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Executive SummaryEli Lilly is within an industry that has been affected by the recent enactment of the Health Reform Act as well as slow increase in domestic and international GDP There has been strength seen within the ROA and ROE which indicates a strong operating performance Eli Lilly also has a strong long-term financial position but lack the ability to maintain a short-term financial position The quick ratio analysis indicates the inability to convert less liquid assets into cash With the risk of this industry high due to environmental regulatory and internal factors the ability to generate cash is key to success As indicated within the PE ratio the market is not optimistic in the future of Eli Lilly With recent acquisition from 2008 through present day Eli Lilly is trying to obtain their reputation with no success In detail analysis below there is indication that management has incentive to reduce 2011 earnings to enable earnings to be reserved for future deficits that are foreseen with the recent regulatory changes within the Pharmaceutical industry There are indication driven by the valuation of inventory and use of LIFO In addition the Allowance for Doubtful Account has disconnected from the economics of the industry within the accounts receivable as a percentage of revenue Overall with the changes in the industry affecting the income generated the need for a reserve to continue research and development and remain competitive is a strong indication of management earnings to reduce income in 2011 External Environmental FactorsIndustrial FactorsEli Lillys pharmaceutical products compete with products manufactured by local and domestic companies in highly risky market Peters 2013 With such competition there are important factors that Eli Lilly must intertwine within their business core and strategy safety effectiveness and ease of use of products price and demonstrated cost-effectiveness marketing effectiveness and research and development of new products and processes Peters 2013 Although Eli Lilly is not a company that is seasonal changes each year
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