Case Study Week 2

253 WordsApr 21, 20142 Pages
Case Study – Week 2 1. Net Sales Growth [(3814/3051)/3051] x 100 = 25%, [(5340/3814)/3814] x 100 = 40%, [(7475/5340)/5340] x 100 = 40%, [(10466/7475)/7475] x 100 = 40% 2. Net Income Growth (Current year net income – last year net income / last year net income x 100 [(1609-1150)/1150] x 100 = 40% [(1943-1609)/1609] x 100 = 21% [(2903-1943)/1943] x 100 = 49% The 3rd year of projections shows a slower projected net income versus sales. I’m not sure if the $500,000.00 that the company is expecting to get from the litigation should be used as it’s not guaranteed money yet. 3. Current Ratio = current assets/current liabilities 1720 / 593 = 2.9 The current ratio for the Chem-Med company is above Pharmicias and the industries average. 4. Debt to Asset Ratio = Total Debt/Total Asset 614/4491 = .14 857/6343 = .14 1212/8641 = .14 1664/11995 = .14 The debt to asset ratio stays relatively the same over all 4 years. Chem – Med has less debt than the average company in the industry. 5. Average Collection Period = Accounts Receivable/Average daily Credit 564 / (3814/365) = 54 days 907 / (5340/365) = 62 days 1495 / (7475/365) = 73 days 2351 / (10466/365) = 82 days The time it takes to collect on accounts receivable continues to go up. 6. ROE = Return on assets (investment) / 1-Debt/assets or Net income /Stockholders equity 1150/3877 .2966 This is almost equal to Pharmcia’s ROE but almost triple the national

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