BCD Pharmaceuticals

Income Statement (in $ millions)

Item	Amount
Sales Revenue	12,000
Cost of Sales	8,000
Gross Profit	4,000
Operating Expenses	2,500
Operating Profit	1,500
Interest Expenses	200
Income Tax Expense	180
Net Income	1,120

Balance Sheet (in $ millions)

Assets

• Current Assets
  • Cash: 250
  • Accounts Receivable: 1,500
  • Inventory: 1,200
  • Total Current Assets: 2,950
• Long-Term Assets
  • Property, Plant & Equipment (net): 3,000
  • Other Assets: 2,500
  • Total Long-Term Assets: 5,500
• Total Assets: 8,450

Liabilities and Equity

• Current Liabilities
  • Trade Creditors: 1,000
  • Short-Term Bank Loans: 750
  • Total Current Liabilities: 1,750
• Long-Term Liabilities
  • Long-Term Debt: 3,500
  • Other Liabilities: 700
  • Total Long-Term Liabilities: 4,200
• Total Liabilities: 5,950
• Equity
  • Common Shares: 1,500
  • Retained Earnings: 1,000
  • Total Equity: 2,500
• Total Liabilities and Equity: 8,450

Required:

1. Calculate the operating profit margin and net profit margin for BCD Pharmaceuticals.
2. Determine the company's current ratio and quick ratio.
3. Assess the company’s financial leverage using the debt-to-equity ratio.
4. BCD Pharmaceuticals is planning to acquire a smaller competitor for $1,500 million. Discuss the potential financing options for this acquisition.
5. Recommend strategies to enhance the company’s profitability and return on equity.