Liquidity Analysis of Aarti Drugs Limited
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Case Code: CLFIN035 Case Length: 7 Pages Period: 2018-21 Pub Date: 2022 Teaching Note: Available |
Price: Rs.300 Organization : Aarti Drugs Limited Industry :Pharmaceuticals & Biotech Countries : India Themes: Financial Analysis |
Abstract
Two trainees from an investment bank, as a part of their training program, were planning to make a presentation on the liquidity position of Aarti Drugs Limited (ADL) for the financial years 2018-19 to 2020-21.
ADL is a leading pharma company in India listed under the category of small caps segment in the Bombay Stock Exchange.
The present case study provides scope to discuss the concept of liquidity analysis and process of analyzing and interpreting the liquidity position of a company using liquidity ratios.
Issues
- The concept of liquidity analysis.
- The application of liquidity ratios.
- The liquidity position of Aarti Drugs Limited.
- The Cash Conversion Cycle (CCC) and its role in liquidity management.
Introduction
As a part of their training program, two trainees from an investment bank selected Aarti Drugs Limited (ADL) to present a report on the liquidity position of the company. They collected the following information regarding ADL. ADL was established in the year 1984 as a subsidiary of the Aarti Group of Industries. It was involved in the manufacture of Active Pharmaceutical Ingredients (APIs) , Pharma Intermediates , and Speciality Chemicals . The company was also engaged in the manufacture of formulations through its wholly owned subsidiary Pinnacle Life Science Private Limited (Refer to Exhibit I for Manufacturing Capacity of ADL). The company enjoyed a leadership position in the APIs segment with a capacity to produce over 50 API molecules for antibiotics, antiprotozoal, anti-inflammatory, anti-diabetic, and anti-fungal medicines, among others..
Keywords
Liquidity analysis; Short-term solvency; Current Assets; Current Liabilities; Liquidity Ratios; Current Ratio; Quick Ratio; Cash ratio; Aarti Drugs Limited
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