Question # 1: Year 2005 2006 2007 2008 2009 Sales 3051 3814 5340 7475 10466 Sales Growth

25% 40% 40% 40%

Sales growth for the year 2006 is 25% where as the sales growth projected for the year 2007, 2008 and 2009 is 40%. Question # 02: Year 2005 2006 2007 2008 2009 Income 766 1150 1609 1943 2903 Income Growth 50.13% 39.91% 20.76% 49.41%

Income growth in the year 2006 was 50.13% which is higher than the growth of sales in 2006 whereas, the income growth in years 2007, 2008 and 2009 is 39.91%, 20.76% and 49.41% respectively. In 2007 the income is growing at the same rate as that of sales, in 2008 the income is growing at lower rate than sales whereas the income in 2009 is growing at faster rate than the sales in 2009. In 2007 income statement 500 is expense as extraordinary expense so this should be treated below the line and should not be deducted from the income from continuing operation. Question # 03:

Year 2006 2007 2008 2009 Current Assets 1720 2255 3417 3261 Current Liabilities 593 830 1162 1647 Current Ratio Chem-Med 2.90 2.72 2.94 1.98 Median Company 2.40 Pharmacia Current Ratio 2.80 Industry Average 2.70

Chem-Med's current ratio is higher than that of Pharmacia in 2006. Company's current ratio is still higher than the industry average and the company's current ratio is in safe zone. In 2009 the company current ratio is still positive but it's lower than the safe zone as mentioned as 2.25 to be adequately safe. So the company's current ratio in 2009 is 1.98. Question # 04:

Year 2006 2007 2008 2009 Debt 614 857 1,212 1,664 Asset 4,491 6,343 8,641 11,995 Debt to Asset Ratio Chem-Med 0.14 0.14 0.14 0.14 Median Company D/A ratio 0.52

Pharmacia D/A ratio 0.55 Industry Average 0.40

The debt to asset ratio of the Chem-Med's company for the year 2006, 2007, 2008 and 2009 is given in the table above, The debt to asset ratio is constant for the company throughout the four years. Industry average is 0.40 so the Chem-Med's company has lower debt to asset ratio form the industry. Question # 05: Year 2,006 2,007 2,008 2,009 Credit Sales 3,814 5,340 7,475 10,466 Account Receivable 564 907 1,495 2,351 Collection period (Days) 54 62 73 82 Average Collection Period 67.74

The collection period for the company is mentioned in the above mentioned table. The average collection period is 67.74 days and the collection period of the company is increasing every with the increase of credit sales and the company is getting relax with the customers. Question # 06:

Year 2,006 Net Income 1150 Equity 3877 ROE of Chem-Med 29.66% ROE of Pharmacia 29.56% ROE of Median Company 12.29% ROE industry Average 23.84%

Du Pont Method for ROE Company Chem-Med Pharmacia Profit Margin 30% 7% Asset turnover 1.37 1.9 1- debt to asset ratio 0.86 0.45 Du Pont ROE 47.79% 29.56%

The ROE of the both company is given in the above table and the ROE of the Chem-Med is higher than the Pharmacia in Du Pont method.