19.96 % 8.98 O % Return on Assets 15.45 5.51 Profit Margin 1.29 times 1.63 times Asset Turnover 4.19 X % 1.03 X % Return on Equity 20.98 X 11.49 Equity Multiplier 0.50 0.22 Acid-Test Ratio 1.78 0.85 Current Ratio Receivables Turnover 11.64 times 20.03 X times 5.23 times 6.27 times Inventory Turnover Times Interest Earned 13.96 X times 10.90 X times
19.96 % 8.98 O % Return on Assets 15.45 5.51 Profit Margin 1.29 times 1.63 times Asset Turnover 4.19 X % 1.03 X % Return on Equity 20.98 X 11.49 Equity Multiplier 0.50 0.22 Acid-Test Ratio 1.78 0.85 Current Ratio Receivables Turnover 11.64 times 20.03 X times 5.23 times 6.27 times Inventory Turnover Times Interest Earned 13.96 X times 10.90 X times
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter8: Investing Activities
Section: Chapter Questions
Problem 1.3AIC: Estimate the average total estimated useful life of depreciable property, plant, and equipment....
Related questions
Question
![Balance Sheets
Metropolitan
Republic
Assets
Cash
Accounts receivable (net)
Short-term investments
Inventory
Prepaid expenses and other current assets
Current assets
263.3
42.4
495.7
394.0
7.8
703.2
558.7
542.4
196.6
Property, plant, and equipment (net)
Intangibles and other assets
$ 1,498.0
2,686.2
283.3
$ 1,706.2
2,529.3
569.3
$ 4,467.5
$ 4,804.7
Total assets
Liabilities and Shareholders' Equity
Accounts payable
551.9
294.1
661.2
765.2
623.4
Short-term notes
608.5
Accruals and other current liabilities
$ 1,997.1
$ 1,507.2
623.6
Current liabilities
623.3
Long-term debt
Deferred tax liability
Other long-term liabilities
452.6
684.7
193.0
178.1
Total liabilities
$ 2,776.4
$3,483.2
418.0
Common stock (par and additional paid-in capital)
Retained earnings
Less: Treasury stock
212.9
2,546.9
(1,068.7)
$ 4,467.5
1,680.9
(777.4)
$ 4,804.7
Total liabilities and shareholders' equity
Income Statements
$ 5,772.0
(2,837.0)
$ 2,935.0
(1,662.7)
(68.8)
$ 1,203.5
(311.7)
891.8
$ 7,839.2
(4,408.7)
$ 3,430.5
(2,755.2)
(43.6)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Interest expense
Income before taxes
631.7
Income tax expense
(200.1)
Net income
24
431.6
Net income per share
$4
2.2
7.2
Evaluate and compare the two companies by responding to the following questions.
Note: Because comparative statements are not provided you should use year-end balances in place of
appropriate.
Required:
1. For both companies, compute the ratios below.
2. Evaluate and compare the two companies.
Republic
Metropolitan
19.96
8.98 %
Return on Assets
15.45 %
5.51 %
Profit Margin
1.29
times
1.63 times
Asset Turnover
4.19 X %
1.03 %
Return on Equity
20.98
11.49
Equity Multiplier
0.50 M
0.22
Acid-Test Ratio
1.78 X
0.85
Current Ratio
11.64 times
20.03 X times
Receivables Turnover
5.23 times
6.27 times
Inventory Turnover
13.96 X times
10.90 X times
Times Interest Earned](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F53a9342a-3958-4c5f-848a-17778d9309f0%2F354bbadb-af03-4597-9020-d02ec0985f66%2F45n72qf_processed.png&w=3840&q=75)
Transcribed Image Text:Balance Sheets
Metropolitan
Republic
Assets
Cash
Accounts receivable (net)
Short-term investments
Inventory
Prepaid expenses and other current assets
Current assets
263.3
42.4
495.7
394.0
7.8
703.2
558.7
542.4
196.6
Property, plant, and equipment (net)
Intangibles and other assets
$ 1,498.0
2,686.2
283.3
$ 1,706.2
2,529.3
569.3
$ 4,467.5
$ 4,804.7
Total assets
Liabilities and Shareholders' Equity
Accounts payable
551.9
294.1
661.2
765.2
623.4
Short-term notes
608.5
Accruals and other current liabilities
$ 1,997.1
$ 1,507.2
623.6
Current liabilities
623.3
Long-term debt
Deferred tax liability
Other long-term liabilities
452.6
684.7
193.0
178.1
Total liabilities
$ 2,776.4
$3,483.2
418.0
Common stock (par and additional paid-in capital)
Retained earnings
Less: Treasury stock
212.9
2,546.9
(1,068.7)
$ 4,467.5
1,680.9
(777.4)
$ 4,804.7
Total liabilities and shareholders' equity
Income Statements
$ 5,772.0
(2,837.0)
$ 2,935.0
(1,662.7)
(68.8)
$ 1,203.5
(311.7)
891.8
$ 7,839.2
(4,408.7)
$ 3,430.5
(2,755.2)
(43.6)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Interest expense
Income before taxes
631.7
Income tax expense
(200.1)
Net income
24
431.6
Net income per share
$4
2.2
7.2
Evaluate and compare the two companies by responding to the following questions.
Note: Because comparative statements are not provided you should use year-end balances in place of
appropriate.
Required:
1. For both companies, compute the ratios below.
2. Evaluate and compare the two companies.
Republic
Metropolitan
19.96
8.98 %
Return on Assets
15.45 %
5.51 %
Profit Margin
1.29
times
1.63 times
Asset Turnover
4.19 X %
1.03 %
Return on Equity
20.98
11.49
Equity Multiplier
0.50 M
0.22
Acid-Test Ratio
1.78 X
0.85
Current Ratio
11.64 times
20.03 X times
Receivables Turnover
5.23 times
6.27 times
Inventory Turnover
13.96 X times
10.90 X times
Times Interest Earned
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