Financial Management and AnalysisTable of ContentsIntroduction 3Company Overview 3Company Ratio Analysis 5Profitability Ratios 5Liquidity Ratios 7Efficiency Ratios 9Gearing Ratios 11Investment Ratios 12Strengths and Weaknesses of Financial Analysis ratios 14IntroductionFinancial analysis involves the use of various financial statements, which serve several functions. The basics of financial analysis consist of a balance sheet and an income statement. The income statement shows companies' revenues and expenses over a certain period of time, usually a year or half a year. The balance sheet shows assets, liabilities and shareholders' equity at a specific point in time (usually at the end of the year or half-year) (http://www.accountingcoach.com/accounting-equation/explanation). Therefore, we see that the company's balance sheet shows the financial health at a specific point in time and an income statement summarizes the company's profitability over time. In this report, a comparison between the two companies will be made through ratio analysis. Biotechnology products, which accounted for less than 7 percent of revenue generated by the world's ten best-selling treatments in 2001, accounted for as much as 71 percent of the top 10 last year. The number of biopharmaceutical medical products in clinical trials increased 155% in 11 years, from 355 in 2001 to 907 in 2012, with large pharmaceutical companies involved in approximately 40% of all biotechnology products in development in 2012. The Tufts CSDD (Center for the Study and Development of Drugs), which examined R&D, pipeline (drugs that have undergone clinical trials and are awaiting FDA approval) and sales data for three specific moments - 2002, 2007 ...... middle of document... ....35Dividend yield ratio 0 0 0 0 0Source: Based on data from Biogen Idec Inc. Annual reportsEarnings per share table in ( USD $)Price to Earnings Ratio (P/E) ChartStrengths and Weaknesses Ratio AnalysisStrengths• Quantifiable and objective• Easy to do – uses available information • Easy to understand – widely accepted • Easy to compare with competitors or with the industry average. Weaknesses • Too mechanical – can prevent people from considering the true situation of the business • Historical – includes historical data, not forward-looking. companies, we must be careful because accounting policies may differ.• Not reflecting market trends.• Problem of incompleteness of rational figures.• Ignoring qualitative data such as: company strategies, quality of management and cohesion of the board of directors.