Current profitability analysis

Example 5 Comparison of alternative investments by different profitability methods. A company has three alternative investments which are being considered. Because all three investments are for the same type of unit and yield the same service, only one of the investments can be accepted. The risk factors are the same for all three cases. Company policies, based on the current economic situation, dictate that a minimum annual return on the original investment of 15 percent after taxes must be predicted for any unnecessary investment with interest on investment not included as a cost. (This may be assumed to mean that other equally sound investments yielding a 15 percent return after taxes are available.) Company policies also dictate that, where applicable, straight-line depreciation is used and, for time-value of money interpretations, end-of-year cost and profit analysis is used. Land value and prestartup costs can be ignored. 

Design a 250,000 Ib/yr Lindane (99 per cent 7 isomer of benzene hexachloride) plant based on process information given in the current literature [e.g., see Chem. Eng. Progr., 52 281 (1956) Chem, Week, 78 54 (1956) Ind. Eng. CAem., 48(10) 41A (1956)], Develop the process flow. sheets, equipment specifications, and plant layout. Examine the economics of producing Lindane including (1) fixed and capital cost estimates by one or more of the methods outlined in Chap. 6, (2) profitability analysis showing return on investment and pay-out time, (3) break-even point analysis of the project, (4) economic estimates for a plant producing 500,000 Ib/yr and 750,000 Ib/yr. 

To conduct a pro forma analysis, it is necessary to construct two income statements using information from the current income statement and knowledge about the pharmacy and the third-party contract being evaluated. Information from the average net profit comparison and the differential analysis also will be needed. An example of a pro forma analysis for Good Service Pharmacy is presented in Table 16-6. The... 

In a balance sheet, total assets and total liabilities should be used as denominators to determine the percentage of specific assets, liabilities, and owner s equity, respectively. All financial statement users, including shareholders, will exhibit concern because this drop in gross profit may make the firm report a net loss on the current income statement. Table 9.9 illustrates a sample of vertical analysis for a balance sheet. 

The application area of LC-MS is rapidly growing. LC-MS is now regularly used for the analysis of many different types of compound drugs and metabolites, herbicides-pesticides and metabolites, surfactants, dyes, saccharides, lipids-phospholipids, steroids, and many others. In our opinion, the area that profits more from the development of LC-MS is bioanalysis natural products, proteins, peptides, nucleosides, and metabolic studies. Despite the current trends toward immunoassays-biospecific assays and capillary electrophoresis, LC-MS is an extremely powerful analytical technique that is considered complementary to the above mentioned, rather than competitive. 

Other problems also cloud Mueller s and Reardon s findings. The benefits of R D cannot be obtained without investments in plant and equipment that produce the products and, in the current market, without the advertising and promotion necessary to sell them. While R D may be a necessary condition for obtaining high returns, firms must invest in those seemingly less profitable activities as well. Analysis of the market returns on investment as a whole in the seven largest pharmaceutical companies in Mueller s and Reardon s study found only three of the companies with stock market returns greater than the cost of capital.37... 

The sensitivity analysis output on profit and RHS ranges is obteiined by varying only one of the parameters and holding all other parameters fixed at their current values. However, it is possible to use the sensitivity analysis output when several parameters are changed simultaneously. This is done with the help of the 100% rule. 

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