Capital Structure (20 points)

Suppose you were the Chief Financial Officer of WPCI Drugs and Products.By 2015, WPCI had become a major player in prescription drugs with sizable market share in quite a few of them, and several "blockbuster" drugs.WPCI also had numerous brand name home products such as Clean detergent and Chef Girlardee canned food.

The three pillars of WPCI's strategy were conservatism, marketing and cost control.WPCI consistently avoided much of the risk of product development and introduction in the volatile drug industry. Most of its new products were acquired or licensed after their development by other firms. Others were copies and clever extensions of products introduced by competitors.WPCI's success was built on its expertise in marketing, which eroded its competitors' headstart, and on cost control, which ensured substantial margins.The results were impressive.Selected financial data for WPCI (in $ millions):