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Financial analysis of aanjaneya life care ltd

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Financial analysis of aanjaneya life care ltd

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  2. 2. • Company profile • Approvals • Financial Analysis (1) Balance Sheet (2) Profit/Loss A/c • Ratio Analysis Contents 2
  3. 3. Company Profile The company was founded in 2006 by K Vishwanath & Chandulal Shah and his friends and is based in Mumbai , India 3
  4. 4. •AANJANEYA LIFE SCIENCE IS RESEARCH DRIVEN PHARMACEUTICAL COMPANY BASED IN INDIA. •COMPANY MANUFACTURES FINISHED DOSAGE FORMS (BRANDED AND GENERIC) AS WELL AS THEIR RAW MATERIALS (API). •AANJANEYA LIFE SCIENCE IS THIRD-LARGEST QUININE SALTS MANUFACTURER IN THE WORLD. •AANJANEYA LIFE SCIENCE ORGANISES MAIN THERAPEUTIC AREAS—DIABETOLOGY, CARDIOLOGY, NEPHROLOGY AND ONCOLOGY. 4
  5. 5. APPROVALS  World Health Organization (WHO)  United states Food and Drug Administration (USFDA)  Medicines and Healthcare Regulatory Agency(MHRA) 5
  6. 6. GROWTH INDICATIVE 12.5 13 13.5 14 14.5 15 15.5 16 CAGR Pharma Industry (13.5) Aanjaneya Ltd (15.4) 6
  7. 7. Financial Analysis 7
  8. 8. What is Financial analysis ?  Financial Analysis is the process of determining the operating & financial characteristics of a firm from accounting data & financial statement.  The goal of such analysis is to determine efficiency & performance of the firm management  Its main aim is to measure the firm‟s liquidity, profitability and other indications that business is conducted in a rational way. 8
  9. 9. How to do Financial Analysis Balance sheet Profit and Loss A/C Ratio Analysis 9
  10. 10. Balance Sheet of Aanjaneya Life science 10
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  13. 13. Ratio Analysis 13
  14. 14. Ratio Analysis Types of ratio: 1.Current ratio 2.Liquid ratio 3.Debt Equity ratio 4.Total assets to debt ratio 5.Proprietory ratio 6.Capital gearing ratio 7.Interest coverage ratio 8.Fixed assets turnover ratio 9.Current assets turnover ratio 10.Net profit ratio 14
  15. 15. Current Ratio 15  Also known as working capital ratio  It is used to evaluate short term financial position of the business concern. It indicates the ability of the firm to meet its short term obligations Current ratio = current assets current liabilities  Ideal current ratio is 2:1.  A very high ratio indicates availability of idle cash and is not a good sign
  16. 16. Current Ratio 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2012 2013 Current ratio = current asset current liabilities Current ratio(2012) =50.6054 /56.86 =0.89 Current ratio(2013) =156.14/110.0 =1.41 16 Ideal current ratio should be 2:1. So, we can say that the company’s financial position is not satisfactory but as compared to 2012, the current ratio of 2013 is more. Which means , Curent assets are less than current liabilities
  17. 17. Quick Ratio 17  It is very useful in measuring liquidity position of a firm.  Quick ratio = liquid asset current liabilities  Liquid ratio of 1:1 is considered satisfactory. If quick assets are equal to current liabilities, then the firm maybe able to meet its short term obligations
  18. 18. Quick/Liquid ratio Quick ratio = liquid assets current liabilities Quick ratio(2012) = 485.0/110 = 4.41 Quick ratio(2013) =359.09/110 = 3.19 0 1 2 3 4 5 2012 2013 18 Interpretation: Ideally, it should be 1:1. So, it can be concluded that company’s financial position in 2012 was more sound compared to 2013.
  19. 19. Debt-Equity Ratio 19  shows a relationship between long term debt and shareholder’s fund.  Also called external internal equity ratio Debt equity ratio = debt or long term debt equity shareholder’s fund  A ratio of 1:1 is usually considered to be satisfactory. This ratio is calculated to know about the organization’s repayment capacity of long term debts
  20. 20. Debt-Equity Ratio • Debt equity ratio= long term debts/equity or share holder funds • Debt equity ratio(2012) =138.85/134.39 =1.03 • Debt equity ratio (2013) =298.58/351.27 =0.85 0 0.2 0.4 0.6 0.8 1 1.2 2012 2013 20 Ideally, it should be 1:1. So, it can be said that the organization’s repayment capacity of long-term debts has increased for the year 2013 as compared to 2012
  21. 21. Proprietory Ratio 21  this establishes the relationship between shareholder’s funds to assets of the firm.  Also known as equity ratio or net worth to total assets ratio Proprietary ratio = equity total assets  Higher the ratio, financial condition of the organization will be sound
  22. 22. Proprietary Ratio • Formula = Equity / total assets • For 2012 =117.48/273.21 =0.43 • For 2013 =188.05/648.46 =0.29 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 2012 2013 22
  23. 23. Interpretation: Since Ratio for the year 2013 is decreased, it can be concluded that the financial condition of the company is not sound. 23
  24. 24. Capital gearing Ratio 24  It shows relationship between equity capital ( including reserves and undistributed profits) and fixed cost bearing capital ( preference sharing capital, fixed interest bearing loans) Capital gearing ratio= eq. share capital+reserves+P&L balance fixed cost bearing capital  A high gearing will be beneficial to equity shareholders
  25. 25. Capital Gearing Ratio • Formula =Equity share capital + reserves + P&L Balance /Fixed cost bearing capital. • For 2012 =134.39/127.65 =1.05 • For 2013 = 348.8/210.53 =1.66 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2012 2013 25
  26. 26. Interpretation: A low gearing is not beneficial to equity shareholders when rate of interest/dividend payable on fixed cost bearing capital is higher than the rate of return on investment in business. 26
  27. 27. Total assets to debt ratio 27  shows a relationship between total assets and the long-term debts Total asset to debt ratio= total assets long term debts
  28. 28. Total asset to Debt ratio • Formula =Total asset / Long term debt • Total asset to debt ratio (2012) =273.21/138.85 =1.96 • Total asset to debt ratio(2013) • 648.4/298.5 = 2.17 1.85 1.9 1.95 2 2.05 2.1 2.15 2.2 2012 2013 28
  29. 29. Interpretation: Total assets in both the years is more than sufficient to repay in cash the total debts. 29
  30. 30. Fixed assets turnover Ratio 30  This ratio indicates relationship between cost of goods sold and fixed assets during a year Fixed assets turnover ratio= cost of goods sold Net fixed assets  If there is increase in ratio, it indicates that there is better utilization of fixed assets and vice versa
  31. 31. Fixed Asset turnover Ratio • Formula – Cost of goods sold/Net fixed assets. • For 2013 = 479.96/358.87 =1.33 • For 2012 =320.26/117.07 =2.730 0.5 1 1.5 2 2.5 3 2012 2013 31
  32. 32. Interpretation: It can be concluded that the fixed assets are not being utilized properly as the ratio remain intact. 32
  33. 33. Net Profit Ratio 33  This ratio indicates relationship between net profit and net sales Net profit ratio= Net profit X 100 Net sales  Decrease in the ratio indicates managerial inefficiency and excessive selling and distribution expenses.  Increase in it shows better performance
  34. 34. Net Profit Ratio • Net profit ratio= net profit*100/net sales • Net profit ratio(2013) = 41.03/479.96*100 = 8.54 • Net profit ratio(2012) =36.01 /320.26*100 =11.24 0 2 4 6 8 10 12 2012 2013 34
  35. 35. Interpretation: The decrease in ratio in 2013 implies managerial efficiency shows less efficient performnce. 35
  36. 36. Interest coverage Ratio 36  Also known as debt service ratio Interest coverage ratio= net profit before interest and income tax ‘fixed interest charges’  This shows how many times the interest charges are covered by profits available to pay interest charges.
  37. 37. Interest coverage ratio • Formula= Net profit before charging interest and tax /Fixed interest charges. • For 2012 =54.63 / 13.65 =4 • For 2013 =63.06 / 29.05 =2.17 0 0.5 1 1.5 2 2.5 3 3.5 4 2012 2013 37
  38. 38. Interpretation: From the findings, it can be said that the business won’t earn sufficiently. 38
  39. 39. Current assets turnover ratio  Formula – Cost of goods sold/Net current assets. .  For 2012 =320.26/156.14 = 2.04  For 2013 = 479.96/289.53 = 1.65 0 0.5 1 1.5 2 2.5 2012 2013 39
  40. 40. Interpretation: Since there is decrease in the ratio in 2013, it can be said that the working capital has not been utilized efficiently in making sales. 40
  41. 41. Conclusions In balance sheet:-  Net worth has increase substantially  Total debt decreases following year.  Total liabilities increase with relation to 2012.  Current liabilities decreases.  Current assets and Total assets both increases . In Profit/Loss a/c:-  Total Income increases.  Total expenses increases.  Net profit increases.  Net sales increases. 41
  42. 42. Thank You 42

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