Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industryJohnson and Johnson (J&J) and Pfizer, Inc. ($ in millions, except per share amounts).

Balance Sheets ($ in millions, except per share data)
	J&J				Pfizer
Assets:
Cash	$	8,877			$	4,597
Short-term investments		4,791				11,047
Accounts receivable (net)		7,299				9,500
Inventories		4,248				6,977
Other current assets		4,085				3,950
Current assets		29,300				36,071
Property, plant, and equipment (net)		11,626				20,067
Intangibles and other assets		16,702				70,027
Total assets	$	57,628			$	126,165
Liabilities and Shareholders' Equity:
Accounts payable	$	5,641			$	3,276
Short-term notes		2,294				9,973
Other current liabilities		7,968				12,863
Current liabilities		15,903				26,112
Long-term debt		3,580				6,380
Other long-term liabilities		5,606				22,601
Total liabilities		25,089				55,093
Capital stock (par and additional paid-in capital)		3,870				67,800
Retained earnings		36,128				34,907
Accumulated other comprehensive income (loss)		(690	)			220
Less: Treasury stock and other equity adjustments		(6,769	)			(31,855	)
Total shareholders' equity		32,539				71,072
Total liabilities and shareholders' equity	$	57,628			$	126,165
Income Statements
Net sales	$	44,537			$	47,863
Cost of goods sold		12,806				10,462
Gross profit		31,731				37,401
Operating expenses		20,373				29,096
Other (income) expensenet		(460	)			3,685
Income before taxes		11,818				4,620
Tax expense		3,545				1,386
Net income	$	8,273			$	3,234	*
Basic net income per share	$	2.67			$	0.47

* This 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. 2. Evaluate and compare the two companies.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 For both companies, compute the ratios below. J&J Pfizer times times days times days times days days Receivables Turnover (#.##) Average Collection Period (#) Inventory Turnover (#.##) Average Days in Inventory (#) Profit Margin (#.##)% Asset Turnover (#.###) Return on Assets (#.#)% Equity Multiplier (#.##) Return on Shareholders' Equity (#.#)% % % times times Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Evaluate and compare the two companies. Analysis Which of the two companies appears more efficient in collecting its accounts receivable and managing its inventory? Which of the two firms had greater earnings relative to resources available? Have the two companies achieved their respective rates of return on assets with similar combinations of profit margin and turnover? From the perspective of a common shareholder, which of the two firms provided a greater rate of return? From the perspective of a common shareholder, which of the two firms appears to be using leverage more effectively to provide a return to shareholders above the rate of return on assets?