Question
Applying the Accounting Equation and Assessing Financial Statement Linkages Answer the following questions. (Hint: Apply the accounting equation.) (a) Intel had assets equal to $63,186
Applying the Accounting Equation and Assessing Financial Statement Linkages Answer the following questions. (Hint: Apply the accounting equation.) (a) Intel had assets equal to $63,186 million and liabilities equal to $13,756 million for a recent year. What was Intel's total equity at year-end? $ We expect a company such as Intel to carry a relatively high proportion of equity vis--vis liabilities because:
It is less risky due to its higher profitability and, therefore, reduces the willingness of debt holders to lend.
It is more risky due to technology innovation and, therefore, debt holders are less willing to lend at reasonable rates.
It is more profitable, and we know that profits increase equity.
It is less risky and can comfortably carry more equity financing.
(b) At the beginning of a recent year, JetBlue's assets were $6,549 million and its equity was $1,546 million. During the year, assets increased by $44 million and liabilities decreased by $64 million. What was JetBlue's equity at the end of the year? (c) Which balance sheet account provides the link between the balance sheet and the income statement?
Cash
Net Sales
Retained Earnings
Total Equity
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