Use the table for the question(s) below.
Balance Sheet
Assets | 2007 | 2008 | Liabilities | 2007 | 2008 |
Current Assets | Current Liabilities |
Cash | 50 | 46 | Accounts payable | 42 | 48 |
Accounts receivable | 22 | 12 | Notes payable/short-term debt | 7 | 5 |
Total current assets | 89 | 96 | Total current liabilities | 49 | 53 |
Long-Term Assets | Long-Term Liabilities |
Net property, plant,
and equipment | 121 | 116 | Long-term debt | 128 | 136 |
Total long-term assets | 121 | 116 | Total long-term liabilities | 128 | 136 |
| Total Liabilities | 177 | 189 |
| Stockholders' Equity | 33 | 23 |
Total Assets | 210 | 212 | Total Liabilities and | 210 | 212 |
If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in stockholders' equity between 2007 and 2008?
◦ The company is very profitable because it is obviously collecting receivables faster.
◦ The company's net income in 2008 was negative.
◦ The company is selling its property, plant and equipment, which may result in a long-term deficiency in production capacity.
◦ No conclusions can be drawn regarding stockholders' equity without additional information.