managing financial resources and decision
DESCRIPTION
MeritProper ReferencingCompany Name: Renata Pharma LtdGSk Pharma Ltd.TRANSCRIPT
HND
Assignment
On
Managing Financial Resources and Decision
Assessment on LO- 1.2, 1.2, 1.3, 4.1, 4.2, 4.3
Submitted to
IIIIIIIIIIIIIII
Submitted by
…………………….
ID: 2015121013
Submission Date
September 10, 2015
ContentsIntroduction:..................................................................................................................................1
Renata Limited: At A Glance..........................................................................................................1
Sources of Finance of Renata Ltd...................................................................................................2
Internal Sources of Finance:...................................................................................................... 2
Personal Savings:................................................................................................................... 3
Retained profit:......................................................................................................................3
Working capital:.....................................................................................................................3
Assets Sales:...........................................................................................................................3
Reducing Stocks:....................................................................................................................4
External Sources of Finance of Renata Limited:.........................................................................4
Ownership capital:.................................................................................................................4
Debentures:........................................................................................................................... 4
Bank overdraft:......................................................................................................................5
Bank Loan:............................................................................................................................. 5
Lease:.....................................................................................................................................5
Venture capital:..................................................................................................................... 6
Trade credit:.......................................................................................................................... 6
Grants:................................................................................................................................... 6
Downward Trend in Bangladeshi Capital Market:.........................................................................6
A New Extension Decision of Renata Ltd.:.....................................................................................8
Available Finance for New Extension Decision (Re-Pharma):....................................................8
Major Elements of Financial Statement of Renata Ltd.:..............................................................10
A balance sheet/ Financial Position:........................................................................................10
Profit & Loss Statement / Statement of Comprehensive Income:...........................................11
Cash Flow Statement:..............................................................................................................12
Statement of Changes in Equity:..............................................................................................13
Importance of Financial Statement:........................................................................................14
Appropriate Formats of Financial Statements of Different types of Businesses:.........................15
Sole Trader...............................................................................................................................15
Partnership.............................................................................................................................. 16
Appropriation account.........................................................................................................16
C’s Current Account.............................................................................................................17
Balance Sheet...................................................................................................................... 17
Formation of a Company.........................................................................................................18
Memorandum of Association...............................................................................................18
Articles of Association..........................................................................................................19
Ratio Analysis of Renata Ltd. Internally:......................................................................................20
Profitability:............................................................................................................................. 20
Capital Employed:................................................................................................................20
Return on Capital Employed: (ROCE)...................................................................................21
Secondary Ratio:......................................................................................................................21
Net Profit Margin:................................................................................................................21
Gross Profit Margin:.............................................................................................................22
Return on Total Asset: (ROA)...............................................................................................24
Return on Equity: (ROE).......................................................................................................25
Liquidity:.................................................................................................................................. 27
Current Ratio:...................................................................................................................... 27
Quick Ratio:..........................................................................................................................28
Stock Turnover Ratio:...........................................................................................................29
Debtors Collection Ratio:.....................................................................................................29
Creditors Ratio:....................................................................................................................31
Capital Structure:.....................................................................................................................32
Debt to Equity Ratio:............................................................................................................32
Capital Gearing Ratio:..........................................................................................................33
Investment Ratio:.....................................................................................................................33
Number of Ordinary Share:..................................................................................................33
Earning per Share (EPS):.......................................................................................................33
Price Earning ratio: (P/E Ratio).............................................................................................34
Dividend Yield:.....................................................................................................................34
Findings:...................................................................................................................................35
Comparison between Renata Ltd. and GlaxoSmithKline Bangladesh Limited(GSK) Year 2013:...36
Liquidity:.................................................................................................................................. 36
Capital Structure:.....................................................................................................................38
Investment Ratio:.....................................................................................................................38
Recommendation:................................................................................................................... 40
References:..................................................................................................................................42
Plagiarism Report:........................................................................................................................43
Appendix......................................................................................................................................44
Acronyms.....................................................................................................................................44
Introduction:
The finance is beat most prerequisites to build up a business and look after it. No business can
make due without stores and to have those trusts organization needs to look for sources of
finance. There are a few sources of finance in today's business and organization needs to
choose which source is reasonable for the organization and suitable for their business.
Generally organization do not depend on one financial source however a few without a
moment's delay to meet the financial needs. The organizations assess these diverse sources of
finance to reach to sufficient financial decisions. These choices incorporate pricing, investment
and planning. The financial related methodologies help organizations to create systems with a
specific end goal to set up a powerful financial performance. The significance of finance and its
administration in a business can't be over-underscored. No business endeavor can exist without
funds, means sufficient trusts. After business incorporation, the business begins existing as a
simulated individual, in other to keep up his presence, an individual will utilize funds to acquire
settled resources, to begin a business, to keep it developing , practical and fluid; most
importantly, to help it develop. This clarifies the significance and need of spot agreed finance
and its management in a business area as all different business exercises spin round 'Finance'.
Below there has been given a wide seeing about overseeing back in different routes inside of
the matter of an organization and looks at these ways. Instructions to profit the distinctive
financial resources and how data about finance helps and contribute in making decision Renata
Limited, which is one of the fastest growing pharmaceuticals company in Bangladesh. It
additionally incorporates thought of making judgments about estimating, speculation and
planning.
Renata Limited: At A Glance
Renata Limited is one of the main and leading and fastest growing pharmaceutical and animal
health product organization in Bangladesh. The organization began its operations in 1972 as
Pfizer (Bangladesh) Limited. In 1993, Pfizer exchanged the responsibility for Bangladesh
operations to neighborhood shareholders and the name of the organization was changed to
1
Renata Limited. The center organizations of Renata Limited are human pharmaceuticals and
animal health products. In Bangladesh, it is the fourth biggest pharmaceutical organization and
the business sector pioneer in animal health products. Furthermore, Renata Ltd. products are
traded to Afghanistan, Belize, Cambodia, Ethiopia, Guyana, Honduras, Hong Kong, Kenya,
Malaysia, Myanmar, Nepal, Philippines, Sri Lanka, Thailand, United Kingdom, and Vietnam. The
Company is recorded on the Dhaka Stock Exchange with business sector capitalization of pretty
nearly Taka 50 billion. The Company has eight assembling offices spread more than three
assembling destinations. Likewise Renata Oncology Limited has two assembling offices.
Appropriation of items is done by 19 warehouses the nation over. Also Renata Ltd. has 4,334
delegated employees. Renata Ltd. has 19 appropriation focuses found deliberately crosswise
over Bangladesh to take care of the business sector demand and guarantee the items
accessibility to the end clients on due time. Renata Ltd.’s corporate headquarter is in Mirpur,
Milk Vita Road, Dhaka, Bangladesh.
A business is difficult to develop and grow without funds. These funds additionally called as
finance for the business. Since it is a fundamental requirement for each business, the cash
requires for business is finance for the business. Since each business needs, back to maintain
their business it is generally a noteworthy sympathy toward the powers and administrations to
make sense of where they can get this cash from, to advance their organizations. To gain these
funds, a business needs to look for financial aid from distinctive option it can discover; these
choices are sources of finance. These choices or sources contribute or give cash to the Renata
Ltd. and get an arrival, which can be called interest rate or cost. There are different financial
resources and each sources of finance has its own elements and methodology. Renata Limited
also need sources of finance to run its function and to manufacture which generate revenue.
Sources of finance of Renata Limited can be classified as internal and external.
Sources of Finance of Renata Ltd.
Internal Sources of Finance:
Internal sources of finance are the funds, which are accessible inside of the organization.
Renata Limited's internal sources of finance comprise of:
2
Personal Savings:
Business gets individual cash of a shareholder, accomplice or proprietor for a business'
monetary needs. This source of finance is known as personal savings or individual investment
funds. It is the measure of cash, which is being utilized by the owner of the organization to
settle down his/her money related issues. It is running by a board of directors where
shareholders maintain all function so personal savings funds can be a source of finance for
Renata Limited. If Renata Limited face some inconvenient financial crises, in that time
shareholders or partner of it can help by giving their personal savings.
Retained profit:
Retained profits are the undistributed profits of a business .It is a procedure by which is the
equalization on the profit and loss appropriation account after deducting all the payments and
dividends is the retained profit for the year. This deposit measure of account is aggregating as a
reinforcement of financial needs and utilized later for a business' improvement. Not at all like
all other organization Renata constrained they are additionally making the profit and loss
appropriation accounts and the balance sheets and are using that profit as a part of
advancement of the business.
Working capital:
It is the money that a business uses for to run day-to-day operation. It promises that adequate
cash is available to meet normal money necessities. An organization gets this measure of cash
by deducting all the current liabilities from its present stakes. Renata Ltd. utilizes the working
capital by giving the wages of the work consistently and different costs, which incorporates
their regular exercises the most up-to-date published financial statement of Renata Ltd. shows
that their net profit after tax was 1,720,208,645 Tk. in 2014.
Assets Sales:
An organization can likewise sell its property, for example, land, structures, logo or gear and so
forth to acquire money. With the help of selling fixed assets, a business can pay-off its debts
and even finance new activities.
3
Reducing Stocks:
Reducing stocks are sorts of assets inside of an organization, which can be sold to acquire cash.
The raw materials, semi-finished products or unsold finished products and so on are sort of
stocks.
External Sources of Finance of Renata Limited:
External sources of finance are from sources that are placed outside the organization, likewise:
Ownership capital:
Ownership capital is the cash put resources into the business by the proprietors themselves. It
can be the capital financing by owners and partners or it can likewise be share purchased by the
shareholders of an organization. There are for the most part two primary sorts of shares, such
as:
Standard shares:
Known as a unit of investment in an organization, have the benefit of accepting a part of
organization profits by dividends of profits as indicated by the estimation of shares held and
yearly profit of the organization. As Renata Ltd. is a public limited organization, they can issue
ordinary shares and they do use this source of finance.
Preference shares:
Preference shareholders get a fixed rate of dividends before the ordinary shareholders are paid.
There are a few sorts of preference shares and organization can issue to raise the obliged
capital, if it is allowed by the By Laws of the organization. The organization have to pay dividend
to their preference shareholders even if the organization are making small profits. Renata Ltd.
has preference shareholders within their organization.
Debentures:
It is a long-term source of finance with fixed interest rates and it has to be paid to the creditors
on time even if there is no profit. Launching new products, service or expanding business is
quite costly and Renata Ltd. uses debentures.
4
Bank overdraft:
An overdraft is concurred aggregates which a client can overdraw structure his current account.
Bank overdraft can be a good source of short-term finance to help a business with occasional
deficiency of stores that does not require long-term solution. The charges differs and are
connected to the bank rate. The advantage of overdraft is that it is dependably there when it is
need and it is at no cost it serves to keep up a good cash flow. Additionally it rushes to set-up
when contrasted with a loan. Disadvantages are the premium rate on an overdraft can be very
high, particularly for small organization where the danger to the bank that they may not
recover their cash is more prominent. What's more, the business is not permitted to surpass
their overdraft limit. In the event that they do, the bank may decline to pay checks to lenders
and may hit the business with a hefty charge for surpassing the limit. Overdraft facilities can be
rearranged however, in the event that this is attempted too often, it might be a sign to the bank
that a business does not have control over its finances. Renata Ltd. uses bank overdraft while
giving the payments to their suppliers if they have shortage of money in bank account. Renata
Ltd. is using overdraft from different banks likewise, Eastern Bank Limited, The Hongkong and
Shanghai Banking, Corporation Limited(HSBC), The City Bank Limited, Standard Chartered Bank,
Citibank N. A., Bank Asia Limited, Commercial Bank of Ceylon PLC in 2014 amount of
613,919,901Tk. (Renata Ltd. Annual report 2014, Page- 139)
Bank Loan:
Loan from bank is an extremely reliable source of business. In any case, generally bank loans
cash for short period of time. In spite of the fact that now banks have started crediting cash for
more time for instance medium term lending much of the time. The interest rate is reasonable
in bank landings. In 2014, was paid 461,817,918 Tk. to seven banks. (Renata Ltd. Annual report
2014, Page- 139)
Lease:
This is a long-term source of finance. It is also known as long-term rent. This long-term rent can
be taken for a long period of time and being used in the business in returns of money
5
Venture capital:
The Company, which invests in other developing companies to promote and in exchange they
took shares of the profit made.
Trade credit:
When a company buys raw materials and other essential items in credit and pays the money in
later date is known as trade credit. Trade credit is a short-term external source of finance.
Renata Ltd. uses trade credit while buying raw materials from other businesses and pay them
later.
Grants:
The amount of money or fund given by the government to any company to benefit the
community.
Downward Trend in Bangladeshi Capital Market:
This issue of Bangladesh Economic Update examines the consistent fall in the capital market of
Bangladesh. Nonstop decline in the capital market has destabilized the whole capital market as
well as has dragged out a huge number of small investors from the market leaving their
investments. There is a discussion given below appraisal of the past and late descending pattern
in the capital market alongside the activities taken by the government to address the downturn
of the business.
Sound Capital Market is an indispensable part of an Economy. Without sound and proficient
capital market, fast financial improvement could be hampered as capital market gives long haul
trusts to business people. Capital Market of Bangladesh is still very theoretical and needs
straightforwardness because of poor administrative system. In Bangladesh, Financial sector was
generally determined by banks and capital market had less guidelines to play as individuals had
blended observation about the danger example in capital market that debilitated them for the
most part to contribute there. In any case, in the mid of nineties of a century ago capital market
began to demonstrate lively conduct that make people interested about the stock exchanges.
6
This time most financial specialists were new and youthful with little information about stocks
and did not think about market risk.
Figure: Last Eight (08) Years Capital Market Trend
They contributed their cash lastly lost everything when the bubble started to burst in December
2010 that had begun to grow from the year 2009. This time Benchmark list boiled down to 3616
points in ahead of schedule February 2012 from its most elevated point 8918 in December
2010. Millions of investors lost their cash and came down to the road. This is the little picture of
stock market crashes in Bangladesh.
Still now, capital market condition is not stable. Nowadays investor are more afraid of invest to
the market which have tremendous impact on overall Bangladesh GDP growth. The
government has made numerous moves to address the consistent declining trend of the capital
market like expense refund of capital business speculators, exception of credit for margin level
investors furthermore making moves to impact banks to produce more interest in capital
market. The late most imperative step that the legislature has effectively pronounced to raise a
banking fund and through banking to put resources into capital market channel and attempted
to recuperate the capital market. Yet, the 'amusement organizers' of this capital market
situation have stayed unspecified. The stride that government has officially taken to recoup the
capital market have yet to be demonstrated productive. In addition, the economic adverse
7
condition together with the monetary policy may bring about a negative effect on turnover and
liquidity of capital market.
A New Extension Decision of Renata Ltd.:
Because of downward trend of capital market in Bangladesh, every organization think
differently to acquire more profit and avoid any kind of financial crisis. Renata Ltd. is one of the
leading medicine manufacturing organization, so it should think about any new extension. It
could be a new factory setup, buy new machine, develop different supply chain, introduce new
product etc. to get stability in Bangladeshi market. Renata Ltd. can launch a completely new
approach of marketing or selling product, which was not introduced before any medicine
company in Bangladesh likewise introducing Retail Outlet name ‘RE- PHARMA’. And the
product price will be same as like other medicine shop but this store will be little bit specialized
with Renata Ltd.’ medicine.
Available Finance for New Extension Decision (Re-Pharma):
When an organization go for any new extension decision, which is related to money then the
financial matter will be the major component for that decision implement. To setup Re-Pharma,
Renata Ltd. will need finance which can be collected from external or internal source, which
alternative is more convenient. Source of finance can be used for setting up ‘Re-Pharma’:
Working Capital:
Renata Ltd. can use working capital, which is 1,720,208,645 Tk. for setting up ‘e-Pharma’. Because
working capital is the internal source of finance, which do not have any interest.
Personal Savings:
Personal savings is one of the internal source of finance that does not have to be paid any
interest because it is owner’s money. Renata Ltd.’s owner or chairman can contribute to set up
‘Re-Pharma’.
Asset Sells:
8
If Renata Ltd. have any unutilized assets, the it can be sold to raise fund to have conducting new
extension, which is internal source of finance.
Bank Loan:
Bank loan is one of the main element to raise a fund externally currently there are two banks
likewise Standard Chartered Bank and HSBC Bank can give limit of 40 core and 80 corer, which
can be used for setting up Re-Pharma. (Renata Ltd. Annual report 2014, Page- 66). However,
interest can be very big deal for new extension of Renata Ltd. Because Renata have to pay the
interest against usable limit of loan, which can be extended from 2018 to 2028 for ten years.
Lease:
Renata Ltd. can take lease any area to use as their production area for the shop.
Grants: To get the grants from the government Renata Ltd needs to do the business more
widely. In addition, make government understand that Renata Ltd. Have power to reshape the
Bangladesh economy.
There are some other external source of finance that can be used by Renata Ltd. likewise, Share
sell. Share is a form of lending money from a person and giving portion of profit in percentage
whether business is doing profit or not.
9
Major Elements of Financial Statement of Renata Ltd.:
A balance sheet/ Financial Position:
A balance sheet, also known as a statement of financial position that summarizes an
organization's benefits, liabilities and shareholder's value at a particular point in time. These
three balance sheet segments give investor a thought with reference to what the organization
possesses and owes, and the sum contributed by the shareholders. There is a format of a
company’s statement of financial position:
Company NameBalance Sheet
As at 31 December 20….
£ £ £
Details Cost
Depreciation NetFixed AssetsLand xxxxx XxxxxBuildings xxxx xxxx XxxxFurniture/fittings xxxx xxxx Xxxx
xxxxxxxxCurrent AssetsClosing stock xxxxxDebtors xxxxProvision for doubtful debts xxxxxxCash in hand xxxxPrepayment of Insurance xxxx
XxxxxTotal Assets Xxxx
Equities and Liabilities
10
Ordinary share xxxxxxGeneral reserve (30000 + 24000) xxxxRetained earnings xxxx
xxxxxxxLong term Liabilities5% Debentures xxxxxx
Current LiabilitiesCreditors xxxxxBank overdraft xxxxAccruals of Wages & salaries xxxx
Debenture interest xxxxxxOrdinary share dividend proposed xxxxTax xxxx
xxxxxxTotal Equities & Liabilities xxxxxxxx
Profit & Loss Statement / Statement of Comprehensive Income:
Profit & Loss Statement, also known as a Statement of Comprehensive Income. A benefit and
misfortune record is a financial statement demonstrating the net profit or loss of the vocation
for a stretch of time. It demonstrates the gross benefit of the business less the aggregate
expenses get to be at risk to amid the time of the record. These costs are specified to as costs
and ought to be organized. For instance as rent, gas, power. Profit & Loss Statement /
Statement of Comprehensive Income of a company format given below,
Company NameProfit and Loss account
For the year ended 31 December 20….
Details £ £
Sales xxxxxx
Less Returns inwards xxxxxxx
11
xxxxxxx
Less Cost of Goods Sold
Opening Stock xxxxx
Purchases xxxxxx
xxxxxxx
Less Closing stock xxxxxxx
xxxxxx
Gross Profit xxxxxxx
Add Income
Discount Received xxxxxx
xxxxxxx
Less Expenses
Rates xxxxxx
Wages & salaries xxxxxxx
Accruals of Wages & salaries xxxxxxx
Insurance xxxxxx
Prepayment of Insurance xxxxxxx
General expenses xxxxxxx
Debenture interest accrued xxxxxx
Depreciation - Buildings (114,000 x 10%) xxxxxxx
Depreciation - Furniture/fittings (66,000 x 10%) xxxxxxx
xxxxxxx12
Profit before interest & tax xxxxxx
Less Tax xxxxxxxx
Profit after Tax xxxxxxx
Less Ordinary share dividend proposed (120,000 x 5%) xxxxxx
xxxxxx
Add Profit b/d xxxxxxx
xxxxxxx
Less General reserve xxxxxxxx
Retained Earningsxxxxxxx
x
Cash Flow Statement:
A statement to maintain the calculation of a company’s cash. It calculates the entire cash flow
of a business, no matter whether it is an expense or an income. In the business of any kind, cash
flow has been divided and maintained into two parts called cash inflow and cash outflow.
A company’s Cash Flow Statement format given below,
Company NameSTATEMENT OF CASH FLOWS
FOR THE YEAR ENDED ‘Month’ 20….
A. Cash flows from operating activitiesCollection from customers and other income XxxxxxxPayment of VAT (xxxxxxx)Payment to suppliers and employees (xxxxxxx)Cash generated by operations Zzzzzzzzzz
13
Finance cost (xxxxxxx)Payment of tax (xxxxxxx)Net cash generated from operating activities zzzzzzzzz
B. Cash flows from investing activitiesPurchase of property, plant and equipment (xxxxxxx)Investment in shares (xxxxxxx)
zzzzzzzzzzzSale proceeds of property, plant and equipmentNet cash used in investing activities (xxxxxxx)
C. Cash flows from financing activitiesBank loan (repaid) / received (net) (xxxxxxx)Dividend paid (xxxxxxx)Net cash (used in) / flows from financing activities (xxxxxxx)
Net cash inflow / (outflow) for the year (A+B+C) yyyyyyyyyy
Statement of Changes in Equity:
This will calculate the actual reserved capital left after all the dividend and profits are paid to
shareholders. It is always counted for an accounting period. Format of Statement Equity given
below:
Company nameSTATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 ‘Month’ 20…..
Share Capital SurplusTax Holiday Reserve
Sales reserve
Retained Earnings Total
Balance at 01 January 2013 xxxxxxxx xxxxxxxx xxxxxxxx Xxxxxxxx xxxxxxxx xxxxxxxx
Stock dividend issuedxxxxxxxx xxxxxxxx xxxxxxxx Xxxxxxxx xxxxxxxx xxxxxxxx
Cash dividend paid(xxxxxxx)
(xxxxxxx) (xxxxxxx) (xxxxxxx) (xxxxxxx) (xxxxxx)
Deferred tax on revaluation surplus ………….. ………….. ………….. ………….. …………..
14
Depreciation adjustment on revalued assets ………….. ………….. ………….. ………….. …………..Net profit after tax for the year ………….. ………….. ………….. ………….. …………..Unrealized gain on quoted shares ………….. ………….. ………….. ………….. …………..
Tax holiday reserve (xxxxxxx)(xxxxxxx) (xxxxxxx) (xxxxxxx) (xxxxxxx) xxxxxxx
Balance at 31 December 20… vvvvvvv vvvvvvv vvvvvvv Vvvvvvv vvvvvvv vvvvvvv
Importance of Financial Statement:
Financial Statement is a very important for an organization. There are three entities who
prepare financial statement. Mainly company must have financial statement. According to
company law a company have to prepare it. If a company is listed in Stock Exchange, the they
have responsibility to prepare and publish this publicly. By financial statement, a company can
measure its profitability, debt, liability, assets, sales, liquidity and many more. Without financial
statement a company cannot go further. There are some government rules and regulation that
force a company to prepare it because when tax is paid the income tax person study the
financial statement. If a company want to raise money from Bank or shareholders then it must
be delivered financial statement otherwise a company cannot get the money. Shareholder
always invest by conducting or analyzing financial statement.
At the end it is clear that without a financial statement a company would be in great danger in
terms of performance evaluation and expansion of the business.
15
Appropriate Formats of Financial Statements of Different types of
Businesses:
Sole Trader
The only one person who owns the business. He is the only person. That is responsible for all
the liabilities.
Company Name
Trading Profit & Loss Account
For the year ended xx/xx/xxxx
£ £ £
Sales xx
Less Cost of goods sold (xx)
Gross profit xx
Add Income xx
Less Expenses (xx)
Net profit xx
Company Name
Balance Sheet
As at xx/xx/xxx
£ £ £
Cost Dep Net
Fixed assets
B xx (x) xx
Total Current assets xx
Less Total Current liabilities (xx)
Working capital xx
Less Long Term liabilities (xx)
Xx
Financed by;
16
Capital xx
Add/Less Net profit/loss xx/ (xx)
Less Drawings (xx)
Xx
Partnership
It has to be 2 or more people but not more than 20 to form a partnership. Each partner is
mutual responsible or right if the partnership agreement is equally divided. All partnership
business must form in Bangladesh Partnership Act 1932.
In Partnership business, profit loss account is same like sole trader but the difference start net
profit portion. In partnership profit, loss account there will be Appropriation Account after net
profit. Because in this appropriation account section all partners expense, salary if any, profit is
listed and there will be a separate current account for each of partners.
Appropriation account
£ £ £
Net profit b/d xx
Interest on drawings:
A xx
B xx
C xx
xx
xx
Salary xx
Interest on capitals
A xx
B xx17
C xx
xx
Share of profit
A 1/2 xx
B1/3 xx
C1/3 xx
xx
C’s Current Account
Details £ Details £
Interest on drawing xx Balance b/d xx
Balance c/d xx Commission xx
Interest on capital xx
Partner’s salary xx
Share of profit xx
xx xx
Balance b/d xx
Partnership Balance sheet is same like sole trader business. Differences start from financed by
portion. There will be Represented by instead of Financed by section.
Balance Sheet
As at xx/xx/xxxx
£ £ £
Represented by;
Partners’ interest:
18
Capital
S xx
P xx
D xx
Xx
Current account
S xx
P xx
D xx
Xx
Xx
Formation of a Company
It is known as incorporation and is governed by law along with Bangladesh Company Act 1994.
If any one wants to form a company they have to go through to major formation which are
Memorandum of Association and Articles of Association.
Memorandum of Association
Section 1 of the Companies Act 1994 refers that;
“Any two or more persons associated for a lawful purpose may by subscribing their names to a
memorandum of association and otherwise complying with the requirements of this act in
respect of registration, form an incorporates company with or without limited liability.”
The Memorandum of Association must contain the following clauses
The name of the Company
The Company Full Address
19
What the Company is going to do
Company members details
Details of the share capital which the company is authorized to issue
A public company will also have a clause stating that the company is a public limited
company
Authorized Shares – total number of shares available for sale
Issued Shares – number of issued shares allocated for sale
Articles of Association
In this section refers to all internal details, which will be maintained that included, likewise
internal regulation adopted from government company law, power of directors. There some
clauses such as:
A statement as to how far the provisions of the model set articles provided for
companies apply
Issue and forfeiture of shares procedures
Procedures for holding and transferring shares
Shareholders voting power
Procedure at meetings
Appointment, qualification, remuneration and removal of directors
Borrowing powers of the company
Regulations as to dividend payment and reserve creation
Company’s profit loss account and balance sheet usually little bit bigger than sole trader and
partnership due to details information every entry. An also there will be appropriation account
as well in profit loss statement. A company’s profit and loss and balance sheet format is been
describe in Page 10-14.
20
Ratio Analysis of Renata Ltd. Internally:
Ratio Analysis is done to quantify the financial performance of the organization and to
comprehend that in which track the organization is going later on. Thus, it is fundamentally one
procedure of assessing the organization's financial performance. In ratio analysis, financial
things of a specific year are thought about. Here connections between the financial items are
examined. Along these lines, by doing ratio analysis and can be judged the financial aspects of a
firm. At that point, when contrast between one year's proportions and another then it shows
that the amount of advancement was made amid the analyzed period. The ratio analysis is
critical to investors, creditors and financial analysts as it aides in decision-making. The analysis
of financial ratios involves two types of comparison:
To start with, the analyst contrasts a present proportion and past and expected future
ratio for the same organization. The present proportion for the present year could be
contrasted and the present proportion for the earlier year-end. At the point when
monetary proportions are orchestrated over a time of years, the examiner can think
about the structure of progress and figure out if there has been a change or crumbling
in the organization's financial condition and performance over time.
The second technique for correlation includes contrasting the ratio of one and those of
comparable contention organization or with industry midpoints at the same point in
time. Such a correlation gives understanding into the organization. It additionally helps
us recognize any huge deviation from any material industry normal.
Profitability:
Capital Employed:
Fixed asset+ working capital (Current asset- current liability)
2014: 9,197,198,644+82,191,534 =9,279,390,178
2013: 8,577,464,610 + (- 1,128,672,481) = 7,448,792,129
21
Return on Capital Employed: (ROCE)
Formula :Profit beforeTax∧Interest
Capital Employeed×100
2014=2,330,922,9429,279,390,178
×100=25.12 %
2013=1,885,359,0527,448,792,129
×100=25.31%
2014 201325.00%
25.05%
25.10%
25.15%
25.20%
25.25%
25.30%
25.35%
25.12%
25.31%
ROCE
Figure: ROCE
ROCE is the amount of profit made in terms of capital employed. ROCE indicates that profit
against employed capital. A higher ratio would be more favorable because it means that more
profits are generated by each capital employed. 2014 and 2013 are almost same. Renata Ltd.
should try to improve their profit by increasing sales or by reducing expenses more.
Secondary Ratio:
Net Profit Margin:
This is the ratio of net income to sales or revenues. Through the net profit, we asses that out of
every Taka of sales, what amount is kept as earning. This is otherwise called profit margin.
Higher the profit margin, better the state of the firm. Higher profit margin implies that from the
22
sales, higher bit is staying as benefit so it additionally demonstrates towards effective cost
controlling capacity.
Formula :Net Profit
Sales /Turnover×100
2014= 1,710,862,52511,107,281,260
×100=15.40 %
2013=1,390,164,5278,757,405,748
×100=15.87 %
2014 2013
15.40%
15.87%
Net Profit Margin
Figure: Net Profit Margin
Renata Ltd’s profit margin in the year 2009 & 2010 almost same, in the year 2014, the net profit
margin was 15.87% but in 2014 it was 15.40%. Nonetheless, in 2014, it decreased by more than
0.47% only. It indicates that its sales were stable, its costs were lower. In addition, this profit
margin indicates that Renata is more profitable company.
Gross Profit Margin:
Profitability relies on upon countless and administrative choices of an organization. All the
impacts of liquidity, asset and debt management on the incomes judged through the
profitability ratios. Gross profit margin, net Profit Margin, Return on Assets and Return on
Equity are the generally utilized profitability ratios.
23
The relationship of sales and cost of goods sold is evaluated through gross profit margin. High
ratio shows a protected position for the organization. Low profit margin signals towards less
protected position in light of the fact that it implies that sales are diminishing, thusly creating
low incomes. It is additionally an awesome tool of distinguishing estimating method and cost
control. It serves to cut cost by introducing that cost is generally low or high than the incomes.
Thus, from the low profit margin we really get the thought that which way we have to control
cost.
Formula :GrossProfit
Turnover /Sales×100
2014= 5,688,309,85411,107,281,260
×100=51.21 %
2013=4,670,630,7208,757,405,748
×100=53.33 %
2014 201346.00%
48.00%
50.00%
52.00%
54.00%
56.00%
58.00%
60.00%
51.21%
53.33%
Gross Profit Margin
Figure: Gross Profit Margin
Over the last years, the gross profit margin has decreased from 53.33% to 51.21% in 2014. The
expenses connected with the deals were additionally too high, thus the edge was low. From this
outcome, Renata attempted to control the expense and accordingly the circumstance was
minimal preferred in 2013 over that of 2014.
24
Return on Total Asset: (ROA)
ROA is the estimation instrument by which we can realize that an organization is how much
productive in correlation with its total asset. Along these lines, it gauges that the organization
how proficiently uses its asset for create benefits. This is otherwise called Return On Investment
(ROI) as it tells that a firm how viably changes its investments on profits. It is regularly
communicated in rate. Higher ROA is constantly fancied as it shows that higher benefit has
been made through fewer investments.
Formula :Net Profit After Tax
Total Asset×100
2014= 1,710,862,52614,493,568,729
×100=11.80%
2013= 1,390,164,52712,714,843,610
×100=10.93 %
2014 201310.00%
10.50%
11.00%
11.50%
12.00%11.80%
10.93%
ROA
Figure: ROA
In 2013 the ROA was 10.93% and then it was increased 2014 which indicates successful
management policies of Renata Bangladesh Ltd. After that, it increased in 2014, which is not so
satisfactory.
25
Return on Equity: (ROE)
Return on Equity is the ratio of net income to total shareholder’s equity. It quantifies that the
organization what amount of earns from the shareholders’ equity. It additionally demonstrates
the organization's productivity at creating benefits from each Tk. of equity capital. Expanding
ROE shows improved performance. In accounting sense, ROE is the true bottom line of
performance measurement.
Formula :Net Profit After TaxShareholder Equity
×100
2014=1,710,862,5267,750,713,063
×100=22.07 %
2013=1,390,164,5276,295,114,611
×100=22.08 %
2014 201322.06%
22.07%
22.08%
22.09%
22.07%
22.08%
ROE
Figure: ROE
From the above we can see that, in 2013 and 2014 there was a change in ROE, over these 2
years it was not expanded. However, in 2013, the destruction proceeded with which shows that
Renata's administration productivity is lower than earlier years and it is procuring less benefit
from the equity capital.
Asset Turnover Ratio:
26
It is the ratio where deals are contrasted and the fixed asset of the organization. The ratio really
illuminates that the organization is sufficiently competent to utilize its fixed asset for procure
incomes or not. In fixed asset turn over, typically, speculations on property, plant and hardware
are numbered and the devaluations of these are subtracted. A high fixed asset turnover is
constantly calculable as it flags towards the company's high profitability. Higher fixed asset
turnover implies the organization is using its fixed asset and creating incomes from these. Then
again, low fixed asset is the sign that the organization is not gainful and the organization
neglects to produce deals income by using the fixed asset.
Formula :Turnover /Sales
¿ Asset׿
2014=11,107,281,2609,197,198,644
׿1.21׿
2013=8,757,405,7488,577,464,610
׿1.02׿
2014 20130.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
1.21
1.02
Asset Turnover Ratio
Figure: Asset Turnover Ratio
Renata had an increasing asset turnover from the year 2013 to 2014. If we compare from 2013
then will find it started from 1.02 and gradual increases, it reached at 1.21 in 2014 and 1.02 in
2013.so the progress is quite not acceptable.
27
Liquidity:
Net working capital= (Current Asset – Current Liability)
2014= 5,296,370,085- 5,214,178,551= 82,191,534 Tk.
2013= 4,137,379,000- 5,266,051,481= - 1,128,672,481 Tk.
This show the working capital cycle of the day-to-day operations. Having a good cycle is better
for the company. In 2013 net working capital is better than 2014. Renata should try to improve
the working capital as a better working capital shows a better planning and strategy utilized in
running the company efficiently.
Current Ratio:
Higher current ratio most likely demonstrates that the organization is very fluid and sufficiently
capable to meet the demands of the creditors. Satisfactory current ratio really fluctuates from
industry to industry yet by and large, if the present ratio lies somewhere around 1.5 and 3 then
it demonstrates that the business is sound. In the event that the present ratio is underneath 1
then it implies that the present liabilities are higher than the current asset, so the organization
can confront numerous challenges while paying back short term debts. Then again, if the
current ratio is too high then it shows that the firm is not effective to use its transient financing
facilities. It might likewise show that the organization has problem in working capital
management. Low current ratios normally indicate that the firm is in trouble to meet current
obligation but not necessarily always, a low current ratio indicates a huge problem.
Formula :Current Asset
Current Liability:1
2014=5,296,370,0855,214,178,551
:1=1.02 :1
2013=4,137,379,0005,266,051,481
:1=0.79:1
28
In 2014 and 2013, Renata had most noteworthy current proportion in 2014 and the sum was
1.02:1. A sign that Renata does not have enough fluid resources or money by which they can
spare their business from enormous inconveniences. In 2013, it is not in the standard level,
which indicates poor performance. Therefore in 2014 in increase from 0.79:1 to 1.02:1 that
indicate Renata performing very slowly, where standard ratio is 2:1.
Quick Ratio:
This ratio evaluates the limit of an organization to recoup its current liabilities by utilizing the
organization's quick asset. The benefit, which can be transformed into money quickly at a sum
that is near to its book worth, is known as quick asset.
Quick ratio is otherwise called Acid-test ratio and fluid proportion. Any Quick ratio under 1
implies that the organization cannot pay back its current debts.
Formula :Current Asset−Inventory
Current Liability:1
20145,296,370,085−2,760,765,470
5,214,178,551:1=0.49 :1
20134,137,379,000−2,628,838,384
5,266,051,481:1=0.29 :1
The graph shows that Renata Ltd. had quick ratio in 2014 is 0.49:1 but it was 0.29:1 in 2013. In
2014 and 2013, Renata has maintained very efficient quick ratios these were quite low than 1
but lower than standard ratio which is 3:1. In 2013, Renata was not quite able to pay back its
short-term debt but if we analyze he trend then we will find that Renata is not capable to tackle
liquidity crisis and to recover from bad situations. It actually means that when the current
assets will generate cash then Renata will gain a high quick ratio. This impact we really can see
in 2014, as in this year the ratio is 0.49:1 so it means Renata has tried recovered from the
lacings in quick assets.
29
Stock Turnover Ratio:
Formula :Closing StockCost of sales
×365days
2014=2,760,765,4705,418,971,406
×365days=186days
2013=2,628,838,3844,086,775,028
×365 days=235days
2014 20130
50
100
150
200
250
186
235
Stock Turnover Ratio
Days
Figure: Stock Turnover Ratio
In case of stock turnover ratio, lower figure is more acceptable. From the graph, we can see
that in 2014 than 2013 so, which indicates less business efficiency in 2014. Therefore, it means
that after 2014 Renata concentrated to increase operational efficiency. In 2014, it was 186 and
in 2013, it was 235 days operational efficiency of Renata was comparatively satisfactory in 2014
than 2013.
Debtors Collection Ratio:
Debtor days are the number of days taken to get the money from customers. Usually the lower
the days taken to recover the payments are better as the business gets its money before/on
time which is a very good situation showing either the business is very good in collecting their
30
debts or have great customer service that the customers feel loyal towards the business the pay
it on time.
Formula :TradedDebtorsSales /Turnover
×365days
2014= 1,355,185,47711,107,281,260
×365days=45 days
2013= 463,336,7998,757,405,748
×365days=19days
2014 20130
5
10
15
20
25
30
35
40
45
5045
19
Debtors Collection Ratio
Days
Figure: Debtors Collection Ratio
In 2014 has increased by 26 days than 2013, which is not good as payments are now being
delayed to come in the business. Renata can offer early settlement discounts to motivate
customers to pay early or give them a free product with their next purchase. Due to clearing the
payment on time for the previous purchases or give loyalty cards to earn points and get
discounts of certain level for payment in due time and keep an eye on sales team whether they
are working properly or not.
31
Creditors Ratio:
Formula :TradedCreditors+AccuralsPurchase /Cost of goods sold
×365days
2014=124,715,572+418,070,2055,418,971,406
×365days=37days
2013=64,986,063+263,876,9624,086,775,028
×365days=29days
2014 20130
5
10
15
20
25
30
35
40 37
29
Creditors Ratio
Days
Figure: Creditors Ratio
Creditor days are the number of days a business takes to pay its suppliers. Usually the longer
the period the better for the business as it get to hold on to the money for longer time. In 2014
has increased by 8 days than in 2013 this is good, as now company will get more time to
arrange the money for payment. Renata should try to negotiate with its suppliers to increase
more days for payments as it will give them enough time to get the money from the customers
and clear dues with suppliers. Renata can also see if there is any discount for early payments as
seen the debtor days are short enough for them to take benefits for settlement discounts and
keep its suppliers happy and keeping its good reputation in the credit market for on time
payments.
32
Capital Structure:
Debt to Equity Ratio:
The debt to equity ratio is the most ideal approach to quantify the budgetary influence of any
organization; it is a standout amongst the most vital ratio of any organization. Higher the ratio,
higher the debt amount of the firm, therefore higher financial advantage. If the ratio is lower,
the advantage of the firm is also lower. It presents the parentage of an organization’s asset that
is financed by debt versus equity. It is a widespread quantity of the long-term capability of an
organization’s business and along with current ratio, a measure of its liquidity, or its ability to
cover its expenses. Therefore, it often takes only long-term debts instead of total liabilities.
Formula :Long termdebt
Sharehlder Equity (Share capital∧Reserve)×100
2014=1,528,677,1157,750,713,063
×100=19.72 %
2013=1,153,677,5186,295,114,611
×100=18.33 %
2014 201317.50%
18.00%
18.50%
19.00%
19.50%
20.00%19.72%
18.33%
Debt to Equity Ratio
Figure: Debt to Equity Ratio
The debt to equity ratio had an upward trend in 2014 and 2013 which indicates that Renata is
taking more financial leverage and also depending on more debts. In 2013, the ratio were high, it
33
was 18.33% and in 2014, it was 19.72% respectively, which might lead the firm towards huge risk.
Yes, higher debt can increase the earnings a lot but it is only possible when the cost of debt is
affordable by the company.
Capital Gearing Ratio:
Formula :Long term debt
Sharehlder Equity+long termliability×100
2014= 1,528,677,1157,750,713,063+1,528,677,115
×100=16.47 %
2013= 1,153,677,5186,295,114,611+1,153,677,518
×100=15.49 %
Investment Ratio:
Number of Ordinary Share:
Formula :Profit after Tax
Number of Ordinary Share(NoOS )
2014 :Number of Ordinary Share (NoOS )=44,127,929
2013 ; Number of Ordinary Share (NoOS )=44,127,929
Number of Ordinary Share (NoOS) is already been given in Financial Statement note 31 & 31.1
(Renata Ltd.Annual Report, Page 146, 147)
Earning per Share (EPS):
2014 2013
38.77 Tk. 31.50 Tk.
In the year 2013, the EPS was low but in 2014, it increased a lot which indicates that earnings
against each share were high on this year. In 2013, the EPS dropped by 7.27 Tk. and therefore,
Renata Ltd. took initiative to increase the EPS and in 2014 it was increased otherwise it may
34
create confusion about the financial condition to the public. In 2014, they increased their EPS,
which is good for the earnings from their share.
Price Earning ratio: (P/E Ratio)
This is the ratio of business quality to EPS. Through this ratio, the late trading cost of the
organization is contrasted and it is EPS. The P/E ratio really speaks to the desire of investor
about the organization. Higher P/E implies that investor have elevated standards about the
organization's future development and that is the reason they are intrigued to contribute.
The P/E proportion has additionally another importance, at times it likewise demonstrates that
how much the investor are willing to pay for per Tk. of income. In this way, for this situation it is
alluded as various. The normal P/E ratio is 20-25 times. Contrasting P/E proportion inside of
firms of same industry gives the thought what organization is performing admirably.
Formula :Market Price Per Share( Share capital
Number of Ordenary Share)
Eps׿
2014= 3.5638.77
׿0.09׿
2013= 3.5731.50
׿ 0.11׿
In 2014 and 2013, the P/E ratio of Renata was great this is because Renata is a well reputed
multinational speculators have awesome enthusiasm on Renata, this is on account of Renata is
a very much rumored multinational organization and has an one of a kind brand picture. In
2014, the ratio was higher than the 2013. Still higher than standard which indicates that people
have positive opinion about the stocks of Renata Ltd.
Dividend Yield:
Ordenary Sharedividend ( total dividendnumber of Ordenary Share
)
Market price×100
2014=5.93100
×100=5.93 %
35
2013=3.79100
×100=3.79 %
2014 20130.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
5.93%
3.79%
Dividend Yield
Figure: Dividend Yield
Dividend yield is dividend made for each shares market value. In 2013 is less than 2014 from
3.79% to 5.93% as the dividend paid is same in both years but the market price increased in
2014 for which the shareholders demand higher yield. Renata now in little higher ratio, which
clarify that the dividend pay is not constant and has effect with market price, which is bad for
Renata Ltd.
Findings:
Renata Ltd. has a huge amount of long-term debt.
Renata Ltd. earns a significant amount every year, its current ratio and turnover ratios
are no so good, which shows that Renata Ltd. is performing not well.
Renata Ltd. has huge production capacity but it is not fully utilizing this chance and it is
not making cheaper products than the competitors are.
Renata Ltd.’s distribution channel and sales team is not that much strong compare to
the local organizations.
Renata Ltd. is not undercapitalized which means Renata Ltd. does only depend on
borrowed capital and the creditors. Therefore, obviously Renata Ltd. is financially not
sound.
36
Comparison between Renata Ltd. and GlaxoSmithKline Bangladesh
Limited(GSK) Year 2013:
Comparison between Renata Ltd. and GlaxoSmithKline Bangladesh Limited Year 2013 in
Liquidity, Capital Structure and Investment Ration given below:
Liquidity:
Net Working Capital:
Renata Ltd.: 2013= 4,137,379,000- 5,266,051,481= - 1,128,672,481 Tk.
GSK: 2013= 3411251000- 2020248000= 1391003000 Tk.
Company Name 2013
Renata Ltd. -1,128,672,481 Tk.
GSK 1,391,003,000 Tk.
From above table, it is clear that GSK had much more working capital than Renata Ltd. Where
Renara had negative working capital. That is means Renata’s current liability exceed its current
asset. Where GSK had very stable working capital.
Current Ratio:
Renara Ltd .=2013=4,137,379,0005,266,051,481
:1=0.79: 1
GSK=2013=34112510001391003000
:1=1.69 :1
Current ratio refers to liquid capital to survive. GSK had much more fighting capital then Renata
Ltd. Where GSK had liquid money. It could help GSK to expand business or go for more
production by paying their creditor where Renata ltd. could not do this.
Quick Ratio:
Renata Ltd .=20134,137,379,000−2,628,838,384
5,266,051,481:1=0.29 :1
37
GSK=20133411251000−1224492000
2020248000:1=1.08 :1
Quick ration implies that current liability is utilized against quick assets. If an organization’s
quick ratio under 1 that’s means that organization does not have enough money to pay their
current debt. Here Renata Ltd. was way behind this ratio, which means Reneta had a very tough
year of 2013. Where GSK was quite stable. They had enough money to pay their current debt.
Stock Turnover Ratio:
Renata Ltd .=2013=2,628,838,3844,086,775,028
×365days=235days
GSK=2013=12244920004516705000
×365days=99days
This figure lower the better. In that case, Renata Ltd. was not handle its operational efficiency
well. Nevertheless, GSK’s operational efficiency was quite impressive.
Debtors Collection Ratio:
Renata Ltd .=2013= 463,336,7998,757,405,748
×365 days=19days
GSK=2013=506,060,0006774872000
×365days=27 days
Usually the lower the days taken to recover the payments are better as the business gets its
money before/on time which is a very good situation showing either the business is very good
in collecting their debts or have great customer service that the customers feel loyal towards
the business the pay it on time. Here Renata Ltd. is quite aware about this matter where GSK
was needed 27 days, which could be carelessness of the management.
Creditors Ratio:
Renata Ltd .=2013=64,986,063+263,876,9624,086,775,028
×365 days=29days
GSK=2013=19493780004516705000
×365days=158days
38
Creditor days are the number of days a business takes to pay its suppliers. Usually the longer
the period the better for the business as it get to hold on to the money for longer time. Here
GSK have strong bargaining power to hold their creditors where Renata Ltd.’s creditors did not
obey them and Renata ltd. did not have power to make their creditors wait. Therefore, Renata
had to take so much overdraft and short-term loan, which had impact on overall profit.
Capital Structure:
Debt to Equity Ratio:
Renata Ltd .=2013=1,153,677,5186,295,114,611
×100=18.33 %
GSK=2013= 1262650001851112000
×100=6.82%
Though the ratio is lower, the advantage of the GSK is also lower. It presents the parentage of a
GSK’s asset that is financed by debt versus equity. It is a widespread quantity of the long-term
capability of a GSK’s business and along with current ratio. Here Renata Ltd. was in favorable
place by acquiring higher ratio than 18.33%, which was in 2013.
Capital Gearing Ratio:
Renata Ltd .=2013= 1,153,677,5186,295,114,611+1,153,677,518
×100=15.49 %
GSK=2013= 1262650001851112000+126265000
×100=6.39 %
Both GSK and Renata Ltd. had very poor percentage of capital gearing ratio. Where it needed to
be 50%. However, Renata Ltd. was in acceptable place than GSK that had only 6.39%.
Investment Ratio:
Number of Ordinary Share:
Renata Ltd .=2013 ; Number of Ordinary Share (NoOS )=44,127,929
GSK=2013=Number of ordinary Share (NoOS )=12,045,181
39
From above data, it can be said that Renata Ltd. had to sell share to rise fund where GSK had
enough money to operate its activity without issued any share which lead to higher profit.
Earning per Share (EPS):
GSK Renata Ltd.
2013 2013
45.35 Tk. 31.50 Tk.
By this table, it can be concluded that GSK had much more stable position in terms of increasing
growth.
Price Earning Ratio: (P/E):
Renata Ltd .=2013= 3.5731.50
׿0.11׿
GSK=2013= 1045.35
׿0.22׿
The P/E ratio has additionally another importance, at times it likewise demonstrates that how
much the investor are willing to pay for per Tk. of income. That means, GSK’s brand value was
impressive than Renata Ltd.
Dividend Yield:
Renata Ltd .=2013=3.79100
×100=3.79 %
GSK=2013= 15100
×100=15.00 %
Dividend yield is dividend made for each shares market value. It refers to that market value of
GSK’s share higher than Renata LLtd. It was risky to invest in Renata Ltd.
40
Recommendation:
Although Renata Ltd. is not maintaining a fair current ratio which is increasing very
slowly from 2013 to 2014. Which is an indication that current liabilities are increasing.
Therefore, Renata Ltd. must concentrate on this issue and should be careful to control
the debts.
There is a slightly increased of debt to equity ratio in 2014, which was almost same on
2013, it is pointing out that debts are decreasing. Renata Ltd. should realize that higher
debts could lead it to higher risk. From now it should be little conservative in case of
taking debts.
Most of the profitability ratios are same like previous year 2013. It means the growth
also is slowing day by day. In this case, Renata Ltd. must needs to make strategy that
how more profit can be achieved and needs to find ways to catch the particular part of
the market thus profit level goes up.
Renata Ltd. need to reach every corner of Bangladesh that can increase profitability of
the year.
Need to more focus on market strategy.
Renata Ltd. should recruit knowledgeable and talented sales executive to boost up the
overall sales.
Renata Ltd. needs to change its policy that force salesperson to convince Doctors to
suggest Renata ltd.’s medicine instead of others.
A retail outlet name ‘Re-Pharma’ can be introduced to generating profit and making
brand image.
Renata Ltd. should try to reduce short-term debt.
Though GSk has huge capital but it has some loophole like GSK is not utilizing its assets
so Renata ltd. can make a strategy based on utilization of assets.
Financial ratios analysis is a piece of financial statement analysis and through this; we can have
information about the organizations at various times execution. In particular, it gives us a
41
thought that what can be the organization's execution later on. Ratio analysis includes the
figuring of measurable relationship in the middle of information and it is an extremely prevalent
method of financial statement analysis. All through my investigation, I came to know about the
financial strength, operational efficacy and management efficacy of Renata ltd. and GSK. I have
understood that Renata Ltd. is struggling, it is not so fiscally solvents however there a few
dangers, which are expanding as of late. In the event that the dangers or dangers can be
handled legitimately then doubtlessly Renata Ltd. can survive effectively as like the earlier
years.
42
References:
http://www.bankingandfinance.ait.asia/sites/default/files/report/report_shahajarul.pdf
(Accessed 08 September 2015).
http://www.mca.gov.in/Ministry/actsbills/pdf/Partnership_Act_1932.pdf. (Accessed: 09
September 2015)
Renata Ltd. Annual Report 2014. Available at: http://renata-ltd.com/news-media/annual-
report-archive/ (Accessed 08 September 2015).
Riley P. 2011. Finance Management Accounting and Financial Reporting. Edition. Viva Books.
The Sources of Finance Available To an Organization. 2015. Available at:
http://www.ukessays.com/essays/finance/the-sources-of-finance-available-to-an-
organization.php (Accessed 08 September 2015).
43
Plagiarism Report:
44
Appendix
Ratio Calculation
Renata Limited Financial Statement.
GlaxoSmithKline Bangladesh Limited Financial Statement.
Acronyms
Renata – Renata Limited.
GSK- GlaxoSmithKline Bangladesh Limited
45