By Sarah Holt
BBC Sport at the Circuit de Catalunya
Schumacher set the fastest time of the winter in testing on Friday
Mercedes believe they have closed the gap on Formula 1's pace-setters Red Bull and Ferrari after fitting their final pre-season upgrade in testing.
Michael Schumacher set the fastest time of the winter at Barcelona's Circuit de Catalunya on Friday, beating Ferrari's Fernando Alonso by 0.346 seconds.
McLaren's Jenson Button was 4.5 seconds behind after an engine change before Saturday's handover to Lewis Hamilton.
Red Bull's Sebastian Vettel finished 1.665 seconds off the pace.
The season starts with the Australian Grand Prix on 27 March and Mercedes signalled an improvement with their updated car.
Schumacher recorded a lap of one minute 21.268 seconds at the end of Friday morning's test session in Spain.
Team principal Ross Brawn admitted the German legend had set his lap on a "low-fuel, soft-tyre run" but added that it was "quite encouraging".
"We've definitely moved forward," Brawn told BBC Sport. "Whether it's enough we won't know until Melbourne.
"I don't believe one or two of the other teams have shown their full hand yet but it's certainly a lot more respectable."
He said the specification of the car when it set that time was "fairly representative of qualifying but we can go further".
Rosberg, who took over from Schumacher later in the day, finished third fastest and half a second off his team-mate's top time.
It was not such an encouraging day for McLaren.
We've definitely moved forward - whether it's enough we won't know until Melbourne
Mercedes team boss
Button was restricted to just 57 laps after the team decided to stop the car just before lunch and then made a precautionary engine change.
The 31-year-old spent the morning practising pit stops and aerodynamic assessments when he recorded his best time of 1:25.837, only good enough for 13th place.
Hamilton will continue McLaren's programme on Saturday but the team will go to Melbourne with real worries over both their pace and reliability.
Vettel completed Red Bull's pre-season programme under the watchful eye of owner Dietrich Mateschitz.
Red Bull are generally believed to have the edge on the field on qualifying pace, with Ferrari next in line, and some F1 insiders believe races could follow a similar pattern.
It was a quiet day for Vettel as he focused mainly on a series of shorter runs and finished eighth overall.
Ferrari also had a smooth day as Alonso tried out front wing configurations in the morning before completing a race weekend simulation.
The Spanish double world champion clocked an impressive 141 laps and will return to complete his preparations on Saturday.
Mercedes were also able to run through the raft of updated parts they had brought to this test.
On Friday, a new front wing, different brake ducts and turning vanes were added to the new diffuser and exhaust system, which had been fitted earlier in the week.
Brawn said: "They all seem to be working. The front wings, as with every other team, are quite a complex area as they affect quite a lot of the dynamics of the car and we've got two different front wings at the moment.
"I think the structure of the package, the bodywork, the exhaust, the floor [and] the brake ducts have all looked very good.
"The front wing we're still playing with to determine which of the three we prefer. It might be down to drivers."
Last week, Brawn told BBC 5 live that he believed the Mercedes was a second off the pace.
Asked if the team had now closed that gap, he said: "I think we have. It's so difficult to judge what other people have done.
"Ferrari are here with a completely new bodywork package; I don't know what Red Bull have done.
"I think most people will have their definitive car. I think we've definitely moved forward, as always it's a moving target.
"You know if you're in deep trouble and we're not in deep trouble, we're fairly respectable.
"Whether you're going to be able to nibble at the front, you honestly don't know.
Will Schumacher eat his rivals for breakfast in the new Mercedes?
"The drivers are giving us good feedback. The car is more consistent now, we are able to make changes to it that have an effect. Everything is moving in the right direction."
Brawn has predicted that the uncertainties introduced by new rules - including moveable rear wings to aid overtaking and tyres that degrade quicker - mean that results will be unpredictable this season.
Race strategy is an area in which Brawn is regarded as the standard-setter in F1, having won many races through clever tactics with Schumacher at Ferrari.
"You have to have a foundation and a good enough car but it's certainly a challenge I'm relishing," he said.
"The team with the fastest car may not necessarily win the races.
"They should do but it is so easy to trip up over the strategy either with the safety car or events or just getting it slightly wrong.
"With Kers or the rear flap adjuster, we've got two powerful tools that should allow more overtaking.
"If you get it wrong and you're out on the track at the wrong time on the wrong tyres, people will overtake you.
"If you've got the fastest car and good strategy, you should win but there is more potential to get it wrong than there was last year."
Fastest times, final pre-season test, day three, Circuit de Catalunya:
1 Michael Schumacher (Ger) Mercedes 1:21.268 seconds
2 Fernando Alonso (Spn) Ferrari 1:21.614
3 Nico Rosberg (Ger) Mercedes 1:21.788
4 Nick Heidfeld (Ger) Renault 1:22.073
5 Rubens Barrichello (Brz) Williams-Cosworth 1:22.233
6 Kamui Kobayashi (Jpn) Sauber-Ferrari 1:22.315
7 Jaime Alguersuari (Spa) Toro Rosso-Ferrari 1:22.675
8 Sebastian Vettel (Ger) Red Bull-Renault 1:22.933
9 Heikki Kovalainen (Fin) Lotus-Renault 1:23.437
10 Paul Di Resta (GB) Force India-Mercedes 1:23.653
11 Adrian Sutil (Ger) Force India-Mercedes 1:23.921
12 Pastor Maldonado (Ven) Williams-Cosworth 1:24.108
13 Jenson Button (GB) McLaren-Mercedes 1:25.837
14 Jerome d'Ambrosio (Bel) Virgin-Cosworth 1:27.375