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.

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Saputo Inc. Income Statement Years Ended March 31 (thousands of Canadlan dollars) 2011 $6,025,470 $5,810,582 2010 Cost of sales, selling and Depreciation and amortization1 Operating income Interest on long-term debt. Other expenses. Earnings before income taxes 104,832 13,506 ..685,308 23,211 29,901 14,2635,161 .. Saputo Inc. Balance Sheet Years Ended March 31 (thousands of Canadian dollars) 2011 2010 Assets Current assets Cash and cash equivalents... 77,491 54,819 29,494 28,242 0 41,343 Prepaid expenses and other assets 50,940 27,743 32,923 Trademarks and other intangibles339,038 316,613 Other assets 138,193 93,666 Liabilities Current liabilities Accounts payable and 8,639 Total current liabilities. S 971,205 S 690,694 Long-term debt....378,480 380,790 188,983 153,369 28,199 Other liabilitie Equity Total equity.... $2,125,641 $2,028,598 Total liabilities and equity$3,664,309 $3,253,451 Fixed assets is another term for PPE. Favourable (F) or Unfavourable (U) Ratio Current ratio Debt ratio.. Calculation Earnings per share