Question

3.   Two similar companies had been competing since they first opened for business in the same year, 2013. At the end of 2016, Elemental Corporation reported assets of $42,500 and Stockholders Equity of $17,325. Blackman Enterprises reported assets of $125,000 and liabilities of $53,500.

a.   Which company had the greater reported liabilities, Elemental or Blackman?

b.   Which company provides a better investment opportunity? Why?

Answer 1

3. a .given

The assets of elemental corporation are $ 42500 and share holders equity are $ 17325.

The assets of blackman enterprises are $ 125000 and liabilities are $ 53500.

The value of assets are more for elemental corporation are more when compared to blackman enterprises and when it comes to liabilities it was more for blackman enterprises so the company blackman enterprises are more liabile.

b. the elemental corporation provides better investment opportunity because it has more amount in the form equity capital which can be increased to greater extent if necessary