FINANCING PATTERN AND DETERMINANTS OF FINANCING PATTERN OF PHARMACEUTICAL INDUSTRY: AN EMPIRICAL ANALYSIS IN INDIA

The paper ascertains the financing patterns and determinants of pharmaceutical industry. We use the financial data of one hundred and forty-one pharmaceutical companies. Financing pattern of sample companies has been studied by using twenty different ratios. The results of the financing pattern ratios of the pharmaceutical industry show that they have not used more debt for financing fixed assets. The earning capacity of the companies is good as indicated by the overall positive values of shareholders equity. Further, we use regression model to study the determinants of financing patterns for the industry, we found that, of the sixty-one independent variables analysed, five independent variables viz, current liabilities to net worth, leverage ratio, short term debt to total debt (including current liabilities), logarithm of PBIT by total assets and logarithm of cash profit by sales as independent variables emerge as determinant for two dependent variables viz. long-term debt to equity and total debt-equity ratio. Further, we found that, forty-eight independent variables are not the determinants of financing pattern for the industry. The results of the study may be used researchers to compare with other foreign Pharmaceutical companies. Further studies can be undertaken for companies in pharmaceutical industry.