5) (A) Debtors Turnover Ratio=Sales/Debtors 1998-99 1999-2000 2000-01 2001-02 Sales 3410 4483 4526 5282 Debtors 460

591 516 669 Ratio (Times) 7.41 7.59 8.77 7.90

2002-03 9351 1368 6.84

INDICATION: The ratio shows the number of days taken to collect the dues of credit sales. It means that the number of times debtor turnover each year. Generally, the higher the value of debtors turnover, the more efficient is the management of credit. The ratio is computed by dividing credit sales by debtors.

10.00 8.00 TIMES 6.00 4.00 2.00 0.00 1998-99 7.41

Debtors turnover ratio

7.59 8.77 7.90 6.84

19992000

2000-01 YEARS

2001-02

2002-03

Debtors turnover ratio

INTERPRETATION:
Cadila Health Care ltd has ratio, which is increased up to year 200001 and then start to decrease. It is highest in year 2000-01, which is good sign for the company. This ratio higher is better. This ratio shows that in year 2000-01, 8.77 times the amount of credit sale is collected. Then it is decreased this is happening because of inefficient Or liberal credit policy.

5)(B) Debtors Collection Period=365/Debtors Turnover Ratio

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Days Debtors Turnover Ratio Ratio (Days)

1998-99 365 7.41 49

1999-2000 365 7.59 48

2000-01 2001-02 365 365 8.77 7.90 42 46

2002-03 365 6.84 53

INDICATION: The debtors turnover suggest the number of times the amount of credit sale is collected during the year, while debtors ratio indicates the number of the days during which the dues for credit sales are collected. The average number of days for which debtors remains outstanding is called the average collection period (A.C.P) and it is computed by dividing 365 days by debtors turnover ratio.

Debtors collection period

60 50

49

48

53 42 46

DAYS

40 30 20 10 0

1998-99 1999-2000 2000-01 YEARS

2001-02

2002-03

Debtors collection period

INTERPRETATION:
The average collection period measures of the quality of the debtors .The CADILA HEALTH CARE LIMITED has ratio of 49,48,42,46and 53 for the year 1998-99,199900,2000-01,2001-02 and 2002-03 respectively. Cadila has credit policy to grant credit of 7 days for local parties (debtors) and 21 days for out station parties (debtors). But the lowest ratio amongst last five years is 42 days, which is doubled of credit term policy. This collection period implies a very liberal and inefficient credit and collection.

1998-99 1999-2000 2000-01 2001-02 2002-03

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EARNING PER SHARE

6.75

6.28

10.97

11.27

12.2

INDICATION;
Earning per share is widely used ratio. It measures the profit available to the equity shareholders on a per share basis that is the amount that they can get on every share held. It is calculated by dividing the profits available to the shareholders by the numbers of outstanding shares.

14 12 10 8 6 4 2 0
1998-99

Earning Per Share

10.97 6.75 6.28 11.27 12.2

RS

1999-2000

2000-01

2001-02

2002-03

YEARS Earning Per Share

INTERPRETATION:
Ratio of the Cadila health care limited shows increasing trend over last five years. Apparently it seems good sign for the companys point of view. But this EPS has increase over the year is the effect of the increase in profit to the owners is actually is effect of the enlarge equity capital as a result of profit retention, though the number of ordinary shares outstanding still remains constant. And this earning per share dose not reveal how much paid to the owners as dividend, how much of the earning retained in the business. It only shows how much theoretically belongs to the shareholders.

1998-99 1999-002000-01 2001-02 2002-03 50

DIVIDEND PER SHARE

2.32

3.5

3.5

INDICATION:
Dividend per share is the dividend paid to the shareholders on a per share basis. in other words, dividen per share is the profi belonging to the shareholders divided by the numbers of ordinary shares outstanding. The DPS would be a better indicator than EPS as the former shows the exactly is received by the owners.

Dividend Per Share

4 3.5 3 2.5 2 1.5 1 0.5 0 3.5 3 2 2.32 3.5

RS

1998-99

1999-2000

2000-01

2001-02

2002-03

YEARS

Dividend Per Share

INTERPRETATION: Dividend per share of the company shows increase over last five years. This is good sign for the Equity investors but it does not show actual measure of profitability because DPS has increase retention due to without any change in the number of outstanding shares.

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