2012, using the following format to provide your answers for the amount of dollar change and the amount of percentage change, rounding “%
Change” to one decimal place, e.g., 8.3%.
Accounts $ Change % Change
(b) Provide a short evaluation of this analysis.
Answer (a)
$ Change % Change
Cash and cash equivalents $ 16,200 27.6%
Trade accounts receivable, net ( 35,700) (18.5%)
Inventory ( 45,200) (17.8%)
Other current assets 2,900 18.7%
Total current assets (61,800) (11.9%)
(b) El Paso Company experienced a large gain in cash and cash equivalents, which indicates the company is more liquid than the previous
accounting period. Accounts receivable decreased, perhaps as a result of decreased sales or better collections by the credit department.
The increase in other current assets is also large, although compared to the dollar amount of cash, is not as significant. Inventory declined
which could mean goods are moving faster, which in turn generates additional sales. Overall, the decline in total current assets may
indicate a need for the company to seek out investment opportunities for cash that is not immediately needed in operations.
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Modify RemoveQuestion Comparative financial statements for Larson Company, prepared on December 31 are shown below:
Income Statement 2012 2011
Sales revenue $190,000 $167,000
Cost of goods sold 112,000 100,000
Gross profit 78,000 67,000
Operating expenses and interest expense 56,000 53,000
Pretax income 22,000 14,000
Income tax 8,000 4,000
Net income 14,000 10,000
Balance Sheet
Cash $4,000 $7,000
Accounts receivable (net) 14,000 18,000
Inventory 40,000 34,000
Operational assets (net) 45,000 38,000
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