RATIO ANALYSIS

GROUP MEMBERS:-AHUJA NILESH 62JHA ALOK 69NARAYANAN NIJA81M. LIONELL 76SHADI SNEHA 104SONEJI DEEPALI 112

ANALYSIS OF FINANCIAL STATEMENTFYMMS(B)

INTRODUCTION• Sanofi-Aventis was formed in 2004 when Sanofi-

Synthelabo acquired Aventis.

• Sanofi-Aventis, headquartered in Paris is a multinational pharmaceutical company, the world's fourth-largest company.

• Sanofi-Aventis engages in the research and development, manufacturing and marketing of pharmaceutical products for sale.

• Sanofi-Aventis covers 7 major therapeutic areas: cardiovascular, central nervous system, diabetes, internal medicine, oncology, thrombosis and vaccines

By Nija

RATIO ANALYSIS

Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and performance of a business concern. Simply, ratio means the comparison of one figure to other relevant figure or figures.

By Nija

LIQUIDITY RATIOSBy Depali

Current Ratio

ANALYSISo Current Liabilities are increasing more than

current assets, hence the ratio decreases over the years.

o However, Company can easily clear its Liabilities.

Current AssetCurrentLiability

1.69 1.88 2.04

LIQUIDITY RATIOS

- - -

By Depali

Acid Test Ratio

ANALYSISo In 08’ there is an increase in Quick ratio because of

increase in debtor from 51.51 to 89.50o In 09’ there is a decrease in the ratio because of

decrease in cash from 23.37 to 9.45

Quick Assets Current

Liabilities0.35 0.74 0.62

LIQUIDITY RATIOS

- - -

By Depali

Inventory Turnover Ratio

ANALYSISo In 08’ there is an increase in the ratio because of better

inventory management ( decrease in inventory from 180.80 to 172.55).

o And in 09’ the ratio decreases because of poor inventory management (increase in inventory from 172.55 to 231.44).

Cost of Goods Sold

AverageInventory

4.54 6.17 5.30

NET WORKING CAPITAL

Net Working Capital= Current Asset – Current Liabilities

By Nija

FINANCIAL YEARS

Current Asset Current Liability

Net Working Capital

Dec 07 260.45 127.34 133.11

Dec 08 285.42 151.33 134.09

Dec 09 293.33 173.40 119.93

NET WORKING CAPITAL

Dec' 07 Dec' 08 Dec' 09110

115

120

125

130

135

LIQUIDITY RATIOS

- - -

By Depali

Working Capital

ANALYSIS• In 08’ working capital increases because of increase in

current assets.• In 09’ there is a decrease in working capital because of

increase in current liability due to more purchase & credit

Current Asset –Current Liability

119.93 134.09 133.11

LIQUIDITY RATIOS

Working Capital Turnover Ratio

ANALYSISo Measures the efficiency with which the working capital is being

used by a firmo Sales fell by 0.39% in 2009 while Net working capital fell by 10.56%. o Aventis Pharma made an efficient use of the working capital

generated

Cost of SalesNet working

capital8.57 7.69 6.69

By Lionell

LIQUIDITY RATIOS

Debtors Turnover ratio

ANALYSISo Indicates how quickly debt is recovered from debtorso Higher value = more efficient management of credit

Credit SalesAverage

Debtors14.44 14.03 14.13

By Lionell

ANALYSISo Aventis launched the following new products

in 2008o Apidara Solostaro Solostar

o Lantus and Amaryl registered 36.4% and 27% respectively.

o Entire retail market grew by around 9.8%o Sales grew by 15.87% in 2008 which shows

that the new products launched were highly successful.

LIQUIDITY RATIOS

Creditors Turnover Ratio

ANALYSISo It is the number of days in which the company pays off

its creditorso No creditors means that Aventis has paid off all its

creditors in cash from reserves and surplus

Average CreditorsCost of sales/365 - - -

By Lionell

LIQUIDITY RATIOS

Asset Turnover Ratio

ANALYSISo Higher the ratio, greater is the intensive

utilization of fixed assets. Lower ratio means under-utilization of fixed assets

Cost of SalesNet Fixed Asset 1.61 1.90 1.99

By lionell

ANALYSISo The company expected to continue it’s growth

plans however reciprocal from competitors reduced sales in 2009 which resulted in a lower asset turnover ratio

LEVERAGE RATIOS

Debt – Equity Ratio

ANALYSISo Company is completely debt-free status & has huge cash

reserves on its Balance Sheet

o As company is Debt free this ratio can not be calculated as company is not taking benefit of trading on Equity.

Total debtTotal Equity - - -

By Nilesh

• ow debt (or leverage) not only keeps a company’s interest cost down, but also gives it flexibility to invest its cash back into the business to expand or develop new products. As debt-free companies are mostly cash-rich, they also do not need to raise large funds from the market to run their operations.

• There are many other advantages that debt-free companies enjoy. For instance, debt-free company need not keep aside a portion of the profit to meet the cost of capital. They get interest on their cash deposited with banks, adding to their reserves. They have low interest-rate risk.

• However, debtless companies have their share of disadvantages, too. It shows that the company is not proactive on expansion and, thus, would be left out on growth rates when the environment turns bullish. There would be lower chances of debt-free companies getting long-term debt at short notice during an emergency as the company will not have a sufficient debt history to boast.

LEVERAGE RATIOS

Debt – Asset Ratio

ANALYSISo As Company is debt free

Total debtTotal Asset - - -

By Nilesh

LEVERAGE RATIOS

Interest Coverage Ratio

ANALYSISo As Company is debt free they don’t have fixed

burden of paying interest.

EBITInterest

- - -

By Nilesh

LEVERAGE RATIOS

Dividend Coverage Ratio

ANALYSISo As we can see company has good capacity to pay its shareholder from its

profit.o This is because sales in Dec. 08 was much higher, where as COGS in Dec 09 was

much higher which resulted in good DCR in Dec. 08.o Such ample cash balances would be helpful to the company while looking at

opportunities & also to maintain its steady dividend payouts

NPATEquity Share

Capital

6.826 7.2174 6.261

By Nilesh

LEVERAGE RATIOS

Dividend per share

ANALYSISo As we can see dividend per share is increasing despite decrease in

net profit margin so company declaring more dividend payout ratio, We believe this to be a positive step in favor of the shareholders.

o Aventis might be don’t have good investment opportunities in India.

Total DividendNo. of shares

2016

16

By Nilesh

PROFITIBALITY RATIOS

Gross Profit Ratio = Gross Profit *100 Net Sales

By Nija

F.Y. Gross Profit Net Sales Gross Profit Ratio ( in %)

Dec 07 175.06 890.03 19.67

Dec 08 203.89 1031.34 19.77

Dec 09 183.36 1027.27 17.85

dec' 07 dec '08 dec' 0902468

101214161820

gross profit

PROFITIBALITY RATIOS

Net Profit Ratio

ANALYSISo A

EBITInterest - - -

By Nija

PROFITIBALITY RATIOS

Operating Ratio

ANALYSISo A

Operating Income/Average total asset - - -

By Nija

F.Y. NPAT Shareholder’s fund

RATIO (IN %)

DEC ‘07 144.42 691.55 20.88

DEC’08 166.2 814.64 20.40

DEC’09 157.41 918.17 17.14

PROFITIBALITY RATIOS

Return on Shareholders Investment Ratio= NPAT- pref. Div.ShareholdersFund

ANALYSIS

Aventi’s return on shareholder’s investment is decreasing for last 3 years.

Overall efficiency is decreasing.

Measures the efficiency of an investment.

PROFITIBALITY RATIOS

Return On Assets NPATTotal Assets

Generation of profit from invested capital.

Should be compared with company’s previous ROA numbers.

F.Y. NPAT ROA (IN %)

DEC ’07 144.42 300.28

DEC’08 166.2 353.72

DEC’09 157.41 398.67

•Figure shows that ROA is increasing per year which is good for a company.

•Company is earning more money on less investments.

PROFITIBALITY RATIOS

Return on Capital Employed

• Indicates efficiency & profitability of company’s capital investments.

• Tells us about the profit from the investments the shareholders have made in their company.

• It should always be higher than the rate at which company borrows.

EBITCapital

Employed

31.24 31.45 25.12

By Alok

PROFITIBALITY RATIOS

Earning Per Share= NPAT-preference Div.No. of equity shares

The portion of a company's profit allocated to each outstanding share of common stock.

•EPS is increasing from ‘07 to ‘08, but it has significantly decreased from ‘08 to ’09

•Not a good sign for company.

F.Y. NPAT EPS (IN %)

DEC’07 144.42 62.71

DEC’08 166.2 72.16

DEC’09 157.41 68.35

PROFITIBALITY RATIOS

Price Earning Ratio

ANALYSISo Primarily reflects : Growth prospects, risk

characteristics, corporate image and the degree of liquidity.

o Higher the P/E ratio higher is the expectation of investors

Mkt. price/shareEPS

0.146 0.138 0.159

DUO POINT ANALYSIS

Rate of Return on Investment

Net Profit as% ofSales

Investment Turnover

Net Profit Sales Sales Total assets

DUO POINT ANALYSIS

ANALYSISo Measures combined effects of profit margin

and asset turnover.o Higher the results higher is the return on

investment

1.10 1.24 1.25

CONCLUSION

-Sanofi Aventis is a key organization in India in the Pharma sector.

-Current ratio of the company is good which shows sound liquidity position.

-Decline in sales was observed. The reason of this was the discontinuance of distribution of Anti rabbies vaccine.

-An inclination was observed in NP ratio and GP ratio from 07 to 08 but further it declined in 09 because of increase in mfg. and operational expenses.

- Aventis’s debtors turnover ratio is also increasing from 14.13% to 14.44% which reflects its efficiency of converting debtors into liquid is increasing.

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