1. Examine the Pfizer's balance sheets and statements of cash flow. What is the demand for credit at each company? Did the company obtain new debt or repay old debt? Look at the investing section to determine what the companies did with any additional debt they raised. This will provide a big picture of the financing activities for the year.

2. Consider the source of debtwho supplies the credit? Read the debt footnote and the lease footnote (if the company uses leases). Does it use short or longterm debt? Is the debt from banks or is it publicly traded? Does the debt carry covenants that provide protection to creditors? Pay special attention to any mention of default or renegotiated covenants as this can indicate a decrease in creditworthiness.

3. Extend the analysis by computing the following ratios for the current and prior years for Pfizer. (Assume a marginal tax rate of 21%.) Return on equity (ROE) Return on assets (ROA) Return on net operating assets (RNOA) Times interest earned