Balance sheet data for two comparable firms are presented below:
| |
Amplus, Inc. |
Brevis, Inc. |
| Cash and equivalents |
3,800 |
500 |
| Accounts receivable |
2,400 |
700 |
| Inventories |
5,800 |
1,100 |
| Current assets |
12,000 |
2,300 |
| Land |
400 |
100 |
| Property, plant and equipment |
24,600 |
6,400 |
| Noncurrent assets |
25,000 |
6,500 |
| Total assets |
37,000 |
8,800 |
| |
|
|
| Accounts payable |
1,800 |
400 |
| Unearned revenue |
600 |
100 |
| Current liabilities |
2,400 |
500 |
| Long-term borrowing |
9,600 |
3,300 |
| Total liabilities |
12,000 |
3,800 |
| |
|
|
| Common stock |
1,500 |
300 |
| Retained earnings |
23,500 |
4,700 |
| Total equity |
25,000 |
5,000 |
| |
|
|
| Total liabilities and equity |
37,000 |
8,800 | Based on common-size analysis of the two firms’ balance sheets, Amplus Company:
A. is more financially leveraged than Brevis Company.
B. has a greater investment in working capital than Brevis Company.
C. uses relatively more fixed assets then Brevis Company.
|
