1

“FINANCIAL ANALYSIS OF GALXO SMITH KLINE COMPANY PAKISTAN

FROM 2004-2008”

Presented By: Aamir Hayat

Contact: +92-314-556-1080

GRADUATE SCHOOL OF MANAGEMENTInternational Islamic University Islamabad

2

ANALYSIS OF FINANCIAL STATMENT

“GLAXO SMITH KLINE COMPANY PAKISTAN”

3

CATEGORY OF RATIOS

“GLAXO SMITH CLINE COMPANY”Activity Ratios

Activity Ratios

Profitability Ratios

Profitability Ratios

Coverage Ratios

Coverage Ratios

Investor’s Analysis Ratios

Investor’s Analysis Ratios

Horizontal and Vertical

Analysis

Horizontal and Vertical

Analysis

4

ACTIVITY RATIOSANALYSIS

2004 2005 2006 2007 20080

1

2

3

4

5

6

Current RatioQuick RatioCash Ratio

CURRENT, QUICK AND CASH RATIOS

6

RECEIVABLE TURNOVER RATIO

Year 2004 2005 2006 2007 2008

265.42 Times 145.14 times 119.11 times 90.81 times 13.18 times

2004 2005 2006 2007 20080

50

100

150

200

250

300

Receivable Turnover Ratio

Receivable Turnover Ratio

7

RECEIVABLE TURNOVER IN DAYS

Year 2004 2005 2006 2007 2008

1.38 Days 2.51 Days 3.06 Days 4.02 Days 27.69 Days

2004 2005 2006 2007 20080

5

10

15

20

25

30

Receivable Turnover in Days

Receivable Turnover in Days

8

INVENTORY TURNOVER RATIO

Year 2004 2005 2006 2007 2008

3.28 Times 3.09 Times 2.99 Times 2.98 Times 3.31 Times

2004 2005 2006 2007 20082.8

2.9

3

3.1

3.2

3.3

3.4

Inventory Turnover

Inventory Turnover

9

INVENTORY TURNOVER IN DAYS

Year 2004 2005 2006 2007 2008

111.13 Days 118.12 Days 122.27 Days 122.58 Days 110.32 Days

2004 2005 2006 2007 2008104

106

108

110

112

114

116

118

120

122

124

Inventory Turnover in days

Inventory Turnover in days

10

Year 2004 2005 2006 2007 2008

111.12 Days 129.28 Days 128.79 Days 124.8 Days 133.58 Days

DAY’S SALES IN RECEIVABLE

2004 2005 2006 2007 20080

20

40

60

80

100

120

140

160

Day's Sales In Receivable

Day's Sales In Receivable

11

OPERATING CYCLE

Year 2004 2005 2006 2007 2008

112.51 Days 120.63 Days 125.33 Days 126.6 Days 138.01 Days

2004 2005 2006 2007 20080

20

40

60

80

100

120

140

160

Operating Cycle

Operating Cycle

12

WORKING CAPITAL

Year 2004 2005 2006 2007 2008

3877907 5252464 5626548 5759184 6032399

2004 2005 2006 2007 20080

1000000

2000000

3000000

4000000

5000000

6000000

7000000

Working Capital

Working Capi-tal

13

SALES TO WORKING CAPITAL

Year 2004 2005 2006 2007 2008

2.29 Times 2.06 Times 1.82 Times 2.87 Times 2.27 Times

2004 2005 2006 2007 20080

0.5

1

1.5

2

2.5

3

3.5

Sales to Working Capital

Sales to Work-ing Capital

14

COVERAGE RATIOSANALYSIS

15

DEBT TO TOTAL ASSETS

Year 2004 2005 2006 2007 2008

19.18 % 18.43 % 20.19 % 20.13 % 21.37 %

2004 2005 2006 2007 200816.00%

17.00%

18.00%

19.00%

20.00%

21.00%

22.00%

Debt to Total Assets

Debt to Total Assets

16

DEBT TO EQUITY RATIO

Year 2004 2005 2006 2007 2008

23.74 % 22.60 % 25.53 % 25.21 % 27.72 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Debt to Equity Ratio

Debt to Equity Ratio

17

CURRENT LIABILITIES TO EQUITY RATIO

Year 2004 2005 2006 2007 2008

19.68 % 18.79 % 22.60 % 21.69 % 23.19 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Current Liabilities to Total Equity

Current Liabili-ties to Total Equity

18

DEBT TO TANGIBLE NET WORTH

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Debt to Tangible Net Worth

Debt to Tangible NeT Worth

Year 2004 2005 2006 2007 2008

23.74 % 22.60 % 25.53 % 25.21 % 27.72 %

19

INVESTORS RATIOSANALYSIS

20

DEGREE OF FINANCIAL LEVEAGE

Year 2004 2005 2006 2007 2008

1 Times 1 Times 1 Times 1 Times 1 Times

2004 2005 2006 2007 20080

0.2

0.4

0.6

0.8

1

1.2

Degree of Financial Leverage

Degree of Financial Leverage

21

EARNING PER SHARE

Year 2004 2005 2006 2007 2008

13.47 Per Share

16.60 Per Share

12.19 Per Share

9.8 Per Share

11.46 Per Share

2004 2005 2006 2007 20080

2

4

6

8

10

12

14

16

18

Earning Per Share

Earning Per Share

22

PRICE EARNING RATIO

Year 2004 2005 2006 2007 2008

13.4 Times 11.2 Times 12.9 Times 19.5 Times 6.6 Times

2004 2005 2006 2007 20080

5

10

15

20

25

Price Earning Ratio

Price Earning Ratio

23

PAYOUT RATIO

Year 2004 2005 2006 2007 2008

51.97 % 48.19 % 65.62 % 76.60 % 82.26 %

2004 2005 2006 2007 20080.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Payout Ratio

Payout Ratio

24

PERCENTAGE OF EARNINGS RETAINED

Year 2004 2005 2006 2007 2008

51.78% 34.43% 23.37% 17.07% 51.78%

2004 2005 2006 2007 20080.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

% Age of Earnings Retained

% Age of Earnings Re-tained

25

DIVIEND YIELD RATIO

Year 2004 2005 2006 2007 2008

3.86 % 4.29 % 5.06 % 3.89 % 12.51 %

2004 2005 2006 2007 20080.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Dividend Yield

Dividend Yield

26

PROFITABILITY RATIOSANALYSIS

27

NET PROFIT MARGIN

Year 2004 2005 2006 2007 2008

16.5 % 19.3 % 16.5 % 15.7 % 14.5 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%Net Profit Margin

Net Profit Margin

28

GROSS PROFIT MARGIN

Year 2004 2005 2006 2007 2008

39.5 % 40.8 % 38.2 % 37.24 % 28.8 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%Gross Profit Margin

Gross Profit Margin

29

RETURN ON ASSETS RATIO

Year 2004 2005 2006 2007 2008

21.4 % 27 % 18.8 % 17 % 18.8 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%Return on Assets

Return on Assets

30

TOTAL ASSETS TURNOVER

Year 2004 2005 2006 2007 2008

1.29 Times 1.24 Times 1.14 Times 1.08 Times 1.29 Times

2004 2005 2006 2007 20080.95

1

1.05

1.1

1.15

1.2

1.25

1.3

1.35Total Asset Turnover

Total Asset Turnover

31

DUPONT ANALYSIS

Year 2004 2005 2006 2007 2008

21.3 % 24 % 18.8 % 16.9 % 18.6 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

DuPont Analysis

DuPont Analysis

32

RETURN ON FIXED ASSETS

Year 2004 2005 2006 2007 2008

1.026 1.206 0.94 0.75 0.809

2004 2005 2006 2007 20080.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

Return on Fixed Assets

Return on Fixed As-sets

33

RETURN ON INVESTMENT

Year 2004 2005 2006 2007 2008

52.5 % 53.5 % 43.9 % 41.0 % 46.0 %

2004 2005 2006 2007 20080.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Return on Investment

Return on Investment

34

RETURN ON TOTAL EQUITY

Year 2004 2005 2006 2007 2008

26.5 % 26.9 % 22.0 % 21.0 % 23.0 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Return on Total Equity

Return on Total Equity

35

RETURN ON COMMON EQUITY

Year 2004 2005 2006 2007 2008

26.5 % 26.9 % 22.0 % 21.0 % 23.0 %

2004 2005 2006 2007 20080.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%Return on Common Equity

Return on Common Equity

36

HORIZONTAL AND VERTICAL ANALYSIS

37

VERTICAL ANALYSIS OF BALANCE SHEET

Vertical Analysis of Balance Sheet

Years 2004 2005 2006 2007 2008

Total Liabilities & Share Holder's Equity 100 100 100 100 100

Issued & paid up capital 12.73 13.22 14.46 16.79 16.06

Trade & other payables 13.89 10.82 16.93 16.71 17.57

Total Assets 100 100 100 100 100

Fixed assets 17.36 18.20 18.8 22.01 22.73

Long Term Loans 0.7 0.48 0.38 0.53 0.58

Trade debts 0.5 0.79 0.90 1.15 9.571

Investments 0 2.4 1.05 9.66 1.46

38

VERTICAL ANALYSISPROFIT & LOSS A/C

Vertical Analysis of Profit & Loss

years 2004 2005 2006 2007 2008

Net Sales 100 100 100 100 100

C.G.S 71 63 61.67 62.75 71.23

Gross Profit 29 37 38.33 37.25 28.77

Profit after taxation 14.6 15.74 16.5 15.74 14.59

39

HORIZONTAL ANALYSIS OF BALANCE SHEET

Horizontal Analysis of Balance Sheet

years 2004 2005 2006 2007 2008

Total Liabilities & Share Holders Equity

Issued & paid up capital 100 125 156.25 195.3124 195.3124

Reserves 100 120.7805 132.031 137.1522 142.2278

Current Liabilities

Trade & other payables 100 93.74531 167.5806 178.0585 195.7662

Taxation 100 269.6506 76.27451 45.48936 50.94932

ASSETS

fixed assets 100 104.85 123.77 156.02 168.47

Long term loans 100 82.95 75.02 112.70 129.28

Trade debts 100 194.21 253.53 349.77 3044.18

Cash & Bank Balances 100 130.46 152.80 139.25 89.22

40

HORIZONTAL ANALYSISPROFIT & LOSS A/C

HOROZONTAL ANALYSYS OF P&L A/C

years 2004 2005 2006 2007 2008

Net Sales 100 106.20 113.77 119.67 151.16

C.G.S 100 103.90 116.05 124.20 178.08

Gross Profit 100 109.72 110.30 112.74 109.98

selling, mkt, dis Expenses 100 86.86 101.48 116.64 128.02

administrative Expenses 100 103.09 124.29 138.49 148.02

other operating Expenses 100 144.52 142.3 143.70 133.72

Net Profit 100 123.3 113.16 113.54 132.89

41

THANK YOU