RANBAXY C.A COMPOSITION The current assets of Ranbaxy co.

From the last 5 years consists of, Inventories Sundry debtors Cash and bank This is the data which is available to us and on the basis of this we were going to analyse the company C.A. let us take them one by one. INVENTORIES Every firm has to maintain a certain level of inventory of finished goods so as to able to meet the requirements of the business. It is therefore, be advisable to dispose off inventory as soon as possible. On the other hand, too low inventory may mean loss of business opportunities. Now, as we know that it is a very important asset of the company, a co. Cannot take any risk by mismanaging it. Now, let us analse the inventories year-on-year basis. A. COMPARISON BETWEEN 1 AND 2 YEAR As we see in the balance sheet that the inventories in 2 year rosed by 191.61 crores, which left us guessing that, (a) Demand for the product has increased (b) They mismanaged their inventory stock (c) Maybe some customers return back their stocks If the increase in stock is due to the 1 reason that will be beneficial for the company, otherwise the company think it twice. B. COMPARISON BETWEEN 2 AND 3 YEAR In this period the inventories were decreased by 5.41 crores which indicates that the demand for the Ranbaxy product is decreased or might be that they were short of finances available with them as we see in the current liab. Column that it also decreased by 28 crore. C. COMPARISON BETWEEN 3 AND 4 YEAR During this period there is substantial rise in the inventories. It rose almost about 64 crore. These are the positive signs for the company as it will generates more revenue for it and also helpful in the longer version of period. D. COMPARISON BETWEEN 3 AND 4 YEAR This period is also somewhat good for the company as it inventory rose only by 22 crore. As compared to 64 crore during the same period in last year. This may be due to the appreciating rupee in that period which ultimately affects their revenues. Therefore, they decided to cut short their production by little bit.

SUNDRY DEBTORS ONE POINT OF CONCERN FOR THE COMPANY IS THAT THE DEBTORS WERE INCREASING PROPORTIONALLY MORE THAN ITS INVENTORY PRODUCTION. Here are some facts, (a) In first 4 years the inventory is less than increase in debtors which is a concerning factor for the company. (b) Also the average collection period for the company is not good as it will goes on increasing year after year. CASH AND BANK The bank balance for the company in 2,3,4 year is deteriorating as they have very less amount of cash available with themselves. In this priod, the current liabilities were much more than its cash available.

According to the data given to us and the analysis which we have done in the last page suggests us that the company current asets in first 4 years were adequate enough to pay off its current liabilities on those very year. However,in 5 year, the current assets of the company is on declining stage whereas the current liabilities on the same year were increasing, and thats not the good sign for the company. Now, with the available data we can find out the current ratio of the company for last 5 years. Years 1 2 3 4 5 current ratio 1.65 1.69 1.75 2.02 1.63

What we can interpret from the raios is that the company in the first 4 years running good but in the last years its situation is somewhat concerning but still it is good enough to meet its short term liabilities, however co. needs to take some initiative to meet its long term liabilities.