Question

Calgary Compressor and Pnew Brunswick Pneumatic are competing manufacturing firms. Their financial statements are printed here.
a. How are the current assets of each firm financed?
b. Which firm has the larger investment in current assets? Why?
c. Which firm is more likely to incur carrying costs, and which is more likely to incur shortage costs? Why?
CALGARY COMPRESSOR
Statement of Comprehensive Income 2015
Income:
Sales........................................................ $162,749
Other income........................................... 1,002
Total income............................................ $163,751
Operating expenses:
Cost of goods sold.................................. 103,570
Selling and administrative expenses....... 28,495
Depreciation............................................ 2,274
Total expenses........................................ $134,339
Pre-tax earnings........................................ 29,412
Taxes........................................................ 14,890
Net earnings.............................................. $ 14,522
Dividends.................................................. $ 9,845
Retained earnings...................................... $ 4,677
PNEW BRUNSWICK PNEUMATIC
Statement of Comprehensive Income 2015
Income:
Sales........................................................ $91,374
Other income........................................... 1,067
Total income............................................ $92,441
Operating expenses:
Cost of goods sold................................... 59,042
Selling and administrative expenses........ 18,068
Depreciation............................................ 1,154
Total expenses........................................ $78,264
Pre-tax earnings........................................ 14,177
Taxes........................................................ 6,838
Net earnings............................................. $ 7,339
Dividends................................................ $ 4,905
Retained earnings.................................... $ 2,434


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  • CreatedJune 17, 2015
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