The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company's financial condition and performance. Blue Hamster Manufacturing Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet. Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $3,690 Accounts payable $0 $0 Accounts receivable 1,688 1,350 Accruals 234 0 Inventories 4,950 3,960 Notes payable 1,328 1,250 Total current assets $11,250 $9,000 Total current liabilities $1,250 Net fixed assets: Long-term debt 4,688 3,750 Net plant and equipment $11,000 Total debt $6,250 $5,000 Common equity: Common stock 12,188 9,750 Retained earnings 5,250 Total assets $25,000 $20,000 Total common equity $18,750 Total liabilities and equity $25,000 $15,000 $20,000 Given the information in the preceding balance sheet-and assuming that Blue Hamster Manufacturing Inc. has 50 million shares of common stock outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.
The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company's financial condition and performance. Blue Hamster Manufacturing Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet. Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $3,690 Accounts payable $0 $0 Accounts receivable 1,688 1,350 Accruals 234 0 Inventories 4,950 3,960 Notes payable 1,328 1,250 Total current assets $11,250 $9,000 Total current liabilities $1,250 Net fixed assets: Long-term debt 4,688 3,750 Net plant and equipment $11,000 Total debt $6,250 $5,000 Common equity: Common stock 12,188 9,750 Retained earnings 5,250 Total assets $25,000 $20,000 Total common equity $18,750 Total liabilities and equity $25,000 $15,000 $20,000 Given the information in the preceding balance sheet-and assuming that Blue Hamster Manufacturing Inc. has 50 million shares of common stock outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet
and other financial statements to make several interpretations regarding the company's financial condition and performance.
Blue Hamster Manufacturing Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of
operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet.
Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars)
Year 2
Year 1
Year 2
Year 1
Assets
Liabilities and equity
Current assets:
Current liabilities:
Cash and equivalents
$3,690
Accounts payable
$0
$0
Accounts receivable
1,688
1,350
Accruals
234
0
Inventories
4,950
3,960
Notes payable
1,328
1,250
Total current assets
$11,250
$9,000
Total current liabilities
$1,250
Net fixed assets:
Long-term debt
4,688
3,750
Net plant and equipment
$11,000
Total debt
$6,250
$5,000
Common equity:
Common stock
12,188
9,750
Retained earnings
5,250
Total assets
$25,000
$20,000
Total common equity
$18,750
Total liabilities and equity $25,000
$15,000
$20,000
Given the information in the preceding balance sheet-and assuming that Blue Hamster Manufacturing Inc. has 50 million shares of common stock
outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.
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