Acknowledgements At first my thanks go to Mr.

Shauvonik Datta, Course Instructor of Investment Theory & Portfolio Management, School of Business, and University of Liberal Arts Bangladesh (ULAB) for giving me chance to make this report which I found to be a rather interesting topic to work on. I am going to get help to many people in the context of preparing this report and some of the persons have been very helpful and cooperative with information and suggestions. In this regard I have worked hard to prepare this report. So by this way I could finish the report properly and on time. Origin of the Report This report is made as a Report on the Investment Theory & Portfolio Management course' on the two companies Beximco Pharmaceuticals and Square Pharmaceuticals. So the business organization of Beximco Pharmaceuticals and Square Pharmaceuticals was chosen and I am discussing on the ratio analysis of the mentioned two companies. This had the formal approval of Mr. Shauvonik Datta who is the Course Instructor of Investment Theory & Portfolio Management, School of Business, University of Liberal Arts Bangladesh (ULAB). I based on this report from the background of information and knowledge that I required from Pharmaceuticals and it provides a reliable effective insight into the ratio process of the particular company. Beximco Pharmaceuticals LTD: The Profile of Beximco Pharmaceuticals LTD. Operational Head Quarter: Dhamnondi-19, R/A, Road #7, Dhaka-1209, Bangladesh. Factory in Bangladesh : Tongi, Gazipur Establishment : 1976 Commercial Production : 1980 Status of company: Public Limited Company Business Type: Marketing, Manufacture,and Export Authorized Capital: Taka of 100 million Shareholders: 50,367 Stock Exchange: Dhaka, Chittagong Export Activities: USA, Bhutan, Georgia, Germany & Yemen etc. Introduction Beximco Pharmaceuticals Ltd. is on of the leading Pharmaceuticals Company in Bangladesh. Beximco Pharmaceuticals Ltd. 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 healthcare needs of the country, about 26 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 achieve themselves in a good position in the world Market within a short period of time. But Beximco Pharmaceuticals Ltd. Company's superstar product "NAPA" continued to retain the number of one position since 1990's.

Square Pharmaceuticals Ltd: The Profile of Square Pharmaceuticals LTD. Operational Head Quarter: Factory in Bangladesh : Establishment : Commercial Production : Status of company: Public Limited Company Business Type: Marketing, Manufacture,and Export Authorized Capital:

Shareholders: Stock Exchange: Dhaka, Chittagong Export Activities: USA, Bhutan, Georgia, Germany & Yemen etc. Introduction: Square Pharmaceuticals Ltd. is a renowned company in Bangladesh. It is a flagship company in the pharmaceutical industry which has reached this mountain of success by fighting many potential competitors like BEXIMCO Pharma, INCEPTA, ACME, RENETA, OPSONIN, SK+F, SANOFI-AVENTIS etc. It initially started as a Partnership in 1958. It was incorporated as a Private Ltd. Company in 1964 and converted into Public Limited Company in 1991. Its initial public offering started in Dhaka and Chittagong stock exchange simultaneously in 1995. Their mission is to produce and provide quality & innovative healthcare relief for people, maintain stringently ethical standard in business operation also ensuring benefit to the shareholders, Stakeholders and the society at large.

Analysis The performances of various devices are used in the Beximco Pharmaceuticals Ltd and Square Pharmaceuticals Ltd. analysis of Financial Statement data to bring out the comparative and relative significance of the financial information presented. This are include in the below: 1. Comparative analysis 2. Percentage (Common size) analysis 3. Ratio analysis 1. Comparative analysis: In Comparative analysis the same information is presented for two or more different dates or periods so that like items may be compared. In Comparative analysis an investment analyst can concentrate on a given item and determine whether it appears to be growing or diminishing year by year and the proportion of such change to related items. 2. Percentage analysis: Percentage analysis consists of reducing a series of related amounts to a series of percentages of a given vase. All items in an income statement are frequently expressed as a percentage of sales or sometimes as a percentage of cost of good sold. This analysis facilitates comparison and is helpful in evaluating the r4elative size of items or the relative changes in items. It may facilitate comparison between companies of different sizes. Analyst can use this analysis to evaluate and compare companies. 3. Ratio analysis: Ratio analysis is the starting point in developing the information desired by the analyst. Ratio analysis provides only a single snapshot, the analysis being for one given point or period in time. In the ratio analysis it is possible to define the company ratio with a standard one. Ratio analysis can be classified as follows: A) Liquidity ratio B) Activity ratio C) Profitability ratio D) Debt-coverage ratio A) Liquidity ratio Liquidity ratio measures the ability of the firm to meet its obligations. These ratios establish relation between cash and other current asset and current liabilities. Creditors to evaluate the creditworthiness of the firm use these ratios. These ratios also provide revels management's policy in managing liquidity position of the firm. The Liquidity ratio we can satisfy on the three ratios, those are: 1. Current ratio 2. Quick ratio or acid test

3. Current cash debt coverage ratio. 1. Current Ratio: Current Ratio indicates the ability of a company to achieve its short-term obligations, where short-term obligations indicate those obligations that are due within a year or within the operating cycle. Current ratios are extent to which the assets that are expected to cash cover the claims of short-term creditors. Current Ratio = Current Assets / Current Liabilities Beximco: Ratio 2009 2008 Current ratio 1.20 Times 1.14 Times

Square: Ratio 2009 2008 Current ratio 1.20 Times 1.14 Times Analysis: In the table we see that in 2000 the ratio is only 1.14 times and in the 2001 increases to 1.20 times. Here we can see that in 2001 the current assets and current liabilities are decreasing than the 2000. And the decreasing rate of current asset is lower than current liabilities at. So, the current ratio increases in 2001. This ratio gives us a gross idea of liquidity position of the company. This ratio includes Inventory, which is considered two steps from cash. That's why it doesn't tell us the actual liquidity position of the firm to

2. Quick Ratio: Quick ratio is most important measure of liquidity than the current ratio. Because inventories which are the least liquid of the current assets from the ratio. It is essential for a company to realize its ability to pay the short-term obligation, without knowing on the sales of inventory because they are the assets on which losses are mostly in the event of liquidation. Quick ratio = (Current assets - Inventory) / Current Liabilities Beximco: Ratio 2009 2008 Quick Ratio .43 times .42 times Square: Ratio 2009 2008 Quick Ratio .43 times .42 times Analysis: The quick ratio has increase over the year 2001 than 2000. This has happened because inventory has decreased about 1.02 times in 2001 and we know that inventory is deducted from current asset while calculating quick ratio. 3. Current cash debt coverage ratio: Current cash debt coverage ratio is the most unadventurous of analyzing liquidity position. The use of the current or quick ratio absolutely understand that the current asset will be changed into cash, but in reality it does not happened in the current asset to pay the current liabilities. For that reasons Current cash debt it's really vital to look how much cash has in hand or in Bank to get together its financial obligations.

Current cash debt coverage ratio=Cash / Current Liabilities Beximco: Ratio 2009 2008 Current cash debt .34 Times .24 Times Square: Ratio 2009 2008 Current cash debt .34 Times .24 Times

Analysis: The ratio has decreased over 2001. This way company is holding its cash, which is not good from investor points of view. Current cash has increase about 1.35 times. The company must invest that money to get a good return.

Ratio Analysis - Activity ratio B) Activity ratio: Activity ratios are used to evaluate the competence, which the company manages and utilizes on its asset. This ratio also calls the turnover ratios because they indicate the speed with which the assets are transformed or turnover into sales. A proper balance between assets and sales generally reflects on that the assets. The Activity ratio we can satisfy on the three ratios, those are: 1. Receivable turnover. 2. Inventory turnover. 3. Assets turnover. 4. Fixed asset turnover 1. Receivable turnover: Receivable turnover ratio indicates the rate of receivable to turn into cash. It indicates the level of outlay in receivables wanted to continue the company's sale stage. This also events of the helpfulness of the company's credit strategy. Receivable turnover =Sales / Accounts Receivable Beximco: Ratio 2009 2008 Receivable turnover 7.19 Times 7.94 Times

Square: Ratio 2009 2008 Receivable turnover

7.19 Times 7.94 Times

Analysis: The company has faced a great problem in collecting its receivable. Here we see that the sales have decreased from previous years, on the other hand receivable by increased in quite high rate. Sometimes it indicates that the company has failed to collect its debts efficiently. 2. Inventory turnover: The liquidity of the company's register can be considered by this ratio. Its ratio indicates show many periods it is needed to twist inventory of sales on a standard. This event on the efficiency of the company's inventory organization. Inventory turnover =Cost of goods sold / inventory average Beximco: Ratio 2009 2008 Inventory turnover 1.28 Times 1.33 Times

Square: Ratio 2009 2008 Inventory turnover 1.28 Times 1.33 Times

Analysis: Because of decreasing sales, cost of good sold have decreased at 1.07 times to other hand inventory has also decreased at 1.02 times. So that the ratio by decrease because of the decreasing rate of cost of good sold is higher than the decreasing rate of inventory. It mean company is holding excessive amount if inventory.

3. Assets turnover: Assets turnover ratio indicates to the capability of the company's to create sales using the asset appropriately. The underutilized assets raise the companies require for the expensive finance. By the achieving a sky-scraping turnover a companies cut cost and increase final profit of the proprietorship. Assets turnover =Sales / Total Assets Beximco: Ratio 2009 2008 Asset turnover

.05 Times .07 Times Square: Ratio 2009 2008 Asset turnover .05 Times .07 Times Analysis: Here we that total assets turnover has decreased because of decreasing total sales and increase of total assets. So analyzing this ratio we can justify that increment has failed to used its assets efficiently. 4. Fixed Asset Turnover: Net fixed asset turnover reflects utilization of fixed assets. The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales revenue from investments in Net Property, Plant, and Equipment back into the company evaluates only the investments. Fixed Asset Turnover=Net Sales/Average Net Fixed Assets Beximco: Ratio 2009 2008 Fixed Asset turnover .05 Times .07 Times Square: Ratio 2009 2008 Fixed Asset turnover .05 Times .07 Times

Analysis: Analysis shows that the fixed asset turnover ratio was as high as 1.42 times among three years. However, it declined to 1.33 times in the following year. In 2005-06 the turnover somewhat increased to 1.35 times.

Ratio Analysis - Profitability ratio C) Profitability ratio: There are many measures of profitability, which relate the returns of the firm to its sales, assets, or equity. As a group, these measures allow the analyst to evaluate the firm's earnings with respect to a given level of sales, a certain level of assets, or the owners' investment. This ratio specify the capacity of the company to survive difficult circumstances, which might occur from a number of basis, such as declining price, increasing cost and declining sale. The Profitability ratio we can justify on the six ratios, those are as follows: 1. Profit margin on sales.

2. Return on asset. 3. Return on common stock. 4. Price earning ratio. 5. Interest Expense Rate 6. Tax Retention Rate 1.Profit margin on sales: Profit margin on sales ratio offered information as regards a company's success from the action of core trade. Ratio gives you an idea about the success relation to sales on after the cost of goods sold is remove. It's could be used as a pointer of the good organization of the manufacture action and relationship between cost of manufacturing goods and selling price. Profit margin on sales= Gross Profit / Sales Beximco: Ratio 2009 2008 Profit margin on sales 16.73% 16.24%

Square: Ratio 2009 2008 Profit margin on sales 16.73% 16.24%

Analysis: In this case the ratio has increased, which is very good sign from on investor's point of view. It means that management has able to handle the operating cost and other cost. As a result company has generated more profit during 2001from the year 2000. 2.Return on asset: Return on asset compute the success of a company by using the advantage to create to get self-governing of the financing of those assets. Its compute consequently divides financing action from working and invests tricks. Return on asset =Net Income / Total Asset Beximco: Ratio 2009 2008 Return on asset 9% 11% Square: Ratio

2009 2008 Return on asset 9% 11%

Analysis: In this case we see that there is a slight decreased of this ratio because the increasing rate of total asset is higher than the increasing rate of net income. Now investors will be unhappy with many current job decreasing this ratio.

3. Return on common stock equity: Return on common stock ratio indicates the amount of, which the company is capable to exchange in service income into an after tax income that finally can be maintain by the investor. It is a helpful ratio for investigate the capability of the company's administration to understand a sufficient come back on the capital invest by the proprietors of the company. Return on common stock equity=Net income / Common stockholders equity Beximco: Ratio 2009 2008 Return on common stock 10% 11%

Square: Ratio 2009 2008 Return on common stock 10% 11%

Analysis: For the same revenue in this case also the ratio has decreased because the increasing rate of total equity 1.11 is higher than the increasing rate of return of net income 1.01. 4. Price earning ratio: Price earning ratio does analysis in discussing the investment possibility of a given enterprise use an off-quoted statistic? This is computed by dividing the market price of stock by it's earning per share. Price earning ratio =Market price of stock / Earning per share Beximco: Ratio

2009 2008 Pay out ratio 22% 39%

Ratio 2009 2008 Pay out ratio 22% 39% Square: Analysis: As a well-established organization it's earning per share is increasing day by day. In 2000 it was 9 Tk and in the 2001it has increased to 9.08. It's a good sign for company reputation and investors will be interested to invest on this company. 5. Interest Expense Rate: Interest expense rate ratio covers the interest burden capacity on the total assets of the company. Actually this ratio refers the times of interest paying capacity by investing the total assets. Beximco: Ratio 2009 2008 Interest Expense Rate 22% 39%

Ratio 2009 2008 Interest Expense Rate 22% 39% Square:

Analysis: 6. Tax Retention Rate:

Tax Retention Rate = (100% - Income Taxes/ Net before Tax)

Beximco: Ratio 2009 2008 Tax Retention Rate 22% 39%

Ratio 2009 2008 Tax Retention Rate 22% 39% Square:

Analysis:

Ratio Analysis - Debt coverage ratio D) Debt-coverage ratio: Debt ratios are calculated to judgement the long-term financial position of the company.This ratio indicate, mix of funds provided by owners and lenders, the manner in whichthe assets are finance, the extent of earning that is magnified or leveraged by use of debtand finally the extent of limited stakeholders control over the company. The Debt-coverage ratio we can satisfy on the three ratios, those are: 1.Debt to total assets. 2.Time interest earned. 3.Book value per share. 1. Debt to total assets: Debt ratio maintain how much of the company's total assets have been financed by the lending. Debt to total asset = Total debt / Total Asset Beximco: Ratio 2009 2008 Debt to total asset 30% 30%

Square Ratio 2009 2008 Debt to total asset 30% 30%

Analysis: In debt ratio is no change between 2000and 2001. The ratio is only 30%. And the only 30% of total assets is financed by the creditor. It's good sign at creditor points of view

2. Time interest earned: This ratio provides an indication of the margin of safety between financial obligations and the net income thus it provides an indication of the available protection to creditors. Failure to meet this obligation can bring legal action by the company's creditors, possibly resulting in bankruptcy. Time interest earned (TIE) = EBIT / Interest charged Beximco: Ratio 2009 2008 Times interest earned 3.60 Times 3.84 Times Square: Ratio 2009 2008 Debt to total asset 30% 30%

Analysis: Here we see that earning before interest tax has increased as well as interest has also increased. But the increasing vote as interest is higher than that of EBIT. The company must this situation.

3. Book value per share: Book value per share = Common stockholders equity / Outstanding shares Beximco: Ratio

2001 2000 Book value per share 94.14 85.06

Square: Ratio 2001 2000 Book value per share 94.14 85.06

Analysis: In this case the ratio has increased. Its many equity is increasing day by day. It indicates the healthy position of the company in the market.

Conclusion Beximco Pharmaceuticals LTD is a well-established and leading Pharmaceuticals firm of the country. The 5 years financial data show a growing trend of the company. The net profits after tax (NOPAT) indicates the company's 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.