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1. What was Chem-Med's rate of sales growth in 2007?

What is it forecasted to be in 2008, 2009, a 2006 3051 2007 3814 25% 2008 5340 40% 2009 7475 40%

Sales Rate of sales growth

2. What was Chem-Med's net income growth in 2007? What is it forecasted to be in 2008, 2009, an computing these values, take a hard look at the 2008 income statement data to see if you want to 2006 766 2007 1150 50.13% 2008 1609 39.91% 2009 1943 20.76%

Net income Net income growth

In 2007 the income is growing at a faster rate than of sales, in 2008 the income is growing at almost the s in 2009 and in 2010 the net income is growing a little bit faster than the sales. I don't think that in 2008 inc

3. How does Chem-Med's current ratio for 2007 compare to Pharmacia's? How does it compare to 2007 1,720 593 2.90 2010 3,261 1647 1.98 Pharmacia's current ratio Industry average current ratio

Current assets Current liabilities Current ratio

Chem-Med's current ratio is higher than that of Pharmacia in 2007. Chem-Med's current ratio is higher th than industry average current ratio because the company's current ratio in 2010 is 1.98.

4. What is Chem-Med's total debt-to-assets ratio for 2007, 2008, 2009, 2010? Is any trend evident in 2006 463 3190 0.15 2007 614 4491 0.14 2008 857 6343 0.14 2009 1212 8641 0.14

Debts Assets Debt-to-assets ratio

The debt to asset ratio of the Chem-Med's company for the year 2007, 2008, 2009 and 2010 is 0.14, so t so the Chem-Med's company has lower debt to asset ratio in comparison from the industry. 5. What is Chem-Med's average accounts receivable collection period for 2007, 2008, 2009, 2010?

Net sales Accounts receivable Collection Period

2006 3051 409 49

2007 3814 564 54

2008 5340 907 62

2009 7475 1495 73

The average collection period is 67.74 days and the collection period of the company is increasing every customers. The consequences are that those could be uncollectible accounts so the company might talk

6. How does Chem-Med's return-on-equity ratio compare to Pharmacia's and the industry for 2007 Compute ROE for each company using the following formula: ROE = Profit margin x Asset turnov 2007 1150 3877 29.66% 3814 30% 2771 1.376 48.07% Median Company ROE Pharmacia ROE Industry average ROE

Net income Equity ROE Net sales Profit margin Fixed assets Asset turnover Du Pont ROE

The return-on-equity ratio of Chem-Med is 29.66% and Pharmacia's is 29.56% so they are really close to

"Chem-Med Company Study Case"

t is it forecasted to be in 2008, 2009, and 2010? 2010 10466 40%

is it forecasted to be in 2008, 2009, and 2010? Is projected net income growing faster or slower than projecte e statement data to see if you want to make any adjustments. 2010 2903 49.41%

008 the income is growing at almost the same rate than sales whereas the income in 2009 is growing at slower rate an the sales. I don't think that in 2008 income should be adjusted because it is growing at the same velocity.

Pharmacia's? How does it compare to the industry average? Compute Chem-Med's current ratio for 2010. Is 2.8 2.7

harmacia's current ratio dustry average current ratio

07. Chem-Med's current ratio is higher than the industry average. In 2010 Chem-Med's current ratio is still positive bu nt ratio in 2010 is 1.98.

08, 2009, 2010? Is any trend evident in the four-year period? Does Chem-Med in 2007 have more or less deb 2010 1664 11995 0.14 Median Company ratio Pharmacia ratio Industry average dta ratio 0.52 0.55 0.40

2007, 2008, 2009 and 2010 is 0.14, so this is uniform which means they are controlling well their debts. Industry ave mparison from the industry.

on period for 2007, 2008, 2009, 2010? Is the period getting longer or shorter? What are the consequences?

2010 10466 2351 82

Average collection period

67.74

eriod of the company is increasing every year with the increase of credit sales and the company is getting relax with ble accounts so the company might talk with the costumers to settle those accounts.

Pharmacia's and the industry for 2007? Using the Du Pont method, compare the positions of Chem-Med and a: ROE = Profit margin x Asset turnover / (1 - Debt to assets). Compare the results to determine the sources 12.29% 29.56% 23.84%

ia's is 29.56% so they are really close to each other. But with the Du Pont formula Chem-Med's is higher than Pharm

Company Study Case"

ng faster or slower than projected sales? After

in 2009 is growing at slower rate than the sales wing at the same velocity.

Med's current ratio for 2010. Is there any problem with it?

ed's current ratio is still positive but it's lower

d in 2007 have more or less debt than the average company industry?

olling well their debts. Industry average is 0.40

What are the consequences?

the company is getting relax with the ts.

the positions of Chem-Med and Pharmacia. sults to determine the sources of ROE for

Chem-Med's is higher than Pharmacia's.

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