Suppose you were the Chief Financial Officer of WPCI Drugs and Products. By 2015, WPCI had become a major player in prescription drugs with sizable market share in quite a few of them, and several "blockbuster" drugs. WPCI also had numerous brand name home products such as Clean detergent and Chef Girlardee canned food. 

The three pillars of WPCI's strategy were conservatism, marketing and cost control. WPCI consistently avoided much of the risk of product development and introduction in the volatile drug industry. Most of its new products were acquired or licensed after their development by other firms. Others were copies and clever extensions of products introduced by competitors. WPCI's success was built on its expertise in marketing, which eroded its competitors' headstart, and on cost control, which ensured substantial margins. The results were impressive. Selected financial data for WPCI (in $ millions):  

Describe WPCI 's capital structure over the period 2011-15. 

What are the likely factors that explain this capital structure? (Your discussion should be based on simple statistics computed from the available data). 

Based on the information given  is this capital structure likely to be optimal? If yes, explain its merits relative to alternative capital structures?

If not, discuss this capital structure's main drawbacks, as well as the relative merits of the different possible paths to a more suitable capital structure.

Answer rating: 100% (QA)

1 Based on the information provided it is not possible to directly determine WPCIs capital structure over the period 201115 as the financial data only ... View the full answer