Using the accounting equation, preparing financial statements, and evaluating business performance [10-15 min]
The 2012 annual report of American Express Services (AES) reported revenue of $21,000,000,000. Total expenses for the year were $14,000,000,000. AES ended the year with total assets of $30,000,000,000, and it owed debts totaling $14,000,000,000. At year-end 2011, the business reported total assets of $23,000,000,000 and total liabilities of $14,000,000,000.
1. Compute AES’s net income for 2012.
2. Did AES’s stockholders’ equity increase or decrease during 2012? By how much?
3. Assume you are a creditor of AES. Would the company’s 2012 performance be good or bad for you, as a creditor?
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