Saputo Inc. is a Canadian company that produces, markets, and distributes a variety of products including cheese, milk, yogurt, and snack-cakes. It is the largest dairy processor in Canada, one of the top three cheese producers in the United States, and the largest snack-cake manufacturer in Canada. Its head office is in St-Leonard, Quebec. Its 2011 and 2010 balance sheets and income statements follow.
Assume the common shares represent 203,830 (thousand) shares issued and outstanding for the entire year ended March 31, 2011.
Required 1. Prepare a common-size balance sheet and income statement on a comparative basis for 2011 and 2010. Identify any significant changes from 2010 to 2011. Round calculations to two decimal places. 2. Calculate the 2011 ratios for Saputo by completing the schedule below, including a comparison against the industry averages in Exhibit 18.11. Round calculations to two decimal places.
Analysis Component: Saputo’s management maintains a strong balance sheet as part of meeting the requirement for a high return on total assets. Explain how a strategy for keeping a strong balance sheet helps high maintain the desired return on totalassets.