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© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 466
LIQUIDITY ANALYSIS OF PHARMACEUTICALS
COMPANIES
Hawa Singh
Assistant Professor, JB Knowledge Park, Faridabad
Bhanwar Singh
Senior Research Fellow, Institute of Management Studies & Research,
Maharshi Dayanand University, Rohtak, India;
Email: [email protected]
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 467
Abstract
Indian Pharmaceutical market is one of the highest growing industries in the world. This
research study is conducted to know and analysis the liquidity of NSE Pharma Index based
companies. A sample of three pharmaceuticals companies draw from NSE Pharma Index by
convenience sampling. The study is conducted from the financial year 2010-11 to 2014-15.
To measure the liquidity of selected companies’ ratio analysis is used and to test the
hypothesis one-ANOVA is employed with SPSS. Study confirms selected NSE Pharma index
based companies maintain the ideal liquidity.
Keyword: Pharma companies, Liquidity analysis, Liquidity Ratio.
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 468
1. Introduction
Indian Pharmaceutical market is one of the highest growing industries in the world.
According to ITPD1 the Indian pharmaceutical market is third and thirteenth largest in the
world in term of volume and value respectively. India pharmaceutical market enjoys a
paramount position in world pharma Industry. Presently India pharmaceutical industry is able
to supply pharma market independently (Singh, 2017).
Indian pharmaceutical market has achieved a CAGR of 17.24 in 2015 from the year 2005.
And according to Investment and Technology Promotion Division sector will be expand at
CAGR of 15.92% upto 2020.
2. Related studies
Jyoti Nair (2013) performed a study to know the solvency of indian pharma companies.
Researcher draw a sample of 23 pharma companies based on a turnover raging from Rs 500
Cr to 1000 Cr and she used Altman's Z score model to know the financial distress livel in
1 Investment and Technology Promotion Division, Ministry of External Affairs, Government of India
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 469
selected firms. Researcher analyzed the data with linear regression. Research study confirms
that financial ratios can be used to know and predict distress level in companies.
Vijayalakshmi and Srividya (2014) studied and analyzed the financial performance of
pharmaceutical industry from the financial year 2010 to 2014 through ratio analysis using
statistical techniques like descriptive statistics, co-efficient of variance, ANOVA, regression
analysis. There study is based on largest pharmaceutical companies which including in BSE
index. There study confirmed that profitability have significant relationship with profit ratio,
operating ratio. EPS, return on equity.
Another study conducted to analyze the liquidity of Sun pharma by Gaglani and Rao (2015).
They argue companies should keep Trade-off between adequate liquidity and profitability.
They used liquidity indicators like Current Ratio, Absolute Ratio for liquidity and Quick
Ratio. They used the statistical Altman's Z-Score Test for measure the liquidity. They found
that moderate correlation between liquidity and risk.
Further liquidity and profitability performance of pharmaceutical companies is analyzed by
Mohmad Mushtaq Khan and Syed Khaja Safiuddin (2016). They used the well known
standard ratio to analyze and compared the liquidity of selected companies. Their study
indicates that Cipla maintain higher current ratio than Dr. Reddys and they confirm that Cipla
has enough funds to meet the all short term needs of company. Their study also confirms
Cipla is generating more profit than its rival Dr Reddys. Study point out that liquidity and
profitability of companies is different.
3. Objective of study
To study the liquidity position of selected pharmaceuticals companies.
To compare and analysis the liquidity position of selected companies.
4. Hypothesis of the study
H0.1: Current ratio of selected pharmaceuticals companies is uniform.
H1.1: Current ratio of selected pharmaceuticals companies is not uniform.
H0.2: Quick ratio of selected pharmaceuticals companies is uniform.
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 470
H1.2: Quick ratio of selected pharmaceuticals companies is not uniform.
H0.3: Inventory turnover ratio of selected pharmaceuticals companies is uniform.
H1.3: Inventory turnover ratio of selected pharmaceuticals companies is not uniform.
H0.4: Dividend payout ratio of selected pharmaceutical is uniform.
H1.4: Dividend payout ratio of selected pharmaceutical is not uniform.
H0.5: Earnings retention ratio of selected pharmaceutical is uniform.
H1.5: Earnings retention ratio of selected pharmaceutical is not uniform.
H0.6: Cash earnings retention ratio of selected pharmaceutical is uniform.
H1.6: Cash earnings retention ratio of selected pharmaceutical is uniform.
5. Research methodology
5.1 Research Design
Present study based on descriptive research design that describe the liquidity position of
pharma companies.
5.2 Data source
To accomplishment of objective of research data set is required. Present study based on
purely on secondary data which collected from authentic sources. Secondary data is
collected form annual report of companies, moneycontrol.com and NSE website. Data for
study is arranged for the year 2010-11 to 2014-15.
5.3 Variables.
To measure the liquidity position of pharma companies following standard ratio is
employed:
I. Current Ratio
II. Quick Ratio
III. Inventory Turnover Ratio
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 471
IV. Dividend Payout Ratio
V. Earnings Retention Ratio
VI. Cash Earnings Retention Ratio
5.4 Sample Unit
NSE Pharma Index is based on ten pharmaceuticals companies
i. Aurobindo Pharma
ii. Cadila Health
iii. Cipla
iv. Divis Laboratories
v. Dr Reddys Laboratories
vi. GlaxoSmithKline Pharmaceuticals
vii. Glenmark Pharma
viii. Lupin
ix. Piraml
x. Sun Pharmaceutical Industries
To conduct the study, three index based companies is selected for sample unit.
i. Cipla
ii. Divis Laboratories
iii. Dr Reddys Laboratories
5.5 Statistical Tools
For data analysis and to test hypothesis one-way ANOVA is used through SPSS and Excel
statistical package
6. Data analysis and interpretation
Table 1: Current Ratio of selected pharma companies
Current Ratio
Pharma Companies
Cipla Divis Laboratories Dr Reddys Laboratories
2010-11 2.84 3.76 1.61
2011-12 4.07 3.18 1.63
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 472
2012-13 3.02 3.40 2.17
2013-14 2.11 3.68 2.22
2014-15 1.83 3.62 2.10
Table 1 show the current ratio of Cipla, Divis Laboratories and Dr Reddys Laboratories from
the financial year 2010-11 to 2014-15.
Table 1.1: ANOVA
Current Ratio
Sum of Squares Df Mean Square F Sig.
Between Groups 6.261 2 3.131 10.261 .003
Within Groups 3.661 12 0.305
Total 9.922 14
Table 1.1 shows the result of sample statistics (ANOVA). Value of sample statistics
F=10.261. Table show the p value 0.003 which is less than level of significance 0.05(α). P
value < α give enough statistical evidence to reject null hypothesis “H0.1: Current ratio of
selected pharmaceuticals companies is uniform” and accept alternate hypothesis “H1.1:
Current ratio of selected pharmaceuticals companies is not uniform”. Rejection of null
hypothesis indicates that one of the current ratio of selected pharma companies is not same
with others.
Table 1.2: Multiple Comparisons
Dependent Variable: Current Ratio
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD
Cipla
Divis Laboratories -.75400 .34934 .120 -1.6860 .1780
Dr Reddys
Laboratories .82800 .34934 .084 -.1040 1.7600
Divis Laboratories
Cipla .75400 .34934 .120 -.1780 1.6860
Dr Reddys
Laboratories 1.58200* .34934 .002 .6500 2.5140
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 473
Dr Reddys
Laboratories
Cipla -.82800 .34934 .084 -1.7600 .1040
Divis Laboratories -1.58200* .34934 .002 -2.5140 -.6500
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories .82800 .34934 .063 -.0462 1.7022
Divis Laboratories Dr Reddys
Laboratories 1.58200* .34934 .001 .7078 2.4562
*. The mean difference is significant at the 0.05 level.
a. Dunnett t-tests treat one group as a control, and compare all other groups
against it.
Table 2: Quick ratio of selected pharma companies
Quick Ratio
Pharma Companies
Cipla Divis Laboratories Dr Reddys Laboratories
2010-11 1.66 2.43 1.17
2011-12 2.52 2.00 1.25
2012-13 1.98 1.94 1.78
2013-14 1.07 2.25 1.86
2014-15 0.91 2.18 1.75
Table 2 shows the quick ratio of Cipla, Divis Laboratories and Dr Reddys Laboratories from
the financial year 2010-11 to 2014-15.
Table 2.1: ANOVA
Quick Ratio
Sum of Squares Df Mean Square F Sig.
Between Groups 1.075 2 .537 2.773 .102
Within Groups 2.326 12 .194
Total 3.401 14
Table 2.1 shows the result of sample statistics (ANOVA). Value of sample statistics F=2.773.
Table show the p value 0.102 which is more than level of significance 0.05(α). P value > α
give enough statistical evidence to accept null hypothesis “H0.2: Quick ratio of selected
pharmaceuticals companies is uniform.” and reject alternate hypothesis “H1.2: Quick ratio of
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 474
selected pharmaceuticals companies is not uniform”. Acceptance of null hypothesis indicates
that quick ratio of all selected pharma companies is identical.
Table 2.2: Multiple Comparisons
Dependent Variable: Quick Ratio
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD
Cipla
Divis Laboratories -.53200 .27842 .178 -1.2748 .2108
Dr Reddys
Laboratories .06600 .27842 .970 -.6768 .8088
Divis Laboratories
Cipla .53200 .27842 .178 -.2108 1.2748
Dr Reddys
Laboratories .59800 .27842 .122 -.1448 1.3408
Dr Reddys
Laboratories
Cipla -.06600 .27842 .970 -.8088 .6768
Divis Laboratories -.59800 .27842 .122 -1.3408 .1448
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories .06600 .27842 .960 -.6307 .7627
Divis Laboratories Dr Reddys
Laboratories .59800 .27842 .093 -.0987 1.2947
a. Dunnett t-tests treat one group as a control, and compare all other groups
against it.
Table 3: Inventory Turnover ratio of selected pharma companies
Inventory Turnover Ratio
Pharma Companies
Cipla Divis Laboratories Dr Reddys Laboratories
2010-11 3.36 2.42 5.08
2011-12 3.82 2.83 5.53
2012-13 3.50 2.64 6.11
2013-14 3.74 2.81 5.81
2014-15 3.08 2.77 6.01
Table 3 show Inventory Turnover Ratio of Cipla, Divis Laboratories and Dr Reddys
Laboratories from the financial year 2010-11 to 2014-15.
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 475
Table 3.1: ANOVA
Inventory Turnover Ratio
Sum of Squares df Mean Square F Sig.
Between Groups 24.348 2 12.174 125.832 .000
Within Groups 1.161 12 .097
Total 25.509 14
Table 3.1 shows the result of sample statistics (ANOVA). Value of sample statistics
F=125.832. Table show the p value 0.000 which is lower than level of significance 0.05(α). P
value < α give enough statistical evidence to reject null hypothesis “H0.3: Inventory turnover
ratio of selected pharmaceuticals companies is uniform.” and accept alternate hypothesis
“H1.3: Inventory turnover ratio of selected pharmaceuticals companies is not uniform”.
Rejection of null hypothesis indicates that one of the inventory turnover ratios of selected
pharma companies is different from others.
Table 3.2: Multiple Comparisons
Dependent Variable: Inventory Turnover Ratio
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD
Cipla
Divis Laboratories .80600* .19672 .004 .2812 1.3308
Dr Reddys
Laboratories -2.20800* .19672 .000 -2.7328 -1.6832
Divis Laboratories
Cipla -.80600* .19672 .004 -1.3308 -.2812
Dr Reddys
Laboratories -3.01400* .19672 .000 -3.5388 -2.4892
Dr Reddys
Laboratories
Cipla 2.20800* .19672 .000 1.6832 2.7328
Divis Laboratories 3.01400* .19672 .000 2.4892 3.5388
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories -2.20800* .19672 .000 -2.7003 -1.7157
Divis Laboratories Dr Reddys
Laboratories -3.01400* .19672 .000 -3.5063 -2.5217
*. The mean difference is significant at the 0.05 level.
© 2018 JETIR November 2018, Volume 5, Issue 11 www.jetir.org (ISSN-2349-5162)
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Table 3.2: Multiple Comparisons
Dependent Variable: Inventory Turnover Ratio
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD
Cipla
Divis Laboratories .80600* .19672 .004 .2812 1.3308
Dr Reddys
Laboratories -2.20800* .19672 .000 -2.7328 -1.6832
Divis Laboratories
Cipla -.80600* .19672 .004 -1.3308 -.2812
Dr Reddys
Laboratories -3.01400* .19672 .000 -3.5388 -2.4892
Dr Reddys
Laboratories
Cipla 2.20800* .19672 .000 1.6832 2.7328
Divis Laboratories 3.01400* .19672 .000 2.4892 3.5388
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories -2.20800* .19672 .000 -2.7003 -1.7157
Divis Laboratories Dr Reddys
Laboratories -3.01400* .19672 .000 -3.5063 -2.5217
a. Dunnett t-tests treat one group as a control, and compare all other groups
against it.
Table 4: Dividend payout ratio of selected pharma companies
Dividend Payout Ratio (NP) (%)
Pharma Companies
Cipla Divis Laboratories Dr Reddys Laboratories
2010-11 23.40 30.44 25.54
2011-12 14.28 31.60 20.13
2012-13 10.65 32.56 15.84
2013-14 11.56 33.53 20.29
2014-15 13.59 31.34 25.13
Table 4 shows the Dividend Payout Ratio of Cipla, Divis Laboratories and Dr Reddys
Laboratories from the financial year 2010-11 to 2014-15.
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Table 4.1: ANOVA
Dividend Payout Ratio (NP) (%)
Sum of Squares Df Mean Square F Sig.
Between Groups 149.187 2 74.594 3.297 .072
Within Groups 271.531 12 22.628
Total 420.718 14
Table 4.1 shows the result of sample statistics (ANOVA). Value of sample statistics F=3.297.
Table show the p value 0.72 which is greater than level of significance 0.05(α). P value > α
give enough statistical evidence to accept null hypothesis “H0.4: Dividend payout ratio of
selected pharmaceuticals companies is uniform.” and reject alternate hypothesis “H1.4:
Dividend payout ratio of selected pharmaceuticals companies is not uniform”. Acceptance of
null hypothesis indicates that dividend payout ratio of all selected pharma companies is same.
Table 4.2: Multiple Comparisons
Dependent Variable: Dividend Payout Ratio (NP) (%)
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD Cipla Divis Laboratories .00000 3.00849 1.000 -8.0263 8.0263
Dr Reddys
Laboratories -6.69000 3.00849 .107 -14.7163 1.3363
Divis Laboratories Cipla .00000 3.00849 1.000 -8.0263 8.0263
Dr Reddys
Laboratories -6.69000 3.00849 .107 -14.7163 1.3363
Dr Reddys
Laboratories
Cipla 6.69000 3.00849 .107 -1.3363 14.7163
Divis Laboratories 6.69000 3.00849 .107 -1.3363 14.7163
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories -6.69000 3.00849 .082 -14.2184 .8384
Divis Laboratories Dr Reddys
Laboratories -6.69000 3.00849 .082 -14.2184 .8384
a. Dunnett t-tests treat one group as a control, and compare all other groups
against it.
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JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 478
Table 5: Earning retention ratio of selected pharma companies
Earnings Retention Ratio (%)
Pharma Companies
Cipla Divis Laboratories Dr Reddys Laboratories
2010-11 76.60 69.56 74.46
2011-12 85.72 68.40 79.87
2012-13 89.35 67.44 84.16
2013-14 88.44 66.47 79.71
2014-15 86.41 68.66 74.87
Table 5 shows the Earning retention ratio of Cipla, Divis Laboratories and Dr Reddys
Laboratories from the financial year 2010-11 to 2014-15.
Table 5.1: ANOVA
Earnings Retention Ratio (%)
Sum of Squares df Mean Square F Sig.
Between Groups 751.576 2 375.788 25.946 .000
Within Groups 173.798 12 14.483
Total 925.374 14
Table 5.1 shows the result of sample statistics (ANOVA). Value of sample statistics
F=25.946. Table show the p value 0.000 which is lower than level of significance 0.05(α). P
value < α give enough statistical evidence to reject null hypothesis “H0.5: Earning retention
ratio of selected pharmaceuticals companies is uniform.” and accept alternate hypothesis
“H1.5: Earning retention ratio of selected pharmaceuticals companies is not uniform”.
Rejection of null hypothesis indicates that one of the earning retention ratios of all selected
pharma companies is different from others.
Table 5.2: Multiple Comparisons
Dependent Variable: Earnings Retention Ratio (%)
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
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JETIR1811968 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 479
Tukey HSD Cipla Divis Laboratories 17.19800* 2.40692 .000 10.7767 23.6193
Dr Reddys
Laboratories 6.69000* 2.40692 .041 .2687 13.1113
Divis Laboratories Cipla -17.19800* 2.40692 .000 -23.6193 -10.7767
Dr Reddys
Laboratories -10.50800* 2.40692 .002 -16.9293 -4.0867
Dr Reddys
Laboratories
Cipla -6.69000* 2.40692 .041 -13.1113 -.2687
Divis Laboratories 10.50800* 2.40692 .002 4.0867 16.9293
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories 6.69000* 2.40692 .030 .6670 12.7130
Divis Laboratories Dr Reddys
Laboratories -10.50800* 2.40692 .002 -16.5310 -4.4850
*. The mean difference is significant at the 0.05 level.
a. Dunnett t-tests treat one group as a control, and compare all other groups
against it.
Table 6: Cash Earnings retention ratio of selected pharma companies
Cash Earnings Retention Ratio (%)
Pharma Companies
Cipla Divis Laboratories Dr Reddys Laboratories
2010-11 81.40 72.88 80.80
2011-12 88.58 71.62 83.86
2012-13 91.13 71.08 86.77
2013-14 90.63 69.97 84.30
2014-15 90.06 73.00 83.01
Table 6 shows the Cash earnings retention ratio of Cipla, Divis Laboratories and Dr Reddys
Laboratories from the financial year 2010-11 to 2014-15.
Table 6.1: ANOVA
Cash Earnings Retention Ratio (%)
Sum of Squares Df Mean Square F Sig.
Between Groups 739.011 2 369.505 49.622 .000
Within Groups 89.356 12 7.446
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Table 6.1: ANOVA
Cash Earnings Retention Ratio (%)
Sum of Squares Df Mean Square F Sig.
Between Groups 739.011 2 369.505 49.622 .000
Within Groups 89.356 12 7.446
Total 828.367 14
Table 5.1 shows the result of sample statistics (ANOVA). Value of sample statistics
F=49.622. Table show the p value 0.000 which is lower than level of significance 0.05(α). P
value < α give enough statistical evidence to reject null hypothesis “H0.6: Cash earnings
retention ratio of selected pharmaceuticals companies is uniform.” and accept alternate
hypothesis “H1.5: Cash earnings retention ratio of selected pharmaceuticals companies is not
uniform”. Rejection of null hypothesis indicates that one of the earning retention ratios of all
selected pharma companies is different from others.
Table 6.2: Multiple Comparisons
Dependent Variable: Cash Earnings Retention Ratio (%)
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD Cipla Divis Laboratories 16.65000* 1.72585 .000 12.0457 21.2543
Dr Reddys
Laboratories 4.61200* 1.72585 .050 .0077 9.2163
Divis Laboratories Cipla -16.65000* 1.72585 .000 -21.2543 -12.0457
Dr Reddys
Laboratories -12.03800* 1.72585 .000 -16.6423 -7.4337
Dr Reddys
Laboratories
Cipla -4.61200* 1.72585 .050 -9.2163 -.0077
Divis Laboratories 12.03800* 1.72585 .000 7.4337 16.6423
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories 4.61200* 1.72585 .037 .2933 8.9307
Divis Laboratories Dr Reddys
Laboratories -12.03800* 1.72585 .000 -16.3567 -7.7193
*. The mean difference is significant at the 0.05 level.
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Table 6.2: Multiple Comparisons
Dependent Variable: Cash Earnings Retention Ratio (%)
(I) Pharma
Companies
(J) Pharma
Companies
Mean
Difference
(I-J)
Std.
Error Sig.
95% Confidence Interval
Lower
Bound
Upper
Bound
Tukey HSD Cipla Divis Laboratories 16.65000* 1.72585 .000 12.0457 21.2543
Dr Reddys
Laboratories 4.61200* 1.72585 .050 .0077 9.2163
Divis Laboratories Cipla -16.65000* 1.72585 .000 -21.2543 -12.0457
Dr Reddys
Laboratories -12.03800* 1.72585 .000 -16.6423 -7.4337
Dr Reddys
Laboratories
Cipla -4.61200* 1.72585 .050 -9.2163 -.0077
Divis Laboratories 12.03800* 1.72585 .000 7.4337 16.6423
Dunnett t (2-
sided)a
Cipla Dr Reddys
Laboratories 4.61200* 1.72585 .037 .2933 8.9307
Divis Laboratories Dr Reddys
Laboratories -12.03800* 1.72585 .000 -16.3567 -7.7193
a. Dunnett t-tests treat one group as a control, and compare all other groups
against it.
7. Conclusion
Current ratio of pharma companies indicate that pharma companies current ratio is more than ideal
current ratio and Divis laboratories current ratio is more ideal among its competitors. Quick ratio of
pharma companies also comfortable and maintain by index companies. Here again Divis Laboratories
quick ratio is one of best model among its rivals. Inventory turnover ratio is also best tool to measure
the efficiency of management how it effective to convert its stock into sells. Dr Reddys Laboratories
is highly effective to convert stock into sells on other side Cipla also achieve comfortable ratio. Divis
Laboratories paying highest dividend out of its income compare to its rival while Cipla highly
retained its income for future expansion. Earnings retention ratio indicate future prospectus of
companies for expansion. Cipla maintain highest earning retention ratio for future opportunities while
Divis Laboratories maintain low earnings retention ratio. Cash earnings retention ratio indicates
company maintains high cash within for smooth functioning of company. Cipla maintain highest cash
earnings retention ratio among its rival followed by Dr Reddys Laboratories. It is concluded that NSE
Pharma index based maintain ideal liquidity.
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Khan, M. M., & Safiuddin, S. K. (2016). Liquidity and Profitability Performance Analysis of
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Nair, J. (2013). Performance analysis and solvency prediction of India pharma companies.
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