Question: Craft Software reported the following amounts on its balance sheets at December 31, 2010, 2009, and 2008: Sales and profits are high. Nevertheless, Craft is

Craft Software reported the following amounts on its balance sheets at December 31, 2010, 2009, and 2008:

Sales and profits are high. Nevertheless, Craft is experiencing a cash shortage. Perform a vertical analysis of Craft Software€™s assets at the end of years 2010, 2009, and 2008. Use the analysis to explain the reason for the cashshortage.

2010 $ 7,500 35,000 260,000 10,000 2009 2008 2,195 21,950 Receivables, n Inventory Prepaid expenses.... Property, plant, and S 1,990 23,880 147,260 11,940 193,160 17,560 equipment, net...187.500 204,135 212,930 S398,000 Total assets $500,000 $439,000

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