Financial Performance and Size Determinants: Growth Trend and Similarity Analysis of Indian Pharmaceutical Industry

Abstract

Purpose of the study: The purpose of the present study is to find out the growth trend, Similarity in financial performance, and co-movement, sensitivity, or governance of firms' size determinants on the profitability of Indian pharmaceutical companies.
 Methodology: The analysis is based on ratio analysis, while Chain based index numbers are calculated to get the trend of financial performance and size determinants. Statistical tools, ANOVA, and coefficient of variations (CV) used to get the Similarity of profitability and Liquidity while Chain based index numbers are the base to calculate the movements of variables and Similarity.
 Main Findings: The trend of profit measures growth governs the growth trend of the size measurements of the Indian pharmaceutical companies. The pharmaceuticals companies are utilizing their funds equally and total resources in the pharmaceuticals companies govern the operational profitability (EBIT), short term, and long term liquidity while it does not affect the short-term movement symmetry of the profitability and size determinants. There is no significant difference in short term movement or sensitivity of profitability and firms' size determinants of Indian pharmaceutical companies.
 Applications of this study: The finding of the study implies that the funds invested in total resources enhance the profits while equal utilization of resources by selected pharmaceutical companies. So, this study recommends enhancing the investment in total resources to get increased amounts of profits.
 Novelty/Originality of this study: This study is one of the few studies that measure the trend of Similarity and sensitivity of financial performance and size determinants of Indian pharmaceutical companies. In this process, it performs the trend, movement sensitivity, and financial performance similarity analysis using the index numbers of financial variables of Indian pharmaceutical companies.

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