Performance Analysis of Glaxo Smithskline Compared with Beacon Pharmaceuticals Limited

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Overall liquidity position of Glaxo SmithKline was better than Beacon Parma.

- Profitability Ratio:

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ROE:

ROE ratio measured profitability earned from equity capital. ROE of Glaxo SmithKline was 29.70% that means it earned TK 29.70 by using TK 100 equity capital. The ratio declined in the year 2011 and 2012 to 16.42%. But in 2013 and 2014 it raised to 35.69%. So profitability on capital of this company was fluctuating.

However ROE of Beacon Pharma was only 1.05% in 2010 that means it earned TK 1.05 by investing TK 100 equity capital. In 2011 it increased little bit to 4.15%. But between 2012 and 2014 it decreased again to 0.33% and .0.84%.

ROE of Glaxo SmithKline was significantly more than Beacon Pharma from 2010 to 2014 because of higher net income followed by higher sales. ROE Beacon Pharma was so low that ranged between 0.33% to maximum 4.15%.That means Glaxo SmithKline earned more return on its equity than Beacon Pharma.

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ROA:

ROA measures profitability earned by using total assets. In 2010 ROA of Glaxo SmithKline was 18.71% that means it was earning TK 18.71 by TK 100 total assets. From 2011 to 2012 it declined to 7.96%. But between 2013 and 2014 it increased to 16.44%.

On contrary, ROA of Beacon Pharma was 0.66% in 2010 that means it earned TK 0.66 profit by using TK 100 assets. It insignificantly increased to 2.58% in 2011. But from 2012 to 2014 it declined to 0.33% and 0.53% respectively.

ROA of Glaxo Smithkline was sharply better than Beacon Pharma. From 2010 to 2014 ROA of Glaxo SmithKline was about 7% to 19% which was so good. But ROA Beacon Pharma was so weak which was from 0.21% to 2.58%. So Glaxo SmithKline was earned more return on its total assets.

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Net Profit Margin:

NPM of Glaxo SmithKline was 11.29% in 2010 that means it earning TK11.29 net profit from TK100 sales. In 2012 it declined 4.39% and again increased to 11.50% in 2014.

NPM of Beacon Pharmawas 4.35% in 2010 that means it earning TK4.35 net profit from TK 100 sales. It was so low in 2013 and 2014 is 0.74% and 1.43% respectively. But NPM of Beacon Pharma, in 2011and 2012 was 15.18% and 7.68% which is more than Glaxo SmithKline.

So, Glaxo SmithKline was earning more net income from its sale than Beacon Pharma.

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Gross Profit Margin:

GPM measures gross propfit from sales. In 2010 GPM of Glaxo Smithkline was 34.20% that means it earned TK 34.20 from TK 100 sales. It was almost stable between 2011 and 2012, 28.48% and 28.61% respectively. But it increased to 37.72% in 2014.

GPM of Beacon Pharma was almost stable from 2010 to 2014 which was ranged 54.55% to 47.10%. So Beacon Pharma was earning more gross profit from its sales than Glaxo SmithKline.

- Efficiency Ratio:

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Accounts Receivable Turnover:

ART ratio shows efficiency in collecting accounts receivable. ART of Glaxo SmithKline was 7.846 times that showed sales were 7.846 times more than its accounts receivable.ART ratio of Glaxo SmithKline was above than Beacon Pharma from 2011 to 2014. But 2010 ART of Glaxo SmithKline was less than Beacon Pharma. That shows overall efficiency in collecting accounts receivable of Glaxo SmithKline was more than Beacon Pharma between 2010 and 2014.

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Inventory Turnover:

Inventory turnover ratio represents efficiency in managing its inventory. Inventory turnover of Glaxo SmithKline was 3.437 times that shows COGS was 3.437 times more than its inventory.

Inventory Turnover of Glaxo SmithKline was above Beacon Pharma significantly. Inventory turnover of Beacon Pharma was below 1 in all the years between 2010 to 2010.That means Glaxo SmithKline is more efficient in managing its inventory than Beacon Pharma.

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Fixed Assets Turnover:

Fixed assets turnover ratio shows the efficiency in managing its fixed assets. Fixed assets turnover ratio of Glaxo SmithKline was 9.867 in 2010 that means it sales was 9.867 times more than its fixed assets. It was increasing to 12.428 times in 2014.

Fixed Assets Turnover of Glaxo SmithKline was sharply more than Beacon Pharma. FAT of Beacon Pharma was very low in all the years which were below 1times. So Glaxo SmithKline was more efficient in generating sales from its fixed assets than Beacon Pharma from 2010 to 2014.

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Total Asset Turnover:

Total assets turnover ratio shows the efficiency in managing its total assets. In 2010 total assets turnover of Glaxo SmithKline was 1.657 times that means sales was 1.657 times than its total assets .Total Assets Turnover of Glaxo SmithKline more than Beacon Pharma between 2010 and 2014 because of higher sales. So Glaxo SmithKline was more efficient in managing its total assets than Beacon Pharma.

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Accounts Payable Turnover:

Accounts payable turnover means efficiency in managing accounts payable. In 2010 Accounts payable turnover of Glaxo SmithKline was 3.776 that mean COGS was 3.776 times higher than its accounts payable. It was less efficient in 2013.

Accounts Payable Turnover of Beacon Pharma is surprisingly more than Glaxo SmithKline from 2010 to 2014 which was 14.337 times to 28.741 times. Owing to accounts payable of Beacon Pharma was less than Glaxo SmithKline. So Glaxo SmithKline was more efficient paying its accounts payable.

- Risk Ratio:

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TIE (Time Interest Earned):

TIE ratio measures riskiness in paying interest expenses compare to EBIT. In 2011 TIE ratio of Glaxo SmithKline was 19.984 that means EBIT was 19.984 times higher than its interest expenses.

However TIE of Beacon Pharma was below 2 times in all the years between