By:

Maaz-ul-Bari
Brief introduction of the company
Highnoon Laboratories Limited was incorporated in 1984 as a
Private Limited Company.

It was converted into a Public Limited Company in September 1985.

With an authorized capital of Rs. 200 million and a paid up capital
of
Rs. 165 million, the Company is engaged in manufacture and
marketing of pharmaceuticals and within a short span of 25 years
the Company has become one of the leading Pakistani
Pharmaceutical Companies.

The new plant, completed at a total cost of Rs. 90.3 million is one of
the finest industrial buildings equipped with the most latest
machinery and quality control equipment

Business Analysis
Companies operating in the industry 600
Number of employees Over 100,000
Registered Drugs 47,000
Registered Molecules 1,100
R&D expenditure 1% of the profit
Average growth Rate 11%
Market share of Multinationals companies 45%
Market share of Local companies 55%
Market Leader GlaxoSmithKline

Business Analysis
Names Market Share
GSK 11.60%
Sanofi Aventis 4.10%
Getz Pharma 3.90%
Abbott Lab 3.80%
Roche 3.10%
Merck 2.90%
Highnoon 0.73%

Highnoon is ranked 12
th
in the industry
Liquidity ratios



1253335
3.7
1
-38124
0.98
0.4
201138038
1.26
0.18
320617393
2.54
1.12
5645601
3.24
1.59
Liquidity
i) Net Working Capital:
ii) Current Ratio
iii) Quick (acid test) ratio:
wYETH SANOFI AVENTIS
Highnoon
ferozsons
GSK
Liquidity
Industry
i) Net Working Capital:
80598679
ii) Current Ratio
2.58
iii) Quick (acid test) ratio:
1.3605
COMMENTS
The net working capital of the company is far greater than the industry. The
company is following a conservative working capital management strategy.

It is satisfactory that the company has more than enough working capital
available for its operations. Still the company should try to match to the level of
industry by reducing its illiquid assets such as inventory, average age of inventory
and prepayments and reducing short term liabilities to a reasonable level.

The current and quick ratios are telling a different story. We see that both these
ratios are far less than the industry average. The company should enhance its
liquid assets and short term ability to meet its obligations.
Activity Ratios
8.31
43.31
2.25
159
1.5
202
19.44
18.5
4.48
80
1.5
98
63.12
5.7
2.12
169
1.34
175
21.11
17.29
1.84
199
0.69
216
14.76
24.38
2.75
130
1.34
155
2. Activity Ratios
i) Accounts receivable turnover
ii) Average collection period
iii) Inventory Turnover
iv) Average age of inventory
v) Total Asset turnover
vi) Operating cycle
wYETH SANOFI AVENTIS
Highnoon
ferozsons
GSK
2. Activity Ratios
i) Accounts receivable turnover
30.217
ii) Average collection period
19.652
iii) Inventory Turnover
2.6135
iv) Average age of inventory
141.95
v) Total Asset turnover
1.239
vi) Operating cycle
154.55
COMMENTS
Account receivable turnover is much higher than the industry. It indicates that
company relatively turns over its sales more frequently than the industry. Its
indeed a good sign.


The average collection period is at a very low level than the industry. It indicates
that the company the company receives cash from its debtors more quickly as
compared to the industry. It is yet again a good sign.

Inventory turnover is a bit lower as compared to the industry average. Company
turns over its inventory a bit slower than the industry.

Average age of inventory is higher than the industry. It indicates that the
inventory stays longer with the company as compared to the industry average.

Total asset turnover and operating cycle both are higher than industry averages.
Operating cycle is higher and so the company should try to reduce its operating
cycle so that it receives cash on its sales sooner than before.


Account receivable turnover is higher than the industry so it is a good sign.
Debt Ratios
0.62
1.66
2.93
0.59
1.94
1.28
0.23
0.37
65.85
0.26
0.36
2.48
-
-
-
3. Solvency/Debt Ratios
i) Debt ratio
ii) Debt/equity ratio:
iii) Times interest earned (TIE)
wYETH
SANOFI AVENTIS
Highnoon
ferozsons
GSK
3. S
olvency/D
ebt R
atios
i) D
ebt ratio
0.390688
ii) D
ebt/equity ratio:
0.918125
iii) Tim
es interest earned (TIE)
53.05438
COMMENTS


Both debt and debt to equity ratios are higher than the industry and TIE is
lower than the industry. It means that the company has higher debt
leverage as compared to the industry averages. It is visible that the
company's EBITs give less coverage to the interest costs as compared to the
industry averages. Although every company has its levels of debt
financing but the company should give this a serious thought.

Short term borrowings have increased in 2009 where as long term loans
have decreased. Although it is good that the company is relying more on
short term financing sources still the financing needs to be rationalized
and restricted only to important operational and expansion purposes.
Profitability Ratios
21
-3
-5
-8
24
2.48
4.8
12
36
2.48
3.75
12
53
16
11
18
24
6
8
11
4. Profitability Ratio
i) Gross profit margin:
ii) Net profit margin:
iii) Return on assets (ROA):
iv) Return on Equity (ROE):
wYETH
SANOFI AVENTIS
Highnoon
ferozsons GSK
4. Profitability Ratio
i) Gross profit margin:
36.55
ii) Net profit margin:
9.5805
iii) Return on assets (ROA):
8.931
iv) Return on Equity (ROE):
16.9535
COMMENTS
Gross profit and net profit margins are lower than the industry. Net profit
margin projects a greater decrease as compared to industry.


The company should therefore work on its operating and finance
expenses to reduce them in order to expand its net profit margin.


ROA and ROE both are lower than the industry. The company needs to
enhance these levels and meet the pace of industry by increasing its EBTs
or reducing its NON-productive assets.
Market Value Ratios
-61
-20
0.69
0
0
17
8
134
4.8
40
3
8.2
31
8
63
5
19.9
47
4.8
91
5. Market value Ratios
i) Earnings per share (EPS)
ii) Price/Earnings ratio:
iii) Book value per share:
iv) Dividend yield
v) Dividend payout
10
11
56
1
9
wYETH
SANOFI AVENTIS
Highnoon ferozsons GSK
5. Market value Ratios
i) Earnings per share (EPS)
30.15
ii) Price/Earnings ratio:
14.265
iii) Book value per share:
50.9185
iv) Dividend yield
4.348
v) Dividend payout
55
COMMENTS
Earning per share, price to earning ratio and book value per share of the
company all are lower than the industry.


These valuation ratios are critical in investor's sight for the company's
reputation. The company should try to maintain its price to earning ratio
that is comparatively good at present. Earning per share needs to be
enhanced in the coming years


.
Dividend yield and dividend payout ratios are satisfactory as both of these
are greater than the industries. It gives a good impression of the company
to the investors.
Findings of the financial analysis.
Its sales were the historically highest and registered impressive growth,
almost 20% growth.

Last year (FY08) Gross Profit Margin was quite good at 35.53% which
further improved to 36.24%.

The company posted net profit after taxation at Rs 65.4 million (FY08: Rs
63.12 million) registering almost 3.70% increase

The company has excellent track record of profit distribution, For the year
2009 the company announced 63% dividend 53% cash dividend plus
10% bonus stock dividend
Average price of shares has increased in 2009-10 and is 3 times the par
value
CONT..
The short-term solvency of the company has declined but still is not at an
alarming level

The company still has more than one rupee to pay back its one rupee of
short term obligations.

Immediate solvency position of the company needs to be improved as the
cash and bank balances have shown a volatile trend over the years.

Credit policies are effective as the company has reduced its long term
loans in 2009 instead relied more on short term borrowings as a means of
financing

Trade debts have also fluctuated over the years but shown a reasonable
decreasing trend in 2008-09.

The fixed deposits are generating other income which has contributed to
the increase in net income.

Safe to buy because
The net profit after tax of the company is increasing for the last two years.
Therefore the shareholders earning per share has also increased continuously
from 2008-2009 by 3.82 to 3.96. This shows it is continuous capital appreciation
per unit share. It makes the stock attractive

The analysis shows the Earning per share and Dividend per share is also
increasing rapidly. Thus It is beneficial to the shareholders and prospective
investor to invest the money in this company.

The rate of return on equity share capital has been decreasing during the year
2006-2008 to 2008-2009. This shows that the company has reducing returns
available to take care of high equity dividend, large transfers to reserve, & also
company has got not a very great scope to attract large amount to fresh funds by
issue of equity share. It may hinder the stock performance

During the last 2 years the operating profit ratio has been stable. It indicates that
the company has stabilized its efficiency in managing all its operations of
production, purchase, inventory, selling and distribution and also has control over
the direct and indirect costs. Thus, company has sufficient margin available to
meet non-operating expenses and earn net profit.



Safe to buy because!
The short-term solvency of the company is quite satisfactory.

Immediate solvency position of the company is also quite satisfactory.

The company can meet its urgent obligations immediately.

Credit policies are effective.

Over all profitability position of the company is quite satisfactory
especially for the last 2 years.

Inventory turnover rate is satisfactory. Stock in trade of the company is
moving fast in the market.

The company is paying promptly to the suppliers.

Findings of the Business analysis
Safe to buy because!
The company is principally engaged in the manufacture, import and
marketing of pharmaceutical and allied products.

It has also made business alliances with some of the best known names in
the pharmaceutical industry.

In just 25 years, on the basis of sales value, it has become the 12th largest
pharmaceutical company in Pakistan.

Highnoon's quality system was recertified by the world renowned
certification agency SGS through surveillance audit for ISO 9001:2000
Quality System.

The company has embarked Rs 120 million expansion project which will
upgrade production facility to support rising sales.

CONT..
In FY09-10 budget, customs duties have been reduced from 25 percent
and 10 percent to just 5 percent on import of 19 types of raw materials
and active ingredients as well as chemicals.

This will provide relief to the sector that was grappling with high cost of
goods sold with major contributor being raw and packaging material.


This beneficial impact is eroding and will continue to do so unless the
Government implements the existing notified policy of allowing price
adjustments to offset inflation and devaluation. This is essential if the
industry is to sustain itself for the future.
cont
The company is exercising strong strategic planning in achieving annual
goals.

It has around 45 distributors throughout Pakistan.
It captures almost the entire country including Azad Jammu Kashmir.

It has strong market position in some cities e.g. Faisalabad, Peshawar,
Quetta and Multan.

It has high skilled professionals and man power.
It uses above moderate production technologies.

Assumptions for Sales forecast
Sales have historically shown an increasing trend but with a fluctuating
percentage.

Sales increase has been forecasted at 14% on an average basis.

Pharmaceutical Price adjustments by the government will also contribute
to the increase in sales.

The company had shown passive sales increase in the last year.

The company has embarked Rs 120 million expansion project which will
upgrade production facility to support rising sales.

Reduction in custom duties of raw material will have a positive impact on
sales

Assumptions for Sales forecast
EQUITY AND LIABILITIES
Share Capital
Reserves
Surplus on revaluation of assets
NON - CURRENT LIABILITIES
Long term loan - Secured
Liabilities against assets subject to finance lease
Long term advances
Deffered Liabiities
Deffered Gain
CURRENT LIABILITIES
Trade and Other Payabales
Liabilities for patent and trade mark
Mark-up payable on secured loans
Short term bank borrowing- secured
Income tax- net
Current portion of long term liabilities
CONTINGENCIES AND COMMITMENTS
Same as previous years
Adjusted with net income and dividends

Forecasted with Logest function because of
an increasing trend
AFN adjusted
Forecasting the historical trend and
subtracting the present value and finance
cost
Average because of unstable pattern
Average because of unstable pattern
Zero for the last 2 years
With sales
Zero for past 3 years
Same no relevant information for payables
AFN Adjusted
Zero for last 3 years
Fixed payment of L.T.L current portion+
principal payment of current potion of
A.S.T.F.L+ Average of long term advances
Assumptions for Sales forecast
ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Intangible assets
Lomg term investments
Long term deposits
CURRENT ASSETS
Stores spares and loose tools
Stock in trade
Trade debts
Advances, deposits and prepayments
Other receivables
Income tax - net
Cash and bank balances

With sales %
Last years ending balance minus
current year amortization expense
Zero for the last 3 years
Fixed for the last 3 years
Zero for the last three years
With sales %
With sales%
With sales%
Average
0
With sales


Assumptions for Sales forecast
Sales - net
Cost of sales
GROSS PROFIT
Other operating income
Distribution, selling and promotional expenses
Administrative and general expenses
Research and development expenses
Other operating expenses
RESULTS FROM OPERATING ACTIVITIES
Finance Cost
PROFIT BEFORE TAXATION
Taxation
PROFITAFTER TAXATION

Already discussed
With sales %

Average
With sales %
With sales %
With sales %
With sales %



On the basis of future mark-ups
Rate applicable
AFN Adjustment
Maintaining current and debt ratio
A
F
N
A
L
L
O
C
A
T
IO
N
IN
2010
TO
TAL FIN
AN
C
IN
G
LIM
IT
1,103,865,945
C
U
R
R
EN
T FIN
AN
C
IN
G
FR
O
M
C
U
R
R
EN
T LIAB
ILITIES
764,406,195
C
U
R
R
EN
T FIN
AN
C
IN
G
FR
O
M
LO
N
G
TER
M
LIAB
ILITIES
259,227,090
AD
D
ITIO
N
AL FIN
AN
C
IN
G
LIM
IT TO
LIAB
ILTITES
80,232,660
AFN
=
54,842,931
C
U
R
R
EN
T R
ATIO
= 1.26
2010 C
U
R
R
EN
T ASSETS =
1028916961
M
AXIM
U
M
FIN
AN
C
IN
G
FR
O
M
C
.L =
816600763
AFN
TO
C
.L
52,194,568
AFN
TO
L T LIAB
ILITIES
2,648,363
.
.













WYETH
PAKISTAN
LIMITED
By;
Mehreen Aslam














Brief introduction of WYETH
Wyeth is one of the worlds
largest research-driven
pharmaceutical and health care
products companies.

It is a leader in the discovery,
development, and
manufacturing and marketing
of pharmaceuticals, vaccines,
biotechnology products,
nutritional and non-
prescription medicines that
improve the quality of life for
people worldwide.

The Companys major divisions
include Wyeth Pharmaceuticals,
Wyeth Consumer Healthcare and
Fort Dodge Animal Health.



Brief introduction of WYETH
.
.













Business Analysis
Pfizer Inc, founded in 1849, is
dedicated to better health and
greater access to health care for
people and their valued animals.
Every day, approximately 81,900
colleagues in more than 150 countries
work to discover, develop,
manufacture and deliver quality, safe
and effective prescription medicines
to patients

On January 26, 2009 Pfizer and Wyeth
announced that they have entered
into a definitive merger agreement
under which Pfizer will acquire Wyeth
in a cash-and-stock transaction
currently valued at $50.19 per share,
or a total of approximately $68
billion. The Boards of Directors of
both companies have approved the
combination.



Business Analysis








The combined company will create one of the most diversified
companies in the global health care industry.

Operating through patient-centric businesses that match the
speed and agility of small focused enterprises with the benefits of a
global organizations scale and resources, the company will respond
more quickly and effectively to meet changing health care needs.

The combined company will have product offerings in numerous
growing therapeutic areas, a strong product pipeline, leading
scientific and manufacturing capabilities, and a premier global
footprint in health care.
Business Analysis
Under the terms of the transaction, each outstanding share
of Wyeth common stock will be converted into the right to
receive $33 in cash and 0.985 of a share of Pfizer common
stock, subject to the terms of the merger agreement.

Based on the closing price of Pfizer stock as of January 23,
2009, the stock component is valued at $17.19 per share.

The transaction provides immediate value to Wyeth
shareholders through the cash component, as well as
continued participation in the future prospects expected to
result from the combination through their ownership of
approximately 16 percent of Pfizers shares.












Liquidity Ratios WYETH SANOFI AVENTIS HIGHNOON FEROZSONS GSK
i) Net Working Capital: 1253335 - 38124 201138038 320617393 5645601
ii) Current Ratio 3.7 0.98 1.26 2.54 3.24
iii) Quick ratio: 1 0.4 0.18 1.12 1.59
Liquidity Industry
i) Net Working Capital: 80598679
ii) Current Ratio 2.58
iii) Quick (acid test) ratio: 1.3605
Annotations
The net working capital of the company is far less than the
industry. It may be because of the disparity between the sizes of
the companies whose averages have been taken. But it is not
reasonable that the company has less than enough working capital
available for its operations. The company should try to match to
the level of industry by increasing its current assets and reducing
short term liabilities to a reasonable level.Basically Wyeth is
using Aggressive Working strategy in which company is spending
far more than what is available.this strategy is bit riskier.

The current and quick ratios are showing different trend. Compared
to industrial averages the current ratio of Wyeth is greater,which
means current assets are increasing,major contribution is of trade
debts and stock in trade.Quick ratio of Wyeth is less than
industrial average because of less liquid assets.company should
increase its liquid assets ie cash and bank balances etc
Activity Ratios WYETH SANOFI AVENTIS HIGHNOON FEROZSONS GSK
i) Accounts receivable
turnover 8.31 19.44 63.12 21.11 14.76
ii) Average collection
period 43.31 18.5 5.7 17.29 24.38
iii) Inventory Turnover 2.25 4.48 2.12 1.84 2.75
iv) Average age of
inventory 159 80 169 199 130
v) Total Asset
turnover 1.5 1.5 1.34 0.69 1.34
vi) Operating cycle 202 98 175 216 155
Activity Ratios Industry
i) Accounts receivable turnover 30.217
ii) Average collection period 19.652
iii) Inventory Turnover 2.6135
iv) Average age of inventory 141.95
v) Total Asset turnover 1.239
vi) Operating cycle 154.55
Annotations
Account receivable turnover is much less than the industry.
It indicates that company has less short term solvency.it is
not a good signal.

The average collection period is at a very high level than
the industry. It indicates that the company receives cash
from its debtors very slowly as compared to the industry.
This again indicates that the company is not performing
well above its competitors with regard to the credit
management and operational efficiency.

Wyeth is operating at a comparatively lower inventory
turnover ratio as compared to its competitors .It means
Wyeth turns over its inventory a slower than the industry.

Average age of inventory is higher than the industry. It
indicates that the inventory stays longer with the company
as compared to the industry average.

Annotations

Total asset turnover and operating cycle both are higher
than industry averages. Operating cycle is higher and so the
company should try to reduce its operating cycle so that it
receives cash on its sales sooner than before.

Debt Ratio

Wyeth is not doing Debt financing at all,as historical
evidence shows.there are trade and other payables and
deffered taxation which do not come in debt,hence
debt ratio can not be calculated.
Profitability Ratio WYETH
SANOFI
AVENTIS HIGHNOON FEROZSONS GSK
i) Gross profit margin: 21 24 36 53 24
ii) Net profit margin: - 3 2.48 2.48 16 6
iii) Return on assets
(ROA): - 5 4.8 3.75 11 8
iv) Return on Equity
(ROE): - 8 12 12 18 11
Profitability Ratio
i) Gross profit margin: 36.55
ii) Net profit margin: 9.5805
iii) Return on assets (ROA): 8.931
iv) Return on Equity (ROE): 16.9535
Annotations
Gross profit and net profit margins are lower than the industry.
low gross profit margin is because of increase in COGS as inflation
and depreciation of currency had made raw material expensive.

Net profit margin projects a greater decrease as compared to
industry.this is because of increase in administrative expenses and
finance cost. The company should therefore work on its operating
and finance expenses to reduce them in order to expand its net
profit margin.

ROA and ROE both are lower than the industry. This is due to
decrease in profits resulting from high cost of production and
increased expenses . This again indicates the inability of the
company to generate more with the money shareholders have
invested .The company needs to enhance these levels and meet the
pace of industry by increasing its EBTs or reducing its
unproductive assets.
Market value Ratios WYETH SANOFI AVENTIS HIGHNOON FEROZSONS GSK
i) Earnings per share
(EPS) - 61 17 3 10 5
ii) Price/Earnings ratio: - 20 8 8.2 11 19.9
iii) Book value per
share: 0.69 134 31 56 47
iv) Dividend yield 0 4.8 8 1 4.8
v) Dividend payout 0 40 63 9 91
Market value Ratios
i) Earnings per share (EPS) 10.1875
ii) Price/Earnings ratio: 14.265
iii) Book value per share: 50.9185
iv) Dividend yield 4.348
v) Dividend payout 55
Annotations
Earning per share, price to earning ratio and book value per
share of the company, all are lower than the industry.as
company has facing loss in last year. These valuation ratios
are critical in investor's sight for the company's
reputation. The company should try to maintain its price to
earning ratio. Earning per share needs to be enhanced in the
coming years.

Dividend yield and dividend payout ratios has not been
calculated because company has issued no dividend as Wyeth
incurred loss in last year

FRANCHISE
FINDINGS OF
FINANCIAL &
BUSINESS
ANALYSIS
Findings of the Financial
Analysis
Net sales has decreased by 3.24% as compare to last year.
Last year 2008 Gross Profit Margin has decreased by 4.16%
which further deteriorated to 28.8% .
The company posted net loss after taxation at Rs 86,849
(2008: Rs 144,292 profit) registering almost 160.1% decrease.
Wyeth announced 250 Rs dividend per share, but as company
has faced loss,so no dividend been announced for year 2009.
Trade debts shows an increasing trend from 2006-09.
Other operating expenses of the Wyeth is following
haphazard trend. Through analysis its clear that its has
increased by 2.63% 2006-07 to 144.78% 2007-08,and then
dropped by 51.56% 2008-09.




Findings of the Financial
Analysis
Finance cost is increasing through out from 1.89% 2006-07 to
239.24% & 2008-09 which is because of bank charges ad interest on
workers profit participation fund.
Distribution cost is basically means salary, wages, fuel, power,
rent, insurance, dues etc.it is showing an increasing trend through
out from 2006-09
Credit policies are effective as the company has no long term loans
in ,instead relied more on short term borrowings as a means of
financing
Short term investments has decreased by 87.9% in year 2008,and in
year 2009 Wyeth did no short term investment because of companys
bad condition.
The short-term solvency of the company has declined but still is
not at an alarming level
Immediate solvency position of the company needs to be improved
as the cash and bank balances have shown a volatile trend over the
years.
Findings of the Business
Analysis
Wyeth, headquartered in New Jersey, has business interests
in pharmaceuticals, consumer healthcare and animal
healthcare products.

The company has a diverse product portfolio and strong
revenue-generating brands. Wyeths peer group comparison
involving GlaxoSmithKline, Novartis, and Merck .

The global pharmaceutical industry is faced with the
challenge of ensuring the viability of its high cost, high-
margin, blockbuster drugs-based business model .

Wyeth engages in the discovery, development, manufacture,
and marketing of pharmaceuticals, vaccines, biotechnology
products, and nonprescription medicines."


Findings of the Business
Analysis
There will be tremendous competition for further growth,
and only the companies with a strong management team
which can produce strong fundamentals will prevail. Luckily
for Wyeth, the company incorporates both of these aspects.

Wyeths management is continuously focused on taking steps
to improve performance in spite of challenging business
environment, Business improvement initiates undertaken in
prior years and the period under review are expected to
contribute towards improving operational efficiencies on
ongoing basis
Findings of the Business
Analysis
The company also remains focused on introducing new
research products. Two products ENBREL and PRISTIQ are
projected to be launched in the latter part of 2010.

The future plans can only be implemented if the Government
implements the existing report policy of allowing price
adjustments to offset inflation and devaluation. This is
essential if the industry is to sustain itself for the future.

Pfizer and Wyeth announced that they have entered into a
definitive merger agreement under which Pfizer will
acquire.



Assumptions for Sales
Forecast
Growth Rate:
The average sales growth rate was taken for the purpose of
forecasting. The company had growth rates of 8.33%, 13.10%
over the past 3 years. During the latest financial year, i.e.
2008-2009 the company performed below expectations and
achieved decrease in growth rate by 3.24%, it was only fair
to take an average of the past figures.No further additions
or subtractions were made in the growth rate as the
companys financial performance is bad,hence sales
predictability is also low.

Forecasted Income Statement:
Based on the percentage of sales method. All accounts under
the income statement have been increased by the sales
growth percentage,except;
Assumptions for Sales
Forecast


Finance cost:

For interest on worker's profit participation
fund,closing balance=0,so no interest for forecasted
year.

For mark-up on running finance,referred to trade and
other payables as note was given.there payable of 452
(rupees 000) was due,which I put forward in next
forecasted year,no running finance was availed in last
3 years I.e 2006,07,08.

Bank charges,no further note is given,because of
haphazard trend so applied logest.







Assumptions for Sales
Forecast

forma Balance Sheet - Pro :

No change in Equity.

No change in hedging Reserve as it is not attached to
sales.

In view of the loss (86849) for the period 2009,directors
have decided not to declare any dividend for 2009.thus all
loss will be retained and transferred to as loss. in
forecasting I took the unappropriate loss of last year and
added the net loss of forecasted income statement of year
2010

No change undertaken in the non-current liabilities as
they are not relevant to sales.

The entire accounts of Current Liabilities were increased
by the percentage of sales growth as they are spontaneous
liabilities.











For Long Term Loans,note:5 its mentioned that these loans are
given to employees,which is interest free loan and not
following any specific trend so took average through logest
There is a need to bring in additional fixed assets following an
increase in expected sales. Hence the fixed assets were
increased by the percentage of sales growth as well.
All Current assets considered as spontaneous accounts except
for other receivables which included pension funds,, etc. which
were unlikely to increase with an increasing sales pattern but
as they are showing random trend and no further information is
given in Report,hence assumed to increase with sales.

Assumptions for Sales
Forecast

Forecasted Cash Flow Statement:

Depreciation for the year has been charged on straight line
method as given under the note 2.7. From the table 8.1, the
average percentage of straight-line depreciation method
has been calculated at approximately 15% and this rate
applied to fixed assets.

Remaining accounts under the cash flow statement only
reflect the increase/decrease in the forecasted balance
sheet and income statement of 2010 and are not necessarily
factual.

















Forecasted Balance Sheet:

Additional Finance Needed (AFN) to be obtained from issue
of new equity. The company has Authorized Capital of
5,000,000 of Rs.100 each,and issued capital is of 1,421,609
shares.so Wyeth has the potential to float more shares.As
company has no debt financing hence the AFN is adjusted in
share Capital by issuing more capital.
AFN ADJUSTMENT








The company has faced loss in year 2009 by amount
Rs.86849.the reason behind is because Wyeth Rs.2.1 million
in the form of cash and medicines for Rehabilitation and
Welfare of Internally Displaced Persons .

Forecasted income statement also shows the loss and all
other indicators were getting bad showing the in-
efficiency of company.

For Wyeth 2009 was a challenging year and witnessed modest
growth in Pakistans Economy due to uncertain law and order
situation and global Economic Recession.

The Economy continues to witness Double Digit Inflation.
Low economic growth and continued depreciation of the
Rupee against major currencies.
Recommendation to
Investor on basis of
Financial Analysis







During this year the Pharmaceutical industry has been
adversely impacted by both Inflationary trend as well as
Rupee depreciation.

Also the Government has not allowed nay across the Board
Price adjustments to Pharmaceutical Industry fro last nine
years. Growth in pharmaceutical market is mainly Volume
growth. All these factors justify the loss faced in year 2009
only by Wyeth .


Recommendation to
Investor on basis of
Financial Analysis







Pfizer has recently acquired Wyeth in 2009,which is the
market leader with highest market share.

After the acquisition Wyeths shareholders value has
increased because Wyeth is now part of Pfizer.

Now it would be a near ideal time to become a shareholder
of this company by buying shares at less price and as there
is great potential of growth in Pfizer being the market
leader, investor can get huge profits out of it.

Thus, after going through the given fundamentals and
comparison to both the industry and its rivals, as an
investor, you should absolutely feel much more confident to
garnering some of your capital into Pfizer.


Recommendation to
Investor on basis of
Business Analysis











THANK YOU !!

By;
HIRA DAUD
Brief introduction of GSK
GlaxoSmithKline (GSK) is a world leading
research-based pharmaceutical company.
Headquartered in the UK, the company is one of
the industry s leading companies with leadership
in four major therapeutic areas
antibiotics,
central nervous system (CNS),
Respiratory,
gastro-intestinal/metabolic.
In addition, it is a leader in vaccines and also
has a growing portfolio of oncology products.
GlaxoSmithKline Pakistan Limited came into existence
after the merger of Smith Kline and French of Pakistan
Limited and Beecham Pakistan (Private) Limited with
Glaxo Wellcome Pakistan Limited in 2002.
Listed in Karachi and Lahore stock exchange
Nine of its products are amongst the top 15 brands in the
country.
It also exports it good quality products, which make
around 2% of GSK s sales. Major export markets include
Afghanistan, Sri Lanka, Syria and Greece.
HISTORY OF GSK

1830
John K. Smith opens a
drugstore in Philadelphia
1842
Thomas Beecham
launches Beechams
pills in England
1880
Burroughs
Wellcome &
Company was
founded
1891
SmithKline & Co.
acquires French,
Richards &
Company
1906
Glaxo is
registered by
Joseph Nathan &
Company
as a trademark
for dried milk

1929
SmithKline &
French
becomes
research
focused
1989
SmithKline &
Beecham
merge
1995
Glaxo & Wellcome
merge
2001
GlaxoSmithKlin
e
BUSINESS ANALYSIS
Companies operating in the industry 600
Number of employees over 100,000
Registered Drugs 47,000
Registered Molecules 1,100
R&D expenditure 1% of the profit
Average growth Rate 11%
Market share of Multinationals companies 45%
Market share of Local companies 55%
Market Leader GlaxoSmithKline
BUSINESS ANALYSIS
Names Market Share

GSK 11.60%
Sanofi Aventis 4.10%
Getz Pharma 3.90%
Abbott Lab 3.80%
Roche 3.10%
Merck 2.90%
Highnoon 0.73%

GSK is the market leader.
Liquidity ratios
Liquidity
i) Net Working Capital:
ii) Current Ratio
iii) Quick (acid test) ratio:
1253335
3.7
1
-38124
0.98
0.4
201138038
1.26
0.18
SANOFI AVENTIS
Highnoon GSK
wYETH
Liquidity Industry
i) Net Working Capital: 80598679
ii) Current Ratio 2.58
iii) Quick (acid test) ratio: 1.3605
5645601
3.24
1.59
ANALYSIS:

The net working capital of the company is far less than
the industry. It shows that the company has adopted
aggressive working capital policy i.e. the company
should increase its current assets to build confidence in
creditors.

The current and quick ratios are far more than the
industry average. the company is performing efficiently
and its current assets in possession are over more than
the current liabilities that might be needed to be
repaid at any point in time. Even the company has
more liquid assets to finance its liability which is good
thing.
Activity Ratios
8.31
43.31
2.25
159
1.5
202
19.44
18.5
4.48
80
1.5
98
63.12
5.7
2.12
169
1.34
175
21.11
17.29
1.84
199
0.69
216
14.76
24.38
2.75
130
1.34
155
2. Activity Ratios
i) Accounts receivable turnover
ii) Average collection period
iii) Inventory Turnover
iv) Average age of inventory
v) Total Asset turnover
vi) Operating cycle
wYETH SANOFI AVENTIS
Highnoon
ferozsons
GSK
2. Activity Ratios
i) Accounts receivable turnover 30.217
ii) Average collection period 19.652
iii) Inventory Turnover 2.6135
iv) Average age of inventory 141.95
v) Total Asset turnover 1.239
vi) Operating cycle 154.55
ANALYSIS:

Account receivable turnover for the industry is
higher, whereas for GSK is way lesser which is
not good because company is recovering it
receivables in frquency loweras compared to
industry average.

Due to an decreased accounts receivable
turnover, the average collection period of the
company is naturally increasing over time which
shows inefficiency in receiving the payments
from creditors.
Contd
Inventory turnover and average age of
inventory show a favorable result as
compared to the industry average which
is a good signal for the company that
means it doesnt carry inventory for a
longer period of time, i.e. the company
bears less carrying cost.
Contd
Asset turnover is more than that of
industry which means that the companys
assets are being used efficiently and
effectively.

Operating cycle is almost same as that of
industry which is good but it has more
room to improve as the account receivable
turnover is less and can be enhanced.
Profitability Ratios
24
6
8
11
4. Profitability Ratio
i) Gross profit margin:
ii) Net profit margin:
iii) Return on assets (ROA):
iv) Return on Equity (ROE):
wYETH
SANOFI AVENTIS
Highnoon
ferozsons GSK
4. Profitability Ratio
i) Gross profit margin: 36.55
ii) Net profit margin: 9.5805
iii) Return on assets (ROA): 8.931
iv) Return on Equity (ROE): 16.9535
53
16
11
18
36
2.48
3.75
12
24
2.48
4.8
12
21
-3
-5
-8
ANALYSIS:
All profitablility ratios decreased as
compared to that of industry.
The downward trend in the gross profit
margin serves as a negative indicator for
the company. The decreased GP margin
is an indication of less amount of money
left over from revenues after accounting
for the cost of goods sold.
The net profit margin decreased because
of rise in expenses due to inflationary
pressures.

ROA of the company remained stable
showing its smooth asset base for the
purpose of generating earnings.


Market Value Ratios
5
19.9
47
4.8
91
5. Market value Ratios
i) Earnings per share (EPS)
ii) Price/Earnings ratio:
iii) Book value per share:
iv) Dividend yield
v) Dividend payout
10
11
56
1
9
wYETH
SANOFI AVENTIS
Highnoon ferozsons GSK
5. Market value Ratios
i) Earnings per share (EPS) 30.15
ii) Price/Earnings ratio: 14.265
iii) Book value per share: 50.9185
iv) Dividend yield 4.348
v) Dividend payout 55
3
8.2
31
8
63
17
8
134
4.8
40
-61
-20
0.69
0
0
ANALYSIS:
Earning per share is lower than the
industry. as company cost of
manufacturing was higher in last year due
to which overall profit was affected. This
gives a very bad impression to the
investors. The company should look
forward to improve its earning per share
to maintain its reputation.
Price to earning ratio is more than the industry
average. The increase in PE ratio is due to a low
EPS and a rather stagnant market price.

Both the dividend ratios are the highest for
GSK when compared with the industry
averages, hence proving that the companys
stock is at a very desirable position as of the
latest market scenario.
Findings of the financial
analysis.
Sales revenue for 2009 was Rs. 10.7 billion showing an overall
increase of 9.1%.
GSK s margins reduced by 4.5% due to a freeze in prices and
increased raw material and packaging material costs along with
higher utility charges

The PAT faced downward pressure despite an increase in other
operating income and a decline in financial charges.

The company has excellent track record of profit distribution, for the
past years it has been paying dividend.
Findings of the financial
analysis:
Other operating income has doubled to Rs.
1,280 million in 2007-2008 This was due to gain
on sale of land in Korangi. however the income
decreased in year 2009 due to improvement and
up gradation of plant and equipment.

Trade debts have also fluctuated over the years
but shown a reasonable decreasing trend in
2008-09.



Findings of Business analysis
The group operates primarily in 117 countries and its
products are sold in over 140 countries.
GlaxoSmithKline Pakistan is one of the
leading pharmaceutical companies in Pakistan and the
it's the world's second largest company with high ranking
stands for Employee Cares.
GSK employs over 99,000 people in114
countries
Over 150 projects in clinical development
are in pipeline
Assumptions for Sales forecast:

Growth Rate:
The average sales growth rate was taken for the purpose
of forecasting. Forecasted sales have increased at 14%
for year 2010 on an average basis.

Proforma Income statement:

all income statement items would increase with the same
proportion as of sales except for finance cost which is
taken as average of last years.
Proforma balance sheet
Equity:
Reserve would remain the same.
After paying the dividend, remaining amount would be added in
unappropriate dividend.
No as such changes in equity

Liabilities:
The long term liabilities would remain the same as they are non
spontaneous in nature
Current liabilities have been increased by the same proportion as of
sales. Except for provision of tax, as it was zero for last year so I
have taken it same.


Proforma balance sheet
Asset side:

Fixed assets were increased by the percentage of sales
growth

Except for
Long term loan for employee and long term deposit:
they showed a fluctuating trend so I took average of the
previous years.

Investment were kept constant.


Proforma balance sheet:
Current assets considered as
spontaneous accounts except for other
receivables which were unlikely to
increase with an increasing sales
pattern
short term investments(T-bills) have been
increased by the rate given in the report
2009 i.e. 12.42%

AFN Adjustment
Forecasted Balance Sheet:

As the company rely in equity financing so
the additional Fund Needed (AFN) to be
obtained from the issuance of new equity.
company has Authorized Capital of
250,000,000 of Rs.10 each,and issued
capital is of 170,671,844 shares. so the
company has the capacity to float more
shares.
Recommendations to the
investor:
I suggest the investor to invest in the company

Reasons:

Over the past years, GlaxoSmithKline Pakistan Limited has
exhibited consistent growth in sales


customs duties have been reduced from 25 percent and 10 percent
to just 5 percent on import of 19 types of raw materials and active
ingredients as well as chemicals. This will provide relief to the
sector that was fighting with high cost of goods sold with major
contributor being raw and packaging material.



Recommendations:
The investor expectations are down compared
to the last few years. The stock prices are
generally low due to economic recession in the
country and weak trading at the stock exchange.
But overall the company is performing well.

It is expected that cost of manufacturing would
decrease due to which profit margin would
increase and hence high return to the investors.
Recommendation:
The liquidity condition of the company is
good
It has a strong asset base.
Inventory turnover rate is satisfactory
For the past 3 years the companys overall
performance was good except for year
2009,when profit margins declined. but it is
expected that the companys profit would
increase in year 2010.
Incorporated in 1967 Karachi Pakistan
Sells and manufactures Pharmaceuticals
Product Area includes:
Thrombosis
Cardiovascular diseases
Diabetes
Vaccines
Oncology
Central nervous system disorders
Neurodegenerative diseases
Metabolic disorders&allergies
Liquidity Ratios
2006 2007 2008 2009 Industry
Average
Current
ratio
1.48 1.31 0.98 0.98 2.58
Quick ratio 0.51 0.41 0.35 0.42 1.36
Net
working
capital
413844 383265 -27776 -38124 80598679
Activity Ratios
2006 2007 2008 2009 Industry
average
Average
Collection
period
13.86 12.74 12.58 18.51 19.65
Accounts
Receivable
Turnover
25.96 28.25 28.60 19.45 30.2
Inventory
turnover
3.20 2.61 2.98 4.49 2.6
Activity Ratios
2006 2007 2008 2009 Industry
average
Average
age of
inventory
112.37 137.97 120.87 80.25 141.9
Total assets
turnover
1.92 1.60 1.45 1.95 1.2
Fixed assets
turnover
5.44 4.92 3.64 4.83
Profitability Ratios
2006 2007 2008 2009 Industry
Average
Gross profit
margin
33 28 24 24 36.55
Net profit
margin
5.94 2.19 24 24 9.58
Operating
profit margin
11.3 6.04 3.94 5.71
Profitability Ratios
2006 2007 2008 2009 Industry
average
Return on
Assets
11.41 3.52 1.28 4.86 8.9
Return on
Equity
20.34 7.67 3.43 12.95 16.9
Solvency Ratios
2006 2007 2008 2009 Industry
Average
Debt
ratio
0.43 0.54 0.62 0.62 0.39
Debt
to
Equity
0.78 1.17 1.67 1.66 0.91
TIE 5.68 2.15 1.96 2.93 53.0
Market value Ratios
2006 2007 2008 2009 Industry
average
Earnings
per share
23.53 8.86 3.96 17.35 30.15
Dividend
payout
30.16 49.63 35.28 40.33 55
Market value Ratios
2006 2007 2008 2009 Industry
average
Dividend
yield
2.82 1.59 0.66 4.82 4.34
Book
value
115.7 115.5 115.7 134 50.91
Price
earning
ratio
10.71 31.13 53.17 8.36 14.26
SAPL has been
listed since 1977
70% dividend
was declared in
2009
Sales:
6,568,789,000
(Year Ending Jan
2010
Market Cap:
1,323,748,800
Outstanding
shares: 9,644,800
Applied LOGEST function to forecast
sales increase
Used interest rates and kibor to forecast
finance cost
Exchanges: Karachi, Lahore & Islamabad
Symbol: Feroz
Country: Pakistan
City: Rawalpindi

Industry: the company is primarily engaged in the
manufacturing and sale of pharmaceuticals and soap
products

Number of Employees: over 570
Year ended 30
th
June
The Ferozsons Laboratories Limited, incorporated
as a Private Limited Company in 1954, became
Pakistan's first local pharmaceutical company to be
listed on the country's stock exchanges in 1960. It
commenced production in 1956. Ferozsons
Laboratories' head office is located in Rawalpindi,
Pakistan and their manufacturing plant is located
in Nowshera, Pakistan.

Ferozsons Laboratories Limited was created in
1956 as one of the first pharmaceutical
manufacturing facilities in the fledgling state of
Pakistan, to ensure a constant and reliable source
of quality medicines for the people of the nation.
Brand-building and customer relationship
management are the key strengths of Ferozsons.
Our sales and marketing infrastructure provides a
solid platform for launching brands licensed from
Quality manufacturers seeking to make inroads
into the $1 Billion Pakistani Healthcare Market. We
are actively seeking licensing-in opportunities for
technical products in the following area:
Cardiology
Cancer Care
Hepatitis Management
Critical Care

Though now an independent entity and a public
limited company listed on the country's three stock
exchanges, the founder's spirit still courses through
the company's veins. In our quest for maximizing
returns to our shareholders and increasing market
share, we have not lost sight of the fact that we exist
first and foremost to improve the quality of life in the
markets we serve.
We seek also to ensure that our products are made
available at prices that are relevant to the local
population in our chosen markets

Companies operating in the industry 600
Number of employees Over 100,000
Registered Drugs 47,000
Registered Molecules 1,100
R&D expenditure 1% of the profit
Average growth Rate 11%
Market share of Multinationals companies 45%
Market share of Local companies 55%
Market Leader GlaxoSmithKline

The pharmaceutical market exhibited signs of improvement
during the year under review, with an increased growth rate
of more than 11%.

This improved trend was spoiled to some extent by the
sudden imposition of GST on retail prices on
pharmaceutical products by the Government of Pakistan,
which resulted in large scale confusion and stuck-up
inventory at the distributor, wholesale and retail levels
during the last year.

In February 2009, Ferozsons of Pakistan and the Bago Group
of Pharmaceutical Companies of Argentina entered into a
joint venture to build country's first biotech pharmaceutical
manufacturing plant.

The Company holds 80% of equity of the
subsidiary and the remaining 20% is held by
Laboratories Bag S.A., Argentina.
Company have invested 98% share in
Farmacia, a subsidiary partnership duly
registered under the Partnership Act, 1932 and
in an unlisted BF Biosciences engaged in
operating retail pharmaceuticals, with large
prospects to earn profit.


Liquidity Ratios WYETH
SANOFI
AVENTIS HIGHNOONFEROZSONS GSK
i) Net Working Capital: 1253335 - 38124 201138038 320617393 5645601
ii) Current Ratio 3.7 0.98 1.26 2.54 3.24
iii) Quick ratio: 1 0.4 0.18 1.12 1.59
Liquidity Industry
i) Net Working Capital: 80598679
ii) Current Ratio 2.58
iii) Quick (acid test) ratio: 1.3605
The net working capital is highest in the industry.
The company is following a conservative net
working capital management policy. The company
should reduce its illiquid short term assets.
The current and quick ratios are slightly lower
than the industry. It means that the company
relative liquidity position is lower than industry
average. It needs to employ more liquid assets and
reduce its current obligations.(trade debts,
inventories, cash, A/P)
Activity Ratios WYETH
SANOFI
AVENTIS
HIGHNOO
N FEROZSONS GSK
i) Accounts receivable
turnover 8.31 19.44 63.12 21.11 14.76
ii) Average collection
period 43.31 18.5 5.7 17.29 24.38
iii) Inventory Turnover 2.25 4.48 2.12 1.84 2.75
iv) Average age of
inventory 159 80 169 199 130
v) Total Asset turnover 1.5 1.5 1.34 0.69 1.34
vi) Operating cycle 202 98 175 216 155
Activity Ratios Industry
i) Accounts receivable turnover 30.217
ii) Average collection period 19.652
iii) Inventory Turnover 2.6135
iv) Average age of inventory 141.95
v) Total Asset turnover 1.239
vi) Operating cycle 154.55
Accounts receivable turnover is lower than industry, it is still on
2
nd
position among all the industries. The sales of the company are
increasing with decreasing trend but A/R are increasing with
increasing trend that makes the turnover to decrease. That means
the turnover frequency of the company is less than other
comapanies
Average collection period is slightly better than the industry that
shows the company receives its account receivable in short period
of time than other companies in industry.
Inventory turnover for the industry is 2.6 whereas our company's
ratio is 1.84 which is less and age of inventory is higher than
industry that means you keep inventory for longer period and
have to bear its cost.
Asset turnover is less of the company than industry. We should
reduce our assets so that we can improve our ratio.(inventories)
Operating cycle of our company is 216 days which is more than
average of industry this is because of high age of inventory.




Solvency/Debt Ratios WYETH
SANOFI
AVENTIS
HIGHNOO
N FEROZSONS GSK
i) Debt
ratio 0.62 0.59 0.23 0.26
ii) Debt/equity ratio: 1.66 1.94 0.37 0.36
iii) Times interest earned (TIE) 2.93 1.28 67.85 2.48
Solvency/Debt Ratios Industry
i) Debt ratio 0.3906875
ii) Debt/equity ratio: 0.918125
iii) Times interest earned (TIE) 53.054375
Debt ratio of the company is 0.2 and the industry is
0.3 that means we are on the positive side. We have
more assets on back to pay debt.
Debt to equity ratio of the company is 0.37 but
industry average is 0.9 which is very high that means
industry rely more on debt but we rely more on
equity. Company have enough internal financing
that it does not have to pay interest cost.
TIE ratio is 53 for the industry and 67.85 for the
company therefore it is very good for the company
as it can easily pay its interest liabilities.

Profitability Ratio WYETH
SANOFI
AVENTIS
HIGHNOO
N FEROZSONS GSK
i) Gross profit margin: 21 24 36 53 24
ii) Net profit margin: - 3 2.48 2.48 16 6
iii) Return on assets
(ROA): - 5 4.8 3.75 11 8
iv) Return on Equity
(ROE): - 8 12 12 18 11
Profitability Ratio
i) Gross profit margin: 36.55
ii) Net profit margin: 9.5805
iii) Return on assets (ROA): 8.931
iv) Return on Equity (ROE): 16.9535
Gross profit margin of the industry is 36 and
company is 53, this is very good for the company
and we are doing our production efficiently with low
COGS.
Net Profit Margin: 9.5 is the industry average and 16
is company's average that again shows that the
finance cost and all other expenses are lower than
industry.
ROA and ROE both are higher than industry
average that shows the company have produced
efficiently and make an effective use of companys
assets.



Market value Ratios WYETH
SANOFI
AVENTIS
HIGHNOO
N FEROZSONS GSK
i) Earnings per share
(EPS) - 61 17 3 10 5
ii) Price/Earnings ratio: - 20 8 8.2 11 19.9
iii) Book value per share: 0.69 134 31 56 47
iv) Dividend yield 0 4.8 8 1 4.8
v) Dividend payout 0 40 63 9 91
Market value Ratios
i) Earnings per share (EPS) 10.1875
ii) Price/Earnings ratio: 14.265
iii) Book value per share: 50.9185
iv) Dividend yield 4.348
v) Dividend payout 55
EPS is equal to the industry average that shows we
are competitive in the industry and all our share
holders are enjoying being the part of the company.
Book value per share is 56 for the company and 50 is
the average therefore it shows an edge to investors.
Dividend yield is 3 for industry and 1 for our
company which is less and the shareholders may get
upset.
Dividend payout ratio of the company is 9 which
are far more less than industry average that is 55.
Company should increase the dividend to the share
holders.


Net sales increased in 2007 by 22.62 then it increased slightly
by 1.08% and then again increased with 16% which is still
high as compared to other companies. The gross profit
increased but with decreasing trend which is mainly because
the COGS is continuously increasing due to high cost and
inflation.
Finance cost decreased in 2008 but increased substantially in
2009 to 147% as they increase LTD. EBT of the company was
18% in 2007 but the % decreased in the next year and goes
negative in 2009. This is because of increased cost of
production.
Net profit and gross profit margin of the company is highest
among the competitors but payout ratio is less as it is
reinvesting in 98% owned subsidiary Farmacia and BF
Biosciences.
Company is working on very good solvency position as
compared to industry. It have 1 unit of assets available for
paying back 0.23 units of debt.
The companys share in the profit of the farmica increased as
well as you can see in the figures stated hence the overall Equity
increased due to the reason. So the companys investments can
be termed as profitable and the Equity financing is in good
shape.
The debt to equity ratio shows that company have enough
internal financing that it does not need to increase the debt of
the company.
EPS of the company is equal to industry average even when
the industry has faced worst overall financial scenario.
Ferozsons Laboratories Limited is a publicly
listed company with shares quoted on the
Karachi Stock Exchange (KSE), as well as the
Lahore and Islamabad Stock Exchanges.
Despite a challenging regulatory environment
with rigid price controls and a depreciating
local currency, we have consistently rewarded
our shareholders through cash and stock
dividends since 1993.
The Company was also a recipient of the KSE
top Companies award in 1997.

The Gross Profit of all the companies has been in
decline but Ferozsons has got somewhat stable Gross
Profit Ratio. Wyeth, Sanofi aventis and even GSK faced
the constant decline in the ratio of Gross profit and for
Highnoon the record has been fluctuating.
While these other four companies had the decreasing
gross profit Ferozsons has been continuously seeing
the somewhat stable gross profit ratios.
The EBIT Ratio is highest in case of the Ferozsons and
has increased contantly.
The return on equity for Ferozsons is the highest as
compared to the other competitors.
The return on assets of Ferozsons is far beyond
comparison with the other companies and it suggested
the strong financial condition of the company.
Feroz Sons is the best company to Invest in with the its
current financial health and its performance over the
time period of 5 years
Ferozsons have invested in subsidiaries that are
expected to earn high yeilds
Based on our analysis, below are few recommendations
for the company which may help increasing the
financial position of the company FEROZSONS:
The average collection period for the company has
decreased, which is a good sign. However, keeping
such a tight repayment policy may lead to loss of
customers.
The company should focus on its management, to
improve the efficiency to convert the inventories into
cash fast.
From the ratio analysis we conclude that the
companys positioning in the investors mind may be
strong.
The company is relatively good for the long term
investment as the financial risk associated with the
company is relatively low.
From the balance sheet and income statement analysis,
we have come to the conclusion that overall financial
health of the company is good.
The company has strived to increase the share holders
wealth.
Sales are increasing with growth % that we
calculated by considering its trend.
Effect of increase in assets and approval of
manufacturing license which is expected in this
year has also caused increase in sales.
Provision for taxation remained same.
Income from share in profit of Farmacia 98%
owned partnership firm, remained unchanged
as we did not have the complete information
regarding their operations.
Interest rate was calculated on 6 months
KIBOR plus 1.5%, as was given in policy.
Sale proceeds from sale of property plant and
equipment were considered zero in cash flow
as no information was given.

Long Term Investment 2010
Farmacia (unlisted subsidiary)
Companys share in profit of subsidiary 1,209,394
BF Biosciences Limited (unlisted subsidiary) 1,209,394
2,418,789
Additional funds available were invested in Long term
investment in the subsidiary Farmacia and BF
Biosciences. The allocation is equal in both heads.