Professional Documents
Culture Documents
Fin 254 Fitegic Final
Fin 254 Fitegic Final
Section: 04
SUBMITTED BY:
Name ID
1 | Page
Table of Content
Introduction: -------------------------------------------------------------------------------------------------- 03
Recommendation: -------------------------------------------------------------------------------------------22
Conclusion: ----------------------------------------------------------------------------------------------------23
Appendix: ------------------------------------------------------------------------------------------------------24
2 | Page
Introduction
Our selected company was "Renata Pharmaceutical".This report has prepared to analyze ratios
and compare them in terms of time series. Our selected company operated in the
"Pharmaceutical" industry. It is one of the leading and fastest-growing pharmaceutical and
animal health product companies in Bangladesh.
We collect information from the annual reports of the company. Annual reports were available
on the official websites of the company. It helps us to calculate various ratios and analyze them.
In total, we estimated 17 ratios over four years, from 2016 to 2019.
Throughout the ratio calculation, we try to interpret different years' values as well as comparison.
And provide some recommendations for their improvement in different segments. Finally, we
discuss the reasons for investing in this company.
3 | Page
Company Overview
Renata Pharmaceutical
In Bangladesh, the Reneta company started its operation in 1972 as Pfizer Limited. In 1993
Pfizer renamed Reneta Limited after the divestment of its Bangladesh operations' ownership to
local shareholders. Renata Limited (formerly Pfizer Limited) is one of the leading and fastest-
growing pharmaceutical and animal health product companies in Bangladesh. The company is
mainly engaged within the manufacture and marketing of human pharmaceutical and animal
health products', holds the largest number four position in a pharmaceutical company, and the
market leader position in animal health products in Bangladesh. Also, Reneta products are
exported to several Asian, African, and European countries. The company is listed on the DSE
(Dhaka Stock Exchange) with Taka 87 billion market capitalization. Renata Limited currently
employs about 4334 people in its eight-manufacturing facilities spread over three manufacturing
sites. Customer satisfaction and conform to the highest ethical standard is their main value focus.
Their mission is to provide maximum value to their customer and communicate where they work
and live. And vision is to establish Reneta permanently among the best of innovative branded
generic companies.
4 | Page
Liquidity Ratios:
Liquidity ratio gives an idea of the ability of a company to meet its short-term debt. It determines
the ability of a company to meet its short-term liabilities with short term assets.
01.Current Ratio:
Current Ratio= Current Assets/Current Liability
5 | Page
02. Quick Ratio:
Quick Ratio= Current Assets-Inventory/Current Liability
Analysis of the Ratios:A quick ratio is considered a more conventional measure than the
current ratio. A higher quick ratio of the company means a better liquid position; the lower the
ratio means the company will struggle with current obligations. A quick ratio above one
indicates the company is able to pay its current debts; below one indicates the company is
currently unable to pay its current debts.
Renata Limited has enough liquid assets to pay its current liabilities. In 2019, the quick ratio was
1.77times, which means for 1 BDT of current liabilities, this company has 1.77taka of liquid
assets. In 2016, the company had 0.71 times liquid assets than that of current liabilities. It
increased to 1.02 times in 2017, and in 2018, it increased to 1.37 times from 1.02 times. Overall,
there was an increase, and performance is satisfied.
The quick ratio of Renata is increasing every year, and higher than its previous year, which
means the company is doing good in terms of time series analysis. So that the company is liquid
and in a good position to meet its current obligations.
6 | Page
Activity Ratio:
The activity ratio indicates how efficiently a company turns its asset into cash and revenue.
Analysis of the Ratios: Inventory turnover determines how many times the company can be
sold and replaced its inventory during a given year. A high inventory turnover indicates a strong
sell, while a low inventory turnover indicates a weak sell.
Renata limited has different values in the inventory turnover rate every year. The company sold
2.07 times its inventory in 2016, which means the company can sell its inventory 2.07times in
2016. It increased to 2.45times in 2017,2.46 times in 2018, again increased the highest to 2.65 in
2019 during these four years. It means Renata Limited holding their inventory for a little more
time, and the time is decreasing because their sales are increasing slowly.The inventory turnover
of Renata is increasing every year, and higher than its previous year, which means the company
is doing good in terms of time series analysis. So, over the four years, the performance was
satisfying since there was an increase and the high value of the ratio reflects efficient
management of inventory, as well as strong sales.
7 | Page
04. Average Collection period:
Average Collection Period = Accounts receivable/Average sales per day
8 | Page
05.Average payment period:
Account Payable / (Annual purchase / 365)
9 | Page
06. Total Asset Turnover:
Total Asset Turnover= Sales/Total Assets
A higher total asset turnover ratio indicates that the company is using its assets efficiently to
generate sales. In terms of time series analysis, the good thing is that their total asset turnover
ratio is increasing each year from the previous year, so they are doing good but overall, not
efficiently.
10 | Page
Debt Ratios:
Debt ratio measures the amount of leverage used by the company. In a word it shows the
company’s total liabilities/debt as a percentage of its total asset.
11 | Page
lower than the previous year. So that in terms of time series analysis Renata Limited is doing
well here.
12 | Page
every year and higher than its previous year, so that the company is doing well here.
13 | Page
lending their money to their customers. As this ratio has continuously increased, so their
financial condition is good.
Profitability Ratio:
The probability ratio represents the company’s capability to generate profit from its operations.
14 | Page
Normally a higher gross profit margin is better. In terms of time series analysis, Renata’s gross
profit margin is constantly stable, just slightly decreased every year, lower than the previous
year, or overall decreasing rate the performance is not good here.
15 | Page
Normally a higher operating profit margin is better. In terms of time series analysis, Renata
Limited’s operating profit margin is stable, just slightly decreasing every year from the previous
year. So overall, the company is not doing well here.
16 | Page
Normally net profit margin higher is better. In terms of time series analysis, the net profit margin
is increasing every year and higher than its previous year, so that Renata Limited is doing well
here.
17 | Page
Normally a higher value of EPS is better because investors will pay more for the company with
higher profit. In terms of time series analysis, earnings per share is increasing every year and
higher than its previous year, so that Renata Limited is doing well here.
18 | Page
increasing every year and higher than its previous year, so that Renata Limited is doing well
here.
19 | Page
period of four years. Normally a higher value of ROE is better because it shows to the investors
how effectively the company generates profit from their investment. In terms of time series
analysis, Renata Limited’s ROE is not consistent with several ups and downs, so that Renata
Limited is not doing well here due to its inconsistent net income.
Market Ratios:
16. Price Earnings Ratio:
Price Earning Ratio= Market price per share/ Earning per share
20 | Page
The price earning ratio represents the relation between stock price and earnings of the company.
It determines what market is willing to pay for the company’s earnings. Renata Limited had the
highest 32.47 times P/E ratio in 2016 during the four years, which decreased to 26.97times in
2017 and again increased to 28.40% in 2018. After that, it decreased to 25.24 times in 2019,
which means the investor was willing to pay 25.24 times more than its earnings in 2019.
Normally higher P/E is better but not too high. In terms of time series analysis, Renata Limited’s
P/E ratio is not consistent with several ups and downs, so that Renata Limited is not doing so
well here.
21 | Page
In terms of time series analysis higher value is better for market/book ratio. But in this ratio
their financial condition has decreased in the year of 2019. So the company’s financial position
is not good.
Recommendations
Although Reneta pharmaceuticals have a significant inventory turnover rate, they should again
try to get higher inventory turnover. They should focus on selling inventories, decreasing the
time of holding inventory, and getting a higher inventory turnover.
Also, they should focus on decreasing the average payment period of Renata Pharmaceuticals
than last year.Renata Pharmaceuticals's total asset turnover is good at all. They must have tried
to increase their total assets turnover strongly by efficiently using their assets and generating
more sales.
In Profitability Ratio segments, they should focus on the gross profit ratio and increase the
percentage rate, which is slightly constant over the years and decreasing slowly by focusing on
reducing the higher the cost of goods sold and service expenses.
After that, Renata should focus on increasing the operating profit margin by improving sales
and maintaining variable expenses more efficiently. They should also focus on their fluctuated
Net Profit Margin and try to improve there as well.Renata pharmaceuticals must have to be
22 | Page
concerned about fluctuating ROE. They should care about net income and try to increase it for
better performance on ROE.
In the Market Ratio segment, Renata pharmaceuticals try to achieve a better price earning ratio
rate. Their P/E ratio is decreasing over the years By increasing market per share or decreasing
market share
Conclusion
In terms of investing issues, as a reasonable investor, we think, we should invest in the Renata
Pharmaceuticals stocks. In this report we have analyzed the financial performance of Renata
Pharmaceutical in terms of time series analysis. We have taken 4 years (2016-2019) financial
data and have analyzed the following ratios of this company. To analyze the following ratios we
observe that the financial position of this company is comparatively in a better position.
Their financial position condition is good in terms of liquidity ratios. This means that they are
more able to convert their current assets into liquid assets to operate their daily activities.
Their financial condition is good in terms of activity ratios. This means that they are more able
to efficiently use their assets that generally help to generate profits for their company.
The financial condition of Renata Pharmaceutical is also good in terms of debt ratios, which
means that they do not use more borrowed assets to finance their company, which is very
attractable to the investors, because it increases the earning power of the company. Though
some of their profitability ratios are not so good, this does not create more impact on the
company’s overall financial position.
23 | Page
However, as a reasonable investor we should invest in Renata Pharmaceutical due to their
following financial conditions.
Appendix
https://renata-ltd.com/news-media/annual-report-archive/
https://renata-ltd.com/wp-content/uploads/2017/11/Annual-
Report-2016-2017.pdf
24 | Page
https://renata-ltd.com/wp-content/uploads/2018/11/Annual-
Report-2017-18.pdf
https://renata-ltd.com/wp-content/uploads/2019/11/Annual-
Report-2018-19.pdf
25 | Page