Interpreting balance sheet changes. Exhibit 2.14 presents a common-size balance sheet for Staples, Inc., an office supply retailer, for two recent years.

a. Identify the ways in which the structure of Staples's assets and the structure of its financing correspond to what one would expect of a retail store chain.

b. Identify the major changes in the nature and mix of assets and the nature and mix of financing between the two year-ends and suggest possible reasons for the changes.

c. "An increase in the common-size balance sheet percentage between two year-ends for a particular balance sheet item (for example, cash) does not necessarily mean that its dollar amount increased." Explain.

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STAPLES, INC. Common-Size Balance Sheet EXHIBIT 2.14 [Problem 37] ASSETS Cash Accounts Receivable Inventories. Other Current Assets Total Current Assets Property, Plant, and Equipment Other Assets Total Assets LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable.. Notes Payable Other Current Liabilities Total Current Liabilities Noncurrent Liabilities Bonds Payable Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities... Shareholders' Equity Common Stock January 31 Year 7 Year 6 5.9% 14.6% 9.3 6.2 45.5 44.5 3.6 2.6 64.3% 67.9% 24.8 23.4 10.9 8.7 100.0% 100.0% 23.6% 26.1% 0.4 1.6 9.7 10.6 33.7% 38.3% 21.9% 20.7% 1.8. 1.6 23.7% 22.3% 57.4% 60.6% 28.4% 24.2% Retained Earnings 14.2 15.2 Total Shareholders' Equity 42.6% 39.4% Total Liabilities and Shareholders' Equity 100.0% 100.0%