Question

QUESTION 6 Partially correct Mark 7.50 out of 10.00 Flag question Edit question Comparing Profitability Ratios for Competitors Selected income statement data for Abbott Laboratories, Bristol-Myers Squibb Company, Johnson & Johnson, GlaxoSmithKline plc, and Pfizer, Inc. is presented in the following table Bristol- Johnson Glaxo Abbott Myers (S millions) Laboratories Squibb Johnson Kline plc Pfizer Smith Sales revenue 20,247 $11,660 $74,331 $35,872 $49,605 Cost of sales 9,218 3.932 22,74611,418 9.577 SG&A expense 6,530 4,822 21.954 3,466 14,097 R&D expense 1.345 4534 8494 5.379 8,39 Interest expense 150203 533 1,134 1,360 2.284 2029 16,323 4,297 9.168 Net income Required a. Compute the profit margin (PM) and gross profit margin (GPM) ratios for each company. (As a Britis company, GlaxoSmithKline plc has a statutory tax rate of 26.5% in 2014; assume a statutory rate of 35 for all other companies.) (Round your answers to one decimal place.) Bristol- Johnson Glaxo Abbott Myers Smith Kline plc Laboratories Squibb Johnson Pfizer PM 7.3 x % 11.3 X % 14.3 % 8.8 X % 12 % GPM 54.5 % 66.3 % 69.4 % 68.2 % b. Compute the research and development (R&D) expense to sales ratio and the selling, general and administrative (SG&A) expense to sales ratio for each company (Round your answers to one decimal place.) Bristol- Glaxo Johnson Smith Abbott Myers Laboratories Squibb Johnson Kline plc Pfizer R&D ETS 6.6 % 38.9 % % 15 % 16.9 % 11.4 SG&A ETS 32.3 % % 29.5 % 37.5 % 28.4 % 41.4

Answer 1

Answer:

Profit Margin = Net Income / Sales

Abbott Laboratories = 2284 / 20247 = 11.28%

Brystol Myers Squib = 2029 / 11660 = 17.40%

Johnson & Johnson = 16323 / 74331 = 21.96%

Glaxo SmithKline plc = 4297 / 35872 = 11.98%

Pfizer = 9168 / 49605 = 18.48%