Dr.

REDDY'S FINANCIAL STATEMENT ANALYSIS OF ANNUAL REPORT 2019-2020

I SHORT TERM LIQUIDITY RATIOS

1 CURRENT RATIO

ANALYSIS

2 QUICK RATIO

ANALYSIS

3 ABSOLUTE CASH RATIO/ SUPER QUICK RATIO

ANALYSIS
 OVERALL ANALYSIS - Current ratio and quick ratio are much higher than the ideal ratio indicating high amount of assets w
super quick ratio is ectremely low compared to the ideal ratio and thus the company needs to impove its market s

II LEVARAGE RATIOS

1 DEBT EQUITY RATIO

ANALYSIS

2 INTEREST COVERAGE RATIO

ANALYSIS

3 DEBT SERVICE COVERAGE RATIO

ANALYSIS
III TURN OVER RATIO

1 STOCK TURNOVER RATIO

LESS

2 STOCK HOLDING PERIOD

ANALYSIS

3 DEBTORS TURNOVER RATIO

4 AVERAGE COLLECTION PERUOD

ANALYSIS

5 CREDITOR'S TURNOVER RATIO

6 AVERAGE PAYMENT PERIOD

ANALYSIS

7 WORKING CAPITAL CYCLE

1 - OPERATING CYCLE
ADD-

2 - CASH CYCLE
LESS-

IV PRFITABILITY RATIO
1 GROSS PROFIT RATIO

2 NET PROFIT RATIO

3 RETURN ON INVESTMENT

4 RETURN ON TOTAL ASSETS

5 RETURN ON CAPITAL EMPLOYED

LESS-

6 RETURN ON EQUITY
 OVERALL ANALYSIS - In case of profatability ratios the company has shown an improvement in all the ratios indicatin

V MARKET TEST RATIOS

1 EPS - EARNINGS PER SHARE

PE - RATIO
\

ANALYSIS

OVERALL ANALYSIS

SHORT TERM LIQUIDITY RATIOS

LEVARAGE RATIOS

TURN OVER RATIO

NPBT
NPAT
PRFITABILITY RATIO
 PRFITABILITY RATIO

MARKET TEST RATIOS

The short term liquidity ratios are way above the ideal ratios which has to be reduced which can be done by reducing inv
the debt equitty ratio remains the same, however the company has resolves major part of its debt compared to previou
reduced from 742.32 times to 118.84 times indicating that the collection period has increased. However, there has been
period. The profitability ratios has improved in 2020 compared to 2019. the PE ratio needs to be improved when compo
sector PE. All the ratios indicate that the company is doing good compared to previous y
EDDY'S FINANCIAL STATEMENT ANALYSIS OF ANNUAL REPORT 2019-2020

SHORT TERM LIQUIDITY RATIOS

2020 2019
CURRENT ASSETS 101,067 89,332
CURRENT LIABILITIES 41,805 30,793

CURRENT RATIO 2.42 2.90

IDEAL CURRENT RATIO 2:1

IDEAL CURRENT RATIO ACCEPTED BY FINANCIAL INSTITUTES 1.33:1

The current ratio is high compared to the ideal ratio of 2:1 due to high inventory and high amount of
trade recievables in both the years. The ratio has reduced from 2.90 in 2019 to 2.42 in 2020 due to
reduction in trade reciavables.

2020 2019
QUICK ASSETS
CURRENT ASSESTS 101,067 89,332
LESS - INVENTORY 21904 20156
LESS - PREPAID EXPANSES 530 482
QUICK ASSETS 78,633 68,694

CURRENT LIABILITIES 41,805 30,793

QUICK RATIO 1.88 2.23

IDEAL QUICK RATIO 1:1

The quick ratio is much higher than the ideal ratio of 1:1 presenting a high liquidity, but it has reduced
from 2.23 in 2019 to 1.88 in 2020.

2020 2019
CASH AND CASH EQUIVALENTS - CASH IN HAND + CASH AT BA 392 1132
MARKETABLE SECURITIES 0 0

CURRENT LIABILITIES 41,805 30,793

ABSOLUTE CASH RATIO/ SUPER QUICK RATIO 0.009 0.037

IDEAL RATIO 0.5:1

The ratio is very less compared to the ideal ratio of 0.5:1 which has reduced from 0.037 from 2019 to
0.009 in 2020 indicating that the conditions are extremely difficult.
ratio are much higher than the ideal ratio indicating high amount of assets which can be liquidated. However, the
pared to the ideal ratio and thus the company needs to impove its market securities to get quick liquidity.

LEVARAGE RATIOS

2020 2019
DEBT 42839 35634
EQUITY 151919 126841

DEBT EQUITY RATIO 0.28 0.28

28.20 28.09

In the year 2019, the company had debt of 28.09% of its equity which has now increased to 28.20% in
the year 2020, the values are almost same which means that the company has not been able to repay
its debts.

2020 2019
NPBT 27758 17007
INTEREST 478 568
NPBIT 28236 17575

INTEREST COVERAGE RATIO 59.071 30.942

The ratio has imrpoved from 30.942 times to 58.071 times, which is almost 97% improvement
compared to previous year.

2020 2019
NPBT 27758 17007
ADD - INTEREST 478 568
ADD - DEPRICIATION AND NON CASH EXPANSES 7,892 7,806
36,128 25,381

INTEREST 478 568

ADD - PREPAID REPAYMENT OF CASH
2020 2019
Long-term loans from banks 0 3454
ADD - PREPAID REPAYMENT OF CASH 3454 1426
Total 3932 1994

DEBT SERVICE COVERAGE RATIO 9.19 12.73

The DSCR has reduced from 12.73 times in 2020 to 9.19 times in 2019.This indicates that the company
has cleared most part of its loan and reduced the levarage.
 TURN OVER RATIO

2020 2019
COST OF GOODS SOLD
Total expenses 98,178 91,632
LESS - FINANCE COST 478 568
LESS- OTHER SELLING EXPANSES 12808 12231
COST OF GOODS SOLD 84,892 78,833

WORKING NOTE
SELLING EXPANSES
Advertisements 122 56
Commission on sales 176 162
Carriage outward 2566 2387
Other selling expenses 9134 8860
Travel and conveyance 810 766
OTHER SELLING EXPANSES 12808 12231

AVERAGE STOCK
2020 2019
OPENING STOCK 20156 18,568
CLOSING STOCK 21904 20156
AVERAGE STOCK 21030 19362

STOCK TURNOVER RATIO 4.037 4.072

2020 2019
STOCK TURNOVER RATIO 4.037 4.072

STOCK HOLDING PERIOD 90.42 89.65

90 DAYS 90 DAYS

This means that the company is maintaining a stock of 90 days in both the years.

2020 2019
CREDIT SALES 109,925 104,667

2020 2019
trade recievables 1,737 113

2020 2019
AVERAGE RECIEVABLES 925 141

DEBTORS TURNOVER RATIO 118.84 742.32

2020 2019
DEBTORS TURNOVER RATIO 118.84 742.32

AVERAGE COLLECTION PERUOD 3.07 0.49

3 DAYS 0.5 DAYS

In case of Dr. Reddy's there is no credit policy and money is being collected in 0.5 days in 2019 which
has increased to 3 days in 2020.

2020 2019

COST OF MATERIALS CONSUMED 25,565 21,032

PURACHSE OF STOCK-IN TRADE 11,172 8,686
CREDIT PURCHASES 36,737 29,718

2020 2019
TRSDE PAYABLES 10684 10316

2020 2019
AVERAGE PAYABLES 10500 10500

CREDITOR'S TURNOVER RATIO 3.50 2.83

CREDITOR'S TURNOVER RATIO 3.50 2.83

AVERAGE PAYMENT PERIOD 104.32 128.96

104 DAYS 129 DAYS

The company was paying its suppliers after 129 days in 2019 and now it is paying after 104 days in
2020.

2020 2019

STOCK HOLDING RATIO 90 DAYS 90 DAYS

AVERAGE COLLECTION PERUOD 3 DAYS 0.5 DAYS

OPERATING CYCLE 93 DAYS 90.5 DAYS

OPERATING CYCLE 93 DAYS 90.5 DAYS

AVERAGE PAYMENT PERIOD 104 DAYS 129 DAYS

CASH CYCLE -11 DAYS -38.5 DAYS

PRFITABILITY RATIO
 2020 2019

SALES 109,925 104,667

COGS 84,892 78,833
GROSS PROFIT 25,033 25,834

GROSS PROFIT RATIO 22.77 24.68

2020 2019
2020 2019
NPBT 27,758 17,007
SALES 109,925 104,667
NET PROFIT RATIO 25.25 16.25

NPAT 29,377 12,773

SALES 109,925 104,667
NET PROFIT RATIO 26.72 12.20

2020 2019
2020 2019
OTHER INCOME 7,432 2,384

INVESTMENT- NON CURRENT ASSETS 33,671 18,191

INVESTMENT- CURRENT ASSETS 21,184 21,144
TOTAL INVESTMENTS 54,855 39,335

RETURN ON INVESTMENT 13.55 6.06

2020 2019
NPAT 29,377 12,773
TOTAL ASSETS 194,758 162,475

RETURN ON TOTAL ASSETS 15.08 7.86

2020 2019
NPAT 29,377 12,773

TOTAL ASSETS 194,758 162,475

CURRENT LIABILITIES 41,805 30,793
CAPITAL EMPLOYED 152,953 131,682

RETURN ON CAPITAL EMPLOYED 19.21 9.70

2020 2019
NPAT 29,377 12,773
 EQUITY 151919 126841

RETURN ON EQUITY 19.34 10.07

lity ratios the company has shown an improvement in all the ratios indicating that its on the path of growth.

MARKET TEST RATIOS

2020 2019
NPAT 29377000000 12773000000
TOTTAL NUMBER OF SHARES 166172082 166065948

EPS - EARNINGS PER SHARE 176.7866 76.915

MPS 3120.75 2933.75

EPS - EARNINGS PER SHARE 176.79 76.92

PE - RATIO 17.65 38.14

SECTOR - PE 39.38 39.38

The PE ratio has reduced from 3.14 in 2019 to 17.65 in 2020 and when compared to the sctor PE which
is 39.38 we can say that the shares of Dr.Reddy's were well paid in 2019 but are underpais in 2020.

OVERALL ANALYSIS

RATIOS 2020 2019

CURRENT RATIO 2.42 2.90
QUICK RATIO 1.88 2.23
ABSOLUTE CASH RATIO/ SUPER QUICK RATIO 0.01 0.04
DEBT EQUITY RATIO 28.20% 28.09%
INTEREST COVERAGE RATIO 59.07 times 30.94 times
DEBT SERVICE COVERAGE RATIO 9.19 times 12.73 times
STOCK TURNOVER RATIO 4.037 times 4.072 times
STOCK HOLDING PERIOD 90 days 90 days
DEBTORS TURNOVER RATIO 118.84 times 742.32 times
AVERAGE COLLECTION PERUOD 3 days 0.5 days
CREDITOR'S TURNOVER RATIO 3.50 times 2.83 times
AVERAGE PAYMENT PERIOD 104 days 129 days
OPERATING CYCLE 93 DAYS 90.5 DAYS
CASH CYCLE -11 DAYS -38.5 DAYS
GROSS PROFIT RATIO 22.77% 24.68%
NET PROFIT RATIO 25.25% 16.25%
NET PROFIT RATIO 26.72% 12.20%
 RETURN ON INVESTMENT 13.55% 6.06%
RETURN ON TOTAL ASSETS 15.08 7.86
RETURN ON CAPITAL EMPLOYED 19.21% 9.70%
RETURN ON EQUITY 19.34% 10.07%
EPS - EARNINGS PER SHARE 176.79% 76.91%
PE - RATIO 17.65 times 38.14 times

the ideal ratios which has to be reduced which can be done by reducing inventory. Looking at the levarage ratios,
wever the company has resolves major part of its debt compared to previous year.The debtors turnover ratio has
ndicating that the collection period has increased. However, there has been a reduction in the average collection
in 2020 compared to 2019. the PE ratio needs to be improved when compoared to previous year ratio as well as
ll the ratios indicate that the company is doing good compared to previous year.
NAME DORIN SHAH
ROLL NO. 19

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141 143 2.6 B - OTHER ASSETS

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148 150 2.18 - FINANCE COSTS
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148 150 2.18 - FINANCE COSTS
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148 150 2.18 - FINANCE COSTS

2018
4880 2020 143 145 2.9 - A -NON CURRENT BRORROWINGS UNDER FINANCIAL LIABILITIES
2019 142 144 2.8 - A -NON CURRENT BRORROWINGS UNDER FINANCIAL LIABILITIES
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WN WN

148 150 2.19 - SELLING AND OTHER EXPANSES

2018
112 114 AANUAL REPORT OF 2019-20
18,568 112 114 ANNUAL REPORT OF 2018-19

2018 112 114 AANUAL REPORT OF 2019-20

169 112 114 ANNUAL REPORT OF 2018-19
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2018 112 114 AANUAL REPORT OF 2019-20

10610 112 114 ANNUAL REPORT OF 2018-19
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ANCIAL LIABILITIES
ANCIAL LIABILITIES