Question

Compare and contrast the results from Celgene and Gilead. Classify each ratio in their respective categories.

Celgene Gilead Gross (Profit) Margin Percentage 96.1% 85.8% Gross Margin Net Sales $10,747 $11,185 $25,692 $29.953 Accounts Receivable Turnover 7.4 5.8 Net Credit Sales Average Net Accounts Receivable $11,185 $1,521 $29,953 $5,184 AVela Debt Ratio 76.5% 66.0% Total Liabilities Total Assets $21,486 $28,086 $37,614 $56,977 = 45 Price-Earnings Ratio (Multiple) 12/30/2016 for andCelgene as of 12/31/2016 $115.75 (Please see the Course Project instructions for the dates EPS $2.57 $71.95 $ 10.08

Answer 1

	The 3 ratios which are given in here will be classified into 3 categories:
1	Profitability ratio-Gross(Profit) Margin percentage:
	Celegne has a gross margin percentage of 96.1% and Gilead has a gross margin percentage of 85.8%, it means that Celegne has less percentage of direct cost from
	its sales as compared to that of Gilead. Hence Celegne has a higher margin as compared to Gilead.
2	Accounts Receivable Turnover-Activity Ratio:
	Celegne has a Accounts Receivable Turnover of 7.4 as compared to Gilead which has a ratio of 5.80. It implies that Celegne is managing its Accounts receivable better
	then Gilead and hence Celegne can convert or collect cash from its receivables better than that of Gilead.
3	Debt Ratio-Solvency Ratio
	Debt ratio shows the percentage of Total Liabilities from the Total Assets.Now Celegne has a Debt ratio of 76.5% which means that the Equity Shareholders consists of 23.5%
	and Gilead has a Debt ratio of 66% which shows that the Equity shareholders consists of 34%. Since Gilead has lower Debt ratio it could be said that its solvency is intact
	whereas Celegne is more risky.
	Now as far as PE ratio is concerned it can be seen that Celegne commands a much better PE ratio mainly due to its higher profitability and better effeciency. PE ratio means the
	price multiple that the investors are willing to pay over its earnings.