As the baby boomers age, the demand for pharmaceuticals has increased. Over the past several years Pfizer Inc. helped introduce three record-breaking products: Lipitor, Viagra. and Celebrex. As a result, in 1999 Pfizer became the world's number one pharmaceutical company in prescription sales. 1. Go to http://www.Pfizer.com. Click on Investing in Pfizer and select the most recent annual report. Use the pull-down menu to select Our Global Presence. In how many coun- tries does Pfizer sell its products? 2. Use the pull-down menu to select the Consolidated Balance Sheet.

a. To account for the uncollectible receivables, does Pfizer use the allowance method or the direct write-off method? How can you tell?

b. For the most recent year, how much do customers owe Pfizer? How much does Pfizer expect to collect? How much does Pfizer expect not to collect? 3. Use the pull-down menu to select the Consolidated Statement of Income

a. Which expense listed includes the amount for uncollectible-account expense? How do you think Pfizer estimates its uncollectible-account expense? Do you think Plizer wrote off any uncollectible accounts this past year?

b. For the most recent year. research and development (R&D) expenses are what per- centage of total revenues? R&D costs are a major expense for pharmaceutical compa- nies. Explain why this is true. 4. For the two most recent years calculate the acid-test ratio. Show your work for the ratio calculations. For the most recent year comment on what the ratio indicates. Is the trend increasing or decreasing? Favorable or unfavorable? Explain why. 5. For the two most recent years calculate one day's sales using the amount reported for net sales in the numerator. For the two most recent years calculate days' sales in receivables. Please show your work for the ratio calculations. For the most recent year comment on what the days sales in receivables ratio indicates. Is the trend increasing or decreasing? Favorable or unfavorable? Explain why.