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FINANCIAL STATEMENT ANALYSIS By SWATHI.V (11141E0005) Carried out At DR.REDDYS LABORATORIES PVT LIMITED
INTRODUCTION
DEFINITIONS:
The term financial analysis is also known as analysis and interpretation of financial statements. It refers to the process of determining financial strengths and weaknesses of the firm by establishing strategic relationships between the items of the balance sheet, profit and loss account and other operative data. By financial statements by means of two statements Profit and loss account or Income Statement Balance Sheet or Position Statement
also the productivity of finances is good, the productivity of men and material would be good. Moreover the study of non-economic and qualitative performance, which studies
the non economic factors like customer satisfaction, citizen satisfaction etc.
SCOPE OF STUDY:
The scope and period of the study is being restricted to the following. The scope is limited to the operations of the Reddys. The information is obtained from the secondary data was limited to the Reddys. The study is based on The profit and loss a/c, the balance sheets of the last four years.
Secondary data:
Study has been taken from secondary sources i.e. published annual reports of the
company editing, classifying and tabulation of the financial data. For this purpose
performance data of DR.REDDYS LABORATORIES for the years 2007-2008 to 20092010 has been used.
LIMITATIONS OF STUDY:
The study is confined to a period of last 4 years. Not all tools of financial statement analysis are used . The duration of the study was limited to period of 45days.so that the extensive and deep study could not be possible.
COMPANY PROFILE:
Established in 1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global
pharmaceutical company. As a fully integrated pharmaceutical company, our purpose is to provide affordable and innovative medicines through our three core businesses: Pharmaceutical Services and Active Ingredients (PSAI), comprising our Active Pharmaceuticals and Custom Pharmaceuticals businesses; COMPANY VISION, MISSION VISION A world class, innovation, Competitive and profitable Engineering Enterprise Providing total business Solutions. To be a top 20 global pharmaceutical company by 2020 MISSION To be the leading Engineering Enterprise providing Quality products System and services in the field of Energy, Transportation, Industry, Infrastructure and other potential areas.
REVIEW OF LITERATURE
FINANCIAL STATEMENT ANALYSIS:
DEFINITIONS: The term financial analysis is also known as analysis and interpretation of financial statements. It refers to the process of determining financial strengths and weaknesses of the firm by establishing strategic relationships between the items of the balance sheet, profit and loss account and other operative data.
FUNCTION:
The finance functions are: Investment or long term asset mix decision Financing or capital mix decision Dividend or profit allocation decision
TYPES OF FINANCIAL STATEMENTS: Financial statements primarily comprise two basic statements:
current assets 155792 166669 155652 192697 235062 276062 310002 453597 580804 771519
current liability 73129 74427 84990 116644 143200 208869 243220 376332 397574 502024
Ratios 2.13 2.23 1.83 1.65 1.64 1.32 1.27 1.2 1.46 1.54
Interpretation The ideal ratio for the concern is 2:1 i.e. current assets doubled for the current liabilities considered to be satisfactory. The current ratio of DR.REDDYS LABORATORIES is less than! .Thus it has to maintain its efficient current assets.
Liquid liabilities 73129 74427 84990 116644 143200 208869 243220 376332 397574 502024
Ratio 0.012 0.017 0.005 0.018 0.032 0.00005 0.00003 0.00003986 0.00371 0.002818
FINDINGS
The net working capital was Rs 91021 lacs in 2000-2001. This decreased to Rs 82663 lacs in the year 2001-2002. In the year 2006-2007 the net working capital is Rs 67193
lacs.
The current ratio of DR.REDDYS LABORATORIES was 2.41 in the year 2000-2001. There was decrease in the ratio up to the year 2007-2008. The ratio is decreasing year by year. But the DR.REDDYS LABORATORIES is maintaining current ratio more than the standard norms of 2. The organization is able to maintain both current ratio and quick ratio above the standard norms. i.e. the ideal current ratio for the concern is 2:1 and the quick ratio is 1:1 but the cash ratio is fluctuating.
year.
The debtors constitute nearly 50% of the Total Current Assets. For the Company it is
difficult to manage the accounts receivables. The company should collect debts as quickly as possible.
The company has to exercise cost of control and cost of reduction techniques to increase its profitability. The debtors turnover ratio in 2005-2006 is 1.97. The ratio has increased than previous years except for 2003-2004, which had 2.10. The decreasing ratio shows the inefficient management. They should concentrate more on the collection of the debts. The return on investment ratio of the DR.REDDYS LABORATORIES is 59.40 in 2005-
BIBILOGRAPHY:
http://www.Dr.ReddysLaboratoriescom/financialinformation/index.php http://www.studyfinance.com/lessons/workcap www.bizsearchpapers.com http://www.Dr.ReddysLaboratorieshyderabad.com/Dr.ReddysLaboratories
_hyderabad_unit.htm
http://en.wikipedia.org/wiki/Bharat_Heavy_Electricals_Limited Financial Management I M Pandey. Accounting for Managers-Jelsy Joseph Kuppapally. Financial statement analysis - Gokul Sinha.