Super Drugs (one of the three largest drug makers) just reported that its 2012 third-quarter profits had

Question:

Super Drugs (one of the three largest drug makers) just reported that its 2012 third-quarter profits had increased substantially over its 2011 third-quarter profits. In addition to this announcement, the same day, Super Drugs also announced that the Food and Drug Administration had just denied approval of a new drug used to treat high blood pressure that Super Drugs developed.
The FDA was concerned about potential side effects of the drug.

Required
Using the above information, answer the following questions.
a. What do you think will happen to the stock price of Super Drugs on the day these two announcements are made? Explain your answer.
b. How will the be affected on that day by the above announcements?
c. How will the income statement be affected on that day by the above announcements?
d. How will the statement of cash flows be affected on that day by the above announcements?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...