Gross Plant and equipment has increased by $400,000 and net plant and equipment has increased by $250,000.
From the financial statements we observe that there were 2 sources of finance (1) throgh issue of bonds for $50,000 and (2) through accounts payable ($190,000).
A major part was financed with sources from short term sources. This is not good for the corporation as short term liabilities have to be discharged in a period less than one year
The investment in plant and equipment is for a long period of time and thus funds raised for long term should be used to invest in them.
The investment in plant and equipment is not satisfactory.