Project Report on Short Term Financial Management

North South University
Section-5
Submitted To:
Syed Asif Hossain
Lecturer, Department of Accounting and Finance
School of Business and Economics,
North South University
Submitted By:
Name ID
William Banarjee 142 0369 030
Ahsan Fahmid Shumit 123 0283 630
Dewan Asif Al Arafat 123 0631 030
Ashfaq Bhuiyain 113 0979 030
Mehedi Hasan 112 0045 030

Letter of Transmittal
Date: 10 th December, 2015
Syed Asif Hossain
Lecturer, North South University
Subject: Letter of Transmittal
Respected Sir,
It has been a great pleasure and at the same time a great opportunity to have completed this course
under your supervision. We have prepared this report in accordance with the instructions provided
by you. Thanks to you, we have learned how to apply our knowledge of Short Term Financial
Management concepts we have learned from this course with practical situations. You have given
us the opportunity to analyze two companies of NYSE and two companies of DSE. We have
analyze their solvency and liquidity ratios. It was quite interesting to work on this topic as we have
learned a lot of things after doing the whole report.
This report has provided us learning opportunities and we are truly thankful for that. We hope we
have done justice to this report and we apologize beforehand for any kind of silly mistakes we
have done in this report.
Regards,
William Banarjee
Ahsan Fahmid Shumit
Dewan Asif Al Arafat
Ashfaq Bhuiyain
Mehedi Hasan

Abstract
The main purpose of this project was to make bridge between the theoretical contents taught in
this course with real world practices. The goal is to make understand the working capital practice
and trend throughout the world. In the first section of the project report we have picked two
companies of New York Stock Exchange (NYSE) and two companies from DSE from same
industry. Then we analyze the Solvency ratio and Liquidity ratios from their financial statement.
Then we show a comparative analysis of their findings between companies in Bangladesh and
LSE/NYSE with interpretation. In second portion of the report we analyzed local commodity store
working capital practices. We focused on their Inventory and A/R policies. From their policy we
have recommend to improve their problems.
We have completed this project on time and it was basically because of teamwork. We have
worked together and put in a lot of effort and in the end, we could finish making our product and
have completed the final report.

Table of Content
Section One:
Analysis of Current Ratio
Analysis of Quick Ratio
Analysis of Net Working Capital
Analysis of Working Capital Requirement
Analysis of Cash Ratio
Analysis of Cash Burn Rate
Analysis of Net Liquid Balance
Analysis of Days Sales Outstanding
Analysis of Days Inventory Held
Analysis of Days Payable Outstanding
Analysis of Inventory Turnover
Analysis of Cash Conversion Period
Analysis of Cash Conversion Efficiency
Section Two:
A/C Policy and Inventory policy of Local Business

Section 0ne:
Analysis of Current Ratio
Current ratio is a liquidity measure that measures a company’s ability to meet its short term
obligations by evaluating the level of current assets against its current liabilities.
GlaxoSmithKline Pharmaceuticals, USA
2012 2013 2014
Current Ratio 0.99 1.11 1.10
Interpretation & Analysis:
GSK USA has $0.99 in 2012, $1.11 in 2013 and $1.10 in 2014 of current asset to pay off every
$1 current liability. In the trend graph, this company had less than 1 current ratio meaning the
company was not in a good position but by the time it went to 1.11 in 2013 and then a little drop
in 2014 as 1.10. The company had a fluctuation over time in their current ratio but they had
minimum current asset to pay of their current liabilities.
Recommendation:
The Company should increase its current ratio to improve their ability to pay off their current
liabilities.
0.99
1.11 1.1
0.9
0.95
1
1.05
1.1
1.15
2012 2013 2014
Current Ratio
Current Ratio

Johnson & Johnson
2012 2013 2014
Current Ratio 1.9 2.19 2.36
J & J USA has maintained a good current ratio over time. In 2012 they had 1.9, in 2013 they had
2.19 and 2014 they had 2.36 current ratio. They followed an increased ratio over time. They had
enough current assets to pay their current liabilities.
Recommendation:
They should maintain their increasing growth to do better for the company.
GlaxoSmithKline Pharmaceuticals, Bangladesh
2014
1.9
2.18 2.36
0
1
2
3
2012 2013 2014
Current Ratio
Current Ratio

Current Ratio 1.73
Square Pharmaceuticals
2014
Current Ratio 2.27
Comparison:
As we can see that the current ratios in GSK USA & J & J USA was 1.10 and 2.36 in 2014.
Current ratios in GSK BD and Square Pharmaceuticals was 1.73 and 2.27 in 2014. So we can
assume that the current ratios was comparatively high in Bangladesh. Companies in BD have
higher current assets to pay off their current liabilities.
Analysis of Quick Ratio
Calculating the current ratio does not disclose the true liquidity position of a company since a
higher current ratio might include current assets that cannot be converted into cash immediately.
Quick ratio provides a stricter definition of the company’s financial ability to pay off its current
obligations.
2012 2013 2014
Quick Ratio 0.70 0.83 0.79

GSK USA had $0.70 in 2012, $0.83 in 2013 and $0.79 in 2014 of current assets excluding
inventories to pay off every $1 of current liabilities. By the time the non-inventorial current
assets had been decreased and the company had going through tough times. Solvency had
decreased substantially in 2012 and 2014.
Recommendation:
They should focus on increasing quick asset over 1.5 and maintain their ratio to pay off their
debts.
Johnson & Johnson
2012 2013 2014
Quick Ratio 1.59 1.89 2.04
0.7
0.83
0.79
0.6
0.7
0.8
0.9
2012 2013 2014
Quick Ratio
Quick Ratio

J & J USA had moderately good quick ratio compared to the GSK USA. J & J USA had their
ratio over 1.5 and they were increasing by the time. In 2014, they had their peak ratio 2.04 and
they had quite efficient management to pay off their current non-inventorial liabilities.
Recommendation: The Company should maintain their current increasing ratio to obtain future
benefits.
2014
Quick Ratio 1.58
Comparison:
As we can see that GSK USA and J & J USA had quick ratios of 0.79 and 2.04 in 2014. Quick
ratio of GSK BD and Square Pharmaceuticals Bangladesh was 1.39 and 1.58 in 2014 as well. We
1.59
1.89
2.36
0
1
2
3
2012 2013 2014
Quick Ratio
Quick Ratio
2014
Quick Ratio 1.39

can assume that GSK USA had less efficiency compared to GSK BD but J & J USA had their
quick ratio over 2 and they maintained a good ratio over time.
Analysis of Net Working Capital
It is the sum of all current assets and liabilities which is used to measure the short term liquidity
of a business. A positive net working capital requirement is favorable since it suggests the
company has adequate current assets to pay off its current debt obligations and vice versa. It also
enables to examine the solvency position and level of default risk of the business.
GSK USA had negative NWC in 2012 that is -123 meaning the firm financed long term assets
with current liabilities. Their solvency was badly impacted. But after that they came up with
-123
1550
1383
-500
0
500
1000
1500
2000
2012 2013 2014
Net Working Capital
Net Working Capital
2012 2013 2014
NWC -123 1550 1383

higher NWC in 2013 and 2014. NWC was more in 2013 that was 1550. It showed a good sign
about the company that they could manage to lower their current liabilities.
Recommendation:
They should maintain their liquid asset and increase current asset and hold the increasing rate.
Johnson & Johnson
2012 2013 2014
NWC 21854 30732 34226
J & J USA maintained a good NWC throughout 2012 to 2014. They had positive net working
capital meaning their long term funds were financed by current assets. They had a high growth
which is favorable for the company. They managed to reduce their current liabilities.
Recommendation:
They might follow their current progress in order to gain success in the upcoming days.
21854
30732
34226
0
10000
20000
30000
40000
2012 2013 2014
Net Working Capital
Net Working Capital

2014
NWC 1876912
2014
NWC 4351448705
Comparison:
In USA, GSK and J & J had their NWC of 1384 & 34226 in 2014. GSK BD and Square
Pharmaceuticals Bangladesh had their NWC of 1876912 and 4351448705. Both results of 2014
are showing constant growth among themselves. But Bangladesh industry is showing quite good
result compared to them and they have long term funds which finances current assets.
Analysis of Working Capital
Requirement
Working capital requirement is an operating liquidity measure which is the minimum amount of
resources and funds a company requires to cover its costs and expenses to operate the business
efficiently. These are the spontaneous uses and sources of funds generated over the working
capital cycle.

2012 2013 2014
WCR 1157 1025 873
The WCR had been positive throughout 2012 to 2014. WCR was positive meaning that the firm
needed external financing to run their operating. Their current operating asset was higher than
current operating liabilities. The rate of WCR was falling throughout 2012 to 2014.
Recommendation:
They need to maintain negative WCR that they can get external financing from their supplier.
1157
1025
873
0
500
1000
1500
2012 2013 2014
Working Capital Requirements
Working Capital
Requirements

Johnson & Johnson
2012 2013 2014
WCR 2302 2771 1208
J & J USA maintained a falling WCR that showed a good vibe for the company. The falling
WCR meant that the firm needed less external financing from other sources and they could
depend on their supplier.
Recommendation:
They need to follow their falling WCR to get to negative WCR and they might arrange financing
from suppliers.
2302
2771
1208
0
1000
2000
3000
2012 2013 2014
Working Capital Requirements
Working Capital
Requirements

2014
WCR 780183
2014
WCR 499399970
Comparison:
WCR in GSK USA and J & J USA was 873 and 1208. WCR in GSK BD and Square
Pharmaceuticals Bangladesh was 780183 and 499399970. WCR was fluctuating in BD. Industry
in Bangladesh should lower their WCR to maintain the trend.

Analysis of Cash Ratio
Cash ratio is known as the stock of cash held on the balance sheet scaled by total assets. The cash
ratio provides the proportion of assets held in cash, this metric is a key measure used to assess
corporate liquidity. Here is the formula to calculate cash ratio
Cash Ratio = Cash ÷ Total Assets
Here is the 3 year’s Ratio of GlaxoSmithKline Pharmaceuticals,
This table shows in 2012, the Cash ratio of the GSK is .10 which means, for every one dollar of
asset, the company has $ 0.10 of cash.
Here we can see that the ratio is fluctuating over the years. It increased in 2013. But In 2014, the
ratio decreased which defines that the amount of cast held out of total asset declined.
10.00%
13.00%
11.00%
0.00%
5.00%
10.00%
15.00%
2012 2013 2014
Cash Ratio
2014 2013 2012
Cash Ratio .11 .13 .10

Johnson & Johnson
Here is the 3 year’s Cash Ratio of J &J,
This table shows in 2012, the Cash ratio of the J & J is .12 which means, for every one dollar of
asset, the company has $ 0.12 of cash.
Here we can see that the ratio is fluctuating over the years. It increased in 2013. But In 2014, the
ratio decreased which defines that the amount of cast held out of total asset declined.
12.00%
16.00%
11.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2012 2013 2014
Cash Ratio
2014 2013 2012
Cash Ratio .11 .16 .12
2014
Cash Ratio .50

This table shows that, in 2013 the Cash ratio of the JSK is .50 which means, for every one dollar
of asset, the company has $ 0.50 of cash.
Here is the 1 year’s Cash Ratio of Square Pharmaceuticals:
This table shows in 2014, the Cash ratio of the SQUARE is .078 which means, for every one dollar
of asset, the company has $ 0.078 of cash.
COMPARISON
GSK VS J & J:
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
2012 2013 2014
GSK
J & J
2014
Cash Ratio .078

The Cash ratio of 2012 of GlaxoSmithKline Pharmaceutical is .10 which is higher than J & J which
is .12.
In 2013, the Cash Burn rate of GlaxoSmithKline Pharmaceuticals, USA which is .13 is lower than
the ratio of J & J which is .16.
In 2014, the Cash Burn rate of GlaxoSmithKline Pharmaceuticals which is .11 is equal to ratio of
J & J which is .11.
So, the ratios of J & J have been higher than the ratios of GSK USA over the recent years
GSK Bangladesh VS Square:
In 2014, the Cash ratio of GlaxoSmithKline Pharmaceutical, Bangladesh is .50 which is way
higher than Square which is only .078.
J & J VS GSK Bangladesh
In 2014, the cash ratio of GSK BD is .50 which is higher than the ratio of J & J which is only
.11. Which means it is performing better than the foreign firms.
RECOMMENDATION
GlaxoSmithKline Pharmaceuticals Bangladesh should maintain its upward trend in cash holdings,
but GSK USA, J & J and most importantly the Square must try to increase their ratio.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
2014
GSK BD
Square

Analysis of Cash Burn Rate
Cash holdings scaled by average daily cost of goods sold. This metric provides the number of
days of COGS that the firm can fund with cash without receiving additional cash inflows or
external financing. Increased burn rates imply a reduced likelihood of illiquidity. Here is the way
to get cash burn ratio,
Cash Burn Ratio = Cash ÷ (COGS ÷ 365 days)
Here is the 3 year’s Cash Burn Rate of GlaxoSmithKline Pharmaceuticals,
The cash burn rate in 2012 implies that there is only enough cash on hand to fund 192 days
(rounded off) of cost of goods sold.
The cash burn rate has markedly increased from 2012 to 2013 which means they had more cash
in 2013 in hand for funding COGS without generating additional external financing. But in 2014,
the ratio decreased.
192.00%
235.00%
216.00%
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
2012 2013 2014
Cash Burn Rate
2014 2013 2012
Cash Burn Rate 216 235 192

Johnson & Johnson
Here is the 3 year’s Cash Burn Rate of J & J,
The cash burn rate has markedly increased from 2012 to 2013 which means they had more cash
in 2013 in hand for funding COGS without generating additional external financing. But in 2014,
the ratio decreased.
251.00%
341.00%
233.00%
0.00%
200.00%
400.00%
2012 2013 2014
Cash Burn Rate
2014 2013 2012
Cash Burn Ratio 233 341 251

Here is the 1 year’s Cash Burn Rate of 2014 of Square Pharmaceuticals,
The cash burn rate in 2014 implies that there is only enough cash on hand to fund 64 days (rounded
off) of cost of goods sold.
Comparison
GSK VS J & J:
The Cash Burn rate of 2012 of GlaxoSmithKline Pharmaceuticals is 192 days which is lower
than the ratio of J & J which is 251 days.
In 2013, the Cash Burn rate of GlaxoSmithKline Pharmaceuticals is 235 days which is lower
In 2014, the Cash Burn rate of GlaxoSmithKline Pharmaceuticals is 216 days which is lower
So, the ratios of J & J have been higher than the ratios of GSK USA over the recent years
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
350.00%
2012 2013 2014
GSK
J & J
2014
Cash Burn Ratio 64 days

In 2014, the Cash Burn rate of GlaxoSmithKline Pharmaceutical, Bangladesh is 206 days which
is way higher than Square which is only 64 days.
J & J VS GSK Bangladesh
In 2014, the Cash Burn rate of GSK BD is 206 days which is lower than the ratio of J & J which
is only 233. Which means the foreign firm is performing better than the Bangladeshi firms.
RECOMMENDATION
GlaxoSmithKline Pharmaceuticals Bangladesh has an upward trend of the rate over recent years.
Therefore they should maintain its upward trend. GSK USA and J & J must try to increase the
rate and control the fluctuation. On the other hand, although Square Bangladesh had an upward
trend over the recent years, it has to lengthen the rate as much as possible to compete with its
competitors in the industry since its burn ratios are comparatively way low than the others.
0.00%
100.00%
200.00%
300.00%
2014
GSK BD
Square

Analysis of Net Liquid Balance
Net liquid balance is the sum of cash and short-term investments minus current non spontaneous
financial liabilities such as notes payable and current maturing debt. The NLB is the interaction
between sales growth and operating cycle. A negative NLB depends on outside financing and
suggests the minimum capacity needed for the credit line but it does not mean that the firm will
face default obligation, it implies reduce liquidity. The NLB equation is,
NLB = Cash – Notes Payable
Here is the 3 year’s Liquid balance of GlaxoSmithKline Pharmaceuticals,
This table shows in 2012, GSK had liquid balance in hand of total 1599 million euro.
0
1000
2000
3000
4000
2012 2013 2014
Net Liquid Balance
2014 2013 2012
NLB 1644 million Euro 2861 million Euro 1599 million Euro

Here we can see that, the net liquid balance of GSK has been fluctuating over the 3 years. It jumped
steeply from 2012 to 2013, however, dropped again significantly from 2013 to 2014.
So it suggests that, in 2013 the company had the most adequate immediate funds to pay off its
current liabilities whenever they are due and has lower chances of facing shortage and uncertain
availability of immediate funds.
Johnson & Johnson
This table shows in 2012, J & J had liquid balance in hand of total 10582 million dollar.
So as we can see, they have managed to maintain tremendous liquidity available within 2012 to
2014 where the amount continuously increased every year. It suggests that, over recent years, the
company has maintained considerable level of net liquid balance, suggesting the company has
adequate immediate funds to pay off its current liabilities whenever they are due and has lower
chances of facing shortage and uncertain availability of immediate funds
0
10000
20000
30000
2012 2013 2014
Net Liquid Balance
2014 2013 2012
NLB
21818 million
dollar
18088 million
dollar
10582 million dollar

Here is the 1 year’s Liquid balance of GlaxoSmithKline Pharmaceuticals,
This table shows in 2014, GSK BD had liquid balance in hand of total 2537032000 taka.
Here is the 1 year’s Liquid balance of Square Pharmaceuticals,
This table shows in 2014, Square BD had liquid balance in hand of total 3852048735 taka.
2014
NLB 2,537,032,000 taka
2014
NLB 3852048735 taka

COMPARISON
In 2014, net liquid balance of GlaxoSmithKline Pharmaceutical, Bangladesh is 2,537,032,000
taka which is lower than the balance of Square which is 3852048735 taka.
**Now, since the unit of total liquid balance in the financial statement differs between two
foreign companies (GSK- Euro and J & J- dollar), it is not logically possible for us to make
comparison unless we use a base to convert them into a common unit.
For the same reason, we cannot directly come to a certain conclusion saying that foreign firms
have been in better liquid balance availability position over BD firms or vice versa.**
RECOMMENDATION
Square Bangladesh should maintain its trend of sophisticated cash holdings, whereas the GSK
needs to increase the amount to compete with Square.
GSK USA should try to increase the amount since it had a sudden fall in cash holdings during
year 2013-2014.
On the other hand, J & J should maintain its upward trend of net liquid balance.
0
1E+09
2E+09
3E+09
4E+09
2014
GSK BD
Square

Analysis of Days Sales Outstanding
Days Sales Outstanding (DSO) represents the average number of days it takes for a supplier to
collect on credit sales. It shows the efficiency of the credit and collections department. DSO is also
referred to as the average collection period and it is common to compare the DSO to the trade
credit terms offered by suppliers. The Formula is,
DSO = Account Receivable ÷ (Sales ÷ 365 days)
This table shows in 2012, the DSO ratio of the GSK is 72.39 which means, they has collected the
credit from sales on an average 72.39 days. It has been fluctuating over the years and has increased
next year. But it declined again in 2014.
72.39%
74.94%
72.98%
71.00%
72.00%
73.00%
74.00%
75.00%
76.00%
2012 2013 2014
DSO
2014 2013 2012
DSO 72.98 74.94 72.39

Here we can see there is increase and decrease in DSO. DSO increased in 2013 than 2012. That
defines their supplier take more time to pay the money so this is bad for them. Again In 2013 to
2014 defines that their supplier takes less time to pay the money so this is good for them.
Johnson & Johnson
This table shows in 2012, the DSO ratio of the J & J is 61.40 which means, they has collected the
credit from sales on an average 61.40 days. It has been fluctuating over the years and has declined
next 2 year.
Here we can see there is a decrease in DSO. DSO decreased in 2013 than 2012. That defines their
supplier take less time to pay the money so this is good for them. Again In 2013 to 2014 defines
that their supplier takes less time to pay the money so this is good for them.
61.94%
59.95%
53.07%
48.00%
50.00%
52.00%
54.00%
56.00%
58.00%
60.00%
62.00%
64.00%
2012 2013 2014
DSO
2014 2013 2012
DSO 53.94 59.95 61.40

This table shows in 2014, the DSO ratio of the GSK is 53.07 which means, they has collected the
credit from sales on an average 53.07 days.
This table shows in 2014, the DSO ratio of the SP is 11.43which means, they has collected the
credit from sales on an average 11.43 days.
Here we can see there is a decrease in DSO. DSO decreased in 2014 on GSK, BD between Square
Pharmaceuticals. That defines their supplier take less time to pay the money so this is good for
them.
53.07%
11.43%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Gsk SP
DSO
2014
DSO 53.07
2014
DSO 11.43

COMPARISON
 Between GlaxoSmithKline Pharmaceuticals, USA and J&J-
o 2014 – J & J is better; as 72.98 >53.94
o 2013 - J & J is better; as 59.95<74.94
o 2012 – J & J is better; as 61.40<72.39
 Between GlaxoSmithKline Pharmaceuticals, Bangladesh and Square
Pharmaceuticals, Bangladesh –
o 2014 - Square Pharmaceuticals, Bangladesh is better; as 11.43<53.07
 Between J & J and Square Pharmaceuticals, Bangladesh –
o Square Pharmaceuticals, Bangladesh is better; as it has the lowest DSO.
RECOMMENDATION
GlaxoSmithKline Pharmaceuticals, USA, GlaxoSmithKline Pharmaceuticals, Bangladesh and J
& J should decrease their DSO.
Analysis of Days Inventory Held
The Days Inventory Held (DIH) represents the average number of days inventory sits idle. This
means the delay between acquisition of inventory and selling the item to a customer. Also, given
that Cost of Goods Sold (COGS) represents inventory production costs, the DIH can be interpreted
as the number of days of days of inventory held on a balance sheet at a given point in time. The
formula of Days Inventory Held (DIH) is:
DIH = Inventory ÷ (COGS ÷ 365 Days)

This table shows in 2012, the DIH ratio of the GSK, USA is 182.80which means inventory sit idle
on an average for 182.80 days. It has been fluctuating over the years and has decreased next year.
But it increased again in 2014.
In 2012 DIH was high which means the inventory was sitting idle. In 2013 it becomes less to
165.81 days. It increased in 2014.
Johnson & Johnson
182.80%
165.81%
210.89%
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
2012 2013 2014
DIH
2014 2013 2012
DIH 210.89 165.81 182.80

This table shows in 2012, the DIH ratiois126.31which means inventory sit idle on an average for
126.31 days. It has been fluctuating over the years and has increased next 2 year.
In 2012 DIH was low which means the inventory was sitting idle. In 2013 and 2014 it becomes
high.
This table shows in 2014, the DIH ratio of the GSK is 70.78 which means inventory sit idle on
an average
for 70.78
days.
126.31%
128.70%
131.33%
122.00%
124.00%
126.00%
128.00%
130.00%
132.00%
2012 2013 2014
DIH
2014 2013 2012
DIH 131.33 128.70 126.31
2014
DIH 70.78

This table shows in 2014, the DIH ratio is 70.99 which means inventory sit idle on an average for
70.99 days.
In 2014 DIH was high which means the inventory was sitting idle. In 2014 DIH was high for
Square Pharmaceuticals than GSK.
COMPARISON
70.78%
72.99%
69.50%
70.00%
70.50%
71.00%
71.50%
72.00%
72.50%
73.00%
73.50%
Gsk SP
DIH
2014
DIH 72.99

o 2014 – J & J is better; as 210.89>131.33
o 2013 - J & J is better; as 5128.70<165.81
o 2012 – J & J is better; as 126.31<182.80
o 2014 - GlaxoSmithKline Pharmaceuticals, Bangladesh is better; as 70.78<72.99
 Between J & J and GlaxoSmithKline Pharmaceuticals, Bangladesh –
o GlaxoSmithKline Pharmaceuticals, Bangladesh is better; as it has the lowest
DIH.
RECOMMENDATION
GlaxoSmithKline Pharmaceuticals, USA and J & J should decrease their DIH.
Analysis of Days Payable Outstanding
Days Payable Outstanding (DPO) is the elapsed time between receipt of inputs and when payments
are made to suppliers. Formula to find out DPO is,
DPO = Accounts Payable ÷ (COGS ÷ 365 days)

This table shows in 2012, the DPO ratio of the GSK is 529.91 which meanstime betweenreceipt
of inputs and when payments are made to supplierson an average is 529.91 days. It has been
fluctuating over the years and has increased next 2 year.
Here we can see there is a fluctuation in DPO. DPO decreased in 2013 than 2012. Again In 2013
to 2014 defines that they took more time in 2014.
529.91%
505.15%
566.64%
460.00%
480.00%
500.00%
520.00%
540.00%
560.00%
580.00%
2012 2013 2014
DPO
2014 2013 2012
DPO 566.64 505.15 529.91

Johnson & Johnson
In 2012, the DPO ratio is 174.97 which meantime between receipt of inputs and when payments
are made to suppliers on an average is 174.97 days. It has been fluctuating over the years and has
decreased next 2 year.
Here we can see there is a fluctuation in DPO. DPO decreased in 2013 than 2012. Again In 2014it
decreased again.
In 2014, the DPO ratio of the GSK is 92.37 which means time between receipt of inputs and when
payments are made to suppliers on an average for 92.37days.
174.97%
146.23% 140.38%
0.00%
50.00%
100.00%
150.00%
200.00%
2012 2013 2014
DPO

This table shows in 2014, the DPO ratio is 53.43 which means time between receipt of inputs
and when payments are made to suppliers on an average for 53.43days.
Here we can see in 2014 the DPO increase for GSK than Square Pharmaceuticals.
COMPARISON
o 2014 – J & J is better; as 566.64>140.38
o 2013 - J & J is better; as 505.15>146.23
o 2012 – J & J is better; as 529.91>174.97
92.37%
53.43%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
GsK SP
DPO
2014
DPO 53.43

o 2014 - Square Pharmaceuticals, Bangladesh is better; as 92.37>53.43
 Between J & J and Square Pharmaceuticals, Bangladesh –
o Square Pharmaceuticals, Bangladesh is better; as it has the lowest DPO.
RECOMMENDATION
GlaxoSmithKline Pharmaceuticals, USA and J & J should decrease their DPO.

Analysis of Inventory Turnover
Rapid Inventory Turnover indicates the efficiency of using the inventory. Formula of inventory
turnover is,
Inventory Turnover = Cost of Goods Sold ÷ Inventory
This table shows in 2012, the Inventory Turnover ratio of the GSK is 1.73 which means inventory
is sold and replaced on an average is 174.97 days. It has been fluctuating over the years.
Here we can see there is a fluctuation in Inventory Turnover increased in 2013 than 2012. Again
In 2013 to 2014 defines that they took less time in 2014.
1.73%
2.20%
2.00%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
2012 2013 2014
Inventory Turnover
2014 2013 2012
Inventory Turnover 2.00 2.20 1.73

Johnson & Johnson
This table shows in 2012, the IT ratio is 2.89 which means inventory is sold and replaced
on an average is 2.89 days. It has been fluctuating over the years.
Here we can see there is a fluctuation in Inventory Turnover decreased in 2013 and 2014 than
2012.
2.89%
2.84%
2.78%
2.72%
2.74%
2.76%
2.78%
2.80%
2.82%
2.84%
2.86%
2.88%
2.90%
2012 2013 2014
Inventory Turnover
2014 2013 2012
Inventory Turnover 2.78 2.84 2.89

This table shows in 2014, the Inventory Turnover ratio is 5.16 which means inventory is
sold and replaced on an average is 5.16 days.
This table shows in 2014, the Inventory Turnover ratio is 16.25which means inventory is
sold and replaced on an average is 16.25 days.
2014
Inventory Turnover 5.16
2014
Inventory Turnover 16.25

Here we can see there is a fluctuation in Inventory Turnover. Inventory Turnover decreased in
2014 on GSK than Square Pharmaceuticals.
COMPARISON
o 2014 – GlaxoSmithKline Pharmaceuticals, USA is better; as 2<2.78
o 2013 - GlaxoSmithKline Pharmaceuticals, USA is better; as 2.20<2.84
o 2012 – GlaxoSmithKline Pharmaceuticals, USA is better; as 1.73<2.89
o 2014 - GlaxoSmithKline Pharmaceuticals, Bangladesh is better; as 16.2>5.25
 Between GlaxoSmithKline Pharmaceuticals, Bangladesh and GlaxoSmithKline
Pharmaceuticals, USA –
o GlaxoSmithKline Pharmaceuticals, USA is better; as it has the lowest IT.
RECOMMENDATION
GlaxoSmithKline Pharmaceuticals, USA, Square Pharmaceuticals, Bangladesh and J & J must
increase the ratio by decreasing total liabilities or increasing total asset in better position.
5.16%
16.25%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
GsK SP
Inventory Turnover

Analysis of Cash Conversion Period
It measures how long a firm will be deprived of cash if it increases its investment in resources in
order to expand customer sales. It is thus a measure of the liquidity risk entailed by growth. The
Cash Conversion Period can be found by following formula.
Cash Conversion Period = Days Inventory Hold + Days Sales Outstanding – Days Payable
Outstanding
2012 2013 2014
CCP -274.73 -264.4 -282.78
The above chart is showing the performance of CCP of GSK, USA. Here, it’s seen that their CCP
is negative. That says that GSK, USA is delaying its creditors more than its DIH and DSO.
Negative CCP is good for the firm cause, it says the firm’s disbursement float is greater than its
collection float. Over three years GSK, USA is performing well and has better CCP in recent year.
Johnson & Johnson
2012 2013 2014
CCP 47.33 42.41 10.29
The above chart is showing the performance of CCP of Johnson & Johnson, USA. Here J &J’s
CCP is positive. Which states that its collection float is greater than disbursement float. That means
it takes more time to turn inventory into cash. For this they may need external financing. Over
three years its CCP is decreasing. In 2014, it’s least. So, J & J is performing well as years passing
by.

Comparison between GSK, USA and J & J, USA
From the above chart, it’s clear that GSK, USA is performing well than J & J. because negative
CCP is good for the firm. J & J’s performance is getting better but not better than GSK, USA.
GSK, USA is doing well and its CCP is getting more negative in recent years. So, GSK, USA is
the better performer.
2014
CCP -66.75
The above chart is showing the performance of CCP of GSK, BD. Its CCP is negative, which states
that it’s delaying its creditor. It doesn’t need extra financing for support.
2014
CCP 30.98
The above chart is showing the performance of CCP of Square Pharmaceuticals. It is seen that its
CCP is positive. Which states that they take 30.98 days to convert sales into cash.
-274.73 -264.4
-282.78
47.33 42.41
10.29
-300
-200
-100
0
100
2012 2013 2014
CCP
GSK USA J & J

Comparison between GSK, BD and Square Pharmaceuticals
The above graph is illustrating the comparative performance of GSK, BD and Square
Pharmaceuticals. It’s clear that GSK, BD is doing well than Square Pharmaceuticals. As negative
CCP preferable.
Comparison between GSK, USA and GSK, BD
Between USA and Bangladeshi Pharmaceuticals Company, we are comparing the best two
companies CCP of 2014. It is seen that USA Company is doing much better than Bangladeshi
company. GSK, USA is doing well compare to Bangladeshi GSK.
-66.75
30.98
-80
-60
-40
-20
0
20
40
1
CCP
GSK BD Square
GSK USA GSK BD
Series1 -282.78 -66.75
-300
-250
-200
-150
-100
-50
0
CCP

Analysis of Cash Conversion Efficiency
The proportion of sales that yield operating cash flow, dubbed Cash Conversion Efficiency (CCE)
which is very critical for firm’s long term viability. Adequate CCE involves monitoring the
financial supply chain, including managing costs and operating working capital.
Formula:
Cash Conversion Efficiency = Operating Cash Flow / Revenue
2012 2013 2014
CCE 17% 27% 22%
The above table is showing the CCE of GSK, USA over 2012, 2013, and 2014. It’s clear that the
performance of company is good though it falls in 2014 from 27% to 22%. Overall it is doing
great.
Johnson & Johnson
2012 2013 2014
CCE 23% 24% 25%
The above table is showing the CCE of J & J, USA over 2012, 2013, and 2014. Here, it is shown
that the CCE of J & j is good and it is doing better as year’s passes by. It is showing an upward
trend of CCE.

Comparison between J & J and GSK USA
The above graph is showing the comparative performance of GSK, USA and J & J’s CCE. Over
three years J & J’s CCE is rising where GSK, USA’s CCE has fluctuated. This means that J & J is
better performer here. J & J is managing their cost, financial supply chain and working capital
more efficiently than GSK, USA.
2014
CCE 19%
The above table is showing the Cash Conversion efficiency of GSK, BD in 2014. Here it’s seen
that GSK, BD is 19% efficient to convert cash.
2012 2013 2014
GSK USA 17% 27% 22%
J & J 23% 24% 25%
0%
5%
10%
15%
20%
25%
30%
CCE
GSK USA J & J

2014
CCE 26%
The above table is showing the Cash Conversion efficiency of Square Pharmaceuticals in 2014.
It can be stated that Square Pharmaceuticals is 26% efficient to convert cash.
Comparison between Square Pharmaceuticals & GSK BD
The above graph is showing the comparative performance of GSK, BD and Square
Pharmaceuticals CCE. It’s clear from that, Square Pharmaceuticals is more efficient than GSK,
BD in terms of CCE. Square Pharmaceuticals is managing its cost, financial supply chain and
working capital more efficiently than GSK, BD.
GSK BD Square Pharma
2014 19% 26%
0%
5%
10%
15%
20%
25%
30%
CCE

Comparison between J&J and Square Pharmaceuticals
The above graph is showing the comparative performance of J&J, USA and Square
Pharmaceuticals performance in Cash Conversion Efficiency. They are both better performer in
their own country. It’s showing that is Square Pharmaceuticals is better than J&J by only 1%. That
means that Square is managing its cost, financial supply chain and working capital more efficiently
than J&J, USA only by 1%.
Section Two:
Summary:
Nurjahan Garments store basically a wholesale store. They sell their product across the country.
But they sell their product mostly in Chittagong, Sylhet & Khulna origin. Many retailer store from
that origin come there & buy garments product from them. They also have some permanent
customer from various market & they sell product on credit to them.
A/C polices:
They sell their product both in credit and payment on purchase time.
For credit sell they give buyers 3 option to pay their payment:
1. Payment on purchase time
J & J Square Pharma
2014 25% 26%
25%
26%
24%
25%
25%
25%
25%
25%
26%
26%
26%
26%
CCE

2. Check
3. Pay later within a particular given time
Temporary or 1st
time coming customer usually have to on purchase time. Those customers
are not able to buy product on credit.
Loyal customer or known customer is paying their payment on check. Sometimes customer
paying check but when sellers going to bank for check cashing, they found their not have
enough money. So they give a specific time to buyers.
Loyal customer and who usually come over & over again, Nurjahan garment giving them
a especial service. They allow to them to pay their payment later & giving them a specific time
to pay like 30 days.
For permanent customer, they delivered ordered product to customer by courier service
and after reached the product to the customer they ask for the bill to pay.
They have some bed debt customer. For them they say to customer, you give 60% money
of bill then in future you may buy product from us later.
Discount offer:
If any particular buyers pay full payment on purchase time then buyer gets a 5-10% discount.
If buyer pay check and payment amount is in the bank then buyer get 5-8% discount
Or any loyal buyers pay their payment on giving particular time they get 3-5% discount
For permanent customer they delivered their product across the country. After reaching the
product if customer pay the bill on time by courier they give 3-5% discount to them.
Inventories:
Nurjahan Garments only sell garment product. They collect their product from 2-3particular
garments and then store in their own store room. They have to pay for the store room.
They basically store product 3-6 days then delivered product to the buyers.
They store more winter garments product on winter season & summer product in summer
season. It means they basically store product on basis on customer demand.

Recommendation:
Nurjahan Garments Store doesn’t follow a specific financial standard. They practice different
polices to different customers. They also have some bed debt. So I suggest them for unknown
or temporary customer they should get security money before product delivered. They should
practice just one polices for all customer.
Store Name: Nurjahan Garments
Manger Name: Jashimuddin Sujon
Contract Number: 01677056220
Address: 1859-60, Bongo-bazar Complex, Bongo Bazar, Dhaka-10000

Project Report on Short Term Financial Management

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