Complete the common-size balance sheet for these companies. Review each company\
ID: 2813594 • Letter: C
Question
Complete the common-size balance sheet for these companies. Review each company's percentages 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?
% of
% of
% of
% of
Balance
Total
Balance
Total
Balance
Total
Balance
Total
ASSETS
Co. 1
Assets
Co. 2
Assets
LIABILITIES
Co. 1
Assets
Co. 2
Assets
Current assets
Current liabilities
Cash
$5,304
%
$291
%
Accounts payable
$12,230
%
$668
%
Investments
$4,047
%
$342
%
Short-term debt
$1,173
%
$0
%
Accounts receivable
$8,173
%
$227
%
Other short-term
Inventory
$5,222
%
$490
%
liabilities
$0
%
$111
%
Total current assets
$22,746
%
$1,350
%
Total current liabilities
$13,403
%
$779
%
Long-term investments
$78
%
$293
%
Long-term debt
$2,960
%
$7
%
Net plant, property
Other liabilities
$4,970
%
$52
%
and equipment
$9,801
%
$1,359
%
Total liabilities
$21,333
%
$838
%
Goodwill
$5,276
%
$61
%
OWNERS’ EQUITY
Intangible
$6,051
%
$14
%
Common stock
$3,175
%
$923
%
Other
$3,635
%
$89
%
Treasury stock
$-6,643
%
$0
%
Retained earnings
$29,722
%
$1,405
%
Total owners’ equity
$26,254
%
$2,328
%
TOTAL LIABILITIES
TOTAL ASSETS
$47,587
100.00
%
$3,166
100.00
%
AND OWNERS’ EQUITY
$47,587
100.00
%
$3,166
100.00
%
Complete the table below:(Round up to two decimal places.)
% of
% of
Balance
Total
Balance
Total
ASSETS
Co. 1
Assets
LIABILITIES
Co. 1
Assets
Current assets
Current liabilities
Cash
$5,304
%
Accounts payable
$12,230
%
Investments
$4,047
%
Short-term debt
$1,173
%
Accounts receivable
$8,173
%
Other short-term
Inventory
$5,222
%
liabilities
$0
%
Total current assets
$22,746
%
Total current liabilities
$13,403
%
Long-term investments
$78
%
Long-term debt
$2,960
%
Net plant, property
Other liabilities
$4,970
%
and equipment
$9,801
%
Total liabilities
$21,333
%
Goodwill
$5,276
%
OWNERS’ EQUITY
Intangible
$6,051
%
Common stock
$3,175
%
Other
$3,635
%
Treasury stock
$-6,643
%
Retained earnings
$29,722
%
Total owners’ equity
$26,254
%
TOTAL LIABILITIES
TOTAL ASSETS
$47,587
100.00
%
AND OWNERS’ EQUITY
$47,587
100.00
%
% of
% of
% of
% of
Balance
Total
Balance
Total
Balance
Total
Balance
Total
ASSETS
Co. 1
Assets
Co. 2
Assets
LIABILITIES
Co. 1
Assets
Co. 2
Assets
Current assets
Current liabilities
Cash
$5,304
%
$291
%
Accounts payable
$12,230
%
$668
%
Investments
$4,047
%
$342
%
Short-term debt
$1,173
%
$0
%
Accounts receivable
$8,173
%
$227
%
Other short-term
Inventory
$5,222
%
$490
%
liabilities
$0
%
$111
%
Total current assets
$22,746
%
$1,350
%
Total current liabilities
$13,403
%
$779
%
Long-term investments
$78
%
$293
%
Long-term debt
$2,960
%
$7
%
Net plant, property
Other liabilities
$4,970
%
$52
%
and equipment
$9,801
%
$1,359
%
Total liabilities
$21,333
%
$838
%
Goodwill
$5,276
%
$61
%
OWNERS’ EQUITY
Intangible
$6,051
%
$14
%
Common stock
$3,175
%
$923
%
Other
$3,635
%
$89
%
Treasury stock
$-6,643
%
$0
%
Retained earnings
$29,722
%
$1,405
%
Total owners’ equity
$26,254
%
$2,328
%
TOTAL LIABILITIES
TOTAL ASSETS
$47,587
100.00
%
$3,166
100.00
%
AND OWNERS’ EQUITY
$47,587
100.00
%
$3,166
100.00
%
Explanation / Answer
aThe two companies are operating with different philosophies and are in different industries.
This can be seen from the below ratio table which highlights that Company 2 is more capital intensive (Higher portion of assets in capital) while at the same time also has a higher money tied up in working capital. Also company 1's business has a much higher percentage of Intangible assets which indicate in the business of Company 1, intangible assets are more important than in 2's. The table for this analysis is :
Also as seen from the above table, we will find that Company 1 is more levered and has a higher debt financing than Company 2. This is also the major difference between the source of financing between the two companies.
The required table from the question is :
Asset Balance Co 1 % of total Assets Balance Company 2 % of total Assets Liability Balance Co 1 % of total Liabilities Balance Company 2 % of total Liabilities Cash 5304 11.15% 291 9.19% Accounts Payable 12230 25.7% 668 21.1% Investments 4047 8.50% 342 10.80% Short Term Debt 1173 2.5% 0 0.0% Accounts Receivable 8173 17.17% 227 7.17% Other Short Term Liabilities 0 0.0% 111 3.5% Inventory 5222 10.97% 490 15.48% Total Current Liabilities 13403 28.2% 779 25% Total Current Assets 22746 47.80% 1350 42.64% Long Term Debt 2960 6.2% 7 0.2% Long Term Investments 78 0.16% 293 9.25% Other Liabilities 4970 10.4% 52 1.6% Plant Property and Equipment 9801 20.60% 1359 42.92% Total Liabilities 21333 44.8% 838 26% Goodwill 5276 11.09% 61 1.93% Owners Equity Intangible 6051 12.72% 14 0.44% Common Stock 3175 6.7% 923 29.2% Other 3635 7.64% 89 2.81% Treasury Stock -6643 -14.0% 0 0.0% Retained Earnings 29722 62.5% 1405 44.4% Total Owners Equity 26254 55.2% 2328 74% Total 47587 3166 Total 47587 3166Related Questions
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