Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Allergan Inc., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio shows a consistent increasing trend over the five-year period. Starting at 6.02 in 2010, the ratio gradually rose each year, reaching 7.08 by 2014. This indicates an improving efficiency in utilizing fixed assets to generate sales, reflecting better asset management or increased sales relative to the fixed assets.
- Total Asset Turnover
- The total asset turnover ratio experienced a slight fluctuation with an initial increase from 0.58 in 2010 to 0.63 in 2011. Subsequently, the ratio slowly declined to 0.62 in 2012, then decreased further to 0.59 in 2013, and ended at 0.57 in 2014. This downward trend in the latter years suggests a diminishing efficiency in using total assets to generate revenue.
- Equity Turnover
- The equity turnover ratio remained relatively stable from 2010 to 2011 at about 1.01, but then gradually declined over the next three years. By 2014, it had decreased to 0.92. This trend points to a decreasing ability to generate sales per dollar of shareholder equity, indicating a potential reduction in equity efficiency over time.
Net Fixed Asset Turnover
Allergan Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Product net sales | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Property, plant and equipment, net | 1,006,300) | 923,200) | 852,900) | 807,000) | 800,600) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 7.08 | 6.71 | 6.69 | 6.63 | 6.02 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Net fixed asset turnover = Product net sales ÷ Property, plant and equipment, net
= 7,126,100 ÷ 1,006,300 = 7.08
2 Click competitor name to see calculations.
- Product net sales
- The data indicates a consistent upward trajectory in product net sales over the analyzed five-year period. Starting at approximately 4.82 billion US dollars in 2010, sales increased each year, reaching about 7.13 billion US dollars by the end of 2014. This represents a substantial growth of nearly 48% over the period, reflecting strong market performance and potential expansion in sales volume or pricing power.
- Property, plant and equipment, net
- The net value of property, plant, and equipment demonstrated a steady increase throughout the period. Beginning at 800.6 million US dollars in 2010, the figure rose gradually to reach 1.01 billion US dollars by 2014. This steady capital base expansion suggests ongoing investment in fixed assets to support operational capacity, aligning with the growth in sales.
- Net fixed asset turnover
- The net fixed asset turnover ratio, which measures sales generated per unit of fixed asset value, showed an improving trend from 6.02 in 2010 to 7.08 in 2014. The gradual increase each year suggests enhanced efficiency in utilizing fixed assets to generate revenue. This improvement may result from operational efficiencies, better asset management, or sales growth outpacing fixed asset investments.
Total Asset Turnover
Allergan Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Product net sales | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Total assets | 12,415,700) | 10,574,300) | 9,179,300) | 8,508,600) | 8,308,100) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.57 | 0.59 | 0.62 | 0.63 | 0.58 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Total asset turnover = Product net sales ÷ Total assets
= 7,126,100 ÷ 12,415,700 = 0.57
2 Click competitor name to see calculations.
The analysis of the financial data reveals a general upward trend in product net sales and total assets over the five-year period under review. However, total asset turnover exhibits a declining tendency in the latter years, indicating changes in efficiency or asset utilization.
- Product Net Sales
- Sales increased steadily each year from 4,819,600 thousand US dollars in 2010 to 7,126,100 thousand US dollars in 2014. This consistent growth suggests a positive demand environment and effective sales strategies, culminating in nearly a 48% increase over the period.
- Total Assets
- Total assets grew from 8,308,100 thousand US dollars in 2010 to 12,415,700 thousand US dollars in 2014. This represents an approximate 49% increase, indicating substantial investment or accumulation of resources over time.
- Total Asset Turnover
- The total asset turnover ratio shows moderate fluctuation. Starting at 0.58 in 2010, it improved slightly to 0.63 in 2011 and remained relatively stable at 0.62 in 2012. However, it declined to 0.59 in 2013 and further to 0.57 in 2014. This decreasing trend in recent years suggests that assets are generating less revenue per unit, indicating either slower asset utilization efficiency or that asset growth is outpacing sales growth.
In summary, while both product net sales and total assets have exhibited strong growth, the diminishing total asset turnover ratio towards the end of the period may warrant further analysis to understand the underlying causes, such as changes in asset composition or operational efficiency.
Equity Turnover
Allergan Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Product net sales | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Total Allergan, Inc. stockholders’ equity | 7,753,000) | 6,463,200) | 5,837,100) | 5,309,600) | 4,757,700) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 0.92 | 0.96 | 0.98 | 1.01 | 1.01 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Equity turnover = Product net sales ÷ Total Allergan, Inc. stockholders’ equity
= 7,126,100 ÷ 7,753,000 = 0.92
2 Click competitor name to see calculations.
The financial data exhibits a clear upward trend in product net sales over the five-year period. Sales increased steadily from approximately 4.82 billion USD in 2010 to 7.13 billion USD in 2014, reflecting consistent revenue growth year over year. This increase suggests successful market performance and potential expansion of product offerings or market share.
Correspondingly, total stockholders’ equity showed a continuous rise during the same timeframe. Equity grew from about 4.76 billion USD at the end of 2010 to approximately 7.75 billion USD by the end of 2014. This growth in equity could indicate retained earnings accumulation, additional capital issuance, or both, signifying strengthened financial stability and enhanced shareholder value.
However, despite the increasing equity and sales, the equity turnover ratio presents a declining trend. Starting at 1.01 in 2010 and 2011, it decreased gradually to 0.92 by 2014. This ratio measures the efficiency of equity in generating sales. The downward trend implies that the company is generating fewer sales per unit of equity over time, which may suggest a diminishing efficiency in utilizing shareholder equity or potential changes in capital structure that are not yet fully translating into proportional revenue growth.
- Product Net Sales
- Consistent annual growth from 4.82 billion USD (2010) to 7.13 billion USD (2014).
- Total Stockholders’ Equity
- Steady increase from 4.76 billion USD (2010) to 7.75 billion USD (2014), indicating improved financial strength.
- Equity Turnover Ratio
- Gradual decline from 1.01 to 0.92, showing reduced efficiency in generating sales from equity.