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CHEM - MED COMPANY Income Statements 2 0 1 3 2 0 1 5 ( in 0 0 0 s ) Pro Forma Income Statements

CHEM-MED COMPANY
Income Statements
20132015(in 000s) Pro Forma Income Statements
201320142015201620172018
Net sales (all credit) $ 777 $3,051 $3,814 $5,340 $7,475 $10,466
Cost of goods sold 2579951,0401,7162,1543,054
Gross profit 5202,0562,7743,6245,3217,412
Selling, etc., expenses 6107059641,5202,1202,645
Other inc (exps)*00050000
Operating profit (90)1,3511,8102,6043,2014,767
Interest expense 117594202302434
Income before tax (101)1,2761,7162,4022,8994,333
Income taxes (40% in 1986; 33% thereafter)05105667939571,430
Net income ($ 101) $ 766 $1,150 $1,609 $1,943 $ 2,903
Dividends paid 000000
Increase in retained earnings ($101) $ 766 $1,150 $1,609 $1,943 $ 2,903
Average number of shares**2,3262,3262,3472,3472,3472,347
Earnings per share ($0.04) $0.33 $0.49 $0.69 $0.83 $ 1.24
* Other Inc (Exps) refers to extraordinary gains and losses. In 2016, $500,000 is expected from Pharmacia, Inc., in settlement of their suit.
** Shares are not publicly traded.CHEM-MED COMPANY
Balance Sheets
Pro Forma Balance Sheets
As of Dec. 31, years ended: As of Dec. 31, years ended:
2013
20142015201620172018
Assets:
Cash and equivalents $124 $103 $167 $ 205 $ 422 $ 101
Accounts receivable 1004095649071,4952,351
Inventories 1513029601,1021,443798
Other current 285929415711
Total current assets 4038731,7202,2553,4173,261
Property, plant, and equipment 1,9012,2982,9174,3015,5318,923
Less: accumulated depreciation 8182346413522588
Property, plant, and equipment, net 1,8202,2162,5713,8885,0098,335
Other fixed assets 0101200200215399
Total assets $2,223 $3,190 $4,491 $6,343 $8,641 $11,995
Liabilities:
Accounts payable 210 $405 $ 551 $ 771 $1,080 $ 1,512
Short-term debt 3539425982135
Total current liabilities 2454445938301,1621,647
Long-term debt 171921275017
Total liabilities 2624636148571,2121,664
Equity:
Common stock 2,0622,0622,0622,0622,0622,062
Retained earnings (101)6651,8153,4245,3668,269
Total equity 1,9612,7273,8775,4867,42810,331
Total liabilities and equity $2,223 $3,190 $4,491 $ 6,343 $8,641 $11,995
Dr. Swan had lunch with his banker just recently, and the banker mentioned several restrictive covenants that the company would have to meet if it came to the bank for financing. Dr. Swan pulled a sheet of paper from his desk drawer and glanced at it. There were three covenants listed:
The current ratio must be maintained above 2.25 to 1.
The debt-to-assets ratio must be less than .3 to 1.
Dividends cannot be paid unless earnings are positive.
Dr. Swan didnt think he would have any trouble with those, but he wasnt sure. Then he suddenly remembered he was supposed to meet a representative from one of the local supermarket chains (who supplied Chem-Med with rooster combs) in five minutes. He hurriedly put his papers away and wished he had more time toBiotechnology Industry Statistics
Median Company in SIC 2831
Biological Products*
201320142015
Current ratio 2.52.32.4
Quick ratio 1.21.11.3
Inventory turnover 5.55.65.7
Total asset turnover 1.151.161.18
Return on sales 4.00%4.00%5.00%
Return on assets 4.60%4.64$ 5

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