INVESTMENTS MANAGEMENT

PROJECT REPORT
FINANCIAL RATIO ANALYSIS: ABBOTT LABORATORIES
PAKISTAN
(2003-2007)

Dated: 29th May, 2008.

DEPARTMENT ADMN. SCIENCES

QUAID-E-AZAM UNIVERSITY,
ISLAMABAD
 Abbott Laboratories (Pakistan) Ltd - Company
Profile Snapshot

Company Abbott Laboratories

Profile: (Pakistan) Ltd

Ticker: ABOT

Exchanges: BOM

2007 Sales: 6,584,500,000

Major Industry: Drugs, Cosmetics & Health

Care

Sub Industry: Ethical Drug Manufacturers

Country: PAKISTAN

Employees: 1350

General Information
Abbott Laboratories(Pakistan) Limited

Opposite Radio Pakistan Transmission

Hyderabad Road
Karachi
Sindh
PAKISTAN

www.abbott.com.pk
T: 92 21 501 50 45 9
F: 92 21 501 32 45

Karachi Stock Exchange Ticker: ABOT

Turnover (PKR Mn): 5,887.7
Financial Year End: November

Company Overview:
Abbott Laboratories (Pakistan) is a subsidiary of Abbott Laboratories, and focuses on
manufacturing and marketing pharmaceutical products. The company also manufactures
diagnostic equipment; diabetes cares products, molecular devices, related testing kits, and
consumer health and hospital products. In addition, it markets pediatrics and medical
nutritional products. The company operates primarily in Pakistan. It is headquartered in
Karachi, Pakistan and employs 1,500 people.

The company recorded revenues of PKR5, 887.7 million (approximately $98 million)
during the fiscal year ended November 2006. The net profit of the company was PKR
1, 000 million (approximately $16.7 million) in fiscal year 2006.

Principal Activities:

The Company's principal activities are to manufacture, import and market research based
pharmaceutical, nutritional, diagnostic, hospital and consumer products and provides toll
manufacturing services. It operates through three segments:

• Pharmaceutical,
• Nutritional and
• Others

The Pharmaceutical segment manufactures, import and markets research based

pharmaceutical products registered with the Ministry of Health and provides toll
manufacturing services. The Nutritional segment is into importing and marketing of
pediatrics nutritional products and medical nutritional products. Other segment includes
importing, manufacturing and marketing diagnostic equipment, testing kits, consumer
healthcare, nutritional and hospital products.
Analysis of Company Data:

The financial information regarding Abbott laboratories was collected and analysed and
the significant ratios were calculated in order to determine the financial situation of thee
company during last 5 years, a report is presented below.

OPERATING & LIQUIDITY RATIOS

(All calculations are done on MS-Excel using formuals, sheets are attached)

Net Working Capital

Net Working Capital= Current Assets – Current Liabilities

2003

Rs. 1233297

2004

Rs. 1809510

2005

Rs. 2211893

2006

Rs. 2814730

2007

Rs. 2247448

Acid test ratio:

Cash+ Marketable securities+ Net Receivables / Current Liabilities

2003

0.8911

2004

2.1108

2005

1.8971

2006

2.4253

2007

0.7088

Current Ratio

Current Assets/ Current Liabilities

2003

2.6523

2004

4.2611

2005

4.1774

2006
 4.7558

2007

3.5490

Receivables as a Percentage of Sales :

Net Receivables / Net Sales * 100

2003

2.27%

2004

1.91%

2005

2.85%

2006

3.55%

2007

1.97%

Total Asset turnover:

Sales / Average Total Assets

2003

1.4460 times per year

2004

1.3650 times per year

2005

1.2536 times per year

2006

1.1693 times per year

2007

1.3984 times per year

Earning Power of Total Investment:

EBIT / Total Assets * 100

2003

30.52%

2004

34.84%

2005

33.16%

2006

28.67%

2007
 37.86%

PROFITABILITY RATIOS

(All calculations are done on MS-Excel using mathematical formulas, sheets

are attached)

Net Profit Margin (%) = Net Profit/ Sales * 100

2003

12.30%

2004

16.25%

2005

18.59%

2006

16.98%

2007

18.48%

Earning Power (%) = EBIT/ Total Assets * 100

2003

28.20%
2004

32.15%

2005

33.16%,

2006

28.67%

2007

37.86%

Rate of Profit on Owner's Equity (%) = Net Profit/ Owner's Equity * 100

2003

24.09%

2004

26.78%

2005

28.20%

2006

23.57%

2007

32.79%
 40
35
30
25
Net Profit Margin
20
Earning Power
15
Profit on Equity
10
5
0
2003 2004 2005 2006 2007

Rate of Profit on Paid-up Capital (%) = Net Profit/ Paid-up capital * 100

2003

111.45%

2004

131.87%

2005

141.52%

2006

102.15%

2007

123.55%

Rate of Profit on Total Investment = Net Profit/ Total Investment

2003
 164.18

2004

224.23

2005

194.50

2006

294.64

2007

275.35

300

250
Rate on paidup
200
capital
150 Rate on
Investments
100

50

0
2003 2004 2005 2006 2007

SHARE PRICES
 (All calculations are done on MS-Excel using mathematical formulas, sheets are
attached)

Book value of ordinary shares = Total common equity/ No. shares

outstanding

2003

$9.9999

2004

$9.9999

2005

$9.9999

2006

$10.00

2007

$10.00

Earning per Share = Net Income/ Number of Shares

2003

11.15

2004

10.99
2005

14.15

2006

10.21

2007

12.36

Dividend per Share = Net Income/ Number of shares outstanding

2003

Rs. 3.00

2004

Rs. 3.00

2005

Rs. 3.50

2006

Rs. 3.55

2007

Rs. 3.99

Payout Ratio = DPS/EPS

2003
 26.99%

2004

27.30%

2005

24.73%

2006

34.77%

2007

32.28%

Dividend Yield (%) = DPS/ Market price per share

2003

0.53%

2004

0.34%

2005

0.27%

2006

0.21%

2007
 1.20%

35
Bookvalue of
30 share
25 EPS
20
DPS
15
10 Payout
5
Dividend Yield
0
2003 2004 2005 2006 2007

Leverage & Capital Structure Ratios

(All calculations are done on MS-Excel using mathematical formulas, sheets are
attached)

Total debt to equity ratio = Total Debt/ Total equity

2003

1.6393%

2004

0.1040%

2005

0.1055%

2006
 0.0811%

2007

0.1013%

Total Debt to Total Capital = Total Debt/ Total debt+ total equity

2003

26.1640%

2004

17.1887%

2005

17.3699%

2006

15.7591%

2007

21.1924%

Long term debt to equity ratio = Long term debt/ total common equity

2003

0.93%

2004

0.87%
2005

0.62%

2006

1.04%

2007

2.99%

2.5

2
Debt to Equity
1.5
Debt to Capital
1 LTD to Equity
0.5

0
2003 2004 2005 2006 2007

Tangible Assets Debt Coverage = Total Assets – Intangibles- Current Assets/

LTD

2003

35.54 times per year

2004

41.59 times per year

2005

57.92 times per year

2006

33.36 times per year

2007

14.06 times per year

Times Interest Earned Ratio = EBIT/ LTD Interest

2003

51.2069 times per year

2004

344.6738 times per year

2005

471.7715 times per year

2006

394.4344 times per year

2007

553.4760 times per year

Cash flow times interest earned ratio = EBIT+ Depreciation/ Interest

2003

59 times per year

2004

392 times per year

2005

523 times per year

2006

438 times per year

2007

612 times per year

700
600
500 Tangible Asset Debt
Coverage
400
Times Interest
300 earned
200 Cash flow times
interst earned
100
0
2003 2004 2005 2006 2007
 Asset Relation Ratios

(All calculations are done on MS-Excel using mathematical formulas, sheets are
attached)

Plant & Equipment to Total Assets = Net Plant + Net Equipment/ Total
Assets

2003

805219/2958071 = 27.22%

2004

972968/3368623 = 28.89%

2005

1187749/4129055 = 28.76%

2006

963726/ 5035425 =19.14%

2007

912435/ 4681368 = 19.49%

Inventory to Total assets= Average Inventory / Total Assets

2003
791608/2958071 = 0.2676

2004

837784.5/3368623 = 0.2487

2005
1067760.5/4129055 = 0.2586

2006

1237020.5/5035425 = 0.2457

2007

1309824.5/4681368 = 0.2798

Receivables to Total Assets = Average Receivables/ Total Assets

2003

97057/2958071= 0.0328

2004

92553.5/3368623 = 0.0275

2005

117673.5/4129055 = 0.0285

2006
 178019.5/5035425 = 0.0353

2007

168779.5/ 4681368 = 0.0360

0.3

0.25
Plant&Equipment
0.2
to totalAssets
0.15 Inventory to total
assets
0.1
Receivable to total
0.05 asset

0
2003 2004 2005 2006 2007