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Company Profile
Glenmark Pharmaceuticals Ltd. (GPL) is a research-driven, global, integrated pharmaceutical company headquartered at Mumbai, India. It is a leading player in the discovery of new molecules both NCEs (new chemical entity) and NBEs (new biological entity). The company has a significant presence in branded generics markets across emerging economies including India. GPL along with its subsidiary has twelve manufacturing facilities in four countries and has five R&D centres.
PROFITABILITY RATIOS
Profitability reflects the final result of business operations. Types of ratios--- Profit Margin Ratios i. Gross Profit Margin ii. Operating Profit Margin / EBITDA Margin iii. Net Profit Margin Rate Of Return Ratios i. Operating profit to operating assets ii. Net income to total assets iii. Return On Equity
Profitability Ratios
Efficiency
Total Asset Turnover Operating Asset Turnover Working Capital Turnover Shareholder Equity Turnover
Year
GlenMark
2009
31.03
2010
13.92 74.89
2011
22.62 65.05
Pharma Industry
23.79
80
60 40 20 0 2009
The company has shown a good gross profit in the year 2009 as comapred to the industry standards. The gross profits dropped drastically in the year 2010 In 2011 there was a marginal increase in gross profits.
Operating Profit margin is generally used to analyze efficiency of a company to use its Operations to generate profits. Management has much more control over its Operating expenses.
Year
Glenmark
Pharma Industry
100
80 60
40 20 0 2009 2010 2011 Glenmark Pharma Industry
Year
2009
2010
2011
Glenmark Pharma
Pharma. Industry
28.79
20.01
11.84
71.24
20.88
61.3
2009 25.5
2010 12.57
2011 17.66
15.95
56.91
48.43
Glenmark industry
2010
2011
Return on Equity
Return On Equity=Net Income/ Average shareholders Equity This ratio indicates how profitable a company is by comparing its net income to its average shareholders' equity. The return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better
RETURN ON EQUITY
YEAR GLENMARK 2009 2010 0.1312009 0.0773371 2011 0.1277392
GLENMARK
0.14
0.12
0.1 0.08
0.06
0.04 0.02
GLENMARK
0
2009 2010 2011
This ratio indicates how profitable a company is relative to its total assets. The return on assets (ROA) ratio illustrates how well management is employing the company's total assets to make a profit. Return on Total Assets = Net Income/ Avg. Total Assets.
As a rule of thumb, investment professionals like to see a company's ROA come in at no less than 5%. Of course, there are exceptions to this rule. An important one would apply to banks, which strive to record an ROA of 1.5% or above.
GLENMARK
0.1
0.08
0.06 0.04 0.02 0 2009 2010 2011 GLENMARK
This ratio measures sales per rupee of investment in total assets. It also measures the efficiency with which total assets are employed. Total Asset Turnover= Net Sales/ Total Assets Higher total asset turnover ratio shows that the company has been more effective in using the investment in the total asset to generate revenue.
GLENMARK
0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2009 2010 2011
GLENMARK
A measurement comparing the depletion of working capital to the generation of sales over a given period. This provides some useful information as to how effectively a company is using its working capital to generate sales. Working Capital Turnover=Net Sales/ Working Capital Higher the working capital turnover, the better
2010
0.6065503
2011
0.7129236
GLENMARK
0.8
0.7
0.6 0.5
0.4
0.3 0.2
GLENMARK
0.1
0 2009 2010 2011
The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.
GLENMARK
10 9 8 7 6 5 4 3 2 1 0 2009 2010 2011
GLENMARK
GLENMARK
0.435 0.43 0.425 0.42 0.415 0.41 0.405 0.4 0.395 0.39 0.385 2009 2010 2011
GLENMARK
Solvency Ratios
Short Term Solvency Current Ratio Quick Ratio Inventory Turnover Ratio Accounts Receivable Turnover Ratio Long Term Solvency
Debt Equity Ratio Interest Cover Ratio
Current Ratio
Current ratio is a popular ratio used to ascertain whether a company's short-term assets are readily available to pay off its short-term liabilities. Current Ratio=Current Assets/ Current Liabilities.
A high current ratio is a sign of financial strength, co has more money than it can efficiently use.
a high current ratio is not necessarily good, and a low current ratio is not necessarily bad (see chart below).
CURRENT RATIO
YEAR GLENMARK 2009 2010 2011
1.85
GLENMARK
2.47
2.52
3 2.5 2 1.5
GLENMARK
1
0.5 0 2009 2010 2011
Quick Ratio
The quick ratio - aka the quick assets ratio or the acidtest ratio - is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities.
Quick Ratio = (Current Assets Inventories)/ Current Liabilities .
An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.
QUICK RATIO
YEAR GLENMARK 2009
1.263587
2010
1.5913493
2011
1.5071685
1.8
GLENMARK
1.6
1.4 1.2 1 0.8 0.6 0.4 GLENMARK
0.2
0 2009 2010 2011
Debtors turnover ratio indicates the relationship between Net Credit Sales and Average Accounts Receivable
Debtors Turnover =Net Credit Sales/Avg. Accounts Receivable The higher the ratio, the greater the efficiency of credit management.
2.8
3.3
3.9
GLENMARK
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2009 2010 2011
GLENMARK
INVENTORY TURNOVER
Inventory Turnover Ratio = Net Sales/Inventory This ratio shows how many times a companys inventory is sold & replaced over a period
INVENTORY TURNOVER
YEAR GLENMARK 2009 2010 2011
4.29
GLENMARK
7.34
7.89
GLENMARK
The debt equity ratio compares a company's total liabilities to its total shareholders equity. Debt Equity Ratio= Total Liabilities/ Shareholders Equity.
If ratio >1=> assets are mainly financed with debt Unfavorable for the company If Ratio <1 = > more money comes out from equity Favorable for the company If ratio = 1; there is no liability
2010
0.61
2011
0.51
0.34
0.26
0.25
GLENMARK INDUSRTY
0
2009 2010 2011
Ratio used to determine how easily the company can pay interest on outstanding debts Interest Coverage Ratio= Earnings Before interest & Taxes/ Interest Expenses. The lower ratio, the more the company is burdened by debt expenses
2010 2.2
7.31
2011 3.9
41.81
10 5 0
2009 2010 2011
Directors Report
Value patent expiration Increased Costs of Drug Development Scope for Expansion
Auditors Report
Notes to Account
SIGNIFICANT ACCOUNTING POLICIES: i) Basis of Accountings ii) Fixed Assets (including Intangibles), Depreciation and Amortization iii) Borrowing Costs iv) Impairment of Assets v) Foreign Currency Transactions
By Group 8