Pfizer is one of the largest pharmaceutical and consumer healthcare products companies in the world. Familiar products sold by Pfizer include Sudafed®, Zantac®, Benadryl®, Listerine®, and Viagra®. The company€™s highest selling product is Lipitor, which is designed to help reduce high cholesterol. Pfizer€™s income statement for 2006 follows.

The following information came from Pfizer€™s statement of stockholders€™ equity and Note 8 dealing with other comprehensive income:

In addition, in the notes to its financial statements, Pfizer reports that advertising expenses in 2004, 2005, and 2006 were approximately $2.7 billion, $2.7 billion, and $2.6 billion, respectively. Advertising expense is reported as part of selling, informational, and administrative expenses.
1. Compute the following for each of the years 2004€“2006:
(a) Net income/Revenues
(b) Cost of sales/Revenues
(c) Research and development expenses/Revenues
(d) Advertising expense/Revenues
2. Comment on the ratios you computed in part (1). Make particular mention of any trends.
3. Compute Pfizer€™s effective tax rate (on continuing operations) for each year.
4. For 2006, estimate the average number of basic and diluted shares outstanding.
5. Compute comprehensive income for each of the years2004€“2006.

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Pfizer Inc. and Subsidiary Companies CONSOLIDATED STATEMENT OF INCOME (millions, except per common share data) Revenues Costs and expenses: Year Ended December 31 2006 $48,37 $47,405 48,988 2005 2004 7.232 15,313 7,256 3,399 Cost of sales 7,640 15,589 7,599 3,261 835 1,323 (904) 6,39 15,304 Selling, Informational and administrative expenses Research and development expenses Amortization of Intangible assets 3,352 Acquistion-related In-process research and development charges .. 1,356 397 Restructuring charges and acquisition-related costs Other (income)/deductions-net Income from continuing operations before provision for taxes on Income, minorty Interests and cumulative effect of a change In accounting principles 13,028 1,992 0,800 3,178 13,403 2.460 Provision for taxes on Income Minority Interests Income from continuing operations before cumulative effect 11,024 of a change in accounting principles Discontinued operations: 0.936 Income from discontinued operations--net of tax 433 7,880 374 Galns on sales of discontinued operations-net of tax Discontinued operati Income before cumulative effect of a change in accounting principles cumulative effect of a change in accounting principles-et of tax . … Net Income EARNINGS PER COMMON SHARE BASIC: Income from continuing operations before cumulative effect 498 8,108 ons-net of tax 11.361 (23)- 19,337 $19,3378,085 $11,36 of a change In accounting principles Discontinued operations Income before cumulative effect of a change in accounting principles Cumulative effect of a change In accounting principles Net Income EARNINGS PER COMMON SHARE-DILUTED: Income from continuing operations before cumulative effect $1.52 0345 0.07 2.67 $ 2.67 .10 151 of a change in accounting p $1.5 02 43 2 0.07 Income before cumulative effect of a change in accounting principles Cumulative effect of a change In accounting principles Net Income $ 2.66 1.09 $1.49 7.2765,969 $5,25 Dividends Currency translation adjustment and other Net unrealized gain/(loss) on derlvative financial Instruments Net unrealized gain/(loss) on avallable-for-sale securitles Minimum pension labilty 4 (481) 2.014 (106) (53) 13 (83 28 (6) (29) (6) .....8