Read theCase 8-1in the textbook.How does a financial analyst who is responsible for determining credit-worthiness compare to two Polish companies in the same industry when one is using the zloty as a functional currency and the other is using the U.S. dollar as a functional currency?

Case 8-1 Columbia Corporation Columbia Corporation, a U.S.-based company, acquired a 100 percent interest in Swoboda Company in Lodz, Poland, on January 1, Year 1, when the exchange rate for the Polish zloty (PLN) was $0.25. The financial statements of Swoboda as of December 31, Year 2, two years later, are as follows: 414 Chapter Eight Balance Sheet December 31, Yoor Assets PLN 1,600,050 Accounts receivable (net .... 1.650,000 4,250,000 Inventory 12.500,090 Equipment. Less Accumulated depreciation (4,250.000) 36,000,003 Building.. Less: Accumulated depreciation (15,150,030) 3,000.000 Land PLN 39,000,DO0 Total assets Liabilities and Stockholders' Equity Accounts payable PLN 1,250,000 Long-term debt... 25,000,000 Common stock 2,500,000 Additional paid-in capital 7.500,000 Retained earnings 2.750,000 Total babilities and stockholders' equity.. PLN 39,000,000 Statement of Income and Retained Earnings For the Year Ending December 31, Year 2 Sales -vamping foot Tom PLN 12,500,000 Cost of goods sold. .. .. (6,000,000) Depreciation expense-equipment . (1.250,000) Depreciation expense building... .. . . . .. 1900,000) Research and development expense. (600.000) Other expenses (induding taxes) 1500,600) Net income .. PIN 3.250,000 Plus Retained earnings, 1/1/72 250,000 Less Dividends. Year 2..... (750,005) Retained earnings, 12/31/72. PLN 2 750,000 Additional information: . The January 1, Year 2, beginning inventory of PLN 3,000,000 was acquired of December 15, Year 1, when the exchange rate was $0.215. Purchases of inver tory during Year 2 were acquired uniformly throughout the year. The December 31, Year 2, ending inventory of PLN 4,250,000 was acquired evenly throughout the fourth quarter of Year 2 when the exchange rate was $0.16. . All fixed assets were on the books when the subsidiary was acquired except for PLN 2,500,000 of equipment which was acquired on January 3, Year 2 when the exchange rate was $0.18 and PLN 6,000,000 in buildings which was acquired of August 5, Year 2, when the exchange rate was 50.17. Equipment is depreciand on a straight-line basis over 10 years. Buildings are depreciated on a straight lie basis over 40 years. A full year's depreciation is taken in the year of acquisition