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Assignment

On

ratio analysis

Presented by:

Abhas Bhushan
Ankush Luhana
Arundhati mishra
Sunil Kumar
Surabhi dugar
Tuhina roy
RATIO ANALYSIS

The relationship between two accounting figures, expressed


mathematically is known as financial ratio. Ratios help us
to summarize large quantities of financial data and to make
qualitative judgments about firm’s financial performance.

OBJECTIVE OF REPORT:

To identify 3 different pharmaceutical companies on the


basis of ratios given- like liquidity ratios, profitability
ratios, activity ratios and support answers with proper
justification.
Ratio analysis of 3 different companies:
Dr.
Ratios RANBAXY CIPLA
REDDY’S

0.850493175 2.11 3.7812


current ratio

0.101786242 1.28 3.04303


quick ratio
Accounts 1.22759362 4.32
receivable turnover
Asset turnover 1.681420402 1.196 3.092901
ratio
12.22067399 38.78 233.12
interest coverage
3.784321139 3.18 8.540805
inventory turn over
292.7 84.56
collection period
0.137493937 24
gross margin
0.133670181 16
net margin
0.138212
0.342230387 25
Earning power 0.138212

0.300655674 0.181262
Return on equity
37.7164037 45.48 55.885
Earning per share
0.031484122 0.16
Capitalization rate
0.340039239 0.17 1.22
Debt equity ratio
0.24605999 0.13
Debt asset ratio
0.22188486 20 0.164103
Return on asset
0.300655159
25
Return on equity

17.01
Dividend per share
The above ratios are being classified as leverage ratios
(which shows proportion of debt and equity in financing
the firm’s asset), liquidity ratios (which measure the firm’s
ability to meet current obligations) activity ratios (reflect
the firm’s efficiency in utilizing its assets) and profitability
ratios measure overall performance and effectiveness of the
firm.

Analysis

This sector is having low inventory turnover ratio which


can be associated with pharma sector as they have to
maintain high inventory level Secondly their second major
expenses are other expenses which also includes research
and development expense as pharma companies invest a
huge amount of their turnover in research and development
that is why these expenses are higher their selling and
distribution expenses are very low because not much of
cost is incurred in transporting pharma products .

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