4-53 Pharmaceutical Company Financial Statements

Merck & Co., Incorporated, is a global health-care company that offers prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The annual report for the year ended December 31, 2011, included the data (slightly modified) shown next ($ in millions). Unless otherwise specified, the balance sheet amounts are the balances as of December 31, 2011.

1. Prepare a combined multiple-step statement of income.

2. Prepare a classified balance sheet. Include the correct number for retained earnings.

3. The average common stockholders equity for the year was $56,874 million. What was the percentage of net income to average common stockholders equity?

4. The average total assets for the year were $105,454.5 million. What was the percentage of net income to average total assets?

5. Compute (a) gross profit percentage, and (b) percentage of net income to sales.

$48,047 $15,525 Sales Long-term debt Cash and cash equivalents Cash dividends declared 4,818 13,531 Inventories 9,731 6,254 Accrued liabilities Paid-in capital 17,953 Short-term investments 1,441 Other current assets 3,694 Taxes on income 942 Retained earnings Property and equipment, net 16,297 December 31, 2010 37,536 Other noncurrent assets 52,192 December 31, 2011 ? Marketing and administrative expense 13,733 Trade accounts payable Research and development expense 2,462 8,467 Other expenses, net 816 Other noncurrent liabilities 16,415 Income taxes payable Cost of sales 16,871 781 3,271 Other current liabilities Accounts receivable 8,261 Long-term investments 3,458 Interest expense, net 946