Chapter 2 Basic Accounting Concepts 91Condensed financial statements for Wm. Wrigley Jr. Companyfor 2004 and 2003 are shown in
Exhibits 9 and 10 of this chapter. Based upon these financial statements, answer the following
questions:- Using the accounting equation, Assets LiabilitiesStockholders’ Equity, fill in the
amounts for 2003. Express the amounts in millions. - If during 2004, assets increased by $646 and liabilities increased by $288, determine the
increase or decrease in stockholders’ equity during 2004. - Based upon your answers to (1) and (2), determine the total stockholders’ equity as of
December 31, 2004. Does this amount agree with Wrigley’s balance sheet shown in
Exhibit 9? - Based upon Exhibit 9, what percent of Wrigley’s total assets was financed by debt during
2004? Assuming you are a long-term creditor of Wrigley, interpret this percent in terms of
the chances that you will be repaid by Wrigley. - Assuming that in (4) you are a short-term creditor of Wrigley, would your interpretation
and analysis of your chances of being repaid change?
The balance sheets (in millions), on the following page, were adapted from the December 31,
2004 and 2003 financial statements of Boeing Co.Instructions
- Prepare a comparative vertical analysis of the balance sheets for 2004 and 2003. Round to
one decimal place. - Based upon (1), what is your analysis of Boeing’s financial condition in 2004 as compared
to 2003?
Statement of Cash Flows
April 30, 2007Cash flows from operating activities:
Cash receipts from fees earned $ 92,500
Net cash from operating activities $ 92,500Cash flows from investing activities:
Cash payments for land 65,000Cash flows from financing activities:
Cash receipts from issuance of capital stock 25,000
Net increase in cash during April $182,500
Cash as of April 1, 2007 0
Cash as of April 30, 2007 $182,500FINANCIAL ANALYSIS AND REPORTING CASES
Case 2-1
Accounting equation
Case 2-2
Vertical analysis