Professional Documents
Culture Documents
No. of words:2956
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TABLE OF CONTENTS:
INTRODUCTION……………………………………………………………2
REASONS……………………………………………………………………15
CONCLUSION……………………………………………………………….19
BIBLIOGRAPHY…………………………………………………………….20
APPENDIX…………………………………………………………………22
Figures:12
Tables:5
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Introduction:
The company operates in the UK, US, France, Sweden, Canada, Brazil,
China, Japan and India. The company’s largest single R & D site is based
at Alderly park, Cheshire, England with over 4,500 staff. All together,
there are over 50,000 people who work for Astrazeneca. Astrazeneca is
listed at #239 Global 2000.In 2014, company revenue was $26.09B and
net income was $1.23B. Today, Astrazeneca is listed in the 100 FTSE
index and it’s market capital is £54.8 billion which makes it 6 th in the
primary L.S.E.
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2.FINANCIAL PERFORMANCE AND POSITION:
Furthermore, these statements and ratios also help the shareholders and
the investors to understand the financial position of the company and
decide whether to invest or not.
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FIGURE 1: GRAPH (PROFITABILITY RATIOS)
A. GROSS PROFIT:
We can see that the gross profit in the year 2011 was 82.06%
which is good. We see that from the years 2012 to 2014, there
has been a decline in the gross profit by 1% to 2% each year
largely because of the fall in revenue due to the loss of
individuality of it’s products such has Crestor, Atacand and
Seroquel as said by the Chairman.
(‘AZ_Annual_Report_2014_EN.pdf’, no date)Although, sales
declined by 3% in Japan,1 % in Europe and 4% in Rest of the
world, it was partially offset by the diabetes franchise sales which
had a huge increase by $644m.
B. NET PROFIT:
The net profit in the year 2011 was 29.72%. It has varied
distinctly in the years 2012-2014 due to the decreased revenues.
Also, due to the financial expenses that increased from $495m to
$963m have caused a drastic decrease in the net income from
$2571m in 2013 to $1235m in 2014 which has caused the net
profit to decline from 10% to 4% respectively. Maximising the
potentiality of the existing products and effective pricing can help
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the in the improvement of net profit.
D. RETURN ON ASSETS:
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E. OPERATING PROFIT:
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TABLE 2: LIQUIDITY RATIOS
A: CURRENT RATIOS:
The company will be able to pay off it’s short term debts
if the current ratio is higher. Astrazeneca’s current ratio
from 2011 to 2013 has been more than 1 which is said to
be good. In the year 2014, it was slightly lower than
which is 0.96 for which the reason is that it’s liabilities are
greater than it’s assets and it is unable to pay off it’s
short-term debts at that time.
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B: QUICK RATIOS: (ACID-TEST RATIOS)
LEVERAGE RATIOS:
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FIGURE 3:GRAPH (LEVERAGE RATIOS)
A.GEARING RATIOS:
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B. DEBT-EQUITY RATIOS:
INVESTMENT RATIOS:
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FIGURE 4: GRAPH (INVESTMENT RATIOS)
EARNINGS PER SHARE:
P/E RATIO:
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also the profit from the merger diabeties company has
been good. Also, it indicates that there is future increase
in earnings expected by investors.
EFFICIENCY RATIOS:
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position overall because they have been able to receive
the money earlier than the payment day arrives. This also
means that the investors can make investments in the
future. Although, the assets turnover has decreased
slightly from 2012 to 2014, it has been efficient enough
to generate sales. This is a good opportunity for the
investors to invest and hope for much better sales.
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ESTIMATED PRICE TO PURCHASE 10% SHARES OF GSK:
= £6615.80
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Figure 8: Graph (EPS Comparison of AZN and GSK)
From the above figure, we can see that the EBIT of GSK has been more than AZN
from 2012 to 2014. This could be good for AZN to invest, but, like I said, there has
been inconsistency in the EPS which is an important factor to look upon before
investing.
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FIGURE 10: GRAPH(P/E RATIO COMPARISON OF AZN and GSK)
We can see that the the P/E ratio of GSK has been low compared to AstraZeneca
from 2013 to 2014, which was not the case in 2011 and 2012. This shows the ups
and downs of the price earnings of GSK. This is one of the reasons I would think
investing right now would not be a good idea. According to me, there has to be
consistency in the business in terms of growth.Thus, I would like to hold on and
wait before buy 10% of GSK’s stock.
Also, there is one reason I would like to give it a thought before investing in GSK
is that the HIV business has just started to grow and it has grown by 15% with
sales and the Chairman is happy about it. Also , Chairman has mentioned that the
three part transaction with Novartis by which GSK will acquire the vaccine
business is going to bring more balanced long term growth for the company.
(‘2014-Annual-report.pdf’, no date). According to me, long term growth is very
important for a company and a wait for about a year or two post the 3 part
transaction will be an ideal time to invest.
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Book value is where the assets are carried on the balance sheet.
In other words, it is the total value of the company’s assets that
shareholder’s would theoretically receive in case the company is
liquidated. When a book value is compared to it’s market value,
there can be indications of the stock being under-priced or
overpriced.
ASTRAZENECA GSK
We can see that the market value of GSK is much higher than it’s
book value.
It is a good sign for GSK as it shows it’s profit more than that of
AstraZeneca. However, there has to be more observation as there
is going to be a 3 part transaction as it could result positive or
negative. Hence, just because the share price is low , it does not
mean that it could possibly be a good time to invest as
investments are made to see a long time profit.
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Figure 12: Graph( Book Value of AZN and GSK)
CONCLUSION:
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BIBLIOGRAPHY:
‘AstraZeneca Annual Report and Form 20-F Information 2012 - 2012-Annual-report.pdf’ (no
date). Available at: https://www.astrazeneca.com/content/dam/az/our-company/investor-
relations/presentations-and-webcast/Annual-Reports/2012-Annual-report.pdf (Accessed: 18
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March 2016).
AZN AstraZeneca PLC XLON:AZN Stock Quote Price News (no date). Available at:
http://www.morningstar.com/stocks/XLON/AZN/quote.html (Accessed: 20 March 2016).
Earnings Per Share (EPS) Definition | Investopedia (no date). Available at:
http://www.investopedia.com/terms/e/eps.asp (Accessed: 20 March 2016).
Growth, Profitability, and Financial Ratios for GlaxoSmithKline PLC (GSK) from
Morningstar.com (no date). Available at: http://financials.morningstar.com/ratios/r.html?
t=GSK®ion=gbr&culture=en-US (Accessed: 20 March 2016).
‘GSK Annual Report & Accounts 2011 - annual-report-2011.pdf’ (no date). Available at:
http://www.gsk.com/media/325141/annual-report-2011.pdf (Accessed: 18 March 2016).
‘GSK Annual Report FINAL 07.03.13.pdf - annual-report-2012.pdf’ (no date). Available at:
http://www.gsk.com/media/279963/annual-report-2012.pdf (Accessed: 18 March 2016).
GSK GlaxoSmithKline PLC XLON:GSK Stock Quote Price News (no date). Available at:
http://www.morningstar.com/stocks/XLON/GSK/quote.html (Accessed: 20 March 2016).
root (2003d) Price-Earnings Ratio (P/E Ratio) Definition, Investopedia. Available at:
http://www.investopedia.com/terms/p/price-earningsratio.asp (Accessed: 20 March 2016).
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root (2003e) Profit Margin Definition, Investopedia. Available at:
http://www.investopedia.com/terms/p/profitmargin.asp (Accessed: 20 March 2016).
Staff, I. (2003b) Return On Capital Employed (ROCE) Definition, Investopedia. Available at:
http://www.investopedia.com/terms/r/roce.asp (Accessed: 20 March 2016).
APPENDIX:
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