The Current Assets Section of the Company's Two Most Recent

question 86

Essay

The current assets section of the company's two most recent balance sheets are presented below:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\\text { Cash }&\$37,500 &\$ 29,400 \\\text { Accounts receivable, net } & 78,750 & 96,600 \\\text { Inventory } & 104,100 & 126,700 \\\text { Other current assets } & 9,200&7,750\\\text { Total current assets }&229,550&260,450\\\text { Total assets }&\$1,325,000&\$1,715,000\end{array}$
-Refer to Regency Lighting.Complete a common size horizontal analysis of the current assets section of the balance sheet for Year 2.Your answers should be expressed as percentages and rounded to one decimal place.Provide a short explanation of this analysis.

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Definitions:

Non-Derivative

A non-derivative is a financial instrument without any underlying assets; its value is determined by the instrument itself, such as stocks or bonds, as opposed to derivatives like options or futures.

Derivative

A financial instrument whose value is derived from the value of another asset, which can include options, futures, and swaps.

Underlying Variable

A factor that can influence the outcome of a financial instrument or contract, such as interest rates, exchange rates, or commodity prices.

Initial Net Investment

The total amount of money required to initialize a project, investment, or venture, net of any financing.