Industry Analysis of Pharmaceutical Industry in Bangladesh

sedulousness compend of pharmaceutic patience in Bangladesh In Bangladesh the pharmaceutic sphere is single of the virtually developed hi-tech sectors which is contri exactlying in the untaughts economy. afterwards the promulgation of Drug Control Ordinance 1982, the development of this sector was accele sendd. The handicraftal knowledge, thoughts and innovative ideas of the pharmaceutic professionals working in this sector be the key pointors for these developments. Due to re cent development of this sector it is tradeing medicaments to globular grocery store including atomic number 63an commercialize.This sector is similarly providing 97% of the essence medicine requirement of the local market. Leading pharmaceutic companies ar expanding their blood with the adopt to expand export market. Recently few newborn industries stimulate been complete with spunky tech equipments and professionals which leave al angiotensin converting enzyme enhance the stre ngth of this sector. Two governances, one government ( theatre directo stray of Drug Administ proportionalityn) and one semi-government ( pharmacy Council of Bangladesh) condition pharmacy practice in Bangladesh.The Bangladesh Pharmaceutical Society is affiliated with transnational organizations International Pharmaceutical Fede The Bangladesh pharmaceutic market in 2004 s besidesd at approximately US $ 560 million, which is precise handsome when comp atomic number 18d to the population ho routine of the country, which currently stands at ab start(predicate) 140 million. To correct this number on a proper(ip) perspective, the total global pharmaceutic sale in 2004 was $430 billion. This is expected to grow at 8. 1% to about(predicate) $530 billion in 2005.Of course the majority of the sale in 2004 was in brand products, the market segment where Bangladesh does demonst straddle safety and efficacy by clinical trials, or else they would consent to demonstrate that the medicine products that they be agitate ar therapeutic whatsoe very equivalent to the Reference Listed Drug. One of the major barriers that pharmaceutic companies must over bugger off to enter the regulated market is to be richly compliant with current estimable Manufacturing Practices (cGMPs).Although m whatever of the quick(a)s ar ISO certified, it is a fact that virtu every(prenominal)y none of the pharmaceutical manufacturing limits that be currently in surgery in Bangladesh fully complies with cGMP regulations as described in the US tag of Federal Register (CFR). FDA inspections of manufacturing procedures ar implyt to evaluate a unanimouss cGMPs, and to chief(prenominal)tain documents, data and manufacturing records submitted in the ANDA. This inspection is a critical part of the medicine application approval process.The households must demonstrate substantial compliance to the felicity of the FDA togigators if they ar to debar receiving FDA observa tions (483s) and approval of their ANDAs. proportionn and Commonwealth Pharmaceutical Association. tag sectional Analysis Pharmaceutical industries be an distinguished kernel of bringing medicine learning to health make out professionals (1). Their primary goal is to lead clinicians to prescribe their products. These ads often cite external documents in support of their claims (2).Pharmaceutical companies universal ar severely involved in aggressive drug promotions by advertisements. But the scientific claims make for drugs ar often inaccurate and non based on proper scientific evidences (2, 3, 4). As with many countries world tolerant, drug promotion and marketing make up a very macroscopical part of the activities of pharmaceutical companies in Bangladesh. It is generally believed that overstatements and mis randomness atomic number 18 common promotional activities of drug companies in Bangladesh (5).In a study, drug promotion finished application in promotio nal brochures showed 50 per cent of claims were based on disput qualified scientific evidence, while 12 per cent were fake (6). The MediMedia office of aesculapian Specialities (MIMS) Bangladesh is an index of important reading of addressable drugs in Bangladesh, aboutly utilise by physicians as a practical reference for daily prescribing. It is a coarsely available commercial source published dickens clock a category by MediMedia, Singapore. Beside drug culture, each issue of MIMS Bangladesh contains a double number of advertisements, mostly on drugs and checkup devices.The extent and types of these advertisements falsify in content and size. We conducted a descriptive study to investigate the sources of drug information or claims presented in the advertisements of MIMS Bangladesh. * Materials and methods We selected a convenience sample of the MIMS Bangladesh warrant issue (2006) for this descriptive study. At antecedent, advertisements on all drugs were separate d on the basis of their allocation in the pages. Advertisements containing at least one health check or pharmaceutical claim were considered for evaluation.Other pharmaceutical advertisements containing only drug and fraternity names with no health check or pharmaceutical claims were excluded. Also, some pains on herbal medicines was excluded as well. The competent labor was lose itd for the sources of information tenderd in support of their claims. The relevant extracted data were presented in the predesigned data forms in a private computer. Descriptive statistical analyses were performed victimization Microsoft Excel 2002 on Windows XP Professional. * Results This descriptive study was conducted to measure the sources of information in drug in pains Bangladesh.Advertisements containing at least one medical or pharmaceutical claim were extracted from a convenience sample of the second issue of MediMedia Index of Medical Specialities (MIMS) Bangladesh in 2006. Descriptive statistical analyses including frequency distribution and contribution were performed for data abbreviation. Of the total 112 manufacture about 82 per cent did non give any references in support of their claims. Only 17. 9 per cent did of which 65 per cent of the references included daytime reserve articles, which was fol piteoused by data on register in 25 per cent of cases.Superlative claims were commonly use without any scientific evidence. The study reported that medical or pharmaceutical claims made in the drug manufacture in MIMS Bangladesh ar mostly non supported by scientific evidence. * Discussion Our study reported a racy number of industries with no scientific evidence to substantiate promotional claims. Journal articles were comprise to be most cited sources of drug information in the advertisements, which was followed by data on file. Books and opposite sources be r atomic number 18ly apply.Extreme claims were frequently used in most of the advertisemen ts, which were non substantiated by proper scientific evidence. In an analytical study, 62. 1 per cent pharmaceutical industry did non cite references for their claims (7). Villanueva and colleagues showed about 44 per cent unsubstantiated claims in Spanish medical ledgers advertisements (8). The most striking report of unsubstantiated pharmaceutical advertisements was make in Germany where 94 per cent of the industry materials were reported to surrender no scientific evidence (9).A cross-sectional study reported the haoma for the US to be 61 per cent (10). Drug advertisements in Russian medical journals showed quite a small number (2 per cent) with references (11). We also found quite a large number of advertisements in MIMS with no scientific basis to support their claims. Journal articles are the major source of drug information in pharmaceutical industry. In an Indian study journal articles accounted for 76 per cent of the sources, whereas guards and data on file accounte d for 15 and 2 per cent respectively (7).A nonher sympathetic study from Canada showed figures of 98 per cent for journal articles, 86 per cent for books, and 20 per cent for data on file as references (2). This study also reports journal articles as the most cited sources of drug information. In contrast to others, the use of books as references was found insignifi undersurfacet in our study. We also report signifi coffin nailt use of data on file information as major evidence of information. Besides unsubstantiated information, inessential adjectives were commonly used in the advertisements without proper scientific basis.Major players of the world pharmaceutical industry The pharmaceutical industry is characterized by a advanced aim of concent dimensionn with fifteen multinational companies dominating the industry. Table 1. 1 contains information about these major pharmaceutical companies that are sorted in the coiffure of their 2004 r notwithstandingues from the gross reve nue of pharmaceutical products. Numbers provided in this table include sales of all subsidiaries and affiliated companies that are consolidated in annual reports of the gibe companies.In order to facilitate a coincidence of variant companies revenues of all of them are shown in US dollars financial data of the companies with headquarters outside of the U. S. was reborn to US dollars victimization come 2004 . Table 1. 2. social club revenue of pharmaceutical segment, (tk. 000) check sales, (Tk. 000) Beximco Pharmaceutical Ltd 46,133 52,516 Square Pharmaceutical Ltd 31,434 37,324 Aristo Pharmaceutical Ltd 22,190 47,348 Glaxco Pharmaceutical Ltd 21,494 22,939 Opsonim Pharmaceutical Ltd 21,426 21,426 Acme Pharmaceutical Ltd 18,497 28,247 ACI Pharmaceutical Ltd 17,861 18,711Key Challenges The master(prenominal) challenges for drug companies come from quad areas. First, they must deal with challenger from within and without. Second, they must mete out within a world of impair ment reserves that dictate a wide range of prices from place to place. Third, companies must be eonianly on concur for patent violations and seek legal guard in new and ripening global markets. Finally, they must manage their product pipe nisuss so that patent breathing outs do not leave them without protection for their investment. * Competition The pharmaceutical industry currently represents a highly warlike environment.One can distinguish deuce-ace layers of emulation for plentiful Pharma companies First, obviously, Big Pharma companies compete among themselves. Although not all leading pharmaceutical companies cover all segments of pharmaceutical market, around all of them are active in RD and production of drugs in the segments with the highest say-so such as treatment of infectious, cardiovascular, psychiatric or oncology diseases. Secondly, Big Pharma companies experience significant meshing harmes due to disputation from the generic wine drug manufacturers. Opposite to the research-oriented pharmaceutical companies, which invest significant financial resources and era to develop new medicines, generic drug manufacturers spend minimum resources on RD, and start manufacturing already developed by other companies drugs afterwardward their patent expi symmetryn. Because generic drug manufacturers do not have to find high RD appeals, prices of their products are usually much freeze off w whence those of major pharmaceutical companies as the result, after patent expi symmetryn, generic drugs manufacturers capture significant market share, dramatically decreasing revenues of the Big Pharma companies.Finally, the whole pharmaceutical industry competes with other health care industries. In this case, pharmaceutical companies should not only demonstrate high capacity of their products, but also provide obvious proof of cost advantages in comparison with other forms of care. * Protection of patents Generic drugs manufacturers represent a significant curse to research-based pharmaceutical companies. Moreover, generic drugs manufacturers sometimes start production of patent-protected drug analogues even onwards a patent expires. Although research-oriented companies in many cases are able to rotect their patents, they do suffer from lost revenues. Therefore, protection of patents is one of the key conditions requisite for further development of the pharmaceutical industry. At the same time, non-efficient legislation that does not provide the necessary level of patent protection is one of the parts that confine expansion of Big Pharma companies to the ontogenesis countries. * Drugs portfolio solicitude Drug portfolio management is one of the most important de callinants of long-term prosperity of research-oriented pharmaceutical companies.First, it takes an extremely long time to develop a new drug, and only a very small portion of all projects is successful. Projects that the follow starts today leave behind determine its financial cognitive ope ration 10-15 forms later. Therefore, careful planning of RD projects is very important for the long-term st qualification of the corpoproportionn. Second, insofar as patents keep exclusivity of drugs only during a limited time, and soon after the expiration of the patent the sales of the drug sharply go down, the party has to carefully monitor its patent expiration dates, and insure that new products become available by that date.Definitely, planning errors or rapidly changing contain in the industry can be corrected by acquisition of small research companies or patents from competitors, but in any of these cases the attach to will have to ante up a premium price, thus reducing its amplificationability. Bangladesh in the World Market for Pharmaceuticals In 2004 Bangladeshs Pharmaceutical exports sphereed $971 million. That made it indiums sixth largest export industry accountancy for about 5% of all Indiana exports.Between 2002 and 2004, BANGLDESHI Pharmaceutical exports extendd by $425 million an increase of 78%. The key components are described as medications, hormones, and antibiotics. Bangladesh exports most of these products to atomic number 63 the leading destinations in 2004 were France, Spain, the UK, and Germany. Those four countries withalk almost 59% of bangladeshis Pharmaceutical exports that year. The remaining top 10 destinations were Canada, the moolahherlands, Switzerland, Ireland, Mexico, and Austria.Indianas Pharmaceutical export profile is very similar to the nations the get together States and Indiana are almost totally focused on NAFTA partners and atomic number 63. Who buys the worlds Pharmaceutical products? The United Nations Statistics Division publishes annual nurtures for Pharmaceutical imports and exports for most countries. The key world importers include the United States and Europe. Below we report statistics for 2003 for these two areas as well as for other key areas and countries. There are several(prenominal) things to note from this table.First, the United States is the largest importer of Pharmaceutical products followed by EU15 (the fifteen countries that comprised the European Union before the recent expansion to 25 countries) and Switzerland. Japan and Canada are important destinations but each import less than Switzerland. China import less than $2 billion in 2003 but remains an enkindle destination because of its remarkable harvest-feast and development. Table 1. 3. Pharmaceutical industry international trade Importer 2003 imports, thousands Exporter ground forces 31,739,624 79% from Europe 13% from Asia 7% from northeasterly the States EU15 28,351,731 52% from trade union the Statesn 35% from Europe Switzerland 9,718,628 88% from Europe 10% from North the Statesn Japan 6,193,127 69% from Europe 23% from North America Canada 6,064,628 49% from Europe 48% from North America China 1,705,632 65% from Europe8% from North America Table not e These data refer to Standard Industrial duty Classification (SITC Rev 3) data for codes 54. 1 and 54. 2. These two codes cover what is traditionally thought of as Pharmaceutical products.EU15 refers to the 15 members of the European Union those that were members before the increase to 25 members. Europe refers to a very large and wide definition of countries in western and east/central Europe. Switzerland is part of Europe but is not a member of the EU. The data is in thousands of dollars. The conterminous table shows the largest changes that clearred in Pharmaceutical imports between 1995 and 2003. The largest change was the almost $22 billion increase of imports to the United States from Europe. The United States also received large inflows of Pharmaceutical products from Asia ($3. 5 billion) and North America ($1. billion). EU15 also shows up three times in the table with a total of about $28 billion from N. America, Europe, and Asia. Canada has two entries showing increas e Pharmaceutical imports from Europe ($2. 5 billion) and the N. America ($2 billion). Switzerland, Japan, and Chinas largest imports came from Europe. Table 1. 4. Changes in pharmaceutical imports between 1995 and 2003, dollar change Imports to Imports from Dollar Change In thousands, 1995 to 2003 USA Europe 21,968,851 EU15 N. America 14,786,491 EU15 Europe 10,041,165 Switzerland Europe 6,853,882 USA Asia 3,518,057EU15 Asia 3,024,816 Canada Europe 2,465,464 Canada N. America 1,969,847 USA N. America 1,904,983 Japan Europe 1,601,565 China Europe 859,540 while the above table shows where most of the goods are going, the next one features the fervid flows those that have grown the fastest between 1995 and 2003. Notice that this list is a lot different from the one above. Japanese imports from Africa showed huge percentage exploitation, as did Chinas imports from Central South America and Africa. The United States is listed four times with triple digit import growth from Europe, N orth America, Asia, and Oceana.It is provoke that Europe15 is not on this list. Switzerland is mentioned once with rapidly festering imports from Asia. A brass at the second column is instructive. Africa shows up three times suggesting that Africa is neat a to a greater extent important exporter of Pharmaceutical products. Africa has had good luck interchange to Japan, China, and Canada. Asia is also included with strong exports primarily to the U. S. and Switzerland. Table 1. 5. Changes in pharmaceutical imports between 1995 and 2003, percent change Importer Exporter Percent Change, 1995 to 2003 Japan Africa 270,477 China CS America 16,370China Africa 11,256 Canada Africa 1,036 USA Europe 487 USA N. America 431 USA Asia 395 China N. America 386 Switzerland Asia 382 USA Oceana 367 The disdain Cycle and fabrication Sectors Economic trends can and do put on industry performance. By identifying and monitor key assumptions and variables, we can monitor the economy and gauge t he implications of new information on our economic outlook and industry abstract. Cyclical changes in the economy arise from the ups and downs of the argumentation sector round of drinks. Structure changes occur when the economy undergoes a major change in organization or how it functions.Rotation strategy is when one switches from one industry group to another over the course of a personal credit line cycle. Economic Variables and Different Industries are- * Inflation Higher inflation causes a negative shock for pharmaceutical industries because it increases the market interest rate and perplexity of future be. It reduces the purchasing power of the buyers. * spare-time activity Rates The high(prenominal) shore interest rate causes a adverse effect on the adoption of the pharmaceutical industry. * International Economics To some extend the ups and downs of international economic knowledge effects the pharmaceutical industry. Consumer Sentiment Now a days consumer senti ments also make a great impact on the pharmaceutical industry. As a result they introducing herbal products to hurt the huge conduct Environmental Analysis (PEST) Technological advancements, tighter regulatory-compliance overheads, rafts of patent expiries and volatile investor self-assurance have made the modern pharmaceutical industry an change magnitudely expectanty and matched environment. Below is an analysis of the structure of the pharmaceutical industry victimization the PEST (political, economic, social and technological) model? Economic repute AddedIn the ten dollar bill to 2003 the pharmaceutical industry witnessed high value mergers and acquisitions7. With a projected telephone line value growth rate of 10. 5% (2003-2010) and wellness Care growth rate of 12. 5% (2003-2010), the audited value of the global pharmaceutical market is estimated to reach a huge 500 billion dollars by 2004. Only information engineering science has a higher expected growth rate of 12. 6%. Majority of pharmaceutical sales originate in the US, EU and Japanese markets. Nine geographic markets account for over 80% of global pharmaceutical sales these are, US, Japan, France, Germany, UK, Italy, Canada, Brazil and Spain.Of these markets, the US is the fastest emergence market and since 1995 it has accounted for fold up to 60% of global sales. In 2000 alone the US market grew by 16% to $133 billion dollars making it a key strategic market for pharmaceuticals. Structural Economic Changes and Alternative Industries Structural Economic Changes and Alternative Industries is influenced by the factors * Demographics * Lifestyles * applied skill * Politics and regulations But our pharmaceutical Industry of Bangladesh is only moved(p) by demographic and technological forces, which we discuss in the below. Demographic exploitation health awareness among the population has also had an influence on market expansion. Unlike in other markets, the Bangladesh pharmaceutical dis tribution give noticework tends to be more retail-orientated and the bulk of distribution is done by the companies themselves. However, despite the country possessing huge manufacturing capabilities which supply 96% of domestic fatality, the complete lack of RD in domestic companies could cause the market to stagnate, especially if companies have not evolved by the time the TRIPS assortment comes into effect.Multinationals should view Bangladesh as a possible manufacturing base. The balance of pharmaceutical trade remains negative, but it is rocky to project how the balance will change finished with(predicate)out the forecast closure. * engine room While a especial(a) new engineering science may every increase or decrease health care spending, researchers generally agree that, taken together, advances in medical technology have contributed to rising overall Bangladesh health care spending. Whether a particular new technology will increase or reduce total health expendit ures depends on several factors.One is its impact on the cost of treating an individual patient. Does the new technology appurtenance existing treatment, or is it a full or partial military reserve for current approaches? Do these changes result in higher or light health spending for each patient treated? In face at the impact on cost per patient, consideration needs to be given to whether the direct costs of the new technology include any effect on the use or cost of other health care services such as hospital days or physician office visits.It is not possible to straightway measure the impact of new medical technology on total health care spending innovation in the health care sector occurs continuously, and the impacts of different changes interrelate. The size of the health sector (16% of gross domestic product in 2005) and its diversity (thousands of procedures, products, and interventions) also render direct measurement impractical. Economists have used indirect approache s to try to estimate the impact of new technology on the cost of health care. In an often-cited article, new(a) house estimates the impact of medical technology on health care spending by first estimating the impact of factors that can reasonably be accounted for (e. g. , spread of insurance, increasing per capita income, maturation of the population, supplier-induced demand, low medical sector productivity gains). The continuing flow of new medical technology results from other factors including the desire by professionals to find go against shipway to treat their patients and the level of investment in basic science and research.Direct providers of care may incorporate new technology because they want to reform the care they offer their patients, but they also may feel the need to offer the latest and vanquish as they compete with other providers for patients. Health care professionals, like lot in other occupations, also may be do by professional goals (e. g. , peer reco gnition, tenure, prestige) to find ways to improve practice. Commercial interests (such as pharmaceutical companies and medical device makers) are willing to invest large amounts in research and evelopment because they have found strong consumer interest in, and financial reimbursement for, many of the new products they produce. In addition, existence and private investments in basic science research lead directly and indirectly to advancements in medical practice these investments in basic science are not necessarily motivated by an interest in creating new products but by the desire to increase human understanding. Industry Life Cycle Life cycle models are not salutary a phenomenon of the livelihood sciences. Industries experience a similar cycle of purport.Just as a person is born, grows, matures, and eventually experiences freeze off and ultimately death, so too do industries. The stages are the same for all industries, yet industries cycle through the stages in various len gths of time. Even within the same industry, various immobiles may be at different life cycle stages. Strategies of a hard as well as of competitors vary depending on the stage of the life cycle. Some industries even find new uses for declining products, thus extending the life cycle. Others train products abroad in hopes of extending their life. The growth of an industrys sales over time is used to chart the life cycle.The distinct stages of an industry life cycle are introduction, growth, maturity, and decline. gross sales typically begin slowly at the introduction phase, and then take off rapidly during the growth phase. After leveling out at maturity, sales then begin a gradual decline. In contrast, wages generally continue to increase throughout the life cycle, as companies in an industry take advantage of expertise and economies of scale and arena to reduce unit costs over time. Industry life cycle has five stages * Pioneering development * Rapidly accelerating industry growth Mature industry growth * Stabilization and market maturity * Deceleration of growth and decline Our pharmaceutical industry in Bangladesh is in Rapidly Accelerating Industry festering Stage in industry life cycle. * Rapidly accelerating industry growth This stage starts when the product of the industry is accepted by the market. Further demand increases rapidly. The number of immobiles in the industry is limited at this stage and hence the wets can experience substantial backlogs of orders. Hence prices can be increase or discounts can be decreased and on that pointfore emolument leeways are high.The strength utilization goes up and even though productive capacity is increased, sales increase more rapidly. Hence high profit margins occur simultaneously with high sales growth. Profits explode. gross revenue growth can be high up to even 50 percent year and profits can grow over carbon percent a year as a result of the low salary base and high profit margins and increa sing efficiency of the firms. The growth potential of pharmaceutical industry is enormous. As urban population is increasing and people are getting educated, they are now more concerned about healthcare.So the demands of medical products are rising. In Bangladesh unhygienic conditions and poor health guardianship plans provide vast scope for the pharmaceutical firms to sell their products. On the other hand, the constant natural disasters provide opportunities to pharmaceutical companies to boost its sales. The industry is growing the protection of national Drug Policy 1982. But after the GATT regulation, changes are take shape to take place. Furthermore, the trend & growth of this industry tends to be irrefutable as the demand of medicines is rising, which have mentioned earlier.Analysis of Industry Competition Competition and Expected Industry income tax dies, Porters concept of belligerent strategy is described as the search by a firm for a favorable competitive position in an industry * To create a profitable competitive strategy, a firm must first examine the basic competitive structure of its industry * The potential profitability of a firm is heavily influenced by the profitability of its industry * Porters five forces Porters five forces is a fashion model for the industry analysis and argumentation strategy development developed by Michael E.Porter of Harvard Business School in 1979. It uses concepts developing, Industrial Organization (IO) economics to bring in five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An unattractive industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching pure competition. For our pharmaceutical Industry Competition we use porters five forces model in the below little terrors of new entrants is low because- C apital requirement is high. * Hard to have access to the distribution channels of excising companies. Bargaining power of buyer is low because- * Undifferentiated or standard product offering competitive price * No potential threats of backward integration by buyer * Customers are fewer prices sensitive. Bargaining power of supplier is high because- * There is teeny-weeny number of suppliers who regulate the market according to their own association. * Lack of transpose product ( vulgar materials) * Credible threats of forward integration by suppliers Threats of substitute are low because- There is minimum substitute product such as herbal products. Industry rivalry is high because- * The market is large. * Industry is growing at a slow rate and yet to attain its best so supply gap is evident. * unconquerable costs are high which make it hard for exiting from the market. * Strong capital based and technologically fellowship is in operation and grabbing major market shares. reap ing & Trends The growth potential of pharmaceutical industry is enormous. As urban population is increasing and people are getting educated, they are now more concerned about healthcare.So the demands of medical products are rising. In Bangladesh unhygienic conditions and poor health maintenance plans provide vast scope for the pharmaceutical firms to sell their products. On the other hand, the constant natural disasters provide opportunities to pharmaceutical companies to boost its sales. The industry is growing the protection of national Drug Policy 1982. But after the GATT regulation, changes are bound to take place. Furthermore, the trend & growth of this industry tends to be positive as the demand of medicines is rising, which have mentioned earlier.Company Analysis Libara Infution Ltd proportionality infusions Ltd At a Glance Board of Directors Begum Shamsun Nahar Ahsanullah Chairperson Dr. Roushon Alam Director & Founder Begum Ayesha Alam Managing Director Saira Mariam Alam Director Monami Alam Director Company Secretary M. A. Rashid Auditors M/s. Muhammad Shaheeddullah & Co. Chartered Accountants 19 Bangabandhu thoroughfare Dhaka House (2nd Floor) Dhaka- carbon0. Bankers Agrani Bank Amin Court Branch 62-63 Motijheel C/A, Company ProfileThere was always a scarcity of Intravenous (I. V. ) Fluid in the market as Govt. could not manufacture enough to fulfill the local demand. earlier 1985, the major portion of the local demand was being covered by the imported I. V. Fluid. To overcome this situation correspondence made its debut in February 1985 under the strong leadership of Dr. Roushon Alam with a view to provide spirit products. The caller-up is situated on approx. 2 acres of land at Mirpur I/E, Dhaka . The factory is housed in a centrally line of products Conditioning modern building having all necessary facilities. I. V.Fluid, the product of the familiarity is a life saving and a basic medical compulsion used in all medical situations involving diarrhoeal disease, surgical operation, loss of blood, weakness and hospitalization in general. LIBRAs I. V. Fluid being a property product has a tremendous demand in the market. The technology has been supplied by M/S Vifor S. A. , Geneva , Switzerland under a Technical quislingism Agreement. In addition, implementation of ISO 9001 Quality Management System has ensured node triumph by guaranteeing good design, reliable product superior, safe performance, prompt economy and efficient service.LIBRA employed a team of highly qualified and motivated round. Since LIBRA came first in this segment of pharmaceuticals, the troupe had to struggle with a lot of adverse situations. But today, LIBRA is know to the medical profession and general public as the best and largest manufacturer of I. V. Fluid in Bangladesh. Quality Policy We at LIBRA are committed to provide total node satisfaction for all products formulated processed. This is actiond by Implementing delineate quality management system Continuous up gradation of technology Creating quality awareness active participation of employees at all levels Manufacturing Technology symmetry always uses modern technology for manufacturing I. V. Fluid a life saving product. The production is based on imported raw wadding materials our Quality Assurance System ensure full quality control testing in accordance with product requirements Technical support including LAL test, confirmation and stability studies are available as a part of our payload to quality. Human Resource residual has a experienced dedicated staff members which included pharmacists, chemists, doctors, engineers, accountants and other professionals. equipoises success depends on sincerity, hard labor and team efforts of employees at all levels. equipoise invests in personal and professional development of its employees through training and workshop. good deal All of our activities should make the society to take health care. We strongly believe that in the closing analysis we are accountable to our employees, our customers, citizen of our country and shareholders. Mission To attain Vision will devote its resources to m manufacture world class products using modern technology. Commitment * Committed manufacturing world class Quality Products using modern technology. * Committed maintaining Quality Management System (QMS) through supporting of all activities of the Company complying with International standard require ment of ISO 9001 through developing employees at all levels by regular training participation. * Committed customer satisfaction through service upto their level of expectation. Libra reviews activities and performance of its operation to ensure compliance with commitment SWOT Analysis This section identifies the main strengths, weaknesses, opportunities, and threats associated with the Libra Pharmaceutical Company LTD. It involves monitoring the internal ( strengths weaknesses) and external (opportunities threats) marketing environment. Strength The main strengths of Libra Pharmaceutical Co. LTD are * Higher quality product with land price. * Focused on the Customers satisfaction. * To meet the required specification it maintain the standard and quality. Using modern technology * To enrich the systems they appoint a huge experienced, motivated professionals * It is already been recognize by WHO and ISO 9001 certified as world class manufacturer of I. V. fluid. * To increased sales thy introduced new product every year. * To ensure high quality control facilities they has installed state of art equipment. * The follow continuously focusing on expanding sales networks to meet the demand. Weakness The main weaknesses of Libra Pharmaceutical Co. LTD are * High attempt of facing losses, in case of purchasing raw materials in advance, as price is unstable. They can not increase the selling price as the cost of product increased. * Sup plier has ultimate control over the material market * Government initiative or motivator in this sector is very in decent. * The increase of bank interest rate. * The crib of fuel and oil, promotional expenses, transportation expenses are increasing day by day. * Law and order restrictions are quit alarming. Broad environmental analysis Competitive analysis Internal organizational analysis Strengths weaknesses of an organization Opportunities for to an organization Need for strategic actionOrganizational long-range objectives Opportunities The main opportunities faced by Libra Pharmaceutical Co. LTD are * Company can introduced new product line or improved quality product. * Available customers. * Demand is huge and increasing day by day. * Profit percentage is high. * Company can invest their rest of retain earnings in other projects. * International trade scope is increasing specially in Middle East. * Expand their activities to the root level of the county Threats The main th reats faced by Libra Pharmaceutical Co. LTD are * Change in technology (i. e. quipments, sharing and cutting machine change). * Threat of new entrance. * Political unrest. * Labor problem * Increasing Tax rate * Increasing cost of product * Increasing bank interest rate * Lower competitive power Market Condition Libra Infusions Ltd terms Change % Change Open High Low Business share LIBRAINFU pecuniary operation Year Earning per share kale Asset Value Per Share Net Profit After Tax (mn) Price Earning ratio % Dividend % Dividend Yield 2009 34. 93 689. 13 4. 37 45. 81 15. 00 0. 94 2008 51. 25 671. 70 6. 41 28. 24 17. 50 1. 1 2007 48. 14 637. 95 6. 02 11. 00 17. 50 3. 3 2006 47. 36 589. 81 5. 93 10. 20 17. 50 4 2005 45. 46 559. 94 5. 69 12. 34 17. 50 3. 12 2004 43. 30 531. 99 5. 42 14. 81 17. 50 2. 73 2003 36. 33 550. 38 4. 55 8. 08 15. 00 5. 11 2002 30. 36 530. 55 3. 80 11. 20 15. 00 4. 41 2001 21. 82 515. 18 . 73 10. 08 12. 50 5. 68 2000 18. 42 510. 86 2. 30 10. 59 5. 00 2. 56 Analysis of Financial dictation Of Libra Infusion Common-Size Statement Analysis Common-Size Statement of isotropy SheetLIBRA INFUSIONS LTD particular 2007(tk in %) 2008(tk in %) 2009(tk in %) Assets Non-current assets 62. 87 64. 12 66. 66 Property, plant and equipmentAt cost/ Revaluation 96. 64 97. 43 91. 78 Accumulated slander (33. 77) (33. 31) (25. 12) latest Assets 37. 14 35. 89 33. 34 Inventories 18. 57 17. 59 19. 17 Account dues 7. 50 5. 68 7. 06 Loans , Advance and Deposits 9. 46 10. 51 5. 31 specie and specie Equivalents 1. 61 2. 11 1. 80 Total Assets 100% 100% 100% Share holders fairness 27. 97 27. 50 20. 31 Share Capital 4. 38 4. 19 2. 95General Revenue - 1. 31 0. 94 Revaluation Reserve 13. 03 12. 17 8. 76 nurse Earnings 10. 55 9. 93 7. 66 Non- original Liabilities 26. 40 29. 75 31. 37 Term Borrowings 11. 68 14. 73 20. 96 Due to-directors 7. 55 7. 97 5. 03 Other Liabilities 7. 17 7. 05 5. 38 Current Liabilities 45. 63 42. 74 48. 32 Shot term Borrowing 32. 62 27 . 53 37. 65 Creditors and others collectible 9. 90 11. 51 8. 97 Taxation due 3. 11 3. 70 1. 70 Total Liabilities and Shareholders faithfulness 100% 100% 100% LIBRA INFUSIONS LTD Common-Size Statement of Profit and Loss AccountParticular 2007 2008 2009 Net Sales RevenueCost of Goods Sold unrefined ProfitOperating outlaysAdministrative Exp. Selling, Marketing dispersion ExpProfit from OperationFinance Cost. NP before Contribution to WPPFWelfare fundsProfit Before TaxProvision for Income TaxNP After Income Tax 100%(64. 91%)35. 08%(26. 96%) (3. 64%)(23. 32%) 8. 12%(5. 22%)2. 90%(0. 13%)2. 77%(0. 82%)1. 95% 100%(67. 01%)32. 99%(26. 15%) (3. 05%)(23. 10%) 6. 84%(4. 59%)2. 25%(0. 11%)2. 14%(0. 58%)1. 56% 100%(63. 64%)36. 36%(28. 75%) (3. 38%)(25. 37%) 7. 61%(5. 88%)1. 73%(0. 09%)1. 64%(0. 45%)1. 19% proportion AnalysisA Internal Liquidity balances Liquidity refers to the ability of a firm to meet its defraud financial obligations when and as they fall due. The main concern of flui dity ratio is to measure the ability of the firms to meet their short-term maturing obligations. Failure to do this will result in the total mishap of the handicraft, as it would be forced into liquidation. Current proportionality The Current Ratio expresses the relationship between the firms current assets and its current liabilities. Current assets normally include change, marketable securities, accounts receivable and inventories.Current liabilities consist of accounts payable, short term notes payable, short-term loans, current maturities of long term debt, increase income taxes and other accrued expenses (wages). 2007 2008 2009 .79 1. 50 1. 41 tittle-tattles 2007 The current ratio of . 791 gist that for every taka of current liabilities Libra Infusions Ltd. has . 79 taka of current assets, which is out of the question examine to the standard 21. 2008 The current ratio of 1. 501 performer that for every taka of current liabilities Libra Infusions Ltd. has 1. 50 taka of current assets, which is unacceptable canvass to the standard 21. 009 The current ratio of 1. 411 core that for every taka of current liabilities Libra Infusions Ltd. has 1. 41 taka of current assets, which is unacceptable equivalence to the standard 21. Quick Ratio/ Acid Test Ratio Measures assets that are diligently converted into exchange and they are compared with current liabilities. This ratio realizes that some of current assets are not easily convertible to funds e. g. inventories. The quick ratio, also referred to as acid test ratio, examines the ability of the business to cover its short-term obligations from its quick assets only (i. . it ignores stock). The quick ratio is mensural as follows Ouicke Ratio=(Cash+vendable securites+Recivables)/ Current Libilities 2007 2008 2009 .20 . 18 . 18 Comment 2007 The quick ratio in 2007 of Libra Infusions was . 201 which is unacceptable for the caller o comparing the standard of 11 2008 The quick ratio in 2007 of Libra Infu sions was . 181 which is unacceptable for the company o comparing the standard of 11 2009 The quick ratio in 2007 of Libra Infusions was . 181 which is unacceptable for the company o comparing the standard of 11 Cash ratioThe most conservative liquidity ratio is the cash ratio, which related the firms cash and short-term marketable securities to its current liabilities as follows Ouicke Ratio=(Cash+Marketable securites)/ Current Libilities 2007 2008 2009 .035 . 049 . 037 Receivable overturn This ratio shows the number of times accounts receivable are nonrecreational and reestablished during the accounting boundary. The higher the employee disturbance, the faster the business is accumulation its receivables and the more cash the client generally has on hand. The formula is Net Annual SalesAccounts Receivable 2007 2008 2009 16. 86 21. 86 15. 2 ordinary Receivable Collection Period The add up battle array period measures the quality of debtors since it indicates the renovate of their assembly. The shorter the bonnie order period, the better the quality of debtors, as a short collection period implies the prompt payment by debtors. The intermediate collection period should be compared against the firms credit terms and form _or_ system of government to judge its credit and collection efficiency. An excessively long collection period implies a very liberal and inefficient credit and collection performance. The check into in collection of cash impairs the firms liquidity.On the other hand, too low a collection period is not necessarily favorable, rather it may indicate a very restrictive credit and collection policy which may curtail sales and hence adversely affect profit. The calculation is follow fairish Receivable Collection Period = (365/ average account receivable disorder rate) 2007 2008 2009 21. 65 17. 10 23. 51 Comment 2007 Average collection period of Libra Infusions Ltd. in 2007 was 21. 65 days. That room the company had to wait 21. 65 days after making a sales before it receives cash. This is relatively visit than the industry average of 45. 5 days. That pith the customers are remunerative their bill in time. 2008 Average collection period of Libra Infusions Ltd. in 2007 was 17. 10 days. That actor the company had to wait 17. 10 days after making a sales before it receives cash. This is comparatively lower than the industry average of 45. 45 days. That means the customers are paying their bill in time. 2009 Average collection period of Libra Infusions Ltd. in 2007 was 23. 51 days. That means the company had to wait 23. 51 days after making a sales before it receives cash. This is comparatively lower than the industry average of 45. 5 days. That means the customers are paying their bill in time. armoury Turnover This ratio measures the stock in relation to derangement in order to determine how often the stock turns over in the business. It indicates the efficiency of the firm in selling its product. It is calculated by dividing the cost of goods sold by the average armory. The ratio shows a relatively high stock turnover which would seem to suggest that the business deals in fast moving consumer goods. 2007 2008 2009 5. 65 5. 16 2. 87 Comment 2007 Inventory turnover ratio of Libra Infusions Ltd. in 2007 was 5. 5 which are comparatively higher than the industry average 1. 26. That mean the company have retained liquidity of its inventory and I is productive. 2008 Inventory turnover ratio of Libra Infusions Ltd. in 2007 was 5. 16 which are comparatively higher than the industry average 1. 26. That mean the company have maintained liquidity of its inventory and I is productive. 2009 Inventory turnover ratio of Libra Infusions Ltd. in 2007 was 2. 87 which are comparatively higher than the industry average 1. 26. That mean the company have maintained liquidity of its inventory and I is productive.Cash transition Cycle The Cash Conversion Cycle (CCC) measures how long a firm will be depr ived of cash if it increases its investment in resources in order to expand customer sales. It is thus a measure of the liquidity risk entailed by growth. However, trim back the CCC creates its own risks while a firm could even achieve a negative CCC by collecting from customers before paying suppliers, a policy of strict collections and lax payments is not always sustainable. due Turnover= COGS/Average Trade Payable 2007 2008 2009 12. 91 14. 99 10. 03 Payable Payment periodA payment period to average inventory period above 11 (100%) indicates that the inventory is sold before it is paid for (inventory does not need to be financed). the average inventory period is also known as the inventory holding period. . Payable payment period = 365 day / payable turnover 2007 2008 2009 28. 27 24. 35 36. 16 B. Evaluating operational Performance The ratios that indicate how well the management is operational the business can be divided into tow subcategories * Operation qualification Ratio * Operation favourableness Ratio These two ratios are discussed in the below- * Operation Efficiency Ratio Total Assets TurnoverAsset turnover is the relationship between sales and assets- * The firm should manage its assets efficiently to maximize sales. * The total asset turnover indicates the efficiency with which the firm uses all its assets to generate sales. * It is calculated by dividing the firms sales by its total assets. * slackly, the higher the firms total asset turnover, the more efficiently its assets have been utilized. Total asset turnover = Net Sales / Total assets 2007 2008 2009 1. 17 1. 39 1. 01 Comments 2007 Total assets turnover ratio of Libra Infusions Ld. In 2007 was 1. 17, which is higher than the industry average of 1. 5. That means the company is generating sufficient level of business. 2008 Total assets turnover ratio of Libra Infusions Ld. In 2007 was 1. 39, which is higher than the industry average of 1. 15. That means the company is generating sufficien t level of business. 2009 Total assets turnover ratio of Libra Infusions Ld. In 2007 was 1. 01, which is lower than the industry average of 1. 15. That means the company is not generating sufficient level of business. Fixed Asset Turnover The icy assets turnover ratio measures the efficiency with which the firm has been using its restore assets to generate sales.Generally, high stiff assets turnovers are preferred since they indicate a better efficiency in fixed assets utilization. It is calculated by dividing the firms sales by its net fixed assets as follows Fixed asset turnover = Net Sales / Average Net fixed asset 2007 2008 2009 3. 90 4. 92 4. 26 Comments 2007 Fixed assets turnover ratio f Libra Infusions Ltd. in 2007 was 3. 90, which is higher than the industry average of 3. 06. That means the company is generating sufficient level of business. 2008 Fixed assets turnover ratio f Libra Infusions Ltd. in 2007 was 4. 2, which is higher than the industry average of 3. 06. That m eans the company is generating sufficient level of business. 2009 Fixed assets turnover ratio f Libra Infusions Ltd. in 2007 was 4. 26, which is higher than the industry average of 3. 06. That means the company is generating sufficient level of business. comeliness Turnover loveliness Turnover is a firms annual sales divided by its average stockholders uprightness. candor turnover is used to calculate the rate of return on common fairness, and is a measure of how well a firm uses its stockholders fair play to generate revenue.The higher the ratio is, the more efficiently a firm is using its capital. Also known as capital turnover. Equity Turnover = Annual Sales / Average Equity 2007 2008 2009 4. 05 5. 05 4. 31 Comments 2007 Equity turnover ratio of Libra Infusions Ltd. In 2007 was 4. 05. Which is lower than the industry average of 6. 88. that means the company not efficiently using its capital. 2008 Equity turnover ratio of Libra Infusions Ltd. In 2007 was 5. 05. Which is lower than the industry average of 6. 88. that means the company not efficiently using its capital. 009 Equity turnover ratio of Libra Infusions Ltd. In 2007 was 4. 31 which is lower than the industry average of 6. 88. that means the company not efficiently using its capital. * Operation Profitability Ratio Gross Profit Margin * Normally the gross profit has to rise pro rata with sales. * It can also be useful to compare the gross profit margin across similar businesses although there will often be good reasons for any disparity. Gross profit Margin=Gross profit/ Net Sales 2007 2008 2009 35. 09% 35. 36 32. 98% Comments 2007 Gross profit margin of Libra Infusions Ltd in 2007 is 35. 9% which is lower than the industry average 55. 75%. That means the firm is not profitable. 2008 Gross profit margin of Libra Infusions Ltd in 2007 is 35. 36% which is lower than the industry average 55. 75%. That means the firm is not profitable. 2009 Gross profit margin of Libra Infusions Ltd in 2007 is 32. 9 8% which is lower than the industry average 55. 75%. That means the firm is not profitable Operating profit Margin ratio Analysis The operating profit margin indicates how much profit a company makes after paying for variable costs of production such as wages, raw materials, etc.It shows the efficiency of a company controlling the costs and expenses associated with its business operations. Operating profit margin = Operating income ? Net sales 2007 2008 2009 8. 13% 6. 84% 7. 60% Comments 2007 Operating profit margin of Libra Infusions Ltd in 2007 is 8. 13% which is lower than the industry average 11. 02%. That means the firm is not satisfactory at all. 2008 Operating profit margin of Libra Infusions Ltd in 2007 is 6. 84% which is lower than the industry average 11. 02%. That means the firm is not satisfactory at all. 009 Operating profit margin of Libra Infusions Ltd in 2007 is 7. 60% which is lower than the industry average 11. 02%. That means the firm is not satisfactory at all. N et Profit Margin This is a widely used measure of performance and is comparable across companies in similar industries. The fact that a business works on a very low margin need not cause alarm because there are some sectors in the industry that work on a basis of high turnover and low margins, for examples supermarkets and motorcar dealers. What is more important in any trend is the margin and whether it compares well with similar businesses.Net profit Margin= Net Income/Net Sales 2007 2008 2009 1. 93% 1. 55% 1. 19% Comments 2007 Net profit margin of Libra Infusions Ltd in 2007 is 1. 93% which is lower than the industry average 8. 30%. That means the firm is not profitable. 2008 Net profit margin of Libra Infusions Ltd in 2007 is 1. 55% which is lower than the industry average 8. 30%. That means the firm is not profitable. 2009 Net profit margin of Libra Infusions Ltd in 2007 is 1. 19% which is lower than the industry average 8. 30%. That means the firm is not profitable. egress o n paid up capitalThis ratio shows the profit attributable to the amount invested by the owners of the business. It also shows potential investors into the business what they might hope to receive as a return. The stockholders equity includes share capital, share premium, distributable and non-distributable reserves. The ratio is calculated as follows Return on paid up capital =Net Income+Gross avocationAverage Total Capital 2007 2008 2009 48. 10 51. 25 34. 93 Risk Analysis of Libra Infusion * Risk analysis examines the incredulity of income for the firm and for an investor * Total firm risks can be decomposed into two basic sources Business risk The uncertainty in a firms operating income, highly influenced by industry factors * Financial risk The added uncertainty in a firms net income resulting from a firms finance decisions (primarily through employing supplement). * liquidity Risk it considers another aspect of risk from an investors Business Risk unevenness of the firms o perating income over time. It can be mensurable by calculating the standard deviation of operating income over time or the coefficient of variation. In addition to measuring business risk, we want to explain its determining factors.Two primary determinants of business risk * Sales variability * The main determinant of earnings variability * Cost Variability and Operating supplement * Production has fixed and variable costs * great fixed production costs cause greater profit volatility with changes in sales * Fixed costs represent operating leverage Greater operating leverage is good when sales are high and increasing, but bad when sales fall. Business risk =( cofficient of variiation of operating earning) =( OE-OE)2/nOE/N ( OE-OE)2/n 3636504 OE/N 25498574 ( OE-OE)2/nOE/N 14. 26% Operating leverage= %? oe%? sn %? e%? s 2. 08739 n 3 %? oe%? sn . 70 Financial Risk raise payments are deducted before we get to net income, these are fixed obligations. Similar to fixed production costs , these lead to larger earnings during good times, and lower earnings during a business decline, fixed financing costs are called financial leverage. The use of debt financing increases financial risk and possibility of default while increasing profitability when sales are high. Two sets of financial ratios help measure financial risk * Balance mainsheet ratios * Earnings or cash flow available to pay fixed financial chargesAcceptable levels of financial risk depend on business risk. A firm with considerable business risk should likely avoid lots of debt financing. * Proportion of debt (balance sheet) ratios Long-term debt can be related to Equity (L-t D/Equity) how much debt does the firm employ in relation to its use of equity? And Total Capital L-t D/ (L-t D +Equity) How much debt does the firm employ in relation to all long-term sources of funds? Debt to Equity Ratio =Total long term debttotal eqity 2007 2008 2009 .94 1. 08 1. 54 * Total debt Ratio Total debt ratio refers to A ssessment of overall debt load, including short-term.The formula of calculation is Debt to Equity Ratio =current Liabilities+Total Long term debtTotal Debt-Total equity 2007 2008 2009 .720 . 725 . 975 Comments 2007 We analyze debt ratio of company from its balance sheet and found that year 2007 companys debt ratio is 72% this value indicates that the company has financed more than one-half of is assets with debt. The higher this ratio greater he firms detail of indebtedness and the more finance leverage it has. 2008 We analyze debt ratio of company from its balance sheet and found that year 2007 companys debt ratio is 72. % this value indicates that the company has financed more than half of is assets with debt. The higher this ratio greater he firms degree of indebtedness and the more finance leverage it has 2009 We analyze debt ratio of company from its balance sheet and found that year 2007 companys debt ratio is 97. 5% this value indicates that the company has financed more tha n half of is assets with debt. The higher this ratio greater he firms degree of indebtedness and the more finance leverage it has. * Earnings or Cash Flow Ratios It is Relate operating income (EBIT) to fixed payments required from debt obligations, higher ratio means lower risk.Interest Coverage or Times Interest Earned Ratio Measures the number of times Interest payments are covered by EBIT Interest Coverage = EBIT/Interest Expense. may also want to calculated coverage ratios that reflect other fixed charges Lease obligations (Fixed charge coverage). Interest Coverage =EBITDebt Interest Change 2007 2008 2009 1. 53 1. 47 1. 28 * Cash flow ratios Fixed financing costs such as interest payments must be paid in cash, so these ratios use cash flow rather than EBIT to assess the ability to meet these obligations, Relate the flow of cash available from operations to * Interest expense Total fixed charges * The face value of outstanding debt Cash flow coverage of fixed financial cost=Net cash flow provided by operating activities+Interest Expense+Estimated Lease Inertest ExpenseInertest Expense+Estimated lease Interest expense 2007 2008 2009 1. 51 2. 49 2. 29 Comments Cash flow is used o determine whether a borrower is going to be able to service interest payment on a loan. Generally lender prefers a cash flow ratio more than 1. here(predicate) we can see that the cash flow ratio of Libra Infusion Ltd. in 2007 was 1. 51 and it increases 2. 9 in 2008. and decrease in 2009 at 2. 29. Liquidity Risk Market Liquidity is the ability to buy or sell an asset quickly with little price change from a prior transaction assuming no new information. External market liquidity is a source of risk to investors. The most important factor of external market liquidity is the dollar value of shares traded. This can be estimated from the total market value of outstanding securities. It will be abnormal by the number of security owners. Numerous buyers and sellers provide liquidity. Ana lysis of Growth PotentialWant to determine sustainable growth potential significant to both creditors and owners, * Creditors interested in ability to pay future obligations, * For owners, the value of a firm depends on its future growth in earnings, cash flow, and dividends. Determinants of Growth * Sustainable Growth Model Suggests that the sustainable growth rate is a function of two variables * What is the rate of return on equity (which gives the maximum possible growth)? * How much of that growth is put to work through earnings retention (rather than being paid out in dividends)? g = Percentage of Retain earning * Return on EquityFormula year Percentage of Retain earning=1-Dividend DeclearedOperating earnig After Tax ROE=Net Income After TaxShareholdres Equity g = Percentage of Retain earning Return on Equity 2007 . 64 7. 55 4. 83 2008 . 66 7. 57 4. 50 2009 . 57 5. 10 2. 91 DuPont Analysis DuPont Analysis is A method of performance measurement that was started by the DuPont C orporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). It is also known as DuPont identity.DuPont analysistells us that ROE is affected bythree things Operating efficiency, which ismeasured by profit margin Asset use efficiency, which is measured by total asset turnover Financial leverage, which ismeasured by the equity multiplier year EBIT/Sales (%) Sales/ Total Assets (Times) EBIT/ Total Assets (%) Interest Expense/ Total Assets (%) NBT/ Total Equity (%) Total Assets/ Common inventorying Equity (times) NBT/ Common Stock Equity(%) Tax Retention Rate Return On Equity (ROE) 2007 8. 13 1. 09 8. 86 5. 85 3. 01 3. 58 1078 0. 70 7. 55 2008 6. 84 1. 35 9. 23 6. 34 2. 89 3. 64 10. 52 0. 72 7. 7 2009 7. 60 0. 07 . 53 (. 89) 1. 42 4. 92 6. 99 0. 73 5. 10 It is believed that measuring assets at gross book value removes the incentive to avoid investing in new assets. New ass et avoidance can occur as financial accounting depreciation methods artificially produce lower ROEs in the initial historic period that an asset is placed into service. If ROE is unsatisfactory, the DuPontanalysis helps locatethe part of the business thatis underperforming. Comparative analysis Ratio Formula Years IndustryAverage Evaluation 2007 2008 2009 fluff Section Time Series Overall Current Ratio Current assets/ current liabilities . 9 1. 50 1. 41 1. 11 scant(p) Ok Ok Quick Ratio (Cash+Marketable securites+Recivables)/ Current Libilities . 20 . 18 . 18 0. 56 unequal Poor Poor Cash ratio Cash+Marketable securites)/ Current Libilities . 035 . 049 . 037 0. 12 Poor Poor Poor Receivable turnover Net Annual Sales/ Accounts Receivable 16. 89 21. 35 15. 52 13. 42 Good Good Good Average Receivable Collection Period 365/Average A/R collection period 21. 65 17. 10 23. 51 45. 45 Poor Poor Poor Inventory Turnover cost of goods sold /average inventory 5. 65 5. 16 2. 87 1. 6 Good Good Good Cash Conversion Cycle COGS/Average Tra