GRADUATE SCHOOL OF MANAGEMENT

International Islamic University Islamabad

“FINANCIAL ANALYSIS OF GALXO

SMITH KLINE COMPANY PAKISTAN
FROM 2004-2008”

Presented By: Aamir Hayat

Contact: +92-314-556-1080

1
ANALYSIS OF FINANCIAL
STATMENT

“GLAXO SMITH KLINE

COMPANY PAKISTAN”

2
 CATEGORY OF RATIOS
“GLAXO SMITH CLINE COMPANY”
Activity
Activity
Ratios
Ratios
Coverage
Coverage
Ratios
Ratios
Horizontal
Horizontal
and
andVertical
Vertical
Analysis
Analysis
Profitability
Profitability
Ratios
Ratios
Investor’s
Investor’s
Analysis
Analysis
Ratios
Ratios

3
ACTIVITY RATIOS
ANALYSIS

4
CURRENT, QUICK AND CASH RATIOS

4
Current Ratio
3 Quick Ratio
Cash Ratio
2

0
2004 2005 2006 2007 2008
RECEIVABLE TURNOVER RATIO
Receivable Turnover Ratio
300

250

200

150

100 Receivable
Turnover Ratio

50

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

265.42 Times 145.14 times 119.11 times 90.81 times 13.18 times

6
RECEIVABLE TURNOVER IN
DAYS
Receivable Turnover in Days
30

25

20

15

Receivable
10
Turnover in
Days
5

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

1.38 Days 2.51 Days 3.06 Days 4.02 Days 27.69 Days

7
 INVENTORY TURNOVER
RATIO
Inventory Turnover
3.4

3.3

3.2

3.1

3 Inventory
Turnover

2.9

2.8
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

3.28 Times 3.09 Times 2.99 Times 2.98 Times 3.31 Times

8
INVENTORY TURNOVER IN
DAYS
Inventory Turnover in days
124

122

120

118

116

114

112
Inventory
110 Turnover in
days
108

106

104
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

111.13 Days 118.12 Days 122.27 Days 122.58 Days 110.32 Days

9
DAY’S SALES IN RECEIVABLE
Day's Sales In Receivable
160

140

120

100

80

60
Day's Sales In
Receivable
40

20

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

111.12 Days 129.28 Days 128.79 Days 124.8 Days 133.58 Days

10
 OPERATING CYCLE
Operating Cycle
160

140

120

100

80

60
Operating
Cycle
40

20

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

112.51 Days 120.63 Days 125.33 Days 126.6 Days 138.01 Days

11
 WORKING CAPITAL
Working Capital
7000000

6000000

5000000

4000000

3000000

Working
2000000 Capital

1000000

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

3877907 5252464 5626548 5759184 6032399

12
SALES TO WORKING CAPITAL
Sales to Working Capital
3.5

2.5

1.5
Sales to
1 Working
Capital

0.5

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

2.29 Times 2.06 Times 1.82 Times 2.87 Times 2.27 Times

13
COVERAGE RATIOS
ANALYSIS

14
 DEBT TO TOTAL ASSETS
Debt to Total Assets
22.00%

21.00%

20.00%

19.00%

18.00% Debt to Total

Assets

17.00%

16.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

19.18 % 18.43 % 20.19 % 20.13 % 21.37 %

15
 DEBT TO EQUITY RATIO
Debt to Equity Ratio
30.00%

25.00%

20.00%

15.00%

10.00% Debt to
Equity Ratio

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

23.74 % 22.60 % 25.53 % 25.21 % 27.72 %

16
 CURRENT LIABILITIES TO
EQUITY RATIO
Current Liabilities to Total Equity
25.00%

20.00%

15.00%

Current
Liabilities to
10.00% Total Equity

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

19.68 % 18.79 % 22.60 % 21.69 % 23.19 %

17
 DEBT TO TANGIBLE NET
WORTH
Debt to Tangible Net Worth

30.00%

25.00%

20.00%

15.00%

Debt to Tangible NeT

10.00% Worth

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

23.74 % 22.60 % 25.53 % 25.21 % 27.72 %

18
INVESTORS RATIOS
ANALYSIS

19
 DEGREE OF FINANCIAL
LEVEAGE
Degree of Financial Leverage
1.2

0.8

0.6
Degree of
Financial Leverage
0.4

0.2

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

1 Times 1 Times 1 Times 1 Times 1 Times

20
 EARNING PER SHARE
Earning Per Share
18

16

14

12

10

6 Earning Per
Share
4

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

13.47 Per 16.60 Per 12.19 Per 9.8 Per 11.46 Per
Share Share Share Share Share

21
 PRICE EARNING RATIO
Price Earning Ratio
25

20

15

10
Price Earning
Ratio

0
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

13.4 Times 11.2 Times 12.9 Times 19.5 Times 6.6 Times

22
 PAYOUT RATIO
Payout Ratio
90.00%

80.00%

70.00%

60.00%

50.00%

40.00%

30.00% Payout Ratio

20.00%

10.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

51.97 % 48.19 % 65.62 % 76.60 % 82.26 %

23
PERCENTAGE OF EARNINGS
RETAINED
% Age of Earnings Retained
60.00%

50.00%

40.00%

30.00%

% Age of
20.00% Earnings
Retained

10.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

51.78% 34.43% 23.37% 17.07% 51.78%

24
 DIVIEND YIELD RATIO
Dividend Yield
14.00%

12.00%

10.00%

8.00%

6.00%
Dividend Yield
4.00%

2.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

3.86 % 4.29 % 5.06 % 3.89 % 12.51 %

25
PROFITABILITY RATIOS
ANALYSIS

26
 NET PROFIT MARGIN
Net Profit Margin
25.00%

20.00%

15.00%

Net Profit
Margin
10.00%

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

16.5 % 19.3 % 16.5 % 15.7 % 14.5 %

27
 GROSS PROFIT MARGIN
Gross Profit Margin
45.00%

40.00%

35.00%

30.00%

25.00%
Gross
20.00% Profit
Margin
15.00%

10.00%

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

39.5 % 40.8 % 38.2 % 37.24 % 28.8 %

28
RETURN ON ASSETS RATIO
Return on Assets
30.00%

25.00%

20.00%

15.00% Return on
Assets

10.00%

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

21.4 % 27 % 18.8 % 17 % 18.8 %

29
 TOTAL ASSETS TURNOVER
Total Asset Turnover
1.35

1.3

1.25

1.2

1.15 Total Asset

Turnover
1.1

1.05

0.95
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

1.29 Times 1.24 Times 1.14 Times 1.08 Times 1.29 Times

30
 DUPONT ANALYSIS
DuPont Analysis
30.00%

25.00%

20.00%

15.00% DuPont
Analysis

10.00%

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

21.3 % 24 % 18.8 % 16.9 % 18.6 %

31
 RETURN ON FIXED ASSETS
Return on Fixed Assets
140.00%

120.00%

100.00%

80.00%
Return on
Fixed
60.00% Assets

40.00%

20.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

1.026 1.206 0.94 0.75 0.809

32
 RETURN ON INVESTMENT
Return on Investment
60.00%

50.00%

40.00%

Return on
30.00% Investme
nt

20.00%

10.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

52.5 % 53.5 % 43.9 % 41.0 % 46.0 %

33
RETURN ON TOTAL EQUITY
Return on Total Equity
30.00%

25.00%

20.00%

15.00%

Return on Total
Equity
10.00%

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

26.5 % 26.9 % 22.0 % 21.0 % 23.0 %

34
RETURN ON COMMON EQUITY
Return on Common Equity
30.00%

25.00%

20.00%

15.00% Return on
Common
Equity

10.00%

5.00%

0.00%
2004 2005 2006 2007 2008

Year 2004 2005 2006 2007 2008

26.5 % 26.9 % 22.0 % 21.0 % 23.0 %

35
 HORIZONTAL AND
VERTICAL ANALYSIS

36
 VERTICAL ANALYSIS OF
BALANCE SHEET
Vertical Analysis of Balance Sheet

Years 2004 2005 2006 2007 2008

Total Liabilities & Share Holder's Equity  100 100  100  100  100 

Issued & paid up capital 12.73 13.22 14.46 16.79 16.06

Trade & other payables 13.89 10.82 16.93 16.71 17.57

           

Total Assets  100  100 100  100  100 

Fixed assets 17.36 18.20 18.8 22.01 22.73

Long Term Loans 0.7 0.48 0.38 0.53 0.58

Trade debts 0.5 0.79 0.90 1.15 9.571

Investments 0 2.4 1.05 9.66 1.46

37
 VERTICAL ANALYSIS
PROFIT & LOSS A/C

Vertical Analysis of Profit & Loss

years 2004 2005 2006 2007 2008

Net Sales 100 100 100 100 100

C.G.S 71 63 61.67 62.75 71.23

Gross Profit 29 37 38.33 37.25 28.77

Profit after taxation 14.6 15.74 16.5 15.74 14.59

38
HORIZONTAL ANALYSIS OF
BALANCE SHEET
Horizontal Analysis of Balance Sheet
years 2004 2005 2006 2007 2008

Total Liabilities & Share Holders Equity          

Issued & paid up capital 100 125 156.25 195.3124 195.3124

Reserves 100 120.7805 132.031 137.1522 142.2278

Current Liabilities          

Trade & other payables 100 93.74531 167.5806 178.0585 195.7662

Taxation 100 269.6506 76.27451 45.48936 50.94932

           

ASSETS          

fixed assets 100 104.85 123.77 156.02 168.47

Long term loans 100 82.95 75.02 112.70 129.28

Trade debts 100 194.21 253.53 349.77 3044.18

Cash & Bank Balances 100 130.46 152.80 139.25 89.22

39
 HORIZONTAL ANALYSIS
PROFIT & LOSS A/C
HOROZONTAL ANALYSYS OF P&L A/C

years 2004 2005 2006 2007 2008

Net Sales 100 106.20 113.77 119.67 151.16

C.G.S 100 103.90 116.05 124.20 178.08

Gross Profit 100 109.72 110.30 112.74 109.98

selling, mkt, dis Expenses 100 86.86 101.48 116.64 128.02

administrative Expenses 100 103.09 124.29 138.49 148.02

other operating Expenses 100 144.52 142.3 143.70 133.72

Net Profit 100 123.3 113.16 113.54 132.89

40
THANK YOU

41