cipla performance analysis

7/30/2019 cipla performance analysis

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NewGate IndiaHyderbad, Andhra Pradesh- 500038

Website:www.newgate.in

Email:[email protected]

Slideshare URL :http://www.slideshare.net/newgateindia

CIPLA LTD

Financial Statement

&

Ratio Analysis
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Table of Contents

1.Introduction .32.Financial Statement..4

2.1 Balance Sheet overview 2007-2009.42.2 P&L Account overview 2007-2009......7

3.Financial Analysis.83.1 Horizontal Analysis...8

3.1.1Analysis of Balance sheet83.1.2Analysis of P&LD account.11

3.2 Ratio Analysis...133.2.1Liquidity Ratio.....163.2.2Solvency Ratio.173.2.3Turnover Ratio.183.2.4Profitability Ratio.....19

4.Conclusion22

Appendix 1.25

Appendix 2.26

Appendix 3.27

Appendix4..28

Appendix5..29

Accounting Glossary.31

Bibliography 33


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1. INTRODUCTION

Cipla, originally founded by Khwaja Abdul Hamiedas The Chemical, Industrial &Pharmaceutical Laboratories is a prominent Indian pharmaceutical company, best-known

outside its home country for manufacturing low-cost anti-AIDS drugs for HIV-positive patients

in developing countries. Cipla makes drugs to treat cardiovasculardisease, arthritis, diabetes,

weight control, depression and many other health conditions, and its products are distributed inmore than 180 countries worldwide. Among the hundreds of generic medications it produces

for international distribution are atorvastatin, amlodipine, fluoxetine, venlafaxine

hydrochloride and metformin.

Cipla offers services like consulting, commissioning, engineering, project appraisal, quality

control, know-how transfer, support, and plant supply.

Apart from its presence in the Indian market, Cipla also has an export market and regularly

exports to more than 150 countries in regions such as North America, South American, Asia,

Europe, Middle East, Australia, and Africa. For the year ended 31 March, 2007 Ciplasexports were worth approximately Rs. 17,500 million. Cipla is also considerably well-known

for its technological innovation and processes for which the company received know-how

loyalties to the tune of Rs. 750 million during 2006-07. Cipla has been approved by regulatory

bodies such as:

World Health Organization Food and Drug Administration (FDA), USA Therapeutic Goods Administration (TGA), Australia Pharmaceutical Inspection Convention (PIC), Germany National Institute of Pharmacy (NIP), Hungary The Medicines and Healthcare products Regulatory Agency (MHRA) is the UK

government agency

Cipla has recently launched I-Pill which is a single dose emergency contraceptive and has

acquired a great deal of popularity in a short span of time. Other latest launches of Cipla include

products such as Nova, Moxicip, Flomex, Fullform, Montair LC, and Imicrit.

Founded : 1935

Headquarters : Mumbai, India

Key people : Y. K. Hamied (CMD) Chairman

Industry : Pharmaceuticals

Revenue : Rs.37.6 billion (~939M USD) (2006)

Net income : Rs. 9.1 billion (2006)

Employees over : 7,000

Website : www.cipla.com


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2. FINANCIAL STATEMENT

To get a better idea about the current financial status of Cipla, we went through following

financial statements

BALANCE SHEET of 2007,2008,2009 PROFIT & LOSS Statements of 2007,2008,2009

2.1 BALANCHE SHEET OVERVIEW from 2007-2009

A standard company balance sheet has three parts

Assets ( Fixed Assets, Current Assets,Investments,Profit & Loss) Liabilities ( Debts, provisions) Ownership equity (Share Capital,Reserves,Surplus)

The main categories of assets are usually listed first and typically in order of liquidity. Assets

are followed by the liabilities. The difference between the assets and the liabilities is known asequity or the net assets or the net worth or capital of the company and according to the

accounting equation net worth must equal assets minus liabilities.[

2.1.1 TOTAL ASSETS of CIPLA ( 2007,2008,2009)

Figure 2.1.

Total Asset = Total Current Asset + Total Fixed Assets

The current assets as well as fixed assets & work in progress have tremendously increased

over 3 years but the investments have decreased with an average rate of ( -16.86 %).

Figure 2.1.


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2.1.2 DEBT & NET WORTH of CIPLA ( 2007,2008,2009)

Figure 2.3

The equity has increased showing a good hold on share holders. The Equity/net worth includes

Capital shares, reserves & surplus which have increased significantly over years with an

average rate of (+15.9 %)

Total debts have increased over years. Debts are the loans payable to the creditors. This are

basically of two types

Secured loan Unsecured loan.

We know that more is the unsecured loan, more is the credit risk. From the below graphs (Figure

2.4) it is quite clear that the credit risk have increased significantly over past three years and the

secured loan have become almost negligible at 2009.

The company is having more credit r isk.

2007 2008 2009

Figure 2.4


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2.1.3 TOTAL LIABILILTIES

Total Liabilities includes share capital, reserves, surplus, equity share warrants,

Shareholders fund, secured & unsecured loans. The liability has increased over 3 year but

the distribution of each element per year for liabilities is shown below.

2009

2008

2007


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2.2 PROFIT & LOSS ACCOUNT OVERVIEW from 2007-2009

Income statement, also referred as profit and loss statement (P&L), earnings statement,

operating statement or statement of operations is a company's financial statement that

indicates how the revenue (money received from the sale of products and services before

expenses are taken out, also known as the "top line") is transformed into the net income (the

result after all revenues and expenses have been accounted for, also known as the "bottom

line"). It displays the revenues recognized for a specific period, and the cost and expenses

charged against these revenues, including write-offs (e.g., depreciation and amortization of

various assets) and taxes The purpose of the income statement is to show managers and

investors whether the company made or lost money during the period being reported.

Basically we will discuss upon

Total Income Total Expenditure

Profitso Operating Profito Net Profit ( Profit after tax)

2.2.1 TOTAL INCOME

Figure 2.5

Total Income has increased at an average rate of(22.3 %)

With time both income and expenditure have increased. Rise was also found in tax as well as

depreciation charges and interest charged upon various items.


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2.2.2 TOTAL EXPENDITURE

Figure 2.6

Total expenditure has increased at an average rate of( 26.7 %)

2.2.3 OPERATING PROFIT

Figure 2.7

Total operating profit has increased at an average by ( 9.5 %)

2.2.4 PROFIT AFTER TAX

Figure 2.8

Total Income has increased at an average by ( 7.32 %)


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3. FINANCIAL ANALYSIS

Financial analysis (also referred to as financial statement analysis oraccounting analysis)

refers to an assessment of the viability, stability and profitability of a business, sub-business

or project.

It is performed by professionals who prepare reports using ratios that make use of information

taken from financial statements and other reports. These reports are usually presented to topmanagement as one of their bases in making business decisions. Based on these reports,

management may:

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

There are basically two type of financial Analysis

Horizontal Analysis Ratio Analysis

3.1 HORIZONTAL ANALYSIS

Financial analysts can also use percentage analysis which involves reducing a series of figures

as a percentage of some base amount. When proportionate changes in the same figure over givetime period expressed as a percentage is know as horizontal analysis[

It can be done on the basis of

Past Performance - Across historical time periods for the same firm (the last 3 years forexample),

Future Performance - Using historical figures and certain mathematical and statisticaltechniques, including present and future values, This extrapolation method is the main

source of errors in financial analysis as past statistics can be poor predictors of future

prospects.

Comparative Performance - Comparison between similar firms.We will undergo

HORIZOMTAL ANALYSIS FOR BALANCE SHEET

% ANALYSIS of FIXED ASSETS % ANALYSIS of CURRENT ASSETS % ANALYSIS of TOTAL LIABILITY % ANALYSIS of EQUITY


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HORIZOMTAL ANALYSIS FOR P&L ACCOUNT

% ANALYSIS of INCOME % ANALYSIS of EXPENDITURE % ANALYSIS of TAX,INTEREST,DEPRECIATION

HORIZONTAL ANALYSIS FOR BALANCE SHEET

3.1.1 HORIZONTAL ANALYSIS of FIXED ASSETS & INVESTMENT

From the graph it is clear that the Investments have decreased over 2007-2008 and2008-2009 by an average rate of( -16.8 %).

Howevercapital work in progress have given a major contribution to the assets withan average increase in 19 %

3.1.2 HORIZONTAL ANALYSIS of CURRENT ASSETS


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From the graph its clear that the current assets have increased at an average rate of 24% Inventories have increased at an average rate of 17% Sundry Debtors have increased at an average rate of 34% Cash and bank balance have decreased at an average rate of 32% Loans & advances initially had increased significantly by 65 % and than went

down by 1.6%

3.1.3 HORIZONTAL ANALYSIS of TOTAL LIABILITIES

Total Liabilities have increased at an average rate of24.5% Secured loan first increased by 94% and than decreased -84 %by in next year

Unsecured loan increased first year by 352% and 78% than by next year Total Debt increased first year by 337 % and than 73 %by next year

3.1.4 HORIZONTAL ANALYSIS of EQUITY

The Equity Share increased in 2008 by 16 %


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HORIZONTAL ANALYSIS of P&L ACCOUNT

3.1.5 HORIZONTAL ANALYSIS of INCOME

Sales turnover have increased at an average rate 17% Excise duty have decreased at an average rate 18% Net sales have increased at an average rate 20% Other income increased at an average rate 27 % Stock Adjustment firstly decreased by -234 % and than increased by 174 % next

year

Total Income increased at an average rate 22%3.1.6 HORIZONTAL ANALYSIS of EXPENDITURE

Raw Material Increased by 20% Power and fuel cost decreased by 13 % and than increased by 22 % Employee cost increased by 23 % Miscellaneous expense firstly decreased 30% by and than increased 542 %by


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3.1.7 HORIZONTAL ANALYSIS of TAX,Depreciation,Interest

Deferred Tax increased by increased by 148% and than decreased by -58% Interest increased at an average rate of 127 % Operating profit increased at an average rate of 9 % Depreciation increased at an average rate of 21 % Tax first decreased by 22 % and than increased by 7%

3.2 RATIO ANALAYSIS

We will take following factors into considerations while doing financial analysis through ratioanalysis

LIQUIDITY SOLVENCY STABILITY PROFITIBILITY

3.2.1 LIQUIDITY RATIO ANALYSIS

In business, economics or investment, market liquidity is an asset's ability to be sold withoutcausing a significant movement in the price and with minimum loss of value. Money, or cash on

hand, is the most liquid asset. An act of exchange of a less liquid asset with a more liquid asset

is called liquidation. Liquidity also refers both to a business's ability to meet its payment

obligations, in terms of possessing sufficient liquid assets, and to such assets themselves.

Liquidity is measured using following ratios

Current Ratio Quick Ratio Working Capital Cash Ratio Interval Measures


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Current ratio = current Asset / Current Liability

Liquidity (current ratio) had suddenly fallen down to 2.9 in 2008 compared to 3.01 of 2007.

However current ratio increased significantly in 2009 to around 3.14 showing a good sign of

liquidity and the ability to meet current obligations easily. Current ratio also satisfies the

minimum required ratio that is 2:1 for better safety precautions. The current assets is almost 3

times over current liabilities which is sufficient to meet the current liabilities in case of any risk

arises to repay the amount.

Company is having good Liquidity compared to previous year.

Quick Ratio = [ Current Asset ( Inventory + pre loans or advances) ]/ Current Liability

Absolute Liquidity (Quick ratio) have significantly increased in 2009.It is a good sign of

liquidity and the ability to meet current obligations easily. Quick ratio also satisfies the

minimum required ratio that is 1:1 for better safety precautions.

It shows that company has sufficient amount of immediate funds to deal with its total

liabilities in case of any emergency.



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Working Capital = Current AssetCurrent Liability

Working capital has increased with time showing that company has more current assets

(liquid) over current liability and the substantial amount have shown improvement with

companys progress.


Cash Ratio = Cash / Current liabilities

The cash in the company has gone down indicating that company is not in the proper state to

hold and make any hard core transactions immediately. More has to be done on credit basis.

Company is not susceptible to any immediate hard core cash tr ansactions.


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Interval Measures = [ Current Asset( Inventory + pre loans or advances) ]/ Average daily

operating expenses

Interval measures is the number of days the company can withstand without any profit on

the basis of absolute liquid present in the company.

Interval measures had suddenly increased significantly over years from 2007 to 2009. The

ability to sustain in case a company receives no cash is only of maximum 5 days.

Company is not susceptible to sustain for a long time in case company doesnt receives any

cash for continuously 5 days.

3.2.2 SOLVENCY RATIO ANALYSIS

In finance or business, solvency is the ability of an entity orindividual to pay debts. Solvency

can also be described as the ability of a corporation to meet its long-term fixed expenses and to

accomplish long-term expansion and growth. The better a company's solvency, the better it is

financially. When a company is insolvent, it means that it can no longer operate and is

undergoing bankruptcy.

Solvency is measured using following ratios

Debt Equity Ratio Long Term Debt Equity Ratio Interest Coverage Ratio


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Debt Equity Ratio = Debt/ Net Worth

Long Term Debt Equity Ratio = Long Term Debt/ Net Worth

The increase in debt Ratio shows that the amount invested by the creditors in the business is

more than the owners. The company is more dependent on the creditors than its own net worth.

Graph says clearly that where 96.2 % of business were financed by the owners in 2007,which

reduced to 86% in 2008 and finally to 79% in 2009.

Company is liable to pay more debts to creditors than before.

Hence Companys solvency has decreased than pr evious years.


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Interest Coverage = EBIDTA/ Interest

The decrease in interest coverage ratio shows that the earning before tax, interest and

depreciation is sufficient to what extent to meet the interest demand. Companys extent to pay

interest over earnings have decreased with time.

Hence Companys solvency has decreased than previous years..

3.2.3 TURN OVER RATIOS

Turnover is sometimes a synonym for revenue (or in certain contexts, sales), especiallyin European and South African usage. Services sold by a company during a particular

period of time.

Turnover is sometimes the name for a measure of how quickly inventory is sold. A highturnover means that goods are sold quickly, while a low turnover means that goods are

sold more slowly.

Turnover is measured using following ratios

Debtor Turnover Ratio Collective Ratio Stock Turnover Ratio Days of Inventory Holding


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DEBT TURNOVER & COLLECTIVE DAYS

Debtors Turnover = Net Sales/ Average debtors

Higher the debtor turnover ratio means better is the management of credit.The graphs shows that

management of credit has depraved indicating more credit risk.

Collective days = 365/ Debtors Turnover Ratio

However collective ratio shows the average number of days for which debtors remain outstanding

.Lesser is the number of outstanding days more less is the credit risk. But graph shows that outstanding

have increased , means more risk in credit management.

The company is having mor e credit r isk and hence is less stable.

Stock Turnover Ratio & Days of Inventory Holding


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Stock Turnover = Net Sales/ Average Inventory

Average inventory = ( Opening Stock +Closing Stock) /

Higher the Stock turnover ratio means better is the management sales and cost management.

More is the ratio more is the efficiency in production and selling. The graphs shows thatmanagement of sales has fallen down in 2009 leading to less sales over the average inventory

Days of Inventory Holding = 365/ Stock Turnover

HoweverInventory Holding ratio shows the average number of days for which inventory

remains outstanding in the company .

More is the number of outstanding days more is the delay of conversion to liquid and more less

is the efficiency. But inventory outstanding have increased in 2009 compared to 2008.

The company is having less eff ici ency in productions and sales.

3.2.4 PROFITIBALITY RATIO

Profit generally is the making of gain in business activity for the benefit of the owners of the

business. The word comes from Latin meaning "to make progress", and is defined in two

different ways, one for economics and one for accounting.

Solvency is measured using following ratios

Gross Profit Ratio Net Profit ratio Operating Profit ratio Return on Asset Return on Equity Earning Per Share


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Operating Profit = ( SalesCOGSOperating Expenses)/ sales

Gross profit increases consistently from 2007 to 2009 showing that company is having more

operating income over the same sales value.

Gross Profit = ( salesCOGS )/ sales

Gross profit increases consistently fro 2007 to 2009 showing that company is having more

trading income over the same sales value.


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Net Profit = Profit After Tax/Sales

Net profit decreases consistently from 2007 to 2009 showing that company is having less

income over the same sales value. Since the tax and differed tax have increased in 2009

leading to less net profit to previous year.

Hence prof itabil i ty of the company has degraded compared to previous year.

Return On Asset = Profit after Tax/ Total Asset

Return on Asset has consistently degraded from 2007 to 2009 showing that company is

having less income over the same sales value of assets.

Hence profi tabil i ty of the company has degraded compared to previous year.


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Return On Equity = Profit after Tax/ Total Equity

Return on Equity has consistently degraded from 2007 to 2009 showing that company is

having less income over the same value of equity.

Hence profi tabil ity of the company has degraded compared to previous year.

ERANING PER SHARE

EPS = Profit After Tax/Number of share Outstanding

PER( Price Earning Ratio) = Market Value per share/ EPS

EPS per share is more indicating that Price Earning ratio is reduced thus indicating decrease in

the profitability of the company.


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4. CONCLUSION

Though overall liquidity condition of company have improved but solvency

ratio has gone down in 2009.The credit risk has become a major issue. The

companys efficiency upon sale and production have depraved and company

seems to be less stable in replaying the debts and having more productivity over

cost.

The profitability of company has also degraded.

So as a whole we come to the conclusion that companys financial status is not

that good in 2009 as it was suppose to be in 2007.


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APPENIDIX-1

CIPLA: BALANCE SHEET

Year Mar 09(12) Mar 08(12) Mar 07(12)

(Rs in Crs)

SOURCES OF FUNDS :

Share Capital 155.46 155.46 155.46

Reserves Total 4,195.29 3,600.36 3,080.81

Equity Share Warrants 0 0 0

Equity Application Money 0 0 0

Total Shareholders Funds 4,350.75 3,755.82 3,236.27

Secured Loans 2.79 14.09 7.25

Unsecured Loans 937.45 526.36 116.31

Total Debt 940.24 540.45 123.56

Total Liabilities 5,290.99 4,296.27 3,359.83

APPLICATION OF FUNDS :

Gross Block 2,693.29 2,201.79 1,799.71

Less : Accumulated Depreciation 700.8 540.43 411.64

Less: Impairment of Assets 0 0 0

Net Block 1,992.49 1,661.36 1,388.07

Lease Adjustment 0 0 0

Capital Work in Progress 366.32 233.12 73.19

Investments 81.32 94.75 117.8

Current Assets, Loans & Advances

Inventories 1,398.32 1,120.49 978.6

Sundry Debtors 1,837.15 1,393.91 1,028.78

Cash and Bank 53 79.28 131.49

Loans and Advances 1,131.10 1,150.30 695.81Total Current Assets 4,419.57 3,743.98 2,834.68

Less : Current Liabilities and Provisions

Current Liabilities 1,012.85 870.98 528.13

Provisions 391.71 416.81 413.13

Total Current Liabilities 1,404.56 1,287.79 941.26

Net Current Assets 3,015.01 2,456.19 1,893.42

Deferred Tax Assets 0 0 0

Deferred Tax Liability 164.15 149.15 112.65

Net Deferred Tax -164.15 -149.15 -112.65

Total Assets 5,290.99 4,296.27 3,359.83


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APPENDIX-2

CIPLA: P&L ACCOUNT

Year Mar 09(12) Mar 08(12) Mar 07(12)

INCOME :

Sales Turnover 5,021.64 4,088.56 3,533.17

Excise Duty 61.04 90.66 94.93

Net Sales 4,960.60 3,997.90 3,438.24

Other Income 366.17 340.31 230.55

Stock Adjustments 113.55 41.37 -30.73

Total Income 5,440.32 4,379.58 3,638.06

EXPENDITURE :

Raw Materials 2,460.95 2,084.08 1,694.85

Power & Fuel Cost 91.71 74.69 86.71

Employee Cost 242.86 186.47 162.05

Other Manufacturing Expenses 364.34 304.85 299.87

Selling and Administration Expenses 856.45 707.78 401.08

Miscellaneous Expenses 318.68 49.58 70.99

Less: Pre-operative Expenses Capitalized 0 0 0

Total Expenditure 4,334.99 3,407.45 2,715.55

Operating Profit 1,105.33 972.13 922.51

Interest 52.23 17.51 11.16

Gross Profit 1,053.10 954.62 911.35

Depreciation 151.79 116.26 103.37

Profit Before Tax 901.31 838.36 807.98

Tax 101 94 121.75

Fringe Benefit tax 8.5 6.43 3.5

Deferred Tax 15 36.5 14.7

Reported Net Profit 776.81 701.43 668.03

Extraordinary Items -3.09 0.94 0.66

Adjusted Net Profit 779.9 700.49 667.37

Adjst. below Net Profit 0 0 0

P & L Balance brought forward 509.9 390.35 304.2

Statutory Appropriations 0 0 0

Appropriations 331.88 581.88 581.88

P & L Balance carried down 954.83 509.9 390.35

Dividend 155.46 155.46 155.46

Preference Dividend 0 0 0

Equity Dividend % 100 100 100

Earnings Per Share-Unit Curr 9.65 8.68 8.25

Earnings Per Share(Adj)-Unit Curr 9.65 8.68 8.25

Book Value-Unit Curr 55.86 48.2 41.52


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APPENDIX 3

CIPLA: HORIZONTAL % ANALYSIS BALANCE SHEET

Year

% change in

2008-2009

% change in

2007-2008

(Rs in Crs)SOURCES OF FUNDS :

Share Capital 0 0

Reserves Total 16.52418092 16.86407146

Equity Share Warrants 0 0

Equity Application Money 0 0

Total Shareholders Funds 15.84021598 16.05397572

Secured Loans -80.1987225 94.34482759Unsecured Loans 78.10053955 352.5492219

Total Debt 73.97354057 337.3988346

Total Liabilities 23.15310723 27.87164827

APPLICATION OF FUNDS :

Gross Block 22.32274649 22.34137722

Less : Accumulated Depreciation 29.67451844 31.28704693

Less:Impairment of Assets 0Net Block 19.93126114 19.68848833

Lease Adjustment 0 0

Capital Work in Progress 57.1379547 218.5134581

Investments -14.17414248 -19.56706282

Current Assets, Loans & Advances

Inventories 24.79540201 14.49928469

Sundry Debtors 31.7983227 35.4915531Cash and Bank -33.14833502 -39.70644155

Loans and Advances -1.669129792 65.31811845

Total Current Assets 18.04470109 32.07769484

Less : Current Liabilities and

Provisions

Current Liabilities 16.28854853 64.91772859

Provisions -6.021928457 0.890760777

Total Current Liabilities 9.067472181 36.81554512Net Current Assets 22.75149724 29.72240707

Miscellaneous Expenses not written 0 0

Deferred Tax Assets 0 0


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APPENDIX 4

CIPLA: HORIZONTAL % ANALYSIS of P&L ACCOUNT

Year% change in

2008-2009

% change in

2007-2008

INCOME :Sales Turnover 22.82172696 15.71931155

Excise Duty -32.67151996 -4.498051196

Net Sales 24.08014207 16.27751408

Other Income 7.598953895 47.60789417

Stock Adjustments 174.4742567 -234.6241458

Total Income 24.2201307 20.38229166

EXPENDITURE :

Raw Materials 18.08327895 22.96545417

Power & Fuel Cost 22.78752176 -13.86229962

Employee Cost 30.2407894 15.06942302

Other Manufacturing Expenses 19.51451534 1.660719645

Selling and Administration Expenses 21.00511458 76.46853496

Miscellaneous Expenses 542.7591771 -30.15917735

Less: Pre-operative Expenses

Capitalised 0 0

Total Expenditure 27.22094235 25.4791847

Operating Profit 13.70187115 5.378803482

Interest 198.2866933 56.89964158

Gross Profit 10.31614674 4.747901465

Depreciation 30.56081197 12.46976879

Profit Before Tax 7.508707477 3.759994059

Tax 7.446808511 -22.7926078

Fringe Benefit tax 32.19284603 83.71428571

Deferred Tax -58.90410959 148.2993197

Reported Net Profit 10.74661762 4.999775459

Extraordinary Items -428.7234043 42.42424242

Adjusted Net Profit 11.33635027 4.962764284

P & L Balance brought forward 30.62636096 28.32018409

Appropriations -42.96418506 0

P & L Balance carried down 87.25828594 30.62636096Earnings Per Share-Unit Curr 11.17511521 5.212121212

Earnings Per Share(Adj)-Unit Curr 11.17511521 5.212121212

Book Value-Unit Curr 15.89211618 16.08863198


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APPENDIX -5

RATIO ANALYSIS

Mar

09(12)

Mar

08(12)

Mar

07(12)

Equity Paid Up 155.46 155.46 155.46

Networth 4341.78 3746.85 3227.3

Capital Employed 5282.02 4287.3 3350.86

Gross Block 2684.32 2192.82 1790.74

Net Working Capital ( Incl. Def. Tax) 2850.86 2307.04 1780.77

Current Assets ( Incl. Def. Tax) 4419.57 3743.98 2834.68

Current Liabilities and Provisions ( Incl. Def.

Tax)1568.71 1436.94 1053.91

Total Assets/Liabilities (excl Reval & W.off) 6850.73 5724.24 4404.77

Gross Sales 5021.64 4088.56 3533.17

Net Sales 4960.6 3997.9 3438.24

Other Income 366.17 340.31 230.55

Cost of Production 3340.28 2792.33 2371.29

PBIDT 1105.33 972.13 922.51

PBDT 1053.1 954.62 911.35

PBIT953.54 855.87 819.14

PBT 901.31 838.36 807.98

PAT 776.81 701.43 668.03

Book Value (Unit Curr) 55.86 48.2 41.52

CEPS (annualised) (Unit Curr) 11.61 10.18 9.58

EPS (annualised) (Unit Curr) 9.65 8.68 8.25

Dividend (annualised%) 100 100 100

Payout (%) 20.72 23.03 24.23

Appendix-5 Contd..


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Key Ratios

Liquidirty ratio

Current Ratio 3.14 2.9 3.01

Quick Ratio 1.34 1.14 1.23

Cash Ratio 0.037 0.61 0.139

Interval Measure 5.17 4.49 3.17

Solvency Ratio

Debt Equity Ratio 0.216 0.143 0.038

Long term Debt Equity ratio 0.215 0.14 0.035

Interest Coverage 21.25 57.17 83.8

Turnover ratio

Debt Turnover ratio 5.27 7.4 27.9

Stock Turnover ratio 3.54 3.56 3.51

Collective days ratio 69 49 13

Profitability Ratio

Gross Profit ratio 4.71 4.18 3.77

Operation Profit ratio 4.48 4.11 3.72

Net Profit ratio 0.156 0.175 0.194

Return on Asset ratio 0.146 0.163 0.198

Return on Equity ratio 0.178 0.186 0.206


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Accounting Glossary

ACCOUNT- A fiscal and accounting entity with a self-balancing set of general ledgercodes in which cash and other financial resources, together with all related liabilities

and residual equities or balances, and changes therein, are recorded and segregated for

the purpose of carrying on specific activities or attaining certain objectives in

accordance with special regulations, restrictions, or limitations. For reporting purposes,

the state identifies certain accounts as major funds, and administratively combines allremaining accounts into roll-up funds. Refer to MAJOR FUND, and ROLL-UP FUND.

ACCOUNTS PAYABLE- Amounts owed to private persons or organizations for goodsand/or services received by the state. Accounts Payable does not include amounts due to

other agencies, funds, or other governments. Refer to DUE TO.

ACCOUNTS RECEIVABLE- Amounts due from private persons or organizations forgoods, and/or services furnished by the state. Accounts Receivable does not include

amounts due from other agencies, funds, or other governments. Refer to DUE FROM.

APPROPRIATION- A legislative authorization for an agency to make expenditures forspecific purposes from designated resources available or estimated to be available

during a specified time period. ASSETS- A probable future economic benefit obtained or controlled by a particular

entity as a result of past transactions or events. These economic resources can be

tangible or intangible.

BALANCE SHEET- A financial statement that discloses the assets, liabilities, andequities of an entity at a specified date in conformity with generally accepted accounting

principles (GAAP).

CREDI T CARD- A card entitling the holder to buy services or goods on credit. CURRENT ASSETS- Resources that are available, or can readily be made available,

to meet the cost of operations or to pay current liabilities.

CURRENT LIABI LI TIES- Those obligations which are payable within one year fromcurrent assets or current resources.

DEBIT CARD- A card that draws funds directly from a deposit account. DEBT- An obligation resulting from the borrowing of money or from the purchase of

goods and services. Debts of the state include bonds, accounts payable, and other

liabilities. Refer to BONDS PAYABLE, ACCOUNTS PAYABLE, LIABILITIES, LONG-

TERM OBLIGATIONS and GENERAL LONG-TERM OBLIGATIONS.

DEFICIT- (1) The excess of the liabilities and reserves of a fund over its assets. (2) Theexcess of expenditures over revenues during an accounting period or, in the case of

proprietary funds, the excess of expenses over revenues during an accounting period.

DEPRECIATION- The portion of the cost of a capital asset representing the expirationin the useful life of the capital asset attributable to wear and tear, deterioration, actionof the physical elements, inadequacy, and obsolescence which is charged off during a

particular period. In accounting for depreciation, the cost of a capital asset, less any

salvage value, is prorated over the estimated useful life of such an asset. Refer to

COMPOSITE METHOD and STRAIGHT-LINE METHOD.

DI RECT COSTS- Costs that include direct materials and labor. Refer to DIRECTEXPENSES.

DIRECT EXPENSES- Expenses which are charged directly as a part of the cost of aproduct or service, or of a department or operating unit, as distinguished from overhead

and other indirect costs which must be prorated among several products or services,

departments, or operating units.

F IXED ASSETS- Refer to CAPITAL ASSETS. FUND- For state purposes, a fund is referred to as an account. Refer to ACCOUNT.


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FUND BALANCE- In governmental funds, this is the difference between fund assetsand fund liabilities. Governmental fund balances should be segregated into reserved and

unreserved amounts. Refer to RESERVED FUND BALANCE and UNRESERVED FUND

BALANCE.

FUND CAPITAL ASSET- Capital assets recorded in proprietary and trust funds andused in the production of the goods or services provided or sold. Depreciation on fundcapital assets is charged as an expense of the fund.

FUND EQUITY- The difference between a fund's assets and liabilities. Ingovernmental funds, it is referred to as fund balance. In proprietary funds, it is referred

to as net assets. Refer to FUND BALANCE and NET ASSETS.

LIABILITIESProbable future sacrifices of economic benefits, arising from presentobligations of a particular entity to transfer assets or provide services to other entities in

the future as a result of past transactions or events. The term does not include

encumbrances.

LIQUIDATION- Payment of debt, cancellation of encumbrance, or conversion intocash.

NET ASSETS- The difference between assets and liabilities. Refer to FUND EQUITY. NET BOOK VALUE- Refer to BOOK VALUE. NET INCOME- A term used in accounting for proprietary funds to designate the excess

of total revenues and operating transfers in over total expenses and operating transfers

out for an accounting period.

RECEIVABLES- Amounts due from private persons, businesses, agencies, funds, orgovernmental units that are expected to be collected in the form of moneys, goods,

and/or services.

SHORT-TERM LI ABIL ITI ES- Short-term liabilities are legal obligations of the statethat arise upon the receipt of goods or services. In governmental fund type accounts,

they are payable from current financial resources. In proprietary fund type accounts,short-term liabilities are payable within one year.

TAXES- Compulsory charges levied by a government for the purpose of financingservices performed for the common benefit.

TAXES RECEIVABLE- An asset account reflecting the uncollected portion of taxesthat have been levied.


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BIBLIOGRAPHY:

Ratio Analysis PPT (by Prof Ruchi Mehrotra, Alliance BusinessSchool)

Financial Accounting for Management ( N Ramachandran,RamKumar Kakani), 2

ndEdition,McGraw Hill

Financial Management( I M PANDEY), 9th Edition,Vikas PublishingHouse PVT LTD

www.cipla.com www.wikipedia.org

www.capitaline.com

cipla performance analysis

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