OVERALL FINANCIAL SUMMARY

After analyzing all the ratios, we have found out the following information:

1.  Liquidity Ratios: In the liquidity ratio we can see that both current ratio and quick ratio improved over time marginally. The situation was almost stable.

2.  Asset Management Ratios: Inventory turnover, Total Asset Turnover, Fixed Asset Turnover all had been relatively stable throughout the three years. Average Collection period is also very good. The only problem here is the Average collection period which is way high. However, such a situation is actually pretty much normal for big companies.

3.  Debt Management Ratios: Here Debt ratio has improved over time and TIE has remained pretty much stable.

4.  Profitability Ratios: Apart from Gross Profit Ratio, most of the Profitability ratios have actually decreased in 2005-06. Although the decrease rate is very minimal still it is a problem for Square and they need to try to improve these ratios.

5.  Market Value Ratios: Both P/E ratio and M/B ratio declined in the year 2005-06. But this happened mostly not because of the company’s failure but for the fact that the whole market was not so friendly for investment in that year.

From the total analysis, we can summarize that Square Pharmaceuticals Ltd. has been doing pretty good through out the years. It is true that last year there return did decline but it is still pretty much satisfactory. Therefore, we can conclude that Square Pharmaceuticals Ltd. is a good enough company to invest on.

APPENDIX

All the ratios below are calculated for 2005-06 financial year:
1.  Current ratio = 1.78 times
2.  Quick ratio = 1.19 times
3.  Inventory turnover ratio = 5.27 times
4.  Days Sales Outstanding (DSO) = 14.87 days
5.  Average Payment Period (APP) = 234.07 days
6.  Fixed assets turnover ratio (FATO) = 1.35 times
7.  Total assets turnover ratio (TATO) = 0.76 times
8.  Debt ratio = 31%
9.  TIE ratio = 11.30 times
10. Net Profit margin = 16.45%
11. Gross Profit Margin (GPM) = 36.19%
12. ROA = 12.54%
13. ROE = 18.21%
14. P/E ratio = 9.70 times
15. Market/Book ratio (M/B) = 1.77 times
16. Book value per share = BDT 1,288,65

Notes on Analysis:

1. In 2003-04 and 2004-05 Quick ratio analysis, STOCK has been used as Inventory.

2. In 2003-04 and 2004-05 TIE ratio analysis, NET PROFIT AFTER WPPF has been used as EBIT and FINANCIAL EXPENSE found in cash flow statement has been used as INTEREST EXPENCE.