Value of Unlevered Firm
Square pharmaceuticals EBIT had increased by 87.20% during FY 2006-2010 and average EBIT of each year was approximately 2,483,706,253 BDT. In FY 2010 EBIT was highest among last 5 (five) FY about 3,275,183,812 BDT. During this year the tax rate was 24.85% and unlevered cost of capital was 12.84%. As a result, square pharmaceuticals value of unlevered was 19,169,008,059 BDT

Value of Levered Firm
Square pharmaceuticals value of unlevered was 19,169,008,059 BDT in FY 2010. The
amount of total debt 2,231,167,169 BDT and the tax rate was 24.85%. So the firm’s value as
a levered firm was 19,723,453,100 BDT in FY 2010.

Present Value of Tax Shield
Square pharmaceuticals Limited Bangladesh had a cost of debt of 7.21% in FY 2010. The amount of total debt 2,231,167,169 BDT and the tax rate was 24.85%. Present value of Tax Shield was 554,445,041 BDT

In 2010 the value of the farm was 46,521,197,669 BDT, which was 4.80% debt financed and 95.20% equity financed. The value of the firm will be higher if they borrow more because of the tax shield but it also increases the cost of bankruptcy. After borrowing, from a certain level the value of the firm will decline. The chances of bankruptcy of the firm increases as soon it borrows more. So the optimal capital structure is at that point on which firm’s value is higher and WACC is lower.

List of Equations:
1 Current Ratio: Current Assets/ Current Liabilities
2 Quick Ratio (Acid Test): (Current Assets-Inventory)/ Current Liabilities
3 Net Working to Total Assets: (Current Assets-Current Liabilities)/ Current Assets
4 Interval Measure: Current Assets/ Average Daily Operating Expense
5 Cash Ratio: Cash and Cash Equivalent/ Current Assets
6 Total Debt Ratio: (Total Assets- Total Equity)/ Total Assets
7 Debt Equity Ratio: (Total Assets- Total Equity )/ Total Equity
8 Equity Multiplier: Total Assets/ Total Equity or [1+ Debt Equity Ratio]
9 Long Term Debt Ratio: Long Term Debt/ (Long Term Debt+ Total Equity)
10 Times Interest Measure: EBIT/ Interest Expense
12 Cash Coverage Ratio: (EBIT+ Depreciation)/Interest Expense
13 Inventory Turnover: Cost of Goods Sold/ Inventory
14 Days to Sales Inventory: 365/ Inventory Turnover
15 Receivables Turnover: Net Sales/ Receivables
16 Days to Sales Receivables: 365/Receivables Turnover
17 Payables Turnover: Cost of Goods Sold/ Payables
18 Days to Sale Payables: 365/Payables Turnover
19 Net Working Capital Turnover: Net Sales/ (Current Assets-Current Liabilities)
20 Fixed Assets Turnover: Net Sales/ Fixed Assets
21 Total Assets Turnover: Net Sales/ Total Assets
22 Profit Margin: Net Income/ Net Sales
23 Return on Assets: Net Income/ Total Assets
24 Return on Equity: Net Income/ Total Equity
25 Earnings Per Share: Net Income/ Shares Outstanding
26 PE Ratio: (Price Per Share)/ (Earning Per Share)
27 Sales Per Share: Net Sales/ Shares Outstanding
28 Price-Sales Ratio: Price Per Share/ Sales Per Share
29 Book Value Per Share: Total Equity/ Shares Outstanding
30 Market to Book Ratio: Market Value Per Share/ Book Value Per Share
31 Dividend Ratio: Cash Dividend/ Shares Outstanding
32 Payout Ratio: Dividend Per Share/ Earnings Per Share
33 Retention Ratio: 1-Payout Ratio
34 FCF Per Share: Free Cash Flow/ Shares Outstanding
35 Price to FCF Share: Price Per Share/ FCF Per Share
36 Required Return on Equity: Risk Free Rate + BE × Market Risk Premium

References
1. www.squarepharma.com.bd
2. www.wikipedia.com
3. www.investopedia.com
4. Fundamentals of Corporate Finance by Ross, Westerfield, Jordan. 9th edition