Item 8. Financial Statements and Supplementary Data. (a) Financial Statements The consolidated balance sheet of Merck & Co., Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2015, the notes to consolidated financial statements, and the report dated February 26, 2016 of PricewaterhouseCoopers LLP, independent registered public accounting firm, are as follows: Consolidated Statement of Income Merck & Co., Inc. and Subsidiaries Years Ended December 31 ($ in millions except per share amounts) 2015 2014 2013 Sales $ 39,498 $ 42,237 $ 44,033 Costs, Expenses and Other Materials and production 14,934 16,768 16,954 Marketing and administrative 10,313 11,606 11,911 Research and development 6,704 7,180 7,503 Restructuring costs 619 1,013 1,709 Other (income) expense, net 1,527 (11,613) 41 1 34,097 24.954 38.488 Income Before Taxes 5,401 17,283 5,545 Taxes on Income 942 5,349 1,028 Net Income 4,459 11,934 4,517 Less: Net Income Attributable to Noncontrolling Interests 17 14 113 Net Income Attributable to Merck & Co., Inc. $ 4,442 $ 11,920 $ 4,404 Basic Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders $ 1.58 $ 4.12 $ 1.49 Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders $ 1.56 $ 4.07 $ 1.47 Consolidated Statement of Comprehensive Income Merck & Co., Inc. and Subsidiaries Years Ended December 31 (S in millions)Consolidated Balance Sheet Merck & Co., Inc. and Subsidiaries December 31 (S in millions except per share amounts) 2015 2014 Assets Current Assets Cash and cash equivalents $ 8,524 $ 7,441 Short-term investments 4,903 8,278 Accounts receivable (net of allowance for doubtful accounts of $165 in 2015 and $153 in 2014) (excludes accounts receivable of $10 in 2015 and $80 in 2014 classified in Other assets - see Note 5) 6,484 6.626 Inventories (excludes inventories of $1,569 in 2015 and $1,664 in 2014 classified in Other assets - see Note 6) 4,700 5,571 Other current assets 5.153 4.689 Total current assets 29.764 32.605 Investments 13,039 13.515 Property, Plant and Equipment (at cost) Land 490 541 Buildings 12.154 13,101 Machinery, equipment and office furnishings 14,261 16,050 Construction in progress 1.525 1.448 28,430 $1,140 Less: accumulated depreciation 15.923 18.004 12,507 Goodwill 17,723 13.136 2.992 Other Intangibles, Net 22,602 20.386 Other Assets 5.144 5.533 $ 101.779 $ 98.167 Liabilities and Equity Current Liabilities Loans payable and current portion of long-term debt S 2,585 $ 2,704 Trade accounts payable 2.533 2.625 Accrued and other current liabilities 11,216 10.523 Income taxes payable 1.560 1.237 Dividends payable 1.309 1.308 Total current liabilities 19.203 18.397 Long-Term Debt 23.929 8.699 Deferred Income Taxes 6.535 Other Noncurrent Liabilities 7.345 1467 7.813 Merck & Co., Inc. Stockholders' Equity Common stock, $0.50 par value Authorized - 6,500,000,000 shares Issued - 3,577,103,522 shares in 2015 and 2014 1,788 1.788 Other paid-in capital 40.222 40,423 Retained earnings 45.348 46,021 Accumulated other comprehensive loss (4,148) (4.3231 83,210 83.909 Less treasury stock, at cost: 795.975 449 shares in 2015 and 738.963.326 shares in 2014 38.534 35.262 Total Merck & Co., Inc. stockholders' equity 44.676 48.647 Noncontrolling Interests 91 144 Total equity 44.767 48.791 $ 101.779 $ 98.167 The accompanying notes are an integral part of this consolidated financial statement.Consolidated Statement of Equity Merck & Co., Inc. and Subsidiaries Years Ended December 31 (S in millions except per share amounts) Accumulated Common Other Other Retained Non- Paid-In Comprehensive Treasury Stock Capital Earnings Loss Stock controlling Interests Total Balance January 1, 2013 $1,788 $40,646 $ 39,985 $ 4,682) $ (24,717) $ 2,443 $55.463 Net income attributable to Merck & Co., Inc. 4,40 1,404 Other comprehensive income, net of tax 2,485 2,485 Cash dividends declared on common stock ($1.73 per share) (5,132) (5,132) Treasury stock shares purchased (6,516) (6,516) Supera joint venture formation 116 112 228 Net income attributable to noncontrolling interests 113 113 Distributions attributable to noncontrolling interests (120) (120) Share-based compensation plans and other (254) .642 13 1.401 Balance December 31, 2013 ,788 40,508 39.257 (2,197) (29,591) 2,561 62.326 Net income attributable to Merck & Co., Inc. 11,920 11.920 Other comprehensive loss, net of tax (2,126) (2,126 Cash dividends declared on common stock ($1.77 per share) (5,156) (5,156) Treasury stock shares purchased - (7,703) (7,703) AstraZeneca option exercise - (2,400) (2,400) Net income attributable to noncontrolling interests 14 14 Distributions attributable to noncontrolling interests (77) (77) Share-based compensation plans and other (85) 2,032 46 1,993 Balance December 31, 201 ,788 40,423 46.021 4,323) 35,262 144 48,791 Net income attributable to Merck & Co., Inc. 4,442 4,442 Other comprehensive income, net of tax 175 175 Cash dividends declared on common stock ($1.81 per share) (5,115) 1 (5,115) Treasury stock shares purchased - (4,186) (4,186) Changes in noncontrolling ownership interests (20) (55) (75) Net income attributable to noncontrolling interests 17 17 Distributions attributable to noncontrolling interests (15) (15) Share-based compensation plans and other 181 914 733 Balance December 31, 2015 $ 1,788 $40,222 $ 45,348 $ (4,148) $ (38,534) $ 91 $44,767 The accompanying notes are an integral part of this consolidated financial statement.Consolidated Statements of Income Pfizer Inc. and Subsidiary Companies Year Ended December 31, (MILLIONS, EXCEPT PER COMMON SHARE DATA) 2015 2014 2013 Revenues 48,851 49,605 51,584 Costs and expenses: Cost of sales la) 9,648 9,577 9,586 Selling, informational and administrative expenses (at 14,809 14,097 14,355 Research and development expenses " 7,690 3,393 6,678 Amortization of intangible assets 3,728 4,039 4,599 Restructuring charges and certain acquisition-related costs 1,152 250 1,182 Other (income)/deductions-net 2,860 1,009 (532) Income from continuing operations before provision for taxes on income 8,965 2,240 15,716 Provision for taxes on income 1,990 3,120 4,306 Income from continuing operations 6,975 9,119 11,410 Discontinued operations: Income from discontinued operations-net of tax 17 (6) 308 Gain/(loss) on disposal of discontinued operations-net of tax (6) 55 10.354 Discontinued operations-net of tax 11 48 10,662 Net income before allocation to noncontrolling interests 6,986 9,168 22,072 Less: Net income attributable to noncontrolling interests 26 32 69 Net income attributable to Pfizer Inc. 6,960 3,135 $ 2,003 Earnings per common share-basic : Income from continuing operations attributable to Pfizer Inc. common shareholders 1.13 1.43 1.67 Discontinued operations-net of tax 0.0 1.56 Net income attributable to Pfizer Inc. common shareholders 1.13 $ 1.44 3.23 Earnings per common share-diluted Income from continuing operations attributable to Pfizer Inc. common shareholders 1.11 S 1.41 1.65 Discontinued operations-net of tax 0.01 1.54 Net income attributable to Pfizer Inc. common shareholders 1.11 1.42 3.19 Weighted-average shares-basic 6,176 6,346 6,813 Weighted-average shares-diluted 6,257 6.424 6.895 Cash dividends paid per common share 1.12 1.04 S 0.96 a Exclusive of amortization of intangible assets, except as disclosed in Note 1K. Basis of Presentation and Significant Accounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Asset Amounts may not add due to rounding.Consolidated Balance Sheets Pieor Inc. and Subsidiary Companies As of December 31, IM LIONS, EXCEPT PREFERRED STOCK BIRULED AND PER CORNON SHARE DATA 2015 2014 Cash and cash equivalents 3,641 3,343 Short-form investments 19,6-49 32,779 Trade accounts receivable, less allowance for doubtful accounts: 2015-8384; 2014-$412 8,176 8,401 Inventories 7,513 5,863 Current tax assets 2,682 2,568 Other current assets 2,843 Total current masets 43,804 65,905 Long-term investments 15,949 17,518 Property, plant and equipment, less accumulated depreciation 11,762 Identifiable intangible assets, less accumulated amorization 40,358 35, 168 Goodwill 48,242 42,060 Noncument deferred tax masets and other noncument tax assets 1,794 1,944 Other noncurrent aasets 3,499 3.513 Total assets 187/460 167,568 Liabilities and Equity Short-form borrowings, Including current portion of long-term debt: 2015-$3,720 2014-$3,011 10,160 5,141 Trade accounts payable 3,620 3,210 Dividends payable 1.852 1,711 Income taxes payable 418 Accrued compensation and related Dema 2.359 1,841 Other current liabilities 10.940 1,153 Total current liabilities 29,399 41,587 Long-term debt 23,618 31,541 Pension benefit obligations, inet 6,310 Postretirement benefit obligations, innet 1,809 2,379 Noncument deferred tax liabilities 26,877 23,317 Other taxes payable 4,992 4,353 Other noncurrent liabilities 5.257 4,823 Total liabilities 102,483 05,044 Commitments and Contingencies Preferred stock, no par value, at stated value, 27 shares authorized; issued: 2015-649; 2014-717 26 20 Common stock, $0.05 par value, 12 000 shares authorized issued: 2015-9,178; 2014-0,110 459 Additional paid in capital 81,016 78,077 Treasury stock, shame at cost 2015-3,003; 2014-2 819 (79,252) 73,021) Retained camings 71,943 72,176 Accumulated other comprehensive loss (9,522) 7.318) Total Pfizer Inc. shareholders' equity 64,720 71,301 Equity attributable to noncontrolling interests 278 321 Total equity 64,948 71,622 Total liabilities and equity 167,460 167 568 Amounts many not add due to roundingFinancial Review Pfizer inc. and Butnidiary Companies ANALYSIS OF THE CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, % Change MILLIONS OF DOLLARS 2015 2014 2012 15/14 14/13 48, 841 49 805 51 584 121 (4) Cost of sales 9 581 * of revenues 193% 18.84 Balling informational and administrative expenses 14,809 14 00 14 355 % of revenues 284% Ansearch and development amparmies 129% Amortization of intangible masets 3, 128 4.500 (12) % of revenues BOM Restructuring charges and carlain requisition-slated costs 1,142 250 1,182 %% of revenues 23% Other (income deductions-nat 2,860 1009 income from continuing operations before provision for taxes on 12 240 15,718 LETI 184% 247% Provision for tools on income 3 120 4.308 (25) 22.2% 25 5% Income from continuing operations 9.1 19 11,410 1241 * of revenues 14.3% 184% 2.14 Discontinued operations-not of Tax 11 48 10 682 Net income before allocation to nonconbiding interests 32 072 (58) * of revenues 14.3% 185% Lives: Net income winbulable to moncontrolling interests 26 (53) Not income alinbutable to Prior inc. 4135 242 003 (58) 14.2% 1849 42.7% Carmain amounts and poroilages may intactfounding adjustments. Calculation not meaningful. Total revenues with $48.9 blion in 2015, A decrease of 2% compared to 2014 , which reflects an operational increase of $3.0 bilion, or 8%, more than offset by the unfavorable impact of foreign exchange of $3 8 billion, or 814, in 2015 compared to 2014. The operational increase was primarily the result of: the performance of severed bay products in developed markets, including the continued shong upiakos of Promar 13 among adults (largely in the U.B.) lance (nearly all in the U.B.). Elquia, Lyntica GIP primarily in the U.B. and Japank, Xoljanz (primarily in the LB.), Viagra (GIP][primarily in the U.B.jzand Nexium 24HR (primarily in the US ) toollactively, up approximately $4.1 billionk indusion of legacy Hospira operations of $1.5 billion; a T's operational increase in revenues in smerging markets, reflecting continued strong operational growth, primarily from Provenar 13, Lipitor and Embroil jup approximately $810 million; and indusion of the vaccines acquired from Baxter of $175 million, partially offeet by the loss of modusivity and immediate multi-source ganeric competition for Celebrex in the U. B. in December 2014 and cartain other developed markets (down approximately $1.8 billionj, and the loss of exclusivity for Lyrica (OEP) in carlain developed Europe markets (down approximately $420 milion), for Zyvox in the U.B. (down approximately $420 million( for Rapamune in the U. B. (down approximately $120 million) and for certain other products joalleclively, down approximately $530 millionE the performance of carlain other products in developed markets and BansFD: in the U. B. jeollactively, down approximately $370 milliont and the lamination of the Spiriva co-promotion collaboration in curtain countries (down approximately $100 million)- Total revenues with $40 6 billion in 2014 , Adecrease of 4%% compared to 2013 , which reflects an operational decrease of $1.1 billion, or 2%, and the unfavorable impact of foreign exchange of approximately $912 million, or 2%, in 2014 compared to 2013 . The operational dac was primarily the incaull of the expiration of the co-promotion form of the collaboration agreement for Enbrel in the U.B. and Canada [approximately $1.4 billion];Question 1 Answer saved Marked out of 2.00 Flag question Accessing SEC reports and Calculating Ratios Access the 2015 financial reports at the SEC websites for Pfizer Inc. and Merck & Co., two close competitors in the pharmaceutical industry. Pfizer's financial reports are available here: Pfizer 2015 financial reports Merick's financial reports are available here: Merck 2015 financial reports a. Use data from the companies' balance sheets and income statements to complete the following table. $ millions Pfizer Merck Total assets $ 0 $ 0 Revenue O O Net income 0 0 b. Compute the ROA and the components for profit margin and asset turnover for each company. Round all answers to two decimal places. For example, asset turnover is rounded like this: 0.34567 = 0.35; all other percentage ratios are rounded like this: 0.12345 = 12.35%. To simplify computations, use year-end balance for total assets to compute ratios. Pfizer Merck Return on assets (ROA) 0 % 0 % Profit margin (PM) 0 % 0 % Asset turnover (AT) 0 0