Beximco Pharmaceutical Limited

Submitted To

Analysis & Interpretation Of Financial Statement Of

Prof. r. !asnan Ahmed

Prof

Professor Of Accounting& Director, BBA Program School of Business & "conomics

Financial Accountin#
$A%% &'()

Submitted By

Bipasha as
I * ++(++,'-+

Section* B
Semester* Sprin#. ('+( /BA Pro#ram

Submission ate
28th April, 2012

(School of Business)

0nited International 0ni1ersity

Introduction Introduction
B"2I/%O P!A3/A%"0TI%ALS LT elongs to Be!imco group, the largest pri"ate sector in#ustrial corporation in Bangla#esh$ Be!imco Pharma is one of the lea#ing Pharmaceuticals %ompan& in Bangla#esh$ 'he compan& is pro#ucing (orl# class of )e#icine, follo(ing the re*uirement of the +orl# ,ealth Organi-ation (+,O) in or#er to impro"e the health happiness an# the $*uantit& of life$ +e place# greatest emphasis on maintaining the highest stan#ar# of the %orporate .o"ernance$ On the asis of /inancial Statement (e can #escri es ho( the principles of the goo# .o"ernance is applie# in Be!imco Pharmaceuticals 0t#$ 'he Be!imco Pharmaceuticals 0t#$committe# to efforts our health care nee#s of the countr&, a out (4 ne( pro#ucts ha"e een a##e# to the e!isting pro#ucts #uring this &ear$ As a result 'riocim, Prosan, 1eco!, Ato"a, an# lot of me#icine are alrea#& achie"ing themsel"es in a goo# position in the (orl# )ar2et (ithin a short perio# of time$ But Be!imco Pharmaceuticals 0t#$ %ompan&3s superstar pro#uct 45APA6 continue# to retain the num er of one position since 17703s$ Be!imco Pharma pro#uces pharmaceutical formulations an# acti"e pharmaceutical ingre#ients, ha"ing a current portfolio of more than 800 pro#ucts an# a #e#icate# team of more than 2,900 emplo&ees$ :n its long ;ourne& o"er three #eca#es, the simple principle on (hich it (as foun#e# remains the same< pro#ucing high=*ualit& generics an# pro"i#ing etter access to me#icines at a much affor#a le cost$ 'he compan& continues to a#here to the glo al stan#ar#s an# ta2es initiati"es to remain more competiti"e in or#er to maintain its strong trac2 recor#$

/ission* >ach of our acti"ities must enefit an# a## "alue to the common (ealth of our
societ&$ +e confi#entl& elie"e that, in the final anal&sis (e are accounta le to each of the constituents (ith (hom (e interact, namel&< our emplo&ees, our customers, our associates, our fello( citi-ens an# sharehol#ers< usiness

5ision Of Beximco Pharma * 4 Beximco pharma aspires to ecome a nationall& a#mire#

an# glo all& repute# stan#ar# pharmaceutical compan&, committe# to enhancing human an# life$6

O ;ecti"es Of 'he 'erm Paper<

'he o ;ecti"es of the term paper are to anal&-e the financial statement of the e!imco pharma lt#$ ,ere : anal&sis the 0i*ui#it&, Profita ilit& an# Sol"enc& 1atio of oth &ear$ 'hese ratios (ill help to un#erstan# the present con#ition of the compan&$ 'his is also help to in"estors an# cre#itors to un#erstan# the compan&3s recent situation$

)>',ODO0O.@

'o ser"e m& purpose, : ha"e follo(e# stan#ar# research metho#olog& to e!tract the fin#ings$ 'here are "arious metho#s to anal&-e the financial statement$ 'he performances of "arious #e"ices are use# in the Be!imco Pharmaceuticals 0t#$ anal&sis of /inancial Statement #ata to ring out the comparati"e an# relati"e significance of the financial information presente#$ 'his are inclu#e in the elo(< A$ %omparati"e Anal&sis B$ Percentage Anal&sis %$ 1atio Anal&sis

A. %omparati1e Analysis* :n %omparati"e anal&sis the same information is presente# for t(o or more #ifferent #ates or perio#s so that li2e items ma& e compare#$ :n %omparati"e anal&sis an in"estment anal&st can focus on a gi"en item an# #etermine (hether it appears to e rising or #iminishing &ear & &ear an# the proportion of such change to relate# items$

B. Percenta#e Analysis* 'his anal&sis facilitates comparison an# is helpful in e"aluating the relati"e si-e of items or the relati"e changes in items$ :t ma& facilitate comparison et(een companies of #ifferent si-es$ Anal&st can use this anal&sis to e"aluate an# compare companies$ %. 3atio Analysis* 1atio anal&sis pro"i#es onl& a single photograph, the anal&sis eing for one gi"en point or perio# in time$ :n the ratio anal&sis it is possi le to #efine the compan& ratio (ith a stan#ar# one$ 1atio anal&sis can e classifie# as follo(s< +. Li6uidity 3atio (. Profitability 3atio ,. Sol1ency 3atio

Analysis
+. Li6uidity 3atio*
0i*ui#it& ratio measures the a ilit& of the firm to meet its o ligations$ 'hese ratios esta lish relationship et(een cash an# other current asset an# current lia ilities$ %re#itors to e"aluate the cre#it(orthiness of the firm use these ratios$ 'hese ratios also pro"i#e re"els management3s polic& in managing li*ui#it& position of the firm$ 'he 0i*ui#it& ratio (e can satisf& on the four ratios, those are< %urrent ratio Acid Test $6uic7) ratio 3ecei1ables turno1er In1entory turno1er

 %urrent 3atio* A measure use# to e"aluate a compan&3s li*ui#it& an# short=term #e t pa&ing a ilit&, compute# & #i"i#ing current assets & current lia ilities$ %urrent 1atio in#icates the a ilit& of a compan& to achie"e its short=term o ligations, (here short=term o ligations in#icate those o ligations that are #ue (ithin a &ear or (ithin the operating c&cle$ %urrent ratios are e!tent to (hich the assets that are e!pecte# to cash co"er the claims of short=term cre#itors$ %urrent 3atio A %urrent Assets B %urrent 0ia ilities 8.+9+.884.:,+; (.&+,.+&4.(,( <=ear>('+'? 8.9+8.4,4.:9,; (.,(+.-&+.8-( <year>(''9? ('+' 3atio %urrent ratio Analysis* :n the ta le (e see that in 2007 the ratio is onl& 2$78<1 an# in the 2010 #ecreases to 2$8C<1$ +e can sa& that compan& has '2$ 2$8C asset against '2$ 1 lia ilit& to pa& the #e t in 2010$ ,ere (e can see that in 2010 the current assets #ecreases an# current lia ilities are increasing than the 2007$ 'hat3s (h& current ratio #ecreases in 2010$ 'his ratio gi"es us a gross i#ea of li*ui#it& position of the compan&$ ,o(e"er the compan& has enough assets to pa& the lia ilit& in 2010, (hich is sufficient$ 'he compan& has enough short=term #e t pa&ing a ilit&$ Acid Test $@uic7) 3atio * Duic2 ratio is most important measure of li*ui#it& than the current ratio$ Because in"entories (hich are the least li*ui# of the current assets from the ratio$ :t is essential for a compan& to reali-e its a ilit& to pa& the short=term o ligation, (ithout 2no(ing on the sales of in"entor& ecause the& are the assets on (hich losses are mostl& in the e"ent of li*ui#ation$ @uic7 ratio A (%ashE Short term :n"estmentE 5et 1ecei"a les) B %urrent 0ia ilities (1,8F1,888,8?CE821,?9C,8?7E897,80?,F08) B 2,91?,19F,2?2 2$8C<1 (''9 2$78<1

A?,192,208,9F7 B2,91?,19F,2?2 <=ear>('+'?

(1,098,8??,9F8E2,900,000,000EC78,111,F?0) B 2,?21,891,C82) A 8,292,989,?08 B 2,?21,891,C82 <=ear>(''9? ('+' 3atio Duic2 ratio Anal&sis< /rom the calculation (e can see that the *uic2 ratio has #ecrease# o"er the &ear$ 'his has happene# ecause in"entor& has increase# & '2$ 2C0,89C,1C0 an# (e 2no( that in"entor& is #e#ucte# from current asset (hile calculating *uic2 ratio$ 1$29<1 (''9 1$8?<1

3ecei1ables Turno1er
1ecei"a le turno"er ratio in#icates the rate of recei"a le to turn into cash$ :t in#icates the le"el of outla& in recei"a les (ante# to continue the compan&3s sale stage$ 'his ratio measures the num er of times, on a"erageG recei"a les are collecte# #uring the perio#$

3ecei1able turno1er A 5et cre#it sales B A"erage recei"a les C,7?F,F99,?80 B F9F,F?8,089 <year>('+'? 8,701,0C9,89F B 977,018,0CC <=ear>(''9? 3atio 1ecei"a le turno"er Anal&sis< :n 2007 BP0 has 8$18 times li*ui#it& in terms of li*ui#it& of recei"a les, against net cre#it sales, ut in 2010 it increases up to 7$1C times, an# in comparison to the others in#ustr& it is goo# enough$ 'he compan& collects recei"a le after e"er& 80 #a&s in &ear 2010$ ('+' 7$1C times (''9 8$18 times

 In1entory turno1er*
:n"entor& turno"er is the ratio of cost of goo#s sol# & a"erage in"entor&$ 'he li*ui#it& of the compan&3s register can e consi#ere# & this ratio$ :ts ratio in#icates ho( man& perio#s it is nee#e# to t(ist in"entor& of sales on a stan#ar#$ :t is an acti"it& or efficienc& ratio an# it measures ho( man& times per perio#, a usiness sells an# replaces its in"entor& again$ In1entory turno1er A %ost of goo#s sol# B A"erage :n"entor& ?,?1F,C80,298B 1,89?,?81,?C8 <=ear>('+'? 2,9CC,20C,C2CB 1,C18,120,C87 <=ear>(''9? 3atio :n"entor& turno"er ('+' 1$F7 times (''9 1$97 times

Anal&sis< :n"entor& turno"er measures the num er of times on a"erage the in"entor& is sol# #uring the perio#, an# BP0 has a 1$97 turno"er #uring 2007 ut in 2007 it increases to 1$F7 times$ 'he :n"entor& turno"er is increasing then the pre"ious &ear$ ,ere, (e can un#erstan# that, in 2007 the compan& sells the in"entor& after e"er& 2?0 #a&s$ A out 2?0 #a&s the in"entor& is unsol# in (arehouse$ 'his is not a goo# situation$ :n 2010 the compan& sells the in"entor& after e"er& 208 #a&s$ 'his situation (as goo# than 2007$

(. Profitability 3atio*
'here are man& measures of profita ilit&, (hich relate the returns of the firm to its sales, assets, or e*uit&$ As a group, these measures allo( the anal&st to e"aluate the firm3s earnings (ith respect to a gi"en le"el of sales, a certain le"el of assets, or the o(ners3 in"estment$ 'his ratio specif& the capacit& of the compan& to sur"i"e #ifficult circumstances, (hich might occur from a num er of asis, such as #eclining price, increasing cost an# #eclining sale$

'he Profita ilit& ratio (e can ;ustif& on the si! ratios, those are as follo(s< Profit mar#in on sales. 3eturn on asset. 3eturn on common stoc7 "arnin# per share Price earnin# ratio. i1idend Pay out ratio

Profit /ar#in On Sales*

Profit margin on sales ratio offere# information as regar#s a compan&3s success from the action of core tra#e$ 1atio gi"es &ou an i#ea a out the success relation to sales on after the cost of goo#s sol# is remo"ing$ :t3s coul# e use# as a pointer of the goo# organi-ation of the manufacture action an# relationship et(een cost of manufacturing goo#s an# selling price$ Profit mar#in on sales A 5et :ncome B 5et sales 1,091,C88,808B C,870,88F,?9? <year>('+'? C28,F80,?0FB 8,8C8,298,719 <=ear>(''9? 3atio Profit margin on sales Anal&sis< :n this anal&sis sa& that (e #one profit 1C$20H on sales in 2010$ 'he ratio has increase#, (hich is "er& goo# sign from on in"estor3s point of "ie($ :t means that management has a le to han#le the operating cost an# other cost$ As a result compan& has generate# more profit #uring 2010 from the &ear 2007$ But the profit margin ratio #oes not reflect the o"erall position of the compan&$ ('+' 1C$20H (''9 12$8?H

3eturn on asset*

1eturn on asset compute the success of a compan& & using the a#"antage to create to get self= go"erning of the financing of those assets$ :ts compute conse*uentl& #i"i#es financing action from (or2ing an# in"ests tric2s$ 3eturn on asset A >arnings efore :nterest an# 'a! B A"erage Assets 1,?C1,9?2,?2C B 20,C?2,1CC,8C1 <year>('+'? 8CF,8CF,82F B 1F,?99,F77,8?1 <year>(''9? 3atio 1eturn on asset Anal&sis< 'he ratio is increase# & 2010 from the 2007$ :n this case : see that there is a slighte# increase# of this ratio ecause the increasing rate of total asset is higher than the increasing rate of net income$ 5o( in"estors (ill e happ& (ith man& current ;o s increasing the rate$ ('+' C$C0 H (''9 9H

3eturn on common stoc7

1eturn on common stoc2 ratio in#icates the amount of, (hich the compan& is capa le to e!change in ser"ice income into an after ta! income that finall& can e maintain & the in"estor$ :t is a helpful ratio for in"estigate the capa ilit& of the compan&3s a#ministration to un#erstan# a sufficient come ac2 on the capital in"est & the proprietors of the compan&$ 3eturn on common stoc7 e6uity A 5et income B A"erage %ommon stoc2hol#ers e*uit& 1,091,C88,808B 1?,827,87C,9?1 <year>('+'? C28,F80,?0FB 10,CCF,798,?81 <year>(''9? 3atio 1eturn on common stoc2 Anal&sis< 'he return on common shoc2 hol#ers e*uit& increase# to F$8?H in 2010 against 9$8CH in 2007$ An# it sho(s the common stoc2 hol#ers e*uit& higher in against of their share$ ('+' F$8? H (''9 9$8C H

 "arnin# per share

"arnin# per shareA 5et :ncome B +eighte# a"erage common share outstan#ing 1,091,C88,808B 20?,820,202 <year>('+'? C28,F80,?0FB 1F8,919,?C2 <year>(''9?

3atio >arning per Share Anal&sis<

('+' '2$ 9$1F

(''9 '2$ ?$90

>arning per share 2010 is higher than 2007$ Because profits a"aila le for common stoc2hol#ers are increase# in 2010 than 2007$

Price earnin# ratio*

Price earning ratio #oes anal&sis in #iscussing the in"estment possi ilit& of a gi"en enterprise use an off=*uote# statisticI 'his is compute# & #i"i#ing the mar2et price of stoc2 & it3s earning per share$

Price earnin# ratio A )ar2et price of per share B >arning per share 1?9$1B 9$1F <year>('+'? 199$8B ?$90 <year>(''9? 3atio Price earning ratio Anal&sis< As a (ell=esta lishe# organi-ation it3s earning per share is #ecreasing 2007 from the &ear 2010$ :t3s not a goo# sign for compan& reputation an# in"estors (ill not e intereste# to in"est on this compan&$ ('+' 2C$1? times (''9 88$91 times

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 Asset turno1er ratio*

Assets turno"er ratio in#icates to the capa ilit& of the compan&3s to create sales using the asset appropriatel&$ 'he un#erutili-e# assets raise the companies re*uire for the e!pensi"e finance$ B& the achie"ing a s2&=scraping turno"er a companies cut cost an# increase final profit of the proprietorship$ Assets turno1er A 5et Sales B A"erage total Assets C,870,88F,?9?B 20,C?2,1CC,8C1 <year>('+'? 8,8C8,298,719B 1F,?99,F77,8?1 <year>(''9? 3atio Asset turno"er Anal&sis< Assets turno"er measures ho( efficientl& compan& uses it assets to generate sales$ ,ere : see that total assets turno"er has increase# ecause of increasing total sales an# increase of total assets$ So anal&-ing this ratio : can ;ustif& that increment has faile# to use# its assets efficientl&$ ('+' $?1 times (''9 $28 times

i1idend Payout 3atio*

:t measures the percentage of earnings #istri ute# in the form of cash #i"i#en#s, compute# & #i"i#ing cash #i"i#en#s & net income$ i1idend Pay out ratio A%ash Di"i#en#B 5et :ncome 'he BP0 has not an& cash #i"i#en# in &ear 2010 A (12F,?7F,97F B C28,F80,?0F) <=ear (''9? A 20H 3atio ('+' Pa&out 1atio ====

(''9 20H

'he price earnings (P=>) ratio is an oft=*uote# measure# of the ratio of the mar2et price of each share of common stoc2 to the earnings per share$

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,. Sol1ency 3atio; ebt co1era#e ratio*

De t ratios are calculate# to ;u#gment the long=term financial position of the compan&$ 'his ratio in#icate, mi! of fun#s pro"i#e# & o(ners an# len#ers, the manner in (hich 'he assets are financeG the e!tent of earning that is magnifie# or le"erage# & use of #e t an# finall& the e!tent of limite# sta2ehol#ers control o"er the compan&$ 'he De t=co"erage ratio (e can satisf& on the three ratios, those are< ebt to total assets.

Time interest earned.

ebt to total assets*

De t ratio maintain ho( much of the compan&3s total assets ha"e een finance# & the len#ing$ ebt to total asset A 'otal #e t B 'otal Asset 9,?78,?1?,098B 21,?F2,?77,907 <year>('+'? 7,00C,22C,808B 17,871,7??,822 <year>(''9? 3atio De t to total asset Anal&sis< :n #e t ratio is change et(een 2010 from 2007$ 'he ratio is #ecreasing 2007 from 2010, (hich is 29$2CH$ :t3s not a goo# sign for cre#itors$ 'he compan& has not enough assets to pa& lia ilit&$ :n total assets 29$2CH #e t for outsi#er cre#itors an# remain#er part is for o(ners$ ('+' 29$2CH (''9 89$28H

Time interest earned*

'his ratio pro"i#es an in#ication of the margin of safet& et(een financial o ligations an# the net income thus it pro"i#es an in#ication of the a"aila le protection to cre#itors$ /ailure to meet

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this o ligation can an2ruptc&$

ring legal action

& the compan&3s cre#itors, possi l& resulting in

Time interest earned $TI") A >B:' B :nterest charge# 1,?C1,9?2,?2CB 908,8?2,?88 <year>('+'? 8CF,8CF,82FB 288,?F0,890 Jyear>(''9?

3atio 'imes interest earne# Anal&sis<

('+' 2$C8 times

(''9 ?$87 times

,ere : see that earnings efore interest ta! as has increase# as (ell as interest has also increase#$ 'imes interest earne# pro"i#es an in#ication of the compan&3s a ilit& to meet in the interest as the& come #ue an# in BP0 times interest earne# rate is lo(er in 2010 an# it (as 2$C8 times (hile in 2007 it (as ?$87 times$

Findin#s
'he o"erall performance of the compan& is goo#$ But all the compan& faces lots of pro lem$ : ha# een anal&sis the ration of the compan&$ : foun# that the compan& has some pro lem (ith some areas$ 'he compan&3s current ratio is "er& goo#$ 'he compan& has pro lem (ith Duic2 ratio$ 'he compan& must increase the *uic2 ratio$ 'he compan&3s 1ecei"a les turno"er, 1eturn on assets, Assets turno"er, De t to total assets is not so goo#$ 'he compan& might ha"e face# a great pro lem$ :f all the fin#ings are not properl& ta2e care ultimatel& the compan& (ill face the great pro lem in ne!t future$ :n 2010 the recei"a les are 7$1C times, (hich is not up to mar2$ 'he Duic2 ratio is $70, the return on assets is 8$72H, Assets turn o"er are $?0 an# De t to total assets are 29$2?H

1?

3ecommendation
Be!imco Pharmaceuticals 0'D is the largest pharmaceuticals compan& in our countr&$ All the compan& faces lots of pro lem$ 'he compan&3s all the things are "er& goo#$ : foun# all the ratios$ 'he compan&3s all the ratios are "er& goo#, >!cept the 1ecei"a les turno"er, 1eturn on assets, Duic2 ration an# De t to total assets$ 'he compan& must ta2e care of all the fin#ings$ :f the pro lems are not properl& han#le or ta2e care the compan& ma& face# ig pro lem$ 'he compan&3s sharehol#ers are not intereste# to in"est in this compan&$ 'he mar2et share of the compan& (ill #ecrease$ So the compan& first increases the *uic2 ratio$ 'he compan& must ha"e to current assets to pa& the current lia ilities$ 'hen :ncrease the recei"a les turno"er$ Assets turno"er must e increase# ecause if the assets not enough turno"er the compan& ma& face the cash pro lem$ After that the compan& must increase the #e t to total assets$ :f the compan& #oes not change this ratio the compan& faces the percentage of total assets pro"i#e# & cre#itors$ :f all the pro lems are properl& han#le the compan& ma& increase the mar2eta ilit& an# as (ell as the sharehol#ers ma& also e increase#$ $

%onclusion
Be!imco Pharmaceuticals 0'D is a (ell=esta lishe# an# lea#ing Pharmaceuticals firm of the countr&$ 'he financial #ata sho( a gro(ing tren# of the compan&$ 'he net profits after ta! (5OPA') in#icate the compan&3s e!cellent performance in operation, turno"er, management an# competiti"e usiness staticall&$ As the in"entor3s e!pectation is to earn more mone& o"er their in"estment, Be!imco Pharmaceuticals 0'D is pla&ing an important role to set the in"estors on it$ /inall& :f all the pro lems are properl& han#le the compan& ma& increase the mar2eta ilit& an# as (ell as the sharehol#ers ma& also e increase#$ :n m& report : tr& to #escri e the action plan gi"en & m& instructor$ :n the ratio anal&sis : tr& to sho( an# compare the #ata (ith last &ear$ : tr& to #escri e all the anal&sis$

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So : can sa& that this term paper help me to e!press m& 2no(le#ge that : gathere# from the course JA%%K902L$ An# it also helps me to 2no( ho( to anal&sis the annual report of a compan&$

"/AB
A consumer #esire an# (illingness to pa& a price for a specific goo# or ser"ice, hol#ing all other factors constant, the price of a goo# or ser"ice increases as its #eman# increases an# "ice "ersa$ LaC of demand 0a( of #eman# states that if all other things remain same, there is negati"e relationship et(een price an# *uantit&$ +hen price of a goo#s or ser"ices increases, the #eman# for that goo#s or ser"ices #ecrease an# (hen the price of goo#s or ser"ices #ecrease#, the #eman# for that goo# or ser"ice increase$

/athematical expression* 'he negati"e relation (i$e$, higher price attracts lo(er #eman# & lo(er prices encourages high *uantit& to e ought & the consumers) is ase# on logic an# e!perience$ )athematicall&, the in"erse relation ma& e state# (ith causal relation as<

+here,

is the *uantit& #eman#e# of ! goo#s an#

is the price of ! goo#s$

emand Schedule* 'he #eman# sche#ules for So& ean Oil are gi"en consumers to get this #ata< elo($ : ha"e inter"ie(e# 10

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1C