Current Assets 119688 6472.7 Current Ratio Current = = 1.85144 = 1.570205 64646 4122.2 Liabilities Interpretation: Current ratio for both companies is more than 1 indicating their ability to pay short term debt which can be translated to good solvency. Also, for both companies the current ratio is not too high which means that the company does not have unemployed cash and cash equivalents. DR. REDDY MYLAN Current Assets - 119688 - 25578 6472.7 - 1951 Inventories Quick Ratio = = 1.45577 = 1.096914 Current 64646 4122.2 Liabilities Interpretation: The difference in the current ratio and the quick ratio of Dr. Reddy and Mylan indicate that Mylan is holding more inventory with respect to its current assets as compared to Dr. Reddy's. In addition, although for both companies the quick ratio is more than 1, Dr. Reddy's has better solvency than Mylan since its current as well as quick ratio are higher.
DR. REDDY MYLAN
Total Total Liabilities 79314 12501.9 Liabilities to = = 0.61802 = 1.280172 Equity Equity 128336 9765.8 Interpretation: The total liability to equity ratio of Mylan indicates heavy reliance of Mylan on liabilities rather than equity to generate revenue as compared to Dr. Reddy's. Thus, creditors have higher stake in Mylan than investors. DR. REDDY MYLAN 22718 + 110 + 1.3 + 1077 + Total Debt to Total Debt = 10685 = 0.26113 6295.6 = 0.755074 Equity Equity 128336 9765.8 Interpretation: D/E ratios of both companies indicate that Mylan has been generating its revenues more by taking debt for its assets while in case of Dr. Reddy's the proportion of equity employed in revenue generation is much higher.
DR. REDDY MYLAN
Proportion of Debt due in one = 22718 + 110 = 68.1169 1.3 + 1077 = 14.6232 debt due in year 22718 + 110 + 1.3 + 1077 + one year Total Debt 10685 6295.6 Interpretation: Dr. Reddy has 68% of its total debt due in one year. This is an alarming percentage. Whereas, Mylan has only 14% of its total debt due in one year. DR. REDDY MYLAN Cash Flow From Operating 41247 2008.5 Operations Cash Flow to = = 1.23078 = 0.27238 22718 + 110 + 1.3 + 1077 + total debt Total Debt 10685 6295.6 Interpretation: This ratio indicates the capacity of the company to cover its debt with cash flow from operations. Generally, ratio of more than 0.8 indicates substantial capacity. Dr. Reddy's indicates strong position to cover its debt with the ratio of more than 1. Mylan indicates poor capacity to cover for its debt with low ratio of 0.27. It can be said that Mylan has low liquidity in terms of operating cash flows DR. REDDY MYLAN Times- EBITDA or 27140 915.4 Interest- EBIT = = 32.8571 = 2.697113 Earned Interest Expense 826 339.4 Interpretation : Both companies have TIE ratio greater than 2.5 which is a healthy indication.
DR. REDDY MYLAN
Common 22718 + 110 + 1.3 + 1077 + Total Debt Sized Total 10685 6295.6 = = 16.1392 = 33.11478 Long Term Total Asset 207650 22267.7 Debt Interpretation: The lower proportion of debt with respect to assets in case of Dr. Reddy's indicates that the better leverage of the company i.e. the company can pay all its debts with assets it owns DR. REDDY MYLAN Common Total Liabilities 79314 12501.9 Sized Total = = 0.38196 = 0.561437 Liabilities Total Assets 207650 22267.7 Interpretation: The lower proportion of liabilities to assets in case of Dr. Reddy's indicates that the better leverage of the company i.e. the company can clear all its liabilities with assets it owns