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- Asset Management (Turnover) Ratio Analysis of Square Pharmaceutical Ltd Bangladesh (Part-4)
Asset Management (Turnover) Ratio Analysis of Square Pharmaceutical Ltd Bangladesh (Part-4)
- By humpty dumpty
- Published 4 February 2012
- Bangladesh Study
- Unrated
Inventory Turnover and Day’s Sales in Inventory
Square Pharmaceuticals Limited Bangladesh had an average cost of goods sold value of 4,976,753,344 BDT during FY 2006-2010. Inventory turnover represents firm’s cost of goods sold per inventory. The cost of goods sold had increased for the company by 86.11% between FY 2006 and 2010 and the ending inventory had increased by 64.42% in the same period. On average the cost of goods sold had increased at a rate of 16.83% annually during FY 2006-2010 period.
The average inventory turnover was 2.69 throughout FY 2006-2010. If we take a closer look at the table of inventory turnover ratio, in FY 2008 it was lowest among last 5 (five) FY and in following fiscal years the scenario had improved and in FY 2010 the firm have highest inventory turnover for past 5 (five) fiscal year.
Inventory Turnover
2006 2007 2008 2009 2010
2.63 2.76 2.40 2.70 2.97
Table of Inventory Turnover Ratio for Fiscal Year 2006-2010
Day’s sales in inventory (average days’ sales in inventory) ratios show the efficiency of a firm. It represents firm’s ability to use inventory efficiently. Square Pharmaceuticals Limited Bangladesh had an average day’s sales in inventory of 136.24 days during FY 2006-2010. The firm day’s sales in inventory had reduced by 13.20% between FY 2006 and 2010. As a result the firm had become efficient in using its inventory.
The worst day’s sales in inventory was recorded in 2008 FY and it was caused by a low inventory turnover of 2.40
Day's Sales in Inventory
2006 2007 2008 2009 2010
138.98 132.05 152.34 135.04 122.78
Table of DSI Ratio for Fiscal Year 2006-2010
Receivables Turnover and Days’ Sales in Receivables
Receivables turnover ratios illustrates how many times per period the company collects its average collectable amount. Square Pharmaceuticals Limited Bangladesh had an average account receivables worth of 391,530,719.20 BDT and it had increased by 76.03% between FY 2006 and 2010. Between FY 2006 and 2010, on average this firm had earned revenue of 8,626,387,092 BDT and had increased by 88.22%. So, we can say that the company is doing well in case of receivables turnover.
The average receivables turnover was 22.07 throughout FY 2006-2010. In FY 2009 it was lowest among last 5 (five) FY and in following fiscal years the situation had improved though the company had performed well in FY 2007 and 2008 comparing to recent years.
Receivables Turnover
2006 2007 2008 2009 2010
21.09 23.23 22.92 20.56 22.55
Table of Receivables Turnover Ratio for Fiscal Year 2006-2010
Day’s sales in receivables (Average Collection Period) ratio show how long the firm takes to collect its trade debt. Square Pharmaceuticals Limited Bangladesh had an average day’s sales in inventory of 16.57 days during FY 2006-2010. The firm day’s sales in receivables had reduced by 6.48% throughout FY 2006 and 2010. As a result the firm takes less time to collect it receivables than preceding years.
The worst day’s sales in inventory was recorded in 2008 FY and it was caused by a low inventory turnover of 2.40
Day's Sales in Receivables
2006 2007 2008 2009 2010
17.31 15.71 15.92 17.75 16.18
Table of DSR Ratio for Fiscal Year 2006-2010
Payables Turnover and Days’ Sales in Payables
Payables turnover refers how many times per period the company pays its average payable amount. The bigger the turnover, the better its reputation becomes to its supplier and creditors. Square Pharmaceuticals Limited Bangladesh had an average account payables worth of 151,976,756.20 BDT and it had increased by 397.18% between FY 2006 and 2010.
The average receivables turnover was 45.05 throughout FY 2006-2010. In FY 2007, it was highest among last 5 (five) FY and in following fiscal years the situation had worsen. In FY 2010, the worst payables turnover was recorded for company’s past 5 (five) fiscal year.
Payables Turnover
2006 2007 2008 2009 2010
44.41 70.43 48.10 45.66 16.62
Table of Payables Turnover Ratio for Fiscal Year 2006-2010
Day’s sales in payables (Average Payment Period) ratio show how long the firm takes to pay its trade credit. Square Pharmaceuticals Limited Bangladesh had an average day’s sales in payables of 10.19 days during FY 2006-2010. The firm day’s sales in inventory had increased by 167.14% throughout FY 2006 and 2010. As a result the firm takes more time to pay its payables than preceding years. The worst day’s sales in inventory was recorded in 2010 FY and it was caused by a low payables turnover of 16.62
Day's Sales in Payables
2006 2007 2008 2009 2010
8.22 5.18 7.59 7.99 21.96
Table of DSP Ratio for Fiscal Year 2006-2010
Net Working Capital Turnover
Net working capital turnover shows how much the firm is earning from investing in its working capital. The bigger the turnover, the better it is for the company. Square Pharmaceuticals Limited Bangladesh had an average net working capital worth of 1,513,815,265.40 BDT and it had increased by 44.42% between FY 2006 and 2010.
During FY 2006-2010, the average net working capital turnover was 6.36; In FY 2008, it was highest among last 5 (five) FY and in following fiscal years the situation had worsen. In FY 2010, the worst net working capital turnover was recorded for company’s past 5 (five) fiscal year. In FY 2010, net working capital was112.66% and the sales was only 16.72 % more than FY 2009. So, the huge difference between the increased accounts caused the net working capital turnover to fall.
Net Working Capital Turnover
2006 2007 2008 2009 2010
3.44 6.66 9.06 8.17 4.48
Table of NWC Turnover Ratio for Fiscal Year 2006-2010
Fixed Asset Turnover
Fixed asset turnover shows how much the firm is earning from investing in its fixed assets. The bigger the turnover, the better the firm gains from fixed assets investment. Square Pharmaceuticals Limited Bangladesh had average fixed assets worth of 4,084,733,699 BDT and it had increased by 147.64% between FY 2006 and 2010.
During FY 2006-2010, the average fixed asset turnover was 2.17; In FY 2006, it was highest among last 5 (five) FY and in following fiscal years the situation had worsen. In FY 2009, the worst fixed asset turnover was recorded for company’s past 5 (five) fiscal year. In FY 2010, though the situation had improved.
Fixed Asset Turnover
2006 2007 2008 2009 2010
2.68 2.12 2.02 2.00 2.04
Table of Fixed Asset Turnover Ratio for Fiscal Year 2006-2010
Total Asset Turnover
Square Pharmaceuticals Limited Bangladesh had total asset turnover of 0.70 on average during FY 2006-2010. Total asset turnover represents a firm’s return from its investment in asset. Square pharmaceuticals total asset had increased by 61.63% and average total asset was approximately 12,153,959,574 BDT. The firm had worst asset turnover during FY 2006 and 2008. But in succeeding the asset turnover had raised to a healthy level.
Total Asset Turnover
2006 2007 2008 2009 2010
0.65 0.72 0.65 0.74 0.76
Table of Total Asset Turnover Ratio for Fiscal Year 2006-2010
Square Pharmaceuticals Limited Bangladesh had an average cost of goods sold value of 4,976,753,344 BDT during FY 2006-2010. Inventory turnover represents firm’s cost of goods sold per inventory. The cost of goods sold had increased for the company by 86.11% between FY 2006 and 2010 and the ending inventory had increased by 64.42% in the same period. On average the cost of goods sold had increased at a rate of 16.83% annually during FY 2006-2010 period.
The average inventory turnover was 2.69 throughout FY 2006-2010. If we take a closer look at the table of inventory turnover ratio, in FY 2008 it was lowest among last 5 (five) FY and in following fiscal years the scenario had improved and in FY 2010 the firm have highest inventory turnover for past 5 (five) fiscal year.
Inventory Turnover
2006 2007 2008 2009 2010
2.63 2.76 2.40 2.70 2.97
Table of Inventory Turnover Ratio for Fiscal Year 2006-2010
Day’s sales in inventory (average days’ sales in inventory) ratios show the efficiency of a firm. It represents firm’s ability to use inventory efficiently. Square Pharmaceuticals Limited Bangladesh had an average day’s sales in inventory of 136.24 days during FY 2006-2010. The firm day’s sales in inventory had reduced by 13.20% between FY 2006 and 2010. As a result the firm had become efficient in using its inventory.
The worst day’s sales in inventory was recorded in 2008 FY and it was caused by a low inventory turnover of 2.40
Day's Sales in Inventory
2006 2007 2008 2009 2010
138.98 132.05 152.34 135.04 122.78
Table of DSI Ratio for Fiscal Year 2006-2010
Receivables Turnover and Days’ Sales in Receivables
Receivables turnover ratios illustrates how many times per period the company collects its average collectable amount. Square Pharmaceuticals Limited Bangladesh had an average account receivables worth of 391,530,719.20 BDT and it had increased by 76.03% between FY 2006 and 2010. Between FY 2006 and 2010, on average this firm had earned revenue of 8,626,387,092 BDT and had increased by 88.22%. So, we can say that the company is doing well in case of receivables turnover.
The average receivables turnover was 22.07 throughout FY 2006-2010. In FY 2009 it was lowest among last 5 (five) FY and in following fiscal years the situation had improved though the company had performed well in FY 2007 and 2008 comparing to recent years.
Receivables Turnover
2006 2007 2008 2009 2010
21.09 23.23 22.92 20.56 22.55
Table of Receivables Turnover Ratio for Fiscal Year 2006-2010
Day’s sales in receivables (Average Collection Period) ratio show how long the firm takes to collect its trade debt. Square Pharmaceuticals Limited Bangladesh had an average day’s sales in inventory of 16.57 days during FY 2006-2010. The firm day’s sales in receivables had reduced by 6.48% throughout FY 2006 and 2010. As a result the firm takes less time to collect it receivables than preceding years.
The worst day’s sales in inventory was recorded in 2008 FY and it was caused by a low inventory turnover of 2.40
Day's Sales in Receivables
2006 2007 2008 2009 2010
17.31 15.71 15.92 17.75 16.18
Table of DSR Ratio for Fiscal Year 2006-2010
Payables Turnover and Days’ Sales in Payables
Payables turnover refers how many times per period the company pays its average payable amount. The bigger the turnover, the better its reputation becomes to its supplier and creditors. Square Pharmaceuticals Limited Bangladesh had an average account payables worth of 151,976,756.20 BDT and it had increased by 397.18% between FY 2006 and 2010.
The average receivables turnover was 45.05 throughout FY 2006-2010. In FY 2007, it was highest among last 5 (five) FY and in following fiscal years the situation had worsen. In FY 2010, the worst payables turnover was recorded for company’s past 5 (five) fiscal year.
Payables Turnover
2006 2007 2008 2009 2010
44.41 70.43 48.10 45.66 16.62
Table of Payables Turnover Ratio for Fiscal Year 2006-2010
Day’s sales in payables (Average Payment Period) ratio show how long the firm takes to pay its trade credit. Square Pharmaceuticals Limited Bangladesh had an average day’s sales in payables of 10.19 days during FY 2006-2010. The firm day’s sales in inventory had increased by 167.14% throughout FY 2006 and 2010. As a result the firm takes more time to pay its payables than preceding years. The worst day’s sales in inventory was recorded in 2010 FY and it was caused by a low payables turnover of 16.62
Day's Sales in Payables
2006 2007 2008 2009 2010
8.22 5.18 7.59 7.99 21.96
Table of DSP Ratio for Fiscal Year 2006-2010
Net Working Capital Turnover
Net working capital turnover shows how much the firm is earning from investing in its working capital. The bigger the turnover, the better it is for the company. Square Pharmaceuticals Limited Bangladesh had an average net working capital worth of 1,513,815,265.40 BDT and it had increased by 44.42% between FY 2006 and 2010.
During FY 2006-2010, the average net working capital turnover was 6.36; In FY 2008, it was highest among last 5 (five) FY and in following fiscal years the situation had worsen. In FY 2010, the worst net working capital turnover was recorded for company’s past 5 (five) fiscal year. In FY 2010, net working capital was112.66% and the sales was only 16.72 % more than FY 2009. So, the huge difference between the increased accounts caused the net working capital turnover to fall.
Net Working Capital Turnover
2006 2007 2008 2009 2010
3.44 6.66 9.06 8.17 4.48
Table of NWC Turnover Ratio for Fiscal Year 2006-2010
Fixed Asset Turnover
Fixed asset turnover shows how much the firm is earning from investing in its fixed assets. The bigger the turnover, the better the firm gains from fixed assets investment. Square Pharmaceuticals Limited Bangladesh had average fixed assets worth of 4,084,733,699 BDT and it had increased by 147.64% between FY 2006 and 2010.
During FY 2006-2010, the average fixed asset turnover was 2.17; In FY 2006, it was highest among last 5 (five) FY and in following fiscal years the situation had worsen. In FY 2009, the worst fixed asset turnover was recorded for company’s past 5 (five) fiscal year. In FY 2010, though the situation had improved.
Fixed Asset Turnover
2006 2007 2008 2009 2010
2.68 2.12 2.02 2.00 2.04
Table of Fixed Asset Turnover Ratio for Fiscal Year 2006-2010
Total Asset Turnover
Square Pharmaceuticals Limited Bangladesh had total asset turnover of 0.70 on average during FY 2006-2010. Total asset turnover represents a firm’s return from its investment in asset. Square pharmaceuticals total asset had increased by 61.63% and average total asset was approximately 12,153,959,574 BDT. The firm had worst asset turnover during FY 2006 and 2008. But in succeeding the asset turnover had raised to a healthy level.
Total Asset Turnover
2006 2007 2008 2009 2010
0.65 0.72 0.65 0.74 0.76
Table of Total Asset Turnover Ratio for Fiscal Year 2006-2010
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Article Series
This article is part 4 of a 8 part series. Other articles in this series are shown below:
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Asset Management (Turnover) Ratio Analysis of Square Pharmaceutical Ltd Bangladesh (Part-4)