Financial Reporting and Analysis - Assessment 2 Report

FINANCIAL REPORTING
AND ANALYSIS -
ASSESSMENT 2 REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Background of Hikma Pharmaceuticals Plc................................................................................3
Critical discussion of importance of different financial statements meant for financial
reporting......................................................................................................................................4
Critical evaluation of Hikma Plc financial performance based on profitability and investment
ratios............................................................................................................................................6
Future expectations of the Hikma Plc performance based on its current and past performance 8
Critical analysis of the advantage and disadvantage of historical cost accounting...................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Financial reporting is considered to be an important part of financial analysis which
indicates financial health of the company and helps in enhancing financial resources along with
its efficient management within the business (Osadchy and et.al., 2018). For the purpose of
financial reporting, various financial statements are prepared such as balance sheet, income
statement and cash flow statement. The present report is based on Hikma Pharmaceutical Plc
which is headquartered in London, United Kingdom. The report includes critical discussion of
various financial statements, company's financial performance on the basis of investment and
profitability ratios, future expected performance of the company with regard to past and current
trends and at last, critical discussion of historical accounting will be done by stating its
advantages and disadvantages.
MAIN BODY
Background of Hikma Pharmaceuticals Plc
Hikma Pharmaceuticals Plc is basically a British multinational organization located in
London, UK founded in the year 1978 having the experience of 44 years in pharmaceuticals
industry. The company manufactures non-branded generic and in-licensed pharmaceuticals
products.
Key Features of Hikma Plc:
 The company have broad global portfolio across diverse market which involve more than
650 compound dosage forms which make them leader in the market.
 Hikma also have extensive and well-established manufacture footprints with high quality
along with its operations in more that 11 countries including Europe, MENA, US etc.
 Another feature of the company is such that they have specialized team of research and
development which involve in the dosage forms and delivery system development.
 Beside this, the company also have experience leadership team along with the strong
financial position (Kolsi, Ananzeh and Awawdeh, 2021).
 In the year 2020, Hikma earns revenue and net profit of $2341 million and $430 million
respectively.
 Presently, the company have around more than 780 products with 7 R&D centres and 31
manufacturing plants in 11 countries.

 The total number of employees work with the Hikma Plc is around 8600 as per the
Hikma 2020 annual report.
Key Objectives of Hikma Plc:
 The objective of Hikma company is provide high quality pharmaceuticals products to the
worldwide consumers in the most inclusive and affordable price.
 With the help of their unique and established strategies, the aim of the company is to
offer clear proposition to investors.
 Another objective of the company involve emphasizing accessibility, with the help of
which their products can benefit people around the world and further contribute towards
the sustainable development (Al-Jedaiah, 2021).
 Also, the company purpose is to measure its progress using the key performance
indicators (KPI) such as return on capital invested etc.
Critical discussion of importance of different financial statements meant for financial reporting
There are various financial statements such as statement of cash flow, statement of financial
position and income statement that are being prepared for the purpose of reporting financial
results obtained at the end of each financial year to the external users of company's financial
information. These statements are of great importance for the purpose of providing financial
information to the external users of the company but also there are various limitations of these
financial statements that has been evaluated in the following section of this report.
Statement of cash flows
Cash flow statement provides important information pertaining to entity's liquidity
position by listing all the events related to movement of money from and into the company. With
the help of this statement, shareholders and investors are able to make out how much money a
concern is spending and making (Chen and et.al., 2019). Also, company's long term cash
planning can be done to ensure future growth where management undertakes vital changes in the
company to prioritize crucial business activities for better financial positioning. Furthermore,
optimal cash balance that is required to be maintained by company can be easily ascertained
because it is necessary to determine whether company has idle or shortage of funds. Working
capital management is one of the most important task of company's financial management as it