financial performance

FINANCIAL PERFORMANCEFor Pfizer & Novartis

2013-2012

AGENDA• Intro

• Pfizer I.S & B.S

• Novartis I.S & B.S

• Profitability Analysis

• Liquidity Analysis

• Solvency Analysis

• Efficiency Analysis

• P/E Analysis

Intro

Top 25 Pharma companies by global sales

Pfizer I.S & B.S

Pfizer Income statement

Pfizer Balance Sheet (1)

Pfizer Balance Sheet (2)

Novartis I.S & B.S

Novartis Income statement

Pfizer Balance Sheet

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

Gross Profit MarginGPM= Gross profit ÷ Revenues x 100

Novartis Pfizer #

67.4 80.8 2012

66.7 81.4 2013

59.8 59.8 Industry 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

Operating Profit MarginOPM= Operating income ÷ Revenues x 100

Novartis Pfizer #

20.0 20.5 2012

18.5 30.5 2013

14.18 14.18 Industry 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

Net Profit MarginNPM= Net income ÷ Revenues x 100

Novartis Pfizer #

16.51 24.70 2012

15.60 42.65 2013

17.33 17.33 Industry 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

Return on Equity (ROE)ROE = Net income ÷ Total shareholders' equity x 100

Novartis Pfizer #

14.09 17.84 2012

12.79 27.94 2013

NA NA Industry Ratio

Deteriorated Improved Analysis

Return on Assets (ROA)ROA = Net income ÷ Total assets x 100

Novartis Pfizer #

7.86 7.80 2012

7.33 12.30 2013

7.71 7.71 Industry Ratio

They utilize all recourses successfully

They utilize all recourses successfully

Analysis

Earning Per Share (EPS)EPS = Net income ÷ No. of Share

Novartis Pfizer #

3.87 1.96 2012

3.71 3.23 2013

NA NA Industry Ratio

Deteriorated Improved Analysis

Quality Of Income =cash flow from operating activity / Net income

Novartis Pfizer #

1.49 1.15 2012

1.43 0.80 2013

NA NA Industry Ratio

Decreased Decreased Analysis

Liquidity Analysis

• Net working Capital • Current Ratio• Quick Ratio• Cash Ratio

Net working Capital NWC= Current assets - Current liabilities

Novartis Pfizer #

1.16 : 1 2.2 : 1 2012

1.15 : 1 2.4 : 1 2013

- - 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

Novartis Pfizer #

3,953.00$ 35,186.00$ 2012

4,174.00$ 32,878.00$ 2013

-NA -NA Industry 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

Current RatioCR = Current assets ÷ Current liabilities

Novartis Pfizer #

1.16 : 1 2.15 :1 2012

1.15 : 1 2.41 : 1 2013

1.33 1.33 Industry 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

Quick RatioQR = Total Quick assets ÷ Current liabilities

Novartis Pfizer #

0.76 : 1 1.90 :1 2012

0.73 : 1 1.79 :1 2013

1.22 1.22 Industry 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

Cash RatioCash R = Cash Assets ÷ Current liabilities

Novartis Pfizer #

0.33 : 1 1.09 :1 2012

0.34 : 1 1.38 : 1 2013

NA NA Industry 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

Solvency Analysis

• Debt Ratio• Debt to Equity• Equity Multiplier

Debt RatioDR = liabilities : assets x 100

Novartis Pfizer #

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

Debt to EquityD/E= liabilities : Equity

Novartis Pfizer #

78% 127% 2012

69% 124% 2013

34% NA Industry Ratio

-

- Analysis

Equity MultiplierEM = Assets : Equity

Novartis Pfizer #

1:8 : 1 2.2 : 1 2012

1.6 : 1 2.24 : 1 2013

NA NA Industry Ratio

Assets : Equity

Assets : Equity Analysis

Efficiency Analysis

• Total Asset Turnover• Fixed Asset Turnover• Receivables Turnover• Average Collection Period• Inventory Turnover• Inventory Days On Hand

Total Asset TurnoverTATO = Net Sales ÷ Total assets

Novartis Pfizer #

0.49 0.26 2012

0.46 0.31 2013

0.25 0.25 Industry 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

Fixed Asset TurnoverFATO = Net Sales ÷ A. Fixed assets

Novartis Pfizer #

3.4 4.12 2012

3.3 4.27 2013

2.50 2.50 Industry 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

Receivable TurnoverRTO = Net Credit Sales ÷ A. Net Receivable

Novartis Pfizer #

6.11 5.14 2012

5.81 5.46 2013

NA NA Industry 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

Average Collection PeriodACP= Average Collection Period÷ A. Age of Receivable

Novartis Pfizer #

63.13 68.11 2012

62.82 66.85 2013

NA NA Industry 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

Inventory TurnoverITO= COGS ÷ A. Inventory

Novartis Pfizer #

8.39 8.11 2012

8.27 8.93 2013

NA NA Industry 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’ efficiency Comparison Analysis

Inventory Days On HandIDOH= 365 ÷ A. Days supply in Inventory

Novartis Pfizer #

41.44 39.80 2012

44.14 40.87 2013

NA NA Industry 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