Corporate Finance

Financial Performance of Pharmaceutical Companies 
 149

Exhibit 7.4 Pharmaceutical firms—income statement

(Rs crore)

Glaxo Ranbaxy Cipla Sun DRL

2001 2000 2001 2000 2001 2000 2001 2000 2001 2000

Income
Sales 1,121.09 955.74 2,362.47 1,983.89 1,400.81 772.14 612.85 479.04 991.24 493.02
Other income 35.74 20.08 25.79 85.47 19.85 17.61 14.41 11.8 8.93 4.87
Change in stocks –10.06 31.88 28.58 20.06 85.09 34.32 44.82 3.26 28.49 –0.25
Non-recurring income 91.34 20 87.52 3.03 8.2 1.63 1.4 1.79 1.43 0.46

Expenditure
Raw material, etc. 526.21 497.12 1,269.93 1,120.59 707.57 390.43 289.1 214 349.31 165.33
Indirect taxes 95.04 89.09 94.51 104.89 115.85 67.42 71.24 48.46 74.02 57.01
Excise duty 87.06 83.98 88.72 99.81 111.33 67.24 52.94 36.46 71.35 55.12
Repairs & maintenance 11.8 11.7 14.59 12.49 29.69 14.79 7.4 5.31 30.06 14.94
Selling & dist. 88.74 66.18 343.34 227.41 119.51 51.59 46.64 40.45 106.22 71.63
Non-recurring exp. 111.62 0 129.85 4.94 27.67 0 0.15 0 2.35 0.65

EBDIT 130.88 131.62 258.15 306.35 255.85 188.74 168.39 114.47 261.45 96.24
Less: Depreciation 25.66 16.41 49.16 50.17 15.63 13.34 16.11 13.76 42.52 13.07
Less: Interest 10.49 12.15 47.47 63.47 2.65 2.74 7.65 10.41 43.38 16.35

PBT 94.73 103.06 161.52 192.71 237.57 172.66 144.63 90.3 175.55 66.82
Less: Tax 45.59 32.52 25.81 12.1 58.5 39.6 9.45 6.64 31.08 6.5
PAT 49.14 70.54 135.71 180.61 179.07 133.06 135.18 83.66 144.47 60.32

We start by defining some key ratios.

Liquidity Ratios

Cash and marketable sec. to total assets = (Cash + Marketable sec.)/Total assets

Acid test ratio = (Cash + Market sec. + Receivables)/CL

Current ratio = Current assets/Current liabilities

Asset management

Days’ receivables = 365/(Sales/Receivables)

Days’ inventory = 365/(Cost of goods sold/Inventory)

Asset turnover = Sales/Total assets

Financial leverage

Debt to total assets = (CL + L.T. debt + Other liabilities)/T.A.

Stockholders equity to total assets = Total stockholders equity to total assets

L.T. debt to stockholders equity = (L.T. Debt + Other liabilities)/Stock equity

Coverage ratio = Operating profit/Interest expense

Profitability

Gross margin ratio = Gross profit/Sales

Return on sales = Net income/Sales