Team: Apostol Andreea Gheorghe Diana Rosca Nicoleta

Pfizer is the world's largest research-based biomedical and pharmaceutical company. The corporate headquarter is located in New York, with major research and development locations in the United States and England. In 2007, Pfizer earned $48.4 billion in revenues and invested $8.1 billion in research and development. Pfizer Inc, founded in 1849, is dedicated to better health and greater access to health care for people and their valued animals. Every day, approximately 85,000 colleagues in more than 150 countries work to discover, develop, manufacture and deliver quality, safe and effective prescription medicines to patients.

Short-term liquidity ratios: Current ratio Quick ratio Cash ratio Average collection period Average payment period Inventory turnover

Long term solvency ratios: Debt ratio Debt to equity ratio Debt to tangible net worth Long-term debt to equity ratio Interest coverage ratio

Profitability ratios: ROE ROI Gross profit rate Return on sales Asset turnover ROA Sales per employee

Market price and dividend ratio EPS PER Market to book ratio Dividend yield ratio Dividend payout ratio

FINANCIAL RATIOS I. Short-Term Liquidity Ratios 1. Current ratio 2. Quick ratio 3. Cash ratio 4. Average Collection Period

2007

2006

2005

2.14 1.64 1.19 72.50

2.19 1.75 1.31 72.27

1.47 1.14 0.79 68.06

5. Average Payment period

6. Inventory Turnover II. Long Term Solvency Ratios 1. Debt ratio 2. Debt to Equity Ratio 3. Debt to Tangible Net Worth 4. Long-Term Debt to Equity Ratio 5. Interest coverage ratio III. Profitability Ratios 1. Return on Shareholders' Equity (ROE) 2. Return on Investment (ROI) 3. Gross Profit Rate 4. Return on Sales 5. Asset Turnover 6. Return on Assets (ROA) 7. Sales per Employee IV. Market Price and Dividend Ratios 1. Earnings per Share(EPS) 2. Price/Earnings Ratio (PER) 3. Market to Book Ratio 4. Dividend yield ratio 5. Dividend payout ratio

76.25
0.48

82.16
0.31

42.71
0.33

0.085 0.2 0.29 0.11 17.08

0.081 0.11 0.16 0.77 23.45

0.083 0.27 0.47 0.10 23.34

0.029 0.110 76.80% 0.168 0.210024 0.017

0.070 0.250 84.20% 0.399 0.210607 0.041

0.030 0.111 83.40% 0.157 0.10658 0.01670

0.290 78.08 2.38 348.25 27193.7

0.660 38.80 2.58 267.14 10365.8

0.540 42.70 2.63 236.88 10115.1

Current ratio
2.5

For Pfizer the current ratio did not suffer a significant change in year 2007, unlike year 2006 when it increased with more than 25% (from 1.47 to 2.19). However, the value of the rate has changed because of a decrease in the current assets and an increase in the current liabilities.

1.5

0.5

0 2007 2006 2005

The ratio 2.14 to 1 is a good one because this means that the company is able to cover all the current liabilities with the current assets.

Quick ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

This ratio also suffers a diminish, but not a relevant one, from 1.75 in 2006 to 1.64 in 2007. This change is due to a small variation of the ratio cash + accounts receivables to current liabilities. Therefore, the company is able to pay its current liabilities from its most liquid assets because the value of the ratio is still above 1.

Cash ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 2007 2006 2005

The quick ratio decreased with 9,16% because the quantity of cash is smaller than the one in year 2006 and also the current liabilities rose. This modifications show the fact that the company is oriented to invest more, this is why the liquidity has diminished, and also to enlarge its activity, this is why the debts, the short one, doubled.

Average payment period

90 80 70

This ratio oscillated a lot during the last 3 years: in 2006 it experienced a 2 fold increase (from 42 to 82) but in 2007 it did not keep the same trend, slowing down with almost 10%.
The fact that the period to pay the companys debts declined is not very favorable, because the company has less time to pay the accounts payable. However the situation is not a grey one because the payment period is lower then the collection period. This shows that the firm first convert its receivables in cash and then it pay its suppliers.

60
50 40 30 20 10 0

Average collection period

80

70

60

50

40

30

20

In 2007 the average collection period continue to grow but more insignificant then in year 2006, below 1%. This shows that the period in which the receivables become cash increased. The period is not a big one, the average payment of its clients is almost 2 and a half months, which is a common practice in every industry.

10

Inventory turnover
0.7
0.6 0.5 0.4 0.3 0.2 0.1 0

The inventory turnover grew with 54%. This represents a significant increase and it was possible because of the growth of the cost of sales with almost 50%

Debt to Equity Ratio

0.3

0.25

0.2

0.15

0.1

The ratio increased because of the growth of the companys debts and the descrease of the owners equity. This shows that the company has more debts to financial entities then to investors, also the lower quantity of owners equity shows a withdrawl.

0.05

Debt ratio
0.086 0.085

0.084
0.083 0.082 0.081 0.08 0.079

The value of this ratio is 0.43, bigger then the one from year 2006 because the companys debts increased. Despite of the debts growth the company is not highly leverages and it is able to pay its debts. This situation is a positive one for the investors.

Long-Term Debt to
Equity Ratio
0.80 0.70 0.60

0.50
0.40 0.30 0.20 0.10 0.00

The value of this ratio is 0,11, it increased but is not a negative step because it is lower which is a favorable situation. It shows the fact that the company is able to pay its long term liabilities from the equity of the shareholders. So the degree of financial leverage is not a big one.

Return on Shareholders' Equity (ROE)

0.070 0.060 0.050 0.040 0.030 0.020 0.010 0.000

It decreased compared to the base year, returning to the value recorded two yesrs before, in 2005. This is due to a drop in net income, that is also similar to the recorded value of 2005.

Return on Sales
0.400 0.350 0.300

0.250
0.200 0.150 0.100 0.050 0.000

As it was expected the Return On Sales is also lower than the in 2006. In fact it is closer to the value recoreded in 2005. Again this is caused by the lower Net Income recoreded in 2007.

Return on Investment (ROI)

0.250

0.200

0.150

0.100

Compared to the base year the ROI suffers too from a decrease and again we notice a resemblance with the values recorded in 2005. This happend form the same reason, the low net income in 2007.

0.050

0.000

Return On Assets

(ROA)
0.045

0.04
0.035 0.03 0.025 0.02 0.015 0.01 0.005

As it is already known, the low Net Income of 2007 is influencing most of the profitability ratios, including the Return on Assets, causing it to present a value very close to the one of 2005.

Asset turnover
0.22 0.218 0.216 0.214 0.212 0.21 0.208 0.206 0.204

The single indicator of this group to show a steady evolution, however sill slightly lower than the base year, this was to be expected since both sales and assets are very close to the what was recoreded in 2006.

Gross Profit Rate

86.00%
84.00% 82.00%

A decreasing Gross Profit to Net Sales ratio is a negative sign, indicating the company is becoming less profitable. The company may even have an increasing Net Sales, but the cost to the company to generate those extra sales may be degrading profits.
However it is not the case here as the Net Income was considerably lower in 2007 compared to the base year. This ratio varies wildly between companies and industries, so the best knowledge from this ratio can be gained by measuring it over several periods.

80.00%
78.00% 76.00%

74.00%
72.00%

The recoreded value is significantly lower than any of the two previous years. This major decrease is explained by the negative evolution of the Gross Profit - cost of goods sold, being almost 50% higher.

Price/Earning ratio
80 60 40 20 0

Market to book ratio

2.7 2.6 2.5 2.4 2.3 2.2 0.2 0 0.8 0.6

Earnings per share

0.4

Dividend yeld ratio

400 300 200 100 0

Dividend payout ratio

30000 25000 20000 15000 10000 5000 0

Market price 31.12.07 Market price 31.12.06 Market price 31.12.05

22.9 25.9 23.45

Book value per share

26 10.2 10 9.8 9.6 9.4 9.2 9 8.8 8.6 8.4 8.2 2007 2006 2005 25.5 25 24.5 24 23.5 23 22.5 22

21.5
21 Market price 31.12.07 Market price 31.12.06 Market price 31.12.05