Investment Strategies of Pharmaceutical Companies and Its Impact on Roi

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Title of the Paper Investment strategies of Pharmaceutical companies and its impact on ROI Abstract Investment decision is a very vital decision of the organization. One of the important aspects of the investment decision is to channelize the funds to various types of assets like fixed assets, investments and current assets in the most efficient way. The literature says that Investment decision is long term commitment of funds with a view to get the returns in future. Investment decisions are necessarily long term in nature and depict the philosophy of the company. The author has studied annual reports of 30 pharmaceutical companies for the period of 10 years from 1997-98 to 2006-07. He has studied the increase or decrease in assets for all the companies for all the years. On the basis of their investment pattern and strategies he has classified the companies into 4 major groups. Those are a. the companies investing in other investments b. companies expanding their core business 3. Companies investing in core assets as well as other investments and 4. The companies which are divesting. The author has found out the ROI of these 30 companies for 10 years and tried to establish a link between the various investment strategies and ROI. 1 Investment Strategy of Pharmaceutical companies & Its Impact on ROI INTRODUCTION Financial Management has three pronged functions of Investment, Financing and Dividend. Investment decision is major decision of any organization. It covers under its umbrella many tactic decisions as decision regarding levels of current assets, parking of excess funds, levels of current liabilities as well as the strategic decisions like mergers, diversification and expansion plans. The composition of the assets into three broad categories of Fixed assets, Investments and Current Assets shall have a substantial impact on the revenue earning

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