Semester: Summar 2023

Course: FIN410 (Financial Statement)

Section: 07
Assignment on
Financial Statement Analysis of

SQUARE PHARMACEUTICALS LIMITED

Submitted To:
Hasan Mohammed Sami (HAS)
Lecturer, Department of Accounting & Finance
Submitted By: (ACTUARIES)
Emon Ahmed (2011905030)
Rasib Mostofa (2012244630)
Md. Faiaz – Al – Ishmam (2013773030)
Sadman Bin Ibrahim (2021776030)
Asikuzzaman (1931276030)
Md. Omar Sabil (2011157030)
Table of Contents
SQUARE PHARMACEUTICALS.......................................................................................................................1
Financial Data and Explanation....................................................................................................................2
Major Values from Financial Statement.......................................................................................................3
Ratio Interpretation.....................................................................................................................................4
Trend Analysis of the Ratios.........................................................................................................................7
PE ratio and EPS...........................................................................................................................................8
 SQUARE PHARMACEUTICALS
Square pharma is recognized as one of the largest pharmaceutical companies in Bangladesh since
1987. Square Group Ltd is the mother company of the Square Pharma, which also is one of the
top conglomerate organizations in Bangladesh. Their pharmaceuticals are well-known for their
high quality and affordable generic medicines. The medicines are not only available in the
Bangladeshi market, but also are exported to more than 40 other countries over the world.
Samson H Chowdhury, the founder of Square Pharma was a visionary entrepreneur who had a
vision of making healthcare more accessible to everyone. With such a vision, he founded Square
Pharma in 1958. It was a small pharmacy in the beginning which grew up with his dream, and
now it is one of the leading pharmaceutical companies in Bangladesh.
Pharmaceutical products are one of the major exports of Bangladesh, which have an even
brighter future. Even globally Bangladesh is one of the major exporters of pharmaceutical
products, where they have currently availed their products in 151 countries through exports, and
Square Pharma is one of the major players in the global market from Bangladesh. It has its own
State-of-the-art manufacturing facility in Dhaka, where it produces more than 600 different
products, including antibiotics, anti-inflammatories, analgesics, cardiovascular drugs, and so on.
They have a strong and efficient R&D department that is continuously working on developing
new products and improving the existing ones at the same time.
Square Pharma has become a well-established Pharmaceutical Brand that has positioned itself as
a high-quality and affordable pharmaceutical company all over the world. They have a strong
Social Responsibility program from the beginning, aligned with the vision of the founder,
Samson H Chowdhury. It is to improve healthcare accessibility in underserved communities and
to promote public health awareness.
Mission
Their mission statement is fully focused on maintaining the product quality, and ethical standard
of their business and benefiting their shareholders, stakeholders, and society. In their language,
“Square Pharma’s mission is to produce and provide quality and innovative healthcare relief for
people, maintain stringently ethical standard in business operation also ensuring benefit to the
shareholders, stakeholders and the society at large.”
Vision
Their view about the business is a means to the material and social well-being of the investors,
employees, and society at large, leading to the accretion of wealth through financial and moral
gains as a part of the process of human civilization.
Objective
The objectives are to conduct transparent business operations based on market mechanisms
within the legal and social framework with the aim of attaining the mission reflected by our
vision.
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 Financial Data and Explanation
Square Pharmaceuticals is a leading pharmaceutical company in Bangladesh with a strong track
record of financial performance. The company has a diversified product portfolio, a strong brand
presence, and a growing export business. Square Pharmaceuticals is also a well-managed
company with a strong commitment to corporate social responsibility.
Here are some of the key financial metrics that support my decision to choose Square
Pharmaceuticals for the financial statement analysis report:
Revenue growth: Square Pharmaceuticals has a strong track record of revenue growth. Over the
past five years, the company's revenue has grown at a compound annual growth rate (CAGR) of
15%. This growth has been driven by strong demand for the company's products in both the
domestic and export markets.
Profitability: Square Pharmaceuticals is a profitable company with a consistently high profit
margin. The company's net profit margin has averaged 20% over the past five years. This
profitability is a testament to the company's efficient operations and strong brand recognition.
Financial stability: Square Pharmaceuticals has a strong financial position with a low debt-to-
equity ratio. The company's debt-to-equity ratio has averaged 0.25 over the past five years. This
low debt level gives the company flexibility to invest in growth opportunities.
Dividend payout: Square Pharmaceuticals has a history of paying regular dividends to its
shareholders. The company's dividend payout ratio has averaged 30% over the past five years.
This dividend payout is a sign of the company's commitment to returning value to its
shareholders.
In addition to these financial metrics, we also considered the following factors when choosing
Square Pharmaceuticals:
Market leadership: Square Pharmaceuticals is the leading pharmaceutical company in
Bangladesh. The company has a strong brand presence and a loyal customer base.
Diversified product portfolio: Square Pharmaceuticals has a diversified product portfolio that
includes a wide range of pharmaceuticals, from antibiotics to anti-inflammatories. This
diversification helps to reduce the company's risk exposure.
Growing export business: Square Pharmaceuticals is a growing exporter of pharmaceuticals.
The company's export business has grown at a CAGR of 20% over the past five years. This
growth is driven by the company's strong reputation and its ability to produce high-quality
pharmaceuticals at competitive prices.
Commitment to CSR: Square Pharmaceuticals is committed to corporate social responsibility.
The company has a number of CSR initiatives in place, including programs to promote
education, healthcare, and environmental sustainability.

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Overall, I believe that Square Pharmaceuticals is a strong company with a bright future. The
company's financial performance, market position, and commitment to CSR make it an ideal
candidate for a financial statement analysis report.

Major Values from Financial Statement

Total Assets for square pharma for 3 years is as follows:

74,350,803,912 86,602,383,695 97,535,186,866

Total Liabilities for square pharma for 3 years is as follows:

7669074934 4,384,808,745 4,527,831,777

Total shareholder equity for square pharma for the 3 years are:
74,350,803,912 86,602,383,695 97,535,186,866

The net revenue for square pharma from 2020 to 2022 is as follows:
45,876,448,841 50,703,028,902 57,597,941,359

The gross profit for square pharma for the 3 years is:
23,339,778,881 25,902,993,347 29,639,914,379

The total Comprehensive Income for square pharma for the 3 years is:
12,417,582,626 16,275,696,477 16,108,486,199

Net Cash Generated from Operating Activities for 3 years are:

10,891,697,196 10,924,582,382 12,345,634,446

Net cash used in investing activities for the 3 years:

-2,272,762,142 4,156,128,233 -1,688,245,284

Net cash used in financing actives for the 3 years are as follows:
-3,313,835,557 -3,967,923,573 -5,564,235,770

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 Ratio Interpretation
Activity Ratio
Ratio 2020 2021 2022 Change 2020 to 2021 Change 2021 to 2022
Inventory Turnover 4.38 3.84 3.63 -12.33% -5.47%
Interpretation: The inventory turnover ratio has decreased over the past two years. This suggests
that the company is taking longer to sell its inventory.
Days Sales in Inventory 82.14 93.87 99.29 14.27% 5.84%
Interpretation: The day’s sales in inventory (DSI) have increased over the past two years. This is
consistent with the decrease in inventory turnover. A higher DSI indicates that the company is
taking longer to sell its inventory.
Receivables Turnover 23.18 24.07 30.09 3.80% 25.29%
Interpretation: The receivables turnover ratio has increased over the past two years. This suggests
that the company is collecting its accounts receivable more quickly.
Payables Turnover (Using COGS) 55.77 67.70 69.35 21.29% 2.51%
Interpretation: The payables turnover ratio has increased over the past two years. This suggests
that the company is paying its accounts payable more quickly.
Working Capital Turnover 1.16 1.06 1.04 -8.62% -1.89%
Interpretation: The working capital turnover ratio has decreased over the past two years. This
suggests that the company is using its working capital less efficiently.
Fixed Asset Turnover 2.22 2.39 2.58 7.66% 8.00%
Interpretation: The fixed asset turnover ratio has increased over the past two years. This suggests
that the company is using its fixed assets more efficiently.
Total Asset Turnover 0.66 0.63 0.63 -4.55% 0.00%
Interpretation: The total asset turnover ratio has decreased over the past two years. This suggests
that the company is using its assets less efficiently. This could be due to a number of factors,
such as decreased sales, increased assets, or a decrease in asset utilization

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b) Liquidity Ratios:
Ratio 2020 2021 2022 Change from 2020 to 2022
Current Ratio 14.52 17.67 18.74 29.09%
Quick Ratio 11.29 15.95 16.91 49.82%
Cash Ratio 9.99 13.94 14.60 46.20%
Cash Conversion Cycle (COGS) 98.54 110.07 124.84 26.67%

The current ratio increased from 14.52 in 2020 to 18.74 in 2022. This means that the company
has 1.87 times as much current asset as current liabilities.
The quick ratio increased from 11.29 in 2020 to 16.91 in 2022. This means that the company has
1.69 times as much cash and cash equivalents as current liabilities.
The cash ratio increased from 9.99 in 2020 to 14.60 in 2022. This means that the company has
1.46 times as much cash and cash equivalents as current liabilities.
The cash conversion cycle increased from 98.54 days in 2020 to 124.84 days in 2022. This
means that it takes the company longer to convert its cash into cash again.

c) Solvency Ratios:

Ratio 2020 2021 2022 Change from 2020 to 2021 Change from 2021 to 2022
Debt to Asset 5.97% 5.06% 4.64% -15.24% - 8.30%
Debt to Equity 6.35% 5.33% 4.87% -16.06% -8.63%
Debt to Capital 3.08% 2.60% 2.38% -15.58% -8.46%
Financial Leverage 0.77% 0.75% 0.68% -2.60% -9.33%
Interest Coverage
16,047,606.65% 139,521,926.22% 71,291,444.42%
769.43% -48.90%
The company's debt to asset ratio has decreased steadily from 2020 to 2022, indicating that the
company is becoming less reliant on debt to finance its assets
Similar to the debt to asset ratio, the debt to equity ratio has also decreased over the past three
years. This suggests that the company is using more equity financing and less debt financing,
which can make the company less risky for investors

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The debt to capital ratio has also been trending downward, further indicating the company's
reduced reliance on debt
The financial leverage ratio has decreased slightly from 2020 to 2022. This means that the
company is using less debt to magnify its earnings per share.
The interest coverage ratio has fluctuated significantly over the past three years. While it
increased substantially from 2020 to 2021, it then declined considerably in 2022. This suggests
that the company's ability to meet its interest obligations has been variable.
.Interest Coverage: Measures a company's ability to meet its interest payments. A higher interest
coverage ratio indicates that a company is more likely to be able to meet its interest payments.

d) Profitability Ratio :
Return on Sales 2020 2021 2022
Gross Profit Margin 50.88% 51.09% 51.46%
Interpretation The gross profit margin has been increasing steadily over the past three years.
This is a positive sign that the company is becoming more efficient in its production process.
Operating Profit Margin 32.12% 31.81% 32.03%
Interpretation The operating profit margin has been relatively stable over the past three years.
This suggests that the company is managing its expenses well.
Pretax Margin 37.46% 36.99% 36.50%
Interpretation The pretax margin has been decreasing slightly over the past three years. This
suggests that the company is paying more in taxes.
Net Profit Margin 28.24% 29.08% 28.50%
Interpretation The net profit margin has been increasing slightly over the past three years. This
is a positive sign that the company is becoming more profitable

ROI Metric 2020 2021 2022 Change from 2020 to 2022

Operating ROA 19.82% 18.62% 18.92% -4.52%
ROA 17.43% 17.02% 16.83% -3.43%
Return on Total Capital 23.11% 21.66% 21.56% -6.72%
ROE 18.53% 17.93% 17.65% -4.75%

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Operating ROA: This metric measures the profitability of a company's core operations. The
decline in operating ROA from 2020 to 2022 suggests that the company's core operations are
becoming less profitable
ROA: This metric measures the overall profitability of a company. The decline in ROA from
2020 to 2022 suggests that the company is becoming less profitable overall.
Return on Total Capital: This metric measures the efficiency with which a company uses its
capital to generate profits. The decline in return on total capital from 2020 to 2022 suggests that
the company is not using its capital as efficiently as it could be.
ROA: This metric measures the overall profitability of a company. The decline in ROA from
2020 to 2022 suggests that the company is becoming less profitable overall. This could be due to
a number of factors, such as increased interest expenses or a decrease in non-operating income.

Trend Analysis of the Ratios

Ratio Year 2020 Year 2021 Year 2022 Trend of 2020- Trend of
2021 (%) 2021-2022
(%)
Inventory 4.3 3.8 3.6 -11.62 -5.26
Turnover
Days Sales in 82 93 99 13.41 6.45
Inventory
Receivables 23.1 24.06 23.00 2.31 -4.40
Turnover
No. of Days of 55.77 67.69 69.35 21.39 2.45
Payables
Turnover
(Using COGS)
Working 1.16 1.06 1.03 -8.62 -2.8
Capital
Turnover
Fixed Asset 2.22 2.39 2.58 7.65 12.55
Turnover
Total Asset 0.65 0.63 0.62 -3.12 -1.58
Turnover
Current Ratio 14.52 17.66 18.73 21.65 6.058
Quick Ratio 11.29 15.95 16.91 41.27 6.01
Cash Ratio 9.98 13.94 14.60 39.6 4.73
Cash 98.53 110.06 124.83 11.70 13.5
Conversion
Cycle (COGS)
Debt to Asset 5.97 5.06 4.64 -15.24 -8.3
Debt to Equity 6.35 5.33 4.87 -16.06 -8.6

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 Financial 0.77 0.75 0.68 -2.59 -9.3
Leverage
Interest 16047606.65 139521926.22 712914444.42 -967.42 410.96
Coverage
Gross Profit 50.88 51.09 51.46 0.412 0.724
Margin
Operating 32.12 31.81 32.03 -0.965 0.69
Profit Margin
Net Profit 28.24 29.08 28.50 2.97 -1.99
Margin
ROE 18.53 17.93 17.65 -3.23 -1.56
ROA 17.43 17.02 16.83 -2.35 -1.11
Price to 34.88 55.15 38.45
Earnings
Price to Cash 27.57 37.19 32.55 34.89 -14.32
Flow
Price to Sales 8.49 11.51 7.98 35.57 -30.67
Price to Book 7.42 8.79 5.57 18.46 -36.63
Value

PE ratio and EPS

PE Ratio
The PE Ratio is a measure of a company's valuation. It is calculated by dividing the current
market price per share of the company's stock by the company's earnings per share (EPS). A high
PE Ratio indicates that investors are willing to pay a high price per share of the company's stock
for each dollar of EPS. This can be because investors believe that the company will grow rapidly
in the future.

The PE Ratio for the Square group is currently 9.85%. The industry average of PE ratio is
37.02%, which is indicating that in terms of PE ratio square is not performing up to industry
standard

EPS
EPS is a measure of a company's profitability. It is calculated by dividing the company's net
income by the number of outstanding shares of the company's stock. A high EPS indicates that
the company is generating a lot of profit per share of stock.

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The EPS for the square group is currently TK20.51. The industry average of EPS is TK26.86
which is again indicating that Square is not as profitable as the other companies in the industry.

WORK DISTRIBUTION

Sadman Bin Ibrahim Balance Sheet, Income Statement, Cashflow

Statement, Liquidity Ratio, Summarization of
Financial statement, PE ratio and EPS
comparison
Rasib Mostofa CSA Balance sheet, CSA Income Statement,
Activity Ratio
Md. Faiaz – Al - Ishmam Company Overview, Financial Data
Explanation, Ratio Interpretation, Profitability
Ratio, Compilation
Emon Ahmded Solvency Ratio, DDM
Asikuzzaman Ratio Interpretation Trend Analysis
Md. Omar Sabil Valuation Ratio

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