Interpreting balance sheet changes Exhibit 3.7 presents the balance sheet for Cemex S.A., a Mexican construction firm, for two recent years. Cemex applies Mexican reporting standards and reports its results in thousands of pesos ($).

a. Prepare a common-size balance sheet for Cemex for the years ended December 31, 2006 and 2007.

b. In what ways is the common-size balance sheet of Cemex on December 31, 2007, typical of a construction company?

c. Identify the major changes in the nature and mix of assets and the nature and mix of financing between the two year-ends, and suggest possible reasons for thechanges.

Cemex S.A. Balance Sheets EXHIBIT 3.7 (amounts in millions of pesos ($)) (Problem 33) Year ended December 31, 2007 2006 ASSETS Current Assets S 8,670 $ 18,494 Cash and Investments Trade Receivables Less Alliowance for Doubtful Accounts 20,719 16,525 Other Accounts Receivable. 9,830 9,206 Inventories, net 19,631 13,974 Other Current Assets 2,394 2,255 $ 61,244 S 60,454 Total Current Assets. Noncurrent Assets S 10,599 Investments in Associates $ 8,712 Other Investments in Noncurrent Accounts Receivable 10,960 9,966 Property, Machinery and Equipment, net Goodwill, Intangible Assets and Deferred Charges 201,425 262,189 197,322 70,526 Tatal Noncurrent Assets $481,070 $290,629 Tatal Assets ,. $542,314 $351,083 LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities Shart-Term Debt Including Current Maturities $ 36,257 of Long-Term Debt Trade Payables .. Other Accounts Payable and Accrued Expenses $ 14,657 23,660 20,110 23,471 17,203 S 83,388 Tatal Current Liabilities $ 51,970 Noncurrent Liabilities Long-Term Debt . S 73,674 S180,654 Pension and Other Retirement Benefits 7,650 7,484 Deferred Income Tax Liability. 50,307 30,119 Other Noncurrent Liabilities 16,162 14,725 $126,002 Tatal Noncurrent Liabilities. $254,773 Tatal Liabilities $338,161 $ 40,985 $177,972 Minority Interest... $ 22,484 Shareholders' Equity Common Stock,. Additional Paid in Capital 4,115 4,113 63,379 56,982 Less: Other Equity Reserves Retained Earnings.. (104,574) (91,244) 200,248 $163,168 $542,314 180,776 Total Shareholders' Equity $150,627 Total Liabilities and Shareholders' Equity $351,083