Reference no: EM13504887

1.       Fill in the income statement for GlaxoSmithKline (UK)and Balance sheet in Appendex A for 2011 and 2010.  Take the numbers from their corporate website ONLY and then take the rate of USD and convert the numbers from Pounds to USD.

(Individual) One challenge of comparing firms, even within the same industry, is that the firms use different formats and classifications in preparing their financial statements. One way to address this situation is to convert the financial statements of firms into a standard format before undertaking financial analysis.

For each firm, convert the Income Statement and Balance Sheet of the firm into the standard format shown in Appendix A.  Clearly indicate how you mapped the items from the financial statements to the standard format. Also, indicate the items in the Income Statement you tagged as non-recurring (with reasons for doing so) and hence did not include in the standard format

2.       (Individual) For each firm, using the model developed in Module 4 of the text, disaggregate ROE into its operating and nonoperating components. Discuss the impact financial leverage has on firm's ROE. Further, disaggregate RNOA into its components and analyze each of the components further to gain insights into the factors driving firm's performance.

Using appropriate ratios, analyze the riskiness (short-term liquidity and long-term solvency) of the firm

Appendix A

Template for Income Statement

 

Income Statement	Current fiscal Year	Past fiscal year
Sales (Net)
Cost of Goods Sold
Gross Profit
R&D Expense
SG&A Expense
Other Operating Expenses (Net)
EBIT (=Operating Income)
Non-Operating Income (Loss)
EBT
Income Taxes
Net Income before Ext. items
Preferred Dividends
Net Income (available to common)

Note: If your firm has Minority Interest in Earnings, ignore it in the calculation of Net IncomeTemplate for Balance Sheet

 

Balance Sheet	Current fiscal year	Prior fiscal year
Operating Cash
Short-term Investments
Receivables
Inventories
Other Current Assets
Total Current Assets
PP&E (Net)
Investments
Intangibles
Other Assets
Total Assets
Current Portion of Debt
Accounts Payable
Income Taxes Payable
Other Current  Liabilities
Total Current Liabilities
Long-Term Debt
Other Liabilities
Deferred Taxes
Total Liabilities
Preferred Stock
Paid in Common Capital (Net)
Retained Earnings
Total Common Equity
Total Liabilities &Common Equity

 

Note: If your firm has Minority Interest take it as part of Common Shareholder's Equity.