ACN305

Section- 01
Submitted to: Md. Safiuddin

by:

Saqeef Rayhan

Id 1722211

22nd September, 2020

 Renata Limited

Renata Limited (formerly Pfizer Limited) is one of the leading and fastest growing
pharmaceutical and animal health product companies in Bangladesh. The company started its
operations in 1972 as Pfizer (Bangladesh) Limited. In 1993, Pfizer transferred the ownership of
its Bangladesh operations to local shareholders and the name of the company was changed to
Renata Limited.
The core businesses of Renata Limited are human pharmaceuticals and animal health products.
In Bangladesh it is the 4th largest pharmaceutical company and the market leader in animal
health products. In addition, Renata products are exported to Afghanistan, Belize, Cambodia,
Ethiopia, Guyana, Honduras, Hong Kong, Kenya, Malaysia, Myanmar, Nepal, Philippines, Sri
Lanka, Thailand, United Kingdom, and Vietnam.
The Company is listed on the Dhaka Stock Exchange with market capitalization of
approximately Taka 87 billion. The Company has eight manufacturing facilities spread over
three manufacturing sites.
In addition, Renata Oncology Limited has two manufacturing facilities. Distribution of products
is carried out by 19 depots across the country. Renata employs 4,334 people.

https://renata-ltd.com/about-us/
 1.What are the relevant IAS/ IFRS for presentation of assets, liabilities and owner’sequity?
Make a list of those.

Renata Limited
Statement of Financial Position as at 30 June 2016

Details 2016 2015

Assets:
Property, plant and equipment - at cost/ revaluation less accumulated 9,549,095,438 9,258,341,054
depreciation
Capital work-in-progress 903,725,332 925,455,341
Investment in shares and others 174,868,870 146,510,809
Non-current assets 10,627,689,640 10,330,307,204
Inventories 3,541,537,632 3,531,077,757
Advances, deposits and prepayments 302,354,739 258,656,080
Trade and other receivables 2,382,112,229 2,081,986,059
Cash and cash equivalents 474,401,334 350,677,490
Current assets 6,700,405,934 6,222,397,386
Total assets 17,328,095,574 16,552,704,590
Equity & Liabilities:
Share capital 529,535,140 529,535,140
Revaluation surplus 156,281,949 156,520,407
Tax holiday reserve 46,643,337 361,670,776
Available for sale reserve 31,640,743 36,440,977
Retained earnings 10,176,639,171 8,632,869,590
Equity attributable to equity holders of Parent Company 10,940,740,340 9,717,036,890
Non-controlling interests 56,911 45,242
Total Equity 10,940,797,251 9,717,082,132
Long term loans - net off current portion 250,095,990 328,914,992
Deferred liability - staff gratuity 19,728,569 17,218,156
Deferred tax liability 970,413,404 768,758,500
Non-Current Liabilities 1,240,237,963 1,114,891,648
Short term bank loans and overdrafts 2,633,744,930 3,237,408,003
Long term loans - current portion 156,800,003 157,000,003
Trade payables 302,611,671 282,437,519
Cost accruals 520,332,876 674,030,168
Provisions and other liabilities 556,436,791 598,003,744
Unclaimed dividend 16,758,741 17,061,417
Provision for taxation 960,375,348 754,789,956
Current liabilities 5,147,060,360 5,720,730,810
Total Equity & liabilities 17,328,095,574 16,552,704,590
Net assets value per share (NAV) 179.66 177.62
 Renata Limited
Statement of Financial Position as at 30 June 2019

Details 2019 2018 2017

Assets:
Property, plant and equipment 10,866,354,030 10,202,591,118 9,799,446,048

Capital work-in-progress 1,705,298,103 1,376,630,382 1,258,756,142

Long term investment 10,936,180 11,222,360 11,794,720

Non-current assets 12,582,588,313 11,590,443,860 11,069,996,910
Inventories 4,337,427,836 3,926,675,733 3,396,070,814
Advances, deposits and prepayments 469,016,265 501,118,209 339,783,944
Trade and other receivables 2,754,102,961 2,614,278,948 2,326,868,750
Cash and cash equivalents 849,907,204 1,083,732,442 651,934,491
Investment in shares and others 3,682,734,594 1,642,611,027 934,669,945
Current assets 12,093,188,860 9,768,416,359 7,649,327,944
Total assets 24,675,777,173 21,358,860,219 18,719,324,854
Equity & Liabilities:
Share capital 805,356,750 700,310,221 608,965,410
Revaluation surplus 154,331,208 154,808,121 155,285,034
Tax holiday reserve 46,637,673 46,637,673 46,637,673
Available for sale reserve 54,338,060 56,743,224 49,859,242
Retained earnings 17,535,319,640 14,549,628,623 12,082,218,918
Equity attributable to equity holders of Parent Company 18,595,983,331 15,508,127,862 12,942,966,277
Non-controlling interests 64,104 69,010 74,723
Total Equity 18,596,047,435 15,508,196,872 12,943,041,000
Long term loans - net off current portion - - 95,910,932
Deferred tax liability 1,343,870,038 1,244,684,960 1,170,470,120
Non-Current Liabilities 1,343,870,038 1,244,684,960 1,266,381,052
Short term bank loans and overdrafts 2,562,606,715 2,405,241,798 1,972,453,954
Long term loans - current portion - 99,662,486 161,200,000
Trade payables 577,121,240 243,664,469 202,413,022
Other Payables 788,416,707 1,047,598,159 1,414,744,187
Provision for taxation 807,715,038 809,811,475 759,091,639
Current liabilities 4,735,859,700 4,605,978,387 4,509,902,802
Total Equity & liabilities 24,675,777,173 21,358,860,219 18,719,324,854
Net assets value per share (NAV) 230.90 221.45 184.82
2. According to international Accounting Standard-1 what are the minimum line items that
should be presented on the face of the statement of financial position (balance sheet)? Make
a disclosure checklist and compare the level of disclosure with your studied companies.

Results Comments
Debt to asset ratio = total 2015 The debt to asset ratio measures the
debt / total assets 6,835,622,458/1,655,2704,590 percentage of the total assets that
=0.41 creditor provide. The higher the
2016 ratio, the higher the degree of
6,387,298,323/1,732,809,5574 leverage (DoL) and, consequently,
=0.37 financial risk and bankruptcy. From
2017 the above calculation, we can see
5,776,283,854/18,719,324,854 that the debt-to asset ratio is
=0.31 decreasing from year to year which
2018 indicates that the company is safe
5,850,663,347/21,358,860,219 from bankruptcy. They are able to
=0.27 pay the loans on time and gradually
2019 they are paying of all the debts
6,079,729,738/24,675,777,173 through their earnings. On the other
=0.25 hand, the Creditors use the ratio to
see how much debt the company
already has and it clearly shows
that the company has the ability
and gaining more ability to pay off
their existing debts and it further
indicates that the company does not
need any additional loan at the
moment.
3. Compute Current ratio, quick ratio, and net working capital of the companies for the
studied period. Make comment regarding the liquidity position of the company from year
to year.

Current ratio

Results Comment
Current Ratio = 2015 The current ratio is the classic measure of
Current assets / liquidity. It indicates whether the business can
6,222,397,386/5,720,730,810
current liabilities pay debts due within one year out of the
= 1.09 current assets. This means The current ratio
reveals how much “cover” the business has for
2016
every Tk that is owed by the firm.
6,850,380,084/5,166,788,929
Over here, Renata Pharma’s current ratio has
= 1.33 been consistently rising from 2015 to 2019.
From 1.09 to 2.55, this indicates that the
2017 pharmaceutical company has enough cash to
7,649,327,944/4,509,902,802 be able to pay its debts, but not too much
finance tied up in current assets which could
= 1.7 be reinvested or distributed to shareholders.
2018 However, there is no such thing as an ideal
9,768,416,359/4,605,978,387 current ratio. The core differs from business to
business and industries to industries. But it is
= 2.12 considered that a ratio of less than one is often
2019 a cause for concern.

12,093,188,860/4,735,859,700
= 2.55
 Quick ratio

Results Comment
Quick Ratio 2015 The quick ratio is a measure of how well a
company can meet its short-term financial
= (Current assets – (6,222,397,386-3,531,077,757)
liabilities. Also known as the acid-test ratio.
Inventory) / current /5,720,730,810
liabilities It is similar to current ratio only the inventories
= 0.47
are excluded from the total current assets.
2016
Here, Renata Pharma has a quick ratio of 0.47 in
(6,850,380,084-3,541,537,632) 2015, 0.64 in 2016, 0.94 in 2017, 1.27 in 2018,
/5,166,788,929 and 1.63 in 2019. We can see that the quick ratio
is also increasing and that in the faster rate over
= 0.64
the years.
2017
As it refers to more liquid types of current asset,
(7,649,327,944-3,396,070,814) shows that Renata Pharma has enough current
/4,509,902,802 assets to cover its current liabilities.
= 0.94
2018
(9,768,416,359-
3,926,675,733) /4,605,978,387
= 1.27
2019
(12,093,188,860-
4,337,427,836) /4,735,859,700
= 1.63
 Net working capital

Results Comment
Net working 2015 Net working capital (NWC) is the difference
capital between a company's current assets and current
6,222,397,386-5,720,730,810
liabilities.
= Current assets
= 501,666,576
-current liabilities Here, Renata Pharma had Tk. 501,666,576 as net
2016 working capital in 2015, Tk. 1,683,591,155 in 2016,
Tk. 3,139,425,142 in 2017, Tk. 5,162,437,972 in
6,850,380,084-5,166,788,929
2018 and Tk. 7,357,329,160 in 2019.
= 1,683,591,155
This shows that the net working capital has been a
2017 positive balance all throughout the years.
7,649,327,944-4,509,902,802 And however, a positive net working capital
indicates a company has sufficient funds to meet its
= 3,139,425,142 current financial obligations and invest in other
2018 activities.

9,768,416,359-4,605,978,387
= 5,162,437,972
2019
12,093,188,860-4,735,859,700
= 7,357,329,160
4. Compute debt to asset ratio, long-term debt to asset ratio of the studied companies for
the studied year and comment on the solvency position of the companies.

Debt to Asset Ratio

Results Comments
Debt to asset ratio = total 2015 The debt to asset ratio measures the
debt / total assets percentage of the total assets that
6,835,622,458/1,655,2704,590 creditor provide. The higher the
ratio, the higher the degree of
=0.41 leverage (DoL) and, consequently,
2016 financial risk and bankruptcy. From
the above calculation, we can see
6,387,298,323/1,732,809,5574 that the debt-to asset ratio is
decreasing from year to year which
=0.37 indicates that the company is safe
2017 from bankruptcy. They are able to
pay the loans on time and gradually
5,776,283,854/18,719,324,854 they are paying of all the debts
through their earnings. On the other
=0.31 hand, the Creditors use the ratio to
2018 see how much debt the company
already has and it clearly shows
5,850,663,347/21,358,860,219 that the company has the ability
and gaining more ability to pay off
=0.27 their existing debts and it further
2019 indicates that the company does not
need any additional loan at the
6,079,729,738/24,675,777,173 moment.

=0.25
 Long Term Debt to Asset Ratio

Results Comment
long-term debt to 2015
asset ratio
1,114,891,648/1,655,2704,590 The long-term debt to total asset ratio
= total long term is a solvency or coverage ratio that
= 0.067
debt / total assets calculates a company's leverage by
2016 comparing total debt to assets. In other
words, it measures the percentage of
1,220,509,394/1,732,809,5574
assets that a business would need to
= 0.070 liquidate to pay off its long-term debt.
2017 From the above calculation, we can
see that the long term debt-to asset
1,266,381,052/18,719,324,854 ratio is increased from 2015 to 2016,
= 0.068 from 0.067 to 0.070 and then started
decreasing from 0.068 to 0.054 from
2018 2017 to 2019. A lower percentage ratio
1,244,684,960/21,358,860,219 means that the company is less
leveraged and owns more of the assets
= 0.058 on balance sheet. In other words, it
2019 they don’t need to sell more assets to
eliminate its debt in the event of a
1,343,870,038/24,675,777,173 bankruptcy.
= 0.054
5. What is the composition of shareholders’ equity section of your studied companies?
Calculate earnings per share and diluted earnings per share of the company for the studied
period. Compute P/E ratio (go to DSE website and search for the market price of the share
as on the reporting date)

Year Composition of shareholders’ equity

2015 Equities:
Share capital= 529,535,140
Share money deposits=
Capital reserves=
Revenue reserves=
2016 Equities:
Share capital= 529,535,140
Share money deposits=
Capital reserves=
Revenue reserves=
2017 Equities:
Share capital= 608,965,410
Share money deposits=
Capital reserves=
Revenue reserves=
2018 Equities:
Share capital= 700,310,221
Share money deposits=
Capital reserves=
Revenue reserves=
2019 Equities:
Share capital= 805,356,750
Share money deposits=
Capital reserves=
Revenue reserves=

The company did not report any share premium or preferred shares in their annual reports.
 Earnings per share

Results Comment
Earnings per 2015 Earnings per share is the monetary value
share of earnings per outstanding share of
50,568,830,801/9,892,218,31
common stock for a company.
= Total earnings / 0
outstanding From beside, we can see that in 2015 the
= 39.2
shares EPS of Renata was TK 39.2 per share
2016 which was still the same in 2016, but
later rose to TK 44 in 2017, Tk 44.4 in
50,568,830,801/9,892,218,31
2018 and finally Tk 46.6 in 2019.
0
However, this is a positive sign for
= 39.2
Renata, because The higher
2017 the EPS figure, the better it is.
53,724,268,590/9,892,218,31 A higher EPS is the sign of higher
0 earnings, strong financial position and,
therefore, shows that Renata is a reliable
= 44 company for investors to invest their
2018 money in.

54,937,977,447/9,892,218,31
0
= 44.4
2019
57,109,583,673/9,892,218,31
0
= 46.6

Diluted earnings per share

Results Comment
Diluted Earnings 2015 Diluted EPS is a calculation used to gauge
per share the quality of a company's earnings per
share (EPS) if all convertible securities
= Total earnings-
2016 were exercised. Convertible securities are
preferred dividend all outstanding convertible preferred shares,
/ outstanding convertible debentures, stock options, and
2017
shares + warrants.
conversions
.
2018

2019

Price to Earnings ratio

Results Comment
Price to Earnings The price to earnings ratio (P/E ratio) is the
Ratio 1026.2/46.63 = 22 ratio for valuing a company that measures
its current share price relative to its per
= Market value
share earnings (EPS). The price to earnings
per share/earnings
ratio is also sometimes known as the price
per share
multiple or the earnings multiple.
This ratio is used by investors and analysts
to determine the relative of a company’s
shares. It can also be used to compare a
company against its own historical record or
to compare aggregate markets against one
another over time.
However, the P/E ratio is lower than PRS
this means the Price of the share is
undervalued. Hence, it is advisable for
investors to invest in Renata.
6. Conclude, by providing final comments to your analysis of the liabilities and equity
section of the balance sheet.

From the financial statements above, it can be seen that the total liabilities have fallen from 2015
to 2019. Analyzing the year to year statements, we can see that the fall in total liabilities is
mostly effected by paying off the long term debts time to time. However Total assets has been
increasing at a higher rate from the year 2015 to 2019. We can see that the total Asset figure is
almost twice as bigger than liabilities. From which the current ratio and acid test ratio gives out a
positive change throughout the years. From 1.09 to 1.33 and 1.7 to 2.12 to 2.55 respectively.
For the Profitability section of Renata, we can see that the company is making profit but at a
higher rate through the net profit margin. They have a constant profit rise from 2015-19. This is
due to cutting off expenses.
Considering the Debt to asset ratio falling and long term debt to asset ratio falling as well, which
the company is generating strong revenue and cash flow.
Lastly, calculating earnings per share gives investors an estimate of what Renata should be
worth. From our calculation, the EPS of Renata has risen from 39.2 in 2015 to 46.6 in 2019. A
higher EPS indicates more value for the business because investors will pay more for a company
with higher profits.