







































American Economic & Social Review 

Vol. 7, No. 1; 2021 

ISSN 2576-1269   E-ISSN 2576-1277 

Published by CRIBFB, USA 

10 

 

FINANCIAL FITNESS OF SELECTED PHARMACEUTICALS 

COMPANIES OF BANGLADESH: A COMPARATIVE 

ASSESSMENT 
 

 

Sultana Akter 

Assistant Professor 

Department of Business Administration 

Int'l Islamic University Chittagong, Bangladesh 

E-mail: sa_maya@rocketmail.com 

 

 

ABSTRACT 

To understand the financial condition of a firm, it is mandated to evaluate the financial fitness of a 

firm, whether manufacturing, trading and service rendering etc. The main purpose of this research is 

to measure the financial fitness of leading pharmaceutical industries and listed on the stock exchange 

in Bangladesh. This study employs a sample of seven companies from pharmaceutical industries in 

Bangladesh where Altman’s Z-score model is used to assess the financial fitness of those companies 

by the prediction of whether they will go into bankruptcy within the next two years. By applying the 

model, it is revealed that SQUARE Pharmaceuticals Ltd, Renata Limited and IBN SINA 

Pharmaceutical Limited are in a very good position with higher Z-Score. Beacon Pharmaceuticals 

Limited and Ambee Pharmaceuticals Limited are heading toward good scores. But ACI Limited and 

Beximco Pharmaceuticals Limited are financially unhealthy and there is a possibility of going into 

bankruptcy in the near future. The finding of the study suggested the main reason for such a situation 

is that the performance of companies is differed by declining market value of shares, falling total asset 

turnover, inadequate proportion of EBIT to total assets and insufficient liquid assets etc. 

 

Keywords: Financial Fitness, Altman Z-Score, Bankruptcy, Pharmaceutical Company. 

 

JEL Classification Codes: G33, G53, M10. 

 

INTRODUCTION 

Bangladesh is one of the least developed countries which meets about 98% of its demand for 

pharmaceutical products. It has a market size of nearly BDT 200 billion. Bangladeshi pharmaceutical 

products are exported to 147 countries. This industry contributes about 1.85% of total GDP. The 

industry has undergone remarkable transformations in recent years, and it is now the most successful 

manufacturing industry in the country (Faisal, 2019). The industry is growing due to the increase in 

per capita income of the people, their hectic daily activities, an aging population, changing lifestyles 

and economic status, unhealthy eating habits, increasing incidence of chronic diseases etc. which 

provide industry players an opportunity to grow. Bangladesh’s pharmaceuticals market size will reach 

more than BDT 400 billion by 2023 (Niti, 2019). 

SQUARE Pharmaceuticals Ltd (2020) started its business in 1958 and after 33 years of 

establishment it was changed into a public limited company in 1991. In 1995, it was listed on stock 

exchanges. It has a market share of 16.95% and a turnover of BDT 50.87 billion. Square 

Pharmaceuticals Limited exports medicines from Bangladesh to 42 countries. The objective of the 

company is to conduct transparent business operations within a legal and social framework. It has 

exported pharmaceutical products since 1995 and provides quality products. It also offers service for 



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product development and provides assistance in product promotion. Renata Limited (2020), one of 

the fastest growing and foremost pharmaceutical companies in Bangladesh, was established in 1972 

as Pfizer (Bangladesh) Limited. It was listed on the Dhaka Stock Exchange. It has a market 

capitalization of approximately Taka 87 billion. The company exports its products to many countries 

around the globe. The company focuses on long-term growth and goes the extra mile for employees. 

Caring for employees, assisting disadvantaged members and building a sustainable environment is 

the main corporate social responsibility of the company. Beacon Pharmaceuticals Limited (2020) 

opened its business in 2006 with the aim of delivering and developing innovative and life-saving 

medicines to fight various life-threatening diseases. It was listed on the Dhaka and Chittagong stock 

exchanges. It has a premium infrastructure & framework designed by European engineers. The IBN 

SINA Pharmaceutical industry Ltd (2020) was established with modern art and technology in 1983 in 

Gazipur. The company is outfitted with high-quality machinery and has established itself as a leader 

in the pharmaceutical industry in Bangladesh. It has two manufacturing segments like Pharmaceutical 

and organic or herbal Medicine Manufacturing Plant. Highest quality medicines at an affordable price 

are the primary objective of IBN SINA. The Advanced Chemical Industries Ltd (ACI) is one of 

Bangladesh's largest companies, having been founded on January 24, 1973.It has four business 

segments such as ACI Agribusiness, ACI Retail Chain, ACI Consumers brands, and ACI 

pharmaceuticals. ACI Pharmaceuticals is excited about combining knowledge, expertise, and modern 

technology to lead a quality health care system in Bangladesh (ACI Ltd., 2020). Ambee 

Pharmaceuticals Limited (2020) was established in 1976. It was incorporated on 4th February 1976. 

It is registered under the companies Act 1913 as a public limited company. It has got its own 

distribution network throughout the country and a Quality Management System is followed to ensure 

consistent quality. They meet all National Regulatory Requirements and follow Good Manufacturing 

Practices (GMP) in their business as recommended by the World Health Organization. Beximco 

Pharmaceuticals Ltd (Beximco Pharma) was established in 1976 and commenced its operations in 

1980. It is a public limited company listed on the Dhaka Stock Exchange. It is headquartered in 

Dhanmondi. The mission of the company is to enhance human health and well-being by providing 

affordable and contemporary medicine. The core values of the company are commitment to quality, 

customer satisfaction, people focus, accountability and corporate social responsibility (Beximco 

Pharma, 2020). 

Based on the foregoing, it is high time to assess and scrutinize the performance of 

pharmaceutical companies. But performance evaluation is a dynamic matter rather than static as 

performance has changes yearly, monthly, daily, even within a moment (Majumder & Rahman, 2011). 

This study is undertaken to evaluate the performance of some selected listed pharmaceutical 

companies in Bangladesh. This will provide insight into the company's financial situation and position 

in comparison. The use of a model to assess the financial condition of the company will assist 

management in taking corrective measures in the future, potentially reducing bankruptcy. It will even 

help creditors, shareholders and regulatory agencies to a great extent. Many studies have been 

undertaken in the past and among them, Edward Altman’s Z-Score is the most popular Z-Score is a 

multi-discriminate analysis. While doing the review of literature on this area, it was found that a few 

studies have been done using Z-Score in Bangladesh. That’s why this study emphases on analyzing 

the financial fitness of selected pharmaceutical companies which are listed on the Dhaka Stock 

Exchange in Bangladesh (Ray, 2011). 

 

LITERATURE REVIEW 

A lot of research has gone into studying and scrutinizing the financial fitness of companies by 

researchers in different parts of the world. The literature in this study mostly involves research 

depending on the published work existing in Bangladesh as well as abroad. A study used the Z-score 

model to analyze the financial health of five Indian pharmaceutical companies over the course of 11 

years. This model revealed that Ranbaxy Lab Ltd. and GlaxoSmithKline Pharmaceuticals Ltd. were 



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in good financial health, while the other three companies needed to focus on improving financial 

performance, particularly in terms of sales revenue generation and asset utilization in the future (Panda 

& Behera, 2015). Akbar conducted a study to predict financial health conditions on stock returns using 

the panel data regression method for seven Indonesian stock exchange companies. The results showed 

that there is a decrease in financial ratios in each company and this has implications for the decline in 

the financial distress model (Akbar et al., 2019). Another study used Edward I Altman’s Z-Score 

model on selected Indian Pharmaceutical companies for the period of 10 years. Statistical tools and 

financial techniques are used to analyze a company’s financial health performance and decide that 

there are no chances of any bankruptcy in the near future as all are in a safe or healthy zone 

(Geethalakshmi & Jothi,2017). Nsiah conducted a study to compare two pharmaceutical companies 

listed on the Ghana stock exchange based on the profitability, liquidity, solvency and probability of 

that company. It was found that the efficiency of Aryton is declining in the case of management in 

utilizing the assets, but Starwin is improving in this case. By using Altman’s Z-score, it was also 

shown that Aryton was not in financial distress but Starwin was in financial distress and likely to be 

bankrupt in the near future (Nsiah & Aidoo, 2015). A study on an industrial firm and used Altman Z-

scores and ratio analysis approaches to predict the firm’s insolvency for the period of 2002-2004. The 

z-score from the analysis was less than 1.81 (z-score < 1.81 which means the firm has increased its 

debt and will be facing bankruptcy in the near future (Al-Rawi et al., 2018). Mizan et al. (2011) has 

selected six leading pharmaceutical companies of Bangladesh listed on the DSE. They have used 

Altman Z-Score to predict, analyze and compare the financial soundness. The values of Z-Score and 

other financial trend analysis of the rest of the companies are found to be unsatisfactory and they have 

a significant likelihood of facing financial distress in the near future. Ahmed and Hasan (2019) used 

ratio analysis of three pharmaceutical companies in Bangladesh. Data has been collected from the 

annual financial reports of Beximco, Renata and SQUARE pharmaceutical companies from 2006 to 

2010 and found that the financial position and operational performance of the selected 

pharmaceuticals are not satisfactory. Jannatunnesa (2016) attempted to analyze the financial 

consistency and the profitability determinants of pharmaceutical companies in Bangladesh. Altman's 

Z-score model was used for measuring the financial soundness of the pharmaceutical industry. It also 

examined the profitability determinants by testing a number of hypotheses. The results show that the 

insolvency possibility of almost every company is very high. The industry also has a high possibility 

of bankruptcy within the next two years. Dakhwani and Nayak (2017) focused on the financial 

position of selected companies of Pharmaceutical Industry in India on the basis of 10 years of data 

collected from financial statements of respective companies using Altman’s Z-Score model. 

According to their analysis, some companies are found to be in the bankruptcy zone, whereas some 

are in a healthy zone and some have become bankrupt. Al Ali (2018) examined the financial soundness 

of the two healthcare companies listed on the Kuwait stock exchange. The results showed that both 

companies are positioned in the gray area, which means that they are facing bankruptcy risk. Mizan 

and Hossain (2014) found on a sample of five cement companies, found that two firms, Heidelberg 

cement and Confidence Cement of Bangladesh, are financially sound whereas the other three are not 

in a good position. 

 

RESEARCH QUESTIONS & OBJECTIVES OF THE STUDY 

Based on the foregoing discussion, two research questions for this study have been identified:  

▪ What is the financial position of the pharmaceutical industry in Bangladesh?  

▪ How financial distress among the selected companies is measured using Altman Z-score 

ratios? 

The ultimate objectives of the study are to get the answer to research questions as follows: 

▪ To assess the financial situation of sample pharmaceuticals companies of Bangladesh 

▪ To measure financial fitness by means of Altman’s Z-score formula and compare the financial 

distress among selected pharmaceutical companies. 



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▪ To highlight some findings and to recommend some measures regarding the financial position 

of selected companies. 

 

RATIONAL OF THE STUDY 

Determining the financial health of a firm is a very important corporate skill. It is important to know 

how the company is performing its business for a number of reasons. It is important to have a clear 

picture of the financial health of a company to make more effective strategic decisions about the 

organization’s resource allocation and its direction. It also plays a significant role in attracting 

investors or for seeking finance. 

The study can provide assistance to companies in evaluating their financial efficiency. It can 

also help investors in analyzing their investment decisions. Management can find out the financial 

problems and take steps for more effective and efficient utilization of resources. It will be helpful to 

investors in taking the decision to invest in specified companies. 

 

METHODOLOGY 

Data Collection 

To conduct the study, secondary data has been gathered from the yearly reports of selected 

pharmaceutical companies from the year 2015-2019. The position of the company is analyzed based 

on various elements of ratio analysis. To predict the financial distress of the companies using ratio 

analysis, the Altman’s Z-score model is used (Altman’s Z-Score Model, 2020). 

 

Population & Sample 

Bangladesh's own-grown pharmaceutical industry has met approximately 98% of the demand for 

pharmaceutical products. The industry is growing due to the increase in per capita income of the 

people, their hectic daily activities, aged population, change in lives and economic status, unconscious 

eating behaviors, growing rate of chronic diseases etc. which provides industry players an opportunity 

to grow There are a number of pharmaceutical businesses, about 50 plus operating in Bangladesh. 

Among them, around 32 companies are listed on the Dhaka Stock Exchange under the pharmaceutical 

and chemicals industry. Among all the listed pharmaceutical companies on the stock exchange, 

samples of seven companies were selected to conduct this study. 

The sample pharmaceutical companies of this study are given below: 

▪ SQUARE Pharmaceuticals Ltd 

▪ Reneta Limited 

▪ Beacon Pharmaceuticals Limited 

▪ The IBN SINA Pharmaceutical Industry Ltd 

▪ ACI Limited 

▪ Ambee Pharmaceuticals Ltd 

▪ Beximco Pharmaceuticals Ltd 

  

Method of Data Processing 

Altman’s Z-score model was published by Edward I. Altman in 1968 to predict the bankruptcy of a 

business. The formula may be used to forecast the possibility of a company going into bankruptcy 

within the next two years. This model quantifies a company's financial fitness by using multiple 

corporate income and balance sheet values. The model was originally used by publicly held 

manufacturers and later it was used in private manufacturing, non-manufacturing and service 

companies. The model proved to be accurate for predicting bankruptcy on various occasions. The 

model has improved and has become a reliable predictor of bankruptcy. 

The study is undertaken by using the Altman’s Z-Score formula. The formula consists of five 

key financial ratios: X1, X2, X3, X4 and X5. These are independent variables which are computed and 

substituted in the formula to derive the Z-Score of each company. After the derivation of the Z-score, 



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14 

the values are compared to the benchmark set by the model to determine whether a company is in a 

safe, grey or distress zone. On the basis of analysis, it is found whether a company will be bankrupt 

in the near future. Lastly, the values of the Z-Score of each company are compared with the average 

Z-Score of each company to give a comparative analysis of the company’s performance. 

 

The formula is used as follows: 

 

Z = 1.2 X1 + 1.4 X2 +3.3 X3+ 0.6 X4 + 1.0 X5 

 

Where: 

X1= Working capital/ total assets. 

X2= Retained Earnings /Total Assets. 

X3=Earnings before interest and taxes/total assets. 

X4= Market Value of equity/ book value of total liabilities. 

X5= Sales/ total assets. 

 

The results obtained from the model are then compared to a benchmark that is set to determine the 

financial soundness of the company. The criteria used to interpret the Z-score model are: 

 

Zones of discrimination 

Score Zone Description 

Z > 2.99 Safety  Do not go for bankruptcy within next two years 

1.80 < Z < 2.99 Grey Reasonable chance to go for bankruptcy within next two 

years 

Z < 1.80 Distress/bankruptcy Certainty goes for bankruptcy within two years. 

 

ANALYSIS & FINDINGS 

 

Altman Z-Score for SQUARE Pharmaceuticals Ltd. 

 

Table 1. Computation of Z-Score for SQUARE Pharmaceuticals Ltd. 

Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets 0.2325 0.3694 0.4100 0.4063 0.5430 0.3922 

X2=Retained Earnings/Total Assets 0.6405 0.6880 0.6912 0.6925 0.7442 0.6913 

X3=EBIT/Total Assets 0.2579 0.2273 0.1785 0.1448 0.1725 0.1962 

X4=Market Value of Equity/ Total Liabilities 43.1798 46.3080 43.6190 32.4179 49.0082 42.9066 

X5=Sales/Total Assets 1.1543 0.8580 0.7277 0.6483 0.6854 0.8147 

Z-Score 29.16 30.79 28.95 22.03 32.35 28.6560 

 

Table 1. shows the average of X1, X2, X3, X4 and X5 are 0.3922, 0.6913, 0.1962, 42.9066 and 0.8147 

respectively. Now, the average Z-score for SQUARE Pharmaceuticals Ltd. can be calculated as 

 

Z = 1.2 X1 + 1.4 X2 +3.3 X3+ 0.6 X4 + 1.0 X5 

 

The Z-score for SQUARE Pharmaceuticals Ltd. will be 28.6560 

 



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Figure 1. Graphical view of Z-Score of SQUARE Pharmaceuticals Ltd 

 

The above graph shows that the Z-Score of SQUARE Pharmaceuticals Ltd has increased in 

2016 and decreased during 2017 and 2018. Then it has increased to the highest in 2019. The results 

of Z Score in each study period is above 2.99, which means the company is in a safe zone and the 

financial performance of the company is very good, which indicates that the firm is not likely to go 

into bankruptcy in the future. 

 

Altman Z-Score for Renata Limited 

Table 2. Computation of Z-Score for Renata Limited 

Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets 0.0518 0.1148 0.1832 0.2596 0.3182 0.1855 

X2=Retained Earnings/Total Assets 0.5199 0.5876 0.6449 0.6827 0.7149 0.6300 

X3=EBIT/Total Assets 0.1951 0.2168 0.2249 0.2212 0.2231 0.21622 

X4=Market Value of Equity/ Total Liabilities 9.6988 10.0945 12.4718 15.9724 16.3560 12.9187 

X5=Sales/Total Assets 0.7982 0.8473 0.8852 0.8942 0.9174 0.8685 

Z-Score 8.05 8.58 10.23 12.47 12.85 10.4360 

 

 

Figure 2. Graphical view of Z-Score of Renata Limited 

 

29.16 30.79
28.95

22.03

32.35

0

5

10

15

20

25

30

35

2015 2016 2017 2018 2019

Z-Score

Z-Score

8.05 8.58
10.23

12.47 12.85

0

5

10

15

2015 2016 2017 2018 2019

Z-Score

Z-Score



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The above graph shows that the Z-Score has been increased throughout the study period. The 

result of Z-Score in each study period is above 2.99. The company is in a safe zone, which means the 

financial performance of the company is very good, which indicates that there is no possibility for the 

firm to go into bankruptcy in the near future. 

  

Altman Z-Score for Beacon Pharmaceuticals Limited 

 

Table 3. Computation of Z-Score for Beacon Pharmaceuticals Limited 

 
Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets 0.3006 0.2817 0.2520 0.2175 0.2774 0.2658 

X2=Retained Earnings/Total Assets 0.0618 0.0737 0.0738 0.0828 0.0830 0.0750 

X3=EBIT/Total Assets 0.0602 0.0527 0.0523 0.0549 0.0622 0.05646 

X4=Market Value of Equity/ Total Liabilities 1.8530 1.9857 2.6514 2.1554 2.4543 2.2110 

X5=Sales/Total Assets 0.4332 0,4970 0.5775 0.7662 0.9540 0.6827 

Z-Score 2.19 2.30 2.75 2.62 3.09 2.59 

 

 

Figure 3. Graphical presentation of Z-Score of Beacon Pharmaceuticals Limited 

 

According to the figure 3, the results of Beacon Pharmaceuticals Limited's Z Score value from 

2015 to 2018 accounting years are between 1.8 and 2.99, indicating that it is in the grey zone of 1.8 

to 2.99. But from the next financial year it has increased, which indicates that the firm is not likely to 

go into bankruptcy in the future. Measures should be taken to increase the ratios of X1, X2, X3, X4 

and X5 in 2019. 

  

Altman Z-Score The IBN SINA Pharmaceutical Industry Ltd 

Table 4. Computation of Z-Score The IBN SINA Pharmaceutical Industry Ltd 

Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets -0.0619 -0.0770 -0.0385 -0.0830 -0.0637 -0.06482 

X2=Retained Earnings/Total Assets 0.2216 0.2200 0.2566 0.3845 0.4107 0.29868 

X3=EBIT/Total Assets 0.1432 0.1613 0.1548 0.1662 0.1728 0.15966 

X4=Market Value of Equity/ Total Liabilities 2.8823 6.0595 6.0971 6.0196 6.1114 5.43398 

X5=Sales/Total Assets 1.9573 2.0167 1.8605 1.9074 1.8612 1.92062 

Z-Score 4.40 6.40 6.34 6.71 6.60 6.09 

 

2.19 2.3

2.75 2.62

3.09

0

0.5

1

1.5

2

2.5

3

3.5

2015 2016 2017 2018 2019

Z-Score

Z-Score



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Figure 4. Graphical view of Z-Score of The IBN SINA Pharmaceutical Industry Ltd 

 

The above graph shows that the results of Z Score in each study period is above 2.99, which 

means the financial performance of the company is good, which indicates that the firm is not likely to 

go into bankruptcy in the future. 

  

Altman Z-Score for ACI Limited 

Table 5. Computation of Z-Score for ACI Limited 

Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets 0.2279 0.2161 0.1385 0.0701 0.0791 0.14634 

X2=Retained Earnings/Total Assets 0.3950 0.3728 0.3243 0.2766 0.2367 0.3211 

X3=EBIT/Total Assets 0.0832 0.0342 0.0588 0.0470 0.0399 0.0526 

X4=Market Value of Equity/ Total Liabilities 3.2166 2.1778 1.7701 0.8112 0.5035 1.6958 

X5=Sales/Total Assets 0.7525 0.3762 0.6766 0.5993 0.5238 0.5857 

Z-Score 3.78 2.58 2.55 1.71 1.38 2.4 

 

 

Figure 5. Graphical presentation of Z-Score of ACI Limited 

 

From figures, it is found that analysis reveals that z scores have been declining from 3.78 

(2015) to 1.38 (2019) for ACI limited. Although the z score value was greater than 2.99 in 2015, it 

indicated that ACI Limited was in a safe zone with a good financial position, but the company entered 

the grey zone (Z 2.99) in 2016 and 2017 by decreasing the z score values from 3.78 to 2.58 and 

2.55.The company has reached the bankruptcy zone (Z 1.8) with z scores of 1.71 and 1.38 respectively 

4.4

6.4 6.34 6.7 6.6

0

2

4

6

8

2015 2016 2017 2018 2019

Z-Score

Z-Score

3.78

2.58 2.55

1.71
1.38

0

1

2

3

4

2015 2016 2017 2018 2019

Z-Score

Z-Score



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in the next two years, 2018 and 2019.The more poor z score indicates that the firm’s performance 

became poorer due to the decline of total assets, market value of shares, EBIT and liquid assets in 

terms of total assets and total liabilities during the period of study. It can be predicted from the 

declining z scores that the company is going to be bankrupt in the near future. 

  

Altman Z-Score for Ambee Pharmaceuticals Ltd 

 

Table 6. Computation of Z-Score for Ambee Pharmaceuticals Ltd 

 
Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets 0.0411 -0.0674 -0.0960 -0.0924 -0.1039 -0.0637 

X2=Retained Earnings/Total Assets 0.0668 0.0721 0.0696 0.0732 0.0712 0.0706 

X3=EBIT/Total Assets 0.0567 0.0853 0.0652 0.0440 0.0539 0.0610 

X4=Market Value of Equity/ Total Liabilities 1.7966 1.9129 2.4921 3.7170 4.0875 2.8012 

X5=Sales/Total Assets 0.7882 1.2128 0.7791 0.7871 0.7971 0.8729 

Z-Score 2.20 2.66 2.47 3.15 3.40 2.776 

 

 

Figure 6. Graphical view of Z-Score of Ambee Pharmaceuticals Ltd 

 

From figure 6, the results of Z Score value of Ambee Pharmaceuticals Ltd from 2015-2017 is 

below 2.99, which indicates that it is entered in the grey zone (1.8 < Z2.99). But from the next financial 

years it has increased and moved to a safe zone, which indicates that the firm is not likely to go into 

bankruptcy in the future. 

 

Altman Z-Score for Beximco Pharmaceuticals Ltd 

Table 7. Computation of Z-Score for Beximco Pharmaceuticals Ltd 

Variable/year 2015 2016 2017 2018 2019 Mean 

X1=Net Working Capital/Total Assets 0.1109 0.1780 0.1680 0.0532 0.0105 0.1041 

X2=Retained Earnings/Total Assets 0.3276 0.3440 0.3688 0.3340 0.3484 0.3446 

X3=EBIT/Total Assets 0.0925 0.1431 0.1012 0.0921 0.1029 0.1064 

X4=Market Value of Equity/ Total Liabilities 3.8870 4.1862 5.0854 2.3220 1.7540 3.4470 

X5=Sales/Total Assets 0.4205 0.6432 0.4550 0.4051 0.4636 0.4775 

Z-Score 3.65 4.32 4.56 2.63 2.36 3.504 

 

2.2
2.66 2.47

3.15 3.4

0

1

2

3

4

2015 2016 2017 2018 2019

Z-Score

Z-Score



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Figure 7. Graphical presentation of Z-Score of Beximco Pharmaceuticals Ltd 

 

The results of Z-Score value of Beximco Pharmaceuticals Ltd shows that the company is in 

the safe zone during 2015, 2016 and 2017 as the score is above 2.99. But from 2018-2019 the score 

is below 2.99, which indicates that it is in a grey zone of 1.8 to 2.99, which indicates that the firm is 

in a moderate zone of bankruptcy and steps must be taken before it goes to bankruptcy in the future. 

  

Comparative Analysis 

Table 8. Summary of Company’s ranking based on activities and ratios 

 

SQUARE Pharmaceuticals Ltd is ranked first on net working capital to total asset ratio, 

retained earnings to total asset ratio and market value of equity to total liabilities. It is ranked second 

on EBIT to total assets and fourth on sales to asset ratio. The performance of the company is good 

and can increase its sales for holding best position. Renata Ltd is ranked first on EBIT to total asset, 

second on retained earnings to total assets and market value to total liabilities. It has ranked third on 

net working to total assets and sales to total assets ratio. The company is performing well. Beacon 

Pharmaceuticals Ltd is ranked second on net working capital to total asset, fifth on sales to total assets 

ratio. It has ranked sixth on retained earnings to total asset ratio EBIT to total asset and market value 

of equity to total liabilities. The company is not performing well. The IBN SINA Pharmaceuticals Ltd 

is ranked first on sales to total assets ratio, third on EBIT to total asset and market value of equity to 

total liabilities. It is ranked fifth on retained earnings to total asset ratio and seventh on net working 

capital to total asset ratio. The company has to work on its retained earnings and net working capital 

policy. ACI Ltd is ranked fourth on net working capital to total asset ratio and retained earnings to 

total asset ratio SQUARE Pharmaceuticals Ltd is ranked first on net working capital to total asset 

ratio, retained earnings to total asset ratio and market value of equity to total liabilities. It is ranked 

second on EBIT to total assets and fourth on sales to asset ratio. The performance of the company is 

good and can increase its sales to hold the best position. Renata Ltd is ranked first on EBIT to total 

assets, second on retained earnings to total assets and market value to total liabilities. It has ranked 

third on net working to total assets and sales to total assets ratio. The company is performing well. 

Company’s 

Indicators 

SQUARE 

Pharmaceuticals 

Ltd 

Reneta 

Ltd 

Beacon 

Pharmaceuticals 

Ltd 

The IBN SINA 

Pharmaceutical 

Industry Ltd 

ACI 

Ltd 

Ambee 

Pharmace

uticals Ltd 

Beximco 

Pharmace

uticals Ltd 

Avg. of X1 1 3 2 7 4 6 5 

Avg. of X2 1 2 6 5 4 7 3 

Avg. of X3 2 1 6 3 7 5 4 

Avg. of X4 1 2 6 3 7 5 4 

Avg. of X5 4 3 5 1 6 2 7 

3.65
4.32 4.56

2.63 2.36

0

1

2

3

4

5

2015 2016 2017 2018 2019

Z-Score

Z-Score



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Beacon Pharmaceuticals Ltd is ranked second on net working capital to total assets, fifth on sales 

to total assets ratio. It has ranked sixth on retained earnings to total asset ratio EBIT to total assets and 

market value of equity to total liabilities. The company is not performing well. IBN SINA 

Pharmaceuticals Ltd is ranked first on sales to total assets ratio, third on EBIT to total assets and 

market value of equity to total liabilities. It is ranked fifth on retained earnings to total asset ratio and 

seventh on net working capital to total asset ratio. The company has to work on its retained earnings 

and net working capital policy. ACI Ltd is ranked fourth on net working capital to total asset ratio 

and retained earnings to total asset ratio. It is ranked sixth on sales to total assets ratio, seventh on 

EBIT to total assets and market value of equity to total liabilities. The performance of the company is 

poor. Ambee Pharmaceuticals Ltd is ranked second on sales to total assets ratio, fifth on EBIT to 

total asset and market value of equity to total liabilities, sixth on net working capital to total asset ratio 

and seventh on retained earnings to total asset ratio. The performance has to be improved. Beximco 

Pharmaceuticals Ltd is ranked third on retained earnings to total asset ratio. It is ranked fourth on 

EBIT to total assets and market value of equity to total liabilities, fifth on net working capital to total 

asset ratio and seventh on sales to total assets ratio. 

From Table 8, it is clear that SQUARE Pharmaceuticals Ltd tops the list among all other 

companies. Renata Ltd is performing well but unable to perform at the same pace. 

 

Table 9. Company’s Z-Score at a glance 

Company/Year 2015 2016 2017 2018 2019 Average 

SQUARE Pharmaceuticals Ltd 29.16 30.79 28.95 22.03 32.35 28.66 

Reneta  Limited 8.05 8.58 10.23 12.47 12.85 10.44 

Beacon Pharmaceuticals Limited 2.19 2.30 2.75 2.62 3.09 2.59 

The IBN SINA Pharmaceutical Industry Ltd 4.40 6.40 6.34 6.71 6.60 6.09 

ACI Limited 3.78 2.58 2.55 1.71 1.38 2.40 

Ambee Pharmaceuticals Ltd 2.20 2.66 2.47 3.15 3.40 2.78 

Beximco Pharmaceuticals Ltd 3.65 4.32 4.56 2.63 2.36 3.50 

 

 

Figure 8. Graphical presentation of Average Z-Score of the Companies 

 

28.66

10.44

2.59
6.09

2.4 2.78 3.5
0
5

10
15
20
25
30
35

Average Z-Score of Selected company

Average Z-Score



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The above graph shows that the Z-Score value of SQUARE Pharmaceuticals Ltd is above 

average in all the years except in 2018, which is 22.03. Renata Limited and Ambee Pharmaceuticals 

Ltd’s Z-Score values were low from 2015-2017 and then they have increased above average for the 

next two years. The Z-Score value of Beacon Pharmaceuticals Limited is low from 2015-2018 and it 

has increased above average in 2019, which is 3.09. The IBN SINA Pharmaceutical Industry Ltd had 

a low value of 4.40 in 2015 and it stood above average for the last four years. ACI Limited and 

Beximco Pharmaceuticals Ltd’s Z-Score value stood above the average for the first three years and 

then it started declining. 

Overall, SQUARE pharmaceutical Limited has higher Z-Score values than other companies, 

which indicates that the company is in a very good position. Renata Limited and The IBN SINA 

Pharmaceutical Industry Ltd also have higher scores than other companies, which indicate a good 

position for investment. 

 

RESULT & CONCLUSION 

Summary of Findings  

▪ Z-Score of SQUARE Pharmaceuticals Ltd has increased in 2016 and decreased during 2017 

and 2018. Then it has increased to the highest in 2019. The results of Z-Score in each study 

period are above 2.99. 

▪ Z-Score of Renata Limited has increased throughout the study period. The result of Z-Score 

in each study period is above 2.99 

▪ The results of Z-Score value of Beacon Pharmaceuticals Limited from 2015-2018 is below 

2.99, which indicates that it is in the grey zone of 1.8 to 2.99. But from the next financial year 

it has increased. 

▪ The results of Z-Score of The IBN SINA Pharmaceutical Industry Ltd in each study period 

are above 2.99. 

▪ The analysis of ACI reveals that z scores varied between 3.78 (2015) to 1.38 (2019). In 2015, 

the company was in the safety zone (Z > 2.99) and from 2017 onwards the company is in the 

grey zone (Z < 2.99) except in 2018 and 2019. 

▪ The results of Z-Score value of Ambee Pharmaceuticals Ltd from 2015-2017 is below 2.99, 

which indicates that it is in the grey zone of 1.8 to 2.99. But from the next financial years it 

has increased. 

▪ The results of Z-Score value of Beximco Pharmaceuticals Ltd shows that the company is in 

the safe zone during 2015, 2016 and 2017 as the score is above 2.99. But from 2018-2019 the 

score is below 2.99, which indicates that it is in the grey zone of 1.8 to 2.99. 

▪ The Z-Score value of SQUARE Pharmaceuticals Ltd is above average in all the years except 

in 2018, which is 22.03. Renata Limited and Ambee Pharmaceuticals Ltd’s Z-Score values 

were low from 2015-2017 and then they have increased above average for the next two years. 

The Z-Score value of Beacon Pharmaceuticals Limited is low from 2015-2018 and it has 

increased above average in 2019, which is 3.09. The IBN SINA Pharmaceuticals Industry Ltd 

had a low value of 4.40 in 2015 and it stood above average for the last four years. 

▪ Overall, SQUARE Pharmaceuticals Limited has higher Z-Score values than other companies 

and tops the lists in all aspects, which indicates that the company is in a very good position. 

Renata Limited and The IBN SINA Pharmaceuticals Industry Ltd also have higher scores than 

other companies, which indicate a good position for investment. 

 

RECOMMENDATIONS & CONCLUSION 

From the above study, it has been seen that SQUARE Pharmaceuticals Ltd, Renata Limited and The 

IBN SINA Pharmaceuticals Limited hold a very good position with the highest score, which is above 

2.99. Beacon Pharmaceuticals Limited was in the grey zone from 2015 to 2018 and only moved to 

the safe zone in 2019, indicating that the firm expects to be risky. Ambee Pharmaceuticals Limited 



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shows improvement year by year. BEXIMCO Pharmaceuticals Limited remains a grey zone that 

increases the chance of bankruptcy, so measures must be taken to increase its overall performance. 

ACI Limited has a very poor Z-Score and headed the company to the bankruptcy zone. The company 

has a higher chance of going bankrupt in the future. Proper measures must be taken to improve the 

condition of the distressed companies. Management must give a close look at the various indicators 

used in the test in order to bring succession to the company. For each selected company, some 

suggestions are provided below. 

▪ Beacon Pharmaceuticals Limited has been in the grey zone for the majority of the years, 

so it must improve sales revenue, which will improve EBIT in the future, and thus the 

company's Z-Score. The company should also take care of its market price of shares to 

increase the Z-Score and must look at its working capital and try to increase its current 

assets. 

▪ The IBN SINA Pharmaceuticals must focus on its sales to hold the position. 

▪ ACI Limited has a very poor score, so it must increase the market value of its share. There 

must be an adequate proportion of EBIT to total assets. The company must increase its 

liquid assets in order to increase net working capital and retained earnings must be 

increased in order to increase its Z-Score. 

▪ Ambee Pharmaceuticals Limited was in the grey zone for the first three years, so it must 

work on its working capital policy. It must make more contribution to its retained earnings. 

▪ Beximco Pharmaceuticals Ltd must increase its liquid assets and increase its sales through 

new drug development. 

▪ All companies must utilize their assets properly and must have realistic goals and efficient 

management. There must be sufficient research and development on the products. The 

companies must hire skilled manpower. 

▪ Measures must be taken to overcome power disruption and trouble with machinery. There 

must be sufficient availability of raw materials and the number of shares must also be 

increased. 

Bangladesh is one of the least developed countries which meets up to 98% of its demand for 

pharmaceutical products. It has a market size of nearly BDT 200 billion. Bangladeshi pharmaceutical 

products are exported to 147 countries. This industry contributes about 1.85% of total GDP. The 

industry has undergone remarkable transformations in recent years, and it is now the most successful 

manufacturing industry in the country. 

 

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