Chem-Med Company Case Study
Case Study 2
Chem-Med Company
1. What was Chem-Med’s rate of sales growth in 2007? What is it forecasted to be in 2008, 2009, and 2010? a. 2007: 25% b. 2008: 40% c. 2009: 40% d. 2010: 40% 2. What was Chem-Med’s net income growth in 2007? What is it forecasted to be in 2008, 2009, and 2010? Is projected net income growing faster or slower than projected sales? After computing these values, take a hard look at the 2008 income statement data to see if you want to make any adjustments. e. 2007: 50.13% f. 2008: 39.91% g. 2009: 20.75% h. 2010: 49.41% i. The projected net income is growing slower than net sales in 2009. The projected net income is growing faster, however, in 2007, 2008 and 2010. j. An adjustment should be made in 2007 due to the fact that there was a much higher amount due to extraordinary gain that did not occur in any of the following years. The net income in the same year should be reduced through the use of the after tax amount. 3. How does Chem-Med’s current ratio for 2007 compare to Pharmacia’s? How does it compare to the industry average? Compute Chem-Med’s current ratio for 2010. Is there any problem with it? k. Chem-Med’s total current ratio of 2.9 was higher than Pharmacia’s current ratio of 2.8. l. Chem-Med’s total current ratio of 2.9 was also higher than the industry average of 2.4. m. Chem-Med’s total current ratio of 2.9 in 2007 was higher than the current ratio of 1.98 in 2010. n. The problem now is that the 2010 ratio does not meet the minimum ratio required by the bank to maintain the loan agreement. 4. What is Chem-Med’s total debt-to-assets ratio for 2007, 2008, 2009, 2010? Is any trend evident in the four-year period? Does Chem-Med in 2007 have more or less debt than the average company in the industry? o. 2007: .1367 p. 2008: .1351 q. 2009: .1402 r. 2010: .1387 s. The only trend
Chem-Med Company
1. What was Chem-Med’s rate of sales growth in 2007? What is it forecasted to be in 2008, 2009, and 2010? a. 2007: 25% b. 2008: 40% c. 2009: 40% d. 2010: 40% 2. What was Chem-Med’s net income growth in 2007? What is it forecasted to be in 2008, 2009, and 2010? Is projected net income growing faster or slower than projected sales? After computing these values, take a hard look at the 2008 income statement data to see if you want to make any adjustments. e. 2007: 50.13% f. 2008: 39.91% g. 2009: 20.75% h. 2010: 49.41% i. The projected net income is growing slower than net sales in 2009. The projected net income is growing faster, however, in 2007, 2008 and 2010. j. An adjustment should be made in 2007 due to the fact that there was a much higher amount due to extraordinary gain that did not occur in any of the following years. The net income in the same year should be reduced through the use of the after tax amount. 3. How does Chem-Med’s current ratio for 2007 compare to Pharmacia’s? How does it compare to the industry average? Compute Chem-Med’s current ratio for 2010. Is there any problem with it? k. Chem-Med’s total current ratio of 2.9 was higher than Pharmacia’s current ratio of 2.8. l. Chem-Med’s total current ratio of 2.9 was also higher than the industry average of 2.4. m. Chem-Med’s total current ratio of 2.9 in 2007 was higher than the current ratio of 1.98 in 2010. n. The problem now is that the 2010 ratio does not meet the minimum ratio required by the bank to maintain the loan agreement. 4. What is Chem-Med’s total debt-to-assets ratio for 2007, 2008, 2009, 2010? Is any trend evident in the four-year period? Does Chem-Med in 2007 have more or less debt than the average company in the industry? o. 2007: .1367 p. 2008: .1351 q. 2009: .1402 r. 2010: .1387 s. The only trend