Abstract

On the request of the manager of a leading bank, the credit evaluator at the bank analyzed the liquidity position of India-based pharmaceutical company Cipla Limited (Cipla) for the financial year 2017-18. He was required to provide inputs on the liquidity position of the company, so as to consider the possibility of a credit facility being extended to it. The case study provides information about the composition of current assets and current liabilities of Cipla and their nature. It helps to calculate, analyze, and interpret the liquidity position of the company using liquidity ratios; Current ratio, Quick ratio, and Cash ratio.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The process of analyzing and interpreting the liquidity position of a company.
• The difference between various liquidity ratios.
• The liquidity position of Cipla Limited.

Keywords

Liquidity of Cipla Limited; Current Ratio; Quick Ratio; Cash Ratio; Overall Liquidity; Current Assets; Current Liabilities; Quick Assets