VECTURA PLC FINANCIAL ANALYSIS

Vectura Plc Financial Analysis

Table of Contents

EXECUTIVE SUMMARY3

INTRODUCTION3

PART 13

Profitability3

Turn Over Ratios4

PART 25

Liquidity Ratios5

Gearing Ratios6

PART 3: ANALYSIS OF SOURCES OF FINANCE7

PART 4: SHARE PRICE ANALYSIS9

PART 5: INVESTOR RATIOS13

PART 6: FINANCIAL ANALYSIS13

PART 7: CONCLUSION & RECOMMENDATIONS16

REFERENCES18

APPENDIX20

Vectura Plc Financial Analysis

Executive Summary

This assignment is based on the analysis of Vectura Plc. Vectura Group plc is a product development company focused on the development of a range of inhaled therapies, principally for the treatment of respiratory diseases. The goal is to improve patients' lives and generate value for our stakeholders.

Introduction

In the current situation of Vectura Plc, ratio analysis possess a very important role in determining the past, present and future outlook of the company. Ratio analysis is the most extensively used form of financial analysis. In this section, ratio analysis is aimed at characterizing the firm in a few basic dimensions considered fundamental to assess the financial health of Vectura Plc.

Part 1

Profitability

Profitability ratios are the projection of how successfully the firm is managing its assets and debts. Actually, profitability ratios measure the ability of the firm to generate earnings or how successfully the firm has generated earnings over a period of time. Profitability ratios are the indicators of the success or failure of the firms' activities.

ROA = Net Income + Interest Expenses/Total Assets

ROA 2008 = (4,397,648+22,969) / 11,817,756

= 37.4%

ROA 2007 = (1,667,985 + 71,943) / 6,592,536

= 26.4%

The return on assets ratio shows that how effectively the assets of Vectura Plc are working to generate profit. According to the situation of the above calculated figures, we can say that the return on assets has increased. This is a positive sign for the company as its earnings are increasing in accordance with the assets.

ROE = Net Income + Interest / Common Equity

ROE 2008 = (4,397,648+22,969) / 7,615,512

= 58%

ROE 2007 = (1,667,985 + 71,943) / 3,217,864

= 54%

Return on equity ratio is a comparison of the amount of earnings and the shareholders' equity. This ratio shows the investors that how much the company has earned in contrast to the amount of shareholder' equity. The trend in the return on equity is positive. This means that the earnings are increasing in comparison to the shareholders' equity.

Sales Margin = (Sales - Operating Expenses) / Sales

Sales Margin 2008 = (34,937,800 -9,293,962) / 34,937,800 = 73.4%

Sales Margin 2007 = (17,785,896 -5,162,044) / 17,785,896

= 70.9%

Turn Over Ratios

Turnover ratios define the performance of the company in terms of turnover from assets, receivables and the inventory. They are essential for the company's financial evaluation.

Total asset turnover = Sales / Total Assets

Total Asset Turnover 2008 = 34,937,800 / 11,817,756

= 2.9

Total Asset Turnover 2007 = 17,785,896 /6,592,536

= 2.7

From the above calculation, it is clear that the trend in the total asset turnover is increasing. This means that for every pound of asset the company owns, the sales is increasing. In 2007, the ratio was 2.7 which increased to 2.9. This is a positive sign for the company as its sales are increasing but on the other hand its ...