Financial Analysis Company Utilization of Assets

            Abbott Laboratories inventory turnover ratio is increasing over the period of time. In 2015, it was 7.85 that is moved up to 8.57. Conversely, other efficiency ratios such as total asset turnover, day’s sales outstanding, and fixed asset turnover are also changing. In accordance to the asset utilization ratios it is clear that inventory turnover ratio is above the market average ratios for inventory turnover. Excluding this other ratio such as day’s sales outstanding, fixed asset turnover, and total asset turnover ratios are below the above average ratios in this industry. In short, we can conclude that Abbott laboratories need to bring more efficiency in the asset utilization to get better results and improve performance.   

Financial Leverage and ratios conclusion

        The debt to asset ratio and times interest earned ratios shows increase in debt to asset ratio  and decrease in times interest earned ratio over the selected period of time.

        Comparative analysis indicate that overall ratios are below the calculated ratios of competitor companies and industry average. Somehow, we can say that the financial leverage ratio is greater than the average ratios of competitors. High financial leverage ratio indications is lower equity multiplier. Considering this we can conclude that the company is managing debt in an effective way.

Profitability and Market Ratios

DuPont Equation

Major strength and weaknesses of the company in the light of DuPont equation are presented below:

Strengths of Company

Company is capable to maintain debt and long-term financing effectively.

Weaknesses of Company

Huge change (decrease) in the value is a showing unstable financial management.