Ebony and Ivory companies operate in the same industry and are similar in size, in terms...

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Ebony and Ivory companies operate in the same industry and are similar in size, in terms of investment in assets and sales volume. The ratio of current assets to current liabilities at the 2013 statement of financial position date is the same for both companies, approximately 2.4 to 1. This is very close to the average for all companies in the industry. Selected data from the cash flow statement of the two companies are presented as follows: Ebony Company Net Cash Provided Operating activities Investing activities Sale of assets Financial activities Long-term borrowing Issuance of share capital Net Cash Used (Various) Net increase (decrease) in cash Ivory Company Net Cash Provided Operating activities Investing activities Sale of assets Financial activities Long-term borrowing Issuance of share capital Net Cash Used (Various) Net increase (decrease) in cash 2010 P100 15 10 125 (115) PIO P 50 10 75 135 (125) P.10 2012 2011 (amounts in thousands) P125 PI15 12 25 162 (150) P.12 P 30 25 15 75 145 (133) P.12 50 165 (170) P.(5) P(60) 50 70 100 160 (165) P.(5) 2013 P128 25 15 168 (164) P4 P 10 50 75 135 (131) P4 Required: (a) Identify similarities in the two companies. (b) Identify differences between the two companies. (c) Which company appears to be in a stronger position from the viewpoint of potential investors in the company's stock and major creditors? Why? Ebony and Ivory companies operate in the same industry and are similar in size, in terms of investment in assets and sales volume. The ratio of current assets to current liabilities at the 2013 statement of financial position date is the same for both companies, approximately 2.4 to 1. This is very close to the average for all companies in the industry. Selected data from the cash flow statement of the two companies are presented as follows: Ebony Company Net Cash Provided Operating activities Investing activities Sale of assets Financial activities Long-term borrowing Issuance of share capital Net Cash Used (Various) Net increase (decrease) in cash Ivory Company Net Cash Provided Operating activities Investing activities Sale of assets Financial activities Long-term borrowing Issuance of share capital Net Cash Used (Various) Net increase (decrease) in cash 2010 P100 15 10 125 (115) PIO P 50 10 75 135 (125) P.10 2012 2011 (amounts in thousands) P125 PI15 12 25 162 (150) P.12 P 30 25 15 75 145 (133) P.12 50 165 (170) P.(5) P(60) 50 70 100 160 (165) P.(5) 2013 P128 25 15 168 (164) P4 P 10 50 75 135 (131) P4 Required: (a) Identify similarities in the two companies. (b) Identify differences between the two companies. (c) Which company appears to be in a stronger position from the viewpoint of potential investors in the company's stock and major creditors? Why?

Answer rating: 100% (QA)

a Similarities Both companies experienced a net increase in cash of P4 in 2013 The ratio of current ... View the full answer