A

Project Study Report

On

Training Undertaken at
Cadila Pharmaceuticals Limited

Titled
“Ratio Analysis”

Submitted in partial fulfillment for the

Award of degree of
Master of Business Administration

Submitted By: - Submitted To:-

Swati Arora Dr. Manoj Kumar
MBA Part II Head of Department
2017-18

1
 CONTENTS

SR NO TITLE PAGE NO

1 Acknowledgement 3

2 Preface 3
3 Company profile 4

4 Ratio Analysis 7

5 Use of Ratio Analysis 7

6 Techniques used in Ratio Analysis 8

7 Importance 9

8 Limitations 10

9 Source of Data 10

10 Classification of Data 11

11 Data Analysis 17

12 Scope of the study & objective o the study 29

2
 Acknowledgement

I would like to thank respected Mr. Ketan Modi for giving me such a wonderful opportunity
to expand my knowledge for my own branch and giving me guidelines to present an
Internship report. It helps me a lot to realize of what we study for.

Secondly, I would like to thank my Professors who guide me what I have to do in the
Organization.

Thirdly, I would like to thank Microsoft for developing such a wonderful tools like MS Word
& MS Excel. It helped to my work a lot to remain error-free.

3
 Preface

I have made this report file on the topic Ratio Analysis I have tried my best to elucidate all
the relevant detail to the topic to be included in the report. While in the beginning I have tried
to give a general view about this topic.

My efforts and wholehearted corporation of each and everyone has ended on a successful
note. I express my sincere gratitude to Mrs. Bhargav Poun who assisting me throughout the
preparation of this topic. I thank him for providing me the reinforcement, confidence and
most importantly the track for the topic whenever I needed it.

4
 COMPANY PROFILE:

CADILA PHARMACEUTICALS LTD

Cadila Pharmaceuticals Limited is an Indian multinational Pharmaceutical company
headquartered in Ahmedabad Gujarat founded in 1951. Cadila Pharmaceuticals
manufactures and sells finished formulations and active pharmaceutical ingredients (APIs) in
100 countries. The company offers formulations across therapeutic areas, such as
cardiovascular, gastrointestinal, analgesics, haematinics, anti-infective and antibiotics,
respiratory agents, antidiabetics and immunological.

Cadila Laboratories was established by Mr. Indravadan A. Modi along with Mr. Raman
Patel in 1951 in Ahmadabad. In 1995 the company was restructured into two separate
companies. These were Cadila Pharmaceuticals to be managed by Mr. Indravadan Modi and
Cadila Healthcare which went to his former partner Mr. Raman Patel. DR Rajiv Modi, son of
Mr. Indravadan Modi is the current chairman and managing director of Cadila
Pharmaceuticals Limited.

MANUFACTURING
Cadila Pharmaceuticals has its formulation manufacturing facilities at Dholk Gujarat
(India); Samba, Jammu (India) and at Addis Ababa (Ethiopia). The 2 API manufacturing
facilities are located at Ankleshwar, Gujarat The manufacturing facility at Dholka and the
API unit at Ankleshwar in Gujarat are USFDA-certified; the overseas manufacturing facility
at Ethiopia is the WHO - CGMP compliant facility Cadila Pharmaceuticals started its Agro
division in 1992. Cadila Pharmaceuticals manufacturing facilities are accredited by WHO-
GMP, WHO- Geneva (GDF site for Anti-TB), USFDA, TGA Australia (PIC/S), MHRA-UK,
MCC-South Africa, ISO 9001 and ISO 14001

RESEARCH
Cadila Pharmaceuticals has established a dedicated R&D facility, spread over 1,05,000 sq. ft.
area at Dholka, Gujarat, India which is manned by 300 scientists. The firm is the first Indian
company to get Investigational New Drug (IND) approval by USFDA for clinical trials to be
conducted in India. The company has five IND dossiers filed with the USFDA for pulmonary
tuberculosis, lung cancer, prostate cancer, bladder cancer and melanoma. The company has
submitted ten ANDAs. Cadila Pharmaceuticals has connections with various institutions for
research; Department of Biotechnology, UDSC, New Delhi; IISC.

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PRODUCTS & SERVICES

Cadila Pharmaceuticals offers branded and generic formulations covering more than 45
therapeutic segments and 12 specialties. It also offers more than 50 APIs and intermediates.
In the services realm, the company offers Contract Research and Contract Manufacturing.
Cadila Pharmaceuticals is the only Indian manufacturer of natural Streptokinase and
Hyaluronic Acid products. The company was also the first in the world to introduce
Rabeprazole in IV form – Rabeloc. In 2009, the world’s first boosted-Rifampicin fixed-dose
combination for the treatment of Tuberculosis – ‘Risorine’ and world's first drug combination
for prevention of Cardiovascular Diseases – ‘Polycap’ were introduced by Cadila
Pharmaceuticals. For the patients suffering from Non-Small Cell Lung Cancer (NSCLC),
company has recently introduced ‘Mycidac-C’ - first in the class active immunotherapy as
well as drug targeting Desmocollin. Some of the top brands of the company are Aciloc,
Envas, Calcirol, Haem Up, Vasograin, Tricort, Fludac, Rabiloc, Trigan-D and Mycobutol.

VISION
“The vision of the company is to be a Leading Pharmaceutical Company in India and to
become a significant global player by providing high quality, affordable and innovative
solution in medicine and treatment.”

MISSION
“They will Discover, Develop & Successful market pharmaceutical products to prevent,
diagnose, alleviate and cure diseases. They shall provide customer satisfaction and achieve
leadership in chosen markets, products & services across the globe, through excellence in
technology, based on world-class research & development. They are responsible to the

MISSION
society. They shall be good corporate citizens and will be driven by high ethical standards in
their practices.”

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 CORPORATE SOCIAL RESPONSIBLITY

As a responsible Corporate Citizen, Cadila Pharmaceuticals undertakes a number of CSR

activities in larger interest of the community, especially in the area of health, education,
women empowerment and child care.

Kaka-Ba Hospital, established in 1985 at Hansot, Dist. Bharuch, Gujarat is the hub of CSR
activities run by Cadila Pharmaceuticals. Established by the founder of Cadila
Pharmaceuticals and philanthropist Shri I.A. Modi, Kaka-Ba Hospital, in a span of three
decade, has emerged as a blessing for poor, needy patients of Bharuch district and nearby
areas. Serving and saving precious lives, till date more than 5 lakh patients have been treated
by the hospital for various ailments.

The hospital is equipped with all the modern health facilities and has departments like
medicine, general surgery, dental surgery, gynaec and fertility clinic, orthopaedics,
psychiatry, paediatrics, plastic surgery, neurology, radiology, pathology, ICCU,
physiotherapy, dermatology, dialysis unit and many more.

In the area of women empowerment, Kaka-Ba hospital has been running nursing attendant
courses for tribal girls. After successfully completing the training, the hospital helps them to
get employment. This initiative has empowered tribal girls and made them economically self-
reliant.

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 Ratio Analysis
What is Ratio Analysis?
Ratio analysis is one of the oldest methods of financial statements analysis. It was
developed by banks and other lenders to help them chose amongst competing companies
asking for their credit. Two sets of financial statements can be difficult to compare. The
effect of time, of being in different industries and having different styles of conducting
business can make it almost impossible to come up with a conclusion as to which company is
a better investment. Ratio analysis helps creditors solve these issues.

Introduction of Ratio Analysis:

Ratio analysis is the process of determining and interpreting numerical relationships based on
financial statements. A ratio is a statistical yardstick that provides a measure of the
relationship between two variables or figures.
This relationship can be expressed as a percent or as a quotient. Ratios are simple to calculate
and easy to understand.

Uses of Ratio Analysis

Ratios calculated from the information in financial statements help investors in three ways:
 They simplify financial statements: Ratio analysis simply information given in
companies’ financial statements. Investors can easily obtain data from a few ratios instead
of trying to understand entire statements.
 They help detect a problematic trend: Each type of ratio analysed over a long period can
point to a defect in the functioning of a business. The analysis can also predict the future
performance of a company in a particular aspect of business.

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Techniques used in Ratio Analysis
Dividing numbers and obtaining ratios is therefore not the main skill. In fact this part can be
automated and done by the computer. Companies wouldn’t want to pay analysts for doing
simple division. The real skill lies in being able to interpret these numbers. Here are some
common techniques used in the interpretation of these numbers.
 Horizontal Analysis
 Cross-Sectional Analysis

Horizontal Analysis:
 Horizontal analysis is an industry jargon for comparison of the same ratio over time.
Once a ratio is calculated, it is compared with what the value was in the previous quarter,
the previous years, or many years in case the analyst is trying to make a trend. This
provides more information of two grounds. They are:
 Horizontal analysis clarifies whether the company has a stable track record or is the value
of the ratio influenced by one time special circumstances.

Cross-Sectional Analysis:
 Cross sectional ratio analysis is the industry jargon used to denote comparison of
ratios with other companies. The other companies may or may not belong to the
same industry.
 Industry Average: The most popular method is to take the industry average and
compare it with the ratios of the firm. This provides a measure of how the company
is performing in comparison to an average firm.
 Industry Leader: Many companies and analysts are not satisfied with being average.
They want to be the industry leader and therefore benchmark against them.
 Best Practice: In case, the company is the industrial leader, then it usually crosses
the industry border and seeks inspiration from anyone anywhere in the world.

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Importance of Different Ratios to Different User Groups:

 Management: Turnover and Operating Performance Ratios

The management of the company may not be so concerned with the results. They are
usually more interested in the cause. This is because while other classes of stakeholders
do not have control over the working of the firm i.e. the cause, the management does. All
the other stakeholders question the management at the annual general meeting. Hence,
management tries to get as much insight into the ratios as possible.

 Shareholders: Profitability
Shareholders, for obvious reasons, are most concerned about profitability. Their
investments are at risk and they expect to gain the maximum. Investors scrutinize
profitability numbers and pounce upon the slightest signs of mismanagement. For the
shareholders, the profitability ratios are the beginning point. They then follow the trail the
ratios leave.

 Debt holders and Suppliers: Cash Flow and Liquidity

 Debt holders and suppliers are concerned whether they will be paid the amount promised
to them at the date that was promised to them. It is for this reason that they are very
concerned about the liquidity of the firm. Slightest signs of liquidity issues are met with
supply cutbacks from suppliers.
 The fact that debt holders are concerned about the same ratios creates a self reinforcing
negative loop for the company. This is because at the same time when suppliers cut
credit and supplies, debt holder`s refuse to lend more money and the whole situation
becomes a cash crunch.

 Credit Rating Agencies: Solvency;

 While debt holders are suppliers are concerned about short term liquidity and cash flow,
credit rating agencies go a step ahead. They use solvency ratios to rigorously analyse
whether the company will be able to smake good its obligations in the long run.

Limitations;
The following are the limitations of ratio analysis:
1. It is always a challenging job to find an adequate standard. The conclusions drawn from
the ratios can be no better than the standards against which they are compared.
2. When the two companies are of substantially different size, age and diversified products,,
comparison between them will be more difficult.
3. A change in price level can seriously affect the validity of comparisons of ratios computed
for different time periods and particularly in case of ratios whose numerator and denominator
are expressed in different kinds of rupees.

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4. Comparisons are also made difficult due to differences of the terms like gross profit,
operating profit, net profit etc.
5. If companies resort to ‘window dressing’, outsiders cannot look into the facts and affect
the validity of comparison.
6. Financial statements are based upon part performance and part events which can only be
guides to the extent they can reasonably be considered as dues to the future.
7. Ratios do not provide a definite answer to financial problems. There is always the question
of judgment as to what significance should be given to the figures.

Sources of Data
Here is where the investors get the data they require for ratio analysis:

 Financial Statements: The financial data published by the company and its competitors
is the prime source of information for ratio analysis.

 Best Practices Reports: There are a wide range of consulting firms that collate and
publish data about various companies. This data is used for operational benchmarking and
can also be used for financial data analysis.

 Market: The data generated by all the activity on the stock exchange is also important
from ratio analysis point of view. There is a whole class of ratios where the stock price is
compared with earnings, cash flow and such other metrics to check if it is fairly priced.

Classification of ratios
Management is interested in evaluating every aspect of the firm’s performance. They have to
protect the interests of all parties and see that the firm grows profitably. In view of these
requirements of the various users of ratios, ratios are classified into following four important
categories:

 Liquidity ratios - short-term financial strength

 Leverage ratios - long-term financial strength

 Profitability ratios - long term earning power

 Activity ratios - term of investment utilization

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 I. Liquidity ratios measure the firm’s ability to meet current obligations;
II. Leverage ratios show the proportions of debt and equity in financing the firm’s assets;
III. Activity ratios reflect the firm’s efficiency in utilizing its assets; and
IV. Profitability ratios measure overall performance and effectiveness of the firm

A. LIQUIDITY RATIO
Liquidity ratio measure the ability of the firm to meet its current obligations (liabilities). The
liquidity ratios reflect the short-term financial strength and solvency of a firm. In fact,
liquidity ratios establishing a relationship between cash and other current assets to current
obligations provide a quick measure of liquidity. The most common ratios which indicate the
extent of liquidity are lack of it, are:

(i) Current ratio

(ii) Quick ratio.

(iii) Cash ratio and

(iv) Net working capital ratio

(i) Current Ratio:

Current ratio is calculated by dividing current assets by current liabilities.

Current Ratio= Current Assets/Current Liabilities

Current assets include cash and other assets that can be converted into cash within in a year,
such as marketable securities, debtors and inventories. Prepaid expenses are also included in
the current assets as they represent the payments that will not be made by the firm in the
future
(ii) Quick Ratio:

Quick ratio also called Acid-test ratio, establishes a relationship between quick, or liquid,
assets and current liabilities. An asset is a liquid if it can be converted into cash immediately
or reasonably soon without a loss of value. Cash is the most liquid asset. Other assets that are
considered to be relatively liquid and included in quick assets are debtors and bills
receivables and marketable securities (temporary quoted investments).

Quick Assets = Current Assets = Inventories

Quick Ratio= Quick Assets/ Current Liabilities

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(iii) Cash Ratio
Since cash is the most liquid asset, it may be examined cash ratio and its equivalent to current
liabilities. Trade investment or marketable securities are equivalent of cash; therefore, they
may be included in the computation of cash ratio:

Cash Ratio = Cash+ Marketable Securities / Current Securities

(iv) Net Working Capital Ratio:

The difference between current assets and current liabilities excluding short – term bank
borrowings in called net working capital (NWC) or net current assets (NCA). NWC is
sometimes used as a measure of firm’s liquidity. It is considered that between two firm’s the
one having larger NWC as the greater ability to meet its current obligations.

NWC Ratio = Net Working Capital(NWC)/Net Assets or Capital

Employed

B. LEVERAGE RATIO:
The short-term creditors, like bankers and suppliers of raw materials, are more concerned
with the firm’s current debt-paying ability. On other hand, long-term creditors like debenture
holders, financial institutions etc are more concerned with the firm’s long-term as well as
short term financial strength & position. To judge the long-term financial position of the firm,
financial leverage, or capital structure ratios are calculated. These ratios indicate mix of
funds provided by owners and lenders.

1. Debt Ratio:
Several debt ratios may be used to analyse the long term solvency of the firm. The firm may
be interested in knowing the proportion of the interest bearing debt (also called as funded
debt) in the capital structure.

Debt Ratio = Total Debt / Total Capital Employed

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2. Debt-Equity Ratio:
The relationship describing the lenders contribution for each rupee of the owners’
contribution is called debt-equity (DE) ratio is directly computed by dividing total debt by net
worth:

Debt-Equity Ratio = Total Debt / Net Worth

3. Capital-Equity Ratio:
A computation that indicates the financial strength of a company. The ratio is equal to the
fixed assets of a company divided by its Equity Capital:

Capital-Equity Ratio= Fixed Assets/ Equity Capital

C. COVERAGE RATIO:

1. Interest Coverage Ratio:

Debt ratios described above are static in nature, and fail to indicate the firm’s ability to meet
interest (and other fixed charges) obligations. The interest coverage ratio or the times
interest-earned is used to test the firm’s debt-servicing capacity. The interest coverage ratio
is computed by dividing earnings before interest and taxes (EBIT) by interest charges:

Interest Coverage Ratio= EBIT / Interest

2. Activity Ratio
Funds of creditors and owners are interested in various assets to generate sales and profits.
The better the management of assets, the larger the amount of sales. Activity ratios are
employed to evaluate the efficiency with which the firm manages and utilizes its assets.
These ratios are also called turnover ratios because they indicate the speed with which assets
are being converted or turned over into sales. Activity ratios, thus, involves a relationship
between sales and assets. A proper balance between sales and assets generally reflects that
assets are managed well. Several activity ratios are calculated to judge the effectiveness of
asset utilization.

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1. Inventory Turnover Ratio:
Inventory turnover indicates the efficiency of the firm in producing and selling its product. It
is calculated by dividing the cost of goods sold by the average inventory:

Inventory Turnover ratio = Cost of Goods Sold / Average Inventory

The average inventory is the average of opening and closing balances of inventory. The cost
of goods sold may not be available so we can compute inventory turnover as sales divided by
inventory.
2. Inventory Conversion Period:

It may also be of interest to see the average time taken for clearing the stock. This can be
possible by calculating the inventory conversion period. This period is calculated by dividing
the no. of days by inventory turnover ratio:

Inventory Conversion Period= No. Of Days in Year/ Inventory Turnover

Ratio

3. Net Assets Turnover Ratio:

Net assets turnover can be computed simply by dividing sales by net assets. It may be
recalled that net assets include net fixed assets and net current assets, that is, current assets
minus current liabilities. Since net assets equal capital employed, net assets turnover may
also be called capital employed turnover.

Net Assets Turnover = Sales/ Net Assets

4. Total Assets Turnover:

Some analysts like to compute the total assets turnover in addition to or instead of the net
assets turnover. This ratio shows the firm’s ability in generating sales from all financial
resources committed to total assets.

Total Assets Turnover = Sales/ Total Assets

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5. Current Assets Turnover:

A firm may also like to relate current assets (or net working gap) to sales. It may thus
complete networking capital turnover by dividing sales by net working capital.

Current Assets Turnover= Sales / Current Assets

6. Fixed Assets Turnover:

The firm to know its efficiency of utilizing fixed assets separately. This ratio measures sales
in rupee of investment in fixed assets. A high ratio indicates a high degree of utilization in
assets and low ratio reflects the inefficient use
of asset.

Fixed Assets Turnover = Sales / Fixed Assets

3. PROFITABILITY RATIOS

A company should earn profits to survive and grow over a long period of time. Profits are
essential, but it would be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits, irrespective of concerns for customers,
employees, suppliers or social consequences. It is unfortunate that the word profit is looked
upon as a term of abuse since some firms always want to maximize profits ate the cost of
employees, customers and society.
Generally, two major types of profitability ratios are calculated:
 Profitability in relation to sales.

 Profitability in relation to investment.

1. Net Profit Margin:

Net profit is obtained when operating expenses; interest and taxes are subtracted from the
gross profit margin ratio is measured by dividing profit after tax by sales.

Net Profit Ratio = Net Profit/ Sales *100

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1. Operating Expense Ratio:
The operating expense ratio explains the changes in the profit margin (EBIT to sales) ratio.
This ratio is computed by dividing operating expenses viz., cost of goods sold plus selling
expense and general and administrative expenses (excluding interest) by sales.

Operating Expenses Ratio= Operating Expense/ Sales

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 DATA ANALYSIS
A. LIQUIDITY RATIOS:

1. Current Ratio
(Amt in lakh)
particulars 2015-16 2014-15 2013-14 2012-13
Current Ratio 0.91 0.91 1.01 0.91
Current Assets 58,817 51,234 48,685 48,102
Current Liabilities 64,956 56,049 48,088 52,895

Current Ratio

1.05 1.01

1.00

0.95 0.91 Current Ratio

0.91 0.91
0.90

0.85
2015-16 2014-15 2013-14 2012-13

INFERANCE: In above table shown the current ratio of four years (2012-2016). The
Current Ratio of Cadila Pharmaceuticals Ltd. Varied from 0.91 to 0.91 with an average of
0.93 during the study period. The solvency position of Cadila Pharmaceuticals Ltd. In terms
of current ratio was above the standard norm volume of 2:1 for the entire period. The current
Ratio in the year 2012-13 as 0.91. This came down to 0.91 in the last 2 years. This shows
utilization of idle funds in the company.

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2. Quick Ratio:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Acid Test Ratio 0.55 0.59 0.66 0.60
Quick Assets 35,415 33,109 31,939 31,834
Current Liabilities 64,956 56,049 48,088 52,895

Acid Test Ratio

0.66
0.70 0.59 0.60
0.55
0.60
0.50
Acid Test Ratio
0.40
0.30
0.20
0.10
2015-16 2014-15 2013-14 2012-13

INFERANCE: The Ideal Ratio is 1:1 except in the four year the firm’s has a good capacity
to pay of current obligations immediately and is a test of liquidity. The high Quick Ratio
indicates that the firm has the ability to meet its current liabilities. The above table shows the
Quick Ratio of four years (2012- 2016). The Quick Ratio of Cadila Pharmaceuticals Ltd.
varied from 0.60 to 0.55 with an average of 0.60. It was above the standard norm of 1:1 for
the entire period. It confirms that the liquidity position of this Cadila Pharmaceuticals Ltd. I n
terms of quick ratio was less than the standard

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 3. Cash ratio:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Cash Ratio 0.13 0.14 0.21 0.17
Cash + Securities 8,266 7,683 9,988 8,977
Total Current Liabilities 64,956 56,049 48,088 52,895

Cash Ratio
0.21
0.21
0.19 0.17
0.17
0.14
0.15 0.13
0.13 Cash Ratio
0.11
0.09
0.07
0.05
2015-16 2014-15 2013-14 2012-13

INFERENCE: This Cash Ratio indicates that the capacity of the company to realize current
liabilities with its liquidity position. In the above Table the Cash Position Ratio of Four Years
(2012-2016). The Cash Ratio of Cadila Pharmaceuticals Ltd. has undergone many
fluctuations. It started with high ratio at first by 0.17 in the year 2012; it was increased in next
year i.e.2014 to [Link] fallen down to 0.14 in the year 2015 and slightly decreased to 0.13
in the year 2016.

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B. LEVERAGE RATIOS:

1. DEBT RATIO:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Debt Ratio 0.73 0.73 0.74 0.73
Total Liablities 100,811 90,898 90,531 94,516
Total Assets 137,792 124,182 123,110 129,471

INFERENCE: The Ratios indicates that the company was taken more debt in the four year
and they reduced their debt taken for further years. Table shows the Debt Ratio of four years
(2012-2016).The Debt Ratio of Cadila Pharmaceuticals Ltd. is started with 0.73 in the year
2012 and slightly increases during the year 2014 to 0.74 and stable for next two year 0.73 in
2015 & 2016.

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2. Debt – equity ratio:
(Amt in lakh)

Particulars 2015-16 2014-15 2013-14 2012-13

Debt Equity Ratio 3.73 3.73 3.78 3.70
Total Liabilities 137,792 124,182 123,110 129,471
Total Equity 36,981 33,284 32,579 34,955

Debt Equity Ratio

3.78
3.78

3.76

3.74 3.73
3.73
Debt Equity Ratio
3.72 3.70

3.70

3.68

3.66
2015-16 2014-15 2013-14 2012-13

INFERENCE: The standard norm for the ratio is 2:1. The actual debt-equity ratio in the
above table shows, the first two years the stand ratio after the ratio has 3.70 in 2012 to 3.70 in
2013. After that stable for two years in 2015 & 2016 that is 3.73. This indicates from the
study that the firm tries increase the debt and increase the financial risk of the firm when both
ratios of the years 2012 and 2016 are compared.

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3. Capital Equity Ratio:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Equity Ratio 0.27 0.27 0.26 0.27
Total Equity 36,981 33,284 32,579 34,955
Total Assets 137,792 124,182 123,110 129,471

Equity Ratio
0.27
0.27
0.27
0.27 0.27
0.27
0.27
0.27 0.26 Equity Ratio
0.27
0.26
0.26
0.26
0.26
2015-16 2014-15 2013-14 2012-13

INFERENCE: The above table shows the Capital Equity Ratio of four years (2012-
13to2015-16).The Capital Equity Ratio of Cadila Pharmaceuticals Ltd. Shows Slightly
fluctuation in the period of study. The ratio of 2012-13 is 0.27 & in year 2013-14 0.26 and in
2014-1 5 is 0.27 and then stable for 2 years.

23
C. ACTIVITY RATIOS:

1. Inventory turnover Ratio:

(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Inventory Turnover Ratio 1.84 2.31 2.19 2.16
Cost Of Goods Sold 41,775 41,041 35,919 33,812
Total Inventory 22,734 17,793 16,433 15,631

Inventory Turnover Ratio

2.50 2.31
2.19 2.16

2.00 1.84

1.50 Inventory Turnover Ratio

1.00

0.50
2015-16 2014-15 2013-14 2012-13

INFERENCE: The Inventory Turnover Ratio increased and decreased on the buys of sales
that sales increased. The ratio increased because the year sales are increased. The ratio is
decreased because the year sales are decreased. In the above Table shows the Inventory
Turnover Ratio of four years (2012-13t2015-16).The inventory ratio of Cadila
Pharmaceuticals Ltd. was started from 2.16 in the year 2012-13 and it was increased to 2.19
in the next year. It was increased to 2.31 in the year 2014-15, and it suddenly decreased in
next year’s.

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 2. Inventory conversion period:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Inventory Conversion Period( in days) 198.37 158.01 166.67 168.98
No Of Days (In a Year) 365 365 365 365
Inventory Turnover 1.84 2.31 2.19 2.16

Inventory Conversion Period( in days)

198.37
200.00
166.67 168.98
158.01
170.00

140.00

110.00 Inventory Conversion Period(

in days)
80.00

50.00

20.00
2015-16 2014-15 2013-14 2012-13

INFERENCE: We can see this in above chart that was shows the Inventory conversation
period. That average conversation period was 173.007 days. In the year 2012-13 the period
was 178.92. Then it is continuously decreased for two years. Then it was suddenly increased
from 198.37 in year 2015-16

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 3. Fixed Assets Turnover Ratio:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Fixed Assets Turnover Ratio 2.40 2.50 2.17 1.90
Sales 145,307 137,209 125,226 108,479
Fixed Assets 60,483 54,832 57,670 56,948

Fixed Assets Turnover Ratio

3.00
2.50
2.40
2.50 2.17
1.90
2.00
Fixed Assets Turnover Ratio
1.50

1.00

0.50
2015-16 2014-15 2013-14 2012-13

INFERENCE: Fixed assets turnover ratio was 1.90, 2.17, 2.50, 2.40 in respective years of
2012-13, 2013-14, 2014-15, 2015-16, so the company achieved maximum fixed asset
turnover ratio in 2014-15.

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 4. Current assets turnover Ratio:
(Amt in lakkh)
Particulars 2015-16 2014-15 2013-14 2012-13
Current Assets Turnover Ratio 2.47 2.68 2.57 2.26
Sales 145,307 137,209 125,226 108,479
Current Assets 58,817 51,234 48,685 48,102

Current Assets Turnover Ratio

2.68
2.70
2.57
2.60
2.47
2.50
2.40
2.26 Current Assets Turnover Ratio
2.30
2.20
2.10
2.00
2015-16 2014-15 2013-14 2012-13

INFERENCE: In this chart it shows the current assets turnover ratio by which company is
currently rotating the assets for business purpose. It was highly purchased current assets by
the end of the year 2014-15. The Current Assets Turnover Ratio for the four years (2012-
2016). Current assets turnover ratio was 2.26, 2.57, 2.68 and 2.47 in respective year of 2012-
13, 2013-14, 2014-15, and 2015-16 so the company achieved maximum Current assets
turnover ratio in 2015.

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D. PROFITABILITY RATIO:

1. Gross Profit Ratio:

(Amt in akhs)
Particulars 2015-16 2014-15 2013-14 2012-13
Gross Profit Ratio 71% 70% 71% 69%
Gross Profit 103,532 96,168 89,306 74,667
Net Sales 145,307 137,209 125,226 108,479

Gross Profit Ratio

71% 71%
72%
71%
70%
71%
70%
70% Gross Profit Ratio
69%
69%
69%
68%
68%
2015-16 2014-15 2013-14 2012-13

INFERENCE: Gross profit ratio was 69, 71, 70, and 71 in respective year of 2012-13, 2013-
14, 2014-15, and 2015-16 so the company achieved maximum Net profit ratio in 20113-14
and 2015-16.

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 2. Return on equity ratio:
(Amt in lakh)
Particulars 2015-16 2014-15 2013-14 2012-13
Return on Equity 0.58 0.77 1.16 0.38
Net Income 5,591 6,529 9,794 3,005
Share Holder's Equity 9,640 8,457 8,457 8,000

Return on Equity
1.16
1.20
1.00 0.77
0.80 0.58
0.60 0.38 Return on Equity
0.40
0.20
-
2015-16 2014-15 2013-14 2012-13

INFERENCE: Return on equity ratio was 0.38, 1.16, 0.77 and 0.58 in respective year of
2012-13, 2013-14, 2014-15, and 2015-16 so the company achieved maximum Return on
equity ratio in 2013-14.

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 Bibliography
1. Reddy, Y. V. (2002), “Public Sector Banks and the Governance ChallengeThe Indian
Experience”,
2. Khurana, S. K. (2000), “Asset Liability Management”, Skylark Publications, New Delhi
3. Gurumoorthy, T. R. (2004), “Analysis of Income and Expenditure in Banks”, Business and
Economic Facts for You, June, pp 27-31.
4. Ramathilagam, G; and Preethi, S. (2005), “Efficiency of Indian Commercial Banks in the Post
Reform Period”, Business and Economic Facts for You, pp 36-40.

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