$2.$ Balance sheet

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.

Blue Hamster Manufacturing 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.

Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December $31($Millions of Dollars$)$

Year $2$ Year $1$ Year $2$ Year $1$

Assets Liabilities and equity

Current assets: Current liabilities:

Cash and equivalents $$14,512$ $$3,690$ Accounts payable $$0$ $$0$

Accounts receivable $1,6881,350$ Accruals $2340$

Inventories $4,9503,960$ Notes payable $1,3281,250$

Total current assets $$11,250$ $$9,000$ Total current liabilities $$1,562$ $$1,250$

Net fixed assets: Long$-$term debt $4,6883,750$

Net plant and equipment $$13,750$ $$11,000$ Total debt $$6,250$ $$5,000$

Common equity:

Common stock $12,1889,750$

Retained earnings $6,5625,250$

Total common equity $$18,750$ $$15,000$

Total assets $$25,000$ $$20,000$ Total liabilities and equity $$25,000$ $$20,000$

Given the information in the preceding balance sheet$$and assuming that Blue Hamster Manufacturing Inc. has $50$ million shares of common stock outstanding$$read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.

Statement #$1$: Blue Hamster$$s net collection of inventory items increased by more than the firm's sales between Years $1$ and $2.$

This statement is $,$ because:

Total inventories of raw materials, work$-$in$-$process, and final goods increased from $$3,960$ million to $$4,950$ million between Year $1$ and Year $2$

The accruals balance decreased by $$234$ million between Years $1$ and $2$

Total inventories of raw materials, work$-$in$-$process, and final goods decreased by $$990$ million between Year $1$ and Year $2$

Statement #$2$: Over the past two years, Blue Hamster Manufacturing Inc. has relied more on the use of short$-$term debt than on long$-$term debt financing.

This statement is $,$ because:

Blue Hamster$$s total current liabilities decreased by $$312$ million, while its long$-$term debt account decreased by $$938$ million

Blue Hamster$$s total current liabilities increased by $$312$ million, while its use of long$-$term debt increased by $$938$ million

Blue Hamster$$s total notes payable increased by $$78$ million, while its common stock account increased by $$2,438$ million

Statement #$3$: The book value per share of Blue Hamster$$s stock in Year $2$ was $$375\mathrm{.}00.$

This statement is $,$ because:

The per$-$share book value is calculated by dividing the company$$s total debt by the number of outstanding shares of common stock

The per$-$share book value is calculated by dividing the company$$s total assets by the number of outstanding shares of common stock

The per$-$share book value is calculated by dividing the company$$s total common equity by the number of outstanding shares of common stock

Based on your understanding of the different items reported in the balance sheet and the information they provide, which statement regarding Blue Hamster Manufacturing Inc.$$s balance sheet is consistent with U$.$S$.$ Generally Accepted Accounting Principles $($GAAP$)?$

The company$$s assets should be listed in alphabetical order.

The company$$s assets should be listed from those carrying the largest balance to those with the smallest balance.

The company$$s assets should be listed in the order in which they are to be converted into cash.