Diagnosing the financial health of Selected Pharmaceutical Companies in Bangladesh

Abstract

In a developing country like Bangladesh the Pharmaceutical industry as a whole play a vital role in the progress of economicdevelopment. But the net profit of this industry has decreased for the last few years. In this paper we have tried to analyze the financial performance of Selected Pharmaceutical Companies in Bangladesh which is measured in terms of Ratio (Profitability, Liquidity, Solvency and Activity ratio) Analysis and in terms of Testing Financial Soundness by using Multivariate Discriminate Analysis (MDA) as developed by Prof. Altman. For the source of data mainly relied on Annual Reports and official records. It was observed from the study of the financial statement of the Pharmaceutical industry that the profit earning capacity, liquidity position, financial position and the performance of the most of the Pharmaceuticals are not in sound position and it was also observed that the most of the Pharmaceuticals has a lower level position of bankruptcy. The reasons behind this position of the industry are inefficiency of financial management, absence of realistic goals, strict government regulation and increased cost of raw-materials, labor and overhead. The financial performance should be improved immediately. Therefore, the appropriate authority should take measures for the removal of the above problems.

Keywords: Financial Performance, Ratio Analysis, Pharmaceuticals Industry, Multivariate Discriminate Analysis (MDA).