the balance sheets and income statements for Amqui Inc. (Amqui).

Additional information:
∎ Allsales are on credit.
∎ All purchases of inventory are on credit.
∎ Amqui must begin repaying its long-term debt in 2016.

Required:

a. Prepare common size balance sheets and income statements for 2012, 2013, and 2014.

b. Analyze and interpret the common size financial statements you prepared.

c. How are these common size statements more useful than the statements originally prepared by Amqui?

d. Why would it be unwise to examine the common size financial statements without considering the financial statements originally prepared by Amqui?

Transcribed Image Text:

Amqui Inc. Balance Sheets as of December 31, Cash Accounts receivable Inventory Other current assets Total current assets 2014 2013 2012 $ 9,000 $ 12,000 $ 10,000 52,600 46,400 35,000 59,250 46,000 45,000 12,000 11,000 8,000 132,850 115,400 98,000 Property, plant, and equipment (net of depreciation) 255,000 210,000 185,000 Total assets $387,850 $325,400 $283,000 Bank loans $ 48,310 $ 27,400 $ 23,000 Accounts payable and accrued liabilities 45,900 41,000 38,000 Total current liabilities 94,210 68,400 61,000 Long-term liabilities 70,000 62,000 50,000