mpany is evident and the company has declared a relatively high dividend of 57p per share in the year 2008 which is a significant improvement as far as last 3 year dividends declared are concerned. All in all, our mathematical method of computing WACC suggests that GSK is highly inclined towards debt financing, which is a prime reason behind the increment in WACC. We also conclude the fact that floating interest rate due to the current economic condition reduces the WACC and also consider the company’s performance which reflects on the net income which ultimately reflects on the dividends declared. It is prime evidence of the fact that the management takes all necessary measures to reduce the cost of doing business which is a major consideration for any and every business.
The operating, investing and financing activities of a company are very handy and useful information for the users of financial infrmation, such as creditors, investors, financial analysts, etc, because these activities change the financial position of the company. Let us now look upon some of the important activities that make some impression on GSK’s financial position.
GSK’s management has adopted sound business strategies in order to ensure smooth and efficient running of its operational activities. These strategies have expanded the cash generation from operations to £ 9,055m in the year 2008 in comparison to previous years. The reason behind this high figure of £9,055 million are the two reclassifications; the cash generated from operations is £106 million lower than that given in GSK’s unaudited or projected accounts issued on 5th February 2009. Also keeping in view that drop-off in liquid investments for the current year has been reclassified from financing activities to investing activities. Some accounting heads that create changes in the trade payables may have been a result of the growth of products that the company introduced. GSK management computes inventories on a