Liquidity Ratio- Biocon

Arjama Mukherjee[DM14D08]

Profile• Biocon, India's largest biotech company is focused on delivering

affordable innovation.

• BICON is a unique dental implant system

• Offering the worldwide dental community a comprehensive solution since 1985

• Its aspiration to become a US $ 1 billion company by FY 18

Source: bicon.com

Financial highlights• Total revenue in a rising

trend

• Debt to equity rose rapidly in 2014 from 2013

• Net worth steadily rising

• Profit became stagnantfrom 2011 to 2012, jumped in 2013, but dropped down in 2014

Source: Bicon annual report 2014

Liquidity ratio• So as to make sure that existing creditors are ready to sale their

goods on credit or not

• Will it be feasible for the investors to pour in their stakes

• Relation between current assets and current liabilities

• To ensure that weather the firm is able to meet its current obligations as they become due

• Preparation of cash budgets and cash and fund flow statements

• Measure its liquiditySource: I M Pandey

Current ratio• Represents margin of

safety for creditors

• Ideal ratio 2 to 1

• It’s a test of quantity not quality

2.3 2.2

1.5

Source: Ace analyser

2012-14

Quick ratio

• Deals with most liquid heads

• Ideal ratio 1 to 1

• Due to poor sale its most of its inventory remained same

• All the debtors might not be liquid

1.51.4

1.2

Source: Ace analyser

2012-14

Cash ratio

• Cash is most liquid

• More conservative look to companies solvency

• Should only be used as determining liquidity

0.61

0.58

0.57

Source: Ace analyser

2012-14

Interval measure• Ability to meet regular cash

expenses

• It has got enough liquid asset to finance it daily expenses

• Instead of calculating only daily expenses one may also include payment to interest, acquiring assets and repaying debt

77 7464

Source: Ace analyser

2012-14

Networking capital ratio

• The difference between current assets and current liabilities excluding short term borrowing

• Measure of liquidity in terms of relationships

0.61

0.58

0.57

Source: Ace analyser

2012-14

Bibliography• Investopedia

• Bicon.com

• Bicon annual report 2014

• Ace analyser

Any questions ?

Thank you