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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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