Year 2 Year 1 $0 $0 293 1,660 0 Green Caterpillar Garden Supplies Inc. Balance sheet for Year Ending December 31 (Millions of dollars) Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $4,612 Accounts payable Accounts receivable 2,109 1,688 Accruals Inventories 6,187 4,950 Notes payable Total current assets $14,062 $11,250 Total current liabilities Net fixed assets: Long-term debt Net plant and equipment $13,750 Tatal debt Common equity: Common stock Retained eamings Tatal common equity Total assets $31,250 $25,000 Total liabilities and equity 1,562 $1,562 5,859 $7,812 4,688 $6,250 15,235 12,188 6,562 $18,750 $25,000 $23,438 $31,250 Given the information in the preceding balance sheet-and assuming that Green Caterpillar Garden Supplies Inc. has 50 million shares of common stock outstanding,read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet. statement #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 inventories of raw materials, work-in-process, and final goods increased from $4,950 million to $6,187 million between Year 1 and Year 2 Total inventories of raw materials, work-in-process, and final goods decreased by $1,237 million between Year 1 and Year 2 The accounts receivable balance increased by $421 million between Years 1 and 2 Statement #2: In Year 2, Green Caterpillar Garden Supplies Inc. was profitable. This statement is because: O The cash and equivalents account increased between Years 1 and 2 O Green Caterpillar's tatal assets increased between Years 1 and 2 O Green Caterpillar's retained eamings account increased between the end of Years 1 and 2 statement #3: The book value per share of Green Caterpillar's stock in Year 2 was $468.76. This statement is because: The per-share book value is calculated by dividing the company's total common equity by the number of outstanding shares of common stock The per-share book value is calculated by dividing the company's total assets by the number of outstanding shares of common stock The per-share book value is calculated by dividing the company's total debt by the number of outstanding shares of common stock 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 increases the dividends paid on its common stock
