Daffodil International University

Title: Renata Ltd Working Capital Report

Course Name: Working Capital Management (FIN-408)

Submitted To:
Ms. Sabrina Akhter
Assistant Professor
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University

Submitted By-
Nabin Chakma Id: 211-11-6618
Renata Ltd Working Capital Report

Company Profile
Renata PLC is one of the largest and fastest growing pharmaceutical companies in Bangladesh.
Our core businesses include human pharmaceuticals and animal health products. At present
Renata is present in 43 countries through partnerships and we aim to be one of the largest global
players in the pharmaceutical sector. In the field of animal health, we have been the undisputed
market leader in Bangladesh for the past 30 years. It is our strong values that has enabled us to
come this far, a pledge concerning excellence and a sincere commitment towards our patients,
strategic partners and marginalized sections of the community. We practice fairness, honesty and
transparency in everything we do. With a commitment to leading the pharmaceutical industry,
Renata relies on the innovation of new products and efficient business models and thus invests
heavily in research and development.

Values
 Focus on Long-Term Growth
 Structural Innovation for Sharing Growth
 Going the Extra Mile for Employees
 Environmental Activism
 Health Activism through Promoting Innovation and Partnerships
The types of Working Capital of they use,
Renata Ltd. employs a comprehensive approach to working capital management, focusing on
maintaining efficient operations, liquidity, and solvency. The company's strategy includes
managing inventory levels, optimizing accounts receivable and payable, and ensuring sufficient
cash flow to meet short-term obligations.
1. Inventory Management: Renata Ltd. carefully balances its inventory levels to ensure
that they have enough stock to meet production needs without holding excessive amounts
 that tie up capital. This involves continuously monitoring inventory to prevent both
shortages and surpluses, which helps in maintaining operational efficiency.
2. Accounts Receivable Management: The company places a strong emphasis on
collecting payments from customers as quickly as possible. By implementing effective
credit policies and following up on outstanding invoices, Renata Ltd. reduces the days
sales outstanding (DSO), which improves cash flow and reduces the risk of bad debts.
3. Accounts Payable Management: On the flip side, Renata Ltd. optimizes its accounts
payable by taking full advantage of the credit terms offered by suppliers. This means they
pay their bills within the agreed period, thus retaining cash in the business for longer,
which can be used for other operational needs or investments.
4. Cash Flow Management: Ensuring that there is always enough cash available to cover
day-to-day expenses is crucial. Renata Ltd. achieves this by balancing its receivables,
payables, and inventory effectively. This approach ensures that they maintain liquidity
and can meet short-term obligations without financial strain.

Cash Management (Current Ratio, Cash Ratio)

Calculation of Total Current Assets
Particulars 30-Jun-19 30-Jun-20 30-Jun-21 30-Jun-22 30-Jun-23
Stock / Inventories 4,172,321,022 5,126,624,240 5,929,259,939 8,485,601,428 9,548,408,005
Trade and Other Receivables 3,352,142,887 3,675,152,550 3,842,555,488 3,865,311,119 4,070,181,739
Cash and cash equivalents 798,213,039 1,372,995,830 1,356,084,645 778,537,319 1,836,745,979
Advances, deposits and prepayments 433,302,071 533,580,314 590,572,952 841,243,294 1,048,100,331
Total Current Assets 8,755,979,019 10,708,352,934 11,718,473,024 13,970,693,160 16,503,436,054
Calculation of Current Liabilities
Short term bank loan and overdrafts 2,562,606,715 2,981,137,076 4,801,509,900 8,896,466,406 10,878,812,800
Trade and Others payables 1,249,596,679 1,720,720,043 1,428,085,991 649,511,784 1,448,741,643
Provision for taxation 800,430,247 1,360,352,448 1,335,048,994 1,003,839,309 419,141,789
Total Liabilities 4,612,633,641 6,062,209,567 7,564,644,885 10,549,817,499 12,746,696,232
Net Working Capital(CA-CL) 4,143,345,378 4,646,143,367 4,153,828,139 3,420,875,661 3,756,739,822
Current Ratio (CA/CL) 2.11 2.30 2.82 4.08 4.39
Cash Ratio 0.17 0.23 0.18 0.07 0.14

The table shows the calculation of the company's total current assets and total current liabilities
for five years, from June 30, 2019 to June 30, 2023.
Current assets are things that a company can easily convert to cash within one year. This
includes cash, inventory, accounts receivable, and prepaid expenses. In the table, the company's
total current assets increased from $8.7 billion in 2019 to $16.5 billion in 2023.
Current liabilities are debts that a company owes that will be due within one year. This includes
short-term loans, accounts payable, and accrued expenses. In the table, the company's total
current liabilities increased from $4.6 billion in 2019 to $12.7 billion in 2023.
Net working capital is the difference between a company's current assets and its current
liabilities. It's a measure of a company's liquidity, or its ability to pay its short-term debts. In the
table, the company's net working capital increased from $4.1 billion in 2019 to $3.8 billion in
2023.
Current ratio is a measure of a company's ability to pay its short-term obligations with its
current assets. A ratio of 1 or higher is generally considered good. In the table, the company's
current ratio increased from 2.11 in 2019 to 4.39 in 2023.
Cash ratio is a stricter measure of liquidity than the current ratio. It only considers a company's
most liquid assets, such as cash and cash equivalents, to pay its current liabilities. In the table,
the company's cash ratio fluctuated between 0.07 and 0.23 over the five years.
Here are some graphical charts,

Calculation of Total Current Assets

18,000,000,000
16,000,000,000
14,000,000,000
12,000,000,000
10,000,000,000
8,000,000,000
6,000,000,000
4,000,000,000
2,000,000,000
0
1 2 3 4 5

Stock / Inventories Trade and Other Receivables Cash and cash equivalents
Advances, deposits and prepayments Total Current Assets

Figure:1- Calculation of Total Current Assets

 Calculation of Current Liabilities
14,000,000,000

12,000,000,000

10,000,000,000

8,000,000,000

6,000,000,000

4,000,000,000

2,000,000,000

0
1 2 3 4 5

Short term bank loan and overdrafts Trade and Others payables
Provision for taxation Total Liabilities

Figure:2- Calculation of Current Liabilities

Accounts Receivables Management (Accounts Receivables Turnover ratio)

Accounts Receivables Turnover ratio
Particulars 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
Sales/Turnover 22,220,887,119 24,164,022,473 29,250,906,541 31,070,554,548 32,970,756,360
Average Accounts Receivables 2,983,210,918 3,513,647,719 3,758,854,019 3,853,933,304 3,967,746,429
Accounts Receivables Turnover ratio 7.45 6.88 7.78 8.06 8.31

The table shows the company's accounts receivable turnover ratio for five years. The accounts
receivable turnover ratio is a measure of how efficiently a company is collecting payments from
customers. A higher ratio indicates that a company is collecting payments from customers more
quickly.
Accounts receivable is money that customers owe to the company for goods or services that
have been provided but not yet paid for.
The accounts receivable turnover ratio is calculated by dividing the company's net credit sales
by its average accounts receivable. Net credit sales are the total sales made on credit, minus any
returns or allowances. Average accounts receivable is the average balance of accounts receivable
over a period of time, typically a year.
In the table, the company's accounts receivable turnover ratio has increased from 7.45 in 2018-
2019 to 8.31 in 2022-2023. This means that the company is collecting payments from customers
more quickly in 2022-2023 than it was in 2018-2019.
Here is the graphical chart,
 Accounts Receivables Turnover ratio

35,000,000,000

30,000,000,000

25,000,000,000

20,000,000,000

15,000,000,000

10,000,000,000

5,000,000,000

0
Sales/Turnover Average Accounts Receivables

2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Figure 3: Accounts Receivables Turnover ratio

Inventory Management (Inventory Turn Over Ratio)

Inventory Turnover Ratio
Particulars 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
Cost of Goods Sold 11,065,965,907 12,632,907,753 15,301,410,933 16,344,582,496 20,185,779,122
Average Inventory 3,965,041,314 4,649,472,631 5,527,942,090 7,207,430,684 9,017,004,717
Inventory Turnover Ratio 2.79 2.72 2.77 2.27 2.24

The table shows the company's inventory turnover ratio for five years. Inventory turnover ratio is
a measure of how efficiently a company manages its inventory. A higher ratio generally indicates
better inventory management.
Inventory turnover ratio is calculated by dividing the cost of goods sold (COGS) by the
average inventory. COGS is the cost of the goods that a company sells to its customers. Average
inventory is the average amount of inventory that a company has on hand over a period of time.
In the table, the company's inventory turnover ratio has fluctuated between 2.24 and 2.79 over
the five years. This means that the company has sold and replaced its inventory between 2.24 and
2.79 times per year over that period.
Here is the graphical chart,
 Inventory Turnover Ratio
25,000,000,000

20,000,000,000

15,000,000,000

10,000,000,000

5,000,000,000

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Cost of Goods Sold Average Inventory

Figure 3: Inventory Turnover Ratio

Accounts Payables (Payables Turn Over Ratio)

Payables Turnover Ratio
Particulars 30-Jun-19 30-Jun-20 30-Jun-21 30-Jun-22 30-Jun-23
Supplier credit purchases 561,264,725 494,139,222 398,897,541 480,090,723 671,918,201
Average Accounts Payable 2,367,929,851 3,031,104,785 3,782,322,444 5,594,522,473 6,801,491,524
Payables Turnover Ratio 0.24 0.16 0.11 0.09 0.10

The table shows the company's payables turnover ratio for five years. The payables turnover
ratio is a measure of how quickly a company pays off its suppliers. A higher ratio indicates that a
company pays its bills faster.
The payables turnover ratio is calculated by dividing a company's total net credit purchases by
its average accounts payable. Net credit purchases are the total purchases made on credit, minus
any returns or allowances. Average accounts payable is the average balance of accounts payable
over a period of time, typically a year.
In the table, the company's payables turnover ratio has decreased from 0.24 in 2019 to 0.10 in
2023. This means that the company is taking longer to pay its bills in 2023 than it was in 2019.
Here is the graphical chart,
 Payables Turnover Ratio
8,000,000,000

7,000,000,000

6,000,000,000

5,000,000,000

4,000,000,000

3,000,000,000

2,000,000,000

1,000,000,000

0
1 2 3 4 5

Supplier credit purchases Average Accounts Payable

Figure 4: Payables Turnover Ratio

Sources of Short-term finance

Short-term finance is like a short-term loan for businesses or individuals. It's money you borrow
to cover your needs for a little while, typically less than a year.
Here is the information of Reneta Ltd short term finance sources of until 30 June 2023,
1. Eastern Bank Limited

Overdraft
: To finance overhead cost and duty payment.
Purpose
: Taka. 20 million.
Facility limit
: Within 365 days from the date of
Repayment
disbursement.
Letter of credit/ Acceptance (Sight/Usance)/
Import finance
: To import plant and machinery and raw
materials.
Purpose
: Combined Taka. 1958.7 million.
Facility limit
: Loan against trust receipt within 180 days
Repayment
and UPAS within 365 days from the date of
disbursement.

2. The City Bank Limited

 Letter of
credit
: To import API, excipient, packing and finished materials, to retire sight
letter of credit documents opened for procurement of API, excipient,
Purpose packing and finished materials, and for payment of duty and other charges
related to import and VAT.

Facility limit : Combined Taka. 2,500 million.

Repayment : Within 180 days from the date of disbursement.
Overdraft
Purpose : To meet the day to day operating, promotional, and marketing expenses.
Facility limit : Taka. 100 million.
Repayment : Within 365 days from the date of disbursement.

3. Standard Chartered Bank

Letter of
credit
: To import raw materials, packing materials, capital machinery, spares and
other items required
for regular course of business, for retirement of documents of only sight letter
Purpose
of credits, and to
provide acceptance against letter of credits issued by the bank.

Facility limit : Combined Taka. 3,100 million.

Repayment : Within 180 days from the date of disbursement.
Overdraft
Purpose : For working capital purposes.
Facility limit : Taka. 150 million.
Repayment : Within 365 days from the date of disbursement

4. Citibank N. A.

Letter of credit
: To open letter of credits for import of raw materials, packing
materials, capital machinery, spares and other items required for
Purpose
regular course of business, and to refinance import letter of credits.

Facility limit : Combined Taka 3,150 million

Repayment : Within 180 days from the date of disbursement.
Short term loan
Purpose : To finance local purchase of active and raw materials, packing
 materials, capital machinery, spares and other items required for
regular course of business.

Facility limit : Taka 510 million.

Repayment : Within 180 days from the date of disbursement.
Overdraft
Purpose : To finance regular selling, general and administrative expenses.
Facility limit : Taka 170 million.
Repayment : Within 365 days from the date of disbursement.

5. Bank Asia Limited

Revolving Letter of credit

: To import raw materials, machineries and spare parts for
Purpose
the Company.
Facility limit
: Taka. 3,000 million.
Repayment
: Within 180 days from the date of disbursement.
Revolving LATR
Purpose : Retirement of documents of only sight letter of credits.
Facility limit : Taka. 600 million.
Repayment : Within 180 days from the date of disbursement.
Overdraft
Purpose : For payment of duty VAT, taxes and operating expenses.
Facility limit : Taka. 250 million.
Repayment : Within 365 days from the date of disbursement.
Revolving demand loan
: For procurement of pharmaceuticals and packing materials
Purpose
from local sources.
Facility limit
: Taka. 150 million.
Repayment
: Within 180 days from the date of disbursement.

6. Commercial Bank of Ceylon PLC

Revolving letter of credit

: To import raw materials, machineries and spare parts for
Purpose
the Company.
Facility limit
: Combined Taka . 3,500 million.
Repayment
: Within 180/365 days from the date of disbursement.
Revolving LATR
Purpose : Retirement of documents of only sight letter of credits.
 Facility limit
Repayment
: Taka. 750 million.
: Within 180 days from the date of disbursement.

Overdraft/STL
: For payment of duty VAT, taxes and operating
Purpose expenses.
Facility limit : Overdraft Taka 250 million and STL 750 million.
Repayment : STL within 180 days and overdraft within 365 days
from the date of disbursement.
Revolving demand loan
: For procurement of pharmaceuticals and packing
Purpose
materials from local sources.
Facility limit
: Taka . 3,250 million.
Repayment
: Within 180 days from the date of disbursement

7. Brac Bank Limited

Revolving letter of credit

: To import raw materials, machineries and spare parts
Purpose for the Company.
Facility limit : Combined Taka. 2,500 million.
Repayment : Within 180 days from the date of disbursement.
Revolving LATR
Purpose
Facility limit : Retirement of documents of only sight letter of credits.
Repayment : Taka. 2,500 million.
: Within 180 days from the date of disbursement.

Overdraft/STL
: For payment of duty VAT, taxes and operating
Purpose expenses.
Facility limit : Overdraft Taka 50 million and STL 1,000 million.
Repayment : STL within 180 days and overdraft within 365 days
from the date of disbursement.
8. Meghna Bank Limited

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 50 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 1663 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.

9. Mutual Trust Bank Limited

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 100 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 1400 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement

10. National Credit & Commerce Bank Ltd

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 100 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 2500 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.
11. One Bank Limited

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 100 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 1400 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.

12. Prime Bank Limited

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka . 100 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka . 1400 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.

13. Dutch Bangla Bank Limited

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 100 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 3000 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.
14. Dhaka Bank Limited

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 100 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 1000 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.

15. HSBC Bank Bangladesh

Overdraft
Purpose : To finance overhead cost and duty payment.
Facility limit : Taka. 30 million.
Repayment : Within 365 days from the date of disbursement.
Letter of credit
: To import plant and machinery and raw materials.
Purpose : Combined Taka. 4400 million.
Facility limit : Loan against trust receipt within 180 days and UPAS
Repayment within 365 days from the date of
disbursement.