Question

Pfizer is one of the largest pharmaceutical and consumer healthcare products companies in the world. Familiar products sold by Pfizer include Sudafed, Zantac, Benadryl, Listerine, and Viagra. The company’s highest selling product is Lipitor, which is designed to help reduce high cholesterol. Pfizer’s income statement for 2004 follows.


The following information came from Pfizer’s statement of stockholders’ equity:


In addition, in the notes to its financial statements, Pfizer reports that advertising expenses in 2002, 2003, and 2004 were $2,298 million, $2,936 million, and $3,490 million, respectively. Advertising expense is reported as part of selling, informational, and administrative expenses.
1. Compute the following for each of the years 2002–2004:
(a) Net income/Revenues
(b) Cost of sales/Revenues
(c) Research and development expenses/Revenues
(d) Advertising expense/Revenues
2. Comment on the ratios you computed in part (1). Make particular mention of any trends.
3. Compute Pfizer’s effective tax rate (on continuing operations) for each year.
4. For 2004, estimate the average number of basic and diluted shares outstanding.
5. Compute comprehensive income for each of the years2002–2004.


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  • CreatedApril 07, 2012
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