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Financial Ratio analysis Glaxosmithkline Ltd. Sun Pharmaceuticals Ltd. Dr. Reddy’s Laboratory.

Financial Ratio analysis Glaxosmithkline Ltd. Sun Pharmaceuticals Ltd. Dr. Reddy’s Laboratory. Submitted By, Swarupa Ray ----- 10202143 Neha Rai ----- 10202144 Pralina Jena ----- 10202145 Neha Paul ----- 10202146

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Financial Ratio analysis Glaxosmithkline Ltd. Sun Pharmaceuticals Ltd. Dr. Reddy’s Laboratory.

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  1. Financial Ratio analysis Glaxosmithkline Ltd. Sun Pharmaceuticals Ltd. Dr. Reddy’s Laboratory. Submitted By, Swarupa Ray ----- 10202143 Neha Rai ----- 10202144 Pralina Jena ----- 10202145 Neha Paul ----- 10202146 Samikshya Panda -- 10202147

  2. OBJECTIVE • To analyze financial performance of firms: Using ratio analysis(5 ratios) • To determine the financial performance of each firm. • To conduct the comparative analysis. • METHODOLOGY • Ratio Analysis

  3. Ratios….. Net profit margin: show how successful management is in creating profit from a given quantity of sales, Fixed asset turnover ratio:this is a measure of a firm’s efficiency in utilising its fixed assets. Debt equity ratio:it measures the relationship between capital provided by the creditors to the amount provided by the shareholders,it measures the long term solvency position of the company

  4. Contd… Return on equity : it measures the efficiency with which the shareholders’ funds are employed Inventory turnover ratio : this ratio shows the number of times a company’s inventory is turned into sales.high inventory turnover ratio is a sign of efficient inventory management.

  5. Ratio analysis of Glaxosmithkline • Net Profit Margin: Increased in 2004-2005 : 6.9% increase in sales (2004-2005); • 50.75% increase in PAT (decrease in cost of production) • Decline in year 2009 :-9.69% increase in sales & Decrease in PAT by 11.15% • (increase in cost of production) • Fixed Asset Turnover Ratio :Increased in 2004-2007—(18.14% increase in sales • Where as Fixed Assets decreased by 2.16%); Decline from 2007-2009 • (11.86% increase in sales & 22.16% increase in Fixed Assets) • Debt-Equity-ratio: Financial leverage is very low. • Return On Equity:Increase in 2004-2005 (50.73% rise in PAT compared to 2.63% • Increase in Net Worth) ; Decline in 2005-2009 (Minor Fluctuation in PAT compared to • Steady increase in Net worth. • Inventory Turnover Ratio: Steady increase from 2004-2009(32.16%increase in sales & • 11.71% increase in inventory.

  6. Analysis of Dr. Reddy’s Lab • Net Profit Margin: Increase in 2006-2007(94.81% increase in sales ;457.44% increase in PAT ).Decline in year 2007-2008(13.85% decrease in sales & Decrease in PAT by 59.61% ) increase in 2008-2010(33.92% increase in sales and 78.01% increase in PAT) • Fixed Asset Turnover Ratio :Increased in 2006-2007—(94.81% increase in sales Whereas Fixed Assets increased by 42.66%); Decline from 2007-2010 • (15.37% increase in sales & 114.1% increase in Fixed Assets) • Debt-Equity-ratio: Financial leverage is very low(D/E<1) • Return On Equity:Increase in 2006-2007 (457.44% rise in PAT compared to 93.32% Increase in Net Worth) ; Decline in 2007-2008 (59.61% decrease in PAT compared to 10.02% Increase in Net Worth) • Inventory Turnover Ratio: Maximum in year 2010.

  7. Analysis of SunPharma • Net Profit Margin: Increase in 2005-2010(81.08% increase in sales ;193.23% increase in PAT • Fixed Asset Turnover Ratio :Increased in 2005-2008—(132% increase in sales • Where as Fixed Assets increase by 36.21%); Decline from 2010(22% decrease in sales & • 25.5% increase in Fixed Assets) • Debt-Equity-ratio: Decline from 2006-2010 (company paid off the borrowings) • Return On Equity:Increase in 2005-2006 (50.52% rise in PAT compared to 32.52% • Increase in Net Worth) ; Decline in 2005-2010 (Increase in both PAT & Net worth, • but More Increase in Net Worth.) • Inventory Turnover Ratio: Highest in 2009.

  8. Comparison of 3 Firms The Sheet

  9. NET PROFIT MARGIN Sun is doing well then other do companies as its net profit ratio is increasing constantly,

  10. FIXED ASSET TURNOVER RATIO Glaxosmith is much ahead of sun pharmaceutical and Dr. reddy lab. Which shows that it is able to use its fixed asset very efficiently

  11. DEBT EQUITY RATIO Sun pharma is relying on debt in the first 3 yrs but in the last 2 years all the three companies are making minimal use of debt

  12. RETURN ON EQUITY Though the return on equity of Glaxosmith is decreasing but it is still better than the other two companies in employing its equity shareholders’ fund

  13. INVENTORY TURNOVER RATIO • The inventory turnover ratio of both the sun pharma and dr.reddy is increasing but the increase of sun pharma is consistent while that of dr.reddy is a bit fluctuating. • Inventory turnover ratio of glaxosmith is almost constant over the 5 yeras

  14. Thankyou

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