MEASUREMENT OF FINANCIAL PERFORMANCE OF SELECTED INDIAN PHARMACEUTICAL COMPANIES BY USING THE ALTMAN' Z-SCORE MODEL

Abstract

The pharmaceutical industry plays a pivotal role in the Indian economy, and the performance of pharmaceutical companies is of significant interest to investors, stakeholders, and policymakers alike. This study delves into the financial performance of selected Indian pharmaceutical companies using Altman's Z-Score model, aiming to evaluate their risk of insolvency. The research spans five years, from 2018-19 to 2022-23, focusing on key industry players: Cipla Ltd., Divis Laboratories Ltd., Torrent Pharmaceutical Ltd., Zydus Lifescience Ltd., and Abbot India Ltd. Altman's Z-Score, a composite metric considering liquidity, profitability, leverage, solvency, and market value, is employed to assess these companies' financial health with secondary data and quantitative method of analysis. The findings reveal a varied financial landscape among the selected companies. Cipla Ltd. and Divis Laboratories Ltd. consistently maintain safe financial positions. Torrent Pharmaceutical Ltd. and Zydus Lifescience Ltd. exhibit moderate stability, with some improvements over recent years. Abbot India Ltd. stands out with a robust and stable financial position, consistently residing in the safe zone. These results emphasize the importance of financial prudence, effective management, and adherence to industry standards to navigate the complexities of the pharmaceutical sector. The study underscores the significance of proactive financial management in safeguarding these vital industry players, ensuring continued contributions to India's healthcare landscape and global pharmaceutical markets.

Keywords: Financial Performance, Altman's Z-Score Model, Indian Pharmaceutical Companies, Financial Distress, Ratio Analysis, Risk Mitigation.