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Interpretation of Ratios

In: Business and Management

Submitted By avkp11
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Report on Beximco Pharmaceutical.
(Ratio Analysis)

Course: Financial Management.

Submitted To: NAFEESA TABASSUM

Submitted By: Nahar Kamrun 07-07812-1 Islam Mohammad Ariful 07-08748-2 Ashfaq Ahmed 06-07395-3 Akter Tanzina 06-07500-3 Islam neamul 06-07469-3

Date of Submission:
25 November 2008

1. Current ratio: Current ratio shows how a company manages its current asset over short term liability. Current ratio provides the best single indicator of the extent to which the claims of short term creditors are covered by assets that are expected to be converted to cash fairly quick, it is the most commonly used measure of short term solvency.
Beximco pharmaceutical has current ratio 1.40 times in 2005, 1.33 times in 2006 and 1.80 times in 2007.It’s ratio is basically sound in 2007 than lower ratio in 2006. The higher the current ratio, the greater the ability to pay its bills however increasing Liquidity shows the poor management in sales and investment. But Beximco has moderate current ratio in 2007. So the company is efficient to manage its asset over current liability.

2. Quick/Acid test ratio: Quick/acid test ratio measure of the firm’s ability to pay off short-term obligations. For pay off short-term obligation Quick/acid test ratio measure without relying on the sale of inventories is important. Because inventories are typically the least liquid of the firm’s current asset. Generally 1 or more than 1 is good for the firms.

Beximco has Quick/acid test ratio 0.72 times in 2005, 0.63 times in 2006 and 0.78 times in 2007. At first it was decreasing but again increasing

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