Problem x. You have to make an investment decision, between the following two companies. Compare them and give your arguments (minimum 10) for your decision (CALCULATIONS FOR MAKING COMPANIES COMPARABLE ARE REQUIRED). The information needed is given below.

Balance Sheet
	Company A	Company B
Assets
Cash	31,000	63,000
Account receivable (net)	20,000	18,000
Inventory	64,000	70,000
Land	270,000	669,000
Building	1,200,000	1,500,000
Accumulated depreciation - Building	(20,000)	(100,000)
Furniture	750,000	900,000
Accumulated depreciation - Furniture	(75,000)	(180,000)
Total Assets	2,240,000	2,940,000
Liabilities and OE
Liabilities	1,300,000	1,000,000
Owner Equity	940,000	1,940,000
Total Liabilities and OE	2,240,000	2,940,000

Net profit for the year: Company A 500,000

Company B 400,000

Inventories

Company A uses FIFO method, and Company B LIFO. If A has used LIFO system, ending inventory would have been 7,000 lower.

Plant Assets

Company A uses straight-line method, with 40 years for buildings and 10 years for furniture, with estimated residual values of 400,000 for buildings and 0 for furniture. Buildings are 1 year old.

Company B uses double-declining method, with 30 years for buildings. Furniture is 1 year old and has useful life of 10 years.

Accounts receivable

Company A uses direct write-off method and projects that 2,000 of receivables are doubtful; while a Company B uses allowance method.