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Investment Valuation Assignment On Altman’s Z-Score Submitted By: A Sreekanth Vidyasagar Garvit Sharma A Dixit Altman Z-score The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The formula may be used to predict the probability that a firm will go into bankruptcy within two years. Z-scores are used to predict corporate defaults and an easy-to-calculate control measure for the financial distress status of companies in…show more content…
When Z is 1.8 to 2.7, the company is likely to be bankrupt within 2 years. When Z is <= 1.8, the company is highly likely to be bankrupt. Pharmaceuticals Sector Analysis: * The Indian Pharmaceutical market (IPM) is highly fragmented with about 24,000 players (330 in the organised sector). The top ten companies make up for more than a third of the market. The market is dominated majorly by branded generics which constitutes of nearly 70% to 80% of market. * The IPM is valued at Rs 750 bn for the year ending March 2014.The growth in 2014 was subdued at 6% YoY vs 12% in 2013. The growth was impacted as the drug price control order (DPCO) issued notice to bring 348 drugs under price control. Despite this, the Indian pharma market remains one of the fastest growing pharma markets in the world. Currently the IPM is third largest in terms of volume and thirteen largest in terms of value. * Besides the domestic market, Indian pharma companies also have a large chunk of their revenues coming from exports. While some are focusing on the generics market in the US, Europe and semi-regulated markets, others are focusing on custom manufacturing for innovator companies. Biopharmaceuticals is also increasingly becoming an area of interest given the complexity in manufacture and limited competition. * Introduction of GDUFA (Generic drug User
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