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When performing vertical analysis, each financial statement item is shown as a percentage

When performing vertical analysis, each financial statement item is shown as a percentage of the base amount.

12) When performing vertical analysis on a balance, the current liabilities are compared typically to total liabilities.

13) When performing vertical analysis on a balance, share capital is calculated as a percentage of total shareholders' equity.

14) When performing vertical analysis on a balance, long term debt is calculated as a percentage of total liabilities and shareholders' equity.

15) When performing vertical analysis on a balance, cash is compared to the total current assets figure.

16) When performing vertical analysis on a balance, accounts receivable is calculated as a percentage of total assets.

17) Prepare a vertical analysis for Young's Point Corporation's balance sheet to determine the component percentages of its assets, liabilities, and shareholders' equity. Round percentages to the nearest one-tenth percent.

Young's Point Corporation

Balance Sheet

December 31, 2010

Assets

Total current assets$ 320,000

Long-term investments100,000

Property, plant, and equipment, net855,000

Total assets$1,275,000

Liabilities

Total current liabilities$210,000

Long-term debt480,000

Total liabilities$690,000

Shareholders' equity

Total shareholders' equity$585,000

Total liabilities and shareholders' equity$1,275,000

18) Prepare vertical analysis calculations by filling in the far right column of the following balance sheet with the appropriate percentages.

Treetops Corporation

Balance Sheet

December 31, 2011

2011Percent

Current assets

Cash$10,000

Short-term investments7,000

Accounts receivable, net30,000

Inventory37,000

Prepaid expenses4,000

Total current assets$ 88,000

Property, plant, and equipment, net33,300

Other assets37,000

Total assets$158,300

Current liabilities

Short-term borrowings$ 28,400

Accounts payable20,000

Total current liabilities$ 48,400

Long-term debt37,500

Total liabilities$ 85,900

Shareholders' equity

Common shares$20,000

Retained earnings52,400

Total shareholders' equity$72,400

Total liabilities and shareholders' equity$158,300

19) Following is the income statement for Lovesick Lake Group Inc., for the year ended December 31, 2011:

Lovesick Lake Group Inc.

Income Statement

For the Year Ended December 31, 2011

Net sales$3,470,000

Expenses:

Cost of goods sold$2,082,000

Selling expenses105,000

General expenses291,000

Interest expense10,000

Income tax expense265,000

Total expenses2,753,000

Net income$ 717,000

Required:

a. Prepare a vertical analysis of the income statement showing appropriate percentages for each item   listed above. Round percentages to one-tenth percent.

Dec 09 2019 View more View Less

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