2. Balance sheet A Aa 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 Cold Goose Metal Works 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 Year 2 Year 1 117 Cold Goose Metal Works Inc. Balance Sheet for Year Ending December 31 (Millions of dollars) Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $2,306 $1,845 Accounts payable Accounts receivable 844 675 Accruals Inventories 2,475 1,980 Notes payable Total current assets $5,625 $4,500 Total current liabilities Net fixed assets: Long-term debt Net plant and equipment $6,875 $5,500 Total debt Common equity: Common stock Retained earnings Total common equity Total assets $12.500 $10,000 Total liabilities and equity 664 $781 625 $625 2,344 $3,125 1,875 $2,500 6,094 3,281 $9,375 $12,500 4,875 2,625 $7,500 $10,000 Given the information in the preceding balance sheet-and assuming that cold Goose Metal Works 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. Statement #1: Cold Goose's net collection of inventory items increased by more than the firm sold between Years 1 and 2 This statement is because: Total inventories of raw materials, work-in-process, and final goods increased from $1,980 million to $2,475 million between Year 1 and Year 2 The accounts receivable balance increased by $169 million between Years 1 and 2 The accruals balance decreased by $117 million between Years 1 and 2 Statement #2: Over the past two years, Cold Goose Metal Works Inc. has relied more on the use of short-term debt than on long-term debt financing. This statement is because: Cold Goose's total current liabilities increased by $156 million, while its use of long-term debt increased by $469 million Cold Goose's total notes payable increased by $39 million, while its common stock account increased by $1,219 million Cold Goose's total current liabilities decreased by $156 million, while its long-term debt account decreased by $469 million Statement #3: If Cold Goose ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders. This statement is , because: Common shareholders are treated as residual investors Debtholders and preferred shareholders are considered residual investors Debtholders are treated as residual investors O Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Cold Goose Metal Works Inc.'s balance sheet is consistent with US Generally Accepted Accounting Principles (GAAP)? The company's debts should be listed from those carrying the largest balance to those with the smallest balance. The company's debts are listed in the order in which they are to be repaid. The company's debts should be listed in order of their liquidity