Ahammed Bin Mannan Asik Cell: 01717517491 Email: asik31@gmail.com

2. Presentation
on
A Study on Working Capital Management of
Public Limited Pharmaceuticals Company
(Beximco Pharmaceuticals limited)

4. • To find out the existing working capital planning process
of the company
• To find out the existing working capital controlling system
of the company.
• To detect the bottlenecks involved in the process of
working capital i.e. Planning and Controlling.
• To advocate the steps to be taken to increase the
efficiency in management of working capital

5. Methodology of the Study
 Literature study
 Analysis of secondary data of financial report of the company by
calculating ratios
Limitations of the Study
The study duration was very short and it
was not possible to cover and analyze
every part of the working capital
management practice

6. Rational of the Study
The investment of the company are made in two ways in an
organization that is-
a)Working Capital
b)Fixed Investment or Long Term Investment
Efficient management of working capital as well
as fixed investment are equally important to
achieve the desired objective of the company

7. Beximco Pharmaceuticals Limited
• Registered as a company in 1976 as a member of Beximco Group
• Began in 1980 when BPL’s first product made under license of Bayer AG,
Germany rolled out of a small manufacturing plant in Tongi, Dhaka.
• Launching of its own products in 1983
• Listing in the Dhaka Stock Exchange as a Public Limited Company as well
as the member of Chittagong Stock Exchange
• Won the first prize of ICAB National Awards 2000 for ‘Best Published
Accounts and Reports’ in Non-Financial Sector Category in 2002
• Listing in the London Stock Exchange (LSE) in 2005
• Blockbuster Products are Neoceptin R, Napa, Amdocal, Filmet, Neoflox,
Azmasol

8. Accounts Payable Value Addition
Raw WIP
Materials
THE WORKING CAPITAL
Cash CYCLE Finished
(OPERATING CYCLE) goods
Accounts SALES
Receivable

9. Data Analysis
Inventory Management

10. Inventory Management
Inventory as a proportion of Current Asset of BEXIMCO Pharmaceuticals Limited
SL Current Asset 2011 2010 2009 2008 2007
1 Inventories 36.64 36.5 28.50 60.94 56.51
2 Accounts Receivable 13.68 13.26 10.03 17.00 17.09
3 Loans, Advances & Deposits 11.75 12.60 10.10 19.02 22.53
4 Short-Term Investment 30.68 13.88 36.07 0.1 -
5 Cash & Cash Equivalents 7.25 23.76 15.03 2.94 2.93
6 Gross Working Capital 100 100 100 100 100

11. Inventory Management
Composition of Inventory
Name of elements in
SL. 2011 2010 2009 2008 2007
Inventory
1
Finished Goods 27.90 29.14 32.17 23.78 22.54
2
Work in Process 7.38 9.83 11.00 11.40 9.70
3
Raw Material 64.724 62.66 56.83 64.82 67.73
4
Stores & Spares 3.95 3.9 3.5 5.02 4.23
4
Total Inventory 100 100 100 100 100

12. Raw Materials Storage Period
Raw Materials Storage Period= Average stock of Raw Materials/ Average cost of raw materials per day
Particulars 2011 2010 2009 2008 2007
Average Stock Raw 295163921 286673911 284271612 278681856 235556789
Material 5 9 1 4 9
Average Cost of Raw
7854080 7854080 6571863 7635119 6453611
Material per day
Raw Material Storage
376 365 433 365 365
Period (Days)

13. Finished Goods Conversion Period
Finished goods conversion period= Average stock of finished goods/Average cost of goods sold per day
Particulars 2011 2010 2009 2008
Average Stock of finished goods 559721452 456201878.5 344724356 364770493
6259010.69
Average Cost of goods sold per day 10166232 8060064.219 5438878.3
5
Finished Goods Conversion Period (days) 55.06 56.60 55.08 67.07

14. Stores & Spares Conversion Period
Stores and spares conversion period= Average stock of Stores and spares/Average consumption per day
Particulars 2011 2010 2009 2008
Average Stock of store and spares 215036533 183998556 168056628 150397257
Average Consumption per day 589141.19 502597.066 460429.12 412047.28
Store & spares conversion period 365.00 366.10 365.00 365.00
(days)

15. W-I-P Holding Period
W-I-P Holding Period= Average w-i-p in inventory/ average cost of production per day
2011 2010 2009 2008
182228787 103280829 180522329 157195606
Average W-I-P in Inventory
Average Cost of Production 10567895.77 8574498.421 6715980.67 5488502.937
per Day
W-I-P Holding period (days) 17.24 12.05 26.88 28.64

16. Comment about Inventory
Management

17. Credit Management

18. Average Collection period
Average Collection Period= 365 days/ Accounts Receivable Turnover
2011 2010 2009 2008 2007
=365/8.7689 =365/8.5661 =365/8.1271 =365/7.9915 =365/7.7361
=41.62 days =42.61days =44.91days =45.67days =47.18 Days

19. Return on Investment
Return on Investment = Net Profit Before Taxes/ Total assets
2011 2010 2009 2008 2007
=1198525342/ =1051648808/ =624740307/ =545341273/ =353067878/
23093340533 21372399509 19891933422 14819665441 11953418940
5.19% 4.92% 3.14% 3.68% 2.95%

20. Z -Score Analysis
Z= 1.2T1+ 1.4T2 + 3.3T3 + 0.6T4 +0.999T5
T1= Working Capital/ Total Asset (Working Capital= Current Assets – Current Liabilities)
T2= Retained Earnings/ Total Assts
T3= Earnings before Income Tax/ Total Assets
T4=Market value of equity/ Total liabilities [Number of Shares * Current Share Price]
T5= Sales/ Total Assts.
Formula =If (B9>2.99,"SAFEzone", IF (B9>1.81,"GREYZone","DISTRESS"))
Year Z-Score Value Remarks
2011 1.1269 Distress
2010 1.0445 Distress
2009 0.9840 Distress
2008 0.5828 Distress
2007 0.8800 Distress

21. Findings
• BEXIMCO Pharmaceuticals has large amount of capital;
• According to ratio analysis the company’s stand on a
comparatively weak position in 2011 than previous year
• To some extent Inefficient management of working capital
especially on inventory part
• From the result of Z -Score model, BEXIMCO Pharma places on
“DISTRESS” zone
• After analysis the financial data, the company is ruling the
market by their brand name, not by their performance
• They are lagging behind for time management about collecting
money from the creditors
• It’s also bearing a large amount of money in inventory sector,
which create an impact on product price

22. SWOT Analysis
• Strengths
• Weakness
• Opportunities
• Threats
Recommendations
• Reduce the days of collection period to collect money from creditors
• Efficient management should be ensured for operating inventory sector
• Proper utilization of liquid asset to ensure maximum profitability;
• Keep concentration on every part of operations viz: cash management,
sale increase, credit terms;
• Proper measures should be taken to invest in different assets (current
and fixed).

24. Question
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