RATIO ANALYSIS
GROUP MEMBERS:-AHUJA NILESH 62JHA ALOK 69NARAYANAN NIJA81M. LIONELL 76SHADI SNEHA 104SONEJI DEEPALI 112
ANALYSIS OF FINANCIAL STATEMENTFYMMS(B)
INTRODUCTION• Sanofi-Aventis was formed in 2004 when Sanofi-
Synthelabo acquired Aventis.
• Sanofi-Aventis, headquartered in Paris is a multinational pharmaceutical company, the world's fourth-largest company.
• Sanofi-Aventis engages in the research and development, manufacturing and marketing of pharmaceutical products for sale.
• Sanofi-Aventis covers 7 major therapeutic areas: cardiovascular, central nervous system, diabetes, internal medicine, oncology, thrombosis and vaccines
By Nija
RATIO ANALYSIS
Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and performance of a business concern. Simply, ratio means the comparison of one figure to other relevant figure or figures.
By Nija
LIQUIDITY RATIOSBy Depali
Current Ratio
ANALYSISo Current Liabilities are increasing more than
current assets, hence the ratio decreases over the years.
o However, Company can easily clear its Liabilities.
Current AssetCurrentLiability
1.69 1.88 2.04
LIQUIDITY RATIOS
- - -
By Depali
Acid Test Ratio
ANALYSISo In 08’ there is an increase in Quick ratio because of
increase in debtor from 51.51 to 89.50o In 09’ there is a decrease in the ratio because of
decrease in cash from 23.37 to 9.45
Quick Assets Current
Liabilities0.35 0.74 0.62
LIQUIDITY RATIOS
- - -
By Depali
Inventory Turnover Ratio
ANALYSISo In 08’ there is an increase in the ratio because of better
inventory management ( decrease in inventory from 180.80 to 172.55).
o And in 09’ the ratio decreases because of poor inventory management (increase in inventory from 172.55 to 231.44).
Cost of Goods Sold
AverageInventory
4.54 6.17 5.30
NET WORKING CAPITAL
Net Working Capital= Current Asset – Current Liabilities
By Nija
FINANCIAL YEARS
Current Asset Current Liability
Net Working Capital
Dec 07 260.45 127.34 133.11
Dec 08 285.42 151.33 134.09
Dec 09 293.33 173.40 119.93
NET WORKING CAPITAL
Dec' 07 Dec' 08 Dec' 09110
115
120
125
130
135
LIQUIDITY RATIOS
- - -
By Depali
Working Capital
ANALYSIS• In 08’ working capital increases because of increase in
current assets.• In 09’ there is a decrease in working capital because of
increase in current liability due to more purchase & credit
Current Asset –Current Liability
119.93 134.09 133.11
LIQUIDITY RATIOS
Working Capital Turnover Ratio
ANALYSISo Measures the efficiency with which the working capital is being
used by a firmo Sales fell by 0.39% in 2009 while Net working capital fell by 10.56%. o Aventis Pharma made an efficient use of the working capital
generated
Cost of SalesNet working
capital8.57 7.69 6.69
By Lionell
LIQUIDITY RATIOS
Debtors Turnover ratio
ANALYSISo Indicates how quickly debt is recovered from debtorso Higher value = more efficient management of credit
Credit SalesAverage
Debtors14.44 14.03 14.13
By Lionell
ANALYSISo Aventis launched the following new products
in 2008o Apidara Solostaro Solostar
o Lantus and Amaryl registered 36.4% and 27% respectively.
o Entire retail market grew by around 9.8%o Sales grew by 15.87% in 2008 which shows
that the new products launched were highly successful.
LIQUIDITY RATIOS
Creditors Turnover Ratio
ANALYSISo It is the number of days in which the company pays off
its creditorso No creditors means that Aventis has paid off all its
creditors in cash from reserves and surplus
Average CreditorsCost of sales/365 - - -
By Lionell
LIQUIDITY RATIOS
Asset Turnover Ratio
ANALYSISo Higher the ratio, greater is the intensive
utilization of fixed assets. Lower ratio means under-utilization of fixed assets
Cost of SalesNet Fixed Asset 1.61 1.90 1.99
By lionell
ANALYSISo The company expected to continue it’s growth
plans however reciprocal from competitors reduced sales in 2009 which resulted in a lower asset turnover ratio
LEVERAGE RATIOS
Debt – Equity Ratio
ANALYSISo Company is completely debt-free status & has huge cash
reserves on its Balance Sheet
o As company is Debt free this ratio can not be calculated as company is not taking benefit of trading on Equity.
Total debtTotal Equity - - -
By Nilesh
• ow debt (or leverage) not only keeps a company’s interest cost down, but also gives it flexibility to invest its cash back into the business to expand or develop new products. As debt-free companies are mostly cash-rich, they also do not need to raise large funds from the market to run their operations.
• There are many other advantages that debt-free companies enjoy. For instance, debt-free company need not keep aside a portion of the profit to meet the cost of capital. They get interest on their cash deposited with banks, adding to their reserves. They have low interest-rate risk.
• However, debtless companies have their share of disadvantages, too. It shows that the company is not proactive on expansion and, thus, would be left out on growth rates when the environment turns bullish. There would be lower chances of debt-free companies getting long-term debt at short notice during an emergency as the company will not have a sufficient debt history to boast.
LEVERAGE RATIOS
Debt – Asset Ratio
ANALYSISo As Company is debt free
Total debtTotal Asset - - -
By Nilesh
LEVERAGE RATIOS
Interest Coverage Ratio
ANALYSISo As Company is debt free they don’t have fixed
burden of paying interest.
EBITInterest
- - -
By Nilesh
LEVERAGE RATIOS
Dividend Coverage Ratio
ANALYSISo As we can see company has good capacity to pay its shareholder from its
profit.o This is because sales in Dec. 08 was much higher, where as COGS in Dec 09 was
much higher which resulted in good DCR in Dec. 08.o Such ample cash balances would be helpful to the company while looking at
opportunities & also to maintain its steady dividend payouts
NPATEquity Share
Capital
6.826 7.2174 6.261
By Nilesh
LEVERAGE RATIOS
Dividend per share
ANALYSISo As we can see dividend per share is increasing despite decrease in
net profit margin so company declaring more dividend payout ratio, We believe this to be a positive step in favor of the shareholders.
o Aventis might be don’t have good investment opportunities in India.
Total DividendNo. of shares
2016
16
By Nilesh
PROFITIBALITY RATIOS
Gross Profit Ratio = Gross Profit *100 Net Sales
By Nija
F.Y. Gross Profit Net Sales Gross Profit Ratio ( in %)
Dec 07 175.06 890.03 19.67
Dec 08 203.89 1031.34 19.77
Dec 09 183.36 1027.27 17.85
dec' 07 dec '08 dec' 0902468
101214161820
gross profit
PROFITIBALITY RATIOS
Net Profit Ratio
ANALYSISo A
EBITInterest - - -
By Nija
PROFITIBALITY RATIOS
Operating Ratio
ANALYSISo A
Operating Income/Average total asset - - -
By Nija
F.Y. NPAT Shareholder’s fund
RATIO (IN %)
DEC ‘07 144.42 691.55 20.88
DEC’08 166.2 814.64 20.40
DEC’09 157.41 918.17 17.14
PROFITIBALITY RATIOS
Return on Shareholders Investment Ratio= NPAT- pref. Div.ShareholdersFund
ANALYSIS
Aventi’s return on shareholder’s investment is decreasing for last 3 years.
Overall efficiency is decreasing.
Measures the efficiency of an investment.
PROFITIBALITY RATIOS
Return On Assets NPATTotal Assets
Generation of profit from invested capital.
Should be compared with company’s previous ROA numbers.
F.Y. NPAT ROA (IN %)
DEC ’07 144.42 300.28
DEC’08 166.2 353.72
DEC’09 157.41 398.67
•Figure shows that ROA is increasing per year which is good for a company.
•Company is earning more money on less investments.
PROFITIBALITY RATIOS
Return on Capital Employed
• Indicates efficiency & profitability of company’s capital investments.
• Tells us about the profit from the investments the shareholders have made in their company.
• It should always be higher than the rate at which company borrows.
EBITCapital
Employed
31.24 31.45 25.12
By Alok
PROFITIBALITY RATIOS
Earning Per Share= NPAT-preference Div.No. of equity shares
The portion of a company's profit allocated to each outstanding share of common stock.
•EPS is increasing from ‘07 to ‘08, but it has significantly decreased from ‘08 to ’09
•Not a good sign for company.
F.Y. NPAT EPS (IN %)
DEC’07 144.42 62.71
DEC’08 166.2 72.16
DEC’09 157.41 68.35
PROFITIBALITY RATIOS
Price Earning Ratio
ANALYSISo Primarily reflects : Growth prospects, risk
characteristics, corporate image and the degree of liquidity.
o Higher the P/E ratio higher is the expectation of investors
Mkt. price/shareEPS
0.146 0.138 0.159
DUO POINT ANALYSIS
Rate of Return on Investment
Net Profit as% ofSales
Investment Turnover
Net Profit Sales Sales Total assets
DUO POINT ANALYSIS
ANALYSISo Measures combined effects of profit margin
and asset turnover.o Higher the results higher is the return on
investment
1.10 1.24 1.25
CONCLUSION
-Sanofi Aventis is a key organization in India in the Pharma sector.
-Current ratio of the company is good which shows sound liquidity position.
-Decline in sales was observed. The reason of this was the discontinuance of distribution of Anti rabbies vaccine.
-An inclination was observed in NP ratio and GP ratio from 07 to 08 but further it declined in 09 because of increase in mfg. and operational expenses.
- Aventis’s debtors turnover ratio is also increasing from 14.13% to 14.44% which reflects its efficiency of converting debtors into liquid is increasing.
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