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

Contents
Introduction:....................................................................................................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
Cs 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 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.
2

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:

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
3

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.

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:
4

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.

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
5

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

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 short6

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.
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.
8

In addition, the economic adverse 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 owners money. Renata Ltd.s owner or
chairman can contribute to set up Re-Pharma.
Asset Sells:
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 RePharma. (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.

10

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 companys
statement of financial position:

Company Name
Balance Sheet
As at 31 December 20.

11

Cos
Details

Depr
eciation

Net

Fixed Assets
Land

xxxxx

Xxxxx

Buildings

xxxx

xxxx

Xxxx

Furniture/fittings

xxxx

xxxx

Xxxx
xxxxxxx
x

Current Assets
Closing stock
Debtors
Provision for doubtful debts

xxxxx
xxxx
xxxxxx

Cash in hand

xxxx

Prepayment of Insurance

xxxx
Xxxxx

Total Assets

Xxxx

Equities and Liabilities

Ordinary share

xxxxxx

General reserve (30000 + 24000)

xxxx

Retained earnings

xxxx
xxxxxxx

Long term Liabilities

5% Debentures

xxxxxx

12

Current Liabilities
Creditors

xxxxx

Bank overdraft

xxxx

Accruals of Wages & salaries

xxxx

Debenture interest

xxxxxx

Ordinary share dividend proposed

xxxx

Tax

xxxx
xxxxxx
xxxxxx
xx

Total Equities & Liabilities

Profit & Loss Statement / Statement of Comprehensive

Income:
Profit & Loss Statement, also known as a Statement of Comprehensive
Income.

benefit

and

misfortune

record

is

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 Name
Profit and Loss account
For the year ended 31 December 20.

13

Details

Sales

xxxxx
x

Less Returns inwards

xxxxx
xx

xxxxxxx
Less Cost of Goods Sold
Opening Stock

xxxxx

Purchases

xxxxx
x
xxxxx
xx

Less Closing stock

xxxxx
xx
xxxxxx

Gross Profit

xxxxxxx

Add Income
Discount Received

xxxxxx
xxxxxxx

Less Expenses
Rates

xxxxx
x

Wages & salaries

xxxxx
xx

Accruals of Wages & salaries

xxxxx
xx

Insurance

xxxxx
x

Prepayment of Insurance

xxxxx
14

xx
General expenses

xxxxx
xx

Debenture interest accrued

xxxxx
x

Depreciation - Buildings (114,000 x 10%)

xxxxx
xx

Depreciation - Furniture/fittings (66,000 x 10%)

xxxxx
xx
xxxxxxx

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 Earnings

xxxxxxxx

Cash Flow Statement:

A statement to maintain the calculation of a companys 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.
15

A companys Cash Flow Statement format given below,

Company Name
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED Month 20.
A. Cash flows from operating activities
Collection from customers and other income

Xxxxxxx

Payment of VAT

(xxxxxxx)

Payment to suppliers and employees

(xxxxxxx)

Cash generated by operations

Zzzzzzzzzz

Finance cost

(xxxxxxx)

Payment of tax

(xxxxxxx)

Net cash generated from operating activities

zzzzzzzzz

B. Cash flows from investing activities

Purchase of property, plant and equipment

(xxxxxxx)

Investment in shares

(xxxxxxx)

Sale proceeds of property, plant and equipment

zzzzzzzzzzz

Net cash used in investing activities

(xxxxxxx)

C. Cash flows from financing activities

Bank loan (repaid) / received (net)

(xxxxxxx)

Dividend paid

(xxxxxxx)

Net cash
activities

(used

in)

flows

from

financing
(xxxxxxx)
16

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 name
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 Month 20..

Tax
Holiday
Reserve

Sales
reserve

Retained
Earnings

Total

Balance at 01
January 2013
xxxxxxxx

xxxxxx
xx
xxxxxxxx

Xxxxxxx
x

xxxxxxxx

xxxxxx
xx

Stock
issued

dividend
xxxxxxxx

xxxxxx
xx
xxxxxxxx

Xxxxxxx
x

xxxxxxxx

xxxxxx
xx

Cash
paid

dividend
(xxxxxxx)

(xxxxx
xx)

(xxxxxxx)

(xxxxxxx
)

(xxxxxxx)

(xxxxx
x)

Deferred
tax
on revaluation
surplus
..

..

..

.. ..

Depreciation
adjustment
on
revalued assets
..

..

..

.. ..

Net profit after

tax for the year
..

..

..

.. ..

Share
Capital

Surpl
us

17

Unrealized gain
on quoted shares ..

..

Tax
reserve

(xxxxx
xx)

holiday
(xxxxxxx)

Balance at 31
December 20
vvvvvvv

..

.. ..

(xxxxxxx)

(xxxxxxx
)

vvvvvv
v
vvvvvvv

Vvvvvvv

(xxxxxxx)

xxxxxx
x

vvvvvvv

vvvvvv
v

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.

18

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

xx

(x)

xx

Fixed assets
B
Total Current assets

xx

Less

(xx)

Total

Current

19

liabilities
Working capital

xx

Less Long Term liabilities

(xx)
Xx

Financed by;
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

xx

xx
20

xx
xx
Salary

xx

Interest on capitals
A

xx

xx

xx
xx

Share of profit
A 1/2

xx

B1/3

xx

C1/3

xx
xx

Cs Current Account
Details
Interest
drawing
Balance c/d

on xx

Details
Balance b/d

xx

xx

Commission
Interest

xx
on xx

capital
Partners salary
Share of profit

xx
xx

Balance b/d

xx
xx

xx

21

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:
Capital
S

xx

xx

xx
Xx

Current account
S

xx

xx

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.
22

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

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

23

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

Companys 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
companys profit and loss and balance sheet format is been describe in Page
10-14.

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

24

critical to investors, creditors and financial analysts as it aides in decisionmaking. 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

Return on Capital Employed: (ROCE)

Formula:

2014=

Profit before TaxInterest

100
Capital Employeed

2,330,922,942
100=25.12
9,279,390,178

25

2013=

1,885,359,052
100=25.31
7,448,792,129

ROCE
25.35%

25.31%

25.30%
25.25%
25.20%
25.15%

25.12%

25.10%
25.05%
25.00%

2014

2013

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 sales, higher bit
is staying as benefit so it additionally demonstrates towards effective cost
controlling capacity.
Formula:

Net Profit
100
Sales /Turnover
26

2014=

1,710,862,525
100=15.40
11,107,281,260

2013=

1,390,164,527
100=15.87
8,757,405,748

Net Profit Margin

15.87%

15.40%

2014

2013

Figure: Net Profit Margin

Renata Ltds 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.

27

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:

Gross Profit
100
Turnover / Sales

2014=

5,688,309,854
100=51.21
11,107,281,260

2013=

4,670,630,720
100=53.33
8,757,405,748

Gross Profit Margin

60.00%
58.00%
56.00%

53.33%

54.00%
52.00%

51.21%

50.00%
48.00%
46.00%

2014

2013

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
28

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.

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

100
Total Asset

2014=

1,710,862,526
100=11.80
14,493,568,729

2013=

1,390,164,527
100=10.93
12,714,843,610

ROA
12.00%

11.80%

11.50%

10.93%

11.00%

10.50%

10.00%

2014

2013

29

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.

Return on Equity: (ROE)

Return on Equity is the ratio of net income to total shareholders 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 Tax

100
Shareholder Equity

2014=

1,710,862,526
100=22.07
7,750,713,063

2013=

1,390,164,527
100=22.08
6,295,114,611

ROE
22.08%

22.08%

22.08%
22.08%
22.08%
22.07%
22.07%
22.07%

22.07%

22.07%
22.07%
22.06%

2014

2013

30

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:
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=

11,107,281,260
1.21
9,197,198,644

2013=

8,757,405,748
1.02
8,577,464,610

31

Asset Turnover Ratio

1.9
1.7
1.5
1.3

1.21

1.1

1.02

0.9
0.7
0.5

2014

2013

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.

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.
32

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
:1
Current Liability

2014=

5,296,370,085
:1=1.02:1
5,214,178,551

2013=

4,137,379,000
:1=0.79 :1
5,266,051,481

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
33

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 AssetInventory
:1
Current Liability

2014

5,296,370,0852,760,765,470
:1=0.49: 1
5,214,178,551

2013

4,137,379,0002,628,838,384
:1=0.29 :1
5,266,051,481

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.

Stock Turnover Ratio:

Formula:

Closing Stock
365 days
Cost of sales

2014=

2,760,765,470
365 days=186 days
5,418,971,406

2013=

2,628,838,384
365 days=235 days
4,086,775,028
34

Stock Turnover Ratio

250

235

200

186
150
Days

100
50
0

2014

2013

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 debts or have
great customer service that the customers feel loyal towards the business
the pay it on time.
Formula:

2014=

Traded Debtors
365 days
Sales /Turnover

1,355,185,477
365 days=45 days
11,107,281,260
35

2013=

463,336,799
365 days=19 days
8,757,405,748

Debtors Collection Ratio

50

45

45
40
35
30

Days

25

19

20
15
10
5
0

2014

2013

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.

Creditors Ratio:
Formula:

2014=

Traded Creditors+ Accurals

365 days
Purchase/Cost of goods sold

124,715,572+ 418,070,205
365 days=37 days
5,418,971,406

36

2013=

64,986,063+263,876,962
365 days=29 days
4,086,775,028

Creditors Ratio
40

37

35

29

30
25

Days

20
15
10
5
0

2014

2013

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.

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
37

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 organizations asset
that is financed by debt versus equity. It is a widespread quantity of the longterm capability of an organizations 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:

Longterm debt
100
Sharehlder Equity (Share capital Reserve)

2014=

1,528,677,115
100=19.72
7,750,713,063

2013=

1,153,677,518
100=18.33
6,295,114,611

Debt to Equity Ratio

20.00%

19.72%

19.50%
19.00%

18.33%

18.50%
18.00%
17.50%

2014

2013

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 was 18.33% and in 2014, it was 19.72%
respectively, which might lead the firm towards huge risk. Yes, higher debt can

38

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

100
Sharehlder Equity +longterm liability

2014=

1,528,677,115
100=16.47
7,750,713,063+1,528,677,115

2013=

1,153,677,518
100=15.49
6,295,114,611+ 1,153,677,518

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
39

increase the EPS and in 2014 it was increased otherwise it may 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.
Market Price Per Share(
Formula:

2014=

3.56
0.09
38.77

2013=

3.57
0.11
31.50

Share capital
)
Number of Ordenary Share

Eps

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.
40

Dividend Yield:
total dividend
)
number of Ordenary Share
100
Market price

Ordenary Share dividend (

2014=

5.93
100=5.93
100

2013=

3.79
100=3.79
100

Dividend Yield
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%

2014

2013

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.

41

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.

Comparison

between

GlaxoSmithKline

Renata

Bangladesh

Ltd.

Limited(GSK)

and
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
Renata Ltd.
GSK

2013
-1,128,672,481 Tk.
1,391,003,000 Tk.
42

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
Renatas current liability exceed its current asset. Where GSK had very stable
working capital.
Current Ratio:
Renara Ltd .=2013=

GSK =2013=

4,137,379,000
:1=0.79 :1
5,266,051,481

3411251000
: 1=1.69:1
1391003000

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 .=2013

GSK =2013

4,137,379,0002,628,838,384
:1=0.29 :1
5,266,051,481

34112510001224492000
:1=1.08:1
2020248000

Quick ration implies that current liability is utilized against quick assets. If an
organizations quick ratio under 1 thats 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:

43

Renata Ltd .=2013=

GSK =2013=

2,628,838,384
365 days=235 days
4,086,775,028

1224492000
365 days=99 days
4516705000

This figure lower the better. In that case, Renata Ltd. was not handle its
operational efficiency well. Nevertheless, GSKs operational efficiency was
quite impressive.
Debtors Collection Ratio:
Renata Ltd .=2013=

GSK =2013=

463,336,799
365 days=19 days
8,757,405,748

506,060,000
365 days=27 days
6774872000

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=

GSK =2013=

64,986,063+263,876,962
365 days=29 days
4,086,775,028

1949378000
365 days=158 days
4516705000

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
44

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=

GSK =2013=

1,153,677,518
100=18.33
6,295,114,611

126265000
100=6.82
1851112000

Though the ratio is lower, the advantage of the GSK is also lower. It presents
the parentage of a GSKs asset that is financed by debt versus equity. It is a
widespread quantity of the long-term capability of a GSKs 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=

GSK =2013=

1,153,677,518
100=15.49
6,295,114,611+1,153,677,518

126265000
100=6.39
1851112000+126265000

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

45

GSK =2013=Number of ordinary Share ( NoOS )=12,045,181

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=

GSK =2013=

3.57
0.11
31.50

10
0.22
45.35

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, GSKs brand value was impressive than Renata Ltd.
Dividend Yield:
Renata Ltd .=2013=

GSK =2013=

3.79
100=3.79
100

15
100=15.00
100

46

Dividend yield is dividend made for each shares market value. It refers to
that market value of GSKs share higher than Renata LLtd. It was risky to
invest in Renata Ltd.

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.

47

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 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.

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References:
http://www.bankingandfinance.ait.asia/sites/default/files/report/report_shahaj
arul.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/newsmedia/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-toan-organization.php (Accessed 08 September 2015).

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Plagiarism Report:

50

Appendix
Ratio Calculation
Renata Limited Financial Statement.
GlaxoSmithKline Bangladesh Limited Financial Statement.

Acronyms

Renata Renata Limited.

GSK- GlaxoSmithKline Bangladesh Limited

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