Profitability Ratio:

ROE = Net Income/ Average Common Shareholders Equity

With Preferred Stock:
ROE = (Net Income Preferred Dividend)/ Average Common Shareholders Equity
ROA = Net Income/Average Total Asset
Gross Profit Margin = Gross Profit/Sales
Net Profit Margin = Net Profit/ Sales

Asset Efficiency Ratio

Asset Turnover Ratio = Sales/ Average Total Assets
Inventory Turnover = Cost of Goods Sold/ Average Inventories
Accounts Receivables Turnover = Credit Sales/Average Accounts Receivables
Accounts Payable Turnover = Cost of Goods Sold/ Average Accounts Payable
Days inventory/ Inventory Conversion Period = 365/ Inventory Turnover
Average Collection Period = 365 / Accounts Receivables Turnover
Average Payment Period = 365/ Accounts Payable Turnover
Cash Conversion Cycle = (365/Inventory Turnover)+(365/Accounts Receivable Turnover)- (
365/Accounts Payable Turnover)

Liquidity Analysis:
Current ratio = Current Asset/ Current Liabilities
Acid test ratio/ quick asset ratio = (Current Asset Inventory)/ Current Liabilities

Solvency / Capital Structure/ Leverage / Gearing Ratio:

Debt to equity: Total Debt/ Shareholders Equity
Debt ratio: Total Debt/ Total Asset
Equity ratio: Shareholders Equity/ Total Asset
Interest coverage ratio: EBIT/ Interest

Market Performance Ratio:

EPS = (Net Income Dividend on Preferred Stock)/ Weighted Average Number of Share Outstanding
Dividend payout ratio = Dividend paid per share/ Earning Per Share
PER = Price Per Share/ Earning Per Share

Analysis of Ratios
Profitability Ratio Analysis:
ROE: In 2011, Return on Equity for Square Pharmaceuticals was 0.19 or 19% of total common
shareholders equity. This shows that net income for the year was 19% of total equity invested
by the common shareholders. Therefore the investment per taka of share equity has led to 19
paisa worth of return.
In 2012, ROE was 0.16 or 16% of total common shareholders equity. Net income was only 16%
of common shareholders equity invested into Square Pharma. Per taka of share equity has led to
a 16 paisa worth of return which shows that there has been a decrease from the previous year. A
higher return on equity invested is always better therefore this figure needs to improve.
In 2013, ROE was 0.20 or 20% of total common shareholders equity. Net income therefore was
20% of common shareholders equity invested into the company. BDT 1 of share equity invested
has led to a return of 20 paisa worth of profit which shows an increase from previous years. As
higher returns are always better for investors it is expected that this figure improves upon in the
coming years.

ROA: In 2011, Return on Assets for Square Pharma was 0.13.