Budget Analysis New England Ski Products recently established goals that it hopes to achieve with regard to asset and debt management. A summarized balance sheet and budgeted percentages at year-end are as follows:

Required:

a. At the balance sheet date, compute the actual balance sheet percentages for New England Ski Products.

b. Which of the current balance sheet amounts will require major adjustment to conform with the desired levels?

c. Discuss briefly what action can be taken to bring the actual amounts into agreement with the budgeted amounts.

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Actual Budget Current assets Cash and cash equivalents $208,000 15% Inventory 320.000 25 Other current assets 32,000 5 Noncurrent assets Buildings and equipment 200.000 35 Land 16,000 5 Other 24,000 15 Total $800,000 100% Current liabilities $160,000 15% Long-term debt 380,000 30 Common stock 120,000 15 Retained earnings 140,000 40 Total $800,000 100%