Financial Statement Analysis of Pharmaceuticals in Pakistan

Topics: Generally Accepted Accounting Principles, Financial ratios, Profit margin Pages: 28 (7172 words) Published: April 20, 2013
Final Project
Profitability Ratios’ Analysis of Pharmaceuticals in same industry for FY 2008-10 Sanofi-Aventis


Submitted By
Sheikh Khurum Akram

Department of Management Sciences,
Virtual University of Pakistan


In the name of ALLAH, the most 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 sound health and determination to perform this task. I really acknowledge guidelines from my course tutor who taught me the techniques of research. This project is my own effort.

Executive Summary

I will evaluate three leading pharmaceuticals of Pakistan for profitability ratio analysis of Abbott, Ferozsons and Sanofi-Aventis. I will assess them on the basis of facts and figures provided in their financial statements. My objective is to figure out their flaws and potencies. Outcomes of profitability analysis are worthy for management in making effective decisions. My findings will make easy for all related parties to have impartial analysis. This project will also make available a snapshot of pharmaceuticals’ capability in managing their resource for yielding profits. The main purpose behind this analysis is to conduct a quantitative study of raw data. Outcomes of my project will assist the title-holders and decision-makers to keep an eye on improvement in their businesses. I will perform profitability ratio analysis of Abbott, Ferozsons and Sanofi-Aventis. 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. Microsoft word and excel will be used to evaluate ratio analysis. APA style of referencing will be used. Ferozsons and Abbott have yielded sufficient net profits to recover all operating, non-operating expenses and taxation charges and 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 is not utilizing its assets properly to generate profit. Abbott laboratory and Ferozsons have higher generating rate of their wealth. Sanofi-Aventis has lower generating rate of its wealth. Ferozsons has better pricing approach and operating competence. On the contrary Sanofi-Aventis has flaws in pricing tactic. Abbott has shown adequate operating profits to meet its fixed cost. 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. Ferozsons has utilized its revenue producing assets exceptionally well. Abbott has produced bulk sales volume with a relatively small amount of 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 generated sufficient gross profit volumes to face unfavorable financial circumstances such as low demanding and price competition. Ferozsons and Abbott need to keep scheming in the same way for curtailing cost of goods sold, operating and non-operating expenses. They need to retain effective management policies by utilizing more assets for the generation of higher profits in future. They need to keep strengthening better pricing approach and operating competence. They need to utilize operating assets more effectively to improve their...
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