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Quantitative and Qualitative Analysis and Management of Financial Firms

   

Added on  2020-01-15

12 Pages2891 Words467 Views
FINANCIAL ANALYSISAND MANAGEMENT

Table of ContentsINTRODUCTION......................................................................................................................1Quantitative and Qualitative analysis.........................................................................................1CONCLUSION..........................................................................................................................7REFERENCES...........................................................................................................................8APPENDIX................................................................................................................................9

INTRODUCTIONFinancial analysis is the process of evaluating company's operation, viability,stability, growth and profitability. However, financial management refers to the planning,collecting, directing and controlling of firm’s financial operations. It is the process ofcollection, procurement and utilizations of funds in an adequate manner to manageorganizational funds and achieve its set targets and objectives. AstraZeneca Plc is a UKpublic limited company which operates in pharmaceutical and biologic products listed onLSE of FTSE 100. Headquarter of the company is located in London, UK established in1999. It is the world's seventh largest pharmaceutical company and operates in more than 100countries. It deals with various diseases such as Cardiovascular, gas, infection, neuroscience,respiratory and inflammation. The reason for choosing this company is that it has aworldwide presence and good market position in the industry. Present project report willcarry out a critical analysis of its financial as well as non financial performance. QUANTITATIVE AND QUALITATIVE ANALYSISThe financial objective of the Astrazeneca (AZN) is to build sustainable growth andstrong position to track good growth in return by 2017. It had announced its new financialtargets in the year 2013 in which company decided to invest in new growth platforms andlaunch new products to make extensive growth revenue by 2017. Further, it targets to buildstrong market position by generating revenues greater than £45 billion by the year 2023(AstraZeneca Strategy on track to deliver sustainable growth and value through innovations,2014). It is continuously focusing to achieve this strategic target by serving large number ofpatients. Moreover, the company focuses on creating value for the shareholders throughproviding great medicines to protect patients from various diseases. AZN is operating in a highly competitive environment in the market. It is facingcompetition from Pfizer, Novartis, Sanofi, Merck & Co., Roche and GlaxoSmith Kline. Thus,high competitive pressure is necessary for the company to drive some major changes tocompete effectively. It is a pharmaceutical company hence; Research and Development(R&D) activities play a crucial role in the organization’s success. It makes company able todetermine patient’s requirement, new diseases and their proper treatment. Further,technological improvement is another major key factor that drives profitability to thebusiness. R&D provides assistance to company to become aware about new and innovatedtechnology and its use (Titman, Martin and Keown, 2015). Thus, AZN needs to make1 | P a g e

investment in advanced technologies and get greater customer satisfaction. Moreover, it hasto upgrade its technology on a regular basis to improve its strategic capabilities. Operational innovations and technological advancement make AZN able to enhancetheir revenues and maximize their profitability. Moreover, customer relationshipmanagement, providing demanded products at affordable prices, responsiveness assistcompany to build customer loyalty and gain competitive advantages. Non-financialperformance indicator (NFPI) shows AZN's abilities to improve competitive positions such ascustomer expectation, satisfaction, market share, on-time delivery of offered services,employee-training, brand recognition, product quality, innovations and new productdevelopment. In context to AZN, it launched new products, reduce its delivery time, increaseits number of services, make technological innovations, improve product quality andintroduce new pipeline which contributed to enhance customer satisfaction (Lasher, 2013).This in turn, it leads to strength competitive position of AstraZeneca. Its Open InnovationPlatform programme assists company to discover and developing new medicines which curepatient’s diseases in an adequate manner. Thus, there is a greater chance of achieving successin future period. Ratio analysis: It is the best way to analyse AZN's performance over the period. Itcalculates various kinds of ratios such as profitability, liquidity, solvency, efficiency andinvestor’s ratios to study how AZN is performing at the market place. Ratios have beenattached in Appendix. Profitability ratio: AZN's profitability can be determined through profit and loss account. Itis a sign of company's operational performance and indicates result of its affairs (DeFuscoand et.al, 2015). Gross Margin (GM) and Net Margin (NM) are the most appropriate ratios toanalyse AZN's performance. It has been described hereunder:Gross margin: It indicates the relationship between gross profits and total revenueswhere GP is the excess of AZN's sales over the cost of goods sold. As per the abovetable, company's GM has been reduced from 79.54% to 77.61% in 2014 henceforth; itshows that in this year, AZN is not performing in 2013 as well. The reason behindsuch decrease in this year was its sales which got improved from 25,711 to 26,095while cost got increased from 5261 to 5842. Thus, high percentage increase in cost to11.04% than sales increase to 1.49% resulted in reduced GP from 20,450 to 20,253.Therefore, it is a poor sign of AZN's performance because of lowering profits (Brooksand Mukherjee, 2013). 2 | P a g e

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