C.

What caused Everelites total assets to increase in 2008? Note Payable and Long term debt in 2008 increased the Everelites technology

asset because they are funds coming in but they still need to be repaid, although they will increase the company asset and that is why they are considered as liabilities but still under asset.

D.)

What financing sources did Everelites use to support its total assets expansion?

Notes Payable: It is a promise to pay a certain amount of money by a specified date, including any charges for the use of that money. Notes can be short term, if they are to be paid within one year or long term, if the repayment period extends over more than one year. In most cases, firms create notes payable when they borrow funds from a bank. It is, however, possible for a firm to issue a note to guarantee an account payable when it is short of cash. In this fashion, it can continue to operate until the necessary revenue has been obtained Long Term Debt: Amount owed for a period exceeding 12 months from the date of the balance sheet. It could be in the form of a bank loan, mortgage bonds, debenture, or other obligations not due for one year. A firm must disclose its long-term debt in its balance sheet with its interest rate and date of maturity. Amount of long-term debt is a measure of a firm's leverage, and is distinguished from long term liabilities which may include supply of services already paid for.

E.)

Everelites current asset account for a large part of the firms total assets. Did

Everelites support its current assets mainly from short term financing or long term financing? Everelites current asset account was majorly supported from short term loans such as account receivable which are money owed by customers either individuals or corporations to another entity in exchange for goods or services that have been delivered or used, but not yet paid for while Inventory financing is bank line of credit secured by the companys inventory. This type of financing can help to free up some of the cash you have tied up in inventory for more pressing needs. Using these two as a financing source, Everelite would receive its money faster and there cash account would increase and its accounts receivable would decrease because collection would be faster due to some payables. Inventory would have to be built up and possibly fixed assets too before sales could be increased.

F.)

Everelites long term debts are much than equity. What is the impact of this

condition on the company? The impact of this on the condition of the company is that, a high long term debt over equity means that Everelite has been financing its growth with debt and as a result of this; it resulted to additional interest expense. If a lot of debt is used to finance

increased operations it will lead to high debt to equity, the company could possibly make more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the interest, then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, the cost of this debt financing may outweigh the return that the company generates on

the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing. In a situation like this, measurement of a company's financial leverage calculation is adopted to know the rate at which proportion of equity and debt the company is using to finance its assets by dividing its total liabilities by stockholders equity.