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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Pfizer Inc. and Subsldiary Companies CONSOLIDATED STATEMENT OF INCOME Year Ended December 31 2004 2003 2002 $52,516 $44,73632.294 (millions, except per share data) Costs and expenses: Cost of sales Selling, informational and administrative Research and development expenses Amortization of intangible assets Merger-related in-process research and development charges Merger-related costs Other income-net 7,54 959 4,014 16,903 5,108 10.829 7,487 5,208 7.684 3,364 2,187 107 5,052 1.193 1,058 630 53 1009 5) 14.007 3246 766 Income from continuing operations before provision for taxes Provision for taxes on income Minority interests Income from continuing operations before cumulative effect on income and minority interests 2.665 14 2599 10 of change in accounting principles 1,332 9 9.16 Income/(loss) from operations of discontinued business and product lines-net of tax (22) 26 298 Gains on sales of discontinued businesses and product lines -net of tax 5 2,285 29 2,311 Discontinued operations-net of tax Income before cumulative effect of change in accounting 375 36 3,940 9,536 (30) (410) Cumulative effect of change in accounting principles net of tax Net income EARNINGS PER COMMON SHARE- BASIC: Income from continuing operations before cumulative effect -$1,361 3,910 $ 9,126 of change in accounting principles Income before cumulative effect of change in accounting Cumulative effect of change in accounting principles 1.5 0.22 $ 1.49 0.32 0.06 .55 (0.07) 1.51 0.54 Net income $. 1.51 0.54 $ 1.48 Year Ended December 31 2004 2003 2002 (millions, except per share data) EARNINGS PER COMMON SHARE DILUTED Income from continuing operations before cumulative effect of change in accounting principles Income before cumulative effect of change in accounting Cumulative effect of change in accounting principles . 149 0.22 147 0.32 0.06 1.53 (0.07 0.54 Net income $ 149 0.54 1.46 Dividends Currency translation adjustment Net unrealized gain (loss) on available-for-sale securities Minimum pension liability $5,25 $4.77 $3,313 85 (32) (6) (68) 9) 1,96 2070 68 128