Cipla ltd.

Mar '18 Mar '17 Mar '16

Profitability Ratios:
𝒈𝒓𝒐𝒔𝒔 𝒑𝒓𝒐𝒇𝒊𝒕 9.87 7.87 12.51
Gross Profit Margin(%) = 𝒏𝒆𝒕 𝒔𝒂𝒍𝒆𝒔
*100

𝒏𝒆𝒕 𝒑𝒓𝒐𝒇𝒊𝒕 9.3 6.99 9.86

Net Profit Margin(%) = *100
𝒏𝒆𝒕 𝒔𝒔𝒂𝒍𝒆
𝒐𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝒆𝒙𝒑.+𝑪𝑶𝑮𝑺 18.57 16.92 17.98
Operating Profit Margin(%) =
𝒏𝒆𝒕 𝒔𝒂𝒍𝒆𝒔

Liquidity Ratios:
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔 2.31 2.02 0.99
Current Ratio =
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

𝒄𝒂𝒔𝒉+𝒄𝒂𝒔𝒉 𝒆𝒒𝒖𝒊𝒗𝒂𝒍𝒆𝒏𝒕𝒔 1.54 1.33 1.24

Cash position Ratio =
𝒍𝒊𝒒𝒖𝒊𝒅 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

Turnover Ratios:
𝒄𝒓𝒆𝒅𝒊𝒕 𝒔𝒂𝒍𝒆𝒔 5.37 5.95 6.33
Debtors Turnover Ratio (Times) =
𝑨𝒗𝒈.𝒅𝒆𝒃𝒕𝒐𝒓𝒔
𝟑𝟔𝟓 68days 61days 58days
Average collection period(days) =
𝒅𝒆𝒃𝒕𝒐𝒓𝒔 𝒕𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝒓𝒂𝒕𝒊𝒐

𝑪𝑶𝑮𝑺 3.76 4.2 3.62

Inventory Turnover Ratio (Times) =
𝑨𝒗𝒈.𝒔𝒕𝒐𝒄𝒌

𝒏𝒆𝒕 𝒔𝒂𝒍𝒆𝒔 2.19 2.42 2.71

Fixed Assets Turnover Ratio =
𝒇𝒊𝒙𝒆𝒅 𝒂𝒔𝒔𝒆𝒕𝒔−𝒂𝒄𝒄𝒖𝒎𝒖𝒂𝒍𝒕𝒆𝒅 𝒅𝒆𝒑.

Composite Ratios:
𝒍𝒐𝒏𝒈 𝒕𝒆𝒓𝒎 𝒅𝒆𝒃𝒕𝒔 0.29 0.33 0.45
Debt Equity Ratio =
𝒔𝒉𝒂𝒓𝒆 𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔𝒇𝒖𝒏𝒅
𝒔𝒆𝒄𝒖𝒓𝒆𝒅 𝒍𝒐𝒂𝒏+𝒖𝒏𝒔𝒆𝒄𝒖𝒓𝒆𝒅 𝒍𝒐𝒂𝒏+𝒑𝒓𝒆𝒇𝒆𝒓𝒏𝒄𝒆 𝒔𝒉𝒂𝒓𝒆𝒔 27.87 16.97 13.01
capital gearing Ratio =
𝒆𝒒𝒖𝒊𝒕𝒚 𝒔𝒉𝒂𝒓𝒆𝒔

𝒆𝒂𝒓𝒏𝒊𝒏𝒈 𝒂𝒇𝒕𝒆𝒓 𝒕𝒂𝒙−𝒑𝒓𝒆𝒇.𝒔𝒉𝒂𝒓𝒆 𝒅𝒊𝒗𝒊𝒅𝒆𝒏𝒕 9.91 8.02 11.8

Return On Equity capital(%) = *100
𝒆𝒒𝒖𝒊𝒕𝒚 𝒔𝒉𝒂𝒓𝒆 𝒄𝒂𝒑𝒊𝒕𝒂𝒍

𝒆𝒂𝒓𝒏𝒊𝒏𝒈 𝒃𝒆𝒇𝒐𝒓𝒆 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒂𝒏𝒅 𝒕𝒆𝒙 10.15 8.29 11.57

Return On Capital Employed(%) = *100
𝒄𝒂𝒑𝒊𝒕𝒂𝒍 𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅

𝒓𝒆𝒕𝒂𝒊𝒏𝒆𝒅 𝒆𝒂𝒓𝒏𝒊𝒏𝒈 87.36 81.43 87.04

Earning Retention Ratio =
𝒏𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
Interpretation

Profitability Ratios:

1. Gross Profit Margin ratio:

 There are high overheads it should be reduce
 Higher values indicate that more cents are earned per dollar of revenue which is
favourable because more profit will be available to cover non-production cost.
2. Net profit margin ratio:
 Percentage of revenue remaining after all operating expense interest taxes
and preferred stock dividends (but not common stock dividends) have been
deducted from a company’s total revenue has increased high in the year 2018.
3. Operating profit margin ratio:
 There is a increase in operating profit ratio in 2018(18.57)

Liquidity Ratios:

4. Current ratio:
 The current ratio of Cipla Ltd is above standard norm of 2:1for the year 2017
and 2018.
 The current ratio of Cipla Ltd is showing a increasing trend
5. Cash position ratio:
 The cash position ratio is continuously increasing.
 The Cipla ltd cash position are good in 2018.

Turnover Ratios:

6. Debtors turnover ratio:

 It is showing constant decrease from year to year.
 Credit period is very liberal
7. Inventory turnover ratio:
 It is an activity ratio measuring the number of times per period.
 The company doesn’t have retained earnings to reinvest it showing constant
fluctuation from year to year.
 It has to really work hard to survive in the market.
8. Fixed asset turnover ratio:
 The asset turnover ratio is maintain the trend
 This shows that the company has used its assets more effectively in order to
generate its revenue.
Composite ratios:

9. Debt equity ratio:

 The debt equity ratio of Cipla ltd is 0.49 , 0.33 ,and 0.29 for the years
2016,2017 and 2018.
10. Capital Gearing ratio:
 It is showing constant increase from year to year.
 In year 2018 rapid increase in capital gearing ratio.
11. Return on equity capital:
 Profitability of company has degraded compare to previous year.
 The company is having less income over the value of equity.
12. Return on capital employed:
 Capital employed is defined as total assets less current liabilities.
 The ratio shows the efficiency and profitability of a company’s capital
investment.
13. Earning retain ratio:
 The earning retain ratio of Cipla lid is 87.04, 81.43 and 87.36 for the years
2016, 2017 and 2018.
 The ratio that measures the amount of earnings retained after dividends have
been paid out to the shareholders.
Cedila healthcare ltd.

Mar '18 Mar '17 Mar '16

Profitability Ratios:
𝒈𝒓𝒐𝒔𝒔 𝒑𝒓𝒐𝒇𝒊𝒕 19.60 18.04 23.17
Gross Profit Margin(%) = *100
𝒏𝒆𝒕 𝒔𝒂𝒍𝒆𝒔
𝒏𝒆𝒕 𝒑𝒓𝒐𝒇𝒊𝒕 14.87 15.54 20.1
Net Profit Margin(%) = *100
𝒏𝒆𝒕 𝒔𝒔𝒂𝒍𝒆
𝒐𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝒆𝒙𝒑.+𝑪𝑶𝑮𝑺 24.11 21.94 26.21
Operating Profit Margin(%) =
𝒏𝒆𝒕 𝒔𝒂𝒍𝒆𝒔

Liquidity Ratios:
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔 1.38 1.17 1.08
Current Ratio =
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

𝒄𝒂𝒔𝒉+𝒄𝒂𝒔𝒉 𝒆𝒒𝒖𝒊𝒗𝒂𝒍𝒆𝒏𝒕𝒔 1.49 1.52 1.37

Cash position Ratio =
𝒍𝒊𝒒𝒖𝒊𝒅 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

Turnover Ratios:
𝒄𝒓𝒆𝒅𝒊𝒕 𝒔𝒂𝒍𝒆𝒔 4.35 4.76 5.77
Debtors Turnover Ratio (Times) =
𝑨𝒗𝒈.𝒅𝒆𝒃𝒕𝒐𝒓𝒔
𝟑𝟔𝟓 84days 77days 63days
Average collection period(days) =
𝒅𝒆𝒃𝒕𝒐𝒓𝒔 𝒕𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝒓𝒂𝒕𝒊𝒐

𝑪𝑶𝑮𝑺 5 5.31 7.19

Inventory Turnover Ratio (Times) =
𝑨𝒗𝒈.𝒔𝒕𝒐𝒄𝒌

𝒏𝒆𝒕 𝒔𝒂𝒍𝒆𝒔 2.02 1.9 2.35

Fixed Assets Turnover Ratio =
𝒇𝒊𝒙𝒆𝒅 𝒂𝒔𝒔𝒆𝒕𝒔−𝒂𝒄𝒄𝒖𝒎𝒖𝒂𝒍𝒕𝒆𝒅 𝒅𝒆𝒑.

Composite Ratios:
𝒍𝒐𝒏𝒈 𝒕𝒆𝒓𝒎 𝒅𝒆𝒃𝒕𝒔 0.58 0.71 0.37
Debt Equity Ratio =
𝒔𝒉𝒂𝒓𝒆 𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔𝒇𝒖𝒏𝒅
𝒔𝒆𝒄𝒖𝒓𝒆𝒅 𝒍𝒐𝒂𝒏+𝒖𝒏𝒔𝒆𝒄𝒖𝒓𝒆𝒅 𝒍𝒐𝒂𝒏+𝒑𝒓𝒆𝒇𝒆𝒓𝒏𝒄𝒆 𝒔𝒉𝒂𝒓𝒆𝒔 32.85 49.97 49.93
capital gearing Ratio =
𝒆𝒒𝒖𝒊𝒕𝒚 𝒔𝒉𝒂𝒓𝒆𝒔

𝒆𝒂𝒓𝒏𝒊𝒏𝒈 𝒂𝒇𝒕𝒆𝒓 𝒕𝒂𝒙−𝒑𝒓𝒆𝒇.𝒔𝒉𝒂𝒓𝒆 𝒅𝒊𝒗𝒊𝒅𝒆𝒏𝒕 20.3 21.37 34.46

Return On Equity capital(%) = *100
𝒆𝒒𝒖𝒊𝒕𝒚 𝒔𝒉𝒂𝒓𝒆 𝒄𝒂𝒑𝒊𝒕𝒂𝒍

𝒆𝒂𝒓𝒏𝒊𝒏𝒈 𝒃𝒆𝒇𝒐𝒓𝒆 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒂𝒏𝒅 𝒕𝒆𝒙 17.7 15.58 30.02

Return On Capital Employed(%) = *100
𝒄𝒂𝒑𝒊𝒕𝒂𝒍 𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅

𝒓𝒆𝒕𝒂𝒊𝒏𝒆𝒅 𝒆𝒂𝒓𝒏𝒊𝒏𝒈 99.95 76.56 67.37

Earning Retention Ratio =
𝒏𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
Profitability Ratios:

1) Gross Profit Margin ratio:

 There are high overheads it should be reduce
 Higher values indicate that more cents are earned per dollar of revenue which is
favourable because more profit will be available to cover non-production cost.
2) Net profit margin ratio:
 Percentage of revenue remaining after all operating expense interest taxes
and preferred stock dividends (but not common stock dividends) have been
deducted from a company’s total revenue has decreased in the year 2018.
3) Operating profit margin ratio:
 There is a increase in operating profit ratio in 2018(24.11)

Liquidity Ratios:

4) Current ratio:
 The current ratio of Cedila Ltd is not as per standard norm of 1:1for all the
year
 The current ratio of Cedila Ltd is showing a increasing trend
5) Cash position ratio:
 The cash position ratio is not stable.
 The Cedila ltd cash position are good in 2018.

Turnover Ratios:

6) Debtors turnover ratio:

 It is showing constant decrease from year to year.
 Credit period is very liberal
7) Inventory turnover ratio:
 It is an activity ratio measuring the number of times per period.
 The company doesn’t have retained earnings to reinvest it showing constant
reduce from year to year.
 It has to really work hard to survive in the market.
8) Fixed asset turnover ratio:
 The asset turnover ratio is maintain the trend
 This shows that the company has used its assets more effectively in order to
generate its revenue.
Composite ratios:

9) Debt equity ratio:

 The debt equity ratio of Cedila ltd is 0.37 , 0.71 ,and 0.58 for the years
2016,2017 and 2018.
10) Capital Gearing ratio:
 It is showing constant reduction from year to year.
 In year 2018 rapid decrease in capital gearing ratio.
11) Return on equity capital:
 Profitability of company has degraded compare to previous year.
 The company is having less income over the value of equity.
12) Return on capital employed:
 Capital employed is defined as total assets less current liabilities.
 The ratio shows the efficiency and profitability of a company’s capital
investment.
13) Earning retain ratio:
 The earning retain ratio of Cedila lid is 67.37, 76.58 and 99.95 for the years
2016, 2017 and 2018.
 There is the rapid increase in year 2018.
 The ratio that measures the amount of earnings retained after dividends have
been paid out to the shareholders.