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Metropolitan Republic Return on Assets 19.96% 8.98% Profit Margin 15.45% 5.51% Asset Turnover 1.29 1.63 Return on Equity 52.73% 32.66% Equity Multiplier 2.64 3.64 Acid-Test Ratio 0.50 0.22 Current Ratio 0.99 0.85 Inventory Turnover 5.23 6.27 Times Interest Earned 18.49 15.49   Please answer Question 2: Evaluate and compare two companies

Metropolitan Republic Return on Assets 19.96% 8.98% Profit Margin 15.45% 5.51% Asset Turnover 1.29 1.63 Return on Equity 52.73% 32.66% Equity Multiplier 2.64 3.64 Acid-Test Ratio 0.50 0.22 Current Ratio 0.99 0.85 Inventory Turnover 5.23 6.27 Times Interest Earned 18.49 15.49   Please answer Question 2: Evaluate and compare two companies

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Metropolitan Republic
Return on Assets 19.96% 8.98%
Profit Margin 15.45% 5.51%
Asset Turnover 1.29 1.63
Return on Equity 52.73% 32.66%
Equity Multiplier 2.64 3.64
Acid-Test Ratio 0.50 0.22
Current Ratio 0.99 0.85
Inventory Turnover 5.23 6.27
Times Interest Earned 18.49 15.49

 

Please answer Question 2:

Evaluate and compare two companies

Balance Sheets Metropolitan Republic Assets Cash Accounts receivable (net) Short-term investments Inventory Prepaid expenses and other current assets Current assets 263.3 42.4 495.7 394.0 7.8 703.2 558.7 542.4 196.6 Property, plant, and equipment (net) Intangibles and other assets $ 1,498.0 2,686.2 283.3 $ 1,706.2 2,529.3 569.3 $ 4,467.5 $ 4,804.7 Total assets Liabilities and Shareholders' Equity Accounts payable 551.9 294.1 661.2 765.2 623.4 Short-term notes 608.5 Accruals and other current liabilities $ 1,997.1 $ 1,507.2 623.6 Current liabilities 623.3 Long-term debt Deferred tax liability Other long-term liabilities 452.6 684.7 193.0 178.1 Total liabilities $ 2,776.4 $3,483.2 418.0 Common stock (par and additional paid-in capital) Retained earnings Less: Treasury stock 212.9 2,546.9 (1,068.7) $ 4,467.5 1,680.9 (777.4) $ 4,804.7 Total liabilities and shareholders' equity Income Statements $ 5,772.0 (2,837.0) $ 2,935.0 (1,662.7) (68.8) $ 1,203.5 (311.7) 891.8 $ 7,839.2 (4,408.7) $ 3,430.5 (2,755.2) (43.6) Net sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes 631.7 Income tax expense (200.1) Net income 24 431.6 Net income per share $4 2.2 7.2 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 appropriate. Required: 1. For both companies, compute the ratios below. 2. Evaluate and compare the two companies. Republic Metropolitan 19.96 8.98 % Return on Assets 15.45 % 5.51 % Profit Margin 1.29 times 1.63 times Asset Turnover 4.19 X % 1.03 % Return on Equity 20.98 11.49 Equity Multiplier 0.50 M 0.22 Acid-Test Ratio 1.78 X 0.85 Current Ratio 11.64 times 20.03 X times Receivables Turnover 5.23 times 6.27 times Inventory Turnover 13.96 X times 10.90 X times Times Interest Earned
Transcribed Image Text:Balance Sheets Metropolitan Republic Assets Cash Accounts receivable (net) Short-term investments Inventory Prepaid expenses and other current assets Current assets 263.3 42.4 495.7 394.0 7.8 703.2 558.7 542.4 196.6 Property, plant, and equipment (net) Intangibles and other assets $ 1,498.0 2,686.2 283.3 $ 1,706.2 2,529.3 569.3 $ 4,467.5 $ 4,804.7 Total assets Liabilities and Shareholders' Equity Accounts payable 551.9 294.1 661.2 765.2 623.4 Short-term notes 608.5 Accruals and other current liabilities $ 1,997.1 $ 1,507.2 623.6 Current liabilities 623.3 Long-term debt Deferred tax liability Other long-term liabilities 452.6 684.7 193.0 178.1 Total liabilities $ 2,776.4 $3,483.2 418.0 Common stock (par and additional paid-in capital) Retained earnings Less: Treasury stock 212.9 2,546.9 (1,068.7) $ 4,467.5 1,680.9 (777.4) $ 4,804.7 Total liabilities and shareholders' equity Income Statements $ 5,772.0 (2,837.0) $ 2,935.0 (1,662.7) (68.8) $ 1,203.5 (311.7) 891.8 $ 7,839.2 (4,408.7) $ 3,430.5 (2,755.2) (43.6) Net sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes 631.7 Income tax expense (200.1) Net income 24 431.6 Net income per share $4 2.2 7.2 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 appropriate. Required: 1. For both companies, compute the ratios below. 2. Evaluate and compare the two companies. Republic Metropolitan 19.96 8.98 % Return on Assets 15.45 % 5.51 % Profit Margin 1.29 times 1.63 times Asset Turnover 4.19 X % 1.03 % Return on Equity 20.98 11.49 Equity Multiplier 0.50 M 0.22 Acid-Test Ratio 1.78 X 0.85 Current Ratio 11.64 times 20.03 X times Receivables Turnover 5.23 times 6.27 times Inventory Turnover 13.96 X times 10.90 X times Times Interest Earned
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