Problem $4-15($Algo$)$ Compare two companies in the same industry; Chapters $3$ and $4[$LO$4-10]$

Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry $($$ in millions, except per share amounts$).$

Balance Sheets

Merz Schueler

Assets

Cash $ $181\mathrm{.}3$ $ $41\mathrm{.}1$

Accounts receivable $($net$)425\mathrm{.}7329\mathrm{.}0$

Short$-$term investments $6\mathrm{.}6$

Inventory $467\mathrm{.}4637\mathrm{.}2$

Prepaid expenses and other current assets $137\mathrm{.}6480\mathrm{.}7$

Current assets $1,212\mathrm{.}01,494\mathrm{.}6$

Property, plant, and equipment $($net$)2,610\mathrm{.}22,086\mathrm{.}8$

Intangibles and other assets $213\mathrm{.}3469\mathrm{.}7$

Total assets $ $4,035\mathrm{.}5$ $ $4,051\mathrm{.}1$

Liabilities and Shareholders$$ Equity

Accounts payable $ $468\mathrm{.}9$ $ $694\mathrm{.}2$

Short$-$term notes $232\mathrm{.}1562\mathrm{.}4$

Accruals and other current liabilities $586\mathrm{.}2543\mathrm{.}5$

Current liabilities $1,287\mathrm{.}21,800\mathrm{.}1$

Long$-$term debt $537\mathrm{.}6546\mathrm{.}3$

Deferred tax liability $388\mathrm{.}6615\mathrm{.}7$

Other long$-$term liabilities $109\mathrm{.}097\mathrm{.}1$

Total liabilities $2,322\mathrm{.}43,059\mathrm{.}2$

Common stock $($par and additional paid$-$in capital$)146\mathrm{.}9336\mathrm{.}0$

Retained earnings $2,480\mathrm{.}91,604\mathrm{.}9$

Less: Treasury stock $(914\mathrm{.}7)(949\mathrm{.}0)$

Total liabilities and shareholders$$ equity $ $4,035\mathrm{.}5$ $ $4,051\mathrm{.}1$

Income Statements

Net sales $ $5,701\mathrm{.}0$ $ $7,770\mathrm{.}2$

Cost of goods sold $(2,905\mathrm{.}0)(4,477\mathrm{.}7)$

Gross profit $2,796\mathrm{.}03,292\mathrm{.}5$

Operating expenses $(1,740\mathrm{.}7)(2,534\mathrm{.}2)$

Interest expense $(51\mathrm{.}8)(43\mathrm{.}6)$

Income before taxes $1,003\mathrm{.}5714\mathrm{.}7$

Income tax expense $(393\mathrm{.}7)(273\mathrm{.}1)$

Net income $ $609\mathrm{.}8$ $ $441\mathrm{.}6$

Net income per share $ $2\mathrm{.}6$ $ $6\mathrm{.}6$

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 average balances as appropriate.

Required:

For both companies, compute the ratios below.

Evaluate and compare the two companies.