FINANCIAL PERFORMANCE For Pfizer & Novartis 2013-2012

AGENDA Intro Pfizer I.S & B.S Novartis I.S & B.S Profitability Analysis Liquidity Analysis Solvency Analysis Efficiency Analysis P/E Analysis

Intro

Top 25 Pharma companies by global sales

Pfizer I.S & B.S

Pfizer Income statement

Pfizer Balance Sheet (1)

Pfizer Balance Sheet (2)

Novartis I.S & B.S

Novartis Income statement

Pfizer Balance Sheet

Profitability Analysis Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Equity (ROE) Return on Assets (ROA) Earning Per Share Quality Of Income

Gross Profit Margin GPM= Gross profit ÷ Revenues x 100 Novartis Pfizer # 67.4 80.8 2012 66.7 81.4 2013 59.8 Industry Ratio For Each 1 $ of Net Sales the company generates 67 cent of gross profit before subtracting any other expenses For Each 1 $ of Net Sales the company generates 81 cent of gross profit before subtracting any other expenses Analysis

Operating Profit Margin OPM= Operating income ÷ Revenues x 100 Novartis Pfizer # 20.0 20.5 2012 18.5 30.5 2013 14.18 Industry Ratio For Each 1 $ of Net Sales the company generates 18.5 cent of Operating profit before subtracting any other expenses For Each 1 $ of Net Sales the company generates 30.5 cent of Operating profit before subtracting any other expenses Analysis

Net Profit Margin NPM= Net income ÷ Revenues x 100 Novartis Pfizer # 16.51 24.70 2012 15.60 42.65 2013 17.33 Industry Ratio For Each 1 $ of Net Sales the company generates 16 cent of Net Income For Each 1 $ of Net Sales the company generates 43 cent of Net Income Analysis

Return on Equity (ROE) ROE = Net income ÷ Total shareholders' equity x 100 Novartis Pfizer # 14.09 17.84 2012 12.79 27.94 2013 NA Industry Ratio Deteriorated Improved Analysis

Return on Assets (ROA) ROA = Net income ÷ Total assets x 100 Novartis Pfizer # 7.86 7.80 2012 7.33 12.30 2013 7.71 Industry Ratio They utilize all recourses successfully Analysis

Earning Per Share (EPS) EPS = Net income ÷ No. of Share Novartis Pfizer # 3.87 1.96 2012 3.71 3.23 2013 NA Industry Ratio Deteriorated Improved Analysis

Quality Of Income =cash flow from operating activity / Net income Novartis Pfizer # 1.49 1.15 2012 1.43 0.80 2013 NA Industry Ratio Decreased Analysis

Liquidity Analysis Net working Capital Current Ratio Quick Ratio Cash Ratio

Net working Capital NWC= Current assets - Current liabilities Novartis Pfizer # $3,953.00 $35,186.00 2012 $4,174.00 $32,878.00 2013 -NA Industry Ratio This is not a ratio this is a absolute amount referred to as simply working capital, is used to determine the availability of a company's liquid assets by subtracting its CL This is not a ratio this is a absolute amount referred to as simply working capital, is used to determine the availability of a company's liquid assets by subtracting its CL. Analysis Novartis Pfizer # 1.16 : 1 2.2 : 1 2012 1.15 : 1 2.4 : 1 2013 - Industry Ratio This is not a ratio this is a absolute amount It means there are no unused assets Analysis

Current Ratio CR = Current assets ÷ Current liabilities Novartis Pfizer # 1.16 : 1 2.15: 1 2012 1.15 : 1 2.41 : 1 2013 1.33 Industry Ratio That means every 1 $ of CL the company has 1.15 of CA to cover it That means every 1 $ of CL the company has 1.41 of CA to cover it Analysis

Quick Ratio QR = Total Quick assets ÷ Current liabilities Novartis Pfizer # 0.76 : 1 1.90: 1 2012 0.73 : 1 1.79: 1 2013 1.22 Industry Ratio That means every 1 $ of CL the company has 0.73 of quick CA to cover it That means every 1 $ of CL the company has 1.79 of quick CA to cover it Analysis

Cash Ratio Cash R = Cash Assets ÷ Current liabilities Novartis Pfizer # 0.33 : 1 1.09: 1 2012 0.34 : 1 1.38 : 1 2013 NA Industry Ratio That means every 1 $ of CL the company has 0.73 of Cash to cover it That means every 1 $ of CL the company has 1.79 of Cash to cover it Analysis

Solvency Analysis Debt Ratio Debt to Equity Equity Multiplier

Debt Ratio DR = liabilities : assets x 100 Novartis Pfizer # 44.2 % 56 % 2012 41.01 % 55.4 % 2013 34 % Industry Ratio That means that 41 % of Assets financed from liabilities That means that 55 % of Assets financed from liabilities Analysis

Debt to Equity D/E= liabilities : Equity Novartis Pfizer # 78 % 127 % 2012 69 % 124 % 2013 34 % NA Industry Ratio - Analysis

Equity Multiplier EM = Assets : Equity Novartis Pfizer # 1:8 : 1 2.2 : 1 2012 1.6 : 1 2.24 : 1 2013 NA Industry Ratio Assets : Equity Analysis

Efficiency Analysis Total Asset Turnover Fixed Asset Turnover Receivables Turnover Average Collection Period Inventory Turnover Inventory Days On Hand

Total Asset Turnover TATO = Net Sales ÷ Total assets Novartis Pfizer # 0.49 0.26 2012 0.46 0.31 2013 0.25 Industry Ratio Each $1 invested in the total assets generates 46 cents net sales Each $1 invested in the total assets generates 31cents net sales Analysis Novartis is better than Pfizer in using assets to generate net sales Comparison Analysis

Fixed Asset Turnover FATO = Net Sales ÷ A. Fixed assets Novartis Pfizer # 3.4 4.12 2012 3.3 4.27 2013 2.50 Industry Ratio Each $1 invested in fixed assets generates $3.3 net sales Each $1 invested in fixed assets generates $4.27 net sales Analysis Pfizer is better than Novartis in using fixed assets to generate net sales Comparison Analysis

Receivable Turnover RTO = Net Credit Sales ÷ A. Net Receivable Novartis Pfizer # 6.11 5.14 2012 5.81 5.46 2013 NA Industry Ratio For every $1 accounts receivables the company makes $5.81credit sales For every $1 accounts receivables the company makes $5.46 credit sales Analysis Pfizer is better than Novartis in using fixed assets to generate net sales Comparison Analysis

Novartis is better than Pfizer in transferring Receivables into cash Average Collection Period ACP= Average Collection Period÷ A. Age of Receivable Novartis Pfizer # 63.13 68.11 2012 62.82 66.85 2013 NA Industry Ratio Company transfer Receivables from credit customers into cash every 62.82 days Company transfer Receivables from credit customers into cash every 66.85 days Analysis Novartis is better than Pfizer in transferring Receivables into cash Comparison Analysis

Inventory Turnover ITO= COGS ÷ A. Inventory Novartis Pfizer # 8.39 8.11 2012 8.27 8.93 2013 NA Industry Ratio Each $1 invested in the inventory generates $8.27 net sales Each $1 invested in the inventory generates $8.93 net sales Analysis Pfizer is better than Novartis in the sales’ efficiency Comparison Analysis

Inventory Days On Hand IDOH= 365 ÷ A. Days supply in Inventory Novartis Pfizer # 41.44 39.80 2012 44.14 40.87 2013 NA Industry Ratio Inventory is sold every 44.14 days Inventory is sold every 40.87 days Analysis Pfizer is better than Novartis in the number of times that inventory could be turned over within the year Comparison Analysis