Sultan Pharmaceuticals Corporation The pharmaceutical industry has flourished in the recent past. While many other industries faced financial difficulties in the 2019-2020 pandemic period, most pharmaceutical companies have never breached their footsteps. The sales volume of the majority of these companies continued to grow steadily. However, despite these overall positive results in the industry, Riham, Chairman of Sultan Pharmaceuticals Corporation, was not happy with the financial picture of Sultan Pharmaceuticals Corporation. Although Riham is relieved to see a recovery from the sales downturn her company faced in 2019, she remains extremely concerned about the profitability generated by these sales. The company has maintained a profitable position, but one of the key questions about Riham relates to the sufficiency of the profits. On several occasions, it has faced its vice president, Amr, with such concern. However, so far Riham does not consider that her questions have been satisfactorily resolved. In response to her inquiries, Amr indicated that the company's operating profits have increased by an "astonishing 141%" over the past four years. Based on this fact, Amr is convinced that the company's financial position has improved impressively. As additional supporting statements to his conviction in the overall prosperity of the company, Amr points to the fact that Sultan's production cost has consistently been less than half of the dollar sales of its products. Although Amr concluded that the company is doing well, Riham still desires more specific financial information regarding the strengths and weaknesses of Sultan Pharmaceuticals. In this regard, she obtained the financial statements of the main competitor of Sultan Pharmaceutical Industries, Imhetep Pharmaceuticals Corporation. Riham for some time let go of competitive pressure from this firm. Hence, she believes that an analysis of an in-depth comparison between the two entities would explain whether her dissatisfaction was justified or not. Although Reham did not have the opportunity to conduct a full investigation, she calculated the return on assets for Imhetep Pharmaceuticals Corporation and found it to be well above the equivalent figure for Sultan. Furthermore, she has noticed her firm's earnings per share to be less than the same computation for Imhetep Pharmaceuticals Corporation in 1976. On the other hand, she did take some comfort in discovering Sultan's return-on-common to be somewhat closer to Imhetep Pharmaceuticals Corporation than the return-on-assets. Also, Riham made a point to compute her competitor's growth in operating income during the most recent four-year period, which proved to be less than the comparable growth rate for Sultan. Since she had not performed a thorough examination, she could not definitely explain the reasons for the more narrow margin between the two firm's return on common and Sultan's larger growth rate in operating income; however, he thought it to be the result of recent investment decisions and Sultan's dividend policy. In a recent meeting with the firm's financial officer, Riham enumerated his concerns as being: 1. Is the business maintaining an adequate liquidity position? 2. Is the management of Sultan Corporation generating sufficient return on the firm's assets? 3. Does the financial mix appear to be appropriate? 4. Is a plentiful return on equity being provided to attract future common stockholders? In this particular matter, Riham is especially interested in knowing the key variables having an impact upon the return on equity. Sultan Pharmaceuticals Corporation The pharmaceutical industry has flourished in the recent past. While many other industries faced financial difficulties in the 2019-2020 pandemic period, most pharmaceutical companies have never breached their footsteps. The sales volume of the majority of these companies continued to grow steadily. However, despite these overall positive results in the industry, Riham, Chairman of Sultan Pharmaceuticals Corporation, was not happy with the financial picture of Sultan Pharmaceuticals Corporation. Although Riham is relieved to see a recovery from the sales downturn her company faced in 2019, she remains extremely concerned about the profitability generated by these sales. The company has maintained a profitable position, but one of the key questions about Riham relates to the sufficiency of the profits. On several occasions, it has faced its vice president, Amr, with such concern. However, so far Riham does not consider that her questions have been satisfactorily resolved. In response to her inquiries, Amr indicated that the company's operating profits have increased by an "astonishing 141%" over the past four years. Based on this fact, Amr is convinced that the company's financial position has improved impressively. As additional supporting statements to his conviction in the overall prosperity of the company, Amr points to the fact that Sultan's production cost has consistently been less than half of the dollar sales of its products. Although Amr concluded that the company is doing well, Riham still desires more specific financial information regarding the strengths and weaknesses of Sultan Pharmaceuticals. In this regard, she obtained the financial statements of the main competitor of Sultan Pharmaceutical Industries, Imhetep Pharmaceuticals Corporation. Riham for some time let go of competitive pressure from this firm. Hence, she believes that an analysis of an in-depth comparison between the two entities would explain whether her dissatisfaction was justified or not. Although Reham did not have the opportunity to conduct a full investigation, she calculated the return on assets for Imhetep Pharmaceuticals Corporation and found it to be well above the equivalent figure for Sultan. Furthermore, she has noticed her firm's earnings per share to be less than the same computation for Imhetep Pharmaceuticals Corporation in 1976. On the other hand, she did take some comfort in discovering Sultan's return-on-common to be somewhat closer to Imhetep Pharmaceuticals Corporation than the return-on-assets. Also, Riham made a point to compute her competitor's growth in operating income during the most recent four-year period, which proved to be less than the comparable growth rate for Sultan. Since she had not performed a thorough examination, she could not definitely explain the reasons for the more narrow margin between the two firm's return on common and Sultan's larger growth rate in operating income; however, he thought it to be the result of recent investment decisions and Sultan's dividend policy. In a recent meeting with the firm's financial officer, Riham enumerated his concerns as being: 1. Is the business maintaining an adequate liquidity position? 2. Is the management of Sultan Corporation generating sufficient return on the firm's assets? 3. Does the financial mix appear to be appropriate? 4. Is a plentiful return on equity being provided to attract future common stockholders? In this particular matter, Riham is especially interested in knowing the key variables having an impact upon the return on equity