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Message from the Chairman

Welcome to Abbott.
Thanks for your interest in our company. I invite you to
learn more about us – what we do and what we can do
for you or someone you care about. And Abbott.com is
the perfect place – the largest single source of
information about our company, and one that's always
available to you.
Our company is a multi-national enterprise and a broad-
based medical innovator, with leadership in technologies
and businesses across the spectrum of health care.
Whether it's maintaining health or detecting and treating
medical conditions, our diverse lines of businesses enable us to serve more
people better than ever before.
Our goal at Abbott is very straightforward: to help the people who depend upon
us by continuing to advance medical science. We do this in many ways –
through our products that directly help patients, through our advocacy for
causes we believe in, and through our global humanitarian efforts that help
people in need around the world.
We are guided in this work by a commitment to building on opportunities that
significantly improve health and the practice of health care. We deliver on this
commitment by staying true to a core set of values:

• We set our sights on pioneering solutions that advance health care.

• We strive to achieve results for those we serve by setting our own high
standards.
• We share a deep passion for our work and caring for the people we help.
• We are here for the long term – building on our strong, enduring heritage and
continuing to invest in the future to address health needs where they are the
greatest.

At Abbott, we don't take our success for granted. Our 68,000 employees
around the world know that it is the result of hard work, a commitment to
excellence, and a desire to make a difference in all that we do. We are proud of
our achievements, and we will continue to work hard to deliver on our promise.
Thank you for taking the time to get to know our company and our work.
Best regards,
Miles D. White
Chairman of the Board and Chief Executive Officer

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About Abbott

We are a global, broad-based health care company

devoted to discovering new medicines, new
technologies and new ways to manage health. Our
products span the continuum of care, from nutritional
products and laboratory diagnostics through medical
devices and pharmaceutical therapies. Our
comprehensive line of products encircles life itself –
addressing important health needs from infancy to the
golden years.

Throughout our 120+ year history, Abbott people have

been driven by a constant goal: to advance medical science to help people live
healthier lives. It’s part of our heritage. And, it continues to drive our work.
Today, 68,000 Abbott employees around the world share the passion for
"Turning Science into Caring." It's a commitment to focusing on what matters
most: life and the potential it holds when we are feeling our best.
Abbott has sales, manufacturing, research and development, and distribution
facilities around the world, close to where our customers need us to be. We are
recognized for our global reach and our ability to serve our customers around
the world.
Abbott prides itself on being recognized as a good place to work because we
strive to provide an environment that enables employees to succeed. We have
received numerous local, national and international distinctions for our
commitment to workplace excellence. Our programs range from award-winning
health care benefits to a variety of convenience and wellness services and
long-term retirement benefits.
Our commitment to improving life extends to humanitarian causes. We
recognize that as a leading provider of innovative health care products, we
have a unique responsibility and opportunity to ensure people have access to
them – whether they are among the poor and underprivileged or are victims of
natural disasters. We’re determined to do our part through creative and varied
social programs.
The promise of our company is in the promise that our work holds for health
and for life.

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History

More than a century ago, 30-year-old Dr. Wallace C. Abbott, a

practicing physician and drug store proprietor, founded the
Abbott Alkaloidal Company. Using the active - or alkaloid - part
of a medicinal plant, he formed tiny pills, called “dosimetric
granules,” which provided a more accurate and effective
dosing for his patients than other treatments available at the
time. The demand for these accurate granules soon far
exceeded the needs of his own practice and from these
modest origins was born Abbott, one of the world’s most broad-based health
care companies and a leader in the discovery, development and manufacture
of products that span the continuum of care.
Abbott trademarks and products in-licensed by Abbott are shown in italics.

Founding and Modern Science: 1888 - 1910

Growth and Service: 1916 - 1938
Progress: 1939 - 1959
Expansion to Specialization: 1962 - 1988
Specialization: 1990 - 1998
Transformation: 1990 – Present

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Founding and Modern Science: 1888 – 1910

From the very beginning, Dr. Abbott and the company’s
early founders championed scientific investigation to
benefit patients. With alkaloidal medicine, Abbott’s founders
were pioneers in the creation of the scientific practice of
pharmacy, devising a new and better way to deliver
medicine granules to improve the quality of care for
patients. Abbott was an early innovator in physician
education as well, supporting a sizable publishing
operation.

1888 Dr. Wallace C. Abbott, a practicing physician, begins manufacturing

dosimetric granules. Dr. Abbott is one of the founders of modern
pharmacy.

1894 Dr. Abbott acquires and becomes editor of The Alkaloidal Clinic.

1900 The company is officially incorporated as the Abbott Alkaloidal

Company.

1906 To reach more physicians, Dr. Abbott establishes the company’s sales
force.

1910 Abbott establishes its first European agency in London and branches
in New York, San Francisco, Seattle, Toronto and India.

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Growth and Service: 1916 - 1938

After the first years of Abbott's success based primarily
on alkaloidal medicines, Dr. Alfred S. Burdick, a young
medical professor and writer hired in 1904, convinced Dr.
Abbott that the future would take a different direction.
With the world standing on the threshold of rapid
progress in chemistry, Abbott shifted its research focus
from alkaloids to synthetic (chemical) medicines, an area
positioned for tremendous growth. In 1915, the name of the company changed
to reflect the commitment to new areas of research, beyond alkaloids. The
newly renamed Abbott Laboratories entered a period of growth characterized
by strategic acquisitions and constant scientific pursuit.

1916 Abbott acquires its first synthetic medicine, an antiseptic agent called
Chlorazene, which is used extensively on the battlefields of World War
I to clean wounds.

1920 Dr. Abbott breaks ground for a new facility in North Chicago, Illinois.
The site serves as the company’s world headquarters for more than 40
years.

1923 Abbott develops the synthetic drug Butyn, a local anesthetic, based on
butyl alcohol. It marks Abbott’s official entrance into the anesthesia
market, and butyl alcohol becomes a keystone of Abbott's scientific
research in sleep-inducing agent.

1929 Abbott stock is listed on the Chicago Stock Exchange with an offering
of 20,000 shares at $32 each.

1930 Nembutal, a sedative - hypnotic agent and one of Abbott's best-known

and longest-lived products, is introduced.

1931 Combining an existing sales office and the Canadian operations of the
recently acquired Swan Meyer, Co., Abbott establishes its first
international affiliate in Montreal, Canada.

1936 Abbott introduces Pentothal (thiopental sodium), which will be the

most widely used induction anesthetic in the world for more than 50
years. Abbott enters the I.V. business by supplying hospitals with bulk
intravenous solutions. This innovation will lead to the induction of two
of our scientist in the U.S. Inventors Hall of Fame.

1938 Abbott celebrates its 50th anniversary with the dedication of its North
Chicago Research Center.
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Progress: 1939 – 1959

In the mid-twentieth century, Abbott rose to a new level

scientifically, commercially and as an employer. New programs to
benefit employees were created. Research during and after World
War II yielded important new products in many therapeutic areas,
including antibiotics. Sales and marketing innovation led to great
commercial growth, and new operations around the world
continued to open.

1939 Health care benefits are extended to employees' dependents.

1941 Discovered in Great Britain in 1928, penicillin had tremendous clinical

value, but had yet to be produced on a large scale. In 1941, Britain
seeks help in starting large-scale production and Abbott accepts the
challenge. Within three months Abbott begins commercial production
of penicillin, one of the five pioneers in the United States.

1942 Abbott introduces Halazone, a water purification tablet shipped by the

millions to every fighting front in World War II.

1943 Abbott opens its first facility in Puerto Rico, later to become one of its
largest manufacturing operations.

1945 Abbott introduces Tridione for treatment of epilepsy, Surbex, a high-

potency vitamin, and Venopac, the first fully disposable intravenous
administration set.

1946 Abbott is the first pharmaceutical company to have a special

laboratory for radioactive pharmaceuticals, or "radiopharmaceuticals,"
a move that leads to the creation of what will become the world’s
leading immunodiagnostics business.

1947 Abbott introduces Aminosol, a new protein solution for intravenous

feeding of surgical patients. Abbott develops the Abbott Sanitary
Counting Tray.

1949 Abbott introduces 74 new products in a single year, including

pharmaceuticals, medical devices, and improved variations of existing
products.

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1950 Raymond E. Horn steps down as president because of illness. His

successor is Dr. Ernest Volwiler, the first president since Dr. Burdick
with a scientific background. Abbott introduces Sucaryl, its first truly
consumer product, opens a registered entity in France, and enters into
business in Spain.

1951 Abbott introduces Selsun Suspension shampoo for dandruff control.

The company establishes an employee contributory stock purchase
plan.

1952 Abbott introduces Erythrocin, a new antibiotic with good activity

against gram-positive bacteria.

1953 Abbott's radiopharmaceutical business introduces Radiocaps,

capsules containing an accurately controlled, invisible and un-
weighable film of radioiodine that simplifies the diagnosis and
treatment of thyroid disorders.

1959 Abbott introduces a new logo, which features a stylized “a” symbol that
is still in use today.

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Expansion to Specialization: 1962 – 1988

The second half of the 20th century is one of continued growth.
Abbott moved into a variety of businesses, including several that
it would exit, such as sweeteners, eye drops and golf
equipment. By the 1980s, several businesses were divested as
Abbott began to narrow its focus where its expertise best
aligned with patient needs.

1962 Abbott enters a joint venture with Dainippon Pharmaceuticals Co.,

Ltd., of Japan to manufacture radiopharmaceuticals. This venture will
become Dainabot, and eventually evolve into Abbott Japan, the
company’s largest operation outside the United States.

1963 The Triosorb diagnostic test kit, even simpler than the Radiocaps
introduced ten years earlier, no longer requires a patient to swallow a
radioactive substance; rather, a blood sample is inoculated with a
radioactive form of thyroid hormone.

1964 Abbott acquires M&R Dietetic Laboratories of Columbus, Ohio, and

best known as makers of Similac infant formula, one of the first milk-
based infant formulas. M&R eventually becomes Abbott’s Ross
Products Division.

1965 Abbott’s growth warrants expansion at its headquarters location, and

the company begins to move some operations to Abbott Park, a 420-
acre site southwest of its North Chicago operations.

1972 Abbott introduces Tranxene, a tranquilizer, Ausria, a

radioimmunoassay test to detect serum hepatitis, and the ABA-100
blood chemistry analyzer.

1973 Abbott forms a diagnostics division to bring together all diagnostic

products and services. The company also introduces Ensure, the first
adult medical nutritional.

1977 TAP Pharmaceuticals, now known as TAP Pharmaceutical Products

Inc., is formed as a joint venture between Abbott and Takeda Chemical
Industries, Ltd. of Japan.

1981 Abbott introduces the TDx therapeutic drug monitoring system.

1983 Depakote (divalproex sodium) is approved in the United States.

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1985 Abbott wins U.S. approval to market the world’s first diagnostic test for
AIDS. Abbott also launches ADD-Vantage, an intravenous drug
delivery system, and TAP receives its first product approval for Lupron
(leuprolide acetate).

1987 Hytrin (terazosin hydrochloride) receives U.S. FDA approval.

1988 Abbott celebrates its centennial. The IMx diagnostic instrument, used
in medium-sized laboratories, is introduced and will become the
world’s leading immunoassay system and one of the best-selling new
products in Abbott’s history.

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Specialization: 1990 – 1998

By the end of the twentieth century, Abbott further
refined its focus, delivering both scientific and
financial results. New, more specialized products
were introduced in many divisions, some developed
in-house and some brought from the outside. Abbott
continued to divest other products so that it could concentrate on what it has
always done best: create quality health care products for people in every stage
of life.

1990 Clarithromycin launched. Clarithromycin is known as Biaxin in the

United States and Klacid and Klaricid in countries around the world.

1991 Several major products are introduced worldwide, including Survanta

(beractant) and a prostate-specific antigen (PSA) test to screen and
monitor therapy for prostate cancer. Abbott enters the hematology
testing market with the acquisition of Sequoia-Turner Corp.

1993 Abbott launches AxSYM, a new labor-saving diagnostic system.

1994 Abbott introduces sevoflurane, and completes an agreement to cross-

license LCR and PCR, two gene amplification technologies.

1995 TAP receives approval for PREVACID (lansoprazole). In diagnostics,

ABBOTT PRISM, the first, fully automated high-volume blood analyzer
is introduced. Today, the ABBOTT PRISM is used to screen the
majority of the world’s donated blood supply.

1996 Abbott launches Norvir (ritonavir). The company enters the glucose
testing market with the acquisition of MediSense, Inc.

1997 After extensive research, Abbott’s Ross Products Division launches an

improved version of Similac called Similac Advance.

1998 Abbott launches Glucerna shakes and snack bars, specially

formulated nutritional products for people with diabetes. The U.S. FDA
approves several major products including TriCor (fenofibrate) and
Zemplar (paricalcitol).

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Transformation: 1990 – Present

In recent years, Abbott has adapted to the rapidly changing and

intensely competitive health care environment of the twenty-first
century. As we’ve added new businesses and reorganized,
we’ve kept our focus where it has always been – on the patient.

1999 Abbott launches ARCHITECT, a next-generation diagnostic system.

Abbott acquires Perclose, Inc., the leading arterial closure device
manufacturer, which provides the foundation for building its vascular
business. Later that year, the FDA approves The Closer, a next
generation vascular closure device.

2000 Abbott receives approval for several new drugs and line extensions,
including Kaletra (lopinavir/ritonavir), Biaxin XL (clarithromycin
extended-release tablets), and Depakote ER (divalproex extended-
release tablets). Abbott introduces an innovative award-winning, 32-
ounce, reclosable plastic bottle for Similac with Iron.

2001 Abbott acquires the pharmaceutical business of BASF AG, including

the global operations of Knoll Pharmaceuticals. In addition, Abbott
acquires Vysis, Inc., and receives clearance to market the Vysis
UroVysion test to monitor for recurrent bladder cancer.

2002 Abbott receives FDA approval for Humira (adalimumab). The company
launches Similac Advance, Isomil Advance and NeoSure Advance
infant formulas in the United States. Abbott acquires the
cardiovascular stent business of Biocompatibles International plc. As it
works to build its vascular business.

2003 Abbott launches HUMIRA in Europe. The company launches three

new immunodiagnostics systems for use on the ARCHITECT platform.
Abbott also continues to build its medical products business through
several strategic acquisitions: JOMED's coronary and peripheral
intervention business lines and Integrated Vascular Systems Inc.;
Spinal Concepts Inc., an innovator of spinal implant devices; and
ZonePerfect Nutritional Co., which signals Abbott's entrance into the
fast-growing healthy living category of the nutrition market.

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2004 Abbott acquires TheraSense Inc., a leading blood glucose monitoring

business, to complement its fast-growing diabetes care business. The
company also enters the point of care diagnostics market with the
acquisition of i-STAT Corp.; adds to its healthy living nutrition offerings
with the acquisition of EAS Inc., and firmly establishes its presence in
the spinal device market with the acquisition of Spine Next S.A. Abbott
also spins off its hospital products business as Hospira, an
independent, publicly traded company. Hospira is one of the largest
global specialty pharmaceutical and medication delivery companies
serving the hospital.

2005 Abbott introduces several medical devices including the Xact carotid
stent with the Emboshield capture device; the Freestyle Connect blood
glucose monitor; and, in the United States, launches the ABBOTT
PRISM blood screening system and the CELL-DYN Sapphire
hematology system. The company also receives FDA approval for two
new uses for HUMIRA. Abbott also makes changes to its Kaletra
product.

2006 Abbott acquires Guidant's vascular business, which, combined with

Abbott's ongoing business, creates one of the leading global vascular
device companies. Abbott acquires Kos Pharmaceuticals, greatly
expanding its presence in cardiovascular medicine including lipid
management.

2007 Abbott integrates Kos Pharmaceuticals, establishing Abbott as a

significant player in the lipid management market. The company
completes construction of a state-of-the-art manufacturing facility in
Puerto Rico for HUMIRA and other biologics in our pipeline. The
m2000 diagnostic system is launched in Europe and the United
States.

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Our Promise
Our "Promise for Life" is a statement that describes – for our
customers, our communities, our shareholders and all of our
stakeholders – what we believe in, what we value, and what
we strive to deliver in our day-to-day work. For Abbott
employees, Our Promise is our compass – guiding us in our
actions and decision making, to ensure we live up to the high
expectations we’ve set for ourselves in order to serve our
stakeholders better. Our Promise challenges us to continually improve and
inspires us to always aim higher.

A Promise for Life

Turning Science into Caring

We are here for the people we serve in their pursuit of healthy

lives. This has been the way of Abbott for more than a century
– passionately and thoughtfully translating science into lasting
contributions to health.
Our products encircle life, from newborns to aging adults,
from nutrition and diagnostics through medical care and
pharmaceutical therapy.
Caring is central to the work we do and defines our responsibility to those we
serve:
We advance leading-edge science and technologies that
hold the potential for significant improvements to health and
to the practice of health care.
We value our diversity – that of our products, technologies,
markets and people – and believe that diverse perspectives
combined with shared goals inspire new ideas and better
ways of addressing changing health needs.
We focus on exceptional performance – a hallmark of
Abbott people worldwide – demanding of ourselves and each
other because our work impacts people’s lives.
We strive to earn the trust of those we serve by
committing to the highest standards of quality, excellence in
personal relationships, and behavior characterized by
honesty, fairness and integrity.
We sustain success – for our business and the people we
serve – by staying true to key tenets upon which our company was founded
over a century ago: innovative care and a desire to make a meaningful
difference in all that we do.
The promise of our company is in the promise that our work holds for health
and life.

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Abbott Worldwide
Abbott distributes pharmaceutical, nutritional, diagnostic and medical
products in more than 130 countries worldwide. The main countries are
given below
Africa
Egypt
Nigeria
South Africa

Asia Pacific
Australia Japan
Korea Malaysia
New Zealand Pakistan
Philippines Singapore
Taiwan Thailand
Vietnam China
Hong Kong India
Indonesia

Europe
Austria Belgium
Bulgaria Croatia
Czech Republic Denmark
Estonia Finland
France Germany
Greece Hungary
Ireland Italy
Latvia Lithuania
Netherlands Norway
Poland Portugal
Romania Russia
Slovakia Slovenia
Spain Sweden
Switzerland Turkey
United Kingdom

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Latin America/Caribbean

Dominican Republic
El Salvador
Guatemala
Mexico
Puerto Rico
Trinidad & Tobago

Middle East

Israel
Lebanon
Saudi Arabia
United Arab Emirates

North America

Canada
United States

South
America
Argentina
Brazil
Chile
Colombia
Ecuador
Peru
Uruguay
Venezuela

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Fast Facts

Chairman and CEO: Miles D. White

Corporate Headquarters: North suburban Chicago, Illinois, USA
Stock Exchange Listing: New York [ABT: NYSE]
Number of Employees: Worldwide: 68,000
2007 Sales: $25.9 billion
2007 R&D Investment: $2.5 billion
Facilities: More than 100 worldwide
Pharmaceutical Abbott Park and North Chicago, Illinois,
Research Centers: USA
Parsippany, New Jersey, USA
Worcester, Massachusetts, USA
Ludwigshafen, Germany
Countries Where
More than 130
Products are Sold:

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Areas of Expertise

Anesthesia Animal Health Anti-

Infectives

Cardiovascular Diabetes Care Hematology

Immunology Metabolic Molecular

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Areas of Expertise

Neuroscience Nutrition Oncology

Pain Care Point of Care Renal Care

Spine Vascular Virology

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Areas of Expertise

Immunodiagnostics and Clinical Chemistry

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Abbott Laboratories (Pakistan) Limited

Opposite Radio Pakistan Transmission,
Hyderabad Road, Landhi,
Karachi.
Phone (Landhi): 111-111-688, 021-5015045-9
Phone (Korangi): 021-5046574-80

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About Abbott Pakistan

Abbott Laboratories is a highly diversified global health care company devoted

to the discovery, development, manufacture and marketing of Pharmaceutical,
Nutritional and medical products.
With over 70,000 employees worldwide and a global presence in more than
130 countries, Abbott is committed to improving people's lives by providing cost
effective health care products and services that consistently meet the needs of
our customers.
Abbott Pakistan is part of the global healthcare corporation of Abbott
Laboratories, Chicago, USA.
Abbott started operations in Pakistan as a marketing affiliate in 1948; the
company has steadily expanded to comprise a work force of over 1500
employees. Currently two manufacturing facilities located at Landhi and
Korangi in Karachi continue to use innovative technology to produce top quality
pharmaceutical products.
Abbott Pakistan has leadership in the field of Pain Management, Anesthesia,
Medical Nutrition and Anti-Infectives. Our wide range of products is managed
and marketed through three marketing arms.
On June 29, 2005 Abbott Pakistan Achieved Class 'A' accreditation against the
Oliver Wight ABCD Check list. This was an outstanding achievement, which
puts Abbott Pakistan amongst some of the best global companies in terms of
operational excellence.
A continuous process of innovation, research and development at Abbott's
worldwide facilities enables Abbott Pakistan to offer effective solutions for
various healthcare challenges, with products and services that are well
focused, within the customer's reach and contribute to improved health care of
the people of Pakistan.

The Company And Its Operations

Abbott Laboratories (Pakistan) Limited (The Company) is a public limited

company incorporated in Pakistan on July 02, 1948, and its shares are quoted
on the Karachi, Lahore and Islamabad stock exchanges. The address of its
registered office is opposite Radio Pakistan Transmission Centre, Hyderabad
Road, Landhi, and Karachi. The Company is principally engaged in the
manufacture, import and marketing of research based pharmaceutical,
nutritional, diagnostic, diabetic care, molecular devices,

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Pharmaceutical Products of ABBOTT PAKISTAN

The list of pharmaceutical products of Abbott Pakistan is given below.

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Pharmaceutical Products of ABBOTT PAKISTAN

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Nutrition Products of ABBOTT PAKISTAN

In PAKISTAN Abbott had introduced its 7 Nutrition products that are

given on next pages one by one.

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Introduction - Abbott Pakistan Nutrition

Abbott in Pakistan has pioneered the nutritional care and support in health and
disease. Abbott Nutrition Pakistan with its pediatric and medical nutrition
ranges, is striving to fulfill the promise of life by providing nutrition support, with
our wide range of products for infants, children, moms and adults.
Abbott Nutrition Pakistan's Nutrition range includes:

• Similac an Infant nutritional product.

• Isomil for babies who require lactose free nutrition.
• Pediasure a nutritional supplement for growing children
• Pedialyte a ready to feed oral rehydration solution.
• Formance is a fat free maternal nutritional supplement for pregnant and
nursing mothers.
• Ensure a leading source of complete, balanced nutrition to help adults
maintain an active, healthy lifestyle, and to recuperate from illness.
• Glucerna RTF and Glucerna SR to support the special needs of
Diabetics.
• Suplena a disease specific nutrition for pre-dialytic patients (requiring
low protein and low electrolytes)

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Product Salient Features:

• Ensure is a nutritional supplement for
all grownups to keep them healthy and
energetic. It helps maintain optimum
energy levels in illness and in health.
• Ensure can be used as a supplement
to your daily diet to boost energy
• Ensure is a complete and balanced
nutrition, which provides all
macronutrients like Fats, Proteins,
Carbohydrates and FOS in
recommended amounts, and important
micronutrients like vitamins and
minerals.
• Ensure has a heart healthy formulation
with low cholesterol, it conforms to
international guidelines. Ensure is
ideal for cardiac patients.
• Ensure can be used as a sole source
of nutrition in those who are unable to eat.
• Ensure is lactose free and gluten free, so ideal for those who suffer from
lactose intolerance and gluten sensitivity disease.

Product Indications: Ensure is being used in varied indication such as

weakness, weight loss, fatigue, malaise, anorexia, old age, infections, oral
pathologies, cardiovascular, orthopedic & neuro-psychiatric diseases, and
convalescence.
How supplied: 400gm Tin, available in Vanilla, Strawberry, Chocolate &
Banana flavors.

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Product Salient Features:

• Ensure Plus is a ready to drink high
energy nutritional supplement.
• Ensure Plus is a high protein, high
calorie complete nutritional
supplement design to meet the
high energy needs in health and
illness.
• Ensure Plus has high value protein
that helps in faster recovery from
illness. It builds immune system
and helps fight infections and
disease.
• Ensure Plus has a heart healthy
formulation with low cholesterol, it
conforms to international
guidelines. Ensure Plus is ideal for
cardiac patients.
• Ensure Plus can be used as a sole
source of nutrition in those who are
unable to eat.
• Ensure Plus is lactose free and gluten free, so ideal for those who suffer
from lactose intolerance and gluten sensitivity disease.

Product Indications: Ensure Plus is recommended in stress/ catabolic states

such as: Surgery, Sepsis, Cancer, Chronic infections, Burns and Multiple
fractures
How supplied: 250 ml ready to use liquid available in vanilla flavor.

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High quality fat free nutrition

for pregnant and nursing mothers

Product Salient Features:

A High Quality fat free Nutritional Support
designed on Latest Scientific Research to
meet specific nutritional needs of Pregnant
& Lactating Ladies

• Provides 178 Calories per serving.

Providing high energy. Meets
tremendous energy requirements in
pregnancy and lactation
• Formance is Fat Free - Ideal for
healthy weight gain & prevention
from complications of obesity
• Formance will keep you smart and
healthy

Product Indications:
For used during:

• Planning for pregnancy

• Pregnancy
• Lactation

For use in women having risk of low birth weight infants due to:

• Malnutrition / inadequate nutritional intake

• Teenage pregnancy
• Poor appetite
• Excessive dieting/ excessive stress etc.

Direction for use: To make a 240ml standard feed, gradually add 4 level
scoops (enclosed) or 50.4 grams of Formance powder in 205ml of water. Once
reconstituted, each serving of Formance provides 178 calories. Formance can
be recommended once, twice or more depending upon the quality of diet being
consumed
How supplied: Formance is available as 300 grams in tin pack.

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Product Salient Features:

• Glucerna RTF is complete and
balanced tailor made nutrition for
all types of Diabetes, which
provides blend of all recommended
macronutrients (Fats, Protein, and
Carbohydrates) as well as all
essential micronutrients
(Vitamins/Minerals).
• Glucerna RTF powder can be used
as a supplement or as total diet
replacement in hospitalized
diabetic patients.
• Glucerna RTF provides complex
carbohydrates which help in a
better glycemic control, Glucerna
RTF contains an ideally formulated
complete & balanced nutrition
profile to build sound nutritional
status to meet the nutritional requirements Glucerna RTF provides high
MUFA lipid system suitable for cardiac patients.
• Glucerna RTF also contains myo- inositol which helps delay long term
diabetic complications such as diabetic neuropathy, nephropathy and
retinopathy
• Glucerna RTF is lactose & Gluten free so there is no risk of lactose
intolerance and Gluten sensitivity disease

Product Indications: Glucerna RTF is recommended for all types of Diabetes

Mellitus such as: Type I, Type II, Gestational and Stress induced diabetes
How supplied: 250 ml ready to use liquid, available in Vanilla flavor.

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Product Salient Features:

Glucerna SR is complete and balanced
tailor made nutrition for all types of
diabetes. It provides blend of all
recommended macronutrients (Fats,
Protein, and Carbohydrates) and important
micronutrients (Vitamins/Minerals) for
diabetics.
Glucerna SR powder can be used as
supplement or as a meal replacement in
ambulatory diabetics.
Glucerna SR contains a slow release
energy mechanism of Complex
carbohydrates, which helps achieve a
better glycemic control.
Glucerna SR contains ideally formulated
complete & balanced nutrition profile to
build sound nutritional status to meet nutritional requirements of diabetics.
Glucerna SR provides high MUFA lipid system. It is low in cholesterol to
maintain desirable lipid profile Ideal for cardiac patients.
Glucerna SR contains myo- inositol, which helps delay long-term diabetic
complications such as diabetic neuropathy, nephropathy and retinopathy.
Glucerna SR helps to meet nutritional goals in diabetes such as:

• Control of blood glucose levels,

• Sound nutritional support and helps
• Helps prevent/ delay long-term diabetic complications.

Glucerna SR Powder Is lactose & Gluten free so there is no risk of lactose

intolerance and Gluten sensitivity disease.
Product Indication: Glucerna SR is recommended for all types of Diabetes
Mellitus such as: Type I, Type II, Gestational and Stress diabetes
How supplied: 400 Gm Tin, available in Vanilla flavor.

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Product Salient Features:

Pedialyte is sterilized oral glucose electrolyte solutions
intended for the management of dehydration secondary to
diarrhea. Pedialyte is formulated to replace fluid and
electrolyte losses in diarrheal stools. Glucose enhances the
absorption of sodium and water in the small intestine, and
helps to prevent tissue catabolism.
Composition:

• Pedialyte 500ml Contains:

• Sodium Chloride ------- 1.75gm
• Trisodium Citrate Dihydrate ------- 1.45gm
• Potassium chloride ------- 0.75gm
• Glucose Anhydrous ------- 10.0gm

Product Indications: Pedialyte is indicated for oral re

hydration of mild to moderate dehydration secondary to
acute diarrhea in infants and children.
Dosage Administration: A physician should be consulted
before Pedialyte is given to children under 2 years of age.
Pedialyte should be offered frequently even if the patient is
vomiting. In particular, when the fluid is administered by spooning rather than
through a nipple or from a cup, successful net retention is usually obtained
despite small amounts being vomited.
Direction for use: Pedialyte is for replacement of body water and minerals
frequently lost during diarrhea and vomiting. After opening bottle should be
store under refrigeration and use contents within 48 hours. Discard any unused
portion. Not to be injected. Do not use if the inner aluminum seal is broken.
How supplied: 500ml sterile solution in Aluminum sealed plastic bottle.

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Product Salient Features:

Good nutrition leads to healthy growth.
To grow properly, kids need to eat the
right amounts of protein, carbohydrates,
fat, vitamins, and minerals.
For times when you are not sure your
child is getting adequate amounts of
proper nutrition from regular food, give
your child pediasure. No matter which
delicious flavor you choose, every can
of pediasure contains 25 essential
vitamins and minerals and a balanced
combination of protein, carbohydrates
and fat. With pediasure, you can be
confident that your child is getting
complete, balanced nutrition.

Vitamins & minerals:

From bone growth to healthy skin to
muscle development, vitamins and
minerals are essential for healthy
growth. A diet that provides a wide
variety of all the food groups can
provide the vitamins and minerals your
child needs.

Protein:
Mainly found in meat, poultry, fish, beans and eggs, protein helps build and
repair cells in the body.

Fat:
In small amounts, fat is essential for the development of a healthy nervous
system. The healthiest fats are mono-or polyunsaturated fats and come mainly
from plant sources.

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LIQUIDITY RATIOS

The liquidity of a firm is measured by its ability to satisfy its short term
obligation as they come due.
Liquidity refers to the solvency of the firm’s overall financial position (the ease
with which it can pay its bills).

The following are liquidity ratios:

1. Current Ratio
2. Quick (Asset Test) Ratio
3. Absolute Quick Ratio

1. Current ratio:

Current ratio measures the firm’s ability to meet its short terms obligations. It is
expressed as follows.

Current Ratio = current assets / current liabilities

The current ratio of Abbott laboratories for 2006 is as follows.

Current Ratio= 3564169 / 749439

Current Ratio= 4.755783

The current ratio of Abbott laboratories for 2007 is as follows.

Current Ratio= 3129129/ 881681

Current Ratio= 3.549049

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2. Quick Ratio:

The quick (acid test) ratio is similar to the current ratio except that it excludes
inventory which is generally the least liquid current test.

Quick Ratio = (current assets-Inventory) / current liabilities

The quick ratio of Abbott laboratories for 2006 is as follows.

Quick ratio = 3564169 ─ 1256141 / 749439

Quick Ratio = 3.079674

The quick ratio of Abbott laboratories for 2007 is as follows.

Quick Ratio = 3129129 ─ 1363508 / 881681

Quick Ratio = 2.002562

3. Absolute Liquid Ratio:-

Absolute Quick Ratio = Absolute Liquid Assets / Current Liabilities

Absolute Liquid Assets = Cash + Bank + Marketable Securities

The Absolute Liquid Ratio of Abbott laboratories for 2006 is as follows.

Absolute Liquid Ratio = 1608841

749439

Absolute Liquid Ratio = 2.15

The Absolute Liquid Ratio of Abbott laboratories for 2007 is as follows.

Absolute Liquid Ratio = 1096118

881681

Absolute Liquid Ratio = 1.24

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Table of Liquidity Ratios

RATIOS 2006 2007 RESULT
Current Ratio 4.76 3.54 Unfavorable

Quick Ratio 3.07 2 Unfavorable

Absolute
2.15 1.24 Unfavorable
Quick Ratio

Graphical Representation

LIQUIDITY RATIOS
4.76
5

4 3.54
3.07
3 2006
2 2.15
2 2007
1.24
1

0
Current Ratio Quick Ratio Absolute Quick Ratio
NAME

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Comments on Liquidity Ratios

Liquidity Ratios are viewed as best leading indicators of cash flow problems.
The two basic measures of liquidity are the current ratio and quick ratio. The
common precursor to financial distress and bankruptcy is low or declining
liquidity.

1. Current Ratio:-

As the current ratio of the firm is still favorable but it’s declining steadily which
is the precursor of financial distress and bankruptcy. The higher the current
ratio, the more liquid the firm is considered to be. A current ratio of 2.0 is
considered acceptable. The speed with which the ratio is decreasing, it’s
showing the deteriorating position because it’s manufacturing firm.

2. Quick (acid test) Ratio:-

It’s similar to the current ratio except that it excludes inventory, which is
generally least liquid current asset. The generally low liquidity results from two
primary factors: (1) many types of inventory cannot be easily sold, (2) its
typically sold on credit. The ratio of 1.0 is acceptable. It provides a better
measure if inventory cannot be converted easily into cash. This firm’s ratio is
acceptable but it’s decreasing which is showing that the firm is going towards
deterioration. It may be due to increase in the inventory level in 2007.

3. Absolute Quick Ratio:-

The firm’s absolute quick ratio is also favorable like other ratios. It’s mean the
firm has adequate cash and bank balances which are highly liquid to meet the
short term obligations. But it’s deteriorating like other ratios in 2007. It’s mean
the firm’s cash flows is decreasing in 2007. It may be due to increase in credit
sales or increased collection period.

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ACTIVITY RATIOS
Activity ratio measures the speed with which various accounts are converted
into sales or cash (inflows or outflows). Activity ratios measure the efficiency of
the management regarding converting assets into sales or cash.

The followings are the activity ratios

1. Inventory Turnover
2. Total Asset Turnover
3. Average Collection Period
4. Average Payment Period
5. Working Capital Turnover

1. Inventory Turnover:-

It commonly measures the activity of liquidity of a firm’s inventory. It is

calculated as follows:

Inventory Turnover = Cost of goods sold

Inventory

The Inventory Turnover ratio of Abbott laboratories in 2006 is as follows.

Inventory Turnover = _3435553_

1256141

Inventory Turnover = 2.735006 times

The Inventory Turnover ratio of Abbott laboratories in 2007 is as follows.

Inventory Turnover = 3850568_

1363508

Inventory Turnover = 2.824 times

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2. Total Asset Turnover:-

It indicates the efficiency with which the firm uses its asses to generate sales.

Total asset turnover is calculated as follows:

Total Asset Turnover = ___Sales____

Total Assets

The Total asset turnover ratio of Abbott laboratories in 2006 is as follows.

Total asset turnover = 5887748

5035425

Total asset turnover = 1.169265 times

The Total asset turnover ratio of Abbott laboratories in 2007 is as follows.

Total asset turnover = 6546371

4681368

Total asset turnover = 1.3983 times

3. Average Collection Period:-

It is also known as “Average age of Accounts Receivable”. It is useful in

evaluating credit and collection policies.

It is calculated as follows:

Average Collection Period = Accounts Receivable

Averages Sales per day

Average collection period = Accounts receivable

Annual Sales/360

The Average collection period of Abbott laboratories in 2006 is as follows.

Average collection period = 208742

16354.86

Average collection period = 12.763 days

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The Average collection period of Abbott laboratories in 2007 is as follows.

Average collection period = 128817

18184.36

Average collection period = 7.083 days

4. Average Payment Period:-

It is also known as average age of accounts payable. It is useful in evaluating

the credit purchase and payment polices.

Average Payment period = Accounts Payable

Averages purchase per day

The Average Payment period of Abbott laboratories in 2006 is as follows.

Average Payment period = 31934

2156.59444

Average Payment period = 14.8076 days

The Average collection period of Abbott laboratories in 2007 is as follows.

Average Payment period = 67062

3462.73888

Average Payment period = 19.36667 days

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5. Working Capital Turnover:-

It is calculated as under:

Working Capital Turnover = Sales

Working Capital

Working Capital = C.A. – C.L.

The Working Capital Turnover Ratio of Abbott laboratories in 2006 is as

follows.

Working Capital = C.A. – C.L.

Working Capital = 3564169 – 749439

Working Capital = 2814730

Working Capital Turnover = 5887748

28114730

Working Capital Turnover = 2.09 times

The Working Capital Turnover Ratio of Abbott laboratories in 2007 is as

follows.

Working Capital = C.A. –– C.L.

Working Capital = 3129129 –– 881681

Working Capital = 2247448

Working Capital Turnover = 6546371

2247448

Working Capital Turnover = 2.91 times

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Table of Activity Ratios

RATIOS 2006 2007 RESULT

Inventory
2.74 2.82 Unfavorable
Turnover
Average
Collection 12.76 7.08 Favorable
Period
Average
14.8 19.37 Favorable
Payment Period
Total Asset
1.17 1.39 Favorable
Turnover Ratio
Working Capital
2.09 2.91 Favorable
Turnover

Graphical Representation

ACTIVITY RATIOS

25
19.37
20
14.8
15 12.76 2006
10 7.08 2007
5 2.742.82 1.171.39 2.092.91
0
Inventory Average Average Total Asset Working
Turnover Collection Payment Turnover Capital
Period Period Ratio Turnover
NAMES

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Comments on Activity Ratios

Activity ratios measure the speed with which various accounts are converted
into sales or cash inflows or outflows.

1. Inventory turnover ratio of Abbott laboratories:-

INVENTORY TURNOVER commonly measures the activity, or liquidity, of a
firm’s inventory. In 2006 the inventory turnover ratio of Abbot Laboratories was
2.74 and in 2007 was 2.82. Its mean that the inventory turnover ratio of Abbott
laboratories is unfavorable in 2007 as compared to 2006 because now the
speed of inventory in which it ends is lower as compared to 2006 which is
unfavorable for the company. It must be meaningful only if the inventory
turnover ratio of Abbott laboratories is lower in 2007 as compared to 2006. But
the situation is reverse here in this period and the inventory turnover ratio is
unfavorable for the firm. Inventory turnover can easily convertible in into an
average age of inventory by dividing it into 360___the assumed number of
days in a year.

2. Average collection period of Abbott laboratories:-

THE average collection period is useful in evaluating credit and collection
policies. IT means that in how much days the company can recover its money
from the debtors. Its shows the strong position of the firm in the market
because the more the speed of recovering the debts the more the efficiency of
the firm. IN 2006 the average collection period of Abbott laboratories was 12.76
days and in 2007 it was 7.08 days its means that now the efficiency of the
company is increased as compared to the last year (2006). NOW in 2007 the
company can recover it amounts from the debtors in 7.08 days which shows
the favorable position of the company.

3. Average payment period of Abbott laboratories:-

IT means the average amount of time needed to pay accounts payable during
a year. The average payment period of Abbott laboratories in 2006 was 14.83
days and in 2007 was 19.37 days. This shows that the position of the firm in
2007 was favorable because if we make payment late then we have a chance
to invest this cash in Marketable Securities or Blue Chips and can generate
more cash. In 2006 we have no chance to avail this opportunity but in 2007 we
can invest it. SO the average payment period is favorable in 2007 as compared
to 2006.

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4. Average collection period v/s average payment period:-

The average collection period must be lesser than the average payment
period.
Suppose: if average collection period is 50 days then payment period must be
more than 50 days in this situation we can pay the dues easily.
But if the collection period is 50 days and the payment period is 40 days then it
is not suitable for the company because we have no money at the end of 40
days.
In case of Abbott laboratories the situation is favorable in 2007 because we
recover our debts in 7.08 days and our payment period is 19.37 days its
means we have the opportunity to invest the money in short term securities.

5. Total assets turnover ratio of Abbott laboratories:-

The total asset turnover indicates the efficiency with which the firm uses its
assets to generate sales. Generally the higher a firm's total asset turnover, the
more efficiently its assets have been used. This measure is probably of
greatest interest to management, because it indicates whether the firm's
operations have been financially efficient. The total asset turnover ratio of the
Abbott laboratories in 2006 was 1.17 and in 2007 was 1.39 which shows that
total assets of the firms are efficiently used in 2007 as compared to 2006.

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PROFITABILITY RATIOS
Profitability ratios measure the strength of the company.

The following are the profitability ratio:

1. Gross profit Margin

2. Operating Profit Margin
3. Net Profit Margin
4. Earning Per share
5. Return on total Assets (ROA)
6. Return on Common Equity (ROE)
7. Return on Operating Assets

1. Gross Profit Margin:

The gross profit margin measures the percentage of each sales dollar
remaining after the firm has paid for its goods.

Gross Profit Margin is calculated as follow:

Gross Profit Margin = Gross Profit X 100

Sales

The Gross Profit ratio of Abbott laboratories in 2006 is as follows.

Gross Profit Margin = 2478628 X 100

5887748

Gross Profit Margin = 42.09807 %

The Gross Profit ratio of Abbott laboratories in 2007 is as follows.

Gross Profit Margin = 2733886 X 100

6546371

Gross Profit Margin = 41.76186 %

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2. Operating Profit Margin:-

The operating profit margin measures the percentage of each sales dollar
remaining after all costs and expenses other than interest, taxes, and preferred
stock dividends are deducted. It represents the “pure profit” earned on each
sales dollar.

It is calculated as under:

Operating Profit Margin = Operating Profits X 100

Sales

The Operating Ratio of Abbott laboratories in 2006 is as follows.

Operating Profit Margin = 1443630 X 100

5887748

Operating Profit Margin = 24.5192 %

The Operating Ratio of Abbott laboratories in 2007 is as follows.

Operating Profit Margin = 1772230 X 100

6546371

Operating Profit Margin = 27.0719 %

3. Net Profit Margin:

The net profit margin measures the percentage of each sales dollar remaining
after all costs and expenses including interest, taxes, and preferred stock
dividends have been deducted.

It is calculated as under:

Net Profit Margin = Net Profits X 100

Sales

The Net Profit Ratio of Abbott laboratories in 2006 are as follows.

Net Profit Margin = 1000008 X 100

5887748

Net Profit Margin = 16.98456 %

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The Net Profit Ratio of Abbott laboratories in 2007 are as follows.

Net Profit Margin = 1209593 X 100

6546371

Net Profit Margin = 18.47731%

4. Earning Per Share:-

EPS represents the number of dollars earned during the period on behalf of
each outstanding share of common stock.

EPS is calculated as under:

Earning per share =

Earning available for common stockholders

Number of shares of common stock outstanding

The Earning per share of Abbott laboratories in 2006 are as follows:

Earning per share = Rs. 10.21

The Earning per share of Abbott laboratories in 2007 are as follows:

Earning per share = Rs. 12.36

5. Return on Total Assets:-

The return on total assets often called the return on investment, measures the
overall effectiveness of management in generating profits with its available
assets.

It is calculated as under:

Return on total assets = Earning available for common

stockholders Total Assets

The Return on Total Assets of Abbott laboratories in 2006 are as follows:

Return on total assets = 1000008

5035425

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Return on total assets = 19.85946 %

The Return on Total Assets of Abbott laboratories in 2007 are as follows:

Return on total assets = 1209593

4681368

Return on total assets = 25.83845 %

6. Return on Common Equity (ROE):-

The return on common equity measures the return earned on the common
stockholders’ investment in the firm.

It is calculated as under:

Return on Common Equity = Earnings available for common

stockholders Common Stock Equity

The Return on Common Equity of Abbott laboratories in 2006 are as follows:

Return on Common Equity = 1000008

4241886

Return on Common Equity = 23.5746 %

The Return on Common Equity of Abbott laboratories in 2007 are as follows:

Return on Common Equity = 1209593

3689273

Return on Common Equity = 32.78675 %

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7. Return on Operating Assets:-

It is calculated as under:-

Return on operating Assets = Operating profit

Fixed Assets

The Return on Operating Assets of Abbott laboratories in 2006 is as

follows:

Return on operating Assets = 1443630

1437023

Return on operating Assets = 100.46 %

The Return on Operating Assets of Abbott laboratories in 2007 is as follows:

Return on operating Assets = 1772230

1516821

Return on operating Assets = 116.84 %

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Table of Profitability Ratios

RATIOS 2006 2007 RESULT

Gross Profit Margin 42.10% 41.76% Favorable

Operating Profit Margin 24.52% 27.07% Favorable

Net Profit Margin 16.98% 18.47% Favorable

Graphical Representation

GENERAL PROFITABILITY

45.00%
40.00%
35.00%
30.00%
25.00% 2006
20.00% 2007
15.00%
10.00%
5.00%
0.00%
Gross Profit Operating Net Profit
Margin Profit Margin Margin

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Table of Return Ratios
RATIOS 2006 2007
Return on Total Asset 19.86% 25.84%
Return on Equity 23.57% 32.79%
Return on Operating Assets 100.46% 116.84%
Earning Per Share 10.21 12.36

Graphical Representation

EARNING PER SHARE

15 12.36
10.21
10 2006
5 2007
0
Earning Per Share
Nam e

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Comments on Profitability Ratios

1. Gross Profit:-

Abbott Laboratory’s gross profit ratio is not as good as compare to previous

year. Although it has high gross profit as compared to previous year yet cost of
goods sold of Abbott Laboratory in 2007 is high rather than in 2006. That is
why the ratio of gross profit is less than in 2007 as compared to 2006

2. Operating Profit & Net Profit:-

Operating Profit and Net Profit is better than the previous year because its
sales are increased 11.19 %. And gross profit 10.29 % is increased as
compared to previous year. That is why it is favorable in 2007 than in 2006.

3. Earning Per Share:-

Company’s EPS is greater due to high Net Profit and it is favorable for
shareholder.

4. Return on Assets:-

Return on Assets of Abbott Laboratory is better than the previous year.

Because ROA in 2007 is better as compared to 2006. The overall effectiveness
of management in 2007 of generating the profit with its available assets is
better than in 2006.

5. Return on Common Equity:-

Return on Common Equity Ratio of Abbott Laboratories is better in 2007 than

in 2006. Because earning available for common stockholder in 2007 is greater
than in 2006. And in 2007, it is better for current stock holders.

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6. Return on Operating Assets:-

Return on Operating Assets is also better in 2007 as compared in 2006.

Because operating profit in 2007 is higher than in 2006.

In profitability, the efficiency of business is measured. The overall profitability

ratio of Abbott Laboratories is better as compared to previous year due to more
profit, more sales. And more returned on assets.

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DEBT RATIOS
The debt position of a firm indicates the amount of other people’s money being
used to generate profits.

1. Debt Ratio
2. Debt to Equity Ratio

1. Debt Ratio:-

The debt ratio measures the proportion of total assets financed by the firm’s
creditors.

It is calculated as under:

Debt ratio = Total liabilities

Total Assets

The Return on Total Assets of Abbott laboratories in 2006 are as follows:

Debt ratio = 793539

5035425

Debt ratio = 0.158

The Return on Total Assets of Abbott laboratories in 2007 are as follows:

Debt ratio = 992095

4681368

Debt ratio = 0.21

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2. Debt to equity Ratio:-

It is calculated as under:

Debt to Equity Ratio = Total Debt

Equity

The Debt to Equity Ratio of Abbott laboratories in 2006 are as follows:

Debt to Equity Ratio = 793539

4241886

Debt to Equity Ratio = 0.19

The Debt to Equity Ratio of Abbott laboratories in 2007 are as follows:

Debt to Equity Ratio = 992095

3689273

Debt to Equity Ratio = 0.27

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Table of Debt Ratios

RATIOS 2006 2007 RESULT

DEBT RATIO 0.158 0.21 Unfavorable
Debt to Equity Ratio 0.19 0.27 Unfavorable

Graphical Representation

SOLVENCY RATIO

0.3 0.27
0.25 0.21
0.19
0.2 0.16
2006
0.15
2007
0.1
0.05
0
DEBT RATIO Debt to Equity Ratio
NAME

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Comments on Debt Ratios

1. DEBT RATIO:-

The debt ratio measures the proportion of total assets financed by the firm’s
creditors. The higher this ratio, the greater the amount of other people’s money
being used to generate profits. In 2006 the debt ratio is favorable (0.16) and in
2007 (0.21) was also favorable because the share of outsiders is not enough.
But if we make comparison then in 2006 was more favorable as compared to
2007 because in 2006 the share of outsiders was less as compared to
2007.But still in 2007 the debt ratio of the Abbott laboratories is favorable. In
2006 the share of debt was 19% in the total assets of the company and in 2007
this share increased up to 21%.its mean the share of debts is increasing in
total assets which is showing the company is going towards deterioration.

2. DEBT TO EQUITY RATIO OF ABBOTT LABORATARIES:-

Another version of debt-equity ratio (known as external-internal equity ratio) is

where relationship is established between borrowed funds and owner’s
equality. In 2006 the debt to equity ratio of Abbott laboratories was 0.19 and in
2007 was 0.27. Its means that debts are increasing which is not suitable for the
company. By increase in the debts the firm has to pay additional charges which
will decrease the return for the investors.

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MARKET RATIOS
Relate the firm’s market value, as measured by its current share price, to
certain accounting values. These ratios give insight into how well investors in
the marketplace feel the firm are doing in terms of risk and return.

These are the following ratio:

1. Price/ Earning (P/E) Ratio

2. Market/Book (M/B) Ratio
3. Dividend Yield Ratio

1. Price/ Earning (P/E) Ratio:-

It measures the amount that investors are willing to pay for each dollar of a
firm’s earring the higher the P/E ratio, the greater is investor confidence.

It is calculated as under:-

Price/Earning (P/E) Ratio = Market price per share of common stock

Earning Per share

The Price/Earning Ratio of Abbott laboratory in 2006 is as follows:

Price/Earning (P/E) Ratio = 144

10.21

Price/Earning (P/E) Ratio = 14.10

The Price/Earning Ratio of Abbott laboratory in 2007 is as follows:

Price/Earning (P/E) Ratio = 206.5

12.36

Price/Earning (P/E) Ratio = 16.71

2. Market/Book (M/B) Ratio:-

It provides an assessment of how investors view the firm’s performance. Firms

expected to earn high returns relative to their risk typically sell at higher M/B
multiples.
It is calculated as under:-

Market/Book (M/B) Ratio = Market price per share of common stock

Book value per share of common stock
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The Market/Book (M/B) ratio of Abbott laboratories in 2006 is as follows:

Market/Book (M/B) Ratio = 144

43.329

Market/Book (M/B) Ratio = 3.32

The Market/Book (M/B) ratio of Abbott laboratories in 2007 is as follows:

Market/Book (M/B) Ratio = 206.5

37.684

Market/Book (M/B) Ratio = 5.48

3. Dividend Yield Ratio:-

It is calculated as under:-

Dividend Yield Ratio = Dividend Per share

Market Value Per share

The Dividend Yield ratio of Abbott laboratories in 2006 is as follows:

Dividend Yield Ratio = 3

144
Dividend Yield Ratio = 2.083%

The Dividend Yield ratio of Abbott laboratories in 2007 is as follows:

Dividend Yield Ratio = 18

206.5

Dividend Yield Ratio = 8.717

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Table of Market Ratios

Ratios 2006 2007 Results

Market to Book Value 3.32 5.48 favorable
Price Earning Ratio 14.1 16.71 favorable
Dividend Yield Ratio 2.083 8.717 favorable

Graphical Representation

MARKET RATIO

18 16.71
16 14.1
14
12
10 8.717 2006
8 2007
5.48
6
3.32
4 2.083
2
0
market to price dividend
book earning yeild
value ratio ratio
nam e

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Comments on Market Ratios

These ratios tend to reflect, on a relative basis, the common stockholders’
assessment of all aspects of the firm’s past and expected future performance.

1. Price/Earnings (P/E) Ratio:-

It focuses on earnings. These ratios shows the amount investors are willing to
pay for each dollar of a firm’s earnings. The level of P/E ratios shows the
degree of confidence that investors have in the firm’s future performance. The
higher the ratio, the greater is investor confidence. In 2006, investors were
willing to pay $14.1 for $1 of the earning. In 2007, investors are willing to pay
$16.7 for each $1 earning of the firm. It shows that the confidence of investors
is increasing in the firm regarding the future performance. It’s an opportunity
the firm has to increase its goodwill in the market. As the confidence is
increasing day by day, the company should increase its market price per share
by further planning to increase efficiency in the field.

2. Market/Book (M/B) Ratio:-

As, it relates the market value of the firm’s shares to their book-strict
accounting-value. In 2006, investors were paying $3.32 for each $1.0 of the
book value of Abbott Co. this really favorable. In 2007, investors were paying
$5.48 for each $1.0 of the book value. It means the market price per share is
increasing which is an opportunity with the stockholders to cash their
confidence in the company. Increasing trend of this ratio is showing that firm is
going towards favorable position. The stock of this firm are expected to perform
well, improve profits, increase their market share etc. the firm is expected to
earn high returns relative to their risk. Investors are willing to pay more than it’s
book value for the firm’s share.

3. Dividend Yield Ratio:-

It’s also called (ROI) but for the investors. In 2006, investors can earn $2.08
against the market value of $144. In 2007, the investors can earn $5.48 against
the market value of $206. The return is increasing in 2007 as compared to
2006 means the investors are getting more but vis-à-vis market value is also
increasing. Due to increase in earnings, market value is also increasing.

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DuPont Analysis
It is used to dissect the firm’s financial statements and to assess its financial
condition.

Dupont Formula:-

Multiplies the firm’s net profit margin by its total assets turnover to calculate the
firm’s return on total asset (ROA).

Modified Dupont Formula:-

Relate the firm’s return on total assets (ROA) to its return on common equity
(ROE) using the financial leverage multiplier (FLM)

Financial Leverage Multiplier:-

The ratio of the firm’s total assets to common stock equity.

ROA = Earnings available for common stockholders X Sales

Sales Total Assets

The Return on Assets of Abbott laboratories in 2006 are as follows:

ROA = 1000008 X 5887748

5887748 5035425

ROA = 17% X 1.17

ROA = 19.86%

The Return on Assets of Abbott laboratories in 2007 as follows:

ROA = 1209539 6546371

6546371 4681368

ROA = 18.48% X 1.4

ROA = 25.87 %

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ROE =Earnings available for common stockholders X Total Assets
Total Assets Common Stock Equity

The Return on Equity of Abbott laboratories in 2006 are as follows:

ROE = 1000008 X 5035425

5035425 4241886

ROE = 19.86 % X 1.19

ROE = 23.57%

The Return on Equity of Abbott laboratories in 2007 are as follows:

ROE = 1209539 X 4681368

4681368 3689273

ROE = 25.84% X 1.27

ROE = 32.81%

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Comments

It merges the income statements and balance sheet into two summary
measures of profitability: ROA & ROE

Dupont Formula:-

The Dupont Formula enables the firm to break down its return into profit—on—
sale and efficiency—of—asset—Use components. Typically a firm with lower
net profit margin has a high total asset turnover which results in reasonably
good return on total assets. Often the opposite situation exits. In 2006, net
profit margin is 17% and efficiency of assets use in 1.17 and in 2007 net profit
margin increases 18.48% & efficiency of assets use is 1.14. as profit rate
increases and efficiency decreases but it results in increased ROA in 2007. the
firm should also increased its efficiency with increased profit margin for further
increase in ROA.

Modified Dupont Formula:-

Use of the financial leverages multiplier to covert the ROA into the ROE to
reflect the impact of financial leverage on owner’s return. The total return to
owner can be analyzed in these three imports dimensions.

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