In case of accruals,

we've compared the firm's cash flow from operations with net income.

We will assign a value of 1 to G3 if the cash

flow from operations is greater than the firm's net income.

Otherwise, we assign a value of 0 to G3.

The cash flow from operations for

the year 2015 is 2,629.2 million Rupees.

The net income for the same year is 3,716.8 million Rupees.

You can see that cash flow from operations is less than the net income.

Hence we give a value of 0 to G3 as this is unfavorable.

And now, for the calculation of G4.

If you remember, G4 is the earnings variability.

Stability of earnings or earnings variability is calculated as the variance

of a firm's quarterly return on assets over the last four years.

In the previous calculations we have seen how to calculate the earnings return on

assets.

In this case we calculate the earnings return on asset for

each quarter for the last four years.

You can see these values on this slide.

Now you'll have to calculate the variance for these values.

For Ajantha Pharma we get the value of variance as 0.00842.

The median earnings growth variability for

all the firms in the pharma industry is 0.01035.

The earnings growth variability for

Ajantha Pharma is less than the industry median.

So we assign it a value of 1.

Now, calculation of G5.

G5 is the sales growth variability.

Sales growth variability is defined as the variants of a firm's

quarter over quarter sales growth.

The slide shows the net sales for all the quarters for the last four years.

By subtracting sales of quarter t minus 1

from the sales of quarter t we get the change in sales growth.

For these values we calculate the sales growth variabilities.

The sales growth variability is the variant of the quarterly sales growth for

the last four years.

The sales growth variability for

Ajantha Pharma is 62,275.35 million rupees.

The median sales growth variability for

the industry is 226,615.3 million.

The sales growth variability for

Ajantha Pharma is again less than the industry median.

So we assign it a value of 1, as it is favorable to us.

Calculation of G 6.

G 6 is the measure of R&D spent by the firm.

Ajantha Pharma has spent 700.7 million on R&D in the year 2015.

The R&D intensity calculated from this is 0.084.

During the same time the median R&D intensity in the industry is 0.080.

Ajantha Pharma has spent a little more compared to the industry median.