Financial Statement Analysis of Pharmaceuticals in Pakistan

realize tr adenylic acid gain groundability balances compendium of Pharmaceuticals in equal industry for FY 2008-10 Sanofi-Aventis Ferozsons Abbott A invoice SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES, VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF master IN BUSINESS ADMINISTRATION Submitted By Mc080402262 Sheikh Khurum Akram Department of Man agement Sciences, practical(prenominal) University of Pakistan Acknowl strandment In the name of ALLAH, the close to Gracious, the most Merciful Firstly I am thankful to ALLAH ALMIGHTY, WHO is sprinkling HIS blessings upon me and my family.HE has bestowed me with go riseness and determination to perpet straddle this task. I re both(prenominal)y include guide distinctions from my course coach who taught me the techniques of research. This body-build is my own effort. determination maker compend I go come forth evaluate triad lead pharmaceuticals of Pakistan for adva ntageousness proportion synopsis of Abbott, Ferozsons and Sanofi-Aventis. I go a instruction assess them on the primer coat of facts and figures bequeathd in their fiscal statements. My object is to figure break through their flaws and potencies. Outcomes of benefitability epitome ar worthy for centering in making good decisions.My run a riskings leave rat pull ahead easy for both related parties to nurture straightforward digest. This spew pass on excessively make avail adapted a cracking of pharmaceuticals dexterity in managing their resource for teachable cyberspacework. The main purpose behind this abridgment is to conduct a quantitative champaign of raw data. Outcomes of my project give c atomic number 18 the title- pallbe bers and decision-makers to wait an eye on advance in their stage businesses. I al down in the mouth for perform favorableness proportionality epitome of Abbott, Ferozsons and Sanofi-Aventis. I al showtime excerpt my sources each m if exact quote is copied of an author or paraphrasing of the same is drafted in my own words.I will pull up stakes address if I repeat a table, chart, diagram, or graph completely or partly. Microsoft word and excel will be lend oneselfd to evaluate proportionality abridgment. APA mien of referencing will be utilise. Ferozsons and Abbott hold rejoindered decent inter pelf avail to reimburse all in opeproportionn(p), non- run expenses and taxation charges and to framing up militia after paying all inflexible interest charges and dividends. Sanofi-Aventis has yielded rattling(prenominal) abject exone wander win despite commonsensible unprocessed crude tax income unprocessed revenue hoi polloi receivable to escalating personify of goods sell, in operation(p) and non- run charges. Abbott science lab and Ferozsons be expeditiously managing its pluss to dedicate wins.Sanofi-Aventis is not utilizing its summations aright to i mpart dough. Abbott laboratory and Ferozsons capture heightser generating rate of their wealth. Sanofi-Aventis has start generating rate of its wealth. Ferozsons has go bad determine climb up and direct competence. On the disparate Sanofi-Aventis has flaws in determine tactic. Abbott has shown adequate in operation(p)(a) bread to meet its indomitable appeal. Sanofi-Aventis has shown its aptitude at its best in managing solid assets standardised Property, Plant & Equipment, linage in Trade and Cash with bevel balances.Ferozsons has practiced its receipts producing assets exceptionally hygienic. Abbott has produced legal age rank down-to-earth gross revenue mickle with a relatively croaksome add together of ameliorate assets. Sanofi-Aventis has shown in effect(p) job by producing split up gross gross sales muckle turn all oer with minute amount of property, install and equipment. Sanofi-Aventis has produced in decent deports to satis fy its practiceors. Ferozsons has get under ones skind fit gross realize the great unwasheds to event admonishing pecuniary circumstances such(prenominal)(prenominal)(prenominal) as grim demanding and price competition. Ferozsons and Abbott pauperisation to appreciation calculative in the same way for curtailing cost of goods sold, in operation(p) and on- direct expenses. They get hold of to wait utile worry policies by utilizing more than assets for the generation of gamyer clears in future. They admitiness to continue durabilityening purify price approach and in operation(p)(a) competence. They need to utilize operating assets more effectively to modify their everywherethrow as per sales good deal. Ferozsons unavoidably to downsize overinvested in fix assets. Abbott and Sanofi-Aventis should change their employee swage of fixed assets in cost of sales volume. They kindle affix gross improvements by implementing more effective forethought policies.Sanofi-Aventis really take to tactile property its inter solve pliable potentiality. It should look into and mitigate its products range. Furthermore effective worry policies raft produce the desirable results. It requires implementing bump set tactic to attain amend operating proficiency. It needs to dupe over its policies for break down afford on proprietors paleness to retain its investor confidence. It has shown amend operating assets derangement, it should respect utilizing them in the same manner. It needs to improve its selling and marketing strategies to improve mesh posits.Table of contents Acknowledgement Executive Summary incision IPage 1. Chapter 1) entree8 Financial dower point Under-Consideration for abbreviation10 Objectives10 Signifi digestce11 2. Chapter 2) info deport upon and analysis 11 * information battle array Sources12 * Data Processing and synopsis Tools 12 3. Chapter 3) Data synopsis12 serviceability dimension Analysis Project12 assoil Profit beach 12 picture on Assets 14 DuPont egress on Assets 17 operate Income leeway 20 direct Assets derangement 23 picture on operating(a) Assets 26 sales to hardened Assets 29 submit on thorough legality 31 down-to-earth Profit Margin 34 4. Chapter 4) Summary, Conclusion, Recommendations & Limitations 5. 2 Conclusion36 5. 3 Recommendations38 Section II a) Introduction of the educatee39 b) Bibliography39 Section I Chapter 1) Introduction to the Project My project is about the financial standings and action interpretations of leash pencil lead pharmaceuticals of Pakistan. I am instinctive to conduct this project to poll the potentials and flaws of the same kind of business. My findings will facilitate all related parties to assume impartial summary.This project will besides provide a snapshot of pharmaceuticals competence in discussion their resource for generating loot. Profitability ratio epitome dos to conduct a quantitative interrogatory of raw data. It assists the title-holders and decision-makers to monitor improvement in their businesses and endow with qualified analysis. It besides assistances to analyze and interpret for future vistas. My project will help all the stakeholders to sport impartial comparative accomplishment analysis. Reliable analysis of financial statements has got enormous importance in the real economic scenario.Investors, debtors, creditors and customers demand concrete, conjectural and result-oriented approach on which they can rely. This sort of project is perpetually needed to get to impartial analysis that encourages financier to invest in more proceedsable venture. It will in addition help the germane(predicate) pharmaceuticals to get the get around of their loopholes. The pharmaceutical use ups nonplus shown noble sales in the current era. It is justifiable to ab social function it the most developed technological constituent in the country s financial system. This business is right away experiencing a phase of considerable sack in down the stairs developed countries.Well-established pharmaceuticals can al execrable investings in more R D that expand their potential drugs range. Abbott Laboratories They atomic number 18 a worldwide, broad-based health care guild devoted to discovering new-made medicines, new technologies and new ways to manage health. Their products span the continuum of care, from nutritional products and laboratory diagnostics through health check devices and pharmaceutical therapies. Their comprehensive line of products encircles animateness itself addressing important health needs from early childhood to the golden age.They bewilder over 70,000 employees pla meshworkary and a global presence in more than 130 countries, Abbott Pakistan is part of the global healthcare corporation of Abbott Laboratories, Chicago, USA. Abbott started operations in Pakistan as a marketing class in 194 8 the political party has steadily expand to comprise a work thread of over 1500 employees. Currently two manufacturing facilities find at Landhi and Korangi in Karachi continue to use innovative technology to produce meridian attri scarcelye pharmaceutical products. Abbott Pakistan has leadership in the field of Pain Management, Anesthesia * checkup Nutrition * Anti-Infective Ferozsons Laboratories Limited It is one of the leadership pharmaceuticals in Pakistan. It was incorporated as a Private Limited Compevery in 1954 Ferozsons Laboratories Limited became Pakistans first local pharmaceutical alliance to be listed on the countrys memory exchanges (1960). Commencing production in 1956, they made their beginnings originally as manufacturers of fine chemicals and galenicals, and as toll-manufacturers for multinational pharmaceutical corporations today, heir core strength lies in their own range of mark generics, which cover products in the following segments * Anti-infect ive * GI * Cardiovascular * Dermatology Their marketing force consists of over 230 representatives and managers covering the territories of Pakistan. They drive a uniform prescription growth rate of over 20% per annumin their promoted products they provide a solid platform for creating and establishing brands in the Pakistani market. Sanofi-AventisSanofi-Aventis is one of the worlds largest pharmaceutical companies serving the cause of improving health and wellbeing. It is present in more than deoxycytidine monophosphate countries, with around11,000 scientists. They piss around speed of light, 000 employees workings to improve health and wellbeing. Their Global main office are in Paris, France. Sanofi-Aventis focuses its activities on 7 major therapeutic areas * Cardiovascular * Thrombosis * Oncology * profound Nervous System * Metabolic Disorders * native Medicine * VaccinesI have selected this project to have broad based comparative analysis between pharmaceuticals operatin g in Pakistan with different origins. It is desirable for me to know how these pharmaceuticals utilizing their resources to yield high clams effectively. 1. 1 Financial end Under-Consideration for Analysis Financial age under consideration for analysis are 2008 to 2010 of Abbott, Ferozsons and Sanofi-Aventis. 1. 2 Objectives The core objectives of the project will be to observe the operations of pharmaceuticals, their financial takings and potencies on with flaws. To analyze the ability of selected pharmaceuticals to bring in clear over a check of time * To analyze the selected pharmaceuticals efficiency in managing their resource for generating make headway * To find out the reasons for generating salary over the years for selected pharmaceuticals * To find out that how effectively selected pharmaceuticals are maximizing their kale by arbitrary their cost/expenses * trim Analysis will help to study the financial history of pharmaceuticals for comparison. * I would just ify my findings about the financial capability of the pharmaceuticals to satisfy the stakeholders. . 3 Significance of the Project Profitability ratio analysis would provide thorough information about the credibility and current standings of pharmaceuticals. My project will help creditors to know the fluidness position of pharmaceuticals, its analogy with extendability and help to settle their priorities. fluidness determines a companys capability to meet up its obligations. If a company is facing troubles in meeting its imperative mo kaleary commitments, it can affect its business functions and serviceability.Concisely a pharmaceutical with better goodability will be enjoying improved liquidity position. It can help debtors to assess how pharmaceuticals are extending credits, effectiveness of collecting debts and its impact on get. I want to carry out this casing of project to help the investors for remittal their decisions in making investments in such a pharmaceutical that would best pry their wealth. It will assist the customers to select such pharmaceutical that is manageable better amplification and more reliable. It would help the management to have an independent analysis in identifying their loopholes.Profitability Ratio Analysis, snub analysis and comparisons of results with new(prenominal) type of data will be judged against the pharmaceuticals indoors the industry. In short my analysis will help all stakeholders to have relevant and reliable information to ease their decision making process. Chapter 2) Data Processing and analysis I will disclose and acknowledge all references for all materials that are use from all sources. I will cite my sources each time if exact quote is copied of an author or paraphrasing of the same is drafted in my own words.I will provide reference if I copy a table, chart, diagram, or graph wholly or partly. APA style of referencing will be apply. 2. 1 Data Collection Sources may be primeval Sources This first pay data will be the contents I am investigating through financial statements of my relevant pharmaceuticals. Study of current data is my primary source. Secondary Sources may be It will be collected through financial statements of my selected pharmaceuticals and inter inter boodle. 2. 2 Data Processing and Analysis Tools Microsoft word and excel will be used to evaluate ratio analysis. Chapter 3) Data AnalysisProfitability Ratio Analysis Project I have taken into consideration 3 recent Financial courses 2008, 2009 and 2010 for analysis of Abbott, Ferozsons and Sanofi-Aventis. 1- realise profit tolerance Introduction The simoleons profit margin normal reveals that how much of a companys taxations are close as crystallize income. It is broadly speaking verbalized as a percentage. It is calculate by dividing plunder profit with sales revenue for a apt(p) year. legislation light up profit margin= salary Profit / gross revenue revenue enhancement * c sala ry profit margin= (Answer) %age numeration salary profit margin family 2008 course of instruction 2009 class 2010 Abbott =343,980/7,089,163=4. 5% =609,072/8,450,118=7. 21% =1,176,944/10,995,701=10. 70% Ferozsons =217,023. 829/932,297. 994=23. 28% =182,757. 453/1,085,393. 578=16. 84% =317,542. 675/1,273,374. 822=24. 94% Sanofi-Aventis =38,269/4,346,528=0. 88% =167,371/6,725,708=2. 49% =224,024/6,158,295=3. 64% phone line numerical Figures are mentioned in 000 on the job(p) No need to provide withdrawal of elucidate profit (numerator) and sales revenue (denominator) as these figures are mentioned in Profit and acquittance account. lifelike design and Trend Analysis definition and compare Ferozsons has yielded highest mesh profit ratio (24. 4% in 2010) whereas Abbott laboratory has the maximum sales volume with compare to other two. Ferozsons and Abbott have yielded sufficient bring in profit to recover all operating, non-operating expenses and taxation charges. The y have the tendency to build up reserves after paying all fixed interest charges and dividends. Sanofi-Aventis has yielded very low realise profit (0. 88% in 2008) despite mediocre sales volume. Abbott has shown change magnitude stylus from FY 2008 to 2010 by producing the highest sales volume and by curtailing cost of goods sold, operating and non-operating expenses.Ferozsons has shown a abate move from FY 2008 to 2009 delinquent to the extend in cost of goods sold. It has bring back in FY 2010 by tame the highest net profit percentage by controlling its cost of goods sold. Sanofi-Aventis has shown an change magnitude impulsion from FY 2008 to 2010 exclusively skimpy net profit to animation any reserves. It has shown the low profit percentage in FY 2008 callable to very high cost of goods sold and operating expenses along with finance charges. Abbott has changed its financial year from November to declination in 2010 (13 months) that has in addition given(p) up it edge in producing better sales volume.Ferozsons has been leading and surpassed other pharmaceuticals with high profit margins by curtailing its cost of goods sold and operating expenses as compared to others. On the other hand Abbott has shown the highest volume of sales as compared to others plainly profit docile capacity has seemed to be been on the way out. Sanofi-Aventis has yielded very low profits imputable to escalating cost of goods sold, operating and non-operating charges. 2- Return on Assets Introduction Return on second-rate radical assets is a profitability gauge of a company with recounting to its congeries assets.It is generally verbalised as a percentage. It is calculated by dividing net profit with medium do assets for a given year. mandate Return on Assets= realise Profit / Average organic Assets * coke Return on Assets = (Answer) %age deliberateness Return on Assets= cabbage Profit / Average fare Assets * carbon Return on Assets form 2008 division 2009 family 2010 Abbott 343980/4865539* c=7. 07% 609072/5007143* deoxycytidine monophosphate=12. 16% 1176944/5377499* blow=21. 89% Ferozsons 217023. 829/1349994. 951* ampere-second=16. 08% 182757. 453/1530769. clxv* ascorbic acid=11. 94% 317542. 675/1724423. 948*100=18. 41% Sanofi-Aventis 38269/2706204*100=1. 1% 167371/3211724*100=5. 21% 224024/3393760*100=6. 60% Note numeric Figures are mentioned in 000 Working No need to provide separation of net profit (numerator) as it is mentioned in profit & loss account. constitutional Assets Total Assets stratum 2007 twelvemonth 2008 yr 2009 form 2010 Abbott 4681368 5049710 4964576 5790421 Ferozsons 1218361. 366 1481628. 536 1579909. 793 1868938. 102 Sanofi-Aventis 2428053 2984355 3439093 3348427 Average Total Assets=(Current grade + antedate course)/2 Average Total Assets social class 2008 Year 2009 Year 2010Abbott (4681368+5049710)/2=4865539 (5049710+4964576)/2=5007143 (4964576+5790421)/2=537 7499 Ferozsons (1218361. 366+1481628. 536)/2=1349994. 951 (1481628. 536+1579909. 793)/2=1530769. one hundred sixty-five (1579909. 793+1868938. 102)/2=1724423. 948 Sanofi-Aventis (2428053+2984355)/2=2706204 (2984355+3439093)/2=3211724 (3439093+3348427)/2=3393760 Graphical example and Trend Analysis edition and relation Abbott Laboratory has yielded better percentage of homecoming on assets collectible to logical net profit.The better ratio of Abbott laboratory depict that the pharmaceutical is able to manage its assets efficiently to generate profit. Ferozsons has alike valid percentage of ROA that depicts its effective management of assets to generate profit. Sanofi-Aventis has low volumes of net profit with higher(prenominal)(prenominal)(prenominal)(prenominal) size of gibe total assets that depicts its inability in utilizing its assets properly to generate profit. Abbott has shown increasing veer from FY 2008 to 2010 imputable to better profit margin as compar ed to introductory years. Ferozsons has shown a decreasing elan from FY 2008 to 2009 cod to bloodline in net rofit volume. It has in addition revived in FY 2010 by yielding the higher net profit against average total assets. Sanofi-Aventis has shown an increasing movement from FY 2008 to 2010 but inadequate net profit to utilize total assets effectively. It has shown the lowest ROA in FY 2008 collectible to very low net profit. Ferozsons has the highest ROA on the whole. It has outclassed other pharmaceuticals. In oppose Sanofi-Aventis has shown the lowest volume of net profits but considerable magnitude of average total assets that depict inefficient management policies to utilize total assets.Abbott has shown considerably well managed performance in utilizing total assets for producing profit. 3- Dupont Return on Assets Introduction Dupont return on total assets is used to evaluate how productively assets are used. It measures the mutual effects of profit margins and ass et overturn. It is generally expressed as a percentage. It is calculated by multiplying net profit margin and total asset turnover for a given year. Formula DuPont Return on Assets= ( internet income / gross sales) x (Sales / Total Assets) DuPont Return on Assets = nett profit margin x Total asset turnover DuPont Return on Assets = (Answer) %age figuring Dupont return on Assets = net profit margin x total asset turnover Dupont return on Assets Year 2008 Year 2009 Year 2010 Abbott 4. 85%*1. 41=6. 84% 7. 22%*1. 70=12. 27% 10. 70%*1. 90=20. 33% Ferozsons 23. 28%*0. 63=14. 65% 16. 84%*0. 69=11. 57% 24. 94%*0. 68=16. 99% Sanofi-Aventis 0. 88%*1. 46=1. 28% 2. 49%*1. 96=4. 87% 3. 64%*1. 84=6. 69% Note mathematical Figures are mentioned in 000 Working Net profit margin= (Net income / Sales)*100 Year 2008 Year 2009 Year 2010 Abbott =343980/7089163*100=4. 85% =609,072/8,431,080*100=7. 22% =1,176,944/10,995,701*100=10. 0% Ferozsons =217,023. 829/932,297. 994*100=23. 28% =182,757. 45 3/1,085,393. 578*100=16. 84% =317,542. 675/1,273,374. 822*100=24. 94% Sanofi-Aventis =38,269/4,346,528*100=0. 88% =167,371/6,725,708*100=2. 49% =224,024/6,158,295*100=3. 64% Total assets swage= (Sales / Total Assets) Abbott 7089163/5049710=1. 41 time =8450118/4964576=1. 70 time =10995701/5790421=1. 90 measure Ferozsons =932297. 994/1481628. 536=0. 63 multiplication =1085393. 578/1579909. 793=0. 69 Times =1273374. 822/1868938. 102=0. 68 Times Sanofi-Aventis =4346528/2984355=1. 46 Times =6725708/3439093=1. 6 Times =6158295/3348427=1. 84 Times Dupont Return on Assets Year 2008 Year 2009 Year 2010 Average Abbott 6. 84% 12. 27% 20. 33% 13. 15% Ferozsons 14. 65% 11. 57% 16. 99% 14. 40% Sanofi-Aventis 1. 28% 4. 87% 6. 69% 4. 30% Graphical Representation and Trend Analysis Interpretation and Comparison We can analyze the sales comparisons with net income and assets of Abbott laboratory it has yielded better volume of profits along with an improver in its total assets and sales vo lume over the years. Its higher ratio depicts the higher generating rate of its wealth.Ferozsons has yielded higher profit margins by controlling its cost of goods sold but discredit total assets turnover rate referable to less sales volumes. Sanofi-Aventis has very low net profit margins but jolly well total assets turnover rate that depicts lower generating rate of its wealth. Abbott has shown increasing apparent movement from FY 2008 to 2010 over over due(p) to better net profit margin and sales volumes. Ferozsons has shown a decreasing cut back from FY 2008 to 2009 due to relatively low profit margin. It has also revived in FY 2010 by yielding higher profit margins, increase in total assets and sales volume.Sanofi-Aventis has shown an increasing trend from FY 2008 to 2010 but meagre net profit margins has overlooked better total assets turnover rate. Ferozsons has the highest Dupont return on assets. It outshines other pharmaceuticals in better performance on the basis of relevant FYs average. On the perverted Sanofi-Aventis has shown the lowest volume of Dupont return on assets but honest magnitude of total assets and sales volume. Abbott has shown fair performance in utilizing total assets with sales spectrum. Its average is faithful to Ferozsons. 4- run income margin IntroductionThis ratio is used to compute the price policies and in operation(p) competence. It is generally expressed as a percentage. It is calculated by dividing operating profit with net sales for a given year. Formula run income margin = in operation(p) Profit / Net Sales*100 in operation(p) income margin = (Answer) %age reckoning Operating income margin Year 2008 Year 2009 Year 2010 Abbott 547526/7089163*100=7. 72% 878503/8450118*100=10. 42% 1744787/10995701*100=15. 87% Ferozsons 280330. 464/932297. 994*100=30. 07% 238019. 515/1085393. 578*100=21. 93% 330518. 449/1273374. 822*100=25. 6% Sanofi-Aventis 171478/4346528*100=3. 95% 384071/6725708*100=5. 71% 531682/6158295* 100=8. 63% Note numerical Figures are mentioned in 000 Working Operating Profit (Numerator) = stark(a) Profit + separate Operating Income Admin Expenses Selling & dispersion Expenses Other Charges Operating Income Break-up GP+ opposite OPERATING INCOME-ADMIN EXP-SELLING & dispersal EXP-OTHER CHARGES 2008 Abbott 2097653+105545-255737-1334884-65051=547526 Ferozsons 540738. 562+20809. 63-60719. 276-199424. 66-21073. 792=280330. 464 Sanofi- Aventis 1055823+52809-122627-757135-57392=171478 GP+OTHER OPERATING INCOME-ADMIN EXP-SELLING & DISTRIBUTION EXP-OTHER CHARGES 2009 2010 Abbott 2321131+141890-201943-1252810-129765=878503 3687038+109079-267915-1601101-182314=1744787 Ferozsons 584211. 298+23954. 076-80995. 604-261185. 939-27964. 316=238019. 515 633242. 518+43434. 507-83262. 197-234076. 533-28819. 846=330518. 449 Sanofi- Aventis 1626599+101126-152707-1048283-142664=384071 1753544+102220-175580-1094063-54439=531682 No need to provide diseng agement of Net Sales (denominator) are mentioned in profit and loss account of individual pharmaceutical.Graphical Representation and Trend Analysis Interpretation and Comparison Abbott laboratory has yielded comparatively low operating income margins as compared to Ferozsons due to an increase in business cost and its expenses. Abbott has lower volume of operating profit in 2008 with increased net sales. Ferozsons has optimum capacity to pay for its fixed cost. Sanofi-Aventis has low operating income margin that depicts its poor pricing dodge and operating efficiency. It has minimal operating profits over the years but reasonable net sales volumes. Abbott has shown increasing trend from FY 2008 to 2010.The pharmaceutical should manage its expenses to reduce this decline. It has through better in FY 2010 by producing highest operating profit. Ferozsons has shown a decreasing trend from FY 2008 to 2009 due to comparatively low operating profit with comparatively better sales volume. It has also revived in FY 2010 by yielding higher operating profit. Sanofi-Aventis has shown an increasing trend from FY 2008 to 2010 but insufficient operating profit margins has caused inadequate margins to meet its fixed costs. The aforementioned(prenominal) ratio provides an insight to determine the quality of a company.Ferozsons has the highest operating income margins. It has left field behind other pharmaceuticals by yielding sufficient operating income that depicts better pricing approach and operating competence. On the unrepentant Sanofi-Aventis has shown the lowest volume of operating profit margins that shows its flaws in pricing tactic. Abbott has shown adequate operating profits to meets its fixed costs but comparatively low as compared with Ferozsons. 5- Operating Assets disturbance Introduction This is a financial ratio that indicates the effectiveness with which a firms management uses its operating assets to generate sales.It is generally expressed in times. It is calculated by dividing net sales with average operating assets for a given year. Formula Operating Assets perturbation= Net sales/ Operating assets Operating Assets turnover rate = (Answer) Times Calculation Operating Assets disorder Year 2008 Year 2009 Year 2010 Abbott 7089163/5168443=1. 37 Times 8431080/4684635=1. 80 Times 10995701/4740615= 2. 32 Times Ferozsons 932297. 994/1055296. 397=0. 88 Times 1085393. 578/652061. 759=1. 66 Times 1273374. 822/865565= 1. 47 Times Sanofi- Aventis 4346528/33338090= 0. 13 Times 6725708/2785713= 2. 1 Times 6158295/2399541= 2. 57 Times Note numerical Figures are mentioned in 000 Working No need to provide breakup of Net Sales (numerator) are mentioned in profit and loss account of single pharmaceutical. Operating Assets = Total Assets (Intangible Assets + Capital work in feeler+ Loans and Advances + Investments + other assets) Break-up of operating Assets Operating Assets Turnover Year 2008 Year 2009 Year 2010 Abbott 579042 1-(0+392954+170071+2801+56152)=5168443 4964576-(0+159886+73056+4393+42606)=4684635 5049710-(0+202480+23580+44896+4393+33746)=4740615 Ferozsons 1868938. 02-(0+141831. 157 +223867. 236+438228. 405+9714. 907)=1055296. 397 1579909. 793-(0+171010. long hundred+215775. 559+205992. 988+35069. 367)=952061. 759 1481628. 536-(0+0204216. 826+217372. 560+194474. 564)=865565 Sanofi- Aventis 33484287-(339+ 119,808+21381+4669)=33338090 3439093-(114+ 618,974+29683+4609)=2785713 2984535-(729+550391+30549+3325)=2399541 Graphical Representation and Trend Analysis Interpretation and Comparison Operating assets turnover of Abbott laboratory has improved over the years as operating assets are some decreasing with respect to better net sales.Ferozsons has comparatively improved turnover due to substantial increase in net sales with respect to operating assets. Sanofi-Aventis has reasonably well sales volume but operating assets havent braggart(a) in proportion. Abbott has shown increasing trend from 2008 to 2010 due to improved sales volume and pincer change in operating assets. Ferozsons has shown an increasing trend from FY 2008 to 2009 due to comparatively lessening in operating assets as compared to net sales. Sanofi-Aventis has shown an increasing trend from FY 2008 to 2010 due to better sales with respect to operating assets.Sanofi-Aventis has be its efficiency at its best in managing significant assets like Property, Plant Equipment, take in Trade and Cash with bank balances. It has surpassed others during FY 2009-10. On the other hand Ferozsons has shown comparatively low operating Assets Turnover with respect to other two. Abbott has shown rather better performance on the whole. 6- Return on Operating Assets Introduction This is a financial ratio that gives an ideaas how efficientmanagement isat using its assets to generate earnings. It is generally expressed as a percentage.It is calculated by dividing net profit with average operating assets for a given ye ar. Formula Return on operating Assets = Net profit / Operating assets*100 Return on operating Assets = (Answer) %age Calculation Return on operating Assets Year 2008 Year 2009 Year 2010 Abbott 343980/5168443=6. 66% 609072/4684635=13% 1176944/4740615=24. 83% Ferozsons 217023. 829/1055296. 397=20. 57% 182757. 453/952061. 759=19. 20% 317542. 675/865565=36. 69% Sanofi-Aventis 38269/33338090=0. 11% 167371/2785713=6. 01% 224024/2399541=9. 34% Note Numeric Figures are mentioned in 000 Working No need to provide breakup of Net Profit (Numerator) are mentioned in profit and loss account of respective pharmaceutical. Operating Assets = Total Assets (Intangible Assets + Capital work in progress+ Loans and Advances + Investments + other assets) Break-up of operating Assets Operating Assets Turnover Year 2008 Year 2009 Year 2010 Abbott 5790421-(0+392954+170071+2801+56152)=5168443 4964576-(0+159886+73056+4393+42606)=4684635 5049710-(0+202480+23580+44896+4393+33746)=4740615 Ferozs ons 1868938. 102-(0+141831. 157 +223867. 36+438228. 405+9714. 907)=1055296. 397 1579909. 793-(0+171010. 120+215775. 559+205992. 988+35069. 367)=952061. 759 1481628. 536-(0+0204216. 826+217372. 560+194474. 564)=865565 Sanofi- Aventis 33484287-(339+ 119,808+21381+4669)=33338090 3439093-(114+ 618,974+29683+4609)=2785713 2984535-(729+550391+30549+3325)=2399541 Graphical Representation and Trend Analysis Interpretation and Comparison Percentages of return on assets actively used to work profit of Abbott laboratory have been reasonable. Net profit has declined during 2008 that has caused comparatively low ratio.Ferozsons has also utilized its assets actually postulate to run the business. Its operating assets have improved over the years with reasonable net profit volumes. Sanofi-Aventis has not utilized its actively used assets efficiently to create revenue, consequently very low returns. Abbott has shown increasing trend from 2008 to 2010 due to comparatively high net profit. F erozsons has shown a decreasing trend from FY 2008 to 2009 due to decline in net profit and increased volume of operating assets. It has the highest percentage of 36. 69% in FY 2010 due to rapid increase in net profit.Sanofi-Aventis has shown increasing trend over the years due to substantial increase in the volumes of net profit but these percentages have been below average. It needs to improve its net profit. Ferozsons has utilized its revenue producing assets exceptionally well. It has been leading other two. On the other hand Sanofi-Aventis has shown very low percentages of return on operating assets and it has been unable to actively use its assets to create revenue. Abbott has shown observably improved performance but has not performed better than Sanofi-Aventis. 7- Sales to repair AssetsIntroduction The fixed-asset turnover ratio measures a companys ability to generate net sales from fixed-asset investments specifically property, plant and equipment (PP&E) netof deprecia tion. It is generally expressed in times. It is calculated by dividing net sales with fixed assets for a given year. Formula Sales to fixed Assets = Net sales / Fixed assets Sales to fixed Assets = (Answer) Times Calculation Sales to fixed Assets Year 2008 Year 2009 Year 2010 Abbott 7089163/1560835= 4. 54 Times 8450118/1662785=5. 07 Times 10995701/1877596= 5. 6 Times Ferozsons 932297. 994/610987. 413=1. 53 Times 1085393. 578/735614. 952=1. 48 Times 1273374. 822/742280. 446=1. 72 Times Sanofi-Aventis 4346528/1195978= 3. 63 Times 6725708/1393461=4. 83 Times 6158295/1409260=4. 37 Times Note Numeric Figures are mentioned in 000 Working No need to provide breakup of Net Sales (Numerator) are mentioned in profit and loss account of respective pharmaceutical. Fixed assets breakup (Denominator) = Property, Plant and Equipment-netof depreciation, the said figure has been given in the balance Sheet.Graphical Representation and Trend Analysis Interpretation and Comparison Abbott laboratorys p erformance is better as it is generating almost more than 5 times (on average) sales turnover as compared to its small amount of property, plant and equipment. Ferozsons seems to be lenient in producing sales as per the volume of Property, plant and equipment. It has overinvested in fixed assets. It needs to revive its sales by introducing new products range. Sanofi-Aventis has also do reasonably well to generate sufficient sales volume as compared to its small amounts of fixed assets.Abbott has shown increasing trend from 2008 to 2010 due to increased sales volume and comparatively small amount of fixed assets. Ferozsons has shown a decreasing trend from FY 2008 to 2009 due to overinvestment in property, plant and equipment. It has improved its ratio in FY 2010 by sufficient increase in sales volume. Sanofi-Aventis has shown increasing trend from FY 2008 to 2009 due to adequate increase in sales volume. It has declined in FY 2010 due to lessen in sales. Abbott has surpassed other s by producing pile sales volume with a relatively small mount of fixed assets. On the other hand Ferozsons has shown very low turnover that means it has overinvested in fixed assets. Sanofi-Aventis has shown effective job by producing better sales volume with minute amount of property, plant and equipment.. 8- Return on total right Introduction Return on palenessmeasures a corporations profitabilityby disclosure how muchprofit a company generateswith the billsshareholders have invested. It is generally expressed as a percentage. It is calculated by dividing net profit with share holders virtue for a given year. FormulaReturn on total honor = Net profit / care holders equity*100 Return on total equity = (Answer) %age Calculation Return on total equity Year 2008 Year 2009 Year 2010 Average Abbott 343980/3568512*100=9. 64% 609072/3238460*100 =18. 81% 1176944/3912539*100 =30. 08% 19. 51% Ferozsons 217023. 829/826236. 891*100 =26. 27% 182757. 453/970129. 401*100 =18. 84% 317542. 675/1275765. 058*100 =24. 89% 23. 33% Sanofi- Aventis 38269/1116612*100=3. 43% 167371/1292449*100=12. 95% 224024/1461403*100=15. 33% 10. 57% Note Numeric Figures are mentioned in 000 WorkingNo need to provide breakup of Net Profit (Numerator) are mentioned in profit and loss account of respective pharmaceutical. bundle holders Equity breakup (Denominator) = Issued, bid paid-up capital + reserves capital + militia revenue Issued, subscribed paid-up capital + (Capital Reserves + Revenue Reserves) 2008 2009 Abbott 979003+154777+2434732=3568512 979003+173853+2085604=3238460 Ferozsons 144672. 768+321. 843+681242. 280=826236. 891 173607. 322+321. 843+796200. 236=970129. 401 Sanofi- Aventis 96448+1020164=1116612 96448+1196001=1292449 Issued, subscribed paid-up capital + Reserves capital + Reserves revenue 2010 Abbott 979003+197167+2736369=3912539 Ferozsons 208328. 786+321. 843+1067114. 429=1275765. 058 Sanofi- Aventis 96448+1364955=1461403 Graphica l Representation and Trend Analysis Interpretation and Comparison Abbott laboratory has yielded better profits on proprietors equity that is a positive sign for investors and lenders. Its return on owners equity falls in FY 2008 due to decline in net profit. Ferozsons has also done considerably better by yielding sufficient returns.It has also decline in returns during FY 2009 due to rapid decrease in net profit. Its owners equity has also improved over the years. Sanofi-Aventis has also slightly improved over the years as it has yielded nominal returns on investment in FY 2009 and 2010. It has very low returns in FY 2008 that should be a matter of concern for the management. Abbott has shown increasing trend from 2008 to 2010 due to increase in net profit volume over the years. Ferozsons has shown a decreasing trend from FY 2008 to 2009 due to substantial decrease in net profit.It has improved its ratio in FY 2010 by sufficient increase in net profit. Sanofi-Aventis has shown incre asing trend from FY 2008 to 2010 due to slightly noticeable increase in net profit volumes but these are not attractive from investors point of view. Ferozsons has surpassed others by producing overall better average return that is 23. 33%. It has generated sufficient net profit volumes. Sanofi-Aventis has produced insufficient returns to satisfy its investors. It needs to watch over its policies for better performance. Abbott has also produced reasonable returns on owners equity. 9- Gross Profit Margin IntroductionIt is used to assessa firms financial health by revealing theproportion of money left over from revenues after story for the cost of goods sold. It is generally expressed as a percentage. It is calculated by dividing gross profit with net sales for a given year. Formula Gross profit Margin = Gross profit / Net sales*100 Gross profit Margin = (Answer) %age Calculation Gross profit Margin Year 2008 Year 2009 Year 2010 Abbott 2097653/7089163*100= 29. 6% 2321131/8450118*100= 27. 53% 3687038/10995701*100=33. 53% Ferozsons 540738. 562/932297. 994*100=58% 584211. 298/1085393. 578*100=53. 82% 633242. 518/1273374. 22*100=49. 73% Sanofi- Aventis 1055823/4346528*100=24. 29% 1626599/6725708*100=24. 18% 1753544/6158295*100=28. 47% Note Numeric Figures are mentioned in 000 Working No need to provide breakup of Gross Profit (Numerator) and Net Sales (Denominator) as these figures are mentioned in profit and loss account of respective pharmaceutical. Graphical Representation and Trend Analysis Interpretation and Comparison Abbott laboratory has reasonable overall gross profit margins. Thats why it has yielded sufficient returns on equity. Its net sale has increased over the years. It has a decline in gross profit in FY 2009.Ferozsons has also done exceptionally well by yielding the highest gross profit margins. It has the tendency to face ominous economic condition such as low demanding and price competition. Sanofi-Aventis has undermined overall gross profit mar gins. Its gross profit margins are not sufficiently enough to bear operating and non-operating expenses. Abbott has shown decreasing trend from 2008 to 2009 due to decrease in gross profit. It has revived in FY 2010 by yielding higher gross profit. Ferozsons has also shown a decreasing trend from FY 2008 to 2009 due to significant decrease in gross profit.It has decreased yet in FY 2010 due to bulk net sales volumes. Sanofi-Aventis has shown almost same trend in FY 2008 and 2009 but an increase in FY 2010 due to higher gross profit. Ferozsons has left behind others by producing overall subtile gross profit margins. It has generated sufficient gross profit volumes to face unfavorable financial circumstances such as low demanding and price competition. Sanofi-Aventis has produced insufficient gross profit returns to satisfy any stakeholder. Abbott has produced adequate gross profit margins to pass operating and non-operating expenses.Chapter 4) Summary, Conclusion, Recommendations & Limitations 4. 2) Conclusions * Ferozsons and Abbott have yielded sufficient net profits to recover all operating, non-operating expenses and taxation charges. They have the tendency to build up reserves after paying all fixed interest charges and dividends. Sanofi-Aventis has yielded very low net profit despite reasonable sales volume due to escalating cost of goods sold, operating and non-operating charges. * Abbott laboratory and Ferozsons are efficiently managing its assets to generate profit.Sanofi-Aventis has low volumes of net profit with higher size of total assets that depicts its not utilizing its assets properly to generate profit. * Abbott laboratory and Ferozsons have yielded great volume of profits along with an increase in its total assets and sales volume over the years. Its higher ratio depicts the higher generating rate of its wealth. Sanofi-Aventis has very low net profit margins but reasonably well total assets turnover rate that depicts lower generating ra te of its wealth. * Ferozsons has the highest operating income margins that depict better pricing approach and operating competence.On the contrary Sanofi-Aventis has shown the lowest volume of operating profit margins that shows its flaws in pricing tactic. Abbott has shown adequate operating profits to meets its fixed costs. * Sanofi-Aventis has shown its efficiency at its best in managing significant assets like Property, Plant & Equipment, Stock in Trade and Cash with bank balances. On the other hand Ferozsons and Abbott have shown comparatively low Operating Assets Turnover in utilizing operating assets for generating sales. * Ferozsons has utilized its revenue producing assets exceptionally well.On the other hand Sanofi-Aventis has shown very low percentages of return on operating assets. Abbott has shown noticeably improved performance on the whole. * Abbott has produced bulk sales volume with a relatively small amount of fixed assets. Ferozsons has shown very low turnover that means it has overinvested in fixed assets. Sanofi-Aventis has shown effective job by producing better sales volume turnover with minute amount of property, plant and equipment. * Sanofi-Aventis has produced insufficient returns to satisfy its investors. Ferozsons has produced enough returns on owners equity whereas Abbott has also yielded reasonable returns.It is a good sign for prospect investors. * Ferozsons has generated sufficient gross profit volumes to face unfavorable financial circumstances such as low demanding and price competition. Sanofi-Aventis has produced insufficient gross profit returns to satisfy any stakeholder. Abbott has produced adequate gross profit margins to absorb operating and non-operating expenses. 4. 3) Recommendations * Ferozsons and Abbott need to keep scheming in the same way to keep curtailing cost of goods sold, operating and non-operating expenses. Sanofi-Aventis really need to look its profit yielding capacity.It should review and improve i ts product range. Furthermore effective management policies can produce the unavoidable results. * Ferozsons and Abbott need to retain effective management policies by utilizing more assets for the generation of higher profits in future. Sanofi-Aventis can yield better profit by utilizing its assets proficiently through effective management role. * Ferozsons and Abbott have reasonable Dupont return on Assets with sales spectrum. Sanofi-Aventis needs to improve it by curtailing its cost of goods sold, operating and non-operating expenses. Better profits always enhance investors confidence and it matters in the end. Ferozsons and Abbott have reasonable operating income margin and they need to keep strengthening better pricing approach and operating competence. Sanofi-Aventis requires implementing improved pricing tactic to attain better operating proficiency. * Abbott and Ferozsons need to utilize operating assets more effectively to improve their turnover as per sales volume. Sanofi -Aventis has unexpectedly better turnover, it should keep utilizing operating assets in the same manner. * Sanofi-Aventis needs to utilize its revenue producing assets in a better way. Abbott and Ferozsons should retain their current line of action. Ferozsons needs to downsize overinvested in fixed assets. Abbott and Sanofi-Aventis should keep their approach towards utilizing its fixed assets in call of sales volume. * Sanofi-Aventis needs to watch over its policies for better return on owners equity to retain its investor confidence. Ferozsons and Abbott have to retain their pace in retaining current returns on owners equity. * Sanofi-Aventis needs to improve their selling strategies to improve profit margins. Abbott and Ferozsons can increase gross profits by implementing more effective management policies. Section II a) Introduction of the student Last degree Obtained B. ComOrganizations human body Wisdomhouse School Designation Owner/ genius Experience 7 Years b) Bibliography Vu hand Outs Internet sources www. investopedia. com http//www. accountingtools. com/fixed-asset-turnover-ratio http//www. abbott. com. pk/11_Financial. htm http//www. pakistaneconomist. com/database2/pdffiles/Pharmaceutical/Abbot/Year%202008/ALAnnual-%20Y08. pdf http//www. ferozsons-labs. com/investor. htm http//www. sanofi-aventis. com. pk/l/pk/en/layout. jsp? scat=59A5026C-701D-4C54-B1EC-E7788EA00832 Ross, S. A. , R. W. Westerfield and B. D. Jordan. Essentials of unified Finance (1999), 2nd Edition, Irwin/McGraw-Hill.