Liabilities are mostly current liabilities

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Hank Chow, owner of Amazing Electric Vehicles Company, is considering buying an existing car manufacturing business called Dollar Inc that is up for sale. The current owners claim that Dollar Inc is highly profitable, but Hank has his doubts. He also thinks that the price that they are asking seems high . In reviewing the financial statements of Dollar Inc, he discovers that the current balance sheet shows that the business has more liabilities than assets.

Questions

1. What does the information on the balance sheet from this case mean ? Please explain your responses

2. Would it make a difference if the liabilities are mostly current liabilities or long term liabilities ? Please explain

3. Should Hank Chow buy Dollar Inc, why or why not ?

Reference no: EM133223453

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