C2-3 Balance Sheet Structure Balance sheets reflect the effects of a company\'s
ID: 2599126 • Letter: C
Question
C2-3 Balance Sheet Structure Balance sheets reflect the effects of a company's investing and financing decisions. Balance sheet structure often differs by industry and it is informative to compare the structure of company balance sheets across industries or for one company over a sequence of years. Doing so will help you to understand how the company or companies carry on business. The following table contains balance sheet information for fiscal year 2004 for four differ ent companies. The companies are in four different industries: Airlines, Pharmaceuticals, Con- sulting, and Department Stores. The data given are in millions of dollars. Company A Company B Company C Company D ASSETS Cash Accounts receivable Inventory Prepaid assets 4,254.6 $ $ 322.0 4,072.0 3,812.0 494.0 $ 831.5 8,700.0 0.0 6,830.0 1,482.0 17,012.0 $ 48.8 55.0 0.0 7.6 $111.4 0.0 523.0 138.1 80.6 89.8 5,017.9 3,021.5 1,059.4 $13,353.4 4,947.8 11,482.1 10,127.1 $39,910.4 Total current assets Investment in securities Property &equipment; Intangible and other assets 0.0 5,819.7 18.3 $6,669.5 32.8 $163.5 (Continued) Total assets CHAPTER 2 BALANCE SHEET CONCEPTS: ASSETS, LIABILITIES, AND EQUITIES37 Company A Company B Company C Company D LIABILITIES AND EQUITY Accounts payable Notes payable Other current liabilities S 4,361.3 3,319.3 2,029.0 $ 9,709.6 3,600.7 $ 312.8 108.8 877.0 $1,298.6 761.0 $2,903.0 1,722.0 244.0 $ 4,869.0 4,374.0 s 17.5 0.0 30.3 47.8 Total current liabilities Long-term debt Other liabilities 0.0 Total liabilities Shareholders' equity $25,078.0 14,832.4 Total liablities and equity $39,910.4 $3,218.5 3,451.0 $6,669.5 $11,190.0 5,822.0 $17,012.0 47.8 $163.5 Required: 1. Recast the preceding table in terms of percentages; that is, for each individual com pany express every individual asset as a percentage of total assets. Express every indi- vidual liability and equity as a percentage of total liabilities and equity. For example, in the case of Company A cash is 10.7% [($4,254.6/$39,910.4) × 100] of total assets, and current liabilities are 24.3% [($9,709.6/$39,910.4) × 1001 of total liabilities and equity. These numbers are entered into the following table. Complete the table.Explanation / Answer
Solution :-
Particular
Company A
Company B
Company C
Company D
Assets
Cash
10.7%
7.8%
1.9%
29.8%
Account Receivables
12.6%
2.1%
23.9%
33.6%
Inventory
7.6%
1.2%
22.4%
0%
Prepaid Assets
2.7%
1.3%
2.9%
4.6%
Total current Assets
33.5%
12.5%
51.1%
68.1%
Investment in securities
12.4%
0%
0%
0%
Property & Equipment
28.8%
87.3%
40.1%
11.8%
Intangible and other assets
25.4%
0.27%
8.7%
20.1%
Total Assets
100%
100%
100%
100%
Particular
Company A
Company B
Company C
Company D
Liabilities & Equity
Accounts Receivables
10.9%
4.7%
17.1%
10.7%
Notes Payable
8.3%
1.6%
10.1%
0%
Other Current Liabilities
5.1%
13.1%
1.4%
18.5%
Total Current Liabilities
24.3%
19.5%
28.6%
29.2%
Long Term Debt
9.0%
11.4%
25.7%
0%
Other Liabilities
29.5%
17.4%
11.4%
0%
Total Liabilities
62.8%
48.3%
65.8%
29.2%
Shareholder’s Equity
37.2%
51.7%
34.2%
70.8%
Total liabilities & Equity
100%
100%
100%
100%
Particular
Company A
Company B
Company C
Company D
Assets
Cash
10.7%
7.8%
1.9%
29.8%
Account Receivables
12.6%
2.1%
23.9%
33.6%
Inventory
7.6%
1.2%
22.4%
0%
Prepaid Assets
2.7%
1.3%
2.9%
4.6%
Total current Assets
33.5%
12.5%
51.1%
68.1%
Investment in securities
12.4%
0%
0%
0%
Property & Equipment
28.8%
87.3%
40.1%
11.8%
Intangible and other assets
25.4%
0.27%
8.7%
20.1%
Total Assets
100%
100%
100%
100%
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