Balance Sheets Metropolitan Republic 8.2 588.0 1. From the perspective of a common shareholder, which of the two firms provided a greater rate of return? 2. Which company has made the most effective use of financial leverage? 3. Of the two companies, which appears riskier in terms of its ability to pay short- term obligations? 4. Which of the two companies manages their current assets more efficiently? 5. From the perspective of a creditor, which company offers the most comfortable margin of safety in terms of its ability to pay fixed interest charges? Assets Cash Accounts receivable (net) Short-term investments Inventories Prepaid expenses and other current assets Current assets Property, plant, and equipment (net) Intangibles and other assets Total assets Liabilities and Shareholders' Equity Accounts payable Short-term notes Accruals and other current liabilities Current liabilities Long-term debt Deferred tax liability Other long-term liabilities Total liabilities Common stock (par and additional paid-in capital) Retained earnings Less: Treasury stock Total liabilities and shareholders' equity Net sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Tax expense Income Statements $ 274.3 S 43.0 507.7 407.0 555.4 711.2 207.6 571.7 $ 1,545.0 $1,741.1 2,612.6 2,698.2 288.3 $ 4,531.5 $ 4,941.8 $ 564.9 $ 778.2 304.1 678.2 635.4 616.5 $ 1,547.2 $ 2,030.1 639.6 840.3 466.6 698.7 207.0 187.1 $ 2,860.4 $ 3,556.2 223.9 2,560.9 (1.113.7) 433.0 1,892.9 (740.3) $ 4,531.5 $ 4,941.8 $ 5,787.0 $ 7,850.2 (2,825.0) (4,395.7) $ 2,962.0 $ 3,454.5 (1,653.7) (2,738.2) (81.8) (48.6) $ 1,226.5 $ 667.7 (299.7) (99.1) $ 926.8 S 568.6 $ 1.5 S 7.6 Net income Net income per share Return on Assets 20% 12% Net Income/Total Assets Profit Margin 16% 7% Net Income/Net Sales Assets Turnover 1.27 Times 1.59 Times Net Sales/Total Assets Return on Shareholders Equity 55% 41% Equity Multiplier 271% 357% Net Income/Shareholders Equity Total Assets/Total Shatholder Equity Acid Test Ratio 0.51 0.23 Liquid Assets/Current Liabilities Current Ratio 0.99 0.86 Receivable Ratio 11.40 Times Inventory Ratio 10.42 Times Times Interest Earned Current Assets/Current Liabilitites. 19.29 Times Net Sales/Account Receivable 11.03 Times Net Sales/Inventory 15.99 Times 14.74 Times EBITDA/Interest Expenses