Aarti Drugs Limited-Profitability Analysis
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Case Code: CLFIN037 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
Srinivas, a retired central government employee, was considering suitable stocks to include in his investment portfolio. He was interested in investing in pharma stock and had identified Aarti Drugs Limited (ADL) as an attractive stock to invest in. However, before taking a final decision, he asked his investment advisor to give him some insights into the company, its activities, and its investment philosophy.
The investment advisor then collected all the information to analyze and provide the necessary insights to Srinivas to help him decide on investing in ADL.
The case study can be used to discuss the application of ratio analysis to analyze the financial statements of a company and to understand the criteria to be followed in understanding the profitability level using different profitability ratios.
Issues
- Ratio analysis as a tool of financial statement analysis.
- Profitability ratios used in the profitability analysis of a company.
- Analysis and interpretation of the profitability position of a company.
Introduction
Srinivas, a retired central government employee, was looking at the stock price index in the newspaper. He wanted to invest in a pharma company to enhance his investment portfolio. He observed the trend of the Nifty Pharma Index (Refer to Exhibit I for Monthly Trends in Nifty Pharma Index) and was fascinated by the performance of some pharma companies during the Covid-19 pandemic. As a result of their built-in capacities, some companies had been able to gain a competitive advantage even during the turbulent times..
Keywords
Profitability Analysis; Net profit ratio; Operating Expenses ratio; Return on Assets; Return on Capital Employed; Return on Equity; API manufacturer; Aarti Drugs Limited; Pharma industry; Covid-19 Pandemic
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