Company Profile:

Square Pharmaceuticals Ltd. was established as a partnership firm in 1958. In 1991 it was
converted into a public limited company. 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. Since 1987 Square has taken
aggressive measures to explore new countries as potential export market.
Vision
Squares view business as a means to the material and social wellbeing of the investors,
employees and the society at large, leading to accretion of wealth through financial and moral
gains as a part of the process of the human civilization.
Mission
Squares 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.
Objective
Squares objectives are to conduct transparent business operation based on market mechanism
within the legal & social frame work with aims to attain the mission reflected by our vision.

Top Management: Board of Directors:

As per provisions of the Article of Association, Board of Directors holds periodic meetings to
resolve issue of policies and strategies, recording minutes/decisions for implementation by the
Executive Management.

Executive Management:
The Executive Management is headed by the Managing Director, the Chief Executive Officer
(CEO) who has been delegated necessary and adequate authority by the Board of Directors. The
Executive Management operates through further delegations of authority at every echelon of the
line management. The Executive Management is responsible for preparation of segment
plans/sub-segment plans forever profit centers with budgetary targets for every items of goods &
services and are held accountable for deficiencies with appreciation for exceptional performance.
These operations are carried out by the Executive Management through series of committees,
sub-committees, ad-hock committees, standing committees assisting the line management.

Products of Square Pharmaceuticals Ltd:

SQUARE has latest technologies for production of a wide varieties of dosage forms including
Tablet, Sustained Release formulation, Capsule, Metered Dose Inhaler (MDI), Injectable,
Syrup(liquid and dry), Suspension (liquid and dry), Pediatric Drops, Nasal & Ophthalmic
formulations, Topical Gel/Ointment/Cream, and oral care formulations.
Current product mix of Square Pharmaceuticals Ltd. comprised of products from the following
types of Drug Delivery Systems:

Tablets:

Non-coated (Vaginal, Dispersible, Chewable, Plain)

Coated (Sugar coated, Film coated, Enteric coated)
Sustained released (coated/non-coated)

Capsules
Injectable:

Vials containing dry powder for injections

Small volume parenteral
2

Liquids:

Oral (suspension, syrup, drops, and stomatologicals)

Topical solutions
Nasal drops

Dry powders:

Oral (for reconstitution to make suspension, syrup and drops)

Topical

Semisolids (creams, ointments and gels)

Solid suppository formulations
Metered Dose Inhalers (MDIs)
Dry Powder Inhalers (DPIs)
Sterile Ophthalmic Formulations (drops)

Financial performances analysis:

Financial performance analysis means a subjective measure of how well a firm can use assets
from its primary mode of business and generate revenues. This term is also used as a general
measure of a firm's overall financial health over a given period of time, and can be used to
compare similar firms across the same industry or to compare industries or sectors in
aggregation. There are many different ways to measure financial performance, but all measures
should be taken in aggregation. Here we look at the ratio analysis to measure the financial
condition of the Square pharmaceuticals.

Liquidity Ratio:
Current Ratio:
The current ratio is widely used measure for evaluating a companys liquidity and short term
debt paying ability. Current Ratio indicates the extent to which current liabilities are converted
by current assets. The ratio is computed by dividing current assets by current liabilities.
The Current Ratio formula is:

(Figures
in Thousands)
Year
Current
Asset
Current
Liabilities
Current
Ratio

2014

2013

2012

2011

2010

7,768,068

5,996,698

6,745,980

7,022,214

4,774,311

3,416,619

3,792,438

4,252,935

4,668,189

2,216,744

2.27

1.58

1.59

1.50

2.05

Source: Annual report of SPL from year 2010-2014

Current Ratio
2.5
2
1.5
1
0.5
0

2.27

2014

2.05
1.58

1.59

1.5

2013

2012

2011

2010

Column2

From the graph it can be concluded that Squares current assets are increasing and current
liabilities are decreasing. So, its liquidity position is relatively stronger compare to others. Here
we see that, the current ratios are fluctuating in last few years. From 2010, 2011, 2011, 2012,
2013, 2014. It was in ups and down. It may not a good sign for square pharmaceutical.
According to current ratio, it must be assumed that Square Pharmaceuticals Limited Bangladesh
was successful to meet its short term obligations very well for the past fiscal years and will
maintain a successful healthy financial performance in coming years. But only in 2014 &
2010 the current ratio was 2.27 & 2.05 which were acceptable if the square pharmaceutical
company maintain that ratio it may good for further investment.

Quick Ratio:
Quick ratio is also known as Acid-test ratio and it excludes the inventories as inventories are less
liquid. Quick ratio less than 1 indicates that the firm is currently unable to pay its current debts.
A high quick ratio is not considered as good always depending on the accounts receivables and
current liabilities. If it happens that the firm has huge account receivables which will be collected
after a long time and the current liabilities are lesser but needs to be paid instantly then the quick
ratio will be higher. However, the firm will be in a risky situation as there is liquidity crisis. On
the other hand, opposite thing can also happen.

(Figures in Thousands)
Year
Current
Asset
Current
Liabilities
Inventory
Quick Ratio

2014

2013

2012

2011

2010

7,768,068

5,996,698

6,745,980

7,022,214

4,774,311

3,416,619

3,792,438

4,252,935

4,668,189

2,216,744

2,345,389

2,503,683
0.92

2,687,818
0.95

2,541,688
0.96

2,207,078
1.15

1.59

Source: Annual report of SPL from year 2010-2014

Quick Ratio
2.5
2
1.5
1
0.5
0

2.05
1.59

2014

0.92

0.95

0.96

2013

2012

2011

2010

Column2

We calculate quick ratio to see the real picture of liquid asset. Quick ratio is always less than
current ratio. Quick ratio is more stringent than current ratio. In 2011, 2012, 2013 ratio was .96, .
95, .92 that means the company has not more liquidate money, because it was less 1. But year
2010 & 2014 the company has more liquidate money, because it was more than 1.

Cash Ratio:
Cash ratio is a companys ratio of cash and cash equivalents to its total current liabilities. This
formula is most often used to gauge a business liquidity. Potential investors or creditors
frequently look to cash ratio when determining a companys capacity to repay debtsincluding
how much it could feasibly repay, and how much time it would need to do so.
(Figures in Thousands)
Year
Cash
Current
Liabilities
Cash Ratio

2014
781,697

2013
932,407

2012
586,920

2011
370,301

2010
258,727

3,416,619

3,792,438

4,252,935

4,668,189

2,216,744

0.21

0.24

0.13

0.07

0.12

Source: Annual report of SPL from year 2010-2014

Cash Ratio
0.25
0.2
0.15
0.1
0.05
0

0.21

0.24

0.13

0.12
0.07

2014

2013

2012

2011

2010

Column2

The Cash ratio is an indicator of a companys liquidity that further refines both the current ratio
and the quick ratio by measuring the amount of cash. Cash cover the current liabilities. In 2012 it
is slightly below, but in 2013-2014 cash ratio was commendable. The firm experienced its
worst cash ratio figure in2014 and by 2013 it had comparatively reached to a
better state of cash ratio.

Debt coverage ratio:

Debt equity Ratio:
The debt equity ratio is a measure of the relationship between the capital invested by creditors
and the capital contributed by shareholders. Lower values of debt equity ratio are favorable
indicating less risk. Higher debt equity ratio is unfavorable because it means that the business
relies more on external lenders thus it is at higher risk, especially at higher interest rates. A debt
equity ratio of 1 means that half of the assets of that business is financed by debt and half by
shareholders' equity. A value higher than 1 means more assets are financed by debt than those
financed by money of shareholders' and vice versa. An increasing trend in of debt equity ratio is
also alarming because it means that the percentage of assets of a business which are financed by
the debts is increasing. Higher debt can lead to both higher gain and risk, so firms should be very
careful while taking financial leverage.

Year
Total
Debt
Total
Equity
Debt to
equity
Ratio

2014

2013

2012

2011

2010

136,440,907

313,421,158

508,778,060

655,645,734

1032,633,160

22,277,516,
628

18,844,746,18
4

16,266,884,25
5

13,817,708,99
9

11,721,331,851

0.006

0.017

0.03

0.04

0.08

Source: Annual report of SPL from year 2010-2014

Debt To Equity Ratio

0.15

0.12

0.1
0.05
0

0.01
2014

0.02
2013

0.03

0.04

2012

2011

2010

Column2

If debt Equity Ratio is high the cost of capital is low but it has risk of bankruptcy. If the ratio is
low the cost of capital is high but bankruptcy risk is low. In 2014 the company debt equity ratio
is low there less risk of bankruptcy.

Debt to Asset Ratio:

This ratio finds out how much of the total asset is funded through debt. A debt ratio greater than
1 indicates that a company has more debt than assets and it is more dependent to its creditors for
necessary financing. Meanwhile, a debt ratio of less than 1 indicates that a company has more
assets than debt. The higher this ratio, the more leveraged the company and the greater its
financial risk. Although higher debt is not a problem if interest payments are made on time, but if
it is not then definitely a great risk for the firm.

10

Year
Total
Debt
Total
Asset
Debt to
Asset
Ratio

2014

2013

2012

2011

2010

136,440,907

313,421,158

508,778,060

655,645,734

1032,633,160

2654953487
8

23734742933

21637553544

21453784762

19444409654

0.006

0.013

0.03

0.03

0.05

Source: Annual report of SPL from year 2010-2014

Debt to Asset Ratio

0.05

0.06
0.04
0.02
0

0.01
2014

0.03

0.03

2012

2011

0.01

2013

2010

Column2

Asset management ratio:

Inventory Turnover Ratio Analysis:
Inventory turnover is the ratio of cost of goods sold by a business to its average inventory during
a given accounting period. It is an activity ratio measuring the number of times per period; a
business sells and replaces its entire batch of inventory again.

Year
COGS
Inventory
Inventory

2014
11727992
2,424,536
4.84

2013
11810961
5392173
2.19

2012
9167253
2,687,818
3.41

(Figures in Thousands)
2011
2010
7703661
6561288
2,541,688
2,207,078
3.03
2.97
11

Turnover
Source: Annual report of SPL from year 2010-2014

From the above figure, we can say that the inventory turnover of Square Pharmaceuticals Ltd. in
2014 is 4.84 times, 2012 is 3.41 times and 2011 is 3.03 times. The inventory turnover is high in
2014. But in 2013 & 2010, it has decreased. So the company is in a better position.

Accounts receivable turnover:

Accounts receivable turnover means how quickly receivables or debtors are converted into cash.
In other words, debtor turnover ratio is test of liquidity of the debtors of a firm. This ratio
indicates the speed with which debtors/accounts receivable are being collected. It implies the
efficiency of trade credit management. The higher the turnover ratio and shorter the collection
period, the better is the trade credit management and the better is the liquidity of debtors as short
collection period and high turnover ratio imply prompt payment on the part of debtors.

Year
Net Sales
Accounts
Receivable
Accounts
Receivable
Turnover

2014
20910773826

2013
17959489496

2012
16054425243

2011
13471424469

2010
1146578410

779366165

804643313

808365323

772435259

508205588

26.83

22.42

19.86

17.44

22.55

Source: Annual report of SPL from year 2010-2014

Accounts Receivable turnover

30

26.83

22.42

19.86

20

22.55
17.44

10
0

2014

2013

2012

2011

2010

Column2

12

From the above figure, we can say that receivables turnover of Square Pharmaceuticals Ltd. in
2014 is 26.83 times, 2013 is 22.42 times and 2010 is 22.55 times. The receivables turnover of
Square Pharmaceuticals Ltd. is low in 2011 & 2012. But in 2013 & 2014 it has increased. So the
company is in a good position.

Average collection period:

The average collection period formula is the number of days in a period divided by the
receivables turnover ratio. The numerator of the average collection period formula shown at the
top of the page is 365 days. For many situations, an annual review of the average collection
period is considered. However, if the receivables turnover is evaluated for a different time
period, then the numerator should reflect this same time period.

Year
Days
Inventory
turnover
Average
collection
period

2014
365

2013
365

2012
365

2011
365

2010
365

26.83

22.42

19.86

17.44

22.55

13.60

16.28

18.38

20.93

16.19

Source: Annual report of SPL from year 2010-2014

Average Collection Period

30
20

13.6

16.28

18.38

20.93

2013

2012

2011

16.19

10
0

2014

2010

Column2

13

Avg. collection period indicate how much time required to collect the credit. From the above
figure, we can say that the average collection period of Square Pharmaceuticals Ltd. in 2014 is
14 days, 2013 is 16 days and 2010 is 16 days. The average collection period in 2011 is high. But
in 2013 & 2014 it is low. So the company is in a good position.

Net Working Capital

The formula for net working capital (NWC), sometimes referred to as simply working capital, is
used to determine the availability of a company's liquid assets by subtracting its current
liabilities. Current Assets are the assets that are available within 12 months. Current Liabilities
are the liabilities that are due within 12 months.

Year
Current
Asset
Current
Liabilities
Net working
Capital

(Figures in Thousands)
2011
2010

2014

2013

2012

7,768,068

5,996,698

6,745,980

7,022,214

4,774,311

3,416,619

3,792,438

4,252,935

4,668,189

2,216,744

4,351,449

2,204,260

2,493,045

2,354,025

2,557,567

Source: Annual report of SPL from year 2010-2014

Profitability Ratio:
Gross Profit Margin:
Gross margin express of the company efficiency of raw material and labor during the working
process .If any company higher gross profit margin then the company more efficiency to controls
their raw material and labors. It can be assigned to single products or an entire company. It
determines the gross profit to divide by net sales.

14

Year
Gross
Profit
Net Sales
Gross
Profit
Margin

2014

2013

2012

2011

2010

9182781155

7825814319

6887171623

5767763259

4901289925

20910773826

17959489496

16054425243

13471424469

1146578410

0.44

0.43

0.42

0.43

0.41

Source: Annual report of SPL from year 2010-2014

0.44
0.44

Gross Profit Margin

0.43

0.43

0.43
0.42

0.42

0.41

0.41
0.4
0.39

2014

2013

2012

2011

2010

Column2

Gross profit margin indicates that how efficient the management is in using its labor & raw
materials in the process of production. From the above figure, we can say that the gross profit
margin of Square Pharmaceuticals Ltd. in 2014 is 44%, 2013 is 43% and 2012 is 42%. The gross
profit margin of Square Pharmaceuticals Ltd. has increased year by year. So the company is in a
good position.

Net Profit Margin:

A ratio of profitability calculated as net income divided by revenues, or net profits divided by
sales. It measures how much out of every dollar of sales a company actually keeps in earnings.
Profit margin is very useful when comparing companies in similar industries. A higher profit
margin indicates a more profitable company that has better control over its costs compared to its
competitors.

Year

2014

2013

2012

2011

2010
15

Net
Income
Net Sales
Net Profit
Margin

4151546470

3318309302

2897710641

2532054550

2087871791

20910773826

17959489496

16054425243

13471424469

1146578410

0.20

0.18

0.18

0.19

0.18

Source: Annual report of SPL from year 2010-2014

0.2

Net Profit Margin

0.2

0.19

0.19

0.18

0.18

2013

2012

0.18

0.18
0.17
0.16

2014

2011

2010

Column2

Net profit margin measures the percentage of each operating income\revenue (TK) remaining
after all costs and expenses. The higher the firms net profit margin, the better position a company
are. From the above figure, we can say that the net profit margin of Square Pharmaceuticals Ltd.
in 2014 is 20%, 2011 is 19%. But net profit margin is low in 2013, 2012 & 2010. But still the
company is in a good position.

Return on Equity (ROE):

The amount of net income returned as a percentage of shareholders equity. Return on equity
measures a corporation's profitability by revealing how much profit a company generates with
the money shareholders have invested.

Year
Net

2014
4151546470

2013
3318309302

2012
2897710641

2011
2532054550

2010
2087871791
16

Income
Common
Equity
Return on
Equity

22277516628

19052891818

16266884255

13817708990

11721331851

0.19

0.18

0.17

0.17

0.18

Source: Annual report of SPL from year 2010-2014

0.19
0.19
0.19
0.18
0.18
0.17
0.17
0.16

Return on Equity
0.18

2014

0.18

2013

0.17

0.17

2012

2011

2010

Column2

Higher this return, the better of this owner. From the above figure, we can say that the return on
equity of Square Pharmaceuticals Ltd. in 2014 is 19%, 2013 is 18% and 2010 is 18%. The return
on equity is low in 2012 and 2011. But in 2014 it is high. But the company is still in a stable
position.

Return on Asset (ROA):

The return on assets ratio, often called the return on total assets, is a profitability ratio that
measures the net income produced by total assets during a period by comparing net income to the
average total assets. In other words, the return on assets ratio or ROA measures how efficiently a
company can manage its assets to produce profits during a period.

Year
Net
Income
Total Asset

2014

2013

2012

2011

2010

4151546470

3318309302

2897710641

2532054550

2087871791

26549534878

23734742933

21453784762

19444409654

15196452304
17

Return on
Asset

0.16

0.14

0.13

0.13

0.14

Source: Annual report of SPL from year 2010-2014

Return on Asset
0.2

0.16

0.15

0.14

0.13

0.13

2013

2012

2011

0.14

0.1
0.05
0

2014

2010

Column2

From the above figure, we can say that the return on assets of Square Pharmaceuticals Ltd. in
2014 is 16%, 2013 is 14% and 2013 is 13%. The return on assets of Square Pharmaceuticals Ltd.
is increasing year by year. So the company is in a good position.

Earnings per Share:

The portion of a company's profit allocated to each outstanding share of common stock. Earnings
per share serves as an indicator of a company's profitability. When calculating, it is more
accurate to use a weighted average number of shares outstanding over the reporting term,
because the number of shares outstanding can change over time.

Year

2014

Net Income 4,031,811,268

number of
shares
outstandin
g
Earnings

2013
3,419,785,25
6

2012

2011

2010

2897710641

2532054550

2087871791

481,999,263

481,999,263

264834760

264834760

196173901

8.36

7.10

10.94

9.56

10.64
18

per Share
Source: Annual report of SPL from year 2010-2014

Earnings per Share

15

10.94

8.36

10

7.1

9.56

10.64

5
0

2014

2013

2012

2011

2010

Column2

Qualitative analysis (SWOT analysis):

The following SWOT analysis captures the main strengths and weaknesses within the company,
and describes the opportunities and threats of the company.
Strengths:
highly experienced Senior Executives some of whom has local and international significant
pharmaceutical literature.
Good reputation with high image.
Efficient, skilled, experienced and dedicated staff members
Resources are available in Bangladesh
Square pharma is able to make benchmarking medicines
Regulatory performance is strong and positive
Employee mobility is lower than that of its rival.
Weakness:
Non-availability of high technology
Time consuming decision making process
Incorrect method for collecting resources and inventory management
19

 Lack of asset management and debt.

Minimum profit in comparison with others.
Opportunities:
Government Support
Opportunity to take market share away from rivals by offering new innovative product or
services.
Opportunity to enter into the global market.
Threats:
Hiking price of raw materials
Mergers and Acquisition
Competitors are much in pharmaceutical industries
Competitors are offering innovative new product and services regularly. Matching them is
really hard.

Findings:

Liquidity position is relatively stronger compare to others.

Company management has proven efficiency in managing its inventory.

Companys management has dealt proficiency with its collection policies

Company is generating sufficient volume of business given its total investment

Operating expenses are going down signifying the companys efficiency.

Recommendation:
To strength the financial soundness in those areas where the Square Pharmaceuticals Ltd. needs
to improve, the following suggestive measures are recommended

The company should give more attention to improve efficiency in utilizing the capital.
20

The company should give more attention on how to effectively manage its cost and

revenue mixes.
The company should give more emphasizes in making the investment decision in a much
better way.

Conclusion:
The financial performance analysis of Square Pharmaceuticals Ltd. shows that it has performed
better in different specific aspects like short term and long term debt payment. However it has
yet some financial and operating areas like profitability where those need much attention to be
given. It can consider same actions recommended to improve its financial performance in the
years to come.

21