Exhibit 1, Balance Sheet

Company ACompany BSector Average

ASSETS

Current assets

Cash and cash equivalents 557

Marketable securities 502

Accounts receivable, net 5 15 12

Inventories 1520 16

Prepaid expenses 5 1511

Total current assets 35 55 48

Property, plant, and equipment, net

40 35 37

Goodwill 25 0 8

Other assets0 10 7

Total assets 100 100100

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable 10 10 10

Short-term debt251015

Accrued expenses 053

Total current liabilities 352528

LIABILITIES AND SHAREHOLDERS' EQUITY

Long-term debt45 2028

Other non-current

liabilities 0 107

Total liabilities 805563

Total shareholders' equity 204537

Total liabilities and

shareholders' equity100 100100

Question 4-A Based on Exhibit 1, which statement is most likely correct?

A Company A has below-average liquidity risk.

B Company B has above-average solvency risk.

C Company A has made one or more acquisitions.

Question 4-B The quick ratio for Company A is closest to:

A 0.43.

B 0.57.

C 1.00.

Question 4-C Based on Exhibit 1, the financial leverage ratio for Company B is closest to:

A 0.55.

B 1.22.

C 2.22.

Question 4-D Based on Exhibit 1, which ratio indicates lower liquidity risk for Company A

compared with Company B?

A Cash ratio

B Quick ratio

C Current ratio