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Author Question: Interpreting the Balance Sheet of a Retail Company (Read 81 times)

karlynnae

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on: Jul 9, 2019
Use the table for the question(s) below.

Balance Sheet
Assets20072008Liabilities20072008
Current AssetsCurrent Liabilities
Cash 50 46Accounts payable 42 48
Accounts receivable22 12Notes payable/short-term debt 75
Inventories 17 38
Total current assets 8996Total current liabilities 4953
Long-Term Assets Long-Term Liabilities
Net property, plant,
and equipment121116Long-term debt 128136
Total long-term assets 121 116Total long-term liabilities 128136
​Total Liabilities 177 189
​Stockholders' Equity 3323
Total Assets 210212Total Liabilities and210212
Stockholders' Equity


If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in the balance sheet between 2007 and 2008?
◦ The company has added a major new asset in terms of plant and equipment.
◦ The company is having difficulties selling its product.
◦ The company has experienced a significant rise in its market value.
◦ The company has reduced its debt.
Fundamentals of Corporate Finance ¦ Berk, DeMarzo, Harford ¦ 2nd Edition
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Marked as best answer by karlynnae on Jul 9, 2019

harveenkau8139

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Reply #1 on: Jul 9, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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jrubin

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Reply #2 on: Jul 9, 2019
Use the table for the question(s) below.

Balance Sheet
Assets20072008Liabilities20072008
Current AssetsCurrent Liabilities
Cash 50 46Accounts payable 42 48
Accounts receivable22 12Notes payable/short-term debt 75
Inventories 17 38
Total current assets 8996Total current liabilities 4953
Long-Term Assets Long-Term Liabilities
Net property, plant,
and equipment121116Long-term debt 128136
Total long-term assets 121 116Total long-term liabilities 128136
​Total Liabilities 177 189
​Stockholders' Equity 3323
Total Assets 210212Total Liabilities and210212
Stockholders' Equity


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.


Smiles0805

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Reply #3 on: Jul 9, 2019
The company's net income in 2008 was negative.


jrubin

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Reply #4 on: Jul 9, 2019
Thanks


Smiles0805

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Reply #5 on: Jul 9, 2019
Welcome :)


tth

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Reply #6 on: Jul 9, 2019
Use the table for the question(s) below.

Balance Sheet
Assets20072008Liabilities20072008
Current AssetsCurrent Liabilities
Cash 50 46Accounts payable 42 48
Accounts receivable22 12Notes payable/short-term debt 75
Inventories 17 38
Total current assets 8996Total current liabilities 4953
Long-Term Assets Long-Term Liabilities
Net property, plant,
and equipment121116Long-term debt 128136
Total long-term assets 121 116Total long-term liabilities 128136
​Total Liabilities 177 189
​Stockholders' Equity 3323
Total Assets 210212Total Liabilities and210212
Stockholders' Equity


If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2007 and 2008?
◦ The company has increased the risk that it will experience a cash shortfall in the near future.
◦ The company has eliminated the risk that it will experience a cash shortfall in the near future.
◦ The company has reduced the risk that it will experience a cash shortfall in the near future.
◦ The risk that the company will experience a cash shortfall in the near future is unchanged.


kristenb95

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Reply #7 on: Jul 9, 2019
The company has increased the risk that it will experience a cash shortfall in the near future.


lindiwe

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Reply #8 on: Jul 9, 2019
Use the table for the question(s) below.

Balance Sheet
Assets20072008Liabilities20072008
Current AssetsCurrent Liabilities
Cash 50 46Accounts payable 42 48
Accounts receivable22 12Notes payable/short-term debt 75
Inventories 17 38
Total current assets 8996Total current liabilities 4953
Long-Term Assets Long-Term Liabilities
Net property, plant,
and equipment121116Long-term debt 128136
Total long-term assets 121 116Total long-term liabilities 128136
​Total Liabilities 177 189
​Stockholders' Equity 3323
Total Assets 210212Total Liabilities and210212
Stockholders' Equity


If the above balance sheet is for a retail company, how has the company's leverage changed between 2007 and 2008?
◦ The company has experienced a significant increase in its leverage.
◦ The company has experienced no significant change in its leverage.
◦ The company has experienced a significant decrease in its leverage.
◦ The company has experienced a very significant decrease in its leverage.


bulacsom

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Reply #9 on: Jul 9, 2019
The company has experienced a significant increase in its leverage.


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