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Financial-Analysis-of-Pharmaceuticals-Industry

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 Course Code: FIN602 (Section-1)
Semester: Summer 2022
Assignment on:
“Financial Analysis of selective companies from Pharmaceuticals Industry in Bangladesh”

Student ID Companies in Pharmaceuticals Industry Analysing Year Time Period

21164032 Square Pharmaceuticals Ltd. 2017-2021 5 years
21364070 ACI Pharmaceuticals 2017-2021 5 years
20364020 Reneta Pharmaceuticals 2017-2021 5 years
21264057 Acme Pharmaceuticals Ltd 2017-2021 5 years
20364049 Beximco Pharmaceuticals Ltd. 2017-2021 5 years

Executive Summary
This report focuses on the comparative financial analysis with external data from annual report of 5
companies. In this report the companies have been chosen from pharmaceuticals industry for financial
analysis for 5 years from 2017 to 2021. The companies are: Square Pharmaceuticals Ltd.; ACI
Pharmaceuticals; Reneta Pharmaceuticals; ACME Pharmaceuticals and Beximco Pharmaceuticals Ltd.

Company Evaluation: Square Pharmaceuticals Limited

Analysis 2017 2018 2019 2020 2021

Liquidity Ratios:
Current Ratio 9.81 12.93 12.93 14.52 17.67
Quick Ratio 8.23 10.91 11.38 12.76 15.34

Cash Ratio 6.68 7.72 9.09 9.99 13.94

Operating Efficiency Ratios:
Inventory Turnover Ratio 4.90 4.53 4.81 3.96 3.42
Inventory Turnover Period 73.49 79.44 74.90 90.85 105.17
Accounts Receivable
16.58 24.55 28.19 30.18 30.99
Turnover Ratio
Accounts Receivables
21.71 14.67 12.77 11.93 11.62
Turnover Period
Accounts Payable Turnover
43.30 75.58 61.41 84.79 82.54
Ratio
Accounts Payables Turnover
8.31 4.76 5.86 4.25 4.36
Period

• Since overall liquidity ratio is getting higher it indicates company's financial growth, since creditors
and investors like to see higher liquidity ratios.
 i) Here low inventory turnover indicates weaker sales and declining demand for a company's
products. However, the high accounts receivables turnover ratio can indicate that the
company is conservative about extending credit to customers and is efficient or aggressive
with its collection practices. It can also mean the company's customers are of high quality,
and/or it runs on a cash basis. In this A high accounts payable ratio signals that a company
is paying its creditors and suppliers quickly.

Analysis 2017 2018 2019 2020 2021

Asset Management:
Total Asset Turnover 0.70 0.65 0.61 0.62 0.59
Fixed Asset Turnover 1.24 1.21 1.31 1.67 1.60
Current Asset Turnover 1.58 1.39 1.15 0.98 0.92
• Asset turnover highlights the amount of assets that the firm used to produce its total sales. Here
over the years low total asset turnover and low current asset turnover indicates that the firm has idle
or improperly use assets. Whereas the higher fixed asset turnover ratio indicates the company has
effectively used investments in fixed assets to generate sales.

Analysis 2017 2018 2019 2020 2021

Debt Management:
Debt Ratio 0.02 0.02 0.02 0.02 0.01
Current Liability Ratio 0.04 0.04 0.04 0.04 0.04
Current Liability to Long
2.09 1.79 2.30 2.54 2.44
Term Debt Ratio
Debt/Equity Ratio 1.07 1.06 1.06 1.06 1.05
Times Interest Earned (TIE) 8.25 8.06 7.02 5.76 8.32

• The debt management ratio measures how much of a company's operations comes from debt instead
of other forms of financing, such as stock or personal savings. Here we see overall the ratios
maintaining consistency except the times interest earned ratio. It implies consistent payments with
positive effect on payment history. Again, the higher times interest earned ratio is favourable
because it means that the company presents less of a risk to investors and creditors in terms of
solvency.

Analysis 2017 2018 2019 2020 2021

Profitability Ratios:
Gross Profit Margin (GPM) 56.78% 56.22% 56.57% 57.42% 57.50%
Operating Profit Margin
33.65% 32.23% 32.12% 32.12% 31.81%
(OPM)
Net Profit Margin (NPM) 49.99% 49.34% 49.83% 50.88% 51.09%
Operating Profit on Assets 23.41% 20.86% 19.60% 19.82% 18.62%
Return on Assets 23.41% 20.86% 19.60% 19.82% 18.62%
Return on Equity 25.08% 22.11% 20.83% 21.10% 19.61%
Operating Return on Assets 48.37% 49.80% 52.62% 52.06% 54.32%
• Profitability ratios indicate how efficiently a company generates profit and value for shareholders.
Higher ratio results are often more favourable. However here profit margins are almost same over
the years. Also, the low return on asset indicates that the company is not able to make maximum
use of its assets for getting more profits. and low return on equity means that the company earns
 relatively little compared to its shareholder's equity. Though in operations it is efficiently using
assets.

• Below, in case of market valuation ratios, the P/E Ratio higher meaning it is taking longer time to
provide return. Again, the increasing dividend pay-out ratio may attract investors.
• The increasing net working capital states it has increasing financial resources to meet all its short-
term financial obligations. This refers the efficiency the company functions.
• Cash Conversion Cycle indicates if the firm doing well converting inventory to cash and showing
business is operating efficiently. However, the increasing cycle is not good as it is signing
operational issues.

Analysis 2017 2018 2019 2020 2021

Market Valuation Ratios:
P/E Ratio 4.61 5.34 5.74 5.79 5.70
P/B (price to book) Ratio 1.08 1.00 1.00 1.11 1.11

Book Value Per Share 66.49 78.41 86.03 82.74 92.75

Dividend Pay-out Ratio 21.81% 22.16% 22.46% 24.81% 24.88%

Book Value of Debt 1,16,94,84,529 1,34,56,99,304 1,53,42,60,204 1,40,09,91,338 1,45,65,65,964

Book Value of Equity 49,02,77,00,210 57,81,65,66,831 67,88,06,17,172 69,84,99,80,823 82,21,75,74,950
Book Value of Total
49,02,77,00,210 57,81,65,66,831 67,88,06,17,172 69,84,99,80,823 82,21,75,74,950
Company
True Value of the Company 52,71,60,89,024 57,81,88,35,367 67,87,83,98,330 77,36,60,67,275 90,89,66,86,565
Net Working Capital: 20,81,43,85,970 26,24,11,35,749 35,44,05,53,507 43,65,86,84,921 51,83,59,78,663
Cash Conversion Cycle: 86.89 89.34 81.81 98.53 112.43

Company Evaluation: ACI Pharmaceuticals

Analysis 2017 2018 2019 2020 2021

Liquidity Ratios:
Current Ratio 0.87 0.87 1.17 1.17 1.27
Quick Ratio 0.52 0.53 0.69 0.76 0.77
Cash Ratio 0.15 0.06 0.09 0.08 0.08
Operating Efficiency
Ratios:
Inventory Turnover 0.24 0.26 1.75 1.85 2.14
Ratio
Accounts Receivable 0.43 0.38 2.37 2.18 3.01
Turnover Ratio
Accounts Payable 1.55 1.83 - - 31.94
Turnover Ratio
• The company has higher liquidity ratio over the years which is good as higher the liquidity ratio,
the more it attracts investors and creditors.
 Asset Management: 2017 2018 2019 2020 2021
Total Asset Turnover 0.08 0.07 0.67 0.62 0.68
Fixed Asset Turnover 0.17 0.17 2.02 1.75 1.59
Current Asset Turnover 0.14 0.14 1.01 0.96 1.20

• In terms of asset management, the firm is having higher ratio over the years which signs having
higher efficiency and effectiveness in terms of asset management.

Debt Management: 2017 2018 2019 2020 2021

Debt Ratio: 0.14 0.17 0.02 0.01 0.02
Current Liability Ratio 0.87 0.87 1.17 1.17 1.27
Current Liability to Long Term 4.45 3.75 33.27 39.11 25.31
Debt Ratio

Debt/Equity Ratio 3.41 4.03 1.43 1.29 0.88

Times Interest Earned (TIE) 0.11 0.04 2.06 1.06 0.73

• The debt ratio shows good pattern as TIE is increasing over the years.

Profitability Ratios: 2017 2018 2019 2020 2021

Gross Profit Margin (GPM) 31% 25% 30% 31% 29%
Operating Profit Margin (OPM) 14% 8% 10% 10% 11%
Net Profit Margin (NPM) 31% 25% 30% 31% 29%
Operating Profit on Assets 1% 1% 7% 6% 8%
Return on Assets 1% 1% 7% 6% 8%
Return on Equity 5% 3% 17% 15% 14%
Operating Return on Assets 1% 1% 7% 6% 8%

• In terms of profitability the ratio is going up in overall this is where the ratio may attract the
investors. Thus, the firm should work on increasing the other ratios.

Market 2017 2018 2019 2020 2021

Valuation
Ratios:
P/E Ratio 37.76 89.79 19.07 25.96 14.11
P/B (price to 5.81 2.56 2.88 2.06 4.74
book) Ratio
Book Value of 6,729,292,414 9,286,047,109 103,412,200 77,564,149 100,206,096
Debt
Book Value of 10,639,058,948 11,020,393,747 2,471,788,968 2,406,741,159 3,009,375,462
Equity
Book Value of 10,639,058,948 11,020,393,747 2,471,788,968 2,406,741,159 3,009,375,462
Total
Company
Net Working (3,819,990,025) (4,648,081,668) 569,430,606 529,813,572 682,895,880
Capital:
CCC: (893.06) (609.31) (54.04) (28.56) (59.67)

• The market valuation is indicating good trend as over the years the P/E ratio is lowering indicating
investors will be having lowered period of receiving return. Again, the increasing net working
 capital is good for the company. The negative cash conversion cycle indicates good for operational
efficiency for the company for the company.

Company Evaluation: Reneta Pharmaceuticals

Analysis 2017 2018 2019 2020 2021
Liquidity Ratios:
Current Ratio 1.70 2.12 2.55 2.46 2.24
Quick Ratio 0.94 1.27 1.64 1.61 1.45
Cash Ratio 0.14 0.24 0.18 0.23 0.18
Operating Efficiency Ratios:
Inventory Turnover Ratio 2.46 2.63 2.78 2.73 2.80
Accounts Receivable Turnover Ratio 6.51 7.71 8.50 8.36 8.77
Accounts Payable Turnover Ratio 5.51 43.12 28.01 20.89 34.20

• The company has higher liquidity ratio over the years which is good as higher the liquidity ratio,
the more it attracts investors and creditors.

Analysis 2017 2018 2019 2020 2021

Asset Management:
Total Asset Turnover 1.98 0.95 0.99 0.91 0.93
Fixed Asset Turnover 1.65 1.68 0.94 0.92 0.94
Current Asset Turnover 2.27 2.19 2.09 1.81 1.85

• In terms of asset management, the firm is having lower ratio over the years which signs having
lower efficiency and effectiveness in terms of asset management.
Analysis 2017 2018 2019 2020 2021
Debt Management:
Debt Ratio 0.31 0.27 0.25 0.26 0.26
Current Liability Ratio 0.24 0.22 0.19 0.21 0.22
Current Liability to Long Term Debt 3.56 3.70 3.52 4.27 5.62
Ratio
Debt/Equity Ratio 0.45 0.38 0.33 1.28 0.35
Times Interest Earned (TIE) 32.71 53.04 45.97 39.17 67.66

• The debt ratio shows good pattern as TIE is increasing over the years.
Analysis 2017 2018 2019 2020 2021
Profitability Ratios:
Gross Profit Margin (GPM) 50.13% 49.51% 49.61% 47.06% 47.32%
Operating Profit Margin (OPM) 24.80% 23.81% 23.19% 23.74% 22.90%
Net Profit Margin (NPM) 16.09% 16.31% 16.46% 16.26% 16.89%
Operating Profit on Assets 22.06% 19.33% 21.44% 19.94% 19.74%
Return on Assets 23.41% 20.86% 19.60% 19.82% 18.62%
Return on Equity 25.08% 22.11% 20.83% 21.10% 19.61%
 • In terms of profitability the ratio is going down this is factor where low ratio will distract the
investors. Thus the firm should work on increasing the ratio.
Analysis 2017 2018 2019 2020 2021
Market Valuation Ratios:
P/E Ratio 45.79 43.69 34.15 27.42 27.85
P/B (price to book) Ratio 9.47 8.75 6.90 5.05 5.48
Book Value Per Share 120.75 144.68 173.49 203.03 239.87
Dividend Payout Ratio 25.58% 17.57% 17.69% 19.93% 22.55%
Book Value of Debt 1,169,484,52 1,345,699,30 1,534,260,20 1,400,991,33 1,456,565,96
9 4 4 8 4
Book Value of Equity 49,027,700,2 57,816,566,8 67,880,617,1 69,849,980,8 82,217,574,9
10 31 72 23 50
Book Value of Total Company 12,943.04 15,508.20 18,596.05 21,762.33 25,711.45
True Value of the Company 122625.36 135723.98 128254.98 109998.38 140962.35
Net Working Capital: 3,139 5,162 7,357 9,000 9,501
Cash Conversion Cycle: 136.49 175.38 158.93 159.86 158.90

• The market valuation is indicating good trend as over the years the P/E ratio is lowering indicating
investors lowered period of receiving return. Again, the increasing net working capital is good for
the company. But the increasing cash conversion cycle indicates risk for the company.

Analysis Formula 2017 2018 2019 2020 2021

Liquidity Ratios:
Current Assets/Current
Current Ratio 1.70 2.12 2.55 2.24 2.46
Liabilities
(Current Asset-
Quick Ratio Inventory)/Current 0.94 1.27 1.64 1.61 1.45
Liabilities
Cash and Cash
Cash Ratio Equivalents/Current 0.14 0.24 0.14 0.18 13.94
Liabilities
Operating Efficiency
Ratios:
Inventory Turnover Ratio COGS/Average Inventory 2.46 2.63 2.55 2.46 2.24
360/Inventory Turnover
Inventory Turnover Period 6.51 6.72 6.85 7.20 7.35
Ratio
Accounts Receivable Net Sales Revenue/Average
7.58 8.52 9.35 8.56 8.98
Turnover Ratio Accounts Receivables
Accounts Receivables 360/Accounts Receivable
6.32 6.58 6.94 5.98 6.50
Turnover Period Turnover Ratio
Accounts Payable Turnover Net Sales Revenue/Average
3.54 4.52 4.55 4.89 5.62
Ratio Accounts Payables
Accounts Payables Turnover 360/Accounts Payable
9.05 4.76 6.21 4.31 4.45
Period Turnover Ratio

Company Evaluation: Acme Pharmaceuticals Limited

• Since the overall liquidity rate is getting advance it indicates the company's fiscal growth since
creditors and investors like to see advanced liquidity rates. Low force development means weaker
deals and declining demand for a company's products. Still, the high accounts receivables
development rate can indicate that the company is conservative about extending credit to guests
and is effective or aggressive with its collection practices. It can also mean the company's guests
are of high quality, and/ or it runs on a cash base. In this, a high accounts outstanding rate signals
that a company is paying its creditors and suppliers snappily.
 Asset Management: 2017 2018 2019 2020 2021
Total Asset Turnover Net Revenue/Total Assets 2.68 3.65 4.57 4.54 5.51
Fixed Asset Turnover Net Revenue/Fixed Assets 1.23 1.21 1.23 1.22 1.21
Current Asset Turnover Net Revenue/Current Assets 1.54 1.38 1.08 1.95 1.90

• Asset turnover highlights the number of means that the firm used to produce its total deals. Then
over the times low total asset development and low current asset turnover indicate that the firm has
idle or improperly use means. Whereas the higher fixed asset turnover rate indicates the company
has effectively used investments in fixed means to induce deals.

Debt Management: 2017 2018 2019 2020 2021

Debt Ratio: Total Debt/Total Assets 33% 74% 65% 47% 52%
Current Liability Ratio Current Asset/Current Liabilities 1.25 1.24 1.28 1.32 1.29
Current Liability to Long Term Debt
Ratio Current Liability/Long Term Debt 2.46 2.37 2.29 2.55 2.44
Debt/Equity Ratio Total Liabilities /Shareholder Equity 1.05 1.05 1.04 1.05 1.04

• The debt management rate measures how important of a company's operations comes from debt
rather of other forms of backing, similar as stock or particular savings. Then we see overall the rates
maintaining thickness except the times interest earned rate. It implies harmonious payments with
positive effect on payment history. Again, the advanced times interest earned rate is favourable
because it means that the company presents lower of a threat to investors and creditors in terms of
solvency.

Profitability Ratios: 2017 2018 2019 2020 2021

Gross Profit Margin (Gross Revenue – Cost of Goods Sold)/Gross
(GPM) Revenue 65.51% 62.22% 60.11% 59.31% 60.91%
Operating Profit Margin
(OPM) EBIT ⁄ Net revenue 77.35% 71.49% 70.41% 71.18% 73.79%
(Net Revenue-Cost Of Goods Sold)⁄Net
Net Profit Margin (NPM) revenue 59.31% 54.38% 51.63% 52.01% 54.12%
Operating Profit on
Assets EBIT/Total Assets 52.87% 46.11% 40.48% 38.12% 38.00%

Return on Assets Net Income/Total Assets 52.87% 46.11% 40.48% 38.12% 38.00%
Return on Equity Net Income/Total Equity 56.47% 46.25% 41.43% 44.92% 43.24%
Operating Return on
Assets (EBIT/Net Sales)*(Net Sales/Total Assets) 113.17% 110.82% 122.47% 132.92% 143.28%

• Profitability rates indicate how efficiently a company generates profit and value for shareholders.
Advanced rate results are frequently more favourable. Still then, profit perimeters are nearly the
same over the times. In addition, the low return on means indicates that the company is not suitable
to make maximum use of its means for getting further gains. In addition, low return on equity means
that the company earns fairly little compared to its shareholder's equity. However, in operations it
is efficiently using means.

• The P/ E rate advanced meaning it is taking longer time to give return. Again, the adding tip pay-
out rate may attract investors.

• Cash Conversion Cycle indicates if the establishment doing well converting force to cash and
showing business is operating efficiently. Still, the adding cycle is not good as it is subscribing
functional issues.
 Analysis 2017 2018 2019 2020 2021

Market Valuation Ratios:

P/E Ratio 5.59 5.03 5.06 5.39 5.61

P/B (price to book) Ratio 0.94 0.88 0.86 0.96 0.95

Book Value Per Share 80.66 59.17 99.56 94.28 106.23

Dividend Pay-out Ratio 27.21% 21.38% 18.43% 23.34% 25.01%

Book Value of Debt 1291.35 1385.95 1827.95 1,1333.65 2050.65

Book Value of Equity 1524.65 1850.65 2012.65 1985.65 2206.35

Book Value of Total Company 49,027,700 57,815,256 675,806,170 632,125,654 678,652,985

True Value of the Company 48,194,326 53,987,711 60,641,494 68,409,482 80,244,326

Net Working Capital: 21,595,387 25,721,135 35,544,553 43,838,474 52,235,968

Cash Conversion Cycle: 98.17 99.94 89.68 106.27 123.23

Company Evaluation: Beximco Pharmaceuticals Limited

2017 2018 2019 2020 2021

Liquidity Ratios:
Current Ratio 2.68 1.26 1.04 1.15 1.47
Quick Ratio 1.66 0.70 0.58 0.63 0.71

Cash Ratio 0.08 0.04 0.05 0.06 0.07

Operating Efficiency Ratios:

Inventory Turnover Ratio 2.40 1.86 2.06 2.31 2.18
Receivable Turnover Ratio 7.16 6.42 6.84 7.75 10.26
A/C Payable Turnover Ratio 10.62 9.51 11.17 9.37 7.92
Since overall liquidity ratio is getting higher it indicates company's financial growth, since creditors
and investors like to see higher liquidity ratios. Here low inventory turnover indicates weaker sales and
declining demand for a company's products. However, the high accounts receivables turnover ratio can
indicate that the company is conservative about extending credit to customers and is efficient or
aggressive with its collection practices. It can also mean the company's customers are of high quality,
and/or it runs on a cash basis. In this A high accounts payable ratio signals that a company is paying its
creditors and suppliers quickly.

Analysis 2017 2018 2019 2020 2021

Asset Management:
Total Asset Turnover 0.48 0.46 0.49 0.52 0.58
Fixed Asset Turnover 0.65 0.62 0.67 0.70 0.78
Current Asset Turnover 1.76 1.73 1.85 1.95 2.20
Asset turnover highlights the number of means that the firm used to produce its total deals. Then over
the times low total asset development and low current asset turnover indicate that the firm has idle or
improperly use means. Whereas the higher fixed asset turnover rate indicates the company has
effectively used investments in fixed means to induce deals.
 Debt Management 2017 2018 2019 2020 2021
Debt Ratio 0.19 0.37 0.39 0.35 0.28
Current Liability Ratio 0.10 0.21 0.26 0.23 0.18
Current .L to L. Term Debt Ratio 1.15 1.22 1.93 1.90 1.69
Debt/Equity Ratio 0.25 0.60 0.65 0.53 0.40
The debt management rate measures how important of a company's operations comes from debt rather
of other forms of backing, similar as stock or particular savings. Then we see overall the rates
maintaining thickness except the times interest earned rate. It implies harmonious payments with
positive effect on payment history. Again, the advanced times interest earned rate is favorable because
it means that the company presents lower of a threat to investors and creditors in terms of solvency.

Operating Profitability Ratios: 2017 2018 2019 2020 2021

Gross Profit Margin (GPM) 46% 47% 47% 46% 47%
Operating Profit Margin (OPM) 22% 23% 22% 22% 23%
Pre Tax Profit Margin 19% 19% 17% 18% 22%
Net Profit Margin (NPM) 14% 14% 13% 14% 18%

ROA 0.07 0.06 0.06 0.07 0.10

ROE 0.09 0.09 0.10 0.11 0.14

Profitability rates indicate how efficiently a company generates profit and value for shareholders.
Advanced rate results are frequently more favorable. Still then, profit perimeters are nearly the same
over the times. In addition, the low return on means indicates that the company is not suitable to make
maximum use of its means for getting further gains. In addition, low return on equity means that the
company earns fairly little compared to its shareholder's equity. However, in operations it is efficiently
using means.
Valuation Ratios: 2017 2018 2019 2020 2021
P/B (price to book)
1.78 1.35 1.13 0.86 1.95
Ratio
Book Value Per Share 61.82 67.44 73.64 80.87 92.13
Dividend Payout Ratio 9% 20% 17% 17% 12%
Retention Ratio 0.91 0.80 0.83 0.83 0.89
P/E Ratio 20.03 14.59 11.10 8.06 15.65
Book value of Debt 3,685,550,597.00 8,937,853,605.00 8,220,606,918.00 7,417,639,318.00 6,932,946,802.00

The P/ E rate advanced meaning it is taking longer time to give return. Again, the adding tip pay- out
rate may attract investors.
Net working Capital 5,724,776,621.00 2,326,013,940.00 518,329,388.00 1,691,113,915.00 4,421,167,771.00
Net working capital
2.68 1.26 1.04 1.15 1.47
ratio

Net working capital (NWC) is the difference between a business' short-term assets and its short-term
debts and liabilities. It is ideal to have a positive net working capital, as this signifies that the company's
financial obligations are met, and it can invest in other operational requirements.
 The net working capital ratio measures the pharmaceutical company’s ability to pay off its current
liabilities with its current assets.

Cash Conversion Cycle: 182.11 229.07 210.25 181.97 176.24

The CCC is one of several quantitative measures to evaluate the efficiency of a company's operations
and management. A trend of decreasing or steady CCC values over multiple periods is a good sign
while rising ones should lead to more investigation and analysis based on other factors.

Comparative Analysis of Pharmaceuticals industry

Company (Year 2021) Square ACI Reneta ACME Beximco Industry
Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Average
Ltd. Ltd.
Liquidity Ratios:
Current Ratio 17.67 1.27 2.24 2.21 1.47 4.97
Quick Ratio 15.34 0.77 1.45 1.31 0.71 3.92
Cash Ratio 13.94 0.08 0.18 0.38 0.07 2.93
CCC 112.43 -59.67 158.90 105.45 186.25 100.67
Net Working Capital 51835978663 682895880 9501216798 9651510000 4421167771 15218553822
Operating Efficiency
Ratios:
Inventory Turnover 3.42 2.14 2.18 9.11 2.18 3.81
Ratio
Accounts Receivable 30.99 3.01 10.26 99.93 10.26 30.89
Turnover Ratio
Accounts Payable 82.54 31.94 7.92 4.85 7.92 27.04
Turnover Ratio
• In terms of overall liquidity ratio analysis Square Pharmaceuticals Ltd. has high liquidity ratio and
net working capital compared to other companies in same industry. This result will attract both
creditors and investors to proceed with Square Pharmaceuticals Ltd. in pharmaceuticals industry.
Company (Year Square ACI Reneta ACME Beximco Industry
2021) Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Average
Ltd. Ltd.
Asset Management:
Total Asset Turnover 0.59 0.68 0.93 1.96 0.58 0.95
Fixed Asset Turnover 1.60 1.59 0.94 6.14 0.78 2.21
Current Asset 0.92 1.20 1.85 1.86 2.20 1.61
Turnover
• In terms of Asset management Acme Pharmaceuticals has high ration meaning it is utilizing its
assets more efficiently compared other firms in same industry.
Company (Year 2021) Square ACI Reneta ACME Beximco Industry
Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Average
Ltd. Ltd.
Debt Management:
Debt Ratio 0.05 0.02 0.26 0.52 0.28 0.23
Current Liability Ratio 0.04 1.27 0.22 0.29 0.18 0.4
Current Liability to Long 2.44 25.31 5.62 4.42 1.69 7.9
Term Debt Ratio
Debt/Equity Ratio 1.05 0.88 0.35 0.55 0.40 0.65
Times Interest Earned (TIE) 8.32 0.73 67.66 47.51 7.90 26.42
 • In case of Debt ratio Reneta pharmaceuticals is performing better with high ratio in TIE ratio. It
also indicates it has lower probability of defaulting.
Company (Year 2021) Square ACI Reneta ACME Beximco Industry
Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Average
Ltd. Ltd.
Profitability Ratios:
Gross Profit Margin 0.57 0.29 0.47 0.46 0.47 0.45
(GPM)
Operating Profit Margin 0.32 0.11 0.23 0.19 0.23 0.22
(OPM)
Net Profit Margin 0.51 0.29 0.17 0.14 0.18 0.26
(NPM)
Operating Profit on 0.19 0.08 0.20 7.20 0.13 1.56
Assets
Return on Assets 0.19 0.08 0.15 0.25 0.10 0.15
Return on Equity 0.20 0.14 0.20 0.20 0.10 0.17

• In overall profitability ratio square pharmaceuticals is performing better with high ratio in overall
all the ratios and increasing industry average.
Company (Year 2021) Square ACI Reneta ACME Beximco Industry
Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Average
Ltd. Ltd.
Market Valuation
Ratios:
P/E Ratio 11.92 14.11 27.85 95.15 15.65 32.94
P/B (price to book) 2.31 4.74 5.48 0.68 1.95 3.03
Ratio
Book Value Per Share 92.75 47.68 239.87 120.35 92.13 118.56
Dividend Pay-out Ratio 25% 30% 23% 28% 12% 24%
Book Value of Debt 1,456,565,964 100206096 1,369,274,868 2,050,650,000 6,932,946,802 2,381,928,746
Book Value of Equity 82,217,574,950 3009375462 25,711,452,786 35,485,250,000 37,364,864,829 36,757,703,605
Book Value of Total 82,217,574,950 3009375462 25,711,452,786 35,485,250,000 37,364,864,829 36,757,703,605
Company
True Value of the 190,028,503,014 16,566,440,625 140,962,353,300 1,685,025,654,000 72,931,215,504 421,102,833,289
Company
• In Market valuation ratio Square has low P/E ratio which is means it gives return earlier than other
firms. This is more lucrative for investors. However, ACI pharmaceuticals has high dividend pay-
out ratio compared to other.

Recommendation:
With the comparative analysis of pharmaceuticals industry for the selected companies, we recommend
Square Pharmaceuticals holding a better position. From the perspectives of creditors: it has high
liquidity ratio and times interest earned ratio meaning lower probability of default with higher credit
worthiness. From investors’ perspective it is better because of its lower P/E ratio and good dividend
pay-out ratio. Moreover, the firm has high net working capital that endures efficient operating cycle
and smooth business.

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