ABC company and XYZ company conduct the same type of business
PART C. Comparing balance sheet
ABC company and XYZ company conduct the same type of business. Both are recently formed entities. the balance sheets of the two companies as at 30 June 2020 are as follows:
You are required to answer the following questions based on the information provided above:
a. assuming that you are a banker and that the owner of each business has applied for a short- term loan of $6000 (repayable in six months), which application would you select as being the more favourable? Explain.
b. assuming that you are a businessperson interested in buying one or both companies, and both owners have indicated their intentions to sell, for which business would you be willing to pay the higher price, assuming you will be taking over the existing liabilities of the company? explain. c. if the existing owners agreed to be accountable for all existing liabilities, how would this change your decision in (b), if at all?
Hint
Accounts & Finance Comparative balance sheets displays side-by-side information pertinent to an entity's shareholders' equity, liabilities, and assets within in-time multiple points. For instance, this balance sheet may present a 3 end of years' balance sheets. Consequently, the same could prevail on an annual monthly orientation upon a rolling basis....
Comparative balance sheets displays side-by-side information pertinent to an entity's shareholders' equity, liabilities, and assets within in-time multiple points. For instance, this balance sheet may present a 3 end of years' balance sheets. Consequently, the same could prevail on an annual monthly orientation upon a rolling basis.
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