1.

Comment on any significant changes in each company in each assets

and liabilities

Answer: Standard Motor Corporation: Asset of the company is divided

into two parts one is Current Asset and Long-term Asset.
There is significant changes are observed in current asset composition of the
company. In FY 2015, Cash of the company is increased by 36.95% compare
to FY 2014.
However there are some perceptible changes took place in long term assets
composition.
Property, Plant and equipment is increased by 6.61% compare to FY
2014, as the company has purchased machinery and equipment, furniture
and tools, dies, and auxiliary equipment.
Other Intangible Asset is comprised of Computer software. There is
14.58% decline in FY2015 due to the amortization of computer software.
Accumulated depreciation in FY2015 is $16 million.
Stone ridges Inc.: Current Asset of the Company has
experienced sharp decline in FY 2015. Cash and cash equivalent, which is the
part of current asset, the company is giving emphasize on generating cash
which is their new initiative.
There is a significant change is observed in accounts receivables and
inventories, which is reduced by 9.67% and 14.38 % respectively. This
change took place due to management decision of the company. Intangible
asset and goodwill which is the Long term asset of the company experienced
significant downfall in FY 2015.
Along with it, current portion of debt also reduced by 29.25% as the
company reduced its outstanding debt by $11.9 million.
2. Comment on any significant changes in each company in the
composition of current assets and current liabilities

Answer:

Standard Motor Corporation: current asset of the company

mainly comprised of CAs and cash equivalent, Receivables, Inventories,

deferred income tax and prepaid expense. The company is maintaining
stable trend in current assets components. There is no such significant
change has observed in FY 2015 and FY2014.
But the company has reduced its current liability portion, among which Notes
Payable reduced by 16.14% compare to FY2014 and Sundry Payables and
Accrued Expense are also reduced by 17.62% compare to FY 2014, which is
significant to mention.
Stone ridges Inc.: Stone ridge has experienced a decline in
current asset composition. Current asset of the company is comprised of
Cash and cash equivalents, Accounts receivables, inventories, prepaid
expense. There is a significant change is observed in accounts receivables
and inventories, which is reduced by 9.67% and 14.38 % respectively. This
change took place due to management decision of the company. According
to the management insight, we are generating cash as result of our ongoing
initiatives

to

reduce

working

capital

and

prudently

manage

capital

expenditures. The company is managing its outstanding receivables and

optimizing its inventory balance.
Along with it, current portion of debt also reduced by 29.25% as the
company reduced its outstanding debt by $11.9 million.
3. Which assets in each company have the most significant

investment?
Answer:

Both of the company is concerned about working capital of the

company. Therefore, they highly invest in working capital components such

as receivables and inventories.
Standard Motor Corporation has significant investment in inventories.
Besides, Stone ridges Inc, significantly invest in receivables, however, in
2015, it is declining compare to previous year, as the company reduced its

dependency on credit sales facility to boost up sales and highly focused on

organic sales growth.
4. Are the companies financed primarily with debt and equity?

Answer: The companies are primarily following combination of debt and

equity to finance. The capital structure of the company is composed of Debt
and Equity.
By using Debt to Capital Ratio: Total Debt/ (Total debt+ Total
shareholders equity),
We find out that Standard Motor Corporation has used significant amount
of debt to finance its business activities, which is 42.45% of total capital
structure composition and equity has played rest of the part to finance.
Besides, Stone ridges Inc, also used debt and equity to finance its
business. The company mostly relied on debt financing which is 70% of its
capital structure composition. Newly introduced Revolving Credit facility
has largely contributed to this high debt financing.
5. Is the debt primarily short-term or long -term?
The both of the company relied on debt financing and they have short term
and long term debt.

6. Compare the balance sheets of both companies with regards to

size and composition of assets, liabilities and stockholders
equity.
Answer: Asset composition of both of the company is almost similar. Current
asset of the Standard Motor products Inc. has larger investment in current
asset compare to Stoneridges Inc. because Standard Motor Products Inc. has
much bigger investment in working capital compare to Stoneridges Inc.
However, it also important to mention that, Stoneridges Inc. has maintained
23.44% cash and cash equivalent asset of total current asset on the other

hand Standard Motor Products Inc. has maintained only 3.91% of cash and
cash equivalent asset of total current asset.
A difference is being observed in long-term asset composition of both of the
companies. Standard Motor Products Inc. has higher goodwill value compare
to Stoneridges Inc. On the other hand, Stoneridges Inc. has bigger
investment in Property, Plant and Equipment compare to Standard Motor
Products Inc. Besides, deferred tax has significantly affected the long term
asset composition of Standard Motor Products Inc.
Standard Motor Products Inc. has maintained relatively higher current
liabilities to finance its business than that of Stoneridges Inc.
On the other hand, long term liability position of Stoneridges Inc. is higher
compare to Standard Motor Products Inc. As Stoneridges Inc. has taken
revolving credit facility from which outstanding is $100 million.
Shareholder equity portion of Stoneridges Inc. is gradually declining over the
year. In addition to this, contribution of Shareholder equity portion in
financing is also low. The company is much more relied on debt financing
which 70.78%. On the other hand, Standard Motor Products Inc. has larger
share of Shareholder equity portion in the business and 57.55% of the
business is equity financing.