AGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy's The Almanac of Business and Industrial Financial Ratios and Dun and Bradstreet's Industry Norms and Key Business Ratios. Following are the 2018 and 2017 comparative income statements and balance sheets for AGF. The market price of AGF's common stock is $47 during 2018. (The financial data we use are from actual financial statements of a well-known corporation, but the company name used in our illustration is fictitious and the numbers and dates have been modified slightly to disguise the company's identity.) Profitability is the key to a company's long-run survival. Profitability measures focus on a company's ability to provide an adequate return relative to resources devoted to company operations.

Required:
1. Calculate the return on shareholders' equity for AGF. The average return for the stocks listed on the New York Stock Exchange in a comparable period was 18.8%. What information does your calculation provide an investor?
2. Calculate AGF's earnings per share and earnings-price ratio. The average return for the stocks listed on the New York Stock Exchange in a comparable time period was 5.4%. What does your calculation indicate about AGF's earnings?

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AGF FOODS COMPANY Years Ended December 31, 20 18 andd 2017 ($ in millions) Comparative Income Statements Net sales Cost of goods solc 2018 2017 $ 6,440 (3,667) 2,773 (1,916) 5,800 (3,389) Gross profit Operating expenses Operating income Interest expense Income from operations before tax Income taxes Net income (1,629) 857 803 (316) $ 487 729 (287) $ 442 Average shares outstanding 181 million 181 million Comparative Balance Sheets Current assets: Cash Accounts receivable Marketable securities $142 320 347 Prepaid expenses Total current assets Property, plant, and equipment (net) Intangibles (net) Other assets Totai assets 914 212 1,879 2,592 874 154 1,490 2,291 843 74 $ 5,345 $4,684 Liabilities and Shareholders' Equity Current liabilities: Accounts payable Accrued liabilities s payable $ 254 493 518 $ 276 496 115 Current portion of long-term debt Total current liabilities 1,473 941 728 Long-term debt Deferred income taxes 407 Total liabilities 2,414 2,013 Shareholders' equity: Common stock, $1 par Additional paid-in capital Retained earnings 180 21 2,730 2,931 $ 5,345 180 Total shareholders' equity Total liabilities and shareholders' equwty 2,428 2,67 1 $ 4,684