Pfizer Financial Analysis Essay

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Pfizer Incorporated (PFE) was established in 1849 in Brooklyn, New York. Charles Pfizer and Charles Erhardt, two German-American cousins, founded a chemicals business and produced an anti-parasitic- Santorin, which was a great success.Pfizer's business began to grow with production of citric acid in 1880s. Total sales of Pfizer had reached almost $3 million by 1910. By 1950s, Pfizer had set up business in countries like Belgium, Canada, Iran, Panama, Turkey, and United Kingdom.
Pfizer is a pharmaceutical company ranking number one in sales in the world. The company is based in New York City, with its research headquarters in Groton, Connecticut. Its headquarters are in Midtown Manhattan, New York City. Pfizer owes a lot of its success to
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However the cash flow liquidity ratio of Pfizer has declined from 0.43 in 2007 to 0.26 in 2008. The declining cash flow from operations is forcing Pfizer to borrow to cover its bills. Overall the liquidity of Pfizer still looks quite sound compared to the industry.
Now as we look at the Average collection period and day’s inventory held for Pfizer, we notice a dramatic change the average collection period of Pfizer has increased about 112% from 2007 to 2009 while the days inventory held for Pfizer has also increased about 189% from 2007 to 2009. This raises a caution flag about the increase in these ratios. Pfizer may be too lenient to its creditors. If we compare the increase in these values to the increase in Pfizer’s Sales, the sales only increased by about 3%.
As we move to analyze the efficiency of Pfizer, we see that account receivable turnover has decreased about 53% from 4.92 times in 2007 to about 2.31 times in 2009. Yet again this major decrease in turnover of accounts receivables shows the inefficiency of Pfizer in collecting cash from creditors. The average collection period has increased dramatically from about 74 days in 2007 to almost 160 days in 2009, rounding to 115% change in the two years. However, apart from the decrease in ratios in the past few years Pfizer is still close to the industry average so we cannot predict that Pfizer is under performing compared to its competitors.
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