Vertical & Horizontal Analysis
When each asset is analyzed as a percent of total assets for a single period, this is known as which type of Analysis?
Vertical Analysis
What is the formula for the following?
Cost of merchandise sold equals beginning inventory:
Cost of merchandise sold equals beginning inventory plus net purchases minus ending inventory.
The balance sheet lists what major categories?
Assets, liabilities, equity
Selecting a base year and expressing each amount as a percent of the base year amount is called:
Trend analysis
From 2016 to 2017, accounts receivable increased from $4,000 to $4,800. The percent increase is:
Answer: 20%
Explanation:
$800/$4,000 = 20%.
Given gross sales of $40,000 and sales returns and allowances of $6,000, what are the net sales?
Answer: $34,000
Explanation:
$40,000 − $6,000 = $34,000
At age 32, you have assets of $283,033 and liabilities of $271,450. What is your net worth?
Answer: 11,583
Explanation:
$283,033 − $271,450 = $11,583 Net worth
Bill's Pizza has an asset turnover of 3.5. The total assets of Bill's were $95,000. The net sales of Bill's Pizza is:
Answer: $332,500.00
Explanation:
3.5 × $95,000 = $332,500.
Complete the horizontal analysis below:
Year 2 Year 1 Amount Percent Change
$88,338 $92,147 ? ?
Answer: ($3,809), −4.1%
Explanation:
$3,809/$92,147 = 4.1%
The French bank Société Générale reported its net income was 25,561 million euros and its operating expenses totaled 16,216 million euros. What was its gross profit?
Answer: 41,777 million euros gross profit
Explanation:
Net income + Operating expenses = Gross profit
25,561 million euros + 16,216 million euros = 41,777 million euros gross profit
Complete the following the current ratio for the following:
Total current assets = $12,000; current liabilities = $10,000
Answer: 1.2
Explanation:
$12,000/$10,000 = 1.2
The asset turnover of Ryan Company is 7.2. The total assets of Ryan are $88,000. Ryan's net sales were:
Answer: $633,600
Explanation:
$88,000 × 7.2 = $633,600.
In analyzing the income statement of Bob Company, cost of goods sold decreased from 2016 to 2017 by 8.2%. The cost of goods sold was $19,000 in 2017. The cost of goods sold to nearest dollar in 2016 was:
Answer: $20,697.17
Explanation:
$19,000/(100% − 8.2%) = $20,697.17.
The cost of merchandise sold from the following data is as follows: sales $80,000, beginning inventory $5,000, purchases $21,800, purchase discounts $790, ending inventory $5,100.
Answer: $20,910
Explanation:
$5,000 + 21,800 − 790 − 5,100 = $20,910.
The total debt to total assets of Logan Company was .71. The total of Logan's assets was $270,000. The amount of total debt is:
Answer: $191,700
Explanation:
Solve: Total debt ÷ 270,000 = .71
.71 × 270,000 = $191,700.
Complete the trend analysis for sales for year 3* (Round to nearest tenth percent):
Year 4 Year 3 Year 2 Year 1*
$782,143 $655,211 $605,000 $646,133
(*) Base year
Answer: 101.4%
Explanation:
$655,211/$646,133 = 101.4%
Complete the following vertical analysis of a balance sheet:
Amount Percent Current assets $15,751 A Accounts rec. 10,888 B Inventory 97,125 C PPD expenses 11,448 D Total Assets $ 135,212 100%
(Round to nearest tenth percent.)
Answer: A - 11.6%, B - 8.1%, C - 71.8%, D - 8.5%
Explanation:
A. $15,751/$135,212 = 11.6%
B. $10,888/$135,212 = 8.1%
C. $97,125/$135,212 = 71.8%
D. $11,448/$135,212 = 8.5%
William Burris invested $100,000 in an Australian-based franchise, Rent Your Boxes, purchasing three territories in the Washington area. After finding out the company had gone bankrupt, he rallied 10 other franchisees to join him and created a new company, Rent Our Boxes. If Rent Our Boxes had net income of $38,702 with net sales of $284,585.
What was its profit margin on net sales to the nearest hundredth percent?
Answer: 13.60%
Explanation:
$38,702/$284,585 = 0.1359945 = 13.60%
Jay Corporation has earned $175,900 after tax. The accountant calculated the return on equity as 12.5%. Jay Corporation's stockholders' equity to the nearest dollar is:
Answer: $1,407,200
Explanation:
$175,900/.125 = $1,407,200.
Given the following:
2010 2011 2012
Sales $400,000 $350,000 $470,000 Gross Profit −100,000 −130,000 −140,000 Net income $300,000 $220,000 $230,000
By trend analysis (base year is 2010), sales in 2012 to the nearest percent of the base year is:
Answer: 118%
Explanation:
$470,000/$400,000 = 117.5%, or 118%.