$10$

points

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Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry $($$ in millions, except per share amounts$).$

Balance Sheets

Metropolitan Republic

Assets

Cash $ $179\mathrm{.}3$ $ $37\mathrm{.}1$

Accounts receivable $($net$)422\mathrm{.}7325\mathrm{.}0$

Short$-$term investments $4\mathrm{.}7$

Inventory $466\mathrm{.}4635\mathrm{.}2$

Prepaid expenses and other current assets $134\mathrm{.}6476\mathrm{.}7$

Current assets $1,203\mathrm{.}01,478\mathrm{.}7$

Property, plant, and equipment $($net$)2,608\mathrm{.}22,064\mathrm{.}6$

Intangibles and other assets $210\mathrm{.}3464\mathrm{.}7$

Total assets $ $4,021\mathrm{.}5$ $ $4,008\mathrm{.}0$

Liabilities and Shareholders$$ Equity

Accounts payable $ $467\mathrm{.}9$ $ $691\mathrm{.}2$

Short$-$term notes $227\mathrm{.}1557\mathrm{.}4$

Accruals and other current liabilities $585\mathrm{.}2538\mathrm{.}5$

Current liabilities $1,280\mathrm{.}21,787\mathrm{.}1$

Long$-$term debt $535\mathrm{.}6542\mathrm{.}3$

Deferred tax liability $384\mathrm{.}6610\mathrm{.}7$

Other long$-$term liabilities $104\mathrm{.}095\mathrm{.}1$

Total liabilities $2,304\mathrm{.}43,035\mathrm{.}2$

Common stock $($par and additional paid$-$in capital$)144\mathrm{.}9335\mathrm{.}0$

Retained earnings $2,476\mathrm{.}91,601\mathrm{.}9$

Less: Treasury stock $(904\mathrm{.}7)(964\mathrm{.}1)$

Total liabilities and shareholders$$ equity $ $4,021\mathrm{.}5$ $ $4,008\mathrm{.}0$

Income Statements

Net sales $ $5,698\mathrm{.}0$ $ $7,768\mathrm{.}2$

Cost of goods sold $(2,909\mathrm{.}0)(4,481\mathrm{.}7)$

Gross profit $2,789\mathrm{.}03,286\mathrm{.}5$

Operating expenses $(1,743\mathrm{.}7)(2,539\mathrm{.}2)$

Interest expense $(56\mathrm{.}8)(46\mathrm{.}6)$

Income before taxes $988\mathrm{.}5700\mathrm{.}7$

Income tax expense $(394\mathrm{.}7)(276\mathrm{.}1)$

Net income $ $593\mathrm{.}8$ $ $424\mathrm{.}6$

Net income per share $ $2\mathrm{.}40$ $ $6\mathrm{.}50$

Evaluate and compare the two companies by responding to the following questions.

Note: Because comparative statements are not provided, you should use year$-$end balances in place of average balances as appropriate.

Required:

For both companies, compute the ratios below.

Evaluate and compare the two companies.