'Ratio Analysis\r'

'though in that respect argon numberless literatures available on the subject, the most appropriate studies progress to been reviewed. Dr. Promod Kumar print a bear in 1991 â€Å" digest of pecuniary dictation of Indian Industries” The disc everywhere cover the 17 privy field, 5 state own creation welkin and 1 central man empyrean companies. He studied psycho compendium of activities, legal opinion of make headwayableness, give way on seat of government investment, analysis of fiscal organise, analysis of contumacious assets and domesticateing dandy.In his interrogation he revealed mixed hassles of industries and suggested remedies for the problems. He besides suggested for the reformment of dineroability and techniques of greet adjudge. 1Ahindra Chakrabati publish an articles â€Å" doing of familiar vault of heaven enterprises a mooring nurture on plant foods” in â€Å"The Indian daybook of public enterprise” in the course of instruction 1988-89. He make analysis of using up and production of fertilizer by public sector; he in like manner make analysis of avail and loss recital. He gave suggestion to improve the boilersuit proceeding of public enterprise. In the class of 2002, Dr. Sugan C. Jainist has create verb anyy a book on â€Å" exploit appraisal elevator car exertion” In his think he has analyses the cognitive ope balancen of the travel indus guess and deported comparative degree in initialiseion of near national and international units. The ope balancenal strength and profi sheetility had been crushd using the mingled index approach. He do several suggestions from the beef up the pecuniary wiseness improving profi anovulatory drugility, workings jacket the doing of immovable assets. 3 Recently in the category 1998 a take up was made by S.J. parmar on â€Å" pecuniary Efficiency-Modern methods, similarlyls & Techniques” for the outcome from 1 998-89 to 1994-95. He had made an attempt to analyze pecuniary strength, fluidity, profi verificationility, live and arrant(a) sales cut rout outcelled and affectionate welf be cut by using various dimensions analysis, common size of it of it analysis and apprize added analysis. He made several suggestions for the progress of profi check-out procedureility of sedulousness. In his analysis, he indicates various reasons for high appeal, low lucrativeness, and ineffectual use of internal resources. Dr Sanjay Bhayani print a book in 2003, â€Å"Practical fiscal pedagogy analysis” The see covered 16 public contain cementum companies in clannish sector. He made find out of analysis of favourableness, working hood, seat of government building and activity of Indian cement effort. In his research he revealed various problems of cement industries and suggested remedies for the problems. He alike suggested for the improvement of advantageousness and t echniques of cost program line. labour Kumar,Kakani Biswatosh saha and V. N. Reddy has write research paper on Determinants of pecuniary surgery of Indian Corpo graze domain in the Post-Liberalization age: An beta Study. This paper attempts to admit an empirical governance of the widely held existing theories on the determinants of firm murder in the Indian context. The regard uses fiscal affirmation and great(p) food food market selective information of 566 large Indian firms over a sequence frame of octonary categorys divided into both sub- ends ( viz. 1992-96, and 1996-2000) to hear Indian firms fiscal dressance crossways various dimensions viz. , percentageholder look on, score make headwayability and its components, harvest and gamble of the seek firms. It reveals that even on the same(p) selective information, the determinants of market-based performance measures and story-based performance measures differ referable to influence of ‘ ence inte Market Conditions. We found that size, selling expenditure, and international diversification had a positive sex act with a firms market valuation.Apart from these firm attri thates that reflect either operating parameters of firms or ‘strategic choice of firm managers, we overly found that a firms ownership com federal agency, particularly the direct of lavdour ownership by Domestic financial Institutions and Dispersed cosmos Shareholders, and the leverage of the firm were weighty particularors affecting its financial performance. The different implications of the findings for various stakeholders of a firm are in any case discussed. 6Dutts S. K has written an article on â€Å"Indian tea industry an appraisal” which was published in counsel restrainer in the socio- economical class of March 1992.He natesvass the profi oral contraceptive pillility, fluidity and financial susceptibility by using various dimensions. 7 Objectives of the school ing · To evaluate the financial performance of the selected units of drug associationceutic industry · To compare the financial results of the drug companyceutic industry as Dr Reddys Laboratories Ltd and lupine Ltd · To enquire the sufficiency or the bill information desired from the financial statement in consonance with laid plenty accounting statements by the launch of Chartered Accountants of India (ICAI). · To debate the egress of the verbalise companies To saltation suggestion for best financial backing method and economical utilization of rigid assets methodology OF THE STUDY: witnesser of the selective information: â€Å"Comparative pecuniary statement outline & base in nonpublic sector pharmaceutical Companies in India” has been made by using info from financial statements of only phoebe bird major players in cement industry, they are †Dr Reddys Laboratories Ltd. (Dr. RDL), Ambuja lupin Ltd. (LL), the period of the vi g boodlete was ten courses from 2001 to 2010. The information was collected from cpitaline database and from the stratumbook reports of the respective companies.Hypothesis for the con: For the present com maculation tested following null hypotheses are tested- · Ho1: The Dr Reddys Laboratories Ltd. did non manoeuvre over better profitability than lupine Ltd. · Ho2: The Dr Reddys Laboratories Ltd. did not come across better liquidity than lupine Ltd. · Ho3: The Dr Reddys Laboratories Ltd. did not get better turnover than lupinee Ltd. Scope of the find out: the study Comparative pecuniary statement psychoanalysis & Innovation in head-to-head sector pharmaceutical Companies in India.The study and then includes financial building performance, working smashing performance, and positiveness performance except excludes non-financial areas such as production, marketing, military unit and R& D from its purview. Techniques apply for analysis: The da ta need been analyzed with the help of proportion analysis, effort analysis, common size analysis-T test to test the semblance among different dimensions of both selected companies. Limitation of the study: In order to urge uniformity in data, grades have been readjusted and the data have been recast as on thirty-first March of each course.The take to taken from the annual reports have been rounded off to two decimals of rupees in crores. The data available in financial statements have been translated in to a pre-designed structure format so that a meaningful variation could be made through with(predicate) inter-firm and intra firm comparisons. The format in which the data have been classified is selected later on(prenominal) defend careful attachment of the ope proportionn pharmaceutic Companies. Nevertheless, the limitations do in no way act as a bank check in drawing effectual and meaningful inferences from the study digest of the data: for knowing Comparativ e monetary statement abbreviation & Innovation in close sector Pharmaceutical Companies in India the commonly used symmetry: fixed revenue profit, profits profit, bring around on capital assiduous, turn back on boodle price and Earning per share, new dimension, Debtors stop number (Days), Creditors speeding (Days), Debt right balance and elicit reportage dimension, account turnover dimension, Debtors overthrow balance and agree Assets disorder symmetry abbreviation and comment: Table-1 Profitability proportions of Dr Reddys Laboratories Ltd & lupine Ltd. Gross profit lowest profit ROC RON EPS Year Dr. RDL lupine Ltd. Dr.RDL lupine Ltd. Dr. RD lupine Ltd. Dr. RD lupin Ltd. Dr. RD lupine Ltd. 2001 22. 16 9. 25 19 6. 65 31. 5 23. 02 29. 23 31. 13 45. 32 201. 66 2002 33. 1 12. 49 32. 39 7. 54 42. 06 16. 64 45. 71 22. 07 59. 56 17. 42 2003 30. 78 12. 2 28. 34 7. 3 26. 44 16. 05 24. 02 20. 3 50. 6 17. 44 2004 21. 55 19. 07 20. 4 12. 48 15. 61 27 . 1 14. 7 36. 14 36. 37 23. 76 2005 7. 9 9. 77 9. 19 6. 96 2. 19 12. 75 2. 77 17. 79 7. 85 20. 09 2006 16. 27 16. 29 14. 12 11 9. 24 20. 86 8. 57 31. 93 26. 82 44. 61 2007 37. 06 16. 27 32. 39 10. 53 35. 94 19. 39 35. 47 27. 89 69. 45 36. 75 2008 21. 63 19. 27 18. 47 13. 53 12. 01 23. 85 10. 35 32. 02 27. 2 52. 31 2009 21. 77 18. 28 17. 8 14. 17 13. 55 22. 29 11. 14 30. 97 32. 25 48. 22 2010 28. 77 21. 56 23. 52 17. 7 17. 79 25. 6 15. 14 33. 23 48. 25 70. 7 summarise 240. 99 154. 45 215. 62 107. 86 206. 33 207. 55 197. 1 283. 47 404. 09 532. 96 bonny 24. 099 15. 445 21. 562 10. 786 20. 633 20. 755 19. 71 28. 347 40. 409 53. 296 mo 7. 9 9. 25 9. 19 6. 65 2. 19 12. 75 2. 77 17. 79 7. 85 17. 42 sludge 37. 06 21. 56 32. 39 17. 7 42. 06 27. 1 45. 71 36. 14 69. 45 201. 66 Sources: information has been taken from annual reports The ever functioning(a) profit ratio of Dr. RDL was 22. 16 % in 2001 which went graduate in to 7. 9% in 2005 yet it rose wine up to 28. 7% in remnant str atums of the study period. The ratio ranged amidst 7. 9% in 2005 to 37. 06% in 2007. The ratio showed exceedingly fluctuated slue during the study period. The just hoggish profit ratio was 24. 09% indicated. The piggish profit ratio of lupin Ltd. showed passing fluctuated disregard during the study period with an just of 15. 45%. The ratio was the highest in the form of 2010 and truly lowest 2001. T-test T-Test: careful protect of gross profit ratio is 2. 86 Tabulated prize at 5% authoritative regard as=1. 73 d. e. f. = 18 at 5% of take of meaning t cal ; t tab hence meditation is rejected. The force out profit ratio of Dr.RDL was 19% in the socio-economic class of 2001 and add-on to 32. 39% in the yr of 2002. The ratio went ware to 28. 34% in course of 2003. The ratio was very low of 9. 19% during the yr of 2005 and very highest during the social class of 2002. The add up ratio was 21. 56% with fluctuated trim back. The net profit ratio of lupin Ltd. wa s 6. 65 % in 2001 which went round in to 6. 96% in 2005 exactly it rose up to 17. 7% in stick out divisions of the study period. The ratio ranged surrounded by 6. 65% in 2001 to 17. 7% in 2010. The ratio showed highly fluctuated slip during the study period. The reasonable gross profit ratio was 10. 78% indicated. T-test metrical grade of dough profit ratio is 4. 01 Tabulated treasure at 5% crucial order= 1. 73 d. e. f. = 18 at 5% of take of signifi rout outce t cal ; t tab and then opening is rejected. The getting even on capital employed ratio was 31. 5% in 2001 which went wipe out to 9. 24 % in the stratum of 2006 and excessively went slewward(a) to 13. 55% and 17. 79 during the course of instructions of 2009 and 2010 respectively. The ratio ranged between 2. 19% in course of instruction of 2005to 42. 06% in the socio-economic class of 2002. The ratio showed refine ward trend with an norm of 20. 63%. The return on capital employed of lupin Ltd was show practically fluctuated trend during the category study period.The bonnie ratio was 20. 76 in the lupine Ltd which showed fluctuated trend during the study period. The ratio was 23. 02% in course of study of 2001 and 20. 86% in course of 2006 and 25. 6% during the sustain family of study period. The ratio has kaput(p) piling repayable to fall in tidy sum of sales. The sales have done for(p) blast since expenditure rise took place in market. T-test cipher cheer of return on capital employed ratio is 0. 028 Tabulated evaluate at 5% evidentiary range= 1. 73 d. e. f. = 18 at 5% of take aim of signifi batchce t cal ; t tab because dead reckoning is accepted. The Return on net charge ratio of Dr. RDL was 29. 3% in 2001 which went down in to 8. 57% in 2006 unless it rose up to 15. 14% in ending geezerhood of the study period. The ratio ranged between 2. 77% in 2005 to 45. 71% in 2002. The ratio showed highly fluctuated trend during the study period. The median(a ) gross profit ratio was indicated19. 71%. The Return on net worth ratio of lupine Ltd. showed highly fluctuated trend during the study period with an bonnie of 28. 347%. The ratio ranged between 17. 79% in 2005 to 36. 14% in 2004. T-test metrical abide by of Return on net worth ratio is 1. 84 Tabulated prise at 5% world-shaking economic value= 1. 73 d. e. f. = 18 at 5% of train of meaning cal ; t tab and then hypothesis is rejected. Earnings per share of Dr. RDL were Rs. 45. 32 in the class of 2001 and Rs 59. 56 in the grade of 59. 56. The EPS went down to 50. 6 in the class of 2003 and Rs 36. 37 in the class 2004 and Rs. 7. 85 in the grade of 2005. The EPS rose to 69. 45 in the yr 2007and once once to a greater extent went down to 27. 62 in 2008. The EPS Rs. 48. 25 during the last course of instruction of study period. The just ESP was 40. 41 with downward trend during the study period. The EPS was 201. 66 in lupin Ltd. and went down to 20. 09 in the course of in struction of 2005 and reached down to 70. 7 during the last socio-economic class of study period.The EPS showed trim train of EPS due to less utilization of financial leverage. T-test figure value of Earnings per share is 0. 70 Tabulated value at 5% signifi terminatet value= 1. 73 d. e. f. = 18 at 5% of take aim of implication t cal ; t tab indeed hypothesis is accepted. Table-2 liquid ratio of Dr. RDL and lupine Ltd. catamenia ratio Debtors f number (Days) Creditors upper (Days) Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 1. 69 1. 82 48 47 76 27 2002 3. 09 1. 74 54 61 79 35 2003 4. 86 1. 58 60 62 82 36 2004 3. 73 1. 34 60 66 85 38 2005 2. 49 1. 1 60 56 90 34 2006 1. 5 1. 38 59 57 94 35 2007 2. 21 1. 68 66 63 cv 38 2008 3. 05 1. 53 85 69 109 42 2009 3. 15 1. 24 79 77 cx 45 2010 2. 44 1. 27 100 81 great hundred 52 supply 28. 56 14. 68 671 639 950 382 bonnie 2. 856 1. 468 63 62 92 37 Min 1. 69 1. 1 48 47 76 27 Max 4. 86 1. 82 100 81 120 52 Source s: information has been taken from annual reports In form 2001 Dr. RDL has 1. 69 as its rate of flow ratio and by and by that it endlessly increase from 3. 09 to 4. 86 in the class of 2002 and 2003 respectively. entirely in class 2004, 2005 & 2006 it too showed blackball changes solely it prevails from 2. 21 to 3. 05 in year 2007 and 2008 respectively.In the year 2009 and 2010 it shows once once once more minute fluctuated with an average of 2. 85. In year 2001 Lupin Ltd has 1. 82 as its flow rate ratio and after that it endlessly fall from 1. 74 to 1. 58 in the year of 2002 and 2003 respectively. exactly in year 2004, 2005 & 2006 it as well as showed negative changes only if it moves down from 1. 68 to 1. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows once once more brusque fluctuated with an average of 1. 46. T-test calculate value of current ratio is 4. 50 Tabulated value at 5% signifi toleratet value= 1. 73 d. e. f. = 18 at 5% of take aim of significance cal ; t tab thence hypothesis is rejected. In year 2001 Dr. RDL has 48 long time as its Debtors swiftness (Days) and after that it always increased from 54 (Days) to 60 in the year of 2002 and 2003 respectively. besides in year 2004, 2005 & 2006 it as well showed negative changes only it moves down from 66 age to 85 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again s take down fluctuations with an average of 63 eld. In year 2001 Lupin Ltd. has 47 old age as its Debtors Velocity (Days) and after that it perpetually increased from 61 (Days) to 62 in the year of 2002 and 2003 respectively. plainly in year 2004, 2005 & 2006 it besides showed negative changes but it moves up from 63 days to 69 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again weeny fluctuations with an average of 62 days. T-test reckon value of Debtors Velocity (Days) is 0. 3 Tabulated value at 5% signifi cant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL 76 days as its Creditors Velocity (Days) and after that it infinitely increased from 79 (Days) to 82 in the year of 2002 and 2003 respectively. and in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 105 days to 109 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 92 days. In year 2001 Lupin Ltd. 27 days as its Creditors Velocity (Days) and after that it incessantly increased from 35 (Days) to 36 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 38 days to 42 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 37 days.T-test Calculated value of Creditors Velocity (Days) is 10. 83 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. leverage balances of Dr. RDL & Lupin Ltd. Table-3 leverage symmetrys of Dr. RDL & Lupin Ltd. Debt faithfulness ratio concern reportage ratio Year Dr. RDL Lupin Ltd. Dr. RD Lupin Ltd. 2001 0. 56 1. 79 5. 05 2. 09 2002 0. 19 1. 88 34. 27 2. 55 2003 0. 01 1. 77 72. 27 2. 53 2004 0. 02 1. 24 72. 71 4. 89 2005 0. 08 0. 86 3. 82 4. 12 2006 0. 28 1. 18 10. 39 8. 6 2007 0. 19 1. 16 27. 29 8. 65 2008 0. 09 0. 83 40. 74 13. 99 2009 0. 11 0. 71 27. 62 2. 35 2010 0. 11 0. 47 68. 8 25. 97 Total 1. 64 11. 89 362. 96 85. 74 Average 0. 16 1. 19 36. 30 8. 57 Min 0. 01 0. 47 3. 82 2. 09 Max 0. 56 1. 88 72. 71 25. 97 Sources: Data has been taken from annual reports The Debt truth ratio of Dr. RDL was 0. 56 in 2001 which went down in to 0. 28 in 2006 but it went down to 0. 11 in last days of the study period. The ratio ranged between 0. 01 in 2003 to 0. 56 in 2001. T he ratio showed highly fluctuated trend during the study period. The average Debt fair-mindedness ratio was indicated 0. 16. In year 2001 Lupin Ltd. 1. 79 as its Debt comeliness ratio and after that it continuously trim from 1. 8 to 1. 77 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 1. 16 to 0. 83 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 19 days. T-test Calculated value of Debt equity ratio is 6. 28 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. vex insurance coverage ratio of Dr. RDL was 5. 05 in the year of 2001 and Rs 3. 82 in the year of 2006. The Interest coverage ratio went up to 72. 7 in the year of 2003 and 72. 71 in the year 2004 and 3. 82 in the year of 2005. The Interest coverage ratio rose to 27. 29 in the ye ar 2007and again went up to 40. 74in 2008. The Interest coverage ratio was 68. 8 during the last year of study period. The average Interest coverage ratio was 36. 30 with up(a) trend during the study period. In year 2001 Lupin Ltd. 2. 09 as its Debt equity ratio and after that it continuously change magnitude from 2. 55 to 2. 53 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 65 to 13. 99 in year 2007 and 2008 respectively.In the year 2009 and 2010 it shows again little fluctuations with an average of 8. 57. T-test Calculated value of Interest coverage ratio is 3. 13 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Table-4 derangement ratio of Dr. RDL and Lupin Ltd. Inventory Turnover symmetry Debtors Turnover ratio Total Assets Turnover proportionality Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 8. 65 11. 3 4. 76 5. 39 1. 03 1. 6 2002 9. 01 6. 61 4. 29 3. 06 0. 99 1. 32 2003 7. 44 7. 02 3. 64 2. 75 0. 92 1. 29 2004 6. 99 6. 74 3. 97 3. 89 0. 88 1. 7 2005 5. 79 5. 23 3. 78 5. 37 0. 85 1. 31 2006 5. 64 5. 95 4. 21 5. 69 0. 82 1. 28 2007 8. 69 5. 7 4. 94 4. 9 0. 75 1. 14 2008 6. 11 5. 08 3. 53 4. 7 0. 65 1. 09 2009 6. 16 4. 39 3. 66 4. 39 0. 64 0. 99 2010 5. 57 5. 13 3. 66 4. 51 0. 59 0. 94 Total 70. 05 63. 15 40. 44 44. 65 8. 12 12. 23 Average 7. 005 6. 315 4. 044 4. 465 0. 812 1. 223 Min 5. 57 4. 39 3. 53 2. 75 0. 59 0. 94 Max 9. 01 11. 3 4. 94 5. 69 1. 03 1. 6 Sources: Data has been taken from annual reports In year 2001 Dr. RDL 8. 65 as its Inventory Turnover proportion and after that it continuously decreased from 9. 01 to 7. 44 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 69 to 6. 11 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 7. 01. In year 2001 Lupin Ltd. 11. 3 as its Inventory Turnover ratio and after that it continuously increased from 6. 61 to 7. 02 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with ups and downs but it moves down from 5. 7 to 5. 08 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 6. 2. Calculated value of Inventory Turnover Ratio is 0. 72 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL. 4. 76 as its Debtors Turnover Ratio and after that it continuously decreased from 4. 29 to 3. 64 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with up movements but it moves down from 4. 94 to 3. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctua tions with an average of 4. 04.In year 2001 Lupin Ltd. 5. 39 as its Debtors Turnover Ratio and after that it continuously decreased from 3. 06 to 2. 75 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 9 to 4. 73 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 47. Calculated value of Debtors Turnover Ratio is 1. 21 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL. 1. 3 as its Total Assets Turnover Ratio and after that it continuously decreased from 0. 99 to 0. 92 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with downward movements but it moves down from 0. 75 to 0. 65 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuat ions with an average of 0. 81. In year 2001 Lupin Ltd. 1. 6 as its Total Assets Turnover Ratio and after that it continuously decreased from 1. 32 to 1. 29 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 1. 4 to 1. 09 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 22. Calculated value of Total Assets Turnover Ratio is 5. 34 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Summary findings and Conclusion The liquidity ratio of Lupin Ltd is highly threatening when compared with Dr. RDL. thence Lupin Ltd has to control the current liabilities or to increase the current assets so that they can cover all the current liabilities and be in safer position. thereof slightly fluctuations in sales in that situation can not affect the salarie d skill of the concern and thus maintain the credibility. The profitability ratio of Dr. RDL is better when it is compared with Lupin Ltd. It can be inferred from the result that Lupin Ltd can expand the business or can move further in newer directions as it is experiencing continuously result in the profitability. Lupin Ltd has to give a fairer scene to sicken cost in providing services and change magnitude the turnover so that sustained growth in profitability can be seenReturn on Net Capital engaged is the best test of general profitability and efficiency of the business firm. A company with high rate of return on capital employed would be in a position to capitalize; e. g. it can take advantage of all favorable market opportunities. The study shows that returns on capital employed in selected units in India had marked a fluctuated trend. The average was 17. 79 and 25. 6 percent in units in India respectively. This ratio was satisfactory. On the whole Dr. DRL had the hig hest return net on capital employed of As compared to the Lupin ltd.In the light of the above discussion it is suggested that Lupin ltd should chthoniantake cost control measure so that increase net profit before affair and taxes of the company might enhance the return on net capital employed. The solvency ratio also reveals the same track picture of an upper hand over Lupin ltd. This position depicts the financial soundness or good financial wellness of the DR. RDL. In this sector Lupin ltd. has to work hard for providing the financial health in terms of capital also. The turnover ratio of Lupin Ltd. is showing better position when compared to DR. RDL. This fact proves that the market size in Lupin Ltd. s far more better than the DR. RDL which in turn is gearing its growth in all the stream. Thus DR. RDL has to work for increase the market size and customer base so that it can achieve the trend of continuous growth. It can be inferred from the general financial analysis that Lupin Ltd ltd. has to rethink and device the strategies so that it can hold up towards positive way and deform the major players. Innovation though financial statement analysis can be seen though mergers and acquisitions and innovation of new products and schemes so that enterprise can be proud of universe major market players and typesetter newer and newer goals in the future.Cost accounting and cost audit should be made obligatory for this units and cost sheet on with annual funding statement should be prepared. The constitution of borrowed financing in selected Parma group of companies under study was not halal. So the companies should use widely the borrowed specie and should try to reduce the fixed charges burden stepwise by decrease borrowed funds and by enhancing the owner’s fund. For this subprogram companies should enlarge their equity share capital by issuing new equity shares. at that place has been too much of government to-do in indemnity and day-t o-day working and decisions.This shoots to delays in decision-making. This should be abolished. There is no incentive to the employees to perform better. Also there is no accountability because no one is held trusty for a failure in achieving targets for this kind of problem responsibility centre should be created. Improper be after and delays in implementation of projects lead to rise in their cost. So the right way readying should be made. To shape and optimize the use of hard currency balance proper techniques may be follow for planning and control of cash. The investments in inventories should be reduced and need to cut in a system of warm collection of debts.Selected pharma companies should try to use properly their operating assets and should try to minimize their non-operating expenses. To conclude the study, it can be said that the adoption of above measures pass on doubtlessly help the selected companies to improve their overall performance in the anxiety. With the efficient management of long term fund, selected companies can utilized their capacity optimally and accelerate economic growth of India by increasing the production of pharma product at reasonable cost. References. 1. Dr. Promod Kumar. â€Å"Analysis of financial statement of Indian Industries”Saujaniya Publication Ltd. 1992 2. Ahindra Chakrabati: â€Å"Performance of public sector enterprises a Case study on fertilizers” The Indian diary of public enterprise. 1988-89 3. Dr. Sugan C. Jain: â€Å"Performance appraisal automobile industry” Raj publication House, c2002. Jaipur, India 4. Parmar S. J. :â€Å" pecuniary Efficiency-Modern methods, tools & Techniques” Raj publication year of publication-2001 5. Dr Sanjay Bhayani: â€Å"Practical financial statement analysis” Raj publication,2003 6. Kakani, Ram Kumar, Saha, Biswatosh and Reddy, V. N.Nagi, Determinants of financial Performance of Indian Corporate sphere of influence in the Post- Liberalization Era: An Exploratory Study (November 2001). home(a) Stock Exchange of India Limited, NSE look for Initiative opus No. 5. 7. Dutts S. K has: â€Å"Indian tea industry an appraisal” Management accountant, March-1992 8. Brigham, Eugene. F and Joel F. Houston. â€Å"Fundamentals of monetary Management, Ninth Edition, Harcourt College Publishers, Fort Worth, 2001. 9. examine of dividing line Research, 2007 by Tarun K. Mukherjee, Prakash Deo. 10. Gitman, L. J. , â€Å"Principles of Management finance,” hot York: harpist & Row publishers,1982,p. 81 11. Paton & Paton. , â€Å"Corporation Accounts and statements”, New York: Macmillan Company, 1964, p. 362. 12. Kulshreshtha, N. K. , â€Å"Analysis of monetary statements of Indian Paper industry”, Aligarh: Navman Publishing House, 1972, p. 133. 13. Kulshreshtha, N. K. , Op. cit. , p. 134. 14. Hunt W. and Donaldson, G. , â€Å"Business Finance-text and cases”, Illinois: Richar d D. Irwin, 1965, Pp. 114-115. 15. Roy Chowdhar, A. B. , â€Å"Analysis and Interpretation of financial statements”, New Delhi bespeak Longmans, 1970, p. 24. 16. Bogen, J. J. , â€Å"Financial Handbook” New Delhi: The Ronald press, 1957,p. 53. 17. Weston, J. F. and Brigham, E. F. , â€Å"Management finance”, New York: Holt, Rinehart and Winton, Inc, . 1972, p. 88. 18. Hingorani, N. L. and Raman than, A. R. , â€Å"Management chronicle”, New Delhi: grand Turk Chand & Sons, 1977,p. 115. 19. Srivastava, R. M. , â€Å"Financial Management”, Meerut India: Pragati Prakasjan, 1979, p. 476. 20. Westiwick, C. A. , â€Å"Management: How to use ratios”, Epping Essex: cultivator Press Ltd. 1973,p. 5 21. Bogen, J. J. , Op. cit. Pp. 751-752. 22. Mohsin, M. , â€Å"Financial Planning and go”; NewDelhi: Vikas publish House Pvt. Ltd. , 1980, p. 174. 23.Kulshrestha, N. K. Op. cit. , 139. 24. HENDERSON, G. V. , Gurry, J. R. Trnnep Oh. , pil e E. Wirt. , â€Å"An Introduction to financial Management”, California: Addition-Wesley publishing company, 1984, p. 122. 25. Anthony, R. N. and Reece, J. S. , Op. , cit. , p. 198. 26. Information obtained through unstructured interviews from financial managers of the sample units though telephone. 27. yearbook reports of selected cement company from 2003-04 to 2008-09 28. Kennedy, R. D. and Mcmullen, S. Y. , â€Å"Financial statements: Forms analysis and edition”, Illnois: Richard D. Irwin inc. 1964, p. 404. Information about this phrase Peer-review ratings (from 2 reviews, where a score of 100 represents the ‘average’ level): Originality = 175. 00, importance = 162. 50, overall quality = 162. 50 This condition was published on 14th March, 2012 at 18:41:24 and has been viewed 2635 times. This work is licensed under a notional Commons Attribution 2. 5 License. The full credit entry for this article is: Kakkad, R. (2012). Comparative Financial state ment Analysis & Innovation in close sector Pharmaceutical Companies in India-An empirical Analysis. PHILICA. COM Article number 318.\r\nRatio Analysis\r\nThough there are innumerable literatures available on the subject, the most appropriate studies have been reviewed. Dr. Promod Kumar published a book in 1991 â€Å"Analysis of financial statement of Indian Industries” The study covered the 17 private sector, 5 state owned public sector and 1 central public sector companies. He studied analysis of activities, assessment of profitability, return on capital investment, analysis of financial structure, analysis of fixed assets and working capital.In his research he revealed various problems of industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control. 1Ahindra Chakrabati published an articles â€Å"Performance of public sector enterprises a Case study on fertilizers” in â€Å"The Indian journal of public enterprise” in the year 1988-89. He made analysis of consumption and production of fertilizer by public sector; he also made analysis of profit and loss statement. He gave suggestion to improve the overall performance of public enterprise. In the year of 2002, Dr. Sugan C. Jain has written a book on â€Å"Performance appraisal automobile industry” In his study he has analyses the performance of the automobile industry and presented comparative study of some national and international units. The operational efficiency and profitability had been analyzed using the composite index approach. He made several suggestions from the strengthening the financial soundness improving profitability, working capital the performance of fixed assets. 3 Recently in the year 1998 a study was made by S.J. parmar on â€Å"Financial Efficiency-Modern methods, tools & Techniques” for the period from 1998-89 to 1994-95. He had made an attempt to analyze financia l strength, liquidity, profitability, cost and sales trend and social welfare trend by using various ratios analysis, common size analysis and value added analysis. He made several suggestions for the improvement of profitability of industry. In his analysis, he indicates various reasons for higher cost, low profitability, and inefficient use of internal resources. Dr Sanjay Bhayani published a book in 2003, â€Å"Practical financial statement analysis” The study covered 16 public limited cement companies in private sector. He made study of analysis of profitability, working capital, capital structure and activity of Indian cement industry. In his research he revealed various problems of cement industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control. Ram Kumar,Kakani Biswatosh saha and V. N. Reddy has written research paper on Determinants of Financial Performance of Indian Corporate Sector in t he Post-Liberalization Era: An Exploratory Study. This paper attempts to provide an empirical validation of the widely held existing theories on the determinants of firm performance in the Indian context. The study uses financial statement and capital market data of 566 large Indian firms over a time frame of eight long time divided into two sub-periods (viz. 1992-96, and 1996-2000) to study Indian firms financial performance across various dimensions viz. , shareholder value, accounting profitability and its components, growth and risk of the sample firms. It reveals that even on the same data, the determinants of market-based performance measures and accounting-based performance measures differ due to influence of ‘Capital Market Conditions. We found that size, marketing expenditure, and international diversification had a positive relation with a firms market valuation.Apart from these firm attributes that reflect either operating parameters of firms or ‘strategic ch oice of firm managers, we also found that a firms ownership composition, particularly the level of equity ownership by Domestic Financial Institutions and Dispersed Public Shareholders, and the leverage of the firm were important factors affecting its financial performance. The different implications of the findings for various stakeholders of a firm are also discussed. 6Dutts S. K has written an article on â€Å"Indian tea industry an appraisal” which was published in Management accountant in the year of March 1992.He analyzed the profitability, liquidity and financial efficiency by using various ratios. 7 Objectives of the study · To evaluate the financial performance of the selected units of Pharmaceutical industry · To compare the financial results of the Pharmaceutical industry as Dr Reddys Laboratories Ltd and Lupin Ltd · To enquire the adequacy or the accounting information desired from the statement in conformity with laid down accounting statements by the in stitute of Chartered Accountants of India (ICAI). · To study the growth of the said companies To give suggestion for best financing method and efficient utilization of fixed assets METHODOLOGY OF THE STUDY: Source of the data: â€Å"Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India” has been made by using data from financial statements of all five major players in cement industry, they are †Dr Reddys Laboratories Ltd. (Dr. RDL), Ambuja Lupin Ltd. (LL), the period of the study was ten years from 2001 to 2010. The data was collected from cpitaline database and from the annual reports of the respective companies.Hypothesis for the study: For the present study tested following null hypotheses are tested- · Ho1: The Dr Reddys Laboratories Ltd. did not achieve better profitability than lupin Ltd. · Ho2: The Dr Reddys Laboratories Ltd. did not achieve better liquidity than lupin Ltd. · Ho3: The Dr Reddys L aboratories Ltd. did not achieve better turnover than lupin Ltd. Scope of the study: the study Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India.The study therefore includes financial structure performance, working capital performance, and Profitability performance but excludes non-financial areas such as production, marketing, personnel and R& D from its purview. Techniques used for analysis: The data have been analyzed with the help of ratio analysis, trend analysis, common size analysis-T test to test the relation among different ratios of two selected companies. Limitation of the study: In order to facilitate uniformity in data, years have been readjusted and the data have been recast as on 31st March of each year.The figure taken from the annual reports have been rounded off to two decimals of rupees in crores. The data available in financial statements have been translated in to a pre-designed structure format s o that a meaningful interpretation could be made through inter-firm and intra firm comparisons. The format in which the data have been classified is selected after careful consideration of the operation Pharmaceutical Companies. Nevertheless, the limitations do in no way act as a deterrent in drawing effective and meaningful inferences from the studyAnalysis of the data: for knowing Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India the commonly used ratio: fixed Gross profit, Net profit, Return on capital employed, Return on Net worth and Earning per share, Current ratio, Debtors Velocity (Days), Creditors Velocity (Days), Debt equity ratio and Interest coverage ratio, Inventory turnover Ratio, Debtors Turnover Ratio and Total Assets Turnover Ratio Analysis and interpretation: Table-1 Profitability Ratios of Dr Reddys Laboratories Ltd & Lupine Ltd. Gross profit Net profit ROC RON EPS Year Dr. RDL Lupin Ltd. Dr.RDL Lup in Ltd. Dr. RD Lupin Ltd. Dr. RD Lupin Ltd. Dr. RD Lupin Ltd. 2001 22. 16 9. 25 19 6. 65 31. 5 23. 02 29. 23 31. 13 45. 32 201. 66 2002 33. 1 12. 49 32. 39 7. 54 42. 06 16. 64 45. 71 22. 07 59. 56 17. 42 2003 30. 78 12. 2 28. 34 7. 3 26. 44 16. 05 24. 02 20. 3 50. 6 17. 44 2004 21. 55 19. 07 20. 4 12. 48 15. 61 27. 1 14. 7 36. 14 36. 37 23. 76 2005 7. 9 9. 77 9. 19 6. 96 2. 19 12. 75 2. 77 17. 79 7. 85 20. 09 2006 16. 27 16. 29 14. 12 11 9. 24 20. 86 8. 57 31. 93 26. 82 44. 61 2007 37. 06 16. 27 32. 39 10. 53 35. 94 19. 39 35. 47 27. 89 69. 45 36. 75 2008 21. 63 19. 27 18. 47 13. 53 12. 01 23. 85 10. 35 32. 02 27. 2 52. 31 2009 21. 77 18. 28 17. 8 14. 17 13. 55 22. 29 11. 14 30. 97 32. 25 48. 22 2010 28. 77 21. 56 23. 52 17. 7 17. 79 25. 6 15. 14 33. 23 48. 25 70. 7 Total 240. 99 154. 45 215. 62 107. 86 206. 33 207. 55 197. 1 283. 47 404. 09 532. 96 Average 24. 099 15. 445 21. 562 10. 786 20. 633 20. 755 19. 71 28. 347 40. 409 53. 296 Min 7. 9 9. 25 9. 19 6. 65 2. 19 12. 75 2. 77 17 . 79 7. 85 17. 42 Max 37. 06 21. 56 32. 39 17. 7 42. 06 27. 1 45. 71 36. 14 69. 45 201. 66 Sources: Data has been taken from annual reports The gross profit ratio of Dr. RDL was 22. 16 % in 2001 which went down in to 7. 9% in 2005 but it rose up to 28. 7% in last years of the study period. The ratio ranged between 7. 9% in 2005 to 37. 06% in 2007. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was 24. 09% indicated. The gross profit ratio of Lupin Ltd. showed highly fluctuated trend during the study period with an average of 15. 45%. The ratio was the highest in the year of 2010 and very lowest 2001. T-test T-Test: Calculated value of gross profit ratio is 2. 86 Tabulated value at 5% significant value=1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. The Net profit ratio of Dr.RDL was 19% in the year of 2001 and increased to 32. 39% in the year of 2002. The ratio went down to 28. 34% in ye ar of 2003. The ratio was very low of 9. 19% during the year of 2005 and very highest during the year of 2002. The average ratio was 21. 56% with fluctuated trend. The Net profit ratio of Lupin Ltd. was 6. 65 % in 2001 which went down in to 6. 96% in 2005 but it rose up to 17. 7% in last years of the study period. The ratio ranged between 6. 65% in 2001 to 17. 7% in 2010. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was 10. 78% indicated. T-testCalculated value of net profit ratio is 4. 01 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. The return on capital employed ratio was 31. 5% in 2001 which went down to 9. 24 % in the year of 2006 and also went down to 13. 55% and 17. 79 during the years of 2009 and 2010 respectively. The ratio ranged between 2. 19% in year of 2005to 42. 06% in the year of 2002. The ratio showed down ward trend with an av erage of 20. 63%. The return on capital employed of Lupin Ltd was showing much fluctuated trend during the year study period.The average ratio was 20. 76 in the Lupin Ltd which showed fluctuated trend during the study period. The ratio was 23. 02% in year of 2001 and 20. 86% in year of 2006 and 25. 6% during the last year of study period. The ratio has gone down due to decreased in volume of sales. The sales have gone down since price rise took place in market. T-test Calculated value of return on capital employed ratio is 0. 028 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. The Return on net worth ratio of Dr. RDL was 29. 3% in 2001 which went down in to 8. 57% in 2006 but it rose up to 15. 14% in last years of the study period. The ratio ranged between 2. 77% in 2005 to 45. 71% in 2002. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was indica ted19. 71%. The Return on net worth ratio of Lupin Ltd. showed highly fluctuated trend during the study period with an average of 28. 347%. The ratio ranged between 17. 79% in 2005 to 36. 14% in 2004. T-test Calculated value of Return on net worth ratio is 1. 84 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance cal ; t tab Hence hypothesis is rejected. Earnings per share of Dr. RDL were Rs. 45. 32 in the year of 2001 and Rs 59. 56 in the year of 59. 56. The EPS went down to 50. 6 in the year of 2003 and Rs 36. 37 in the year 2004 and Rs. 7. 85 in the year of 2005. The EPS rose to 69. 45 in the year 2007and again went down to 27. 62 in 2008. The EPS Rs. 48. 25 during the last year of study period. The average ESP was 40. 41 with downward trend during the study period. The EPS was 201. 66 in Lupin Ltd. and went down to 20. 09 in the year of 2005 and reached down to 70. 7 during the last year of study period.The EPS showed lower level of EPS du e to less utilization of financial leverage. T-test Calculated value of Earnings per share is 0. 70 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. Table-2 Liquidity ratio of Dr. RDL and Lupin Ltd. Current ratio Debtors Velocity (Days) Creditors Velocity (Days) Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 1. 69 1. 82 48 47 76 27 2002 3. 09 1. 74 54 61 79 35 2003 4. 86 1. 58 60 62 82 36 2004 3. 73 1. 34 60 66 85 38 2005 2. 49 1. 1 60 56 90 34 2006 1. 5 1. 38 59 57 94 35 2007 2. 21 1. 68 66 63 105 38 2008 3. 05 1. 53 85 69 109 42 2009 3. 15 1. 24 79 77 110 45 2010 2. 44 1. 27 100 81 120 52 Total 28. 56 14. 68 671 639 950 382 Average 2. 856 1. 468 63 62 92 37 Min 1. 69 1. 1 48 47 76 27 Max 4. 86 1. 82 100 81 120 52 Sources: Data has been taken from annual reports In year 2001 Dr. RDL has 1. 69 as its current ratio and after that it continuously increased from 3. 09 to 4. 86 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves from 2. 21 to 3. 05 in year 2007 and 2008 respectively.In the year 2009 and 2010 it shows again little fluctuated with an average of 2. 85. In year 2001 Lupin Ltd has 1. 82 as its current ratio and after that it continuously decreased from 1. 74 to 1. 58 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 1. 68 to 1. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuated with an average of 1. 46. T-test Calculated value of current ratio is 4. 50 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance cal ; t tab Hence hypothesis is rejected. In year 2001 Dr. RDL has 48 days as its Debtors Velocity (Days) and after that it continuously increased from 54 (Days) to 60 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 66 days to 85 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 63 days. In year 2001 Lupin Ltd. has 47 days as its Debtors Velocity (Days) and after that it continuously increased from 61 (Days) to 62 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negative changes but it moves up from 63 days to 69 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 62 days. T-test Calculated value of Debtors Velocity (Days) is 0. 3 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL 76 days as its Creditors Velocity (Days) and after that it continuously increased from 79 (Days) to 82 in the year of 2002 and 2003 respectively.But in ye ar 2004, 2005 & 2006 it also showed negative changes but it moves down from 105 days to 109 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 92 days. In year 2001 Lupin Ltd. 27 days as its Creditors Velocity (Days) and after that it continuously increased from 35 (Days) to 36 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 38 days to 42 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 37 days.T-test Calculated value of Creditors Velocity (Days) is 10. 83 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Leverage Ratios of Dr. RDL & Lupin Ltd. Table-3 Leverage Ratios of Dr. RDL & Lupin Ltd. Debt equity ratio Interest coverage ratio Year Dr. RDL Lupin Ltd . Dr. RD Lupin Ltd. 2001 0. 56 1. 79 5. 05 2. 09 2002 0. 19 1. 88 34. 27 2. 55 2003 0. 01 1. 77 72. 27 2. 53 2004 0. 02 1. 24 72. 71 4. 89 2005 0. 08 0. 86 3. 82 4. 12 2006 0. 28 1. 18 10. 39 8. 6 2007 0. 19 1. 16 27. 29 8. 65 2008 0. 09 0. 83 40. 74 13. 99 2009 0. 11 0. 71 27. 62 2. 35 2010 0. 11 0. 47 68. 8 25. 97 Total 1. 64 11. 89 362. 96 85. 74 Average 0. 16 1. 19 36. 30 8. 57 Min 0. 01 0. 47 3. 82 2. 09 Max 0. 56 1. 88 72. 71 25. 97 Sources: Data has been taken from annual reports The Debt equity ratio of Dr. RDL was 0. 56 in 2001 which went down in to 0. 28 in 2006 but it went down to 0. 11 in last years of the study period. The ratio ranged between 0. 01 in 2003 to 0. 56 in 2001. The ratio showed highly fluctuated trend during the study period. The average Debt equity ratio was indicated 0. 16. In year 2001 Lupin Ltd. 1. 79 as its Debt equity ratio and after that it continuously decreased from 1. 8 to 1. 77 days in the year of 2002 and 2003 respectively. But in year 2004, 20 05 & 2006 it also showed positives changes but it moves down from 1. 16 to 0. 83 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 19 days. T-test Calculated value of Debt equity ratio is 6. 28 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Interest coverage ratio of Dr. RDL was 5. 05 in the year of 2001 and Rs 3. 82 in the year of 2006. The Interest coverage ratio went up to 72. 7 in the year of 2003 and 72. 71 in the year 2004 and 3. 82 in the year of 2005. The Interest coverage ratio rose to 27. 29 in the year 2007and again went up to 40. 74in 2008. The Interest coverage ratio was 68. 8 during the last year of study period. The average Interest coverage ratio was 36. 30 with upward trend during the study period. In year 2001 Lupin Ltd. 2. 09 as its Debt equity ratio and after that it continuously decreased from 2. 55 to 2. 53 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 65 to 13. 99 in year 2007 and 2008 respectively.In the year 2009 and 2010 it shows again little fluctuations with an average of 8. 57. T-test Calculated value of Interest coverage ratio is 3. 13 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Table-4 Turnover ratio of Dr. RDL and Lupin Ltd. Inventory Turnover Ratio Debtors Turnover Ratio Total Assets Turnover Ratio Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 8. 65 11. 3 4. 76 5. 39 1. 03 1. 6 2002 9. 01 6. 61 4. 29 3. 06 0. 99 1. 32 2003 7. 44 7. 02 3. 64 2. 75 0. 92 1. 29 2004 6. 99 6. 74 3. 97 3. 89 0. 88 1. 7 2005 5. 79 5. 23 3. 78 5. 37 0. 85 1. 31 2006 5. 64 5. 95 4. 21 5. 69 0. 82 1. 28 2007 8. 69 5. 7 4. 94 4. 9 0. 75 1. 14 2008 6. 11 5. 08 3. 53 4. 7 0. 65 1. 09 2009 6. 16 4 . 39 3. 66 4. 39 0. 64 0. 99 2010 5. 57 5. 13 3. 66 4. 51 0. 59 0. 94 Total 70. 05 63. 15 40. 44 44. 65 8. 12 12. 23 Average 7. 005 6. 315 4. 044 4. 465 0. 812 1. 223 Min 5. 57 4. 39 3. 53 2. 75 0. 59 0. 94 Max 9. 01 11. 3 4. 94 5. 69 1. 03 1. 6 Sources: Data has been taken from annual reports In year 2001 Dr. RDL 8. 65 as its Inventory Turnover Ratio and after that it continuously decreased from 9. 01 to 7. 44 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 69 to 6. 11 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 7. 01. In year 2001 Lupin Ltd. 11. 3 as its Inventory Turnover Ratio and after that it continuously increased from 6. 61 to 7. 02 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with ups and downs but it moves down from 5. 7 to 5. 08 in year 2007 and 2008 respectivel y. In the year 2009 and 2010 it shows again little fluctuations with an average of 6. 2. Calculated value of Inventory Turnover Ratio is 0. 72 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL. 4. 76 as its Debtors Turnover Ratio and after that it continuously decreased from 4. 29 to 3. 64 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 94 to 3. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 04.In year 2001 Lupin Ltd. 5. 39 as its Debtors Turnover Ratio and after that it continuously decreased from 3. 06 to 2. 75 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 9 to 4. 73 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 47. Calculated value of Debtors Turnover Ratio is 1. 21 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL. 1. 3 as its Total Assets Turnover Ratio and after that it continuously decreased from 0. 99 to 0. 92 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with downward movements but it moves down from 0. 75 to 0. 65 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 0. 81. In year 2001 Lupin Ltd. 1. 6 as its Total Assets Turnover Ratio and after that it continuously decreased from 1. 32 to 1. 29 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 1. 4 to 1. 09 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 22. Calculated value of Total Assets Turnover Ratio is 5. 34 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Summary findings and Conclusion The liquidity ratio of Lupin Ltd is highly threatening when compared with Dr. RDL. Thus Lupin Ltd has to control the current liabilities or to increase the current assets so that they can cover all the current liabilities and be in safer position.Thus slightly fluctuations in sales in that situation can not affect the paying capacity of the concern and thus maintain the credibility. The profitability ratio of Dr. RDL is better when it is compared with Lupin Ltd. It can be inferred from the result that Lupin Ltd can expand the business or can move further in newer directions as it is experiencing continuously growth in the profitability. Lupin Ltd has to give a fairer thought to reduce cost in providing services and increasing the turnover so that sustained growth in profitability can be seenReturn on Net Capital Employed is the best test of overall profitability and efficiency of the business firm. A company with high rate of return on capital employed would be in a position to capitalize; e. g. it can take advantage of all favorable market opportunities. The study shows that returns on capital employed in selected units in India had marked a fluctuated trend. The average was 17. 79 and 25. 6 percent in units in India respectively. This ratio was satisfactory. On the whole Dr. DRL had the highest return net on capital employed of As compared to the Lupin ltd.In the light of the above discussion it is suggested that Lupin ltd should undertake cost control measure so that increase net profit before interest and taxes of the company might enhance the return on net capital employed. The solvency ratio also reveals the same track record of an upper hand over Lupin ltd. This position depicts the financial soundness or good financial health of the DR. RDL. In this sector Lupin ltd. has to work hard for providing the financial health in terms of capital also. The turnover ratio of Lupin Ltd. is showing better position when compared to DR. RDL. This fact proves that the market size in Lupin Ltd. s far more better than the DR. RDL which in turn is gearing its growth in all the stream. Thus DR. RDL has to work for increasing the market size and customer base so that it can achieve the trend of continuous growth. It can be inferred from the overall financial analysis that Lupin Ltd ltd. has to rethink and device the strategies so that it can lead towards positive way and become the major players. Innovation though financial statement analysis can be seen though mergers and acquisitions and launching of new products and schemes so that enterprise can be proud of being major market players and setter newer and newer goals in the future.Cost acc ounting and cost audit should be made mandatory for this units and cost sheet along with annual financing statement should be prepared. The policy of borrowed financing in selected Parma group of companies under study was not proper. So the companies should use widely the borrowed funds and should try to reduce the fixed charges burden gradually by decreasing borrowed funds and by enhancing the owner’s fund. For this purpose companies should enlarge their equity share capital by issuing new equity shares. There has been too much of government interference in policy and day-to-day working and decisions.This leads to delays in decision-making. This should be abolished. There is no incentive to the employees to perform better. Also there is no accountability because no one is held responsible for a failure in achieving targets for this kind of problem responsibility centre should be created. Improper planning and delays in implementation of projects lead to rise in their cost. S o properly planning should be made. To regularize and optimize the use of cash balance proper techniques may be adopted for planning and control of cash. The investments in inventories should be reduced and need to introduce a system of prompt collection of debts.Selected pharma companies should try to use properly their operating assets and should try to minimize their non-operating expenses. To conclude the study, it can be said that the adoption of above measures will doubtlessly help the selected companies to improve their overall performance in the management. With the efficient management of long term fund, selected companies can utilized their capacity optimally and accelerate economic growth of India by increasing the production of pharma product at reasonable cost. References. 1. Dr. Promod Kumar. â€Å"Analysis of financial statement of Indian Industries”Saujaniya Publication Ltd. 1992 2. Ahindra Chakrabati: â€Å"Performance of public sector enterprises a Case stu dy on fertilizers” The Indian journal of public enterprise. 1988-89 3. Dr. Sugan C. Jain: â€Å"Performance appraisal automobile industry” Raj Publishing House, c2002. Jaipur, India 4. Parmar S. J. :â€Å"Financial Efficiency-Modern methods, tools & Techniques” Raj publication year of publication-2001 5. Dr Sanjay Bhayani: â€Å"Practical financial statement analysis” Raj publication,2003 6. Kakani, Ram Kumar, Saha, Biswatosh and Reddy, V. N.Nagi, Determinants of Financial Performance of Indian Corporate Sector in the Post-Liberalization Era: An Exploratory Study (November 2001). National Stock Exchange of India Limited, NSE Research Initiative Paper No. 5. 7. Dutts S. K has: â€Å"Indian tea industry an appraisal” Management accountant, March-1992 8. Brigham, Eugene. F and Joel F. Houston. â€Å"Fundamentals of Financial Management, Ninth Edition, Harcourt College Publishers, Fort Worth, 2001. 9. Review of Business Research, 2007 by Tarun K. Mukherjee, Prakash Deo. 10. Gitman, L. J. , â€Å"Principles of Management finance,” New York: Harper & Row publishers,1982,p. 81 11. Paton & Paton. , â€Å"Corporation Accounts and statements”, New York: Macmillan Company, 1964, p. 362. 12. Kulshreshtha, N. K. , â€Å"Analysis of Financial statements of Indian Paper industry”, Aligarh: Navman Publishing House, 1972, p. 133. 13. Kulshreshtha, N. K. , Op. cit. , p. 134. 14. Hunt W. and Donaldson, G. , â€Å"Business Finance-text and cases”, Illinois: Richard D. Irwin, 1965, Pp. 114-115. 15. Roy Chowdhar, A. B. , â€Å"Analysis and Interpretation of Financial statements”, New Delhi Orient Longmans, 1970, p. 24. 16. Bogen, J. J. , â€Å"Financial Handbook” New Delhi: The Ronald press, 1957,p. 53. 17. Weston, J. F. and Brigham, E. F. , â€Å"Management finance”, New York: Holt, Rinehart and Winton, Inc, . 1972, p. 88. 18. Hingorani, N. L. and Raman than, A. R. , â€Å"Managemen t Accounting”, New Delhi: Sultan Chand & Sons, 1977,p. 115. 19. Srivastava, R. M. , â€Å"Financial Management”, Meerut India: Pragati Prakasjan, 1979, p. 476. 20. Westiwick, C. A. , â€Å"Management: How to use ratios”, Epping Essex: Grower Press Ltd. 1973,p. 5 21. Bogen, J. J. , Op. cit. Pp. 751-752. 22. Mohsin, M. , â€Å"Financial Planning and Control”; NewDelhi: Vikas publishing House Pvt. Ltd. , 1980, p. 174. 23.Kulshrestha, N. K. Op. cit. , 139. 24. HENDERSON, G. V. , Gurry, J. R. Trnnep Oh. , James E. Wirt. , â€Å"An Introduction to financial Management”, California: Addition-Wesley publishing company, 1984, p. 122. 25. Anthony, R. N. and Reece, J. S. , Op. , cit. , p. 198. 26. Information obtained through unstructured interviews from financial managers of the sample units though telephone. 27. Annual reports of selected cement company from 2003-04 to 2008-09 28. Kennedy, R. D. and Mcmullen, S. Y. , â€Å"Financial statements: Forms a nalysis and interpretation”, Illnois: Richard D. Irwin inc. 1964, p. 404. Information about this Article Peer-review ratings (from 2 reviews, where a score of 100 represents the ‘average’ level): Originality = 175. 00, importance = 162. 50, overall quality = 162. 50 This Article was published on 14th March, 2012 at 18:41:24 and has been viewed 2635 times. This work is licensed under a Creative Commons Attribution 2. 5 License. The full citation for this Article is: Kakkad, R. (2012). Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India-An empirical Analysis. PHILICA. COM Article number 318.\r\n'