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Using the information below: comment on the financial strength/weakness of Company A and B. Utilize ratios to back up your response. (10 marks) EXHIBIT 1

Using the information below: comment on the financial strength/weakness of Company A and B. Utilize ratios to back up your response. (10 marks) EXHIBIT 1 Common-Size Balance Sheets for Company A, Company B, and Sector Average ASSETS Current assets Sector Company A Company B Average Cash and cash equivalents 5 Marketable securities 0 2 Accounts receivable, net 15 12 Inventories 15 20 16 Prepaid expenses 15 11 Total current assets 35 55 48 Property, plant, and equipment, net 40 35 37 Goodwill 25 0 8 Other assets 0 10 Total assets 100 100 100 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable Short-term debt Accrued expenses Total current liabilities Long-term debt Other non-current liabilities Total liabilities Total shareholders' equity Total liabilities and shareholders' equity ^| | |g 100 = 10 15 3 28 28 63 45 37 100

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