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Financial Decision Making PDF

   

Added on  2020-04-13

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Running Head: Financial Decision Making1Project report: Financial Decision Making
Financial Decision Making PDF_1

Financial Decision Making2ContentsIntroduction.......................................................................................................................3Financial ratio analysis.....................................................................................................3Profitability, earnings and dividends............................................................................4Financial stability and liquidity....................................................................................6A critical reflection on the company................................................................................7Corporate governance.......................................................................................................8Asset price and evaluation................................................................................................8Conclusion........................................................................................................................9References.......................................................................................................................10Appendix.........................................................................................................................11
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Financial Decision Making3Introduction:This report has been prepared to analyze the financial performance, position and the profitability state of the company, HIKMA PHARMACEUTICALS PLC. In this report, the financial statement of the HIKMA PHARMACEUTICALS PLC has been analyzed along with the financial statement of its competitive company, INDIVIOR PLC. Study of ratio analysis has been performed to analyze and identify the financial performance of the company so that a better report could be presented to the board of directors of the company. Being a financial director, all the financial aspect of the company has been investigated and a better financial report has been prepared accordingly. HIKMA PHARMACEUTICALS PLC is a global pharmaceutical organization which is based in the London market. This company manufactures non branded and branded genericproducts. This company has been founded in Jordan in 1978. Currently, it is listed in the London Stock Exchange. This company has its operations in various countries and the marketbase and the share of the company is continuously enhancing. According to the reports and the articles of the company, it has been evaluated that the company share and the revenue is continuously enhancing (Home, 2017). The vision and the goals of the company depict that the company is required to manage the strategic acquisition and the organic growth to manage and develop the business and sustain the high level of responsibility and the ethics which are quite central to the manner we administer. Financial ratio analysis:Further, the study has been performed over the financial statement and the liquidity position, profitability position, solvency position and efficiency position of the company. For analyzing the performance of the company, it is required to manage and identify the ratio analysis of the company. The ratio analysis of the company is as follows:DescriptionFormulaHIKMA PHARMACEUTICALS PLC20162015201420132012ProfitabilityOperating MarginOperating profit / Sales50.56%56.81%57.15%55.97%45.20%
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Financial Decision Making4Net marginNet profit/revenues7.95%17.50%18.67%15.53%9.05%Return on equityNet profit/Equity6.47%18.85%23.22%20.85%12.05%LiquidityCurrent ratioCurrent assets/current liabilities1.58 2.30 1.20 1.53 1.67 Quick RatioCurrent assets-Inventory/current liabilities1.08 1.87 0.88 1.06 1.09 EfficiencyReceivables collection periodReceivables/ Total sales*365130.84 109.50 94.13 102.95 96.80 Payables collection periodPayables/ Cost of sales*36565.12 81.57 73.80 72.88 66.44 Asset turnoverratioTotal sales/ Total assets0.45 0.55 0.66 0.71 0.64 SolvencyDebt to Equity RatioDebt/ Equity0.82 0.94 0.88 0.90 1.08 Debt to assetsDebt/ Total assets 0.45 0.49 0.47 0.47 0.52 (Morningstar, 2018)
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Financial Decision Making5Through the above analysis over the key financial ratios of the company, it has been expressed that the current financial position of the company is average. Various changes havetaken place into the performance and the position of the company. More, the position of the company has also been changed (Morningstar, 2017). The current performance and the position of the company express that the position of the company is bit better from last 5 years in the market. Profitability, earnings and dividends:By looking at the profitability ratios, it has found that various changes have taken place into the performance and the position of the company. More, the position of the company has also been changed. In 2010, the operating margin of the company was 45.20% and consequently, in 2016, it has become 50.56%. This depict that various changes have taken place into the operations and the activities of the company such as the expenses on marketing, sales and general administration has been enhanced in current year as well as the company has invested huge amount on research to manage the performance of the company.The given chart depict that the operating profit of both the companies are very different from each other. In HIKMA PHARMACEUTICALS, the operating profit has enhanced but with various fluctuations whereas the operating profit of the INDIVIOUR PLC is enhancing continuously (Home, 2017). Further, it has also been found that various internal and external factors have impacted over the position and the performance of the company. Chart 1: operating profit
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Financial Decision Making6Further, the study has been performed over the earnings of the company and it explained that the position and the performance of the company is enhancing continuously of both the companies. Through the analysis and below given chart, it found that numerous alternations have taken place into HIKMA PHARAMCEUTICALS LIMITED which have impacted over the earnings of the company. The analysis explains that the earnings of the HIKMA PHARAMCEUTICALS LIMITED is average whereas the earings of he INDIVIOUR have been enahnced videly. Chart 2: Earnings Lastly, the dividends and the stuructre of the company has been analyzed to identify the posiiton and the performace of the company as well as it has also been analyzed that whatdividend policies are performed by the company. The given figures explains that the company has paid enough dividend accoridng to the performance and he position of the company (Elton, Gruber, Brown and Goetzmann, 2009). Cash Flows From Financing Activities201620152014Debt issued8160000005290100000246000000Debt repayment-663000000-361000000-121000000Common stock issued1000000Common stock repurchasedDividend paid-77000000-64000000-55000000Other financing activities-57000000-28000000-40000000Net cash provided by (used for) financing activities190000007700000030000000
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