Selected financial data of two intense competitors in a recent year are presented here (in millions)

ABC LTD

XYZ LTD

STATEMENT OF PROFIT OR LOSS DATA

Net sales

ABC $40000

XYZ $82000

Cost of sales

ABC (32000)

XYZ (65000)

Selling and administrative expenses

ABC (7200)

XYZ (13000)

Finance expense

ABC -600

XYZ (1000)

Gain on sale of equipment

800

200

Income tax expense

(300)

(1200)

Profit

$700

$2000

STATEMENT OF FINANCIAL POSITION DATA (END-OF-YEAR)

Current assets

$11000

$11000

Property, plant and equipment (net)

9000

17481

Total assets

$20000

$28481

Current liabilities

$5500

$9000

Non-current liabilities

8200

11000

Total equity

6300

8481

Total liabilities and equity

$20000

$28481

BEGINNING-OF-YEAR BALANCES

Total assets

$17504

$26441

Current liabilities

5698

9981

Total equity

6093

10753

OTHER DATA

Average net receivables

$5500

$2200

Average inventory

5000

8000

Net cash provided by operating activities

1000

2500

Required:

a.For each entity, calculate the following: (6 marks)

1. Current ratio.
2. Receivables turnover.
3. Average collection period.
4. Profit margin.
5. Return on assets.
6. Debt to total assets ratio.

(Hint:Use beginning of year information provided to calculate beginning of year balance for total liabilities.)

b.Use the ratios that you calculated in (a) to compare the two entities. What is you finding from the comparison (8 marks)