UNIVERSITY OF BARISHAL

REPORT ON
Management of working capital in central pharmaceutical ltd.
Course Title: Working Capital Management
Course Code: F – 303

Submitted to:
Tandra Mondal
Assistant Professor
Dept. of Finance & Banking
University of Barisal

Submitted by:
Group no. 13
3rd Year 1st Semester
Dept. of Finance & Banking
University of Barisal

Date of Submission: 10 jun 2021

 Group Profile
Group - 13

SI no. Name of group members ID No.

1 ABM Musfiqur Rahim 19 FIN 075

2 Md Jahidul Islam Nayon 19 FIN 076

3 Md Mohebbullah Al Muise 19 FIN 077

4 Majidul 19 FIN 078

5 Nannu Jaman 17 FIN 025

Letter of Transmittal
2|Page
10th jun, 2021
Tandra Mondal
Assistant Professor,
Department of Finance and Banking
University of Barisal
Subject: Letter of Transmittal for the report “Management of working capital in
central pharmaceutical.”

Dear Madam,
With due respect we, the undersigned students of Group-5, 3rd year 1st semester,
Department of Finance & Banking have reported on “Management of working
capital in central pharmaceutical.”
Though we are learning curve, this report has enabled us to gain insight into
working capital management. So it becomes as an extremely challenging and
interesting experience. Thank you for supportive consideration for formulating an
idea. Without your inspiring this report would have been an incomplete one.
Lastly I would thankful once again if you please give your advice on our effort.

Md Jahidul Islam Nayon

Yours’ sincerely,
On behalf of group no: 13
Dept. of Finance and Banking
University of Barisal

Acknowledgement
3|Page
In performing our report, we had to take the help and guideline from some articles
on web, thanks to the author of those article who deserve our greatest gratitude.
The completion of this report gives us much pleasure. We would like to show our
gratitude Tandra Mondal, Course Teacher, University of Barisal for giving us a
good guideline for report throughout numerous consultations. We would also like
to expand our deepest gratitude to all those who have directly and indirectly guided
us in writing this report.

In addition, a thank you to Assistant Professor Tandra Mondal, who introduced

us to the Methodology of work, and whose passion for the “underlying structures”
had lasting effect. We also thank the University of Barisal for giving us platform
by which we are able to conduct such types of experiencing work.

Many people, especially our classmates and group members itself, have made
valuable comment suggestions on this proposal which gave us an inspiration to
improve our report. We thank all the people for their help directly and indirectly to
complete our report.

Table of Content

4|Page
 Serial Chapter Page no.
1 Executive Summery 7

Chapter 1: Introduction
8
1.1: Introduction of the report
8
1.2: Scope of the study 8
1.3: Objective of the study 8
2 1.4: Limitation of the study 9
1.5: Methodology 9

3 Chapter 2: Overview of pharmaceutical in 10

Bangladesh
11
2.1: Company profile
4 Chapter 3: Working Capital Management

3.1: Introduction
11-12
3.2: Importance of Working Capital 13
3.3: Classification of Working Capital 13-14
3.4: Estimation of Working Capital 14-15
3.5: Working Capital Consideration of Textile Companies 15
3.6: Sources of Working Capital 16
16
3.7: Characteristics of Working Capital
16
3.8: Management of Working Capital 17
3.9: Evaluation of Working Capital 17-20

Chapter 4: Financial Analysis – Interpretation

5
4.1: Financial Analysis and Ratio
21-27

6 Chapter 5: SWOT Analysis of Textile Industries 28-29

7 Chapter 6: Conclusion 30
8 Reference 31

5|Page
 MAGEMENT OF WORKING CAPITAL
OF CENTRAL PHARMACEUTICAL LTD

Executive Summary

6|Page
Working capital is one of the vital element to perform daily task in different types
of business organizations. To produce the best possible returns, firms shouldn’t
keep any unproductive asset and should finance with cheapest available of funds.
For pharmaceutical industries, working capital management is very much
necessary. In our country RMG is one of the most profitable sources of foreign
currency. To operate a Pharmaceuticals & Chemicals efficiently the firm need
management of working capital with an efficient way. Here we will discuss about
three DSE listed Pharmaceuticals & Chemicals and how they manage their
working capital. We will also do SWOT analysis and draw some
recommendations. We added different ratio related to working capital by
evaluating last five years’ data of central pharmaceutical companies. By evaluating
these company we will try to draw an overall image of working capital
management of central pharmaceutical.

Chapter – 1

7|Page
 Introduction
1.1 Introduction of the report
Every organization irrespective of the size is required two types of financial
assistance. One is long-term funds which are required primarily to acquire basic
infrastructure for the company to create production facilities through purchase of
fixed assets such as plant & machinery, land, building, furniture, etc. Investments
in these assets represent that part of firm’s capital which is blocked on permanent
or fixed basis and is called fixed capital. Funds are also needed for short-term
purposes for the purchase of raw material, payment of wages and other day – today
operations. These funds are known as working capital. In simple words, working
capital refers to that part of the firm’s capital which is required for financing short-
term or current assets such as cash, marketable securities, debtors & inventories.
Funds, thus, invested in current assets keep revolving fast and are being constantly
converted in to cash and these cash flows out again in exchange for other current
assets. Hence, it is also known as revolving or circulating capital or short term
capital. In today’s competitive environment one of the primary goals of the
financial management is effective utilization of available funds. The project
assigned to me during my summer training in account & finance department is
“The working capital management.”
1.2 Scope of the Study:
The scope of the study is identified after and during the study is conducted. The
main scope of the study was easy access into the internet. All the annual report was
available to their website. The study of working capital is based on tools like Ratio
Analysis, Statement of changes in working capital. Further the study is based on
last 5 years Annual Reports of central pharmaceutical .
1.3 OBJECTIVES OF THE STUDY:
To study the sources and uses of the working capital.
To study the liquidity position through various working capital related ratios.
To study the working capital components such as receivables accounts, Cash
management.
To make suggestions based on the finding of the study.
1.4 Limitation of the Study:
The Study is limited to only the last year performance of the Company. That means
present year data didn’t include in this report.

8|Page
 For making a clear-cut opinion, Ratio technique of financial management has been
used.
Lack of primary data.
There is no wi-fi internet facility in our campus.

1.5 METHODOLOGY
Primary data collection
Though it’s an analyzing report but it is matter of great regret we hardly use
primary data for this report. The main reason for this issue is far from the capital
and that’s why we couldn’t collect any data directly and for this causes we actually
depended on the secondary data.
Secondary data collection
Secondary data was collected from following way:
FGD (Focus Group Discussion):
It is not possible to do such a report alone. We group members are really done very
well when doing this report. Each and every member did their level best for
completing this report efficiently. Internet This report actually done by using
internet data. We collected previous 5 years’ data from the website of the related
companies.
Books
We used our reference book for the guideline of this report.
Analysis
1. The initial step of the project was studying about the company and then
evaluating the financial position of the company on the basis of ratio
analysis.
2. Comparing the firm’s financial position with last five years’ data of central
pharmaceurical with the help of following ratios:
Liquidity ratios
Solvency/leveraging ratios
Coverage ratios
Activity/turnover ratios
Profitability ratios
Investors ratio
9|Page
 3.The project will focus on the study of overall working capital management at
the organizations, for which the following study analysis will be undertaken.
Tools for Financial Calculation
Microsoft Excel

Chapter - 2
Overview of pharmaceutical & chemical in Bangladesh

The pharmaceutical industry in Bangladesh is one of the most developed

technology sectors within the country. Manufacturers produce insulin, hormones,
and cancer drugs. This sector provides 97% of the total medicinal requirement of
the local market. The industry also exports medicines to global markets, including
Europe. Pharmaceutical companies are expanding their business with the aim to
expand the export market.
There are 5 types of medicine manufacturing companies in Bangladesh.

Type of drug Number of manufacturing Current

manufacturer companies manufacturing status
Allopathic Drug 199 Functional
Manufacturers
Ayurvedic Drug 172 Functional
Manufacturers
Unani Drug Manufacturers 500 Functional
Herbal Drug Manufacturers 29 Functional
Homoeopathic & 28 Functional
Biochemic Drug
Manufacturers

2.1 Company profile:

Central Pharmaceuticals Limited is engaged in manufacturing and marketing of
medicines.The Company is producing and marketing finished formulation

10 | P a g e
 products for general Peoples, Hospitals, Clinic, Govt. Organizations, NGO’s,
Corporations & other Non-govt. organizations. The Company was incorporated
on November 13, 1980 as a ‘Private' Company started its commercial operation
from December 1, 1980. On December 20, 2010 the Company registered itself
as a Public Limited Company. It is headquartered in Dhaka.

Chapter – 3
Working capital Management

3.1 INTRODUCTION
Capital is the keynote of economic development. In this modern age, the level of
economic development is determined by the proportion of capital available.

Meaning of Capital: In the ordinary sense of the word Capital means initial
investment invested by businessman or owner at the time of commencing the
business. Capital (economics), a factor of production that is not wanted for itself
but for its ability to help in producing other goods.

Definition: Capital is a factor of production with a specific, changeable value

attached to it that could, potentially, provide its owner with more wealth. It is an
abstract economic concept, and, as such, has many different definitions and
classifications, but the unifying feature of capital is that it has a certain value, so it
in itself is a type of wealth, and it has the potential of generating more wealth.

Features of Capital: Capital has the following features.

1. Capital is a man made.
2. Capital is a perishable.
3. Capital is a human control possible.
11 | P a g e
 4. Capital is a mobile.
5. Capital is a human sacrifice.
6. Capital is a scarce.
7. Capital is a passive factor.

Introduction of Working Capital: Working capital could be defined as the

portion of assets used in current operations. The movements of the funds from
capital to income and profits and back to working capital are one of the most
important characteristics of the business. This cyclical operation is concerned with
utilization of the funds with the hope that will return with an additional amount
called income. If the operations of the company are to run smoothly, a proper
relationship between fixed capital and current capital has to maintain. Sufficiently
liquidity is important and must be achieved and maintained to provide that funds to
pay off obligation as they arise. The adequacy of cash and other current assets
together with their efficient handling, virtually determine the survival of demise of
the company. A businessman should be able to judge the accurate requirement of
working capital and should be quick enough to raise the enquired funds to finance
he working capital needs. Working capital is also called as net current assets, “it is
the excess of current assets over current liabilities.” All organization has to carry
working capital. It is important from the point of view of both liquidity and
profitability. Poor management of working capital means that funds that
unnecessarily tied up in idle assets hence educing liquidity and also reducing
ability to invest in productive assets such as plant and machinery. So affecting
profitability.
The term working capital refers to current assets, which may be defined as:
Those which are convertible into cash or equivalents with the period of one
year
Those which are required to meet day to day operations The fixed as well as
current assets, both requires investment of ‘Funds’.
So the management of working capital and fixed assets apparently seem to involve
it type of consideration but it is no so. The management of working capital involve
different concept and methodology than the techniques used in fixed assets
management.

12 | P a g e
3.2 IMPORTANCE OF WORKING CAPITAL:

Solvency of the business: Adequate working capital helps in maintaining

the solvency of the business by providing uninterrupted of production.
Goodwill: Sufficient amount of working capital enables a firm to make
prompt payments and makes and maintain the goodwill.
Easy loans: Adequate working capital leads to high solvency and credit
standing can arrange loans from banks and other on easy and favorable
terms.
Cash discounts: Adequate working capital also enables a concern to avail
cash discounts on the purchases and hence reduces cost.
Regular Supply of Raw Material: Sufficient working capital ensures
regular supply of raw material and continuous production.
Regular payment of salaries, wages and other day to day commitments:
It leads to the satisfaction of the employees and raises the morale of its
employees, increases their efficiency, reduces wastage and costs and
enhances production and profits.
Exploitation of favorable market conditions: If a firm is having adequate
working capital then it can exploit the favorable market conditions such as
purchasing its requirements in bulk when the prices are lower and holdings
its inventories for higher prices.
Ability to Face Crises: A concern can face the situation during the
depression.
Quick and regular return on investments: Sufficient working capital
enables a concern to pay quick and regular of dividends to its investors and
gains confidence of the investors and can raise more funds in future.

3.3 Classification of working capital:

i) On the basis of concept.
ii) On the basis of time.
iii) On the basis of concept working capital is classified into two types:
iv) Net working capital
v) Gross working capital

13 | P a g e
1.Net Working Capital: Term Net working capital can be defining in two way

i) It is the difference between current assets and current liabilities.

ii) Amount left for operational requirement.
2.Gross Working Capital: Gross working capital means the total current assets.
And On the basis of time working capital may be classified as:
Permanent working capital
Temporary working capital
1.Permanent Working Capital: It is the minimum amount of the current assets,
which are needs to conduct the business even during the dullest season of the year.
This amount varies from year to year depending upon the growth of a company
and stage of the business cycle in which it operates. It is the amount of funds
required to produce the goods and services, which are necessary to satisfy demand
at a particular point. It represents the current assets, which are required on a
continuing basis over the year. It is maintained as the medium to carry on operation
at any time. Permanent working capital has following features:
a) It is classified on the basis of the time factor.
b) Its size increases with the growth of the business.
c) It is constantly shifted from one asset to another and continues to remain in
the business process.
2.Temporary Working Capital: It represents the additional assets, which are
required at different times during the operating year. Seasonal working capital is
the additional amount of current assets particularly cash, receivables, and inventory
which is required during the more active business seasons of the year. It is the
temporary investment in the current assets and possesses the following features:
a) It is not always gainfully employed, though it may also shift from one asset
to another as permanent working capital does.
b) It is particularly suited to business of seasonal on cyclical nature .

3.4 ESTIMATION OF WORKING CAPITAL REQIUREMENTS:

Managing the working capital is a matter of balance. The firms must have
sufficient funds on hand to meet its immediate needs. are manufacturing oriented

14 | P a g e
organization. The following aspects have to be taken into consideration while
estimating the working capital requirements. They are:

1. Total costs incurred on material, wages and overheads.

2. The length of time for which raw material are to remain in stores before they
are issued for production.
3. The length of the production cycle or work-in-process, i.e., the time taken
for conversion of raw material into finished goods.
4. The length of sales cycle during which finished goods to be kept waiting for
sales.
5. The average period of credit allowed to customers.
6. The amount of cash required paying day-today expenses of the business.
7. The average amount of cash required to make advance payments.
8. The average credit period expected to be allowed by suppliers.
9. Time lag in the payment of wages and other expenses.

3.5 Working Capital Consideration of these industries:

There are two concepts of working capital one is gross working capital and net
working capital. Gross working capital is the total of all current assets. The
constituents of current assets are shown in the part A in table 1 and current
liabilities are shown in the part B in the table 1 the alternate definition of net
working capital is the portion of a firm’s current assets that are financed with
short-term fund.

TABLE 1: CONSTITUENTS OF CURRENT ASSETS AND CURRENT LIABILITIES

PART- A: CURRENT ASSETS

Inventories Raw materials and components
Work-in-progress
Finished goods Others
Trade debtors Loan and advances
Investment Cash and bank balance
PART-B: CURRENT LIABILITIES
Sundry creditors
Trade advances Borrowings From
- Commercial banks

15 | P a g e
 -Others Provision
3.6 Sources of Working Capital
Mainly there are two sources of working capital:
i. Permanent or Fixed working capital
ii. Temporary or variables working capital
In any concern, a part of the working capital investments is as investment in fixed
assets. This is so because there is always a minimum level of current assets, which
are copiously required by the enterprise to carry out its day-to-day business
operation and this minimum, cannot be expected to reduce at any time. This
minimum level of current assets need long term working capital, which is
permanently blocked. Similarly, some amount of working capital may be required
to meet the seasonal demands and some special exigencies such as rise in prices,
strikes, etc. this gives rise to short term working capital which is required for day
to day transaction also. The fixed proportion of working capital should be
generally financed from the fixed capital sources while the temporary or variable
working capital equipment may be met from the short term sources of capital.

3.7 CHARACTERSTICS OF WORKING CAPITAL:

In the management of working capital two characteristics of current assets must be
borne in mind: (i) short life span, and (ii) swift transformation into other current
asset forms. Current assets have a short life span. The life span of current assets
depends upon the time required in the activities of procurement, production, sales
and collection and the degree of synchronization among them. Each current asset is
swiftly transformed into other current asset forms: Cash is used for acquiring raw
materials and raw materials are transformed into finished goods (this
transformation may involve several stages of work-in-progress).
Conversion of cash into raw materials.
Conversion of raw materials into work in progress.
Conversion of work in progress into finished stock.
Conversion of finished stock into accounts receivables (Debtors) through
sale and
Conversion of account receivables into cash.

16 | P a g e
3.8 Management of working capital:
Working capital, in general practice, refers to him excess of current assets over
current liabilities. Management of working capital therefore, is concened with
problems that arise in attempting to manage him current assets, current libilities,
and interrelationship that exists between them. In other word it refers to all aspects
of administration of both current assets and current liabilities. The basic goal of
working capital management is to manage the current assets and current liabilities
of a firm in such way that a satisfactory level of working capital is maintained, i.e.
neither inadequate nor excessive. This is so because both inadequate as well as
excessive working capital position is bad for the business. Inadequacy of working
capital, may lead the firm insolvency and excessive working capital implies idle
funds, which earn no profit for the business. Working capital management policies
of the firm have a great effect on its profitability, liquidity and structural health of
the organization. In this context, working capital management is three-dimensional
nature:

1. Dimension I is concerned with the formulation of the policy with regard to

Profitability, risk and liquidity.
2. Dimension II is concerned with the decision about his composition and level
of current assets.
3. Dimension III is concerned with the decision about his composition and
level of current liabilities.

3.9 Evaluation of working capital:

The working capital management needs attention of all the finance head/ working
capital management is important fo voiding unnecessary blockage of fund. Like
that liquidity is important at it refer to the short-term financial strength of
company. It is very important to have proper balance in regard to the liquidity of
the firm.
For details information of working capital of central pharmaceutical please turn
over to the following page

17 | P a g e
 CENTRAL PHARMACEUTICALS LTD
STATEMENT OF FINANCIAL POSITION
LAST FIVE YEARS

PARTICULARS NOTE 2019-20 2018-19 2017-18 2016-17 2015-16

ASSETS

Non-Current Assets 960434581 996730137 1025568216 1056805602 1097500049

Property, plant , equipment 960293605 995573497 1025394171 1056612218 1097285177
3.00
Intangible assets 140976 158640 174045 193384 214872
4.00
Current assets 395038784 1476377543 1349943950 1233641390 1031557506
Inventories 23207070 532943683 462692942 434212782 389201629
5.00
Spare parts & supplies 28688922 35196119 38584115 41211177 27569583
6.00
Advances, deposites & pre-payment 283046766 304633550 293571883 254953295 217469219
7.00
Accounts recevable 56020610 597922124 548465784 494605483 387387401
8.00
Cash & cash equivalent 4095416 5682167 6629226 8658653 9929674
9.00
Total 1355473365 2473107780 2375512166 2290446992 2129057555

Equity & liability

Shareholders’ equity 790683341 1781918907 1801710280 1740804182 1631717942
Share capital 1198008440 1198008440 1140960420 1037236750 942942500
10.00
Revaluation reserve 514848089 514848089 514848089 514848089 514848089
11.00
Retained earnings (922173188) 69062378 145901771 188719343 173927353
12.00
Non-current Liabilities 151577263 155817478 165628430 169482920 168996283
Long term lone 101359681 102747789 102747789 106232789 106232789
13.00
Deferred tax liabilities 50217582 53069689 62880641 63250131 62763494
14.00
Current Liabilities 413212761 535346396 408173456 380159890 328343330
Short term lone 110987248 102747789 102667185 104152185 104152185
15.00

18 | P a g e
 Current portion of long term loan 16.00 13875320 - - - -
Sundry creditors 17.00 2036072 3995229 4393062 4665427 4080654
Liabilities for expanses 18.00 485799 139945936 27277882 14416735 356082
Others payable 19.00 6849850 6582325 6582325 6582325 6582325
Provision for tax liabilities fund 20.00 278978472 2789784723 263217228 243038359 206514066
Workers profit participation fund 21.00 - 3152249 4035774 7304859 6655081

Total 1355473365 2473082780 2375512166 2290446992 2129057555

NAV per share 31.00 6.60 14.87 15.79 16.67 17.30

19 | P a g e
Statement of changes in the working capital is prepared to show the changes in the
working capital among these . This statement is prepared with the help of the
current asset and current liabilities.So,
An increase in current asset increases working capital
A decrease in current assets decreases in working capital
An increase in current liabilities decreases working capital.
A decrease in current liabilities increase working capital It is worth noting
that schedule of changes in working capital is prepared only from current
assets and current liabilities and the other information is not of any use for
preparing this statement. The company should look in to the proper current
liabilities.

20 | P a g e
 Chapter – 4
Financial analysis-interpretation of ratios

4.1FINANCIAL ANALYSIS:
(A) LIQUIDITY RATIOS (SHORT-TERM LIQUIDITY):
Liquidity ratios measure the short-term solvency i.e. the firm’s ability to pay its
current dues and also indicate the efficiency with which working capital is being
used. Commercial banks and short-term creditors may be basically in the ratios
under this group.

Current ratio or working capital ratio:

Current ratio is a relationship of current assets to current liabilities Current assets
means the assets that are either in the form of cash or cash equivalents or can be
converted into cash or cash equivalents in short time (say within a year) like cash,
bank balances, marketable securities, sundry debtors, stocks, bills receivables,
prepaid expenses. Current liabilities mean liabilities repayable in as short time like
sundry creditor, bills payable, outstanding expenses, bank overdraft. Computation:
The ratio is calculated as follows:

current assets
Current ratio = current liabilities

Objective:
The ratio is mainly used to give an idea of the company’s ability to pay back
its short term liabilities with its short-term assets.
The higher the current ratio, the more capable the company is of paying its
obligations. A ratio under 1 suggests that the company would be unable to
pay its obligations if they came due at that point.
While this shows the company is not in good financial health, it does not
necessarily mean that it will go bankrupt-as there are many ways to access
financing-but it is definitely not a good sign.
21 | P a g e
 2019-20 2018-19 2017-18 2016-17 2015-16
0.96 2.76 3.31 3.25 3.14

current ratio

2019-20 2018-19 2017-18 2016-17 2015-16

Gross profit ratio:

Gross profit ratio (GP ratio) is a financial ratio that measures the performance and
efficiency of a business by dividing its gross profit figure by the total net sales. The
gross profit ratio can also be expressed in percentage form, multiplying the result
by 100. It is then called gross profit percentage or gross profit margin.

22 | P a g e
Objective:
It gives management a clear idea of how much capital they can reinvest
It can attract or discourage investors
It can give a company the flexibility it needs
It is typically difficult to change

2019-20 2018-19 2017-18 2016-17 2015-16

(349.18) 46.72 46.53 48.45 49.24

Gross profit ratio (%)

2019-20 2018-19 2017-18 2016-17 2015-16

Operating Profit ratio:

Operating profit ratio establishes a relationship between operating Profit earned
and net revenue generated from operations (net sales). Operating profit ratio is a
type of profitability ratio which is expressed as a percentage.Net sales include both
Cash and Credit Sales, on the other hand, Operating Profit is the net operating
23 | P a g e
profit i.e. the Operating Profit before interest and taxes. Operating Profit ratio helps
to find out Operating Profit earned in comparison to revenue earned from
operations.

2019-20 2018-19 2017-18 2016-17 2015-16

(785.11) 33.14 30.66 36.70 24.44

Operating Profit Ratio

2019-20 2018-19 2017-18 2016-17 2015-16

Net profit ratio:

The net profit percentage is the ratio of after-tax profits to net sales. It reveals the
remaining profit after all costs of production, administration, and financing have
been deducted from sales, and income taxes recognized. As such, it is one of the
best measures of the overall results of a firm, especially when combined with an
evaluation of how well it is using its working capital. The measure is commonly

24 | P a g e
reported on a trend line, to judge performance over time. It is also used to compare
the results of a business with its competitors.

Net profit is not an indicator of cash flows, since net profit incorporates a number
of non-cash expenses, such as accrued expenses, amortization, and depreciation.

2019-20 2018-19 2017-18 2016-17 2015-16

(790.20) 18.57 19.06 23.94 23.44

Net profit ratio (%)

2019-20
2015-
16
2018-
19

2016- 2017-
17 18

Debit equity ratio:

25 | P a g e
The debt to equity ratio is a financial, liquidity ratio that compares a company’s
total debt to total equity. The debt to equity ratio shows the percentage of company
financing that comes from creditors and investors. A higher debt to equity ratio
indicates that more creditor financing (bank loans) is used than investor financing
(shareholders).

2019-20 2018-19 2017-18 2016-17 2015-16

0.71 0.39 0.32 0.32 0.30

Debit equity Ratio %

15%
2019-20
35%
2018-19
16% 2017-18
2016-17
2015-16
16%
19%

Return on equity:
Return on equity (ROE) is a measure of financial performance calculated by
dividing net income by shareholders' equity. Because shareholders' equity is equal

26 | P a g e
to a company’s assets minus its debt, ROE is considered the return on net assets.
ROE is considered a measure of a corporation's profitability in relation to
stockholders’ equity.

KEY TAKEAWAYS:
Return on equity (ROE) measures a corporation's profitability in relation to
stockholders’ equity.
Whether an ROE is considered satisfactory will depend on what is normal
for the industry or company peers.
As a shortcut, investors can consider an ROE near the long-term average of
the S&P 500 (14%) as an acceptable ratio and anything less than 10% as
poor.

2019-20 2018-19 2017-18 2016-17 2015-16

(140.00) 3.20 3.38 6.27 5.99

27 | P a g e
 Return on Equity %

2019-20 2018-19 2017-18 2016-17 2015-16

28 | P a g e
 Chapter – 5
SWOT Analysis of Textile Industries

STRENTHS:
Availability of manpower.
High quality product.
Low price high quality.
Availability of raw materials.
WEAKNESS:
Heavy transport charges.
Less available bank loan for new industry.
Less textile industry in Barisal though there is availability of easy water
transportation.
OPPORTUNITIES:
Technological up gradation.

29 | P a g e
 Foreign market expansion.
Online ordering process.
Product expansion.
Market expansion.
THREATS:
Entry of competitors.
Product substitution.

30 | P a g e
 Chapter - 6
Conclusion

Pharmaceutical Industry in our country is a profitable sector. It is due to the reason

that the firms in the industry are very competitive and has gained efficiency in
managing its resources competently. The impact of overall working capital policy
on profitability in this industry is proved to be significant and the ratios related to
working capital can explain the differences between the firms. A positive
correlation has been found in the mathematical model, between current assent
management and financial performance of Pharmaceutical firms. Thus it is evident
that for the overall performance of this industry, working capital plays a vital role.
Our findings from the questionnaire, indicates that the sample firms in the industry
have been efficient in managing Cash, Account Receivables and Payables. For this
industry, maintaining large volume of Inventory doesn’t reflect inefficient
management. Thus the bottom line is that the firms industry should be cautious in
formulating Working Capital Policies

31 | P a g e
 Reference

Websites
1. http://www.centralphl.com/
2. http://www.centralphl.com/attachments/article/144/Annual%20Report%202019-
2020%20.pdf
3. http://www.centralphl.com/attachments/article/144/ANNUAL%20REPT.%202018-
2019.pdf
4. http://www.centralphl.com/attachments/article/144/ANNUAL%20REPORT%202017-
2018.pdf
5. http://www.centralphl.com/attachments/article/144/ANNUAL%20REPORT%202016-
2017.pdf
6. http://www.centralphl.com/attachments/article/144/ANNUAL%20REPORT%202015-
2016.pdf

Books:
1. Frederick C.Scherr, Prentice Hall International Edition, “Modern Working Capital
Management.

32 | P a g e