Astrazeneca Plc
Essay by kenneth muriithi • January 4, 2018 • Research Paper • 1,805 Words (8 Pages) • 720 Views
ASTRAZENECA PLC
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AstraZeneca PLC
Introduction
AstraZeneca PLC is a transnational pharmaceutical and biotechnology entity strategically focused on three core therapy areas. The operations of the UK-based company are built around skills and expertise, science quality, pipeline, commercial capabilities and intellectual property. The entity’s activities spread over the whole life-cycle of medicine (Astrazeneca.com, 2017). The investments of the Cambridge-based Corporation center on the location, development, production and profit orientation on the pipeline of new biological prescription medicine incorporating focused business enhancement via collaboration, regulation, and acquisitions. The entity generates income from sales of the fully-developed products as well as its divestments and external activities. The entity aims to create innovative items which will continue bringing in revenue in the future. The entity’s goal is to supply life-changing medical products, provide benefits to the patients and build the value for the owners.
Ratio Analysis
The ratios for the multinational entity are shown below.
Category | ratio | 2016 | 2015 | Change | Industry average | |
profitability | profit margin | (Net income/total sales)*100 | 14.81% | 11.44% | +3.37% | -268.68% |
return on assets | (Net income/total assets)*100 | 5.55% | 4.76% | +0.79% | -998.38% | |
return on equity | (Net income/total stockholder equity)*100 | 20.43% | 14.83% | +5.6% | -2207.18% | |
efficiency | asset turnover | (Net sales/average total assets)*365 | 138.7 days | 153.3 days | 14.6 days[pic 1] | 49.48 days |
receivables turnover | (Net credit sales/average accounts receivable)*365 | 1292.1 days | 1135.15 days | 156.95 days[pic 2] | N/A | |
inventory turnover | (Cost of sales/average inventory)*365 | 671.6 days | 824.9 days | 153.3 days[pic 3] | N/A | |
gearing | debt-to-equity | Total liabilities/total equity | 3.21:1 | 2.25:1 | +0.96 | 9.22 |
debt ratio | Total liabilities/total assets | 0.76:1 | 0.69:1 | +0.07 | N/A | |
equity multiplier | Total assets/total stockholders’ equity | 4.21x | 3.25x | 0.96x | N/A | |
liquidity | current ratio | Current assets/current liabilities | 0.87:1 | 1.08:1 | -0.21 | 3.94 |
cash ratio | Ending cash balance/current liabilities | 0.39:1 | 0.46:1 | -0.07 | N/A | |
investment potential | PE ratio | Price of share/ earnings per share | 21.62p | 31.63p | -10.01p | 0.097p |
Profitability
The profit margin proportion is a proportion which depicts the proportion of sales which remain after all the costs are settled by the enterprise. This profitability standard is used by creditors and prospective investors to ascertain how effectively the firm can be in transforming its sales into net profit (Gerstel, 2002). The profit margin of the England-based entity increased by almost 3.4% between 2015 and 2016. This increase in this proportion is beneficial to the entity as well as the creditors and lenders. The creditors want to ascertain that the entity has sufficient profits which can be utilized in discharging the debts (Damodaran, 2012). On the other hand, the investors want to see an increment in the profit margin benchmark as it depicts the potential increase in the dividends paid.
The return on assets benchmark showcases the capability of the company to efficiently oversee and control its assets to realize profits during a period (Pinson, 2008). This standard is utilized by shareholders and executives to observe the effectiveness of the conversion of the investments in the net assets into profit generation. For most entities capital assets are largest investments. The return on assets proportion of AstraZeneca PLC increased from 4.76% to 5.55% between 2015 and 2016. The rise of the profitability standard depicts the increasing efficiency of the entity in the management of the assets to produce profits. This bodes well for the shareholders and the management as it shows the entity is on the right path.
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