Anmol Arora

Section-A
Roll No.18
 LIQUIDITY ANALYSIS FOR
LUPIN LTD.

2016-17 2015-16 Change

(A) Current ratio
Current Assets ₹ 92,520.1 ₹ 72,564.8
Current Liabilities ₹ 25,656.1 ₹ 19,551.0

Current ratio 3.606163836 3.711564626 -0.02839794

(B) Quick Ratio

Current Assets ₹ 92,520.1 ₹ 72,564.8
Inventories ₹ 21,256.6 ₹ 19,139.6
Current Liabilities ₹ 25,656.1 ₹ 19,551.0

Quick Ratio 2.777643523 2.732607028 0.016481146

Inventory Holding
(C) Period (in days)
Inventories ₹ 21,256.6 ₹ 19,139.6
Cost of Goods Sold
Purchases ₹ 22,068.2 ₹ 23,375.9
Changes in inventories of W-I-P,
finished goods and stock-in-trade -₹ 1,852.6 -₹ 1,727.2
Excise duty ₹ 1,269.5 ₹ 1,239.3
Total COGS ₹ 21,485.1 ₹ 22,888.0

Inventory Holding
Period 361.1181237 305.2234359 0.183127117

Credit Turnover
(D) ratio (in days)
Trade Payables ₹ 14,784.9 ₹ 11,289.4
Purchases ₹ 22,068.2 ₹ 23,375.9

Credit Turnover
ratio 244.5368675 176.276892 0.387231558

Debtors Collection
(E) Period (In days)
Trade Receivables ₹ 39,024.5 ₹ 45,451.5
Total Sales ₹ 174,943.3 ₹ 142,555.4

Debtors Collection -
Period 81.42033733 116.3743885 0.300358624
 LIQUIDITY RATIOS OF LUPIN LTD. AND PHILIPS INDIA LTD.

Liquidity
2016-17 2015-16 Change Analysis
(A) Current ratio
Lupin Ltd. 3.61 3.71 -0.02839794
Philips India Ltd. 1.67 1.7 -0.017647059

(B) Quick Ratio

Lupin Ltd. 2.78 2.73 0.018315018
Philips India Ltd. 1.22 1.29 -0.054263566

(C) Inventory Holding Period (in days)

Lupin Ltd. 361 305 0.183127117
Philips India Ltd. 93 84 0.097615941

(D) Credit Turnover ratio

Lupin Ltd. 245 176 0.387231558
Philips India Ltd. 118 108 0.093256548

(E) Debtors Collection Period

Lupin Ltd. 81 116 -0.300358624
Philips India Ltd. 59 63 -0.069763755
 COMPARISON

1.Current Ratio of Lupin Limited for Year 2016-17 Is 3.61 Times whereas the Current Ratio of Philips
Limited Is for The Year 2016-17 Is 1.67 Times. This Shows Lupin Limited Has Far Higher Amount Than
Required to Discharge Day to Day Expenses.
Also, According to Institutional Norms Which Is 1.33:1, Lupin Is Having Very High Current Ratio

2.Lupin Limited Liquidity Ratio for The Year 2016-17 Is 2.77 Times Whereas Philips Limited Has A
Liquidity Ratio Of 1.22 Times This Shows That Lupin Is Having High Liquid Assets Than Required to
Meet the Current Liabilities Also the Institutional Norms for Liquidity Ratio Is 1:1 Which Shows That
Lupin Limited Has Very High Liquidity Ratio

3.The Inventory Turnover Ratio for Lupin Limited for The Year 2016-17 Is 145.64 Days and The
Inventory Turnover Ratio of Philips Limited Is 92.54 Days Which Is Better. It Shows That It Takes Way
More Time for Lupin Limited to Convert Its Inventory into Cash Than Philips Limited.

4. The Creditor Turnover Ratio of Lupin Limited for The Year 2016-17 Is 244.53 Days Whereas That of
Philips Limited Is 117.70 Days Which Shows That Lupin Limited Has A Higher Credit Period and Has
More Time to Pay to Its Supplier Than Philips Limited

5. The Debtor Turnover Ratio of Lupin Limited for The Year 2016-17 Is 81.42 Days and That of Philips
Limited Is 58.67 Days. This Shows That Philips Limited Collect Its Dues from Credit Sales Much Faster
Than Lupin Limited.

ANS.3) As per the ratios of both the companies, the Philips company is more liquid than the lupin because
ratios of Philips are more ideal than the ratios of lupin, so Philips is more liquid than the lupin.

ANS4) As an investor I won't invest in the lupin limited because the creditors payment period of lupin is much
more than the Philips in both the years, so as a supplier I don’t want to supply to lupin as compared to Philips.