Eli Lilly And Company Performance

1750 Words Oct 26th, 2015 7 Pages
Executive Summary
Eli Lilly and Company (Lilly) is a global pharmaceutical company, ranked 115 on the Fortune 500. Lilly’s operating performance has been strong in 2011, with ROA and ROE much higher than its competitor, Pfizer. The company has improved sales in the year 2011; however, its net income fell. Lilly’s future performance is challenged by factors such as major patent expirations, which will expose the company to the generic version of their drugs being produced by other manufacturers. Lilly has also experienced some pipeline setbacks, which includes the discontinuation of major experimental drug projects. Lilly has been lately focusing on expanding through the acquisition of other businesses and has been using operating cash flows and its short-term borrowings to fund those acquisitions. Lilly has high profit margins and its gross profit margin is also higher than Pfizer. Management would be under some pressure to maintain those trends. Lilly has strong short-term financial performance while its long-term financial position does not appear as strong. However, I did not find explicit evidence of earnings management, except for few questionable methods employed by the management. As a result of my analysis, I would devote some additional audit time on their inventory costing, goodwill and other intangibles and restructuring charges.

External Environmental Factors
Industrial Factors Eli and Lilly Company (Lilly) develop, manufactures, and sells…
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