INTRODUCTION

• GlaxoSmithKline Pakistan is one of the leading Pharmaceutical companies in Pakistan and is the world's second largest company high-ranking stands for Employee Cares.

• GSK International is a United Kingdom-based pharmaceutical, biological, and healthcare company. It has wide portfolio of pharmaceutical products covering anti-invectives, central nervous system (CNS), respiratory, gastro-intestinal/metabolic, oncology, and vaccines, oral healthcare products, nutritional drinks, and over the counter (OTC) medicines.

LIQUIDITY RATIO:other company of industry

working capital              2011 2012 2013 2014 2015 2015             

current assets 9,616,883 9,404,16910,922,72

011,378,061 10,266,081 12,380,092current liabilities 3,881,011 4,151,055 5,726,508 6,180,168 5,442,700 3,319,884             net working capital 5,735,872 5,253,114 5,196,212 5,197,893 4,823,381 9,060,208

 Current ratio              2011 2012 2013 2014 2015 2015

current assets 9,616,883 9,404,16910,922,72

011,378,061 10,266,081 12,380,092current liabilities 3,881,011 4,151,055 5,726,508 6,180,168 5,442,700 3,319,884             current ratios 2.50 2.30 1.90 1.80 1.80 3.73

 Quick ratio              2011 2012 2013 2014 2015 2015

current assets 9,616,883 9,404,16910,922,72

011,378,061 10,266,081 12,380,092less: inventory 5,602,526 5,080,220 6,271,405 6,308,061 4,707,918 2,908,690quick assets 4,014,357 4,323,949 4,651,315 5,070,000 5,558,163 9,471,402             current liabilities 3,881,011 4,151,055 5,726,508 6,180,168 5,442,700 3,319,884             quick ratios 1.03 1.04 0.81 0.82 0.90 2.81

 

INTERPRETATION OF LIQUIDITY RATIO

• The current ratio of this company from 2011 to 2015, they are starting from 2.50 times and ending at 1.80.

• Values of current ratios are getting low from 2011, this defines that this company is at suitable condition to meet its financial obligations, which is a very good sign for doing the business.

• Quick or asset test ratios in year 2011 in which it is 1.03 times. The value of quick ratio in 2015 is 0.90 times. In short the firm has sufficient current assets to pay of its current liability.

PROFITABILITY RATIO:   

Gross profit margin              2011 2012 2013 2014 2015 2015Gross profit/ loss 5,818,419 6,081,015 6,223,713 7,345,771 6,424,171 8,227,233sales 21,750,147 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446             margin 27% 26% 25% 26% 27% 39%

 Operatin profit margin              2011 2012 2013 2014 2015 2015Operating income/ loss 2,273,414 2,359,608 1,969,089 2,868,945 3,568,467 5,006,477sales 21,750,147 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446             margin 10% 10% 8% 10% 15% 26%

 Net profit margin              2011 2012 2013 2014 2015 2015net income/ loss 1,140,999 1,320,096 1,008,659 1,609,095 2,717,444 3,568,467sales 21,750,147 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446             margin 5% 6% 4% 6% 11% 17%

 Return on assets              2011 2012 2013 2014 2015 2015total assets 15,437,585 16,243,325 17,938,810 19,100,878 20,120,182 16,488,275net income/ loss 1,140,999 1,320,096 1,008,659 1,609,095 2,717,444 3,568,467             return on assets 7% 8% 6% 8% 14% 22%

 Return on equity              2011 2012 2013 2014 2015 2015net income/ loss 1,140,999 1,320,096 1,008,659 1,609,095 2,717,444 3,568,467T. Shareholder's equity:            Total equity 11,108,572 11,393,438 11,349,313 11,945,103 11,945,103 12,949,247share deposit money 0 0 0 0 0 0surplus on revaluation of fixed assets 0 0 0 0 0 0T. Shareholder's equity 11,108,572 11,393,438 11,349,313 11,945,103 13,070,211 12,949,247

INTERPRETATION OF PROFITABILITY RATIO

•GSK are only able to make this ratio up to 27% which is in both 2011 and 2015 this ratio was in declining phase from 2012 to 2014.

•Operating profit margin the value is low which is 15% in 2015, in net profit margin, there is a positive trend from 2011 to 2015 GSK is unable to control their operating expenses and need some action on controlling the cost related to the business.

•Return on assets and return on equity are both reasonable over the period from 2011 to 2015 and are constantly increasing and going in positive figures, this is mainly due to the high sales, management, productivity.

•Profitability ratios it seems like this firm needs to sort out some of its problems related to the gross profit margin and operating profit margin.

DEBT RATIOS:  

 

Debt Ratio            

  2011 2012 2013 2014 2015 2015

total debt 4329013 4,151,055 6,589,497 7,155,775 7,049,971 3,539,028

total assets 15,437,585 16,243,325 17,938,810 19,100,878 20,120,182 16,488,275

             

Debt ratios 28% 26% 37% 37% 35% 21%

 

Debt to equity ratio            

  2011 2012 2013 2014 2015 2015

total debt 4,329,013 4,151,055 6,589,497 7,155,775 7,049,971 3,539,028

T. Shareholder's equity 11,108,572 11,393,438 11,349,313 11,945,103 13,070,211 12,949,247

             

debt to equity ratio 39% 36% 58% 60% 54% 27%

 

Time interest earned ratio            

  2011 2012 2013 2014 2015 2015

Operating Income 2,273,414 2,359,608 1,969,089 2,868,945 3,568,467 5,006,477

interest expense 30,372 12,205 9,753 5,793 10,908 8,573

             

Time interest earned ratio 61.2 48.9 11.4 139.9 70.8 851.86

INTERPRETATION OF DEBT RATIO• GSK 2011 and 2012 debt ratio is less than 50% which is

appropriate according to the industry standards.

• Debt to equity ratio has increased more than 50 % in 2015 which is not at all a good sign for GSK.

• GSK has too much of debt that they can really control and afford and the debt to equity trend from 2011 to 2015 is constantly increasing.

• Time interest ratio of GSK tells us that it is not at all in the position to cover its interest payment as compared to the industry average.

ACTIVITY RATIOS:   

Average Collection period              2011 2012 2013 2014 2015 2015Acc- Receviables 319,800 438,674 392,202 301,986 313,127 97,495sales 21,750,147 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446Avg. Daily credit sales 59,589 63,425 69,126 76,391 65,266 58,001             Average Collection period 5.37 6.92 5.67 3.95 4.80 1.68

 Inventory Turnover ratio              2011 2012 2013 2014 2015 2015cost of goods sold 15,931,728 17,068,949 19,007,165 20,537,116 17,397,755 12,943,213avg. inventory 15,349,386 13,918,411 17,181,932 17,282,359 12,898,405 7,969,014             inventory turnover in times 3.1 3.1 3.3 3.2 3.4 4.52inventory turnover in days 119 117 112 115 107 80.82

 Receviable Turnover ratio              2011 2012 2013 2014 2015 2015credit sales 21,749,985 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446Average Receviables 876,164 1,201,847 827,359 827,359 857,882 267,104             receviable T.O in times 68.1 66.7 72.1 63 56.1 44.14receviable T.O in days 5 5 5 6 7 8.27

 Fixed Assets T.O Ratio              2011 2012 2013 2014 2015 2015sales 21,749,985 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446net fixed Assets 1,011,025,834 6,839,156 7,016,090 7,695,670 8,264,685 4,108,183             Fixed Assets ratio 4.5 4 4.2 4.2 4.1 5.7

 total Assets T.O Ratio              2011 2012 2013 2014 2015 2015sales 21,749,985 23,149,964 25,230,878 27,882,887 23,821,926 21,170,446total assets 1,397,393,111 16,243,325 17,938,810 19,100,878 20,120,182 16,488,275             total assets turnover ratio 1.4 1.4 1.4 1.5 1.5 1.4

INTERPRETATION OF ASSET ACTIVITY RATIOS

• The average collection period of 2011 is 5.37 times which becomes low in 2015 with the value of 4.80 times.

• GSK has increased its inventory turnover ratio from 3.1 to 3.4 over the 5-year time, it is good enough.

• Fixed assets turnover firm has the value 4.5 times in 2011 and 4.1 times in 2015, means GSK is more efficient at converting fixed assets to sales and they are productive.

• Total assets turnover ratio they are acceptable, assets are productive from the year 2011 to 2015, with the value of 1.4 and 1.5 respectively.

• Assets Activity ratios are used to measure all the aspects of performance of the organization . company it seems that this firm is very affective in using its resources.

MARKET VALUE RATIOS:  

 

Price to earning ratio            

  2011 2012 2013 2014 2015 2015

Market price per share 67 73 136 219 220 220

Earning per share 4 5 3 5 8.30 36.64net income avaliable for equity holder's 1,140,999 6,921,177 1,008,659 1,609,095 2,717,444 3,586,736

no. of shares outstanding 239,269,179263,196,09

7289,515,70

7318,467,27

8318,467,27

8 97,900,302

             

price to earning ratios 15.5 16 40.8 41.4 26.51 17.30

         

Market to book ratio            

  2011 2012 2013 2014 2015 2015

market price per share 67 73 136 219 220 635

bookvalue per share 21.54 23 26 27 24.37 7.56

T. owner's equity 11,108,572 11,393,438 11,349,313 11,945,103 13,070,211 12,949,247

no. of shares outstanding 239,269,179263,196,09

7289,515,70

7318,467,27

8318,467,27

8 97,900,302

             

market to book with surplus 1.4 1.7 3.5 5.8 5.4-

INTERPRETATION OF MARKET VALUE RATIO

• GSK’s market value ratios, investors are willing to pay as much per rupee of earnings or per rupee of book value, and they are continuously getting very positive signals from the operations of the firm.

• Price earning ratio is 26.51 in 2015 which is good enough.

• M/B ratio are also positive that is 5.4 which is a good deal for the shareholders and for the past years they are developing the sense of high opinion and good perception about the GSK.

description 2011 2012 2013 2014 2015

Cash generated from operations1,402,37

83,213,88

62,355,35

23,221,

2594,476,5

02Staff retirement benefits paid 205,481 64,793 100,242 78,358 512,424

Taxes paid1,061,46

0 909,3481,210,35

2710,37

8 935,995Increase / decrease in long-term loans to employees and deposits 8,324 4,935 11,776 733 15,888Net cash generated from operating activities 127,113

2,234,810

1,056,534

2,431,790

3,012,195

less: capital expenditure          

Fixed capital expenditure 834,5971,497,58

1 725,0191,221,

0131,343,7

63

free cash flow -707,484 737,229 331,5151,210,

7771,668,4

32

CASH FLOW STATEMENT

Cash flow statement it seems like the company is struggling in 2011 because of the negative cash flows but recovers in the course of 5-year time. 2015 have the highest amount of positive cash flows that means cash-equivalents moving into the business. Positive cash flow indicates that a company's liquid assets are increasing.

BALANCE SHEET ANALYSIS

Share Capital and Reserves 9.40 5.20 -0.40 3.70 1.70 1.90

Non Current Liabilities -34.40 13.00 22.20 21.50 9.30 8.40

Current Liabilities 3.60 7.90 38.00 7.00 9.00 6.40

Total Equity and Liabilities 5.30 6.50 10.40 5.20 3.70 3.20

Non Current Assets 7.90 9.70 2.10 17.60 11.70 4.00

Current Assets 3.80 4.20 16.40 -2.30 -0.60 2.70

Total Assets 5.30 6.50 10.40 5.20 3.70 3.20

The asset side and the equity, liability side both are equal, this means that assets, or the means used to operate the company, are balanced by a company's financial obligations, along with the equity investment brought into the company and its retained earnings.

GLAXOSMITHKLINE

INCOME STATEMENT

AS AT DECEMBER 31 th 2015

DISCRIPTION 2014 2015 AMOUNT

CHANGE

PERCENTAGE

CHANGE

(IN Rs.) (IN Rs.) (IN Rs.) (%)

sales 22,843,25

0

23,821,92

6

978,676 4%

less: cost of good sold 16,996,45

9

17,397,75

5

401,296 2%

gross profit 5,846,791 6,424,171 577,380 10%

operating expenses:

distribution cost 2,607,462 2,787,942 180,480 7%

administrative expenses 936,170 971,144 34,974 4%

other expenses 230,783 255,635 24,852 11%

total operating expenses 3,774,415 4,014,721 240,306 6%

operating profit 2,072,376 2,409,450 337,074 16%

other income 488,010 1,159,017 671,007 137%

profit from operations 2,560,386 3,568,467 1,008,081 39%

finance cost 20,363 54,361 33,998 167%

profit before taxation 2,540,023 3,514,106 974,083 38%

taxation 1,005,105 1,003,380 -1,725 0%

profit after taxation 1,534,918 2,510,726 975,808 64%

12. EMPLOYEMENT IN THE COMPANY:

YES, we would accept the employment in the company

because by looking at the ratio analysis it seems that GSK is

good at gaining profits and maintaining its stability in the

market. Although, by observation it is clear that it has some

problems in leverage financing but it is fixable.