Back to Assignment Attempts Keep the Highest 5 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 malce several interpretations regarding the company's financial condition and performance. Cute Camel Woodcraft Company 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. Cute Camel Woodcraft Company Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity $6,457 50 SO Current assets: Cash and equivalents Accounts receivable Inventories 2,953 21 363 Current liabilities: Accounts payable Accruals Notes payable Total current liabilities 410 0 8,662 6,930 2,324 2187 Total current assets $19,697 $15.750 $2,187 6,562 Net fixed assets: 8,203 Long-term debt Total debt Net plant and equipment $19,250 $10,937 $8.750 Common equity Common stock 21 328 17.063 Retained earnings 9.187 Total common equity SB2.813 526-250 Total assets $43,750 $35,000 Total Habilities and equity 543,750 $35.000 Given the information in the preceding balance sheet-and assuming that Oute Camel Woodcraft Company has 50 million shares of common stock outstanding-read each of the following statements, then identify the selection that best interprers the information conveyed by the balance sheet Statement #1. Cute Camel's pool of relatively liquid assets, which are available to support the company's current and future sales, decreased from Year 1 to Year 2 This statement is Because O Cute Camels total current liabilities balance decreased by $ 987 million between Nearl and year 2 Cute Camel's tota current asset balance actually increased from $15.750 million to $19.687 milion between year i and Near 2 Cute Came s tota current abilities balance increased from $2.363 million to $2/953 million between year and Year 2 Statement #2: In Year 2, Oute Came Woodcraft Company was profitable, This statement is because: Cute Camel's total assets increased between Years 1 and 2 The cash and equivalents account increased between Years 1 and 2 Cute Camel's retained earnings account increased between the end of Years 1 and 2 Statement #3: If Oute Camel ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders This statement is because: Debtholders are treated as residual investors Common shareholders are treated as residual investors Debtholders and preferred shareholders are considered residual investors Based on your understanding of the different items reported on the balance sheet and the information they provide feverything else remains the same, then the cash and equiva ents item on the current balance sheet is likely to f the firm issues s million afine common stock