Green Caterpillar Garden Supplies Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Gven the information in the preceding balance sheet-and assuming that Green Caterpiltar Garden Supplies inc. has 50 milion shares of common stock outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance shect. Statement \#1: Green Caterpiliar's net collection of inventory items increased by more than the firm sold between Years 1 and 2. Given the information in the preceding balance shect-and assuming that Green Caterpiliar Garden Supolies inci has so-million shares of commen stock outstanding - read each of the following statements, then identify the selection that best interprets the information comveyed by the balance sheet. Statement a 1: Green Caterpillar's net collection of inventory items increased by more than the firm sold between Years 1 and 2 . This statement is because: Total inventenes of riaw materials, workin-process, and final poods decreased by $1,732 million between year 1 and Year 2. Total imventories of raw matenals, wark-in-process, and final goods increased from $6,930 million to $5,662 milion between Year 1 and Year 2 The accounts receivable balance increased by $590 millon between Years 1 and 2. Statenent =2: Over the past two years, Green Catepillar Garden supplies tnc has relied more on the use of short terms debt than on lang-term dete firancing. This staterient is because: Green Caterpiliars total current lablties decreased by sS47 milion, while its long-term debe account decreased by 51 , 540 millan. Green Cakerpillar's total current Babilities increased by $547 million, while its use of leog-term debt increased by 51,640 miltion. Green Caterpilar's totad notes payable increased by $137m milion, while its comman stock account increased by 54,265 million. Statement a a. One way to interpet the change in Green Cateipiliars accounts recelyable balance from Year 1 to rear 2 is that more customiers. purchased new items on credt rather than paying off eosting credat accounts. This staternent is beciuse. The change from 56,930 milion to sib,66? malion retects a not accumutation of nev cedit sales. Statement \#3: One way to interpret the change in Green Caterpillar's accounts receivable balance from Year 1 to Year 2 is that more custamers purchased new items on credit rather than paying off existing credit accounts. This statement is , because: The change from $6,930 milben to $6,662 milion reflects a net accumulation of new credit sales. The 5590 inc ease in accounts receivable means either that Year 1's existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, of that Year 1 's credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1 's credit sales. The decrease from $2,953 million to $2,363 mitlon implies a net decrease in accounts receivable and that mare astomers are paying of their receivables balances than are buying on credt. Based on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to if the firm issues 53 milion of new common stock
