Below is the balance sheet information on two companies. Prepare a common-size balance sheet for each...

Below is the balance sheet information on two companies. Prepare a common-size balance sheet for each company. Review each company's percentage of total assets. Are these companies operating with similar philosophies or in similar industries? What appears to be the major difference in financing for these two companies?

Account	Balance Sheet Company 1	Balance. Sheet Company 2
Current Assets
Cash	$5,377	$299
Investments	$4,146	$354
Accts. Rec.	$8,100	$221
Inventory	$5,372	$494
Total Current	$22,995	$1,368
Long Inv.	$84	$307
PP&E	$9,846	$1,471
Goodwill	$5,390	$69
Intangible	$6,149	$27
Other	$3,799	$86
Total Assets	$48,263	$3,328

Liabilities
Accts. Pay.	$12,309	$661
Short –Term D	$1,139	$0
Other Short Lia	$0	$122
Current. Liab.	$13,448	$783
Long-Term D	$2,955	$4
Other Liab.	$4,991	$54
Total Liab.	$21,394	$841

Owner’s Equity
Common Stock	$3,120	$1,026
Treasury Stock	($6,754)	$0
Retained Earn.	$30,503	$1,461
Total Equity	$26,869	$2,487

Total Liab. &Equity	$48,263	$3,328

Expert Solution


Common-Size Balance Sheet

	Company 1	% of Total Assets	Company 2	% of Total Assets

Current Assets
Cash	5,377	11.14%	299	8.98%
Investments	4,146	8.59%	354	10.64%
Accts. Receivables	8,100	16.78%	221	6.64%
Inventory	5,372	11.13%	494	14.84%
Total Current Assets	22,995	47.65%	1,368	41.11%
Long-term Investments	84	0.17%	307	9.22%
Property, Plant & Equipment	9,846	20.40%	1,471	44.20%
Goodwill	5,390	11.17%	69	2.07%
Intangible Assets	6,149	12.74%	27	0.81%
Other Assets	3,799	7.87%	86	2.58%

Total Assets	48,263	100.00%	3,328	100.00%

Liabilities
Accounts Payable	12,309	25.50%	661	19.86%
Short –Term Debts	1,139	2.36%
Other Short Liabilities	0	0.00%	122	3.67%
Current. Liabilities	13,448	27.86%	783	23.53%
Long-Term Debts	2,955	6.12%	4	0.12%
Other Liab.ilities	4,991	10.34%	54	1.62%
Total Liabilities	21,394	44.33%	841	25.27%

Owner’s Equity
Common Stock	3,120	6.46%	1,026	30.83%
Treasury Stock	-6,754	-13.99%	0	0.00%
Retained Earnings	30,503	63.20%	1,461	43.90%
Total Equity	26,869	55.67%	2,487	74.73%

Total Liabilities & Equity	48,263	100.00%	3,328	100.00%

jeff jeffy answered 1 year ago

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