Abbot Project

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Message from the Chairman Welcome to Abbott. Thanks for your interest in our company. I invite you to learn more about us – what we do and what we can do for you or someone you care about. And Abbott.com is the perfect place – the largest single source of information about our company, and one that's always available to you. Our company is a multi-national enterprise and a broadbased medical innovator, with leadership in technologies and businesses across the spectrum of health care. Whether it's maintaining health or detecting and treating medical conditions, our diverse lines of businesses enable us to serve more people better than ever before. Our goal at Abbott is very straightforward: to help the people who depend upon us by continuing to advance medical science. We do this in many ways – through our products that directly help patients, through our advocacy for causes we believe in, and through our global humanitarian efforts that help people in need around the world. We are guided in this work by a commitment to building on opportunities that significantly improve health and the practice of health care. We deliver on this commitment by staying true to a core set of values: • • • •

We set our sights on pioneering solutions that advance health care. We strive to achieve results for those we serve by setting our own high standards. We share a deep passion for our work and caring for the people we help. We are here for the long term – building on our strong, enduring heritage and continuing to invest in the future to address health needs where they are the greatest.

At Abbott, we don't take our success for granted. Our 68,000 employees around the world know that it is the result of hard work, a commitment to excellence, and a desire to make a difference in all that we do. We are proud of our achievements, and we will continue to work hard to deliver on our promise. Thank you for taking the time to get to know our company and our work. Best regards, Miles D. White Chairman of the Board and Chief Executive Officer

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About Abbott We are a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Our products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Our comprehensive line of products encircles life itself – addressing important health needs from infancy to the golden years. Throughout our 120+ year history, Abbott people have been driven by a constant goal: to advance medical science to help people live healthier lives. It’s part of our heritage. And, it continues to drive our work. Today, 68,000 Abbott employees around the world share the passion for "Turning Science into Caring." It's a commitment to focusing on what matters most: life and the potential it holds when we are feeling our best. Abbott has sales, manufacturing, research and development, and distribution facilities around the world, close to where our customers need us to be. We are recognized for our global reach and our ability to serve our customers around the world. Abbott prides itself on being recognized as a good place to work because we strive to provide an environment that enables employees to succeed. We have received numerous local, national and international distinctions for our commitment to workplace excellence. Our programs range from award-winning health care benefits to a variety of convenience and wellness services and long-term retirement benefits. Our commitment to improving life extends to humanitarian causes. We recognize that as a leading provider of innovative health care products, we have a unique responsibility and opportunity to ensure people have access to them – whether they are among the poor and underprivileged or are victims of natural disasters. We’re determined to do our part through creative and varied social programs. The promise of our company is in the promise that our work holds for health and for life.

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History More than a century ago, 30-year-old Dr. Wallace C. Abbott, a practicing physician and drug store proprietor, founded the Abbott Alkaloidal Company. Using the active - or alkaloid - part of a medicinal plant, he formed tiny pills, called “dosimetric granules,” which provided a more accurate and effective dosing for his patients than other treatments available at the time. The demand for these accurate granules soon far exceeded the needs of his own practice and from these modest origins was born Abbott, one of the world’s most broad-based health care companies and a leader in the discovery, development and manufacture of products that span the continuum of care. Abbott trademarks and products in-licensed by Abbott are shown in italics. Founding and Modern Science: 1888 - 1910 Growth and Service: 1916 - 1938 Progress: 1939 - 1959 Expansion to Specialization: 1962 - 1988 Specialization: 1990 - 1998 Transformation: 1990 – Present

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Founding and Modern Science: 1888 – 1910 From the very beginning, Dr. Abbott and the company’s early founders championed scientific investigation to benefit patients. With alkaloidal medicine, Abbott’s founders were pioneers in the creation of the scientific practice of pharmacy, devising a new and better way to deliver medicine granules to improve the quality of care for patients. Abbott was an early innovator in physician education as well, supporting a sizable publishing operation.

1888

Dr. Wallace C. Abbott, a practicing physician, begins manufacturing dosimetric granules. Dr. Abbott is one of the founders of modern pharmacy.

1894

Dr. Abbott acquires and becomes editor of The Alkaloidal Clinic.

1900

The company is officially incorporated as the Abbott Alkaloidal Company.

1906

To reach more physicians, Dr. Abbott establishes the company’s sales force.

1910

Abbott establishes its first European agency in London and branches in New York, San Francisco, Seattle, Toronto and India.

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Growth and Service: 1916 - 1938 After the first years of Abbott's success based primarily on alkaloidal medicines, Dr. Alfred S. Burdick, a young medical professor and writer hired in 1904, convinced Dr. Abbott that the future would take a different direction. With the world standing on the threshold of rapid progress in chemistry, Abbott shifted its research focus from alkaloids to synthetic (chemical) medicines, an area positioned for tremendous growth. In 1915, the name of the company changed to reflect the commitment to new areas of research, beyond alkaloids. The newly renamed Abbott Laboratories entered a period of growth characterized by strategic acquisitions and constant scientific pursuit.

1916

Abbott acquires its first synthetic medicine, an antiseptic agent called Chlorazene, which is used extensively on the battlefields of World War I to clean wounds.

1920

Dr. Abbott breaks ground for a new facility in North Chicago, Illinois. The site serves as the company’s world headquarters for more than 40 years.

1923

Abbott develops the synthetic drug Butyn, a local anesthetic, based on butyl alcohol. It marks Abbott’s official entrance into the anesthesia market, and butyl alcohol becomes a keystone of Abbott's scientific research in sleep-inducing agent.

1929

Abbott stock is listed on the Chicago Stock Exchange with an offering of 20,000 shares at $32 each.

1930

Nembutal, a sedative - hypnotic agent and one of Abbott's best-known and longest-lived products, is introduced.

1931

Combining an existing sales office and the Canadian operations of the recently acquired Swan Meyer, Co., Abbott establishes its first international affiliate in Montreal, Canada.

1936

Abbott introduces Pentothal (thiopental sodium), which will be the most widely used induction anesthetic in the world for more than 50 years. Abbott enters the I.V. business by supplying hospitals with bulk intravenous solutions. This innovation will lead to the induction of two of our scientist in the U.S. Inventors Hall of Fame.

1938

Abbott celebrates its 50th anniversary with the dedication of its North Chicago Research Center. UNIVERSITY OF THE PUNJAB (Gujranwala Campus) 6

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Progress: 1939 – 1959 In the mid-twentieth century, Abbott rose to a new level scientifically, commercially and as an employer. New programs to benefit employees were created. Research during and after World War II yielded important new products in many therapeutic areas, including antibiotics. Sales and marketing innovation led to great commercial growth, and new operations around the world continued to open.

1939

Health care benefits are extended to employees' dependents.

1941

Discovered in Great Britain in 1928, penicillin had tremendous clinical value, but had yet to be produced on a large scale. In 1941, Britain seeks help in starting large-scale production and Abbott accepts the challenge. Within three months Abbott begins commercial production of penicillin, one of the five pioneers in the United States.

1942

Abbott introduces Halazone, a water purification tablet shipped by the millions to every fighting front in World War II.

1943

Abbott opens its first facility in Puerto Rico, later to become one of its largest manufacturing operations.

1945

Abbott introduces Tridione for treatment of epilepsy, Surbex, a highpotency vitamin, and Venopac, the first fully disposable intravenous administration set.

1946

Abbott is the first pharmaceutical company to have a special laboratory for radioactive pharmaceuticals, or "radiopharmaceuticals," a move that leads to the creation of what will become the world’s leading immunodiagnostics business.

1947

Abbott introduces Aminosol, a new protein solution for intravenous feeding of surgical patients. Abbott develops the Abbott Sanitary Counting Tray.

1949

Abbott introduces 74 new products in a single year, including pharmaceuticals, medical devices, and improved variations of existing products.

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1950

Raymond E. Horn steps down as president because of illness. His successor is Dr. Ernest Volwiler, the first president since Dr. Burdick with a scientific background. Abbott introduces Sucaryl, its first truly consumer product, opens a registered entity in France, and enters into business in Spain.

1951

Abbott introduces Selsun Suspension shampoo for dandruff control. The company establishes an employee contributory stock purchase plan.

1952

Abbott introduces Erythrocin, a new antibiotic with good activity against gram-positive bacteria.

1953

Abbott's radiopharmaceutical business introduces Radiocaps, capsules containing an accurately controlled, invisible and unweighable film of radioiodine that simplifies the diagnosis and treatment of thyroid disorders.

1959

Abbott introduces a new logo, which features a stylized “a” symbol that is still in use today.

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Expansion to Specialization: 1962 – 1988 The second half of the 20th century is one of continued growth. Abbott moved into a variety of businesses, including several that it would exit, such as sweeteners, eye drops and golf equipment. By the 1980s, several businesses were divested as Abbott began to narrow its focus where its expertise best aligned with patient needs.

1962

Abbott enters a joint venture with Dainippon Pharmaceuticals Co., Ltd., of Japan to manufacture radiopharmaceuticals. This venture will become Dainabot, and eventually evolve into Abbott Japan, the company’s largest operation outside the United States.

1963

The Triosorb diagnostic test kit, even simpler than the Radiocaps introduced ten years earlier, no longer requires a patient to swallow a radioactive substance; rather, a blood sample is inoculated with a radioactive form of thyroid hormone.

1964

Abbott acquires M&R Dietetic Laboratories of Columbus, Ohio, and best known as makers of Similac infant formula, one of the first milkbased infant formulas. M&R eventually becomes Abbott’s Ross Products Division.

1965

Abbott’s growth warrants expansion at its headquarters location, and the company begins to move some operations to Abbott Park, a 420acre site southwest of its North Chicago operations.

1972

Abbott introduces Tranxene, a tranquilizer, Ausria, a radioimmunoassay test to detect serum hepatitis, and the ABA-100 blood chemistry analyzer.

1973

Abbott forms a diagnostics division to bring together all diagnostic products and services. The company also introduces Ensure, the first adult medical nutritional.

1977

TAP Pharmaceuticals, now known as TAP Pharmaceutical Products Inc., is formed as a joint venture between Abbott and Takeda Chemical Industries, Ltd. of Japan.

1981

Abbott introduces the TDx therapeutic drug monitoring system.

1983

Depakote (divalproex sodium) is approved in the United States. UNIVERSITY OF THE PUNJAB (Gujranwala Campus) 9

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1985

Abbott wins U.S. approval to market the world’s first diagnostic test for AIDS. Abbott also launches ADD-Vantage, an intravenous drug delivery system, and TAP receives its first product approval for Lupron (leuprolide acetate).

1987

Hytrin (terazosin hydrochloride) receives U.S. FDA approval.

1988

Abbott celebrates its centennial. The IMx diagnostic instrument, used in medium-sized laboratories, is introduced and will become the world’s leading immunoassay system and one of the best-selling new products in Abbott’s history.

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Specialization: 1990 – 1998 By the end of the twentieth century, Abbott further refined its focus, delivering both scientific and financial results. New, more specialized products were introduced in many divisions, some developed in-house and some brought from the outside. Abbott continued to divest other products so that it could concentrate on what it has always done best: create quality health care products for people in every stage of life.

1990

Clarithromycin launched. Clarithromycin is known as Biaxin in the United States and Klacid and Klaricid in countries around the world.

1991

Several major products are introduced worldwide, including Survanta (beractant) and a prostate-specific antigen (PSA) test to screen and monitor therapy for prostate cancer. Abbott enters the hematology testing market with the acquisition of Sequoia-Turner Corp.

1993

Abbott launches AxSYM, a new labor-saving diagnostic system.

1994

Abbott introduces sevoflurane, and completes an agreement to crosslicense LCR and PCR, two gene amplification technologies.

1995

TAP receives approval for PREVACID (lansoprazole). In diagnostics, ABBOTT PRISM, the first, fully automated high-volume blood analyzer is introduced. Today, the ABBOTT PRISM is used to screen the majority of the world’s donated blood supply.

1996

Abbott launches Norvir (ritonavir). The company enters the glucose testing market with the acquisition of MediSense, Inc.

1997

After extensive research, Abbott’s Ross Products Division launches an improved version of Similac called Similac Advance.

1998

Abbott launches Glucerna shakes and snack bars, specially formulated nutritional products for people with diabetes. The U.S. FDA approves several major products including TriCor (fenofibrate) and Zemplar (paricalcitol).

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Transformation: 1990 – Present

In recent years, Abbott has adapted to the rapidly changing and intensely competitive health care environment of the twenty-first century. As we’ve added new businesses and reorganized, we’ve kept our focus where it has always been – on the patient.

1999

Abbott launches ARCHITECT, a next-generation diagnostic system. Abbott acquires Perclose, Inc., the leading arterial closure device manufacturer, which provides the foundation for building its vascular business. Later that year, the FDA approves The Closer, a next generation vascular closure device.

2000

Abbott receives approval for several new drugs and line extensions, including Kaletra (lopinavir/ritonavir), Biaxin XL (clarithromycin extended-release tablets), and Depakote ER (divalproex extendedrelease tablets). Abbott introduces an innovative award-winning, 32ounce, reclosable plastic bottle for Similac with Iron.

2001

Abbott acquires the pharmaceutical business of BASF AG, including the global operations of Knoll Pharmaceuticals. In addition, Abbott acquires Vysis, Inc., and receives clearance to market the Vysis UroVysion test to monitor for recurrent bladder cancer.

2002

Abbott receives FDA approval for Humira (adalimumab). The company launches Similac Advance, Isomil Advance and NeoSure Advance infant formulas in the United States. Abbott acquires the cardiovascular stent business of Biocompatibles International plc. As it works to build its vascular business.

2003

Abbott launches HUMIRA in Europe. The company launches three new immunodiagnostics systems for use on the ARCHITECT platform. Abbott also continues to build its medical products business through several strategic acquisitions: JOMED's coronary and peripheral intervention business lines and Integrated Vascular Systems Inc.; Spinal Concepts Inc., an innovator of spinal implant devices; and ZonePerfect Nutritional Co., which signals Abbott's entrance into the fast-growing healthy living category of the nutrition market.

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2004

Abbott acquires TheraSense Inc., a leading blood glucose monitoring business, to complement its fast-growing diabetes care business. The company also enters the point of care diagnostics market with the acquisition of i-STAT Corp.; adds to its healthy living nutrition offerings with the acquisition of EAS Inc., and firmly establishes its presence in the spinal device market with the acquisition of Spine Next S.A. Abbott also spins off its hospital products business as Hospira, an independent, publicly traded company. Hospira is one of the largest global specialty pharmaceutical and medication delivery companies serving the hospital.

2005

Abbott introduces several medical devices including the Xact carotid stent with the Emboshield capture device; the Freestyle Connect blood glucose monitor; and, in the United States, launches the ABBOTT PRISM blood screening system and the CELL-DYN Sapphire hematology system. The company also receives FDA approval for two new uses for HUMIRA. Abbott also makes changes to its Kaletra product.

2006

Abbott acquires Guidant's vascular business, which, combined with Abbott's ongoing business, creates one of the leading global vascular device companies. Abbott acquires Kos Pharmaceuticals, greatly expanding its presence in cardiovascular medicine including lipid management.

2007

Abbott integrates Kos Pharmaceuticals, establishing Abbott as a significant player in the lipid management market. The company completes construction of a state-of-the-art manufacturing facility in Puerto Rico for HUMIRA and other biologics in our pipeline. The m2000 diagnostic system is launched in Europe and the United States.

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Our Promise Our "Promise for Life" is a statement that describes – for our customers, our communities, our shareholders and all of our stakeholders – what we believe in, what we value, and what we strive to deliver in our day-to-day work. For Abbott employees, Our Promise is our compass – guiding us in our actions and decision making, to ensure we live up to the high expectations we’ve set for ourselves in order to serve our stakeholders better. Our Promise challenges us to continually improve and inspires us to always aim higher.

A Promise for Life Turning Science into Caring

We are here for the people we serve in their pursuit of healthy lives. This has been the way of Abbott for more than a century – passionately and thoughtfully translating science into lasting contributions to health. Our products encircle life, from newborns to aging adults, from nutrition and diagnostics through medical care and pharmaceutical therapy. Caring is central to the work we do and defines our responsibility to those we serve: We advance leading-edge science and technologies that hold the potential for significant improvements to health and to the practice of health care. We value our diversity – that of our products, technologies, markets and people – and believe that diverse perspectives combined with shared goals inspire new ideas and better ways of addressing changing health needs. We focus on exceptional performance – a hallmark of Abbott people worldwide – demanding of ourselves and each other because our work impacts people’s lives. We strive to earn the trust of those we serve by committing to the highest standards of quality, excellence in personal relationships, and behavior characterized by honesty, fairness and integrity. We sustain success – for our business and the people we serve – by staying true to key tenets upon which our company was founded over a century ago: innovative care and a desire to make a meaningful difference in all that we do. The promise of our company is in the promise that our work holds for health and life.

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Abbott Worldwide Abbott distributes pharmaceutical, nutritional, diagnostic and medical products in more than 130 countries worldwide. The main countries are given below

Africa Egypt Nigeria South Africa

Asia Pacific Australia Korea New Zealand Philippines Taiwan Vietnam Hong Kong Indonesia

Japan Malaysia Pakistan Singapore Thailand China India

Europe Austria Bulgaria Czech Republic Estonia France Greece Ireland Latvia Netherlands Poland Romania Slovakia Spain Switzerland United Kingdom

Belgium Croatia Denmark Finland Germany Hungary Italy Lithuania Norway Portugal Russia Slovenia Sweden Turkey

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Latin America/Caribbean Dominican Republic El Salvador Guatemala Mexico Puerto Rico Trinidad & Tobago

Middle East Israel Lebanon Saudi Arabia United Arab Emirates

North America Canada United States

South America Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela

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Fast Facts Chairman and CEO:

Miles D. White

Corporate Headquarters:

North suburban Chicago, Illinois, USA

Stock Exchange Listing:

New York [ABT: NYSE]

Number of Employees:

Worldwide: 68,000

2007 Sales:

$25.9 billion

2007 R&D Investment:

$2.5 billion

Facilities:

More than 100 worldwide

Pharmaceutical Research Centers:

Abbott Park and North Chicago, Illinois, USA Parsippany, New Jersey, USA Worcester, Massachusetts, USA Ludwigshafen, Germany

Countries Where Products are Sold:

More than 130

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Areas of Expertise

Anesthesia Infectives

Cardiovascular

Immunology

Animal Health

Diabetes Care

Metabolic

Anti-

Hematology

Molecular

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Areas of Expertise

Neuroscience

Pain Care

Spine

Nutrition

Point of Care

Vascular

Oncology

Renal Care

Virology

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Areas of Expertise

Immunodiagnostics and Clinical Chemistry

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Abbott Laboratories (Pakistan) Limited Opposite Radio Pakistan Transmission, Hyderabad Road, Landhi, Karachi. Phone (Landhi): 111-111-688, 021-5015045-9 Phone (Korangi): 021-5046574-80

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About Abbott Pakistan Abbott Laboratories is a highly diversified global health care company devoted to the discovery, development, manufacture and marketing of Pharmaceutical, Nutritional and medical products. With over 70,000 employees worldwide and a global presence in more than 130 countries, Abbott is committed to improving people's lives by providing cost effective health care products and services that consistently meet the needs of our customers. Abbott Pakistan is part of the global healthcare corporation of Abbott Laboratories, Chicago, USA. Abbott started operations in Pakistan as a marketing affiliate in 1948; the company has steadily expanded to comprise a work force of over 1500 employees. Currently two manufacturing facilities located at Landhi and Korangi in Karachi continue to use innovative technology to produce top quality pharmaceutical products. Abbott Pakistan has leadership in the field of Pain Management, Anesthesia, Medical Nutrition and Anti-Infectives. Our wide range of products is managed and marketed through three marketing arms. On June 29, 2005 Abbott Pakistan Achieved Class 'A' accreditation against the Oliver Wight ABCD Check list. This was an outstanding achievement, which puts Abbott Pakistan amongst some of the best global companies in terms of operational excellence. A continuous process of innovation, research and development at Abbott's worldwide facilities enables Abbott Pakistan to offer effective solutions for various healthcare challenges, with products and services that are well focused, within the customer's reach and contribute to improved health care of the people of Pakistan.

The Company And Its Operations Abbott Laboratories (Pakistan) Limited (The Company) is a public limited company incorporated in Pakistan on July 02, 1948, and its shares are quoted on the Karachi, Lahore and Islamabad stock exchanges. The address of its registered office is opposite Radio Pakistan Transmission Centre, Hyderabad Road, Landhi, and Karachi. The Company is principally engaged in the manufacture, import and marketing of research based pharmaceutical, nutritional, diagnostic, diabetic care, molecular devices,

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Pharmaceutical Products of ABBOTT PAKISTAN The list of pharmaceutical products of Abbott Pakistan is given below.

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Pharmaceutical Products of ABBOTT PAKISTAN

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Nutrition Products of ABBOTT PAKISTAN In PAKISTAN Abbott had introduced its 7 Nutrition products that are given on next pages one by one.

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Introduction - Abbott Pakistan Nutrition Abbott in Pakistan has pioneered the nutritional care and support in health and disease. Abbott Nutrition Pakistan with its pediatric and medical nutrition ranges, is striving to fulfill the promise of life by providing nutrition support, with our wide range of products for infants, children, moms and adults. Abbott Nutrition Pakistan's Nutrition range includes:

• • • • • • • •

Similac an Infant nutritional product. Isomil for babies who require lactose free nutrition. Pediasure a nutritional supplement for growing children Pedialyte a ready to feed oral rehydration solution. Formance is a fat free maternal nutritional supplement for pregnant and nursing mothers. Ensure a leading source of complete, balanced nutrition to help adults maintain an active, healthy lifestyle, and to recuperate from illness. Glucerna RTF and Glucerna SR to support the special needs of Diabetics. Suplena a disease specific nutrition for pre-dialytic patients (requiring low protein and low electrolytes)

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Product Salient Features: •

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Ensure is a nutritional supplement for all grownups to keep them healthy and energetic. It helps maintain optimum energy levels in illness and in health. Ensure can be used as a supplement to your daily diet to boost energy Ensure is a complete and balanced nutrition, which provides all macronutrients like Fats, Proteins, Carbohydrates and FOS in recommended amounts, and important micronutrients like vitamins and minerals. Ensure has a heart healthy formulation with low cholesterol, it conforms to international guidelines. Ensure is ideal for cardiac patients. Ensure can be used as a sole source of nutrition in those who are unable to eat. Ensure is lactose free and gluten free, so ideal for those who suffer from lactose intolerance and gluten sensitivity disease.

Product Indications: Ensure is being used in varied indication such as weakness, weight loss, fatigue, malaise, anorexia, old age, infections, oral pathologies, cardiovascular, orthopedic & neuro-psychiatric diseases, and convalescence. How supplied: 400gm Tin, available in Vanilla, Strawberry, Chocolate & Banana flavors.

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Product Salient Features: • •

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Ensure Plus is a ready to drink high energy nutritional supplement. Ensure Plus is a high protein, high calorie complete nutritional supplement design to meet the high energy needs in health and illness. Ensure Plus has high value protein that helps in faster recovery from illness. It builds immune system and helps fight infections and disease. Ensure Plus has a heart healthy formulation with low cholesterol, it conforms to international guidelines. Ensure Plus is ideal for cardiac patients. Ensure Plus can be used as a sole source of nutrition in those who are unable to eat. Ensure Plus is lactose free and gluten free, so ideal for those who suffer from lactose intolerance and gluten sensitivity disease.

Product Indications: Ensure Plus is recommended in stress/ catabolic states such as: Surgery, Sepsis, Cancer, Chronic infections, Burns and Multiple fractures How supplied: 250 ml ready to use liquid available in vanilla flavor.

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High quality fat free nutrition for pregnant and nursing mothers

Product Salient Features: A High Quality fat free Nutritional Support designed on Latest Scientific Research to meet specific nutritional needs of Pregnant & Lactating Ladies •

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Provides 178 Calories per serving. Providing high energy. Meets tremendous energy requirements in pregnancy and lactation Formance is Fat Free - Ideal for healthy weight gain & prevention from complications of obesity Formance will keep you smart and healthy

Product Indications: For used during: • • •

Planning for pregnancy Pregnancy Lactation

For use in women having risk of low birth weight infants due to: • • • •

Malnutrition / inadequate nutritional intake Teenage pregnancy Poor appetite Excessive dieting/ excessive stress etc.

Direction for use: To make a 240ml standard feed, gradually add 4 level scoops (enclosed) or 50.4 grams of Formance powder in 205ml of water. Once reconstituted, each serving of Formance provides 178 calories. Formance can be recommended once, twice or more depending upon the quality of diet being consumed How supplied: Formance is available as 300 grams in tin pack.

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Product Salient Features: •

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Glucerna RTF is complete and balanced tailor made nutrition for all types of Diabetes, which provides blend of all recommended macronutrients (Fats, Protein, and Carbohydrates) as well as all essential micronutrients (Vitamins/Minerals). Glucerna RTF powder can be used as a supplement or as total diet replacement in hospitalized diabetic patients. Glucerna RTF provides complex carbohydrates which help in a better glycemic control, Glucerna RTF contains an ideally formulated complete & balanced nutrition profile to build sound nutritional status to meet the nutritional requirements Glucerna RTF provides high MUFA lipid system suitable for cardiac patients. Glucerna RTF also contains myo- inositol which helps delay long term diabetic complications such as diabetic neuropathy, nephropathy and retinopathy Glucerna RTF is lactose & Gluten free so there is no risk of lactose intolerance and Gluten sensitivity disease

Product Indications: Glucerna RTF is recommended for all types of Diabetes Mellitus such as: Type I, Type II, Gestational and Stress induced diabetes How supplied: 250 ml ready to use liquid, available in Vanilla flavor.

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Product Salient Features: Glucerna SR is complete and balanced tailor made nutrition for all types of diabetes. It provides blend of all recommended macronutrients (Fats, Protein, and Carbohydrates) and important micronutrients (Vitamins/Minerals) for diabetics. Glucerna SR powder can be used as supplement or as a meal replacement in ambulatory diabetics. Glucerna SR contains a slow release energy mechanism of Complex carbohydrates, which helps achieve a better glycemic control. Glucerna SR contains ideally formulated complete & balanced nutrition profile to build sound nutritional status to meet nutritional requirements of diabetics. Glucerna SR provides high MUFA lipid system. It is low in cholesterol to maintain desirable lipid profile Ideal for cardiac patients. Glucerna SR contains myo- inositol, which helps delay long-term diabetic complications such as diabetic neuropathy, nephropathy and retinopathy. Glucerna SR helps to meet nutritional goals in diabetes such as: • • •

Control of blood glucose levels, Sound nutritional support and helps Helps prevent/ delay long-term diabetic complications.

Glucerna SR Powder Is lactose & Gluten free so there is no risk of lactose intolerance and Gluten sensitivity disease. Product Indication: Glucerna SR is recommended for all types of Diabetes Mellitus such as: Type I, Type II, Gestational and Stress diabetes How supplied: 400 Gm Tin, available in Vanilla flavor.

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Product Salient Features: Pedialyte is sterilized oral glucose electrolyte solutions intended for the management of dehydration secondary to diarrhea. Pedialyte is formulated to replace fluid and electrolyte losses in diarrheal stools. Glucose enhances the absorption of sodium and water in the small intestine, and helps to prevent tissue catabolism. Composition: • • • • •

Pedialyte 500ml Contains: Sodium Chloride ------- 1.75gm Trisodium Citrate Dihydrate ------- 1.45gm Potassium chloride ------- 0.75gm Glucose Anhydrous ------- 10.0gm

Product Indications: Pedialyte is indicated for oral re hydration of mild to moderate dehydration secondary to acute diarrhea in infants and children. Dosage Administration: A physician should be consulted before Pedialyte is given to children under 2 years of age. Pedialyte should be offered frequently even if the patient is vomiting. In particular, when the fluid is administered by spooning rather than through a nipple or from a cup, successful net retention is usually obtained despite small amounts being vomited. Direction for use: Pedialyte is for replacement of body water and minerals frequently lost during diarrhea and vomiting. After opening bottle should be store under refrigeration and use contents within 48 hours. Discard any unused portion. Not to be injected. Do not use if the inner aluminum seal is broken. How supplied: 500ml sterile solution in Aluminum sealed plastic bottle.

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Product Salient Features: Good nutrition leads to healthy growth. To grow properly, kids need to eat the right amounts of protein, carbohydrates, fat, vitamins, and minerals. For times when you are not sure your child is getting adequate amounts of proper nutrition from regular food, give your child pediasure. No matter which delicious flavor you choose, every can of pediasure contains 25 essential vitamins and minerals and a balanced combination of protein, carbohydrates and fat. With pediasure, you can be confident that your child is getting complete, balanced nutrition. Vitamins & minerals: From bone growth to healthy skin to muscle development, vitamins and minerals are essential for healthy growth. A diet that provides a wide variety of all the food groups can provide the vitamins and minerals your child needs. Protein: Mainly found in meat, poultry, fish, beans and eggs, protein helps build and repair cells in the body. Fat: In small amounts, fat is essential for the development of a healthy nervous system. The healthiest fats are mono-or polyunsaturated fats and come mainly from plant sources.

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LIQUIDITY RATIOS The liquidity of a firm is measured by its ability to satisfy its short term obligation as they come due. Liquidity refers to the solvency of the firm’s overall financial position (the ease with which it can pay its bills). The following are liquidity ratios: 1. Current Ratio 2. Quick (Asset Test) Ratio 3. Absolute Quick Ratio

1. Current ratio: Current ratio measures the firm’s ability to meet its short terms obligations. It is expressed as follows. Current Ratio

=

current assets / current liabilities

The current ratio of Abbott laboratories for 2006 is as follows. Current Ratio=

3564169 / 749439

Current Ratio=

4.755783

The current ratio of Abbott laboratories for 2007 is as follows. Current Ratio=

3129129/ 881681

Current Ratio=

3.549049

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2. Quick Ratio: The quick (acid test) ratio is similar to the current ratio except that it excludes inventory which is generally the least liquid current test. Quick Ratio =

(current assets-Inventory) / current liabilities

The quick ratio of Abbott laboratories for 2006 is as follows. Quick ratio

=

Quick Ratio =

3564169 ─ 1256141 /

749439

3.079674

The quick ratio of Abbott laboratories for 2007 is as follows. Quick Ratio =

3129129 ─ 1363508 / 881681

Quick Ratio =

2.002562

3. Absolute Liquid Ratio:Absolute Quick Ratio = Absolute Liquid Assets / Current Liabilities Absolute Liquid Assets = Cash + Bank + Marketable Securities The Absolute Liquid Ratio of Abbott laboratories for 2006 is as follows. Absolute Liquid Ratio

=

1608841 749439

Absolute Liquid Ratio

=

2.15

The Absolute Liquid Ratio of Abbott laboratories for 2007 is as follows. Absolute Liquid Ratio

=

1096118 881681

Absolute Liquid Ratio

=

1.24

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Table of Liquidity Ratios RATIOS

2006

2007

RESULT

Current Ratio

4.76

3.54

Unfavorable

Quick Ratio

3.07

2

Unfavorable

Absolute Quick Ratio

2.15

1.24

Unfavorable

Graphical Representation LIQUIDITY RATIOS 5 4

4.76 3.54

3

3.07 2

2

2006

2.15 1.24

2007

1 0 Current Ratio

Quick Ratio

Absolute Quick Ratio

NAME

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Comments on Liquidity Ratios Liquidity Ratios are viewed as best leading indicators of cash flow problems. The two basic measures of liquidity are the current ratio and quick ratio. The common precursor to financial distress and bankruptcy is low or declining liquidity.

1. Current Ratio:As the current ratio of the firm is still favorable but it’s declining steadily which is the precursor of financial distress and bankruptcy. The higher the current ratio, the more liquid the firm is considered to be. A current ratio of 2.0 is considered acceptable. The speed with which the ratio is decreasing, it’s showing the deteriorating position because it’s manufacturing firm.

2. Quick (acid test) Ratio:It’s similar to the current ratio except that it excludes inventory, which is generally least liquid current asset. The generally low liquidity results from two primary factors: (1) many types of inventory cannot be easily sold, (2) its typically sold on credit. The ratio of 1.0 is acceptable. It provides a better measure if inventory cannot be converted easily into cash. This firm’s ratio is acceptable but it’s decreasing which is showing that the firm is going towards deterioration. It may be due to increase in the inventory level in 2007.

3. Absolute Quick Ratio:The firm’s absolute quick ratio is also favorable like other ratios. It’s mean the firm has adequate cash and bank balances which are highly liquid to meet the short term obligations. But it’s deteriorating like other ratios in 2007. It’s mean the firm’s cash flows is decreasing in 2007. It may be due to increase in credit sales or increased collection period.

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ACTIVITY RATIOS Activity ratio measures the speed with which various accounts are converted into sales or cash (inflows or outflows). Activity ratios measure the efficiency of the management regarding converting assets into sales or cash. The followings are the activity ratios 1. 2. 3. 4. 5.

Inventory Turnover Total Asset Turnover Average Collection Period Average Payment Period Working Capital Turnover

1. Inventory Turnover:It commonly measures the activity of liquidity of a firm’s inventory. It is calculated as follows: Inventory Turnover

=

Cost of goods sold Inventory

The Inventory Turnover ratio of Abbott laboratories in 2006 is as follows. Inventory Turnover =

_3435553_ 1256141

Inventory Turnover =

2.735006 times

The Inventory Turnover ratio of Abbott laboratories in 2007 is as follows. Inventory Turnover =

Inventory Turnover =

3850568_ 1363508 2.824 times

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2. Total Asset Turnover:It indicates the efficiency with which the firm uses its asses to generate sales. Total asset turnover is calculated as follows: Total Asset Turnover

=

___Sales____ Total Assets

The Total asset turnover ratio of Abbott laboratories in 2006 is as follows. Total asset turnover =

5887748 5035425

Total asset turnover =

1.169265 times

The Total asset turnover ratio of Abbott laboratories in 2007 is as follows. Total asset turnover =

6546371 4681368

Total asset turnover =

1.3983 times

3. Average Collection Period:It is also known as “Average age of Accounts Receivable”. It is useful in evaluating credit and collection policies. It is calculated as follows: Average Collection Period

=

Accounts Receivable Averages Sales per day

Average collection period

=

Accounts receivable Annual Sales/360

The Average collection period of Abbott laboratories in 2006 is as follows. Average collection period

=

208742 16354.86

Average collection period

=

12.763 days

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MC-506 The Average collection period of Abbott laboratories in 2007 is as follows. Average collection period

=

128817 18184.36

Average collection period

=

7.083 days

4. Average Payment Period:It is also known as average age of accounts payable. It is useful in evaluating the credit purchase and payment polices. Average Payment period

=

Accounts Payable Averages purchase per day

The Average Payment period of Abbott laboratories in 2006 is as follows. Average Payment period

=

31934 2156.59444

Average Payment period

=

14.8076 days

The Average collection period of Abbott laboratories in 2007 is as follows. Average Payment period

=

67062 3462.73888

Average Payment period

=

19.36667 days

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5. Working Capital Turnover:It is calculated as under: Working Capital Turnover Working Capital

=

Sales Working Capital

C.A. – C.L.

=

The Working Capital Turnover Ratio of Abbott laboratories in 2006 is as follows. C.A. – C.L.

Working Capital

=

Working Capital

= 3564169 – 749439

Working Capital

= 2814730

Working Capital Turnover

=

5887748 28114730

Working Capital Turnover

=

2.09 times

The Working Capital Turnover Ratio of Abbott laboratories in 2007 is as follows. Working Capital

=

C.A. –– C.L.

Working Capital

=

3129129 –– 881681

Working Capital

=

2247448

Working Capital Turnover

=

6546371 2247448

Working Capital Turnover

=

2.91 times

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Table of Activity Ratios RATIOS

2006

2007

RESULT

Inventory Turnover

2.74

2.82

Unfavorable

Average Collection Period

12.76

7.08

Favorable

Average Payment Period

14.8

19.37

Favorable

Total Asset Turnover Ratio

1.17

1.39

Favorable

Working Capital Turnover

2.09

2.91

Favorable

Graphical Representation ACTIVITY RATIOS 25 20 12.76

15

2006

7.08

10 5

19.37 14.8

2.742.82

1.171.39

2.092.91

Total Asset Turnover Ratio

Working Capital Turnover

2007

0 Inventory Turnover

Average Collection Period

Average Payment Period NAMES

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Comments on Activity Ratios Activity ratios measure the speed with which various accounts are converted into sales or cash inflows or outflows.

1. Inventory turnover ratio of Abbott laboratories:INVENTORY TURNOVER commonly measures the activity, or liquidity, of a firm’s inventory. In 2006 the inventory turnover ratio of Abbot Laboratories was 2.74 and in 2007 was 2.82. Its mean that the inventory turnover ratio of Abbott laboratories is unfavorable in 2007 as compared to 2006 because now the speed of inventory in which it ends is lower as compared to 2006 which is unfavorable for the company. It must be meaningful only if the inventory turnover ratio of Abbott laboratories is lower in 2007 as compared to 2006. But the situation is reverse here in this period and the inventory turnover ratio is unfavorable for the firm. Inventory turnover can easily convertible in into an average age of inventory by dividing it into 360___the assumed number of days in a year.

2. Average collection period of Abbott laboratories:THE average collection period is useful in evaluating credit and collection policies. IT means that in how much days the company can recover its money from the debtors. Its shows the strong position of the firm in the market because the more the speed of recovering the debts the more the efficiency of the firm. IN 2006 the average collection period of Abbott laboratories was 12.76 days and in 2007 it was 7.08 days its means that now the efficiency of the company is increased as compared to the last year (2006). NOW in 2007 the company can recover it amounts from the debtors in 7.08 days which shows the favorable position of the company.

3. Average payment period of Abbott laboratories:IT means the average amount of time needed to pay accounts payable during a year. The average payment period of Abbott laboratories in 2006 was 14.83 days and in 2007 was 19.37 days. This shows that the position of the firm in 2007 was favorable because if we make payment late then we have a chance to invest this cash in Marketable Securities or Blue Chips and can generate more cash. In 2006 we have no chance to avail this opportunity but in 2007 we can invest it. SO the average payment period is favorable in 2007 as compared to 2006.

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4. Average collection period v/s average payment period:The average collection period must be lesser than the average payment period. Suppose: if average collection period is 50 days then payment period must be more than 50 days in this situation we can pay the dues easily. But if the collection period is 50 days and the payment period is 40 days then it is not suitable for the company because we have no money at the end of 40 days. In case of Abbott laboratories the situation is favorable in 2007 because we recover our debts in 7.08 days and our payment period is 19.37 days its means we have the opportunity to invest the money in short term securities.

5. Total assets turnover ratio of Abbott laboratories:The total asset turnover indicates the efficiency with which the firm uses its assets to generate sales. Generally the higher a firm's total asset turnover, the more efficiently its assets have been used. This measure is probably of greatest interest to management, because it indicates whether the firm's operations have been financially efficient. The total asset turnover ratio of the Abbott laboratories in 2006 was 1.17 and in 2007 was 1.39 which shows that total assets of the firms are efficiently used in 2007 as compared to 2006.

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PROFITABILITY RATIOS Profitability ratios measure the strength of the company. The following are the profitability ratio: 1. 2. 3. 4. 5. 6. 7.

Gross profit Margin Operating Profit Margin Net Profit Margin Earning Per share Return on total Assets (ROA) Return on Common Equity (ROE) Return on Operating Assets

1. Gross Profit Margin: The gross profit margin measures the percentage of each sales dollar remaining after the firm has paid for its goods. Gross Profit Margin is calculated as follow: Gross Profit Margin

=

Gross Profit X 100 Sales

The Gross Profit ratio of Abbott laboratories in 2006 is as follows. Gross Profit Margin Gross Profit Margin

= =

2478628 X 100 5887748 42.09807 %

The Gross Profit ratio of Abbott laboratories in 2007 is as follows. Gross Profit Margin

=

Gross Profit Margin

=

2733886 6546371

X 100

41.76186 %

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2. Operating Profit Margin:The operating profit margin measures the percentage of each sales dollar remaining after all costs and expenses other than interest, taxes, and preferred stock dividends are deducted. It represents the “pure profit” earned on each sales dollar. It is calculated as under: Operating Profit Margin

=

Operating Profits X 100 Sales

The Operating Ratio of Abbott laboratories in 2006 is as follows. Operating Profit Margin

=

Operating Profit Margin

=

1443630 5887748

X 100

24.5192 %

The Operating Ratio of Abbott laboratories in 2007 is as follows. Operating Profit Margin

=

Operating Profit Margin

=

1772230 6546371

X 100

27.0719 %

3. Net Profit Margin: The net profit margin measures the percentage of each sales dollar remaining after all costs and expenses including interest, taxes, and preferred stock dividends have been deducted. It is calculated as under: Net Profit Margin

=

Net Profits X 100 Sales

The Net Profit Ratio of Abbott laboratories in 2006 are as follows. Net Profit Margin

=

1000008 X 100 5887748

Net Profit Margin

=

16.98456 %

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MC-506 The Net Profit Ratio of Abbott laboratories in 2007 are as follows. Net Profit Margin

=

1209593 X 100 6546371

Net Profit Margin

=

18.47731%

4. Earning Per Share:EPS represents the number of dollars earned during the period on behalf of each outstanding share of common stock. EPS is calculated as under: Earning per share = Earning available for common stockholders Number of shares of common stock outstanding The Earning per share of Abbott laboratories in 2006 are as follows: Earning per share

=

Rs. 10.21

The Earning per share of Abbott laboratories in 2007 are as follows: Earning per share

=

Rs. 12.36

5. Return on Total Assets:The return on total assets often called the return on investment, measures the overall effectiveness of management in generating profits with its available assets. It is calculated as under: Return on total assets stockholders

=

Earning available for common Total Assets

The Return on Total Assets of Abbott laboratories in 2006 are as follows: Return on total assets

=

1000008 5035425

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=

19.85946 %

The Return on Total Assets of Abbott laboratories in 2007 are as follows: Return on total assets

=

1209593 4681368

Return on total assets

=

25.83845 %

6. Return on Common Equity (ROE):The return on common equity measures the return earned on the common stockholders’ investment in the firm. It is calculated as under: Return on Common Equity = stockholders

Earnings available for common Common Stock Equity

The Return on Common Equity of Abbott laboratories in 2006 are as follows: Return on Common Equity =

1000008 4241886

Return on Common Equity =

23.5746 %

The Return on Common Equity of Abbott laboratories in 2007 are as follows: Return on Common Equity = Return on Common Equity =

1209593 3689273 32.78675

%

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7. Return on Operating Assets:It is calculated as under:Return on operating Assets

= Operating profit Fixed Assets

The Return on Operating Assets of Abbott laboratories in follows: Return on operating Assets

= 1443630 1437023

Return on operating Assets

=

2006 is as

100.46 %

The Return on Operating Assets of Abbott laboratories in 2007 is as follows: Return on operating Assets

= 1772230 1516821

Return on operating Assets

=

116.84 %

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Table of Profitability Ratios RATIOS

2006

2007

RESULT

Gross Profit Margin

42.10%

41.76%

Favorable

Operating Profit Margin

24.52%

27.07%

Favorable

Net Profit Margin

16.98%

18.47%

Favorable

Graphical Representation GENERAL PROFITABILITY 45.00% 40.00% 35.00% 30.00% 25.00%

2006

20.00%

2007

15.00% 10.00% 5.00% 0.00% Gross Profit Operating Margin Profit Margin

Net Profit Margin

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Table of Return Ratios RATIOS

2006

2007

Return on Total Asset

19.86%

25.84%

Return on Equity

23.57%

32.79%

Return on Operating Assets

100.46%

116.84%

Earning Per Share

10.21

12.36

Graphical Representation

EARNING PER SHARE 15

12.36

10.21

10

2006

5

2007

0 Earning Per Share Nam e

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Comments on Profitability Ratios 1. Gross Profit:Abbott Laboratory’s gross profit ratio is not as good as compare to previous year. Although it has high gross profit as compared to previous year yet cost of goods sold of Abbott Laboratory in 2007 is high rather than in 2006. That is why the ratio of gross profit is less than in 2007 as compared to 2006

2. Operating Profit & Net Profit:Operating Profit and Net Profit is better than the previous year because its sales are increased 11.19 %. And gross profit 10.29 % is increased as compared to previous year. That is why it is favorable in 2007 than in 2006.

3. Earning Per Share:Company’s EPS is greater due to high Net Profit and it is favorable for shareholder.

4. Return on Assets:Return on Assets of Abbott Laboratory is better than the previous year. Because ROA in 2007 is better as compared to 2006. The overall effectiveness of management in 2007 of generating the profit with its available assets is better than in 2006.

5. Return on Common Equity:Return on Common Equity Ratio of Abbott Laboratories is better in 2007 than in 2006. Because earning available for common stockholder in 2007 is greater than in 2006. And in 2007, it is better for current stock holders.

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6. Return on Operating Assets:Return on Operating Assets is also better in 2007 as compared in 2006. Because operating profit in 2007 is higher than in 2006.

In profitability, the efficiency of business is measured. The overall profitability ratio of Abbott Laboratories is better as compared to previous year due to more profit, more sales. And more returned on assets.

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DEBT RATIOS The debt position of a firm indicates the amount of other people’s money being used to generate profits. 1. Debt Ratio 2. Debt to Equity Ratio

1. Debt Ratio:The debt ratio measures the proportion of total assets financed by the firm’s creditors. It is calculated as under: Debt ratio

=

Total liabilities Total Assets

The Return on Total Assets of Abbott laboratories in 2006 are as follows: Debt ratio

=

793539 5035425

Debt ratio

=

0.158

The Return on Total Assets of Abbott laboratories in 2007 are as follows: Debt ratio

=

Debt ratio

=

992095 4681368 0.21

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2. Debt to equity Ratio:It is calculated as under: Debt to Equity Ratio =

Total Debt Equity

The Debt to Equity Ratio of Abbott laboratories in 2006 are as follows: Debt to Equity Ratio =

793539 4241886

Debt to Equity Ratio =

0.19

The Debt to Equity Ratio of Abbott laboratories in 2007 are as follows: Debt to Equity Ratio =

992095 3689273

Debt to Equity Ratio =

0.27

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Table of Debt Ratios RATIOS

2006

2007

RESULT

DEBT RATIO

0.158

0.21

Unfavorable

Debt to Equity Ratio

0.19

0.27

Unfavorable

Graphical Representation SOLVENCY RATIO 0.3

0.27

0.25 0.2

0.21

0.19

0.16

2006

0.15

2007

0.1 0.05 0 DEBT RATIO

Debt to Equity Ratio NAME

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Comments on Debt Ratios 1. DEBT RATIO:The debt ratio measures the proportion of total assets financed by the firm’s creditors. The higher this ratio, the greater the amount of other people’s money being used to generate profits. In 2006 the debt ratio is favorable (0.16) and in 2007 (0.21) was also favorable because the share of outsiders is not enough. But if we make comparison then in 2006 was more favorable as compared to 2007 because in 2006 the share of outsiders was less as compared to 2007.But still in 2007 the debt ratio of the Abbott laboratories is favorable. In 2006 the share of debt was 19% in the total assets of the company and in 2007 this share increased up to 21%.its mean the share of debts is increasing in total assets which is showing the company is going towards deterioration.

2. DEBT TO EQUITY RATIO OF ABBOTT LABORATARIES:Another version of debt-equity ratio (known as external-internal equity ratio) is where relationship is established between borrowed funds and owner’s equality. In 2006 the debt to equity ratio of Abbott laboratories was 0.19 and in 2007 was 0.27. Its means that debts are increasing which is not suitable for the company. By increase in the debts the firm has to pay additional charges which will decrease the return for the investors.

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MARKET RATIOS Relate the firm’s market value, as measured by its current share price, to certain accounting values. These ratios give insight into how well investors in the marketplace feel the firm are doing in terms of risk and return. These are the following ratio: 1. Price/ Earning (P/E) Ratio 2. Market/Book (M/B) Ratio 3. Dividend Yield Ratio

1. Price/ Earning (P/E) Ratio:It measures the amount that investors are willing to pay for each dollar of a firm’s earring the higher the P/E ratio, the greater is investor confidence. It is calculated as under:Price/Earning (P/E) Ratio =

Market price per share of common stock Earning Per share

The Price/Earning Ratio of Abbott laboratory in 2006 is as follows: Price/Earning (P/E) Ratio =

144 10.21

Price/Earning (P/E) Ratio =

14.10

The Price/Earning Ratio of Abbott laboratory in 2007 is as follows: Price/Earning (P/E) Ratio = Price/Earning (P/E) Ratio =

206.5 12.36 16.71

2. Market/Book (M/B) Ratio:It provides an assessment of how investors view the firm’s performance. Firms expected to earn high returns relative to their risk typically sell at higher M/B multiples. It is calculated as under:Market/Book (M/B) Ratio =

Market price per share of common stock Book value per share of common stock UNIVERSITY OF THE PUNJAB (Gujranwala Campus) 59

MC-506 The Market/Book (M/B) ratio of Abbott laboratories in 2006 is as follows: Market/Book (M/B) Ratio

=

144 43.329

Market/Book (M/B) Ratio

=

3.32

The Market/Book (M/B) ratio of Abbott laboratories in 2007 is as follows: Market/Book (M/B) Ratio

=

Market/Book (M/B) Ratio

=

206.5 37.684 5.48

3. Dividend Yield Ratio:It is calculated as under:Dividend Yield Ratio

=

Dividend Per share Market Value Per share

The Dividend Yield ratio of Abbott laboratories in 2006 is as follows: Dividend Yield Ratio

=

3 144

Dividend Yield Ratio

=

2.083%

The Dividend Yield ratio of Abbott laboratories in 2007 is as follows: Dividend Yield Ratio

=

18 206.5

Dividend Yield Ratio

=

8.717

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Table of Market Ratios Ratios

2006

2007

Results

Market to Book Value

3.32

5.48

favorable

Price Earning Ratio

14.1

16.71

favorable

Dividend Yield Ratio

2.083

8.717

favorable

Graphical Representation MARKET RATIO 18 16 14 12 10 8 6 4 2 0

16.71 14.1

8.717

2006 2007

5.48 3.32

2.083

market to price dividend book earning yeild value ratio ratio nam e UNIVERSITY OF THE PUNJAB (Gujranwala Campus) 61

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Comments on Market Ratios These ratios tend to reflect, on a relative basis, the common stockholders’ assessment of all aspects of the firm’s past and expected future performance.

1. Price/Earnings (P/E) Ratio:It focuses on earnings. These ratios shows the amount investors are willing to pay for each dollar of a firm’s earnings. The level of P/E ratios shows the degree of confidence that investors have in the firm’s future performance. The higher the ratio, the greater is investor confidence. In 2006, investors were willing to pay $14.1 for $1 of the earning. In 2007, investors are willing to pay $16.7 for each $1 earning of the firm. It shows that the confidence of investors is increasing in the firm regarding the future performance. It’s an opportunity the firm has to increase its goodwill in the market. As the confidence is increasing day by day, the company should increase its market price per share by further planning to increase efficiency in the field.

2. Market/Book (M/B) Ratio:As, it relates the market value of the firm’s shares to their book-strict accounting-value. In 2006, investors were paying $3.32 for each $1.0 of the book value of Abbott Co. this really favorable. In 2007, investors were paying $5.48 for each $1.0 of the book value. It means the market price per share is increasing which is an opportunity with the stockholders to cash their confidence in the company. Increasing trend of this ratio is showing that firm is going towards favorable position. The stock of this firm are expected to perform well, improve profits, increase their market share etc. the firm is expected to earn high returns relative to their risk. Investors are willing to pay more than it’s book value for the firm’s share.

3. Dividend Yield Ratio:It’s also called (ROI) but for the investors. In 2006, investors can earn $2.08 against the market value of $144. In 2007, the investors can earn $5.48 against the market value of $206. The return is increasing in 2007 as compared to 2006 means the investors are getting more but vis-à-vis market value is also increasing. Due to increase in earnings, market value is also increasing.

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DuPont Analysis It is used to dissect the firm’s financial statements and to assess its financial condition.

Dupont Formula:Multiplies the firm’s net profit margin by its total assets turnover to calculate the firm’s return on total asset (ROA).

Modified Dupont Formula:Relate the firm’s return on total assets (ROA) to its return on common equity (ROE) using the financial leverage multiplier (FLM) Financial Leverage Multiplier:The ratio of the firm’s total assets to common stock equity. ROA =

Earnings available for common stockholders X Sales Sales Total Assets

The Return on Assets of Abbott laboratories in 2006 are as follows: ROA =

1000008 5887748

X 5887748 5035425

ROA =

17%

1.17

ROA =

19.86%

X

The Return on Assets of Abbott laboratories in 2007 as follows: ROA =

1209539 6546371

ROA =

18.48%

ROA =

25.87 %

6546371 4681368 X

1.4

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MC-506 ROE =Earnings available for common stockholders X Total Assets Total Assets Common Stock Equity The Return on Equity of Abbott laboratories in 2006 are as follows: ROE =

1000008 5035425

ROE =

19.86 %

ROE =

23.57%

X

5035425 4241886

X 1.19

The Return on Equity of Abbott laboratories in 2007 are as follows: ROE =

1209539 X 4681368 4681368 3689273

ROE =

25.84%

ROE =

32.81%

X 1.27

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Comments It merges the income statements and balance sheet into two summary measures of profitability: ROA & ROE

Dupont Formula:The Dupont Formula enables the firm to break down its return into profit—on— sale and efficiency—of—asset—Use components. Typically a firm with lower net profit margin has a high total asset turnover which results in reasonably good return on total assets. Often the opposite situation exits. In 2006, net profit margin is 17% and efficiency of assets use in 1.17 and in 2007 net profit margin increases 18.48% & efficiency of assets use is 1.14. as profit rate increases and efficiency decreases but it results in increased ROA in 2007. the firm should also increased its efficiency with increased profit margin for further increase in ROA.

Modified Dupont Formula:Use of the financial leverages multiplier to covert the ROA into the ROE to reflect the impact of financial leverage on owner’s return. The total return to owner can be analyzed in these three imports dimensions.

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