I am going back over the answers for the second company Gilead and was wondering if the starting with Rate of Return will also need to be adjusted as well?

1.Earnings per Share of Common Stock

1. Current Ratio
2. Gross (Profit)Margin Percentage
3. Rate of Return (Net Profit Margin) on Sales
4. Inventory Turnover
5. Days? Inventory Outstanding (DIO)

7.Accounts Receivable Turnover

8.Days? Sales Outstanding (DSO)

1. Asset Turnover
2. Rate of Return on Total Assets (ROA)

Is the following the correct equation for the Rate of Return (Net Profit Margin) on Sales for Gilead Corporation

18106 / 32639 = 55.44% instead of what is on the attached template

A Comparative Analysis of Celgene Corporation and Gilead Sciences, Inc. Prepared By: Cynthia Ritchardson and Mohamed Ragab. Jun-17 ACCT-504 Prof. Melinda Howerton Celgene Corporation is an American biotechnology company that discovers, develops and commercializes medicines for cancer and inflammatory disorders. It is incorporated in Delaware and headquartered in Summit, New Jersey. The company's major product is Revlimid (lenalidomide), in combination with dexamethasone for the treatment of multiple myeloma patients. Revlimid is also approved in the United States for the treatment of patients with transfusion-dependent anemia due to Low- or Intermediate-1risk Myelodysplastic syndromes (MDS) associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. Revlimid is sold through proprietary risk-management distribution programs to ensure safe and appropriate use of these pharmaceuticals. Vidaza is approved for the treatment of patients with MDS. Headquarters: Summit, NJ CEO: Mark J. Alles (Mar 1, 2016-) Number of employees: 4,182 (December 2010) Founder: Sol J. Barer Subsidiaries: Receptos, Inc., Signal Pharmaceuticals, Celgene A Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. We strive to transform and simplify care for people with life-threatening illnesses around the world. Gilead's portfolio of products and pipeline of investigational drugs includes treatments for HIV/AIDS, liver diseases, cancer, inflammatory and respiratory diseases, and cardiovascular conditions. (Advancing Therapeutics, Improving Lives About Gilead, n.d.) Headquarters: Foster City, CA Revenue: 30.4 billion USD (2016) Number of employees: 7,900 (2015) Founder: Michael L. Riordan Subsidiaries: Bristol Myers Squibb & Gilead Sciences LLC, (Gilead Sciences Biotecnology Company, n.d.) The 2015 financial statements used to calculate these ratios are available in the Investor Relations section of the Celgene and Gilead Sciences websites. Celgene Corporation Earnings per Share of Common Stock (basic - common) Current Ratio Gross (Profit) Margin Percentage Rate of Return (Net Profit Margin) on Sales As given in the income statement $ Gilead Sciences, Inc. 2.02 12.37 Gilead Sciences Earnings Per Share (EPS) is higher than Gelgene Corporation $ Celgene Cporation Current Ration (CR) is higher than Gilead Sciences, Inc.. Celgene Corporation has more liquidity. The higher the current ratio, better the financial health. Current assets Current liabilities $9,401 $1,969 = 4.77 $24,763 $9,891 = 2.50 Gross margin Net sales $8,741 $9,161 = 95.4% $28,145 $32,151 = 87.5% Celgene Corporation Gross Profit Margin percentage is better than Gilead Sciences, Inc. Net income Net sales $1,602 $9,256 = 17.3% $18,106 $32,151 = 56.3% Gilead Sciences, Inc. Net Profit Margin is higher than Celgene Corporation Inventory Turnover Cost of goods sold Average inventory $420 $418 Days' inventory outstanding (DIO) 365 Inventory turnover 365 1.0 1.0 times $3,014 $1,671 363 days 365 1.8 1.8 times Gilead Services has a higher Inventory Turnover Ratio. The inventory turnover ratio is a key measure for evaluating just how efficient management is at managing company inventory and generating sales from it. Usually, a higher inventory turnover ratio is preferred, as it indicates that more sales are being generated given a certain amount of inventory. Alternatively, for a given amount of sales, using less inventory to do so will improve the ratio. Gilead Services has less day's inventory outstanding than Celgene Corporation Accounts Receivable Turnover Net sales (assume all sales are credit sales) Average net accounts receivable $9,161 $1,294 Days' Sales Outstanding (DSO) 365 Accounts receivable turnover 365 7.1 Net sales Average total assets $9,161 $22,197 Asset turnover Rate of Return on Total Assets (ROA) Debt Ratio Times-Interest-Earned Ratio Dividend Yield Rate of Return on Common Stockholders' Equity (ROE) Free cash flow Price-Earnings Ratio (Multiple) Rate of return on sales times asset turnover = = = 202 days Celgene Corporation has a higher Accounts Receivable Turnover. A high receivables turnover ratio can imply a variety of things about a company. It may suggest that a company operates on a cash basis, collection of accounts receivable is efficient, and that the company has a high proportion of quality customers that pay off their debts quickly. A high ratio can also suggest that the company has a conservative policy regarding its extension of credit. A low ratio, can suggest a few things about a company, such as poor collecting processes, a bad credit policy or none at all, or bad customers or customers with financial difficulty. 7.1 $32,151 $5,245 = 6.1 51.5 days 365 6.1 = 59.5 days = 0.41 $32,151 $43,252 = 0.74 = 7.1% = 41.9% Gilead has a higher return on total asset, which puts it in a stronger position than celgene Gileade has a better debt ratio than Celgene = Gilead Services has a higher DSI than Celgene Corporation. The days sales of inventory value, or DSI, is a financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory (including goods that are a work in progress, if applicable) into sales. Generally, a lower (shorter) DSI is preferred, but it is important to note that the average DSI varies from one industry to another. Gilead Services has a higher asset turnover than Celgene Copiration Total Liabilities Total Assets $21,134 $27,053 = 78.1% $32,726 $51,839 = 63.1% Income from operations Interest expense $2,255 $311 = 7.3 22,193 688 = 32.3 Gileade has better Times Interest ratio, which give it a better position for investors and lenders Dividend per share of common stock (Yahoo Finance 12/31/2016) Market price per share of common stock (Yahoo Finance 12/31/2016) $0.00 $118.73 = 0.0% $1.84 $65.40 = 2.8% Celgene corporation does not pay dividens Net income - Preferred dividends Average common stockholders' equity $1,602 $2,548 62.9% $16,232 $9,673 = 167.8% = Net cash provided by operating activities minus cash payments earmarked for investments in plant assets Market price per share of common stock as of 12/31/2015 Earnings per share = $119.76 $2.02 = $ $78,065 59 Gileade shows better ROE 492,274 Gileade has better cash flow = $101.19 $11.91 = 8 Celgene has a better P/E ratio Measuring Ability to Pay Current Liabilities: Gileade has the advantage for the current ratio. Gileade has $1.58 in current assets for every dollar in current liabilities, while Celgene has only $1.28 in current assets for every dollar in current liabilities. Measuring Turnover: Gilead Services has a higher Inventory Turnover Ratio. The inventory turnover ratio is a key measure for evaluating just how efficient management is at managing company inventory and generating sales from it. Usually, a higher inventory turnover ratio is preferred, as it indicates that more sales are being generated given a certain amount of inventory. Alternatively, for a given amount of sales, using less inventory to do so will improve the ratio. Measuring Leverage - Overall Ability to Pay Debts: Gileade has less debt than Celgene as evidenced by Gileade's 63.1% debt-to-asset ratio as compared to Celgene's 78.1% debt-to-asset ratio. Gileade can cover its interest expense 32.3 times with income before interest and taxes, while Celgene can only cover its interest expense 7.3 times with their income before interest and taxes. Gileade has the advantage for each of these ratios. Measuring Profitability: Hershey has the advantage for 4 of the 5 profitability ratios. Hershey has a significant edge in return on common stockholders' equity, with a 54% return on common stockholders' equity, as compared to Tootsie Roll's 9.2% return on common stockholders' equity. Hershey has a higher gross profit rate (45.0%- 36.9%), while Tootise Roll has a higher net profit margin ratio (11.7%-11.4%). Hershey also has a significant advantage for asset turnover (1.35-.60) and rate of return on total assets (15.4%-7.0%). Analyzing Stock as an Investment: Hershey returns a 2.6% dividend yield to its investors, while Tootsie Roll's yield is 1.1%. Hershey has positive free cash flow of $492.2 million, while Tootsie Roll has positive free cash flow of $78.1 million. Free cash flow can be used to undertake acquisitions, pay additional dividends, pay down debt, or buy back stock. Conclusion: Tootsie Roll is the safer investment when you examine their ability to pay current liabilities and overall liabilities; however, Hershey has the advantage for the turnover and profitability ratios. For the conservative investor, Tootsie Roll looks like the way to go because of their strong current and times-interestearned ratios. For the growth-oriented investor, Hershey is the way to go because of their stronger profitability ratios and large amount of free cash flow. Your textbook and any information that you use to profile the companies should be cited as a reference below. Advancing Therapeutics, Improving Lives About Gilead. (n.d.). Retrieved from Gilead: http://www.gilead.co Gilead Sciences Biotecnology Company. (n.d.). Retrieved from Google: https://www.google.com/search?q=gilead+ 8&oe=utf-8 How do I calculate the inventory turnover ratio? | Investopedia http://www.investopedia.com/ask/answers/070914/how inventory-turnover-ratio.asp#ixzz4jZ2hJr6f