Financial Performance Comparison Research Proposal

Financial Performance Comparison - Research Proposal Example It should be noted that both of these business organizations are important players in the global pharmaceutical industry. Astrazeneca is involved in the "discovery, development, manufacture, and marketing of prescription pharmaceuticals primarily for the cardiovascular, gastrointestinal, neuroscience, oncology, respiratory and inflammation, and infection areas in the healthcare sector worldwide" (Astrazeneca Plc Profile 2006). GSK is the major competitor of Astrazeneca as the former engages in the "creation, discovery, development, manufacture, and marketing of pharmaceutical and consumer health related products worldwide" (GlaxoSmithKline Plc Profile 2006). In comparing the profitability of investing in these pharmaceutical companies, financial ratio analysis will be conducted. Financial ratio analysis is a very essential tool in assessing the financial health of a business entity. It enables a financial analyst to spot trends in a business and to compare it with the performance of similar business enterprises within the same industry. This tool is currently utilized by business managers, investors, creditors, suppliers, and other decision makers in order to determine the financial performance and well being of a business organisation. Financial ratios are grouped into five categories, each showing a different aspect of a company's financial operations. These are profitability ratios, financial leverage ratios, liquidity/solvency ratios, efficiency ratios, and investor ratios. 2.1. Profitability Ratios Profitability ratios measure the ability of the company to generate income from its investments less the costs incurred (Fraser & Ormiston 2004). Return on capital employed is a variant of return on investment. Return on capital employed (ROCE) is a measure how well the company is utilizing its capital. The computed sales profit margin, which is the ratio of operating income to sales measures as a percentage of sales, the excess revenue from sales over cost of normal operation excluding financing. Asset turnover measures the amount of sales generated by every pound in the company's assets. Net profit margin, on the other hand, is the ratio of net income to sales showing the company's ability to efficiently manage cost and turn its revenue into profits (Fraser and Ormiston 2006). Logically, higher performance ratios indicate a healthier financial condition. Table 1. At first look, it becomes apparent that GSK is more profitable than Astrazeneca. GSK reports higher return on capital employed, gross profit margin, and net profit margin from 2003-2005. Astrazeneca only manages to overtake GSK in asset turnover ratio during 2005, implying that the former is more efficient in utilizing its resources to generate revenue. Looking at the ratios more closely, it can also be deduced that even though GSK shows higher profitability than Astrazeneca, this ability to make profits has been significantly declining over the years. From the ROCE of 78.28% in 2003, GSK's performance has slumped attaining an ROCE of 38.06 last year. Gross profit margin and asset turnover have also dropped from 78.28% and 2.48 times to 76

Functions of Management Essay Example | Topics and Well Written Essays - 750 words

Functions of Management - Essay Example When talking about Food and Beverage Businesses, planning is important because it helps in forecasting where the company wants to be in a few years and on the basis of that what goals need to be set and what action needs to be taken. Planning will not be from one perspective, but it will take into account the whole organization, make sure that your inventory level is sufficient, that the employees know what the goals and missions are and are working towards them. Organizing structures the work of the organization, it helps in achieving the objectives mentioned during the planning stage of the organization. In this function, the focus is on division of labor, coordination, flow of information and control of tasks. Authority and responsibility is distributed among the employees. The first thing that helps is the organizational structure, in the food and beverage business it will enable the employees to know who is reporting to whom, where the information is coming from and who it is going to. The next important thing is the division of labor, who is performing what task and who is responsible for what. For example somebody is responsible for cooking the food, while somebody else is responsible for getting the ingredients. The waiter will deliver the food, while the chef will only cook it and he might come up with new recipes as well. There is one very important thing to note here, a leader ... Being a good leader is the ability to influence other people's decision and actions. A leader needs to motivate the employees and direct them towards achieving the goals and their duties and responsibilities. Most of the leadership characteristics exist in one's personality. Leaders communicate and interact with their workforce on a daily basis. In the food and beverage industry, especially for a restaurant it is very important that the managers are good leader because at dinner and lunch time, the chef has to lead his assistants so that they cook the food according to his standards. At rush hours, there is time constraint and a lot of pressure of the chef and the assistants. Having good leadership makes the job easier as they know they have someone on their side helping them out. Controlling This is the last of the four functions; through this the manager can enable that the plans are being implemented properly and that the employees are working towards achieving the goals of the organization. Controlling completes the circle of management. There are many ways of controlling employees; there are performance standards which are measured against the employee's performance. Evaluation forms are filled out periodically to gain insight on the performance of all employees. If the performance criteria are being met very easily then managers set higher standards. In a restaurant you might have seen how the chef keeps an eye on what is being made and sent out of the kitchen. This is a way of keeping a check and balance. Another way can be form the number of revisits you get from a customer. If the service is nice and the food is good, the people will come again. Performance can be measured this way as well, while they