Inferential Statistics as a Measure of Judging the Short-Term Solvency: An Empirical Study of Five Pharmaceutical Companies in India

This empirical study of five pharmaceutical companies in India demonstrates the significance of inferential statistics in analyzing and solving complex business problems. The accounting technique of ratio analysis has been used in conjunction with the techniques of inferential statistics to draw inferences regarding short-term solvency of the companies selected for the study. Beside the main liquidity ratios, the relevant turnover ratios have also been used to know how quickly the different components of current assets are converted into cash so as to maintain liquidity in the business. In addition, statistical tools like, mean, standard deviation, Coefficient of Variation (CV), Analysis of Variance (ANOVA) and Student’s t-test of hypothesis testing have been applied. Thus, this study focuses on the pertinence of statistical tools in evaluating the short-term financial strength of the selected companies in conjunction with the relevant liquidity and turnover ratios. In the end, the study offers some meaningful suggestions in order to improve the short-term solvency of the pharmaceutical companies selected for this study.