27 27 PRACTICE PROBLEMS 14 Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industry-Benatar and Jett, Inc. ($ in millions, except per share amounts). Balance Sheets ($ in millions, except per share data) Assets: Benatar Jett Cash Short-term investments $18,143 $12.398 Accounts receivable (net) 6,390 12,646 9,184 11,385 Inventory 6,016 10,135 Other current assets 6,100 5,965 Current assets 45,833 52,529 Property, plant, and equipment (net): 16,254 24,695 Intangibles and other assets 20,030 73,355 Total assets $82,117 $150,579 Liabilities and Shareholders' Equity: Accounts payable Short-term notes $ 7,396 $ 5,031 5,297 12,976 Other current liabilities 9,593 14.488 Current liabilities 22,286 32,495 Long-term debt 5,205 8,005 Other long-term liabilities 7.205 24,200 Total liabilities 34,696 64,700 Common stock (par and additional paid-in capital). Retained earnings 5,820 69,750 50,893 49,272 Accumulated other comprehensive income (loss) (950) 285 Less: Treasury stock and other equity adjustments (8,342) (33,428) Total shareholders' equity 47,421 85,879 Total liabilities and shareholders' equity $82,117 $150,579 Income Statements Net sales $51,492 $ 54,818 Cost of goods sold 14,444 12,100 Gross profit 37,048 42,718 Operating expenses Other (income) expense-net Income before taxes ncome tax expense Het income asic net income per share 21,959 30,682 (655) 3,880 15,744 8,156 4,723 2,447 $11,021 $ 5,709* $ 3.32 $ 0.48 is before income from discontinued operations. PRACTICE PROBLEMS 14 Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industry-Benatar and Jett, Inc. ($ in millions, except per share amounts). Balance Sheets ($ in millions, except per share data) 27 Assets: Benatar Jett Cash Short-term investments $18.143 $12,398 Accounts receivable (net) 6,390 12,646 Inventory 9,184 11.385 Other current assets 6,016 10,135 Current assets 6,100 5,965 Intangibles and other assets Property, plant, and equipment (net) 45,833 52,529 16,254 24,695 20,030 73,355 Total assets $82,117 $150,579 Accounts payable Short-term notes Liabilities and Shareholders' Equity: $ 7,396 $ 5,031 5,297 12,976 Other current liabilities 9,593 14,488 Current liabilities 22,286 32,495 Long-term debt 5,205 8,005 Other long-term liabilities 7.205 24,200 Total liabilities 34,696 64,700 Common stock (par and additional paid-in capital) Retained earnings 5,820 69,750 50,893 49,272 Accumulated other comprehensive income (loss) Less: Treasury stock and other equity adjustments Total shareholders' equity (950) 285 (8,342) (33,428) 47,421 85,879 Total liabilities and shareholders' equity $82,117 $150,579 Net sales Cost of goods sold Gross profit Operating expenses. Other (income) expense-net Income before taxes Income tax expense Net income Basic net income per share Income Statements $51,492 $ 54,818 14,444 12,100 37,048 42,718 21,959 30,682 (655) 3,880 15,744 8,156 4,723 2,447 $11,021 $ 3.32 $ 0.48 $ 5,709 his is before income from discontinued operations. Evaluate and compare the two companies by responding to the following questions. Note: Because two-year comparative statements are not provided, you should use year-end balances in place of average balances as appropriate. Required: 1. For both companies, compute the ratios below. Benatar Receivables Turnover Average Collection Period Inventory Turnover Average Days in Inventory Profit Margin Asset Turnover Return on Assets Equity Multiplier Return on Equity Jett times days times. days % times % %