$(1)$ Prepare vertical common$-$size income statements and balance sheets for both companies. Note: Use $$total sales$$ and $$total assets$$ as the denominators for the income statement and balance sheet, respectively. Compute for $2022,2021,$ and $2020.$

$(2)$ Prepare horizontal analysis on income statements and balance sheets for both companies for $2022$ and $2021.$

$(3)$ Prepare ratio analyses $($for $2022,2021,$ and $2020)$ for both companies. You should include the following ratios in your computations:

$$ Profitability ratios

o Gross Profit margin

o Profit margin

o Return on assets

o Return on equity

$$ Productivity

o Inventory Turnover

o Accounts Receivable Turnover

o PPE Turnover

o Asset Turnover

$$ Solvency

o Debt$-$to$-$equity

o Times interest earned

o Return on Financial leverage

$$ Liquidity

o Current Ratio

o Quick Ratio

o Operating cash flow to current liabilities

Note: Assume the Tax rate to be $35\%$ when calculating Earnings without interest expense $($EWI$).$

$(4)$ Based upon your calculations, recommend the better$-$performing firm for potential investment. Explain why?

As Reported Annual Balance Sheet

Report Date $2022202120202019$

Currency USD USD USD USD

Scale Millions Millions Millions Millions

Cash & cash equivalents $2,229\mathrm{.}005,911\mathrm{.}008,511\mathrm{.}002,577\mathrm{.}00$

Inventory $13,499\mathrm{.}0013,902\mathrm{.}0010,653\mathrm{.}008,992\mathrm{.}00$

Accounts Receivable $1,695\mathrm{.}001,353\mathrm{.}001,135\mathrm{.}00962\mathrm{.}00$

Prepaid expenses $188\mathrm{.}00170\mathrm{.}00171\mathrm{.}00154\mathrm{.}00$

Other current assets $235\mathrm{.}00237\mathrm{.}00286\mathrm{.}00217\mathrm{.}00$

Total current assets $17,846\mathrm{.}0021,573\mathrm{.}0020,756\mathrm{.}0012,902\mathrm{.}00$

Property & equipment, net $31,512\mathrm{.}0028,181\mathrm{.}0026,879\mathrm{.}0026,283\mathrm{.}00$

Operating lease assets $2,657\mathrm{.}002,556\mathrm{.}002,227\mathrm{.}002,236\mathrm{.}00$

Company$-$owned life insurance investments, net of loans $440\mathrm{.}00470\mathrm{.}00450\mathrm{.}00418\mathrm{.}00$

Goodwill & intangible assets $645\mathrm{.}00656\mathrm{.}00668\mathrm{.}00686\mathrm{.}00$

Other noncurrent assets $235\mathrm{.}00375\mathrm{.}00268\mathrm{.}00254\mathrm{.}00$

Total assets $53,335\mathrm{.}0053,811\mathrm{.}0051,248\mathrm{.}0042,779\mathrm{.}00$

Liability

Accounts payable $13,487\mathrm{.}0015,478\mathrm{.}0012,859\mathrm{.}009,920\mathrm{.}00$

Accrued & other current liabilities $5,883\mathrm{.}006,098\mathrm{.}006,122\mathrm{.}004,406\mathrm{.}00$

Current portion of long$-$term debt & other borrowings $130\mathrm{.}00171\mathrm{.}001,144\mathrm{.}00161\mathrm{.}00$

Total current liabilities $19,500\mathrm{.}0021,747\mathrm{.}0020,125\mathrm{.}0014,487\mathrm{.}00$

Long$-$term debt & other borrowings $16,009\mathrm{.}0013,549\mathrm{.}0011,536\mathrm{.}0011,338\mathrm{.}00$

Noncurrent operating lease liabilities $2,638\mathrm{.}002,493\mathrm{.}002,218\mathrm{.}002,275\mathrm{.}00$

Deferred income taxes $2,196\mathrm{.}001,566\mathrm{.}00990\mathrm{.}001,122\mathrm{.}00$

Other noncurrent liabilities $1,760\mathrm{.}001,629\mathrm{.}001,939\mathrm{.}001,724\mathrm{.}00$

Total liabilities $42,103\mathrm{.}0040,984\mathrm{.}0036,808\mathrm{.}0030,946\mathrm{.}00$

Stockholders' Equity

Common stock $38\mathrm{.}0039\mathrm{.}0042\mathrm{.}0042\mathrm{.}00$

Additional paid$-$in capital $6,608\mathrm{.}006,421\mathrm{.}006,329\mathrm{.}006,226\mathrm{.}00$

Retained earnings $5,005\mathrm{.}006,920\mathrm{.}008,825\mathrm{.}006,433\mathrm{.}00$

Accumulated other comprehensive income $($loss$)(419\mathrm{.}00)(553\mathrm{.}00)(756\mathrm{.}00)(868\mathrm{.}00)$

Total shareholders' Equity $11,232\mathrm{.}0012,827\mathrm{.}0014,440\mathrm{.}0011,833\mathrm{.}00$

$2022202120202019$

Land $6,231\mathrm{.}006,164\mathrm{.}006,141\mathrm{.}006,036\mathrm{.}00$

Buildings & improvements $34,746\mathrm{.}0032,985\mathrm{.}0031,557$

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