measures how efficiently a

company pays its suppliers or creditors. It shows how many times a company pays
off its accounts payable during a specific period, typically a year.

Payable Turnover = Cost of Goods Sold ÷ Accounts Payable

Beximco = 20646152225 ÷ 3049103942 = 6.8

365/6.8 = 54 Days

Square = 32526763732 ÷ 4199146597 = 7.8

365/7.8 = 47 Days

56

54

52

50

48

46

44

42
Payable Turnover

Beximco Square

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Payable turnover means when the company gets more time to pay accounts
payable. Beximco gets time for 54 days, and Square gets time to pay their payable
only 47 days. That means Beximco has earned trust from the suppliers, which is
why they get more time to pay than Square.

4. Total Asset Turnover

The total asset turnover ratio measures a company's efficiency in using its assets
to generate revenue. It indicates how many dollars of revenue are produced for
every dollar invested in total assets.

Total Asset Turnover = Sales ÷ Total Assets

Beximco = 36899028814 ÷ 62984537875 = 0.59

Square = 59794584816 ÷ 112009914748 = 0.53

0.6

0.59

0.58

0.57

0.56

0.55

0.54

0.53

0.52

0.51

0.5
Total Asset Turnover

Beximco Square

Beximco’s total asset turnover is 0.59, and Square's is 0.53. Here, Beximco's sales
are higher than Square's. Compared to Beximco's investment, they get better
sales.
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III. Long term solvency/Financial leverage ratio

This segment basically shows that how much portion of a firm’s assets are
financed with debt financing and also showed the capability of meet its fixed
expenses.
This segment includes three ratios
1. Debt ratio
2. Debt to equity ratio
3. Interest coverage ratio

1. Debt Ratio
Debt ratio is calculated by total liabilities divided by total assets. Total liabilities
include all short term and long term liabilities and total assets includes all
current and fixed assets.

Debt Ratio = Total Liabilities ÷ Total Asset × 100

Beximco = 15593053498 ÷ 62984537875 × 100 = 24.75%
Square = 7366507107÷112009914748 × 100 = 6.57%

Debt Ratio
27.5

22.5

17.5

12.5

7.5

2.5
Beximco Square

From the above data and figure, we can see that in the year of 2024 the debt
ratio is way higher in case of Beximco which is 24.75% which implies higher
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financial risk as they financed their assets maximum from borrowing debt in
comparison with Square which is only 6.57 %.

2. Debt to Equity Ratio

Debt to equity ratio is calculated by total debt divided by total asset. Total
liabilities include all short term and long term liabilities and total equity is the
owner’s claim on the company’s assets after all liabilities are deducted.

Debt to Equity Ratio = Total Liabilities ÷ Total Equity

Beximco = 15593053498 ÷ 473914843770 = 0.33

Square=7366507107÷105795119620 =0.069

Debt to Equity Ratio

0.33
0.325

0.275

0.225

0.175

0.125
0.069
0.075

0.025

Beximco Square

From the above data and figure we can see that in the year 2024 beximco debt to
equity ratio is 0.33 which means they rely more on debt compared to square
whose ratio is only 0.069.

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 3. Interest Coverage Ratio

Interest coverage ratio shows that a firm’s capability to pay interest with its
earning. Higher the ratio means higher capability to pay interest with its
earnings and getting favor to get loan.

Interest Coverage Ratio = Earnings before interest and taxes ÷ Interest rate
Beximco=7703346884 ÷ 1101682248 = 7.0 times
Square = 15490670863÷38786925 =399.5 times

Interest Coverage Ratio

425

375

325

275

225

175

125

75

25

beximco square

From the above data and figure it’s apparent that the ratio is higher in case of
square 399.35 in comparison with beximco in the year of 2024. The more the ratio
the more the company is able to meet its interest obligations because earning are
significantly greater than annual interest obligation which we find in case of
square based on their performance on times interest earned ratio. Beximco has very
low interest coverage ratio which means they might be falling to meet its interest
coverage ratio, it may bring legal action by the firm’s creditors possibly resulting
in bankruptcy

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IV. Profitability Ratio

The others segment shows the way firm is operating but this segment shows the
combined effects of others segment on operating results.
This segment includes six ratios.
1. Net profit margin
2. Gross profit
3. Gross profit margin
4. Return on Asset
5. Return on Equity
6. Payout Ratio
7. Retention Ratio

1. Net Profit Margin:

Net Profit Margin measures the percentage of revenue that remains as net income
(profit) after all expenses, including COGS, operating costs, interest, and taxes.

Net Profit Margin = (Net Revenue / Income) ×100

Beximco = (5610513429 / 36899028814) ×100 = 15.21%
Square = (15591371906 / 59794584816) ×100 = 26.07%

For every BDT 100 of sales, Beximco retains BDT 15.21 as net profit. Lower
than Square, indicating higher operational costs or interest burdens. And Square

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 earns BDT 28.07 per BDT 100 of sales—near-double Beximco’s margin,
showcasing superior cost control or premium pricing.

2. Gross profit:
Gross Profit is the profit remaining after subtracting the Cost of
Goods Sold (COGS) from total revenue.

Gross Profit = Revenue − COGS

Beximco = (36899028814 − 20646152225) = 16252876589
Square = (59794584816 − 32526763732) = 27267821084

Here, Square’s Gross Profit is higher than Beximco that reflect larger sales
volume.

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3. Gross profit margin:

Gross Profit Margin expresses gross profit as a percentage of

revenue, showing how efficiently a company produces and sells
its goods.

Gross Profit Margin = (Gross Profit / Sales Revenue) ×100

Beximco = (16252876589 / 36899028814) ×100 = 44.05%
Square = (27267821084 / 59794584816) ×100 = 45.60%

Their margins are close (~1.5% difference), indicating similar production

efficiency. Square’s slight edge may come from better pricing or cost control.

4. Return on Asset:

ROA measures how efficiently a company uses its total assets to generate profit.

Return on Asset = (Net Profit / Total Asset) ×100

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 Beximco = (5610513429 / 62984537875) ×100 = 8.91%
Square = (15591371906 / 112009914748) ×100 =13.92%

Square generates 13.92% profit per taka of assets, highlighting better asset
utilization And Beximco’s lower ROA could signal underused assets or higher
debt.

5. Return on Equity:

ROE measures how effectively a company generates profit from shareholders'

equity

Return on Equity = (Net Profit / Total Equity) ×100

Beximco = (5610513429 / 47391484377) ×100 = 11.84%

Square = (15591371906 / 105795119620) ×100 =14.74%

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Beximco earns a profit of 11.84% for every 100-taka invested by shareholders,
while Square earns 14.74% profit. Here Square earns more profit than Beximco.
A portion of this profit can be distributed to shareholders as dividends, or the
company may choose to reinvest it. This decision is entirely up to the company.

6. Payout Ratio:

The Payout Ratio shows the percentage of net income distributed as dividends to
shareholders.

Payout Ratio = (Dividend / Net Profit) ×100

Beximco = (1562674496 / 5610513429) ×100 = 27.85%

Square = (9750961110 / 15591371906) ×100 = 62.54%

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 Square distributes most of its earnings as dividends, appealing to income-

focused investors but leaving less for reinvestment. One the other hand

Beximco retains more earnings (72.15% retention ratio), suggesting a focus

on growth or debt reduction.

7. Retention Ratio:

Retention Ratio refers to the amount of money that is Retained to reinvestment.

Retention Ratio = (100% - Payout Ratio)

Beximco = (100% - 27.85%) = 72.15%

Square = (100% - 62.54%) = 37.46%

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 Beximco retained 72.15% of dividend and Square retained 37.46% for investment. Where
Beximco willing to overcome their financial problem by more retaining than Square.

V: Market Ratio
Market ratios are financial metrics that compare a company's market value to its
financial performance. They help investors assess the valuation of a stock and
compare it to its peers.
This segment includes two ratios.
1. Price/ Earnings Ratio
2. Market/ Book value Ratio

1. Price/ Earnings Ratio

This ratio compares the current market price of a stock to its earnings per share
(EPS). A higher P/E ratio generally indicates that investors expect higher future
growth from the company.

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Price/Earnings Ratio = Market Price per Share of Common Stock ÷ Earnings
per Share

Beximco = 146.20 ÷ 12.58= 11.62

Square = 119.35 ÷ 17.59 = 6.79

Chart Title
14

12

10

0
Category 1

BEXIMCO SQURE2

Square P/E ratio is lower than Beximco, which said that the company was in a
somewhat riskier position than most of its competitors and having poorer growth
prospects. Because low P/E of Square might indicate that the current stock price
is low compared to earnings and on the other hand, the high P/E of Beximco
said that a stock's price is high relative to earnings and possibly overvalued.

23
 Financial analysis of Square Pharmaceutical and Beximco Pharmaceutical

Square Comment Beximco Comment Comparative

comment
Liquidity Ratio

Current ratio 12.48 Better 2.21 Good Square Better

Quick ratio 10.55 Better 0.93 Risky Square Better
Activity Ratio
Total Asset 0.53 Good 0.59 Better Beximco
Turnover Better
Receivable Ratio 29 days Better 36 days Risky Square Better
Inventory 120 Good 189 days Better Beximco
Turnover days Better
Payable Turnover 47 days Risky 54 days Better Beximco
Better
Long Term
Solvency
debt Ratio 6.57% Better 24.75% Risky Square Better
Debt to Equity 0.069 Better 0.33 Risky Square Better
Interest Coverage
Ratio
Profitability
Ratio
Net Profit Margin 26.07% Better 15.21% Good Square Better
Gross Profit 45.60% Better 44.05% Good Square Better
Margins
Return on Asset 13.92% Good 8.91% Low Square Better
Return on Equity 14.74% Good 11.84% Low Square Better
Payout Ratio 62.54% Better 27.85% Low Square Better
Retention ratio 37.46% 72.15%
Market Ratio
Price Earning 6.79 Low 11.62 Better Beximco
Ratio Better
Market to Book N/A N/A N/A
Value Ratio

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Chapter 5 Conclusion/ Recommendation

Conclusion:

Square Pharmaceuticals has firmly established itself as a market leader in

Bangladesh’s pharmaceutical sector and a growing force in the global market. With
consistent financial growth, strategic international expansion, and strong
investment in research and development, the company demonstrates resilience and
innovation. Its adherence to global quality standards and commitment to ethical
practices further reinforce its credibility. Overall, Square Pharmaceuticals is well-
positioned for sustained success, contributing significantly to public health both
locally and internationally

Beximco Pharmaceuticals' performance in FY24 reflects its strategic focus on

production, market expansion, and operational efficiency. The company's ability to
achieve significant profit growth and expand its global footprint, despite
macroeconomic challenges, positions it well for sustained success in the
pharmaceutical industry.

25
Bibliography

26
Appendix
Square Pharmaceuticals Financial Statements 2024

27
Beximco Pharmaceuticals Financial Statements 2024
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