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    Computation of the financial ratios

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    Selected financial data of two intense competitors in a recent year are presented be-low in millions of dollars.

    Bethlehem Steel Inland Steel
    Corporation Company

    Income Statement Data for Year

    Net sales $4,819 $4,497
    Cost of goods sold 4,548 3,991
    Selling and administrative expenses 137 265
    Interest expense 46 72
    Other income (net) 7 0
    Income taxes 14 62
    Net income $ 81 $ 107
    ______ _____

    Bethlehem Steel Inland Steel
    Corporation Company
    Balance Sheet Data (End-of-Year)
    Current assets $1,569 $1,081
    Property, plant, and equipment (net) 2,759 1,610
    Other assets 1,454 662
    Total assets $5,782 $3,353
    _______ ______

    Current liabilities $1,011 $ 565
    Long-term debt 3,615 2,056
    Total stockholders' equity 1,156 732
    Total liabilities and stockholders' equity $5,782 $3,353
    _______ ______

    Beginning-of-Year Balances
    Total assets $5,877 $3,436
    Total stockholders' equity 697 623

    Other Data
    Average net receivables $ 511 $ 515
    Average inventory 868 403
    Net cash provided by operating activities 90 160
    Average current liabilities 1,210 540
    Average total liabilities 4,820 2,595

    Page 2

    Instructions
    (a) For each company, compute the following ratios.
    (1) Current. (7) Return on common stockholders' equity.
    (2) Receivables turnover. (8) Debt to total assets.
    (3) Inventory turnover. (9) Times interest earned.
    (4) Profit margin. (10) Current cash debt coverage.
    (5) Asset turnover. (11) Cash return on sales.
    (6) Return on assets. (12) Cash debt coverage.

    (b) Compare the liquidity, profitability, and solvency of the two companies.

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    Solution Preview

    (See attached file for full problem description)

    ---
    Selected financial data of two intense competitors in a recent year are presented be-low in millions of dollars.

    Bethlehem Steel Inland Steel
    Corporation Company

    Income Statement Data for Year

    Net sales $4,819 $4,497
    Cost of goods sold 4,548 3,991
    Selling and administrative expenses 137 265
    Interest expense 46 72
    Other income (net) 7 0
    Income taxes 14 ...

    Solution Summary

    This provides the steps for Computation of the financial ratios

    $2.19

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