Orion Pharma Case Study
Orion Pharma
Solvency Measures
Solvency measures show the firms balance between current assets and current liabilities.
Net Working Capital:
Net working capital = Current Assets (CA) – Current Liabilities (CL)
All amounts are in BDT.
Years 2010 2011 2012 2013 2014
Current Assets 229.86M 269.44M 232.82M 288.65M 289.70M
Current Liabilities 338.36M 222.52M 214.08M 327.60M 522.97M
Net Working Capital (CA – CL) -108.5.34M 46.92M 18.73M -38.95M -233.26M
Orion Pharma’s NWC improved abrubtly in 2011, since then it again continued to go downwards in the following years .This means that in the recent years, the firms dependency on current liabilities, to fund long term assets, has increased each consecutive years. There solvency position is …show more content…
Even without calculating the CCP, the DPO looks realtively short than the OC. This may be due to the fact that there are few pharmaceuticals ingredient suppliers or most of the firms in this industry has to depend on foreign suppliers for the raw materials, thus suppliers has the last say.
CCP:
Year 2010 2011 2012 2013 2014
DSO 39.23 37.01 43.91 56.26 62.43
DIH 93.16 132.34 105.05 81.89 91.51
DPO 30.86 23.12 29.50 33.53 29.92
CCP 101.53 146.23 119.46 104.62 124.02
It took Orion more than 100 days to convert $1 of cash outflow to $1 cash inflow all throughout 2010 to 2014. The highest time orion took to convert inventory to cash was 146 days, where the inventory sat idle for 132 days. However, the DSO of the year was one of the lowest in the 5 years. Overall, Orion needed to arrange financing to fund the cash cycle from non spontaneous sources for minimum of 100 days in each of the years. Sales growth lead to account receivables growth, thus the higher DSO values. However, among the 3 elements of CCP, DIH show the highest values. This indicate that the firm need to review its inventory management strategies in order to shorten the cash
Solvency Measures
Solvency measures show the firms balance between current assets and current liabilities.
Net Working Capital:
Net working capital = Current Assets (CA) – Current Liabilities (CL)
All amounts are in BDT.
Years 2010 2011 2012 2013 2014
Current Assets 229.86M 269.44M 232.82M 288.65M 289.70M
Current Liabilities 338.36M 222.52M 214.08M 327.60M 522.97M
Net Working Capital (CA – CL) -108.5.34M 46.92M 18.73M -38.95M -233.26M
Orion Pharma’s NWC improved abrubtly in 2011, since then it again continued to go downwards in the following years .This means that in the recent years, the firms dependency on current liabilities, to fund long term assets, has increased each consecutive years. There solvency position is …show more content…
Even without calculating the CCP, the DPO looks realtively short than the OC. This may be due to the fact that there are few pharmaceuticals ingredient suppliers or most of the firms in this industry has to depend on foreign suppliers for the raw materials, thus suppliers has the last say.
CCP:
Year 2010 2011 2012 2013 2014
DSO 39.23 37.01 43.91 56.26 62.43
DIH 93.16 132.34 105.05 81.89 91.51
DPO 30.86 23.12 29.50 33.53 29.92
CCP 101.53 146.23 119.46 104.62 124.02
It took Orion more than 100 days to convert $1 of cash outflow to $1 cash inflow all throughout 2010 to 2014. The highest time orion took to convert inventory to cash was 146 days, where the inventory sat idle for 132 days. However, the DSO of the year was one of the lowest in the 5 years. Overall, Orion needed to arrange financing to fund the cash cycle from non spontaneous sources for minimum of 100 days in each of the years. Sales growth lead to account receivables growth, thus the higher DSO values. However, among the 3 elements of CCP, DIH show the highest values. This indicate that the firm need to review its inventory management strategies in order to shorten the cash