Analysis of Finansial Ratios Gsk

As for the quick ratio, the desirable range is 1.1 and this ideal range is considered satisfactory by lenders and investors. Apparently, we can see from the above bar chart that the quick ratio is consistently increased for 2000 to 2004. It recorded as 2.72 times in 2004 and it is eventually exceeding the acceptable quick ratio which is 1.0. This result indicated that the company has high ability to meet its current obligations from its liquid assets excluding the inventories.

The following report is a brief comparative analysis of two of Australia’s largest deposit-taking financial institutions (FI), Australia and New Zealand Banking Group Ltd. (ANZ) and Westpac Banking Corporation (Westpac). This report seeks to identify which of the FIs has a greater aggregate return per dollar of equity and thus establish the highest performer, or most profitable, of the two. The Return on Equity Model (ROE) (Koch & MacDonald,

The higher the ratio the better the company stands with ability to pay loans. The four quarters for quick ratios in year one are as follows; 1.48, -.14, .25, 1.29, and year 2-4 are as follows; 3.26, 3.88, 5.11, 5.69 (NetMBA, 2010.)

Liquidity ratios are the measure of a company’s ability to meet its short term liabilities by converting its assets into cash without losing value. The results of the liquidity ratios depend on the outcome of Current ratio and quick ratio. In the appendix-I, in 2011 Target had better Current ratio

“The use of ratio analysis is rather like solving a mystery in which each clue leads to a new area of inquiry” (2005, Block & Hirt, p. 55, chap. 3). These ratios help to make pro forma determinations for future years. The first step to making any predictions is to review the current year and past year ratios, making comparisons and determining areas of strengths and weaknesses. Larger companies may require a review of the past five-year’s ratios to obtain detailed analyses of these areas. For this review, we are concentrating on the years 2007 and 2006 and have prepared the following rations for review:

The company’s current assets are just over two times its current liabilities, giving it a current ratio of 2.08. This is a sign of financial strength. The Quick ratio (current assets-inventory then divided by current liabilities) is 0.96. This measures the company’s ability to come up with cash in a matter of hours to days. It has working capital (current assets-current liabilities) of $7,508,998. With a working capital per dollar of sales of 15%. This is adequate given the high inventory turn.

Although the company’s liquidity ratios have dropped their ratios are still outperforming their RMA industry average by 15%. The decrease in the company’s liquidity ratios is the result of their current liabilities increasing 6.5% from fiscal year 2014 and their current assets only increasing 0.7% from fiscal year 2014. The company saw a decrease in cash and equivalents, accounts receivable, and income tax receivable in 2015. While also increasing accounts payable, accrued expenses, and deferred revenue and other liabilities. The combination of the movement in these accounts result in lower liquidity ratios for fiscal year 2015.

Working Capital is again in the red zone, dropping more than 75% from FY09 to FY10. However, the historic trend for the company is not very impressive, with working capital dropping as low as -$3 billion. The Operating Cash Flow Ratio is somewhat more reassuring, standing at 18.13 in FY10 from 14.67 a year earlier. This implies that for every dollar of current liability, the operations are providing $18 of revenue to cover the expense. However, operations are not primarily meant to cover just short term obligations, but also long term costs. Thus it cannot be justified that operations are very adequate to meet ST obligations.

When analyzing current ratio and quick ratio we can say that the company’s liquidity is efficient enough to pay off its currents debts, since the trend for the period stayed fluctuating around the same percentages. Meanwhile, accounts receivable followed a negative trend, meaning that the company’s days of accounts receivable increased showing that they are having a hard time collecting receivables in a timely manner. In addition, inventory and accounts payable turnover increased over the first three years, showing in one hand the inefficiency of the company at selling inventory and on the other hand that they are making payments faster to the supplier which is a sign of their improving financial conditions. The last item under liquidity ratio is cash conversion cycle, showing a deteriorating trend, which confirms the effectiveness of a company’s management converting cash on hand into inventory to sales and sales back into

Shoppers Drug Mart Limited is not in a good financial position in terms of liquidity and being able to pay out its liabilities. Over the three above indicated fiscal periods, Shoppers had a current ratio on average of 1.54, which means that it has $1.54 of current assets available to cover each $1 of current liabilities. The higher the current ratio is for a firm, the better position the company’s liquidity position is. Over the course of a year or over the course of the company’s operating cycle (whichever is longer), resources would be tight for Shoppers but they would be able to pay out their current obligations as the current ratio is greater than 1. In the time period less than a year or the operating cycle, repayment of the firm’s liabilities may prove to be challenging. The quick ratio also measures a company’s liquidity position but there

Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.

Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.

The quick ratio reflects on a company’s ability to meet its current liabilities without liquidating inventories that could require markdowns. It is a more stringent test of liquidity than the current ratio and may provide more insight into company liquidity in some cases. For Colgate-Palmolive, the quick ratio has declined from 0.73 in 2008 to 0.58 in 2010. While this does not necessarily mean a problem, a higher current ratio and quick ratio analysis will mean that the company will not have difficulty in meeting its short-term obligations from its operations and not by liquidating its assets.

The long-term liquidity risk ratio such as LT debt/Equity, D/E, and Total Liabilities to Total Assets all show a decline from year 2005 due to the repayment of debts. The interest coverage ratio also shows a healthy number of 29.45 in comparison to the industrial average of 15.04 indicating a high ability to pay out its interest expense. Such a low relative risk is not surprising due to the nature of its business depending heavily in R&D development and large intangible assets.

This is a strategic analysis of GlaxoSmithKline that examines the key factors that influence the company and its activities. The strategic analysis will examine key factors in the company’s internal and external environment and their influence on the company’s strategies. GlaxoSmithKline is a global healthcare company that offers pharmaceutical, vaccines and consumer products. The company is a product of various mergers, the latest occurring in 2001 between GlaxoWellcome and SmithKline Beecham. The company started in London United Kingdom in 1715 as Plough Court pharmacy and has evolved to become one of the leading global healthcare companies. The healthcare company operates in more than 150 countries with 89 manufacturing locations and research centers in the USA, China, UK and Belgium. In 2015, the company’s sales grew to £23.9 billion from £23.0 billion in 2014 (GlaxoSmithKline plc. 2015).