Question

Consider the following 2017 data for several pharmaceutical firms ($ millions):

	Average Current Liabilities	Cash from Operations	Expenditures on PPE
Merck & Co., Inc.	$17,909	$6,447	$1,888
Pfizer Inc.	30,771	16,470	1,956
Abbott Laboratories	7,786	5,570	1,135
Johnson & Johnson	28,412	21,056	3,279

a. Compute the operating cash flow to current liabilities (OCFCL) ratio for each firm.
(Round your answer to two decimal places.)

	Merck & Co., Inc.
	Pfizer Inc.
	Abbott Laboratories
	Johnson & Johnson

b. Compute the free cash flow for each firm.

	Merck & Co., Inc.
	Pfizer Inc.
	Abbott Laboratories
	Johnson & Johnson

Answer 1

a. Compute the operating cash flow to current liabilities (OCFCL) ratio for each firm.
(Round your answer to two decimal places.)

	Merck & Co., Inc.	6447/17909 = 0.36
	Pfizer Inc.	16470/30771 = 0.54
	Abbott Laboratories	5570/7786 = 0.72
	Johnson & Johnson	21056/28412 = 0.74

b. Compute the free cash flow for each firm.

	Merck & Co., Inc.	6447-1888 = 4559
	Pfizer Inc.	16470-1956 = 14514
	Abbott Laboratories	5570-1135 = 4435
	Johnson & Johnson	21056-3279 = 17777