Chapter 1, Problem 4AP

1.

To determine

Identify the Company reporting higher total assets.

2.

To determine

Identify the Company reporting higher total liabilities and explain whether this company always has a higher chance of bankruptcy due to non-repayment of debts.

3.

To determine

State the relevant information provided by the total assets and total liabilities to the investors on deciding whether to invest in Company AE or Company B.

4.

To determine

State the Company reporting higher net income and explain whether this company’s operations are always more profitable.

5.

To determine

Ascertain the relevant information provided by the net income to the investors on deciding whether to invest in Company AE or Company B.