Estimate pharmas sustainable sales growth rate

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Pharma Biotech is interested in developing an initial "big picture" of the size of financing that might be needed to support its rapid growth objectives for 2011 and 2012.

A. Calculate the following financial ratios (as covered in Chapter 5| for Pharma Biotech for 2010: (a) net profit margin, (b) sales-to-total-assets ratio. |c) equity multiplier, and (d) total-debt-to-total-assets. Apply the return on assets and return on equity models. Discuss your observations.

B. Estimate Pharma's sustainable sales growth rate based on its 2010 financial statements. What financial policy change might Pharma Biotech make to improve its sustainable growth rate? Show your calculations.

C. Estimate the additional funds needed (AFN) for 2011, using the formula or equation method presented in the chapter D. Also, estimate the AFN using the equation method for Pharma Biotech for 2012. What will be the cumulative AFN for the two-year period?

Reference no: EM132055844

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