Cash wise company - Term Paper Example

This assignment presents the results and analysis of financial ratios of a publicly traded company. We selected a company listed in the S&P 500 index. The comparison of nine sectors of S&P 500 index within five years of interval shows that the Health Care is the leading sector (“S&P Sector Performance”). Based on information provided in Table 1, we select AbbVie Inc (ABBV) for our study, and Abbott Laboratories (ABT), Amgen Inc (AMGN), Baxter Intl (BAX) as its competitors. Our selection is based on the beta value and market capitalization of the company (Table 1) and character of the historical stock prices shown in Figure 2.

The stock prices of ABBV are stable and without noises. AbbVie Inc. is a pharmaceuticals company; it conducts extensive researches to treat diseases such as HIV, thyroid disease, Parkinson’s disease, chronic kidney disease and other complex diseases. AbbVies portfolio of products include HUMIRA, Synthroid, AndroGel, Creon, Kaletra, Norvir, Lupron, Niaspan, TriCor, TRILIPIX, Synagis, Duodopa, Dupa, Zemplar (“AbbVie”). Financial ratios are used to assess a company’s performance and position in the competitive landscape of business.

It allows measuring the company’s performance across time and among its competitors. Our objective of this study is to evaluate AbbVie Inc.’s financial ratios for years from 2012 to 2014 and compare them with ratios of its competitors. Financial ratios are divided into four categories: profitability, efficiency, liquidity, and leverage. Profitability Ratios. A company’s principal goal is to make a profit. Assets and operational activities employed in the company are assigned to achieve this goal.

Profitability ratios measure a company’s ability to generate profit. There are several profitability ratios. This assignment uses Net profit margin, Return on assets, and Return on equity. Efficiency Ratios. Assets and liability are two important issues of a