What was Chem-Med's net income growth in 2006? What is it forecasted to be in 2007, 2008, and 2009? Is projected net income growing faster or slower than projected sales? After computing these values, take a hard look at the 2007 income statement data to see if you want to make any adjustments.

 
 

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Figure 1 CHEM-MED COMPANY Income Statements 2004-2005 (in 000s) Pro Forma Income Statements 2004 2005 2006 2007 2008 2009 Net sales (all credit).. Cost of goods sold. Gross profit... Selling, etc., expenses.. Other inc (exps)*. Operating profit. Interest expense. Income before tax.. $ 777 257 520 610 $3,051 995 2,056 705 $3,814 1,040 2,774 964 $5,340 1,716 3,624 1,520 500 2,604 202 2,402 793 $1.609 $7,475 2,154 5,321 2,120 $10,466 3,054 7,412 2,645 (90) 11 (101) 1,351 75 1,276 510 $ 766 1,810 94 1,716 566 S1,150 3,201 302 2,899 957 $1,943 4,767 434 4,333 1,430 $2,903 Income taxes (40% in 1986; 33% thereafter) Net income ($ 101) Dividends paid... Increase in retained earnings Average number of shares** Earnings per share. ($ 101) 2,326 ($ 0.04) $ 766 2,326 $ 0.33 $1,150 2,347 $ 0.49 $1,609 2,347 $ 0.69 $1,943 2,347 $ 0.83 $2,903 2,347 $ 1.24 * Other Inc (Exps) refers to extraordinary gains and losses. In 2007, $500,000 is expected from Pharmacia, Inc., in settlement of their suit. ** Shares are not publicly traded. Figure 1 CHEM-MED COMPANY Income Statements 2004-2005 (in 000s) Pro Forma Income Statements 2004 2005 2006 2007 2008 2009 Net sales (all credit).. Cost of goods sold. Gross profit... Selling, etc., expenses.. Other inc (exps)*. Operating profit. Interest expense. Income before tax.. $ 777 257 520 610 $3,051 995 2,056 705 $3,814 1,040 2,774 964 $5,340 1,716 3,624 1,520 500 2,604 202 2,402 793 $1.609 $7,475 2,154 5,321 2,120 $10,466 3,054 7,412 2,645 (90) 11 (101) 1,351 75 1,276 510 $ 766 1,810 94 1,716 566 S1,150 3,201 302 2,899 957 $1,943 4,767 434 4,333 1,430 $2,903 Income taxes (40% in 1986; 33% thereafter) Net income ($ 101) Dividends paid... Increase in retained earnings Average number of shares** Earnings per share. ($ 101) 2,326 ($ 0.04) $ 766 2,326 $ 0.33 $1,150 2,347 $ 0.49 $1,609 2,347 $ 0.69 $1,943 2,347 $ 0.83 $2,903 2,347 $ 1.24 * Other Inc (Exps) refers to extraordinary gains and losses. In 2007, $500,000 is expected from Pharmacia, Inc., in settlement of their suit. ** Shares are not publicly traded.

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If you see the image attached Growth rate if Net income in 2006 is 5013 Growth rate ... View the full answer