Shown below are selected data from the balance sheets of Alanis, Inc. and Tori, Inc. that are in the same industry (euro amounts are in thousands):

	Alanis, Inc. €	Tori, Inc. €
Cash	25	50
Accounts receivable	50	100
Inventory	225	125
Total assets	450	450
Current liabilities	175	175
Noncurrent liabilities	50	200
Operating Income	75	50
Net Income	50	35
Total Assets beginning of year	400	500
Average Stockholders’ Equity	500	900
Number of shares outstanding	500	500

Required:

Please write a (brief, straight to the point) report comparing the two companies in terms of liquidity, efficiency, and solvency. Make sure you show all your supporting calculations clearly.

Give a reason why a manager would like to inflate the assets of his/her company (i.e. to make their amount appear higher), and also give a reason why would a manager wish to deflate the assets of his/her company (i.e. to make their amount appear lower).

Answer rating: 100% (QA)

Report Alanis Inc and Tori Inc are both in the same industry and have the same amount of total asset... View the full answer