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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 $ $263\mathrm{.}3$ $ $42\mathrm{.}4$

Accounts receivable $($net$)495\mathrm{.}7394\mathrm{.}0$

Short$-$term investments $7\mathrm{.}8$

Inventory $542\mathrm{.}4703\mathrm{.}2$

Prepaid expenses and other current assets $196\mathrm{.}6558\mathrm{.}7$

Current assets $1,498\mathrm{.}01,706\mathrm{.}2$

Property, plant, and equipment $($net$)2,686\mathrm{.}22,529\mathrm{.}3$

Intangibles and other assets $283\mathrm{.}3569\mathrm{.}3$

Total assets $ $4,467\mathrm{.}5$ $ $4,804\mathrm{.}7$

Liabilities and Shareholders$$ Equity

Accounts payable $ $551\mathrm{.}9$ $ $765\mathrm{.}2$

Short$-$term notes $294\mathrm{.}1623\mathrm{.}4$

Accruals and other current liabilities $661\mathrm{.}2608\mathrm{.}5$

Current liabilities $1,507\mathrm{.}21,997\mathrm{.}1$

Long$-$term debt $623\mathrm{.}6623\mathrm{.}3$

Deferred tax liability $452\mathrm{.}6684\mathrm{.}7$

Other long$-$term liabilities $193\mathrm{.}0178\mathrm{.}1$

Total liabilities $2,776\mathrm{.}43,483\mathrm{.}2$

Common stock $($par and additional paid$-$in capital$)212\mathrm{.}9418\mathrm{.}0$

Retained earnings $2,546\mathrm{.}91,680\mathrm{.}9$

Less: Treasury stock $(1,068\mathrm{.}7)(777\mathrm{.}4)$

Total liabilities and shareholders$$ equity $ $4,467\mathrm{.}5$ $ $4,804\mathrm{.}7$

Income Statements

Net sales $ $5,772\mathrm{.}0$ $ $7,839\mathrm{.}2$

Cost of goods sold $(2,837\mathrm{.}0)(4,408\mathrm{.}7)$

Gross profit $2,935\mathrm{.}03,430\mathrm{.}5$

Operating expenses $(1,662\mathrm{.}7)(2,755\mathrm{.}2)$

Interest expense $(68\mathrm{.}8)(43\mathrm{.}6)$

Income before taxes $1,203\mathrm{.}5631\mathrm{.}7$

Income tax expense $(311\mathrm{.}7)(200\mathrm{.}1)$

Net income $ $891\mathrm{.}8$ $ $431\mathrm{.}6$

Net income per share $ $2\mathrm{.}2$ $ $7\mathrm{.}2$

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.

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