FINANCIAL PERFORMANCE

1. FINANCIAL PERFORMANCE
For Pfizer & Novartis
2013-2012

2. AGENDA
• Intro
• Pfizer I.S & B.S
• Novartis I.S & B.S
• Profitability Analysis
• Liquidity Analysis
• Solvency Analysis
• Efficiency Analysis
• P/E Analysis

3. Intro

4. Top 25 Pharma companies by global sales

5. Pfizer I.S & B.S

6. Pfizer Income statement

7. Pfizer Balance Sheet (1)

8. Pfizer Balance Sheet (2)

9. Novartis I.S & B.S

10. Novartis Income statement

11. Pfizer Balance Sheet

12. Profitability Analysis
• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
• Return on Equity (ROE)
• Return on Assets (ROA)
• Earning Per Share
• Quality Of Income

13. Gross Profit Margin
GPM= Gross profit ÷ Revenues x 100
NovartisPfizer#
67.480.82012
66.781.42013
59.859.8Industry Ratio
For Each 1 $ of Net Sales
the company generates
67 cent of gross profit
before subtracting any
other expenses
For Each 1 $ of Net Sales the
company generates 81 cent
of gross profit before
subtracting any other
expenses
Analysis

14. Operating Profit Margin
OPM= Operating income ÷ Revenues x 100
NovartisPfizer#
20.020.52012
18.530.52013
14.1814.18Industry Ratio
For Each 1 $ of Net Sales
the company generates
18.5 cent of Operating
profit before subtracting
any other expenses
For Each 1 $ of Net Sales the
company generates 30.5
cent of Operating profit
before subtracting any other
expenses
Analysis

15. Net Profit Margin
NPM= Net income ÷ Revenues x 100
NovartisPfizer#
16.5124.702012
15.6042.652013
17.3317.33Industry Ratio
For Each 1 $ of Net Sales
the company generates
16 cent of Net Income
For Each 1 $ of Net Sales the
company generates 43 cent
of Net Income
Analysis

16. Return on Equity (ROE)
ROE = Net income ÷ Total shareholders' equity x 100
NovartisPfizer#
14.0917.842012
12.7927.942013
NANAIndustry Ratio
DeterioratedImprovedAnalysis

17. Return on Assets (ROA)
ROA = Net income ÷ Total assets x 100
NovartisPfizer#
7.867.802012
7.3312.302013
7.717.71Industry Ratio
They utilize all recourses
successfully
They utilize all recourses
successfully
Analysis

18. Earning Per Share (EPS)
EPS = Net income ÷ No. of Share
NovartisPfizer#
3.871.962012
3.713.232013
NANAIndustry Ratio
DeterioratedImprovedAnalysis

19. Quality Of Income
=cash flow from operating activity / Net income
NovartisPfizer#
1.491.152012
1.430.802013
NANAIndustry Ratio
DecreasedDecreasedAnalysis

20. Liquidity Analysis
• Net working Capital
• Current Ratio
• Quick Ratio
• Cash Ratio

21. Net working Capital
NWC= Current assets - Current liabilities
NovartisPfizer#
1.16 : 12.2 : 12012
1.15 : 12.4 : 12013
--Industry Ratio
This is not a ratio this is a
absolute amount It
means there are no
unused assets
This is not a ratio this is a
absolute amount It means
there are no unused assets
Analysis
NovartisPfizer#
$3,953.00$35,186.002012
$4,174.00$32,878.002013
-NA-NAIndustry Ratio
This is not a ratio this is a
absolute amount
referred to as simply
working capital, is used
to determine the
availability of a
company's liquid assets
by subtracting its CL
This is not a ratio this is a
absolute amount referred to
as simply working capital, is
used to determine the
availability of a company's
liquid assets by subtracting its
CL.
Analysis

22. Current Ratio
CR = Current assets ÷ Current liabilities
NovartisPfizer#
1.16 : 12.15: 12012
1.15 : 12.41 : 12013
1.331.33Industry Ratio
That means every 1 $ of
CL the company has
1.15 of CA to cover it
That means every 1 $ of CL
the company has 1.41 of CA
to cover it
Analysis

23. Quick Ratio
QR = Total Quick assets ÷ Current liabilities
NovartisPfizer#
0.76 : 11.90: 12012
0.73 : 11.79: 12013
1.221.22Industry Ratio
That means every 1 $ of
CL the company has
0.73 of quick CA to
cover it
That means every 1 $ of CL
the company has 1.79 of
quick CA to cover it
Analysis

24. Cash Ratio
Cash R = Cash Assets ÷ Current liabilities
NovartisPfizer#
0.33 : 11.09: 12012
0.34 : 11.38 : 12013
NANAIndustry Ratio
That means every 1 $ of
CL the company has
0.73 of Cash to cover it
That means every 1 $ of CL
the company has 1.79 of
Cash to cover it
Analysis

25. Solvency Analysis
• Debt Ratio
• Debt to Equity
• Equity Multiplier

26. Debt Ratio
DR = liabilities : assets x 100
NovartisPfizer#
44.2 %56 %2012
41.01 %55.4 %2013
34 %34 %Industry Ratio
That means that 41 % of
Assets financed from
liabilities
That means that 55 % of
Assets financed from
liabilities
Analysis

27. Debt to Equity
D/E= liabilities : Equity
NovartisPfizer#
78 %127 %2012
69 %124 %2013
34 %NAIndustry Ratio
--Analysis

28. Equity Multiplier
EM = Assets : Equity
NovartisPfizer#
1:8 : 12.2 : 12012
1.6 : 12.24 : 12013
NANAIndustry Ratio
Assets : EquityAssets : EquityAnalysis

29. Efficiency Analysis
• Total Asset Turnover
• Fixed Asset Turnover
• Receivables Turnover
• Average Collection Period
• Inventory Turnover
• Inventory Days On Hand

30. Total Asset Turnover
TATO = Net Sales ÷ Total assets
NovartisPfizer#
0.490.262012
0.460.312013
0.250.25Industry Ratio
Each $1 invested in the
total assets generates 46
cents net sales
Each $1 invested in the total
assets generates 31cents net
sales
Analysis
Novartis is better than Pfizer in using assets to generate
net sales
Comparison
Analysis

31. Fixed Asset Turnover
FATO = Net Sales ÷ A. Fixed assets
NovartisPfizer#
3.44.122012
3.34.272013
2.502.50Industry Ratio
Each $1 invested in fixed
assets generates $3.3
net sales
Each $1 invested in fixed
assets generates $4.27 net
sales
Analysis
Pfizer is better than Novartis in using fixed assets to
generate net sales
Comparison
Analysis

32. Receivable Turnover
RTO = Net Credit Sales ÷ A. Net Receivable
NovartisPfizer#
6.115.142012
5.815.462013
NANAIndustry Ratio
For every $1 accounts
receivables the
company makes
$5.81credit sales
For every $1 accounts
receivables the company
makes $5.46 credit sales
Analysis
Pfizer is better than Novartis in using fixed assets to
generate net sales
Comparison
Analysis

33. Average Collection Period
ACP= Average Collection Period÷ A. Age of Receivable
NovartisPfizer#
63.1368.112012
62.8266.852013
NANAIndustry Ratio
Company transfer
Receivables from credit
customers into cash
every 62.82 days
Company transfer
Receivables from credit
customers into cash every
66.85 days
Analysis
Novartis is better than Pfizer in transferring Receivables
into cash
Comparison
Analysis

34. Inventory Turnover
ITO= COGS ÷ A. Inventory
NovartisPfizer#
8.398.112012
8.278.932013
NANAIndustry Ratio
Each $1 invested in the
inventory generates
$8.27 net sales
Each $1 invested in the
inventory generates $8.93 net
sales
Analysis
Pfizer is better than Novartis in the sales’ efficiencyComparison
Analysis

35. Inventory Days On Hand
IDOH= 365 ÷ A. Days supply in Inventory
NovartisPfizer#
41.4439.802012
44.1440.872013
NANAIndustry Ratio
Inventory is sold every
44.14 days
Inventory is sold every 40.87
days
Analysis
Pfizer is better than Novartis in the number of times that
inventory could be turned over within the year
Comparison
Analysis