Interpreting balance sheet changes. Exhibit 2.15 presents a common-size balance sheet for Pacific Gas and Electric (PG\&E), an electric and gas utility, for two recent years.

a. In what ways is the common-size balance sheet of PG\&E on January 31, Year 9, typical of an electric and gas utility?

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.

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EXHIBIT 2.15 PACIFIC GAS AND ELECTRIC COMPANY Common-Size Balance Sheet Problem 38) ASSETS Current Assets Cash Accounts Receivable Inventories Prepayments Total Current Assets Property, Plant, and Equipment Other Assets Total Assets.. LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Note Payable Other Current Liabilities Total Current Liabilities Noncurrent Liabilities Bonds Payable Other Noncurrent Liabilities Total Noncurrent Liabilities Total Current Liabilities January 31 Year 9 Year 10 1.6% 7.2% 5.0 9.6 1.5 1.1 4.0 13.7 12.1% 31.6% 67.0 57.1 20.9 11.3 100.0% 100.0% 2.4% 10.7% 8.0 20.4 10.2 20.6% 17.9 49.0% 49.6% 38.3% 3.8 1.5 53.4% 39.8% 74.0% 88.8% Shareholders' Equity Preferred Stock 1.6% 1.4% Common Stock 17.7 15.0 Retained Eamings 6.7 (5.2) Total Shareholders' Equity 26.0% 11.2 % Total Liabilities and Shareholders' Equity 100.0% 100.0%