Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 66

Critical Thinking: Analyzing the Effects of Depreciation Policies on Income
As an aspiring financial analyst, you have applied to a major Wall Street firm for a summer job. To screen potential applicants, the firm provides you a short case study and asks you to evaluate the financial success of two hypothetical companies that started operations on January 1, 2012. Both companies operate in the same industry, use very similar assets, and have very similar customer bases. Among the additional information provided about the companies are the following comparative income statements.

Required:
Prepare an analysis of the two companies with the goal of determining which company is better managed. If you could request two additional pieces of information from these companies' financial statements, describe specifically what they would be and explain how they would help you to make a decision.